Market Newsdesk

November 19, 2020 4:30 am

PMI’s ESG Performance Recognized by the S&P Dow Jones Indices

PMI’s ESG Performance Recognized by the S&P Dow Jones Indices

PMI Named in Dow Jones Sustainability North American Index; the Company Continues to Demonstrate Progress Toward Delivering a Smoke-Free World

LAUSANNE, Switzerland–(BUSINESS WIRE)–
Philip Morris International Inc. (PMI) (NYSE: PM) has been included for the first time in the Dow Jones Sustainability Index (DJSI) North America, recognizing its exemplary sustainability performance. Moreover, for the third year in a row, PMI leads the industry in DJSI’s innovation management category, which assesses companies’ research and development spending, product innovations, and portfolio of tobacco alternatives and reduced-risk products. The DJSI North America Index includes the Dow Jones Indices’ top 20 percent of ESG performers across 61 industries—those that exhibit best-in-class performance against DJSI’s environmental, social, and governance (ESG) metrics.

“Integrating ESG into our business is at the core of our smoke-free strategy,” said PMI Chief Sustainability Officer Jennifer Motles. “Indeed, for us to be a truly sustainable company we must continue to relentlessly address the health impacts of our products by focusing our efforts and resources on phasing out cigarettes as quickly as possible. As the only cigarette manufacturer committed to removing cigarettes from our business, we are proud to be part of the Dow Jones Sustainability North America Index, confirming the significant progress we’re making to transform our business.”

To make its transformation measurable and transparent, PMI reports regularly on its progress toward achieving its purpose—first announced in 2016—to deliver a smoke-free future by focusing resources on developing, scientifically substantiating, and responsibly commercializing smoke-free products that are less harmful than smoking, with the aim of completely replacing cigarettes with smoke-free alternatives for those adults who would otherwise continue to smoke as soon as possible. In 2016 PMI introduced a set of bespoke key performance indicators (KPIs), Business Transformation Metrics, to clearly showcase the pace and scale of the company’s transformation. These allow stakeholders to assess the actions, resource allocation, and outcomes achieved in PMI’s rapid advancement toward a smoke-free future. In 2019, the company continued to expand these metrics, to 25 indicators, such as the availability of PMI’s smoke-free products worldwide, including in non-OECD countries.

To further demonstrate PMI’s clarity of purpose, in March 2020 the company’s Board of Directors issued its Statement of Purpose, published in PMI’s Proxy Statement, reaffirming its commitment to delivering a smoke-free future. In June 2020 PMI released its first Integrated Report, helping stakeholders and investors make the connection between product-focused sustainability initiatives, which form the core of PMI’s ESG strategy, and financial performance over time. Informed by PMI’s sustainability materiality assessment, the report describes the company’s performance in addressing its most pressing ESG issues and enables company stakeholders to better evaluate PMI’s progress in achieving its purpose of delivering a smoke-free future. In October, PMI reinforced its commitment to addressing ESG issues by integrating the Sustainability team within the company’s Finance organization.

“We congratulate Philip Morris International for being included in the DJSI North America Index,” said Manjit Jus, global head of ESG Research and Data, S&P Global. “A DJSI distinction is a reflection of being a sustainability leader in your industry. With a record number of companies participating in the 2020 Corporate Sustainability Assessment and more stringent rules for inclusion this year, this sets your company apart and rewards your continued commitment to people and planet.”

Additional information on the company’s sustainability efforts and ESG performance are available at PMI.com/Sustainability.

Notes: The term “materiality,” “material,” and similar terms, when used in the context of economic, environmental, and social topics, are defined in the referenced sustainability standards, and are not meant to correspond to the concept of materiality under the U.S. securities laws and/or disclosures required by the U.S. Securities and Exchange Commission.

Philip Morris International: Delivering a Smoke-Free Future

Philip Morris International (PMI) is leading a transformation in the tobacco industry to create a smoke-free future and ultimately replace cigarettes with smoke-free products to the benefit of adults who would otherwise continue to smoke, society, the company, and its shareholders. PMI is a leading international tobacco company engaged in the manufacture and sale of cigarettes, as well as smoke-free products and associated electronic devices and accessories, and other nicotine-containing products in markets outside the U.S. In addition, PMI ships a version of its IQOS Platform 1 device and its consumables to Altria Group, Inc. for sale under license in the U.S., where the U.S. Food and Drug Administration (FDA) has authorized their marketing as a modified risk tobacco product (MRTP), finding that an exposure modification order for these products is appropriate to promote the public health. PMI is building a future on a new category of smoke-free products that, while not risk-free, are a much better choice than continuing to smoke. Through multidisciplinary capabilities in product development, state-of-the-art facilities, and scientific substantiation, PMI aims to ensure that its smoke-free products meet adult consumer preferences and rigorous regulatory requirements. PMI’s smoke-free product portfolio includes heat-not-burn and nicotine-containing vapor products. As of September 30, 2020, PMI estimates that approximately 11.7 million adult smokers around the world have already stopped smoking and switched to PMI’s heat-not-burn product, available for sale in 61 markets in key cities or nationwide under the IQOS brand. For more information, please visit www.pmi.com and www.pmiscience.com.

# # #

View source version on businesswire.com: https://www.businesswire.com/news/home/20201119005567/en/

Philip Morris International

Daniella Weinberg

T. +1 484 433 0447

E. [email protected]

KEYWORDS: Europe Switzerland United States North America New York

INDUSTRY KEYWORDS: Retail Other Consumer Consumer Environment Other Retail Tobacco

MEDIA:

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November 19, 2020 4:15 am

Bank Hapoalim Announces Third Quarter 2020 Financial Results

PR Newswire

TEL AVIV, Israel, Nov. 19, 2020 /PRNewswire/ — Bank Hapoalim (TASE: POLI) (ADR: BKHYY), today announced its financial results for the third quarter ended September 30, 2020.

Key financial highlights:

Net profit totaled NIS 816 million, compared with NIS 736 million in the corresponding quarter of 2019.
Return on equity – totaled 8.8%, compared with 7.6% in the corresponding quarter of 2019.
The Bank continued to demonstrate strong capital and liquidity resilience:
Common Equity Tier 1 (CET1) capital ratio stood at 11.53%, well above both regulatory and internal capital targets.
Liquidity Coverage Ratio (LCR) stood at 132% as at the end of the reporting period.
Provision for credit losses – following high reserve build in the first half of 2020, the bank recorded a materially lower net provision for credit losses of NIS 193 million, or 0.26%.
Loan book – reflective of the subdued credit demand and risk appetite during the period, net credit to the public at the end of the third quarter totaled NIS 293 billion, of which housing loans totaled NIS 96.4 billion compared with NIS 89.3 billion at the end of 2019, an increase of 7.9%.
Retail deposits increased 16.3% since year-end and totaled NIS 273 billion.
Operating and other expenses declined by 6.0%, totaling NIS 1,851 million, compared with NIS 1,970 million in the same quarter last year
Cost income ratio was 56.1% compared with 62.2% in the same quarter last year. The bank continues to implement various cost efficiency measures, amongst them the acceleration of its fifth efficiency program calling for the early retirement of approximately 10% of its workforce by end 2022.

Recent mentions:

Appointment of directors: At the shareholder meeting of the bank held on October 22, 2020, the following directors were elected: Prof. Stanley Fischer and Mr. Israel Trau were elected to serve as directors of the bank, and Adv. Ronit Abramson-Rokach and Ms. Dalia Lev, CPA, were elected to a second term as external directors of the bank. The appointments are subject to approval by the Bank of Israel.
Appointment of Chief Accountant : The Board of Directors approved the appointment of Mr. Guy Kalif, CPA, presently Head of Financial Planning and Budgets, to the position of Chief Accountant and member of the Board of Management, replacing Mr. Ofer Levy, CPA, who is retiring from the bank. The appointment is subject to approval by the Bank of Israel.
COVID-19: The Bank continues its commitment to support its employees, customers and the community through the COVID-19 crisis. Among its many initiatives:
Deferral of loan payments: The bank has continued to expand measures for its customers who are suffering the effects of COVID-19. Among other efforts, the bank is allowing customers to defer loan and mortgage payments, in order to provide cash-flow relief. The total cumulative balance of loans in respect of which payments were deferred is NIS 43.3 billion as at the end of the third quarter of 2020, of which loans in the amount of NIS 21.4 billion remain in deferral. The cumulative balance of mortgage loans in respect of which payments were deferred is NIS 20.8 billion, of which loans in the amount of 7.4 billion remain in deferral, representing a 64% reduction. Near the date of publication of the report, the credit balance in respect of which payments have been deferred totaled approximately NIS 19.1 billion.
Participation in government guarantee scheme: The bank continues to offer loans to businesses under the scheme. As at the end of the third quarter, the bank has provided loans to its customers in the amount of approximately NIS 4.85 billion through the scheme. Approximately 77% of which have been granted to small businesses and microbusinesses, and an additional 23% to mid-sized and large businesses.
Scheduled appointments at the branches of the bank: The bank has accelerated the drive towards scheduled appointments with bankers at its branches, in line with common practice at advanced organizations around the world. Scheduled appointments as a percentage of total meetings rose from approximately 20% at the beginning of this year to approximately 83% at the end of October, allowing improvement of the customer experience and better operational efficiency at the branches.
Designated loan fund for self-employed individuals: The bank and the Lahav announced a NIS 0.5 billion loan fund targeted to assist self-employed individuals, with interest rates similar to those offered in government-backed loans.
Business collaborations in the United Arab Emirates: Following the historic signing of the Abraham Accord, the bank has taken a leadership role in advancing the economic ties between Israel and the UAE, establishing corresponding relations with two of the national largest banks and instating trade financing activities.

Key developments in the financial statements for the third quarter of 2020:

Income from regular financing activity totaled NIS 2,336 million in the third quarter of 2020, compared with NIS 2,387 million in the same quarter last year. The decline mainly reflects the negative impact of lower FED and local interest rates on deposit margins and from a decline in consumer credit balances.
Net provision for credit losses totaled NIS 193 million in the second quarter of 2020, or 0.26% of the average total credit to the public (annualized), compared with a net Income for credit losses in the amount of NIS 40 million in the same quarter last year.
Fees and other income, totaled NIS 766 million in the third quarter of 2020, compared with NIS 826 million in the same quarter last year, a decrease of 7.3%, mainly as a result of decline in income from credit cards and account-management fees.
Operating and other expenses, totaled NIS 1,851 million in the third quarter of 2020, compared with NIS 1,970 million in the same quarter last year, a decrease of 6.0%.
Salary expenses, totaled NIS 988 million in the third quarter of 2020, compared with NIS 1,033 million in the same quarter last year, a decrease of 4.4%.
Cost income ratio was 56.1% in the third quarter of 2020, compared with 62.2% in the same quarter last year.

Key developments in balance sheet items:

Consolidated balance sheet, totaled NIS 513.7 billion as at September 30, 2020, compared with NIS 463.7 billion at the end of 2019, an increase of 10.8%.
Net credit to the public, totaled NIS 292.8 billion, compared with NIS 292.9 billion at the end of 2019.
Consumer credit in Israel, totaled NIS 37.3 billion, compared with NIS 41.5 billion at the end of 2019, a decrease of 10.1%.
Housing loans in Israel, totaled NIS 96.4 billion, compared with NIS 89.3 billion at the end of 2019, an increase of 7.9%.
Credit to small businesses in Israel, totaled NIS 30.7 billion, compared with NIS 31.0 billion at the end of 2019, a decrease of 0.9%.
Credit to the commercial segment in Israel, totaled NIS 41.3 billion, compared with NIS 40.1 billion at the end of 2019, an increase of 2.8%.
Credit to the corporate segment in Israel, totaled NIS 72.7 billion, compared with NIS 76.6 billion at the end of 2019, a decrease of 5.1%.
Deposits from the public, totaled NIS 417.0 billion, compared with NIS 361.6 billion at the end of 2019, an increase of 15.3%.
Deposits from consumers in Israel, totaled NIS 217.2 billion, compared with NIS 188.8 billion at the end of 2019, an increase of 15.1%.
Deposits from small businesses in Israel, totaled NIS 55.9 billion, compared with NIS 46.0 billion at the end of 2019, an increase of 21.5%.
Shareholders’ equity, totaled NIS 39.0 billion, compared with NIS 38.2 billion at the end of 2019, an increase of 2.1%.
The bank continues to maintaining a very high liquidity and stability indices – Liquidity coverage ratio stood at 132% in the third quarter of 2020 compared with 124% in the same quarter last year.
Common Equity Tier 1 capital ratio as at September 30, 2020, stood at 11.53%, well above both regulatory and internal targets.
Total capital ratio , as at September 30, 2020 stood at 14.74%, above the capital thresholds required by the Bank of Israel.

Conference Call Information:

Bank Hapoalim will host a conference call today to discuss its third quarter 2020 financial results at 5:00 p.m. (Israel); 3:00 p.m. (UK); 10:00 a.m. (ET). To access the conference call, please dial:
1-888-281-1167 toll free from the United States; 0-800-051-8913 toll free from the United Kingdom; or 972-3-9180685 internationally. No password is required. The call will be accompanied by a slide presentation, which, together with the financial statements, will be available on the Bank’s website at www.bankhapoalim.com, under Investor Relations, Financial Information. A recording of the conference call will be available on the Bank’s website at the above address one business day following the completion of the call.

Please note: The conference call does not replace the need to peruse the immediate reports and the Financial Statements of the Bank, including all the forward-looking information included therein in accordance with Section 32A of the Israeli Securities Law, 1968.

About
Bank Hapoalim
:

Bank Hapoalim is Israel’s leading financial group. In Israel, the Bank Hapoalim operates 199 full-service retail branches, regional business centers and specialized industry relationship managers for major corporate customers. The Bank Hapoalim Group includes holdings in financial companies involved in investment banking, trust services and portfolio management. Internationally, commercial banking services are provided in North America by the New York branch. Bank Hapoalim is listed on the Tel Aviv Stock Exchange (TASE: POLI) and holds a Level-1 ADR program. For more information about Bank Hapoalim, please visit us online at www.bankhapoalim.com

Please note: This press release was prepared for convenience only. In case of any discrepancy, the Bank’s reported financial statements in Hebrew will prevail.

Contact:

Karen Mazor

Head of Investor Relations
T: +972 3 5673440
E: [email protected]

Table 1-1: Condensed financial information and principal performance indicators over time

	For the three months ended September 30		For the nine months ended September 30		For the year ended December 31
	2020	2019	2020	2019	2019
Main performance indicators
Return of net profit on equity attributed to shareholders of the Bank⁽¹⁾	8.78%	7.63%	4.01%	8.43%	4.62%
Return of net profit on equity attributed to shareholders of the Bank excluding extraordinary items⁽¹⁾⁽²⁾	8.78%	8.30%	4.54%	8.40%	7.13%
Return of net profit from continued operations on equity attributed to shareholders of the Bank⁽¹⁾	8.78%	7.46%	4.39%	7.52%	3.86%
Return of net profit from continued operations on equity attributed to shareholders of the Bank excluding extraordinary items⁽¹⁾⁽³⁾	8.78%	8.13%	4.54%	7.97%	6.72%
Return on average assets⁽¹⁾	0.64%	0.65%	0.31%	0.71%	0.39%
Ratio of income to average assets⁽¹⁾	2.00%	2.07%	2.02%	2.15%	2.17%
Ratio of fees to average assets⁽¹⁾	0.59%	0.72%	0.64%	0.70%	0.71%
Efficiency ratio – cost-income ratio from continued operations	56.06%	62.20%	56.85%	59.58%	66.44%
Efficiency ratio – cost-income ratio excluding extraordinary items from continued operations⁽³⁾	56.06%	61.01%	56.55%	58.49%	58.13%
Financing margin from regular activity⁽¹⁾⁽⁴⁾	1.93%	2.23%	2.04%	2.28%	2.26%
Liquidity coverage ratio⁽⁵⁾	132%	124%	132%	124%	121%

			As at September 30		December 31
			2020	2019	2019
Ratio of common equity Tier 1 capital to risk components⁽⁶⁾			11.53%	11.87%	11.53%
Ratio of total capital to risk components⁽⁶⁾			14.74%	15.16%	14.64%
Leverage ratio⁽⁶⁾			6.92%	7.92%	7.61%
(1) Calculated on an annualized basis.
(2) Does not include expenses in respect of the update of the provision in connection with the investigation of the Bank Group’s business with American customers and FIFA, the effect of the closure of the private-banking activity overseas, net profit or loss from the separation from Isracard, and loss from impairment in respect of the Bank’s investment in Bank Pozitif.
(3) Does not include expenses in respect of the update of the provision in connection with the investigation of the Bank Group’s business with American customers and FIFA, the effect of the closure of the private-banking activity overseas, and loss from impairment in respect of the Bank’s investment in Bank Pozitif.
(4) Financing profit from regular activity (see the Report of the Board of Directors and Board of Management, in section 2.2 “Material developments in income, expenses, and comprehensive income”) divided by total financial assets after allowance for credit losses, net of non-interest bearing balances in respect of credit cards.
(5) For additional information, see the section “Liquidity and refinancing risk,” in the financial statements.
(6) For additional information, see the section “Capital, capital adequacy, and leverage,” in the financial statements.

Condensed financial information and principal performance indicators over time (continued)

	For the three months ended September 30		For the nine months ended September 30		For the year ended December 31
	2020	2019	2020	2019	2019
Main credit quality indicators
Allowance for credit losses as a percentage of credit to the public	2.07%	1.35%	2.07%	1.35%	1.58%
Impaired debts and debts in arrears of 90 days or more as a percentage of credit to the public	1.65%	1.29%	1.65%	1.29%	1.80%
Net charge-offs as a percentage of average credit to the public⁽¹⁾	(0.03%)	0.01%	0.18%	0.10%	0.12%
Provision for credit losses as a percentage of average credit to the public⁽¹⁾	0.26%	(0.05%)	0.95%	0.18%	0.44%

Main profit and loss data
	NIS millions
Net profit attributed to shareholders of the Bank	816	736	1,141	2,428	1,799
Net profit attributed to shareholders of the Bank excluding extraordinary items⁽²⁾	816	798	1,290	2,419	2,778
Net profit from continued operations attributed to shareholders of the Bank	816	720	1,250	2,170	1,503
Net profit from continued operations attributed to shareholders of the Bank excluding extraordinary items⁽³⁾	816	782	1,290	2,298	2,619
Net interest income	2,201	2,283	6,559	7,026	9,319
Provision (income) for credit losses	193	(40)	2,130	400	1,276
Net financing profit*	2,536	2,341	7,393	7,339	9,878
Non-interest income	1,101	884	3,280	2,775	3,889
Of which: fees	755	815	2,364	2,404	3,240
Operating and other expenses	1,851	1,970	5,593	5,839	8,776
Of which: salaries and related expenses	988	**1,033	2,913	**3,119	**4,108
Total income	3,302	3,167	9,839	9,801	13,208

Additional data
Net profit per share attributed to shareholders of the Bank (in NIS)	0.61	0.55	0.86	1.82	1.13
Total dividend per share (in agorot)⁽⁴⁾	–	74.90	⁽⁵⁾ 53.94	74.90	74.90
* Net financing profit includes net interest income and non-interest financing income (expenses).
** Reclassified.
(1) Calculated on an annualized basis.
(2) Does not include expenses in respect of the update of the provision in connection with the investigation of the Bank Group’s business with American customers and FIFA, the effect of the closure of the private-banking activity overseas, net profit or loss from the separation from Isracard, and loss from impairment in respect of the Bank’s investment in Bank Pozitif.
(3) Does not include expenses in respect of the update of the provision in connection with the investigation of the Bank Group’s business with American customers and FIFA, the effect of the closure of the private-banking activity overseas, and loss from impairment in respect of the Bank’s investment in Bank Pozitif.
(4) According to the date of declaration.
(5) Paid as a dividend in kind, in shares; calculated based on the value of Isracard shares on March 8, 2020 (NIS 10.91).

Condensed financial information and principal performance indicators over time (continued)

	September 30		December 31
	2020	2019	2019
	NIS millions
Main balance sheet data
Total assets	513,686	453,347	463,688
Of which: Cash and deposits with banks	128,421	72,517	88,122
Securities	67,835	65,592	59,486
Net credit to the public	292,845	291,007	292,940
Net problematic credit risk	9,252	7,761	8,787
Net impaired balance sheet debts	2,643	2,295	3,034
Credit to the public not accruing interest income (NPL)	3,482	2,401	3,867
Total liabilities	474,688	414,086	425,467
Of which: Deposits from the public	417,005	348,027	361,645
Deposits from banks	3,280	3,178	3,520
Bonds and subordinated notes	24,724	28,337	26,853
Shareholders’ equity	38,971	39,218	38,181
Additional data
Share price at end of period (in NIS)	18.3	26.7	28.7

View original content:http://www.prnewswire.com/news-releases/bank-hapoalim-announces-third-quarter-2020-financial-results-301176832.html

SOURCE Bank Hapoalim

November 19, 2020 4:05 am

Shares of Exillon Energy Plc to be traded at J P Jenkins Ltd.

PR Newswire

LONDON, Nov. 19, 2020 /PRNewswire/ — J P Jenkins Ltd. is pleased to announce that shares of Exillon Energy Plc (EXI.LN) are in the process of being admitted onto its share dealing platform.

Exillon Energy plc (the “Company”) is an independent oil producer with assets in two oil-rich regions of Northern Russia: Exillon TP in Timan-Pechora and Exillon WS in Western Siberia. The Company is incorporated in the Isle of Man, and has its operational headquarters in Urai, Russia.

On 18 November 2020, an Extraordinary General Meeting of shareholders of the Company passed a resolution to cancel the listing of the Company’s ordinary shares (the “Ordinary Shares”) on the Official List and the admission of the Ordinary Shares to trading on the London Stock Exchange’s Main Market for listed securities on 18 December 2020 (the “Cancellation”). In order to facilitate trading in the Ordinary Shares post the Cancellation, the Company shall launch a matched bargain facility starting from 21 December 2020 (the “Launch Date”).

J P Jenkins is the oldest established trading platform in the UK for unlisted or unquoted companies which enables shareholders and prospective investors to trade their shares on a matched bargain basis.

Shareholders or persons wishing to acquire or dispose of the Ordinary Shares will be able, through their stockbroker, to leave an indication with J P Jenkins (J P Jenkins is unable to deal directly with members of the public), of the number of the Ordinary Shares that they are prepared to buy or sell and indicative price. All indicative bids will be collected J P Jenkins, but no transaction with Ordinary Shares will take place until the Launch Date.

The indicative price and transaction history are available on J P Jenkins’s website (www.jpjenkins.com) or via phone at +44 (0) 20 7469 0937.

Veronika Oswald, Director of J P Jenkins said: “We are delighted to welcome Exillon Energy Plc, to our growing share dealing platform”.

For further information, please contact:

J P Jenkins Ltd.
Veronika Oswald
Director
+44 (0)20 7469 0937

Exillon Energy Plc

Tom Blackwell, EM
Telephone: +7 919 102 9064
Email: [email protected]

View original content:http://www.prnewswire.com/news-releases/shares-of-exillon-energy-plc-to-be-traded-at-j-p-jenkins-ltd-301176828.html

SOURCE J P Jenkins Ltd

November 19, 2020 4:03 am

Axway enables European customers to leverage AMPLIFY Platform in a secure EU region

Axway enables European customers to leverage AMPLIFY Platform in a secure EU region

Customers can now choose additional region to provision AMPLIFY

PARIS–(BUSINESS WIRE)–
Axway (Euronext: AXW.PA), a leading provider of API Management and integration software, announced today the General Availability of regionalized storage for AMPLIFY critical data in the EU. Customers have the choice to provision the AMPLIFY ™ platform and store data from AMPLIFY SaaS services in the EU region with secure data protection as an alternative to the U.S. region.

This change benefits European organizations by helping with the data residency requirement, keeping key application data in the EU region. It also reduces latency through access to regionally hosted services.

“Extending our services in the EU region was the next logical step to serve our global customer base as an integrated part of our vision and strategy,” said Vince Padua, Axway CTIO. “The delivery of single pane of glass for hybrid architectures that span SaaS and non-SaaS, Axway and non-Axway — all to help our customers in their journey to the cloud and faster innovation.”

Trial customers can choose the EU region as part of their sign up. For non-trial purposes, Axway will provision the user’s organization in the region of choice (EU or US) as part of the initial setup process.

Users belonging to a United States or a European organization will be able to keep their application data in their respective region to comply with regional regulations.

Users have the following AMPLIFY services available in their region of choice: AMPLIFY Central, Unified Catalog, App Integration, and Visibility.

Learn more about the GA EU announcement here.

About Axway

Axway revitalizes heritage IT infrastructures, helping more than 11,000 customers accelerate their digital journeys, add new business capabilities, and drive growth. With the AMPLIFY™ platform — which combines APIs, MFT, B2B integration, and content services — we guide innovation and enhance the customer experience faster and more securely than ever. axway.com

View source version on businesswire.com: https://www.businesswire.com/news/home/20201119005511/en/

Joshua Molina

[email protected]

KEYWORDS: Europe United States North America France

INDUSTRY KEYWORDS: Networks Internet Data Management Technology Software

MEDIA:

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November 19, 2020 4:03 am

Huize Holding Limited Reports Third Quarter 2020 Unaudited Financial Results

SHENZHEN, China, Nov. 19, 2020 (GLOBE NEWSWIRE) — Huize Holding Limited, (“Huize”, the “Company” or “we”) (NASDAQ: HUIZ), a leading independent online insurance product and service platform in China, today announced its unaudited financial results for the three months ended September 30, 2020.

Third
Quarter
2020
Operational
and Financial
Highlights:

Total Gross Written Premiums (“GWP”) facilitated on our platform increased by 41.2% to a record quarterly high of RMB779.0 million, compared to RMB551.8 million in the third quarter of 2019.
Total operating revenue increased by 22.9% to a record quarterly high of RMB348.5 million (US$51.3 million), compared to RMB283.6 million in the third quarter of 2019.
GWP of long-term life and health insurance products accounted for approximately 92.9% of total GWP facilitated, compared to 87.5% in the third quarter of 2019.
Cumulative number of insurance clients served was approximately 6.7 million, and cumulative number of insured clients was approximately 56.0 million as of September 30, 2020.
Net profit was RMB14.7 million (US$2.2 million). Non-GAAP net profit¹ was RMB20.4 million (US$3.0 million).

¹
Non-GAAP net profit is a non-GAAP financial measure. For more information, please see the section of “Use of Non-GAAP Financial Measure Statement” and the table captioned “Unaudited Reconciliations of GAAP and Non-GAAP Results” set forth at the end of this press release.

Mr. Cunjun Ma, Founder, Chairman and Chief Executive Officer of Huize, commented, “As China gradually recovers from the COVID-19 epidemic, the year-over-year growth rate of per capita disposable income in China reversed from negative to positive in the third quarter of 2020. At the same time, we continued to observe a steady increase of people’s insurance awareness, as well as increasing adoption of online purchase of insurance products by consumers. In line with this trend and the ongoing revitalization of the broader economy, we achieved robust year-over-year growth and record highs for both total GWP facilitated and total operating revenue in the third quarter. Moreover, we continued to deliver solid execution through the third quarter and generated positive cash flow from operations, achieving a net profit of RMB14.7 million and a non-GAAP net profit of RMB20.4 million. Such solid financial results further demonstrates the viability of our business model and our strategic focus on developing first-rate digital capabilities in providing quality long-term insurance solutions to our users.”

“We also continued to gain recognition for our industry leadership during the third quarter. In September, we were included in Hurun’s ‘China Digital Insurance Agencies 2020’ list, wherein we were ranked fourth in terms of market performance and innovation capabilities. Moreover, in September, our critical illness insurance product, ‘Darwin 3,’ won the ‘Popular Health Insurance Product of 2020’ award, marking the sixth time that our ‘Darwin’ critical illness series of insurance products has won such an industry award.”

“Looking ahead, as many of the insurance clients we have served come from families in first and second tier cities with high customer lifetime value potential, we will be rolling out offline service centers in select first and second tier cities in order to better serve their differentiated demands for higher-quality products and premium insurance services.”

“Over the next three years, we will take the opportunity to invest in a comprehensive strategic upgrade for the core Huize platform as we evolve into the post-COVID era where consumers demand further innovation in insurance products and digital transformation of the insurance purchase and service experience, by targeting to build an insurance product and service cloud platform incorporating core technologies such as cloud computing, big data analytics and artificial intelligence. We envisage the upgraded platform will accelerate the integration of online and offline channels, further empower upstream and downstream partners in our ecosystem with data and technology, and ultimately enable the industry as a whole to reach insurance clients in all scenarios and provide them with a fuller range of personalized insurance products and services throughout their entire life cycle more efficiently.”

Third
Quarter 2020 Financial Results

Total operating revenue

Total operating revenue in the third quarter of 2020 increased by RMB64.9 million, or 22.9%, to RMB348.5 million (US$51.3 million) from RMB283.6 million in the same period of 2019. The increase in total operating revenue was primarily driven by an increase in brokerage income, which increased by 23.6% year over year to RMB346.8 million (US$51.1 million) in the third quarter of 2020. The increase in brokerage income was primarily driven by the 41.2% increase in total GWP facilitated, which amounted to RMB779.0 million during the third quarter of 2020, of which first year premiums accounted for RMB358.1 million and renewal premiums accounted for RMB420.9 million.

Total operating costs

Cost of revenue in the third quarter of 2020 increased by RMB45.4 million, or 24.0%, to RMB234.7 million (US$34.6 million) from RMB189.3 million in the same period of 2019, which was primarily attributable to increased service fees paid to user traffic channels.

Total operating costs in the third quarter of 2020 increased by RMB45.5 million, or 24.0%, to RMB235.3 million (US$34.7 million) from RMB189.8 million in the same period of 2019, primarily attributable to the increase in cost of revenue.

Operating expenses

Selling expenses in the third quarter of 2020 increased by RMB17.7 million, or 43.9%, to RMB57.9 million (US$8.5 million) from RMB40.2 million in the same period of 2019. This increase was primarily attributable to increased advertising and marketing expenses, an increase in personnel costs as the Company increased its headcount, and, to a lesser extent, an increase in share-based compensation expenses.

General and administrative expenses in the third quarter of 2020 decreased by RMB0.1 million, or 0.6%, to RMB30.5 million (US$4.5 million) from RMB30.6 million in the same period of 2019. This decrease was primarily attributable to the decrease in share-based compensation expenses, which amounted to RMB2.8 million in the third quarter of 2020, compared to RMB10.5 million in the same period of 2019. Excluding the impact of share-based compensation expenses, general and administrative expenses in the third quarter of 2020 increased by 37.1% year over year, primarily due to an increase in general and administrative headcount.

Research and development expenses in the third quarter of 2020 increased by RMB3.4 million, or 41.7%, to RMB11.5 million (US$1.7 million) from RMB8.1 million in the same period of 2019, primarily attributable to an increase in the number of R&D personnel.

Net profit and Non-GAAP net profit for the period

Net profit in the third quarter of 2020 was RMB14.7 million (US$2.2 million), compared to a net profit of RMB16.1 million in the third quarter of 2019. Non-GAAP net profit in the third quarter of 2020 was RMB20.4 million (US$3.0 million), compared to RMB29.7 million in the third quarter of 2019.

Cash and cash equivalents

As of September 30, 2020, the combined balance of the Company’s cash and cash equivalents amounted to RMB446.1 million (US$65.7 million), compared to RMB88.1 million as of December 31, 2019. The increase was primarily due to the cash proceeds raised from the Company’s initial public offering in February 2020.

Business Outlook

Based on the Company’s preliminary assessment of the current market conditions, the Company currently expects total operating revenue for the fourth quarter of 2020 to be in the range of RMB330 million to RMB350 million. This forecast reflects the Company’s current and preliminary views on the market and operational conditions, which are subject to change as a result of various market uncertainties, including those related to the continued outbreak of COVID-19 globally.

Share Repurchase Program

As of September 30, 2020, the Company had purchased an aggregate of 6,647 ADSs for a total amount of approximately US$0.04 million, under its share repurchase program pursuant to which the Company has been authorized to repurchase up to US$10 million ADSs by April 15, 2021, as previously announced on April 15, 2020.

Conference Call

The Company’s management team will hold a Direct Event conference call on Thursday, November 19, 2020, at 7:00 A.M. Eastern Time (or 8:00 P.M. Beijing Time on the same day) to discuss the financial results. Details for the conference call are as follows:

Event Title:	Huize Holding Limited Third Quarter 2020 Earnings Conference Call
Conference ID:	#3687648
Registration Link:	http://apac.directeventreg.com/registration/event/3687648

All participants must use the link provided above to complete the online registration process in advance of the conference call. Upon registering, each participant will receive a set of participant dial-in numbers, the Direct Event passcode, and a unique access PIN, which can be used to join the conference call.

A replay of the conference call will be accessible through November 27, 2020, by dialing the following numbers:

International:	+61-2-8199-0299
Mainland China Toll Free:	400-632-2162
United States Toll Free:	+1-855-452-5696
Hong Kong, China Toll Free:	800-963-117

A live and archived webcast of the conference call will also be available at the Company’s investor relations website at ir.huize.com.

About Huize Holding Limited

Huize Holding Limited is a leading independent online insurance product and service platform in China. Targeting the younger generation, Huize is dedicated to serving its insurance clients for their life-long insurance needs. Leveraging its online platform, Huize offers a wide variety of insurance products with a focus on long-term life and health insurance products, and empowers its insurer partners to reach a large fragmented client base in the insurance retail market efficiently and enhance their insurance sales. Huize provides insurance clients with digitalized insurance experience and services, including suitable product recommendations, consulting service, intelligent underwriting and assistance in claim application and settlement, which significantly improve transaction experience.

For more information, please visit http://ir.huize.com.

Use of
Non-GAAP Financial Measure
Statement

In evaluating our business, we consider and use non-GAAP net profit/(loss) as a supplemental measure to review and assess our operating performance. The presentation of the non-GAAP financial measure is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with U.S. GAAP. We define non-GAAP net profit/(loss) as net profit/(loss) excluding share-based compensation expenses and interest on convertible bond. Such adjustments have no impact on income tax because either the non-GAAP adjustments were recorded at entities located in tax free jurisdictions, such as the Cayman Islands or because the non-GAAP adjustments were recorded at operating entities located in the PRC for which the non-GAAP adjustments were not deductible for tax purposes.

We present the non-GAAP financial measure because it is used by our management to evaluate our operating performance and formulate business plans. Non-GAAP net profit/(loss) enables our management to assess our operating results without considering the impact of share-based compensation expenses and the interest on convertible bond. We also believe that the use of this non-GAAP financial measure facilitates investors’ assessment of our operating performance.

This non-GAAP financial measure is not defined under U.S. GAAP and is not presented in accordance with U.S. GAAP. The non-GAAP financial measure has limitations as an analytical tool. One of the key limitations of using adjusted net profit/(loss) is that it does not reflect all items of income and expense that affect our operations. Further, the non-GAAP financial measure may differ from the non-GAAP financial information used by other companies, including peer companies, and therefore their comparability may be limited.

The non-GAAP financial measure should not be considered in isolation or construed as an alternative to net profit/(loss) or any other measure of performance or as an indicator of our operating performance. Investors are encouraged to review the historical non-GAAP financial measure in light of the most directly comparable GAAP measure, as shown below. The non-GAAP financial measure presented here may not be comparable to similarly titled measure presented by other companies. Other companies may calculate similarly titled measures differently, limiting the usefulness of such measures when analyzing our data comparatively. We encourage investors and others to review our financial information in its entirety and not rely on a single financial measure.

Exchange Rate Information

This announcement contains translations of certain RMB amounts into U.S. dollars at a specified rate solely for the convenience of the reader. Unless otherwise noted, all translations from RMB to U.S. dollars and from U.S. dollars to RMB are made at a rate of RMB6.7896 to US$1.00, the exchange rate on September 30, 2020 set forth in the H.10 statistical release of the Federal Reserve Board. The Company makes no representation that the RMB or U.S. dollars amounts referred could be converted into U.S. dollars or RMB, as the case may be, at any particular rate or at all.

Safe Harbor Statement

This announcement contains forward-looking statements. These statements are made under the “safe harbor” provisions of the U.S. Private Securities Litigation Reform Act of 1995. Statements that are not historical facts, including statements about Huize’s beliefs and expectations, are forward-looking statements. These forward-looking statements can be identified by terminology such as “will,” “expects,” “anticipates,” “future,” “intends,” “plans,” “believes,” “estimates,” “confident” and similar statements. Among other things, business outlook and quotations from management in this announcement, contain forward-looking statements. Huize may also make written or oral forward-looking statements in its periodic reports to the U.S. Securities and Exchange Commission (the “SEC”), in its annual report to shareholders, in press releases and other written materials and in oral statements made by its officers, directors or employees to third parties. Forward-looking statements involve inherent risks and uncertainties. A number of factors could cause actual results to differ materially from those contained in any forward-looking statement, including but not limited to the following: Huize’s goal and strategies; Huize’s expansion plans; Huize’s future business development, financial condition and results of operations; Huize’s expectation regarding demand for, and market acceptance of, its online insurance products; Huize’s expectations regarding its relationship with insurer partners and insurance clients and other parties it collaborates with; general economic and business conditions; and assumptions underlying or related to any of the foregoing.

Further information regarding these and other risks is included in Huize’s filings with the SEC. All information provided in this press release is as of the date of this press release, and Huize does not undertake any obligation to update any forward-looking statement, except as required under applicable law.

For investor and media inquiries, please contact:

Investor Relations

Harriet Hu
Investor Relations Director
+852 3180 9207
[email protected]

Media Relations

[email protected]

Huize Holding Limited

Unaudited Consolidated Balance Sheets

(all amounts in thousands, except for share and per share data)

	As of December 31		As of S eptember 3 0
	2019		2020
	RMB		RMB		USD
Assets
Current assets
Cash and cash equivalents	88,141		446,068		65,699
Restricted cash	161,186		255,807		37,676
Accounts receivable, net of allowance for doubtful accounts	180,393		195,590		28,807
Insurance premium receivables	2,329		2,051		302
Amounts due from related parties	280		169		25
Prepaid expense and other receivables	29,196		39,162		5,767
Total current assets	461,525		938,847		138,276

Non-current assets
Property, plant and equipment, net	8,006		8,511		1,254
Intangible assets, net	1,652		2,158		318
Deferred tax assets	64		194		29
Long-term investments	23,395		25,353		3,734
Other assets	14,163		1,862		274
Operating lease right-of-use assets	–		10,517		1,549
Total non-current assets	47,280		48,595		7,158
Total assets	508,805		987,442		145,434

Current liabilities
Short-term borrowings	36,880		72,000		10,604
Accounts payable	124,441		163,749		24,118
Insurance premium payables	125,587		115,659		17,035
Other payables and accrued expenses	30,211		20,260		2,984
Payroll and welfare payable	43,993		51,822		7,633
Income taxes payable	206		2,874		423
Operating lease liabilities	–		7,854		1,157
Amounts due to related parties	465		–		–
Total current liabilities	361,783		434,218		63,954

Non-current liabilities
Long-term borrowings	–		40,000		5,891
Deferred tax liabilities	530		605		89
Operating lease liabilities	–		2,742		404
Payroll and welfare payable	–		5,335		786
Other non-current liabilities	518		–		–
Total non-current liabilities	1,048		48,682		7,170
Total liabilities	362,831		482,900		71,124

Mezzanine equity
Series A redeemable preferred shares	84,072		–		–
Series B redeemable preferred shares	261,272		–		–
Series B+ redeemable preferred shares	81,654		–		–
Series B++ redeemable preferred shares	27,629		–		–
Total mezzanine equity	454,627		–		–

Shareholders’ (deficit)/equity
Common shares	33		–		–
Class A common shares	–		62		9
Class B common shares	–		10		1
Treasury stock	–		(319	)	(47	)
Additional paid-in capital	64,882		879,310		129,508
Accumulated other comprehensive income	414		(9,208	)	(1,356	)
Accumulated deficit	(373,982	)	(365,313	)	(53,805	)
Total shareholders’ (deficit)/equity	(308,653	)	504,542		74,310
Total liabilities, mezzanine equity and shareholders’ equity	508,805		987,442		145,434

Huize Holding Limited

Unaudited Consolidated Stat
ements of Comprehensive
Income

(all amounts in thousands, except for share and per share data)

	For the Three Months Ended S eptember 3 0 ,						For the N ine Months Ended S eptember 30,
	2019		2020				2019		2020
	RMB		RMB		USD		RMB		RMB		USD
Operating revenue
Brokerage income	280,563		346,773		51,074		728,517		828,639		122,045
Other income	3,027		1,677		247		6,539		3,509		517
Total operating revenue	283,590		348,450		51,321		735,056		832,148		122,562
Operating costs and expenses
Cost of revenue	(189,306	)	(234,658	)	(34,561	)	(469,618	)	(522,303	)	(76,927	)
Other cost	(499	)	(649	)	(96	)	(1,314	)	(2,184	)	(322	)
Total operating costs	(189,805	)	(235,307	)	(34,657	)	(470,932	)	(524,487	)	(77,249	)
Selling expenses	(40,201	)	(57,857	)	(8,521	)	(102,850	)	(158,929	)	(23,408	)
General and administrative expenses	(30,649	)	(30,475	)	(4,488	)	(127,284	)	(112,938	)	(16,634	)
Research and development expenses	(8,101	)	(11,478	)	(1,691	)	(22,006	)	(33,292	)	(4,903	)
Total operating costs and expenses	(268,756	)	(335,117	)	(49,357	)	(723,072	)	(829,646	)	(122,194	)
Operating income	14,834		13,333		1,964		11,984		2,502		368

Other income
Interest expenses	(3	)	(193	)	(28	)	(265	)	(812	)	(120	)
Unrealized exchange (loss) /income	(4	)	–		–		365		(38	)	(6	)
Investment income	675		137		20		675		137		20
Others, net	901		3,278		483		10,220		9,261		1,365
P rof it before income tax, and share of income of equity method investee	16,403		16,555		2,439		22,979		11,050		1,627
Income tax expense	(232	)	(1,794	)	(264	)	(376	)	(2,613	)	(385	)
Share of (loss)/income of equity method investee	(67	)	(67	)	(10	)	(90	)	232		34

Net profit	16,104		14,694		2,165		22,513		8,669		1,276

Net (loss)/ profit attributable to non-controlling interests	(25	)	–		–		66		–		–
Net profit attributable to Huize Holding Limited	16,129		14,694		2,165		22,447		8,669		1,276
Redeemable preferred shares redemption value accretion	(7,868	)	–		–		(22,976	)	(4,274	)	(629	)
Allocation to redeemable preferred shares	(7,981	)	–		–		(11,157	)	1,074		158
Net profit/(loss) attributable to common shareholders	280		14,694		2,165		(11,686	)	5,469		805

Net profit	16,104		14,694		2,165		22,513		8,669		1,276
Foreign currency translation adjustment, net of tax	112		(13,117	)	(1,932	)	116		(9,622	)	(1,417	)
Comprehensive income/ (loss)	16,216		1,577		233		22,629		(953	)	(141	)

Comprehensive (loss)/ income attributable to non- controlling interests	(7	)	–		–		87		–		–
Comprehensive income/( loss) attributable to Huize Holding Limited	16,223		1,577		233		22,542		(953	)	(141	)


Weighted average number of common shares used in computing net profit per share
Basic	459,501,183	1,021,608,313	1,021,608,313	459,501,183		943,959,644	943,959,644
Diluted	459,501,183	1,029,852,116	1,029,852,116	459,501,183		951,064,828	951,064,828
Net income/(loss) per share attributable to common shareholders
Basic	0.00	0.01	0.00	(0.03	)	0.01	0.00
Diluted	0.00	0.01	0.00	(0.03	)	0.01	0.00

Huize Holding Limited

Unaudited Reconciliations of GAAP and Non-GAAP Results

(all amounts in thousands, except for share and per share data)

	For the Three Months Ended September 3 0 ,			For the Nine Months Ended September 30,
	2019	2020		2019	2020
	RMB	RMB	USD	RMB	RMB	USD
Net profit	16,104	14,694	2,165	22,513	8,669	1,276
Share-based compensation expenses	13,567	5,719	842	81,341	48,045	7,076
Non-GAAP net profit	29,671	20,413	3,007	103,854	56,714	8,352

November 19, 2020 3:54 am

Agilitee Private Limited Announces an Exclusive Manufacturing Contract With eBikeGo Limited of India

JOHANNESBURG, South Africa, Nov. 19, 2020 (GLOBE NEWSWIRE) — Agilitee Limited. (“Agilitee”), the electric vehicle manufacturer, today announced that it has entered in an exclusive manufacturing license agreement for Electric Vehicles (EVs) with eBikeGo Private Limited. The agreement with eBikeGo provides Agilitee with the ability to meet the demand for its product with greater manufacturing capacity, agile and flexible factory set up, and the quality standard demanded by our customers.

“We are very pleased to announce this amazing partnership agreement with eBikeGo as it demonstrates Agilitee’s capabilities and competitiveness in the EV market,” stated Dr. Mandla Lamba, Founder & Executive Chairman, Agilitee Private Limited. “I have been extremely impressed with the level of innovation and quality of eBikeGo’s technology and products. eBikeGo’s growth rate and position in the business within the rapidly expanding EV sector is an adventure of its own and Agilitee looks forward to playing a significant role in the business of green technology and Artificial Intelligence in Africa. The transaction took a year to negotiate and finally concluded, and I must say that I am grateful to the Founder of eBikeGo Dr. Irfan Khan, with whom over the period we have developed a personal friendship that I believe is necessary for us as Agilitee because he is a visionary of note, and I am truly inspired by him,” concluded Dr. Mandla Lamba.

“As we start this Journey, it becomes apparent that our customers would be better served by a more streamlined process,” said Hon. Thembekile Mzantsi, Co-Chairman, Agilitee. “The most important thing was making sure our customers can rely on delivery of the product and the highest quality service. The combination of eBikeGo’s long experience in the EV industry and ability to manufacture to the highest quality standards and Agilitee ability to service its products and customers delivers the best of all worlds to the growing EV markets globally.”

The exclusive transaction that is done with Verityhurst on behalf of Agilitee will allow eBikeGo to manufacture a new brand of electric motorbikes and scooters under the brand name of Agilitee, the same will be sent to Africa as knocked downs and will be assembled in South Africa for the entire African Market. eBikeGo will send a delegation of engineers to South Africa to build an assembly plant that would be used to assemble the Electric Vehicles. eBikeGo will also send engineers that will transfer skills to the locals thereby creating hundreds of jobs as the partnership with Verityhurst and Agilitee is exclusively for the entire continent of Africa. Agilitee will not be selling the EVs directly but will be selling country-to-country licenses across Africa who will in turn sell the vehicles to the public; however, it will control the operations of the plant in South Africa which will act as a conduit to the African market as a whole. Agilitee will be guided closely by eBikeGo on the deployment of the African growth strategy though it will have an independent decision-making process that has to adhere to the terms of the agreement. Companies that are interested to buy licenses for their countries can contact Verityhurst or Agilitee directly. On behalf of Agilitee, the transaction was advised by Verityhurst Capital and the contract management advisory was provided by Nondwe Bakaco. Agilitee will be doing a capital raising exercise of R500 million for the development of both the assembly and the manufacturing plant, the same will be backed by the Private Equity parent company of Agilitee, Verityhurst (Pty) Ltd that is headed by Hon. Thembekile Mzantsi. Verityhurst will provide R100 million in a form of a convertible note. The aim is to have Agilitee listed on either the Johannesburg Stock Exchange or the London Stock Exchange in the third quarter of 2021

Commenting on the transaction, Dr. Irfan Khan, Founder & CEO of eBikeGo said “With the market expansion in multiple cities in India, we are now focusing on expanding our brand internationally and it was a great collaboration with Dr Mandla Lamba and their entire team for Africa region. We with our technology and innovation in the EV market would add a great value and wanted our partner to be one of the leading manufacturer in EV segment in Africa.”

About
Agilitee

Agilitee manufactures and produces new electric vehicles, car charging facilities, and other products. Agilitee’s business spans over research, production and sales of electric vehicles. It is actively promoting the commercialization of new energy vehicles and connected cars and exploring the research and industrialization of intelligent technologies. Agilitee is a subsidiary company of Verityhurst (Pty) Ltd. www.agilitee.africa

About Verityhurst Capital

AN ADVISORY FIRM DEDICATED TO THE SUCCESS OF SMALL TO MIDDLE-MARKET COMPANIES IN AFRICA With Headquarters in Fourways, Johannesburg, Verityhurst Capital is an independent investment banking and advisory firm dedicated to the small to middle market companies in South Africa. Since the founding of Verityhurst Capital in 2019, the firm has provided honest and effective advice on mergers and acquisitions, private capital raising, financial restructuring, fairness opinions and valuations, and strategic advisory to the executive teams, boards of directors, and financial sponsors of public and private companies. Working with one of the most high-ranking Johannesburg Stock Exchange approved Sponsors and Designated Advisors, Verityhurst Capital can swiftly assist its clients in raising capital through listings on the Johannesburg Stock Exchange. www.verityhurstcapital.com

About
eBikeGo

eBikeGo is India’s leading electric mobility design company with their operations spread across India serving leading delivery companies. eBikeGo’s scooters are built using robust technology and innovation. eBikeGo is now the trusted electric mobility partner for more than 30 leading companies in 8 major cities in India. www.ebikego.in

For more information

Dr. Mandla Lamba

Chief Investment Officer

Tel: +27(0)11 367 0636

Email: info @verityhurstonline.com

Website: www.verityhurstonline.com

November 19, 2020 3:43 am

Yiren Digital to Report Third Quarter 2020 Financial Results on November 26, 2020

PR Newswire

BEIJING, Nov. 19, 2020 /PRNewswire/ — Yiren Digital Ltd. (NYSE: YRD) (“Yiren Digital” or the “Company”), a leading fintech company in China, announced that it plans to release its unaudited financial results for the quarter ended September 30, 2020 after U.S. market closes on Thursday, November 26, 2020.

Yiren Digital’s management will host an earnings conference call at 7:00 p.m. U.S. Eastern Time on November 26, 2020 (or 8:00 a.m. Beijing/Hong Kong Time on November 27, 2020).

Participants who wish to join the call should register online in advance of the conference at:

http://apac.directeventreg.com/registration/event/5509629

Please note the Conference ID number of 5509629.

Once registration is completed, participants will receive the dial-in information for the conference call, an event passcode, and a unique registrant ID number.

Participants joining the conference call should dial-in at least 10 minutes before the scheduled start time.

A replay of the conference call may be accessed by phone at the following numbers until December 4, 2020:

International	+61 2-8199-0299
U.S.	+1 646-254-3697
Replay Access Code:	5509629

Additionally, a live and archived webcast of the conference call will be available at ir.yirendai.com.

About Yiren Digital

Yiren Digital Ltd. (NYSE: YRD) is a leading fintech company in China, providing both credit and wealth management services. For its credit business, the Company provides an effective solution to address largely underserved investor and individual borrower demand in China through online and offline channels to efficiently match borrowers with investors and execute loan transactions. Yiren Digital deploys a proprietary risk management system, which enables the Company to effectively assess the creditworthiness of borrowers, appropriately price the risks associated with borrowers, and offer quality loan investment opportunities to investors. Yiren Digital’s marketplace provides borrowers with quick and convenient access to consumer credit at competitive prices and investors with easy and quick access to an alternative asset class with attractive returns. For its wealth management business, the Company targets China’s mass affluent population and strives to provide customized wealth management services, with a combination of long-term and short-term targets as well as different types of investments, ranging from cash and fixed-income assets, to funds and insurance. For more information, please visit ir.Yirendai.com.

View original content:http://www.prnewswire.com/news-releases/yiren-digital-to-report-third-quarter-2020-financial-results-on-november-26-2020-301176815.html

SOURCE Yiren Digital

November 19, 2020 3:42 am

NeoDynamics AB (publ) Third Quarter 2020

PR Newswire

STOCKHOLM, Nov. 19, 2020 /PRNewswire/ — The proposed financing strengthens NeoDynamics ahead of pivotal period

Third quarter 2020

There were no sales during the period. Revenue amounted to SEK 2.643 m (4.581 m) including capitalized costs of SEK 2.051 m (4.469 m).
Loss after tax amounted to SEK -6.731 m (-4.416 m).
Loss per share amounted to SEK -0.19 (-0.29).

9 months 2020

There were no sales during the period. Revenue amounted to SEK 15.175 m (16.329 m), whereof capitalized costs SEK 14.140 m (16 214 m).
Costs for product development contuned to be higher than expected.
Loss after tax amounted to SEK -18.011 m (-12.498 m).
Loss per share amounted to SEK -0.71 (-0.82).
Equity per share was SEK 2.52 (3.63 at year-end).
Equity ratio was 94 (60 per cent at year-end)

Significant events during the third quarter

Reference centers established in Germany to support the introduction of the new pulse biopsy system NeoNavia and optimize the diagnosis of breast cancer.
An Extraordinary General Meeting on 13 August resolved on an incentive program for employees with a maximum of 1,021,900 warrants, where each warrant entitles to subscribe to one new share at SEK 4.71 per share during the period 1 Aug – 30 Sep 2023.
The directed share issue of 2,561,339 shares, SEK 7,684,017 announced in April, was registered with the Swedish Companies Registration Office in September. Hence, the share capital is SEK 3,600,695.10 distributed on 36,006,951 shares.
In September, the NeoNavia biopsy system was very well received at the international senology congresses in Vienna and Lucerne, and for the first time, physicians gained practical experience of the finished product.

Significant events after the period

An Extraordinary General Meeting on November 19 will resolve on a directed share issue to a limited group of investors. The subscription price in the share issue is proposed to be SEK 3.71 per share and was determined through an accelerated bookbuilding procedure. The share issue can provide the company with close to SEK 90 million before transaction costs.
On November 2, the company announced that its CFO, Jörgen Vrenning, has decided to leave the company after eight years to retire. Jörgen will continue in an advisory role until the end of May 2021 to ensure a smooth transition.
The company joined a scientific partnership to evaluate the NeoNavia pulse biopsy system for knee and bone tissue sampling in a new potential indication, osteoarthritis.
Neodynamics gets first order for the pulse biopsy system NeoNavia from the Buckinghamshire Healthcare NHS Trust, London.

CEO’s comments

Proposed new financing strengthens NeoDynamics ahead of pivotal period

During the autumn, the Board discussed various ways to strengthen the company’s cash flow in order to be able to carry out the forthcoming market introduction of NeoNavia in a successful manner. These discussions, which have also involved the company’s main owners, led to the Board’s proposal for a directed issue of approximately SEK 90 million. The company’s owners will decide on the matter at an extraordinary general meeting on 19 November. The share issue provides much-needed room for manoeuvre to create value. The Board’s assessment is that the funding benefits both old and new shareholders.Through the proposed raising of capital, the ownership circle will be expanded with competence and experience in MedTech, a significant stamp of quality for a company such as NeoDynamics The Dutch investment firm Nyenburgh and Swedish Cardeon Futuring Finance have thoroughly analysed the company prior to investing in NeoDynamics. Both appreciate the solid preparation for the launch of NeoNavia, and state it as one of the most important reasons why they have chosen to invest in NeoDynamics.

First order

NeoNavia is now launched in the UK, Germany and Sweden, somewhat delayed compared to plan as the announced product development dragged on and the pandemic further delayed the project in the critical verification and validation phase. Covid-19 currently also limits the possibility of physical meetings on site with radiologists, but many activities are now underway thanks to our specialist sales staff in the UK, Germany and Sweden.It is gratifying to note that after a short introduction, the first centre in the UK was able to place an order. A strong symbolism that we are now up and running. Other centres will want to follow suit.The cancer area remains a priority in hospitals and there is a backlog when it comes to caring for breast cancer patients. Our studies have familiarized doctors with our product and built knowledge on how to use it. This provides benefits when NeoNavia now becomes commercially available.Due to the pandemic, the study in the UK has not been able to be conducted normally and therefore we are expanding with more centres for faster results that can be used in sales work.

The United States is the next step

Work on our registration application to the Federal Drug Administration (FDA) is ongoing, as is the dialogue with the authority. We expect to submit the documentation at the beginning of 2021, in order to get the go-ahead to start selling NeoNavia in the USA during the year as well. Covid-19 has led to the closure of several states where we have planned user tests with American physiciansThe work in the USA also lays the foundation for the regulative application in China, which is next on the agenda. We will also perform a local study in China to get a strong basis, both in the dialogue with the authority and with future customers in the Chinese market.

Scale up of production

The company works continuously to optimize its production processes to keep manufacturing costs at a level that enables a long-term good profit margin. We have been collaborating for just over a year with a well-established FDA-approved Thai manufacturer who, together with us, is preparing the transfer of our disposable probes (needles) to serial / commercial production. The first delivery is expected to take place in mid-2021. Until then, the company’s Swedish partner Sanmina in Örnsköldsvik will be used, which will continue to manufacture the reusable system parts (base unit and driver) which are built with a significantly larger technical content.Finally, we have recently started an international research collaboration to evaluate the NeoNavia pulse biopsy system for knee and bone tissue sampling in osteoarthritis, which is also a large indication. Here we collaborate with William Hunter Revisited, a research consortium consisting of six universities as well as academic hospitals, which specialize in osteoarthritis. We know that our pulse technology is attractive to develop in other indications as well, which we have confirmed by being approached by this research team

NeoDynamics is finally on its way to the market. We look forward to in-depth relationships with cancer clinics in Europe, to roll out NeoNavia in the US and to receive feedback on how the products will be received by doctors and patients.

CEO Anna Eriksrud

The information was submitted for publication through the agency of the contact person set out below, at 08:55 CET on November 19, 2020

For additional information please contact:

Anna Eriksrud, CEO NeoDynamics AB (publ). Phone +46 708 444 966, e-mail: [email protected]

Jörgen Vrenning, CFO/IR NeoDynamics AB (publ), Phone +46 708 519 648, e-mail:
[email protected]

About NeoDynamics

NeoDynamics AB (publ) is a Swedish Medical Technology Company dedicated to advancing diagnosis and care of breast cancer. The company has developed an innovative biopsy system, NeoNavia. The pulse biopsy system is built on a patented pulse technology, based on research at the Karolinska Institutet in Sweden. The system is designed to offer clinicians and patients accurate lesion targeting and high tissue yield for correct diagnosis and individualized treatment. NeoNavia is evaluated at leading clinics in UK, Germany and Sweden.

About NeoNavia

NeoNavia is the brand name for the entire pulse biopsy system intended to be used under ultrasound guidance. NeoNavia consists of a base unit, a handheld driver and three different types of biopsy needles. Each needle type is driven by a pulse technology enabling high precision and control when inserting and positioning the biopsy needle in a suspicious lesion. The system is designed to offer accurate lesion targeting and high tissue yield for correct diagnosis and individualized treatment.

About the pulse technology

The patented pulse technology is based on a pneumatically driven mechanism that enables high precision and control when inserting and positioning the biopsy needle, independent of tissue type, size and location. The pneumatic driver that generates the pulses is placed in a handheld instrument. With power from the base-unit, the driver accelerates the needle with great control even over a short distance, enabling its distinct stepwise insertion without the risk of destroying surrounding tissue. This facilitates ease of access and flexibility in sampling, even in very small lesions in delicate and difficult locations.

This information was brought to you by Cision http://news.cision.com

https://news.cision.com/neodynamics/r/neodynamics-ab–publ–third-quarter-2020,c3239987

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SOURCE NeoDynamics

November 19, 2020 3:33 am

NetEase Announces Third Quarter 2020 Unaudited Financial Results

PR Newswire

BEIJING, Nov. 19, 2020 /PRNewswire/ — NetEase, Inc. (NASDAQ: NTES and HKEX: 9999, “NetEase” or the “Company”), one of China’s leading internet and online game services providers, today announced its unaudited financial results for the third quarter ended September 30, 2020.

Third Quarter 2020 Financial Highlights

Net revenues were RMB18.7 billion (US$2.7 billion), an increase of 27.5% compared with the third quarter of 2019.

– Online game services net revenues were RMB13.9 billion (US$2.0 billion), an increase of 20.2% compared with the third quarter of 2019.
– Youdao net revenues were RMB896.0 million (US$132.0 million), an increase of 159.0% compared with the third quarter of 2019.
– Innovative businesses and others net revenues were RMB3.9 billion (US$574.4 million), an increase of 41.6% compared with the third quarter of 2019.

Gross profit was RMB9.9 billion (US$1.5 billion), an increase of 25.6% compared with the third quarter of 2019.
Total operating expenses were RMB7.0 billion (US$1.0 billion), an increase of 54.7% compared with the third quarter of 2019.
Net income from continuing operations attributable to the Company’s shareholders was RMB3.0 billion (US$441.6 million), which includes net exchange losses of RMB1.6 billion (US$231.4 million). Non-GAAP net income from continuing operations attributable to the Company’s shareholders was RMB3.7 billion (US$540.4 million).^[1]
Basic net income from continuing operations was US$0.65 per ADS (US$0.13 per share). Non-GAAP basic net income from continuing operations was US$0.80 per ADS (US$0.16 per share).^{[1] [2]}

^[1] As used in this announcement, non-GAAP net income from continuing operations attributable to the Company’s shareholders and non-GAAP basic and diluted net income from continuing operations per ADS and per share are defined to exclude share-based compensation expenses. See “Unaudited Reconciliation of GAAP and Non-GAAP Results” at the end of this announcement.

^[2] Effective October 1, 2020, the Company changed the ratio of its American depositary shares (“ADSs”), representing ordinary shares, from the previous one ADS for every twenty-five ordinary shares to one ADS for every five ordinary shares. The data throughout this announcement have been revised to reflect the ratio change as if it had occurred throughout the periods presented herein.

Third Quarter 2020 and Recent Operational Highlights

Introduced new titles to the Chinese market including Onmyoji: Yokai Koya, PES Club Manager, King of Hunters and For All Time, and EVE Echoes and MARVEL Duel to overseas markets.
Extended the popularity of a number of mobile titles that climbed China’s iOS top grossing chart in the past months including Invincible, Onmyoji and Sky.
Maintained steady performances of flagship PC titles such as Fantasy Westward Journey Online, New Westward Journey Online II and Justice.
Strengthened NetEase Game’s international presence with strong performances from Knives Out, Life-After and Identity V in Japan.
Further developed a robust pipeline with titles including Unknown Future, Akasha Book, Revelation mobile game, Infinite Lagrange, Harry Potter: Magic Awakened, The Lord of the Rings: Rise to War, Nightmare Breaker, Ghost World Chronicle, Diablo^®Immortal™ and Pokémon Quest. Several of these titles, including Revelation mobile game, will be released before Chinese New Year.
Increased net revenues from Youdao’s learning services and products by over 200% year-over-year.

“With strong and steady contributions from our online game services, our total net revenues for the third quarter reached RMB18.7 billion, an increase of 27.5% year-over-year,” said Mr. William Ding, Chief Executive Officer and Director of NetEase. “The strength of our games business is bolstered by our diverse and growing game portfolio with impressive longevity. Additionally, our robust pipeline of games ready for launch is hugely exciting, and we cannot wait to unveil our game sensations across multiple genres to both domestic and global players in the coming quarters.

“Our other businesses including Youdao, NetEase Cloud Music and Yanxuan are also on track, with promising year-over-year topline growth. As we work to bring even more value to our community and shareholders, we will continue to focus on expanding our sustainable growth prospects for each of our businesses,” Mr. Ding concluded.

Third Quarter 2020 Financial Results

Net
Revenues

Net revenues for the third quarter of 2020 were RMB18,658.2 million (US$2,748.1 million), compared to RMB18,184.8 million and RMB14,635.7 million for the preceding quarter and the third quarter of 2019, respectively.

Net revenues from online game services were RMB13,862.0 million (US$2,041.7 million) for the third quarter of 2020, compared to RMB13,828.3 million and RMB11,534.8 million for the preceding quarter and the third quarter of 2019, respectively. Net revenues from mobile games accounted for approximately 72.7% of net revenues from online games for the third quarter of 2020, compared to 72.3% and 71.0% for the preceding quarter and the third quarter of 2019, respectively.

Net revenues from Youdao were RMB896.0 million (US$132.0 million) for the third quarter of 2020, compared to RMB623.3 million and RMB345.9 million for the preceding quarter and the third quarter of 2019, respectively.

Net revenues from innovative businesses and others were RMB3,900.1 million (US$574.4 million) for the third quarter of 2020, compared to RMB3,733.3 million and RMB2,755.0 million for the preceding quarter and the third quarter of 2019, respectively.

Gross Profit

Gross profit for the third quarter of 2020 was RMB9,885.8 million (US$1,456.0 million), compared to RMB9,792.2 million and RMB7,870.4 million for the preceding quarter and the third quarter of 2019, respectively.

The quarter-over-quarter gross profit in online game services was generally stable. The year-over-year increase was primarily due to increased net revenues from self-developed games such as Fantasy Westward Journey H5, Life-After and Knives Out, as well as certain licensed games.

The quarter-over-quarter and year-over-year increases in Youdao gross profit were primarily attributable to the significant increase in net revenues, improved economies of scale, and faculty compensation structure optimization for its learning services and products.

The quarter-over-quarter decrease in innovative businesses and others gross profit was primarily due to decreased gross profit from advertising services. The year-over-year increase was primarily due to increased net revenues from NetEase Cloud Music.

Gross Profit Margin

Gross profit margin for online game services for the third quarter of 2020 was 63.6%, compared to 63.8% each for the preceding quarter and the third quarter of 2019. Gross profit margin for online game services was generally stable, fluctuating within a narrow band based on the revenue mix of mobile and PC games, as well as self-developed and licensed games.

Gross profit margin for Youdao for the third quarter of 2020 was 45.9%, compared to 45.2% and 25.8% for the preceding quarter and the third quarter of 2019, respectively. The quarter-over-quarter gross profit margin was comparatively stable. The year-over-year increase was primarily attributable to the factors enumerated above.

Gross profit margin for innovative businesses and others for the third quarter of 2020 was 16.8%, compared to 18.5% and 15.2% for the preceding quarter and the third quarter of 2019, respectively. The quarter-over-quarter decrease was primarily due to decreased gross profit margin from advertising services. The year-over-year increase was primarily due to increased net revenues from NetEase Cloud Music.

Operating Expenses

Total operating expenses for the third quarter of 2020 were RMB7,015.7 million (US$1,033.3 million), compared to RMB5,622.3 million and RMB4,535.6 million for the preceding quarter and the third quarter of 2019, respectively. The quarter-over-quarter and year-over-year increases were mainly due to increased marketing expenditures related to Youdao and online game services, as well as higher staff-related costs and research and development investments.

Other Income

Other income consisted of investment income, interest income, exchange gains/ (losses) and others. The quarter-over-quarter and year-over-year decreases were mainly due to net exchange losses of RMB1,571.3 million (US$231.4 million) recorded in the third quarter of 2020, which were mainly related to net unrealized exchange losses arising from the Company’s U.S. dollar-denominated bank deposits and short-term loan balances as the exchange rate of the U.S. dollar against the RMB fluctuated over the periods. Such unrealized exchange losses were partially offset by increased investment income arising from fair value changes of equity investments with readily determinable fair value.

Income Taxes

The Company recorded a net income tax charge of RMB342.7 million (US$50.5 million) for the third quarter of 2020, compared to RMB1,064.5 million and RMB88.0 million for the preceding quarter and the third quarter of 2019, respectively. The effective tax rate for the third quarter of 2020 was 10.9%, compared to 18.6% and 2.1% for the preceding quarter and the third quarter of 2019, respectively. The effective tax rate represents certain estimates by the Company as to the tax obligations and benefits applicable to it in each quarter, and the rate for the third quarter of 2020 was affected by certain tax credits received and recognized during the quarter.

Net Income and Non-GAAP Net Income

Net income from continuing operations attributable to the Company’s shareholders for the third quarter of 2020 totaled RMB2,998.2 million (US$441.6 million), which includes net exchange losses of RMB1,571.3 million (US$231.4 million), compared to RMB4,537.8 million and RMB4,134.2 million for the preceding quarter and the third quarter of 2019, respectively.

Non-GAAP net income from continuing operations attributable to the Company’s shareholders for the third quarter of 2020 totaled RMB3,669.2 million (US$540.4 million), compared to RMB5,226.0 million and RMB4,726.0 million for the preceding quarter and the third quarter of 2019, respectively.

NetEase reported basic and diluted net income from continuing operations per ADS of US$0.65 and US$0.64, respectively, for the third quarter of 2020, compared to US$1.03 and US$1.02, respectively, for the preceding quarter, and US$0.94 each for the third quarter of 2019. NetEase reported basic and diluted net income from continuing operations per share of US$0.13 each for the third quarter of 2020, compared to US$0.21 and US$0.20, respectively, for the preceding quarter, and US$0.19 each for the third quarter of 2019.

Non-GAAP basic and diluted net income from continuing operations per ADS were US$0.80 and US$0.79, respectively, for the third quarter of 2020, compared to US$1.19 and US$1.17, respectively, for the preceding quarter and US$1.08 and US$1.07, respectively, for the third quarter of 2019. Non-GAAP basic and diluted net income from continuing operations per share were US$0.16 each for the third quarter of 2020, compared to US$0.24 and US$0.23, respectively, for the preceding quarter and US$0.22 and US$0.21, respectively, for the third quarter of 2019.

Quarterly

Dividend

The board of directors has approved a dividend of US$0.1950 per ADS (US$0.0390 per share) for the third quarter of 2020, to holders of ADSs and holders of ordinary shares as of the close of business on December 4, 2020, New York Time and Hong Kong Time, respectively, payable in U.S. dollars. For holders of ordinary shares, in order to qualify for the dividend, all valid documents for the transfer of shares accompanied by the relevant share certificates must be lodged for registration with the Company’s Hong Kong branch share registrar, Computershare Hong Kong Investor Services Limited, at Shops 1712-1716, 17th Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong no later than 4:30 p.m. on December 4, 2020 (Hong Kong Time). The payment date is expected to be on December 15, 2020 for holders of ordinary shares and on or around December 18, 2020 for holders of ADSs (assuming the dividend payment is timely received by the ADS depositary).

NetEase paid a dividend of US$0.2320 per ADS (US$0.0464 per share) for the first quarter of 2020 in June 2020, and paid a dividend of US$0.2970 per ADS (US$0.0594 per share) for the second quarter of 2020 in September 2020.

Starting in the second quarter of 2019, the Company’s policy has been to set quarterly dividends at an amount equivalent to approximately 20%-30% of the Company’s anticipated net income after tax in each fiscal quarter. The determination to make dividend distributions and the amount of such distributions in any particular quarter will be made at the discretion of the board of directors and will be based upon the Company’s operations and earnings, cash flow, financial condition and other relevant factors.

Other Information

As of September 30, 2020, the Company’s total cash and cash equivalents, current and non-current time deposits and short-term investments balance totaled RMB102,650.0 million (US$15,118.7 million), compared to RMB74,406.0 million as of December 31, 2019. Cash flow generated from continuing operating activities was RMB5,401.0 million (US$795.5 million) for the third quarter of 2020, compared to RMB4,772.3 million and RMB3,846.3 million for the preceding quarter and the third quarter of 2019, respectively.

Share
Purchase

/
Repurchase

Program

On November 20, 2019, the Company announced that its board of directors had approved a share purchase program of up to US$20.0 million of Youdao’s outstanding ADSs for a period not to exceed 12 months beginning on November 25, 2019. Under the terms of this program, NetEase may purchase Youdao’s ADSs in open-market transactions on the New York Stock Exchange. As of September 30, 2020, approximately 198,000 ADSs had been purchased under this program for a total cost of US$3.4 million.

On February 26, 2020, the Company announced that its board of directors had approved a share repurchase program of up to US$1.0 billion of the Company’s outstanding ADSs for a period not to exceed 12 months beginning on March 2, 2020. On May 19, 2020, the Company announced that its board of directors had approved an amendment to such program to increase the total authorized repurchase amount to US$2.0 billion. Under the terms of this program, NetEase may repurchase its issued and outstanding ADSs in open-market transactions on the NASDAQ Global Select Market. As of September 30, 2020, approximately 15.3 million ADSs had been repurchased under this program for a total cost of US$1.1 billion.

For both of the above-mentioned current programs, it is expected that the timing and dollar amount of purchase transactions will be in accordance with the Securities and Exchange Commission (SEC) Rule 10b-18 requirements and such purchases may be affected pursuant to a plan in conformity with SEC Rule 10b5-1. The extent to which NetEase repurchases its ADSs or purchases Youdao’s ADSs will depend upon a variety of factors, including market conditions. These programs may be suspended or discontinued at any time.

** The United States dollar (US$) amounts disclosed in this announcement are presented solely for the convenience of the reader. Translations of amounts from RMB into United States dollars for the convenience of the reader were calculated at the noon buying rate of US$1.00 = RMB6.7896 on September 30, 2020 as set forth in the H.10 statistical release of the U.S. Federal Reserve Board. No representation is made that the RMB amounts could have been, or could be, converted into US$ at that rate on September 30, 2020, or at any other certain date. The percentages stated are calculated based on RMB.

Conference Call

NetEase’s management team will host a teleconference call with simultaneous webcast at 7:00 a.m. New York Time on Thursday, November 19, 2020 (Beijing/Hong Kong Time: 8:00 p.m., Thursday, November 19, 2020). NetEase’s management will be on the call to discuss the quarterly results and answer questions.

Interested parties may participate in the conference call by dialing 1-646-828-8143 and providing conference ID: 5158324, 15 minutes prior to the initiation of the call. A replay of the call will be available by dialing 1-719-457-0820 and entering passcode 5158324#. The replay will be available through December 2, 2020.

This call will be webcast live and the replay will be available for 12 months. Both will be available on NetEase’s Investor Relations website at http://ir.netease.com/.

About NetEase, Inc.

As a leading internet technology company based in China, NetEase, Inc. (NASDAQ: NTES and HKEX: 9999, “NetEase”) is dedicated to providing premium online services centered around innovative and diverse content, community, communication and commerce. NetEase develops and operates some of China’s most popular mobile and PC games. In more recent years, NetEase has expanded into international markets including Japan and North America. In addition to its self-developed game content, NetEase partners with other leading game developers, such as Blizzard Entertainment and Mojang AB (a Microsoft subsidiary), to operate globally renowned games in China. NetEase’s other innovative service offerings include the intelligent learning services of its majority-controlled subsidiary, Youdao (NYSE: DAO); music streaming through its leading NetEase Cloud Music business; and its private label e-commerce platform, Yanxuan. For more information, please visit: http://ir.netease.com/.

Forward Looking Statements

This announcement contains statements of a forward-looking nature. These statements are made under the “safe harbor” provisions of the U.S. Private Securities Litigation Reform Act of 1995. You can identify these forward-looking statements by terminology such as “will,” “expects,” “anticipates,” “future,” “intends,” “plans,” “believes,” “estimates” and similar statements. In addition, statements that are not historical facts, including statements about NetEase’s strategies and business plans, its expectations regarding the growth of its business and its revenue and the quotations from management in this announcement are or contain forward-looking statements. NetEase may also make forward-looking statements in its periodic reports to the U.S. Securities and Exchange Commission (the “SEC”), in announcements made on the website of The Stock Exchange of Hong Kong Limited (the “Hong Kong Stock Exchange”), in press releases and other written materials and in oral statements made by its officers, directors or employees to third parties. The accuracy of these statements may be impacted by a number of business risks and uncertainties that could cause actual results to differ materially from those projected or anticipated, including risks related to: the risk that the online game market will not continue to grow or that NetEase will not be able to maintain its position in that market in China or globally; the risk that COVID-19 or other health risks in China or globally could adversely affect the Company’s operations or financial results; risks associated with NetEase’s business and operating strategies and its ability to implement such strategies; NetEase’s ability to develop and manage its operations and business; competition for, among other things, capital, technology and skilled personnel; potential changes in government regulation that could adversely affect the industry and geographical markets in which NetEase operates; the risk that NetEase may not be able to continuously develop new and creative online services or that NetEase will not be able to set, or follow in a timely manner, trends in the market; competition in NetEase’s existing and potential markets; and the risk that fluctuations in the value of the Renminbi with respect to other currencies could adversely affect NetEase’s business and financial results. Further information regarding these and other risks is included in NetEase’s filings with the SEC and announcements on the website of the Hong Kong Stock Exchange. NetEase does not undertake any obligation to update this forward-looking information, except as required under the applicable law.

Non-GAAP Financial Measures

NetEase considers and uses non-GAAP financial measures, such as non-GAAP net income from continuing operations attributable to the Company’s shareholders and non-GAAP basic and diluted net income from continuing operations per ADS and per share, as supplemental metrics in reviewing and assessing its operating performance and formulating its business plan. The presentation of non-GAAP financial measures is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”).

NetEase defines non-GAAP net income from continuing operations attributable to the Company’s shareholders as net income from continuing operations attributable to the Company’s shareholders excluding share-based compensation expenses. Non-GAAP net income from continuing operations attributable to the Company’s shareholders enables NetEase’s management to assess its operating results without considering the impact of share-based compensation expenses, which are non-cash charges. NetEase believes that these non-GAAP financial measures provide useful information to investors in understanding and evaluating the Company’s current operating performance and prospects in the same manner as management does, if they so choose. NetEase also believes that the use of this non-GAAP financial measure facilitates investors’ assessment of its operating performance.

Non-GAAP financial measures are not defined under U.S. GAAP and are not presented in accordance with U.S. GAAP. Non-GAAP financial measures have limitations as analytical tools. One of the key limitations of using non-GAAP net income from continuing operations attributable to the Company’s shareholders is that it does not reflect all items of expense/ income that affect our operations. Share-based compensation expenses have been and may continue to be incurred in NetEase’s business and are not reflected in the presentation of non-GAAP net income from continuing operations attributable to the Company’s shareholders. In addition, the non-GAAP financial measures NetEase uses may differ from the non-GAAP measures used by other companies, including peer companies, and therefore their comparability may be limited.

NetEase compensates for these limitations by reconciling non-GAAP net income from continuing operations attributable to the Company’s shareholders to the nearest U.S. GAAP performance measure, all of which should be considered when evaluating the Company’s performance. See “Unaudited Reconciliation of GAAP and Non-GAAP Results” at the end of this announcement. NetEase encourages you to review its financial information in its entirety and not rely on a single financial measure.

Contact for Media and Investors:

Margaret Shi
Email: [email protected]
Tel: (+86) 571-8985-3378
Twitter: https://twitter.com/NetEase_Global

Brandi Piacente

Email: [email protected]
Tel: (+1) 212-481-2050

NETEASE, INC.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(RMB and USD in thousands)
	December 31,	September 30,	September 30,
	2019	2020	2020
	RMB	RMB	USD (Note 1)
Assets

Current assets:
Cash and cash equivalents	3,246,373	6,466,250	952,376
Time deposits	53,487,075	79,639,453	11,729,624
Restricted cash	3,150,354	2,885,935	425,052
Accounts receivable, net	4,169,358	4,948,999	728,909
Inventories, net	650,557	524,360	77,230
Prepayments and other current assets	4,817,422	7,005,805	1,031,843
Short-term investments	15,312,595	12,294,335	1,810,760
Assets held for sale	271,278	–	–
Total current assets	85,105,012	113,765,137	16,755,794

Non-current assets:
Property, equipment and software, net	4,621,712	4,439,270	653,834
Land use right, net	3,707,179	4,200,099	618,608
Deferred tax assets	903,904	892,862	131,504
Time deposits	2,360,000	4,250,000	625,957
Other long-term assets	15,424,166	17,184,276	2,530,970
Assets held for sale	2,398	–	–
Total non-current assets	27,019,359	30,966,507	4,560,873
Total assets	112,124,371	144,731,644	21,316,667

Liabilities, Redeemable Noncontrolling Interests and Shareholders’ Equity

Current liabilities:
Accounts payable	1,212,303	997,099	146,857
Salary and welfare payables	2,957,360	2,130,624	313,807
Taxes payable	3,156,513	4,062,230	598,302
Short-term loans	16,828,226	22,247,523	3,276,706
Deferred revenue	8,602,227	10,376,439	1,528,284
Accrued liabilities and other payables	5,484,228	7,114,994	1,047,925
Liabilities held for sale	2,156	–	–
Total current liabilities	38,243,013	46,928,909	6,911,881

Non-current liabilities:
Deferred tax liabilities	382,030	533,208	78,533
Other long-term payable	456,912	514,763	75,816
Liabilities held for sale	961	–	–
Total non-current liabilities	839,903	1,047,971	154,349
Total liabilities	39,082,916	47,976,880	7,066,230

Redeemable noncontrolling interests	10,448,600	10,660,981	1,570,193

Total NetEase, Inc.’s equity	61,453,699	85,246,787	12,555,495
Noncontrolling interests	1,139,156	846,996	124,749
Total shareholders’ equity	62,592,855	86,093,783	12,680,244

Total liabilities, redeemable noncontrolling interests and shareholders’ equity	112,124,371	144,731,644	21,316,667

The accompanying notes are an integral part of this announcement.

NETEASE, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share data or per ADS data)
	Three Months Ended				Nine Months Ended
	September 30,	June 30,	September 30,	September 30,	September 30,	September 30,	September 30,
	2019	2020	2020	2020	2019	2020	2020
	RMB	RMB	RMB	USD (Note 1)	RMB	RMB	USD (Note 1)

Net revenues	14,635,690	18,184,806	18,658,222	2,748,059	43,506,341	53,905,395	7,939,406

Cost of revenues	(6,765,340)	(8,392,631)	(8,772,379)	(1,292,032)	(20,161,469)	(24,849,755)	(3,659,973)

Gross profit	7,870,350	9,792,175	9,885,843	1,456,027	23,344,872	29,055,640	4,279,433

Selling and marketing expenses	(1,619,531)	(2,321,397)	(3,442,821)	(507,073)	(4,067,384)	(7,627,289)	(1,123,378)
General and administrative expenses	(753,794)	(892,622)	(783,815)	(115,443)	(2,317,544)	(2,561,871)	(377,323)
Research and development expenses	(2,162,254)	(2,408,306)	(2,789,051)	(410,783)	(6,145,736)	(7,340,006)	(1,081,066)
Total operating expenses	(4,535,579)	(5,622,325)	(7,015,687)	(1,033,299)	(12,530,664)	(17,529,166)	(2,581,767)

Operating profit	3,334,771	4,169,850	2,870,156	422,728	10,814,208	11,526,474	1,697,666

Other income:
Investment income, net	394,907	711,159	1,280,483	188,595	574,873	1,881,911	277,176
Interest income, net	184,795	396,519	446,914	65,823	542,228	1,188,617	175,064
Exchange gains/ (losses), net	120,562	17,008	(1,571,326)	(231,431)	153,688	(1,310,261)	(192,981)
Other, net	214,847	421,199	109,940	16,192	330,037	597,847	88,053

Income before tax	4,249,882	5,715,735	3,136,167	461,907	12,415,034	13,884,588	2,044,978
Income tax	(87,957)	(1,064,455)	(342,700)	(50,474)	(2,038,397)	(2,489,188)	(366,618)

Net income from continuing operations	4,161,925	4,651,280	2,793,467	411,433	10,376,637	11,395,400	1,678,360
Net income from discontinued operations	8,596,089	–	–	–	7,962,519	–	–
Net income	12,758,014	4,651,280	2,793,467	411,433	18,339,156	11,395,400	1,678,360

Accretion and deemed dividends in connection with repurchase of redeemable noncontrolling interests	(70,124)	(150,958)	(118,448)	(17,446)	(211,955)	(655,425)	(96,534)
Net loss attributable to noncontrolling interests	42,409	37,484	323,221	47,605	56,583	347,077	51,119
Net income attributable to the Company’s shareholders	12,730,299	4,537,806	2,998,240	441,592	18,183,784	11,087,052	1,632,945
Including:
-Net income from continuing operations attributable to the Company’s shareholders	4,134,210	4,537,806	2,998,240	441,592	10,221,265	11,087,052	1,632,945
-Net income from discontinued operations attributable to the Company’s shareholders	8,596,089	–	–	–	7,962,519	–	–

Basic net income per share:	3.95	1.40	0.89	0.13	5.65	3.37	0.50
-Continuing operations	1.28	1.40	0.89	0.13	3.18	3.37	0.50
-Discontinued operations	2.67	–	–	–	2.47	–	–
				–			–
Basic net income per ADS:	19.73	7.00	4.43	0.65	28.25	16.87	2.48
-Continuing operations	6.41	7.00	4.43	0.65	15.88	16.87	2.48
-Discontinued operations	13.32	–	–	–	12.37	–	–
				–			–
Diluted net income per share:	3.91	1.38	0.87	0.13	5.60	3.33	0.49
-Continuing operations	1.27	1.38	0.87	0.13	3.15	3.33	0.49
-Discontinued operations	2.64	–	–	–	2.45	–	–
				–			–
Diluted net income per ADS:	19.56	6.92	4.37	0.64	28.02	16.65	2.45
-Continuing operations	6.35	6.92	4.37	0.64	15.75	16.65	2.45
-Discontinued operations	13.21	–	–	–	12.27	–	–

Weighted average number of ordinary shares outstanding, basic	3,225,704	3,242,061	3,384,051	3,384,051	3,217,806	3,286,194	3,286,194
Weighted average number of ADS outstanding, basic	645,141	648,412	676,810	676,810	643,561	657,239	657,239
Weighted average number of ordinary shares outstanding, diluted	3,254,269	3,281,100	3,431,274	3,431,274	3,244,404	3,329,149	3,329,149
Weighted average number of ADS outstanding, diluted	650,854	656,220	686,255	686,255	648,881	665,830	665,830

Effective October 1, 2020, the Company changed the ratio of its American depositary shares (“ADSs”), representing ordinary shares, from the previous one ADS for every twenty-five ordinary shares to one ADS for every five ordinary shares. The data throughout this announcement have been revised to reflect the ratio change as if it had occurred throughout the periods presented herein.
The accompanying notes are an integral part of this announcement.

NETEASE, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(RMB and USD in thousands)
	Three Months Ended				Nine Months Ended
	September 30,	June 30,	September 30,	September 30,	September 30,	September 30,	September 30,
	2019	2020	2020	2020	2019	2020	2020
	RMB	RMB	RMB	USD (Note 1)	RMB	RMB	USD (Note 1)
Cash flows from operating activities:
Net income	12,758,014	4,651,280	2,793,467	411,433	18,339,156	11,395,400	1,678,360
Net income from discontinued operations	(8,596,089)	–	–	–	(7,962,519)	–	–
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	703,387	892,150	913,049	134,478	1,918,138	2,495,256	367,511
Fair value changes of equity security investments	(144,547)	(503,281)	(1,103,428)	(162,517)	(187,425)	(1,279,669)	(188,475)
Impairment losses of investments and other intangible assets	12,585	–	–	–	177,567	6,600	972
Fair value changes of short-term investments	(198,390)	(174,738)	(133,943)	(19,728)	(497,354)	(461,787)	(68,014)
Share-based compensation cost	593,259	691,945	676,751	99,675	1,781,726	2,034,510	299,651
Allowance for/ (reversal of) provision for doubtful debts	4,725	(1,305)	(2,146)	(316)	(10,740)	46,488	6,847
(Gains)/losses on disposal of property, equipment and software	(2,639)	1,070	2,645	390	1,551	3,752	553
Unrealized exchange (gains)/losses	(111,807)	(20,159)	1,568,627	231,034	(141,850)	1,305,960	192,347
(Gains)/losses on disposal of long-term investments, business and subsidiaries	(83,678)	(14,803)	2,995	441	(95,812)	(27,241)	(4,012)
Deferred income taxes	(114,434)	499,509	(550,137)	(81,026)	654,942	162,220	23,892
Net equity share of (gains)/ losses from associated companies	(8,595)	(10,948)	(28,915)	(4,259)	7,947	(86,074)	(12,677)
Changes in operating assets and liabilities:
Accounts receivable	(333,859)	(498,550)	43,177	6,359	(556,921)	(885,908)	(130,480)
Inventories	83,150	3,329	34,429	5,071	378,866	126,198	18,587
Prepayments and other assets	(746,434)	233,607	65,383	9,630	(1,179,256)	(804,808)	(118,535)
Accounts payable	(105,131)	(271,697)	147,811	21,770	(123,461)	(222,565)	(32,780)
Salary and welfare payables	(447,025)	132,037	(447,645)	(65,931)	(888,267)	(853,515)	(125,709)
Taxes payable	(408,348)	(568,138)	240,464	35,416	(302,048)	906,404	133,499
Deferred revenue	816,599	(605,444)	1,000,530	147,362	477,582	1,774,212	261,313
Accrued liabilities and other payables	175,544	336,444	177,853	26,195	(391,548)	1,038,491	152,953
Net cash provided by continuing operating activities	3,846,287	4,772,308	5,400,967	795,477	11,400,274	16,673,924	2,455,803
Net cash provided by discontinued operating activities	7,136	–	–	–	305,487	–	–
Net cash provided by operating activities	3,853,423	4,772,308	5,400,967	795,477	11,705,761	16,673,924	2,455,803
Cash flows from investing activities:
Purchase of property, equipment and software	(329,722)	(237,039)	(350,866)	(51,677)	(973,760)	(752,225)	(110,791)
Proceeds from sale of property, equipment and software	5,190	3,970	4,903	722	10,908	9,645	1,421
Purchase of intangible assets, content and licensed copyrights	(208,748)	(839,441)	(755,132)	(111,219)	(1,358,609)	(1,901,408)	(280,047)
Net change in short-term investments with terms of three months or less	(683,304)	1,083,342	298,667	43,989	779,524	601,474	88,588
Purchase of short-term investments	(4,997,000)	(3,080,000)	(4,555,000)	(670,879)	(18,997,000)	(17,705,000)	(2,607,665)
Proceeds from maturities of short-term investments	5,901,842	2,345,218	11,295,357	1,663,626	10,972,655	20,528,551	3,023,529
Investment in associated companies and other long-term investments	(711,229)	(520,762)	(647,533)	(95,371)	(1,330,474)	(1,373,300)	(202,265)
Proceeds from disposal of investment in equity investments, businesses and subsidiaries	127,332	33,856	397,342	58,522	378,413	628,150	92,516
Placement/rollover of matured time deposits	(19,339,634)	(38,412,268)	(26,718,380)	(3,935,192)	(52,170,926)	(76,798,135)	(11,311,143)
Proceeds from maturities of time deposits	11,869,243	19,442,266	13,550,559	1,995,782	46,417,255	46,633,442	6,868,364
Change in other long-term assets	63,196	(76,103)	(21,957)	(3,234)	(25,116)	(108,582)	(15,993)
Amounts received from disposed businesses	1,488,349	–	–	–	1,938,835	–	–
Net cash used in continuing investing activities	(6,814,485)	(20,256,961)	(7,502,040)	(1,104,931)	(14,358,295)	(30,237,388)	(4,453,486)
Net cash used in discontinued investing activities	(264,897)	–	–	–	(832,252)	–	–
Net cash used in investing activities	(7,079,382)	(20,256,961)	(7,502,040)	(1,104,931)	(15,190,547)	(30,237,388)	(4,453,486)

The accompanying notes are an integral part of this announcement.

NETEASE, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
(RMB and USD in thousands)
	Three Months Ended				Nine Months Ended
	September 30,	June 30,	September 30,	September 30,	September 30,	September 30,	September 30,
	2019	2020	2020	2020	2019	2020	2020
	RMB	RMB	RMB	USD (Note 1)	RMB	RMB	USD (Note 1)
Cash flows from financing activities:
Proceeds of short-term bank loans	58,840	360,474	68,978	10,159	371,715	529,452	77,980
Payment of short-term bank loans	–	(358,171)	–	–	–	(456,566)	(67,245)
Net changes in short-term loans with terms of three months or less	1,469,031	2,305,176	1,031,040	151,856	1,066,023	5,875,786	865,410
Net proceeds received from/(paid for) issuance of shares in Hong Kong	–	22,083,467	(212)	(31)	–	22,083,255	3,252,512
Capital injection from/ (repurchase of) noncontrolling interests and redeemable noncontrolling interests shareholders, net	128,192	163,865	4,815	709	412,716	(278,952)	(41,085)
Cash (paid for)/received from repurchase of NetEase’s/ purchase of Youdao’s ADSs	(7)	(3,260,996)	(2,223,165)	(327,437)	10,638	(8,045,058)	(1,184,909)
Dividends paid to shareholders	(923,444)	(1,115,136)	(1,377,570)	(202,894)	(1,950,150)	(3,419,251)	(503,601)
Net cash provided/(used in) by financing activities	732,612	20,178,679	(2,496,114)	(367,638)	(89,058)	16,288,666	2,399,062

Effect of exchange rate changes on cash, cash equivalents
and restricted cash held in foreign currencies	38,196	180,056	(25,033)	(3,687)	55,926	229,123	33,746
Net (decrease)/ increase in cash, cash equivalents and restricted cash	(2,455,151)	4,874,082	(4,622,220)	(680,779)	(3,517,918)	2,954,325	435,125
Cash, cash equivalents and restricted cash, at the beginning of the period	9,143,771	9,100,323	13,974,405	2,058,207	10,206,538	6,397,860	942,303
Cash, cash equivalents and restricted cash, at end of the period	6,688,620	13,974,405	9,352,185	1,377,428	6,688,620	9,352,185	1,377,428
Less: Cash, cash equivalents and restricted cash of held for sale at end of the period	14,693	–	–	–	14,693	–	–
Cash, cash equivalents and restricted cash of continuing operations at end of the period	6,673,927	13,974,405	9,352,185	1,377,428	6,673,927	9,352,185	1,377,428

Supplemental disclosures of cash flow information of continuing operations:
Cash paid for income tax, net	906,425	548,556	948,130	139,644	2,004,180	1,698,730	250,196
Cash paid for interest expense	73,573	55,301	47,862	7,049	297,647	199,874	29,438
Supplemental schedule of non-cash investing and financing activities of continuing opearations:
Fixed asset purchases financed by accounts payable and accrued liabilities	292,528	277,314	238,309	35,099	292,528	238,309	35,099

The accompanying notes are an integral part of this announcement.

NETEASE, INC.
UNAUDITED SEGMENT INFORMATION
(RMB and USD in thousands, except percentages)

	Three Months Ended				Nine Months Ended
	September 30,	June 30,	September 30,	September 30,	September 30,	September 30,	September 30,
	2019	2020	2020	2020	2019	2020	2020
	RMB	RMB	RMB	USD (Note 1)	RMB	RMB	USD (Note 1)
Net revenues:
Online game services	11,534,763	13,828,256	13,862,035	2,041,657	34,818,308	41,208,535	6,069,361
Youdao	345,908	623,290	896,041	131,973	894,451	2,060,719	303,511
Innovative businesses and others	2,755,019	3,733,260	3,900,146	574,429	7,793,582	10,636,141	1,566,534
Total net revenues	14,635,690	18,184,806	18,658,222	2,748,059	43,506,341	53,905,395	7,939,406

Cost of revenues:
Online game services	(4,172,678)	(5,009,354)	(5,044,177)	(742,927)	(12,692,675)	(14,905,362)	(2,195,323)
Youdao	(256,674)	(341,751)	(484,488)	(71,357)	(646,259)	(1,131,902)	(166,711)
Innovative businesses and others	(2,335,988)	(3,041,526)	(3,243,714)	(477,748)	(6,822,535)	(8,812,491)	(1,297,939)
Total cost of revenues	(6,765,340)	(8,392,631)	(8,772,379)	(1,292,032)	(20,161,469)	(24,849,755)	(3,659,973)

Gross profit:
Online game services	7,362,085	8,818,902	8,817,858	1,298,730	22,125,633	26,303,173	3,874,038
Youdao	89,234	281,539	411,553	60,616	248,192	928,817	136,800
Innovative businesses and others	419,031	691,734	656,432	96,681	971,047	1,823,650	268,595
Total gross profit	7,870,350	9,792,175	9,885,843	1,456,027	23,344,872	29,055,640	4,279,433

Gross profit margin:
Online game services	63.8%	63.8%	63.6%	63.6%	63.5%	63.8%	63.8%
Youdao	25.8%	45.2%	45.9%	45.9%	27.7%	45.1%	45.1%
Innovative businesses and others	15.2%	18.5%	16.8%	16.8%	12.5%	17.1%	17.1%

The accompanying notes are an integral part of this announcement.

NETEASE, INC.

NOTES TO
UNAUDITED
FINANCIAL
INFORMATION

Note 1: The conversion of Renminbi (RMB) into United States dollars (USD) is based on the noon buying rate of USD1.00 = RMB6.7896 on the last trading day of September 2020 (September 30, 2020) as set forth in the H.10 statistical release of the U.S. Federal Reserve Board.

Note 2: Share-based compensation cost reported in the Company’s unaudited condensed consolidated statements of comprehensive income is set out as follows in RMB and USD (in thousands):

	Three Months Ended				Nine Months Ended
	September 30,	June 30,	September 30,	September 30,	September 30,	September 30,	September 30,
	2019	2020	2020	2020	2019	2020	2020
	RMB	RMB	RMB	USD (Note 1)	RMB	RMB	USD (Note 1)
Share-based compensation cost included in:
Cost of revenues	180,990	204,953	200,116	29,474	567,340	612,984	90,283
Operating expenses
– Selling and marketing expenses	21,176	27,034	25,563	3,765	67,567	77,408	11,401
– General and administrative expenses	200,394	247,589	236,323	34,807	585,614	714,283	105,203
– Research and development expenses	190,699	212,369	214,749	31,629	561,205	629,835	92,765

The accompanying notes are an integral part of this announcement.

NETEASE, INC.
UNAUDITED RECONCILIATION OF GAAP AND NON-GAAP RESULTS
(in thousands, except per share data or per ADS data)

	Three Months Ended				Nine Months Ended
	September 30,	June 30,	September 30,	September 30,	September 30,	September 30,	September 30,
	2019	2020	2020	2020	2019	2020	2020
	RMB	RMB	RMB	USD (Note 1)	RMB	RMB	USD (Note 1)
Net income from continuing operations attributable to the Company’s shareholders	4,134,210	4,537,806	2,998,240	441,592	10,221,265	11,087,052	1,632,945
Add: Share-based compensation	591,769	688,227	671,004	98,828	1,779,077	2,021,102	297,676
Non-GAAP net income from continuing operations attributable to the Company’s shareholders	4,725,979	5,226,033	3,669,244	540,420	12,000,342	13,108,154	1,930,621

Non-GAAP basic net income from continuing operations per share	1.47	1.61	1.08	0.16	3.73	3.99	0.59
Non-GAAP basic net income from continuing operations per ADS	7.33	8.06	5.42	0.80	18.65	19.94	2.94
Non-GAAP diluted net income from continuing operations per share	1.45	1.59	1.07	0.16	3.70	3.94	0.58
Non-GAAP diluted net income from continuing operations per ADS	7.26	7.96	5.35	0.79	18.49	19.69	2.90

The accompanying notes are an integral part of this announcement.

View original content:http://www.prnewswire.com/news-releases/netease-announces-third-quarter-2020-unaudited-financial-results-301176782.html

SOURCE NetEase, Inc.

November 19, 2020 3:33 am

Youdao Reports Third Quarter 2020 Unaudited Financial Results

PR Newswire

HANGZHOU, China
, Nov. 19, 2020 /PRNewswire/ — Youdao, Inc. (“Youdao” or the “Company”) (NYSE: DAO), a leading intelligent learning company in China, today announced its unaudited financial results for the third quarter ended September 30, 2020.

Third Quarter 2020 Financial Highlights

Total net revenues were RMB896.0 million (US$132.0 million), a 159.0% increase from the same period in 2019.
– Net revenues from learning services and products were RMB763.5 million (US$112.4 million), a 239.1% increase from the same period in 2019.
– Net revenues from online marketing services were RMB132.6 million (US$19.5 million), a 9.8% increase from the same period in 2019.
Gross billings
of online courses^[1] increased 228.4% year-over-year to RMB955.5 million (US$140.7 million) and gross billings of Youdao Premium Courses^[2] increased 308.6% year-over-year to RMB877.0 million (US$129.2 million).
Gross margin was 45.9%, compared with 25.8% for the same period in 2019.
Deferred revenue from online courses was RMB992.4 million (US$146.2 million), compared with RMB407.9 million as of December 31, 2019.

^[1] Gross billings is a non-GAAP financial measure. Gross billings for a specific period refers to the total amount of consideration for Youdao’s online courses sold on Youdao Premium Courses, NetEase Cloud Classroom and China University MOOC, net of the total amount of refunds, in such period. See “Non-GAAP Measures” and “Unaudited Reconciliation of GAAP and non-GAAP Results” at the end of this press release.

^[2] Youdao Premium Courses are Youdao’s flagship online learning offerings primarily focused on K-12 students, covering a wide spectrum of subject matters, learning goals and areas of interest.

Third Quarter 2020 Key Operating and Financial Data

	For the three months ended September 30
(in millions, RMB)	2019	2020	% of Change
Gross billings of online courses	290.9	955.5	228.4%

Gross billings of Youdao Premium Courses	214.6	877.0	308.6%

Paid student enrollments of Youdao Premium Courses (in thousands)	237.1	623.5	163.0%
K-12 paid student enrollments	92.7	498.7	437.9%
Adult paid student enrollments	144.4	124.8	-13.5%

Gross billings per paid student enrollment of Youdao Premium Courses (in RMB)	905	1,406	55.4%

“Significant increases in our K-12 Youdao Premium Course enrollments drove our robust top-line growth in the third quarter,” said Dr. Feng Zhou, Chief Executive Officer and Director of Youdao. “With core operating and financial improvements to our business and increased marketing, our online courses reached RMB955.5 million in gross billings, and gross margin of learning services expanded to 53.9% in the third quarter, up from just 26.7% a year ago. We also continue to lead the market in intelligent learning devices, with sales accelerating to RMB163.1 million, primarily from the K-12 population.

“As the online education market quickly gets more expansive and more competitive, our unique product matrix, comprising online courses, intelligent devices, and learning apps, enables us to better address customer needs in innovative ways and to achieve organic growth. We will continue to scale, delivering high quality products and services to more students, to propel our long-term growth.” Dr. Zhou concluded.

Third Quarter 2020 Financial Results

Net Revenues

Net revenues for the third quarter of 2020 were RMB896.0 million (US$132.0 million), a 159.0% increase from RMB345.9 million for the same period of 2019.

Net revenues from learning services and products were RMB763.5 million (US$112.4 million) for the third quarter of 2020, a 239.1% increase from RMB225.2 million for the same period of 2019. The year-over-year growth from learning services was primarily attributable to the increased revenues generated from online courses, which were further driven by a substantial increase in both the paid student enrollments for K-12 courses of Youdao Premium Courses and gross billings per paid student enrollment of Youdao Premium Courses. The paid student enrollments for K-12 courses of Youdao Premium Courses increased by 437.9% year-over-year to 498,700 in the third quarter of 2020. Gross billings per paid student enrollment of Youdao Premium Courses increased by 55.4% year-over-year to RMB1,406 in the third quarter of 2020. Revenues generated from Youdao’s intelligent learning products also increased by 289.3% year-over-year to RMB163.1 million (US$24.0 million) in the third quarter of 2020, which was primarily driven by the expanded sales volume of Youdao Dictionary Pen.

Net revenues from online marketing services were RMB132.6 million (US$19.5 million) for the third quarter of 2020, a 9.8% increase from RMB120.8 million for the same period in 2019.

Gross Profit and Gross Margin

Gross profit for the third quarter of 2020 was RMB411.6 million (US$60.6 million), a 361.2% increase from RMB89.2 million for the same period of 2019. Gross margin increased to 45.9% for the third quarter of 2020 from 25.8% for the same period of 2019.

Gross margin for learning services and products increased to 48.8% for the third quarter of 2020 from 27.5% for the same period of 2019, primarily attributable to improved gross margin in online courses, which was positively impacted by improved economies of scale and the continuous optimization of Youdao’s faculty compensation structure.

Gross margin for online marketing services was 29.5% for the third quarter of 2020, compared with 22.6% for the same period of 2019. The increase was mainly attributable to more revenue generated from brand advertising services, which carry a higher gross margin profile.

Operating Expenses

Total operating expenses for the third quarter of 2020 were RMB1.3 billion (US$192.3 million), representing an increase of 303.0%, compared with RMB324.0 million for the same period of last year.

Sales and marketing expenses for the third quarter of 2020 were RMB1.1 billion (US$169.1 million), representing an increase of 397.0%, compared with RMB231.0 million for the same period of 2019. This increase was mainly driven by intensified sales and marketing efforts associated with student acquisition and branding enhancement during Youdao’s summer campaign, as well as increased compensation expenses related to the expansion of the sales and marketing team for Youdao’s online courses.

Research and development expenses for the third quarter of 2020 were RMB121.0 million (US$17.8 million), representing an increase of 61.5%, compared with RMB74.9 million for the same period of 2019. The increase was primarily due to increased payroll-related expenses including share-based compensation expenses, as well as rental and facility expenses associated with an increased number of course development and technology professionals.

General and administrative expenses for the third quarter of 2020 were RMB36.6 million (US$5.4 million), representing an increase of 102.7%, compared with RMB18.1 million for the same period of 2019. The increase was mainly attributable to increased payroll-related expenses including share-based compensation expenses charged in the third quarter of 2020.

Loss from Operations

Loss from operations for the third quarter of 2020 was RMB894.0 million (US$131.7 million), compared with RMB234.7 million for the same period in 2019. The margin of loss from operations was 99.8%, compared with 67.9% for the same period of last year.

Net Loss Attributable to Youdao’s Ordinary Shareholders

Net loss attributable to Youdao’s ordinary shareholders for the third quarter of 2020 was RMB877.8 million (US$129.3 million), compared with RMB242.2 million for the same period of last year. Non-GAAP net loss attributable to Youdao’s ordinary shareholders for the third quarter of 2020 was RMB865.7 million (US$127.5 million), compared with RMB238.8 million for the same period of last year.

Basic and diluted net loss per American Depositary Share (“ADS”) attributable to ordinary shareholders for the third quarter of 2020 was RMB7.73(US$1.14), compared with RMB2.63 for the same period of 2019. Non-GAAP basic and diluted net loss per ADS attributable to ordinary shareholders was RMB7.63(US$1.12), compared with RMB2.60 for the same period of 2019.

Balance Sheet

As of September 30, 2020, Youdao’s cash, cash equivalents, time deposits and short-term investments totaled RMB1.1 billion (US$166.9 million), compared with RMB1.6 billion as of December 31, 2019. The decrease was primarily attributable to more payment made due to increased sales and marketing activities during the summer campaign. For the third quarter of 2020, net cash used in operating activities was RMB593.4 million (US$87.4 million), capital expenditures totaled RMB12.1 million (US$1.8 million), and depreciation and amortization expenses amounted to RMB4.3 million (US$0.6 million).

As of September 30, 2020, the Company’s contract liabilities, which mainly consist of deferred revenues generated from Youdao’s online courses, were RMB1.1 billion (US$156.9 million), representing an increase of 133.3% from RMB456.8 million as of December 31, 2019.

Conference Call

Youdao’s management team will host a teleconference call with simultaneous webcast at 6:00 a.m. Eastern Time on Thursday, November 19, 2020 (Beijing/Hong Kong Time: 7:00 p.m., Thursday, November 19, 2020). Youdao’s management will be on the call to discuss the financial results and answer questions.

Dial-in details for the earnings conference call are as follows:

United States (toll free):	+1-888-346-8982
International:	+1-412-902-4272
Mainland China (toll free):	400-120-1203
Hong Kong (toll free):	800-905-945
Hong Kong:	+852-3018-4992
Conference ID:	10149588

A live and archived webcast of the conference call will be available on the Company’s investor relations website at http://ir.youdao.com.

A replay of the conference call will be accessible by phone one hour after the conclusion of the live call at the following numbers, until November 26, 2020:

United States:	+1-877-344-7529
International:	+1-412-317-0088
Replay Access Code:	10149588

About Youdao, Inc.

Youdao, Inc. (NYSE: DAO) is a leading intelligent learning company in China dedicated to developing and using technologies to provide learning content, applications and solutions to users of all ages. Building on the popularity of its online knowledge tools such as Youdao Dictionary, Youdao Cloudnote and Youdao Translation, Youdao now offers online courses covering a wide spectrum of age groups, subject matters, learning goals and areas of interest. In addition, Youdao has developed a variety of interactive learning apps and smart learning devices. Youdao was founded in 2006 as part of NetEase, Inc. (NASDAQ: NTES; HKEX: 9999), a leading internet technology company in China.

For more information, please visit: http://ir.youdao.com.

Non-GAAP Measures

Youdao considers and uses non-GAAP financial measures, such as gross billings and non-GAAP net income/(loss) attributable to the Company’s ordinary shareholders and non-GAAP basic and diluted earnings/(loss) per ADS, as supplemental metrics in reviewing and assessing its operating performance and formulating its business plan. The presentation of non-GAAP financial measures is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”).

Youdao defines gross billings for a specific period as the total amount of consideration for online courses sold on Youdao Premium Courses, NetEase Cloud Classroom and China University MOOC, net of the total amount of refunds, in such period. The management uses gross billings as a performance measurement because the Company generally bills students for the entire course tuition at the time of sale of the courses and recognizes revenue proportionally over an average of the learning periods of different online courses. Youdao defines non-GAAP net income/(loss) attributable to the Company’s ordinary shareholders as net income/(loss) attributable to the Company’s ordinary shareholders excluding share-based compensation expenses. Non-GAAP net income/(loss) attributable to the Company’s shareholders enables Youdao’s management to assess its operating results without considering the impact of share-based compensation expenses, which are non-cash charges. Youdao believes that these non-GAAP financial measures provide useful information to investors in understanding and evaluating the Company’s current operating performance and prospects in the same manner as management does, if they so choose.

Non-GAAP financial measures are not defined under U.S. GAAP and are not presented in accordance with U.S. GAAP. Non-GAAP financial measures have limitations as analytical tools, which possibly does not reflect all items of expense that affect our operations. Share-based compensation expenses have been and may continue to be incurred in our business and are not reflected in the presentation of non-GAAP net income/(loss) attributable to the Company’s ordinary shareholders. In addition, the non-GAAP financial measures Youdao uses may differ from the non-GAAP measures uses by other companies, including peer companies, and therefore their comparability may be limited.

The presentation of these non-GAAP financial measures is not intended to be considered in isolation from or as a substitute for the financial information prepared and presented in accordance with GAAP. For more information on these non-GAAP financial measures, please see the table captioned “Unaudited Reconciliation of GAAP and non-GAAP Results” set forth at the end of this release.

The accompanying tables have more details on the reconciliations between our GAAP financial measures that are most directly comparable to non-GAAP financial measures. Youdao encourages you to review its financial information in its entirety and not rely on a single financial measure.

Exchange Rate Information

This announcement contains translations of certain RMB amounts into U.S. dollars (“US$”) at specified rates solely for the convenience of the reader. Unless otherwise stated, all translations from RMB to US$ were made at the rate of RMB6.7896 to US$1.00, the exchange rate on September 30, 2020 set forth in the H.10 statistical release of the Federal Reserve Board. The Company makes no representation that the RMB or US$ amounts referred could be converted into US$ or RMB, as the case may be, at any particular rate or at all.

Safe Harbor Statement

This press release contains forward-looking statements. These statements are made under the “safe harbor” provisions of the U.S. Private Securities Litigation Reform Act of 1995. Statements that are not historical facts, including statements about the Company’s beliefs and expectations, are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties, and a number of factors could cause actual results to differ materially from those contained in any forward-looking statement. In some cases, forward-looking statements can be identified by words or phrases such as “may,” “will,” “expect,” “anticipate,” “target,” “aim,” “estimate,” “intend,” “plan,” “believe,” “potential,” “continue,” “is/are likely to” or other similar expressions. The Company may also make written or oral forward-looking statements in its reports filed with, or furnished to, the U.S. Securities and Exchange Commission, in its annual reports to shareholders, in press releases and other written materials and in oral statements made by its officers, directors or employees to third parties. Statements that are not historical facts, including statements about the Company’s beliefs and expectations, are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties. Further information regarding such risks, uncertainties or factors is included in the Company’s filings with the SEC. All information provided in this press release is as of the date of this press release, and the Company does not undertake any duty to update such information, except as required under applicable law.

For investor and media inquiries, please contact:

In China:
Regina Wang
Youdao, Inc.
Tel: +86-10-8255-8963
E-mail: [email protected]

The Piacente Group, Inc.
Emilie Wu
Tel: +86-21-6039-8363
E-mail: [email protected]

In the United States:
The Piacente Group, Inc.
Brandi Piacente
Tel: +1-212-481-2050
E-mail: [email protected]

YOUDAO, INC.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(RMB and USD in thousands)


	As of December 31,	As of September 30,	As of September 30,
	2019	2020	2020
	RMB	RMB	USD⁽¹⁾

Assets
Current assets:
Cash and cash equivalents	173,328	77,975	11,484
Time deposits	1,325,737	817,475	120,401
Short-term investments	121,126	237,418	34,968
Accounts receivable, net	200,675	334,329	49,241
Inventories, net	73,225	91,938	13,541
Amounts due from NetEase Group	14,930	5,728	844
Prepayment and other current assets	120,891	200,584	29,544
Total current assets	2,029,912	1,765,447	260,023

Non-current assets:
Property and equipment, net	24,551	39,488	5,816
Operating lease right-of-use assets, net	23,873	83,463	12,293
Other assets, net	8,128	26,776	3,943
Total non-current assets	56,552	149,727	22,052

Total assets	2,086,464	1,915,174	282,075

Liabilities and Shareholders’ Equity/(Deficit)
Current liabilities:
Accounts payables	62,675	119,175	17,553
Payroll payable	94,488	97,045	14,293
Amounts due to NetEase Group	48,126	38,116	5,614
Contract liabilities	456,805	1,065,563	156,940
Taxes payable	25,977	35,501	5,229
Accrued liabilities and other payables	192,643	583,497	85,940
Short-term loans from NetEase Group	878,000	878,000	129,315
Total current liabilities	1,758,714	2,816,897	414,884

Non-current liabilities:
Long-term lease liabilities	21,206	65,279	9,615
Other non-current liabilities	5,517	4,394	647
Total non-current liabilities	26,723	69,673	10,262

Total liabilities	1,785,437	2,886,570	425,146

Shareholders’ equity/(deficit):
Youdao’s shareholders’ equity/(deficit)	300,091	(972,573)	(143,244)
Noncontrolling interests	936	1,177	173
Total shareholders’ equity/(deficit)	301,027	(971,396)	(143,071)

Total liabilities and shareholders’ equity/(deficit)	2,086,464	1,915,174	282,075

Note 1: The conversion of Renminbi (RMB) into United States dollars (USD) is based on the noon buying rate of USD1.00=RMB6.7896 on the last trading day of September (September 30, 2020) as set forth in the H.10 statistical release of the U.S. Federal Reserve Board.

YOUDAO, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(RMB and USD in thousands, except share and per ADS data)

	Three Months Ended				Nine Months Ended
	September 30,	June 30,	September 30,	September 30,	September 30,	September 30,
	2019	2020	2020	2020	2019	2020
	RMB	RMB	RMB	USD⁽¹⁾	RMB	RMB
Net revenues:
Learning services	183,256	433,697	600,350	88,422	454,980	1,423,025
Online marketing services	120,753	103,212	132,585	19,528	354,494	335,047
Learning products	41,899	86,381	163,106	24,023	84,977	302,647
Total net revenues	345,908	623,290	896,041	131,973	894,451	2,060,719

Cost of revenues⁽²⁾:	(256,674)	(341,751)	(484,488)	(71,357)	(646,259)	(1,131,902)
Gross profit	89,234	281,539	411,553	60,616	248,192	928,817

Operating expenses:
Sales and marketing expenses ⁽²⁾	(230,975)	(445,151)	(1,147,927)	(169,073)	(417,111)	(1,892,237)
Research and development expenses ⁽²⁾	(74,929)	(91,423)	(120,991)	(17,820)	(186,113)	(296,513)
General and administrative expenses ⁽²⁾	(18,072)	(27,978)	(36,639)	(5,396)	(41,856)	(93,080)
Total operating expenses	(323,976)	(564,552)	(1,305,557)	(192,289)	(645,080)	(2,281,830)
Loss from operations	(234,742)	(283,013)	(894,004)	(131,673)	(396,888)	(1,353,013)

Interest (expense)/income, net	(4,071)	(424)	(1,217)	(179)	(16,433)	(1,518)
Others, net	8,939	25,619	17,352	2,556	17,192	51,547
Loss before tax	(229,874)	(257,818)	(877,869)	(129,296)	(396,129)	(1,302,984)

Income tax expenses	(802)	(9)	(240)	(35)	(2,441)	(2,434)
Net loss	(230,676)	(257,827)	(878,109)	(129,331)	(398,570)	(1,305,418)
Net (income)/loss attributable to noncontrolling interests	(454)	21	304	44	(935)	383
Net loss attributable to the Company	(231,130)	(257,806)	(877,805)	(129,287)	(399,505)	(1,305,035)
Accretions of convertible redeemable preferred shares to redemption value	(11,053)	–	–	–	(32,209)	–
Net loss attributable to ordinary shareholders of the Company	(242,183)	(257,806)	(877,805)	(129,287)	(431,714)	(1,305,035)

Basic net loss per ADS	(2.63)	(2.30)	(7.73)	(1.14)	(4.69)	(11.60)
Diluted net loss per ADS	(2.63)	(2.30)	(7.73)	(1.14)	(4.69)	(11.60)

Shares used in computing basic net loss per ADS	92,000,000	112,277,976	113,495,422	113,495,422	92,000,000	112,517,299
Shares used in computing diluted net loss per ADS	92,000,000	112,277,976	113,495,422	113,495,422	92,000,000	112,517,299


Note 1: The conversion of Renminbi (RMB) into United States dollars (USD) is based on the noon buying rate of USD1.00=RMB6.7896 on the last trading day of September (September 30, 2020) as set forth in the H.10 statistical release of the U.S. Federal Reserve Board.

Note 2:
Share-based compensation in each category:
Cost of revenues	540	1,043	1,665	245	1,447	3,876
Sales and marketing expenses	(92)	808	2,071	305	688	3,790
Research and development expenses	1,020	3,016	5,418	798	1,061	11,577
General and administrative expenses	1,903	2,394	2,917	430	2,302	7,658

YOUDAO, INC.
UNAUDITED ADDITIONAL INFORMATION
(RMB and USD in thousands)

	Three Months Ended				Nine Months Ended
	September 30,	June 30,	September 30,	September 30,	September 30,	September 30,
	2019	2020	2020	2020	2019	2020
	RMB	RMB	RMB	USD	RMB	RMB

Net revenues
Learning services and products	225,155	520,078	763,456	112,445	539,957	1,725,672
Online marketing services	120,753	103,212	132,585	19,528	354,494	335,047
Total net revenues	345,908	623,290	896,041	131,973	894,451	2,060,719

Cost of revenues
Learning services and products	163,225	267,942	391,037	57,593	400,035	885,756
Online marketing services	93,449	73,809	93,451	13,764	246,224	246,146
Total cost of revenues	256,674	341,751	484,488	71,357	646,259	1,131,902

Gross margin
Learning services and products	27.5%	48.5%	48.8%	48.8%	25.9%	48.7%
Online marketing services	22.6%	28.5%	29.5%	29.5%	30.5%	26.5%
Total gross margin	25.8%	45.2%	45.9%	45.9%	27.7%	45.1%

YOUDAO, INC.
UNAUDITED RECONCILIATION OF GAAP AND NON-GAAP RESULTS
(RMB and USD in thousands, except per ADS data)

	Three Months Ended				Nine Months Ended
	September 30,	June 30,	September 30,	September 30,	September 30,	September 30,
	2019	2020	2020	2020	2019	2020
	RMB	RMB	RMB	USD	RMB	RMB

Net revenues of online courses	163,389	394,596	567,044	83,517	391,622	1,317,440
Add: value-added tax	16,468	38,687	54,083	7,966	33,551	114,118
Add: ending deferred revenue	296,693	658,052	992,393	146,164	296,693	992,393
Less: beginning deferred revenue	(185,622)	(549,317)	(658,052)	(96,921)	(129,144)	(407,861)
Non-GAAP gross billings of online courses	290,928	542,018	955,468	140,726	592,722	2,016,090

Net revenues of Youdao Premium Courses	116,529	332,202	496,508	73,128	307,818	1,130,235
Add: value-added tax	12,148	33,044	49,643	7,312	26,510	100,779
Add: ending deferred revenue	243,128	562,643	893,517	131,601	243,128	893,517
Less: beginning deferred revenue	(157,184)	(470,668)	(562,643)	(82,868)	(109,105)	(344,111)
Non-GAAP gross billings of Youdao Premium Courses	214,621	457,221	877,025	129,173	468,351	1,780,420

Net loss attributable to ordinary shareholders of the Company	(242,183)	(257,806)	(877,805)	(129,287)	(431,714)	(1,305,035)
Add: share-based compensation	3,371	7,261	12,071	1,778	5,498	26,901
Non-GAAP net loss attributable to ordinary shareholders of the Company	(238,812)	(250,545)	(865,734)	(127,509)	(426,216)	(1,278,134)


Non-GAAP basic net loss per ADS	(2.60)	(2.23)	(7.63)	(1.12)	(4.63)	(11.36)
Non-GAAP diluted net loss per ADS	(2.60)	(2.23)	(7.63)	(1.12)	(4.63)	(11.36)

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SOURCE Youdao, Inc.