Abril Educação S.A. Quarterly Information (ITR) at March 31, 2015 and report on review of quarterly information

Transcription

1 (A free translation of the original in Portuguese) Abril Educação S.A. Quarterly Information (ITR) at March 31, 2015 and report on review of quarterly information

2 (A free translation of the original in Portuguese) ABRIL EDUCAÇÃO S.A. QUARTERLY INFORMATION - ITR At March 31, 2015 and Report on review of quarterly information CONTENTS Page Report on review of quarterly information 1-2 Management Report 3-10 Balance sheet Statement of income Statement of changes in equity 14 Statement of cash flow 15 Statements of value added 16 Notes to the quarterly information Other information considered relevant by the Company 60 Board of Directors and Statutory Audit Board 61 Executive Board 62

3 (A free translation of the original in Portuguese) Report on review of quarterly information To the Board of Directors and Stockholders Abril Educação S.A. Introduction We have reviewed the accompanying parent company and consolidated interim accounting information of Abril Educação S.A. ("Company"), included in the Quarterly Information Form (ITR) for the quarter ended March 31, 2015, comprising the balance sheet as at that date and the statements of income, changes in equity and cash flow for the quarter then ended, and a summary of significant accounting policies and other explanatory information. Management is responsible for the preparation of the parent company and consolidated interim accounting information in accordance with the accounting standard CPC 21, Interim Financial Reporting, of the Brazilian Accounting Pronouncements Committee (CPC) and International Accounting Standard (IAS) 34 - Interim Financial Reporting issued by the International Accounting Standards Board (IASB), as well as the presentation of this information in accordance with the standards issued by the Brazilian Securities Commission (CVM), applicable to the preparation of the Quarterly Information (ITR). Our responsibility is to express a conclusion on this interim accounting information based on our review. Scope of review We conducted our review in accordance with Brazilian and International Standards on Reviews of Interim Financial Information (NBC TR Review of Interim Financial Information Performed by the Independent Auditor of the Entity and ISRE Review of Interim Financial Information Performed by the Independent Auditor of the Entity, respectively). A review of interim information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with Brazilian and International Standards on Auditing and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion. Conclusion on the interim information Based on our review, nothing has come to our attention that causes us to believe that the accompanying parent company and consolidated interim accounting information included in the quarterly information referred to above has not been prepared, in all material respects, in accordance with CPC 21 and IAS 34 applicable to the preparation of the Quarterly Information, and presented in accordance with the standards issued by the CVM. 1

4 Abril Educação S.A. Other matters Statements of value added We have also reviewed the parent company and consolidated statements of value added for the quarter ended March 31, These statements are the responsibility of the Company's management, and are required to be presented in accordance with standards issued by the CVM applicable to the preparation of Quarterly Information (ITR) and are considered supplementary information under the International Financial Reporting Standards (IFRS), which do not require the presentation of the statement of value added. These statements have been submitted to the same review procedures described above and, based on our review, nothing has come to our attention that causes us to believe that they have not been prepared, in all material respects, in a manner consistent with the parent company and consolidated interim accounting information taken as a whole. São Paulo, May 11, 2015 PricewaterhouseCoopers Auditores Independentes CRC 2SP000160/O-5 Estela Maris Vieira de Souza Contadora CRC 1RS046957/O-3 "S" SP 2

5 NET REVENUE REACHES R$374.7 MILLION IN 1Q15 São Paulo, May 11, Abril Educação S.A. (BM&FBOVESPA: ABRE3) announces its results for the first quarter of 2015 (1Q15). The comments herein refer to the consolidated results in accordance with International Financial Reporting Standards (IFRS) and comparisons are with the same period in 2014, as indicated. KEY INDICATORS CONSOLIDATED QUARTER Change(%) (R$ mm) 1Q15 1Q14 1Q15/1Q14 Net Revenue % (=) Adjusted EBITDA (current) % (+) Stock-based compensation plan (=) Adjusted EBITDA by stock-based plan % EBITDA Margin (%) 39% 40% -1 p.p. (=) Net Income (loss) before minority interest % Operating Cash Generation % HIGHLIGHTS Net revenue advanced 12% over 1Q14 to R$374.7 million. Revenue growth in the period was driven by the positive contribution from the Learning Systems and Schools segments, which combined contributed with R$210 million, reflecting the new student recruiting process, with growth of 18% in Traditional Learning Systems and organic growth of 10% in the Schools segment. The first quarter of 2015 includes the revenue of R$5.3 million associated with the new assets acquired, SIGMA Aguas Claras (as of February) and Maxi Cuiabá (as of March). In 1Q15, EBITDA adjusted by the stock-based compensation plan amounted to R$146.5 million, up 8% on 1Q14. EBITDA margin contracted 1 p.p., explained by the growth in Learning Systems with lower average ticket. In the Learning Systems segment, which includes Traditional Learning Systems (Anglo, ph, SER, GEO, Maxi, Motivo and Farias Brito), Technical Learning Systems ETB and the program The Leader in Me (OLEM), we had 899,000 students at the end of March, an increase of 30% on the same period last year. Operating cash generation in 1Q15 was R$123.0 million, compared to R$120.8 million in 1Q14. Operating cash generation in 1Q15 was adversely affected by the delay in the payment of the last installment from the National Textbook Program (PNLD) (outstanding balance: R$20 million). Events after the Reporting Period As previously announced, on February 9, 2015, Thunnus Participações S.A., a company owned by certain investment funds and portfolios managed by Tarpon Gestora de Recursos S.A., entered into with Abrilpar Participações Ltda. and the Civita Family an amendment to the share purchase and sale agreement for the acquisition of the remaining 54,152,107 shares representing 20.73% of the voting and total capital of the Company. On April 2, 2015, the transfer of the controlling interest in the Company to Thunnus, upon the acquisition of the 33,594,740 shares from the Abrilpar Group, was concluded. On May 4, 2015, Thunnus acquired the remaining 20,557,367 shares issued by the Company from the Abrilpar Group, following the release of said shares from certain bank guarantees offered by the Abrilpar Group. On April 2, due to the conclusion of the transaction for the transfer of the Company s control, the members of the board of directors connected with Abrilpar Group resigned from their respective positions, with the Board of Directors now composed as follows: Fernando Shayer (Chairman), José Carlos Reis de Magalhães Neto (Vice-Chairman), Gustavo Josef Wigman (Member), Leonardo Almeida Byrro (Member), Vitor Francisco Miguita Paulino (Member) and Fahad Abdulla Al-Mana (Member). The following Independent Member remained in office: Florian Bartunek, Marcos Antônio Magalhães and Wolfgang Stephan Schwerdtle. On April 8, 2015, Thunnus submitted to the Securities and Exchange Commission of Brazil (CVM) the documentation associated with a mandatory public share tender offer ( Mandatory Public Tender Offer ) to all shareholders holding the common shares issued by the Company representing the free-float. The Mandatory Public Tender Offer will be made for the same price paid to the controlling shareholders for the shares in the controlling group, as already provided for and announced in the Material Fact notice dated February 9,

6 MESSAGE FROM MANAGEMENT The first quarter is marked by the enrollment of the students in the Learning Systems and Schools who will form our student base in the 2015 academic year. In 2015, the results of our student recruiting campaign maintained the Company s organic growth trend. In the Learning Systems and Schools segments, we recorded student base growth of 30% and 18%, respectively, which means we ended the quarter serving and contributing to the education of more than 900,000 students in both public and private schools. In our other businesses, the highlight was Red Balloon, which posted student base growth of 23% on the year-ago period, and the Grupo Ometz posted growth compared to 1Q14 of 11% in the student/franchise ratio and of 6% in sales of teaching material kits, which more than offset the 13% drop in new enrollments. The result already reflects our new policy to prioritize the provision of high-quality services to students and franchisees in this segment. These actions combined helped improve results in the period, with growth on the same period last year of 12% in Net Revenue and of 8% in adjusted EBITDA to R$146.5 million. The results of these first three months confirm the positive trend the Company has been experiencing. Looking ahead, we reaffirm our commitment to providing high-quality basic education, while we strive to manage our business based on meritocracy and on promoting integration of teams and activities, encouraging innovation and maintaining a sharp focus on expansion opportunities. Growing in the education industry, which is so strategic for the country, is at the same time thrilling and challenging. 4

7 OPERATING PERFORMANCE ANALYSIS Learning Systems In Traditional Learning Systems, we closed March 2015 with 776,000 students enrolled in 2,480 schools in the public and private segment, which represents organic growth of 18% (+121,000 students) in comparison with end-march Net revenue per student advanced 2.8% to R$152.2/student in 1Q15, from R$148.1/student in 1Q14, mainly due to: (i) the inclusion of the SESI schools into our student base; and (ii) solid growth in the public segment (+31%), both of which are factors that supported the advance of brands with lower average tickets. Note that these figures do not include the returns that typically take place in the second quarter; therefore, the total number of students will be determined by June The ETB Technical Learning System ended 1Q15 with growth of 45,000 students compared to a year earlier. At the end of 1Q15, The Leader in Me (OLEM) had 73,000 students, representing growth of 45,000 students year over year. Number of Students Traditional Learning Systems Technical Learning System (ETB) The Leader in Me (OLEM) Total Students 1Q15 1Q14 Change (%) % % % % Publishers The highlight in the period was the private segment, which posted sales of 2.1 million books in 1Q15, down 18% from 1Q14. However, an analysis based on the sales cycle, which extends from July to March, indicates a decrease in the 2015 cycle of 8%, from 4.7 million to 4.3 million books. The average book sales price increased by 8%. I) Schools and Preparatory Courses The Schools and Preparatory Courses business ended 1Q15 with 26,800 students enrolled at 24 units, which represents an advance of 18% on 1Q14, including the new acquisitions (Sigma Águas Claras and Maxi Cuiabá). In the Schools segment, the student base expanded by 33%, including the 3,100 students from the newly acquired assets. On comparable basis, the student base in the Schools segment expanded by 10%, combined with a 5% increase in the average ticket. In Preparatory Courses, the student base contracted by 2%, reflecting the more aggressive competition in this segment. II) Language Courses The language school (Red Balloon and Grupo Ometz) ended March with 87,400 students enrolled at 427 units. Red Balloon had 17,900 students at 8 own units, 49 franchisees and 25 in-school units, which represents an increase of 3,400 students year over year. At the end of 1Q15, Grupo Ometz had 69,500 students enrolled, an increase of 2% over 1Q14, with the same 345 franchisees reported in 4Q14. As a result, the number of students per franchise unit increased by 11% on 1Q14. The Grupo Ometz brands sold 16,800 teaching material kits in 1Q15, or 6% more than the 15,800 registered in 1Q14. In 1Q15, new enrollments amounted to 19,400, down 13% from the year-ago period. 5

8 FINANCIAL PERFORMANCE ANALYSIS I) Abril Educação Consolidated QUARTER Change(%) (R$ mm) 1Q15 1Q14 1Q15/1Q14 Net Revenue % (-) Cost of goods sold (COGS) (94.9) (72.1) 32% (=) Gross Profit % Gross margin (%) 75% 78% -3 p.p. (-) Selling, general and administrative expenses (175.0) (153.8) 14% (=) Operating income (loss) % Operating Margin(%) 28% 32% -4 p.p. (-) Financial Result (28.6) (23.3) 23% (=) Net Income (loss) before shareholding % (-) Equity income (1.1) (0.1) 9% (=) Net Income (loss) before income tax and social contribution % (-) Income tax and social contribution (26.6) (27.8) -4% (=) Net Income (loss) before minority interest % (+) Non-controlling interest (1.3) (3.1) -58% (=) Net Income (loss) after minority interest % Net Margin (%) 13% 16% -3 p.p. (=) Operating income (loss) % (+) Depreciation and Amortization % (+) Amortization of publishing investment % (=) Adjusted EBITDA (current) % (+) Stock-based compensation plan (=) Adjusted EBITDA by stock-based compensation plan % EBITDA Margin (%) 39% 40% -1 p.p. Net Revenue Net revenue grew 12% from 1Q14, to R$374.7 million, which includes R$5.3 million in combined revenue from the newly acquired assets SIGMA Aguas Claras (as of February) and Maxi Cuiabá (as of March). The main contribution to this increase came from the Learning Systems and Schools and Preparatory Courses segments, which contributed R$33.0 million and R$12.6 million, respectively, to consolidated revenue in the period, driven by the student recruiting campaigns. Cost of Goods Sold Consolidated COGS increased 32% in 1Q15, to R$94.9 million, compared to R$72.1 million in 1Q14. Gross margin stood at 75%, contracting 3 p.p. The result is partially explained by the increases of R$9.8 million and R$14.2 million in the COGS of the Learning Systems and Schools and Preparatory Courses segments, respectively, driven primarily by: (i) the recognition of costs associated with the inclusion of the SESI schools into our student base and with the growth of ETB Technical Learning System; (ii) the costs associated with the new school acquisitions (R$2.2 million); and (iii) the changes in the recognition of rental and condominium expenses from the schools, which were reallocated to COGS, in line with the other businesses of the Schools and Preparatory Courses segment. Selling, General and Administrative Expenses In 1Q15, total expenses amounted to R$175.0 million, increasing 14% from 1Q14, basically due to: (i) the recognition of expenses related to the new stock-based compensation plan (R$9.3 million); and (ii) the increase in expenses related to the acquired schools, Sigma Aguas Claras and Maxi Cuiabá (R$1.1 million). Excluding these effects, total expenses in the quarter advanced by 7%. 6

9 EBITDA In 1Q15, EBITDA adjusted by the stock-based compensation plan of R$9.3 million amounted to R$146.5 million, increase 8% on 1Q14. EBITDA margin contracted 1 p.p., explained by the growth in Learning Systems from brands with lower average tickets and to the student base growth in the public school segment. 1Q15 1Q14 Financial Results (28.6) (23.3) Finance income Finance costs (43.0) (36.3) Cash + Investments (427.3) (425.4) Gross Debt 1, ,269.5 Net Debt Financial Result The net financial expense in 1Q15 amounted to R$28.6 million, compared to the expense of R$23.3 million in 1Q14. This increase is explained by the growth in the Company s debt resulting from its acquisition strategy and from the higher interest rates in relation to a year earlier. Dividends On April 30, 2015, the Annual Shareholders Meeting approved the distribution of R$11.6 million in the form of dividends, which is equivalent to 25% of net income for the period, after the constitution of a 5% legal reserve. The payment will be made on May 29, 2015 to shareholders of record on April 30. The amount corresponds to earnings per share of R$ Investments Operating investments amounted to R$32.2 million through March 2015, distributed as follows: (i) R$15.3 million to acquisitions of property and equipment and intangible assets; and (ii) R$16.9 million to the production and updating of content for the new collections of the Learning Systems and Publishers. The total amount was 63% higher than the R$19.8 million in March 2014, basically due to the reformulation of language course materials, and the acquisition of the copyrights of the Technical Learning System. Excluding these non-recurring effects, investments in 1Q15 amounted to R$20.1 million. Operating Cash Generation Operating cash generation in 1Q15 was R$123.0 million, compared to R$120.8 million in 1Q14. The positive result was made possible by (i) the expected seasonality in the Publishers business, which enjoys high receivables in the quarter from the National Textbook Program (PNLD) and from the private market; and (ii) the higher receivables from Learning Systems and Schools. We maintain a balance receivable of R$20 million related to the last installment under the 2015 PNLD. Cash generation, net of interest and tax payments, amounted to R$101.4 million in 1Q15, up 18% from R$86.0 million in 1Q14. The improvement reflects the reduction in income tax paid and the maintaining in the amount of interest paid. Capital Structure Abril Educação ended March 2015 with consolidated net debt of R$883.5 million, formed by gross debt of R$1,310.8 million and cash and cash equivalents of R$427.3 million. Total gross debt was formed by R$871.5 million in financial debt and R$439.3 million in debt with the sellers of the acquired companies. Of this amount, 92% corresponded to long-term debt. 7

10 II) Business Highlights in the Quarter Learning Systems Learning Systems -R$ mm 1Q15 1Q14 1Q15/1Q14 Net Revenue % (-) Cost of goods sold (COGS) (26.5) (16.7) 58% (=) Gross Profit % Gross margin (%) 80% 84% -4 p.p. (-) Selling, general and administrative expenses (31.5) (22.0) 43% (=) Operating income (loss) % (+) Depreciation and Amortization % (+) Amortization of publishing investment % EBITDA % EBITDA Margin (%) 60% 65% -5 p.p. Revenue from Learning Systems came to R$135.1 million in 1Q15, advancing 32% on 1Q14, driven by growth of 30% in the student base and 2% in average ticket, due to the higher revenue contribution from brands with lower average tickets and to the student base growth in the public segment. COGS in 1Q15 came to R$26.5 million, advancing 58%, due to: (i) the recognition of costs associated with the growth in the ETB Technical Learning System, from 5,000 students in 1Q14 to 50,000 students in 1Q15; (ii) the accrual of the provision for obsolescence arising from the renovation of materials; and (iii) the costs associated with the production and distribution for the SESI schools. Expenses from Learning Systems in 1Q15 came to R$31.5 million, advancing 43%, which is primarily explained by: (i) the recognition of the expenses associated with the growth in Learning Systems; (ii) the inclusion of the SESI schools into our student base (ongoing); and (iii) the expenses with royalties for the partnership with the Farias Brito Learning System. Publishers Publishers -R$ mm 1Q15 1Q14 1Q15/1Q14 Net Revenue % (-) Cost of goods sold (COGS) (20.6) (22.1) -7% (=) Gross Profit % Gross margin (%) 78% 79% -1 p.p. (-) Selling, general and administrative expenses (39.9) (41.1) -3% (=) Operating income (loss) % (+) Depreciation and Amortization % (+) Amortization of publishing investment % EBITDA % EBITDA Margin (%) 45% 47% -2 p.p. In 1Q15, net revenue from Publishers amounted to R$95.4 million, down 9% on the year-ago period. Considering the sales cycle, which goes from July to March, this reduction was 8%. This result is explained by the 18% drop in the number of books sold in the private segment, which was partially offset by the 8% increase in the average price. COGS in the Publishers segment amounted to R$20.6 million in 1Q15, down 7% from the R$22.1 million reported in the same period last year. This reduction accompanied the decrease in revenue, basically due to the lower volume of books sold. Selling, general and administrative expenses in the Publishers segment amounted to R$39.9 million in 1Q15, a significant reduction of 3% from R$41.1 million in 1Q14, reflecting the gains from synergies with the Company's other businesses line and the ongoing efforts to cut fixed expenses arising from zero-based budget (ZBB). 8

11 Schools and Preparatory Courses Schools and Prep. Courses -R$ mm 1Q15 1Q14 1Q15/1Q14 Net Revenue % (-) Cost of goods sold (COGS) (43.2) (29.0) 49% (=) Gross Profit % Gross margin (%) 42% 54% -12 p.p. (-) Selling, general and administrative expenses (22.1) (23.6) -6% (=) Operating income (loss) % (+) Depreciation and Amortization % (+) Amortization of publishing investment % EBITDA % EBITDA Margin (%) 15% 18% -3 p.p. Revenue from Schools and Preparatory Courses business amounted to R$74.9 million, increasing 20% on 1Q14, with this figure including R$5.3 million from the newly acquired assets Sigma Aguas Claras and Maxi Cuiabá. Excluding the effects from acquisitions, organic growth was 12%, reflecting the growth in new enrollments and the 5% increase in the average ticket in the Schools segment. The Schools and Preparatory Courses business registered COGS of R$43.2 million in 1Q15, up 49% from 1Q14, due to: (i) the contribution from new acquisitions, which did not exist in 1Q14; and (ii) the changes in the recognition of rental and condominium expenses from schools, which were reallocated to COGS, in line with the other businesses in the segment, which contributed to the reduction in expenses in the period. Language Courses Languages -R$ mm 1Q15 1Q14 1Q15/1Q14 Net Revenue % (-) Cost of goods sold (COGS) (6.3) (5.4) 16% (=) Gross Profit % Gross margin (%) 90% 91% -1 p.p. (-) Selling, general and administrative expenses (37.5) (35.3) 6% (=) Operating income (loss) % (+) Depreciation and Amortization %. (+) Amortization of publishing investment % EBITDA % EBITDA Margin (%) 35% 30% 5 p.p. Net revenue in the Language School business increased 13% from 1Q14. This result was due to the 5% increase in revenue from Grupo Ometz, from R$45.0 million to R$47.4 million in 1Q15, due to the higher number of students and kits sold, which offset the decline in new enrollments. The result also benefited from the 42% revenue growth at Red Balloon, from R$12.3 million to R$17.5 million in 1Q15, which was driven by: (i) the growth of 23% in the student base; and (ii) the 33% increase in the average ticket of the kits sold. The 16% increase in COGS in the quarter is basically explained by: (i) the inventory write-off of obsolete materials at Grupo Ometz, which were replaced by the new teaching materials developed during

12 INCOME STATEMENT BY BUSINESS LINE 1Q15 Corporate* (R$ million) Per Business Line -R$ mm Learning Publishers 1Q15 Results Systems Schools and Language Others Prep. Courses Corporate Consolidated Elimination Amortization Expenses AE Net Revenue (2.3) (-) Cost of goods sold (COGS) (20.6) (26.5) (43.2) (6.3) (0.5) (94.9) (=) Gross Profit (0.2) Gross margin (%) 78% 80% 42% 90% 93%... 6%... 75% (-) Selling, general and administrative expenses (39.9) (31.5) (22.1) (37.5) (5.9) (23.2) 0.2 (14.9) (175.0) (=) Operating income (loss) (23.2) 0.0 (14.9) (+) Depreciation and Amortization (+) Amortization of publishing investment (0.0) (=) Adjusted EBITDA (22.2) (+) Stock-based compensation plan (=) Adjusted EBITDA by stock-based plan (12.9) EBITDA Margin (%) 45% 60% 15% 35% 17%... 0%... 39% Per Business Line -R$ mm Learning Publishers 1Q14 Results Systems 1Q14 Corporate* (R$ million) Schools and Language Others Prep. Courses Corporate Consolidated Elimination Amortization Expenses AE Net Revenue (2.0) (-) Cost of goods sold (COGS) (22.1) (16.7) (29.0) (5.4) (0.8) (72.1) (=) Gross Profit (0.2) Gross margin (%) 79% 84% 54% 91% 91%... 8%... 78% (-) Selling, general and administrative expenses (41.1) (22.0) (23.6) (35.3) (4.8) (12.6) 0.2 (14.6) (153.8) (=) Operating income (loss) (12.6) 0.0 (14.6) (+) Depreciation and Amortization (+) Amortization of publishing investment (=) Adjusted EBITDA (12.6) (+) Stock-based compensation plan (=) Adjusted EBITDA by stock-based plan (12.6) EBITDA Margin (%) 47% 65% 18% 30% 46%... 0%... 40% Per Business Line -R$ mm - Changes % Learning Publishers 1Q14 vs 1Q15 Systems 1Q15 vs. 1Q14 Change (%) Schools and Language Others Prep. Courses Corporate Consolidated Elimination Amortization Expenses AE Net Revenue -9% 32% 20% 13% -22%... 14%... 12% (-) Cost of goods sold (COGS) -7% 58% 49% 16% -39%... 17%... 32% (=) Gross Profit -10% 27% -5% 13% -20% %... 7% Gross margin (%) -1 p.p. -4 p.p. -12 p.p. -1 p.p. 2 p.p p.p p.p. (-) Selling, general and administrative expenses -3% 43% -6% 6% 24% 102% -25% 2% 14% (=) Operating income (loss) -17% 22% -1% 26% 90% 84%... 2% -3% (+) Depreciation and Amortization 63% 76% 49% 271% 0% % 22% (+) Amortization of publishing investment -4% 58% 0% 0% -101% % (=) Adjusted EBITDA -13% 23% 4% 32% 71% 77% % (+) Stock-based compensation plan (=) Adjusted EBITDA by stock-based plan -13% 23% 4% 32% 71% 3% % EBITDA Margin (%) -2 p.p. -5 p.p. -3 p.p. 5 p.p. 45 p.p p.p. (*) Consolidated data on a corporate basis and data by business on a managerial basis. Consolidated EBITDA is adjusted by amortization of the publishing investment. In accordance with CVM Instruction 527/12, EBITDA is defined as Earnings Before Interest, Tax (Income and Social Contribution Taxes), Depreciation and Amortization. On this basis, in accordance with this Instruction, EBITDA amounted to R$126.6 million in 1Q14 and R$127.5 million in 1Q15. Adjusted EBITDA is calculated based on operating income including the amounts related to depreciation and amortization and including amortization of publishing investments. Pursuant to CVM Instruction 527/12, the Company may opt to report EBITDA excluding the net amounts related to discontinued operations, as per Technical Pronouncement CPC 31 Non-Current Assets Held for Sale and Discontinued Operations, and adjusted for other items that contribute to information on the potential gross cash generation. 10

13 (A free translation of the original in Portuguese) BALANCE SHEET (All amounts in thousands of Reais) ASSETS March 31, 2015 Parent company December 31, 2014 March 31, 2015 Consolidated December 31, 2014 CURRENT ASSETS Cash and cash equivalents (Note 7) , ,069 Trade receivables (Note 8) 2,567 2, , ,135 Inventories (Note 9) , ,125 Taxes recoverable (Note 10) 14,165 15,313 64,177 62,173 Dividends and interest on capital (Note 31) 7,153 9, Other assets (Note 11) ,079 24,055 24,788 28,674 1,035, ,557 NON-CURRENT ASSETS Trade receivables (Note 8) ,346 6,889 Taxes recoverable (Note 10) - - 4,412 4,467 Deferred income tax and social contribution (Note 19) , ,979 Judicial deposits (Note 18) 6 6 8,944 9,088 Other assets (Note 11) ,966 12,480 Investments (Note 12) 1,650,556 1,585,042 6,674 7,728 Intangible assets (Note 13) - - 2,153,760 2,122,524 Property and equipment (Note 14) , ,715 1,650,582 1,585,078 2,429,348 2,379,870 Total assets 1,675,370 1,613,752 3,465,216 3,360,427 11

14 (continued) BALANCE SHEET (All amounts in thousands of Reais) LIABILITIES AND EQUITY Parent company Consolidated March 31, 2015 December 31, 2014 March 31, 2015 December 31, 2014 CURRENT LIABILITIES Trade and other payables (Note 15) 19,663 17, , ,593 Borrowings (Note 16) ,096 39,482 Taxes and contributions payable (Note 17) 31 1,531 4,786 6,558 Income tax and social contribution payable - - 2,151 3,604 Dividends payable 11,608 11,608 12,558 12,545 Payables for acquisition of ownership interest (Note 30) ,460 43,880 31,302 30, , ,662 NON-CURRENT LIABILITIES Trade and other payables (Note 15) 6,177 10,944 10,342 12,668 Loans and other credit operations with related parties (Note 31) 12, Payables for acquisition of ownership interest (Note 30) , ,093 Borrowings (Note 16) , ,085 Taxes and contributions payable (Note 17) Provision for contingencies (Note 18) ,633 44,649 Deferred income tax and social contribution (Note 19) 4,631 4, , ,260 22,973 15,575 1,410,303 1,381,506 Total liabilities 54,275 46,443 1,833,178 1,784,168 EQUITY Attributable to the owners of the parent Share capital (Note 22) 852, , , ,868 Capital reserves (Note 23) 540, , , ,564 Profit reserves (Note 23) 257, , , ,456 Carrying value adjustments (13,228) (13,228) (13,228) (13,228) Treasury shares (Note 22.b) (4,671) (4,671) (4,671) (4,671) Goodwill on capital transaction (Note 12) (58,680) (58,680) (58,680) (58,680) Profit for the period 47,248-47,248-1,621,095 1,567,309 1,621,095 1,567,309 Non-controlling interest ,943 8,950 Total equity 1,621,095 1,567,309 1,632,038 1,576,259 Total liabilities and equity 1,675,370 1,613,752 3,465,216 3,360,427 The accompanying notes are an integral part of this quarterly information. 12

15 (A free translation of the original in Portuguese) STATEMENT OF INCOME QUARTER ENDED MARCH 31 (All amounts in thousands of Reais unless otherwise stated) (A free translation of the original in Portuguese) STATEMENT OF INCOME Parent company Consolidated Net revenue (Note 25) , ,706 Cost of sales and services (Note 26) - - (94,856) (72,115) Gross profit , ,591 Selling expenses (Note 26) (1) - (99,037) (90,002) General and administrative expenses (Note 26) (350) 1,144 (77,299) (63,997) Other income, net 102-1, Operating profit (loss) (247) 1, , ,827 Finance income (Note 27) 363 2,224 14,406 12,946 Finance costs (Note 27) (693) (468) (44,454) (36,098) Foreign exchange variation, net (Note 27) - - 1,460 (167) Profit (loss) before equity in results of subsidiaries (577) 2,904 76,240 84,508 Equity in results of subsidiaries, net of amortization (Note 12) 47,825 50,560 (1,054) (129) Profit before income tax and social contribution 47,248 53,464 75,186 84,379 Income tax and social contribution (Note 28) - (51) (26,648) (27,827) Profit for the period 47,248 53,413 48,538 56,552 Attributable to Owners of the Company 47,248 53,413 Non-controlling interest 1,290 3,139 48,538 56,552 Basic earnings per share - R$ (Note 23.5) Diluted earnings per share - R$ (Note 23.5) The accompanying notes are an integral part of this quarterly information. 13

16 (A free translation of the original in Portuguese) STATEMENT OF CHANGES IN EQUITY (All amounts in thousands of Reais) Capital reserves Profit reserves Stock Carrying Goodwill on Equity Share Capital options Legal Profit value Treasury capital Retained attributable to Non-controlling capital reserve granted reserve retention adjustments shares transactions earnings owners interest Total AT DECEMBER 31, , ,857 20,335 16, ,619 (13,228) (330) - - 1,576,691 10,641 1,587,332 Stock option plan (Note 21) Purchase of shares (Note 22.b) (4,231) - - (4,231) - (4,231) Profit for the quarter ended ,413 53,413 3,139 56,552 Other changes involving non-controlling interest (30) (30) AT MARCH 31, , ,857 21,030 16, ,619 (13,228) (4,561) - 53,413 1,626,568 13,750 1,640,318 AT DECEMBER 31, , ,857 36,707 19, ,442 (13,228) (4,671) (58,680) - 1,567,309 8,950 1,576,259 Stock option plan (Note 21) - - 6, ,538-6,538 Profit for the quarter ended ,248 47,248 1,290 48,538 Other changes involving non-controlling interest AT MARCH 31, , ,857 43,245 19, ,442 (13,228) (4,671) (58,680) 47,248 1,621,095 10,943 1,632,038 The accompanying notes are an integral part of this quarterly information. 14

17 (A free translation of the original in Portuguese) STATEMENT OF CASH FLOW QUARTER ENDED MARCH 31 (All amounts in thousands of Reais) Parent company Consolidated CASH FLOWS FROM OPERATING ACTIVITIES Cash from operations (Note 30) (4,846) (1,163) 123, ,788 Interest paid - - (11,505) (12,302) Income tax and social contribution paid - - (10,108) (22,502) NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES (4,846) (1,163) 101,406 85,984 CASH FLOWS FROM INVESTING ACTIVITIES Acquisition of (additions to): Property and equipment - (53) (7,489) (8,358) Intangible assets - - (7,855) (3,328) Finance income Acquisition of subsidiary in the period, net of cash obtained (Note 33) - - (23,903) - Capital increase in subsidiaries (9,877) (16,470) - - Interest on capital received 2, Loans received from related parties 11, NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES 4,134 (16,523) (39,247) (11,361) CASH FLOWS FROM FINANCING ACTIVITIES New borrowings Repayment of borrowings - - (5,113) (3,254) Payments of PAES and taxes in installments (1,030) Capital increase - non-controlling interest Treasury shares (Note 22.b) - (4,231) - (4,231) Dividends paid to non-controlling interest (1,207) NET CASH USED IN FINANCING ACTIVITIES - (4,231) (3,905) (9,722) INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (712) (21,917) 58,254 64,901 Cash and cash equivalents at the beginning of the year , , ,420 Cash and cash equivalents at the end of the year , , ,321 INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (712) (21,917) 58,254 64,901 The accompanying notes are an integral part of this quarterly information. 15

18 (A free translation of the original in Portuguese) STATEMENT OF VALUE ADDED QUARTER ENDED MARCH 31 (All amounts in thousands of Reais) P arent company C ons olidated R EV EN UE , ,742 Sa le s o f g o o d s a n d s e rv ic e s (N o te 25) , ,172 O th e r in c o me (N o te 27) 102-1, Pro v is io n fo r imp a irme n t o f tra d e re c e iv a b le s (N o te 8) - - (3,845) (2,788) IN P UTS A C Q UIR ED FR O M THIR D P A R TIES 1,800 1, , ,572 Ra w ma te ria ls c o n s u me d Co s t o f p ro d u c ts a n d s e rv ic e s ,553 38,721 M a te ria ls, e le c tric ity, o u ts o u rc e d s e rv ic e s a n d o th e r 1,800 1, ,095 62,652 GR O S S V A LUE A D D ED (1,696) (1,061 ) 257, ,170 R ETEN TIO N S ,724 18,742 D e p re c ia tio n a n d a mo rtiza tio n (N o te s 13 a n d 14) ,724 18,74 2 N ET V A LUE A D D ED GEN ER A TED B Y THE C O MP A N Y (1,706) (1,113 ) 235, ,428 V A LUE A D D ED R EC EIV ED THR O UGH TR A N S FER 48,188 52,784 15,241 13,196 Eq u ity in re s u lts o f s u b s id ia rie s (N o te 12) 47,825 50,56 0 (1,054) (129 ) Fin a n c e in c o me (N o te 27) 363 2, ,406 12,94 6 Fo re ig n e xc h a n g e v a ria tio n g a in s (N o te 27) - - 1, TO TA L V A LUE A D D ED TO D IS TR IB UTE 4 6, , , ,62 4 D IS TR IB UTIO N O F V A LUE A D D ED Pe rs o n n e l a n d c h a rg e s (1,468) (2,562 ) 75,254 61,71 4 D ire c t re mu n e ra tio n (1,524) (2,625 ) 63,595 52,03 3 Be n e fits ,069 5,90 6 Go v e rn a n c e Se v e ra n c e In d e mn ity Fu n d fo r Emp lo y e e s (F GT S ,590 3,77 5 T a xe s a n d c o n trib u tio n s ,255 51,74 2 F e d e ra l ,849 46,04 1 S ta te M u n ic ip a l - - 4,566 5,30 6 T h ird -p a rty c a p ita l re mu n e ra tio n ,364 62,616 In te re s t (N o te 27) ,454 36,09 8 F o re ig n e xc h a n g e v a ria tio n lo s s e s (N o te 27) Re n ta ls ,630 9,38 6 Co p y rig h ts ,851 16,58 0 O th e r O w n c a p ita l re mu n e ra tio n 47,248 53,413 48,538 56,552 Re ta in e d e a rn in g s 47,248 53, ,248 53,41 3 N o n -c o n tro llin g in te re s t - - 1,290 3,13 9 TO TA L V A LUE A D D ED D IS TR IB UTED 4 6, , , ,62 4 T h e a c c o mp a n y in g n o te s a re a n in te g ra l p a rt o f th is q u a rte rly in fo rma tio n. 16

19 (A free translation of the original in Portuguese) 1. GENERAL INFORMATION NOTES TO THE QUARTERLY INFORMATION (ITR) AT MARCH 31, 2015 (All amounts in thousands of Reais unless otherwise stated) Abril Educação S.A. (the "Company") is a corporation headquartered at Avenida Otaviano Alves de Lima, no , 7 th floor, in the city of São Paulo, State of São Paulo. The Company and its subsidiaries (the "Group") operate in the segment of primary and pre-university education, with the following business lines: Editora Ática and Editora Scipione - educational book publishing houses, SER teaching system and "O Líder em Mim" (OLEM) program; Sistema de Ensino Abril Educação - Anglo teaching system, Ph teaching system, Motivo system and pre-university entrance courses; Ph Group - basic teaching schools and pre-university entrance courses; ETB System - technical and professional teaching system; Maxiprint Gráfica e Editora - Maxi teaching system; Edumobi - digital content distribution technology; SGE - GEO teaching system; Jafar (Alfacon) - preparatory courses for civil service exams; Red Balloon - English language teaching schools for children and teenagers; Ei Você - e-learning, professional training and free courses, Ometz - English language teaching service for teenagers and adults through the Wise Up and You Move brands, Motivo Group - basic teaching schools and pre-university entrance courses; Sigma - basic, secondary and high school teaching institutions, and Colégio Maxi - secondary and high school, integral, extension courses and High School program institutions. The Company's activities include the editing, printing, publication, advertising and sale, in the wholesale and retail markets, of books, textbooks and publications for basic education and pre-college admission courses, as well as the provision of specialized training services for teachers and school managers, meetings, lectures and workshop activities related to education, and pedagogical activities for its basic and professional teaching courses through its own schools or teaching systems. The issue of these financial statements was definitively authorized by the Company's Board of Directors on May 8, SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 2.1 Basis of presentation The Quarterly Information (ITR) was prepared on a historical costs basis, with financial assets measured at fair value through profit or loss. The ITR was based on principles, methods and criteria consistent with those adopted at the end of the last financial year ended December 31, 2014 and, consequently, should be read together with the published annual financial statements. The interim quarterly information was prepared in accordance with the technical pronouncement CPC 21 (R1), "Interim Financial Reporting, issued by the Brazilian Accounting Pronouncements Committee (CPC), and is being presented in accordance with the standards issued by the Brazilian Securities Commission (CVM) applicable to the preparation of quarterly information. 17

20 The preparation of quarterly information requires the use of certain critical accounting estimates. It also requires management to exercise its judgment in the process of applying the Group's accounting policies. Those areas involving a higher degree of judgment or complexity, or areas where assumptions and estimates are significant to the quarterly information, are disclosed in Note 3. The actual results of the operations for the quarters shown do not necessarily represent an indication of the results expected for the full financial year ending December 31, (a) Consolidated quarterly information The consolidated quarterly information has been prepared and is being presented in accordance with the accounting practices adopted in Brazil, including the pronouncements issued by the Brazilian Accounting Pronouncements Committee (CPC), as well as in accordance with the International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board (IASB). The presentation of the parent company and consolidated statements of value added is required by the Brazilian corporate legislation and the accounting practices adopted in Brazil for listed companies, but is not required under IFRS. Therefore, under IFRS, the presentation of such statements is considered supplementary information, and not part of the formal set of quarterly information. (b) Parent company quarterly information 2.2 Consolidation The parent company quarterly information has been prepared in accordance with the accounting practices adopted in Brazil issued by the CPC. Because the accounting practices adopted in Brazil applicable to individual financial statements, from 2014, no longer differ from the IFRS applicable to separate financial statements, which now allow entities to use the equity method to account for investments in subsidiaries in the separate financial statements, they are also in compliance with IFRS. The parent company quarterly information is disclosed together with the consolidated quarterly information. The parent company and consolidated quarterly information reflect the balances of assets, liabilities and equity at March 31, 2015 and at December 31, 2014 and the operations for the quarters ended March 31, 2015 and 2014 of the Company and its subsidiaries. (a) Subsidiaries Subsidiaries are all entities over which the Group has control. They are fully consolidated from the date on which control is transferred to the Group, and deconsolidated from the date on which that control ceases. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date. The Group recognizes any non-controlling interest in the acquiree based on the proportional share of the non-controlling interest at fair value of the acquiree's net assets. Non-controlling interests are determined on each acquisition. 18

21 Transactions, balances and unrealized gains on transactions between Group companies are eliminated. Unrealized losses are also eliminated, unless the transaction provides evidence of impairment of the asset being transferred. The accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Group. (b) Transactions with non-controlling interests The Group treats transactions with non-controlling interests as transactions with equity owners of the Group. For purchases from non-controlling interests, the difference between any consideration paid and the proportion acquired of the carrying value of net assets of the subsidiary is recorded in equity. Gains or losses on disposals to non-controlling interests are also recorded directly in equity, in "Carrying value adjustments". 2.3 Segment reporting Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker responsible for allocating resources and assessing performance of the operating segments, which has been identified as the Board of Directors, which also makes the Group's strategic decisions. 2.4 New standards that are not yet effective The following new standards were issued by IASB but are not effective for the current quarter of The early adoption of standards, even though encouraged by the IASB, has not been implemented in Brazil by the CPC.. IFRS 15, "Revenue from Contracts with Customers", replaces IAS 11, "Construction Contracts", IAS 18, "Revenue" and related interpretations, and introduces the principles to be applied by an entity to determine the measurement and recognition of revenue. The effective date is January 1, Management has yet to assess the full impact of the adoption of IFRS 15.. IFRS 9, "Financial instruments" addresses the classification, measurement and recognition of financial assets and financial liabilities. The complete version of IFRS 9 was issued in July 2014 and is effective from January 1, It replaces the guidance included in IAS 39 related to the classification and measurement of financial instruments. IFRS 9 retains but simplifies the mixed measurement model and establishes three primary measurement categories for financial assets: amortized cost, fair value through other comprehensive income and fair value through profit or loss. There is now a new expected credit losses model that replaces the current incurred loss impairment model. IFRS 9 relaxes the requirements for hedge effectiveness. It also requires an economic relationship between the hedged item and hedging instrument and for the "hedged ratio" to be the same as the one management actually use for risk management purposes. Management has yet to assess the full impact of the adoption of IFRS 9. There are no other IFRSs or IFRIC interpretations that are not yet effective that would be expected to have a material impact on the Group. 19

22 3. CRITICAL ACCOUNTING ESTIMATES AND JUDGMENTS Accounting estimates and judgments are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. 3.1 Critical accounting estimates and assumptions Based on assumptions, the Group makes estimates concerning the future. The resulting accounting estimates will, by definition, seldom equal the related actual results. The estimates and assumptions that carry a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the current financial year are addressed below: (a) Impairment of goodwill and trademarks The Group tests annually whether goodwill and acquired trademarks have suffered any impairment. The recoverable amounts of cash-generating units (CGUs) have been determined based on value-in-use calculations. These calculations require the use of estimates. For the purposes of impairment testing, which is conducted on an annual basis, the Company uses business projections for each of its CGUs, along with market information about the risks related to these CGUs. Accordingly, the main critical judgments include: Projected growth rate for each business Projected interest rate Discount rate used to calculate the present value of the projected flows Establishment of a perpetual rate for each business analyzed, and Expected savings arising from the non-payment of trademark-related royalties. At December 31, 2014, management reviewed the recoverable values of goodwill and trademarks acquired and did not identify the need to record any provision for impairment. In accordance with management's past practice, the impairment test in 2015 will be performed at the end of the year, or earlier for specific items if management identifies any evidence of impairment. (b) Deferred income tax and social contribution The Group recognizes deferred tax assets and liabilities based on the differences between the carrying amounts of assets and liabilities and their tax bases, using the current tax rates and taking into account the historical profits generated and the estimated future taxable profits, based on technical feasibility studies supporting the recording and maintenance of these assets. (c) Contingencies The Group is a party to several judicial and administrative proceedings. Provisions are recorded for all contingencies related to judicial proceedings assessed as representing probable losses. The likelihood of unfavorable outcomes is determined based on evidence available, including the opinion of external lawyers. Management believes that these contingencies are properly presented in the financial statements. 20