UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 20-F

(Mark One)

o	REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR 12(g) OF THE SECURITIES EXCHANGE ACT OF 1934

or

x	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended August 31, 2016

or

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

or

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

Date of event requiring this shell company report

Commission file number: 001-36356

NORD ANGLIA EDUCATION, INC.

(Exact name of Registrant as specified in its charter)

N/A

(Translation of Registrant’s name into English)

Cayman Islands

(Jurisdiction of incorporation or organization)

Level 12, St. George’s Building, 2 Ice House Street,
Central, Hong Kong

(Address of principal executive offices)

Andrew Fitzmaurice, Chief Executive Officer
Tel: +852 3951 1100
E-mail: Andrew.Fitzmaurice@nordanglia.com
Level 12, St. George’s Building
2 Ice House Street
Central, Hong Kong

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

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

Title of each class		Name of each exchange on which registered
Ordinary shares, par value $0.01 per share		The New York Stock Exchange

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

None

(Title of Class)

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

None

(Title of Class)

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

104,121,876 ordinary shares, par value $0.01 per share, as of August 31, 2016.

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

x Yes o No

If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.

o Yes x No

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

x Yes o No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

x Yes o No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer o

Accelerated filer x

Non-accelerated filer o

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

U.S. GAAP o

International Financial Reporting Standards as issued
by the International Accounting Standards Board x

Other o

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

o Item 17 o Item 18

If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

o Yes x No

(APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PAST FIVE YEARS)

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

o Yes o No

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TABLE OF CONTENTS

IMPLICATIONS OF BEING AN EMERGING GROWTH COMPANY		ii

FORWARD-LOOKING STATEMENTS		ii

PART I		1
Item 1.	Identity of Directors, Senior Management and Advisers	1
Item 2.	Offer Statistics and Expected Timetable	1
Item 3.	Key Information	1
Item 4.	Information on the Company	25
Item 4A.	Unresolved Staff Comments	57
Item 5.	Operating and Financial Review and Prospects	57
Item 6.	Directors, Senior Management and Employees	78
Item 7.	Major Shareholders and Related Party Transactions	89
Item 8.	Financial Information	89
Item 9.	The Offer and Listing	90
Item 10.	Additional Information	90
Item 11.	Quantitative and Qualitative Disclosures About Market Risk	101
Item 12.	Description of Securities Other than Equity Securities	101

PART II		103
Item 13.	Defaults, Dividend Arrearages and Delinquencies	103
Item 14.	Material Modifications to the Rights of Security Holders and Use of Proceeds	103
Item 15.	Controls and Procedures	103
Item 16A.	Audit Committee Financial Expert	107
Item 16B.	Code of Ethics	108
Item 16C.	Principal Accountant Fees and Services	108
Item 16D.	Exemptions from the Listing Standards for Audit Committees	108
Item 16E.	Purchases of Equity Securities by the Issuer and Affiliated Purchasers	108
Item 16F.	Change in Registrant’s Certifying Accountant	108
Item 16G.	Corporate Governance	108
Item 16H.	Mine Safety Disclosure	108

PART III		109
Item 17.	Financial Statements	109
Item 18.	Financial Statements	109
Item 19.	Exhibits	109

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IMPLICATIONS OF BEING AN EMERGING GROWTH COMPANY

We qualify as an “emerging growth company” as defined in the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”). An emerging growth company may take advantage of specified reduced reporting and other burdens that are otherwise applicable generally to public companies. We may take advantage of these provisions until August 31, 2019 or such earlier time that we are no longer an emerging growth company. We would cease to be an emerging growth company if we have more than $1.0 billion in annual revenue, have more than $700 million in market value of our ordinary shares held by non-affiliates as of the last business day of our most recently completed second fiscal quarter, or issue more than $1.0 billion of non-convertible debt over a three-year period.

In addition, under the JOBS Act, emerging growth companies can delay adopting new or revised accounting standards issued by the Financial Accounting Standards Board until those standards apply to private companies. We have irrevocably elected not to avail ourselves of this exemption from new or revised accounting standards. Because we prepare our financial statements in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board (“IFRS”), accounting standards issued by the Financial Accounting Stands Board will not apply to us unless we adopt U.S. generally accepted accounting principles in place of IFRS or present a reconciliation of our financial statements to U.S. generally accepted accounting principles.

FORWARD-LOOKING STATEMENTS

This annual report includes statements that express our current opinions, expectations, beliefs, plans, objectives, assumptions or projections regarding future events or future results and therefore are, or may be deemed to be, “forward looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 (the “Act”). The following cautionary statements are being made pursuant to the provisions of the Act and with the intention of obtaining the benefits of the “safe harbor” provisions of the Act. These forward looking statements can generally be identified by the use of forward-looking terminology, including the terms “believe,” “expect,” “may,” “will,” “should,” “seek,” “project,” “approximately,” “intend,” “plan,” “estimate” or “anticipate,” or, in each case, their negatives or other variations or comparable terminology.

These forward-looking statements include all matters that are not historical facts. They appear in a number of places throughout this report and include statements regarding our intentions, beliefs or current expectations concerning among other things, our results of operations, financial condition, liquidity, prospects, growth, strategies and the industry in which we operate.

By their nature, forward-looking statements relate to events that involve risks and uncertainties or that depend on circumstances that may or may not occur in the future. These statements include, among other things, statements relating to:

· our future market opportunities;

· our goals and strategies;

· our competitive strengths;

· our future results of operations and financial condition;

· our future business developments; and

· our acquisition and expansion strategy.

Although we base these forward-looking statements on assumptions that we believe are reasonable when made, we caution you that forward-looking statements are not guarantees of future performance and that our actual results of operations, financial condition and liquidity, and the development of the industry in which we operate may differ materially from those made in or suggested by the forward-looking statements contained in this quarterly report. In addition, even if our results of operations, financial condition and liquidity, and the development of the industry in which we operate, are consistent with the forward-looking statements contained in this report, those results or developments may not be indicative of results or developments in subsequent periods.

Given these risks and uncertainties, you are cautioned not to place undue reliance on these forward-looking statements. Any forward-looking statement that we make in this report speaks only as of the date of such statement, and we undertake no obligation to update any forward-looking statements or to publicly announce the results of any revisions to any of those statements to reflect future events or developments.

Other sections of this annual report include additional factors that could adversely impact our business and financial performance, principally “Item 3. Key Information—D. Risk Factors.” Moreover, we operate in an evolving environment. New risk factors and uncertainties emerge from time to time and it is not possible for our management to predict all risk factors and uncertainties, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. We qualify all of our forward-looking statements by these cautionary statements.

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PART I

Item 1. Identity of Directors, Senior Management and Advisers

Not Applicable.

Item 2. Offer Statistics and Expected Timetable

Not Applicable.

Item 3. Key Information

A. Selected Financial Data

The following selected financial data for and as of the years ended August 31, 2014, 2015 and 2016 have been derived from our audited consolidated financial statements included in this annual report. The following selected consolidated financial data for and as of the year ended August 31, 2013 have been derived from our audited consolidated financial statements not included in this annual report. The following selected consolidated financial data for and as of the year ended August 31, 2012 have been derived from our unaudited consolidated financial statements not included in this annual report.

The selected financial data presented in the tables below should be read in conjunction with, and is qualified in its entirety by reference to, our audited consolidated financial statements and accompanying notes. Our consolidated financial statements have been prepared in accordance with IFRS.

During the year ended August 31, 2016, we finalized the purchase price allocation accounting from the prior year, made voluntary presentation changes and made corrections of prior period errors, by adjusting the prior period information. We assessed the materiality of the prior period errors in accordance with Staff Accounting Bulletin (“SAB”) No. 99 — Materiality, as issued by the Securities and Exchange Commission (“SEC”). We determined that the errors were not material to prior annual financial statements and therefore amendments of previously filed reports were not required. We corrected the errors for all prior periods presented by revising the consolidated financial statements appearing herein.

The revisions do not have a material impact on key items and metrics such as Cash and cash equivalents, Net assets, Revenue and Profit/(loss) before tax.

1) Finalization of acquisition accounting

a) Meritas

A finalization of the provisional purchase allocation exercise for Sterling International Schools C Corporation (the Meritas schools), acquired on June 25, 2015, has been reflected in the financial statements as at and for the years ended August 31, 2015 and 2016, as permitted by IFRS 3 — Business combinations. Fair value of identifiable net assets acquired increased by $9.3 million, thus decreasing intangible assets with no impact on the Consolidated Income Statement. This does not reflect an error in prior period financial reporting and the updated purchase price allocation has been disclosed in Note 2 to our audited consolidated financial statements included in this annual report.

2) Voluntary change in presentation

a) Foreign exchange translation gains/(losses) presentation in the Consolidated Income Statement

We have changed our Consolidated Income Statement presentation of Foreign exchange translation gains/(losses) in the financial statements as at and for the year ended August 31, 2016 and have reclassified the prior period comparatives to align with the reclassified presentation. Prior to the year ended August 31, 2016, we reported Foreign exchange gains/(losses), including the revaluation of intercompany loans and on the revaluation of the CHF bond, in Selling, general and administrative expenses. IAS 1 — Presentation of financial statements and IAS 21 — The effects of changes in foreign exchange rates are not prescriptive regarding the presentation in the Consolidated Income Statement of Foreign exchange gains/(losses). We deem it a better reflection of the substance of the transactions to report Foreign exchange gains/(losses) on the revaluation of the CHF bond within Finance expense and Foreign exchange gains/(losses) on other activities, including the revaluation of intercompany loans, within Other gains/(losses).

For fiscal 2016, the impact of this change in presentation is a reclassification of a gain of $4.7 million and a gain of $17.2 million to Finance expense and Other gains/(losses), respectively, from Selling, general and administrative expenses.

b) Finance lease liabilities presentation in the Consolidated Balance Sheet

We have changed our Consolidated Balance Sheet presentation of Finance lease liabilities between current and non-current in the financial statements as at and for the year ended August 31, 2016 and have reclassified the prior period comparatives to align with the reclassified presentation. Prior to the year ended August 31, 2016, we calculated the split between current and non-current liabilities on the basis of the maturity profile of cash payments. IAS 17 - Leases is not prescriptive regarding whether this split should be calculated on the basis of the maturity profile of future cash payments or on the forecast reduction in the total liability in the next twelve months. We deem it more appropriate to determine the split on the basis of the maturity profile of the lease liability.

For fiscal 2016, the impact of this change in presentation is a reclassification of $3.6 million between current and non-current finance lease liabilities.

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3) Correction of errors

a) Correction of embedded derivatives

Embedded derivatives have been identified within the Chicago South Loop and Houston land and buildings leases. The embedded derivatives involve the linkage of operating lease contracts to a multiplier of Consumer Price Index (“CPI”) that is greater than one. As a result the derivatives are required to be separated from the host contract, valued separately and reported on the Consolidated Balance Sheet at inception within Deferred lease expense and Derivative financial instruments. The Deferred lease expense is amortized to Cost of sales over the lease term. The Derivative financial instruments are revalued each reporting period with the change in valuation from the previous period reported in the Consolidated Income Statement within Other gains/(losses).

b) Correction of acquisition accounting

We have corrected an acquisition accounting error in relation to Dover Court International School (Pte.) Limited, acquired on April 22, 2014, in Singapore. Included within the net assets acquired was Deferred revenue, representing Cash and cash equivalents collected, relating to a pre-acquisition building fund levied for future capital expenditure. On acquisition this was accounted for as Deferred revenue that would be released subsequently to the Consolidated Income Statement. It has been identified that there was no performance obligation to provide a future service to recognize the deferred revenue and therefore this has been determined to be an error. This has been corrected retrospectively, as this represents a pre-acquisition reserve.

As at September 1, 2014, the impact of this correction is a decrease in Intangible assets of $7.4 million with a corresponding decrease in Deferred revenue. For the year ended August 31, 2015, the impact of this correction is a net loss of $1.0 million and a foreign exchange gain of $0.6 million, with a decrease in Intangible assets of $6.8 million, a decrease of Deferred revenue of $6.2 million, and a decrease in Current tax liabilities of $0.2 million.

Separate from the correction above, for fiscal 2014, a foreign exchange adjustment of $1.7 million in relation to the acquisition of Dover Court International School (Pte.) Limited has been made.

At the time of the acquisition of British International Schools Company, Vietnam, completed on January 1, 2015, a consultancy fee received from the vendor was reported as Revenue. However, it has been determined that the acquisition agreement and consultation arrangement were linked transactions and as such this should have been treated as a reduction in consideration paid rather than Revenue. Therefore, this has now been corrected retrospectively. The overall impact in the financial statements for the year ended August 31, 2015 is a loss of $1.7 million, with a corresponding decrease in Intangible assets.

Also in relation to the Vietnam acquisition, a correction of discount rate used in the valuation of the deferred consideration of the purchase has been made. The impact of this adjustment in the financial statements for the year ended August 31, 2015 is a reduction of Finance expense of $0.7 million, with an increase in Intangible assets of $1.3 million and an increase in payables of $0.6 million.

For the year ended August 31, 2014, we have corrected an acquisition accounting error in relation to Deferred tax liabilities that were miscalculated in the consolidated financial statements. This resulted in a decrease of $1.4 million in Income tax expense and Deferred tax liabilities.

In addition, following a review of our cost of investments register, we have corrected other smaller acquisition accounting errors.

c) Timing of book fees recognition

A school in Doha began to charge a “book fee” during the year ended August 31, 2015, which should be reported as Revenue in the school year to which the fees relate (i.e. one school year later), as opposed to in the year in which the fees were received. A correction has been made to reflect the correct timing of revenue recognition, whereby $1.0 million of revenue recognized in 2015 should have been deferred into 2016, to align with the period when the student receives the book fee service.

d) Correction of classification of accrued expenses

In the financial statements as at and for the year ended August 31, 2015, we changed our Consolidated Balance Sheet presentation to disclose Accruals separately from Deferred revenue. However, some of the accruals were classified incorrectly within Deferred revenue in the Consolidated Balance Sheet as at August 31, 2015. A correction has been made, which involves a Consolidated Balance Sheet correction from Deferred revenue to Other payables only.

e) Other

All known errors from the prior year have been corrected in the current year financial statements. Those that impact profit or loss, goodwill, foreign currency translation reserve, tax balances, or have an impact of more than $0.5 million on any individual line item have been corrected retrospectively to the comparatives.

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4) Other

The Company has made adjustments for two other items which affect the Consolidated Balance Sheet only.

a) Inventories presentation in the Consolidated Balance Sheet

We have deemed inventories to be significant enough to be disclosed separately from Trade and other receivables. For fiscal 2016, the impact of this is an adjustment of $4.3 million from Trade and other receivables to Inventories.

b) Deferred gain presentation in the Consolidated Balance Sheet

We have deemed a Deferred gain from a sale and leaseback transaction to be significant enough to be disclosed separately from Deferred revenue. For fiscal 2016, the impact of this is an adjustment of $12.3 million from Deferred revenue to Deferred gain.

For additional information about the prior year revisions, see Note 1 to our audited consolidated financial statements included in this annual report.

Consolidated Income Statement Data:

	Year Ended August 31,
	2012		2013		2014		2015		2016
	(unaudited)
	(in millions of dollars, except per share data)

Revenue	274.4		323.7		474.6		573.1		856.0
Cost of sales	(162.4	)	(190.4	)	(280.3	)	(355.8	)	(522.2	)
Gross profit	112.0		133.3		194.3		217.3		333.8
Selling, general and administrative expenses	(58.3	)	(64.5	)	(96.9	)	(129.8	)	(192.7	)
Depreciation	(0.3	)	(0.4	)	(2.0	)	(0.7	)	(0.8	)
Amortization	(3.5	)	(5.7	)	(10.4	)	(13.9	)	(18.7	)
Impairment	(10.7	)	—		—		—		(1.0	)
Other gains/(losses)	—		—		2.1		12.4		13.4
Exceptional expenses	(12.5	)	(17.7	)	(100.2	)	(18.8	)	(8.8	)
Total expenses	(85.3	)	(88.3	)	(207.4	)	(150.8	)	(208.6	)
Operating profit/(loss)	26.7		45.0		(13.1	)	66.5		125.2
Finance income	2.0		2.3		2.0		2.4		2.3
Finance expense	(49.7	)	(51.3	)	(55.5	)	(48.7	)	(65.9	)
Net finance expense	(47.7	)	(49.0	)	(53.5	)	(46.3	)	(63.6	)
(Loss)/profit before income tax	(21.0	)	(4.0	)	(66.6	)	20.2		61.6
Income tax expense	(16.4	)	(19.3	)	(23.6	)	(12.5	)	(12.4	)
(Loss)/profit after income tax	(37.4	)	(23.3	)	(90.2	)	7.7		49.2
(Loss)/profit attributable to:
- Owners of the parent	(37.4	)	(23.3	)	(90.2	)	6.5		47.1
- Non-controlling interest	—		—		—		1.2		2.1
(Loss)/profit for the period	(37.4	)	(23.3	)	(90.2	)	7.7		49.2
Earnings per ordinary share(1) (in dollars)
Basic	(0.52	)	(0.34	)	(1.07	)	0.07		0.45
Diluted	(0.52	)	(0.34	)	(1.07	)	0.07		0.45

(1) Earnings per ordinary share is calculated by dividing (loss)/profit for the period by the weighted average ordinary shares outstanding for the period. For the fiscal years 2012 and 2013 the basic and diluted weighted average ordinary shares outstanding were 74.0 million ordinary shares. On completion of our initial public offering on March 31, 2014, we issued 21.8 million ordinary shares and all previously existing preference shares and classes of ordinary shares were converted into 75.9 million ordinary shares of par value $0.01 per share. For the year ended August 31, 2014, the basic and diluted weighted average ordinary shares outstanding were 85.1 million ordinary shares. For the year ended August 31, 2015, the basic and diluted weighted average ordinary shares outstanding were 99.4 million and 99.5 million, respectively. For the year ended August 31, 2016, the basic and diluted weighted average shares outstanding were 104.1 million and 104.1 million, respectively.

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Consolidated Balance Sheet Data:

	As of August 31,
	2012		2013		2014		2015		2016
	(unaudited)
	(in millions of dollars)
Non-current assets
Property, plant and equipment	36.1		98.2		140.1		464.9		328.5
Intangible assets	455.1		763.4		796.3		1,402.5		1,365.4
Investments in joint ventures and associates	0.5		0.5		0.5		0.5		0.5
Trade and other receivables	10.9		12.4		9.2		37.4		42.0
Deferred lease expense	—		—		8.7		17.1		30.6
Deferred tax assets	6.1		21.2		25.1		77.5		79.0
	508.7		895.7		979.9		1,999.9		1,846.0
Current assets
Current tax assets	0.3		1.0		1.6		1.2		3.4
Inventories	—		—		2.4		4.5		4.3
Trade and other receivables	49.3		83.2		92.4		126.8		132.5
Deferred lease expense	—		—		0.5		0.9		1.7
Cash and cash equivalents (excluding bank overdrafts)	167.6		222.9		256.4		316.6		371.9
	217.2		307.1		353.3		450.0		513.8
Assets held for sale	—		—		—		—		8.3

	217.2		307.1		353.3		450.0		522.1
Total assets	725.9		1,202.8		1,333.2		2,449.9		2,368.1

Current liabilities
Trade and other payables	(62.3	)	(96.8	)	(63.7	)	(170.7	)	(140.3	)
Interest-bearing loans and borrowings	(80.9	)	(82.4	)	(113.4	)	(98.3	)	(5.0	)
Finance lease liabilities	—		(0.0	)	(0.0	)	(0.8	)	(1.2	)
Deferred revenue	(162.1	)	(267.2	)	(322.6	)	(518.2	)	(550.0	)
Deferred gain	—		—		—		(0.2	)	(0.2	)
Provisions for other liabilities and charges	(3.1	)	(3.6	)	(0.5	)	(0.0	)	(0.0	)
Current tax liabilities	(5.0	)	(4.2	)	(1.7	)	(2.7	)	(4.5	)
	(313.4	)	(454.2	)	(501.9	)	(790.9	)	(701.2	)
Non-current liabilities
Interest-bearing loans and borrowings	(318.9	)	(630.4	)	(499.2	)	(1,066.3	)	(1,058.2	)
Derivative financial instruments	—		—		(11.1	)	(21.6	)	(25.2	)
Finance lease liabilities	—		—		—		(48.0	)	(63.3	)
Other payables	(6.6	)	(38.5	)	(50.7	)	(49.6	)	(49.1	)
Deferred revenue	—		—		(2.6	)	(7.0	)	(8.0	)
Deferred gain	—		—		—		(12.4	)	(12.1	)
Retirement benefit obligations	(30.4	)	(22.2	)	(25.8	)	(46.6	)	(48.9	)
Provisions for other liabilities and charges	(2.3	)	(2.2	)	(1.2	)	(1.7	)	—
Deferred tax liabilities	(10.5	)	(35.3	)	(47.6	)	(124.3	)	(110.2	)
	(368.7	)	(728.6	)	(638.2	)	(1,377.5	)	(1,375.0	)
Total liabilities	(682.1	)	(1,182.8	)	(1,140.1	)	(2,168.4	)	(2,076.2	)
Net assets	43.8		20.0		193.1		281.5		291.9
Equity attributable to equity holders of the parent
Share capital	67.5		67.5		1.0		1.0		1.0
Share premium	255.2		256.5		597.1		735.2		736.0
Other reserves	6.9		6.9		6.9		6.9		6.9
Currency translation reserve	(0.1	)	9.8		0.8		(50.8	)	(91.7	)
Shareholder deficit	(285.7	)	(320.7	)	(413.2	)	(415.2	)	(365.7	)
Shareholders’ funds	43.8		20.0		192.6		277.1		286.5
Non-controlling interest	—		—		0.5		4.4		5.4
	43.8		20.0		193.1		281.5		291.9

B. Capitalization and Indebtedness

Not Applicable.

C. Reasons for the Offer and Use of Proceeds

Not Applicable.

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D. Risk Factors

An investment in our ordinary shares involves significant risks. You should carefully consider the risks described below as well as the other information in this annual report, including our consolidated financial statements and related notes, before you decide to buy our ordinary shares. If any of the following risks materializes, our business, prospects, financial condition and results of operations could be materially harmed, the trading price of our ordinary shares could decline and you could lose all or part of your investment.

Risks Related to Our Business

Adverse changes in key industry drivers may reduce demand for our schools.

We believe that the key industry drivers for our schools include:

· globalization and increasing foreign direct investment (“FDI”); and

· a growing emphasis by parents on high-quality education for their children.

Changes in our key industry drivers may materially adversely affect our business, prospects, results of operations and financial condition. For example, if FDI stock declines in one of the countries in which we operate, the number of expatriate families in that country may decrease, which could reduce demand for our schools. During the 2009/2010 academic year, attracting new students was more difficult than in previous and subsequent academic years, which we believe was due in part to the 2008 global financial crisis. Furthermore, as some of the emerging markets in which we operate reach a higher level of economic development and develop a more skilled local workforce, companies could increasingly rely on the local workforce and employ fewer expatriates, which could reduce our business if we are unable to adapt or attract local students.

In addition, we believe that growth of GDP and individual disposable income in emerging markets tends to increase demand from local families, as they increase their focus and spending on premium quality education. Accordingly, decreases or limited growth in GDP or disposable income may reduce demand for our schools from local families and limit our ability to recruit and retain local students.

Competition in the premium school market could reduce enrollments, increase our cost of recruiting and retaining students and teachers and put downward pressure on our tuition fees and profitability.

We face competition from other schools in the locations in which we operate that target the children of expatriate and affluent local families. Some of our existing and future competitors may be able to devote greater resources than we can to the development and construction of schools offering premium quality education and respond more quickly to changes in parents’ demands, admissions standards, market needs or new technologies. Moreover, our competitors may increase capacity in any of our markets to an extent that leads to an over-supply.

If we are unable to differentiate our schools from those of our competitors and successfully market our schools to parents and students, we could face competitive pressures that reduce enrollment. If our enrollment falls, we may be required to reduce our tuition fees or increase spending in order to attract and retain students, which could materially adversely affect our business, prospects, results of operations and financial condition. See “Item 4. Information on the Company—B. Business Overview—Competition.”

If we fail to increase or maintain our tuition fees, our financial performance may suffer.

Tuition fees at our schools are among the highest in their markets. Factors that could affect our ability to increase or maintain our premium tuition fees include:

· a decline in our reputation for quality;

· resistance to tuition fee increases from parents and expatriates’ employers as a result of difficult economic conditions or fee increases in recent academic years;

· pricing pressure from other premium schools in our markets; and

· government restrictions that limit our ability to increase tuition fees, such as those to which our schools in Qatar, Dubai and Abu Dhabi are subject (see “Item 4. Information on the Company—B. Business Overview—Regulation”).

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In addition, changes in expatriate compensation and benefits packages that alter the way in which employers pay for tuition fees may negatively affect our ability to increase or maintain our tuition fees. For example, if employers were to increasingly rely on cost of living adjustments in the form of lump sum payments in cash to expatriate parents rather than paying tuition fees directly, parents may become more price sensitive to tuition fees. Our inability to increase or maintain our tuition fees could materially adversely affect our business, prospects, financial condition and results of operations.

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

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

· members of our staff behave or are perceived to behave inappropriately or illegally;

· members of our staff fail to appropriately supervise children under their care;

· we fail to properly deal with an accident or other event that injures our students;

· we fail to conduct proper checks on members of our staff who come into contact with children and young adults;

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

· our students engage in inappropriate or illegal conduct;

· we fail to obtain or lose a license, permit, accreditation or other authorization to operate a school;

· poor-quality operators use names that create confusion with our schools or third parties fraudulently use our brand name or the name of one of our schools;

· we do not maintain consistent teaching quality or fail to deliver strong academic results;

· the curricula in our schools are not perceived as being sufficiently high quality;

· our school facilities do not meet the standards expected by parents and students of premium schools;

· we close one or more of our schools; and

· we become subject to litigation or other legal proceedings relating to any of the above or other matters.

The likelihood that any of the foregoing occurs increases as we expand our network of schools. These events could influence the way our schools are viewed not only by students and parents, but also by other constituencies in the education sector and the general public. Moreover, an event that directly damages the reputation of one of our schools could adversely affect the reputation and operations of our other schools. If our reputation declines, our overall business, prospects, results of operations and financial condition could be harmed.

If we fail to enroll new students and re-enroll existing students, our financial performance may suffer.

Increasing enrollments in our schools is critical to our financial performance. In our experience, approximately 25% of our students leave our schools each academic year, primarily due to expatriate relocations and graduation. If our recruitment efforts fail to increase enrollment or replace departing students, our financial performance may suffer. In addition, if we fail to maintain our quality of education, parents may choose not to re-enroll their children in our schools. If we are unable to recruit and retain students, our business, prospects, results of operations and financial condition (including working capital and cash flow) could be materially adversely affected.

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We may lose accreditations or permits that we require to operate our schools.

In order to operate our schools, we maintain various accreditations from curriculum providers and permits from examination bodies, such as the International Baccalaureate Organization. To maintain our accreditations and permits, we must meet standards related to, among other things, performance, governance, institutional integrity, educational quality, staff, administrative capability, resources and financial stability. If any of our schools fails to meet these standards, it could lose its accreditations or permits, which could materially adversely affect our business, prospects, results of operations and financial condition.

We may be unable to recruit, train and retain qualified and experienced principals and teaching staff.

The process of hiring employees with the combination of skills and attributes required to implement our business strategy can be difficult and time-consuming. Our school principals in particular are key to the success of their schools. We face competition in attracting and retaining principals and teachers who possess the necessary experience and accreditation to teach at our schools. We may find it difficult to recruit principals and teachers who are willing to relocate to some of our international locations, and we must provide competitive compensation packages to attract and retain qualified individuals. Some of our principals and teachers remain at their school only for a limited time, which could affect our reputation in the market if we provide insufficient continuity. As we expand and add personnel, it may be difficult to maintain consistency in the quality of our principals and teachers. If we are unable to, or are perceived to be unable to, attract and retain experienced and qualified principals and teachers, our business, prospects, results of operations and financial condition may be materially adversely affected.

We may lose the services of members of our senior management team.

Our success depends in part on the continued skills, efforts and motivation of our officers and senior management team. We have in the past, and may in the future, experience changes in our senior management for a variety of reasons, including restructuring, medical problems, retirement and resignations. In addition, key personnel could leave us to join our competitors. Losing the services of key members of senior management or experienced personnel may be disruptive and cause uncertainty. We depend upon the services of our executive committee members and other members of our management team who have significant experience with our company and within the education industry. If one or more members of our senior management team or key personnel are unable or unwilling to continue in their present positions, including for health, family or other personal reasons, we may not be able to replace them easily or at all. Our inability to attract and retain qualified senior managers or key personnel in a timely manner could materially adversely affect our business, prospects, results of operations and financial condition.

We may be unable to manage our current operations and future growth.

Our recent significant growth may strain our ability to manage our operations and integrate our acquisitions. During fiscal 2014 and 2015, we acquired 12 new schools, 7 of which are in jurisdictions in which we had not previously operated schools— Singapore, Cambodia, Vietnam and Mexico.

Acquiring or developing greenfield schools entails significant risks, including the following:

· we may be unable to integrate acquired schools into our network or achieve expected cost savings or synergies from acquisitions without disrupting our operations or diverting management’s attention or at all;

· we may incorrectly evaluate the financial performance or potential of our acquisitions or greenfield developments or schools we acquire may have insufficient financial or operational resources;

· we may be unable to successfully integrate and retain an acquired school’s principal, teachers and other employees or adequately staff greenfield schools;

· our use of cash to pay for acquisitions limits other potential uses of our cash and may deplete our cash reserves;

· acquisitions may require substantial new capital, either by the issuance of debt or equity, and we may not be able to access the capital or loan markets or obtain new capital on terms acceptable to us, or at all. Increases in our level of indebtedness resulting from acquisitions may have significant implications for our future business and operations. See “—Risks Related to our Debt;”

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· the development of greenfield projects may be delayed as a result of many factors, such as delays in obtaining government approvals or licenses, delays in acquiring possession of the project site, shortage of key supplies and skilled labor, construction accidents, natural catastrophes and adverse weather conditions, some of which are beyond our control;

· cost overruns;

· resistance from parents, teachers or administrators to an acquisition could reduce its value; and

· we may incur write-offs, impairment charges, amortization expenses or other expenses related to goodwill and other intangible assets we record.

These risks may increase when we expand into new countries or new cities in countries where we already operate. Managing the growth of a geographically diverse business involves significant risks and challenges. We may find it difficult to manage financial resources, implement uniform policies and standards and maintain our operational, management and technology systems across our global network. New markets also pose challenges related to cultural differences and relationships with local education authorities.

If we are unable to manage our current operations, our growth strategy or the risks that we may encounter in expanding our operations into new markets, our business, prospects, results of operations and financial condition may be materially adversely affected.

Acquisitions may expose us to liabilities.

When we acquire a school, we may become subject to regulatory, licensing, litigation, tax and other liabilities based on circumstances we fail to discover in our due diligence review. When we do discover potential liabilities during our due diligence review, neither the valuation adjustment nor the contractual protections we negotiate may be sufficient to fully protect us from losses. For example, we estimate that we face potential tax liabilities of up to $4.9 million as a result of one of our acquisitions. Although we generally have rights to indemnification, our rights are limited by survival periods for bringing claims and limitations on the nature and amount of losses we may recover, and we cannot be certain that any indemnification will be collectible or sufficient in amount, scope or duration to fully offset any loss we may suffer. Although the seller indemnified us against tax liabilities, we cannot assure you that our estimate of our potential tax liability is accurate or that we would be able to recover the full amount of any potential losses.

If we fail to obtain suitable sites for greenfield and new-build schools, increase capacity at existing schools or acquire new schools we may not be able to grow our business.

Our growth strategies include developing greenfield and new-build schools, increasing capacity at our current schools and acquiring new schools. We may be unable to find suitable sites in desirable locations in markets where we wish to build new schools or expand our operations. Available sites may be too small for our capacity requirements, prohibitively expensive or subject to zoning restrictions that do not permit school facilities. If we do locate suitable sites for new schools or to expand capacity at existing schools, we may be unable to finance acquisition, construction or other costs, or we may be subject to stringent restrictions or requirements imposed by relevant authorities with respect to, for example, tuition fees and education licences and permits. Similarly, we may be unable to find acquisition targets that satisfy our requirements for size, quality, location, price or other factors we consider important, and we may be unable to finance the acquisition of suitable targets that we do find. If we fail to grow our business, our prospects, results of operations and financial condition may be materially adversely affected.

If we are unable to upgrade our schools, they may become less attractive to parents and students and we may fail to grow our business.

All of our schools require periodic upgrades to remain attractive to parents and students. Upgrading the facilities at our schools could be difficult for a number of reasons, including the following:

· our properties may not have the capacity or configuration to accommodate proposed renovations;

· construction and other costs may be prohibitive;

· we may fail to obtain regulatory approvals;

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· we may be unable to finance construction and other costs; and

· we may not be able to negotiate reasonable terms with our landlords or developers or complete the work within acceptable timeframes.

Our failure to upgrade the facilities of our schools could lead to lower enrollment and may materially adversely affect our business, prospects, results of operations and financial condition.

Some of the cities in which we operate schools may become less popular destinations for expatriates.

Changing environmental, political and other factors could make cities in which we operate schools less attractive to expatriates.

For example, concerns about air quality in Beijing and Shanghai have been widely reported by international media. Poor air quality may particularly concern parents with school-age children, who are generally perceived to be more vulnerable to air pollution than adults. If air quality fails to improve or deteriorates, the number of expatriates with school-age children may decline, which could reduce our enrollments or limit our ability to grow.

Political tensions and rising security concerns could also make cities less attractive to expatriates. For example, if protests begin to occur regularly or become more severe or an act of terrorism occurs in one of the cities where we have schools, we could face enrollment pressures as expatriates leave the region.

Our leases may be terminated or we may be unable to renew our leases on acceptable terms; if we wish to relocate, we may incur additional costs if we terminate a lease.

Many of the buildings our schools occupy underwent renovations or were custom-built to meet our requirements. If we are unable to renew a lease on acceptable terms or if a lease is terminated:

· we may be unable to find a new property with the amenities and in the location we require, which may force us to close the school or move to a less desirable location;

· we may incur significant costs in identifying, securing and moving to a new location; and

· the relocation may significantly disrupt the school’s operations and the school may be unable to collect tuition fees or retain its students.

Our school properties in Singapore, Hong Kong and some school properties in China are leased from government authorities, which can terminate our leases at any time due to public purpose or need. In some cases a third party may take actions that would interfere with our use of a leased property as a result of contractual arrangements between the third party and the lessor.

In addition, terminating any of our school leases could be costly. Many of our leases do not contain break provisions that would permit us to terminate the lease prior to its expiration. In the past, we found it difficult to obtain early termination of some of our leases. If we wish to terminate a lease in order to relocate or close a school, we may be unable to negotiate satisfactory termination arrangements and could incur significant costs or liabilities under the lease, which could materially adversely affect our business, prospects, results of operations and financial condition.

If our landlords do not perform their obligations under the terms of our leases or a landlord changes in the course of the lease, our operations could be disrupted and our costs could increase.

A good working relationship with the landlords of our school properties is fundamental to the successful operation of our schools and can generate additional property development opportunities that support our growth. In many cases, our landlords are responsible for the maintenance of a core part of the facilities we lease. If our landlords do not maintain such facilities to the required standards, we may have to increase our expenditures to maintain the quality of our schools. In addition, during the course of our lease, the landlord of one or more of our schools could change, for example due to its insolvency or the sale of the underlying property, and we may need to develop a relationship with a new contracting party. The new landlord may have interests that conflict with ours, may be less willing to expand the school’s capacity or improve its facilities or be a less reliable counterparty in fulfilling its obligations under the terms of the lease. If an existing landlord or a new landlord does not comply with the terms of our leases for any reason, our operations could be disrupted, our costs could increase and we may be required to close or relocate the affected school, which could materially adversely affect our business, prospects, results of operations and financial condition.

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If we sell or close a school we may not achieve anticipated cost savings or other benefits and could remain liable for events that occurred while we operated the school.

If we sell or close a school, we may not achieve anticipated cost savings or other benefits. We could be subject to claims by the new owner, parents and educational authorities for financial liabilities related to our previous operation of the school and could be subject to unforeseen liabilities. The reputation of some or all of our remaining schools may also suffer in the event we close one of our schools. In addition, if a new owner does not operate the school to a high standard, our reputation could suffer by association, even though we no longer have any control over the operations of the school, which could damage our reputation. As a result, selling or closing a school could materially adversely affect our business, prospects, results of operations and financial condition.

Any change in the timing of tuition fee payments could create cash flow issues for us.

We collect most of our tuition fees before the beginning of the first term of the academic year and more than half of the remainder before the beginning of the second and third terms of the academic year. If regulations in new markets, new regulations in existing markets or changing market conditions require us to collect our fees more evenly over the course of the academic year, our cash flow may be negatively affected and we may require additional working capital or third-party funding to finance our operations.

We may not have adequate protection for our intellectual property, and we may infringe upon the intellectual property of others.

In most of the markets where we operate schools, we do not have trademark protection for the brand names under which the schools operate. As a result, we may need to spend significant resources in legal proceedings if other organizations improperly use a similar school name. We rely on trademark protection in selected jurisdictions to protect our rights to the mark “Nord Anglia,” our distinctive logos and other marks associated with our services. We cannot assure you that these measures will be adequate, that we have secured, or will be able to secure, appropriate protection for all of our proprietary rights in selected jurisdictions or that third parties will not infringe upon or misappropriate our trademark and brand name. In some new jurisdictions in which we operate, e.g. Cambodia and Mexico, we have submitted trademark applications but there is no guarantee that they can be successfully registered. Policing the unauthorized use of our trademarks and brand names can be difficult and expensive, and litigation may be necessary to enforce or protect our brand name or determine the validity and scope of the proprietary rights of others. We may not prevail in any intellectual property litigation and a favorable outcome may not be adequate to protect our rights. In addition, third parties may accuse us of infringing their intellectual property. Third-party intellectual property rights may be extremely broad and it may not be possible for us to conduct our operations without infringing those intellectual property rights.

We could incur significant defense costs and losses in litigation or other legal proceedings and may become liable for the legal costs of the adverse party.

From time to time, we are party to legal proceedings in the various jurisdictions in which we operate. See “Item 8. Financial Information—A. Consolidated Statements and Other Financial Information—Legal Proceedings.” Litigation can be costly and time consuming and may divert management attention and resources from our operations. We could incur significant defense costs and, in the event of an adverse outcome, be required to pay damages and interest to the prevailing party and, depending on the jurisdiction of the litigation, be held responsible for the costs of the prevailing party. Operating in highly litigious jurisdictions, such as the United States, increases the risk of materially adverse litigation.

We may be liable for accidents or other events that affect our students and staff. Events of this kind may harm our reputation among parents and government bodies.

We may be held responsible for the health and safety of our students and staff. If personal injuries or accidents occur, we may face claims from parents, government officials or other parties alleging that we were negligent, provided inadequate supervision or were otherwise responsible for causing injury. We may also face allegations that teachers, other personnel or students committed unlawful acts. The occurrence or alleged occurrence of these events and others that impact our students or staff could expose us to financial liability or harm our reputation, even if we are not at fault. This would be especially true if the potential liability exceeded our insurance coverage.

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A successful liability claim against us for injuries or other harm suffered by students, employees or other people could materially adversely affect our reputation and results of operations. Even if such a claim is unsuccessful or unwarranted, it could divert management attention from our operations, cause us to incur substantial costs in defending the claim and harm our reputation, all of which could materially adversely affect our business, prospects, results of operations and financial condition.

Our insurance may be inadequate or premiums may increase substantially.

We maintain liability insurance at a level we believe to be adequate and consistent with industry practice. However, claims in excess of our insurance coverage or claims not covered by our insurance could arise. Furthermore, there can be no assurance that we will be able to obtain liability insurance coverage in the future on acceptable terms or at all. A successful claim against us that is not covered by or is in excess of our insurance coverage could materially adversely affect our business, prospects, results of operations and financial condition. Any such claims may also increase our insurance premiums.

Security breaches and other disruptions could compromise our information and expose us to liability, which would cause our business and reputation to suffer.

In the ordinary course of our business, we collect and store sensitive data, including intellectual property, our proprietary business information and personally identifiable information of our employees and our students and their families, including academic and medical records, on our networks. To address our business needs, we engage various third parties to store and process such information. The secure processing, maintenance and transmission of this information is critical to our operations. Despite the security measures that we and our service providers put in place, the relevant information technology and infrastructure may be vulnerable to attacks by hackers or breached due to employee error, malfeasance or other disruptions. Any such breach could compromise our networks and the information stored there could be accessed, publicly disclosed, lost or stolen. Any such access, disclosure or other loss of information could result in legal claims or proceedings, liability under laws that protect the privacy of personal information and regulatory penalties, and could disrupt our operations, damage our reputation and harm our ability to attract and retain students, any of which could adversely affect our business, prospects, results of operations and financial condition.

We operate various information technology systems in different jurisdictions; the incompatibility or failure of these systems could materially adversely affect our business.

We do not have a universal information technology system in place across all the jurisdictions in which we operate. As a result, schools may have difficulty sharing information and curricula and we may have difficulties taking advantage of synergies among our different schools. These difficulties and related risks are heightened by the growth of our business. We may incur greater costs and achieve fewer savings as a result of maintaining multiple information technology systems than we would if there were one information technology system operating across all our jurisdictions. These increased costs and lost opportunities for savings and synergies could materially adversely affect our business, prospects, results of operations and financial condition.

Exchange rate fluctuations may materially adversely affect our results of operations and profitability.

It is our general practice to collect revenues and pay expenses in the local currency. The Chinese renminbi has an exchange rate tied to a basket of foreign currencies that include the U.S. dollar, euro, Japanese yen and South Korean won and is allowed to float within a narrow band around the central parity managed by the People’s Bank of China. In the Middle East, substantially all of our operations are conducted in the Qatari riyal and the United Arab Emirates (“UAE”) dirham, which are pegged to the U.S. dollar. Our operations in the United Kingdom are conducted in sterling. Elsewhere in Europe, our operations are conducted in the euro and local currencies, including the Swiss franc, Czech crown, Hungarian forint and Polish zloty. Our operations in Thailand are conducted in Thai baht. Our operations in Singapore are conducted in Singapore dollars. Our operations in Cambodia are conducted in Cambodian riel. Our operations in Vietnam are conducted in Vietnamese dong. Our operations in Hong Kong are conducted in Hong Kong dollars. Our operations in the United States are conducted in U.S. dollars. Our operations in Mexico are conducted in Mexican pesos. Conducting business across multiple currencies subjects us to currency fluctuation risks. In particular, fluctuations in currency exchange rates can have an impact on the translation of foreign currency-denominated amounts into U.S. dollars, which is our functional currency, and affect our results of operations when we transact between foreign currencies. As of August 31, 2016, the majority of our debt was denominated in U.S. dollars. Because a majority of our income is denominated in currencies other than the U.S. dollar and we do not fully hedge our exchange rate risk, changes in exchange rates could reduce our ability to service our debt. Conducting business in multiple currencies subjects us to exchange rate and currency risk that could materially adversely affect our business and reported results. For information about our hedging activities, see “Item 5. Operating and Financial Review and Prospects—B. Liquidity and Capital Resources—Borrowings”, “Item 11. Quantitative and Qualitative Disclosures about Market Risk” and note 25 to our audited consolidated financial statements appearing elsewhere in this annual report.

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We may become subject to taxes, penalties or additional liabilities in relation to our current and past use of independent consultants and the payment of some of our teachers.

If our independent consultants are deemed to be, or deemed to have been, our employees, we could be subject to penalties and be liable for unpaid taxes, as well as unpaid employment benefits, and we would have to incur the cost of providing these consultants with such benefits going forward. In addition, in some of our European schools we make payments to teachers through an offshore entity. If the local authorities were to successfully challenge the nature of such arrangements, we could be held liable for the payment of additional taxes, social security contributions, interest and penalties, and any such payment may materially adversely affect our business, results of operations and financial condition.

The occurrence of epidemics or other adverse public heath developments, natural disasters or unanticipated catastrophic events could have an adverse material effect on our business, prospects, results of operations and financial condition.

If an epidemic or other outbreak of disease occurs, parents may withdraw their children from school to protect them from the possibility of infection, faculty and staff may become ill or avoid coming to work in order to protect themselves from the outbreak or the government may order schools to close in order to contain the epidemic or outbreak. For example, certain Asian countries have encountered epidemics, such as SARS, the avian flu and other influenza strains. Past epidemic outbreaks, depending on their scale, have caused different degrees of damage to national and local economies throughout the world. In 2012, there were reports of the outbreak of the viral hand, foot and mouth disease in Thailand, China and other neighboring countries, including several confirmed human cases and deaths, particularly among children. In 2014, cases of Ebola virus disease, which originated in West Africa, appeared in Europe and the United States. An outbreak of Zika virus began in Brazil in 2015, spread to other countries in the Americas and the Caribbean, and in 2016 reached Malaysia and Singapore. An outbreak of SARS, avian flu, viral hand, foot and mouth disease, the Ebola virus, Zika virus or any other epidemic in any region in which we operate could materially adversely affect our business operations, including temporary closures of our schools. Similarly, the occurrence of natural disasters or unanticipated catastrophic events could result in material disruptions to our businesses. To the extent that any such interruption is not covered by our insurance, our business and results of operation could suffer and it may take a significant amount of time for our business to recover to previous levels of student enrollment and revenues.

Risks Related to Our Debt

Our debt could adversely affect our financial health and competitive position.

As of August 31, 2016, we had total debt of face value $1,091.6 million. Of this amount, $888.1 million was due under our term loan facility, which will mature in 2021, and $203.5 million was due under our Swiss franc denominated senior secured notes, which will mature in 2022. See “Item 5. Operating and Financial Review and Prospects—B. Liquidity and Capital Resources—Borrowings.”

Our debt could materially adversely affect our business by, for example:

· limiting our ability to pay dividends;

· increasing our vulnerability to general adverse economic and industry conditions;

· requiring us to dedicate a material portion of our cash flows from operations to make payments on our debt, thereby reducing the availability of cash to fund our operations or make capital expenditures;

· limiting our flexibility in planning for, or reacting to, changes in our business or industry; and

· limiting our ability to borrow additional funds.

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We require cash to service our debt, and our ability to generate cash is subject to many factors beyond our control.

Our ability to service our debt and fund capital expenditures will depend on our ability to generate cash. Our ability to generate cash depends on the performance of our schools, which in turn depends on global and local economic, financial, competitive, regulatory and other factors that are beyond our control.

We cannot assure you that our business will generate sufficient cash flow from operations or that future borrowings will be available to us in an amount sufficient to enable us to service our debt or to fund our other liquidity needs. We may need to refinance all or a portion of our debt on or before maturity. We cannot assure you that we will be able to refinance any of our debt on commercially reasonable terms or at all. Failure to refinance our debt on terms we believe to be acceptable could materially adversely affect our business, financial condition, results of operations and cash flow.

Failure of financial institutions to fulfill their commitments under our derivative financial instruments may adversely affect our future earnings and cash flows.

We use cross currency interest rate swaps in conjunction with certain debt issuances in order to secure a fixed local currency interest rate. Our unsecured contracts for cross currency interest rate swaps are with major financial institutions and mature at various dates. The failure of a counterparty to fulfill its obligation under the cross currency interest rate swaps may have a material adverse effect on our results of operations, financial condition, liquidity and cash flows.

For information about our hedging activities, see “Item 5. Operating and Financial Review and Prospects—B. Liquidity and Capital Resources—Borrowings” and “Item 11. Quantitative and Qualitative Disclosures about Market Risk”.

Our indebtedness may restrict our ability to pursue our business strategies.

Our debt instruments limit our ability to, among other things:

· incur additional debt;

· pay dividends or make other distributions or repurchase or redeem our shares;

· make investments;

· sell assets, including capital stock of restricted subsidiaries;

· enter into agreements restricting our subsidiaries’ ability to pay dividends;

· consolidate, merge, sell or otherwise dispose of all or substantially all of our assets;

· enter into sale and leaseback transactions;

· enter into transactions with our affiliates; and

· incur liens.

Our ability to comply with these covenants and restrictions may be affected by events beyond our control. If we breach any of our covenants, we could be in default under our debt instruments. This would permit our lenders to take certain actions, including requiring us to repay all our debt prior to the scheduled maturity. Furthermore, our lenders could cancel our credit facility. If our debt repayment were to be accelerated, we may not have the cash or liquid assets to repay our debt. The occurrence of any of these events could materially adversely affect our business, financial condition and results of operations.

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We are subject to interest rate risk resulting from general economic conditions and policies of governmental and regulatory agencies.

As of August 31, 2016, we had total principal amount of $1,156.3 million floating rate debt outstanding, and we do not fully hedge our interest rate risk. Interest rates are highly sensitive to many factors that are beyond our control, including general economic conditions and policies of governmental and regulatory agencies and, in particular, the United States Federal Reserve Board. Changes in monetary policy, including changes in interest rates, could influence the amount of interest we pay on our floating interest rate obligations and any floating interest rate obligations we may incur in the future. If interest rates increase, our debt service obligations on our floating rate debt would increase even though the amount borrowed remained the same, and our net income would decrease. An increase in our financing costs could materially adversely affect our results of operations and our ability to pay amounts due on our debt and make distributions to our shareholders. For information about our hedging activities and interest rate risk, see “Item 5. Operating and Financial Review and Prospects—B. Liquidity and Capital Resources—Borrowings” and “Item 11. Quantitative and Qualitative Disclosures about Market Risk”.

Risks Related to the Jurisdictions in which We Operate

We may experience adverse changes in general economic, political, social and regulatory conditions in our markets.

We operate in China, Europe, the Middle East, Southeast Asia and North America where many local communities, economies and legal and administrative structures are rapidly evolving. As a result, our success depends in part upon our ability to adapt to and succeed in differing economic, legal, social and political conditions. In particular, financial risks associated with our operations include risks of liquidity, inflation, devaluation, price volatility, currency convertibility and exchange rates and actual or perceived risk of country default resulting from significant deficits or political instability. Government interference in the economy in certain countries, changes in economic, political and social conditions (including, for example, significant changes to foreign exchange policies and wage controls), changes in government attitudes toward for-profit education, particularly K-12 schools, and changes in government policies on how schools should be operated could materially adversely affect our business, prospects, results of operations and financial condition.

Uncertainties regarding the general regulatory and legal environment, particularly in China, the Middle East and parts of Southeast Asia, could adversely affect our business.

Our international operations are governed by local laws and regulations applicable to foreign investments, foreign-owned enterprises and the operation of international schools generally. Our business could be adversely affected by the interpretation and enforcement of and changes in these laws and regulations. These laws and regulations often lack transparency, can be difficult to interpret and may be enforced inconsistently.

China, the Middle East and parts of Southeast Asia have not developed integrated legal systems that cover all aspects of our activities. The Chinese legal system is based on written statutes. Prior court decisions may be cited for reference but have limited precedential value. Since 1979, Chinese legislation and regulations have significantly enhanced the protections afforded to various forms of foreign investments in China. Because these laws and regulations are relatively new, and because of the limited volume of published decisions and their nonbinding nature, the interpretation and enforcement of these laws and regulations are uncertain. In addition, the Chinese legal system is based in part on government policies and internal rules that may have retroactive effect and, in some cases, are not published at all. As a result, we may not be aware of any alleged violation of these policies and rules until after the alleged violation has occurred. Any litigation in China may be protracted and result in substantial costs and diversion of resources and management attention.

The laws and regulations of China and countries in the Middle East and South East Asia are often unclear and subject to differing regulatory interpretation. National, regional, local and other governmental bodies may issue inconsistent decisions and opinions. In particular, the laws and regulations applicable to the establishment and operation of international schools can be vague and uncertain. Regulatory agencies in China, the Middle East and parts of Southeast Asia have substantial discretionary authority to implement and enforce regulations. Such implementation and enforcement is not always consistent or predictable. We cannot assure you that we will not be found to be in violation of any current or future laws and regulations in these countries, including laws and regulations relating to the ownership and operation of our schools, including our curricula, admissions criteria and leases. Potential consequences could include fines, penalties or the revocation of a school’s education license, or the ownership of a school could be challenged which would cause such school to cease operations. In some jurisdictions, the legal interpretation of our leases and other agreements may be uncertain. Exposure to regulatory uncertainty could limit our legal protection and ability to comply with regulations applicable to us, which could materially adversely affect our business, prospects, results of operations and financial condition.

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Policies, laws and regulations of foreign governments, including those relating to education, could adversely affect our existing business and our potential growth.

Our business is subject to the policies, laws and regulations of each jurisdiction in which we operate. These policies and regulations apply to many aspects of our business, including:

· applying for, obtaining and maintaining necessary licenses, permits, visas, accreditations and other authorizations for operating our schools and employing our teachers;

· our ability to recruit expatriate and local students;

· pricing and mechanisms for receipt of tuition fees;

· employment conditions, including taxation rates and other factors related to both foreign and local staff;

· the development of curricula that meet the requirements of local educational authorities;

· ownership structure and governance, in particular policies and regulations that relate to foreign ownership; and

· the ability of our schools to earn profits or pay management or product fees or royalties and our ability to repatriate cash through dividends or fees.

We may not be able, in part or at all, to comply with such policies, laws and regulations or any significant change thereof in each of the jurisdictions in which we operate or would like to expand our operations, or we may incur significant costs to do so. Our failure to comply or the imposition of significant compliance costs on us could materially adversely affect our business, prospects, results of operations and financial condition.

We rely on contractual arrangements with third parties to operate and control Nord Anglia Chinese International School Shanghai. These contractual arrangements may not be effective in giving us control and may be adversely impacted by changes in PRC laws or their interpretation.

We do not have an equity interest in Nord Anglia Chinese International School Shanghai (“NACIS”) because under the currently effective Catalogue for the Guidance of Foreign Investment, foreign investors are prohibited from investing in primary and middle schools and restricted from investing in high schools that teach local Chinese students. Instead, we control and operate NACIS through a series of contractual arrangements with third parties which ultimately own NACIS. Such arrangements have been adopted by many companies, but they pose the following key risks:

· There are substantial uncertainties regarding the interpretation of PRC laws and regulations applicable to such arrangements, and there can be no assurance that the PRC authorities will find our contractual arrangements to comply with PRC law. New PRC legislation could also impair the validity of our contractual arrangements.

· If the third parties which ultimately own NACIS fail to perform their obligations under the contractual arrangements, we may have to spend substantial costs and other resources to enforce our contracts, and remedies available under PRC law may not effectively protect our interests.

· The Ministry of Commerce published a draft Foreign Investment Law in January 2015. Under the draft Foreign Investment Law, an entity such as NACIS established in the PRC but “controlled” by foreign investors via contractual arrangements will be treated as a foreign-invested enterprise, and will be subject to restrictions or prohibitions on foreign investment in a “negative list” to be issued by the State Council at a later date. If the “negative list” includes primary, middle and high school education, a foreign-invested enterprise would require the Ministry of Commerce’s approval before it can operate. It is unclear how existing enterprises such as NACIS would be treated by the new Foreign Investment Law if enacted. For example, it is unclear whether the law would have retroactive effect or whether grandfathering will be granted to existing enterprises. If the Foreign Investment Law does not exempt existing enterprises, it is unclear how we would comply with the new law.

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Our schools in Guangzhou and Chengdu have not registered with the local Civil Affairs Bureau, which could subject the schools to enforcement actions resulting in sanctions, including a suspension of our operations.

Under PRC laws and regulations, civil non-enterprise entities are generally required to register with the local Civil Affairs Bureau. Failure to do so may give rise to sanctions such as warnings, orders for rectification or suspension of operations. The Guangzhou Education Commission and the Guangdong Education Commission, which are the education commissions at the municipal and provincial levels, respectively, have only recently advised us to register our school in Guangzhou with the Guangzhou Civil Affairs Bureau, and this registration application is now in progress. Our school in Chengdu, Leman International School (“LIS”), which we acquired in June 2015, has commenced the process for registration with the Sichuan Provincial Department of Civil Affairs for its official establishment.

Given the uncertainties of interpretation and implementation of relevant regulations by different authorities, we cannot assure you that our school in Guangzhou and LIS will be successful with their applications to the Guangzhou Civil Affairs Bureau and the Sichuan Provincial Department of Civil Affairs, respectively. Our failure to complete required registrations could materially adversely affect our reputation, business, prospects, results of operations and financial condition.

We may face restrictions on our ability to transfer and distribute funds.

We currently transfer and distribute funds among the jurisdictions in which we operate and we expect to continue to do so in order to fund our group-wide cash and financing requirements, including servicing our debt. To transfer funds among jurisdictions, we rely principally on cash-pooling arrangements, dividends and other distributions, inter-company loans, and the payment of administrative and management fees, royalties and licensing fees.

BISS has made substantial distributions through dividends and our schools in Shanghai, Beijing and Guangzhou have transferred cash through consultancy services fees, royalties and management charges paid to one of our subsidiaries. In addition, we have repatriated cash from China through intercompany transfers of interests in subsidiaries. Our schools in Thailand and Vietnam make distributions through quarterly and annual dividends, respectively. We also receive management charges from our school in Guangzhou. If any of the transfers or arrangements described above were found to be invalid by the relevant authorities, distributions from these schools could be discontinued and we may be required to repay amounts previously transferred.

Our ability to make distributions is restricted in some jurisdictions.

Due to restrictions imposed by local authorities and regulations, the entities operating our schools in Hong Kong, Hungary, Slovakia, Mexico and NACIS in the PRC cannot make distributions in the form of dividends. If we acquire or build more schools which are subject to similar restrictions, our ability to fund our operations, make distributions and pay dividends will be adversely affected.

If the PRC government finds that the structures of our schools in China do not comply with applicable PRC laws and regulations or we failed to obtain required permits or approvals for our intra-group transfer of our schools in Beijing, we may be unable to operate these schools and may be subject to penalties.

In China, the Ministry of Education regulates the education industry, and the local education commissions in the Chinese cities in which we operate have responsibility for local enforcement and oversight with respect to matters under their jurisdiction. These authorities have broad discretion in dealing with any violation of PRC laws or regulations, including any failure to obtain, maintain or comply with any required permit or approval, by our schools in China.

Under the Interim Regulations Concerning the Establishment of Schools for the Children of Expatriates (the “Interim Regulations”), only foreign individuals with lawful residence in China, wholly foreign-owned enterprises and certain foreign entities duly registered or established in China may apply to establish an international school, subject to the approval of the Ministry of Education. The approval authority has been delegated to the Ministry of Education’s local counterpart at the provincial level pursuant to the Decision of the State Council on the Sixth Batch of Cancelled and Amended Administrative Examination and Approval Items issued by the State Council of the PRC on September 23, 2012. An employee of Nord Anglia Education, who had lawful residence in China at the time, applied to the Ministry of Education for the establishment of BISS in 2002 as its sponsor. Since 2005, documents that we have submitted to the Shanghai Education Commission have identified as sponsor one of our wholly-owned subsidiaries that does not fall within one of the categories of permitted sponsors in the Interim Regulations. To date, no challenges in this respect have been brought against the operations of BISS by local or national educational authorities. We have not directly approached the Ministry of Education on this matter and do not anticipate doing so.

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Pursuant to the Interim Measures for the Administration of Examination and Approval of Overseas Investment Projects, the National Development and Reform Commission (“NDRC”) requires approvals for overseas investment projects made by PRC entities. We obtained approvals from the Ministry of Commerce of the PRC and the PRC State Administration of Foreign Exchange for the intra-group transfer of our schools in Beijing to our PRC subsidiaries and were advised by transaction counsel that local NDRC approval was not required.

If the Ministry of Education, the NDRC or other applicable PRC regulatory agencies were to find that the ownership structures of our schools do not comply with applicable PRC laws and regulations or we failed to obtain required approvals for the transfer of our schools in Beijing, we may be unable to operate our schools in Beijing and may be subject to penalties.

Our school in Guangzhou has not obtained written endorsement from the local and provincial education commissions for the site that houses its kindergarten.

International schools in China require an endorsement from the local or provincial education commission to operate multiple teaching sites. Prior to the acquisition of our school in Guangzhou, the school had not obtained a written endorsement from either the Guangzhou or Guangdong education commission for the site that houses its kindergarten. Both the Guangzhou and Guangdong education commissions are aware of the kindergarten, and we intend to seek their formal endorsement. However, we cannot assure you that we will obtain a formal endorsement. If we are unable to obtain a formal endorsement, the education commissions could take various regulatory actions against us and we may be required to relocate our kindergarten students to our main Guangzhou campus.

If our landlords’ title to the properties and/or other legal status of the facilities we lease for our schools were challenged, our operations could be disrupted.

We lease all of our school facilities in China and Vietnam. Our landlords should have valid land use and property ownership rights with respect to such school facilities and associated land. If our landlords are not the holders of land use rights or lessees of such holders, they are required to receive full authorization to sub-lease the relevant properties. In addition, in order to build new facilities or expand existing facilities, our landlords are also required to obtain all necessary planning, building and other regulatory approvals.

For most of our schools in China there is some uncertainty as to the landlords’ land use and property ownership rights or the receipt by such landlords of all necessary regulatory approvals. For the BISS Puxi campus, although the landlord has confirmed to us that the formal lease agreements and ownership certificates have been granted, it is unclear that the respective owners have obtained all of the requisite approvals from the competent land and building administrative authority to lease these facilities to BISS. Also for the BISS Puxi campus, the landlord is in the process of obtaining the land use right associated with a grass sports field for the secondary school. With respect to The British School of Beijing’s Shunyi facility, the landlord has not provided us with a valid property ownership certificate for the buildings. With respect to The British School of Beijing’s Sanlitun facility, the landlord has not provided us with a valid land use right certificate. Although we have been advised by the landlord that it is in the process of obtaining such certificate and other requisite approvals, they have not yet been obtained. The landlord has advised that the facility was built more than 30 years ago and to the knowledge of our management no enforcement action has been taken by the relevant Beijing governmental authorities with respect to the allocation of the land to the landlord, the educational use of the land and the construction approvals held by the landlord. With respect to the kindergarten campus of the British School of Guangzhou (“BSG”), the landlord has not provided us with a valid property ownership certificate. With respect to the LIS campus, the landlord, the Chengdu Education Bureau, has yet to obtain a land use right certificate, approval to lease the land to LIS or real estate property certificates for the facilities on the land. With respect to the campus of Nord Anglia Chinese International School Shanghai (“NACIS”), the landlord has not provided us with the ownership certificate for parts of the buildings and the land use rights certificate for parts of the land.

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We are not aware of any sanction, claim, or investigation contemplated by the competent authorities based on the foregoing. However, we cannot be certain that such actions will not be taken. If the title to or legal status of the facilities leased by The British School of Beijing, BISS, BSG, LIS or NACIS were challenged by the competent regulatory authorities or any third party, our landlords’ ability to perform their obligations under their leases could be materially adversely affected which could disrupt our operations in China. In addition, uncertainty as to the landlords’ title to the properties may limit our ability to seek and obtain specific performance of the landlords’ obligations under their leases in the event of a dispute.

In addition, in accordance with local practice we did not register our lease contracts with the competent administrative department of the PRC within 30 days after their execution. As a result, if our landlords enter into lease agreements with third parties for the premises we lease and the third parties register the leases, then the third parties may be able to challenge the validity of our leases.

In Vietnam, our landlord has not provided us with valid land use right certificates and building ownership documents in relation to certain areas leased by BIS Ho Chi Minh City, and our joint venture partners in Hanoi have not provided us with valid land use right certificates and building ownership documents for our two schools in Hanoi.

In the future, we may also operate more schools where there is defect or uncertainty in our title to land and property used for school operation, and the abovementioned risk we face will increase.

We operate three defined benefit pension schemes in the United Kingdom, all of which are currently in deficit.

We operate three defined benefits plans in the United Kingdom: the Lifetime Pension Scheme, the Wyburn School Limited Pension & Life Assurance Scheme (1985) and the Nord Anglia Joint Pension Scheme (collectively, the “UK Defined Benefit Plans”). The Lifetime Pension Scheme is closed to future accrual, meaning new members cannot join the plan and existing members cannot build up additional entitlements within it. The other two UK Defined Benefit Plans have no active members, meaning that no employees are currently accruing benefits in those plans in respect of their on-going employment. In their place, we offer a defined contribution pension plan to our UK employees. While this closure to future accrual will reduce any future service deficit, the past service deficit in respect of benefits already accrued will not be reduced by this change.

Our consolidated financial statements include reference to our defined benefit pension liability. As of August 31, 2016, the aggregate deficit for the UK Defined Benefit Plans was $22.4 million on an IFRS accounting basis.

The last agreed actuarial valuation of the Lifetime Pension Scheme was carried out as of August 31, 2014, resulting in a deficit of £24.8 million on the scheme-specific basis. Should a wind-up trigger occur in relation to this plan, the buy-out deficit will become due and payable by the employers with a liability to the plan, and the deficit of the Lifetime Pension Scheme on a buy-out basis was £32.9 million as of August 31, 2014.

The last actuarial valuation of each of the Wyburn School Limited Pension & Life Assurance Scheme (1985) and the Nord Anglia Joint Pension Scheme was carried out as of September 1, 2013. The aggregate of the scheme-specific deficits of these plans was £0.9 million, and we estimate that the aggregate of their buy-out deficits was approximately £1.8 million. Any movement as a result of changes reported in the actuarial valuations would not be regarded as significant.

As a result of these valuations, we are required to make on-going cash contributions in order to reduce the funding deficits. We have agreed with the trustees to a schedule of payments until September 2024 for the Lifetime Pension Scheme based on the 2014 valuation. This schedule began with a payment of £2.3 million in September 2015, increasing each year by 3.0% per annum until 2024, when the payment is £3.0 million. We have also agreed on a funding recovery plan with the trustees of the Wyburn School Limited Pension & Life Assurance Scheme (1985) and the Nord Anglia Joint Pension Scheme of aggregate payments of £48,300 per annum until May 2020.

A number of our subsidiary companies also participate in the Lifetime Pension Scheme, making it a multi-employer pension plan. Due to a number of these participating employers ceasing to employ any active members in the pension plan, statutory debts have become due from them to the plan.

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These statutory debts represent a proportion of the plan’s overall liabilities, based on the amount which would be needed to secure annuities for members, calculated with reference to the number of members each participating employer is liable for. As part of the 2011 valuation, these statutory debts have been allocated to the continuing employers in the Lifetime Pension Scheme. In addition, Nord Anglia Education Limited has provided a guarantee in respect of the obligations of the participating subsidiary companies in the plan.

Disputes with our business partners may adversely affect our business.

In some of the jurisdictions in which we operate or may operate in the future, including Abu Dhabi, Dubai, Qatar, Thailand and Vietnam, we operate our schools through joint ventures with local businesses or individuals due to regulatory or other business requirements. For the operation of Nord Anglia Chinese International School Shanghai, we rely on contractual arrangements with a local individual and his wholly-owned company. These business partners may (i) have economic or business interests or goals that are inconsistent with ours, (ii) take actions contrary to our instructions or requests or contrary to our policies or objectives or (iii) be unable or unwilling to fulfill their obligations under their agreements with us. A serious dispute with a business partner could materially adversely affect our business, financial condition and results of operations. In addition, if there is any adverse publicity in relation to our business partners, the reputation and operations of our relevant schools may be adversely affected.

The ownership structure of our schools in Thailand may be challenged.

Thai law requires all school permit holders to be majority owned by Thai persons. Although the articles of association of our Thai subsidiaries entitle us to 100% of the economic benefits of our Thai schools, we hold 49% of the shares of each school while Thai persons hold the remaining shares. The articles of association entitle the Thai persons to fixed, de minimus payments upon the declaration of dividends by the subsidiaries. We consolidate these companies because we are entitled to 100% of their economic benefit.

We cannot assure you that, if our ownership structure is challenged, the Thai regulator will interpret the relevant legislation so as to find that the ownership structure of our Thai schools, including our entitlement to 100% of their economic benefit, complies with Thai regulations, or that Thai regulations governing foreign ownership of schools will not change in the future. If the ownership structure of our schools in Thailand is found to be non-compliant with Thai regulations, we may be unable to operate our schools in Thailand, which could materially adversely affect our business, prospects, results of operations and financial condition.

We are subject to anti-corruption laws in the jurisdictions in which we operate including, anti-corruption laws of China and the U.S. Foreign Corrupt Practices Act (“FCPA”). Our failure to comply with these laws could result in penalties which could harm our reputation and materially adversely affect our business, results of operations and financial condition.

We are subject to the FCPA, which generally prohibits companies and their intermediaries from making improper payments to foreign officials for the purpose of obtaining any benefit, along with various other anti-corruption laws. Although we have implemented policies and continue to carry out training and introduce procedures designed to ensure that we, our employees and other intermediaries comply with the FCPA and other anti-corruption laws to which we are subject, there is no assurance that such measures will work effectively all of the time or protect us against liability under the FCPA or other laws for actions taken by our employees and other intermediaries with respect to our business or any businesses that we may acquire. If we fail to comply with the FCPA or other laws governing the conduct of business with government entities or other corruption offences, or if any of the schools we acquire are found to have failed to comply with those laws before we acquired them, we may be subject to criminal and civil penalties and other remedial measures, which could adversely affect our business, financial condition, results of operations and liquidity. Any investigation of any potential violations of the FCPA or other anti-corruption laws by U.S. or foreign authorities could also adversely affect our business, financial condition, results of operations and liquidity, regardless of the outcome of the investigation. Violations of the FCPA or other anti-corruption laws could also breach the terms of our financing agreements. See “—Risks Related to our Debt—Our indebtedness may restrict our ability to pursue our business strategies.”

The audit report included in this annual report is prepared by an auditor who is not inspected by the Public Company Accounting Oversight Board and, as a result, you are deprived of the benefits of such inspection.

Auditors of companies that are registered with the SEC and traded publicly in the United States, including our independent registered public accounting firm, must be registered with the US Public Company Accounting Oversight Board (United States) (the “PCAOB”) and are required by the laws of the United States to undergo regular inspections by the PCAOB to assess their compliance with the laws of the United States and professional standards. Because we have substantial operations within the PRC and the PCAOB is currently unable to conduct inspections of the work of our auditors as it relates to those operations without the approval of the Chinese authorities, our auditor’s work related to our operations in China is not currently inspected by the PCAOB.

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This lack of the PCAOB inspections of audit work performed in China prevents the PCAOB from regularly evaluating audit work of any auditors that was performed in China including that performed by our auditors. As a result, investors will be deprived of the full benefits of the PCAOB inspections.

The inability of the PCAOB to conduct inspections of audit work performed in China makes it more difficult to evaluate the effectiveness of our auditor’s audit procedures as compared to auditors in other jurisdictions that are subject to the PCAOB inspections on all of their work. In May 2013, the PCAOB announced that it had entered into a Memorandum of Understanding on Enforcement Cooperation with the China Securities Regulatory Commission (“the CSRC”) and the PRC Ministry of Finance, which establishes a cooperative framework between the parties for the production and exchange of audit documents relevant to investigations undertaken by the PCAOB, the CSRC or the PRC Ministry of Finance in the United States and the PRC, respectively. The PCAOB is continuing discussions with the CSRC and the PRC Ministry of Finance to permit joint inspections in the PRC of audit firms that are registered with the PCAOB and audit PRC companies that trade on the U.S. exchanges.

If additional remedial measures are imposed on the Big Four PRC-based accounting firms, including an affiliate of our independent registered public accounting firm, in connection with administrative proceedings brought by the SEC alleging the firms’ failure to meet specific criteria set by the SEC, our financial statements could fail to comply with the requirements of the Exchange Act.

In December 2012, the SEC instituted administrative proceedings against the Big Four PRC-based accounting firms, including an affiliate of our independent registered public accounting firm, alleging that these firms had violated U.S. securities laws and the SEC’s rules and regulations thereunder by failing to provide to the SEC the firms’ work papers related to their audits of certain PRC-based companies that are publicly traded in the United States. On January 22, 2014, an initial administrative law decision was issued, sanctioning these accounting firms and suspending them from practicing before the SEC for a period of six months. The sanction will not take effect until there is an order of effectiveness issued by the SEC. Any Commission endorsement or other determination could be appealed by the accounting firms in the U.S. court system. On February 12, 2014, the Big Four PRC-based accounting firms initiated a review of the initial administrative law decision to the SEC. We were not and are not involved in the proceedings brought by the SEC against these accounting firms. On February 6, 2015, the Big Four PRC-based accounting firms each agreed to a censure and to pay a fine to the SEC to settle the dispute and avoid suspension of their ability to practice before the SEC and audit US-listed companies. The settlement required the Big Four PRC-based accounting firms to follow the SEC’s specified procedures and to seek to provide the SEC with access to the Big Four PRC-based accounting firms’ audit documents via the CSRC in response to future document requests by the SEC made through the CSRC. If potential document productions depart from the criteria pursuant to the SEC’s specified procedures, the SEC retains authority to impose a variety of additional remedial measures on the Big Four PRC-based accounting firms, depending on the nature of the departure.

If the Big Four PRC-based accounting firms are subject to additional remedial measures, because our auditor’s PRC-based affiliate carries out audit procedures on our PRC operations, our ability to file our financial statements in compliance with SEC requirements could be impacted.

Risks Related to Ownership of Our Ordinary Shares

The trading price of our ordinary shares may be volatile, which could result in substantial losses to investors.

The trading price of our ordinary shares could fluctuate widely. Factors that could affect the trading price of our ordinary shares include broad market and industry trends over which we have no control and factors specific to our operations, including the following:

· actual or anticipated fluctuations in our quarterly results of operations;

· variations in our revenues, earnings and cash flow;

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· announcements of new investments, acquisitions, strategic partnerships or joint ventures;

· announcements of expansions by us or our competitors;

· changes in financial estimates by securities research analysts;

· departures of our executive officers and key personnel;

· release or expiry of lock up or other transfer restrictions on our outstanding equity securities or sales of additional equity securities;

· potential litigation or regulatory investigations; and

· potential or actual changes in the regulatory environment in which we operate.

Any of these factors may result in large and sudden changes in the volume and price at which our ordinary shares will trade. Furthermore, the securities market has from time to time experienced significant price and volume fluctuations that are not related to the operating performance of particular companies. These market fluctuations may also materially adversely affect the market price of our ordinary shares. As a result, you could lose all or part of your investment.

If our operating results do not meet analyst projections, our stock price could decline.

Several independent securities analysts publish quarterly and annual projections of our financial performance. These projections are developed independently by these analysts based on their own analyses. We do not disclose to analysts any material non-public information, internal forecasts or other confidential business information. As a result, you should not assume that we endorse any reports issued by, or any statement or view expressed in, these securities analysts’ reports. Moreover, we expressly disclaim any responsibility to advise securities analysts or the public markets of our views regarding the accuracy of their published reports. If our actual results do not meet analysts’ guidance, our stock price could decline.

Substantial future sales or expected sales of our ordinary shares in the public market could cause the price of our ordinary shares to decline.

Sales of substantial amounts of our ordinary shares, or the expectation that these sales could occur, could adversely affect the price of our ordinary shares and could impair our ability to raise capital through the sale of additional shares. As of November 18, 2016, we had 104,130,038 ordinary shares outstanding. The ordinary shares are freely tradable without restriction under the Securities Act, except for any of our ordinary shares that may be held or acquired by our directors, executive officers and other affiliates, as that term is defined in the Securities Act, which are restricted securities under the Securities Act. Restricted securities may not be sold in the public market unless the sale is registered under the Securities Act or an exemption from registration is available.

In the future, we may also issue our securities if we need to raise capital in connection with a capital raise or acquisition. The amount of our ordinary shares issued in connection with a capital raise or acquisition could constitute a material portion of our then-outstanding ordinary shares.

Because we do not expect to pay any dividends on our ordinary shares for the foreseeable future, you may never receive a return on your investment.

You should not rely on an investment in our ordinary shares to provide dividend income. We do not anticipate paying any cash dividends to our shareholders in the foreseeable future. Instead, we plan to retain any earnings to maintain and expand our operations. In addition, our ability to pay cash dividends is currently limited by the terms of our debt instruments, and any future debt instruments may contain terms prohibiting or limiting the amount of dividends that may be declared or paid on our ordinary shares. Accordingly, you must rely on sales of your ordinary shares after price appreciation, which may never occur, as the only way to realize any return on your investment.

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Our articles of association contain anti-takeover provisions that could materially adversely affect the rights of holders of our ordinary shares.

Our articles of association limit the ability of others to acquire control of our company or cause us to engage in change-of-control transactions. These provisions could have the effect of depriving our shareholders of an opportunity to sell their shares at a premium over prevailing market prices by discouraging third parties from seeking to obtain control of our company in a tender offer or similar transaction. For example, our board of directors has the authority, without further action by our shareholders, to issue preferred shares in one or more series and to fix their designations, powers, preferences, privileges, and relative participating, optional or special rights and the qualifications, limitations or restrictions, including dividend rights, conversion rights, voting rights, terms of redemption and liquidation preferences, any or all of which may be greater than the rights associated with our ordinary shares. Preferred shares could be issued quickly with terms calculated to delay or prevent a change in control of our company or make removal of management more difficult. If our board of directors decides to issue preferred shares, the price of our ordinary shares may fall and the voting and other rights of the holders of our ordinary shares may be materially adversely affected.

Premier Education Holdings has significant influence over us, including control over decisions that require the approval of shareholders, which could limit your ability to influence the outcome of key transactions, including a change of control.

As of November 18, 2016, our controlling shareholder is Premier Education Holdings which owned 66.9% of our outstanding shares as of November 18, 2016. For as long as Premier Education Holdings continues to beneficially own shares representing more than 50% of the voting power of our shares, it will be able to direct the election of a majority of the members of our board of directors and exercise a controlling influence over our business and affairs, including any determinations requiring shareholder approval with respect to mergers or other business combinations, the acquisition or disposition of assets, the incurrence of debt, the issuance of any additional shares or other equity securities, the repurchase or redemption of shares and the payment of dividends. Similarly, Premier Education Holdings has the power to determine matters submitted to a vote of our shareholders without the consent of our other shareholders, has the power to prevent a change in our control and could take other actions that might be favorable to it. Even if its ownership falls below 50%, Premier Education Holdings may continue to be able to strongly influence or effectively control our decisions.

Additionally, affiliates of Premier Education Holdings are in the business of making investments in companies and may acquire and hold interests in businesses that compete directly or indirectly with us and may pursue acquisition opportunities that may be complementary to our business, and, as a result, those acquisition opportunities may not be available to us.

Your right to participate in any future rights offerings may be limited, which may cause dilution to your holdings, and you may not receive distributions with respect to the underlying ordinary shares if it is impractical to make them available to you.

We may from time to time distribute rights to our shareholders, including rights to acquire our securities. However, we cannot make rights available to our shareholders in the United States unless we register the rights and the securities to which the rights relate under the Securities Act or an exemption from the registration requirements is available. We are under no obligation to file a registration statement with respect to any such rights or securities or to endeavor to cause such a registration statement to be declared effective. Moreover, we may not be able to establish an exemption from registration under the Securities Act. Accordingly, you may be unable to participate in our rights offerings and may experience dilution in your holdings.

We are a Cayman Islands company and, because judicial precedent regarding the rights of shareholders is more limited under Cayman Islands law than under U.S. law, you may have less protection for your shareholder rights than you would under U.S. law.

Our corporate affairs are governed by our amended and restated memorandum and articles of association, the Cayman Islands Companies Law (2013 Revision) and the common law of the Cayman Islands. The rights of shareholders to take action against the directors, actions by minority shareholders and the fiduciary responsibilities of our directors to us under Cayman Islands law are to a large extent governed by the common law of the Cayman Islands. The common law of the Cayman Islands is derived in part from comparatively limited judicial precedent in the Cayman Islands as well as that from English common law, which has persuasive, but not binding, authority on a court in the Cayman Islands. The rights of our shareholders and the fiduciary responsibilities of our directors under Cayman Islands law are different from what they would be under statutes or judicial precedent in some jurisdictions in the United States. In particular, the Cayman Islands has a different body of securities laws than the United States. In addition, some U.S. states, such as Delaware, have more fully developed and judicially interpreted bodies of corporate law than the Cayman Islands.

As a result of all of the above, public shareholders may have more difficulty in protecting their interests in the face of actions taken by management, members of the board of directors or controlling shareholders than they would as shareholders of a U.S. public company.

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We are a foreign private issuer and, as a result, are not subject to U.S. proxy rules and are subject to more lenient and less frequent Exchange Act reporting obligations than a U.S. issuer.

Because we qualify as a foreign private issuer under the Securities Exchange Act of 1934, we are exempt from certain provisions of the Exchange Act that are applicable to U.S. public companies, including (i) the sections of the Exchange Act that regulate the solicitation of proxies, consents or authorizations in respect of a security registered under the Exchange Act, (ii) the sections of the Exchange Act that require insiders to file public reports of their stock ownership and trading activities and impose liability on insiders who profit from trades made in a short period of time and (iii) the rules under the Exchange Act that require the filing of quarterly reports on Form 10-Q containing unaudited financial and other specified information and current reports on Form 8-K upon the occurrence of specified significant events. In addition, foreign private issuers are not required to file their annual report on Form 20-F until 120 days after the end of each fiscal year, while U.S. domestic issuers that are accelerated filers are required to file their annual report on Form 10-K within 75 days after the end of each fiscal year. Foreign private issuers are also exempt from Regulation FD, aimed at preventing issuers from making selective disclosures of material information. As a result, you may not have the same protections afforded to stockholders of companies that are not foreign private issuers.

We may lose our foreign private issuer status in the future, which could result in significant additional costs and expenses.

The determination of foreign private issuer status is made annually on the last business day of an issuer’s most recently completed second fiscal quarter and, accordingly, the next determination will be made with respect to us on February 28, 2017. We would lose our foreign private issuer status if (i) a majority of our outstanding voting securities are directly or indirectly held of record by U.S. residents and (ii) a majority of our directors or executive officers are U.S. citizens or residents, a majority of our assets are located in the United States or our business is administered principally in the United States. If we were to lose our foreign private issuer status, the regulatory and compliance costs to us under U.S. securities laws as a U.S. domestic issuer may be significantly higher. We may also be required to modify certain of our policies to comply with corporate governance practices associated with U.S. domestic issuers, which would involve additional costs.

We are an “emerging growth company” and we cannot be certain if the reduced disclosure requirements applicable to emerging growth companies will make our ordinary shares less attractive to investors.

We are an “emerging growth company,” as defined in the JOBS Act, and we may take advantage of certain exemptions from various reporting requirements that are applicable to public companies that are not “emerging growth companies” including, but not limited to, not being required to comply with the auditor attestation requirements of section 404 of the Sarbanes-Oxley Act. We cannot predict if investors will find our ordinary shares less attractive because we may rely on these exemptions. If some investors find our ordinary shares less attractive as a result, there may be a less active trading market for our ordinary shares and the trading price of our ordinary shares may be more volatile. In addition, our costs of operating as a public company may increase when we cease to be an emerging growth company.

The obligations associated with being a public company require significant resources and management attention, and failure to achieve and maintain effective internal controls could have a material adverse effect on our business, results of operations and the trading price of our ordinary shares.

As a public company in the United States, we incur legal, accounting and other expenses that we did not previously incur as a private company. We are subject to the reporting requirements of the Exchange Act, and the Sarbanes-Oxley Act, the listing requirements of the New York Stock Exchange and other applicable securities rules and regulations. Compliance with these rules and regulations increases our legal and financial compliance costs, make some activities more difficult, time-consuming or costly and increases demand on our systems and resources, particularly after we are no longer an “emerging growth company.” The Exchange Act requires that we file annual and current reports with respect to our business, financial condition and results of operations. The Sarbanes-Oxley Act requires, among other things, that we establish and maintain effective internal controls and procedures for financial reporting. Furthermore, the need to establish and maintain the corporate infrastructure demanded of a public company may divert management’s attention from implementing our growth strategy, which could prevent us from improving our business, financial condition and results of operations. We have made, and will continue to make, changes to our internal controls and procedures for financial reporting and accounting systems to meet our reporting obligations as a public company. However, the measures we have taken, and will continue to take, may not be sufficient to satisfy our obligations as a public company. In addition, these rules and regulations increase our legal and financial compliance costs and make some activities more time-consuming and costly. For example, these rules and regulations make it more difficult and more expensive for us to obtain director and officer liability insurance, and we may be required to incur substantial costs to maintain the same or similar coverage. These additional obligations could have a material adverse effect on our business, financial condition, results of operations and cash flow.

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In addition, changing laws, regulations and standards relating to corporate governance and public disclosure are creating uncertainty for public companies, increasing legal and financial compliance costs and making some activities more time consuming. These laws, regulations and standards are subject to varying interpretations, in many cases due to their lack of specificity, and, as a result, their application in practice may evolve over time as new guidance is provided by regulatory and governing bodies. This could result in continuing uncertainty regarding compliance matters and higher costs necessitated by ongoing revisions to disclosure and governance practices. We intend to invest resources to comply with evolving laws, regulations and standards, and this investment may result in increased general and administrative expenses and a diversion of management’s time and attention from revenue-generating activities to compliance activities. If our efforts to comply with new laws, regulations and standards differ from the activities intended by regulatory or governing bodies due to ambiguities related to their application and practice, regulatory authorities may initiate legal proceedings against us and our business, financial condition, results of operations and cash flow could be adversely affected.

For as long as we are an “emerging growth company” under the JOBS Act, our independent registered public accounting firm will not be required to attest to the effectiveness of our internal control over financial reporting pursuant to Section 404 of the Sarbanes-Oxley Act. We could be an emerging growth company until August 31, 2019. Furthermore, after the date we are no longer an emerging growth company, our independent registered public accounting firm will only be required to attest to the effectiveness of our internal control over financial reporting depending on our market capitalization. Even if our management concludes that our internal controls over financial reporting are effective, our independent registered public accounting firm may still decline to attest to our management’s assessment or may issue a report that is qualified if it is not satisfied with our controls or the level at which our controls are documented, designed, operated or reviewed, or if it interprets the relevant requirements differently from us.

In connection with the preparation of this annual report on Form 20-F, we carried out an evaluation of the effectiveness of our internal control over financial reporting. Based on this evaluation, our principal executive officer and principal financial officer concluded that our internal control over financial reporting was not effective based on management’s identification of two material weaknesses. See “Item 15. Controls and Procedures.”

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the company’s annual and interim financial statements will not be prevented or detected on a timely basis.

We are in the process of implementing measures to remedy these material weaknesses. We cannot assure you that we will be able to resolve these material weakness in internal control over financial reporting in a timely and effective manner or that a significant deficiency or material weakness in our internal control over financial reporting will not be identified in the future. If we fail to maintain effective internal control over financial reporting in the future, we and our independent registered public accounting firm may not be able to conclude that we have effective internal control over financial reporting. This could in turn result in the loss of investor confidence in the reliability of our financial statements and negatively impact the trading price of our common shares, inhibiting our ability to raise sufficient capital on favorable terms.

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We may be classified as a passive foreign investment company, which could result in adverse U.S. federal income tax consequences to U.S. holders of our ordinary shares.

Based on the current market price of our ordinary shares and the composition of our income, assets and operations, we do not expect to be treated as a passive foreign investment company (“PFIC”) for U.S. federal income tax purposes for the current taxable year or in the foreseeable future. However, the application of the PFIC rules is subject to uncertainty in several respects, and we cannot assure you the U.S. Internal Revenue Service will not take a contrary position. Furthermore, this is a factual determination that must be made annually after the close of each taxable year. If we are a PFIC for any taxable year during which a U.S. Holder (as defined in “Item 10. Additional Information—E. Taxation—Material United States Federal Income Tax Considerations”) holds our ordinary shares, certain adverse U.S. federal income tax consequences could apply to such U.S. Holder. See “Item 10. Additional Information—E. Taxation—Material United States Federal Income Tax Considerations—Passive Foreign Investment Company.”

Item 4. Information on the Company

A. History and Development of the Company

Our controlling shareholder is Premier Education Holdings Ltd, which is controlled by Baring Private Equity Asia.

Our business was founded in 1972. From 1997 through August 2008, we conducted business as Nord Anglia Education plc, whose shares were listed on the main board of the London Stock Exchange. In August 2008, Nord Anglia Education plc was acquired in a going-private transaction led by Baring Private Equity Asia. Premier Education (UK) Holdco Limited, renamed “Nord Anglia Education (UK) Holdings plc” in 2012, was the buying consortium’s ultimate holding vehicle that owned the acquiring entity that purchased all the shares in Nord Anglia Education plc. After the acquisition, Nord Anglia Education plc was delisted and renamed “Nord Anglia Education Limited.” We, Nord Anglia Education, Inc., were incorporated in the Cayman Islands as an exempted company in 2011, and in 2012 shareholders of Nord Anglia Education (UK) Holdings plc swapped their shares for shares in our company.

Our principal executive offices are located at Level 12, St. George’s Building, 2 Ice House Street, Central, Hong Kong. Our telephone number at this address is +852-3951-1100. Our registered office is located at Maples Corporate Services Limited, P.O. Box 309, Ugland House, Grand Cayman, KY1-1104, Cayman Islands.

B. Business Overview

Overview

We believe we are the world’s leading operator of premium international schools. We teach over 37,000 students, from kindergarten through the end of secondary school (“K-12”), at our 43 premium schools in China, Europe, the Middle East, South East Asia and North America. We primarily operate in geographic markets with high FDI, large expatriate populations and rising disposable income. We believe that these factors contribute to high demand for premium schools and strong growth in our business. Our student enrollment increased at a compound annual growth rate (“CAGR”) of 31% from the end of fiscal 2008 to the end of fiscal 2016.

Our commitment to quality drives our strong operating performance. Our highly qualified principals, teachers and support staff strive to maximize every student’s academic performance. Although we accept students with a wide range of academic ability, for many of whom English is their second language, our students’ standardized examination results exceed global averages. In 2016, our IBDP pass rate equalled 91% compared to the IB World Average of 80.8%, and 15.7% of our IBDP students scored over 40 points out of 45, compared with the IB World Average of 7.4%. In 2016, one out of three of our graduates matriculated to one of the world’s top 100 universities in QS World University Rankings. Our academic quality helps us maintain our market-leading position, supports our premium pricing and drives consistent enrollment growth.

Our schools derive all of their revenue from private sources and therefore are not exposed to government funding risk. As of September 30, 2016, 62% of our students were expatriates and 38% were from local families. Employers of expatriates fund most of our tuition fees as part of expatriate compensation packages, through allowances or direct payments to our schools. Education allowances are often key recruitment incentives for expatriate employees.

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Our attractive business model leads to good visibility, price inelasticity, low capital requirements and strong cash generation. Our average student tenure of 4.0 years provides good visibility on future enrollments and revenues. Giving pro forma effect to our acquisition of our four schools in Vietnam and six schools from Meritas, our average tenure in the last two years would have been 4.1 years. Our private-pay model and the importance of education to parents make us resilient to changing economic conditions and government policies. We have been able to increase tuition fees at an average of approximately 4-5% per year over the last five years. Our capital-efficient approach to growth enables us to generate high returns on capital. We focus on securing high-quality, purpose-built schools through long-term leases, with the construction costs of many of our schools funded by real estate developers desiring premium schools within their residential and commercial developments. Our strong margins and working capital dynamics make our business highly cash generative. We generally receive a large portion of our schools’ revenue before the beginning of the fiscal year. As an example, we received approximately 50% of our fiscal 2016 schools’ revenue before August 31, 2015.

We have grown our business significantly since 2008. We increased our student capacity and enrollments from 5,393 places and 4,010 students as of August 31, 2008 to 54,813 places and 37,026 students as of November 18, 2016. During that period, we expanded capacity at our existing schools by 7,016 places, developed eight greenfield schools with a total of 10,462 places and acquired 31 schools with a total of 31,942 places.

In fiscal 2016, we had revenue of $856.0 million, profit for the period of $49.2 million and Adjusted EBITDA of $207.3 million. In fiscal 2016, our schools in China, Europe, Middle East, South East Asia and North America contributed 23.2%, 24.9%, 10.2%, 15.3% and 26.4% of our schools’ revenue, respectively.

The following table shows our regional enrollments as of November 18, 2016:

	November 18, 2016	% of Total

Full-time equivalent students:
China	5,912	16	%
Europe	6,868	19	%
Middle East	5,627	15	%
South East Asia	8,241	22	%
North America	9,932	27	%
China Bilingual	446	1	%
Total	37,026	100	%

Our Market Opportunity

We primarily target geographic markets with high FDI, large expatriate populations and rising disposable incomes, all of which increase demand for premium schools. Employers of expatriates fund most of our tuition fees. We believe that companies that rely on expatriate employees view the availability of high-quality schools as vital to recruiting and retaining key employees. In addition, many governments and business and trade associations actively promote premium international schools in their jurisdictions, recognizing that the availability of premium quality education for the children of expatriate employees is critical to attracting FDI from corporations.

A majority of premium schools are family-owned and operated or managed by foundations. Family operators and foundations typically focus on academic performance, exclusivity and prestige. These operators have historically been reluctant to add capacity even when demand in their markets exceeds supply, leaving significant opportunities for companies that operate schools with high academic standards while also focusing on financial performance and growth.

Competitors seeking to enter the premium school market face significant barriers to entry, including:

· the lead time required to build brand recognition and reputation, both locally and globally;

· the challenges unproven operators face in securing government licenses and regulatory approval in many jurisdictions;

· in many markets, the scarcity of real estate in desirable areas that can accommodate a sizeable campus with the comprehensive and high-quality facilities expected of premium schools;

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· the tendency of property developers and landlords to require school operators with significant financial resources and a reputation for quality in order to enhance the value of their adjacent residential or retail real estate; and

· the tendency of students to stay enrolled in the same school until they graduate or their parents relocate.

We believe increasing globalization and a growing emphasis by parents on high-quality education for their children will drive strong growth in many markets. There are few premium-quality operators with the global scale required to benefit from this attractive opportunity.

Our Strengths

Global Market Leadership and Partner of Choice

We believe we are the world’s leading operator of premium international schools. We teach over 37,000 students at our network of 43 premium international schools across 34 locations in 15 countries. We are a trusted partner of key stakeholders, including governments, sellers of premium schools and real estate developers, and enjoy significant benefits of scale.

Our strong reputation among governmental authorities, which recognize the importance of premium schools in attracting FDI, helps us secure schools in prime education markets.

Sellers of premium schools often focus on the operating record, financial stability and reputation of potential buyers.

Real estate developers and landlords seek school operators with a reputation for quality in order to enhance the value of their adjacent residential or retail real estate.

Our reputation also helps create unique opportunities to improve our educational offering through curricula enrichment and innovative professional development for teachers. In May 2016 we announced our collaboration with one of the world’s leading universities, the Massachusetts Institute of Technology (MIT), to implement a science, technology, engineering, visuals arts and mathematics program across our schools worldwide. The program focuses on the juncture between the STEAM disciplines as a catalyst for developing key transferable skills which will benefit students in school and in their future careers.

In 2015 we announced The Juilliard-Nord Anglia Performing Arts Program, a multifaceted collaboration to provide an innovative arts education curriculum for students in grades K-12. Developed in conjunction with The Juilliard School, the world-renowned performing arts conservatory, the program seeks to inspire and equip our students with the skills, curiosity and cultural literacy to engage in the performing arts throughout their lives.

In 2015, we also announced a unique professional development opportunity for teachers in collaboration with King’s College London, a world top 20 university and a leader in professional and executive education. Each year, 50 teachers will commence a part-time Executive Master’s in International Education, focused on developing participants’ understanding of effective school leadership in an international education environment.

Our market leadership and scale also enable us to:

· recruit, develop and retain top-quality principals and teachers;

· set tuition fees at the high end of each market;

· apply best practices throughout our network, including cost management and control through benchmarking;

· stay at the forefront of educational theory; and

· offer initiatives, such as the Global Campus, The Juilliard-Nord Anglia Performing Arts Program and the MIT collaboration, which develop our students into world-ready, global citizens.

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Premium Quality Education with Strong Brand Recognition

Our schools have excellent reputations and are among the most respected premium K-12 school brands in their markets. We focus on the needs of individual students and track each student’s performance against personalized targets to help maximize every student’s academic achievement.

Our approach to education and the benefits of belonging to a global network of premium schools help to distinguish our schools from our competitors. For example, we have developed a supplementary learning platform, the Global Campus, which is accessible to all of our students. The Global Campus Online is an Internet-based system that complements our curricula and allows our students to interact online with experts in various fields and collaborate with students at any of our schools around the world. This innovative learning environment creates independent learners, prepares students for future university study and helps them to become global citizens. As part of the Global Campus, students also have opportunities to come together from around the world and take part in unique experiences in the Global Campus Worldwide. In 2016, 764 students from our schools around the world participated in transformational learning experiences through our Global Campus Worldwide expeditions to Tanzania and Switzerland. Additionally, our Global Campus Worldwide brought 105 students to the Cambridge Science Festival for a bespoke program of activities as part of our collaboration with MIT.

Although most of our schools do not select students based on academic ability, and English is not the first language of many of our students, our students’ standardized examination results well exceed global averages. In 2016, our International Baccalaureate Diploma Program (“IBDP”) pass rate equaled 91% compared to the IB World Average of 80.8%, and 15.7% of our IBDP students scored over 40 points out of 45, compared with the IB World Average of 7.4%. In 2016, one out of three of our graduates matriculated to one of the world’s top 100 universities in QS World University Rankings.

Our reputation for quality and a distinctive approach to education result in high referral rates, with 91% of parents of children at our schools whom we surveyed in the academic year 2015/2016 reporting that they would recommend our schools. Our reputation and attention to individual students are key to parents who choose our schools over competing schools.

Superior Business Model

Our business model emphasizes operational efficiency and uses a data-driven approach to enhance student achievement, growth and profitability. Our global, regional and school teams track and analyze key performance indicators and we refine our operating strategy accordingly.

We focus on the following key areas of our operations:

· Academic quality assurance: We monitor the academic quality of our schools and assess the quality of schools we acquire through a structured quality review framework that includes an annual review by our central Schools’ Academic Performance Board. In addition, we perform ad hoc assessments of schools as required. We evaluate the achievement of students, the quality of teaching, the behavior and safety of students, the quality of school leadership and management and overall effectiveness.

· Student recruitment: We have a systematic approach to student recruitment. Our comprehensive recruitment strategies are adapted to each school’s local market and executed by each school’s principal, admissions team and marketing manager. We use a relationship management system to monitor an applicant’s file from initial inquiry through enrollment.

· Pricing: We monitor local market trends, including economic developments and supply and demand dynamics, to set tuition fees.

· Cost management: We use metrics-based management throughout our school operations to enhance efficiencies. We achieve operational efficiencies through various means, including efficient class scheduling and optimizing our teaching resources. We accomplish this by minimizing teachers’ administrative responsibilities, allowing them to spend more time focused on teaching.

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· Capacity planning: Our expertise in planning and adding capacity to meet demand enables us to manage growth by efficiently utilizing capacity at existing schools and expanding as necessary. We also work with architectural consultants who specialize in optimizing school configurations. Our approach to growing our network of schools is highly analytical, includes the use of demographic and economic models and we often commission third-party market research to identify opportunities for expansion.

We use a balanced scorecard of key performance indicators that measures each school’s performance from the perspective of all stakeholders, including parents, students, teachers and investors. Our balanced scorecard evaluates each school based on student safety, student performance, financial performance, staff performance and marketing and admissions. By regularly monitoring key performance indicators at each school, we can ensure that its operations meet our expectations. We learn of potential problems at any school in real time and intervene as required. This helps us maintain consistency across our schools and allows us to quickly integrate newly acquired or greenfield schools, which makes our business highly scalable.

Capital Efficient, Returns-Focused Approach to Growth

We have significantly grown our business while driving high returns on capital. Our capital efficient expansion strategy focuses on securing high-quality, purpose-built schools through long-term leases, with the construction cost of many of our schools funded by real estate developers. When we acquire existing schools, we often acquire the operating businesses and enter into long-term leases with the sellers who retain ownership of the real estate.

Highly Attractive Financial Profile

· High Visibility and Predictability: We operate a highly visible and predictable business. Average student tenure across our network in the last two years was 4.1 years. In our latest academic year we lost only 2% of our students for reasons related to academic quality, student needs or tuition levels, based on parent responses to our exit surveys. At a majority of our schools, our terms and conditions require a full term’s notice of withdrawal for a refund of prepaid tuition. The final academic term at most of our schools starts in April of each year and historically we have had few requests for refunds. We track inquiries and visits to estimate new enrollments. In fiscal 2016, we converted 47% of prospective student visits to our schools into enrollments. As a result, we can estimate in-year and year-to-year student re-enrollment, new enrollment and revenue.

· Favorable Working Capital Dynamics: We generally receive a large portion of our schools’ revenue before the beginning of the fiscal year. As an example, we received approximately 50% of our fiscal 2016 schools’ revenue before August 31, 2015. We collected approximately 67% of our schools’ revenue prior to January 2016, and up to 94% prior to May 2016. The timing of our schools’ revenue collection allows us to finance our operating expenses principally with pre-paid tuition fees.

· Price Inelasticity Supported by Private Pay Model: We have been able to increase our tuition fees at an average of approximately 4-5% per year over the last six years, which we believe exceeds the median rate of inflation in the markets where our schools are located, while continuing to grow our global enrollment organically. Our private pay model insulates our schools from volatility in government funding resulting from changing economic conditions or policies. The high quality of our schools supports our premium pricing. A significant proportion of our tuition fees are directly or indirectly paid by employers, who we believe accept price increases because education allowances typically represent only a small percentage of an expatriate’s total compensation. We believe self-funding expatriates and affluent local families also accept our price increases because of the importance they place on a quality education for their children.

· Strong Margins: Our premium pricing and operating efficiencies result in strong margins. In fiscal 2016, our Adjusted EBITDA margin was 24.2%. With capacity utilization of 67.5% as of November 18, 2016, we have significant scope to expand our margins by growing enrollments without increasing capacity.

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Experienced Management Team with Local and Global Expertise

Our management team combines seasoned executives with experience in running publicly listed companies and leading education specialists. Andrew Fitzmaurice has been our CEO for more than 13 years and was CEO when Nord Anglia Education plc was listed on the main board of the London Stock Exchange. Over the last several years, we have bolstered our senior management team with a number of significant appointments, including our corporate development director, education director, human resources director and marketing director. Our senior management team is supported by experienced regional managers and local school administrators who implement our operating philosophy in each of our markets.

Our Strategies

Continue to Deliver High-Quality Education and Strong Outcomes for Students

Our commitment to quality will remain the foundation of our operating performance and growth. We will continue to offer our students an excellent education, recruit and retain experienced and highly qualified principals and teachers and strive to help each student achieve high academic performance. We believe that building upon our reputation for quality and ensuring that our schools live up to the expectations of students and parents are key to strengthening our position as the world’s leading international operator of premium schools.

Increase Student Enrollments at Our Existing Schools

We aim to continue to increase enrollments by applying our systematic processes for generating inquiries, converting inquiries to enrollments and retaining existing students. Our school principals lead the recruitment effort with dedicated admissions and marketing teams. We generate inquiries and visits through referrals and digital and other marketing activities. In fiscal 2016, we converted 47% of prospective student visits to our schools into enrollments.

Continue Price Leadership

We will continue to invest in our teachers and campuses to enable us to consistently provide high-quality premium education. Improving our schools supports our strong reputation in the markets where we operate, which we expect will allow us to continue increasing prices in excess of inflation.

Increase Capacity

Using our capital efficient, returns-focused approach, we may increase capacity across our geographically diverse school portfolio.

· Capacity Expansion at Our Existing Schools. At our existing schools, we may increase capacity where market demand supports additional places. We will continue to develop our relationships with real estate developers and landlords, who we expect will continue to fund our capacity expansion. Our systematic approach to capacity expansion has enabled us to add 10,462 places to existing schools since August 31, 2008.

· Greenfield Expansion in Existing and New Markets. We may strategically open new schools in markets where we currently operate and in attractive new markets. We have successfully completed eleven greenfield projects since 1992. We have greenfield projects under development in Abu Dhabi, Bangkok and Hong Kong.

In many new markets, our global market leadership and premium quality attract inquiries from governments, real estate developers and landlords. Governments and business and trade associations recognize that the availability of premium quality education for the children of expatriate employees is critical to attracting FDI from corporations.

· Acquisitions. An abundance of single-site operators provides a supply of incremental acquisition opportunities. Potential sellers often engage with us in exclusive negotiations because of our reputation, success at integrating schools, capital resources and interest in keeping sellers involved as landlords and consultants without the ongoing responsibility of operating the school. We evaluate each potential acquisition using a returns-based approach focused on the school’s quality, reputation, curriculum, local market dynamics, tuition levels, financial position and opportunities for growth. Once we acquire a school, our proven operating model drives educational improvements, enrollment growth and operational efficiencies. We have a highly successful record of acquiring and integrating schools.

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Our Approach to Academic Quality

Although our schools are inclusive in that they accept students with a wide range of academic ability, we ensure that our students achieve academic results that are comparable to those of students attending schools with admissions policies based on academic ability.

The key elements that we focus on to promote academic quality are:

An academically rigorous educational program

We believe that our personalized approach to teaching and learning can help every student achieve strong academic results. We use a customized technology platform designed around individual students, which enables us to track the performance of individual students as well as benchmark within and across our schools. We believe that this maximizes our students’ performance by giving each student and our faculty an accurate gauge of individual progress. In addition, this platform allows us to set clear objectives for a classroom, class year or entire school and intervene as required. Our technology platform also creates accountability among faculty members and drives consistency in instruction by applying comparable metrics across our network.

In addition, we have a supplementary informal online learning environment, our Global Campus Online, which is accessible to all of our students. The Global Campus Online is an Internet-based system that complements our curricula while allowing our students to interact online with experts in various fields and collaborate with students at any of our schools around the world. This innovative learning environment creates independent learners, preparing them for future university study and turning them into global citizens. Almost all of our schools teach the English National Curriculum.

Highly qualified principals, teachers and administrative staff

We demonstrate our commitment to premium quality education by hiring and retaining highly qualified principals, teachers and administrative staff. Our international reputation allows us to recruit from among the best candidates. We generally require our teachers to have formal teacher qualifications, such as a Post Graduate Certification in Education or its equivalent, and at least two years of teaching experience.

Our principals and teachers also benefit from the centralized support and experience of our educational team. In addition, we have in place various continuing professional development initiatives, including Nord Anglia University, which is designed to prepare our staff for career progression and help continuously improve all of our teachers. We regularly and rigorously review our principals and teaching staff to ensure that their performance meets our high standards.

Small class sizes

We restrict classes to a maximum of 24 students, with a few exceptions, in order to provide each student with close teacher interaction and individual attention and support. This benefits students and promotes staff retention by providing a rewarding environment for our teachers.

High-quality school facilities

Our school facilities, such as science laboratories, music and theater resources, swimming pools and other sports facilities enhance the educational experience of our students. In addition, the majority of classrooms provide interactive digital technologies that facilitate student participation. We use internationally-recognized architectural consultants specializing in school design to develop new facilities and expand or refurbish our existing schools in order to create outstanding learning environments for our staff and students.

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Our Schools

We operate 43 schools in 34 locations across China, Europe, the Middle East, South East Asia and North America. The following table sets forth certain information about each school and its educational programs.

School	Date Founded	Date Acquired/ Founded	Curriculum	Qualification
China
Nord Anglia International School Shanghai, Pudong (Pudong, Shanghai, China)	2002	2002	English National Curriculum	IGCSE/IBD
The British International School Shanghai, Puxi (Puxi, Shanghai, China)	2005	2005	English National Curriculum	IGCSE/IBD
The British School of Beijing, Sanlitun (Sanlitun, Beijing, China)	2003	2009	English National Curriculum	K-6(1)
The British School of Beijing, Shunyi (Shunyi, Beijing, China)	2009	2009	English National Curriculum	IGCSE/IBD
The British School of Guangzhou (Guangzhou, China)	2006	2013	English National Curriculum	IGCSE/A levels
Léman International School (Chengdu, China)	2009	2015	IB Curriculum	AP/IBD
Nord Anglia International School Hong Kong (Hong Kong, China)	2014	2014	English National Curriculum	K-9(1)
China Bilingual
Nord Anglia Chinese International School	2016	2016	Shanghai National Curriculum & IB Curriculum	Zhongkao/IBD
Europe
The British School Warsaw (Warsaw, Poland)	1992	1992	English National Curriculum	IGCSE/IBD
The English International School Prague (Prague, Czech Republic)	1995	1995	English National Curriculum	IGCSE/IBD
The British International School Bratislava (Bratislava, Slovakia)	1998	1998	English National Curriculum	IGSE/IBD
The British International School Budapest (Budapest, Hungary)	2002	2002	English National Curriculum	IGCSE/IBD
Collège Beau-Soleil (Villars-sur-Ollon, Switzerland)	1910	2011	French and Swiss Curriculum	IBD or French Bac
Collège Champittet Pully (Pully, Switzerland)	1903	2011	French and Swiss Curriculum	French Bac/Swiss Maturité/ IBD
Collège Champittet Nyon (Nyon, Switzerland)	2007	2011	French and Swiss Curriculum	K-7(1)
La Côte International School Aubonne (Aubonne, Switzerland)	2008	2011	English National Curriculum and IBC	IBD
Collège du Léman (Geneva, Switzerland)	1960	2005	U.S., French, Swiss & IB Curriculum	AP/IBD/ICSE/Swiss Maturité/French Bac
International College Spain (Madrid, Spain)	1982	2013	IB Curriculum	IBD
Middle East
Nord Anglia International School Dubai (Dubai, UAE)	2014	2014	English National Curriculum	IGCSE/IBD
The British International School Abu Dhabi (Abu Dhabi, UAE)	2009	2013	English National Curriculum	IGCSE/IBD
Compass International School Doha, Gharaffa (Gharaffa, Doha, Qatar)	2006	2013	English National Curriculum	K-6(1)
Compass International School Doha, Madinat Khalifa (Madinat Khalifa, Doha, Qatar)	2010	2013	English National Curriculum	IGCSE(1)
Compass International School Doha, Rayyan, (Al Rayyan, Doha, Qatar)	2009	2013	English National Curriculum	K-6(1)
Nord Anglia International School, Al Khor (Al Khor, Qatar)	2012	2013	English National Curriculum	K-9(1)
South East Asia
Regents International School Pattaya (Pattaya, Thailand)	1994	2012	English National Curriculum	IGCSE/IBD
St Andrews International School Bangkok (Bangkok, Thailand)	1997	2013	English National Curriculum	IGCSE/IBD
Dover Court International School (Singapore)	1972	2014	English National Curriculum	IGCSE
Northbridge International School Cambodia (Phnom Penh, Cambodia)	1996	2014	English National Curriculum	IBD
The British International School, Ho Chi Minh City (Ho Chi Minh City, Vietnam)	2000	2015	English National Curriculum	IGCSE/IBD

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School	Date Founded	Date Acquired/ Founded	Curriculum	Qualification
The British International School, Hanoi (Hanoi, Vietnam)	2012	2015	English National Curriculum	IGCSE/A-Levels
The British Vietnamese School, Ho Chi Minh City (Ho Chi Minh City, Vietnam)	2011	2015	English National Curriculum	IGCSE/A-Levels
The British Vietnamese School, Hanoi (Hanoi, Vietnam)	2012	2015	English National Curriculum	IGCSE/A-Levels
North America
The British School of Washington (Washington D.C., U.S.A.)	1998	2013	English National Curriculum	IGCSE/IBD
The British International School of Boston (Boston, Massachusetts, U.S.A).	2000	2013	English National Curriculum	IGCSE/IBD
The British International School of Houston (Houston, Texas, U.S.A.)	2000	2013	English National Curriculum	IGCSE/IBD/A-Levels
The British International School of Chicago, Lincoln Park (Chicago, Illinois, U.S.A.)	2001	2013	English National Curriculum	IGCSE/IBD
The British International School of Chicago, South Loop (Chicago, Illinois, U.S.A.)	2015	2015	English National Curriculum	IGCSE/IBD
The British International School of Charlotte (Charlotte, North Carolina, U.S.A.)	2003	2013	English National Curriculum	IGCSE
Nord Anglia International School New York (New York, U.S.A.)	2011	2013	English National Curriculum	K-6(1)
The Village School (Houston, Texas, USA)	1966	2015	U.S. & IB Curriculum	AP/IBD
North Broward Preparatory School (Coconut Creek, Florida, USA)	1957	2015	U.S. & IB Curriculum	AP/IBD
Windermere Preparatory School (Windermere, Florida, USA)	2000	2015	U.S. & IB Curriculum	AP/IBD
Instituto San Roberto (Monterrey, Mexico)	1982	2015	U.S. & IB Curriculum	K-9(1)

(1) This school educates students in pre-qualification years.

“AP” stands for Advanced Placement; “IBD” stands for International Baccalaureate Diploma Program; and “IGCSE” stands for International General Certificate of Secondary Education.

Our Seven International Schools in China

Nord Anglia International School Shanghai, Pudong —Pudong, Shanghai, China

We opened this school, our first school in China, in 2002 with an initial capacity of 100 places. The school now has a capacity of 1,800 places. The school is located within a large scale residential development in Pudong, approximately five miles from the center of Shanghai in the free trade zone.

Its facilities include science laboratories, computer suites, art, music and physical education rooms, libraries, a 1,000-seat state-of-the-art theater, a new secondary school building, three indoor sports halls and a 25-meter indoor swimming pool.

As of September 30, 2016, 97% of the students at this school were expatriates.

The British International School Shanghai, Puxi—Puxi, Shanghai, China

We opened this school in 2005 with an initial capacity of 668 places and the school now has a capacity of 2,000 places. The school is adjacent to several high-end residential developments popular with expatriate families. The school’s facilities include two gymnasiums, two swimming pools of 15 and 25 meters, a dance studio, a fitness suite, outdoor basketball courts, four tennis courts, one astro-turf football field and playing fields. Other facilities include two libraries, a 250 seat auditorium, a 500 seat auditorium, an internet cafe, science laboratories, music rooms and two cafeterias. The expansion to this school was officially opened by His Royal Highness Prince Andrew in 2011.

As of September 30, 2016, 98% of the students at this school were expatriates.

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The British School of Beijing, Shunyi—Shunyi, Beijing, China

We acquired this school in 2009 with a capacity of 400 places and moved it to new custom built facilities with 1,500 places one mile from its original location. The school is located in a large residential area containing many expatriate developments in suburbs on the outskirts of Beijing. The school’s campus includes outdoor and indoor sport facilities, gymnasiums, fitness suites, a football field and tennis and basketball courts, along with an indoor swimming pool and dance studio. In addition, the school has two theaters, dedicated music rooms, computer music suites, a recording studio, a Lego robotics laboratory, science laboratories and art studios. The school was officially opened by His Royal Highness Prince Andrew in 2010.

As of September 30, 2016, 100% of the students at this school were expatriates.

The British School of Beijing, Sanlitun—Sanlitun, Beijing, China

We acquired this school in 2009 with a capacity of 280 places and the school now has a capacity of 600 places. The school is located in the heart of the Embassy district of Beijing and educates students from age three to age 13. Its facilities include a football pitch, a full size gymnasium, an assembly hall, tennis and basketball courts and an Astroturf play area with climbing frames.

As of September 30, 2016, 100% of the students at this school were expatriates.

The British School of Guangzhou—Guangzhou, China

We acquired this school in 2013 with a capacity of 904 places and the school now has a capacity of 1,500 places. The school is located on the shores of scenic Nanhu Lake, a short drive from the business district of Guangzhou. The school features separate campuses for lower- and upper-school students. Facilities include gymnasiums, four basketball courts, four football pitches, a driving range and a top-class swimming pool complex. In addition, the school has a theater, three fully-equipped music rooms, a dance studio and two libraries.

As of September 30, 2016, 100% of the students at this school were expatriates.

Léman International School—Chengdu, China

We acquired Léman International School in June 2015 as part of the Meritas acquisition with a capacity of 1,050 places. Founded in 2009, Léman International School is located near the city center of Chengdu. The expansive campus features a library, state-of-the-art media center, science and computer labs, large dance and theater studio, art and music studios, gymnasium, and a 25-meter heated swimming pool. Outdoor facilities include an extensive green space with a 400m/6 lane athletic track, two soccer fields and tennis courts.

As of September 30, 2016, 89% of the students at this school were expatriates.

Nord Anglia International School Hong Kong—Hong Kong, China

We opened this school in September 2014 with a capacity of 792 places. The school’s facilities include a large sports and performance hall, a 25 meter swimming pool, specialist classrooms for music, art, drama and science and a Learning Resource Centre that can be used for individual and group study.

As of September 30, 2016, 79% of the students at this school were expatriates.

Our first Bilingual School in China

Nord Anglia Chinese International School — Shanghai, China

We opened this school in September 2016 with a capacity of 2,250 places. The school has world class facilities, which include a 400 seat performing arts center for music, drama and performance form, multi-purpose central atrium for community interaction, state-of-the-art information technology, various sports facilities including a 25 meter in-door swimming pool, and a Learning Resource Centre.

As of September 30, 2016, 0% of the students at this school were expatriates.

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Our Ten Schools in Europe

Collège Champittet Pully—Pully, Switzerland

Founded by Dominican monks in 1903, we believe that Collège Champittet is one of the best known private schools in Switzerland. The school is located near the banks of Lake Geneva in Lausanne. An affiliate of our parent company acquired this school in 2009 and we acquired it in February 2011. The school includes high-quality academic and recreation facilities including sports fields, playgrounds, a library, science laboratories, a chapel, a dining hall and cafeteria and computer suites. The school also has boarding accommodation for up to 100 students. The school has a capacity of 944 places.

As of September 30, 2016, 10% of the students at this school were expatriates.

Collège Champittet Nyon—Nyon, Switzerland

This school opened in 2007 and was acquired by an affiliate of our parent company in 2009. We acquired it in February 2011 in conjunction with the acquisition of Collège Champittet-Lausanne. The school is located near the banks of Lake Geneva between Geneva and Lausanne. Its facilities include playgrounds, a dining hall and a computer lab. The school has a capacity of 240 places.

As of September 30, 2016, 7% of the students at this school were expatriates.

Collège Beau-Soleil—Villars-sur-Ollon, Switzerland

We acquired this boarding school in January 2011 with a capacity of 220 places and the school now has a capacity of 240 places. The school is located in the Alpine region not far from Lake Geneva. The school’s facilities include an Astroturf pitch with seating, premium boarding facilities, a recently renovated art center, a fitness center, two restaurants, a theater and a private ski slope. Founded in 1910, Beau-Soleil is one of the oldest Swiss educational establishments.

As of September 30, 2016, 95% of the students at this school were expatriates.

La Côte International School—Aubonne, Switzerland

This school was founded in 2008 and we acquired the school in September 2011. At acquisition, the school had a capacity of 220 places and was located near Lake Geneva in Gland. In September 2014, we relocated the school to a new state-of-the-art campus in Aubonne, Switzerland with a total capacity of 840 places. The new campus boasts 44 classrooms and 12 special rooms designed for science, computing, art and music.

As of September 30, 2016, 59% of the students at this school were expatriates.

Collège du Léman—Geneva, Switzerland

We acquired Collège du Léman in June 2015 as part of the Meritas acquisition with a capacity of 2,475 places. Founded in 1960, the school is situated at the right bank of Lake Geneva and nestled between the Jura Mountains and the lake on the outskirts of Geneva. The campus offers attractive residential facilities and recreational areas including a theater, outdoor sports grounds for tennis, basketball and football, a swimming pool and two sports domes for indoor use. The school also has boarding accommodation for approximately 275 students.

As of September 30, 2016, 89% of the students at this school were expatriates.

The British International School Bratislava—Bratislava, Slovakia

We opened this school in 1998 with a capacity of 100 places. The school is operated out of two locations, with one allocated for the kindergarten and Year 1 students and the other for students in Years 2 to 13. The location for younger students has its own library, information and communication technology room, music area, and a playground. The second building has three well-equipped science labs, three ICT rooms, two specialist music rooms, and a computer-equipped library. The campus also has two gymnasiums, one of which has a climbing wall, a dance studio, basketball courts, a 200-meter athletics track, and a half-size football field. In response to increasing demand, we opened the second building in 2006 bringing the school to its current capacity of 876 places. The new facilities were formally opened by His Royal Highness Prince Andrew.

As of September 30, 2016, 67% of the students at this school were expatriates.

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The British International School Budapest—Budapest, Hungary

We assumed operations of this school in 2002 with a capacity of 420 places. In 2005, we relocated the school to new custom built facilities in its current location in Budapest’s third district. Its facilities include two science labs, music rooms equipped with computers, a dance and drama studio, an amphitheater and a library. Its outdoor facilities include an organic wild garden for science lessons as well as an outdoor pavilion classroom. Its sporting facilities include a half-size football pitch, a 220-meter track, an outdoor basketball court, and a large indoor gymnasium. The school now has a capacity of 1,056 places.

As of September 30, 2016, 68% of the students at this school were expatriates.

The English International School Prague—Prague, Czech Republic

We opened this school in 1995 on a site that we converted for educational use near the center of the city. In September 2007, we moved the school to a new custom built campus with modern facilities in two buildings including a sports field, a gymnasium, two libraries, art and music rooms and a dance studio. The classrooms are all networked, with interactive digital technologies, and each section of the school is equipped with its own computer suite. The new campus was formally opened by Her Royal Highness Princess Anne. The school has a capacity of 550 places.

As of September 30, 2016, 84% of the students at this school were expatriates.

The British School Warsaw—Warsaw, Poland

Founded by Nord Anglia Education in 1992 in association with a local family, this was our first international school. In 2004, we opened a new building, which was formally opened by His Royal Highness Prince Andrew, by converting a former electrical engineering college into high-quality academic facilities and this building has been further expanded and upgraded on a number of occasions. The school boasts modern facilities, including a sports field, a gymnasium, and art and music rooms. The school has a capacity of 1,370 places.

As of September 30, 2016, 37% of the students at this school were expatriates.

International College Spain—Madrid, Spain

We acquired International College Spain through our acquisition of WCL Group in 2013. This prestigious school is located in the prosperous suburbs of Alcobendes and has built an excellent reputation since it was established in 1980. The campus has five science laboratories, two music rooms, six language rooms, two gymnasiums, two libraries, a dance studio, a drama room and an auditorium including a stage. Outdoor facilities include extensive open recreational space for students, including fenced-in tennis courts and space for a football pitch. The school has a capacity of 1,100 places.

As of September 30, 2016, 42% of the students at this school were expatriates.

Our Six Schools in Middle East

The British International School Abu Dhabi— Abu Dhabi, United Arab Emirates

We opened the British International School Abu Dhabi (“BISAD”) in September 2009 and in August 2010 sold our 49% equity interest in the school to Premier Education Holdings, our shareholder, and entered into an agreement to manage the school. On September 28, 2012, Nord Anglia Education entered into an agreement to re-purchase the 49% equity interest from Premier Education Holdings. On April 1, 2013, we began consolidating the results of BISAD under IFRS, as we obtained effective control of BISAD from that date. The school’s facilities include dedicated music rooms, a drama studio with the latest media technology, gardens and outdoor learning areas as well as a wide range of indoor and outdoor sports. The school has a capacity of 1,800 places.

As of September 30, 2016, 79% of the students at this school were expatriates.

Nord Anglia International School Dubai—Dubai, United Arab Emirates

We opened Nord Anglia International School Dubai in September 2014 with a state-of-the-art new campus. The school has excellent facilities including an auditorium, large well-lit open plan art studios, craft centers, dark rooms and theater spaces. The school also has outdoor sports facilities, a swimming pool and three dining rooms. The school has a capacity of 1,750 places.

As of September 30, 2016, 100% of the students at this school were expatriates.

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Compass International School Doha, Rayaan—Doha, Qatar

We acquired this school through our acquisition of WCL Group in 2013. Founded in 2006, this campus is situated in the west of Doha on the grounds of a former palace. Since the school first opened, extensive renovations have been completed, including the recent addition of 10 new classrooms, a large sports hall, IT facilities, a library and enhanced play facilities. The school has a capacity of 413 places.

As of September 30, 2016, 54% of the students at this school were expatriates.

Compass International School Doha, Gharaffa —Doha, Qatar

We acquired this school through our acquisition of WCL Group in 2013. The Gharaffa campus is a primary school campus and the facilities include outdoor grass play areas, a football pitch, a swimming pool, a large multipurpose hall, two libraries, a computer suite and dedicated language learning rooms. The school has a capacity of 600 places.

As of September 30, 2016, 85% of the students at this school were expatriates.

Compass International School Doha, Madinat Khalifa —Doha, Qatar

We acquired this school through our acquisition of WCL Group in 2013. The Madinat Khalifa campus opened in September 2010 to meet growing demand for places in the area. The campus is based in a residential area near the Landmark Shopping Mall. School facilities include a 20 meter swimming pool, specialist rooms for science, music, art and languages, and an air-conditioned sports hall. The school has a capacity of 720 places.

As of September 30, 2016, 100% of the students at this school were expatriates.

Nord Anglia International School Al Khor—Al Khor, Qatar

We acquired this school through our acquisition of WCL Group in 2013. Founded in 2012, the school is located on the outskirts of Doha, 15 miles from the city limits. The school has two science laboratories, a language room, a gymnasium and a library. Outdoor facilities include an extensive hard and soft area for sports and recreation, including a football pitch, a basketball court and a covered courtyard area. The school has a capacity of 904 places.

The school was established to provide high-quality education to employees of Shell. While Al Khor accepts students whose parents do not work for Shell, it has benefited from a contract with Shell to supply up to 300 guaranteed student places. The initial contract with Shell expired in July 2016 and is currently being renewed.

As of September 30, 2016, 75% of the students at this school were expatriates.

Our Eight Schools in South East Asia

Regents International School Pattaya—Pattaya, Thailand

We acquired this school on August 1, 2012. The school is located in the Eastern Seaboard region of the Gulf of Thailand, 120 kilometers southeast of Bangkok and 16 kilometers northeast of Pattaya. The facilities at the school include a 25 meter swimming pool with audience seating, a full-size rugby and football pitch (with two additional, smaller football pitches), a double gymnasium with basketball facilities and tennis courts, a 400-seat theater, a brand new early-years building for younger children and boarding houses. The school has a capacity of 1,350 places.

As of September 30, 2016, 68% of the students at this school were expatriates.

St. Andrews International School Bangkok—Bangkok, Thailand

We acquired this school in August 2013. The school is located on an attractive campus close to Bangkok’s amenities and transportation links. The school features a gymnasium, a football pitch and a 25-meter salt water swimming pool. In addition, the school has computer suites and computer research centers, a new library, design technology and art facilities and two fully-equipped music rooms. The school has a capacity of 1,225 places.

As of September 30, 2016, 49% of the students at this school were expatriates.

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Dover Court International School—Singapore, Singapore

We acquired this school in April 2014. Founded in 1972, Dover Court International School is set in 14 acres in the center of Singapore with facilities including a large swimming pool complex, a six-lane running track, a full sized soccer pitch, extensive playing fields and an indoor multi-purpose hall. The school is also equipped with modern classroom facilities, computer rooms, music halls and science labs. The school has a capacity of 1,384 places.

As of September 30, 2016, 96% of the students at this school were expatriates.

Northbridge International School Cambodia—Phnom Penh, Cambodia

We acquired this school in July 2014 with an initial capacity of 650 places. Founded in 1996, the school is situated on a 20 acre-campus and provides outstanding facilities to students. It has a world-class performing arts center, an outdoor plaza with amphitheater, a covered gymnasium, outdoor playing fields, tennis courts, and a 25-meter long by six-lane wide competition sized swimming pool. The school has a capacity of 954 places.

As of September 30, 2016, 42% of the students at this school were expatriates.

The British International School, Ho Chi Minh City—Ho Chi Minh City, Vietnam

We acquired this school in January 2015 with an initial capacity of 2,100 places. Founded in 2000, the school operates on a modern purpose-built campus in the vibrant city of Ho Chi Minh. It has superb facilities including interactive whiteboards in every primary school classroom, a 25 meter indoor swimming pool, state-of-the-art libraries, large sports halls, and a 250 seat auditorium.

As of September 30, 2016, 69% of the students at this school were expatriates.

The British International School, Hanoi—Hanoi, Vietnam

We acquired this school in January 2015 with an initial capacity of 1,718 places. Founded in 2012, BIS Hanoi is a first class, purpose- built school situated in Vinhomes, Riverside, Long Bien District, Hanoi. The campus boasts exceptional facilities including large libraries, a theater, an auditorium, a 25 meter indoor swimming pool and grass playing fields.

As of September 30, 2016, 31% of the students at this school were expatriates.

The British Vietnamese International School, Ho Chi Minh City—Ho Chi Minh City, Vietnam

We acquired this school in January 2015 with an initial capacity of 2,480 places. Founded in 2011, the BVIS HCMC campus is situated in the Binh Chanh District, Ho Chi Minh City. The facilities include a modern theater, a library, a sports hall, grass playing fields and specialist suites for Science, Music, Art and Drama. In addition, Primary classrooms also feature special ‘breakout’ rooms for dual-language work and Early Years classrooms have their own dedicated mini splash pools, sand pits and outside playground.

As of September 30, 2016, 5% of the students at this school were expatriates.

The British Vietnamese International School Hanoi—Hanoi, Vietnam

We acquired this school in January 2015 with an initial capacity of 1,350 places. Founded in 2012, this campus is conveniently situated in the city center of Hanoi. The facilities include well stocked libraries, music and computer suites, large sports halls, an auditorium with full stage, lighting and sound system and science laboratories.

As of September 30, 2016, 10% of the students at this school were expatriates.

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Our Eleven Schools in North America

The British School of Washington—Washington, D.C.

We acquired this school through our acquisition of WCL Group in 2013. Founded in 1998, the British School of Washington was the first WCL Group school and established the British Schools of America brand. The school is located in the Georgetown neighborhood, in the heart of Washington, D.C. The school has four science laboratories, four language rooms, two libraries, an indoor fitness room and an auditorium including a stage. A nearby gymnasium and playing fields are rented as required for tennis, swimming, football, athletics and rugby. The school has a capacity of 735 places.

As of September 30, 2016, 61% of the students at this school were expatriates.

The British International School of Boston—Boston, Massachusetts

We acquired this school through our acquisition of WCL Group in 2013. The British School of Boston was founded in 2000 and has been located at its current site near Jamaica Plains in Boston since 2004. The school has three science laboratories, a music room, a gymnasium and a dance studio. Outdoor facilities include a playing field and wooded areas, all-weather outdoor play areas and a shared swimming pool. The school has a capacity of 480 places.

As of September 30, 2016, 36% of the students at this school were expatriates.

The British International School of Houston—Houston, Texas

We acquired this school through our acquisition of WCL Group in 2013. Founded in 2000, The British School of Houston moved from its original location to a purpose built, 2,200 place capacity, state-of-the-art campus in September, 2016. The campus is located in northwest Houston, twenty minutes from downtown. The school has an impressive array of facilities including a two-story science center, a 600-seat theatre, dance studio, keyboard and string laboratories, two NCAA-sized gymnasiums, a 6-lane aquatics center and other exciting learning areas designed specifically to enhance learning opportunities.

As of September 30, 2016, 88% of the students at this school were expatriates.

The British International School of Chicago, Lincoln Park—Chicago, Illinois

We acquired this school through our acquisition of WCL Group in 2013. Founded in 2001, the British International School of Chicago moved in 2008 to the prestigious Lincoln Park neighborhood of Chicago, minutes from the business district. The school has three science laboratories, three music rooms, three language rooms, a gymnasium, three libraries and a dance studio. Students also have access to third-party sports facilities. The school has a capacity of 900 places.

As of September 30, 2016, 16% of the students at this school were expatriates.

The British International School of Chicago, South Loop—Chicago, Illinois

We opened a second campus for The British International School of Chicago in September 2015. Located on South Wells Street, the new campus features a 9,000-square-foot gymnasium, technology classrooms with 3D printers, a state-of-the-art science wing, two libraries, a music recording studio and sound-proof practice rooms, a restaurant-style cafeteria, a community rooftop garden, and an on-site sports field with artificial turf. The school has a capacity of 1,100 places.

As of September 30, 2016, 27% of the students at this school were expatriates.

The British International School of Charlotte—Charlotte, North Carolina

We acquired this school through our acquisition of WCL Group in 2013. Founded in 2003, the British American School of Charlotte is located in the Ballantyne section of Charlotte. The school has science laboratories, a computer room, an arts room, a music room, a language room, a gymnasium and a library. Outdoor facilities include an extensive green space with a soccer pitch, and a playground area. The school has a capacity of 400 places.

As of September 30, 2016, 46% of the students at this school were expatriates.

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Nord Anglia International School New York—New York, New York

Nord Anglia International School New York was founded in 2011 and we acquired this school through our acquisition of WCL Group in 2013. The recently refurbished facilities in New York include a music room, a gymnasium and a library. A roof area accessible by an elevator is currently being built and will be converted into an outside play area. The school has a capacity of 480 places.

As of September 30, 2016, 61% of the students at this school were expatriates.

The Village School—Houston, Texas, USA

We acquired the Village School as part of the Meritas acquisition in June 2015 with an initial capacity of 1,766 places. Founded in 1966, the Village School is the only IB boarding school in the greater Houston area, located in a residential area of West Houston near the prestigious Energy Corridor. The school has three libraries, three computer labs, a dance studio and a gymnasium. Outdoor facilities include a large outdoor space with athletic fields. The school also has boarding accommodation for up to 152 students and capacity of 2,098 places.

As of September 30, 2016, 74% of the students at this school were expatriates.

North Broward Preparatory School—Coconut Creek, Florida, USA

We acquired North Broward Preparatory School as part of the Meritas acquisition in June 2015 with an initial capacity of 1,758 places. Founded in 1957, the school is a prestigious, purpose-built boarding school comprising two campuses. The primary campus is located in Coconut Creek north of Ft. Lauderdale and a second boarding campus is located in Coral Springs approximately 15 minutes’ drive away from the primary campus. The campuses offer exceptional indoor facilities including a large athletic center, elite boarding suites, gymnasium, and theater. Outdoor facilities include a running track, football and baseball field. The school also has boarding accommodation for up to 298 students. The school has a capacity of 2,158 places.

As of September 30, 2016, 10% of the students at this school were expatriates.

Windermere Preparatory School—Windermere, Florida, USA

We acquired Windermere Preparatory School as part of the Meritas acquisition in June 2015 with an initial capacity of 1,400 places. Founded in 2000, the school is located by Lake Cypress in the Windermere Rural Settlement of southwest Orange County, Florida. The expansive campus includes a library, specialist rooms for science, computers, music and art, a sports center, track and football field, baseball field and basketball and tennis courts. The school also has boarding accommodation for up to 104 students. The school has a capacity of 1,400 places.

As of September 30, 2016, 34% of the students at this school were expatriates.

Instituto San Roberto—Monterrey, Mexico

We acquired Institution San Roberto as part of the Meritas acquisition in June 2015 with an initial capacity of 2,931 places. Founded in 1982, the school is located in the Monterrey metropolitan area with two campuses. Both campuses offer indoor and outdoor facilities including a library, auditorium, science and technology labs, art and music rooms, outdoor basketball courts, turf soccer fields, racetrack, gymnasium with basketball courts and semi-Olympic pool.

As of September 30, 2016, 15% of the students at this school were expatriates.

Marketing Our Schools

Our Brand

We leverage our scale as a family of 43 schools to develop a brand which sets us apart as a global leader in K-12 international education. In April 2015, we launched our new philosophy, which can be summed up by the phrase “Be Ambitious.” We are ambitious for our students, our people and our family of schools. All the schools in our family are aligned to this philosophy and therefore promote the same brand values. This clear message allows everyone to understand what Nord Anglia Education stands for and enables us to develop Nord Anglia Education as a leading global brand. Our brand identity was also refreshed at this time to reflect our brand positioning with an identity that better resonates with parents.

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Our marketing strategy is underpinned by an empirical model designed to optimize admissions. It is designed to build brand awareness among prospective parents and students, and brand loyalty and advocacy amongst existing parents and students. We seek to build brand awareness in each of our existing and new markets with respect to our individual schools and the “Nord Anglia Education” name. We believe that this approach also contributes to the recruitment and retention of quality teachers and principals and enables us to access unique opportunities and collaborations.

We believe that a school’s attractiveness to parents and students is based largely upon its reputation. Accordingly, our marketing strategy is focused on the communication and enhancement of the excellent reputation that our schools enjoy within their respective markets. Our marketing strategy is executed at each school by our principals and the admissions and marketing teams. It focuses on our online presence, reputation and referrals from existing parents as opposed to costly media campaigns. Accordingly, we achieve our enrollment results in a highly cost-effective manner.

We have developed a systematic approach to student recruitment and retention and we ensure that enquiry generation and conversion into new student enrollments are prioritized and well managed.

Student Recruitment

The student recruitment process has three stages:

· Enquiries: parents considering enrolling their child at one of our schools register their child’s details and request further information.

· Visits: parents personally visit the school campus often accompanied by their children.

· Enrollments: parents register their child with the school, specify a start date and pay a non-refundable application fee. Almost all applicants enroll either within the academic year in which they applied or in the subsequent academic year.

Generation of Enquiries

The majority of our enquiries are generated through the following methods.

Digital Marketing

In our experience, when considering overseas assignments, parents’ first step is often to thoroughly research schools online. We recognize that online marketing is a critical means of communication with prospective parents and students and a key part of our strategy is to prioritize online tools. We ensure that our websites are optimized to deliver important information to prospective parents in a concise and user friendly manner. This enables them to make informed decisions when evaluating our schools.

Corporate and School Websites

Our corporate website is designed to introduce parents to our commitment and approach to outstanding education, network of schools and history. Our corporate website contains direct web links to each individual school and provides details of the innovative educational work undertaken by our educational team. Each of our schools has an individual school website that is designed to inform prospective parents about that school’s curriculum, facilities, admissions process and why parents should choose the school for their children.

Search Engine Optimization / Search Engine Marketing / Web Advertising

We have tailored each school’s website to maximize effectiveness and ease of use. Our ongoing search engine optimization and search engine marketing techniques generate a substantial number of visits to our website. We also identify and advertise on popular websites used by our target families.

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Parent Referrals

Parent referrals are important for generating enquiries. We believe that prospective parents seek out parents of current and former students for their opinions on our schools, helping to convert enquiries to visits and applications. We encourage the parents of current and former students to speak positively about our schools and achieve this by providing high quality education, communicating with and involving parents in our schools and seeking to place each of our schools at the center of its community.

In our most recent parental surveys, 92% of our parents said that they would be happy to recommend our school.

Relocation Agents

Relocation agents who settle expatriate families are an important source of enquiries. We develop close relationships with these relocation agents through a variety of initiatives, such as hosting school visits, providing quality information on our schools and producing user- friendly materials they can share with their clients.

In addition, we invite relocation agents to participate in the community events that the schools run. These events are a useful networking opportunity for relocation agents and also provide us with an excellent opportunity to showcase our schools.

Employers

In each of our markets, we have established relationships with major employers, such as multinational corporations and embassies. From our research, we know that parents consult their employers for school recommendations and information. In addition, we ensure these key personnel participate in the community events the school runs, providing us with an excellent opportunity to showcase our schools.

Converting Enquiries

Parents will typically draw up a shortlist of schools for their child and then physically visit these school campuses. Parents generally visit two or three different schools and usually undertake these visits with an open mind as to which school they will eventually select. Management of the school visit is therefore important and we have designed our systems carefully to help maximize the conversion ratio between visit and application.

A parent’s perception of a school’s academic quality is frequently a key factor in school selection. Based on research conducted by an independent education consultancy, we found that the main criteria parents use to assess academic quality are teacher quality and students’ work observed during a visit. We therefore manage the visit to provide adequate time for parents to interact with the actual teachers who will educate their child and also ensure we showcase the excellent work produced by current pupils.

Each of our schools has a dedicated admissions and marketing team who work closely with our principals during the student recruitment process in order to maximize the conversion of enquiries and visits to enrollments. Our marketing and admissions teams typically have prior education industry experience and are chosen through a highly selective hiring process. In order to ensure that we achieve high conversion rates, we use a highly personalized approach to engaging prospective parents that is designed to respond to their child’s particular needs and interests.

Retention

We are focused on retaining our students. Once a student has enrolled at one of our schools, the school’s teaching staff and principal are responsible for ensuring that the student receives a premium education and remains enrolled.

To this end, we track the number of students who leave for reasons other than those outside of our control such as graduation or family relocation. Over the last two years we have lost an average of only 2% of our total number of students per year for reasons related to academic quality, student needs or tuition levels, based on parent responses to our exit surveys. We monitor the number of students leaving on a weekly basis and take immediate corrective action on any weaknesses identified for each school.

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Visibility

In addition to high levels of visibility in relation to the financial performance for the current fiscal year, we are able to forecast enrollments for the following fiscal year with a certain degree of confidence. Our students stay in our schools for an average of 4.0 years. By analyzing inquiries and visits, we can gauge likely enrollment trends for each school. This visibility is an important tool in our budgetary process, most notably for the recruitment of additional teachers and planning capacity.

Our Teaching, Administrative, Regional and Central Support Staff

As of August 31, 2016, we had 7,360 full-time equivalent employees. Our schools had 7,228 full-time equivalent employees, of whom 5,168 were teaching staff, 1,998 were school administration and management and 62 were regional support. Our learning services business had 29 full-time equivalent employees. In addition, we had 103 Group Central Support staff. The table below shows our full-time equivalent employees by category of activity as of August 31, 2014, 2015 and 2016:

	Full-time equivalent employees
	2014	2015	2016
Teachers and Teacher Support	2,752	4,967	5,168
School Support	944	1,953	1,998
Regional Support	34	68	62
Learning	127	49	29
Group Central Support (Globally)	78	94	103
Total	3,935	7,131	7,360

The table below shows our full-time equivalent employees by geographic location as of August 31, 2014, 2015 and 2016:

	Full-time equivalent employees
	2014	2015	2016
China	1,173	1,258	1,329
Europe	1,094	1,422	1,442
ME/SEA	1,231	2,665	2,788
North America	437	1,786	1,801
Total	3,935	7,131	7,360

Talent Acquisition

Our principals and teaching staff are highly qualified and experienced, and we recruit them through a rigorous hiring process. We are able to attract highly qualified staff through our international scale, reputation for quality and competitive compensation packages. We emphasise on-going professional development and a policy to promote from within to attract and retain teachers. Initiatives such as Nord Anglia University (“NAU”), which provides comprehensive professional training programs for teachers and principals, underscore our commitment to professional development.

Launched in 2012 and now in its 4th year, the highly successful Outstanding Teachers for Outstanding School (“OTOS”) recruitment strategy continues to attract premium candidates. By developing and maintaining an outstanding recruitment process we ensure that we select the very highest quality candidates. The most recent annual teacher recruitment event in London in January 2016 attracted over 11,500 applicants for approximately 300 positions. We believe there are no other events like this held by a schools organization in the international schools recruitment calendar.

Our annual recruitment program extends past the recruitment event in January to take into account growth and the need to attract internationally-based teachers. All vacancies are advertised internally, with a weekly update circulated to all principals highlighting who of our teachers, middle and senior leaders are interested in moving to a different Nord Anglia Education school.

Talent and Development

Nord Anglia Education is committed to supporting our teachers and staff to Be Ambitious and to develop all aspects of their practice in both learning and teaching, and in leadership. At the heart of this is our Talent Management Framework and our Core 7 Leadership Capabilities, introduced in 2014. The Talent Management Framework and Core 7 provide the capabilities, standards and expectations we have for all employee at every level of an employee’s career journey, and they can use this framework to identify gaps to help guide their development. Initially starting with behavioural indictors and outcomes for our four senior leadership tiers, we have expanded the framework to cover every tier.

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Part of the Talent Management Framework is our Group Talent Review Boards that provide the mechanism through which we identify top talent at the school, regional and group level and have enabled us to put in place targeted development to ensure we have in place a pipeline of potential Principals and senior leaders for our future growth. The results of these review boards provide valuable developmental data that can be fed into our group-wide leadership programs and also provide a robust and layered succession plan to enable us to continue to “Grow Our Own” as we grow as an organization.

Continuous professional development is paramount for our Teachers and other employees throughout the organization and we continue to run our highly successful Senior and Middle Leadership Programs through Nord Anglia University, which provide structured development specifically focused on career progression and development to more senior posts, as well as providing a firm foundation for all of our senior leaders to be successful in their current roles.

The Aspiring Principals program is under development and will serve to provide the targeted and bespoke development needed for those top performers, identified through the Talent Review Boards, to become Principals of our schools within 1-2 years of completing the program.

Through Nord Anglia University, we also provide on-going professional development for all our employees in the form of online, in-school and face-to-face training and support. We also have, this year, extended our online development programs to include some on-line management training programs.

Competition

The local market for premium schools in each of the cities where we operate is highly fragmented and competitive. All of our schools face competition from other private premium schools, including schools that use the English National Curriculum and the International Baccalaureate Curriculum and schools that use curricula based on other educational traditions. We also compete with other school operators for acquisition opportunities. There are significant barriers to entry in the premium schools market, which include:

· the lead time required to build brand recognition and reputation, both locally and globally;

· the challenges faced by unproven operators in securing government licenses and regulatory approval in some jurisdictions;

· in many markets, the scarcity of real estate in the most desirable areas to establish a sizeable campus with the comprehensive and high-quality facilities expected of premium schools;

· property developers and landlords facing substantial capital expenditure commitments when building premium school facilities and thus increasingly requiring tenants in good financial standing and with strong track records in operating schools; and

· the tendency of students to stay enrolled in the same school until they graduate, or, in the case of expatriates, until their parents complete their overseas assignments.

Although we benefit from these barriers to entry in the markets in which we operate, some of these barriers may make it difficult for us to enter new markets. In addition, competitors that are able to devote greater resources than we can to overcoming barriers to entry may have an advantage over us.

We believe that premium schools compete based on:

· their reputation and brand recognition;

· the quality of education they provide;

· the curricula they use;

· their ability to recruit and retain students;

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· their ability to recruit and retain principals and teaching staff;

· their ability to identify and secure locations;

· the overall quality of the educational experience they provide and their relationships with parents; and

· the strength of their relationships with educational authorities and other key stakeholders, such as real estate developers.

Information Technology Systems and Management

Nord Anglia has invested in a comprehensive and reliable information technology infrastructure that supports the company’s data-driven approach to managing our portfolio of schools. This platform enables our executive team, regional managers, school principals and teachers to engage in timely decision-making on key performance indicators. Our information technology platform is both scalable and customizable to support the future growth of our schools.

We have deployed a global infrastructure to allow the entire organization to collaborate and share information seamlessly and effectively. This new infrastructure includes a common e-mail platform, instant messaging, conference services as well as an intranet and file storage system using a hybrid model of cloud and in-house services and resources.

Furthermore, the deployment of a new Management Information System (“MIS”) for all our schools provides a uniform system across the group for enquiry and admissions tracking, monitoring student academic progress, as well as invoice billing and management. This new MIS solution feeds into a data warehouse for information extraction and reporting to analyze key business metrics and facilitate overall strategic decision-making. The implementation of this system enhances each individual student’s academic progress through tracking performance at a student and subject level. The key benefits of this platform includes the ability to:

· maximize individual student performance;

· implement accountability at a student, teacher, year group, subject and overall school level;

· encourage parental involvement and ownership of students’ academic objectives; and

· maintain comprehensive benchmarking within and among schools.

In addition, we have implemented a suite of virtual learning applications based around Moodle 2.9, with Global Campus being a flagship product available to all of our schools.

Our infrastructure is managed and monitored by a team of technology professionals, who are both in-house and outsourced.

Intellectual Property

We have applied for or registered trademarks relating primarily to our logos and names, including “Nord Anglia,” “British Schools of America,” “British American School” and “Léman” in various jurisdictions. In Singapore, Vietnam and the USA, we own the trademarks “The British International School”, “British Vietnamese International School” (and school logo), and “British School” respectively. We do not own the rights to the name “The British School,” “The British International School” or similar names in other jurisdictions in which we operate a school under these names, and any organization that meets certain accreditation requirements can use these names.

Regulation

Our schools are subject to regulation by national and local authorities under applicable law. Most of our premium schools are subject to regular inspections by national or local education authorities.

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China

China regulates the education services industry at central and provincial levels. The highest executive organ of the central government of China is the State Council, and we are regulated by several ministries and agencies under its authority, including the Ministry of Education (“MOE”) and the Ministry of Civil Affairs (“MCA”), and their respective local counterparts.

The Education Law

In 1995, the National People’s Congress enacted the Education Law, which established the fundamental principles relating to the educational system of China at all levels, from preschool through higher education, a system of nine year compulsory education and a system of education certificates. Under this legislation, the government formulates plans for the development of education and establishes and operates schools and other educational institutions. The Education Law was subsequently amended on August 27, 2009 and on December 27, 2015, respectively.

Regulation of International Schools in China

International schools in China (like The British International School Shanghai, The British School of Beijing and the British School of Guangzhou) are regulated under the Interim Regulations Concerning the Establishment of Schools for the Children of Expatriates issued by the MOE on April 5, 1995 (“Interim Regulations”).

Under the Interim Regulations, the establishment of international schools requires approval from the MOE with prior verification by the MOE’s local counterpart at the provincial or municipal level. Our international schools in Beijing, Shanghai, Guangzhou and Chengdu have obtained such approval from the MOE. The approval authority has been delegated to MOE’s local counterpart at the provincial level pursuant to the Decision of the State Council on the Sixth Batch of Cancelled and Amended Administrative Examination and Approval Items issued by the State Council of the PRC on September 23, 2012.

From the date of MOE approval, our international schools attained legal person status and could assume civil liabilities. International schools are permitted to admit only the children of parents holding a foreign passport and having a legal residence in China.

The Interim Regulations impose various criteria and restrictions on the establishment and operation of international schools. For example:

· only foreign individuals with legal residence in China or the following entities can apply to establish an international school: foreign institutions registered in China, wholly foreign owned enterprises duly established in China or international organizations’ institutions in China; and

· the establishment and operation of an international school is subject to approval by the MOE.

The Tentative Administrative Measures on the Registration of Civil Non-enterprise Entities issued by the State Council on October 25, 1998 require all civil non-enterprise entities to register with the local civil affairs authorities. It is commonly understood that international schools are civil non-enterprise entities as defined under these measures and, under these regulations, our schools in Shanghai and Beijing have registered with the Shanghai Civil Affairs Bureau and the Beijing Civil Affairs Bureau, respectively, and our schools in Guangzhou and Chengdu are in the process of registering with the Guangzhou Civil Affairs Bureau and the Sichuan Provincial Department of Civil Affairs, respectively. See “Item 3. Key Information —D. Risk Factors—Risks Related to the Jurisdictions in which We Operate—Our schools in Guangzhou and Chengdu have not registered with the local Civil Affairs Bureau, which could subject the schools to enforcement actions resulting in sanctions, including a suspension of our operations.

Regulation of Bilingual Schools in China

Schools like NACIS which are established using funds not from the State are regarded as private schools. Pursuant to foreign investment laws and regulations, only Chinese individuals and/or organizations are allowed to establish private schools offering primary and middle school education. Foreign investment in kindergarten and high school education must be in the form of a joint venture with a Chinese party who must maintain control over the school.

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Private schools are regulated by the Law for Promoting Private Education (enacted on September 1, 2003 and amended on June 29, 2013) and the Implementation Rules for the Law for Promoting Private Education (enacted on April 1, 2004).

Under these currently effective regulations, private schools providing dual curriculum programs shall be subject to approval by the education authorities at or above the county level. A duly approved private school will be granted a Permit for operating a Private School and shall be registered with the local counterpart of the Ministry of Civil Affairs of the PRC (the “MCA”) as a civil non-enterprise entity. NACIS has obtained the Permit for Operating a Private School and has been registered with the relevant local counterpart of the MCA in Shanghai.

According to the currently effective regulations, private schools are divided into three categories: (i) private schools established with donated funds; (ii) private schools from which school sponsors require reasonable returns; and (iii) private schools from which school sponsors do not require reasonable returns. NACIS is registered as a private school from which the sponsors do not require reasonable returns. Thus NACIS is not allowed to distribute any profit or dividend generated from school operation to its sponsor.

On November 7, 2016, the Standing Committee of National People’s Congress approved the Amended Law for Promoting Private Education which will become effective from September 1, 2017. This amended law abolishes the three categories described above and classifies private schools into two categories, namely “for profit schools” and “not for profit schools”. It allows the establishment of “for profit” private schools providing kindergarten and high school education, while private schools providing primary and middle school education must be “not for profit”. As NACIS is currently registered as a private school from which the sponsors do not require reasonable returns, it shall restructure to be a “not for profit” private school after the Amended Law for Promoting Private Education becomes effective, i.e. it will not be allowed to distribute any profit or dividend generated from school operation to its sponsor.

Regulation of Transfers of Foreign Exchange

The transfer of foreign currency from within China to persons offshore is regulated by the State Administration of Foreign Exchange (“SAFE”) under the Regulations on the Administration of Foreign Exchange of the People’s Republic of China. Under these regulations, these transfers require the approval of the competent office of SAFE. In the event of a transfer offshore of foreign exchange made in violation of these regulations, the competent office of SAFE may request that such foreign exchange be returned onshore within a time period specified by it and may also impose a fine. If imposed, the fine would be an amount less than 30% of the amount of foreign exchange improperly transferred. If the non-compliance is serious (the rules do not set forth criteria for determining which violations are serious), then a fine of up to 100% of the amount of foreign exchange improperly transferred may be imposed.

In addition, the Administrative Measures on the Settlement, Sale and Payment of Foreign Exchange, which were issued in June 1996, require that revenues of onshore entities received offshore in foreign exchange must be remitted onshore timely. In the event that such foreign exchange revenues are not remitted onshore timely, the competent office of SAFE may request that such foreign exchange revenues be remitted onshore within a time period specified by it and may also impose a fine and/or confiscate illegal gains.

Hong Kong

Under the laws of Hong Kong, every school must be registered or provisionally registered with the Hong Kong Education Bureau. Our school in Hong Kong, Nord Anglia International School, Hong Kong completed its registration with the Hong Kong Education Bureau in 2016 as a private school offering primary and secondary education. Nord Anglia International School, Hong Kong commenced its first school year in September 2014 following completion of refurbishment of the school site awarded by the Hong Kong Education Bureau.

Nord Anglia International School, Hong Kong was founded by Nord Anglia School (Hong Kong) Limited as its sponsoring body. The school is managed by Nord Anglia International School, Hong Kong Limited as its management committee. Both entities are recognized charitable institutions in Hong Kong in the legal form of companies limited by guarantee. Any surplus from the operation of Nord Anglia International School, Hong Kong must be applied by the charitable institutions exclusively for the purposes of the school and for the advancement of education and is not available for distribution.

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Europe

In contrast to China, regulation of private schools such as ours in countries in which we operate in Europe is quite limited, except as described in the country sections below. There is a relatively simple registration regime for private schools, which is not focused on operations or curriculum, and there are few, if any, restrictions on fees. In addition, all of these countries are part of the European Union, which greatly facilitates the applicable administrative formalities.

Poland

Under Polish law, all private primary schools (“szkola podstawowa”) and junior high schools (“gimnazjum”), including Grades (Years) 1 through 11, must have equal status with Polish public schools. To this end, private primary schools and junior high schools must comply with terms and conditions established by Polish law, unless the Minister of Education gives a special authorization permitting exceptions from such terms and conditions. Private schools are registered by the local authorities. In the case of our primary school, junior high school and high school in Poland, the competent local authority is the President of the capital city of Warsaw. Our primary school, junior high school and high school are duly registered with the registry of non-public schools and institutions maintained by the President of the capital city of Warsaw. The Minister of Education has given our primary school and junior high school special authorizations allowing them to employ foreign teachers and teach the English National Curriculum which supplements the Polish curriculum.

We operate our school in Poland as a limited liability company.

The Czech Republic

Our school in Prague, the English International School Prague, operates as a corporation under various licenses, including those covering specialized retail operations and English language teaching. All licenses are in full force and effect and are issued for an indefinite period.

The English International School Prague operates as a foreign school established by a foreign legal entity and is not registered in the Czech registry of schools. This precludes the school from obtaining government subsidies. In 2016, the Czech Ministry of Education acknowledged that Czech students at the school may fulfill their mandatory school attendance requirements at the English International School Prague. In order for the Czech authorities to recognize the educational qualifications earned by students at the school, the students need to arrange with a Czech school to take Czech examinations for certain subjects. Studying at the English International School Prague is recognized by the Czech Ministry of Education as being equivalent to studying at a Czech secondary school for the purpose of the Czech pension insurance and state social security systems relating to compulsory education, so long as the grade levels overlap with Czech secondary school levels.

The English International School Prague has the appropriate licenses to conduct its activities as well as a general uncertified license that covers the provision of various services, including extracurricular education and training, courses, seminars and lectures. These licenses are sufficient to operate an educational institution which is not a Czech school.

We operate our school in the Czech Republic as a company and extract profits accordingly.

Hungary

Under Hungarian law, a nondomestic educational entity may operate in Hungary if it is validly accredited under the law of its home country. Our school in Budapest, the British International School Budapest is accredited with Edexcel International and the Examinations Board. In addition, British International School Budapest is registered with the Hungarian Minister of National Resources and has a valid license to carry on educational activities in Hungary.

British International School Budapest is a separate legal entity operating as a foreign educational institute under Hungarian Act No. CXC of 2011 on National Education, and was founded and is operated by the British International School Foundation. The British International School Budapest holds an operating permit granted by the Ministry of Education (now Ministry of National Resources) as of 2002. The British International School Foundation operates in the legal form of a foundation registered in Hungary. The activities of the British International School Foundation are not profit-oriented, but it may pursue business activity secondarily, solely in the interest of and without jeopardizing its objectives and to provide the necessary funds in compliance with the applicable legal provisions. The British International School Foundation may not distribute profits acquired through its business activities but shall use such profits exclusively for purposes of its main education objectives and activities.

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Slovakia

Under the laws of Slovakia, a private school can be established only if it forms part of a school system and the Ministry of Education has determined that it has been integrated into that school system. These requirements have been met by our school in Bratislava. British International School Bratislava operates as a legal entity on a not for profit basis and the founder has no right to dividends or similar distributions from the school. Under Slovak law, any use of profits from school fees is limited to operational expenses, financing of salaries, including insurance payments for mandatory public health insurance, social insurance, contributions for pension savings, modernization of educational facilities, the development of the school, solving of emergency situations and the improvement of the quality of the services provided by it.

The British International School Bratislava has received approval by the Ministry of Education for the integration into the network of schools and educational facilities in Slovakia Republic for the private primary school, nursery and private high school. The British International School Bratislava is duly registered with the statistical office.

Spain

Education is acknowledged to be a fundamental right in the 1978 Spanish Constitution (Constitución Española), the main terms of which are set forth in two organic laws: (i) Organic Law on the right to education (Ley Órganica 8/1985, de 3 de julio, reguladora del derecho a la educación), which develops the basic rights and principles set forth in the Spanish Constitution regarding education, such as the right to receive an education, parents’ right to choose their children’s educational center, parents’ freedom of association, etc.; and (ii) Organic Law on Education (Ley Órganica 2/2006, de 3 de mayo, de Educación), which, on the basis of the principles of offering universal quality education cooperation at all levels and achieving the European Union’s goals in the education sector, sets forth the main organization and planning of school-level education, teachers, educational centers, inspection and the allocation of public sector resources.

Spanish privately-owned foreign schools, as is International College Spain, S.A.U., are regulated under the Royal Decree 806/1993 (Real Decreto 806/1993, de 28 de mayo, por el que se regula el régimen de los centros docentes extranjeros en España , hereinafter, the “Royal Decree”).

In order to carry out their business in Spain, the aforementioned schools must obtain an opening and functioning authorization from the Spanish education authorities. Once obtained, they must register within the Public Registry of Schools and are subject to inspection by the Spanish education authorities.

In order to obtain the foregoing authorization, foreign privately-owned schools must satisfy, along with certain basic Spanish requirements (such as adequate hygiene and safety conditions at the school premises), the legal requirements set forth by their domestic education authorities in order for the education received to be officially valid in their country, which shall be proved to the Spanish education authorities generally by means of a certificate issued by their relevant domestic authorities or their diplomatic representation in Spain (such as the Embassy or Consulate).

In addition, in order to be able to teach Spanish students, pursuant to the Royal Decree, the teaching of the foreign educational curriculum must be completed with certain Spanish-specific contents.

Switzerland

Under Swiss law, operating and teaching in a private school is subject to authorization in accordance with applicable provisions of both Swiss federal and cantonal law regarding, in particular, the protection of minors and private education. Our schools in the canton of Vaud and the canton of Geneva, respectively operate under the supervision of the cantonal authority, the Department of Education and Youth. The authorization for the director to operate a private school and the authorizations for the teachers to teach in the school are individual. The direction of the private school must confirm to the competent authority that all teachers meet the requirements. The Vaud Department of Education and Youth and the Geneva Department of Education and Youth, respectively can verify, if necessary by examinations, that the education provided in a private school is at least equivalent to the education received in public schools.

We operate our schools in Switzerland as a company and extract profits accordingly.

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Middle East

Abu Dhabi, United Arab Emirates

The Abu Dhabi Education Council (“ADEC”) established in accordance with law No. 24 of 2005, as amended by Law No.8 of 2008, regulates education institutions based in the Emirate of Abu Dhabi and has developed minimum standards for non-government schools. Although at a federal level this responsibility rests with the UAE Ministry of Education, the Ministry has delegated this authority to ADEC.

A proprietor intending to establish a new non-government school in Abu Dhabi must make an application to ADEC, in order to obtain a provisional license. Under Abu Dhabi Executive Council Resolution No. (26) of 2013 (the “Resolution”) and the Private Schools Policy and Guidance Manual 2014-2015 (the “Manual”), all private schools are required to register with ADEC and to allow inspections of their sites. BISAD registered accordingly and obtained such a license, allowing the school to open on September 6, 2009.

BISAD must continue to demonstrate on-going compliance with the Resolution and the Manual in order to qualify for annual license renewal. In order to assess whether a school meets the criteria, a team from ADEC inspects the school approximately every two years and compiles a report based on the school’s performance against nine inspection standards. ADEC also requires each licensed, non-government school to prepare an annual report to publicly disclose the school’s educational, financial performance and other policies of the school, as identified by the Director-General of ADEC.

The ability for BISAD to increase tuition fees is restricted by ADEC. The Resolution and the Manual state how BISAD may increase its tuition fees. The Resolution states that ADEC shall specify the requirements that BISAD must fulfil in order to increase its tuition fees and any other charges imposed by it. BISAD must satisfy ADEC that it is charging appropriate fees. Any proposed increase in fees must be viewed as appropriate by ADEC and ADEC must be satisfied that an increase in fees will improve the School’s overall effectiveness, increase employees’ salaries, provide for investments that will be made by the School and other matters. ADEC has total discretion on whether to approve such increase in fees.

The Resolution also states that BISAD needs ADEC’s prior approval if it is to increase its income from sources such as grants, endowments, bonds, school facilities and rental of buildings.

We entered into a definitive agreement to acquire the 49% equity interest in BISAD owned by our parent in September 2012 and completed the acquisition in February 2014. In accordance with the provisions of the UAE Federal Commercial Companies Law No. 2 of 2015 (the “Law”), the shares of a UAE partner in a limited liability company (“LLC”) should not be less than 51% at all times. Although the Law provides that the capital of an LLC should be divided into equal shares and further confirms that the profits and losses shall be equally divided amongst the shares, it qualifies this general provision by stating “unless otherwise stipulated in the memorandum of association.” It has been a widely accepted practice to provide in the memorandum of the LLC that the profits and losses of an LLC will be shared in a ratio different to that of the shareholder’s stake.

Dubai, United Arab Emirates

The Knowledge and Human Development Authority in Dubai (“KHDA”) established in accordance with Law No. 30 of 2006 is tasked with planning, providing for and developing the requirements for knowledge and human development, including the licensing and regulation of educational institutions in Dubai. Although at a federal level this responsibility rests with the UAE Ministry of Education, the Ministry has delegated this authority to KHDA. The Dubai Schools Inspection Bureau (“DSIB”), established by Executive Council Resolution No (38) 2007, is responsible for the monitoring of educational institutions in Dubai and the School Agency at the KHDA (“School Agency”), established by Executive Council Resolution No (11) 2007, is responsible for the development of the school sector specifically. The relationship between KHDA and each of the DSIB and the School Agency, broadly and as it pertains the regulation of schools like Nord Anglia International School Dubai, is governed by working agreements that align the strategic objectives of the KHDA with each entity, create a framework for cooperation and outline the powers and duties of each party.

As a school licensed by the KHDA, Nord Anglia International School Dubai is required to comply with the KHDA issued Resolution No. (1) of 2007 Concerning licensing of Private Educational Institutions in Dubai (the “Resolution”) and Order No. (1) Concerning the Special Conditions for licensing Schools, Free Zone Schools and Foreign Community Educational Institutions in the Emirate of Dubai as amended by Order No. (1) of 2009 (the “Order”), such compliance being imposed, monitored and assessed on an ongoing basis by the KHDA, the DSIB and the School Agency.

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The Order requires Nord Anglia International School Dubai to provide all necessary information regarding its students and faculty, as requested by the KHDA from time to time, as well as providing all of the school’s financial information annually to the KHDA, with the KHDA reserving its right to audit the financial records of the school with prior notice, as required. Furthermore, for the purpose of public awareness and transparency, the KHDA has the right to share the school’s information (excluding financial details) on the KHDA’s internet portal.

As a school that follows an international curriculum, Nord Anglia International School Dubai is required by the Order to commit to seeking membership of internationally recognized accreditation agencies approved by the KHDA. This requirement must be completed during the third year of operation and the school is working with KHDA to agree an accrediting agency.

The ability for Nord Anglia International School Dubai to increase tuition fees is restricted, as the KHDA reserves the right to disallow any educational or non-educational fee increase pursuant to the Order. Any increase of fees by the school shall be subject to the submission of a formal application by the school and the approval of such application by the KHDA. The fee increase is set as per the School Fee Framework, where a combination of the schools DSIB School Performance Results and the Educational Cost Index (ECI) specified by the Dubai Statistics Center allow for an increase as per ECI percentage or up to 2 times ECI for Outstanding schools. The Executive Council Decision No. 16/2015 sets out the exceptions to this rule, provided that certain criteria are met. This criteria includes the length of its operation, occupancy levels, salary levels and financial rate of return. Under certain circumstances an exceptional fee increase may be considered.

Nord Anglia International School Dubai is required to allocate a minimum percentage of its revenue as determined by the KHDA toward staff training, such obligation being incorporated into the school’s financial plan each year. It is also required to confirm with the KHDA the maximum number of students permitted to be attending the school.

Qatar

The regulation and supervision of schools in Qatar is the ultimate responsibility of the Qatar Ministry of Education. The legal and regulatory regime distinguishes between two classes of schools—namely government schools which are directly controlled and supervised by the Ministry of Education and which offer free-of-charge schooling to all children in Qatar who hold Qatari nationality and are governed by the Independent Schools Law, Qatari Law No. 11 of 2006, as amended by Law No. 20 of 2010, and the private sector, which includes our operations in Qatar. Private schools in Qatar are governed by Qatari Law No. 23 of 2015, as well as regulations issued by the Ministry of Education. These regulations govern matters such as licensing and inspection. The ability of our schools in Qatar to increase tuition fees is subject to the approval of the Ministry of Education. Each of our schools is required to submit to the Ministry of Education a schedule containing all fees it wishes to charge students enrolling at the schools, and such fees schedule must be approved by the Ministry of Education prior to being adopted by the schools. Any changes to the fees schedule must be approved by the Ministry of Education.

South East Asia

Cambodia

Under the laws of Cambodia, the national educational system is divided into three classes: primary (grade 1 to grade 6), secondary (including lower secondary from grade 7 to grade 9 and upper secondary from grade 10 to grade 12) and higher education (university and institute). Schools may be either public or private school, and may offer either general education or technical and vocational education. Cambodia does not have special laws governing the operations of international schools.

Regulations governing the classification and management of schools and the frameworks, guidelines and mechanisms for monitoring education including control and evaluation systems, fall within the responsibility of the Ministry of Education, Youth and Sport (“MoEYS”).

Establishment and operating a school in Cambodia requires a specific, per-category, school license, which a natural person or public or private legal entity may apply for at the MoEYS. School licenses are valid for 5 years and are thereafter renewable. Licenses are granted according to the level of education that a school provides. In order to obtain a school license, the school has to enter into a contract with the MoEYS under which the school, among other things, is obligated to periodically and regularly submit reports on the administrative and technical affairs of the school to the relevant authorities of the MoEYS. Failing to do so may cause the MoEYS to revoke the school license.

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According to the Education Law, adopted in 2007, the basic curriculum for general education determined by the MoEYS is compulsory at all schools in Cambodia. A school may, however, implement a specific curriculum, which is different from the MoEYS’s adopted curriculum or in a foreign language, with the prior approval of the MoEYS. The MoEYS’s review and approval of a curriculum generally is made simultaneously with the grant of a school license during the application process.

At all times, a school has to keep the MoEYS and its relevant authorities informed of any changes made to the operation of the school.

Our school in Cambodia, through the Prakas No. 1506 on “Establishment of Private General Education School ‘Northbridge International School (Cambodia) Limited’,” issued on July 1, 2014 by the MoEYS, has met the foregoing requirements and has been granted a school license to operate a private school offering primary to secondary general education under its international curriculum.

The Law on Foreign Exchange Control permits purchases and sales of currency on foreign exchange markets, money transfers, all kinds of international settlements, and capital flows in foreign or domestic currency, between Cambodia and other countries or between residents and nonresidents. However, the above-mentioned transactions may be carried out only through authorized intermediaries, meaning all licensed financial institutions in Cambodia. Any person who violates this obligation shall be liable for a fine of 50% of the amount involved.

In case of a foreign exchange crisis, the National Bank of Cambodia (“NBC”) may impose temporary restrictions on foreign exchange operations of the authorized intermediaries for a maximum period of 3 months. In case the crisis still persists, the NBC and the Ministry of Economy and Finance must seek the approval from the Prime Minister to extend the restrictions.

Investments made abroad by a resident for an amount equaling or exceeding USD 10,000 are subject to prior declaration to the NBC. Any person who violates this obligation shall be liable for a fine of 20% of the amount involved. Loans and other borrowings, including trade credits, may be freely contracted between residents and nonresidents, provided that disbursements and repayments are made through authorized intermediaries.

Singapore

Private education institutions in Singapore are regulated by the Private Education Act (Chapter 247A of Singapore), which sets out the mandatory registration requirements and legislation obligations for these institutions. The Act is administered by the Council for Private Education, a statutory board sanctioned with the legislative power to regulate the private education sector in Singapore.

The Act requires a private education institution to be registered with the Council for Private Education before it is allowed to commence operations. A private education institution is managed by managers, who have statutory duties and responsibilities (including keeping proper records and furnishing information requested by the Council for Private Education). In the case of a private education institution which is a company, the managers are the directors or members of its board or committee of management which is responsible for the management of the affairs of the company.

A private education institution must ensure that its teachers have the relevant qualifications and experience that meet the requirements stipulated by the Act. A private education institution also has to seek and receive permission from the Council for Private Education before it offers any course, unless exempted. A private education institution is required to set up an academic board and an examinations board with at least three members each; these boards are required to set up proper academic and examination processes and frameworks respectively.

Dover Court International School (Pte.) Ltd. is a private limited company incorporated in Singapore, and it is registered as a private education institution with the Council for Private Education.

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Vietnam

Regulations on foreign-invested schools

Foreign investment in education services in Vietnam is governed mainly by the Law on Education 2005 (as amended in 2009 and 2014) and its implementing regulations (in particular Decree No. 73/2012/ND-CP of Vietnam’s Government dated 26 September 2012 (“Decree 73”) and Circular 34/2014/TT-BGDDT of Vietnam’s Ministry of Education and Training dated 15 October 2014.

A foreign-invested educational institution may invest in most forms of education under the laws of Vietnam, including kindergartens for foreign children using foreign curricula and general education institutions (i.e., primary schools, secondary schools, high schools and mixed general education institutions) for foreign students and Vietnamese students using foreign curricula. Our schools in Vietnam are kindergartens and general educational institutions that satisfy these standards.

Under Decree 73, a foreign-invested educational institution must obtain (i) an investment certificate from a People’s Committee at provincial level, (ii) a decision approving the establishment of the institution issued by a People’s Committee at the provincial or district level depending on the level of the educational institution and (iii) a license to conduct educational activities issued by a department/division of education and training at the provincial or district level where applicable. Our schools in Vietnam have satisfied these conditions.

A foreign-invested education entity in Vietnam is generally required to satisfy various operational conditions, including with respect to: (i) nationality of children/students to be enrolled by the school, (ii) investment capital, (iii) facilities, equipment and infrastructure, (iv) teaching staff and student quota per class and (v) education program, qualifications and certificates. In particular, foreign-invested educational institutions must register their diplomas with Vietnam’s Ministry of Education and Training. Our schools in Vietnam have satisfied these conditions.

Foreign exchange control and remittance of profits abroad

The transfer of funds from Vietnam overseas is subject to the regulations under Vietnam’s Ordinance on Foreign Exchange Control and guidelines of the State Bank of Vietnam.

Profits generating from our schools in Vietnam may only be remitted overseas on an annual basis, provided that:

· all tax obligations in Vietnam have been fulfilled; and

· the audited financial statements and the relevant annual finalization corporate income tax return have been submitted to the tax authorities.

Furthermore, remittance is not permitted in case of accumulated losses (of previous years) which have not been fully off-set.

Remittance of profit generated from direct investments may be conducted freely without any further approval from the State Bank of Vietnam provided that the remitting entity submits the required supporting documents justifying the underlying transaction such as a certified copy of the investment registration certificate of the company, internal corporate resolutions of the company on the distribution of dividends and remittance of profits and notification to the tax authorities of the dividends distributed and to be remitted.

Thailand

Regulation of Private Schools in Thailand

A private school business must be conducted in accordance with the rules and procedures specified in the Private Schools Act B.E. 2550 (2007) (subsequently amended by the Private Schools Act (No.2) B.E. 2554 (2011) (the “Private Schools Act”), which has replaced the Private Schools Act B.E. 2525 (1982). The Private Schools Act reforms the previous supervisory system to promote self-management. The Office of the Private Education Promotion Board, under the supervision of the Office of the Permanent Secretary for Education, is responsible for the supervision of our school in Thailand. The monitoring, evaluation and standards that a private school is expected to comply with in Thailand are the same as those for Thai public schools.

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The Private Schools Act requires that a private school must hold a school permit in order to operate. One of the main conditions for obtaining a permit to operate a school through a private limited company under the Private Schools Act is that not less than half of the total number of shares and shareholders must be Thai persons.

Under the Private Schools Act, there are two separate entities which comprise the school: (i) the school entity and (ii) the permit holder (our Thai school company) that owns the school entity. As the school entity is a separate entity from the permit holder, it is managed by the school board under the school charter (which sets out the basis on which the school should be operated). Our Thai school company, as permit holder, is each school entity’s authorized representative and a member of the school board.

Currently, each of our schools in Thailand holds a school permit under the Private Schools Act, a school board has been appointed and a school charter is in place.

Regulation of Transfers of Foreign Exchange

Thai foreign exchange controls are administered by the Bank of Thailand on behalf of the Ministry of Finance, pursuant to the Exchange Control Act B.E. 2485 (1942). The Bank of Thailand has granted commercial banks and certain other entities the authority to conduct foreign exchange transactions as authorized agents of the Bank of Thailand. The Bank of Thailand instituted measures in 1998 to restrict certain foreign exchange related transactions by domestic financial institutions with non-residents of Thailand and to safeguard against instability and speculation in the domestic currency market.

The outward remittance from Thailand of dividends after payment of the applicable Thai taxes, if any, may be made without the requirement to file a specified form to the relevant authorized agent if the amount is less than $50,000 (or the equivalent amount in the relevant currency) per remittance. If the amount is $50,000 or above (or its equivalent in the relevant currency), a specified form must be submitted to the authorized commercial bank together with documents or evidence as to the particular transaction. Dividends paid to a non-resident must be converted into foreign currency prior to the outward remittance from Thailand.

North America

United States

Schools in the United States are subject to national, state and local regulations and licensing requirements. We have policies and procedures in place to assist in complying with such regulations and requirements. These regulations and the administrative bodies in charge of these regulations vary from jurisdiction to jurisdiction and may apply differently within the same jurisdiction to elementary, middle school and high schools. In most jurisdictions, these agencies conduct scheduled and unscheduled inspections of the schools and licenses must be renewed periodically.

Most jurisdictions establish requirements for background checks or other clearance procedures for new employees of schools. Repeated failures of a school to comply with applicable regulations can subject the school to sanctions, which might include probation or, in more serious cases, suspension or revocation of the school’s license to operate and could also lead to investigations of our other schools located in the same jurisdiction. In addition, this type of action could lead to negative publicity extending beyond that jurisdiction and potentially affecting our other locations. We believe that our operations are in substantial compliance with all material regulations applicable to our business. However, there is no assurance that a licensing authority will not determine a particular school to be in violation of applicable regulations and take action against that school and possibly other schools in the same jurisdiction. In addition, there may be unforeseen changes in regulations and licensing requirements, such as changes in the required ratio of child center staff personnel to enrolled children that could have a material adverse effect on our operations. States in which we operate routinely review the adequacy of regulatory and licensing requirements and implement changes, which may significantly increase our costs to operate in those states.

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C. Organizational Structure

The following diagram illustrates our corporate structure as of the date of this annual report.

The following table sets forth information about our significant subsidiaries as of the date of this annual report.

Name of Company	Equity Interest		Place of Incorporation
B I S Ltd.	100	%	British Virgin Islands
British American School of Charlotte, L.L.C.	100	%	Delaware, USA
British International School Bratislava s.r.o.	100	%	Slovakia
British International School Foundation	100	%	Hungary
British International School LLC(1)	49	%	Abu Dhabi, UAE
British School of Beijing	100	%	China
British School of Boston, L.L.C.	100	%	Delaware, USA
British School of Chicago, L.L.C.	100	%	Delaware, USA
British School of Guangzhou	100	%	China
British School of Houston, L.P.	100	%	Texas, USA
British School of Washington, L.L.C.	100	%	Delaware, USA
British Schools of America, LLC	100	%	Delaware, USA
British Schools of Texas, L.L.C.	100	%	Delaware, USA
Collège Alpin Beau-Soleil SA	100	%	Switzerland
Collège Champittet SA	100	%	Switzerland
Collège du Léman Sàrl	100	%	Switzerland
Dover Court International School (Pte.) Ltd.	100	%	Singapore
Education Overseas Qatar L.L.C.(1)	49	%	Qatar
English International School Prague, s.r.o.	100	%	Czech Republic
Instituto de Desarrollo Educacion y Aprendizaje, S.C.	100	%	Mexico
International College Spain, S.A.U.	100	%	Spain
La Côte International School SA	100	%	Switzerland
NA Schools Limited	100	%	UK
NAE HK Holdings Limited	100	%	Hong Kong
NAE Hong Kong Limited	100	%	Hong Kong

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Name of Company	Equity Interest		Place of Incorporation
Nord Anglia Chinese International School Shanghai	N/A	(3)	China
Nord Anglia Education (UK) Holdings plc	100	%	UK
Nord Anglia Education Finance LLC	100	%	Delaware, USA
Nord Anglia Education Limited	100	%	UK
Nord Anglia International School L.L.C(1)	49	%	Dubai, UAE
Nord Anglia International School, Hong Kong Limited	100	%	Hong Kong
Nord Anglia School (Hong Kong) Limited	100	%	Hong Kong
Nord International Schools Limited	100	%	UK
North Broward Preparatory Schools, LLC	100	%	Florida, USA
Northbridge International School (Cambodia) Limited	100	%	Cambodia
Regent Pattaya Campus Management Co., Ltd.(2)	49	%	Thailand
Saint Andrews International School Sukhumvit Campus Co., Ltd.(2)	49	%	Thailand
The British International School Company Limited	90	%	Vietnam
The British International School, Shanghai	100	%	China
The British School Sp. z o.o.	100	%	Poland
The Léman International School — Chengdu	100	%	China
Thien Huong Education Joint Stock Company	81	%	Vietnam
Thien Huong Investment Company Limited	90	%	Vietnam
Viking Holdco, Inc.	100	%	Delaware, USA
Viking Holding Company, LLC	100	%	Delaware, USA
Village Real Estate LLC	100	%	Texas, USA
WCL Academy of New York LLC	100	%	Delaware, USA
WCL Holdco Limited	100	%	UK

(1) We exercise control of this company pursuant to its constitutional documents.

(2) We are entitled to approximately 91% of the voting power pursuant to the company’s constitutional documents.

(3) We do not own any equity interest in Nord Anglia Chinese International School Shanghai; we control and operate this school through contractual arrangements.

D. Property, Plant and Equipment

Properties

Our headquarters are located at Level 12, St. George’s Building, 2 Ice House Street, Central in Hong Kong, where we lease 6,695 net square feet. We continue to operate in two locations in the United Kingdom, one of which is for our learning services business. We lease most of our current school facilities under long-term leases. The table below summarizes the main operating leases for each of our schools:

School	Termination Date*	Area +
China
The British School of Beijing, Sanlitun (Sanlitun, Beijing, China)	2017 /2023	8,032.37 m2
The British School of Beijing, Shunyi (Shunyi, Beijing, China)	2029	21,439.26 m2 (1)
Nord Anglia International School Shanghai, Pudong (Pudong, Shanghai, China)	2022	25,413.13 m2 (2)
The British International School Shanghai, Puxi (Puxi, Shanghai, China)	2025/2036	24,668.11 m2 (3)
The British School of Guangzhou (Guangzhou, China)	2017 / or upon 2 years notice by landlord	5,229 m2 / 29,187 m2 / 7,349 m2 / 7,538 m2
Léman International School (Chengdu, China)	2030	25,000 m2 (4)
Nord Anglia International School Hong Kong (Hong Kong, China)	2023	4,555 m2 (5)
Nord Anglia Chinese International School Shanghai	2036	36,572.39 m2 (16)
Europe
Collège Beau-Soleil (Villars-sur-Ollon, Switzerland)	2035/2027	4,750m2 (6) / 1,300 m2 (7)
Collège Champittet, Pully (Pully, Switzerland)	2026	48,971 m2
Collège Champittet, Nyon (Nyon, Switzerland)	2017	3,375.6 m2
La Côte International School (Aubonne, Switzerland)	2039	9,350 m2 (8)
Collège du Léman (Geneva, Switzerland)	2090/2090	6,675 m2 (9) / 65,503 m2 (9)
The English International School Prague (Prague, Czech Republic)	2032	27,686 m2
The British School Warsaw (Warsaw, Poland)	2035/auto-renew	8,497 m2 (10) / 1,088 m2 (11)
The British International School Bratislava (Bratislava, Slovakia)	2039/2019	7,309 m2 (4) / 774 m2 (4)
The British International Budapest (Budapest, Hungary)	2046	6109 m2 (4) / 3155 m2 (4)
International College Spain (Madrid, Spain)	2026	42,000 m2
Middle East
The British International School (Abu Dhabi, UAE)	2025	19,440 m2
Compass International School Doha, Gharaffa (Gharaffa, Doha, Qatar)	2020	9,427 m2
Compass International School Doha, Madinat Khalifa (Madinat Khalifa, Doha, Qatar)	2022	9,550 m2

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School	Termination Date*	Area +
Compass International School Doha, Rayyan (Al Rayyan, Doha, Qatar)	2024	8,100 m2
Nord Anglia International School, Al Khor (Al Khor, Doha, Qatar)	N/A	18,617 m2
Nord Anglia International School (Dubai, UAE)	2017	32,516.05 m2 (5)
South East Asia
Regents International School Pattaya (Pattaya, Thailand)	2037	81,560 m2
St Andrews International School Bangkok (Bangkok, Thailand)	2038	18,640 m2
Dover Court International School (Singapore)	2020/2017	16,369 m2 (5) / 27,136.70 m2 (12)
Northbridge International School Cambodia (Phnom Penh, Cambodia)	2039	69,491 m2 (13)
The British International School of Ho Chi Minh City (HCMC, Vietnam)	2039	18,721 m2 (9)
The British Vietnamese International School Ho Chi Minh City (HCMC, Vietnam)	2040	14,568 m2 (9)
The British International School Hanoi (Hanoi, Vietnam)	2042	40,876 m2 (9)
The British Vietnamese International School Hanoi (Hanoi, Vietnam)	2043	19,147 m2 (9)
North America
The British School of Washington (Washington, D.C., U.S.A)	2019	10,379 m2
The British International School of Boston. (Boston, Massachusetts, U.S.A)	2020/2020	4,323 m2 (14) / 613 m2
The British International School of Houston (Houston, Texas, U.S.A)	2036	1,453,882 m2
The British International School of Chicago, Lincoln Park (Chicago, Illinois, U.S.A)	2040	7,702 m2 (4)
The British International School of Chicago, Southloop (Chicago, Illinois, U.S.A)	2035	9,476 m2 (4)
The British International School of Charlotte (Charlotte, North Carolina, U.S.A)	2021	5,041 m2 (15)
Nord Anglia International School New York (New York, New York, U.S.A)	2025	5,047 m2 (4)
The Village School (Houston, Texas, U.S.A)	2041/2033	20,866 m2 (4) /60,703 m2 (5)
North Broward Preparatory School (Coconut Creek, Florida, U.S.A)	2041/2041	16,520 m2 (4) / 3,847 m2 (4)
Windermere Preparatory School (Windermere, Florida, U.S.A)	2041	14,580 m2 (4)
Instituto San Roberto (Monterrey, Mexico)	2046 (17)	52,065 m2 (18)

* More than one date indicates the termination date of multiple leases.

+ Unless otherwise indicated, the total area includes the area of the school building(s) and the size/area of the plot of land/grounds/playground/parking and etc. outside of the school building(s).

(1) Area of the building(s) only; the area of land is 33,300 m2.

(2) Area of the building(s) only; the area of land is 72,517 m2.

(3) Area of the building(s) only; the area of land is 50,728 m2.

(4) Area of the building(s) only.

(5) Area of land with school building(s).

(6) Area of the building(s) only; the area of land is 7,999 m2.

(7) Area of the building(s) only; this is a shared building and we do not have our own land.

(8) Area of the building(s) only; the area of land is 8,060 m2.

(9) Area of the land plot only.

(10) Area of the building(s) only; the area of land is 16,938 m2.

(11) Area of the building(s) only; the area of land is 5,557 m2.

(12) Area of land for playfield only.

(13) Area includes two plots of land and existing and future buildings and structures thereon, including works under construction and future improvements.

(14) Area of the building(s) only; the area of land is 153,362 m2; the land is shared with the landlord.

(15) Area of the building(s) only; the area of land is 10.8 acres.

(16) Area of the actual total gross floor including the building(s).

(17) One of the campuses has a soccer field lease that expires in 2047.

(18) Area of the building(s) only; the area of the land is 110,302 m2.

Item 4A. Unresolved Staff Comments

None.

Item 5. Operating and Financial Review and Prospects

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our consolidated financial statements and the related notes included elsewhere in this annual report on Form 20-F. This discussion and analysis may contain forward-looking statements based upon current expectations that involve risks and uncertainties. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth under “Item 3. Key Information—D. Risk Factors” or in other parts of this annual report on Form 20-F.

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A. Operating Results

Overview

We believe we are the world’s leading global operator of premium international schools. We have over 37,000 full time equivalent students (“FTEs”), from kindergarten through the end of secondary school (“K-12”), at our 43 premium schools in China, Europe, the Middle East, South East Asia and North America. As of November 18, 2016, we had 37,026 FTEs and capacity of 54,813 seats, representing a utilization rate of 67.5%.

Recent Developments

On November 23, 2016, we entered into an agreement to sell a parcel of land in Houston, Texas to KIPP, Inc. for $9.7 million. The completion of the transaction is subject to the satisfaction of various conditions.

Factors Affecting Our Results of Operations

Key Performance Indicators

We use the following key operating metrics to manage our schools: FTEs, capacity, utilization and revenue per FTE. We monitor FTEs on a weekly basis and the other operating metrics on a monthly, quarterly and annual basis, as we believe that they are the most reliable metrics for measuring the profitability of our schools.

	Year Ended August 31,
	2014		2015		2016
Full-time equivalent students (average for the period)(1)
China	4,827		5,228		5,820
Europe	4,514		4,624		6,679
Middle East	3,229		4,344		5,302
South East Asia	2,001		5,274		7,505
North America	2,742		2,816		9,513
Total	17,313		22,286		34,819

Capacity (average for the period)(2)
China	6,964		7,756		9,052
Europe	5,322		6,084		8,617
Middle East	3,591		5,251		5,851
South East Asia	2,370		8,507		12,150
North America	3,760		3,760		13,507
Total	22,007		31,358		49,177

Utilization (average for the period)(3)
China	69	%	67	%	64	%
Europe	85	%	76	%	78	%
Middle East	90	%	83	%	91	%
South East Asia	84	%	62	%	62	%
North America	73	%	75	%	70	%
Total	79	%	71	%	71	%

Revenue per FTE (in $ thousands)(4)
China	34.3		35.0		33.9
Europe	30.1		28.8		31.7
Middle East	14.9		15.8		16.4
South East Asia	18.9		17.4		17.4
North America	25.1		29.3		23.6
Total	26.4		25.1		24.4

(1) We calculate average FTEs for a period by dividing the sum of the number of FTEs at each calendar month end in the period by the number of calendar months in the period.

(2) We calculate average capacity for a period by dividing the total number of FTEs that can be accommodated based on existing classrooms at each academic calendar month divided by the number of months in such period.

(3) We calculate utilization for a period as a percentage equal to the average FTEs for the period divided by average capacity for the period.

(4) We calculate revenue per FTE for a period by dividing revenue from our schools for the period by the average FTEs for the period.

Full-Time Equivalent Students. Because our schools derive substantially all of their revenue from tuition fees, the number of FTEs enrolled in our schools is critical to our operating performance and growth. As a result, we monitor the number of FTEs to measure the performance of our schools. We also monitor FTEs on a school-by-school basis to help plan capacity expansion and track local market trends.

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We define a FTE as a student who is enrolled to attend school for the full school day, five days a week. For example, a student who enrolls for three full days a week equals 0.6 FTEs and a student who enrolls for five mornings a week equals 0.5 FTEs. We calculate average FTEs for a period by dividing the total number of FTEs at each calendar month-end in the period by the number of calendar months in the period.

The number of same-school FTEs fluctuates throughout the academic year, as new students enroll or as current students depart. Our average FTEs have grown from 8,180 in fiscal 2012 to 34,819 in fiscal 2016. The increase resulted from growing enrollments at our schools and acquisitions of new schools.

In addition to monitoring our FTEs, we also focus on the number of inquiries, visits and applications by prospective students at each of our schools and the number of applications that result in enrollments. In our experience, the ratios of inquiries to visits and of visits to enrollments are leading indicators of student enrollments. Thus, in our marketing and recruitment activities we seek to maximize the generation of inquiries, the conversion of inquiries into visits, of visits into applications and of applications into enrollments.

Capacity. We calculate average capacity for a period by dividing the total number of FTEs that we can accommodate at each calendar month-end in the period by the number of calendar months in the period.

We increased our average capacity from 22,007 places in fiscal 2014 to 49,177 places in fiscal 2016. The increase resulted primarily from the acquisition of new premium schools in China, Switzerland, Spain, Thailand, the United States, Qatar, Singapore, Cambodia, Vietnam and Mexico, greenfield openings in the United States, China, the Middle East and Europe and capacity expansion at our schools in all our regions.

Utilization. We calculate utilization for a period as a percentage equal to the ratio of average FTEs for the period divided by average capacity for the period.

In fiscal 2014, 2015 and 2016 we had average utilization of 79%, 71% and 71%, respectively. The reduction in utilization was primarily due to the schools we acquired in Vietnam with 44% utilization on acquisition and the opening of our new schools in Chicago, Dubai and Aubonne.

Revenue per Full-Time Equivalent Student. We calculate revenue per FTE for a period by dividing the revenue from our schools for the period by the average FTEs for the period. Revenue per FTE is impacted primarily by the tuition fees we charge at each of our premium schools and the revenue per FTE of new schools that we acquire relative to our other premium schools within those regions.

Revenue per FTE, and therefore our revenue, is directly impacted by our ability to increase tuition fees year on year at each of our premium schools. A majority of our tuition fees are paid by expatriate employers, who we believe accept price increases because education allowances typically represent only a small percentage of an expatriate’s total compensation package. We believe self-funding expatriates and affluent local families accept our price increases because of the importance they place on a quality education for their children. As a result, we have been able to increase tuition fees at our premium schools at an average of approximately 4-5% per year over the last five years, which we believe to be in excess of the median rate of inflation in the markets where these schools are located.

Almost all of our tuition fees are charged in the local currencies of the countries where the schools are located. Therefore, our revenue per FTE is subject to fluctuations in foreign exchange rates between these local currencies and our reported currency, the US dollar. See “—Currency Translation.”

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Acquisitions

In the three years ended August 31, 2016, we acquired 12 schools in Switzerland, China, Singapore, Cambodia, the United States, Vietnam and Mexico; we continue to assess a pipeline of acquisition opportunities and look for new acquisition opportunities. The following table shows the schools we acquired during the three fiscal years ended August 31, 2016:

Fiscal 2014
Dover Court International School	Singapore	April 2014
Northbridge International School Cambodia	Cambodia	July 2014(1)

Fiscal 2015
The British International School, Ho Chi Minh City	Vietnam	January 2015
The British Vietnamese International School, Ho Chi Minh City	Vietnam	January 2015
The British International School, Hanoi	Vietnam	January 2015
The British Vietnamese International School Hanoi	Vietnam	January 2015
The Village School	United States	June 2015
North Broward Preparatory School	United States	June 2015
Windermere Preparatory School	United States	June 2015
Instituto San Roberto	Mexico	June 2015
Collège du Léman	Switzerland	June 2015
Léman International School	China	June 2015

Fiscal 2016

None.

(1) Premium schools acquired during the summer months of July and August do not have a significant impact on the current fiscal year results as most school years commence on September 1, which is the first day of the following fiscal year, and revenue and direct teaching costs are not recognized during July and August in line with our accounting policies.

Increased Focus on Premium Schools

In fiscal 2012, we made a strategic decision to no longer bid on new learning services contracts and gradually phased out some of our existing contracts. As a result, our premium schools revenue, as a percentage of our total revenue, has grown significantly. In fiscal 2014, 2015 and 2016, revenue from our premium schools represented 96.2%, 97.6% and 99.4%, respectively, of our total revenue. In fiscal 2016, other revenue, which is predominantly revenue from learning services, accounted for 0.6% of our revenue and contributed 0.2% of our Adjusted EBITDA (before the allocation of central and regional costs). In the three years ended August 31, 2015, we acquired 25 schools in Switzerland, China, Thailand, the United States, Qatar, Spain, Singapore, Cambodia, Mexico and Vietnam and have expanded capacity at our schools in North America, China, the Middle East, South East Asia and Europe. In September 2014 we opened new schools in Hong Kong and Dubai, in September 2015, we opened a new school in Chicago and in September 2016 we opened a new campus for one of our schools in Houston and a new bilingual school in Shanghai. We expect to further expand our network of premium schools and increase capacity at existing schools.

Macroeconomic Conditions

The results of our operations are indirectly affected by general economic conditions in each of the countries in which we operate, which may influence the demand for premium schools education and the tuition fees we are able to charge at our schools. As a result of the importance parents place on education in the markets in which we operate and the relative resilience shown by expatriate flows during difficult economic conditions, we believe our revenue and profitability are resilient to fluctuations as a result of macro-economic conditions. We have grown our business significantly since 2008 despite a challenging global economic climate. Total enrollment in our schools has grown at a CAGR of 31% from the end of fiscal 2008 to the end of fiscal 2016, and we have raised our tuition fees by an average of approximately 4-5% per year over the last five years.

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Currency Translation

We conduct our business in several major currencies, most notably the Chinese renminbi, Swiss franc, Polish zloty, pound sterling, U.A.E. dirham, Qatari riyal, euro, Thai baht, Hong Kong dollar, Singapore dollar, Cambodian riel and U.S. dollar, while our reporting currency is the U.S. dollar. Fluctuations in exchange rates between the U.S. dollar and our other operating currencies affect the translation of our results and the net assets or liabilities of our overseas entities into U.S. dollars.

In fiscal 2014, the Chinese renminbi, the Polish zloty, British pound, euro and Swiss franc all strengthened against the US dollar while the Thai baht weakened against the dollar. Overall, the impact of these movements positively influenced our results in that period.

In fiscal 2015, the U.S. dollar strengthened against all our major trading currencies. Overall, the impact of these movements negatively influenced our results in that period.

In fiscal 2016, the U.S. dollar strengthened against all our major trading currencies. Overall, the impact of these movements negatively influenced our results in that period.

Substantially all of our revenues and costs are denominated in the local currencies. We recognize translational gains and losses primarily upon the conversion of our foreign currency denominated earnings into U.S. dollars through other comprehensive income.

Supplementary Financial Data

The following table sets forth certain supplementary financial data for the periods indicated.

	Year Ended August 31,
	2014		2015		2016
	(in millions of dollars)
Revenue (segment)
Premium Schools
China	165.6		183.2		197.3
Europe	136.0		133.3		211.8
Middle East	48.2		68.6		87.2
South East Asia	37.8		91.6		130.4
North America	68.8		82.6		224.3
Total Premium Schools	456.4		559.3		851.0
Other	18.2		13.8		5.0
Total Revenue	474.6		573.1		856.0

Adjusted EBITDA (segment)
Premium Schools
China	78.4		84.6		85.8
Europe	26.0		16.9		41.9
Middle East	11.0		9.0		17.5
South East Asia	11.2		27.0		41.9
North America	23.2		23.0		59.7
Total Premium Schools	149.8		160.5		246.8
Other	4.0		1.5		0.5
Central and regional expenses	(26.4	)	(31.3	)	(40.0	)
Adjusted EBITDA	127.4		130.7		207.3
Adjusted Net Income	22.8		41.6		67.5

We use EBITDA, Adjusted EBITDA, Adjusted Net Income and Adjusted Earnings per Ordinary Share as supplemental financial measures of our operating performance. We define EBITDA as (loss)/profit for the period plus income tax expense, net financing (expense)/income, exceptional items, impairment of goodwill, amortization and depreciation, and we define Adjusted EBITDA as EBITDA adjusted for the items set forth in the table below. We define Adjusted Net Income as Adjusted EBITDA adjusted for the items in the table below. We define Adjusted Earnings per Ordinary share as Adjusted Net Income divided by the weighted average ordinary shares outstanding for the period.

EBITDA, Adjusted EBITDA, Adjusted Net Income and Adjusted Earnings per Ordinary Share are not standard measures under IFRS. These measures should not be considered in isolation or construed as alternatives to cash flows, net income, earnings per ordinary share or any other measure of financial performance or as indicators of our operating performance, liquidity, profitability or cash flows generated by operating, investing or financing activities. We may incur expenses similar to the adjustments in this presentation in the future and certain of these items could be recurring. EBITDA, Adjusted EBITDA, Adjusted Net Income and Adjusted Earnings per Ordinary Share presented herein may not be comparable to similarly titled measures presented by other companies.

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Reconciliation of EBITDA, Adjusted EBITDA and Adjusted Net Income

Set forth below is a reconciliation of EBITDA, Adjusted EBITDA and Adjusted Net Income to the most directly comparable IFRS measure for the periods indicated:

	Year Ended August 31,
	2014		2015		2016
	(in millions of dollars, except per share data)
(Loss)/profit for the period	(90.2	)	7.7		49.2
Income tax (credit)/expense	23.6		12.5		12.4
Net financing expense(1)	53.5		46.3		63.6
Exceptional items(2)	100.2		18.8		8.8
Other (gains)/losses(3)	(2.1	)	(12.4	)	(13.4	)
Impairment	—		—		1.0
Amortization	10.4		13.9		18.7
Depreciation	2.0		0.7		0.8
Depreciation in Cost of Sale	21.4		33.9		45.7
EBITDA	118.8		121.4		186.8
Loss on disposal of property, plant and equipment(4)	0.1		0.3		0.4
Share based payments(5)	3.1		2.3		6.7
Management fees — sponsor(6)	1.2		—		—
Greenfield pre-opening costs(7)	4.1		4.0		7.7
Rollout of Juilliard program(8)	—		0.7		1.9
Rollout of MIT collaboration(9)	—		—		0.9
Global campus expedition facility(10)	—		—		1.2
China expat taxes(11)	—		1.1		—
Lender waiver fee(12)	—		—		1.1
Sarbanes-Oxley project(13)	—		—		0.6
Other	0.1		0.9		—
Adjusted EBITDA	127.4		130.7		207.3

Depreciation	(23.4	)	(34.6	)	(46.5	)
Net Financing Expense(1)	(53.5	)	(46.3	)	(63.6	)
Financing expense adjustments(14)	—		9.7		(4.7	)
Income Tax (Credit)/Expense	(23.6	)	(12.5	)	(12.4	)
Tax Adjustments(15)	(4.1	)	(4.2	)	(10.5	)
Non-controlling Interest	—		(1.2	)	(2.1	)
Adjusted Net (Loss)/Income	22.8		41.6		67.5

Adjusted (Loss)/Earnings per Ordinary Share (in dollars)(16)
Basic	0.27		0.42		0.65
Diluted	0.27		0.42		0.65

(1) In March 2014 we drew down in full on a new $515.0 million term loan facility and using proceeds from the loan and our initial public offering, we discharged our obligations under the indentures governing our $490.0 million 10.25% senior secured notes and $150.0 million 8.50%/9.50% PIK toggle notes, both of which were fully redeemed as of April 14, 2014. In March 2015, we incurred $150.0 million of incremental loans under the facility to finance our acquisition of four schools in Vietnam and for general corporate purposes. In June 2015, we incurred an additional $240.0 million of incremental loans under the facility and issued CHF 200.0 million in aggregate principal amount of 5.75% senior secured notes due 2022 to partially finance our acquisition of the six Meritas Schools.

(2) In fiscal 2014, exceptional expenses primarily related to the costs associated with our initial public offering and refinancing and expenses related to the acquisitions of schools, including associated transaction and integration costs. In fiscal 2014, we incurred exceptional charges of $89.9 million related to the redemption of our outstanding notes, including the release of $12.9 million of prepaid costs. In fiscal 2015, exceptional expenses primarily related to the acquisition of schools, including associated transaction and integration costs and debt issuance costs in connection with the acquisitions that were not capitalized on the balance sheet. In fiscal 2016, exceptional expenses primarily related to the acquisition of schools, including associated transaction and integration costs and the transaction costs in relation to the sale and leaseback transactions.

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(3) Represents the fair value gains and losses on our cross currency swaps, various put/call options, embedded lease derivatives at our Chicago South Loop school and the British International School of Houston and unrealized foreign exchange movements on our intercompany loans.

(4) In fiscal 2014, 2015 and 2016, includes loss on disposal of property, plant and equipment associated with the termination of learning services contracts and the closure of associated offices in the UK and on the sale and leaseback.

(5) Represents non-cash charges associated with equity investments in our company by members of management.

(6) Represents management fees paid to Premier Education Holdings Ltd.

(7) In fiscal 2014, includes the pre-opening costs associated with the opening of our schools in Hong Kong and Dubai in September 2014. In fiscal 2015, includes the pre-opening costs associated with the opening of our second school in Chicago in September 2015. In fiscal 2016, includes the pre-opening costs associated with the opening of our new campus in Houston and our new school in Shanghai in September 2016 and pre-opening costs associated with the opening of our new campuses in Bangkok and Hong Kong and our new school in Abu Dhabi, all expected to open in September 2017.

(8) Represents the costs associated with the roll-out of The Juilliard-Nord Anglia Performing Arts Program which commenced in a further 29 schools in September 2016.

(9) Represents the costs associated with the initial roll-out of the MIT collaboration, which we launched in 13 schools in September 2016.

(10) Represents the costs associated with the establishment of a new leadership expedition facility in Switzerland as part of Global Campus.

(11) Represents costs associated with expatriate taxes levied on teacher salaries relating to the period prior to the year-ended August 31, 2014.

(12) Represents the fees paid to the lenders under our Credit Facility in connection with obtaining a waiver to extend the reporting deadline for fiscal 2015.

(13) Represents costs associated with establishing a Sarbanes-Oxley implementation project.

(14) Adjustment for unrealized foreign exchange gain/(loss) arising from the revaluation of the CHF200.0 million senior secured notes to US dollar.

(15) Represents the tax impact associated with the exclusion of certain costs including exceptional items and amortization in calculating Adjusted Net Income. The effective tax rate for fiscal 2016 used in calculating the tax impact is 24.8%, which is the effective tax rate for fiscal 2016 excluding certain items that impact the effective tax rate per the accounts of 20.1%. These include adding back the unrealised FX gain on inter-company balances and the impact of the sale and leaseback transaction which is one-off in nature. The effective tax rate for fiscal 2015 and 2014 was 28.1% and 54.9%, respectively.

(16) Calculated by dividing Adjusted Net Income for the period by the weighted average ordinary shares outstanding for the period. For the year ended August 31, 2014, the basic and diluted weighted average ordinary shares outstanding were 85.1 million. For the year ended August 31, 2015, the basic and diluted weighted average ordinary shares outstanding were 99.4 million and 99.5 million, respectively. For the year ended August 31, 2016, the basic and diluted weighted average ordinary shares outstanding were 104.1 million.

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Revenue

Revenue comprises the fair value of consideration received or receivable in the ordinary course of the Group’s activities.

Sales of services which have been invoiced but not yet recognized as revenue are included on the Consolidated Balance Sheet as Deferred revenue.

School fee income

School fee income comprises tuition fees and income from ancillary sources including examinations, school trips, bus transportation and lunch fees.

School fee income is recognized over the school terms, Term one being late August / early September to December, Term two January to March and Term three April to June. School fees are payable in advance on or before the first day of each term and are recognized across the months of each term. Where fees are received in advance for more than one term, the income is recognized over the months in the terms for which payment has been made.

At a majority of the Group’s schools, our terms and conditions require a full term’s notice of withdrawal for a refund of prepaid tuition.

Deposits

Refundable deposits relate to fees that may result in a return of funds / monies to a customer. These are reported as a financial liability until they are either returned to the customer or the term / condition under which it will be refunded has expired or is no longer valid. At this point, the fee is either earned and the Revenue is recognized, or the fees have been refunded and the liability is relieved.

Non-refundable deposits relate to fees that have no terms or conditions attached which would result in any monies ever being returned to the customer. The Revenue is earned and recognized to the extent that the services have been fulfilled, with any excess deferred and recognized as Revenue over the Group’s average student tenure.

Cost of Sales

Cost of sales consist principally of salary and benefits for school principals and teaching staff and lecturers employed in our Premium Schools and Learning Services businesses, plus the costs of teaching materials as well as expenses for the provision of school lunches, bus services and athletics programs. Premium School land and building operating leases and depreciation charges arising from tangible assets owned by Premium Schools is also included in the cost of sales. For the Learning Services businesses the costs are recognized as incurred. For the Premium Schools business salary and benefits for school principals and teaching staff are recognized as incurred, being the 10 months over which teaching services are provided and as such they follow the same recognition period as the relevant fee income.

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Selling, General and Administrative Expenses

Selling, general and administrative expenses consist of several cost categories including salary and benefits for senior management team and other personnel engaged in finance, human resources, education policy and quality, legal compliance, information systems and infrastructure and other functions at our corporate headquarters. In addition, this category of expense encompasses salary and benefits for regional personnel supporting our operations in China, Europe, Middle East, Southeast Asia, North America and Others. Finally, this category also includes business travel costs, advertising and promotion expenses, conference costs, general liability insurance premiums, communication costs, bad debt expense, training costs and others.

Other Operating Expenses

Other operating expenses consist primarily of amortization and impairment charges on intangible assets, depreciation expenses and other non-operating expenses.

Finance Income

Finance income primarily consists of interest on bank deposits.

Finance Expenses

Finance expenses represent interest on borrowings and finance leases, shareholder loan notes.

Income Tax Expense

Income tax expense consists of corporate income tax in the jurisdictions in which we operate as well as withholding taxes on dividends. Income tax expense also includes a charge or credit for deferred tax. Fluctuations in our effective tax rate are primarily attributed to changes in the operating results of our subsidiaries, which are subject to various tax rates and tax concessions in their respective jurisdictions.

Critical Accounting Policies

The preparation of the consolidated Group financial statements requires management to make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances. Actual results may differ from these estimates. The estimates and underlying assumptions are reviewed on an on-going basis.

Critical estimates and assumptions that are applied in the preparation of the consolidated financial statements include:

Goodwill allocation and impairment testing

Goodwill arising on consolidation represents the excess of the cost of acquisitions over our interest in the fair value of the identifiable assets and liabilities at the date of acquisition. Fair values are attributed to the identifiable assets, liabilities and contingent liabilities that existed at the date of acquisition, reflecting their condition at that date.

Goodwill acquired in a business combination is allocated, at the date of acquisition, to the cash-generating units (“CGU”) that benefitted from that business combination. We consider that a CGU is generally an individual school or contract. For the purposes of testing for impairment to goodwill annually, each CGU is tested individually. For the purpose of disclosure, CGUs are aggregated together to groupings with similar risk characteristics.

Goodwill is recognized as an asset. It is not subject to annual amortization, but is assessed for impairment at least annually or more frequently if there are indications that goodwill might be impaired. The recoverable amounts of the goodwill are calculated on a discounted cash flow basis by applying appropriate long-term growth rates and discount rates, based on historic trends adjusted for management’s estimates of future prospects, to the CGUs on an individual basis. Both the calculated recoverable value of goodwill and any impairment adjustment could vary significantly if different long-term growth rates and FTE numbers were applied.

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Intangible assets

Intangible assets acquired as part of an acquisition of a business are capitalized separately from goodwill if those assets are identifiable and their fair value can be measured reliably.

Intangible assets with finite lives are amortized over the useful economic life and assessed for impairment whenever there is an indication that the intangible asset may be impaired. The amortization period and the amortization method are reviewed at least at each financial year end. Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in the asset is accounted for by changing the amortization period or method, as appropriate, and are treated as changes in accounting estimates.

Intangible assets with indefinite useful lives are tested for impairment annually either individually or at the CGU level and are not amortized. The useful life of an intangible asset with an indefinite life is reviewed annually to determine whether indefinite life assessment continues to be supportable. If not, the change in the useful life assessment from indefinite to finite is made on a prospective basis.

The initial identification of intangible assets requires considerable judgment in respect of the classification of the assets and in the assessment of their life. In addition, when assessing the values of the intangible assets, management is required to exercise judgment in determining the future profitability and cash flows of those assets, royalty rates, life of customer base and the appropriate weighted average cost of capital. The subsequent impairment reviews equally require continuing assessment of the above factors as well as continuous assessment of the assets’ lives. Gains and losses arising from de-recognition of an intangible asset are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognized in the Consolidated Income Statement when the asset is derecognized.

Leases

Lease agreements are evaluated to determine if they are finance leases meeting the following main criteria:

· The lease transfers ownership of the asset to the lessee by the end of the lease term,

· The lessee has the option to purchase the asset at a price that is expected to be sufficiently lower than the fair value at the date the option becomes exercisable for it to be reasonably certain, at the inception of the lease, that the option will be exercised,

· The lease term is for the major part of the economic life of the asset even if title is not transferred,

· At the inception of the lease the present value of the minimum lease payments amounts to at least substantially all of the fair value of the leased asset, and

· The leased assets are of such a specialised nature that only the lessee can use them without major modifications.

In determining whether the above criteria are met, critical estimates and judgements, including but not limited to the fair value of the leased asset, the economic life of the leased asset, and the discount rate used to calculate the present value of the minimum lease payments, are used. The accounting treatment of a particular lease is based on the classification and our accounting policy for leases described above.

Fair value measurement

We measure financial instruments such as derivatives, at fair values at each balance sheet date. Fair value related disclosures for financial instruments and non-financial assets that are measured at fair value or where the fair values are disclosed, are summarised in the following notes:

·	Disclosures for valuation methods, significant estimates and assumptions	Note 1, 2, 25
·	Quantitative disclosures of fair value measurement hierarchy	Note 25
·	Financial instruments (including those carried at amortized cost)	Note 25

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Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either:

· in the principal market for the asset or liability; or

· in the absence of a principal market, in the most advantageous market for the asset or liability.

The principal or the most advantageous market must be accessible by us.

The fair value measurement of a non-financial asset takes into account a market participant’s ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use.

We use valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximising the use of relevant observable inputs and minimising the use of unobservable inputs.

All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorised within the fair value hierarchy, described as follows based on the lowest level input that is significant to the fair value measurement as a whole:

· Level 1 — Quoted (unadjusted) market prices in active markets for identical assets or liabilities

· Level 2 — Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable

· Level 3 — Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable

For assets and liabilities that are recognized in the financial statements at fair value on a recurring basis, we determine whether transfers have occurred between levels in the hierarchy by re-assessing categorization (based on the lowest level input that is significant to the fair value measurement as a whole) at the end of each reporting period.

For the purpose of fair value disclosures, we have determined classes of assets and liabilities on the basis of the nature, characteristics and risks of the asset or liability and the level of the fair value hierarchy, as explained above.

Pension obligations

The present value of pension obligations depends on a number of factors that are determined on an actuarial basis using a number of assumptions. The assumptions used in determining the net cost/(income) for pensions include the expected long-term rate of return on the relevant plan assets and the discount rate. Any changes in these assumptions will impact the carrying amount of pension obligations.

The expected return on plan assets assumption is determined on a uniform basis, taking into consideration long-term historical returns, asset allocation and future estimates of long-term investment returns.

We determine the appropriate discount rate at the end of each year. This is the interest rate that should be used to determine the present value of estimated future cash outflows expected to be required to settle the pension obligations. In determining the appropriate discount rate, we consider the interest rates of Exchange Fund Notes that are denominated in the currency in which the benefits will be paid, and that have terms to maturity approximating the terms of the related pension liability.

Other key assumptions for pension obligations are based in part on current market conditions.

Share based payments

We operate an equity settled share based compensation plan.

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The fair value of the employee services received under share based payment plans is recognized as an expense in the Consolidated Income Statement. Fair value is calculated by using the Black Scholes Option Pricing Model for share option schemes. The amount charged over the vesting period is determined by reference to the fair value of share incentives excluding the impact of any non-market vesting conditions. Non-market vesting conditions are considered within the assumptions to estimate the number of share incentives that are expected to vest. The impact of the revision of original estimates, if any, is recognized in the Consolidated Income Statement over the remaining vesting period with corresponding adjustments made to equity. The cash payment is accounted for as a reduction to shareholders’ equity, except when the cash settlement exceeds the fair value of the equity instruments that would have been issued, for which such amount is recorded to expense.

The application of both the Black-Scholes Option Pricing Model and the Binomial method require the application of a number of judgments including volatility, risk free interest rate, and expected life to exercise. Accordingly the recognition of the fair value expense of the employee services received under share based payment plans could vary if significantly different assumptions were applied to the valuation models.

Control and consolidation

Subsidiaries are fully consolidated from the date on which control is transferred to us. On March 2, 2015, we completed an acquisition of 90% interest in The British International Schools Group (Vietnam). In accordance with IFRS 10 — Consolidated Financial Statements, the Group gained control of BIS Vietnam from January 1, 2015 and incorporated the results from the same date. Financial and operating control was deemed to be gained from January 1, 2015, because we obtained power over the relevant activities of Vietnam (including the right to appoint key staff and set fees) and the risks and rewards of Vietnam. After certain administrative matters were concluded, the acquisition was completed on March 2, 2015. The impact of consolidation from January 1, 2015 increased Revenue by $9.0 million and EBITDA by $1.4 million.

On February 26, 2016, the Group established a dual-curriculum school, Nord Anglia Chinese International School Shanghai, by utilizing a legal structure through a structured entity which involves not owning directly the equity interest in the school. In accordance with IFRS 10 - Consolidated financial statements, the Group gained effective control and incorporated the results from the same date.

Functional currency

In assessing the functional currencies of our subsidiaries, management exercises judgement in relation to whether the subsidiaries are to be treated as an extension of the reporting entity or whether they operate with a significant degree of autonomy. For those subsidiaries that are not deemed to have local autonomy they follow the functional currency of the parent company or that of another company they are operating on behalf of. For those subsidiaries that are deemed to have local activity / autonomy, the second stage of the assessment is to review factors that impact the functional currency at the local level such as the currency that mainly influences the sales price for its goods and services and the labour materials and other costs of providing goods and services.

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Taxation

Deferred tax liabilities of $2.1 million (2015 - $3.2 million, 2014 - $1.9 million) on assessable temporary differences have been recognized on undistributed earnings of $20.9 million (2015 - $32.3 million, 2014 - $19.0 million). There are undistributed earnings of $52.1 million (2015 - $48.5 million, 2014 - $38.6 million) which, if paid out as dividends, would be subject to tax in the hands of the recipient. An assessable temporary difference exists, but no deferred tax liability has been recognized on such undistributed earnings as the parent entity is able to control the timing of the distributions from the subsidiaries and it is not expected to distribute these profits in the foreseeable future. The undistributed earnings will be permanently reinvested. The tax impact if such earnings were distributed would be $5.2 million (2015 - $2.5 million, 2014 - $2.0 million).

Deferred tax assets are recognized for unused tax losses to the extent that it is probable that taxable profit will be available against which the losses can be utilized. Significant management judgement is required to determine the amount of deferred tax assets that can be recognized, based upon the likely timing and the level of future taxable profits. We have $79.0 million of recognized deferred tax assets, including $38.1 million of tax losses carried forward and other recognized timing differences of $40.9 million. The deferred tax asset on recognized tax losses relate mainly to the US, amounting to $34.5 million where expiration is 20 years and Switzerland of $2.6 million where expiration is 6 years, and others where there is no time expiration. We also have $49.7 million of unrecognized tax losses carried forward. These losses relate to subsidiaries that have a history of losses, which do not expire, and may not be used to offset taxable income elsewhere in the group. The subsidiaries neither have any taxable temporary difference nor any opportunities available that could partly support the recognition of these losses as deferred tax assets. On this basis, we have determined that we cannot recognize deferred tax assets on the tax losses carried forward. If we were able to recognize all unrecognized deferred tax assets, profit and equity would have increased by $49.7 million net based on the statutory tax rate of each respective country and company where we do not recognize a deferred tax asset. This would lead to a total deferred tax asset of $128.7 million. Further details on deferred taxes are disclosed in Note 15 to our audited consolidated financial statements included in this annual report.

We are subject to income taxes in numerous jurisdictions but also enjoy tax concessions and benefits in jurisdictions including Hong Kong, Thailand and Mexico. Significant judgement is required in determining the worldwide provision for income taxes. There are transactions and calculations for which the ultimate tax determination is uncertain during the ordinary course of business. We recognize liabilities for potential tax audit issues based on estimates of whether additional taxes will be due. Where the final tax outcome of these matters is different from the amounts that were recorded initially, such differences will impact the income tax and deferred tax provisions in the period in which such determination is made. We believe that we have provided for all probable and estimable tax liabilities and thus therefore does not expect any liability arising from audits to have a material impact on the Group’s results of operations, liquidity, capital resources or financial position.

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Our Results of Operations

The following table sets forth income statement data as a percentage of revenue indicated.

	Year Ended August 31,
	2014				2015				2016
	$ millions		% Revenue		$ millions		% Revenue		$ millions		% Revenue
Revenue	474.6		100.0	%	573.1		100.0	%	856.0		100.0	%
Cost of sales	(280.3	)	(59.1	)%	(355.8	)	(62.1	)%	(522.2	)	(61.0	)%
Gross profit	194.3		*40.9*	%	217.3		*37.9*	%	333.8		*39.0*	%
Selling, general and administrative expenses	(96.9	)	(20.4	)%	(129.8	)	(22.6	)%	(192.7	)	(22.5	)%
Depreciation	(2.0	)	(0.4	)%	(0.7	)	(0.1	)%	(0.8	)	(0.1	)%
Amortization	(10.4	)	(2.2	)%	(13.9	)	(2.4	)%	(18.7	)	(2.2	)%
Impairment	—		—		—		—		(1.0	)	(0.1	)%
Other gains/(losses)	2.1		0.4	%	12.4		2.2	%	13.4		1.5	%
Exceptional expenses	(100.2	)	(21.1	)%	(18.8	)	(3.3	)%	(8.8	)	(1.0	)%
Total expenses	(207.4	)	*(43.7*	)%	(150.8	)	*(26.3*	)%	(208.6	)	*(24.4*	)%
Operating profit/(loss)	(13.1	)	*(2.8*	)%	66.5		*11.6*	%	125.2		*14.6*	%
Finance income	2.0		0.4	%	2.4		0.4	%	2.3		0.3	%
Finance expense	(55.5	)	(11.7	)%	(48.7	)	(8.5	)%	(65.9	)	(7.7	)%
Net finance expense	(53.5	)	*(11.3*	)%	(46.3	)	*(8.1*	)%	(63.6	)	*(7.4*	)%
(Loss)/profit before income tax	(66.6	)	(14.0	)%	20.2		3.5	%	61.6		7.2	%
Income tax expense	(23.6	)	(5.0	)%	(12.5	)	(2.2	)%	(12.4	)	(1.4	)%
(Loss)/profit for the year	(90.2	)	*(19.0*	)%	7.7		*1.3*	%	49.2		*5.8*	%
Adjusted EBITDA	127.4		*26.8*	%	130.7		*22.8*	%	207.3		*24.2*	%
Adjusted Net Income	22.8		*4.8*	%	41.6		*7.3*	%	67.5		*7.9*	%

Year ended August 31, 2016 compared to year ended August 31, 2015

Revenue

Revenue increased $282.9 million, or 49.4% (54.7% on a constant currency basis(1)), from $573.1 million in fiscal 2015 to $856.0 million in fiscal 2016. This increase was due to increases in FTEs and tuition fees at our existing schools and the full year impact of the schools we acquired in Vietnam, China, Mexico, Switzerland and the United States in fiscal 2015.

Revenue from our premium schools increased $291.7 million, or 52.2% (57.5% on a constant currency basis), from $559.3 million in fiscal 2015 to $851.0 million in fiscal 2016. This increase was primarily due to organic FTE growth and increases in tuition fees as well as the impact of the schools we acquired in Vietnam, China, Mexico, United States and Switzerland in fiscal 2015. Of our premium schools revenue, $298.0 million and $49.7 million was attributable to the schools we acquired in Vietnam, China, Mexico, United States and Switzerland, in fiscal 2016 and fiscal 2015, respectively.

Other revenue decreased $8.8 million, or 64.1%, from $13.8 million in fiscal 2015 to $5.0 million in fiscal 2016. This decrease was primarily due to the end of a learning services contract in the UK during fiscal 2015.

Cost of Sales

Cost of sales increased by $166.4 million, or 46.8% (51.7% on a constant currency basis), from $355.8 million in fiscal 2015 to $522.2 million in fiscal 2016. The increase was primarily due to increased direct costs associated with the number of teachers added as a result of the school we opened in Chicago in September 2015 and the schools we acquired in Vietnam, China, Mexico, the United States and Switzerland in fiscal 2015. This cost of sales increase was partly offset by the lower cost of sales associated with the reduced learning services contracts, which resulted in a reduction in the number of consultants we employed.

Gross Profit

Gross profit increased $116.5 million, or 53.6% (59.8% on a constant currency basis), from $217.3 million for the fiscal 2015 to $333.8 million in fiscal 2016, resulting in a gross profit margin of 39.0% for fiscal 2016 compared to 37.9% for fiscal 2015. The increase in margin was largely due to the impact of a full quarter contribution from the schools we acquired during Q4 FY2015 in Q4 FY2016.

(1) Constant currency basis calculated by applying the current period foreign exchange rate to the comparable prior period results in local currency, and then calculating the variance in US dollars.

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Selling, General and Administrative Expenses

Selling, general and administrative (“SGA”) expenses increased $62.9 million, or 48.5%, from $129.8 million for fiscal 2015 to $192.7 million for fiscal 2016. The SGA expenses as a percentage of revenue remained largely unchanged at 22.6% for fiscal 2015 compared to 22.5% for fiscal 2016.

Depreciation & Amortization Expenses

Depreciation expense increased $0.1 million, or 13.3%, from $0.7 million in fiscal 2015 to $0.8 million in fiscal 2016. Total depreciation, including depreciation charged to Cost of Sales, increased by $11.9 million from $34.6 million in fiscal 2015 to $46.5 million in fiscal 2016, largely reflecting the impact of the new greenfield school in Chicago opened in September 2015 and the impact of the acquisitions completed in fiscal 2015.

Amortization expense on intangible assets increased $4.8 million, or 34.8%, from $13.9 million in fiscal 2015 to $18.7 million in fiscal 2016 due to the impact of the acquisitions completed in fiscal 2015.

Other gains/(losses)

Other gains increased by $1.0 million from a gain of $12.4 million in fiscal 2015 to a gain of $13.4 million in fiscal 2016. The gain in 2015 was made up of a $14.0 million foreign exchange gain on the revaluation of intercompany balances denominated in a currency other than our functional currency of each subsidiary offset by a loss of $1.6 million on fair value revaluation of derivatives. The respective numbers for fiscal 2016 are a gain on foreign exchange of $17.2 million, offset by a loss of the fair value revaluation of derivatives of $3.8 million.

Exceptional Expenses

Exceptional expenses decreased $10.0 million from $18.8 million in fiscal 2015 to $8.8 million in fiscal 2016. The charge of $18.8 million in fiscal 2015 includes a $10.0 million fee on a loan commitment fee taken out as part of the Meritas acquisition, and $5.3 million relating to the acquisitions and integration costs of acquisitions. The charge of $8.8 million in fiscal 2016 includes $3.7 million relating to the integration costs of the acquisitions completed during fiscal 2015 and $3.6 million related to costs from the sale and leaseback transaction.

Net Financing Expense

Net financing expense increased by $17.3 million, or 37.5%, from $46.3 million for fiscal 2015 to $63.6 million for fiscal 2016, due to the increased interest expense from the additional $150.0 million term loans incurred in connection with the Vietnam acquisition on March 3, 2015, and the additional $240.0 million term loans and CHF 200.0 million 5.75% senior notes incurred on June 25, 2015 in connection with the Meritas acquisition. In addition, the charge for fiscal 2016 includes a foreign exchange gain of $4.7 million on the CHF senior secured notes compared to a loss of $9.7 million in fiscal 2015.

Income Tax Expense

Income tax expense decreased by $0.1 million, or 1.0%, from $12.5 million in fiscal 2015 to $12.4 million in fiscal 2016. The decrease was primarily due to an increase in current tax expense of $7.5 million offset by a $7.6 million increase in deferred tax income from $9.7 million in fiscal 2015 to $17.3 million in fiscal 2016.

Profit for the Year

As a result of the foregoing, we made a profit in fiscal 2016 of $49.2 million compared to a profit of $7.7 million in fiscal 2015.

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Adjusted EBITDA

Adjusted EBITDA increased by $76.6 million, or 58.6% (65.9% on a constant currency basis), from $130.7 million for fiscal 2015 to $207.3 million for fiscal 2016. Adjusted EBITDA in fiscal 2016 was negatively impacted by the opening of our greenfield school in Chicago in September 2015 and the additional rent from the sale and leaseback transaction completed in fiscal 2016.

Adjusted Net Income

Adjusted net income increased by $25.9 million, or 61.9%, from $41.6 million in fiscal 2015 to $67.5 million in fiscal 2016. This improvement was primarily due to the increase in Adjusted EBITDA.

Year ended August 31, 2015 compared to year ended August 31, 2014

Revenue

Revenue increased $98.5 million, or 20.8% (24.4% on a constant currency basis), from $474.6 million in fiscal 2014 to $573.1 million in fiscal 2015. This increase was due to increases in FTEs and tuition fees at our existing schools and the impact of the schools we acquired in Singapore and Cambodia in fiscal 2014 and in Vietnam, China, Mexico, Switzerland and the United States in fiscal 2015.

Revenue from our premium schools increased $102.9 million, or 22.5% (26.7% on a constant currency basis), from $456.4 million in fiscal 2014 to $559.3 million in fiscal 2015. This increase was primarily due to an increase in average FTEs and increases in tuition fees as well as the impact of the schools we acquired in Singapore and Cambodia in fiscal 2014 and Vietnam, China, Mexico, United States and Switzerland in fiscal 2015. $69.0 million of our premium schools revenue in fiscal 2015 was attributable to the schools we acquired in Singapore, Cambodia, Vietnam, China, Mexico, United States and Switzerland.

Other revenue decreased $4.4 million, or 24.0%, from $18.2 million in fiscal 2014 to $13.8 million in fiscal 2015. This decrease was primarily due to the end of a learning services contract in the UK.

Cost of Sales

Cost of sales increased by $75.5 million, or 26.9% (31.5% on a constant currency basis), from $280.3 million in fiscal 2014 to $355.8 million in fiscal 2015. The increase was primarily due to increased direct costs associated with the number of teachers added as a result of the schools we opened in Dubai and Hong Kong at the beginning of fiscal 2015 and the schools we acquired in Singapore, Cambodia, Vietnam, China, Mexico, United States and Switzerland. This cost of sales increase was partly offset by the lower cost of sales associated with the reduced learning services contracts, which resulted in a reduction in the number of consultants we employed.

Gross Profit

Gross profit increased $23.0 million, or 11.8%, from $194.3 million for the fiscal 2014 to $217.3 million in fiscal 2015, resulting in a gross profit margin of 37.9% for fiscal 2015 compared to 40.9% for fiscal 2014. The reduction in margin was largely due to the adverse impact of the loss-making schools opened in Dubai and Aubonne, strong growth in the lower margin Middle East and South East Asia regions and the acquisition of schools in Vietnam and from Meritas with a lower gross margin than our existing schools, partially offset by tuition fee increases in excess of cost inflation and increased FTEs within our schools.

Selling, General and Administrative Expenses

Selling, general and administrative (“SGA”) expenses increased $32.9 million, or 34.0%, from $96.9 million for fiscal 2014 to $129.8 million for fiscal 2015. The SGA expenses as a percentage of revenue increased from 20.4% in fiscal 2014 to 22.6% in fiscal 2015. This was mainly due to the timing of the acquisition of six schools from Meritas which was completed on June 25, 2015. The results for fiscal year 2015 therefore includes two full months of SGA and very little revenue or gross margin contribution.

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Depreciation & Amortization Expenses

Depreciation expense decreased $1.3 million, or 65.0%, from $2.0 million in fiscal 2014 to $0.7 million in fiscal 2015. Total depreciation, including depreciation charged to Cost of Sales increased by $11.2 million from $23.4 million in fiscal 2014 to $34.6 million in fiscal 2015, largely reflecting the impact of the new greenfield schools opened in September 2014 and the impact of the acquisitions completed in fiscal 2014 and fiscal 2015.

Amortization expense on intangible assets increased $3.5 million, or 33.7%, from $10.4 million in fiscal 2014 to $13.9 million in fiscal 2015 due to the impact of the acquisitions mentioned above.

Other gains/(losses)

In fiscal 2015, we incurred a gain of $12.4 million made up of a $14.0 million foreign exchange gain on the revaluation of intercompany balance denominated in a currency other than our functional currency, partly offset by a loss of $1.6 million on fair value revaluation of derivatives. The respective numbers for fiscal 2014 are a gain on foreign exchange of $4.0 million, offset by a loss of the fair value revaluation of derivatives of $1.9 million.

Exceptional Expenses

Exceptional expenses decreased $81.4 million from $100.2 million in fiscal 2014 to $18.8 million in fiscal 2015. The charge of $100.2 million in fiscal 2014 reflects the impact of our IPO and refinancing completed in the third quarter, including charges of $89.9 million related to the redemption of our outstanding notes (including the release of $12.9 million of prepaid costs). We also incurred an exceptional charge of $2.5 million in connection with the transfer of our transactional banking and revolving credit facility from Barclays Bank PLC to the Hong Kong and Shanghai Bank in January 2014. The charge of $18.8 million in fiscal 2015 includes a $10.0 million fee on a loan commitment fee taken out as part of the Meritas acquisition, and $5.3 million relating to acquisitions and integration costs of acquisitions.

Net Financing Expense

Net financing expense decreased by $7.2 million, or 13.5%, from $53.5 million for fiscal 2014 to $46.3 million for fiscal 2015, due to the reduced interest expense on the $515.0 million term loan facility following the completion of our IPO partially offset by the increased interest expense from the additional $150.0 million term loans incurred in connection with the Vietnam acquisition on March 3, 2015, and the additional $240.0 million term loans and CHF 200.0 million 5.75% senior notes incurred on June 25, 2015 in connection with the Meritas acquisition. The $515.0 million term loan and proceeds from our initial public offering were used to redeem the $490.0 million 10.25% senior secured notes and $150.0 million 8.50%/9.50% PIK toggle notes, both of which were fully redeemed as of April 14, 2014. In addition, the fiscal 2015 charge includes a foreign exchange loss of $9.7 million on the CHF senior secured notes.

Income Tax Expense

Income tax expense decreased by $11.1 million, or 47.0%, from $23.6 million in fiscal 2014 to $12.5 million in fiscal 2015. The decrease was primarily due to an increase in current tax expense of $0.2 million offset by a $11.3 million reduction in deferred tax expense from a charge of $1.6 million in fiscal 2014 compared to a credit of $9.7 million in fiscal 2015.

Profit for the Year

As a result of the foregoing, we made a profit in fiscal 2015 of $7.7 million compared to a loss of $90.2 million in fiscal 2014.

Adjusted EBITDA

Adjusted EBITDA increased by $3.3 million, or 2.6% (4.1% on a constant currency basis), from $127.4 million for fiscal 2014 to $130.7 million for fiscal 2015. Adjusted EBITDA in fiscal 2015 was negatively impacted from the timing of the acquisition of the six schools from Meritas and the inclusion of losses from our start-up schools in Aubonne and Dubai. Excluding our loss making start-up schools which contributed revenue of $17.9 million, our Adjusted EBITDA in fiscal 2015 would have been $6.4 million higher at $137.1 million and our Adjusted EBITDA margin would have been 1.9% better at 24.7%.

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Adjusted Net Income

Adjusted net income increased by $18.8 million, or 82.5%, from $22.8 million in fiscal 2014 to $41.6 million in fiscal 2015. This improvement was primarily due to the increase in Adjusted EBITDA and a $3.3 million reduction in our net interest charge, partially offset by the timing of the Meritas acquisition which had a negative impact on operating profit.

B. Liquidity and Capital Resources

The following table sets forth certain information relating to our cash flows for fiscal 2014, 2015 and 2016:

	Year Ended August 31,
$ millions	2014		2015		2016
Net cash generated from/(used in) operating activities	(42.7	)	86.6		125.1
Net cash generated from/(used in) investing activities	(87.3	)	(709.0	)	40.2
Net cash (used in)/generated from financing activities	125.1		699.9		(11.5	)
Cash and cash equivalents (end of period) (including overdrafts)	166.2		225.9		371.9
Cash and cash equivalents (end of period) (excluding overdrafts)(1)	256.4		316.6		371.9

(1) For information about cash and cash equivalents held in jurisdictions where foreign exchange or other regulatory controls may limit the distribution of cash to subsidiaries in jurisdictions without foreign exchange or other regulatory controls, see Note 25(c) to our audited financial statements included elsewhere in this annual report; for information about undistributed earnings we consider permanently reinvested in jurisdictions with foreign exchange or other regulatory controls, see Note 10 to our audited financial statements included elsewhere in this annual report.

Our on-going operations require the availability of cash to service debt, fund working capital needs, fund maintenance and capacity-expansion capital expenditure and expenses associated with the acquisition of schools.

We believe that our operating cash flows and available amounts under our senior secured revolving credit facility will be sufficient to fund our working capital requirements, anticipated capital expenditures and debt service requirements for the next twelve months.

Net Cash generated from/(used in) Operating Activities

Net cash generated from operating activities was $125.1 million in fiscal 2016, compared to net cash generated from operating activities of $86.6 million in fiscal 2015. The increase was due to increased profit before taxation of $61.6 million in fiscal 2016 compared with $20.2 million in fiscal 2015, partially offset by a decrease in cash inflow from changes in working capital of $31.1 million in fiscal 2016 compared to $37.1 million in fiscal 2015, increased tax paid of $28.9 million in fiscal 2016 compared to $19.9 million in fiscal 2015 and increased interest paid and financing costs of $67.5 million in fiscal 2016 compared to $60.5 million in fiscal 2015. Due to the receipt of a portion of tuition fees in advance of the school and fiscal year, change in working capital for the fiscal year typically results in a positive inflow. The extent of the inflow may be impacted by the timing of acquisitions and the tuition receipt timing for the school acquired.

Net cash generated from operating activities was $86.6 million, in fiscal 2015, compared to net cash used in operating activities of $42.7 million in fiscal 2014. The increase was due to a cash inflow from changes in working capital of $37.1 million compared to $23.3 million in fiscal 2014, decreased interest paid of $31.2 million in fiscal 2015 compared to $73.4 million in fiscal 2014, lower tax paid of $19.9 million in fiscal 2015 compared to $25.2 million in fiscal 2014 and the payment of financing related costs and commitment fees of $29.3 million in fiscal 2015 compared to bond redemption expenses paid of $77.0 million in fiscal 2014.

Net cash used in operating activities was $42.7 million in fiscal 2014, primarily due to an operating profit before tax and non-cash expenses of $109.6 million and a cash inflow from working capital changes of $23.3 million, offset by tax paid of $25.2 million, interest paid of $73.4 million and the payment of $77.0 million in make-whole premium on redemption of our notes. This represents a decrease of $63.6 million from the $12.3 million net cash generated from operating activities in fiscal 2013. The main reasons for the decrease were an increase in interest paid of $27.6 million and the payment of $77.0 million in make-whole premium on redemption of our notes.

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Net Cash generated from/(used in) Investing Activities

Net cash generated from investing activities was $40.2 million in fiscal 2016, compared to net cash used in investing activities of $709.0 million in fiscal 2015. This was primarily due to a $167.0 million inflow from the proceeds of the sale and leaseback transaction, offset by capital expenditure of $94.3 million and $33.6 million for the acquisition of subsidiaries (net of cash acquired) which included the final deferred payment for the Meritas acquisition. Capital expenditure included the impact of the significant increase in the number of schools following our acquisitions in China, United States, Mexico, Switzerland, Vietnam and Cambodia as well as our new campus in Houston and new bilingual school in Shanghai which opened in September 2016.

Net cash used in investing activities was $709.0 million in fiscal 2015, an increase of $621.7 million from $87.3 million in fiscal 2014. This was primarily due to the net cash used in the acquisition of four schools from BIS Vietnam ($105.6 million) and six schools from Meritas ($541.5 million) and capital expenditure of $62.3 million. Capital expenditure included the impact of the significant increase in the number of schools following our acquisitions in China, United States, Mexico, Switzerland, Vietnam and Cambodia as well as our new school in Chicago which opened in September 2015.

Net cash used in investing activities was $87.3 million in fiscal 2014. This was primarily due to the net cash used in the acquisition of our schools in Singapore ($15.5 million) and Cambodia ($14.9 million) and capital expenditure of $53.6 million. Capital expenditure included the impact of the significant increase in the number of schools following our acquisitions in Thailand, China, North America, Qatar, Spain, Singapore and Cambodia as well as the refurbishment expenditure on our school in Hong Kong and the costs of our new schools in Aubonne and Dubai, which opened in September 2014.

Net Cash (used in)/generated from Financing Activities

Net cash used in financing activities was $11.5 million in fiscal 2016. Net cash from financing activities was $699.9 million in fiscal 2015. The outflow was primarily from scheduled amortization payments on our senior secured credit facilities ($9.1 million).

Net cash from financing activities was $699.9 million in fiscal 2015. The inflow was primarily from the proceeds of the issuance of share capital ($126.2 million), the issuance of our 5.75% senior secured notes ($217.7 million) and the increase in our term loan facilities during fiscal 2015 ($390.0 million) offset by repayment of our revolving credit facility ($20.0 million) and repayments on our term loan facilities ($6.5 million).

Net cash from financing activities was $125.1 million in fiscal 2014. The inflow was primarily due to the IPO proceeds net of fees and expenses of $323.8 million and the draw-down of our new $515.0 million senior secured term loan in March 2014 offset by repayment of the notes of $640.0 million and the payment of $63.5 million to redeem preference shares and deferred shares on completion of the IPO.

Borrowings

The following table sets forth the carrying value of our outstanding long-term debt as of August 31, 2016.

	August 31, 2016
	(in millions of dollars)
Bank overdraft	—
Term Loan	866.5
Revolving Credit Facility	—
5.75% Senior Secured Notes	196.7
Total debt	1,063.2
Less current maturities	(5.0	)
Long-term debt	1,058.2

On March 2, 2015, we incurred an incremental $150.0 million principal amount of term loan pursuant to an amendment of our senior secured credit facilities. $112.2 million of the amount borrowed was used to partially fund our acquisition of BIS Vietnam.

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On June 25, 2015, we incurred incremental term loans of $240.0 million pursuant to an amendment and restatement of our senior secured credit facilities. Term loans under our amended and restated senior secured credit facilities bear interest based on LIBOR (subject to a 1.00% interest rate floor) plus a margin percentage of 4.00% per annum, with a step down to 3.75% per annum if total net leverage ratio is less than or equal to 4.5x. Revolving loans bear interest at LIBOR plus a margin ranging from 2.75% to 3.75% (currently 3.75%) depending on our total net leverage ratio as set forth below:

Total Net Leverage Ratio		Applicable Margin
> 4.50:1.00		3.75%
< 4.50:1.00 > 3.50:1.00		3.50%
< 3.50:1.00 > 3.00:1.00		3.25%
< 3.00:1.00 > 2.50:1.00		3.00%
< 2.50:1.00		2.75%

On March 14, 2016, we entered into six separate cross currency swaps totalling $210.0 million notional value maturing on August 31, 2017, August 31, 2018 and August 31, 2019, each with an embedded FX option that limits the potential gains on final exchange. Under each contract, we swapped a USD floating rate liability under our term loans for a RMB or euro fixed interest rate liability with an obligation to pay a fixed rate on the RMB or euro equivalent amount. At maturity there is also the payment of principal amounts between currencies.

The outstanding CHF 200.0 million senior notes described below and the cross currency swaps reduce our exposure to foreign currency fluctuations and lock in fixed local currency interest rates.

For further information, see note 25 to our audited consolidated financial statements appearing elsewhere in this annual report.

On June 25, 2015, we issued CHF200.0 million in aggregate principal amount of 5.750% senior secured notes due 2022. The issuer of the notes and the borrower under the senior secured credit facilities is a U.S. domestic limited liability company wholly owned by us. The notes and the borrowings under our senior secured credit facilities are guaranteed by us and certain of our subsidiaries and are secured by collateral primarily consisting of share pledges and security interests in assets of certain subsidiaries. The collateral is shared between holders of the notes and lenders under our senior secured credit facilities on an equal and ratable basis.

At any time prior to July 15, 2018, we may, subject to certain exceptions, on any one or more occasions, redeem up to 35% of the aggregate principal amount of the notes at a redemption price of 105.750 % of their principal amount, plus accrued and unpaid interest to the redemption date, with the net proceeds of certain equity offerings.

At any time prior to July 15, 2018, we may, on any one or more occasions, at our option redeem all or part of the notes, at a redemption price equal to 100% of the principal amount of the notes, plus an applicable redemption premium and accrued and unpaid interest to the redemption date.

At any time on or after July 15, 2018 and prior to maturity, we may on any one or more occasions at our option redeem all or part of the notes, subject to certain conditions, at the redemption prices set forth below, plus accrued and unpaid interest to the redemption date.

Year		Redemption Price
2018		102.875%
2019		101.438%
2020 and thereafter		100.000%

We may redeem all, but not less than all, of the notes at a redemption price equal to 100% of the principal amount of the notes outstanding plus accrued and unpaid interest upon the occurrence of certain changes in applicable tax law.

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For purposes of the indenture governing the notes, the below sets forth the calculations of our “Consolidated EBITDA” and “Consolidated Interest Expense” (each as defined in the indenture) for the four quarters ended August 31, 2016, after giving effect on a pro forma basis to acquisitions and related financings that occurred since May 1, 2014 and the sale and lease back of the properties in which we operate Windermere Preparatory School, North Broward Preparatory School and The Village School (see “Item 10. Additional Information—C. Material Contracts”):

$ millions	Twelve Months Ended August 31, 2016

Adjusted EBITDA	207.3
Interest Income	2.3
Consolidated EBITDA	209.6
Full year impact of the sale and lease back(1)	(9.2	)
Consolidated EBITDA (adjusted for the full year impact of acquisitions)	200.4
Consolidated Interest Expense (on a pro forma basis)	66.6

(1) Incorporates the full twelve-month impact of the sale and lease back as if those transactions had occurred as of September 1, 2015

Our senior secured credit facilities and the indenture governing the notes contain a number of covenants that, among other things and subject to certain exceptions, may restrict our ability to:

· incur additional debt;

· pay dividends or make other distributions or repurchase or redeem our shares;

· make investments; sell assets, including capital stock of subsidiaries;

· enter into agreements restricting our subsidiaries’ ability to pay dividends;

· consolidate, merge, sell or otherwise dispose of all or substantially all of our assets;

· enter into sale and leaseback transactions;

· enter into transactions with our affiliates; and

· incur liens.

In addition, the credit agreement requires us to maintain a pro forma net leverage ratio of not greater than 5.25:1.00 if the sum of our (i) revolving loans and (ii) letter of credit/bank guarantee usage in excess of $20.0 million exceeds 30% of our aggregate revolving commitments.

The credit agreement and indenture also contain customary events of default and the credit agreement contains customary affirmative covenants.

Capital Expenditures

Our capital expenditures were $53.6 million, $62.3 million and $94.3 million in fiscal 2014, 2015 and 2016 respectively. Our capital expenditures were primarily related to capacity expansion and maintenance. Our maintenance capital expenditures were $14.0 million, $18.7 million and $29.0 million in fiscal 2014, 2015 and 2016, respectively. We fund our capital expenditures primarily by cash generated from our operations, sale of shares, borrowings from commercial banks and the issuance of debt securities. We expect to fund future capital expenditures primarily by cash generated from operating and financing activities.

C. Research and Development. Patents and Licenses. Etc.

We do not conduct research and development activities.

D. Trend Information

Other than as disclosed elsewhere in this annual report, we are not aware of any trends, uncertainties, demands, commitments or events since August 31, 2016 that are reasonably likely to have a material adverse effect on our revenues, income, profitability, liquidity or capital resources, or that would cause the disclosed financial information to be not necessarily indicative of future operating results or financial conditions.

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E. Off-Balance Sheet Arrangements

We do not have any material off- balance sheet arrangements. We are sometimes required to provide bid or performance bank guarantees on certain of our learning service contracts. These bank guarantees provide legal evidence of our liability to our client or financial institution acting on their behalf, so that if we should default, the third party can require payment directly from the bank and we would be liable for the debt. As of August 31, 2016, we had $7.5 million in such guarantees.

F. Contractual Obligations

The following table sets forth our contractual obligations and commercial commitments as of August 31, 2016:

Contractual Obligations (in millions of dollars)	Total	Less than 1 year	1 — 3 years	3 — 5 years	More than 5 years

Long-Term Debt Obligations	1,359.0	66.9	129.5	952.5	210.1
Operating Lease Obligations	1,843.6	111.4	167.3	167.4	1,397.5
Purchase Obligations(1)	13.8	13.8	—	—	—
Cross Currency Swaps(2)	1.1	0.6	0.5	—	—
Other Long-Term Liabilities(3)	269.9	21.9	17.7	8.8	221.5
Total	3,487.4	214.6	315.0	1,128.7	1,829.1

(1) Purchase obligations represent committed purchases for services or goods that have not been received as at August 31, 2016, primarily fixed asset purchases at our schools in Hong Kong, Warsaw, Budapest, Madrid and Geneva.

(2) Amounts represent the net cash outflow under the cross currency interest rate swaps outstanding at August 31, 2016 based on exchange rates as at August 31, 2016. The cross currency interest rate swaps are recorded on the consolidated balance sheet at fair value. For additional information, see Note 25 to our audited consolidated financial statements included elsewhere in this annual report.

(3) Primarily relates to deferred consideration for Vietnam and finance leases.

Except as disclosed above and in Note 28 to our audited consolidated financial statements included elsewhere in this annual report, as of August 31, 2016, we did not have any material contingent liabilities or guarantees.

G. Safe Harbor

See the section entitled “Forward-Looking Statements” at the beginning of this annual report.

Item 6. Directors, Senior Management and Employees

A. Directors and Senior Management

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

Name	Age	Position/Title
*Directors*
Alan Kelsey	67	Chairman
Andrew Fitzmaurice	56	Chief Executive Officer and Director
Graeme Halder	53	Chief Financial Officer and Director
Jack Hennessy	47	Director
Kosmas Kalliarekos	51	Director
Carlos Watson	47	Director
Nicholas Baird	54	Director
Louis T. Hsieh	52	Director

*Executive Officers*
Philippe Lagger	48	Corporate Development Director
Nicola Duggan Redfern	47	Group Human Resources Director

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Alan Kelsey has served as a member of our board of directors since November 2003 and became the chairman in January 2005. Prior to joining us, Mr. Kelsey had more than 30 years’ experience in the investment banking industry and commerce. Mr. Kelsey was the group corporate development director at National Express Group PLC, where he served as one of three executive directors between 1996 and 1998. Also, Mr. Kelsey served as the senior independent director at PD Ports PLC (2004 to 2006) and at Stobart Group Ltd. (2011 to 2013). In March 2013 he was appointed Chairman of Explore Learning. Mr. Kelsey has a BA and MA from Oxford University and is a fellow of the Institute of Logistics and Transport. In addition, Mr. Kelsey is a trustee of the Prince’s Teaching Institute.

Andrew Fitzmaurice has served as our chief executive officer and as a member of our board since April 2003. From March 2000 until March 2003, Mr. Fitzmaurice served as chief executive officer of easyCar.com, an international online automobile rental company. Prior to his tenure at easyCar.com, Mr. Fitzmaurice spent 13 years at TNT Express UK where he served in a variety of positions, including as division managing director. Mr. Fitzmaurice graduated from the University of Wales Cardiff, Magna Cum Laude, with a degree in economics.

Graeme Halder has served as our chief financial officer since October 2010. Mr. Halder has more than 20 years’ experience serving as a director and chief financial officer of both privately held and publicly listed companies with turnover ranging from $75 million to $3 billion in sectors including hospitality and leisure, retail and security services. Prior to joining us, Mr. Halder was the interim chief financial officer of Camco International, an AIM listed company with operations in China, Southeast Asia, Russia, Africa and the United States. For four years, Mr. Halder served as chief financial officer of Command Security Corporation, a NASDAQ quoted company with offices throughout the US. Mr. Halder has been an Associate Chartered Accountant since 1987.

Jack Hennessy has served as a member of our board of directors since August 2008. Since January 2001, Mr. Hennessy has served as a managing director of Baring Private Equity Asia Pte. Ltd. and also serves as a member of the investment committee and portfolio management committee of Baring Private Equity Asia Group Limited. Mr. Hennessy serves on the board of directors of various companies, including Courts Asia Limited and Hexaware Technologies Limited. Mr. Hennessy graduated from Monash University in Australia with degrees in engineering and science and received an M.B.A. from INSEAD.

Kosmas Kalliarekos has served as a member of our board of directors since August 2008. Since 2008, Mr. Kalliarekos has served as a managing director of Baring Private Equity Asia Limited and also serves as a member of the portfolio management committee of Baring Private Equity Asia Group Limited. Prior to joining Baring Private Equity Asia Limited, Mr. Kalliarekos was a founding member, senior partner and member of the executive committee of The Parthenon Group LLC, a global consulting firm, where he founded and headed the Global Education Industry Center of Excellence. Mr. Kalliarekos serves on the board of directors of various companies, including Hexaware Technologies Limited. Mr. Kalliarekos graduated from The Wharton School of Business at the University of Pennsylvania and received an M.B.A. with high distinction from Harvard Business School.

Carlos Watson has served as a member of our board of directors since March 2014. Mr. Watson is the founder and CEO of Ozymandias (“Ozy”), a digital news and culture magazine launched in September 2013. From 2010 to 2012, Mr. Watson served as Managing Director in the investment banking division of The Goldman Sachs Group, Inc., where he focused on media and for-profit education companies. Prior to joining Goldman Sachs, from 1995 to 1997, Mr. Watson worked as a consultant at McKinsey & Company, where he advised a wide range of Fortune 500 companies. In 1997, Mr. Watson founded a successful venture-backed education company, Achieva College Prep Services, which he sold to The Washington Post Co.’s Kaplan education division in 2002. Mr. Watson has also had a distinguished media career, serving as an anchor and analyst for CNN and MSNBC. Mr. Watson won an Emmy Award in 2007 for his television interview specials. Mr. Watson graduated cum laude from Harvard University with an A.B. in government and cum laude from Stanford Law School with a Juris Doctor degree.

Nicholas Baird has served as a member of our board of directors since April 2015. Mr. Baird has been Group Corporate Affairs Director of Centrica plc since March 2014. Before this, he had a long and varied career in Government. He was CEO of UK Trade and Investment, the UK government department that supports British exporters and foreign companies looking to invest in the UK, from June 2011 to December 2013. Previously, Mr. Baird was the Director General in the Foreign and Commonwealth Office leading its work on Europe, the Global Economy and Consular issues (2009-11) and the British Ambassador to Turkey (2006-2009). Mr. Baird speaks Arabic, French, German and Turkish.

Louis T. Hsieh has served as a member of our board of directors since August 2016. Mr. Hsieh is currently a non-executive director and senior advisor to the Chief Executive Officer at New Oriental Education and Technology Group (NYSE:EDU), China’s largest private educational services provider. Mr Hsieh joined New Oriental in 2005 as Chief Financial Officer (2005-2015), served as President (2009-2016), and director (2007-Present). Prior to his time at New Oriental Mr Hsieh held senior executive positions in private equity and investment banking with UBS AG (Managing Director and Asia Tech/Media/Telecom Head), JP Morgan (Vice President) and Credit Suisse, and served as a corporate and securities law attorney at White & Case. Mr. Hsieh holds a B.S. from Stanford University, an MBA from the Harvard Business School, and a JD from the Boalt Hall Law School at UC Berkeley.

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Philippe Lagger has served as our Corporate Development Director since January 2010. Mr. Lagger joined Nord Anglia Education in September 2009 as Managing Director for Collège Champittet. Prior to that, from January 2006 to June 2009 he was Investment Director with the private equity firm Lydian Capital, where he generated and led initiatives in the education, food and leisure sectors. Mr. Lagger started his career in Ciba Specialty Chemicals in Switzerland and India and then became a member of the Tetra Laval Group’s M&A team from February 2000 to December 2005. Mr. Lagger earned an MSc from the Swiss Federal Institute of Technology and an MBA from the International Institute for Management Development in Lausanne.

Nicola Duggan Redfern has served Nord Anglia Education since January 30, 2012. In her role as Group Human Resources Director, based in Hong Kong, Ms. Duggan Redfern is responsible for leading the development, implementation of our human resources strategies across the group. Prior to joining us, Ms. Duggan Redfern worked for HSBC as the Regional Finance Head of Organization Development, working with a community of 2,500 across 22 countries in the Asia Pacific region, as well as the global lead on a number of “people change” projects for the group. Prior to that Ms. Duggan Redfern was the Human Resources Director of a creative arts tertiary institute in Singapore, the ASEAN recruitment lead for IBM, Singapore, and held numerous HR-related roles with Flight Centre in their head office in Brisbane, Australia. Ms. Duggan Redfern graduated with a BSc (Hons) degree in Psychology from the University of Stirling, Scotland.

The business address for each of our executive officers and directors is Level 12, St. George’s Building, 2 Ice House Street, Central, Hong Kong.

Employment Agreements

We have entered into employment agreements with our senior executive officers. Under these employment agreements, each of our executive officers is employed until either we terminate, on three to 12 months’ notice, or the executive officer terminates, on either three or six months’ notice, such employment. We may terminate the employment for cause, at any time, without notice or remuneration, for certain acts of the executive officer, including but not limited to gross misconduct, gross incompetence or willful neglect in the discharge of the executive officer’s duties, a conviction for certain crimes or certain acts of dishonesty or fraud. These agreements do not provide for any special termination benefits, nor do we have other arrangements with these executive officers for special termination benefits.

Each executive officer has agreed to hold, both during and after the employment agreement is earlier terminated, in strict confidence and not to use, except as required in the performance of his duties in connection with the employment, any confidential information, trade secrets, technical data and know-how of our company or the confidential information of any third party, received by us. In addition, each executive officer has agreed to be bound by non-competition restrictions set forth in his or her employment agreement. Specifically, each executive officer has agreed not to, for a period of either three or six months following the termination of the employment agreement, (i) carry on or be employed, engaged, concerned or interested in any business in direct competition with our business and with which the executive officer was involved in the course of employment with us during the 12 months preceding termination; (ii) negotiate with, solicit business from or endeavor to entice away from us, any person or entity who to the executive officer’s knowledge has been our customer, client, agent or supplier or in the habit of dealing with us within 12 months prior to such executive officer’s termination of employment; (iii) undertake to provide in competition with us services similar to those with which the executive officer was concerned during the 12 months prior to termination to any of our customers, clients, agents or suppliers during the 12 months prior to termination with whom the executive officer had dealings; (iv) solicit, interfere with, tender for or endeavor to entice away from us any contract, project or business in which the executive officer had dealings during the 12 months prior to termination; or (v) interfere with, solicit or endeavor to entice away from us, any senior management within 12 months prior to termination of employment with whom the executive officer had dealings during the 12 months prior to termination.

B. Compensation

For the fiscal year ended August 31, 2016, we paid an aggregate of approximately $8.6 million in cash to our directors and executive officers. Total compensation for our directors and executive officers was $15.0 million. The total amount set aside or accrued by us to provide pension, retirement or similar benefits to our directors and our executive management employees with respect to the year ended August 31, 2016 was $0.0 million.

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We have established a discretionary bonus plan which enables the compensation committee to grant cash bonus payments to employees and executive officers based on the attainment of financial or operational objectives as well as individual performance and development objectives. Directors, other than Mr. Andrew Fitzmaurice, who participates in his capacity as Chief Executive Officer, and Mr. Graeme Halder, who participates in his capacity as Chief Financial Officer, are excluded from this plan. The discretionary bonus plan is administered by, and any bonus payments are made at the sole discretion of, the compensation committee.

Our directors and shareholders have authorized our 2014 Equity Incentive Award Plan, which provides for the issuance of up to 9,800,000 of our ordinary shares, of which 3,365,367 shares remain available for issuance as of November 18, 2016. The following table summarizes the awards that we granted to our directors and executive officers during the fiscal year ended August 31, 2016:

	Number of Shares Covered by Award	Aggregate Purchase Price	Exercise Price		Expiration Date
Directors and Executive Officers
Restricted share units	8,162	N/A	N/A		N/A
Options	349,300	N/A	$	20.87	September 24, 2025
	50,300	N/A	$	19.60	October 30, 2025
Performance share units	715,405	N/A	N/A		N/A

The following table summarizes the outstanding awards as of November 18, 2016 that we granted to our directors and executive officers and other individuals as a group:

	Number of Shares Covered by Award	Aggregate Purchase Price		Exercise Price		Expiration Date
Directors and Executive Officers
Restricted share units	15,325	N/A		N/A		N/A

Restricted shares	4,617	$	2,500.00	N/A		N/A
	4,645	$	46.45	N/A		N/A

Options	197,800	N/A		$	18.00	May 30, 2024
	224,100	N/A		$	19.57	January 8, 2025
	349,300	N/A		$	20.87	September 24, 2025
	50,300	N/A		$	19.60	October 30, 2025
	354,200	N/A		$	21.91	September 22, 2026
	134,000	N/A		$	22.00	October 10, 2026
	52,700	N/A		$	24.18	November 17, 2026

Performance Share Units	909,237	N/A		N/A		N/A

All other Plan Participants as a Group
Options	106,400	N/A		$	18.00	May 30, 2024
	23,100	N/A		$	19.58	July 14, 2024
	161,850	N/A		$	19.57	January 8, 2025
	273,800	N/A		$	20.87	September 24, 2025
	12,600	N/A		$	19.60	October 30, 2025
	320,700	N/A		$	21.91	September 22, 2026

Performance Share Units	426,243	N/A		N/A		N/A

2014 Equity Incentive Award Plan

We have adopted the Nord Anglia Education, Inc. 2014 Equity Incentive Award Plan (the “2014 Incentive Plan”). The purpose of the 2014 Incentive Plan is to promote our success and enhance our value by linking the individual interests of our non-employee directors, employees and consultants to those of our shareholders by providing such individuals with an incentive for outstanding performance to generate superior returns to our shareholders. The 2014 Incentive Plan is also intended to provide us flexibility in our ability to motivate, attract, and retain the services of non-employee directors, employees and consultants upon whose judgment, interest and special effort we are largely dependent. The principal features of the 2014 Incentive Plan are summarized below.

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Share Reserve and Award Limits

Under the 2014 Incentive Plan, 9,800,000 of our ordinary shares have been reserved for issuance pursuant to a variety of share-based compensation awards that may be awarded under the 2014 Incentive Plan. The maximum number of our ordinary shares that may be subject to one or more awards granted to any person pursuant to the 2014 Incentive Plan during any calendar year will be 1,200,000 and the maximum amount that may be paid in cash to any one person during any calendar year with respect to one or more awards payable in cash shall be $10.0 million. Such maximums will not, however, apply to the extent that the deduction limitation set forth in Section 162(m) of the Internal Revenue Code of 1986 does not apply to us (because we are a foreign private issuer, are exempt under Section 162(m) transition rules or otherwise). In addition to the foregoing limits, no non-employee director will be granted awards pursuant to the 2014 Incentive Plan with an aggregate value (determined as of the date of grant under applicable accounting standards) in excess of $5.0 million during any fiscal year.

Types of Awards

The types of awards we may grant under the 2014 Incentive Plan include the options to purchase our ordinary shares at a specified price and in a specified period determined by our compensation committee. Under the 2014 Incentive Plan, we may also grant awards of our (1) restricted shares, (2) restricted share units, (3) performance awards, (4) dividend equivalents, (5) share payments, (6) deferred shares, (7) deferred share units and (8) share appreciation rights, under the terms and conditions determined by our compensation committee.

· Share Options will provide for the right to purchase our ordinary shares at a specified price which, except as otherwise determined by the administrator, shall not be less than fair market value on the date of grant, and usually will become exercisable (at the discretion of the administrator) in one or more installments after the grant date, subject to the participant’s continued employment or service with us and/or subject to the satisfaction of corporate performance targets and individual performance targets established by the administrator. The 2014 Incentive Plan provides that share options may be granted for any term specified by the administrator that does not exceed ten (10) years. To the extent the share options are governed by US tax laws, the share options may be either “nonqualified share options” or “incentive share options.” Incentive share options (“ISOs”) will be designed in a manner intended to comply with the provisions of Section 422 of the Internal Revenue Code of 1986 and will be subject to specified restrictions contained in the Internal Revenue Code of 1986. Among such restrictions, ISOs will have an exercise price of not less than the fair market value of an ordinary share on the date of grant, will only be granted to employees, and will not be exercisable after a period of ten (10) years measured from the date of grant. In the case of an ISO granted to an individual who owns (or is deemed to own) at least 10% of the total combined voting power of all classes of our capital stock, the 2014 Incentive Plan provides that the exercise price must be at least 110% of the fair market value of an ordinary share on the date of grant and that the ISO must not be exercisable after a period of five (5) years measured from the date of grant.

· Restricted Shares may be granted to any eligible individual selected by the administrator and will be made subject to such restrictions as may be determined by the administrator. Restricted shares, typically, will be forfeited for no consideration or repurchased by us at the original purchase price if the conditions or restrictions on vesting are not met. The 2014 Incentive Plan provides that restricted shares generally may not be sold or otherwise transferred until restrictions are removed or expire. Recipients of restricted shares, unlike recipients of share options, will have voting rights and will generally have the right to receive dividends, if any, prior to the time when the restrictions lapse; however, in the sole discretion of the administrator, any extraordinary dividends will not be released until restrictions are removed or expire.

· Restricted Share Units may be awarded to any eligible individual selected by the administrator, typically without payment of consideration, but subject to vesting conditions based on continued employment or service or on performance criteria established by the administrator. The 2014 Incentive Plan provides that, like restricted shares, restricted share units may not be sold, or otherwise transferred or hypothecated, until vesting conditions are removed or expire. Unlike restricted shares, ordinary shares underlying restricted share units will not be issued until the restricted share units have vested, and recipients of restricted share units generally will have no voting or dividend rights prior to the time when vesting conditions are satisfied and the ordinary shares are released.

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· Performance Awards (including performance share units and performance cash bonuses) may be granted by the administrator in its discretion to any eligible individual, and may include, without limitation, restricted shares the restrictions with respect to which lapse upon the attainment of specified performance goals, restricted share units that vest and become payable upon the attainment of specified performance goals, share bonus awards that become payable upon the attainment of specified performance goals and other performance awards that vest or become exercisable or payable upon the attainment of one or more specified performance goals. The value of performance awards, including performance share units, may be linked to any one or more specified performance criteria or other specific criteria determined by the administrator, in each case on a specified date or dates or over any period or periods and in such amounts as may be determined by the administrator. Performance awards, including performance share unit awards, may be paid in cash or in ordinary shares or in a combination of cash and ordinary shares.

· Dividend Equivalents will represent the value of the dividends, if any, per ordinary share paid by us, calculated with reference to the number of ordinary shares covered by the award. The 2014 Incentive Plan provides that dividend equivalents may be settled in cash or ordinary shares and at such times as determined by the administrator.

· Share Payments will be payments made to eligible individuals as authorized by the administrator in its discretion in the form of ordinary shares or an option or other right to purchase ordinary shares, and may be made as part of a deferred compensation or other arrangement in lieu of all or any part of compensation, including bonuses, that would otherwise be payable in cash to such eligible individual, and may be subject to a vesting schedule, including vesting upon the attainment of performance criteria, in which case the share payment will not be made until the vesting criteria have been satisfied.

· Deferred Share Awards will represent the right to receive ordinary shares on a future date. The 2014 Incentive Plan provides that deferred shares may not be sold or otherwise hypothecated or transferred until issued. Deferred shares will not be issued until the deferred share award has vested, and recipients of deferred shares generally will have no voting or dividend rights prior to the time when the vesting conditions are satisfied and the ordinary shares are issued. Deferred share awards generally will be forfeited, and the underlying ordinary shares will not be issued, if the applicable vesting conditions and other restrictions are not met.

· Deferred Share Unit Awards will be awarded to any eligible individual selected by the administrator, typically without payment of consideration, but may be subject to vesting conditions based on continued employment or service or on performance criteria established by the administrator. Each deferred share unit shall entitle the holder thereof to receive one ordinary share on the date the deferred share unit becomes vested or upon a specified settlement date thereafter. The 2014 Incentive Plan provides that, like deferred shares, deferred share units may not be sold, or otherwise transferred or hypothecated, until vesting conditions are removed or expire. Unlike deferred shares, deferred share units may provide that ordinary shares underlying the deferred share units will not be issued until a specified date or event following the vesting date. Recipients of deferred share units generally will have no voting or dividend rights prior to the time when vesting conditions are satisfied and the ordinary shares underlying the award have been issued to the holder.

· Share Appreciation Rights (“SARs”) may be granted in the administrator’s discretion in connection with share options or other awards, or separately. SARs granted in connection with share options or other awards typically will provide for payments to the holder based upon increases in the price of our ordinary shares over a set exercise price. The exercise price of any SAR granted under the 2014 Incentive Plan generally will be at least 100% of the fair market value of a share of our common stock on the date of grant. There are no restrictions specified in the 2014 Incentive Plan on the exercise of SARs or the amount of gain realizable therefrom, although the 2014 Incentive Plan provides that restrictions may be imposed by the administrator in the SAR agreements. SARs granted under the 2014 Incentive Plan will be settled in cash or ordinary shares, or in a combination of both, at the election of the administrator.

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Eligibility

The 2014 Incentive Plan provides that awards may be granted to individuals who will then be our non-employee directors, employees or consultants or the non-employee directors, employees or consultants of certain of our subsidiaries; provided, however, that in the United Kingdom awards may be granted only to employees of our company or subsidiaries.

Plan Administration

The compensation committee of our board of directors (or other committee as our board of directors may appoint) administers the 2014 Incentive Plan unless our board of directors assumes authority for administration. Notwithstanding the foregoing, our full board of directors acting by a majority of its members in office conducts the general administration of the 2014 Incentive Plan with respect to awards granted to nonemployee directors. The committee (or board of directors with respect to awards granted to non-employee directors) determines the terms and conditions of each grant, including but not limited to, the exercise, grant or purchase prices, any performance criteria, any reload provision, any restrictions or limitations on the awards, vesting schedules, lapse of forfeiture restrictions or restrictions on the exercisability of the awards, any acceleration or waivers thereof, and any provision related to non-competition and recapture of gain on the awards.

Award Agreements

Awards granted under the 2014 Incentive Plan are evidenced by award agreements that set forth the terms, conditions and limitations for each award. Share awards may be evidenced by way of an issuance of certificates or book entries with appropriate legends. The certificates and book entry procedures may be subject to counsel’s advice, stop-transfer orders or other conditions or restrictions where the plan administrator deems necessary to comply with the required laws and regulations.

Transfer Restrictions

The 2014 Incentive Plan generally provides that awards granted under the 2014 Incentive Plan may not be sold, pledged, assigned or transferred in any manner other than by will or the laws of descent and distribution or, subject to the consent of the administrator, pursuant to a domestic relations order as defined by the Internal Revenue Code of 1986 or Title I of the Employee Retirement Income Security Act of 1974 or similar non-US law, unless and until such award has been exercised, or the shares underlying such award have been issued, and all restrictions applicable to such shares have lapsed.

Forfeiture and Claw-Back Provisions

The 2014 Incentive Plan provides that the administrator has the right to provide, in an award agreement or otherwise, or to require a holder to agree by separate written or electronic instrument, that: (1) (a) any proceeds, gains or other economic benefit actually or constructively received by the holder upon any receipt or exercise of the award, or upon the receipt or resale of any shares underlying the award, must be paid to the company, and (b) the award will terminate and any unexercised portion of the award (whether or not vested) will be forfeited, if (i) a termination of service occurs prior to a specified date, or within a specified time period following receipt or exercise of the award, or (ii) the holder at any time, or during a specified time period, engages in any activity in competition with us, or which is inimical, contrary or harmful to our interests, as further defined by the administrator or (iii) the holder incurs a termination of service for “cause” (as such term is defined in the sole discretion of the administrator, or as set forth in a written agreement relating to such award between us and the holder); and (2) all awards (including any proceeds, gains or other economic benefit actually or constructively received by the holder upon any receipt or exercise of any award or upon the receipt or resale of any shares underlying the award) will be subject to the provisions of any claw-back policy implemented by us, including, without limitation, any claw-back policy adopted to comply with the requirements of any applicable law, including without limitation the Dodd-Frank Wall Street Reform and Consumer Protection Act and any rules or regulations promulgated thereunder, to the extent set forth in such claw-back policy and/or in the applicable award agreement.

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Amendments or Termination

The 2014 Incentive Plan provides that our board of directors or the compensation committee, as applicable, may terminate, amend or modify the 2014 Incentive Plan at any time and from time to time. However, the 2014 Incentive Plan generally requires us to obtain shareholder approval to the extent required by applicable law, rule or regulation (including any applicable stock exchange requirement), including in connection with any amendments to increase the number of shares available under the 2014 Incentive Plan (other than in connection with certain corporate events, as described below).

The 2014 Incentive Plan provides that in the event of any changes affecting our ordinary shares or the price of our ordinary shares, the plan administrator may make proportionate and equitable adjustments to reflect such changes. Upon or in anticipation of a corporate transaction, including acquisition, disposal of substantially all or all assets, reverse takeover or dissolution or any other unusual or nonrecurring transaction or event, the plan administrator may, in its discretion, provide for the termination, replacement or assumption of awards granted under the 2014 Incentive Plan, make adjustments in the aggregate number and type of shares subject to the 2014 Incentive Plan or to the terms and conditions, including grant or exercise price or performance criteria applicable to awards outstanding on the date of such change to prevent dilution or enlargement of potential benefits intended to be available thereunder, or provide that the awards become exercisable, payable or fully vested. The 2014 Incentive Plan will expire and no further awards may be granted after the tenth anniversary of the date that the 2014 Incentive Plan was adopted.

Securities Laws

The 2014 Incentive Plan is designed to comply with all applicable provisions of the Securities Act and the Exchange Act and, to the extent applicable, any and all regulations and rules promulgated by the SEC thereunder. The 2014 Incentive Plan is administered, and share options will be granted and may be exercised, only in such a manner as to conform to such laws, rules and regulations. We have filed with the SEC a registration statement on Form S-8 covering the ordinary shares issuable under the 2014 Incentive Plan.

Non- US Participants

Certain employees, non-employee directors and consultants who provide services to us outside of the U.S. may receive awards under the 2014 Incentive Plan. In order to comply with the laws in countries other than the United States in which we (either directly or through subsidiaries) operate or have employees, non-employee directors or consultants, or in order to comply with the requirements of any foreign securities exchange, the administrator has the power and authority to: (a) determine which of our subsidiaries will be covered by the 2014 Incentive Plan; (b) determine which employees, non-employee directors or consultants outside the United States will be eligible to participate in the 2014 Incentive Plan; (c) modify the terms and conditions of any award granted to employees, non-employee directors or consultants outside the United States to comply with applicable foreign laws or listing requirements of any such foreign securities exchange; (d) establish subplans and modify exercise procedures and other terms and procedures, to the extent such actions may be necessary or advisable; and (e) take any action, before or after an award is made, that it deems advisable to obtain approval or comply with any necessary local governmental regulatory exemptions or approvals or listing requirements of any such foreign securities exchange. However, notwithstanding the foregoing, the 2014 Incentive Plan provides that the plan administrator may not take any such action with respect to non-US participants if it would violate any applicable law.

C. Board Practices

Board of Directors

Our board of directors consists of eight directors. A director is not required to hold any shares in the company by way of qualification.

A director may vote with respect to any contract or transaction in which he or she is materially interested provided the nature of the interest is disclosed prior to its consideration and any vote on such contract or transaction. The directors may exercise all the powers of the company to borrow money, mortgage its undertaking, property and uncalled capital, and issue debentures or other securities whenever outright or as security for any debt, liability or obligation of the company or of any third party. No director is entitled to any severance benefits upon termination of his or her employment with our company.

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Cayman Islands law does not require our directors to be independent. We comply with the New York Stock Exchange requirement that our board comprises a majority of independent directors.

Our independent directors hold executive sessions, during which only the independent directors are present, at least once a year. Depending on the nature of the discussion at an executive session, any one of our independent directors may preside over the session.

Committees of the Board of Directors

We have established three committees under the board of directors: the audit committee, the compensation committee and the nominating and corporate governance committee. We have adopted a charter for each of the three committees which can be found on the investor relations section of our website. Each committee’s members and functions are described below.

Audit Committee. Our audit committee consists of Louis Hsieh, Carlos Watson, Alan Kelsey and Nicholas Baird, all of whom satisfy the “independence” requirements of Section 303A of the Corporate Governance Rules of the New York Stock Exchange and the independence requirements of Rule 10A-3 under the Exchange Act. Mr. Watson has been the chair of our audit committee until August 17, 2016 and since then Mr. Louis Hsieh has taken up the role as the chair of our audit committee. Mr. Hsieh qualifies as an “audit committee financial expert” as defined in Item 16A of Form 20-F. The purpose of the audit committee is to assist our board of directors with its oversight responsibilities regarding: (1) the integrity of our financial statements, (2) our compliance with legal and regulatory requirements, (3) the independent auditor’s qualifications and independence, and (4) the performance of our internal audit function and independent auditor. The audit committee is responsible for, among other things:

· selecting our independent auditors and pre-approving all auditing and non-auditing services permitted to be performed by our independent auditors;

· reviewing with our independent auditors any audit problems or difficulties and management’s response;

· discussing the annual audited financial statements with management and our independent auditors;

· reviewing major issues as to the adequacy of our internal controls and any special audit steps adopted in light of material control deficiencies;

· annually reviewing and reassessing the adequacy of our audit committee charter;

· such other matters that are specifically delegated to our audit committee by our board of directors from time to time;

· meeting separately and periodically with management and our internal and independent auditors; and

· reporting regularly to the full board of directors.

Compensation Committee. Our compensation committee consists of Alan Kelsey, Jack Hennessy and Kosmas Kalliarekos, all of whom satisfy the “independence” requirements of Section 303A of the Corporate Governance Rules of the New York Stock Exchange. Mr. Kelsey is the chair of our compensation committee. The compensation committee is responsible for, among other things:

· approving and overseeing the compensation package for our executive officers;

· reviewing and making recommendations to the board with respect to the compensation of our directors;

· reviewing and approving corporate goals and objectives relevant to the compensation of our chief executive officer, evaluating the performance of our chief executive officer in light of those goals and objectives, and setting the compensation level of our chief executive officer based on this evaluation; and

· reviewing periodically and making recommendations to the board regarding any long-term incentive compensation or equity plans, programs or similar arrangements, annual bonuses, employee pension and welfare benefit plans.

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Nominating and Corporate Governance Committee. Our nominating and corporate governance committee consists of Alan Kelsey, Jack Hennessy, Carlos Watson and Kosmas Kalliarekos, all of whom satisfy the “independence” requirements of Section 303A of the Corporate Governance Rules of the New York Stock Exchange. Mr. Hennessy is the chair of our nominating and corporate governance committee. The nominating and corporate governance committee is responsible for, among other things:

· identifying individuals qualified to become Board members consistent with criteria approved by the Board;

· recommending that the Board select the director nominees for the next annual meeting of shareholders;

· identifying and recommending to the board the names of directors to serve as members of the audit committee and the compensation committee, as well as the nominating and corporate governance committee itself; and

· developing and recommending to the Board a set of Corporate Governance Guidelines and overseeing the evaluation of the Board and management.

Duties of Directors

In summary, directors and officers owe the following fiduciary duties under Cayman Islands law:

· duty to act in good faith in what the directors believe to be in the best interests of the company as a whole;

· duty to exercise powers for the purposes for which those powers were conferred and not for a collateral purpose;

· duty not to improperly fetter the exercise of future discretion;

· duty to exercise powers fairly as between different sections of shareholders;

· duty not to put themselves in a position in which there is a conflict between their duty to the company and their personal interests; and

· duty to exercise independent judgement.

In addition to the above, directors also owe a duty of care which is not fiduciary in nature. This duty has been defined as a requirement to act as “a reasonably diligent person” having both:

· the general knowledge, skill and experience that may reasonably be expected of a person carrying out the same functions as are carried out by that director in relation to the company; and

· the general knowledge, skill and experience which that director has.

As set out above, directors have a duty not to put themselves in a position of conflict and this includes a duty not to engage in self-dealing, or to otherwise benefit as a result of their position. However, in some instances what would otherwise be a breach of this duty can be forgiven and/or authorized in advance by the shareholders provided that there is full disclosure by the directors. This can be done by way of permission granted in the memorandum and articles of association or alternatively by shareholder approval at general meetings.

Terms of Directors and Officers

Shareholders permitted to exercise more than 50% of the voting power capable of being exercised at any general meeting are entitled, by notice in writing to the company from time to time, to appoint any natural person or corporation to be a director and to remove and/or replace any director. Unless re-appointed or removed from office pursuant to the preceding sentence, each director is appointed for a term expiring at our next- following annual general meeting. The directors may appoint any person to be a director, either to fill a vacancy or as an additional director provided that the appointment does not cause the number of directors to exceed any number fixed by or in accordance with our articles of association as the maximum number of directors. The office of a director shall be vacated if: (a) the director gives notice in writing to the company that he resigns the office of director, (b) the director absents himself (without being represented by proxy or an alternate director appointed by him) from three consecutive meetings of the board of directors without special leave of absence from the directors, and the directors pass a resolution that he has by reason of such absence vacated office, (c) the director dies, becomes bankrupt or makes any arrangement or composition with his creditors generally, (d) the director is found to be or becomes of unsound mind, or (e) all of the other directors (being not less than two in number) determine that he should be removed as a director, either by a resolution passed by all of the other directors at a meeting of the directors duly convened and held in accordance with our articles of association or by a resolution in writing signed by all of the other directors.

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D. Employees

See “Item 4. Information on the Company—B. Business Overview—Our Teaching, Administrative, Regional and Central Support Staff.’

E. Share Ownership

The following table sets forth information with respect to the beneficial ownership of our ordinary shares as of November 18, 2016, by:

· each of our directors and executive officers; and

· each person known to us to own beneficially more than 5% of our ordinary shares.

Beneficial ownership is determined in accordance with the rules and regulations of the SEC. In computing the number of shares beneficially owned by a person and the percentage ownership of that person, we have included shares that the person has the right to acquire within 60 days of November 18, 2016 including through the exercise of any option, warrant or other right or the conversion of any other security. These shares, however, are not included in the computation of the percentage ownership of any other person.

	Shares Beneficially Owned
	Number	%
Directors and Executive Officers:
Andrew Fitzmaurice	2,115,830	2.0
Graeme Halder	*	*
Alan Kelsey	*	*
Jack Hennessy	—	—
Kosmas Kalliarekos	—	—
Carlos Watson	*	*
Nicholas Baird	*	*
Louis T. Hsieh	—	—
Philippe Lagger	*	*
Nicola Duggan Redfern	*	*
All directors and executive officers as a group	2,914,062	2.8

Principal Shareholders:
Premier Education Holdings Ltd(1)	69,613,389	66.9
Baron Capital Group, Inc.(2)	6,431,177	6.2

* Less than 1% of our total outstanding ordinary shares

(1) The Baring Asia Private Equity Fund III (“Fund III”) and The Baring Asia Private Equity Fund IV (“Fund IV”) and certain affiliates hold approximately 96% of the shares in Premier Education Holdings. The general partner of Fund III is Baring Private Equity Asia GP III, L.P. (“Fund III GP”). The general partner of Fund III GP is Baring Private Equity Asia GP III Limited (“Fund III Limited”). The general partner of Fund IV and such affiliates is Baring Private Equity Asia GP IV, L.P. (“Fund IV GP”). The general partner of Fund IV GP is Baring Private Equity Asia GP IV Limited (“Fund IV Limited”). As the sole shareholder of Fund III Limited and Fund IV Limited, Jean Eric Salata may be deemed to have voting and dispositive power with respect to our shares beneficially owned by Fund IV and its affiliates, but disclaims beneficial ownership of such shares. The address of Fund III GP, Fund IV GP, Fund III Limited, Fund IV Limited and Jean Eric Salata is c/o Maples Corporate Services Limited, 390 GT Ugland House, South Church Street, Georgetown, Grand Cayman, Cayman Islands.

(2) Held as to 6,270,290 shares by BAMCO INC. and 160,887 shares by Baron Capital Management, Inc., both of which are subsidiaries of Baron Capital Group, Inc. Ronald Baron owns a controlling interest in Baron Capital Group, Inc. The business address of each of the foregoing is 767 Fifth Avenue, 49th Floor, New York, New York 10153. We have furnished the information about the beneficial ownership of these persons based on their joint Schedule 13-G (Amendment No. 1) filed with the SEC on February 16, 2016.

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As a number of our shares are held in book-entry form, we are not aware of the identity of all our shareholders. As of November 18, 2016, we had 33,223,297 ordinary shares held by two U.S. resident shareholders of record, representing approximately 31.9% of total voting power.

None of our existing shareholders have different voting rights from other shareholders. We are not aware of any arrangement that may, at a subsequent date, result in a change of control of our company.

Item 7. Major Shareholders and Related Party Transactions

A. Major Shareholders

Please refer to “Item 6. Directors, Senior Management and Employees—E. Share Ownership.”

B. Related Party Transactions

None.

C. Interests of Experts and Counsel

Not applicable.

Item 8. Financial Information

A. Consolidated Statements and Other Financial Information

See “Item 18. Financial Statements.”

Legal Proceedings

From time to time, we are parties to litigations in various jurisdictions in which we operate. We are not engaged in nor are we aware of any threatened litigation which may have, or have had in the recent past, significant effects on our financial position or profitability for the following.

Our leases for the main campus of Instituto San Roberto are undergoing a contractual rent review. We are party to an ongoing court process in Mexico with the landlords to determine the validity of appraisals submitted for the rent review. Depending on the outcome of the process our rent for this property may increase substantially.

On September 30, 2016, plaintiffs Global Indian Schools Holdings Limited, Global Schools Foundation Ltd and K12 Eduschools Holdings Limited added us as co-defendants in a suit previously filed in the High Court of the Republic of Singapore against defendants Baring Private Equity Asia Limited and two of their officers in relation to an alleged conspiracy between the defendants to withhold business opportunities from the plaintiffs. We filed our Memorandum of Appearance with the High Court on October 20, 2016, and our defence was filed on November 18, 2016. The matter was previously subject to an arbitration proceeding between the original parties to the suit, in which the defendants prevailed. Plaintiffs have not indicated the quantum of the relief they seek.

Dividend Policy

We do not plan to pay any cash dividends on our ordinary shares in the foreseeable future. We intend to retain most, if not all, of our available funds and any future earnings to operate and expand our business.

Our board of directors has complete discretion whether to pay dividends, subject to the approval of our shareholders. If our board of directors decides to pay dividends, the form, frequency and amount will depend upon our future operations and earnings, capital requirements and surplus, general financial condition, contractual restrictions and other factors that the board of directors may deem relevant. Cash dividends on our ordinary shares, if any, will be paid in U.S. dollars.

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B. Significant Changes

Except as disclosed elsewhere in this annual report, we have not experienced any significant changes since the date of our audited consolidated financial statements included in this annual report.

Item 9. The Offer and Listing

A. Offer and Listing Details

The following table provides the high and low trading prices for our ordinary shares on The New York Stock Exchange for the periods indicated since our initial public offering.

	Sales Price
	High	Low
Yearly High and Low
Fiscal year ended August 31, 2016	23.12	15.17
Fiscal year ended August 31, 2015	26.83	14.55
Fiscal year ended August 31, 2014	20.87	17.44
Quarterly High and Low
Fiscal quarter ended August 31, 2016	23.12	20.67
Fiscal quarter ended May 31, 2016	22.40	19.54
Fiscal quarter ended February 29, 2016	21.45	15.17
Fiscal quarter ended November 30, 2015	21.83	18.67
Fiscal quarter ended August 31, 2015	26.29	20.54
Fiscal quarter ended May 31, 2015	26.83	21.01
Fiscal quarter ended February 28, 2015	21.41	16.35
Fiscal quarter ended November 30, 2014	19.12	14.55
Monthly High and Low
October 2016	22.51	21.29
September 2016	22.03	21.40
August 2016	22.77	21.18
July 2016	21.99	21.06
June 2016	23.12	20.67
May 2016	22.40	20.90

B. Plan of Distribution

Not applicable.

C. Markets

Our ordinary shares, are listed on The New York Stock Exchange.

D. Selling Shareholders

Not applicable.

E. Dilution

Not applicable.

F. Expenses of the Issue

Not applicable.

Item 10. Additional Information

A. Share Capital

Not applicable.

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B. Memorandum and Articles of Association

We are a Cayman Islands exempted company and our affairs are governed by our memorandum and articles of association and the Cayman Islands Companies Law, which we refer to as the Companies Law below.

As of the date of this annual report, our authorized share capital consists of $20,000,000 divided into 2,000,000,000 shares of par value $0.01 each. The following is a summary of the material provisions of our currently effective memorandum and articles of association and the Companies Law as they relate to the material terms of our ordinary shares.

Ordinary Shares

General

All of our outstanding ordinary shares are fully paid and non-assessable. Certificates representing the ordinary shares are generally not issued and legal title to our ordinary shares is recorded in registered form in the register of members. Shareholders who are non-residents of the Cayman Islands may freely hold and vote their shares.

Dividends

The holders of our ordinary shares are entitled to such dividends as may be declared by our board of directors subject to the Companies Law and our articles of association.

Voting Rights

Each ordinary share is entitled to one vote on all matters upon which the ordinary shares are entitled to vote. Voting at any shareholders’ meeting is by show of hands unless a poll is demanded. A poll may be demanded by our chairman or any shareholder.

A quorum required for a meeting of shareholders consists of shareholders who hold at least one-third of the issued voting share capital at the meeting present in person or by proxy or, if a corporation or other non-natural person, by its duly authorized representative. Although not required by the Companies Law, we expect to hold annual shareholders’ meetings as required by NYSE and such meetings may be convened by our board of directors on its own initiative or upon a request to the directors by shareholders holding in aggregate at least one-third of our voting share capital. Advance notice of at least 21 clear days is required for the convening of our annual general meeting and other shareholders’ meetings.

An ordinary resolution to be passed by the shareholders requires the affirmative vote of a simple majority of the votes attaching to the ordinary shares cast in a general meeting, while a special resolution requires the affirmative vote of no less than two-thirds of the votes cast attaching to the ordinary shares. A special resolution is required for certain important matters specified in the Companies Law and our articles of association, including reducing the amount of our share capital, amending the memorandum or articles of association, and changing the corporate name. Holders of the ordinary shares may effect certain changes by ordinary resolution, including increasing the amount of our authorized share capital, consolidating and dividing all or any of our share capital into shares of larger amount than our existing share capital, and canceling any unissued shares.

Transfer of Shares

Subject to the restrictions of our memorandum and articles of association, as applicable, a shareholder may transfer all or any of his or her ordinary shares by an instrument of transfer in writing and in the usual or common form or any other form approved by our board.

If our directors refuse to register a transfer they must, within two months after the date on which the instrument of transfer was lodged, send to each of the transferor and the transferee notice of such refusal. The registration of transfers may, on 14 calendar days’ notice being given by advertisement in such one or more newspapers or by electronic means, be suspended and our register of members closed at such times and for such periods as our board of directors may from time to time determine. However, the registration of transfers may not be suspended, and the register may not be closed, for more than 40 calendar days in any year.

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Liquidation

On a return of capital on winding up or otherwise (other than on conversion, redemption or purchase of shares), assets available for distribution among the holders of ordinary shares must be distributed among the holders of the ordinary shares on a pro rata basis. If our assets available for distribution are insufficient to repay all of the paid-up capital, the assets will be distributed so that the losses are borne by our shareholders proportionately.

Calls on Shares and Forfeiture of Shares

Our board of directors may from time to time make calls upon shareholders for any amounts unpaid on their shares in a notice served to such shareholders at least 14 days prior to the specified time and place of payment. The shares that have been called upon and remain unpaid on the specified time are subject to forfeiture.

Redemption of Shares

Subject to the provisions of the Companies Law, we may issue shares on terms that are subject to redemption, at our option or at the option of the holders, on such terms and in such manner as may be determined by our board, before the issue of such shares.

Variation of Rights of Shares

All or any of the special rights attached to any class of shares may, subject to the provisions of the Companies Law, be varied either with the consent in writing of the holders of not less than two-thirds of the issued shares of the relevant class or with the sanction of a resolution passed at a separate meeting of the holders of the shares of such class by a majority of two-thirds of the votes cast at such a meeting.

Inspection of Books and Records

Holders of our ordinary shares have no general right under Cayman Islands law to inspect or obtain copies of our register of members or our corporate records. However, we will provide our shareholders with annual audited financial statements.

Exempted Company

We are an exempted company with limited liability under the Companies Law of the Cayman Islands. The Companies Law distinguishes between ordinary resident companies and exempted companies. Any company that is registered in the Cayman Islands but conducts business mainly outside of the Cayman Islands may apply to be registered as an exempted company. The requirements for an exempted company are essentially the same as for an ordinary company except for the exemptions and privileges listed below:

· annual reporting requirements are minimal and consist mainly of a statement that the company has conducted its operations mainly outside of the Cayman Islands and has complied with the provisions of the Companies Law;

· an exempted company’s register of members is not open to inspection;

· an exempted company does not have to hold an annual general meeting;

· an exempted company may issue negotiable or bearer shares or shares with no par value;

· an exempted company may obtain an undertaking against the imposition of any future taxation (such undertakings are usually given for 20 years in the first instance);

· an exempted company may register by way of continuation in another jurisdiction and be deregistered in the Cayman Islands;

· an exempted company may register as a limited duration company; and

· an exempted company may register as a segregated portfolio company.

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Differences in Corporate Law

The Companies Law is modeled after that of England and Wales but does not follow recent statutory enactments in England. In addition, the Companies Law differs from laws applicable to Delaware corporations and their shareholders. Set forth below is a summary of the significant differences between the provisions of the Companies Law applicable to us and the laws applicable to Delaware corporations and their shareholders.

Mergers and Similar Arrangements

The Companies Law permits mergers and consolidations between Cayman Islands companies and between Cayman Islands companies and non-Cayman Islands companies. For these purposes:

· a “merger” means the merging of two or more constituent companies and the vesting of their undertaking, property and liabilities in one of such companies as the surviving company; and

· a “consolidation” means the combination of two or more constituent companies into a consolidated company and the vesting of the undertaking, property and liabilities of such companies to the consolidated company.

In order to effect a merger or consolidation, the directors of each constituent company must approve a written plan of merger or consolidation, which must then be authorized by:

· a special resolution of the shareholders of each constituent company; and

· such other authorization, if any, as may be specified in such constituent company’s articles of association.

The plan of merger or consolidation must be filed with the Registrar of Companies together with a declaration as to the solvency of the consolidated or surviving company, a list of the assets and liabilities of each constituent company and an undertaking that a copy of the certificate of merger or consolidation will be given to the members and creditors of each constituent company and that notification of the merger and consolidation will be published in the Cayman Islands Gazette. Dissenting shareholders have the right to be paid the fair value of their shares if they follow the required procedures, subject to certain exceptions. The fair value of the shares will be determined by the Cayman Islands court if it cannot be agreed among the parties. Court approval is not required for a merger or consolidation effected in compliance with these statutory procedures.

In addition, there are statutory provisions that facilitate the reconstruction and amalgamation of companies, provided that the arrangement is approved by a majority in number of each class of shareholders and creditors with whom the arrangement is to be made, and who must in addition represent three-fourths in value of each such class of shareholders or creditors, as the case may be, that are present and voting either in person or by proxy at a meeting, or meetings, convened for that purpose. The convening of the meetings and subsequently the arrangement must be sanctioned by the Grand Court of the Cayman Islands.

While a dissenting shareholder has the right to express to the court the view that the transaction ought not to be approved, the court can be expected to approve the arrangement if it determines that:

· the statutory provisions as to the required majority vote have been met;

· the shareholders have been fairly represented at the meeting in question;

· the arrangement is such that a businessman would reasonably approve; and

· the arrangement is not one that would more properly be sanctioned under some other provision of the Companies Law.

When a take-over offer is made and accepted by holders of not less than 90% of the shares within four months, the offerer may, within a two-month period conversing on the expiration of such four months period, require the holders of the remaining shares to transfer such shares on the terms of the offer. An objection can be made to the Grand Court of the Cayman Islands but this is unlikely to succeed unless there is evidence of fraud, bad faith or collusion.

If the arrangement and reconstruction is thus approved, the dissenting shareholder would have no rights comparable to appraisal rights, which would otherwise ordinarily be available to dissenting shareholders of United States corporations, providing rights to receive payment in cash for the judicially determined value of the shares.

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Shareholder Suits

We are not aware of any reported class action having been brought in a Cayman Islands court. Derivative actions have been brought in the Cayman Islands courts, and the Cayman Islands courts have confirmed the availability for such actions. In most cases, the company will be the proper plaintiff in any claim based on a breach of duty owed to it, and a claim against (for example) the company’s officers or directors usually may not be brought by a shareholder. However, based on English authorities, which would in all likelihood be of persuasive authority and be applied by a court in the Cayman Islands, exceptions to the foregoing principle apply in circumstances in which:

· a company is acting, or proposing to act, illegally or beyond the scope of its authority;

· the act complained of, although not beyond the scope of the authority, could be effected if duly authorized by more than the number of votes which have actually been obtained; or

· those who control the company are perpetrating a “fraud on the minority.”

A shareholder may have a direct right of action against the company where the individual rights of that shareholder have been infringed or are about to be infringed.

Directors’ Fiduciary Duties

Under Delaware corporate law, a director of a Delaware corporation has a fiduciary duty to the corporation and its shareholders. This duty has two components, the duty of care and the duty of loyalty. The duty of care requires that a director act in good faith, with the care that an ordinarily prudent person would exercise under similar circumstances. Under this duty, a director must inform himself of, and disclose to shareholders, all material information reasonably available regarding a significant transaction. The duty of loyalty requires that a director must act in a manner he or she reasonably believes to be in the best interests of the corporation. A director must not use his or her corporate position for personal gain or advantage. This duty prohibits self-dealing by a director and mandates that the best interests of the corporation and its shareholders take precedence over any interest possessed by a director, officer or controlling shareholder and not shared by the shareholders generally. In general, actions of a director are presumed to have been made on an informed basis, in good faith and in the honest belief that the action taken was in the best interests of the corporation. However, this presumption may be rebutted by evidence of a breach of one of the fiduciary duties. Should such evidence be presented concerning a transaction by a director, the director must prove the procedural fairness of the transaction and that the transaction was of fair value to the corporation.

As a matter of Cayman Islands law, a director of a Cayman Islands company is in the position of a fiduciary with respect to the company, and therefore it is considered that he or she owes the following duties to the company—a duty to act bona fide in the best interests of the company, a duty not to make a profit out of his or her position as director (unless the company permits him or her to do so) and a duty not to put himself or herself in a position where the interests of the company conflict with his or her personal interests or his or her duty to a third party. A director of a Cayman Islands company owes to the company a duty to act with skill and care. It was previously considered that a director need not exhibit in the performance of his or her duties a greater degree of skill than may reasonably be expected from a person of his or her knowledge and experience. However, there are indications that the courts are moving towards an objective standard with regard to the required skill and care.

Under our memorandum and articles of association, directors who are in any way, whether directly or indirectly, interested in a contract or proposed contract with our company must declare the nature of their interest at a meeting of the board of directors. Following such declaration, a director may vote in respect of any contract or proposed contract notwithstanding his interest.

Shareholder Action by Written Resolution

Under the Delaware General Corporation Law, a corporation may eliminate the right of shareholders to act by written consent by amendment to its certificate of incorporation. Under Cayman Islands law, a company may eliminate the ability of shareholders to approve corporate matters by way of written resolution signed by or on behalf of each shareholder who would have been entitled to vote on such matters at a general meeting without a meeting being held by amending the articles of association. Our memorandum and articles of association allow shareholders to act by written resolutions.

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Cumulative Voting

Under the Delaware General Corporation Law, cumulative voting for elections of directors is not permitted unless the corporation’s certificate of incorporation specifically provides for it. Cumulative voting potentially facilitates the representation of minority shareholders on a board of directors since it permits the minority shareholder to cast all the votes to which the shareholder is entitled for a single director, which increases the shareholder’s voting power with respect to electing such director.

As permitted under Cayman Islands law, our memorandum and articles of association do not provide for cumulative voting.

Removal of Directors

Under the Delaware General Corporation Law, a director of a corporation may be removed with the approval of a majority of the outstanding shares entitled to vote, unless the certificate of incorporation provides otherwise.

Under our memorandum and articles of association, directors can be removed by shareholders permitted to exercise more than 50% of the voting power capable of being exercised at any general meeting.

Transactions with Interested Shareholders

The Delaware General Corporation Law contains a business combination statute applicable to Delaware public corporations whereby, unless the corporation has specifically elected not to be governed by such statute by amendment to its certificate of incorporation, it is prohibited from engaging in certain business combinations with an “interested shareholder” for three years following the date on which such person becomes an interested shareholder. An interested shareholder generally is one which owns or owned 15% or more of the target’s outstanding voting shares within the past three years. This has the effect of limiting the ability of a potential acquirer to make a two-tiered bid for the target in which all shareholders would not be treated equally. The statute does not apply if, among other things, prior to the date on which such shareholder becomes an interested shareholder, the board of directors approves either the business combination or the transaction that resulted in the person becoming an interested shareholder. This encourages any potential acquirer of a Delaware public corporation to negotiate the terms of any acquisition transaction with the target’s board of directors.

Cayman Islands law has no comparable statute. As a result, we cannot avail ourselves of the types of protections afforded by the Delaware business combination statute. However, although Cayman Islands law does not regulate transactions between a company and its significant shareholders, it does provide that such transactions entered into must be bona fide in the best interests of the company and not with the effect of perpetrating a fraud on the minority shareholders.

Dissolution and Winding Up

Under the Delaware General Corporation Law, unless the board of directors approves the proposal to dissolve, dissolution must be approved by shareholders holding 100% of the total voting power of the corporation. Only if the dissolution is initiated by the board of directors may it be approved by a simple majority of the corporation’s outstanding shares. The Delaware General Corporation Law allows a Delaware corporation to include in its certificate of incorporation a supermajority voting requirement in connection with dissolutions initiated by the board of directors.

Under our memorandum and articles of association, if our company is wound up, the liquidator of our company may distribute the assets with the sanction of an ordinary resolution of the shareholders.

Variation of Rights of Shares

Under the Delaware General Corporation Law, a corporation may vary the rights of a class of shares with the approval of a majority of the outstanding shares of such class, unless the certificate of incorporation provides otherwise.

Under Cayman Islands law and our memorandum and articles of association, if our share capital is divided into more than one class of shares, we may vary the rights attached to any class with the consent in writing of the holders of not less than two-thirds of the issued shares of the relevant class or with the sanction of a resolution passed at a separate meeting of the holders of the shares of such class by a majority of two-thirds of the votes cast at such a meeting.

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Amendment of Governing Documents

Under the Delaware General Corporation Law, a corporation’s governing documents may be amended with the approval of a majority of the outstanding shares entitled to vote, unless the certificate of incorporation provides otherwise.

Our memorandum and articles of association may be amended by a special resolution of shareholders.

Inspection of Books and Records

Under the Delaware General Corporation Law, any shareholder of a corporation may for any proper purpose inspect or make copies of the corporation’s stock ledger, list of shareholders and other books and records.

Holders of our shares have no general right under Cayman Islands law to inspect or obtain copies of our register of members or our corporate records. However, we intend to provide our shareholders with annual reports containing audited financial statements.

Anti-takeover Provisions in our Memorandum and Articles of Association

Some provisions of our memorandum and articles of association may discourage, delay or prevent a change of control of our company or management that shareholders may consider favorable, including a provision that authorizes our board of directors to issue preference shares in one or more series and to designate the price, rights, preferences, privileges and restrictions of such preference shares without any further vote or action by our shareholders.

Such shares could be issued quickly with terms calculated to delay or prevent a change in control of our company or make removal of management more difficult. If our board of directors decides to issue these preference shares, the price of our ordinary shares may fall and the voting and other rights of the holders of our ordinary shares may be materially adversely affected.

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

Rights of Non-resident or Foreign Shareholders

There are no limitations imposed by foreign law or by our memorandum and articles of association on the rights of non-resident or foreign shareholders to hold or exercise voting rights on our shares. In addition, there are no provisions in our memorandum and articles of association governing the ownership threshold above which shareholder ownership must be disclosed.

C. Material Contracts

Below is a description of material contracts we entered into in the two years preceding the date of this annual report other than contracts entered into in the ordinary course of business and other than contracts described in “Item 4. Information on the Company” or elsewhere in this annual report on Form 20-F.

On April 24, 2015, we entered into a definitive agreement to acquire six schools from Meritas, LLC, an operator of international schools based in Chicago, and certain affiliates (the “Meritas Schools”) for $575 million in cash, subject to certain adjustments. In connection with the acquisition of the Meritas Schools, we also agreed to acquire from Meritas, LLC and certain affiliates, for an additional $7.5 million, a convertible subordinated promissory note that is convertible into a 10% equity interest in Léman Manhattan Preparatory School (founded in 2005) in New York City upon the occurrence of certain events. Under the terms of this investment, we may acquire 100% of the school in the future subject to certain conditions being met. The transactions closed on June 25, 2015.

On February 25, 2016, we entered into definitive agreements with W. P. Carey Inc. to sell and lease back from them the properties in which we operate Windermere Preparatory School in Orlando, Florida, North Broward Preparatory School in Coconut Creek, Florida and The Village School in Houston, Texas for an aggregate purchase price of $167.0 million. The Windermere Preparatory School transaction completed on April 1, 2016 and the North Broward Preparatory School and The Village School transactions completed on May 31, 2016. The properties were leased back to the schools for 25 years, with each lease having the option to extend the term for four additional periods of five years each.

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D. Exchange Controls

There are no Cayman Islands exchange control regulations that would affect the import or export of capital or the remittance of dividends, interest or other payments to non-resident holders of our shares.

E. Taxation

The following summary of the material Cayman Islands and United States federal income tax consequences of an investment in our ordinary shares is based upon laws and relevant interpretations thereof in effect as of the date of this annual report, all of which are subject to change. This summary does not deal with all possible tax consequences relating to an investment in our ordinary shares, such as the tax consequences under state, local and other tax laws.

Cayman Islands Taxation Considerations

Prospective investors should consult their professional advisers on the possible tax consequences of buying, holding or selling any ordinary shares under the laws of their country of citizenship, residence or domicile.

The following is a discussion of certain Cayman Islands income tax consequences of an investment in the ordinary shares. The discussion is a general summary of present law, which is subject to prospective and retroactive change. It is not intended as tax advice, does not consider any investor’s particular circumstances, and does not consider tax consequences other than those arising under Cayman Islands law.

Under existing Cayman Islands laws, payments of dividends and capital in respect of the ordinary shares will not be subject to taxation in the Cayman Islands and no withholding will be required on the payment of dividend or capital to any holder of the ordinary shares nor will gains derived from the disposal of the ordinary shares be subject to Cayman Islands income or corporation tax. The Cayman Islands currently have no income, corporation or capital gains tax and no estate duty, inheritance tax or gift tax.

Material United States Federal Income Tax Considerations

The following discussion describes the material U.S. federal income tax consequences to U.S. Holders (defined below) under present law of an investment in our ordinary shares. This summary applies only to U.S. Holders that hold our ordinary shares as capital assets and that have the U.S. dollar as their functional currency. This discussion is based on the tax laws of the United States as in effect on the date of this annual report and on U.S. Treasury regulations in effect or, in some cases, proposed, as of the date of this annual report, as well as judicial and administrative interpretations thereof available on or before such date. All of the foregoing authorities are subject to change, which change could apply retroactively and could affect the tax consequences described below. This summary does not address any estate or gift tax consequences or any state, local, or non-U.S. tax consequences, nor does it address the Medicare contribution tax on net investment income.

The following discussion does not deal with the tax consequences to any particular investor and does not describe all of the tax consequences to persons in special tax situations such as:

· banks;

· certain financial institutions;

· regulated investment companies;

· insurance companies;

· broker dealers;

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· traders that elect to mark to market;

· tax-exempt entities;

· persons liable for alternative minimum tax;

· certain U.S. expatriates;

· persons holding our ordinary shares as part of a straddle, hedging, constructive sale, conversion or integrated transaction;

· persons that actually or constructively own 10% or more of the company’s voting stock;

· persons that are resident or ordinarily resident in or have a permanent establishment in a jurisdiction outside the United States;

· persons who acquired our ordinary shares pursuant to the exercise of any employee share option or otherwise as compensation; or

· persons holding our ordinary shares through partnerships or other pass-through entities.

PROSPECTIVE PURCHASERS ARE URGED TO CONSULT THEIR TAX ADVISORS ABOUT THE APPLICATION OF THE U.S. FEDERAL TAX RULES TO THEIR PARTICULAR CIRCUMSTANCES AS WELL AS THE STATE, LOCAL AND NON-U.S. TAX CONSEQUENCES TO THEM OF THE PURCHASE, OWNERSHIP AND DISPOSITION OF OUR ORDINARY SHARES.

The discussion below of the U.S. federal income tax consequences to “U.S. Holders” applies to a holder that is a beneficial owner of our ordinary shares and is, for U.S. federal income tax purposes,

· an individual who is a citizen or resident of the United States;

· a corporation (or other entity taxable as a corporation) organized under the laws of the United States, any State or the District of Columbia;

· an estate whose income is subject to U.S. federal income taxation regardless of its source; or

· a trust that (1) is subject to the supervision of a court within the United States and the control of one or more U.S. persons or (2) has a valid election in effect under applicable U.S. Treasury regulations to be treated as a U.S. person.

The tax treatment of an entity taxable as a partnership for U.S. federal income tax purposes that holds our ordinary shares generally will depend on such partner’s status and the activities of the partnership.

Dividends

Subject to the passive foreign investment company rules discussed below, the gross amount of distributions made by the company with respect to our ordinary shares (including the amount of any non-U.S. taxes withheld therefrom, if any) generally will be includable in a U.S. Holder’s gross income in the year received as dividend income, but only to the extent that such distributions are paid out of the company’s current or accumulated earnings and profits as determined under U.S. federal income tax principles. The company does not maintain calculations of its earnings and profits under U.S. federal income tax principles, and, accordingly, a U.S. Holder should therefore expect to treat all cash distributions as dividends for such purposes. The dividends will generally be foreign source and non-U.S. taxes withheld therefrom, if any, may be creditable against the U.S. Holder’s U.S. federal income tax liability subject to applicable limitations. The dividends will not be eligible for the dividends- received deduction allowed to corporations in respect of dividends received from other U.S. corporations. With respect to certain non-corporate U.S. Holders (including individuals), dividends will be taxed at the lower capital gains rate applicable to “qualified dividend income,” provided that (1) our ordinary shares are readily tradable on an established securities market in the United States, (2) the company is neither a PFIC (as defined below) nor treated as such with respect to the U.S. Holder for the taxable year in which the dividend is paid and the preceding taxable year, and (3) certain holding period requirements are met. Under U.S. Internal Revenue Service authority, common or ordinary shares generally are considered for purposes of clause (1) above to be readily tradable on an established securities market in the United States if they are listed on the New York Stock Exchange, as our ordinary shares are. A U.S. Holder should consult its tax advisor regarding the availability of the lower tax rate applicable to qualified dividend income for any dividends we pay with respect to our ordinary shares, as well as the effect of any change in applicable law after the date of this annual report.

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Sale or Other Disposition of Ordinary Shares

Subject to the passive foreign investment company rules discussed below, upon a sale or other disposition of our ordinary shares, a U.S. Holder will recognize a capital gain or loss for U.S. federal income tax purposes in an amount equal to the difference between the amount realized and the U.S. Holder’s tax basis in such ordinary shares. Any such gain or loss generally will be U.S. source gain or loss and will be treated as long-term capital gain or loss if the U.S. Holder’s holding period in our ordinary shares exceeds one year. Non-corporate U.S. Holders (including individuals) generally will be subject to U.S. federal income tax on long-term capital gain at preferential rates. The deductibility of capital losses is subject to significant limitations. Gain, if any, realized by a U.S. Holder on the sale or other disposition of our ordinary shares generally will be treated as U.S. source income for U.S. foreign tax credit purposes.

Passive Foreign Investment Company

We would be classified as a passive foreign investment company (a “PFIC”), for any taxable year if either: (a) at least 75% of its gross income is “passive income” for purposes of the PFIC rules, or (b) at least 50% of the value of its assets (determined on the basis of a quarterly average) produce or are held for the production of passive income. For this purpose, we will be treated as owning its proportionate share of the assets and earning its proportionate share of the income of any other corporation in which it owns, directly or indirectly, 25% or more (by value) of the stock.

Under the PFIC rules, if we were considered a PFIC at any time that a U.S. Holder holds our ordinary shares, we would continue to be treated as a PFIC with respect to such holder’s investment unless (i) we cease to be a PFIC and (ii) the U.S. Holder has made a “deemed sale” election under the PFIC rules.

Based on the current market price of our ordinary shares and the composition of our income, assets and operations, we do not expect to be treated as a PFIC for U.S. federal income tax purposes for the current taxable year or in the foreseeable future. This is a factual determination, however, that must be made annually after the close of each taxable year. Therefore there can be no assurance that we will not be classified as a PFIC for the current taxable year or for any future taxable year.

If we are considered a PFIC at any time that a U.S. Holder holds our ordinary shares, any gain recognized by the U.S. Holder on a sale or other disposition of our ordinary shares, as well as the amount of any “excess distribution” (defined below) received by the U.S. Holder, would be allocated ratably over the U.S. Holder’s holding period for our ordinary shares. The amounts allocated to the taxable year of the sale or other disposition (or the taxable year of receipt, in the case of an excess distribution) and to any year before we became a PFIC would be taxed as ordinary income. The amount allocated to each other taxable year would be subject to tax at the highest rate in effect for individuals or corporations, as appropriate, for that taxable year, and an interest charge would be imposed. For the purposes of these rules, an excess distribution is the amount by which any distribution received by a U.S. Holder on its ordinary shares exceeds 125% of the average of the annual distributions on our ordinary shares received during the preceding three years or the U.S. Holder’s holding period, whichever is shorter. Certain elections may be available that would result in alternative treatments (such as mark-to-market treatment) of our ordinary shares.

If we are treated as a PFIC with respect to a U.S. Holder for any taxable year, the U.S. Holder will be deemed to own shares in any of our subsidiaries that are also PFICs. However, an election for mark-to-market treatment would likely not be available with respect to any such subsidiaries. If we are considered a PFIC, a U.S. Holder will also be subject to information reporting requirements, possibly on an annual basis. U.S. Holders should consult their own tax advisors about the potential application of the PFIC rules to an investment in our ordinary shares.

U.S. Information Reporting and Backup Withholding

Dividend payments with respect to our ordinary shares and proceeds from the sale, exchange or redemption of our ordinary shares may be subject to information reporting to the U.S. Internal Revenue Service and possible U.S. backup withholding. Backup withholding will not apply, however, to a U.S. Holder who furnishes a correct taxpayer identification number and makes any other required certification or who is otherwise exempt from backup withholding. U.S. Holders who are required to establish their exempt status may be required to provide such certification on U.S. Internal Revenue Service Form W-9. U.S. Holders should consult their tax advisors regarding the application of the U.S. information reporting and backup withholding rules.

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Backup withholding is not an additional tax. Amounts withheld as backup withholding may be credited against a U.S. Holder’s U.S. federal income tax liability, and such holder may obtain a refund of any excess amounts withheld under the backup withholding rules by timely filing the appropriate claim for refund with the U.S. Internal Revenue Service and furnishing any required information.

Information With Respect to Foreign Financial Assets

Certain U.S. Holders who are individuals and certain entities may be required to report information relating to our ordinary shares, subject to certain exceptions (including an exception for ordinary shares held in accounts maintained by certain U.S. financial institutions). U.S. Holders should consult their tax advisors regarding their reporting obligations with respect to their ownership and disposition of our ordinary shares.

Certain United Kingdom Tax Considerations

Although we are incorporated in the Cayman Islands, we are resident for tax purposes in the United Kingdom. The following discussion of certain United Kingdom tax consequences of an investment in our ordinary shares is based upon current UK tax law and published HMRC practice as of the date of this prospectus supplement, all of which are subject to change. The following discussion does not deal with all possible United Kingdom tax consequences relating to an investment in our ordinary shares and investors should take their own professional advice in respect thereof.

The United Kingdom does not impose an obligation on a paying entity to withhold or deduct an amount for or on account of United Kingdom tax on a payment of a dividend.

Individuals and companies who are not resident for tax purposes in the United Kingdom and do not carry on a trade, profession or vocation in the United Kingdom, and who hold our ordinary shares as an investment and not for trading purposes will not generally be subject to United Kingdom capital gains tax or United Kingdom corporation tax in respect of chargeable gains on a disposal of their ordinary shares.

No United Kingdom stamp duty or stamp duty reserve tax should be payable in connection with a transfer of or an agreement to transfer our ordinary shares, provided that our ordinary shares are not and do not become paired with shares issued by a body corporate incorporated in the United Kingdom, no register for our ordinary shares is kept in the United Kingdom, and no instrument of transfer relating to our ordinary shares is executed within or brought into the United Kingdom.

F. Dividends and Paying Agents

Not applicable.

G. Statement by Experts

Not applicable.

H. Documents on Display

You may read and copy any reports or other information that we file at the SEC’s Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549. Information on the operation of the Public Reference Room may be obtained by calling the SEC at l-800-SEC-0330. In addition, the SEC maintains an Internet website that contains reports, proxy statements and other information about issuers, like us, that file electronically with the SEC. The address of that site is www.sec.gov.

We also make available on our website, free of charge, our annual reports on Form 20-F and the text of our reports on Form 6-K, including any amendments to these reports, as well as certain other SEC filings, as soon as reasonably practicable after they are electronically filed with or furnished to the SEC. Our website address is www.nordangliaeducation.com. The information contained on our website is not incorporated by reference in this document.

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I. Subsidiary Information

For a listing of our subsidiaries, see Exhibit 8.1.

Item 11. Quantitative and Qualitative Disclosures About Market Risk

Market risk is the risk of loss related to adverse changes in market prices, including interest rates and foreign exchange rates, of financial instruments. We are exposed to various types of market risk, including changes in interest rates and foreign exchange rates, in the ordinary course of business. We face foreign exchange risk to the extent that our business’s revenue, costs, assets and liabilities are denominated in currencies other than the U.S. dollar. Our interest rate risk arises from changes in interest rates which may affect the cost of our financings.

Foreign Currency Risk

We have significant and expanding international operations trading in non-U.S. dollar currencies. Movements in global exchange rates can cause currency exposures to our consolidated U.S. dollar financial results. Where stable currencies exist, trade is conducted in local currencies and where appropriate, borrowings are matched in that currency to mitigate the risk of exposure to our assets and liabilities from exchange rate movements. In countries of operation where currency trading zones are considered to be weaker, some transactions are conducted in U.S. dollars and euros to try to minimize exchange rate fluctuation risks.

We hold significant non-U.S. dollar cash balances in overseas operations which arise from fee income and which represent a combination of working capital and trading profits. These balances are held in operations which include countries where exchange control restrictions may prevent full repatriation of funds to the UK parent undertakings. We utilize these funds through a combination of reinvestment in the expansion or improvement of existing overseas operations or by repatriation to the UK through management contracts, royalty agreements, management charges and dividends.

Through these means we believe that satisfactory distribution of these funds can be achieved.

Interest Rate Risk

Our interest rate risk arises from our existing long-term borrowings. Borrowings issued at variable rates expose us to cash flow interest rate risk. Borrowings issued at fixed rates expose us to fair value interest rate risk. During fiscal 2016, fiscal 2015 and fiscal 2014, our borrowings at variable rates were denominated in U.S. dollars.

To manage our exposure to foreign currency and interest rate risk, on March 14, 2016 we entered into six separate cross currency swaps totalling $210 million notional value maturing on August 31, 2017, August 31, 2018 and August 31, 2019, each with an embedded FX option that limits the potential gains on final exchange. Under each contract, we swapped a USD floating rate liability under our term loans for a RMB or euro fixed interest rate liability with an obligation to pay a fixed rate on the RMB or euro equivalent amount. At maturity there is also the payment of principal amounts between currencies. We do not enter into financial instruments for speculative purposes and do not actively trade our derivative financial instruments. For further information about market risk, see Note 25 to our audited consolidated financial statements appearing elsewhere in this annual report.

Item 12. Description of Securities Other than Equity Securities

A. Debt Securities

Not applicable.

B. Warrants and Rights

Not applicable.

C. Other Securities

Not applicable.

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D. American Depositary Shares

Not applicable.

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PART II

Item 13. Defaults, Dividend Arrearages and Delinquencies

None.

Item 14. Material Modifications to the Rights of Security Holders and Use of Proceeds

None.

Item 15. Controls and Procedures

Disclosure Controls and Procedures

We have carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures (as the term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) with the participation of the principal executive officer and the principal financial officer. There are inherent limitations to the effectiveness of any system of disclosure controls and procedures, including the possibility of human error and the circumvention or overriding of the controls and procedures. Accordingly, even effective disclosure controls and procedures can only provide reasonable assurance of achieving their control objectives. Based upon our evaluation as of August 31, 2016, the principal executive officer and principal financial officer have concluded that our disclosure controls and procedures were not effective as of August 31, 2016 because of the material weaknesses described below under “Management’s Annual Report on Internal Control over Financial Reporting.”

Management’s Annual Report on Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting (“ICFR”), as the term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act.

ICFR has inherent limitations. ICFR is a process that involves human diligence and compliance and is susceptible to lapses in judgment and human failure. ICFR also can be circumvented by collusion or improper management override. Because of these limitations, there is a risk that ICFR will not prevent material misstatements. It is possible to design safeguards to reduce but not eliminate, this risk.

Our management has assessed the effectiveness of our ICFR as of August 31, 2016 based on the Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations (“COSO”) of the Treadway Commission. Based on this evaluation, our management has concluded that, due to the following material weaknesses, our ICFR was not effective as of August 31, 2016:

(1) Complement of Personnel

We did not have a sufficient complement of personnel with an appropriate level of knowledge, experience and training commensurate with our financial reporting requirements to ensure proper application of IFRS, to maintain effective ICFR and to prepare and review consolidated financial statements and related disclosure to fulfill SEC financial reporting requirements.

(2) Lack of fully developed framework

We do not have in place a formally designed and/or documented framework for our ICFR. This includes entity level controls, and the following COSO framework components:

Control Environment

The lack of financially experienced staff at the head office and regional level has impacted our ability to identify and mitigate the risk of material misstatements relating to new transactions, certain accounting issues and consolidation.

Risk Assessment

The lack of a formal enterprise risk management framework or formalised anti-fraud program, coupled with the lack of an understanding of risks relevant to the financial reporting process, has limited our ability to assess and manage risk and to identify processes and controls to mitigate those risks, including the risks of material misstatement.

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Control Activities

We did not design and document effective controls over certain business processes, including our period-end financial reporting process and formalized controls over our policies and procedures under IFRS, as well as the review, approval, and documentation related to the application of IFRS. Examples include:

· Effectively Operating Accounting Policies and Procedures Manual. We did not have standard company formalised accounting policies and procedures in effect and operating as of August 31, 2016.

· Related Party Transactions. We did not have adequate controls and procedures in place as of August 31, 2016 to identify, assess and gather information to adequately and timely determine the company’s related party transactions in all cases.

· Segregation of Duties. We did not maintain, in the head office and in certain schools, adequate segregation of duties for an appropriate level of checks and balances.

· Involvement and Review of Work Performed by Management Experts and Service Providers. We did not design and maintain effective controls to adequately assess, monitor and review work performed by management experts and service providers used by the company to assist with valuation of special accounting transactions, such as valuations over pension reserves, share based payments and derivatives.

· Effectiveness of controls over key account reconciliations. In one region and at head office, controls over balance sheet and significant account reconciliations were not always operating effectively.

· Evidence over Operation of process level controls and business performance review Controls. We did not maintain adequate evidence over the operation of certain controls and therefore cannot infer those controls have been operating effectively as designed.

· Physical access to cash and bank. We did not adequately maintain and implement controls over the physical access to cash held onsite prior to depositing into the bank (two schools in one region), lacked adequate safeguards over petty cash (one school in another region) and we lacked adequate controls over bank mandates (six schools in one region).

· Standing adjustments. We did not maintain adequate records and supporting information over historical standing adjustments within the consolidation.

· Information Technology General Controls. We did not adequately design and implement certain controls over information technology used in our financial reporting. These areas included the following: access security controls to financial applications; systems implementations and change management procedures; lack of formalised policies and procedures and general information technology governance controls including segregation of duties in those areas; lack of adequate controls over the use of certain critical manually prepared spreadsheets; and controls over changes to standing data.

Monitoring Controls

We did not design and maintain effective monitoring controls related to the documentation over, design of and operational effectiveness of our internal controls.

Information and Communication

We did not have effective processes and procedures to internally communicate sufficient information, including objectives and responsibilities for internal control, necessary to enable all personnel to understand and carry out their internal control responsibilities and to support the functioning of ICFR.

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Continuing Remediation Activities over Current and Prior Material Weaknesses

We have taken remediation steps to address the material weaknesses noted in the prior year and referenced above that continue to remain as of August 31, 2016, and to improve our control over financial reporting. In this regard, in the time since our last annual report, we have assessed in more detail the specific control deficiencies and necessary remedial work, and while the material weaknesses continue to exist, we have identified more specific areas of deficiencies which we are now focused on remediating.

We have identified and implemented, and continue to identify and implement, actions to improve the effectiveness of our ICFR, including plans to enhance our resources and training with respect to financial reporting and disclosure responsibilities and to review such actions with the audit committee.

In addition, we have taken, and continue to take, the actions described below to remediate the identified material weaknesses. As we continue to evaluate and work to improve our internal controls over financial reporting, our senior management may determine to take additional measures to address control deficiencies or determine to modify the remediation efforts described in this section. Until the remediation efforts discussed in this section, including any additional remediation efforts that our senior management identifies as necessary, are completed, the material weaknesses described above will continue to exist. In order to consider the material weaknesses to be remediated, we believe additional time and efforts are needed.

Complement of Personnel

To address the material weakness associated with a lack of personnel with sufficient training, knowledge and experience commensurate with our financial reporting requirements, we continued to hire personnel during fiscal 2016 with the appropriate experience, certification, education, and training for key positions in the financial reporting and accounting function. We recruited Regional Finance Managers to strengthen oversight of schools. In addition, we have taken appropriate remedial actions with respect to certain employees, including increased supervision and training.

Lack of framework for our internal control over financial reporting

Control environment

We have taken actions to commence remediation of the material weaknesses associated with the control environment including:

· personnel changes in the financial reporting and accounting function in order to ensure we have personnel with an appropriate level of knowledge, experience and training;

· the augmentation of these personnel with qualified consulting resources to ensure we have sufficient staffing to meet our regulatory obligations;

· the reinforcement of adherence to established internal controls and company policies and procedures through the establishment and distribution of a formalised accounting policies and procedures manual;

· the development and rollout of a company intranet for disseminating policies and procedures;

· the development of more robust procedures over the review of significant contracts, including the establishment of a significant contracts register; and

· the establishment of procedures for ensuring clear reporting structures, reporting lines, and decisional authority responsibilities in the organization and enhancement of communications with our operational departments, accounting personnel, Board and audit committee.

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Risk assessment

To address the material weakness associated with controls in response to the risk of material misstatement, we are establishing mechanisms to identify, evaluate, and monitor risks to financial reporting throughout the organization. These include:

· enhancements to the company’s risk assessment process;

· the development of a new enterprise risk assessment process to refine the company’s risk assessment; and

· the enhancement and development of the annual Sarbanes-Oxley risk assessment.

We are updating and formalising our global enterprise risk management program and assessment as well as a detailed financial risk assessment over the risk of material misstatement. We have implemented new procedures and enhanced controls governing our internal management and external reporting processes associated with the review and approval of the content of our SEC filings.

Control activities

We have taken actions to address the material weakness associated with control activities, including:

· the continued hiring of additional resources with an appropriate level of IFRS knowledge and expertise;

· the supplementation of these personnel with qualified consulting resources to ensure an adequate level of staff;

· the preparation and distribution of a formalized accounting manual; and

· implementation of additional detailed checks and balances on cash and bank accounts, monitoring of discounts, enhancing detailed reviews on cash forecasts and performing analysis over expected budgets against actual results and increases in our analytical monitoring of revenues.

In addition, we have reinforced existing policies and procedure with a formalised accounting policy and procedural manual, to better define requirements for effective and timely reconciliations of balance sheet and significant accounts, including independent review. Lastly, we are implementing transaction controls that address the design deficiencies previously identified.

To address the material weakness associated with controls over account reconciliations and other transaction level controls, we have improved controls over the preparation, analysis and review of transactions, journal entries and the execution of balance sheet and significant account reconciliations, however we believe additional time and control improvements are needed at the head office and in one region.

We have implemented a formal accounting manual covering the company’s IFRS policies and procedures.

We are continuing to implement controls over the completeness and accuracy of data and assumptions. In order to consider this material weakness remediated, we believe additional time is needed.

Monitoring

During fiscal 2016, the internal audit department and newly formed Sarbanes-Oxley and compliance teams enhanced (i) our processes to perform the scoping and identification of processes and key controls, (ii) began the documentation of these processes and (iii) are designing our testing procedures to promote the consistency and accuracy of conclusions, deliverables and disclosures associated with Sarbanes-Oxley compliance.

Information and communication

We have improved our processes and procedures over the communication of our internal control structure to better the understanding for our personnel in order that they may carry out their internal control responsibilities in our organization, including providing internal controls informational training and individual and group meetings and discussions.

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We have reorganised duties at the head office, supplemented by new personnel. In order to consider this material weakness fully remediated, we believe additional time and remedial activities are needed to demonstrate effectiveness and sustainability as they relate to the revised controls.

Changes in Internal Control over Financial Reporting

Our remediation efforts were ongoing during the year ended August 31, 2016. The following remediation steps are among the measures taken by the company during the fiscal year:

· We hired personnel during fiscal 2016 with the appropriate experience, certification, education, and training for key positions in the financial reporting and accounting function.

· We took actions to remediate the material weakness associated with the ineffective process for internal communication between the accounting and other departments within the business including:

· changes to the design and reporting structure of the financial reporting and accounting function;

· the establishment and distribution of a formal accounting policy and procedural manual; and

· the issuance of guidance on required internal technical accounting consultations and a formalized tracking system for technical accounting matters.

· We formalised and improved our risk assessment process, including the preparation of our documentation over our processes, and have recruited a compliance manager and supplemented internal financial and internal audit resources with external qualified consulting resources where needed.

· We have revised and formalised the account reconciliation processes, significant accounting procedures and instituted internal controls training for our accounting personnel.

· We have formalised our process over the preparation, analysis and review of significant accounting treatments including the review and signoff of accounting issues as they arise.

· We have strengthened and revised our controls and process over contractual arrangements including the rollout of a new contract management system, stronger reporting controls from the schools and regions to the company’s legal department and added additional layers of review on significant contracts.

· We have strengthened and revised our controls over the analysis over and review of lease arrangements that we enter into, including reviews over modifications of leases in effect.

There were no other material changes in our ICFR that occurred during fiscal 2016 that materially affected, or that are reasonably likely to materially affect, our ICFR.

This annual report does not include an attestation report of the company’s independent registered public accounting firm because we qualify as an emerging growth company and, as such, are exempt from such attestation.

Item 16A. Audit Committee Financial Expert

Our board of directors has determined that Louis T. Hsieh, an independent director (under the standards set forth in Section 303A of the Corporate Governance Rules of the New York Stock Exchange and Rule 10A-3 under the Exchange Act) and a member of our audit committee, is an audit committee financial expert.

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Item 16B. Code of Ethics

We have adopted a Code of Conduct and Ethics that applies to all our employees, officers and directors, including our principal executive, principal financial and principal accounting officers. Our Code of Conduct and Ethics addresses, among other things, competition and fair dealing, conflicts of interest, financial matters and external reporting, company funds and assets, confidentiality and corporate opportunity requirements and the process for reporting violations of the Code of Conduct and Ethics, employee misconduct, conflicts of interest or other violations. Our Code of Conduct and Ethics is intended to meet the definition of “code of ethics” under Item 16B of form 20-F under the Exchange Act.

Our Code of Conduct and Ethics is available on our website at www.nordangliaeducation.com.

Item 16C. Principal Accountant Fees and Services

The following table sets forth the aggregate fees by categories specified below in connection with certain professional services rendered by PricewaterhouseCoopers, our independent registered public accounting firm, for the periods indicated.

	Year Ended August 31,
	2015	2016
	($ in millions)
Audit fees(1)	0.6	1.7
Audit-related fees(2)	1.4	1.9
Tax fees(3)	0.3	0.1
All other fees(4)	1.6	0.5

(1) “Audit fees” means the aggregate fees billed in each of the fiscal years listed for professional services rendered by our independent registered public accounting firm for the audit of our annual financial statements that are normally provided in connection with statutory and regulatory filings or engagements for those fiscal years.

(2) “Audit-related fees” means the aggregate fees billed in each of the fiscal years listed for assurance and related services by our independent registered public accounting firm that are reasonably related to the performance of the audit or review of our financial statements and are not reported under “Audit fees.”

(3) “Tax fees” means the aggregate fees billed in each of the fiscal years listed for professional services rendered by our independent registered public accounting firm for tax compliance, tax advice, and tax planning.

(4) “All other fees” means the aggregate fees billed in each of the fiscal years listed for products and services provided by our independent registered public accounting firm, other than the services reported in the other categories.

The policy of our audit committee is to pre-approve all audit and non-audit services provided by our independent registered public accounting firm, including audit services, audit-related services, tax services and other services as described above, other than those for de minimis services which are approved by the Audit Committee prior to the completion of the audit.

Item 16D. Exemptions from the Listing Standards for Audit Committees

Not applicable.

Item 16E. Purchases of Equity Securities by the Issuer and Affiliated Purchasers

Not applicable.

Item 16F. Change in Registrant’s Certifying Accountant

Not applicable.

Item 16G. Corporate Governance

We believe that there are no significant differences between our corporate governance practices and those of U.S. domestic companies under the listing standards of the New York Stock Exchange.

Item 16H. Mine Safety Disclosure

Not applicable.

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PART III

Item 17. Financial Statements

Not applicable.

Item 18. Financial Statements

The audited consolidated financial statements as required under Item 18 are attached hereto starting on page F-1 of this annual report.

Item 19. Exhibits

Exhibit Number		Description of Document
1.1		Seventh Amended and Restated Memorandum and Articles of Association of Nord Anglia Education, Inc. dated as of March 10, 2014 (incorporated by reference to Exhibit 3.2 of our Registration Statement on Form F-1 (file No. 333-193989), as amended, filed with the Securities and Exchange Commission on March 11, 2014)

2.1		Indenture dated June 25, 2015 relating to the Registrant’s CHF200,000,000 5.750% Senior Secured Notes Due 2022 (incorporated by reference to Exhibit 2.1 of our annual report on Form 20-F (file No. 001-36356) filed with the Securities and Exchange Commission on December 31, 2015)

4.1		2014 Equity Incentive Award Plan (incorporated by reference to Exhibit 4.1 of our Registration Statement on Form S-8 (file No. 333-195020) filed with the Securities and Exchange Commission on April 3, 2014)

4.2		Amendment and Restatement Agreement dated January 13, 2014 related to an up to $40,000,000 Senior Revolving Facility Agreement dated March 21, 2012 (as amended on October 24, 2012) of Nord Anglia Education (UK) Holdings plc (incorporated by reference to Exhibit 10.8 of our Registration Statement on Form F-1 (file No. 333-193989), as amended, initially filed with the Securities and Exchange Commission on February 18, 2014)

4.3		Revolving Facility Agreement dated January 13, 2014 made between, among others, Nord Anglia Education (UK) Holdings plc, The Hongkong and Shanghai Banking Corporation Limited as mandated lead arranger and bookrunner, The Hongkong and Shanghai Banking Corporation Limited as agent and Citicorp International Limited as security agent (incorporated by reference to Exhibit 10.9 of our Registration Statement on Form F-1 (file No. 333-193989), as amended, initially filed with the Securities and Exchange Commission on February 18, 2014)

4.4		Credit and Guaranty Agreement dated as of March 31, 2014 of Nord Anglia Education Finance LLC (incorporated by reference to Exhibit 4.18 of our annual report on Form 20-F (file No. 001-36356) filed with the Securities and Exchange Commission on November 19, 2014)

4.5		Amended and Restated Credit and Guaranty Agreement dated as of June 25, 2015 of Nord Anglia Education Finance LLC (incorporated by reference to Exhibit 4.5 of our annual report on Form 20-F (file No. 001-36356) filed with the Securities and Exchange Commission on December 31, 2015)

4.6		Intercreditor Agreement dated as of June 25, 2015 made between, among others, Nord Anglia Education, Inc., Nord Anglia Education Finance LLC and HSBC Bank USA, N.A., HSBC Bank PLC and Citicorp International Limited (incorporated by reference to Exhibit 4.6 of our annual report on Form 20-F (file No. 001-36356) filed with the Securities and Exchange Commission on December 31, 2015)

4.7		Share Purchase Agreement, dated October 14, 2014, in relation to acquisition of 100% share capital of BIS Ltd. between Stellar View Limited as the Seller, the Seller Guarantors named therein, Nord Anglia Education Limited as the Purchaser Guarantor and NAE Hong Kong Limited as the Purchaser (incorporated by reference to Exhibit 2.1 of our Registration Statement on Form F-3 (file No. 333-204586), as amended, filed with the Securities and Exchange Commission on May 29, 2015)

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4.8		Deed of Novation and Amendment, dated February 11, 2015, relating to Share Purchase Agreement dated October 14, 2014, between Stellar View Limited as the Seller, the Seller Guarantors named therein, Nord Anglia Education Limited as the Purchaser Guarantor, NAE Hong Kong Limited as the Transferor and NAE HK Holdings Limited as the Transferee (incorporated by reference to Exhibit 2.2 of our Registration Statement on Form F-3 (file No. 333-204586), as amended, filed with the Securities and Exchange Commission on May 29, 2015)

4.9		Transaction Agreement, dated as of April 24, 2015, by and among Nord Anglia Education, Inc., Viking Holdco, Inc., Viking Merger Subsidiary, LLC, NAE HK Holdings Limited, Meritas, LLC, Viking Holding Company, LLC, Sterling International Schools, Sterling International Schools C Corporation and the sellers listed on the schedule thereto (incorporated by reference to Exhibit 2.3 of our Registration Statement on Form F-3 (file No. 333-204586), as amended, filed with the Securities and Exchange Commission on May 29, 2015)

4.10		Letter Agreement, dated as of May 26, 2015, by and among Meritas, LLC, Viking Holding Company, LLC, Sterling International Schools C Corporation, Sterling International Schools, Meritas, LLC, as Sellers’ Representative, Nord Anglia Education, Inc., Viking Holdco, Inc., Viking Merger Subsidiary, LLC and NAE HK Holdings Limited (incorporated by reference to Exhibit 2.4 of our Registration Statement on Form F-3 (file No. 333-204586), as amended, filed with the Securities and Exchange Commission on May 29, 2015)

4.11		Purchase and Sale Agreement, dated February 25, 2016, by and between North Broward Preparatory Schools, LLC and BMOC-MIA (FL) LLC

4.12		Purchase and Sale Agreement, dated February 25, 2016, by and between Village Real Estate LLC and BMOC-HOU (TX) LP

4.13		Purchase and Sale Agreement, dated February 25, 2016, by and between Collegiate Prep Realty, LLC and BMOC-ORL (FL) LLC

8.1		Subsidiaries of the Registrant

12.1		CEO Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

12.2		CFO Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

13.1		CEO Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

13.2		CFO Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

15.1		Consent of PricewaterhouseCoopers, Hong Kong

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SIGNATURES

The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized the undersigned to sign this annual report on its behalf.

	Nord Anglia Education, Inc.


	By:	/s/ Andrew Fitzmaurice
		Name: Andrew Fitzmaurice
		Title: Chief Executive Officer

Date: November 29, 2016

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Contents

	Pages

Report of Independent Registered Public Accounting Firm	F-2

Consolidated Income Statement for the year ended August 31, 2016	F-3

Consolidated Statement of Comprehensive Income/(Loss) for the year ended August 31, 2016	F-4

Consolidated Balance Sheet as at August 31, 2016	F-5 - F-6

Consolidated Statement of Changes in Equity for the year ended August 31, 2016	F-7 - F-9

Consolidated Cash Flow Statement for the year ended August 31, 2016	F-10

Notes to the Financial Statements for the year ended August 31, 2016	F-11 - F-111

Parent Company Financial Information	F-112 - F-120

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Table of Contents

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Shareholders of Nord Anglia Education, Inc.

In our opinion, the accompanying consolidated balance sheets and the related consolidated statements of income, statement of comprehensive income/(loss), changes in equity and cash flows present fairly, in all material respects, the financial position of Nord Anglia Education, Inc. as at August 31, 2016, August 31, 2015 and September 1, 2014, and the results of their operations and their cash flows for each of the three years in the period ended August 31, 2016 in conformity with International Financial Reporting Standards as issued by the International Accounting Standards Board. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

/s/ PricewaterhouseCoopers

Hong Kong

November 29, 2016

PricewaterhouseCoopers,22/F Prince’s Building, Central Hong Kong

T: +852 2289 8888, F: +852 2810 9888, www.pwchk.com

F-2

Table of Contents

Consolidated Income Statement

for the three years ended August 31

		2014		2015		2016
	Note	$m		$m		$m

Revenue	3	474.6		573.1		856.0
Cost of sales		(280.3	)	(355.8	)	(522.2	)

Gross profit		194.3		217.3		333.8

Selling, general and administrative expenses		(96.9	)	(129.8	)	(192.7	)
Depreciation		(2.0	)	(0.7	)	(0.8	)
Amortization	13	(10.4	)	(13.9	)	(18.7	)
Impairment	13	—		—		(1.0	)
Other gains	5	2.1		12.4		13.4
Exceptional expenses	4	(100.2	)	(18.8	)	(8.8	)

Total expenses	6	(207.4	)	(150.8	)	(208.6	)

Operating profit/(loss)		(13.1	)	66.5		125.2

Finance income	9	2.0		2.4		2.3
Finance expense	9	(55.5	)	(48.7	)	(65.9	)

Net financing expense		(53.5	)	(46.3	)	(63.6	)

Profit/(loss) before tax		(66.6	)	20.2		61.6
Income tax expense	10	(23.6	)	(12.5	)	(12.4	)

Profit/(loss) for the year		(90.2	)	7.7		49.2

Attributable to:
Owners of the parent		(90.2	)	6.5		47.1
Non-controlling interest		—		1.2		2.1

Earnings/(loss) per share from continuing operations attributable to the owners of the parent during the year (expressed in $ per share):

Basic earnings/(loss) per share	30	(1.07	)	0.07		0.45

Diluted earnings/(loss) per share	30	(1.07	)	0.07		0.45

The notes on pages F-11 to F-111 form an integral part of these financial statements.

F-3

Table of Contents

Consolidated Statement of Comprehensive Income/(Loss)

for the three years ended August 31

		2014		2015		2016
	Note	$m		$m		$m

Profit/(loss) for the year		(90.2	)	7.7		49.2

Other comprehensive loss
Items that will not be reclassified to profit or loss:
Actuarial losses on defined benefit pension plans	22	(5.3	)	(11.3	)	(7.2	)

Tax relating to items that will not be reclassified to profit or loss	15	0.2		0.9		3.3

Items that may be subsequently reclassified to profit or loss
Foreign exchange translation losses		(9.2	)	(51.6	)	(40.9	)

Other comprehensive loss for the year, net of income tax		(14.3	)	(62.0	)	(44.8	)

Total comprehensive income/(loss) for the year		(104.5	)	(54.3	)	4.4

Attributable to:
Owners of the parent		(104.5	)	(55.5	)	2.3
Non-controlling interest		—		1.2		2.1

Total comprehensive income/(loss) for the year		(104.5	)	(54.3	)	4.4

The notes on pages F-11 to F-111 form an integral part of these financial statements.

F-4

Table of Contents

Consolidated Balance Sheet

as at September 1, 2014, August 31, 2015 and 2016

		September 1, 2014		August 31, 2015		August 31, 2016
	Note	$m		$m		$m

Non-current assets
Property, plant and equipment	11	140.1		464.9		328.5
Intangible assets	13	796.3		1,402.5		1,365.4
Investments in joint ventures and associates	14	0.5		0.5		0.5
Trade and other receivables	16	9.2		37.4		42.0
Deferred lease expense	1	8.7		17.1		30.6
Deferred tax assets	15	25.1		77.5		79.0

		979.9		1,999.9		1,846.0
Current assets
Current tax assets		1.6		1.2		3.4
Inventories	18	2.4		4.5		4.3
Trade and other receivables	16	92.4		126.8		132.5
Deferred lease expense	1	0.5		0.9		1.7
Cash and cash equivalents (excluding bank overdrafts)	17	256.4		316.6		371.9

		353.3		450.0		513.8
Assets held for sale	12	—		—		8.3

		353.3		450.0		522.1

Total assets		1,333.2		2,449.9		2,368.1

Current liabilities
Trade and other payables	21	(63.7	)	(170.7	)	(140.3	)
Interest-bearing loans and borrowings	19	(113.4	)	(98.3	)	(5.0	)
Finance lease liabilities	20	(0.0	)	(0.8	)	(1.2	)
Deferred revenue		(322.6	)	(518.2	)	(550.0	)
Deferred gain	1	—		(0.2	)	(0.2	)
Provisions for other liabilities and charges	23	(0.5	)	(0.0	)	(0.0	)
Current tax liabilities		(1.7	)	(2.7	)	(4.5	)

		(501.9	)	(790.9	)	(701.2	)
Non-current liabilities
Interest-bearing loans and borrowings	19	(499.2	)	(1,066.3	)	(1,058.2	)
Derivative financial instruments	25	(11.1	)	(21.6	)	(25.2	)
Finance lease liabilities	20	—		(48.0	)	(63.3	)
Other payables	21	(50.7	)	(49.6	)	(49.1	)
Deferred revenue		(2.6	)	(7.0	)	(8.0	)
Deferred gain	1	—		(12.4	)	(12.1	)
Retirement benefit obligations	22	(25.8	)	(46.6	)	(48.9	)
Provisions for other liabilities and charges	23	(1.2	)	(1.7	)	—
Deferred tax liabilities	15	(47.6	)	(124.3	)	(110.2	)

		(638.2	)	(1,377.5	)	(1,375.0	)

Total liabilities		(1,140.1	)	(2,168.4	)	(2,076.2	)

Net assets		193.1		281.5		291.9

The notes on pages F-11 to F-111 form an integral part of these financial statements.

F-5

Table of Contents

Consolidated Balance Sheet

as at September 1, 2014, August 31, 2015 and 2016 (continued)

		September 1, 2014		August 31, 2015		August 31, 2016
	Note	$m		$m		$m

Equity attributable to equity holders of the parent
Share capital	24	1.0		1.0		1.0
Share premium	24	597.1		735.2		736.0
Other reserves		6.9		6.9		6.9
Currency translation reserve		0.8		(50.8	)	(91.7	)
Shareholder deficit		(413.2	)	(415.2	)	(365.7	)

Shareholders’ funds		192.6		277.1		286.5
Non-controlling interest		0.5		4.4		5.4

		193.1		281.5		291.9

The notes on pages F-11 to F-111 form an integral part of these financial statements.

These financial statements set out on pages F-3 to F-111 were approved by the board of Directors on November 29, 2016 and were signed on its behalf by:

A Fitzmaurice	G Halder
Director	Director
November 29, 2016	November 29, 2016
Company number: MC-264950

F-6

Table of Contents

Consolidated Statement of Changes in Equity

for the three years ended August 31

	Share capital		Share premium		Other reserves	Currency translation reserves		Shareholders’ deficit		Total parent equity		Non- controlling interest	Total equity
	$m		$m		$m	$m		$m		$m		$m	$m

Balance at September 1, 2013	67.5		256.5		6.9	10.0		(320.9	)	20.0		0.5	20.5

Total comprehensive loss for the year
Loss for the year	—		—		—	—		(90.2	)	(90.2	)	—	(90.2	)

Other comprehensive loss for the year
Currency translation differences	—		—		—	(9.2	)	—		(9.2	)	—	(9.2	)
Actuarial losses on defined benefit pension schemes	—		—		—	—		(5.1	)	(5.1	)	—	(5.1	)

Total comprehensive loss for the year	—		—		—	(9.2	)	(95.3	)	(104.5	)	—	(104.5	)

Transactions with owners, recorded directly in equity
Proceeds from ordinary shares issued	1.0		348.6		—	—		—		349.6		—	349.6
Issuance of preference shares	0.0		3.8		—	—		—		3.8		—	3.8
Contribution from parent	—		14.5		—	—		—		14.5		—	14.5
Transaction cost recognized directly in equity	—		(29.6	)	—	—		—		(29.6	)	—	(29.6	)
Return of capital to pre-IPO shareholders	(67.5	)	4.0		—	—		—		(63.5	)	—	(63.5	)
Forgiveness of loan	—		14.3		—	—		—		14.3		—	14.3
Distribution to parent	—		(15.0	)	—	—		—		(15.0	)	—	(15.0	)
Equity-settled share-based payment transactions	—		—		—	—		3.0		3.0		—	3.0
Equity dividends paid	—		—		—	—		0.0		0.0		—	0.0

Total contributions by and distributions to owners	(66.5	)	340.6		—	—		3.0		277.1		—	277.1

Balance at August 31, 2014	1.0		597.1		6.9	0.8		(413.2	)	192.6		0.5	193.1

The notes on pages F-11 to F-111 form an integral part of these financial statements.

F-7

Table of Contents

Consolidated Statement of Changes in Equity

for the three years ended August 31 (continued)

	Share capital	Share premium		Other reserves	Currency translation reserves		Shareholders’ deficit		Total parent equity		Non- controlling interest	Total equity
	$m	$m		$m	$m		$m		$m		$m	$m

Balance at September 1, 2014	1.0	597.1		6.9	0.8		(413.2	)	192.6		0.5	193.1

Total comprehensive income for the year
Income for the year	—	—		—	—		6.5		6.5		1.2	7.7

Other comprehensive (loss)/income for the year
Currency translation differences	—	—		—	(51.6	)	—		(51.6	)	0.0	(51.6	)
Actuarial losses on defined benefit pension schemes	—	—		—	—		(10.4	)	(10.4	)	—	(10.4	)

Total comprehensive (loss)/income for the year	—	—		—	(51.6	)	(3.9	)	(55.5	)	1.2	(54.3	)

Transactions with owners, recorded directly in equity
Proceeds from ordinary shares issued	0.0	148.6		—	—		—		148.6		—	148.6
Transaction cost recognized directly in equity	—	(10.8	)	—	—		—		(10.8	)	—	(10.8	)
Equity-settled share based payment transactions	—	—		—	—		2.3		2.3		—	2.3
Exercise of share options	—	0.3		—	—		(0.3	)	—		—	—
Dividend paid	—	—		—	—		(0.1	)	(0.1	)	—	(0.1	)
Acquisition of Non-controlling interest	—	—		—	—		—		—		2.7	2.7

Total contributions by and distributions to owners	0.0	138.1		—	—		1.9		140.0		2.7	142.7

Balance at August 31, 2015	1.0	735.2		6.9	(50.8	)	(415.2	)	277.1		4.4	281.5

The notes on pages F-11 to F-111 form an integral part of these financial statements.

F-8

Table of Contents

Consolidated Statement of Changes in Equity

for the three years ended August 31 (continued)

	Share capital	Share premium	Other reserves	Currency translation reserves		Shareholders’ deficit		Total parent equity		Non-controlling interest		Total equity
	$m	$m	$m	$m		$m		$m		$m		$m

Balance at September 1, 2015	1.0	735.2	6.9	(50.8	)	(415.2	)	277.1		4.4		281.5

Total comprehensive income for the year
Income for the year	—	—	—	—		47.1		47.1		2.1		49.2

Other comprehensive loss for the year
Currency translation differences	—	—	—	(40.9	)	—		(40.9	)	—		(40.9	)
Actuarial losses on defined benefit pension schemes	—	—	—	—		(3.9	)	(3.9	)	—		(3.9	)

Total comprehensive income/(loss) for the year	—	—	—	(40.9	)	43.2		2.3		2.1		4.4

Transactions with owners, recorded directly in equity
Proceeds from ordinary shares issued	0.0	0.4	—	—		—		0.4		—		0.4
Transaction cost recognized directly in equity	—	—	—	—		—		—		—		—
Equity-settled share based payment transactions	—	0.0	—	—		6.7		6.7		—		6.7
Exercise of share options	—	0.4	—	—		(0.4	)	—		—		—
Dividend paid	—	—	—	—		—		—		(1.1	)	(1.1	)
Acquisition of Non-controlling interest	—	—	—	—		—		—		—		—

Total contributions by and distributions to owners	0.0	0.8	—	—		6.3		7.1		(1.1	)	6.0

Balance at August 31, 2016	1.0	736.0	6.9	(91.7	)	(365.7	)	286.5		5.4		291.9

The notes on pages F-11 to F-111 form an integral part of these financial statements.

F-9

Table of Contents

Consolidated Cash Flow Statement

for the three years ended August 31

		2014		2015		2016
	Note	$m		$m		$m

Cash flows from operating activities
Profit/(loss) for the year before taxation		(66.6	)	20.2		61.6
Adjustments for:
Depreciation and amortization		33.8		48.5		65.2
Impairment		—		—		1.0
Bad debts and other gains		(2.1	)	(12.4	)	(11.6	)
Refinancing fees		10.0		—		—
Payment of bond redemption expense and commitment fees		77.0		29.3		5.0
Other non-cash item		0.9		(1.7	)	(6.7	)
Difference between pension contribution paid and amounts recognized in the Consolidated Income Statement		—		(2.9	)	5.2
Loss on sale of property, plant and equipment and intangible assets		0.1		0.3		0.4
Net financial expense	9	53.5		46.3		63.6
Equity settled share-based payment expenses		3.0		2.3		6.7

		109.6		129.9		190.4
Increase in trade and other receivables, inventories and deferred lease expense		(8.4	)	(27.1	)	(34.9	)
Increase in trade and other payables, deferred revenue and deferred gain		31.7		64.2		66.0

Cash generated from operations		132.9		167.0		221.5

Payment of bond redemption expense and commitment fees		(77.0	)	(29.3	)	(5.0	)
Interest paid		(73.4	)	(31.2	)	(62.5	)
Tax paid		(25.2	)	(19.9	)	(28.9	)

Net cash generated from/(used in) operating activities		(42.7	)	86.6		125.1

Cash flows from investing activities
Proceeds from sale of property, plant and equipment		0.1		0.5		167.3
Purchase of intangible assets		(0.7	)	(1.7	)	(1.4	)
Acquisition of subsidiary, net of cash acquired	2	(35.1	)	(647.1	)	(33.6	)
Acquisition of property, plant and equipment		(53.6	)	(62.3	)	(94.3	)
Interest received		2.0		1.6		2.2

Net cash generated from/(used in) investing activities		(87.3	)	(709.0	)	40.2

Cash flows from financing activities
Proceeds from the issue of share capital	24	323.8		126.2		0.4
Transaction cost on issue of shares		—		(7.3	)	(1.7	)
Proceeds from new loan		577.0		471.1		81.0
Proceeds from bond		—		217.7		—
Repayment of borrowings		(697.2	)	(107.7	)	(90.1	)
Distribution to parent		(15.0	)	—		—
Share capital redemption	24	(63.5	)	—		—
Dividend paid		(0.0	)	(0.1	)	(1.1	)

Net cash (used in)/generated from financing activities		125.1		699.9		(11.5	)

Net increase/(decrease) in cash and cash equivalents		(4.9	)	77.5		153.8
Cash and cash equivalents at September 1		171.1		166.2		225.9
Effect of exchange rate fluctuations on cash held		(0.0	)	(17.8	)	(7.8	)

Cash and cash equivalents at August 31, (including overdrafts)		166.2		225.9		371.9
Bank overdrafts		90.2		90.7		—

Cash and cash equivalents at August 31, (excluding overdrafts)	17	256.4		316.6		371.9

The notes on pages F-11 to F-111 form an integral part of these financial statements.

F-10

Table of Contents

Notes to the financial statements for the year ended August 31, 2016

1 Accounting policies

General information

Nord Anglia Education, Inc. (“the Company”) was incorporated in the Cayman Islands on December 14, 2011 as an exempt company with limited liability under Companies Law, Cap 22 (Law 3 of 1961, as consolidated and revised) of the Cayman Islands. The address of its registered office is Offices of Maples Corporate Services, Ugland House, PO Box 309, Grand Cayman, KY1-1104, Cayman Islands.

The main activities of the Company is an investment holding and its subsidiaries (together “the Group”) are operating Premium Schools worldwide.

Basis of preparation

The consolidated financial statements have been prepared and approved by the Directors in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”). The Group has elected to prepare its parent Company financial statements in accordance with IFRS (see Note 32). The consolidated financial statements and Company financial statements are presented in US dollar, generally rounded to the nearest million. They are prepared on the historical cost basis, except for certain financial instruments and pension assets that have been measured at fair value.

The consolidated financial statements for the three years ended August 31, 2016 represent the consolidated financial statements of the Group.

Items included in the financial statements of each of the Group’s entities are measured using the currency of the primary economic environment in which the entity operates (‘the functional currency’). The consolidated financial statements are presented in US dollar which is the Company’s functional and presentation currency.

The accounting policies set out below have been applied consistently to all periods presented in these consolidated financial statements.

Prior year revisions

During the year ended August 31, 2016, the Group finalized the purchase price allocation accounting from prior year, made voluntary presentation changes and made corrections of prior period errors, by adjusting the prior period information. Management assessed the materiality of the prior period errors in accordance with Staff Accounting Bulletin (“SAB”) No. 99 — Materiality, as issued by the Securities and Exchange Commission (“SEC”). The Group determined that the errors were not material to prior annual financial statements and therefore amendments of previously filed reports were not required. The Group has corrected the errors for all prior periods presented by revising the consolidated financial statements appearing herein.

The revisions do not have a material impact on key items and metrics such as Cash and cash equivalents, Net assets, Revenue and Profit/(loss) before tax. The following tables set out the impact.

F-11

Table of Contents

Notes to the financial statements for the year ended August 31, 2016 (continued)

1 Accounting policies (continued)

Prior year revisions (continued)

Impact on items within Consolidated Income Statement and Consolidated Statement of Comprehensive Income/(Loss) for the year ended August 31, 2015

	As reported previously ($m)		Finalization of acquisition accounting (1)	Voluntary change in presentation (2)		Correction of errors (3)		Other (4)	As revised ($m)

*Consolidated Income Statement*

Revenue	577.0		—	—		b, c (3.9	)	—	573.1
Cost of sales	(355.9	)	—	—		a, b, e 0.1		—	(355.8	)
Gross profit	221.1		—	—		(3.8	)	—	217.3

Selling, general and administrative expenses	(127.0	)	—	a (3.9	)	e 1.1		—	(129.8	)
Other gains/(losses)	(3.0	)	—	a 13.6		a, e 1.8		—	12.4

Operating profit/(loss)	57.7		—	9.7		(0.9	)	—	66.5

Finance income	2.8		—	—		e (0.4	)	—	2.4
Finance expense	(39.7	)	—	a (9.7	)	b 0.7		—	(48.7	)

Profit/(loss) before tax	20.8		—	—		(0.6	)	—	20.2

Income tax expense	(12.2	)	—	—		a, b, c, e (0.3	)	—	(12.5	)

Profit/(loss) for the year	8.6		—	—		(0.9	)	—	7.7

Basic earnings/(loss) per share	0.07		—	—		(0.00	)	—	0.07
Diluted earnings/(loss) per share	0.07		—	—		(0.00	)	—	0.07

F-12

Table of Contents

Notes to the financial statements for the year ended August 31, 2016 (continued)

1 Accounting policies (continued)

Prior year revisions (continued)

Impact on items within Consolidated Income Statement and Consolidated Statement of Comprehensive Income/(Loss) for the year ended August 31, 2015 (continued)

	As reported previously ($m)		Finalization of acquisition accounting (1)	Voluntary change in presentation (2)	Correction of errors (3)	Other (4)	As revised ($m)

*Consolidated Statement of Comprehensive Income/(Loss)*

Foreign exchange translation losses	(52.6	)	—	—	b, e 1.0	—	(51.6	)

Total comprehensive income/(loss) for the year	(54.4	)	—	—	0.1	—	(54.3	)

F-13

Table of Contents

Notes to the financial statements for the year ended August 31, 2016 (continued)

1 Accounting policies (continued)

Prior year revisions (continued)

Impact on items within Consolidated Income Statement and Consolidated Statement of Comprehensive Income/(Loss) for the year ended August 31, 2014

	As reported previously ($m)		Finalization of acquisition accounting (1)	Voluntary change in presentation (2)		Correction of errors (3)		Other (4)	As revised ($m)

*Consolidated Income Statement*
Selling, general and administrative expenses	(92.9	)	—	a (4.0	)	—		—	(96.9	)
Other gains/(losses)	—		—	a 4.0		a (1.9	)	—	2.1

Operating profit/(loss)	(11.2	)	—	—		(1.9	)	—	(13.1	)

Profit/(loss) before tax	(64.7	)	—	—		(1.9	)	—	(66.6	)

Income tax expense	(25.7	)	—	—		a, b 2.1		—	(23.6	)

Profit/(loss) for the year	(90.4	)	—	—		0.2		—	(90.2	)

Basic earnings/(loss) per share	(1.07	)	—	—		0.00		—	(1.07	)
Diluted earnings/(loss) per share	(1.07	)	—	—		0.00		—	(1.07	)

*Consolidated Statement of Comprehensive Income/(Loss)*

Foreign exchange translation losses	(10.9	)	—	—		b 1.7		—	(9.2	)

Total comprehensive income/(loss) for the year	(106.4	)	—	—		1.9		—	(104.5	)

F-14

Table of Contents

Notes to the financial statements for the year ended August 31, 2016 (continued)

1 Accounting policies (continued)

Prior year revisions (continued)

Impact on items within Consolidated Balance Sheet as at August 31, 2015

	As reported previously ($m)		Finalization of acquisition accounting (1)		Voluntary change in presentation (2)	Correction of errors (3)		Other (4)		As revised ($m)

Property, plant and equipment	449.7		a 15.2		—	—		—		464.9
Intangible assets	1,415.5		a (9.3	)	—	b (3.7	)	—		1,402.5
Trade and other receivables	37.9		—		—	e (0.5	)	—		37.4
Deferred lease expense	—		—		—	a 17.1		—		17.1
Deferred tax assets	70.4		—		—	a 7.1		—		77.5
Total Non-current assets	1,974.0		5.9		—	20.0		—		1,999.9

Inventory	—		—		—	—		a 4.5		4.5
Trade and other receivables	131.1		—		—	e 0.2		a (4.5	)	126.8
Deferred lease expense	—		—		—	a 0.9		—		0.9
Cash and cash equivalents (excluding bank overdrafts)	317.0		—		—	e (0.4	)	—		316.6
Total Current assets	449.3		—		—	0.7		—		450.0

Trade and other payables	(170.9	)	a (0.3	)	—	b, e 0.5		—		(170.7	)
Finance lease liabilities	(3.7	)	—		b 2.9	—		—		(0.8	)
Deferred revenue	(518.8	)	—		—	b, c 0.4		b 0.2		(518.2	)
Deferred gain	—		—		—	—		b (0.2	)	(0.2	)
Current tax liabilities	(2.9	)	—		—	b, c, e 0.2		—		(2.7	)
Total Current liabilities	(794.6	)	(0.3	)	2.9	1.1		—		(790.9	)

F-15

Table of Contents

Notes to the financial statements for the year ended August 31, 2016 (continued)

1 Accounting policies (continued)

Prior year revisions (continued)

Impact on items within Consolidated Balance Sheet as at August 31, 2015 (continued)

	As reported previously ($m)		Finalization of acquisition accounting (1)		Voluntary change in presentation (2)		Correction of errors (3)		Other (4)		As revised ($m)

Derivative financial instruments	(3.0	)	—		—		a (18.6	)	—		(21.6	)
Finance lease liabilities	(44.6	)	a (0.5	)	b (2.9	)	—		—		(48.0	)
Other payables	(45.7	)	a (0.4	)	—		b, d, e (3.5	)	—		(49.6	)
Deferred revenue	(27.4	)	—		—		b, d 8.0		b 12.4		(7.0	)
Deferred gain	—		—		—		—		b (12.4	)	(12.4	)
Deferred tax liabilities	(114.1	)	a (4.7	)	—		a, b (5.5	)	—		(124.3	)
Total Non-current liabilities	(1,349.4	)	(5.6	)	(2.9	)	(19.6	)	—		(1,377.5	)

Net assets	279.3		—		—		2.2		—		281.5

Currency translation reserve	(53.7	)	—		—		b, e 2.9		—		(50.8	)
Shareholder deficit	(414.0	)	—		—		a, b, c, e (1.2	)	—		(415.2	)
Non-controlling interest	3.9		—		—		b 0.5		—		4.4
Total Equity	279.3		—		—		2.2		—		281.5

F-16

Table of Contents

Notes to the financial statements for the year ended August 31, 2016 (continued)

1 Accounting policies (continued)

Prior year revisions (continued)

Impact on items within Consolidated Balance Sheet as at September 1, 2014

	As reported previously ($m)		Finalization of acquisition accounting (1)	Voluntary change in presentation (2)	Correction of errors (3)		Other (4)		As revised ($m)

Intangible assets	801.5		—	—	b (5.2	)	—		796.3
Deferred lease expense	—		—	—	a 8.7		—		8.7
Deferred tax assets	20.9		—	—	a 4.2		—		25.1
Total Non-current assets	972.2		—	—	7.7		—		979.9

Inventory	—		—	—	—		a 2.4		2.4
Trade and other receivables	94.8		—	—	—		a (2.4	)	92.4
Deferred lease expense	—		—	—	a 0.5		—		0.5
Total Current assets	352.8		—	—	0.5		—		353.3

Deferred revenue	(324.0	)	—	—	b 1.4		—		(322.6	)
Total Current liabilities	(503.3	)	—	—	1.4		—		(501.9	)

Derivative financial instruments	—		—	—	a (11.1	)	—		(11.1	)
Deferred revenue	(8.6	)	—	—	b 6.0		—		(2.6	)
Deferred tax liabilities	(45.5	)	—	—	a, b (2.1	)	—		(47.6	)
Total Non-current liabilities	(631.0	)	—	—	(7.2	)	—		(638.2	)

Net assets	190.7		—	—	2.4		—		193.1

Currency translation reserve	(1.1	)	—	—	b 1.9		—		0.8
Shareholder deficit	(413.2	)	—	—	a, b 0.0		—		(413.2	)
Non-controlling interest	—		—	—	b 0.5		—		0.5
Total Equity	190.7		—	—	2.4		—		193.1

F-17

Table of Contents

Notes to the financial statements for the year ended August 31, 2016 (continued)

1 Accounting policies (continued)

Prior year revisions (continued)

1) Finalization of acquisition accounting

a) Sterling International Schools C Corporation

A finalization of the provisional purchase allocation exercise for Sterling International Schools C Corporation, acquired on June 25, 2015, has been reflected in the financial statements as at and for the years ended August 31, 2015 and 2016, as permitted by IFRS 3 — Business combinations. Fair value of identifiable net assets acquired increased by $9.3 million, thus decreasing intangible assets with no impact on the Consolidated Income Statement. This does not reflect an error in prior period financial reporting and the updated purchase price allocation has been disclosed in Note 2.

2) Voluntary change in presentation

a) Foreign exchange translation gains/(losses) presentation in the Consolidated Income Statement

The Group has changed its Consolidated Income Statement presentation of Foreign exchange translation gains/(losses) in the financial statements as at and for the year ended August 31, 2016 and has reclassified the prior period comparatives to align with the reclassified presentation. Prior to the year ended August 31, 2016, the Group reported Foreign exchange gains/(losses), including the revaluation of intercompany loans and on the revaluation of the CHF bond, in Selling, general and administrative expenses. IAS 1 — Presentation of financial statements and IAS 21 — The effects of changes in foreign exchange rates are not prescriptive regarding the presentation in the Consolidated Income Statement of Foreign exchange gains/(losses). Management deems it a better reflection of the substance of the transactions to report Foreign exchange gains/(losses) on the revaluation of the CHF bond within Finance expense and Foreign exchange gains/(losses) on other activities, including the revaluation of intercompany loans, within Other gains/(losses).

For the current year, the impact of this change in presentation is a reclassification of a gain of $4.7 million and a gain of $17.2 million to Finance expense and Other gains/(losses), respectively, from Selling, general and administrative expenses.

b) Finance lease liabilities presentation in the Consolidated Balance Sheet

The Group has changed its Consolidated Balance Sheet presentation of Finance lease liabilities between current and non-current in the financial statements as at and for the year ended August 31, 2016 and has reclassified the prior period comparatives to align with the reclassified presentation. Prior to the year ended August 31, 2016, the Group calculated the split between current and non-current liabilities on the basis of the maturity profile of cash payments. IAS 17 - Leases is not prescriptive regarding whether this split should be calculated on the basis of the maturity profile of future cash payments or on the forecast reduction in the total liability in the next twelve months. Management deems it more appropriate to determine the split on the basis of the maturity profile of the lease liability.

For the current year, the impact of this change in presentation is a reclassification of $3.6 million between current and non-current finance lease liabilities.

F-18

Table of Contents

Notes to the financial statements for the year ended August 31, 2016 (continued)

1 Accounting policies (continued)

Prior year revisions (continued)

3) Correction of errors

The following tables detail the impact of the corrections of errors.

Impact on items within Consolidated Income Statement and Consolidated Statement of Comprehensive Income/(Loss) for the year ended August 31, 2015

	Correction of embedded derivatives ($m) (a)		Correction of acquisition accounting ($m) (b)		Timing of book fees recognition ($m) (c)		Other ($m) (e)		Total adjustments ($m)

*Consolidated Income Statement*

Revenue	—		(2.9	)	(1.0	)	—		(3.9	)
Cost of sales	(0.1	)	0.5		—		(0.3	)	0.1
Gross profit	(0.1	)	(2.4	)	(1.0	)	(0.3	)	(3.8	)

Selling, general and administrative expenses	—		—		—		1.1		1.1
Other gains/(losses)	1.4		—		—		0.4		1.8

Operating profit/(loss)	1.3		(2.4	)	(1.0	)	1.2		(0.9	)

Finance income	—		—		—		(0.4	)	(0.4	)
Finance expense	—		0.7		—		—		0.7

Profit/(loss) before tax	1.3		(1.7	)	(1.0	)	0.8		(0.6	)

Income tax expense	(0.5	)	0.2		0.0		(0.0	)	(0.3	)

Profit/(loss) for the year	0.8		(1.5	)	(1.0	)	0.8		(0.9	)

*Consolidated Statement of Comprehensive Income/(Loss)*

Foreign exchange translation losses	—		1.2		—		(0.2	)	1.0

Total comprehensive income/(loss) for the year	0.8		(0.3	)	(1.0	)	0.6		0.1

F-19

Table of Contents

Notes to the financial statements for the year ended August 31, 2016 (continued)

1 Accounting policies (continued)

Prior year revisions (continued)

3) Correction of errors (continued)

Impact on items within Consolidated Income Statement and Consolidated Statement of Comprehensive Income/(Loss) for the year ended August 31, 2014

	Correction of embedded derivatives ($m) (a)		Correction of acquisition accounting ($m) (b)	Total adjustments ($m)

*Consolidated Income Statement*

Selling, general and administrative expenses	—		—	—
Other gains/(losses)	(1.9	)	—	(1.9	)

Operating profit/(loss)	(1.9	)	—	(1.9	)

Profit/(loss) before tax	(1.9	)	—	(1.9	)

Income tax expense	0.7		1.4	2.1

Profit/(loss) for the year	(1.2	)	1.4	0.2

*Consolidated Statement of Comprehensive Income/(Loss)*

Foreign exchange translation losses	—		1.7	1.7

Total comprehensive income/(loss) for the year	(1.2	)	3.1	1.9

F-20

Table of Contents

Notes to the financial statements for the year ended August 31, 2016 (continued)

1 Accounting policies (continued)

Prior year revisions (continued)

3) Correction of errors (continued)

Impact on items within Consolidated Balance Sheet as at August 31, 2015

	Correction of embedded derivatives ($m) (a)	Correction of acquisition accounting ($m) (b)		Timing of book fees recognition ($m) (c)		Correction of classification of accrued expenses ($m) (d)	Other ($m) (e)		Total adjustments ($m)

Property, plant and equipment	—	—		—		—	—		—
Intangible assets	—	(3.7	)	—		—	—		(3.7	)
Trade and other receivables	—	—		—		—	(0.5	)	(0.5	)
Deferred lease expense	17.1	—		—		—	—		17.1
Deferred tax assets	7.1	—		—		—	—		7.1
Total Non-current assets	24.2	(3.7	)	—		—	(0.5	)	20.0

Inventory	—	—		—		—	—		—
Trade and other receivables	—	—		—		—	0.2		0.2
Deferred lease expense	0.9	—		—		—	—		0.9
Cash and cash equivalents (excluding bank overdrafts)	—	—		—		—	(0.4	)	(0.4	)
Total Current assets	0.9	—		—		—	(0.2	)	0.7

Trade and other payables	—	(0.7	)	—		—	1.2		0.5
Finance lease liabilities	—	—		—		—	—		—
Deferred revenue	—	1.4		(1.0	)	—	—		0.4
Deferred gain	—	—		—		—	—		—
Current tax liabilities	—	0.2		0.0		—	(0.0	)	0.2
Total Current liabilities	—	0.9		(1.0	)	—	1.2		1.1

F-21

Table of Contents

Notes to the financial statements for the year ended August 31, 2016 (continued)

1 Accounting policies (continued)

Prior year revisions (continued)

3) Correction of errors (continued)

Impact on items within Consolidated Balance Sheet as at August 31, 2015 (continued)

	Correction of embedded derivatives ($m) (a)		Correction of acquisition accounting ($m) (b)		Timing of book fees recognition ($m) (c)		Correction of classification of accrued expenses ($m) (d)		Other ($m) (e)		Total adjustments ($m)

Derivative financial instruments	(18.6	)	—		—		—		—		(18.6	)
Finance lease liabilities	—		—		—		—		—		—
Other payables	—		(0.1	)	—		(3.2	)	(0.2	)	(3.5	)
Deferred revenue	—		4.8		—		3.2		—		8.0
Deferred gain	—		—		—		—		—		—
Deferred tax liabilities	(6.9	)	1.4		—		—		—		(5.5	)
Total Non-current liabilities	(25.5	)	6.1		—		—		(0.2	)	(19.6	)

Net assets	(0.4	)	3.3		(1.0	)	—		0.3		2.2

Currency translation reserve	—		3.1		—		—		(0.2	)	2.9
Shareholder deficit	(0.4	)	(0.3	)	(1.0	)	—		0.5		(1.2	)
Non-controlling interest	—		0.5		—		—		—		0.5
Total Equity	(0.4	)	3.3		(1.0	)	—		0.3		2.2

F-22

Table of Contents

Notes to the financial statements for the year ended August 31, 2016 (continued)

1 Accounting policies (continued)

Prior year revisions (continued)

3) Correction of errors (continued)

Impact on items within Consolidated Balance Sheet as at September 1, 2014

	Correction of embedded derivatives (a)		Correction of acquisition accounting (b)		Total adjustments ($m)

Intangible assets	—		(5.2	)	(5.2	)
Deferred lease expense	8.7		—		8.7
Deferred tax assets	4.2		—		4.2
Total Non-current assets	12.9		(5.2	)	7.7

Inventory	—		—		—
Trade and other receivables	—		—		—
Deferred lease expense	0.5		—		0.5
Total Current assets	0.5		—		0.5

Deferred revenue	—		1.4		1.4
Total Current liabilities	—		1.4		1.4

Derivative financial instruments	(11.1	)	—		(11.1	)
Deferred revenue	—		6.0		6.0
Deferred tax liabilities	(3.5	)	1.4		(2.1	)
Total Non-current liabilities	(14.6	)	7.4		(7.2	)

Net assets	(1.2	)	3.6		2.4

Currency translation reserve	—		1.9		1.9
Shareholder deficit	(1.2	)	1.2		0.0
Non-controlling interest	—		0.5		0.5
Total Equity	(1.2	)	3.6		2.4

F-23

Table of Contents

Notes to the financial statements for the year ended August 31, 2016 (continued)

1 Accounting policies (continued)

Prior year revisions (continued)

3) Correction of errors (continued)

a) Correction of embedded derivatives

b) Correction of acquisition accounting

Management has corrected an acquisition accounting error in relation to Dover Court International School (Pte.) Limited, acquired on April 22, 2014, in Singapore. Included within the net assets acquired was Deferred revenue, representing Cash and cash equivalents collected, relating to a pre-acquisition building fund levied for future capital expenditure. On acquisition this was accounted for as Deferred revenue that would be released subsequently to the Consolidated Income Statement. It has been identified that there was no performance obligation to provide a future service to recognize the deferred revenue and therefore this has been determined to be an error. This has been corrected retrospectively, as this represents a pre-acquisition reserve.

Separate from the correction above, for 2014, a foreign exchange adjustment of $1.7 million in relation to the acquisition of Dover Court International School (Pte.) Limited has been made.

At the time of the acquisition of British International Schools Group, Vietnam, completed on January 1, 2015, a consultancy fee received from the vendor was reported as Revenue. However, it has been determined that the acquisition agreement and consultation arrangement were linked transactions and as such this should have been treated as a reduction in consideration paid rather than Revenue. Therefore, this has now been corrected retrospectively. The overall impact in the financial statements for the year ended August 31, 2015 is a loss of $1.7 million, with a corresponding decrease in Intangible assets.

For the year ended August 31, 2014, Management has corrected an acquisition accounting error in relation to Deferred tax liabilities that were miscalculated in the consolidated financial statements. This resulted in a decrease of $1.4 million in Income tax expense and Deferred tax liabilities.

In addition, following a review of the Group’s cost of investments register, Management has corrected other smaller acquisition accounting errors.

c) Timing of book fees recognition

d) Correction of classification of accrued expenses

In the financial statements as at and for the year ended August 31, 2015, the Group changed its Consolidated Balance Sheet presentation to disclose Accruals separately from Deferred revenue. However, some of the accruals were classified incorrectly within Deferred revenue in the Consolidated Balance Sheet as at August 31, 2015. A correction has been made, which involves a Consolidated Balance Sheet correction from Deferred revenue to Other payables only.

F-24

Table of Contents

Notes to the financial statements for the year ended August 31, 2016 (continued)

1 Accounting policies (continued)

Prior year revisions (continued)

3) Correction of errors (continued)

e) Other

4) Other

The Group has made adjustments for two other items which affect the Consolidated Balance Sheet only.

a) Inventories presentation in the Consolidated Balance Sheet

Management has deemed inventories to be significant enough to be disclosed separately from Trade and other receivables. For the current year, the impact of this is an adjustment of $4.3 million from Trade and other receivables to Inventories.

b) Deferred gain presentation in the Consolidated Balance Sheet

Management has deemed a Deferred gain from a sale and leaseback transaction to be significant enough to be disclosed separately from Deferred revenue. For the current year, the impact of this is an adjustment of $12.3 million from Deferred revenue to Deferred gain.

F-25

Table of Contents

Notes to the financial statements for the year ended August 31, 2016 (continued)

1 Accounting policies (continued)

Basis of consolidation

The consolidated financial statements consist of the financial statements of the Group and the Group’s share of its interests in joint ventures and associates. In situations where the Group has a less than 100% interest, the Group considers further factors such as voting rights and exposure to variable returns and the linkage between power and returns in order to determine whether or not it controls the subsidiary. Details of the Group’s assessment with regard to new acquisitions in the year are disclosed in Note 2.

Non-controlling interests in the results and equity of subsidiaries are shown separately in the Consolidated Income Statement, Consolidated Statement of Comprehensive Income/(Loss), Consolidated Balance Sheet and Consolidated Statement of Changes in Equity.

Subsidiaries

Subsidiaries are all entities (including structured entities) over which the Group has control. The Group controls an entity when the Group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power to direct the activities of the entity. Subsidiaries are consolidated fully from the date on which control is transferred to the Group. They are deconsolidated from the date that control ceases. The acquisition method of accounting is used to account for business combinations by the Group.

Intercompany transactions, balances and unrealized gains on transactions between Group companies are eliminated. Unrealized losses are also eliminated unless the transaction provides evidence of an impairment of the transferred asset. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Group.

Joint arrangements

Under IFRS 11 - Joint arrangements, investments in joint arrangements are classified as either joint operations or joint ventures. The classification depends on the contractual rights and obligations of each investor, rather than the legal structure of the joint arrangement. The Group has a joint venture which is accounted for using the equity method after being recognized initially at cost in the Consolidated Balance Sheet.

Under the equity method of accounting, the investments are recognized initially at cost and adjusted thereafter to recognize the Group’s share of the post-acquisition profits or losses of the investee in profit or loss and the Group’s share of movements in other comprehensive income of the investee in other comprehensive income. Dividends received or receivable from associates and joint ventures are recognized as a reduction in the carrying amount of the investment.

When the Group’s share of losses in an equity-accounted investment equals or exceeds its interest in the entity, including any other unsecured long-term receivables, the Group does not recognize further losses, unless it has incurred obligations or made payments on behalf of the other entity. Unrealized gains on transactions between the Group and its joint venture are eliminated to the extent of the Group’s interest in the entity.

Unrealized losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. Accounting policies of equity accounted investees have been changed where necessary to ensure consistency with the policies adopted by the Group.

The Group determines at each reporting date whether there is any objective evidence that the investment in the joint venture is impaired. If this is the case, the Group calculates the amount of impairment as the difference between the recoverable amount of the joint venture and its carrying value and recognizes the amount adjacent to share of profit/(loss) of joint venture in the Consolidated Income Statement.

F-26

Table of Contents

Notes to the financial statements for the year ended August 31, 2016 (continued)

1 Accounting policies (continued)

Basis of consolidation (continued)

Associates

Associates are all entities over which the Group has significant influence but not control, generally accompanying a shareholding of between 20.0% and 50.0% of the voting rights. Under the equity method of accounting, the investments are recognized initially at cost and adjusted thereafter to recognize the Group’s share of the post-acquisition profits or losses of the investee in profit or loss and the Group’s share of movements in other comprehensive income of the investee in other comprehensive income. Dividends received or receivable from associates and joint ventures are recognized as a reduction in the carrying amount of the investment.

The Group’s investment in associates includes goodwill identified on acquisition.

If the ownership interest in an associate is reduced but significant influence is retained, only a proportionate share of the amounts previously recognized in other comprehensive income is reclassified to profit or loss where appropriate.

The Group’s share of post-acquisition profit or loss is recognized in the Consolidated Income Statement, and its share of post-acquisition movements in other comprehensive income is recognized in other comprehensive income with a corresponding adjustment to the carrying amount of the investment. When the Group’s share of losses in an associate equals or exceeds its interest in the associate, including any other unsecured receivables, the Group does not recognize further losses, unless it has incurred legal or constructive obligations or made payments on behalf of the associate.

The Group determines at each reporting date whether there is any objective evidence that the investment in the associate is impaired. If this is the case, the Group calculates the amount of impairment as the difference between the recoverable amount of the associate and its carrying value and recognizes the amount adjacent to share of profit/(loss) of associates in the Consolidated Income Statement.

Profits and losses resulting from upstream and downstream transactions between the Group and its associate are recognized in the Group’s financial statements only to the extent of unrelated investor’s interests in the associates. Unrealized losses are eliminated unless the transaction provides evidence of an impairment of the asset transferred. Accounting policies of associates have been changed where necessary to ensure consistency with the policies adopted by the Group. Dilution gains and losses arising in investments in associates are recognized in the Consolidated Income Statement.

Revenue recognition

Revenue comprises the fair value of consideration received or receivable in the ordinary course of the Group’s activities.

Sales of services which have been invoiced but not yet recognized as revenue are included on the Consolidated Balance Sheet as Deferred revenue.

School fee income

School fee income comprises tuition fees and income from ancillary sources including examinations, school trips, bus transportation and lunch fees.

At a majority of the Group’s schools, our terms and conditions require a full term’s notice of withdrawal for a refund of prepaid tuition.

F-27

Table of Contents

Notes to the financial statements for the year ended August 31, 2016 (continued)

1 Accounting policies (continued)

Revenue recognition (continued)

Deposits

Expenses

Cost of sales

Cost of sales consist principally of salary and benefits for school principals and teaching staff and lecturers employed in our Premium Schools and Learning Services businesses, plus the costs of teaching materials as well as expenses for the provision of school lunches, bus services and athletics programmes. Premium School land and building operating leases and depreciation charges arising from tangible assets owned by Premium Schools is also included in the cost of sales. For the Learning Services businesses the costs are recognized as incurred. For the Premium Schools business salary and benefits for school principals and teaching staff are recognized as incurred, being the 10 months over which teaching services are provided and as such they follow the same recognition period as the relevant fee income.

Selling, general and administrative expenses

Foreign exchange

The Company has a US dollar functional currency and the Group adopts a US dollar presentational currency. The Group has significant and expanding international operations trading in non-US dollar currencies and the functional currency of each subsidiary is dependent on that subsidiary’s operating environment. Movements in global exchange rates can cause currency exposures to the Group’s consolidated US dollar financial results. Trade is conducted in local currencies and, where appropriate, borrowings are matched in that currency to mitigate the risk of exposure of the Group’s assets and liabilities to exchange rate movements.

Transactions in foreign currencies are translated at the exchange rate on the date of the transaction. At each reporting date, monetary assets and liabilities denominated in foreign currencies are re-translated at the rates prevailing on the reporting date. All differences are taken to the Consolidated Income Statement. The Group includes foreign currency exchange gains and losses relating to external debts within Finance expense, while those relating to intercompany and other operational activities are included within Other gains/(losses).

The assets and liabilities of overseas subsidiaries denominated in foreign currencies are translated into US dollar at exchange rates prevailing at the date of the Consolidated Balance Sheet; profits and losses are translated at average exchange rates for the relevant accounting periods. Exchange differences arising are recognized in the Consolidated Statement of Comprehensive Income/(Loss) and are included in the Group’s Currency translation reserve. Such translation differences are recognized as income or expenses in the period in which the operation is disposed of.

Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreign entity and translated at the closing rate.

F-28

Table of Contents

Notes to the financial statements for the year ended August 31, 2016 (continued)

1 Accounting policies (continued)

Post-employment and similar obligations

The Group operates various post-employment schemes, including both defined benefit and defined contribution pension plans and post-employment medical plans.

Pension obligations

The liability or asset recognized in the Consolidated Balance Sheet in respect of defined benefit pension plans is the present value of the defined benefit obligation at the end of the reporting period less the fair value of plan assets. The defined benefit obligation is calculated annually by independent actuaries using the projected unit credit method.

The present value of the defined benefit obligation is determined by discounting the estimated future cash outflows using interest rates of high-quality corporate bonds that are denominated in the currency in which the benefits will be paid, and that have terms approximating to the terms of the related obligation. In countries where there is no deep market in such bonds, the market rates on government bonds are used.

The net interest cost is calculated by applying the discount rate to the net balance of the defined benefit obligation and the fair value of plan assets. This cost is included in employee benefit expense in the statement of profit or loss.

Re-measurement gains and losses arising from experience adjustments and changes in actuarial assumptions are recognized in the period in which they occur, directly in other comprehensive income. They are included in retained earnings in the Consolidated Balance Sheet and Consolidated Statement of Changes in Equity.

Changes in the present value of the defined benefit obligation resulting from plan amendments or curtailments are recognized immediately in profit or loss as past service costs.

For defined contribution plans, the Group pays contributions to publicly or privately administered pension insurance plans on a mandatory, contractual or voluntary basis. The Group has no further payment obligations once the contributions have been paid. The contributions are recognized as employee benefit expense when they are due. Prepaid contributions are recognized as an asset to the extent that a cash refund or a reduction in the future payments is available.

Other post-employment obligations

Some Group companies provide post-retirement healthcare benefits to their retirees. The entitlement to these benefits is usually conditional on the employee remaining in service up to retirement age and the completion of a minimum service period. The expected costs of these benefits are accrued over the period of employment using the same accounting methodology as used for defined benefit pension plans. Re-measurement gains and losses arising from experience adjustments and changes in actuarial assumptions are charged or credited to equity in other comprehensive income in the period in which they arise. These obligations are valued annually by independent qualified actuaries.

Share-based payments

The Group operates a share based compensation plan under which the entity receives services from employees as consideration for equity instruments (options) of the Group. The fair value of the employee services received in exchange for the grant of the options is recognized as an expense over the vesting period. The total amount to be expensed is determined by reference to the fair value of the options granted and estimation of the number of options that expect to vest.

Fair value is calculated using the Black Scholes Option Pricing Model, the details of which are disclosed in Note 22.

Exceptional items

Exceptional items are those significant items which are separately disclosed by virtue of their size or incidence to enable a full understanding of the Group’s financial performance. Transactions which may give rise to exceptional items are principally early termination of debt instruments, restructurings, costs related to the acquisition of subsidiaries and other significant transactions not expected to occur as part of normal operating activities.

F-29

Table of Contents

Notes to the financial statements for the year ended August 31, 2016 (continued)

1 Accounting policies (continued)

Borrowings

Borrowings are recognized initially at fair value, net of transaction costs incurred. Borrowings are measured subsequently at amortized cost. Any difference between the proceeds (net of transaction costs) and the redemption amount is recognized in profit or loss over the period of the borrowings using the effective interest method. Fees paid on the establishment of loan facilities are recognized as transaction costs of the loan to the extent that it is probable that some or all of the facility will be drawn down. In this case, the fee is deferred until the draw down occurs. To the extent there is no evidence that it is probable that some or all of the facility will be drawn down, the fee is capitalized as a prepayment for liquidity services and amortized over the period of the facility to which it relates.

Preference shares, which are redeemable mandatorily on a specific date, are classified as liabilities. The dividends on these preference shares are recognized in profit or loss as finance costs.

The fair value of the liability portion of a convertible bond is determined using a market interest rate for an equivalent non-convertible bond. This amount is recorded as a liability on an amortized cost basis until extinguished on conversion or maturity of the bonds. The remainder of the proceeds is allocated to the conversion option. This is recognized and included in shareholders’ equity, net of income tax effects.

Borrowings are removed from the Consolidated Balance Sheet when the obligation specified in the contract is discharged, cancelled or expired. The difference between the carrying amount of a financial liability that has been extinguished or transferred to another party and the consideration paid, including any non-cash assets transferred or liabilities assumed, is recognized in profit or loss as other income or finance costs.

Where the terms of a financial liability are re-negotiated and the entity issues equity instruments to a creditor to extinguish all or part of the liability (debt for equity swap), a gain or loss is recognized in profit or loss, which is measured as the difference between the carrying amount of the financial liability and the fair value of the equity instruments issued. Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least 12 months after the reporting period.

When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as the de-recognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognized in the statement of profit or loss.

Borrowing costs

General and specific borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset are capitalized during the period of time that is required to complete and prepare the asset for its intended use or sale. Qualifying assets are assets that necessarily take a substantial period of time to get ready for their intended use or sale.

Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalization.

F-30

Table of Contents

Notes to the financial statements for the year ended August 31, 2016 (continued)

1 Accounting policies (continued)

Taxation

The tax expense included in the Consolidated Income Statement consists of current and deferred tax.

Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted by the reporting date. Tax expense is recognized in the Consolidated Income Statement except to the extent that it relates to items recognized in the Consolidated Statement of Comprehensive Income/(Loss) or directly in the Consolidated Statement of Changes in Equity, in which case it is recognized in the Consolidated Statement of Comprehensive Income/(Loss) or directly in the Consolidated Statement of Changes in Equity, respectively.

Deferred tax is provided using the balance sheet liability method, providing for temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Provisions are made for deferred tax that would arise on remittance of the retained earnings of overseas subsidiaries when it is expected that this will be repatriated to the shareholder. Provisions are not made for wholly-owned subsidiaries when the intention is to retain retained earnings in the underlying entity for future investment.

Deferred tax is calculated at the tax rates that have been enacted or substantively enacted by the reporting date. Deferred tax is charged or credited in the Consolidated Income Statement, except when it relates to items charged or credited directly to equity or other comprehensive income, in which case the deferred tax is also recognized in equity, or other comprehensive income, respectively.

Deferred tax liabilities and assets are not recognized for temporary differences between the carrying amount and tax bases of investments in foreign operations where the company is able to control the timing of the reversal of the temporary differences and it is probable that the differences will not reverse in the foreseeable future.

The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the assets to be recovered.

Deferred tax assets and liabilities are offset against each other when there is a legally enforceable right to set-off current taxation assets against current taxation liabilities and it is the intention to settle these on a net basis.

Dividends

Dividends are recorded in the financial statements in the period in which they are approved by the Group’s shareholders.

F-31

Table of Contents

Notes to the financial statements for the year ended August 31, 2016 (continued)

1 Accounting policies (continued)

Business combinations and goodwill

The acquisition method of accounting is used to account for all business combinations, regardless of whether equity instruments or other assets are acquired. The consideration transferred for the acquisition of a subsidiary comprises of:

· fair values of the assets transferred;

· liabilities incurred to the former owners of the acquired business;

· equity interests issued by the Group;

· fair value of any asset or liability resulting from a contingent consideration arrangement; and

· fair value of any pre-existing equity interest in the subsidiary.

Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are, with limited exceptions, measured initially at their fair values at the acquisition date. The Group recognizes any non-controlling interest in the acquired entity on an acquisition-by-acquisition basis. Non-controlling interests in the acquired entity that are present ownership interests and entitle their holders to a proportionate share of the entity’s net assets in the event of liquidation are measured either at fair value or the present ownership interests’ proportionate share in the recognized amounts of the acquired entity’s net identifiable assets. All other components of non-controlling interests are measured at their acquisition date fair value, unless another measurement basis is required by IFRS.

Acquisition-related costs are expensed as incurred.

The excess of the

· consideration transferred,

· amount of any non-controlling interest in the acquired entity, and

· acquisition-date fair value of any previous equity interest in the acquired entity over the fair value of the net identifiable assets acquired is recorded as goodwill. If those amounts are less than the fair value of the net identifiable assets of the subsidiary acquired, the difference is recognized directly in profit or loss as a bargain purchase.

Where settlement of any part of cash consideration is deferred, the amounts payable in the future are discounted to their present value as at the date of acquisition. The discount rate used is the entity’s incremental borrowing rate, being the rate at which a similar borrowing could be obtained from an independent financier under comparable terms and conditions.

Contingent consideration is classified either as equity or a financial liability. Amounts classified as a financial liability are re-measured subsequently to fair value with changes in fair value recognized in profit or loss.

If the business combination is achieved in stages, the acquisition date carrying value of the acquirer’s previously held equity interest in the acquiree is re-measured to fair value at the acquisition date. Any gains or losses arising from such re-measurement are recognized in profit or loss.

Goodwill is measured initially at cost, being the excess of the aggregate of the consideration transferred and the amount recognized for non-controlling interests, and any previous interest held, over the net identifiable assets acquired and liabilities assumed. If the fair values of the net assets acquired is in excess of the aggregate consideration transferred, the Group re-assesses whether it has correctly identified all of the assets acquired and all of the liabilities assumed and reviews the procedures used to measure the amounts to be recognized at the acquisition date. If the re-assessment still results in an excess of the fair value of net assets acquired over the aggregate consideration transferred, then the gain is recognized in profit or loss.

At the acquisition date of a subsidiary, goodwill acquired is recognized as an asset and is allocated to each of the cash-generating units (“CGUs”) expected to benefit from the business combination’s synergies. Goodwill by CGU is allocated into the premium school level and is monitored and tested for impairment at this level by management. Goodwill arising on the acquisition of joint ventures and associates is included within the carrying value of the investment.

On disposal of a subsidiary, joint venture or associate, the attributable amount of goodwill is included in the determination of the profit or loss on disposal.

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Table of Contents

Notes to the financial statements for the year ended August 31, 2016 (continued)

1 Accounting policies (continued)

Acquired intangible assets

Separately acquired intangible assets such as brands/trademarks, customer relationships, contracts and software are measured initially at cost. Intangible assets acquired in a business combination are recognized at fair value at the acquisition date. Intangibles with finite useful lives are carried at cost and are amortized on a straight line basis over their estimated useful lives as follows:

Customer relationships		6 to 15 years straight line
Brands		50 years or indefinite life
Contracts		Length of contract on a straight line basis
Curriculum products & Intellectual property		3 years straight line
Computer software		3 years straight line

Brand name

Legally protected or otherwise separable brand names acquired as part of a business combination are capitalized at fair value on acquisition. For some of the brand names in Western Europe, Management’s expectation is to retain brand names within the business for an indefinite life due to the nature and premium associated with the brand names that the Group has acquired and as such they are not amortized and are therefore subject to an annual impairment review (see Note 13). Brand names with finite useful lives are carried at cost and are amortized on a straight-line basis over their estimated useful lives of 50 years.

Assets held for sale

Non-current assets and associated liabilities are classified as held for sale when their carrying amount will be recovered principally through a sale transaction rather than continuing use and a sale is highly probably. Assets designated as held for sale are held at the lower of carrying amount at designation and fair value less costs to sell.

Depreciation is not charged against Property, plant and equipment classified as held for sale.

Property, plant and equipment

Property, plant and equipment are stated at historic cost less accumulated depreciation and any provision for impairment in value. Cost includes the original purchase price of the asset and the costs attributable to bringing the asset to its working condition for its intended use. Depreciation is provided at rates calculated to write-off the cost, less the estimated residual value, of property, plant and equipment over their estimated useful lives. Estimated useful lives and depreciation rates are as follows:

Freehold and long leasehold buildings		25 to 50 years straight line
Short leasehold land and buildings		The unexpired term of the lease on a straight line basis
Computer equipment		3 to 6 years straight line
Motor vehicles		4 to 5 years straight line
Fixtures and fittings		3 to 7 years straight line

Assets held under finance leases are depreciated over their expected useful lives on the same basis as owned assets or, when shorter, over the term of the relevant lease.

F-33

Table of Contents

Notes to the financial statements for the year ended August 31, 2016 (continued)

1 Accounting policies (continued)

Impairment of non-financial assets

Goodwill is allocated initially to a CGU and tested for impairment at this level. Goodwill is reviewed for impairment at least annually by assessing the recoverable amount of each CGU to which the goodwill relates. The recoverable amount is the higher of fair value less costs to sell and value in use. When the recoverable amount is less than the carrying amount, an impairment loss is recognized. Any impairment is recognized immediately in the Consolidated Income Statement and is not reversed subsequently.

For all other non-financial assets (including other Intangible assets and Property, plant and equipment), the Group performs impairment testing where there are indicators of impairment. If such an indicator exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where the asset does not generate cash flows that are independent from other assets, the Group estimates the recoverable amount of the CGU to which the asset belongs.

The recoverable amount is the higher of fair value less costs to sell and value in use. If the recoverable amount of an asset (or CGU) is estimated to be less than its carrying amount, the carrying amount of the asset (or CGU) is reduced to its recoverable amount. An impairment loss is recognized immediately in the Consolidated Income Statement.

Where an impairment loss reverses subsequently, the carrying amount of the asset (or CGU) is increased to the revised estimate of the recoverable amount, but only to the extent that the increased carrying amount does not exceed the carrying amount that would have been determined if no impairment loss had been recognized for the asset (or CGU) in prior years. A reversal of an impairment loss is recognized immediately as a credit to the Consolidated Income Statement.

Leases

Leases in which a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases. Payments made under operating leases (net of any incentives received form the lessor) are charged to the Consolidated Income Statement on a straight-line basis over the period of the lease.

The Group leases certain Property, plant and equipment. Leases of Property, plant and equipment where the Group has substantially all the risks and rewards of ownership are classified as finance leases. Finance leases are capitalized at the lease’s commencement at the lower of the fair value of the leased property and the present value of the minimum lease payments.

Each lease payment is allocated between the liability and finance charges. The corresponding rental obligations, net of finance charges, are included in Finance lease liabilities (current and non-current). The interest element of the finance cost is charged to the Consolidated Income Statement over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period. The Property, plant and equipment acquired under finance leases are depreciated over the shorter of the useful life of the asset and the lease term.

Sale and leaseback transactions

When a sale and leaseback results in a finance lease, any gain on the sale is deferred and recognized as income over the lease term. Any loss on the sale is immediately recognized as an impairment loss when the sale occurs.

If the leaseback is classified as an operating lease, then any gain is recognized immediately if the sale and leaseback terms are demonstrably at fair value. Otherwise, the sale and leaseback are accounted for as follows:

· If the sale price is below fair value then the gain or loss is recognized immediately other than to the extent that a loss is compensated for by future rentals at a below-market price, then the loss is deferred and amortized over the period that the asset is expected to be used.

· If the sale price is above fair value, then any gain is deferred and disclosed as Deferred gain in the Consolidated Balance Sheet, and amortized over the useful life of the asset.

· If the fair value of the asset is less than the carrying amount of the asset at the date of the transaction, then that difference is recognized immediately as a loss on the sale.

F-34

Table of Contents

Notes to the financial statements for the year ended August 31, 2016 (continued)

1 Accounting policies (continued)

Inventories

Inventories consist of goods for resale, which are carried at the lower of cost and net realisable value, after making allowance for obsolete and slow moving items. Inventory cost is calculated using actual cost.

Trade receivables

Trade receivables are recognized initially at fair value and subsequently measured at amortized cost using the effective interest method, less provision for impairment. A provision for impairment of receivables is established when there is objective evidence that the Group will not be able to collect all amounts due according to the original terms of the receivable. Significant financial difficulties of the entity that owes the receivable, probability that the entity that owes the receivable will enter bankruptcy or financial reorganization and default or delinquency in payments (which is 60-75 days overdue depending on the nature of the invoice) are considered indicators that the trade receivable is impaired. The amount of the provision is the difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted at the original effective interest rate. The carrying amount of the asset is reduced through the use of an allowance account and the amount of the loss is recognized in the Consolidated Income Statement. When a receivable is uncollectible, it is written-off against the allowance account for receivables.

Cash and cash equivalents

Cash and cash equivalents includes cash in hand, term and call deposits held with banks and other short-term highly liquid investments with original maturities of three months or less. Bank overdrafts are classified as current liabilities.

Trade payables

Trade payables are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Accounts payable are classified as current liabilities if payment is due within one year or less (or in the normal operating cycle of the business if longer). If not, they are presented as non-current liabilities.

Trade payables are recognized initially at fair value and subsequently measured at amortized cost using the effective interest method.

Financial instruments

The Group has three types of derivative financial instruments, including the Vietnam option, embedded derivatives and the cross currency swaps.

Derivative financial instruments are recognized at fair value, generally being the cost at the date a contract is entered into and are re-measured subsequently at their fair value. The Group adopted the Put-Call Parity to perform the valuation on the fair value of the Vietnam option. Embedded derivatives are separated from their non-derivative host contracts and accounted for as derivatives. Changes in fair value are recognized in other gains/losses.

Depending on the type of derivative financial instrument, fair value calculation techniques include, but are not limited to, quoted market value and present value of estimated future cash flows (of which the valuation of interest rate instruments is an example).

Derivative assets and liabilities are classified as non-current unless they mature within one year from the reporting date.

(i) Classification

The Group classifies its financial assets in the following categories:

Financial assets at fair value through profit or loss, and loans and receivables. The classification depends on the purpose for which the investments were acquired. Management determines the classification of its investments at initial recognition and, in the case of assets classified as held-to-maturity, re-evaluates this designation at the end of each reporting period.

F-35

Table of Contents

Notes to the financial statements for the year ended August 31, 2016 (continued)

1 Accounting policies (continued)

Financial instruments (continued)

(a) Financial assets at fair value through profit or loss

Financial assets at fair value through profit or loss are financial assets held for trading. A financial asset is classified in this category if acquired principally for the purpose of selling in the short term. Derivatives are also categorised as held for trading unless they are designated as hedges. Assets in this category are classified as current assets if expected to be settled within 12 months, otherwise they are classified as non-current.

(b) Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are included in current assets, except for maturities greater than 12 months after the end of the reporting period. These are classified as non-current assets. The Group’s loans and receivables comprise Trade and other receivables and Cash and cash equivalents in the Consolidated Balance Sheet.

(ii) Reclassification

The Group may choose to reclassify a non-derivative trading financial asset out of the held for trading category if the financial asset is no longer held for the purpose of selling it in the near term. Financial assets other than loans and receivables are permitted to be reclassified out of the held for trading category only in rare circumstances arising from a single event that is unusual and highly unlikely to recur in the near term. In addition, the Group may choose to reclassify financial assets that would meet the definition of loans and receivables out of the held for trading or available-for-sale categories if the Group has the intention and ability to hold these financial assets for the foreseeable future or until maturity at the date of reclassification.

Reclassifications are made at fair value as of the reclassification date. Fair value becomes the new cost or amortized cost as applicable, and no reversals of fair value gains or losses recorded before reclassification date are subsequently made. Effective interest rates for financial assets reclassified to loans and receivables and held-to-maturity categories are determined at the reclassification date. Further increases in estimates of cash flows adjust effective interest rates prospectively.

(iii) Recognition and de-recognition

Regular way purchases and sales of financial assets are recognized on trade-date, the date on which the Group commits to purchase or sell the asset. Financial assets are derecognized when the rights to receive cash flows from the financial assets have expired or have been transferred and the Group has transferred substantially all the risks and rewards of ownership. When securities classified as available-for-sale are sold, the accumulated fair value adjustments recognized in other comprehensive income are reclassified to profit or loss as gains and losses from investment securities.

Offsetting of financial instruments

Financial assets and financial liabilities are offset and the net amount is reported in the Consolidated Balance Sheet if there is a currently enforceable legal right to offset the recognized amounts and there is an intention to settle on a net basis, to realise the assets and settle the liabilities simultaneously.

F-36

Table of Contents

Notes to the financial statements for the year ended August 31, 2016 (continued)

1 Accounting policies (continued)

Provisions

Provisions are recognized when:

· the Group has a present legal or constructive obligation as a result of past events;

· it is more likely than not that an outflow of resources will be required to settle the obligation; and

· the amount can be estimated reliably.

Provisions for onerous leases are recognized when the Group believes that the unavoidable costs of meeting the lease obligations exceed the economic benefits expected to be received under the lease. Provisions for dilapidation costs are recognized on a lease-by-lease basis.

Provisions are not recognized for future operating losses. Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement is determined by considering the class of obligations as a whole. A provision is recognized even if the likelihood of an outflow with respect to any one item included in the same class of obligations may be small.

If the effect of the time value of money is material, provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and, where appropriate, the risks specific to the liability. Where discounting is used, the increase in the provision due to the passage of time is recognized as an interest expense.

Where the Group expects amounts to be received in relation to a provision, the reimbursement is recognized as a separate asset when its receipt is considered virtually certain.

Loss contingencies

The Group is subject to various claims and contingencies which are in the scope of ordinary and routine litigation incidental to the business, including those related to regulation, litigation, business transactions and employee-related matters and taxes. When a claim or potential claim is identified, the likelihood of any loss or exposure is assessed. If it is probable that a loss will result and the amount of the loss can be reasonably estimated, a liability for the loss is recorded in the Consolidated Income Statement. The liability recorded includes probable and estimable legal costs incurred to date and future legal costs. If the loss is not probable or the amount of the loss cannot be reasonably estimated, the claim is disclosed if the likelihood of a potential loss is reasonably possible and the amount of the potential loss could be material. For matters where no loss contingency is recorded, legal fees are expensed as incurred.

Share capital

Share capital issued by the Group is recorded at the proceeds received, net of direct issue costs.

Ordinary shares are classified as equity.

Equity instruments

Financial instruments issued by the Group are treated as equity only to the extent that they meet the following two conditions:

· they include no contractual obligations upon the Company (or Group as the case may be) to deliver cash or other financial assets or to exchange financial assets or financial liabilities with another party under conditions that are potentially unfavourable to the Company (or Group); and

· where the instrument will or may be settled in the company’s own equity instruments, it is either a non-derivative that includes no obligation to deliver a variable number of the company’s own equity instruments or is a derivative that will be settled by the company’s exchanging a fixed amount of cash or other financial assets for a fixed number of its own equity instruments.

To the extent that this definition is not met, the proceeds of issue are classified as a financial liability. Where the instrument so classified takes the legal form of the Company’s own shares, the amounts presented in these financial statements for called up share capital and share premium account exclude amounts in relation to those shares.

F-37

Table of Contents

Notes to the financial statements for the year ended August 31, 2016 (continued)

1 Accounting policies (continued)

Going concern

The Consolidated Balance Sheet as at August 31, 2016 shows that assets exceed liabilities by $291.9 million (2015 - $281.5 million, 2014 - $193.1 million).

The Directors have reviewed the latest guidance relating to going concern and, having made all relevant enquiries, have formed a judgement at the date of the approval of the financial statements that the Group has adequate resources at its disposal to continue its operations for the foreseeable future. This judgement is based on a review undertaken of the current business forecast to twelve months after the signing of the financial statements and the projected cash requirements over that period to assess the likelihood of the Group being able to continue as a going concern. Suitable sensitivities were run for the periods up to twelve months after the signing of the financial statements to assess the headroom available.

As at August 31, 2016, the Group had available but undrawn borrowing facilities of $117.4 million and based on the projected operating cash flows the Directors’ do not believe that there will be a requirement to increase this facility in the foreseeable future. The Group continues to generate strong operating cash flows and benefits from favourable working capital movements through the receipt of tuition fees in advance of the school year. Although the current liabilities exceed current assets by $179.1 million (2015 - $340.9 million, 2014 - $148.6 million), the main reason for this is the receipt of tuition fees in advance of the school year generating current Deferred revenue of $550.0 million which is not considered to be a cash cost in the coming year. In addition, the acquisitions of subsidiaries are timed such as to optimise the cash impact by taking into account the working capital cycle of the acquiree.

This review concluded that there were no material uncertainties that potentially could give rise to a significant doubt about the business continuing as a going concern.

Earnings per share

(i) Basic earnings per share

Basic earnings per share is calculated by dividing:

· the profit attributable to owners of the Company, excluding any costs of servicing equity other than ordinary shares

· by the weighted average number of ordinary shares outstanding during the financial year, adjusted for bonus elements in ordinary shares issued during the year and excluding treasury shares

(ii) Diluted earnings per share

Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account:

· the after income tax effect of interest and other financing costs associated with dilutive potential ordinary shares, and

· the weighted average number of additional ordinary shares that would have been outstanding assuming the conversion of all dilutive potential ordinary shares.

F-38

Table of Contents

Notes to the financial statements for the year ended August 31, 2016 (continued)

1 Accounting policies (continued)

Critical accounting estimates and judgements

Critical estimates and assumptions that are applied in the preparation of the consolidated financial statements include:

Goodwill allocation and impairment testing

Goodwill arising on consolidation represents the excess of the cost of acquisitions over the Group’s interest in the fair value of the identifiable assets and liabilities at the date of acquisition. Fair values are attributed to the identifiable assets, liabilities and contingent liabilities that existed at the date of acquisition, reflecting their condition at that date.

Goodwill acquired in a business combination is allocated, at the date of acquisition, to the CGU that benefitted from that business combination. The Directors consider that a CGU is generally an individual school or contract. For the purposes of testing for impairment to goodwill annually, each CGU is tested individually. For the purpose of disclosure, CGUs are aggregated together to groupings with similar risk characteristics.

Additional information is disclosed in Note 13.

Intangible assets

Intangible assets acquired as part of an acquisition of a business are capitalized separately from goodwill if those assets are identifiable and their fair value can be measured reliably.

F-39

Table of Contents

Notes to the financial statements for the year ended August 31, 2016 (continued)

1 Accounting policies (continued)

Critical accounting estimates and judgements (continued)

Leases

Lease agreements are evaluated to determine if they are finance leases meeting the following main criteria:

· The lease transfers ownership of the asset to the lessee by the end of the lease term,

· The lease term is for the major part of the economic life of the asset even if title is not transferred,

· At the inception of the lease the present value of the minimum lease payments amounts to at least substantially all of the fair value of the leased asset, and

· The leased assets are of such a specialised nature that only the lessee can use them without major modifications.

Fair value measurement

The Group measures financial instruments such as derivatives, at fair values at each balance sheet date. Fair value related disclosures for financial instruments and non-financial assets that are measured at fair value or where the fair values are disclosed, are summarised in the following notes:

· Disclosures for valuation methods, significant estimates and assumptions	Note 1, 2, 25
· Quantitative disclosures of fair value measurement hierarchy	Note 25
· Financial instruments (including those carried at amortized cost)	Note 25

· in the principal market for the asset or liability; or

· in the absence of a principal market, in the most advantageous market for the asset or liability.

The principal or the most advantageous market must be accessible by the Group.

F-40

Table of Contents

Notes to the financial statements for the year ended August 31, 2016 (continued)

1 Accounting policies (continued)

Critical accounting estimates and judgements (continued)

Fair value measurement (continued)

The Group uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximising the use of relevant observable inputs and minimising the use of unobservable inputs.

· Level 1 — Quoted (unadjusted) market prices in active markets for identical assets or liabilities

· Level 2 — Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable

· Level 3 — Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable

For assets and liabilities that are recognized in the financial statements at fair value on a recurring basis, the Group determines whether transfers have occurred between levels in the hierarchy by re-assessing categorisation (based on the lowest level input that is significant to the fair value measurement as a whole) at the end of each reporting period.

For the purpose of fair value disclosures, the Group has determined classes of assets and liabilities on the basis of the nature, characteristics and risks of the asset or liability and the level of the fair value hierarchy, as explained above.

Pension obligations

The Group determines the appropriate discount rate at the end of each year. This is the interest rate that should be used to determine the present value of estimated future cash outflows expected to be required to settle the pension obligations. In determining the appropriate discount rate, the Group considers the interest rates of Exchange Fund Notes that are denominated in the currency in which the benefits will be paid, and that have terms to maturity approximating the terms of the related pension liability.

Other key assumptions for pension obligations are based in part on current market conditions. Additional information is disclosed in Note 22.

F-41

Table of Contents

Notes to the financial statements for the year ended August 31, 2016 (continued)

1 Accounting policies (continued)

Critical accounting estimates and judgements (continued)

Share based payments

The Group operates an equity settled share based compensation plan.

Control and consolidation

Subsidiaries are fully consolidated from the date on which control is transferred to the Group. On March 2, 2015, the Group completed an acquisition of 90% interest in The British International Schools Group (Vietnam). In accordance with IFRS 10 — Consolidated Financial Statements, the Group gained control of BIS Vietnam from January 1, 2015 and incorporated the results from the same date. Financial and operating control was deemed to be gained from January 1, 2015, because the Group obtained power over the relevant activities of Vietnam (including the right to appoint key staff and set fees) and the risks and rewards of Vietnam. After certain administrative matters were concluded, the acquisition was completed on March 2, 2015. The impact of consolidation from January 1, 2015 increased Revenue by $9.0 million and EBITDA by $1.4 million.

Functional currency

In assessing the functional currencies of the Group’s subsidiaries, management exercises judgement in relation to whether the subsidiaries are to be treated as an extension of the reporting entity or whether they operate with a significant degree of autonomy. For those subsidiaries that are not deemed to have local autonomy they follow the functional currency of the parent company or that of another company they are operating on behalf of. For those subsidiaries that are deemed to have local activity / autonomy, the second stage of the assessment is to review factors that impact the functional currency at the local level such as the currency that mainly influences the sales price for its goods and services and the labour materials and other costs of providing goods and services.

Taxation

F-42

Table of Contents

Notes to the financial statements for the year ended August 31, 2016 (continued)

1 Accounting policies (continued)

Critical accounting estimates and judgements (continued)

Taxation (continued)

Deferred tax assets are recognized for unused tax losses to the extent that it is probable that taxable profit will be available against which the losses can be utilized. Significant management judgement is required to determine the amount of deferred tax assets that can be recognized, based upon the likely timing and the level of future taxable profits. The Group has $79.0 million of recognized deferred tax assets, including $38.1 million of tax losses carried forward and other recognized timing differences of $40.9 million. The deferred tax asset on recognized tax losses relate mainly to the US, amounting to $34.5 million where expiration is 20 years and Switzerland of $2.6 million where expiration is 6 years, and others where there is no time expiration. The Group also has $49.7 million of unrecognized tax losses carried forward. These losses relate to subsidiaries that have a history of losses, which do not expire, and may not be used to offset taxable income elsewhere in the Group. The subsidiaries neither have any taxable temporary difference nor any opportunities available that could partly support the recognition of these losses as deferred tax assets. On this basis, the Group has determined that it cannot recognize deferred tax assets on the tax losses carried forward. If the Group was able to recognize all unrecognized deferred tax assets, profit and equity would have increased by $49.7 million net base on the statutory tax rate of each respective country and company where the Directors do not recognize a deferred tax asset. This would lead to a total deferred tax asset of $128.7 million. Further details on deferred taxes are disclosed in Note 15.

The Group is subject to income taxes in numerous jurisdictions but also enjoys tax concession and benefits in jurisdictions including Hong Kong, Thailand and Mexico. Significant judgement is required in determining the worldwide provision for income taxes. There are transactions and calculations for which the ultimate tax determination is uncertain during the ordinary course of business. The Group recognizes liabilities for potential tax audit issues based on estimates of whether additional taxes will be due. Where the final tax outcome of these matters is different from the amounts that were recorded initially, such differences will impact the income tax and deferred tax provisions in the period in which such determination is made. The Group believes that it has provided for all probable and estimable tax liabilities and thus therefore does not expect any liability arising from audits to have a material impact on the Group's results of operations, liquidity, capital resources or financial position.

Recent accounting pronouncements

The Group considers that there are no relevant standards or relevant interpretations mandatory for the current accounting period that have not been applied.

The standards and interpretations that are issued, but not yet effective, up to the date of issuance of the Group’s financial statements are disclosed below. The Group intends to adopt these standards, if applicable, when they become effective.

IFRS 9 - Financial instruments

In July 2014, the IASB issued the final version of IFRS 9 - Financial instruments that replaces IAS 39 - Financial instruments: recognition and measurement and all previous versions of IFRS 9. IFRS 9 is effective for annual periods beginning on or after January 1, 2018. Except for hedge accounting, retrospective application is required but providing comparative information is not compulsory.

The Group plans to adopt the new standard on the required effective date. During 2015, the Group has performed a high-level impact assessment of all three aspects of IFRS 9. This preliminary assessment is based on currently available information and may be subject to changes arising from further detailed analyses or additional reasonable and supportable information being made available to the Group in the future. Overall, the Group is continuing to evaluate the change but expects no significant impact on its Consolidated Balance Sheet.

The Group is continuing to evaluate but does not expect a significant impact on its Consolidated Balance Sheet or equity on applying the classification and measurement requirements of IFRS 9. It expects to continue measuring at fair value all financial assets currently held at fair value. The equity shares in non-listed companies are intended to be held for the foreseeable future.

IFRS 9 requires the Group to record expected credit losses on all of its debt securities, loans and trade receivables, either on a 12-month or lifetime basis. The Group expects to apply the simplified approach and record lifetime expected losses on all trade receivables. The Group is continuing to evaluate the change but does not expect a significant impact.

F-43

Table of Contents

Notes to the financial statements for the year ended August 31, 2016 (continued)

1 Accounting policies (continued)

Recent accounting pronouncements (continued)

IFRS 15 - Revenue from contracts with customers

The IASB has issued a new standard for the recognition of revenue. This will replace IAS 18 - Revenue and IAS 11 — Construction contracts.

The new standard is based on the principle that revenue is recognized when control of a good or service transfers to a customer- so the notion of control replaces the existing notion of risks and rewards.

The standard permits a modified retrospective approach for the adoption. Under this approach entities will recognize transitional adjustments in retained earnings on the date of initial application (i.e. without restating the comparative period). They will only need to apply the new rules to contracts that are not completed as of the date of initial application. The Group is continuing to evaluate the change.

IFRS 16 — Leases

The IASB issued IFRS 16 — Leases in January 2016. IFRS 16 sets out the principles for the recognition, measurement, presentation and disclosure of leases for both parties to a contract, i.e. the customer (‘lessee’) and the supplier (‘lessor’).

IFRS 16 is effective from 1 January 2019. A company can choose to apply IFRS 16 before that date but only if it also applies IFRS 15 — Revenue from contracts with customers.

IFRS 16 eliminates the classification of leases as either operating leases or finance leases as is required by IAS 17 and, instead, introduces a single lessee accounting model. Applying that model, a lessee is recognize:

a) assets and liabilities for all leases with a term of more than 12 months, unless the underlying asset is of low value; and

b) depreciation of lease assets separately from interest on lease liabilities in the Consolidated Income Statement.

The Group is continuing to evaluate the change and expects a significant impact on its balance sheet, due to the large number of operating leases.

Annual Improvements 2012-2014 Cycle

These improvements are effective for annual periods beginning on or after January 1, 2016.

The latest annual improvements clarify:

· IFRS 2 Share-based Payment This improvement is applied prospectively and clarifies various issues relating to the definitions of performance and service conditions which are vesting conditions. The clarifications are consistent with how the Group has identified any performance and service conditions which are vesting conditions in previous periods. In addition, the Group had not granted any awards during the second half of 2014 and 2015. Thus, these amendments did not impact the Group’s financial statements or accounting policies.

· IFRS 5 — Non-current assets held for sale and discontinued operations — when an asset (or disposal group) is reclassified from ‘held for sale’ to ‘held for distribution’ or vice versa, this does not constitute a change to a plan of sale or distribution and does not have to be accounted for as such.

· IFRS 7 — Financial instruments: disclosures — specific guidance for transferred financial assets to help management determine whether the terms of a servicing arrangement constitute ‘continuing involvement’ and, therefore, whether the asset qualifies for de-recognition.

· IFRS 7 — Financial instruments: disclosures — that the additional disclosures relating to the offsetting of financial assets and financial liabilities only need to be included in interim reports if required by IAS 34 — Interim financial reporting.

· IAS 12 — Recognition of deferred tax assets for unrealized losses — clarification of the accounting for deferred tax where an asset is measured at fair value and that fair value is below the asset’s tax base.

· IAS 19 — Employee benefits — that when determining the discount rate for post-employment benefit obligations, it is the currency that the liabilities are denominated in that is important and not the country where they arise.

· IAS 34 — Interim financial reporting — what is meant by the reference in the standard to ‘information disclosed elsewhere in the interim financial report’ and adds a requirement to cross-reference from the interim financial statements to the location of that information.

F-44

Table of Contents

Notes to the financial statements for the year ended August 31, 2016 (continued)

2 Business combinations

Acquisitions in 2014

	Principal activity	Date of acquisition	Proportion of voting equity interests acquired	Consideration transferred $m

Dover Court International School (Pte.) Limited	Premium School	04/22/14	100%	25.2
Neptune Education Holdings Limited	Holding company	07/10/14	100%	20.0

Dover Court Preparatory School and Neptune Education Holdings Limited (Northbridge International School Cambodia) were acquired as part of the continued expansion of the Group’s activities in Premium Schools internationally.

Consideration transferred

	Dover Court Preparatory School $m	Neptune Education Holdings Limited $m

Cash	25.2	15.0
Deferred consideration	—	5.0

Total consideration transferred	25.2	20.0

The deferred consideration of $5.0 million relating to the acquisition of Neptune Education Holdings Limited was settled on October 11, 2016.

Acquisition-related costs have been recognized as an expense within the ‘Exceptional expenses’ line item in the Consolidated Income Statement.

F-45

Table of Contents

Notes to the financial statements for the year ended August 31, 2016 (continued)

2 Business combinations (continued)

Acquisitions in 2014 (continued)

Fair value of assets acquired and liabilities recognized at the date of acquisition

The final fair value of assets acquired and liabilities recognized at the date of acquisition is as follows.

	Dover Court International School (Pte.) Limited $m		Neptune Education Holdings Limited $m		Total $m

Non-current assets
Brand (see Note 13)	7.2		7.7		14.9
Customer relationships (see Note 13)	11.2		8.8		20.0
Property, plant and equipment (see Note 11)	3.0		0.7		3.7

Current assets
Trade and other receivables	1.5		0.1		1.6
Cash and cash equivalents	9.7		0.1		9.8

Current liabilities
Trade and other payables	(4.9	)	(0.1	)	(5.0	)

Current tax liabilities	(0.3	)	(0.2	)	(0.5	)

Non-current liabilities
Deferred tax liabilities (see Note 15)	(3.1	)	(3.3	)	(6.4	)

	24.3		13.8		38.1

The fair value of trade and other receivables is $1.6 million and the gross contractual amount for trade receivables due is $1.6 million, of which $nil is expected to be uncollectible.

Goodwill arising on acquisition

	Dover Court Preparatory School $m		Neptune Education Holdings Limited $m		Total $m

Consideration transferred	25.2		20.0		45.2
Less: fair value of identifiable net assets acquired	(24.3	)	(13.8	)	(38.1	)

Goodwill arising on acquisition (see Note 13)	0.9		6.2		7.1

Goodwill arose from the two acquisitions. The consideration paid for the combination effectively included amounts in relation to the benefit of expected synergies, revenue growth, future market development and assembled workforce of the acquired businesses. These benefits are not recognized separately from goodwill because they do not meet the recognition criteria for identifiable assets. None of the goodwill arising on these acquisitions is expected to be deductible for tax purposes.

F-46

Table of Contents

Notes to the financial statements for the year ended August 31, 2016 (continued)

2 Business combinations (continued)

Acquisitions in 2014 (continued)

The initial accounting for the acquisitions of Dover Court International School (Pte.) Limited (“Dover Court”) and Neptune Education Holdings Limited (“Northbridge”) has been finalized in 2015.

Acquisitions in 2015

	Principal activity	Date of acquisition	Proportion of voting equity interests acquired	Consideration transferred $m

British International Schools Group, Vietnam	Premium Schools	01/01/2015	90%	161.5
Sterling International Schools C Corporation	Holding Company	06/25/2015	100%	604.5

British International Schools Group, Vietnam and Sterling International Schools C Corporation were acquired so as to continue the expansion of the Group’s activities in Premium Schools internationally.

Consideration transferred

	Sterling International Schools C Corporation $m	British International Schools Group $m

Cash	577.2	116.0
Deferred consideration	2.3	23.1
Contingent consideration	25.0	—
Equity	—	22.4

Total consideration transferred	604.5	161.5

The contingent consideration arrangement required the Group to pay, in cash, to the former owners of Sterling International Schools C Corporation, $25.0 million when the number of enrolments of Sterling International Schools C Corporation, in the aggregate, as of September 30, 2015 exceeds the enrolments as of May 31, 2015. This amount ($25.0 million) has been subsequently settled on November 6, 2015, therefore the carrying value is equal to the fair value. Deferred consideration amounting to $2.3 million was settled on October 29, 2015.

$8.5 million of the $23.1 million deferred consideration relating to the acquisition of British International Schools Group, Vietnam was settled in November 2016.

Acquisition-related costs have been recognized as an expense within the ‘Exceptional expenses’ line item in the Consolidated Income Statement.

F-47

Table of Contents

Notes to the financial statements for the year ended August 31, 2016 (continued)

2 Business combinations (continued)

Acquisitions in 2015 (continued)

Fair value of assets acquired and liabilities recognized at the date of acquisition

	Sterling International Schools Corporation $m		British International Schools Group $m		Total $m

Non-current assets
Brand (see Note 13)	152.7		—		152.7
Customer relationships (see Note 13)	34.6		34.3		68.9
IT Software (see Note 13)	0.3		0.2		0.5
Property, plant and equipment (see Note 11)	300.0		9.4		309.4
Other non-current assets	0.7		20.4		21.1

Current assets
Trade and other receivables	9.9		3.3		13.2
Cash and cash equivalents	35.7		6.9		42.6

Current liabilities
Trade and other payables	(125.4	)	(40.4	)	(165.8	)
Finance lease liabilities	(0.1	)	—		(0.1	)
Current tax liabilities	(0.8	)	(0.3	)	(1.1	)
Short-term debt and loans	(0.7	)	—		(0.7	)

Non-current liabilities
Deferred tax liabilities (see Note 15)	(31.2	)	(3.4	)	(34.6	)
Other payables	(2.7	)	(1.7	)	(4.4	)
Finance lease liabilities	(62.6	)	—		(62.6	)
Retirement benefit obligation	(13.8	)	—		(13.8	)

	296.6		28.7		325.3

F-48

Table of Contents

Notes to the financial statements for the year ended August 31, 2016 (continued)

2 Business combinations (continued)

Acquisitions in 2015 (continued)

Fair value of assets acquired and liabilities recognized at the date of acquisition (continued)

The fair value of trade and other receivables is $13.2 million and includes trade receivables with a fair value of $7.1 million. The gross contractual amount for trade receivables due is $11.5 million, of which $4.4 million is expected to be uncollectible.

Adjustments to the 2015 financial statements to reflect retrospectively the final adjustments to the provisional allocation of the purchase price for the Sterling International Schools Corporation acquisition

During the provisional purchase price allocation exercise in June 2015, the valuation of three of the Sterling International Schools Cooperation schools was based on the assumption that the schools would be operated. As a result of a sale and leaseback transaction in 2016, additional information was obtained to support the final fair value of the properties. As a result, the acquisition date fair value of Property, plant and equipment was $300.0 million, an increase of $15.2 million over the provisional value. Furthermore, the acquisition date fair value of Trade and other payables, non-current Other payables and Finance lease liabilities was $125.4 million, $2.7 million and $62.6 million respectively, an increase of $1.0 million, $0.4 million and $0.5 million over the provisional amounts. As a result, there was a net increase in the deferred tax liabilities of $4.7 million. There was also a corresponding decrease in goodwill of $8.6 million, resulting in $308.2 million of total goodwill arising on the acquisition. The increased depreciation charge on the Property, plant and equipment from the acquisition date to August 31, 2015 was not considered to be material to the Group.

Goodwill arising on acquisition

	Sterling International Schools C Corporation $m		British International Schools Group $m		Total $m

Consideration transferred	604.5		161.5		766.0
Non-controlling interest	0.3		2.9		3.2
Less: fair value of identifiable net assets acquired	(296.6	)	(28.7	)	(325.3	)

Goodwill arising on acquisition (see Note 13)	308.2		135.7		443.9

Acquisitions in the current period

In February 2016, the Group completed the acquisition of student and staff contracts, furniture, equipment, cash and receivables of the Lausanne campus of Institut Catholique Mont-Olivet, a school formed under the laws of Switzerland. The Group operated the school from February 2016 until the end of the 2015/2016 academic year on its original campus, and relocated the students and staff to our existing school at Collège Champittet at the beginning of the 2016/2017 academic year. The acquisition aims at expanding the Group’s activities and education services in Switzerland. The aggregate consideration and goodwill arising on acquisition was $2.7 million and $1.4 million, respectively.

F-49

Table of Contents

Notes to the financial statements for the year ended August 31, 2016 (continued)

3 Segmental reporting

The Group’s reporting segments are determined based on the Group’s internal reporting to the Chief Operating Decision Maker (“CODM”). The CODM has been determined to be the Executive Committee (“EXCO”) as it is primarily responsible for the allocation of resources to segments and the assessment of performance of the segments.

The CODM considers the principal activities of the Group to be:

· Premium Schools and associated activities in:

China - People’s Republic of China and Hong Kong SAR;

Europe - Switzerland, Slovakia, Hungary, Czech Republic, Spain, Poland;

Middle East (“ME”) - United Arab Emirates, Qatar;
Southeast Asia (“SEA”) - Thailand, Singapore, Cambodia, Vietnam; and

North America - United States of America, Mexico.

· Unallocated — being the unallocated operations, related to Central & Regional head office costs and the Learning Services division.

In the years ended August 31, 2014 and August 31, 2015, ME and SEA had been considered to be one reporting segment. For comparative purposes, the segment results below for 2014 and 2015 have been adjusted to show ME and SEA as two separate reporting segments, to be consistent with the year ended August 31, 2016. The change has reflects a more strategic approach to the two regions all designed to support growth and opportunities unique to each segment and will further support the Group’s strategy and reflect an end-market orientation and alignment to our values.

The CODM uses revenue and Adjusted EBITDA, earnings before interest, tax, depreciation, amortization, impairment, exceptional and other management exceptional items, exchange gain/(loss) and gain/(loss) on disposal of property, plant and equipment, as reviewed at monthly EXCO meetings, as the key measure of the segments’ results as it reflects the segments’ underlying trading performance for the financial year under evaluation. Revenue and Adjusted EBITDA before exceptional items is a consistent measure within the Group.

Segment Adjusted EBITDA is an adjusted measure of operating profit and measures the performance of each segment before the impact of interest, tax, depreciation, amortization, impairment, exceptional and other management exceptional items, exchange gain/(loss) and gain/(loss) on disposal of property, plant and equipment.

The segment results, the reconciliation of the segment measures to the respective statutory items included in the Consolidated Income Statement, the segment assets and other segment information are as follows:

Year ended August 31, 2014	China $m		Europe $m		ME $m		SEA $m		North America $m		Total reportable segments $m		Un- allocated $m		Total $m

Revenue	165.6		136.0		48.2		37.8		68.8		456.4		18.2		474.6

Adjusted EBITDA	78.4		26.0		11.0		11.2		23.2		149.8		(22.4	)	127.4

Adjusted EBITDA margin	47.3	%	19.1	%	22.8	%	29.6	%	33.7	%	32.8	%	(123.1	)%	26.8	%

F-50

Table of Contents

Notes to the financial statements for the year ended August 31, 2016 (continued)

3 Segmental reporting (continued)

Year ended August 31, 2015	China $m		Europe $m		ME $m		SEA $m		North America $m		Total reportable segments $m		Un- allocated $m		Total $m

Revenue	183.2		133.3		68.6		91.6		82.6		559.3		13.8		573.1

Adjusted EBITDA	84.6		16.9		9.0		27.0		23.0		160.5		(29.8	)	130.7

Adjusted EBITDA margin	46.2	%	12.7	%	13.1	%	29.5	%	27.8	%	28.7	%	(215.9	)%	22.8	%

Year ended August 31, 2016

China
$m

Europe
$m

ME
$m

SEA
$m

North
America
$m

Total
reportable
segments
$m

Un-
allocated
$m

Total
$m

Revenue

197.3

211.8

87.2

130.4

224.3

851.0

5.0

856.0

Adjusted EBITDA

85.8

41.9

17.5

41.9

59.7

246.8

(39.5

)

207.3

Adjusted EBITDA margin

43.5

19.8

20.1

32.1

26.6

29.0

(790.0

24.2

The parent entity is domiciled in the Cayman Islands and did not generate external revenue during the years presented.

F-51

Table of Contents

Notes to the financial statements for the year ended August 31, 2016 (continued)

3 Segmental reporting (continued)

Reconciliation of Adjusted EBITDA to profit after tax

2014	China $m		Europe $m		ME $m		SEA $m		North America $m		Total reportable segments $m		Un- allocated $m		Total $m

Adjusted EBITDA	78.4		26.0		11.0		11.2		23.2		149.8		(22.4	)	127.4
Adjustments:
Exceptional items (see Note 4)	(0.1	)	(1.2	)	13.3		—		(0.3	)	11.7		(111.9	)	(100.2	)
Other management exceptional items *	(1.7	)	(0.0	)	(2.7	)	(0.0	)	—		(4.4	)	(4.1	)	(8.5	)
Other gains/(losses)	—		(0.1	)	(0.4	)	—		(1.9	)	(2.4	)	4.5		2.1
Loss on disposal of property, plant and equipment	(0.1	)	(0.0	)	—		(0.0	)	—		(0.1	)	—		(0.1	)
Depreciation	(8.6	)	(4.9	)	(4.1	)	(0.8	)	(3.7	)	(22.1	)	(1.3	)	(23.4	)
Amortization	(0.0	)	(0.1	)	(0.0	)	(0.0	)	(0.1	)	(0.2	)	(10.2	)	(10.4	)

Operating profit/(loss)	67.9		19.7		17.1		10.4		17.2		132.3		(145.4	)	(13.1	)
Finance income	1.7		0.2		0.0		0.1		—		2.0		—		2.0
Finance expense	(0.4	)	(0.3	)	(0.0	)	(0.0	)	—		(0.7	)	(54.8	)	(55.5	)

Profit/(loss) before tax	69.2		19.6		17.1		10.5		17.2		133.6		(200.2	)	(66.6	)
Tax	(15.2	)	(3.4	)	(1.4	)	(0.2	)	(1.3	)	(21.5	)	(2.1	)	(23.6	)

Profit/(loss) for the year attributable to equity holders	54.0		16.2		15.7		10.3		15.9		112.1		(202.3	)	(90.2	)

2015	China $m		Europe $m		ME $m		SEA $m		North America $m		Total reportable segments $m		Un- allocated $m		Total $m

Adjusted EBITDA	84.6		16.9		9.0		27.0		23.0		160.5		(29.8	)	130.7
Adjustments:
Exceptional items (see Note 4)	(0.0	)	(0.7	)	(0.0	)	(0.1	)	(0.4	)	(1.2	)	(17.6	)	(18.8	)
Other management exceptional items *	(1.4	)	(1.7	)	(0.0	)	(0.3	)	(3.7	)	(7.1	)	(1.9	)	(9.0	)
Other gains/(losses)	0.2		1.2		0.4		(0.5	)	1.4		2.7		9.7		12.4
(Loss)/profit on disposal of property, plant and equipment	(0.1	)	0.1		—		(0.0	)	—		(0.0	)	(0.3	)	(0.3	)
Depreciation	(11.7	)	(6.9	)	(5.0	)	(4.6	)	(5.9	)	(34.1	)	(0.5	)	(34.6	)
Amortization	(0.6	)	(3.0	)	(0.9	)	(5.3	)	(3.0	)	(12.8	)	(1.1	)	(13.9	)

Operating profit/(loss)	71.0		5.9		3.5		16.2		11.4		108.0		(41.5	)	66.5
Finance income	1.1		0.1		0.0		0.2		0.1		1.5		0.9		2.4
Finance expense	(0.0	)	(0.8	)	(0.0	)	(0.1	)	(0.0	)	(0.9	)	(47.8	)	(48.7	)

Profit/(loss) before tax	72.1		5.2		3.5		16.3		11.5		108.6		(88.4	)	20.2
Tax	(12.4	)	(8.0	)	(0.8	)	(1.0	)	8.3		(13.9	)	1.4		(12.5	)

Profit/(loss) for the year attributable to equity holders	59.7		(2.8	)	2.7		15.3		19.8		94.7		(87.0	)	7.7

F-52

Table of Contents

Notes to the financial statements for the year ended August 31, 2016 (continued)

3 Segmental reporting (continued)

Reconciliation of Adjusted EBITDA to profit after tax (continued)

2016

China
$m

Europe
$m

ME
$m

SEA
$m

North
America
$m

Total
reportable
segments
$m

Un-
allocated
$m

Total
$m

Adjusted EBITDA

85.8

41.9

17.5

41.9

59.7

246.8

(39.5

)

207.3

Adjustments:

Exceptional items (see Note 4)

(0.0

)

(1.2

)

(0.1

)

(0.3

)

(3.5

)

(5.1

)

(3.7

)

(8.8

)

Other management exceptional items *

(6.0

)

(0.8

)

(0.2

)

(1.3

)

(1.7

)

(10.0

)

(10.1

)

(20.1

)

Other gains/(losses)

0.2

0.3

0.8

0.0

(1.4

)

(0.1

)

13.5

13.4

(Loss)/profit on disposal of property, plant and equipment

0.0

0.3

0.0

(0.2

)

(0.2

)

(0.1

)

(0.3

)

(0.4

)

Depreciation

(11.8

)

(10.4

)

(5.4

)

(6.4

)

(11.8

)

(45.8

)

(0.7

)

(46.5

)

Amortization

(0.9

)

(4.2

)

(1.2

)

(5.5

)

(5.5

)

(17.3

)

(1.4

)

(18.7

)

Impairment

—

(1.0

)

—

(1.0

)

—

(1.0

)

Operating profit/(loss)

67.3

25.9

10.4

28.2

35.6

167.4

(42.2

)

125.2

Finance income

1.2

0.1

0.0

0.6

0.4

2.3

0.0

2.3

Finance expense

(0.1

)

(3.0

)

—

0.0

(3.1

)

(62.8

)

(65.9

)

Profit/(loss) before tax

68.4

23.0

10.4

28.8

36.0

166.6

(105.0

)

61.6

Tax

(10.1

)

(9.5

)

(0.8

)

(1.6

)

7.2

(14.8

)

2.4

(12.4

)

Profit/(loss) for the year attributable to equity holders

58.3

13.5

9.6

27.2

43.2

151.8

(102.6

)

49.2

* Other management exceptional items are costs which fall outside the definition of exceptional costs for statutory purposes but it is the view of the Directors that these costs should be highlighted in order that the underlying profit of the Group can be fully evaluated.

In 2014, this amount includes a share based payment charges of $3.0 million, school pre-opening costs of $4.1 million and management fees of $1.2 million payable.

In 2015, this amount includes share based payment charges of $2.3 million, school pre-opening costs of $4.3 million, roll out costs of The Julliard-Nord Anglia Performing Arts Program of $0.7 million and costs associated with expatriate taxes levied on teacher salaries of $1.2 million.

In 2016, this amount includes a share based payment charge of $6.7 million, school pre-opening costs of $7.7 million, which includes $4.7 million in relation to the new China dual-curriculum school that opened in September 2016, debt waiver fees of $1.1 million, Sarbanes-Oxley implementation costs of $0.6 million and Global Campus costs of $4.0 million, which relates to the roll out of the Juilliard-Nord Anglia Performing Arts Program ($1.9 million), roll out of the MIT-Nord Anglia Collaboration ($0.9 million), and creation of a second Global Campus site in Switzerland ($1.2 million).

Segment assets

At August 31, 2014	China $m	Europe $m	ME $m	SEA $m	North America $m	Total reportable segments $m	Un- allocated $m	Total $m

Total segment non-current assets	345.2	226.3	62.2	89.7	248.6	972.0	7.9	979.9

F-53

Table of Contents

Notes to the financial statements for the year ended August 31, 2016 (continued)

3 Segmental reporting (continued)

Segment assets (continued)

At August 31, 2015	China $m	Europe $m	ME $m	SEA $m	North America $m	Total reportable segments $m	Un- allocated $m	Total $m

Total segment non-current assets	426.1	537.0	85.3	251.0	691.8	1,991.2	8.7	1,999.9

At August 31, 2016

China
$m

Europe
$m

ME
$m

SEA
$m

North
America
$m

Total
reportable
segments
$m

Un-
allocated
$m

Total
$m

Total segment non-current assets

402.3

563.8

63.9

271.8

519.1

1,820.9

25.1

1,846.0

The parent entity is domiciled in the Cayman Islands and did not have any non-current assets during the years presented.

Other segment information

Year ended August 31, 2014	China $m		Europe $m		ME $m		SEA $m		North America $m		Total reportable segments $m		Un- allocated $m		Total $m

Capital expenditure (including acquisitions through business combinations):
Property, plant and equipment	31.3		11.5		9.4		6.7		6.0		64.9		0.6		65.5
Goodwill and other intangible assets	0.0		0.3		0.1		42.1		0.0		42.5		0.2		42.7
Depreciation of tangible assets	(8.6	)	(4.9	)	(4.1	)	(0.8	)	(3.7	)	(22.1	)	(1.3	)	(23.4	)
Amortization of intangible assets	(0.0	)	(0.1	)	(0.0	)	(0.0	)	(0.1	)	(0.2	)	(10.2	)	(10.4	)
Exceptional items (see Note 4)	(0.1	)	(1.2	)	14.3		(1.0	)	(0.3	)	11.7		(111.9	)	(100.2	)

F-54

Table of Contents

Notes to the financial statements for the year ended August 31, 2016 (continued)

3 Segmental reporting (continued)

Other segment information (continued)

Year ended August 31, 2015	China $m		Europe $m		ME $m		SEA $m		North America $m		Total reportable segments $m		Un- allocated $m		Total $m

Capital expenditure (including acquisitions through business combinations):
Property, plant and equipment	22.0		81.5		6.4		15.8		227.5		353.2		1.3		354.5
Goodwill and other intangible assets	76.4		231.3		0.1		170.7		188.7		667.2		1.1		668.3
Depreciation of tangible assets	(11.7	)	(6.9	)	(5.0	)	(4.6	)	(5.9	)	(34.1	)	(0.5	)	(34.6	)
Amortization of intangible assets	(0.6	)	(3.0	)	(0.9	)	(5.3	)	(3.0	)	(12.8	)	(1.1	)	(13.9	)
Exceptional items (see Note 4)	(0.0	)	(0.7	)	(0.0	)	(0.1	)	(0.4	)	(1.2	)	(17.6	)	(18.8	)

Year ended August 31, 2016

China
$m

Europe
$m

ME
$m

SEA
$m

North
America
$m

Total
reportable
segments
$m

Un-
allocated
$m

Total
$m

Capital expenditure (including acquisitions through business combinations):

Property, plant and equipment

26.0

35.2

6.6

8.9

15.6

92.3

0.8

93.1

Goodwill and other intangible assets

0.2

3.7

0.1

0.2

4.3

0.8

5.1

Depreciation of tangible assets

(11.8

)

(10.4

)

(5.4

)

(6.4

)

(11.8

)

(45.8

)

(0.7

)

(46.5

)

Amortization of intangible assets

(0.9

)

(4.2

)

(1.2

)

(5.5

)

(5.5

)

(17.3

)

(1.4

)

(18.7

)

Exceptional items (see Note 4)

(0.0

)

(1.2

)

(0.1

)

(0.3

)

(3.5

)

(5.1

)

(3.7

)

(8.8

)

F-55

Table of Contents

Notes to the financial statements for the year ended August 31, 2016 (continued)

4 Exceptional expenses

	2014		2015		2016
	$m		$m		$m

Exceptional administrative expenses

a Corporate restructure	(3.2	)	(0.1	)	(0.6	)
b Bond issuance, redemption expense and commitment fees, net	(89.9	)	(10.0	)	—
c Acquisition	(1.5	)	(5.3	)	(0.9	)
d Integration	(4.0	)	(2.4	)	(3.7	)
e Sale and leaseback	—		—		(3.6	)
f Others, net	(1.6	)	(1.0	)	(0.0	)

	(100.2	)	(18.8	)	(8.8	)

a	Corporate restructure in the current, prior year and 2014 is in relation to the closure of the Learning Services business in the Middle East and in the UK at contract completion. Included within the 2014 balance is $2.5 million of costs relating to the transfer of the Group revolving credit facilities from Barclays Bank plc to The Hongkong and Shanghai Banking Corporation Limited (“HSBC”).

b	In 2015, the $10.0 million charge for commitment fees relates to a loan commitment fee which was not capitalized as it related to excess short-term liquidity retained as part of the Group’s liquidity management. This facility matured during 2015 and is no longer available to the Group.

	In 2014, the major elements of the $89.9 million exceptional expense were the $77.0 million bond redemption cost arising upon the early redemption of the $490.0 million 10.25% senior secured notes due 2017 and the $150.0 million 8.50% / 9.50% senior PIK toggle notes due 2018, which were all fully redeemed as of April 14, 2014. The remaining $12.9 million was the release of capitalized costs in connection with these notes.

c	Acquisition related costs in 2016 were incurred for potential acquisitions.

	Acquisition related costs in 2015 were due to the acquired two new subsidiaries (Sterling International Schools C Corporation (“Meritas”) operating in three continents and British International Schools Group, Vietnam) to complement its existing portfolio of Premium Schools, as detailed in Note 2. The $5.3 million relates to legal fees and fees payable to advisors in relation to various aspects of the acquisitions.

	Acquisition related costs in 2014 were due to the business combinations of Dover Court International School (Pte.) Limited, Singapore and Neptune Education Holdings Limited (Northbridge International School Cambodia), including legal fees and fees payable to advisors in relation to various aspects of the acquisitions, as well as final costs incurred on the acquisitions made in 2013.

d	During 2016, the $3.7 million charge, net of an over provision of $1.8 million relating to the acquisition transaction costs of Meritas (see Note 32c), the majority of the charge pertains to the integration costs for the two groups acquired in 2015 (Meritas operating in three continents and British International Schools Group, Vietnam).

e	The $3.6 million relates to the transaction costs of a sale and leaseback of properties in North America for $167.0 million (see Note 11).

f	The 2016 charge mainly relates to other one off costs pertaining to the Management Information Systems (“MIS”) Project, relating to a system used for operations including enquiry and admissions tracking, student academic progress monitoring, and invoice billing.

	The 2015 charge of $1.0 million relates to initial public offering expenses ($0.2 million), pre-opening costs for 3 new schools in North America, Middle East and South East Asia regions ($0.5 million) and IT resourcing and travelling costs pertaining to the MIS Project ($0.3 million).

	The 2014 charge of $1.6 million relates to pre-opening costs of our Tanzania camp ($0.5 million), pre-opening costs on the new schools in Hong Kong and Dubai ($0.7 million) and the part release our overseas employees provision ($0.4 million).

F-56

Table of Contents

Notes to the financial statements for the year ended August 31, 2016 (continued)

5 Other gains and losses

	2014		2015		2016

Financial assets at fair value through profit or loss:
- Fair value losses (i)	(1.9	)	(1.6	)	(3.8	)

- Foreign exchange gain, net (ii)	4.0		14.0		17.2

	2.1		12.4		13.4

(i)	Represents the fair value revaluation of derivatives. Losses in 2016 relate to $1.6 million on cross currency swaps, $0.7 million on call options and $1.5 million on embedded lease derivatives (see Note 25a).
(ii)	Represents the revaluation of intercompany balances denominated in a currency other than the functional currency of each subsidiary, and foreign exchange gains and losses on the revaluation of monetary assets and liabilities.

6 Expenses and auditors’ remuneration

Included in the profit/(loss) are the following:

	2014	2015	2016
	$m	$m	$m

Staff costs (see Note 7)	227.7	282.7	409.3
Loss on disposal of property, plant and equipment and intangible assets	0.1	0.3	0.4
Operating lease rentals:
Land and buildings	42.2	57.4	75.3
Other	0.5	0.7	1.4
Depreciation in cost of sales	21.4	33.9	45.7
Depreciation	2.0	0.7	0.8
Amortization of intangible assets	10.4	13.9	18.7
Impairment (see Note 13)	—	—	1.0

Auditors’ remuneration:

	2014	2015	2016
	$m	$m	$m

Fees payable to Company’s auditor for the audit of parent Company and consolidated financial statements	0.4	0.6	1.7

*Disclosure below based on fees payable in respect of services to the company and its subsidiaries*
Fees payable to Group’s auditors and their subsidiaries in respect of:
The auditing of accounts of any subsidiary of the company	0.5	1.4	1.9
Tax advisory services	0.0	0.3	0.1
All other services	4.2	1.6	0.5

F-57

Table of Contents

Notes to the financial statements for the year ended August 31, 2016 (continued)

7 Staff numbers and costs

The monthly average number of persons employed by the Group (including Directors) during the year, analysed by category, was as follows:

	Number of employees
	2014	2015	2016

Administration and management	1,173	1,500	2,299
Teaching	2,616	3,223	4,719
Advisors and guidance officers	39	43	142

	3,828	4,766	7,160

The aggregate employee benefit expense of these persons was as follows:

	2014	2015	2016
	$m	$m	$m

Wages and salaries	206.3	256.7	365.7
Share based payments (see Note 22)	3.0	2.3	6.7
Social security costs	15.4	19.3	28.2
Contributions to defined contribution plans (see Note 22)	1.2	2.1	3.4
Expenses related to defined benefit plans (see Note 22)	1.8	2.3	5.3

	227.7	282.7	409.3

8 Key management personnel

	2014	2015	2016
	$m	$m	$m

Fee, salaries and other short term employment benefits	6.7	7.9	8.6
Share-based payments (see Note 22)	2.1	1.8	6.0
Other benefits	0.2	0.3	0.4

	9.0	10.0	15.0

The key management personnel are the Directors and senior managers who received emoluments, as noted above.

Other short term employment benefits relate to medical insurance premiums and rental benefit paid.

Other benefits relate to contributions to defined contribution schemes.

	2014	2015	2016

Number of key management personnel accruing benefits under:
- Defined benefit schemes	1	—	—

Please refer to Note 22 for the details of the defined benefit schemes.

F-58

Table of Contents

Notes to the financial statements for the year ended August 31, 2016 (continued)

9 Finance income and expense

Recognized in Consolidated Income Statement:

	2014	2015	2016
	$m	$m	$m

Bank interest	2.0	2.4	2.3

Total finance income	2.0	2.4	2.3

Net loss on financial instruments designated as fair value through profit or loss:
Derivative financial instruments	—	—	0.5

Total interest expense on financial liabilities measured at amortized cost:
Term loan due 2021	10.9	31.7	49.8
5.75% Senior secured notes due 2021	—	2.3	12.7
10.25% Senior secured notes due 2017	32.2	—	—
8.50% Senior PIK toggle notes due 2018	8.3	—	—
Bank loans and overdrafts	3.2	2.1	3.0
Interest on defined benefit pension plan obligation (see Note 22)	0.9	0.8	0.8
Discount unwind on deferred consideration	—	1.6	0.9
Foreign exchange loss/(gain) on senior secured notes	—	9.7	(4.7	)
Finance lease liabilities	—	0.5	2.9

Total finance expense	55.5	48.7	65.9

Net finance expense	53.5	46.3	63.6

F-59

Table of Contents

Notes to the financial statements for the year ended August 31, 2016 (continued)

10 Income tax expense

Recognized in the Consolidated Income Statement:

	2014		2015		2016
	$m		$m		$m

Current tax expense
Overseas current tax charge	21.3		20.2		29.4
Adjustment for prior years overseas tax charge	0.7		2.0		0.3

Current tax expense	22.0		22.2		29.7

Deferred tax (income)/expense
Origination and reversal of temporary differences	(2.1	)	(9.5	)	(17.3	)
Adjustment in respect of prior years	3.7		(0.2	)	—

Deferred tax (income)/expense	1.6		(9.7	)	(17.3	)

Total tax expense	23.6		12.5		12.4

Reconciliation of effective tax rate

The tax assessed for the period differs from the standard rate of Corporation tax in China of 25.0% (2015 - 25.0%, 2014 - 25.0%) per the explanation below:

	2014		2015		2016
	$m		$m		$m

Profit/(loss) before tax	(66.6	)	20.2		61.6

Tax using a tax rate of 25.0% (2015 - 25.0%, 2014 - 25.0%)	(16.7	)	5.1		15.4
Effect of tax rates in foreign jurisdictions	12.1		2.2		(9.2	)
Non-deductible expenses/(non-assessable income)	8.0		(7.1	)	1.2
Withholding tax paid or payable on overseas dividends and other income for which no relief is available	6.0		1.0		2.1
Losses for which no deferred tax asset was recognized	9.8		9.9		5.4
Recognition of temporary differences not recognized previously	—		—		(2.5	)
Change in tax rates in foreign jurisdiction	—		—		(0.2	)
Utilization of losses brought forward not recognized	—		(0.4	)	(0.1	)
Under/(Over) provision in prior years	4.4		1.8		0.3

Total tax expense	23.6		12.5		12.4

Tax credited/(charged) to other comprehensive income *	0.2		0.9		3.3

* Included within Actuarial losses on defined benefit pension schemes

F-60

Table of Contents

Notes to the financial statements for the year ended August 31, 2016 (continued)

10 Income tax expense (continued)

The adjustment in respect of prior year primarily relates to changes in the tax deductibility of certain expenses following a review with a local tax authority.

The Group has used the statutory tax rate for China, being 25.0% rather than that for Cayman Islands, being 0.0% or that for the United Kingdom, being 20.6%, as the Group believes this provides a more meaningful comparison, and the majority of the Group’s taxable profits are earned in China, and the majority of the Group’s taxes are paid in China.

Deferred tax assets are recognized for tax losses carried forward to the extent that the realization of the related tax benefit through future taxable profits is probable. The Group did not recognize a total deferred tax asset of $49.7 million (2015 - $65.7 million, 2014 - $69.9 million). This includes an un-provided deferred tax asset of $34.7 million (2015 - $48.3 million, 2014 - $60.8 million) which relates to UK losses which have no expiry date and for which relief is not anticipated to be available in the foreseeable future. The decrease is mainly attributable to change in tax rates, foreign currency translation and finalization of tax computations. None of these tax losses have been utilized in the current year. It also includes an un-provided deferred tax asset of $15.0 million (2015 - $9.7 million, 2014 - $4.9 million) which relates to losses in overseas entities.

Management has determined that it is appropriate to recognize a deferred tax asset of $4.0 million in relation to the full temporary difference arising from the deficit in the UK pension scheme in the current year, as future taxable profits are now considered probable. The un-provided deferred tax asset in relation to the deficit in the UK pension scheme was $7.7 million in 2015 and $4.1 million in 2014.

The Group is subject to income taxes in numerous jurisdictions but also enjoys tax concessions and benefits in jurisdictions including Hong Kong, Thailand and Mexico. Significant judgement is required in determining the worldwide provision for income taxes. There are many transactions and calculations for which the ultimate tax determination is uncertain. The Group recognizes liabilities for potential tax audit issues based on estimates of whether additional taxes will be due.

F-61

Table of Contents

Notes to the financial statements for the year ended August 31, 2016 (continued)

11 Property, plant and equipment

	Land and buildings		Fixtures and fittings		Computer equipment		Motor vehicles		Assets under construction		Total
	$m		$m		$m		$m		$m		$m

Cost
Balance at September 1, 2013	83.7		22.7		15.4		1.3		7.6		130.7
Acquisitions through business combinations	2.9		0.7		0.1		0.0		—		3.7
Additions	12.5		11.3		9.2		0.8		28.0		61.8
Disposals	(1.3	)	(0.9	)	(2.0	)	(0.0	)	—		(4.2	)
Transfers	9.5		—		—		—		(9.5	)	—
Effect of movements in foreign exchange	(0.5	)	(0.4	)	—		0.0		(0.0	)	(0.9	)

Balance at August 31, 2014	106.8		33.4		22.7		2.1		26.1		191.1

Balance at September 1, 2014	106.8		33.4		22.7		2.1		26.1		191.1
Acquisitions through business combinations	263.2		12.0		6.4		1.9		25.9		309.4
Additions	14.3		15.8		11.2		1.4		16.7		59.4
Disposals	(0.9	)	(0.4	)	(2.2	)	(0.6	)	(0.0	)	(4.1	)
Transfers	23.1		(0.3	)	1.0		0.1		(23.9	)	—
Effect of movements in foreign exchange	(7.3	)	(2.4	)	(1.7	)	(0.3	)	(0.8	)	(12.5	)

Balance at August 31, 2015	399.2		58.1		37.4		4.6		44.0		543.3

Balance at September 1, 2015	399.2		58.1		37.4		4.6		44.0		543.3
Additions	39.6		11.4		11.8		0.8		29.5		93.1
Disposals	(196.8	)	(4.9	)	(4.1	)	(0.2	)	—		(206.0	)
Assets held for sale	(10.3	)	—		—		—		—		(10.3	)
Transfers	46.3		3.6		2.3		—		(52.2	)	—
Effect of movements in foreign exchange	(5.0	)	(0.3	)	(0.3	)	—		(0.5	)	(6.1	)

Balance at August 31, 2016	273.0		67.9		47.1		5.2		20.8		414.0

Accumulated depreciation and impairment
Balance at September 1, 2013	16.8		8.4		6.6		0.7		—		32.5
Depreciation charge for the year	11.7		5.8		5.6		0.3		—		23.4
Disposals	(1.2	)	(0.9	)	(2.0	)	0.0		—		(4.1	)
Transfers	0.0		—		—		0.0		—		0.0
Effect of movements in foreign exchange	(0.4	)	(0.3	)	(0.1	)	0.0		—		(0.8	)

Balance at August 31, 2014	26.9		13.0		10.1		1.0		—		51.0

Balance at September 1, 2014	26.9		13.0		10.1		1.0		—		51.0
Depreciation charge for the year	16.5		9.4		7.9		0.8		—		34.6
Disposals	(0.8	)	(0.3	)	(1.7	)	(0.5	)	—		(3.3	)
Transfers	—		—		—		—		—		—
Effect of movements in foreign exchange	(2.6	)	(0.3	)	(0.9	)	(0.1	)	—		(3.9	)

Balance at August 31, 2015	40.0		21.8		15.4		1.2		—		78.4

F-62

Table of Contents

Notes to the financial statements for the year ended August 31, 2016 (continued)

11 Property, plant and equipment (continued)

Land and
buildings

Fixtures
and fittings

Computer
equipment

Motor
vehicles

Assets
under
construction

Total

Accumulated depreciation and impairment

Balance at September 1, 2015

40.0

21.8

15.4

1.2

—

78.4

Depreciation charge for the year

21.4

13.4

10.6

1.1

—

46.5

Disposals

(28.9

)

(3.9

)

(3.9

)

(0.2

)

—

(36.9

)

Assets held for sale

(2.0

)

—

(2.0

)

Transfers

(0.0

)

—

(0.0

)

Effect of movements in foreign exchange

(0.5

)

(0.0

)

(0.0

)

(0.0

)

—

(0.5

)

Balance at August 31, 2016

30.0

31.3

22.1

2.1

—

85.5

Net book value

At August 31, 2014

79.9

20.4

12.6

1.1

26.1

140.1

At August 31, 2015

359.2

36.3

22.0

3.4

44.0

464.9

At August 31, 2016

243.0

36.6

25.0

3.1

20.8

328.5

The Group completed the sale and leaseback of Windermere Preparatory School on April 1, 2016 and the properties of North Broward Preparatory School and The Village School on May 31, 2016. The total sale price was $167.0 million and the total net book value was $167.2 million, resulting in a loss of $0.2 million. There were also transaction costs of $3.6 million which have been recognized in exceptional costs. The sales and leaseback transaction involves an operating lease and the loss from the sale has been recognized immediately.

Land and buildings and motor vehicles includes the following amounts where the Group is a lessee under a finance lease:

	2014	2015		2016		2014		2015		2016		2014		2015		2016
	Land and buildings					Motor vehicles						Computer equipment
	$m	$m		$m		$m		$m		$m		$m		$m		$m

Cost-capitalized finance lease	—	47.5		65.4		0.0		1.2		1.2		0.0		0.1		0.1
Accumulated depreciation	—	(3.0	)	(3.5	)	(0.0	)	(0.2	)	(0.4	)	(0.0	)	(0.0	)	(0.1	)

At August 31,	—	44.5		61.9		0.0		1.0		0.8		0.0		0.1		0.0

The Group leases buildings under non-cancellable finance lease agreements. The lease terms are between 4 and 90 years, and risks and rewards of the assets lies within the Group.

F-63

Table of Contents

Notes to the financial statements for the year ended August 31, 2016 (continued)

12 Assets held for sale

	2014	2015	2016
	$m	$m	$m

Land and buildings	—	—	8.3

	—	—	8.3

In August 2016, the Group decided to sell the 14.5 acres of land (including all structures) at 4211 Watonga Blvd, Houston, Texas which was originally acquired for the British School of Houston. A sale and purchase agreement was signed subsequent to the year end for a sale price of $9.7 million, subject to due diligence.

The asset is presented within current assets.

F-64

Table of Contents

Notes to the financial statements for the year ended August 31, 2016 (continued)

13 Intangible assets

	Goodwill		Brand name		Customer relations		Contracts		Website & Intellectual property		Computer software		Total
	$m		$m		$m		$m		$m		$m		$m

Cost
Balance at September 1, 2013	687.7		56.4		71.9		0.6		2.6		2.0		821.2
Acquisitions through business combinations	7.1		14.9		20.0		—		—		—		42.0
Additions	—		—		—		—		0.4		0.3		0.7
Disposals and adjustments *	—		—		—		—		—		(0.2	)	(0.2	)
Impairment	—		—		—		—		—		—		—
Effect of movements in foreign exchange	1.6		0.5		0.6		—		0.0		—		2.7

Balance at August 31, 2014	696.4		71.8		92.5		0.6		3.0		2.1		866.4

Balance at September 1, 2014	696.4		71.8		92.5		0.6		3.0		2.1		866.4
Acquisitions through business combinations	443.9		152.7		68.9		—		—		0.5		666.0
Additions	—		—		—		—		0.3		1.7		2.0
Disposals and adjustments *	—		—		—		—		—		(1.0	)	(1.0	)
Impairment	—		—		—		—		—		—		—
Effect of movements in foreign exchange	(39.4	)	(5.6	)	(6.5	)	—		(0.2	)	(0.0	)	(51.7	)

Balance at August 31, 2015	1,100.9		218.9		154.9		0.6		3.1		3.3		1,481.7

Balance at September 1, 2015	1,100.9		218.9		154.9		0.6		3.1		3.3		1,481.7
Acquisitions through business combinations	1.4		—		2.1		—		—		—		3.5
Additions	—		—		—		—		0.3		1.3		1.6
Disposals and adjustments *	—		—		—		(0.6	)	—		(0.1	)	(0.7	)
Impairment	—		(1.0	)	—		—		—		—		(1.0	)
Effect of movements in foreign exchange	(25.2	)	(2.2	)	(0.2	)	—		(0.5	)	0.2		(27.9	)

Balance at August 31, 2016	1,077.1		215.7		156.8		—		2.9		4.7		1,457.2

Accumulated amortization and impairment
Balance at September 1, 2013	46.7		0.3		8.7		0.5		0.2		0.9		57.3
Amortization for the year	—		0.8		7.9		0.1		1.0		0.6		10.4
Disposals and adjustments *	—		—		—		—		—		(0.2	)	(0.2	)
Impairment	—		—		—		—		—		—		—
Effect of movements in foreign exchange	2.6		—		0.0		—		—		—		2.6

Balance at August 31, 2014	49.3		1.1		16.6		0.6		1.2		1.3		70.1

Balance at September 1, 2014	49.3		1.1		16.6		0.6		1.2		1.3		70.1
Amortization for the year	—		1.3		11.0		—		0.9		0.7		13.9
Disposals and adjustments *	—		—		—		—		—		(1.0	)	(1.0	)
Impairment	—		—		—		—		—		—		—
Effect of movements in foreign exchange	(2.9	)	(0.1	)	(0.7	)	—		(0.1	)	0.0		(3.8	)

Balance at August 31, 2015	46.4		2.3		26.9		0.6		2.0		1.0		79.2

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Notes to the financial statements for the year ended August 31, 2016 (continued)

13 Intangible assets (continued)

	Goodwill		Brand name		Customer relations		Contracts		Website & Intellectual property		Computer software		Total
	$m		$m		$m		$m		$m		$m		$m

Accumulated amortization and impairment
Balance at September 1, 2015	46.4		2.3		26.9		0.6		2.0		1.0		79.2
Amortization for the year	—		2.8		13.8		—		0.8		1.3		18.7
Disposals and adjustments *	—		—		—		(0.6	)	—		(0.0	)	(0.6	)
Impairment	—		(0.0	)	—		—		—		—		(0.0	)
Effect of movements in foreign exchange	(5.3	)	(0.0	)	(0.1	)	—		(0.4	)	0.3		(5.5	)

Balance at August 31, 2016	41.1		5.1		40.6		—		2.4		2.6		91.8

Net book value
At August 31, 2014	647.1		70.7		75.9		0.0		1.8		0.8		796.3

At August 31, 2015	1,054.5		216.6		128.0		0.0		1.1		2.3		1,402.5

At August 31, 2016	1,036.0		210.6		116.2		—		0.5		2.1		1,365.4

* Fully amortized assets were reviewed during the year and certain assets that were no longer in use have been adjusted for, reducing cost and accumulated depreciation by $0.6 million (2015 - $nil, 2014 - $nil).

A CGU is the smallest identifiable group of assets that generates cash inflows that are largely independent of the cash inflows from other assets or groups of assets. Goodwill by CGU is allocated into the premium school level and is monitored and tested for impairment at this level by management.

The recoverable amount of a CGU is determined based on value-in-use calculations. These calculations use pre-tax cash flow projections based on financial budgets approved by management covering a five-year period discounted using pre-tax discount rates. Cash flows beyond the five-year period are extrapolated using the estimated growth rates stated below. The growth rate does not exceed the long-term average growth rate for the education industry in which the CGU operates.

The key assumptions used for value-in-use calculations in 2014 were as follows:

	Carrying Value of Goodwill $m	Pupil Growth (Year 1 to 5)		Discount Rate	Long-Term Growth Rate (Average)

China	278.9	11.2	%	16.2% - 18.1%	2.0	%
Western Europe	91.5	19.0	%	10.4% - 13.5%	1.5	%
Eastern Europe	51.2	19.0	%	11.6% - 12.8%	1.5	%
Qatar	32.1	28.3	%	14.0%	2.0	%
Thailand	21.0	28.3	%	15.2%	2.0	%
Other — Southeast Asia	6.7	28.3	%	14.9% - 19.5%	2.0	%
North America	158.9	63.8	%	13.7% - 15.5%	1.5	%
Learning Services	6.8	n/a		13.1%	—

	647.1

The 2014 discount rates were revised in the August 31, 2015 financial statements to correct an error.

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Notes to the financial statements for the year ended August 31, 2016 (continued)

13 Intangible assets (continued)

The key assumptions used for value-in-use calculations in 2015 are as follows:

	Carrying Value of Goodwill $m	Pupil Growth (Year 1 to 5)		Discount Rate	Long-Term Growth Rate (Average)

China	313.6	40.7	%	16.2% - 18.1%	2.3	%
Western Europe	238.7	24.4	%	10.4% - 13.5%	1.5	%
Eastern Europe	43.9	13.7	%	11.6% - 12.8%	1.5	%
Qatar	32.0	0.0	%	14.0%	2.0	%
Thailand	18.7	13.9	%	15.2%	2.0	%
Vietnam	129.7	50.6	%	22.4% - 23.3%	4.0	%
Other — Southeast Asia	7.0	32.1	%	14.9% - 19.5%	2.0	%
North America	264.6	30.8	%	13.7% - 15.5%	2.2	%
Learning Services	6.3	n/a		13.1%	1.0	%

	1,054.5

The key assumptions used for value-in-use calculations in 2016 are as follows:

	Carrying Value of Goodwill $m	Pupil Growth (Year 1 to 5)		Discount Rate	Long-Term Growth Rate (Average)

China	299.4	28.9	%	13.9% - 14.6%	2.3	%
Western Europe	235.5	36.8	%	9.5% - 14.8%	0.9	%
Eastern Europe	43.2	26.0	%	12.0% - 14.1%	1.5	%
Qatar	32.5	1.9	%	13.8% - 14.4%	4.7	%
Thailand	19.4	11.7	%	13.4%	1.6	%
Vietnam	130.5	26.4	%	21.4% - 22.3%	3.8	%
Other — Southeast Asia	7.0	26.2	%	11.8% - 24.0%	1.9	%
North America	263.1	19.6	%	10.9% - 12.5%	2.0	%
Learning Services	5.4	n/a		10.8%	1.7	%

	1,036.0

The value-in-use calculations are most sensitive to the following assumptions:

· Full Time Equivalent students (“FTEs”)

· EBITDA margins

· Discount rates

· Growth rate estimates

FTEs — FTEs are based on budgeted numbers and extrapolated based on expected future growth and historical performance. The Group defines a FTE as a student who is enrolled to attend school for the full school day, five days a week. For example, a student who enrols for three days a week equals 0.6 FTEs and a student who enrols for five mornings a week equals 0.5 FTEs. The assumptions for FTEs are disclosed above as pupil growth percentages from year 1 to 5.

EBITDA margins — EBITDA margins are based on average values achieved in similar schools in the region. Forecasted EBITDA margins are not specifically disclosed due to sensitivity of the information. However, EBITDA is mainly driven by FTEs which are disclosed above as pupil growth percentages from year 1 to 5.

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Notes to the financial statements for the year ended August 31, 2016 (continued)

13 Intangible assets (continued)

Discount rates — Discount rates represent the current market assessment of the risks specific to each CGU, taking into consideration the time value of money and individual risks of the underlying assets that have not been incorporated in the cash flow estimates. The discount rate calculation is based on the specific circumstances of the Group and its CGUs and is derived from its weighted average cost of capital (“WACC”). The WACC takes into account both debt and equity. As a result of the acquisitions, the initial public offering and further diversification of the geographical location of CGUs management have reassessed the underlying inputs to the calculation of the discount rates to be applied to the individual CGUs. The cost of equity is derived from the expected return on investment by the Group’s investors. The cost of debt is based on the interest-bearing borrowings the Group is obliged to service which has changed year on year. Segment-specific risk is incorporated by applying individual beta factors. The beta factors are evaluated annually based on publicly available market data. Adjustments to the discount rate are made to factor in the specific amount and timing of the future tax flows in order to reflect a pre-tax discount rate.

Growth rate estimates — Rates are based on industry research and disclosed above as long-term growth rates.

2014

When applying the updated discount rates in the 2014 value-in-use calculation, there remains sufficient headroom as compared to carrying value.

2015

Upon management’s annual impairment review on goodwill and indefinite life intangible assets, a school in Western Europe has displayed potential indicators of impairment. A sensitivity analysis has been performed on the value-in-use calculation.

Specific assumptions used

The following assumptions were used in the value-in-use calculation for the school in Western Europe:

	Current assumptions			Revised assumptions*		Decrease on headroom ($m)

Cumulative FTE growth (year 1 to 5)	17.0		%	15.0	%	1.9
Discount rates	10.6		%	11.6	%	4.7
Growth rate estimates	1.50		%	0.75	%	2.8
Intangible assets at risk	$	37.3 million
Headroom	$	6.9 million

* Represents revised assumptions after a reasonable possible shift.

Sensitivity to the changes in assumptions

The implications of the key assumptions for the recoverable amount are discussed below:

· FTEs — Management has considered the possibility of lower than forecast increases of FTEs. This may occur if Management’s recruitment efforts fail to increase enrolment or replace departing students. Additionally, if Management fails to maintain the Group’s quality of education, parents may choose not to re-enrol their children in the schools. A reduction of FTEs by 6.2% every year from 2017 to 2020 would result in impairment.

· EBITDA margins — the main driver for EBITDA is FTEs. Revenue is mainly generated from tuition fees and variable costs are mainly driven by the amount of resources necessary to provide education to the enrolled students. The impact of a possible decline is modelled through the reduction of FTEs discussed above.

· Discount rates — the discount rate calculation is based on the specific circumstances of the CGUs and is derived from its WACC (as described above) of the individual CGU. 10.6% represents the discount rate of the Western Europe school at risk, this rate is at the low end of the WACC range within Western Europe due to the CGU and country specific debt and equity characteristics. A rise in the pre-tax discount rate to 12.2% would result in impairment.

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Notes to the financial statements for the year ended August 31, 2016 (continued)

13 Intangible assets (continued)

2015 (continued)

Sensitivity to the changes in assumptions (continued)

· Growth rate assumptions — the effect of new entrants is not expected to have an adverse impact on the forecasts due to the long established history and brand of the schools. A reduction by 2.1% in the long term growth rates would result in impairment.

2016

Upon management’s annual impairment review on goodwill and indefinite life intangible assets, a school in Western Europe and a school in Eastern Europe have displayed potential indicators of impairment. A sensitivity analysis has been performed on the value-in-use calculations.

Specific assumptions used

The following table sets out the assumptions that were used in the value-in-use calculation for the two schools, as well as the impact on headroom should the assumptions change:

	School #1 (Western Europe)						School #2 (Eastern Europe)
	Current assumptions			Revised Assumptions*		Decrease on headroom ($m)	Current assumptions			Revised Assumptions*		Decrease on headroom ($m)

Cumulative FTE growth (year 1 to 5)	31.7		%	30.7	%	1.8	63.3		%	58.3	%	1.6

Discount rate	10.1		%	11.1	%	4.2	12.6		%	13.6	%	1.0

Terminal growth rate	0.8		%	0.4	%	1.8	1.6		%	0.8	%	0.8

Intangible assets at risk	$	39.5 million					$	8.7 million

Headroom	$	6.0 million					$	4.2 million

* Represents revised assumptions after a reasonable possible shift.

Sensitivity to the changes in assumptions

The implications of the key assumptions for the recoverable amount are discussed below:

· FTEs - for School #1, a reduction of FTEs by 2.5% every year from 2018 to 2021 would result in impairment. For School #2, a reduction of FTEs by 8.1% every year from 2018 to 2021 would result in impairment.

· Discount rates - for School #1, a rise in the pre-tax discount rate to 11.6% would result in impairment. For School #2, a rise in the pre-tax discount rate to 18.5% would result in impairment.

· Growth rate assumptions - for School #1, a reduction by 1.5% in the long term growth rates would result in impairment. For School #2, a reduction by 5.6% in the long term growth rates would result in impairment.

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Notes to the financial statements for the year ended August 31, 2016 (continued)

13 Intangible assets (continued)

Individual intangible assets other than goodwill that are considered to be material to the Group are as follows:

		Brand Names
		2014	2015	2016
CGU		$m	$m	$m

British School of Guangzhou	China	4.0	3.8	3.5
Léman International School — Chengdu	China	—	11.5	10.7
Collège Beau-Soleil*	Western Europe	13.3	12.7	12.5
Collège Champittet*	Western Europe	6.3	5.9	5.8
International College Spain	Western Europe	3.3	2.8	2.7
Collège du Léman*	Western Europe	—	60.2	59.0
Compass International School Doha	Qatar	3.9	3.9	3.8
The Regent’s International School	Thailand	5.0	4.4	4.5
Dover Court Preparatory School	Other — Southeast Asia	7.2	6.3	6.4
Northbridge International School	Other — Southeast Asia	7.7	7.5	7.4
British International School of Boston	North America	3.4	3.4	3.3
British School of Chicago	North America	5.0	4.9	4.8
British International School of Houston	North America	4.6	4.5	4.4
British School of Washington	North America	3.4	3.4	3.3
San Roberto International School	North America	—	5.1	4.5
The Village School	North America	—	25.8	25.4
North Broward Preparatory School	North America	—	29.7	29.1
Windermere Preparatory School	North America	—	17.6	17.3
Other		3.6	3.2	2.2

		70.7	216.6	210.6

* Indefinite useful life intangible assets. Impairment testing is completed as part of the impairment testing above for goodwill.

In the year ended August 31, 2016, an impairment of $1.0 million (2015 — $nil, 2014 - $nil) has been recorded in the profit and loss in relation to a brand name, as the usage of the name has been discontinued.

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Notes to the financial statements for the year ended August 31, 2016 (continued)

14 Subsidiaries

As at August 31, 2016, the Group had the following interests in subsidiaries:

	Country of	Class of	Percentage of Ownership
	Incorporation	shares held	2014		2015		2016

Holding companies
Nord Anglia Education Finance LLC+dS	USA	n/a	100	%	100	%	100	%
Nord Anglia Education (UK) Holdings PLC+dSG	UK	Ordinary	100	%	100	%	100	%
		Deferred
Nord Anglia Education Limited*dSG	UK	Ordinary	100	%	100	%	100	%
NAE Hong Kong Limited*dSG	Hong Kong	Ordinary	100	%	100	%	100	%
Nord Anglia Education Development Services Limited*dSG	UK	Ordinary	100	%	100	%	100	%
Nord Anglia Middle East Holding S.P.C*	Bahrain	n/a	100	%	100	%	100	%
Nord International Schools Limited*dSG	UK	Ordinary	100	%	100	%	100	%
EEE Enterprise Limited*dSG	BVI	Ordinary	100	%	100	%	100	%
Rice Education Hong Kong Limited*dSG	Hong Kong	Ordinary	100	%	100	%	100	%
Regent Pattaya Campus Management Co., Ltd.SH	Thailand	Ordinary	49	%	49	%	49	%
Saint Andrews International School Sukhumvit Campus Co., Ltd.SH	Thailand	Preference	49	%	49	%	49	%
NA Educational Services Limited*dSG	UK	Ordinary	100	%	100	%	100	%
NA Schools Limited*dSG	UK	Ordinary	100	%	100	%	100	%
WCL HoldCo Limited*dSG	UK	Ordinary	100	%	100	%	100	%
WCL Group Limited*dSG	UK	Ordinary	100	%	100	%	100	%
WCL Intermediate Holdings Limited*dSG	UK	Ordinary	100	%	100	%	100	%
WCL Services Limited*dSG	UK	Ordinary	100	%	100	%	100	%
WCL School Management Services Limited*dSG	UK	Ordinary	100	%	100	%	100	%
British Schools of America, LLC*SG	USA	n/a	100	%	100	%	100	%
BST Holding, L.L.C.*SG	USA	n/a	100	%	100	%	100	%
British Schools of Texas, L.L.C.*SG	USA	n/a	100	%	100	%	100	%
WCL Intermediate Holdings Spain, S.L.U (dissolved)*SG	Spain	n/a	100	%	100	%	n/a	#
International College 2, S.L.U (dissolved)*SG	Spain	n/a	100	%	100	%	n/a	#
British International School Foundation*dG	Hungary	n/a	100	%	100	%	100	%
British International School Bratislava, s.r.o.^S	Slovakia	n/a	100	%	100	%	100	%
BSG Limited*dSG	Hong Kong	Ordinary	100	%	100	%	100	%
Guangzhou Yingkai Investment & Consulting Co., Ltd.*	China	n/a	100	%	100	%	100	%
Uma Education Holdings Limited*dGS	BVI	Ordinary	100	%	100	%	100	%
Uma Education Hong Kong Limited*dGS	Hong Kong	Ordinary	100	%	100	%	100	%
WCL EBT Limited*	UK	Ordinary	100	%	100	%	100	%
Nord Anglia (Beijing) Consulting Limited*	China	n/a	100	%	100	%	100	%
KG Investments Limited ^	Jersey	n/a	100	%	100	%	100	%
KG (Beijing) Investment Consultant Co., Ltd.*	China	n/a	100	%	100	%	100	%
Neptune Education Holdings Limited*	Hong Kong	Ordinary	100	%	100	%	100	%
Nord Anglia School (Hong Kong) Limited*	Hong Kong	n/a	100	%	100	%	100	%
诺地安格（上海）商务信息咨询有限公司*	China	n/a	100	%	100	%	100	%
BIS Ltd*SG	BVI	Ordinary	n/a		100	%	100	%
Oasis Development Management LimitedSG	BVI	Ordinary	n/a		96.2	%	96.2	%
The British International School Company Limited	Vietnam	n/a	n/a		90	%	90	%
Thien Huong Investment Company Limited	Vietnam	Investment	n/a		90	%	90	%
Thien Huong Education Joint Stock Company	Vietnam	Charter	n/a		81	%	81	%
NAE HK Holdings Limited+SG	Hong Kong	Ordinary	n/a		100	%	100	%
Viking Holdco, Inc.*dSG	USA	n/a	n/a		100	%	100	%
Viking Holding Company, LLC^dSG	USA	n/a	n/a		100	%	100	%
Viking C Corporation (formerly Sterling International Schools C Corporation) *dSG	USA	n/a	n/a		100	%	100	%

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Notes to the financial statements for the year ended August 31, 2016 (continued)

14 Subsidiaries (continued)

	Country of	Class of	Percentage of Ownership
	Incorporation	shares held	2014		2015		2016

Meritas MX, LLC*dSG	USA	n/a	n/a		100	%	100	%
Meritas MX II, LLC*	USA	n/a	n/a		100	%	100	%
Meritas Luxembourg Holdings SARL*SG	Luxembourg	Ordinary	n/a		100	%	100	%
Meritas (Gibraltar) Holdings Limited*SG	Gibraltar	Ordinary	n/a		100	%	100	%
Meritas CH Sarl*dSG	Swizterland	Ordinary	n/a		100	%	100	%
Meritas Malta Holdings Limited^SG	Malta	Ordinary	n/a		100	%	100	%
Meritas Mexico, S. de R.L. de C.V^SG	Mexico	n/a	n/a		100	%	100	%
NAE (Chengdu Holdings) Ltd. (formerly Sterling International Schools)*SG	Cayman Islands	Ordinary	n/a		100	%	100	%
NAE Chengdu Holdings Limited (formerly Sterling Asian Schools Holdings Limited)*SG	Hong Kong	Ordinary	n/a		100	%	100	%
Chengdu Sterling Educational Consulting Ltd.*	China	n/a	n/a		100	%	100	%
Shanghai Nord Anglia Investment Consulting Co., Ltd.*	China	n/a	n/a		n/a		100	%
Shanghai Yingdi Business Consultancy Company LimitedI	China	n/a	n/a		n/a		n/a

Premium Schools
English International School Prague, s.r.o.^S	Czech Republic	n/a	100	%	100	%	100	%
British International School Kindergarten, Primary and Secondary School*	Hungary	n/a	100	%	100	%	100	%
The British School Sp. Z o.o.*dSG	Poland	n/a	100	%	100	%	100	%
The British International School, Shanghai*	China	n/a	100	%	100	%	100	%
British School of Beijing*	China	n/a	100	%	100	%	100	%
Collège Champittet SA*dSG	Switzerland	n/a	100	%	100	%	100	%
Collège Alpin Beau-Soleil SA*dSG	Switzerland	n/a	100	%	100	%	100	%
La Côte International School SA*dSG	Switzerland	n/a	100	%	100	%	100	%
The Regent’s SchoolH	Thailand	n/a	49	%	49	%	49	%
British School of Washington, L.L.C.*SG	USA	n/a	100	%	100	%	100	%
British School of Boston, L.L.C.*SG	USA	n/a	100	%	100	%	100	%
British International School	Vietnam	n/a	n/a		90	%	90	%
British Vietnamese International School Royal	Vietnam	n/a	n/a		90	%	90	%
British International School — Hanoi	Vietnam	n/a	n/a		90	%	90	%
The British Vietnamese International School (Kindergarten), The British Vietnamese International School (Primary), The British Vietnamese International School (Secondary and High School)	Vietnam	n/a	n/a		81	%	81	%
Collegiate Prep Realty, LLC*dSG	USA	n/a	n/a		100	%	100	%
Village Real Estate, LLC*dSG	USA	n/a	n/a		100	%	100	%
North Broward Preparatory Schools, LLC*dSG	USA	n/a	n/a		100	%	100	%
College du Léman, SARL*dSG	Switzerland	Ordinary	n/a		100	%	100	%
Instituto de Desarrollo Educacion y Aprendizaje, S.C. ^	Mexico	n/a	n/a		100	%	100	%
The Léman International School — Chengdu*	China	n/a	n/a		100	%	100	%
Camplife, Ltd.	USA	n/a	n/a		50.5	%	50.5	%
British School of Chicago, L.L.C.*SG	USA	n/a	100	%	100	%	100	%
British School of Houston, L.P.^SG	USA	n/a	100	%	100	%	100	%
International College Spain, S.A.U.*SG	Spain	n/a	100	%	100	%	100	%
Education Overseas Qatar LLC GH	Qatar	n/a	49	%	49	%	49	%

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Notes to the financial statements for the year ended August 31, 2016 (continued)

14 Subsidiaries (continued)

	Country of	Class of	Percentage of Ownership
	Incorporation	shares held	2014		2015		2016

Sukromna spojena skola British International School Bratislava*	Slovakia	n/a	100	%	100	%	100	%
Northbridge International School (Cambodia) Limited*	Cambodia	n/a	100	%	100	%	100	%
British American School of Charlotte, L.L.C.*GS	USA	n/a	100	%	100	%	100	%
WCL Academy of New York LLC*GS	USA	n/a	100	%	100	%	100	%
St. Andrews International School Bangkok (Sukhumvit) H	Thailand	n/a	49	%	49	%	49	%
British School of Guangzhou*	China	n/a	100	%	100	%	100	%
Dover Court International School (Pte.) Ltd.*dSG	Singapore	Ordinary	100	%	100	%	100	%
Nord Anglia International School, Hong Kong Limited*	Hong Kong	n/a	100	%	100	%	100	%
British International School LLC GH	Abu Dhabi, UAE	n/a	n/a		49	%	49	%
Saturn Education Holdings Limited*	Abu Dhabi Global Market, UAE	n/a	n/a		n/a		100	%
Nord Anglia International School L.L.C GH	Dubai, UAE	n/a	n/a		49	%	49	%
Nord Anglia Chinese International School ShanghaiI	China	n/a	n/a		n/a		n/a

Learning Services
Nord Anglia Vocational Education and Training Services Ltd*dSG	UK	Ordinary	100	%	100	%	100	%
Brighton Education Learning Services Sdn. Bhd.*	Malaysia	n/a	100	%	100	%	100	%
Nord Anglia Education Sdn. Bhd.*	Malaysia	n/a	100	%	100	%	100	%
BSA Resource Solutions, LLC SG	USA	n/a	50	%	50	%	50	%
Fieldwork Education Limited*dSG	UK	Ordinary	100	%	100	%	100	%
WCL School Management Services (India) Limited*	UK	Ordinary	100	%	100	%	100	%
Overseas Schools SA*	Belgium	n/a	100	%	100	%	100	%
Nord Anglia Educational Consultancies Saudi Arabia Limited ^	Saudi Arabia	n/a	100	%	100	%	100	%

* Investment held indirectly by 100% owned subsidiary of the Group.

^ Investments held 100% within the Group by more than one subsidiary of the Group

+The Companies denoted are direct subsidiaries of the Group

d Material assets of subsidiary form part of security arrangement for borrowings (see Note 19)

S Share capital of subsidiary is pledged as security for borrowings (see Note 19)

G Subsidiary is a guarantor under the security arrangement for borrowings (see Note 19)

H The Group holds interests of less than 50% of certain companies. Where indicated, these companies are consolidated by the Group due to the majority of the economic interests in these companies in the form of both the right to receive dividends and the right to full distribution on liquidation and majority of voting rights.

I The Group does not own any equity interest in Shanghai Yingdi Business Consultancy Company Limited and Nord Anglia Chinese International School Shanghai. The Group controls and operates these two companies through contractual arrangements, effective 2016.

# In September 2015, the Group completed two successive reverse mergers whereby WCL Intermediate Holdings Spain, S.L.U. and International College 2, S.L.U. were respectively merged with their subsidiary entity, International College Spain, S.A.U. As a result of the two reverse mergers, WCL Intermediate Holdings Spain, S.L.U. and International College 2, S.L.U. were dissolved and all their assets and liabilities were passed to International College Spain, S.A.U. as the surviving entity.

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Notes to the financial statements for the year ended August 31, 2016 (continued)

14 Subsidiaries (continued)

The total non-controlling interest for the year is $5.4 million (2015 - $4.4 million, 2014 - $0.5). The Directors have assessed that the non-controlling interests of British International School, Vietnam; British Vietnamese International School Royal, Vietnam; British International School — Hanoi; The British Vietnamese International School (Kindergarten), The British Vietnamese International School (Primary), The British Vietnamese International School (Secondary and High School) and Camplife Limited are immaterial to the Group’s financial position and financial performance for separate disclosure of the underlying business financial performance, financial position and cash flow in accordance with IFRS 12 — Disclosure of interests in other entities.

Investments in joint ventures and associates

The amounts recognized in the Consolidated Balance Sheet are as follows:

	2014	2015	2016
	$m	$m	$m

Associates	—	—	—
Joint ventures	0.5	0.5	0.5

Total	0.5	0.5	0.5

Set out below are the joint ventures and associates of the Group as at August 31, 2016.

Name of entity	Place of business	Associate / Joint Venture?	% of ownership interest		Measurement method

Léman Manhattan Preparatory School LLC	United States	Associate	10	%	Equity
EduAction (Waltham Forest) Limited	UK	Joint Venture	50	%	Equity

The associate and joint venture had no contingent liabilities or capital commitments as at August 31, 2016 and 2015. Léman Manhattan Preparatory School LLC requires the parent’s consent to distribute its profits, as the associate is in a loss making position the parent does not foresee such distributions at the reporting date. EduAction (Waltham Forest) Limited cannot distribute its profits without the consent from the two venture partners.

In the opinion of the Directors, the above joint venture and associate are not material to the Group and as such no summarized financial information for Léman Manhattan Preparatory School LLC and EduAction (Waltham Forest) Limited is disclosed.

Structured entity

To comply with People’s Republic of China (“PRC”) foreign investment laws governing education provided by schools such as Nord Anglia Chinese International School Shanghai (“NACIS”) that teach local Chinese students, the Group and NACIS have entered into a series of contractual arrangements which allow the Group to direct the activities that most significantly affect the economic performance of NACIS and to receive the economic benefits of NACIS. Such contractual arrangements include the following:

Exclusive cooperation agreement

Under this agreement, one of the Group’s subsidiaries has the exclusive right to provide to NACIS various business management and support services (e.g. procurement of premises, marketing and public relations, curriculum design and development and human resources). This agreement provides that separate service agreements will be entered into between the service provider and NACIS to determine the details of each service including the scope and the fee, which provides a framework for the Group to obtain the economic benefits from NACIS. The sponsor of NACIS, Shanghai Yingdi Business Consultancy Company Limited (“Yingdi”), is ultimately owned by a PRC individual who is an independent third party to the Group (the “Yingdi Shareholder”). Yingdi and the Yingdi Shareholder jointly and severally guarantee the performance of this agreement by NACIS. This agreement is effective until terminated by the parties mutually or by the subsidiary unilaterally.

Equity interest pledge agreement

Under this agreement, the Yingdi Shareholder has pledged all his equity interest in Yingdi to the subsidiary to secure the fulfilment of his obligations under, among other things, the exclusive cooperation agreement. Additionally, the Yingdi Shareholder agrees not to transfer or dispose of his equity interest in Yingdi, and not to mortgage such equity interest except at the request and direction of the pledgee. The agreement is effective until the later of the Yingdi Shareholder ceasing to be the equity interest holder of Yingdi, or the fulfilment of the Yingdi Shareholder’s obligations which are the subject of the pledge.

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Table of Contents

Notes to the financial statements for the year ended August 31, 2016 (continued)

14 Subsidiaries (continued)

Structured entity (continued)

Guarantee agreement

Pursuant to this agreement, Yingdi and the Yingdi Shareholder guarantee that all the contracts between NACIS and the subsidiary, including the exclusive cooperation agreement and the specific service agreements contemplated under the exclusive cooperation agreement, shall be duly performed.

Power of attorney

The Yingdi Shareholder has executed a power of attorney in favour of the subsidiary to exercise his rights in respect of his equity interest in Yingdi. In addition, Yingdi has executed a power of attorney in favour of the subsidiary to exercise Yingdi’s rights as the founder and owner of NACIS.

Service agreement

In accordance with the exclusive cooperation agreement, the Group’s subsidiary and NACIS have entered into a service agreement whereby the Group’s subsidiary provides to NACIS various services.

As a result of the above arrangements NACIS has been consolidated within the Group.

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Notes to the financial statements for the year ended August 31, 2016 (continued)

15 Deferred tax assets and liabilities

The analysis of Deferred tax assets and Deferred tax liabilities is as follows:

	2014		2015		2016
	$m		$m		$m

Deferred tax assets:

- Deferred tax assets to be recovered after more than 12 months	21.7		72.1		73.5
- Deferred tax asset to be recovered within 12 months	3.4		5.4		5.5

	25.1		77.5		79.0

	2014		2015		2016
	$m		$m		$m

Deferred tax liabilities:

- Deferred tax liability to be recovered after more than 12 months	(45.0	)	(116.0	)	(99.5	)
- Deferred tax liability to be recovered within 12 months	(2.6	)	(8.3	)	(10.7	)

	(47.6	)	(124.3	)	(110.2	)

Deferred tax liabilities (net)	(22.5	)	(46.8	)	(31.2	)

Deferred tax assets and liabilities are attributable to the following:

	Assets			Liabilities
	2014	2015	2016	2014		2015		2016
	$m	$m	$m	$m		$m		$m

Property, plant and equipment	0.3	0.2	0.5	(6.6	)	(16.9	)	(11.0	)
Intangible assets	—	—	—	(33.3	)	(88.0	)	(83.2	)
Employee benefits - pension	1.6	5.7	10.6	—		—		—
Tax value of loss carry-forwards	5.6	47.8	38.1	—		—		—
Provisions and accruals	13.3	16.7	21.8	(4.2	)	(12.5	)	(9.3	)
Derivatives	4.3	7.1	8.0	(3.5	)	(6.9	)	(6.7	)

Tax assets / (liabilities)	25.1	77.5	79.0	(47.6	)	(124.3	)	(110.2	)

Net tax liabilities	—	—	—	(22.5	)	(46.8	)	(31.2	)

F-76

Table of Contents

Notes to the financial statements for the year ended August 31, 2016 (continued)

15 Deferred tax assets and liabilities (continued)

Movement in deferred tax is as follows:

	September 1, 2013		Recognized in income statement		Recognized in comprehensive income	Foreign exchange movements		Acquired in business combination		August 31, 2014
	$m		$m		$m	$m		$m		$m
`
Property, plant and equipment	(6.2	)	—		—	(0.1	)	—		(6.3	)
Intangible assets	(25.6	)	(1.2	)	—	(0.1	)	(6.4	)	(33.3	)
Employee benefits - pension	1.4		0.1		0.2	(0.1	)	—		1.6
Tax value of loss carry-forwards	5.2		0.4		—	—		—		5.6
Provisions and accruals	13.8		(4.5	)	—	(0.2	)	—		9.1
Derivatives	—		0.7		—	0.1		—		0.8
Goodwill	(1.0	)	1.1		—	(0.1	)	—		—
Other	(1.7	)	1.8		—	(0.1	)	—		—

	(14.1	)	(1.6	)	0.2	(0.6	)	(6.4	)	(22.5	)

	September 1, 2014		Recognized in profit/(loss)		Recognized in comprehensive income/(loss)	Foreign exchange movements		Acquired in business combination		August 31, 2015
	$m		$m		$m	$m		$m		$m

Property, plant and equipment	(6.3	)	2.5		—	(0.3	)	(12.6	)	(16.7	)
Intangible assets	(33.3	)	3.8		—	1.7		(60.2	)	(88.0	)
Employee benefits - pension	1.6		0.4		0.9	(1.0	)	3.8		5.7
Tax value of loss carry-forwards	5.6		5.9		—	—		36.3		47.8
Provisions and accruals	9.1		(2.4	)	—	(0.6	)	(1.9	)	4.2
Derivatives	0.8		(0.5	)	—	(0.1	)	—		0.2

	(22.5	)	9.7		0.9	(0.3	)	(34.6	)	(46.8	)

	September 1, 2015		Recognized in profit/(loss)		Recognized in comprehensive income/(loss)	Recognized in pre- acquisition reserve		Foreign exchange movements	Acquired in business combination		August 31, 2016
	$m		$m		$m	$m		$m	$m		$m

Property, plant and equipment	(16.7	)	6.1		—	—		0.1	—		(10.5	)
Intangible assets	(88.0	)	5.2		—	—		0.1	(0.5	)	(83.2	)
Employee benefits - pension	5.7		1.3		3.3	—		0.3	—		10.6
Tax value of loss carry-forwards	47.8		(9.8	)	—	—		0.1	—		38.1
Provisions and accruals	4.2		13.4		—	(5.9	)	0.8	—		12.5
Derivatives	0.2		1.1		—	—		—	—		1.3

	(46.8	)	17.3		3.3	(5.9	)	1.4	(0.5	)	(31.2	)

F-77

Table of Contents

Notes to the financial statements for the year ended August 31, 2016 (continued)

16 Trade and other receivables

	2014		2015		2016
	$m		$m		$m

Current
Trade receivables	74.3		99.1		98.9
Less: Provision for impairment of trade receivables (see Note 25)	(4.7	)	(6.6	)	(5.4	)

Net trade receivables (see Note 25b)	69.6		92.5		93.5

Prepayments	13.2		25.3		29.0
Accrued income	3.8		0.2		0.2
Other receivables	5.8		8.8		9.8

	92.4		126.8		132.5

Prepayments mainly relate to rental prepayments on school sites of the Premium Schools.

Non-current
Other receivables	9.2		37.4		42.0

In 2015 and 2016, non-current receivables mainly relate to rental prepayments on Premium School sites in Vietnam and China which is not recoverable for at least 12 months from this date.

17 Cash and cash equivalents

	2014	2015	2016
	$m	$m	$m

Cash and cash equivalents (excluding bank overdraft)	256.4	316.6	371.9

Please refer to Note 25b and 25c for the detailed analysis of cash and cash equivalents on credit risk and liquidity risk, respectively.

18 Inventories

	2014	2015	2016
	$m	$m	$m

Inventories — at cost	2.4	4.5	4.3

Inventories are mainly made up of school uniforms in the Premium Schools.

(i) Assigning costs to inventories

The costs of individual items of inventory are determined using actual cost.

(ii) Amounts recognized in profit or loss

Inventories recognized as an expense during the year ended August 31, 2016 amounted to $1.7 million (2015 - $1.4 million, 2014 - $1.2 million). These were included in Cost of sales as shown in the Consolidated Income Statement.

There were no write-downs of Inventories during the year ended August 31, 2016.

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Notes to the financial statements for the year ended August 31, 2016 (continued)

19 Interest-bearing loans and borrowings

This note provides information about the contractual terms of the Group and Company’s interest-bearing loans and borrowings, which are measured at amortized cost. For more information about the Group’s exposure to interest rate and foreign currency risk, see Note 25.

	2014	2015	2016
	$m	$m	$m

Current liabilities
Bank overdraft	90.2	90.7	—
5.75% senior secured notes	—	1.1	0.3
Current portion of secured bank loans	20.0	0.2	—
Current portion of term loan due 2021	3.2	6.3	4.7

	113.4	98.3	5.0

Non-current liabilities
5.75% senior secured notes	—	199.8	196.4
Term loan due 2021	499.2	866.5	861.8

	499.2	1,066.3	1,058.2

All borrowings are secured by fixed and floating charges over all the current and future assets of certain Group entities. The Group subsidiaries which are party to this arrangement are detailed in Note 14, along with details of certain Group entities whose share capital has also been pledged as part of the security arrangement, including the assignment of certain insurances.

	Terms and debt repayment schedule				Face	Carrying	Face	Carrying	Face	Carrying
	Currency	Nominal interest rate		Year of maturity	value 2014 $m	amount 2014 $m	value 2015 $m	amount 2015 $m	value 2016 $m	amount 2016 $m

Bank overdraft	US $				90.2	90.2	90.7	90.7	—	—

5.75% senior secured notes ^	CHF	5.75	%	2022	—	—	208.1	200.9	203.5	196.7

Term loan *	US $	4.50% - 5.00	%	2021	513.7	502.4	897.2	872.8	888.1	866.5

Revolving credit facility #	US $	4.75	%	2021	20.0	20.0	—	0.2	—	—

					623.9	612.6	1,196.0	1,164.6	1,091.6	1,063.2

The Group has provided bank guarantees which are offset against the revolving credit facility (see Note 28). As at August 31, 2016, the Group had available but undrawn borrowing facilities of $117.4 million (2015 - $114.4 million, 2014 - $44.0 million).

Face value is the nominal amount of debt at issuance whereas the carrying value also deducts the upfront prepaid costs.

F-79

Table of Contents

Notes to the financial statements for the year ended August 31, 2016 (continued)

19 Interest-bearing loans and borrowings (continued)

* The term loan is a floating rate loan. Changes in interest rates have minimal impact on fair value since loans reprice to the market frequently and on that basis, fair value is assumed to equal carrying value. The term loan facility bears interest based on applicable margin percentages of 3.00% per annum for base rate loans and 4.00% per annum for LIBOR rate loans, provided that the base rate for base rate loans may not be lower than 2.00% and LIBOR may not be lower than 1.00%.

# Revolving credit facility under the credit agreement will bear interest based on a margin ranging from 2.75% to 3.25% depending on our net-leverage ratio, plus the applicable LIBOR rate.

^ The 5.75% senior secured notes are a fixed rate Swiss bond and the fair value is derived from quoted prices (unadjusted) in active markets for these financial liabilities.

All interest is settled by cash payments on the required date.

On March 31, 2014, the Group entered into a new credit agreement for a $515.0 million term loan facility and a $75.0 million revolving credit facility. The borrower under the credit agreement is a newly formed 100% wholly owned U.S. domestic limited liability company. On the same date, the Group drew down the term loan facility in full and using proceeds from the loan and our initial public offering, the Group discharged its obligations under the indentures governing the $490.0 million 10.25% senior secured notes and $150.0 million 8.50%/9.50% PIK toggle notes, both of which were redeemed fully as of April 14, 2014.

On March 31, 2014, the Group also repaid and terminated its previous super senior revolving facility using proceeds from the initial public offering (see Note 4).

On March 2, 2015, the Group drew down an additional $150.0 million on the term loan facility.

On June 25, 2015, the Group further drew down on additional $240.0 million on the term loan facility and issued CHF 200 million 5.75% senior secured notes.

Maturity of the Group’s borrowings are as follows:

	2014	2015	2016
	$m	$m	$m

Less than one year	113.4	98.3	5.0
Between one and five years	13.4	859.8	1,058.2
More than five years	485.8	206.5	—

	612.6	1,164.6	1,063.2

F-80

Table of Contents

Notes to the financial statements for the year ended August 31, 2016 (continued)

20 Finance lease liabilities

Lease liabilities are effectively secured as the rights to the leased asset revert to the lessor in the event of default.

	2014		2015		2016
	$m		$m		$m

Gross finance lease liabilities — minimum lease payments:
No later than one year	0.0		3.7		4.8
Later than one year and no later than five years	—		11.9		17.6
Later than five years	—		194.7		221.5

	0.0		210.3		243.9
Future finance charges on finance lease liabilities	(0.0	)	(161.5	)	(179.4	)

Present value of finance lease liabilities	0.0		48.8		64.5

Present value of finance lease liabilities:
No later than one year	0.0		0.8		1.2
Later than one year and no later than five years	—		1.0		1.9
Later than five years	—		47.0		61.4

	0.0		48.8		64.5

The difference between the minimum lease payments and the present value of the finance lease liabilities are due to the long duration of the most significant lease (74 years remaining). Additions in the year include a change of an operating lease to a finance lease in a Premium School in Hungary amounting to $17.0 million.

21 Trade and other payables

	2014	2015	2016
	$m	$m	$m

Current
Trade payables due to third parties	12.4	31.3	28.4
Other taxes and social security	3.1	3.1	4.0
Amounts owed to related parties	0.2	0.2	0.2
Other payables	21.3	51.3	49.9
Contingent consideration (see Note 2)	—	25.0	—
Deferred consideration	2.0	21.6	17.0
Accrued expenses	24.7	38.2	40.8

	63.7	170.7	140.3

Other payables mainly relate to student deposits which are repayable on demand.

Non-current
Other payables	47.7	18.8	18.5
Accrued expenses	—	15.5	22.4
Deferred consideration	3.0	15.3	8.2

	50.7	49.6	49.1

F-81

Table of Contents

Notes to the financial statements for the year ended August 31, 2016 (continued)

21 Trade and other payables (Continued)

Non-current accrued expenses mainly relate to rental accruals on school sites which is not payable for at least 12 months from this date.

22 Employee benefits

Pension plans

The Group operates a variety of post-employment benefit arrangements, covering both funded defined contribution and funded and unfunded defined benefit schemes. The most significant of these are the funded defined benefit pension schemes for the Group’s employees in the UK and Switzerland.

Defined contribution plans

The Group operates a number of defined contribution pension plans. The total expense relating to these plans in the current year was $3.4 million (2015 - $2.1 million, 2014 - $1.2 million), recognized in the Consolidated Income Statement.

Defined benefit plans

United Kingdom

The Group operates three defined benefit pension schemes in the UK. In each case the assets of the scheme are held as a segregated fund and administered by Trustees.

A defined benefit scheme was established for Lifetime Careers employees (employed by a Group subsidiary) - (“Lifetime”). Contributions are determined by independent professionally qualified actuaries on the basis of triennial valuations. JLT Benefit Solutions Limited, an independent actuary, carried out the latest triennial actuarial assessment of the scheme as at August 31, 2016, using the projected unit method.

Both the Nord Anglia Joint Pension Scheme (“Joint”) and The Wyburn School Limited Pension and Life Assurance Scheme (1985) (“Wyburn”) are closed schemes and are valued under the projected unit method. The most recent formal actuarial valuation for both of the schemes were performed at August 31, 2016 using the aggregate method which assess the adequacy of the fund to meet the minimum funding requirement and calculates contributions on the level of pensionable payroll to provide the retirement benefits for the members.

Actuarial valuation reports have been requested by the Group for both the Nord Anglia Joint Pension Scheme and The Wyburn School Limited Pension and Life Assurance Scheme (1985). Given the underlying size of these schemes (1% of the consolidated pension assets and liabilities); any movement as a result of changes reported in the actuarial valuation would not be regarded as significant.

Closure of schemes

At August 31, 2011, all three schemes closed to future accruals and active members became deferred pension members. Whilst the Group will continue to make future employer contributions to the schemes, member contributions will no longer be made.

Other

The most significant other schemes are the funded defined benefit schemes which operate in Switzerland. An independent actuary, using the projected unit method, carried out the latest actuarial assessment of the Swiss schemes as at August 31, 2016. In addition to this, there is one arising from College du Léman SARL due to the acquisition in 2015. Another defined benefit scheme is operated in Thailand.

The valuations used for IAS 19R have been based on the most recent actuarial valuations and updated to take account of the requirements of IAS 19R in order to assess the liabilities of the scheme as at August 31, 2016. The details of the IAS 19R valuations are set out in the following tables:

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Notes to the financial statements for the year ended August 31, 2016 (continued)

22 Employee benefits (continued)

Pension plans (continued)

Principal assumptions

The major assumptions, on a weighted average basis, used by the actuaries were as follows:

	UK			Switzerland
	2014 %	2015 %	2016 %	2014 %	2015 %	2016 %

Discount rate	4.20	3.90	2.08	1.80	0.83	0.40
Price inflation	3.40	3.50	3.20	1.50	0.78	0.50 - 1.00
Rate of increase in salaries	n/a	n/a	n/a	1.00	1.30	0.50
Rate of increase in pension payments	3.40	3.50	3.20	n/a	0.00	0.00

Mortality assumptions

The assumptions relating to longevity underlying the UK and Swiss pension liabilities at the reporting date are based on standard actuarial mortality tables and include an allowance for future improvements in longevity. The following table illustrates the expectation of life of an average member retiring at age 65 at the reporting date.

Switzerland

2014
years

2015
years

2016
years

2014
years

2015
years

2016
years

Retiring at reporting date at age 65:

Male

22.2

23.0

22.7

21.3

21.5

22.3

Female

22.4

24.9

24.7

23.8

24.0

24.3

Retiring 20 years after the end of the reporting period:

Male

23.5

24.3

24.1

23.1

23.2

24.2

Female

26.0

26.4

26.2

25.6

25.7

26.2

The sensitivity in terms of basis points (“bps”) of the defined benefit obligation to changes in the weighted principal assumption is:

	UK		Switzerland
Change in obligation	Increase in assumption by 25bps	Decrease in assumption by 25bps	Increase in assumption by 25bps	Decrease in assumption by 25bps

Discount rate	Decrease by 590bps	Increase by 590bps	Decrease by 340bps	Increase by 360bps
Inflation	Increase by 570bps	Decrease by 570bps	Increase by 10bps	Decrease by 10bps

	Increase by 1 year in assumption	Decrease by 1 year in assumption	Increase by 1 year in assumption	Decrease by 1 year in assumption

Life expectancy	Increase by 380bps	Decrease by 380bps	Increase by 180bps	Decrease by 180bps

F-83

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Notes to the financial statements for the year ended August 31, 2016 (continued)

22 Employee benefits (continued)

Rates of return on scheme assets

The fair value of the assets in the defined benefit pension schemes are as follows:

	UK			Switzerland
	2014 $m	2015 $m	2016 $m	2014 $m	2015 $m	2016 $m

Equities	28.0	15.4	5.6	—	15.3	14.1
Diversified Growth Assets	11.3	11.1	15.1	—	9.4	12.5
Corporate bonds	1.3	9.5	1.9	—	15.5	13.1
Cash	2.2	4.2	3.3	—	0.0	1.6
With profit funds	0.8	2.4	1.5	—	5.0	5.0
Liability driven investments	—	—	22.3	—	—	—
Insurance assets	—	0.4	1.1	22.8	24.4	27.6

	43.6	43.0	50.8	22.8	69.6	73.9

Actual return on plan assets	4.3	1.6	12.0	0.9	0.4	1.0

F-84

Table of Contents

Notes to the financial statements for the year ended August 31, 2016 (continued)

22 Employee benefits (continued)

Movement in pension deficit during the financial year

Changes in the fair value of defined benefit pension assets are as follows:

	UK						Switzerland
	2014 $m		2015 $m		2016 $m		2014 $m		2015 $m		2016 $m

Opening fair value of the defined benefit pension assets	35.2		43.6		43.0		21.1		22.8		69.6
Business combination (see Note 2)	—		—		—		—		49.5		1.6
Interest income	1.9		1.7		1.6		0.5		0.5		0.6
Administrative expenses	—		—		—		—		—		(0.2	)
Return on plan assets greater than discount rate	2.4		(0.0	)	11.4		0.4		(0.9	)	0.8
Contributions by employer	3.1		3.1		3.4		1.5		2.3		4.5
Contributions by members	—		—		—		1.2		1.8		3.6
Benefits paid	(1.6	)	(2.2	)	(1.2	)	(2.4	)	(4.0	)	(5.2	)
Foreign currency translation	2.6		(3.2	)	(7.4	)	0.5		(2.4	)	(1.4	)

Closing fair value of defined benefit pension assets	43.6		43.0		50.8		22.8		69.6		73.9

Changes in the fair value of defined benefit pension obligation are as follows:

	UK						Switzerland
	2014 $m		2015 $m		2016 $m		2014 $m		2015 $m		2016 $m

Opening defined benefit pension obligation	(51.1	)	(62.2	)	(64.8	)	(27.4	)	(29.9	)	(94.3	)
Business combination (see Note 2)	—		—		—		—		(63.3	)	(2.4	)
Current service cost	—		—		—		(1.9	)	(2.9	)	(5.1	)
Past service cost	—		—		—		0.1		0.6		—
Interest cost	(2.6	)	(2.3	)	(2.3	)	(0.7	)	(0.6	)	(0.7	)
Actuarial losses	(6.4	)	(7.1	)	(18.2	)	(1.5	)	(3.3	)	(1.2	)
Contributions by members	—		—		—		(1.2	)	(1.8	)	(3.6	)
Benefits paid	1.6		2.2		1.2		2.4		4.0		5.2
Foreign currency translation	(3.7	)	4.6		10.9		0.3		2.9		1.8

Closing fair value of defined benefit pension assets	(62.2	)	(64.8	)	(73.2	)	(29.9	)	(94.3	)	(100.3	)

F-85

Table of Contents

Notes to the financial statements for the year ended August 31, 2016 (continued)

22 Employee benefits (continued)

Movement in pension deficit during the financial year (continued)

The amounts that have been charged to the Consolidated Income Statement and Consolidated Statement of Comprehensive Income/(Loss) for the three years ended August 31, 2016 are set out below:

	UK						Switzerland
	2014 $m		2015 $m		2016 $m		2014 $m		2015 $m		2016 $m

Analysis of the amount charged to Operating profit/(loss):
Current service cost	—		—		—		(1.9	)	(2.9	)	(5.1	)
Past service cost	n/a		n/a		n/a		0.1		0.6		0.0
Administrative expenses	—		—		—		—		—		(0.2	)

Analysis of the amount credited/(charged) to Finance income/(expense):
Interest on defined benefit pension assets	1.9		1.7		1.6		0.5		0.5		0.6
Interest on defined benefit pension obligation	(2.6	)	(2.3	)	(2.3	)	(0.7	)	(0.6	)	(0.7	)

Net pension finance expense	(0.7	)	(0.6	)	(0.7	)	(0.2	)	(0.1	)	(0.1	)

Total charged to the Consolidated Income Statement	(0.7	)	(0.6	)	(0.7	)	(2.0	)	(2.4	)	(5.4	)

Analysis of the amount recognized in the Consolidated Statement of Comprehensive Income/(Loss):
Re-measurement gains/(losses):
- Actuarial changes arising from changes in demographic assumptions	—		(0.9	)	0.9		—		—		1.2
- Actuarial changes arising from changes in financial assumptions	(6.4	)	(5.5	)	(20.7	)	(1.2	)	(2.7	)	(2.9	)
- Experience adjustments	—		(0.7	)	1.6		(0.3	)	(0.6	)	0.5

	(6.4	)	(7.1	)	(18.2	)	(1.5	)	(3.3	)	(1.2	)
Return on plan asset excluding interest income	2.4		(0.0	)	11.4		0.4		(0.9	)	0.8

Total losses recognized in the Consolidated Statement of Comprehensive Income/(Loss)	(4.0	)	(7.1	)	(6.8	)	(1.1	)	(4.2	)	(0.4	)

F-86

Table of Contents

Notes to the financial statements for the year ended August 31, 2016 (continued)

22 Employee benefits (continued)

Movement in pension deficit during the financial year (continued)

The cumulative losses recognized through the Consolidated Statement of Comprehensive Income/(Loss) since the date of transition to IFRS (September 1, 2009) are UK: $20.8 million (2015 - $14.0 million, 2014 - $6.9 million); and since the date of acquisition - Switzerland: $7.6 million (2015 - $7.2 million, 2014 - $3.0 million).

Summary of movements in the deficit during the financial year

	UK						Switzerland
	2014 $m		2015 $m		2016 $m		2014 $m		2015 $m		2016 $m

Deficit in schemes at the beginning of the year	(15.9	)	(18.6	)	(21.8	)	(6.3	)	(7.1	)	(24.7	)
Business combination	—		—		—		—		(13.8	)	(0.8	)
Current service cost	—		—		—		(1.9	)	(2.9	)	(5.1	)
Past service cost	—		—		—		0.1		0.6		—
Administrative expenses	—		—		—		—		—		(0.2	)
Net pension finance expense	(0.7	)	(0.6	)	(0.7	)	(0.2	)	(0.1	)	(0.1	)
Return on plan asset, excluding amount included in interest expense	2.4		(0.0	)	11.4		0.4		(0.9	)	0.8
Contributions by employer	3.1		3.1		3.4		1.5		2.3		4.5
Foreign currency translation	(1.1	)	1.4		3.5		0.8		0.5		0.4
Actuarial losses	(6.4	)	(7.1	)	(18.2	)	(1.5	)	(3.3	)	(1.2	)

Deficit in schemes at the end of the year net of deferred tax	(18.6	)	(21.8	)	(22.4	)	(7.1	)	(24.7	)	(26.4	)

History of movements

The historical movement in defined benefit pension schemes’ assets and liabilities are as follows:

	2012 $m		2013 $m		2014 $m		2015 $m		2016 $m

Closing fair value of defined benefit pension assets	50.6		56.3		66.4		112.6		124.7
Present value of liabilities	(81.0	)	(78.5	)	(92.2	)	(159.1	)	(173.5	)

Pension deficit	(30.4	)	(22.2	)	(25.8	)	(46.5	)	(48.8	)

Deficit in the Thailand pension scheme amounted to $0.1 million (2015 - $0.1 million, 2014 - $0.1 million).

Expected contributions

A funding plan in respect of the Lifetime scheme has been agreed with the trustees for the period from September 2013 to 2020. An amount of $3.1 million was paid in September 2016 (September 2015 - $3.5 million, September 2014 - $2.9 million).

The Group expects to make normal cash contributions of approximately $7.2 million (2015 - $7.9 million, 2014 - $4.7 million) to defined benefit schemes in the financial year ending August 31, 2017.

F-87

Table of Contents

Notes to the financial statements for the year ended August 31, 2016 (continued)

22 Employee benefits (continued)

Share-based payments

2014 Equity Incentive Award Plan

Share options are granted to Directors and selected employees. The exercise price of the granted options is equal to the market price of the shares on the date of the grant. Options are conditional on the employee remaining in employment during the vesting period. The 1st allocation of options were exercisable in January 2015 and options thereafter are exercisable on the anniversary of the grant.

Under the 2014 Equity Incentive Award Plan (“2014 Incentive Plan”), 9,800,000 of our ordinary shares have been reserved for issuance pursuant to a variety of share-based compensation awards that may be awarded under the 2014 Incentive Plan. The maximum number of our ordinary shares that may be subject to one or more awards granted to any person pursuant to the 2014 Incentive Plan during any calendar year will be 1,200,000 and the maximum amount that may be paid in cash to any one person during any calendar year with respect to one or more awards payable in cash shall be $10.0 million. However, no non-employee Director will be granted awards pursuant to the 2014 Incentive Plan with an aggregate value in excess of $5.0 million during any fiscal year.

None of the awards vested in the period.

A fair value for the shares issued was calculated using the Black-Scholes Option Pricing Model incorporating the following assumptions; the terms and conditions of the grants are as follows:

	Issued 2014			Issued 2015			Issued 2016

Exercise price	$	18.00		$	19.57		$	20.87
Equity price	$	18.00		$	19.57		$	20.87
Volatility	33.63		%	35.50		%	32%/28%		*
Dividend yield	0		%	0		%	0		%
Risk free interest rate	1.79		%	1.41		%	1.75		%
Expected life to exercise	6.25 years			6.25 years			6.25 years
Number of shares awarded	451,100			519,400			773,400

* 32% for 1 year and 28% thereafter

The fair value of each share was calculated as $6.17-7.26 (2015 - $7.28, 2014 - $6.55).

The table below summarizes the options granted under the plan:

	2014		2015		2016
	Average exercise price per share option $	Share options (thousands)	Average exercise price per share option $	Share options (thousands)	Average exercise price per share option $	Share options (thousands)

At September 1	—	—	18.09	448.7	18.90	918.4
Granted	18.09	448.7	19.57	519.4	20.77	773.4
Forfeited	—	—	18.50	41.5	19.60	252.7
Exercised *	—	—	18.00	8.2	18.55	27.9
Expired	—	—	—	—	—	—

At August 31,	18.09	448.7	18.90	918.4	19.79	1,411.2

Vested and exercisable at August 31,	—	—	18.09	97.4	18.66	254.9

* The weighted average share price at the date of exercise of options exercised during the year ended August 31, 2016 was $20.88 (2015 – $21.20, 2014 – not applicable).

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Table of Contents

Notes to the financial statements for the year ended August 31, 2016 (continued)

22 Employee benefits (continued)

Share-based payments (continued)

No options expired during the period covered by the above tables.

Share options outstanding at the end of the year have the following expiry date and exercise prices:

			Share options
Grant date	Expiry date	Exercise price ($)	2014 (thousands)	2015 (thousands)	2016 (thousands)

May 30, 2014	May 30, 2024	18.00	425.6	389.2	307.0
July 14,2014	May 30, 2024	19.58	23.1	23.1	23.1
January 9, 2015	January 8, 2025	19.57	—	506.1	390.1
September 24, 2015	September 24, 2025	20.77	—	—	691.0

			448.7	918.4	1,411.2

Weighted average remaining contractual life of options outstanding at end of period			9.8 years	9.1 years	8.5 years

2016 Performance Stock Units

Share options are granted to Directors and selected employees. The exercise price of the granted options is equal to the market price of the shares on the date of the grant. Options are conditional on the performance and share price of the company and employee remaining in employment during the vesting period. Market performance conditions are not disclosed due to sensitivity.

None of the awards vested in the period.

A fair value for the shares issued was calculated using the Black-Scholes Option Pricing Model incorporating the following assumptions; the terms and conditions of the grants are as follows:

	Issued 2016

Exercise price	$	20.87
Equity price	$	20.87
Volatility	32%/28%		*
Dividend yield	0		%
Risk free interest rate	1.75		%
Expected life to exercise
Number of shares awarded	1,140,100

* 32% for 1 year and 28% thereafter

The fair value of each share was calculated as $5.86-20.87 (2015 – not applicable, 2014 – not applicable).

Share options outstanding at the end of the year have the following expiry date and exercise prices:

			Share options
Grant date	Expiry date	Exercise price ($)	2014 (thousands)	2015 (thousands)	2016 (thousands)

September 24, 2015	Not applicable	20.74	—	—	1,030.3

			—	—	1,030.3

Weighted average remaining contractual life of options outstanding at end of period			Not applicable	Not applicable	Not applicable

F-89

Table of Contents

Notes to the financial statements for the year ended August 31, 2016 (continued)

22 Employee benefits (continued)

Share-based payments (continued)

The table below summarizes the options granted under the plan:

	2016
	Average exercise price per share option $	Share options (thousands)

At September 1	—	—
Granted	20.74	1,140.1
Forfeited	20.87	109.8
Exercised *	—	—
Expired	—	—

At August 31,	20.73	1,030.3

Vested and exercisable at August 31,	—	—

* The weighted average share price at the date of exercise of options exercised during the year ended August 31, 2016 was $nil (2015 – not applicable, 2014 – not applicable).

F-90

Table of Contents

Notes to the financial statements for the year ended August 31, 2016 (continued)

23 Provisions for other liabilities and charges

	Legal		Other		Total
	$m		$m		$m

Balance at September 1, 2013	0.7		5.1		5.8
Provisions made during the year	—		0.1		0.1
Provisions used during the year	(0.4	)	(3.8	)	(4.2	)
Provisions reversed during the year	—		—		—
Foreign exchange	—		0.0		0.0

Balance at August 31, 2014	0.3		1.4		1.7

Balance at September 1, 2014	0.3		1.4		1.7
Provisions made during the year	0.8		0.0		0.8
Provisions reversed during the year	(0.3	)	(0.5	)	(0.8	)

Balance at August 31, 2015	0.8		0.9		1.7

Balance at September 1, 2015	0.8		0.9		1.7
Provisions made during the year	0.3		—		0.3
Provisions used during the year	(0.8	)	—		(0.8	)
Provisions reversed during the year	(0.3	)	(0.9	)	(1.2	)

Balance at August 31, 2016	—		(0.0	)	(0.0	)

Current	—		(0.0	)	(0.0	)
Non-current	—		—		—

	—		(0.0	)	(0.0	)

From time to time, the Group is party to litigations in various jurisdictions in which the Group operates. The Group is not engaged in nor is the Group aware of any threatened litigation which may have, or have had in the recent past, significant effects on the Group’s financial position or profitability.

F-91

Table of Contents

Notes to the financial statements for the year ended August 31, 2016 (continued)

24 Capital and reserves

Share capital

2014

2015

2016

Authorized

No.

Ordinary shares of $0.01 each

2,000,000,000

20.0

2,000,000,000

20.0

2,000,000,000

20.0

2,000,000,000

20.0

2,000,000,000

20.0

2,000,000,000

20.0

2014

2015

2016

Allotted, called up and fully paid

No.

Ordinary shares of $0.01 each

97,747,778

1.0

104,091,367

1.0

104,121,876

1.0

97,747,778

1.0

104,091,367

1.0

104,121,876

1.0

	Ordinary shares $m		Redeemable preference shares $m		Share premium $m

At September 1, 2013	2.3		65.2		256.5
Issued during the year	1.0		0.0		366.9
Transaction cost recognized directly in equity	—		—		(29.6	)
Return of capital to pre-IPO shareholders	—		—		4.0
Forgiveness of loan	—		—		14.3
Distribution to parent	—		—		(15.0	)
Share redemption	(2.3	)	(65.2	)	—

At August 31, 2014	1.0		—		597.1

At September 1, 2014	1.0		—		597.1
Issued during the year	0.0		—		148.6
Transaction cost recognized directly in equity	—		—		(10.8	)
Exercise share options	—		—		0.3

At August 31, 2015	1.0		—		735.2

At September 1, 2015	1.0		—		735.2
Issued during the year	0.0		—		0.0
Transaction cost recognized directly in equity	—		—		—
Exercise share options	—		—		0.8

At August 31, 2016	1.0		—		736.0

	2014 $m	2015 $m	2016 $m

Shares classed as liabilities	—	—	—
Shares classified in shareholders’ funds	1.0	1.0	1.0

Shares classified in shareholders’ funds	1.0	1.0	1.0

F-92

Table of Contents

Notes to the financial statements for the year ended August 31, 2016 (continued)

24 Capital and reserves (continued)

The holders of Ordinary shares are entitled to receive notice of, attend, speak and vote at any general meeting of the Company. The Ordinary shares are entitled to receive dividends.

On March 31, 2014, the Company completed its initial public offering and issued 21,850,000 ordinary shares at $16.00 per share, raising gross proceed of $349.6 million. This included shares issued pursuant to the exercise of the underwriters’ overallotment option, raising net proceeds of $320.0 million, net of offering costs. On the same day the existing 208,607,689 ordinary and preference shares were redeemed and replaced with 75,897,778 ordinary shares of the Company.

On March 2, 2015, 1,050,000 ordinary shares at $21.32 per share were issued as part of the purchase consideration for the acquisition of the British International Schools Group, Vietnam (see Note 2).

On June 25 2015, to part fund the acquisition of the Sterling International Schools C Corporation, the Company issued 5,260,000 ordinary shares at $24.00 per share, raising gross proceeds of $126.2 million to part fund the acquisition of the six schools.

Currency translation reserve

The currency translation reserve comprises all foreign exchange differences arising since September 1, 2009, the transition date to IFRSs, from the translation of the financial statements of foreign operations.

Other reserves

Other reserves relate to the capital contributions reserve created upon the settlement of loan notes issued to the parent company and senior management.

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Table of Contents

Notes to the financial statements for the year ended August 31, 2016 (continued)

25 Financial instruments

25a Fair values of financial instruments

Trade and other receivables

The fair value of trade and other receivables, is estimated as the present value of future cash flows, discounted at the effective rate of interest at the reporting date if the effect is material.

Trade and other payables

The fair value of trade and other payables is estimated as the present value of future cash flows, discounted at the effective rate of interest at the reporting date if the effect is material.

Cash and cash equivalents

The fair value of cash and cash equivalents is estimated as its carrying amount where the cash is repayable on demand. Where it is not repayable on demand then the fair value is estimated at the present value of future cash flows, discounted at the effective rate of interest at the reporting date.

Interest-bearing borrowings

Fair value is calculated based on the present value of future principal and interest cash flows, discounted at the effective rate of interest at the reporting date. For finance leases the market rate of interest is determined by reference to similar lease agreements.

Derivative financial instruments

The fair value of call options is determined through the use of valuation techniques which maximise observable market data as the instruments are not traded in an active market.

The Group uses cross currency interest rate swaps in conjunction with certain debt issuances in order to secure a fixed local currency interest rate. Under these cross currency swaps, the Group receives interest based on a floating US dollar rate and pays interest on a fixed local currency rate based on the contractual amounts in dollars and the local currency, respectively. At maturity, there is also the payment of principal amounts between currencies. The cross currency interest rate swaps are recorded on the Consolidated Balance Sheet at fair value, with changes in value reported in Other gains/(losses). The following table indicates the contractual amounts of the Group’s cross currency interest rate swaps:

Interest rates

Embedded foreign
currency option
(cap on final

Maturing

Contractual amounts (m)

Receive

Pay

exchange upside)

August 31, 2017

USD

40.0

CNY

260.7

Floating USD LIBOR plus 3.75%

Fixed 6.75%

August 31, 2017

USD

30.0

EUR

27.3

Floating USD LIBOR plus 3.75%

Fixed 2.91%

August 31, 2018

USD

40.0

CNY

260.7

Floating USD LIBOR plus 3.75%

Fixed 7.00%

12.5

August 31, 2018

USD

30.0

EUR

27.3

Floating USD LIBOR plus 3.75%

Fixed 3.20%

August 31, 2019

USD

40.0

CNY

260.7

Floating USD LIBOR plus 3.75%

Fixed 7.25%

August 31, 2019

USD

30.0

EUR

27.3

Floating USD LIBOR plus 3.75%

Fixed 3.46%

F-94

Table of Contents

Notes to the financial statements for the year ended August 31, 2016 (continued)

25 Financial instruments (continued)

25a Fair values of financial instruments (continued)

The fair value of cross currency interest rate swaps is determined by quoted mid-market price based on actual bids and offers for positions that are quoted in an active market taking into account observable market inputs (3 months LIBOR and yield curves denominated in RMB and EUR).

The prior year figures have been revised to include the embedded derivatives for the Chicago and Houston operating leases with CPI multipliers (2015 - a liability of 11.1 million, 2014 - a liability of 18.6 million). Their valuation is based on inputs other than quoted prices included within level 1 that are observable either directly or indirectly and hence are classified as level 2 financial instruments. The respective fair value and liquidity risk disclosures have been corrected accordingly.

Fair values

The fair values of all financial assets and financial liabilities by class together with their carrying amounts shown in the Consolidated Balance Sheet are as follows:

	Carrying amount		Fair value		Carrying amount		Fair value		Carrying amount		Fair value
	2014		2014		2015		2015		2016		2016
	$m		$m		$m		$m		$m		$m

Loans and receivables
Cash and cash equivalents (see Note 17)	256.4		256.4		317.0		317.0		371.9		371.9
Other loans and receivables	81.5		81.5		108.4		108.4		110.8		110.8

Total financial assets	337.9		337.9		425.4		425.4		482.7		482.7

Derivative financial liabilities
Financial liabilities classified at fair value through profit or loss	(11.1	)	(11.1	)	(21.6	)	(21.6	)	(25.2	)	(25.2	)

Financial liabilities measured at amortized cost
Other interest-bearing loans and borrowings (see Note 19)	(612.6	)	(612.6	)	(1,164.6	)	(1,176.1	)	(1,063.2	)	(1,080.1	)
Trade and other payables	(111.2	)	(111.2	)	(197.3	)	(197.3	)	(159.9	)	(159.9	)
Finance lease liabilities	—		—		(48.8	)	(48.8	)	(64.5	)	(64.5	)

Total financial liabilities	(734.9	)	(734.9	)	(1,432.3	)	(1,443.8	)	(1,312.8	)	(1,329.7	)

Net financial instruments	(397.0	)	(397.0	)	(1,006.9	)	(1,018.4	)	(830.1	)	(847.0	)

The fair value of the derivative financial liabilities is summarised as below.

	2014 $m		2015 $m		2016 $m

Vietnam option	—		(3.0	)	(3.7	)
Cross currency swap	—		—		(1.6	)
Embedded derivatives	(11.1	)	(18.6	)	(19.9	)

Total	(11.1	)	(21.6	)	(25.2	)

F-95

Table of Contents

Notes to the financial statements for the year ended August 31, 2016 (continued)

25 Financial instruments (continued)

25a Fair values of financial instruments (continued)

Fair value hierarchy

The table below analyses financial instruments measured at fair value, into a fair value hierarchy based on the valuation technique used to determine fair value.

· Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities.

· Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).

· Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).

	Level 1	Level 2		Level 3		Total
2014	$m	$m		$m		$m

Cash and cash equivalents	256.4	—		—		256.4
Other loans and receivables	—	81.5		—		81.5
Trade and other payables	—	(111.2	)	—		(111.2	)
Finance lease liabilities	—	(0.0	)	—		(0.0	)
Other interest-bearing loans	—	(612.6	)	—		(612.6	)
Derivative financial liabilities(1)	—	—		(11.1	)	(11.1	)

	256.4	(642.3	)	(11.1	)	(397.0	)

	Level 1	Level 2		Level 3		Total
2015	$m	$m		$m		$m

Cash and cash equivalents	317.0	—		—		317.0
Other loans and receivables	—	108.4		—		108.4
Trade and other payables	—	(197.3	)	—		(197.3	)
Finance lease liabilities	—	(48.8	)	—		(48.8	)
Other interest-bearing loans	—	(1,176.1	)	—		(1,176.1	)
Derivative financial liabilities(1)	—	—		(21.6	)	(21.6	)

	317.0	(1,313.8	)	(21.6	)	(1,018.4	)

	Level 1	Level 2		Level 3		Total
2016	$m	$m		$m		$m

Cash and cash equivalents	371.9	—		—		371.9
Other loans and receivables	—	110.8		—		110.8
Trade and other payables	—	(159.9	)	—		(159.9	)
Finance lease liabilities	—	(64.5	)	—		(64.5	)
Other interest-bearing loans	—	(1,080.1	)	—		(1,080.1	)
Derivative financial liabilities(1)	—	(1.6	)	(23.6	)	(25.2	)

	371.9	(1,195.3	)	(23.6	)	(847.0	)

(1) The level 2 hierarchy includes the cross currency swaps and the level 3 hierarchy includes the Vietnam option and the embedded derivatives.

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Table of Contents

Notes to the financial statements for the year ended August 31, 2016 (continued)

25 Financial instruments (continued)

25a Fair values of financial instruments (continued)

Transfers between level 2 and 3

There are no transfers between level 2 and 3 in the year.

Reconciliation of fair value measurement using significant unobservable inputs (level 3)

The following table presents the changes in level 3 items for the periods ended August 31,:

	Option $m	Embedded derivatives $m		Total $m

As at September 1, 2014	—	11.1		11.1
Acquisitions	3.0	—		3.0
Additions	—	7.6		7.6
Fair value adjustment	—	(0.1	)	(0.1	)

As at August 31, 2015	3.0	18.6		21.6

As at September 1, 2015	3.0	18.6		21.6
Fair value adjustment	0.7	1.3		2.0

As at August 31, 2016	3.7	19.9		23.6

Description of significant unobservable inputs to valuation

The valuation of the embedded derivatives are based on the fair value of rent payable pursuant to the terms and conditions set forth in the lease agreement when compared with rent under normal commercial terms. A year on year inflation swap and option valuation model which takes into account the leverage, cap and floor characteristics and the market rate has been applied to perform the valuation.

The valuation of the a call option to purchase the remaining 10% interest in the British International Schools Group, Vietnam is dependent on the future cash flows of the underlying business as well as the market capitalization of the Company. The Group adopted the Put-Call Parity to perform the valuation on this call option.

25b Credit risk

Financial risk management

Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from the Group’s receivables from customers, bank balances. This credit risk is minimized by a policy under which the Group only enters into such contracts with companies, governments, banks and financial institutions with strong credit ratings within limits set for each organization. In respect of derivatives, dealing activity is closely controlled and counterparty positions are monitored regularly. No credit limits were exceeded during the year and the Group does not anticipate that any losses will arise from non-performance by these counterparties.

Exposure to credit risk

Credit risk from balances with banks and financial institutions is managed by the Group’s treasury department in accordance with the Group’s policy. Investments of surplus funds are made only with approved counterparties and within credit limits assigned to each counterparty. The maximum exposure to credit risk at the reporting date was $110.8 million (2015 - $117.2 million, 2014 - $81.5 million) being the total of the carrying amount of financial assets.

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Table of Contents

Notes to the financial statements for the year ended August 31, 2016 (continued)

25 Financial instruments (continued)

25b Credit risk (continued)

Financial assets

The maximum exposure to credit risk for financial assets at the reporting date by currency was:

	2014	2015	2016
	$m	$m	$m

Sterling	4.6	4.1	2.6
Dollar and Dollar peg currencies	30.4	51.6	41.2
Chinese Renminbi	3.9	6.3	9.1
European currencies (excluding Sterling)	11.3	9.9	13.6
Malaysian Ringgit	0.8	0.6	0.7
Swiss Franc	25.3	28.3	31.1
Thai Baht	3.0	3.7	4.3
Singapore Dollar	2.2	1.5	0.7
Vietnamese Dong	—	1.3	6.4
Mexican Peso	—	1.1	1.1

	81.5	108.4	110.8

The maximum exposure to credit risk for financial assets at the reporting date by type of counterparty was:

	2014	2015	2016
	$m	$m	$m

School fees	60.4	88.7	91.7
Amounts receivable through other contracts	9.3	3.8	1.8
Rental deposits	3.6	6.3	6.9
Others	8.2	9.6	10.4

	81.5	108.4	110.8

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Notes to the financial statements for the year ended August 31, 2016 (continued)

25 Financial instruments (continued)

25b Credit risk (continued)

Credit quality of financial assets and impairment losses

The ageing of trade receivables at the reporting date was:

	2014				2015
	Gross	Provision for impairment		Total	Gross	Provision for impairment		Total
	$m	$m		$m	$m	$m		$m

Not past due	40.9	(0.1	)	40.8	35.5	(0.0	)	35.5
Less than 1 month past due	8.2	—		8.2	22.6	(0.1	)	22.5
1 – 3 months past due	20.8	(0.3	)	20.5	29.5	(0.2	)	29.3
More than 3 months past due	4.4	(4.3	)	0.1	11.5	(6.3	)	5.2

	74.3	(4.7	)	69.6	99.1	(6.6	)	92.5

	2016
	Gross	Provision for impairment		Total
	$m	$m		$m

Not past due	38.7	(0.0	)	38.7
Less than 1 month past due	28.4	(0.0	)	28.4
1 – 3 months past due	17.5	(0.3	)	17.2
More than 3 months past due	14.3	(5.1	)	9.2

	98.9	(5.4	)	93.5

The Group defines impaired trade receivables to include those debts aged more than 60 – 75 days from the due date and are no longer deemed to be collectible.

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Notes to the financial statements for the year ended August 31, 2016 (continued)

25 Financial instruments (continued)

25b Credit risk (continued)

Credit quality of financial assets and impairment losses (continued)

The movement in the allowance for impairment in respect of trade receivables during the year was as follows:

	2014		2015		2016
	$m		$m		$m

Balance at September 1	1.1		4.7		6.6
Impairment loss recognized	3.9		5.4		1.6
Impairment loss reversed	(0.3	)	(2.2	)	(0.2	)
Impairment loss written off	—		(1.2	)	(2.6	)
Effect of foreign exchange movements	0.0		(0.1	)	(0.0	)

Balance at August 31,	4.7		6.6		5.4

25c Liquidity risk

The following are the contractual maturities of financial liabilities, including estimated interest payments and excluding the effect of netting agreements:

	2014					2015
	Undiscounted contractual cash flows	1 year or less	1 to <2years	2 to <5years	5years and over	Undiscounted contractual cash flows	1 year or less	1 to <2years	2 to <5years	5years and over
	$m	$m	$m	$m	$m	$m	$m	$m	$m	$m

Bank overdraft	90.2	90.2	—	—	—	90.7	90.7	—	—	—
Borrowings	688.4	48.6	28.7	85.9	525.2	1,438.2	69.7	66.0	130.7	1,171.8
Finance lease liabilities	0.0	0.0	—	—	—	210.3	3.7	3.0	8.9	194.7
Trade and other payables	111.2	60.5	7.6	18.4	24.7	197.3	167.3	9.6	12.9	7.5
Derivative financial liabilities	27.7	0.1	0.2	1.0	26.4	26.1	0.1	0.2	1.5	24.3

	917.5	199.4	36.5	105.3	576.3	1,962.6	331.5	78.8	154.0	1,398.3

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Notes to the financial statements for the year ended August 31, 2016 (continued)

25 Financial instruments (continued)

25c Liquidity risk (continued)

	2016
	Undiscounted contractual cash flows	1 year or less	1 to <2years	2 to <5years	5 years and over
	$m	$m	$m	$m	$m

Borrowings	1,359.0	66.9	65.0	1,017.0	210.1
Finance lease liabilities	243.9	4.8	4.4	13.2	221.5
Trade and other payables	159.9	132.9	12.4	7.6	7.0
Derivative financial liabilities	29.2	0.6	4.4	1.2	23.0

	1,792.0	205.2	86.2	1,039.0	461.6

As the Group conducts most of its operations outside the United States (for example, 33 of the Group’s 43 premium schools are in non-United States jurisdictions), the Group’s Premium Schools hold significant non-US dollar cash balances in overseas operations which arise from fee income and represent a combination of working capital and trading profits. As the cash and cash equivalents held by non-United States subsidiaries are used generally to fund the Group’s non-United States operations, the Group believes that the amount of cash and cash equivalents held by non-United States subsidiaries is not significant to an understanding of the Group’s liquidity. These monies are held in operations in countries which include those where exchange control restrictions may prevent full repatriation of funds to the UK parent undertaking. The Group utilizes these funds through a combination of reinvestment in the expansion or improvement of overseas operations, or by repatriation to the UK through management contracts, including royalty agreements, management charges and dividends. Through these means the Directors believe that satisfactory distribution of these funds can be achieved.

As at August 31, 2016, the Group held $208.3 million (2015 - $193.8 million, 2014 - $140.0 million) of cash and equivalents in jurisdictions where foreign exchange and other regulatory controls may limit the distribution of cash to subsidiaries in jurisdictions without foreign exchange and other regulatory controls. For information about undistributed earnings management considers permanently reinvested in jurisdictions with foreign exchange and other regulatory controls, see Note 10.

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Table of Contents

Notes to the financial statements for the year ended August 31, 2016 (continued)

25 Financial instruments (continued)

25d Market risk

Financial risk management

Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and equity prices will affect the Group’s income or the value of its holdings of financial instruments.

Foreign currency risk

The Group has significant and expanding international operations trading in non US dollar currencies. Movements in global exchange rates can cause currency exposures to the Group’s consolidated US dollar financial results. Where stable currencies exist, trade is conducted in local currencies and where appropriate, borrowings are matched in that currency to mitigate the risk of exposure to the Group’s assets and liabilities from exchange rate movements. In countries of operation where currency trading zones are considered to be weaker, some transactions are conducted in US dollar and Euro to try to minimize exchange fluctuation risks.

A significant portion of the Group’s debt is denominated in US dollar. The Group uses cross currency interest rate swaps in conjunction with certain debt issuances such as the CHF 200 million senior notes issued in June 2015 to reduce exposure to foreign currency fluctuations and to lock in fixed local currency interest rates. Under these cross currency interest rate swaps, the Group receives interest based on a floating US dollar rate and pays interest based on a fixed local currency rate based on the contractual amounts in US dollar and the local currency, respectively. For each of the six currently outstanding cross currency interest rate swaps, the Group swapped an US dollar floating rate liability with an obligation to pay LIBOR (with a 1% floor) plus a margin of 3.75% for a RMB or EUR fixed interest rate liability with an obligation to pay a fixed rate on the RMB or EUR equivalent amount. Each swap includes an embedded foreign exchange option that limits the potential gains on final exchange to between 10-15%. The Group does not hold or issue financial instruments for trading purposes and does not use derivatives for speculative purposes.

The following table sets out the Cash and cash equivalents balance based on currency.

	2014	2015	2016
	$m	$m	$m

Dollar and Dollar-pegged currencies	32.1	23.6	59.4
Sterling	10.8	25.6	7.3
European currencies (excluding Sterling)	54.0	53.3	56.0
Chinese Renminbi	130.2	141.2	135.3
Swiss Franc	6.9	9.0	23.2
Vietnamese Dong	—	36.3	54.9
Singaporean Dollar	12.5	11.7	17.7
Malaysian Ringgit	0.1	0.0	0.0
Thai Baht	9.8	8.6	8.9
Mexican Peso	—	7.3	9.2

	256.4	316.6	371.9

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Table of Contents

Notes to the financial statements for the year ended August 31, 2016 (continued)

25 Financial instruments (continued)

25d Market risk (continued)

Foreign currency risk (continued)

The table below shows converted into US dollar, the aggregate monetary assets and liabilities that are in a different currency from the various functional currencies of the entities in the Group.

August 31, 2014	Sterling $m		European currencies $m		US dollar and US dollar peg $m		Singapore Dollar $m		Swiss Franc $m		Total $m

Cash and cash equivalents	0.0		0.1		18.4		—		—		18.5
Trade and other payables	(0.1	)	—		—		(0.0	)	—		(0.1	)

	(0.1	)	0.1		18.4		(0.0	)	—		18.4

August 31, 2015	Sterling $m		European currencies $m		US dollar and US dollar peg $m		Singapore Dollar $m		Swiss Franc $m		Total $m

Cash and cash equivalents	0.0		9.4		15.3		—		15.0		39.7
Trade and other payables	(0.1	)	(0.1	)	—		(0.0	)	—		(0.2	)
Other interest-bearing loans	—		—		—		—		(200.9	)	(200.9	)

	(0.1	)	9.3		15.3		(0.0	)	(185.9	)	(161.4	)

August 31, 2016	Sterling $m		European currencies $m		US dollar and US dollar peg $m		Singapore Dollar $m		Swiss Franc $m		Total $m

Cash and cash equivalents	0.1		2.4		16.2		—		0.0		18.7
Loans and receivables	0.2		0.0		0.0		—		—		0.2
Trade and other payables	(0.1	)	(0.0	)	(8.3	)	—		—		(8.4	)
Finance lease liabilities	—		(17.0	)	—		—		—		(17.0	)
Other interest-bearing loans	—		—		—		—		(196.7	)	(196.7	)

	0.2		(14.6	)	7.9		—		(196.7	)	(203.2	)

The Group is also exposed to foreign exchange risk on intercompany transactions. Please refer to Note 5 for more details.

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Notes to the financial statements for the year ended August 31, 2016 (continued)

25 Financial instruments (continued)

25d Market risk (continued)

Sensitivity analysis

The following tables demonstrate the sensitivity to a reasonably possible change in US dollar exchange rates, with all other variables held constant. The impact on the Group’s profit or loss is due to changes in the fair value of monetary assets and liabilities. The impact on the Group’s equity is due to the changes in the fair value of non-monetary assets and liabilities. A 4% strengthening (2015 - 4% strengthening) of the following currencies against the US dollar at August 31, would have increased/(decreased) equity and profit or loss by the amounts shown below.

	Profit and loss					Equity
	2014	2015		2016		2014	2015		2016
	$m	$m		$m		$m	$m		$m

Sterling	0.0	0.0		0.0		0.0	0.0		0.0
European currencies (excluding Sterling)	0.0	0.0		(0.7	)	0.0	0.0		(0.7	)
Chinese Renminbi	—	—		—		—	—		—
Swiss Franc	—	(8.1	)	(8.3	)	—	(8.1	)	(8.3	)
Vietnamese Dong	—	—		—		—	—		—
Singaporean Dollar	0.0	—		—		0.0	—		—
Malaysian Ringgit	—	—		—		—	—		—
Thai Baht	—	—		—		—	—		—
Mexican Peso	—	—		—		—	—		—

Profile

At the reporting date the interest rate profile of the Group’s interest-bearing financial instruments was:

	2014	2015	2016
	$m	$m	$m

Fixed rate instruments
Financial liabilities	—	200.9	196.7

Variable rate instruments
Financial liabilities	612.6	963.7	866.5

The Group does not apply hedge accounting for any of its derivative financial instruments. As such the Group recognizes changes in fair value in respect of any of its derivative financial instruments immediately in its Consolidated Income Statement.

The Group’s interest rate risk arises from long-term borrowings. Borrowings issued at variable rates expose the Group to cash flow interest rate risk. Borrowings issued at fixed rates expose the Group to fair value interest rate risk. The interest rate profile of the Group’s debt is predominately variable.

At the August 31, 2016, all of the Group’s borrowings were issued at variable interest rates with the exception of the 5.75% senior secured notes due 2022 which are fixed rate. The impact of a 1% increase in the 3 month LIBOR rate of 0.84% a as at 31 August 2016 (2015 - 0.33%, 2014 — 0.23%) on the Group’s variable interest rate debt which is subject to a 1.00% LIBOR floor not covered by the derivative financial instruments would be to increase the Group’s interest charge by approximately $5.7 million (2015 - $2.9 million, 2014 - $1.2 million).

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Notes to the financial statements for the year ended August 31, 2016 (continued)

25 Financial instruments (continued)

25e Capital management

The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going concern in order to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital. In order to maintain or adjust the capital structure, the Group may issue new shares or sell fixed assets to reduce debt.

The Group monitors capital on the basis of the debt to equity ratio. This ratio is calculated as net debt divided by total capital. Net debt is calculated as total borrowings (including ‘current and non-current borrowings’ as shown in the Consolidated Balance Sheet) less cash and cash equivalents. Total capital is calculated as ‘equity’ as shown in the Consolidated Balance Sheet plus net debt.

On March 31, 2014, the Group entered into a credit agreement for a $515.0 million senior secured term loan facility and a $75.0 million revolving credit facility. The senior secured term loan was subsequently increased by $150.0 million on March 2, 2015 and further increased by $240.0 million on June 25, 2015 and the revolving credit facility increased to $125.0 million. The Group discharged its obligations under the indentures governing the $490.0 million 10.25% senior secured notes and $150.0 million 8.50%/9.50% PIK toggle notes, both of which were fully redeemed as of April 14, 2014. Post entry into the senior secured term loan facility, the Group monitors the Net Leverage Ratio (“NLR” — Debt less Cash and Cash Equivalents divided by Consolidated EBITDA as defined in the facility agreement. In the credit agreement for the senior secured term loan facility, debt is defined as the greater of the Consolidated Balance Sheet amount of all the debt or the par value of such debt and Consolidated EBITDA is adjusted for the full year impact of acquisitions and interest receivable). The relevant ratios for the three years ended August 31, 2016 were as follows:

	2014		2014		2015		2015		2016		2016
	Carrying value		Face value		Carrying value		Face value		Carrying value		Face value
	$m		$m		$m		$m		$m		$m

Total borrowings	612.6		623.9		1,164.6		1,196.0		1,063.2		1,091.6
Less cash and cash equivalents	(256.4	)	(256.4	)	(316.6	)	(316.6	)	(371.9	)	(371.9	)

Net debt	356.2		367.5		848.0		879.4		691.3		719.7
Total equity	193.1		193.1		281.5		281.5		287.9		291.9

Total capital	549.3		560.6		1,129.5		1,160.9		979.2		1,011.6

Net debt to total equity ratio	1.8:1		1.9:1		3.0:1		3.1:1		2.4:1		2.5:1

Net leverage ratio (NLR)*	2.75		2.75		3.93		3.93		3.82		3.82

* Figures are unaudited.

25f Offsetting financial assets and financial liabilities

There are no offsetting financial assets and financial liabilities during the year.

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Notes to the financial statements for the year ended August 31, 2016 (continued)

26 Operating leases

Future aggregate minimum lease payments are as follows:

	2014	2015	2016
	$m	$m	$m

Land and Buildings
Less than one year	53.8	71.1	110.9
Between one and five years	204.1	252.9	334.2
More than five years	454.4	972.0	1,397.5

	712.3	1,296.0	1,842.6
Other
Less than one year	0.4	0.4	0.5
Between one and five years	0.7	0.5	0.5
More than five years	—	—	0.0

	1.1	0.9	1.0

	713.4	1,296.9	1,843.6

Operating leases are payable at market rates and are not subject to any restrictions other than those that would normally be expected to apply to such agreements. Agreements in respect of properties may be subject to renewal according to the landlord’s terms. There are no new terms of renewal applicable to any other operating lease agreements.

27 Commitments

Capital commitments

	2014	2015	2016
	$m	$m	$m

Contracted but not provided for	3.0	9.3	7.9
Authorised but not contracted or provided for	28.6	15.0	5.9

	31.6	24.3	13.8

All capital commitments relate to tangible assets.

28 Contingencies

The Group has provided the following bank guarantees:

To SCTAI Anglo Iskola KFT for €0.7 million ($0.7 million, 2015 -$0.7 million, 2014 - $0.4 million) in respect of a 30-year lease of school premises in Budapest. The annual payments under this lease are €1.3 million ($1.4 million, 2015 - €0.4 million ($0.4 million), 2014 - $0.6 million) and the guarantee expires on September 14, 2016.

To Abu Dhabi Education Council for AED 1.3 million ($0.3 million, 2015 - $0.4 million, 2014 - $0.4 million) which is open ended.

To Dubai Islamic Bank for AED 24.0 million ($6.5 million, 2015 - $9.8 million, 2014 - $9.8 million) in respect of a 13-year lease for school premises in Dubai, the guarantee reduced to AED 12.0 million from September 14, 2016 and expires on September 15, 2017.

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Notes to the financial statements for the year ended August 31, 2016 (continued)

29 Related party transactions

Controlling entities

Premier Education Holdings Limited (“PEH”) owns 66.9% of the ordinary shares of Nord Anglia Education, Inc., and Baring Private Equity Asia owns 100% of Premier Education Holdings Limited.

Transactions with related parties

During the year the Group and Company entered into transactions, in the ordinary course of business, with key management personnel. Transactions entered into, and trading balances outstanding at August 31, are as follows:

	2014		2015		2016
	Amounts owed by related parties $m	Amounts owed to related parties $m	Amounts owed by related parties $m	Amounts owed to related parties $m	Amounts owed by related parties $m	Amounts owed to related parties $m

Entities with significant influence over the Group:
Premier Education Holdings Limited	—	—	—	—	—	—

Key management personnel	1.5	0.8	1.5	0.8	1.5	0.6

Name of Company	Holding	Proportion of voting rights and shares held		Nature of business

Subsidiary undertaking:
Nord Anglia Education (UK) Holdings PLC	Ordinary	100	%	Holding company

Remuneration of senior management is disclosed in Note 8.

The Group holds a 50% shareholding in EduAction Waltham Forest Limited through its 100% owned subsidiary Nord Anglia Education Limited. At the reporting date the joint venture was owed an amount of $0.9 million (2015 - $1.1 million, 2014 - $1.1 million) by the Group which is included within other payables due less than one year.

During the year ended August 31, 2016, consistent with August 31, 2015 financial statements, the Swiss schools continue to rent premises from a key member of management and companies which are controlled by the key member of management.

	Balance at August 31, 2014 $m	Rental charge for the period $m	Balance at August 31, 2015 $m	Rental charge for the period $m	Balance at August 31, 2016 $m	Rental charge for the period $m

Leosolis SA	0.2	3.4	—	3.2	—	4.2
Catal Services DMCC	—	—	—	—	—	1.1
Hunters SA	—	1.0	—	0.9	—	0.8
Toumim SA	—	0.5	—	0.3	—	0.3
Delphim SA	0.8	3.5	—	3.2	—	3.1
Educim SA	—	0.0	—	3.1	—	2.4
La Renardières Service SA	—	0.7	—	0.7	—	0.6
Jérôme de Meyer	—	—	—	—	—	0.0

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Notes to the financial statements for the year ended August 31, 2016 (continued)

29 Related party transactions (continued)

Future aggregate minimum lease payments to the key member of management as well as companies controlled by the key member of management are as follows:

2014	Total payable ($m)	Due within 1 year ($m)	Due within 1 to 5 years ($m)	Due after more than 5 years ($m)

Leosolis SA	68.8	3.3	13.1	52.4
Hunters SA	12.8	0.9	2.6	9.3
Toumim SA	6.7	0.3	1.3	5.1
Delphim SA	40.5	3.4	13.5	23.6
Educim SA	65.2	2.6	10.5	52.1
La Renardières Service SA	7.5	0.6	2.3	4.6
Residence Panorama SA	0.4	0.1	0.3	—
Jérôme de Meyer	0.1	0.1	—	—

	202.0	11.3	43.6	147.1

2015	Total payable $m	Due within 1 year $m	Due within 1 to 5 years $m	Due after more than 5 years $m

Leosolis SA	62.4	3.1	12.5	46.8
Hunters SA	11.4	0.9	2.2	8.3
Toumim SA	6.0	0.3	1.3	4.4
Delphim SA	35.4	3.2	12.9	19.3
Educim SA	59.7	2.5	10.0	47.2
La Renardières Service SA	6.6	0.6	2.2	3.8
Residence Panorama SA	0.3	0.1	0.2	—
Jérôme de Meyer	0.0	0.0	—	—

	181.8	10.7	41.3	129.8

2016	Total payable $m	Due within 1 year $m	Due within 1 to 5 years $m	Due after more than 5 years $m

Leosolis SA	58.0	3.1	12.2	42.7
Hunters SA	10.6	0.8	2.2	7.6
Toumim SA	5.7	0.3	1.2	4.2
Delphim SA	31.4	3.1	12.6	15.7
Educim SA	55.4	1.8	9.8	43.8
La Renardières Service SA	6.0	0.6	2.2	3.2
Jérôme de Meyer	0.0	0.0	—	—

	167.1	9.7	40.2	117.2

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Notes to the financial statements for the year ended August 31, 2016 (continued)

29 Related party transactions (continued)

There is a rental guarantee made to Delphim SA for CHF 1.2 million in respect of a 14-year lease of school premises in Switzerland. The annual payment under this lease are CHF 3.1 million ($3.2 million) and the guarantee expires on August 31, 2026.

In addition to the above, companies owned by the key management personnel were also paid a consultancy fee of $2.7 million (2015 - $0.2 million, 2014 - $1.2 million) and reimbursement of costs of $1.0 million (2015 - $2.5 million, 2014 - $1.2 million).

Included within other payables is an amount of $0.6 million (current - $0.2 million, non-current - $0.4 million), 2015 - $0.8 million (current - $0.2 million, non-current - $0.6 million), 2014 - $0.8 million (current - $0.2 million, non-current - $0.6 million). The $0.6 million is due to the vendor of College Champittet for the earn-out agreement and is to be settled over the next three years (2015 - $0.8 million to be settled over the next four years, 2014 - $0.8 million to be settled over four years).

During the year ended August 31, 2014, $15.0 million was paid to Baring Private Equity Asia, the ultimate parent of the Group in respect of the termination of professional services and consultancy agreement in 2014 and management and consultancy fees in 2013. Furthermore in 2013, $0.2 million was paid to Barings Private Equity Asia for the reimbursement of travelling expenses.

During the year ended August 31, 2014, $61.2 million of preference share redemption premium was paid to PEH and the carrying value of the shares redeemed was $0.0 million. Included within the transactions with PEH is the $19.5 million consideration in respect of the transfer of British International School Abu Dhabi (“BISAD”) in the prior year. The remaining balance ($14.5 million) was settled as part of the share cancellation and recapitalization (see Note 24).

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Notes to the financial statements for the year ended August 31, 2016 (continued)

30 Earnings/(loss) per share

Basic earnings/(loss) per share amounts are calculated by dividing the earnings/(losses) attributable to owners of the company by the weighted average number of ordinary shares in issue during the financial year, which has been adjusted to reflect retroactively as outstanding in all periods the shares held by PEH, the parent, immediately prior to the initial public offering. During the year $nil (2015 - $nil, 2014 - $32.1 million) of new preference shares were redeemed at the option of the Company. The amount paid on redemption was $nil (2015 - $nil, 2014 - $61.6 million) and the carrying value of the shares redeemed comprised of $nil (2015 - $nil, 2014 - $0.0 million) of share capital and $nil (2015 - $nil, 2014 - $61.6 million) of associated share premium. The redemption premium paid to the preference shareholders, whom are not the controlling party, has been added to loss for the year available for equity shareholders.

Diluted earnings/(loss) per share amounts are calculated by dividing the earnings/(losses) attributable to owners of the company by the weighted average number of ordinary shares in issue during the financial year adjusted for the effects of potentially dilutive options. The dilutive effect is calculated on the full exercise of all potentially dilutive ordinary share options granted by the Group, including performance-based options which the Group considers to have been earned.

	2014					2015			2016
	Basic		Potentially dilutive share options	Diluted		Basic	Potentially dilutive share options	Diluted	Basic	Potentially dilutive share options	Diluted

Loss ($m)
Continuing operations	(90.2	)		(90.2	)	6.5		6.5	47.1		47.1
Preference share redemption premium	(0.4	)		(0.4	)	—		—	—		—

Total losses attributable to equity shareholders	(90.6	)		(90.6	)	6.5		6.5	47.1		47.1

Weighted average number of shares (millions)	85.1		—	85.1		99.4	0.1	99.5	104.1	—	104.1

Loss per share ($ per share)	(1.07	)		(1.07	)	0.07		0.07	0.45		0.45

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Notes to the financial statements for the year ended August 31, 2016 (continued)

31 Subsequent events

A sale and purchase agreement was signed in relation to a Houston property, reported as an asset held for sale, subsequent to the year end, for a sale price of $9.7 million (see Note 12). This is subject to due diligence.

F-111

Table of Contents

Notes to the financial statements for the year ended August 31, 2016 (continued)

32 Parent company financial information

Income Statement

for the year ended August 31

		2014		2015		2016
	Note	$m		$m		$m

Revenue		—		—		—
Cost of sales		—		—		—

Gross profit		—		—		—

Selling, general and administrative expense		(3.0	)	(1.0	)	(4.1	)
Depreciation		—		—		—
Amortization		—		—		—
Exceptional items	32c	(35.0	)	(16.1	)	1.7

Total expenses		(38.0	)	(17.1	)	(2.4	)

Operating loss		(38.0	)	(17.1	)	(2.4	)

Finance income		—		1.5		8.2
Finance expense	32d	(10.4	)	(5.0	)	(5.5	)

Net financing income/(expense)		(10.4	)	(3.5	)	2.7

Profit/(loss) before tax		(48.4	)	(20.6	)	0.3
Income tax		—		—		—

Profit/(loss) for the period		(48.4	)	(20.6	)	0.3

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Notes to the financial statements for the year ended August 31, 2016 (continued)

32 Parent company financial information (continued)

Statement of Comprehensive Income/(Loss)

for the year ended August 31

		2014		2015		2016
	Note	$m		$m		$m

Profit/(loss) for the period		(48.4	)	(20.6	)	0.3

Other comprehensive income/(loss) for the period, net of income tax		—		—		—

Total comprehensive income/(loss) for the year		(48.4	)	(20.6	)	0.3

Attributable to:
Equity holders of the company		(48.4	)	(20.6	)	0.3

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Notes to the financial statements for the year ended August 31, 2016 (continued)

32 Parent company financial information (continued)

Balance Sheet

as at September 1, 2014, August 31, 2015 and 2016

			September 1, 2014		August 31, 2015		August 31, 2016
	Note		$m		$m		$m

Non-current assets
Investments	32b		538.3		538.3		550.6
Advances to subsidiaries			—		119.7		123.0

			538.3		658.0		673.6

Current assets
Advances to subsidiaries			14.6		—		—
Cash and cash equivalents			0.0		0.0		0.0

			14.6		0.0		0.0

Total assets			552.9		658.0		673.6

Current liabilities
Other interest-bearing loans and borrowings			0.0		—		—
Advances from subsidiaries and other payables			(25.2	)	(7.5	)	(2.4	)

			(25.2	)	(7.5	)	(2.4	)
Non-current liabilities
Other interest-bearing loans and borrowings			0.0		—		—
Advances from subsidiaries			(109.1	)	(114.4	)	(121.9	)

			(109.1	)	(114.4	)	(121.9	)

Total liabilities			(134.3	)	(121.9	)	(124.3	)

Net assets			418.6		536.1		549.3

Equity attributable to equity holders of the parent
Share capital	24	*	1.0		1.0		1.0
Share premium	24	*	597.1		735.2		736.0
Shareholder deficit			(179.5	)	(200.1	)	(187.7	)

Shareholders’ funds			418.6		536.1		549.3

These financial statements set out on pages 120 to 128 were approved the board of Directors on November 29, 2016 and were signed on its behalf by:

A Fitzmaurice		G Halder
Director		Director
November 29, 2016		November 29, 2016

Company number: MC-264950

* Reference refers to consolidated financial statement note.

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Notes to the financial statements for the year ended August 31, 2016 (continued)

32 Parent company financial information (continued)

Statement of Changes in Equity

for the year ended August 31, 2014, August 31, 2015 and August 31, 2016

	Share capital		Share premium		Shareholders’ deficit		Total shareholder equity

Balance at September 1, 2013	67.5		256.5		(133.7	)	190.3

Total comprehensive loss for the year

Loss for the year	—		—		(48.4	)	(48.4	)

Transactions with owners, recorded directly in equity

Proceeds from shares issued (see Note 24*)	1.0		348.6		—		349.6
Issue of preference shares	0.0		3.8		—		3.8
Contribution from parent	—		14.5		—		14.5
Transaction costs recognized directly in equity	—		(29.6	)	—		(29.6	)
Return of capital to pre-IPO shareholders	(67.5	)	4.0		—		(63.5	)
Forgiveness of the loan	—		14.3		—		14.3
Distribution to parent	—		(15.0	)	—		(15.0	)
Equity-settled share based payment transactions (see Note 24*)	—		—		2.6		2.6

Total contributions by and distributions to owners	(66.5	)	340.6		2.6		276.7

Balance at August 31, 2014 and September 1, 2014	1.0		597.1		(179.5	)	418.6

Total comprehensive loss for the year

Loss for the year					(20.6	)	(20.6	)

Transactions with owners, recorded directly in equity

Proceeds from shares issued (see Note 24*)	0.0		148.6		—		148.6
Transaction costs recognized directly in equity	—		(10.8	)	—		(10.8	)
Equity-settled share based payment transactions (see Note 24*)	—		0.3		0.0		0.3

Total contributions by and distributions to owners	0.0		138.1		0.0		138.1

Balance at August 31, 2015	1.0		735.2		(200.1	)	536.1

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Notes to the financial statements for the year ended August 31, 2016 (continued)

32 Parent company financial information (continued)

Statement of Changes in Equity

for the year ended August 31, 2014, August 31, 2015 and August 31, 2016 (continued)

	Share capital	Share premium	Shareholders’ deficit		Total shareholder equity

Balance at September 1, 2015	1.0	735.2	(200.1	)	536.1

Total comprehensive income for the year

Income for the year	—	—	0.3		0.3

Transactions with owners, recorded directly in equity

Proceeds from shares issued (see Note 24*)	0.0	0.6	—		0.6
Equity-settled share based payment transactions # (see Note 24*)	0.0	0.0	12.3		12.3
Exercise of share option	—	0.2	(0.2	)	—

Total contributions by and distributions to owners	0.0	0.8	12.1		12.9

Balance at August 31, 2016	1.0	736.0	(187.7	)	549.3

* Reference refers to consolidated financial statement note.

# Represents all vested share options of the employee employed by subsidiaries.

F-116

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Notes to the financial statements for the year ended August 31, 2016 (continued)

32 Parent company financial information (continued)

Cash Flow Statement

for the year ended August 31,

	2014 $m		2015 $m		2016 $m

Cash flows from operating activities
Profit/(loss) for the period before taxation	(48.4	)	(20.6	)	0.3
Adjustments for:
Bond redemption expense	13.8		—		—
Loan to subsidiary forgone	—		14.5		—
Net financial (income)/expense	10.4		3.5		(2.7	)
Equity settled share-based payment expenses	2.6		0.3		0.2

Cash used in operations	(21.6	)	(2.3	)	(2.2	)

Payment of bond redemption expense	(13.8	)	—		—
Interest paid	(9.4	)	(5.0	)	(5.5	)

Net cash used in operating activities	(44.8	)	(7.3	)	(7.7	)

Cash flows from investing activities
Investment in subsidiary	(206.2	)	—		—
Interest received	—		1.5		8.2
Advances to subsidiaries	(5.3	)	(116.2	)	(3.3	)

Net cash generated from/(used in) investing activities	(211.5	)	(114.7	)	4.9

Cash flows from financing activities
Proceeds from the issue of share capital, net	323.8		118.9		—
Advances from subsidiaries	161.0		3.1		2.8
Repayment of borrowings	(150.0	)	—		—
Distribution to parent	(15.0	)	—		—
Share redemption	(63.5	)	—		—

Net cash generated from financing activities	256.3		122.0		2.8

Net increase in cash and cash equivalents	0.0		0.0		0.0
Cash and cash equivalents at the beginning of period	0.0		0.0		0.0
Effect of exchange rate fluctuations on cash held	0.0		0.0		0.0

Cash and cash equivalents at August 31	0.0		0.0		0.0

F-117

Table of Contents

Notes to the parent company financial statements

32 Parent company financial information (continued)

Nord Anglia Education, Inc. was incorporated in the Cayman Islands on December 14, 2011 as an exempt company with limited liability under the Companies Law, Cap 22 (Law 3 of 1961, as consolidated and revised) of the Cayman Islands. The address of its registered office is Offices of Maples Corporate Services, Ugland House, PO Box 309, Grand Cayman, KY1-1104, Cayman Islands.

32a Basis of preparation

The parent company financial statements are prepared on the historical cost basis. The financial statements are presented in US dollar (“$”), unless otherwise stated.

The financial statements are prepared on a going concern basis. The Net assets as at August 31, 2016 amount to $549.3 million (2015 - $536.1 million, 2014 - $418.6 million).

The Directors have reviewed the latest guidance relating to going concern and, having made all relevant enquiries, have formed a judgement that Nord Anglia Education, Inc and its subsidiaries (together “the Group”) has adequate resources at its disposal to continue its operations for the foreseeable future. This judgement is based on a review undertaken of the current business forecast to twelve months after the signing of the financial statements and the projected cash requirements over that period to assess the likelihood of the Group being able to continue as a going concern. Suitable sensitivities were run for the periods up to twelve months after the signing of the financial statements to assess the headroom available. This review concluded that there were no material uncertainties that potentially could give rise to a significant doubt about the business continuing as a going concern.

Investments

In accordance with IAS 27R — Separate financial statements, the Company accounts for its investments in subsidiaries and associates at cost.

The Group operates a share based compensation plan under which the entity receives services from employees as consideration for equity instruments (options) of the Group (see Note 22). All vested share options of employees employed by subsidiaries are recognized as investments in subsidiaries and share based payment reserve.

Investments are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable, an impairment loss is recognized for the amount by which the carrying amount exceeds the recoverable amount, and the recoverable amount is the higher of value in use and fair value less costs to sell.

Borrowings and borrowing costs

All loans and borrowings are recognized initially at the fair value of the consideration received net of issue costs associated with the borrowing. Borrowings are stated subsequently at amortized cost; any difference between the proceeds (net of transaction costs) and the redemption value is recognized in the Company Income Statement over the period of the borrowings using the effective interest rate method.

Borrowing costs are expensed in the period in which they are incurred, except for issue costs, which are amortized over the period of the borrowing. Any initial differences between book value and the fair value of the loan due to the parent company are adjusted to equity to the extent they represent capital transactions with the parent.

Out of period adjustments

Management has corrected historical share based payment accounting error in the current year financial statements. This had the effect of increasing Investments in the Parent company, with a corresponding increase in the Shareholders’ funds. The impact relating to 2014 and 2015 is $3.8 million and $2.1 million, respectively. This had no impact on the consolidated financial statements, no impact on the Company Income Statement, and was not deemed to be a material error. As a result, the correction was made in the current year Balance Sheet.

F-118

Table of Contents

Notes to the parent company financial statements (continued)

32 Parent company financial information (continued)

32b Investments

		$m

At August 31, 2013		332.1
Additions during the year		206.2

At August 31, 2014		538.3
Additions during the year		—

At August 31, 2015		538.3
Additions during the year		12.3

At August 31, 2016		550.6

Investments represent 100% of the issued share capital of Nord Anglia Education (UK) Holdings PLC, a company incorporated in the United Kingdom. The principle activity of this subsidiary is that of a holding company.

The additions of investment costs in 2016 represent all vested share options of the employee employed by subsidiaries.

The Directors believe the carrying value of the investments is supported by their underlying net assets and future cash flows.

Details of investments indirectly held by the Company are disclosed in Note 14 of the consolidated financial statements.

32c Exceptional items

Included within the current year income of $1.7 million is the release of an over-accrual of Meritas transaction acquisition costs from 2015 of $1.8 million. The finalization of the transaction costs was completed in April 2016 when the last of the invoices was received and settled.

Included within the 2015 charge of $16.1 million is a loan to a subsidiary (NA Schools Limited) of $14.5 million which was written off. A charge has been recognized through the profit and loss as a result of the de-recognition of the financial asset.

In 2014, the exceptional charges of $35.0 million relates to the Initial Public Offering and the extinguishment of the 8.5% Senior PIK toggle notes due 2018.

32d Finance expense

The amount is an interest payable to a subsidiary.

32e Contingent liabilities

The Company had no contingent liabilities at August 31, 2016 (2015 - $nil, 2014 - $nil).

32f Operating leases

The Company had no operating leases at August 31, 2016 (2015 - $nil, 2014 - $nil).

32g Capital commitments

The Company had no capital commitments at August 31, 2016 (2015 - $nil, 2014 - $nil).

32h Related party transactions

There are no related party transactions other than those disclosed in the Group accounts. Under IAS 24 — Related party disclosures, the Company is exempt from disclosing transactions within wholly-owned subsidiaries.

F-119

Table of Contents

Notes to the parent company financial statements (continued)

32 Parent company financial information (continued)

32i Supplemental information

The following reconciliations are provided as additional information to satisfy the schedule 1 SEC requirements for parent-only financial information.

	2014		2015		2016
Year ended August 31	$m		$m		$m

IFRS profit/(loss) reconciliation
Parent only — IFRS profit/(loss) for the period	(48.4	)	(20.6	)	0.3
Additional profit/(loss) if subsidiaries had been accounted for on the equity method of accounting as opposed to cost	(41.8	)	27.1		46.8

Consolidated IFRS profit/(loss) for the period	(90.2	)	6.5		47.1

IFRS equity reconciliation
Parent only — IFRS equity	418.6		536.1		549.3
Additional loss if subsidiaries had been accounted for on the equity method of accounting as opposed cost	(226.0	)	(259.0	)	(262.8	)

	192.6		277.1		286.5

F-120

Exhibit 4.11

EXECUTION VERSION

PURCHASE AND SALE AGREEMENT

This Purchase and Sale Agreement (this “Agreement”) is made and entered into as of February 25, 2016 (the “Effective Date”) by and between North Broward Preparatory Schools, LLC, a Florida limited liability company (“Seller”), and BMOC-MIA (FL) LLC, a Delaware limited liability company (“Purchaser”).

RECITALS:

A. Seller is the owner of that certain land and improvements consisting of a United States school described as North Broward Preparatory School located in Coconut Creek, Florida. The land and improvements comprising the School consists of approximately 3,073,593 square feet and is more particularly described on the attached Exhibit A (the “Land”), and all buildings, structures, fixtures, fittings and equipment located thereon and all rights and appurtenances thereto which comprises a building area of approximately 214,469 square feet (the “Improvements”).

B. Seller desires to sell to Purchaser and Purchaser desires to purchase from Seller the Property (as defined in Section 2.1 below) upon the following terms, covenants, and conditions.

AGREEMENTS:

In consideration of the foregoing and the mutual covenants and agreements set forth herein, and subject to all of the following terms, provisions and conditions, Seller and Purchaser agree as follows:

1. Recitals/ Definitions. The Recitals set forth in the beginning of this Agreement form a part of this Agreement. The following terms for purposes of this Agreement shall have the meanings hereinafter specified (additional terms may be defined elsewhere in the Agreement):

“Additional Earnest Money” means cash in the amount of One Million Four Hundred Thirty Seven Thousand Eight Hundred Thirty Seven and 84/100 Dollars ($1,437,837.84).

“Additional Purchase Contracts” is defined in Section 4.6.2.

“Agreement” is defined in the introductory paragraph of this Agreement.

“Blocked Person” means a person (i) described in Section 1 of the Executive Order or (ii) listed in the “Alphabetical Listing of Blocked Persons, Specially Designated Nationals, Specially Designated Terrorists, Specially Designated Global Terrorists, Foreign Terrorist Organizations, and Specially Designated Narcotics Traffickers” published by OFAC, 31 C.F.R. Chapter V, Appendix A, as in effect from time to time.

“Camplife Lease” is defined in Schedule 8.1.10.

“Capital Lease Determination” is defined in Section 30.1.

“Closing” is defined in Section 3.

“Closing Costs” is defined in Section 7.

“Closing Date” is defined in Section 3.

“Closing Statement” is defined in Section 3.3.8.

“Deed” is defined in Section 3.3.1.

“Due Diligence” is defined in Section 4.5.1.

“Earnest Money” means the Initial Earnest Money plus Additional Earnest Money, and any accrued interest thereon.

“Effective Date” is defined in the introductory paragraph of this Agreement.

“Exception Documents” is defined in Section 4.1.

“Execution Version of Lease” is defined in Section 2.3.1.

“Hazardous Substances” means any substance that is toxic, radioactive, ignitable, dangerous, harmful, flammable, explosive, reactive or corrosive. and that is, in the form, quantity, condition and location then found upon or under the Property regulated by any governmental authority. “Hazardous Substance” also includes any and all materials and substances that are defined as “hazardous waste,” “hazardous material,” “hazardous chemical,” “pollutant,” “contaminant” or “hazardous substance,” in the form, quantity, condition and location then found upon the Property pursuant to applicable laws. “Hazardous Substance” includes asbestos in any form and any substance containing asbestos, polychlorinated biphenyls, petroleum, lead-based paint, mold, and urea formaldehyde foam insulation.

“Improvements” is defined in the recitals of the Agreement.

“Initial Earnest Money” means cash in the amount of Six Hundred Sixteen Thousand Two Hundred Sixteen and 22/100 Dollars ($616,216.22).

“Inspection Period” is defined in Section 4.3.

“Land” is defined in the recitals of this Agreement.

“Leaseback” is defined in Section 2.3.

“Leaseback Lease” means the form lease attached hereto as Exhibit B.

“OFAC” means the United States Office of Foreign Assets Control.

“Permitted Exceptions” is defined in Section 4.3.

“Personal Property” is defined in Section 2.1.3.

“Property” is defined in Section 2.1.

“Property Documents” is defined in Section 4.4.

“Purchase Price” is equal to Sixty-Eight Million Six Hundred Eleven Thousand One Hundred Eleven and 11/100 Dollars ($68,611,111.11).

“Purchaser” is defined in the introductory paragraph of this Agreement.

“Purchaser’s Title Notice” is defined in Section 4.3.

“PWC” is defined in Section 30.1.

“Reports” is defined in Section 4.5.4.

“School” means the Land and Improvements (together, the “School”). School will not include the operating educational business at any of these locations.

“Seller” is defined in the introductory paragraph of this Agreement.

“Significant Portion” is defined in Section 25.1.

“Survey” is defined in Section 4.2.

“Third Party Appraisal” means that certain appraisal procured by Seller in connection with the Capital Lease Determination.

“Title Commitment” means a preliminary title report and commitment for an Owner Policy of Title Insurance in favor of Purchaser covering the Property in the amount of the Purchase Price.

“Title Company” means First American Title Insurance Company.

“Title Policy” is defined in Section 5.

“Transaction Costs” is defined in Section 30.2.

“WPC Group” means CORPORATE PROPERTY ASSOCIATES 18 — GLOBAL INCORPORATED, CORPORATE PROPERTY ASSOCIATES 17 — GLOBAL INCORPORATED, and/or W. P. Carey Inc.

2. Purchase and Sale; Purchase Price; Leaseback.

2.1 Purchase and Sale; Property. On the Closing Date, Seller shall sell, assign, transfer, grant and convey to Purchaser, and Purchaser shall purchase from Seller, by good and sufficient limited warranty deed to Purchaser, upon all of the terms, covenants and conditions set forth in this Agreement all of the following (collectively, the “Property”):

2.1.1 good and indefeasible fee simple title to the Land, together with all rights and appurtenances belonging thereto and all right, title and interest of Seller in and to

adjacent streets, alleys and rights of way, and right, title and interest of Seller in and to all utilities and utility availability, drainage facilities, easements and utility facilities, sewage treatment capacity and water capacity available to, which serves, or which will serve such land, and all oil, gas and other minerals and water rights with respect thereto.

2.1.2 the Improvements;

2.1.3 all of Seller’s right, title and interest in and to the equipment, appliances, tools, permanent fixtures and furniture and other tangible personal property attached to, appurtenant to, located in and used exclusively in connection with the ownership or operation of the Improvements, but specifically excluding trade goods, equipment, furnishings, fixtures and personal property that are integral to Seller’s business at the School (the personal property provided in this Section 2.1.3 to be transferred to Purchaser at Closing being, the “Personal Property”).

2.1.4 [intentionally omitted].

For and in consideration of the sale, assignment, transfer, grant and conveyance of the Property pursuant to the terms of this Agreement, Purchaser shall pay the Purchase Price to Seller, in cash or immediately available funds, at Closing (as defined below), subject to the specific adjustments contemplated herein.

2.2 Earnest Money. Purchaser will deliver to the Title Company, which shall serve as escrow agent and closing agent, the Initial Earnest Money within one (1) business days after the Effective Date. The Initial Earnest Money and any accrued interest is refundable to Purchaser only if Purchaser terminates this Agreement pursuant to Section 4.6 or as otherwise expressly provided in this Agreement.

2.2.1 If Purchaser does not timely terminate this Agreement prior to the expiration of the Inspection Period pursuant to Section 4.6, Purchaser will deliver to the Title Company the Additional Earnest Money within one (1) business day after the expiration of the Inspection Period. Following the expiration of the Inspection Period, the Earnest Money will be nonrefundable to Purchaser unless (i) the Closing does not occur solely due to a Seller default or (ii) this Agreement is terminated pursuant to Section 25 or otherwise as expressly provided in this Agreement.

2.2.2 The Earnest Money will be held and administered in accordance with a mutually agreed form of escrow agreement, which shall be executed by Purchaser, Seller and the Title Company prior to depositing the Earnest Money with the Title Company. The Title Company will invest the Earnest Money, at the instruction and sole election of Purchaser, only in (a) bonds, notes, Treasury bills or other securities constituting direct obligations of, or guaranteed by the full faith and credit of, the United States of America, and in no event maturing beyond the Closing Date, or (b) an interest-bearing account at a commercial bank mutually acceptable to Seller, Purchaser and Title Company. The investment of the Earnest Money will be at the sole risk of Purchaser.

2.3 Leaseback. Seller and Purchaser intend that Seller will leaseback the School from Purchaser following the Closing (the “Leaseback”).

2.3.1 Following the expiration of the Inspection Period, Purchaser will prepare an execution version of the Leaseback Lease for the School by inserting School specific provisions (e.g. legal descriptions, addresses, leased area) into the Leaseback Lease (the “Execution Version of Lease”). No later than five (5) business days prior to the Closing Date, Purchaser will deliver the Execution Version of Lease to Seller and following final approval thereof by Seller, the Execution Version of Lease will be final and will be executed by the parties thereto at Closing.

3. Closing. The closing of the sale and purchase of the Property (the “Closing”) hereunder shall be held through an escrow administered by the Chicago, Illinois office of the Title Company. The Closing will take place on or about May 31, 2016 (the “Outside Date”), or such other date that Purchaser and Seller may agree upon (the “Closing Date”); provided that Seller (after the expiration of the Inspection Period), may elect to cause the Closing to occur prior to the Outside Date upon twenty (20) days prior written notice to Purchaser.

3.1 Seller’s Obligation to Close. Seller’s obligation to close on the transactions contemplated in this Agreement is subject to the satisfaction of all of the following conditions (any or all of which may be waived in whole or in part by Seller at any time): (i) all representations and warranties by Purchaser set forth in this Agreement shall be true and correct as of the applicable Closing Date in all material respects, and (ii) Purchaser shall have delivered all of Purchaser’s deliverables pursuant to Section 3.4 hereof.

3.2 Purchaser’s Obligation to Close. Purchaser’s obligation to close on the transactions contemplated in this Agreement is subject to the satisfaction of all of the following conditions (any or all of which may be waived in whole or in part by Purchaser at any time): (i) all representations and warranties by Seller with respect to Seller and the School set forth in this Agreement shall be true and correct at and as of the Closing Date in all material respects, (ii) Seller shall have delivered all of Seller’s deliverables pursuant to Section 3.3 hereof, and (iii) Seller shall have provided to Purchaser evidence of (a) Camplife Ltd’s consent to the transactions contemplated in this Agreement or (b) an amendment to the Camplife Lease showing that Camplife Ltd’s consent to the transactions contemplated in this Agreement is no longer required pursuant to the terms of the Camplife Lease (either (a) or (b) being in a form acceptable to Purchaser in its commercially reasonable judgment). For the avoidance of doubt, Purchaser’s ability to secure financing is not a condition to Purchaser’s obligation to close.

3.3 Seller’s Deliveries. At the Closing, Seller shall deliver into escrow at Title Company’s Chicago office or cause to be delivered to Purchaser the following documents:

3.3.1 An executed special warranty (or state equivalent) deed (the “Deed”) for the School conveying title to the Property to Purchaser, subject only to the Permitted Exceptions. The Deed shall be in recordable form and, upon Closing, shall be recorded in the Real Property Records of the applicable county and state where the subject of the applicable Deed is located.

3.3.2 An executed owner’s affidavit in customary form acceptable to the Title Company.

3.3.3 An irrevocable commitment from the Title Company to issue, promptly after the Closing and effective as of the Closing Date, the Title Policy.

3.3.4 An executed certificate of Non Foreign Status, in a form complying with Section 1445 of the Internal Revenue Code of 1986, as amended, and the regulations promulgated pursuant thereto.

3.3.5 Evidence of Seller’s capacity and authorization to close the transactions contemplated in this Agreement and the Execution Version of Lease along with formation documents, operating agreements, bylaws, and good standings certificates certified by the relevant jurisdictions and/or the necessary and proper officers of Seller.

3.3.6 An executed counterpart of a bill of sale conveying the Personal Property.

3.3.7 An executed counterpart of any required State, County, or Municipal transfer declaration forms or tax forms.

3.3.8 An executed counterpart of the closing statement prepared by the Title Company (the “Closing Statement”).

3.3.9 The Personal Property.

3.3.10 An executed counterpart of the Execution Version of Lease.

3.3.11 Such other documents as counsel to Seller and Purchaser may mutually agree are necessary or appropriate to carry out the intents and purposes of this Agreement.

3.3.12 Possession of the applicable Property, subject only to the Permitted Exceptions.

3.3.13 An executed Parent Guaranty in the form attached hereto as Exhibit E (the “Parent Guaranty”) from each of Nord Anglia Education Inc., Nord Anglia Education Limited, and Viking Holding Company, LLC (collectively, the “Guarantor”).

3.3.14 Certificate of Guarantor’s in-house counsel regarding compliance with existing credit facilities in the form attached hereto as Exhibit F.

3.3.15 An executed counterpart to the Construction Agency Agreement along with an executed counterpart to the attached Owner’s Guaranty, in the form attached hereto as Exhibit G, (the “CAA”);

3.3.16 A counterpart of the side letter regarding loans in the form attached hereto as Exhibit H (the “Side Letter”);

3.3.17 An executed certificate of Seller wherein it certifies that each representation and warranty of Seller set forth in Section 8.1 hereof is true and correct in all material respects as of the Closing Date.

3.3.18 Opinion(s) of counsel (such opinion form, and counsel, as acceptable to Purchaser in its commercially reasonable judgment) addressed to Purchaser regarding the Execution Version of the Lease, the CAA, and the Parent Guaranty and covering due authorization, execution, and delivery under the applicable laws of the place of incorporation/formation; enforceability under Florida law with respect to the Execution Version of the Lease and the CAA; enforceability of the Parent Guaranty under New York law; and with respect to the Parent Guaranty, an opinion regarding enforcement of remedies in the jurisdiction of incorporation/formation of Nord Anglia Education Inc. and Nord Anglia Education Limited.

3.4 Purchaser’s Deliveries. At the Closing Purchaser shall deliver into escrow at Title Company’s Chicago office the following funds and documents:

3.4.1 Funds available for immediate disbursement at Closing in an amount equal to the Purchase Price less the Earnest Money, and as adjusted for expenses as provided herein.

3.4.2 Evidence of Purchaser’s capacity and authorization to close the transactions contemplated in this Agreement.

3.4.3 A counterpart of a Bill of Sale conveying the Personal Property.

3.4.4 A counterpart of any required State, County, or Municipal transfer declaration forms.

3.4.5 A counterpart of the Execution Version of Lease.

3.4.6 A counterpart of the Closing Statement.

3.4.7 Such other documents as are contemplated herein or as counsel to Seller and Purchaser may mutually agree are necessary or appropriate to carry out the intents and purposes of this Agreement.

3.4.8 A counterpart of the Side Letter.

3.4.9 An executed certificate of Purchaser wherein it confirms that each representation and warranty of Purchaser set forth in Section 8.2 hereof is true and correct in all material respects as of the Closing Date.

3.4.10 A counterpart of the CAA (including Owner’s Guaranty).

4. Title and Survey Review.

4.1 Title Commitment; Exception Documents. Within one (1) business day after the Effective Date, Seller will cause the Title Company to issue, and deliver to Seller and

Purchaser, the Title Commitment, which Title Commitment shall be accompanied by complete and legible copies of all recorded documents relating to easements, rights of way, and other matters affecting title thereto (the “Exception Documents”).

4.2 Survey. During the Inspection Period, Purchaser shall be entitled to obtain an ALTA/ACSM Land Title Survey for the School (the “Survey”) and Seller shall reasonably cooperate with Purchaser with respect to Purchaser’s effort in this regard. Within one (1) business day after the Purchaser’s receipt of the Exception Documents, Purchaser shall engage a surveyor to prepare the Survey. Promptly upon receipt of such Survey, Purchaser shall forward a copy of the Survey to Seller via email.

4.3 Title Inspection. The Purchaser shall have the period commencing on the Effective Date and ending thirty (30) days following receipt of the Property Documents at 5:00 p.m. Central Time (the “Inspection Period”) to examine title to the Property and to make objections thereto, such objections to be made in writing (“Purchaser’s Title Notice”) and delivered to Seller on or before the date that is ten (10) days prior to the expiration of the Inspection Period; provided that to the extent Purchaser shall have not had sufficient time to review the Survey prior to delivery of the Purchaser’s Title Notice, Purchaser shall have the right to supplement Purchaser’s Title Notice so long as such supplement is delivered no later than the date that is five (5) days prior to the expiration of the Inspection Period. Following receipt of the Property Documents, the parties (directly or through their respective counsel) shall confirm the expiration date of the Inspection Period via email. If Purchaser shall fail to timely make any objections to title pursuant to this Section 4.3 or waives objections to title, Purchaser shall be deemed to have accepted title to the Property. If any objections to title are timely made by Purchaser pursuant to this Section 4.3, then Seller shall have the right, but not the obligation, to cure (by removal, and if reasonably acceptable to Purchaser, by endorsement of Purchaser’s title insurance policy or otherwise) any or all of such objections on or before the Closing Date. Seller shall make the aforesaid election by giving notice to Purchaser on or before the date which is five (5) business days after receipt of Purchaser’s Title Notice. If no such notice from Seller concerning such election is received by Purchaser by such date, then Seller shall be deemed to have elected not to cure any such objections. If Seller does not elect to cure any of Purchaser’s title objections, then Purchaser shall have the right prior to the expiration of the Inspection Period to either (a) waive the objections noted in Purchaser’s Title Notice or (b) terminate this Agreement pursuant to Section 4.6, in which event the Initial Earnest Money and all interest thereon will be returned to Purchaser and neither party shall have any further obligations to the other party. If Purchaser does not so elect to terminate this Agreement, then Purchaser shall be deemed to have waived such objections and any objections that Seller has not agreed to cure shall be deemed to be “Permitted Exceptions”. In no event will Permitted Exceptions include deeds of trust or mortgages, assignments of rents and leases, and financing statements giving notice of liens on fixtures; judgment liens; mechanics’ and materialmen’s liens; tax liens; and all other monetary liens, attributable to Seller. If any exceptions to title are created after the date of the Title Commitment but before Closing, Purchaser will have the right to object to such exceptions (provided that the exceptions are not caused by the acts or omissions of Purchaser) and Seller will have the right to remove such exceptions in the same manner as set forth above in this Section 4.3.

4.4 Property Documents. Seller will deliver or make available to Purchaser such documents and information pertaining to the Property as described on Exhibit C hereto (collectively, the “Property Documents”), if any, that are in the possession of the Seller within five (5) business days after the Effective Date.

4.5 Property Inspection.

4.5.1 Upon reasonable advanced written notice to Seller (which may be coordinated via email to the following address: Ed Schmidt (Ed.Schmidt@nordanglia.com) with copy to Ben Hall (Ben.Hall@nordanglia.com)), during the Inspection Period, Purchaser may, at Purchaser’s sole cost and expense, conduct Due Diligence of the Property. For the purposes of this Agreement, “Due Diligence” includes (i) Purchaser’s Seller-escorted access to the Schools outside of normal school hours for purposes of conducting inspections, including a complete property condition assessment using professional technical, engineering and structural consultants; (ii) Purchaser’s on-site or other access to the Property Documents; (iii) Purchaser’s right to interview the business manager and property manager operating and managing the Property or Schools; provided, however, that Purchaser may not interview any other personnel at the Property; (v) upon Seller’s prior written consent, Purchaser’s right to interview top management of Nord Anglia Education at its offices in Hong Kong and the United States (via in-person, video conference, or telephone); and (vi) Purchaser’s review of each School’s key performance indicators of the past three (3) years, current budget and one year forecast, and capital programs related to academic and non-academic enhancement plans. While on-site of any School, Purchaser shall not, and shall instruct its contractors and agents to not, interact with any students.

4.5.2 Purchaser will: (i) maintain comprehensive general liability (occurrence) insurance in an amount not less than Two Million and No/100 Dollars ($2,000,000.00) and on terms (including (A) contractual indemnity coverage with respect to the indemnity in Section 4.5.3 and (B) a requirement that Seller be notified 30 days prior to any cancellation) satisfactory to Seller covering any accident arising in connection with the presence or activities of Purchaser or those entering the Property at the direction of Purchaser for purposes of conducting Due Diligence on the Property, and, prior to entry upon the Property, deliver to Seller a certificate of insurance verifying such coverage and confirming that Seller is named as an additional insured on such coverage; (ii) promptly pay when due the costs of all inspections, entries, samplings and tests and examinations done with regard to the Property; and (iii) promptly restore the Property to its condition as existed immediately prior to any such inspection, investigations, examinations, entries, samplings and tests, but in no event later than ten (10) days after the damage occurs (unless not commercially reasonably to fully address within such ten (10) day period in which case Purchaser may have a reasonable additional time to cure provided that it commences such cure within the 10-day period and thereafter diligently pursues completion of the cure within 120 days thereafter).

4.5.3 Purchaser hereby indemnifies, defends and holds Seller and its affiliates harmless from any and all loss, claim, action, demand and liability (including reasonable attorneys’ fees) which may arise by virtue of any of property damage or bodily injury, and diligently repair any such damage resulting therefrom, that is a result of Purchaser’s

inspections or physical tests and Due Diligence pursuant to this Section 4. This Section 4 will survive the termination of this Agreement.

4.5.4 Each of Seller and Purchaser shall be co-addressees, as applicable, of the Survey or any study or report (including phase I environmental assessment, soils study and/or engineering report) performed by or on behalf of Purchaser in connection with the Due Diligence (collectively, the “Reports”). Purchaser will use commercially reasonable efforts to cause the Reports to be issued in both Purchaser’s and Seller’s names and both parties are entitled to rely on the Reports.

4.6 Termination During Inspection Period.

4.6.2 Notwithstanding anything to the contrary set forth in Section 4.6.1 above or elsewhere in this Agreement, Seller and Purchaser acknowledge that simultaneously with the entering into of this Agreement, affiliates of Seller and Purchaser are entering into certain Purchase and Sale Agreements for the real property and improvements commonly known as Windermere Preparatory School located in Windermere, Orange County, Florida and The Village School located in Houston, Texas (together “Additional Purchase Contracts”). In accordance therewith, it is the intention of Seller and Purchaser that Purchaser shall have the right to either (a) proceed under both this Agreement and the Additional Purchase Contracts or (b) terminate both this Agreement and the Additional Purchase Contracts. It follows that if Purchaser terminates this Agreement pursuant to Section 4.6.1, it shall be deemed to have also terminated the Other Purchase Contracts under the corresponding sections (without prejudice to any rights of the purchasers thereunder) and accordingly, if Purchaser does not terminate this Agreement pursuant to Section 4.6.1, it shall be obligated to close on the transactions contemplated under the Other Purchase Contracts (without prejudice to any rights of the purchasers thereunder).

5. Owner’s Title Policy. At the Closing Seller shall cause to be furnished to Purchaser an Owner Policy of Title Insurance, standard to the state in which the School is located, issued by the Title Company, insuring the good and indefeasible fee simple title of Purchaser to the Property for the School in the amount of the Purchase Price (the “Title Policy”). The cost of the Title Policy will be paid pursuant to Section 7. The only exceptions to said Owner Policy of Title Insurance shall be (i) the standard printed exceptions contained therein (unless removed pursuant to an endorsement) and (ii) the Permitted Exceptions.

6. Prorations. Seller and Purchaser agree that all expenses of the Property are allocated to the tenant under the Execution Version of the Lease and as such there will be no prorations under this Agreement.

7. Expenses. Purchaser and Seller will equally split all costs relating to the Closing (the “Closing Costs”), including:

7.1 all applicable transfer taxes, documentary stamp taxes and similar charges relating to the transfer of the Property;

7.2 the cost of recording all deeds and memorandums of lease;

7.3 [reserved];

7.4 the cost for escrow fees and title charges of the Title Company;

7.5 the cost for the Title Policy plus the following endorsements: Contiguity if applicable, Navigational Servitude if applicable, Survey, and Florida Comprehensive; provided that in all cases, Purchaser’s and Seller’s portion of the costs under this Section 7.5 shall be with full Butler rebate applied;

7.6 the cost of the Survey;

7.7 the cost of Purchaser’s Due Diligence, including any appraisal of the Property; and

7.8 all other costs related to Closing which are agreed to in advance by Purchaser and Seller;

provided that, the Closing Costs will not include (i) the costs of financing obtained by Purchaser, including capital structuring in lieu of traditional financing, and any taxes assessed in relation thereto, including without limitation mortgage taxes, for which Purchaser will be solely responsible; and (ii) attorneys’ fees incurred by either party in connection with the sale or lease of the Property, which shall be borne by the party that incurs them, subject to Section 20. This Section 7 shall survive the Closing.

8. Representations and Warranties.

8.1 Seller’s Representations and Warranties. Seller represents and warrants to Purchaser that:

8.1.1 Seller holds good and indefeasible fee simple title to the Property.

8.1.2 To Seller’s Knowledge, Seller has not received any written notice of any material violation of any ordinance, regulation, law or statute from any governmental agency regarding the Property or the operation of the School which has not been complied with.

8.1.3 There are no leases, licenses and other agreements to occupy any portion of the Land or the Improvements except (i) the Camplife Lease and (ii) those provided in the Property Documents.

8.1.4 To Seller’s Knowledge, Seller has not received any written notice of any material action or proceeding (including condemnation proceedings) pending against Seller or the Property before any court or governmental department, commission, board, agency or instrumentality.

8.1.5 North Broward Preparatory Schools, LLC is a limited liability company duly organized and validly existing under the laws of the state of Florida, and has the full power and authority to execute and deliver this Agreement, and to perform and carry out all covenants and obligations to be performed and carried out by it hereunder.

8.1.6 Intentionally Omitted.

8.1.7 No consent, approval, authorization, registration, qualification, designation, declaration or filing with any governmental authority is required in connection with the execution and delivery of this Agreement by Seller.

8.1.8 To Seller’s Knowledge, there are no actions, suits, proceedings or investigations pending or threatened with respect to the Property, which would materially and adversely affect the value of the Property, or negate the validity or enforceability of the transaction contemplated herein, or which may materially and adversely affect Seller’s ability to perform hereunder. Materiality for purposes of this Section 8.1.10 shall mean a demand, cause of action, or other liability or potential liability in excess of $1,000,000.

8.1.9 Seller is not, a “foreign person” within the meaning of Internal Revenue Code Section 1445.

8.1.10 Except as provided in Schedule 8.1.10, execution of this Agreement and all documents executed pursuant to this Agreement, and performance by Seller of its obligations hereunder, will not breach or violate any other agreement, court order or other arrangement by which Seller is bound.

8.1.11 Seller (i) is not acting, directly or indirectly, for or on behalf of any person, group, entity, or nation named by any Executive Order or the United States Treasury Department as a terrorist, “Specially Designated National and Blocked Person,” or other banned or blocked person, group, entity, nation, or transaction pursuant to any law, order, rule or regulation that is enforced or administered by the Office of Foreign Assets Control; and (ii) is not engaged in this transaction, directly or indirectly on behalf of, or instigating or facilitating this transaction, directly or indirectly on behalf of, any such person, group, entity or nation. The foregoing representation and warranty in this Section 8.1.13 shall not be deemed to include any representation or warranty as to any shareholder of Seller’s ultimate parent.

8.1.12 To Seller’s Knowledge, the Property Documents delivered or to be delivered to Purchaser hereunder are or will be true and complete copies of those documents in Seller’s possession.

8.1.13 Intentionally Omitted.

8.1.14 Seller has not granted any option or right of first refusal or first opportunity to any party to acquire any interest in any of the Property.

8.1.15 Seller has not (i) made a general assignment for the benefit of creditors, (ii) filed any voluntary petition in bankruptcy or suffered the filing of any involuntary petition by Seller’s creditors, (iii) suffered the appointment of a receiver to take possession of the Property or all, or substantially all, of Seller’s other assets, (iv) suffered the attachment or other judicial seizure of any of the Property or all, or substantially all, of Seller’s other assets, (v) admitted in writing its inability to pay its debts as they come due, or (vi) made an offer of settlement, extension or composition to its creditors generally.

8.1.16 To Seller’s Knowledge, Seller is not aware of the release, discharge, spill, leakage or presence of Hazardous Substances on, at, in or under the Property in violation of applicable Environmental Laws.

“To Seller’s Knowledge” and similar terms means the present actual (as opposed to constructive or imputed) knowledge solely of the Managing Director of the School (who has significant responsibilities for, and significant familiarity with, such School) as of the Effective Date, without any independent investigation or inquiry whatsoever. Such individuals are named in this Agreement solely for the purpose of establishing the scope of Seller’s knowledge. Such individuals shall not be deemed to be parties to this Agreement nor to have made any representations or warranties hereunder, and no recourse shall be had to such individuals for any of Seller’s representations and warranties hereunder (and Purchaser hereby waives any liability of or recourse against such individuals).

8.2 Purchaser’s Representations and Warranties. Purchaser represents and warrants to Seller that:

8.2.1 Purchaser is not insolvent or bankrupt.

8.2.2 Purchaser is a limited liability company duly organized and validly existing under the laws of the state of Delaware, and Purchaser has the full right and authority to enter into this Agreement and to consummate the sale, transfer and assignment contemplated herein, and the person or persons signatory to this Agreement and any document executed pursuant hereto on behalf of Purchaser have full power and authority to bind Purchaser.

8.2.3 No consent, approval, authorization, registration, qualification, designation, declaration or filing with any governmental authority is required in connection with the execution and delivery of this Agreement by Purchaser.

8.2.4 Execution of this Agreement and all documents executed pursuant to this Agreement, and performance by Purchaser of its obligations hereunder, will not breach or violate any other agreement, court order or other arrangement by which Purchaser is bound.

8.2.5 Purchaser is not, and to Purchaser’s knowledge, no affiliate of Purchaser is, or has been determined by the U.S. Secretary of the Treasury to be acting on behalf

of a Blocked Person, or has otherwise been designated as a person (i) with whom an entity organized under the laws of the United States (or a state hereof) is prohibited from entering into transactions or (ii) from whom such an entity is prohibited from receiving money or other property or interests in property. In addition, neither Purchaser nor any affiliate of Purchaser is located in, or operating from, a country subject to U.S. economic sanctions administered by OFAC. The foregoing representation and warranty contained in this Section 8.2.3 shall not be deemed to include any representation or warranty as to any shareholder of Purchaser’s ultimate parent.

8.3 Indemnification. Each party shall indemnify and hold the other party harmless from and against any and all claims, actions, judgments, liabilities, liens, damages, penalties, fines, costs and reasonable attorneys’ fees, foreseen or unforeseen, asserted against, imposed on or suffered or incurred by such party (or the Property) directly or indirectly arising out of or in connection with any breach of the foregoing representations and warranties. If Seller reasonably requires, Seller shall promptly update the foregoing representations and warranties prior to Closing if it determines any are not or are no longer true and correct. The foregoing representations and warranties shall be deemed remade as of Closing and such warranties and representations as so remade, and the indemnity obligation set forth in herein, shall survive Closing. Notwithstanding the foregoing, if Purchaser becomes aware prior to the Closing that any representation or warranty hereunder is untrue, and Purchaser nonetheless proceeds to close its purchase of the Property (and therefore waives the requirement of delivery of the certificate identified in Section 3.3.17 hereof), then Purchaser shall be deemed to have irrevocably and absolutely waived, relinquished and released all rights and claims against Seller for any damage or other loss arising out of or resulting from such untrue representation or warranty. Furthermore, in the event that any representation or warranty is promptly updated by Seller as provided for herein, then, (i) if such update is as a result of a change of circumstances rather than such representation or warranty being untrue when made, then such misrepresentation shall not be deemed a breach of this Agreement and shall not trigger any indemnity obligations under this Section 8.3, (ii) if such update is as a result of such representation having been untrue when made, then Seller’s indemnity obligations shall be limited to matters arising prior to the delivery of such update and (iii) for the avoidance of doubt, if such update causes Seller to be unable to deliver the certificate identified in Section 3.3.17 hereof, then, at Purchaser’s election, it shall be excused from Closing and entitled to prompt return of the Earnest Money.

8.4 Pre-Closing Covenants. Between the Effective Date and the Closing, Seller: (i) will continue to operate the School in the same manner as Seller has operated the School prior to the Effective Date; (ii) will pay as they become due any and all taxes and assessments levied against the Property, all utility charges incurred with respect to the Property and all other expenses incurred in the operation of the Property; and (iii) will not grant, create, assume or permit to be created any mortgage, lien, encumbrance, easement, covenant, condition, right-of-way or restriction upon the Property without the consent of Purchaser, which consent will not be unreasonably withheld, conditioned or delayed.

8.5 Remedies.

8.5.1 If Seller defaults in its material obligations under this Agreement prior to Closing for any reason other than Purchaser’s default, Purchaser may, in its sole

discretion, upon five (5) days written notice to Seller, if such breach or failure is not cured within such five (5)-day period, either: (i) terminate this Agreement, without further liability on Purchaser’s part in which event the Earnest Money and any accrued interest will be returned to Purchaser as Purchaser’s sole and exclusive remedy and the parties shall have no further obligations to each other; or (ii) enforce specific performance of this Agreement. Further, if Seller is in breach of its obligations under Section 29 of this Agreement and as a result, enforcement of specific performance is not available, then in addition to the remedies set forth in this Section 8.5.1, Purchaser shall have the right to bring an action for direct and indirect damages (including loss of profits) against Seller for Seller’s default under this Agreement.

8.5.2 If after the expiration of the Diligence Period, Purchaser defaults in its material obligations under this Agreement prior to Closing for any reason other than Seller’s default, Seller may, in its sole discretion, upon five (5) days written notice to Purchaser, if such breach or failure is not cured within such five (5)-day receive the Earnest Money as liquidated damages as its sole and exclusive remedy and the parties shall have no further obligations to each other.

9. As-Is. Purchaser expressly acknowledges and agrees that Purchaser and Purchaser’s agents have reviewed or will review pursuant to the terms of this Agreement all materials regarding the condition of the Property which it deems necessary. Subject to the representations and warranties set forth herein, Purchaser further acknowledges and agrees that it is buying the Property on an “AS IS” “WHERE IS,” and “WITH ALL FAULTS” basis. Purchaser is, or after completion of such inspections pursuant to the terms of this Agreement will be, in all respects satisfied with the Property, including the physical condition thereof, and, except for the representations and warranties set forth herein, Purchaser has not relied upon any representation or warranty made by either Seller or any officer, employee, agent or representative of Seller in connection with the Property, including specifically, without limitation, any warranty or representation as to the condition of the planning status, topography, grading, climate, air, flood or mudslide hazards, water rights, water, utilities, present and future zoning, governmental entitlements and restrictions, soil, subsoil, paint or contamination of soil or water, access to public roads or the presence or absence of any hazardous waste. EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT, SELLER HAS NO OBLIGATION TO REPAIR ANY DAMAGE TO OR DEFECT IN THE PROPERTY, REPLACE ANY OF THE PROPERTY OR OTHERWISE REMEDY ANY MATTER AFFECTING THE CONDITION OF THE PROPERTY. EXCEPT FOR THE REPRESENTATIONS AND WARRANTIES SET FORTH HEREIN, SELLER HEREBY DISCLAIMS ANY AND ALL WARRANTIES WITH RESPECT TO THE LAND, INCLUDING WITHOUT LIMITATION, WARRANTIES AS TO QUALITY HABITABILITY, FITNESS, MERCHANTABILITY AND SUITABILITY FOR ANY PURPOSE. PURCHASER ACKNOWLEDGES THAT THE PURCHASE PRICE REFLECTS THE “AS IS” NATURE OF THIS SALE AND ANY FAULTS, LIABILITIES, DEFECTS OR OTHER ADVERSE MATTERS THAT MAY BE ASSOCIATED WITH THE PROPERTY. PURCHASER HAS FULLY REVIEWED THE DISCLAIMERS AND WAIVERS SET FORTH IN THIS AGREEMENT WITH ITS COUNSEL AND UNDERSTANDS THE SIGNIFICANCE AND EFFECT THEREOF. WITHOUT LIMITATION TO THE FOREGOING, PURCHASER UNDERSTANDS, ACKNOWLEDGES AND AGREES THAT, EXCEPT AS SPECIFICALLY ADDRESSED HEREIN, SELLER’S REPRESENTATIONS AND WARRANTIES DO NOT APPLY TO ANY

ENVIRONMENTAL, HEALTH OR SAFETY MATTERS, INCLUDING WITHOUT LIMITATION ANY MATTERS UNDER ENVIRONMENTAL LAWS. PURCHASER ACKNOWLEDGES AND AGREES THAT THE DISCLAIMERS AND OTHER AGREEMENTS SET FORTH IN THIS SECTION 9 ARE AN INTEGRAL PART OF THIS AGREEMENT AND THAT SELLER WOULD NOT HAVE AGREED TO SELL THE FEE PREMISES TO PURCHASER FOR THE PURCHASE PRICE WITHOUT THE DISCLAIMERS AND OTHER AGREEMENTS SET FORTH IN THIS SECTION 9. Nothing in this Section 9 will be construed to amend Seller’s obligations as tenant under the Leaseback Lease.

10. RESERVED.

11. Brokers. There are no brokers involved in this transaction acting for and on behalf of Purchaser or Seller for which a brokerage commission is or may become due, other than Marcus & Millichap, which broker will be paid by Seller pursuant to a separate agreement. Each party agrees to indemnify and hold the other party harmless from any and all claims for real estate or brokerage commissions or other compensation arising out of or relating to this transaction from any other broker or brokers whose claim for commission or other compensation arises (or is alleged to arise) by, through or under the actions or purported actions of the indemnifying party.

12. Notices. Any notice to be given or to be served upon any party hereto, in connection with this Agreement must be in writing to the addresses as follows:

If to Purchaser:

c/o W. P. Carey Inc.

50 Rockefeller Plaza, 2nd Floor

New York, New York 10020

Attention: Gino Sabatini and Zachary Pasanen

Email: gsabatini@wpcarey.com; zpasanen@wpcarey.com

With a copy to:

c/o W. P. Carey Inc.

50 Rockefeller Plaza, 2nd Floor

New York, New York 10020

Attention: Darren M. Sharlach, Esq., Jessica Dolfman Martin, Esq, and
Abigail Lamb, Esq.

Email: dsharlach@wpcarey.com; jdolfman@wpcarey.com, and
alamb@wpcarey.com

If to Seller:

Nord Anglia Education, HK

Attention: Head of Legal Department

Floor 12, St. George’s Building

2 Ice House Street, Central

Hong Kong S.A.R.

Tel +852 3951 1100

Email: Jodie.Coutts@nordanglia.com

with copy to: Michael Sawyer Smith

Baker & McKenzie

300 East Randolph Street, Suite 5000

Chicago, IL 60601, USA

Phone: 312-861-8930

Email: Michael.S.Smith@bakermckenzie.com

If any notice is given (a) by a private delivery service or recognized overnight courier, it shall be deemed to have been given and received when delivered or attempted to be delivered to the address of the party to whom it is addressed, and (b) by email transmission, it shall be deemed to have been given and received at the time confirmation of such transmission is received by the sender provided that a confirmation copy of such notice is also delivered by another method permitted under this Section 12. For the avoidance of doubt, any notice given pursuant to Section 4.6 of this Agreement may be delivered by email so long as it is otherwise delivered in accordance with the terms of this Section 12.

Any party hereto may at any time, by giving five (5) days’ written notice to the other party hereto, designate any other address in substitution of the foregoing address to which such notice shall be given.

13. Governing Law. This Agreement shall be governed by, and construed and enforced in accordance with the internal laws of the State of Florida (without regard to conflicts-of-law principles). The parties agree that the venue for any cause of action arising hereunder shall be in Miami, Florida.

14. Binding Effect; Assignment. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns. Purchaser may not assign this Agreement to any other party without the consent of Seller, which consent may be withheld in Seller’s sole discretion. Notwithstanding the foregoing Purchaser may assign this Agreement prior to the Closing (x) pursuant to Section 28 of this Agreement or (y) to any affiliate of Purchaser that is a wholly owned subsidiary of any entity or entities within the WPC Group without the prior consent of Seller so long as (i) such affiliate assumes all of the obligations of Purchaser under this Agreement, (ii) no such assignment shall have the effect of delaying the Closing in any respect, (iii) no such assignment shall relieve Purchaser from any of Purchaser’s obligations hereunder and (iv) Seller is given written notice of the assignee at least two (2) business days prior to the Closing.

15. No Waiver. One or more waivers of any covenant, term or condition of this Agreement by either party shall not be construed as a waiver of a subsequent breach of the same or any other covenant, term or condition; nor shall any delay or omission by either party to seek a remedy for any breach of this Agreement or to exercise a right accruing to such party by reason of such breach be deemed a waiver by such party of its remedies or rights with respect to such breach.

16. Severability. In case any one or more of the material provisions contained in this Agreement shall for any reason be held to be invalid, illegal or unenforceable in any respect, this Agreement shall terminate in its entirety and be of no further force or effect; provided, that if any one or more of the non material provisions contained herein shall for any reason be held to be invalid, illegal or unenforceable, such invalidity, illegality or unenforceability shall not affect any other provision hereof, and this Agreement shall be construed as if such invalid, illegal or unenforceable nonmaterial provisions had never been contained herein.

17. Entire Agreement. This Agreement constitutes the entire agreement of the parties hereto and supersedes any prior understandings or written or oral agreements between the parties respecting the within subject matter, and this Agreement may be amended or modified only be a written agreement signed by both parties hereto.

18. Caption. The descriptive headings of the sections contained in this Agreement are inserted for convenience only and shall not control or affect the meaning or construction of any of the provisions hereof.

19. Time. Time is of the essence in the performance of the parties’ respective obligations contained in this Agreement.

20. Expenses and Attorneys’ Fees. Except as specifically provided herein, each party hereto shall bear and pay its own costs and expenses of their respective counsel; provided, that in the event that any dispute between the parties hereto should result in litigation, the prevailing party shall be reimbursed for all reasonable costs, including, but not limited to, reasonable attorneys’ fees, incurred in connection with such litigation. BOTH PARTIES WAIVE TRIAL BY JURY IN ANY CLAIMS OR PROCEEDINGS ARISING FROM OR RELATING IN ANY WAY TO THIS AGREEMENT OR THE PROPERTY.

21. Exhibits. All exhibits and schedules attached to this Agreement are hereby incorporated herein and for all purposes made a part hereof.

22. Further Assurances.

22.1 Seller’s Cooperation. In addition to the obligations required to be performed hereunder by Seller prior to or at the Closing, Seller agrees to perform such other reasonable acts and to execute, acknowledge and/or deliver subsequent to the Closing such other reasonable instruments, documents and other materials as Purchaser may reasonably request in order to effectuate the consummation of the transactions contemplated herein and to vest title to the Property in Purchaser.

22.2 Purchaser’s Cooperation. In addition to the obligations required to be performed hereunder by Purchaser prior to or at the Closing, Purchaser agrees to perform such other reasonable acts, and to execute, acknowledge and/or deliver subsequent to the Closing such other reasonable instruments, documents and other materials, as Seller may reasonably request in order to effectuate the consummation of the transactions contemplated herein.

23. Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed an original but all of which shall constitute one and the same instrument. Delivery of an executed counterpart of this Agreement by facsimile or other electronic format (including PDF) shall be equally effective as delivery of a manually executed counterpart of this Agreement.

24. Number and Gender. All words herein shall be deemed to refer to the masculine, feminine or neuter, singular or plural, as the context may require.

25. Casualty and Condemnation.

25.1 Significant Casualty. If, prior to the Closing Date, all or any portion of the Land and Improvements is destroyed or damaged by fire or other casualty, Seller will notify Purchaser of such casualty. Purchaser will have the option, in the event all or any significant portion of any School is so destroyed or damaged so as to make operation of a School impractical (“Significant Portion”), to terminate this Agreement with respect to such affected School upon notice to Seller given not later than ten (10) days after receipt of Seller’s notice. If this Agreement is terminated with respect to an affected School, the Earnest Money will not be returned to Purchaser and the parties will proceed to Closing with the remaining Schools, and the Purchase Price will be reduced by the Allocated Percentage of the affected School. If Purchaser does not elect to terminate this Agreement with respect to the affected School, Seller will not be obligated to repair such damage or destruction but (a) Purchaser shall have the right to act jointly with Seller to adjust the insurance proceeds related to the same, (b) Seller will assign and turn over to Purchaser all of the insurance proceeds net of reasonable collection costs (or, if such have not been awarded, all of its right, title and interest therein) payable with respect to such fire or other casualty (excluding any proceeds of insurance that are payable on account of any business interruption, rental insurance or similar coverage intended to compensate Seller for loss of rental or other income from the Property attributable to periods prior to the Closing), (c) the parties will proceed to Closing pursuant to the terms hereof without abatement of the Purchase Price, except that Purchaser will receive a credit against cash due at Closing for the amount of the deductible on such insurance policy less any amounts reasonably and actually expended by Seller to collect any such insurance proceeds or to remedy any unsafe conditions at the affected School, and (d) Purchaser shall deliver all insurance proceeds to Seller and Seller will rebuild the Property in accordance with the applicable provisions of the Execution Version of the Lease.

25.2 Casualty of Less Than a Significant Portion. If less than a Significant Portion of the Property is damaged as aforesaid, Purchaser shall not have the right to terminate this Agreement and (a) Seller will repair such damage or destruction to the Property through insurance proceeds and (b) the parties will proceed to Closing pursuant to the terms hereof without abatement of the Purchase Price.

25.3 Condemnation of Property. In the event of condemnation or sale in lieu of condemnation of all or any portion of the Property or if Seller shall receive an official notice from any governmental authority having eminent domain power over the Land and Improvements of its intention to take, by eminent domain proceeding, all or any part of the Land and Improvements, prior to the Closing, Purchaser will have the option, by providing Seller written notice within twenty (20) days after receipt of Seller’s notice of such condemnation or sale, of terminating Purchaser’s obligations under this Agreement or electing to have this Agreement remain in full force and effect. In the event Purchaser does not terminate this Agreement pursuant to the preceding sentence, Seller will assign to Purchaser any and all claims for the proceeds of such condemnation or sale to the extent the same are applicable to the Land and Improvements, and Purchaser will take title to the Property with the assignment of such proceeds and subject to such condemnation and without reduction of the Purchase Price. Should Purchaser elect to terminate Purchaser’s obligations under this Agreement under the provisions of this Section 25.3, Earnest Money will be returned to Purchaser and thereafter neither Seller nor Purchaser will have any further rights or obligations to the other hereunder except for obligations that survive the termination of this Agreement. Notwithstanding anything to the contrary herein, if any eminent domain or condemnation proceeding is instituted (or notice of same is given) solely for the taking of any subsurface rights for utility easements or for any right-of-way easement, and the surface may, after such taking, be used in substantially the same manner as though such rights have not been taken, Purchaser will not be entitled to terminate this Agreement as to any part of the Property, but any award resulting therefrom will be assigned to Purchaser at Closing and will be the exclusive property of Purchaser upon Closing.

26. Confidentiality. Seller views all information of Seller provided or to be provided in writing to Purchaser, including, without limitation, the financial terms of this Agreement and the Leaseback Lease, the marketing and timing for application and enrollment to the Schools, and Seller’s costs, profit and business plans for the Schools (the “Confidential Information”) to be confidential information. Information that becomes generally available to the public shall no longer be deemed Confidential Information. However, Seller shall be entitled to disclosure Confidential Information to third parties without being deemed to have waived its intention to maintain the confidentiality of that Confidential Information. Purchaser will not disclose the Confidential Information to third parties without prior written consent of Seller other than as required by law or to Purchaser’s employees, affiliates, counsel, board members, contractors, lenders, agents and advisors and then subject to their agreement to maintain the confidentiality of that Confidential Information, except that Purchaser shall be permitted to disclosure Confidential Information (i) to the extent required by any governmental authorities; provided that Purchaser will give Seller prior notice of any disclosure requirements and afford Seller a reasonable opportunity to make (and will cooperate with Seller in making) an objection to such disclosure requirement, (ii) to the extent otherwise required by applicable laws or by any subpoena or similar legal process, (iii) in connection with any disclosure pursuant to an arbitration proceeding; provided that such disclosure will not constitute a waiver by Seller of the confidentiality obligations hereunder and the parties will cooperate to maintain the confidentiality of the Confidential Information during the arbitration proceeding, (iv) in connection with the exercise of any remedies hereunder or in any suit, action or proceeding relating to the enforcement of its rights hereunder; provided that Purchaser will cooperate with Seller in any request by Seller to a court to maintain the confidentiality of the Confidential Information, and (v) to the extent such Confidential Information (X) becomes publicly available

other than as a result of a breach of this Section 26, or (Y) becomes available to Purchaser or any affiliate thereof on a non-confidential basis from a source other than Seller (unless such source is known to be under a confidentiality agreement with respect to such information). Purchaser shall not make press releases relating to the Schools or this transaction without Seller’s consent (which consent shall not be unreasonably withheld, conditioned or delayed); Seller will be notified in writing at least three (3) days in advance of any press release approved by Seller being released by Purchaser.

27. Announcements. Neither party shall (and shall procure that its affiliates and advisors shall not) make any press release or other public announcement concerning this Agreement or any ancillary matter, except as required by law, regulation or any competent stock exchange or regulatory body, or as approved by the other party to this Agreement in advance in writing. If Purchaser is required by law or regulation to make an announcement relating to this Agreement or the documents or transactions contemplated hereunder, it shall only make such announcement or disclosure after consultation with Seller and after taking into account Seller’s reasonable requirements as to its timing, content and manner of making.

28. Tax Free Exchange. Either party may exchange the Property for like kind property under terms and conditions which qualify for non-recognition, including in connection with a so-called “reverse exchange”, in accordance with and pursuant to Section 1031 of the Internal Revenue Code. Each party agrees to reasonably cooperate with the other party who chooses to effectuate such exchange and to execute and deliver any and all documents that may be reasonably required to effectuate the exchange, including any documentation that may be required in connection with a so called “sandwich lease” to be executed between Purchaser’s exchange accommodation titleholder and Purchaser to be in effect during the exchange period, provided that neither party shall be obligated to incur any additional cost or liability in connection with the exchange and provided further that, in no event, shall such exchange delay the Closing. A requesting party shall indemnify, defend and hold the other party harmless from any and all closing costs, expenses, liabilities or losses arising by reason of such exchange.

29. Exclusivity. Subject to Purchaser depositing the Earnest Money when due pursuant to this Agreement, through Closing or the earlier termination of this Agreement Seller will not market the Property for sale, and Seller shall not solicit or accept any offers to purchase the Property from any party other than Purchaser.

30. Capital Lease Termination Rights.

30.1 Notwithstanding anything to the contrary set forth in this Agreement, Seller may elect to terminate this Agreement by delivering at least five (5) days prior to the expiration of the Inspection Period a notice to Purchaser containing such termination election and an opinion letter issued by PricewaterhouseCoopers (“PwC”) based on a Third-Party Appraisal that states the Leaseback Lease will be accounted for as “capital lease” as opposed to an “operating lease” (the “Capital Lease Determination”) because the transactions contemplated in this Agreement are considered not to be “arms-length” due to the Third Party Appraisal concluding that the fair market value for the Property is less than $61,634,435.43.

30.2 If Seller elects to terminate this Agreement due to the Capital Lease Determination, then, Purchaser shall be entitled to an immediate return of the Earnest Money, and in addition, Seller shall promptly reimburse Purchaser for Purchaser’s documented third-party costs incurred by Purchaser following the signing of this Agreement in undertaking its due diligence with respect to the Property (the “Transaction Costs”). In furtherance of Section 4.6.2, wherein the parties acknowledge that this Purchase Agreement is being entered into simultaneously with the Additional Purchase Contracts, if any other Additional Purchase Contracts are terminated under the paragraph corresponding to this Section 30 in such Additional Purchase Contract, then this Agreement will likewise terminate, Purchaser shall be entitled to an immediate return of the Earnest Money, and Seller shall promptly reimburse Purchaser for all Transaction Costs.

[SIGNATURE PAGE FOLLOWS.]

IN WITNESS WHEREOF, the parties have executed this Agreement as of the dates set forth above.

	SELLER:

	North Broward Preparatory Schools, LLC


	By:	/s/ Graeme Halder
	Name:	Graeme Halder
	Title:	President

Signature Page to North Broward Purchase and Sale Agreement

PURCHASER:


BMOC-MIA (FL) LLC, a Delaware limited liability company

By:	WPC HOLDCO LLC, a Maryland limited liability company, its sole member

By:	W. P. Carey Inc., a Maryland corporation, its sole member

By:		/s/ Gino M. Sabatini
Name:		Gino M. Sabatini
Title:		Managing Director

Signature Page to North Broward Purchase and Sale Agreement

SCHEDULE 8.1.10

Lease date December 1997, between North Broward Preparatory Schools, Ltd. and Camplife, Ltd., as amended by Amendment dated September 9, 2003 (the “Camplife Lease”).

EXHIBIT A

LEGAL DESCRIPTION

TRACT 1

Parcel 1

Parcel “A” of THE NORTH BROWARD SCHOOL PLAT, as recorded in Plat Book 163, at page 19 of the public records of Broward County, Florida, less area described as follows:

A portion of Parcel “A”, THE NORTH BROWARD SCHOOL PLAT, according to the plat thereof as recorded in Plat Book 163, page 19 of the public records of Broward County, Florida, more particularly described as follows:

Begin at the southwest corner of said Parcel “A”; thence North 00° 53’ 39” West, along the west line of said Parcel “A”, 318.04 feet; thence North 05° 57’ 18” East, 100.62 feet; thence North 00° 53’ 39” West, 67.22 feet to a point on the arc of a non-tangent curve, concave to the northwest (radial line to said point bears North 82° 55’ 58” West); thence northeasterly along the arc of said curve, having a radius of 2228.00 feet, a central angle of 01° 08’ 19” and an arc distance of 44.27 feet to a point of compound curvature of a curve, concave to the northwest; thence northeasterly along the arc of said curve, having a radius of 2372.00 feet, a central angle of 02° 10’ 03” and an arc distance of 89.73 feet; thence North 47° 48’ 38” East, 39.97 feet to a point on a north line of said Parcel “A”, also being the south right of way line of N.W. 79th Court (last six (6) courses and distances being coincident with the west line of said Parcel “A”); thence North 89° 34’ 58” East, along said north line and south right of way line 478.11 feet to a point on the arc of a tangent curve, concave to the southwest; thence southeasterly along the arc of said curve, having a radius of 25.00 feet, a central angle of 103° 36’ 28” and an arc distance of 45.21 feet to a point of reverse curvature of a curve, concave to the northeast; thence southeasterly along the arc of said curve, having a radius of 60.00 feet, a central angle of 143° 57’ 56” and an arc distance of 150.76 feet to a point hereinafter referred to as Reference Point “A” (last three (3) courses and distances being coincident with the south right of way line of said N.W. 79th Court and a north line of said Parcel “A”); thence South 00° 56’ 38” East, 554.28 feet to a point on the south line of said Parcel “A”; thence South 89° 36’ 39” West, along said south line, 660.42 feet to the Point of Beginning.

TOGETHER WITH:

Begin at aforementioned Reference Point “A”; thence North 00° 56’ 38” West, 92.15 feet to a point on the arc of a non-tangent curve, concave to the southwest (a radial line to said point bears North 38° 53’ 13” East) and the Point of Beginning; thence northwesterly along the arc of said curve, having a radius of 60.00 feet, a central angle of 39° 43’ 18” and an arc distance of 41.60 feet to a point on a north line of said Parcel “A”; thence North 89° 34’ 58” East, along said north line, 38.32 feet to a point of intersection of said north line and a west line of said Parcel “A”; thence South 00° 56’ 38” East, along the southerly extension of said west line, 13.57 feet to the Point of Beginning.

Parcel 2

The West one-half of Tract 28, lying south of the Hillsboro Canal, and the West one-half of Tract 29, together with the 30 foot vacated road lying between said Tracts 28 and 29, vacated by Resolution recorded in Official Records Book 4538, page 810, together with the East 50 feet of Tract 30 and the East 50 feet of the South one-half of the vacated road lying north of Tract 30, vacated by Resolution recorded in Official Records Book 4538, page 810, all in Block 83, PALM BEACH FARMS COMPANY PLAT NO. 3, according to the plat thereof as recorded in Plat Book 2, page 53 of the public records of Palm Beach County, Florida. Said lands situate, lying and being in Broward County, Florida.

Parcel 3

Tract 38 less the West 50 feet, Block 83, PALM BEACH FARMS COMPANY PLAT NO. 3, according to the plat thereof as recorded in Plat Book 2, page 53 of the public records of Palm Beach County, Florida. Said lands situate, lying and being in Broward County, Florida.

Parcel 4

Tract 37 in Block 83, less the West 50 feet, of PALM BEACH FARMS COMPANY PLAT NO. 3, according to the plat thereof as recorded in Plat Book 2, page 53 of the public records of Palm Beach County, Florida; said lands lying in Broward County, Florida.

And

The West 50 feet of Tract 38 in Block 83 of PALM BEACH FARMS COMPANY PLAT NO. 3, according to the plat thereof as recorded in Plat Book 2, page 53 of the public records of Palm Beach County, Florida; said lands situate, lying and being in Broward County, Florida.

Parcel 5

said Parcel “A”, also being the south right of way line of N.W. 79th Court (last six (6) courses and distances being coincident with the west line of said Parcel “A”); thence North 89° 34’ 58” East, along said north line and south right of way line 478.11 feet to a point on the arc of a tangent curve, concave to the southwest; thence southeasterly along the arc of said curve, having a radius of 25.00 feet, a central angle of 103° 36’ 28” and an arc distance of 45.21 feet to a point of reverse curvature of a curve, concave to the northeast; thence southeasterly along the arc of said curve, having a radius of 60.00 feet, a central angle of 143° 57’ 56” and an arc distance of 150.76 feet to a point hereinafter referred to as Reference Point “A” (last three (3) courses and distances being coincident with the south right of way line of said N.W. 79th Court and a north line of said Parcel “A”); thence South 00° 56’ 38” East, 554.28 feet to a point on the south line of said Parcel “A”; thence South 89° 36’ 39” West, along said south line, 660.42 feet to the Point of Beginning.

TOGETHER WITH:

LESS AND EXCEPT:

Commence at the most northerly northwest corner of said Parcel “A”; thence South 00° 56’ 38” East, along the west line of said Parcel “A”, 240.51 feet; thence South 89° 34’ 58” West, along the north line of said Parcel “A”, 38.32 feet; thence South 00° 50’ 04” East, 120.00 feet to a point on the curve of a cul-de-sac of said Parcel “A” and the POINT OF BEGINNING; thence South 89° 09’ 56” West, 31.56 feet to a point of curvature of a curve concave to the northeast; thence northwesterly along the arc of said curve, having a radius of 60.00 feet and a central angle of 83° 24’ 05”, a distance of 87.34 feet to a point of reverse curvature of a curve concave to the southwest; thence westerly along the arc of said curve, having a radius of 20.00 feet and a central angle of 82° 59’ 02”, a distance of 28.97 feet to a point of tangency; thence South 89° 34’ 58” West, 209.11 feet to a point of curvature of a curve concave to the northeast; thence northwesterly along the arc of said curve, having a radius of 69.00 feet and a central angle of 60° 28’ 42”, a distance of 72.83 feet to a point on the north line of said Parcel “A”; thence North 89° 34’ 58” East, along said north line, 297.50 feet to a point of curvature of a curve concave to the southwest; thence southerly along the arc of said curve, having a radius of 25.00 feet and a central angle of 103° 36’ 28”, a distance of 45.21 feet to a point of reverse curvature of a curve concave to the northeast; thence southeasterly along the arc of said curve, having a radius of

60.00 feet and a central angle of 104° 01’ 31”, a distance of 108.93 feet to the Point of Beginning. (The previous three courses and distances being along the boundary of said Parcel “A”.)

Parcel 6

The North 128 feet of Tract 34, Block 83, PALM BEACH FARMS COMPANY PLAT NO. 3, less the East 25 feet, according to the map or plat thereof as recorded in Plat Book 2, page 45 of the public records of Palm Beach County, Florida, said lands situate, lying and being in Broward County, Florida.

Parcel 7

The South 128 feet of the North 256 feet of Tract 34 in Block 83 of PALM BEACH FARMS COMPANY PLAT NO. 3, according to the plat thereof as recorded in Plat Book 2, page 45 of the public records of Palm Beach County, Florida, said property situate, lying and being in Broward County, Florida.

Parcel 8

All that part of the East 322.50 feet of Tract 25, Block 83, lying south of the Hillsboro Canal, PALM BEACH FARMS COMPANY PLAT NO. 3, according to the plat thereof as recorded in Plat Book 2, pages 45 through 54, public records of Palm Beach County, Florida, said lands situate, lying and being in Broward County, Florida.

Parcel 9

Lots 1, 2, 3, 4, 5, 6, 7, 8, 9 and 10 of MARBLE HEAD SUBDIVISION - SECTION I, according to the plat thereof recorded in Plat Book 165, page 49 of the public records of Broward County, Florida, together with the previously dedicated rights of way vacated by Resolution 2004-276 dated March 23, 2004 and recorded April 5, 2004 in Official Records Book 37187, page 1861 of the public records of Broward County, Florida.

Parcel 10

A non-exclusive easement for ingress and egress for the benefit of Parcels 6 and 7 described above, created by, and more particularly described in the Grant of Easement recorded in Official Records Book 7018, page 338 of the public records of Broward County, Florida.

TRACT 2

Parcel 1

Parcel “B” of SPRINGS PARK, according to the plat thereof recorded in Plat Book 77, page 2 of the public records of Broward County, Florida.

Parcel 2

Lot 3, Block E of SPRINGS PARK, according to the plat thereof recorded in Plat Book 77, page 2 of the public records of Broward County, Florida.

Parcel 3

Parcel “E” of SPRINGS PARK, according to the plat thereof recorded in Plat Book 77, page 2 of the public records of Broward County, Florida.

EXHIBIT B

FORM OF LEASEBACK LEASE

EXHIBIT C

PROPERTY DOCUMENTS

1. Copies of the Phase I reports conducted by TRC Environmental Corporation for the Property;

2. Copies of site plans and topographical maps related to the Property and authorize release from architects and/or engineers of shell building plans, specifications, permits, and entitlements for the Property;

3. Authorize release of copies of all soils, geological and engineering reports related to the Property;

4. Copies of all utility agreements and reservations related to the Property, to the extent not recorded;

5. If applicable, copies of all leases of all or any part of the Property and other agreements relating to the use and operation of all or any part of the Property;

6. Certificates of existing property and casualty insurance coverages and policies for the School;

7. Descriptions of all existing material litigation involving the Property or any aspects of the School’s operations;

8. Operating statements and capital expenditures for the Property for the periods: prior three years, year to date fiscal year 2016 and fiscal year 2016 budget;

9. Any other information, reports, and analyses requested by Purchaser reasonably deemed necessary to complete its Due Diligence for the Property.

EXHIBIT D

[RESERVED]

Draft of ____/____/____

EXHIBIT E

PARENT GUARANTY

Draft of ____/____/____

EXHIBIT F

STRICTLY PRIVATE AND CONFIDENTIAL — FOR THE ADDRESSEE ONLY

[INSERT NAME OF BUYER]

c/o W.P. Carey Inc.

50 Rockefeller Plaza, 2nd Floor

New York, New York 10020

Attention: Director, Asset Management

[INSERT DATE OF CLOSING]

Dear Sirs,

Nord Anglia Education — Credit Agreement

Reference is made to the Amended and Restated Credit and Guaranty Agreement dated 25 June 2015 and entered into by and between, inter alia, (1) Nord Anglia Education Finance LLC as Borrower, (2) Nord Anglia Education, Inc. as Parent and as a Guarantor, (3) certain subsidiaries of Nord Anglia Education, Inc. as Guarantors, including Nord Anglia Education Limited, and Viking Holding Company, LLC and (4) Goldman Sachs Bank USA, Credit Suisse Securities (USA) LLC, Deutsche Bank Securities Inc. and HSBC Securities (USA) Inc. as Joint Lead Arrangers, Joint Lead Bookrunners and Joint Syndication Agents (the “Credit Agreement”).

Reference is further made to the purchase agreement (“Purchase Agreement”) dated ______________ 2016 and entered into between [INSERT APPLICABLE SELLER Collegiate Prep Realty, LLC, Village Real Estate LLC and North Broward Preparatory Schools, LLC] (“Sellers”) and [INSERT APPLICABLE PURCHASER](as “Purchaser”), whereby the Seller wishes to sell to and lease back from the Purchaser that certain land on which the Seller operate the school known as [INSERT APPLICABLE SCHOOL Windermere Preparatory School, The Village School and North Broward Preparatory School] (the transactions contemplated under the Purchase Agreement being herein referred to as the “Sale and Leaseback”).

It is confirmed that:

· The Appendix annexed hereto is a true and accurate extract of Sections 2.14(a), 6.6 and 6.8 of the Credit Agreement as in force on the date of this letter.

· Entry into and completion of the Sale and Leaseback by the Sellers and Nord Anglia Education, Inc., Nord Anglia Education Limited, and Viking Holding Company, LLC as Guarantor, in accordance with the terms of the Purchase Agreement, is in compliance with the terms of the Credit Agreement, including Sections 2.14(a), 6.6 and 6.8 thereof.

· The Credit Agreement does not restrict Nord Anglia Education, Inc., Nord Anglia Education Limited, or Viking Holding Company, LLC (individually or collectively) from guaranteeing the obligations of the Seller pursuant to the Sale and Leaseback Transaction.

Yours sincerely,



Jodie Coutts
Head of Legal
Nord Anglia Education

Draft of ____/____/____

EXHIBIT G

FORM OF CONSTRUCTION AGENCY AGREEMENT

Draft of ____/____/____

EXHIBIT H

SIDE LETTER

[INSERT TENANT LETTERHEAD]

______________, 20_____

[INSERT RELEVANT LANDLORD]

c/o W. P. Carey Inc.

50 Rockefeller Plaza

Second Floor

New York, NY 10020

Re: Lease Agreement, dated as of ____________, 20_____, between ________________________________________________________ and _______________________________________________ (the “Lease”)

Gentlemen:

In consideration of the execution and delivery of the above-referenced Lease by [INSERT RELEVANT LANDLORD]a Delaware limited ________ (together with its successors and assigns, “Landlord”), ____________________________ (together with its successors and assigns, “Tenant”) hereby covenants and agrees with Landlord that, in connection with the closing of a Loan (as defined in the Lease), Tenant shall execute and deliver to Landlord a letter in substantially the form attached hereto as Exhibit “A”.

	Very truly yours,



	By:
	Name:
	Title:

Loan Letter for _________________________

Draft of ____/____/____

EXHIBIT A

[INSERT TENANT LETTERHEAD]

______________, 20_____

[INSERT RELEVANT LANDLORD]

c/o W. P. Carey Inc.

50 Rockefeller Plaza

Second Floor

New York, NY 10020

Re: Lease Agreement, dated as of ____________, 20_____, between ________________________________________________________ and _______________________________________________ (the “Lease”)

Gentlemen:

Reference is made to that certain $______________ loan (the “Loan”) made by ____________________________ (together with its successors and assigns, “Lender”) to __________________________________ (together with its successors and assigns, “Landlord”), which Loan is secured by, inter alia, a certain [Mortgage] of even date herewith (the “Mortgage”) encumbering certain property located in __________________________ (the “Property”), which Property is leased to ___________________________ (together with its successors and assigns, “Tenant”) pursuant to the above-referenced Lease.

In consideration of the execution and delivery of the Lease by Landlord and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Tenant hereby covenants and agrees with Landlord that, in the event Tenant or any Affiliate (as hereinafter defined) of Tenant purchases the interest of Lender in the Loan, Tenant or such Affiliate will not exercise any of the remedies provided to Lender under the Mortgage or any of the other documents evidencing or securing the Loan if and so long as an Event of Default exists and is continuing under the Lease.

For the purposes hereof, the term “Affiliate” means as applied to a person or entity, any other person or entity who directly or indirectly owns or controls 50% or more of the stock having voting power or partnership or membership interests or any person or entity directly or indirectly controlling, controlled by, or under common control with, that person or entity.

“Controls”, “controlled by” and “under common control with” each refers to the effective power, directly or indirectly, to direct or cause the direction of the management and

policies of the person, trust, corporation, partnership, limited liability company, venture or other entity in question, whether by contract or otherwise.

	Very truly yours,




	By:
	Name:
	Title:

Exhibit 4.12

EXECUTION VERSION

PURCHASE AND SALE AGREEMENT

This Purchase and Sale Agreement (this “Agreement”) is made and entered into as of February 25, 2016 (the “Effective Date”) by and between Village Real Estate LLC, a Delaware limited liability company (“Seller”), and BMOC-HOU (TX) LP, a Texas limited partnership (“Purchaser”).

RECITALS:

A. Seller is the owner of that certain land and improvements consisting of a United States school described as The Village School located in Houston, Texas. The land and improvements comprising the School consists of approximately 547,549 square feet and is more particularly described on the attached Exhibit A (the “Land”), and all buildings, structures, fixtures, fittings and equipment located thereon and all rights and appurtenances thereto which comprises a building area of approximately a building area of approximately 224,600 square feet ( the “Improvements”).

B. Seller desires to sell to Purchaser and Purchaser desires to purchase from Seller the Property (as defined in Section 2.1 below) upon the following terms, covenants, and conditions.

AGREEMENTS:

“Additional Earnest Money” means cash in the amount of One Million Fifty Nine Thousand Four Hundred Fifty-Nine and 46/100 Dollars ($1,059,459.46).

“Additional Purchase Contracts” is defined in Section 4.6.2.

“Agreement” is defined in the introductory paragraph of this Agreement.

“Capital Lease Determination” is defined in Section 30.1.

“Closing” is defined in Section 3.

“Closing Costs” is defined in Section 7.

“Closing Date” is defined in Section 3.

“Closing Statement” is defined in Section 3.3.8.

“Deed” is defined in Section 3.3.1.

“Due Diligence” is defined in Section 4.5.1.

“Earnest Money” means the Initial Earnest Money plus Additional Earnest Money, and any accrued interest thereon.

“Effective Date” is defined in the introductory paragraph of this Agreement.

“Exception Documents” is defined in Section 4.1.

“Execution Version of Lease” is defined in Section 2.3.1.

“Improvements” is defined in the recitals of the Agreement.

“Initial Earnest Money” means cash in the amount of Four Hundred Fifty-Four Thousand Fifty-Four and 05/100 Dollars ($454,054.05).

“Inspection Period” is defined in Section 4.3.

“Land” is defined in the recitals of this Agreement.

“Leaseback” is defined in Section 2.3.

“Leaseback Lease” means the form lease attached hereto as Exhibit B.

“OFAC” means the United States Office of Foreign Assets Control.

“Permitted Exceptions” is defined in Section 4.3.

“Personal Property” is defined in Section 2.1.3.

“Property” is defined in Section 2.1.

“Property Documents” is defined in Section 4.4.

“Purchase Price” is equal to Fifty Million Five Hundred Fifty-Five Thousand Five Hundred Fifty-Five and 56/100 Dollars ($50,555,555.56).

“Purchaser” is defined in the introductory paragraph of this Agreement.

“Purchaser’s Title Notice” is defined in Section 4.3.

“PWC” is defined in Section 30.1.

“Reports” is defined in Section 4.5.4.

“School” means the Land and Improvements (together, the “School”). School will not include the operating educational business at any of these locations.

“Seller” is defined in the introductory paragraph of this Agreement.

“Significant Portion” is defined in Section 25.1.

“Survey” is defined in Section 4.2.

“Third Party Appraisal” means that certain appraisal procured by Seller in connection with the Capital Lease Determination.

“Title Commitment” means a preliminary title report and commitment for an Owner Policy of Title Insurance in favor of Purchaser covering the Property in the amount of the Purchase Price.

“Title Company” means First American Title Insurance Company.

“Title Policy” is defined in Section 5.

“Transaction Costs” is defined in Section 30.2.

“WPC Group” means CORPORATE PROPERTY ASSOCIATES 18 — GLOBAL INCORPORATED, CORPORATE PROPERTY ASSOCIATES 17 — GLOBAL INCORPORATED, and/or W. P. Carey Inc.

2. Purchase and Sale; Purchase Price; Leaseback.

2.1.1 good and indefeasible fee simple title to the Land, together with all rights and appurtenances belonging thereto and all right, title and interest of Seller in and to adjacent streets, alleys and rights of way, and right, title and interest of Seller in and to all utilities and utility availability, drainage facilities, easements and utility facilities, sewage

treatment capacity and water capacity available to, which serves, or which will serve such land, and all right, title and interest of Seller in and to all oil, gas and other minerals and water rights with respect thereto.