S.C.P.C — Investor Presentation 2019

Apr 18, 2019

Stock Ticker :1720

Standard Chem. & Pharm. Co., Ltd. (SCP) Investor Conference 2019.04.18

免責聲明 Safe Harbor Notice

本次簡報與討論包含特定預測性的說明，而其內容有關於營運結
果、財務狀況，以及對未來事件的預期。因為此等前瞻性說明是有關
於未來事件，而且取決於未來發生時的環境因素，所以必然含有風險
與不確定性。

本公司將不負擔公開更新或修改這些預測性的說明之義務，無論是
出現新資訊、未來發生任何事件，或其他情況。實際結果可能與此等
預測性說明推測的內容有重大差異。

In these presentations and discussions, there are certain forward looking statements regarding the results of operation, financial condition and current expectation about future events. As forward-looking statements relate to events and depend on circumstances in the future, they involve risk and uncertainty.

We do not undertake any obligation to publicly revise or update any forward looking statements for availability of new information, future events or otherwise. Real result probably differ substantially from those expected in these forward-looking statements.

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Agenda

Corporate Introduction to 2018 ForwardSocial Standard Group Financial Responsibility looking (SCP Group) Statements (CSR)

• Milestones  Consolidated • Future  Fan Dao Nan

• Resource Financial Development Foundation Statements Direction

• Integration

• Past • Separate Financial • Actions for Statements Revenue

• Financial Growth

• Performance • Forwardlooking Strategy

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Introduction to Standard Group (SCP Group)

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Historical Milestones

2017 1998 2009 2012 2000 SCP is the first Tw SCP is first TW SCP’s API plant SCP passes K-FDA 2015 SCP is ranked in the Top 20th Percentile of Taiwanese listed pharmaceutical company to company to pass passes TGA inspection, and is SCP receives its first Companies by the Taiwan Stock be ISO9001 US FDA inspection certified GDP by US-FDA approved ANDA the T-FDA SCP receives Common Exchange. certified inspection Wealth Magazine’s SCP passes US-FDA cGMP Corporate Social inspection with no. 483 Responsibility Award 1967 1990 2000 2010 2020 2018 1967 1995 SCP receives the SCP’s Initial SCP is Public Offering 2014 Badge of Accredited formally SCP receives the Gold Healthy Workplace by established 2008 Award for Outstanding the T-FDA FDF Plant and API SCP receives Biotechnology Company PMDA’s Plant passed PMDA “Certificate of 2016 Audit 2010 Foreign Drug SCP receives the Citizen’s SCP passes TW PIC/S Manufacturer” Award for CSR GMP inspection

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 Standard Chem.& Pharm.Co.,Ltd  Souriree Biotech.Co.,Ltd.

• (Syn-Tech Chem. & Pharm. Co., Ltd.)

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Pharmaceuticals
- Rx
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 Syngen Biotech Co., Ltd.

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API
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Software/
Hardware
Service

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• ( CNH)

SCP Group Resource Integration

 Inforight Technology Co., Ltd.

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Biological
Fermentation
Products
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 AdvPharma, Inc.

• Multipower Enterprise Corp.

• Syngen Biotech.Co.,Ltd

• (Your Chance Pharmacy Chain)

• (Sun You Biotech Pharm.Co.,Ltd)

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51 Years of Continuous Profit (15 years of Profit and Dividend Performance)

Income after Taxes

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EPS
(Expressed in thousands of New Taiwan Dollars)
Net Income Cash Dividend Stock Dividend EPS
400000 3
350000
2.5
300000
2.15
2.09 2.09 2.09
2.03 2
1.95
250000 1.88 1.9
1.81
1.77
1.73
1.66
1.61
200000 1.47 1.5
1.35
2.5
150000
1
0.5
1.2 1.2
1.6 1.6
100000 1.5 1.5 1.5 1.5
1.25 1.2
1 1 1 0.5
50000 0.7
0.3 0.3
0 0 0 0 0 0 0 0 0 0 0 0 0 0
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(Expressed in thousands of New Taiwan Dollars)

Remark: Distribution of dividends in 2018 was approved by Board of Directors without the resolution of the shareholders’ meeting.

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2018 Financial Statements

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Income Statement (Consolidated)

(Expressed in thousands of New Taiwan Dollars)

	2018	2018	2017	2017	+(-)	Growth Rate	9
	Amount	%	Amount	%	Amount	%
Operating revenue	3,573,093	100	3,848,684	100	-275,591	-7
Operating cost	2,028,483	57	2,099,686	55	-71,203	-3
Gross profit	1,544,610	43	1,748,998	45	-204,388	-12
Operating expense	1,156,352	32	1,207,523	31	-51,171	-4
Operating profit	388,258	11	541,475	14	-153,217	-28
Non-operating income and expense	129,208	3	8,737	0	120,471	1,379
Income before tax	517,466	14	550,212	14	-32,746	-6
Net income	427,936	12	433,339	11	-5,403	-1
Net income attributed to Stockholders of the Parent Company	374,359	10	363,286	9	11,073	3
EPS (NT$)	2.09		2.03		0.06	3

Balance Sheet (Consolidated)

(Expressed in thousands of New Taiwan Dollars)

	2018	2018	2017	2017
	Amount	%	Amount	%
Cash and cash equivalents	1,254,061	19	1,192,512	19
Accounts receivable	931,257	15	936,713	15
Inventories	793,128	12	727,894	11
Investments	731,794	12	798,303	12
Property, plant, and equipment	2,134,253	33	2,156,720	34
Other current and non-current assets	594,620	9	562,075	9
Total Assets	6,439,113	100	6,374,217	100
Current Liabilities	1,687,530	26	1,646,341	26
Long-term loans	152,283	3	187,312	3
Other liabilities	352,988	5	338,379	5
Total liabilities	2,192,801	34	2,172,032	34
Total shareholder’s equity	4,246,312	66	4,202,185	66
Total liabilities and shareholder’s equity	6,439,113	100	6,374,217	100

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Global Revenue Ratio of past 5 Years (Consolidated)

(Expressed in thousands of New Taiwan Dollars)

 International Sales of past 5 years

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1,000,000
745,705
800,000 686,077
644,528
600,000
444,475 445,642
400,000
200,000
-
2014 2015 2016 2017 2018
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 Ratio of International-to-Domestic Sales of past 5 years

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Domestic International
100% 13.5% 13.4% 17.5% 19.4% 19.2%
80%
60%
86.5% 86.6% 82.5% 80.6% 80.8%
40%
20%
0%
2014 2015 2016 2017 2018
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 International Revenue (Ex-Taiwan)

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2018 年 2017 年
300,000 37%
250,000 33% 31%
26%
200,000 24%
20%
150,000
100,000
6%
5% 5%
50,000 3% 3% 3%
1% 1% 2% 0%
0
China S.E.A. Other- U.S.A Other- Europe Japan Others
Asia Americas
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Income Statement

(Parent Company)

(Expressed in thousands of New Taiwan Dollars)

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Growth
2018 2017 (±)
Rate
Amount % Amount % Amount %
Operating revenue 2,385,819 100 2,410,610 100 -24,791 -1
Operating cost 1,287,252 54 1,290,577 54 -3,325 0
Gross profit 1,098,567 46 1,120,033 46 -21,466 -2
Operating expense 739,224 31 759,458 31 -20,234 -3
Operating profit 359,343 15 360,575 15 -1,232 0
Non-operating income and
88,618 4 72,083 3 16,535 23
expense
Income before tax 447,961 19 432,658 18 15,303 4
Net income 374,359 16 363,286 15 11,073 3
EPS(NT$) 2.09 2.03 0.06 3
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Balance Sheet ( Parent Company )

(Expressed in thousands of New Taiwan Dollars)

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2018 2017
Amount % Amount %
Cash and cash equivalents 946,253 18 729,506 14
Accounts receivable 683,451 13 634,621 12
Inventories 510,031 10 520,549 10
Investments 1,765,909 33 1,922,635 36
Property, plant, and equipment 1,141,224 22 1,193,519 23
Other current and non-current
273,084 4 306,553 5
assets
Total Assets 5,319,952 100 5,307,383 100
Current Liabilities 1,227,480 23 1,198,955 23
Long-term loans 70,000 2 100,000 2
Other liabilities 341,247 6 336,005 6
Total liabilities 1,638,727 31 1,634,960 31
Total shareholder's equity 3,681,225 69 3,672,423 69
Total liabilities and
shareholder's equity 5,319,952 100 5,307,383 100
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Global Revenue Ratio of past 5 Years ( Parent Company )

 International Sales of past 5 years

 Ratio of International-to-Domestic Sales of past 5 years

(Expressed in thousands of New Taiwan Dollars)

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700,000
593,234
600,000
526,951
501,616
500,000
400,000 368,522 370,005
300,000
200,000
100,000
-
2014 2015 2016 2017 2018
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Domestic
International
100%
16.5% 16.8%
90% 23.4% 24.6% 22.1%
80%
70%
60%
50%
83.5% 83.2%
40% 78.7% 75.4% 77.9%
30%
20%
10%
0%
2014 2015 2016 2017 2018
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Comparison of Quarterly Revenue of past 4 years (Consolidated)

1,200,000	1,200,000							(Expressed in thousands of New Taiwan Dollars)	(Expressed in thousands of New Taiwan Dollars)
0 200,000 400,000 600,000 800,000 1,000,000
		Season 1			Season 2		Season 3 Season 4
			2016		2017		2018 2019
	Consolidated Revenue		Season 1	Season		2	Season 3	Season 4 Annual Statistics
		2016	859,024		940,238		919,663	954,876 3,673,801
		2017	909,933		976,177		1,056,753	905,821 3,848,684
		2018	763,261		897,693		913,353	998,786 3,573,093
		2019	846,177

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Forward looking Strategy

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SCP – Major International Operations of the past 2 years

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Taiwan China Japan
 Continuous growth for  Quality Consistency  Export of Asthma
in-licensing of Japanese Evaluation for Generic product to Japan
Anti-psychotic Drugs: Contracts signed  Anti-inflammatory
Latuda® for seven products. Oral Solid Dosage
 Estimated contract was submitted for
value: over NT$100 review in February
millions 2019; schedule to
 Future Business Model: launch in 2020
Profit Sharing
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Future Milestone

Taiwan Generics

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International Better than Generics

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Revenue Growth Strategy - Taiwan

• Taiwan as Base of Operations for Global R&D and Pharmaceutical Manufacturing

• Yearly increase of international operations ratio.

• Launch new products every year

• Strengthen Manufacturing Capability

• Manufacturing line complies with international standards; have passed numerous international audits

• Production line standardization

• In-licensing: Psychiatry, Urology, and improve system product integrity

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Revenue Growth Strategy - China

SCP Competitiveness

 SCP has successful experience with c U.S. and Japan regulatory dossiers  SCP to continue to specialize expertise in BE design and execution

NMPA review of importation

 2 diabetes product

 1 cardiovascular product

Mid-Term Goals

 Increase technology in-flow

• Increase revenue from profitsharing

Collaboration Model

NMPA Consistency Evaluation

 2017: 2 contracts signed

 2018: 5 contracts signed

 2019: ongoing negotiations

Results

• Tech-transfer

• Co-development

• BE Collaboration

• Profit-sharing Partnerships

• Increase the number of cooperative projects

• Increase the number of cooperative pharmaceutical companies

• Expand cooperation

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NMPA Reforms: Current State of Consistency Evaluation

• Policy Direction of Consistency Evaluation

• The deadline was cancelled on December 28[th] , 2018.

• If a product passes Consistency Evaluation, it would be highlighted in order to urge the other venders to accelerate their applying process.

• If a product first passes Consistency Evaluation, it would be suggested for the other vendors to apply for the same product to complete Consistency Evaluation in 3 years.

• Current Process of Total Revisions of Consistency Evaluation

	Revised Docs with No.	Items	Entities
Total in 2018.12(P.S.1)	676	231	249
Total in 2019.03(P.S.2)	1,102	336	361
Announced Item	289 items, 17,000 approvals, 1,800 entities

P.S.1 ： 2018.12.29 www.yaozh.com Report of CDE Statistics P.S.2 ： 2019.04.02 信狐藥訊

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NMPA Reforms: Total Submissions of Consistency Evaluation

• 2017.07~2019.03 Consistency Evaluation: 1,023 submissions were revised in total

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Source ： www.yaozh.com Report of CDE Statistics

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NMPA Reforms: Intense competition among Pharmaceutical Companies in Mainland China

	The Entities Submitted the most	Submissions for BE	Submissions for BE	Revised Docs with No.	Revised Docs with No.	Approval items	Approval items	Accepted items
		2017	2018	2018	2019	2018	2019	2019
1	Qilu Pharmaceutical Co., Ltd.	24	16	37	53	2	10	29
2	Sichuan KELUN PHARMACEUTICAL Co., Ltd.	6	10	14	27	6	8	18
3	Yichang Renfu Pharmaceutical Industry	N/A	7	7	26	0	1	16
4	Jiangsu Hengrui Medicine	11	11	19	25	3	6	17
5	Haosen Pharmaceutical Industry	6	N/A	18	22	3	5	13
6	Shijiazhuang Pharma Group	10	12	15	21	4	7	16
7	Jiangsu Chiatai Tianqing	31	11	14	20	1	2	15
8	Hunan Kelun Pharmacy Limited Company	N/A	N/A	13	19	1	1	10
9	Yangtze River Pharmaceutical Group	6	16	9	18	1	4	15
10	Zhejiang Huahai Pharmaceutical	14	N/A	10	18	10	11	12

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Source (2018) ： www.yaozh.com Report of CDE Statistics on 2018.12.29 ； Source (2019) ： 2019.04.02 信狐藥訊

NMPA Reforms: Fierce Competitions for popular items

	The most popular items	The most popular items	Revisions	Revisions	Submitted Entities	Submitted Entities	Approved Entities	Approved Entities
			2018	2019	2018	2019	2018	2019
1	氨氯地平	Amlodipine	25	39	23	35	5	8
2	阿莫西林	Amoxicillin	28	37	20	26	4	4
3	二甲双胍	Metformin	14	29	13	27	2	4
4	雷尼替丁	Ranitidine	10	20	10	19	0	1
5	頭孢氨卡	Cefalexin	12	16	8	11	0	0
6	蒙脫石散	Montmorillonite	13	16	13	16	4	4
7	對乙烯氨基酚	Acetaminophen	8	16	8	16	1	1
8	卡托普利	Captopril	10	15	8	12	2	2
9	引達帕胺	Indapamide	10	14	10	14	0	2
10	瑞舒伐他汀鈣	Rosuvastatin	13	13	6	6	4	5

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Source (2018) ： www.yaozh.com Report of CDE Statistics on 2018.12.29 ； Source (2019) ： 2019.04.02 信狐藥訊

NMPA Reforms: Submissions is still hot in 2019

 In 2019, up to 2/15, CDE has accepted 218 submissions

一致性評價 CDE 受理情況

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700
613
600
500
400
300
218
200
106
100
0
2017 年 2018 年 2019 年
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Source ： Reports from 藥通社

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Revenue Growth Strategy - Japan

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Collaboration Model

 Japanese Distribution Partner  Contract Development, SCP Manufacturing

• License Holder

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Current State

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Raw Material Strategy

 Collaborate with Syn-Tech Chem. & Pharm. Co., Ltd.

• API Vertical Integration

Under Development

 Obtained marketing license for Montelukast (Asthma), 3[rd] straight year of continuous

export

 Co-development of Nonsteroidal Antiinflammatory Drug (NSAID) – passed BE in 2018

• Dossier submission in February 2019; Estimated Market Launch is 2020.

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Revenue Growth Strategy – U.S.A.

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U.S.A. Market

• Largest Rx Market

• Characterized by lengthy review

• timelines.

• Expensive compilation and filing

• costs

• Part of SCP’s long term goals

Strategy

• Collaboration with

Syn-tech Chem. & Pharm. Co. Ltd.

• API Vertical Integration via strategic partnerships

Current State

• Actively export one diabetic treatment

• One approval, pending patent settlement terms

• Two ANDA’s under review

• Schedule to submit Muscle Relaxant in 2019

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Forward-looking Strategy Layout

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Future:
2018 2020 2020
International
China Japan U.S.A. - -
Better than Generics
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Increase
International
Revenue Ratio
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• Increase international business resources

• Recruit international talent

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Specialized technology and
professional development of
international performance
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• Develop Taiwan into

• a base of cutting-edge R&D technology and revenue generation.

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Leverage
Competitiveness in
Overseas Markets
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• Stable foundation

• Rapid revenue creation

• Step-by-step optimization

• for minimization of loss

• Focus on market knowledge

• and business acumen

• Establish strategic

partnerships for mid- and long-term goals

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Corporate Social Responsibility

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Fan Dao Nan Foundation

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Fan Dao Nan Foundation

 Established in 1987

 Endowment Fund: NT$196 Million

 Annual Budget: NT$12 Million

Principal Activities

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 Non-profit education

• Cultural and educational

development activities

 Sponsor R&D and Innovation

• Scholarships and Talent Cultivation

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Rewards and Honors Received

 2011: Special Recognition Award – Dept. of Education

• 2012: Tainan City Govt. Grant for Scholarship Program

• 2013: National Special Selection Award for

After-School Program – Dept. of Education

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Corporate Social Responsibility

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Scholarships

 University (related fields): 2 universities/5 students  High school: 8 schools/113 students  Middle school: 56 schools/814 students

 Elementary school: 232 schools/2,681 students Scholarship Totals – NT$5.99MM

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Hope After-school Class

 Weekday afternoons  18 schools  1,520 students

Scholarship Totals – NT$1.9MM

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Sunflower Wednesdays

 Every Wednesday afternoon  4 schools  310 students Scholarship Totals – NT$250KK

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Other Sponsorships

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Meal-Assistance

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Charity

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 Member of 19-corporation alliance for sponsorship cultural and educational advancement

 In 2018, provided 7,325 meals to students during winter and summer holidays.

 SCP Children’s Drawing Competition  SCP National Table Tennis Competition

Grant Total – NT$482KK

Assistance Totals – NT$440KK

Prize Totals – NT$1.65MM

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Q & A

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Thanks for your attention

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