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UNITEDSTATESSECURITIESANDEXCHANGECOMMISSION

WASHINGTON,DC20549

FORM20-F

(MarkOne)oo REGISTRATIONSTATEMENTPURSUANTTOSECTION12(b)OR12(g)OFTHESECURITIESEXCHANGE

ACTOF1934

or

xx ANNUALREPORTPURSUANTTOSECTION13OR15(d)OFTHESECURITIESEXCHANGEACTOF1934

ForthefiscalyearendedAugust31,2016

or

oo TRANSITIONREPORTPURSUANTTOSECTION13OR15(d)OFTHESECURITIESEXCHANGEACTOF

1934

or

oo SHELLCOMPANYREPORTPURSUANTTOSECTION13OR15(d)OFTHESECURITIESEXCHANGEACT

OF1934

Dateofeventrequiringthisshellcompanyreport

Commissionfilenumber:001-36356

NORDANGLIAEDUCATION,INC.(ExactnameofRegistrantasspecifiedinitscharter)

N/A

(TranslationofRegistrantsnameintoEnglish)

CaymanIslands(Jurisdictionofincorporationororganization)

Level12,St.GeorgesBuilding,2IceHouseStreet,

Central,HongKong(Addressofprincipalexecutiveoffices)

AndrewFitzmaurice,ChiefExecutiveOfficer

Tel:

+85239511100

E-mail:

Andrew.Fitzmaurice@nordanglia.com

Level12,St.GeorgesBuilding

2IceHouseStreet

Central,HongKong

(Name,Telephone,E-mailand/orFacsimilenumberandAddressofCompanyContactPerson)

SecuritiesregisteredortoberegisteredpursuanttoSection12(b)oftheAct:

Titleofeachclass

NameofeachexchangeonwhichregisteredOrdinaryshares,parvalue$0.01pershare

TheNewYorkStockExchange

SecuritiesregisteredortoberegisteredpursuanttoSection12(g)oftheAct:

None(TitleofClass)

TableofContents

SecuritiesforwhichthereisareportingobligationpursuanttoSection15(d)oftheAct:

None(TitleofClass)

Indicatethenumberofoutstandingsharesofeachoftheissuersclassesofcapitalorcommonstockasofthecloseoftheperiodcoveredbytheannualreport.

104,121,876ordinaryshares,parvalue$0.01pershare,asofAugust31,2016.Indicatebycheckmarkiftheregistrantisawell-knownseasonedissuer,asdefinedinRule405oftheSecuritiesAct.

xYesoNoIfthisreportisanannualortransitionreport,indicatebycheckmarkiftheregistrantisnotrequiredtofilereportspursuanttoSection13or15(d)oftheSecuritiesExchangeActof1934.

oYesxNoIndicatebycheckmarkwhethertheregistrant:(1)hasfiledallreportsrequiredtobefiledbySection13or15(d)oftheSecuritiesExchangeActof1934duringthepreceding12months(orforsuchshorterperiodthattheregistrantwasrequiredtofilesuchreports),and(2)hasbeensubjecttosuchfilingrequirementsforthepast90days.

xYesoNoIndicatebycheckmarkwhethertheregistranthassubmittedelectronicallyandpostedonitscorporateWebsite,ifany,everyInteractiveDataFilerequiredtobesubmittedandpostedpursuanttoRule405ofRegulationS-T(232.405ofthischapter)duringthepreceding12months(orforsuchshorterperiodthattheregistrantwasrequiredtosubmitandpostsuchfiles).

xYesoNoIndicatebycheckmarkwhethertheregistrantisalargeacceleratedfiler,anacceleratedfiler,oranon-acceleratedfiler.SeedefinitionofacceleratedfilerandlargeacceleratedfilerinRule12b-2oftheExchangeAct.(Checkone):

Largeacceleratedfilero

Acceleratedfilerx

Non-acceleratedfileroIndicatebycheckmarkwhichbasisofaccountingtheregistranthasusedtopreparethefinancialstatementsincludedinthisfiling:

U.S.GAAPo

InternationalFinancialReportingStandardsasissuedbytheInternationalAccountingStandardsBoardx

Othero

IfOtherhasbeencheckedinresponsetothepreviousquestion,indicatebycheckmarkwhichfinancialstatementitemtheregistranthaselectedtofollow.

oItem17oItem18

Ifthisisanannualreport,indicatebycheckmarkwhethertheregistrantisashellcompany(asdefinedinRule12b-2oftheExchangeAct).oYesxNo

(APPLICABLEONLYTOISSUERSINVOLVEDINBANKRUPTCYPROCEEDINGSDURINGTHEPASTFIVEYEARS)IndicatebycheckmarkwhethertheregistranthasfiledalldocumentsandreportsrequiredtobefiledbySections12,13or15(d)oftheSecuritiesExchangeActof1934subsequenttothedistributionofsecuritiesunderaplanconfirmedbyacourt.

oYesoNo

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TABLEOFCONTENTSIMPLICATIONSOFBEINGANEMERGINGGROWTHCOMPANY ii FORWARD-LOOKINGSTATEMENTS ii PARTI

1Item1. IdentityofDirectors,SeniorManagementandAdvisers 1Item2. OfferStatisticsandExpectedTimetable 1Item3. KeyInformation 1Item4. InformationontheCompany 25Item4A. UnresolvedStaffComments 57Item5. OperatingandFinancialReviewandProspects 57Item6. Directors,SeniorManagementandEmployees 78Item7. MajorShareholdersandRelatedPartyTransactions 89Item8. FinancialInformation 89Item9. TheOfferandListing 90Item10. AdditionalInformation 90Item11. QuantitativeandQualitativeDisclosuresAboutMarketRisk 101Item12. DescriptionofSecuritiesOtherthanEquitySecurities 101

PARTII

103Item13. Defaults,DividendArrearagesandDelinquencies 103Item14. MaterialModificationstotheRightsofSecurityHoldersandUseofProceeds 103Item15. ControlsandProcedures 103Item16A. AuditCommitteeFinancialExpert 107Item16B. CodeofEthics 108Item16C. PrincipalAccountantFeesandServices 108Item16D. ExemptionsfromtheListingStandardsforAuditCommittees 108Item16E. PurchasesofEquitySecuritiesbytheIssuerandAffiliatedPurchasers 108Item16F. ChangeinRegistrantsCertifyingAccountant 108Item16G. CorporateGovernance 108Item16H. MineSafetyDisclosure 108

PARTIII

109Item17. FinancialStatements 109Item18. FinancialStatements 109Item19. Exhibits 109

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IMPLICATIONSOFBEINGANEMERGINGGROWTHCOMPANY

WequalifyasanemerginggrowthcompanyasdefinedintheJumpstartOurBusinessStartupsActof2012(theJOBSAct).Anemerginggrowthcompanymaytakeadvantageofspecifiedreducedreportingandotherburdensthatareotherwiseapplicablegenerallytopubliccompanies.WemaytakeadvantageoftheseprovisionsuntilAugust31,2019orsuchearliertimethatwearenolongeranemerginggrowthcompany.Wewouldceasetobeanemerginggrowthcompanyifwehavemorethan$1.0billioninannualrevenue,havemorethan$700millioninmarketvalueofourordinarysharesheldbynon-affiliatesasofthelastbusinessdayofourmostrecentlycompletedsecondfiscalquarter,orissuemorethan$1.0billionofnon-convertibledebtoverathree-yearperiod.

Inaddition,undertheJOBSAct,emerginggrowthcompaniescandelayadoptingneworrevisedaccountingstandardsissuedbytheFinancialAccountingStandardsBoarduntilthosestandardsapplytoprivatecompanies.Wehaveirrevocablyelectednottoavailourselvesofthisexemptionfromneworrevisedaccountingstandards.BecauseweprepareourfinancialstatementsinaccordancewithInternationalFinancialReportingStandardsasissuedbytheInternationalAccountingStandardsBoard(IFRS),accountingstandardsissuedbytheFinancialAccountingStandsBoardwillnotapplytousunlessweadoptU.S.generallyacceptedaccountingprinciplesinplaceofIFRSorpresentareconciliationofourfinancialstatementstoU.S.generallyacceptedaccountingprinciples.

FORWARD-LOOKINGSTATEMENTS

Thisannualreportincludesstatementsthatexpressourcurrentopinions,expectations,beliefs,plans,objectives,assumptionsorprojectionsregardingfutureeventsorfutureresultsandthereforeare,ormaybedeemedtobe,forwardlookingstatementswithinthemeaningofthePrivateSecuritiesLitigationReformActof1995(theAct).ThefollowingcautionarystatementsarebeingmadepursuanttotheprovisionsoftheActandwiththeintentionofobtainingthebenefitsofthesafeharborprovisionsoftheAct.Theseforwardlookingstatementscangenerallybeidentifiedbytheuseofforward-lookingterminology,includingthetermsbelieve,expect,may,will,should,seek,project,approximately,intend,plan,estimateoranticipate,or,ineachcase,theirnegativesorothervariationsorcomparableterminology.

Theseforward-lookingstatementsincludeallmattersthatarenothistoricalfacts.Theyappearinanumberofplacesthroughoutthisreportandincludestatementsregardingourintentions,beliefsorcurrentexpectationsconcerningamongotherthings,ourresultsofoperations,financialcondition,liquidity,prospects,growth,strategiesandtheindustryinwhichweoperate.

Bytheirnature,forward-lookingstatementsrelatetoeventsthatinvolverisksanduncertaintiesorthatdependoncircumstancesthatmayormaynotoccurinthefuture.Thesestatementsinclude,amongotherthings,statementsrelatingto:

ourfuturemarketopportunities;

ourgoalsandstrategies;

ourcompetitivestrengths;

ourfutureresultsofoperationsandfinancialcondition;

ourfuturebusinessdevelopments;and

ouracquisitionandexpansionstrategy.

Althoughwebasetheseforward-lookingstatementsonassumptionsthatwebelievearereasonablewhenmade,wecautionyouthatforward-lookingstatementsarenotguaranteesoffutureperformanceandthatouractualresultsofoperations,financialconditionandliquidity,andthedevelopmentoftheindustryinwhichweoperatemaydiffermateriallyfromthosemadeinorsuggestedbytheforward-lookingstatementscontainedinthisquarterlyreport.Inaddition,evenifourresultsofoperations,financialconditionandliquidity,andthedevelopmentoftheindustryinwhichweoperate,areconsistentwiththeforward-lookingstatementscontainedinthisreport,thoseresultsordevelopmentsmaynotbeindicativeofresultsordevelopmentsinsubsequentperiods.

Giventheserisksanduncertainties,youarecautionednottoplaceunduerelianceontheseforward-lookingstatements.Anyforward-lookingstatementthatwemakeinthisreportspeaksonlyasofthedateofsuchstatement,andweundertakenoobligationtoupdateanyforward-lookingstatementsortopubliclyannouncetheresultsofanyrevisionstoanyofthosestatementstoreflectfutureeventsordevelopments.

Othersectionsofthisannualreportincludeadditionalfactorsthatcouldadverselyimpactourbusinessandfinancialperformance,principallyItem3.KeyInformationD.RiskFactors.Moreover,weoperateinanevolvingenvironment.Newriskfactorsanduncertaintiesemergefromtimetotimeanditisnotpossibleforourmanagementtopredictallriskfactorsanduncertainties,norcanweassesstheimpactofallfactorsonourbusinessortheextenttowhichanyfactor,orcombinationoffactors,maycauseactualresultstodiffermateriallyfromthosecontainedinanyforward-lookingstatements.Wequalifyallofourforward-lookingstatementsbythesecautionarystatements.

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PARTIItem1.IdentityofDirectors,SeniorManagementandAdvisers

NotApplicable.Item2.OfferStatisticsandExpectedTimetable

NotApplicable.Item3.KeyInformationA.SelectedFinancialData

ThefollowingselectedfinancialdataforandasoftheyearsendedAugust31,2014,2015and2016havebeenderivedfromourauditedconsolidatedfinancialstatementsincludedinthisannualreport.ThefollowingselectedconsolidatedfinancialdataforandasoftheyearendedAugust31,2013havebeenderivedfromourauditedconsolidatedfinancialstatementsnotincludedinthisannualreport.ThefollowingselectedconsolidatedfinancialdataforandasoftheyearendedAugust31,2012havebeenderivedfromourunauditedconsolidatedfinancialstatementsnotincludedinthisannualreport.

Theselectedfinancialdatapresentedinthetablesbelowshouldbereadinconjunctionwith,andisqualifiedinitsentiretybyreferenceto,ourauditedconsolidatedfinancialstatementsandaccompanyingnotes.OurconsolidatedfinancialstatementshavebeenpreparedinaccordancewithIFRS.

DuringtheyearendedAugust31,2016,wefinalizedthepurchasepriceallocationaccountingfromtheprioryear,madevoluntarypresentationchangesandmadecorrectionsofpriorperioderrors,byadjustingthepriorperiodinformation.WeassessedthematerialityofthepriorperioderrorsinaccordancewithStaffAccountingBulletin(SAB)No.99Materiality,asissuedbytheSecuritiesandExchangeCommission(SEC).Wedeterminedthattheerrorswerenotmaterialtopriorannualfinancialstatementsandthereforeamendmentsofpreviouslyfiledreportswerenotrequired.Wecorrectedtheerrorsforallpriorperiodspresentedbyrevisingtheconsolidatedfinancialstatementsappearingherein.

TherevisionsdonothaveamaterialimpactonkeyitemsandmetricssuchasCashandcashequivalents,Netassets,RevenueandProfit/(loss)beforetax.1) Finalization of acquisition accounting

a) Meritas

AfinalizationoftheprovisionalpurchaseallocationexerciseforSterlingInternationalSchoolsCCorporation(theMeritasschools),acquiredonJune25,2015,hasbeenreflectedinthefinancialstatementsasatandfortheyearsendedAugust31,2015and2016,aspermittedbyIFRS3Businesscombinations.Fairvalueofidentifiablenetassetsacquiredincreasedby$9.3million,thusdecreasingintangibleassetswithnoimpactontheConsolidatedIncomeStatement.ThisdoesnotreflectanerrorinpriorperiodfinancialreportingandtheupdatedpurchasepriceallocationhasbeendisclosedinNote2toourauditedconsolidatedfinancialstatementsincludedinthisannualreport.

2) Voluntary change in presentation

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

WehavechangedourConsolidatedIncomeStatementpresentationofForeignexchangetranslationgains/(losses)inthefinancialstatementsasatandfortheyearendedAugust31,2016andhavereclassifiedthepriorperiodcomparativestoalignwiththereclassifiedpresentation.PriortotheyearendedAugust31,2016,wereportedForeignexchangegains/(losses),includingtherevaluationofintercompanyloansandontherevaluationoftheCHFbond,inSelling,generalandadministrativeexpenses.IAS1PresentationoffinancialstatementsandIAS21TheeffectsofchangesinforeignexchangeratesarenotprescriptiveregardingthepresentationintheConsolidatedIncomeStatementofForeignexchangegains/(losses).WedeemitabetterreflectionofthesubstanceofthetransactionstoreportForeignexchangegains/(losses)ontherevaluationoftheCHFbondwithinFinanceexpenseandForeignexchangegains/(losses)onotheractivities,includingtherevaluationofintercompanyloans,withinOthergains/(losses).

Forfiscal2016,theimpactofthischangeinpresentationisareclassificationofagainof$4.7millionandagainof$17.2milliontoFinanceexpenseandOthergains/(losses),respectively,fromSelling,generalandadministrativeexpenses.

b) Finance lease liabilities presentation in the Consolidated Balance Sheet

WehavechangedourConsolidatedBalanceSheetpresentationofFinanceleaseliabilitiesbetweencurrentandnon-currentinthefinancialstatementsasatandfortheyearendedAugust31,2016andhavereclassifiedthepriorperiodcomparativestoalignwiththereclassifiedpresentation.PriortotheyearendedAugust31,2016,wecalculatedthesplitbetweencurrentandnon-currentliabilitiesonthebasisofthematurityprofileofcashpayments.IAS17-Leasesisnotprescriptiveregardingwhetherthissplitshouldbecalculatedonthebasisofthematurityprofileoffuturecashpaymentsorontheforecastreductioninthetotalliabilityinthenexttwelvemonths.Wedeemitmoreappropriatetodeterminethesplitonthebasisofthematurityprofileoftheleaseliability.

Forfiscal2016,theimpactofthischangeinpresentationisareclassificationof$3.6millionbetweencurrentandnon-currentfinanceleaseliabilities.

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TableofContents3) Correction of errors

a) Correction of embedded derivatives

EmbeddedderivativeshavebeenidentifiedwithintheChicagoSouthLoopandHoustonlandandbuildingsleases.TheembeddedderivativesinvolvethelinkageofoperatingleasecontractstoamultiplierofConsumerPriceIndex(CPI)thatisgreaterthanone.Asaresultthederivativesarerequiredtobeseparatedfromthehostcontract,valuedseparatelyandreportedontheConsolidatedBalanceSheetatinceptionwithinDeferredleaseexpenseandDerivativefinancialinstruments.TheDeferredleaseexpenseisamortizedtoCostofsalesovertheleaseterm.TheDerivativefinancialinstrumentsarerevaluedeachreportingperiodwiththechangeinvaluationfromthepreviousperiodreportedintheConsolidatedIncomeStatementwithinOthergains/(losses).

b) Correction of acquisition accounting

WehavecorrectedanacquisitionaccountingerrorinrelationtoDoverCourtInternationalSchool(Pte.)Limited,acquiredonApril22,2014,inSingapore.IncludedwithinthenetassetsacquiredwasDeferredrevenue,representingCashandcashequivalentscollected,relatingtoapre-acquisitionbuildingfundleviedforfuturecapitalexpenditure.OnacquisitionthiswasaccountedforasDeferredrevenuethatwouldbereleasedsubsequentlytotheConsolidatedIncomeStatement.Ithasbeenidentifiedthattherewasnoperformanceobligationtoprovideafutureservicetorecognizethedeferredrevenueandthereforethishasbeendeterminedtobeanerror.Thishasbeencorrectedretrospectively,asthisrepresentsapre-acquisitionreserve.

AsatSeptember1,2014,theimpactofthiscorrectionisadecreaseinIntangibleassetsof$7.4millionwithacorrespondingdecreaseinDeferredrevenue.FortheyearendedAugust31,2015,theimpactofthiscorrectionisanetlossof$1.0millionandaforeignexchangegainof$0.6million,withadecreaseinIntangibleassetsof$6.8million,adecreaseofDeferredrevenueof$6.2million,andadecreaseinCurrenttaxliabilitiesof$0.2million.

Separatefromthecorrectionabove,forfiscal2014,aforeignexchangeadjustmentof$1.7millioninrelationtotheacquisitionofDoverCourtInternationalSchool(Pte.)Limitedhasbeenmade.

AtthetimeoftheacquisitionofBritishInternationalSchoolsCompany,Vietnam,completedonJanuary1,2015,aconsultancyfeereceivedfromthevendorwasreportedasRevenue.However,ithasbeendeterminedthattheacquisitionagreementandconsultationarrangementwerelinkedtransactionsandassuchthisshouldhavebeentreatedasareductioninconsiderationpaidratherthanRevenue.Therefore,thishasnowbeencorrectedretrospectively.TheoverallimpactinthefinancialstatementsfortheyearendedAugust31,2015isalossof$1.7million,withacorrespondingdecreaseinIntangibleassets.

AlsoinrelationtotheVietnamacquisition,acorrectionofdiscountrateusedinthevaluationofthedeferredconsiderationofthepurchasehasbeenmade.TheimpactofthisadjustmentinthefinancialstatementsfortheyearendedAugust31,2015isareductionofFinanceexpenseof$0.7million,withanincreaseinIntangibleassetsof$1.3millionandanincreaseinpayablesof$0.6million.

FortheyearendedAugust31,2014,wehavecorrectedanacquisitionaccountingerrorinrelationtoDeferredtaxliabilitiesthatweremiscalculatedintheconsolidatedfinancialstatements.Thisresultedinadecreaseof$1.4millioninIncometaxexpenseandDeferredtaxliabilities.

Inaddition,followingareviewofourcostofinvestmentsregister,wehavecorrectedothersmalleracquisitionaccountingerrors.

c) Timing of book fees recognition

AschoolinDohabegantochargeabookfeeduringtheyearendedAugust31,2015,whichshouldbereportedasRevenueintheschoolyeartowhichthefeesrelate(i.e.oneschoolyearlater),asopposedtointheyearinwhichthefeeswerereceived.Acorrectionhasbeenmadetoreflectthecorrecttimingofrevenuerecognition,whereby$1.0millionofrevenuerecognizedin2015shouldhavebeendeferredinto2016,toalignwiththeperiodwhenthestudentreceivesthebookfeeservice.

d) Correction of classification of accrued expenses

InthefinancialstatementsasatandfortheyearendedAugust31,2015,wechangedourConsolidatedBalanceSheetpresentationtodiscloseAccrualsseparatelyfromDeferredrevenue.However,someoftheaccrualswereclassifiedincorrectlywithinDeferredrevenueintheConsolidatedBalanceSheetasatAugust31,2015.Acorrectionhasbeenmade,whichinvolvesaConsolidatedBalanceSheetcorrectionfromDeferredrevenuetoOtherpayablesonly.

e) Other

Allknownerrorsfromtheprioryearhavebeencorrectedinthecurrentyearfinancialstatements.Thosethatimpactprofitorloss,goodwill,foreigncurrencytranslationreserve,taxbalances,orhaveanimpactofmorethan$0.5milliononanyindividuallineitemhavebeencorrectedretrospectivelytothecomparatives.

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TableofContents4) Other

TheCompanyhasmadeadjustmentsfortwootheritemswhichaffecttheConsolidatedBalanceSheetonly.

a) Inventories presentation in the Consolidated Balance Sheet

WehavedeemedinventoriestobesignificantenoughtobedisclosedseparatelyfromTradeandotherreceivables.Forfiscal2016,theimpactofthisisanadjustmentof$4.3millionfromTradeandotherreceivablestoInventories.

b) Deferred gain presentation in the Consolidated Balance Sheet

WehavedeemedaDeferredgainfromasaleandleasebacktransactiontobesignificantenoughtobedisclosedseparatelyfromDeferredrevenue.Forfiscal2016,theimpactofthisisanadjustmentof$12.3millionfromDeferredrevenuetoDeferredgain.

Foradditionalinformationabouttheprioryearrevisions,seeNote1toourauditedconsolidatedfinancialstatementsincludedinthisannualreport.

ConsolidatedIncomeStatementData:

YearEndedAugust31,

2012

2013

2014

2015

2016

(unaudited)

(inmillionsofdollars,exceptpersharedata)

Revenue

274.4

323.7

474.6

573.1

856.0

Costofsales

(162.4) (190.4) (280.3) (355.8) (522.2)Grossprofit

112.0

133.3

194.3

217.3

333.8

Selling,generalandadministrativeexpenses

(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)Othergains/(losses)

2.1

12.4

13.4

Exceptionalexpenses

(12.5) (17.7) (100.2) (18.8) (8.8)Totalexpenses

(85.3) (88.3) (207.4) (150.8) (208.6)Operatingprofit/(loss)

26.7

45.0

(13.1) 66.5

125.2

Financeincome

2.0

2.3

2.0

2.4

2.3

Financeexpense

(49.7) (51.3) (55.5) (48.7) (65.9)Netfinanceexpense

(47.7) (49.0) (53.5) (46.3) (63.6)(Loss)/profitbeforeincometax

(21.0) (4.0) (66.6) 20.2

61.6

Incometaxexpense

(16.4) (19.3) (23.6) (12.5) (12.4)(Loss)/profitafterincometax

(37.4) (23.3) (90.2) 7.7

49.2

(Loss)/profitattributableto:

-Ownersoftheparent

(37.4) (23.3) (90.2) 6.5

47.1

-Non-controllinginterest

1.2

2.1

(Loss)/profitfortheperiod

(37.4) (23.3) (90.2) 7.7

49.2

Earningsperordinaryshare (indollars)

Basic

(0.52) (0.34) (1.07) 0.07

0.45

Diluted

(0.52) (0.34) (1.07) 0.07

0.45

(1)Earningsperordinaryshareiscalculatedbydividing(loss)/profitfortheperiodbytheweightedaverageordinarysharesoutstandingfortheperiod.Forthefiscalyears2012and2013thebasicanddilutedweightedaverageordinarysharesoutstandingwere74.0millionordinaryshares.OncompletionofourinitialpublicofferingonMarch31,2014,weissued21.8millionordinarysharesandallpreviouslyexistingpreferencesharesandclassesofordinaryshareswereconvertedinto75.9millionordinarysharesofparvalue$0.01pershare.FortheyearendedAugust31,2014,thebasicanddilutedweightedaverageordinarysharesoutstandingwere85.1millionordinaryshares.FortheyearendedAugust31,2015,thebasicanddilutedweightedaverageordinarysharesoutstandingwere99.4millionand99.5million,respectively.FortheyearendedAugust31,2016,thebasicanddilutedweightedaveragesharesoutstandingwere104.1millionand104.1million,respectively.

3

(1)

TableofContentsConsolidatedBalanceSheetData:

AsofAugust31,

2012

2013

2014

2015

2016

(unaudited)

(inmillionsofdollars)

Non-currentassets

Property,plantandequipment

36.1

98.2

140.1

464.9

328.5

Intangibleassets

455.1

763.4

796.3

1,402.5

1,365.4

Investmentsinjointventuresandassociates

0.5

0.5

0.5

0.5

0.5

Tradeandotherreceivables

10.9

12.4

9.2

37.4

42.0

Deferredleaseexpense

8.7

17.1

30.6

Deferredtaxassets

6.1

21.2

25.1

77.5

79.0

508.7

895.7

979.9

1,999.9

1,846.0

Currentassets

Currenttaxassets

0.3

1.0

1.6

1.2

3.4

Inventories

2.4

4.5

4.3

Tradeandotherreceivables

49.3

83.2

92.4

126.8

132.5

Deferredleaseexpense

0.5

0.9

1.7

Cashandcashequivalents(excludingbankoverdrafts)

167.6

222.9

256.4

316.6

371.9

217.2

307.1

353.3

450.0

513.8

Assetsheldforsale

8.3

217.2

307.1

353.3

450.0

522.1

Totalassets

725.9

1,202.8

1,333.2

2,449.9

2,368.1

Currentliabilities

Tradeandotherpayables

(62.3) (96.8) (63.7) (170.7) (140.3)Interest-bearingloansandborrowings

(80.9) (82.4) (113.4) (98.3) (5.0)Financeleaseliabilities

(0.0) (0.0) (0.8) (1.2)Deferredrevenue

(162.1) (267.2) (322.6) (518.2) (550.0)Deferredgain

(0.2) (0.2)Provisionsforotherliabilitiesandcharges

(3.1) (3.6) (0.5) (0.0) (0.0)Currenttaxliabilities

(5.0) (4.2) (1.7) (2.7) (4.5)

(313.4) (454.2) (501.9) (790.9) (701.2)Non-currentliabilities

Interest-bearingloansandborrowings

(318.9) (630.4) (499.2) (1,066.3) (1,058.2)Derivativefinancialinstruments

(11.1) (21.6) (25.2)Financeleaseliabilities

(48.0) (63.3)Otherpayables

(6.6) (38.5) (50.7) (49.6) (49.1)Deferredrevenue

(2.6) (7.0) (8.0)Deferredgain

(12.4) (12.1)Retirementbenefitobligations

(30.4) (22.2) (25.8) (46.6) (48.9)Provisionsforotherliabilitiesandcharges

(2.3) (2.2) (1.2) (1.7)

Deferredtaxliabilities

(10.5) (35.3) (47.6) (124.3) (110.2)

(368.7) (728.6) (638.2) (1,377.5) (1,375.0)Totalliabilities

(682.1) (1,182.8) (1,140.1) (2,168.4) (2,076.2)Netassets

43.8

20.0

193.1

281.5

291.9

Equityattributabletoequityholdersoftheparent

Sharecapital

67.5

67.5

1.0

1.0

1.0

Sharepremium

255.2

256.5

597.1

735.2

736.0

Otherreserves

6.9

6.9

6.9

6.9

6.9

Currencytranslationreserve

(0.1) 9.8

0.8

(50.8) (91.7)Shareholderdeficit

(285.7) (320.7) (413.2) (415.2) (365.7)Shareholdersfunds

43.8

20.0

192.6

277.1

286.5

Non-controllinginterest

0.5

4.4

5.4

43.8

20.0

193.1

281.5

291.9

B.CapitalizationandIndebtedness

NotApplicable.C.ReasonsfortheOfferandUseofProceeds

NotApplicable.

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TableofContentsD.RiskFactors

Aninvestmentinourordinarysharesinvolvessignificantrisks.Youshouldcarefullyconsidertherisksdescribedbelowaswellastheotherinformationin

thisannualreport,includingourconsolidatedfinancialstatementsandrelatednotes,beforeyoudecidetobuyourordinaryshares.Ifanyofthefollowingrisksmaterializes,ourbusiness,prospects,financialconditionandresultsofoperationscouldbemateriallyharmed,thetradingpriceofourordinarysharescoulddeclineandyoucouldloseallorpartofyourinvestment.RisksRelatedtoOurBusinessAdversechangesinkeyindustrydriversmayreducedemandforourschools.

Webelievethatthekeyindustrydriversforourschoolsinclude:

globalizationandincreasingforeigndirectinvestment(FDI);and

agrowingemphasisbyparentsonhigh-qualityeducationfortheirchildren.

Changesinourkeyindustrydriversmaymateriallyadverselyaffectourbusiness,prospects,resultsofoperationsandfinancialcondition.Forexample,ifFDIstockdeclinesinoneofthecountriesinwhichweoperate,thenumberofexpatriatefamiliesinthatcountrymaydecrease,whichcouldreducedemandforourschools.Duringthe2009/2010academicyear,attractingnewstudentswasmoredifficultthaninpreviousandsubsequentacademicyears,whichwebelievewasdueinparttothe2008globalfinancialcrisis.Furthermore,assomeoftheemergingmarketsinwhichweoperatereachahigherlevelofeconomicdevelopmentanddevelopamoreskilledlocalworkforce,companiescouldincreasinglyrelyonthelocalworkforceandemployfewerexpatriates,whichcouldreduceourbusinessifweareunabletoadaptorattractlocalstudents.

Inaddition,webelievethatgrowthofGDPandindividualdisposableincomeinemergingmarketstendstoincreasedemandfromlocalfamilies,astheyincreasetheirfocusandspendingonpremiumqualityeducation.Accordingly,decreasesorlimitedgrowthinGDPordisposableincomemayreducedemandforourschoolsfromlocalfamiliesandlimitourabilitytorecruitandretainlocalstudents.Competitioninthepremiumschoolmarketcouldreduceenrollments,increaseourcostofrecruitingandretainingstudentsandteachersandputdownwardpressureonourtuitionfeesandprofitability.

Wefacecompetitionfromotherschoolsinthelocationsinwhichweoperatethattargetthechildrenofexpatriateandaffluentlocalfamilies.Someofourexistingandfuturecompetitorsmaybeabletodevotegreaterresourcesthanwecantothedevelopmentandconstructionofschoolsofferingpremiumqualityeducationandrespondmorequicklytochangesinparentsdemands,admissionsstandards,marketneedsornewtechnologies.Moreover,ourcompetitorsmayincreasecapacityinanyofourmarketstoanextentthatleadstoanover-supply.

Ifweareunabletodifferentiateourschoolsfromthoseofourcompetitorsandsuccessfullymarketourschoolstoparentsandstudents,wecouldfacecompetitivepressuresthatreduceenrollment.Ifourenrollmentfalls,wemayberequiredtoreduceourtuitionfeesorincreasespendinginordertoattractandretainstudents,whichcouldmateriallyadverselyaffectourbusiness,prospects,resultsofoperationsandfinancialcondition.SeeItem4.InformationontheCompanyB.BusinessOverviewCompetition.Ifwefailtoincreaseormaintainourtuitionfees,ourfinancialperformancemaysuffer.

Tuitionfeesatourschoolsareamongthehighestintheirmarkets.Factorsthatcouldaffectourabilitytoincreaseormaintainourpremiumtuitionfeesinclude:

adeclineinourreputationforquality;

resistancetotuitionfeeincreasesfromparentsandexpatriatesemployersasaresultofdifficulteconomicconditionsorfeeincreasesinrecentacademicyears;

pricingpressurefromotherpremiumschoolsinourmarkets;and

governmentrestrictionsthatlimitourabilitytoincreasetuitionfees,suchasthosetowhichourschoolsinQatar,DubaiandAbuDhabiaresubject

(seeItem4.InformationontheCompanyB.BusinessOverviewRegulation).

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Inaddition,changesinexpatriatecompensationandbenefitspackagesthatalterthewayinwhichemployerspayfortuitionfeesmaynegativelyaffectourabilitytoincreaseormaintainourtuitionfees.Forexample,ifemployersweretoincreasinglyrelyoncostoflivingadjustmentsintheformoflumpsumpaymentsincashtoexpatriateparentsratherthanpayingtuitionfeesdirectly,parentsmaybecomemorepricesensitivetotuitionfees.Ourinabilitytoincreaseormaintainourtuitionfeescouldmateriallyadverselyaffectourbusiness,prospects,financialconditionandresultsofoperations.Anydamagetothereputationofanyofourschoolsmayadverselyaffectouroverallbusiness,prospects,resultsofoperationsandfinancialcondition.

Ourreputationcouldbeadverselyaffectedundermanycircumstances,includingthefollowing:

membersofourstaffbehaveorareperceivedtobehaveinappropriatelyorillegally;

membersofourstafffailtoappropriatelysupervisechildrenundertheircare;

wefailtoproperlydealwithanaccidentorothereventthatinjuresourstudents;

wefailtoconductproperchecksonmembersofourstaffwhocomeintocontactwithchildrenandyoungadults;

accidents,epidemicsorothereventsadverselyaffectourstudents;

ourstudentsengageininappropriateorillegalconduct;

wefailtoobtainorlosealicense,permit,accreditationorotherauthorizationtooperateaschool;

poor-qualityoperatorsusenamesthatcreateconfusionwithourschoolsorthirdpartiesfraudulentlyuseourbrandnameorthenameofoneofourschools;

wedonotmaintainconsistentteachingqualityorfailtodeliverstrongacademicresults;

thecurriculainourschoolsarenotperceivedasbeingsufficientlyhighquality;

ourschoolfacilitiesdonotmeetthestandardsexpectedbyparentsandstudentsofpremiumschools;

wecloseoneormoreofourschools;and

webecomesubjecttolitigationorotherlegalproceedingsrelatingtoanyoftheaboveorothermatters.

Thelikelihoodthatanyoftheforegoingoccursincreasesasweexpandournetworkofschools.Theseeventscouldinfluencethewayourschoolsare

viewednotonlybystudentsandparents,butalsobyotherconstituenciesintheeducationsectorandthegeneralpublic.Moreover,aneventthatdirectlydamagesthereputationofoneofourschoolscouldadverselyaffectthereputationandoperationsofourotherschools.Ifourreputationdeclines,ouroverallbusiness,prospects,resultsofoperationsandfinancialconditioncouldbeharmed.Ifwefailtoenrollnewstudentsandre-enrollexistingstudents,ourfinancialperformancemaysuffer.

Increasingenrollmentsinourschoolsiscriticaltoourfinancialperformance.Inourexperience,approximately25%ofourstudentsleaveourschoolseachacademicyear,primarilyduetoexpatriaterelocationsandgraduation.Ifourrecruitmenteffortsfailtoincreaseenrollmentorreplacedepartingstudents,ourfinancialperformancemaysuffer.Inaddition,ifwefailtomaintainourqualityofeducation,parentsmaychoosenottore-enrolltheirchildreninourschools.Ifweareunabletorecruitandretainstudents,ourbusiness,prospects,resultsofoperationsandfinancialcondition(includingworkingcapitalandcashflow)couldbemateriallyadverselyaffected.

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Inordertooperateourschools,wemaintainvariousaccreditationsfromcurriculumprovidersandpermitsfromexaminationbodies,suchastheInternationalBaccalaureateOrganization.Tomaintainouraccreditationsandpermits,wemustmeetstandardsrelatedto,amongotherthings,performance,governance,institutionalintegrity,educationalquality,staff,administrativecapability,resourcesandfinancialstability.Ifanyofourschoolsfailstomeetthesestandards,itcouldloseitsaccreditationsorpermits,whichcouldmateriallyadverselyaffectourbusiness,prospects,resultsofoperationsandfinancialcondition.Wemaybeunabletorecruit,trainandretainqualifiedandexperiencedprincipalsandteachingstaff.

Theprocessofhiringemployeeswiththecombinationofskillsandattributesrequiredtoimplementourbusinessstrategycanbedifficultandtime-consuming.Ourschoolprincipalsinparticulararekeytothesuccessoftheirschools.Wefacecompetitioninattractingandretainingprincipalsandteacherswhopossessthenecessaryexperienceandaccreditationtoteachatourschools.Wemayfinditdifficulttorecruitprincipalsandteacherswhoarewillingtorelocatetosomeofourinternationallocations,andwemustprovidecompetitivecompensationpackagestoattractandretainqualifiedindividuals.Someofourprincipalsandteachersremainattheirschoolonlyforalimitedtime,whichcouldaffectourreputationinthemarketifweprovideinsufficientcontinuity.Asweexpandandaddpersonnel,itmaybedifficulttomaintainconsistencyinthequalityofourprincipalsandteachers.Ifweareunableto,orareperceivedtobeunableto,attractandretainexperiencedandqualifiedprincipalsandteachers,ourbusiness,prospects,resultsofoperationsandfinancialconditionmaybemateriallyadverselyaffected.Wemaylosetheservicesofmembersofourseniormanagementteam.

Oursuccessdependsinpartonthecontinuedskills,effortsandmotivationofourofficersandseniormanagementteam.Wehaveinthepast,andmayinthefuture,experiencechangesinourseniormanagementforavarietyofreasons,includingrestructuring,medicalproblems,retirementandresignations.Inaddition,keypersonnelcouldleaveustojoinourcompetitors.Losingtheservicesofkeymembersofseniormanagementorexperiencedpersonnelmaybedisruptiveandcauseuncertainty.Wedependupontheservicesofourexecutivecommitteemembersandothermembersofourmanagementteamwhohavesignificantexperiencewithourcompanyandwithintheeducationindustry.Ifoneormoremembersofourseniormanagementteamorkeypersonnelareunableorunwillingtocontinueintheirpresentpositions,includingforhealth,familyorotherpersonalreasons,wemaynotbeabletoreplacethemeasilyoratall.Ourinabilitytoattractandretainqualifiedseniormanagersorkeypersonnelinatimelymannercouldmateriallyadverselyaffectourbusiness,prospects,resultsofoperationsandfinancialcondition.Wemaybeunabletomanageourcurrentoperationsandfuturegrowth.

Ourrecentsignificantgrowthmaystrainourabilitytomanageouroperationsandintegrateouracquisitions.Duringfiscal2014and2015,weacquired12newschools,7ofwhichareinjurisdictionsinwhichwehadnotpreviouslyoperatedschoolsSingapore,Cambodia,VietnamandMexico.

Acquiringordevelopinggreenfieldschoolsentailssignificantrisks,includingthefollowing:

wemaybeunabletointegrateacquiredschoolsintoournetworkorachieveexpectedcostsavingsorsynergiesfromacquisitionswithoutdisruptingouroperationsordivertingmanagementsattentionoratall;

wemayincorrectlyevaluatethefinancialperformanceorpotentialofouracquisitionsorgreenfielddevelopmentsorschoolsweacquiremayhave

insufficientfinancialoroperationalresources;

wemaybeunabletosuccessfullyintegrateandretainanacquiredschoolsprincipal,teachersandotheremployeesoradequatelystaffgreenfieldschools;

ouruseofcashtopayforacquisitionslimitsotherpotentialusesofourcashandmaydepleteourcashreserves;

acquisitionsmayrequiresubstantialnewcapital,eitherbytheissuanceofdebtorequity,andwemaynotbeabletoaccessthecapitalorloan

marketsorobtainnewcapitalontermsacceptabletous,oratall.Increasesinourlevelofindebtednessresultingfromacquisitionsmayhavesignificantimplicationsforourfuturebusinessandoperations.SeeRisksRelatedtoourDebt;

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thedevelopmentofgreenfieldprojectsmaybedelayedasaresultofmanyfactors,suchasdelaysinobtaininggovernmentapprovalsorlicenses,delaysinacquiringpossessionoftheprojectsite,shortageofkeysuppliesandskilledlabor,constructionaccidents,naturalcatastrophesandadverseweatherconditions,someofwhicharebeyondourcontrol;

costoverruns;

resistancefromparents,teachersoradministratorstoanacquisitioncouldreduceitsvalue;and

wemayincurwrite-offs,impairmentcharges,amortizationexpensesorotherexpensesrelatedtogoodwillandotherintangibleassetswerecord.

Theserisksmayincreasewhenweexpandintonewcountriesornewcitiesincountrieswherewealreadyoperate.Managingthegrowthofa

geographicallydiversebusinessinvolvessignificantrisksandchallenges.Wemayfinditdifficulttomanagefinancialresources,implementuniformpoliciesandstandardsandmaintainouroperational,managementandtechnologysystemsacrossourglobalnetwork.Newmarketsalsoposechallengesrelatedtoculturaldifferencesandrelationshipswithlocaleducationauthorities.

Ifweareunabletomanageourcurrentoperations,ourgrowthstrategyortherisksthatwemayencounterinexpandingouroperationsintonewmarkets,ourbusiness,prospects,resultsofoperationsandfinancialconditionmaybemateriallyadverselyaffected.Acquisitionsmayexposeustoliabilities.

Whenweacquireaschool,wemaybecomesubjecttoregulatory,licensing,litigation,taxandotherliabilitiesbasedoncircumstanceswefailtodiscoverinourduediligencereview.Whenwedodiscoverpotentialliabilitiesduringourduediligencereview,neitherthevaluationadjustmentnorthecontractualprotectionswenegotiatemaybesufficienttofullyprotectusfromlosses.Forexample,weestimatethatwefacepotentialtaxliabilitiesofupto$4.9millionasaresultofoneofouracquisitions.Althoughwegenerallyhaverightstoindemnification,ourrightsarelimitedbysurvivalperiodsforbringingclaimsandlimitationsonthenatureandamountoflosseswemayrecover,andwecannotbecertainthatanyindemnificationwillbecollectibleorsufficientinamount,scopeordurationtofullyoffsetanylosswemaysuffer.Althoughthesellerindemnifiedusagainsttaxliabilities,wecannotassureyouthatourestimateofourpotentialtaxliabilityisaccurateorthatwewouldbeabletorecoverthefullamountofanypotentiallosses.Ifwefailtoobtainsuitablesitesforgreenfieldandnew-buildschools,increasecapacityatexistingschoolsoracquirenewschoolswemaynotbeabletogrowourbusiness.

Ourgrowthstrategiesincludedevelopinggreenfieldandnew-buildschools,increasingcapacityatourcurrentschoolsandacquiringnewschools.Wemaybeunabletofindsuitablesitesindesirablelocationsinmarketswherewewishtobuildnewschoolsorexpandouroperations.Availablesitesmaybetoosmallforourcapacityrequirements,prohibitivelyexpensiveorsubjecttozoningrestrictionsthatdonotpermitschoolfacilities.Ifwedolocatesuitablesitesfornewschoolsortoexpandcapacityatexistingschools,wemaybeunabletofinanceacquisition,constructionorothercosts,orwemaybesubjecttostringentrestrictionsorrequirementsimposedbyrelevantauthoritieswithrespectto,forexample,tuitionfeesandeducationlicencesandpermits.Similarly,wemaybeunabletofindacquisitiontargetsthatsatisfyourrequirementsforsize,quality,location,priceorotherfactorsweconsiderimportant,andwemaybeunabletofinancetheacquisitionofsuitabletargetsthatwedofind.Ifwefailtogrowourbusiness,ourprospects,resultsofoperationsandfinancialconditionmaybemateriallyadverselyaffected.Ifweareunabletoupgradeourschools,theymaybecomelessattractivetoparentsandstudentsandwemayfailtogrowourbusiness.

Allofourschoolsrequireperiodicupgradestoremainattractivetoparentsandstudents.Upgradingthefacilitiesatourschoolscouldbedifficultforanumberofreasons,includingthefollowing:

ourpropertiesmaynothavethecapacityorconfigurationtoaccommodateproposedrenovations;

constructionandothercostsmaybeprohibitive;

wemayfailtoobtainregulatoryapprovals;

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wemaybeunabletofinanceconstructionandothercosts;and

wemaynotbeabletonegotiatereasonabletermswithourlandlordsordevelopersorcompletetheworkwithinacceptabletimeframes.

Ourfailuretoupgradethefacilitiesofourschoolscouldleadtolowerenrollmentandmaymateriallyadverselyaffectourbusiness,prospects,resultsofoperationsandfinancialcondition.Someofthecitiesinwhichweoperateschoolsmaybecomelesspopulardestinationsforexpatriates.

Changingenvironmental,politicalandotherfactorscouldmakecitiesinwhichweoperateschoolslessattractivetoexpatriates.

Forexample,concernsaboutairqualityinBeijingandShanghaihavebeenwidelyreportedbyinternationalmedia.Poorairqualitymayparticularlyconcernparentswithschool-agechildren,whoaregenerallyperceivedtobemorevulnerabletoairpollutionthanadults.Ifairqualityfailstoimproveordeteriorates,thenumberofexpatriateswithschool-agechildrenmaydecline,whichcouldreduceourenrollmentsorlimitourabilitytogrow.

Politicaltensionsandrisingsecurityconcernscouldalsomakecitieslessattractivetoexpatriates.Forexample,ifprotestsbegintooccurregularlyorbecomemoresevereoranactofterrorismoccursinoneofthecitieswherewehaveschools,wecouldfaceenrollmentpressuresasexpatriatesleavetheregion.Ourleasesmaybeterminatedorwemaybeunabletorenewourleasesonacceptableterms;ifwewishtorelocate,wemayincuradditionalcostsifweterminatealease.

Manyofthebuildingsourschoolsoccupyunderwentrenovationsorwerecustom-builttomeetourrequirements.Ifweareunabletorenewaleaseonacceptabletermsorifaleaseisterminated:

wemaybeunabletofindanewpropertywiththeamenitiesandinthelocationwerequire,whichmayforceustoclosetheschoolormovetoalessdesirablelocation;

wemayincursignificantcostsinidentifying,securingandmovingtoanewlocation;and

therelocationmaysignificantlydisrupttheschoolsoperationsandtheschoolmaybeunabletocollecttuitionfeesorretainitsstudents.

OurschoolpropertiesinSingapore,HongKongandsomeschoolpropertiesinChinaareleasedfromgovernmentauthorities,whichcanterminateour

leasesatanytimeduetopublicpurposeorneed.Insomecasesathirdpartymaytakeactionsthatwouldinterferewithouruseofaleasedpropertyasaresultofcontractualarrangementsbetweenthethirdpartyandthelessor.

Inaddition,terminatinganyofourschoolleasescouldbecostly.Manyofourleasesdonotcontainbreakprovisionsthatwouldpermitustoterminatetheleasepriortoitsexpiration.Inthepast,wefounditdifficulttoobtainearlyterminationofsomeofourleases.Ifwewishtoterminatealeaseinordertorelocateorcloseaschool,wemaybeunabletonegotiatesatisfactoryterminationarrangementsandcouldincursignificantcostsorliabilitiesunderthelease,whichcouldmateriallyadverselyaffectourbusiness,prospects,resultsofoperationsandfinancialcondition.Ifourlandlordsdonotperformtheirobligationsunderthetermsofourleasesoralandlordchangesinthecourseofthelease,ouroperationscouldbedisruptedandourcostscouldincrease.

Agoodworkingrelationshipwiththelandlordsofourschoolpropertiesisfundamentaltothesuccessfuloperationofourschoolsandcangenerateadditionalpropertydevelopmentopportunitiesthatsupportourgrowth.Inmanycases,ourlandlordsareresponsibleforthemaintenanceofacorepartofthefacilitieswelease.Ifourlandlordsdonotmaintainsuchfacilitiestotherequiredstandards,wemayhavetoincreaseourexpenditurestomaintainthequalityofourschools.Inaddition,duringthecourseofourlease,thelandlordofoneormoreofourschoolscouldchange,forexampleduetoitsinsolvencyorthesaleoftheunderlyingproperty,andwemayneedtodeveloparelationshipwithanewcontractingparty.Thenewlandlordmayhaveintereststhatconflictwithours,maybelesswillingtoexpandtheschoolscapacityorimproveitsfacilitiesorbealessreliablecounterpartyinfulfillingitsobligationsunderthetermsofthelease.Ifanexistinglandlordoranewlandlorddoesnotcomplywiththetermsofourleasesforanyreason,ouroperationscouldbedisrupted,ourcostscouldincreaseandwemayberequiredtocloseorrelocatetheaffectedschool,whichcouldmateriallyadverselyaffectourbusiness,prospects,resultsofoperationsandfinancialcondition.

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TableofContentsIfwesellorcloseaschoolwemaynotachieveanticipatedcostsavingsorotherbenefitsandcouldremainliableforeventsthatoccurredwhileweoperatedtheschool.

Ifwesellorcloseaschool,wemaynotachieveanticipatedcostsavingsorotherbenefits.Wecouldbesubjecttoclaimsbythenewowner,parentsandeducationalauthoritiesforfinancialliabilitiesrelatedtoourpreviousoperationoftheschoolandcouldbesubjecttounforeseenliabilities.Thereputationofsomeorallofourremainingschoolsmayalsosufferintheeventwecloseoneofourschools.Inaddition,ifanewownerdoesnotoperatetheschooltoahighstandard,ourreputationcouldsufferbyassociation,eventhoughwenolongerhaveanycontrolovertheoperationsoftheschool,whichcoulddamageourreputation.Asaresult,sellingorclosingaschoolcouldmateriallyadverselyaffectourbusiness,prospects,resultsofoperationsandfinancialcondition.Anychangeinthetimingoftuitionfeepaymentscouldcreatecashflowissuesforus.

Wecollectmostofourtuitionfeesbeforethebeginningofthefirsttermoftheacademicyearandmorethanhalfoftheremainderbeforethebeginningofthesecondandthirdtermsoftheacademicyear.Ifregulationsinnewmarkets,newregulationsinexistingmarketsorchangingmarketconditionsrequireustocollectourfeesmoreevenlyoverthecourseoftheacademicyear,ourcashflowmaybenegativelyaffectedandwemayrequireadditionalworkingcapitalorthird-partyfundingtofinanceouroperations.Wemaynothaveadequateprotectionforourintellectualproperty,andwemayinfringeupontheintellectualpropertyofothers.

Inmostofthemarketswhereweoperateschools,wedonothavetrademarkprotectionforthebrandnamesunderwhichtheschoolsoperate.Asaresult,wemayneedtospendsignificantresourcesinlegalproceedingsifotherorganizationsimproperlyuseasimilarschoolname.WerelyontrademarkprotectioninselectedjurisdictionstoprotectourrightstothemarkNordAnglia,ourdistinctivelogosandothermarksassociatedwithourservices.Wecannotassureyouthatthesemeasureswillbeadequate,thatwehavesecured,orwillbeabletosecure,appropriateprotectionforallofourproprietaryrightsinselectedjurisdictionsorthatthirdpartieswillnotinfringeuponormisappropriateourtrademarkandbrandname.Insomenewjurisdictionsinwhichweoperate,e.g.CambodiaandMexico,wehavesubmittedtrademarkapplicationsbutthereisnoguaranteethattheycanbesuccessfullyregistered.Policingtheunauthorizeduseofourtrademarksandbrandnamescanbedifficultandexpensive,andlitigationmaybenecessarytoenforceorprotectourbrandnameordeterminethevalidityandscopeoftheproprietaryrightsofothers.Wemaynotprevailinanyintellectualpropertylitigationandafavorableoutcomemaynotbeadequatetoprotectourrights.Inaddition,thirdpartiesmayaccuseusofinfringingtheirintellectualproperty.Third-partyintellectualpropertyrightsmaybeextremelybroadanditmaynotbepossibleforustoconductouroperationswithoutinfringingthoseintellectualpropertyrights.Wecouldincursignificantdefensecostsandlossesinlitigationorotherlegalproceedingsandmaybecomeliableforthelegalcostsoftheadverseparty.

Fromtimetotime,wearepartytolegalproceedingsinthevariousjurisdictionsinwhichweoperate.SeeItem8.FinancialInformationA.ConsolidatedStatementsandOtherFinancialInformationLegalProceedings.Litigationcanbecostlyandtimeconsumingandmaydivertmanagementattentionandresourcesfromouroperations.Wecouldincursignificantdefensecostsand,intheeventofanadverseoutcome,berequiredtopaydamagesandinteresttotheprevailingpartyand,dependingonthejurisdictionofthelitigation,beheldresponsibleforthecostsoftheprevailingparty.Operatinginhighlylitigiousjurisdictions,suchastheUnitedStates,increasestheriskofmateriallyadverselitigation.Wemaybeliableforaccidentsorothereventsthataffectourstudentsandstaff.Eventsofthiskindmayharmourreputationamongparentsandgovernmentbodies.

Wemaybeheldresponsibleforthehealthandsafetyofourstudentsandstaff.Ifpersonalinjuriesoraccidentsoccur,wemayfaceclaimsfromparents,governmentofficialsorotherpartiesallegingthatwewerenegligent,providedinadequatesupervisionorwereotherwiseresponsibleforcausinginjury.Wemayalsofaceallegationsthatteachers,otherpersonnelorstudentscommittedunlawfulacts.Theoccurrenceorallegedoccurrenceoftheseeventsandothersthatimpactourstudentsorstaffcouldexposeustofinancialliabilityorharmourreputation,evenifwearenotatfault.Thiswouldbeespeciallytrueifthepotentialliabilityexceededourinsurancecoverage.

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Asuccessfulliabilityclaimagainstusforinjuriesorotherharmsufferedbystudents,employeesorotherpeoplecouldmateriallyadverselyaffectourreputationandresultsofoperations.Evenifsuchaclaimisunsuccessfulorunwarranted,itcoulddivertmanagementattentionfromouroperations,causeustoincursubstantialcostsindefendingtheclaimandharmourreputation,allofwhichcouldmateriallyadverselyaffectourbusiness,prospects,resultsofoperationsandfinancialcondition.Ourinsurancemaybeinadequateorpremiumsmayincreasesubstantially.

Wemaintainliabilityinsuranceatalevelwebelievetobeadequateandconsistentwithindustrypractice.However,claimsinexcessofourinsurancecoverageorclaimsnotcoveredbyourinsurancecouldarise.Furthermore,therecanbenoassurancethatwewillbeabletoobtainliabilityinsurancecoverageinthefutureonacceptabletermsoratall.Asuccessfulclaimagainstusthatisnotcoveredbyorisinexcessofourinsurancecoveragecouldmateriallyadverselyaffectourbusiness,prospects,resultsofoperationsandfinancialcondition.Anysuchclaimsmayalsoincreaseourinsurancepremiums.Securitybreachesandotherdisruptionscouldcompromiseourinformationandexposeustoliability,whichwouldcauseourbusinessandreputationtosuffer.

Intheordinarycourseofourbusiness,wecollectandstoresensitivedata,includingintellectualproperty,ourproprietarybusinessinformationandpersonallyidentifiableinformationofouremployeesandourstudentsandtheirfamilies,includingacademicandmedicalrecords,onournetworks.Toaddressourbusinessneeds,weengagevariousthirdpartiestostoreandprocesssuchinformation.Thesecureprocessing,maintenanceandtransmissionofthisinformationiscriticaltoouroperations.Despitethesecuritymeasuresthatweandourserviceprovidersputinplace,therelevantinformationtechnologyandinfrastructuremaybevulnerabletoattacksbyhackersorbreachedduetoemployeeerror,malfeasanceorotherdisruptions.Anysuchbreachcouldcompromiseournetworksandtheinformationstoredtherecouldbeaccessed,publiclydisclosed,lostorstolen.Anysuchaccess,disclosureorotherlossofinformationcouldresultinlegalclaimsorproceedings,liabilityunderlawsthatprotecttheprivacyofpersonalinformationandregulatorypenalties,andcoulddisruptouroperations,damageourreputationandharmourabilitytoattractandretainstudents,anyofwhichcouldadverselyaffectourbusiness,prospects,resultsofoperationsandfinancialcondition.Weoperatevariousinformationtechnologysystemsindifferentjurisdictions;theincompatibilityorfailureofthesesystemscouldmateriallyadverselyaffectourbusiness.

Wedonothaveauniversalinformationtechnologysysteminplaceacrossallthejurisdictionsinwhichweoperate.Asaresult,schoolsmayhavedifficultysharinginformationandcurriculaandwemayhavedifficultiestakingadvantageofsynergiesamongourdifferentschools.Thesedifficultiesandrelatedrisksareheightenedbythegrowthofourbusiness.Wemayincurgreatercostsandachievefewersavingsasaresultofmaintainingmultipleinformationtechnologysystemsthanwewouldiftherewereoneinformationtechnologysystemoperatingacrossallourjurisdictions.Theseincreasedcostsandlostopportunitiesforsavingsandsynergiescouldmateriallyadverselyaffectourbusiness,prospects,resultsofoperationsandfinancialcondition.Exchangeratefluctuationsmaymateriallyadverselyaffectourresultsofoperationsandprofitability.

Itisourgeneralpracticetocollectrevenuesandpayexpensesinthelocalcurrency.TheChineserenminbihasanexchangeratetiedtoabasketofforeigncurrenciesthatincludetheU.S.dollar,euro,JapaneseyenandSouthKoreanwonandisallowedtofloatwithinanarrowbandaroundthecentralparitymanagedbythePeoplesBankofChina.IntheMiddleEast,substantiallyallofouroperationsareconductedintheQataririyalandtheUnitedArabEmirates(UAE)dirham,whicharepeggedtotheU.S.dollar.OuroperationsintheUnitedKingdomareconductedinsterling.ElsewhereinEurope,ouroperationsareconductedintheeuroandlocalcurrencies,includingtheSwissfranc,Czechcrown,HungarianforintandPolishzloty.OuroperationsinThailandareconductedinThaibaht.OuroperationsinSingaporeareconductedinSingaporedollars.OuroperationsinCambodiaareconductedinCambodianriel.OuroperationsinVietnamareconductedinVietnamesedong.OuroperationsinHongKongareconductedinHongKongdollars.OuroperationsintheUnitedStatesareconductedinU.S.dollars.OuroperationsinMexicoareconductedinMexicanpesos.Conductingbusinessacrossmultiplecurrenciessubjectsustocurrencyfluctuationrisks.Inparticular,fluctuationsincurrencyexchangeratescanhaveanimpactonthetranslationofforeigncurrency-denominatedamountsintoU.S.dollars,whichisourfunctionalcurrency,andaffectourresultsofoperationswhenwetransactbetweenforeigncurrencies.AsofAugust31,2016,themajorityofourdebtwasdenominatedinU.S.dollars.BecauseamajorityofourincomeisdenominatedincurrenciesotherthantheU.S.dollarandwedonotfullyhedgeourexchangeraterisk,changesinexchangeratescouldreduceourabilitytoserviceourdebt.Conductingbusinessinmultiplecurrenciessubjectsustoexchangerateandcurrencyriskthatcouldmateriallyadverselyaffectourbusinessandreportedresults.Forinformationaboutourhedgingactivities,seeItem5.OperatingandFinancialReviewandProspectsB.LiquidityandCapitalResourcesBorrowings, Item11.QuantitativeandQualitativeDisclosuresaboutMarketRisk andnote25toourauditedconsolidatedfinancialstatementsappearingelsewhereinthisannualreport.

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TableofContentsWemaybecomesubjecttotaxes,penaltiesoradditionalliabilitiesinrelationtoourcurrentandpastuseofindependentconsultantsandthepaymentofsomeofourteachers.

Ifourindependentconsultantsaredeemedtobe,ordeemedtohavebeen,ouremployees,wecouldbesubjecttopenaltiesandbeliableforunpaidtaxes,aswellasunpaidemploymentbenefits,andwewouldhavetoincurthecostofprovidingtheseconsultantswithsuchbenefitsgoingforward.Inaddition,insomeofourEuropeanschoolswemakepaymentstoteachersthroughanoffshoreentity.Ifthelocalauthoritiesweretosuccessfullychallengethenatureofsucharrangements,wecouldbeheldliableforthepaymentofadditionaltaxes,socialsecuritycontributions,interestandpenalties,andanysuchpaymentmaymateriallyadverselyaffectourbusiness,resultsofoperationsandfinancialcondition.Theoccurrenceofepidemicsorotheradversepublicheathdevelopments,naturaldisastersorunanticipatedcatastrophiceventscouldhaveanadversematerialeffectonourbusiness,prospects,resultsofoperationsandfinancialcondition.

Ifanepidemicorotheroutbreakofdiseaseoccurs,parentsmaywithdrawtheirchildrenfromschooltoprotectthemfromthepossibilityofinfection,facultyandstaffmaybecomeilloravoidcomingtoworkinordertoprotectthemselvesfromtheoutbreakorthegovernmentmayorderschoolstocloseinordertocontaintheepidemicoroutbreak.Forexample,certainAsiancountrieshaveencounteredepidemics,suchasSARS,theavianfluandotherinfluenzastrains.Pastepidemicoutbreaks,dependingontheirscale,havecauseddifferentdegreesofdamagetonationalandlocaleconomiesthroughouttheworld.In2012,therewerereportsoftheoutbreakoftheviralhand,footandmouthdiseaseinThailand,Chinaandotherneighboringcountries,includingseveralconfirmedhumancasesanddeaths,particularlyamongchildren.In2014,casesofEbolavirusdisease,whichoriginatedinWestAfrica,appearedinEuropeandtheUnitedStates.AnoutbreakofZikavirusbeganinBrazilin2015,spreadtoothercountriesintheAmericasandtheCaribbean,andin2016reachedMalaysiaandSingapore.AnoutbreakofSARS,avianflu,viralhand,footandmouthdisease,theEbolavirus,Zikavirusoranyotherepidemicinanyregioninwhichweoperatecouldmateriallyadverselyaffectourbusinessoperations,includingtemporaryclosuresofourschools.Similarly,theoccurrenceofnaturaldisastersorunanticipatedcatastrophiceventscouldresultinmaterialdisruptionstoourbusinesses.Totheextentthatanysuchinterruptionisnotcoveredbyourinsurance,ourbusinessandresultsofoperationcouldsufferanditmaytakeasignificantamountoftimeforourbusinesstorecovertopreviouslevelsofstudentenrollmentandrevenues.RisksRelatedtoOurDebtOurdebtcouldadverselyaffectourfinancialhealthandcompetitiveposition.

AsofAugust31,2016,wehadtotaldebtoffacevalue$1,091.6million.Ofthisamount,$888.1millionwasdueunderourtermloanfacility,whichwillmaturein2021,and$203.5millionwasdueunderourSwissfrancdenominatedseniorsecurednotes,whichwillmaturein2022.SeeItem5.OperatingandFinancialReviewandProspectsB.LiquidityandCapitalResourcesBorrowings.

Ourdebtcouldmateriallyadverselyaffectourbusinessby,forexample:

limitingourabilitytopaydividends;

increasingourvulnerabilitytogeneraladverseeconomicandindustryconditions;

requiringustodedicateamaterialportionofourcashflowsfromoperationstomakepaymentsonourdebt,therebyreducingtheavailabilityofcashtofundouroperationsormakecapitalexpenditures;

limitingourflexibilityinplanningfor,orreactingto,changesinourbusinessorindustry;and

limitingourabilitytoborrowadditionalfunds.

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TableofContentsWerequirecashtoserviceourdebt,andourabilitytogeneratecashissubjecttomanyfactorsbeyondourcontrol.

Ourabilitytoserviceourdebtandfundcapitalexpenditureswilldependonourabilitytogeneratecash.Ourabilitytogeneratecashdependsontheperformanceofourschools,whichinturndependsonglobalandlocaleconomic,financial,competitive,regulatoryandotherfactorsthatarebeyondourcontrol.

Wecannotassureyouthatourbusinesswillgeneratesufficientcashflowfromoperationsorthatfutureborrowingswillbeavailabletousinanamountsufficienttoenableustoserviceourdebtortofundourotherliquidityneeds.Wemayneedtorefinancealloraportionofourdebtonorbeforematurity.Wecannotassureyouthatwewillbeabletorefinanceanyofourdebtoncommerciallyreasonabletermsoratall.Failuretorefinanceourdebtontermswebelievetobeacceptablecouldmateriallyadverselyaffectourbusiness,financialcondition,resultsofoperationsandcashflow.Failureoffinancialinstitutionstofulfilltheircommitmentsunderourderivativefinancialinstrumentsmayadverselyaffectourfutureearningsandcashflows.

Weusecrosscurrencyinterestrateswapsinconjunctionwithcertaindebtissuancesinordertosecureafixedlocalcurrencyinterestrate.Ourunsecuredcontractsforcrosscurrencyinterestrateswapsarewithmajorfinancialinstitutionsandmatureatvariousdates.Thefailureofacounterpartytofulfillitsobligationunderthecrosscurrencyinterestrateswapsmayhaveamaterialadverseeffectonourresultsofoperations,financialcondition,liquidityandcashflows.

Forinformationaboutourhedgingactivities,seeItem5.OperatingandFinancialReviewandProspectsB.LiquidityandCapitalResourcesBorrowings andItem11.QuantitativeandQualitativeDisclosuresaboutMarketRisk .Ourindebtednessmayrestrictourabilitytopursueourbusinessstrategies.

Ourdebtinstrumentslimitourabilityto,amongotherthings:

incuradditionaldebt;

paydividendsormakeotherdistributionsorrepurchaseorredeemourshares;

makeinvestments;

sellassets,includingcapitalstockofrestrictedsubsidiaries;

enterintoagreementsrestrictingoursubsidiariesabilitytopaydividends;

consolidate,merge,sellorotherwisedisposeofallorsubstantiallyallofourassets;

enterintosaleandleasebacktransactions;

enterintotransactionswithouraffiliates;and

incurliens.

Ourabilitytocomplywiththesecovenantsandrestrictionsmaybeaffectedbyeventsbeyondourcontrol.Ifwebreachanyofourcovenants,wecouldbeindefaultunderourdebtinstruments.Thiswouldpermitourlenderstotakecertainactions,includingrequiringustorepayallourdebtpriortothescheduledmaturity.Furthermore,ourlenderscouldcancelourcreditfacility.Ifourdebtrepaymentweretobeaccelerated,wemaynothavethecashorliquidassetstorepayourdebt.Theoccurrenceofanyoftheseeventscouldmateriallyadverselyaffectourbusiness,financialconditionandresultsofoperations.

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TableofContentsWearesubjecttointerestrateriskresultingfromgeneraleconomicconditionsandpoliciesofgovernmentalandregulatoryagencies.

AsofAugust31,2016,wehadtotalprincipalamountof$1,156.3millionfloatingratedebtoutstanding,andwedonotfullyhedgeourinterestraterisk.Interestratesarehighlysensitivetomanyfactorsthatarebeyondourcontrol,includinggeneraleconomicconditionsandpoliciesofgovernmentalandregulatoryagenciesand,inparticular,theUnitedStatesFederalReserveBoard.Changesinmonetarypolicy,includingchangesininterestrates,couldinfluencetheamountofinterestwepayonourfloatinginterestrateobligationsandanyfloatinginterestrateobligationswemayincurinthefuture.Ifinterestratesincrease,ourdebtserviceobligationsonourfloatingratedebtwouldincreaseeventhoughtheamountborrowedremainedthesame,andournetincomewoulddecrease.Anincreaseinourfinancingcostscouldmateriallyadverselyaffectourresultsofoperationsandourabilitytopayamountsdueonourdebtandmakedistributionstoourshareholders.Forinformationaboutourhedgingactivitiesandinterestraterisk,seeItem5.OperatingandFinancialReviewandProspectsB.LiquidityandCapitalResourcesBorrowings andItem11.QuantitativeandQualitativeDisclosuresaboutMarketRisk .RisksRelatedtotheJurisdictionsinwhichWeOperateWemayexperienceadversechangesingeneraleconomic,political,socialandregulatoryconditionsinourmarkets.

WeoperateinChina,Europe,theMiddleEast,SoutheastAsiaandNorthAmericawheremanylocalcommunities,economiesandlegalandadministrativestructuresarerapidlyevolving.Asaresult,oursuccessdependsinpartuponourabilitytoadapttoandsucceedindifferingeconomic,legal,socialandpoliticalconditions.Inparticular,financialrisksassociatedwithouroperationsincluderisksofliquidity,inflation,devaluation,pricevolatility,currencyconvertibilityandexchangeratesandactualorperceivedriskofcountrydefaultresultingfromsignificantdeficitsorpoliticalinstability.Governmentinterferenceintheeconomyincertaincountries,changesineconomic,politicalandsocialconditions(including,forexample,significantchangestoforeignexchangepoliciesandwagecontrols),changesingovernmentattitudestowardfor-profiteducation,particularlyK-12schools,andchangesingovernmentpoliciesonhowschoolsshouldbeoperatedcouldmateriallyadverselyaffectourbusiness,prospects,resultsofoperationsandfinancialcondition.Uncertaintiesregardingthegeneralregulatoryandlegalenvironment,particularlyinChina,theMiddleEastandpartsofSoutheastAsia,couldadverselyaffectourbusiness.

Ourinternationaloperationsaregovernedbylocallawsandregulationsapplicabletoforeigninvestments,foreign-ownedenterprisesandtheoperationofinternationalschoolsgenerally.Ourbusinesscouldbeadverselyaffectedbytheinterpretationandenforcementofandchangesintheselawsandregulations.Theselawsandregulationsoftenlacktransparency,canbedifficulttointerpretandmaybeenforcedinconsistently.

China,theMiddleEastandpartsofSoutheastAsiahavenotdevelopedintegratedlegalsystemsthatcoverallaspectsofouractivities.TheChineselegalsystemisbasedonwrittenstatutes.Priorcourtdecisionsmaybecitedforreferencebuthavelimitedprecedentialvalue.Since1979,ChineselegislationandregulationshavesignificantlyenhancedtheprotectionsaffordedtovariousformsofforeigninvestmentsinChina.Becausetheselawsandregulationsarerelativelynew,andbecauseofthelimitedvolumeofpublisheddecisionsandtheirnonbindingnature,theinterpretationandenforcementoftheselawsandregulationsareuncertain.Inaddition,theChineselegalsystemisbasedinpartongovernmentpoliciesandinternalrulesthatmayhaveretroactiveeffectand,insomecases,arenotpublishedatall.Asaresult,wemaynotbeawareofanyallegedviolationofthesepoliciesandrulesuntilaftertheallegedviolationhasoccurred.AnylitigationinChinamaybeprotractedandresultinsubstantialcostsanddiversionofresourcesandmanagementattention.

ThelawsandregulationsofChinaandcountriesintheMiddleEastandSouthEastAsiaareoftenunclearandsubjecttodifferingregulatoryinterpretation.National,regional,localandothergovernmentalbodiesmayissueinconsistentdecisionsandopinions.Inparticular,thelawsandregulationsapplicabletotheestablishmentandoperationofinternationalschoolscanbevagueanduncertain.RegulatoryagenciesinChina,theMiddleEastandpartsofSoutheastAsiahavesubstantialdiscretionaryauthoritytoimplementandenforceregulations.Suchimplementationandenforcementisnotalwaysconsistentorpredictable.Wecannotassureyouthatwewillnotbefoundtobeinviolationofanycurrentorfuturelawsandregulationsinthesecountries,includinglawsandregulationsrelatingtotheownershipandoperationofourschools,includingourcurricula,admissionscriteriaandleases.Potentialconsequencescouldincludefines,penaltiesortherevocationofaschoolseducationlicense,ortheownershipofaschoolcouldbechallengedwhichwouldcausesuchschooltoceaseoperations.Insomejurisdictions,thelegalinterpretationofourleasesandotheragreementsmaybeuncertain.Exposuretoregulatoryuncertaintycouldlimitourlegalprotectionandabilitytocomplywithregulationsapplicabletous,whichcouldmateriallyadverselyaffectourbusiness,prospects,resultsofoperationsandfinancialcondition.

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TableofContentsPolicies,lawsandregulationsofforeigngovernments,includingthoserelatingtoeducation,couldadverselyaffectourexistingbusinessandourpotentialgrowth.

Ourbusinessissubjecttothepolicies,lawsandregulationsofeachjurisdictioninwhichweoperate.Thesepoliciesandregulationsapplytomanyaspectsofourbusiness,including:

applyingfor,obtainingandmaintainingnecessarylicenses,permits,visas,accreditationsandotherauthorizationsforoperatingourschoolsandemployingourteachers;

ourabilitytorecruitexpatriateandlocalstudents;

pricingandmechanismsforreceiptoftuitionfees;

employmentconditions,includingtaxationratesandotherfactorsrelatedtobothforeignandlocalstaff;

thedevelopmentofcurriculathatmeettherequirementsoflocaleducationalauthorities;

ownershipstructureandgovernance,inparticularpoliciesandregulationsthatrelatetoforeignownership;and

theabilityofourschoolstoearnprofitsorpaymanagementorproductfeesorroyaltiesandourabilitytorepatriatecashthroughdividendsorfees.

Wemaynotbeable,inpartoratall,tocomplywithsuchpolicies,lawsandregulationsoranysignificantchangethereofineachofthejurisdictionsin

whichweoperateorwouldliketoexpandouroperations,orwemayincursignificantcoststodoso.Ourfailuretocomplyortheimpositionofsignificantcompliancecostsonuscouldmateriallyadverselyaffectourbusiness,prospects,resultsofoperationsandfinancialcondition.WerelyoncontractualarrangementswiththirdpartiestooperateandcontrolNordAngliaChineseInternationalSchoolShanghai.ThesecontractualarrangementsmaynotbeeffectiveingivinguscontrolandmaybeadverselyimpactedbychangesinPRClawsortheirinterpretation.

WedonothaveanequityinterestinNordAngliaChineseInternationalSchoolShanghai(NACIS)becauseunderthecurrentlyeffectiveCataloguefortheGuidanceofForeignInvestment,foreigninvestorsareprohibitedfrominvestinginprimaryandmiddleschoolsandrestrictedfrominvestinginhighschoolsthatteachlocalChinesestudents.Instead,wecontrolandoperateNACISthroughaseriesofcontractualarrangementswiththirdpartieswhichultimatelyownNACIS.Sucharrangementshavebeenadoptedbymanycompanies,buttheyposethefollowingkeyrisks:

TherearesubstantialuncertaintiesregardingtheinterpretationofPRClawsandregulationsapplicabletosucharrangements,andtherecanbenoassurancethatthePRCauthoritieswillfindourcontractualarrangementstocomplywithPRClaw.NewPRClegislationcouldalsoimpairthevalidityofourcontractualarrangements.

IfthethirdpartieswhichultimatelyownNACISfailtoperformtheirobligationsunderthecontractualarrangements,wemayhavetospend

substantialcostsandotherresourcestoenforceourcontracts,andremediesavailableunderPRClawmaynoteffectivelyprotectourinterests.

TheMinistryofCommercepublishedadraftForeignInvestmentLawinJanuary2015.UnderthedraftForeignInvestmentLaw,anentitysuchasNACISestablishedinthePRCbutcontrolledbyforeigninvestorsviacontractualarrangementswillbetreatedasaforeign-investedenterprise,andwillbesubjecttorestrictionsorprohibitionsonforeigninvestmentinanegativelisttobeissuedbytheStateCouncilatalaterdate.Ifthenegativelistincludesprimary,middleandhighschooleducation,aforeign-investedenterprisewouldrequiretheMinistryofCommercesapprovalbeforeitcanoperate.ItisunclearhowexistingenterprisessuchasNACISwouldbetreatedbythenewForeignInvestmentLawifenacted.Forexample,itisunclearwhetherthelawwouldhaveretroactiveeffectorwhethergrandfatheringwillbegrantedtoexistingenterprises.IftheForeignInvestmentLawdoesnotexemptexistingenterprises,itisunclearhowwewouldcomplywiththenewlaw.

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TableofContentsOurschoolsinGuangzhouandChengduhavenotregisteredwiththelocalCivilAffairsBureau,whichcouldsubjecttheschoolstoenforcementactionsresultinginsanctions,includingasuspensionofouroperations.

UnderPRClawsandregulations,civilnon-enterpriseentitiesaregenerallyrequiredtoregisterwiththelocalCivilAffairsBureau.Failuretodosomaygiverisetosanctionssuchaswarnings,ordersforrectificationorsuspensionofoperations.TheGuangzhouEducationCommissionandtheGuangdongEducationCommission,whicharetheeducationcommissionsatthemunicipalandprovinciallevels,respectively,haveonlyrecentlyadvisedustoregisterourschoolinGuangzhouwiththeGuangzhouCivilAffairsBureau,andthisregistrationapplicationisnowinprogress.OurschoolinChengdu,LemanInternationalSchool(LIS),whichweacquiredinJune2015,hascommencedtheprocessforregistrationwiththeSichuanProvincialDepartmentofCivilAffairsforitsofficialestablishment.

Giventheuncertaintiesofinterpretationandimplementationofrelevantregulationsbydifferentauthorities,wecannotassureyouthatourschoolinGuangzhouandLISwillbesuccessfulwiththeirapplicationstotheGuangzhouCivilAffairsBureauandtheSichuanProvincialDepartmentofCivilAffairs,respectively.Ourfailuretocompleterequiredregistrationscouldmateriallyadverselyaffectourreputation,business,prospects,resultsofoperationsandfinancialcondition.Wemayfacerestrictionsonourabilitytotransferanddistributefunds.

Wecurrentlytransferanddistributefundsamongthejurisdictionsinwhichweoperateandweexpecttocontinuetodosoinordertofundourgroup-widecashandfinancingrequirements,includingservicingourdebt.Totransferfundsamongjurisdictions,werelyprincipallyoncash-poolingarrangements,dividendsandotherdistributions,inter-companyloans,andthepaymentofadministrativeandmanagementfees,royaltiesandlicensingfees.

BISShasmadesubstantialdistributionsthroughdividendsandourschoolsinShanghai,BeijingandGuangzhouhavetransferredcashthroughconsultancyservicesfees,royaltiesandmanagementchargespaidtooneofoursubsidiaries.Inaddition,wehaverepatriatedcashfromChinathroughintercompanytransfersofinterestsinsubsidiaries.OurschoolsinThailandandVietnammakedistributionsthroughquarterlyandannualdividends,respectively.WealsoreceivemanagementchargesfromourschoolinGuangzhou.Ifanyofthetransfersorarrangementsdescribedabovewerefoundtobeinvalidbytherelevantauthorities,distributionsfromtheseschoolscouldbediscontinuedandwemayberequiredtorepayamountspreviouslytransferred.Ourabilitytomakedistributionsisrestrictedinsomejurisdictions.

Duetorestrictionsimposedbylocalauthoritiesandregulations,theentitiesoperatingourschoolsinHongKong,Hungary,Slovakia,MexicoandNACISinthePRCcannotmakedistributionsintheformofdividends.Ifweacquireorbuildmoreschoolswhicharesubjecttosimilarrestrictions,ourabilitytofundouroperations,makedistributionsandpaydividendswillbeadverselyaffected.IfthePRCgovernmentfindsthatthestructuresofourschoolsinChinadonotcomplywithapplicablePRClawsandregulationsorwefailedtoobtainrequiredpermitsorapprovalsforourintra-grouptransferofourschoolsinBeijing,wemaybeunabletooperatetheseschoolsandmaybesubjecttopenalties.

InChina,theMinistryofEducationregulatestheeducationindustry,andthelocaleducationcommissionsintheChinesecitiesinwhichweoperatehaveresponsibilityforlocalenforcementandoversightwithrespecttomattersundertheirjurisdiction.TheseauthoritieshavebroaddiscretionindealingwithanyviolationofPRClawsorregulations,includinganyfailuretoobtain,maintainorcomplywithanyrequiredpermitorapproval,byourschoolsinChina.

UndertheInterimRegulationsConcerningtheEstablishmentofSchoolsfortheChildrenofExpatriates(theInterimRegulations),onlyforeignindividualswithlawfulresidenceinChina,whollyforeign-ownedenterprisesandcertainforeignentitiesdulyregisteredorestablishedinChinamayapplytoestablishaninternationalschool,subjecttotheapprovaloftheMinistryofEducation.TheapprovalauthorityhasbeendelegatedtotheMinistryofEducationslocalcounterpartattheprovinciallevelpursuanttotheDecisionoftheStateCouncilontheSixthBatchofCancelledandAmendedAdministrativeExaminationandApprovalItemsissuedbytheStateCouncilofthePRConSeptember23,2012.AnemployeeofNordAngliaEducation,whohadlawfulresidenceinChinaatthetime,appliedtotheMinistryofEducationfortheestablishmentofBISSin2002asitssponsor.Since2005,documentsthatwehavesubmittedtotheShanghaiEducationCommissionhaveidentifiedassponsoroneofourwholly-ownedsubsidiariesthatdoesnotfallwithinoneofthecategoriesofpermittedsponsorsintheInterimRegulations.Todate,nochallengesinthisrespecthavebeenbroughtagainsttheoperationsofBISSbylocalornationaleducationalauthorities.WehavenotdirectlyapproachedtheMinistryofEducationonthismatteranddonotanticipatedoingso.

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PursuanttotheInterimMeasuresfortheAdministrationofExaminationandApprovalofOverseasInvestmentProjects,theNationalDevelopmentandReformCommission(NDRC)requiresapprovalsforoverseasinvestmentprojectsmadebyPRCentities.WeobtainedapprovalsfromtheMinistryofCommerceofthePRCandthePRCStateAdministrationofForeignExchangefortheintra-grouptransferofourschoolsinBeijingtoourPRCsubsidiariesandwereadvisedbytransactioncounselthatlocalNDRCapprovalwasnotrequired.

IftheMinistryofEducation,theNDRCorotherapplicablePRCregulatoryagenciesweretofindthattheownershipstructuresofourschoolsdonotcomplywithapplicablePRClawsandregulationsorwefailedtoobtainrequiredapprovalsforthetransferofourschoolsinBeijing,wemaybeunabletooperateourschoolsinBeijingandmaybesubjecttopenalties.OurschoolinGuangzhouhasnotobtainedwrittenendorsementfromthelocalandprovincialeducationcommissionsforthesitethathousesitskindergarten.

InternationalschoolsinChinarequireanendorsementfromthelocalorprovincialeducationcommissiontooperatemultipleteachingsites.PriortotheacquisitionofourschoolinGuangzhou,theschoolhadnotobtainedawrittenendorsementfromeithertheGuangzhouorGuangdongeducationcommissionforthesitethathousesitskindergarten.BoththeGuangzhouandGuangdongeducationcommissionsareawareofthekindergarten,andweintendtoseektheirformalendorsement.However,wecannotassureyouthatwewillobtainaformalendorsement.Ifweareunabletoobtainaformalendorsement,theeducationcommissionscouldtakevariousregulatoryactionsagainstusandwemayberequiredtorelocateourkindergartenstudentstoourmainGuangzhoucampus.Ifourlandlordstitletothepropertiesand/orotherlegalstatusofthefacilitiesweleaseforourschoolswerechallenged,ouroperationscouldbedisrupted.

WeleaseallofourschoolfacilitiesinChinaandVietnam.Ourlandlordsshouldhavevalidlanduseandpropertyownershiprightswithrespecttosuchschoolfacilitiesandassociatedland.Ifourlandlordsarenottheholdersoflanduserightsorlesseesofsuchholders,theyarerequiredtoreceivefullauthorizationtosub-leasetherelevantproperties.Inaddition,inordertobuildnewfacilitiesorexpandexistingfacilities,ourlandlordsarealsorequiredtoobtainallnecessaryplanning,buildingandotherregulatoryapprovals.

FormostofourschoolsinChinathereissomeuncertaintyastothelandlordslanduseandpropertyownershiprightsorthereceiptbysuchlandlordsofallnecessaryregulatoryapprovals.FortheBISSPuxicampus,althoughthelandlordhasconfirmedtousthattheformalleaseagreementsandownershipcertificateshavebeengranted,itisunclearthattherespectiveownershaveobtainedalloftherequisiteapprovalsfromthecompetentlandandbuildingadministrativeauthoritytoleasethesefacilitiestoBISS.AlsofortheBISSPuxicampus,thelandlordisintheprocessofobtainingthelanduserightassociatedwithagrasssportsfieldforthesecondaryschool.WithrespecttoTheBritishSchoolofBeijingsShunyifacility,thelandlordhasnotprovideduswithavalidpropertyownershipcertificateforthebuildings.WithrespecttoTheBritishSchoolofBeijingsSanlitunfacility,thelandlordhasnotprovideduswithavalidlanduserightcertificate.Althoughwehavebeenadvisedbythelandlordthatitisintheprocessofobtainingsuchcertificateandotherrequisiteapprovals,theyhavenotyetbeenobtained.Thelandlordhasadvisedthatthefacilitywasbuiltmorethan30yearsagoandtotheknowledgeofourmanagementnoenforcementactionhasbeentakenbytherelevantBeijinggovernmentalauthoritieswithrespecttotheallocationofthelandtothelandlord,theeducationaluseofthelandandtheconstructionapprovalsheldbythelandlord.WithrespecttothekindergartencampusoftheBritishSchoolofGuangzhou(BSG),thelandlordhasnotprovideduswithavalidpropertyownershipcertificate.WithrespecttotheLIScampus,thelandlord,theChengduEducationBureau,hasyettoobtainalanduserightcertificate,approvaltoleasethelandtoLISorrealestatepropertycertificatesforthefacilitiesontheland.WithrespecttothecampusofNordAngliaChineseInternationalSchoolShanghai(NACIS),thelandlordhasnotprovideduswiththeownershipcertificateforpartsofthebuildingsandthelanduserightscertificateforpartsoftheland.

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Wearenotawareofanysanction,claim,orinvestigationcontemplatedbythecompetentauthoritiesbasedontheforegoing.However,wecannotbecertainthatsuchactionswillnotbetaken.IfthetitletoorlegalstatusofthefacilitiesleasedbyTheBritishSchoolofBeijing,BISS,BSG,LISorNACISwerechallengedbythecompetentregulatoryauthoritiesoranythirdparty,ourlandlordsabilitytoperformtheirobligationsundertheirleasescouldbemateriallyadverselyaffectedwhichcoulddisruptouroperationsinChina.Inaddition,uncertaintyastothelandlordstitletothepropertiesmaylimitourabilitytoseekandobtainspecificperformanceofthelandlordsobligationsundertheirleasesintheeventofadispute.

Inaddition,inaccordancewithlocalpracticewedidnotregisterourleasecontractswiththecompetentadministrativedepartmentofthePRCwithin30daysaftertheirexecution.Asaresult,ifourlandlordsenterintoleaseagreementswiththirdpartiesforthepremisesweleaseandthethirdpartiesregistertheleases,thenthethirdpartiesmaybeabletochallengethevalidityofourleases.

InVietnam,ourlandlordhasnotprovideduswithvalidlanduserightcertificatesandbuildingownershipdocumentsinrelationtocertainareasleasedbyBISHoChiMinhCity,andourjointventurepartnersinHanoihavenotprovideduswithvalidlanduserightcertificatesandbuildingownershipdocumentsforourtwoschoolsinHanoi.

Inthefuture,wemayalsooperatemoreschoolswherethereisdefectoruncertaintyinourtitletolandandpropertyusedforschooloperation,andtheabovementionedriskwefacewillincrease.WeoperatethreedefinedbenefitpensionschemesintheUnitedKingdom,allofwhicharecurrentlyindeficit.

WeoperatethreedefinedbenefitsplansintheUnitedKingdom:theLifetimePensionScheme,theWyburnSchoolLimitedPension&LifeAssuranceScheme(1985)andtheNordAngliaJointPensionScheme(collectively,theUKDefinedBenefitPlans).TheLifetimePensionSchemeisclosedtofutureaccrual,meaningnewmemberscannotjointheplanandexistingmemberscannotbuildupadditionalentitlementswithinit.TheothertwoUKDefinedBenefitPlanshavenoactivemembers,meaningthatnoemployeesarecurrentlyaccruingbenefitsinthoseplansinrespectoftheiron-goingemployment.Intheirplace,weofferadefinedcontributionpensionplantoourUKemployees.Whilethisclosuretofutureaccrualwillreduceanyfutureservicedeficit,thepastservicedeficitinrespectofbenefitsalreadyaccruedwillnotbereducedbythischange.

Ourconsolidatedfinancialstatementsincludereferencetoourdefinedbenefitpensionliability.AsofAugust31,2016,theaggregatedeficitfortheUKDefinedBenefitPlanswas$22.4milliononanIFRSaccountingbasis.

ThelastagreedactuarialvaluationoftheLifetimePensionSchemewascarriedoutasofAugust31,2014,resultinginadeficitof24.8milliononthescheme-specificbasis.Shouldawind-uptriggeroccurinrelationtothisplan,thebuy-outdeficitwillbecomedueandpayablebytheemployerswithaliabilitytotheplan,andthedeficitoftheLifetimePensionSchemeonabuy-outbasiswas32.9millionasofAugust31,2014.

ThelastactuarialvaluationofeachoftheWyburnSchoolLimitedPension&LifeAssuranceScheme(1985)andtheNordAngliaJointPensionSchemewascarriedoutasofSeptember1,2013.Theaggregateofthescheme-specificdeficitsoftheseplanswas0.9million,andweestimatethattheaggregateoftheirbuy-outdeficitswasapproximately1.8million.Anymovementasaresultofchangesreportedintheactuarialvaluationswouldnotberegardedassignificant.

Asaresultofthesevaluations,wearerequiredtomakeon-goingcashcontributionsinordertoreducethefundingdeficits.WehaveagreedwiththetrusteestoascheduleofpaymentsuntilSeptember2024fortheLifetimePensionSchemebasedonthe2014valuation.Thisschedulebeganwithapaymentof2.3millioninSeptember2015,increasingeachyearby3.0%perannumuntil2024,whenthepaymentis3.0million.WehavealsoagreedonafundingrecoveryplanwiththetrusteesoftheWyburnSchoolLimitedPension&LifeAssuranceScheme(1985)andtheNordAngliaJointPensionSchemeofaggregatepaymentsof48,300perannumuntilMay2020.

AnumberofoursubsidiarycompaniesalsoparticipateintheLifetimePensionScheme,makingitamulti-employerpensionplan.Duetoanumberoftheseparticipatingemployersceasingtoemployanyactivemembersinthepensionplan,statutorydebtshavebecomeduefromthemtotheplan.

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Thesestatutorydebtsrepresentaproportionoftheplansoverallliabilities,basedontheamountwhichwouldbeneededtosecureannuitiesformembers,calculatedwithreferencetothenumberofmemberseachparticipatingemployerisliablefor.Aspartofthe2011valuation,thesestatutorydebtshavebeenallocatedtothecontinuingemployersintheLifetimePensionScheme.Inaddition,NordAngliaEducationLimitedhasprovidedaguaranteeinrespectoftheobligationsoftheparticipatingsubsidiarycompaniesintheplan.Disputeswithourbusinesspartnersmayadverselyaffectourbusiness.

Insomeofthejurisdictionsinwhichweoperateormayoperateinthefuture,includingAbuDhabi,Dubai,Qatar,ThailandandVietnam,weoperateourschoolsthroughjointventureswithlocalbusinessesorindividualsduetoregulatoryorotherbusinessrequirements.FortheoperationofNordAngliaChineseInternationalSchoolShanghai,werelyoncontractualarrangementswithalocalindividualandhiswholly-ownedcompany.Thesebusinesspartnersmay(i)haveeconomicorbusinessinterestsorgoalsthatareinconsistentwithours,(ii)takeactionscontrarytoourinstructionsorrequestsorcontrarytoourpoliciesorobjectivesor(iii)beunableorunwillingtofulfilltheirobligationsundertheiragreementswithus.Aseriousdisputewithabusinesspartnercouldmateriallyadverselyaffectourbusiness,financialconditionandresultsofoperations.Inaddition,ifthereisanyadversepublicityinrelationtoourbusinesspartners,thereputationandoperationsofourrelevantschoolsmaybeadverselyaffected.TheownershipstructureofourschoolsinThailandmaybechallenged.

ThailawrequiresallschoolpermitholderstobemajorityownedbyThaipersons.AlthoughthearticlesofassociationofourThaisubsidiariesentitleusto100%oftheeconomicbenefitsofourThaischools,wehold49%ofthesharesofeachschoolwhileThaipersonsholdtheremainingshares.ThearticlesofassociationentitletheThaipersonstofixed,deminimuspaymentsuponthedeclarationofdividendsbythesubsidiaries.Weconsolidatethesecompaniesbecauseweareentitledto100%oftheireconomicbenefit.

Wecannotassureyouthat,ifourownershipstructureischallenged,theThairegulatorwillinterprettherelevantlegislationsoastofindthattheownershipstructureofourThaischools,includingourentitlementto100%oftheireconomicbenefit,complieswithThairegulations,orthatThairegulationsgoverningforeignownershipofschoolswillnotchangeinthefuture.IftheownershipstructureofourschoolsinThailandisfoundtobenon-compliantwithThairegulations,wemaybeunabletooperateourschoolsinThailand,whichcouldmateriallyadverselyaffectourbusiness,prospects,resultsofoperationsandfinancialcondition.Wearesubjecttoanti-corruptionlawsinthejurisdictionsinwhichweoperateincluding,anti-corruptionlawsofChinaandtheU.S.ForeignCorruptPracticesAct(FCPA).Ourfailuretocomplywiththeselawscouldresultinpenaltieswhichcouldharmourreputationandmateriallyadverselyaffectourbusiness,resultsofoperationsandfinancialcondition.

WearesubjecttotheFCPA,whichgenerallyprohibitscompaniesandtheirintermediariesfrommakingimproperpaymentstoforeignofficialsforthepurposeofobtaininganybenefit,alongwithvariousotheranti-corruptionlaws.Althoughwehaveimplementedpoliciesandcontinuetocarryouttrainingandintroduceproceduresdesignedtoensurethatwe,ouremployeesandotherintermediariescomplywiththeFCPAandotheranti-corruptionlawstowhichwearesubject,thereisnoassurancethatsuchmeasureswillworkeffectivelyallofthetimeorprotectusagainstliabilityundertheFCPAorotherlawsforactionstakenbyouremployeesandotherintermediarieswithrespecttoourbusinessoranybusinessesthatwemayacquire.IfwefailtocomplywiththeFCPAorotherlawsgoverningtheconductofbusinesswithgovernmententitiesorothercorruptionoffences,orifanyoftheschoolsweacquirearefoundtohavefailedtocomplywiththoselawsbeforeweacquiredthem,wemaybesubjecttocriminalandcivilpenaltiesandotherremedialmeasures,whichcouldadverselyaffectourbusiness,financialcondition,resultsofoperationsandliquidity.AnyinvestigationofanypotentialviolationsoftheFCPAorotheranti-corruptionlawsbyU.S.orforeignauthoritiescouldalsoadverselyaffectourbusiness,financialcondition,resultsofoperationsandliquidity,regardlessoftheoutcomeoftheinvestigation.ViolationsoftheFCPAorotheranti-corruptionlawscouldalsobreachthetermsofourfinancingagreements.SeeRisksRelatedtoourDebtOurindebtednessmayrestrictourabilitytopursueourbusinessstrategies.TheauditreportincludedinthisannualreportispreparedbyanauditorwhoisnotinspectedbythePublicCompanyAccountingOversightBoardand,asaresult,youaredeprivedofthebenefitsofsuchinspection.

AuditorsofcompaniesthatareregisteredwiththeSECandtradedpubliclyintheUnitedStates,includingourindependentregisteredpublicaccountingfirm,mustberegisteredwiththeUSPublicCompanyAccountingOversightBoard(UnitedStates)(thePCAOB)andarerequiredbythelawsoftheUnitedStatestoundergoregularinspectionsbythePCAOBtoassesstheircompliancewiththelawsoftheUnitedStatesandprofessionalstandards.BecausewehavesubstantialoperationswithinthePRCandthePCAOBiscurrentlyunabletoconductinspectionsoftheworkofourauditorsasitrelatestothoseoperationswithouttheapprovaloftheChineseauthorities,ourauditorsworkrelatedtoouroperationsinChinaisnotcurrentlyinspectedbythePCAOB.

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ThislackofthePCAOBinspectionsofauditworkperformedinChinapreventsthePCAOBfromregularlyevaluatingauditworkofanyauditorsthatwasperformedinChinaincludingthatperformedbyourauditors.Asaresult,investorswillbedeprivedofthefullbenefitsofthePCAOBinspections.

TheinabilityofthePCAOBtoconductinspectionsofauditworkperformedinChinamakesitmoredifficulttoevaluatetheeffectivenessofourauditorsauditproceduresascomparedtoauditorsinotherjurisdictionsthataresubjecttothePCAOBinspectionsonalloftheirwork.InMay2013,thePCAOBannouncedthatithadenteredintoaMemorandumofUnderstandingonEnforcementCooperationwiththeChinaSecuritiesRegulatoryCommission(theCSRC)andthePRCMinistryofFinance,whichestablishesacooperativeframeworkbetweenthepartiesfortheproductionandexchangeofauditdocumentsrelevanttoinvestigationsundertakenbythePCAOB,theCSRCorthePRCMinistryofFinanceintheUnitedStatesandthePRC,respectively.ThePCAOBiscontinuingdiscussionswiththeCSRCandthePRCMinistryofFinancetopermitjointinspectionsinthePRCofauditfirmsthatareregisteredwiththePCAOBandauditPRCcompaniesthattradeontheU.S.exchanges.IfadditionalremedialmeasuresareimposedontheBigFourPRC-basedaccountingfirms,includinganaffiliateofourindependentregisteredpublicaccountingfirm,inconnectionwithadministrativeproceedingsbroughtbytheSECallegingthefirmsfailuretomeetspecificcriteriasetbytheSEC,ourfinancialstatementscouldfailtocomplywiththerequirementsoftheExchangeAct.

InDecember2012,theSECinstitutedadministrativeproceedingsagainsttheBigFourPRC-basedaccountingfirms,includinganaffiliateofourindependentregisteredpublicaccountingfirm,allegingthatthesefirmshadviolatedU.S.securitieslawsandtheSECsrulesandregulationsthereunderbyfailingtoprovidetotheSECthefirmsworkpapersrelatedtotheirauditsofcertainPRC-basedcompaniesthatarepubliclytradedintheUnitedStates.OnJanuary22,2014,aninitialadministrativelawdecisionwasissued,sanctioningtheseaccountingfirmsandsuspendingthemfrompracticingbeforetheSECforaperiodofsixmonths.ThesanctionwillnottakeeffectuntilthereisanorderofeffectivenessissuedbytheSEC.AnyCommissionendorsementorotherdeterminationcouldbeappealedbytheaccountingfirmsintheU.S.courtsystem.OnFebruary12,2014,theBigFourPRC-basedaccountingfirmsinitiatedareviewoftheinitialadministrativelawdecisiontotheSEC.WewerenotandarenotinvolvedintheproceedingsbroughtbytheSECagainsttheseaccountingfirms.OnFebruary6,2015,theBigFourPRC-basedaccountingfirmseachagreedtoacensureandtopayafinetotheSECtosettlethedisputeandavoidsuspensionoftheirabilitytopracticebeforetheSECandauditUS-listedcompanies.ThesettlementrequiredtheBigFourPRC-basedaccountingfirmstofollowtheSECsspecifiedproceduresandtoseektoprovidetheSECwithaccesstotheBigFourPRC-basedaccountingfirmsauditdocumentsviatheCSRCinresponsetofuturedocumentrequestsbytheSECmadethroughtheCSRC.IfpotentialdocumentproductionsdepartfromthecriteriapursuanttotheSECsspecifiedprocedures,theSECretainsauthoritytoimposeavarietyofadditionalremedialmeasuresontheBigFourPRC-basedaccountingfirms,dependingonthenatureofthedeparture.

IftheBigFourPRC-basedaccountingfirmsaresubjecttoadditionalremedialmeasures,becauseourauditorsPRC-basedaffiliatecarriesoutauditproceduresonourPRCoperations,ourabilitytofileourfinancialstatementsincompliancewithSECrequirementscouldbeimpacted.

RisksRelatedtoOwnershipofOurOrdinarySharesThetradingpriceofourordinarysharesmaybevolatile,whichcouldresultinsubstantiallossestoinvestors.

Thetradingpriceofourordinarysharescouldfluctuatewidely.Factorsthatcouldaffectthetradingpriceofourordinarysharesincludebroadmarketandindustrytrendsoverwhichwehavenocontrolandfactorsspecifictoouroperations,includingthefollowing:

actualoranticipatedfluctuationsinourquarterlyresultsofoperations;

variationsinourrevenues,earningsandcashflow;

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announcementsofnewinvestments,acquisitions,strategicpartnershipsorjointventures;

announcementsofexpansionsbyusorourcompetitors;

changesinfinancialestimatesbysecuritiesresearchanalysts;

departuresofourexecutiveofficersandkeypersonnel;

releaseorexpiryoflockuporothertransferrestrictionsonouroutstandingequ