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 OR For the fiscal year ended August 31, 2022 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 even ...

[Executive Summary & Financial Highlights](index=1&type=section&id=Executive%20Summary%20%26%20Financial%20Highlights) This section provides a comprehensive overview of the company's financial performance and key highlights for the reported periods [Fourth Fiscal Quarter Ended August 31, 2022 Financial Highlights](index=1&type=section&id=Fourth%20Fiscal%20Quarter%20Ended%20August%2031%2C%202022%20Financial%20Highlights) In the fourth fiscal quarter of 2022, the company's continuing operations revenue grew by 26.2% year-over-year, gross profit significantly increased by 73.4%, and operating and net losses narrowed considerably, indicating strong business recovery Financial Highlights (RMB in million) | Metric | Q4 2022 | Q4 2021 | YoY Change % | | :----------------------------------- | :----------------------- | :----------------------- | :--------- | | Revenue from Continuing Operations | 403.9 | 320.0 | 26.2% | | Gross Profit from Continuing Operations | 83.8 | 48.3 | 73.4% | | Gross Margin from Continuing Operations | 20.7% | 15.1% | 5.6% | | Operating Loss from Continuing Operations | (59.4) | (204.0) | 70.9% | | Operating Margin from Continuing Operations | (14.7)% | (63.7)% | 49.0% | | Quarterly Net Loss | (99.4) | (478.2) | 79.2% | | Adjusted Gross Profit from Continuing Operations | 87.7 | 53.0 | 65.5% | | Adjusted Operating Loss from Continuing Operations | (48.8) | (99.2) | 50.7% | | Adjusted Quarterly Net Loss | (89.7) | (175.5) | 48.9% | | Adjusted Quarterly EBITDA | (47.6) | (29.8) | 59.9% | | Basic and Diluted Loss per Ordinary Share from Continuing Operations | (0.90) | (2.40) | 62.5% | | Adjusted Quarterly Basic and Diluted Loss per Ordinary Share | (0.82) | (1.53) | 46.4% | | Basic and Diluted Loss per ADS from Continuing Operations | (3.60) | (9.60) | 62.5% | | Adjusted Quarterly Basic and Diluted Loss per ADS | (3.28) | (6.12) | 46.4% | [Fiscal Year 2022 Ended August 31, 2022 Financial Highlights](index=2&type=section&id=Fiscal%20Year%202022%20Ended%20August%2031%2C%202022%20Financial%20Highlights) For the full fiscal year 2022, continuing operations revenue increased by 22.3% year-over-year, gross profit surged by 115.8%, operating and net losses significantly improved, and adjusted EBITDA turned positive, reflecting sustained business recovery and effective cost management throughout the year Financial Highlights (RMB in million) | Metric | FY 2022 | FY 2021 | YoY Change % | | :----------------------------------- | :------- | :------- | :--------- | | Revenue from Continuing Operations | 1,714.9 | 1,401.8 | 22.3% | | Gross Profit from Continuing Operations | 478.1 | 221.5 | 115.8% | | Gross Margin from Continuing Operations | 27.9% | 15.8% | 12.1% | | Operating Loss from Continuing Operations | (63.0) | (389.7) | 83.8% | | Operating Margin from Continuing Operations | (3.7)% | (27.8)% | 24.1% | | Annual Net Loss | (159.4) | (165.8) | 3.8% | | Adjusted Gross Profit from Continuing Operations | 495.9 | 237.7 | 108.7% | | Adjusted Operating Loss from Continuing Operations | (39.4) | (271.4) | 85.5% | | Adjusted Annual Net Loss | (139.6) | (420.2) | 66.8% | | Adjusted Annual EBITDA | 149.0 | (30.3) | 592.5% | | Basic and Diluted Loss per Ordinary Share from Continuing Operations | (1.39) | (4.54) | 69.4% | | Adjusted Annual Basic and Diluted Loss per Ordinary Share | (1.23) | (3.57) | 65.5% | | Basic and Diluted Loss per ADS from Continuing Operations | (5.56) | (18.16) | 69.4% | | Adjusted Annual Basic and Diluted Loss per ADS | (4.92) | (14.28) | 65.5% | [Management Commentary](index=4&type=section&id=Management%20Commentary) Management highlighted the company's business recovery in a challenging year, with significant growth in continuing operations revenue and gross profit, substantial narrowing of losses, and a continued focus on cost management, optimizing sustainable returns, and delivering high-quality education and holistic development support services - The company's continuing operations revenue grew by **26.2%** in the fourth fiscal quarter and **22.3%** for the full year, with gross profit increasing by **73.4%** and **115.8%** respectively, while operating and net losses continued to narrow[10](index=10&type=chunk) - Management expressed satisfaction with the business recovery but remains vigilant regarding the UK energy crisis and future inflationary pressures, actively managing costs to optimize sustainable returns in the medium to long term[10](index=10&type=chunk) - The company will continue to develop its business, comprehensively considering how to provide high-quality education and holistic development support services to students, innovating to meet student needs, and deepening the connectivity of its diversified education service platform[13](index=13&type=chunk) [Overall Performance](index=4&type=section&id=Overall%20Performance) Executive Vice Chairman Jerry He stated that the company achieved robust business recovery in a challenging year, with significant revenue and gross profit growth in continuing operations for both the fourth fiscal quarter and the full year, alongside substantial narrowing of operating and net losses - Fourth fiscal quarter continuing operations revenue grew by **26.2%**, gross profit increased by **73.4%**, and operating and net losses continued to narrow[10](index=10&type=chunk) - Full-year continuing operations revenue grew by **22.3%**, gross profit increased by **115.8%**, and operating and net losses improved by **83.8%** and **70.2%** respectively[10](index=10&type=chunk) [Overseas Schools Business](index=4&type=section&id=Overseas%20Schools%20Business) Overseas schools business revenue grew by 61.1% in the fourth fiscal quarter and 29.9% for the full year, primarily driven by the return of demand for high-quality education post-pandemic - Overseas schools business revenue grew by **61.1%** in the fourth fiscal quarter and **29.9%** for the full year[10](index=10&type=chunk) - The performance growth reflects the gradual return of parental and student demand for high-quality education after pandemic-induced disruptions to in-person learning[10](index=10&type=chunk) [Complementary Education Services](index=5&type=section&id=Complementary%20Education%20Services) Complementary education services faced challenges in the fourth fiscal quarter with a 1.6% revenue decrease, but full-year revenue saw a modest 1.8% increase, with strong performance in overseas study consulting and career counseling, growing by 35.1% and 46.7% respectively in Q4 - Complementary education services revenue decreased by **1.6%** in the fourth fiscal quarter but increased by **1.8%** for the full year[12](index=12&type=chunk) - Overseas study consulting and career counseling businesses continued to recover, with fourth fiscal quarter revenue growing by **35.1%** and **46.7%** respectively, and full-year growth of **26.6%** and **9.9%** respectively[12](index=12&type=chunk) [Domestic Kindergartens & K-12 Operation Services](index=5&type=section&id=Domestic%20Kindergartens%20%26%20K-12%20Operation%20Services) Domestic kindergartens and K-12 operation services revenue grew by 65.7% in the fourth fiscal quarter and 55.6% for the full year, primarily due to increased catering service revenue and expanded procurement services - Domestic kindergartens and K-12 operation services revenue grew by **65.7%** in the fourth fiscal quarter and **55.6%** for the full year[13](index=13&type=chunk) - The performance growth is primarily attributed to increased catering service revenue and expanded procurement services, serving **24 schools** and **60 kindergartens** as of the end of August 2022[13](index=13&type=chunk) [Outlook](index=5&type=section&id=Outlook) The company will continue to reshape and rebuild its business amidst dynamic macroeconomic challenges and profound social changes, leveraging its diversified business portfolio to focus on providing high-quality education and holistic development support services, and is committed to achieving profitability post-K-12 regulatory impact - The company will continue to develop its business, comprehensively considering how to provide high-quality education and holistic development support services to students, and innovating to meet student needs[13](index=13&type=chunk) - The company will continue to implement measures to reduce administrative expenses and mitigate risks from inflationary cost pressures[13](index=13&type=chunk) - The company remains firmly committed to restoring profitability following the impact of China's K-12 regulations[13](index=13&type=chunk) [Business Segments Overview](index=4&type=section&id=Business%20Segments%20Overview) This section provides an overview of the company's key business segments, including overseas schools, complementary education services, and domestic kindergarten and K-12 operation services [Overseas Schools (CATS Global Schools)](index=4&type=section&id=Overseas%20Schools%20%28CATS%20Global%20Schools%29) As of August 31, 2022, CATS Global Schools comprised four Stafford House campuses in the UK, four CATS Colleges in the US and UK, Cambridge School of Visual & Performing Arts, and three independent boarding schools in the UK - As of August 31, 2022, CATS Global Schools included **four Stafford House campuses** in the UK, **four CATS Colleges** in the US and UK, the Cambridge School of Visual & Performing Arts, and **three independent boarding schools** in the UK[7](index=7&type=chunk) [Complementary Education Services](index=4&type=section&id=Complementary%20Education%20Services) Complementary education services encompass language training, overseas study consulting, career counseling, study tours, and international competition training - Complementary education services include language training, overseas study consulting, career counseling, study tours, and international competition training[8](index=8&type=chunk) [Domestic Kindergartens & K-12 Operation Services](index=4&type=section&id=Domestic%20Kindergartens%20%26%20K-12%20Operation%20Services) Domestic kindergartens and K-12 operation services include the operation of for-profit kindergartens and K-12 schools in China, offering services such as catering and procurement - Domestic kindergartens and K-12 operation services include the operation of for-profit kindergartens and domestic K-12 schools, offering services such as catering and procurement[9](index=9&type=chunk) [Recent Developments](index=5&type=section&id=Recent%20Developments) This section outlines recent corporate actions, including the company's compliance with NYSE minimum price requirements [NYSE Minimum Price Requirement Compliance](index=5&type=section&id=NYSE%20Minimum%20Price%20Requirement%20Compliance) The company regained compliance with the NYSE minimum share price requirement on September 1, 2022, by adjusting its ADS to Class A ordinary share ratio from 1:1 to 1:4, ensuring continued ADS listing and trading - To regain compliance with the NYSE minimum share price requirement, the company adjusted its ADS to Class A ordinary share ratio from **1:1 to 1:4** on August 19, 2022[14](index=14&type=chunk) - On September 1, 2022, the company received confirmation from the NYSE that it had regained compliance with the listing standards within the prescribed timeframe, and its ADSs will continue to trade on the NYSE[15](index=15&type=chunk) [Unaudited Financial Results for the Fourth Fiscal Quarter Ended August 31, 2022](index=6&type=section&id=UNAUDITED%20FINANCIAL%20RESULTS%20FOR%20THE%20FOURTH%20FISCAL%20QUARTER%20ENDED%20AUGUST%2031%2C%202022) This section details the unaudited financial performance for the fourth fiscal quarter of 2022, covering revenue, costs, profits, and losses from continuing operations [Revenue from Continuing Operations](index=6&type=section&id=Revenue%20from%20Continuing%20Operations_Q4) Revenue from continuing operations for the fourth fiscal quarter of 2022 was RMB 403.9 million, a 26.2% year-over-year increase, driven by strong growth in overseas schools and domestic kindergartens & K-12 operation services, despite a slight decline in complementary education services due to pandemic impacts Revenue by Business Segment (RMB in million) | Business Segment | Q4 2022 Revenue (RMB million) | Q4 2021 Revenue (RMB million) | YoY Growth % | Percentage of Total Revenue % | | :------- | :----------------------- | :----------------------- | :--------- | :------------- | | Overseas Schools | 121.6 | 75.5 | 61.1% | 30.1% | | Complementary Education | 179.7 | 182.6 | -1.6% | 44.5% | | Domestic K-12 | 102.6 | 61.9 | 65.7% | 25.4% | | **Total** | **403.9** | **320.0** | **26.2%** | **100%** | [Overseas Schools Revenue](index=6&type=section&id=Overseas%20Schools%20Revenue_Q4) Overseas schools revenue for the fourth fiscal quarter was RMB 121.6 million, a 61.1% year-over-year increase, primarily attributed to the recovery of overseas school operations post-pandemic - Fourth fiscal quarter overseas schools revenue was **RMB 121.6 million**, a **61.1%** year-over-year increase[18](index=18&type=chunk) - The growth is primarily attributed to the recovery of overseas school operations post-pandemic[18](index=18&type=chunk) [Complementary Education Services Revenue](index=6&type=section&id=Complementary%20Education%20Services%20Revenue_Q4) Complementary education services revenue for the fourth fiscal quarter was RMB 179.7 million, a slight decrease from RMB 182.6 million in the prior year period, mainly due to regional outbreaks of new COVID variants disrupting study tours and language training businesses - Fourth fiscal quarter complementary education services revenue was **RMB 179.7 million**, a decrease from **RMB 182.6 million** in the prior year period[19](index=19&type=chunk) - The decrease is primarily attributed to regional outbreaks of new COVID variants leading to disruptions in study tours and language training businesses[19](index=19&type=chunk) [Domestic Kindergartens & K-12 Operation Services Revenue](index=6&type=section&id=Domestic%20Kindergartens%20%26%20K-12%20Operation%20Services%20Revenue_Q4) Domestic kindergartens and K-12 operation services revenue for the fourth fiscal quarter was RMB 102.6 million, a 65.7% year-over-year increase, primarily driven by increased catering service revenue and expanded procurement services - Fourth fiscal quarter domestic kindergartens and K-12 operation services revenue was **RMB 102.6 million**, a **65.7%** year-over-year increase[20](index=20&type=chunk) - The growth is primarily attributed to increased catering service revenue and expanded procurement services[20](index=20&type=chunk) [Cost of Revenue from Continuing Operations](index=6&type=section&id=Cost%20of%20Revenue%20from%20Continuing%20Operations_Q4) Cost of revenue from continuing operations for the fourth fiscal quarter was RMB 320.1 million, an increase from RMB 271.7 million in the prior year period Cost of Revenue from Continuing Operations (RMB in million) | Metric | Q4 2022 | Q4 2021 | | :-------------------- | :------- | :------- | | Cost of Revenue from Continuing Operations | 320.1 | 271.7 | [Gross Profit, Gross Margin and Adjusted Gross Profit from Continuing Operations](index=6&type=section&id=Gross%20Profit%2C%20Gross%20Margin%20and%20Adjusted%20Gross%20Profit%20from%20Continuing%20Operations_Q4) Gross profit from continuing operations for the fourth fiscal quarter increased by 73.4% year-over-year to RMB 83.8 million, with gross margin improving to 20.7%, primarily due to the recovery of overseas operations; adjusted gross profit grew by 65.5% to RMB 87.7 million Gross Profit and Margin (RMB in million) | Metric | Q4 2022 | Q4 2021 | YoY Growth % | | :-------------------- | :------- | :------- | :--------- | | Gross Profit | 83.8 | 48.3 | 73.4% | | Gross Margin | 20.7% | 15.1% | 5.6% | | Adjusted Gross Profit | 87.7 | 53.0 | 65.5% | - The growth in gross profit and gross margin is primarily attributed to the recovery of overseas operations[23](index=23&type=chunk) [Selling, General and Administrative Expenses from Continuing Operations](index=6&type=section&id=Selling%2C%20General%20and%20Administrative%20Expenses%20from%20Continuing%20Operations_Q4) Total selling, general and administrative expenses for the fourth fiscal quarter were RMB 137.8 million, a 13.0% year-over-year decrease, primarily due to the company's proactive cost management across all business segments SG&A Expenses (RMB in million) | Metric | Q4 2022 | Q4 2021 | YoY Change % | | :-------------------- | :------- | :------- | :--------- | | SG&A Expenses | 137.8 | 158.5 | -13.0% | - The decrease in SG&A expenses is primarily attributed to the company's proactive cost management across all business segments[25](index=25&type=chunk) [Operating Loss, Operating Margin and Adjusted Operating Loss from Continuing Operations](index=6&type=section&id=Operating%20Loss%2C%20Operating%20Margin%20and%20Adjusted%20Operating%20Loss%20from%20Continuing%20Operations_Q4) Operating loss from continuing operations for the fourth fiscal quarter significantly narrowed by 70.9% to RMB 59.4 million, with the operating loss margin improving to 14.7%; adjusted operating loss narrowed by 50.7% to RMB 48.8 million Operating Loss and Margin (RMB in million) | Metric | Q4 2022 | Q4 2021 | YoY Change % | | :-------------------- | :------- | :------- | :--------- | | Operating Loss | (59.4) | (204.0) | 70.9% | | Operating Loss Margin | (14.7)% | (63.7)% | 49.0% | | Adjusted Operating Loss | (48.8) | (99.2) | 50.7% | [Net Loss and Adjusted Net Loss](index=7&type=section&id=Net%20Loss%20and%20Adjusted%20Net%20Loss_Q4) Net loss from continuing operations for the fourth fiscal quarter significantly decreased by 64.4% to RMB 99.4 million from RMB 279.3 million, with adjusted net loss narrowing by 48.9% to RMB 89.7 million Net Loss (RMB in million) | Metric | Q4 2022 | Q4 2021 | YoY Change % | | :-------------------- | :------- | :------- | :--------- | | Net Loss from Continuing Operations | (99.4) | (279.3) | 64.4% | | Adjusted Net Loss | (89.7) | (175.5) | 48.9% | - Management is closely monitoring the possibility of goodwill and intangible asset impairment due to the company's market capitalization being below its net assets[28](index=28&type=chunk) [Net Loss per Ordinary Share/ADS and Adjusted Net Loss per Ordinary Share/ADS](index=7&type=section&id=Net%20Loss%20per%20ordinary%20share%2FADS%20and%20Adjusted%20Net%20Loss%20per%20ordinary%20share%2FADS_Q4) Basic and diluted net loss per ordinary share from continuing operations for the fourth fiscal quarter was RMB 0.90, and per ADS was RMB 3.60, both significantly narrowed from the prior year period, with adjusted net loss per ordinary share and per ADS also substantially reduced Net Loss per Share/ADS (RMB) | Metric | Q4 2022 | Q4 2021 | YoY Change % | | :----------------------------------- | :------- | :------- | :--------- | | Basic and Diluted Net Loss per Ordinary Share from Continuing Operations | (0.90) | (2.40) | 62.5% | | Adjusted Basic and Diluted Net Loss per Ordinary Share | (0.82) | (1.53) | 46.4% | | Basic and Diluted Net Loss per ADS from Continuing Operations | (3.60) | (9.60) | 62.5% | | Adjusted Basic and Diluted Net Loss per ADS | (3.28) | (6.12) | 46.4% | [Adjusted EBITDA Loss](index=7&type=section&id=Adjusted%20EBITDA%20Loss_Q4) Adjusted EBITDA loss for the fourth fiscal quarter was RMB 47.6 million, with the loss amount decreasing by 59.9% year-over-year Adjusted EBITDA Loss (RMB in million) | Metric | Q4 2022 | Q4 2021 | YoY Change % | | :-------------------- | :------- | :------- | :--------- | | Adjusted EBITDA Loss | (47.6) | (29.8) | 59.9% | [Unaudited Financial Results for the Fiscal Year Ended August 31, 2022](index=7&type=section&id=UNAUDITED%20FINANCIAL%20RESULTS%20FOR%20THE%20FISCAL%20YEAR%20ENDED%20AUGUST%2031%2C%202022) This section presents the unaudited financial performance for the full fiscal year 2022, detailing revenue, costs, profits, and losses from continuing operations [Revenue from Continuing Operations](index=7&type=section&id=Revenue%20from%20Continuing%20Operations_FY22) Revenue from continuing operations for the full fiscal year 2022 was RMB 1,714.9 million, a 22.3% year-over-year increase, driven by comprehensive growth across overseas schools, complementary education services (especially overseas study and career consulting), and domestic kindergartens & K-12 operation services Revenue by Business Segment (RMB in million) | Business Segment | FY 2022 Revenue (RMB million) | FY 2021 Revenue (RMB million) | YoY Growth % | Percentage of Total Revenue % | | :------- | :----------------------- | :----------------------- | :--------- | :------------- | | Overseas Schools | 652.8 | 502.6 | 29.9% | 38.1% | | Complementary Education | 636.6 | 625.6 | 1.8% | 37.1% | | Domestic K-12 | 425.5 | 273.6 | 55.6% | 24.8% | | **Total** | **1,714.9** | **1,401.8** | **22.3%** | **100%** | [Overseas Schools Revenue](index=7&type=section&id=Overseas%20Schools%20Revenue_FY22) Overseas schools revenue for fiscal year 2022 was RMB 652.8 million, a 29.9% year-over-year increase, primarily attributed to the recovery of overseas school operations post-pandemic - Fiscal year 2022 overseas schools revenue was **RMB 652.8 million**, a **29.9%** year-over-year increase[34](index=34&type=chunk) - The growth is primarily attributed to the recovery of overseas school operations post-pandemic[34](index=34&type=chunk) [Complementary Education Services Revenue](index=8&type=section&id=Complementary%20Education%20Services%20Revenue_FY22) Complementary education services revenue for fiscal year 2022 was RMB 636.6 million, a 1.8% year-over-year increase, primarily driven by the recovery of overseas study consulting and career counseling businesses - Fiscal year 2022 complementary education services revenue was **RMB 636.6 million**, a **1.8%** year-over-year increase[36](index=36&type=chunk) - The growth is primarily attributed to the recovery of overseas study consulting and career counseling businesses[36](index=36&type=chunk) [Domestic Kindergartens & K-12 Operation Services Revenue](index=8&type=section&id=Domestic%20Kindergartens%20%26%20K-12%20Operation%20Services%20Revenue_FY22) Domestic kindergartens and K-12 operation services revenue for fiscal year 2022 was RMB 425.5 million, a 55.6% year-over-year increase, primarily due to increased catering service revenue and expanded procurement services - Fiscal year 2022 domestic kindergartens and K-12 operation services revenue was **RMB 425.5 million**, a **55.6%** year-over-year increase[37](index=37&type=chunk) - The growth is primarily attributed to increased catering service revenue and expanded procurement services[37](index=37&type=chunk) [Cost of Revenue from Continuing Operations](index=8&type=section&id=Cost%20of%20Revenue%20from%20Continuing%20Operations_FY22) Cost of revenue from continuing operations for fiscal year 2022 was RMB 1,236.8 million, an increase from RMB 1,180.3 million in the prior year period Cost of Revenue from Continuing Operations (RMB in million) | Metric | FY 2022 | FY 2021 | | :-------------------- | :------- | :------- | | Cost of Revenue from Continuing Operations | 1,236.8 | 1,180.3 | [Gross Profit, Gross Margin and Adjusted Gross Profit from Continuing Operations](index=8&type=section&id=Gross%20Profit%2C%20Gross%20Margin%20and%20Adjusted%20Gross%20Profit%20from%20Continuing%20Operations_FY22) Gross profit from continuing operations for fiscal year 2022 increased by 115.8% year-over-year to RMB 478.1 million, with gross margin improving to 27.9%, primarily due to the sustained recovery of overseas operations, overseas study consulting, and career counseling businesses; adjusted gross profit grew by 108.7% to RMB 495.9 million Gross Profit and Margin (RMB in million) | Metric | FY 2022 | FY 2021 | YoY Growth % | | :-------------------- | :------- | :------- | :--------- | | Gross Profit | 478.1 | 221.5 | 115.8% | | Gross Margin | 27.9% | 15.8% | 12.1% | | Adjusted Gross Profit | 495.9 | 237.7 | 108.7% | - The growth in gross profit and gross margin is primarily attributed to the sustained recovery of overseas operations, overseas study consulting, and career counseling businesses[40](index=40&type=chunk) [Selling, General and Administrative Expenses from Continuing Operations](index=8&type=section&id=Selling%2C%20General%20and%20Administrative%20Expenses%20from%20Continuing%20Operations_FY22) Total selling, general and administrative expenses for fiscal year 2022 were RMB 539.9 million, remaining largely consistent with RMB 535.9 million in the prior year period SG&A Expenses (RMB in million) | Metric | FY 2022 | FY 2021 | | :-------------------- | :------- | :------- | | SG&A Expenses | 539.9 | 535.9 | [Operating Loss, Operating Margin and Adjusted Operating Loss from Continuing Operations](index=8&type=section&id=Operating%20Loss%2C%20Operating%20Margin%20and%20Adjusted%20Operating%20Loss%20from%20Continuing%20Operations_FY22) Operating loss from continuing operations for fiscal year 2022 significantly narrowed by 83.8% to RMB 63.0 million, with the operating loss margin improving to 3.7%; adjusted operating loss narrowed by 85.5% to RMB 39.4 million Operating Loss and Margin (RMB in million) | Metric | FY 2022 | FY 2021 | YoY Change % | | :-------------------- | :------- | :------- | :--------- | | Operating Loss | (63.0) | (389.7) | 83.8% | | Operating Loss Margin | (3.7)% | (27.8)% | 24.1% | | Adjusted Operating Loss | (39.4) | (271.4) | 85.5% | [Net Loss and Adjusted Net Loss](index=8&type=section&id=Net%20Loss%20and%20Adjusted%20Net%20Loss_FY22) Net loss from continuing operations for fiscal year 2022 significantly decreased by 70.2% to RMB 159.4 million from RMB 535.1 million, with adjusted net loss narrowing by 66.8% to RMB 139.6 million Net Loss (RMB in million) | Metric | FY 2022 | FY 2021 | YoY Change % | | :-------------------- | :------- | :------- | :--------- | | Net Loss from Continuing Operations | (159.4) | (535.1) | 70.2% | | Adjusted Net Loss | (139.6) | (420.2) | 66.8% | [Net Loss per Ordinary Share/ADS and Adjusted Net Loss per Ordinary Share/ADS](index=8&type=section&id=Net%20Loss%20per%20ordinary%20share%2FADS%20and%20Adjusted%20Net%20Loss%20per%20ordinary%20share%2FADS_FY22) Basic and diluted net loss per ordinary share from continuing operations for fiscal year 2022 was RMB 1.39, and per ADS was RMB 5.56, both significantly narrowed from the prior year period, with adjusted net loss per ordinary share and per ADS also substantially reduced Net Loss per Share/ADS (RMB) | Metric | FY 2022 | FY 2021 | YoY Change % | | :----------------------------------- | :------- | :------- | :--------- | | Basic and Diluted Net Loss per Ordinary Share from Continuing Operations | (1.39) | (4.54) | 69.4% | | Adjusted Basic and Diluted Net Loss per Ordinary Share | (1.23) | (3.57) | 65.5% | | Basic and Diluted Net Loss per ADS from Continuing Operations | (5.56) | (18.16) | 69.4% | | Adjusted Basic and Diluted Net Loss per ADS | (4.92) | (14.28) | 65.5% | [Adjusted EBITDA](index=9&type=section&id=Adjusted%20EBITDA_FY22) Adjusted EBITDA for fiscal year 2022 was RMB 149.0 million, a significant increase of 592.5% from a loss of RMB 30.3 million in the prior year period, marking a turnaround to positive EBITDA Adjusted EBITDA (RMB in million) | Metric | FY 2022 | FY 2021 | YoY Change % | | :-------------------- | :------- | :------- | :--------- | | Adjusted EBITDA | 149.0 | (30.3) | 592.5% | [Cash and Working Capital](index=9&type=section&id=Cash%20and%20Working%20Capital) As of August 31, 2022, the company's cash and cash equivalents and restricted cash totaled RMB 857.8 million (US$124.5 million), a decrease from RMB 1,371.6 million as of May 31, 2022, primarily due to the redemption of US$232.3 million in matured senior notes Cash and Cash Equivalents and Restricted Cash (RMB in million) | Metric | August 31, 2022 | May 31, 2022 | | :-------------------- | :------------- | :------------- | | Cash and Cash Equivalents and Restricted Cash | 857.8 | 1,371.6 | - The company redeemed all outstanding senior notes due July 31, 2022, for a total redemption price of **US$232.3 million** (including principal and interest)[51](index=51&type=chunk) [Convenience Translation](index=9&type=section&id=Convenience%20Translation) The company reports in RMB, but for reader convenience, current period amounts in periodic reports are translated into US dollars using the exchange rate at the balance sheet date, which was US$1.00 = RMB 6.8890 as of August 31, 2022 - The company's reporting currency is RMB, but for reader convenience, current period amounts in periodic reports are translated into US dollars using the exchange rate at the balance sheet date[52](index=52&type=chunk) - As of August 31, 2022, the translation exchange rate was **US$1.00 = RMB 6.8890**[52](index=52&type=chunk) [Non-GAAP Financial Measures](index=10&type=section&id=NON-GAAP%20FINANCIAL%20MEASURES) This section defines and explains the rationale and limitations of the company's non-GAAP financial measures used for performance evaluation and business planning [Definitions of Non-GAAP Measures](index=10&type=section&id=Definitions%20of%20Non-GAAP%20Measures) The company uses non-GAAP metrics such as adjusted EBITDA, adjusted net income/(loss), adjusted gross profit/(loss), and adjusted operating income/(loss) to assess operating performance, providing a clearer view by excluding non-cash or non-recurring items like share-based compensation, intangible asset amortization, asset impairment losses, and income/(loss) from discontinued operations - Adjusted gross profit/(loss) is defined as gross profit/(loss) from continuing operations excluding intangible asset amortization[54](index=54&type=chunk) - Adjusted EBITDA is defined as net income/(loss) excluding net interest income/(expense), income tax expense/benefit, depreciation and amortization, share-based compensation expenses, impairment loss of operating lease right-of-use assets, impairment loss of goodwill, impairment loss of property and equipment, and net income/(loss) from discontinued operations[54](index=54&type=chunk) - Adjusted net income/(loss) is defined as net income/(loss) excluding share-based compensation expenses, intangible asset amortization, tax impact of intangible asset amortization, impairment loss of operating lease right-of-use assets, impairment loss of goodwill, impairment loss of property and equipment, and net income/(loss) from discontinued operations[54](index=54&type=chunk) [Rationale for Non-GAAP Measures](index=10&type=section&id=Rationale%20for%20Non-GAAP%20Measures) The company utilizes non-GAAP financial measures to better evaluate operating performance and formulate business plans, enabling clearer period-over-period comparisons for management and investors by excluding non-cash expenses (e.g., depreciation, amortization, share-based compensation) and non-operating or non-recurring items (e.g., income/loss from discontinued operations) - The company uses non-GAAP financial measures to assess operating performance and formulate business plans[56](index=56&type=chunk) - Intangible asset amortization is excluded to enhance comparability of operating results between newly acquired and long-held businesses, as related intangible assets are not significantly correlated with business growth[55](index=55&type=chunk) - Income/(loss) from discontinued operations is excluded to facilitate period-over-period comparison of operating results, as it is a non-recurring item[55](index=55&type=chunk) [Limitations of Non-GAAP Measures](index=11&type=section&id=Limitations%20of%20Non-GAAP%20Measures) Non-GAAP financial measures are not defined or presented according to US GAAP and have analytical limitations, as they do not reflect all revenue and expense items affecting company operations and may differ from non-GAAP information used by other companies, thereby limiting comparability - Non-GAAP financial measures are not defined or presented according to US GAAP and have analytical limitations[58](index=58&type=chunk) - These metrics do not reflect all revenue and expense items affecting the company's operations, such as net interest income/(expense), income tax expense/benefit, depreciation and amortization, and share-based compensation expenses[58](index=58&type=chunk) - These non-GAAP measures may differ from non-GAAP information used by other companies, including peer companies, thus limiting their comparability[58](index=58&type=chunk) [Company Information & Disclosures](index=11&type=section&id=Company%20Information%20%26%20Disclosures) This section provides essential company details, including its profile, forward-looking statement disclaimers, and investor and media contact information [About Bright Scholar Education Holdings Limited](index=11&type=section&id=About%20Bright%20Scholar%20Education%20Holdings%20Limited) Bright Scholar Education Holdings Limited is a leading global education services company primarily offering high-quality international education to students worldwide, supplemented by Chinese government-mandated curricula to support students pursuing higher education - Bright Scholar is a leading global education services company primarily providing high-quality international education to students worldwide[59](index=59&type=chunk) - The company also offers Chinese government-mandated curricula to meet the needs of students seeking higher education in China[59](index=59&type=chunk) [Safe Harbor Statement](index=11&type=section&id=Safe%20Harbor%20Statement) This announcement contains forward-looking statements involving known or unknown risks, uncertainties, and other factors that could cause actual results to differ materially from those in the forward-looking statements, and the company undertakes no obligation to update any forward-looking statements unless required by law - This announcement contains forward-looking statements involving known or unknown risks, uncertainties, and other factors that could cause the company's actual results to differ materially from those in the forward-looking statements[60](index=60&type=chunk) - The company undertakes no obligation to update any forward-looking statements unless required by law[60](index=60&type=chunk) [IR Contact](index=11&type=section&id=IR%20Contact) Investor Relations contact is GCM Strategic Communications, email: BEDU.IR@gcm.international - Investor Relations contact: GCM Strategic Communications, email: **BEDU.IR@gcm.international**[61](index=61&type=chunk) [Media Contact](index=11&type=section&id=Media%20Contact) Media contact is email: media@brightscholar.com, phone: +86-757-6683-2507 - Media contact: email: **media@brightscholar.com**, phone: **+86-757-6683-2507**[61](index=61&type=chunk) [Unaudited Condensed Consolidated Financial Statements](index=12&type=section&id=Unaudited%20Condensed%20Consolidated%20Financial%20Statements) This section presents the unaudited condensed consolidated financial statements, including balance sheets, statements of operations, cash flows, and GAAP to non-GAAP reconciliations [Balance Sheets](index=12&type=section&id=Balance%20Sheets) As of August 31, 2022, the company's total assets were RMB 5,469 million, total liabilities were RMB 3,056 million, and total equity was RMB 2,413 million, with both total assets and liabilities decreasing from August 31, 2021, primarily due to the divestiture of discontinued operations and redemption of senior notes Balance Sheets (RMB in thousands) | Metric (RMB in thousands) | August 31, 2021 | August 31, 2022 | | :-------------------- | :------------- | :------------- | | **Assets** | | | | Cash and Cash Equivalents | 844,684 | 664,769 | | Restricted Cash | 669,029 | 191,365 | | Accounts Receivable, Net | 41,723 | 19,084 | | Amounts Due from Related Parties, Net | 15,087 | 196,626 | | Other Receivables, Deposits and Other Assets, Net | 81,119 | 114,151 | | Inventories | 7,579 | 6,869 | | Amounts Due from Affected Entities, Net | 2,028,866 | - | | **Total Current Assets** | **3,688,087** | **1,192,864** | | Restricted Cash - Non-current | 1,450 | 1,650 | | Property and Equipment, Net | 519,452 | 404,534 | | Intangible Assets, Net | 485,822 | 430,495 | | Goodwill, Net | 1,950,186 | 1,832,296 | | Long-term Investments | 75,443 | 40,486 | | Prepaid Construction Contracts | 5,974 | 4,894 | | Deferred Tax Assets, Net | 64,096 | 85,103 | | Other Non-current Assets, Net | 68,217 | 15,343 | | Operating Lease Right-of-Use Assets | 1,773,773 | 1,461,333 | | **Total Non-current Assets** | **4,944,413** | **4,276,134** | | **Total Assets** | **8,632,500** | **5,468,998** | | **Liabilities and Equity** | | | | **Current Liabilities** | | | | Accounts Payable | 73,411 | 100,229 | | Amounts Due to Related Parties | 40,445 | 343,032 | | Accrued Expenses and Other Current Liabilities | 234,036 | 259,267 | | Short-term Borrowings | 753,754 | 149,239 | | Bonds Payable | 1,836,362 | - | | Income Taxes Payable | 178,213 | 85,856 | | Contract Liabilities | 425,954 | 516,731 | | Refund Liabilities | 32,362 | 20,517 | | Operating Lease Liabilities | 123,215 | 106,629 | | Amounts Due to Affected Entities | 333,270 | - | | **Total Current Liabilities** | **4,031,022** | **1,581,500** | | Contract Liabilities – Non-current | 1,421 | 2,203 | | Deferred Tax Liabilities, Net | 26,744 | 21,707 | | Other Non-current Liabilities to Related Parties | 13,154 | 11,197 | | Long-term Borrowings | 616 | 633 | | Operating Lease Liabilities – Non-current | 1,752,667 | 1,438,449 | | **Total Non-current Liabilities** | **1,794,602** | **1,474,189** | | **Total Liabilities** | **5,825,624** | **3,055,689** | | **Equity** | | | | Share Capital | 8 | 8 | | Additional Paid-in Capital | 1,727,020 | 1,693,358 | | Statutory Reserves | 2,531 | 14,873 | | Accumulated Other Comprehensive Income | 168,324 | 8,076 | | Accumulated Retained Earnings | 648,944 | 471,353 | | **Total Shareholders’ Equity** | **2,546,827** | **2,187,668** | | Non-controlling Interests | 260,049 | 225,641 | | **Total Equity** | **2,806,876** | **2,413,309** | | **Total Liabilities and Equity** | **8,632,500** | **5,468,998** | [Statements of Operations](index=15&type=section&id=Statements%20of%20Operations) For both the fourth fiscal quarter and the full fiscal year 2022, the company's continuing operations achieved revenue growth, significant improvements in gross profit and operating loss, substantial narrowing of net loss, and corresponding reductions in loss per share and per ADS, reflecting effective business recovery and cost control Statements of Operations (RMB in thousands) | Metric (RMB in thousands) | Q4 2021 | Q4 2022 | FY 2021 | FY 2022 | | :----------------------------------- | :------- | :------- | :------- | :------- | | **Continuing Operations** | | | | | | Revenue | 320,021 | 403,855 | 1,401,780 | 1,714,909 | | Cost of Revenue | (271,701) | (320,057) | (1,180,263) | (1,236,799) | | Gross Profit | 48,320 | 83,798 | 221,517 | 478,110 | | Selling, General and Administrative Expenses | (158,504) | (137,825) | (535,878) | (539,893) | | Operating Loss | (203,981) | (59,361) | (389,697) | (63,030) | | Net Loss | (478,192) | (99,427) | (165,803) | (159,447) | | Net Loss Attributable to Ordinary Shareholders | (364,751) | (106,983) | (52,805) | (165,250) | | Basic and Diluted Net Loss per Ordinary Share - Continuing Operations | (2.40) | (0.90) | (4.54) | (1.39) | | Basic and Diluted Net Loss per ADS - Continuing Operations | (9.60) | (3.60) | (18.16) | (5.56) | [Statements of Cash Flows](index=17&type=section&id=Statements%20of%20Cash%20Flows) In the fourth fiscal quarter of 2022, net cash inflow from operating activities was RMB 165.5 million, net cash inflow from investing activities was RMB 310.2 million, and net cash outflow from financing activities was RMB 1,001.4 million; for the full year, net cash inflow from operating activities was RMB 45.5 million, net cash outflow from investing activities was RMB 836.8 million, and net cash inflow from financing activities was RMB 101.4 million Statements of Cash Flows (RMB in thousands) | Metric (RMB in thousands) | Q4 2021 | Q4 2022 | FY 2021 | FY 2022 | | :-------------------- | :------- | :------- | :------- | :------- | | Net Cash Provided by Operating Activities | 842,770 | 165,485 | 698,808 | 45,497 | | Net Cash (Used in)/Provided by Investing Activities | (558,856) | 310,193 | (3,079,036) | (836,769) | | Net Cash (Used in)/Provided by Financing Activities | (468,702) | (1,001,420) | (446,534) | 101,383 | | Effect of Exchange Rate Changes | 31,861 | 11,936 | (82,012) | 32,510 | | Net Change in Cash and Cash Equivalents and Restricted Cash | (152,927) | (513,806) | (2,908,774) | (657,379) | | Cash and Cash Equivalents and Restricted Cash at End of Period | 1,515,163 | 857,784 | 1,515,163 | 857,784 | [Reconciliations of GAAP and Non-GAAP Results](index=18&type=section&id=Reconciliations%20of%20GAAP%20and%20Non-GAAP%20Results) The company provides reconciliations of GAAP to non-GAAP financial measures, detailing adjustments from GAAP gross profit, operating loss, net loss, and net loss attributable to ordinary shareholders to adjusted non-GAAP metrics, including share-based compensation, intangible asset amortization, asset impairment losses, and income/loss from discontinued operations Reconciliations of GAAP and Non-GAAP Results (RMB in thousands) | Metric (RMB in thousands) | Q4 2021 | Q4 2022 | FY 2021 | FY 2022 | | :----------------------------------- | :------- | :------- | :------- | :------- | | Gross Profit from Continuing Operations | 48,320 | 83,798 | 221,517 | 478,110 | | Add: Intangible Asset Amortization | 4,680 | 3,931 | 16,141 | 17,814 | | **Adjusted Gross Profit from Continuing Operations** | **53,000** | **87,729** | **237,658** | **495,924** | | Operating Loss from Continuing Operations | (203,981) | (59,361) | (389,697) | (63,030) | | Add: Share-based Compensation Expenses | (167) | - | 1,865 | (816) | | Add: Intangible Asset Amortization | 4,680 | 3,931 | 16,141 | 17,814 | | Add: Impairment Loss of Operating Lease Right-of-Use Assets | 15,575 | - | 15,575 | - | | Add: Impairment Loss of Goodwill | 84,730 | - | 84,730 | - | | Add: Impairment Loss of Property and Equipment | - | 6,586 | - | 6,586 | | **Adjusted Operating Loss from Continuing Operations** | **(99,163)** | **(48,844)** | **(271,386)** | **(39,446)** | | Net Loss | (478,192) | (99,427) | (165,803) | (159,447) | | Add: Share-based Compensation Expenses | (167) | - | 1,865 | (816) | | Add: Intangible Asset Amortization | 4,680 | 3,931 | 16,141 | 17,814 | | Add: Tax Impact of Intangible Asset Amortization | (1,029) | (811) | (3,343) | (3,764) | | Add: Impairment Loss of Operating Lease Right-of-Use Assets | 15,575 | - | 15,575 | - | | Add: Impairment Loss of Goodwill | 84,730 | - | 84,730 | - | | Add: Impairment Loss of Property and Equipment | - | 6,586 | - | 6,586 | | Less: Net Income/(Loss) from Discontinued Operations | (198,941) | - | 369,343 | - | | **Adjusted Net Loss** | **(175,462)** | **(89,721)** | **(420,178)** | **(139,627)** | | Net Loss Attributable to Ordinary Shareholders | (364,751) | (106,983) | (52,805) | (165,250) | | Add: Share-based Compensation Expenses | (167) | - | 1,865 | (816) | | Add: Intangible Asset Amortization | 4,680 | 3,931 | 16,141 | 17,814 | | Add: Tax Impact of Intangible Asset Amortization | (1,029) | (811) | (3,343) | (3,764) | | Add: Impairment Loss of Operating Lease Right-of-Use Assets | 15,575 | - | 15,575 | - | | Add: Impairment Loss of Goodwill | 84,730 | - | 84,730 | - | | Add: Impairment Loss of Property and Equipment | - | 6,586 | - | 6,586 | | Less: Net Income/(Loss) from Discontinued Operations | (78,625) | - | 487,963 | - | | **Adjusted Net Loss Attributable to Ordinary Shareholders** | **(182,337)** | **(97,277)** | **(425,800)** | **(145,430)** | | Net Loss | (478,192) | (99,427) | (165,803) | (159,447) | | Add: Net Interest Expense | 47,330 | 17,093 | 169,693 | 127,840 | | Add: Income Tax Expense | 66,664 | 11,667 | 94,176 | 58,919 | | Add: Depreciation and Amortization | 35,325 | 16,442 | 138,847 | 115,934 | | Add: Share-based Compensation Expenses | (167) | - | 1,865 | (816) | | Add: Impairment Loss of Operating Lease Right-of-Use Assets | 15,575 | - | 15,575 | - | | Add: Impairment Loss of Goodwill | 84,730 | - | 84,730 | - | | Add: Impairment Loss of Property and Equipment | - | 6,586 | - | 6,586 | | Less: Net Income/(Loss) from Discontinued Operations | (198,941) | - | 369,343 | - | | **Adjusted EBITDA** | **(29,794)** | **(47,639)** | **(30,260)** | **149,016** | | Adjusted Net Loss per Ordinary Share - Basic and Diluted | (1.53) | (0.82) | (3.57) | (1.23) | | Adjusted Net Loss per ADS - Basic and Diluted | (6.12) | (3.28) | (14.28) | (4.92) |

Revenue and Profitability - Revenue from continuing operations for the third fiscal quarter was RMB 437.5 million, a 20.7% increase from RMB 362.4 million in the same period last year[3]. - Gross profit from continuing operations reached RMB 135.4 million, representing a 158.2% increase compared to RMB 52.4 million in the same quarter last year[3]. - Adjusted EBITDA for the quarter was RMB 69.0 million, a significant increase of 2,052.6% from RMB 3.2 million in the same quarter last year[3]. - Revenue for the nine-month period was RMB 1,311.1 million, a 21.2% increase from RMB 1,081.8 million for the same period last fiscal year[20]. - Gross profit for the period was RMB 394.3 million, a 127.7% increase from RMB 173.2 million for the same period last fiscal year, with a gross margin increase to 30.1% from 16.0%[22]. - Adjusted EBITDA for the quarter was RMB 69.0 million, compared to RMB 3.2 million for the same period last fiscal year[20]. Operating Performance - Operating income from continuing operations was RMB 19.3 million, a turnaround from an operating loss of RMB 70.1 million in the same quarter last year[3]. - Operating income for the quarter was RMB 19.3 million, a 127.5% increase from an operating loss of RMB 70.1 million for the same period last fiscal year[18]. - Adjusted operating income for the quarter was RMB 23.8 million, representing a 136.4% increase from an adjusted operating loss of RMB 65.3 million for the same period last fiscal year[18]. - Net loss for the quarter was RMB 7.1 million, compared to net income of RMB 163.9 million for the same period last fiscal year[18]. - The company reported a significant increase in amounts due to related parties, rising to RMB 461,379 from RMB 40,445, an increase of over 1,040%[43]. Expenses and Cost Management - Total SG&A expenses for the quarter decreased to RMB 117.1 million from RMB 129.2 million in the same quarter last year[16]. - Total SG&A expenses for the period were RMB 402.1 million, compared to RMB 377.4 million for the same period last fiscal year[23]. - Selling, general and administrative expenses from continuing operations decreased from RMB 129,180 million in 2021 to RMB 117,122 million in 2022, a reduction of approximately 9%[57]. - Adjusted selling, general and administrative expenses from continuing operations were RMB 128,518 million in 2021 and RMB 117,122 million in 2022, showing a decrease of about 9%[58]. Cash Flow and Liquidity - Cash and cash equivalents as of May 31, 2022, were RMB 1,371.6 million (US$205.6 million), down from RMB 1,492.6 million as of February 28, 2022[27]. - Net cash generated from operating activities for the three months ended May 2022 was RMB 321,060, a turnaround from a net cash used of RMB 200,367 in the same period of 2021[54]. - Cash and cash equivalents at the end of the period for May 2022 were RMB 1,371,590, down from RMB 1,668,090 at the beginning of the period[54]. - The company experienced a net change in cash and cash equivalents of RMB (121,030) for the three months ended May 2022[54]. Balance Sheet and Financial Position - As of May 31, 2022, total assets amounted to RMB 7,644,389, a decrease from RMB 8,632,500 as of August 31, 2021[41]. - Total current liabilities decreased to RMB 3,434,608 from RMB 4,031,022, reflecting a reduction of approximately 14.8%[43]. - The company's cash and cash equivalents were RMB 759,848, down from RMB 844,684, indicating a decline of about 10%[41]. - Accounts receivable, net, decreased significantly to RMB 21,197 from RMB 41,723, a drop of approximately 49%[41]. - Total equity as of May 31, 2022, was RMB 2,579,888, down from RMB 2,806,876, representing a decrease of about 8%[47]. - The total liabilities decreased to RMB 5,064,501 from RMB 5,825,624, a reduction of about 13%[47]. Management and Strategic Focus - The management remains focused on rebuilding business revenues and improving operational efficiency amid ongoing challenges[13]. - The company redeemed all outstanding senior notes totaling US$ 223.98 million, with a total redemption price of US$ 232.33 million[9]. Shareholder Information - Adjusted net loss for the quarter was RMB 3.5 million, a 96.1% improvement compared to a loss of RMB 90.2 million in the same quarter last year[3]. - Adjusted net loss attributable to ordinary shareholders improved from RMB 256,970 million in 2021 to RMB 0 in 2022, indicating a significant recovery[56]. - Adjusted net loss per share attributable to ordinary shareholders was (0.69) in 2022, compared to (0.05) in 2021, reflecting a deterioration in per-share performance despite overall improvements[60].

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 OR For the fiscal year ended August 31, 2021 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 even ...

Financial Data and Key Metrics Changes - For the fourth fiscal quarter, the company recorded a 23.3% growth in revenue and a 105.6% increase in gross profit compared to the same period of the previous fiscal year [9] - For the full fiscal year, revenue was RMB1.4 billion, down by 5.1% compared to fiscal year 2020 [9] - The adjusted net loss for the quarter was RMB175.5 million, compared to an adjusted net loss of RMB131.4 million for the same period last fiscal year [21] - The net loss for the fiscal year was RMB165.8 million, consisting of RMB535.1 million loss from continuing operations and RMB369.3 million profit from discontinued operations [21] Business Line Data and Key Metrics Changes - Revenue from domestic kindergarten and K-12 operation services increased by 83.2% for the quarter and 173.4% on a yearly basis [18] - Revenue from complementary education services grew by 16.5% year-over-year to RMB182.6 million [13] - Revenue from overseas schools was up 9.2% for the quarter but down 39.9% on a yearly basis [18] Market Data and Key Metrics Changes - The company noted a stable operating environment for recovery due to China's COVID-19 containment strategy [10] - Demand for non-school supplementary services has been growing rapidly, indicating significant market opportunities [13] Company Strategy and Development Direction - The overarching strategy includes expanding business portfolios, strengthening operational performance, and diversifying revenue streams [16] - The company plans to expand into management services for domestic K-12 schools and broaden service offerings in complementary education services [16] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the long-term recovery of the business fundamentals and the ability to navigate the current operating environment [15] - The company is focused on driving adjusted EBITDA growth and maintaining financial flexibility for future growth opportunities [22] Other Important Information - The company completed a share repurchase program, buying back 0.7 million shares for $3.1 million [22] - The company has decided not to provide financial guidance for fiscal year 2022 until a better understanding of the business disposal plan's impact is achieved [23] Q&A Session Summary Question: Clarification on amounts due from affected entities - Management confirmed that the amount due from affected entities was part of short-term investments and has since been settled, resulting in cash with the listed company [27][29]

Revenue Performance - Revenue from continuing operations for the fourth fiscal quarter ended August 31, 2021, was RMB 320.0 million, a 23.3% increase year-over-year from RMB 259.5 million[7]. - Revenue from discontinued operations for the fourth fiscal quarter was RMB 470.7 million, contributing to a total revenue decline due to the impact of the Implementation Rules[4]. - For the fiscal year ended August 31, 2021, revenue from continuing operations was RMB 1,401.8 million, a decrease of 5.1% from RMB 1,476.3 million in the previous fiscal year[9]. - Revenue from Complementary Education Services for the fourth fiscal quarter was RMB 182.6 million, accounting for 57.1% of total revenue[13]. - The overseas schools segment, CATS Global Schools, generated revenue of RMB 75.5 million in the fourth fiscal quarter, a 9.2% increase year-over-year[12][18]. - Revenue for Q4 2021 was RMB320.0 million, a 23.3% increase from RMB259.5 million in Q4 2020[20]. - Overseas Schools generated RMB75.5 million, accounting for 23.6% of total revenue, up 9.2% from RMB69.1 million in the same period last year[20]. - Complementary Education Services contributed RMB182.6 million, representing 57.1% of total revenue, a 16.5% increase from RMB156.8 million year-over-year[20]. - Domestic Kindergartens & K-12 Operation Services saw revenue of RMB61.9 million, an 84.2% increase from RMB33.6 million in the same period last year[21]. Profitability and Loss - Gross profit from continuing operations for the fourth fiscal quarter was RMB 48.3 million, representing a 105.6% increase compared to RMB 23.5 million in the same period last year[7]. - The net loss for the fourth fiscal quarter was RMB 478.2 million, a significant increase of 221.8% from a net loss of RMB 148.6 million in the same quarter of the previous year[7]. - Adjusted net loss for Q4 2021 was RMB175.5 million, compared to an adjusted net loss of RMB131.4 million in Q4 2020[25]. - The company reported an impairment loss on goodwill of RMB 84,730 thousand for the three months ended August 31, 2021[61]. - Net loss attributable to ordinary shareholders was RMB (364,751) million in 2021 compared to RMB (153,838) million in 2020, showing an increase in loss of 136.5%[71]. - Adjusted EBITDA improved from RMB (59,699) million in 2020 to RMB (29,794) million in 2021, a positive change of 50%[70]. Financial Position - As of August 31, 2021, cash and cash equivalents were RMB1,515.2 million, down from RMB2,011.9 million a year earlier[37]. - Total assets as of August 31, 2021, amounted to RMB 13,489,487, an increase from RMB 8,632,500 as of August 31, 2020[54]. - Current liabilities as of August 31, 2021, totaled RMB 4,031,022, compared to RMB 6,111,219 as of August 31, 2020, indicating a reduction[57]. - Total liabilities as of August 31, 2021, were RMB 10,365,106 thousand, up from RMB 5,825,624 thousand as of August 31, 2020[58]. - Total equity as of August 31, 2021, was RMB 3,124,381 thousand, compared to RMB 2,806,876 thousand as of August 31, 2020, reflecting a growth in shareholder value[58]. - Cash and cash equivalents at the end of the period on August 31, 2021, were RMB 1,515,163 thousand, down from RMB 4,423,937 thousand at the beginning of the period[65]. Operational Insights - The company has ceased VIE contractual arrangements with schools providing compulsory education, classifying them as discontinued operations, which adversely affected revenue[3]. - The company is currently unable to provide financial guidance for fiscal year 2022 due to uncertainties surrounding the Business Disposal Plan[5]. - The company aims to expand its business portfolios and strengthen operational performance across global businesses while diversifying revenue streams[18]. - The company incurred amortization expenses related to intangible assets from various acquisitions, which are excluded to enhance comparability of operating results[46]. - Non-GAAP financial measures such as adjusted EBITDA and adjusted net income are utilized by management to evaluate operating performance, excluding non-cash charges and non-recurring items[47]. - The company emphasizes the importance of non-GAAP measures for investors to assess operating performance without the impact of certain expenses[48]. - The company has classified certain entities as discontinued operations, which are treated as non-recurring items for performance comparison[46]. Shareholder Information - Weighted average shares used in calculating earnings per ordinary share remained stable around 119 million for both years, indicating no significant dilution[73]. - Share-based compensation expense showed a significant fluctuation, from RMB 1,406 million in 2020 to RMB (167) million in 2021, reflecting a change in accounting treatment[72].

Financial Performance and Key Metrics - The company reported a revenue growth of 42.5% year-over-year for Q3 2021, reaching RMB1,053.8 million, and a 7.4% increase for the nine-month period to RMB2,914.4 million [10][19] - Net income grew by 141% year-over-year for Q3, with adjusted net income at RMB170.6 million, up 285.5% from RMB44.3 million [10][25] - Adjusted EBITDA for Q3 was RMB319.3 million, reflecting a 94.1% increase from RMB164.5 million [25] Business Line Performance - Domestic K-12 schools, including international and bilingual schools, saw a revenue increase of 72.5% for Q3 and 28.4% for the nine-month period [20] - Revenue from complementary education services grew by 78.5% year-over-year, driven by the recovery of camps and domestic tour business [21] - Overseas schools revenue decreased by 32.4% for Q3 and 44.3% for the nine-month period due to ongoing pandemic impacts [21] Market Data and Key Metrics - Enrollment in international schools increased by 11.6%, bilingual schools by 8.4%, and kindergartens by 29.4% in Q3 [11][20] - The company reported a gross margin of 39.7% for Q3, a slight increase from the previous year, while the nine-month gross margin decreased to 35.2% [23] Company Strategy and Industry Competition - The company aims to enhance efficiency in domestic K-12 business, rebuild overseas revenue post-COVID, and expand complementary service offerings [17] - Management expressed confidence in capturing market opportunities as the operating environment normalizes, despite ongoing risks related to economic and regulatory issues [17] Management Comments on Operating Environment and Future Outlook - Management highlighted a strong recovery in domestic business and expressed optimism about sustainable growth despite challenges posed by the pandemic [10][29] - The company is focused on maintaining financial flexibility to grow its organic business and pursue acquisition opportunities [26] Other Important Information - The Board of Directors declared a cash dividend of $0.12 per ADS, reflecting the company's strong financial position [26] - The company is on track to achieve its revenue guidance for the fiscal year, expecting total revenue between RMB3.59 billion and RMB3.69 billion [27] Q&A Session Summary Question: Are the short-term investments held onshore or offshore? - Management confirmed that short-term investments are onshore, with the capability to transfer funds offshore for bond repayments [31][32] Question: What is the update on regulations in China's private education sector? - Management indicated that new laws may make it difficult to obtain new school licenses, but existing schools are expected to continue operating without significant impact [33][34]

[Executive Summary & Financial Highlights](index=1&type=section&id=Executive%20Summary%20%26%20Financial%20Highlights) This section provides an overview of Bright Scholar's financial performance for the third fiscal quarter and the nine months ended May 31, 2021 [Third Fiscal Quarter Financial Highlights](index=1&type=section&id=Third%20Fiscal%20Quarter%20Financial%20Highlights) Bright Scholar reported strong financial results for the third fiscal quarter ended May 31, 2021, with significant year-over-year growth in revenue, gross profit, operating income, and net income, primarily driven by the recovery of domestic businesses | Metric (RMB in million) | Q3 FY2021 | Q3 FY2020 | YoY % Change | | :---------------------- | :-------- | :-------- | :----------- | | Revenue | 1,053.8 | 739.4 | 42.5% | | Gross Profit | 418.2 | 292.0 | 43.2% | | Gross Margin | 39.7% | 39.5% | 0.2% | | Operating Income | 212.7 | 136.2 | 56.2% | | Operating Margin | 20.2% | 18.4% | 1.8% | | Net Income | 163.9 | 68.0 | 141.0% | | Net Margin | 15.6% | 9.2% | 6.4% | | Adjusted Net Income | 170.6 | 44.3 | 285.5% | | Adjusted EBITDA | 319.3 | 164.5 | 94.1% | | Basic and Diluted EPS | 1.43 | 0.64 | 123.4% | | Adjusted Basic and Diluted EPS | 1.49 | 0.44 | 238.6% | [Nine Months Ended Financial Highlights](index=1&type=section&id=Nine%20Months%20Ended%20Financial%20Highlights) For the nine months ended May 31, 2021, Bright Scholar achieved revenue growth despite a slight decline in gross profit and operating income, with adjusted net income showing a modest increase | Metric (RMB in million) | 9M FY2021 | 9M FY2020 | YoY % Change | | :---------------------- | :-------- | :-------- | :----------- | | Revenue | 2,914.4 | 2,714.4 | 7.4% | | Gross Profit | 1,025.1 | 1,072.3 | (4.4)% | | Gross Margin | 35.2% | 39.5% | (4.3)% | | Operating Income | 400.8 | 479.6 | (16.4)% | | Operating Margin | 13.8% | 17.7% | (3.9)% | | Net Income | 312.4 | 312.8 | (0.1)% | | Net Margin | 10.7% | 11.5% | (0.8)% | | Adjusted Net Income | 331.8 | 326.7 | 1.6% | | Adjusted EBITDA | 688.2 | 669.4 | 2.8% | | Basic and Diluted EPS | 2.61 | 2.62 | (0.4)% | | Adjusted Basic and Diluted EPS | 2.78 | 2.73 | 1.8% | [Business Performance Highlights](index=3&type=section&id=Business%20Performance%20Highlights) This section details the performance of Bright Scholar's key business segments, including domestic K-12 schools, complementary education, overseas schools, and education technology [Domestic K-12 Schools](index=3&type=section&id=Domestic%20K-12%20Schools) The domestic K-12 school business, including international schools, bilingual schools, and kindergartens, showed strong recovery and growth in both student enrollment and revenue for the third fiscal quarter and nine-month period - Average student enrollment increased by **16.9% to 57,188** for Q3 FY2021 and **13.7% to 55,376** for the nine-month period[6](index=6&type=chunk) Q3 FY2021 Domestic K-12 Schools Performance (RMB million) | Metric | Q3 FY2021 | Q3 FY2020 | YoY % Change | | :----- | :-------- | :-------- | :----------- | | Revenue (RMB million) | 750.0 | 434.8 | 72.5% | | Revenue (% of total) | 71.2% | 58.9% | - | | Gross Margin | 47.8% | 43.1% | 4.7% | | Operating Margin | 37.0% | 27.0% | 10.0% | 9M FY2021 Domestic K-12 Schools Performance (RMB million) | Metric | 9M FY2021 | 9M FY2020 | YoY % Change | | :----- | :-------- | :-------- | :----------- | | Revenue (RMB million) | 1,993.5 | 1,552.1 | 28.4% | | Revenue (% of total) | 68.4% | 57.1% | - | | Gross Margin | 41.8% | 42.3% | (0.5)% | | Operating Margin | 28.9% | 28.8% | 0.1% | [Complementary Education Services](index=3&type=section&id=Complementary%20Education%20Services) Complementary education services, including language training and overseas study counseling, showed strong revenue growth in Q3 FY2021, driven by recovery in camps and domestic tours, despite ongoing impacts on overseas-related services Q3 FY2021 Complementary Education Services Performance (RMB million) | Metric | Q3 FY2021 | Q3 FY2020 | YoY % Change | | :----- | :-------- | :-------- | :----------- | | Revenue (RMB million) | 130.2 | 72.9 | 78.5% | | Revenue (% of total) | 12.4% | 9.7% | - | | Gross Margin | 27.2% | 38.4% | (11.2)% | | Operating Margin | 6.6% | 8.0% | (1.4)% | 9M FY2021 Complementary Education Services Performance (RMB million) | Metric | 9M FY2021 | 9M FY2020 | YoY % Change | | :----- | :-------- | :-------- | :----------- | | Revenue (RMB million) | 387.7 | 323.8 | 19.7% | | Revenue (% of total) | 13.3% | 12.1% | - | | Gross Margin | 27.0% | 26.2% | 0.8% | | Operating Margin | 9.6% | 4.6% | 5.0% | [Overseas Schools (CATS Global Schools)](index=3&type=section&id=Overseas%20Schools%20(CATS%20Global%20Schools)) Overseas schools continued to be significantly impacted by the pandemic and travel restrictions, leading to a substantial decline in revenue and negative operating margins for both the quarter and nine-month period Q3 FY2021 Overseas Schools Performance (RMB million) | Metric | Q3 FY2021 | Q3 FY2020 | YoY % Change | | :----- | :-------- | :-------- | :----------- | | Revenue (RMB million) | 142.3 | 210.4 | (32.4)% | | Revenue (% of total) | 13.4% | 28.5% | - | | Gross Margin | 6.3% | 29.9% | (23.6)% | | Operating Margin | (33.4)% | 5.1% | (38.5)% | 9M FY2021 Overseas Schools Performance (RMB million) | Metric | 9M FY2021 | 9M FY2020 | YoY % Change | | :----- | :-------- | :-------- | :----------- | | Revenue (RMB million) | 427.1 | 766.8 | (44.3)% | | Revenue (% of total) | 14.7% | 28.2% | - | | Gross Margin | 7.6% | 36.7% | (29.1)% | | Operating Margin | (30.3)% | 9.5% | (39.8)% | [Education Technology ("EdTech")](index=3&type=section&id=Education%20Technology%20(%22EdTech%22)) The EdTech business demonstrated strong revenue growth for both the third fiscal quarter and the nine-month period, indicating increasing adoption of online career counseling, Academic Olympiad training, and international school services Q3 FY2021 Education Technology Performance (RMB million) | Metric | Q3 FY2021 | Q3 FY2020 | YoY % Change | | :----- | :-------- | :-------- | :----------- | | Revenue (RMB million) | 31.3 | 21.3 | 47.1% | | Revenue (% of total) | 3.0% | 2.9% | - | | Gross Margin | 49.6% | 65.0% | (15.4)% | | Operating Margin | 15.4% | 37.6% | (22.2)% | 9M FY2021 Education Technology Performance (RMB million) | Metric | 9M FY2021 | 9M FY2020 | YoY % Change | | :----- | :-------- | :-------- | :----------- | | Revenue (RMB million) | 106.1 | 71.7 | 47.9% | | Revenue (% of total) | 3.6% | 2.6% | - | | Gross Margin | 50.8% | 68.1% | (17.3)% | | Operating Margin | 15.7% | 34.5% | (18.8)% | [Management Commentary & Outlook](index=4&type=section&id=Management%20Commentary%20%26%20Outlook) This section presents management's review of the third fiscal quarter performance, insights into business segments, and the company's future strategy and guidance [Third Fiscal Quarter Performance Review](index=4&type=section&id=Third%20Fiscal%20Quarter%20Performance%20Review) Management expressed satisfaction with the strong Q3 FY2021 results, attributing them to a robust recovery in domestic businesses and the acceleration of strategic initiatives, alongside effective cost discipline - **Strong Q3 FY2021 results** were driven by a stronger than expected recovery in domestic businesses and acceleration of key strategic initiatives[10](index=10&type=chunk) - Focus on engines of growth and cost discipline across all businesses led to **42.5% revenue growth** and **141.0% net income growth YoY** for Q3[10](index=10&type=chunk) - Domestic K-12 business showed the strongest recovery in Q3, with enrollment growth across international schools (**11.6%**), bilingual schools (**8.4%**), and kindergartens (**29.4%**); revenues and average fees per student returned to pre-COVID levels[10](index=10&type=chunk) [Business Segment Insights](index=4&type=section&id=Business%20Segment%20Insights) Management provided specific insights into the performance of each business segment, highlighting strong recovery in domestic K-12 and complementary education, while acknowledging the continued challenges faced by overseas schools due to the pandemic - **94% of 2021 graduating class students** from international schools in China received offers from global top 50 institutions[10](index=10&type=chunk) - Complementary business revenue grew by **78.5% YoY to RMB130.2 million** in Q3, primarily due to moderate recovery of camps and domestic tour business and after-school all-round education services[10](index=10&type=chunk) - Overseas related complementary business and overseas school business continued to be impacted by the pandemic and travel restrictions, leading to slower recovery; the company integrated and rebranded its overseas business as CATS Global Schools, serving **3,500 full-time students** and **14,500 English language training students** across 16 locations[10](index=10&type=chunk)[11](index=11&type=chunk) [Future Outlook and Strategy](index=5&type=section&id=Future%20Outlook%20and%20Strategy) Bright Scholar remains confident in its ability to drive continued recovery and growth, focusing on strategic initiatives such as improving domestic K-12 efficiency, rebuilding overseas revenue, and expanding complementary services, while navigating economic, political, regulatory, and global health risks - Company is confident in continued recovery with multiple engines of growth as the pandemic recedes[12](index=12&type=chunk) - Strategic initiatives include improving utilization and efficiency of domestic K-12, rebuilding overseas business revenue post-COVID, and expanding complementary service offerings[12](index=12&type=chunk) - These initiatives aim to bolster brand awareness, build an effective global organization, expand emblematic offerings, enrich learning experience, and generate new business growth mid to long term[12](index=12&type=chunk) [Dividend Declaration](index=5&type=section&id=Dividend%20Declaration) The Board of Directors declared a cash dividend of US$0.12 per ADS, reflecting confidence in the company's financial future and commitment to delivering value to stakeholders - Board of Directors declared a cash dividend of **US$0.12 per ADS** to shareholders[12](index=12&type=chunk) [Unaudited Financial Results - Third Fiscal Quarter](index=5&type=section&id=Unaudited%20Financial%20Results%20-%20Third%20Fiscal%20Quarter) This section provides a detailed breakdown of Bright Scholar's unaudited financial results for the third fiscal quarter, including revenue, costs, profits, and earnings per share [Revenue Analysis](index=5&type=section&id=Revenue%20Analysis_Q3) Total revenue for the third fiscal quarter increased significantly by 42.5% year-over-year, primarily driven by a strong recovery in domestic businesses, particularly kindergartens Q3 FY2021 Revenue by Segment (RMB million) | Segment | Q3 FY2021 Revenue (RMB million) | % of Total Revenue | Q3 FY2020 Revenue (RMB million) | % of Total Revenue | YoY % Change | | :---------------------- | :------------------------------ | :----------------- | :------------------------------ | :----------------- | :----------- | | Domestic K-12 Schools | 750.0 | 71.2% | 434.8 | 58.9% | 72.5% | | International Schools | 300.2 | 28.5% | 242.9 | 32.9% | 23.6% | | Bilingual Schools | 260.2 | 24.7% | 185.5 | 25.1% | 40.3% | | Kindergartens | 189.6 | 18.0% | 6.4 | 0.9% | 2,875.4% | | Overseas Schools | 142.3 | 13.4% | 210.4 | 28.5% | (32.4)% | | Education Technology | 31.3 | 3.0% | 21.3 | 2.9% | 47.1% | | Complementary Education | 130.2 | 12.4% | 72.9 | 9.7% | 78.5% | | **Total** | **1,053.8** | **100.0%** | **739.4** | **100.0%** | **42.5%** | [Cost of Revenue](index=5&type=section&id=Cost%20of%20Revenue_Q3) Cost of revenue increased by 42.1% year-over-year, largely in line with the revenue growth - Cost of revenue for Q3 FY2021 was **RMB635.6 million**, a **42.1% increase** from RMB447.4 million in Q3 FY2020[14](index=14&type=chunk) [Gross Profit and Margin](index=6&type=section&id=Gross%20Profit%20and%20Margin_Q3) Gross profit saw a substantial increase of 43.2% year-over-year, with a slight improvement in gross margin; adjusted gross profit also increased, though adjusted gross margin slightly decreased Q3 FY2021 Gross Profit by Segment (RMB million) | Segment | Q3 FY2021 Gross Profit (RMB million) | Margin % | Q3 FY2020 Gross Profit (RMB million) | Margin % | YoY % Change | | :---------------------- | :----------------------------------- | :------- | :----------------------------------- | :------- | :----------- | | Domestic K-12 Schools | 358.3 | 47.8% | 187.4 | 43.1% | 91.3% | | International Schools | 149.3 | 49.7% | 127.3 | 52.4% | 17.3% | | Bilingual Schools | 123.5 | 47.5% | 94.9 | 51.1% | 30.2% | | Kindergartens | 85.5 | 45.1% | (34.8) | (547.2)% | (345.1)% | | Overseas Schools | 8.9 | 6.3% | 62.8 | 29.9% | (85.8)% | | Education Technology | 15.5 | 49.6% | 13.8 | 65.0% | 12.3% | | Complementary Education | 35.5 | 27.2% | 28.0 | 38.4% | 26.5% | | **Total** | **418.2** | **39.7%**| **292.0** | **39.5%**| **43.2%** | - Adjusted gross profit for Q3 FY2021 was **RMB426.0 million**, a **40.7% increase YoY**; adjusted gross margin was **40.4%**, down from 41.0% YoY[16](index=16&type=chunk) [Selling, General and Administrative Expenses](index=6&type=section&id=Selling%2C%20General%20and%20Administrative%20Expenses_Q3) Total SG&A expenses increased by 28.8% year-over-year, while adjusted SG&A expenses increased by 7.5%, indicating some efficiency gains when excluding share-based compensation Q3 FY2021 SG&A Expenses by Segment (RMB million) | Segment | Q3 FY2021 SG&A (RMB million) | % of Total Revenue | Q3 FY2020 SG&A (RMB million) | % of Total Revenue | YoY % Change | | :---------------------- | :--------------------------- | :----------------- | :--------------------------- | :----------------- | :----------- | | Domestic K-12 Schools | 82.9 | 7.9% | 70.3 | 9.6% | 17.9% | | Overseas Schools | 60.9 | 5.8% | 60.7 | 8.2% | 0.3% | | Education Technology | 10.9 | 1.0% | 5.8 | 0.8% | 87.4% | | Complementary Education | 28.2 | 2.7% | 22.7 | 3.0% | 24.7% | | Unallocated Corporate Expenses | 31.2 | 3.0% | 6.8 | 0.9% | 355.0% | | **Total** | **214.1** | **20.4%** | **166.3** | **22.5%** | **28.8%** | - Adjusted SG&A expenses for Q3 FY2021 were **RMB213.5 million**, a **7.5% increase** from RMB198.6 million YoY[19](index=19&type=chunk) [Operating Income and Margin](index=7&type=section&id=Operating%20Income%20and%20Margin_Q3) Operating income surged by 56.2% year-over-year, with operating margin improving to 20.2%; adjusted operating income also saw a substantial increase of 92.8%, reflecting strong operational performance Q3 FY2021 Operating Income by Segment (RMB million) | Segment | Q3 FY2021 Operating Income (RMB million) | Margin % | Q3 FY2020 Operating Income (RMB million) | Margin % | YoY % Change | | :---------------------- | :--------------------------------------- | :------- | :--------------------------------------- | :------- | :----------- | | Domestic K-12 Schools | 277.4 | 37.0% | 117.5 | 27.0% | 136.1% |\ | Overseas Schools | (47.5) | (33.4)% | 10.6 | 5.1% | (546.3)% | | Education Technology | 4.8 | 15.4% | 8.0 | 37.6% | (39.9)% | | Complementary Education | 8.6 | 6.6% | 5.8 | 8.0% | 47.6% | | Unallocated Corporate Expenses | (30.6) | - | (5.7) | - | 431.0% | | **Total** | **212.7** | **20.2%**| **136.2** | **18.4%**| **56.2%** | - Adjusted operating income for Q3 FY2021 was **RMB221.2 million**, a **92.8% increase** from RMB114.7 million YoY; adjusted operating margin increased to **21.0%** from 15.5% YoY[21](index=21&type=chunk) [Net Income and EPS](index=7&type=section&id=Net%20Income%20and%20EPS_Q3) Net income and adjusted net income both experienced significant year-over-year growth, leading to substantial increases in basic and diluted earnings per share - Net income for Q3 FY2021 was **RMB163.9 million**, a **141.0% increase** from RMB68.0 million YoY[22](index=22&type=chunk) - Adjusted net income for Q3 FY2021 was **RMB170.6 million**, a **285.5% increase** from RMB44.3 million YoY[22](index=22&type=chunk) Q3 FY2021 Earnings Per Share | Metric | Q3 FY2021 | Q3 FY2020 | YoY % Change | | :-------------------------------- | :-------- | :-------- | :----------- | | Basic and Diluted EPS | 1.43 | 0.64 | 123.4% | | Adjusted Basic and Diluted EPS | 1.49 | 0.44 | 238.6% | [Adjusted EBITDA](index=7&type=section&id=Adjusted%20EBITDA_Q3) Adjusted EBITDA for the third fiscal quarter showed a strong increase of 94.1% year-over-year, reflecting improved operational profitability before non-cash and non-operating items - Adjusted EBITDA for Q3 FY2021 was **RMB319.3 million**, a **94.1% increase** from RMB164.5 million YoY[24](index=24&type=chunk) [Unaudited Financial Results - Nine Months Ended](index=8&type=section&id=Unaudited%20Financial%20Results%20-%20Nine%20Months%20Ended) This section presents a comprehensive analysis of Bright Scholar's unaudited financial results for the nine months ended May 31, 2021, covering key income statement metrics [Revenue Analysis](index=8&type=section&id=Revenue%20Analysis_9M) Total revenue for the nine months ended May 31, 2021, increased by 7.4% year-over-year, primarily driven by growth in domestic K-12 schools and education technology, partially offset by a decline in overseas schools 9M FY2021 Revenue by Segment (RMB million) | Segment | 9M FY2021 Revenue (RMB million) | % of Total Revenue | 9M FY2020 Revenue (RMB million) | % of Total Revenue | YoY % Change | | :---------------------- | :------------------------------ | :----------------- | :------------------------------ | :----------------- | :----------- | | Domestic K-12 Schools | 1,993.5 | 68.4% | 1,552.1 | 57.1% | 28.4% | | International Schools | 802.2 | 27.5% | 695.5 | 25.6% | 15.4% | | Bilingual Schools | 706.0 | 24.2% | 573.2 | 21.1% | 23.2% | | Kindergartens | 485.3 | 16.7% | 283.4 | 10.4% | 71.3% | | Overseas Schools | 427.1 | 14.7% | 766.8 | 28.2% | (44.3)% | | Education Technology | 106.1 | 3.6% | 71.7 | 2.6% | 47.9% | | Complementary Education | 387.7 | 13.3% | 323.8 | 12.1% | 19.7% | | **Total** | **2,914.4** | **100.0%** | **2,714.4** | **100.0%** | **7.4%** | [Cost of Revenue](index=8&type=section&id=Cost%20of%20Revenue_9M) Cost of revenue for the nine-month period increased by 15.1% year-over-year, outpacing revenue growth and contributing to a decline in gross profit - Cost of revenue for the nine-month period was **RMB1,889.3 million**, a **15.1% increase** from RMB1,642.1 million in the prior year[26](index=26&type=chunk) [Gross Profit and Margin](index=8&type=section&id=Gross%20Profit%20and%20Margin_9M) Gross profit for the nine-month period decreased by 4.4% year-over-year, with gross margin declining to 35.2%, primarily due to the significant impact on overseas schools 9M FY2021 Gross Profit by Segment (RMB million) | Segment | 9M FY2021 Gross Profit (RMB million) | Margin % | 9M FY2020 Gross Profit (RMB million) | Margin % | YoY % Change | | :---------------------- | :----------------------------------- | :------- | :----------------------------------- | :------- | :----------- | | Domestic K-12 Schools | 833.9 | 41.8% | 657.3 | 42.3% | 26.9% | | Overseas Schools | 32.6 | 7.6% | 281.2 | 36.7% | (88.4)% | | Education Technology | 53.9 | 50.8% | 48.9 | 68.1% | 10.3% | | Complementary Education | 104.7 | 27.0% | 84.9 | 26.2% | 23.3% | | **Total** | **1,025.1** | **35.2%**| **1,072.3** | **39.5%**| **(4.4)%** | - Adjusted gross profit for the nine-month period was **RMB1,047.5 million**, a **5.2% decrease YoY**; adjusted gross margin was **35.9%**, down from 40.7% YoY[28](index=28&type=chunk) [Selling, General and Administrative Expenses](index=9&type=section&id=Selling%2C%20General%20and%20Administrative%20Expenses_9M) Total SG&A expenses increased by 6.3% year-over-year for the nine-month period, while adjusted SG&A expenses increased by 3.9%, reflecting controlled spending despite business expansion 9M FY2021 SG&A Expenses by Segment (RMB million) | Segment | 9M FY2021 SG&A (RMB million) | % of Total Revenue | 9M FY2020 SG&A (RMB million) | % of Total Revenue | YoY % Change | | :---------------------- | :--------------------------- | :----------------- | :--------------------------- | :----------------- | :----------- | | Domestic K-12 Schools | 261.7 | 8.9% | 213.2 | 7.8% | 22.8% | | Overseas Schools | 169.7 | 5.8% | 216.8 | 8.0% | (21.7)% | | Education Technology | 38.0 | 1.3% | 24.7 | 0.9% | 53.9% | | Complementary Education | 76.2 | 2.6% | 71.7 | 2.7% | 6.3% | | Unallocated Corporate Expenses | 101.5 | 3.5% | 82.1 | 3.0% | 23.5% | | **Total** | **647.1** | **22.1%** | **608.5** | **22.4%** | **6.3%** | - Adjusted SG&A expenses for the nine-month period were **RMB645.1 million**, a **3.9% increase** from RMB620.6 million YoY[31](index=31&type=chunk) [Operating Income and Margin](index=9&type=section&id=Operating%20Income%20and%20Margin_9M) Operating income for the nine-month period decreased by 16.4% year-over-year, with operating margin declining to 13.8%, primarily due to the challenges in the overseas schools segment 9M FY2021 Operating Income by Segment (RMB million) | Segment | 9M FY2021 Operating Income (RMB million) | Margin % | 9M FY2020 Operating Income (RMB million) | Margin % | YoY % Change | | :---------------------- | :--------------------------------------- | :------- | :--------------------------------------- | :------- | :----------- | | Domestic K-12 Schools | 576.4 | 28.9% | 446.5 | 28.8% | 29.1% | | Overseas Schools | (129.5) | (30.3)% | 72.9 | 9.5% | (277.6)% | | Education Technology | 16.6 | 15.7% | 24.7 | 34.5% | (32.9)% | | Complementary Education | 37.1 | 9.6% | 14.8 | 4.6% | 151.8% | | Unallocated Corporate Expenses | (99.8) | - | (79.3) | - | 25.7% | | **Total** | **400.8** | **13.8%**| **479.6** | **17.7%**| **(16.4)%** | - Adjusted operating income for the nine-month period was **RMB425.3 million**, a **15.0% decrease** from RMB500.5 million YoY; adjusted operating margin was **14.6%**, down from 18.4% YoY[34](index=34&type=chunk) [Net Income and EPS](index=10&type=section&id=Net%20Income%20and%20EPS_9M) Net income for the nine-month period remained relatively stable year-over-year, while adjusted net income saw a slight increase, leading to minor changes in basic and diluted earnings per share - Net income for the nine-month period was **RMB312.4 million**, compared to RMB312.8 million YoY, a **(0.1)% change**[34](index=34&type=chunk) - Adjusted net income for the nine-month period was **RMB331.8 million**, a **1.6% increase** from RMB326.7 million YoY[34](index=34&type=chunk) 9M FY2021 Earnings Per Share | Metric | 9M FY2021 | 9M FY2020 | YoY % Change | | :-------------------------------- | :-------- | :-------- | :----------- | | Basic and Diluted EPS | 2.61 | 2.62 | (0.4)% | | Adjusted Basic and Diluted EPS | 2.78 | 2.73 | 1.8% | [Adjusted EBITDA](index=10&type=section&id=Adjusted%20EBITDA_9M) Adjusted EBITDA for the nine-month period increased by 2.8% year-over-year, indicating a modest improvement in core operational cash flow - Adjusted EBITDA for the nine-month period was **RMB688.2 million**, a **2.8% increase** from RMB669.4 million YoY[36](index=36&type=chunk) [Liquidity and Capital Resources](index=10&type=section&id=Liquidity%20and%20Capital%20Resources) As of May 31, 2021, Bright Scholar maintained a solid liquidity position with significant cash and short-term investments, despite a decrease in cash and cash equivalents from the previous quarter Liquidity Position (RMB million) | Metric | As of May 31, 2021 (RMB million) | As of Feb 28, 2021 (RMB million) | | :-------------------------- | :------------------------------- | :------------------------------- | | Cash and cash equivalents | 661.199 | 2,098.4 | | Restricted cash | 1,005.491 | - | | Short-term investments | 2,507.2 | - | | **Total Cash, Restricted Cash & Short-term Investments** | **4,173.89** | **2,098.4** | - Capital expenditure for the nine months ended May 31, 2021, was approximately **RMB110.4 million**, up **2.9% YoY**[37](index=37&type=chunk) [Fiscal Year 2021 Guidance](index=10&type=section&id=Fiscal%20Year%202021%20Guidance) Bright Scholar reaffirms its guidance for fiscal year 2021, expecting revenue growth and an increase in average student enrollment in its domestic and overseas schools - Company reaffirms FY2021 revenue guidance in the range of **RMB3.59 billion to RMB3.69 billion**, representing **7% to 10% YoY growth**[38](index=38&type=chunk) - Average student enrollment in domestic and overseas schools is expected to be between **56,000 and 57,000**, representing an **8% to 10% YoY increase**[38](index=38&type=chunk) [Additional Information](index=11&type=section&id=Additional%20Information) This section includes supplementary details such as conference call information, convenience translation notes, non-GAAP financial measure definitions, company overview, and a safe harbor statement [Conference Call Details](index=11&type=section&id=Conference%20Call%20Details) Details for the conference call to discuss the quarterly results and business activities, scheduled for July 22, 2021, are provided - A conference call was scheduled for **8:00 am US Eastern Time** (**8:00 pm Beijing/Hong Kong Time**) on **July 22, 2021**, to discuss quarterly results[41](index=41&type=chunk) [Convenience Translation](index=11&type=section&id=Convenience%20Translation) The report clarifies that financial figures are reported in Renminbi (RMB), with U.S. dollar translations provided for convenience using a specific exchange rate as of May 28, 2021 - Reporting currency is Renminbi (RMB); U.S. dollar translations are for convenience, using an exchange rate of **US$1.00 = RMB6.3674** as of May 28, 2021[42](index=42&type=chunk) [Non-GAAP Financial Measures](index=12&type=section&id=Non-GAAP%20Financial%20Measures) This section defines and explains the rationale behind the use of non-GAAP financial measures such as adjusted EBITDA, adjusted net income, and adjusted gross profit, emphasizing their role in evaluating operating performance and business plans - Non-GAAP measures (**adjusted EBITDA, net income, gross profit, SG&A, operating income, EPS**) are used by management to evaluate operating performance and formulate business plans[44](index=44&type=chunk)[46](index=46&type=chunk) - Exclusion of amortization of intangible assets allows for greater comparability of operating results over time, as these assets do not have a significant connection to business growth[45](index=45&type=chunk) - Non-GAAP measures have limitations as analytical tools, as they do not reflect all income and expense items and may differ from those used by other companies[47](index=47&type=chunk) [About Bright Scholar Education Holdings Limited](index=13&type=section&id=About%20Bright%20Scholar%20Education%20Holdings%20Limited) Bright Scholar is a global premier education service company offering international and Chinese government-mandated curricula across 107 schools in China and eight overseas schools as of May 31, 2021 - Bright Scholar is a global premier education service company providing international education and Chinese government-mandated curriculum[49](index=49&type=chunk) - As of May 31, 2021, the company operated **107 schools** across twelve provinces in China and **eight schools overseas**, covering K-12 academic needs[49](index=49&type=chunk) [Safe Harbor Statement](index=13&type=section&id=Safe%20Harbor%20Statement) This statement advises that the announcement contains forward-looking statements subject to known and unknown risks and uncertainties, and the company does not undertake to update them - The announcement contains forward-looking statements subject to known and unknown risks, uncertainties, and other factors that may cause actual results to differ materially[50](index=50&type=chunk) [IR Contact](index=13&type=section&id=IR%20Contact) Contact information for investor relations and media inquiries is provided - IR Contact: GCM Strategic Communications, Email: **BEDU.IR@gcm.international**[51](index=51&type=chunk) - Media Contact: Email: **media@brightscholar.com**, Phone: **+86-757-6683-2507**[51](index=51&type=chunk) [Financial Statements](index=14&type=section&id=Financial%20Statements) This section contains the unaudited condensed consolidated balance sheets, statements of operations, statements of cash flows, and reconciliations of GAAP and non-GAAP results [Unaudited Condensed Consolidated Balance Sheets](index=14&type=section&id=Unaudited%20Condensed%20Consolidated%20Balance%20Sheets) The balance sheets present the company's financial position as of August 31, 2020, and May 31, 2021, showing assets, liabilities, and equity Condensed Consolidated Balance Sheets (RMB in thousands) | Metric (RMB in thousands) | As of Aug 31, 2020 | As of May 31, 2021 | | :------------------------ | :----------------- | :----------------- | | Total Current Assets | 4,700,630 | 4,394,448 | | Total Non-Current Assets | 6,122,679 | 6,190,688 | | **TOTAL ASSETS** | **10,823,309** | **10,585,136** | | Total Current Liabilities | 3,695,043 | 3,196,330 | | Total Non-Current Liabilities | 4,003,885 | 3,951,920 | | **TOTAL LIABILITIES** | **7,698,928** | **7,148,250** | | Total Equity | 3,124,381 | 3,436,886 | [Unaudited Condensed Consolidated Statements of Operations](index=17&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Operations) The statements of operations detail the company's revenues, expenses, and net income for the third fiscal quarter and nine months ended May 31, 2021 Condensed Consolidated Statements of Operations (RMB in thousands) | Metric (RMB in thousands) | Q3 FY2020 | Q3 FY2021 | 9M FY2020 | 9M FY2021 | | :------------------------ | :-------- | :-------- | :-------- | :-------- | | Revenue | 739,390 | 1,053,789 | 2,714,384 | 2,914,362 | | Cost of revenue | (447,427) | (635,624) | (1,642,122) | (1,889,267) | | Gross profit | 291,963 | 418,165 | 1,072,262 | 1,025,095 | | Selling, general and administrative expenses | (166,304) | (214,117) | (608,537) | (647,116) | | Operating income | 136,156 | 212,677 | 479,608 | 400,819 | | Net income | 68,006 | 163,904 | 312,778 | 312,389 | | Net income attributable to ordinary shareholders | 76,797 | 170,352 | 314,843 | 311,946 | | Basic and Diluted EPS | 0.64 | 1.43 | 2.62 | 2.61 | [Unaudited Condensed Consolidated Statements of Cash Flows](index=18&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) The cash flow statements provide an overview of cash generated from or used in operating, investing, and financing activities for the third fiscal quarter and nine months ended May 31, 2021 Condensed Consolidated Statements of Cash Flows (RMB in thousands) | Metric (RMB in thousands) | Q3 FY2020 | Q3 FY2021 | 9M FY2020 | 9M FY2021 | | :------------------------ | :-------- | :-------- | :-------- | :-------- | | Net cash used in operating activities | (211,310) | (200,367) | (111,576) | (143,962) | | Net cash used in investing activities | (214,278) | (307,578) | (1,756,712) | (2,520,180) | | Net cash generated from financing activities | 51,901 | 118,089 | 705,541 | 22,168 |\ | Net change in cash and cash equivalents, and restricted cash | (341,464) | (430,349) | (1,173,040) | (2,755,847) | | Cash and cash equivalents, and restricted cash at end of the period | 2,091,974 | 1,668,090 | 2,091,974 | 1,668,090 | [Reconciliations of GAAP and Non-GAAP Results](index=19&type=section&id=Reconciliations%20of%20GAAP%20and%20Non-GAAP%20Results) This section provides detailed reconciliations between GAAP and non-GAAP financial measures, including gross profit, operating income, net income, and EBITDA, for both the third fiscal quarter and the nine-month period Reconciliations of GAAP and Non-GAAP Results (RMB in thousands) | Metric (RMB in thousands) | Q3 FY2020 | Q3 FY2021 | 9M FY2020 | 9M FY2021 | | :------------------------ | :-------- | :-------- | :-------- | :-------- | | Gross profit | 291,963 | 418,165 | 1,072,262 | 1,025,095 | | Add: Amortization of intangible assets | 10,896 | 7,834 | 32,891 | 22,438 | | **Adjusted gross profit** | **302,859** | **425,999** | **1,105,153** | **1,047,533** | | Operating income | 136,156 | 212,677 | 479,608 | 400,819 | | Add: Share-based compensation expense | (32,336) | 662 | (12,037) | 2,032 | | Add: Amortization of intangible assets | 10,896 | 7,834 | 32,891 | 22,438 | | **Adjusted operating income** | **114,716** | **221,173** | **500,462** | **425,289** | | Net income | 68,006 | 163,904 | 312,778 | 312,389 | | Add: Share-based compensation expense | (32,336) | 662 | (12,037) | 2,032 | | Add: Amortization of intangible assets | 10,896 | 7,834 | 32,891 | 22,438 | | Add: Tax effect of amortization of intangible assets | (2,305) | (1,754) | (6,948) | (5,059) | | **Adjusted net income** | **44,261** | **170,646** | **326,684** | **331,800** | | **Adjusted EBITDA** | **164,492** | **319,250** | **669,442** | **688,206** | | Adjusted selling, general and administrative expenses | 198,640 | 213,455 | 620,574 | 645,084 | | Adjusted net earnings per share attributable to ordinary shareholders —Basic | 0.44 | 1.49 | 2.73 | 2.78 |

Bright Scholar Education Holdings Limited (NYSE:BEDU) Q2 2021 Earnings Conference Call April 22, 2021 8:00 AM ET Company Participants Ruby Yim - IR Counsel Jerry He - Executive VC Dora Li - CFO Andy Chen - Co-CEO Wanmei Li - Co-CEO Conference Call Participants Operator Good morning and thank you for standing by for Bright Scholar's FY 2021 Second Fiscal Quarter Earnings Conference Call. At this time, all participants are in listen-only mode. After management's prepared remarks, there will be a question-and- ...