Climate Change Data

Environmental Metrics

Climate Goals & Targets

Environmental Challenges

• Rapid growth challenges (attracting and retaining students and staff, integrating acquired businesses, obtaining accreditations).
• Profitability challenges (some schools operating at a loss, managing costs and expenses).
• PRC regulatory changes (Amended Law on Private Education, uncertainties in interpretation and implementation, potential impact on profitability and dividend payments).
• Corporate structure uncertainties (reliance on contractual arrangements, potential conflicts of interest with related parties, scrutiny by PRC tax authorities).
• Kindergarten operation and expansion limitations (listing status, PRC laws and regulations).
• Learning center licensing issues (lack of required permits and licenses).
• Acquisition-related risks (financing, integration, managing increased leverage, unforeseen liabilities).
• Geographic concentration risk (significant portion of schools located in Guangdong province).
• Student enrollment and retention challenges.
• Risks of accidents and injuries at schools.
• Tuition pricing challenges (regulatory restrictions, competition).
• Renewal of school operation agreements and maintaining favorable fee rates.
• Curriculum and textbook compliance challenges.
• Dependence on Country Garden's residential communities.
• Competition in the private education market.
• Challenges in developing and launching new education services.
• Risks related to international operations.
• Reputation risks.
• Seasonal fluctuations in business.
• Risks related to loss of key personnel.
• Intellectual property protection challenges.
• Brand management challenges (multiple brands).
• Infringement claims.
• Data security risks.
• Data management system failures or interruptions.
• Limited insurance coverage.
• Risks related to natural disasters, health epidemics, or terrorist attacks.
• Share-based compensation expenses.
• Internal control challenges.
• Risks related to doing business in China (economic, political, and social conditions, government policies, legal system uncertainties, tax implications, foreign exchange restrictions, dividend restrictions, M&A regulations).
• Risks related to ordinary shares and ADSs (price volatility, class action lawsuits, dual-class share structure, analyst coverage, dividend policy, debt servicing, PFIC classification, anti-takeover provisions, Cayman Islands incorporation, foreign private issuer status, NYSE controlled company status, limitations on transfer of ADSs).

Mitigation Strategies

• Implementing measures to address growth challenges.
• Implementing cost control measures and improving operating efficiency.
• Monitoring and adapting to PRC regulatory changes.
• Maintaining contractual arrangements and addressing potential conflicts of interest.
• Addressing learning center licensing issues.
• Implementing integration strategies for acquired businesses.
• Diversifying geographic presence.
• Improving student retention rates.
• Implementing safety measures.
• Adjusting tuition pricing strategies.
• Renegotiating contract terms with Country Garden.
• Ensuring curriculum and textbook compliance.
• Developing schools independent of Country Garden.
• Differentiating services from competitors.
• Developing and launching new education services.
• Adapting business models to local markets.
• Protecting reputation.
• Managing seasonal fluctuations.
• Retaining key personnel.
• Protecting intellectual property.
• Implementing brand management strategies.
• Conducting due diligence to mitigate infringement risks.
• Strengthening data security measures.
• Improving data management system.
• Increasing insurance coverage.
• Developing contingency plans for natural disasters, epidemics, and terrorist attacks.
• Managing share-based compensation.
• Strengthening internal controls.
• Addressing risks related to doing business in China (legal compliance, risk management).

Supply Chain Management

Climate-Related Risks & Opportunities

Environmental Metrics

Social Achievements

• Approximately 93.6% of the 2020 graduating class enrolled in our Diploma Program, Advance Placement or A-level curricula in our domestic K-12 schools that applied for overseas universities were admitted into global top 50 institutions

Climate Goals & Targets

Environmental Challenges

• PRC laws and regulations imposing significant limitations on our ability to engage in the private for-profit education business
• Uncertainties in our contractual arrangements resulting from changes in and interpretations of PRC laws and regulations
• Limitations on our ability to maintain the operation of our kindergartens and to expand our kindergarten network
• Our learning centers being able to secure required educational permits and business licenses
• Acquisition related risks as a result of our acquisition strategy
• Our ability to manage our business expansion and integrate businesses we acquire
• Unknown or contingent liabilities related to the acquired businesses
• Our ability to secure additional capital for our future expansion
• Our ability to ramp up existing schools and successfully launch new schools
• Concentration of our business in Guangdong province, China
• Our ability to enroll and retain a sufficient number of students
• Accidents, injuries or other harm that may occur at our schools, learning centers or the events we organize
• Our ability to charge tuition or other fees at sufficient levels
• Competition in the private education market
• Failure to adequately protect our intellectual property
• Unauthorized disclosure of personal data
• Failures or interruptions in our centralized data management system
• Failure to maintain the proper functioning of or improve our technology infrastructure
• Limited insurance coverage
• Risks related to natural disasters, health epidemics or terrorist attacks in China
• Deterioration of the relation between China and the United States

Mitigation Strategies

• Implemented an ERP system to centralize the collection and analysis of budgeting, procurement and financial information and data
• Implemented measures to address significant deficiency and other control deficiencies in internal control over financial reporting
• Developed domestic travel study programs in response to the challenges posed by the COVID-19 pandemic
• Consolidated offline teaching sites to accommodate certain boarding students in the UK, while the majority of the rest quickly shifted to online courses
• Permanently ceased the operation of the four language training institutions in the United States as a resource conserving measure in response to the challenges posed by the COVID-19 pandemic
• Reduced cost structure, upgraded IT and management systems, realigned sales and marketing strategies and improved education outcome

Supply Chain Management

Climate-Related Risks & Opportunities

Environmental Metrics

Climate Goals & Targets

Environmental Challenges

• Compliance with the Implementation Rules materially and adversely affected the company's business, financial condition, results of operations, and prospects.
• Limitations on the ability to maintain the operation of kindergartens and expand the kindergarten network.
• Acquisition-related risks.
• Inability to meet financial obligations due to net current liabilities.
• Challenges in ramping up existing schools and launching new schools.
• Difficulty engaging with Affected Entities to provide education services.
• Challenges in enrolling and retaining sufficient students.
• Changes in international regulations, travel restrictions, and sanctions.
• Risks related to accidents, injuries, or harm at schools or events.
• Challenges in charging sufficient tuition or other fees.

Mitigation Strategies

• Engaging with government authorities and external advisors to ensure compliance with regulations.
• Implementing measures to address material weaknesses and significant deficiencies in internal control over financial reporting.
• Exploring possibilities for future cooperation with Affected Entities.
• Intending to enroll students, recruit teachers, increase utilization rates, and invest in overseas and complementary businesses.
• Implementing a centralized data management system.
• Implementing policies and procedures to comply with laws and regulations in various jurisdictions.
• Implementing a centralized teacher recruitment program.
• Providing ongoing professional development for teachers and principals.

Supply Chain Management

Climate-Related Risks & Opportunities