PR Newswire | Dec 21, 2021 07:30PM EST

Quarter and Fiscal Year 2021

12/21 18:30 CST

Bright Scholar Announces Unaudited Financial Results for the Fourth Fiscal Quarter and Fiscal Year 2021 FOSHAN, China, Dec. 21, 2021

FOSHAN, China, Dec. 21, 2021 /PRNewswire/-Bright Scholar Education Holdings Limited ("Bright Scholar," the "Company," "we" or "our") (NYSE: BEDU), a global premier education service company, today announced its unaudited financial results for the fourth fiscal quarter and fiscal year ended August 31, 2021.

IMPACT OF IMPLEMENTATION RULES FOR PRIVATE EDUCATION LAWS

Implementation Rules On April 7, 2021, the State Council of the People's Republic of China promulgated the amended Implementation Regulations of the Law on the Promotion of Private Education of the People's Republic of China (the "Implementation Rules"), which became effective on September 1, 2021. The Implementation Rules prohibit social organizations and individuals from controlling private schools that provide compulsory education and not-for-profit kindergartens through, among other methods, mergers, acquisitions and contractual arrangements. Additionally, the Implementation Rules prohibit any private schools providing compulsory education from conducting transactions with its related parties. As a result, the Implementation Rules affected the Company's control over the affiliated entities providing compulsory education and not-for-profit kindergartens as well as the sponsor entities (collectively referred to as the "Affected Entities").

Actions In compliance with the Implementation Rules and other applicable PRC regulations, the Company has determined to cease VIE contractual arrangements with schools providing compulsory education, not-for-profit kindergartens, and the sponsor entities, and classified them as discontinued operations. As of the date of this earnings release, the Company is still in the process of working with advisors and relevant authorities to ascertain the manner and definitive scope of the Business Disposal Plan (the "Plan") as specified in the Company's EGM Proxy Statement, dated November 15, 2021, furnished to the Company's shareholders by its board of directors. Moreover, the Company has been actively engaging with the Affected Entities in the negotiation of possible future cooperation in the provision of operation services as well as management services such as consultation for school operation, catering and accommodation, property management and maintenance, administrative management, student recruiting and school branding.

Financial Impact Based on above and the relevant accounting standard in accordance with U.S. GAAP, the Company was deemed to have lost control over the Affected Entities on August 31, 2021. The discontinued operations of the Affected Entities had a substantial adverse impact on the Company's revenues for fourth fiscal quarter and fiscal year ended August 31, 2021. As of the date of this earnings release, revenue for the discontinued operations was RMB470.7 million for the fourth fiscal quarter and RMB2,303.3 million for the year ended August 31, 2021.

The definitive financial impact from the implementation of the Plan may vary subject to the actual scope of entities that are to be disposed of pursuant to the Plan.

Guidance for Fiscal Year 2022 As the scope of entities to be disposed of pursuant to the Business Disposal Plan has yet to be finalized, the management is currently not in a position to provide a meaningful estimate of the Company's future financial performance. For that reason, the Company has decided not to provide a financial guidance for fiscal year 2022 until the Company has a better and more definitive understanding of the outcomes of the impact the Business Disposal Plan will have on the Company's financial performance.

FINANCIAL PERFORMANCE HIGHLIGHTS

Fourth Fiscal Quarter Ended August 31, 2021 Financial Highlights(in comparison to the same period of the last fiscal year):

RMB in million Fourth Fiscal QuarterFourth Fiscal QuarterYoY Except EPS and % Ended August 31, 2021Ended August 31, 2020% Change

Revenue from continuing operations 320.0 259.5 23.3%

Gross Profit from continuing operations 48.3 23.5 105.6%

Operating Loss from continuing operations (204.0) (128.6) (58.6%)

(Loss)/income from discontinued operations, net of tax (198.9) 1.0 (21,041.2%)

Net Loss for the quarter (478.2) (148.6) (221.8%)



Adjusted Gross Profit from continuing operations^ (1) 53.0 28.4 86.6%

Adjusted Operating Loss from continuing operations^ (2)(99.2) (109.6) 9.5%

Adjusted Net Loss ^(3) for the quarter (175.5) (131.4) (33.5%)

Adjusted EBITDA ^(4) for the quarter (29.8) (59.7) 50.1%



Basic and Diluted Loss per Share from continuing (2.40) (1.31) (83.2%) operations

Basic and Diluted (Loss)/earnings per Share from (0.66) 0.02 (3,400.0%) discontinued operations

Adjusted Basic and Diluted Loss per Share ^(5) for the (1.53) (1.16) (31.9%) quarter

Fiscal Year 2021 Ended August 31, 2021 Financial Highlights(in comparison to the same period of the last fiscal year):

RMB in million Fiscal Year 2021 Fiscal Year 2020 YoY Except EPS and % Ended August 31, 2021Ended August 31, 2020% Change

Revenue from continuing operations 1,401.8 1,476.3 (5.1%)

Gross Profit from continuing operations 221.5 416.8 (46.9%)

Operating Loss from continuing operations (389.7) (123.8) (214.8%)

Income from discontinued operations, net of tax 369.3 471.5 (21.7%)

Net (Loss)/income for the year (165.8) 164.2 (201.0%)



Adjusted Gross Profit from continuing operations^ (1) 237.7 443.6 (46.4%)

Adjusted Operating Loss from continuing operations^ (271.4) (94.9) 186.0% (2)

Adjusted Net Loss ^(3) for the year (420.2) (283.6) 48.2%

Adjusted EBITDA ^(4) for the year (30.3) 39.7 (176.2%)



Basic and Diluted Loss per Share from continuing (4.54) (2.64) (72.0%) operations

Basic and Diluted Earnings per Share from discontinued4.09 3.98 2.8% operations

Adjusted Basic and Diluted Loss per Share ^(5) for the(3.57) (2.44) (46.3%) year

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1. Adjusted gross profit/(loss) from continuing operations is defined as gross profit/(loss) from continuing operations excluding amortization of intangible assets.

2. Adjusted operating income/(loss) from continuing operations is defined as operating income/(loss) from continuing operations excluding share-based compensation expense, amortization of intangible assets, impairment loss on operating lease right-of-use assets and impairment loss on goodwill.

3. Adjusted net income/(loss) is defined as net income/(loss) excluding share-based compensation expense, amortization of intangible assets, tax effect of amortization of intangible assets, impairment loss on operating lease right-of-use assets, impairment loss on goodwill and income/(loss) from discontinued operations, net of tax.

4. Adjusted EBITDA is defined as net income/(loss) excluding interest income/(expense), net; income tax expense/benefit; depreciation and amortization, share-based compensation expense, impairment loss on operating lease right-of-use assets, impairment loss on goodwill and income/(loss) from discontinued operations, net of tax.

5. Adjusted basic and diluted earnings/(loss) per share is defined as adjusted net income/(loss) attributable to ordinary shareholders (net income/(loss) attributable to ordinary shareholders excluding share-based compensation expense, amortization of intangible assets, tax effect of amortization of intangible assets, impairment loss on operating lease right-of-use assets, impairment loss on goodwill and income/(loss) from discontinued operations, net of tax.) divided by the weighted average number of basic and diluted ordinary shares or American depositary shares (each an "ADS"), each representing one Class A ordinary share of the Company, on an as-converted basis.

For more information on these adjusted financial measures, please see the section captioned under "Non-GAAP Financial Measures" and the tables captioned "Reconciliations of GAAP and Non-GAAP Results" set forth at the end of this release.

BUSINESS PERFORMANCE HIGHLIGHTS - CONTINUING OPERATIONS(in comparison to the same period of the last fiscal year)

Overseas Schools (CATS Global Schools)CATS Global Schools include 6 Stafford House locations in UK and Canada, 4 CATS Colleges in US and UK, Cambridge School of Visual & Performing Arts and 3 independent boarding schools in UK as of August 31, 2021.

* Revenue amounted to RMB75.5 million, compared to RMB69.1 million in the same fiscal quarter last year, and accounted for 23.6% of the total revenue for the fourth fiscal quarter. * For the fiscal year, revenue amounted to RMB502.6 million, compared to RMB835.9 million in the same period of last fiscal year, and accounted for 35.9% of the total revenue.

Complementary Education ServicesThe complementary education services business comprises of language training, overseas study counselling, career counselling, study tour and camps as well as international contest training and others.

* Revenue amounted to RMB182.6 million and accounted for 57.1% of the total revenue for the fourth fiscal quarter. * For the fiscal year, revenue amounted to RMB625.6 million and accounted for 44.6% of the total revenue.

Domestic Kindergartens & K-12 Operation ServicesThe domestic kindergartens & K-12 operation services business comprises of for-profit kindergartens and operation services for domestic K-12 schools including catering and procurement services.

* Revenue amounted to RMB61.9 million and accounted for 19.3% of the total revenue for the fourth fiscal quarter. * For the fiscal year, revenue amounted to RMB273.6 million and accounted for 19.5% of the total revenue.

"Despite the significant financial impact from the discontinued operations of the affected entities in our domestic K-12 business segment, we capped off a challenging fiscal year 2021 with a solid fiscal fourth quarter. Our financial performance reflects the strength of our multi-faceted growth strategy and the agility of our diversified portfolio of businesses," said Mr. Jerry He, Executive Vice Chairman of Bright Scholar. "For continuing operations in the quarter, we recorded a 23.3% growth in revenue and 105.6% in gross profit as compared to the same period of fiscal year. On a full fiscal year basis, our revenue was RMB1.4 billion, down by 5.1% as compared to fiscal year 2020."

"China's COVID-19 containment strategy provides a stable operating environment for continuous recovery," said Ms. Wanmei Li, Chief Executive Officer of Domestic Kindergartens and K-12 Operation Services. "Providing high quality education services is the key component of our mission. Our performance demonstrates our unwavering commitment in delivering quality education. As of August 31, 2021, approximately 93.5% of our 2021 graduating class were admitted to global top 50 institutions and 97.7% were admitted to global top 100 institutions. For our 2022 graduating class, we made a historical breakthrough and obtained one offer from Princeton University as of the date of this earnings release. We also have been leveraging our collaboration with CATS Global School to enrich our offerings and at the same time expand into management services to include school operation, property management and maintenance, administrative management, student recruiting and school branding in preparation for future partnership with third party schools and kindergartens."

"Bright Scholar is well positioned within an evolving regulatory environment in China designed to address quality, equity and all-round development in China's education system," Ms. Li concluded.

"For Complementary Education Services, Bright Scholar is in full alignment with the blueprint of the government policy that focuses on all-round development for students," said Mr. Zi Chen, Chief Executive Officer. "Our strategic roadmap is based on our conviction that both school and non-school contexts are critical to children's learning and achievement. Over the years, we have been expanding our complementary learning programs including study tours and camps, and strengthened our offerings by incorporating overseas study counseling, international contest training and career counseling. We continue to see tremendous market opportunities coming our way as demands for non-school supplementary services has been growing at a phenomenal pace."

"In the fiscal fourth quarter, revenue for Complementary Education Services grew by 16.5% year-over-year to RMB182.6 million. The pace of growth has been affected by the ongoing travel restrictions from regional outbreak of pandemic in China and across the globe. However, in light of the speedy response from governments in offering booster shots, we are optimistic that the pandemic will soon be contained again. In the meantime, we continue to execute on our strategy to expand our brand awareness, broaden our service offerings, diversify revenue sources and be ready to seize market opportunities when operating environments return to normal," Mr. Chen concluded.

Mr. He commented on the performance of overseas school business, "Recovery in the overseas markets continues to be slow but steady despite the travel restrictions that have been on and off amid the emergence of new variants. However, our strategic initiative to streamline the businesses, rebuild revenue growth and optimize cost synergies through our shared-service center in UK yielded early results. In the quarter, revenue recorded an encouraging year-over-year increase of 9.2%."

"Overseas business which recently grouped and branded under CATS Global Schools (CGS) is of strategic importance to us. It is one of the key building blocks to advance our ambition as a global premier education service company. Our long-term vision is to build a business that scales, with market-leading global family of schools, recognized for education excellence," Mr. He continued. "I am pleased to report that we have completed the corporate branding campaign with great success and has progressed to the next phase that focuses on integration as well as establishment of high performing operating model for our group of schools. We are organizing our business for a post-pandemic future and to be a future-ready company."

"We are very pleased about the operational improvements that we've demonstrated in fiscal year 2021 and the progress made on enhancing capabilities that provide a path toward our long-term goals," said Mr. He. "Heading into fiscal 2022, we are optimistic that our business will have a strong long-term recovery. Our business fundamentals are strong, and we remain well positioned to navigate the current operating environment. The overarching strategy of Bright Scholar is to continue to expand our business portfolios, strengthen operational performance across our global businesses, optimize synergies across the network, broaden our service offerings in complementary education business, expand into management service for domestic K-12 schools and diversify our revenue streams to bring the most value to our students and stakeholders."

UNAUDITED FINANCIAL RESULTS FOR THE FOURTH FISCAL QUARTER ENDED AUGUST 31, 2021

Revenue from Continuing Operations

Revenue for the quarter was RMB320.0 million, representing a 23.3% increase from RMB259.5 million for the same period of the last fiscal year.

Overseas Schools: Revenue contribution for the quarter was RMB75.5 million and accounted for 23.6% of total revenue. It represented a 9.2% increase from RMB69.1 million for the same period of the last fiscal year, which accounted for 26.6% of total revenue in that period.

Complementary Education Services: Revenue contribution for the quarter was RMB182.6 million and accounted for 57.1% of total revenue. It represented a 16.5% increase from RMB156.8 million for the same period of the last fiscal year, which accounted for 60.4% of total revenue in that period.

Domestic Kindergartens & K-12 Operation Services: Revenue contribution for the quarter was RMB61.9 million and accounted for 19.3% of total revenue. It represented an 84.2% increase from RMB33.6 million for the same period of the last fiscal year, which accounted for 13.0% of total revenue in that period.

Cost of Revenue from Continuing Operations

Cost of revenue for the quarter was RMB271.7 million, as compared to RMB236.0 million for the same period of the last fiscal year.

Gross Profit, Gross Margin and Adjusted Gross Profitfrom Continuing Operations

Gross profit for the quarter was RMB48.3 million, representing a 105.6% increase from RMB23.5 million for the same period of the last fiscal year. Gross margin was 15.1% for the quarter, as compared to 9.1% for the same period of the last fiscal year.

Adjusted gross profit for the quarter was RMB53.0 million, representing an 86.6% increase from RMB28.4 million for the same period of the last fiscal year. Adjusted gross margin was 16.6% for the quarter, as compared to 10.9% for the same period of the last fiscal year.

Selling, General and Administrative Expenses and Adjusted SG&A Expenses from Continuing Operations (6)

Total SG&A expenses for the quarter were RMB158.5 million, representing a 1.4% decrease from RMB160.7 million for the same period of the last fiscal year. Adjusted SG&A expenses for the quarter were RMB158.7 million, representing a 0.4% decrease from RMB159.3 million for the same period of the last fiscal year.

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6. Adjusted SG&A expenses from continuing operations is defined as selling, general and administrative expenses from continuing operations excluding share-based compensation expense.

Operating Loss, Operating Margin and Adjusted Operating Lossfrom Continuing Operations

Operating loss for the quarter was RMB204.0 million, as compared to operating loss of RMB128.6 million for the same period of the last fiscal year. Operating margin was (63.7%) for the quarter, as compared to (49.6%) for the same period of the last fiscal year.

Adjusted operating loss for the quarter was RMB99.2 million, as compared to adjusted operating loss of RMB109.6 million for the same period of the last fiscal year. Adjusted operating margin was (31.0%) for the quarter, as compared to (42.2%) for the same period of the last fiscal year.

Net Loss and Adjusted Net Income/Loss

Net loss for the quarter was RMB478.2 million, as compared to net loss of RMB148.6 million for the same period of the last fiscal year. Net loss for the quarter consist of RMB279.3 million loss from continuing operations and RMB198.9 million loss from discontinued operations. Due to the impact of the Implementation Rules, which became effective from September 1, 2021, the Affected Entities were deconsolidated from the unaudited condensed consolidated financial statement of the Company starting from the end of August 31, 2021. As a result, one-off losses upon deconsolidation of the Affected Entities amounting to RMB261.3 million were recognized and included in loss from discontinued operations for the quarter. Except for one-off losses, the discontinued operations generated RMB62.4 million profit for the quarter.

Adjusted net loss for the quarter was RMB175.5 million, as compared to adjusted net loss of RMB131.4 million for the same period of the last fiscal year.

Earnings/Loss per ordinary share/ADS and Adjusted Earnings per ordinary share/ADS

Basic and diluted net loss per ordinary share/ADS attributable to ordinary shareholders/ADS holders from continuing operations for the quarter were RMB2.40 and RMB2.40, respectively, as compared to loss of RMB1.31 and RMB1.31, respectively, for the same period of the last fiscal year.

Basic and diluted net loss per ordinary share/ADS attributable to ordinary shareholders/ADS holders from discontinued operations for the quarter were RMB0.66 and RMB0.66, respectively, as compared to earnings of RMB0.02 and RMB0.02, respectively, for the same period of the last fiscal year.

Adjusted basic and diluted net loss per ordinary share/ADS attributable to ordinary shareholders/ADS holders for the quarter were RMB1.53 and RMB1.53, respectively, as compared to loss of RMB1.16 and RMB1.16, respectively, for the same period of the last fiscal year.

Adjusted EBITDA

Adjusted EBITDA loss for the quarter was RMB29.8 million, compared to loss of RMB59.7 million for the same period of the last fiscal year.

UNAUDITED FINANCIAL RESULTSfor the Fiscal yearENDED August 31, 2021

Revenue from Continuing Operations

Revenue for fiscal year 2021 was RMB1,401.8 million, as compared to RMB1,476.3 million for the last fiscal year.

Overseas Schools: Revenue contribution for the fiscal year was RMB502.6 million, as compared to RMB835.9 million for the same period of the last fiscal year. It accounted for 35.9% of total revenue, as compared to 56.6% of total revenue of the last fiscal year.

Complementary Education Services:Revenue contribution for the fiscal year was RMB625.6 million and accounted for 44.6% of total revenue. It represented a 15.8% increase from RMB540.4 million for the same period of the last fiscal year, which accounted for 36.6% of total revenue of the last fiscal year.

Domestic Kindergartens & K-12 Operation Services: Revenue contribution for the fiscal year was RMB273.6 million and accounted for 19.5% of total revenue. It represented a 173.4% increase from RMB100.0 million for the same period of the last fiscal year, which accounted for 6.8% of total revenue of the last fiscal year.

Cost of Revenue from Continuing Operations

Cost of revenue for the fiscal year was RMB1,180.3 million, as compared to RMB1,059.5 million for the last fiscal year.

Gross Profit, Gross Margin and Adjusted Gross Profit from Continuing Operations

Gross profit for the fiscal year was RMB221.5 million, as compared to RMB416.8 million for the last fiscal year. Gross margin was 15.8% for the period, as compared to 28.2% for the last fiscal year.

Adjusted gross profit for the fiscal year was RMB237.7 million, as compared to RMB443.6 million for the last fiscal year. Adjusted gross margin was 17.0% for the fiscal year, as compared to 30.0% for the last fiscal year.

Selling, General and Administrative Expenses and Adjusted SG&A Expenses from Continuing Operations (6)

Total SG&A expenses for the fiscal year were RMB535.9 million, representing a 4.7% decrease from RMB562.6 million for the last fiscal year.

Adjusted SG&A expenses for the fiscal year were RMB534.0 million, representing a 6.8% decrease from RMB573.2 million for the last fiscal year.

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6. Adjusted SG&A expenses from continuing operations is defined as selling, general and administrative expenses from continuing operations excluding share-based compensation expense.

Operating Loss, Operating Margin and Adjusted Operating Loss from Continuing Operations

Operating loss for the fiscal year was RMB389.7 million, as compared to operating loss of RMB123.8 million for the last fiscal year. Operating margin was (27.8%) for the fiscal year, as compared to (8.4%) for the last fiscal year.

Adjusted operating loss for the fiscal year was RMB271.4 million, as compared to adjusted operating loss of RMB94.9 million for the last fiscal year. Adjusted operating margin was (19.4%) for the fiscal year, as compared to (6.4%) for the last fiscal year.

Net Loss and Adjusted Net Income/Loss

Net loss for the fiscal year was RMB165.8 million, as compared to net income of RMB164.2 million for the last fiscal year. Net loss for the fiscal year consist of RMB535.1 million loss from continuing operations and RMB369.3 million profit from discontinued operations. Due to the impact of the Implementation Rules, which became effective from September 1, 2021, the Affected Entities were deconsolidated from the unaudited condensed consolidated financial statement of the Company starting from the end of August 31, 2021. As a result, one-off losses upon deconsolidation of the Affected Entities amounting to RMB261.3 million were recognized and included in income from discontinued operations for the fiscal year. Except for one-off losses, the discontinued operations generated RMB630.6 million profit for the fiscal year.

Adjusted net loss for the fiscal year was RMB420.2 million, as compared to adjusted net loss of RMB283.6 for the last fiscal year.

Earnings/Loss per ordinary share/ADS and Adjusted Earnings per ordinary share/ADS

Basic and diluted loss per ordinary share/ADS attributable to ordinary shareholders/ADS holders from continuing operations for the fiscal year were RMB4.54 and RMB4.54, respectively, as compared to loss of RMB2.64 and RMB2.64, respectively, for the last fiscal year.

Basic and diluted earnings per ordinary share/ADS attributable to ordinary shareholders/ADS holders from discontinued operations for the fiscal year was RMB4.09 and RMB4.09, respectively as compared to earnings of RMB3.98 and RMB3.98, respectively, for the last fiscal year.

Adjusted basic and diluted loss per ordinary share/ADS attributable to ordinary shareholders/ADS holders for the fiscal year were RMB3.57 and RMB3.57, respectively, as compared to loss of RMB2.44 and RMB2.44, respectively, for the last fiscal year.

Adjusted EBITDA

Adjusted EBITDA loss for the fiscal year was RMB30.3 million, as compared to adjusted EBITDA of RMB39.7 million for the last fiscal year.

Cash and Working Capital

As of August 31, 2021, the Company's cash and cash equivalents and restricted cash were RMB1,515.2 million (US$234.5 million), as compared to RMB2,011.9 million as of August 31, 2020. The company also had amount due from affected entities of RMB2,028.9 million as of August 31, 2021, most of which was settled as of this earnings release date.

Conference Call

BEDU's management will host a conference call at 8:00 am US Eastern Time (9:00 pm Beijing/Hong Kong Time) on December 22, 2021 to discuss its quarterly results and recent business activities.

To participate in the conference call, please dial the following number five to ten minutes prior to the scheduled conference call time:

Mainland China: 400-120-9264Hong Kong: 852-301-88394Singapore: 65-6394-9910 United States: 1-323-701-0160Canada: 1-613-903-5719International: 1-323-701-0160

When prompted, provide the confirmation code or event title:

Event Title: Bright Scholar Fourth Fiscal Quarter and Fiscal Year 2021 Earnings Conference CallConfirmation Code: 1023813

The Company will also broadcast a live audio webcast of the conference call. The webcast will be available at http://ir.brightscholar.com/.

Following the earnings conference call, an archive of the call will be available by dialling:

United States Toll Free: 888-203-1112Canada Toll Free: 888-203-1112International: 1-719-457-0820Replay Passcode: 1023813Replay End Date: December 29, 2021

CONVENIENCE TRANSLATION

The Company's reporting currency is Renminbi ("RMB"). However, periodic reports made to shareholders will include current period amounts translated into U.S. dollars using the prevailing exchange rates at the balance sheet date, for the convenience of readers. Translations of balances in the condensed consolidated balance sheets, and the related condensed consolidated statements of operations, and cash flows from RMB into U.S. dollars as of and for the quarter and fiscal year 2021 ended August 31, 2021 are solely for the convenience of the readers and were calculated at the rate of US$1.00=RMB6.4604, representing the noon buying rate set forth in the H.10 statistical release of the U.S. Federal Reserve Board on August 31, 2021. No representation is made that the RMB amounts could have been, or could be, converted, realized or settled into US$ at that rate on August 31, 2021 or at any other rate.

NON-GAAP FINANCIAL MEASURES

In evaluating our business, we consider and use certain non-GAAP measures, including primarily adjusted EBITDA, adjusted net income/(loss), adjusted gross profit/(loss), adjusted SG&A expenses, adjusted operating income/(loss), adjusted net earnings/(loss) per share attributable to ordinary shareholders basic and diluted as supplemental measures to review and assess our operating performance. The presentation of these non-GAAP financial measures is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with U.S. GAAP. We define adjusted gross profit/(loss) from continuing operations as gross profit/(loss) from continuing operations excluding amortization of intangible assets, and adjusted gross margin from continuing operations as adjusted gross profit/(loss) from continuing operations divided by revenue from continuing operations. We define adjusted EBITDA as net income/(loss) excluding interest income/(expense), net, income tax expense/benefit, depreciation and amortization, share-based compensation expense, impairment loss on operating lease right-of-use assets, impairment loss on goodwill and income/(loss) from discontinued operations, net of tax. We define adjusted net income/(loss) as net income/(loss) excluding share-based compensation expense, amortization of intangible assets, tax effect of amortization of intangible assets, impairment loss on operating lease right-of-use assets, impairment loss on goodwill and income/(loss) from discontinued operations, net of tax. We define adjusted SG&A expenses from continuing operations as selling, general and administration expense from continuing operations excluding share-based compensation expense. We define adjusted operating income/(loss) from continuing operations as net operating income/(loss) from continuing operations excluding share-based compensation expense and amortization of intangible assets impairment loss on operating lease right-of-use assets and impairment loss on goodwill. Additionally, we define adjusted net earnings/(loss) per share attributable to ordinary shareholders, basic and diluted, as adjusted net income/(loss) attributable to ordinary shareholders (net income/(loss) to ordinary shareholders excluding share-based compensation expense, amortization of intangible assets, tax effect of amortization of intangible assets, impairment loss on operating lease right-of-use assets, impairment loss on goodwill and income/(loss) from discontinued operations, net of tax) divided by the weighted average number of basic and diluted ordinary shares or American depositary shares, each representing one Class A ordinary share of the Company, on an as-converted basis.

We incur amortization expense of intangible assets related to various acquisitions that have been made in recent years. These intangible assets are valued at the time of acquisition and are then amortized over a period of several years after the acquisition. We believe that exclusion of these expenses allows greater comparability of operating results that are consistent over time for the Company's newly-acquired and long-held business as the related intangibles do not have significant connection to the growth of the business. Therefore, we provide exclusion of amortization of intangible assets to define adjusted gross profit from continuing operations, adjusted operating income/(loss) from continuing operations, adjusted net income/(loss), and adjusted net earnings/(loss) per share attributable to ordinary shareholders, basic and diluted. In addition, due to the impact of the Implementation Rules, the Affected Entities deconsolidated is classified as discontinued operations, which is a non-recurring item. The exclusion facilitates comparisons of our operating performance on a period-to-period basis. Therefore, we provide exclusion of income/(loss) from discontinued operations, net of tax, to define adjusted net income/(loss), adjusted EBITDA, adjusted net earnings/(loss) per share attributable to ordinary shareholders, basic and diluted.

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

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

About Bright ScholarEducation Holdings Limited

Bright Scholar is a global premier education service company, which primarily provides quality international education to global students and equip them with the critical academic foundation and skillsets necessary to succeed in the pursuit of higher education. Bright Scholar also complements its international offerings with Chinese government-mandated curriculum for students who wish to maintain the option of pursuing higher education in China.

Safe Harbor Statement

This announcement contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and as defined in the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements include, without limitation, the Company's business plans and development, which can be identified by terminology such as "may," "will," "expect," "anticipate," "aim," "estimate," "intend," "plan," "believe," "potential," "continue," "is/are likely to" or other similar expressions. Such statements are based upon management's current expectations and current market and operating conditions and relate to events that involve known or unknown risks, uncertainties and other factors, all of which are difficult to predict and many of which are beyond the Company's control, which may cause the Company's actual results, performance or achievements to differ materially from those in the forward-looking statements. Further information regarding these and other risks, uncertainties or factors is included in the Company's filings with the U.S. Securities and Exchange Commission. The Company does not undertake any obligation to update any forward-looking statement as a result of new information, future events or otherwise, except as required under law.

IR Contact:GCM Strategic CommunicationsEmail: BEDU.IR@gcm.international

Media Contact:Email: media@brightscholar.comPhone: +86-757-6683-2507

BRIGHT SCHOLAR EDUCATION HOLDINGS LIMITED

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

(Amounts in thousands)

As of

August 31, August 31,

2020 2021

RMB RMB USD

ASSETS

Current assets

Cash and cash equivalents 972,803 844,684 130,748

Restricted cash 1,037,653 669,029 103,558

Short-term investments 13,695 - -

Accounts receivable, net 14,785 41,723 6,458

Amounts due from related parties, net 16,513 15,087 2,335

Other receivables, deposits and other assets, net 166,216 81,119 12,558

Inventories 5,993 7,579 1,173

Amount due from affected entities, net 2,140,534 2,028,866 314,046

Current assets belong to discontinued operations 2,998,616 - -

Total current assets 7,366,808 3,688,087 570,876

Restricted cash - non current 1,400 1,450 224

Property and equipment, net 557,528 519,452 80,406

Intangible assets, net 504,515 485,822 75,200

Goodwill, net 2,052,723 1,950,186 301,868

Long-term investments 55,136 75,443 11,678

Prepayment for construction contract 3,348 5,974 925

Deferred tax assets, net 32,907 64,096 9,921

Other non-current assets, net 6,813 68,217 10,559

Operating lease right-of-use assets 1,816,721 1,773,773 274,561

Non-Current Assets belong to discontinued operations 1,091,588 - -

Total non-current assets 6,122,679 4,944,413 765,342

TOTAL ASSETS 13,489,487 8,632,500 1,336,218

BRIGHT SCHOLAR EDUCATION HOLDINGS LIMITED

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS-CONTINUED

(Amounts in thousands)

As of

August 31, August 31,

2020 2021

RMB RMB USD

LIABILITIES AND EQUITY

Current liabilities

Accounts payable (including accounts payable of the consolidated VIEs without recourse to Bright Scholar of (68,233) (73,411) (11,363) RMB 3,834 and RMB 10,941 as of August 31, 2020 and August 31, 2021, respectively)

Amounts due to related parties (including amounts due to related parties of the consolidated VIEs without recourse to (45,893) (40,445) (6,260) Bright Scholar of RMB 11,897 and RMB 5,641 as of August 31, 2020 and August 31, 2021, respectively)

Accrued expenses and other current liabilities (including accrued expenses and other current liabilities of the consolidated VIEs without recourse to (264,132) (234,036) (36,226) Bright Scholar of RMB 11,548 and RMB 6,984 as of August 31, 2020 and August 31, 2021, respectively)

Short term loan (including short term loan of the consolidated VIEs without recourse to Bright Scholar of RMB nil (930,800) (753,754) (116,673) and RMB nil as of August 31, 2020 and August 31, 2021, respectively)

Bond payable (including bond payable of the consolidated VIEs without recourse to Bright Scholar of RMB nil and RMB - (1,836,362) (284,249) nil as of August 31, 2020 and August 31, 2021, respectively)

Income tax payable (including income tax payable of the consolidated VIEs without recourse to Bright Scholar of (93,310) (178,213) (27,585) RMB 9,587 and RMB 19,091 as of August 31, 2020 and August 31, 2021, respectively)

Contract liabilities (including contract liabilities of the consolidated VIEs without recourse to Bright Scholar of (386,493) (425,954) (65,933) RMB 134,090 and RMB 139,126 as of August 31, 2020 and August 31, 2021, respectively)

Refund liabilities (including refund liabilities of the consolidated VIEs without recourse to Bright Scholar of (56,783) (32,362) (5,009) RMB 9,876 and RMB 10,398 as of August 31, 2020 and August 31, 2021, respectively)

Operating lease liabilities (including operating lease liabilities of the consolidated VIEs without recourse to (196,129) (123,215) (19,072) Bright Scholar of RMB 16,648 and RMB 12,005 as of August 31, 2020 and August 31, 2021, respectively)

Amounts due to affected entities (including Amounts due to affected entities of the consolidated VIEs without recourse to (525,643) (333,270) (51,587) Bright Scholar of RMB 14,067 and RMB 283,270 as of August 31, 2020 and August 31, 2021, respectively)

Current liabilities belong to discontinued (3,543,803) - - operations

Total current liabilities (6,111,219) (4,031,022) (623,959)

Contract liabilities - non current (including

contract liabilities - non current of the consolidated VIEs without recourse to (1,772) (1,421) (220) Bright Scholar of RMB 1,772 and RMB 1,084 as of August 31, 2020 and August 31, 2021, respectively)

Deferred tax liabilities, net (including deferred tax liabilities of the consolidated VIEs without recourse to (31,193) (26,744) (4,140) Bright Scholar of RMB 8,007 and RMB 9,561 as of August 31, 2020 and August 31, 2021, respectively)

Other non-current liabilities due to related parties (including non-current liabilities due to related parties of the consolidated VIEs without recourse to Bright Scholar (26,843) (13,154) (2,036) of RMB 26,843 and RMB 13,154 as of August 31, 2020 and August 31, 2021, respectively)

Other non-current liabilities (including non-

current liabilities of the consolidated VIEs without recourse to Bright Scholar (12,019) - - of RMB 3,771 and RMB nil as of August 31, 2020 and August 31, 2021, respectively)

Bond payable (including bond payable of the consolidated VIEs without recourse to Bright Scholar of RMB nil and RMB (2,017,369) - - nil as of August 31, 2020 and August 31, 2021, respectively)

Long term loan (including long term loan of the consolidated VIEs without recourse to Bright Scholar of RMB nil and RMB (419) (616) (95) nil as of August 31, 2020 and August 31, 2021, respectively)

Operating lease liabilities - non current (including operating lease liabilities - non current of the consolidated VIEs without recourse to Bright Scholar of (1,662,928) (1,752,667) (271,294) RMB 83,077 and RMB 29,693 as of August 31, 2020 and August 31, 2021, respectively)

Non-Current Liabilities belong to (501,344) - - discontinued operations

Total non-current liabilities (4,253,887) (1,794,602) (277,785)

TOTAL LIABILITIES (10,365,106) (5,825,624) (901,744)

EQUITY

Share capital (8) (8) (1)

Additional paid-in capital (1,854,262) (1,727,020) (267,324)

Statutory reserves (65,567) (2,531) (392)

Accumulated other comprehensive income (185,371) (168,324) (26,055)

Accumulated retained earnings (632,722) (648,944) (100,449)

Shareholders' equity (2,737,930) (2,546,827) (394,221)

Non-controlling interests (386,451) (260,049) (40,253)

Total equity (3,124,381) (2,806,876) (434,474)

TOTAL LIABILITIES AND EQUITY (13,489,487) (8,632,500) (1,336,218)

BRIGHT SCHOLAR EDUCATION HOLDINGS LIMITED

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Amounts in thousands, except for shares and per share data)

Three Months Ended August 31, Twelve Months Ended August 31,

2020 2021 2020 2021

RMB RMB USD RMB RMB USD

Continuing operations

Revenue 259,509 320,021 49,536 1,476,347 1,401,780 216,980

Cost of revenue (236,004) (271,701) (42,057) (1,059,537) (1,180,263) (182,692)

Gross profit 23,505 48,320 7,479 416,810 221,517 34,288

Selling, general and administrative expenses (160,738) (158,504) (24,535) (562,600) (535,878) (82,948)

Impairment loss on goodwill impairment loss - (84,730) (13,115) - (84,730) (13,115)

Impairment loss on operating lease right-of use assets (12,772) (15,575) (2,411) (12,772) (15,575) (2,411)

Other operating income 21,378 6,508 1,007 34,761 24,969 3,865

Operating loss (128,627) (203,981) (31,575) (123,801) (389,697) (60,321)

Interest expense, net (54,063) (47,330) (7,326) (162,912) (169,693) (26,267)

Investment income 35,576 42,169 6,527 54,166 129,575 20,057

Other expenses (8,112) (3,035) (469) (10,364) (10,137) (1,569)

Loss before income taxes and share of equity in loss of (155,226) (212,177) (32,843) (242,911) (439,952) (68,100) unconsolidated affiliates

Income tax benefit/(expense) 6,015 (66,664) (10,319) (63,815) (94,176) (14,577)

Share of equity in loss of unconsolidated affiliates (343) (410) (63) (595) (1,018) (158)

Loss from continuing operations (149,554) (279,251) (43,225) (307,321) (535,146) (82,835)

Discontinued operations

Income/(loss) from discontinued operations, net of tax 950 (198,941) (30,794) 471,495 369,343 57,170

Net (loss)/income (148,604) (478,192) (74,019) 164,174 (165,803) (25,665)

Net (loss)/income attributable to non-controlling interests

Continuing operations 7,093 6,875 1,064 9,557 5,622 870

Discontinued operations (1,859) (120,316) (18,624) (6,388) (118,620) (18,361)

Net (loss)/ incomeattributable to ordinary shareholders

Continuing operations (156,647) (286,126) (44,289) (316,878) (540,768) (83,705)

Discontinued operations 2,809 (78,625) (12,170) 477,883 487,963 75,532

Net (loss)/earnings per share attributable to

ordinary shareholders

-Basic

Continuing operations (1.31) (2.40) (0.37) (2.64) (4.54) (0.70)

Discontinued operations 0.02 (0.66) (0.10) 3.98 4.09 0.63

-Diluted

Continuing operations (1.31) (2.40) (0.37) (2.64) (4.54) (0.70)

Discontinued operations 0.02 (0.66) (0.10) 3.98 4.09 0.63

Weighted average shares used in

calculating net earnings per ordinary share:

-Basic

Continuing operations 119,641,203 118,983,474 118,983,474 120,158,001 119,220,331 119,220,331

Discontinued operations 119,641,203 118,983,474 118,983,474 120,158,001 119,220,331 119,220,331

-Diluted

Continuing operations 119,641,203 118,983,474 118,983,474 120,158,001 119,220,331 119,220,331

Discontinued operations 119,641,203 118,983,474 118,983,474 120,158,001 119,220,331 119,220,331

BRIGHT SCHOLAR EDUCATION HOLDINGS LIMITED

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Amounts in thousands)

Three Months Ended August 31, Twelve Months Ended August 31,

2020 2021 2020 2021

RMB RMB USD RMB RMB USD

Net cash generated from operating activities 685,176 842,770 130,452 491,227 698,808 108,168

Net cash generated from/(used in) investing 1,829,279 (558,856) (86,505) 72,567 (3,079,036) (476,601)activities

Net cash (used in)/generated from financing (112,211) (468,702) (72,550) 675,703 (446,534) (69,119)activities

Effect of exchange rate changes on cash (70,281) 31,861 4,932 (80,574) (82,012) (12,695)

Net change in cash and cash equivalents, and 2,331,963 (152,927) (23,671) 1,158,923 (2,908,774) (450,247)restricted cash

Cash and cash equivalents, and restricted cash 2,091,974 1,668,090 258,202 3,265,014 4,423,937 684,778at beginning of the period

Cash and cash equivalents, and restricted cash 4,423,937 1,515,163 234,531 4,423,937 1,515,163 234,531at end of the period

BRIGHT SCHOLAR EDUCATION HOLDINGS LIMITED

Reconciliations of GAAP and Non-GAAP Results

(Amounts in thousands, except for shares and per share data)

Three Months Ended August 31, Twelve Months Ended August 31,

2020 2021 2020 2021

RMB RMB USD RMB RMB USD

Gross profit from continuing operations 23,505 48,320 7,479 416,810 221,517 34,288

Add: Amortization of intangible assets 4,897 4,680 724 26,754 16,141 2,498

Adjusted gross profit from continuing operations 28,402 53,000 8,203 443,564 237,658 36,787

Operating loss from continuing operations (128,627) (203,981) (31,575) (123,801) (389,697) (60,321)

Add: Share-based compensation expense 1,406 (167) (26) (10,631) 1,865 289

Add: Amortization of intangible assets 4,897 4,680 724 26,754 16,141 2,498

Add:Impairment loss on operating lease right-of-use assets 12,772 15,575 2,411 12,772 15,575 2,411

Add: Impairment loss on goodwill - 84,730 13,115 - 84,730 13,115

Adjusted operating loss from continuing operations (109,552) (99,163) (15,349) (94,906) (271,386) (42,008)

Net (loss)/income (148,604) (478,192) (74,019) 164,174 (165,803) (25,665)

Add: Share-based compensation expense 1,406 (167) (26) (10,631) 1,865 289

Add: Amortization of intangible assets 4,897 4,680 724 26,754 16,141 2,498

Add: Tax effect of amortization of intangible assets (959) (1,029) (159) (5,148) (3,343) (517)

Add:Impairment loss on operating lease right-of-use assets 12,772 15,575 2,411 12,772 15,575 2,411

Add: Impairment loss on goodwill - 84,730 13,115 - 84,730 13,115

Less: Loss/(income) from discontinued operations, net of tax 950 (198,941) (30,794) 471,495 369,343 57,170

Adjusted net loss (131,438) (175,462) (27,160) (283,574) (420,178) (65,039)

Net (loss)/income attributable to ordinary shareholders (153,838) (364,751) (56,459) 161,005 (52,805) (8,174)

Add: Share-based compensation expense 1,406 (167) (26) (10,631) 1,865 289

Add: Amortization of intangible assets 4,897 4,680 724 26,754 16,141 2,498

Add: Tax effect of amortization of intangible assets (959) (1,029) (159) (5,148) (3,343) (517)

Add:Impairment loss on operating lease right-of-use assets 12,772 15,575 2,411 12,772 15,575 2,411

Add: Impairment loss on goodwill - 84,730 13,115 - 84,730 13,115

Less: Loss/(income) from discontinued operations, net of tax 2,809 (78,625) (12,170) 477,883 487,963 75,532

Adjusted net loss attributable to ordinary shareholders (138,531) (182,337) (28,224) (293,131) (425,800) (65,909)

Net (loss)/income (148,604) (478,192) (74,019) 164,174 (165,803) (25,665)

Add: Interest expense, net 54,063 47,330 7,326 162,912 169,693 26,267

Add: Income tax (benefit)/expense (6,015) 66,664 10,319 63,815 94,176 14,577

Add: Depreciation and amortization 27,629 35,325 5,468 118,160 138,847 21,492

Add: Share-based compensation expense 1,406 (167) (26) (10,631) 1,865 289

Add:Impairment loss on operating lease right-of-use assets 12,772 15,575 2,411 12,772 15,575 2,411

Add: Impairment loss on goodwill - 84,730 13,115 - 84,730 13,115

Less: (Loss)/income from discontinued operations, net of tax 950 (198,941) (30,794) 471,495 369,343 57,170

Adjusted EBITDA (59,699) (29,794) (4,612) 39,707 (30,260) (4,684)

Selling, general and administrative expenses from continuing (160,738) (158,504) (24,535) (562,600) (535,878) (82,948)operations

Add: Share-based compensation expense 1,406 (167) (26) (10,631) 1,865 289

Adjusted selling, general and administrative expenses from (159,332) (158,671) (24,561) (573,231) (534,013) (82,659)continuing operations

Weighted average shares used in calculating earnings perordinary share:

-Basic and Diluted

Continuing operations 119,641,203 118,983,474 118,983,474 120,158,001 119,220,331 119,220,331

Discontinued operations 119,641,203 118,983,474 118,983,474 120,158,001 119,220,331 119,220,331

Adjusted net loss per share attributable to ordinaryshareholders

-Basic (1.16) (1.53) (0.24) (2.44) (3.57) (0.55)

-Diluted (1.16) (1.53) (0.24) (2.44) (3.57) (0.55)

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SOURCE Bright Scholar Education Holdings Ltd.