Share Structure and Listing - The company reported a total of 1,690,082,150 ordinary shares with a par value of $0.001 each as of May 31, 2021[5] - The company's American Depositary Shares (ADS) are listed on the New York Stock Exchange under the ticker symbol "EDU"[3] - The company's American Depositary Shares (ADS) ratio changed from 1 ADS representing 4 ordinary shares to 1 ADS representing 1 ordinary share on August 18, 2011, with this change reflected retroactively in the annual report[9] - The company's ADS holders may have fewer rights compared to ordinary shareholders, including limited voting rights and potential delays in receiving voting materials[116] - ADS holders may face limited participation in future rights offerings, potentially leading to equity dilution[117] - The company's ADS may be delisted under the Holding Foreign Companies Accountable Act if the PCAOB is unable to inspect auditors located in China, which could significantly adversely affect the value of investors' holdings[22] - The company's American Depositary Shares (ADS) and ordinary shares have experienced significant price volatility, with ADS prices ranging from $1.70 to $19.68 and ordinary shares ranging from HK$13.50 to HK$154.10 between June 2020 and September 2021[114] - The company's ADS and ordinary shares have experienced and may continue to experience significant price volatility, potentially causing substantial losses for shareholders[23] - The company's American Depositary Shares (ADS) may be subject to transfer restrictions, and the depositary may refuse to deliver or transfer ADS under certain circumstances[118] Financial Performance and Reporting - The company's financial statements are prepared in accordance with U.S. Generally Accepted Accounting Principles (GAAP)[6] - The company's internal control over financial reporting was deemed effective by its registered public accounting firm[6] - The company's annual report includes audited consolidated financial statements for the fiscal year ended May 31, 2021[1] - The company's annual report is available on the Hong Kong Stock Exchange website and the company's investor relations website[1] - New Oriental Education & Technology Group Inc. reported selected consolidated financial data for fiscal years ending May 31, 2019, 2020, and 2021, with audited financial statements included in the annual report[13] - The company's financial statements are presented in USD, with certain financial data converted to USD for convenience using exchange rates of RMB 6.3674 to USD 1.00 and HKD 7.7610 to USD 1.00 as of May 28, 2021[9] - Net revenue from education courses and services increased from $1,608,954 thousand in 2017 to $3,936,969 thousand in 2021, representing a growth of approximately 145% over five years[14] - Total net revenue grew from $1,799,509 thousand in 2017 to $4,276,539 thousand in 2021, an increase of approximately 138%[14] - Operating income fluctuated over the years, peaking at $399,003 thousand in 2020 before dropping to $117,266 thousand in 2021[14] - Net profit attributable to shareholders decreased from $274,457 thousand in 2017 to $334,414 thousand in 2021, with a notable drop in 2021 compared to 2020[14] - Total assets increased significantly from $2,924,979 thousand in 2017 to $10,151,053 thousand in 2021, reflecting substantial growth in the company's asset base[17] - Cash and cash equivalents grew from $641,018 thousand in 2018 to $1,612,211 thousand in 2021, indicating improved liquidity[17] - Total liabilities rose from $1,204,901 thousand in 2017 to $5,132,877 thousand in 2021, reflecting increased financial obligations[17] - The company recorded goodwill impairment losses of $5.2 million in FY2019, $0 in FY2020, and $28.9 million in FY2021, along with $2.9 million in intangible asset impairment losses in FY2021[49] - The company reported a fair value loss of $3.8 million on long-term investments in FY2021, including a $5.5 million loss from its investment in Beijing Shangde[50] - The company's deferred revenue is subject to future performance obligations and may not represent actual revenue in future periods[48] - The company's financial and operating performance may not meet market expectations due to factors such as economic conditions, regulatory changes, and consumer behavior shifts[47] Regulatory and Legal Risks - The company faces significant risks related to regulatory changes in China's private education sector, particularly the "Double Reduction" policy, which has adversely impacted its business and financial performance[20] - The company's business, financial condition, and operating performance may be significantly adversely affected by changes in China's economic, political, or social conditions or government policies[22] - The company's ability to provide or continue to provide securities to investors may be severely restricted or completely hindered by Chinese government regulations, potentially leading to a significant decline in the value of such securities[22] - The company's operations and the value of its American Depositary Shares (ADS) may be significantly adversely affected by uncertainties in China's legal system, including risks related to law enforcement and rapidly evolving regulations[22] - The company's business, financial condition, and operating performance, as well as its ability to obtain financing, may be adversely affected by global or Chinese economic downturns[22] - The company's ADS may be delisted under the Holding Foreign Companies Accountable Act if the PCAOB is unable to inspect auditors located in China, which could significantly adversely affect the value of investors' holdings[22] - The company's business, financial condition, and operating performance have been and will continue to be significantly adversely affected by compliance with China's "Double Reduction" policy and its implementation measures[24][25][26] - The company has ceased providing academic tutoring services during national holidays, weekends, and school holidays, and may take further actions, including closing some learning centers and layoffs, to comply with regulations[26] - The company may face fines, penalties, or be required to immediately terminate certain operations due to regulatory non-compliance, which could further adversely affect its business, financial condition, and operating performance[26] - The company may incur significant impairment and severance costs related to lease terminations, employee dismissals, and other actions taken in response to regulatory developments, which could adversely affect its financial condition, operating performance, and prospects[26] - The revised "Private Education Promotion Law" prohibits social organizations and individuals from controlling private schools providing compulsory education or non-profit private schools offering preschool education through mergers or control agreements[27] - Off-campus tutoring institutions must comply with regulations including course material filing, class scheduling restrictions, and teacher qualification requirements[28] - The company's revenue may decline if it fails to attract students without significantly reducing course fees[29] - The company's business heavily relies on the "New Oriental" brand, and failure to maintain or enhance it could harm operations and performance[30] - The company depends on a qualified and dedicated teaching staff, and failure to maintain consistent teaching quality could negatively impact its brand and business[31] - The company's corporate structure, involving Cayman Islands registration and variable interest entities in China, poses legal and regulatory risks that could affect its operations and investor interests[21] - The company's ability to enforce share pledge agreements with variable interest entity (VIE) shareholders may be limited under Chinese law, with registered pledged equity amounts totaling RMB 50,000,000 for New Oriental China[74][75] - The company's contractual arrangements with VIEs and their shareholders are governed by Chinese law, and disputes must be resolved through arbitration or Chinese courts, which may limit enforcement capabilities[73] - The company's consolidated affiliated entities contributed 99.9% of total net revenue in fiscal year 2021, highlighting the critical importance of these arrangements to its financial performance[73] - The company may face challenges in enforcing its rights under share pledge agreements if Chinese courts determine that the registered pledged equity amounts represent the full collateral value, potentially leaving additional obligations unsecured[75] - The company's ability to direct the activities of consolidated affiliated entities and consolidate their financial results under U.S. GAAP could be jeopardized if contractual arrangements are not enforceable[73] - The company's reliance on contractual arrangements with VIEs and their shareholders exposes it to potential legal disputes and enforcement risks under Chinese law[73] - The company's Chinese operations are subject to regulatory risks, including potential restructuring requirements or restrictions on the use of proceeds from future offerings to fund its business in China[72] - The company's ability to operate private schools may be significantly impacted by changes in Chinese laws, regulations, and policies, such as the "Double Reduction" policy[78] - Contractual arrangements with consolidated affiliated entities may be subject to scrutiny by Chinese tax authorities, potentially leading to additional tax liabilities and penalties[79] - The company depends on dividends and distributions from its wholly-owned subsidiaries to meet cash and financing needs, which could be adversely affected if payment capabilities are restricted[79] - The company relies on dividends from its wholly-owned subsidiaries in China and service fees, license fees, and other payments from New Oriental China and its schools and affiliated companies to meet its cash needs, including any potential debt obligations[80] - Chinese regulations require subsidiaries to allocate at least 10% of post-tax profits (if any) to statutory reserves until the reserve reaches 50% of registered capital, and further allocations may be required for employee welfare funds[80] - Private schools in China must allocate a minimum of 25% of annual net profits to development funds if they seek reasonable returns, or 25% of the annual increase in net asset value if they do not seek reasonable returns[80] - Loans provided by the company to its Chinese subsidiaries or New Oriental China and its schools and affiliated companies must comply with Chinese regulations, including registration with the State Administration of Foreign Exchange (SAFE)[81] - The company may face restrictions on providing loans or additional capital injections to its Chinese subsidiaries due to Chinese regulations on offshore holding companies and currency exchange controls[81] - Foreign-invested enterprises in China are subject to restrictions on the use of RMB funds converted from foreign currency registered capital, which may limit the company's ability to fund or expand its business in China[82] - The company's ability to use proceeds from offshore offerings for its Chinese operations may be restricted by Chinese laws and regulations, potentially impacting liquidity and business expansion[83] - The company operates most of its business in China through contractual arrangements with New Oriental China and its schools and affiliated companies, which hold critical assets for its operations[83] - The company does not hold priority security interests or liens over the assets of New Oriental China, which could pose risks in the event of involuntary liquidation[83] - The company closely monitors the operations and finances of New Oriental China to mitigate risks of involuntary liquidation and ensure sufficient capital[83] - The company can enforce the transfer of all equity of New Oriental China to a designated entity if shareholders attempt to liquidate without prior consent[84] - New Oriental China shareholders are restricted from distributing dividends or retained earnings without the company's approval[84] - The company's operations are significantly influenced by China's political, economic, and social conditions, with potential adverse effects from government policies[85] - China's economic growth has slowed since 2010, and COVID-19 may continue to negatively impact the economy, potentially reducing demand for the company's products and services[85] - The Chinese government's significant oversight and discretionary power over the company's operations could lead to adverse changes in its business and ADS value[86] - Additional industry-wide regulations or government actions could severely limit the company's ability to offer securities, potentially causing a significant decline in its stock value[86] - The company's business, financial condition, and ability to obtain financing may be adversely affected by a global or Chinese economic recession[87] - Uncertainties in China's legal system, including the interpretation and enforcement of new laws, could negatively impact the company's operations[88] - Legal proceedings in China may be prolonged, costly, and divert resources and management attention from business operations[88] - The implementation and interpretation of the Foreign Investment Law may impact the company's structure, governance, and operations, potentially requiring adjustments to existing contractual arrangements or even divestment of certain business operations[89] - Internet content regulations in China could lead to penalties, license revocation, or website closures if the company's online platforms are found in violation, affecting operations and reputation[90] - The company must obtain and maintain multiple licenses and permits for its education and training services in China, with non-compliance risking fines, revenue forfeiture, or operational suspension[90] - Chinese regulations on overseas special purpose companies may restrict the company's ability to inject capital into its Chinese subsidiaries or repatriate profits, potentially impacting financial operations[91] - Regulatory uncertainties around employee participation in equity incentive plans could limit the company's ability to grant stock awards to Chinese employees, affecting talent retention[92] - Foreign acquisitions in China are subject to complex procedures under the M&A regulations and other Chinese laws, potentially hindering the company's growth through acquisitions[93] - Overseas investments by Chinese-controlled entities must comply with NDRC's approval, filing, and reporting requirements, with sensitive projects requiring pre-approval[94] - Rising labor costs in China, including wages and employee benefits, are expected to continue increasing, potentially impacting profitability[95] - The company's ability to pay dividends in foreign currency may be restricted due to China's foreign exchange controls[96] - Fluctuations in the RMB exchange rate against foreign currencies, particularly the USD, could significantly impact the company's revenue, profits, and stock value[97] - Limited availability of hedging tools in China to mitigate foreign exchange risks, with potential losses exacerbated by foreign exchange control regulations[98] - The company's six wholly-owned subsidiaries in China, including Beijing Zhiyu Jiaye Software Technology Co., Ltd. and Beijing Dingshixing Education Consulting Co., Ltd., qualify as "High-Tech Enterprises" and are eligible for a preferential corporate income tax rate of 15%[99] - Four of the company's wholly-owned subsidiaries in China, including Beijing Jinghong Software Technology Co., Ltd. and Beijing Zhiyuan Hangcheng Software Technology Co., Ltd., qualify as "Software Enterprises" and are exempt from corporate income tax for the first two profitable years, followed by a reduced tax rate of 12.5% for the next three years[99] - The company's actual effective tax rates for the fiscal years ending May 31, 2019, 2020, and 2021 were 26.96%, 27.46%, and 26.53%, respectively[100] - As of May 31, 2021, 11 of the company's schools have chosen to operate as non-profit schools, while 31 have chosen to operate as for-profit schools[100] - The termination of preferential tax treatments currently enjoyed by the company, particularly in major cities, could lead to an increase in the effective tax rate, resulting in higher income tax expenses and reduced net profits[100] - The company may be classified as a "resident enterprise" under Chinese tax law, potentially requiring it to pay Chinese income tax on its global income and withhold taxes on dividends paid to non-Chinese shareholders and ADS holders[100] - Foreign enterprises established outside China but with "effective management institutions" in China may be classified as "resident enterprises" and subject to a unified corporate income tax rate of 25%[101] - The State Taxation Administration has issued notices clarifying the criteria for determining "resident enterprise" status, including the location of senior management, financial decision-making, and key assets[101] - Overseas-registered, Chinese-controlled enterprises classified as "resident enterprises" must submit classification applications to local tax authorities and are subject to taxation on dividends, profits, and other equity investment income[101] - The company may be considered a Chinese resident enterprise, subject to a 25% corporate income tax rate on global income, potentially increasing tax burden and impacting cash flow and profitability[102] - Dividends received by non-Chinese investors may be subject to a 10% withholding tax if the company is deemed a Chinese resident enterprise[102] - Dividends from Chinese subsidiaries to non-resident enterprises are subject to a maximum withholding tax rate of 20%, reduced to 10% by the State Council[103] - Dividends paid to Hong Kong entities under the double taxation arrangement may be subject to a 5% withholding tax if certain conditions are met[103] - Indirect transfers of Chinese resident enterprise equity by non-resident enterprises may be reclassified and subject to a 10% withholding tax under Bulletin 7[104] - The company faces uncertainty regarding the application of Bulletin 7 and Bulletin 37, which may require significant resources to comply with or determine tax obligations[104] - The company's online education services may require specific licenses, and failure to obtain or maintain these licenses could result in fines, legal sanctions, or suspension of services[105] - The definition of "audio-visual programs" and "broadcast television programs" is ambiguous, creating uncertainty about whether the company's online courses require specific licenses[105] - The company's U.S. depositary shares may be delisted under the Holding Foreign Companies Accountable Act (HFCAA) if PCAOB cannot inspect auditors located in China, potentially adversely affecting investment value[106] - The HFCAA requires the SEC to prohibit trading of the company's securities if it determines that the company has submitted audit reports for three consecutive years (starting from 2021) from auditors not inspected by PCAOB[106] - The U.S. Senate passed a bill on June 22, 2021, which, if enacted, would reduce the required consecutive non-inspection years for delisting from three to two under the HFCAA[106] - PCAOB cannot fully evaluate the audit and quality control procedures of the company's independent registered public accounting firm due to its inability to conduct inspections in China[107] - In 2013, PCAOB established a cooperation framework with Chinese regulators for document exchange related to investigations, but joint inspections of audit firms in China remain unresolved[108] - The SEC's administrative proceedings against China's "Big Four" accounting firms (including the company's auditor) could result in financial statements being deemed non-compliant with securities laws[109] - If the SEC restarts administrative proceedings, U.S.-listed companies with major China operations may face difficulties retaining auditors, potentially leading to delisting[110] - Overseas regulators face significant challenges in conducting investigations or evidence collection within China due to legal and practical barriers[111] - China's new regulations on cracking down on securities violations, issued on July 6, 2021, may impose additional requirements on overseas-listed Chinese companies[112] - The company's compliance costs may increase if its shares are deemed to have a dual primary listing in Hong Kong, requiring potential revisions to its corporate structure and articles of association[113] - Shareholders may face challenges enforcing judgments against the company due to its Cayman Islands incorporation and primary operations in China, as Cayman Islands and Chinese laws may not enforce foreign judgments[119] - Chinese courts may not recognize or enforce U.S. court judgments against the company or its directors, as there is no treaty or reciprocal agreement between China and the U.S. for mutual recognition of foreign judgments[120] - Shareholder rights under Cayman Islands law are more
新东方-S(09901) - 2021 - 年度财报