Bright Scholar Education Holdings Limited

 
 
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;
 
ii

 
 
 
●
“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.
 
iii

 
 
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.
 
iv

 
 
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.”
 
v

 
 
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.
 
vi

 
 
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.
 
vii

 
 
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.
 
viii

 
 
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.”
 
ix

 
 
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.”
  
x

 
 
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.
 
xi

 
 
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.”
 
xii

 
 
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.
  
xiii

 
 
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”;
 
4

 
 
 
●
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”.
 
5

 
 
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. 
 
6

 
 
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.
  
7

 
 
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.
 
8

 
 
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.
 
9

 
 
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.”
 
10

 
 
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;
 
11

 
 
 
●
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.
 
12

 
 
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.
  
14

 
 
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.
 
16

 
 
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.
 
19

 
 
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.
 
23

 
 
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.
 
24

 
 
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.
 
25

 
 
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.
 
26

 
 
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.
 
27

 
 
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.
 
28

 
 
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.
 
29

 
 
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.
 
30

 
 
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.
 
31

 
 
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.”
 
32

 
 
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.
 
33

 
 
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.
 
34

 
 
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.
 
35

 
 
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.
 
36

 
 
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.”
 
37

 
 
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.
 
38

 
 
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.
 
39

 
 
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.
 
40

 
 
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.
 
41

 
 
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.
 
42

 
 
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.
 
43

 
 
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.
 
44

 
 
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.
 
45

 
 
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.
 
46

 
 
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.
 
47

 
 
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.
 
48

 
 
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.
 
49

 
 
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.
 
50

 
 
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.
 
51

 
 
 
●
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.”
 
52

 
 
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.
 
53

 
 
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.
 
54

 
 
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.
 
55

 
 
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.
 
57

 
 
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.
 
58

 
 
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. 
 
59

 
 
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.
  
60

 
 
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.
 
61

 
 
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.”
 
62

 
 
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.
 
63

 
 
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.
 
64

 
 
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)”.
 
65

 
 
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.”
 
66

 
 
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.
 
67

 
 
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. 
 
68

 
 
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
 
69

 
 
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
 
70

 
 
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
 
71

 
 
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.
 
72

 
 
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.
 
73

 
 
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.
 
74

 
 
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.
 
75

 
 
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 
 
76

 
 
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.
 
77

 
 
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     
  
 
78

 
 
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.
  
79

 
 
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 
 
80

 
 
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.
 
82

 
 
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.
 
92

 
 
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.
 
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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.
 
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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.
 
102

 
 
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.
 
104

 
 
(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.
 
105

 
 
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.
 
106

 
 
 
●
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.
 
107

 
 
 
 
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.”
 
108

 
 
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.
 
109

 
 
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.
 
110

 
 
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.”
 
111

 
 
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.
 
112

 
 
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.
 
113

 
 
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;
 
114

 
 
 
●
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.
 
115

 
 
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.
 
116

 
 
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.
 
117

 
 
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.
 
118

 
 
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.
 
119

 
 
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.
 
120

 
 
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.
 
121

 
 
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.
 
122

 
 
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.
 
123

 
 
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.
 
124

 
 
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.
 
125

 
 
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
  
—   
—   
—   
—   
—   
—   
—   
(33,108)  
(25,196)  
(58,304)

shareholders
(b)
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.
 
F-19

 
 
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.
 
F-30

 
 
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

Exhibit 4.43
 
Supplementary agreement
 
THIS SUPPLEMENTAL AGREEMENT is made and entered
 into on June 17, 2024, at Shunde District, Foshan City, Guangdong Province, People’s
Republic of China, by and between the parties hereto:
 
Party A: Zhuhai Hengqin Bright Scholar Management
Consulting Co., Ltd., a wholly foreign-owned enterprise legally established and existing under the
laws of China, with its unified social
credit code of 91440400MA4W6P9G26, and its registered address at 1421 Office, No. 128, Xingsheng 1st Road,
Hengqin New District, Zhuhai
 
Party B:
 
Party B 1: Foshan Shangtai Education Technology
Co., Ltd, a limited liability company legally established and existing under the laws of China, with its
unified social credit code is
91440606MA56YR0W26, and its registered address is F5-06, Fifth Floor, BGY Center Building, No. 1, BGY Avenue, BGY
Community, Beijiao Town,
Shunde District, Foshan City, Guangdong Province (residence declaration)
 
Party B 2: Foshan Renliang Education Technology
Co., Ltd, a limited liability company legally established and existing under the laws of China, with its
unified social credit code is
91440606MA56YJ5HX8, and its registered address is F5-11, Fifth Floor, BGY Center Building, No. 1, BGY Avenue, BGY
Community, Beijiao Town,
Shunde District, Foshan City, Guangdong Province (residence declaration)
 
Party B 3: Foshan Meiliang Education Technology
Co., Ltd, a limited liability company legally established and existing under the laws of the PRC, with its
unified social credit code
of 91440606MA56YPTMXP, and its registered address is F5-14, 5th Floor, BGY Center Building, No. 1, BGY Avenue, BGY
Community, Beijiao
Town, Shunde District, Foshan City, Guangdong Province (residence declaration)
 
Party B 4: Foshan Zhiliang Education Technology
Co., Ltd, a limited liability company legally established and existing under the laws of China, with its
unified social credit code is
91440606MA56YQMP21, and its registered address is F5-10, Fifth Floor, BGY Center Building, No. 1, BGY Avenue, BGY
Community, Beijiao
Town, Shunde District, Foshan City, Guangdong Province (residence declaration)
 
Party B 5: Beijing Boteng Education Consulting
Co., Ltd., a limited liability company legally established and existing under the laws of China, with its
unified social credit code of
91110105MA04B4R54T, and its registered address is 6240, 1-9, 6th Floor, Building 1, No. 2, Hengfu Zhongjie, Fengtai
District, Beijing,
China.
 
Party B 6: Foshan Yongliang Education Technology
Co., Ltd, a limited liability company legally established and existing under the laws of China, with its
unified social credit code of
91440606MA56YQQ54M, and its registered address is F5-13, Fifth Floor, BGY Center Building, No. 1, BGY Avenue, BGY
Community, Beijiao Town,
Shunde District, Foshan City, Guangdong Province (residence declaration)
 
(Party B 1, Party B 2, Party B 3, Party B 4, Party
B 5, Party B 6 collectively referred to as “Party B”)
 
Party C: Meirong Yang, a Chinese citizen
Wenjie Yang, a Chinese citizen
 
(Parties A, B and C are hereinafter each referred
to as a “Party” and collectively as the “Parties”)
 
 

 
 
Given:
 
(1) Party A is a wholly foreign-owned enterprise
validly established and legally existing under the laws of China and has the necessary resources to provide
technical and consulting services;
 
(2) Party B are limited liability companies validly
established and legally existing under the laws of the PRC, which are engaged in education science and
technology, investment and management
of education industry, education consulting service, education and cultural exchange planning, and promotion of
education projects (hereinafter
referred to as “Education Service”);
 
(3) Party C are shareholders of Party B and hold
100% of the equity interest in Party B in the aggregate;
 
(4) Party A, BGY Education Investment Management
Co., Ltd. (hereinafter referred to as “BGY Education”) and its then subsidiaries, Party C entered into
the Exclusive Management
Service and Business Cooperation Agreement on January 25, 2017, and Party A, BGY Education, Party C entered into the
Exclusive Call Option
Agreement and the Equity Pledge Agreement on January 25, 2017 ( the “Exclusive Management Service and Business Cooperation
Agreement”,
the “Exclusive Call Option Agreement” and the “Equity Pledge Agreement” signed in 2017 are collectively referred
to hereinafter as the
“Original VIE Agreements”)
 
(5) Party A, BGY Education, Party B and Party
 C entered into the Supplemental Agreement to the Exclusive Management Services and Business
Cooperation Agreement on August 13, 2021,
agreeing that Party B shall join the Exclusive Management Services and Business Cooperation Agreement
and agreeing that from the effective
date of the Implementation of the Law for Promoting Private Education on September 1, 2021, BGY Education and its
subsidiaries containing
compulsory education stage private schools, non-profit institutions, and companies that (intend to) organize non-profit institutions
will
no longer be bound by the Exclusive Management Service and Business Cooperation Agreement, and at the same time, Party A, Party C and
each
Party B entered into the Equity Pledge Agreement and the Exclusive Call Option Agreement, respectively, on August 13, 2021 (the “Supplemental
Agreement to the Exclusive Management Service and Business Cooperation Agreement”, the “Equity Pledge Agreement” and the
“Exclusive Call Option
Agreement” entered into in 2021 are collectively referred to as the “New VIE Agreements”).
 
(6) BGY Education and Party B 3, Party B 4 and
Party B 5 entered into the Equity Transfer Framework Agreement on August 13, 2021, pursuant to which
BGY Education transferred the companies
 listed in the Equity Transfer Framework Agreement held by it to Party B 3, Party B 4 and Party B 5,
respectively.
 
Accordingly, the parties have reached the following
supplementary agreement by consensus:
 
1. Exit
 
It is hereby agreed that after the signing of
this Supplemental Agreement, the following subjects shall no longer be bound by the Original VIE Agreements
and the New VIE Agreements
upon respective closing of the disposal of equity interest of such entities or upon their deregistration:
 
1.1 Party B 1
 
1.2 Party B 2
 
1.3 The following subsidiaries of Party B 4:
 
1.3.1 Foshan Shunde Beijiao Xingjian
Art Training Co., Ltd. and all its subsidiaries
1.3.2 Taishan Lebemeng Education Consulting
Co., Ltd.
1.3.3 Wuhan Mierdun Education Technology
Co., Ltd. and all its subsidiaries
 
2

 
 
1.4 The following subsidiaries of Party B 5:
 
1.4.1 Shanghai Huodai Commercial Information
Consulting Co., Ltd. and all its subsidiaries 1.4.2 Chengdu Yinzhe Education and Technology Co., Ltd.
and all its subsidiaries
1.4.3 Beijing Huanxue International
Travel Limited. and all its subsidiaries
1.4.4 Jiangxi Leti Culture and Tourism
Development Co., Ltd. and all its subsidiaries
1.4.5 Qingdao Bright Scholar Chuangjing
Education Management Consulting Co., Ltd.
1.4.6 Zhenjiang Bright Scholar Sports
Development Co., Ltd.
 
1.5 The following subsidiaries of Party B 6:
 
1.5.1 Foshan Shunqian Culture Co.,
Ltd.
1.5.2 Jurong Shuntai Culture Co.,
Ltd.
1.5.3 Changsha Kunheng Culture Co.,
Ltd.
1.5.4 Guangzhou Shunheng Culture Co.,
Ltd.
1.5.5 Jiangmen Shunkun Culture Co.,
Ltd.
 
2. Dispute resolution
 
The laws of the People’s Republic of China shall
apply to this Supplementary agreement. All disputes arising in the course of the performance of the
Original VIE Agreements, the New VIE
Agreements and this Supplemental Agreement shall be resolved by amicable negotiation between the parties; in
the event that such negotiation
 fails, either party may submit the dispute to the China International Economic and Trade Arbitration Commission
(“CIETAC”)
for arbitration in accordance with the CIETAC arbitration rules then effective, with the place of arbitration in Beijing and the language
of
arbitration in Chinese, and the arbitral award shall be final and binding on all parties. Except for the portion being submitted to
arbitration, the other
portions of this Supplemental Agreement II shall remain in effect. The validity of this clause shall not be affected
by whether or not this Supplemental
Agreement is changed, discharged or terminated.
 
3. Additional Article
 
3.1 In case of inconsistency between this Supplemental
Agreement and the Original VIE Agreements and the New VIE Agreements, this Supplemental
Agreement shall prevail. Anything not agreed in
this Supplemental Agreement shall be performed in accordance with the Original VIE Agreements and the
New VIE Agreements.
 
3.2 Each party approves that this Supplemental
Agreement shall be enforced to the extent permitted by law. If any provision of this Supplemental
Agreement or any part of a provision
is held to be illegal, invalid or unenforceable by any competent authority, court or arbitration institution of competent
jurisdiction,
 such illegality, invalidity or unenforceability shall not affect the other provisions of this Supplemental Agreement or other parts of
 such
provision, which shall remain in full force and effect, and the parties shall try their best to modify such illegal, invalid or unenforceable
provision to
achieve the purpose of the original provision.
 
3.3 This Supplemental Agreement shall enter into
effect on the date when it is signed or stamped by all parties in nine copies, one for each of Party A, Party
B and Party C, and shall
have the same legal effect.
 
(no text below)
 
3

 
 
IN WITNESS WHEREOF, the parties have caused this
Supplemental Agreement to be executed by their authorized representatives on the date set forth at
the beginning of this agreement.
 
Party A: Zhuhai Hengqin Bright Scholar Management
Consulting Co., Ltd.
 
(Seal) Seal of Zhuhai Hengqin Bright Scholar
Management Consulting Co., Ltd. Affixed
 
By:
/s/ Meirong Yang
 
Name:  Meirong Yang
 
Title:
Legal Representative
 
 
4

 
 
IN WITNESS WHEREOF, the parties have caused this
Supplemental Agreement to be executed by their authorized representatives on the date set forth at
the beginning of this agreement.
 
Party B 1: Foshan Shangtai Education Technology
Co., Ltd.
 
(Seal) Seal of Foshan Shangtai Education Technology
Co., Ltd. Affixed
 
By:
/s/ Meirong Yang
 
Name:  Meirong Yang
 
Title:
Legal Representative
 
 
5

 
 
IN WITNESS WHEREOF, the parties have caused this
Supplemental Agreement to be executed by their authorized representatives on the date set forth at
the beginning of this agreement.
 
Party B 2: Foshan Renliang Education Technology
Co., Ltd.
 
(Seal) Seal of Foshan Renliang Education Technology
Co., Ltd. Affixed
 
By:
/s/ Meirong Yang
 
Name:  Meirong Yang
 
Title:
Legal Representative
 
 
6

 
 
IN WITNESS WHEREOF, the parties have caused this
Supplemental Agreement to be executed by their authorized representatives on the date set forth at
the beginning of this agreement.
 
Party B 3: Foshan Meiliang Education Technology
Co., Ltd.
 
(Seal) Seal of Foshan Meiliang Education Technology
Co., Ltd. Affixed
 
By:
/s/ Meirong Yang
 
Name:  Meirong Yang
 
Title:
Legal Representative
 
 
7

 
 
IN WITNESS WHEREOF, the parties have caused this
Supplemental Agreement to be executed by their authorized representatives on the date set forth at
the beginning of this agreement.
 
Party B 4: Foshan Zhiliang Education Technology
Co., Ltd.
 
(Seal) Seal of Foshan Zhiliang Education Technology
Co., Ltd. Affixed
 
By:
/s/ Meirong Yang
 
Name:  Meirong Yang
 
Title:
Legal Representative
 
 
8

 
 
IN WITNESS WHEREOF, the parties have caused this
Supplemental Agreement to be executed by their authorized representatives on the date set forth at
the beginning of this agreement.
 
Party B 5: Beijing Boteng Education Consulting
Co., Ltd.
 
(Seal) Seal of Beijing Boteng Education Consulting
Co., Ltd. Affixed
 
By:
/s/ Hui Zhang
 
Name:  Hui Zhang
 
Title:
Legal Representative
 
 
9

 
 
IN WITNESS WHEREOF, the parties have caused this
Supplemental Agreement to be executed by their authorized representatives on the date set forth at
the beginning of this agreement.
 
Party B 6: Foshan Yongliang Education Technology
Co., Ltd.
 
(Seal) Seal of Foshan Yongliang Education Technology
Co., Ltd. Affixed
 
By:
/s/ Meirong Yang
 
Name:  Meirong Yang
 
Title:
Legal Representative
 
 
10

 
 
IN WITNESS WHEREOF, the parties have caused this
Supplemental Agreement to be executed by their authorized representatives on the date set forth at
the beginning of this agreement.
 
Party C:
 
Meirong Yang
 
Signature:
/s/ Meirong Yang
 
 
11

 
 
IN WITNESS WHEREOF, the parties have caused this
Supplemental Agreement to be executed by their authorized representatives on the date set forth at
the beginning of this agreement.
 
Party C:
 
Wenjie Yang
 
Signature:
/s/ Wenjie Yang
 
 
 
12
 

Exhibit 4.44
 
Supplementary agreement II
 
THIS SUPPLEMENTAL AGREEMENT II is made and entered
into on August 31, 2024 at Shunde District, Foshan City, Guangdong Province, People’s
Republic of China, by and between the parties hereto:
 
Party A: Zhuhai Hengqin Bright Scholar Management
Consulting Co., Ltd., a wholly foreign-owned enterprise legally established and existing under the
laws of China, with its unified social
credit code of 91440400MA4W6P9G26, and its registered address at 1421 Office, No. 128, Xingsheng 1st Road,
Hengqin New District, Zhuhai
 
Party B: Foshan Meiliang Education Technology Co., Ltd., a limited liability company legally established and
existing under the laws of China, with its
unified social credit code of 91440606MA56YPTMXP, and its registered address at F5-14,
5th Floor, BGY Center Building, No. 1, BGY Avenue, BGY
Community, Beijiao Town, Shunde District, Foshan City, Guangdong Province
(residence declaration)
 
Party C: Meirong Yang, a Chinese citizen
Wenjie Yang, a Chinese citizen
 
(Party A, PartyB and PartyC are hereinafter each
referred to as a “Party” and collectively as the “Parties”)
 
Given:
 
(1) Party A is a wholly foreign-owned enterprise
validly established and legally existing under the laws of China and has the necessary resources to provide
technical and consulting services;
 
(2) Party B is a limited liability company validly
established and legally existing under the laws of the PRC, which is engaged in education science and
technology, investment and management
of education industry, education consulting service, education and cultural exchange planning, and promotion of
education projects (hereinafter
referred to as “Education Service”);
 
(3) Party C are shareholders of Party B and hold
100% of the equity interest in Party B in the aggregate;
 
(4) Party A, BGY Education Investment Management
Co., Ltd. (hereinafter referred to as “BGY Education”) and its then subsidiaries, Party C entered into
the Exclusive Management
Service and Business Cooperation Agreement on January 25, 2017, and Party A, BGY Education, Party C entered into the
Exclusive Call Option
Agreement and the Equity Pledge Agreement on January 25, 2017 ( the “Exclusive Management Service and Business Cooperation
Agreement”,
the “Exclusive Call Option Agreement” and the “Equity Pledge Agreement” signed in 2017 are collectively referred to
hereinafter as the
“Original VIE Agreements”).
 
 

 
 
(5) Party A, BGY Education, Party B and Party
 C entered into the Supplemental Agreement to the Exclusive Management Services and Business
Cooperation Agreement on August 13, 2021,
agreeing that Party B shall join the Exclusive Management Services and Business Cooperation Agreement
and agreeing that from the effective
date of the Implementation of the Law for Promoting Private Education on September 1, 2021, BGY Education and its
subsidiaries containing
compulsory education stage private schools, non-profit institutions, and companies that (intend to) organize non-profit institutions
will
no longer be bound by the Exclusive Management Service and Business Cooperation Agreement, and at the same time, Party A, Party C and
each
Party B entered into the Equity Pledge Agreement and the Exclusive Call Option Agreement, respectively, on August 13, 2021 (the “Supplemental
Agreement to the Exclusive Management Service and Business Cooperation Agreement”, the “Equity Pledge Agreement” and the
“Exclusive Call Option
Agreement” entered into in 2021 are collectively referred to as the “New VIE Agreements”).
 
(6) BGY Education and Party B entered into the
Equity Transfer Framework Agreement on August 13, 2021, pursuant to which BGY Education transferred
to Party B the companies listed in
the Equity Transfer Framework Agreement held by BGY Education.
 
Accordingly, the parties have reached the following
supplementary agreement II by consensus:
 
1. Exit and Consideration
 
It is hereby agreed that Party B and its subsidiaries
shall no longer be bound by the Original VIE Agreements and the New VIE Agreements as of the date
of this Supplemental Agreement II.
 
As consideration for the dissolution of the VIE
Agreement, Party C, the registered shareholder of Party B, shall pay a total of RMB 1 to Party A’s account
or Party A’s designated collection
account within five working days from the date of signing of this Supplemental Agreement II; The price to be paid by
each of the two natural
person shareholders of Party C shall be allocated in accordance with their each shareholding ratio as registered; If either of the
natural
persons fails to pay the corresponding contract price within the time limit stipulated herein, Party A has the right to request the other
natural person
shareholder of Party C to assume joint and several liability.
 
2

 
 
2. Dispute resolution
 
The laws of the People’s Republic of China shall
apply to this Supplementary agreement II. All disputes arising in the course of the performance of the
Original VIE Agreements, the New
VIE Agreements and this Supplemental Agreement II shall be resolved by amicable negotiation between the parties; in
the event that such
 negotiation fails, either party may submit the dispute to the China International Economic and Trade Arbitration Commission
(“CIETAC”)
for arbitration in accordance with the CIETAC arbitration rules then effective, with the place of arbitration in Beijing and the language
of
arbitration in Chinese, and the arbitral award shall be final and binding on all parties. Except for the portion being submitted to
arbitration, the other
portions of this Supplemental Agreement II shall remain in effect. The validity of this clause shall not be affected
by whether or not this Supplemental
Agreement II is changed, discharged or terminated.
 
3. Additional Article
 
3.1 In the event of any inconsistency between
 this Supplemental Agreement II and the Original VIE Agreements or the New VIE Agreements, this
Supplemental Agreement II shall prevail.
Anything not agreed in this Supplemental Agreement II shall be performed in accordance with the Original VIE
Agreements and the New VIE
Agreements.
 
3.2 Each party approves that this Supplemental
Agreement II shall be enforced to the extent permitted by law. If any provision of this Supplemental
Agreement II or any part of a provision
 is held to be illegal, invalid or unenforceable by any competent authority, court or arbitration institution of
competent jurisdiction,
such illegality, invalidity or unenforceability shall not affect the other provisions of this Supplemental Agreement II or other parts
of such provision, which shall remain in full force and effect, and the parties shall try their best to modify such illegal, invalid or
unenforceable provision to
achieve the purpose of the original provision.
 
3.3 This Supplemental Agreement II shall enter
into effct on the date when it is signed or stamped by all parties, in four copies, one for each of Party A,
Party B and Party C, and
shall have the same legal effect.
 
(no text below)
 
3

 
 
IN WITNESS WHEREOF, the parties have caused this
Supplemental Agreement II to be executed by their authorized representatives on the date set forth
at the beginning of this agreement.
 
Party A: Zhuhai Hengqin Bright Scholar Management
Consulting Co., Ltd.
 
(Seal) Seal of Zhuhai Hengqin Bright Scholar
Management Consulting Co., Ltd. Affixed
 
4

 
 
IN WITNESS WHEREOF, the parties have caused this
Supplemental Agreement II to be executed by their authorized representatives on the date set forth
at the beginning of this agreement.
 
Party B: Foshan Meiliang Education Technology
Co., Ltd.
 
(Seal) Seal of Foshan Meiliang Education Technology
Co., Ltd. Affixed
 
5

 
 
IN WITNESS WHEREOF, the parties have caused this
Supplemental Agreement II to be executed by their authorized representatives on the date set forth
at the beginning of this agreement.
 
Party C:
 
Meirong Yang
 
Signature:
/s/ Meirong Yang
 
 
6

 
 
IN WITNESS WHEREOF, the parties have caused this
Supplemental Agreement II to be executed by their authorized representatives on the date set forth
at the beginning of this agreement.
 
Party C:
 
Wenjie Yang
 
Signature:
/s/ Wenjie Yang
 
 
 
7
 
 

Exhibit 4.45
 
Rights and Obligations Assumption Letter
 
This entity, Foshan Yixue Culture Co., Ltd., is
the subsidiary established by Foshan Yongliang Education Technology Co., Ltd. (“Investor”) and registered
in Foshan
City at Shunde District Administration for Market Regulation on July 4, 2024. The Investor holds 100% of the interests in this entity.
 
In accordance with the Exclusive Management Service
and Business Cooperation Agreement (“Agreement”) entered into by and between Zhuhai Hengqin
Bright Scholar Management
Consulting Co., Ltd. and other relevant parties on January 25, 2017 and the supplemental agreement entered into on August
13, 2021, and
the supplemental agreement entered into on June 17th, 2024, this entity shall join the Agreement according to Article 10.3 of the Agreement
as a “New Subsidiary of Party B” under the Agreement.
 
This entity hereby agrees to join the Agreement
as a new Subsidiary of Party B of the Investor, enjoy the rights under the Agreement, and perform the
obligations according to the Agreement.
This Assumption Letter came into effect upon the date of execution.
 
Foshan Yixue Culture Co., Ltd.（Seal）Seal
of Foshan Yixue Culture Co., Ltd. Affixed
 
Date: September 19, 2024
 
-End-
 

Exhibit 4.46
 
Rights and Obligations Assumption Letter
 
This entity, Foshan Saiyuan Culture Co., Ltd.,
is the subsidiary established by Foshan Yixue Culture Co., Ltd.(“Foshan Yixue”), which is the wholly
owned subsidiary
of Foshan Yongliang Education Technology Co., Ltd. (“Investor”) and registered in Foshan City at Shunde District Administration
for
Market Regulation on July 9, 2024. The Investor indirectly holds 100% of the interests in this entity through Foshan Yixue.
 
In accordance with the Exclusive Management Service
and Business Cooperation Agreement (“Agreement”) entered into by and between Zhuhai Hengqin
Bright Scholar Management
Consulting Co., Ltd. and other relevant parties on January 25, 2017, the supplemental agreement entered into on August 13,
2021,
and the supplemental agreement entered into on June 17th, 2024, this entity shall join the Agreement according to Article 10.3 of the
Agreement as a
“New Subsidiary of Party B” under the Agreement.
 
This entity hereby agrees to join the Agreement
as a new Subsidiary of Party B of the Investor, enjoy the rights under the Agreement, and perform the
obligations according to the Agreement.
This Assumption Letter came into effect upon the date of execution.
 
Foshan Saiyuan Culture Co., Ltd.（Seal）Seal
of Foshan Saiyuan Culture Co., Ltd. Affixed
 
Date: September 19, 2024
-End-
 

Exhibit 4.47
 
Rights and Obligations Assumption Letter
 
This entity, Guangzhou Yinghe Culture Co., Ltd.,
is the subsidiary established by Foshan Yixue Culture Co., Ltd.(“Foshan Yixue”), which is the wholly
owned subsidiary
of Foshan Yongliang Education Technology Co., Ltd. (“Investor”) and registered in Guangzhou City at Haizhu District
Administration
for Market Regulation on July 9, 2024. The Investor indirectly holds 100% of the interests in this entity through Foshan
Yixue. Guangzhou Yinghe Culture
Co., Ltd. Beijing Branch (“Beijing Branch”) is a branch established by this entity
and registered in Administration for Market Regulation of Tongzhou
District, Beijing on October 15, 2024. Beijing Branch is also a subsidiary
of the Investor and Foshan Yixue.
 
In accordance with the Exclusive Management Service
and Business Cooperation Agreement (“Agreement”) entered into by and between Zhuhai Hengqin
Bright Scholar Management
Consulting Co., Ltd. and other relevant parties on January 25, 2017, the supplemental agreement entered into on August 13,
2021, and the
supplemental agreement entered into on June 17, 2024, this entity and Beijing Branch shall join the Agreement according to Article 10.3
of
the Agreement as “New Subsidiary of Party B” under the Agreement.
 
This entity and Beijing Branch hereby agree to
join the Agreement as new Subsidiary of Party B of the Investor, enjoy the rights under the Agreement, and
perform the obligations according
to the Agreement. This Assumption Letter came into effect upon the date of execution.
 
Guangzhou Yinghe Culture Co., Ltd.（Seal）Seal
of Guangzhou Yinghe Culture Co., Ltd. Affixed
 
Guangzhou Yinghe Culture Co., Ltd. Beijing
Branch（Seal）Seal
of Guangzhou Yinghe Culture Co., Ltd. Beijing Branch Affixed
 
Date: November 26, 2024
 
-End-
 

Exhibit 4.48
 
Rights and Obligations Assumption Letter
 
This entity, Guangzhou Feijia Culture Co., Ltd.,
is the subsidiary established by Foshan Yixue Culture Co., Ltd.(“Foshan Yixue”), which is the wholly
owned subsidiary
of Foshan Yongliang Education Technology Co., Ltd. (“Investor”) and registered in Guangzhou City at Panyu District
Administration
for Market Regulation on July 9, 2024. The Investor indirectly holds 100% of the interests in this entity through Foshan
Yixue.
 
In accordance with the Exclusive Management Service
and Business Cooperation Agreement (“Agreement”) entered into by and between Zhuhai Hengqin
Bright Scholar Management
Consulting Co., Ltd. and other relevant parties on January 25, 2017, the supplemental agreement entered into on August 13,
2021, and the
supplemental agreement entered into on June 17th, 2024, this entity shall join the Agreement according to Article 10.3 of the Agreement
as a
“New Subsidiary of Party B” under the Agreement.
 
This entity hereby agrees to join the Agreement
as a new Subsidiary of Party B of the Investor, enjoy the rights under the Agreement, and perform the
obligations according to the Agreement.
This Assumption Letter came into effect upon the date of execution.
 
Guangzhou Feijia Culture Co., Ltd.（Seal）Seal
of Guangzhou Feijia Culture Co., Ltd. Affixed
 
Date: September 19, 2024
 
-End-
 

Exhibit 8.1
 
List of Subsidiaries and Affiliated Entities
 
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
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
 
 

 
 
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
 
2

 
 
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
 
3
 

Exhibit 12.1
 
Certification by
the Principal Executive Officer
Pursuant to Section
302 of the Sarbanes-Oxley Act of 2002
 
I, Ruolei Niu, certify that:
 
1.
I have reviewed this annual report on Form 20-F of Bright Scholar Education Holdings Limited;
 
2.
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this
report;
 
3.
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the
financial condition, results of operations and cash flows of the company as of, and for, the periods presented in this report;
 
4.
The company’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f))
for the company and have:
 
 
a.
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to
ensure that material information relating to the company, including its consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this report is being prepared;
 
 
b.
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our
supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting principles;
 
 
c.
Evaluated the effectiveness of the company’s disclosure controls and procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
 
 
d.
Disclosed in this report any change in the company’s internal control over financial reporting that occurred during the period covered by the
annual report that has materially affected, or is reasonably likely to materially affect, the company’s internal control over financial reporting; and
 
5.
The company’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the
company’s auditors and the audit committee of the company’s board of directors (or persons performing the equivalent functions):
 
 
a.
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably
likely to adversely affect the company’s ability to record, process, summarize and report financial information; and
 
 
b.
Any fraud, whether or not material, that involves management or other employees who have a significant role in the company’s internal control
over financial reporting.
 
Date:
December 13, 2024
 
 
 
 
By:
/s/ Ruolei Niu
 
Name:  Ruolei Niu
 
Title:
Chief Executive Officer
 
 

Exhibit 12.2
 
Certification by
the Principal Financial Officer
Pursuant to Section
302 of the Sarbanes-Oxley Act of 2002
 
I, Hui Zhang, certify that:
 
1.
I have reviewed this annual report on Form 20-F of Bright Scholar Education Holdings Limited;
 
2.
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this
report;
 
3.
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the
financial condition, results of operations and cash flows of the company as of, and for, the periods presented in this report;
 
4.
The company’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f))
for the company and have:
 
 
a.
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to
ensure that material information relating to the company, including its consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this report is being prepared;
 
 
b.
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our
supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting principles;
 
 
c.
Evaluated the effectiveness of the company’s disclosure controls and procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
 
 
d.
Disclosed in this report any change in the company’s internal control over financial reporting that occurred during the period covered by the
annual report that has materially affected, or is reasonably likely to materially affect, the company’s internal control over financial reporting; and
 
5.
The company’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the
company’s auditors and the audit committee of the company’s board of directors (or persons performing the equivalent functions):
 
 
a.
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably
likely to adversely affect the company’s ability to record, process, summarize and report financial information; and
 
 
b.
Any fraud, whether or not material, that involves management or other employees who have a significant role in the company’s internal control
over financial reporting.
 
Date:
December 13, 2024
 
 
 
 
By:
/s/ Hui Zhang
 
Name:  Hui Zhang
 
Title:
Chief Financial Officer
 
 

Exhibit 13.1
 
Certification by the Principal Executive
Officer
Pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002
 
In connection with the Annual Report of Bright
Scholar Education Holdings Limited (the “Company”) on Form 20-F for the fiscal year ended August 31,
2024 as filed with the
Securities and Exchange Commission on the date hereof (the “Report”), I, Ruolei Niu, Chief Executive Officer of the Company,
certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:
 
 
(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
 
 
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
 
December 13, 2024
 
 
 
 
 
By:
/s/ Ruolei Niu
 
Name:  Ruolei Niu
 
Title:
Chief Executive Officer
 

Exhibit 13.2
 
Certification by the Principal Financial
Officer
Pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002
 
In connection with the Annual Report of Bright
Scholar Education Holdings Limited (the “Company”) on Form 20-F for the fiscal year ended August 31,
2024 as filed with the
Securities and Exchange Commission on the date hereof (the “Report”), I, Hui Zhang, Chief Financial Officer of the Company,
certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:
 
 
(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
 
 
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
 
December 13, 2024
 
 
 
 
 
By:
/s/ Hui Zhang
 
Name:  Hui Zhang
 
Title:
Chief Financial Officer
 

Exhibit 15.1
 
 
 
TIAN YUAN LAW FIRM
Unit 509 Tower A,
Corporation Square 35, Financial Street,
Xicheng District, Beijing 100033
P.R.China
Tel: (8610) 5776-3888;
Fax: (8610) 5776-3777.
 
Date: December 13, 2024
 
Bright Scholar Education Holdings Limited
Suites 6-7, The Turvill Building Old Swiss, 149 Cherry Hinton Road
Cambridge, England, CB1 7BX, United Kingdom 
 
Dear Sirs:
 
We consent to the references to our firm under “Introduction—Permissions
and Licenses Required from the PRC Authorities for Our Operations and
Overseas Securities Offerings” “Item 3. Key Information—D.
Risk Factors—Risks Related to Our Business” “Item 3. Key Information—D. Risk Factors—
Risks Related to Doing
Business in the Jurisdictions Where We Operate” “Item 3. Key Information—D. Risk Factors—Risks Related to Our
Corporate
Structure” and “Item 4. Information on the Company—A. History and development of the company” included
 in Bright Scholar Education Holdings
Limited’s annual report on Form 20-F for the fiscal year ended August 31, 2024 (the “Annual
Report”), which is filed with the Securities and Exchange
Commission (the “SEC”) on December 13, 2024. We also consent
to the filing with the SEC of this consent letter as an exhibit to the Annual Report.
 
In giving such consent, we do not thereby admit that we come within
the category of persons whose consent is required under Section 7 of the Securities
Act of 1933, or under the Securities Exchange Act
of 1934, in each case, as amended, or the regulations promulgated thereunder.
 
Sincerely yours,
 
Tian Yuan Law Firm
 
 
 
 
By:
/s/ Tian Yuan Law Firm
 
 
Date: December 13, 2024
 

Exhibit 15.2
 
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
We consent to the incorporation by reference in Registration Statement
Nos. 333-222072 and 333-279488 on Form S-8 of our report dated December 13,
2024, relating to the financial statements of Bright Scholar
Education Holdings Limited appearing in this Annual Report on Form 20-F for the year ended
August 31, 2024.
 
/s/ Deloitte Touche Tohmatsu Certified Public Accountants LLP
 
Shenzhen,
China
 
December 13, 2024