UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 OR 15d-16 UNDER THE SECURITIES EXCHANGE ACT OF 1934
For the month of October 2021
Commission File Number: 001-39519
Vitru Limited
(Exact name of registrant as specified in its charter)
Rodovia José
Carlos Daux, 5500, Torre Jurerê A,
2nd floor, Saco Grande, Florianópolis, State of
Santa Catarina, 88032-005, Brazil
+55 (47) 3281-9500
(Address of principal executive office)
Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F:
Form 20-F |
X |
Form 40-F |
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):
Yes | No |
X |
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):
Yes | No |
X |
VITRU LIMITED
TABLE OF CONTENTS
ITEM | |
1. |
CESUMAR – Centro de Ensino Superior de Maringá Ltda. — Unaudited condensed interim financial statements of CESUMAR – Centro de Ensino Superior de Maringá Ltda. as of June 30, 2021 and for the six months ended June 30, 2021 and 2020.
|
2. |
CESUMAR – Centro de Ensino Superior de Maringá Ltda. — Audited financial statements of CESUMAR – Centro de Ensino Superior de Maringá Ltda. as of and for the years ended December 31, 2020 and 2019.
|
3. | Vitru Limited — Unaudited pro forma condensed consolidated financial information of Vitru Limited as of and for the six months ended June 30, 2021 and for the year ended December 31, 2020. |
Item 1
CESUMAR – Centro de Ensino Superior de Maringá Ltda. — Unaudited condensed interim financial statements of CESUMAR – Centro de Ensino Superior de Maringá Ltda. as of June 30, 2021 and for the six months ended June 30, 2021 and 2020.
Cesumar - Centro de Ensino Superior de Maringá Ltda.
Condensed interim balance sheet as at
All amounts in thousands of reais
Assets |
June 30, 2021 |
December 31, 2020 | Liabilities and equity |
June 30, 2021 |
December 31, 2020 | |||
Current assets | Current liabilities | |||||||
Cash and cash equivalents (Note 5) | 221,155 | 129,042 | Borrowings (Note 14) | 13,698 | 16,569 | |||
Trade receivables (Note 6) | 57,188 | 45,848 | Trade payables (Note 16) | 21,880 | 20,232 | |||
Advances (Note 7) | 63,210 | 54,412 | Obligations and social charges (Note 17) | 33,436 | 24,873 | |||
Inventories (Note 10) | 3,092 | 3,101 | Taxes payable (Note 18) | 6,159 | 7,774 | |||
Prepaid expenses | 1,067 | 487 | Related parties (Note 8) | 27 | 26 | |||
Recoverable taxes (Note 9) | 4,994 | 4,956 | Lease liabilities (Note 15) | 1,376 | 1,961 | |||
Other assets (Note 11) | 2,501 | 4,579 | Other payables (Note 16) | 7,307 | 11,518 | |||
353,207 | 242,426 | 83,884 | 82,953 | |||||
Non-current liabilities | ||||||||
Non-current assets | Borrowings (Note 14) | 20,294 | 23,248 | |||||
Trade receivables (Note 6) | 12,134 | 15,962 | Lease liabilities (Note 15) | 2,640 | 2,170 | |||
Related parties (Note 8) | 1,509 | 1,543 | Provision for civil, labor and tax risks (Note 19) | 14,584 | 15,067 | |||
Advances (Note 7) | 4,661 | 5,871 | Government grants | 3,526 | ||||
Other assets (Note 11) | 1,735 | 1,550 | 41,044 | 40,485 | ||||
Deferred taxes (Note 25) | 16,665 | 15,948 | ||||||
Equity (Note 20) | ||||||||
Property and equipment (Note 12) | 287,650 | 278,555 | Share Capital | 58,500 | 58,500 | |||
Leases right-of-use (Note 15) | 3,764 | 3,914 | Capital reserve | 39,548 | 39,548 | |||
Intangible assets (Note 13) | 12,362 | 13,233 | Retained earnings | 470,711 | 357,516 | |||
Total non-current assets | 340,480 | 336,575 | 568,758 | 455,563 | ||||
Total assets | 693,687 | 579,001 | Total liabilities and equity | 693,687 | 579,001 |
The accompanying notes are an integral part of these condensed interim financial statements.
1-1
Cesumar - Centro de Ensino Superior de Maringá Ltda.
Condensed interim statement of income
Six-month period ended June 30
All amounts in thousands of reais
2021 | 2020 | |||
Continuing operations | ||||
Net revenue (Note 21) | 356,266 | 302,238 | ||
Cost of services and sales (Note 23) | (82,246) | (72,465) | ||
Gross profit | 274,019 | 229,773 | ||
Operating expenses | ||||
Selling expenses (Note 23) | (27,725) | (21,465) | ||
Net impairment losses on financial assets | (12,063) | (12,037) | ||
General and administrative expenses (Note 23) | (105,126) | (95,961) | ||
Other operating income and expenses (Note 22) | (595) | 1,901 | ||
Operating profit before finance result | 128,511 | 102,212 | ||
Finance result, net (Note 24) | ||||
Finance income | 6,810 | 4,165 | ||
Finance costs | (6,539) | (5,378) | ||
271 | (1,214) | |||
Profit before income tax and social contribution | 128,782 | 100,998 | ||
Income tax and social contribution (Note 25) | (5,962) | (6,410) | ||
Profit for the period | 122,820 | 94,589 |
The accompanying notes are an integral part of these condensed interim financial statements.
1-2
Cesumar - Centro de Ensino Superior de Maringá Ltda.
Condensed interim statement of comprehensive income
Six-month period ended June 30
All amounts in thousands of reais
2021 | 2020 | |||
Profit for the period | 122,820 | 94,589 | ||
Other comprehensive income | - | - | ||
Total comprehensive income for the period | 122,820 | 94,589 |
The accompanying notes are an integral part of these condensed interim financial statements.
1-3
Cesumar - Centro de Ensino Superior de Maringá Ltda.
Condensed interim statement of changes in equity
All amounts in thousands of reais
Reserves | |||||||||
Share Capital |
Retained earnings | ||||||||
Donations | Capital | Total | |||||||
At December 31, 2019 | 58,500 | 11 | 39,537 | 228,763 | 326,811 | ||||
Profit for the period | 94,589 | 94,589 | |||||||
Dividends distributed | (12,770) | (12,770) | |||||||
At June 30, 2020 | 58,500 | 11 | 39,537 | 310,582 | 408,630 | ||||
At December 31, 2020 | 58,500 | 11 | 39,537 | 357,515 | 455,563 | ||||
Profit for the period | 122,820 | 122,820 | |||||||
Dividends distributed | (9,624) | (9,624) | |||||||
At June 30, 2021 | 58,500 | 11 | 39,537 | 470,711 | 568,759 |
The accompanying notes are an integral part of these condensed interim financial statements.
1-4
Cesumar - Centro de Ensino Superior de Maringá Ltda.
Condensed interim statement of cash flows at June 30
All amounts in thousands of reais unless otherwise stated
2021 | 2020 | |||
Cash flows from operating activities | ||||
Profit before income tax and social contribution | 128,782 | 100,998 | ||
Adjustments for: | ||||
Depreciation and amortization (Note 23) | 10,694 | 10,210 | ||
Depreciation of right-of-use assets (Note 15) | 1,014 | 1,463 | ||
Loss on disposal of property and equipment (Note 22) | 2,668 | 11 | ||
Impairment of trade receivables and advances | 12,063 | 12,037 | ||
Interest and monetary variations, net (Note 15) | 821 | 596 | ||
Changes in assets and liabilities: | ||||
Trade receivables (Note 6) | (18,423) | (23,096) | ||
Advances (Note 7) | (8,740) | (2,449) | ||
Inventories (Note 10) | 10 | (298) | ||
Recoverable taxes (Note 9) | (37) | (1) | ||
Related parties (Note 8) | 36 | 114 | ||
Other current and non-current assets (Note 11) | 1,313 | 622 | ||
Trade payables (Note 16) | 1,648 | (5,017) | ||
Obligations and social charges (Note 17) | 8,564 | 10,192 | ||
Taxes payable (Note 18) | (1,615) | 1,382 | ||
Other current and non-current liabilities | (4,694) | (9,326) | ||
Cash from operations | 134,102 | 97,436 | ||
Interest paid (Note 14) | (137) | |||
Income tax and social contribution paid | (6,679) | (5,580) | ||
Net cash provided by operating activities | 127,244 | 91,856 | ||
Cash flows from investing activities | ||||
Purchases of property and equipment (Note 12) | (16,470) | (31,558) | ||
Purchases of intangible assets (Note 13) | (1,590) | (1,377) | ||
Net cash used in investing activities | (18,060) | (32,935) | ||
Cash flows from financing activities | ||||
Proceeds from borrowings (Note 14) | - | 40,000 | ||
Payment of borrowings (Note 14) | (6,327) | (2,017) | ||
Payment of leases (Note 15) | (1,162) | (1,914) | ||
Dividends paid to quotaholders (Note 20) | (9,624) | (12,770) | ||
Net cash (used in) provided by financing activities | (17,113) | 23,299 | ||
Net increase in cash and | ||||
cash equivalents for the period | 92,113 | 82,220 | ||
Cash and cash equivalents at the beginning of the period | 129,042 | 26,833 | ||
Cash and cash equivalents at the end of the period | 221,155 | 109,053 |
1-5
Cesumar - Centro de Ensino Superior de Maringá Ltda.
Notes to the condensed interim
financial statements at June 30, 2021
All amounts in thousands of reais unless otherwise stated
1 | General information |
1.1 | Operations |
Cesumar - Centro de Ensino Superior de Maringá Ltda. (the “Entity”) is a limited liability entity headquartered in the city of Maringá, State of Paraná – Brazil.
In addition to its head office, the Entity has three other campuses in the following cities of the State of Paraná: Curitiba, Ponta Grossa and Londrina and 1 (one) campus in the city of Corumbá-MS. The Entity also has a presence all over Brazil through distance learning (EAD) units, with 747 units (2020 - 701) (unaudited).
The Entity is primarily engaged in the provision of educational, cultural, scientific and social services, at several educational levels, through the offering of graduation, extension and specialization courses for people in public and private enterprises.
The issue of these condensed interim financial statements was authorized by the Entity’s Executive Board on October 20, 2021.
Purpose of financial statements
These financial statements have been prepared for inclusion in VITRU Limited’s Registration Statement with the United States Securities and Exchange Commission (SEC), pursuant to Rule 3-05 of Regulation SX under the Securities Act (“Rule 3-05”).
1.2 | Basis of preparation |
The condensed interim financial statements have been prepared in accordance with the International Accounting Standard (IAS) 34 - Interim Financial Reporting, issued by the International Accounting Standards Board (IASB), and disclose all (and only) the applicable significant information related to the interim financial statements, which is consistent with the information utilized by management in the performance of its duties.
The condensed interim financial statements at June 30, 2021 do not incorporate all the notes and disclosures required by accounting standards for annual financial statements, as their purpose is to provide an update of significant activities, events, and circumstances in relation to those annual financial statements. Therefore, these condensed interim financial statements should be read in conjunction with the financial statements for the year ended December 31, 2020, issued on October 22, 2021.
The condensed interim financial statements have been prepared consistently with the accounting policies disclosed in Note 2 to the financial statements at December 31, 2020, already aggregating the changes in accounting policies of the standards that became effective as from January 1, 2020. There are no new standards to be applied for 2021.
1-6
Cesumar - Centro de Ensino Superior de Maringá Ltda.
Notes to the condensed interim
financial statements at June 30, 2021
All amounts in thousands of reais unless otherwise stated
1.3 | Covid-19 impacts |
The Entity has been monitoring the spread of the Coronavirus (COVID-19), which was declared a pandemic by the World Health Organization (WHO). The Entity has been following the decisions of the WHO and the guidance of the Ministry of Health and decisions of the State and Municipal governments, and, since March 2, 2020, has been adopting measures to fight the COVID-19 pandemic, aiming to safeguard the health and interests of all the parties involved in the activities of the institution and preserve business continuity.
As regards onsite teaching, from March 20, 2020 the Entity’s onsite undergraduate and graduate education activities were replaced by remote activities through the digital platform “Studeo”, to ensure the learning process of students, without affecting the completion of the activities of the semester. The 2021 school year began on February 15 and classes returned in a hybrid form; a different group of students have onsite classes each week, and the other students have classes via the digital platform.
The Entity’s distance learning activities were not impacted and onsite tests were replaced by online tests. The new enrollment and re-enrollment processes continue as usual, with no initial impact on the recognition of revenue of enrolled students.
As to the Entity’s administrative activities, it adopted measures such as the change from onsite work to remote work from March 23, 2020, for positions that permit this type of system. There is no estimated date for the return of employees to onsite classes.
Despite the circumstances imposed by Covid-19, the Entity reported a profit before taxes for the second quarter of 2021 of R$130,017, 28% higher if compared to the same period of 2020, due to the increase in the number of students by 36%, mainly from EAD. The default rate averaged 20.88%, increasing by 3% compared to the same period last year (17.88% in 2020), the variation is attributed to the effects and prolongation of the pandemic.
2 | Critical accounting estimates and judgments |
The critical accounting estimates and judgments used in the preparation of the condensed interim financial statements are consistent with those disclosed in the financial statements at December 31, 2020.
3 | Financial risk management |
3.1 | Financial risk factors |
The Entity’s activities expose it to a variety of financial risks: market risk (including cash flow or fair value interest rate risk), credit risk and liquidity risk. The Entity’s risk management program focuses on the unpredictability of financial markets and seeks to minimize potential adverse impacts on the Entity’s financial performance. The Entity does not use derivative financial instruments to hedge certain risk exposures.
Risk management is carried out by the Entity’s Central treasury department. The Entity’s treasury identifies, evaluates and hedges financial risks. The Board of Directors establishes principles for risk management, as well as for specific areas.
1-7
Cesumar - Centro de Ensino Superior de Maringá Ltda.
Notes to the condensed interim
financial statements at June 30, 2021
All amounts in thousands of reais unless otherwise stated
(a) | Market risk (including cash flow and fair value interest rate risk) |
The Entity’s interest rate risk arises from short and long-term borrowings and financial investments, substantially linked to the floating rates of the Interbank Deposit Certificate (CDI).
The Entity analyzes its interest rate exposure on a dynamic basis. Scenarios are analyzed taking into consideration refinancing and renewal of existing positions. Based on this analysis, the Entity monitors the risk of significant variation in the interest rate and calculates the impact on profit or loss.
(b) | Credit risk |
Credit risk is managed on a centralized basis. Credit risk arises from cash and cash equivalents, financial instruments and deposits with banks and other financial institutions, as well as credit exposures to customers, including outstanding receivables.
The Entity’s sales policy considers the credit risk level it is willing to accept in the course of its business. Enrollment for the next school period is blocked whenever a student is in default with the institution. The broad diversification of the receivables portfolio, the selectivity in accepting students, as well as the follow-up of maturities, are procedures adopted in order to minimize issues arising from default on accounts receivable.
The Entity maintains a provision for impairment of trade receivables to address credit risk. This credit analysis evaluates the credit quality of students taking into account the payment history, the period of the relationship with the institution and the credit analysis (SPC and Serasa).
(c) | Liquidity risk |
This is the risk of the Entity not having sufficient liquid funds to meet its financial commitments, due to the mismatch of terms or volume in expected receipts and payments.
To manage liquidity of cash, assumptions for future disbursements and receipts are determined, and these are monitored daily by the treasury area.
3.2 | Capital management |
The Entity’s objectives when managing capital are to safeguard its ability to continue as a going concern in order to provide returns for quotaholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital.
The Entity monitors capital on the basis of the gearing ratio. This ratio corresponds to the net debt expressed as a percentage of total capitalization. Net debt is calculated as total borrowings (including current and non-current borrowings as shown in the balance sheet) less cash and cash equivalents.
At June 30, 2020, the Entity has a cash surplus of R$ 187,163 (R$ 89,225 at December 31, 2020).
1-8
Cesumar - Centro de Ensino Superior de Maringá Ltda.
Notes to the condensed interim
financial statements at June 30, 2021
All amounts in thousands of reais unless otherwise stated
4 | Financial instruments by category |
June 30, 2021 | December 31, 2020 | |||
Amortized
cost |
Amortized
cost |
|||
Financial assets | ||||
Cash and cash equivalents | 221,155 | 129,042 | ||
Trade receivables | 69,322 | 62,574 | ||
Other assets (Rotesma) | 1,746 | 3,950 | ||
Judicial deposits | 711 | 717 | ||
Related parties | 1,509 | 1,543 | ||
294,443 | 197,826 | |||
Amortized
cost |
Amortized
cost |
|||
Financial liabilities | ||||
Trade payables | 21,880 | 20,232 | ||
Borrowings | 33,992 | 39,818 | ||
Related parties | 27 | 26 | ||
Other payables | 984 | 1,186 | ||
Lease liabilities | 4,016 | 4,131 | ||
60,899 | 65,392 |
5 | Cash and cash equivalents |
June 30, 2021 | December 31, 2020 | |||
Cash and checks | 47 | 498 | ||
Short-term bank deposits | 221,108 | 128,543 | ||
221,155 | 129,042 |
The Entity’s cash and cash equivalents comprise cash and short-term bank deposits with a maturity not exceeding 90 days, held to meet short-term commitments and not for investment or other purposes, which are readily convertible into a known amount of cash and subject to an insignificant risk of change in value. The average remuneration for financial investments is 120% of the CDI (120% of the CDI in 2020).
1-9
Cesumar - Centro de Ensino Superior de Maringá Ltda.
Notes to the condensed interim
financial statements at June 30, 2021
All amounts in thousands of reais unless otherwise stated
6 | Trade receivables |
June 30,
2021 |
December 31,
2020 |
|||
Current | ||||
Monthly tuition fees receivable | 96,502 | 84,988 | ||
Credit agreements (a) | 57,278 | 53,462 | ||
Monthly tuition fees receivable (b) | 22,929 | 16,893 | ||
Student Financing Program (FIES) receivable | 7,634 | 9,598 | ||
Other receivables | 5,996 | 3,137 | ||
Provision for impairment of trade receivables (i) | (133,151) | (122,240) | ||
57,188 | 45,848 | |||
Non-current | ||||
Monthly tuition fees receivable (b) | 12,134 | 15,962 | ||
Total trade receivables | 69,322 | 61,180 |
(a) Refers to the renegotiation of monthly tuition fees that are past due.
(b) Refers to tuition fees receivable from students through its own financing program.
The aging of trade receivables at June 30 is as follows:
June 30,
2021 |
December
31, 2020 |
|||
Not yet due | 30,222 | 27,848 | ||
From 01 to 30 days past due | 12,715 | 10,238 | ||
From 31 to 60 days past due | 9,064 | 6,919 | ||
From 61 to 90 days past due | 10,289 | 7,848 | ||
From 91 to 120 days past due | 8,144 | 5,818 | ||
From 121 to 150 days past due | 7,690 | 5,958 | ||
From 151 to 180 days past due | 5,306 | 2,868 | ||
From 181 to 365 days past due | 25,448 | 24,804 | ||
More than 366 days past due | 93,596 | 91,751 | ||
(-) Provision for impairment of trade receivables | (133,151) | (122,240) | ||
69,322 | 61,810 |
The increase in trade receivables is due to the expansion of the customer portfolio, which in the same period in 2020 comprised 230 thousand students and in June 2021 comprises approximately 307 thousand students.
1-10
Cesumar - Centro de Ensino Superior de Maringá Ltda.
Notes to the condensed interim
financial statements at June 30, 2021
All amounts in thousands of reais unless otherwise stated
(i) | The changes in the provision for impairment of trade receivables are as follows: |
2021 | 2020 | |||
Opening balance – January, 31 | 122,240 | 80,833 | ||
Provision for the period | 10,911 | 12,037 | ||
Closing balance – June, 30 | 133,151 | 92,870 |
7 | Advances |
June 30,
2021 |
December 31,
2020 |
|||
Advances to suppliers | 907 | 1,368 | ||
Advances to employees | 137 | 4,065 | ||
Advances to hub partners – Distance Learning Centers (i) | 69,326 | 57,101 | ||
(-) Provision for losses with hub partners – Distance Learning Centers (i) | (4,341) | (3,189) | ||
Other advances | 1,843 | 939 | ||
67,871 | 60,283 | |||
(-) Current | 63,210 | 54,412 | ||
Non-current | 4,661 | 5,871 |
(i) | A hub is a local operating unit and has the responsibility for offering to students the necessary structure in terms of audiovisual resources, library and information technology, to support the distance learning courses. |
Advances represent amounts advanced to hub partner so that they can generate initial cash, develop the first customer portfolio and invest in media for the promotion of the unit. These amounts will be reimbursed by hub partner on a monthly basis in accordance with the terms stipulated in the contract, through the provision of services.
In 2020, due to the impacts of the COVID-19 pandemic, management carried out an analysis of the recoverability of the amounts advanced to the Distance Learning Centers and the subsequent recording of a provision for these recoverability of these credits. The change aimed to capture situations that could increase the risks of loss. Thus, there has been an increase in the provision for hub partner that have significant debt.
To this end, the Entity analyzes, in each partner, the relation between the balance of advances and the accumulated amount transferred. For partners with an index greater than 1.4, the Entity recorded a provision of 25%. For all others, the provision percentage used was 2%.
1-11
Cesumar - Centro de Ensino Superior de Maringá Ltda.
Notes to the condensed interim
financial statements at June 30, 2021
All amounts in thousands of reais unless otherwise stated
In relation to the amounts that are recorded as past due, as a result of the COVID-19 pandemic, the Entity launched the “Sou + Mútuo” program, which will grant new payment deadlines for loans (past due and not yet due) for the units that achieve specific fund raising targets.
8 | Related parties |
(a) | Breakdown of balances |
June 30, 2021 | December 31, 2020 | |||||||||||||||||
Centro Universitário | Soedmar | GP Adm. | Cesutec | ICETI | WWW ADM. | Other (i) | Total | Total | ||||||||||
Assets | ||||||||||||||||||
Non-current | ||||||||||||||||||
Advances | 2 | 1,257 | 130 | 8 | 54 | 58 | 1,509 | 1,543 | ||||||||||
Liabilities | ||||||||||||||||||
Current | ||||||||||||||||||
Trade payables | 26 | 26 | 26 | |||||||||||||||
Profit or loss | ||||||||||||||||||
Donations | 830 | 1,480 | 2,310 | 5,624 |
(i) | Refers to: |
Fundação Cesumar
Hoper Administração e Participações Ltda.
UPR - Unidade Paranaense de Ensino Superior Ltda.
WL Administração e Participações Ltda.
PL Administração e Participações Ltda.
(b) Key management compensation
Key management includes members of the rectorate, prorectorate and executive board. The compensation paid or payable to key management totals R$ 14,399 at June 30, 2021 (2020 – R$ 13,005).
Benefits include fixed compensation (salaries and fees, vacation pay and 13th month salary), variable compensation and social security charges (contributions to the National Institute of Social Security (INSS) and the Government Severance Indemnity Fund for Employees (FGTS).
1-12
Cesumar - Centro de Ensino Superior de Maringá Ltda.
Notes to the condensed interim
financial statements at June 30, 2021
All amounts in thousands of reais unless otherwise stated
9 | Recoverable taxes |
June 30,
2021 |
December 31,
2020 |
|||
Income tax and social contribution (i) | 3,264 | 3,264 | ||
Withholding Income Tax (IRRF) | 237 | 200 | ||
PIS and COFINS | 1,485 | 1,485 | ||
Other | 8 | 6 | ||
4,994 | 4,956 |
(i) | Due to the changes in legislation through RFB Normative Instruction 1,394/2013 referring to the calculation of income tax and social contribution using the method of the operating profit on tax-incentive activities, applicable to private higher education institutions that enrolled in PROUNI, the expectation of the Entity’s management is to realize in 2021 the balance of income tax and social contribution. |
10 | Inventories |
June 30,
2021 |
December 31,
2020 |
|||
Storeroom supplies | 308 | 486 | ||
Consumables | 762 | 696 | ||
Inventory - Distance learning | 1,473 | 1,825 | ||
Other | 549 | 95 | ||
3,092 | 3,101 |
11 | Other assets |
June 30,
2021 |
December 31,
2020 |
|||
Judicial deposits | 711 | 717 | ||
Rotesma Ind. de Pré Moldados (i) | 1,745 | 3,950 | ||
Instituto Salgado de Saude Integral | 179 | 179 | ||
Sicoob quotas | 396 | 339 | ||
Other | 1,205 | 944 | ||
4,236 | 6,129 | |||
(-) Current | 2,501 | 4,579 | ||
Non-current | 1,735 | 1,550 |
(i) | The balance refers to the termination of the contract signed with Rotesma Industria de Pré Moldados, initially contracted to build one of the blocks intended for the courses offered. The initial debt balance of R$ 6,200 will be received in 24 equal and monthly installments. |
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Cesumar - Centro de Ensino Superior de Maringá Ltda.
Notes to the condensed interim
financial statements at June 30, 2021
All amounts in thousands of reais unless otherwise stated
12 | Property and equipment |
Land | Buildings, facilities and improvements | IT and communication equipment | Industrial machinery and equipment | Furniture, fittings and tools | Vehicles | Other | Construction in progress | Total | ||||||||||
At December 31, 2019 | 43,994 | 126,366 | 9,150 | 7,573 | 11,748 | 2,573 | 22,900 | 20,531 | 244,835 | |||||||||
Additions | - | - | 2,000 | 1,861 | 2,150 | 649 | 2,060 | 22,838 | 31,558 | |||||||||
Disposals | - | - | - | (3) | - | - | - | (8) | (11) | |||||||||
Transfers | - | 1,985 | - | - | - | - | 54 | (2,039) | - | |||||||||
Depreciation | - | (2,335) | (2,065) | (608) | (897) | (459) | (1,546) | - | (7,910) | |||||||||
At June 30, 2020 | 43,994 | 126,016 | 9,085 | 8,823 | 13,001 | 2,763 | 23,468 | 41,322 | 268,472 | |||||||||
At December 31, 2020 | 43,994 | 127,109 | 8,007 | 8,745 | 12,221 | 2,522 | 31,763 | 44,194 | 278,555 | |||||||||
Additions | - | 3,526 | 3,229 | 553 | 706 | 246 | 7,568 | 4,168 | 19,996 | |||||||||
Disposals | - | - | - | - | - | (2,518) | (2,518) | |||||||||||
Transfers | - | 678 | - | - | - | (678) | - | |||||||||||
Depreciation | - | (2,503) | (1,917) | (679) | (958) | (446) | (1,880) | - | (8,383) | |||||||||
At June 30, 2021 | 43,994 | 128,810 | 9,319 | 8,619 | 11,969 | 2,322 | 37,451 | 45,166 | 287,650 | |||||||||
Total cost | 43,994 | 164,663 | 34,492 | 16,463 | 28,790 | 7,057 | 67,782 | 45,204 | 408,445 | |||||||||
Accumulated depreciation | - | (35,853) | (25,173) | (7,844) | (16,821) | (4,735) | (30,331) | (38) | (120,794) | |||||||||
Net book value | 43,994 | 128,810 | 9,319 | 8,619 | 11,969 | 2,322 | 37,451 | 45,166 | 287,650 | |||||||||
Annual depreciation rate % | - | 2 | 20 | 10 | 10 | 20 | 10 | - |
(a) | Review and adjustment of estimated useful lives |
The Entity annually reviews the estimated economic useful lives of property and equipment items to calculate depreciation, as well as to determine the residual value of property and equipment items. There was no change in useful lives of property and equipment items in the period.
(b) | Significant transactions |
The significant balances that comprise the construction in progress refer to the Curitiba campus R$ 23,177 and the 2nd phase of expansion of the Ponta Grossa unit amounting to R$ 8,454.
1-14
Cesumar - Centro de Ensino Superior de Maringá Ltda.
Notes to the condensed interim
financial statements at June 30, 2021
All amounts in thousands of reais unless otherwise stated
13 | Intangible assets |
Software | Other | Total | |||
At December 31, 2019 | 8,152 | 1,000 | 9,152 | ||
Purchases | 1,377 | 1,377 | |||
Amortization | (2,299) | (2,299) | |||
Net book value at June 30, 2019 | 7,230 | 1,000 | 8,230 | ||
At December 31, 2020 | 7,381 | 5,852 | 13,233 | ||
Purchases | 1,590 | - | 1,590 | ||
Disposals | (150) | - | (150) | ||
Amortization | (2,311) | - | (2,311) | ||
Net book value | 6,510 | 5,852 | 12,362 | ||
Total cost | 25,172 | 5,852 | 31,024 | ||
Accumulated amortization | (18,662) | (18,662) | |||
At June 30, 2021 | 6,510 | 5,852 | 12,362 | ||
Average annual amortization rate - % | 20 | 20 |
1-15
Cesumar - Centro de Ensino Superior de Maringá Ltda.
Notes to the condensed interim
financial statements at June 30, 2021
All amounts in thousands of reais unless otherwise stated
14 | Borrowings |
(a) | Breakdown of balances |
June 30, 2021 | December 31, 2020 | ||||
Current | |||||
Working capital | 100% DI* | 13,554 | 16,171 | ||
BNDES** - machinery | TJLP + 3.2 p.a. | 22 | 26 | ||
Other | Amplified Consumer Price Index (IPCA) | 122 | 372 | ||
13,698 | 16,569 | ||||
Non-current | |||||
Working capital | 100% DI* | 20,294 | 23,238 | ||
BNDES** - machinery | TJLP + 3.2 p.a. | 10 | |||
20,294 | 23,248 | ||||
Total borrowings | 33,992 | 39,817 |
*Interbank Deposit
** National Economic and Social Development Bank
Borrowings are held in local currency (R$).
(b) | Maturity of contracts classified in non-current liabilities |
Year | 2021 | 2020 | |||
2022 | 5,587 | 11,388 | |||
2023 | 10,549 | 10,549 | |||
2024 | 4,158 | 4,158 | |||
20,294 | 26,095 |
(c) | Changes in balances |
2021 | 2020 | |||
Opening balance January 1st | 39,817 | 3,654 | ||
Proceeds from borrowings | - | 40,000 | ||
Interest, monetary and foreign exchange variations provided for | 638 | 347 | ||
Repayment - principal | (6,326) | (2,017) | ||
Payment - interest | (137) | |||
Closing balance June 30th | 33,992 | 41,984 |
1-16
Cesumar - Centro de Ensino Superior de Maringá Ltda.
Notes to the condensed interim
financial statements at June 30, 2021
All amounts in thousands of reais unless otherwise stated
15 | Leases |
(i) | Balances recorded in the balance sheet |
The balance sheet shows the following amounts relating to leases:
June 30,
2021 |
December 31,
2020 |
|||
Right-of-use assets | ||||
Buildings | 3,764 | 3,914 | ||
3,764 | 3,914 | |||
Lease liabilities | ||||
Current | 1,376 | 1,961 | ||
Non-current | 2,640 | 2,170 | ||
4,016 | 4,131 |
(ii) | Balances recorded in the statement of income |
The statement of income shows the following amounts relating to leases:
June 30, 2021 |
June 30,
2020 |
|||
Amortization of right-of-use assets | ||||
Buildings | 1,014 | 1,463 | ||
Interest expense (included in finance costs) | 183 | 249 | ||
1,197 | 1,712 |
The Entity leases commercial buildings to its own distance learning units and logistics warehouses. Rental contracts are typically made for fixed periods of 1 to 5 years.
Right-of-use assets
The changes in right-of-use assets are as follows:
2021 | 2020 | |||
Opening balances - At January 1st | 3,914 | 5,505 | ||
Additions due to new contracts | 864 | 0 | ||
Depreciation expense | (1,014) | (1,463) | ||
Closing balances - Right-of-use assets at June 30th | 3,764 | 4,042 |
1-17
Cesumar - Centro de Ensino Superior de Maringá Ltda.
Notes to the condensed interim
financial statements at June 30, 2021
All amounts in thousands of reais unless otherwise stated
Lease liabilities
The changes in lease liabilities are as follows:
2021 | 2020 | |||
Opening balances - At January 1st | 4,131 | 6,106 | ||
Interest provided | 183 | 249 | ||
Additions due to new contracts | 864 | |||
Lease payments | (1,162) | (1,936) | ||
Closing balances - Lease liabilities at June 30th | 4,016 | 4,419 |
The Entity’s analysis of its contracts based on their maturity dates is presented below. The amounts are discounted to present value.
Contract maturity dates
Installment maturity dates | |||
Less than 1 year | 1,428 | ||
Between 1 and 2 years | 2,095 | ||
Between 3 and 5 years | 493 | ||
Lease liabilities at June 30, 2021
|
4,016 |
16 | Trade and other payables |
June 30,
2021 |
December 31,
2020 |
|||
Trade payables | ||||
Hub partners - Distance Learning Centers | 13,448 | 10,638 | ||
Sundry suppliers | 8,432 | 9,594 | ||
21,880 | 20,232 | |||
Other payables | ||||
Advances from customers | 6,049 | 10,332 | ||
Other | 1,258 | 1,186 | ||
7,307 | 11,518 | |||
Total - Trade and other payables | 29,187 | 31,750 |
1-18
Cesumar - Centro de Ensino Superior de Maringá Ltda.
Notes to the condensed interim
financial statements at June 30, 2021
All amounts in thousands of reais unless otherwise stated
17 | Obligations and social charges |
June 30,
2021 |
December 31,
2020 |
|||
Salaries payable | 8,931 | 6,472 | ||
Social security obligations and social charges | 4,998 | 5,165 | ||
Provision for vacation pay and related charges | 19,412 | 13,067 | ||
Other | 95 | 169 | ||
33,436 | 24,873 |
18 | Taxes payable |
June 30,
2021 |
December 31,
2020 |
|||
Services Tax (ISS) | 2,635 | 2,079 | ||
Income tax and social contribution | ||||
- IRPJ and CSLL | 112 | 570 | ||
Social Integration Program (PIS) | 76 | 46 | ||
Social Contribution on Revenues (COFINS) | 351 | 235 | ||
Withholding Income Tax (IRRF) | 2,741 | 4,610 | ||
Other | 244 | 234 | ||
6,159 | 7,774 |
19 | Provision for civil, labor and tax risks |
(a) | Breakdown and changes in the provisions for legal claims |
Tax | Civil | Labor | Total | ||||||
At December 31, 2019 | 3,551 | 2,079 | 5,789 | 11,419 | |||||
Write-offs due to payment | - | (57) | (139) | (196) | |||||
At June 30, 2020 | 3,551 | 2,022 | 5,650 | 11,223 | |||||
At December 31, 2020 | 3,704 | 3,408 | 7,955 | 15,067 | |||||
Write-offs due to payment | - | (169) | (314) | (483) | |||||
At June 30, 2021 | 3,704 | 3,239 | 7,641 | 14,584 |
1-19
Cesumar - Centro de Ensino Superior de Maringá Ltda.
Notes to the condensed interim
financial statements at June 30, 2021
All amounts in thousands of reais unless otherwise stated
(b) | Possible losses, not provided for in the balance sheet |
At June 30, 2021, the Entity has tax litigation involving risks of loss classified by management as possible, based on the evaluation of the legal advisors, for which no provision for estimated possible losses has been recorded, as shown below:
2021 | 2020 | |||
Labor | 2,203 | 1,498 | ||
Civil | 2,328 | 1,947 | ||
4,531 | 3,445 |
20 | Equity |
(a) | Share Capital |
At June 30, 2021 and December 31, 2020, fully paid-up share capital is divided into 58,500,000 registered common quotas, with a par value of R$ 1.00 (one real) each.
(b) | Capital reserve |
At June 30, 2021 and December 31, 2020, the Entity had a capital reserve of R$ 39,548, referring to the surplus for the period in which it operated as a not-for-profit entity.
(c) | Dividends |
In June 2021, dividends of R$ 9,624 (R$ 12,770 in the same period of 2020) were distributed.
(d) | Retained earnings |
The retained earnings refers to the retention of the remaining balance of retained earnings and remains at the disposal of the quotaholders.
1-20
Cesumar - Centro de Ensino Superior de Maringá Ltda.
Notes to the condensed interim
financial statements at June 30, 2021
All amounts in thousands of reais unless otherwise stated
21 | Net revenue |
June 30,
2021 |
June 30,
2020 |
|||
Gross amount from undergraduate services | 811,052 | 576,329 | ||
Gross amount from graduate services | 16,820 | 17,552 | ||
Gross amount from clerk services | 2,395 | 2,058 | ||
Gross amount from other services | 818 | 691 | ||
Taxes on services | (13,206) | (10,160) | ||
Scholarships (i) | (383,496) | (227,655) | ||
Discounts and other deductions | (78,117) | (56,576) | ||
356,266 | 302,238 |
The net revenue of the onsite teaching increased by approximately 20% compared to 2020, mainly due to the increase in places for the Medicine course and the increase in the number of students, captured through new courses and expansion of campuses, as well as adjustment in the price list.
The net revenue of the EAD increased by approximately 33% compared to 2020, mainly as a result of the increase in the number of students.
(i) | The scholarships are divided as follows: |
June 30,
2021 |
June 30,
2020 |
|||
PROUNI | 48,658 | 39,248 | ||
Institutional - undergraduate | 331,790 | 185,169 | ||
Institutional - graduate | 3,048 | 3,238 | ||
383,496 | 227,655 | |||
1-21
Cesumar - Centro de Ensino Superior de Maringá Ltda.
Notes to the condensed interim
financial statements at June 30, 2021
All amounts in thousands of reais unless otherwise stated
22 | Other operating income and expenses |
June 30,
2021 |
June 30,
2020 |
|||
Gain (loss) on disposal of property and equipment | (2,518) | - | ||
Medical and veterinary services | 783 | 1,024 | ||
Gym | 330 | 206 | ||
Income - restaurant | 100 | 596 | ||
Other operating income and expenses | 701 | 75 | ||
(595) | 1,901 |
23 | Costs and expenses by nature |
June 30,
2021 |
June 30,
2020 |
|||
Personnel and payroll charges (i) | 123,778 | 115,039 | ||
Third-party services | 8,983 | 5,789 | ||
Utilities, cleaning and security | 2,539 | 2,472 | ||
Teaching materials | 7,141 | 2,735 | ||
Maintenance | 10,811 | 9,595 | ||
Depreciation of right-of-use assets | 1,014 | 1,463 | ||
Advertising and publicity | 28,167 | 16,960 | ||
Travel | 3,474 | 3,867 | ||
Depreciation and amortization | 10,692 | 10,210 | ||
Other | 18,498 | 21,761 | ||
215,097 | 189,891 | |||
Distributed by: | ||||
Costs of services and sales | 78,923 | 69,536 | ||
Selling expenses | 27,725 | 21,465 | ||
General and administrative expenses | 108,449 | 98,890 |
(i) | The costs with personnel and payroll charges increased due to the increase in the number of class-hours given because of the mix of courses offered and the related payroll charges. |
1-22
Cesumar - Centro de Ensino Superior de Maringá Ltda.
Notes to the condensed interim
financial statements at June 30, 2021
All amounts in thousands of reais unless otherwise stated
24 | Finance result, net |
June 30,
2021 |
June 30,
2020 |
|||
Finance income | ||||
Interest income from monthly tuition fees | 3,899 | 3,954 | ||
Income from financial investments | 2,845 | 186 | ||
Discounts obtained | 5 | 14 | ||
Other | 61 | 10 | ||
6,810 | 4,165 | |||
Finance costs | ||||
Interest on financial transactions | (946) | (135) | ||
Discounts granted on monthly tuition fees | (2,040) | (1,848) | ||
Interest paid on payments to suppliers | (8) | (39) | ||
Bank expenses | (3,342) | (2,676) | ||
Interest on lease liability | (183) | (249) | ||
Other - finance costs | (20) | (432) | ||
(6,539) | (5,378) | |||
Finance result, net | 272 | (1,214) |
25 | Income tax and social contribution |
In accordance with Law 11,096/2005, regulated by Decree 5,493/2005 and standardized by Normative Instruction 456/2004 of the Internal Revenue Service, pursuant to Article 5 of Provisional Measure 213/2004, and Normative Instruction 1,394/2013, the higher education institutions enrolled in PROUNI are exempt, during the period of effectiveness of the enrollment agreement, from IRPJ and CSLL; among others, computation shall be based on the operating profit of exempt activities. The reconciliation of taxes calculated in accordance with the nominal rates and the amounts of taxes recorded in the years ended June 30, 2021 and 2020 are presented below:
1-23
Cesumar - Centro de Ensino Superior de Maringá Ltda.
Notes to the condensed interim
financial statements at June 30, 2021
All amounts in thousands of reais unless otherwise stated
June 30,
2021 |
June 30,
2020 |
|||
Profit before taxes | 128,782 | 100,998 | ||
Nominal rates | 34% | 34% | ||
IRPJ and CSLL at the | ||||
nominal rates | (43,786) | (34,339) | ||
PROUNI adjustments | 39,778 | 29,175 | ||
Permanent additions (donations, health care), net | (1,955) | (1,246) | ||
IRPJ and CSLL in the results | (5,963) | (6,410) | ||
Current | (6,679) | (6,398) | ||
Deferred | 718 | (12) | ||
IRPJ and CSLL in the results | (5,963) | (6,410) |
26 | Events after the reporting period – corporate change |
On August 23, 2021, the Institution’s quotaholders entered into an agreement for the purchase and sale of quotas with VITRU Brasil Empreendimentos, Participações e Comércio S.A. (Vitru) for the sale of 100% of the entity’s share capital to Vitru. This transaction is subject to compliance with the conditions precedent provided for the aforementioned instrument and the approval of the Administrative Council for Economic Defense (CADE).
* * *
1-24
Item 2
CESUMAR – Centro de Ensino Superior de Maringá Ltda. — Audited financial statements of CESUMAR – Centro de Ensino Superior de Maringá Ltda. as of and for the years ended December 31, 2020 and 2019.
Report of Independent Auditors
To the Cesumar – Centro de Ensino Superior de Maringá Ltda.
We have audited the accompanying financial statements of Cesumar – Centro de Ensino Superior de Maringá Ltda., which comprise the balance sheets as of December 31, 2020 and 2019, and the related statements of income, comprehensive income, changes in shareholders’ equity and cash flows for the years then ended and the related notes to the financial statements.
Management’s Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of the financial statements in accordance with International Financial Reporting Standards – IFRS as issued by the International Accounting Standards Board - IASB; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.
Auditors’ Responsibility
Our responsibility is to express an opinion on the financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on our judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, we consider internal control relevant to the Company's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Opinion
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Cesumar – Centro de Ensino Superior de Maringá Ltda. as of December 31, 2020 and 2019, and the results of its operations and its cash flows for the years then ended in accordance with International Financial Reporting Standards – IFRS as issued by the International Accounting Standards Board – IASB.
/s/ PricewaterhouseCoopers Auditores Independentes
Maringá, Paraná
October, 22 2021
2-1
Cesumar – Centro de Ensino Superior de Maringá Ltda.
Balance sheet as at December 31
All amounts in thousands of reais
Assets | 2020 | 2019 | Liabilities and equity | 2020 | 2019 | |||
Current assets | Current liabilities | |||||||
Cash and cash equivalents (Note 6) | 129,042 | 26,833 | Borrowings (Note 15) | 16,569 | 3,047 | |||
Trade receivables (Note 7) | 45,848 | 35,043 | Trade payables (Note 17) | 20,232 | 19,988 | |||
Advances (Note 8) | 54,412 | 38,707 | Obligations and social charges (Note 18) | 24,873 | 26,317 | |||
Inventories (Note 11) | 3,101 | 2,804 | Taxes payable (Note 19) | 7,774 | 5,605 | |||
Prepaid expenses | 487 | 524 | Related parties (Note 9) | 26 | 27 | |||
Recoverable taxes (Note 10) | 4,956 | 4,956 | Lease liabilities (Note 16) | 1,961 | 3,030 | |||
Other assets (Note 12) | 4,579 | 3,974 | Other payables (Note 17) | 11,518 | 14,470 | |||
242,426 | 112,841 | 82,953 | 72,485 | |||||
Non-current assets | Non-current liabilities | |||||||
Trade receivables (Note 7) | 15,962 | 14,656 | Borrowings (Note 15) | 23,248 | 607 | |||
Related parties (Note 9) | 1,543 | 1,447 | Lease liabilities (Note 16) | 2,170 | 3,076 | |||
Advances (Note 8) | 5,871 | 7,110 | Provision for civil, labor and tax risks (Note 20) | 15,067 | 11,419 | |||
Other assets (Note 12) | 1,550 | 5,421 | 40,485 | 15,102 | ||||
Deferred taxes (Note 26) | 15,948 | 13,429 | ||||||
Property and equipment (Note 13) | 278,555 | 244,835 | Equity (Note 21) | |||||
Leases – right of use (Note 16) | 3,914 | 5,505 | Share Capital | 58,500 | 58,500 | |||
Intangible assets (Note 14) | 13,233 | 9,152 | Capital reserve | 39,548 | 39,548 | |||
336,575 | 301,556 | Retained earnings | 357,515 | 228,763 | ||||
455,563 | 326,811 | |||||||
Total assets | 579,001 | 414,397 | Total liabilities and equity | 579,001 | 414,397 |
The accompanying notes are an integral part of these financial statements.
2-2
Cesumar – Centro de Ensino Superior de Maringá Ltda.
Statement of income
Years ended December 31
All amounts in thousands of reais
Statement of income | ||||
2020 | 2019 | |||
Continuing operations | ||||
Net revenue (Note 22) | 610,047 | 519,281 | ||
Cost of services and sales (Note 24) | (149,376) | (150,712) | ||
Gross profit | 460,671 | 368,569 | ||
Operating expenses | ||||
Selling expenses (Note 24) | (47,604) | (54,049) | ||
Net impairment losses on financial assets | (20,368) | (21,039) | ||
General and administrative expenses (Note 24) | (194,810) | (209,437) | ||
Other operating income, net (Note 23) | 3,229 | 8,270 | ||
Operating profit before finance result | 201,118 | 92,314 | ||
Finance result, net (Note 25) | ||||
Finance income | 9,640 | 10,444 | ||
Finance costs | (12,239) | (9,590) | ||
(2,599) | 854 | |||
Profit before income tax and social contribution | 198,519 | 93,168 | ||
Income tax and social contribution (Note 26) | (7,776) | (3,522) | ||
Profit for the year | 190,743 | 89,646 |
The accompanying notes are an integral part of these financial statements.
2-3
Cesumar – Centro de Ensino Superior de Maringá Ltda.
Statement of comprehensive income
Years ended December 31
All amounts in thousands of reais
2020 | 2019 | |||
Profit for the year | 190,743 | 89,646 | ||
Other comprehensive income | - | - | ||
Total comprehensive income for the year | 190,743 | 89,646 |
The accompanying notes are an integral part of these financial statements.
2-4
Cesumar – Centro de Ensino Superior de Maringá Ltda.
Statement of changes in equity
All amounts in thousands of reais
Reserves | |||||||||
Retained | |||||||||
Capital | Donations | Capital | earnings | Total | |||||
At December 31, 2018 | 58,500 | 11 | 39,537 | 178,505 | 276,553 | ||||
Profit for the year | - | - | - | 89,646 | 89,646 | ||||
Dividends distributed (Note 21) | - | - | - | (39,388) | (39,388) | ||||
At December 31, 2019 | 58,500 | 11 | 39,537 | 228,763 | 326,811 | ||||
Profit for the year | - | - | - | 190,743 | 190,743 | ||||
Dividends distributed (Note 21) | - | - | - | (61,991) | (61,991) | ||||
At December 31, 2020 | 58,500 | 11 | 39,537 | 357,515 | 455,563 |
The accompanying notes are an integral part of these financial statements.
2-5
Cesumar – Centro de Ensino Superior de Maringá Ltda.
Statement of cash flows
Years ended December 31
All amounts in thousands of reais
2020 | 2019 | |||
Cash flows from operating activities | ||||
Profit before income tax and social contribution | 198,519 | 93,168 | ||
Adjustments for: | ||||
Depreciation and amortization (Note 24) | 21,192 | 18,531 | ||
Amortization of right-of-use assets (Note 16) | 2,702 | 2,724 | ||
Provision for civil, labor and tax (Note 20) | 3,648 | 2,628 | ||
Impairment of trade receivables (Note 7) | 20,368 | 21,039 | ||
Interest and monetary variations, net (Notes 15 and 16) | 1,926 | 576 | ||
Changes in assets and liabilities: | ||||
Trade receivables (Note 7) | (32,479) | (27,411) | ||
Advances (Note 8) | (14,466) | (16,721) | ||
Inventories (Note 11) | (297) | (434) | ||
Recoverable taxes (Note 10) | (1) | 62 | ||
Related parties (Note 9) | (97) | (139) | ||
Other current and non-current assets (Note 12) | 3,314 | 554 | ||
Trade payables (Note 17) | 244 | 3,005 | ||
Obligations and social charges (Note 18) | (1,445) | 3,683 | ||
Taxes payable (Note 19) | 2,169 | (1,549) | ||
Other current and non-current liabilities | (2,951) | (315) | ||
Cash from operations | 202,346 | 99,401 | ||
Interest paid (Note 15) | (61) | (123) | ||
Income tax and social contribution paid | (10,305) | (8,900) | ||
Net cash provided by operating activities | 191,980 | 90,378 | ||
Cash flows from investing activities | ||||
Purchases of property and equipment (Note 13) | (50,344) | (46,818) | ||
Purchases of intangible assets (Note 14) | (8,649) | (3,278) | ||
Net cash used in investing activities | (58,993) | (50,096) | ||
Cash flows from financing activities | ||||
Proceeds from borrowings (Note 15) | 40,276 | 248 | ||
Payment of borrowings (Note 15) | (5,536) | (4,099) | ||
Payment of leases (Note 16) | (3,527) | (3,044) | ||
Dividends paid to quotaholders (Note 21) | (61,991) | (39,388) | ||
Net cash used in financing activities | (30,778) | (46,283) | ||
Net increase (decrease) in cash and | ||||
cash equivalents for the year | 102,209 | (6,001) | ||
Cash and cash equivalents at the beginning of the year | 26,833 | 32,834 | ||
Cash and cash equivalents at the end of the year | 129,042 | 26,833 |
The accompanying notes are an integral part of these financial statements.
2-6
Cesumar – Centro de Ensino Superior de Maringá Ltda.
Notes to the financial statements
at December 31, 2020
All amounts in thousands of reais unless otherwise stated
1 | General information |
1.1 | Operations |
Cesumar – Centro de Ensino Superior de Maringá Ltda. (the “Entity”) is a limited liability entity headquartered in the city of Maringá, State of Paraná - Brazil.
In addition to its head office, the Entity has three other campuses in the following cities of the State of Paraná: Curitiba, Ponta Grossa and Londrina. The Entity also has a presence all over Brazil through distance learning (EAD) units, with 734 units at December 31, 2020 (unaudited).
The Entity is primarily engaged in the provision of educational, cultural, scientific and social services, at several educational levels, through the offering of graduation, extension and specialization courses for people in public and private enterprises.
The issue of these financial statements was authorized by the Entity’s Executive Board on October 20, 2021.
Purpose of financial statements
These financial statements have been prepared for inclusion in VITRU Limited’s Registration Statement with the United States Securities and Exchange Commission (SEC), pursuant to Rule 3-05 of Regulation SX under the Securities Act (“Rule 3-05”).
1.2 | Basis of preparation |
The financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB), and disclose all (and only) the applicable significant information related to the financial statements, which is consistent with the information utilized by management in the performance of its duties.
The financial statements have been prepared under the historical cost convention.
The preparation of financial statements requires the use of certain critical accounting estimates. It also requires management to exercise its judgment in the process of applying the Entity’s accounting policies. The areas involving a higher degree of judgment or complexity, or areas where assumptions and estimates are significant to the financial statements, are disclosed in Note 3.
1.3 | COVID-19 impacts |
The Entity has been monitoring the spread of the Coronavirus (COVID-19), which was declared a pandemic by the World Health Organization (WHO). The Entity has been following the decisions of the WHO and the guidance of the Ministry of Health and decisions of the State and Municipal governments, and, since March 2, 2020, has been adopting measures to fight the COVID-19 pandemic, aiming to safeguard the health and interests of all the parties involved in the activities of the institution and preserve business continuity.
2-7
Cesumar – Centro de Ensino Superior de Maringá Ltda.
Notes to the financial statements
at December 31, 2020
All amounts in thousands of reais unless otherwise stated
As regards onsite teaching, from March 20, 2020 the Entity’s onsite undergraduate and graduate education activities were replaced by remote activities through the digital platform “Studeo”, to ensure the learning process of students, without affecting the completion of the activities of the semester. The 2021 school year began on February 15 and classes returned in a hybrid form; a different group of students have onsite classes each week, and the other students have classes via the digital platform.
The Entity’s distance learning activities were not impacted and onsite tests were replaced by online tests. The new enrollment and re-enrollment processes continue as usual, with no initial impact on the recognition of revenue of enrolled students.
As to the Entity’s administrative activities, it adopted measures such as the change from onsite work to remote work from March 23, 2020, for positions that permit this type of system. There is no estimated date for the return of employees to onsite classes. Therefore, no relevant impacts related to this topic were identified in the Entity’s financial statements.
2 | Summary of significant accounting policies |
The main accounting policies applied in the preparation of these financial statements are set out below. These policies have been consistently applied in the years presented, unless otherwise stated.
2.1 | Functional and presentation currency |
The items included in the financial statements are measured using the currency of the primary economic environment in which the Entity operates (“the functional currency”).
The financial statements are presented in Brazilian reais (R$), which is the Entity’s functional and presentation currency.
2.2 | Cash and cash equivalents |
Cash and cash equivalents include cash on hand and short-term highly liquid bank deposits with original maturities of three months or less, and with immaterial risk of change in value.
2.3 | Financial assets |
2.3.1 | Classification |
The Entity classifies its financial assets in the following measurement categories:
· | Measured at amortized cost. |
The classification depends on the entity’s business model for managing the financial assets and the contractual terms of the cash flows.
2-8
Cesumar – Centro de Ensino Superior de Maringá Ltda.
Notes to the financial statements
at December 31, 2020
All amounts in thousands of reais unless otherwise stated
2.3.2 | Recognition and derecognition |
Purchases and sales of financial assets, when applicable, are recognized on the trade date, that is, the date on which the Entity commits to purchase or sell the asset. Financial assets are derecognized when the rights to receive cash flows have expired or have been transferred and the Entity has transferred substantially all the risks and rewards of ownership.
2.3.3 | Measurement |
At initial recognition, the Entity measures a financial asset at its fair value plus, in the case of a financial asset not carried at fair value through profit or loss, transaction costs that are directly attributable to the acquisition of the financial asset. Transaction costs of financial assets carried at fair value through profit or loss are expensed in profit or loss.
Subsequent measurements of financial assets depend on the Entity’s business model for managing the asset and the cash flow characteristics of the asset. There are measurement categories into which the Entity classifies its financial assets:
· | Amortized cost: Assets that are held for receipt of the contractual cash flows where those cash flows represent solely payments of principal and interest are measured at amortized cost. Interest income from these financial assets is included in finance income using the effective interest rate method. Any gain or loss arising on derecognition of the asset is recognized directly in profit or loss and presented in other net operating income. Impairment losses are presented as selling expenses in the statement of income. |
2.3.4 | Impairment of financial assets |
The Entity assesses on a prospective basis the expected credit losses associated with its debt instruments carried at amortized cost and fair value through profit or loss.
For trade receivables, the Entity applies the simplified approach permitted by IFRS 9, which requires expected lifetime losses to be recognized from initial recognition of the receivables.
2.3.5 | Offsetting of financial instruments |
Financial assets and liabilities are offset and the net amount presented in the balance sheet when there is a legally enforceable right to offset the recognized amounts and there is an intention to settle on a net basis or realize the asset and settle the liability simultaneously. The legally enforceable right must not be contingent on future events and must be enforceable in the normal course of business and in the event of default, insolvency or bankruptcy of the entity or the counterparty.
2.4 | Trade receivables |
Trade receivables are amounts due for onsite and online higher education services rendered in the ordinary course of the Entity’s business. If receipt is expected in one year or less, they are classified as current assets. If not, they are presented as non-current assets.
Trade receivables are recognized initially at fair value and subsequently measured at amortized cost using the effective interest rate method, less provision for impairment of trade receivables.
2-9
Cesumar – Centro de Ensino Superior de Maringá Ltda.
Notes to the financial statements
at December 31, 2020
All amounts in thousands of reais unless otherwise stated
2.5 | Inventories |
Inventories are stated at the lower of cost and net realizable value. Cost is determined using the weighted average cost. Net realizable value is the estimated selling price in the ordinary course of business, less completion costs and selling expenses.
2.6 | Property and equipment |
Property and equipment are stated at historical cost less accumulated depreciation. Historical cost includes expenditure that is directly attributed to the acquisition of the items. Historical cost includes finance costs related to the acquisition of qualifying assets.
Subsequent costs are included in the asset’s carrying amount or recognized as a separate asset, as appropriate, only when it is probable that future economic benefits associated with these costs will flow to the Entity and they can be measured reliably. The carrying amount of the replaced items or parts is derecognized. All other repairs and maintenance are charged to the statement of income during the financial period in which they are incurred.
Land is not depreciated. Depreciation of other assets is calculated using the straight-line method to reduce their cost to their residual values over their estimated useful lives, as follows:
Years | |
Buildings, facilities and improvements | 50 |
Furniture fittings and tools | 10 |
Machinery and equipment | 5 – 10 |
Vehicles | 5 |
IT and communication equipment | 5 |
The assets’ useful lives are reviewed, and adjusted if appropriate, at the end of each reporting period.
An asset’s carrying amount is immediately written down to the recoverable amount when it exceeds that amount.
Gains and losses on disposals are determined by comparing the amounts of sales with the carrying amounts and are recognized within “Other operating income, net” in the statement of income.
2.7 | Intangible assets |
Software
Computer software licenses are capitalized on the basis of the costs incurred to purchase and bring to use the specific software. These costs are amortized over the estimated useful life of the software (three to five years).
Costs associated with maintaining computer software programs are recognized as an expense as incurred. Development costs that are directly attributable to the design and testing of identifiable and unique software products controlled by the Entity are recognized as intangible assets.
2-10
Cesumar – Centro de Ensino Superior de Maringá Ltda.
Notes to the financial statements
at December 31, 2020
All amounts in thousands of reais unless otherwise stated
2.8 | Impairment of non-financial assets |
Assets that have an indefinite useful life are not subject to amortization and are tested annually for impairment.
Assets that are subject to amortization are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognized when the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and its value in use.
For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (Cash-generating units (CGUs)).
The Entity assessed the existence of indications of impairment for the period and did not identify any.
2.9 | Trade payables |
Trade payables are obligations to pay for goods or services that have been acquired in the ordinary course of business. Accounts payable are classified as current liabilities if payment is due in one year or less. If not, they are presented as non-current liabilities.
Trade payables are recognized initially at fair value and subsequently measured at amortized cost using the effective interest rate method.
2.10 | Borrowings |
Borrowings are recognized initially at fair value, net of transaction costs incurred, and are subsequently carried at amortized cost. Any difference between the proceeds (net of transaction costs) and the total amount payable is recognized in the statement of income over the period of the borrowings using the effective interest rate method.
Borrowings are classified as current liabilities unless the Entity has an unconditional right to defer settlement of the liability for at least 12 months after the reporting period.
Both general and specific borrowing costs directly related to the acquisition, construction or production of a qualifying asset that requires a substantial period of time to be prepared for its intended use or sale are capitalized as part of the cost of that asset when it is probable that future economic benefits associated with the item will flow to the Entity and the costs can be measured reliably. The other borrowing costs are recognized as finance costs in the period in which they are incurred.
2.11 | Provisions |
Provisions for legal claims are recognized when: (i) the Entity has a present legal or constructive obligation as a result of past events; (ii) it is probable that an outflow of resources will be required to settle the obligation; and (iii) the amount can be reliably estimated.
Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement is determined by considering the class of obligations as a whole. A provision is recognized even if the likelihood of an outflow with respect to any one item included in the same class of obligations may be small.
2-11
Cesumar – Centro de Ensino Superior de Maringá Ltda.
Notes to the financial statements
at December 31, 2020
All amounts in thousands of reais unless otherwise stated
2.12 | Capital |
Capital quotas are classified in equity.
2.13 | Revenue recognition |
Revenue comprises the fair value of the consideration received or receivable for the sale of undergraduate and graduate teaching services in the ordinary course of the Entity’s activities. Revenue is shown net of value-added tax, returns, rebates and discounts.
(a) | Net revenue from teaching services |
Revenues include monthly tuition fees for undergraduate and graduate courses, monthly tuition fees for extension courses and certifications, in addition to charges and other services.
Revenue from teaching services are recognized over time when services are rendered to the customer and the Entity satisfies its performance obligation under the contract at an amount that reflects the consideration to which the Entity expects to be entitled in exchange for those services. Revenues from teaching services are recognized net of scholarships from government programs, cancelations and other discounts, refunds and taxes.
(b) | Interest income |
Interest income is recognized on the accrual basis, using the effective interest rate method.
Interest income on financial assets at amortized cost and financial assets at fair value through other comprehensive income calculated using the effective interest method is recognized in the statement of income as part of interest income.
(c) | Joint operations with hub partners |
A hub is a local operating unit owned by third parties (hub partners) and has the responsibility for offering to students the necessary structure in terms of audiovisual resources, library and information technology, to support the distance learning courses.
The contractual agreement between the Entity and each hub partner is a joint operation and establishes the rights of each hub partner on the related revenues and obligations for the related expenses. In this sense, the revenue from distance learning and related accounts receivable are recognized only to the portion of the Company’s right to the jointly revenue. As a result, when the Company receives the student’s monthly tuition fee in whole, an obligation to the hub partner is accrued under trade payables.
2.14 | Taxation |
(a) | Current income tax and social contribution |
The income tax and social contribution benefit or expense for the period comprise current taxes. Taxes on profit are recognized in the statement of income, except to the extent that they relate to items recognized directly in equity. In such cases, the taxes are also recognized in equity. For institutions that are enrolled in the University for All Program (PROUNI), the undergraduate teaching activities are subject to exemption, for the period of the enrollment contract, as regards Corporate Income Tax (IRPJ) and Social Contribution on Net Income (CSLL).
2-12
Cesumar – Centro de Ensino Superior de Maringá Ltda.
Notes to the financial statements
at December 31, 2020
All amounts in thousands of reais unless otherwise stated
(b) | University for All Program (PROUNI) |
The Entity is enrolled in PROUNI and therefore is exempt, from the following federal taxes:
. | IRPJ and CSLL, established by Law 7,689 of December 15, 1988; |
. | Social Contribution on Revenues (COFINS), established by Complementary Law 70 of December 30, 1991; and, |
. | Social Integration Program (PIS), established by Complementary Law 7 of September 07, 1970. |
The ProUni program benefit for income taxes is based on a fixed percentage of approved scholarships granted by the federal government to students upon each student’s request and is deducted from tuition gross revenue during the entire duration of such student's undergraduate studies (regardless of the tuition fee set out in the service contract) and as long as the student continues to comply with the scholarship requirements imposed by the government for each semester during the undergraduate course. The Company recognizes the economic benefits from the ProUni scholarships as tax deductions, as applicable. The regulation of PROUNI defines that the revenue from traditional and technological under-graduation courses are exempt from PIS and COFINS.
(c) | PIS and COFINS |
Revenues from teaching activities, except for undergraduate activities due to the enrollment in PROUNI, are subject to PIS and COFINS at the rates of 0.65% and 3.00%, respectively.
(d) | Municipal Scholarship Program (PROMUBE) |
The Municipal Scholarship Program (PROMUBE) was established by the Municipal Government of Maringá, through Municipal Law 7,359/2006, and aims to grant full and partial (50%) scholarships for students of specific undergraduate or sequential courses in private higher education institutions of Maringá that are enrolled in PROMUBE, pursuant to the legislation that regulates the program.
Management understands that the number of scholarships offered is in accordance with the rules of the Scholarship Program and has been deducting from its obligations related to the Services Tax (ISSQN) the benefits of joining this program. The Entity obtained a reduction in the ISS payable of R$ 9,280 in 2020 (R$ 7,655 in 2019).
(e) | Deferred income taxes |
Deferred income tax and social contribution are recognized, using the liability method, on temporary differences between the tax bases of assets and liabilities and their carrying amounts in the financial statements. However, deferred taxes are not accounted for if they arise from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects either accounting nor taxable profit or loss.
Deferred tax assets are recognized only to the extent it is probable that future taxable profit will be available against which the temporary differences and/or tax losses can be utilized. In accordance with the Brazilian tax legislation, loss carryforwards can be used to offset up to 30% of taxable profit for the year and do not expire.
Deferred tax assets and liabilities are presented net in the statement of financial position when there is a legally enforceable right and the intention to offset them upon the calculation of current taxes, generally when related to the same legal entity and the same jurisdiction.
2-13
Cesumar – Centro de Ensino Superior de Maringá Ltda.
Notes to the financial statements
at December 31, 2020
All amounts in thousands of reais unless otherwise stated
2.15 | Leases |
The Entity leases commercial buildings to its own distance learning units and logistics warehouses. Rental contracts are typically made for fixed periods of one to five years.
Lease terms are negotiated on an individual basis. Lease contracts do not include restrictive covenants. However, the related leased assets must not be given as guarantees for borrowings.
Assets and liabilities arising from a lease are initially measured at present value, using the implicit lease rate or an incremental rate.
Lease liabilities include the net present value of the following lease payments:
. | fixed payments (including in-substance fixed payments), less any lease incentives receivable; |
. | variable lease payments that depend on an index or rate; |
. | amounts expected to be paid by the lessee, according to the residual value guarantees; |
. | payments of penalties for terminating the lease if the lease term reflects the lessee exercising the option to terminate the lease. |
The lease payments are discounted using the interest rate implicit in the lease. If that rate cannot be readily determined, the lessee’s incremental borrowing rate is used, being the rate that the lessee would have to pay to borrow the funds necessary to obtain an asset of similar value in a similar economic environment and with similar terms and conditions.
To determine the incremental borrowing rate, the Entity:
. | where possible, uses recent third-party financing received as a starting point, adjusted to reflect changes in financing conditions since the third-party financing was received; |
. | uses a build-up approach that starts with a risk-free interest rate adjusted for credit risk for leases held by the Entity, which does not have recent third party financing; and |
. | makes adjustments specific to the rate, such as term, country, currency, and security. |
The Entity is exposed to potential future increases in variable lease payments based on an index or rate, which are not included in the lease liability until they take effect. When adjustments to lease payments based on an index or rate take effect, the lease liability is reassessed and adjusted against the right-of-use asset.
Lease payments are allocated between the principal and finance cost. Finance costs are charged to the statement of income over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period. Right-of-use assets are measured at cost according to the following items:
. | the amount of the initial measurement of the lease liability; |
2-14
Cesumar – Centro de Ensino Superior de Maringá Ltda.
Notes to the financial statements
at December 31, 2020
All amounts in thousands of reais unless otherwise stated
. | any lease payments made at or before the commencement date less any lease incentives received; |
. | any initial direct costs; and |
. | restoration costs. |
Right-of-use assets are generally depreciated over the shorter of the asset’s useful life and the lease term, on a straight-line basis. If the Entity is reasonably certain to exercise a purchase option, the right-of-use asset is depreciated over the underlying asset’s useful life.
Payments associated with short-term leases of equipment and vehicles and all leases of low-value assets are recognized on a straight-line basis as an expense in profit or loss. Short-term leases are leases with a lease term of 12 months or less.
2.16 | Profit distribution |
Because the articles of incorporation do not establish minimum levels and/or rules for profit distribution, it only requires the approval of the partners. The profits paid to the Entity’s partners are recognized as deductions from retained earnings at the time of distribution.
2.17 | Rounding of amounts |
All amounts disclosed in the financial statements and notes have been rounded off to the nearest thousand reais, unless otherwise stated.
2.18 | Joint arrangements |
Investments in joint arrangements are classified as either joint operations or joint ventures, depending on the contractual rights and obligations of each investor, rather than the legal structure of the joint arrangement. The Entity has only joint operations.
Joint operations
The Entity recognizes its direct right to the assets, liabilities, revenues and expenses of joint operations and its share of any jointly held or incurred assets, liabilities, revenues and expenses. These have been incorporated in the financial statements under the appropriate headings. Details of the joint operations are set out in Note 2.13 (c).
2.19 | Amendments to new standards that are not yet effective |
The following amendments to new standards were issued by the IASB but are not effective for 2020. The early adoption of standards, even though encouraged by the IASB, has not been implemented in Brazil by the Brazilian Accounting Pronouncements Committee (CPC).
· | Amendments to IFRS 9, IAS 39 and IFRS 7 “Financial Instruments”, IFRS 4 “Insurance Contracts” and IFRS 16 “Leases”: the amendments set out in Phase 2 of the IBOR reform address issues that may affect financial reporting during the interest rate benchmark reform, including the effects of changes in contractual cash flows or hedge relationships arising from the replacement of a rate with an alternative benchmark interest rate (replacement issues). The effective date to apply such amendment is January 1, 2021. The Group’s contracts linked to EURIBOR and LIBOR are being reviewed between the parties and will be updated by the respective published alternative rates, plus spread. Management estimates that the adjusted cash flows will be economically equivalent to the original ones, and does not expect material impacts related to this replacement. |
2-15
Cesumar – Centro de Ensino Superior de Maringá Ltda.
Notes to the financial statements
at December 31, 2020
All amounts in thousands of reais unless otherwise stated
· | Amendment to IAS 16 “Property, Plant and Equipment”: in May 2020, IASB issued an amendment prohibiting an entity from deducting from the cost of the property, plant and equipment the amounts received from the sale of items produced while the asset is being prepared for its intended use. These revenues and related costs must be recognized in profit or loss. The effective date to apply this amendment is January 1, 2022. |
· | Amendment to IAS 37 “Provisions, Contingent Liabilities and Contingent Assets”: in May 2020, IASB issued this amendment to clarify that, to assess if a contract is onerous, the cost for the performance of a contract includes the incremental fulfillment costs of this contract and an allocation of other costs directly related to its fulfillment. The effective date to apply this amendment is January 1, 2022. |
· | Amendment to IFRS 3 “Business Combinations”: issued in May 2020 with the objective of replacing the references of the former version of the conceptual framework with the most recent version. The amendment to IFRS 3 will be effective as from January 1, 2022. |
· | Annual Improvements – 2018-2020 Cycle: in May 2020, IASB issued the following amendments as part of the annual improvement process, applicable as from January 1, 2022: |
(i) | IFRS 9 – “Financial Instruments” – clarifies which rates should be included in the 10% test for the derecognition of financial liabilities. |
(ii) | IFRS 16 – “Leases” – amendment of example 13 to exclude the example of lessor payments related to leasehold improvements. |
(iii) | IFRS 1 – “First-time Adoption of the International Financial Reporting Standards” – simplifies the application of this standard by a subsidiary that adopts IFRS for the first time after its parent company, in relation to the measurement of the accumulated amount of foreign exchange variations. IAS 41 – “Biological Assets” – removal of the requirement to exclude cash flows from taxation when measuring the fair value of biological assets and agricultural produce, thus aligning the fair value measurement requirements in IAS 41 with those of other IFRS standards. |
These changes will not have a material impact on the Entity.
There are no other IFRS or IFRIC interpretations that are not yet effective that would be expected to have a material impact on the Entity’s financial statements.
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.
Based on assumptions, the Entity makes estimates concerning the future. The resulting accounting estimates will, by definition, seldom equal the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are addressed below:
2-16
Cesumar – Centro de Ensino Superior de Maringá Ltda.
Notes to the financial statements
at December 31, 2020
All amounts in thousands of reais unless otherwise stated
(a) | Provisions for civil, labor and tax risks |
The Entity is a party to lawsuits at various levels. The provisions against potentially unfavorable outcomes of litigation in progress are established and updated based on management evaluation, as supported by external legal counsel, and require a high judgment level on the matters involved.
(b) | Incremental rate on lessee’s borrowing |
The incremental rate on the lessee’s borrowing is the one that the lessee would have to pay to borrow the funds necessary to obtain an asset of similar value to the leased asset, with similar terms.
IFRS 16/CPC 06(R2) allows the incremental rate to be determined for a group of contracts, based on the validation that the grouped contracts share similar features. The incremental borrowing rate was measured taking into account the Entity’s borrowing cost for real estate construction (object to which the lease contracts refer), which was (Long-Term Interest Rate) TJLP + 3%. The incremental rate established was 10.23% p.a. for contracts of up to 48 months; accordingly, the incremental rate used was the same for all lease contracts as none of the contracts in force, on the date of adoption, had a term that exceeded this period.
The Entity is not able to establish the implicit discount rate to be applied to its lease contracts. Accordingly, the incremental rate applied to the lessee’s borrowing is used to calculate the present value of lease liabilities at the initial recording of the contract.
(c) | Provision for expected credit losses for accounts receivable |
The Entity recognizes a provision for expected credit losses for accounts receivable applying a simplified approach. As a result, the Entity does not track changes in credit risk, but recognizes an allowance for loan losses at each reporting date.
The Entity established a provision matrix based on its historical credit loss experience, adjusted for prospective factors specific to the debtors and the economic environment. In certain cases, however, the Entity may also consider an asset to be in default when internal or external information indicates that the Entity is unlikely to receive the contractual amount with the customer in full.
4 | Financial risk management |
4.1 | Financial risk factors |
The Entity’s activities expose it to a variety of financial risks: market risk (including cash flow or fair value interest rate risk), credit risk and liquidity risk. The Entity’s risk management program focuses on the unpredictability of financial markets and seeks to minimize potential adverse impacts on the Entity’s financial performance. The Entity does not use derivative financial instruments to hedge certain risk exposures.
Risk management is carried out by the Entity’s Central treasury department. The Entity’s treasury identifies, evaluates and hedges financial risks. The Board of Directors establishes principles for risk management, as well as for specific areas.
2-17
Cesumar – Centro de Ensino Superior de Maringá Ltda.
Notes to the financial statements
at December 31, 2020
All amounts in thousands of reais unless otherwise stated
(a) | Market risk (including cash flow and fair value interest rate risk) |
The Entity’s interest rate risk arises from short and long-term borrowings and financial investments, substantially linked to the floating rates of the Interbank Deposit Certificate (CDI).
The Entity analyzes its interest rate exposure on a dynamic basis. Scenarios are analyzed taking into consideration refinancing and renewal of existing positions. Based on this analysis, the Entity monitors the risk of significant variation in the interest rate and calculates the impact on profit or loss.
(b) | Credit risk |
Credit risk is managed on a centralized basis. Credit risk arises from cash and cash equivalents, financial instruments and deposits with banks and other financial institutions, as well as credit exposures to customers, including outstanding receivables.
The Entity’s sales policy considers the credit risk level it is willing to accept in the course of its business. Enrollment for the next school period is blocked whenever a student is in default with the institution. The broad diversification of the receivables portfolio, the selectivity in accepting students, as well as the follow-up of maturities, are procedures adopted in order to minimize issues arising from default on accounts receivable.
The Entity maintains a provision for impairment of trade receivables to address credit risk. This credit analysis evaluates the credit quality of students taking into account the payment history, the period of the relationship with the institution and the credit analysis (SPC and Serasa).
(c) | Liquidity risk |
This is the risk of the Entity not having sufficient liquid funds to meet its financial commitments, due to the mismatch of terms or volume in expected receipts and payments.
To manage liquidity of cash, assumptions for future disbursements and receipts are determined, and these are monitored daily by the treasury area.
4.2 | Capital management |
The Entity’s objectives when managing capital are to safeguard its ability to continue as a going concern in order to provide returns for quotaholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital.
The Entity manages its capital structure and makes adjustments in light of changes in economic conditions and to maintain and adjust the capital structure, the Entity may adjust the dividend payment to quotaholders.
At December 31, 2020, the Entity had a capital structure designed to enable its growth strategy. Investment decisions take into consideration the expected return potential. No changes were made in the objectives, policies or processes for managing capital during the years ended December 31, 2020 and 2019.
2-18
Cesumar – Centro de Ensino Superior de Maringá Ltda.
Notes to the financial statements
at December 31, 2020
All amounts in thousands of reais unless otherwise stated
5 | Financial instruments by category |
2020 | 2019 | |||
Financial assets | Amortized cost | Amortized cost | ||
Cash and cash equivalents | 129,042 | 26,833 | ||
Trade receivables | 61,810 | 49,699 | ||
Other assets (Rotesma) | 3,950 | 5,425 | ||
Judicial deposits | 717 | 1,952 | ||
Related parties | 1,543 | 1,447 | ||
197,062 | 85,356 | |||
Financial liabilities | Amortized cost | Amortized cost | ||
Trade payables | 20,232 | 19,988 | ||
Borrowings | 39,818 | 3,654 | ||
Related parties | 26 | 27 | ||
Lease liabilities | 4,131 | 6,106 | ||
Other payables | 1,186 | 1,634 | ||
65,393 | 31,409 |
Fair Values
The Entity assessed that the fair values of cash and cash equivalents, trade receivables, other assets, trade payables, borrowings, lease liabilities and other payables approximate their carrying amounts largely due to the short-term maturities of these instruments.
6 | Cash and cash equivalents |
2020 | 2019 | |||
Cash and checks | 499 | 271 | ||
Short-term bank deposits | 128,543 | 26,562 | ||
129,042 | 26,833 |
The Entity’s cash and cash equivalents comprise cash and short-term bank deposits with a maturity not exceeding 90 days, held to meet short-term commitments and not for investment or other purposes, which are readily convertible into a known amount of cash and subject to an insignificant risk of change in value. The average remuneration for financial investments in 2020 was 120% of the CDI (100% of the CDI in 2019).
2-19
Cesumar – Centro de Ensino Superior de Maringá Ltda.
Notes to the financial statements
at December 31, 2020
All amounts in thousands of reais unless otherwise stated
7 | Trade receivables |
2020 | 2019 | |||
Current | ||||
Monthly tuition fees receivable | 84,998 | 72,055 | ||
Credit agreements | 53,463 | 43,253 | ||
Monthly tuition fees receivable (a) | 16,893 | 12,454 | ||
Student Financing Program (FIES) receivable | 9,598 | 6,814 | ||
Other receivables | 3,136 | 2,341 | ||
Provision for impairment of trade receivables (i) | (122,240) | (101,872) | ||
45,848 | 35,043 | |||
Non-current | ||||
Monthly tuition fees receivable (a) | 15,962 | 14,656 | ||
Total trade receivables | 61,810 | 49,699 |
(a) | Refers to tuition fees receivable from students through its own financing program. |
The aging of trade receivables at December 31 is as follows:
2020 | 2019 | |||
Not yet due | 27,848 | 22,758 | ||
From 01 to 30 days past due | 10,238 | 10,209 | ||
From 31 to 60 days past due | 6,919 | 4,642 | ||
From 61 to 90 days past due | 7,848 | 5,759 | ||
From 91 to 120 days past due | 5,818 | 6,406 | ||
From 121 to 150 days past due | 5,958 | 5,048 | ||
From 151 to 180 days past due | 2,868 | 4,168 | ||
From 181 to 365 days past due | 24,804 | 17,952 | ||
More than 366 days past due | 91,751 | 74,631 | ||
(-) Provision for impairment of trade receivables | (122,240) | (101,872) | ||
61,810 | 49,699 |
(i) | The changes in the provision for impairment of trade receivables are as follows: |
2020 | 2019 | |||
Opening balance | 101,872 | 80,833 | ||
Provision for the year | 20,368 | 21,039 | ||
Closing balance | 122,240 | 101,872 |
2-20
Cesumar – Centro de Ensino Superior de Maringá Ltda.
Notes to the financial statements
at December 31, 2020
All amounts in thousands of reais unless otherwise stated
8 | Advances |
2020 | 2019 | |||
Advances to suppliers | 1,368 | 4,174 | ||
Advances to employees | 4,065 | 4,875 | ||
Advances to hub partners – Distance Learning Centers (i) | 57,101 | 38,309 | ||
(-) Provision for losses with partners – Distance Learning Centers (i) | (3,189) | (2,589) | ||
Other advances | 938 | 1,048 | ||
60,283 | 45,817 | |||
(-) Current | 54,412 | 38,707 | ||
Non-current | 5,871 | 7,110 |
(i) | A hub is a local operating unit and has the responsibility for offering to students the necessary structure in terms of audiovisual resources, library and information technology, to support the distance learning courses. |
Advances represent amounts advanced to hub partner so that they can generate initial cash, develop the first customer portfolio and invest in media for the promotion of the unit. These amounts will be reimbursed by hub partner on a monthly basis in accordance with the terms stipulated in the contract, through the provision of services.
In 2020, due to the impacts of the COVID-19 pandemic, management carried out an analysis of the recoverability of the amounts advanced to the Distance Learning Centers and the subsequent recording of a provision for these recoverability of these credits. The change aimed to capture situations that could increase the risks of loss. Thus, there has been an increase in the provision for hub partner that have significant debt.
To this end, the entity analyzes, in each partner, the relation between the balance of advances at December 31, 2020 and the 2020 accumulated amount transferred. For partners with an index greater than 1.4, the Entity recorded a provision of 25%. For all others, the provision percentage used was 2%.
In relation to the amounts that are recorded as past due, as a result of the COVID-19 pandemic, the Entity launched the “Sou + Mútuo” program, which will grant new payment deadlines for loans (past due and not yet due) for the units that achieve specific fund raising targets.
2-21
Cesumar – Centro de Ensino Superior de Maringá Ltda.
Notes to the financial statements
at December 31, 2020
All amounts in thousands of reais unless otherwise stated
9 | Related parties |
(a) | Breakdown of balances |
2020 | 2019 | |||||||||||||||||
Centro
Universitário |
Soedmar | GP Adm. | Cesutec | ICETI | WWW ADM. | Other (i) | Total | Total | ||||||||||
Assets | ||||||||||||||||||
Non-current | ||||||||||||||||||
Advances | 2 | 1,312 | 116 | 8 | 54 | 51 | 1,543 | 1,447 | ||||||||||
Liabilities | ||||||||||||||||||
Current | ||||||||||||||||||
Trade payables | 26 | 26 | 27 | |||||||||||||||
Profit or loss | ||||||||||||||||||
Donations | 1,394 | 4,230 | 5,624 | 4,375 |
(i) | Refers to: |
Fundação Cesumar
Hoper Administração e Participações Ltda.
UPR – Unidade Paranaense de Ensino Superior Ltda.
PL Administração e Participações Ltda.
WL Administração e Participações Ltda.
(b) | Significant transactions |
Cesumar acquired 50% (fifty percent) of a PHENOM 100 aircraft, model BEM-500, year of manufacture 2014, Brazilian registration PP-WMP, jointly with the holding company WM Administração e Participações. The contract was signed between the parties on July 21, 2020, with a value of R$ 8,340 as follows: payment of R$ 6,386 on September 10, 2020 and R$ 1,954, subject to monthly settlement of the financing installments.
(c) | Key management compensation |
Key management includes members of the rectorate, prorectorate and executive board. The compensation paid or payable to key management totals R$ 26,263 at December 31, 2020 (2019 – R$ 26,483).
Benefits include fixed compensation (salaries and fees, vacation pay and 13th month salary), variable compensation and social security charges (contributions to the National Institute of Social Security (INSS) and the Government Severance Indemnity Fund for Employees (FGTS).
2-22
Cesumar – Centro de Ensino Superior de Maringá Ltda.
Notes to the financial statements
at December 31, 2020
All amounts in thousands of reais unless otherwise stated
10 | Recoverable taxes |
2020 | 2019 | |||
Income tax and social contribution (i) | 3,264 | 3,264 | ||
Withholding Income Tax (IRRF) | 199 | 200 | ||
PIS and COFINS (ii) | 1,485 | 1,485 | ||
Other | 8 | 7 | ||
4,956 | 4,956 | |||
(i) | Due to the changes in legislation through RFB Normative Instruction 1,394/2013 referring to the calculation of income tax and social contribution using the method of the operating profit on tax-incentive activities, applicable to private higher education institutions enrolled in PROUNI, the expectation of the Entity’s management is to realize in 2021 the balance of income tax and social contribution. |
(ii) | For PIS and COFINS balances, realization is expected in 2021. |
11 | Inventories |
The Entity maintains as inventory items:
2020 | 2019 | |||
Storeroom supplies | 486 | 234 | ||
Consumables | 695 | 405 | ||
Inventory – Distance learning | 1,825 | 1,973 | ||
Other | 95 | 192 | ||
3,101 | 2,804 |
12 | Other assets |
Other assets include credits arising from unusual businesses in relation to the Entity’s main activity, and their balance comprises:
2020 | 2019 | |||
Judicial deposits (ii) | 717 | 1,952 | ||
Rotesma Ind. De Pré Moldados (i) | 3,950 | 5,425 | ||
Instituto Salgado de Saude Integral | 179 | 179 | ||
Sicoob quotas | 339 | 279 | ||
Other | 944 | 1,560 | ||
6,129 | 9,395 |
(i) | The balance refers to the termination of the contract signed with Rotesma Industria de Pré Moldados, initially contracted to build one of the blocks intended for the courses offered. The initial debt balance of R$ 6,200 will be received in 24 equal and monthly installments. |
(ii) | Refers to judicial deposits, mostly of a labor nature. |
2-23
Cesumar – Centro de Ensino Superior de Maringá Ltda.
Notes to the financial statements
at December 31, 2020
All amounts in thousands of reais unless otherwise stated
13 | Property and equipment |
(a) | Breakdown of balances |
Buildings, | IT and | Industrial | Furniture, | |||||||||||||||
facilities and | communication | machinery and | fittings | Construction | ||||||||||||||
Land | improvements | equipment | equipment | and tools | Vehicles | Other | in progress | Total | ||||||||||
At December 31, 2018 | 42,894 | 93,716 | 8,059 | 5,775 | 11,369 | 1,420 | 19,408 | 36,317 | 218,958 | |||||||||
Additions | 1,100 | 270 | 5,174 | 2,678 | 2,413 | 1,877 | 5,231 | 28,075 | 46,818 | |||||||||
Disposals | - | - | (18) | (1) | (477) | (2) | (2) | (6,320) | (6,820) | |||||||||
Transfers | - | 36,479 | 11 | 99 | 79 | - | 873 | (37,541) | - | |||||||||
Depreciation | - | (4,099) | (4,076) | (978) | (1,636) | (722) | (2,610) | - | (14,121) | |||||||||
At December 31, 2019 | 43,994 | 126,366 | 9,150 | 7,573 | 11,748 | 2,573 | 22,900 | 20,531 | 244,835 | |||||||||
Additions | - | 2,808 | 2,434 | 2,323 | 899 | 11,350 | 31,840 | 51,654 | ||||||||||
Disposals | - | - | - | (3) | - | - | - | (1,307) | (1,310) | |||||||||
Transfers | - | 5,430 | 112 | - | - | - | 1,073 | (6,615) | - | |||||||||
Depreciation | - | (4,687) | (4,063) | (1,259) | (1,850) | (1,205) | (3,560) | - | (16,624) | |||||||||
At December 31, 2020 | 43,994 | 127,109 | 8,007 | 8,745 | 12,221 | 2,267 | 31,763 | 44,449 | 278,555 | |||||||||
Total cost | 43,994 | 160,460 | 31,792 | 15,911 | 27,890 | 6,531 | 59,905 | 44,449 | 390,931 | |||||||||
Accumulated depreciation | - | (33,351) | (23,785) | (7,166) | (15,669) | (4,264) | (28,142) | - | (112,376) | |||||||||
Net book value | 43,994 | 127,109 | 8,007 | 8,745 | 12,221 | 2,267 | 31,763 | 44,449 | 278,555 | |||||||||
Average annual depreciation rate % | - | 2 | 20 | 10 | 10 | 20 | 10 | - |
2-24
Cesumar – Centro de Ensino Superior de Maringá Ltda.
Notes to the financial statements
at December 31, 2020
All amounts in thousands of reais unless otherwise stated
(b) | Review and adjustment of estimated useful lives |
The Entity annually reviews the estimated economic useful lives of property and equipment items to calculate depreciation, as well as to determine the residual value of property and equipment items.
(c) | Significant transactions |
The significant balances that comprise the construction in progress refer to the Curitiba campus R$ 22,196 and the 2nd phase of expansion of the Ponta Grossa unit amounting to R$ 7,466. The balance referring to the acquisition of the aircraft is disclosed in Note 9 – Related parties.
14 | Intangible assets |
Software | Other | Total | |||
At December 31, 2018 | 9,283 | 1,001 | 10,284 | ||
Purchases | 3,278 | - | 3,278 | ||
Disposals | - - | -- | - | ||
Amortization | (4,409) | (1) | (4,410) | ||
Net book value | (1,131) | (1) | (1,132) | ||
Total cost | 20,025 | 1,001 | 21,026 | ||
Accumulated amortization | (11,873) | (1) | (11,874) | ||
At December 31, 2019 | 8,152 | 1,000 | 9,152 | ||
Purchases | 3,796 | 4,853 | 8,649 | ||
Transfers | - | - | - | ||
Disposals | -- | - | - | ||
Amortization | (4,567) | (1) | (4,568) | ||
Net book value | 7,381 | 5,852 | 13,233 | ||
Total cost | 23,821 | 5,853 | 29,674 | ||
Accumulated amortization | (16,440) | (1) | (16,441) | ||
At December 31, 2020 | 7,381 | 5,852 | 13,233 | ||
Average annual amortization rate – % | 20 |
2-25
Cesumar – Centro de Ensino Superior de Maringá Ltda.
Notes to the financial statements
at December 31, 2020
All amounts in thousands of reais unless otherwise stated
15 | Borrowings |
(a) | Breakdown of balances |
* Interbank Deposit
** National Economic and Social Development Bank
In view of the uncertainties at the beginning of the pandemic and the credit offer at lower cost by banks, due to the reduction in the Special System for Settlement and Custody (SELIC) rate, the Entity obtained a borrowing of R$ 40 million from Banco Itaú during the first half of the year, seeking to be prepared in the event it required funds; however, the use of these funds was not necessary up to the end of the current year.
Borrowings are held in local currency (R$).
(b) | Maturity of contracts classified in non-current liabilities |
Year | 2020 | 2019 | ||
2021 | 497 | |||
2022 | 8,541 | 69 | ||
2023 | 10,549 | 41 | ||
2024 | 4,158 | - | ||
23,248 | 607 |
(c) | Changes in balances |
2020 | 2019 | |||
Opening balance | 3,654 | 7,972 | ||
Proceeds from borrowings | 40,276 | 248 | ||
Interest, monetary and foreign exchange variations provided for | 1,485 | 82 | ||
Transfers (leases) | - | (427) | ||
Payment- principal | (5,536) | (4,098) | ||
Payment – interest | (60) | (123) | ||
Closing balance | 39,817 | 3,654 |
2-26
Cesumar – Centro de Ensino Superior de Maringá Ltda.
Notes to the financial statements
at December 31, 2020
All amounts in thousands of reais unless otherwise stated
(d) | Covenants |
The Entity is in compliance with all covenants in its borrowing contracts, namely:
Contract number | Bank | Covenants |
013610970-9 | Itaú | (clause 9): “(f) occurrence of any process of corporate reorganization or change of control, either direct or indirect, in which the Client is involved". |
12287294 | Bradesco | (clause 8): “e) if there is a change or transfer, for any purpose, of the shareholding control or ownership of the issuer's quotas, and also if it is merged, spun off, combined or undergoes a corporate reorganization." |
22126864 | Itaú | (f) occurrence of any process of corporate reorganization or change of control, either direct or indirect, in which the Client is involved; |
22126864 | Itaú | (g) change in the Client's corporate purpose or core business or sale of commercial establishment or significant portion of assets or rights of its permanent assets. |
16 | Leases |
(i) | Balances recorded in the balance sheet |
The balance sheet shows the following amounts relating to leases:
2020 | 2019 | |||
Right-of-use assets | ||||
Buildings | 3,914 | 5,505 | ||
3,914 | 5,505 | |||
Lease liabilities | ||||
Current | 1,961 | 3,030 | ||
Non-current | 2,170 | 3,076 | ||
4,131 | 6,106 |
Additions to the right-of-use assets during the 2020 financial year were R$ 1,111. The amounts shown in the table above are net of depreciation.
(ii) | Balances recorded in the statement of income |
The statement of income shows the following amounts relating to leases:
2020 | 2019 | |||
Amortization of right-of-use assets | ||||
Buildings | 2,702 | 2,724 | ||
Interest expense (included in finance costs) | 441 | 494 | ||
3,143 | 3,218 |
Lease payments in 2020 with interest totaled R$ 3,527 thousand.
2-27
Cesumar – Centro de Ensino Superior de Maringá Ltda.
Notes to the financial statements
at December 31, 2020
All amounts in thousands of reais unless otherwise stated
Right-of-use assets
The changes in right-of-use assets are as follows:
At January 1, 2019 | 5.219 |
Additions due to new contracts | 3.010 |
Depreciation expense | (2.724) |
Right-of-use assets at December 31, 2019 | 5.505 |
At January 1, 2020 | 5,505 | |
Additions due to new contracts | 1,111 | |
Depreciation expense | (2,702) | |
Right-of-use assets at December 31, 2020 | 3,914 |
Lease liabilities
The changes in lease liabilities are as follows:
At January 1, 2019 | 5,219 |
Transfer of financial liabilities | 426 |
Interest provided | 494 |
Additions due to new contracts | 3,010 |
Lease payments | (3,043) |
Lease liabilities at December 31, 2019 | 6,106 |
At January 1, 2020 | 6,106 |
Interest provided | 441 |
Additions due to new contracts | 1,111 |
Lease payments | (3,527) |
Lease liabilities at December 31, 2020 | 4,131 |
The Entity’s analysis of its contracts based on their maturity dates is presented below. The amounts are not discounted to present value.
Contract maturity dates
Installment maturity dates | ||
Less than 1 year | 1,637 | |
Between 1 and 2 years | 1,019 | |
Between 3 and 5 years | 1,475 | |
Lease liabilities at December 31, 2020 | 4,131 |
2-28
Cesumar – Centro de Ensino Superior de Maringá Ltda.
Notes to the financial statements
at December 31, 2020
All amounts in thousands of reais unless otherwise stated
17 | Trade and other payables |
2020 | 2019 | |||
Trade payables | ||||
EAD units (i) | 10,638 | 8,526 | ||
Sundry suppliers | 9,594 | 11,462 | ||
20,232 | 19,988 | |||
Other payables | ||||
Advances from customers | 10,332 | 12,936 | ||
Other | 1,186 | 1,534 | ||
11,518 | 14,470 | |||
Total - Trade and other payables | 31,750 | 34,458 |
(i) | Refers to the amount to be transferred to the EAD units in the normal course of their activities. The EAD units receive a portion of monthly fees for services provided at distance learning units. |
18 | Obligations and social charges |
2020 | 2019 | |||
Salaries payable | 6,472 | 6,777 | ||
Social security obligations and social charges | 5,165 | 5,189 | ||
Provision for vacation pay and related charges | 13,067 | 14,305 | ||
Other | 169 | 46 | ||
24,873 | 26,317 |
19 | Taxes payable |
2020 | 2019 | |||
Services Tax (ISS) | 2,079 | 534 | ||
Income tax and social contribution | ||||
- IRPJ and CSLL | 570 | 698 | ||
Social Integration Program (PIS) | 46 | 43 | ||
Social Contribution on Revenues (COFINS) | 235 | 205 | ||
Withholding Income Tax (IRRF) | 4,610 | 3,419 | ||
Taxes payable in installments (i) | - | 537 | ||
Other | 234 | 169 | ||
7,774 | 5,605 |
20 | Provision for civil, labor and tax risks |
(a) | Breakdown and changes in the provisions for legal claims |
Tax | Civil | Labor | Total | ||||||
At December 31, 2018 | 3,407 | 1,453 | 3,936 | 8,796 | |||||
Additions | 144 | 626 | 1,853 | 2,623 | |||||
Write-offs due to payment | - | ||||||||
At December 31, 2019 | 3,551 | 2,079 | 5,789 | 11,419 | |||||
Additions | 153 | 1,329 | 2,166 | 3,648 | |||||
Write-offs | - | - | - | - | |||||
At December 31, 2020 | 3,704 | 3,408 | 7,955 | 15,067 |
2-29
Cesumar – Centro de Ensino Superior de Maringá Ltda.
Notes to the financial statements
at December 31, 2020
All amounts in thousands of reais unless otherwise stated
(b) | Possible losses, not provided for in the balance sheet |
At December 31, 2020, the Entity has tax litigation involving risks of loss classified by management as possible, based on the evaluation of the legal advisors, for which no provision for estimated possible losses has been recorded, as shown below:
2020 | 2019 | |||
Labor | 2,203 | 1,498 | ||
Civil | 2,328 | 1,947 | ||
4,531 | 3,445 |
21 | Equity |
(a) | Share Capital |
At December 31, 2020, fully paid-up share capital is divided into 58,500,000 registered common quotas, with a par value of R$ 1.00 (one real) each.
(b) | Capital reserve |
At December 31, 2020, the Entity had a capital reserve of R$ 39,548, referring to the surplus for the period in which it operated as a not-for-profit entity.
(c) | Dividends |
At December 31, 2020, dividends of R$ 61,991 (2019 – R$ 39,388) were distributed.
(d) | Retained earnings |
The Retained earnings refers to the retention of the remaining balance of retained earnings and remains at the disposal of the quotaholders.
22 | Net revenue |
2020 | 2019 | |||
Gross amount from undergraduate services | 1,180,250 | 873,765 | ||
Gross amount from graduate services | 34,095 | 30,153 | ||
Gross amount from clerk services | 3,896 | 4,936 | ||
Gross amount from other services | 1,562 | 2,255 | ||
Taxes on services | (22,072) | (17,099) | ||
Returns | (30) | (2) | ||
Scholarships (i) | (494,638) | (299,364) | ||
Discounts and other deductions | (93,016) | (75,364) | ||
610,047 | 519,281 |
2-30
Cesumar – Centro de Ensino Superior de Maringá Ltda.
Notes to the financial statements
at December 31, 2020
All amounts in thousands of reais unless otherwise stated
(i) | The scholarships are divided as follows: |
2020 | 2019 | |||
PROUNI | 89,004 | 74,404 | ||
Institutional – undergraduate | 399,403 | 218,710 | ||
Institutional – graduate | 6,231 | 6,250 | ||
494,638 | 299,364 |
23 | Other operating income, net |
2020 | 2019 | |||
Medical and veterinary services | 1,147 | 3,191 | ||
Gym | 140 | 631 | ||
Income – restaurant | 1,113 | 1,787 | ||
Other operating income and expenses | 828 | 2,661 | ||
3,229 | 8,270 |
24 | Costs and expenses by nature |
2020 | 2019 | |||
Personnel and payroll charges | 236,242 | 244,453 | ||
Third-party services | 13,516 | 11,688 | ||
Utilities, cleaning and security | 3,901 | 4,802 | ||
Teaching materials | 5,513 | 6,854 | ||
Maintenance | 17,382 | 19,395 | ||
Advertising and publicity | 45,257 | 54,227 | ||
Travel | 5,971 | 12,872 | ||
Depreciation and amortization | 23,895 | 18,531 | ||
Contingencies | 3,856 | 2,628 | ||
Other | 36,259 | 38,748 | ||
391,790 | 414,198 | |||
Costs of services and sales | 143,531 | 146,203 | ||
Selling expenses | 47,604 | 54,049 | ||
General and administrative expenses | 200,656 | 213,946 | ||
391,790 | 414,198 |
2-31
Cesumar – Centro de Ensino Superior de Maringá Ltda.
Notes to the financial statements
at December 31, 2020
All amounts in thousands of reais unless otherwise stated
25 | Finance result, net |
2020 | 2019 | |||
Finance income | ||||
Interest income from monthly tuition fees | 6,964 | 7,517 | ||
Income from financial investments | 1,799 | 2,292 | ||
Discounts obtained | 18 | 33 | ||
Other | 859 | 601 | ||
9,640 | 10,444 | |||
Finance costs | ||||
Interest on financial transactions | (1,528) | (544) | ||
Discounts granted on monthly tuition fees | (3,751) | (3,569) | ||
Interest paid on payments to suppliers | (49) | (33) | ||
Bank expenses | (5,412) | (4,387) | ||
Interest on lease liability | (441) | (494) | ||
Other – finance costs | (1,058) | (563) | ||
(12,239) | (9,590) | |||
Finance result, net | (2,600) | 855 |
26 | Income tax and social contribution |
In accordance with Law 11,096/2005, regulated by Decree 5,493/2005 and standardized by Normative Instruction 456/2004 of the Internal Revenue Service, pursuant to Article 5 of Provisional Measure 213/2004, and Normative Instruction 1,394/2013, the higher education institutions enrolled in PROUNI are exempt, during the period of effectiveness of the enrollment agreement, from IRPJ and CSLL, among others; computation shall be based on the operating profit of exempt activities. The reconciliation of taxes calculated in accordance with the nominal rates and the amounts of taxes recorded in the years ended December 31, 2020 and 2019 are presented below:
2020 | 2019 | |||
Profit before taxes | 198,519 | 93,168 | ||
Nominal rates | 34% | 34% | ||
IRPJ and CSLL at the | ||||
nominal rates | (67,496) | (31,677) | ||
PROUNI tax benefits | 61,198 | 29,099 | ||
Permanent additions (donations, health care), net | (1,478) | (944) | ||
IRPJ and CSLL in the results | (7,776) | (3,522) | ||
Current | (10,295) | (9,493) | ||
Deferred | 2,519 | 5,971 | ||
IRPJ and CSLL in the results | (7,776) | (3,522) |
27 | Events after the reporting period – corporate change |
Through the ninth amendment to the articles of incorporation, the owners decided to transfer the ownership interest belonging to two family holding companies to the individuals who constituted the capital of the holding companies. This decision had no impact of control or change of officers – it was only a strategic decision of management, and had no impact on covenants disclosed in note 15 (d).
On August 23, 2021, the Institution’s quotaholders entered into an agreement for the purchase and sale of quotas with VITRU Brasil Empreendimentos, Participações e Comércio S.A. (Vitru) for the sale of 100% of the entity’s share capital to Vitru. This transaction is subject to compliance with the conditions precedent provided for the aforementioned instrument and the approval of the Administrative Council for Economic Defense (CADE).
* * *
2-32
Item 3
Vitru Limited — Unaudited pro forma condensed consolidated financial information of Vitru Limited as of and for the six months ended June 30, 2021 and for the year ended December 31, 2020.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION
On August 23, 2021, we entered into a purchase agreement with the shareholders of CESUMAR - Centro de Ensino Superior de Maringá Ltda, or “Unicesumar,” to acquire the entire share capital of Unicesumar. Unicesumar is a leading and fast-growing higher education institution in Brazil focused on the distance learning market, founded 30 years ago in Maringá – Paraná. Unicesumar has approximately 760 hubs and 331 thousand students, including 314 thousand in digital education. Unicesumar also has a sizeable presence in health-related on-campus courses, particularly Medicine, with more than 1,600 students in 348 current medical seats.
The closing of the transaction is subject to customary conditions precedent, including antitrust and other regulatory approvals.
Set forth below are the unaudited pro forma condensed consolidated statement of financial position as of June 30, 2021 and the unaudited pro forma condensed consolidated statements of operations for the six-month period ended June 30, 2021 and for the year ended December 31, 2020.
Assumptions underlying the pro forma adjustments are described in the accompanying notes, which should be read in conjunction with this unaudited pro forma condensed consolidated financial information.
We expect to incur integration costs and synergies from the consolidation of Unicesumar. The unaudited pro forma condensed consolidated financial information does not reflect any future integration costs or synergies that may result from the consolidation of Unicesumar.
The Unicesumar acquisition by Vitru will be accounted for as a business combination in accordance with IFRS 3 — Business Combinations, using the purchase method of accounting. The pro forma information presented, including allocation of the purchase price, is based upon our preliminary estimates of the fair value of the assets acquired and liabilities assumed, available information as of this date and management assumptions, and will be revised upon final calculations during the one year measurement period as from the acquisition date. Therefore, the actual adjustments may differ from the pro forma adjustments, and the differences may be material.
Additionally, the final determination of the fair value of assets acquired and liabilities assumed on the Unicesumar acquisition will be based on the actual net tangible and intangible assets and liabilities of Unicesumar that existed as of the closing date. Accordingly, the pro forma purchase price adjustments presented herein may not reflect any final purchase price adjustments. We estimated the fair value of Unicesumar’s assets and liabilities based on discussions with Unicesumar’s management, due diligence and preliminary work performed by third-party valuation specialists. As the final valuations are being performed, increases or decreases in the fair value of the assets acquired and liabilities assumed will result in adjustments, which may result in material differences from the information presented herein.
3-1
Unaudited pro forma condensed consolidated statement of financial position
As of June 30, 2021
(amounts in thousands of reais)
ASSETS |
Vitru
Historical |
Unicesumar Historical | Pro forma adjustments | Note |
Total
pro forma |
CURRENT ASSETS | |||||
Cash and cash equivalents | 143,229 | 221,155 | (82,457) | 2(b)/(c) | 281,927 |
Short-term investments | 486,104 | - | (400,000) | 2(b) | 86,104 |
Trade receivables | 136,990 | 57,188 | 194,178 | ||
Income taxes recoverable | - | - | - | ||
Prepaid expenses | 9,776 | 64,277 | 74,053 | ||
Other current assets | 1,459 | 10,587 | 12,046 | ||
TOTAL CURRENT ASSETS | 777,558 | 353,207 | (482,457) | 648,308 | |
NON-CURRENT ASSETS | |||||
Trade receivables | 6,248 | 12,134 | 18,382 | ||
Indemnification assets | 7,753 | - | 7,753 | ||
Deferred tax assets | 72,646 | 16,665 | (89,311) | 2 | - |
Other non-current assets | 1,577 | 7,905 | 9,482 | ||
Right-of-use assets | 134,971 | 3,764 | 244,267 | 2(d) | 383,002 |
Property and equipment | 99,287 | 287,650 | (226,122) | 2(c) | 160,815 |
Intangible assets | 664,825 | 12,362 | 3,464,039 | 2(e) | 4,141,226 |
TOTAL NON-CURRENT ASSETS | 987,307 | 340,480 | 3,392,873 | 4,720,660 | |
TOTAL ASSETS | 1,764,865 | 693,687 | 2,910,416 | 5,368,968 | |
LIABILITIES | |||||
CURRENT LIABILITIES | |||||
Trade payables | 35,051 | 21,880 | 20,967 | 2(g) | 77,898 |
Loans and financing | 152,155 | 13,698 | 165,853 | ||
Lease liabilities | 25,840 | 1,376 | 21,235 | 2(d) | 48,451 |
Labor and social obligations | 38,413 | 33,436 | 71,849 | ||
Income taxes payable | 5,147 | 6,159 | 11,306 | ||
Taxes payable | 2,881 | - | 2,881 | ||
Prepayments from customers | 6,782 | - | 6,782 | ||
Accounts payable from acquisition of subsidiaries | 142,665 | - | 539,940 | 2(a) | 682,605 |
Other current liabilities | 2,092 | 7,334 | 9,426 | ||
TOTAL CURRENT LIABILITIES | 411,026 | 83,884 | 582,142 | 1,077,052 | |
NON-CURRENT | |||||
Loans and financing | - | 20,294 | 1,553,779 | 2(b) | 1,574,073 |
Lease liabilities | 132,631 | 2,640 | 223,032 | 2(d) | 358,303 |
Share-based compensation | 52,409 | - | 52,409 | ||
Accounts payable from acquisition of subsidiaries | 136,495 | - | 136,495 | ||
Provisions for contingencies | 13,392 | 14,584 | 27,976 | ||
Deferred tax liabilities | - | - | 523,234 | 2 | 523,234 |
Other non-current liabilities | 634 | 3,526 | 4,160 | ||
TOTAL NON-CURRENT LIABILITIES | 335,561 | 41,044 | 2,300,045 | 2,676,650 | |
TOTAL LIABILITIES | 746,587 | 124,929 | 2,882,187 | 3,753,703 | |
EQUITY | 1,018,278 | 568,758 | 28,229 | 2(f) | 1,615,265 |
TOTAL LIABILITIES AND EQUITY | 1,764,865 | 693,687 | 2,910,416 | 5,368,968 |
3-2
Unaudited pro forma condensed consolidated statement of profit and loss
For the six-month period ended June 30, 2021
(amounts in thousands of reais, except per share data)
Vitru
Historical |
Unicesumar Historical | Pro forma adjustments | Note |
Total
pro forma |
|
NET REVENUE | 317,146 | 356,266 | 673,412 | ||
Cost of services rendered | (112,563) | (82,246) | (10,309) | 2(c)/(d)/(e) | (205,118) |
GROSS PROFIT | 204,583 | 274,019 | (10,309) | 468,293 | |
General and administrative expenses | (42,045) | (105,126) | (19,542) | 2(e) | (166,713) |
Selling expenses | (63,295) | (27,725) | (28,819) | 2(e) | (119,839) |
Net impairment losses on financial assets | (52,908) | (12,063) | (64,971) | ||
Other income (expenses), net | 426 | (595) | (169) | ||
Operating expenses | (157,822) | (145,509) | (48,361) | (351,692) | |
OPERATING PROFIT | 46,761 | 128,511 | (58,670) | 116,602 | |
Financial income | 17,822 | 6,810 | 24,632 | ||
Financial expenses | (31,317) | (6,539) | (51,324) | 2(b)/(d) | (89,180) |
Financial results | (13,495) | 271 | (51,324) | (64,548) | |
PROFIT (LOSS) BEFORE TAXES | 33,266 | 128,782 | (109,994) | 52,054 | |
Current income taxes | (17,888) | (6,679) | 13,561 | 2(h) | (11,006) |
Deferred income taxes | 21,871 | 717 | 23,837 | 2(h) | 46,425 |
Income taxes | 3,983 | (5,962) | 37,398 | 35,419 | |
NET INCOME (LOSS) FOR THE PERIOD | 37,249 | 122,820 | (72,596) | 87,473 | |
Basic earnings per share (R$) | 0.68 | 2(i) | 2.89 | ||
Diluted earnings per share (R$) | 0.63 | 2(i) | 2.75 |
3-3
Unaudited pro forma condensed consolidated statement of operations
For the year ended December 31, 2020
(amounts in thousands of reais, except per share data)
Vitru
Historical |
Unicesumar Historical | Pro forma adjustments | Note |
Total
pro forma |
|
NET REVENUE | 519,179 | 610,047 | 1,129,226 | ||
Cost of services rendered | (221,452) | (149,376) | (21,902) | 2(c)/(d)/(e) | (392,730) |
GROSS PROFIT | 297,727 | 460,671 | (21,902) | 736,496 | |
General and administrative expenses | (73,852) | (194,810) | (60,051) | 2(e)/(g) | (328,713) |
Selling expenses | (86,604) | (47,604) | (57,639) | 2(e) | (191,847) |
Net impairment losses on financial assets | (76,840) | (20,368) | (97,208) | ||
Other income (expenses), net | 512 | 3,229 | 3,741 | ||
Operating expenses | (236,784) | (259,553) | (117,690) | (614,027) | |
OPERATING PROFIT | 60,943 | 201,118 | (139,592) | 122,469 | |
Financial income | 36,558 | 9,640 | 46,198 | ||
Financial expenses | (64,418) | (12,239) | (143,464) | 2(a)/(b)/(d) | (220,121) |
Financial results | (27,860) | (2,599) | (143,464) | (173,923) | |
PROFIT (LOSS) BEFORE TAXES | 33,083 | 198,519 | (283,056) | (51,454) | |
Current income taxes | (19,556) | (10,295) | 34,303 | 2(h) | 4,452 |
Deferred income taxes | 38,587 | 2,519 | 61,936 | 2(h) | 103,042 |
Income taxes | 19,031 | (7,776) | 96,239 | 107,494 | |
NET INCOME (LOSS) FOR THE PERIOD | 52,114 | 190,743 | (186,817) | 56,040 | |
Basic earnings per share (R$) | 2.79 | 2(i) | 2.17 | ||
Diluted earnings per share (R$) | 2.68 | 2(i) | 2.10 |
Notes to unaudited pro forma condensed consolidated financial information
(amounts in thousands of reais, except per share data)
1. | Basis of preparation. |
The unaudited pro forma condensed consolidated statement of financial position is based on the historical unaudited interim consolidated financial statements of Vitru and the historical unaudited interim financial statements of Unicesumar, appearing elsewhere in this Form 6-K, and gives effect to the Unicesumar acquisition as if it had been consummated on June 30, 2021.
The unaudited pro forma condensed consolidated statement of operations for the six-month period ended June 30, 2021 is based on the historical unaudited interim consolidated financial statements of Vitru and the historical unaudited interim financial statements of Unicesumar, appearing elsewhere in this Form 6-K, and gives effect to the Unicesumar acquisition as if it had been consummated on January 1, 2020.
The unaudited pro forma condensed consolidated statement of operations for the year ended December 31, 2020 is based on the historical audited consolidated financial statements of Vitru, incorporated by reference in this Form 6-K, and the historical audited financial statements of Unicesumar, appearing elsewhere in this Form 6-K, and gives effect to the Unicesumar acquisition as if it had been consummated on January 1, 2020.
The unaudited pro forma adjustments are based upon available information and certain assumptions that are factually supportable and that we believe are reasonable under the circumstances.
The unaudited pro forma condensed consolidated financial information is presented for information purposes only.
The unaudited pro forma condensed consolidated financial information does not purport to represent what our actual consolidated results of operations would have been had the Unicesumar acquisition occurred on the dates indicated, nor are they indicative of future consolidated results of operations or financial condition.
The unaudited pro forma condensed consolidated financial information should be read in conjunction with our historical consolidated financial statements and the historical financial statements of Unicesumar.
The audited consolidated financial statements and the unaudited interim condensed consolidated financial statements from which the unaudited pro forma condensed consolidated financial information have been derived, were prepared in accordance with IFRS.
3-4
2. | Pro Forma adjustments and assumptions |
Vitru has performed a preliminary valuation analysis of the fair market value of Unicesumar’s assets to be acquired and liabilities to be assumed. Using the total consideration for the acquisition, Vitru has estimated the allocations to such assets and liabilities. The following table summarizes the allocation of the preliminary purchase price as if the Closing Date had been June 30, 2021.
Note | ||
Cash consideration | 2,593,719 | |
Vitru’s Shares issue (7,182 thousand shares at US$ 17.2 per share) | 617,957 | |
Total consideration | 3,211,676 | (a) |
Book value of Unicesumar’s shareholders’ equity at June 30, 2021 | 568,758 | |
Book value of property to be transferred to Soedmar | (208,578) | (c) |
Pro forma adjusted book value of Unicesumar’s shareholders’ equity | 360,180 | |
Fair value adjustments | ||
Customer relationships | 276,667 | |
Brand | 408,990 | |
Non-compete agreement | 153,726 | |
Software | 30,738 | |
Teaching-learning material (TLM) | 24,522 | |
Operation licenses for distance learning | 786,841 | |
Leasing contracts | 56,264 | |
Licenses to operate medical courses | 63,856 | |
Deferred taxes on temporary differences | (612,545) | |
Total fair value impacts | 1,189,059 | |
Total pro forma goodwill | 1,662,437 |
This preliminary purchase price allocation has been used to prepare pro forma adjustments in the pro forma balance sheet and income statement. The final purchase price allocation will be determined when Vitru has the approval of all the regulators and completed the detailed valuations and necessary calculations. The final allocation could differ materially from the preliminary allocation used in the pro forma adjustments. The final allocation may include (1) changes in the value of the consideration paid, (2) changes in fair values of property, plant and equipment, (3) changes in allocations to intangible assets such as customers relationships, Operation licenses for distance learning and Additional medical seats as well as goodwill and (4) other changes to assets and liabilities.
The pro forma adjustments are based on currently available information and certain estimates and assumptions and, therefore, the actual effects of these transactions will differ from the pro forma adjustments. We have only included material adjustments that are directly attributable to the acquisition, factually supportable and, with respect to the statement of income, expected to have a continuing impact on the consolidated results. A general description adjustment is provided as follows:
(a) | Consideration paid was estimated based on the terms of the transaction considering that the owners of Unicesumar will receive cash and Vitru’s shares as agreed in the terms of the acquisition. Consideration will consist of R$ 2,594 million to be paid in cash plus 7,182 thousand Vitru’s Shares to be Issued on the Closing Date. In this Unaudited Pro Forma Condensed Consolidated Financial Information, the Vitru’s Shares to be issued have been valued using the June 30, 2021 quoted market price of US$ 17.20 per share. Actual consideration will be based on share price on the Closing Date. |
Purchase consideration | 3,211,676 | % |
Cash payable at the acquisition date | 2,053,779 | 63.95% |
Payable after 12 months (i) | 539,940 | 16.81% |
Payable through the issuance of new Vitru shares (ii) | 617,957 | 19.24% |
(i) Reflects the estimated adjustment to financial expenses resulting from the interest expense from the monetary indexation by the CDI rate on the amounts payable in installments of the purchase consideration. The estimated adjustment to financial expenses amounted to R$ (41,950) for the year ended December 31, 2020. No adjustment was reflected for the six months period ended June 30, 2021; due to the fact the payables are due within 12 months from the Closing date.
(ii) If the Vitru quoted market price per Vitru’s Share on the Closing Date had increased/decreased by 10% compared to the June 30, 2021 quoted market price, the consideration paid would have increased/decreased by approximately R$ 61.8 million, and, as a consequence, goodwill would have increased/decreased by the same amount.
3-5
(b) | It is assumed that as of June 30, 2021 the cash consideration of R$ 2,053,779 will be paid as follows: |
Cash and cash equivalents | 100,000 |
Short term investments | 400,000 |
Loans and financing | 1,553,779 |
Total | 2,053,779 |
Vitru has secured a firm credit line from leading Brazilian banks up to an aggregate amount of R$1.95 billion (five-year financing) for the transaction. In order to have sufficient resources to pay the cash portion of the acquisition price, which amounts R$2,053,779, the Company will use its own cash (R$500,000) plus resources from a firm credit line (R$1,553,779). For the pro-forma purposes, the credit line represented an increase in Loans and financing in the total amount of R$1,553,779 as of June 30, 2021.
It is assumed that the secured credit line would bear interest at approximately CDI+2.75% p.a. The related estimated financial expense for the credit line obtained above amounted R$ 85.6 million for the year ended December 31, 2020 and R$ 43.4 million for the six-month period ended June 30, 2021.
(c) | As a precondition for the Transaction, some assets will be transferred/sold by Unicesumar to the previous owners, therefore these assets, which are currently reflected in the Unicesumar financial historical information, will not be part of the Business combination. The adjustments below reflect the elimination of (i) the book value of property and equipment to be transferred from Unicesumar to Soedmar Sociedade Educacional de Maringá Ltda (Soedmar) prior to the Closing Date and (ii) the book value of property and equipment of Unicesumar to be sold to the current shareholders of Unicesumar prior to the Closing Date. Such tangible assets, as detailed below, will not be included in the net assets acquired by Vitru: |
Assets to be transferred | |
Lands | 47,520 |
Buildings | 122,856 |
Construction in progress | 38,202 |
Total assets to be transferred (c.1) | 208,578 |
Assets to be sold | |
Lands | 5,378 |
Buildings | 4,682 |
Airplane | 7,483 |
Total assets to be sold at book value (c.2) | 17,543 |
Total | 226,121 |
(c.1) The adjustment is reflected as a reduction of Unicesumar equity as demonstrated in (a) above.
(c.2) The adjustment is reflected as an increase in cash and a decrease in Property and Equipment in the statement of financial position.
Also it reflects the elimination of depreciation expense of such assets amounting R$ 3,488 for the six-month period ended June 30, 2021 and R$ 5,689 for the year ended December 31, 2020.
(d) | The adjustment reflects the estimated fair value of the leasing contract for the right of use of certain Land and Building (refer to (c) above) to be signed prior to the Closing Date between Unicesumar and Soedmar (as disclosed in “c” above, this is a precondition for the transaction). |
Also it reflects (i) the amortization expenses resulting from the recognition of estimated right-of-use assets of R$ (6,107) for the six months period ended June 30, 2021 and R$ (12,213) for the period ended December 31, 2020, and (ii) the interest expense related to the financial liability related to the lease liability of R$ (7,951) for the six months period ended June 30, 2021 and R$ (15,901) for the period ended December 31, 2020.
3-6
(e) | The adjustment reflects the recognition of the fair value impacts from goodwill, identified assets and their amortization as detailed bellow: |
Identifiable assets acquired | Pro forma fair value | Expected life in years |
Customer relationships | 276,667 | 4.8 |
Brand | 408,990 | 26.5 |
Non-compete agreement | 153,726 | 6.5 |
Software | 30,738 | 7.0 |
Teaching-learning material (TLM) | 24,522 | 3.0 |
Operation licenses for distance learning | 786,841 | - |
Leasing contracts | 56,264 | 20.0 |
Licenses to operate medical courses | 63,856 | - |
Pro forma goodwill | 1,662,437 | - |
Total pro forma Identifiable assets + goodwill | 3,464,041 |
Six-months period ended | Year ended | |
Identifiable assets - amortization | June 30, 2021 | December 31, 2020 |
Customer relationships | 28,819 | 57,639 |
Brand | 7,717 | 15,434 |
Non-compete agreement | 11,825 | 23,650 |
Software | 2,196 | 4,391 |
Teaching-learning material (TLM) | 4,087 | 8,174 |
Leasing contracts | 1,407 | 2,813 |
Total | 56,051 | 112,101 |
Cost of services rendered | 7,690 | 15,378 |
General and administrative expenses | 19,542 | 39,084 |
Selling expenses | 28,819 | 57,639 |
Total | 56,051 | 112,101 |
The amortization is calculated using the straight-line method over the expected life of the asset.
(f) | Represents the elimination of Unicesumar’s shareholders equity plus the issuance of 7,182 million shares of Vitru at US$ 17.20 per share – note (a). |
(g) | The adjustment reflects the transaction costs related to the transaction incurred by the Company amounting R$ (20,967) for the period ended December 31, 2020. |
(h) | Reflects the estimated income taxes effects on the pro forma adjustments considering the effective rate of 34%. |
(i) | The following table reflects the pro forma profit and share data used in the basic and diluted pro forma EPS calculations: |
Six-months period ended | Year ended | |
June 30, 2021 | December 31, 2020 | |
Net income attributable to the shareholders of the Company | 87,473 | 56,040 |
Weighted average number of outstanding common shares (thousands) | 30,245 | 25,884 |
Weighted average number of outstanding common shares (thousands) - Effects of dillution from shared based compensation plan | 1,586 | 763 |
Basic earnings per common share (R$) | 2.89 | 2.17 |
Diluted earnings per common share (R$) | 2.75 | 2.10 |
3-7
(j) | The following reclassifications were made in the pro forma presentation to align the historical financial statements of Unicesumar to the pro forma financial information provided for Vitru: |
Unicesumar Historical | Reclassification |
Pro forma
Vitru |
|
Advances | 63,210 | (63,210) | - |
Prepaid expenses | 1,067 | 63,210 | 64,277 |
Prepaid expenses | 64,277 | - | 64,277 |
Unicesumar Historical | Reclassification |
Pro forma
Vitru |
|
Inventories | 3,092 | (3,092) | - |
Recoverable taxes | 4,994 | (4,994) | - |
Other assets | 2,501 | 8,086 | 10,587 |
Prepaid expenses | 10,587 | - | 10,587 |
Unicesumar Historical | Reclassification |
Pro forma
Vitru |
|
Related parties | 1,509 | (1,509) | - |
Advances | 4,661 | (4,661) | - |
Other assets | 1,735 | 6,170 | 7,905 |
Other non-current assets | 7,905 | - | 7,905 |
Unicesumar Historical | Reclassification |
Pro forma
Vitru |
|
Related parties | 27 | (27) | - |
Other payables | 7,307 | 27 | 7,334 |
Other current liabilities | 7,334 | - | 7,334 |
3-8
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Vitru Ltd. | |||||
By: | /s/ Carlos Henrique Boquimpani de Freitas | ||||
Name: | Carlos Henrique Boquimpani de Freitas | ||||
Title: | Chief Financial Officer |
Date: October 22, 2021