Abril Educação ends 1Q12 with 22% net revenue growth, totaling R$248.8 million. Consolidated EBITDA reached R$110.1 million, 13% up year-over-year, and net income increased by 26%. São Paulo, May 11, 2012 - Abril Educação S.A. (BM&FBOVESPA: ABRE11) announces its results for the first quarter of 2012 (1Q12). Comments herein refer to the consolidated results under IFRS, and comparisons refer to the same period in 2011 (1Q11), as indicated. CONSOLIDATED RESULTS (R$ mm) 1Q12 1Q11 Changes (%) Net Revenue 248.8 203.8 22% (-) Cost of goods sold (COGS) (64.4) (60.0) 7% (=) Gross Profit 184.4 143.8 28% Gross margin (%) 74% 71% 3 p.p. (-) Selling, general and administrative expenses (93.3) (67.2) 39% (=) Operating income (loss) 91.2 76.6 19% Operating Margin(%) 37% 38% -1 p.p. (-) Financial Result (9.1) (12.3) -26% (=)Income (loss) before income tax and social contribution 82.1 64.3 28% (-) Income tax and social contribution (28.3) (21.5) 32% (=) Net Income (loss) 53.9 42.8 26% Net Margin (%) 22% 21% 1 p.p. (=) Operating income (loss) 91.2 76.6 19% (+) Depreciation and Amortization 8.9 7.1 25% (+) Amortization of editorial investment 10.0 14.1-29% (=) EBITDA 110.1 97.8 13% EBITDA Margin (%) 44% 48% -4 p.p. Number of Shares (million) 226.5 - - Earnings per share (R$) 0.2381 - - For the purposes of both, financial and operational analysis, it is necessary to consider the periods of acquisition of each business and their respective contributions to revenue and expenses. The Anglo Learning System and Preparatory Courses were acquired in July 2010, the ph Schools and Preparatory Courses and the Escolas Técnicas do Brasil (ETB) were acquired in April 2011, the Maxi Learning System in October 2011, and the Escolas Satélite in February 2012. The assets arising from these transactions began to be booked in the Company s financial statements as of their respective acquisition dates, influencing Abril Educação s performance in the comparison between 1Q12 and 1Q11. Price on May,11 ABRE11 : R$27.05 Market Value: R$2,0 billion Conference Call: 05/14/12 Portuguese: 12:00pm English: 11:00am (EST) Investor Relations ri@abrileducacao.com.br 55 11 3990 1601 1
HIGHLIGHTS Consolidated net revenue totaled R$248.8 million in 1Q12, 22% up over the R$203.8 million recorded in 1Q11, driven by the acquisitions (ph Group, Maxi and ETB), which added R$34 million, and organic growth, which added R$11.1 million; R$10.4 million of which from the expansion of the Anglo and SER Learning Systems. The learning systems posted net revenue of R$72.1 million, 30% up on the R$55.4 million reported in 1Q11. Excluding Maxi learning system, acquired in October 2011, and the revenue originated by Anglo from the PNBE (National School Library Program), as well as the impact from the change in SER s sales cycle (mentioned in the previous earnings release and more detailed later on in this report), the learning systems grew by 31.2%, driven by Anglo and SER, which grew by 30% and 35%, respectively. We closed March 2012 with 538,000 students enrolled in schools that use the Company s Learning Systems, 43% more than the 377,000 recorded in 1Q11. These figures do not include: (a) returns, which usually occur in the second quarter; and (b) city governments that, at the end of the quarter, were still concluding their bidding process for the learning system to be adopted in 2012. The Publishers closed 1Q12 with net revenue of R$143.6 million, virtually identical to the R$143.7 million posted in 1Q11. The private school segment recorded growth of 4%, while revenue from the public school segment fell by 13%. However, using the same comparable basis, revenue grew by 5.7%, after taking into consideration the following factors: (i) the higher percentage of 2011 PNLD (National Textbook Program) sales accounted in 1Q11 than 2012 PNLD program sales accounted in 1Q12 (10.6% and 9.1% respectively); (ii) the non-recurring purchases by EJA (Youth and Adult Education Program) in 1Q11; and (iii) Abril Educação and Anglo s participation in the PNBE under their own respective corporate identities, which decreased the share of the Publishers. Consolidated gross profit grew by 28% over 1Q11 to R$184.4 million, while the gross margin widened from 71% to 74%. Consolidated EBITDA increased by 13% over 1Q11 to R$110.1 million, although the EBITDA margin narrowed from 48% to 44%. Gross profit growth outpaced the EBITDA expansion, due to the 39% upturn in selling, general and administrative expenses. 2
SG&A expenses totaled R$93.3 million, 39%, or R$26.1 million, up over 1Q11, contributors to such an increase in expenses were: (a) the R$1.9 million growth in the direct expenses of the holding company, whose structuring for the management of the various business lines took place throughout 2011, especially as of the second quarter. The R$1.9 million includes the recognition of the stock option program, amounting to R$2.4 million, which had not been implemented in the first half of the year (with no cash effect); (b) R$2.4 million related to typical holding company services, but which were provided by some of the business lines to the others; (c) R$13.0 million related to the businesses acquired, R$9.2 million of which from ph s Preparatory Course and Schools, which have lower margins than the other business lines, as well as the amortization of the surplus value from intangible assets, with no cash effect; and (d) R$7.7 million related to the company s organic growth and five new expansion projects which are not yet generating revenue and are scheduled to be launched in the second half of 2012. Net income totaled R$53.9 million, 26% up on the R$42.8 million posted in 1Q11, due to the improvement in the financial result, from a net expense of R$12.3 million in 1Q11 to a net expense of R$9.1 million in 1Q12, and the 29% reduction in the amortization of editorial investments, given that none of Abril Educação s works, submitted for evaluation by the 2013 PNLD, were rejected. Unlikely in 2011, when the non-approval of some of the works submitted generated an accelerated amortization of the non-approved and non-reusable works which exceeded the amount amortized in 2012 by R$5.1 million. At the end of March, the federal government announced the list of books approved, in the technical assessment, by the 2013 PNLD, which will be produced and sold by the publishers participating in the program in the last two quarters of 2012. None of the works submitted by Ática and Scipione were rejected, giving them an important presence in the list making up the PNLD catalogue and in the selection of books by primary school teachers. 3
NET REVENUE In 1Q12, we continued to diversify our revenue, contributing to mitigating the impact of seasonality on the Publishers business, focusing on acquisitions and initiatives with higher growth potential in business lines that generate more regular revenue throughout the year. Publishers: The Publishers closed 1Q12 with net revenue of R$143.6 million, in line with the R$143.7 million posted in 1Q11. Revenue from the private school market increased by 4%, due to a similar increase in average price of the books sold and flat sales volume. However, the public schools market recorded a 13% decline, from R$33.9 million to R$29.7 million. Using the same comparable basis, the Publishers revenue grew by 5.7%, after considering the following factors: (i) (ii) the higher share of PNLD 2011 sales accounted in 1Q11 (10.6%) than PNLD 2012 sales accounted in 1Q12 (9.1%), which had a negative impact of R$4.5 million in 1Q12; the non-recurring purchases by the EJA Program in 1Q11, totaling R$2.4 million (typical of that year); and 4
(iii) Abril Educação and Anglo s participation in the PNBE (School Library Program) under their own respective corporate identities), with R$1.3 million revenue, diluting the Publishers share of the program in fact total revenue from this program increased by 29.4%, from R$3.0 million, in 1Q11, to R$3.9 million in 1Q12. Publishers Net Revenues - R$ mm Number of Books Sold - '000 143.7 143.6 8,613 8,331 +4% 109.8 113.9-0.4% 3,531 3,517-13% 33.9 29.7-5% 5,082 4,814 1Q11 1Q12 1Q11 1Q12 Public Private Public Private Publishers Net Revenue Growth "As Is" (R$ mm) Publishers Net Revenue Growth Comparable Basis (R$ mm) 143.7 143.6 +6% 149.4 5.8 EJA 143.7 2.4 PNLD + PNBE PNLD + PNBE 141.3 143.6 1Q11 1Q12 1Q11 1Q12 Learning Systems: The Anglo learning system recorded net revenue of R$56.4 million, 32% up over the R$42.6 million registered in 1Q11. This amount includes revenue of R$2.6 million from Anglo s ph brand, launched at the end of 2011, and the books sold via Gráfica e Editora Anglo S/A to the PNBE program totaling R$1.0 million, as previously mentioned. The number of students using the Anglo and ph systems grew by 18%, from 259,000, in 1Q11, to 304,000, while the average ticket increased by 10.8%. 5
Although SER s student base and average prices increased by 17.4% and 15.1%, respectively, over 1Q11, the system s net revenue fell by 26%, from R$12.8 million to R$9.5 million. This reduction was not structural in nature, but was due to a combination of two factors: (a) As mentioned in the previous earnings release, we implemented a new cycle that anticipates deliveries and revenue recognition at the beginning of a given school year to the last quarter of the previous year. In 2011, we anticipated to 4Q11 the recognition of R$4.9 million in revenue from sales related to 2012. A similar impact will occur in 4Q12, when we will recognize revenue related to sales in 1Q13. We rationalized SER s production process by reducing the number of system versions and changing the delivery schedule of these versions along the year. The change in the delivery schedule has a negative impact on revenue in the first half, comparatively, and is entirely offset in the second half, so it will not alter expected revenue for 2012, although it does change recognition from quarter to quarter. Thus, we did not recognize R$2.9 million in 1Q12, which will be recognized in the following quarters. Using the same comparable basis, SER would have recorded revenue growth of 35% over 1Q11. The acquisition of the Maxi system in October 2011 added R$6.2 million to 1Q12 revenue in 1Q12. Consequently, excluding the negative effects from the changes in sales policy and the positive impact from the sale of textbooks by Anglo to the PNBE program, the system recorded real revenue growth of 42%. 6
Schools and Preparatory Courses: Anglo s Preparatory Courses posted net revenue growth of 17%, from R$4.6 million, in 1Q11, to R$5.4 million. The Tatuapé unit, Anglo s fourth, but the first to be inaugurated after the company s acquisition by Abril Educação, began operations in 2012 with 305 students out of a total capacity of 600 students per shift (morning, afternoon, night), totaling 1,800 in all. With new investments, the unit s total capacity may reach 3,000 students in the three shifts. Given the limited time available for enrollment at the beginning of the 2012 school year, since Tatuapé unit was ready by March 2012, and using as benchmark the growth in the number of students following the opening of new ph schools, we believe the inauguration of this unit has been very successful so far. The ph Group (Schools and Preparatory Courses) reported revenue of R$26.1 million in 1Q12, reflecting the 18% growth in the number of students, from 6,400 in March 2011 to 7,500 in March 2012. ETB closed 1Q12 with revenue of R$1.7 million and 2,400 students, in line with 1Q11. The School and Preparatory Courses business combined (Anglo, Siga, ph and ETB) closed the quarter with 17,000 students enrolled in 17 units, 9% more than the 15,000 recorded at the end of 1Q11. COST OF GOODS SOLD (COGS) AND GROSS PROFIT Consolidated COGS totaled R$64.4 million in 1Q12, 7% up over 1Q11. As a result, consolidated gross income increased by R$40.6 million to R$184.4 million and the gross margin widened from 71%, in 1Q11, to 74% in 1Q12. Publishers: 1Q12 Publisher s COGS fell by 5%, from R$40.3 million in 1Q11 to R$38.4 million, due to: (a) the higher share of PNLD 2011 sales accounted in 1Q11 (10.6%) than PNLD 2012 sales accounted in 1Q12 (9.1%), as previously mentioned, which had a negative impact of R$1.2 million in 1Q12; and (b) the 3% decline in the volume of textbooks sold (public and private segments). 7
Learning Systems: Anglo s COGS increased by 15%, from R$8.2 million to R$9.4 million, including the ph branded learning system, launched at the end of 2011, and R$0.3 million from sales to the PNBE program under Anglo s own corporate identity. COGS increased at a lower rate than revenue (+32%), reflecting operational efficiency gains, in turn due to the higher number of students, lower printing costs, increased logistics efficiency and stable paper costs. SER s COGS fell by 48%, from R$7.5 million in 1Q11 to R$3.9 million in 1Q12. As explained earlier in this release, the implementation of SER s new sales cycle advanced the recognition of COGS worth R$1.3 million to 4Q11. The change in the recognition of SER s revenue, which is now based on the number of notebooks delivered, led to a R$0.8 million reduction in COGS, which will be recognized in the remaining quarters of the year. Adopting a same comparable basis, COGS fell by 20%, from R$7.5 million in 1Q11 to R$6.0 million in 1Q12, versus revenue growth of 35% in the same period. This reduction reflects SER s adoption by of Anglo s best operational practices, such as the aforementioned rationalization of the production process. The Maxi system recorded COGS of R$1.4 million, resulting in a gross profit of R$4.8 million and a gross margin of 77%. 8
Schools and Preparatory Courses: In 1Q12, Anglo reported Preparatory Course COGS of R$4.4 million, 10% up over 1Q11, given that the reduction in teaching material costs was more than offset by the recognition of expenses with academic management, previously booked under copyrights by the learning systems. The businesses acquired (ph, ETB and Escola Satélite) reported consolidated COGS of R$7.5 million. SELLING, GENERAL AND ADMINISTRATIVE EXPENSES AND OPERATIONAL INCOME In 1Q12, SG&A expenses totaled R$93.3 million, R$26.1 million or 39% up over 1Q11, due to the three factors below: (a) the R$4.3 million increase in the expenses of the holding company Abril Educação and expenses incurred by the Publishers and Learning Systems related from services that are typical of holding companies, but which were provided and booked by these units. Of this total, R$2.4 million represent the recognition of the granting of stock options to management in the second half of 2011, with no cash impact. These increases are related to the establishment of the holding company throughout 2011, especially as of the second half, and the increased need for controls and reports related to the Company s IPO. 9
(b) The R$13.0 million growth in expenses from the businesses acquired (ph, ETB, Maxi and Escola Satélite) and the respective amortization of the surplus value from intangible assets, with no cash effect, which increased from R$5.5 million in 1Q11 to R$6.6 million in 1Q12. (c) Organic growth and investments in five expansion projects, which will only generate revenue as of the second half of 2012, which increased expenses by R$7.7 million, in 1Q11, to R$66.7 million. The higher SG&A reduced some of the operating margins of the business lines in the period. 10
EBITDA Consolidated EBITDA reached R$110.1 million in 1Q12, 13% up over R$97.8 million reported in 1Q11. The EBITDA margin decreased by 4 p.p. from 48% to 44% in 1Q12. Publishers: 1Q12 Publishers EBITDA fell by 9% over 1Q11 to R$65.0 million, with a margin of 45%, versus 50% in the previous quarter. The decrease reflects R$4.7 million, a non-recurring reduction in COGS reported in 1Q11, resulting from a reversal of provision for paper loss, which did not occur in 1Q12. Learning Systems: The Anglo learning system posted EBITDA of R$39.2 million, 42% up on 1Q11, with a margin of 70%, a 5 p.p. improvement over the 65% reported in the same quarter last year, confirming the business profitability. The SER learning system reported EBITDA of R$1.4 million, 52% down over 1Q11, with an EBITDA margin of 15%. The EBITDA decrease is the result of a change in the management of the system as aforementioned. The system is, indeed, undergoing a process of significant improvement in profitability. On a comparable basis, SER EBITDA would have been R$7.2 million, a hefty 154% over 1Q11, resulting in an EBITDA margin of 42%. The Maxi learning system posted EBITDA of R$3.2 million, with a margin of 52%, in 1Q12. On a comparable basis, the learning systems combined, ended 1Q12 with an EBITDA of $ 49.7 million, 56% over the R$31.9 million reported in 1Q11, with margin of 63.0%, 5.4 p.p. above the 57.6% recorded in 1Q11. Schools and Preparatory Courses: The Anglo s preparatory course business line, recorded a negative EBITDA of R$4.3 million in 1Q12, reflecting the fact that expenses growth outpaced the upturn in revenue. On a comparable basis, EBITDA would have been negative in -R$2.5 million in 1Q12 compared to - R$2.4 reported in the same quarter of last year. 11
The acquired businesses contributed positively, especially ph, with R$10.4 million EBITDA and a 40% margin. NET INCOME 1Q12 net income totaled R$ 53.9 million, 25.8% over R$ 42.8 million recorded in1q11. Apart from acquisition effects, contributed to the increase in results, the improvement in the financial result and the aforementioned decrease in the amortization of editorial investment. Net income was negatively impacted by the amortization of the surplus value from intangible assets related to recent acquisitions (R$ 6.6 million) and Anglo and ph s deferred income and social contribution taxes (R$ 8.3 million), related to the amortization of fiscal goodwill and recognition of the future use of accumulated fiscal losses. None of these two impacts have a cash effect for the Company. If one disregards these effects, the Company would have posted a net income of R$ 68.6 million in 1Q12, compared to R$ 53.9 million. 12
CONSOLIDATED INVESTMENTS Abril Educação s consolidated investments in 1Q12 were primarily related to the acquisitions of new platforms for growth, acquisitions of fixed assets (vehicles and computer equipment) and intangibles (computer systems and software), which totaled R$ 4.6 million or 1.8% of net revenues. In 1Q12, the editorial investment was R$ 12.3 million, R$ 2.7 million higher than in 2011. Those resources were used to new collection production, renewal, updates of learning systems materials and collections, as well as finalization and production of ph learning system. CONSOLIDATED TRADE RECEIVABLES The characteristics of Abril Educação s businesses and the profile of its clients are generally associated with low levels of accounts receivable delinquencies. In 1Q12, the amount set aside for provisions for doubtful accounts recognized in the results was R$ 0.3 million. This amount represents 0.1% of net revenues for the period. In the learning systems business, sales are billed to client schools. The delivery of the respective teaching materials is made quarterly. In the event that a school fails to pay, subsequent deliveries are suspended. Also, in general, and largely due to the size of the monthly tuition fees in schools and college entrance preparatory courses of the Company, the students more often come from classes A/B, with higher household incomes. Sales by the publishers are intended for the private and the public school markets. The Federal Government has a consistent history of timely payments. The private market is composed of (i) exclusive distributors, where the history of failure to pay is practically nonexistent, and (ii) bookstores and schools whose management of credit is handled in a very rigorous manner. CONSOLIDATED CHASH FLOW In 1Q12, the Company generated operating cash flow of R$ 91.3 million, a R$ 21.0 million reduction compared to 1Q11 (R$ 112.4 million). The lower cash generation in comparison with 1Q11 was chiefly due to the payment of R$19 million in vendor financing in 1Q12. This operation began in 2011, when the Company negotiated substantially longer payment terms for paper suppliers, thereby permanently improving working capital needs and the cash position in 1Q11, particularly. In 1Q12, we experienced payments to suppliers of paper purchased in previous periods, when the vendor financing program or alternate programs for lengthening of payment term with paper suppliers will enter in regimen. Cash flow was also impacted by expenses related to copyright payments from the 2012 PNLD program, whose secondary education works have higher prices. 13
DIVIDENDS On March 20, the Company's Board of Directors approved the payment of R$11.5 million in dividends, equivalent to 25% of the year-end net income, after a 5% legal reserve constitution. On April 30, 2012, the Annual General Shareholders Meeting ratified the distribution of these dividends in the amount of R$0.050669/share (R$0.152007/unit). Payment to shareholders with rights to receive dividends will be made on May 31, 2012 Also, at the Annual General Shareholders Meeting held on April 30, a Fiscal Council was installed composed by 5 members, of which 3 were elected by the Company s Board and 2 by the minority shareholders. The members elected by the Board were: Marcos Bastos Rocha, Eduardo Khair Chalita and Carlos Alberto Julio (substitutes: Valdemir Pereira Ramos, Marcio Almeida Andrade and Francisco Papéllas Filho); and by the minority shareholders: Marcello da Costa Silva and Xavier Abdon de Sousa (substitutes: Rafael Sales Guimarães and Robson Candido da Silva). CONSOLIDATED CAPITAL STRUCTURE (R$mm) Jun 11 Sep 11 Dec 11 Mar12 Banking Debt 379.1 280.6 280.1 284.5 Sellers Debt 348.5 285.5 303.4 314.7 Total 727.6 566.1 583.5 599.2 Cash 211.2 320.7 305.6 379.5 Net Debt 516.4 245.4 277.8 219.7 Shareholders Equity 577.2 912.9 959.0 1,015.7 Total Capital 1093.6 1,158.4 1,236.8 1,235.4 Note: Sellers Debt: Debt with former controllers of the acquired companies (Anglo, ph, Maxi and Escola Satélite) 1Q12 consolidated net debt of Abril Educação was R$219.7 million, with a gross debt of R$599.2 million, and net cash available of R$379.5 million. Long-term debt accounted for 83% of total debt. The Company is not exposed to exchange rate risks or impacts as its entire debt is denominated in local currency. In March 2012, shareholders equity was R$1,015.7 million. The capital raised from the IPO in July 2010 has provided the Company with sufficient financial flexibility to implement its development plan. The Company has a sound and solid capital structure, with a financial leverage ratio of only 18%. 14
Share price - R$ R$ million 1Q12 RESULTS STOCK PERFORMANCE Abril Educação UNITS began trading in the Level 2 Corporate Governance segment of the BMF&BOVESPA. Each UNIT of Abril Educação corresponds to one common share (ON) and two preferred shares (PN). Between the IPO and May 10, 2012, Abril Educação s UNITS appreciated 34%, over the IPO closing price, versus the Bovespa Index s 0.6% upturn in the same period. 30 Price (R$) vs. Volume (R$ mm) (07/26/2011 a 05/10/2012) 26.80 30 25 25 20 15 10 5 20.00* 20 15 10 5 0 0 27-Jul 16-Aug 5-Sep 26-Sep 17-Oct 7-Nov 28-Nov 16-Dec 6-Jan 27-Jan 16-Feb 9-Mar 29-Mar 19-Apr 10-May *IPO price Volume (R$) Price Since the IPO until 03/30/2012 Since the IPO until 05/10/2012 In R$, unless otherwise stated* Values In R$, unless otherwise stated* Values Price at the beginning of the period 18.50 Price at the beginning of the period 18.50 Maximum 27.85 Maximum 28.30 Average 20.77 Average 21.57 Minimum 13.70 Minimum 13.70 Price at the end of the period 27.85 Price at the end of the period 26.80 Average daily volume (R$ million) 27.2 Average daily volume (R$ million) 25.7 Number of shares(mil)¹ 226,471 Number of shares(mil)¹ 226,471 ¹ Number of shares for the end of the period *considers the closing price of the day 15
FINANCIAL INFORMATION PER BUSINESS LINES ( AS IS ) PUBLISHERS ÁTICA AND SCIPIONE (R$ mm) 1Q12 1Q11 Change Net Revenue 143.6 143.7-0.1% (-) Cost of goods sold (COGS) (38.4) (40.3) -5% (=) Gross Profit 105.2 103.4 2% Gross Margin (%) 73% 72% 1 p.p. (-) Selling, general and administrative expenses (50.5) (46.2) 9% (=) Operating income (loss) 54.7 57.2-4% Operating Margin (%) 38% 40% -2 p.p. (+) Depreciation and Amortization 1.8 1.4 29% (+) Amortization of editorial investment 8.4 12.6-33% (=) EBITDA 65.0 71.2-8.8% EBITDA Margin (%) 45% 50% -5 p.p. LEARNING SYSTEMS ANGLO SER MAXI (R$ mm) 1Q12 1Q11 Change 1Q12 1Q11 Change 1Q12 1Q11 Net Revenue 56.4 42.6 32% 9.5 12.8-26% 6.2 - (-) Cost of goods sold (COGS) (9.4) (8.2) 15% (3.9) (7.5) -48% (1.4) - (=) Gross Profit 47.0 34.4 37% 5.6 5.4 4% 4.8 - Gross Margin (%) 83% 81% 2 p.p. 59% 42% 17 p.p. 77% - (-) Selling, general and administrative expenses (8.8) (6.9) 28% (4.9) (4.0) 23% (1.7) - (=) Operating income (loss) 38.2 27.6 38% 0.7 1.4-50% 3.1 - Operating Margin (%) 68% 65% 3 p.p. 7% 11% -4 p.p. 50% - (+) Depreciation and Amortization 0.1 0.0-0.0 0.0-0.1 - (+) Amortization of editorial investment 0.9 0.0-0.7 1.5-53% 0.0 - (=) EBITDA 39.2 27.6 42% 1.4 2.9-52% 3.2 - EBITDA Margin (%) 70% 65% 5 p.p. 15% 23% -8 p.p. 52% - SCHOOLS AND PREPARATORY COURSES ANGLO PH ETB (R$ mm) 1Q12 1Q11 Change 1Q12 1Q11 1Q12 1Q11 Net Revenue 5.4 4.6 17% 26.1-1.7 - (-) Cost of goods sold (COGS) (4.4) (4.0) 10% (6.7) - (0.7) - (=) Gross Profit 1.0 0.6 67% 19.4-1.0 - Gross Margin (%) 19% 13% 6 p.p. 74% - 59% - (-) Selling, general and administrative expenses (5.4) (1.9) 184% (9.2) - (1.0) - (=) Operating income (loss) (4.4) (1.3) 238% 10.2 - (0.0) - Operating Margin (%) -81% -28% -53 p.p. 39% - 0% - (+) Depreciation and Amortization 0.1 0.1 0% 0.2-0.0 - (+) Amortization of editorial investment 0.0 0.0-0.0-0.0 - (=) EBITDA (4.3) (1.2) 258% 10.4-0.0 - EBITDA Margin (%) -80% -26% -54 p.p. 40% - 0% - 16
ANNEX I STATEMENT OF INCOME FISCAL YEAR ENDED MARCH 31 (all amounts in R$ thousands) 2012 2011 2012 2011 Net revenue 274-248,835 203,807 Cost of sales and services (59) - (64,405) (60,015) Gross profit 215-184,430 143,792 Selling expenses (32) (141) (55,012) (48,011) General and administrative expenses (4,820) (2,626) (37,898) (19,453) Other income (expenses), net - - (359) 305 Operating profit (loss) (4,637) (2,767) 91,161 76,633 Finance income 7,753 5,464 9,622 8,173 Finance costs (1,878) - (18,878) (20,528) Foreign exchange variations, net (106) - 180 36 Profit (loss) before equity in the results of subsidiaries 1,132 2,697 82,085 64,314 Equity in the results of subsidiaries 53,600 40,702 - - Profit before income tax and social contributions 54,732 43,399 82,085 64,314 Income tax and social contributions (815) (555) (28,346) (21,470) Profit for the year 53,917 42,844 53,739 42,844 Profit attributable to: Parent Consolidated Owners of the Company 53,917 42,844 Non-controlling interests (178) - 53,739 42,844 Basic earnings per share - R$ 0.23807 0.12625 Diluted earnings per share - R$ 0.23691 0.12625 17
ANNEX II BALANCE SHEETS FISCAL YEAR ENDED MARCH 31 (all amounts in R$ thousands) ASSETS Parent Consolidated 2012 2011 2012 2011 CURRENT ASSETS Cash and cash equivalents 282,638 259,225 379,463 305,647 Trade receivables 18 1,848 154,309 183,414 Inventory - - 200,632 195,461 Taxes recoverable 9,243 7,792 32,058 38,562 Dividends receivable 13,881 13,881 - - Interest on capital 6,826 6,826 - - Advances and prepaid expenses 1,660 1,640 8,739 8,405 314,266 291,212 775,201 731,489 NON-CURRENT ASSETS Loans and other credits with related parties 14,015 37,097 368 434 Financial assets 3,644 3,752 3,644 3,752 Taxes recoverable - - 4,099 4,094 Deferred income tax and social contributions - - 3,422 11,434 Judicial deposits - - 5,330 5,664 Advances and prepaid expenses 3,089 3,083 3,714 3,832 Investments 700,573 646,973 - - Intangible assets - - 926,110 926,175 Property and equipment 426 396 65,724 65,111 721,747 691,301 1,012,411 1,020,496 Total assets 1,036,013 982,513 1,787,612 1,751,985 18
ANNEX II (cont.) BALANCE SHEETS FISCAL YEAR ENDED MARCH 31 (all amounts in R$ thousands) LIABILITIES AND SHAREHOLDERS EQUITY Parent Consolidated 2012 2011 2012 2011 CURRENT LIABILITIES Trade and other payables 4,150 5,826 117,780 153,686 Loans and financing - - 77,874 70,944 Taxes and contributions payable 6 758 6,990 7,940 Income tax and social contributions payable - - 13,210 12,853 Dividends payable 11,475 11,475 11,475 11,475 Payables for acquisition of equity interests - - 99,266 93,099 15,631 18,059 326,595 349,997 NON-CURRENT LIABILITIES Trade and other payables 1,021 1,006 1,034 1,018 Loans and financing with related parties - - 11 - Payables for acquisition of equity interests - - 215,453 210,280 Loans and financing - - 206,583 209,142 Taxes and contributions payable - - 5,540 6,306 Provision for contingencies - - 11,851 11,337 Deferred income tax and social contribution 4,631 4,631 4,859 4,887 5,652 5,637 445,331 442,970 Total liabilities 21,283 23,696 771,926 792,967 EQUITY Attributable to owners of the parent Share capital 463,946 463,946 463,946 463,946 Capital reserves 408,471 406,475 408,471 406,475 Revenue reserves 88,396 88,396 88,396 88,396 Accumulated revenue 53,917-53,917 - Non-controlling interests 1,014,730 958,817 1,014,730 958,817 - - 956 201 Total equity 1,014,730 958,817 1,015,686 959,018 Total liabilities and equity 1,036,013 982,513 1,787,612 1,751,985 19
ANNEX III STATEMENT OF CASH FLOWS FISCAL YEAR ENDED DECEMBER 31 (all amounts in R$ thousands) Parent Consolidated 2012 2011 2012 2011 CASH FLOW FROM OPERATING ACTIVITIES Cash generated from operations (Note 31) 948 (1,935) 91,347 112,363 Interest paid - - (1,361) (779) Income tax and social contribution paid (726) (162) (8,366) (11,729) NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES 222 (2,097) 81,620 99,855 CASH FLOW FROM INVESTMENT ACTIVITIES Purchases of: Property and equipment (76) - (2,995) (308) Intangible assets - - (487) (48) Acquisition of subsidiary, net of cash acquired - - (1,093) - Loans granted to related parties (18,062) (19,077) - - Loans received from related parties 40,776 62,896 77 - Interest received 553 1,443 553 - NET CASH USED IN INVESTMENT ACTIVITIES 23,191 45,262 (3,945) (356) CASH FLOW FROM FINANCING ACTIVITIES New loans and financing - - 44 - Repayment of loans and financing - - (2,997) (2,217) Payment of PAES and taxes in instalments - - (906) (1) NET CASH PROVIDED BY FINANCING - - (3,859) (2,218) ACTIVITIES INCREASE IN CASH AND CASH EQUIVALENTS 23,413 43,165 73,816 97,281 Cash and cash equivalents at the beginning of the year 259,225 158,497 305,647 211,170 Cash and cash equivalents at the end of the year 282,638 201,662 379,463 308,451 NET CHANGE IN CASH AND CASH EQUIVALENTS 23,413 43,165 73,816 97,281 20
CONFERENCE CALL AND WEBCAST The release will be available on our website www.abrileducacao.com.br. Conference Call: May 14, 2012 English Portuguese May 14, 2012 May 14, 2012 12:00 pm (Brasília Time) 10h30 (Brasília Time) 11:00 am ((US EST) 9h30 (US EST) Phone: +1 (877) 317-6776 (EUA) Phone: +55 (11) 3127-4971 +1 (412) 317-6776 (other countries) Code: Abril Educação Code: Abril Educação Replay.: +1 (877) 344-7529 (EUA) Replay: +55 (11) 3127-4999 +1 (412) 317-0088 (other countries) Code: 39457211 Code: 10012852 Participants are requested to connect ten minutes prior to the time set for the conference calls. Webcast: The Conference Calls will be live broadcast over the Internet, remaining available after the event. Replay: A conference call replay facility will be available for 7 days. In order to access the replay, dial above mentioned numbers. About Abril Educação Abril Educação is the first listed company focused on the primary, secondary and pre-university education sectors, which, considered together, constitute the largest educational market in Brazil in terms of number of students. The company operates in the following business lines: learning systems, K-12, technical and vocational schools, preparatory courses for college admissions exams, textbooks and foreign languages distance learning. LEGAL DISCLAIMER This Document contains forecasts. This information is not based only on historical fact, but also reflects the goals and expectations of the management of ABRIL EDUCAÇÃO. The words anticipates, desires, expects, foresees, intends, plans, predicts, projects, names and similar words when written are intended to identify statements that necessarily involve risks both known and unknown. ABRIL EDUCAÇÃO is not responsible for operations or investment decisions based on the information contained in this document. 21