Bright Scholar Education Holdings Limited (BEDU) 20-F 2024 FY Annual report (foreign)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 20-F

(Mark One)

☐ REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR THE SECURITIES ACT OF 1934

OR

☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended August 31, 2024

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

OR

☐ SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Date of event requiring this shell company report

For the transition period from to

Commission file number: 001-38077

Bright Scholar Education Holdings Limited

(Exact name of Registrant as specified in its charter)

N/A

(Translation of Registrant’s name into English)

Cayman Islands

(Jurisdiction of incorporation or organization)

SUITES 6-7 THE TURVILL BUILDING OLD SWISS, 149 CHERRY HINTON ROAD

CAMBRIDGE, ENGLAND, CB1 7BX, UNITED KINGDOM

(Address of principal executive offices)

Mr. Ruolei Niu, Chief Executive Officer
Suites 6-7 The Turvill Building Old Swiss, 149 Cherry Hinton Road
Cambridge, England, CB1 7BX, United Kingdom
Telephone: +44 12-2334-1303
E-mail: robertniu@brightscholar.com

(Name, Telephone, E-mail and/or Facsimile number and Address of Company Contact Person)

Securities registered or to be registered, pursuant to Section 12(b) of the Act

Title of each class	Trading Symbol	Name of each exchange on which registered
American depositary shares, each representing four Class A ordinary share, par value US$0.00001 per share	BEDU	The New York Stock Exchange
Class A ordinary shares, par value US$0.00001 per share*
*Not for trading, but only in connection with the listing on the New York Stock Exchange of American depositary shares

Securities registered or to be registered pursuant to Section 12(g) of the Act.

None

(Title of Class)

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act.

None

(Title of Class)

Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report:

Class A ordinary shares, par value US$0.00001 each	31,314,817
Class B ordinary shares, par value US$0.00001 each	87,590,000

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. ☐ Yes ☒ No

If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934. ☐ Yes ☒ No 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒ Yes ☐ No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☒ Yes ☐ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer. ☐ Accelerated filer ☐ Non-accelerated filer ☒ Emerging growth company ☐

If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards† provided pursuant to Section 13(a) of the Exchange Act. ☐

† The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5, 2012.

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☐

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements.  ☐

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b).  ☐

Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:

U.S. GAAP ☒ International Financial Reporting Standards as issue by the International Accounting Standards Board ☐ Other ☐

If “Other” has been checked in response to the previous question indicate by check mark which financial statement item the registrant has elected to follow. ☐ Item 17 ☐ Item 18

If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes ☒ No

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. ☐ Item 17 ☐ Item 18

TABLE OF CONTENTS

		Page(s)
INTRODUCTION		ii
MARKET AND INDUSTRY DATA		xiii
PART I		1
ITEM 1.	IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS	1
ITEM 2.	OFFER STATISTICS AND EXPECTED TIMETABLE	1
ITEM 3.	KEY INFORMATION	1
ITEM 4.	INFORMATION ON THE COMPANY	51
ITEM 4A.	UNRESOLVED STAFF COMMENTS	73
ITEM 5.	OPERATING AND FINANCIAL REVIEW AND PROSPECTS	73
ITEM 6.	DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES	97
ITEM 7	MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS	106
ITEM 8.	FINANCIAL INFORMATION	108
ITEM 9.	THE OFFER AND LISTING	109
ITEM 10.	ADDITIONAL INFORMATION	110
ITEM 11.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	117
ITEM 12.	DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES	118
PART II		119
ITEM 13.	DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES	119
ITEM 14.	MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS	119
ITEM 15.	CONTROLS AND PROCEDURES	120
ITEM 16	[Reserved]	121
ITEM 16A.	AUDIT COMMITTEE FINANCIAL EXPERT	121
ITEM 16B.	CODE OF ETHICS	122
ITEM 16C.	PRINCIPAL ACCOUNTANT FEES AND SERVICES	122
ITEM 16D.	EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES	122
ITEM 16E	PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS	122
ITEM 16F.	CHANGE IN REGISTRANT’S CERTIFYING ACCOUNTANT	123
ITEM 16G.	CORPORATE GOVERNANCE	123
ITEM 16H.	MINE SAFETY DISCLOSURE	123
ITEM 16I	DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS	123
ITEM 16J	INSIDER TRADING POLICIES	124
ITEM 16K	CYBERSECURITY	124
PART III		126
ITEM 17.	FINANCIAL STATEMENTS	126
ITEM 18.	FINANCIAL STATEMENTS	126
ITEM 19.	EXHIBITS	126

i

INTRODUCTION

Except where the context otherwise requires and for purposes of this annual report on Form 20-F only:

● “ADSs” refers to American depositary shares, each of which represents four Class A ordinary share;

● “Affected Entities” refers to private schools within China that are affected by the Implementation Rules, entities holding such private schools as well as other enterprises within China that are affected by the Implementation Rules;

● “A-Level” or “A Levels” refers to the General Certificate of Education (Advanced Level) Examination, a subject-based qualification conferred as part of the General Certificate of Education, as well as a school leaving qualification offered by the educational bodies in the United Kingdom and the educational authorities of British Crown dependencies to students completing secondary or pre-university education;

● “BGY Education Investment” refers to BGY Education Investment Management Co., Ltd., which was historically controlled and consolidated by Bright Scholar Holdings through contractual arrangements but has been deconsolidated together with its subsidiaries and schools since August 31, 2021;

● “Bright Scholar Holdings” refers to Bright Scholar Education Holdings Limited, our Cayman Islands holding company;

● “CAGR” refers to compound annual growth rate;

● “China” or “PRC” refers to the People’s Republic of China, and only in the context of describing the PRC laws, rules, regulations, regulatory authorities, and any PRC entities or citizens under such rules, laws and regulations and other legal or tax matters in this annual report, excludes Taiwan and the special administrative regions of Hong Kong and Macau. The operational risks associated with being based in and having operations in mainland China also apply to operations in Hong Kong. While entities and businesses in Hong Kong operate under different sets of laws from mainland China, the legal risks associated with being based in and having operations in mainland China could apply to our operations in Hong Kong, if the laws applicable to mainland China become applicable to entities and businesses in Hong Kong in the future;

● “Country Garden” refers to Country Garden Holdings Company Limited, a company listed on The Stock Exchange of Hong Kong Limited (stock code: 2007), a related party, and its subsidiaries;

● “fiscal year” refers to the period from September 1 of the previous calendar year to August 31 of the concerned calendar year;

● “Implementation Rules” refers to the Implementation Rules of the Law for Promoting Private Education, which was issued by the PRC State Council on May 14, 2021 and became effective on September 1, 2021;

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● “learning centers” refers to entities providing after-school education training services, including enrichment education training and extracurricular programs;

● “ordinary shares” or “shares” refers to our Class A and Class B ordinary shares of par value US$0.00001 per share;

● “RMB” or “Renminbi” refers to the legal currency of China;

● “school” refers to (1) each of our international schools, bilingual schools, overseas schools and kindergartens, unless otherwise specified, before the deconsolidation of BGY Education Investment, (2) each of our overseas schools and domestic for-profit kindergartens, unless otherwise specified, after the deconsolidation of BGY Education Investment but prior to September 1, 2024, and (3) each of our overseas schools, unless otherwise specified, after September 1, 2024, in each case as the context requires;

● “school year” refers to the annual period of instruction at each school respectively, which customarily runs from September of the previous calendar year to July of the concerned calendar year;

● “SEC” refers to the Securities and Exchange Commission of the United States;

● “US$,” “U.S. dollars,” “$” and “dollars” refers to the legal currency of the United States of America;

● “VIEs” refers to the entities that Bright Scholar Holdings controls and consolidates or used to control and consolidate through contractual arrangements, as the context requires, including (1) BGY Education Investment and the schools and subsidiaries it held, as the context requires, prior to its deconsolidation; (2) Foshan Meiliang Education Technology Co., Ltd., Foshan Shangtai Education Technology Co., Ltd., Foshan Renliang Education Technology Co., Ltd., Foshan Yongliang Education Technology Co., Ltd., Foshan Zhiliang Education Technology Co., Ltd., and Beijing Boteng Consulting Co., Ltd. and subsidiaries and schools they hold respectively, as the context requires, before and after the deconsolidation of BGY Education Investment; and (3) Foshan Yongliang Education Technology Co., Ltd., Foshan Zhiliang Education Technology Co., Ltd., and Beijing Boteng Consulting Co., Ltd. and subsidiaries they hold respectively, as the context requires, after September 1, 2024;

● “we,” “us,” “our,” and “our company” refers to Bright Scholar Education Holdings Limited and its subsidiaries; and

● “Zhuhai Bright Scholar” refers to Zhuhai Hengqin Bright Scholar Management Consulting Co., Ltd., our wholly-owned subsidiary in China.

Effective on August 19, 2022, we changed the ratio of the ADSs to Class A ordinary shares from the then ADS ratio of one ADS to one Class A ordinary share to a new ADS ratio of one ADS representing four Class A ordinary shares.

Names of certain companies provided in this annual report are translated or transliterated from their original Chinese legal names.

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Discrepancies in any table between the amounts identified as total amounts and the sum of the amounts listed therein are due to rounding.

This annual report on Form 20-F includes our audited consolidated financial statements for the 2022, 2023 and 2024 fiscal years.

This annual report contains translations of certain Renminbi amounts into U.S. dollars at specified rates. Unless otherwise stated, the translation of Renminbi into U.S. dollars has been made at RMB7.0900 to US$1.00, the noon buying rate in effect on August 30, 2024 as set forth in the H.10 Statistical Release of the Federal Reserve Board. We make no representation that any Renminbi or U.S. dollar amounts could have been, or could be, converted into U.S. dollars or Renminbi, as the case may be, at any particular rate, the rates stated below, or at all. The PRC government imposes controls over its foreign currency reserves in part through direct regulation of the conversion of Renminbi into foreign exchange and through restrictions on foreign trade. On December 6, 2024, the noon buying rate was RMB7.2700 to US$1.00.

Bright Scholar Holdings is not a Chinese operating company but a Cayman Islands holding company with no equity ownership in the VIEs. Bright Scholar Holdings has contractual arrangements with the VIEs, which control and hold our domestic learning centers and complementary services, and indirectly holds Bright Scholar (UK) Holdings Limited, through which we operate our overseas schools. Investors in the ADSs are purchasing equity securities of our ultimate Cayman Islands holding company rather than purchasing equity securities of the VIEs. We conduct our business operations through both our consolidated subsidiaries and the VIEs based on certain contractual arrangements. We, together with the VIEs, are subject to PRC laws relating to, among others, prohibitions and restrictions over foreign investments in education services (including the entity providing online education services) set out in the Negative List (2024 Version) promulgated by the Ministry of Commerce (“MOFCOM”), and the National Development and Reform Commission (the “NDRC”). The VIE structure is used to replicate foreign investment in China-based companies and provide investors with exposure to foreign investment in China-based companies where the PRC law prohibits direct foreign investment in the operating companies. Neither we nor our subsidiaries own any share in the VIEs, and investors may never hold equity interests in the Chinese operating companies. Instead, as a result of our direct ownership in Zhuhai Bright Scholar and the contractual agreements with the VIEs, we are regarded as the primary beneficiary of the VIEs for accounting purposes. Accordingly, we have consolidated the financial results of the VIEs in our consolidated financial statements in accordance with U.S. GAAP. Neither Bright Scholar Holdings nor its investors have had an equity ownership in, direct foreign investment in, or control, other than as defined under U.S. GAAP, through contractual arrangements with, the VIEs. The contractual arrangements are not equivalent to an equity ownership in the business of the VIEs and its subsidiaries in China. Because of our corporate structure, we are subject to risks due to uncertainty of the interpretation and the application of the PRC laws and regulations, including but not limited to prohibitions and limitation on control of domestic learning centers and complementary services through variable interest vehicle, and foreign ownership of internet technology companies, and regulatory review of oversea listing of PRC companies through a special purpose vehicle, and the validity and enforcement of the contractual agreements. We are also subject to the risks of uncertainty about any future actions of the PRC government in this regard. Our contractual agreements may not be effective in providing control over the VIEs. We may also subject to sanctions imposed by PRC regulatory agencies including Chinese Securities Regulatory Commission if we fail to comply with their rules and regulations.

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We and the VIEs face various legal and operational risks and uncertainties related to being based in and having significant operations in China. The PRC government has significant authority to exert influence on the ability of a China-based company, such as us and the VIEs, to conduct its business, accept foreign investments or list on U.S. or other foreign exchanges. For example, we and the VIEs face risks associated with regulatory approvals of offshore offerings, oversight on cybersecurity and data privacy, as well as the uncertainty of PCAOB inspection on our auditors. Such risks could result in a material change in our operations and/or the value of the ADSs or could significantly limit or hinder our ability to offer ADSs and/or other securities to investors and cause the value of such securities to significantly decline or be worthless. The PRC government also has discretion over the conduct of the business of us and the VIEs and may intervene with or influence our operations or the development of the private education industry as it deems appropriate to further regulatory, political and societal goals. Furthermore, the PRC government has recently indicated an intent to exert more oversight and control over overseas securities offerings and foreign investment in China-based companies like us. Any such action, once taken by the PRC government, could significantly limit or hinder our ability to offer securities to investors and cause the value of such securities to significantly decline or in extreme cases, become worthless. For further details, see “Item 3. Key Information-D. Risk Factors-Risks Related to Our Corporate Structure” and “Item 3. Key Information—D. Risk Factors—Risks Related to Doing Business in the Jurisdictions Where We Operate.”

Our corporate structure is subject to unique risks associated with the VIE structure. The contractual arrangements with the VIEs have not been tested in court. If the PRC government deems that our contractual arrangements with the VIEs do not comply with PRC regulatory restrictions on foreign investment in the relevant industries, or if these regulations or the interpretation of existing regulations change or are interpreted differently in the future, we could be subject to severe penalties if our contractual arrangements are deemed to violate PRC regulatory restrictions as a result. The PRC regulatory authorities could disallow our holding company structure which could lead to a material change in our operations and/or a material change in the value of our ADSs and could cause the value of our ADSs to significantly decline or become worthless. Our holding company, our PRC subsidiaries, and investors of our company face uncertainty about potential future actions by the PRC government that could affect the enforceability of the historical contractual arrangements with the VIEs and, consequently, may affect the historical financial performance of the VIEs and our company as a whole.

We are subject to a number of prohibitions, restrictions and potential delisting risk under the Holding Foreign Companies Accountable Act, as amended by the Consolidated Appropriations Act, 2023 (the “HFCAA”). Pursuant to the HFCAA and related regulations, if we have filed an audit report issued by a registered public accounting firm that the Public Company Accounting Oversight Board (the “PCAOB”) has determined that it is unable to inspect and investigate completely, the SEC will identify us as a “Commission-identified Issuer,” and the trading of our securities on any U.S. national securities exchange, as well as any over-the-counter trading in the United States, will be prohibited if we are identified as a Commission-identified Issuer for two consecutive years. In August 2022, the PCAOB, the China Securities Regulatory Commission (the “CSRC”) and the Ministry of Finance of the PRC signed a Statement of Protocol (the “Statement of Protocol”), which establishes a specific and accountable framework for the PCAOB to conduct inspections and investigations of PCAOB-governed accounting firms in mainland China and Hong Kong. On December 15, 2022, the PCAOB announced that it was able to secure complete access to inspect and investigate PCAOB registered public accounting firms headquartered in mainland China and Hong Kong completely in 2022. The PCAOB Board vacated its previous 2021 determinations that the PCAOB was unable to inspect or investigate completely registered public accounting firms headquartered in mainland China and Hong Kong. However, whether the PCAOB will continue to be able to satisfactorily conduct inspections of PCAOB-registered public accounting firms headquartered in mainland China and Hong Kong is subject to uncertainties and depends on a number of factors out of our and our auditor’s control. The PCAOB continues to demand complete access in mainland China and Hong Kong moving forward and is making plans to resume regular inspections in early 2023 and beyond, as well as to continue pursuing ongoing investigations and initiate new investigations as needed. The PCAOB has also indicated that it will act immediately to consider the need to issue new determinations with the HFCAA if needed. Our financial statements contained in this annual report on Form 20-F have been audited by Deloitte Touche Tohmatsu Certified Public Accountants LLP, an independent registered public accounting firm headquartered in mainland China. As of the date of this annual report, we are not and do not expect to be identified by the SEC as a “Commission-identified Issuer” under the HFCAA. However, if the PCAOB is unable to inspect and investigate completely registered public accounting firms located in China and we fail to retain another registered public accounting firm that the PCAOB is able to inspect and investigate completely in 2023 and beyond, or if we otherwise fail to meet the PCAOB’s requirements, the ADSs will be delisted from the New York Stock Exchange, and our shares and ADSs will not be permitted for trading over the counter in the United States under the HFCAA and related regulations. For details, see “Item 3. Key Information—D. Risk Factors—Risks Related to Doing Business in the Jurisdictions Where We Operate—Our ADSs will be delisted and prohibited from trading in the over-the-counter market under the Holding Foreign Companies Accountable Act, if the PCAOB is unable to inspect or investigate completely auditors located in China for two consecutive years. The delisting of the ADSs, or the threat of their being delisted, may materially and adversely affect the value of your investment.”

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We listed the ADSs on the New York Stock Exchange under the symbol “BEDU” on May 18, 2017 and completed an initial public offering of 17,250,000 ADSs on June 7, 2017. We issued an additional 10,000,000 ADSs on March 2, 2018. In July 2019, we issued senior notes in the aggregate principal amount of US$300.0 million, with interests of 7.45% per annum and maturing on July 31, 2022, and listed such senior notes on the Stock Exchange of Hong Kong Limited. As of July 31, 2022, we had redeemed all outstanding senior notes matured on the same date. Upon the completion of such redemption, all senior notes have been cancelled and delisted from the official list of the Stock Exchange of Hong Kong Limited.

As of the date of this annual report, laws and regulations in Hong Kong, including regulatory actions related to data security or anti-monopoly concerns in Hong Kong, do not have a material impact on our ability to conduct business, accept foreign investment, or list on a United States or foreign stock exchange.

Our Contractual Arrangements

Foreign ownership in education services (including the entity providing online education services) is subject to significant regulations in China. The PRC government regulates the provision of education services through strict licensing requirements. We are a company incorporated in the Cayman Islands. Our PRC subsidiary, Zhuhai Bright Scholar, is a wholly foreign-owned enterprise and currently ineligible to operate online education business or otherwise hold equity interests therein. Due to these restrictions, we, through our PRC subsidiary, Zhuhai Bright Scholar, have entered into a series of contractual arrangements with (1) the VIEs, and (2) the shareholders of the VIEs, i.e., Ms. Meirong Yang and Mr. Wenjie Yang.

On May 14, 2021, the State Council promulgated the Implementation Rules, which became effective on September 1, 2021 and further stipulate the operation and management of private schools and the capital operation of private education. Pursuant to the Implementation Rules, (1) foreign-invested enterprises established in China and social organizations whose actual controllers are foreign parties shall not sponsor, participate in or actually control private schools that provide compulsory education, (2) social organizations or individuals shall not control any private school that provides compulsory education or any non-profit private school that provides pre-school education by means of merger, acquisition, contractual arrangements, etc., and (3) private schools providing compulsory education shall not conduct any transaction with any related party. As a result of the foregoing, in August 2021, shareholder of BGY Education Investment established several new entities, including, Foshan Meiliang Education Technology Co., Ltd., Foshan Shangtai Education Technology Co., Ltd., Foshan Renliang Education Technology Co., Ltd., Foshan Yongliang Education Technology Co., Ltd., Foshan Zhiliang Education Technology Co., Ltd. and Beijing Boteng Consulting Co., Ltd. On August 13, 2021, Foshan Meiliang Education Technology Co., Ltd., Foshan Shangtai Education Technology Co., Ltd., Foshan Renliang Education Technology Co., Ltd., Foshan Yongliang Education Technology Co., Ltd., Foshan Zhiliang Education Technology Co., Ltd. and Beijing Boteng Consulting Co., Ltd. entered into series of supplementary agreements, which enabled them to join the 2017 contractual arrangements and share the same rights and obligations, if applicable, of BGY Education Investment. On June 17, 2024, an agreement supplementary to the 2017 contractual arrangements and 2021 supplemental agreements was entered into by and among Zhuhai Bright Scholar, Ms. Meirong Yang and Mr. Wenjie Yang, and Foshan Meiliang Education Technology Co., Ltd., Foshan Shangtai Education Technology Co., Ltd., Foshan Renliang Education Technology Co., Ltd., Foshan Yongliang Education Technology Co., Ltd., Foshan Zhiliang Education Technology Co., Ltd. and Beijing Boteng Consulting Co., Ltd., to stipulate that Foshan Shangtai Education Technology Co., Ltd. and Foshan Renliang Education Technology Co., Ltd. shall no longer be bound by the 2017 contractual arrangements and 2021 supplemental agreements upon their deregistration, and part of affiliated entities of Foshan Yongliang Education Technology Co., Ltd., Foshan Zhiliang Education Technology Co., Ltd. and Beijing Boteng Consulting Co., Ltd. shall no longer be bound by the 2017 contractual arrangements and 2021 supplemental agreements upon respective closing of the disposal of equity interest of such entities or their deregistration. As of the date of this annual report, Foshan Shangtai Education Technology Co., Ltd. and Foshan Renliang Education Technology Co., Ltd. have completed the deregistration process. On August 31, 2024, an agreement supplementary to the 2017 contractual arrangements and 2021 supplemental agreements was entered into by and among Zhuhai Bright Scholar, Ms. Meirong Yang and Mr. Wenjie Yang, and Foshan Meiliang Education Technology Co., Ltd, which provides that upon execution of this supplementary agreement, Foshan Meiliang Education Technology Co., Ltd., and its affiliated entities (including nine domestic kindergartens) shall no longer be bound by the 2017 contractual arrangements and 2021 supplemental agreements. As of the date of this annual report, Foshan Meiliang Education Technology Co., Ltd., and its affiliated entities (including nine domestic kindergartens) are no longer bound by the 2017 contractual arrangements and 2021 supplemental agreements.

The following is a summary of the material provisions of these contractual arrangements with the VIEs, respectively, and their respective shareholders. We may not amend or terminate these agreements unless authorized by a majority vote of our board of directors.

Call Option Agreements. Pursuant to the call option agreements between Zhuhai Bright Scholar, Ms. Meirong Yang and Mr. Wenjie Yang, and the VIEs, Ms. Meirong Yang and Mr. Wenjie Yang unconditionally and irrevocably granted Zhuhai Bright Scholar or its designee an exclusive option to purchase, to the extent permitted under PRC laws and regulations, all or part of the equity interest in the VIEs at nil consideration or the lowest consideration permitted by PRC laws and regulations under the circumstances where Zhuhai Bright Scholar or its designee is permitted under PRC laws and regulations to own all or part of the equity interests of the VIEs or where we otherwise deem it necessary or appropriate to exercise the option. Zhuhai Bright Scholar has the sole discretion to decide when to exercise the option, and whether to exercise the option in part or in full. Without Zhuhai Bright Scholar’s written consent, Ms. Meirong Yang and Mr. Wenjie Yang may not sell, transfer, pledge or otherwise dispose of or create any encumbrance on any of the VIEs’ assets or equity interests. Without obtaining Zhuhai Bright Scholar’s written consent, Ms. Meirong Yang and Mr. Wenjie Yang may not enter into any material contracts, incur any indebtedness, or alter the business scope of the VIEs.

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Power of Attorney. In January 2017 and August 2021, respectively, Ms. Meirong Yang and Mr. Wenjie Yang each executed irrevocable powers of attorney, appointing Zhuhai Bright Scholar, or any person designated by Zhuhai Bright Scholar, as his/her attorney-in-fact to (1) call and attend shareholders meeting of the VIEs and execute relevant shareholders resolutions, (2) exercise on his/her behalf all his/her rights as a shareholder of the VIEs, including those rights under PRC laws and regulations and the articles of association of the VIEs, such as voting, appointing, replacing or removing directors, (3) submit all documents as required by government authorities on behalf of the VIEs, (4) assign Ms. Meirong Yang’s and Mr. Wenjie Yang’s shareholding rights to Zhuhai Bright Scholar, including the rights to receive dividends, dispose of equity interest and enjoy the rights and interests during and after liquidation, (5) review the resolutions, books and accounts of the VIEs, and (6) exercise any other rights and benefits associated with shareholding that Ms. Meirong Yang or Mr. Wenjie Yang receive from the VIEs.

Exclusive Management Services and Business Cooperation Agreement. Pursuant to the exclusive management services and business cooperation agreement among Zhuhai Bright Scholar, the VIEs, Ms. Meirong Yang and Mr. Wenjie Yang, as the shareholders of the VIEs, entered into in January 2017 and its supplementary agreement in August 2021, Zhuhai Bright Scholar has the exclusive right to provide comprehensive technical and business support services to the VIEs. Such services include conducting market research, offering strategic business advice and providing information technology services, advice on mergers and acquisitions, human resources management services, intellectual property licensing services, support for teaching activities and other services that the parties may mutually agree. Without the prior consent of Zhuhai Bright Scholar, none of the VIEs may accept such services from any third party. Zhuhai Bright Scholar owns the exclusive intellectual property rights created as a result of the performance of this agreement. The VIEs agree to pay Zhuhai Bright Scholar service fees in an amount solely decided by Zhuhai Bright Scholar, but not to exceed the paying school’s total revenues deducted by costs, taxes, mandatory reserve fund and other expenses. At the sole discretion of Zhuhai Bright Scholar, the calculation of the service fees should be determined based on the complexity of the services provided, the time and resources committed by Zhuhai Bright Scholar, the commercial value of the services, the market reference price and the operating condition of the paying school. As part of the exclusive management services and business cooperation agreement, Ms. Meirong Yang, Mr. Wenjie Yang and the VIEs agree that they will not take any action, such as incurring indebtedness, disposing of material assets, materially changing the scope or nature of the business of the VIEs, or disposing of their equity interests in the VIEs, without the written consent of Zhuhai Bright Scholar. The exclusive management services and business cooperation agreement may not be terminated by Ms. Meirong Yang, Mr. Wenjie Yang or any of the VIEs without the written consent of Zhuhai Bright Scholar.

Unless terminated, the agreement shall remain in full force and effect during the term of operations of Zhuhai Bright Scholar and the VIEs.

Equity Pledge Agreements. Pursuant to the equity pledge agreement among Zhuhai Bright Scholar, Ms. Meirong Yang, Mr. Wenjie Yang and the VIEs, Ms. Meirong Yang and Mr. Wenjie Yang unconditionally and irrevocably pledged all of their respective equity interests in the VIEs to Zhuhai Bright Scholar to guarantee performance of the obligations of the VIEs under the call option agreements, power of attorneys and exclusive management services and business cooperation agreements, each as described above. Ms. Meirong Yang and Mr. Wenjie Yang each agreed that without prior written consent of Zhuhai Bright Scholar, they shall not transfer or dispose of the pledged equity interests or create or allow any encumbrance on the pledged equity interests. Unless terminated, the equity pledge agreements remain in full force and effect until all of the obligations of Ms. Meirong Yang, Mr. Wenjie Yang and the VIEs under the agreements described above have been duly performed and related payments are duly paid. The pledge of equity interests in the VIEs has been effective upon the registration with the local branch of SAIC.

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These contractual arrangements may not be as effective as direct equity ownership in providing us with control over the VIEs. The VIEs and their shareholders may fail to take certain actions required for our business, or to procure that newly established or acquired schools enter into the contractual arrangements in a timely manner, or to follow our instructions despite their contractual obligations to do so. If they fail to perform their obligations under their respective agreements with us, we may have to rely on legal remedies under PRC law, including seeking specific performance or injunctive relief, which may not be effective. Any failure by the VIEs and the shareholders of the VIEs to perform their obligations under the contractual arrangements would have a material adverse effect on the financial position and performance of our company. For example, the contractual arrangements are governed by PRC law and provide for the resolution of disputes through arbitration in China. Accordingly, these contracts would be interpreted in accordance with PRC law and any disputes would be resolved in accordance with arbitral procedures as contractually stipulated. The commercial arbitrator has discretion in interpretation of laws, regulations and rules in China, which could limit our ability to enforce these contractual arrangements. In addition, if the legal structure and the contractual arrangements were found to violate any existing or future PRC laws and regulations, we may be subject to fines or other legal or administrative sanctions. If the imposition of government actions causes us to lose our right to direct the activities of the VIEs or our right to receive substantially all the economic benefits and residual returns from the VIEs and we are not able to restructure our ownership structure and operations in a satisfactory manner, we would no longer be able to consolidate the financial results of the VIEs. Furthermore, we are a holding company incorporated in the Cayman Islands. It is uncertain whether and on what basis a PRC court would enforce a judgment rendered by a court in the United States or in the Cayman Islands. In the event we are unable to enforce our contractual arrangements, or if we suffer significant delay or other obstacles in the process of enforcing these contractual arrangements, we may not be able to exert effective control over our affiliate entities, and our ability to conduct our business may be negatively affected. See “Item 3. Key Information—D. Risk Factors—Risks Related to Our Corporate Structure—We rely on contractual arrangements with the VIEs and their shareholders for our operations in China, which may not be as effective in providing control as direct ownership.”

Permissions and Licenses Required from the PRC Authorities for Our Operations and Overseas Securities Offerings

The operations of the businesses that we own and operate in China are subject to PRC laws and regulations. The laws and regulations governing the private education industry in China are relatively new and evolving, hence bringing uncertainties to their interpretation and enforcement. For example, our operations in China are subject to regulatory approvals and permit requirements, oversight on cybersecurity and data privacy, and anti-monopoly and anti-unfair competition laws, with respect to which the applicable laws and regulations have evolved substantially in recent years. For details, see “Item 4. Information on the Company—B. Business Overview—Regulations” in this annual report.

We, through our WFOE and the affiliated entities, conduct certain of our operations in China. We and the affiliated entities are required to obtain certain licenses, permits from or filing with relevant governmental authorities in China in order to operate our business and conduct overseas securities offerings and listings. Based on the opinion of our PRC legal counsel, Tian Yuan Law Firm, as of the date of this annual report, other than disclosed in “Item 3. Key Information—D. Risk Factors—Risks Related to Our Business—Our learning centers may not be able to obtain or update the required educational permits and filings, which may subject us to fines and other penalties, including the suspension of operations in noncompliant learning centers and confiscation of profits derived from non-compliant operations,” “—If we lose the permits or licenses required to provide our education or complementary education services or operate our learning centers or if we fail to obtain the accreditations, permits or licenses for our new entities or complementary education services, our business could be materially and adversely affected,” and “—We face uncertainties with respect to the development of regulatory requirements on operating licenses and permits for our online education services in mainland China. Failure to obtain or renew requested licenses or permits in a timely manner or obtain newly required ones due to adverse changes in regulations or policies could have a material adverse impact on our business, financial condition and results of operations” we, our PRC subsidiaries, the VIEs and our affiliated entities in China have obtained all requisite permissions and approvals from the PRC government authorities for our business operations in China. We have not received any requirement to obtain any other permission or approval from any PRC government authority with respect to the operation of our business, nor have we been denied or dismissed by any government authority of any application of permissions or approvals that are necessary to the operations of our business. The relevant requisite permissions and approvals primarily include travel agency permit, food operation permit and permit for production and operation of radio and TV programs.

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Given the uncertainties of interpretation and implementation of relevant laws and regulations and the enforcement practice by relevant government authorities, we may be required to obtain additional licenses, permits, filings or approvals for our existing and new operations in the future. If we, our PRC subsidiaries and the VIEs do not receive or maintain any necessary permissions or approvals from PRC authorities to operate business or offer securities, or inadvertently conclude that such permissions or approvals are not required, we cannot assure you that we will be able to obtain the necessary permissions or approvals in a timely manner, or at all, and such approvals may be rescinded even if obtained. In addition, if applicable laws, regulations or interpretations change, we may be required to obtain such permissions or approvals in the future. Any such circumstance could subject us to penalties, including fines, suspension of business and revocation of the required licenses, significantly limit or hinder our ability to continue to offer securities to investors, and cause the value of such securities to significantly decline or be worthless.

The Standing Committee of the National People’s Congress amended the Law on the Promotion of Private Education on November 7, 2016, which became effective on September 1, 2017 and were further amended on December 29, 2018 (the “Amended Law”). According to the Amended Law, which became effective on September 1, 2017, private schools for after-school tutoring can be established as for-profit private schools at the election of the school sponsors. The Amended Law also deleted the provision stipulating that measures for administration of profit-making non-state training institutions registered with the administrative department for industry and commerce shall be separately formulated by the State Council. According to the Rules for the Implementation of Supervision and Management of For-profit Private Schools, jointly issued by the PRC Ministry of Education (the “MOE”), the Ministry of Human Resources and Social Security and the State Administration for Industry and Commerce, and came into force on December 30, 2016, for-profit private tutoring institutions shall be in compliance with the regulations applicable to private schools. Pursuant to the Alleviating Burden Opinion, which was promulgated on July 24, 2021, local governmental authorities shall administer the non-academic after-school tutoring institutions by classifying sports, culture and art, science and technology and other non-academic subjects, formulating standards among different classification of non-academic tutoring and conducting strict examination before granting permission. On February 8, 2024, the MOE issued the Administrative Regulations on Off-campus Tutoring (Draft for Comments) (the “Draft Off-campus Tutoring Regulation”), which provides that, among other things, (1) off-campus tutoring institutions shall be administered by the classification of academic subjects and non-academic subjects. All off-campus tutoring institutions shall obtain corresponding off-campus tutoring operating permit while the academic off-campus tutoring institutions for students in compulsory education shall complete registration as non-profit; (2) online off-campus tutoring institutions shall be subject to review and approval by provincial education administration authorities. For non-academic off-campus tutoring institutions, prior to the application to education administration authorities, they are required to obtain approval from corresponding competent authorities depending on the tutoring categories. Where multiple competent authorities are involved, the application shall be submitted respectively; (3) the income of off-campus tutoring institutions collected from financing and tutoring fees shall be mainly used for engaging in educational services, improving training conditions and guaranteeing the welfare of employees. However, unlike the Alleviating Burden Opinion and certain previous regulations implementing the Alleviating Burden Opinion, the Draft Off-campus Tutoring Regulation no longer emphasizes administration and supervision over academic subjects tutoring institutions for students on grade ten to twelve shall be implemented by reference to the relevant provisions of the Alleviating Burden Opinion. As of the date of this annual report, the Draft Off-campus Tutoring Regulation was released for public comment only, and its respective provisions and anticipated adoption or effective date may be subject to change.

Therefore, we expect that the Amended Law, accompanied with its relevant implementation rules and regulations as well as other administrative actions, will bring significant changes to our compliance environment. A certain number of our entities, through which we operate our existing learning centers, may be required to obtain new licenses and permits or update their existing ones.

If we fail to obtain and update such permits or licenses in any event as required by relevant laws or regulations, we may be subject to penalties, including fines, suspension of business and revocation of required licenses, confiscation of profits derived from non-compliant operations or suspension of admitting students, and we may be unable to continue the operations or suspension of admitting students, at our non-complying learning centers, which could materially and adversely affect our business and results of operations. For details, see “Item 3. Key Information—D. Risk Factors-Risks Related to Our Business—Our learning centers may not be able to obtain or update the required educational permits and filings, which may subject us to fines and other penalties, including the suspension of operations in noncompliant learning centers and confiscation of profits derived from non-compliant operations,” “—If we lose the permits or licenses required to provide our education or complementary education services or operate our schools or if we fail to obtain the accreditations, permits or licenses for our new schools or complementary education services, our business could be materially and adversely affected.” and “—We face uncertainties with respect to the development of regulatory requirements on operating licenses and permits for our online education services in mainland China. Failure to obtain or renew requested licenses or permits in a timely manner or obtain newly required ones due to adverse changes in regulations or policies could have a material adverse impact on our business, financial condition and results of operations.”

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On December 28, 2021, the Cyberspace Administration of China (the “CAC”) and other twelve PRC regulatory authorities jointly revised and promulgated the Measures for Cybersecurity Review (the “Cybersecurity Review Measures”), which became effective on February 15, 2022. As of the date of this annual report, we have not received any notice that we are a critical information infrastructure operator from any government authority, nor have we received any request from the CAC, to undergo a cybersecurity review pursuant to any PRC laws or regulations. Moreover, none of us, our subsidiaries or the affiliated entities have received any notice from any PRC authority requiring us to obtain any permissions, in each case in connection with our previous issuance of securities to foreign investors. Based on the opinion of our PRC legal counsel, Tian Yuan Law Firm, we are not required to file an application for the cybersecurity review by the CAC for our previous issuance of securities to foreign investors as of the date of this annual report, because (1) we have not received any notice that we are a critical information infrastructure operator from any government authority, nor do we operate as a network platform operator engaging in relevant data processing activities which affect or may affect national security of the PRC; and (2) we are not in possession of personal information of over one million users and it is also very unlikely that we will reach such threshold in the near future.

On February 17, 2023, the CSRC, as approved by the State Council, released the Trial Measures for Administration of Overseas Securities Offerings and Listings by Domestic Enterprises and five interpretive guidelines (collectively, the “CSRC Filing Rules”), which came into effect on March 31, 2023. Under the CSRC Filing Rules, a filing-based regulatory system shall be applied to “indirect overseas offerings and listings” of PRC domestic enterprises, which refers to securities offerings and listings in an overseas market made under the name of an offshore entity but based on the underlying equity, assets, earnings or other similar rights of a domestic enterprise that operates its main business domestically. The CSRC Filing Rules state that, any post-listing follow-on offering by an issuer in the same overseas market where it has previously offered and listed securities, including issuance of shares, convertible notes and other similar securities, shall be subject to filing requirement within three business days after the completion of the offering, and if the subsequent offering is conducted in other overseas markets, it shall be filed with the CSRC within three working days after the applications for such offerings are submitted. Therefore, any of our future offering and listing of our securities in an overseas market shall be subject to the filing requirements under the CSRC Filing Rules. In addition, as advised by our PRC legal counsel, we are required to submit a report to CSRC after the occurrence and public disclosure of the following material events: (1) change of control; (2) investigations or sanctions imposed by overseas securities regulatory agencies or other relevant competent authorities; (3) change of listing status or transfer of listing segment and (4) voluntary or mandatory delisting. With respect to our ability to offer securities to investors, based on the opinion of our PRC legal counsel, Tian Yuan Law Firm, pursuant to the CSRC Filing Rules, under the PRC laws, regulations and regulatory rules currently in effect, as of the date of this annual report, issuers that had already been listed in an overseas market by March 31, 2023, such as us, are not required to make any immediate filing with CSRC; however, such issuers will be required to complete certain filing procedures with the CSRC in connection with future securities offerings and listings outside of mainland China, including follow-on offerings, issuance of convertible bonds, offshore relisting after going-private transactions, and other equivalent offering activities. If we fail to complete the filing or reporting procedures, under the CSRC Filing Rules or otherwise, for any future overseas securities offering or listing, we may face sanctions by the CSRC or other PRC regulatory authorities, which may include orders for correction, warnings and fines. Any adverse regulatory actions or sanctions could have a material adverse effect on our business, financial condition, results of operations, reputation and prospects, as well as the trading price of the ADSs. For details, see “Item 3. Key Information—D. Risk Factors—Risks Related to Doing Business in the Jurisdictions Where We Operate—The filing with and reporting to the CSRC will be required in connection with our capital raising activities and occurrences of other specific events, and we cannot assure you that we or the affiliated entities will be able to make such filing or reporting in a timely manner or at all, in which case we may face regulatory sanctions for failure to make such filing or reporting.”

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Organizational Structure

The following diagram illustrates our corporate structure, including our principal subsidiaries and affiliated entities, as of the date of this annual report.

(1) See “Item 6. Directors, Senior Management and Employees—E. Share Ownership.”

(2) The remaining 30% equity interest is owned by CAN-ACHIEVE GLOBAL EDUCATION PARTNERS LIMITED, an unaffiliated third party.

Cash Flows Through Our Organization

We are a holding company with no business operations of our own. We conduct certain of our operations through our PRC subsidiaries and VIEs in China. As a result, our ability to pay dividends and to service any debt we may incur and pay our operating expenses may depend on dividends paid by our PRC subsidiaries. Under the current laws of the Cayman Islands, we are not subject to tax on income or capital gains. In addition, upon payments of dividends to our shareholders, no Cayman Islands withholding tax will be imposed.

Under applicable PRC laws and regulations, our PRC subsidiaries are permitted to pay dividends to us only out of their accumulated profits, if any, determined in accordance with PRC accounting standards and regulations. In addition, our PRC subsidiaries are required to allocate at least 10% of their accumulated profits each year, if any, to fund statutory reserves of up to 50% of the registered capital of the enterprise. Statutory reserves are not distributable as cash dividends except in the event of liquidation.

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If we intend to distribute dividends, we will transfer the dividends to Time Education China Holdings Limited, or Time Education, our Hong Kong subsidiary, in accordance with the laws and regulations of the PRC, and then Time Education will transfer the dividends to Impetus Investment Limited, our Cayman Islands subsidiary, and further to Bright Scholar Holdings, the Cayman Islands holding company, and the dividends will be distributed from the Bright Scholar Holdings to all shareholders respectively in proportion to the shares they hold, regardless of whether the shareholders are U.S. investors or investors in other countries or regions. For the fiscal years of 2022, 2023 and 2024, no dividends were declared and paid by our PRC subsidiaries to our Cayman holding company or Cayman subsidiaries. We declared a cash dividend of US$0.10, US$0.12 and US$0.12 per ordinary share on September 18, 2019, July 23, 2020 and July 21, 2021, respectively. We have no current intention to pay dividends to shareholders. We currently intend to retain most, if not all, of our available funds and any future earnings to fund the development and growth of our business.

Under applicable PRC laws and regulations, Bright Scholar Holdings may provide funding to our PRC subsidiaries only through capital contributions or loans, and to the VIEs only through loans, subject to the satisfaction of applicable government registration and approval requirements. Loans by Bright Scholar Holdings to our PRC subsidiaries to finance their activities cannot exceed statutory limits and must be registered with the local counterpart of the State Administration of Foreign Exchange of the PRC (“SAFE”), and capital contributions to our PRC subsidiaries are subject to approval by the relevant government authorities and must also be registered with SAFE or its local counterparts. For more details, see “Item 4. Information on the Company—B. Business Overview—Regulation—Regulations on Loans to and Direct Investment in the PRC Entities by Offshore Holding Companies.” For the 2022, 2023 and 2024 fiscal years, the subsidiaries of Bright Scholar Holdings provided interest-free loans of nil, RMB82.9 million and RMB65.2 million (US$9.2 million) to Bright Scholar Holdings, respectively. For the 2022, 2023 and 2024 fiscal years, the subsidiaries of Bright Scholar Holdings borrowed loans of nil, RMB375.9 million and RMB2,471.5 million (US$348.6 million) from Bright Scholar Holdings, respectively. The subsidiaries of Bright Scholar Holdings repaid RMB542.3 million to Bright Scholar Holdings in the 2022 fiscal year.

For the 2020 fiscal year, the subsidiaries of Bright Scholar Holdings borrowed interest-free loans of RMB278.3 million from the VIEs. The VIEs repaid RMB447.6 million to the subsidiaries of Bright Scholar Holdings in the 2021 fiscal year. The VIEs borrowed interest free loans of RMB50.6 million from the subsidiaries of Bright Scholar Holdings in the 2023 fiscal year. For the 2022, 2023 and 2024 fiscal years, the subsidiaries of Bright Scholar Holdings provided interest-free loans of RMB45.6 million, RMB17.6 million and RMB64.0 million (US$9.0 million) to the VIEs, respectively. For the 2022, 2023 and 2024 fiscal years, no assets other than the above cash transactions were transferred between the subsidiaries of Bright Scholar Holdings and the VIEs. See “Item 8. Financial Information—A. Consolidated Statements and Other Financial Information—Dividend Policy.” For PRC and United States federal income tax considerations of an investment in our ADSs, see “Item 10. Additional Information—E. Taxation.” For more information relating to cash and asset flows through our organization, see information disclosed in “Item 5. Operating and Financial Review and Prospects—B. Liquidity and Capital Resources—Financial Information Related to the VIEs.”

Furthermore, cash transfers from our PRC subsidiaries to entities outside of China are subject to PRC government controls on currency conversion and approvals, filings and/or registrations with relevant government authorities. As a result, cash in mainland China may not be available to fund operations or for other use outside of the PRC due to the imposition of restrictions and limitations on our PRC subsidiaries’ ability to transfer cash. Shortages in the availability of foreign currency may temporarily delay the ability of our PRC subsidiaries to remit sufficient foreign currency to pay dividends or other payments to us, or otherwise satisfy their foreign currency denominated obligations. There is no assurance the PRC government will not impose restrictions on us and our subsidiaries to transfer cash. In view of the foregoing, to the extent cash in our business is held in China or by a PRC entity, such cash may not be available to fund operations or for other use outside of China. As of the date of this annual report, there are no equivalent or similar restrictions or limitations in Hong Kong on cash transfers in, or out of, our subsidiary in Hong Kong. However, if certain restrictions or limitations were to become applicable to cash transfers in and out of Hong Kong entities in the future, the funds in our subsidiary in Hong Kong may not be available to fund operations or for other use outside of Hong Kong. For risks relating to the fund flows of our operations in China, see “Item 3. Key Information—D. Risk Factors—Risks Related to Doing Business in the Jurisdictions Where We Operate—Restrictions on currency exchange may limit our ability to receive and use our revenues effectively.”

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We currently have not maintained any cash management policies that specifically dictate how funds shall be transferred among Bright Scholar Holdings, its subsidiaries, the VIEs and investors. We will determine the payment of dividends and fund transfer based on our specific business needs in accordance with the applicable laws and regulations.

Under Cayman Islands laws, Bright Scholar Holdings is not subject to tax on income or capital gains. Upon payments of dividends to our shareholders, no Cayman Islands withholding tax will be imposed. For purposes of illustration, the following discussion reflects the hypothetical taxes that might be required to be paid in mainland China and Hong Kong, assuming that: (1) we have taxable earnings and (2) we determine to pay a dividend in the future:

	Tax calculation
Hypothetical pre-tax earnings(2)		100.0	%
Tax on earnings at statutory rate of 25%(3)		(25.0	)%
Net earnings available for distribution		75.0	%
Withholding tax at standard rate of 10%(4)		(7.5	)%
Net distribution to shareholders		67.5	%

(1) For purposes of this hypothetical example, the tax calculation has been simplified. The hypothetical book pre-tax earnings amount is assumed to equal PRC taxable income.

(2) For purposes of this hypothetical example, the table above reflects a maximum tax scenario under which the full statutory rate would be effective.

(3) The PRC Enterprise Income Tax Law and its implementation rules impose a withholding income tax of 10% on dividends distributed by a foreign invested enterprise in China to its immediate holding company outside China. A lower withholding income tax rate of 5% is applied if the foreign invested enterprise’s immediate holding company is registered in Hong Kong or other jurisdictions that have a tax treaty arrangement with China, subject to a qualification review at the time of the distribution. There is no incremental tax at Hong Kong level for any dividend distribution to Bright Scholar Holdings.

(4) If a 10% withholding income tax rate is imposed, the withholding tax will be 7.5% and the amount to be distributed as dividend at Hong Kong level and the net distribution to Bright Scholar Holdings will be 67.5%.

The table above has been prepared under the assumption that all profits of the VIEs will be distributed as fees to our PRC subsidiaries under tax neutral contractual arrangements. If, in the future, the accumulated earnings of the VIEs exceed the service fees paid to our PRC subsidiaries (or if the current and contemplated fee structure between the inter-group entities is determined to be non-substantive and disallowed by PRC tax authorities), the VIEs could make a non-deductible transfer to our PRC subsidiaries for the amounts of the stranded cash in the VIEs. This would result in such transfer being non-deductible expenses for the VIEs but still taxable income for our WFOE. Such a transfer and the related tax burdens would reduce our after-tax income to approximately 50.6% of the pre-tax income. Our management believes that there is only a remote possibility that this scenario would happen.

MARKET AND INDUSTRY DATA

Market data and certain industry forecasts used in this annual report were obtained from internal surveys, market research, publicly available information and industry publications. Industry publications generally state that the information contained therein has been obtained from sources believed to be reliable, but that the accuracy and completeness of such information is not guaranteed. Similarly, internal surveys, industry forecasts and market research, while believed to be reliable, have not been independently verified, and we make no representation as to the accuracy of such information.

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PART I

ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS

Not applicable.

ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE

Not applicable.

ITEM 3. KEY INFORMATION

Enforceability of Civil Liabilities

We are incorporated under the laws of the Cayman Islands as an exempted company with limited liability to take advantage of certain benefits associated with being a Cayman Islands exempted company:

● political and economic stability;

● an effective judicial system;

● a favorable tax system;

● the absence of foreign exchange control or currency restrictions; and

● the availability of professional and support services.

However, certain disadvantages accompany incorporation in the Cayman Islands. These disadvantages include, but are not limited to, the following:

● the Cayman Islands has a less exhaustive body of securities laws than the United States and these securities laws provide significantly less protection to investors; and

● Cayman Islands companies may not have standing to sue before the federal courts of the United States.

Our currently effective memorandum and articles of association do not contain provisions requiring that disputes, including those arising under the securities laws of the United States, between us, our officers, directors and shareholders, be arbitrated.

As a Cayman Islands company, substantially all of our assets are located outside of the United States. The majority of our current operations are conducted in the United Kingdom and China. In addition, a majority of our current directors and officers are nationals and residents of countries other than the United States. Most of the assets of these persons are located outside the United States. In particular, Mr. Hongru Zhou, the chairperson of our board of directors, Ms. Shuting Zhou and Mr. Meng Rui, our directors, as well as Ms. Hui Zhang, our chief financial officer, are nationals and residents of mainland China and/or Hong Kong. As a result, it may be difficult or impossible for a shareholder to effect service of process within the United States upon us or these persons, or to enforce against us or them judgments obtained in United States courts, including judgments predicated upon the civil liability provisions of the securities laws of the United States or any state in the United States.

1

Cayman Islands

The Cayman Islands courts are unlikely (1) to recognize or enforce against us judgments of courts of the United States based on certain civil liability provisions of U.S. securities laws, or (2) to impose liabilities against us, in originating actions brought in the Cayman Islands, based on certain civil liability provisions of U.S. securities laws.

Although there is no statutory enforcement in the Cayman Islands of judgments obtained in the federal or state courts of the United States (and the Cayman Islands are not a party to any treaties for the reciprocal enforcement or recognition of such judgments), the courts of the Cayman Islands would generally recognize as a valid, final and conclusive judgment in personam obtained in the United States. This recognition would apply to judgments under which a sum of money is payable (excluding sums of money payable in respect of multiple damages, taxes or other charges of a like nature or in respect of a fine or other penalty) or, in certain circumstances, in personam judgments for non-monetary relief, and would give a judgment based thereon provided that (1) such courts had proper jurisdiction over the parties involved in the judgment, (2) such courts did not contravene the rules of natural justice of the Cayman Islands, (3) such judgment was not obtained by fraud, (4) the enforcement of the judgment would not be contrary to the public policy of the Cayman Islands, (5) no new admissible evidence relevant to the action is submitted prior to the rendering of the judgment by the courts of the Cayman Islands, and (6) there is due compliance with the correct procedures under the laws of the Cayman Islands.

However, the Cayman Islands courts are unlikely to enforce a punitive judgment of a United States court predicated upon the liabilities provision of the federal securities laws in the United States without retrial on the merits if such judgment gives rise to obligations to make payments that may be regarded as fines, penalties or similar charges.

As a result of the above, our public shareholders may have more difficulty in protecting their interests in the face of actions taken by management, members of the board of directors or principal shareholders than compared to public shareholders of a company incorporated in the United States.

PRC

Tian Yuan Law Firm, our PRC legal counsel, has advised us that there is uncertainty as to whether the PRC courts would:

● recognize or enforce judgments of United States courts or Cayman courts obtained against us or our directors or officers predicated upon the civil liability provisions of the securities laws of the United States or any state in the United States; or

● entertain original actions brought in each respective jurisdiction against us or our directors or officers predicated upon the securities laws of the United States or any state in the United States.

Tian Yuan Law Firm has further advised us that the recognition and enforcement of foreign judgments are provided for under the PRC Civil Procedures Law. PRC courts may recognize and enforce foreign judgments in accordance with the requirements of the PRC Civil Procedures Law. China does not have any treaties or other form of reciprocity with the United States or the Cayman Islands that provide for the reciprocal recognition and enforcement of foreign judgments. In addition, according to the PRC Civil Procedures Law, courts in China will not enforce a foreign judgment against us or our directors and officers if they decide that the judgment violates the basic principles of PRC law or national sovereignty, security or public interest. As a result, it is uncertain whether and on what basis a PRC court would enforce a judgment rendered by a court in the United States or in the Cayman Islands. Under the PRC Civil Procedures Law, foreign shareholders may originate actions based on PRC law against us in China if they can establish sufficient connection to China for a PRC court to have jurisdiction, and meet other procedural requirements, including, among others, the plaintiff must have a direct interest in the case, and there must be a concrete claim, a factual basis and a cause for the suit. However, it will be difficult for foreign shareholders, by virtue only of holding the ordinary shares, to establish a sufficient connection to China for a PRC court to have jurisdiction as required under the PRC Civil Procedures Law.

2

A. [Reserved]

B. Capitalization and Indebtedness

Not applicable.

C. Reasons for the Offer and Use of Proceeds

Not applicable.

D. Risk Factors

An investment in the ADSs involves risks. You should carefully consider the risks described below, as well as the other information included or incorporated by reference in this annual report, before making an investment decision. Our business, financial condition or results of operations could be materially adversely affected by any of these risks. The market or trading price of the ADSs could decline due to any of these risks, and you may lose all or part of your investment. In addition, the risks discussed below also include forward-looking statements and our actual results may differ substantially from those discussed in these forward-looking statements. Please note that additional risks not presently known to us, that we currently deem immaterial or that we have not anticipated may also impair our business and operations.

Risk Factor Summary

Risks Related to Our Business

● compliance with the Implementation Rules materially and adversely affecting our business, financial condition, results of operations and prospect in the future;

● our ability to execute our growth strategies or continue to grow as rapidly as we have in the past;

● our ability to remain profitable or increase profitability in the future;

● our corporate structure on contractual arrangements which has caused us to lose control of the Affected Entities;

● our ability to obtain or update our learning centers’ educational permits and business licenses;

● acquisition related risks as a result of our acquisition strategy;

● our ability to manage our business expansion and integrate businesses we acquire;

● unknown or contingent liabilities related to the acquired businesses;

● our ability to meet financial obligations due to the net current liabilities as of August 31, 2024;

● our ability to secure additional capital for our future expansion;

● our ability to ramp up existing schools and successfully launch new schools;

● our ability to engage with the Affected Entities to provide education services as we expected;

● our ability to enroll and retain a sufficient number of students;

● changes in international regulations, travel restrictions and sanctions;

● accidents, injuries or other harm that may occur at our schools, learning centers or the events we organize; and

● our ability to charge tuition or other fees at sufficient levels.

3

Risks Related to Our Corporate Structure

● ownership structure and contractual arrangements being challenged by extensive regulation over private education service business in China;

● uncertainties in the interpretation and implementation of PRC Foreign Investment Law and how it may impact the viability of our current corporate structure, corporate governance and business operations;

● contractual arrangements with the VIEs and their shareholders being ineffective in providing control as direct ownership;

● uncertainties in the interpretation of newly issued rules, regulatory actions and statements related to VIEs, private learning centers and complementary services, under which we may be unable to assert our contractual rights over the assets of the VIE;

● potential conflict of interest between us and our largest shareholder; and

● additional taxes owed by us or the VIEs due to the PRC tax authorities’ scrutiny over our contractual arrangement.

Risks Related to Doing Business in the Jurisdictions Where We Operate

● Although mainland China’s economy has grown significantly in the past decade, growth has been uneven, both geographically and among various sectors of the economy. The Chinese government has implemented various measures to encourage economic growth and guide the allocation of resources. Some of the government measures may benefit the overall Chinese economy, but PRC economic, political and social conditions, as well as changes in any government policies, laws and regulations, could adversely affect our business. As of the date of this annual report, we have not received any inquiry or notice or any objection in connection with our previous issuance of securities to foreign investors from the CSRC, the CAC or any other PRC governmental authorities that have jurisdiction over our operations. However, given the current regulatory environment in the PRC, there remains uncertainty regarding the interpretation and enforcement of PRC laws, which are subject to changes and any future actions within the discretion of PRC authorities. See “—Risks Related to Doing Business in the Jurisdictions Where We Operate—PRC economic, political and social conditions, as well as changes in any government policies, laws and regulations, could adversely affect the overall economy in China or the education services market, which could harm our business,” “—Risks Related to Doing Business in the Jurisdictions Where We Operate—Failure to comply with governmental regulations and other legal obligations concerning data protection and cybersecurity may materially and adversely affect our business, as we routinely collect, store and use data during the conduct of our business” and “—Risks Related to Doing Business in the Jurisdictions Where We Operate—The filing with and reporting to the CSRC will be required in connection with our capital raising activities and occurrences of other specific events, and we cannot assure you that we or the affiliated entities will be able to make such filing or reporting in a timely manner or at all, in which case we may face regulatory sanctions for failure to make such filing or reporting”;

● We face risks arising from the uncertainties with respect to the enforcement and changes of laws and regulations. There may be risks and uncertainties regarding the interpretation and enforcement of PRC laws and regulations, which may affect our decisions on the policies and actions to be taken to comply with PRC laws and regulations. See “—Risks Related to Doing Business in the Jurisdictions Where We Operate—Uncertainties with respect to the enforcement and changes of laws and regulations could have a material adverse effect on us”;

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● The PRC government has significant oversight and discretion over the conduct of our business and may intervene with or influence our operations as the government deems appropriate to further regulatory, political and societal goals. We and the affiliated entities face various legal and operational risks and uncertainties related to being based in and having significant operations in China. Any actions by the Chinese government to exert more oversight and control over offerings that are conducted overseas and/or foreign investment in China-based issuers could significantly limit or hinder our ability to offer or continue to offer securities to investors and cause the value of such securities to significantly decline or become worthless. See “—Risk Factors—Risks Related to Doing Business in the Jurisdictions Where We Operate—The PRC government has significant oversight and discretion over the conduct of our business and may intervene with or influence our operations as the government deems appropriate to further regulatory, political and societal goals”;

● Cash transfers from our PRC subsidiaries to entities outside of mainland China are subject to PRC government controls on currency conversion and approvals, filings and/or registrations with relevant government authorities. As a result, cash in mainland China may not be available to fund operations or for other use outside of mainland China due to the imposition of restrictions and limitations on our PRC subsidiaries’ ability to transfer cash. There is no assurance the PRC government will not impose restrictions on us and our subsidiaries to transfer cash. Although currently there are no equivalent or similar restrictions or limitations in Hong Kong on cash transfers in, or out of, our subsidiaries in Hong Kong, if certain restrictions or limitations in mainland China were to become applicable to cash transfers in and out of Hong Kong entities in the future, the funds in our subsidiaries in Hong Kong, likewise, may not be available to fund operations or for other use outside of Hong Kong. See “Introduction—Cash Flows through Our Organization” and “—Risks Related to Doing Business in the Jurisdictions Where We Operate—Restrictions on currency exchange may limit our ability to receive and use our revenues effectively”;

● We face risks arising from the increase in applicable enterprise income tax rates or the discontinuation of any preferential tax treatments currently available to us. See “—Risk Factors—Risks Related to Doing Business in the Jurisdictions Where We Operate—Any increase in applicable enterprise income tax rates or the discontinuation of any preferential tax treatments currently available to us may result in significantly higher tax burden or the disgorgement of any benefits we enjoyed in the past, which could in turn materially and adversely affect our business, financial condition and results of operations”;

● We face risks arising from the unfavorable tax consequences to us as a result of us being classified as a PRC “resident enterprise.” See “—Risk Factors—Risks Related to Doing Business in the Jurisdictions Where We Operate—Under the PRC enterprise income tax law, we may be classified as a PRC ‘resident enterprise,’ which could result in unfavorable tax consequences to us and our non-PRC shareholders”;

● We face risks arising from the uncertainties under the PRC enterprise income tax law relating to the withholding tax liabilities of our PRC subsidiaries. See “—Risk Factors—Risks Related to Doing Business in the Jurisdictions Where We Operate—There are uncertainties under the PRC enterprise income tax law relating to the withholding tax liabilities of our PRC subsidiaries, and dividends payable by our PRC subsidiaries to our offshore subsidiaries may not qualify to enjoy certain preferential treatments”;

● We face risks arising from the uncertainties in the application and interpretation of the Law on the Promotion of Private Education, the Implementation Rules and their detailed implementation rules and regulations. See “—Risk Factors—Risks Related to Doing Business in the Jurisdictions Where We Operate—Based on the recent development of PRC law, there is uncertainty about the application and interpretation of the Law on the Promotion of Private Education, the Implementation Rules and their detailed implementation rules and regulations. We may face significant limitations on our ability to engage in the private education business, acquire private schools, or receive payments from the VIEs and may otherwise be materially and adversely affected by changes in PRC laws and regulations”; and

● We face risks arising from the uncertainties with respect to indirect transfers of the equity interests in PRC resident enterprises by their non-PRC holding companies. See “—Risk Factors—Risks Related to Doing Business in the Jurisdictions Where We Operate—We face uncertainties with respect to indirect transfers of the equity interests in PRC resident enterprises by their non-PRC holding companies”.

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Risks Related to Our Ordinary Shares and ADSs

● volatile ADS trading price;

● decline in our ADS price due to substantial future sales or perceived potential sales of the ADSs;

● decline in our ADS price due to techniques employed by short sellers;

● limitation on your ability to influence corporate matter’s due to our dual-class share structure with different voting rights; and

● decline in our ADS price due to inaccurate, unfavorable or little research about us.

Risks Related to Our Business

Our compliance with the Implementation Rules has materially and adversely affected and may continue to materially and adversely affect our business, financial condition, results of operations and prospect in the future, and we have been subject to significant limitations on our ability to engage in the private for-profit education business and may otherwise be materially and adversely affected by changes in PRC laws and regulations.

The Standing Committee of the National People’s Congress amended the Law on the Promotion of Private Education on November 7, 2016, which became effective on September 1, 2017 and were further amended and effective on December 29, 2018 (the “Amended Law”). Pursuant to the Amended Law, sponsors of private schools may choose to establish schools in China either as non-profit or for-profit schools. Sponsors of for-profit private schools are entitled to retain the profits from their schools and the operating surplus may be allocated to the sponsors pursuant to the PRC company law and other relevant laws and regulations. On the other hand, sponsors of non-profit private schools are not entitled to any distribution of profits from their schools and all revenue must be used for the operation of the schools. As a holding company, our ability to generate profits, pay dividends and other cash distributions to our shareholders under the existing and the Amended Law is affected by many factors, including but not limited to the profitability of our affiliated entities, and our ability to receive dividends and other distributions from our PRC subsidiaries. Furthermore, pursuant to the Amended Law, sponsors are not permitted to establish for-profit schools if such schools provide compulsory education (including primary school education of six years and middle school education of three years) services, which cover grades one to nine. Nevertheless, prior to the deconsolidation of BGY Education Investment, income from compulsory education services accounted for a significant portion of revenue. For further details, see “Item 4. Information on the Company—B. Business Overview— Regulations—Regulations on Private Education in the PRC—The Law for Promoting Private Education and the Implementation Rules.”

On May 14, 2021, the PRC State Council announced the Implementation Rules, which became effective on September 1, 2021. Pursuant to the Implementation Rules, (1) foreign-invested enterprises established in China and social organizations whose actual controllers are foreign parties shall not sponsor, participate in or actually control private schools that provide compulsory education, (2) social organizations or individuals shall not control any private school that provides compulsory education or any non-profit private school that provides pre-school education by means of merger, acquisition, contractual arrangements, etc., and (3) private schools providing compulsory education shall not conduct any transaction with any related party.

The Implementation Rules had significantly impacted our business operations and our results of operations. After consultation with PRC legal counsel and external advisors, we reached the conclusion that, as a result of the effectiveness of the Implementation Rules, we have lost control over the Affected Entities, which primarily include our private schools providing compulsory education, not-for-profit kindergartens and other enterprises within China that are affected by the Implementation Rules. We have determined that, in substance, we ceased to recognize revenues for all activities related to the Affected Entities with compulsory education and discontinued all business activities with such entities, by August 31, 2021 while continuing to provide essential services to keep these schools open. However, in May and June 2023, the related staff had transferred out from the services center in our headquarters, and we ceased to provide such services. As a result, our ability to engage in the private not-for-profit education in China has been materially and adversely affected, and we cannot assure you that we will be able to restore such ability, which could materially and adversely affect our business, prospects, results of operations and financial condition. 

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We may not be able to execute our growth strategies or continue to grow as rapidly as we have in the past several years.

The discontinuation in 2021 due to the effectiveness of the Implementation Rules had caused our school network to shrink drastically. For details of the discontinuation in 2024, see “Item 4. Information on the Company—B. Business Overview—Discontinued Operations.” We cannot assure you that we will be able to effectively expand our school network, which could materially and adversely affect our business, prospects, results of operations and financial condition. For our continuing operations, we intend to enroll students, recruit teachers and educational staff, and increase the utilization rates of our existing and new schools. However, we may not be able to continue to grow as rapidly as we did previously due to uncertainties involved in the process, for example:

● we may not be able to attract and retain a sufficient number of students for our existing and new schools;

● we may not be able to hire and retain principals, teachers, educational staff and other employees for our existing and new schools;

● we may require more time than expected to obtain the accreditation for the education programs, particularly the international education programs, at our schools;

● we may not be able to continue to refine our curricula and optimize our students’ academic performance;

● the development of new schools may be delayed or affected as a result of many factors, such as delays in obtaining government approvals or licenses, shortages of key construction supplies and skilled labor, construction accidents, or natural catastrophes, some of which are beyond our control;

● we may be subject to further limitation in our ability to engage in the private for-profit education business; and

● we may not be able to successfully execute new growth strategies.

These risks may increase significantly when we expand into new cities or countries. Managing the growth of a geographically diverse business also involves significant risks and challenges. We may find it difficult to manage financial resources, implement uniform education standards and operational policies and maintain our operational, management and technology systems across our network. If we are unable to manage our expanding operations or successfully achieve future growth, our business, prospects, results of operations and financial condition may be materially and adversely affected.

We may not be able to achieve profitability in the future.

We may not be able to achieve profitability. In particular, some of our schools, especially those at the ramp-up stage and with comparatively low utilization rates, are currently operating at loss and we may not be able to achieve profitability for these schools. Newly launched schools may negatively impact our overall financial condition.

Our ability to achieve profitability and maintain positive cash flow will depend in large part on our ability to control our costs and expenses, which are expected to increase as we further develop and expand our business network, as well as our ability to attract and retain educational talents to promote our business success. We may incur significant losses in the future for a number of reasons, including the other risks described in this annual report. We may also further encounter unforeseen expenses, difficulties, complications, delays and other unknown events. If we fail to increase revenue at the rate we anticipate or if our costs and expenses increase at a faster rate than the increase in our revenue, we may not be able to achieve profitability.

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Our corporate structure is built upon a series of contractual arrangements which has caused us to lose control of the Affected Entities.

On August 17, 2020, the MOE, and other four ministries and commissions promulgated the Opinions on Further Standardization of Education Fee, which further strengthens the regulation of private education fees. The Opinions on Further Standardization of Education Fee stipulates that private schools must publicize the itemized fees and standards at a prominent location in the school and indicate the itemized fees and standards in the admissions brochure and admission notice. If fees that should be publicized are not publicized, or the content of the publicity is not in compliance with the relevant policies, students are entitled to refuse the payment of the fees. In addition, the Opinions on Further Standardization of Education Fee emphasizes that sponsors of non-profit schools shall not transfer proceeds generated from operating such schools by way of related party transactions that fail to meet the requirements of being open, fair or just, and other service fees charged to our students must be charged based on a reasonable basis and voluntary and non-profit principles. If the regulatory authority deems otherwise, our operations may be adversely affected.

On September 7, 2020, the MOE published the draft Pre-school Education Law for public comments which was then submitted for review to the State Council on April 12, 2021 (the “First Draft of PEL”). The draft Preschool Education Law, among other things, tightens restrictions over kindergartens in pursuing profits and prohibits social capital from controlling state-run kindergartens and non-profit kindergartens through mergers and acquisitions, entrusted operation, franchising, through variable interest entities or via contractual control, prohibits (a) kindergartens from being directly or indirectly involved as assets of a company aiming at a listing, and (b) a listed company or its controlling shareholders to invest for-profit kindergartens through capital market financing or purchase the assets of for-profit kindergartens by issuing shares or paying cash.

On July 24, 2021, the General Office of Central Committee of the Communist Party of China and the General Office of State Council jointly promulgated the Opinions on Further Alleviating the Burden of Homework and After-School Tutoring for Students in Compulsory Education (the “Alleviating Burden Opinion”). The Alleviating Burden Opinion prohibits foreign investors from controlling or holding interest (including through contractual arrangements) in institutions providing after-school tutoring services on academic subjects in relation to the compulsory education.

On November 8, 2024, the Standing Committee of the National People’s Congress officially published the Preschool Education Law, which will be implemented on June 1, 2025. According to the Preschool Education Law, social capital shall not control state-run kindergartens or non-profit kindergartens through mergers and acquisitions, or via contractual control, and it also repeats the prohibitions of (a) kindergartens from being directly or indirectly involved as assets of a company aiming at a listing either domestically or abroad, and (b) a listed company to invest for-profit private kindergartens through stock market financing or purchase the assets of for-profit private kindergartens by issuing shares or paying cash.

In addition, pursuant to the Implementation Rules, which became effective on September 1, 2021, social organizations and individuals are prohibited from controlling a private school that provides compulsory education or a non-for-profit private school that provides pre-school education by means of merger, acquisition, contractual arrangements, among others, and private school providing compulsory education shall not conduct any transaction with any related party, and any other private school conducting any transaction with any related party shall follow the principles of openness, fairness and impartiality, fix the price reasonably and regulate the decision-making, and shall not damage the interests of the state and the school or the rights and interests of the teachers and students, which may impose restrictions on the above-mentioned related party transactions. Such prohibition has significantly affected the enforceability of the exclusive management services and business cooperation agreements with affiliated entities providing compulsory education. Therefore, we concluded that we lost control of the schools providing compulsory education, not-for-profit kindergartens, and the sponsor entities (i.e., the Affected Entities) as from August 31, 2021 and such VIE contractual arrangements with them have become invalid since then and classified them as discontinued operations. Such discontinuation has had a material and adverse impact on our business, financial condition and results of operations.

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If our existing group structure or contractual arrangements are deemed to violate any rules, laws or regulations, we may be required to terminate or amend our contractual arrangement. We may also be restricted from further expanding our schools or school network. For example, we may not be able to acquire non-profit private schools. If any of the foregoing occurs, our business, financial condition and results of operations would be materially and adversely affected.

Our learning centers may not be able to obtain or update the required educational permits and filings, which may subject us to fines and other penalties, including the suspension of operations in noncompliant learning centers and confiscation of profits derived from non-compliant operations.

According to the Amended Law, which became effective on September 1, 2017, private schools for after-school tutoring can be established as for-profit private schools at the election of the school sponsors. The Amended Law also deleted the provision stipulating that measures for administration of profit-making non-state training institutions registered with the administrative department for industry and commerce shall be separately formulated by the State Council. According to the Rules for the Implementation of Supervision and Management of For-profit Private Schools, jointly issued by the MOE, the Ministry of Human Resources and Social Security and the State Administration for Industry and Commerce, and came into force on December 30, 2016, for-profit private tutoring institutions shall be in compliance with the regulations applicable to private schools. On February 13, 2018, the General Offices of the MOE and three other ministries in China jointly issued the Notice to Launch Special Campaign towards After-school Tutoring Institutions on Practically Reducing Burdens for Primary and Middle School Students, which requires after-school tutoring institutions with satisfactory conditions to obtain school operation licenses and other permits. Further, on August 22, 2018, the State Council issued the Opinion on Supervising After-School Tutoring Institutions (the “Circular 80”), which provides detailed guidance for these after-school tutoring institutions. Council Circular 80 and the Implementation Rules further require the learning centers of a training school providing after-school tutoring services to make filings with the relevant education authorities. On August 23, 2023, the MOE promulgated the Provisional Measures on Administrative Penalties for After-school Tutoring, which provides regulatory guidelines and a legal basis of the enforcement for the local authorities overseeing service providers of after-school tutoring. For the non-academic tutoring services, the Alleviating Burden Opinion requires that local governmental authorities shall administer the non-academic after-school tutoring institutions by classifying sports, culture and art, science and technology and other non-academic subjects, formulating standards among different classification of non-academic tutoring and conducting strict examination before granting permission. On February 8, 2024, the MOE issued the Administrative Regulations on Off-campus Tutoring (Draft for Comments) (the “Draft Off-campus Tutoring Regulation”), which provides that, among other things, (1) off-campus tutoring institutions shall be administered by the classification of academic subjects and non-academic subjects. All off-campus tutoring institutions shall obtain corresponding off-campus tutoring operating permit while the academic off-campus tutoring institutions for students in compulsory education shall complete registration as non-profit; (2) online off-campus tutoring institutions shall be subject to review and approval by provincial education administration authorities. For non-academic off-campus tutoring institutions, prior to the application to education administration authorities, they are required to obtain approval from corresponding competent authorities depending on the tutoring categories. Where multiple competent authorities are involved, the application shall be submitted respectively; (3) the income of off-campus tutoring institutions collected from financing and tutoring fees shall be mainly used for engaging in educational services, improving training conditions and guaranteeing the welfare of employees. However, unlike the Alleviating Burden Opinion and certain previous regulations implementing the Alleviating Burden Opinion, the Draft Off-campus Tutoring Regulation no longer emphasizes administration and supervision over academic subjects tutoring institutions for students on grade ten to twelve shall be implemented by reference to the relevant provisions of the Alleviating Burden Opinion. As of the date of this annual report, the Draft Off-campus Tutoring Regulation was released for public comment only, and its respective provisions and anticipated adoption or effective date may be subject to change.

Due to the complex and evolving regulatory environment of education industry, our learning centers are not able to obtain their private school operation permits. We cannot assure you that we have obtained and maintained all private school operation permits and filings for all of our learning centers. There is also no assurance that such permits and filings will be renewed on a timely basis, or at all, or that we will be able to update the existing permits and filings. If we fail to obtain and update any such permits, licenses or filings in any event as required by relevant laws or regulations, we may be subject to fines, confiscation of profits derived from non-compliant operations or suspension of admitting students, and we may be unable to continue the operations at our non-complying learning centers, which could materially and adversely affect our business and results of operations.

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We face uncertainties with respect to the development of regulatory requirements on operating licenses and permits for our online education services in mainland China. Failure to obtain or renew requested licenses or permits in a timely manner or obtain newly required ones due to adverse changes in regulations or policies could have a material adverse impact on our business, financial condition and results of operations.

The internet industry and education industry in mainland China are highly regulated by the PRC government. We have a mini-program to provide internet-based education service and information dissemination and delivery service. We are required to obtain and maintain all necessary approvals, licenses or permits applicable to our business operations and make all necessary registration and filings for our education services in mainland China, and we may be required to apply for and obtain additional licenses or permits for our operations as the interpretation and implementation of current laws and regulations of mainland China are still evolving, and new laws and regulations may also be promulgated.

For example, applicable laws and regulations of mainland China require any entity engaged in certain audio-visual program services via the internet to hold a License for Online Transmission of Audio-visual Programs, or the AVSP or complete relevant registration procedures with the State Administration of Press, Publication, Radio, Film and Television, or the SAPPRFT (currently known as National Radio and Television Administration) or its local bureaus. As of the date of this annual report, only wholly state-owned or state-controlled enterprises are eligible to apply for the AVSP. We offer video recordings of courses and certain other audio-video contents on our online platforms to our learners. Due to the significant uncertainty regarding the scope of audio-visual program services, we may be required to obtain an AVSP or to complete the relevant registration. However, we may not be able to obtain the AVSP as we are not a wholly state-owned or state-controlled entity. If this were to occur, we may be subject to penalties, fines, legal sanctions or an order to suspend the provision of our relevant services. In addition, as of the date of this annual report, there are no implementation rules, explicit interpretation from government authorities or prevailing enforcement practice deeming the provision of our educational content to our students through our online platform as “online publishing” which requires an Online Publishing Service Permit. See “Item 4. Information on the Company—B. Business Overview—Regulations.” However, there is no assurance that local PRC authorities will not adopt different enforcement practice, or any PRC government will not issue more explicit interpretation and rules or promulgate new laws and regulations from time to time to further regulate the online education industry, which may subject us to additional licensing requirements to continue to operate our business. Furthermore, due to the complex and evolving regulatory environment and discretion of authorities on interpretation and implementations of relevant laws, regulations, policies and rules in China, we cannot assure you that whether our operation on mini program will be deemed as provision of value-added telecommunications services, and if so, whether we are able to obtain Value-Added Telecommunications Operation Licenses in a timely manner, or at all. Failure to obtain such licenses may subject us to fines, legal sanctions or an order to suspend our relevant operation.

As of the date of this annual report, no material fines or other penalties have been imposed on us for failure to obtain such additional licenses, permits or recordation, including, among other things, License for Online Transmission of Audio-Visual Programs and Online Publishing Services Permit as well as Value-Added Telecommunications Operation Licenses.

There can be no assurance that once required, we will be able to obtain all the required approvals, licenses, permits and complete all necessary filings, record renewals and registrations on a timely basis for our online education services, given the significant amount of discretion the PRC authorities may have in interpreting, implementing and enforcing relevant rules and regulations, as well as other factors beyond our control and anticipation. We may develop new business lines or change the operations of certain of our current business in mainland China, which may require us to obtain additional licenses, approvals, permits, registrations and filings while there can be no assurance that we are able to successfully obtain such licenses, approvals, permits, registrations and filings in a timely manner or at all. If we fail to obtain required permits in a timely manner or obtain or renew any permits and certificates, or fail to complete the necessary filings, record renewals or registrations on a timely basis, we may be subject to fines, confiscation of the gains derived from our non-compliant operations, suspension of our non-compliant operations or claims for compensation of any economic loss suffered by our students or other relevant parties, which may materially and adversely affect our business operation. In addition, there can be no assurance that we will be able to maintain our existing licenses, approvals, registrations or permits necessary to provide our current services in mainland China, renew any of them when their current term expires, or update existing licenses or obtain additional licenses, approvals, permits, registrations or filings necessary for our business expansion from time to time. If we fail to do so, our business, financial condition and operational results may be materially and adversely affected.”

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We have in the past acquired several businesses and intend to remain acquisitive while continuing our organic growth, which may expose us to acquisition related risks.

We are at all times pursuing acquisition opportunities and these processes are, at any time, in various stages of completion. For example, we have completed several acquisitions in the United Kingdom and will continue to seek opportunities in overseas markets and in complementary education services. Our targets may cover a wide range of education. Our acquisition strategy exposes us to significant acquisition-related risks. If we successfully complete several of these ongoing opportunities, the overall scope of our operations could grow substantially in the near to mid-term future and would have a material impact on our business, results of operations and financial condition. While there is no certainty as to whether any of the opportunities that we are currently pursuing, or any future opportunity, will be completed, some of these opportunities may be completed in the near- or mid-term future, if current challenges to the processes can be overcome. Our acquisition-related risks include:

● failure to obtain sufficient financing on satisfactory commercial terms in a timely manner;

● failure to successfully manage the increased leverage, interest expense, gearing and risks of default;

● depletion of our resources and cash flows available for existing operations;

● significant reduction in our cash flow and liquidity for financing the acquisitions;

● unanticipated challenges in operating in jurisdictions in which we do not currently operate in or do not operate at a significant scale, such as failure to get accustomed to the political, cultural and legal environment of these new jurisdictions;

● unforeseen challenges in operating new types of schools or programs and the failure to obtain relevant licenses for these new businesses;

● failure to manage and integrate the acquired businesses into our current operations effectively and may require financial resources that would otherwise be available for the ongoing development or expansion of our existing operations;

● failure to adjust our current business model to manage and operate at a more sizable scale and to realize the expected benefits from economies of scale;

● diversion of our management’s attention from existing businesses as they commit significant resources and efforts to the acquisition process;

● incurrence of significant costs in pursuing each acquisition, even if transactions cannot be successfully pursued, such as legal and managerial costs in conducting due diligence on the targeted businesses, resulting in a deprivation of the value of the targeted businesses;

● unforeseen contingent risks and latent liabilities of the targeted businesses that are not revealed to us in the due diligence process;

● financial risks related to the acquisition processes due to the inaccuracy of our assumptions with respect to the cost of and schedule for completing the acquisitions;

● potential loss of key personnel and students of the acquired business and failure to develop new relationships with students, teachers and other third parties in the overseas market;

● failure to recover the cost of the acquisitions through the materialization of the expected value from the targeted businesses or to achieve synergistic effect;

● regulatory risks related to the acquisition processes and to the operation of the newly acquired businesses, such as trade barriers and other restrictive or protective measures of our targeted overseas markets due to our lack of experience in dealing with the relevant authorities;

● liabilities related to the acquisitions against the sellers if we are unable to fulfil our obligations to them pursuant to the relevant sell and purchase agreements resulting in unanticipated financial costs;

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● unanticipated increase in financing cost for the acquisitions due to fluctuation in foreign currencies and other foreign exchange restrictions or currency controls; and

● failure to protect our minority interests in certain non-wholly owned schools or to increase our shareholdings by acquiring more equity interests and our interests may not be aligned with those of controlling shareholders’.

We may not be able to effectively manage our business expansion and successfully integrate businesses we acquire.

In recent years, we have expanded rapidly through acquisitions. As part of our expansion plan, we have been exploring merger and acquisition opportunities to expand our school network, targeting quality private education providers and reputable schools in our targeted countries and jurisdictions.

Our rapid expansion has resulted, and will continue to result, in substantial demands on our management, personnel, operational, technological and other resources. The sustainable post-acquisition organic growth is largely dependent on our ability to integrate operations, system infrastructure, existing partnerships and management philosophies of acquired schools and businesses. The integration of acquired schools is complicated and time-consuming and requires significant resource commitment, standardized integration process, and adequate planning and implementation. We cannot assure you that the acquisitions will be as successful as intended, or at all. The main challenges involved in integrating acquired schools and businesses include the following:

● implementing integration process and management systems to ensure management philosophies, group-wide strategies and evaluation benchmarks can be effectively carried out at each acquired school and business;

● demonstrating to students at our acquired schools and more importantly their parents that the acquisitions will not result in adverse changes in the service quality and business focus;

● retaining local existing managerial and operational teams and qualified education professionals of our acquired schools and businesses;

● integrating and streamlining different system infrastructure and data management systems;

● integrating financial reporting systems, the failure of which could cause a delay in, or impact the reliability of, our financial statements;

● maintaining adequate internal control over financial reporting and preventing failed or delayed integration of these acquired businesses into our internal control over financial reporting;

● preserving strategic, marketing or other important relationships of the acquired schools;

● obtaining requisite pre-acquisition and post-acquisition regulatory approvals in countries and jurisdictions in which our target schools and businesses are located in a timely manner or at all; and

● competing with multinational education companies.

Therefore, we cannot assure you that we will be able to integrate the acquired schools and businesses with our existing operations in accordance with the expected timetables, and we may incur significant financial expenses and commit significant resources to streamline the operation of the acquired schools and businesses under our internal control requirements, and our pricing and profitability targets may not prove accurate or feasible, which may result in adverse impact to our financial performance. Any difficulties or delays encountered in connection with the integration of our and the acquired businesses’ operations could divert substantial management attention to the transition of the acquired schools and businesses before achieving full integration and may result in delay or deferral by our management of important strategic decisions for our existing businesses, which may adversely affect our business growth. In addition, the businesses and schools we acquire may be loss-making or have existing liabilities or other risks that we may not be able to effectively manage or may not be aware of at the time we acquire them, which may impact our ability to realize the expected benefits from the acquisition or our financial performance.

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In addition, we may acquire additional overseas schools to expand our global network. We cannot assure you that we will be able to effectively and efficiently identify new overseas school projects, manage acquired overseas schools and our overseas operations, or integrate the acquired overseas schools with our existing operations. In addition, political and economic instabilities, tariffs, trade barriers and other restrictive actions taken by the governments of our targeted markets, fluctuations in foreign exchange rates, our insufficient experience and knowledge of the local markets as well as the relevant local laws and regulations may all affect our ability to operate our overseas schools and manage our overseas operations, which in turn may have a material and adverse effect on our business, financial position and results of operations.

We may be subject to unknown or contingent liabilities related to the acquired businesses, which may adversely affect our financial performance.

The businesses and schools we acquired or plan to acquire may be operating at a loss or have existing liabilities or other risks that we may not be able to effectively manage or may not be aware of at the time that we acquire them. Although consistent with industry practice, we always conduct a review of assets prior to each acquisition, such reviews are inherently incomplete as it is generally not feasible to review in depth every individual asset involved in each acquisition. Ordinarily, our due diligence focuses on higher-value businesses or assets and will only conduct a sample due diligence on the remainder. Nonetheless, even an in-depth review of all assets and records may not necessarily reveal an exhaustive list of existing and potential problems, nor will it permit us to become sufficiently familiar with the assets to assess fully their deficiencies and capabilities. As we may have no recourse, or only limited recourse, against the sellers for these unknown liabilities and risks, this may in turn affect our ability to realize the expected benefits from the acquisition or our financial performance. Furthermore, even though the sellers may be required to indemnify us with respect to breaches of the representations and warranties pursuant to the respective sell and purchase agreements, such indemnification is limited and subject to various materiality thresholds and an aggregate cap on losses. As a result, we cannot assure you that we will be able to recover any amount with respect to losses due to breaches by the sellers of their representations and warranties. In addition, the total amount of costs and expenses that may be incurred with respect to liabilities associated with the acquired business may exceed our expectations, along with other unanticipated adverse effects, all of which may adversely affect our business, results of operations and financial condition.

We may not generate sufficient profit to guarantee our ability to meet financial obligations due to the net current liabilities as of August 31, 2024.

As of August 31, 2024, we had net current liabilities of RMB338.6 million (US$47.7 million) for our continuing operations. Although we had net cash generated from operating activities of RMB126.4 million (US$17.8 million) for the 2024 fiscal year, we cannot assure you that we will not experience periods of net current liabilities in the future. We may record net current liabilities in future periods as we expand. A net current liabilities position could expose us to liquidity risks, constrain our operational flexibility and adversely affect our ability to obtain financing and expand our business. We cannot assure you that we will always be able to generate sufficient cash flow from our operations or obtain necessary funding to meet our future financial needs, including repaying liabilities upon maturity and financing our capital commitments. If we fail to meet our financial obligations, our business, liquidity, financial condition and prospects could be materially and adversely affected.

As of the date of this annual report, our management has concluded that we will have sufficient financial resources to support our operations and meet our financial obligations and commitments as they become due. Therefore, our financial statements have been prepared assuming we will continue on a going concern basis. However, our ability to continue as a going concern is dependent on our ability to generate sufficient profits and/or obtain necessary funding from outside sources, and we cannot assure you that we will be able to generate such profits or obtain such funding. Failure to continue as a going concern would require that our assets and liabilities be restated on a liquidation basis, which could differ significantly from the going concern basis.

13

We may need additional capital for our future expansion and our leverage profile may change significantly.

To the extent our existing sources of capital are not sufficient to satisfy our existing and future needs, we may have to seek external financing sources. Our ability to obtain additional capital from external sources in the future is subject to a variety of uncertainties, including our future financial condition, results of operations and cash flows, regulatory considerations, general market conditions for capital raising activities and economic, political and other conditions in jurisdictions where we operate. In particular, future debt financing, if can be obtained, could include terms that may restrict our financial flexibility or our ability to manage our business freely, which may adversely affect our business and results of operations. In addition, we have completed several overseas acquisitions in the past, such as the acquisitions of Bournemouth Collegiate School (“BCS”), St. Michael’s School, Bosworth Independent School (“BIC”) and CATS Colleges Holdings Limited (“CATS”) and may in the future enter into agreements in relation to future overseas acquisitions, some of which may be funded by debt financing. In the event that the amount of debt drawn to fund such acquisitions is significant, this could result in a significant change to our leverage profile and financing costs, which could impact our financial position and results of operations in the future. Additional debt financing may also increase our interest expense, leverage and gearing, as well as potentially require us to dedicate a substantial portion of our cash flow from operations to debt servicing. If we fail to repay our debt in a timely manner, we may face risks of default which may also cause our other debt to be accelerated.

If we fail to ramp up our existing schools or successfully launch new schools, our business growth and prospects could be materially and adversely affected.

The discontinuation in 2021 due to the effectiveness of the Implementation Rules had caused our school network to shrink drastically. See “—Our compliance with the Implementation Rules has materially and adversely affected and may continue to materially and adversely affect our business, financial condition, results of operations and prospect in the future, and we have been subject to significant limitations on our ability to engage in the private for-profit education business and may otherwise be materially and adversely affected by changes in PRC laws and regulations.” For details of the discontinuation in 2024, see “Item 4. Information on the Company—B. Business Overview—Discontinued Operations.” We cannot assure you that we will be able to continue to attract a sufficient number of students to enroll in our learning centers, recruit additional qualified teachers and educational staff to meet the demands of the increased student enrollment or otherwise expand our operations at our entities in a manner that ensures a consistently high quality of education service. We or our partners may encounter difficulty in procuring the land and obtaining the permits for construction. We cannot assure you that we will be able to apply our experience from the operation of our existing entities to new schools or that we will be able to obtain the requisite permits, licenses or accreditations or recruit a sufficient number of qualified teachers. If we fail to attract students to our existing entities or start new schools with the requisite permits, licenses and accreditations and teachers, our business growth and prospects could be materially and adversely affected.

We may be unable to engage with the Affected Entities to provide education services as we expected.

Following the effectiveness of the Implementation Rules, we have been engaging with the relevant government authorities and external advisors to seek full compliance with the Implementation Rules and other applicable PRC laws and regulations. However, we are exploring the possibility of continuing to engage with the Affected Entities in future cooperation on mutually acceptable terms and in full compliance with the Implementation Rules and other applicable PRC laws and regulations.  The future cooperation may involve our provision of services to some of the Affected Entities, such as consultation for school operation, property management and maintenance, administrative management and school branding.

However, the future cooperation with the Affected Entities, if any, will be arm’s length transactions on mutually acceptable terms. We cannot assure you that the cooperation under contemplation will be specifically permitted by competent government authorities or that we will be able to agree on commercial terms satisfactory to us, and as such, we may be unable to effectuate the cooperation with the Affected Entities as we expect.

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We had ceased to recognize revenues for all activities related to the Affected Entities with compulsory education and discontinued all business activities with such entities by August 31, 2021, while continuing to provide essential services to keep these schools open. However, in May and June 2023, the related staff transferred out from the services center in our headquarters and we ceased to provide such services.

Services provided to these schools primarily include marketing and consulting, procurement support, human resources, finance and legal support, and information technology support, all of which were conducted through our centralized management system. Our centralized management system provided services to the Affected Entities with compulsory education without charges together with certain kindergartens that we charged services fee for. As we did not track the costs incurred by the centralized management system separately among different service recipients, and majority of the costs are staff costs incurred by the centralized management system, there are significant limitations for us to accurately determine the costs attributable to providing services to the Affected Entities. The related staff had transferred out from the services center in our headquarters.

It is not clear under the Implementation Rule whether the provision of such services to the Affected Entities will be considered transactions with any related parties in spite of the fact that it is free of charge. If the provision of such services to the Affected Entities is considered transactions with related parties, we may be subject to penalty for our past provision of services to these entities, and we may be prohibited from providing such services to the Affected Entities.

If we fail to enroll and retain a sufficient number of students, our business could be materially and adversely affected.

Our ability to continue to enroll and retain students for our schools is critical to the continued success and growth of our business. The success of our efforts to enroll and retain students will depend on several factors, including our ability to:

● enhance existing education programs and services to respond to market changes and student demands;

● develop new programs and services that appeal to our students and their parents;

● maintain and enhance our reputation as a leading school operator offering enrichment education;

● expand our school network and geographic reach;

● effectively market our schools and programs to a broader range of prospective students;

● manage our growth while maintaining the consistency of our teaching quality;

● develop and license additional high quality education content; and

● respond to increasing competition in the market.

Our business, financial condition and results of operations could be materially and adversely affected if we cannot maintain or increase our student base as we expand our school network.

Moreover, our ability to enroll and retain a sufficient number of students may be adversely affected the declining birth rate worldwide. Continued decline in birth rate may cause the demand for private education to decline and the competition among education service providers to intensify, leading to reduced revenue and profitability of our operations.

Changes in international regulations and travel restrictions have materially and adversely affected and together with changes in sanctions could continue to materially adversely affect international student enrollments.  

We are subject to a wide range of laws and regulations relating to our international operations. These include laws and regulatory regimes of the countries in which we operate, such as the U.S. Foreign Corrupt Practices Act and the U.K. Bribery Act. These laws and regulations change frequently. Failure to comply with these laws and regulations could result in significant penalties or the revocation of our authority to operate in the applicable jurisdiction, each of which could have a material adverse effect on our operating results.

15

Further changes to the regulatory environment, including changes to government policy or practice in oversight and enforcement, or other factors, including geopolitical instability, imposition or extension of international sanctions, a natural disaster or pandemic in either the students’ countries of origin or countries in which they desire to study, could continue to negatively affect our ability to attract and retain students and negatively affect our operating results. Any significant changes to availability of government funding for education, visa policies for students and their dependents, or other administrative immigration requirements, or the tax environment, including changes to tax laws, policies and practices, in any one or more countries in which we operate our business available could negatively affect our operating results.

A substantial portion of our revenue comes from oversea schools.  Our ability to enroll students in oversea schools is directly dependent on our ability to comply with complex regulatory environments. For example, the impact of Brexit on us over time will depend on the agreed terms of the U.K.’s withdrawal from the EU. Uncertainty over the impact and terms of Brexit trade deals may materially diminish interest in traveling to the U.K. for study. If the U.K. is no longer viewed as a favorable study destination, our ability to recruit international students would be adversely impacted, which would materially adversely affect our results of operations and cash flows. Moreover, the outcome of general elections in the U.K. may affect investors’ ability to access the U.K. market and impair our ability to expand our service offering in the U.K.

Changes to levels of direct and indirect government funding for international education programs would also materially affect the success of our operations. For example, if access to student loans or other funding were to be lost for our operations that admit students who are entitled to receive the benefit of this funding, our operating results could be materially adversely affected.

In January 2021, U.S. President Biden reversed a previously enacted ban on travel from certain countries to the U.S. and directed the State Department to restart visa processing for individuals from the affected countries. There have since been new, unrelated travel restrictions into the U.S. due to COVID-19, and those restrictions can be expected to continue changing. On September 25, 2020, the previous U.S. presidential administration proposed significant changes to the visa rules governing entry of non-immigrant academic students and exchange visitors. In July 2021, the Biden administration formally withdrew the notice of proposed rulemaking regarding these changes. Nevertheless, negative perceptions regarding travel to the U.S. could continue to have a negative impact on our ability to recruit international students, and our business could be materially adversely affected.

Accidents, injuries or other harm may occur at our schools, learning centers or the events we organize, which could negatively affect our reputation and our ability to attract and retain students.

There are inherent risks of accidents or injuries in our business. We could be held liable if any student, employee or other person is injured in any accident or incident at any of our schools, learning centers or the events we organize. Though we believe we have taken appropriate measures to limit these risks, in the event of personal injuries, food poisoning, fires or other accidents or incidents suffered by students or other people, we could nonetheless face claims alleging that we were negligent, that we provided inadequate supervision or that we were otherwise liable for the injuries. In addition, if any of our students, teachers or instructors commits acts of violence or otherwise behaves inappropriately, we could face claims alleging our failure to provide adequate security measures or precautions to prevent such actions. Similar events and allegations may also arise with respect to events we organize, including off-campus gatherings and overseas camp programs. Parents of our students may perceive our facilities or programs to be unsafe, which may discourage them from sending their children to our schools, learning centers or programs. We have historically encountered isolated student-related accidents on our school premises and compensated the injured students. Although we maintain liability insurance, the insurance coverage may not be adequate to fully protect us from claims of all kinds and we cannot assure you that we will be able to obtain sufficient liability insurance in the future on commercially reasonable terms or at all. A liability claim against us or any of our employees could adversely affect our reputation and ability to attract and retain students. Even if unsuccessful, such a claim could create unfavorable publicity, cause us to incur substantial expenses and divert the time and attention of our management.

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We may be unable to charge tuition at sufficient levels to be profitable or raise tuition or other fees as planned.

Our results of operations are affected in large part by the pricing of our education services. We charge tuition or other fees based on each student’s grade level and the programs in which the student is enrolled. Subject to the applicable regulatory requirements, we generally determine tuition or other fees based on the demand for our education services, the cost of our services, and the tuition and the fees charged by our competitors. Although we have been able to increase the tuition or other fees in the past, we cannot assure you that we will be able to maintain or increase our tuition or other fees in the future without adversely affecting the demand for our education services.

Furthermore, the tuition or other fees we are able to charge is subject to a number of other factors, such as the perception of our brand, the academic results achieved by our students, our ability to hire qualified teachers, and general local economic conditions. Any significant deterioration in these factors could have a material adverse effect on our ability to charge tuition or other fees at levels sufficient for us to remain profitable.

If we fail to help our students achieve their academic goals, students’ and parents’ satisfaction with our education services may decline.

The success of our business depends on our ability to deliver quality learning experiences and help our students achieve their academic goals. Our entities may not be able to meet the expectations of our students and their parents in terms of students’ academic performance. A student may not be able to attain the level of academic improvement that he or she seeks and his or her performance may otherwise not progress or decline due to reasons beyond our control. We may not be able to provide education that is satisfactory to all of our students and their parents. Their satisfaction with our services may decline. In addition, we cannot assure you that our students will be admitted to the higher-level education institutions of their choice. Any of the foregoing could result in a student’s withdrawal from our entities, and dissatisfied students or their parents may attempt to persuade other students or prospective students not to attend our entities. If our ability to retain students decreases significantly or if we otherwise fail to continue to enroll and retain new students, our business, financial condition and results of operations may be materially and adversely affected.

17

Our business is subject to the risks of international operations.

We have entered into the global market, such as United Kingdom and the United States, through acquisition of established overseas schools, and we may expand our operations in additional markets and regions in the future. We may have to adapt our business models to the local markets due to various legal requirements and market conditions. Our international operations and expansion efforts have resulted and may continue to result in increased costs and expenses and are subject to a variety of risks, including increased competition, uncertain enforcement of our intellectual property rights, changes and evolutions in overseas market conditions, and the complexity of compliance with the local laws and regulations.

In addition, compliance with applicable laws and regulations in various jurisdictions, such as education laws, anti-corruption laws, tax laws, foreign exchange controls and cash repatriation restrictions, data privacy requirements, labor laws, restrictions on foreign investment, and anti-competition regulations, increases the costs and risk exposure of doing business in foreign jurisdictions. Although we have implemented policies and procedures to comply with these laws and regulations, a violation by us or our employees, contractors or agents could nevertheless occur. In some cases, compliance with the laws and regulations of one country could violate the laws and regulations of another country. Violations of these laws and regulations could materially and adversely affect our brand, international growth efforts and business.

We may not be able to recruit, train and retain a sufficient number of qualified and experienced teachers and principals.

Teachers are critical to maintaining the quality of our education and services and our brand and reputation. Our principals are also instrumental to the successful operation of our schools. Our ability to continue to attract teachers and principals with the necessary experience and qualifications is therefore a critical contributing factor to the success of our operations. There are a limited number of teachers and principals in China with the necessary experience, expertise and qualifications that meet our requirements.

If we lose the permits or licenses required to provide our education or complementary education services or operate our learning centers or if we fail to obtain the accreditations, permits or licenses for our new entities or complementary education services, our business could be materially and adversely affected.

We must apply periodically to the local education bureaus and other government authorities to obtain or renew the permits or licenses to operate our learning centers and ancillary services. While we believe that we will be able to obtain or renew such permits or licenses, we cannot assure you that such permits and licenses will be obtained or renewed in a timely manner, or at all, or that new conditions will not be imposed. There is also no assurance that the scope of operation designated in the permits and licenses we hold will cover all of our business operation. Moreover, there may be new rules, regulations, government interpretations or government policies in China to govern the businesses we currently operate. Such new rules, regulations, government interpretations or government policies may subject our business operations to additional license or filing requirements. If we fail to comply with applicable legal requirements, we may be subject to fines, confiscation of the gains derived from our noncompliant operations or the suspension of our noncompliant operations, which may materially and adversely affect our business and results of operations. In addition, we may develop new business lines or make changes to the operations of certain of the current business of our PRC subsidiaries or the consolidated affiliated entities, which may require us to obtain additional licenses, approvals, permits, registrations and filings. However, there can be no assurance that we are, or will be, able to successfully obtain such licenses, approvals, permits, registrations and filings in a timely manner, or at all. Any failure to obtain or renew the required permits, or licenses, registrations and filings, and to obtain or maintain the permits and licenses with sufficient scope of operation to operate our business could give rise to administrative penalties including rectification or suspension of operations in non-complying entities or confiscation of profits derived from noncompliant operations, which could materially and adversely affect our business, results of operations and financial condition.

18

Severe competition in the private education market may cause the enrollment at our schools and learning centers to fall, bring up cost for recruiting and retaining teachers and limit our tuition cap, and thus, reduce profitability.

We may face competition from other existing or new schools and learning centers targeting the children of affluent local families in the locations in which we operate. Some of our existing and potential competitors may be able to devote greater resources than we can to the development and construction of private schools and learning centers and respond more quickly to changes in demands of students and their parents, admissions standards, market needs or new technologies. Moreover, our competitors may increase capacity in any of the local markets to an extent that leads to an over-supply of placement positions at private schools and learning centers and downward pressure on tuition prices. Our existing or potential competitors may also provide higher compensation to teachers in the same region, making it more difficult for us to recruit and retain competent and qualified teachers. Our existing or potential competitors may also strategically price their tuition lower than ours to attract students and parents. Among other legislations and national policies that encourage social forces to provide diversified education services (such as childcare services), the Amended Law may attract more private school and learning centers operators to offer non-compulsory education and further increase competition in this market.

Our complementary businesses, including enrichment education training and extracurricular programs, may also face competition from other providers of comparable services that may have stronger financial resources, technology, service performance or brand recognition.

If we are unable to differentiate our services from those of our competitors and successfully market our services to students and their parents, we could face competitive pressures that reduce our student enrollment. If our student enrollment falls, we may be required to reduce our tuition or increase spending in order to attract and retain students, which could materially and adversely affect our business, prospects, results of operations and financial condition.

Our business and financial performance may suffer if we fail to successfully develop and launch new education services.

The future success of our business depends partly on our ability to develop new education services. The planned timing or launch of new education services is subject to risks and uncertainties. Actual timing may differ materially from originally proposed timeframes. Unexpected operational, technical or other issues could delay or prevent the launch of one or more of our new education services or programs. In addition, significant investment of human capital, financial resources and management time and attention may be required to successfully launch features of our new education programs. However, we cannot assure you that our students will choose us over third-party service providers or that we will be able to successfully integrate such services with our schools and other complementary businesses without expending significant financial resources on marketing and operational optimization. If we fail to manage the expansion of our portfolio of education services cost-effectively, our business could be negatively affected.

We cannot assure you that any of our new services will achieve market acceptance or generate incremental revenue. If our efforts to develop, market and sell our new education services and programs to the market are not successful, our business, financial position and results of operations could be materially and adversely affected.

Any deterioration in our relationships with providers of overseas education services may adversely affect our business.

We have business collaborations with various overseas schools and institutions. We derive direct benefits from these relationships such as the ability to offer more diverse programs and classes, including summer and winter camps, and the ability to charge a premium for the programs we offer with other overseas education service providers. We also derive indirect benefits from these relationships, including enhancement of our brand and reputation and exposure to international education methods and experiences.

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If our relationships with any of these overseas education service providers deteriorate or are otherwise damaged or terminated, or if the benefits we derive from these relationships diminishes, whether as a result of our own actions, actions of our partners, actions of any third party, including our competitors, or of regulatory authorities or other entities beyond our control, our business, prospects, financial condition and results of operations could be adversely affected.

Any damage to the reputation of any of our business may adversely affect our overall business, prospects, results of operations and financial condition.

Our reputation could be adversely affected under many circumstances, including the following:

● accidents, epidemics or other events adversely affect our students;

● we fail to properly manage accidents or other events that injure our students;

● our staff behave or are perceived to behave inappropriately or illegally;

● our staff fail to appropriately supervise students under their care;

● we fail to conduct proper background checks on our staff;

● our third-party business partners may commit misconduct or other improper activities that cause negative publicity concerning us or penalties from relevant authorities;

● we lose any license, permit, accreditation or other authorization to operate an education program, a school or a complementary education service;

● we do not maintain consistent education quality or fail to enable our students to achieve strong academic results;

● our schools, learning centers or other entities do not meet the relevant standards during the regular inspections by governmental authorities;

● our school facilities do not meet the standards expected by parents and students for private education; and

● school operators of lower quality that abuse our brand name or those with brand names similar to ours conduct fraudulent activities and create confusion among students and their parents.

The likelihood that any of the foregoing may occur increases as we expand our school and learning center network. These events could influence the perception of our schools not only by our students and their parents, but also by other constituencies in the education sector and the general public. Moreover, an event that directly damages the reputation of one of our schools could adversely affect the reputation and operations of our other schools. If our reputation deteriorates, our overall business, prospects, results of operations and financial condition could be adversely affected.

20

Our business is subject to seasonal fluctuations, which may cause our results of operations to fluctuate from quarter to quarter, and in turn result in volatility in and adversely affect the price of the ADSs.

Our business is subject to seasonal fluctuations as our costs and expenses vary significantly throughout the fiscal year and do not necessarily correspond with the timing of recognition of our revenues. Our students enrolled in our domestic learning centers and overseas schools and their parents typically pay the tuition and other fees prior to the commencement of a semester or cycle (for learning centers), and we recognize revenues from the delivery of education services on a straight-line basis over a semester or cycle (for learning centers). We typically incur higher upfront operating expenses in the first fiscal quarter at the start of each school year or cycle (for learning centers), and also typically recognize more revenue in the second half of fiscal years due to higher revenues from complementary education services during the summer and, to a lesser extent, students who transfer into our schools for the second semester. As a result of the combination of the foregoing, we have historically incurred net loss or significantly lower net income in the second and fourth fiscal quarters, primarily due to our schools being closed during winter and summer holidays, when no revenue from our school operations is recognized. We expect to continue to experience seasonal fluctuations in our results of operations. These fluctuations could result in volatility in and adversely affect the price of the ADSs.

Our business could be disrupted if we lose the services of members of our senior management team, key principals and teaching staff.

Our success depends in part on the continued application of skills, efforts and motivation of our officers and senior management team. In the 2023 and 2024 fiscal years, we experienced changes in our senior management team. We may in the future experience such changes for reasons beyond our control. In addition, key personnel could leave us to join our competitors. Losing the services of key members of senior management or experienced personnel may be disruptive to and cause uncertainty for our business. We depend upon the services of our senior management team, who collectively has significant experience with our company and within the education industry. If one or more members of our senior management team are unable or unwilling to continue in their present positions for health, family or other reasons, we may not be able to replace them easily or at all. If we cannot attract and retain qualified senior management members, key principals and teaching staff in a timely manner, our business, results of operations and financial condition could be materially and adversely affected.

Failure to adequately protect our intellectual property could materially and adversely affect our business.

We have historically relied upon the brand name of “Country Garden” to market our schools. As we expand our schools and learning centers beyond the network of Country Garden’s residential communities, we have created and begun to promote our own brands, including “Bright Scholar.” Since our inception, we have also created other intellectual property, including education materials developed by our teaching staff. Unauthorized use of any of our intellectual property may adversely affect our business and reputation. We rely on a combination of copyright, trademark and trade secrets laws to protect our intellectual property rights. Nevertheless, despite our efforts, third parties may obtain and use our intellectual property without proper authorization. The practice of intellectual property rights enforcement by the PRC regulatory authorities is in its developing stages. We may also need to resort to litigation and other legal proceedings to enforce our intellectual property rights. Any such action, litigation or other legal proceedings could result in substantial costs and diversion of our management’s attention and resources and could disrupt our business. In addition, we cannot assure you that we will be able to exercise our intellectual property rights effectively or otherwise prevent others from the unauthorized use of our intellectual property. Failure to adequately protect our intellectual property could materially and adversely affect our business, financial condition and results of our operations.

We operate our business under several brands, which may have a dilutive effect on brand recognition among our students and their parents.

We operate our business under several brands including overseas study counseling business under “Can-Achieve” and overseas schools under “CATS,” “Worthgate,” “Guildhouse,” “Bosworth,” “St Michael’s” and “Bounemouth Collegiate Schools.” We intend to otherwise promote a unified brand “Bright Scholar” as our corporate image, which represents the full range of education services we offer. Maintaining multiple brands could dilute our brand recognition among students and their parents and increase our overall marketing expenses as we allocate resources among different brands. We may transition our individual brands to “Bright Scholar” in the future if the market responds positively to our new corporate image. We cannot assure you, however, that our prospective students will embrace our new brand given its limited market exposure and recognition. We may incur significant financial resources for, and divert considerable management attention to, the integration of our existing brands with our new corporate image and the enhancement of brand recognition, which may adversely affect our business, results of operation and financial condition.

21

We may be exposed to infringement claims by third parties, which, if successful, could cause us to pay significant damages.

We cannot assure you that education materials and content used in our schools, learning centers and programs do not or will not infringe on intellectual property rights of third parties. While we are not aware of any claims for intellectual property infringement with regard to the above-mentioned education materials and content as of the date of this annual report, we cannot assure you that third parties will not claim that we have infringed on their proprietary rights in the future.

We may also use education materials designed in conjunction with our overseas associates and we cannot assure you that disputes will not arise over the intellectual property rights associated with these materials.

Although we plan to vigorously defend ourselves in any such litigation or legal proceedings, we cannot assure you that we will prevail in such matters. Participation in such litigation and legal proceedings may also cause us to incur substantial expenses and divert our management’s time and attention. If we are required to pay damages or incur settlement expenses, it could negatively impact our financial condition and results of operations. In addition, if we are required to pay any royalties or enter into any licensing agreements with the owners of intellectual property rights, we may find that the terms are not commercially acceptable, and lose the ability to use the related materials or content, which in turn could adversely affect our education programs. Any similar claim against us, even ungrounded, could also damage our reputation and brand image. Any such event could have a material adverse effect on our business, financial condition and results of operations.

Unauthorized disclosure of personal data that we collect and retain, whether due to a system failure or otherwise, could damage our business.

We maintain certain personal data, which may include academic records, address and family information. Our online services may store and process certain personal and other sensitive data provided by students or their parents. There are numerous laws regarding privacy and the storing, sharing, use, disclosure and protection of personally identifiable information and data. Specifically, personally identifiable and other confidential information is increasingly subject to legislation and regulations in PRC and numerous foreign jurisdictions. The PRC government has enacted a series of laws and regulations relating to the protection of privacy and personal information, which require internet service providers and other network operators to clearly indicate the purposes, methods and scope of any information collection and usage, obtain appropriate user consent and establish user information protection systems with appropriate remedial measures.

Internationally, many jurisdictions have established data privacy and cybersecurity legal frameworks with which we may need to comply. For example, the EU has adopted the General Data Protection Regulation (“GDPR”), which requires covered businesses to comply with rules regarding the processing of personal data, including its use, protection and the ability of persons whose personal data is processed to access, to correct or delete personal data about themselves. Failure to meet GDPR requirements could result in penalties of up to 4% of annual worldwide turnover or EUR 20 million (whichever is the greater). Additionally, the U.K. General Data Protection Regulation (“U.K. GDPR”) (i.e., a version of the GDPR as implemented into U.K. law) went into effect following Brexit. While the GDPR and the U.K. GDPR are substantially the same, going forward there is an increasing risk for divergence in application, interpretation and enforcement of the data privacy and cybersecurity laws and regulations as between the EU and the United Kingdom, which may result in greater operational burdens, costs and compliance risks. Additionally, the GDPR and the U.K. GDPR include certain limitations and stringent obligations with respect to the transfer of personal data from the EU and the United Kingdom to third countries, and the mechanisms to comply with such obligations are also in considerable flux and may lead to greater operational burdens, costs and compliance risks.

However, these regulatory frameworks for privacy issues in China and worldwide are currently evolving and are likely to remain uncertain for the foreseeable future. We cannot assure you that our existing privacy and personal protection system and technical measures will be considered sufficient under applicable laws and regulations. We could be adversely affected if legislation or regulations in China or worldwide are expanded to require changes in business practices or privacy policies, or if the PRC or foreign governmental authorities interpret or implement their legislation or regulations in ways that negatively affect our business, financial condition and results of operations. In addition to laws, regulations and other applicable rules regarding privacy and privacy advocacy, industry groups or other private parties may propose new privacy standards that we must comply with. The interpretation and application of privacy and data protection laws and privacy standards are still uncertain, it is possible that these laws or privacy standards may be interpreted and applied in a manner that is inconsistent with our practices. Any inability to adequately address privacy concerns, even if unfounded, or to comply with applicable privacy or data protection laws, regulations and privacy standards, could result in additional cost and liability for us, damage our reputation, inhibit the use of our services and harm our business.

22

If we were found to be in breach of any international privacy and data protection laws and regulations, we could incur significant expenses in connection with rectifying any security breaches, settling any resulting claims, payment of possible fines and providing enhanced protection to prevent additional breaches. In addition, any failure to protect personal information may adversely impact our ability to attract and retain students, harm our reputation and materially adversely affect our business, prospects and results of our operations.

Failures or interruptions in our centralized data management system may adversely affect our operations.

We have established a centralized data management system, which collects and analyzes group-wide financial, procurement and student admission information and data. We are in the process of gradually refining the features and functionalities of such enterprise resource planning system (“ERP system”) to enhance efficiency. We are also expanding the application of such ERP system into entities we newly acquired in order to streamline our data and information management system. However, we cannot assure you that such ERP system will not encounter technical failures and interruptions, leading to our management’s failure to timely access accurate key operating data, which may adversely affect our operation. We may encounter compatibility issues when incorporating newly acquired schools into our ERP system, which may compromise the overall accuracy and value of the operating information generated from such ERP system and adversely affect the implementation of our growth strategies as we expand our business and integrate new businesses. 

We may fail to maintain the proper functioning of or improve our technology infrastructure.

Our online education services and internal systems rely on software that is highly technical and complex and depend on the ability of such software to store, retrieve, process and manage immense amounts of data. Our systems are vulnerable to disruptions from design errors, execution errors, employee misconduct, external fraud, security breaches, capacity constraints, software flaws, computer viruses, cyberattacks, power outages and similar events. We cannot assure you that our information technology systems will always operate without interruptions. Some errors may only be discovered after the code has been released for external or internal use. Any errors, bugs or defects discovered in the software on which we rely could cause failures in our systems’ performance and result in disruptions in operations, slower response time and delays in information processing, thereby compromising our ability to support our online teaching activities. If any of the above were to occur, our business, financial condition and results of operations may be adversely affected. In addition, some of our subsidiaries and affiliates have historically been targeted in cyberattacks. Although we have stepped up the protection of our information systems, we cannot assure you that we will not become a target in cyberattacks again. Any such attacks could result in significant financial losses, damage to our reputation, disruption to our operations, and loss of confidential information.

We will also continue to upgrade and improve our information technology systems, software, mobile application and big data analytics in order to support our business growth and optimize our operating efficiency. Adopting new technologies and maintaining and upgrading our technology infrastructure require significant investment of time and resources, including adding new hardware, updating software and recruiting and training new engineering personnel. However, we cannot assure you that we will be successful in implementing these upgrades and improvement plans. New technologies may not be fully integrated with our existing systems on a timely basis, or at all. Our systems may experience slower response time and interruptions during upgrades, which could impair the experience of our students and business partners, delay the reporting of accurate operating and financial information, and result in material and adverse effects on our business, financial condition, results of operations and prospects.

In addition, the reliability and availability of our platform depends on telecommunications carriers and other third-party providers for communications and storage capacity, including bandwidth and server storage, among other things. If we are unable to enter into and renew agreements with these providers on acceptable terms, if any of our existing agreements with such providers are terminated as a result of our breach or otherwise, or if these service providers themselves experience service disruptions or cessations, the proper functioning of our platform could be adversely affected.

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We have limited insurance coverage with respect to our business and operations.

We are exposed to various risks associated with our business and operations, and we have limited insurance coverage. See “Item 4. Information on the Company—B. Business Overview—Insurance” for more information. We are exposed to risks including, among other things, accidents or injuries in our schools and learning centers, loss of key management and personnel, business interruption, natural disasters, terrorist attacks and social instability or any other events beyond our control. The insurance industry in China is still at a developing stage. As a result, insurance companies in China offer limited business-related insurance products. We do not have any business disruption insurance, product liability insurance or key-man life insurance. Any business disruption, legal proceeding or natural disaster or other events beyond our control could result in substantial costs and diversion of our resources, which may materially and adversely affect our business, financial condition and results of operations. 

We face risks related to natural disasters, health epidemics or terrorist attacks in regions where we operate.

Our business could be materially and adversely affected by natural disasters, such as earthquakes, floods, landslides, tornados and tsunamis, outbreaks of health epidemics such as avian influenza and severe acute respiratory syndrome, or SARS, COVID-19 virus, and Influenza A virus, such as H5N1 subtype and H5N2 subtype flu viruses, as well as terrorist attacks, other acts of violence or war or social instability in the regions in which we operate or those generally affecting China and regions where we operate. If any of these occur, our schools and facilities may be required to temporarily or permanently close and our business operations may be suspended or terminated. Our students, teachers and staff may also be negatively affected by such event. In addition, any of these could adversely affect the economy and demographics of the regions where we operate, which could cause significant declines in the number of our students in those regions and could have a material adverse effect on our business, financial condition and results of operations.

COVID-19 has significantly affected China and many other countries. During the peak of the COVID-19 pandemic, various nations imposed various measures to keep COVID-19 in check, including travel restrictions from time to time. Such measures have adversely affected our operation, as it has caused inconvenience to our day-to-day operating activities. Following the phase-out of COVID-19 prevention measures globally, we have resumed our operations. If the outbreak persists or escalates, we may be subject to further negative impact on our business operations and financial condition.

Our business, financial performance and results of operations could be adversely affected by deterioration of the relation between China and the United States.

Recent international trade disputes, including those between China and the United States, and the uncertainties created by such disputes may disrupt the transnational flow of goods and significantly undermine the stability of the global and Chinese economy, thereby harming our business. International trade disputes could result in tariffs and other protectionist measures that could adversely affect our business. Any escalation in existing trade tensions or the advent of a trade war, or news and rumors of the escalation of a potential trade war, could affect consumer confidence and have a material adverse effect on our business, results of operations and, ultimately, the trading price of the ADSs.

Political tensions between the United States and China have escalated due to various reasons. Rising political tensions could reduce levels of trades, investments, technological exchanges and other economic activities between the two major economies, which would have a material adverse effect on global economic conditions and the stability of global financial markets. Any of these factors could have a material adverse effect on our business, prospects, financial condition and results of operations. Furthermore, there have been media reports on deliberations within the U.S. government regarding potentially limiting or restricting China-based companies from accessing U.S. capital markets. If any such deliberations were to materialize, resulting legislation may have a material and adverse impact on the stock performance of China-based issuers listed in the United States. It is currently unclear whether the proposed or additional legislations would be enacted that would have the effect of potentially limiting or restricting China-based companies from accessing U.S. capital markets.

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We will continue to monitor developments related to these political tensions and their potential impact on our business. Nonetheless, we cannot assure you that we will not be adversely affected by any future legislative or regulatory changes or other developments related to these tensions.

Fluctuation in the exchange rate of the British pound may affect international students’ affordability of our private education services.

Fluctuation in the exchange rate of British pound may affect international students’ affordability of our private education services in the United Kingdom. International students need to pay more in their local currency in exchange for British pounds when the British pound strengthens, and this increases the cost of studying and living in the United Kingdom for them. Exchange rate fluctuations also impact the daily living expenses of international students in the United Kingdom. The exchange rate movements of the British pound are complex and influenced by various factors such as economic conditions, political factors, and market expectations. If the exchange rate of the British pound rises drastically or fluctuates in an unpredictable way, international students’ demand for our services in the United Kingdom may decrease, and our business, results of operations and financial condition may be adversely affected.

If we grant additional employees share options or other equity incentives in the future, our net income could be adversely affected.

We granted share options to purchase a total of 3,509,242 Class A ordinary shares to certain school principals and management team members pursuant to our 2017 Share Incentive Plan (the “2017 Plan”) from 2017 to 2023. On January 18, 2024, our board of directors approved the 2024 Share Incentive Plan (the “2024 Plan”), which became effective on the same date. Subject to certain capitalization adjustments, the aggregate number of ordinary shares that may be issued pursuant to the 2024 Plan from and after its effective date will not exceed 17,835,723 Class A ordinary shares, i.e., 15% of our total issued and outstanding ordinary shares on the date of adoption of the 2024 Plan. As of November 30, 2204, we had granted share options to purchase a total of 13,200,120 Class A ordinary shares to certain management team members pursuant to the 2024 Plan. We may grant additional share options under the 2024 Plan in the future. We are required to account for share-based compensation in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718, Compensation-Stock Compensation, which generally requires a company to recognize, as an expense, the fair value of share options and other equity incentives to employees based on the fair value of equity awards on the date of the grant, with the compensation expense recognized over the period in which the recipient is required to provide service in exchange for the equity award. If we grant options or other equity incentives in the future, we could incur significant compensation charges and our results of operations could be adversely affected.

If we fail to implement and maintain an effective system of internal controls, we may be unable to accurately or timely report our results of operations or prevent fraud, and investor confidence and the market price of the ADSs may be materially and adversely affected.

We are subject to reporting obligations under U.S. securities laws. Pursuant to Section 404 of the Sarbanes-Oxley Act of 2002 and the related rules adopted by the Securities and Exchange Commission, or the SEC, every public company is required to include a management report on the company’s internal controls over financial reporting in its annual report, which contains management’s assessment of the effectiveness of the company’s internal controls over financial reporting. As required by Section 404 of the Sarbanes-Oxley Act and related rules as promulgated by the SEC, our management assessed the effectiveness of the internal control over financial reporting as of August 31, 2024 using criteria established in “Internal Control — Integrated Framework (2013)” issued by the Committee of Sponsoring Organizations of the Treadway Commission. Management is not permitted to conclude that the Company’s internal control over financial reporting is effective if there are one or more material weaknesses in the Company’s internal control over financing reporting. A material weakness is a deficiency, or a combination of deficiencies, in internal controls over financial reporting, such that there is a reasonable possibility that a material misstatement of a company’s annual or interim consolidated financial statements would not be prevented or detected on a timely basis.

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In the 2024 fiscal year, we and our independent registered public accounting firm identified one significant deficiency, together with other control deficiencies not identified as significant in our internal control over financial reporting as of August 31, 2024. The significant deficiency identified related to Information Technology General Controls (“ITGCs”) in the areas of access security, change management and service organization management in certain financially relevant systems within our business.

As further described in “Item 15. Controls and Procedures—Changes in Internal Control over Financial Reporting,” we have implemented and are continuing to implement a number of measures to address our historical significant deficiencies and other control deficiencies not identified as significant, as well as the current significant deficiency and other control deficiencies not identified as significant in our internal control over financial reporting. We cannot assure you, however, that these measures will fully address the significant deficiencies, together with other control deficiencies identified in our internal control over financial reporting. Our failure to correct these control deficiencies or our failure to discover and address any other control deficiencies could result in inaccuracies in our financial statements and could also impair our ability to comply with applicable financial reporting requirements and related regulatory filings on a timely basis. As a result, our business, financial condition, results of operations and prospects, as well as the trading price of the ADSs, may be materially and adversely affected. Moreover, ineffective internal control over financial reporting significantly hinders our ability to prevent fraud.

As a public company in the United States, we are subject to the Sarbanes-Oxley Act of 2002. Section 404 of the Sarbanes-Oxley Act of 2002 requires that we include a report from management on the effectiveness of our internal control over financial reporting in our annual report on Form 20-F. Our management has concluded that our internal control over financial reporting was effective as of August 31, 2024. See “Item 15. Controls and Procedures.” If we fail to maintain effective internal control over financial reporting in the future, our management and our independent registered public accounting firm may also conclude that our internal control over financial reporting is not effective. This could adversely impact the market price of the ADSs due to a loss of investor confidence in the reliability of our reporting processes. We will need to incur additional costs and use management and other resources in order to comply with Section 404. In addition, once we cease to be a non-accelerated filer as defined in Rule 12b-2 under the Exchange Act, our independent registered public accounting firm must attest to and report on the effectiveness of our internal control over financial reporting. Our management may conclude that our internal control over financial reporting is not effective. Moreover, even if our management concludes that our internal control over financial reporting is effective, our independent registered public accounting firm may issue a report that is qualified if it is not satisfied with our internal controls or the level at which our controls are documented, designed, operated or reviewed, or if it interprets the relevant requirements differently from us.

During the course of documenting and testing our internal control procedures, in order to satisfy the requirements of Section 404 of the Sarbanes-Oxley Act of 2002, we may identify other weaknesses and deficiencies in our internal control over financial reporting, and we may not be able to conclude on an ongoing basis that we have effective internal control over financial reporting in accordance with Section 404 of the Sarbanes-Oxley Act of 2002. If we fail to achieve and maintain an effective internal control environment, we could suffer material misstatements in our financial statements and fail to meet our reporting obligations, which would likely cause investors to lose confidence in our reported financial information. This could in turn limit our access to capital markets, harm our results of operations, and lead to a decline in the trading price of the ADSs. Additionally, ineffective internal control over financial reporting could expose us to increased risk of fraud or misuse of corporate assets and subject us to potential delisting from the stock exchange on which we list, regulatory investigations and civil or criminal sanctions. We may also be required to restate our financial statements from prior periods.

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The continuing impact of “Brexit” may have a negative effect on our business operated in the United Kingdom. 

Following a national referendum and enactment of legislation by the government of the United Kingdom, the United Kingdom formally withdrew from the European Union (“Brexit”) and ratified a trade and cooperation agreement governing its future relationship with the European Union. The agreement, which became effective in 2021, addresses economic arrangements, law enforcement, judicial cooperation and a governance framework including procedures for dispute resolution, among other things. Because the agreement merely sets forth a framework in many respects and will require complex additional bilateral negotiations between the United Kingdom and the European Union as both parties continue to work on the rules for implementation, significant political and economic uncertainty remains about how the precise terms of the relationship between the parties will differ from the terms before withdrawal. As a result, we face risks associated with the potential uncertainty and disruptions that may follow Brexit and the implementation and application of the trade and cooperation agreement, including with respect to disruptions to the free movement of people, data and capital between the United Kingdom and the European Union and potential material changes to the regulatory regime applicable to our operations in the United Kingdom. In addition, Brexit could lead to legal uncertainty and potentially divergent national laws and regulations as the United Kingdom determines which laws of the European Union to replace or replicate. These developments have had and may continue to have a material adverse effect on global economic conditions and the stability of global financial markets and could significantly reduce global market liquidity and limit the ability of key market participants to operate in certain financial markets.

The ongoing instability and uncertainty surrounding Brexit and the implementation and application of the trade and cooperation agreement, could require us to restructure our business operations in the United Kingdom, may increase our regulatory costs, and could have an adverse impact on our business and staff in the United Kingdom.

Changes in U.K. tax laws could have a material adverse effect on our business.

We derive a substantial portion of our revenue from our operations in the United Kingdom, and our subsidiaries in the United Kingdom have filed returns for U.K. corporation tax on the basis that they are resident in the United Kingdom. Such subsidiaries are subject to U.K. tax in respect of their worldwide income and gains (subject to any applicable exemptions). Any change in such subsidiaries’ status or any change in U.K. tax laws could materially affect our business, prospects, financial condition or results of operations.

Fluctuations in the value of the Renminbi and British pound sterling, among others, may have a material adverse effect on your investment.

As we operate globally, our business and share price may be affected by fluctuations between Renminbi and British pound sterling, among others, against the U.S. dollar and other currencies. For example, on July 21, 2005, the PRC government changed its policy of pegging the value of the Renminbi to the U.S. dollar. Under the new policy, the Renminbi was permitted to fluctuate within a narrow and managed band against a basket of certain foreign currencies. Later on, the People’s Bank of China has decided to further implement the reform of the RMB exchange regime and to enhance the flexibility of RMB exchange rates. Such changes in policy have resulted in a significant appreciation of the Renminbi against the U.S. dollar since 2005. There is still significant international pressure on the PRC government to adopt a more flexible currency policy, which could result in a further and more significant adjustment of the rate for Renminbi against the U.S. dollar.

Any significant appreciation or depreciation of the Renminbi and British pound sterling, among others, may have a material adverse effect on the value of, and any dividends payable on, the ADSs in foreign currency terms. More specifically, if we decide to convert our Renminbi or British pound sterling into U.S. dollars, the appreciation of the U.S. dollar against the Renminbi or British pound sterling would have a negative effect on the U.S. dollar amount available to us. To the extent that we need to convert U.S. dollars we receive from our initial public offering into Renminbi or British pound sterling for our operations, appreciation of the Renminbi or British pound sterling against the U.S. dollar would have an adverse effect on the Renminbi or British pound sterling amount we receive from the conversion. In addition, appreciation or depreciation in the exchange rate of the Renminbi or British pound sterling to the U.S. dollar could materially and adversely affect the price of the ADSs in U.S. dollars without giving effect to any underlying change in our business or results of operations.

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Risks Related to Our Corporate Structure

Our private education service business is subject to extensive regulation in China. If the PRC government finds that the contractual arrangement that establishes our corporate structure for operating our business does not comply with applicable PRC laws and regulations, we could be subject to severe penalties.

Our domestic private education service business is subject to extensive regulations in China. The PRC government regulates various aspects of our business and operations, such as curriculum content, education materials, standards of school operations, student recruitment activities, tuition and other fees. The laws and regulations applicable to the private education sector are subject to frequent change, and new laws and regulations may be adopted, some of which may have a negative effect on our business, either retrospectively or prospectively.

Foreign ownership in education services (including the entity providing online education services) is subject to strict regulations in China. The PRC government regulates the provision of education services through strict licensing requirements. We are a company incorporated in the Cayman Islands. Our PRC subsidiary, Zhuhai Bright Scholar, is a foreign-owned enterprise and is currently ineligible to operate online education business or otherwise hold equity interests therein. Due to these restrictions, we conduct our private online education business in China primarily through contractual arrangements among (1) Zhuhai Bright Scholar, (2) the VIEs, and (3) the ultimate shareholders of the VIEs, including Ms. Meirong Yang. We have been and expect to continue to be dependent on the VIEs to operate our private education business. See “Item 4. Information on the Company—C. Organizational Structure” for more information.

If our ownership structure and contractual arrangements are found to violate any PRC laws or regulations or if we are found to require but failed to obtain any of the permits or approvals for our private education business, the relevant PRC regulatory authorities include the MOE, which regulates the education industry, the PRC Ministry of Commerce, or MOFCOM, which regulates foreign investments, and SAIC, which regulates the registration of for-profit schools. The authorities would have broad discretion in imposing fines or punishments upon us for such violations, including:

● revoking the business and operating licenses of our group and/or the VIEs;

● discontinuing or restricting any related-party transactions between our group and the VIEs;

● imposing fines and penalties, or imposing additional requirements for our operations with which we, or the VIEs may not be able to comply;

● requiring us to restructure the ownership and control structure or our current schools;

● restricting or prohibiting our use of the proceeds of our equity offerings to finance our business and operations in China, particularly the expansion of our business through strategic acquisitions; or

● restricting the use of financing sources by us or the VIEs or otherwise restricting our or their ability to conduct business.

Similar ownership structure and contractual arrangements have been used by many China-based companies listed overseas, including a number of education companies listed in the United States. To our knowledge, none of the fines or punishments listed above has been imposed on any of these public companies, including companies in the education industry. However, we cannot assure you that such fines or punishments will not be imposed on us or any other companies in the future. If any of the above fines or punishments is imposed on us, our business, financial condition and results of operations could be materially and adversely affected. If any of these penalties results in our inability to direct the activities of the VIEs and their respective subsidiaries that most significantly impact their economic performance, and/or our failure to receive the economic benefits from the VIEs and their respective subsidiaries, we may not be able to consolidate the VIEs and their respective subsidiaries in our financial statements in accordance with U.S. GAAP. However, we do not believe that such actions would result in the liquidation or dissolution of our company, our wholly-owned subsidiaries in China or the VIEs or their respective subsidiaries.

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In addition, pursuant to the Implementation Rules, (1) foreign-invested enterprises established in China and social organizations whose actual controllers are foreign parties shall not sponsor, participate in or actually control private schools that provide compulsory education, (2) social organizations or individuals shall not control any private school that provides compulsory education or any non-profit private school that provides pre-school education by means of merger, acquisition, contractual arrangements, etc., and (3) private schools providing compulsory education shall not conduct any transaction with any related party. Any private school conducting transactions with related parties must adhere to the principles of openness, fairness and impartiality. Tuition and fees shall be set reasonable. And the decision-making process shall not damage the state interests, the interests of the school or the rights and interests of the teachers and students. Failure to comply with these principles may result in an order to make corrections within a specified time limit. Illegal gains obtained, if any must be confiscated, and collected fees returned. If the circumstances are serious, the sponsor, actual controller and member of the decision-making body or supervisory body shall not become the sponsor, actual controller or member of the decision-making body or supervisory body of other private school within one to five years. In cases where the violations have an especially severe adverse social impact, such individuals may be permanently prohibited from becoming sponsors, actual controllers, or members of decision-making or supervisory bodies of other private schools. If a violation constitutes a public security administration offense, the public security organ will impose a punishment according to law. If a violation constitutes a crime, criminal responsibility will be investigated in accordance with the law.

These regulations may challenge the validity of our contractual arrangements that establish our corporate structure for operating our business. Furthermore, our contractual arrangements may not be enforceable in the PRC if the PRC government authorities view such contracts as contravening any mandatory provision of PRC laws and administrative regulations or are otherwise not enforceable due to offending public order or good morals. In the event we are unable to enforce these contractual arrangements, for our continuing operations, we may not be able to exert effective control over those VIEs and their respective shareholders, and our ability to conduct our business may be materially and adversely affected. We are continuously assessing the impact of relevant regulations on our business and making necessary measures and efforts to comply with the requirements under these regulations and implementations, including restructuring corporate structure or unwinding contractual arrangements, etc. However, the relevant authorities have yet to promulgate any detailed implementation rules and regulations under the Implementation Rules. It is still unclear whether the above provisions have any retrospective effect for contractual arrangements over private compulsory education schools existing before September 1, 2021. Therefore, uncertainty remains as to when and how the Implementation Rules will specifically be applied to our business.

Uncertainties exist with respect to the interpretation and implementation of the PRC Foreign Investment Law and how it may impact the viability of our current corporate structure, corporate governance and business operations.

On March 15, 2019, the National People’s Congress approved the Foreign Investment Law (“Foreign Investment Law”), which came into effect on January 1, 2020 and replaced the Law on Chinese-Foreign Equity Joint Ventures, the Law on Chinese-Foreign Contractual Joint Ventures, and the Wholly Foreign-invested Enterprise Law, together with their implementation rules and ancillary regulations. On December 26, 2019, the State Council issued the Implementation Rules of the Foreign Investment Law to clarify and elaborate relevant provisions of the Foreign Investment Law, and the Supreme People’s Court of the PRC promulgated a judicial interpretation to address several issues concerning the application of the Foreign Investment Law. The above Implementation Rules and the judicial interpretation became effective as of January 1, 2020.

The Foreign Investment Law embodies an expected PRC regulatory trend to China’s foreign investment regulatory regime to align with international standards and unify the corporate legal requirements for both foreign and domestic investments. However, uncertainties still exist in relation to its interpretation and implementation. For instance, under the Foreign Investment Law, “foreign investment” refers to the investment activities directly or indirectly conducted by foreign individuals, enterprises or other entities in China. Though it does not explicitly classify contractual arrangements as a form of foreign investment, we cannot assure you that foreign investment via contractual arrangement would not be interpreted as a type of indirect foreign investment activities under the definition in the future. In addition, the definition contains a catch-all provision which includes investments made by foreign investors through means stipulated in laws or administrative regulations or other methods prescribed by the State Council. Therefore, it still leaves leeway for future laws, administrative regulations or provisions promulgated by the State Council to provide for contractual arrangements as a form of foreign investment. In any of these cases, it will be uncertain whether our contractual arrangements will be deemed to be in violation of the market access requirements for foreign investment under PRC Laws. Furthermore, if future laws, administrative regulations or provisions prescribe further actions to be taken by companies with respect to existing contractual arrangements, we may face substantial uncertainties as to whether we can complete such actions in a timely manner, or at all. Failure to take timely and appropriate measures to cope with any of these or similar regulatory compliance challenges could materially and adversely affect our business, results of operations or financial position.

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We rely on contractual arrangements with the VIEs and their shareholders for our operations in China, which may not be as effective in providing control as direct ownership.

We have relied and expect to continue to rely on the contractual arrangements with the VIEs and their respective shareholders to operate our private education business in China. For a description of these contractual arrangements, see “Item 4. Information on the Company—C. Organizational Structure.” The revenue contribution of the VIEs from continuing operations accounted for 7.5% of the total revenues for our continuing operations in the 2024 fiscal year. However, these contractual arrangements may not be as effective as direct equity ownership in providing us with control over the VIEs. The VIEs and their shareholders may fail to take certain actions required for our business, or to procure that newly established or acquired schools enter into the contractual arrangements in a timely manner, or to follow our instructions despite their contractual obligations to do so. If they fail to perform their obligations under their respective agreements with us, we may have to rely on legal remedies under PRC law, including seeking specific performance or injunctive relief, which may not be effective. Any failure by the VIEs and the shareholders of the VIEs to perform their obligations under the contractual arrangements would have a material adverse effect on the financial position and performance of our company. For example, the contractual arrangements are governed by PRC law and provide for the resolution of disputes through arbitration in China. Accordingly, these contracts would be interpreted in accordance with PRC law and any disputes would be resolved in accordance with arbitral procedures as contractually stipulated. The commercial arbitrator has discretion in interpretation of laws, regulations and rules in China, which could limit our ability to enforce these contractual arrangements. In addition, if the legal structure and the contractual arrangements were found to violate any existing or future PRC laws and regulations, we may be subject to fines or other legal or administrative sanctions.

If the imposition of government actions causes us to lose our right to direct the activities of the VIEs or our right to receive substantially all the economic benefits and residual returns from the VIEs and we are not able to restructure our ownership structure and operations in a satisfactory manner, we would no longer be able to consolidate the financial results of the VIEs.

As a holding company incorporated in the Cayman Islands with no material operations, we conduct a substantial majority of our operations through our subsidiaries, the VIEs, and their subsidiaries in China. We control and receive the economic benefits of the VIEs and its subsidiaries’ business operations through certain contractual arrangements. Our ADSs listed on the New York Stock Exchange represents shares of our offshore holding company instead of shares of the VIEs or their subsidiaries in China. We may not be able to continue to satisfy the applicable requirements and rules with respect to this structure. If we are unable to satisfy the New York Stock Exchange criteria for maintaining our listing, our securities could be subject to delisting.

If the PRC government determines that the contractual arrangements constituting part of the VIE structure do not comply with PRC regulations, or if regulations change or are interpreted differently in the future, we may be unable to exercise our contractual rights over the assets of the VIEs, and the ADSs or ordinary shares may decline in value or become worthless.

Investors in the ADSs are not purchasing equity securities of our subsidiaries that have substantive business operations in China but instead are purchasing equity securities of a Cayman Islands holding company. We are a Cayman Islands holding company that conducts a portion of its operations in China through our PRC subsidiaries and VIEs based on certain contractual agreements. Such structure involves unique risks to investors in the ADSs.

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The PRC government has adopted a series of regulatory actions and issued statements to regulate business operations in China, including those related to VIEs and private schools, which may challenge the validity of our contractual arrangements. In the event that the PRC government determines that the contractual arrangements constituting part of the VIE structure do not comply with PRC regulations, or if these regulations change or are interpreted differently in the future, we may be unable to assert our contractual rights over the assets of the VIEs, and the ADSs or ordinary shares may decline in value or become worthless.

On May 14, 2021, the PRC State Council announced the Implementation Rules, which became effective on September 1, 2021. Under the Implementation Rules, social organizations and individuals are prohibited from controlling a private school that provides compulsory education or a non-profit private school that provides pre-school education by means of, among others, merger, acquisition, and contractual arrangements, and a private school providing compulsory education is prohibited from conducting transactions with its related party. In particular, the prohibition over related party transactions has significantly affected the enforceability of the exclusive management services and business cooperation agreements with affiliated entities providing compulsory education. Therefore, we re-assessed our control over the Affected Entities. Based on the relevant accounting standard in accordance with U.S. GAAP, we have concluded that we have lost control of the Affected Entities since August 31, 2021, in view of the significant uncertainties and restrictions the Implementation Rules impose on our ability to direct the range of ongoing activities that would most significantly impact the returns of those entities and to be exposed to returns that are commensurate with a controlling interest, and that such uncertainties and restrictions already had a significant impact on our ability to direct and its economic exposure from involvement with such entities.

Except for the Affected Entities, the contractual arrangements enable us to: (1) exercise effective control over the VIEs; (2) receive substantially all of the economic benefits of the VIEs in consideration for the services provided by us; and (3) have an exclusive option to purchase all of the equity interests in the VIEs when and to the extent permitted under PRC law. Therefore, we are able to consolidate the financial results of the VIEs in our consolidated financial statements. However, our PRC legal counsel has advised us that as there are substantial uncertainties regarding the interpretation and application of PRC laws and regulations, and we cannot assure you that the PRC government would agree that our corporate structure or any of the above contractual arrangements comply with current or future PRC laws or regulations. PRC laws and regulations governing the validity of these contractual arrangements are uncertain and the relevant government authorities may have broad discretion in interpreting these laws and regulations. For a detailed description of the risks associated with our corporate structure, see “—Risks Related to Our Corporate Structure” and “—Risks Related to Doing Business in the Jurisdictions Where We Operate.”

The directors of the VIEs may have potential conflict of interest with us and not act in the best interests of our company.

Ms. Meirong Yang is a director of two of the VIEs and Ms. Hui Zhang is a director of the remaining one of the VIEs. We cannot assure you that directors of the VIEs will always act in the best interests of our company. In addition, directors of the VIEs owe duties of loyalty and diligence to the VIEs as their directors pursuant to PRC law. However, they do not owe a fiduciary duty to our company as they are not an officer or director of our company. We provide no incentives to encourage directors of the VIEs to act in our best interest in their capacity as the shareholders of the VIEs. We rely on directors of the VIEs to comply with the terms and conditions of the contractual arrangements. Although directors of the VIEs are obligated to honor their contractual obligations with respect to the VIEs, they may nonetheless breach or cause the VIEs to breach or refuse to renew the existing contractual arrangements which allow us to effectively exercise control over the VIEs and to receive economic benefits from them. If directors of the VIEs does not honor their contractual obligations with respect to the VIEs, we may exercise our exclusive option to purchase, or cause our designee to purchase, all or part of the equity interest in the VIEs to the extent permitted by PRC law. If we cannot resolve any disputes between us and the shareholders of the VIEs, we would have to rely on arbitration or legal proceedings, which could result in disruption of our business and substantial uncertainty as to the outcome of any such legal proceedings.

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Contractual arrangements between the VIEs and us may be subject to scrutiny by the PRC tax authorities and a finding that we or the VIEs owe additional taxes could materially reduce our net income and the value of your investment.

Under PRC laws and regulations, transactions between related parties should be conducted on an arm’s-length basis and may be subject to audit or challenge by the PRC tax authorities. We could face material adverse tax consequences if the PRC tax authorities determine that the contractual arrangements among our subsidiary in China, the VIEs and the shareholders of the VIEs are not conducted on an arm’s-length basis and adjust the income of the VIEs through the transfer pricing adjustment. A transfer pricing adjustment could, among other things, result in, for PRC tax purposes, increased tax liabilities of the VIEs. In addition, the PRC tax authorities may require us to disgorge our prior tax benefits, and require us to pay additional taxes for prior tax years and impose late payment fees and other penalties on the VIEs for underpayment of prior taxes. To date, similar contractual arrangements have been used by many public companies, including companies listed in the United States, and, to the best of our knowledge, no publicly available information has indicated that the PRC tax authorities have imposed any material penalties on those companies. However, we cannot assure you that such penalties will not be imposed on any other companies or us in the future. Our net income may be reduced if the tax liabilities of the VIEs materially increase or if they are found to be subject to additional tax obligations, late payment fees or other penalties.

If any of the VIEs becomes bankrupt or enter into liquidation proceeding, we may lose the ability to use and dispose assets held by such entity, which could materially and adversely affect our business, financial condition and results of operations.

We currently conduct certain of our operations in China through contractual arrangements with the VIEs and the shareholders of the VIEs. As part of these arrangements, certain of our education-related assets that are critical to the operation of our business are held by the VIEs. If any of these entities goes bankrupt and all or part of their assets become subject to liens or rights of third-party creditors, we may be unable to continue some or all of our business activities, which could materially and adversely affect our business, financial condition and results of operations. If any of the VIEs undergoes a voluntary or involuntary liquidation proceeding, its equity owner or unrelated third-party creditors may claim rights relating to some or all of these assets, which would hinder our ability to operate our business and could materially and adversely affect our business, our ability to generate revenue and the market price of the ADSs.

If the custodians or authorized users of our controlling non-tangible assets, including chops and seals, fail to fulfill their responsibilities, or misappropriate or misuse these assets, our business and operations could be materially and adversely affected.

Under PRC law, legal documents for corporate transactions, including agreements and contracts that our business relies on, are executed with validity when using the chop or seal of the signing entity or with the signature of a legal representative whose designation is registered and filed with the relevant PRC industry and commerce authorities.

In order to maintain the physical security of our chops, we generally have them stored in secured locations accessible only to authorized employees. Although we monitor such authorized employees, the procedures may not be sufficient to prevent all instances of abuse or negligence. There is a risk that our employees could abuse their authority, for example, by entering into a contract not approved by us or seeking to gain control of one of our subsidiaries or affiliated entities. If any employee obtains, misuses or misappropriates our chops and seals or other controlling intangible assets for whatever reason, we could experience disruption to our normal business operations.

We may have to take corporate or legal action, which could involve significant time and resources to resolve and divert management from our operations.

PRC regulation of loans and direct investment by offshore holding companies to PRC entities may delay or prevent us from using the proceeds of our public offerings and other financing activities to make loans or additional capital contributions to our PRC subsidiaries and affiliated entities, which could harm our liquidity and our ability to fund and expand our business.

As an offshore holding company of our PRC subsidiaries and affiliated entities, in utilizing the proceeds of our initial public offerings and other financing activities, we may (1) make loans to our PRC subsidiaries and affiliated entities, (2) make additional capital contributions to our PRC subsidiaries, (3) establish new PRC subsidiaries and make capital contributions to these new PRC subsidiaries, and (4) acquire offshore entities with business operations in China in an offshore transaction. For details on our use of offering proceeds, see “Item 14. Material Modifications to the Rights of Security Holders and Use of Proceeds—Use of Proceeds.”

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However, most of these uses are subject to PRC regulations and approvals. For example:

● loans by us to our wholly-owned subsidiaries in China, which are foreign-invested enterprises, cannot exceed statutory limits, which is the difference between the total investment amount and the registered capital of our wholly-owned subsidiaries, and must be registered with the State Administration of Foreign Exchange of the PRC (“SAFE”), or its local counterparts;

● loans by us to the VIEs, which are domestic PRC entities, over a certain threshold must be approved by the relevant government authorities and must also be registered with SAFE or its local counterparts; and

● capital contributions to our wholly-owned subsidiaries in China must be filed with MOFCOM or its local counterparts and must also be registered with the local bank authorized by SAFE.

As a result of the requirements and limitations outlined above, the amount of funds that we can directly contribute to our operations in China through Zhuhai Bright Scholar, a foreign-invested enterprise indirectly held by us, is limited.

In addition, on March 30, 2015, SAFE promulgated the Circular on Reforming the Management Approach regarding the Settlement of Foreign Exchange Capital of Foreign-invested Enterprises (“Circular 19”), which came into effect from June 1, 2015. The notice requires that the capital of a foreign-invested company settled in Renminbi converted from foreign currencies shall be used only for purposes within the business scope as approved by the applicable government authorities and may not be used for equity investments in China unless such activity is set forth in the business scope or is otherwise permissible under PRC laws or regulations. Furthermore, SAFE strengthened its oversight of the flow and use of such capital of a foreign-invested company settled in Renminbi converted from foreign currencies. The use of such Renminbi capital may not be changed without SAFE’s approval, and may not in any case be used to repay Renminbi loans if the proceeds of such loans have not otherwise been used. On October 23, 2019, the SAFE issued the Notice of the State Administration of Foreign Exchange on Further Facilitating Cross-border Trade and Investment, which, among other things, expanded the use of foreign exchange capital in domestic equity investment. Non-investment foreign-funded enterprises are allowed to lawfully make domestic equity investments by using their capital on the premise without violation of prevailing special administrative measures for access of foreign investments (negative list) and the authenticity and compliance with the regulations of domestic investment projects. If our affiliated entity requires financial support from us or our wholly owned subsidiary in the future, and we find it necessary to use foreign currency-denominated capital to provide such financial support, our ability to fund our variable interest entity’s operations will be subject to statutory limits and restrictions, including those described above.

On February 13, 2015, SAFE promulgated the Circular of the State Administration of Foreign Exchange on Further Simplifying and Improving the Direct Investment-related Foreign Exchange Administration Policies (“Circular 13”), which was implemented on June 1, 2015. Pursuant to Circular 13, the registration of existing equity is required in lieu of annual foreign exchange inspection of direct investment. Circular 13 also grants the authority to examine and process foreign exchange registration with respect to both domestic and overseas direct investments.

On January 5, 2023, the National Development and Reform Commission (the “NDRC”), issued the Management Measures for the Review and Registration of Medium-and-Long-Term Foreign Debt of Enterprises, effective from February 10, 2023, which provide that PRC enterprises and the overseas enterprises or branches under their control shall, in respect of a debt instrument with a maturity of one year or above, issued overseas and denominated in RMB or a foreign currency, under which the principal and interest are repaid as agreed, apply to the NDRC for review and registration of foreign debt and report and disclose relevant information. The NDRC shall, within three months after accepting the application, issue the Certificate of Review and Registration for the application that complies with the provisions, or issue a written notice of objection for the application that fails to comply with the provisions.

In December 2023, SAFE promulgated the Circular on Further Deepening Reforms to Facilitate Cross-border Trade and Investment, which, among other things, provides that the use of capital funds of non-financial enterprises, foreign exchange income under foreign debt and RMB funds derived from foreign exchange settlement shall follow the principle of truthfulness and self-use, and shall not be used directly or indirectly for expenditures prohibited by national laws and regulations; unless otherwise expressly provided, it shall not be used directly or indirectly for investment in securities or other investment and wealth management (except for wealth management products and structured deposits with risk ratings of not higher than Level 2); and it shall not be used for the issuance of loans to non-affiliated enterprises (except for those expressly permitted in the scope of business and the four specific areas of China); and shall not be used for the purchase of non-self-use residential properties (except for enterprises engaged in real estate development and operation and real estate leasing and operation). Such circular further specifies that in the event of any inconsistency between the previous regulations and this circular, this circular shall prevail.

We expect that PRC laws and regulations may continue to limit our use of proceeds from our initial public offerings and other financing activities or from other financing sources. We cannot assure you that we will be able to obtain these government registrations or approvals on a timely basis, if at all, with respect to future loans or capital contributions by us to our entities in China. If we fail to receive such registrations or approvals, our ability to use the proceeds of our initial public offerings and other financing activities and to capitalize our PRC operations may be hindered, which could adversely affect our liquidity and our ability to fund and expand our business.

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Risks Related to Doing Business in the Jurisdictions Where We Operate

Although mainland China’s economy has grown significantly in the past decade, growth has been uneven, both geographically and among various sectors of the economy. The Chinese government has implemented various measures to encourage economic growth and guide the allocation of resources. Some of the government measures may benefit the overall Chinese economy, but PRC economic, political and social conditions, as well as changes in any government policies, laws and regulations, could adversely affect our business.

Our business, prospects, financial condition and results of operations are subject, to a significant extent, to economic, political and legal developments in China.

The PRC economy differs from the economies of most developed countries in many respects. Although the PRC economy has been transitioning from a planned economy to a more market-oriented economy since the late 1970s, the PRC government continues to play a significant role in regulating the industry. The PRC government has significant influence on China’s economic growth through allocating resources, controlling the incurrence and oversight and discretion over the conduct of our business and may intervene with or influence our operations to further regulatory, political and societal goals. Furthermore, the PRC government has recently indicated the intent to exert more oversight and control over overseas securities offerings and other capital markets activities and foreign investment in China-based companies. Any such action, once taken by the PRC government, could significantly limit or hinder our ability to offer or continue to offer securities to investors. This could result in a substantial decline in the value of such securities or, in the most extreme cases, render them completely worthless.

While the PRC economy has grown significantly in the past two to three decades, such growth has been uneven among various regions and among various sectors of the economy. Demand for our services depends, in large part, on economic conditions in China and especially the regions where we operate. Any significant slowdown in China’s economic growth may adversely affect the disposable income of the families of prospective students and cause them to delay or cancel their plans to choose our services, which in turn could reduce our revenues. In addition, any sudden changes to China’s political system or the occurrence of social unrest could also have a material adverse effect on our business, prospects, financial condition and results of operations.

Furthermore, our company, the VIEs and their subsidiaries, and our investors may face uncertainty about future actions by the government of China that could significantly affect the VIEs and their subsidiaries’ financial performance and operations, including the enforceability of the contractual arrangements. As of the date of this annual report, neither our company nor the VIEs have received or have been denied permission from Chinese authorities to list on U.S. exchanges. However, we cannot assure you that our company or the VIEs will receive or not be denied permission from Chinese authorities to list on U.S. exchanges in the future.

Uncertainties with respect to the enforcement and changes of laws and regulations could have a material adverse effect on us.

The PRC legal system is a civil law system based on written statutes. Unlike the common law system, prior court decisions in a civil law system may be cited as reference but have limited precedential value. Since 1979, newly introduced PRC laws and regulations have significantly enhanced the protections of interests related to foreign investments in China. However, since the PRC legal system evolves from time to time, the interpretations of such laws and regulations may not always be consistent, and enforcement of these laws and regulations involves uncertainties. Any of these could limit the available legal protections.

In addition, the PRC administrative and judicial authorities have broad discretion in interpreting, implementing or enforcing statutory rules and contractual terms. As a result, it may be more challenging to predict the outcome of administrative and judicial proceedings and the level of legal protection we may receive in the PRC than under some more developed legal systems. These uncertainties may affect our decisions on the policies and actions to be taken to comply with PRC laws and regulations, and may affect our ability to enforce our contractual or tort rights. In addition, the regulatory uncertainties may be exploited through unmerited legal actions or threats to extract payments or benefits from us. Such uncertainties may therefore increase our operating expenses and costs, and materially and adversely affect our business and results of operations.

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The PRC government has significant oversight and discretion over the conduct of our business and may intervene with or influence our operations as the government deems appropriate to further regulatory, political and societal goals.

The PRC government has exercised and continues to exercise substantial control over virtually every sector of the Chinese economy through regulation and state ownership. The ability of our subsidiaries and the VIEs to operate in China may be impaired by changes in its laws and regulations, including those relating to education, personal information protection, taxation, land use rights, foreign investment limitations, and other matters. We cannot assure you that government authorities in China will not introduce enhanced regulation over the industry we operate our business that may lead to our inability to operate in China at all. Furthermore, the PRC government has recently indicated an intent to exert more oversight and control over overseas securities offerings and other capital markets activities and foreign investment in China-based companies like us. For example, on July 6, 2021, the relevant PRC government authorities promulgated the Opinions on Strictly Scrutinizing Illegal Securities Activities in accordance with the Law, or the Opinions. The Opinions emphasized the need to strengthen the administration over illegal securities activities and the supervision on overseas listings by China-based companies and proposed to take effective measures, such as promoting the construction of relevant regulatory systems to deal with the risks and incidents faced by China-based overseas-listed companies. On February 17, 2023, with the approval of the State Council, the CSRC released the Trial Administrative Measures of Overseas Securities Offering and Listing by Domestic Companies, or the Trial Measures and five supporting guidelines, which came into effect on March 31, 2023. According to the Trial Measures, among other requirements, (1) domestic companies that seek to offer or list securities overseas, both directly and indirectly, should fulfill the filing procedures with the CSRC; if a domestic company fails to complete the filing procedures, such domestic company may be subject to administrative penalties; (2) where a domestic company seeks to indirectly offer and list securities in an overseas market, the issuer shall designate a major domestic operating entity responsible for all filing procedures with the CSRC, and such filings shall be submitted to the CSRC within three business days after the submission of the overseas offering and listing application; and (3) where a listed issuer seeks to indirectly offer and list securities in the same overseas market, such filings shall be submitted to the CSRC within three business days after the completion of the overseas offering and listing. On the same day, the CSRC also held a press conference for the release of the Trial Measures and issued the Notice on Administration for the Filing of Overseas Offering and Listing by Domestic Companies, which clarifies that (1) on or prior to the effective date of the Trial Measures, domestic companies that have already submitted valid applications for overseas offering and listing but have not obtained approval from overseas regulatory authorities or stock exchanges may reasonably arrange the timing for submitting their filing applications with the CSRC, and must complete the filing before the completion of their overseas offering and listing; (2) a six-month transition period will be granted to domestic companies which, prior to the effective date of the Trial Measures, have already obtained the approval from overseas regulatory authorities or stock exchanges, but have not completed the indirect overseas listing; if domestic companies fail to complete the overseas listing within such six-month transition period, they shall file with the CSRC according to the requirements; and (3) the CSRC will solicit opinions from relevant regulatory authorities and complete the filing of the overseas listing of companies with contractual arrangements which duly meet the compliance requirements, and support the development and growth of these companies. Any such action, once taken by the PRC government, could significantly limit or hinder our ability to offer or continue to offer securities to investors and cause the value of such securities to significantly decline or, in extreme cases, become worthless. We did not have to complete such filings with the CSRC for our initial public offering on May 19, 2017 and the follow-on offering on February 28, 2018 because the offerings had taken place before the enactment of the Trial Measures; however, we will be required to complete such filings with the CSRC for our future offerings. If we cannot complete such filings with the CSRC, we may not continue to offer securities to investors and cause the value of our securities to significantly decline or, in extreme cases, become worthless.

Any increase in applicable enterprise income tax rates may result in significantly higher tax burden or the disgorgement of any benefits we enjoyed in the past, which could in turn materially and adversely affect our business, financial condition and results of operations.

Prior to April 1, 2023, our subsidiaries operating in the United Kingdom had been subject to income tax rate at 19%. Form April 1, 2023, the income tax rate for our subsidiaries operating in the United Kingdom increased to 25%. Changes that represent an increase in our tax burden can negatively impact our business. Such changes include changes in tax rates, tax base, tax deductibility and, occasionally, the creation of taxes (temporary or non-temporary). If these changes directly or indirectly increase our tax burden, we may have our gross margin reduced, adversely affecting our business, financial condition and results of operations.

Under the PRC enterprise income tax law, we may be classified as a PRC “resident enterprise,” which could result in unfavorable tax consequences to us and our non-PRC shareholders.

The PRC enterprise income tax law and its implementing rules provide that enterprises established outside of China whose “de facto management bodies” are located in China are considered “resident enterprises” under PRC tax laws. The implementing rules define the term “de facto management bodies” as a management body which substantially manages, or has control over the business, personnel, finance and assets of an enterprise. On April 22, 2009, the State Administration of Taxation issued Circular 82, which provides that a foreign enterprise controlled by a PRC company or a group of PRC companies will be classified as a “resident enterprise” with its “de facto management body” located within China if all of the following requirements are satisfied: (1) the senior management and core management departments in charge of its daily operations function are mainly in China; (2) its financial and human resources decisions are subject to determination or approval by persons or bodies in China; (3) its major assets, accounting books, company seals, and minutes and files of its board and shareholders’ meetings are located or kept in China; and (4) at least half of the enterprise’s directors with voting right or senior management reside in China. The State Administration of Taxation issued a bulletin on August 3, 2011 to provide more guidance on the implementation of Circular 82. The bulletin clarifies certain matters relating to resident status determination, post-determination administration and competent tax authorities. Although both the circular and the bulletin only apply to offshore enterprises controlled by PRC enterprises and not those by PRC individuals, the determination criteria set forth in the circular and administration clarification made in the bulletin may reflect the general position of the State Administration of Taxation on how the “de facto management body” test should be applied in determining the tax resident status of offshore enterprises and the administration measures should be implemented, regardless of whether they are controlled by PRC enterprises or PRC individuals.

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In addition, the State Administration of Taxation issued a bulletin on January 29, 2014 to provide more guidance on the implementation of Circular 82. This bulletin further provides that, among other things, an entity that is classified as a “resident enterprise” in accordance with the circular shall file the application for classifying its status of resident enterprise with the local tax authorities where its main domestic investors are registered.

As the tax resident status of an enterprise is subject to the determination by the PRC tax authorities, if we are deemed as a PRC “resident enterprise,” we will be subject to PRC enterprise income tax on our worldwide income at a uniform tax rate of 25.0%, although dividends distributed to us from our existing PRC subsidiaries and any other PRC subsidiaries which we may establish from time to time could be exempt from the PRC dividend withholding tax due to our PRC “resident recipient” status. This could have a material adverse effect on our overall effective tax rate, our income tax expenses and our net income. Furthermore, dividends, if any, paid to our shareholders and ADS holders may be decreased as a result of the decrease in distributable profits. In addition, if we were to be considered a PRC “resident enterprise,” dividends we pay with respect to the ADSs or ordinary shares and the gains realized from the transfer of the ADSs or ordinary shares may be considered income derived from sources within China and be subject to PRC withholding tax, which could have a material adverse effect on the value of your investment in us and the price of the ADSs.

There are uncertainties under the PRC enterprise income tax law relating to the withholding tax liabilities of our PRC subsidiaries, and dividends payable by our PRC subsidiaries to our offshore subsidiaries may not qualify to enjoy certain preferential treatments.

Under the PRC enterprise income tax and its implementation rules, the profits of a foreign-invested enterprise generated through operations, which are distributed to its immediate holding company outside China, will be subject to a withholding tax rate of 10.0%. Pursuant to a special arrangement between Hong Kong and China, such rate may be reduced to 5.0% if a Hong Kong resident enterprise owns more than 25.0% of the equity interest in the PRC company and can be considered as a “beneficial owner” and entitled to treaty benefits under the Double Taxation Arrangement (Hong Kong). The State Administration of Taxation promulgated the Notice on Issues Relating to “Beneficial Owner” in Tax Treaties, or Circular 9, defines the “beneficial owner” as a party who holds ownership of and control over the income of the entity, or the rights or assets from which such income are derived. Circular 9 sets forth certain detailed factors in determining the “beneficial owner” status. Further, the State Administration of Taxation promulgated the Notice on How to Recognize the “Beneficial Owner” in Tax Treaties on June 29, 2012, which replaced the Notice on How to Understand and Recognize the “Beneficial Owner” in Tax Treaties. Furthermore, the State Administration of Taxation promulgated Announcement of the State Administration of Taxation on Issues Relating to “Beneficial Owner” in Tax Treaties (“Circular 9”) in February 3, 2018, which took effect on April 1, 2018, replaced the Notice on How to Understand and Recognize the “Beneficial Owner” in Tax Treaties and provides guidance for determining whether a resident of a contracting state is the “beneficial owner” of an item of income under China’s tax treaties and tax arrangements. Entitlement to a lower tax rate on dividends according to tax treaties or arrangements between the PRC central government and governments of other countries or regions is subject to inspection or approval of the relevant tax authorities.

Our current PRC subsidiaries are wholly owned by our Hong Kong subsidiary. Thus, dividends paid by our PRC subsidiaries to us through our Hong Kong wholly-owned subsidiaries may be subject to the 5% withholding tax if we and our Hong Kong subsidiaries are considered as “non-resident enterprises” under the PRC Enterprise Income Tax Law and our Hong Kong subsidiaries are considered as “beneficial owners” and entitled to treaty benefits under the Double Taxation Arrangement (Hong Kong). If our Hong Kong subsidiaries are not regarded as the beneficial owners of any such dividends, they will not be entitled to the treaty benefits under the Double Taxation Arrangement (Hong Kong). As a result, such dividends would be subject to regular withholding tax of 10% as provided by the PRC domestic law rather than the favorable rate of 5% applicable under the Double Taxation Arrangement (Hong Kong). As a result, we cannot assure you that we will be entitled to any preferential withholding tax rate under tax treaties for dividends received from our PRC subsidiaries.

We face uncertainties with respect to indirect transfers of the equity interests in PRC resident enterprises by their non-PRC holding companies.

The State Administration of Taxation issued Bulletin on Several Issues concerning the Enterprise Income Tax on the Indirect Transfers of Properties by Non-Resident Enterprises (“Bulletin 7”), on February 3, 2015. Under Bulletin 7, an “indirect transfer” of assets, including equity interests in a PRC resident enterprise, by non-PRC resident enterprises may be re-characterized and treated as a direct transfer of PRC taxable assets if the arrangement does not have a reasonable commercial purpose and was established for the purpose of avoiding payment of PRC enterprise income tax. As a result, gains derived from such indirect transfer may be subject to PRC enterprise income tax. According to Bulletin 7, “PRC taxable assets” include assets attributed to an establishment in China, immoveable properties in China, and equity investments in PRC resident enterprises. In respect of an indirect offshore transfer of assets of a PRC establishment, the relevant gain is to be regarded as effectively connected with the PRC establishment and therefore included in its enterprise income tax filing, and would consequently be subject to PRC enterprise income tax at a rate of 25.0%. If the underlying transfer relates to the immoveable properties in China or to equity investments in a PRC resident enterprise that is not effectively connected to a PRC establishment of a non-resident enterprise, a PRC enterprise income tax at 10.0% would apply, subject to available preferential tax treatment under applicable tax treaties or similar arrangements. The party obligated to make the transfer payments has the withholding obligation. There is uncertainty as to the implementation details of Bulletin 7. If Bulletin 7 was determined by the tax authorities to be applicable to some of our transactions involving PRC taxable assets, our offshore subsidiaries conducting the relevant transactions might be required to spend valuable resources to comply with Bulletin 7 or to establish that the relevant transactions should not be taxed under Bulletin 7.

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On October 17, 2017, the State Administration of Taxation issued the Bulletin on Issues Concerning the Source-based Withholding of Enterprise Income Tax on Non-resident Enterprises (“Bulletin 37”), which became effective on December 1, 2017. According to Bulletin 37, non-resident enterprises who voluntarily declare their enterprise income tax shall at the same time confirm when they would make payments for the declared amount of tax. If the withholding agent fails to or is unable to withhold the income tax in accordance with the law, the non-resident enterprise will be deemed to have cleared its tax payment on time if it voluntarily declares and pays the tax before or within the time limit the tax authority orders it to do so. If the taxable income before withholding on a source-basis falls within the form of dividends or any equity investment gains, the obligation to settle such tax payments is triggered on the date of actual payment of the dividends or other equity investment gains. In addition, on December 1, 2017, Bulletin 37 repealed the Notice of the State Administration of Taxation on Strengthening the Administration over Enterprise Income Tax on Income of Non-resident Enterprises from Equity Transfer and Notice of the State Administration of Taxation on Issuing the Interim Measures for the Administration of Source-based Withholding of the Enterprise Income Tax of Non-resident Enterprises issued by the State Administration of Taxation on December 10, 2009 and January 1, 2009, respectively.

As a result, we and our non-PRC shareholders may have the risk of being taxed for the disposition of our ordinary shares or ADS and may be required to spend valuable resources to comply with Bulletin 7 and Bulletin 37 or to establish that we or our non-PRC shareholders should not be taxed as an indirect transfer, which may have a material adverse effect on our financial condition and results of operations or the investment by non-PRC investors in us.

Restrictions on currency exchange may limit our ability to receive and use our revenue effectively.

Restrictions on currency exchange may limit our ability to use revenue generated in Renminbi to fund any business activities we may have outside China in the future or to make dividend payments to our shareholders and ADS holders in U.S. dollars. Under current PRC laws and regulations, Renminbi is freely convertible for current account items, such as trade and service-related foreign exchange transactions and dividend distributions. However, Renminbi is not freely convertible for direct investment or loans or investments in securities outside China, unless such use is approved by SAFE. For example, foreign exchange transactions under our subsidiary’s capital account, including principal payments in respect of foreign currency-denominated obligations, remain subject to significant foreign exchange supervision and the approval requirement of SAFE. These limitations could affect our ability to obtain foreign exchange for capital expenditures.

Our PRC subsidiaries are permitted to declare dividends to our offshore subsidiary holding their equity interest, convert the dividends into a foreign currency and remit to its shareholder outside China. In addition, in the event that any of our PRC subsidiaries liquidates, proceeds from the liquidation may be converted into foreign currency and distributed outside China to our overseas subsidiary holding its equity interest. Furthermore, in the event that any of the VIEs liquidates, our PRC subsidiary, Zhuhai Bright Scholar, may, pursuant to the power of attorneys respectively executed by Ms. Meirong Yang and Mr. Wenjie Yang, require such VIE to pay and remit the proceeds from such liquidation to Zhuhai Bright Scholar. Zhuhai Bright Scholar then may distribute such proceeds to us after converting them into foreign currency and remit them outside China in the form of dividends or other distributions. Once remitted outside of China, dividends, distributions or other proceeds from liquidation paid to us will not be subject to restrictions under PRC regulations on its further transfer or use.

Other than the above distributions by and through our PRC subsidiaries, which are permitted without further approvals, any conversion of the Renminbi-denominated revenue generated by the VIEs for direct investment, loans or investment in securities outside China will be subject to the limitations discussed above. To the extent we need to convert and use any Renminbi-denominated revenue generated by the VIEs not paid to our PRC subsidiaries and revenue generated by our PRC subsidiaries not declared and paid as dividends, the limitations discussed above will restrict the convertibility of, and our ability to directly receive and use such revenue. As a result, our business and financial condition may be adversely affected. In addition, we cannot assure you that the PRC regulatory authorities will not impose more stringent restrictions on the convertibility of Renminbi in the future, especially with respect to foreign exchange transactions.

In light of the flood of capital outflows of China in 2016 due to the weakening Renminbi, the PRC government has imposed more restrictive foreign exchange policies and increased scrutiny of major outbound capital movement including overseas direct investment. More restrictions and substantial vetting process are put in place by SAFE to regulate cross-border transactions falling under the capital account. If any of our shareholders regulated by such policies fails to satisfy the applicable overseas direct investment filing or approval requirement timely or at all, it may be subject to penalties from the relevant PRC authorities. The PRC government may at its discretion further restrict access in the future to foreign currencies for current account transactions. If the foreign exchange control system prevents us from obtaining sufficient foreign currencies to satisfy our foreign currency demands, we may not be able to utilize cash held in mainland China or generated by a PRC entity to fund our operations outside of mainland China or pay dividends in foreign currencies to our shareholders, including holders of the ADSs. There is no assurance the PRC government will not impose restrictions on us, our subsidiaries, and the VIEs to transfer cash. Although currently there are no equivalent or similar restrictions or limitations in Hong Kong on cash transfers in, or out of, our subsidiary in Hong Kong (including currency conversion), if certain restrictions or limitations in mainland China were to become applicable to cash transfers in and out of Hong Kong entities (including currency conversion) in the future, the funds in our subsidiaries in Hong Kong, likewise, may not be available to meet our currency demand. See “Introduction—Cash Flows through Our Organization.”

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Our subsidiaries and affiliated entities in China are subject to restrictions on making dividends and other payments to us.

As a holding company, we primarily rely on dividends paid by our subsidiaries in China for our cash needs, including paying dividends and other cash distributions to our shareholders to the extent we choose to do so, servicing any debt we may incur and paying our operating expenses. The income for our PRC subsidiaries, especially Zhuhai Bright Scholar, in turn depends on the service fees paid by the VIEs. Current PRC regulations permit our subsidiaries in China to pay dividends to us only out of their accumulated profits, if any, determined in accordance with Chinese accounting standards and regulations. Under the applicable requirements of PRC law, our PRC subsidiaries may only distribute dividends after they have made allowances to fund certain statutory reserves. These reserves are not distributable as cash dividends. Furthermore, if our subsidiaries or the VIEs in China incur debt on their own behalf in the future, the instruments governing the debt may restrict their ability to pay dividends or make other payments to us. Any such restrictions may materially affect such entities’ ability to make dividends or make payments, in service fees or otherwise, to us, which may materially and adversely affect our business, financial condition and results of operations.

Certain PRC regulations, including the M&A Rules and national security regulations, may require a complicated review and approval process which could make it more difficult for us to pursue growth through acquisitions in China.

The Provisions on the Merger and Acquisition of Domestic Enterprises by Foreign Investors (Revised in 2009), or the M&A Rules, established additional procedures and requirements that could make merger and acquisition activities in China by foreign investors more time-consuming and complex. For example, MOFCOM must be notified if a foreign investor takes control of a PRC domestic enterprise. In addition, certain acquisitions of domestic companies by offshore companies that are related to or affiliated with the same entities or individuals of the domestic companies, are subject to MOFCOM approval. In addition, the Implementing Rules Concerning Security Review on Mergers and Acquisitions by Foreign Investors of Domestic Enterprises, issued by MOFCOM in August 2011, require that mergers and acquisitions by foreign investors in “any industry with national security concerns” be subject to national security review by MOFCOM. In addition, any activities attempting to circumvent such review process, including structuring the transaction through a proxy or contractual control arrangement, are strictly prohibited. According to the Q&A on the official website of the Foreign Investment Department of the Ministry of Commerce in 2024, after the implementation of the Foreign Investment Law in 2020, the competent commerce department will no longer approve or record the establishment and changes of foreign-invested enterprises. Foreign investors’ mergers and acquisitions of domestic enterprises shall comply with the requirements of the M&A Rules other than the approval procedures.

Complying with these requirements could be time-consuming. The required notification, review or approval process may materially delay or affect our ability to complete merger and acquisition transactions in China. As a result, our ability to seek growth through acquisitions may be materially and adversely affected.

In addition, if MOFCOM determines that we should have obtained its approval for our entry into contractual arrangements with the VIEs and the shareholders of the VIEs, we may be required to file for remedial approvals. We cannot assure you that we would be able to obtain such approval from MOFCOM. We may also be subject to administrative fines or penalties by MOFCOM that may require us to limit our business operations in China, delay or restrict the conversion and remittance of our funds in foreign currencies into China or take other actions that could have material adverse effect on our business, financial condition and results of operations.

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Failure by the beneficial owners of our shares who are PRC residents to comply with certain PRC foreign exchange regulations could restrict our ability to distribute profits, restrict our cross-border investment activities and subject us to liability under PRC law.

SAFE has promulgated regulations, including the Notice on Relevant Issues Relating to Foreign Exchange Control on Domestic Residents’ Investment and Financing and Round-Trip Investment through Special Purpose Vehicles (“Circular 37”), effective on July 4, 2014, and its appendices. Circular 37 requires PRC residents, including PRC institutions and individuals, to register with local branches of SAFE if they direct establish or indirect control an offshore entity for the purpose of overseas investment and financing. Such domestic or offshore entities with PRC residents’ legally owned assets or equity interests are referred to in Circular 37 as a “special purpose vehicle.” The term “control” under Circular 37 is broadly defined as the operation rights, beneficiary rights or decision-making rights acquired by the PRC residents in the offshore special purpose vehicles by means as acquisition, trust, proxy, voting rights, repurchase, convertible bonds or other arrangements. Circular 37 further requires amendment to the registration in the event of any significant changes with respect to the special purpose vehicle, such as increase or decrease of capital contributed by PRC individuals, share transfer or exchange, merger, division or other material event. If a PRC shareholder holding interests in a special purpose vehicle fails to fulfill the required SAFE registration, the PRC subsidiaries of that special purpose vehicle may be prohibited from making profit distributions to the offshore parent and from carrying out subsequent cross-border foreign exchange activities, and the special purpose vehicle may be restricted in its ability to contribute additional capital into its PRC subsidiaries. Further, failure to comply with the various SAFE registration requirements described above could result in liability under PRC law for foreign exchange evasion.

These regulations apply to our direct and indirect shareholders who are PRC residents and may apply to any offshore acquisitions or share transfers that we make in the future if our shares are issued to PRC residents. Additionally, in practice, different local SAFE branches may have different views and procedures on the application and implementation of SAFE regulations, and there remains uncertainty with respect to its implementation. As of the date of this annual report, all PRC residents known to us that currently hold direct or indirect interests in our company either have completed the necessary registrations or are in the process of updating their necessary registration with SAFE as required by Circular 37. However, we cannot assure you that these individuals or any other direct or indirect shareholders or beneficial owners of our company who are PRC residents will be able to successfully complete the registration or update the registration of their direct and indirect equity interest as required in the future. If they fail to make or update the registration, our PRC subsidiaries could be subject to fines and legal penalties, and SAFE could restrict our cross-border investment activities and our foreign exchange activities, including restricting our PRC subsidiaries’ ability to distribute dividends to, or obtain loans denominated in foreign currencies from, our company, or prevent us from contributing additional capital into our PRC subsidiaries. As a result, our business operations and our ability to pay dividends could be materially and adversely affected.

The filing with and reporting to the CSRC will be required in connection with our capital raising activities and occurrences of other specific events, and we cannot assure you that we or the Affiliated Entities will be able to make such filing or reporting in a timely manner or at all, in which case we may face regulatory sanctions for failure to make such filing or reporting.

Under the current Regulations on Merger and Acquisition of Domestic Enterprises by Foreign Investors (the “M&A Rules”), as jointly adopted by six PRC regulatory agencies in 2006 and amended in 2009, an offshore special purpose vehicle that is controlled by PRC domestic companies or individuals and that has been formed for the purpose of an overseas listing of securities through acquisitions of PRC domestic companies or assets is required to obtain the approval of the CSRC prior to the listing and trading of such special purpose vehicle’s securities on an overseas stock exchange. However, substantial uncertainty remains regarding the scope and applicability of the M&A Rules to offshore special purpose vehicles. It remains uncertain as to how the M&A Rules will be interpreted or implemented in the context of an overseas offering and its opinions summarized above are subject to any new laws, regulations and rules or detailed implementations and interpretations in any form relating to the M&A Rules. We cannot assure you that relevant PRC government agencies, including the CSRC, might, from time to time, further clarify or interpret the M&A Rules in writing or orally and require their approvals to be obtained for an offering. If we fail to obtain required CSRC approval under the M&A Rules in a timely manner, we may face sanctions by the CSRC or other PRC regulatory agencies, which may include fines and penalties on the operations in China, delays in or restrictions on the repatriation of the proceeds from the relevant offering into China, restrictions on or prohibition of the payments or remittance of dividends by our WFOE or the VIE in China, or other actions that could have a material adverse effect on our business, results of operations, financial condition, reputation and prospects, as well as the trading price of the ADSs.

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On July 6, 2021, the General Office of the State Council of the PRC, together with another regulatory authority, jointly promulgated the Opinions on Strictly Cracking Down Illegal Securities Activities in Accordance with the Law, which calls for enhanced administration and supervision of overseas-listed China-based companies, proposes to revise the relevant regulation governing the overseas issuance and listing of shares by such companies, and clarifies the responsibilities of competent domestic industry regulators and government authorities.

Moreover, on February 17, 2023, the CSRC, as approved by the State Council, released a new filing-based regime to regulate overseas offerings and listings by domestic companies. The new filing rules consist of the Trial Measures for Administration of Overseas Securities Offerings and Listings by Domestic Companies (the “Trial Measures”) and five interpretive guidelines (collectively, the “CSRC Filing Rules”), which came into effect on March 31, 2023. Under the CSRC Filing Rules, a filing-based regulatory system shall be applied to “indirect overseas offerings and listings” of PRC domestic companies. Pursuant to the CSRC Filing Rules, if the issuer meets either of the following conditions, its securities offerings and listing will be deemed as an “indirect overseas offering and listing by a PRC domestic company” and is therefore subject to the filing requirements: (1) any of the revenues, profits, total assets or net assets of the issuer’s Chinese operating entities in the most recent financial year accounts for more than 50% of the corresponding data in the issuer’s audited consolidated financial statements for the same period; and (2) the key link of its business operations are conducted in mainland China or its principal place of business is located in the mainland China, or the majority of senior management in charge of business operations are Chinese citizens or have domicile in the PRC. The CSRC Filing Rules state that, any post-listing follow-on offering by an issuer in an the same overseas market where it has previously offered and listed securities, including issuance of shares, convertible notes and other similar securities, shall be subject to filing requirement within three business days after the completion of the offering, and if the subsequent offering is conducted in other overseas markets, it shall be filed with the CSRC within three working days after the applications for such offerings are submitted. Therefore, any of our future offering and listing of our securities in an overseas market will be subject to the filing requirements under the CSRC Filing Rules. In addition, we are required to submit a report to CSRC after the occurrence and public disclosure of the following material events: (1) change of control; (2) investigations or sanctions imposed by overseas securities regulatory agencies or other relevant competent authorities; (3) change of listing status or transfer of listing segment and (4) voluntary or mandatory delisting. If we fail to complete the filing or reporting procedures with the CSRC as required, we may face sanctions by the CSRC, which may include orders for correction, warnings and fines. Any adverse regulatory actions or sanctions could have a material adverse effect on our business, financial condition, results of operations, reputation and prospects, as well as the trading price of the ADSs.

Failure to comply with governmental regulations and other legal obligations concerning data protection and cybersecurity may materially and adversely affect our business, as we routinely collect, store and use data during the conduct of our business.

We routinely collect, store and use data during our operations. We are subject to PRC laws and regulations governing the collecting, storing, sharing, using, processing, disclosure and protection of data on the Internet and mobile platforms as well as cybersecurity. On April 13, 2020, the Office of the Central Cyberspace Affairs Commission and 10 other government authorities jointly promulgated the Measures for Cybersecurity Review. On August 17, 2021, the PRC State Council promulgated the Regulations on Protection of Critical Information Infrastructure, which became effective on September 1, 2021. Pursuant to the Regulations on Protection of Critical Information Infrastructure, critical information infrastructure shall mean any important network facilities or information systems of an important industry or field, such as public communication and information service, energy, communications, water conservation, finance, public services, e-government affairs and national defense science, which may endanger national security, peoples’ livelihood and public interest in the event of damage, function loss or data leakage. In addition, relevant administration departments of each critical industry and sector (the “Protection Departments”), shall be responsible to formulate eligibility criteria and determine the critical information infrastructure operator in the respective industry or sector. The operators shall be informed about the final determination as to whether they are categorized as critical information infrastructure operators. On January 4, 2022, the CAC announced the adoption of the Cybersecurity Review Measures, and effective February 15, 2022, online platforms and network providers possessing personal information of more than one million individual user must undergo a cybersecurity review by the CAC when they seek listing in foreign markets. Furthermore, the Standing Committee of the National People’s Congress passed the Personal Information Protection Law of the PRC, which became effective from November 1, 2021 and requires personal information processing operators, among other regulatory requirements, to obtain a personal information protection certification issued by recognized institutions in accordance with the CAC regulation before such personal information can be transferred out of China. As of the date of this annual report, we have not been informed that we are identified as a critical information infrastructure operator by any governmental authorities.

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On August 20, 2021, the Standing Committee of the National People’s Congress promulgated the Personal Information Protection Law, which became effective on November 1, 2021. The Personal Information Protection Law aims to protect personal information rights and interests, regulate the processing of personal information, ensure the orderly and free flow of personal information in accordance with the law, and promote the reasonable use of personal information. According to the Personal Information Protection Law, personal information includes all kinds of identified or identifiable information related to natural persons recorded by electronic or other means, but excludes de-identified information. The Personal Information Protection Law also specifies the rules for handling sensitive personal information, which includes biometrics, religious beliefs, specific identities, medical health, financial accounts, trails and locations, and personal information of teenagers under fourteen years old and other personal information, which may easily infringe the personal dignity or harm safety of livelihood and property upon leakage or illegal usage. Personal information handlers are responsible for their personal information handling activities, and must adopt necessary measures to safeguard the security of the personal information they handle. Otherwise, the personal information handlers will be ordered for rectification or suspension or termination of provision of services, confiscation of illegal income, subject to fines or other penalties.

We face regulatory uncertainties in China that could restrict our ability to grant share incentive awards to our employees or consultants who are PRC citizens.

Pursuant to the Notices on Issues concerning the Foreign Exchange Administration for Domestic Individuals Participating in a Stock Incentive Plan of an Overseas Publicly-Listed Company issued by SAFE on February 15, 2012 (“Circular 7”), a qualified PRC agent (which could be the PRC subsidiary of the overseas-listed company) is required to file an application with SAFE on behalf of “domestic individuals” (both PRC residents and non-PRC residents who reside in China for a continuous period of not less than one year, excluding foreign diplomatic personnel and representatives of international organizations) who are granted shares or share options by the overseas-listed company according to its share incentive plan. The application is for conducting SAFE registration with respect to such share incentive plan and obtaining approval for an annual allowance with respect to the purchase of foreign exchange in connection with the share purchase or share option exercise. The foreign exchange income received from the sale of shares and dividends distributed by the overseas listed company and any other income by such PRC individuals shall be fully remitted into a collective foreign currency account in China, which is opened and managed by the PRC domestic agent before distribution to such individuals. In addition, such domestic individuals must also retain an overseas entrusted institution to handle matters in connection with their exercise of share options and their purchase and sale of shares. The PRC domestic agent also needs to update registration with SAFE within three months after the overseas-listed company materially changes its share incentive plan or make any new share incentive plans.

We have granted shares options under the 2017 Plan and the 2024 Plan in the past and may continue to grant additional share options in the future. When we do, we need to apply for or update our registration with SAFE or its local branches on behalf of our employees or consultants who receive options or other equity-based incentive grants under our share incentive plan or material changes in our share incentive plan. However, we may not always be able to make applications or update our registration on behalf of our employees or consultants who hold any type of share incentive awards in compliance with Circular 7. We cannot assure you that such applications or update of registration will be successful. If we or the participants of our share incentive plan who are PRC citizens fail to comply with Circular 7, we and/or such participants of our share incentive plan may be subject to fines and legal sanctions. There may be additional restrictions on the ability of such participants to exercise their share options or remit proceeds gained from sale of their shares into China, and we may be prevented from further granting share incentive awards under our share incentive plan to our employees or consultants who are PRC citizens.

Labor contract laws in China may adversely affect our results of operations.

The current PRC Labor Contract Law imposes greater liabilities on employers and significantly increases the cost of an employer’s decision to reduce its workforce. Moreover, it stipulates that the employment contract of an employee must be automatically terminated upon reaching the mandatory retirement age. If we decide to significantly change or decrease our workforce, the Labor Contract Law could adversely affect our ability to enact such changes in a manner that is most advantageous to our business or in a timely and cost-effective manner, thus materially and adversely affecting our financial condition and results of operations.

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Increases in labor costs and employee benefits in China may adversely affect our business and our profitability.

We are required by PRC laws and regulations to pay various statutory employee benefits, including pensions, housing fund, medical insurance, work-related injury insurance, unemployment insurance and maternity insurance to designated government agencies for the benefit of our employees. The determination of the relevant government agencies whether an employer has made adequate payments of the requisite statutory employee benefits is within their discretion. Employers that fail to make adequate payments may be subject to late payment fees, fines and/or other penalties. Future increases in China’s inflation and material increases in labor costs and employee benefits may materially and adversely affect our profitability and results of operations unless we are able to pass on these costs to our students by increasing tuition.

Litigation and negative publicity surrounding China-based companies listed in the United States may negatively impact the trading price of the ADSs.

Litigation and negative publicity surrounding companies with operations in China listed in the United States have negatively impacted stock prices of these companies. Certain politicians in the United States have publicly warned investors to shun China-based companies listed in the United States. The SEC and the Public Company Accounting Oversight Board (United States), or the PCAOB, also issued a joint statement on April 21, 2020, reiterating the disclosure, financial reporting and other risks involved in the investments in companies that are based in emerging markets, and the limited remedies thereof. Furthermore, various equity-based research organizations have recently published reports on China-based companies after examining their corporate governance practices, related party transactions, sales practices and financial statements. These reports have led to special investigations and listing suspensions on U.S. national exchanges. Any similar scrutiny on us, regardless of its merit, could cause the market price of the ADSs to fall, divert management resources and energy, cause us to incur expenses in defending ourselves against rumors, and increase the premiums we pay for director and officer insurance.

If the PCAOB is unable to inspect or investigate completely auditors located in China for two consecutive years, our ADSs will be delisted and prohibited from trading in the over-the-counter market under the Holding Foreign Companies Accountable Act (“HFCAA”). The delisting of the ADSs, or the threat of their being delisted, may materially and adversely affect the value of your investment.

Pursuant to the HFCAA, if the SEC determines that we have filed audit reports issued by a registered public accounting firm that has not been subject to inspections by the PCAOB for two consecutive years, the SEC will prohibit our shares or ADSs from being traded on a national securities exchange or in the over-the-counter trading market in the United States.

On December 16, 2021, the PCAOB issued a report to notify the SEC of its determination that the PCAOB was unable to inspect or investigate completely registered public accounting firms headquartered in mainland China and Hong Kong and our auditor was subject to that determination. On December 15, 2022, the PCAOB removed mainland China and Hong Kong from the list of jurisdictions where it is unable to inspect or investigate completely registered public accounting firms. For this reason, we do not expect to be identified as a Commission-Identified Issuer under the HFCAA after we file this annual report on Form 20-F for the fiscal year ended August 31, 2024.

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Each year, the PCAOB will determine whether it can inspect and investigate completely audit firms in mainland China and Hong Kong, among other jurisdictions. Our financial statements contained in this annual report on Form 20-F have been audited by Deloitte Touche Tohmatsu Certified Public Accountants LLP, an independent registered public accounting firm headquartered in mainland China. As of the date of this annual report, we are not and do not expect to be identified by the SEC as a “Commission-identified Issuer” under the HFCAA. However, if the PCAOB determines in the future that it no longer has full access to inspect and investigate completely accounting firms in mainland China and Hong Kong and we use an accounting firm headquartered in one of these jurisdictions to issue an audit report on our financial statements filed with the SEC, we would be identified as a Commission-Identified Issuer following the filing of the annual report on Form 20-F for the relevant fiscal year. In accordance with the HFCAA, our securities would be prohibited from being traded on a national securities exchange or in the over-the-counter trading market in the United States if we are identified as a Commission-Identified Issuer for two consecutive years under such circumstances. If our shares and the ADSs are prohibited from trading in the United States, there is no assurance that we will be able to list on a non-U.S. exchange or that a market for our shares will develop outside of the United States. A prohibition of being able to trade in the United States would substantially impair your ability to sell or purchase the ADSs when you wish to do so, and the risk and uncertainty associated with delisting would have a negative impact on the price of the ADSs. Also, such a prohibition would significantly affect our ability to raise capital on terms acceptable to us, or at all, which would have a material adverse impact on our business, financial condition and prospects.

Risks Related to Our Ordinary Shares and ADSs

The trading price of the ADSs may experience rapid and substantial volatility, which could result in substantial losses for investors.

The trading price of the ADSs is likely to be volatile and could fluctuate widely due to factors beyond our control. This may happen because of broad market and industry factors, including the performance and fluctuation of the market prices of other companies with business operations located mainly in China that have listed their securities in the United States. In addition, factors specific to our operations can contribute to the volatility of the ADSs. These factors may include, but are not limited to:

● actual or anticipated variations in our revenues, earnings, cash flow and changes or revisions of our expected results;

● fluctuations in operating metrics;

● announcements of new investments, acquisitions, strategic partnerships or joint ventures by us or our competitors;

● announcements of new products, services and courses and expansions by us or our competitors;

● changes in financial estimates by securities analysts;

● announcements of studies and reports relating to the quality of our product, service and course offerings or those of our competitors;

● changes in the performance or market valuations of other education companies;

● detrimental negative publicity about us, our competitors or our industry;

● additions or departures of key personnel;

● release of lockup or other transfer restrictions on our outstanding equity securities or sales of additional equity securities;

● regulatory developments affecting us or our industry;

● general economic or political conditions affecting China or elsewhere in the world;

● fluctuations of exchange rates between the Renminbi and the British pound sterling and the U.S. dollar; and

● potential litigation or regulatory investigations.

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Any of these factors may result in significant and sudden changes in the volume and price of the trading of the ADSs. The securities of some China-based companies that have listed their securities in the United States have experienced significant volatility since their initial public offerings in recent years, including, in some cases, substantial declines in the trading prices of their securities. The trading performances of these companies’ securities after their offerings may affect the attitudes of investors towards Chinese companies listed in the United States in general, which consequently may impact the trading performance of the ADSs, regardless of our actual operating performance. In addition, any negative news or perceptions about inadequate corporate governance practices or fraudulent accounting, corporate structure or other matters of other Chinese companies may also negatively affect the perceptions of investors towards Chinese companies in general, including us, regardless of whether we have engaged in any inappropriate activities. In particular, the global financial crisis, the ensuing economic recessions and deterioration in the credit market in many countries have contributed and may continue to contribute to extreme volatility in the global stock markets.

Moreover, recent instances of extreme stock price fluctuations, especially among companies with smaller public floats, have led to increased volatility in the market. As we have a relatively small public float, we may experience greater stock price volatility, including aggressive price run-ups and declines, lower trading volume and less liquidity, compared with companies with larger public floats. In particular, the ADSs may be subject to rapid and substantial price volatility, low volumes of trades and large spreads in bid and ask prices. Such volatility, including any stock run-up, may be unrelated to our actual or expected operating performance, financial condition or prospects, and industry, market or economic factors, which makes it difficult for prospective investors to assess such rapidly changing value of the ADSs. In addition, due to the potential low trading volumes, even small quantities of buying or selling can have a disproportionate impact on the price of the ADSs. This low volume of trades could also cause the price of the ADSs to fluctuate significantly, with large percentage changes occurring within a single trading day. Holders of the ADSs may also not be able to readily liquidate their investment or may be forced to sell at depressed prices due to such low-volume trading. As a result of such volatility, investors may experience losses on their investment in the ADSs. Such volatility also could adversely affect our ability to issue additional ADSs or other securities and our ability to obtain additional financing in the future, as well as our ability to retain key employees, many of whom have been granted equity incentives. Furthermore, the potential extreme volatility may confuse the public investors of the value of the ADSs, distort the market’s perception of the price of the ADSs, and our financial performance and public image, and negatively affect the long-term liquidity of the ADSs, regardless of our actual or expected operating performance.

In the past, shareholders of public companies have often brought securities class action suits against companies following periods of instability in the market price of their securities. If we were involved in a class action suit, it could divert a significant amount of our management’s attention and other resources from our business and cost us significant expenses to defend the suit, which could harm our results of operations. Any such class action suit, successful or not, could harm our reputation and restrict our ability to raise capital in the future. In addition, if a claim is successfully made against us, we may be required to pay significant damages, which could have a material adverse effect on our results of operations and financial condition.

Substantial future sales or perceived potential sales of the ADSs in the public market could cause the price of the ADSs to decline.

Sales of substantial amounts of the ADSs in the public market, or the perception that these sales could occur, could adversely affect the market price of the ADSs. All of our outstanding ADSs are freely transferable without restriction or additional registration under the Securities Act. If any existing shareholder or shareholders sell a substantial amount of ADSs, the prevailing market price for the ADSs could be adversely affected. Such sales also might make it more difficult for us to sell in the future at a time and price that we deem appropriate.

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Techniques employed by short sellers may drive down the market price of the ADSs.

Short selling is a trading strategy where an investor sells securities that they have borrowed from a third party, with the intention of buying back the same securities at a later time to return to the lender. The short seller hopes to profit from a decrease in the value of the securities between the sale of the borrowed securities and the purchase of the replacement shares, as the short seller expects to pay less in that purchase than it received in the sale. As it is in the short seller’s interest for the price of the security to decline, many short sellers publish, or arrange for the publication of, negative opinions regarding the relevant issuer and its business prospects in order to create negative market momentum and generate profits for themselves after selling a security short. These short attacks have, in the past, led to selling of shares in the market.

Public companies listed in the United States with a significant portion of their operations in China have been the subject of short selling. Much of the scrutiny and negative publicity has centered on allegations of a lack of effective internal control over financial reporting resulting in financial and accounting irregularities and mistakes, inadequate corporate governance policies or a lack of adherence thereto and, in many cases, allegations of fraud. They may also be subject to external investigations by regulatory bodies such as the SEC. Additionally, shareholders have initiated lawsuits against some of these companies.

We may be the subject of unfavorable allegations made by short sellers in the future. Any such allegations may be followed by periods of instability in the market price of our common shares and ADSs and negative publicity. Once we become the subject of any unfavorable allegations, whether true or not, we would have to expend significant amount of resource to investigate such allegations and/or defend ourselves. While we would strongly defend against any such short seller attacks, we may be constrained in the manner in which we can proceed given the principles of freedom of speech, the availability of injunctive reliefs, applicable federal or state law or issues of commercial confidentiality. Such a situation could be costly and time-consuming and could distract our management from growing our business. Even if such allegations are ultimately proven to be groundless, allegations against us could severely impact our business operations and shareholders’ equity, and the value of any investment in the ADSs could be greatly reduced or even rendered worthless.

Our dual-class share structure with different voting rights will limit your ability to influence corporate matters and could discourage others from pursuing any change of control transactions that holders of our Class A ordinary shares and ADSs may view as beneficial.

As of November 30, 2024, Excellence Education Investment Limited and Ultimate Wise Group Limited collectively hold over 90% of the aggregate voting power of our company. See “Item 6. Directors, Senior Management And Employees—E. Share Ownership.” As a result of the dual-class share structure and the concentration of ownership, Excellence Education Investment Limited and Ultimate Wise Group Limited have considerable influence over matters such as decisions regarding mergers, consolidations, sale of all or substantially all of our assets, election of directors and other significant corporate actions. Their interests may not always align with the best interests of the company or our other shareholders. This concentration of ownership may discourage, delay or prevent a change in control of our company, which could have the effect of depriving our other shareholders of the opportunity to receive a premium for their shares as part of a sale of our company and may reduce the price of the ADSs. This concentrated control will limit your ability to influence corporate matters and could discourage others from pursuing any potential merger, takeover or other change of control transactions that holders of Class A ordinary shares and ADSs may view as beneficial.

If securities or industry analysts do not publish research or publish inaccurate or unfavorable research about our business, the market price for the ADSs and trading volume could decline.

The trading market for the ADSs will depend in part on the research and reports that securities or industry analysts publish about us or our business. If research analysts do not establish and maintain adequate research coverage or if one or more of the analysts who covers us downgrades the ADSs or publishes inaccurate or unfavorable research about our business, the market price for the ADSs would likely decline. If one or more research analysts discontinue their coverage of our company or reduce the frequency of publishing reports on us, it may lead to a reduced visibility of our company in the financial markets. This lack of visibility could adversely impact the market price and trading volume of the ADSs.

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Because our board has the complete discretion as to dividend distribution, the return on your investment in the ADSs will likely depend entirely upon any future price appreciation of the ADSs.

We declared a cash dividend of US$0.10, US$0.12 and US$0.12 per ordinary share on September 18, 2019, July 23, 2020 and July 21, 2021, respectively. Our board of directors has complete discretion as to whether to distribute dividends, subject to applicable laws. Even if our board of directors decides to declare and pay dividends, the timing, amount and form of future dividends, if any, will depend on, among other things, our future results of operations and cash flow, our capital requirements and surplus, the amount of distributions, if any, received by us from our subsidiaries, our financial condition, contractual restrictions and other factors deemed relevant by our board of directors. Accordingly, the return on your investment in the ADSs will likely depend entirely upon any future price appreciation of the ADSs. We cannot assure you that the ADSs will appreciate in value or even maintain the price at which you purchased the ADSs. You may not realize a return on your investment in the ADSs and you may even lose your entire investment in the ADSs.

U.S. holders that own 10% or more of the vote or value of our Class A ordinary shares or ADSs may suffer adverse tax consequences if any of our non-U.S. subsidiaries are characterized as a “controlled foreign corporation,” or a CFC, under Section 957(a) of the U.S. Internal Revenue Code of 1986, as amended, or the Code.

A non-U.S. corporation is considered a CFC if more than 50% of (1) the total combined voting power of all classes of shares of such corporation entitled to vote or (2) the total value of the shares of such corporation, is owned, or is considered as owned by applying certain constructive ownership rules, by U.S. shareholders (within the meaning of the Code) on any day during the taxable year of such non-U.S. corporation. Certain U.S. shareholders of a CFC generally are required to include currently in gross income such shareholders’ share of the CFC’s “Subpart F income,” a portion of the CFC’s earnings to the extent the CFC holds certain U.S. property and a portion of the CFC’s “global intangible low-taxed income” (as defined under Section 951A of the Code). Such U.S. shareholders are subject to current United States federal income tax with respect to such items, even if the CFC has not made an actual distribution to such shareholders.

Although we are not likely to be a CFC, because our group could include one or more United States subsidiaries, we believe that certain of our non-U.S. subsidiaries may be classified as CFCs. In the event that any of our subsidiaries are a CFC, U.S. holders who hold (directly, indirectly or constructively) 10% or more of the vote or value of our Class A ordinary shares or ADSs may realize adverse United States federal income tax consequences. If you are a U.S. holder who holds (directly, indirectly or constructively) 10% or more of the vote or value of our Class A ordinary shares or ADSs, you should consult your own tax advisors regarding the U.S. tax consequences of acquiring, owning or disposing our Class A ordinary shares or our ADSs and the impact of the legislation commonly known as Tax Cuts and Jobs Act of 2017, especially the changes to the rules relating to CFCs.

We may be classified as a passive foreign investment company for United States federal income tax purposes, which could result in adverse United States federal income tax consequences to United States investors in the ADSs or Class A ordinary shares.

We will be classified as a “passive foreign investment company,” or PFIC, if, in any particular taxable year, either (1) 75.0% or more of our gross income for such year consists of certain types of passive income, or (2) 50.0% or more of the average quarterly value of our assets during such year produce or are held for the production of passive income. Although the law in this regard is unclear, we treat the New VIEs as being owned by us for United States federal income tax purposes, not only because we exercise effective control over the operation of such entities but also because we are entitled to substantially all of their economic benefits, and, as a result, we consolidate their results of operation in our financial statements. Assuming that we are the owner of the New VIEs for United States federal income tax purposes, and based upon our historical and current income and assets, we do not believe that we are likely to be classified as a PFIC for the taxable year ended August 31, 2024.

The determination of whether we are or will become a PFIC will depend upon the composition of our income (which may differ from our historical results and current projections) and assets and the value of our assets from time to time, including, in particular, the value of our goodwill and other unbooked intangibles (which may depend upon the market value of the ADSs or Class A ordinary shares from time-to-time and may be volatile). In estimating the value of our goodwill and other unbooked intangibles, we have taken into account our market capitalization, which may fluctuate. Among other matters, if our market capitalization declines further, we may be classified as a PFIC for the current or future taxable years. It is also possible that the Internal Revenue Service, or the IRS, may challenge our classification or valuation of our goodwill and other unbooked intangibles, which may result in our company being, or becoming classified as, a PFIC for the current or future taxable years.

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Finally, in determining our PFIC status, we have relied on our unaudited and audited financials. If we are required to restate or amend our financials further, it is possible that our company may have been, or we may determine that it is, a PFIC.

The determination of whether we are or will be a PFIC may also depend, in part, on how, and how quickly, we use our liquid assets. Under circumstances where we retain significant amounts of liquid assets, or if the New VIEs were not treated as owned by us for United States federal income tax purposes, our risk of being classified as a PFIC may substantially increase. Because there are uncertainties in the application of the relevant rules and PFIC status is a factual determination made annually after the close of each taxable year, we cannot assure you that we will not be a PFIC for the current taxable year or any future taxable year.

If we are classified as a PFIC in any taxable year, a U.S. Holder (as defined in “Item 10. Additional Information—E. Taxation—United States Federal Income Tax Considerations”) may incur significantly increased United States federal income tax on gain recognized on the sale or other disposition of the ADSs or Class A ordinary shares and on the receipt of distributions on the ADSs or Class A ordinary shares to the extent such gain or distribution is treated as an “excess distribution” under the United States federal income tax rules, and such holders may be subject to burdensome reporting requirements. Further, if we are classified as a PFIC for any year during which a U.S. Holder holds the ADSs or Class A ordinary shares, we generally will continue to be treated as a PFIC for all succeeding years for which such U.S. Holder holds the ADSs or Class A ordinary shares. For more information, see “Item 10. Additional Information—E. Taxation—United States Federal Income Tax Considerations.”

Our memorandum and articles of association contains anti-takeover provisions that could have a material adverse effect on the rights of holders of our Class A ordinary shares and ADSs.

Our memorandum and articles of association contain provisions to limit the ability of others to acquire control of our company or prompt us to engage in change-of-control transactions. While these provisions exist with the intention of safeguarding our interests, they may inadvertently limit our shareholders’ opportunity to sell their shares at a premium over prevailing market prices by discouraging third parties from seeking to obtain control of our company in a tender offer or similar transaction. For example, our board of directors has the authority subject to any resolution of the shareholders to the contrary, to issue preferred shares in one or more series and to fix their designations, powers, preferences, privileges, and relative participating, optional or special rights and the qualifications, limitations or restrictions, including dividend rights, conversion rights, voting rights, terms of redemption and liquidation preferences, any or all of which may be greater than the rights associated with our Class A ordinary shares, in the form of ADS or otherwise. The issuance of preferred shares can be expedited and structured in a manner that delays or prevents a change in control of our company or complicates the removal of management. If our board of directors decides to issue preferred shares, the price of the ADSs may fall and the voting and other rights of the holders of our Class A ordinary shares and ADSs may be materially and adversely affected.

However, under Cayman Islands law, our board of directors may only exercise the rights and powers granted to them by our memorandum and articles of association for a proper purpose and for what they believe in good faith to be in the best interest of the Company.

You may face difficulties in protecting your interests, and your ability to protect your rights through U.S. courts may be limited, because we are incorporated under Cayman Islands law.

We are an exempted company incorporated under the laws of the Cayman Islands. Our corporate affairs are governed by our memorandum and articles of association, the Cayman Islands Company Act (As Revised) and the common law of the Cayman Islands. The rights of shareholders to take action against the directors, actions by minority shareholders and the fiduciary responsibilities of our directors to us under Cayman Islands law are to a large extent governed by the common law of the Cayman Islands. The common law of the Cayman Islands is derived in part from comparatively limited judicial precedent in the Cayman Islands as well as from the common law of England. English courts’ decisions are of persuasive authority but not binding upon a court in the Cayman Islands. The rights of our shareholders and the fiduciary responsibilities of our directors under Cayman Islands law are not as clearly established as they would be under statutes or judicial precedents in some jurisdictions in the United States. In particular, the Cayman Islands has a less developed body of securities laws than the United States. Some U.S. states, such as Delaware, have more fully developed and judicially interpreted bodies of corporate law than the Cayman Islands. In addition, Cayman Islands companies may not have standing to initiate a shareholder derivative action in a federal court of the United States.

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The Cayman Islands courts are also unlikely (1) to recognize or enforce against us judgments of courts of the United States based on certain civil liability provisions of U.S. securities laws, or (2) to impose liabilities against us, in original actions brought in the Cayman Islands, based on certain civil liability provisions of U.S. securities laws.

Although there is no statutory enforcement in the Cayman Islands of judgments obtained in the federal or state courts of the United States (and the Cayman Islands are not a party to any treaties for the reciprocal enforcement or recognition of such judgments), the courts of the Cayman Islands would generally recognize as a valid, final and conclusive judgment in personam obtained in the United States. This recognition would apply to judgments under which a sum of money is payable (excluding sums of money payable in respect of multiple damages, taxes or other charges of a like nature or in respect of a fine or other penalty) or, in certain circumstances, in personam judgments for non-monetary relief, and would give a judgment based thereon provided that (1) such courts had proper jurisdiction over the parties involved in the judgment, (2) such courts did not contravene the rules of natural justice of the Cayman Islands, (3) such judgment was not obtained by fraud, (4) the enforcement of the judgment would not be contrary to the public policy of the Cayman Islands, (5) no new admissible evidence relevant to the action is submitted prior to the rendering of the judgment by the courts of the Cayman Islands, and (6) there is due compliance with the correct procedures under the laws of the Cayman Islands.

However, the Cayman Islands courts are unlikely to enforce a punitive judgment of a United States court predicated upon the liabilities provision of the federal securities laws in the United States without retrial on the merits if such judgment gives rise to obligations to make payments that may be regarded as fines, penalties or similar charges.

As a result of the above, our public shareholders may have more difficulty in protecting their interests in the face of actions taken by management, members of the board of directors or large shareholders than compared to public shareholders of a company incorporated in the United States.

Certain judgments obtained against us by our shareholders may not be enforceable.

As a Cayman Islands company, substantially all of our assets are located outside of the United States. The majority of our current operations are conducted in the United Kingdom and China. In addition, a majority of our current directors and officers are nationals and residents of countries other than the United States. In particular, Mr. Hongru Zhou, the chairperson of our board of directors, Ms. Shuting Zhou and Mr. Meng Rui, our directors, as well as Ms. Hui Zhang, our chief financial officer, are nationals and residents of mainland China and/or Hong Kong. Most of the assets of these persons are located outside the United States. The SEC, U.S. Department of Justice, or the DOJ, and other authorities often have substantial difficulties in bringing and enforcing actions against non-U.S. companies and non-U.S. persons, including company directors and officers, in certain emerging markets, including China. Additionally, our public shareholders may have limited rights and few practical remedies in emerging markets where we operate. Although shareholder claims are common in the United States, such as class action, claims under securities law and fraud, it’s generally more difficult or impossible to pursue as a matter of law or practicality in many emerging markets, including China. In China, there are significant legal and other obstacles for the SEC, the DOJ and other U.S. authorities to obtaining information needed for shareholder investigations or litigation. Although the competent authorities in China may establish a regulatory cooperation mechanism with the securities regulatory authorities of another country or region to implement cross-border supervision and administration, the regulatory cooperation with the securities regulatory authorities in the United States has not been efficient in the absence of a mutual and practical cooperation mechanism. According to Article 177 of the PRC Securities Law which became effective in March 2020, no foreign securities regulator is allowed to directly conduct investigation or evidence collection activities within the territory of the PRC. Accordingly, without the consent of the competent PRC securities regulators and relevant authorities, no organization or individual may provide the documents and materials relating to securities business activities to foreign securities regulators. Pursuant to the Data Security Law and the Personal Information Protection Law, the provision of data stored in the territory of the PRC to entities outside the territory of the PRC requires the approval of the competent authorities, and organizations, individuals or processors of personal information in the territory of the PRC shall not provide data and personal information stored in the territory of the PRC to foreign judicial or law enforcement agencies without the approval of the competent authorities of the PRC. As a result, it may be difficult for you to bring an action against us or against these individuals in the United States in the event that you believe that your rights have been infringed under the U.S. federal securities laws or otherwise. Even if an action is successfully brought, the laws of the Cayman Islands and of China may render it difficult to enforce a judgment against our assets or the assets of our directors and officers.

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We are a foreign private issuer within the meaning of the rules under the Exchange Act, and as such we are exempt from certain provisions applicable to United States domestic public companies.

Because we are a foreign private issuer under the Exchange Act, we are exempt from certain provisions of the securities rules and regulations in the United States that are applicable to U.S. domestic issuers, including:

● the rules under the Exchange Act requiring the filing of quarterly reports on Form 10-Q or current reports on Form 8-K with the SEC;

● the sections of the Exchange Act regulating the solicitation of proxies, consents, or authorizations in respect of a security registered under the Exchange Act;

● the sections of the Exchange Act requiring insiders to file public reports of their stock ownership and trading activities and liability for insiders who profit from trades made in a short period of time; and

● the selective disclosure rules by issuers of material nonpublic information under Regulation FD.

We will be required to file an annual report on Form 20-F within four months of the end of each fiscal year. In addition, we intend to publish our results on a quarterly basis through press releases, distributed pursuant to the rules and regulations of the New York Stock Exchange. Press releases relating to financial results and material events will also be furnished to the SEC on Form 6-K. However, the information we are required to file with or furnish to the SEC may be less extensive and less timely compared to that required to be filed with the SEC by U.S. domestic issuers. As a result, investors may not have access to the same level of protection or information that would be available were the investors to invest in a U.S. domestic issuer.

As a “controlled company” under the rules of the NYSE, we are exempt from certain corporate governance requirements, which could adversely affect our public shareholders.  

Under the rules of the NYSE, a company of which more than 50% of the voting power for the election of directors is held by an individual, group or another company is a controlled company and may elect not to comply with certain corporate governance requirements, including the requirement that a majority of our directors be independent, as defined in the NYSE rules, and the requirement that our compensation and nominating and corporate governance committees consist entirely of independent directors. Excellence Education Investment Limited and Ultimate Wise Group Limited collectively hold over 90% of the aggregate voting power of our company. See “Item 6. Directors, Senior Management and Employees—E. Share Ownership” for details. Therefore, we are a “controlled company” under the rules of the NYSE. We have elected to rely on certain exemptions under the NYSE rules available to controlled companies, including the exemption from having a majority of our directors be independent, and may continue to elect to do so as long as we remain a controlled company. As a result, you may not have the same protections enjoyed by shareholders of companies that are subject to all of the NYSE corporate governance requirements.

As a company incorporated in the Cayman Islands, we are permitted to adopt certain home country practices in relation to corporate governance matters that differ significantly from New York Stock Exchange corporate governance listing standards; these practices may afford less protection to shareholders than they would enjoy if we complied fully with from New York Stock Exchange corporate governance listing standards.

As a Cayman Islands company listed on the New York Stock Exchange, we are subject to New York Stock Exchange corporate governance listing standards. However, the New York Stock Exchange rules allow a foreign private issuer like us to follow the corporate governance practices of its home country. Certain corporate governance practices in the Cayman Islands, which is our home country, may differ significantly from New York Stock Exchange corporate governance listing standards. Shareholders of Cayman Islands exempted companies like us have no general rights under Cayman Islands law to inspect corporate records or to obtain copies of lists of shareholders of these companies. Our directors have discretion under the articles of association to determine whether or not, and under what conditions, our corporate records may be inspected by our shareholders, but are not obliged to make them available to our shareholders. This may make it more difficult for you to obtain the information needed to establish any facts necessary for a shareholder motion or to solicit proxies from other shareholders in connection with a proxy contest.

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Certain corporate governance practices in the Cayman Islands, which is our home country, differ significantly from requirements for companies incorporated in other jurisdictions such as the United States. We have followed and intend to continue to follow Cayman Islands corporate governance practices in lieu of the corporate governance requirements of the NYSE that, for example, listed companies must have a majority of independent directors and that the audit committee consists of at least three members. To the extent we choose to follow home country practice with respect to corporate governance matters, our shareholders may have less protection than they otherwise would under rules and regulations applicable to U.S. domestic issuers.

The voting rights of holders of ADSs are limited by the terms of the deposit agreement, and you may not be able to exercise your right to vote.

As a holder of the ADSs, you will only be able to exercise the voting rights with respect to the underlying Class A ordinary shares in accordance with the provisions of the deposit agreement. Under the deposit agreement, you must vote by giving voting instructions to the depositary. Upon receipt of your voting instructions, the depositary will vote the underlying Class A ordinary shares in accordance with these instructions. You will not be able to directly exercise your right to vote with respect to the underlying shares unless you withdraw the shares. Under our memorandum and articles of association, the minimum notice period required for convening a general meeting is ten days. When a general meeting is convened, you may not receive notice sufficiently in advance to withdraw the shares underlying your ADSs to allow you to vote with respect to any specific matter. If we ask for your instructions, the depositary will notify you of the upcoming vote and will arrange to deliver our voting materials to you. We cannot assure you that you will receive the voting materials in time to ensure that you can instruct the depositary to vote your shares. In addition, the depositary and its agents are not responsible for failing to carry out voting instructions or for their manner of carrying out your voting instructions. This means that you may not be able to exercise your right to vote and you may have no legal remedy if the shares underlying your ADSs are not voted as you requested.

The depositary for the ADSs will give us a discretionary proxy to vote our Class A ordinary shares underlying your ADSs if you do not vote at shareholders’ meetings, except in limited circumstances, which could adversely affect your interests.

Under the deposit agreement for the ADSs, if you do not vote, the depositary will give us a discretionary proxy to vote our Class A ordinary shares underlying your ADSs at shareholders’ meetings unless:

● we have failed to timely provide the depositary with notice of meeting and related voting materials;

● we have instructed the depositary that we do not wish a discretionary proxy to be given;

● we have informed the depositary that there is substantial opposition as to a matter to be voted on at the meeting; or

● a matter to be voted on at the meeting would have a material adverse impact on shareholders.

The effect of this discretionary proxy is that if you do not vote at shareholders’ meetings, you cannot prevent our Class A ordinary shares underlying your ADSs from being voted, except in the circumstances described above. This may make it more difficult for shareholders to influence the management of our company. Holders of our ordinary shares are not subject to this discretionary proxy.

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You may not receive dividends or other distributions on our Class A ordinary shares and you may not receive any value for them, if it is illegal or impractical to make them available to you.

The depositary of the ADSs has agreed to pay to you the cash dividends or other distributions it or the custodian receives on ordinary shares or other deposited securities underlying the ADSs, after deducting its fees and expenses. You will receive these distributions in proportion to the number of Class A ordinary shares your ADSs represent. However, the depositary is not responsible if it decides that it is unlawful or impractical to make a distribution available to any holders of ADSs. For example, it would be unlawful to make a distribution to a holder of ADSs if such distribution consists of securities that require registration under the Securities Act but that are not properly registered or under exemption. The depositary may also determine that it is not feasible to distribute certain property through the mail. Additionally, the value of certain distributions may be less than the cost of mailing them. In these cases, the depositary may determine not to distribute such property. We have no obligation to register under U.S. securities laws any ADSs, ordinary shares, rights or other securities received through such distributions. We also have no obligation to take any other action to permit the distribution of ADSs, ordinary shares, rights or anything else to holders of ADSs. This means that you may not receive distributions we make on our ordinary shares or any value for them if it is illegal or impractical for us to make them available to you. These restrictions may cause a material decline in the value of the ADSs.

You may experience dilution of your holdings due to inability to participate in rights offerings.

We may, from time to time, distribute rights to our shareholders, including rights to acquire securities. Under the deposit agreement, the depositary will not distribute rights to holders of ADSs unless the distribution and sale of rights and the securities to which these rights relate are either exempt from registration under the Securities Act with respect to all holders of ADSs, or are registered under the provisions of the Securities Act. The depositary may, but is not required to, attempt to sell these undistributed rights to third parties, and may allow the rights to lapse. We may be unable to establish an exemption from registration under the Securities Act, and we are under no obligation to file a registration statement with respect to these rights or underlying securities or to endeavor to have a registration statement declared effective. Accordingly, holders of ADSs may be unable to participate in our rights offerings and may experience dilution of their holdings.

You may be subject to limitations on transfer of your ADSs.

Your ADSs are transferable on the books of the depositary. However, the depositary may close its books at any time or from time to time when it deems expedient when performing its duties. The depositary may close its books from time to time for a number of reasons, including in connection with corporate events such as a right offering, during which the depositary needs to maintain an exact number of ADS holders on its books for a specified period. The depositary may also close its books in emergencies, and on weekends and public holidays. The depositary may refuse to deliver, transfer or register transfers of the ADSs generally when the share register or the books of the depositary are closed, or at any time if we or the depositary thinks it is advisable to do so because of any requirement of law or of any government or governmental body, or under any provision of the deposit agreement, or for any other reason.

ITEM 4. INFORMATION ON THE COMPANY

A. History and development of the company

We are an exempted company with limited liability incorporated in the Cayman Islands. We conduct our business primarily through our subsidiaries and affiliated entities in China, the United Kingdom and the United States. As of the date of this annual report, we have a network of a number of learning centers for after-school programs through certain contractual arrangements with the VIEs, which in turn control and hold these learning centers. As of the date of this annual report, we operate eight overseas schools, which we may also refer to as international language schools, through Bright Scholar (UK) Holdings Limited, a wholly owned subsidiary of ours. We trace our history back to the founding of Guangdong Country Garden School, our first private school, in 1994. Over the past two decades, we have launched and acquired a number of schools and complementary education services in China, the United Kingdom, the United States and Canada.

Beginning in 2016, we underwent a series of restructurings. In particular:

● Incorporation of the listing entity. In December 2016, Ms. Meirong Yang incorporated Bright Scholar Holdings in the Cayman Islands.

● Acquisition of Impetus. In January 2016, we acquired Impetus Investment Ltd. (“Impetus”), a Cayman Islands company from Mr. Junli He, our former director and executive vice chairman, and other selling shareholders.

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● Incorporation of PRC subsidiary. In January 2017, Time Education China Holdings Limited incorporated Zhuhai Bright Scholar, as our wholly-owned subsidiary in China.

● Contractual arrangements. In January 2017, we, through our PRC subsidiary, Zhuhai Bright Scholar, entered into a series of contractual arrangements with (1) BGY Education Investment and the schools and subsidiaries it owns and operates, and (2) Ms. Meirong Yang and Mr. Wenjie Yang, the shareholders of BGY Education Investment, to obtain effective control of BGY Education Investment and the schools and subsidiaries it owns and operates (the “2017 contractual arrangements”).

In August 2021, shareholder of BGY Education Investment, i.e., Ms. Meirong Yang and Mr. Wenjie Yang, established several new entities, including Foshan Meiliang Education Technology Co., Ltd., Foshan Shangtai Education Technology Co., Ltd., Foshan Renliang Education Technology Co., Ltd., Foshan Yongliang Education Technology Co., Ltd., Foshan Zhiliang Education Technology Co., Ltd. and Beijing Boteng Consulting Co., Ltd. On August 13, 2021, a set of agreements supplementary to the 2017 contractual arrangements were entered into among Zhuhai Bright Scholar, BGY Education Investment, Ms. Meirong Yang and Mr. Wenjie Yang, and these new entities to enable them, as well as their subsidiaries, to join the 2017 contractual arrangements and share the same rights and obligations, if applicable, of BGY Education Investment.

On June 17, 2024, an agreement supplementary to the 2017 contractual arrangements and 2021 supplemental agreements was entered into by and among Zhuhai Bright Scholar, Ms. Meirong Yang and Mr. Wenjie Yang, and Foshan Meiliang Education Technology Co., Ltd., Foshan Shangtai Education Technology Co., Ltd., Foshan Renliang Education Technology Co., Ltd., Foshan Yongliang Education Technology Co., Ltd., Foshan Zhiliang Education Technology Co., Ltd. and Beijing Boteng Consulting Co., Ltd., to stipulate that Foshan Shangtai Education Technology Co., Ltd. and Foshan Renliang Education Technology Co., Ltd. shall no longer be bound by the 2017 contractual arrangements and 2021 supplemental agreements upon their deregistration, and part of affiliated entities of Foshan Yongliang Education Technology Co., Ltd., Foshan Zhiliang Education Technology Co., Ltd. and Beijing Boteng Consulting Co., Ltd. shall no longer be bound by the 2017 contractual arrangements and 2021 supplemental agreements upon respective closing of the disposal of equity interest of such entities or their deregistration. As of the date of this annual report, Foshan Shangtai Education Technology Co., Ltd. and Foshan Renliang Education Technology Co., Ltd. have completed the deregistration process.

On August 31, 2024, an agreement supplementary to the 2017 contractual arrangements and 2021 supplemental agreements was entered into by and among Zhuhai Bright Scholar, Ms. Meirong Yang and Mr. Wenjie Yang, and Foshan Meiliang Education Technology Co., Ltd, which provides that upon execution of this supplementary agreement, Foshan Meiliang Education Technology Co., Ltd., and its affiliated entities (including nine domestic kindergartens) shall no longer be bound by the 2017 contractual arrangements and 2021 supplemental agreements. As of the date of this annual report, Foshan Meiliang Education Technology Co., Ltd., and its affiliated entities (including nine domestic kindergartens) are no longer bound by the 2017 contractual arrangements and 2021 supplemental agreements.

We have been advised by our PRC legal counsel that the contractual arrangements among Zhuhai Bright Scholar, Foshan Yongliang Education Technology Co., Ltd., Foshan Zhiliang Education Technology Co., Ltd. and Beijing Boteng Consulting Co., Ltd. are valid, binding and enforceable under PRC laws and regulations, and are not in violation of PRC laws or regulations currently in effect. If the VIEs, Ms. Meirong Yang and Mr. Wenjie Yang fail to perform their obligations under the contractual arrangements, we could be limited in our ability to enforce the contractual arrangements that give us the effective control over the VIEs. See “Item 3. Key Information—D. Risk Factors—Risks Related to Our Corporate Structure—We rely on contractual arrangements with the VIEs and their shareholders for our operations in China, which may not be as effective in providing control as director ownership.”

We have been advised by our PRC legal counsel, however, that there are substantial uncertainties regarding the interpretation and application of current and future PRC laws and regulations. Accordingly, the PRC regulatory authorities may in the future take a view that is contrary to the above opinion of our PRC legal counsel. We have been further advised by our PRC legal counsel that if the PRC government finds that the contractual arrangements that establish the structure for operating our business in China do not comply with relevant PRC government restrictions on foreign investment, we could be subject to severe penalties, including being prohibited from continuing operations. For a detailed description of the risks associated with our corporate structure, see “Item 3. Key Information—D. Risk Factors—Risks Related to Our Corporate Structure” and “Item 3. Key Information—D. Risk Factors—Risks Related to Doing Business in the Jurisdictions Where We Operate.”

If we are unable to maintain effective control over the VIEs, we will not be able to continue to consolidate the financial results of the VIEs into our financial results. We concluded that we have lost control over the private schools among the Affected Entities since August 31, 2021 based on the relevant accounting standard in accordance with U.S. GAAP due to the Implementation Rules that became effective on September 1, 2021. Further, as a holding company, our ability to generate profits, pay dividend and other cash distributions to our shareholders depends principally on our ability to receive dividends and other distributions from our PRC subsidiaries. We, through our PRC subsidiary, Zhuhai Bright Scholar, have entered into an exclusive management services and business cooperation agreement with each of the VIEs, pursuant to which we provide service to the VIEs in exchange for the payment of service fees. The services fees we are entitled to collect under the agreement are calculated as the balance of general income less any costs, taxes and other reserved fees stipulated by laws and regulations. In practice, we evaluate on a case-by-case basis the performance and future plans of individual entities before determining the amount we collect from each entity. We do not have unfettered access to the revenues from our PRC subsidiaries or affiliated entities due to the significant PRC legal restrictions on the payment of dividends by PRC companies, foreign exchange control restrictions, and the restrictions on foreign investment, among others. For example, under the applicable requirements of PRC law, our PRC subsidiaries may only distribute dividends after they have made allowances to fund certain statutory reserves. See “Item 3. Key Information—D. Risk Factors—Risks Related to Doing Business in the Jurisdictions Where We Operate—Our subsidiaries and affiliated entities in China are subject to restrictions on making dividends and other payments to us.”

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We listed the ADSs on the New York Stock Exchange under the symbol “BEDU” on May 18, 2017 and completed an initial public offering of 17,250,000 ADSs on June 7, 2017, raising approximately US$174.7 million in net proceeds after deducting underwriting commissions and the offering expenses payable by us. On March 2, 2018, we completed a follow-on public offering of 10,000,000 ADSs, raising approximately US$181.4 million in net proceeds after deducting underwriting commissions and the offering expenses payable by us.

In April 2018, our board approved a share repurchase program (the “2018 Share Repurchase Program”) to repurchase up to US$100.0 million worth of our outstanding ADSs within 12 months. The 2018 Share Repurchase Program has expired on April 30, 2019 and as of such date, we had repurchased 6,679,183 of our outstanding ADSs for an aggregate purchase price of approximately US$77 million, pursuant to the 2018 Share Repurchase Program. In September 2019, our board approved a share repurchase program (the “2019 Share Repurchase Program”) to repurchase up to US$30.0 million worth of our outstanding ADSs within 12 months. The 2019 Share Repurchase Program expired on November 19, 2020 and as of such date we had repurchased 1,200,000 of our outstanding ADSs for an aggregate purchase price of approximately US$9.4 million pursuant to the program. In November 2020, our board approved a share repurchase program (the “2020 Share Repurchase Program”) to repurchase up to US$50.0 million worth of our outstanding ADSs within 12 months.

In July 2019, we issued senior notes in the aggregate principal amount of US$300.0 million, with interests of 7.45% per annum and maturing on July 31, 2022 at an issue price of 100.0% in reliance on Regulation S under the Securities Act. We listed such senior notes on the Stock Exchange of Hong Kong Limited by way of debt issues to professional investors (as defined in Chapter 37 of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited and in the Securities and Futures Ordinance (Cap. 571) of Hong Kong) only. As of July 31, 2022, we had redeemed all outstanding senior notes matured on the same date. Upon the completion of such redemption, all senior notes have been cancelled and delisted from the official list of the Stock Exchange of Hong Kong Limited.

On April 29, 2022, our board of directors received a preliminary non-binding proposal letter (the “Proposal”) dated the same date from Ms. Huiyan Yang, our ex-chairlady, and Ms. Meirong Yang (collectively, the “Buyer Group”) proposing to acquire all of our outstanding Class A ordinary shares, including Class A Shares represented by ADSs, and Class B ordinary shares that are not already beneficially owned by the Buyer Group for a purchase price of US$0.83 per share in cash in a going private transaction (the “Proposed Transaction”), subject to certain conditions. Our board of directors formed a special committee consisting of three then independent directors, Mr. Peter Andrew Schloss, Mr. Jun Zhao and Mr. Ronald J. Packard, to evaluate and consider the Proposed Transaction. On December 29, 2022, our board of directors received a letter dated the same date from the Buyer Group, informing us the decision of the Buyer Group to withdraw the Proposal dated April 29, 2022 and forego the Proposal to privatize our company.

Effective on August 19, 2022, we changed the ratio of the ADSs to Class A ordinary shares from the then ADS ratio of one ADS to one Class A ordinary share to a new ADS ratio of one ADS representing four Class A ordinary shares.

Our principal executive office is located at Suites 6-7, The Turvill Building Old Swiss, 149 Cherry Hinton Road Cambridge, England, CB1 7BX, United Kingdom. Our principal phone number is +44 12-2334-1303. Our registered office in the Cayman Islands is located at the offices of Conyers Trust Company (Cayman) Limited, Cricket Square, Hutchins Drive, PO Box 2681, Grand Cayman, KY1-1111, Cayman Islands. Investors should submit any inquiries to the address and telephone number of our principal executive offices. Our website is www.brightscholar.com. The information contained on our website is not a part of this annual report. Our agent for service of process in the United States is Law Debenture Corporate Services Inc., located at 801 2nd Avenue, Suite 403, New York, New York 10017.

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For information regarding our principal capital expenditures, see “Item 5. Operating and Financial Review and Prospects—B. Liquidity and Capital Resources—Capital Expenditures.”

B. Business Overview

We are a global premier education service company, which primarily provides quality international education service to global students and equip them with the critical academic foundation and skillsets necessary to succeed in the pursuit of higher education. As part of our global expansion plan, we have been actively exploring mergers and acquisition opportunities abroad to expand our global school network, targeting quality private education providers and reputable schools in our targeted overseas countries and jurisdictions. As of the date of this annual report, we have eight overseas school located in the United Kingdom and the United States. During the 2024 school year, we had an average of 2,652 students enrolled at our schools for our continuing operations. Bright Scholar Holdings is not a Chinese operating company but a Cayman Islands holding company with no equity ownership in the VIEs. Bright Scholar Holdings has contractual arrangements with the VIEs, which control and hold our domestic learning centers and complementary services, and indirectly holds Bright Scholar (UK) Holdings Limited, through which we operate our overseas schools.

Our continuing business primarily includes overseas schools and complementary education services. As a global premier education service provider, we have built our global presence primarily through acquiring established overseas schools and language training institutions in countries such as the United Kingdom and the United States. We also offer a range of complementary education services, primarily including camp programs, after-school programs, through our network of learning centers in China, as well as international education consulting services.

For our continuing operations, our revenue was RMB1,439.3 million, RMB1,772.1 and RMB1,775.2 million (US$247.6 million) for the 2022, 2023 and 2024 fiscal years, respectively. Our net loss was RMB703.5 million, RMB386.8 and RMB1,032.9 million (US$145.7 million) for the same periods, respectively. We use adjusted net loss, which excludes share-based compensation expense, amortization of intangible assets, tax effect of amortization of intangible assets, impairment loss on operating lease right-of-use assets, impairment loss on goodwill, impairment loss on intangible assets, impairment loss on property and equipment, impairment loss on the long-term investment, and income from discontinued operations, net of tax, in evaluating our ongoing results of operations. Our adjusted net loss was RMB135.0 million and RMB192.6 million for the 2022 and 2023 fiscal year, respectively, and our adjusted net income was RMB1.1 million (US$0.2 million) for the 2024 fiscal year. See “Item 5. Operating and Financial Review and Prospectus—A. Operating Results—Results of Operations—Non-GAAP measures” for details.

Our Overseas Schools

As of the date of this annual report, we have an overseas school network of eight schools, including seven schools in the United Kingdom and one in the United States, with an average of 2,652 enrolled students for the 2024 school year. As a global premier education provider, we have built our global presence primarily through overseas acquisition of schools and education services in countries such as the United Kingdom and the United States.

In December 2018, we acquired BCS, an established independent school located in the United Kingdom. BCS offers day and boarding education from two to 18 years of age, and has a strong global inclusive philosophy based on a traditional UK education. In July 2019, we acquired CATS, which operates five overseas schools and three language training institutions across the United Kingdom and the United States as of the date of this annual report. In addition, we granted a third party the right to use the brands “CATS” and “Cambridge School of Visual & Performing Arts” for the operation of two campuses in Shanghai, China. In September 2019, we acquired St. Michael’s School and BIC located in the United Kingdom. St. Michael’s School offers day and boarding education from three to 18 years of age, comprising predominantly day students and boarders from more than 15 countries. BIC provides independent boarding education to pupils from the United Kingdom and other countries from 13 to 19 years of age.

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The following table sets forth certain information about each of our overseas schools.

Name	Location	Acquisition Time	Average number of students enrolled during the 2023 school year		Average number of students enrolled during the 2024 school year		Capacity as of September 1, 2024
Bournemouth Collegiate School	the United Kingdom	December 2018		669		630		730
Guildhouse School London (previously known as CATS London)	the United Kingdom	July 2019		189		186		400
CATS Cambridge	the United Kingdom	July 2019		201		241		525
The Worthgate School Canterbury (previously known as CATS Canterbury)	the United Kingdom	July 2019		286		304		500
CATS Academy Boston	the United States	July 2019		345		368		700
Cambridge School of Visual & Performing Arts	the United Kingdom	July 2019		270		293		525
St. Michael’s School	the United Kingdom	September 2019		415		421		480
Bosworth Independent School	the United Kingdom	September 2019		209		209		400
Total				2,584		2,652		4,260

Bournemouth Collegiate School (BCS)

Bournemouth Collegiate School is an established independent school located in Bournemouth, Dorset, England. It offers day and boarding education from age 2—18 on two campuses. It has a strong global inclusive philosophy based on a traditional UK education. Bournemouth Collegiate School has an average of 630 students enrolled for the 2024 school year, including local students and international boarders from 29 countries.

CATS Colleges

CATS Colleges is an international school network focused primarily on the provision of enrichment education services to international students with a globally integrated platform of campuses located across the United Kingdom and the United States. As of the date of this annual report, CATS Colleges comprised five schools in Cambridge, London, Canterbury and Boston as well as three language training institutions in the United Kingdom. It has a diverse mix of over 1,300 students from around 90 nationalities in the 2024 school year.

In July 2020, we decided to permanently cease the operation of the four language training institutions in the United States as a resource conserving measure in response to the challenges posed by the COVID-19 pandemic. In December 2021, we sold one language training institutions in the United Kingdom and two institutions in Canada to focus on the operation of the remaining three language training institutions in the United Kingdom.

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St. Michael’s School

St. Michael’s School is an established independent school in the United Kingdom. Located in Llanelli, Wales. It offers day and boarding education from age three to 18. Established in 1923, the school has an inclusive philosophy for all its students based on a traditional UK education, and was named Welsh Independent Secondary School of the Year 2019 in The Sunday Times Parent Power rankings and regularly ranking in the United Kingdom’s top 30 Independent Schools for A level results. The school has an average of 421 students enrolled for the 2024 school year, comprised predominantly of day students as well as boarding students from more than five countries.

Bosworth Independent College (BIC)

BIC is a leading independent boarding college in the United Kingdom. Located in Northampton, England, it provides independent boarding education to pupils from the United Kingdom and abroad from 13 to 19 years of age. Established in 1977, it was ranked in the UK’s Top 100 Coeducational Boarding Schools by A Level results in 2018. The school has an average of 209 students enrolled for the 2024 school year, including boarding students from 29 countries.

Our Complementary Education Services

We provide complementary education services to students from our schools and others. These complementary education services further enhance students’ overall learning experience and generate synergies with our school operations.

Camp programs

We have organized summer and winter camp programs in certain countries, including the United Kingdom, the United States and Australia. We also offer summer school programs, which are more rigorous and allow our participants to study for specific courses or prepare for standardized tests.

As of the date of this annual report, we have developed business collaborations with a number of overseas universities and high schools as the local hosts of our camps or summer school programs. We work together with our partners to design programs and activities to improve the participants’ English communication skills, expand their knowledge and develop a familiarity with college environments and international cultures.

Our overseas camp programs typically take place on university campuses and include various activities, such as classes and excursions. For high school students, we offer tours to different universities during our programs. These visits allow participants to become familiar with the overseas campuses, talk with admissions officers and spend time with our alumni currently studying at each university. Some of our camp programs include a homestay, which allows the participants to get an inside look at Western family dynamics and form supportive friendships in an immersive English-speaking environment. We send our teachers to escort the students during their tours. By participating in the summer and winter camps, we believe our students not only broaden their horizons and improve their English proficiency, but also clarify their academic goals and enhance their motivation to pursue overseas studies after graduating from our schools.

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Our overseas camp programs were adversely affected by the COVID-19 pandemic due to the global travel freeze resulted therefrom. In response, we developed domestic travel study programs, which are complementary to our students’ classroom education and allow students to study and explore humanities, history, technology, nature, etc., depending on the theme of each program.

After-school programs

We offer a wide range of extracurricular programs primarily to children. Our programs encompass popular subjects, such as art, soccer and programmable robotics. Our programs supplement in-classroom learning and promote the well-balanced development of children. Our programs also help children tap into their interests and potential that benefit their study or career goals. We work with our partners on these programs.

We have also strategically invested in the acquisition of equity interest in Hangzhou Impression Arts Training Co., Ltd. (“Hangzhou Impression”), a Zhejiang-based art training institution, to supplement the extracurricular programs we offer.

Overseas Study Consulting Services

We offer overseas study education consulting services to better serve our students in and outside of our network of schools. As of the date of this annual report, we have strategically invested in the acquisitions of equity interests in several providers of education consulting services, including Can-achieve (Beijing) Education Consulting Co., Ltd. (“Can-achieve”) and FGE Holdings Limited and its subsidiaries (“FGE”). Through these strategic acquisitions, we are able to provide a comprehensive range of services covering K-12 education as well as consulting services from application to overseas universities, which we believe will drive our future growth.

Discontinued Operations

Discontinued Domestic Kindergartens

Due to the effectiveness of the Implementation Rules, we have concluded that we have lost control of 68 domestic kindergartens since August 31, 2021 and that such VIE contractual arrangements with them has become invalid since then. On August 31, 2024, an agreement supplementary to the 2017 contractual arrangements and 2021 supplemental agreements was entered into by and among Zhuhai Bright Scholar, Ms. Meirong Yang and Mr. Wenjie Yang, and Foshan Meiliang Education Technology Co., Ltd, which provides that upon execution of this supplementary agreement, Foshan Meiliang Education Technology Co., Ltd., and its affiliated entities (including nine domestic kindergartens) shall no longer be bound by the 2017 contractual arrangements and 2021 supplemental agreements. As of the date of this annual report, Foshan Meiliang Education Technology Co., Ltd., and its affiliated entities (including nine domestic kindergartens) are no longer bound by the 2017 contractual arrangements and 2021 supplemental agreements. In the 2024 fiscal year, these nine kindergartens provided an active and healthy learning environment to help students develop their potential and personality, appreciate diverse cultures and lay the foundation to drive future success.

English proficiency training

Prior to August 2024, we offered English proficiency development courses to children aged from five to 15 through a network of 18 learning centers located in Beijing, Shanghai and Guangdong province under the brand of “élan.” However, aligned with our strategy to focus our resources on our high-growth core business while optimizing organizational structure to improve our operational and management efficiency, we divested our noncore English proficiency training business from our complementary education services segment in August 2024.

Career counselling and International Contest Training Services

Prior to May 2024 and June 2024, we offered international contest training and career counselling services to students, respectively. However, aligned with our strategy to focus our resources on our high-growth core business while optimizing organizational structure to improve our operational and management efficiency, we divested our noncore international contest training business and career counseling business from our complementary education services segment in May and June 2024.

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Centralized Management

We have provided services of a centralized management system for our school network, through which we manage and oversee certain aspects of our kindergartens across our network, including school administration, supply procurement and sharing and development of teaching resources, to support and facilitate management of our schools as well as to ensure consistency in the quality of our education. For our overseas operations, we have established a center of excellence to centralize certain functions of management, including finance, IT, human resources, procurement, marketing and admissions.

Sharing and development of teaching resources

In order to maintain and improve our teaching quality, some of our schools share their teaching resources with each other and jointly hold teacher development workshops. We also operate a centralized teaching staff recruitment program through which we hire and deploy teachers and educational staff within our school network based on each school’s needs and teacher preferences. We intend to continue to leverage the availability of our teaching resources at different schools within our network to ensure consistency in teaching quality.

Education material and equipment procurement

We make procurement decisions regarding teaching materials and equipment and other education supplies for our schools in the same geographical areas to improve our operating efficiency, maximize economies of scale and enhance our overall bargaining power with suppliers. Such procurement choices include those for catering, textbooks, school uniforms, classroom furniture, computers, kitchen equipment, tableware and office appliances.

School administration

To improve our service efficiency, we have centralized our finance, marketing, human resources, legal and information technology functions. We have adopted a series of policies and procedures relating to general corporate governance matters, which are aimed at strengthening the management and government of our company and our schools. For example, in the 2018 fiscal year, we implemented an ERP system where we centralize the collection and analysis of budgeting, procurement and financial information and data, which enhanced the efficiency of our data management processes, adding value to the overall operation of our business.

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Our Students

Student admission

Our overseas schools recruit students from around the world, with a student body comprising around 95 different nationalities for the 2024 school year. The majority of the students in our overseas schools are from 14 to 18 years old.

Student and parent support services

We generally have small class sizes across our school network in order to provide each student with close and frequent teacher interactions and individual attention and support. Our teachers assist students through academic difficulties with personalized remedial measures, including additional practice materials and instructive sessions.

We also maintain regular communication with the parents of our students and provide them with complementary seminars and training on education programs, university applications and parenting.

Our Teachers

Teacher qualifications

We have assembled a team of teachers with extensive experience in education. Our schools are staffed with different levels of teachers and educational staff. Certain senior teachers have managerial responsibilities in addition to their responsibilities as instructors. Educational staff include teaching assistants, librarians and medical staff. We seek to employ teachers that have a passion for teaching, mastery of their subject areas, strong communication skills and proficiency in employing innovative and effective teaching methods. In the 2024 fiscal year, we had an average of 542 teachers and instructors globally.

Teacher recruitment

Our teachers are critical to maintaining the quality of our programs and services and in promoting our brand and reputation. We place particular importance on recruiting teachers who are appropriately qualified and experienced. For our overseas schools, we also expect teachers to have a wealth of international experience across the world of academia. We implement a centralized recruitment program that seeks to hire teachers and educational staff and deploy them across our school network based on each kindergarten’s needs and teacher preferences. We screen candidates for strong academic credentials, dedication and knowledge in the relevant teaching subjects, and commitment to serving students’ needs. We require our teachers to possess the appropriate qualifications required by PRC regulatory authorities, including the foreign expert certificate in the case of foreign teachers. We believe that teacher candidates are attracted to our schools because of our reputation, commitment to quality education, financial strength and competitive compensation package. To enhance our retention rate, we also allow our teachers to laterally transfer within our school network.

Teacher training

We are committed to providing ongoing professional development for our teachers and principals, in the form of online, on-campus or one-on-one training and support sessions. From time to time, we organize seminars on professional training in cooperation with prestigious institutions. We also invite veteran teachers to participate in school administration by offering them management training with the possibility of promotion to principal positions. The opportunity for ongoing professional training and career advancement is not always available at private schools in China and is a key differentiator in our ability to attract, develop and retain talented teachers.

Teachers in our overseas schools are continuously assessed under Continues Development, a program that measure the effectiveness and quality of their teaching and provide them with the right learning environment that enables them to adapt teaching methods and use innovative tools to delivery academic excellence. 

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Our Tuition

We charge our students tuition, boarding and other applicable fees generally prior to the beginning of each cycle. Tuition and fees being paid in arrears is subject to special approval. We offer a partial refund if a student withdraws in the predetermined period. Tuition refund or discounts did not materially and adversely affect our business, results of operations or financial position. We have limited discretion in determining the types and amounts of fees we charge under the current PRC regulatory regime. In determining the amount of tuition we charge, we consider factors including the demand for our education programs, the cost of our operations, and general economic conditions. Our tuition and fees charged for internationally accredited programs are typically higher than that for government-mandated curricula, which reflects the additional educational and operational resources associated with administering the former. For the 2024 school year, we charged average tuition and fees of RMB289,085 for overseas schools.

Research and Curriculum Development

We believe we have devoted significant resources to our research and curriculum development efforts which are reflected in the course materials and effective teaching methods. We work with school teachers to develop, update and improve school curricula and course materials based upon students’ needs and the latest official government curricula or course outlines issued by the relevant international programs. As students’ academic ability levels vary, our curricula are designed with the flexibility to address a particular student’s strengths and weaknesses. Our teaching and research department works with school teachers to prepare or update such course curricula, and revises the curricula based on feedback from the classroom. To ensure our education quality can be upheld across schools, we have dedicated a professional team to designing curricula for the programs implemented in our schools and to keep our teaching materials updated with reference to the latest educational trends. Our overseas schools are continuously developing curriculum and academic extension activities to prepare students for admission to top universities. For example, preparation for students applying to Oxbridge has included preparation for admissions tests, workshops with a drama specialist to prepare students for interview, and mock interviews with academics from the University of Cambridge. Additionally, our overseas schools develop curricula in specific subject areas, which focus on the skills needed for interested students’ success at university.

Marketing 

We take measures to increase word-of-mouth referrals which have been instrumental to attracting new students and building our brand. We have also strengthened our marketing strategy to drive student recruitment, and built up our marketing teams at both headquarters and regional levels to assist student’s recruitment, while allocating more marketing and promotional budgets for schools in the ramp-up stage.

● Referrals. Word-of-mouth referrals by former and current students and their families have been a significant source of our student enrollment. We actively work with our alumni and current students to encourage them to recommend our programs to prospective students.

● Promotional events. From time to time, we organize promotional and recruiting events to provide real-time, on-site opportunities for our prospective students to learn more about our services and programs, as well as to meet our teachers and staff.

● Media advertising. From time to time, we may publish articles on popular local newspapers to promote our brand awareness and advocate for our education philosophy. We have also placed advertisements on searching engines and internet portals.

Our overseas schools depend on advertisements on related websites such as university targeted websites, generic campaigns on platforms such as Facebook and Instagram, and educational agencies to market themselves and recruit students. We have also assembled a team of specialists to offer support, training and guidance to the educational agencies and assist them in student recruitment.

Competition

The education service market is rapidly evolving, highly fragmented and competitive. We may compete with enrichment education service providers in each region we have a presence. Similarly, our overseas schools compete against large operators such as Nord Anglia and Alpha Plus in the United Kingdom, as well as standalone private schools in each region. We believe we are well-positioned to replicate our success and compete effectively based on the following factors:

● scalable business model;

● operating knowledge;

● reputation and brand recognition;

● teaching quality;

● ability to recruit and retain students;

● ability to recruit and retain principals and teaching staff;

● relationship with local education authorities, international program accreditors and overseas colleges and universities; and

● relationship with other key stakeholders, such as real estate developers.

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Properties and Facilities

As of the date of this annual report, we own 34 properties and lease 35 facilities in the United Kingdom and the United States for school campuses and office use. As of the same date, we lease over 35 facilities for office use and learning centers.

Intellectual Property

We have obtained a license to use certain trademarks, including “Country Garden” from Country Garden free of charge for a term expiring in 2028 and 2030. We have applied for or registered trademarks relating to our logos and names, including “Bright Scholar” and “Bo Shi Le” in China. As of the date of this annual report, we have registered 164 trademarks with the PRC Trademark Office and major domain names used for our operation with the China Internet Network Information Center, including www.brightscholar.com, brightscholar.net, www.bgyedu.cn, 博实乐.cn and 博实乐.com. From time to time, we are required to obtain licenses with respect to course materials owned by third parties for our education services, in particular for our international program which requires foreign-language education materials. We own copyrights to the course content we developed in-house.

Our trademarks and other intellectual property rights distinguish our services and products from those of our competitors and contribute to our ability to compete in our target markets. To protect our intellectual properties, we rely on a combination of trademark, copyright and trade secret laws. We have confidentiality clauses in our employment agreements with our employees to protect our intellectual property rights, and also monitor any infringement or misappropriation of our intellectual property rights.

Insurance

We maintain various insurance policies to safeguard against risks and unexpected events. We maintain insurance to cover students and teachers’ medical expenses for injuries they might sustain at our schools. We also maintain insurance to cover our liability should any injuries occur at our schools. In addition, we maintain property insurance for our vehicles. We do not maintain business interruption insurance, product liability insurance or key-man life insurance. See “Item 3. Key Information—D. Risk Factors—Risks Related to Our Business—We have limited insurance coverage with respect to our business and operations.” We consider our insurance coverage to be in line with that of other private education providers of a similar scale in China.

Legal Proceedings

From time to time, we are subject to legal proceedings, investigations and claims during the ordinary course of our business. We are not currently a party to any legal proceeding or investigation which, in the opinion of our management, is likely to have a material adverse effect on our business, financial condition or results of operations.

Regulations

We operate our business in China under a legal regime consisting of the National People’s Congress, which is the country’s highest legislative body, the State Council, which is the highest authority of the executive branch of the PRC central government, and several ministries and agencies under its authority, including the MOE, the Ministry of Industry and Information Technology, the State Administration for Market Regulation, the State Administration of Radio, Film and Television, the State Administration of Press and Publication (National Copyright Bureau) under the Propaganda Department of the Central Committee of the Communist Party of China and their respective local offices. We have also entered into the United Kingdom market through acquisition of established overseas. While England and Wales share a common legal system, there are some differences in areas of education law and regulation. The Department for Education (“DfE”) in England and the Welsh Ministers in Wales are responsible for the registration and regulation of independent schools in their respective jurisdictions. The Independent Schools Inspectorate (“ISI”) in England and Estyn in Wales are authorized by these bodies to inspect independent schools to ensure compliance with regulatory requirements. The section summarizes the principal PRC and United Kingdom regulations related to our business.

PRC Laws and Regulations Relating to Foreign Investment

Special Administrative Measures for Access of Foreign Investment (Negative List) (2024 Version)

On September 6, 2024, the NDRC and the MOFCOM jointly released the Special Administrative Measures for Access of Foreign Investment (Negative List) (2024 Version), or the 2024 Negative List which came into effect on November 1, 2024 and replaced the 2021 Negative List. The 2024 Negative List specifies industries that are restricted or prohibited from foreign investment. In principle, industries not specified in the Negative List are not prohibited or restricted from foreign investment, though certain restrictions on foreign investment in a few industries are provided in other industry-specified rules. Specifically, foreign investment is prohibited from production and operation of Radio and TV programs, online transmission of audio-visual programs and online publishing services.

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Regulations on Private Education in the PRC

Education Law of the PRC

On March 18, 1995, the National People’s Congress of the PRC, or the NPC, enacted the Education Law of the PRC, or the Education Law, which was amended on August 27, 2009. The Education Law sets forth provisions relating to the fundamental education systems of the PRC, including a school education system comprising kindergarten education, primary education, secondary education and higher education, a system of nine-year compulsory education, a national education examination system, and a system of education certificates. The Education Law stipulates that the government formulates plans for the development of education, establishes and operates schools and other education institution. Furthermore, it provides that in principle, enterprises, social organizations and individuals are encouraged to establish and operate schools and other types of education institutions in accordance with PRC laws and regulations. Meanwhile, no organization or individual may establish or operate a school or any other education institution for profit-making purposes. The Education Law was amended on December 27, 2015, and further amended on April 29, 2021. The amended Education Law repudiates a specific paragraph of the old law, which prohibits any organization or individual from establishing or operating a school or any other education institution for profit-making purposes. Nevertheless, schools and other education institutions sponsored wholly or partially by government financial funds and donated assets remain prohibited from being established as for-profit organizations.

The Law for Promoting Private Education and the Implementation Rules

The Law for Promoting Private Education of the PRC became effective on September 1, 2003 and was amended on June 29, 2013, on November 7, 2016 and on December 29, 2018, and the Implementation Rules became effective on April 1, 2004 and was amended on May 14, 2021 and the amended version became effective on September 1, 2021. Under these regulations, “private schools” are defined as schools established by social organizations or individuals using non-government funds. Private schools providing academic qualifications education, kindergarten education, education for self-study examination and other education shall be subject to approval by the education authorities at or above the county level, while private schools engaging in occupational qualification training and occupational skill training shall be subject to approvals from the authorities in charge of labor and social welfare at or above the county level.

On May 14, 2021, the State Council announced the amended version of the Implementation Rules of the Law for Promoting Private Education, the other details of the operation requirement of non-profit schools and for-profit schools will further of the PRC, or the Implementation Rules, which became effective on September 1, 2021. Pursuant to the Amended Regulations, (1) foreign-invested enterprises established in China and social organizations whose actual controllers are foreign parties shall not sponsor, participate in or actually control private schools that provide compulsory education, (2) social organizations or individuals shall not control any private school that provides compulsory education or any non-profit private school that provides pre-school education by means of merger, acquisition, contractual arrangements, etc., and (3) private schools providing compulsory education shall not conduct any transaction with any related party. Where a private school other than private schools providing compulsory education conducts transactions with any related party, it shall follow the principles of openness, fairness and equality, determine the reasonable fees and regulate the decision-making, and shall not do detriment to the state interests, the interests of the school or the rights and interests of the teachers and students, otherwise, there is a risk of being ordered to make corrections within a time limit, and the illegal gains, if any, shall be confiscated after the fees collected are returned; if the circumstances are serious, the sponsor, actual controller and member of the decision-making body or supervisory body shall not become the sponsor, actual controller or member of the decision-making body or supervisory body of other private school within one to five years; if the circumstances are especially serious with adverse social impact, the sponsor, actual controller and member of the decision-making body or supervisory body shall not become the sponsor, actual controller and members of the decision-making body or supervisory body of other private school permanently; if a violation of public security administration is constituted, the public security organ shall impose a public security administration punishment according to law; if a crime is constituted, criminal responsibility shall be investigated in accordance with the law.

For a detailed discussion on how the Amendment and the above regulations will affect our schools, see “Item 3. Key Information—D. Risk Factors—Risks Related to Our Business—Our compliance with the Implementation Rules has materially and adversely affected and may continue to materially and adversely affect our business, financial condition, results of operations and prospect in the future, and we have been subject to significant limitations on our ability to engage in the private for-profit education business and may otherwise be materially and adversely affected by changes in PRC laws and regulations.”

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Regulations on After-School Tutoring

The State Council issued an Opinion on Supervising After-School Tutoring Institutions (“Circular 80”) on August 6, 2018, which provides various guidance on regulating after-school tutoring institutions that target primary and secondary school students. Circular 80 requires that after-school tutoring institutions obtain school operating permits and other legally required licenses and permits, and instructs relevant governmental authorities to strengthen their supervisions and regulations on after-school tutoring institutions. Circular 80 also standardizes the approval and registration processes of after-school tutoring institutions.

Pursuant to the Alleviating Burden Opinion, local governmental authorities shall administer the non-academic after-school tutoring institutions by classifying sports, culture and art, science and technology and other non-academic subjects, formulating standards among different classification of non-academic tutoring and conducting strict examination before granting permission.

On February 8, 2024, the MOE issued the Administrative Regulations on Off-campus Tutoring (Draft for Comments) (the “Draft Off-campus Tutoring Regulation”), which provides that, among other things, (i) off-campus tutoring institutions shall be administered by the classification of academic subjects and non-academic subjects. All off-campus tutoring institutions shall obtain corresponding off-campus tutoring operating permit while the academic off-campus tutoring institutions for students in compulsory education shall complete registration as non-profit; (ii) online off-campus tutoring institutions shall be subject to review and approval by provincial education administration authorities. For non-academic off-campus tutoring institutions, prior to the application to education administration authorities, they are required to obtain approval from corresponding competent authorities depending on the tutoring categories. Where multiple competent authorities are involved, the application shall be submitted respectively; (iii) the income of off-campus tutoring institutions collected from financing and tutoring fees shall be mainly used for engaging in educational services, improving training conditions and guaranteeing the welfare of employees. However, unlike the Alleviating Burden Opinion and certain previous regulations implementing the Alleviating Burden Opinion, the Draft Off-campus Tutoring Regulation no longer emphasizes administration and supervision over academic subjects tutoring institutions for students on grade ten to twelve shall be implemented by reference to the relevant provisions of the Alleviating Burden Opinion. As of the date of this annual report, the Draft Off-campus Tutoring Regulation was released for public comment only, and its respective provisions and anticipated adoption or effective date may be subject to change.

The interpretation and implementation of the above regulations and rules on implementing the Alleviating Burden Opinion are subject to changes, we cannot assure you that we would not be required to take further actions regarding our tutoring services to comply with these regulations and rules, and there can be no assurance that we could fully comply with any further or detailed requirements regarding our tutoring services in a timely manner, or at all. For detailed discussion, please see “Item 3. Key Information—D. Risk Factors—Risks Related to Our Business— Significant risks exist in relation to the interpretation and implementation of, or proposed changes to, the PRC laws, regulations and policies regarding the private education industry. In particular, our compliance with the Opinions on Further Alleviating the Burden of Homework and After-School Tutoring for Students in Compulsory Education and the implementation measures issued thereunder by the relevant PRC government authorities has had, and could have further, material adverse effect on us.”

Measures for Punishment for Violation of Professional Ethics of Primary and Secondary School Teachers

The Measures for Punishment for Violation of Professional Ethics of Primary and Secondary School Teachers as promulgated by MOE on January 11, 2014 and amended on November 8, 2018 prohibits teachers of primary and secondary schools from providing paid tutoring in schools or in out-of-school learning centers. Some provinces and cities have adopted more stringent regulations which prohibit public school teachers from teaching, on a part-time basis, at private schools or learning centers. For a detailed description of the risk associated with these matters, see “Item 3. Key Information—D. Risk Factors—Risks Related to Our Business—We may be unable to recruit, train and retain a sufficient number of qualified and experienced teachers and principals.”

Regulations on Canteen of Private Compulsory Education Schools

On February 20, 2019, the MOE, the State Administration for Market Regulation and the National Health Commission jointly issued the Regulations on School Food Safety and Nutritional Health Management, which came into effect on April 1, 2019. These regulations stipulate that school self-operated canteens should adhere to the principle of public welfare and not be profit-oriented. Rural compulsory education school canteens implementing nutrition improvement plans shall not be outsourced or entrusted to operate externally. School canteens shall obtain a food business license in accordance with the law, strictly operate in accordance with the business items specified in the food business license, and hang or place the license in a prominent position in the canteen.

On December 2, 2019, the MOE, the State Administration for Market Regulation and the National Health Commission jointly issued the Guiding Opinions on Implementing Main Responsibility and Strengthening Campus Food Safety Management. Such opinions stipulate that qualified canteens of primary schools, secondary schools and kindergartens shall supply food themselves in principle, shall no longer outsourced or entrusted the operation to social forces and shall not sign new outsourced or entrusted contracts.

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On October 31, 2022, the MOE and six other departments jointly issued the Implementation Measures for the Nutrition Improvement Plan for Rural Compulsory Education Students. According to such measures, regions and schools implementing the nutrition improvement plan should vigorously promote the provision of meals in school canteens, and canteens of such schools shall be independently operated and managed by the schools, and cannot be outsourced or entrusted to external parties for operation.

A growing number of local regulations restrict the outsourcing and operating profits of primary and secondary school canteens, and the relevant regulatory practices are becoming increasingly stringent. Primary and secondary school self run canteens shall adhere to “zero profit” principle. In addition, various regions have put forward requirements for the contract period and profit margin of outsourced canteens (such as Shandong requiring profit margin control within 5%; Hubei requiring outsourcing period not exceeding three years and profit margin within 5%).

Regulation Related to Online Transmission of Audio-Visual Programs

The PRC, State Administration of Press Publication Radio Film and Television, or the SAPPRFT (currently known as National Radio and Television Administration), and the MIIT jointly promulgated the Administrative Provisions on Internet Audio-Visual Program Service, or the Audio-Visual Program Provisions, on December 20, 2007, which was last amended on August 28, 2015. Under the Audio-Visual Program Provisions, “online audio-visual program services” is defined as activities of producing, redacting and integrating audio-visual programs, providing them to the general public via internet, and providing service for other people to upload and transmit audio-visual programs, and providers of online audio-visual program services are required to obtain a License for Online Transmission of Audio-Visual Programs issued by the SAPPRFT, or complete certain registration procedures with the SAPPRFT. In general, providers of online audio-visual program services must be either state-owned or state-controlled entities, and the business to be carried out by such providers must satisfy the overall planning and guidance catalog for internet audio-visual program service determined by the SAPPRFT.

On May 21, 2008, SAPPRFT issued a Notice on Relevant Issues Concerning Application and Approval of License for the Online Transmission of Audio-Visual Programs, as amended on August 28, 2015, which sets out detailed provisions concerning the application and approval process regarding the License for Online Transmission of Audio-Visual Programs. According to the above regulations, providers of internet audio-visual program services that engaged in such services prior to the promulgation of the Audio-Visual Program Provisions are eligible to apply for the license so long as those providers did not violate the relevant laws and regulations in the past or their violation of the laws and regulations is minor in scope and can be rectified in a timely manner and they have no records of violation during the last three months prior to the promulgation of the Audio-Visual Program Provisions.

On March 30, 2009, SAPPRFT promulgated the Notice on Strengthening the Administration of the Content of Internet Audio-Visual Programs, which reiterates the pre-approval requirements for the audio-visual programs transmitted via the internet, including through mobile networks, where applicable, and prohibits certain types of internet audio-visual programs containing violence, pornography, gambling, terrorism, superstition or other similarly prohibited elements.

On March 10, 2017, SAPPRFT issued the Provisional Implementation of the Tentative Categories of Internet Audio-Visual Program Services, or the Categories, which revised the previous version issued on March 17, 2010. According to the Categories, there are four categories of internet audio and video programs services which are further divided into seventeen sub-categories. The third sub-category to the second category covers the making and editing of certain specialized audio-visual programs concerning, among other things, educational content, and broadcasting such content to the general public online.

We currently do not hold a License for Online Transmission of Audio-Visual Programs. As of the date of this document, only wholly state-owned or state-controlled enterprises are eligible to apply for the License for Online Transmission of Audio-Visual Programs. We offer video recordings of courses and certain other audio-video contents on our online platforms (a mini program) to our learners. Due to the significant uncertainty regarding the scope of audio-visual program services, we may be required to obtain a License for Online Transmission of Audio-Visual Programs or to complete the relevant registration. However, we may not be able to obtain the License for Online Transmission of Audio-Visual Programs as we are not a wholly state-owned or state-controlled entity. If this were to occur, we may be subject to penalties, fines, legal sanctions or an order to suspend the provision of our relevant services. In addition, it remains uncertain whether the PRC governmental authorities would issue more explicit interpretation and rules or promulgate new laws and regulations. See “Item 3. Key Information—D. Risk Factors—Risks Related to Our Business—We face uncertainties with respect to the development of regulatory requirements on operating licenses and permits for our online education services in mainland China. Failure to obtain or renew requested licenses or permits in a timely manner or obtain newly required ones due to adverse changes in regulations or policies could have a material adverse impact on our business, financial condition and results of operations.”

Regulation Related to Production and Distribution of Radio and Television Programs

On 19 July 2004, SAPPRFT promulgated the Administrative Measures on the Production and Operation of Radio and Television Programs, or the Radio and TV Programs Measures, which became effective on August 20, 2004 and were last amended on October 29, 2020. The Radio and TV Programs Measures are applicable for establishing institutions that produce and distribute radio and television programs or for the production of radio and television programs like programs with a special topic, column programs, variety shows, animated cartoons, radio plays and television dramas and for activities like transactions and agency transactions of program copyrights. Pursuant to the Radio and TV Programs Measures, any entity that intends to produce or operate radio or television programs must first obtain the Permit for Production and Operation of Radio and TV Programs from SAPPRFT or its local branches.

We currently hold a Permit for Production and Operation of Radio and TV Programs that is valid until December 19, 2025.

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Regulation Related to Online Publishing

On February 4, 2016, the SAPPRFT (currently reformed into the State Administration of Press and Publication (National Copyright Bureau) under the Propaganda Department of the Central Committee of the Communist Party of China) and the MIIT jointly issued the Administrative Provisions on Online Publishing Services, or the Online Publishing Provisions, which came into effect on March 10, 2016. Under the Online Publishing Provisions, any entity providing online publishing services shall obtain an Online Publishing Services Permit. “Online publishing services” refer to the provision of online publications to the public through information networks; and “online publications” refer to digital works with publishing features such as having been edited, produced or processed and are available to the public through information networks, including: (1) written works, pictures, maps, games, cartoons, audio/video reading materials and other original digital works containing useful knowledge or ideas in the field of literature, art, science or other fields; (2) digital works of which the content is identical to that of any published book, newspaper, periodical, audio/video product, electronic publication or the like; (3) network literature databases or other digital works, derived from any of the aforesaid works by selection, arrangement, collection or other means; and (4) other types of digital works as may be determined by the SAPPRFT.

We currently do not hold an Online Publishing Service Permit. As of the date of this annual report, there are no explicit interpretation from the governmental authorities or prevailing enforcement practice deeming the provision of our educational content to our students through our online platform as “online publishing” which requires an Online Publishing Service Permit. Nevertheless, it remains unclear whether the local PRC authorities would adopt a different practice. In addition, it remains uncertain whether the PRC governmental authorities would issue more explicit interpretation and rules or promulgate new laws and regulations. See “Item 3. Key Information—D. Risk Factors—Risks Related to Our Business—We face uncertainties with respect to the development of regulatory requirements on operating licenses and permits for our online education services in mainland China. Failure to obtain or renew requested licenses or permits in a timely manner or obtain newly required ones due to adverse changes in regulations or policies could have a material adverse impact on our business, financial condition and results of operations.”

PRC Laws and Regulations Relating to Trademark and Domain Name

Trademark

Pursuant to the Trademark Law of the PRC, or the Trademark Law, which was revised on April 23, 2019 and with effect from November 1, 2019, registered trademarks refer to trademarks that have been approved and registered by the Trademark Office of the National Intellectual Property Administration, which include commodity trademarks, service trademarks, collective marks and certification marks. The trademark registrant shall enjoy an exclusive right to use the trademark, which shall be protected by law.

Domain name

Pursuant to the Measures for the Administration of Internet Domain Names of China, which was promulgated by the Ministry of Industry and Information Technology of the PRC on August 24, 2017 and with effect from November 1, 2017, “domain name” shall refer to the character mark of hierarchical structure, which identifies and locates a computer on the internet and corresponds to the Internet protocol (IP) address of that computer and the principle of “first come, first serve” is followed for the domain name registration service. Domain name applicants shall provide true, accurate and complete identification of the domain name holder as requested by the domain name registration service provider.

PRC Laws and Regulations Relating to Foreign Exchange

The principal regulation governing foreign currency exchange in China is the Foreign Exchange Administration Rules of the PRC. These were promulgated by the State Council of the PRC on January 29, 1996 and with effect from April 1, 1996 and were amended on January 14, 1997 and August 5, 2008. Under these rules, Renminbi is generally freely convertible for payments of current account items, such as trade and service-related foreign exchange transactions and dividend payments, but not freely convertible for capital account items, such as direct investment, loan or investment in securities outside China, unless the prior approval of the SAFE or its local counterparts is obtained.

Under the Foreign Exchange Administration Rules, foreign-invested enterprises in the PRC may, without the approval of SAFE, make a payment from their foreign exchange accounts at designated foreign exchange banks for paying dividends with certain evidencing documents (such as board resolutions, tax certificates), or for trade and services-related foreign exchange transactions by providing commercial documents evidencing such transactions. They are also allowed to retain foreign currency (subject to a cap approval by SAFE) to satisfy foreign exchange liabilities. In addition, foreign exchange transactions involving overseas direct investment or investment and trading in securities, derivative products abroad are subject to registration with SAFE or its local counterparts and approval form or filling with the relevant PRC government authorities (if necessary).

According to the Circular on the Management of Offshore Investment and Financing and Round Trip Investment By Domestic Residents through Special Purpose Vehicles, or Circular 37, which was promulgated on July 4, 2014 and with effect from the same day, before a domestic resident contributes its legally owned onshore or offshore assets and equity into a Special Purpose Vehicle, or SPV, the domestic resident shall be required to register with the local branch of SAFE for foreign exchange registration of overseas investments before contributing the domestic and overseas lawful assets or interests to a SPV, and to update such registration in the event of any change of basic information of the registered SPV or major change in the SPV’s capital, including increases and decreases of capital, share transfers, share swaps, mergers or divisions. The SPV is defined as an “offshore enterprise directly established or indirectly controlled by the domestic resident (including domestic institution and individual resident) with their legally owned assets and equity of the domestic enterprise, or legally owned offshore assets or equity, for the purpose of investment and financing”; “Round Trip Investments” refer to “the direct investment activities carried out by a domestic resident directly or indirectly via an SPV, that is, establishing a foreign-invested enterprise or project within the PRC through a new entity, merger or acquisition and other ways, while obtaining ownership, control, operation and management and other rights and interests”. In addition, according to the procedural guidelines as attached to the Circular 37, the principle of review has been changed to “the domestic individual resident is only required to register the SPV directly established or controlled (first level)”.

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Pursuant to Circular of the State Administration of Foreign Exchange on Further Simplifying and Improving the Direct Investment-related Foreign Exchange Administration Policies, or Circular 13, which was promulgated on February 13, 2015 and implemented June 1, 2015, the initial foreign exchange registration for establishing or taking control of a SPV by domestic residents can be conducted with a qualified bank, instead of the local foreign exchange bureau, and the Circular 13 also simplifies some procedures relating to foreign exchange for direct investments.

On March 30, 2015, the SAFE promulgated the Circular on Reforming the Management Approach regarding the Settlement of Foreign Exchange Capital of Foreign-invested Enterprises, or Circular 19, which came into effect from June 1, 2015. According to Circular 19, the foreign exchange capital of foreign-invested enterprises shall be subject to the Discretional Foreign Exchange Settlement. The Discretional Foreign Exchange Settlement refers to the foreign exchange capital in the capital account of a foreign-invested enterprise for which the rights and interests of monetary contribution has been confirmed by the local foreign exchange bureau (or the book-entry registration of monetary contribution by the banks) can be settled at the banks based on the actual operational needs of the foreign-invested enterprise. The proportion of Discretional Foreign Exchange Settlement of the foreign exchange capital of a foreign-invested enterprise is temporarily determined to be 100%. The Renminbi converted from the foreign exchange capital will be kept in a designated account and if a foreign-invested enterprise needs to make further payment from such account, it still needs to provide supporting documents and go through the review process with the banks.

SAFE issued the Circular on Reforming and Regulating Policies on the Control over Foreign Exchange Settlement of Capital Accounts, or Circular 16, on June 9, 2016, which became effective simultaneously. Pursuant to Circular 16, enterprises registered in the PRC may also convert their foreign debts from foreign currency to Renminbi on a self-discretionary basis. Circular 16 provides an integrated standard for conversion of foreign exchange under capital account items (including but not limited to foreign currency capital and foreign debts) on self-discretionary basis which applies to all enterprises registered in the PRC. Circular 16 reiterates the principle that Renminbi converted from foreign currency-denominated capital of a company may not be directly or indirectly used for purposes beyond its business scope or prohibited by PRC laws or regulations, while such converted Renminbi shall not be provided as loans to its non-affiliated entities.

On January 26, 2017, SAFE promulgated the Circular on Further Improving Reform of Foreign Exchange Administration and Optimizing Authenticity and Compliance Verification, or Circular 3, which took effect on the same date. Circular 3 sets out various measures to tighten authenticity and compliance verification of cross-border transactions and cross-border capital flow, which include without limitation requiring banks to verify board resolutions, tax filing form, and audited financial statements before wiring foreign invested enterprises’ foreign exchange distribution above US$50,000, and strengthening genuineness and compliance verification of foreign direct investments.

On October 23, 2019, SAFE issued the Circular of the State Administration of Foreign Exchange on Further Promoting the Facilitation of Cross-border Trade and Investment, or the Circular 28, which took effect on the same date. Circular 28 allows non-investment foreign-invested enterprises to use their capital funds to make equity investments in China, with genuine investment projects and in compliance with effective foreign investment restrictions (negative list) and other applicable laws. However, as the Circular 28 was newly issued, there are still substantial uncertainties as to its interpretation and implementations in practice.

According to the Circular of SAFE on Optimizing Foreign Exchange Administration to Support the Development of Foreign-related Business promulgated and effective on April 10, 2020 by SAFE, the reform of facilitating the payments of income under the capital accounts shall be promoted nationwide. Under the prerequisite of ensuring true and compliant use of funds and compliance and complying with the prevailing administrative provisions on use of income from capital projects, enterprises which satisfy the criteria are allowed to use income under the capital account, such as capital funds, foreign debt and overseas listing, etc., for domestic payment, without the need to provide proof materials for veracity to the bank beforehand for each transaction.

In December 2023, SAFE promulgated the Circular on Further Deepening Reforms to Facilitate Cross-border Trade and Investment, which, among other things, provides that the use of capital funds of non-financial enterprises, foreign exchange income under foreign debt and RMB funds derived from foreign exchange settlement shall follow the principle of truthfulness and self-use, and shall not be used directly or indirectly for expenditures prohibited by national laws and regulations; unless otherwise expressly provided, it shall not be used directly or indirectly for investment in securities or other investment and wealth management (except for wealth management products and structured deposits with risk ratings of not higher than Level 2); and it shall not be used for the issuance of loans to non-affiliated enterprises (except for those expressly permitted in the scope of business and the four specific areas of China); and shall not be used for the purchase of non-self-use residential properties (except for enterprises engaged in real estate development and operation and real estate leasing and operation). Such circular further specifies that in the event of any inconsistency between the previous regulations and this circular, this circular shall prevail.

As of the date of this annual report, all PRC residents known to us that currently have direct or indirect interests in our company have completed or in the course of updating the necessary registrations, as required by Circular 37. For a detailed description of the risk associated with the non-completion of such process, see “Item 3. Key Information—D. Risk Factors—Risks Related to Doing Business in the Jurisdictions Where We Operate—A failure by the beneficial owners of our shares who are PRC residents to comply with certain PRC foreign exchange regulations could restrict our ability to distribute profits, restrict our overseas and cross-border investment activities and subject us to liability under PRC law.”

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Regulations on loans to and direct investment in the PRC entities by offshore holding companies

According to the Implementation Rules for the Provisional Regulations on Statistics and Supervision of Foreign Debt promulgated by SAFE on September 24, 1997 and the Interim Provisions on the Management of Foreign Debts promulgated by SAFE, the NDRC and the MOF on January 8, 2003 and effective from March 1, 2003, loans by foreign companies to their subsidiaries in China, which accordingly are foreign-invested enterprises, are considered foreign debt, and such loans must be registered with the local branches of the SAFE. Under the provisions, the total amount of accumulated medium-term and long-term foreign debt and the balance of short-term debt borrowed by a foreign-invested enterprise is limited to the difference between the total investment and the registered capital of the foreign-invested enterprise.

According to the Provisional Regulations for the Proportion of Registered Capital to Total Amount of Investment of Joint Ventures Using Chinese and Foreign Investment issued by SAIC on February 17, 1987 and Decision on Amending the Provisions on the Merger or Acquisition of Domestic Enterprises by Foreign Investors issued by MOFCOM on August 8, 2006, if the registered capital of a foreign-invested enterprise is less than US$2.1 million, its total investment amount may not exceed 1.4 times the registered capital; if the registered capital of a foreign-invested enterprise is more than US$2.1 million but less than US$5 million, its total investment amount may not exceed two times the registered capital; if the registered capital of a foreign-invested enterprise is more than US$5 million but less than US$12 million, its total investment amount may not exceed 2.5 times the registered capital; and if the registered capital of a foreign-invested enterprise is more than US$12 million, its total investment amount may not exceed three times the registered capital.

According to the Measures for the Administration of Foreign Debt Registration issued by SAFE on April 28, 2013, the statutory limit on the amount of loans from an overseas shareholder to a foreign-invested enterprise is the difference between the total investment amount and the registered capital of the foreign-invested enterprise.

On January 12, 2017, the People’s Bank of China promulgated Notice of the People’s Bank of China on Issues Concerning Macro Prudential Management of Full Scale Cross-border Financing, or PBOC Circular 9. According to PBOC Circular 9, the People’s Bank of China establishes a cross-border financing regulation system and the legal entities and financial institutions established in PRC excluding government financing vehicles and real estate enterprise, may carry out cross-border financing of foreign currency in accordance with relevant regulations. PBOC Circular 9 provides that, among other things, the outstanding amount of the foreign currency for the entities in cross-border financing, shall be limited to the upper limit of the risk-weighted balance of such entity.

The enterprise shall, after signing the cross-border financing contract, but not later than three business days before the withdrawal of the borrowing funds, file with the local branches of SAFE for the cross-border financing through SAFE’s capital project information system. PBOC Circular 9 also provides that during the one-year period starting from January 11, 2017, foreign-invested enterprises may choose one method to carry out cross-border financing in foreign currency either according to PBOC Circular 9 or according to the Interim Provisions on the Management of Foreign Debts. After the end of such one-year period, the method of foreign-invested enterprises to carry out cross-border financing in foreign currency will be determined by the People’s Bank of China and SAFE.

On January 5, 2023, the National Development and Reform Commission issued the Management Measures for the Review and Registration of Medium-and-Long-Term Foreign Debt of Enterprises, effective from February 10, 2023, which provide that PRC enterprises and the overseas enterprises or branches under their control shall, in respect of a debt instrument with a maturity of one year or above, issued overseas and denominated in RMB or a foreign currency, under which the principal and interest are repaid as agreed, apply to the NDRC for review and registration of foreign debt and report and disclose relevant information. The NDRC shall, within 3 months after accepting the application, issue the Certificate of Review and Registration for the application that complies with the provisions, or issue a written notice of objection for the application that fails to comply with the provisions.

In December 2023, SAFE promulgated the Circular on Further Deepening Reforms to Facilitate Cross-border Trade and Investment, which, among other things, provides that the use of capital funds of non-financial enterprises, foreign exchange income under foreign debt and RMB funds derived from foreign exchange settlement shall follow the principle of truthfulness and self-use, and shall not be used directly or indirectly for expenditures prohibited by national laws and regulations; unless otherwise expressly provided, it shall not be used directly or indirectly for investment in securities or other investment and wealth management (except for wealth management products and structured deposits with risk ratings of not higher than Level 2); and it shall not be used for the issuance of loans to non-affiliated enterprises (except for those expressly permitted in the scope of business and the four specific areas of China); and shall not be used for the purchase of non-self-use residential properties (except for enterprises engaged in real estate development and operation and real estate leasing and operation). Such circular further specifies that in the event of any inconsistency between the previous regulations and this circular, this circular shall prevail.

Zhuhai Bright Scholar, a foreign-invested enterprise indirectly held by us, currently has a total investment amount of RMB14.0 million (approximately US$2.0 million) and an initially subscribed registered capital RMB10.0 million (approximately US$1.5 million). We may provide shareholder loans of up to the U.S. dollar equivalent of RMB4.0 million (approximately US$0.6 million) to Zhuhai Bright Scholar, which is the difference between its total investment amount and registered capital. According to the Measures for the Reporting of Foreign Investment Information issued by MOFCOM and SAIC on December 30, 2019, which supersedes the Interim Measures for the Administration of the Establishment and Alteration of Archival Filing of Foreign Invested Enterprises, the increase of total investment amount and registered capital of a foreign-invested enterprise must be reported to commerce departments through the enterprise registration system and the National Enterprise Credit Information Publicity System, and market regulatory departments shall forward such investment information reported by foreign investors or foreign-invested enterprises to commerce departments in a timely manner.

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According to applicable PRC regulations on foreign-invested enterprises, capital contributions from a foreign holding company to its PRC subsidiaries, which are considered foreign-invested enterprises, may only be made when approval by or registration with the MOFCOM or its local counterpart is obtained.

Provisions on the Merger and Acquisition of Domestic Enterprises by Foreign Investors (Revised in 2009)

Under the M&A Rules, a foreign investor is required to obtain necessary approvals when (1) a foreign investor acquires equity in a domestic non-foreign invested enterprise thereby converting it into a foreign-invested enterprise, or subscribes for new equity in a domestic enterprise via an increase of registered capital thereby converting it into a foreign-invested enterprise; or (2) a foreign investor establishes a foreign-invested enterprise which purchases and operates the assets of a domestic enterprise, or which purchases the assets of a domestic enterprise and injects those assets to establish a foreign-invested enterprise. According to Article 11 of the M&A Rules, where a domestic company or enterprise, or a domestic natural person, through an overseas company established or controlled by it/him/her, acquires a domestic company which is related to or connected with it/him/her, approval from the MOFCOM is required.

According to the Q&A on the official website of the Foreign Investment Department of the Ministry of Commerce in 2024, after the implementation of the Foreign Investment Law in 2020, the competent commerce department will no longer approve or record the establishment and changes of foreign-invested enterprises. Foreign investors’ mergers and acquisitions of domestic enterprises shall comply with the requirements of the M&A Rules other than the approval procedures.

For a detailed description of the risk associated with the M&A Rules, see “Item 3. Key Information—D. Risk Factors—Risks Related to Doing Business in the Jurisdictions Where We Operate—Certain PRC regulations, including the M&A Rules and national security regulations, may require a complicated review and approval process which could make it more difficult for us to pursue growth through acquisitions in China.”

Amended Company Law

The establishment, operation and management of corporate entities in the PRC are governed by the Company Law of the PRC. On December 29, 2023, the Standing Committee of the National People’s Congress promulgated the amended Company Law of the PRC, which came into effect on July 1, 2024, to supersede the existing PRC Company Law which was amended in October 2018. The major revisions made by the amended PRC Company Law included improving the system for the establishment and liquidation of companies, optimizing organizational structures of companies, improving the capital system of companies, strengthening the responsibilities of the controlling shareholder and management staff, and enhancing the social responsibilities of companies, etc. With respect to the period for payment of the registered capital, pursuant to the amended PRC Company Law, all shareholders of a PRC limited liability company shall fully pay up the registered capital subscribed for by such shareholders within five years since the date of establishment of the PRC limited liability company, unless otherwise provided by laws and regulations. On July 1, 2024, the State Council issue the Provisions of the State Council on Implementing the Registered Capital Registration and Management System under the PRC Company Law, which further specified the detailed requirements and measures of the registration and management of registered capital under the amended PRC Company Law. Pursuant to such provisions, there shall be a three-year interim period from July 1, 2024 to June 30, 2027 for the existing companies to adjust their periods of capital contribution.

Regulations on Independent Schools in the United Kingdom

Independent schools in the UK must maintain registration with the appropriate regulatory authority and obtain prior approval for any material changes to their operations. Material changes include changes to proprietorship, premises, student age ranges, maximum capacity, gender admission policies, boarding provisions, and special educational needs provisions.

These schools are subject to regular inspections that evaluate multiple aspects of their operations. The inspections assess the quality of education provided, spiritual and cultural development of pupils, welfare and safety standards, staff suitability, premises and accommodation quality, information provision, complaint handling procedures, and the overall quality of leadership and management.

For the recruitment of international students, independent schools must maintain appropriate sponsor licenses from UK Visas and Immigration (“UKVI”). These licenses typically cover both Child Student (ages 4-16) and Student (ages 16+) routes. Schools must comply with UKVI requirements and regulations. If a school fails an inspection by the relevant inspectorate body, they must notify UKVI within 20 working days of the inspection report’s publication, which will result in the school’s allocation of sponsorship certificates being zeroed until the school is reinspected and achieves the required rating.

The regulatory framework provides for enforcement mechanisms in cases of non-compliance. In serious cases, regulators may take steps to remove a school from the register of independent schools, and it is an offense to operate an unregistered school. For immigration matters, UKVI may suspend or cancel sponsorship licenses if immigration compliance requirements are not met.

Recent changes to the tax regime in the UK have introduced new financial obligations for independent schools. These include the introduction of a 20% VAT on school fees from January 2025, and the removal of the 80% business rates relief previously available to many independent schools, also effective from April 2025. Additionally, while applicable to all businesses, the increase in employer National Insurance contributions to 15% from April 2025, coupled with the reduction of the secondary threshold to £5,000, is expected to affect independent schools. 

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C. Organizational Structure

The following diagram illustrates our corporate structure, including our principal subsidiaries and affiliated entities, as of the date of this annual report.

(1) See “Item 6. Directors, Senior Management and Employees—E. Share Ownership.”

(2) The remaining 30% equity interest is owned by CAN-ACHIEVE GLOBAL EDUCATION PARTNERS LIMITED, an unaffiliated third party.

The following table sets forth the details of our significant subsidiaries, VIEs and subsidiaries held by the VIEs from our continuing operations.

Subsidiaries	Place of Incorporation
Bright Scholar (Enlightenment) Investment Holdings Limited	Cayman
Impetus Investment Limited	Cayman
Can-Achieve Academy Limited	Canada
Can-Achieve International Education Limited (Vancouver)	Canada
Bright Can-Achieve Pte. Ltd.	Singapore
Foundation Global Education (Singapore) Pte. Ltd.	Singapore
FGE Holdings Limited	BVI
Bright Can-Achieve Limited	Hong Kong

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Foundation Global Education Limited	Hong Kong
Foundation Education China Limited	Hong Kong
Foundation Academy Limited	Hong Kong
Foundation Education Services Limited	Hong Kong
Time Education China Holdings Limited	Hong Kong
Xin Rui Management Co., Ltd.	Hong Kong
Bright Scholar (UK) Holdings Limited	United Kingdom
Bright Scholar (BCS) Property Limited	United Kingdom
Bournemouth Collegiate School Limited	United Kingdom
Bosworth Independent School Limited	United Kingdom
ST Michael's School Limited	United Kingdom
CATS Colleges Holdings Limited	United Kingdom
Worthgate School Limited	United Kingdom
Guildhouse School Limited	United Kingdom
CATS Retail Limited	United Kingdom
Cambridge School of Visual and Performing Arts Limited	United Kingdom
Cambridge Arts and Science Limited	United Kingdom
Cambridge School of Art and Design Limited	United Kingdom
CEG Properties Limited	United Kingdom
CEG Colleges Limited	United Kingdom
CGS Administrative Services Limited	United Kingdom
Stafford House Companies Limited	United Kingdom
Stafford House School of English Limited	United Kingdom
Stafford House Study Holidays Limited	United Kingdom
Study Holidays Limited	United Kingdom
Cambridge Education Group Holdings Inc.	United States
CATS Academy Boston Inc.	United States
Boston Academy of English Inc.	United States
Intrax English Academies LLC	United States
Can-achieve Global Education, Inc	United States
Foundation Global Education (USA) Inc	United States
BRIGHT CAN-ACHIEVE LLC	United States
CATS Education Services FZ - LLC	Dubai
Bright Can-Achieve Education Company Limited	Vietnam
CEG Education Technology (Shanghai) Co., Ltd.	The PRC
Beijing Cambridge Arts and Science Consulting Co., Ltd.	The PRC
Shanghai CGS Cultural Media Co., Ltd.	The PRC
Shanghai CGS Consulting Management Co., Ltd.	The PRC
Foundation Information Consulting (Shenzhen) Co., Ltd.	The PRC
Foundation Information Consulting (Shanghai) Co., Ltd.	The PRC
Guangdong Bright Scholar Education Technology Co., Ltd.	The PRC
Shenzhen Qianhai Xingkeyucai Trading Co., Ltd.	The PRC
Zhuhai Hengqin Bright Scholar Management Consulting Co., Ltd.	The PRC
Guangdong Zhixing Weilai Logistics Management Co., Ltd.	The PRC
Beijing Jingshiboda Education Technology Co., Ltd.	The PRC
Zhuhai Xin Xu Education Consulting Co., Ltd.	The PRC
Hangzhou Impression Arts Training Co., Ltd.	The PRC
Can-achieve (Beijing) Education Consulting Co., Ltd.	The PRC
Guangzhou Can-achieve Global Consulting Co., Ltd.	The PRC
Bright Scholar Wanjia (Beijing) Education Consulting Co., Ltd.	The PRC
Beijing Can-achieve Lingying Information Consulting Co., Ltd.	The PRC

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Beijing Yinxiang Bright Scholar Education Consulting Co., Ltd.	The PRC
Shanghai Yinle Arts Training Co., Ltd.	The PRC
Guangdong Leyu Weilai Property Management Co., Ltd.	The PRC
Hangzhou Hangbogui Apartment Management Co., Ltd.	The PRC
Guangzhou Nansha Kaiyu Management Consulting Co., Ltd.	The PRC
Hangzhou Tongyan Impression Media Co., Ltd.	The PRC
Hangzhou Luzhi Media Co., Ltd.	The PRC

VIEs	Place of Incorporation
Foshan Yongliang Education Technology Co., Ltd.	The PRC
Foshan Zhiliang Education Technology Co., Ltd.	The PRC
Beijing Boteng Consulting Co., Ltd.	The PRC

Subsidiaries held by VIEs	Place of Incorporation
Foshan Shunde Beijiao Town Xingjian Art Training Co., Ltd.	The PRC
Guangzhou Huihua Education Consulting Co., Ltd.	The PRC
Beijing Huanxue International Travel Limited	The PRC
Guangdong Lebeimeng Education Consulting Co., Ltd.	The PRC
Guangzhou Xingzhu Information Technology Co., Ltd.	The PRC
Guangdong Bright Scholar Ivy League Education Science Research Institute Co., Ltd.	The PRC
Tongxiang Wuzhen Leti Camping Operation Management Co., Ltd.	The PRC
Foshan Kunshun Culture Co., Ltd.	The PRC
Beijing Boteng Technology Co., Ltd.	The PRC
Foshan ShunQian Culture Co., Ltd.	The PRC
Guangzhou Shunheng Culture Co., Ltd.	The PRC
Jiangmen Shunkun Culture Co., Ltd.	The PRC
Changsha Kunheng Culture Co., Ltd.	The PRC
Jurong Shuntai Culture Co., Ltd.	The PRC
Foshan Yixue Culture Co., Ltd.	The PRC
Foshan Saiyuan Culture Co., Ltd.	The PRC
Guangzhou Yinghe Culture Co., Ltd.	The PRC
Guangzhou Feijia Culture Co., Ltd.	The PRC

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Our Contractual Arrangements

Foreign ownership in education services (including the entity providing online education services) is subject to significant regulations in China. The PRC government regulates the provision of education services through strict licensing requirements. We are a company incorporated in the Cayman Islands. Our PRC subsidiary, Zhuhai Bright Scholar, is a wholly foreign-owned enterprise and currently ineligible to operate online education business or otherwise hold equity interests therein. Due to these restrictions, we, through our PRC subsidiary, Zhuhai Bright Scholar, have entered into a series of contractual arrangements with (1) the VIEs, and (2) the shareholders of the VIEs, i.e., Ms. Meirong Yang and Mr. Wenjie Yang.

On May 14, 2021, the State Council promulgated the Implementation Rules, which became effective on September 1, 2021 and further stipulate the operation and management of private schools and the capital operation of private education. Pursuant to the Implementation Rules, (1) foreign-invested enterprises established in China and social organizations whose actual controllers are foreign parties shall not sponsor, participate in or actually control private schools that provide compulsory education, (2) social organizations or individuals shall not control any private school that provides compulsory education or any non-profit private school that provides pre-school education by means of merger, acquisition, contractual arrangements, etc., and (3) private schools providing compulsory education shall not conduct any transaction with any related party. As a result of the foregoing, in August 2021, shareholder of BGY Education Investment established several new entities, including, Foshan Meiliang Education Technology Co., Ltd., Foshan Shangtai Education Technology Co., Ltd., Foshan Renliang Education Technology Co., Ltd., Foshan Yongliang Education Technology Co., Ltd., Foshan Zhiliang Education Technology Co., Ltd. and Beijing Boteng Consulting Co., Ltd. On August 13, 2021, Foshan Meiliang Education Technology Co., Ltd., Foshan Shangtai Education Technology Co., Ltd., Foshan Renliang Education Technology Co., Ltd., Foshan Yongliang Education Technology Co., Ltd., Foshan Zhiliang Education Technology Co., Ltd. and Beijing Boteng Consulting Co., Ltd. entered into series of supplementary agreements, which enabled them to join the 2017 contractual arrangements and share the same rights and obligations, if applicable, of BGY Education Investment. On June 17, 2024, an agreement supplementary to the 2017 contractual arrangements and 2021 supplemental agreements was entered into by and among Zhuhai Bright Scholar, Ms. Meirong Yang and Mr. Wenjie Yang, and Foshan Meiliang Education Technology Co., Ltd., Foshan Shangtai Education Technology Co., Ltd., Foshan Renliang Education Technology Co., Ltd., Foshan Yongliang Education Technology Co., Ltd., Foshan Zhiliang Education Technology Co., Ltd. and Beijing Boteng Consulting Co., Ltd., to stipulate that Foshan Shangtai Education Technology Co., Ltd. and Foshan Renliang Education Technology Co., Ltd. shall no longer be bound by the 2017 contractual arrangements and 2021 supplemental agreements upon their deregistration, and part of affiliated entities of Foshan Yongliang Education Technology Co., Ltd., Foshan Zhiliang Education Technology Co., Ltd. and Beijing Boteng Consulting Co., Ltd. shall no longer be bound by the 2017 contractual arrangements and 2021 supplemental agreements upon respective closing of the disposal of equity interest of such entities or their deregistration. As of the date of this annual report, Foshan Shangtai Education Technology Co., Ltd. and Foshan Renliang Education Technology Co., Ltd. have completed the deregistration process. On August 31, 2024, an agreement supplementary to the 2017 contractual arrangements and 2021 supplemental agreements was entered into by and among Zhuhai Bright Scholar, Ms. Meirong Yang and Mr. Wenjie Yang, and Foshan Meiliang Education Technology Co., Ltd, which provides that upon execution of this supplementary agreement, Foshan Meiliang Education Technology Co., Ltd., and its affiliated entities (including nine domestic kindergartens) shall no longer be bound by the 2017 contractual arrangements and 2021 supplemental agreements. As of the date of this annual report, Foshan Meiliang Education Technology Co., Ltd., and its affiliated entities (including nine domestic kindergartens) are no longer bound by the 2017 contractual arrangements and 2021 supplemental agreements.

The following is a summary of the material provisions of these contractual arrangements with the VIEs, respectively, and their respective shareholders. We may not amend or terminate these agreements unless authorized by a majority vote of our board of directors.

Call Option Agreements. Pursuant to the call option agreements between Zhuhai Bright Scholar, Ms. Meirong Yang and Mr. Wenjie Yang, and the VIEs, Ms. Meirong Yang and Mr. Wenjie Yang unconditionally and irrevocably granted Zhuhai Bright Scholar or its designee an exclusive option to purchase, to the extent permitted under PRC laws and regulations, all or part of the equity interest in the VIEs at nil consideration or the lowest consideration permitted by PRC laws and regulations under the circumstances where Zhuhai Bright Scholar or its designee is permitted under PRC laws and regulations to own all or part of the equity interests of the VIEs or where we otherwise deem it necessary or appropriate to exercise the option. Zhuhai Bright Scholar has the sole discretion to decide when to exercise the option, and whether to exercise the option in part or in full. Without Zhuhai Bright Scholar’s written consent, Ms. Meirong Yang and Mr. Wenjie Yang may not sell, transfer, pledge or otherwise dispose of or create any encumbrance on any of the VIEs’ assets or equity interests. Without obtaining Zhuhai Bright Scholar’s written consent, Ms. Meirong Yang and Mr. Wenjie Yang may not enter into any material contracts, incur any indebtedness, or alter the business scope of the VIEs. The key factor for us to decide whether to exercise the option is whether the current regulatory restrictions on foreign investment in the education services business will be removed in the future, the likelihood of which we are not in a position to know or comment on.

Power of Attorney. In January 2017 and August 2021, respectively, Ms. Meirong Yang and Mr. Wenjie Yang each executed irrevocable powers of attorney, appointing Zhuhai Bright Scholar, or any person designated by Zhuhai Bright Scholar, as his/her attorney-in-fact to (1) call and attend shareholders meeting of the VIEs and execute relevant shareholders resolutions, (2) exercise on his/her behalf all his/her rights as a shareholder of the VIEs, including those rights under PRC laws and regulations and the articles of association of the VIEs, such as voting, appointing, replacing or removing directors, (3) submit all documents as required by government authorities on behalf of the VIEs, (4) assign Ms. Meirong Yang’s and Mr. Wenjie Yang’s shareholding rights to Zhuhai Bright Scholar, including the rights to receive dividends, dispose of equity interest and enjoy the rights and interests during and after liquidation, (5) review the resolutions, books and accounts of the VIEs, and (6) exercise any other rights and benefits associated with shareholding that Ms. Meirong Yang or Mr. Wenjie Yang receive from the VIEs.

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Exclusive Management Services and Business Cooperation Agreement. Pursuant to the exclusive management services and business cooperation agreement among Zhuhai Bright Scholar, the VIEs, Ms. Meirong Yang and Mr. Wenjie Yang, as the shareholders of the VIEs, entered into in January 2017 and its supplementary agreement in August 2021, Zhuhai Bright Scholar has the exclusive right to provide comprehensive technical and business support services to the VIEs. Such services include conducting market research, offering strategic business advice and providing information technology services, advice on mergers and acquisitions, human resources management services, intellectual property licensing services, support for teaching activities and other services that the parties may mutually agree. Without the prior consent of Zhuhai Bright Scholar, none of the VIEs may accept such services from any third party. Zhuhai Bright Scholar owns the exclusive intellectual property rights created as a result of the performance of this agreement. The VIEs agree to pay Zhuhai Bright Scholar service fees in an amount solely decided by Zhuhai Bright Scholar, but not to exceed the paying school’s total revenues deducted by costs, taxes, mandatory reserve fund and other expenses. At the sole discretion of Zhuhai Bright Scholar, the calculation of the service fees should be determined based on the complexity of the services provided, the time and resources committed by Zhuhai Bright Scholar, the commercial value of the services, the market reference price and the operating condition of the paying school. As part of the exclusive management services and business cooperation agreement, Ms. Meirong Yang, Mr. Wenjie Yang and the VIEs agree that they will not take any action, such as incurring indebtedness, disposing of material assets, materially changing the scope or nature of the business of the VIEs, or disposing of their equity interests in the VIEs, without the written consent of Zhuhai Bright Scholar. The exclusive management services and business cooperation agreement may not be terminated by Ms. Meirong Yang, Mr. Wenjie Yang or any of the VIEs without the written consent of Zhuhai Bright Scholar.

Unless terminated, the agreement shall remain in full force and effect during the term of operations of Zhuhai Bright Scholar and the VIEs.

Equity Pledge Agreements. Pursuant to the equity pledge agreement among Zhuhai Bright Scholar, Ms. Meirong Yang, Mr. Wenjie Yang and the VIEs, Ms. Meirong Yang and Mr. Wenjie Yang unconditionally and irrevocably pledged all of their respective equity interests in the VIEs to Zhuhai Bright Scholar to guarantee performance of the obligations of the VIEs under the call option agreements, power of attorneys and exclusive management services and business cooperation agreements, each as described above. Ms. Meirong Yang and Mr. Wenjie Yang each agreed that without prior written consent of Zhuhai Bright Scholar, they shall not transfer or dispose of the pledged equity interests or create or allow any encumbrance on the pledged equity interests. Unless terminated, the equity pledge agreements remain in full force and effect until all of the obligations of Ms. Meirong Yang, Mr. Wenjie Yang and the VIEs under the agreements described above have been duly performed and related payments are duly paid. The pledge of equity interests in the VIEs has been effective upon the registration with the local branch of SAIC.

D. Property, plants and equipment

See “—B. Business Overview—Properties and Facilities.”

ITEM 4A. UNRESOLVED STAFF COMMENTS

None.

ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS

The following discussion of our financial condition and results of operations is based upon and should be read in conjunction with our consolidated financial statements and their related notes included in this annual report. This report contains forward-looking statements. You should carefully consider the information provided under the caption “Item 3. Key Information—D. Risk Factors” in this annual report. We caution you that our businesses and financial performance are subject to substantial risks and uncertainties.

A. Operating Results

Overview

We are a global premier education service company, which primarily provides quality international education services to global students and equip them with the critical academic foundation and skillsets necessary to succeed in the pursuit of higher education. As part of our global expansion plan, we have been exploring mergers and acquisition opportunities abroad to expand our global school network, targeting quality private education providers and reputable schools in the targeted overseas countries and jurisdictions. As of the date of this annual report, we have eight overseas school located in the United Kingdom and the United States.

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On May 14, 2021, the PRC State Council announced the Implementation Rules, which became effective on September 1, 2021. Pursuant to the Implementation Rules, (1) foreign-invested enterprises established in China and social organizations whose actual controllers are foreign parties shall not sponsor, participate in or actually control private schools that provide compulsory education, (2) social organizations or individuals shall not control any private school that provides compulsory education or any non-profit private school that provides pre-school education by means of merger, acquisition, contractual arrangements, etc., and (3) private schools providing compulsory education shall not conduct any transaction with any related party.

The Implementation Rules have had significant impacts on our business and our results of operations. After consultation with its PRC legal counsel and external advisors, we have reached the conclusion that, as a result of the effectiveness of the Implementation Rules, we have lost control over the Affected Entities, which primarily include our private schools providing compulsory education, not-for-profit kindergartens and other enterprises within China that are affected by the Implementation Rules. We have determined that, in substance, we had ceased to recognize revenues for all activities related to the Affected Entities with compulsory education and discontinued all business activities with such entities, by August 31, 2021 while continuing to provide essential services to keep these schools open. However, in May and June 2023, the related staff had transferred out from the services center in our headquarters and we ceased to provide such free services.

Our continuing business primarily includes overseas schools and complementary education services. We have built our global presence primarily through acquiring established overseas schools and language training institutions in countries such as the United Kingdom and the United States. We also offer a range of complementary education services, primarily including camp programs, after-school programs, through our network of learning centers in China, as well as international education consulting services.

For our continuing operations, our revenue was RMB1,439.3 million, RMB1,772.1 million and RMB1,755.2 million (US$247.6 million) for the 2022, 2023 and 2024 fiscal years, respectively. Our net loss was RMB703.5 million, RMB386.8 and RMB1,032.9 million (US$145.7 million) for the same periods, respectively. We use adjusted net loss, which excludes share-based compensation expense, amortization of intangible assets, tax effect of amortization of intangible assets, impairment loss on operating lease right-of-use assets, impairment loss on goodwill, impairment loss on intangible assets, impairment loss on property and equipment, impairment loss on the long-term investment and income from discontinued operations, net of tax, in evaluating our ongoing results of operations. Our adjusted net loss was RMB135.0 million and RMB192.6 million for the 2022 and 2023 fiscal years, respectively, and our adjusted net income was RMB1.1 million (US$0.2 million) for the 2024 fiscal year. See “—Non-GAAP measures” for details.

Major Factors Affecting Our Results of Operations

We believe that our results of operations are affected by general factors affecting the private K-12 education industry in China and overseas and company-specific factors, including the following:

Demand for quality private K-12 education globally

Our performance depends largely on the demand for quality private K-12 education services globally and in particular the overseas markets where we have operations. Demand for private K-12 education in each respective overseas market is affected by, among many other factors, the general economic conditions and political trend, local policies and regulations on private education, and the quality of local public education. Material changes to these factors will affect our operation results.

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Our student enrollment and mix

Our revenue primarily consists of tuition and fees from students enrolled at our schools. The level of students enrolled at our schools directly affects our revenue and profitability. Our total student enrollment for our overseas schools for the 2022, 2023 and 2024 fiscal years was 2,377, 2,584 and 2,652, respectively. Student enrollment is generally dependent on, among other things, the reputation of our schools, which is primarily driven by our education quality and our students’ academic results, the ramp-up stage of our schools, the expansion of our school network.

Student enrollment is also affected by the number and capacity of our overseas schools. The total number of our overseas schools for the 2022, 2023 and 2024 fiscal years was eight, eight and eight, respectively. For the same years, the student capacity of our overseas schools was 4,260, 4,260 and 4,260, respectively.

As utilization rates are generally higher for schools that have been in operation for a longer period of time, the unutilized capacity at our recently opened schools, which are still at the ramp-up stage, allows us to readily increase student enrollment without incurring significant additional investment. The utilization rate is defined as the average of monthly student enrollment at a school for a period divided by the school capacity as of the start of such period.

Our tuition and fees

Our results of operations are affected by the level of the tuition and fees we charge. We charge fees for meals and accommodations to students. In particular, such fees accounted for over 90% of the revenue generated from our K-12 operation services in the 2024 fiscal year. We charge tuition and fees based on the type of school that the student is enrolled at, the location of the school and, in certain cases, the student’s grade level. We generally seek to gradually increase our tuition and fee level without compromising our student enrollment. The tuition and fees we charge are subject to approval by the competent government pricing authorities. The government pricing authorities, at both the provincial and local levels, have broad powers to regulate the private education industry in China including the tuition, room and boarding fees and other fees charged by schools.

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Our ability to control our costs and expenses and improve our operating efficiency

Staff costs and administrative expenses have a direct impact on our profitability. The number of our staff, particularly our teachers, generally increases as our student base expands, while other expenses, particularly those in relation to administrative functions, are relatively fixed. Our ability to drive the productivity of our staff and enhance our operating efficiency affects our profitability. The ratio of the number of our students to the number of our teachers in our schools affects our margins, with higher student-to-teacher ratios generally representing higher operating efficiency and higher margins. Our student-to-teacher ratio for our overseas schools in the 2024 school years was 6.7. We had a negative operating margin of 44.0%, 9.1% and 46.7% in the 2022, 2023 and 2024 fiscal years, respectively.

Our newly established schools’ ability to grow rapidly during the ramp-up period following their establishment is expected to result in their growing brand value and increasing student enrollment, which will improve the capacity utilization of their campuses and further result in greater operating leverage and increasing profitability at these schools.

Strategic acquisitions and investments

In recent years, we have expanded rapidly through acquisitions and strategic investments in China and overseas. We plan to continue to make strategic investments into and acquisitions of schools and complementary businesses to better serve our students, expand our global school network and drive our future growth. Our overall financial condition and profitability could be affected by the different levels of profitability of our acquisition targets.

Seasonality

Our business is subject to seasonal fluctuations as our costs and expenses vary significantly and do not necessarily correspond with our recognition of revenues. Our students enrolled in our overseas schools and their parents typically pay the tuition and fees prior to the commencement of a semester, and we recognize revenues from the delivery of education services on a straight-line basis over the semester. For our overseas schools, we typically incur higher upfront operating expenses in the first fiscal quarter at the start of each school year. We also typically recognize more revenue in the second half of fiscal years due to higher revenues from complementary education services during the summer and, to a lesser extent, students who transfer into our schools for the second semester. As a result of the combination of the forgoing, we have historically incurred net loss or significantly lower net income in the second and fourth fiscal quarters, primarily due to our schools being closed due to the winter and summer holidays, with minimal school term revenue recognized typically in July and August.

Key Components of Results of Operations

Revenue

The following tables compare revenue generated from our overseas schools, complementary education services, and K-12 operation services and as a percentage of total revenues for our continuing operations for the periods indicated.

	Year Ended August 31,
	2022				2023				2024
	RMB		%		RMB		%		RMB		US$		%
	(in thousands except for percentage)
Overseas schools		652,773		45.4		809,488		45.7		951,190		134,159		54.2
Complementary education services		389,090		27.0		519,247		29.3		495,087		69,829		28.2
K-12 operation services		397,428		27.6		443,392		25.0		308,929		43,573		17.6
Total		1,439,291		100.0		1,772,127		100.0		1,755,206		247,561		100.0

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We generally charge our students tuition and other fees prior to the beginning of each semester. We offer a partial refund if a student withdraws during a semester.

Cost of revenue

Our cost of revenue primarily consists of staff costs, comprising primarily salaries and other benefits for teachers and educational staff, and other costs, comprising primarily expenses relating to room, board and meal services, educational activities and utilities and maintenance of school facilities.

The following tables set forth the components of our cost of revenue by amount and as a percentage of total business segment revenue for the periods indicated.

	Year Ended August 31,
	2022				2023				2024
	RMB		%		RMB		%		RMB		US$		%
	(in thousands except for percentages)
Overseas schools		574,744		39.9		657,099		37.1		725,938		102,389		41.4
Complementary education services		229,230		15.9		316,014		17.8		312,010		44,007		17.8
K-12 Operation Services		264,652		18.4		331,586		18.7		213,672		30,137		12.1
Total		1,068,626		74.2		1,304,699		73.6		1,251,620		176,533		71.3

Selling, general and administrative expenses

Our selling, general and administrative expenses primarily consisted of salaries and other benefits for our administrative, management and marketing personnel, maintenance costs of our office facilities and teaching equipment, and share-based compensation expenses. Our selling, general and administrative expenses were RMB458.8 million, RMB512.9 million and RMB469.0 million (US$66.2 million) in the 2022, 2023 and 2024 fiscal years, respectively, accounting 31.9%, 28.9% and 26.7% of our revenue for the same periods, respectively.

Results of Operations

Reportable Segment

For the years ended August 31, 2022 and 2023, we identified three reportable segments, including Overseas Schools, Complementary Education Services, and Domestic Kindergartens and K-12 Operation Services. During the year ended August 31, 2024, we disposed of the domestic kindergartens that were part of the discontinued operations, leading to a change in the segment name from Domestic Kindergartens and K-12 Operation Services to K-12 Operation Services. Because the discontinued operations are components of Complementary Education Services and K-12 Operation Services reportable segments, the following disclosure has been retrospectively revised representing the continuing operations only.

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The following tables set forth a summary of our consolidated results of operations by amount and as a percentage of total revenues for our continuing operations for the periods indicated. This information should be read together with our consolidated financial statements and related notes included elsewhere in this annual report. The results of operations in any period are not necessarily indicative of the results that may be expected for any future period.

	Year Ended August 31,
	2022						2023						2024
	RMB			%			RMB			%			RMB			US$			%
	(in thousands, except for percentages, share and per share data)
Continuing operations
Revenue		1,439,291			100.0			1,772,127			100.0			1,755,206			247,561			100.0
Cost of revenue		(1,068,626	)		(74.2	)		(1,304,699	)		(73.6	)		(1,251,620	)		(176,533	)		(71.3	)
Gross profit		370,665			25.8			467,428			26.4			503,586			71,028			28.7
Selling, general and administrative expenses		(458,816	)		(31.9	)		(512,882	)		(28.9	)		(469,047	)		(66,156	)		(26.7	)
Other operating income		4,198			0.3			43,783			2.5			3,699			522			0.2
Impairment loss on operating lease right-of-use assets		(8,861	)		(0.6	)		-			-			-			-			-
Impairment loss on goodwill		(419,805	)		(29.2	)		(147,116	)		(8.3	)		(593,748	)		(83,744	)		(33.8	)
Impairment loss on intangible assets		(113,385	)		(7.9	)		-			-			(258,326	)		(36,435	)		(14.7	)
Impairment loss on property and equipment		(6,586	)		(0.5	)		(12,891	)		(0.7	)		(6,607	)		(932	)		(0.4	)
Operating loss		(632,590	)		(44.0	)		(161,678	)		(9.1	)		(820,443	)		(115,717	)		(46.7	)
Interest expenses, net		(126,029	)		(8.8	)		(5,452	)		(0.3	)		(1,315	)		(185	)		(0.1	)
Investment income		134,353			9.3			(807	)		-			(2,516	)		(355	)		(0.1	)
Other expenses		(7,421	)		(0.5	)		(7,380	)		(0.4	)		(4,012	)		(567	)		(0.2	)
Loss before income taxes and share of equity in loss of unconsolidated affiliates		(631,687	)		(43.9	)		(175,317	)		(9.9	)		(828,286	)		(116,824	)		(47.2	)
Income tax expenses		(55,143	)		(3.8	)		(183,208	)		(10.3	)		(32,908	)		(4,641	)		(1.9	)
Share of equity in loss of unconsolidated affiliates		(151	)		-			(339	)		-			(7,876	)		(1,111	)		(0.4	)
Net loss from continuing operations		(686,981	)		(47.7	)		(358,864	)		(20.3	)		(869,070	)		(122,576	)		(49.5	)
Loss from discontinued operations, net of tax		(16,556	)		(1.2	)		(27,959	)		(1.6	)		(163,791	)		(23,102	)		(9.3	)
Net loss		(703,537	)		(48.9	)		(386,823	)		(21.8	)		(1,032,861	)		(145,678	)		(58.8	)
Less: Net (loss)/income attributable to the non-controlling interests
Continuing operations		(629	)		(0.04	)		823			0.05			(17,296	)		(2,439	)		(1.0	)
Discontinued operations		6,432			(0.45	)		7,488			0.4			(19,286	)		(2,720	)		(1.1	)
Net loss attributable to Bright Scholar Holdings ordinary shareholders		(709,340	)		(49.3	)		(395,134	)		(22.3	)		(996,279	)		(140,519	)		(56.8	)
Net loss per share attributable to ordinary shareholders - basic and diluted:
Net loss from continuing operations attributable to ordinary shareholders		(5.79	)					(3.03	)					(7.18	)		(1.01	)
Net loss from discontinued operations attributable to ordinary shareholders		(0.19	)					(0.30	)					(1.22	)		(0.17	)
Net loss attributable to Bright Scholar Education Holdings Limited shareholders		(5.98	)					(3.33	)					(8.40	)		(1.18	)
Weighted average shares used in calculating net earnings per ordinary share, basic and diluted		118,697,495						118,669,795						118,669,795			118,669,795

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Non-GAAP measures

In evaluating our business, we consider and use certain non-GAAP measures, including primarily adjusted EBITDA, adjusted net income/(loss), adjusted gross profit/(loss) and adjusted operating income/(loss) as supplemental measures to review and assess our operating performance. The presentation of these 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 U.S. GAAP. We define adjusted gross profit/(loss) from continuing operations as gross profit/(loss) from continuing operations excluding amortization of intangible assets. We define adjusted EBITDA as net income/(loss) excluding interest income/(expense), net, income tax expense/benefit, depreciation and amortization, share-based compensation expense, impairment loss on operating lease right-of-use assets, impairment loss on goodwill, impairment loss on intangible assets, impairment loss on property and equipment, impairment loss on the long-term investment, and loss from discontinued operations, net of tax. We define adjusted net income/(loss) as net income/(loss) excluding share-based compensation expense, amortization of intangible assets, tax effect of amortization of intangible assets, impairment loss on operating lease right-of-use assets, impairment loss on goodwill, impairment loss on intangible assets, impairment loss on property and equipment, impairment loss on the long-term investment, and loss from discontinued operations, net of tax. We define adjusted operating income/(loss) from continuing operations as operating income/(loss) from continuing operations excluding share-based compensation expense, amortization of intangible assets, impairment loss on operating lease right-of-use assets, impairment loss on goodwill, impairment loss on intangible assets, impairment loss on property and equipment, and impairment loss on the long-term investment.

We incur amortization expense of intangible assets related to various acquisitions that have been made in recent years. These intangible assets are valued at the time of acquisition and are then amortized over a period of several years after the acquisition. We believe that exclusion of these expenses allows greater comparability of operating results that are consistent over time for the Company’s newly acquired and long-held business as the related intangibles does not have significant connection to the growth of the business. Therefore, we provide exclusion of amortization of intangible assets to define adjusted gross profit from continuing operations, adjusted operating income/(loss) from continuing operations, and adjusted net income/(loss). In addition, the strategic move to dispose of the non-core businesses is viewed as discontinued operations, which is a non-recurring item. The exclusion facilitates comparisons of our operating performance on a period-to-period basis. Therefore, we provide exclusion of loss from discontinued operations, net of tax, to define adjusted net income/(loss) and adjusted EBITDA.

We present the non-GAAP financial measures because they are used by our management to evaluate our operating performance and formulate business plans. Such non-GAAP measures include adjusted EBITDA, adjusted net income/(loss), adjusted gross profit/(loss) from continuing operations, adjusted operating income/(loss) from continuing operations. Non-GAAP financial measures enable our management to assess our operating results without considering the impact of non-cash charges, including depreciation and amortization and share-based compensation expense, and without considering the impact of non-operating items such as interest income/(expense), net; income tax expense/benefit; share-based compensation expense; amortization of intangible assets, tax effect of amortization of intangible assets, and without considering the impact of non-recurring item, i.e. loss from discontinued operations. We also believe that the use of these non-GAAP measures facilitates investors’ assessment of our operating performance.

The non-GAAP financial measures are not defined under U.S. GAAP and are not presented in accordance with U.S. GAAP. The non-GAAP financial measures have limitations as analytical tools. One of the key limitations of using these non-GAAP financial measures is that they do not reflect all items of income and expense that affect our operations. Interest income/(expense), net; income tax expense/benefit; depreciation and amortization; share-based compensation expense; and tax effect of amortization of intangible assets, have been and may continue to be incurred in our business and are not reflected in the presentation of these non-GAAP measures, including adjusted EBITDA or adjusted net income/(loss). Further, these non-GAAP measures may differ from the non-GAAP information used by other companies, including peer companies, and therefore their comparability may be limited.

We reconcile the non-GAAP financial measures to the nearest U.S. GAAP performance measures, which should be considered when evaluating our performance. We encourage you to review our financial information in its entirety and not rely on a single financial measure.

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The following tables reconcile our adjusted gross profit from continuing operations, adjusted operating profit/(loss) from continuing operations, adjusted net income/(loss) and adjusted EBITDA for the periods indicated to their respective most directly comparable financial measures calculated and presented in accordance with U.S. GAAP.

	Year Ended August 31,
	2022			2023			2024
	RMB			RMB			RMB			US$
	(in thousands, except for share amounts and per share data)
Reconciliation of gross profit to adjusted gross profit
Gross profit from continuing operations		370,665			467,428			503,586			71,028
Add: Amortization of intangible assets		5,192			4,341			4,184			590
Adjusted gross profit from continuing operations		375,857			471,769			507,770			71,618
Reconciliation of operating loss to adjusted operating loss
Operating loss from continuing operations		(632,590	)		(161,678	)		(820,443	)		(115,717	)
Add: Share-based compensation expense		(816	)		-			8,101			1,143
Add: Amortization of intangible assets		5,192			4,341			4,184			590
Add: Impairment loss on operating lease right-of-use assets		8,861			-						-
Add: Impairment loss on goodwill		419,805			147,116			593,748			83,744
Add: Impairment loss on intangible assets		113,385			-			258,326			36,435
Add: Impairment loss on property and equipment		6,586			12,891			6,607			932
Add: Impairment loss on the long-term investment		-			2,613			-			-
Adjusted operating profit/(loss) from continuing operations		(79,577	)		5,283			50,523			7,127
Reconciliation of net loss to adjusted net loss
Net loss		(703,537	)		(386,823	)		(1,032,861	)		(145,678	)
Add: Share-based compensation expense		(816	)		-			8,101			1,143
Add: Amortization of intangible assets		5,192			4,341			4,184			590
Add: Tax effect of amortization of intangible assets		(1,039	)		(670	)		(833	)		(117	)
Add: Impairment loss on operating lease right-of-use assets		8,861			-			-			-
Add: Impairment loss on goodwill		419,805			147,116			593,748			83,744
Add: Impairment loss on intangible assets		113,385			-			258,326			36,435
Add: Impairment loss on property and equipment		6,586			12,891			6,607			932
Add: Impairment loss on the long-term investment		-			2,613			-			-
Less: Loss from discontinued operations, net of tax		(16,555	)		(27,959	)		(163,791	)		(23,102	)
Adjusted net income/(loss)		(135,006	)		(192,573	)		1,063			151
Reconciliation of net loss to adjusted EBITDA
Net loss		(703,537	)		(386,823	)		(1,032,861	)		(145,678	)
Add: Interest expense, net		126,029			5,452			1,315			185
Add: Income tax expense		55,143			183,208			32,908			4,641
Add: Depreciation and amortization		95,441			63,598			48,796			6,882
Add: Share-based compensation expense		(816	)		-			8,101			1,143
Add: Impairment loss on operating lease right-of-use assets		8,861			-			-			-
Add: Impairment loss on goodwill		419,805			147,116			593,748			83,744
Add: Impairment loss on intangible assets		113,385			-			258,326			36,435
Add: Impairment loss on property and equipment		6,586			12,891			6,607			932
Add: Impairment loss on the long-term investment		-			2,613			-			-
Less: Loss from discontinued operations, net of tax		(16,556	)		(27,959	)		(163,791	)		(23,102	)
Adjusted EBITDA		137,453			56,014			80,731			11,386

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Segment information

The following tables set forth the revenue, cost of revenue and gross profit of our three segments of business by amount and as a percentage of total segment revenue for our continuing operations for the periods indicated.

	Year Ended August 31,
	2022				2023				2024
	RMB		%		RMB		%		RMB		US$		%
	(in thousands, except for percentages)
Revenue		1,439,291		100.0		1,772,127		100.0		1,755,206		247,561		100.0
Overseas schools		652,773		45.4		809,488		45.7		951,190		134,159		54.2
Complementary education services		389,090		27.0		519,247		29.3		495,087		69,829		28.2
K-12 operation services		397,428		27.6		443,392		25.0		308,929		43,573		17.6
Cost of revenue		1,068,626		74.2		1,304,699		73.6		1,251,620		176,533		71.3
Overseas schools		574,744		39.9		657,099		37.1		725,938		102,389		41.4
Complementary education services		229,230		15.9		316,014		17.8		312,010		44,007		17.8
K-12 operation services		264,652		18.4		331,586		18.7		213,672		30,137		12.1
Gross profit		370,665		25.8		467,428		26.4		503,586		71,028		28.7
Overseas schools		78,029		5.5		152,389		8.6		225,252		31,770		12.8
Complementary education services		159,860		11.1		203,233		11.5		183,077		25,822		10.4
K-12 operation services		132,776		9.2		111,806		6.3		95,257		13,436		5.5

Year ended August 31, 2023 compared to year ended August 31, 2024

Revenue. Our revenue from continuing operations was RMB1,755.2 million (US$247.6 million) in the 2024 fiscal year, compared to RMB1,772.1 million in the 2023 fiscal year.

● Overseas schools. Our revenue from overseas schools increased by 17.5% from RMB809.5 million in the 2023 fiscal year to RMB951.2 million (US$134.2 million) in the 2024 fiscal year, primarily due to increases in the number of students enrolled and the average tuition fees of overseas schools.

81

● Complementary education services. Our revenue from complementary education services was RMB495.1 million (US$69.8 million) in the 2024 fiscal year, compared to RMB519.2 million in the 2023 fiscal year. The decrease was mainly attributable to a reduction in extracurricular programs and study tours.

● K-12 operation services. Our revenue from K-12 operation services was RMB308.9 million (US$43.6 million) in the 2024 fiscal year, compared to RMB443.4 million in the 2023 fiscal year.

Cost of revenue. Our cost of revenue from continuing operations decreased by 4.1% from RMB1,304.7 million in the 2023 fiscal year to RMB1,251.6 million (US$176.5 million) in the 2024 fiscal year.

● Overseas schools. Our costs of revenue incurred by our overseas schools increased by 10.5% from RMB657.1 million in the 2023 fiscal year to RMB725.9 million (US$102.4 million) in the 2024 fiscal year, primarily due to increases in both the number of students enrolled and the average tuition fees of overseas schools.

● Complementary education services. Our cost of revenue incurred by complementary education services decreased by 1.3% from RMB316.0 million in the 2023 fiscal year to RMB312.0 million (US$44.0 million) in the 2024 fiscal year, primarily due to a reduction in extracurricular programs and study tours.

● K-12 operation services. K-12 operation services. Our cost of revenue incurred by K-12 operation services decreased by 35.6% from RMB331.6 million in the 2023 fiscal year to RMB213.7 million (US$30.1 million) in the 2024 fiscal year.

Gross profit. As a result of the foregoing, our gross profit increased by 7.7% from RMB467.4 million in the 2023 fiscal year to RMB503.6 million (US$71.0 million) in the 2024 fiscal year. Our gross margin increased from 26.4% in the 2023 fiscal year to 28.7% in the 2024 fiscal year, primarily due to the continuous recovery of our overseas business.

Selling, general and administrative expenses. Our selling, general and administrative expenses decreased by 8.6% from RMB512.9 million in the 2023 fiscal year to RMB469.0 million (US$66.2 million) in the 2024 fiscal year. Our selling, general and administrative expenses as a percentage of our revenue decreased from 28.9% in the 2023 fiscal year to 26.7% in the 2024 fiscal year. The decrease in selling, general and administrative expenses was primarily due to our continuous efforts to streamline our global operations and improve operational efficiency of our headquarters.

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Impairment loss on goodwill. We recorded an impairment loss on goodwill of RMB593.7 million (US$83.7 million) in the 2024 fiscal year as compared to RMB147.1 million in the 2023 fiscal year. The impairment is recorded in complementary education services reportable segment in the 2023 fiscal year. The impairment is recorded in complementary education services reportable segment and overseas schools reportable segment in the 2024 fiscal year.

Impairment loss on intangible assets. We recorded an impairment loss on intangible assets of RMB258.3 million (US$36.4 million) in the 2024 fiscal year as compared to nil in the 2023 fiscal year. The impairment is recorded in overseas schools reportable segment in the 2024 fiscal years.

Operating loss. As a result of the foregoing, we experienced an operating loss of RMB161.7 million in the 2023 fiscal year and RMB820.4 million (US$115.7 million) in the 2024 fiscal year.

Interest expense, net. We recorded a net interest expense of RMB1.3 million (US$0.2 million) in the 2024 fiscal year as compared to RMB5.5 million in the 2023 fiscal year.

Income tax expense. Our income tax expense was RMB32.9 million (US$4.6 million) in the 2024 fiscal year. Our effective tax rate decreased from -104.5% in the 2023 fiscal year to -4.0% in the 2024 fiscal year, primarily due to unrecognized tax losses.

Loss for the year. As a result of the foregoing, we experienced a net loss of RMB386.8 million for the 2023 fiscal year and a net loss of RMB1,032.9 million (US$145.7 million) for the 2024 fiscal year.

Adjusted net loss. We recorded an adjusted net income of RMB1.1 million (US$0.2 million) for the 2024 fiscal year, compared to an adjusted net loss of RMB192.6 million for the 2023 fiscal year See “—Non-GAAP measures.”

Year ended August 31, 2022 compared to year ended August 31, 2023

Revenue. Our revenue from continuing operations increased by 23.1% from RMB1,439.3 million in the 2022 fiscal year to RMB1,772.1 million in the 2023 fiscal year.

● Overseas schools. Our revenue from overseas schools increased by 24.0% from RMB652.8 million in the 2022 fiscal year to RMB809.5 million in the 2023 fiscal year, primarily due to the continuous recovery of overseas schools’ operation from the pandemic.

● Complementary education services. Our revenue from complementary education services increased by 33.5% from RMB389.1 million in the 2022 fiscal year to RMB519.2 million in the 2023 fiscal year, primarily due to the continuous recovery of study tour and other complementary business.

● K-12 operation services. Our revenue from K-12 operation services increased by 11.6% from RMB397.4 million in the 2022 fiscal year to RMB443.4 million in the 2023 fiscal year, primarily due to the short term rebound of various service revenues.

83

Cost of revenue. Our cost of revenue from continuing operations increased by 22.1% from RMB1,068.6 million in the 2022 fiscal year to RMB1,304.7 million in the 2023 fiscal year, primarily due to the continuous recovery of study tour and other complementary business.

● Overseas schools. Our costs of revenue incurred by our overseas schools increased by 14.3% from RMB574.7 million in the 2022 fiscal year to RMB657.1 million in the 2023 fiscal year, primarily due to the continuous recovery of overseas schools’ operation from the pandemic.

● Complementary education services. Our cost of revenue incurred by complementary education services increased by 37.9% from RMB229.2 million in the 2022 fiscal year to RMB316.0 million in the 2023 fiscal year, primarily due to the continuous recovery of study tour and other complementary business.

● K-12 operation services. K-12 operation services. Our cost of revenue incurred by K-12 operation services increased by 25.3% from RMB264.7 million in the 2022 fiscal year to RMB331.6 million in the 2023 fiscal year, primarily due to the short term rebound of various service revenues.

Gross profit. As a result of the foregoing, our gross profit increased by 26.1% from RMB370.7 million in the 2022 fiscal year to RMB467.4 million in the 2023 fiscal year. Our gross margin increased from 25.8% in the 2022 fiscal year to 26.4% in the 2023 fiscal year, primarily due to the continuous recovery of our overseas business, our study tour and other complementary business.

Selling, general and administrative expenses. Our selling, general and administrative expenses increased by 11.8% from RMB458.8 million in the 2022 fiscal year to RMB512.9 million in the 2023 fiscal year. Our selling, general and administrative expenses as a percentage of our revenue decreased from 31.9% in the 2022 fiscal year to 28.9% in the 2023 fiscal year. The increase in selling, general and administrative expenses was primarily due to increased management and administrative activities in our overseas schools and complementary education services.

Impairment loss on operating lease right-of-use assets. We recorded no impairment loss on operating lease right-of-use assets in the 2023 fiscal year as compared to RMB8.9 million in the 2022 fiscal year.

Impairment loss on goodwill. We recorded an impairment loss on goodwill of RMB147.1 million in the 2023 fiscal year as compared to RMB419.8 million in the 2022 fiscal year. The impairment is recorded in complementary education services reportable segment and overseas schools reportable segment in the 2023 and 2022 fiscal year, respectively.

Impairment loss on intangible assets. We recorded an impairment loss on intangible assets of nil in the 2023 fiscal year as compared to RMB113.4 million in the 2022 fiscal year. The impairment is recorded in overseas schools reportable segment in the 2022 fiscal year.

Operating loss. As a result of the foregoing, we experienced an operating loss of RMB632.6 million in the 2022 fiscal year and RMB161.7 million in the 2023 fiscal year.

Interest expense, net. We recorded a net interest expense of RMB5.5 million in the 2023 fiscal year as compared to RMB126.0 million in the 2022 fiscal year. The decrease was mainly due to the redemption of senior notes.

Income tax expense. Our income tax expense was RMB183.2 million in the 2023 fiscal year. Our effective tax rate decreased from -8.7% in the 2022 fiscal year to -104.5% in the 2023 fiscal year, primarily due to unrecognized tax losses.

Loss for the year. As a result of the foregoing, we experienced a net loss of RMB703.5 million for the 2022 fiscal year and a net loss of RMB386.8 million for the 2023 fiscal year.

Adjusted net loss. We recorded an adjusted net loss of RMB192.6 million for the 2023 fiscal year, compared to an adjusted net loss of RMB135.0 million for the 2022 fiscal year See “—Non-GAAP measures.”

84

B. Liquidity and Capital Resources

Historically, we have financed our operations primarily through cash generated from our operating activities and proceeds from our financing activities. As of August 31, 2022, 2023 and 2024, we had RMB722.1 million, RMB419.9 million and RMB505.8 million (US$71.3 million), respectively, in cash and cash equivalents and restricted cash for our continuing operations. Approximately 58.7% of our cash and cash equivalents and restricted cash as of August 31, 2024 for our continuing operations were held in China. Our cash primarily consists of cash on hand and interest-bearing financial instruments which are unrestricted as to withdrawal or use. We intend to finance our future working capital requirements and capital expenditures primarily from cash generated from operating activities, and to a lesser extent, from debt and equity financing activities.

Although we combine the results of the VIEs and their respective subsidiaries, we do not have direct access to the cash and cash equivalents or future earnings of the VIEs or their respective subsidiaries. However, a portion of the cash balances of the VIEs and their respective subsidiaries will be paid to us pursuant to our contractual arrangements with the VIEs and their respective subsidiaries. For restrictions and limitations on liquidity and capital resources as a result of our corporate structure, see “—Holding Company Structure.”

We have not encountered any difficulties in meeting our cash obligations to date. When considering our liquidity position and our future capital resources and needs, we take into account price controls set by local governments that may affect the tuition and fees we are able to charge to students in our schools, annual enrollment numbers approved for our schools, the economic benefits we have received from our subsidiaries and affiliated entities attributable to the provision of services to these entities and the economic benefits we may receive from our subsidiaries and affiliated entities directly through payments under our exclusive management services and business cooperation agreement. We believe that our current cash and cash equivalents and anticipated cash flow from operations, will be sufficient to meet our anticipated cash needs for longer than the next twelve months.

The following table sets forth a condensed summary of our cash flows for both continuing operations and discontinued operations for the periods indicated.

	Year Ended August 31,
	2022			2023			2024
	RMB			RMB			RMB			US$
	(in thousands)
Net cash generated from operating activities		47,173			22,261			126,394			17,827
Net cash used in investing activities		(836,769	)		(52,949	)		(98,004	)		(13,823	)
Net cash generated from/(used in) financing activities		101,383			(298,794	)		(85,459	)		(12,053	)
Net decrease in cash and cash equivalents, and restricted cash		(688,213	)		(329,482	)		(57,069	)		(8,049	)
Cash and cash equivalents, and restricted cash at beginning of the year		1,515,163			857,784			567,236			80,005
Effect of exchange rate change		30,834			38,934			(4,373	)		(617	)
Cash and cash equivalents, and restricted cash at end of the year		857,784			567,236			505,794			71,339

Operating activities

We generate cash from operating activities primarily from tuition and fees for our schools and fees for our complementary education services, all of which are typically paid in advance before the respective services are rendered. Tuition and fees for schools and fees for our complementary education services are initially recorded under contract liabilities. We recognize such amounts received as revenue proportionately over the relevant period in which the students attend the applicable programs.

85

For the 2024 fiscal year, we had net cash generated from operating activities of RMB126.4 million (US$17.8 million). This amount represents our net loss of RMB1,032.9 million (US$145.7 million), adjusted primarily for (1) noncash lease expenses of RMB127.3 million (US$18.0 million), (2) depreciation of RMB51.8 million (US$7.3 million), (3) deferred tax expenses of RMB5.4 million (US$0.8 million), (4) impairment loss on goodwill of RMB765.5 million (US$108.0 million), (5) impairment loss on property and equipment of RMB6.6 million (US$0.9 million), (6) impairment loss on intangible assets of RMB258.3 million (US$36.4 million) and (7) changes in working capital. Adjustment for changes in working capital primarily consisted of (1) an increase of RMB67.5 million (US$9.5 million) in other receivables, deposits and other assets and (2) an increase of RMB17.3 million (US$2.4 million) in the amounts due to related parties and an increase of RMB110.5 million (US$15.6 million) in accrued expenses and other current liabilities, partially offset by a decrease of RMB100.9 million (US$14.2 million) in lease liabilities.

For the 2023 fiscal year, we had net cash generated from operating activities of RMB22.3 million. This amount represents our net loss of RMB386.8 million, adjusted primarily for (1) noncash lease expenses of RMB123.4 million, (2) depreciation of RMB69.0 million, (3) deferred tax expenses and withholding tax expenses of RMB108.1 million, (4) impairment loss on goodwill of RMB207.8 million, (5) impairment loss on property and equipment of RMB12.9 million, (6) impairment loss on intangible assets of RMB2.1 million, (7) impairment loss on the long-term investment of RMB2.6 million and (8) changes in working capital. Adjustment for changes in working capital primarily consisted of (1) an increase of RMB37.5 million in other assets and liabilities and (2) an increase of RMB10.3 million in the amounts due to related parties, partially offset by a decrease of RMB99.6 million in lease liabilities and a decrease of RMB25.9 million in accrued expenses and other current liabilities.

For the 2022 fiscal year, we had net cash generated from operating activities of RMB47.2 million. This amount represents our net loss of RMB703.5 million, adjusted primarily for (1) noncash lease expenses of RMB132.4 million, (2) depreciation of RMB98.1 million, (3) share of equity in loss of unconsolidated affiliates of RMB39.7 million, (4) impairment loss on goodwill of RMB419.8 million, (5) impairment loss on intangible assets of RMB113.4 million and (6) changes in working capital. Adjustment for changes in working capital primarily consisted of (1) an increase of RMB114.8 million in contract liabilities, (2) an increase of RMB86.5 million in the amounts due to related parties, (3) an increase of RMB74.9 million in accrued expenses and other current liabilities, partially offset by a decrease of other assets and liabilities in RMB132.1 million and a decrease of operating lease liabilities in RMB113.6 million.

Investing activities

For the 2024 fiscal year, we had net cash used in investing activities of RMB98.0 million (US$13.8 million), primarily attributable to (1) additions of property and equipment and intangible assets of RMB45.5 million (US$6.4 million), (2) disposal of subsidiaries of RMB121.0 million (US$17.1 million), partially offset by proceeds from disposal of property and equipment of RMB95.0 million (US$13.4 million).

For the 2023 fiscal year, we had net cash used in investing activities of RMB52.9 million, primarily attributable to additions of property and equipment and intangible assets of RMB79.4 million, partially offset by proceeds from disposal of property and equipment of RMB26.4 million.

For the 2022 fiscal year, we had net cash used in investing activities of RMB836.8 million, primarily attributable to (1) purchase of short-term investments of RMB2,337.0 million, (2) additions of property and equipment and intangible assets of RMB89.6 million, partially offset by proceeds from redemption of short-term investments upon maturity of RMB1,536.5 million and proceeds from loan receivable of RMB55.4 million.

Financing activities

For the 2024 fiscal year, we had net cash used in financing activities of RMB85.5 million (US$12.1 million), representing (1) dividend payment to non-controlling shareholders of RMB18.0 million (US$2.5 million), (2) repayment to related parties of RMB139.4 million (US$20.0 million) and (3) advances from related parties of RMB71.9 million (US$10.1 million).

For the 2023 fiscal year, we had net cash used in financing activities of RMB298.8 million, representing (1) dividend payment to non-controlling shareholders of RMB58.3 million, (2) repayment of bank loans of RMB171.9 million, (3) repayment to related parties of RMB41.6 million and (4) payments for purchase of non-controlling interest of RMB27.8 million.

86

For the 2022 fiscal year, we had net cash used in financing activities of RMB101.4 million, representing (1) dividend payment to shareholders of RMB27.5 million, (2) repurchase of ordinary shares of RMB9.2 million, (3) repurchase of senior notes of RMB1,908.2 million and (4) repayment of bank loans of RMB1,221.8 million, partially offset by proceeds from bank loan of RMB629.0 million and proceeds from promissory note of RMB877.5 million.

For the translations of our net proceeds from our initial public offering and follow-on offering as well as proceeds from issuance of senior notes, we used the foreign exchange rates on the dates of closing of the initial public offering, follow-on offering and issuance of senior notes, respectively.

Capital Expenditures

We incurred capital expenditures of RMB89.6 million, RMB79.4 million and RMB45.5 million (US$6.4 million) in the 2022, 2023 and 2024 fiscal years, respectively, primarily in connection with the construction, maintenance and renovation of school facilities and purchase of educational equipment. We intend to fund our future capital expenditures with our existing cash balance, proceeds from our offering and other financing alternatives. We will continue to incur capital expenditures to support the growth of our business.

Holding Company Structure

We are a holding company with no material operations of our own. We conduct our operations primarily through our subsidiaries and affiliated entities in China, the United Kingdom and the United States. As a result, our ability to pay dividends depends upon dividends paid by these subsidiaries. If our PRC subsidiaries or any newly formed subsidiaries incur any debt in the future, the instruments governing their debt may restrict their ability to pay dividends to us. Our PRC subsidiaries are permitted to pay dividends to us only out of their retained earnings, if any, as determined in accordance with PRC accounting standards and regulations. Under PRC law, each of our subsidiaries and affiliated entities is required to set aside at least 10.0% of its after-tax profits each year, if any, to fund a statutory surplus reserve until such reserve reaches 50.0% of its registered capital. In addition, each of our PRC subsidiaries may allocate a portion of its after-tax profits based on PRC accounting standards to enterprise expansion fund and staff bonus and welfare fund at its discretion. Each of the VIEs may allocate a portion of its after-tax profits based on PRC accounting standards to a discretionary surplus fund at its discretion. Although the statutory surplus reserves can be used to increase the registered capital and eliminate future losses in excess of retained earnings of the respective companies, the reserve funds are not distributable as cash dividends except in the event of liquidation. For the 2022, 2023 and 2024 fiscal years, our PRC subsidiaries and affiliated entities made apportions of RMB11.5 million, RMB5.0 million and RMB0.1 million (US$0.01 million) to the statutory surplus reserve fund, and our schools made no apportions to the development fund. Our PRC subsidiaries have not historically paid any dividends to our offshore entities until they generate accumulated profits and meet the requirements for statutory reserve funds.

The following table sets forth the respective revenue contributions for our continuing operations of (1) the VIEs and (2) our subsidiaries for the periods indicated as a percentage of total revenues.

	As of August 31,
	2022					2023					2024
	RMB		% of total revenues			RMB		% of total revenues			RMB		US$		% of total revenues
	(in thousands, except percentages)
The VIEs		136,117		9.5	%		194,646		11.0	%		131,626		18,565		7.5	%
Our subsidiaries		1,303,174		90.5	%		1,577,481		89.0	%		1,623,580		228,996		92.5	%
Total revenues		1,439,291		100.0	%		1,772,127		100.0	%		1,755,206		247,561		100.0	%

87

The following table sets forth the respective asset contributions of (1) BGY Education Investment and the six newly established companies, including Foshan Meiliang Education Technology Co., Ltd., Foshan Zhiliang Education Technology Co., Ltd., Beijing Boteng Education Consulting Co., Ltd., Foshan Shangtai Education Technology Co., Ltd., Foshan Renliang Education Technology Co., Ltd. and Foshan Yongliang Education Technology Co., Ltd., collectively referred to as the “New VIE Entities,” see Note 2 to our consolidated financial statements pursuant to Item 17 of Part III of this annual report for more details, and (2) our subsidiaries as of the date indicated as a percentage of total assets.

	As of August 31,
	2022					2023					2024
	RMB		% of total asset			RMB		% of total asset			RMB		US$		% of total asset
	(in thousands, except percentages)
The VIEs		63,426		1.3	%		44,358		1.0	%		63,148		8,907		2.1	%
Our subsidiaries		4,889,705		98.7	%		4,575,152		99.0	%		2,982,301		420,634		97.9	%
Total asset		4,953,131		100.0	%		4,619,510		100.0	%		3,045,449		429,541		100.0	%

Financial Information Related to the VIEs

The following tables present the condensed consolidating schedules for Bright Scholar Holdings (the “Parent”), the WFOE and its subsidiaries, the VIEs and its subsidiaries, and our other subsidiaries for the periods and as of the dates indicated.

Condensed consolidating statements of operations information

	Year Ended August 31, 2024
	Parent		WFOE		VIE consolidated		Other subsidiaries		Intercompany Elimination		Group Consolidated
	(RMB in thousands)
Revenues	-		27,675		131,626		1,600,168		(4,263	)	1,755,206
Cost of revenues	-		(36,381	)	(34,677	)	(1,181,418	)	856		(1,251,620	)
Equity in loss of subsidiaries, VIEs and subsidiaries of VIEs	(1,050,026	)	(105,061	)	-		-		1,155,087		-
Net income/(loss) from continuing operations	(996,281	)	(187,393	)	70,932		(891,800	)	1,135,472		(869,070	)
Income/(loss) from discontinued operations, net of tax	-		-		(171,491	)	447,945		-		276,454
Comprehensive loss	(977,144	)	(187,393	)	(100,559	)	(884,075	)	1,135,472		(1,013,669	)

	Year Ended August 31, 2023
	Parent			WFOE			VIE consolidated			Other subsidiaries			Intercompany Elimination			Group Consolidated
	(RMB in thousands)
Revenues		-			39,233			194,646			1,541,588			(3,340	)		1,772,127
Cost of revenues		-			(44,702	)		(104,259	)		(1,155,738	)		-			(1,304,699	)
Equity in loss of subsidiaries, VIEs and subsidiaries of VIEs		(504,028	)		(130,813	)		-			-			634,841			-
Net income/(loss) from continuing operations		(395,134	)		(179,003	)		35,455			(442,197	)		622,015			(358,864	)
Income/(loss) from discontinued operations, net of tax		-			-			(37,331	)		9,372			-			(27,959	)
Comprehensive loss		(257,305	)		(179,003	)		(1,876	)		(432,879	)		622,015			(249,048	)

	Year Ended August 31, 2022
	Parent			WFOE			VIE consolidated			Other subsidiaries			Intercompany Elimination			Group Consolidated
	(RMB in thousands)
Revenues		-			102,319			136,117			1,239,062			(38,207	)		1,439,291
Cost of revenues		-			(56,092	)		(60,358	)		(952,176	)		-			(1,068,626	)
Equity in profit/(loss) of subsidiaries, VIEs and subsidiaries of VIEs		(466,371	)		60,274			-			406,097						-
Net income/(loss) from continuing operations		(709,340	)		90,620			41,898			(261,822	)		151,663			(686,981	)
Income/(loss) from discontinued operations, net of tax		-			-			3,873			(20428	)		-			(16,555	)
Comprehensive income/(loss)		(843,263	)		90,620			45,771			(282,167	)		151,663			(837,376	)

88

Condensed consolidating balance sheets information

	As of August 31, 2024
	Parent		WFOE		VIE consolidated		Other subsidiaries		Intercompany Elimination			Group Consolidated
	(RMB in thousands)
ASSETS
Current assets
Cash and cash equivalents		2,339		19,072		27,017		444,949		-			493,377
Restricted cash		-		-		120		12,047		-			12,167
Accounts receivable, net		-		3,768		2,731		12,294		-			18,793
Amounts due from related parties, net		-		9,740		-		4,677		-			14,417
Other receivables, deposits and other assets, net		2,036		9,885		29,507		82,432		-			123,860
Inventories		-		11		355		794		-			1,160
Amount due from the subsidiaries of the Group		2,350,088		1,246,314		201,767		435,419		(4,233,588	)		-
Total current assets		2,354,463		1,288,790		261,497		992,612		(4,233,588	)		663,774
Restricted cash – non current		-		-		250		-		-			250
Property and equipment, net		-		7,207		1,025		341,117		-			349,349
Prepayments for construction contracts		-		-		62		266		-			328
Intangible assets, net		-		-		-		49,598		-			49,598
Goodwill, net		-		-		1,703		525,594		-			527,297
Long-term investments, net		-		19,338		-		5,083		-			24,421
Investments in subsidiaries, VIEs and subsidiaries of VIEs		-		320,336		-		10,000		(330,336	)		-
Operating lease right-of-use assets – non-current		-		42,537		-		1,376,869		-			1,419,406
Deferred tax assets, net		-		-		-		1,920		-			1,920
Other non-current assets, net		-		16		378		8,712		-			9,106
Total non-current assets		-		389,434		3,418		2,319,159		(330,336	)		2,381,675
TOTAL ASSETS		2,354,463		1,678,224		264,915		3,311,771		(4,563,924	)		3,045,449
LIABILITIES
Current liabilities
Accounts payable		25		10,460		2,461		78,897		-			91,843
Amounts due to related parties		-		44,163		33,927		275		-			78,365
Accrued expenses and other current liabilities		52,231		20,771		9,513		108,707		-			191,222
Income tax payable		-		5,657		7,301		66,028		-			78,986
Contract liabilities – current		-		80		883		444,752		-			445,715
Refund liabilities – current		-		-		30		9,842		-			9,872
Operating lease liabilities – current		-		1,163		-		105,162		-			106,325
Investments in subsidiaries, VIEs and subsidiaries of VIEs(deficit)		1,005,089								(1,005,089	)		-
Amount due to the subsidiaries of the Group		1,979,961		455,396		128,459		1,736,075		(4,299,891	)		-
Total current liabilities		3,037,306		537,690		182,574		2,549,738		(5,304,980	)		1,002,328
Deferred tax liabilities, net		-		-		-		31,174		-			31,174
Operating lease liabilities – non current		-		49,594		-		1,355,379		-			1,404,973
Non-current contract liabilities		-		-		-		866		-			866
Total non-current liabilities		-		49,594		-		1,387,419		-			1,437,013
TOTAL LIABILITIES		3,037,306		587,284		182,574		3,937,157		(5,304,980	)		2,439,341

89

	As of August 31, 2023
	Parent		WFOE		VIE consolidated		Other subsidiaries		Intercompany Elimination			Group Consolidated
	(RMB in thousands)
ASSETS
Current assets
Cash and cash equivalents		2,689		125,358		13,147		268,892		-			410,086
Restricted cash		-		-		-		9,521		-			9,521
Accounts receivable, net		-		806		2,688		10,306		-			13,800
Amounts due from related parties, net		-		70,389		32		113,047		-			183,468
Other receivables, deposits and other assets, net		1,244		10,036		7,858		97,669		-			116,807
Inventories		-		14		161		1,008		-			1,183
Current assets of discontinued operations		-		-		271,980		2,163		(81,609	)		192,534
Amounts due from discontinued operations		-		-		-		-		-
Amount due from the subsidiaries of the Group		2,612,232		1,118,739		159,291		64,691		(3,954,953	)		-
Total current assets		2,616,165		1,325,342		455,157		567,297		(4,036,562	)		927,399
Restricted cash – non current		-		-		250		-		-			250
Property and equipment, net		-		3,815		13,550		372,641		-			390,006
Prepayments for construction contracts		-		-		950		762		-			1,712
Intangible assets, net		-		-		-		310,022		-			310,022
Goodwill, net		-		-		1,703		1,109,099		-			1,110,802
Long-term investments, net		-		7,872		-		24,860		-			32,732
Investments in subsidiaries, VIEs and subsidiaries of VIEs		44,937		425,397		-		10,000		(480,334	)		-
Operating lease right-of-use assets – non-current		-		44,833		3,693		1,441,483		-			1,490,009
Deferred tax assets, net		-		-		-		1,644		-			1,644
Other non-current assets, net		-		469		326		8,629		-			9,424
Non-current assets of discontinued operations						317,641		27,869		-			345,510
Total non-current assets		44,937		482,386		338,113		3,307,009		(480,334	)		3,692,111
TOTAL ASSETS		2,661,102		1,807,728		793,270		3,874,306		(4,516,896	)		4,619,510
LIABILITIES
Current liabilities
Accounts payable		-		6,027		3,638		84,816		-			94,481
Amounts due to related parties		-		55,338		188,261		660		-			244,259
Accrued expenses and other current liabilities		5,558		27,409		28,003		172,083		-			233,053
Income tax payable		-		14,363		12,534		61,563		-			88,460
Contract liabilities – current		-		783		5,640		422,194		-			428,617
Refund liabilities – current		-		-		164		9,965		-			10,129
Operating lease liabilities – current		-		1,378		1,822		101,705		-			104,905
Current liabilities of discontinued operations		-		-		304,030		18,168		(45,699	)		276,499
Amount due to the subsidiaries of the Group		1,057,719		481,436		64,394		2,448,388		(4,051,937	)		-
Amounts due to discontinued operations		-		-		-		-		-			-
Total current liabilities		1,063,277		586,734		608,486		3,319,542		(4,097,636	)		1,480,403
Deferred tax liabilities, net		-		-		73		34,682		-			34,755
Operating lease liabilities – non current		-		47,074		2,026		1,412,155		-			1,461,255
Non-current contract liabilities		-		-		-		971		-			971
Non-current liabilities of discontinued operations						70,436		34		-			70,470
Total non-current liabilities		-		47,074		72,535		1,447,842		-			1,567,451
TOTAL LIABILITIES		1,063,277		633,808		681,021		4,767,384		(4,097,636	)		3,047,854

90

Condensed consolidating cash flows information

	Year Ended August 31, 2024
	Parent			WFOE			VIE consolidated			Other subsidiaries			Intercompany Elimination			Group Consolidated
	(RMB in thousands)
Net cash (used in) provided by operating activities		(12,794	)		(58,286	)		119,168			78,306			-			126,394
Net cash (used in) provided by investing activities		(8,983	)		(74,934	)		(161,814	)		(54,528	)		202,255			(98,004	)
Net cash provided by (used in) financing activities		21,509			26,934			(90,270	)		158,623			(202,255	)		(85,459	)
Effect of exchange rate changes		(82	)		-			-			(4,291	)		-			(4,373	)
Net (decrease) increase in cash and cash equivalents		(350	)		(106,286	)		(132,916	)		178,110			-			(61,442	)

	Year Ended August 31, 2023
	Parent			WFOE			VIE consolidated			Other subsidiaries			Intercompany Elimination			Group Consolidated
	(RMB in thousands)
Net cash (used in) provided by operating activities		(12,672	)		(52,166	)		141,875			(54,776	)		-			22,261
Net cash (used in) provided by investing activities		(142,041	)		(136,105	)		(68,610	)		(385,294	)		679,101			(52,949	)
Net cash provided by (used in) financing activities		62,280			128,946			(67,664	)		256,745			(679,101	)		(298,794	)
Effect of exchange rate changes		7,075			-			-			31,859			-			38,934
Net (decrease) increase in cash and cash equivalents		(85,358	)		(59,325	)		5,601			(151,466	)		-			(290,548	)

	Year Ended August 31, 2022
	Parent			WFOE			VIE consolidated			Other subsidiaries			Intercompany Elimination			Group Consolidated
	(RMB in thousands)
Net cash (used in) provided by operating activities		(237,359	)		55,511			36,096			192,925			-			47,173
Net cash provided by/(used in) investing activities		633,408			(825,814	)		(54,677	)		(74,970	)		(514,716	)		(836,769	)
Net cash (used in)/provided by financing activities		(1,112,413	)		954,635			26,281			(281,836	)		514,716			101,383
Effect of exchange rate changes		26,168			-			-			4,666			-			30,834
Net (decrease) increase in cash and cash equivalents		(690,196	)		184,332			7,700			(159,215	)		-			(657,379	)

91

Cash Flows Through Our Organization

We are a holding company with no business operations of our own. We conduct certain of our operations through our PRC subsidiaries and VIEs in China. As a result, our ability to pay dividends and to service any debt we may incur and pay our operating expenses may depend on dividends paid by our PRC subsidiaries. Under the current laws of the Cayman Islands, we are not subject to tax on income or capital gains. In addition, upon payments of dividends to our shareholders, no Cayman Islands withholding tax will be imposed.

Under applicable PRC laws and regulations, our PRC subsidiaries are permitted to pay dividends to us only out of their accumulated profits, if any, determined in accordance with PRC accounting standards and regulations. In addition, our PRC subsidiaries are required to allocate at least 10% of their accumulated profits each year, if any, to fund statutory reserves of up to 50% of the registered capital of the enterprise. Statutory reserves are not distributable as cash dividends except in the event of liquidation.

If we intend to distribute dividends, we will transfer the dividends to Time Education China Holdings Limited, or Time Education, our Hong Kong subsidiary, in accordance with the laws and regulations of the PRC, and then Time Education will transfer the dividends to Impetus Investment Limited, our Cayman Islands subsidiary, and further to Bright Scholar Holdings, the Cayman Islands holding company, and the dividends will be distributed from the Bright Scholar Holdings to all shareholders respectively in proportion to the shares they hold, regardless of whether the shareholders are U.S. investors or investors in other countries or regions. For the fiscal years of 2022, 2023 and 2024, no dividends were declared and paid by our PRC subsidiaries to our Cayman holding company or Cayman subsidiaries. We declared a cash dividend of US$0.10, US$0.12 and US$0.12 per ordinary share on September 18, 2019, July 23, 2020 and July 21, 2021, respectively. We have no current intention to pay dividends to shareholders. We currently intend to retain most, if not all, of our available funds and any future earnings to fund the development and growth of our business.

Under applicable PRC laws and regulations, Bright Scholar Holdings may provide funding to our PRC subsidiaries only through capital contributions or loans, and to the VIEs only through loans, subject to the satisfaction of applicable government registration and approval requirements. Loans by Bright Scholar Holdings to our PRC subsidiaries to finance their activities cannot exceed statutory limits and must be registered with the local counterpart of the State Administration of Foreign Exchange of the PRC (“SAFE”), and capital contributions to our PRC subsidiaries are subject to approval by the relevant government authorities and must also be registered with SAFE or its local counterparts. For more details, see “Item 4. Information on the Company—B. Business Overview—Regulation—Regulations on Loans to and Direct Investment in the PRC Entities by Offshore Holding Companies.” For the 2022, 2023 and 2024 fiscal years, the subsidiaries of Bright Scholar Holdings provided interest-free loans of nil, RMB82.9 million and RMB65.2 million (US$9.2 million) to Bright Scholar Holdings, respectively. For the 2022, 2023 and 2024 fiscal years, the subsidiaries of Bright Scholar Holdings borrowed loans of nil, RMB375.9 million and RMB2,471.5 million (US$348.6 million) from Bright Scholar Holdings, respectively. The subsidiaries of Bright Scholar Holdings repaid RMB542.3 million to Bright Scholar Holdings in the 2022 fiscal year.

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For the 2020 fiscal year, the subsidiaries of Bright Scholar Holdings borrowed interest-free loans of RMB278.3 million from the VIEs. The VIEs repaid RMB447.6 million to the subsidiaries of Bright Scholar Holdings in the 2021 fiscal year. The VIEs borrowed interest free loans of RMB50.6 million from the subsidiaries of Bright Scholar Holdings in the 2023 fiscal year. For the 2022, 2023 and 2024 fiscal years, the subsidiaries of Bright Scholar Holdings provided interest-free loans of RMB45.6 million, RMB17.6 million and RMB64.0 million (US$9.0 million) to the VIEs, respectively. For the 2022, 2023 and 2024 fiscal years, no assets other than the above cash transactions were transferred between the subsidiaries of Bright Scholar Holdings and the VIEs. See “Item 8. Financial Information—A. Consolidated Statements and Other Financial Information—Dividend Policy.” For PRC and United States federal income tax considerations of an investment in our ADSs, see “Item 10. Additional Information—E. Taxation.” For more information relating to cash and asset flows through our organization, see information disclosed in “Item 5. Operating and Financial Review and Prospects—B. Liquidity and Capital Resources—Financial Information Related to the VIEs.”

Furthermore, cash transfers from our PRC subsidiaries to entities outside of China are subject to PRC government controls on currency conversion and approvals, filings and/or registrations with relevant government authorities. As a result, cash in mainland China may not be available to fund operations or for other use outside of the PRC due to the imposition of restrictions and limitations on our PRC subsidiaries’ ability to transfer cash. Shortages in the availability of foreign currency may temporarily delay the ability of our PRC subsidiaries to remit sufficient foreign currency to pay dividends or other payments to us, or otherwise satisfy their foreign currency denominated obligations. There is no assurance the PRC government will not impose restrictions on us and our subsidiaries to transfer cash. In view of the foregoing, to the extent cash in our business is held in China or by a PRC entity, such cash may not be available to fund operations or for other use outside of China. As of the date of this annual report, there are no equivalent or similar restrictions or limitations in Hong Kong on cash transfers in, or out of, our subsidiary in Hong Kong. However, if certain restrictions or limitations were to become applicable to cash transfers in and out of Hong Kong entities in the future, the funds in our subsidiary in Hong Kong may not be available to fund operations or for other use outside of Hong Kong. For risks relating to the fund flows of our operations in China, see “Item 3. Key Information—D. Risk Factors—Risks Related to Doing Business in the Jurisdictions Where We Operate—Restrictions on currency exchange may limit our ability to receive and use our revenues effectively.”

We currently have not maintained any cash management policies that specifically dictate how funds shall be transferred among Bright Scholar Holdings, its subsidiaries, the VIEs and investors. We will determine the payment of dividends and fund transfer based on our specific business needs in accordance with the applicable laws and regulations.

Under Cayman Islands laws, Bright Scholar Holdings is not subject to tax on income or capital gains. Upon payments of dividends to our shareholders, no Cayman Islands withholding tax will be imposed. For purposes of illustration, the following discussion reflects the hypothetical taxes that might be required to be paid in mainland China and Hong Kong, assuming that: (1) we have taxable earnings and (2) we determine to pay a dividend in the future:

	Tax calculation
Hypothetical pre-tax earnings(2)		100.0	%
Tax on earnings at statutory rate of 25%(3)		(25.0	)%
Net earnings available for distribution		75.0	%
Withholding tax at standard rate of 10%(4)		(7.5	)%
Net distribution to shareholders		67.5	%

(1) For purposes of this hypothetical example, the tax calculation has been simplified. The hypothetical book pre-tax earnings amount is assumed to equal PRC taxable income.

(2) For purposes of this hypothetical example, the table above reflects a maximum tax scenario under which the full statutory rate would be effective.

(3) The PRC Enterprise Income Tax Law and its implementation rules impose a withholding income tax of 10% on dividends distributed by a foreign invested enterprise in China to its immediate holding company outside China. A lower withholding income tax rate of 5% is applied if the foreign invested enterprise’s immediate holding company is registered in Hong Kong or other jurisdictions that have a tax treaty arrangement with China, subject to a qualification review at the time of the distribution. There is no incremental tax at Hong Kong level for any dividend distribution to Bright Scholar Holdings.

(4) If a 10% withholding income tax rate is imposed, the withholding tax will be 7.5% and the amount to be distributed as dividend at Hong Kong level and the net distribution to Bright Scholar Holdings will be 67.5%.

93

The table above has been prepared under the assumption that all profits of the VIEs will be distributed as fees to our PRC subsidiaries under tax neutral contractual arrangements. If, in the future, the accumulated earnings of the VIEs exceed the service fees paid to our PRC subsidiaries (or if the current and contemplated fee structure between the inter-group entities is determined to be non-substantive and disallowed by PRC tax authorities), the VIEs could make a non-deductible transfer to our PRC subsidiaries for the amounts of the stranded cash in the VIEs. This would result in such transfer being non-deductible expenses for the VIEs but still taxable income for our WFOE. Such a transfer and the related tax burdens would reduce our after-tax income to approximately 50.6% of the pre-tax income. Our management believes that there is only a remote possibility that this scenario would happen. 

Off-Balance Sheet Arrangements

We have not entered into any financial guarantees or other commitments to guarantee the payment obligations of any third parties. In addition, we have not entered into any derivative contracts that are indexed to our shares and classified as shareholders’ equity or that are not reflected in our consolidated financial statements. Furthermore, we do not have any retained or contingent interest in assets transferred to an unconsolidated entity that serves as credit, liquidity or market risk support to such entity. Moreover, we do not have any variable interest in any unconsolidated entity that provides financing, liquidity, market risk or credit support to us or engages in leasing, hedging or research and development services with us.

We do not currently have any outstanding off-balance sheet arrangements or commitments. We have no plans to enter into transactions involving, or otherwise form relationships with, unconsolidated entities or financial partnerships established for the purpose of facilitating off-balance sheet arrangements or commitments.

Contractual Obligations

The following table sets forth our contractual obligations as of August 31, 2024.

Payment Due by Period

Total

Less than one year

One to three years

Three to five years

More than five years

RMB

US$

RMB

RMB

RMB

RMB

Operating lease payment

1,974,220

278,451

154,767

307,669

294,246

1,217,538

We lease certain school and office premises under non-cancellable operating leases that expire at various dates. We incurred lease costs, including operating lease costs, short-term lease costs and variable lease costs, of RMB198.4 million, RMB150.8 million and RMB162.2 million (US$22.9 million) in the 2022, 2023 and 2024 fiscal years, respectively.

We also have certain capital commitments that primarily related to commitments for construction of schools and investment in an equity method investment. Total capital commitments contracted but not yet reflected in the consolidated financial statement was RMB0.1 million (US$0.01 million) as of August 31, 2024. All of these capital commitments will be fulfilled in the future according to the construction progress and the investment payment schedule.

In July 2019, we issued senior notes in the aggregate principal amount of US$300.0 million, with interests of 7.45% per annum and maturing on July 31, 2022. As of July 31, 2022, we had redeemed all outstanding senior notes matured on the same date. Upon the completion of such redemption, all senior notes have been cancelled and delisted from the official list of the Stock Exchange of Hong Kong Limited.

From time to time, we take out loans with commercial banks to provide for our working capital for daily operation.

C. Research and Development, Patents and Licenses, etc.

See “Item 4. Information on the Company—B. Business Overview—Research and Curriculum Development.”

D. Trend Information

Other than as disclosed elsewhere in this annual report, we are not aware of any trends, uncertainties, demands, commitments or events for the 2024 fiscal year that are reasonably likely to have a material adverse effect on our revenue, income, profitability, liquidity or capital resources, or that caused the disclosed financial information to be not necessarily indicative of future operating results or financial condition.

94

E. Critical Accounting Estimates

We prepare our consolidated financial statements in accordance with U.S. GAAP. The preparation of financial statements in conformity with U.S. GAAP requires management to make judgments, estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and reported amounts of revenues and expenses during the reporting period. We continually evaluate these judgments and estimates based on our own experience, knowledge and assessment of current business and other conditions.

Our expectations regarding the future are based on available information and assumptions that we believe to be reasonable, which together form our basis for making judgments about matters that are not readily apparent from other sources. Since the use of estimates is an integral component of the financial reporting process, our actual results could differ from those estimates. Some of our accounting policies require a higher degree of judgment than others in their application.

An accounting policy is considered critical if it requires an accounting estimate to be made based on assumptions about matters that are highly uncertain at the time such estimate is made and if different accounting estimates that reasonably could have been used, or changes in the accounting estimates that are reasonably likely to occur, could materially impact the combined and consolidated financial statements. We believe that the following accounting policies involve a higher degree of judgment and complexity in their application and require us to make significant accounting estimates.

Impairment of assessment of indefinite lived intangible assets and goodwill

We test indefinite lived intangible assets and goodwill for impairment on an annual basis as of August 31, or more frequently if events or changes in circumstances indicate that it might be impaired.

Our indefinite lived intangible assets consist of the overseas schools’ brand name. As of August 31, 2024, the carrying value of indefinite lived intangible assets, net of impairment, was RMB34.9 million. We test indefinite lived intangible assets for impairment by first assessing qualitative factors to determine whether it is necessary to perform a quantitative impairment test. If based on the qualitative assessment, it is more likely than not that the fair value of the indefinite lived intangible asset is less than its carrying amount, a quantitative impairment test is required. We test indefinite lived intangible assets for impairment using the relief-from-royalty method of the income approach, which requires management to make significant estimates and assumptions, including, but not limited to, royalty rate, discount rate, terminal growth rate and forecasts of future revenues. In our 2024 annual impairment assessment for indefinite lived intangible assets impairment, the key assumptions used are a royalty rate of 0.5% (2023:3.5%), a discount rate of 16.0% (2023:15.5%), a terminal growth rate of 1.5% (2023:2.0%) and forecast of future revenues. Based on the results of our impairment assessment on indefinite lived intangible assets brand names performed as of August 31, 2024, it indicated the carrying vales of indefinite lived intangible assets brand names associated with Overseas Schools reporting unit exceeded their fair values, therefore, impairment loss of RMB258.3 million (US$36.4 million) was recorded for the year ended August 31, 2024. 

In goodwill impairment test, we have the option to first assess qualitative factors to determine whether it is necessary to perform the two-step quantitative test. In the qualitative assessment, we consider primary factors such as industry and market considerations, overall financial performance of the reporting unit, and other specific information related to the operations. We will perform the quantitative impairment test if we bypass the qualitative assessment, or based on the qualitative assessment, if it is more likely than not that the fair value of each reporting unit is less than the carrying amount. For the year ended August 31, 2024, we bypassed the qualitative assessment and performed a quantitative assessment of the goodwill for all reporting units.

95

In the impairment test, we compare the fair value of a reporting unit to its carrying amount. An impairment charge is recognized for the amount by which the carrying amount exceeds the reporting units fair value. However, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit.

We estimate the fair values of reporting units using discounted cash flow model of the income approach, which requires management to make significant estimates and assumptions, including, but not limited to, discount rate, terminal growth rate and others used to project future cash flows, such as forecasts of future revenues. These assumptions were affected by management’s business plans and expectations about future market and economic conditions.

Based on the results of our annual goodwill impairment assessment performed as of August 31, 2024 for all of reporting units, we determined that the carrying amounts of our goodwill reporting units did not exceed their respective fair values and, therefore, no impairment existed, except for the overseas schools and Hangzhou Impression reporting units. We utilized the discounted cash flow model to estimate the fair value of the reporting units and concluded the carrying amount of the overseas schools and Hangzhou Impression units exceeded their respective fair value. Accordingly, we recorded RMB547.3 million (US$77.2 million) and RMB46.4 million (US$6.5 million) as impairment loss on goodwill of overseas schools and Hangzhou Impression reporting units on the consolidated statement of operations for the year ended August 31, 2024, respectively. The key assumptions used in the annual goodwill impairment assessment for these reporting units are a discount rate of 15.0% (overseas schools) (2023: 15.0%); 16.5% (Hangzhou Impression) (2023: 16.5%); a terminal growth rate of 1.5% (overseas schools) (2023: 2.0%); 2.0% (Hangzhou Impression) (2023: 2.0%); and forecasts future revenues.

The Company continuously monitors for events and circumstances that could negatively impact the key assumptions in determining fair value. While the Company believes the judgments and assumptions used in the goodwill and indefinite-lived intangible impairment tests are reasonable, different assumptions or changes in general industry, market and macro-economic conditions could change the estimated fair values and, therefore, future impairment charges could be required, which could be material to the consolidated financial statements.

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Assessment of realization of deferred tax assets

The carrying amounts of deferred tax assets are reduced by a valuation allowance if an assessment of their components indicates that it is more likely than not that all or some portion of these assets will not be realized. Judgment is required in estimating valuation allowances for deferred tax assets. The realization of a deferred tax asset ultimately depends on the existence of sufficient taxable income in either the carryback or carryforward periods under the applicable tax law.

We regularly assess the realizability of our deferred tax assets and related valuation allowances, or whenever events or changes in circumstances indicate that an assessment is required. In determining the requirement for a valuation allowance, the historical and projected financial results of the legal entity or consolidated group recording the net deferred tax asset are considered, along with any other positive or negative evidence. Since future financial results may differ from previous estimates, periodic adjustments to our valuation allowances may be necessary.

Recent Accounting Pronouncements

For a summary of recent accounting pronouncements, see Note 2 to our consolidated financial statements pursuant to Item 17 of Part III of this annual report.

ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES

A. Directors and Senior Management

The following table sets forth information regarding our executive officers and directors as of the date of this annual report.

Directors and Executive Officers	Age	Position/Title
Hongru Zhou	39	Chairperson of the Board of Director
Shuting Zhou	40	Director
Meng Rui	57	Director
Jun Zhao	62	Director
Ruolei Niu	41	Chief Executive Officer
Hui Zhang	40	Chief Financial Officer

Hongru Zhou has served as a director and the chairperson of our company since November 2022 and the chief executive officer of our company from February 2023 to January 2024. Mr. Zhou is a co-founder of Country Garden Venture Capital and has served as its chief executive officer and chairman of investment committee since its inception in 2019. Mr. Zhou joined Country Garden Holdings Company Limited in 2015 and served as special assistant to the chairman of its board. Prior to that, Mr. Zhou served as a hedge fund analyst at Bear Stearns Asset Management Inc. from 2007 to 2008. He was also an analyst at RBS Global Banking and Markets from 2008 to 2009, and an assistant fund manager at China Merchants Fund Management Co., Ltd. from 2009 to 2011. Mr. Zhou holds a bachelor’s degree in applied mathematics and economics from Harvard University.

Shuting Zhou became a director of Bright Scholar Holdings in May 2017. Ms. Zhou had served as the general manager of new business department finance branch at Country Garden Holdings Company Limited from November 2019 to September 2023. Ms. Zhou had been a deputy financial controller of Guangdong Country Garden Property Management Co., Ltd., a subsidiary of Country Garden Holdings Company Limited, from May 2016 to September 2023. Ms. Zhou held various managerial positions at Guangdong Country Garden Property Management Co., Ltd. from February 2009 to April 2016. From March 2007 to January 2009, Ms. Zhou served as an accounting manager at Gaoyao Biyi Property Development Co., Ltd. and Shaoguan Country Garden Property Development Co., Ltd., both of which are subsidiaries of Country Garden Holdings Company Limited. Ms. Zhou obtained a bachelor’s degree in financial management from Guangdong University of Finance & Economics.

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Meng Rui became a director of Bright Scholar Holdings in February 2023. Mr. Rui is the Parkland Chair Professor in Finance at China Europe International Business School and has served as an independent director at various listed companies in China and overseas, including Shang Gong Group Co., Ltd. (SSE: 600843), China Education Group Holdings Limited (HKEX: 00839), Landsea Green Management Limited (HKEX: 00106), Dexin Services Group Limited (HKEX: 02215), Country Garden Services Holdings Company Limited (HKEX:06098) and Jiayin Group Inc. (NASDAQ: JFIN). Mr. Rui was also an independent director at Midea Group Co., Ltd. (SZSE: 000333) from 2015 to 2018, Winner Technology Co., Inc. (SZSE: 300609) from 2014 to 2020, and Cosco Shipping Energy Transportation Co., Ltd. (HKEX: 01138; SSE: 600026) from 2015 to 2021. Mr. Rui holds a bachelor’s degree in international economics from University of International Relations, a Master of Science degree in economics from Oklahoma State University, and a Master of Business Administration degree and a Doctor of Philosophy degree in business administration from the University of Houston. Mr. Rui is a Certified Financial Analyst by the Association for Investment Management and Research since 2000 and a Financial Risk Manager by the Global Association of Risk Professionals since 2010.

Jun Zhao became a director of Bright Scholar Holdings in May 2017. Mr. Zhao has served as the chairman of Beijing Fellow Partners Investment Management Ltd. since October 2014 and an independent director of China Merchants Bank Co., Ltd., a company listed on Shanghai Stock Exchange and The Stock Exchange of Hong Kong Limited, since January 2015. Mr. Zhao served as a managing partner at DT Capital Partners from July 2005 to September 2014. From May 2000 to July 2005, he served as a managing director of ChinaVest, Ltd. Mr. Zhao obtained a bachelor’s degree in shipbuilding engineering from Harbin Engineering University, a master’s degree in ocean engineering from Shanghai Jiao Tong University, a doctor degree in civil engineering from University of Houston and a MBA from Yale University.

Ruolei Niu has served as the chief executive officer of Bright Scholar Holdings since January 2024 and the chief financial officer of Bright Scholar Holdings from February 2023 to January 2024. Mr. Niu served as the vice general manager of Country Garden Venture Capital from February 2022 to February 2023. Prior to that, Mr. Niu had also served as the founder, general manager, co-chief investment officer and responsible officer at CG Partners Asset Management Co., Limited from 2015 to 2022, and the executive director, fund manager and responsible officer at China Merchants Fund Management Co., Ltd. from 2010 to 2015. Mr. Niu was an investment analyst and an investment and taxation accountant at ING Investment Management from 2007 to 2010 and 2004 to 2007, respectively. Mr. Niu holds a Bachelor of Commerce degree in accounting from the University of Melbourne and a Master of Commerce degree in finance from the University of Sydney. Mr. Niu is a Certified Financial Analyst and a member of Certified Practising Accountant Australia.

Hui Zhang has served as the chief financial officer of Bright Scholar Holdings since January 2024 and the financial director of the Company from June 2023 to January 2024. Prior to that, Ms. Zhang served as the financial controller at Country Garden Venture Capital from 2018 to 2023, the financial controller at Bigo Inc. from 2015 to 2018, the financial senior manager at Joyy Inc. from 2012 to 2015, and the senior associate at Ernst & Young LLP from 2008 to 2012. Ms. Zhang holds a bachelor’s degree in information and computational science from Dalian University of Technology and a master’s degree in accounting from Shanghai University of Finance and Economics.

B. Compensation

Compensation of Directors and Executive Officers

For the fiscal year ended August 31, 2024, we paid an aggregate of approximately RMB8.2 million (US$1.1 million) in cash to our officers and directors. Other than the statutory benefits that we are required by the PRC law to contribute for each employee, including pension insurance, we have not set aside or accrued any amount to provide pension, retirement or other similar benefits to our executive officers and directors.

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Share Incentive Plan

In February 2017, our board of directors approved the 2017 Share Incentive Plan (the “2017 Plan”) to attract and retain the best available personnel, provide additional incentives to employees, directors and consultants and promote the success of our business. Under the 2017 Plan, the maximum aggregate number of shares which may be issued pursuant to all awards under the 2017 Plan shall be 5,263,158 ordinary shares, which constitutes 5.0% of the total outstanding shares of our company on an as-converted basis as of the date of adoption of the 2017 Plan, after giving effect to a ten-for-one share split effected on April 26, 2017. In December 2017, we granted share options to purchase a total of 845,000 Class A ordinary shares to certain school principals and management team members at an exercise price of US$8.74 per share with vesting period varying from three to five years. In September 2018, we granted options to purchase 167,138 Class A ordinary shares to certain members of the senior management team of Can-achieve pursuant to the 2017 Plan at an exercise price of US$8.74 per share with vesting periods ending on December 31, 2018, 2019 and 2020. In January 2019, we granted options to purchase 2,545,000 Class A ordinary shares to a certain member of our senior management team pursuant to the 2017 plan at an exercise price of US$8.74 per share.

On January 18, 2024, our board of directors approved the 2024 Share Incentive Plan (the “2024 Plan”), which became effective on the same date. Subject to certain capitalization adjustments, the aggregate number of ordinary shares that may be issued pursuant to the 2024 Plan from and after its effective date will not exceed 17,835,723 Class A ordinary shares, i.e., 15% of our total issued and outstanding ordinary shares on the date of adoption of the 2024 Plan. As of November 30, 2024, we had granted share options to purchase a total of 13,200,120 Class A ordinary shares to certain management team members pursuant to the 2024 Plan.

In the 2022 fiscal year, we recorded share-based payment expenses of RMB0.8 million. In the 2023 fiscal year, we recorded no share-based payment expenses. In the 2024 fiscal year, we recorded share-based payment expenses of RMB8.1 million (US$1.1 million).

The following table summarizes, as of November 30, 2024, the outstanding options we have granted to our directors, officers and other individuals under the 2017 Plan.

Name	Options		Exercise Price (US$/Share)		Date of Grant	Date of Expiration
Senior management members of Can-achieve		34,277	US$	8.74	September 1, 2018	December 14, 2027
Other individuals as a group		399,495	US$	8.74	December 15, 2017	December 14, 2027

The following table summarizes, as of November 30, 2024, the outstanding options we have granted to our directors, officers and other individuals under the 2024 Plan.

Name	Options		Exercise Price (US$/Share)		Date of Grant	Date of Expiration
Senior management members		13,200,120	US$	0.35	January 18, 2024	January 18, 2034

The following table sets forth the number of options that have been granted, exercised, and forfeited or cancelled as of November 30, 2024.

	Options
Granted		16,709,362
Exercised		14,457
Forfeited/Cancelled		3,061,013
Outstanding		13,633,892

The following paragraphs describe the principal terms of the 2017 Plan.

Types of awards. The 2017 Plan permits the awards of options, restricted shares or restricted share units.

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Plan administration. Our board of directors or a committee of one or more members of the board of directors will administer the 2017 Plan. The committee or the full board of directors, as applicable, will determine the participants to receive awards, the type and number of awards to be granted to each participant, and the terms and conditions of each award grant.

Award agreement. Awards granted under the 2017 Plan are evidenced by an award agreement that sets forth terms, conditions and limitations for each award, which may include the term of the award, the provisions applicable in the event of the grantee’s employment or service terminates, and our authority to unilaterally or bilaterally amend, modify, suspend, cancel or rescind the award.

Eligibility. We may grant awards to our employees, directors and consultants of our company, and other individuals, as determined by the plan administrator. However, we may grant options that are intended to qualify as incentive share options only to our employees and employees of our parent companies and subsidiaries.

Vesting schedule. In general, the plan administrator determines the vesting schedule, which is specified in the relevant award agreement.

Exercise of options. The plan administrator determines the exercise price for each award, which is stated in the award agreement. The vested portion of option will expire if not exercised prior to the time as the plan administrator determines at the time of its grant. However, the maximum exercisable term is 10 years from the date of a grant.

Transfer restrictions. Awards may not be transferred in any manner by the recipient except under limited circumstances, including by will or the laws of descent and distribution, unless otherwise provided by the plan administrator.

Termination and amendment of the 2017 Plan. Unless terminated earlier, the 2017 Plan has a term of 10 years. Our board of directors has the authority to amend or terminate the plan. However, no such action may adversely affect in any material way any awards previously granted without the prior written consent of the recipient.

The following paragraphs describe the principal terms of the 2024 Plan.

Types of awards. The 2024 Plan permits the awards of options, share appreciation rights, restricted shares and restricted share units, among others.

Plan administration. Our board of directors will administer the 2024 Plan and may delegate administration of the 2024 Plan to a committee or committees.

Share Award agreement. Each option or share appreciation right will be in such form and will contain such terms and conditions as our board of directors deems appropriate. The provisions of separate options or share appreciation rights need not be identical; provided, however, that each share award agreement for options or share appreciation rights will conform to the substance of certain provisions specified in the 2024 Plan.

Eligibility. We may grant awards to our employees, directors and consultants of our company. However, we may grant options that are intended to qualify as incentive share options only to our employees and employees of our parent companies and subsidiaries.

Vesting generally. The total number of ordinary shares subject to an option or share appreciation right may vest and become exercisable in periodic installments that may or may not be equal. The option or share appreciation right may be subject to such other terms and conditions on the time or times when it may or may not be exercised (which may be based on the satisfaction of performance goals or other criteria) as our board of directors may deem appropriate. The vesting provisions of individual option or share appreciation right may vary.

Exercise of options. No option or share appreciation right will be exercisable after the expiration of ten (10) years from the date of its grant or such shorter period specified in the share award agreement.

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Transferability. Our board of directors may, in its sole discretion, impose such limitations on the transferability of options and share appreciation rights as it will determine. In the absence of such determination by our board of directors to the contrary, certain restrictions on the transferability as specified in the 2024 Plan will apply.

Termination of the 2024 Plan. Our board of directors may suspend or terminate the 2024 Plan at any time. Unless terminated sooner by our board of directors, the 2024 Plan will automatically terminate on the day before the tenth (10th) anniversary of the earlier of (1) the date the 2024 Plan is adopted or (2) the date the 2024 Plan is approved by our shareholders.

C. Board Practices

Board of Directors

Our board of directors consists of four directors, including two independent directors. A director is not required to hold any shares in our company. A director may vote with respect to any contract, proposed contract, or arrangement in which he or she is materially interested provided (1) such director, if his interest in such contract or arrangement is material, has declared the nature of his interest at the earliest meeting of the board at which it is practicable for him to do so, either specifically or by way of a general notice and (2) if such contract or arrangement is a transaction with a related party, such transaction has been approved by the audit committee. A director may exercise all the powers of the company to borrow money, mortgage its business, property and uncalled capital, and issue debentures or other securities whenever money is borrowed or as security for any obligation of the company or of any third party. None of our directors has a service contract with us that provides for benefits upon termination of service.

Committees of the Board of Directors

Our board of directors has established an audit committee, a compensation committee and a nominating and corporate governance committee and adopted a charter for each of the three committees. Each committee’s members and functions are described below.

Audit Committee. Our audit committee consists of Mr. Jun Zhao and Mr. Meng Rui, and is chaired by Mr. Rui. Mr. Rui and Mr. Zhao satisfy the “independence” requirements of Section 303A of the Corporate Governance Rules of the New York Stock Exchange and meet the independence standards under Rule 10A-3 under the Exchange Act. We have determined that Mr. Rui qualifies as an “audit committee financial expert.” The audit committee oversees our accounting and financial reporting processes and the audits of the financial statements of our company. The audit committee is responsible for, among other things:

● selecting the independent registered public accounting firm and pre-approving all auditing and non-auditing services permitted to be performed by the independent registered public accounting firm;

● reviewing with the independent registered public accounting firm any audit problems or difficulties and management’s response;

● reviewing and approving all proposed related party transactions, as defined in Item 404 of Regulation S-K under the Securities Act;

● discussing the annual audited financial statements with management and the independent registered public accounting firm;

● reviewing major issues as to the adequacy of our internal controls and any special audit steps adopted in light of material control deficiencies;

● reviewing and reassessing annually the adequacy of our audit committee charter;

● meeting separately and periodically with management and the independent registered public accounting firm; and

● monitoring compliance with our code of business conduct and ethics, including reviewing the adequacy and effectiveness of our procedures to ensure proper compliance.

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Compensation Committee. Our compensation committee consists of Mr. Jun Zhao and Mr. Hongru Zhou, and is chaired by Mr. Zhao. Mr. Zhao satisfies the “independence” requirements of Section 303A of the Corporate Governance Rules of the New York Stock Exchange. The compensation committee assists the board in reviewing and approving the compensation structure, including all forms of compensation, relating to our directors and executive officers. Our chief executive officer may not be present at any committee meeting during which their compensation is deliberated upon. The compensation committee is responsible for, among other things:

● reviewing and approving, or recommending to the board for its approval, the compensation for our chief executive officer and other executive officers;

● reviewing and recommending to the board for determination with respect to the compensation of our non-employee directors;

● reviewing periodically and approving any incentive compensation or equity plans, programs or similar arrangements; and

● selecting compensation consultant, legal counsel or other adviser only after taking into consideration all factors relevant to that person’s independence from management.

Nominating and Corporate Governance Committee. Our nominating and corporate governance committee consists of Mr. Jun Zhao and Mr. Hongru Zhou, and is chaired by Mr. Zhao. Mr. Zhao satisfies the “independence” requirements of Section 303A of the Corporate Governance Rules of the New York Stock Exchange. The nominating and corporate governance committee assists the board in selecting individuals qualified to become our directors and in determining the composition of the board and its committees. The nominating and corporate governance committee is responsible for, among other things:

● recommending nominees to the board for election or re-election to the board, or for appointment to fill any vacancy on the board;

● reviewing annually with the board the current composition of the board with regards to characteristics such as independence, age, skills, experience and availability of service to us;

● selecting and recommending to the board the names of directors to serve as members of the audit committee and the compensation committee, as well as of the nominating and corporate governance committee itself;

● developing and reviewing the corporate governance principles adopted by the board and advising the board with respect to significant developments in the law and practice of corporate governance and our compliance with such laws and practices; and

● evaluating the performance and effectiveness of the board as a whole.

Duties of Directors

Under Cayman Islands law, our directors owe to us fiduciary duties, including a duty of loyalty, a duty to act honestly and a duty to act in what they consider in good faith to be in our best interests. Our directors also have a duty to exercise the skill they actually possess and such care and diligence that a reasonably prudent person would exercise in comparable circumstances. In fulfilling their duty of care to us, our directors must ensure compliance with our memorandum and articles of association, as amended and restated from time to time. Our company may have the right to seek damages if a duty owed by our directors is breached.

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Terms of Directors and Officers

Pursuant to the amended and restated memorandum and articles of association, our officers are elected by and serve at the discretion of the board. Our directors are not subject to a term of office and hold office until such time as they resign or are removed from office by ordinary resolution of our shareholders. A director will be removed from office automatically if, among other things, the director (1) becomes bankrupt or has a receiving order made against him or her or suspends payment or compounds with his or her creditors; or (2) dies or becomes of unsound mind.

Employment Agreements

We have entered into employment agreements with our executive officers. Each of our executive officers is employed for a specified time period, which will be automatically extended for successive one-year terms unless either party gives the other party a prior written notice to terminate employment. We may terminate the employment for cause, at any time, without advance notice or remuneration, for certain acts of the executive officer, including conviction or pleading of guilty to a felony, fraud, misappropriation or embezzlement; negligent or dishonest act to our detriment; misconduct or failure to perform his or her duty; disability; or death. An executive officer may terminate his or her employment at any time with a one-month prior written notice if there is a material and substantial reduction in such executive officer’s existing authority and responsibilities or at any time if the termination is approved by our board of directors.

Each executive officer has agreed to hold, both during and after the employment agreement expires, in strict confidence and not to use or disclose to any person, corporation or other entity without written consent, any confidential information. Each executive officer has also agreed to assign to us all his or her all inventions, improvements, designs, original works of authorship, formulas, processes, compositions of matter, computer software programs, databases, mask works and trade secrets.

D. Employees

We had 2,106, 2,961 and 2,193 employees for our continuing operations in the 2022, 2023 and 2024 fiscal years, respectively. The majority of our employees are full-time and have signed employment agreements for one year, renewable with substantially same terms on mutual agreements. In addition to teachers, we also have supporting staff such as security guards, chefs, electricians and chauffeurs, and educational and administrative staff including teaching assistants, librarians, medical staff, and employees in sales and marketing, finance and general administration. The following table sets forth the average numbers of our employees, categorized by function for the period indicated.

	2022 fiscal		2023 fiscal		2024 fiscal
	year		year		year
Teachers and instructors		473		498		542
Managerial staff		483		376		317
Educational and administrative staff		168		145		134
Supporting staff		982		1,942		1,200
Total		2,106		2,961		2,193

As required by PRC laws and regulations, we participate in various employee social security plans for our employees that are administered by local PRC governments, including housing, pension, medical insurance and unemployment insurance. We compensate our employees with basic salaries and performance-based bonuses. None of our employees is represented by any collective bargaining arrangements. We believe we have maintained good relationship with our employees.

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E. Share Ownership

The following table sets forth information concerning the beneficial ownership of our ordinary shares as of November 30, 2024 by:

● each of our directors and executive officers; and

● each person known to us to beneficially own more than 5.0% of our ordinary shares.

The calculations in the table below are based on the fact that there were 118,904,817 ordinary shares outstanding, including 31,314,817 Class A ordinary shares and 87,590,000 Class B ordinary shares outstanding as of November 30, 2024.

Beneficial ownership is determined in accordance with the rules and regulations of the SEC. In computing the number of shares beneficially owned by a person and the percentage ownership of that person, we have included shares that the person has the right to acquire within 60 days, including through the exercise of any option, warrant, or other right or the conversion of any other security. These shares, however, are not included in the computation of the percentage ownership of any other person.

	Ordinary Shares Beneficially Owned
					Total ordinary		% of		% of
	Class A		Class B		shares on an		aggregate		aggregate
	ordinary		ordinary		as-converted		ordinary		voting
	shares		shares		basis		shares***		power†***
Directors and Executive Officers:**
Mr. Hongru Zhou		-		-		-		-		-
Ms. Shuting Zhou		-		-		-		-		-
Mr. Meng Rui		-		-		-		-		-
Mr. Jun Zhao		-		-		-		-		-
Mr. Ruolei Niu		-		-		-		-		-
Ms. Hui Zhang		-		-		-		-		-
Directors and executive officers as a group		-		-		-		-		-
Principal Shareholders:
Excellence Education Investment Limited (1)		-		72,590,000		72,590,000		61.2		81.4
Ultimate Wise Group Limited (2)		451,559		15,000,000		15,451,559		13.0		16.9

† For each person and group included in this column, percentage of voting power is calculated by dividing the voting power beneficially owned by such person or group by the voting power of all of our Class A and Class B ordinary shares as a single class. Each holder of Class A ordinary shares is entitled to one vote per share and each holder of our Class B ordinary shares is entitled to 20 votes per share on all matters submitted to them for a vote. Our Class A ordinary shares and Class B ordinary shares vote together as a single class on all matters submitted to a vote of our shareholders, except as may otherwise be required by law. Our Class B ordinary shares are convertible at any time by the holder thereof into Class A ordinary shares on a one-for-one basis.

* Less than 1% of our total outstanding share on an as-converted basis or voting power.

** The business address of our directors and executive officers is Suites 6-7, The Turvill Building Old Swiss, 149 Cherry Hinton Road, Cambridge, England, CB1 7BX, United Kingdom.

***  The calculation of percentage of aggregate ordinary shares and aggregate voting power does not take into account the 235,022 Class A ordinary shares issued to The Bank of New York Mellon and reserved for further issuance to beneficiaries under the 2017 Plan. We have, however, included the 14,457 Class A ordinary shares already issued upon exercise of options under the 2017 Plan as of November 30, 2024. We did not reserve any shares for issuance to beneficiaries under the 2024 Plan and no shares were issued upon exercise of options under the 2024 Plan. We have also included Class A ordinary shares that may be issued for options exercisable within 60 days from the date of this annual report, provided that these shares are not included in the computation of the percentage ownership or voting power of any other person.

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(1) Represents 72,590,000 Class B ordinary shares directly held by Excellence Education Investment Limited (“Excellence Education”), which is a wholly owned subsidiary of Noble Pride Global Limited (“Noble Pride”). The sole shareholder of Noble Pride is TMF Trust (HK) Limited (“TMF Trust”), which acts as the trustee for Yeung Family Trust V. Yeung Family Trust V is an irrevocable discretionary trust established under the laws of Jersey. Ms. Meirong Yang and her relative, Ms. Huiyan Yang, are the joint settlors of Yeung Family Trust V. Prior to July 18, 2024, Ms. Meirong Yang and Ms. Huiyan Yang were also the members of the investment committee of Yeung Family Trust V. On July 18, 2024, the composition of the investment committee of Yeung Family Trust V was restructured. Ms. Huiyan Yang resigned from the investment committee, and Mr. Hongru Zhou and Mr. Ruolei Niu were appointed as new members. The investment committee currently consists of three members: Ms. Meirong Yang, Mr. Hongru Zhou, and Mr. Ruolei Niu. Each member has one vote on the investment committee. The investment committee retains the sole power to vote the shares beneficially owned by Yeung Family Trust V or direct the trustee of Yeung Family Trust V to vote such shares. Noble Pride and Excellence Education are both British Virgin Islands companies. Excellence Education’s registered office is located at Commerce House, Wickhams Cay 1, P.O. Box 3140, Road Town, Tortola, British Virgin Islands. TMF Trust is incorporated and existing under the laws of Hong Kong, with its principal business address at 31/F, Tower Two, Times Square, 1 Matheson Street, Causeway Bay, Hong Kong. See the Schedule 13D jointly filed by Excellence Education, Ultimate Wise Group Limited (“Ultimate Wise”), Noble Pride, Yeung Family Trust V and TMF Trust on July 31, 2024 for further details.

(2) Represents 451,559 Class A ordinary shares in the form of ADSs and 15,000,000 Class B ordinary shares directly held by Ultimate Wise, which is a wholly owned subsidiary of Noble Pride. Ultimate Wise is a British Virgin Islands company with its registered office located at Trident Chambers, P.O. Box 146, Road Town, Tortola, British Virgin Islands. See also footnote (1) above.

To our knowledge, as of November 30, 2024, there was one record holder of our Class A ordinary shares in the United States, The Bank of New York Mellon, the depositary of our ADS program. The number of beneficial owners of the ADSs in the United States is likely to be much larger than the number of record holders of our ordinary shares in the United States.

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ITEM 7 MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS

A. Major Shareholders

See “Item 6. Directors, Senior Management and Employees—E. Share Ownership.”

B. Related Party Transactions

Contractual Arrangements with the VIEs and Their Shareholders

We entered into a series of contractual arrangements with the VIEs, including the schools held by the VIEs, and Ms. Meirong Yang, and Mr. Wenjie Yang, the shareholders of the VIEs, in August 2021. Such contractual arrangements enable us to (1) have the power to direct the activities that most significantly affects the economic performance of the VIEs; (2) bear the obligation to absorb losses of the VIEs that could potentially be significant to the affiliated entities or to receive benefits from the affiliated entities that could potentially be significant to the affiliated entities; and (3) have an exclusive option to purchase all of the equity interests in the VIEs when and to the extent permitted under PRC law. On June 17, 2024, an agreement supplementary to the 2017 contractual arrangements and 2021 supplemental agreements was entered into by and among Zhuhai Bright Scholar, Ms. Meirong Yang and Mr. Wenjie Yang, and Foshan Meiliang Education Technology Co., Ltd., Foshan Shangtai Education Technology Co., Ltd., Foshan Renliang Education Technology Co., Ltd., Foshan Yongliang Education Technology Co., Ltd., Foshan Zhiliang Education Technology Co., Ltd. and Beijing Boteng Consulting Co., Ltd., to stipulate that Foshan Shangtai Education Technology Co., Ltd. and Foshan Renliang Education Technology Co., Ltd. shall no longer be bound by the 2017 contractual arrangements and 2021 supplemental agreements upon their deregistration, and part of affiliated entities of Foshan Yongliang Education Technology Co., Ltd., Foshan Zhiliang Education Technology Co., Ltd. and Beijing Boteng Consulting Co., Ltd. shall no longer be bound by the 2017 contractual arrangements and 2021 supplemental agreements upon respective closing of the disposal of equity interest of such entities or their deregistration. As of the date of this annual report, Foshan Shangtai Education Technology Co., Ltd. and Foshan Renliang Education Technology Co., Ltd. have completed the deregistration process. On August 31, 2024, an agreement supplementary to the 2017 contractual arrangements and 2021 supplemental agreements was entered into by and among Zhuhai Bright Scholar, Ms. Meirong Yang and Mr. Wenjie Yang, and Foshan Meiliang Education Technology Co., Ltd, which provides that upon execution of this supplementary agreement, Foshan Meiliang Education Technology Co., Ltd., and its affiliated entities (including nine domestic kindergartens) shall no longer be bound by the 2017 contractual arrangements and 2021 supplemental agreements. As of the date of this annual report, Foshan Meiliang Education Technology Co., Ltd., and its affiliated entities (including nine domestic kindergartens) are no longer bound by the 2017 contractual arrangements and 2021 supplemental agreements. Therefore, we control the VIEs, including the subsidiaries owned and operated by the VIEs. For a description of these contractual arrangements, see “Item 4. Information on the Company—C. Organizational Structure—Our Contractual Arrangements.”

All of our newly established VIE subsidiaries in the 2024 fiscal year have executed Rights and Obligations Assumption Letters to enjoy the rights and perform the obligations under the contractual arrangements.

Transactions with Certain Related Parties

Purchase of services and materials

We purchase services and materials, from other entities controlled by Ms. Huiyan Yang, our ex-chairlady, including Country Garden. In the 2022, 2023 and 2024 fiscal years, we entered into various agreements with certain entities controlled by Ms. Huiyan Yang or her affiliates, including primarily the following:

● Guangdong Phoenix Holiday International Travel Service Co., Ltd.

● Guangdong Shunde Chuang Xi Bang Sheng Furniture Co., Ltd.

● Foshan Shunde Country Garden Property Development Co., Ltd.

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● Dongguan World Expo Xintiandi Property Investment Co., Ltd.

● Huidong Country Garden Real Estate Development Co., Ltd.

● Guangdong Chengjia Design Co., Ltd.

For the 2022, 2023 and 2024 fiscal years, we entered into transactions of an aggregate of approximately RMB2.8 million, RMB13.1 million and RMB9.5 million (US$1.4 million), respectively, to purchase materials, construction services and other services from such related parties for the continuing operations and discontinued operations.

During the fiscal year 2022 and 2023, we continued to provide essential services to keep these schools open without recognizing relevant revenues. Services provided to these schools primarily include marketing and consulting, procurement support, human resources, finance and legal support, and information technology support, all of which were conducted through our centralized management system. Our centralized management system provided services to the Affected Entities without charges together with certain kindergartens that we charged services fee for. As we did not track the costs incurred by the centralized management system separately among different service recipients, and majority of the costs are staff costs incurred by the centralized management system, there are significant limitations for us to accurately determine the costs attributable to providing services to the Affected Entities. However, in May and June 2023, the related staff had transferred out from the services center in our headquarters, and we ceased to provide such free services.

Advances and loans from and to related parties

The following table presents amounts owed from and to our related parties as of August 31, 2023 and 2024:

	As of August 31,
	2023			2024
	RMB			RMB			US$
	(in Thousands)
Amounts due from related parties*
BGY Education Investment and its affiliates (1)		185,372			22,188			3,130
Shaoguan Shunhong Real Estate Development Co., Ltd. (2)		10,000			10,000			1,410
Kaiping Country Garden Property Development Co., Ltd. (3)		1,060			1,060			150
Others		375			181			26
Less: allowance for amounts due from related parties		(13,339	)		(19,012	)		(2,683	)
Total		183,468			14,417			2,033

* Amounts due from related parties are non-interest bearing, unsecured, and due on demand.

(1) The amounts mainly represent the acquisition payable paid on behalf of BGY Education Investment and its affiliates, and the receivables from disposal of property and equipment to BGY Education investment.

(2) The amounts represent the expense paid on behalf of Shaoguan Shunhong Real Estate Development Co., Ltd. For the year ended August 31, 2023, the Group provided a full allowance for it.

(3) The amounts mainly represent the receivables of providing consulting services on pre-opening schools to Kaiping Country Garden Property Development Co., Ltd. For the year ended August 31, 2023, we provided a full allowance for it.

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	As of August 31,
	2023		2024
	RMB		RMB		US$
	(in Thousands)
Amounts due to related parties*
BGY Education Investment and its affiliates (1)		204,966		33,623		4,742
Chuzhou Country Garden Property Development Co., Ltd. (2)		30,769		30,769		4,340
Huidong Country Garden Real Estate Development Co., Ltd. (3)		7,713		13,185		1,860
Others		811		788		111
Total		244,259		78,365		11,053

* Amounts due to related parties are non-interest bearing, unsecured, and payable on demand.

(1) The amounts mainly represent the acquisition payables to BGY Education Investment and its affiliates for the acquisition of certain PRC subsidiaries under common control in fiscal year 2021.

(2) The amounts mainly represent financing funds from other entities controlled by Ms. H, for the purpose of maintaining daily operation of certain schools.

(3) The amounts represent the rental payables to Huidong Country Garden Property Development Co., Ltd. for certain short-term leases.

Employment Agreements

See “Item 6. Directors, Senior Management and Employees—C. Board Practices—Employment Agreements.”

Share Incentive Plan

See “Item 6. Directors, Senior Management and Employees-B. Compensation-Share Incentive Plan.”

C. Interests of Experts and Counsel

Not applicable.

ITEM 8. FINANCIAL INFORMATION

A. Consolidated Statements and Other Financial Information

We have appended consolidated financial statements filed as part of this annual report.

Legal Proceedings

See “Item 4. Information on the Company—B. Business Overview—Legal Proceedings.”

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Dividend Policy

On September 18, 2019, we declared a cash dividend of US$0.10 per ordinary share; on July 23, 2020, we declared a cash dividend of US$0.12 per ordinary share; and on July 21, 2021, we declared a cash dividend of US$0.12 per ordinary share. We currently have no further plan to declare or pay any dividends in the near future on our shares or ADSs. We currently intend to retain most, if not all, of our available funds and any future earnings to operate and expand our business.

Our board of directors has discretion as to whether to distribute dividends, subject to applicable laws. Under Cayman Islands law, a Cayman Islands company may pay a dividend on its shares out of its profits, realized or unrealized, or from any reserve set aside from profits which its directors determine is no longer required or out of the share premium account or any other fund or account that can be authorized for this purpose in accordance with the Companies Act (As Revised) of the Cayman Islands, provided that in no circumstances may a dividend be paid if this would result in the company being unable to pay its debts due in the ordinary course of business. Even if our board of directors decides to pay dividends, the form, frequency and amount will depend upon our future operations and earnings, capital requirements and surplus, general financial condition, contractual restrictions and other factors that our board of directors may deem relevant. If we pay any dividends, we will pay our ADS holders to the same extent as holders of our Class A ordinary shares, subject to the terms of the deposit agreement, including the fees and expenses payable thereunder. Cash dividends on our Class A ordinary shares, if any, will be paid in U.S. dollars.

We are a holding company incorporated in the Cayman Islands. We rely principally on dividends from our Hong Kong and PRC subsidiaries for our cash requirements, including any payment of dividends to our shareholders. PRC regulations may restrict the ability of our PRC subsidiaries to pay dividends to us. See “Item 3. Key Information—D. Risk Factors—Risks Related to Doing Business in the Jurisdictions Where We Operate—Our subsidiaries and affiliated entities in China are subject to restrictions on making dividends and other payments to us.”

B. Significant Changes

Except as disclosed elsewhere in this annual report, we have not experienced any significant changes since the date of our audited consolidated financial statements included in this annual report.

ITEM 9. THE OFFER AND LISTING

A. Offer and Listing Details

Our ADSs are listed on the New York Stock Exchange under the symbol “BEDU.” Effective on August 19, 2022, we changed the ratio of the ADSs to Class A ordinary shares from the then ADS ratio of one ADS to one Class A ordinary share to a new ADS ratio of one ADS representing four Class A ordinary shares.

B. Plan of Distribution

Not applicable.

C. Markets

Our ADSs have been listed for trading on the New York Stock Exchange under the symbol “BEDU” since May 18, 2017.

D. Selling Shareholders

Not applicable.

E. Dilution

Not applicable.

F. Expenses of the Issue

Not applicable.

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ITEM 10. ADDITIONAL INFORMATION

A. Share Capital

Not applicable.

B. Memorandum and Articles of Association

We incorporate by reference into this annual report our amended and restated memorandum of association and our amended and restated articles of association filed as Exhibit 3.2 to our F-1 registration statement (File No. 333-217359), as amended, initially filed with the SEC on April 18, 2017.

C. Material Contracts

Material contracts other than in the ordinary course of business are described in Item 4 and Item 7 or elsewhere in this annual report.

D. Exchange Controls

See “Item 4. Information on the Company—B. Business Overview—Regulations—PRC Laws and Regulations Relating to Foreign Exchange.”

E. Taxation

The following discussion of material Cayman Islands, PRC and United States federal income tax consequences of an investment in the ADSs or Class A ordinary shares is based upon laws and relevant interpretations thereof in effect as of the date of this annual report, all of which are subject to change. This discussion does not deal with all possible tax consequences relating to an investment in the ADSs or Class A ordinary shares, such as the tax consequences under state, local and other tax laws.

Cayman Islands Taxation

The Cayman Islands currently levies no taxes on individuals or corporations based upon profits, income, gains or appreciation and there is no taxation in the nature of inheritance tax or estate duty. There are no other taxes likely to be material to us levied by the government of the Cayman Islands except for stamp duties which may be applicable on instruments executed in, or after execution brought within the jurisdiction of, the Cayman Islands.

The Cayman Islands are a party to a double tax treaty entered into with the United Kingdom in 2010 but otherwise is not party to any double tax treaties.

There are no exchange control regulations or currency restrictions in the Cayman Islands.

Pursuant to Section 6 of the Tax Concessions Act (revised) of the Cayman Islands, we have obtained an undertaking from the Governor-in-Cabinet that:

● no law which is enacted in the Cayman Islands imposing any tax to be levied on profits or income or gains or appreciation shall apply to us or our operations; and

● the aforesaid tax or any tax in the nature of estate duty or inheritance tax shall not be payable on our shares, debentures or other obligations.

● The undertaking for us is for a period of 20 years from January 10, 2017.

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People’s Republic of China Taxation

Bright Scholar Holdings is a holding company incorporated in the Cayman Islands and its income depends primarily on dividends from our PRC subsidiaries. The PRC enterprise income tax law and its implementation rules provide that an income tax rate of 10.0% will be applicable to dividends payable by Chinese companies to non-PRC-resident enterprise shareholders unless otherwise exempted or reduced according to treaties or arrangements between the PRC central government and governments of other countries or regions. Under the Double Tax Avoidance Arrangement, dividends paid by a foreign-invested enterprise in the PRC to its direct holding company, which is considered a Hong Kong tax resident and is determined by the PRC tax authority to have satisfied relevant requirements under the Double Tax Avoidance Arrangement between China and Hong Kong and other applicable PRC laws, will be subject to withholding tax at the rate of 5.0%. Entitlement to a lower tax rate on dividends according to tax treaties or arrangements between the PRC central government and governments of other countries or regions is subject to inspection or approval of the relevant tax authorities. Furthermore, the State Administration of Taxation promulgated Circular 9 to clarify the definition of beneficial owner under PRC tax treaties and tax arrangements. According to Circular 9, a beneficial owner refers to a party who holds ownership of and control over the income of the entity, or the rights or assets from which such income is derived. The test to determine whether a resident of the other contracting party to the double taxation treaty or arrangement is a beneficial owner shall focus on several factors including, among others, (1) whether the applicant is under the obligation to pay 50% or more of the income received to any resident of any third country or region within 12 months upon receipt of the income; and (2) whether the business activities carried out by the applicant constitutes substantive business activities, which include substantive manufacturing, distribution, management and other activities. See “Item 3. Key Information—D. Risk Factors—Risk Related to Doing Business in China—There are uncertainties under the PRC enterprise income tax law relating to the withholding tax liabilities of our PRC subsidiaries, and dividends payable by our PRC subsidiaries to our offshore subsidiaries may not qualify to enjoy certain treaty benefits.”

Under the PRC enterprise income tax law, enterprises established under the laws of jurisdictions outside China with their “de facto management body” located within China may be considered to be PRC tax resident enterprises for tax purposes and therefore subject to PRC enterprise income tax at the rate of 25% on their worldwide income. The implementation rules of the PRC enterprise income tax law define the term “de facto management body” as a management body which substantially manages, or has control over the business, personnel, finance and assets of an enterprise. The State Administration of Taxation issued the Notice Regarding the Determination of Chinese-Controlled Offshore Incorporated Enterprises as PRC Tax Resident Enterprises on the Basis of De Facto Management Bodies, or Circular 82, on April 22, 2009. Circular 82 provides certain specific criteria for determining whether the “de facto management body” of a Chinese-controlled offshore incorporated enterprise is located in China, which include all of the following conditions: (1) the senior management and core management departments in charge of daily operations are located mainly within China, (2) financial and human resources decision are subject to determination or approval by persons or bodies in China, (3) major assets, accounting books, company seals and minutes and files of board and shareholders’ meeting are located or kept within China, and (4) at least half of the enterprise’s directors with voting rights or senior management reside within China. The State Administration of Taxation issued a bulletin on August 3, 2011 to provide more guidance on the implementation of Circular 82. The bulletin clarifies certain matters relating to resident status determination, post-determination administration and competent tax authorities. Although both the circular and the bulletin only apply to offshore enterprises controlled by PRC enterprises and not those by PRC individuals, the determination criteria set forth in the circular and administration clarification made in the bulletin may reflect the general position of the State Administration of Taxation on how the “de facto management body” test should be applied in determining the tax resident status of offshore enterprises and the administration measures should be implemented, regardless of whether they are controlled by PRC enterprises or PRC individuals. See “Item 3. Key Information—D. Risk Factors—Risk Related to Doing Business in China—Under the PRC enterprise income tax law, we may be classified as a PRC “resident enterprise,” which could result in unfavorable tax consequences to us and our non-PRC shareholders.”

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United States Federal Income Tax Considerations

The following discussion is a summary of United States federal income tax considerations relating to the ownership and disposition of the ADSs or Class A ordinary shares by a U.S. Holder, as defined below, who holds the ADSs or Class A ordinary shares as “capital assets” (generally, property held for investment) under the United States Internal Revenue Code of 1986, as amended, or the Code. This discussion is based upon existing United States federal income tax law, which is subject to differing interpretations or change, possibly with retroactive effect. No ruling has been sought from the Internal Revenue Service, or the IRS, with respect to any United States federal income tax consequences described below, and we cannot assure you that the IRS or a court will not take a contrary position. This discussion does not address all aspects of United States federal income taxation that may be important to particular investors in light of their individual circumstances, including investors subject to special tax rules (such as, for example, financial institutions, insurance companies, regulated investment companies, real estate investment trusts, broker-dealers, traders in securities that elect mark-to-market treatment, partnerships or other pass-through entities and their partners or investors, tax-exempt organizations (including private foundations)), investors who are not U.S. Holders, investors subject to special accounting rules under Section 451(b) of the Code, investors that own (directly, indirectly, or constructively) 10% or more of our stock by vote or by value, investors that hold their ADSs or Class A ordinary shares as part of a straddle, hedge, conversion, constructive sale or other integrated transaction, or investors that have a functional currency other than the U.S. dollar, all of whom may be subject to tax rules that differ significantly from those summarized below.

In addition, this discussion does not address any state, local, alternative minimum tax, or non-United States tax considerations, or the Medicare contribution tax on net investment income. Each potential investor is urged to consult its tax advisor regarding the United States federal, state, local and non-United States income and other tax considerations of an investment in the ADSs or Class A ordinary shares. This discussion does not address any tax consequences or reporting obligations that may be applicable to persons holding our ADSs or Class A ordinary shares through a bank, financial institution or other entity, or a branch thereof, located, organized or resident outside the United States, and does not describe any tax consequences arising in respect of the Foreign Account Tax Compliance Act, or FATCA regime.

If a partnership (or other entity or arrangement treated as a partnership for United States federal income tax purposes) is a beneficial owner of the ADSs or Class A ordinary shares, the tax treatment of a partner in the partnership will depend upon the status of the partner and the activities of the partnership. Partnerships and partners of a partnership holding the ADSs or Class A ordinary shares are urged to consult their tax advisors regarding an investment in the ADSs or Class A ordinary shares.

General

For purposes of this discussion or arrangement, a “U.S. Holder” is a beneficial owner of the ADSs or Class A ordinary shares that is, for United States federal income tax purposes, (1) an individual who is a citizen or resident of the United States, (2) a corporation (or other entity treated as a corporation for United States federal income tax purposes) created in, or organized under the laws of, the United States or any state thereof or the District of Columbia, (3) an estate the income of which is includible in gross income for United States federal income tax purposes regardless of its source, or (4) a trust (a) the administration of which is subject to the primary supervision of a United States court and which has one or more United States persons who have the authority to control all substantial decisions of the trust or (b) that has otherwise elected to be treated as a United States person under the Code.

For United States federal income tax purposes, a U.S. Holder of ADSs will generally be treated as the beneficial owner of the underlying shares represented by the ADSs. Accordingly, deposits or withdrawals of Class A ordinary shares for ADSs will generally not be subject to United States federal income tax.

Passive foreign investment company considerations

A non-United States corporation, such as our company, will be classified as a “passive foreign investment company,” or PFIC, for United States federal income tax purposes, if, in the case of any particular taxable year, either (1) 75% or more of its gross income for such year consists of certain types of “passive” income or (2) 50% or more of its average quarterly assets during such year produce or are held for the production of passive income. For this purpose, cash is categorized as a passive asset and the company’s unbooked intangibles associated with active business activities may generally be classified as active assets. Passive income generally includes, among other things, dividends, interest, rents, royalties, and gains from the disposition of passive assets. We will be treated as owning our proportionate share of the assets and earning our proportionate share of the income of any other non-U.S. corporation in which we own, directly or indirectly, more than 25% (by value) of the stock.

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Although the law in this regard is unclear, we treat the New VIEs as being owned by us for United States federal income tax purposes, not only because we exercise effective control over the operation of such entities but also because we are entitled to substantially all of their economic benefits, and, as a result, we consolidate their operating results in our consolidated financial statements. Assuming that we are the owner of the New VIEs for United States federal income tax purposes, based upon our historical and current income and assets, we do not believe that we are likely to be classified as a PFIC for the taxable year ending August 31, 2024.

The determination of whether we are or will become a PFIC will depend upon the composition of our income (which may differ from our historical results and current projections) and assets and the value of our assets from time to time, including, in particular the value of our goodwill and other unbooked intangibles (which may depend upon the market value of the ADSs or Class A ordinary shares from time-to-time and may be volatile). In estimating the value of our goodwill and other unbooked intangibles, we have taken into account our market capitalization, which may fluctuate. If our market capitalization declines further, we may be classified as a PFIC for the current or future taxable years. It is also possible that the IRS may challenge our classification or valuation of our goodwill and other unbooked intangibles, which may result in our company being, or becoming classified as, a PFIC for the current or one or more future taxable years.

Finally, in determining our PFIC status, we have relied on our unaudited and audited financials. If we are required to restate or amend our financials further, it is possible that our company may have been, or we may determine that it is, a PFIC.

The determination of whether we are or will be a PFIC may also depend, in part, on how, and how quickly, we use our liquid assets, including cash. Under circumstances where we retain significant amounts of liquid assets including cash, or if the New VIEs were not treated as owned by us for United States federal income tax purposes, our risk of being classified as a PFIC may substantially increase. Because there are uncertainties in the application of the relevant rules and PFIC status is a factual determination made annually after the close of each taxable year, we cannot assure you that we will not be a PFIC for the current taxable year or any future taxable year. If we are classified as a PFIC for any year during which a U.S. Holder holds the ADSs or Class A ordinary shares, we generally would continue to be treated as a PFIC for all succeeding years during which such U.S. Holder holds the ADSs or Class A ordinary shares.

The discussion below under “Dividends” and “Sale or Other Disposition of ADSs or Class A Ordinary Shares” is written on the basis that we will not be classified as a PFIC for United States federal income tax purposes. The United States federal income tax rules that apply if we are classified as a PFIC for the current taxable year or any subsequent taxable year are discussed below under “Passive Foreign Investment Company Rules.”

Dividends

Subject to the PFIC rules described below, any cash distributions (including the amount of any PRC tax withheld) paid on the ADSs or Class A ordinary shares out of our current or accumulated earnings and profits, as determined under United States federal income tax principles, will generally be includible in the gross income of a U.S. Holder as dividend income on the day it is actually or constructively received by the U.S. Holder, in the case of Class A ordinary shares, or by the depositary bank, in the case of ADSs. Because we do not intend to determine our earnings and profits on the basis of United States federal income tax principles, any distribution will generally be treated as a “dividend” for United States federal income tax purposes. Under current law, a non-corporate recipient of dividend income will generally be subject to tax on dividend income from a “qualified foreign corporation” at the lower applicable net capital gains rate rather than the marginal tax rates generally applicable to ordinary income provided that certain holding period and other requirements are met.

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A non-United States corporation (other than a corporation that is classified as a PFIC for the taxable year in which the dividend is paid or the preceding taxable year) will generally be considered to be a qualified foreign corporation (1) if it is eligible for the benefits of a comprehensive tax treaty with the United States which the Secretary of Treasury of the United States determines is satisfactory for purposes of this provision and which includes an exchange of information program, or (2) with respect to any dividend it pays on stock (or ADSs in respect of such stock) which is readily tradable on an established securities market in the United States. Our ADSs are listed on the New York Stock Exchange. Accordingly, we believe that the ADSs are readily tradable on an established securities market in the United States and that we will be a qualified foreign corporation with respect to dividends paid on the ADSs. Since we do not expect that our Class A ordinary shares will be listed on established securities markets, it is unclear whether dividends that we pay on our Class A ordinary shares that are not backed by ADSs currently meet the conditions required for the reduced tax rate. We cannot assure you that the ADSs will continue to be considered readily tradable on an established securities market in later years. In the event we are deemed to be a PRC resident enterprise under the EIT Law, we may be eligible for the benefits of the Agreement Between the Government of the United States of America and the Government of the People’s Republic of China for the Avoidance of Double Taxation and the Prevention of Tax Evasion with Respect to Taxes on Income (the “United States-PRC income tax treaty”) (which the Secretary of the Treasury of the United States has determined is satisfactory for this purpose), in which case we would be treated as a qualified foreign corporation with respect to dividends paid on our Class A ordinary shares or ADSs. U.S. Holders are urged to consult their tax advisors regarding the availability of the reduced tax rate on dividends in their particular circumstances. Dividends received on the ADSs or Class A ordinary shares will not be eligible for the dividends received deduction allowed to corporate shareholders of a domestic corporation.

For United States foreign tax credit purposes, dividends paid on the ADSs or Class A ordinary shares will generally be treated as income from foreign sources and will generally constitute passive category income. In the event that we are deemed to be a PRC resident enterprise under the EIT Law, a U.S. Holder may be subject to PRC withholding taxes on dividends paid, if any, on the ADSs or Class A ordinary shares. A U.S. Holder may be eligible, subject to a number of complex limitations, to claim a foreign tax credit in respect of any foreign withholding taxes imposed on dividends received on the ADSs or Class A ordinary shares. A U.S. Holder who does not elect to claim a foreign tax credit for foreign tax withheld may instead claim a deduction for United States federal income tax purposes in respect of such withholding, but only for a year in which such holder elects to do so for all creditable foreign income taxes. The rules governing the foreign tax credit are complex. U.S. Holders are urged to consult their tax advisors regarding the availability of the foreign tax credit under their particular circumstances.

Sale or other disposition of ADSs or Class A ordinary shares

Subject to the PFIC rules discussed below, a U.S. Holder will generally recognize capital gain or loss, if any, upon the sale or other disposition of ADSs or Class A ordinary shares in an amount equal to the difference between the amount realized upon the disposition and the holder’s adjusted tax basis in such ADSs or Class A ordinary shares. Any capital gain or loss will be long-term gain or loss if the ADSs or Class A ordinary shares have been held for more than one year and will generally be United States source gain or loss for United States foreign tax credit purposes. Long-term capital gains of non-corporate taxpayers are currently eligible for reduced rates of taxation. In the event that we are treated as a PRC resident enterprise under the EIT Law, and gain from the disposition of the ADSs or Class A ordinary shares is subject to tax in the PRC, such gain may be treated as PRC source gain for foreign tax credit purposes under the United States-PRC income tax treaty. The deductibility of a capital loss may be subject to limitations. U.S. Holders are urged to consult their tax advisors regarding the tax consequences if a foreign tax is imposed on a disposition of the ADSs or Class A ordinary shares, including the availability of the foreign tax credit under their particular circumstances.

Passive Foreign Investment Company Rules

If we are classified as a PFIC for any taxable year during which a U.S. Holder holds the ADSs or Class A ordinary shares, unless the U.S. Holder makes a mark-to-market election (as described below), the U.S. Holder will, except as discussed below, be subject to special tax rules that have a penalizing effect, regardless of whether we remain a PFIC, on (1) any excess distribution that we make to the U.S. Holder (which generally means any distribution paid during a taxable year to a U.S. Holder that is greater than 125% of the average annual distributions paid in the three preceding taxable years or, if shorter, the U.S. Holder’s holding period for the ADSs or Class A ordinary shares), and (2) any gain realized on the sale or other disposition, including, under certain circumstances, a pledge, of ADSs or Class A ordinary shares. Under the PFIC rules:

● the excess distribution and/or gain will be allocated ratably over the U.S. Holder’s holding period for the ADSs or Class A ordinary shares;

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● the amount of excess distribution or gain allocated to the taxable year of distribution or gain and any taxable years in the U.S. Holder’s holding period prior to the first taxable year in which we are classified as a PFIC, or a pre-PFIC year, will be taxable as ordinary income; and

● the amount of excess distribution or gain allocated to each prior taxable year, other than the taxable year of distribution or gain or a pre-PFIC year, will be subject to tax at the highest tax rate in effect applicable to the individuals or corporations, as appropriate, for that year, and will be increased by an additional tax equal to interest on the resulting tax deemed deferred with respect to each such other taxable year.

If we are a PFIC for any taxable year during which a U.S. Holder holds the ADSs or Class A ordinary shares and any of our non-United States subsidiaries is also a PFIC, such U.S. Holder would be treated as owning a proportionate amount (by value) of the shares of the lower-tier PFIC for purposes of the application of these rules. Each U.S. Holder is advised to consult its tax advisors regarding the application of the PFIC rules to any of our subsidiaries.

As an alternative to the foregoing rules, a U.S. Holder of “marketable stock” in a PFIC may make a mark-to-market election with respect to the ADSs (but not Class A ordinary shares), provided that the ADSs are “regularly traded” (as specially defined) on the New York Stock Exchange. No assurances may be given regarding whether the ADSs will continue to qualify as being regularly traded in this regard. If a mark-to-market election is made, the U.S. Holder will generally (1) include as ordinary income for each taxable year that we are a PFIC the excess, if any, of the fair market value of ADSs held at the end of the taxable year over the adjusted tax basis of such ADSs and (2) deduct as an ordinary loss the excess, if any, of the adjusted tax basis of the ADSs over the fair market value of such ADSs held at the end of the taxable year, but only to the extent of the net amount previously included in income as a result of the mark-to-market election. The U.S. Holder’s adjusted tax basis in the ADSs would be adjusted to reflect any income or loss resulting from the mark-to-market election. If a U.S. Holder makes an effective mark-to-market election, in each year that we are a PFIC any gain recognized upon the sale or other disposition of the ADSs will be treated as ordinary income and loss will be treated as ordinary loss, but only to the extent of the net amount previously included in income as a result of the mark-to-market election. Because our Class A ordinary shares are not listed on a stock exchange, U.S. Holders will not be able to make a mark-to-market election with respect to our Class A ordinary shares.

If a U.S. Holder makes a mark-to-market election in respect of a corporation classified as a PFIC and such corporation ceases to be classified as a PFIC, the U.S. Holder will not be required to take into account the mark-to-market gain or loss described above during any period that such corporation is not classified as a PFIC.

Because a mark-to-market election cannot be made for any lower-tier PFICs that a PFIC may own, a U.S. Holder who makes a mark-to-market election with respect to the ADSs may continue to be subject to the general PFIC rules with respect to such U.S. Holder’s indirect interest in any of our non-United States subsidiaries that is classified as a PFIC.

We do not intend to provide information necessary for U.S. Holders to make qualified electing fund elections, which, if available, would result in tax treatment different from the general tax treatment for PFICs described above.

As discussed above under “Dividends,” dividends that we pay on the ADSs or Class A ordinary shares will not be eligible for the reduced tax rate that applies to qualified dividend income if we are classified as a PFIC for the taxable year in which the dividend is paid or the preceding taxable year. In addition, if a U.S. Holder owns the ADSs or Class A ordinary shares during any taxable year that we are a PFIC, the holder must file an annual information return with the IRS. Each U.S. Holder is urged to consult its tax advisor concerning the United States federal income tax consequences of purchasing, holding, and disposing ADSs or Class A ordinary shares if we are or become a PFIC, including the possibility of making a mark-to-market election and the unavailability of the qualified electing fund election.

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Information reporting and backup withholding

Certain U.S. Holders are required to report information to the IRS relating to an interest in “specified foreign financial assets” (as defined in the Code), including shares issued by a non-United States corporation, for any year in which the aggregate value of all specified foreign financial assets exceeds $50,000 (or a higher dollar amount prescribed by the IRS), subject to certain exceptions (including an exception for shares held in custodial accounts maintained with a United States financial institution). These rules also impose penalties if a U.S. Holder is required to submit such information to the IRS and fails to do so.

In addition, U.S. Holders may be subject to information reporting to the IRS and backup withholding with respect to dividends on and proceeds from the sale or other disposition of the ADSs or Class A ordinary shares. Information reporting will apply to payments of dividends on, and to proceeds from the sale or other disposition of, Class A ordinary shares or ADSs by a paying agent within the United States to a U.S. Holder, other than U.S. Holders that are exempt from information reporting and properly certify their exemption. A paying agent within the United States will be required to withhold at the applicable statutory rate, currently 24%, in respect of any payments of dividends on, and the proceeds from the disposition of, Class A ordinary shares or ADSs within the United States to a U.S. Holder (other than U.S. Holders that are exempt from backup withholding and properly certify their exemption) if the U.S. Holder fails to furnish its correct taxpayer identification number or otherwise fails to comply with applicable backup withholding requirements. U.S. Holders who are required to establish their exempt status generally must provide a properly completed IRS Form W-9.

Backup withholding is not an additional tax. Amounts withheld as backup withholding may be credited against a U.S. Holder’s United States federal income tax liability. A U.S. Holder generally may obtain a refund of any amounts withheld under the backup withholding rules by filing the appropriate claim for refund with the IRS in a timely manner and furnishing any required information.

Each U.S. Holder is advised to consult with its tax advisor regarding the application of the United States information reporting and backup withholding rules to their particular circumstances.

F. Dividends and Paying Agents

Not applicable.

G. Statement by Experts

Not applicable.

H. Documents on display

We have previously filed with the SEC our registration statement on Form F-1 (File Number 333-217359), as amended and our registration statement on Form F-1 (File Number 333-223193), as amended.

We are subject to the periodic reporting and other informational requirements of the Exchange Act. Under the Exchange Act, we are required to file reports and other information with the SEC. Specifically, we are required to file annually a Form 20-F within four months after the end of each fiscal year. Copies of reports and other information, when so filed, may be inspected without charge and may be obtained at prescribed rates at the public reference facilities maintained by the SEC at 100 F Street, N.E., Room 1580, Washington, D.C. 20549. The public may obtain information regarding the Washington, D.C. Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC also maintains a web site at www.sec.gov that contains reports, proxy and information statements, and other information regarding registrants that make electronic filings with the SEC using its EDGAR system.

As a foreign private issuer, we are exempt from the rules of the Exchange Act prescribing the furnishing and content of quarterly reports and proxy statements, and our executive officers, directors and principal shareholders are exempt from the reporting and short-swing profit recovery provisions contained in Section 16 of the Exchange Act. In addition, we are not required under the Exchange Act to file periodic reports and financial statements with the SEC as frequently or as promptly as U.S. companies whose securities are registered under the Exchange Act.

We will furnish The Bank of New York Mellon, the depositary of the ADSs, with our annual reports, which will include a review of operations and annual audited consolidated financial statements prepared in conformity with U.S. GAAP, and all notices of shareholders’ meetings and other reports and communications that are made generally available to our shareholders. The depositary will make such notices, reports and communications available to holders of ADSs and, upon our request, will mail to all record holders of ADSs the information contained in any notice of a shareholders’ meeting received by the depositary from us.

I. Subsidiary Information

Not applicable.

J. Annual Report to Security Holders

We are not required to provide an annual report to security holders in response to the requirements of Form 6-K.

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ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Foreign currency risk

Our revenues, expenses and assets and liabilities are primarily denominated in Renminbi. Renminbi is not freely convertible into foreign currencies for capital account transactions. The value of the Renminbi against the U.S. dollar and other currencies is affected by changes in China’s political and economic conditions and by China’s foreign exchange policies, among other things. In July 2005, the PRC government changed its decades-old policy of pegging the value of the Renminbi to the U.S. dollar, and the Renminbi appreciated more than 20% against the U.S. dollar over the following three years. Between July 2008 and June 2010, this appreciation subsided and the exchange rate between the Renminbi and the U.S. dollar remained within a narrow band. Since June 2010, the Renminbi has fluctuated against the U.S. dollar, at times significantly and unpredictably. On March 17, 2014, the PRC government announced a policy to further expand the maximum daily floating range of Renminbi trading prices against the U.S. dollar in the inter-bank spot foreign exchange market to 2.0%. On August 10, 2015, the PRC government announced that it had changed the calculation method for Renminbi’s daily central parity exchange rate against the U.S. dollar, which resulted in an approximately 2.0% depreciation of Renminbi on that day. We expect Renminbi to fluctuate more significantly in value against the U.S. dollar or other foreign currencies in the future, depending on the market supply and demand with reference to a basket of major foreign currencies. It is difficult to predict how market forces or PRC or U.S. government policy may impact the exchange rate between the Renminbi and the U.S. dollar in the future.

To date, we have not entered into any hedging transactions in an effort to reduce our exposure to foreign currency exchange risk. To the extent that we need to convert U.S. dollars we received from the offering into Renminbi for our operations or capital expenditures, appreciation of the Renminbi against the U.S. dollar would have an adverse effect on the Renminbi amount we would receive from the conversion. Conversely, if we decide to convert our Renminbi into U.S. dollars for the purpose of making payments for dividends on our ordinary shares or ADSs or for other business purposes, appreciation of the U.S. dollar against the Renminbi would have a negative effect on the U.S. dollar amount available to us.

In addition, very limited hedging options are available in China to reduce our exposure to exchange rate fluctuations. To date, we have not entered into any hedging transactions in an effort to reduce our exposure to foreign currency exchange risk. While we may decide to enter into hedging transactions in the future, the availability and effectiveness of these hedges may be limited and we may not be able to adequately hedge our exposure or at all. In addition, our currency exchange losses may be magnified by PRC exchange control regulations that restrict our ability to convert Renminbi into foreign currency.

Concentration of credit risk

Financial instruments that potentially subject us to significant concentration of credit risk consist primarily of cash and cash equivalents and restricted cash. As of August 31, 2024, substantially all of our cash and cash equivalents and term deposits were deposited with financial institutions with high-credit ratings and quality.

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ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES

A. Debt Securities

Not applicable.

B. Warrants and Rights

Not applicable.

C. Other Securities

Not applicable.

D. American Depositary Shares

Fees and Expenses

Our ADS holders are required to pay the following service fees to the depositary bank, the Bank of New York Mellon, and certain taxes and governmental charges (in addition to any applicable fees, expenses, taxes and other governmental charges payable on the deposited securities represented by any of your ADSs):

Persons depositing or withdrawing shares or ADS holders must pay:	For:
US$5.00 (or less) per 100 ADSs (or portion of 100 ADSs)	Issuance of ADSs, including issuances resulting from a distribution of shares or rights or other property Cancellation of ADSs for the purpose of withdrawal, including if the deposit agreement terminates
US$0.05 (or less) per ADS	Any cash distribution to ADS holders
A fee equivalent to the fee that would be payable if securities distributed to you had been shares and the shares had been deposited for issuance of ADSs	Distribution of securities distributed to holders of deposited securities (including rights) that are distributed by the depositary to ADS holders
US$0.05 (or less) per ADS per calendar year	Depositary services
Registration or transfer fees	Transfer and registration of shares on our share register to or from the name of the depositary or its agent when you deposit or withdraw shares
Expenses of the depositary	Cable, telex and facsimile transmissions (when expressly provided in the deposit agreement) converting foreign currency to U.S. dollars
Taxes and other governmental charges the depositary or the custodian has to pay on any ADSs or shares underlying ADSs, such as stock transfer taxes, stamp duty or withholding taxes	As necessary
Any charges incurred by the depositary or its agents for servicing the deposited securities	As necessary

The depositary collects its fees for delivery and surrender of ADSs directly from investors depositing shares or surrendering ADSs for the purpose of withdrawal or from intermediaries acting for them. The depositary collects fees for making distributions to investors by deducting those fees from the amounts distributed or by selling a portion of distributable property to pay the fees. The depositary may collect its annual fee for depositary services by deduction from cash distributions or by directly billing investors or by charging the book-entry system accounts of participants acting for them. The depositary may collect any of its fees by deduction from any cash distribution payable (or by selling a portion of securities or other property distributable) to ADS holders that are obligated to pay those fees. The depositary may generally refuse to provide fee-attracting services until its fees for those services are paid.

From time to time, the depositary may make payments to us to reimburse us for costs and expenses generally arising out of establishment and maintenance of the ADS program, waive fees and expenses for services provided to us by the depositary or share revenue from the fees collected from ADS holders. In performing its duties under the deposit agreement, the depositary may use brokers, dealers, foreign currency dealers or other service providers that are owned by or affiliated with the depositary and that may earn or share fees, spreads or commissions.

The depositary may convert currency itself or through any of its affiliates and, in those cases, acts as principal for its own account and not as agent, advisor, broker or fiduciary on behalf of any other person and earns revenue, including, without limitation, transaction spreads, that it will retain for its own account. The revenue is based on, among other things, the difference between the exchange rate assigned to the currency conversion made under the deposit agreement and the rate that the depositary or its affiliate receives when buying or selling foreign currency for its own account. The depositary makes no representation that the exchange rate used or obtained in any currency conversion under the deposit agreement will be the most favorable rate that could be obtained at the time or that the method by which that rate will be determined will be the most favorable to ADS holders, subject to the depositary’s obligations under the deposit agreement. The methodology used to determine exchange rates used in currency conversions is available upon request.

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PART II

ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES

None.

ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS

Material Modifications to the Rights of Security Holders

See “Item 10. Additional Information” for a description of the rights of securities holders, which remain unchanged.

Use of Proceeds

The following “Use of Proceeds” information relates to the registration statement on Form F-1, as amended (File Number 333-217359) in relation to our initial public offering of 17,250,000 ADSs representing 17,250,000 Class A ordinary shares, at an initial offering price of US$10.50 per ADS, and the F-1 Registration Statement (File Number 333-223193) in relation to our follow-on public offering of 10,000,000 ADSs representing 10,000,000 Class A ordinary shares at US$19.00 per ADS. Our initial public offering closed in June 2017, and our follow-on offering closed in March 2018. Morgan Stanley & Co. International plc and Deutsche Bank Securities Inc. were the representatives of the underwriters for our initial public offering, and Deutsche Bank Securities Inc. and Goldman Sachs (Asian) LLC were the representatives of the underwriters for our follow-on public offering.

The F-1 registration statement for our initial public offering was declared effective by the SEC on May 17, 2017. For the period from the effective date of the F-1 registration statement to August 31, 2017, the total expenses incurred for our company’s account in connection with our initial public offering was approximately US$0.6 million. We received net proceeds of approximately US$174.7 million from our initial public offering. None of the transaction expenses included payments to directors or officers of our company or their associates, persons owning more than 10% or more of our equity securities or our affiliates. None of the net proceeds from the initial public offering were paid, directly or indirectly, to any of our directors or officers or their associates, persons owning 10% or more of our equity securities or our affiliates.

The F-1 registration statement for our follow-on public offering was declared effective by the SEC on February 27, 2018. For the period from the effective date of the F-1 registration statement to August 31, 2018, the total expenses incurred for our company’s account in connection with our follow-on public offering was approximately US$1.0 million. We received net proceeds of approximately US$181.4 million from our follow-on offering. None of the transaction expenses included payments to directors or officers of our company or their associates, persons owning more than 10% or more of our equity securities or our affiliates. None of the net proceeds from the follow-on offering were paid, directly or indirectly, to any of our directors or officers or their associates, persons owning 10% or more of our equity securities or our affiliates.

For the period from May 17, 2017, the date that the F-1 registration statement in connection with our initial public offering was declared effective by the SEC, to the date of this annual report, we have used (1) approximately US$2.0 million as the registered capital of Guangdong Bright Scholar Education Technology Co., Ltd., (2) approximately US$90.3 million for the repurchase of the ADSs, and (3) approximately US$228.7 million for overseas acquisitions, of the net proceeds received from our public offerings.

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ITEM 15. CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

Under the supervision and with the participation of our management, including our chief executive officer and chief financial officer, we carried out an evaluation of the effectiveness of our disclosure controls and procedures, which is defined in Rules 13a-15(e) of the Exchange Act, as of August 31, 2024. Based on that evaluation, our chief executive officer and chief financial officer concluded that our disclosure controls and procedures as of August 31, 2024 were effective.

Management’s Annual Report on Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Rule 13a-15(f), of the Exchange Act. Our internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S. GAAP. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions or because the degree of compliance with policies or procedures may deteriorate.

Under the supervision and with the participation of our management, including our chief executive officer and chief financial officer, we conducted an assessment of the effectiveness of our internal control over financial reporting as of August 31, 2024. The assessment was based on criteria established in the framework Internal Control-Integrated Framework (2013), issued by the Committee of Sponsoring Organizations of the Treadway Commission.

Based on this assessment, management concluded that our internal control over financial reporting was effective as of August 31, 2024.

Attestation Report of the Registered Public Accounting Firm

This annual report on Form 20-F does not include an attestation report of our registered public accounting firm because our company is neither an accelerated filer nor a large accelerated filer, as such terms are defined in Rule 12b-2 under the Exchange Act.  

Changes in Internal Control over Financial Reporting

We have implemented remediation measures to address the significant deficiencies related to (1) the control environment in our overseas schools component and (2) ITGCs in the areas of access security, change management, and data backup in certain financially relevant systems in our business as of and for the fiscal year ended August 31, 2023 by further enhancing the controls designed and implemented over the financial reporting process in the overseas schools component, and design and implement ITGCs and related procedures for certain financially relevant systems in the areas of access security, change management, and data backup within our business, respectively. Our historical significant deficiency related to the control environment in our overseas schools component had been remediated during the year ended August 31, 2024 and the significant deficiency related to ITGCs in the areas of access security, change management, and data backup has been partially remediated during the year ended August 31, 2024.

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In the 2024 fiscal year, we identified one significant deficiency within our internal control over financial reporting. The significant deficiency identified related to ITGCs in the areas of access security, change management and service organization management in certain financially relevant systems within our business. Having identified the significant deficiency, we are in the process of further enhancing the design and implementation of ITGCs and related procedures for certain financially relevant systems in the areas of access security, change management and service organization management within our business, respectively.

However, we cannot assure you that we will not identify material weaknesses or significant deficiencies in the future. In addition, the process of designing and implementing an effective financial reporting system is a continuous effort that requires us to anticipate and react to changes in our business and the economic and regulatory environments and to employ significant resources to maintain a financial reporting system that satisfies our reporting obligations. See “Item 3. Key Information—D. Risk Factors—Risks Related to Our Business—If we fail to implement and maintain an effective system of internal controls, we may be unable to accurately or timely report our results of operations or prevent fraud, and investor confidence and the market price of the ADSs may be materially and adversely affected.” As a result, we may be subject to a number of risks, including increased risks that we have or may not file our financial statements and related reports with the SEC on a timely basis and that there are errors in our reported financial statements and material misstatements in our reports and other documents filed with the SEC.

ITEM 16. [Reserved]

ITEM 16A. AUDIT COMMITTEE FINANCIAL EXPERT

Our board of directors has determined that Mr. Meng Rui, an independent director (under the standards set forth in Section 303A of the Corporate Governance Rules of the New York Stock Exchange and Rule 10A-3 under the Exchange Act) and the chairman of our audit committee, is our audit committee financial expert.

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ITEM 16B. CODE OF ETHICS

Our board of directors has adopted our code of conduct and ethics, a code that applies to members of the board of directors including its chairman and other senior officers, including the chief executive officer, the chief financial officer and the chief operations officer. This code is publicly available on our website at http://ir.brightscholar.com/.

ITEM 16C. PRINCIPAL ACCOUNTANT FEES AND SERVICES

The following table sets forth the aggregate fees by categories specified below in connection with certain professional services rendered by Deloitte Touche Tohmatsu Certified Public Accountants LLP (“Deloitte”), our independent registered public accounting firm, its member firms of Deloitte Touche Tohmatsu Limited, and their respective affiliates (“Deloitte Entities”), for the periods indicated. We did not pay any other fees to the Deloitte Entities during the periods indicated below.

	2023 Fiscal Year		2024 Fiscal Year
	(in thousands)
Audit fees (1)	RMB	11,380	RMB	8,150	US$	1,150

(1) “Audit fees” represent the aggregate fees billed for each of the fiscal years listed for professional services rendered by our principal accountant for the audit of our annual consolidated financial statements, review of quarterly financial information, and audit services that are normally provided by the principal accountant in connection with regulatory filings or engagements for those fiscal years.   The policy of our audit committee is to pre-approve all audit and non-audit services provided by Deloitte Touche Tohmatsu Certified Public Accountants LLP, including audit services as described above, other than those for de minimis services which are approved by the audit committee prior to the completion of the audit.

ITEM 16D. EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES

Not applicable.

ITEM 16E PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS

In April 2018, our board of directors announced a share repurchase program pursuant to which we would repurchase up to US$100 million worth of the ADSs. The 2018 share repurchase program expired on April 30, 2019 and as of such date we had repurchased 6,679,183 of our outstanding ADSs for an aggregate purchase price of approximately US$77 million pursuant to the program.

In September 2019, our board of directors announced a new share repurchase program pursuant to which we would repurchase up to US$30 million worth of the ADSs. The 2019 Share Repurchase Program expired on November 29, 2020 and as of such date we had repurchased 1.2 million of our outstanding ADSs for an aggregate purchase price of approximately US$9.4 million pursuant to the program.

In November 2020, our board of directors announced a new share repurchase program pursuant to which we would repurchase up to US$50 million worth of the ADSs. The 2020 Share Repurchase Program expired on November 19, 2021 and as of such date we had repurchased 0.7 million of our outstanding ADSs for an aggregate purchase price of approximately US$3.1 million pursuant to the program.

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Since 2022 fiscal year and up to November 30, 2024, we had not purchased any ADSs from the open market pursuant to the applicable share repurchase programs.

ITEM 16F. CHANGE IN REGISTRANT’S CERTIFYING ACCOUNTANT

Not applicable.

ITEM 16G. CORPORATE GOVERNANCE

As a Cayman Islands company listed on the New York Stock Exchange, we are subject to New York Stock Exchange corporate governance listing standards. However, the New York Stock Exchange rules permit a foreign private issuer like us to follow the corporate governance practices of its home country. Certain corporate governance practices in the Cayman Islands, which is our home country, may differ significantly from New York Stock Exchange corporate governance listing standards. Shareholders of Cayman Islands exempted companies like us have no general rights under Cayman Islands law to inspect corporate records or to obtain copies of lists of shareholders of these companies. Our directors have discretion under our articles of association to determine whether or not, and under what conditions, our corporate records may be inspected by our shareholders, but are not obliged to make them available to our shareholders. This may make it more difficult for you to obtain the information needed to establish any facts necessary for a shareholder motion or to solicit proxies from other shareholders in connection with a proxy contest.

Certain corporate governance practices in the Cayman Islands, which is our home country, differ significantly from requirements for companies incorporated in other jurisdictions such as the United States. To the extent we choose to follow home country practice with respect to corporate governance matters, our shareholders may be afforded less protection than they otherwise would under rules and regulations applicable to U.S. domestic issuers. See “Item 3. Key Information—D. Risk Factors—Risks Related to Our Ordinary Shares and ADSs—As a company incorporated in the Cayman Islands, we are permitted to adopt certain home country practices in relation to corporate governance matters that differ significantly from New York Stock Exchange corporate governance listing standards; these practices may afford less protection to shareholders than they would enjoy if we complied fully with New York Stock Exchange corporate governance listing standards.”

ITEM 16H. MINE SAFETY DISCLOSURE

Not applicable.

ITEM 16I. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS

Not applicable.

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ITEM 16J. INSIDER TRADING POLICIES

We have adopted an insider trading policy to promote compliance with applicable securities laws and regulations, including those that prohibit insider trading. This policy applies to all officers, directors, employees and consultants of our Group (each, an “Affiliate”) and extends to all activities within and outside an individual’s duties at our group. The insider trading policy establishes guidelines and procedures for the following:

1. No Trading: No Affiliate can trade any securities or enter into a trading plan while possessing material non-public information about us. Affiliates in possession of such information must wait for a 48-hour period after public disclosure and the lapse of one full trading day on Nasdaq before trading. Additionally, affiliates cannot trade during limited trading periods, regardless of the possession of material information. All transactions of securities by officers, directors, and key employees must be pre-approved by our compliance officer.

2. Trading Window: The insider trading policy establishes a trading window for officers, directors, employees, or consultants, during which they can trade our securities or enter into a trading plan. The trading window begins at the close of business on the second trading day following the public disclosure of our financial results for the previous fiscal year or quarter and ends on the last day of each fiscal quarter. Trading during the trading window does not provide a safe harbor, and affiliates must comply with all policies. If in doubt, consult the compliance officer before trading.

3. No Tipping: No Affiliate may directly or indirectly disclose any material information to anyone who trades in our securities.

4. Confidentiality: No Affiliate may communicate any material information to anyone outside our Group under any circumstances unless approved by the compliance officer in advance, or to anyone within our group other than on a need-to-know basis.

5. No Comment: No Affiliate may discuss any internal matters or developments of our Group with anyone outside our group, except as required in the performance of regular corporate duties. Unless expressly authorized to do otherwise, if an affiliate receives any inquiries about our group or its securities from any press, investment analyst, investor or other outsiders, or any requests for comments or interviews, they should decline to comment and direct the inquiry or request to the compliance officer or any other office designated by the chief executive officer.

6. Corrective Action: If any information that may be considered material information is unintentionally disclosed, any affiliate with knowledge of the disclosure should notify the compliance officer immediately. This allows our group to determine if any corrective action, such as public disclosure, is necessary.

We are committed to maintaining the highest standards of ethical conduct and have implemented these insider trading policies and procedures to ensure compliance with applicable securities laws and to protect the interests of our shareholders.

ITEM 16K. CYBERSECURITY

Cybersecurity Risk Management and Strategy

To maintain a consistently high level of service experience, preserve the confidentiality, integrity, and availability of our information systems, safeguard our assets, data, intellectual property and network infrastructure, while meeting regulatory requirements, it is crucial to effectively manage cybersecurity risks. To achieve this, we have implemented a comprehensive cybersecurity risk management framework, which is integrated in our overall enterprise risk management system and processes and is internally managed.

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Our dedicated cybersecurity staff is tasked with assessing, identifying and managing risks related to cybersecurity threats and, under the leadership of our head of cybersecurity, is responsible for:

● risk assessments designed to help identify material cybersecurity risks to our critical systems, information, services, and our broader enterprise IT environment;

● development of risk-based action plans to manage identified vulnerabilities and implementation of new protocols and infrastructure improvements;

● cybersecurity incident investigations;

● monitoring threats to sensitive data and unauthorized access to our systems;

● secure access control measures applied to critical IT systems, equipment and devices, designed to prevent unauthorized users, processes, and devices from assessing IT systems and data;

● developing and executing protocols to ensure that information regarding cybersecurity incidents is promptly shared with our board of directors, as appropriate, to allow for risk and materiality assessments and to consider disclosure and notice requirements; and

● developing and implementing training on cybersecurity, information security and threat awareness.

There were no cybersecurity incidents during the 2024 fiscal year, that resulted in an interruption to our operations, known losses of any critical data or otherwise had a material impact on our strategy, financial condition or results of operations. However, the scope and impact of any future incident cannot be predicted.

Governance

Our board of directors acknowledges the significance of robust cybersecurity management programs and actively participates in overseeing and reviewing our cybersecurity risk profile and exposures.

Our board of directors receives reports on cybersecurity risks, including recent legislative developments and evolving standards on cybersecurity, key issues, priorities and challenges in our cybersecurity management, and relevant data or metrics. Our board of directors also receives prompt and timely information regarding any significant cybersecurity incidents, as well as ongoing updates regarding any such incidents. Furthermore, in the event of any significant updates or adjustments to our cybersecurity related policies, our chief executive officer will present them to our board of directors for their review and approval.

Our chief executive officer leads the overall assessment, identification and management of risks related to cybersecurity threats. Our chief executive officer works collaboratively within us and receives regular briefings on cybersecurity matters, such as report on cybersecurity incidents and responses and remedial measures. Our chief executive officer has many years of relevant experience in risk management, cybersecurity and information technology.

Our chief executive officer and their dedicated staff are responsible for the daily management of our cybersecurity efforts. This includes updates and refinement of cybersecurity policies, execution and management of cybersecurity measures, and the preparation of regular reports on cybersecurity execution. Their primary focus is to consistently update our cybersecurity programs and mitigation strategies, ensuring they align with industry best practices and procedures.

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PART III

ITEM 17. FINANCIAL STATEMENTS

We have elected to provide financial statements pursuant to Item 18.

ITEM 18. FINANCIAL STATEMENTS

Our consolidated financial statements are included at the end of this annual report.

ITEM 19. EXHIBITS

Exhibit No.	Description of Exhibit
1.1	Amended and Restated Articles of Association of the Registrant (incorporated by reference to Exhibit 3.2 of our Registration Statement on Form F-1 (file No. 333-217359) filed with the Securities and Exchange Commission on April 18, 2017)
2.1	Registrant’s specimen American depositary receipt (included in Exhibit 2.3)
2.2	Registrant’s specimen certificate for ordinary shares (incorporated by reference to Exhibit 4.2 of our Registration Statement on Form F-1 (file No. 333-217359) filed with the Securities and Exchange Commission on May 5, 2017)
2.3	Form of deposit agreement by and among the Registrant, the depositary and holders of the American Depositary Receipts (incorporated by reference to Exhibit 4.3 of our Registration Statement on Form F-1 (file No. 333-217359) filed with the Securities and Exchange Commission on May 5, 2017)
2.4	Indenture, dated as of July 31, 2019, among Bright Scholar Education Holdings Limited, its Subsidiary Guarantors and The Bank of New York Mellon, London Branch, as the Trustee (incorporated by reference to Exhibit 2.4 of our Form 20-F (file No. 001-38077) filed with the Securities and Exchange Commission on December 23, 2019)
2.5	Description of Securities (incorporated by reference to Exhibit 2.5 of our Form 20-F (file No. 001-38077) filed with the Securities and Exchange Commission on June 21, 2023)
3.1	English translation of acting-in-concert agreement between Ms. Meirong Yang and Ms. Huiyan Yang dated February 8, 2017 (incorporated by reference to Exhibit 4.4 of our Registration Statement on Form F-1 (file No. 333-217359) filed with the Securities and Exchange Commission on April 18, 2017)
4.1	Form of employment agreement between the Registrant and the executive officers of the Registrant (incorporated by reference to Exhibit 10.1 of our Registration Statement on Form F-1 (file No. 333-217359) filed with the Securities and Exchange Commission on April 18, 2017)
4.2	Form of indemnification agreement by and between the Registrant and its directors and executive officers (incorporated by reference to Exhibit 10.2 of our Registration Statement on Form F-1 (file No. 333-217359) filed with the Securities and Exchange Commission on April 18, 2017)
4.3	English translation of exclusive management service and business cooperation agreement among Zhuhai Bright Scholar, our affiliated entities, and Ms. Meirong Yang and Mr. Wenjie Yang, dated January 25, 2017 (incorporated by reference to Exhibit 10.3 of our Registration Statement on Form F-1 (file No. 333-217359) filed with the Securities and Exchange Commission on April 18, 2017)
4.4	English translation of exclusive call option agreement among Zhuhai Bright Scholar, Ms. Meirong Yang and Mr. Wenjie Yang, and BGY Education Investment dated January 25, 2017 (incorporated by reference to Exhibit 10.4 of our Registration Statement on Form F-1 (file No. 333-217359) filed with the Securities and Exchange Commission on April 18, 2017)
4.5	English translation of power of attorney granted by BGY Education Investment dated January 25, 2017 (incorporated by reference to Exhibit 10.5 of our Registration Statement on Form F-1 (file No. 333-217359) filed with the Securities and Exchange Commission on April 18, 2017)
4.6	English translation of power of attorney granted by Ms. Meirong Yang dated January 25, 2017 (incorporated by reference to Exhibit 10.6 of our Registration Statement on Form F-1 (file No. 333-217359) filed with the Securities and Exchange Commission on April 18, 2017)
4.7	English translation of power of attorney granted by Mr. Wenjie Yang dated January 25, 2017. (incorporated by reference to Exhibit 10.7 of our Registration Statement on Form F-1 (file No. 333-217359) filed with the Securities and Exchange Commission on April 18, 2017)

126

Exhibit No.	Description of Exhibit
4.8	English translation of equity pledge agreement among Zhuhai Bright Scholar, Ms. Meirong Yang and Mr. Wenjie Yang, and BGY Education Investment dated January 25, 2017 (incorporated by reference to Exhibit 10.8 of our Registration Statement on Form F-1 (file No. 333-217359) filed with the Securities and Exchange Commission on April 18, 2017)
4.9	2017 Share Incentive Plan (incorporated by reference to Exhibit 10.9 of our Registration Statement on Form F-1 (file No. 333-217359) filed with the Securities and Exchange Commission on April 18, 2017)
4.10	Business and Asset Sale and Purchase Agreement in relation to the sale and purchase of the Business and Asset of Bournemouth Collegiate School dated October 1, 2018 (incorporated by reference to Exhibit 4.26 of our Form 20-F (file No. 001-38077) filed with the Securities and Exchange Commission on December 14, 2018)
4.11	English Translation of Rights and Obligations Assumption Letter executed by Beijing Huanxue International Travel Limited dated December 12, 2019 (incorporated by reference to Exhibit 4.33 of our Form 20-F (file No. 001-38077) filed with the Securities and Exchange Commission on December 23, 2019)
4.12	English Translation of Rights and Obligations Assumption Letter executed by Guangzhou Huihua Education Consulting Co., Ltd. dated December 12, 2019 (incorporated by reference to Exhibit 4.34 of our Form 20-F (file No. 001-38077) filed with the Securities and Exchange Commission on December 23, 2019)
4.13	Purchase Agreement in relation to the issuance and sales of US$300,000,000 7.45% Senior Notes due 2022 to the Initial Purchaser dated July 24, 2019 (incorporated by reference to Exhibit 4.35 of our Form 20-F (file No. 001-38077) filed with the Securities and Exchange Commission on December 23, 2019)
4.14	Sale and Purchase Agreement relating to CATS Colleges Holdings Limited dated July 5, 2019 (incorporated by reference to Exhibit 4.36 of our Form 20-F (file No. 001-38077) filed with the Securities and Exchange Commission on December 23, 2019)
4.15	English translation of exclusive management service and business cooperation agreement among Zhuhai Bright Scholar, our affiliated entities, Beijing Haidian Bright Scholar Training School and Beijing Elib Technology Co., Ltd., dated November 26, 2019 (incorporated by reference to Exhibit 4.37 of our Form 20-F (file No. 001-38077) filed with the Securities and Exchange Commission on December 23, 2020)
4.16	English Translation of Rights and Obligations Assumption Letter executed by Guangzhou Xingzhu Information Technology Co., Ltd. dated August 31, 2019 (incorporated by reference to Exhibit 4.44 of our Form 20-F (file No. 001-38077) filed with the Securities and Exchange Commission on December 23, 2020)
4.17	English Translation of Rights and Obligations Assumption Letter executed by Guangdong Lebeimeng Education Consulting Co., Ltd. dated November 29, 2019 (incorporated by reference to Exhibit 4.59 of our Form 20-F (file No. 001-38077) filed with the Securities and Exchange Commission on December 23, 2020)
4.18	English Translation of Rights and Obligations Assumption Letter executed by Guangdong Bright Scholar Ivy League Education Science Research Institute Co., Ltd. dated December 7, 2020 (incorporated by reference to Exhibit 4.66 of our Form 20-F (file No. 001-38077) filed with the Securities and Exchange Commission on December 23, 2020)

127

Exhibit No.	Description of Exhibit
4.19	English translation of supplemental agreement to the exclusive management service and business cooperation agreement among Zhuhai Bright Scholar, BGY Education Investment, Foshan Meiliang Education Technology Co., Ltd., Foshan Shangtai Education Technology Co., Ltd., Foshan Renliang Education Technology Co., Ltd., Foshan Yongliang Education Technology Co., Ltd., Foshan Zhiliang Education Technology Co., Ltd., and Beijing Boteng Consulting Co., Ltd., dated August 13, 2021 (incorporated by reference to Exhibit 4.69 of our Form 20-F (file No. 001-38077) filed with the Securities and Exchange Commission on January 18, 2022)
4.20	English translation of equity transfer framework agreement among BGY Education Investment, Baoding Baigou New City Shenghua Country Garden Kindergarten Co., Ltd., Hubei Sannew Education Development Limited, Foshan Meiliang Education Technology Co., Ltd., Foshan Zhiliang Education Technology Co., Ltd., and Beijing Boteng Consulting Co., Ltd., dated August 13, 2021 (incorporated by reference to Exhibit 4.70 of our Form 20-F (file No. 001-38077) filed with the Securities and Exchange Commission on January 18, 2022)
4.21	English translation of supplementary power of attorney granted by Ms. Meirong Yang dated August 13, 2021 (incorporated by reference to Exhibit 4.71 of our Form 20-F (file No. 001-38077) filed with the Securities and Exchange Commission on January 18, 2022)
4.22	English translation of supplementary power of attorney granted by Mr. Wenjie Yang dated August 13, 2021 (incorporated by reference to Exhibit 4.72 of our Form 20-F (file No. 001-38077) filed with the Securities and Exchange Commission on January 18, 2022)
4.23	English translation of power of attorney granted by Foshan Meiliang Education Technology Co., Ltd. dated August 13, 2021 (incorporated by reference to Exhibit 4.73 of our Form 20-F (file No. 001-38077) filed with the Securities and Exchange Commission on January 18, 2022)
4.24	English translation of power of attorney granted by Foshan Zhiliang Education Technology Co., Ltd. dated August 13, 2021 (incorporated by reference to Exhibit 4.74 of our Form 20-F (file No. 001-38077) filed with the Securities and Exchange Commission on January 18, 2022)
4.25	English translation of power of attorney granted by Beijing Boteng Consulting Co., Ltd. dated August 13, 2021 (incorporated by reference to Exhibit 4.75 of our Form 20-F (file No. 001-38077) filed with the Securities and Exchange Commission on January 18, 2022)
4.26	English translation of power of attorney granted by Foshan Shangtai Education Technology Co., Ltd. dated August 13, 2021 (incorporated by reference to Exhibit 4.76 of our Form 20-F (file No. 001-38077) filed with the Securities and Exchange Commission on January 18, 2022)
4.27	English translation of power of attorney granted by Foshan Renliang Education Technology Co., Ltd. dated August 13, 2021 (incorporated by reference to Exhibit 4.77 of our Form 20-F (file No. 001-38077) filed with the Securities and Exchange Commission on January 18, 2022)
4.28	English translation of power of attorney granted by Foshan Yongliang Education Technology Co., Ltd. dated August 13, 2021 (incorporated by reference to Exhibit 4.78 of our Form 20-F (file No. 001-38077) filed with the Securities and Exchange Commission on January 18, 2022)
4.29	English translation of equity pledge agreement among Zhuhai Bright Scholar, Ms. Meirong Yang and Mr. Wenjie Yang, and Foshan Meiliang Education Technology Co., Ltd. dated August 13, 2021 (incorporated by reference to Exhibit 4.79 of our Form 20-F (file No. 001-38077) filed with the Securities and Exchange Commission on January 18, 2022)
4.30	English translation of equity pledge agreement among Zhuhai Bright Scholar, Ms. Meirong Yang and Mr. Wenjie Yang, and Foshan Zhiliang Education Technology Co., Ltd. dated August 13, 2021 (incorporated by reference to Exhibit 4.80 of our Form 20-F (file No. 001-38077) filed with the Securities and Exchange Commission on January 18, 2022)
4.31	English translation of equity pledge agreement among Zhuhai Bright Scholar, Ms. Meirong Yang and Mr. Wenjie Yang, and Beijing Boteng Consulting Co., Ltd. dated August 13, 2021 (incorporated by reference to Exhibit 4.81 of our Form 20-F (file No. 001-38077) filed with the Securities and Exchange Commission on January 18, 2022)
4.32	English translation of equity pledge agreement among Zhuhai Bright Scholar, Ms. Meirong Yang and Mr. Wenjie Yang, and Beijing Foshan Shangtai Education Technology Co., Ltd. dated August 13, 2021 (incorporated by reference to Exhibit 4.82 of our Form 20-F (file No. 001-38077) filed with the Securities and Exchange Commission on January 18, 2022)
4.33	English translation of equity pledge agreement among Zhuhai Bright Scholar, Ms. Meirong Yang and Mr. Wenjie Yang, and Beijing Foshan Renliang Education Technology Co., Ltd. dated August 13, 2021 (incorporated by reference to Exhibit 4.83 of our Form 20-F (file No. 001-38077) filed with the Securities and Exchange Commission on January 18, 2022)
4.34	English translation of equity pledge agreement among Zhuhai Bright Scholar, Ms. Meirong Yang and Mr. Wenjie Yang, and Beijing Foshan Yongliang Education Technology Co., Ltd. dated August 13, 2021 (incorporated by reference to Exhibit 4.84 of our Form 20-F (file No. 001-38077) filed with the Securities and Exchange Commission on January 18, 2022)

128

Exhibit No.	Description of Exhibit
4.35	English translation of exclusive call option agreement among Zhuhai Bright Scholar, Ms. Meirong Yang and Mr. Wenjie Yang, and Foshan Meiliang Education Technology Co., Ltd. dated August 13, 2021 (incorporated by reference to Exhibit 4.85 of our Form 20-F (file No. 001-38077) filed with the Securities and Exchange Commission on January 18, 2022)
4.36	English translation of exclusive call option agreement among Zhuhai Bright Scholar, Ms. Meirong Yang and Mr. Wenjie Yang, and Foshan Zhiliang Education Technology Co., Ltd. dated August 13, 2021 (incorporated by reference to Exhibit 4.86 of our Form 20-F (file No. 001-38077) filed with the Securities and Exchange Commission on January 18, 2022)
4.37	English translation of exclusive call option agreement among Zhuhai Bright Scholar, Ms. Meirong Yang and Mr. Wenjie Yang, and Beijing Boteng Consulting Co., Ltd. dated August 13, 2021 (incorporated by reference to Exhibit 4.87 of our Form 20-F (file No. 001-38077) filed with the Securities and Exchange Commission on January 18, 2022)
4.38	English translation of exclusive call option agreement among Zhuhai Bright Scholar, Ms. Meirong Yang and Mr. Wenjie Yang, and Foshan Shangtai Education Technology Co., Ltd. dated August 13, 2021 (incorporated by reference to Exhibit 4.88 of our Form 20-F (file No. 001-38077) filed with the Securities and Exchange Commission on January 18, 2022)
4.39	English translation of exclusive call option agreement among Zhuhai Bright Scholar, Ms. Meirong Yang and Mr. Wenjie Yang, and Foshan Renliang Education Technology Co., Ltd. dated August 13, 2021 (incorporated by reference to Exhibit 4.89 of our Form 20-F (file No. 001-38077) filed with the Securities and Exchange Commission on January 18, 2022)
4.40	English translation of exclusive call option agreement among Zhuhai Bright Scholar, Ms. Meirong Yang and Mr. Wenjie Yang, and Foshan Yongliang Education Technology Co., Ltd. dated August 13, 2021 (incorporated by reference to Exhibit 4.90 of our Form 20-F (file No. 001-38077) filed with the Securities and Exchange Commission on January 18, 2022)
4.41	English Translation of Rights and Obligations Assumption Letter executed by Tongxiang Wuzhen Leti Camping Operation Management Co., Ltd. dated May 6, 2021 (incorporated by reference to Exhibit 4.105 of our Form 20-F (file No. 001-38077) filed with the Securities and Exchange Commission on January 18, 2022)

129

Exhibit No.	Description of Exhibit
4.42	2024 Share Incentive Plan (incorporated by reference to Exhibit 4.1 to our Current Report on Form 6-K (file No. 001-38077) furnished to the Securities and Exchange Commission on January 19, 2024 and amended on February 22, 2024)
4.43*	English translation of an agreement supplementary to the 2017 contractual arrangements and 2021 supplemental agreements by and among Zhuhai Bright Scholar, Ms. Meirong Yang and Mr. Wenjie Yang, and Foshan Meiliang Education Technology Co., Ltd., Foshan Shangtai Education Technology Co., Ltd., Foshan Renliang Education Technology Co., Ltd., Foshan Yongliang Education Technology Co., Ltd., Foshan Zhiliang Education Technology Co., Ltd. and Beijing Boteng Consulting Co., Ltd. dated June 17, 2024
4.44*	English translation of an agreement supplementary to the 2017 contractual arrangements and 2021 supplemental agreements by and among Zhuhai Bright Scholar, Ms. Meirong Yang and Mr. Wenjie Yang, and Foshan Meiliang Education Technology Co., Ltd. dated August 31, 2024
4.45*	English Translation of Rights and Obligations Assumption Letter executed by Foshan Yixue Culture Co., Ltd. dated September 19, 2024
4.46*	English Translation of Rights and Obligations Assumption Letter executed by Foshan Saiyuan Culture Co., Ltd. dated September 19, 2024
4.47*	English Translation of Rights and Obligations Assumption Letter executed by Guangzhou Yinghe Culture Co., Ltd. and Guangzhou Yinghe Culture Co., Ltd. Beijing Branch dated November 26, 2024
4.48*	English Translation of Rights and Obligations Assumption Letter executed by Guangzhou Feijia Culture Co., Ltd. dated September 19, 2024
8.1*	List of subsidiaries and affiliated entities of the Registrant
11.1	Code of business conduct and ethics (incorporated by reference to Exhibit 99.1 of our Registration Statement on Form F-1 (file No. 333-217359) filed with the Securities and Exchange Commission on April 18, 2017)
11.2	Insider Trading Policy (incorporated by reference to Exhibit 11.2 of our Form 20-F (file No. 001-38077) filed with the Securities and Exchange Commission on June 21, 2023)
12.1*	CEO Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
12.2*	CFO Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
13.1**	CEO Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
13.2**	CFO Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
15.1*	Consent of Tian Yuan Law Firm
15.2*	Consent of Deloitte Touche Tohmatus Certified Public Accountants LLP
97.1	Policy Relating to Recovery of Erroneously Awarded Compensation (incorporated by reference to Exhibit 97.1 of our Form 20-F (file No. 001-38077) filed with the Securities and Exchange Commission on January 2, 2024)
101.INS*	Inline XBRL Instance Document
101.SCH*	Inline XBRL Taxonomy Extension Schema Document.
101.CAL*	Inline XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF*	Inline XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB*	Inline XBRL Taxonomy Extension Label Linkbase Document.
101.PRE*	Inline XBRL Taxonomy Extension Presentation Linkbase Document.sff
104	Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).

* Filed with this annual report on Form 20-F

** Furnished with this annual report on Form 20-F

130

SIGNATURES

The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized the undersigned to sign this annual report on its behalf.

BRIGHT SCHOLAR EDUCATION HOLDINGS LIMITED
By:	/s/ Ruolei Niu
Name:	Ruolei Niu
Title:	Chief Executive Officer

Date: December 13, 2024

131

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

	Page
Report of Independent Registered Public Accounting Firm (PCAOB ID 1113)	F-2
Consolidated Balance Sheets as of August 31, 2023 and 2024	F-4
Consolidated Statements of Operations for the years ended August 31, 2022, 2023 and 2024	F-7
Consolidated Statements of Comprehensive Loss for the years ended August 31, 2022, 2023 and 2024	F-8
Consolidated Statements of Shareholders’ Equity for the years ended August 31, 2022, 2023 and 2024	F-9
Consolidated Statements of Cash Flows for the years ended August 31, 2022, 2023 and 2024	F-11
Notes to Consolidated Financial Statements	F-13

F-1

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Shareholders and the Board of Directors of Bright Scholar Education Holdings Limited

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Bright Scholar Education Holdings Limited and its subsidiaries (the “Company”) as of August 31, 2023 and 2024, the related consolidated statements of operations, comprehensive loss, shareholders’ equity and cash flows for each of the three years in the period ended August 31, 2024, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of August 31, 2023 and 2024, and the results of its operations and its cash flows for each of the three years in the period ended August 31, 2024, in conformity with accounting principles generally accepted in the United States of America.

Convenience Translation

Our audits also comprehended the translation of Renminbi amounts into United States dollar amounts and, in our opinion, such translation has been made in conformity with the basis stated in Note 2(g) to the financial statements. Such United States dollar amounts are presented solely for the convenience of the readers outside the People’s Republic of China.

Basis for Opinion

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

F-2

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Goodwill and indefinite lived intangible assets - Overseas Schools reporting unit - Refer to Notes 2, 6 and 8 to the financial statements

Critical Audit Matter Description

Management conducts an impairment assessment annually or more frequently if events or circumstances indicate that the carrying values of goodwill and indefinite lived intangible assets may be impaired. The Company’s impairment evaluation involves the comparison of the fair values to the carrying values of each reporting unit and the comparison of the fair values to the carrying values of each indefinite lived intangible asset. The fair value of each reporting unit is estimated by management using the discounted cash flow model. The fair values of indefinite lived intangible assets are estimated by management using the relief-from-royalty method. The determination of the fair values of the reporting units and the indefinite lived intangible assets requires management to make significant estimates and assumptions. In particular, the fair value estimate is sensitive to certain assumptions, such as discount rate, terminal growth rate and royalty rate as well as others used to project future cash flows, such as forecasts of future revenues. These assumptions were affected by management’s business plans and expectations about future market and economic conditions, including the impact of the new Value Added Tax (VAT) legislation on private school fees in United Kingdom.

As of August 31, 2024, the carrying value of the goodwill net of impairment allocated to the Overseas Schools segment, which also represents as Overseas Schools reporting unit, was RMB 270.4 million. The Company performed annual impairment test as of August 31, 2024 and determined that the carrying value of Overseas Schools reporting unit exceeded its fair value and, therefore, an impairment loss of RMB 547.3 million on goodwill was recorded for the year ended August 31, 2024. Furthermore, as of August 31, 2024, the carrying value of indefinite lived intangible assets associated with Overseas Schools reporting unit, net of impairment, was RMB 34.9 million. The Company performed annual impairment test as of August 31, 2024 and determined that the carrying value of intangible assets associated with the Overseas Schools reporting unit exceeded their fair value and, therefore, an impairment loss of RMB 258.3 million on indefinite lived intangible assets was recorded for the year ended August 31, 2024.

We identified goodwill and indefinite lived intangible assets impairment assessments for Overseas Schools reporting unit as a critical audit matter because of the significant estimates and assumptions made by management in estimating the fair values. This required a high degree of auditor judgment and an increased extent of effort, including the need to involve our valuation specialists, when performing audit procedures to evaluate the reasonableness of management’s estimates and assumptions relating to discount rate, terminal growth rate, royalty rate, forecasts of future revenue, specifically due to the sensitivity of Overseas Schools’ operations to changes of the market and economic conditions.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to discount rate, terminal growth rate and royalty rate and forecasts of future revenue used by management to estimate the fair values of the Overseas Schools reporting unit and indefinite lived intangible assets included the following, among others:

● We evaluated management’s ability to appropriately forecast future revenue by comparing actual results to management’s historical forecasts.

● We evaluated the reasonableness of management’s forecasts of future revenue by comparing the forecasts to:

– Historical and current performances.

– Future business plans, developed by the management of the Overseas Schools reporting unit.

– Current industry and economic trends.

● With the assistance of our valuation specialists, we evaluated the reasonableness of the (1) valuation methodology, (2) terminal growth rate, (3) discount rate and (4) royalty rate, including testing the source information underlying the determination of the terminal growth rate, discount rate and royalty rate, and the mathematical accuracy of the calculation, and developing an independent estimate of discount rate and comparing it to the discount rate selected by management.

/s/ Deloitte Touche Tohmatsu Certified Public Accountants LLP 

Shenzhen, China

December 13, 2024

We have served as the Company’s auditor since 2016.

F-3

BRIGHT SCHOLAR EDUCATION HOLDINGS LIMITED

CONSOLIDATED BALANCE SHEETS

(Amounts in thousands, except shares and par value data)

		As of August 31,		As of August 31,
	Notes	2023		2024
		RMB		RMB		USD
						Note 2(g)
ASSETS
Current assets
Cash and cash equivalents			410,086		493,377		69,588
Restricted cash			9,521		12,167		1,716
Accounts receivable, net of allowance of RMB 13,223 and RMB 12,517 as of August 31, 2023 and 2024, respectively	12		13,800		18,793		2,651
Amounts due from related parties, net of allowance of RMB 13,339 and RMB 19,012 as of August 31, 2023 and 2024, respectively	16		183,468		14,417		2,033
Other receivables, deposits and other assets, net of allowance of RMB 854 and RMB 549 as of August 31, 2023 and 2024, respectively	4		116,807		123,860		17,470
Inventories			1,183		1,160		164
Current assets of discontinued operations	3		192,534		-		-
Total current assets			927,399		663,774		93,622
Restricted cash – non-current			250		250		35
Property and equipment, net	5		390,006		349,349		49,273
Intangible assets, net	6		310,022		49,598		6,995
Goodwill, net	8		1,110,802		527,297		74,372
Long-term investments, net	7		32,732		24,421		3,444
Prepayments for construction contracts			1,711		328		46
Deferred tax assets, net	14		1,644		1,920		271
Other non-current assets, net of allowance of RMB 177 and RMB 141 as of August 31, 2023 and 2024, respectively			9,424		9,106		1,284
Operating lease right-of-use assets – non-current	10		1,490,009		1,419,406		200,198
Non-current assets of discontinued operations	3		345,510		-		-
Total non-current assets			3,692,111		2,381,675		335,918
TOTAL ASSETS			4,619,510		3,045,449		429,540

F-4

BRIGHT SCHOLAR EDUCATION HOLDINGS LIMITED

CONSOLIDATED BALANCE SHEETS - continued

(Amounts in thousands, except shares and par value data)

		As of August 31,		As of August 31,
	Notes	2023		2024
		RMB		RMB		USD
						Note 2(g)
LIABILITIES AND EQUITY
Current liabilities
Accounts payable (including accounts payable of the consolidated VIEs without recourse to Bright Scholar Education Holdings Limited of RMB 3,638 and RMB 2,461 as of August 31, 2023 and 2024, respectively)			94,481		91,843		12,954
Amounts due to related parties (including amounts due to related parties of the consolidated VIEs without recourse to Bright Scholar Education Holdings Limited of RMB 188,262 and RMB 33,927 as of August 31, 2023 and 2024, respectively)	16		244,259		78,365		11,053
Accrued expenses and other current liabilities (including accrued expenses and other current liabilities of the consolidated VIEs without recourse to Bright Scholar Education Holdings Limited RMB 28,003 and RMB 9,513 as of August 31, 2023 and 2024, respectively)	9		233,053		191,222		26,971
Income tax payable (including income tax payable of the consolidated VIEs without recourse to Bright Scholar Education Holdings Limited of RMB 12,534 and RMB 7,301 as of August 31, 2023 and 2024, respectively)			88,460		78,986		11,140
Contract liabilities – current (including contract liabilities of the consolidated VIEs without recourse to Bright Scholar Education Holdings Limited of RMB 5,640 and RMB 883 as of August 31, 2023 and 2024, respectively)	12		428,617		445,715		62,865
Refund liabilities – current (including refund liabilities of the consolidated VIEs without recourse to Bright Scholar Education Holdings Limited of RMB 164 and RMB 30 as of August 31, 2023 and 2024, respectively)	12		10,129		9,872		1,392
Operating lease liabilities – current (including operating lease liabilities - current of the consolidated VIEs without recourse to Bright Scholar Education Holdings Limited of RMB 1,822 and RMB nil as of August 31, 2023 and 2024, respectively)	10		104,905		106,325		14,996
Current liabilities of discontinued operations (including current liabilities of discontinued operations of the consolidated VIEs without recourse to Bright Scholar Education Holdings Limited of RMB 258,330 and RMB nil as of August 31, 2023 and 2024, respectively)	3		276,499		-		-
Total current liabilities			1,480,403		1,002,328		141,371
Non-current contract liabilities (including non-current portion of contract liabilities of the consolidated VIEs without recourse to Bright Scholar Education Holdings Limited of RMB nil and RMB nil as of August 31, 2023 and 2024, respectively)	12		971		866		122
Deferred tax liabilities, net (including deferred tax liabilities, net of the consolidated VIEs without recourse to Bright Scholar Education Holdings Limited of RMB 74 and RMB nil as of August 31, 2023 and 2024, respectively)	14		34,755		31,174		4,397

F-5

BRIGHT SCHOLAR EDUCATION HOLDINGS LIMITED

CONSOLIDATED BALANCE SHEETS - continued

(Amounts in thousands, except shares and par value data)

		As of August 31,			As of August 31,
	Notes	2023			2024
		RMB			RMB			USD
								Note 2(g)
Operating lease liabilities – non-current (including operating lease liabilities – non-current of the consolidated VIEs without recourse to Bright Scholar Education Holdings Limited of RMB 2,025 and RMB nil as of August 31, 2023 and 2024, respectively)	10		1,461,255			1,404,973			198,163
Non-current liabilities of discontinued operations (including non-current liabilities of discontinued operations of the consolidated VIEs without recourse to Bright Scholar Education Holdings Limited of RMB 70,436 and RMB nil as of August 31, 2023 and 2024, respectively)	3		70,470			-			-
Total non-current liabilities			1,567,451			1,437,013			202,682
TOTAL LIABILITIES			3,047,854			2,439,341			344,053
Commitments and Contingencies	17
EQUITY
Share capital (US$0.00001 par value; 118,669,795 shares issued and outstanding as of August 31, 2023 and 2024, respectively)	11		8			8			1
Additional paid-in capital			1,697,370			1,783,490			251,550
Statutory reserves			20,155			16,535			2,332
Accumulated other comprehensive income			172,230			191,397			26,995
Accumulated deficit			(473,154	)		(1,474,619	)		(207,986	)
Shareholders’ equity			1,416,609			516,811			72,892
Non-controlling interests	18		155,047			89,297			12,595
TOTAL EQUITY			1,571,656			606,108			85,487
TOTAL LIABILITIES AND EQUITY			4,619,510			3,045,449			429,540

The accompanying notes are an integral part of these consolidated financial statements.

F-6

BRIGHT SCHOLAR EDUCATION HOLDINGS LIMITED

CONSOLIDATED STATEMENTS OF OPERATIONS 

FOR THE YEARS ENDED AUGUST 31, 2022, 2023 AND 2024 

(Amounts in thousands, except for share and per share data)

	Notes	2022			2023			2024
		RMB			RMB			RMB			USD
Revenue	12		1,439,291			1,772,127			1,755,206			247,561
Cost of revenue			(1,068,626	)		(1,304,699	)		(1,251,620	)		(176,533	)
Gross profit			370,665			467,428			503,586			71,028
Selling, general and administrative expenses			(458,816	)		(512,882	)		(469,047	)		(66,156	)
Other operating income			4,198			43,783			3,699			522
Impairment loss on property and equipment			(6,586	)		(12,891	)		(6,607	)		(932	)
Impairment loss on operating lease right-of-use assets			(8,861	)		-			-			-
Impairment loss on intangible assets			(113,385	)		-			(258,326	)		(36,435	)
Impairment loss on goodwill			(419,805	)		(147,116	)		(593,748	)		(83,744	)
Operating loss			(632,590	)		(161,678	)		(820,443	)		(115,717	)
Interest expense, net			(126,029	)		(5,452	)		(1,315	)		(185	)
Investment income/ (loss)			134,353			(807	)		(2,516	)		(355	)
Other expenses			(7,421	)		(7,380	)		(4,012	)		(567	)
Loss before income taxes and share of equity in loss of unconsolidated affiliates			(631,687	)		(175,317	)		(828,286	)		(116,824	)
Income tax expense	14		(55,143	)		(183,208	)		(32,908	)		(4,641	)
Share of equity in loss of unconsolidated affiliates			(151	)		(339	)		(7,876	)		(1,111	)
Net loss from continuing operations			(686,981	)		(358,864	)		(869,070	)		(122,576	)
Loss from discontinued operations, net of tax	3		(16,556	)		(27,959	)		(163,791	)		(23,102	)
Net loss			(703,537	)		(386,823	)		(1,032,861	)		(145,678	)
Less: Net income/ (loss) attributable to the non-controlling interests
Continuing operations			(629	)		823			(17,296	)		(2,439	)
Discontinued operations			6,432			7,488			(19,286	)		(2,720	)
Net loss attributable to Bright Scholar Education Holdings Limited shareholders			(709,340	)		(395,134	)		(996,279	)		(140,519	)
Net loss per share attributable to ordinary shareholders — basic and diluted:
Net loss from continuing operations attributable to ordinary shareholders	15		(5.79	)		(3.03	)		(7.18	)		(1.01	)
Net loss from discontinued operations attributable to ordinary shareholders	15		(0.19	)		(0.30	)		(1.22	)		(0.17	)
Net loss attributable to Bright Scholar Education Holdings Limited shareholders	15		(5.98	)		(3.33	)		(8.40	)		(1.18	)
Weighted average shares used in calculating net loss per ordinary share, basic and diluted	15		118,697,495			118,669,795			118,669,795			118,669,795

The accompanying notes are an integral part of these consolidated financial statements.

F-7

BRIGHT SCHOLAR EDUCATION HOLDINGS LIMITED

CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

FOR THE YEARS ENDED AUGUST 31, 2022, 2023 AND 2024

(Amounts in thousands)

	2022			2023			2024
	RMB			RMB			RMB			USD
										Note 2(g)
Net loss		(703,537	)		(386,823	)		(1,032,861	)		(145,678	)
Other comprehensive (loss)/income, net of tax
Foreign currency translation adjustment		(133,840	)		137,775			19,192			2,707
Other comprehensive (loss)/income		(133,840	)		137,775			19,192			2,707
Comprehensive loss		(837,377	)		(249,048	)		(1,013,669	)		(142,971	)
Less: comprehensive income/ (loss) attributable to non-controlling interests
Continuing operations		(546	)		769			(17,271	)		(2,435	)
Discontinued operations		6,432			7,488			(19,286	)		(2,720	)
Comprehensive loss attributable to ordinary shareholders		(843,263	)		(257,305	)		(977,112	)		(137,816	)

The accompanying notes are an integral part of these consolidated financial statements.

F-8

BRIGHT SCHOLAR EDUCATION HOLDINGS LIMITED

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

(Amounts in thousands, except for share data)

	Share capital					Additional paid-in capital			Statutory reserves			Retained earnings (accumulated deficit)			Accumulated other comprehensive income			Total Bright Scholar Education Holdings Limited shareholders’ equity			Non- controlling interests			Non- controlling interests of discontinued operations			Total equity
	Number of shares			RMB		RMB			RMB			RMB			RMB			RMB			RMB			RMB			RMB
Balance as of August 31, 2021		118,957,153			8		1,727,020			2,531			648,944			168,324			2,546,827			150,387			109,662			2,806,876
Net (loss)/income for the year		—			—		—			—			(709,340	)		—			(709,340	)		(629	)		6,432			(703,537	)
Capital injection		—			—		1,000			—			—			—			1,000			4,630			1,530			7,160
Foreign currency translation adjustment		—			—		—			—			—			(133,923	)		(133,923	)		83			—			(133,840	)
Repurchase of ordinary shares (a)		—			—		(9,245	)		—			—			—			(9,245	)		—			—			(9,245	)
Cancellation of Treasury Stock (a)		(287,358	)		*		*			—			—			—			—			—			—			—
Share-based compensation (Note 13)		—			—		(816	)		—			—			—			(816	)		—			—			(816	)
Provision for statutory reserves		—			—		—			12,341			(12,341	)		—			—			—			—			—
Distribution of dividends to non-controlling interest shareholders (b)		—			—		—			—			—			—			—			(6,149	)		(21,324	)		(27,473	)
Acquisition of additional interest in subsidiaries of non-controlling interests		—			—		(24,601	)		—			—			—			(24,601	)		(6,798	)		(12,183	)		(43,582	)
Balance as of August 31, 2022 in RMB		118,669,795			8		1,693,358			14,872			(72,737	)		34,401			1,669,902			141,524			84,117			1,895,543
Net (loss)/income for the year		—			—		—			—			(395,134	)		—			(395,134	)		1,607			6,704			(386,823	)
Capital injection		—			—		—			—			—			—			—			5			760			765
Foreign currency translation adjustment		—			—		—			—			—			137,829			137,829			(54	)		—			137,775
Provision for statutory reserves		—			—		—			5,283			(5,283	)		—			—			—			—			—
Distribution of dividends to non-controlling interest shareholders (b)		—			—		—			—			—			—			—			(33,108	)		(25,196	)		(58,304	)
Acquisition of additional interest in subsidiaries of non-controlling interests		—			—		(7,877	)		—			—			—			(7,877	)		—			(19,886	)		(27,763	)
Disposal of a subsidiary to an entity under common control (c)		—			—		8,282			—			—			—			8,282			2,181			—			10,463
Exemption for future capital injection		—			—		3,607			—			—			—			3,607			—			(3,607	)		—
Balance as of August 31, 2023 in RMB		118,669,795			8		1,697,370			20,155			(473,154	)		172,230			1,416,609			112,155			42,892			1,571,656
Net loss for the year		—			—		—			—			(996,279	)		—			(996,279	)		(17,296	)		(19,286	)		(1,032,861	)
Foreign currency translation adjustment		—			—		—			—			—			19,167			19,167			25			—			19,192
Share-based compensation (Note 13)		—			—		8,101			—			—			—			8,101			—			—			8,101
Provision for statutory reserves		—			—		—			343			(343	)		—			—			—			—			—
Distribution of dividends to non-controlling interest shareholders (b)		—			—		—			—			—			—			—			(4,441	)		(13,518	)		(17,959	)
Disposal of a VIE to a shareholder of the Company (Note 2(b))		—			—		69,213			—			—			—			69,213			—			2,081			71,294
Disposal of subsidiaries (Note 3)		—			—		8,806			(3,963	)		(4,843	)		—			—			(1,146	)		(12,169	)		(13,315	)
Balance as of August 31, 2024 in RMB		118,669,795			8		1,783,490			16,535			(1,474,619	)		191,397			516,811			89,297			—			606,108
Balance as of August 31, 2024 in USD		118,669,795			1		251,550			2,332			(207,986	)		26,995			72,892			12,595			—			85,487

The accompanying notes are an integral part of these consolidated financial statements.

Note*: The amount is less than RMB one thousand.

F-9

BRIGHT SCHOLAR EDUCATION HOLDINGS LIMITED

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY - continued

(Amounts in thousands, except for share data)

Note (a): The repurchase of ordinary shares is accounted for under the cost method whereby the entire cost of the acquired ordinary shares is recorded as treasury stock. During the year ended August 31, 2022, the Group repurchased a total of 258,731 ordinary shares from the market for a cash consideration of RMB 9,245. Total of 287,358 ordinary shares had been cancelled by the Group during the year ended August 31, 2022. As of August 31, 2023 and 2024, the number of treasury stock is nil.

Note (b): The Group has distributed a cash dividend of RMB 27,473, RMB 58,304 and RMB 17,959 to the non-controlling interest shareholders during the years ended August 31, 2022, 2023 and 2024, respectively. The cash dividend has been fully paid as of August 31, 2022, 2023 and 2024, respectively.

Note (c): During the year ended August 31, 2023, the Company disposed of a subsidiary to Wuhan Sannew Education Development Co., Ltd. (“Wuhan Sannew”) with a total consideration of RMB 1,000, which equals to the share capital of the disposed subsidiary. Wuhan Sannew is one of the affected entities, which had been deconsolidated due to the effectiveness of the Implementation Rules on August 31, 2021. The difference of RMB 8,282 between the consideration of RMB 1,000 and the carrying amounts of the net assets transferred of RMB (9,463) including the non-controlling interests of RMB (2,181) is recognized in additional paid-in capital of the Company.

F-10

BRIGHT SCHOLAR EDUCATION HOLDINGS LIMITED

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED AUGUST 31, 2022, 2023 AND 2024

(Amounts in thousands)

	Notes	2022			2023			2024
		RMB			RMB			RMB			USD
											Note 2(g)
Cash flows from operating activities
Net loss for the year			(703,537	)		(386,823	)		(1,032,861	)		(145,678	)
Adjustments to reconcile net cash flows from operating activities:
Depreciation			98,120			69,003			51,774			7,302
Amortization of intangible assets			17,814			14,916			11,312			1,595
Non-cash lease expense			132,392			123,383			127,285			17,953
Impairment loss on property and equipment			6,586			12,891			6,607			932
Impairment loss on operating lease right-of-use assets			8,861			—			—			—
Impairment loss on the long-term investments			—			2,613			7,647			1,079
Impairment loss on intangible assets			113,385			2,052			258,326			36,435
Impairment loss on goodwill			419,805			207,830			765,514			107,971
Gain on lease early termination			(17,022	)		(28,688	)		(5,847	)		(825	)
(Reversal)/ provision of current expected credit losses			(5,835	)		12,054			4,507			636
Finance costs			19,853			344			—			—
Loss/(gain) on disposal of property and equipment			582			(14,571	)		8,477			1,196
Gain on disposal of subsidiaries	3		—			—			(4,725	)		(666	)
Share of equity in loss of unconsolidated affiliates*			39,747			339			225			32
Share-based compensation			(816	)		—			8,101			1,142
Investment (income)/loss			(83,787	)		1,464			439			62
Deferred income taxes			(33,535	)		108,110			5,366			757
Fair value change of contingent consideration payable for Leti acquisition**			—			(11,541	)		—			—
Changes in operating assets and liabilities and other, net:
Accounts receivable			27,279			521			(5,097	)		(719	)
Inventories			710			1,378			1,035			146
Amounts due from related parties			(12,361	)		5,376			11,093			1,565
Other receivables, deposits and other assets			(36,650	)		(2,491	)		(67,505	)		(9,521	)
Accounts payable			36,857			(1,496	)		2,958			417
Amounts due to related parties			86,533			10,289			(17,255	)		(2,434	)
Accrued expenses and other current liabilities			74,936			(25,923	)		110,475			15,582
Contract liabilities			114,800			(13,740	)		18,271			2,577
Refund liabilities			(11,845	)		(2,945	)		(4,630	)		(653	)
Other assets and liabilities			(132,071	)		37,508			(34,198	)		(4,825	)
Operating lease liabilities			(113,628	)		(99,592	)		(100,900	)		(14,231	)
Net cash provided by operating activities			47,173			22,261			126,394			17,827
Cash flows from investing activities
Purchase of short-term investments			(2,337,000	)		—			(40,000	)		(5,642	)
Proceed from redemption of short-term investments upon maturity			1,536,494			—			13,500			1,904
Additions of property and equipment			(89,644	)		(79,375	)		(45,463	)		(6,412	)
Proceeds from sale of property and equipment			2,949			26,445			95,005			13,400
Disposal of subsidiaries, net of cash disposed of RMB nil, RMB 19 and RMB 175,482 in 2022, 2023 and 2024, respectively	3		—			(19	)		(121,046	)		(17,073	)
Purchase of long-term investments	7		(5,000	)		—			—			—
Proceeds from loan receivable			55,432			—			—			—
Net cash used in investing activities			(836,769	)		(52,949	)		(98,004	)		(13,823	)

Note*: This amount included share of equity in loss of unconsolidated affiliates in discontinued operation for the year ended August 31, 2022.

Note**: In the fiscal year 2023, Leti failed to meet the financial performance requirement agreed in the share purchase agreement and is expected not able to meet future financial performance requirement. The fair value of the contingent consideration payable to related parties (non-controlling interest shareholder of Leti) has reduced to RMB nil.

F-11

BRIGHT SCHOLAR EDUCATION HOLDINGS LIMITED

CONSOLIDATED STATEMENTS OF CASH FLOWS - continued

FOR THE YEARS ENDED AUGUST 31, 2022, 2023 AND 2024 - CONTINUED

(Amounts in thousands)

	Note	2022			2023			2024
		RMB			RMB			RMB			USD
											Note 2(g)
Cash flows from financing activities
Payments for purchase of non-controlling interest			(43,582	)		(27,763	)		—			—
Advances from related parties			1,806,663			—			71,946			10,148
Repayments for advances from related parties			—			(41,563	)		(139,446	)		(19,668	)
Proceeds from related party loan			480,000			—			—			—
Repayment for related party loan			(480,000	)		—			—			—
Repurchase of ordinary shares			(9,245	)		—			—			—
Dividend to non-controlling interests			(27,473	)		(58,304	)		(17,959	)		(2,533	)
Proceeds from bank loans			629,008			—			—			—
Repayment for bank loans			(1,221,799	)		(171,929	)		—			—
Repurchase of bonds			(394,756	)		—			—			—
Redemption of bonds			(1,513,460	)		—			—			—
Capital injection from non-controlling interests			7,160			765			—			—
Proceeds from promissory note			877,487			—			—			—
Payment for acquisition of Leti			(2,500	)		—			—			—
Payment for acquisition of Linstitute			(6,120	)		—			—			—
Net cash provided by/ (used in) financing activities			101,383			(298,794	)		(85,459	)		(12,053	)
Net decrease in cash and cash equivalents, and restricted cash			(688,213	)		(329,482	)		(57,069	)		(8,049	)
Cash and cash equivalents and restricted cash at beginning of the year			1,515,163			857,784			567,236			80,005
Effect of exchange rate changes on cash and cash equivalents and restricted cash			30,834			38,934			(4,373	)		(617	)
Cash and cash equivalents and restricted cash at end of the year			857,784			567,236			505,794			71,339
Supplemental disclosure of cash flow information:
Income tax paid			153,821			65,993			38,097			5,373
Non-cash investing and financing activities:
For the years ended of August 31, 2022, 2023 and 2024
Accounts payable balance for acquisition of property and equipment			(5,205	)		(6,812	)		(6,924	)		(977	)
Amounts due to related parties balance for acquisition of property and equipment			(512	)		(497	)		(501	)		(71	)
Other receivables, deposits and other assets balance for disposal of property and equipment			—			25,256			13,286			1,874
Right-of-use assets obtained in exchange for the new operating lease liabilities			86,116			30,165			12,898			1,819
Decrease of right-of-use assets for early termination			55,908			23,380			21,098			2,976
Decrease of amount due to related parties by offsetting with short-term investments	16		884,293			—			—			—
Increase of amount due from related parties from disposal of property and equipment	16		57,998			—			—			—

The accompanying notes are an integral part of these consolidated financial statements.

F-12

BRIGHT SCHOLAR EDUCATION HOLDINGS LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands, except for share and per share data, unless otherwise stated)

1. ORGANIZATION AND PRINCIPAL ACTIVITIES

Bright Scholar Education Holdings Limited (the “Company”) was incorporated under the laws of Cayman Islands on December 16, 2016. The Company, its subsidiaries, schools, its variable interest entities (the “VIE”s) and its VIEs’ subsidiaries (collectively referred to as the “Group”) are principally engaged in the provision of education services, including complementary education services, operation services for domestic schools, and education programs and services including independent schools and colleges in United Kingdom (the “UK”) and the United States (the “US”).

As of August 31, 2024, details of the material Company’s subsidiaries, schools, its VIEs and the VIE’s major subsidiaries of the continuing operations were as follows:

	Place of establishment	Date of establishment	Equity interest attributed to the Group as of August 31, 2024			Principal activities
Major wholly owned subsidiaries:
Impetus Investment Limited (“Impetus”)	Cayman	April 1, 2014		100	%	Investment holding
Zhuhai Bright Scholar	PRC	January 24, 2017		100	%	Management consulting service
Time Education China Holdings Limited	Hong Kong	August 16, 2013		100	%	Investment holding
Bright Scholar (Enlightenment) Investment Holdings Limited	Cayman	December 27, 2017		100	%	Investment holding
Shenzhen Qianhai Xingkeyucai Trading Co., Ltd.	PRC	December 15, 2016		100	%	Complementary education services
Can-achieve (Beijing) Education Consulting Co., Ltd.	PRC	May 14, 2008		70	%	Complementary education services
Guangdong Bright Scholar Education Technology Co., Ltd.	PRC	September 26, 2017		100	%	Complementary education services
Guangdong Zhixing Weilai Logistics Management Co., Ltd.	PRC	October 24, 2018		100	%	Complementary education services
Bright Scholar (UK) Holdings Limited	UK	July 31, 2018		100	%	Investment holding
CATS Colleges Holdings Limited	UK	March 13, 2019		100	%	Investment holding
Cambridge Arts and Science Limited	UK	October 23, 1997		100	%	Overseas education services
The Worthgate School Canterbury	UK	August 29, 2007		100	%	Overseas education services
Guildhouse School London	UK	November 17, 2010		100	%	Overseas education services
CATS Academy Boston Inc.	US	July 5, 2012		100	%	Overseas education services
VIEs of the Company:
Foshan Zhiliang Education Technology Co., Ltd.	PRC	August 13, 2021		100	%	Investment holding
Beijing Boteng Consulting Co., Ltd.	PRC	June 1, 2021		100	%	Investment holding
Foshan Yongliang Education Technology Co., Ltd.	PRC	August 13, 2021		100	%	Investment holding
Major subsidiaries and schools of the VIEs:
Foshan Kunshun Culture Co., Ltd.	PRC	April 27, 2022		100	%	Complementary education services
Foshan ShunQian Culture Co., Ltd.	PRC	May 20, 2022		100	%	Complementary education services
Guangzhou Shunheng Culture Co., Ltd.	PRC	March 17, 2022		100	%	Complementary education services
Jiangmen Shunkun Culture Co., Ltd.	PRC	June 16, 2022		100	%	Complementary education services
Jurong Shuntai Culture Co., Ltd.	PRC	May 31, 2022		100	%	Complementary education services

F-13

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(a) Basis of presentation

The consolidated financial statements the Group have been prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”).

Following a strategic decision to place greater focus on the Group’s core oversea business, a disposal plan was formed in the early of fiscal year 2024 to divest the Group’s non-core businesses. The disposals of six business units (collectively referred to as the “Disposal Group”) were completed during the year ended August 31, 2024. Except for domestic for-profit kindergartens, which belonged to the Company’s Domestic Kindergartens and K-12 Operation Services segment, the other five businesses belonged to the Company’s Complementary Education Service segment. The Company’s sales of the Disposal Group represented a strategic business shift having a major effect on the Group’s operations and financial results. As a result of the strategy to divest the Group’s non-core businesses, the results of operations for the Disposal Group are presented as discontinued operations on the consolidated statements of operations and comprehensive loss, and assets and liabilities are reflected as “Assets and Liabilities of Discontinued Operations” on the consolidated balance sheets for all periods presented. Amounts for all periods discussed below reflect the results of operations, financial condition and cash flows from the Company’s continuing operations, unless otherwise noted. Refer to Note 3 for further discussion on the Group’s discontinued operations.

(b) Principles of consolidation

The consolidated financial statements include the financial statements of the Company, its subsidiaries, schools, its VIEs and the VIEs’ subsidiaries and schools. All inter-company transactions and balances have been eliminated upon consolidation.

Consolidation of VIEs

PRC laws and regulations prohibit foreign ownership of companies and institutions providing compulsory education services at primary and middle school levels and restrict foreign investment in education services at the kindergarten and high school level. In addition, the PRC government regulates the provision of education services through strict licensing requirements.

Accordingly, in 2017, the Company, through its wholly owned subsidiary (the “WFOE”) Zhuhai Hengqin Bright Scholar Management Consulting Co., Ltd. (“Zhuhai Bright Scholar”), have entered into the following contractual arrangements with Guangdong Country Garden Education Investment Management Co., Ltd. (“BGY Education Investment”), BGY Education Investment’s subsidiaries and schools, and BGY Education Investment’s shareholders that enable the Company to (1) have power to direct the activities that most significantly affects the economic performance of the VIE, and (2) receive the economic benefits of the VIE that could be significant to the VIE (collectively referred to as the “2017 contractual arrangements”).

On May 14, 2021, the General Office of the State Council of the People’s Republic of China (the “PRC State Council”) announced the issuance of the Implementation Regulations of the People’s Republic of China on the Law Regarding the Promotion of Private Education (the “Implementation Rules”), which became effective on September 1, 2021.

In response to the Implementation Rules, a set of supplementary agreements to the contractual arrangements were entered into among Company’s WFOE, Zhuhai Bright Scholar, BGY Education Investment, BGY Education Investment’s shareholders and six newly established companies in August 2021 to enable them, as well as their subsidiaries, to entitle to the same power, rights and obligations of the contractual arrangements as BGY Education Investment (collectively referred to as the “2021 supplemental agreements”). The six newly established companies, including Foshan Meiliang Education Technology Co., Ltd., Foshan Zhiliang Education Technology Co., Ltd., Beijing Boteng Education Consulting Co., Ltd., Foshan Shangtai Education Technology Co., Ltd., Foshan Renliang Education Technology Co., Ltd. and Foshan Yongliang Education Technology Co., Ltd. (collectively referred to as the “New VIEs”), are owned by the same equity shareholders as BGY Education Investment. On the same day, the New VIEs obtained the equity interest of the subsidiaries providing complementary education services, operation services for domestic schools and for-profit kindergartens from BGY Education Investment, which were previously held by BGY Education Investment.

F-14

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - continued

(b) Principles of consolidation - continued

Consolidation of VIEs - continued

To streamline the Group corporate structure, on June 21, 2024, two VIE entities, Foshan Shangtai Education Technology Co., Ltd. and Foshan Renliang Education Technology Co., Ltd., completed their deregistration process and were liquidated. Both entities were shell companies with nominal net liabilities at the deregistration date. Related VIE contractual arrangements was unbounded in the deregistration process.

On August 31, 2024, an agreement supplementary to the 2017 contractual arrangements and 2021 supplemental agreements was entered into among Zhuhai Bright Scholar, Ms. Meirong Yang and Mr. Wenjie Yang, and Foshan Meiliang Education Technology Co., Ltd., (“Foshan Meiliang”) to stipulate that Foshan Meiliang and its affiliated entities (including nine for-profit kindergartens) are no longer bound by the 2017 contractual arrangements and 2021 supplemental agreements. As of the completion date on August 31, 2024, the net deficit amount of Foshan Meiliang and its affiliated entities was RMB 71,294. The Company accounted for the difference between the net deficit of Foshan Meiliang and the nominal consideration from the Company’s shareholders as a deemed contribution from the shareholders and recorded it in additional paid-in capital amounting to RMB 69,213 and non-controlling interests amounting to RMB 2,081, respectively.

Accordingly, the Group had consolidated the financial position and operating results of BGY Education Investment, new VIEs and its subsidiaries and schools in the consolidated financial statements of the Company during the year ended August 31, 2021 before the Group lost control over the affected entities and schools by August 31, 2021 as a result of the effectiveness of the Implementation Rules. The Company’s VIE includes (1) BGY Education Investment and the schools and subsidiaries it held, prior to August 31, 2021; and (2) the New VIEs and subsidiaries and schools they hold respectively before and after August 31, 2021, except for Foshan Shangtai Education Technology Co., Ltd., Foshan Renliang Education Technology Co., Ltd. and Foshan Meiliang Education Technology Co., Ltd. since their respective termination from the contract arrangements.

Agreements that provide the Group with effective control over the VIEs include:

Voting Rights Proxy Agreement & Irrevocable Power of Attorney

Under the aforementioned 2021 supplementary agreements, including supplementary voting right proxy agreement and irrevocable power of attorney, each of the shareholders of New VIEs has executed a power of attorney to grant Zhuhai Bright Scholar the power of attorney to act on his or her behalf on all matters pertaining to the New VIEs and to exercise all of his or her rights as a shareholder of the New VIEs, including but not limited to convene, attend and vote at shareholders’ meetings, designate and appoint directors and senior management members. The proxy agreement will remain in effect unless Zhuhai Bright Scholar terminates the agreement by giving a prior written notice or gives its consent to the termination by the New VIEs.

Exclusive Call Option Agreement

Under the aforementioned 2021 supplementary agreements, including the exclusive call option agreement, each of the shareholders of the New VIEs granted Zhuhai Bright Scholar or its designated representative(s) an irrevocable and exclusive option to purchase their equity interests in the New VIEs when and to the extent permitted by PRC law. Zhuhai Bright Scholar or its designated representative(s) has sole discretion as to when to exercise such options, either in part or in full. Without Zhuhai Bright Scholar’s written consent, the shareholders of the New VIEs shall not transfer, donate, pledge, or otherwise dispose any equity interests of the New VIEs in any way. The acquisition price for the shares or assets will be the minimum amount of consideration permitted under the PRC law at the time when the option is exercised. The agreement cannot be terminated by the New VIEs or their shareholders.

F-15

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - continued

(b) Principles of consolidation - continued

Equity Pledge Agreement

Under the aforementioned 2021 supplementary agreements including the equity pledge agreement, each of the shareholders pledged all of their equity interests in the New VIEs to Zhuhai Bright Scholar as collateral to secure their obligations under the equity pledge agreements. If the shareholders of the New VIEs breach their respective contractual obligations, Zhuhai Bright Scholar, as pledgee, will be entitled to certain rights, including the right to dispose the pledged equity interests. Pursuant to the agreement, the shareholders of the New VIEs shall not transfer, assign or otherwise create any new encumbrance on their respective equity interest in the New VIEs without prior written consent of Zhuhai Bright Scholar. The equity pledge right held by Zhuhai Bright Scholar will expire when the shareholders of the New VIEs and Zhuhai Bright Scholar have fully performed their respective obligations under the Consulting Services Agreement and Operating Agreement, or the shareholder is no longer a shareholder of the New VIEs or the satisfaction of all its obligations by the New VIEs under the VIE contractual arrangements.

The agreements that transfer economic benefits of the New VIEs to the Group include:

Exclusive Management Services and Business Cooperation Agreement

Under the aforementioned 2021 supplementary agreements including the exclusive management services and business cooperation agreement, the New VIEs engage Zhuhai Bright Scholar as their exclusive technical and operational consultant and under which Zhuhai Bright Scholar agrees to assist in business development and related services necessary to conduct the New VIEs’ operational activities. The New VIEs shall not seek or accept similar services from other providers without the prior written approval of Zhuhai Bright Scholar. The agreements will be effective as long as the New VIEs exist. Zhuhai Bright Scholar may terminate this agreement at any time by giving a prior written notice to the New VIEs.

Under the above agreements, the shareholders of the New VIEs irrevocably granted Zhuhai Bright Scholar the power to exercise all voting rights to which they were entitled in the respective periods. In addition, Zhuhai Bright Scholar has the option to acquire all of the equity interests in the New VIEs, to the extent permitted by the then-effective PRC laws and regulations, for nominal consideration in the respective periods. Finally, Zhuhai Bright Scholar is entitled to receive service fees for services to be provided to the New VIEs.

The Call Option Agreement and Voting Rights Proxy Agreement provide the Group with effective control over the New VIEs, while the Equity Pledge Agreements secure the obligations of the shareholders of the New VIEs under the relevant agreements. Because the Group, through Zhuhai Bright Scholar, has (i) the power to direct the activities of the New VIEs, that most significantly affect the entity’s economic performance and (ii) the right to receive substantially all of the benefits from the New VIEs, the Group is deemed the primary beneficiary of the New VIEs. Accordingly, the Company consolidates the New VIEs’ financial results of operations, assets and liabilities in the Group’s consolidated financial statements.

The Group believes that the contractual arrangements with the VIEs are in compliance with the PRC law and regulations and are legally enforceable.

F-16

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - continued

(b) Principles of consolidation - continued

Exclusive Management Services and Business Cooperation Agreement - continued

Risks related contractual arrangements

However, there are uncertainties regarding the interpretation and application of existing and future PRC laws and regulations. If the ownership structure of the Company and the contractual arrangements are found to violate any PRC laws or regulations, or if the Company is found to be required but failed to obtain any of the permits or approvals for its private education business, the relevant PRC regulatory authorities would have broad discretion in imposing fines or punishments upon the Company for such violations, including:

● revoking the business and operating licenses of the Group and/or its VIEs;

● discontinuing or restricting any related-party transactions between the Group and its VIEs;

● imposing fines and penalties, or imposing additional requirements for the Group’s operations with which it, or its VIEs may not be able to comply;

● requiring the Group to restructure the ownership and control structure or its current schools;

● restricting or prohibiting the use of the proceeds of the Company’s equity offerings to finance its business and operations in China, particularly the expansion of its business through strategic acquisitions; or

● restricting the use of financing sources by the Group or its affiliated entities or otherwise restricting the Group’s or its VIEs’ ability to conduct business.

The Group’s ability to conduct its business may be negatively affected if the PRC government were to carry out of any of the aforementioned actions. As a result, the Group may not be able to consolidate the New VIEs in its consolidated financial statements as it may lose the ability to exert effective control over the New VIEs and their shareholders, and it may lose the ability to receive economic benefits from the New VIEs.

F-17

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - continued

(b) Principles of consolidation - continued

Exclusive Management Services and Business Cooperation Agreement - continued

Risks related contractual arrangements - continued

The following balances of VIEs as of August 31, 2023 and 2024, were included in the Group’s consolidated balance sheet after the elimination of intercompany balances, respectively.

	As of August 31,
	2023		2024
	RMB		RMB
ASSETS
Current assets
Cash and cash equivalents		13,147		27,017
Restricted cash		-		120
Accounts receivable, net		2,688		2,731
Amounts due from related parties, net		32		-
Other receivables, deposits and other assets, net		7,858		29,507
Inventories		161		355
Total current assets		23,886		59,730
Restricted cash - non-current		250		250
Property and equipment, net		13,550		1,025
Goodwill, net		1,703		1,703
Prepayments for construction contract		950		62
Operating lease right-of-use assets – non-current		3,693		-
Other non-current assets, net		326		378
Total non-current assets		20,472		3,418
TOTAL ASSETS		44,358		63,148
LIABILITIES
Current liabilities
Accounts payable		3,638		2,461
Amounts due to related parties		188,262		33,927
Accrued expenses and other current liabilities		28,003		9,513
Income tax payable		12,534		7,301
Contract liabilities		5,640		883
Refund liabilities		164		30
Operating lease liabilities – current		1,822		-
Total current liabilities		240,063		54,115
Deferred tax liabilities, net		74		-
Operating lease liabilities – non-current		2,025		-
Total non-current liabilities		2,099		-
TOTAL LIABILITIES		242,162		54,115

F-18

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - continued

(b) Principles of consolidation - continued

Exclusive Management Services and Business Cooperation Agreement - continued

Risks related contractual arrangements - continued

The following amounts of VIEs for the years ended August 31, 2022, 2023 and 2024, were included in the Group’s consolidated statements of operations and consolidated statements of cash flows after the elimination of intercompany balances.

	For the year ended August 31,
	2022			2023			2024
	RMB			RMB			RMB
Revenue from continuing operations		136,117			194,646			131,626
Revenue from discontinued operations		191,456			260,830			273,579
Net income from continuing operation after elimination of intercompany transactions		41,898			35,455			70,931
Net income/ (loss) from discontinued operations after elimination of intercompany transactions		3,872			(37,331	)		(171,491	)
Net cash provided by operating activities		39,184			107,531			91,090
Net cash (used in)/ provided by investing activities		(53,738	)		(68,598	)		13,170
Net cash provided by/ (used in) financing activities		26,922			(49,528	)		(90,270	)
Net increase in cash and cash equivalents and restricted cash		12,368			(10,595	)		13,990
Cash and cash equivalents and restricted cash at beginning of year		11,624			23,992			13,397
Cash and cash equivalents and restricted cash at end of year		23,992			13,397			27,387

VIEs contributed an aggregate of 9.5%, 11.0% and 7.5% of the consolidated revenue from continuing operations for the three years ended August 31, 2022, 2023 and 2024, respectively. As of August 31, 2023, the VIEs accounted for an aggregate of 1.1% of the consolidated total assets, and 9.0% and of the consolidated total liabilities from continuing operations. And as of August 31, 2024, the VIEs accounted for an aggregate of 2.1% of the consolidated total assets, and 2.2% and of the consolidated total liabilities.

There are no terms in any arrangements, considering both explicit arrangements and implicit variable interests that require the Company or its subsidiaries to provide financial support to the VIEs. However, if the VIEs were ever to need financial support, the Group may, at its option and subject to statutory limits and restrictions, provide financial support to its VIEs through loans to the shareholders of the VIEs or entrustment loans to the VIEs.

The Group believes that there are no assets held in the VIEs that can be used only to settle obligations of the VIEs, except for registered capital and the PRC statutory reserves, in the respective periods. As the VIEs are incorporated as limited liability companies under the PRC Company Law, creditors of the VIEs do not have recourse to the general credit of the Company for any of the liabilities of the VIEs. Relevant PRC laws and regulations restrict the VIEs from transferring a portion of their net assets, equivalent to the balance of its statutory reserve and its share capital, to the Company in the form of loans and advances or cash dividends. Please refer to Note 21 for disclosure of restricted net assets.

(c) Use of estimates

The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and reported amounts of revenues and expenses during the reporting period. Actual results may differ from these estimates. The Group bases its estimates on historical experience and various other factors believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Significant accounting estimates reflected in the Group’s financial statements include the consolidation of variable interest entities, impairment assessment of indefinite lived intangible assets, goodwill and long-lived assets and assessment of realization of deferred tax assets. Actual results may differ materially from those estimates.

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2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - continued

(d) Fair value

Fair value is considered to be the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required or permitted to be recorded at fair value, the Group considers the principal or most advantageous market in which it would transact and considers assumptions that market participants would use when pricing the asset or liability.

Authoritative literature provides a fair value hierarchy, which prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. The level in the hierarchy within which the fair value measurement in its entirety falls is based upon the lowest level of input that is significant to the fair value measurement as follows:

Level 1 applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities.

Level 2 applies to assets or liabilities for which there are inputs other than quoted prices included within Level 1 that are observable for the asset or liability such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data.

Level 3 applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities.

The carrying values of short-term financial instruments, which consist of cash and cash equivalents, restricted cash, accounts receivable, amounts due from related parties, other receivables, deposits, accounts payable, amounts due to related parties and other current liabilities that are recorded at cost, which approximates their fair value due to the short-term nature of these instruments.

(e) Foreign currency translation

The Group’s reporting currency is Renminbi (“RMB”). The functional currency of the affiliates incorporated outside of mainland China includes the United States dollar (“US dollar” or “US$”), Great Britain Pound (“GBP”), Hong Kong dollar (“HKD” or “HK$”), and Canadian dollar (“CAD”). The functional currency of all the other subsidiaries and the VIEs is RMB.

Monetary assets and liabilities denominated in currencies other than the applicable functional currencies are translated into the functional currencies at the prevailing rates of exchange at the balance sheet date. Nonmonetary assets and liabilities are remeasured into the applicable functional currencies at historical exchange rates. Exchange gains and losses are recognized in the consolidated statement of operation. All assets and liabilities are translated at exchange rates at the balance sheet date and revenue and expenses are translated at the average yearly exchange rates and equity is translated at historical exchange rate. Any translation adjustments are not included in determining net income but are included in foreign exchange adjustment to other comprehensive income.

(f) Foreign currency risk

The RMB is not a freely convertible currency. The State Administration for Foreign Exchange, under the authority of the People’s Bank of China, controls the conversion of RMB into other currencies. The value of the RMB is subject to changes in central government policies, international economic and political developments affecting supply and demand in the China Foreign Exchange Trading System market. The Group’s cash and cash equivalents and restricted cash denominated in RMB amounted to RMB 225,075 and RMB 249,091 as of August 31, 2023 and 2024, respectively.

(g) Convenience translation

The Group’s reporting currency is RMB. However, periodic reports made to shareholders will include current period amounts translated into US dollars using the then current exchange rates, for the convenience of the readers. Translations of balances in the consolidated balance sheets, and the related consolidated statements of operations, comprehensive loss, shareholders’ equity and cash flows from RMB into US dollars as of and for the year ended August 31, 2024 are solely for the convenience of the readers and were calculated at the rate of US$1.00=RMB7.0900, representing the noon buying rate set forth in the H.10 statistical release of the U.S. Federal Reserve Board on August 30, 2024. No representation is made that the RMB amounts could have been, or could be, converted, realized or settled into US$ at that rate on August 31, 2024, or at any other rate.

F-20

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - continued

(h) Cash and cash equivalents

Cash and cash equivalents consist of cash on hand, cash in banks and highly liquid investments which are unrestricted as to withdrawal or use, and which have original maturities of three months or less when purchased.

(i) Restricted cash

The Group’s restricted cash mainly represents (a) deposit restricted as to withdrawal or use under government regulations; and (b) deposit held in a designated bank account for the sole purpose of business operation including the establishment of new subsidiaries.

(j) Long-term investments

Long-term investments include equity securities without readily determinable fair values and equity method investments.

● Equity securities without readily determinable fair values

The Group elects a practicability exception to fair value measurement for the equity securities without readily determinable fair values, under which these investments are measured at cost, less impairment, plus or minus observable price changes of an identical or similar investment of the same issuer with fair value change recorded in the consolidated statements of operations.

The Group reviews its equity securities without readily determinable fair value for impairment at each reporting period. If a qualitative assessment indicates that the investment is impaired, the Group estimates the investment’s fair value in accordance with the principles of ASU 2011- 4: Fair Value Measurement (ASC 820). If the fair value is less than the investment’s carrying value, the Group recognizes an impairment loss equal to the difference between the carrying value and fair value in the consolidated statements of operations.

● Equity method investments

Investee companies over which the Group has the ability to exercise significant influence, but does not have a controlling interest through investment in ordinary shares or in-substance ordinary shares, are accounted for using the equity method. Significant influence is generally considered to exist when the Group has an ownership interest in the voting stock of the investee between 20% and 50%, and other factors, such as representation on the investee’s board of directors, voting rights and the impact of commercial arrangements, are also considered in determining whether the equity method of accounting is appropriate. For certain investment in the limited partnership, the Group’s influence over the partnership operating and financial policies is determined to be more than minor. Accordingly, the Group accounts for the investment as an equity method investment.

Under the equity method, the Group initially records its investment at cost and subsequently recognizes the Group’s proportionate share of each equity investee’s net income or loss after the date of investment into the consolidated statements of operations and accordingly adjusts the carrying amount of the investment.

The Group reviews its equity method investments for impairment whenever an event or circumstance indicates that an other-than-temporary impairment has occurred. The Group considers available quantitative and qualitative evidence in evaluating potential impairment of its equity method investments. An impairment charge is recorded when the carrying amount of the investment exceeds its fair value and this condition is determined to be other-than-temporary.

(k) Allowance for doubtful accounts

Accounts receivable mainly represents amounts due from corporate customers of the Group’s various subsidiaries, and amounts due from students of the Group’s UK schools. The allowance for doubtful accounts is the Group’s best estimates of the amount of probable credit losses in the Group’s existing accounts receivable balance. The Group provides allowance for doubtful accounts based on historical credit loss experience and a review of the current status and reasonable and supportable forecasts of future events and economic conditions. Accounts receivable, other receivables and amounts due from related parties are presented net of allowance for doubtful accounts.

(l) Inventories

Inventories are stated at the lower of cost or net realizable value.

F-21

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - continued

(m) Property and equipment, net

Property and equipment is generally stated at historical cost and depreciated on a straight-line basis over the estimated useful lives of the assets. Depreciation expense is included in either cost of revenue or selling, general and administrative expenses, as appropriate. Property and equipment consist of the following and depreciation is calculated on a straight-line basis over the following estimated useful lives:

Buildings	20 - 50 years
Leasehold improvement	3 - 20 years or the lesser of remaining life of lease
Motor vehicles	4 - 10 years
Electronic equipment	4 - 10 years
Office equipment	3 - 5 years
Furniture and other equipment	3 - 5 years
Others	3 years
Construction in progress	*

Note*: The Group constructs certain of its property. In addition to cost under the construction contracts, external costs, including consulting fee directly related to the construction of such facilities, are capitalized. Depreciation is recorded at the time assets are ready for the intended use.

The Group assesses lands with indefinite life for impairment periodically.

(n) Goodwill, net

Goodwill represents the excess of the purchase consideration over the fair value of the identifiable net assets acquired in a business combination. Goodwill is not amortized but is tested for impairment on an annual basis as of August 31, or more frequently if events or changes in circumstances indicate that it might be impaired. The Group has the option to first assess qualitative factors to determine whether it is necessary to perform quantitative goodwill impairment test. In the qualitative assessment, the Group considers primary factors such as industry and market considerations, overall financial performance of the reporting unit, and other specific information related to the operations. The Group will perform the quantitative impairment test if the Group bypasses the qualitative assessment, or based on the qualitative assessment, if it is more likely than not that the fair value of each reporting unit is less than the carrying amount. For the year ended August 31, 2024, the Group bypassed the qualitative assessment and performed a quantitative assessment of the goodwill for all reporting units.

In the impairment test, the Group compares the fair value of a reporting unit to its carrying amount. An impairment charge is recognized for the amount by which the carrying amount exceeds the reporting unit’s fair value. However, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit.

The Group estimate the fair values of reporting units using discounted cash flow model of the income approach, which requires management to make significant estimates and assumptions, including, but not limited to, discount rate, terminal growth rate and others used to project future cash flows, such as forecasts of future revenues. These assumptions were affected by management’s business plans and expectations about future market and economic conditions.

For the years ended August 31, 2022, 2023 and 2024, the Group recorded RMB 419,805, RMB 147,116 and RMB 593,748 impairment loss on goodwill, respectively (Note 9).

(o) Intangible assets, net

Intangible assets with a definite economic life are carried at cost less accumulated amortization. Intangible assets with definite lives are amortized over their estimated useful lives. The useful life of an intangible asset is the period over which the asset is expected to contribute directly or indirectly to future cash flows. Intangible assets with indefinite lives consist of oversea schools’ brand name and is tested for impairment annually, or whenever events are indicators of impairment occur between annual impairment tests. Management expects to use the brand name indefinitely.

F-22

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - continued

(o) Intangible assets, net - continued

Like goodwill, the Group test indefinite lived intangible assets for impairment by first assessing qualitative factors to determine whether it is necessary to perform a quantitative impairment test. If based on the qualitative assessment, it is more likely than not that the fair value of the indefinite lived intangible asset is less than its carrying amount, a quantitative impairment test is required. The Group test indefinite lived intangible assets for impairment using the relief-from-royalty method of the income approach, which requires management to make significant estimates and assumptions, including, but not limited to, royalty rate, discount rate, terminal growth rate and forecasts of future revenues.

Acquired intangible assets consist of trademarks and brand names, customer relationship, backlog and student base, non-compete agreements and core curriculum are carried at cost, less accumulated amortization and impairment. The amortization periods by major intangible asset classes are as follows:

Trademarks and brand names	10 years-indefinite
Customer relationship, backlog and student base	0.6-7 years
Non-compete agreements	4-8 years

For the years ended August 31, 2022, 2023 and 2024, the Group recorded RMB 113,385, RMB nil and RMB 258,326 impairment loss on indefinite lived intangible assets, respectively.

(p) Leases

The Group determines if an arrangement is a lease or contains a lease at lease inception. Operating leases are required to be recorded in the balance sheets as operating lease right-of-use (ROU) assets and operating lease liabilities, initially measured at the present value of the lease payments. The Group adopts the practical expedient to account for each separate lease component and the non-lease components associated with that lease component as a single lease component. Lastly, the Company also has elected to utilize the short-term lease recognition exemption and, for those leases that qualified, the Group did not recognize operating lease ROU assets or operating lease liabilities.

The Company has leases that have variable payments, including lease payments where lease payment increases are based on the percentage change in the Consumer Price Index (“CPI”). For such leases, payment at the lease commencement date is used to measure the operating lease ROU assets and operating lease liabilities. Lease payments that are based on a change in CPI are treated as variable lease payments and recognized in the period in which the obligation for those payments was incurred. Majority of the leases within Overseas Schools reportable segment have variable payments. As of August 31, 2023 and 2024, the leases within Overseas Schools reportable segment that are subject to terms of variable payments contributed to the operating lease right-of-use assets by RMB 928,284 and RMB 1,359,545 respectively, and to operating lease liabilities by RMB 964,043 and RMB 959,406, respectively.

As the rate implicit in the lease is not readily determinable, the Group estimates its incremental borrowing rate based on the information available at the commencement date in determining the present value of lease payments. The incremental borrowing rate is estimated in a portfolio approach to approximate the interest rate on a collateralized basis with similar terms and payments in a similar economic environment. Lease terms may include options to extend or terminate the lease when it is reasonably certain that the Group will exercise that option. Lease expenses are recorded on a straight-line basis over the lease term.

During the fiscal years ended August 31, 2023, the Group received Coronavirus Disease 2019 (“COVID-19”) related rent concessions. Consistent with updated guidance from the Financial Accounting Standards Board (“FASB”) in April 2020, the Group elected to treat COVID-19-related rental discount as variable rent and applied payable approach to COVID-19 related deferral of rent payment. No rent concession was received by the Group during fiscal years ended August 31, 2024. Rental discount, amounting to RMB 981, was recognized as an offset to rent expense within selling, general and administrative expenses and cost of revenue on the Group’s consolidated statement of operations during the years ended August 31, 2023.

F-23

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - continued

(q) Impairment of long-lived assets with definite life

The Group evaluates the recoverability of long-lived assets with determinable useful lives whenever events or changes in circumstances indicate that an asset’s carrying amount may not be recoverable. The Group measures the carrying amount of long-lived asset against the estimated undiscounted future cash flows expected to result from the use of the assets and their eventual disposition. Impairment exists when the sum of the expected future net cash flows is less than the carrying value of the asset being evaluated. Impairment loss is calculated as the amount by which the carrying value of the asset exceeds its fair value.

Fair value is estimated based on various valuation techniques, including the discounted value of estimated future cash flows. The evaluation of asset impairment requires the Group to make assumptions about future cash flows over the life of the asset being evaluated. These assumptions require judgment and actual results may differ from assumed and estimated amounts.

The Group recorded RMB 8,861, RMB nil and RMB nil impairment loss on operating lease right-of-use assets during the years ended August 31, 2022, 2023 and 2024, respectively (Note 10). In addition, for the years ended August 31, 2022, 2023 and 2024, the Group recorded RMB 6,586, RMB 12,891 and RMB 6,607 impairment loss on property and equipment, respectively (Note 5).

(r) Other non-current assets

Other non-current assets primarily consist of deposits for operating leases.

(s) Revenue recognition

Revenue is recognized when control of promised goods or services is transferred to the Group’s customers in an amount of consideration to which Group expects to be entitled to in exchange for those goods or services. The Group follows the five steps approach for revenue recognition under Topic 606: (i) identify the contract(s) with a customer, (ii) identify the performance obligations in the contract, (iii) determine the transaction price, (iv) allocate the transaction price to the performance obligations in the contract, and (v) recognize revenue when (or as) the Group satisfies a performance obligation. The primary sources of the Group’s revenues are as follows:

Income from educational programs and services

The educational programs and services from continuing operations consist of tuition, boarding and meal service from overseas schools in the UK and the US. After the effectiveness of the Implementation Rule on August 31, 2021, the education services also consist of boarding and meal service provided to the students in the affected private schools. Each contract of educational programs and services is accounted for as a single performance obligation which is satisfied proportionately over the service period. The program and service fee is generally collected in advance prior to the beginning of each semester, or prior to the beginning of the education programs, and is initially recorded as contract liabilities. Refunds are provided to students if they decide within the predetermined period that they no longer want to take the course or enroll in the program. After the predetermined period as agreed in the contract, if a student withdraws from the program, the program fee is no longer available for refund. The Group determines the transaction price to be earned based on the tuition fee and the estimated refund liability. The refund liability is determined based on historical refund ratio on a portfolio basis using the expected value method. Historically, the Group has not had material refunds in this respect.

Complementary training course fees

The Group offers various types of after-school tutoring services and art training services, which primarily consist of after-school group class courses, personalized tutoring courses and art training courses. The tutoring services and art training services are accounted for as a single performance obligation. Tutoring services and art training service fees is recognized proportionately as the tutoring sessions and art training courses are delivered. The course fees are generally collected in advance and are initially recorded as contract liability. Tuition refunds are provided to students if they decide within the trial period that they no longer want to take the course. For certain courses, the Group also offers refunds for any unutilized classes for students who withdraw from the course. The Group determines the transaction price to be earned based on the tutoring services and art training service fees and the estimated refund liability. The refund liability is determined based on historical refund ratio on a portfolio basis using the expected value method.

F-24

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - continued

(s) Revenue recognition - continued

Commission income

The Group earns commission revenue by providing referral services to overseas education universities and institutions. Students’ referral service is accounted for as a single performance obligation. Commission income is recognized at the point in time when the referred students enrolled at the overseas education universities or institutions’ program, with the tuition fees are paid and upon the Group is entitled to the commission income.

Consulting service income

The Group offers study abroad consulting to students who intend to study abroad. Study-abroad consulting services are accounted for as a single performance obligation. The Group charges each student an up-front prepaid fee based on the scope of consulting services requested by the student. Portion of the prepaid services fee are refundable if the student does not successfully gain admission. The Group determines the transaction price to be earned based on the consulting service fees and the estimated refund liability. The refund liability is determined based on historical refund ratio on a portfolio basis using the expected value method. The Group has not experienced significant refunds in the past or in the current year. The Group recognizes revenue over the consulting service period.

Camp service income

The Group offers camp services for students during school vacations. Camp service is accounted for as a single performance obligation. Camp service fees are generally collected upfront and are initially recorded as contract liability. Portion of the prepaid service fees are refundable if the student requests for refund prior to the camp starts. The Group determines the transaction price to be earned based on the camp service fee and the estimated refund liability. The refund liability is determined based on historical refund ratio on a portfolio basis using the expected value method. The Group has not experienced significant refunds in current year. The Group recognizes revenue over the camping period.

Operation service income

The Group offers operation services which mainly consist of marketing and consulting, procurement support, human resources, finance and legal support, and information technology support, to domestic not-for-profit kindergartens. Operation service is accounted for as a single performance obligation. The Group recognizes the operation service income over the service period.

Practical expedients and exemptions

The Group has applied the new revenue standard requirements to a portfolio of contracts (or performance obligations) with similar characteristics for transactions where it is expected that the effects on the financial statements of applying the revenue recognition guidance to the portfolio would not differ materially from applying this guidance to the individual contracts (or performance obligations) within that portfolio. Therefore, the Group elects the portfolio approach in applying the new revenue guidance.

The Group has elected to record the incremental costs of obtaining a contract as an expense when incurred if the amortization period of the asset that the entity otherwise would have recognized is one year or less.

F-25

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - continued

(t) Cost of revenues

Cost of revenues consists of the following:

● staff costs, which primarily consist of salaries and other benefits for the teachers,

● education expenses, which primarily consist of expenses related to educational activities, including teaching material expenses and student activity expenses,

● depreciation and amortization costs of long-lived assets used in the provision of educational activities,

● utilities and maintenance costs for the schools,

● cost of goods sold for ancillary services, which primarily consist of cost of goods sold at the on-campus canteens,

● commission expenses to agents in relation to referral services and overseas school enrollment.

(u) Government Subsidies

The Group recognizes government subsidies as other operating income when they are received because they are not subject to any past or future conditions, there are no performance conditions or conditions of use, and they are not subject to future refunds. Government subsidies received and recognized as other operating income totaled RMB 2,256, RMB 9,049 and RMB 8,235 for the years ended August 31, 2022, 2023 and 2024, respectively. During the year ended August 31, 2023, the government subsidies of RMB 2,578 was recognized from the remuneration compensation plan executed by UK government due to COVID-19.

(v) Income Taxes

Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates in effect for the year in which those temporary differences are expected to be recovered or settled. Deferred tax assets are reduced by a valuation allowance when, based upon the weight of available evidence, it is more likely than not that some portion or all of the deferred tax assets will not be realized.

The determination of Group’s provision for income taxes requires significant judgment, the use of estimates, and the interpretation and application of complex tax laws. Significant judgment is required in assessing the timing and amounts of deductible and taxable items.

The Group record unrecognized tax benefit liabilities for known or anticipated tax issues based on the Group’s analysis of whether, and the extent to which, additional taxes will be due. The Group accrues interest and penalties related to unrecognized tax benefits in other liabilities and recognizes the related expense in income tax expense.

(w) Employee Benefits

Obligations for contributions to defined contribution pension plans are recognized as an employee benefit expense in profit or loss in the period during which services are rendered by employees. Pursuant to the relevant labor rules and regulations in the PRC, the Group participates in defined contribution retirement schemes (the “Schemes”) organized by the relevant local government authorities for its eligible employees whereby the Group is required to make contributions to the Schemes at certain percentages of the deemed salary rate announced annually by the local government authorities.

The Company also makes payments to other defined contribution plans for the benefit of employees employed by subsidiaries outside of the PRC (Note 20).

The Group has no other material obligation for payment of pension benefits associated with those schemes beyond the annual contributions described above.

F-26

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - continued

(x) Share-based compensation

Share-based payment transactions with employees are measured based on the grant date fair value of the equity instrument issued and recognized as compensation expense net of a forfeiture rate on a straight-line basis, over the requisite service period, with a corresponding impact reflected in additional paid-in capital.

For the share option with service condition only, changes in estimated forfeiture rate will be adjusted on a prospective basis. The estimate of forfeiture rate will be adjusted over the requisite service period to the extent that actual forfeiture rate differs, or is expected to differ, from such estimates.

For the share option with both service condition and performance condition, the Group recognizes the compensation cost, net of estimated forfeitures, if it is probable that the performance condition will be achieved at the end of each reporting period.

(y) Comprehensive loss

Comprehensive loss is defined to include all changes in equity from transactions and other events and circumstances from non-owner sources. For the years presented, the Group’s comprehensive loss includes net loss and foreign currency translation adjustments and is presented in the consolidated statements of comprehensive loss.

(z) Segment

The Group uses management approach to determine operating segment. The management approach considers the internal organization and reporting used by the Group’s chief operating decision maker (“CODM”) for making decisions, allocation of resource and assessing performance. The CODM was identified as the management committee who reviews the financial information of its operating and reportable segments when making decisions about allocation of resources and assessing performance. The Group operates in three reportable segments including Overseas Schools, Complementary Education Services, and K-12 Operation Services.

(aa) Concentration of credit risk

Financial instruments that potentially subject the Company to significant concentration of credit risk consist primarily of cash and cash equivalents and restricted cash. As of August 31, 2024, substantially all of the Group’s cash and cash equivalents and restricted cash were deposited with financial institutions with high-credit ratings and quality.

(ab) Earnings per Share

Basic earnings per share are computed by dividing earning attributable to holders of ordinary shares by the weighted average number of ordinary shares outstanding during the period. Diluted earnings per share reflects the potential dilution that could occur if securities or other contracts to issue ordinary shares were exercised into ordinary shares. The Group had share options which could potentially dilute basic earnings per ordinary share in the future. To calculate the number of shares for diluted earnings per ordinary shares, the effect of the share options is computed using the treasury stock method.

(ac) Recent accounting pronouncements adopted

In October 2021, the FASB issued ASU 2021-08, Business Combinations (Topic 805), Accounting for Contract Assets and Contract Liabilities from Contracts with Customers, which the amendments in this update require that an entity (acquirer) recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with Topic 606. The amendments in this update address how to determine whether a contract liability is recognized by the acquirer in a business combination. The ASU is effective for the fiscal year beginning after December 15, 2022, and interim periods within those fiscal years. Early adoption is permitted, including early adoption in an interim period, for periods for which financial statements have not yet been issued. The Group adopted this new standard beginning September 1, 2023 and concluded the adoption does not have any material impact on its consolidated financial statements.

F-27

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - continued

(ad) Recent accounting pronouncements issued not yet adopted

In November 2023, the FASB issued ASU No. 2023-07, “Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures” (“ASU 2023-07”). ASU 2023-07 intends to improve reportable segment disclosure requirements, enhance interim disclosure requirements and provide new segment disclosure requirements for entities with a single reportable segment. ASU 2023-07 is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. ASU 2023-07 is to be adopted retrospectively to all prior periods presented. The Group is currently evaluating the impact from the adoption of this ASU on its consolidated financial statements.

In December 2023, the FASB issued ASU 2023-09 “Improvements to Income Tax Disclosures” (“ASU 2023-09”). ASU 2023-09 intends to improve the transparency of income tax disclosures. ASU 2023-09 is effective for fiscal years beginning after December 15, 2024 and is to be adopted on a prospective basis with the option to apply retrospectively. The Group is currently evaluating the impact from the adoption of this ASU on its consolidated financial statements.

In November 2024, the FASB issued ASU 2024-03 “Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40). The amendments in this update intend to improve the disclosures about a public business entity’s expenses and address requests from investors for more detailed information about the types of expenses (including purchases of inventory, employee compensation, depreciation, amortization, and depletion) in commonly presented expense captions (such as cost of sales, selling, general and administrative expenses, and research and development). ASU 2024-03 is effective for fiscal years beginning after December 15, 2026, and interim periods beginning after December 15, 2027. The Group is currently evaluating the impact from the adoption of this ASU on its consolidated financial statements.

3. DISCONTINUED OPERATIONS

A disposal is categorized as a discontinued operation if the disposal group is a component of an entity or group of components that meets the held for sale criteria, is disposed of by sale or other than by sale and represents a strategic shift that has or will have a major effect on an entity’s operations and financial results. The results of disposals that qualify as a discontinued operation are presented as such for all reporting periods presented. Results of discontinued operations include all revenues and expenses directly derived from such disposal group; general corporate overhead is not allocated to a discontinued operation. For disposals other than by sale, results of operations of a business would not be recorded as a discontinued operation until the period in which the business is actually disposed of other than by sale.

As refer to Note 2(a), the Group evaluated and concluded that the Disposal Group should be accounted as discontinued operations during the year ended August 31, 2024. During the year ended August 31, 2024, following the disposal plan formed in the early of fiscal year 2024, Group completed six disposals for an aggregate consideration RMB 42,771 and recorded a gain on the disposal of subsidiaries of RMB 4,725 and an equity contribution on the disposal of a VIE and its kindergartens of RMB 69,213. The Disposal Group includes 100% equity interest in Beijing Huanxue Tianxia International Travel Limited and its affiliates (“Huanxue Tianxia”), 60% equity interest of Jiangxi Leti Camp Education Technology Co., Ltd. and its subsidiaries (“Leti”), 60% equity interest in Shanghai Huodai Business Information Consulting Co., Ltd. and its affiliates (“Linstitute”), 90% equity interest in Chengdu Yinzhe Education and Technology Co., Ltd., its subsidiaries and its affiliates (“Chengdu Yinzhe”), 100% equity interest in Guangzhou Elan Culture Consulting Service Co., Ltd. and its affiliates (“Elan”) and the VIE entity Foshan Meiliang and its for-profit kindergartens (Note 2(b)).

Reconciliation of the carrying amounts of the major classes of assets and liabilities from the discontinued operations in the consolidated balance sheets as of August 31, 2023 is as follow.

F-28

3. DISCONTINUED OPERATIONS - continue

	As of  August 31,
	2023
	RMB
ASSETS
Current assets
Cash and cash equivalents		127,239
Restricted cash		18,740
Accounts receivable, net of allowance RMB 109		5,409
Amounts due from related parties, net of allowance of RMB 60		4,977
Other receivables, deposits and other assets, net of allowance of RMB 103		31,872
Inventories		4,297
Total current assets		192,534
Restricted cash – non-current		1,400
Property and equipment, net*		24,219
Intangible assets, net**		33,055
Goodwill, net		218,070
Long-term investments, net		3,338
Deferred tax assets, net		166
Operating lease right-of-use assets – non-current		59,438
Other non-current assets, net of allowance of RMB 109		5,824
Total non-current assets		345,510
TOTAL ASSETS		538,044
LIABILITIES
Current liabilities
Accounts payable		10,712
Amounts due to related parties		67,192
Accrued expenses and other current liabilities		46,637
Income tax payable		10,907
Contract liabilities		113,066
Refund liabilities		7,443
Operating lease liabilities – current		20,542
Total current liabilities		276,499
Non-current portion of contract liabilities		1,145
Deferred tax liabilities, net		7,338
Operating lease liabilities – non-current		61,987
Total non-current liabilities		70,470
TOTAL LIABILITIES		346,969

Note*: For the years ended August 31, 2022, 2023 and 2024, depreciation expenses were RMB 2,679, RMB 5,405 and RMB 2,978, respectively.

Note**: Intangible assets consist of trademarks and brand names, core curriculum and non-compete agreements, with amortaizion periods of 10 years, 10 years and 6-8 years, respectively. For the years ended August 31, 2022, 2023 and 2024, amortization expenses for the intangible assets were RMB 12,622, RMB 10,575 and RMB 7,128, respectively.

F-29

3. DISCONTINUED OPERATIONS - continue

Reconciliation of the major classes of losses from discontinued operations in the consolidated statements of operations and comprehensive loss for the years ended August 31, 2022, 2023 and 2024 is as follow:

	For the year ended August 31,
	2022			2023			2024
	RMB			RMB			RMB
Revenue*		274,674			351,624			276,454
Cost of revenue		(168,680	)		(221,720	)		(178,185	)
Gross profit		105,994			129,904			98,269
Selling, general and administrative expenses		(81,077	)		(104,302	)		(92,809	)
Other operating income		1,141			12,260			1,054
Impairment loss on goodwill**		-			(60,714	)		(171,766	)
Impairment loss on intangible assets***		-			(2,052	)		-
Operating income/(loss)		26,058			(24,904	)		(165,252	)
Interest expense, net		(1,811	)		(1,915	)		(796	)
Investment income		956			867			7,936
Other income/(expenses)		1,613			703			(1,597	)
Income/(loss) before income taxes and share of equity in loss of unconsolidated affiliate		26,816			(25,249	)		(159,709	)
Income tax expense		(3,776	)		(2,710	)		(4,082	)
Share of equity in loss of unconsolidated affiliate		(39,596	)		-			-
Net loss from discontinued operations		(16,556	)		(27,959	)		(163,791	)
Summarized cash flow information for discontinued operations are as follows:
Net cash provided by operating activities		51,529			51,315			103,235
Net cash (used in)/ provided by investing activities****		(48,607	)		9,892			45,088
Net cash used in financing activities*****		(22,152	)		(49,303	)		(120,221	)

The following table summarizes significant non-cash operating items and capital expenditures of discontinued operations included in the consolidated statements of cash flows for the periods presented.

Significant non-cash operating items
Depreciation and amortization	15,301		15,980		10,106
Impairment loss of goodwill	-		60,714		171,766
Impairment loss of intangible assets	-		2,052		-
Share of equity in loss of unconsolidated affiliate	39,596		-		-
Gain on disposal of property and equipment	(202	)	(33	)	(220	)
Significant investing activities:
Additions of property and equipment	(6,383	)	(7,274	)	(5,049	)
Proceeds from sale of property and equipment	834		322		525

Note*: The revenue from discontinued operations primarily consists of tuition income from complementary training courses and consulting service income.

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3. DISCONTINUED OPERATIONS - continue

Complementary training course fees

The Group offered various types of after-school tutoring services, which primarily consist of after-school group class tutoring courses and personalized tutoring courses. The tutoring services were accounted for as a single performance obligation. Tutoring service fee was recognized proportionately as the tutoring sessions are delivered. The course fees were generally collected in advance and are initially recorded as contract liability. Tuition refunds were provided to students if they decide within the trial period that they no longer want to take the course. For certain courses, the Group also offered refunds for any unutilized classes for students who withdraw from the course. The Group determined the transaction price to be earned based on the tutoring services and the estimated refund liability. The refund liability was determined based on historical refund ratio on a portfolio basis using the expected value method.

Consulting service income

The Group offered career consulting services to candidates who intend to successfully obtain target job offer. Career consulting services were accounted for as a single performance obligation. The Group charged each candidate an up-front prepaid fee based on the scope of consulting services requested by the candidate. Portion of the prepaid services fee were refundable if the candidate does not successfully obtain target job offer. The Group determined the transaction price to be earned based on the consulting service fees and the estimated refund liability. The refund liability was determined based on historical refund ratio on a portfolio basis using the expected value method. The Group has not experienced significant refunds in the past or in the current year. The Group recognized revenue over the consulting service period.

Note**: For the year ended August 31, 2023, the Group performed impairment test of its goodwill. The Group has determined that based on the underperformance, the market conditions and other factors, it was more likely than not that there were indications of impairment for Chengdu Yinzhe and Leti reporting units. The Group utilized the discounted cash flow model to estimate the fair value of the reporting units and concluded the carrying amount of Chengdu Yinzhe and Leti reporting units exceeded their respective fair value. Accordingly, the Group recorded RMB 39,840 and RMB 20,874 as impairment loss on goodwill of Chengdu Yinzhe and Leti reporting units on the consolidated statement of operations for the year ended August 31, 2023, respectively. The key assumptions used in the annual goodwill impairment assessment for these reporting units were a discount rate of 18.0% (Chengdu Yinzhe); 25.0% (Leti); a terminal growth rate of 2.0% (Chengdu Yinzhe); 2.0% (Leti); and forecasts future revenues.

During the year ended August 31, 2024, when the disposal business qualifies for held-for-sale classification, the Group performed impairment test of its goodwill. Based on the agreed consideration, it was more likely than not that there were indications of impairment for Linsititue, Chengdu Yinzhe and Elan reporting units. The Group utilized the implied consideration of 100% equity interest of these reporting units to estimate the fair value of the reporting units and concluded the carrying amount of Linsititue, Chengdu Yinzhe and Elan reporting units exceeded their respective fair value. Accordingly, the Group recorded RMB 31,382, RMB 101,640, and RMB38,744 as impairment loss on goodwill of Linsititue, Chengdu Yinzhe and Elan reporting units.

Note***: For the year ended August 31, 2023, the Group recorded RMB 2,052 impairment loss on definite lived intangible assets associated with Leti reporting unit.

Note****: There were amount of RMB 40,065 cash invested into and RMB 13,683 cash received from continuing operations during the years ended August 31, 2022 and 2023, respectively. The amount of RMB 76,491 cash was received from continuing operations for the year ended August 31, 2024.

Note*****: There were amount of RMB 39,990 and RMB 17,275 cash received from continuing operations by the discontinued operations during the years ended August 31, 2022 and 2023, respectively. The amount of RMB 56,792 was repaid to continuing operations for the years ended August 2024.

F-31

3. DISCONTINUED OPERATIONS - continue

The following table summarizes the changes in non-controlling interests of discontinued operations from August 31, 2021 through August 31, 2024.

	Chengdu Yinzhe			Linstitute			Others			Total
	RMB			RMB			RMB			RMB
Balance at August 31, 2021		59,532			34,989			15,141			109,662
Capital injection from non-controlling interest shareholders		—			—			1,530			1,530
Income/(loss) attributable to non-controlling interests		2,694			7,099			(3,361	)		6,432
Acquisition of additional interest in a subsidiary of non-controlling interests*		(12,183	)		—			—			(12,183	)
Distribution of dividends to non-controlling interest shareholders		(12,522	)		(8,802	)		—			(21,324	)
Balance at August 31, 2022		37,521			33,286			13,310			84,117
Capital injection from non-controlling interest shareholders		—			—			760			760
Income/(loss) attributable to non-controlling interests		2,213			10,104			(5,613	)		6,704
Acquisition of additional interest in a subsidiary of non-controlling interests*		(12,895	)		(6,991	)		—			(19,886	)
Distribution of dividends to non-controlling interest shareholders		(9,721	)		(15,475	)		—			(25,196	)
Exemption for future capital injection		—			—			(3,607	)		(3,607	)
Balance at August 31, 2023		17,118			20,924			4,850			42,892
Loss attributable to non-controlling interests		(6,131	)		(3,568	)		(9,587	)		(19,286	)
Disposal of a VIE to a shareholder of the Company		—			—			2,081			2,081
Disposal of subsidiaries		(4,159	)		(10,665	)		2,655			(12,169	)
Distribution of dividends to non-controlling interest shareholders		(6,828	)		(6,691	)		1			(13,518	)
Balance at August 31, 2024		—			—			—			—

Note*:

During the year ended August 31, 2022, the Company acquired additional 5% of equity interests in Chengdu Yinzhe from a non-controlling interest shareholder with total cash consideration of RMB 12,708. The net carrying amount of the acquired non-controlling interests was RMB 12,183 and the difference of RMB 525 was charged to additional paid in capital of the Company accordingly. During the year ended August 31, 2023, the Company further acquired additional 5% of equity interest in Chengdu Yinzhe from a non-controlling interest shareholder with total cash consideration of RMB 12,741. The net carrying amount of the acquired non-controlling interests was RMB 12,895 and the difference of RMB (154) was charged to additional paid in capital of the Company accordingly. As of August 31, 2023, the equity interest of the Company in Chengdu Yinzhe is 90%. During the year ended August 31, 2024, the Company disposed of its 90% of equity interest in Chengdu Yinzhe.

During the year ended August 31, 2023, the Company acquired additional 9% of equity interest in Linstitute from a non-controlling interest shareholder with total cash consideration of RMB 15,022. The net carrying amount of the acquired non-controlling interests was RMB 6,991 and the difference of RMB 8,031 was charged to additional paid in capital of the Company accordingly. As of August 31, 2023, the equity interest of the Company in Linstitute is 60%. During the year ended August 31, 2024, the Company disposed of its 60% of equity interest in Linstitute.

4. OTHER RECEIVABLES, DEPOSITS AND OTHER ASSETS

Other receivables, deposits and other assets consisted of the following:

	As of August 31,
	2023			2024
	RMB			RMB
Other receivables from third parties		2,553			4,986
Consideration receivables		-			45,870
Advances to employees		809			711
Deposits		15,311			14,660
Prepaid tax and deductible value-added tax-in		2,390			666
Rental prepayment (a)		15,436			5,404
Prepayment for suppliers		47,366			39,344
Receivables from disposal of property and equipment		25,256			6,154
Others		8,540			6,614
		117,661			124,409
Less: allowance for other receivables		(854	)		(549	)
		116,807			123,860

(a) Rental prepayment represents the prepayment of rent related to leases less than 12 months.

F-32

5. PROPERTY AND EQUIPMENT, NET

Property and equipment, net, consisted of the following:

	As of August 31,
	2023			2024
	RMB			RMB
Buildings		323,307			298,164
Leasehold improvement		289,527			302,994
Motor vehicles		353			348
Electronic equipment		51,818			55,203
Office equipment		129,533			134,902
Furniture and other equipment		10,474			13,597
Others		40,475			43,400
Less: accumulated depreciation		(443,423	)		(483,941	)
Less: accumulated impairment		(19,477	)		(26,084	)
Construction in progress		7,419			10,766
Property and equipment, net		390,006			349,349

For the years ended August 31, 2022, 2023 and 2024, depreciation expenses were RMB 95,441, RMB 63,598 and RMB 48,796 respectively.

During the year ended August 31, 2022, the Group recorded impairment loss of RMB 6,586 related to the property and equipment within the Overseas Schools reportable segment, due to closure of certain schools. During the years ended August 31, 2023 and 2024, the Group recorded RMB 12,891 and RMB 6,607 impairment loss on the property and equipment of Tongxiang Wuzhen Leti Camping Operation Management Co., Ltd., by which the carrying amount exceeded the expected future cash flows of the related leasehold improvements, respectively.

6. INTANGIBLE ASSETS, NET

Intangible assets, net, consisted of the following:

	As of August 31, 2023											As of August 31, 2024
	Cost			Accumulated amortization			Accumulated Impairment			Net amount		Cost			Accumulated amortization			Accumulated Impairment			Net amount
	RMB			RMB			RMB			RMB		RMB			RMB			RMB			RMB
Indefinite lived intangible assets
Brand names		402,928	**		-			(113,385	)		289,543		406,602	**		-			(371,711	)		34,891
Definite lived intangible assets
Brand names		17,100			(4,061	)		-			13,039		17,100			(4,916	)		-			12,184
Non-compete agreements		22,001			(17,063	)		-			4,938		22,001			(21,167	)		-			834
Student bases		21,857			(19,355	)		-			2,502		21,857			(20,168	)		-			1,689
Others*		2,893			(2,893	)		-			-		2,893			(2,893	)		-			-
		466,779			(43,372	)		(113,385	)		310,022		470,453			(49,144	)		(371,711	)		49,598

Note*: Others include backlog and license.

Note**: The increase in cost of brand names in 2023 and 2024 are resulted from the foreign exchange realignment.

Amortization expenses for the intangible assets for the years ended August 31, 2022, 2023 and 2024 were RMB 5,192, RMB 4,341 and RMB 4,184 respectively. As of August 31, 2024, the estimated amortization expenses related to intangible assets for each of the next five years is expected to be RMB 2,534, RMB 1,700, RMB 855, RMB 855 and RMB 855, respectively, and RMB 7,908 thereafter. 

F-33

6. INTANGIBLE ASSETS, NET - continued

Based on the result of the Group’s annual impairment assessment on indefinite lived intangible assets performed as of August 31, 2023, the fair value of indefinite lived intangible assets brand names associated with the Overseas Schools reporting unit exceeded their carrying values, therefore, no impairment loss was recorded. In the Group’s 2023 annual indefinite lived intangible assets impairment assessment for the overseas schools brand names, the key assumptions used are a royalty rate of 3.5% (2022: 3.5%), a discount rate of 15.5% (2022: 15.5%), a terminal growth rate of 2.0% (2022: 2.3%) and forecast future revenue.

Based on the result of the Group’s annual impairment assessment on indefinite lived intangible assets performed as of August 31, 2024, it is determined that the carrying amounts of indefinite lived intangible assets brand names associated with the Overseas Schools reporting unit exceeded their fair values and, therefore, an impairment loss was recorded. The Group has determined that based on the underperformance of the Overseas Schools reporting unit, market conditions and other factors, it was more likely than not that there were indications of impairment. In the Group’s 2024 annual indefinite lived intangible assets impairment assessment for the overseas schools brand names, the key assumptions used are a royalty rate of 0.5% (2023: 3.5%), a discount rate of 16.0% (2023: 15.5%), a terminal growth rate of 1.5% (2023: 2.0%) and forecast future revenue. For the year ended August 31, 2024, the Group recorded RMB 258,326 of impairment loss on indefinite lived intangible assets.

7. LONG-TERM INVESTMENTS, NET

Long-term investments, net, consisted of the following:

	As of August 31,
	2023		2024
	RMB		RMB
Equity method investments:
Startcamp Education Technology Limited (“Startcamp”) (a)		7,872		-
BOTO Academic English Co., Ltd. (“BOTO”) (b)		-		-
Other investment (c)		439		-
Equity securities without readily determinable fair value (d)		24,421		24,421
Total		32,732		24,421

(a) The Group acquired 25% equity interest in Startcamp for total cash consideration of RMB 10,000 in the year ended August 31, 2019. The Group accounts for the investment under the equity method because the Group has the ability to exercise significant influence but does not have control over the investee. Loss of RMB 153, RMB 339 and RMB 7,872 were recorded for the years ended August 31, 2022, 2023 and 2024, respectively.

(b) The Group holds 30% equity interest in BOTO through acquisition of Can-achieve Education Consultants Co., Ltd. and its subsidiaries (“Can-achieve Group”) in fiscal year 2018. The Group accounts for the investment under the equity method because the Group has the ability to exercise significant influence but does not have control over the investee. Loss of RMB 4 and RMB nil were recorded for the years ended August 31, 2021 and 2022, respectively. During the year ended August 31, 2023, BOTO was shut down, and the Group recorded RMB 1,464 of investment loss.

(c) The other investment consists of 46% equity interest in Beijing Cloud Apply Co., Ltd.. The Group accounts for the investment under the equity method because the Group has the ability to exercise significant influence but does not have control over the investee. During the year ended August 31, 2024, Beijing Cloud Apply Co., Ltd. was shut down, and the Group recorded RMB 439 of investment loss.

(d) The Group accounted for these equity investments using the measurement alternative when equity method is not applicable and there is no readily determinable fair value for the investments. During the year ended August 31, 2021, the Group acquired 18% equity interest in Shanghai Yurong Culture and Art Co., Ltd. (“Golden Ballet”) for a total cash consideration of RMB 21,951. During year ended August 31, 2022, the Group acquired 10% equity interest in Hurun Baixue (Shanghai) Industrial Co., Ltd. for a total cash consideration RMB 5,000. During the year ended August 31, 2023 and 2024, the Group recorded RMB 2,613 and RMB nil of impairment loss on the equity interest of Golden Ballet respectively, representing the difference between the fair value of the investment and its carrying amount.

F-34

8. GOODWILL, NET

The following table summarizes the change in the carrying amount of goodwill by segment for the years ended August 31, 2023 and 2024:

	Overseas Schools			Complementary Education Services			Total
	RMB			RMB			RMB
Balance as of August 31, 2022		704,695			450,437			1,155,132
Impairment (a)		-			(147,116	)		(147,116	)
Exchange realignment		102,786			-			102,786
Balance as of August 31, 2023		807,481			303,321			1,110,802
Impairment (b)		(547,344	)		(46,404	)		(593,748	)
Exchange realignment		10,243			-			10,243
Balance as of August 31, 2024		270,381			256,917			527,297

Notes:

(a) For each of the years ended August 31, 2022 and 2023, the Company performed impairment test of its goodwill.

Based on the results of the Group’s annual goodwill impairment assessment performed as of August 31, 2022 for all of reporting units, it is determined that the carrying amounts of the Group’s goodwill reporting units did not exceed their respective fair values and, therefore, no impairment existed, except for the Overseas Schools reporting unit. The Group has determined that based on the underperformance of the Overseas Schools reporting unit, market conditions and other factors, it was more likely than not that there were indications of impairment. The Group utilized the discounted cash flow model to estimate the fair value of the reporting units and concluded the carrying amount of the Overseas Schools reporting unit exceeded its fair value. Accordingly, the Group recorded RMB 419,805 as impairment loss on goodwill on the consolidated statement of operations for the year ended August 31, 2022. The impairment is recorded in Overseas Schools reportable segment.

For the year ended August 31, 2023, the Group performed impairment test of its goodwill. The Group has determined that based on the underperformance, the market conditions and other factors, it was more likely than not that there were indications of impairment for Can-achieve and Hangzhou Impression reporting units. The Group utilized the discounted cash flow model to estimate the fair value of the reporting units and concluded the carrying amount of Can-achieve and Hangzhou Impression reporting units exceeded their respective fair value. Accordingly, the Group recorded RMB 116,755 and RMB 30,361 as impairment loss on goodwill of Can-achieve and Hangzhou Impression reporting units on the consolidated statement of operations for the year ended August 31, 2023, respectively. The key assumptions used in the annual goodwill impairment assessment for these reporting units are a discount rate of 17.5% (Can-achieve); 16.5% (Hangzhou Impression); a terminal growth rate of 2.0% (Can-achieve); 2.0% (Hangzhou Impression); and forecasts future revenues. The impairment is recorded in complementary education services reportable segment.

Furthermore, based on the result of the Group’s annual goodwill impairment performed as of August 31, 2023, it is determined that the carrying amount of the Overseas Schools reporting unit did not exceed its fair value, therefore, no impairment loss was recorded. In the Group’s 2023 annual goodwill impairment assessment for the Overseas Schools reporting unit, the key assumptions used are a discount rate of 15.0% (2022: 15.0%), a terminal growth rate of 2.0% (2022: 2.3%) and forecast future revenue.

F-35

8. GOODWILL, NET - continued

Notes: - continued

(b) For the year ended August 31, 2024, the Group performed impairment test of its goodwill. The Group has determined that based on the underperformance, the market conditions and other factors, it was more likely than not that there were indications of impairment for Overseas Schools and Hangzhou Impression reporting units. The Group utilized the discounted cash flow model to estimate the fair value of the reporting units and concluded the carrying amount of Overseas Schools and Hangzhou Impression reporting units exceeded their respective fair value. Accordingly, the Group recorded RMB 547,344 and RMB 46,404 as impairment loss on goodwill of Overseas Schools and Hangzhou Impression reporting units on the consolidated statement of operations for the year ended August 31, 2024, respectively. The key assumptions used in the annual goodwill impairment assessment for these reporting units are a discount rate of 15.0% (Overseas Schools) (2023: 15.0%); 16.5% (Hangzhou Impression) (2023: 16.5%); a terminal growth rate of 1.5% (Overseas Schools) (2023: 2.0%); 2.0% (Hangzhou Impression) (2023: 2.0%); and forecasts future revenues. The impairment is recorded in Overseas Schools and Complementary Education Services reportable segment, respectively.

Furthermore, based on the result of the Group’s annual goodwill impairment performed as of August 31, 2024, it is determined that the carrying amount of the Can-achieve reporting unit did not exceed its fair value, therefore, no impairment loss was recorded. In the Group’s 2024 annual goodwill impairment assessment for the Can-achieve reporting unit, the key assumptions used are a discount rate of 17.5% (2023: 17.5%), a terminal growth rate of 2.0% (2023: 2.0%) and forecast future revenue.

(c) The carrying amount of goodwill included RMB 566,921 and RMB 1,160,669 of accumulated impairments as of August 31, 2023 and 2024, respectively.

9. ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

Accrued expenses and other current liabilities consisted of the following:

	As of August 31,
	2023		2024
	RMB		RMB
Payroll and related benefits		69,902		58,090
Temporary receipt from students		5,368		2,833
Deposits received		43,683		49,602
Other tax payable		3,455		2,284
Professional fee		25,718		17,794
Commission fee		10,570		17,800
Accrual rental expense		4,209		3,055
Accrual utilities expenses		8,443		6,851
Accrual other expenses		36,666		14,904
Others		25,039		18,009
Total		233,053		191,222

10. LEASES

The Group has operating leases mainly for campuses, office space and learning centers, the lease term ranges from less than 12 months to 21 years. Leases with an initial term of 12 months or less are not recorded on the balance sheet. The Group does not have options to extend or terminate leases, as the renewals or terminations of these leases are on negotiation basis. None of these leases contain material residual value guarantees or material restrictive covenants.

F-36

10. LEASES - continued

Supplemental balance sheet information related to the leases are as follows:

	As of August 31,
	2023			2024
	RMB			RMB
ROU assets		1,490,009			1,419,406
Operating lease liabilities – current		104,905			106,325
Operating lease liabilities – non-current		1,461,255			1,404,973
Weighted-average remaining lease term		12.64			13.12
Weight-average discount rate		4.11	%		4.11	%

The components of lease costs of these operating leases from continuing operations are as follow:

	For the year ended August 31,
	2023		2024
	RMB		RMB
Operating lease cost for fixed payments		131,758		154,461
Short - term lease costs		4,773		2,674
Variable lease costs		14,301		5,101
Total lease costs		150,832		162,236

Supplemental cash flow information related to the operating leases is as follows:

	For the year ended August 31,
	2023		2024
	RMB		RMB
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows for operating leases		145,857		148,493

The following table provides the maturities of the operating lease liabilities as of August 31, 2024:

	Operating leases
Fiscal year ending
August 2025		154,767
August 2026		153,237
August 2027		154,432
August 2028		146,373
August 2029		147,873
August 2030 and thereafter		1,217,538
Total future undiscounted lease payments		1,974,220
Less: imputed interest		462,922
Total present value of operating lease liabilities		1,511,298

Impairment loss on operating lease right-of-use assets

The Group tests its long-lived assets for recoverability whenever events or changes in circumstances indicate that its carrying amount may not be recoverable. As a result of the adverse impacts of the COVID-19 pandemic on the economic environment and change in the Group’s business strategy, the Group determines to close certain language training centers in the US resulting in four idled operating leases. The Group determines the fair value of the ROU assets based on the discounted value of estimated future cash flows from subleases, if any. For the years ended August 31, 2022, 2023 and 2024, the Group recorded impairment loss of RMB 8,861, RMB nil and RMB nil related to the ROU assets within the Overseas Schools reportable segment, respectively.

F-37

11. SHARE CAPITAL

Holders of Class A Ordinary Shares and Class B Ordinary Shares are entitled to the same rights except for voting and conversion rights. In respect of matters requiring a shareholder’s vote, each Class A Ordinary Share is entitled to one vote and each Class B Ordinary Share is entitled to 20 votes. Class B Ordinary Shares are convertible at any time by the holder thereof into Class A Ordinary Shares on a one-for-one basis.

The Company was incorporated on December 16, 2016. After the reorganization completed in 2017, the total issued share capital of the Company was USD 0.0001 consisting of 10 ordinary shares with a par value of USD 0.00001 and total authorized share capital was USD 50 divided into 5,000,000,000 shares.

The Company completed a follow-on public offering of American Depositary Shares (“ADSs”) priced at US$19.00 per ADS on March 2, 2018. The Company issued and sold 10,000,000 ADSs, each representing one Class A Ordinary Share of the Company.

In September 2019, the Board of Directors approved a US$30,000 share repurchase program (the “2019 Repurchase Program”). Under the 2019 Repurchase Program, the Group repurchased 1,096,312 shares during the year ended August 31, 2020 with a cost of USD 8,721 (approximately RMB 56,058). For the year ended August 31, 2020, the Board of Directors approved and the Company completed the cancellation and retirement of 569,732 shares that were repurchased.

In November 2020, the Board of Directors approved a US$50,000 share repurchase program (the “2020 Repurchase Program”). Under the 2020 Repurchase Program, the Group repurchased 560,436 shares and 258,731 shares during the years ended August 31, 2021 and 2022, respectively with a cost of US$ 3,075 (approximately RMB 24,628) and US$ 1,530 (approximately RMB 9,245), respectively. For the years ended August 31, 2021 and 2022, the Board of Directors approved and the Company completed the cancellation and retirement of 1,058,389 shares and 287,358 shares that were repurchased respectively.

In August 2022, the Company changed the ratio of its ADSs to its Class A Ordinary Shares (the “ADS Ratio”), par value US$0.00001 per share, from the previous ADS Ratio of one ADS to one Class A Ordinary Share to the current ADS Ratio of one ADS to four Class A Ordinary Shares, effective on August 19, 2022.

For the years ended August 31, 2023 and 2024, there is no share repurchased by the Company.

12. REVENUE

Continuing operations

The Group provides international education program oversea. Overseas business includes arts programs, language programs and university foundation programs. The Group’s revenue includes tuition income from education programs, meal income, boarding income, commission income, study-abroad consulting service income, camp service and other education services related revenue. Revenue for the years ended August 31, 2022, 2023 and 2024 were primarily generated in the PRC, Hong Kong, Canada, the UK and US. Please refer to Note 19 for disaggregation of revenue by geographical areas. The Group recognized majority of its revenue over time and have insignificant amount of revenue recognized at a point in time.

(a) Disaggregation of revenue

	For the year ended August 31,
	2022			2023			2024
	RMB			RMB			RMB
Tuition income from education programs		380,067			453,550			515,426
Tuition income from complementary training courses		139,459			145,976			133,662
Meal income from education service		358,643			352,353			356,411
Boarding income from education service		145,077			290,812			253,973
Commission income		148,154			200,169			274,314
Consulting service income		54,996			76,219			61,318
Operation service income		59,702			41,824			28,317
Camp service income		12,020			39,311			9,868
Other revenues		144,028			176,399			124,580
Less: sales tax		(2,855	)		(4,486	)		(2,663	)
Total		1,439,291			1,772,127			1,755,206

F-38

12. REVENUE - continued

(b) Contract balances

	As of August 31,
	2023		2024
	RMB		RMB
Accounts receivable, net of allowance		13,800		18,793
Contract liabilities - Current		428,617		445,715
Non-current contract liabilities		971		866
Refund liabilities		10,129		9,872

Contract liabilities principally relate to customer advances received prior to performance of services. Substantially all contract liabilities at the beginning of the year ended August 31, 2024 were recognized as revenue during the year ended August 31, 2024 and substantial all contract liabilities as of August 31, 2024 are expected to be realized in the following year.

Refund liabilities mainly related to the estimated refunds that are expected to be provided to students if they decide they no longer want to take the course. Refund liabilities estimates are based on historical refund ratio on a portfolio basis using the expected value method.

13. SHARE-BASED COMPENSATION

Share incentive plan

On December 15, 2017, the Company adopted the Bright Scholar Education Holdings Limited 2017 Share Incentive Plan (the “2017 Plan”). There were no additional share incentive plan adopted during the years ended August 31, 2022 and 2023.

On January 18, 2024, the Company adopted the Bright Scholar Education Holdings Limited 2024 Share Incentive Plan (the “2024 Plan”), which provide up to an aggregate of 17,835,723 Class A ordinary shares of the Company as stock-based compensation to the officers of the Company with vesting period of 3 years.

The Company uses the Binomial tree of lattice pricing model to determine the estimated fair value for each option granted below with the assistance of an independent valuation firm.

The assumptions used in determining the fair value of the share options on the grant date were as follows:

Assumptions	2024
Expected dividend yield		1.87%
Risk-free interest rate		4.15%
Expected volatility		65.49%
Expected life		10 years
Exercise multiples		2.80 times
Fair value of underlying ordinary shares (US$/share)		0.23-0.24

Notes:

(1) The expected dividend yield was estimated by the Company based on its dividend policy over the expected life of the options.

(2) The risk-free interest rate was estimated based on the US Government Bond yield with the maturity commensurate with the expected life.

(3) The expected volatility of the underlying ordinary shares was estimated based on historical volatility of the Company for the period before the valuation date with length commensurate to expected life of the options.

(4) The expected life was the contractual life of the share options.

(5) The Company estimated the exercise multiple based on a consideration of various research studies regarding exercise pattern from historical statistical data.

(6) The fair values of underlying ordinary shares were determined based on the closing price in the market.

F-39

13. SHARE-BASED COMPENSATION - continued

Share incentive plan - continued

For the year ended August 31, 2024, the share options movement were as follows:

	Number of share options			Weighted average exercise price		Weighted average remaining contractual years		Weighted average fair value at grant date		Aggregate intrinsic value
					US$				US$		US$
As of August 31, 2023		656,125			8.74		4.29		11.08		-
Granted		13,200,120			0.35		9.39		0.23
Forfeited/Cancelled		(222,353	)		8.74		3.29
Outstanding as of August 31, 2024		13,633,892			0.62		9.20		0.57
Vested and exercisable as of August 31, 2024		433,772			8.74		3.29		10.89		-

For the years ended August 31, 2022, 2023 and 2024, the Group recognized share-based payment expenses of RMB (816), RMB nil and RMB 8,101, respectively, in connection with the share options granted to employees and officers.

The total compensation expense is recognized on a straight-line basis over the respective vesting periods. As of August 31, 2022, 2023 and 2024, there were RMB nil, RMB nil and RMB 14,369 unrecognized compensation expense, respectively, related to un-vested share options granted to employees and officers of the Group. As of August 31, 2024 the unvested share options expense relating to the share options of the Group is expected to be recognized over a weighted average vesting period of 1.48 years.

14. INCOME TAX EXPENSE

Continuing operations

Income tax expense consisted of the following:

	For the year ended August 31,
	2022			2023			2024
	RMB			RMB			RMB
Current income tax expense:
PRC		57,851			53,242			27,266
Hong Kong		29,923			19,193			9,550
US		2,455			450			-
Canada		44			-			-
Vietnam		-			-			1
Singapore		-			-			22
Deferred income tax (benefit) expense:
PRC		(1,024	)		19,531			(994	)
Canada		67			(261	)		90
US		(28	)		8,050			(3,027	)
UK		(34,145	)		83,003			-
Total income tax expense:		55,143			183,208			32,908

Cayman Islands

The Company and Impetus are incorporated in the Cayman Islands. Under the current laws of the Cayman Islands, the Company and Impetus are not subject to income or capital gains taxes. In addition, dividend payments are not subject to withholdings tax in the Cayman Islands.

US

Can-achieve Global Education, Inc. (Los Angeles), Foundation Global Education (USA) Inc, Bright Can-achieve LLC, Cambridge Education Group Holding Inc. (US) and its subsidiaries are located in US and are subject to an income tax rate of 21% for taxable income earned in the US.

F-40

14. INCOME TAX EXPENSE - continued

Continuing operations - continued

UK

Prior to April 1, 2023, the Company’s subsidiaries operating in UK were subjected to income tax rate at 19%. Form April 1, 2023, the income tax rate for the Company’s subsidiaries operating in UK changed to 25%.

Canada

Can-Achieve International Education Limited (Vancouver) operating in Vancouver and Can-Achieve Academy Limited operating in Toronto are subject to income tax rate ranging from 26% to 26.5% according to the province tax rates.

Vietnam

Bright Can-Achieve Education Company Limited operating in Vietnam is subject to income tax rate of 20%.

Singapore

Bright Can-Achieve Pte. Ltd. and Foundation Global Education (Singapore) Pte. Ltd. operating in Singapore is subject to income tax rate of 17%.

Hong Kong

The Group’s subsidiaries operating in Hong Kong are subject to a two-tiered income tax rate for taxable income earned in Hong Kong effectively since April 1, 2018. The first 2 million Hong Kong dollars of profits earned by a company are subject to be taxed at an income tax rate of 8.25%, while the remaining profits will continue to be taxed at the existing tax rate of 16.5%.

PRC

The subsidiaries and VIEs incorporated in the PRC were generally subject to a corporate income tax rate of 25%.

Effective from January 1, 2008, a new Enterprise Income Tax Law, or (“the New EIT Law”), consolidated the previous income tax laws for foreign invested and domestic invested enterprises in the PRC by the adoption a unified tax rate of 25% for most enterprises with the following exceptions.

Zhuhai Bright Scholar is a company registered in Hengqin New Area whose main business, providing outsourcing consulting services, falls within the preferential enterprise income tax (“EIT”) catalogue of Hengqin New Area in Zhuhai and whose revenue derived from its main business accounts for more than 60% of its total revenue. Zhuhai Bright Scholar was classified as a domestically-owned enterprise in Hengqin New Area, Zhuhai in an encouraged industry sector, and was approved by the PRC tax authorities to enjoy a preferential EIT rate of 15% from January 24, 2017 (date of incorporation). Zhuhai Bright Scholar met the relevant requirements and was eligible for the preferential EIT rate on or before August 31, 2022. Due to the failure to meet the abovementioned 60% requirement, Zhuhai Bright Scholar adopted to the EIT rate of 25% during the years ended August 31, 2023 and 2024.

Further, according to Announcement [2021] No.12 from the Ministry of Finance and the State Administration of Taxation (“MOF&SAT”), these PRC subsidiaries qualified as “small-scaled minimal profit enterprise” are subject to preferential income tax rate of 2.5% and 10% for the first RMB 1,000 of taxable income and remaining profit respectively, in calendar year 2021. According to Announcement [2022] No.13 from the MOF&SAT subsequently issued, the applicable preferential income tax rate is 2.5% and 5% for the first RMB 1,000 of taxable income and remaining profit respectively, in calendar year 2022. According to Announcement [2023] No.6 from the MOF&SAT subsequently issued, these PRC subsidiaries are subject to preferential income tax rate of 5% for the taxable income in calendar year 2023 and 2024. There are numbers of PRC subsidiaries with minimum taxable income, as such, are subject to preferential income tax rate of 5%.

F-41

14. INCOME TAX EXPENSE - continued

Continuing operations - continued

PRC - continued

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The Group’s deferred tax assets and liabilities were as follows:

	As of August 31,
	2023			2024
	RMB			RMB
Deferred tax assets:
Net operating loss carry-forward		181,103			229,442
Less: valuation allowance		(179,459	)		(227,522	)
Total deferred tax assets		1,644			1,920
Deferred tax liabilities:
Intangible assets		14,555			10,974
Withholding tax		20,200			20,200
Total deferred tax liabilities		34,755			31,174

Movement in valuation allowance is as follows:

	For the year ended August 31,
	2022			2023			2024
	RMB			RMB			RMB
Beginning balance		81,555			84,053			179,459
Additions		10,289			173,366			58,846
Decrease from disposal of subsidiaries		-			(8,244	)		(74	)
Reversal		(7,791	)		(38,515	)		(10,360	)
Expired		-			(31,201	)		(349	)
Ending balance		84,053			179,459			227,522

As of August 31, 2022, 2023 and 2024, the tax loss carry-forward in the PRC amounted to RMB 74,183, RMB 107,909 and RMB 201,081 respectively, which would expire by the end of calendar year 2027, 2028 and 2029. The Group operates its business through its subsidiaries and VIEs. The Group does not file consolidated tax returns, therefore, losses from individual subsidiaries or the VIEs may not be used to offset other subsidiaries’ or VIEs’ earnings within the Group. Valuation allowance is considered on each individual subsidiary and VIE basis. A valuation allowance of RMB 84,053, RMB 179,459 and RMB 227,522 had been established as of August 31, 2022, 2023 and 2024, respectively, in respect of certain deferred tax assets as it is considered more likely than not that the relevant deferred tax assets will not be realized in the foreseeable future.

For the year ended August 31, 2023, the Group recognized a full valuation allowance amounting to approximately RMB 128,781 against its Overseas Schools’ deferred tax assets. This determination was based on the assessment of the available positive and negative evidence to estimate whether sufficient future taxable income will be generated to utilize the existing deferred tax assets. A significant piece of objective negative evidence evaluated was the cumulative loss incurred by Overseas Schools for the recent three years. The presence of a three-year cumulative loss limits the ability to consider other objective evidence, such as the Group’s expectations of future taxable income and projections for growth of Overseas Schools. For the year ended August 31, 2024, the Group further recognized an allowance amounting to approximately RMB 13,549 against its Overseas Schools’ deferred tax assets.

The total deferred tax assets of RMB 1,644 and RMB 1,920 as of August 31, 2023 and 2024, were mainly attributed to the deductible tax losses carry-forward arising from certain overseas and PRC subsidiaries.

A deferred tax liability should be recorded for taxable temporary differences attributable to the excess of financial reporting amounts over tax basis amounts, including those differences attributable to a more than 50% interest in a domestic subsidiary. However, recognition is not required in situations where the tax law provides a means by which the reported amount of that investment can be recovered tax-free and the enterprise expects that it will ultimately use that means. The Company has not recorded any such deferred tax liability attributable to the undistributed earnings of its financial interest in VIEs because it believes such excess earnings can be distributed in a manner that is considered to be indefinitely reinvested and thus would not be subject to income tax.

F-42

14. INCOME TAX EXPENSE - continued

Continuing operations - continued

PRC - continued

The impact of an uncertain income tax position on the income tax return is recognized at the largest amount that is more likely than not to be sustained upon audit by the relevant tax authority. An uncertain income tax position will not be recognized if it has less than a 50% likelihood of being sustained. Interest and penalties on income taxes will be classified as a component of the provisions for income taxes. The Group has concluded that there are no significant uncertain tax positions requiring recognition in consolidated financial statements for the years ended August 31, 2022, 2023 and 2024.

The Group did not incur any interest and penalties related to potential underpaid income tax expenses and also does not anticipate any significant increases or decreases in unrecognized tax benefits in the next 12 months. The Group has no material unrecognized tax benefits which would favorably affect the effective income tax rate in future years. 

According to the PRC Tax Administration and Collection Law, the tax authority may require the taxpayer or the withholding agent to make delinquent tax payment within three years if the underpayment of taxes is resulted from the tax authority’s act or error. No late payment surcharge will be assessed under such circumstances. The statute of limitation will be three years if the underpayment of taxes is due to the computational errors made by the taxpayer or the withholding agent. Late payment surcharge will be assessed in such case. The statute of limitation will be extended to five years under special circumstances which are not clearly defined (but an underpayment of tax liability exceeding RMB 0.1 million is specifically listed as a “special circumstance”). The statute of limitation for transfer pricing related issue is ten years. There is no statute of limitation in the case of tax evasion. Therefore, the Group is subject to examination by the PRC tax authorities based on the above.

Reconciliation between the provision for income taxes computed by applying the PRC EIT rates of 25% in year 2022, 2023 and 2024 to income before income taxes and the actual provision for income tax were as follows:

	For the year ended August 31,
	2022			2023			2024
	RMB			RMB			RMB
Net loss before provision for income tax and share of equity in loss of unconsolidated affiliates after elimination adjustment		(631,687	)		(175,317	)		(828,286	)
PRC statutory tax rate		25	%		25	%		25	%
Income tax at statutory tax rate		(157,922	)		(43,829	)		(207,072	)
Effect of expenses that are not deductible in determining taxable profit*		181,109			95,560			206,468
Unrecognized tax losses		10,289			173,366			58,846
Utilization of tax losses previously not recognized		(7,791	)		(38,515	)		(10,360	)
Effect of tax rate difference from tax holiday and statutory rate in other jurisdictions		7,223			(29,061	)		(4,941	)
Withholding tax expense**		25,000			20,200			-
Impact of change in tax rate in UK		-			2,797			-
Others		(2,765	)		2,690			(10,033	)
Income tax expense recognized in profit or loss		55,143			183,208			32,908

Note*: Included in the expenses that are not deductible in determining taxable profit were primarily related to impairment loss, share based compensation and non-deductible expenses arose from Overseas Schools.

Note**: The Enterprise Income Tax Law and its implementation rules also impose a withholding tax at 10%, unless reduced by a tax treaty or agreement, for dividends receivable by non-PRC-resident enterprises from PRC-resident enterprises in respect of earnings accumulated beginning on January 1, 2008. As of August 31, 2022, the Group has recorded RMB 25,000 for dividend withholding tax at rate of 10% related to the distributed earnings of Zhuhai Bright Scholar to its immediate holding company Time Education China Holdings Limited located in Hong Kong. As of August 31, 2023, the Group expects to distribute a portion of the earnings (RMB 202,000) of Zhuhai Bright Scholar to Time Education China Holdings Limited, and hence accrued a withholding tax of RMB 20,200 at rate of 10% at the year end. The remaining undistributed earnings of the Company’s PRC subsidiaries are intended to be permanently reinvested, and accordingly, no deferred tax liabilities have been provided for the PRC dividend withholding taxes that would be payable upon the distribution of those amounts to the Company.

F-43

14. INCOME TAX EXPENSE - continued

Continuing operations - continued

PRC - continued

If the tax holidays granted to certain entities of the Group were not available, the Group’s income tax expense would have increased by RMB 11,144, RMB 655 and RMB 343 for the years ended August 31, 2022, 2023 and 2024, respectively. The basic net earnings or loss per share attributable to the Company would decrease in earning or increase in loss by RMB 0.09, RMB 0.01 and RMB 0.003 for the years ended August 31, 2022, 2023 and 2024, respectively.

15. LOSS PER SHARE

	For the year ended August 31,
	2022			2023			2024
	RMB			RMB			RMB
Numerator used in basic and diluted loss per share:
Net loss attributable to Bright Scholar Education Holdings Limited from continuing operations		(686,352	)		(359,687	)		(851,774	)
Net loss attributable to Bright Scholar Education Holdings Limited from discontinued operations		(22,988	)		(35,447	)		(144,505	)
Net loss attributable to Bright Scholar Education Holdings Limited shareholders		(709,340	)		(395,134	)		(996,279	)
Shares (denominator):
Weighted average ordinary shares outstanding used in calculating loss per share - basic and diluted		118,697,495			118,669,795			118,669,795
Net loss per share attributable to ordinary shareholders - basic and diluted:
Net loss from continuing operations attributable to ordinary shareholders		(5.79	)		(3.03	)		(7.18	)
Net loss from discontinued operations attributable to ordinary shareholders		(0.19	)		(0.30	)		(1.22	)
Net loss attributable to Bright Scholar Education Holdings Limited shareholders		(5.98	)		(3.33	)		(8.40	)

As of August 31, 2022, 2023 and 2024, there were 684,574, 656,125 and 13,633,892 employee share options or non-vested ordinary shares excluded from the computation of diluted net loss per share in the periods presented, as their inclusion would have been anti-dilutive for the years presented.

F-44

16. RELATED PARTY TRANSACTIONS

The table below sets forth the major related parties and their relationships with the Group:

Name of related parties	Relationship with the group
Foshan Shunde Country Garden Property Development Co., Ltd.	Entities controlled by Ms. Huiyan Yang (“Ms. H”)*
Huidong Country Garden Real Estate Development Co., Ltd.	Entities controlled by Ms. H*
Guangdong Phoenix Holiday International Travel Service Co., Ltd.	Entities controlled by Ms. H*
Guangdong Shunde Chuang Xi Bang Sheng Furniture Co., Ltd.	Entities controlled by Ms. H*
Guangdong Chengjia Design Co., Ltd.	Entities controlled by Ms. H*
Guangdong Biyouwei Catering Co., Ltd.	Entities controlled by Ms. H*
Kaiping Country Garden Property Development Co., Ltd.	Entities controlled by Ms. H*
Chuzhou Country Garden Property Development Co., Ltd.	Entities controlled by Ms. H*
Dongguan World Expo Xintiandi Property Investment Co., Ltd.	Entities controlled by Ms. H*
Shaoguan Shunhong Real Estate Development Co., Ltd.	Entities controlled by Ms. H*
Fine Nation Group Limited	Entities controlled by the immediate family of Ms. H*
BGY Education Investment and its affiliates**	Entities controlled by Ms. Meirong Yang, the shareholder of the Group
Phoenix City Bilingual Kindergarten and other non-for-profit Kindergartens**	Entities controlled by Ms. Meirong Yang, the shareholder of the Group

Note*: Ms. H served as the chairperson for the year ended August 31, 2022.The Board has accepted Ms. H’s resignation and appointed Mr. Hongru Zhou as the chairman of the Board on November 29, 2022, the appointment is effective on November 30, 2022.

Note**: These entities were deconsolidated on August 31, 2021 due to the effectiveness of the Implementation Rules.

The Group entered into the following transactions with its related parties:

Details of related party transactions in continuing operations for the years ended August 31, 2022, 2023 and 2024 are as follows:

	For the year ended August 31,
	2022		2023		2024
	RMB		RMB		RMB
Purchases of services and materials provided by other entities controlled by Ms. H are as below
Foshan Shunde Country Garden Property Development Co., Ltd.		-		688		-
Huidong Country Garden Real Estate Development Co., Ltd.		-		7,050		9,489
Guangdong Phoenix Holiday International Travel Service Co., Ltd.		-		237		-
Dongguan World Expo Xintiandi Property Investment Co., Ltd.		-		3,560		-
Others		765		1,322		-
Total		765		12,857		9,489

F-45

16. RELATED PARTY TRANSACTIONS - continued

	For the year ended August 31,
	2022		2023		2024
	RMB		RMB		RMB
Construction services provided by other entities controlled by the Ms. H are as below
Guangdong Chengjia Design Co., Ltd.		339		133		-
Guangdong Shunde Chuang Xi Bang Sheng Furniture Co., Ltd.		1,910		-		-
Total		2,249		133		-

	For the year ended August 31,
	2022		2023		2024
	RMB		RMB		RMB
Interest expense paid to the related parties are as below
Fine Nation Group Limited (1)		6,946		-		-
BGY Education Investment (2)		4,172		-		-
Total		11,118		-		-

(1) On July 22, 2022, the Group issued a Promissory Note (the “Note”) to Fine Nation Group Limited with a principal amount of USD 130,000 (approximately RMB 877,487) at an interest rate of 7.45% per annum. As of August 31, 2022, the Note had been fully offset with the Group’s short-term investments in accordance to the agreement among the Group, Fine Nation Group Limited and the investment management institution.

(2) On July 12, 2022, the Group borrowed a short term loan from BGY Education Investment amounting to RMB 480,000 at an interest rate of 7.45% per annum, which had been fully paid as of August 31, 2022.

	For the year ended August 31,
	2022		2023		2024
	RMB		RMB		RMB
Property and equipment disposed to the related parties are as below
BGY Education Investment (1)		57,998		-		-

(1) On February 28, 2022, the Group has disposed of property and equipment to BGY Education Investment in total consideration of RMB 57,998, which is equal to the carrying amount of theses property and equipment as of the transaction date.

F-46

16. RELATED PARTY TRANSACTIONS - continued

	For the year ended August 31,
	2022			2023		2024
	RMB			RMB		RMB
Services provided to other entities controlled by Ms. H are as below
Phoenix City Bilingual Kindergarten and other non-for-profit Kindergartens (1)		53,197			26,434		10,100
Guangdong Biyouwei Catering Co., Ltd.		97	��		-		-
Total		53,294			26,434		10,100

(1) The amount represented the management fees charged for the provision of services to the Phoenix City Bilingual Kindergarten and other non-for-profit kindergartens.

During the fiscal year 2022 and 2023, other than the services above, the Group provided various types of services to keep the affected entities, which were deconsolidated on August 31, 2021 due to the effectiveness of the Implementation Rules, open without entering into any service contract. Services provided to the affected entities include marketing and consulting, procurement support, human resources, finance and legal support, and information technology support, all of which were conducted through the centralized management system in the Group’s headquarters. The Group does not expect to be entitled to any compensation in exchange for those services, and therefore does not recognize relevant revenues. This centralized management system provided services to the affected entities without charges together with other kindergartens that the Group charged services fee for. As the Group did not track the costs incurred by the services center separately among different service recipients, and majority of the costs are staff costs incurred by the service centers, there are significant limitations for the Group to accurately determine the costs attributable to providing services to the affected entities. As a result, such costs related to services provided to the affected entities are not disclosed. However, in May and June 2023, the related staff had transferred out from the services center in the Group’s headquarters and the Group ceased to provide such free services since then.

The following table presents amounts owed from and to related parties as of August 31, 2023 and 2024:

	As of August 31,
	2023			2024
	RMB			RMB
Amounts due from related parties
BGY Education Investment and its affiliates (1)		185,372			22,188
Shaoguan Shunhong Real Estate Development Co., Ltd. (2)		10,000			10,000
Kaiping Country Garden Property Development Co., Ltd. (3)		1,060			1,060
Others		375			181
Less: allowance for amounts due from related parties		(13,339	)		(19,012	)
Total		183,468			14,417

Amounts due from related parties are non-interest bearing, unsecured, and due on demand.

(1) The amounts mainly represent the acquisition payable paid on behalf of BGY Education Investment and its affiliates, and the receivables from disposal of property and equipment to BGY Education investment.

(2) The amounts represent the expense paid on behalf of Shaoguan Shunhong Real Estate Development Co., Ltd.. For the year ended August 31, 2023, the Group provided a full allowance for it.

(3) The amounts mainly represent the receivables of providing consulting services on pre-opening schools to Kaiping Country Garden Property Development Co., Ltd.. For the year ended August 31, 2023, the Group provided a full allowance for it.

F-47

16. RELATED PARTY TRANSACTIONS - continued

	As of August 31,
	2023		2024
	RMB		RMB
Amounts due to related parties
BGY Education Investment and its affiliates (1)		204,966		33,628
Chuzhou Country Garden Property Development Co., Ltd. (2)		30,769		30,769
Huidong Country Garden Real Estate Development Co., Ltd. (3)		7,713		13,185
Others		811		783
Total		244,259		78,365

Amounts due to related parties are non-interest bearing, unsecured, and payable on demand.

(1) The amounts mainly represent the acquisition payables to BGY Education Investment and its affiliates for the acquisition of certain PRC subsidiaries under common control in fiscal year 2021.

(2) The amounts mainly represent financing funds from other entities controlled by Ms. H, for the purpose of maintaining daily operation of certain schools.

(3) The amounts represent the rental payables to Huidong Country Garden Property Development Co., Ltd. for certain short-term leases.

17. COMMITMENTS AND CONTINGENCIES

Capital commitments

As of August 31, 2023 and 2024, future minimum capital commitments under non-cancelable contracts were as follows:

	As of August 31,
	2023		2024
	RMB		RMB
Capital commitment for construction of schools		4,610		115

Contingent liabilities

The Group has been named in a number of lawsuits arising in its ordinary course of business. Although the outcome of those lawsuits are uncertain, the Group does not believe the possibility of a material loss is probable.

F-48

18. NON-CONTROLLING INTERESTS

The following table summarizes the changes in non-controlling interests from August 31, 2021 through August 31, 2024.

	Can-achieve			Hangzhou Impression			Others			Total
	RMB			RMB			RMB			RMB
Balance at August 31, 2021		107,883			25,169			17,335			150,387
Capital injection from non-controlling interest shareholders		—			—			4,630			4,630
(Loss)/income attributable to non-controlling interests		(351	)		183			(461	)		(629	)
Foreign currency translation		83			—			—			83
Acquisition of additional interest in a subsidiary of non-controlling interests*		—			—			(6,798	)		(6,798	)
Distribution of dividends to non-controlling interest shareholders		—			(1,451	)		(4,698	)		(6,149	)
Balance at August 31, 2022		107,615			23,901			10,008			141,524
Capital injection from non-controlling interest shareholders		5			—			—			5
Income attributable to non-controlling interests		915			384			308			1,607
Foreign currency translation		(54	)		—			—			(54	)
Disposal of a subsidiary to an entity under common control		—			—			2,181			2,181
Distribution of dividends to non-controlling interest shareholders		(26,177	)		(1,926	)		(5,005	)		(33,108	)
Balance at August 31, 2023		82,304			22,359			7,492			112,155
Loss attributable to non-controlling interests		(1,659	)		(13,607	)		(2,030	)		(17,296	)
Foreign currency translation		25			—			—			25
Disposal of subsidiaries		—			—			(1,146	)		(1,146	)
Distribution of dividends to non-controlling interest shareholders		—			(3,240	)		(1,201	)		(4,441	)
Balance at August 31, 2024		80,670			5,512			3,115			89,297

F-49

Note*:

During the year ended August 31, 2022, the Company acquired additional 25% of equity interests in FGE Holdings Limited and its subsidiaries (“FGE”) from a non-controlling interest shareholder with total cash consideration of RMB 30,874. The net carrying amount of the acquired non-controlling interests was RMB 6,798 and the difference of RMB 24,076 was charged to additional paid in capital of the Company accordingly. As of August 31, 2022, 2023 and 2024, the equity interest of the Company in FGE is 100%.

19. SEGMENT INFORMATION

The CODM reviews financial information of operating segments based on internal management report when making decisions about allocating resources and assessing the performance of the Group.

For the years ended August 31, 2022 and 2023, the Group identified three reportable segments, including Overseas Schools, Complementary Education Services, and Domestic Kindergartens and K-12 Operation Services. During the year ended August 31, 2024, the Group disposed of the domestic kindergartens that were part of the Disposal Group, leading to a change in the segment name from Domestic Kindergartens and K-12 Operation Services to K-12 Operation Services. Because the discontinued operations were components of Complementary Education Services and K-12 Operation Services reportable segments, the following disclosure has been retrospectively revised to represent the continuing operations only.

The Group’s CODM evaluates performance based on the operating segment’s operating income/(loss). Revenue, costs of revenue, gross profit and operating income/(loss) by segments are as follows:

For the year ended August 31, 2022

	Continuing operations
	Overseas Schools			Complementary Education Services			K-12 Operation Services			Total
	RMB			RMB			RMB			RMB
Revenue		652,773			389,090			397,428			1,439,291
Costs of revenue		(574,744	)		(229,230	)		(264,652	)		(1,068,626	)
Segment gross profit		78,029			159,860			132,776			370,665
Operating (loss)/income		(720,846	)		90,000			(1,744	)		(632,590	)

F-50

19. SEGMENT INFORMATION - continued

For the year ended August 31, 2023

	Continuing operations
	Overseas Schools			Complementary Education Services			K-12 Operation Services			Total
	RMB			RMB			RMB			RMB
Revenue		809,488			519,247			443,392			1,772,127
Costs of revenue		(657,099	)		(316,014	)		(331,586	)		(1,304,699	)
Segment gross profit		152,389			203,233			111,806			467,428
Operating loss		(109,689	)		(38,777	)		(13,212	)		(161,678	)

For the year ended August 31, 2024

	Continuing operations
	Overseas Schools			Complementary Education Services			K-12 Operation Services			Total
	RMB			RMB			RMB			RMB
Revenue		951,190			495,087			308,929			1,755,206
Costs of revenue		(725,938	)		(312,010	)		(213,672	)		(1,251,620	)
Segment gross profit		225,252			183,077			95,257			503,586
Operating (loss)/income		(914,272	)		74,773			19,056			(820,443	)

The Group’s CODM review the financial position at consolidated level, thus total assets of each operating segment is not presented.

GEOGRAPHIC INFORMATION

The Group’s revenues are attributed to geographic areas based on the selling location.

The following table presents total revenues from continuing operations for the years ended August 31, 2022, 2023 and 2024 from a geographical perspective:

	For the year ended August 31,
	2022		2023		2024
	RMB		RMB		RMB
Revenues from sales originated:
China **		825,061		1,003,250		854,915
Canada		7,013		3,263		4,331
US		89,309		112,840		131,055
UK		517,908		652,774		764,696
Singapore		-		-		209
Total		1,439,291		1,772,127		1,755,206

The following table presents long-lived assets from continuing operations including property and equipment, net, and operating lease right-of-use assets as of August 31, 2023 and 2024 from a geographical perspective:

	As of August 31,
	2023		2024
	RMB		RMB
China **		142,761		108,595
US		378,691		338,188
UK		1,358,563		1,321,972
Total		1,880,015		1,768,755

** Includes mainland China and Hong Kong.

F-51

20. CONTRIBUTION PLAN

In mainland China, full-time employees of the Group in the PRC participate in a government-mandated defined contribution plan pursuant to which certain pension benefits, medical care, unemployment insurance, employee housing fund and other welfare benefits are provided to employees. The PRC labor regulations require the Group to accrue for these benefits based on certain percentages of the employees’ salaries. Total contributions for such employee benefits were RMB 21,161, RMB 26,228 and RMB 11,526 for the years ended August 31, 2022, 2023 and 2024, respectively.

The Company also provides other defined contribution plans for the benefit of overseas employees. Total contribution for such employee benefits for the years ended August 31, 2022, 2023 and 2024 were recorded in consolidated statements of operations in an amount of RMB 29,434, RMB 32,393 and RMB 58,098, respectively.

21. STATUTORY RESERVES AND RESTRICTED NET ASSETS

As stipulated by the relevant PRC laws and regulations applicable to the Group’s entities in the PRC, the Group is required to make appropriations from net income as determined in accordance with the accounting principles generally accepted in the PRC to non-distributable reserves, which include a statutory surplus reserve and a statutory welfare reserve. The PRC laws and regulations require that annual appropriations of 10% of after-tax income should be set aside prior to payments of dividends as reserve fund, and in private school sector, the PRC laws and regulations require that annual appropriations of 25% of after-tax income should be set aside prior to payments of dividend as development fund. The appropriations to statutory surplus reserve are required until the balance reaches 50% of the PRC entity registered capital.

The statutory reserve may be applied against prior year losses, if any, and may be used for general business expansion and production or increase in registered capital of the entities. For the years ended August 31, 2022, 2023 and 2024, the Group made apportions of RMB 11,474, RMB 5,007 and RMB 54 to the statutory surplus reserve fund, respectively, and RMB nil, RMB nil and RMB nil to the development fund, respectively.

As a result of these PRC laws and regulations and the requirement that distributions by PRC entities can only be paid out of distributable profits computed in accordance with the accounting principles generally accepted in the PRC, the PRC entities are restricted from transferring a portion of their net assets to the Group. Restricted net assets include paid-in capital, additional paid-in capital, and the statutory reserve of the Company’s PRC subsidiaries and VIEs. As of August 31, 2024, the balance of paid-in capital, additional paid-in capital, and the statutory reserve of such entities was RMB 115,494, RMB 1 and RMB 16,647, respectively. Therefore, the total of restricted net assets was RMB 132,142 as of August 31, 2024.

F-52

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