4Q16 Earnings Release

Transcription

1 Earnings Release Ser Educacional records adjusted EBITDA of R$68.6 million in Net income totals R$354.1 million in 2016, with an adjusted margin of 31.5% Conference Call March 17, 2017 Portuguese 10:00 am (Brasília time) 9:00 am (New York time) Phone: +55 (11) Code: Ser Educacional Replay: +55 (11) English 11:30 am (Brasília time) 10:30 am (New York time) Phone: +1 (646) or +55 (11) Code: Ser Educacional Replay: +55 (11) Code: Ser Educacional Contacts: Jânyo Diniz CEO João Aguiar - CFO Rodrigo Alves - IRO Geraldo Soares - IR Manager Phone: ri@sereducacional.com Website: Media Relations Sílvia Fragoso (+55 81) silvia.fragoso@sereducacional.com Recife, March 17, 2017 Ser Educacional S.A. (BM&FBOVESPA SEER3, Bloomberg SEER3:BZ and Reuters SEER3.SA) announces its results for the fourth quarter of 2016 (). The information is presented in accordance with international financial reporting standards (IFRS) and consolidated in Brazilian reais (R$). Comparisons refer to the fourth quarter of 2015, unless otherwise indicated. 4Q15 and 2015 results herein are presented excluding the effects from the adjustment to present value (AVP) of FIES accounts receivable, as published on March 18, The table with the comparisons based exclusively on the financial statements published is available on page 17. Highlights Net revenue totaled R$277.4 million in, 11.6% up on 4Q15, due to the 5.1% increase in the student base, the pass through of inflation to prices, and the higher average ticket of the new courses approved during the period, especially in the health, engineering and law segments, as well as the improved enrollment mix in units located in areas with greater brand recognition. Adjusted EBITDA came to R$68.6 million in, 28.5% up on 4Q15. The adjusted EBITDA margin stood at 24.7%, versus 21.5% in the same period last year, chiefly due to the Company s organic growth and operating efficiency gains as a result of the projects to increase efficiency and synergies from the acquisitions of UNG and UNAMA. Net income amounted to R$32.2 million in, 99.1% more than the R$16.1 million recorded in 4Q15, fueled by the Company's better operating performance in 2016 and the improved financial result encouraged by the increase in the average cash position. Operating cash generation came to R$82.6 million, versus a negative cash generation of R$7.5 million in 4Q15. In 2016, cash generation totaled R$287.8 million, 273.4% more than the R$77.1 million reported in 2015, fueled by the combined effect of recurring cash flow from paying students and the normalization of the FIES payment flow by the federal government. As of March 16, 2017, the Company had enrolled 38,839 new undergraduate students (on-campus and distance learning) as part of its student intake, an increase of 7.8% over the 36,024 students on March 16, Financial Highlights 4Q15 (R$ '000) Net Revenue 277, , % 1,125,380 1,032, % Gross Profit 138, , % 613, , % Gross Margin 50.1% 47.2% 2.9 p.p. 54.6% 53.8% 0.8 p.p. Adjusted EBITDA 68,612 53, % 354, , % Adjusted EBITDA Margin 24.7% 21.5% 3.2 p.p. 31.5% 28.8% 2.6 p.p. Net Income 32,155 16, % 230, , % Net Margin 11.6% 6.5% 5.1 p.p. 20.5% 16.8% 3.7 p.p.

2 A total of 97 new courses were approved in, totaling 1,159 courses on December 31, The highlight in terms of new courses was the state of Bahia, where 14 new courses were approved, including: Nursing, Nutrition, Physiotherapy, Pharmacy, Psychology and Civil Engineering. Through the five units in the state of Bahia, Ser Educacional already has a portfolio of 114 courses, 29 of which approved within the last 12 months. Since the publication of the earnings release, the Company had ten new units accredited by the Ministry of Education (MEC). After the approval of NABUCO in Maceió/AL, approved in December 2016 and other nine units approved in 2017: UNAMA in Boa Vista/RR, Porto Velho/RO, Rio Branco/AC, Marabá/PA, NASSAU in Fortaleza/CE, Garanhuns/PE, Maracanaú/CE and Ananindeua/PA and UNIVERITAS in Anápolis/GO. The units will begin operating with five courses each. As a result, the Company had 15 units accredited of the 45 accreditations envisaged in its long-term plan. In January, the Company announced the end of its share repurchase program began in January 2016 and the launching of a new share repurchase program, valid until January 9, 2018, totaling up to 2,950,000 shares. On March 13, the Board of Directors approved the distribution of R$34.2 million in dividends, corresponding to per share, to be paid on May 5, Message from Management 2016 was a year of recovering financial and operational results for Ser Educacional despite the adverse economic environment, mainly as of 2015, with a sharp reduction in the federal government's student financing program (FIES) and the economic deterioration, combined with a significant slowdown in economic activity throughout the country, as well as high inflation and unemployment. This recovery was mainly influenced by the projects to improve the Company's operating efficiency, such as the Ser Retention System (SRS), the new tuition negotiation scale, the new curriculum matrix, the review of the organizational structure and the market intelligence cell for enrollment (enrollment BI) and renegotiation of expenses and costs with suppliers and landlords. All these factors were essential to help the Company consistently improve its operating efficiency indicators. Another major factor contributing to the recovery in our results was the successful consolidation of the recent acquisitions, enabling synergy gains and revenue expansion: Universidade da Amazônia (UNAMA), consolidated as of October 2014, Universidade de Guarulhos (UNG), consolidated in February 2015 and, to a lesser extent, Faculdade Talles de Mileto (FAMIL). The Company's management moved on with Ser Educacional s organic growth plan, bringing important development for the long-term growth of the student base. In 2016, approvals totaled 253 new courses, for a total of 1,159 courses on December 31, Four new on-campus education units were also approved in the cities of Cabo de Santo Agostinho/PE, João Pessoa/PB, Jaboatão dos Guararapes/PE, and Maceió/AL. In addition, new well-located units were fully restructured and gained good quality infrastructure, such as the new buildings in Aracaju/SE and Salvador/BA, expansions in Caruaru/PE, Fortaleza/CE and the new Medicine Block in Recife/PE. The Company moved on with its distance learning growth plan and finalized the creation of its service structure, with a fully revamped education platform, featuring the most modern functionalities in the sector, including adaptive learning methodologies and inverted classroom in a teaching environment focused on encouraging interaction and socialization between students and teachers. We also created new content and a complete infrastructure with 4 studios, 14 individual booths for web conferences, dressing rooms and 8 editing stations, in addition to a modern structure to provide services and support to students. The conclusion of these activities is crucial for the plan to expand the portfolio from the 15 distance learning centers in operation to 400 centers. The requests for approval of these new centers were filed in 4Q15 and are currently pending authorization by the Ministry of Education (MEC). The growth of the base is only sustainable with quality education, satisfied students and good academic level, allowing students to enter the labor market and improve their income. In order to obtain these results, the academic goals of Ser Educacional focus on employability and good performance in the IGC (General Course Index) and CPC (Preliminary Course Concept) indicators. One hundred percent of the Company's institutions had satisfactory performance in the IGC and CPC indicators (IGC equal to or higher than 3) in 2015, indicating their good quality, with a positive evolution year after year. In relation to 2

3 the CPC, 92% of our courses evaluated in 2015 were rated higher than 3, a significant increase in positive grades over the 84% recorded in 2012, when the same group of courses was compared (humanity courses). In addition to MEC's indicators, the Company's Maurício de Nassau unit in Maceió was recognized as a University Center, which in addition to being a recognition for the institution's quality, gives us autonomy for opening new units and courses in the city. In 2016, UNAMA was recognized by Guia do Estudante (Student's Guide), of Editora Abril, one of the most renowned publications in the sector, as the Best Private University in Northern Brazil. Social responsibility practices are embedded in the values and the day-to-day activities of Ser Educacional. The Company encourages its students, teachers and staff to engage in activities that benefit society and the population where it operates. These activities are subdivided into four main pillars: culture, sports, communities, and social and environmental initiatives. They foster students feeling of belonging to regional communities and the institution which promotes them, creating a connection between students, society, the government and the institution, which is extremely beneficial for all involved. The Company promotes these activities through its institutions and with the coordination of Instituto Ser Educacional, responsible for more than 10,000 social assistance calls in the four areas mentioned above. In recognition of these efforts, UNINASSAU was ranked first among the most remembered private institutions by Pernambuco people for the seventh consecutive time. The Recall de Marcas Award is the result of a survey conducted by Jornal do Commercio in partnership with Instituto Harrop de Pesquisa. The Group also received certifications from the Brazilian Association of Higher Education Supporters (ABMES) attesting to the institution's commitment to social responsibility and community development, due to its work to assist in the development of society through its brands. Despite all the changes in the regulatory framework and economic uncertainties, the Company once again managed to successfully implement its expansion plan and conducted a number of relevant projects to improve operating efficiency, helping Ser Educational become more competitive and ready to face the persisting challenging scenario. OPERATING PERFORMANCE Intake As of March 16, 2017, the Company had already enrolled 38,839 undergraduate students, which represents an increase of 7.8% when compared to enrollment on March 16, Of this total, on-campus undergraduate increased 4.0%, while the EAD segment, 71.5%. Status of Undergraduate Student Enrollment 03/16/ /16/2016 % Undergraduate Enrollments 38,839 36, % On-campus 35,390 34, % Distance Learning 3,449 2, % Of the total number of students enrolled so far, 6,600 came with student loans, 1,000 of whom financed through PraValer, 400 through Educred and 4,600 through FIES. On the same date in , 300 students were financed by Educred and 300 students through Pravaler. A total of 5,800 new FIES contracts have been finalized to date (4,600 freshmen and 1,100 upperclassmen), filling around 48% of the 12,000 places allocated to the Company by the federal government in , compared to a gain of 46% of the 19,100 places allocated in , totaling 8,700 students, of which 7,200 freshmen and 1,500 upperclassmen. 3

4 Dropout Rate Dropout fell 3.4 p.p. in 2H16, from 13.7% in 2H15 to 10.3%, mainly due to the non-recurring dropout of approximately 3,600 students in 2H15 who did not have access to FIES and had to abandon their courses due to inability to pay. These students had expected to gain access to the financing program, but could not due to the rule changes introduced in If we adjust the 2H15 dropout rate for this non-recurring effect, it comes to 11.1%, i.e. 0.8 p.p. higher than the 2H16 figure. This improvement was in turn mainly influenced by the implementation of the Ser Retention System (SRS) since mid-2015, a dropout prevention program based on an analysis of student behavior using more than 600 variables and the new negotiation scale, which allows for more proactive financial relations with students. It also increases collection capacity in regard to students in default and results in more fruitful negotiations with students who need to resolve their pending financial issues during the re-enrollment process. Student Growth Trends Number of Students Undergraduate Graduate Vocational Total On Campus Distance Learning On Campus Distance Learning Jun16 Base 136,400 5,006 9, ,434 Enrollments* 16,026 3,637 2, ,528 Leavers (6,251) (54) (1,545) - (374) (8,224) Dropouts (15,083) (2,487) (1,177) (93) (36) (18,876) Dec16 Base 131,092 6,102 9, ,862 % Dec16 Base / Jun16 Base -3.9% 21.9% -3.7% 103.8% -53.1% -3.0% % Dec16 Base / Dec15 Base 5.7% 97.5% -8.5% 248.5% -88.0% 5.1% Total Total In 2H16, 16,000 new undergraduate students were enrolled, 1.0% more than the 15,900 recorded in the same period in A total of 4,200 new FIES contracts had been finalized by December 31 (2,900 freshmen and 1,300 upperclassmen), filling around 74.0% of the 5,700 places allocated to the Company by the federal government. The distance learning segment was the undoubted highlight in 2H16, with intake of 3,600 students, 81.2% more than the 2,000 recorded in 2H15. This growth was chiefly influenced by the Company s commercial efforts to enter this segment, with the stepping up of marketing and product positioning initiatives, resulting in an increasing number of enrollments, especially in the nine UNINASSAU centers, located in the Northeast region. The UNG centers, located in the Southeast and approved in November 2015, are still in the initial phase of operations, but already accounted for approximately 19% of the total distance-learning intake in 2H16, demonstrating their great potential for penetration in this segment in their region, even though activities are still in the opening months. The 2H16 re-enrollment ratio reached 92.8% of the renewable student base, accompanied by an improvement in the dropout rate, thanks to the initiatives presented in the Dropout Rate section. As a result, the on-campus undergraduate student base totaled 131,100 students, 5.7% more than the 124,000 reported in 2H15. The total student base grew by 5.1% over the 140,700 students reported in the fourth quarter of Dec14 Base Enrollments Acquisition Leavers Dropouts Dec15 Base Enrollments Leavers Dropouts Dec16 Base 4

5 Average Net Ticket Average Ticket (R$) 4Q15 Undergraduate Students (On Campus) % % The average ticket in was R$699.02, 10.6% up on 4Q15, mainly due to the pass through of inflation and the improvement in the course mix, exemplified by the gradually increasing share of engineering and health courses. Another contributing factor to the improved ticket was the increased number of enrollments in cities where the Company maintains more recognized brands. Student Financing STUDENT LOANS Dec/12 Dec/13 Dec/14 Dec/15 Dec/16 Students 48,670 70, , , ,092 FIES Students 15,916 31,432 48,048 56,089 58,840 % of FIES Students 32.7% 44.7% 47.5% 45.2% 44.9% EDUCRED Students 754 1,922 % of EDUCRED Students 0.6% 1.5% PRAVALER Students 954 1,794 % of PRAVALER Students 0.8% 1.4% PRAVALER Students 57,797 62,556 % of PRAVALER Students 46.6% 47.7% On December 31, 2016, students adhering to the FIES program accounted for 44.9% of the undergraduate student base, a 0.3 p.p. reduction over the 45.2% on December 31, As of April 2015, the Company launched two new student financing plans. The first was PraValer, one of Brazil s largest private student financing programs. The second option was the re-launch of Educred, the Company s own loan program that finances approximately 50% of tuition with interest. At the close of 2H16, 300 of the enrolled students were financed by PraValer and 200 by Educred. Organic Growth In, 97 new courses were authorized, giving a total of 1,159, and the number of places in certain courses also expanded. As a result, in December 2016, the Company had more than 378,000 places per year, 111,400 of which in the distance learning segment. Ser Educacional continues to develop its organic growth strategy based on the accreditation of new units and the authorization of new courses. In the fourth quarter, the highlight in terms of new courses was the state of Bahia, where 14 new courses were approved, including: Nursing, Nutrition, Physiotherapy, Pharmacy, Psychology and Civil Engineering. Through the five units in the state of Bahia, Ser Educacional already has a portfolio of 114 courses, 29 of which approved within the last 12 months. Number of Authorized Courses 1,

6 FINANCIAL PERFORMANCE Gross Revenue Gross Revenue (R$ '000) 4Q15 Gross Operating Revenue 355, , % 349, % 1,426,045 1,289, % Undergraduate Monthly Tuition 340, , % 332, % 1,364,367 1,198, % Graduate Monthly Tuition 5,529 7, % 6, % 23,462 28, % Vocational Courses Revenues 550 4, % % 5,838 39, % Distance Learning Revenues 5,528 2, % 5, % 18,316 9, % Others 3,554 3, % 3, % 14,062 13, % Deductions from Gross Revenue (78,109) (64,547) 21.0% (76,237) 2.5% (300,665) (256,838) 17.1% Discounts and Scholarships (67,974) (55,234) 23.1% (66,791) 1.8% (258,190) (213,340) 21.0% Taxes (10,135) (9,313) 8.8% (9,446) 7.3% (42,475) (43,498) -2.4% % Discounts and Scholarships/ Net Oper. Rev. 19.1% 17.6% 1.5 p.p. 19.1% 0.0 p.p. 18.1% 16.5% 1.6 p.p. Net Operating Revenue 277, , % 273, % 1,125,380 1,032, % In, gross revenue totaled R$355.5 million, 13.6% higher than in 4Q15, thanks to the combined effect of organic growth and the addition of the recently acquired UNG and UNAMA, which increased the total undergraduate student base, as well as the upturn in the average ticket, the pass through of inflation and the improved course mix. For the same reasons, gross revenue in the undergraduate segment increased by 15.1% year-on-year, reaching R$340.3 million in and accounting for 95.7% of the total. The graduate segment recorded revenue of R$5.5 million in, or 1.6% of the total, 23.7% down on 4Q15, due to the reduction in the student base. Revenue from Vocational Training/Pronatec totaled R$0.6 million in, accounting for 0.2% of the total, 86.6% down on 4Q15, reflecting the graduation of Pronatec students in 2H16, which in turn were not replaced due to the cuts to the program by the federal government. Distance learning, a segment in which the Company began operating in 2014, already accounted for 1.6% of total revenue, or R$5.5 million, an increase by 114.5% over 4Q15, reflecting the 108.0% year-on-year upturn in the segment s student base, in undergraduate and graduate courses. Deductions from gross revenue increased by 21.0% in, due to the increase in sales discounts and scholarships, in turn mainly due to (i) the higher number of PROUNI students as a result of the allocation of this type of scholarship to UNG and UNAMA in 2015, given that they were originally nonprofit institutions and therefore had little exposure to PROUNI; (ii) a R$5.7 million increase as a result of the additional 2% deduction on freed student charges, transferred directly to the financial agents, pursuant to FIES Executive Decree 741 (approved by the congress in December); and (iii) a higher volume of discounts and scholarships to attract regular students. On December 31, 2016, discounts, scholarships and rebates contained R$30.1 million in FGEDUC discounts, versus R$25.6 million on December 31, At the close of, 92.8% of FIES students were with FGEDUC and 7.2% had guarantors. Net revenue increased 11.6%, from R$248.5 million in 4Q15 to R$277.4 million in. Cost of Services Rendered Breakdown of Cost of Services Rendered¹ - Accounting (R$ '000) 4Q15 Cash Cost of Services Rendered (129,129) (122,629) 5.3% (109,517) 17.9% (474,249) (443,251) 7.0% Payroll and Charges (98,162) (94,681) 3.7% (82,814) 18.5% (360,429) (343,197) 5.0% Rent (17,044) (15,503) 9.9% (15,493) 10.0% (64,578) (59,893) 7.8% Concessionaires ( Electricity, Water and Telephone) (8,349) (9,208) -9.3% (6,800) 22.8% (30,126) (28,849) 4.4% Third-Party Services and Others (5,574) (3,237) 72.2% (4,410) 26.4% (19,116) (11,312) 69.0% The cash cost of services rendered (excluding depreciation and amortization) totaled R$129.1 million in, 5.3% more than in 4Q15. The main components of this line all recorded an upturn in for the following reasons: a) Payroll and charges increased by 3.7% in over 4Q15. This increase lower than the 8% average pay rise chiefly reflects the operating synergy gains with the consolidation of UNG and UNAMA, as in 4Q15 and there were non-recurring effects (totaling R$5.7 million and R$7.9 million, respectively), due to operating synergy gains and 6

7 the reduction in the number of academic staff (from 4,800 teachers in December 2015 to 4,400 in December 2016, down by 7.7%). This net efficiency gain effect can be observed by the 2.9% increase in this cost line in the managerial table below, which shows this result on a recurring basis. b) The rental line grew by 9.9%, from R$15.5 million in 4Q15 to R$17.0 million in 4Q15, due to the pass through of inflation to agreements and rent of the new units, particularly influenced by the beginning of the leasing agreement in Rio de Janeiro, which is a larger property. This effect was offset by the return of properties in 2015 and the suspension of leasing agreements for 12 months in properties belonging to the Company in which the controlling shareholder retains a majority stake, as announced in the 1Q16 Earnings Release. c) The concessionaires line fell 9.3%, due to the tariff reduction, return of properties last year, as well as the electricity cost reduction initiatives announced in December 2015, and lower telecommunications costs mainly at UNAMA. These effects were partially offset by the increased number of operational units (Petrolina, Jaboatão dos Guararapes, Feira de Santana and Cabo de Santo Agostinho) and the inauguration of new buildings to expand operations, as in Aracaju and Salvador. d) Third-party services increased by 72.2% from R$3.2 million in 4Q15, to R$5.6 million, due to the contracting of a larger number of service providers to implement improvements to the Company s processes and activities, including distance learning, the Ser Retention System (SRS), student service and internal procedures, among others. The table below shows managerial operating costs, adjusted for non-recurring effects from the synergy gains with the consolidation of UNG and UNAMA. Breakdown of Cost of Services Rendered¹ - Managerial (R$ '000) 4Q15 Cash Cost of Services Rendered (123,431) (114,196) 8.1% (109,517) 12.7% (463,973) (429,989) 7.9% Payroll and Charges (92,464) (86,746) 6.6% (82,814) 11.7% (351,770) (330,758) 6.4% Rent (17,044) (15,004) 13.6% (15,493) 10.0% (62,960) (59,070) 6.6% Concessionaires ( Electricity, Water and Telephone) (8,349) (9,208) -9.3% (6,800) 22.8% (30,126) (28,849) 4.4% Third-Party Services and Others (5,574) (3,237) 72.2% (4,410) 26.4% (19,116) (11,312) 69.0% Gross Profit Gross Profit - 4Q15 Accounting (R$ '000) Net Operating Revenue 277, , % 273, % 1,125,380 1,032, % Cost of Services Rendered (138,533) (131,201) 5.6% (118,966) 16.4% (511,386) (477,456) 7.1% Gross Profit 138, , % 154, % 613, , % Gross Margin 50.1% 47.2% 2.9 p.p. 56.5% -6.4 p.p. 54.6% 53.8% 0.8 p.p. (-) Depreciation 9,404 8, % 9, % 37,137 34, % Cash Gross Profit 148, , % 163, % 651, , % Cash Gross Margin 53.5% 50.7% 2.8 p.p. 59.9% -6.5 p.p. 57.9% 57.1% 0.8 p.p. Cash gross profit increased by 17.8%, from R$125.9 million in 4Q15 to R$148.3 million in. The cash gross margin stood at 53.5% in, versus 50.7% in 4Q15. The upturn in the gross margin was primarily due to the resumption of the Company s operating efficiency, which had been jeopardized in 2015 by a non-recurring loss of students as a result of the abrupt changes in the FIES rules. In that year, the Company was also involved in the integration of its recent acquisitions, whose operating margins were lower, generating a reduction in the consolidated margin. The table below shows managerial gross profit, adjusted for non-recurring effects from the synergy gains with the consolidation of UNG and UNAMA. 7

8 Gross Profit - 4Q15 Managerial (R$ '000) Net Operating Revenue 277, , % 273, % 1,125,380 1,032, % Cost of Services Rendered (132,835) (122,768) 8.2% (118,966) 11.7% (501,110) (464,194) 8.0% Adjusted Gross Profit 144, , % 154, % 624, , % Gross Margin 52.1% 50.6% 1.5 p.p. 56.5% -4.3 p.p. 55.5% 55.0% 0.4 p.p. (-) Depreciation 9,404 8, % 9, % 37,137 34, % Adjusted Cash Gross Profit 153, , % 163, % 661, , % Cash Gross Margin 55.5% 54.0% 1.5 p.p. 59.9% -4.4 p.p. 58.8% 58.4% 0.4 p.p. Operating Expenses (Selling, General and Administrative) Operating Expenses - Accounting 4Q15 (R$ '000) General and Administrative Expenses (89,109) (81,162) 9.8% (87,350) 2.0% (322,072) (313,726) 2.7% Payroll and Charges (29,297) (27,647) 6.0% (27,025) 8.4% (109,056) (124,899) -12.7% Third-Party Services (6,747) (6,423) 5.0% (5,842) 15.5% (26,720) (28,625) -6.7% Advertising (18,739) (12,813) 46.2% (18,394) 1.9% (66,191) (51,249) 29.2% Materials (4,173) (3,878) 7.6% (3,929) 6.2% (15,295) (14,385) 6.3% PDA (14,435) (18,155) -20.5% (14,849) -2.8% (48,732) (47,659) 2.3% Others (9,439) (6,551) 44.1% (11,489) -17.8% (32,938) (25,014) 31.7% Depreciation and Amortization (6,279) (5,695) 10.3% (5,822) 7.8% (23,140) (21,895) 5.7% Operating Income 50,445 32, % 67, % 296, , % General and Administrative Expenses (Ex-Depreciation and Amortization) (82,830) (75,467) 9.8% (81,528) 1.6% (298,932) (291,831) 2.4% Fourth-quarter general and administrative expenses increased by 9.8%, from R$81.2 million in 4Q15, to R$89.1 million, mainly due to: a) Personnel expenses grew 6.0% over 4Q15, due to the approximately 8% average wage increase of the administrative staff, generating a significant synergy gain as the student base expanded by approximately 6% between the periods. As of 4Q15, the pace of synergy gains in this line slowed down given that the most important initiatives to consolidate UNG and UNAMA took place in 2H15. We could notice a nominal reduction in G&A expenses in 2016, due to the transfer of UNG's and UNAMA's activities which were previously booked as expenses and are currently recorded under costs. As a result, there is apparently a weaker gross margin performance gain. However, in reality we are seeing a substantial improvement in the EBITDA margin, given that the consolidated effect of the synergy gains from payroll costs and expenses resulted in the centralization of all the Group s integrated back-office operations, so that a single employee can now serve all the brands, increasing scale gains with administrative expenses in the units, while generating only marginal increases in operating costs. b) Increased advertising expenses due to the student intake process, which involved more units than in the previous year, including the operational start-up of Centro Universitário UNIVERITAS. c) The provision for doubtful accounts reduced by 20.5%, from R$18.2 million in 4Q15 to R$14.4 million, contracting from 7.3% to 5.2% of net revenue. This reduction was mainly influenced by the non-recurring increase in dropout in 2015 related to 3,600 students who left the institution because they could not gain access to FIES. Of this total, 1,500 students generated an additional provision for doubtful accounts of R$4.6 million in the quarter. Therefore, excluding this 2015 amount, the provision for doubtful accounts remained stable in over 4Q15. Revenue related to the 2,100 remaining students was reversed still in 4Q15 (R$6.0 million). If we also consider this amount as provision for doubtful accounts, the 4Q15 figure was R$24.2 million, equivalent to a 68% reduction in over 4Q15. d) Other expenses increased by 44.1%, from R$6.6 million in 4Q15, to R$9.4 million, fueled by the updating of contingencies and expenses with services and travel, as well as non-recurring expenses totaling R$2.3 million related to the expansion in distance learning, M&A activities and economic and legal consulting services. In percentage of net revenue terms, in the and 2016 year-on-year comparisons, the reductions in payroll and charges and third-party services demonstrate the streamlining of the Company s expenses and point to the beginning of operational synergy gains from the recent acquisitions. 8

9 The table below shows managerial general and administrative expenses, adjusted for non-recurring effects from the synergy gains with the consolidation of UNG and UNAMA and particularly due to the provision for doubtful accounts. Operating Expenses - Managerial (R$ '000) 4Q15 General and Administrative Expenses (86,773) (80,733) 7.5% (87,350) -0.7% (317,459) (301,405) 5.3% Payroll and Charges (29,297) (27,647) 6.0% (27,025) 8.4% (109,056) (122,529) -11.0% Third-Party Services (6,747) (6,423) 5.0% (5,842) 15.5% (25,636) (27,219) -5.8% Advertising (18,739) (12,813) 46.2% (18,394) 1.9% (66,191) (51,249) 29.2% Materials (4,173) (3,878) 7.6% (3,929) 6.2% (15,295) (14,385) 6.3% PDA (14,435) (18,155) -20.5% (14,849) -2.8% (48,732) (42,780) 13.9% Others (7,103) (6,122) 16.0% (11,489) -38.2% (29,409) (21,348) 37.8% Depreciation and Amortization (6,279) (5,695) 10.3% (5,822) 7.8% (23,140) (21,895) 5.7% Managerial Operating Income 58,479 41, % 67, % 306, , % General and Administrative Expenses (Ex- Depreciation and Amortization) (80,494) (75,038) 7.3% (81,528) -1.3% (294,319) (279,510) 5.3% EBITDA and Adjusted EBITDA EBITDA (R$ '000) 4Q15 Net Income (Loss)¹ 32,155 16, % 48, % 230, , % (+) Net financial expense² 17,657 12, % 17, % 61,102 45, % (+) Income and social contribution taxes 633 4, % 1, % 5,445 11, % (+) Depreciation and amortization 15,683 14, % 15, % 60,277 56, % EBITDA³ 66,128 47, % 82, % 357, , % EBITDA Margin 23.8% 19.0% 4.9 p.p. 30.2% -6.4 p.p. 31.7% 27.7% 4.0 p.p. (+) Revenue from interest and fines on tuition 5 4,200 7, % 8, % 25,941 24, % (+) Non-recurring costs and expenses 6 8,034 8, % - 0.0% 9,889 25, % (-) Minimum rent paid 7 (9,750) (9,750) 0.0% (9,750) 0.0% (39,000) (38,529) 1.2% Adjusted EBITDA 4 68,612 53, % 81, % 354, , % Adjusted EBITDA Margin 24.7% 21.5% 3.2 p.p. 29.8% -5.1 p.p. 31.5% 28.8% 2.6 p.p. 1. Due to our adherence to PROUNI, we are entitled to certain tax benefits that affect net income. 2. Corresponds to the difference between financial revenue and expenses. 3 EBITDA is not an official accounting measurement. 4 Adjusted EBITDA corresponds to EBITDA plus (a) financial revenue from fines and interest on tuitions, (b) non-recurring costs and expenses, and (c) minimum rent paid. 5 Revenue from interest and fines on tuitions corresponds to financial charges on renegotiated and overdue tuition fees. 6. Non-recurring costs and expenses are mainly related to costs and expenses from mergers and acquisitions, which would not affect normal cash flow. 7. Minimum rent refers to rental agreements recorded under financial leasing in accordance with CPC 6. The expenses from such leasing are not recorded under EBITDA, but are part of adjusted EBITDA. Cash generation as measured by adjusted EBITDA totaled R$68.6 million in, 28.5% up on the R$53.4 million reported in 4Q15. The adjusted EBITDA margin closed the quarter at 24.7%, a 3.2 p.p. improvement over 4Q15. The increase in the EBITDA margin was due to operational synergy gains resulting from the gains in scale following the recent acquisitions and the Company s organic growth, as well as the projects specifically designed to improve operating efficiency implemented throughout Financial Result Financial Result - Accounting 4Q15 (R$ '000) (+) Financial Revenue 14,922 25, % 18, % 78,166 61, % Interest on Tuition and Agreements 4,200 7, % 8, % 25,941 24, % Returns on Financial Investments 10,297 10, % 12, % 37,023 20, % Others 425 8, % (1,732) % 15,202 16, % (-) Financial Expenses (32,579) (37,804) -13.8% (36,515) -10.8% (139,268) (107,366) 29.7% Interest Expenses (12,862) (15,070) -14.7% (14,770) -12.9% (56,094) (36,400) 54.1% Interest on Leasing (8,523) (8,663) -1.6% (8,561) -0.4% (34,308) (34,242) 0.2% Discounts Granted (5,749) (7,732) -25.6% (4,460) 28.9% (22,318) (17,646) 26.5% Monetary Variation Expenses (4,556) (4,287) 6.3% (6,207) -26.6% (18,882) (14,957) 26.2% Others (889) (2,052) -56.7% (2,517) -64.7% (7,666) (4,121) 86.0% Financial Result (17,657) (12,295) 43.6% (17,726) -0.4% (61,102) (45,555) 34.1% 9

10 Financial revenue declined by 41.5%, from R$25.5 million in 4Q15, to R$14.9 million, due to the lower interest on tuitions and negotiated agreements, in view of the reduced volume of new negotiations compared with 4Q15 and the reduction in other financial revenue, due to (i) a reduction in the recognition of financial revenue on the balance of outstanding FIES accounts receivable from R$7 million in 4Q15 to R$2.5 million in, (ii) the recurring effect from the provision for payment of PIS/COFINS taxes on financial revenue, of approximately R$0.8 million in, which began in, given that the court lifted an injunction protecting the Company against the collection of PIS and COFINS established by Decree 8426 of April 1, 2015 and (iii) the reclassification of R$3.0 million from the reversal of interest on IFC loans booked under fixed assets which until were classified as other financial revenue and as of began to be booked under deduction from interest expenses. Financial expenses contracted from R$37.8 million in 4Q15, to R$32.6 million in. In the comparison of the two periods, this reduction was primarily due to: a) Interest expenses which fell by 14.7%, from R$15.1 million in 4Q15 to R$12.9 million in, chiefly due to the reclassification of the reversal of interest on IFC loans booked under fixed assets, as mentioned in the Financial Revenue section above. b) Discounts granted, down by 25.6%, from R$7.7 million in 4Q15, to R$5.7 million, due to the lower number of UNG and UNAMA students who prepaid their monthly tuition and the reduced volume of student renegotiations in the reenrollment process and agreements for students in arrears for more than 360 days. c) Monetary variation expenses, corresponding to financial remuneration related to amounts payable, mainly impacted by the acquisition of UNG and Talles de Mileto, which increased from R$4.3 million in 4Q15, to R$4.6 million, as a result of their restatement in line with the IGPM general market price index. As a result of the factors mentioned above, the net financial result was an expense of R$17.7 million in, versus an expense of R$12.3 million in 4Q15, up by 43.6%. The table below shows managerial financial result, adjusted for non-recurring effects from other financial revenue and interest expenses. Financial Result - Managerial 4Q15 (R$ '000) (+) Financial Revenue 12,725 24, % 25, % 86,129 59, % Interest on Tuition and Agreements 4,200 7, % 8, % 25,941 24, % Returns on Financial Investments 10,297 10, % 12, % 37,023 20, % Others (1,772) 7, % 4, % 23,165 14, % (-) Financial Expenses (30,382) (37,804) -19.6% (36,515) -16.8% (139,268) (107,366) 29.7% Interest Expenses (10,665) (15,070) -29.2% (14,770) -27.8% (56,094) (36,400) 54.1% Interest on Leasing (8,523) (8,663) -1.6% (8,561) -0.4% (34,308) (34,242) 0.2% Discounts Granted (5,749) (7,732) -25.6% (4,460) 28.9% (22,318) (17,646) 26.5% Monetary Variation Expenses (4,556) (4,287) 6.3% (6,207) -26.6% (18,882) (14,957) 26.2% Others (889) (2,052) -56.7% (2,517) -64.7% (7,666) (4,121) 86.0% Financial Result (17,657) (12,895) 36.9% (11,363) 55.4% (53,139) (48,252) 10.1% Net Income 4Q15 Net Income - Accounting (R$ 000) Operating Income 50,445 32, % 67, % 296, , % (+) Financial Result (17,657) (12,295) 43.6% (17,726) -0.4% (61,102) (45,555) 34.1% (+) Income and Soc. Contrib. Taxes (719) (4,869) -85.2% (1,115) -35.5% (5,791) (11,882) -51.3% (+) Deferred Income and Soc. Contrib. Taxes % % % Net Income (Loss) 32,155 16, % 48, % 230, , % Net Margin 11.6% 6.5% 5.1 p.p. 17.8% -6.2 p.p. 20.5% 16.8% 3.7 p.p. Operating income increased by 53.3%, from R$32.9 million in 4Q15 to R$50.4 million. Income tax and social contributions fell by 85.2% over 4Q15, to R$0.7 million, due to the compensation of R$4.1 million related to tax losses in units acquired previously. 10

11 Net income grew from R$16.1 million in the quarter ended December 31, 2015, to R$32.2 million in the quarter ended December 31, 2016, representing an increase of 99.1%. Net income came to 11.6% of net revenue, 5.1 p.p. higher than the 6.5% in 4Q15. Net income adjusted for non-recurring effects in the quarter which affected the financial result came to R$40.0 million in and R$247.9 million in 2016, with respective net margins of 14.4% and 22%. The table below shows managerial net income, adjusted for non-recurring effects. It is worth noting that the Company continues to calculate its dividend payments in accordance with the results presented in IFRS. Net Income - Managerial (R$ 000) 4Q15 Operating Income 58,479 41, % 67, % 306, , % (+) Financial Result (17,657) (12,895) 36.9% (11,363) 55.4% (53,139) (48,252) 10.1% (+) Income and Soc. Contrib. Taxes (874) (6,659) -86.9% (1,247) -29.9% (6,203) (13,304) -53.4% (+) Deferred Income and Soc. Contrib. Taxes % % % Adjusted Net Income (Loss) 40,034 22, % 54, % 247, , % Managerial Net Margin 14.4% 9.1% 5.3 p.p. 20.1% -5.6 p.p. 22.0% 18.9% 3.2 p.p. Accounts Receivable and Average Collection Period Accounts Receivable and Average Receivable Days (R$ '000) 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 Gross Accounts Receivable 139, , , , , , , , , , , ,869 Monthly tuition fees 33,970 43,577 35,479 74, ,462 93,071 66,214 69,965 73,334 76,245 60,406 84,309 FIES 69, , , , , , , , , , , ,518 PRONATEC 6,639 15,347 12,893 19,610 30,309 17,408 12,111 10,023 7,791 6,343 6,021 5,474 Negotiated agreements receivable 15,839 16,361 19,050 17,736 29,020 33,320 47,533 46,789 58,411 54,861 64,647 60,889 Education credits receivable 10,376 9,628 9,023 8,730 8,171 8,202 7,380 9,020 10,229 9,616 9,333 10,799 Others 2,605 1,166 2,663 5,900 6,622 10,726 12,703 5,988 7,925 19,420 10,664 6,880 PDA balance (18,459) (18,344) (19,829) (27,744) (25,595) (31,129) (37,319) (45,743) (41,330) (37,029) (40,854) (44,613) Net Accounts Receivable 120, , , , , , , , , , , ,256 Net Revenue (Last 12 Months - FIES+Ex-FIES+Pronatec) 504, , , , , , ,799 1,032,448 1,048,075 1,064,511 1,096,490 1,125,380 Net Receivable Days (FIES+Ex-FIES+Pronatec) Net Revenue FIES (Last 12 Months) 230, , , , , , , , , , , ,902 Net Receivable Days (FIES) Net Receivable Days (Monthly tuition fees + Negotiated agreements receivable) Net Receivable Days (Monthly tuition fees + Negotiated agreements receivable + Education credits receivable) Net accounts receivable climbed by 6.3% over 4Q15, mainly due to the upturn in accounts receivable from monthly tuitions, negotiated agreements and education credits, partially offset by the reduction in accounts receivable from FIES and PRONATEC. The turnover of accounts receivable from non-fies students remains under control and within the Company s policy of provisioning 100% of receivables overdue by more than 180 days, plus FIES provisions. Aging of Monthly tuition fees 4Q15 (R$ '000) Overdue by up to 30 day 18, % 12, % Overdue from 31 to 60 days 14, % 9, % Overdue from 61 to 90 days 13, % 8, % Overdue from 91 to 180 days 18, % 12, % Overdue more than 180 days 19, % 26, % TOTAL 84, % 69, % % of Gross Accounts Receivable 18.7% 16.4% Aging of Negotiated Agreements (R$ '000) 4Q15 Not yet due 14, % 14, % Overdue by up to 30 day 8, % 5, % Overdue from 31 to 60 days 7, % 4, % Overdue from 61 to 90 days 6, % 4, % Overdue from 91 to 179 days 12, % 8, % Overdue more than 180 days 12, % 8, % TOTAL 60, % 46, % % of Gross Accounts Receivable 13.5% 11.0% 11

12 Accounts receivable from students refers to renegotiations with students in debt to the Company. The table above shows that 24.5% of the agreements were falling due. The table below shows the evolution of our provision for doubtful accounts from December 31, 2015 to December 31, 2016: Constitution of Provision for Gross Increase in Doubtful Accounts in the Provision for Income Statement (R$ '000) 12/31/2015 Doubtful Accounts Write-off 12/31/2016 Total 45,743 48,732 (49,862) 44,613 Investments (CAPEX) CAPEX (R$ ('000)) % of Total % of Total CAPEX Total 81, % 98, % Property acquisition / Construction / Maintenance of campuses 41, % 45, % Equipment / Library / IT 22, % 26, % MEC Licenses 4, % 13, % Software Licenses 5, % 8, % Partnerships 1, % % Intangibles and Others 5, % 3, % Acquisitions Debt Payment 28,668 71,109 Total CAPEX + Aquisitions Payables 109, ,057 In 2016, Ser Educacional invested R$42.0 million in the remodeling of campuses, given that in the fourth quarter the Company's funds went to remodeling, improvements and construction in Fortaleza, Caruaru ad Recife. In, investments went to UNINASSAU s new M block in Recife and laboratories. In 2Q16, the new Aracaju and Salvador buildings were delivered and a number of works were executed, most notably the expansion of the number of classrooms in the Fortaleza unit, the conclusion of the M block in the UNINASSAU unit in Recife and the completion of the parking lot in Aracaju. In 1Q16, there were expansions in João Pessoa and Caruaru. Of the R$28.7 million in debt payments related to previous acquisitions (payment commitments) recorded under cash flow as investing activities, R$14.0 million was allocated to the payment of the UNG acquisition and R$11 million was allocated to the acquisition of the maintenance of Instituto Bennett which began operating in January 2017 under the UNIVERITAS brand, after the conclusion of the process for transferring the maintenance. Indebtedness Indebtedness (R$ '000) 12/31/ /31/2015 Dec16 x Dec15 Cash and cash equivalents 62,036 69, % Securities 337, , % Gross debt (517,723) (563,135) -8.1% Loans and financing (348,788) (382,724) -8.9% Short term (99,259) (49,484) 100.6% Long term (249,529) (333,240) -25.1% Aquisitions Payables* (168,935) (180,411) -6.4% Net debt (118,140) (280,001) -57.8% Net debt / Adjusted EBITDA (LTM) * Acquisitions payables refer to acquisition scheduled payments 12

13 The increase in bonds and securities in 2016 over 2015 was basically influenced by the normalization of the FIES receivable flow and the first installment of the legal settlement with the Federal Government related to FIES amounts that were not received in the second half of Ser Educacional closed December 2016 with gross debt of R$517.7 million, 8.1% down on the R$563.1 million recorded in 4Q15, due to the settlement of commitments related to the acquisition of UNG. The Company's indebtedness is primarily due to the increase in commitments related to the acquisitions and the taking out of two longterm loans with the following characteristics: (i) financing from the IFC over seven years, totaling R$120.0 million at the CDI+2.05% p.a., payable semi-annually as of April 15, 2017 and maturing on April 15, 2022, (ii) the issuance of non-convertible simple debentures with a term of 5 years totaling R$150.0 million at the CDI+2.5% p.a., with monthly payments as of February 2017 until final maturity in July On the same date, the Company s net debt stood at R$118.1 million, representing a leverage ratio (net debt / LTM EBITDA) of 0.33x, versus 0.95x in 4Q15. Debt Amortization Schedule (R$ '000) Loans and Financing A.V. (%) Aquisitions Payables A.V. (%) Debentures A.V. (%) Total A.V. (%) Short Term 55, % 80, % 43, % 179, % Total Long Term 140, % 88, % 108, % 338, % 1-2 years 43, % 28, % 42, % 113, % 2-3 years 33, % 29, % 42, % 104, % 3-4 years 23, % 31, % 24, % 79, % 4-5 years 23, % - 0.0% - 0.0% 23, % After five years 16, % - 0.0% - 0.0% 16, % Total Loans, Financing and Acquisitions payables 196, % 168, % 152, % 517, % In regard to the debt payment schedule, 34.6% corresponds to short-term debt, showing that the Company has adequate debt amortization terms, as well as a comfortable level of financial leverage. Cash Flow In, the Company's cash flow reduced by R$38.7 million, resulting in period cash generation of R$82.6 million from operating activities. This increase in excess of EBITDA in the same period was due to the combined effect of recurring cash generation from paying students and the receipt of FIES amounts due related to July This operating cash generation was partially offset by the use of R$15.2 million in financing activities and R$39.7 million in investing activities (as mentioned in the CAPEX section). Cash Flow (R$ '000) 4Q15 Cash flow from operating activities Net cash from operating activities 82,602 (7,536) % 287,770 77, % (-) Cash flow allocated to investing activities (39,732) (46,383) -14.3% (109,771) (170,122) -35.5% (+) Securities (66,407) 43, % (124,412) (149,717) -16.9% (+) Cash flow allocated to financing activities (15,169) (2,668) 468.6% (61,550) 239, % Financing Actvities (15,169) % (38,433) 251, % Dividends - (2,847) % (23,117) (12,192) 89.6% Increase in cash and cash equivalents (38,706) (12,825) 201.8% (7,963) (3,249) 145.1% Net increase in cash and cash equivalents Beginning of period % 69,999 73, % End of period (38,706) (12,825) 201.8% 62,036 69, % Increase in cash and cash equivalents (38,706) (12,825) 201.8% (7,963) (3,249) 145.1% Cash and Securities changes 27,701 (56,587) % 116, , % 13

14 ABOUT GRUPO SER EDUCACIONAL Founded in 2003 and headquartered in Recife, Grupo Ser Educacional (BM&FBOVESPA SEER3, Bloomberg SEER3:BZ and Reuters SEER3.SA) is one of the largest private education groups in Brazil and the leader in the Northeast and North regions in terms of number of students enrolled. It offers undergraduate, graduate, vocational and distance learning courses in 15 states, with a consolidated base of more than 147,000 students. The Company operates under the following brands: Faculdades Maurício de Nassau, UNINASSAU Centro Universitário Maurício de Nassau, Faculdades Joaquim Nabuco, Escolas Técnicas Joaquim Nabuco and Maurício de Nassau, UNAMA/ FIT (Universidade da Amazônia), UNG (Universidade Guarulhos), and UNIVERITAS (Universus Veritas University Center and Faculty), through which it offers more than 1,155 courses. This notice may contain forward-looking statements related to business prospects, estimates of operating and financial results and the growth prospects of Grupo Ser Educacional. These are merely projections and, as such, are solely based on the expectations of the Management of Grupo Ser Educacional. Such forward-looking statements are substantially dependent on external factors, in addition to the risks presented in the disclosure documents filed by Grupo Ser Educacional and are therefore subject to change without prior notice. 14

15 ATTACHMENTS Income Statement Excluding APV Income Statement - Ex-APV R$ ('000) 4Q15 Var. (%) Var. (%) Var. (%) Gross Operating Revenue 355, , % 349, % 1,426,045 1,289, % Undergraduate Monthly Tuition 340, , % 332, % 1,364,367 1,198, % Graduate Monthly Tuition 5,529 7, % 6, % 23,462 28, % Vocational Courses Revenues 550 4, % % 5,838 39, % Distance Learning Revenues 5,528 2, % 5, % 18,316 9, % Others 3,554 3, % 3, % 14,062 13, % Deductions from Gross Revenue (78,109) (64,547) 21.0% (76,237) 2.5% (300,665) (256,838) 17.1% Discounts and Scholarships (67,974) (55,234) 23.1% (66,791) 1.8% (258,190) (213,340) 21.0% Taxes (10,135) (9,313) 8.8% (9,446) 7.3% (42,475) (43,498) -2.4% Net Operating Revenue 277, , % 273, % 1,125,380 1,032, % Cash Cost of Services Rendered (138,533) (131,201) 5.6% (118,966) 16.4% (511,386) (477,456) 7.1% Payroll and Charges (98,162) (94,681) 3.7% (82,814) 18.5% (360,429) (343,197) 5.0% Rent (17,044) (15,503) 9.9% (15,493) 10.0% (64,578) (59,893) 7.8% Concessionaires ( Electricity, Water and Telephone) (8,349) (9,208) -9.3% (6,800) 22.8% (30,126) (28,849) 4.4% Third-Party Services (5,574) (3,237) 72.2% (4,410) 26.4% (19,116) (11,312) 69.0% Depreciation and Amortization (9,404) (8,572) 9.7% (9,449) -0.5% (37,137) (34,205) 8.6% Managerial Gross Profit 138, , % 154, % 613, , % Gross Margin 50.1% 47.2% 2.9 p.p. 56.5% -6.4 p.p. 54.6% 53.8% 0.8 p.p. Operating Expenses/Revenue (88,422) (84,400) 4.8% (86,914) 1.7% (316,999) (324,707) -2.4% General and Administrative Expenses (89,109) (81,162) 9.8% (87,350) 2.0% (322,072) (313,726) 2.7% Payroll and Charges (29,297) (27,647) 6.0% (27,025) 8.4% (109,056) (124,899) -12.7% Third-Party Services (6,747) (6,423) 5.0% (5,842) 15.5% (26,720) (28,625) -6.7% Advertising (18,739) (12,813) 46.2% (18,394) 1.9% (66,191) (51,249) 29.2% Materials (4,173) (3,878) 7.6% (3,929) 6.2% (15,295) (14,385) 6.3% PDA (14,435) (18,155) -20.5% (14,849) -2.8% (48,732) (47,659) 2.3% Others (9,439) (6,551) 44.1% (11,489) -17.8% (32,938) (25,014) 31.7% Depreciation and Amortization (6,279) (5,695) 10.3% (5,822) 7.8% (23,140) (21,895) 5.7% Other Operating Expenses/Revenue 687 (3,238) % % 5,073 (10,981) % Managerial Operating Income 50,445 32, % 67, % 296, , % Operating Margin 18.2% 13.2% 4.9 p.p. 24.7% -6.5 p.p. 26.4% 22.3% 4.1 p.p. (+) Depreciation and Amortization 15,683 14, % 15, % 60,277 56, % EBITDA 66,128 47, % 82, % 357, , % EBITDA Margin 23.8% 19.0% 4.9 p.p. 30.2% -6.4 p.p. 31.7% 27.7% 4.0 p.p. (+) Non-recurring costs and expenses 8,034 8, % % 9,889 25, % (+) Interest on tuition and agreements 4,200 7, % 8, % 25,941 24, % ( - ) Minimum rent paid (9,750) (9,750) 0.0% (9,750) 0.0% (39,000) (38,529) 1.2% Adjusted EBITDA 68,612 53, % 81, % 354, , % Adjusted EBITDA Margin 24.7% 21.5% 3.2 p.p. 29.8% -5.1 p.p. 31.5% 28.8% 2.6 p.p. ( - ) Depreciation and Amortization (15,683) (14,267) 9.9% (15,271) 2.7% (60,277) (56,100) 7.4% EBIT Ajustado 52,929 39, % 66, % 293, , % Margem EBIT Ajustado 19.1% 15.8% 3.3 p.p. 24.2% -5.1 p.p. 26.1% 23.4% 2.7 p.p. Financial Result (17,657) (12,295) 43.6% (17,726) -0.4% (61,102) (45,555) 34.1% (+) Financial Revenue 14,922 25, % 18, % 78,166 61, % Interest on Tuition and Agreements 4,200 7, % 8, % 25,941 24, % Returns on Financial Investments 10,297 10, % 12, % 37,023 20, % Others 425 8, % (1,732) % 15,202 16, % (-) Financial Expenses (32,579) (37,804) -13.8% (36,515) -10.8% (139,268) (107,366) 29.7% Interest Expenses (12,862) (15,070) -14.7% (14,770) -12.9% (56,094) (36,400) 54.1% Interest on Leasing (8,523) (8,663) -1.6% (8,561) -0.4% (34,308) (34,242) 0.2% Discounts Granted (5,749) (7,732) -25.6% (4,460) 28.9% (22,318) (17,646) 26.5% Monetary Variation Expenses (4,556) (4,287) 6.3% (6,207) -26.6% (18,882) (14,957) 26.2% Others (889) (2,052) -56.7% (2,517) -64.7% (7,666) (4,121) 86.0% Income Before Income Taxes 32,788 20, % 49, % 235, , % Income and Social Contribution Taxes (633) (4,465) -85.8% (1,028) -38.4% (5,445) (11,478) -52.6% Current (15,569) (12,468) 24.9% (22,080) -29.5% (87,783) (68,775) 27.6% Tax Incentive - Prouni 14,850 7, % 20, % 81,992 56, % Deferred % % % Consolidated Net Income/Loss 32,155 16, % 48, % 230, , % Net Margin 11.6% 6.5% 5.1 p.p. 17.8% -6.2 p.p. 20.5% 16.8% 3.7 p.p. 15