Document and Entity Information
Document and Entity Information | 12 Months Ended |
Dec. 31, 2020shares | |
Document and Entity Information | |
Entity Registrant Name | Arco Platform Ltd. |
Document Type | 20-F |
Document Registration Statement | false |
Document Annual Report | true |
Document Period End Date | Dec. 31, 2020 |
Document Transition Report | false |
Title of 12(b) Security | Class A common shares, par value US$0.00005 per share |
Trading Symbol | ARCE |
Security Exchange Name | NASDAQ |
Document Shell Company Report | false |
Entity Incorporation, State or Country Code | E9 |
Entity Well-known Seasoned Issuer | No |
Entity Interactive Data Current | Yes |
Entity Filer Category | Large Accelerated Filer |
Entity Emerging Growth Company | false |
ICFR Auditor Attestation Flag | true |
Entity Shell Company | false |
Entity Current Reporting Status | Yes |
Entity Voluntary Filers | No |
Entity Central Index Key | 0001740594 |
Current Fiscal Year End Date | --12-31 |
Document Fiscal Year Focus | 2020 |
Document Fiscal Period Focus | FY |
Amendment Flag | false |
Class A | |
Document and Entity Information | |
Entity Common Stock, Shares Outstanding | 30,186,715 |
Class B | |
Document and Entity Information | |
Entity Common Stock, Shares Outstanding | 27,400,848 |
Consolidated statements of fina
Consolidated statements of financial position R$ in Thousands, $ in Thousands | Dec. 31, 2020BRL (R$) | Dec. 31, 2019BRL (R$) |
Current assets | ||
Cash and cash equivalents | R$ 424410 | R$ 48900 |
Financial investments | 712,645 | 574,804 |
Trade receivables | 415,282 | 329,428 |
Inventories | 74,076 | 40,106 |
Recoverable taxes | 19,304 | 15,612 |
Financial instruments from acquisition of interest | 3,794 | |
Related parties | 9,970 | 1,298 |
Other assets | 24,073 | 14,630 |
Total current assets | 1,679,760 | 1,028,572 |
Non-current assets | ||
Financial instruments from acquisition of interest | 32,152 | |
Deferred income tax | 236,903 | 156,748 |
Recoverable taxes | 1,121 | 6,613 |
Financial investments | 10,349 | 4,690 |
Related parties | 10,508 | 14,813 |
Other assets | 22,239 | 14,399 |
Investments and interests in other entities | 9,654 | 48,574 |
Property and equipment | 26,087 | 21,328 |
Right-of-use assets | 30,022 | 21,631 |
Intangible assets | 2,549,637 | 1,811,903 |
Total non-current assets | 2,896,520 | 2,132,851 |
Total assets | 4,576,280 | 3,161,423 |
Current liabilities | ||
Trade payables | 40,925 | 34,521 |
Labor and social obligations | 85,069 | 68,511 |
Taxes and contributions payable | 9,676 | 7,508 |
Income taxes payable | 44,731 | 52,038 |
Advances from customers | 23,080 | 25,626 |
Lease liabilities | 12,742 | 6,845 |
Loans and financing | 107,706 | 98,561 |
Accounts payable to selling shareholders, Current | 656,014 | 117,959 |
Other liabilities | 331 | 607 |
Total current liabilities | 980,274 | 412,176 |
Non-current liabilities | ||
Labor and social obligations | 36,570 | 2,801 |
Lease liabilities | 22,478 | 19,012 |
Loans and financing | 203,413 | |
Financial instruments from acquisition of interests | 33,940 | |
Provision for legal proceedings | 1,366 | 251 |
Accounts payable to selling shareholders, Non-current | 1,130,501 | 1,098,273 |
Other liabilities | 794 | 160 |
Total non-current liabilities | 1,395,122 | 1,154,437 |
Total liabilities | 2,375,396 | 1,566,613 |
Equity | ||
Share capital | 11 | 11 |
Capital reserve | 2,200,645 | 1,607,622 |
Share-based compensation reserve | 80,817 | 84,546 |
Accumulated losses | (80,589) | (97,369) |
Total equity | 2,200,884 | 1,594,810 |
Total liabilities and equity | R$ 4576280 | R$ 3161423 |
Consolidated statements of inco
Consolidated statements of income - BRL (R$) R$ in Thousands | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Consolidated statements of income | |||
Net revenue | R$ 1001710 | R$ 572837 | R$ 380981 |
Cost of sales | (221,130) | (117,258) | (80,745) |
Gross profit | 780,580 | 455,579 | 300,236 |
Selling expenses | (372,269) | (199,780) | (113,270) |
General and administrative expenses | (270,558) | (191,438) | (129,754) |
Other income (expenses), net | (2,258) | (6,287) | 4,856 |
Operating profit | 135,495 | 58,074 | 62,068 |
Finance income | 45,211 | 72,047 | 36,618 |
Finance costs | (142,013) | (170,855) | (198,795) |
Finance result | (96,802) | (98,808) | (162,177) |
Share of profit (loss) of equity-accounted investees | 409 | (1,800) | (792) |
Income (loss) before income taxes | 39,102 | (42,534) | (100,901) |
Income taxes - income (expense) | |||
Current | (87,379) | (46,850) | (26,553) |
Deferred | 65,057 | 79,953 | 44,538 |
Income taxes benefit (expense) | (22,322) | 33,103 | 17,985 |
Net profit for the year | 16,780 | (9,431) | (82,916) |
Total comprehensive income (loss) for the year | 16,780 | (9,431) | (82,916) |
Profit (loss) attributable to Equity holders of the parent | 16,780 | (9,431) | (82,380) |
Profit (loss) attributable to Non-controlling interests | (536) | ||
Class A common shares | |||
Income taxes - income (expense) | |||
Profit (loss) attributable to Equity holders of the parent | R$ 8534 | R$ 4379 | R$ 37047 |
Basic earnings per share - in Brazilian reais per share | R$ 0.30 | R$ 0.18 | R$ 1.64 |
Diluted earnings per share - in Brazilian reais per share | R$ 0.30 | R$ 0.18 | R$ 1.64 |
Class B common shares | |||
Income taxes - income (expense) | |||
Profit (loss) attributable to Equity holders of the parent | R$ 8246 | R$ 5052 | R$ 45333 |
Basic earnings per share - in Brazilian reais per share | R$ 0.30 | R$ 0.18 | R$ 1.64 |
Diluted earnings per share - in Brazilian reais per share | R$ 0.30 | R$ 0.18 | R$ 1.64 |
Consolidated statements of chan
Consolidated statements of changes in equity - BRL (R$) R$ in Thousands | Share capital | Capital reserve | Legal reserve | Retained earnings reserve | Share-based compensation reserve | Accumulated losses | Attributable to equity holders of the parent | Non-controlling interests | Total |
Change in accounting policy | R$ 4307 | R$ 4307 | R$ 4307 | ||||||
Restated opening balance | R$ 55897 | R$ 160682 | R$ 8165 | R$ 73827 | R$ 7053 | (4,307) | 301,317 | R$ 111 | 301,428 |
Beginning balance at Dec. 31, 2017 | 55,897 | 160,682 | 8,165 | 73,827 | 7,053 | 305,624 | 111 | 305,735 | |
Profit (loss) for the year | (82,380) | (82,380) | (536) | (82,916) | |||||
Total comprehensive income (loss) | (82,380) | (82,380) | (536) | (82,916) | |||||
Corporate reorganization | (55,890) | 63,444 | R$ 8165 | R$ 73827 | (74,438) | (74,438) | |||
Tax benefit on tax deductible goodwill - reversion | 46,314 | 46,314 | 46,314 | ||||||
Capital increase | 3,091 | 3,091 | 3,091 | ||||||
Issuance of common shares in initial/follow-on public offering | 3 | 895,179 | 895,182 | 895,182 | |||||
Share issuance costs | (79,205) | (79,205) | (79,205) | ||||||
Non-controlling interest | 131 | 131 | |||||||
Share-based compensation plan | 60,297 | 60,297 | 60,297 | ||||||
Ending balance at Dec. 31, 2018 | 10 | 1,089,505 | 67,350 | (86,687) | 1,070,178 | (294) | 1,069,884 | ||
Change in accounting policy | (1,251) | (1,251) | (1,251) | ||||||
Restated opening balance | 10 | 1,089,505 | 67,350 | (87,938) | 1,068,927 | (294) | 1,068,633 | ||
Profit (loss) for the year | (9,431) | (9,431) | (9,431) | ||||||
Total comprehensive income (loss) | (9,431) | (9,431) | (9,431) | ||||||
Corporate reorganization | (36,624) | (36,624) | (36,624) | ||||||
Tax benefit on tax deductible goodwill - reversion | (46,314) | (46,314) | (46,314) | ||||||
Capital increase | 1 | 13,829 | 13,830 | 13,830 | |||||
Issuance of common shares in initial/follow-on public offering | 589,602 | 589,602 | 589,602 | ||||||
Share issuance costs | (18,223) | (18,223) | (18,223) | ||||||
Non-controlling interest | R$ 294 | 294 | |||||||
Share-based compensation plan | 33,043 | 33,043 | 33,043 | ||||||
Restricted stocks transferred | 15,847 | (15,847) | |||||||
Ending balance at Dec. 31, 2019 | 11 | 1,607,622 | 84,546 | (97,369) | R$ 1594810 | 1,594,810 | |||
Profit (loss) for the year | 16,780 | 16,780 | |||||||
Total comprehensive income (loss) | 16,780 | 16,780 | |||||||
Issuance of common shares in initial/follow-on public offering | 591,898 | 591,898 | |||||||
Share issuance costs | (16,291) | (16,291) | |||||||
Share-based compensation plan | 13,687 | 13,687 | |||||||
Restricted stocks transferred | 17,416 | (17,416) | |||||||
Ending balance at Dec. 31, 2020 | R$ 11 | R$ 2200645 | R$ 80817 | R$ 80589 | R$ 2200884 |
Consolidated statements of cash
Consolidated statements of cash flows R$ in Thousands, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2020BRL (R$) | Dec. 31, 2019BRL (R$) | Dec. 31, 2018BRL (R$) | |
Operating activities | |||
Profit (loss) before income taxes | R$ 39102 | R$ 42534 | R$ 100901 |
Adjustments to reconcile profit (loss) before income taxes | |||
Depreciation and amortization | 127,455 | 48,314 | 19,594 |
Inventory reserves | 7,453 | 8,476 | 7,252 |
Allowance for doubtful accounts | 34,684 | 17,392 | 9,588 |
Loss on sale/disposal of property and equipment and intangible assets disposed | 4,277 | 3,499 | 138 |
Fair value change in financial instruments from acquisition interests | (562) | (473) | (659) |
Changes in accounts payable to selling shareholders | 20,330 | 89,403 | 130,378 |
Share of (profit) loss of equity-accounted investees | (409) | 1,800 | 792 |
Share-based compensation plan | 36,333 | 33,043 | 60,297 |
Accrued interest on loans and financing | 19,862 | 1,002 | |
Interest accretion on acquisition liability | 68,379 | 42,206 | 8,704 |
Income from non-cash equivalents | (13,388) | (45,797) | |
Interest on lease liabilities | 3,036 | 1,489 | |
Provision for legal proceedings | 587 | 120 | 131 |
Provision for payroll taxes (restricted stock units) | (2,997) | 8,333 | |
Foreign exchange income (loss) | (188) | 555 | 34,435 |
Changes in fair value of step acquisitions | 307 | (3,708) | |
Gain on sale of investment | (3,286) | ||
Other financial cost/revenue, net | (2,315) | (2,362) | |
Adjustments to reconcile profit (loss) before income taxes | 341,946 | 157,472 | 169,749 |
Changes in assets and liabilities | |||
Trade receivables | (108,087) | (136,407) | (57,020) |
Inventories | (18,161) | (14,637) | (3,563) |
Recoverable taxes | 3,152 | (8,494) | (3,807) |
Other assets | (14,087) | (16,035) | (2,254) |
Trade payables | 3,886 | 8,455 | 10,256 |
Labor and social obligations | 7,239 | 15,950 | 7,169 |
Taxes and contributions payable | 1,147 | 1,951 | 1,476 |
Advances from customers | (2,981) | 19,997 | 99 |
Other liabilities | (1,420) | (268) | (3,342) |
Cash generated from operations | 212,634 | 27,984 | 118,763 |
Income taxes paid | (95,053) | (34,747) | (26,639) |
Interest paid on lease liabilities | (2,100) | (852) | |
Interest paid on accounts payable to selling shareholders | (187) | ||
Interest paid on loans and financing | (13,423) | ||
Payments for contingent consideration | (9,520) | ||
Net cash flows from (used in) operating activities | 92,351 | (7,615) | 92,124 |
Investing activities | |||
Acquisition of property and equipment | (10,822) | (10,991) | (6,854) |
Payment of investments and interests in other entities | (32,628) | (41,853) | (2,000) |
Acquisition of subsidiaries, net of cash acquired | (204,286) | (798,885) | |
Payment of accounts payable to selling shareholders | (14,756) | ||
Acquisition of intangible assets | (96,827) | (43,102) | (29,403) |
Net sales (purchase) of financial investments | (130,113) | 277,389 | (727,951) |
Loans to related parties | (5,000) | (14,000) | |
Net cash flows used in investing activities | (479,676) | (631,442) | (780,964) |
Financing activities | |||
Capital increase - exercised stock options | 13,830 | 3,091 | |
Capital increase - proceeds from public offering | 591,898 | 589,602 | 895,182 |
Share issuance costs | (16,291) | (18,897) | (78,531) |
Payments of lease liabilities | (8,510) | (4,407) | |
Payment of loans and financing | (301,151) | (563) | |
Payment to owners to acquire entity's shares | (1,733) | (928) | |
Loans and financing | 498,434 | 97,574 | |
Dividends paid by subsidiaries | (85,000) | ||
Net cash flows generated from financing activities | 762,647 | 676,211 | 734,742 |
Foreign exchange effects on cash and cash equivalents | 188 | (555) | (34,435) |
Increase in cash and cash equivalents | 375,510 | 36,599 | 11,467 |
Cash and cash equivalents at the beginning of the year | 48,900 | 12,301 | 834 |
Cash and cash equivalents at the end of the year | R$ 424410 | R$ 48900 | R$ 12301 |
Corporate information
Corporate information | 12 Months Ended |
Dec. 31, 2020 | |
Corporate information | |
Corporate information | 1 Corporate information Arco Platform Limited (“Arco”) is a holding company incorporated under the laws of the Cayman Islands on April 12, 2018 whose shares are publicly traded on the National Association of Securities Dealers Automated Quotations Payments exchange (NASDAQ) under the ticker symbol “ARCE”. Arco and its subsidiaries are collectively referred to as the Company. Arco became the parent company of Arco Educação S.A. ("Arco Brazil") through the completion of a corporate reorganization and initial public offering in 2018. Arco Brazil is the holding company of the operating subsidiaries, including PSD Educação S.A. (“PSD”), which provides educational content from basic to secondary education (“K‑12 curriculum”). The Company’s principal administrative office is located at 2840 Rua Augusta, 11th Floor, Consolação, São Paulo, Brazil. Since 2015, the Company has been investing in technology and its printed methodology has evolved to an educational platform, capable of delivering the entire K‑12 curriculum content. The Company offers a complete pedagogical methodology using technology features to deliver educational content to improve the learning process. The Company’s activities comprise the editing, publishing, advertising and sale of educational content for private schools. The Company has an asset-light, highly scalable business model that emphasizes operational efficiency and profitability. Arco operates through long-term service contracts with private schools. These contracts generally have terms of validity ranging from one to five years, pursuant to which educational content is provided in printed and digital format to private schools. The revenue is driven by the number of enrolled students at each customer using the solutions and the agreed upon price per student per year, all in accordance with the terms and conditions set forth in each contract. As a result, the Company benefits from high visibility in its net revenue and operating margin, which is calculated by dividing the operating profit by net revenue over a given period. These consolidated financial statements were authorized for issue by the Board of Directors on March 31, 2021. 1.2 Significant events during the year (a) Follow-on public offering On June 04, 2020, Arco completed a follow-on public offering of 5,563,203 Class A common shares, offered by General Atlantic Arco (Bermuda), L.P. (“GA”), and Alfaco Holding Inc. (the "Selling Shareholders"), at a public offering price of U$ 47.70. Arco did not receive any proceeds from the sale of the Class A common shares by the Selling Shareholders. Neither Arco nor any of its other shareholders, including its founding shareholders and members of management, sold Class A common shares in this offering. On September 8, 2020, the Company completed a follow-on public offering of 2,500,000 Class A common shares issued by Arco at a public offering price of US$44.80. The public offering resulted in gross proceeds of US$112.0 million (or R$591.9) for the Company. The Company received net proceeds of US$109,760 (or R$580,059), after deducting US$2,240 (or R$11,839) in underwriting discounts and commissions. In addition, the Company incurred in the amount of R$ 4,452 for audit, consulting and legal services related to the offering. These transactions costs, net of taxes, are classified in equity as a reduction of the gross proceeds resulting from the public offering. (b) Internal restructurings PSD Educação S.A. (“PSD”) On August 01, 2020, continuing the corporate restructuring, PSD Educação S.A. incorporated the companies Positivo Soluções Didáticas Ltda. and Editora Piá Ltda. When PSD Educação S.A. acquired these entities, goodwill and fair value adjustments recognized in the amount of R$830,028 and R$726,876, respectively, were not tax deductible. However, as a result of the corporate restructuring, PSD Educação S.A now has tax benefits from the deductibility of the amortization of goodwill and fair value adjustments of R$529,347 (tax rate of 34%). The fair value adjustments are deductible over the next 5 to 20 years, according to the useful lives of the identified is deductible over 7.5 years, as defined by the Company's Management, under Brazilian tax laws. (c) Acquisition of investments Geekie Desenvolvimento de Softwares S.A. (“Geekie”) On November 27, 2020, the Company signed a new shareholders’ agreement and based on the new terms defined, on that date the Company acquired control of Geekie and the investee became a consolidated subsidiary of Arco as shown in Note 4.c). Bewater Ventures I GA Fundo de Investimento em Participações Multiestratégia (“Bewater”) On July 24, 2020, the Company acquired a 14.48% interest in Bewater Ventures I GA FIP - Multiestratégia, a fund managed by Paraty Capital, through the purchase of 9,670 Class B quotas for R$9,670 as described in Note 11. The fund´s main goal was to make a minority investment in Grupo A, a company that provides educational solutions for higher education, which happened subsequently to our investment. Escola da Inteligência Cursos Educacionais Ltda. (“EI” or “Escola da Inteligência”) On August 28, 2020, the Company announced that it entered into a definitive agreement to acquire Escola da Inteligência, the leading solution in social-emotional learning (SEL) in Brazil. On November 13, 2020, the Company received approval of the transaction from Brazil’s Administrative Council for Economic Defense – CADE, with no restrictions, and the Company concluded the transaction on December 2, 2020. Accordingly, on that date, the Company, through its subsidiary PSD, acquired control of EI as described in Note 4.d). WPensar S.A. (“WPensar”) On September 21, 2020, the Company acquired control of WPensar S.A. through the acquisition of the remaining 75.0% interest and started to consolidate it as subsidiary of the Company with 100.0% interest in the share capital. See Note 4.a) for further information. Studos Software Ltda. (“Studos”) On September 21, 2020, the Company acquired the control of Studos Software Ltda. (“Studos”) by acquiring 100.0% of its outstanding ordinary shares and voting interests as described in Note 4.b). (d) Information related to Covid-19 pandemic On March 11, 2020, the World Health Organization declared the novel coronavirus (COVID-19) a global pandemic. While the spread started in December 2019 in China and adversely impacted regional economies across the globe, first cases in Brazil were officially reported during the first quarter of 2020. Such events caused the disruption of economic activity, imposing restrictions on industries, commerce, and social contact. At the beginning of the pandemic, state and local authorities have ordered many companies to limit or suspend operations and encourage social distancing with the aim to reduce the speed at which COVID-19 is spreading. The initial measures of restrictions taken by Brazilian states and local authorities directly impacted the education industry by indefinitely postponing on-site school activities. Nonetheless, as education is an important and essential service, the private schools are conducting classes on a flex model, with classroom and virtual classes. In Brazil, the resumption of economic activity is occurring in stages, some activities are gradually being released, including presential classes in some cases and states with several security rules. The return is occurring differently in each Brazilian state, according to their particular situation. Notwithstanding the above, the Company did not suspend its activities and, even with the return allowed by the authorities, most of its workforce continues to work remotely from home, except for some people from administrative teams and distribution centers’ teams that are working on site in accordance with health and safety protocols and social distancing guidelines. In this scenario, the Company has made additional investments in IT and network infrastructure; incurred additional expenses for cleaning and disinfecting the installations; purchased alcohol and masks; funded COVID-19 tests and H1N1 flu vaccination campaigns with the objective of taking care of its employees, reducing the demand for care in health units and to facilitate the diagnosis of COVID-19. The Company also delivered chairs, computers, and work kits to its employees. Additionally, to support schools, since day 1, the Company has made available an integrated platform with daily live classes to all students, webinars, broadcast, and remote support to maintain student learning with the social distancing measures The measures discussed above, including travel restrictions, were put in place to safeguard the health and safety of our employees, customers, and suppliers, but have not limited the Company’s ability to maintain its operations. In addition, these alternative working arrangements have not adversely affected financial reporting systems, internal control over financial reporting or disclosure controls and procedures. Our content production continues according to the scheduled curriculum calendar and the current educational material has been delivered to the schools according to the school calendar for the year, enabling the Company to recognize the revenues on these products. With respect to the Company’s distribution and delivery capacity, which relies on third parties, the Company’s principal vendors responsible for the printing of educational material did not raise any issues related to their ability to fulfill scheduled shipments or with respect to the incurrence of any significant additional expenses. As a result, as of December 31, 2020, the following events and transactions occurred during the year: · Expected credit losses were revised considering estimated increases in financial defaults, arising from renegotiations with customers and in unemployment rates in Brazil for the foreseeable future due COVID-19, which resulted in an increase of R$ 6,996 in allowance for doubtful accounts as of December 31, 2020. · The Company incurred additional expenses of R$ 7,707 during the year ended December 31, 2020. These additional expenses are related to IT, network infrastructure and an integrated teaching platform, as well as expenses to maintain protective measures such as cleaning and disinfecting the installations, distribution of protective masks and alcohol to employees and delivery of chairs, computers and work kits. · The Company assessed the existence of potential impairment indicators and the possible impacts on the key assumptions and projections caused by the pandemic on the recoverability of long-lived assets and concluded that there are no indications that demonstrate the need to recognize a provision for impairment of long-lived assets in the consolidated financial statements. · Despite the year’s such unprecedent events, the Company was able to recognize 96% of the 2020 school year ACV. · The inventory reserves were increased to accurately reflect the expected realization of inventories, which resulted in an incremental charge of R$287 in the consolidated financial statement of income for the year ended December 31, 2020. · As of December 31, 2020, management opted to not benefit from the payroll relief measures announced by the Brazilian government. On the tax side, the Company opted for some Brazilian benefits of postponing tax payments for certain entities (INSS and FGTS) for the second half of the year. The payments were settled in the last quarter of 2020. · There were rent concessions, regarding leased buildings, that occurred as a direct consequence of the COVID-19 pandemic and were accounted as if they were not lease modifications. Therefore, no changes occurred in the expected useful life and residual value of properties and equipment. For the year ended December 31, 2020, the discount obtained was R$ 350. · No changes in the provision for contingencies against the Company were identified because of COVID-19. · The Company entered into an additional loan agreement of R$ 200,000, with no significant change in costs. The Company has no financial covenants on any of its existing loans and financing and has sufficient working capital and other undrawn financing facilities to service its operating activities and ongoing investments. The loan was repaid on September 21, 2020. See Note 15 for further information. In January 2021, the COVID vaccine began to be applied in Brazilians. Vaccination started with the priority groups: health workers, the elderly, the disabled and indigenous villagers. Although there is no exact date for application in 100% of the population, expectations are for 2022. The future impact of the COVID-19 pandemic on an ongoing basis is still uncertain and will remain a factor in the analysis of key estimates and judgements used in preparing the Company’s financial statements, especially given the rapid and unexpected changes the pandemic is posing to global and local economic environments. Despite the beginning of the vaccination, we are now facing a new wave of contamination from COVID-19. Given the uncertainty around the extent and timing of the future spread of COVID-19, the imposition of additional protective measures, or the relaxation of existing protective measures, it is not possible to accurately predict COVID-19's general impact on the education industry or to reasonably estimate its impact on Arco's results of operations, cash flows or financial condition, including, but not limited to: · A decrease in the number of students, which may impact the expected amount of revenue. · An increase in bad debts due to the current economic scenario. · A change in the fair value of financial instruments. · The renegotiation of loans and lease agreements to ensure the continued strength of the Company’s financial position. Management will continue to monitor and assess the impact COVID-19 may have on the Company’s business and financial performance and position. |
Significant accounting policies
Significant accounting policies | 12 Months Ended |
Dec. 31, 2020 | |
Significant accounting policies | |
Significant accounting policies | 2 Significant accounting policies 2.1 Basis for preparation of the consolidated financial statements The Company’s consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB). The consolidated financial statements have been prepared on a historical cost basis, except for certain financial assets, derivative financial instruments and contingent consideration from business combinations that have been measured at fair value. Arco is a holding company and considers the currency of the local environment of the operational companies in Brazil as its functional currency, as this is the environment which drives the dividend income it receives, which is its primary source of revenue. Therefore, the functional currency of the Company is the Brazilian real and the consolidated financial statements are presented in Brazilian reais (“BRL” or “R$”). All amounts are rounded to the nearest thousands, except when otherwise indicated. The consolidated financial statements provide comparative information in respect of the previous period. 2.2 Basis of consolidation and investments The consolidated financial statements comprise the financial statements of the Company, its subsidiaries and investments as of December 31, 2020 and 2019 and for the years ended December 31, 2020, 2019 and 2018. The table below is a list of the Company’s subsidiaries and investments: Principal Investment Direct and indirect interest Name activities Country type 2020 2019 2018 Arco Educação S.A. Holding Brazil Subsidiary 100.0 % 100.0 % 100.0 % PSD Educação S.A. Educational content Brazil Subsidiary 100.0 % 100.0 % 100.0 % Barra Américas Editora Ltda. Educational content Brazil Subsidiary 100.0 % 100.0 % 100.0 % Distribuidora de Material Didático Desterro Ltda. Educational content Brazil Subsidiary 100.0 % 100.0 % 100.0 % Novagaúcha Editora e Livraria Ltda. Educational content Brazil Subsidiary — — 100.0 % SAS Sistema de Ensino Ltda. Educational content Brazil Subsidiary 100.0 % 100.0 % 100.0 % Arco Ventures S.A. Educational content Brazil Subsidiary 100.0 % 100.0 % 100.0 % SAS Livrarias Ltda. Educational content Brazil Subsidiary 100.0 % 100.0 % 100.0 % SAE Digital S.A. Educational content Brazil Subsidiary 100.0 % 100.0 % 100.0 % Escola de Aplicação São José dos Campos Ltda. Educational services Brazil Subsidiary — — 69.6 % International School Serviços de Ensino, Treinamento e Editoração, Franqueadora S.A. Educational content Brazil Subsidiary 51.5 % 51.5 % 51.5 % NS Ventures Participações Ltda. Educational content Brazil Subsidiary — — 100.0 % NS Educação Ltda. Educational content Brazil Subsidiary — — 100.0 % Nave à Vela Ltda. Educational content Brazil Subsidiary 51.0 % 51.0 % — EEM Licenciamento de Programas Educacionais Ltda. Educational technology Brazil Subsidiary 100.0 % 100.0 % — NLP Soluções Educacionais Ltda. Educational content Brazil Subsidiary 100.0 % 100.0 % — WPensar S.A. Educational technology Brazil Subsidiary 100.0 % 25.0 % 25.0 % Geekie Desenvolvimento de Softwares S.A. Educational technology Brazil Subsidiary 56.0 % 37.5 % 8.05 % Studos Software Ltda. Educational content Brazil Subsidiary 100.0 % — — Escola da Inteligência Cursos Educacionais Ltda. Educational content Brazil Subsidiary 60.0 % — — Bewater Ventures I GA Fundo de Investimento em Participações Multiestratégia Private equity Brazil Investee 14.48 % — — Control is achieved when the Company is exposed to, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. Consolidation of a subsidiary begins when the Company obtains control over the subsidiary and ceases when the Company loses control of the subsidiary. Assets, liabilities, income and expenses of a subsidiary acquired or disposed of during the year are included in the consolidated financial statements from the date the Company gains control until the date the Company ceases control of the subsidiary. Where necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies in line with the Company’s accounting policies. All intra-group assets and liabilities, equity, income, expenses and cash flows relating to transactions, and any unrealized income and expenses arising from intra-group transactions, are eliminated in full on consolidation. A change in the ownership interest of a subsidiary, without a loss of control, is accounted for as an equity transaction. If the Company loses control over a subsidiary, it derecognizes the related assets (including goodwill), liabilities, non-controlling interest and other components of equity, and any resulting gain or loss is recognized in profit or loss. Non-controlling interests in the results and equity of subsidiaries are shown separately in the consolidated statements of income (loss) and comprehensive income (loss), changes in equity and financial position, respectively. 2.3 Summary of significant accounting policies This note provides a description of the significant accounting policies adopted in the preparation of these consolidated financial statements in addition to other policies that have been disclosed in other notes to these consolidated financial statements. These policies have been consistently applied to all periods presented, unless otherwise stated. a) Business combinations and goodwill Business combinations are accounted for using the acquisition method. The cost of an acquisition is measured as the aggregate of the consideration transferred, which is measured at acquisition date fair value, and the amount of any non-controlling interests in the acquiree. For each business combination, the Company elects whether to measure the non-controlling interests in the acquiree at fair value or at the proportionate share of the acquiree’s identifiable net assets. Acquisition-related costs are expensed as incurred and included in general and administrative expenses. The Company determines that it has acquired a business when the acquired set of activities and assets include an input and a substantive process that together significantly contribute to the ability to create outputs. The acquired process is considered substantive if it is critical to the ability to continue producing outputs, and the inputs acquired include an organized workforce with the necessary skills, knowledge, or experience to perform that process or it significantly contributes to the ability to continue producing outputs and is considered unique or scarce or cannot be replaced without significant cost, effort, or delay in the ability to continue producing outputs. When the Company acquires a business, it assesses the financial assets and liabilities assumed for appropriate classification and designation in accordance with the contractual terms, economic circumstances, and pertinent conditions as of the acquisition date. Any contingent consideration to be transferred by the acquirer is recognized at fair value at the acquisition date. Contingent consideration classified as an asset or liability that is a financial instrument and within the scope of IFRS 9 Financial Instruments, is measured at fair value with the changes in fair value recognized in the statement of income (loss) in accordance with IFRS 9. Other contingent consideration that is not within the scope of IFRS 9 is measured at fair value at each reporting date with changes in fair value recognized in profit or loss. Goodwill is initially measured at cost (being the excess of the aggregate of the consideration transferred and the amount recognized for non-controlling interests and any previous interest held over the net identifiable assets acquired and liabilities assumed). If the fair value of the net assets acquired is in excess of the aggregate consideration transferred, the Company re-assesses whether it has correctly identified all of the assets acquired and all of the liabilities assumed and reviews the procedures used to measure the amounts to be recognized at the acquisition date. If the reassessment still results in an excess of the fair value of net assets acquired over the aggregate consideration transferred, then the gain is recognized in profit or loss. After initial recognition, goodwill is measured at cost less any accumulated impairment losses. For the purpose of impairment testing, goodwill acquired in a business combination is, from the acquisition date, allocated to each segment that is expected to benefit from the combination. Where goodwill has been allocated to a segment and part of the operation within that segment is disposed of, the goodwill associated with the disposed operation is included in the carrying amount of the operation when determining the gain or loss on disposal. Goodwill disposed in these circumstances is measured based on the relative values of the disposed operation and the portion of the segment unit retained. The current Brazilian tax law allows the deductibility of the acquisition date goodwill and fair value of net assets acquired when a corporate reorganization occurs after acquisition by the Company (i.e. when the Company merges or spins off the businesses acquired). Until such action occurs, the tax and accounting bases of the net assets acquired are the same as of the acquisition date and no deferred tax effects are recognized. Certain acquired subsidiaries utilize the presumed profit regime as described in Note 24.a) to calculate income taxes. Under this regime, there is no difference between the carrying amount and related tax basis of assets and liabilities and therefore no deferred income taxes were recorded in these financial statements at acquisition date or any subsequent periods. b) Investment in associates and joint venture An associate is an entity over which the Company has significant influence. Significant influence is the power to participate in the financial and operating policy decisions of the investee but is not control or joint control over those policies. A joint venture is a type of joint arrangement whereby the parties that have joint control of the arrangement have rights to the net assets of the joint venture. Joint control is the contractually agreed sharing of control of an arrangement, which exists only when decisions about the relevant activities require the unanimous consent of the parties sharing control. The considerations made in determining significant influence or joint control are similar to those necessary to determine control over subsidiaries. The Company’s investments in its associate and joint venture are accounted for using the equity method. Under the equity method, the investment in an associate or a joint venture is initially recognized at cost. The carrying amount of the investment is adjusted to recognize changes in the Company’s share of net assets of the associate or joint venture since the acquisition date. Goodwill relating to the associate or joint ventures is included in the carrying amount of the investment and is not tested for impairment separately. The statement of income (loss) reflects the Company’s share of the results of operations of the associate or joint venture. In addition, when there has been a change recognized directly in the equity of the associate or joint venture, the Company recognizes its share of any changes, when applicable, in the statement of changes in equity. Unrealized gains and losses resulting from transactions between the Company and the associate or joint venture are eliminated to the extent of the interest in the associate or joint venture. The aggregate of the Company’s share of profit or loss of an associate and a joint venture is shown on the face of the statement of income (loss) outside operating profit and represents profit or loss after tax of the associate or joint venture. The financial statements of the associate or joint venture are prepared for the same reporting period as the Company. When necessary, adjustments are made to bring the accounting policies in line with those of the Company. After application of the equity method, the Company determines whether it is necessary to recognize an impairment loss on its investment in its associate or joint venture. At each reporting date, the Company determines whether there is objective evidence that the investment in the associate or joint venture is impaired. If there is such evidence, the Company calculates the amount of impairment as the difference between the recoverable amount of the associate or joint venture and its carrying value, and then recognizes the loss within share of profit (loss) of equity-accounted investees in the statement of income (loss). c) Current versus non-current classification The Company presents assets and liabilities in the statement of financial position based on current/non-current classification. An asset is current when it is: · Expected to be realized or intended to be sold or consumed in the normal operating cycle; · Held primarily for the purpose of trading; · Expected to be realized within twelve months after the reporting period; or · Cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period. All other assets are classified as non-current. A liability is current when: · It is expected to be settled in the normal operating cycle; · It is held primarily for the purpose of trading; · It is due to be settled within twelve months after the reporting period; or · There is no unconditional right to defer the settlement of the liability for at least twelve months after the reporting period. The terms of the liability that could, at the option of the counterparty, result in its settlement by the issue of equity instruments do not affect its classification. The Company classifies all other liabilities as non-current. Deferred tax assets and liabilities are classified as non-current assets and liabilities. d) Fair value measurement The Company measures certain financial instruments such as, financial assets, financial investments, derivatives and financial liabilities at fair value at each balance sheet date. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either: · in the principal market for the asset or liability; or · in the absence of a principal market, in the most advantageous market for the asset or liability. The principal or the most advantageous market must be accessible by the Company. The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their economic best interest. The Company uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximizing the use of relevant observable inputs and minimizing the use of unobservable inputs. All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorized within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole: · Level 1 — Quoted (unadjusted) market prices in active markets for identical assets or liabilities. · Level 2 — Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable. · Level 3 — Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable. For assets and liabilities that are recognized in the financial statements at fair value on a recurring basis, the Company determines whether transfers have occurred between levels in the hierarchy by re-assessing categorization (based on the lowest level input that is significant to the fair value measurement as a whole) at the end of each reporting period. At each reporting date, the Company analyzes the movements in the values of assets and liabilities which are required to be remeasured or re-assessed as per the Company’s accounting policies. For this analysis, the Company verifies the major inputs applied in the latest valuation by agreeing the information in the valuation computation to contracts and other relevant documents. The Company also compares the change in the fair value of each asset and liability with relevant external sources to determine whether the change is reasonable. For the purpose of fair value disclosures, the Company has determined classes of assets and liabilities based on the nature, characteristics and risks of the asset or liability and the level of the fair value hierarchy, as explained above. See Note 26 for further information. e) Financial instruments – initial recognition and measurement A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity. f) Financial assets Initial recognition and measurement Financial assets are classified, at initial recognition, as subsequently measured at amortized cost, fair value through other comprehensive income (OCI), and fair value through profit or loss. The classification of financial assets at initial recognition depends on the financial asset’s contractual cash flow characteristics and the Company’s business model for managing them. Except for trade receivables that do not contain a significant financing component or for which the Company has applied the practical expedient, the Company initially measures a financial asset at its fair value plus, in the case of a financial asset not at fair value through profit or loss, transaction costs. Trade receivables that do not contain a significant financing component or for which the Company has applied the practical expedient are measured at the transaction price under IFRS 15. For a financial asset to be classified and measured at amortized cost or fair value through other comprehensive income (OCI), it should give rise to cash flows that are ‘solely payments of principal and interest (SPPI)’ on the principal amount outstanding. This assessment is referred to as the SPPI test and is performed at an instrument level. Financial assets with cash flows that are not SPPI are classified and measured at fair value through profit or loss, irrespective of the business model. The Company’s business model for managing financial assets refers to how it manages its financial assets to generate cash flows. The business model determines whether cash flows will result from collecting contractual cash flows, selling the financial assets, or both. Financial assets classified and measured at amortized cost are held within a business model with the objective to hold financial assets in order to collect contractual cash flows while financial assets classified and measured at fair value through OCI are held within a business model with the objective of both holding to collect contractual cash flows and selling. Subsequent measurement For purposes of subsequent measurement, financial assets are classified as: amortized cost or fair value through profit or loss. There are no financial assets designated as fair value through OCI. Financial assets at amortized cost Financial assets at amortized cost are subsequently measured using the effective interest (EIR) method and are subject to impairment. Gains and losses are recognized in profit or loss when the asset is derecognized, modified or impaired. The Company’s financial assets at amortized cost include trade receivables and certain financial investments. Financial assets at fair value through profit or loss Financial assets at fair value through profit or loss are carried in the statement of financial position at fair value with net changes in fair value recognized in the statement of profit or loss. This category includes derivative instruments. A derivative embedded in a hybrid contract, with a financial liability or non-financial host, is separated from the host and accounted for as a separate derivative if: the economic characteristics and risks are not closely related to the host; a separate instrument with the same terms as the embedded derivative would meet the definition of a derivative; and the hybrid contract is not measured at fair value through profit or loss. Embedded derivatives are measured at fair value with changes in fair value recognized in profit or loss. Reassessment only occurs if there is either a change in the terms of the contract that significantly modifies the cash flows that would otherwise be required or a reclassification of a financial asset out of the fair value through profit or loss category. Derecognition A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is primarily derecognized (i.e., removed from the Company’s consolidated statement of financial position) when: · The rights to receive cash flows from the asset have expired; or · The Company has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the received cash flows in full without material delay to a third party under a ‘pass-through’ arrangement‑and either (a) the Company has transferred substantially all the risks and rewards of the asset, or (b) the Company has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset. When the Company has transferred its rights to receive cash flows from an asset or has entered into a pass-through arrangement, it evaluates if, and to what extent, it has retained the risks and rewards of ownership. When it has neither transferred nor retained substantially all the risks and rewards of the asset, nor transferred control of the asset, the Company continues to recognize the transferred asset to the extent of its continuing involvement. In that case, the Company also recognizes an associated liability. The transferred asset and the associated liability are measured on a basis that reflects the rights and obligations that the Company has retained. Continuing involvement that takes the form of a guarantee over the transferred asset is measured at the lower of the original carrying amount of the asset and the maximum amount of consideration that the Company could be required to repay. Impairment Further disclosures relating to impairment of financial assets are also provided in the following notes: · Disclosures for significant assumptions - Note 3 · Trade receivables, including contract assets - Note 7 The Company recognizes an allowance for expected credit losses (ECLs) for all debt instruments not held at fair value through profit or loss. ECLs are based on the difference between the contractual cash flows due in accordance with the contract and all the cash flows that the Company expects to receive, discounted at an approximation of the original effective interest rate. The expected cash flows will include cash flows from the sale of collateral held or other credit enhancements that are integral to the contractual terms. For trade receivables, the Company applies a simplified approach in calculating ECLs. Therefore, the Company does not track changes in credit risk, but instead recognizes a loss allowance based on lifetime ECLs at each reporting date. The Company has established a provision matrix that is based on its historical credit loss experience, adjusted for forward-looking factors specific to the debtors and the economic environment. The Company considers a financial asset in default when contractual payments are 360 days past due. Management considers this period of maturity to be adequate considering the Company's business model and the historical customer's payment since the contracts are signed annually and during this period the Company can negotiate the payment of the security reducing the credit risk. However, in certain cases, the Company may also consider a financial asset to be in default when internal or external information indicates that the Company is unlikely to receive the outstanding contractual amounts in full before taking into account any credit enhancements held by the Company. A financial asset is written off when there is no reasonable expectation of recovering the contractual cash flows. g) Financial liabilities Initial recognition and measurement Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through profit or loss, loans and borrowings, or payables, as appropriate. All financial liabilities are recognized initially at fair value and, in the case of loans and borrowings and payables, net of directly attributable transaction costs. The Company’s financial liabilities include trade payables, loans and borrowings, financial instruments from acquisition of interests and accounts payable to selling shareholders. Subsequent measurement For purposes of subsequent measurement, financial liabilities are classified in two categories: · Financial liabilities at fair value through profit or loss · Financial liabilities at amortized cost (loans and borrowings) Financial liabilities at fair value through profit or loss Financial liabilities at fair value through profit or loss include financial liabilities held for trading and financial liabilities designated upon initial recognition as at fair value through profit or loss. Financial liabilities are classified as held for trading if they are incurred for the purpose of repurchasing in the near term. This category also includes derivative financial instruments entered by the Company that are not designated as hedging instruments in hedge relationships as defined by IFRS 9. Separated embedded derivatives are also classified as held for trading unless they are designated as effective hedging instruments. Gains or losses on liabilities held for trading are recognized in the statement of income (loss). Financial liabilities designated upon initial recognition at fair value through profit or loss are designated at the initial date of recognition, and only if the criteria in IFRS 9 are satisfied. Financial liabilities at amortized cost (loans and borrowings) After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortized cost using the effective interest rate (EIR) method. Gains and losses are recognized in profit or loss when the liabilities are derecognized as well as through the EIR amortization process. Amortized cost is calculated by considering any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortization is included as finance costs in the statement of income (loss). Derecognition A financial liability is derecognized when the obligation under the liability is discharged or cancelled or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as the derecognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognized in the statement of income (loss). h) Offsetting of financial instruments Financial assets and financial liabilities are offset and the net amount is reported in the consolidated statement of financial position if there is a currently enforceable legal right to offset the recognized amounts and there is an intention to settle on a net basis, to realize the assets and settle the liabilities simultaneously. i) Derivative financial instruments Initial recognition and subsequent measurement The Company has derivative financial instruments from call and put options from acquisitions of subsidiaries, associates and joint venture arrangements. Such derivative financial instruments are initially recognized at fair value on the date on which a derivative contract is entered into and are subsequently remeasured at fair value. Derivatives are carried as financial assets when the fair value is positive and as financial liabilities when the fair value is negative. Any gains or losses arising from changes in the fair value of derivatives are recorded directly to finance result. j) Cash and cash equivalents Cash and cash equivalents in the statement of financial position comprise cash at banks and on hand and short-term highly liquid financial investments with an original maturity of three months or less, that are readily convertible to a known amount of cash and subject to an insignificant risk of changes in value. For the purpose of the consolidated statement of cash flows, cash and cash equivalents consist of cash and short-term financial investments, as they are considered an integral part of the Company’s cash management. k) Inventories Inventories are measured at the lower of cost and net realizable value. The costs of inventories are based on the average cost method and include costs incurred on the purchase of inventories, editorial production costs and other costs incurred in bringing them to their current location and condition. Costs of purchased inventory are determined after deducting any discounts and recoverable taxes. Educational content in progress is considered as inventories in progress and comprises the costs incurred to produce educational content. This amount is measured based on the allocation of hours incurred by editorial production employees in the preparation of educational content. The inventory reserve for educational material is calculated based on their expected net realizable value. Inventory reserve corresponds to a reserve for inventory obsolescence and is recorded in cost of sales. It is estimated based on the amount of educational materials from prior collections which are no longer used for sale and educational materials which the Company expects will not be sold based on the actual sales. In determining the inventory reserve, the Company considers management’s current assessment of the marketplace, industry trends and projected product demand as compared to the number of units currently in stock. l) Property and equipment Property and equipment is stated at cost, net of accumulated depreciation and accumulated impairment losses, if any. Subsequent expenditure is capitalized only if it is probable that the future economic benefits associated with the expenditure will flow to the Company. Depreciation is calculated on a straight-line basis over the estimated useful lives of the assets, as follows: Machinery and equipment 10 % Vehicles 20 % Furniture and fixtures 10 % IT equipment 20 % Facilities 10 % Leasehold improvements 20% to 33 % An item of property and equipment and any significant part initially recognized is derecognized upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the statement of income (loss) when the asset is derecognized. The residual values, useful lives and methods of depreciation of property and equipment are reviewed at each financial year end and adjusted prospectively, if appropriate. m) Leases The Company assesses at contract inception whether a contract is, or contains, a lease. That is, if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. Company as a lessee The Company applies a single recognition and measurement approach for all leases, except for short-term leases and leases of low-value assets. The Company recognizes lease liabilities to make lease payments and right-of-use assets representing the right to use the underlying assets. Right-of-use assets The Company recognizes right-of-use assets at the commencement date of the lease (i.e., the date the underlying asset is available for use). Right-of-use assets are measured at cost, less any accumulated depreciation and impairment losses, and adjusted for any remeasurement of lease liabilities. The cost of right-of-use assets includes the amount of l |
Significant accounting judgemen
Significant accounting judgements, estimates and assumptions | 12 Months Ended |
Dec. 31, 2020 | |
Significant accounting judgements, estimates and assumptions | |
Significant accounting judgements, estimates and assumptions | 3 Significant accounting judgements, estimates and assumptions The preparation of the Company’s consolidated financial statements requires management to make judgments, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the accompanying disclosures. Uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of assets or liabilities affected in future periods. 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. Revisions to estimates are recognized prospectively. Other disclosures relating to the Company’s exposure to risks and uncertainties includes: · Capital management – Note 27 · Financial instruments risk management – Notes 26 and 27 · Sensitivity analyses disclosures – Note 27 Estimates and assumptions The key assumptions about the future and other key sources of estimation uncertainty as of the reporting date that include a significant risk of a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are described below. The Company based its assumptions and estimates on parameters available when the consolidated financial statements were prepared. Existing circumstances and assumptions about future developments, however, may change due to market changes or circumstances that arise and that are beyond the Company’s control. Such changes are reflected in the assumptions where they occur. Impairment of non-financial assets Impairment exists when the carrying value of an asset or cash generating unit (“CGU”) or group of CGU exceeds its recoverable amount, defined as the higher of its fair value less costs of disposal and its value in use. The fair value less costs of disposal calculation is based on data available from binding sales transactions, conducted at arm’s length, for similar assets or observable market prices less incremental costs of disposing of the asset. The value in use calculation is based on a discounted cash flow model (“DCF” model). The cash flows are derived from the budget for the next five years and do not include restructuring activities to which the Company has not yet committed or significant future investments that will enhance the performance of the assets of the CGU being tested. The recoverable amount is sensitive to the discount rate used for the DCF model as well as to expected future cash-inflows and the growth rate used for extrapolation purposes. The Company determined that its operating segment is the cash generating unit. These estimates are most relevant to goodwill that are recognized by the Company. The key assumptions used to determine the recoverable amount for the different operating segments, including a sensitivity analysis, are disclosed and further explained in Note 14. Inventory reserve The Company recognizes a provision for disposal of inventory considering materials from previous collections not sold and a prospective model to estimate the forecast of obsolescence of products from current collections. The applied model considers the historical data of non-realization of products to obtain the expected loss percentages. Any significant changes between the observed losses compared to the historical loss pattern impact the expected loss percentages estimated by the Company. See Note 8 for further information. Provision for expected credit losses of trade receivables and contract assets The Company uses a provision matrix to calculate ECLs for trade receivables and contract assets. The provision rates are based on days past due for customer. The provision matrix is initially based on the Company’s historical observed default rates. The Company calibrates the matrix to adjust the historical credit loss experience with forward-looking information. The assessment of the correlation between historical observed default rates, forecast economic conditions and ECLs is a significant estimate. The amount of ECLs is sensitive to changes in circumstances and of forecast economic conditions. The Company’s historical credit loss experience and forecast of economic conditions may also not be representative of customer’s actual default in the future. The information about the ECLs on the Company’s trade receivables and contract assets is disclosed in Note 7. Share-based payment Estimating fair value for share-based payment transactions requires determination of the most appropriate valuation model, which depends on the terms and conditions of the grant. This estimate also requires determination of the most appropriate inputs to the valuation model including the expected life of the share option or appreciation right, volatility and dividend yield and making assumptions about them. For the measurement of the fair value of equity-settled transactions, the Company uses the Black & Scholes model. The assumptions and models used for estimating fair value for share-based payment transactions are disclosed in Note 18. b). Taxes Deferred tax assets are recognized for deductible temporary differences and unused tax credits from net operating losses carryforward to the extent that it is probable that taxable profit will be available against which the losses can be utilized. Significant management judgement is required to determine the amount of deferred tax assets that can be recognized, based upon the likely timing and the level of future taxable profits, together with future tax planning strategies. The Company has R$ 4,380 (2019: R$ 4,066) of unrecognized unused tax loss carryforwards as of December 31, 2020 related to a subsidiary that has a history of losses. Such unused tax loss carryforwards do not expire and may not be used to offset taxable income of other subsidiaries of the Company. See Note 24. Fair value measurement of financial instruments When the fair values of financial assets and financial liabilities recorded in the statement of financial position cannot be measured based on quoted prices in active markets, their fair value is measured using valuation techniques including the DCF model. The inputs into these models are taken from observable markets where possible, but where this is not feasible, a degree of judgement is required to estimate fair values. Judgements include considerations of inputs such as liquidity risk, credit risk and volatility. Changes in assumptions relating to these factors could affect the reported fair value of financial instruments. See Note 26 for further disclosures. Contingent consideration, resulting from business combinations, is valued at fair value as of the acquisition date as part of the business combination. When the contingent consideration meets the definition of a financial liability, it is subsequently remeasured at each reporting date. This determination of fair value is based on discounted cash flows. The key assumptions taken into consideration are the probability of meeting each performance target and the discount factor (see Notes 6 and 26 for additional information). Any contingent consideration is classified as financial instruments from acquisition of interests (see Note 16). |
Business combinations and acqui
Business combinations and acquisition of non-controlling interests | 12 Months Ended |
Dec. 31, 2020 | |
Business combinations and acquisition of non-controlling interests | |
Business combinations and acquisition of non-controlling interests | 4 Business combinations and acquisition of non-controlling interests The fair value of the identifiable assets and liabilities as of the date of each acquisition was: Fair value as of the acquisition date 2020 2019 WPensar Studos Geekie EI EEM Nave Positivo Assets Cash and cash and equivalents 378 191 7,796 14,492 219 1,565 37,635 Trade receivables 75 126 1,120 11,129 126 896 72,780 Inventories — — 8,333 4,419 — 897 13,664 Recoverable taxes 108 — 524 — 12 7 99 Deferred taxes — — 15,098 — — — 7,518 Advance to employees — — — 11,484 — — — Other assets 1 — 710 697 14 284 1,526 Property and equipment 172 39 2,592 843 80 292 4,760 Right-of-use assets — — 292 2,418 — — 5,241 Intangible assets 6,192 5,996 36,328 238,825 5,866 19,009 773,134 6,926 6,352 72,793 284,307 6,317 22,950 916,357 Liabilities Trade payables 47 18 823 1,709 48 271 12,463 Labor and social obligations 385 79 21,584 3,097 240 1,444 29,607 Taxes and contributions payable 152 56 677 — 109 50 2,937 Income taxes payable 8 — — — — 2 22,643 Leases — — 292 2,418 — — 5,374 Loans and financing — — 8,836 — 548 — — Loans with related parties 1,285 — 10,885 — — — — Provision for legal proceedings — — — 599 — — — Advances from customers 100 27 269 — — — — Other liabilities 35 10 — 166 156 546 — 2,012 190 43,366 7,989 1,101 2,313 73,024 Total identifiable net assets at fair value 4,914 6,162 29,427 276,318 5,216 20,637 843,333 Goodwill arising on acquisition 18,994 13,371 162,552 282,667 13,069 37,557 830,028 Purchase consideration transferred 23,908 19,533 191,979 558,985 18,285 58,194 1,673,361 Cash paid 14,345 8,298 4,500 200,000 16,355 21,098 800,851 Capital contribution — — 4,000 — — — — Forward contract of non-controlling interest at acquisition — — 115,222 354,365 — 29,728 — Retained payments 3,586 11,235 — — 1,930 — 872,510 Price adjustment — — — 4,620 — — — Fair value of previously held interest in a step acquisition 5,977 — 68,257 — — 7,368 — Analysis of cash flows on acquisition: Transaction costs of the acquisition (included in cash flows from operating activities) (115) (275) (762) (6,510) (649) (467) (27,389) Cash paid and subscribed capital net of cash acquired with the subsidiary (included in cash flows from investing activities) (13,967) (8,107) 3,296 (185,508) (16,136) (19,533) (763,216) The purchase price allocation is subject to change during the period of completion of the determination of the fair value of intangible assets according to the deadline defined by IFRS. (a) WPensar S.A. (“WPensar”) WPensar is a company engaged in the development and licensing of software, related to school management systems. The Company bought, as a first step, a 25.0% stake in the entity in April 2015 for R$ 5,000, of which R$ 4,777 related to the consideration transferred as capital contribution and R$ 223 to the initial recognition of asymmetrical put and call options. Pursuant to the investment and share purchase agreement for the acquisition of WPensar, Arco purchased the remaining 75.0% on September 21, 2020. The purchase consideration transferred was R$ 23,908, consisting of R$ 14,345 paid at the acquisition date, R$ 3,586 retained until September 30, 2021 as a guarantee for any losses and R$ 5,977 regarding the fair value of the previously held interest. At the date of acquisition, the carrying amount of the investment previously held interest was R$ 2,729, resulting in a gain in step acquisition of R$ 3,248. The amount will be released in a single installment, adjusted by Interbank certificates of deposit (CDI). On the due date, if there are no losses, the amount will be paid to the selling shareholders. The Company did not recognize any deferred taxes related to the business combination because the tax basis and accounting basis, including fair value adjustments, were the same at the acquisition date. Goodwill The goodwill acquired on the acquisition was R$ 18,994 and is expected to be deductible for tax purposes after the Company merges the acquiree. For the purposes of impairment testing, the goodwill has been allocated to the Supplemental operating segment. The goodwill recognized is primarily attributable to the expected synergies and other benefits from combining the assets and activities of WPensar with those of the Company. The goodwill paid is based on the Business Plan prepared for purposes of the acquisition, and the principal business assumptions used were considered by the administration as appropriate. Transaction costs Transaction costs of R$ 115 were expensed and are included in general and administrative expenses on December 31, 2020. Measurement of fair value The valuation techniques used for measuring the fair value of separate identified intangible assets acquired were as follows: Asset acquired Valuation technique Customer relationship Multi-period excess earning method The method considers the present value of net cash flows expected to be generated by customer relationship, by excluding any cash flows related to contributory assets. Non-compete agreement With-and-without method The With-and-Without method consists of estimating the fair value of an asset by the difference between the value of this asset in two scenarios: a scenario considering the existence of the asset in question and another, considering its non-existence. Software Replacement cost The method considers the amount that an entity would have to pay to replace at the present time, according to its current worth. (b) Studos Software Ltda. (“Studos”) On September 21, 2020, the Company acquired control of Studos, by acquiring 100% of the outstanding ordinary shares and voting interests. Studos is a platform that contributes to enrich students’ learning and optimize teachers' time, in addition to providing simplified management for coordinators. The purchase consideration transferred was R$ 19,533. The amount of R$ 8,298 was paid on the acquisition date and R$ 11,235 has been retained for the period of 2 years and is conditioned to the performance of the entity. The amount will be released in two annual installments. The Company did not recognize deferred taxes related to the business combination because the tax basis and the accounting basis, including fair value adjustments, were the same at the date of the business combination. Goodwill The goodwill recorded on the acquisition was R$ 13,371 and it is expected to be deductible for tax purposes after the Company merges the acquiree. For the purposes of impairment testing, the goodwill has been allocated to the Supplemental operating segment. The goodwill acquired is primarily attributable to the expected synergies and other benefits from combining the assets and activities of Studos with those of the Company. The goodwill paid is based on the Business Plan prepared for purposes of the acquisition, and the principal business assumptions used were considered by the administration as appropriate. Transaction costs Transaction costs of R$ 275 were expensed and are included in general and administrative expenses on December 31, 2020. Measurement of fair value The valuation techniques used for measuring the fair value of separate identified intangible assets acquired were as follows: Asset acquired Valuation technique Customer relationship Multi-period excess earning method The method considers the present value of net cash flows expected to be generated by customer relationship, by excluding any cash flows related to contributory assets. Non-compete agreement With-and-without method The With-and-Without method consists of estimating the fair value of an asset by the difference between the value of this asset in two scenarios: a scenario considering the existence of the asset in question and another, considering its non-existence. Educational system Relief-from-royalty method The relief-from-royalty method considers the discount estimated royalty payments that are expected to be avoided as a result of the educational platform being owned. (c) Geekie Desenvolvimento de Softwares S.A. (“Geekie”) Geekie Desenvolvimento de Software S.A. is an entity that provides technology for adaptive assessment and learning products and engages in the production, development and licensing of software tailored to the specific requirements of education sector customers. In December 2016, the Company acquired a 6.54% interest in Geekie, Based on the agreement signed by Geekie’s shareholders, the Company exercised significant influence over the investment, as the Company: (i) had representation on the board of directors; (ii) participated in strategic decision making regarding all relevant matters; (iii) approved all products launched by Geekie; and (iv) provided essential technical information (Geekie's products are based on the Company’s educational content). At that date, the Company entered into an agreement through which it had a call option and the sellers had a put option over the remaining shares. The price would be determined by the greater of the multiple of the Company’s EBITDA for 2021 multiplied by Geekie’s EBITDA, including any cash or debt; or 10 times Geekie´s EBITDA for 2021, less net debt. The put option could be exercised between the period beginning on May 1, 2022, through May 31, 2022. Call and put options were recorded at fair value, calculated through the multiple scenarios method – Monte Carlo. Any adjustment to the fair value was recognized as finance income (costs) in the statement of income (loss). The amount to acquire the 6.54% interest of R$ 8,000 was paid in January 2017, of which R$ 4,000 was a capital contribution and R$ 4,000 was paid to the selling shareholders. The Company agreed with the selling shareholders that if in June 2018 the cash and cash equivalents of Geekie were lower than a threshold of R$ 5,000, the Company would have to subscribe capital in the amount of R$ 2,000. On July 2, 2018, the extraordinary shareholders' meeting authorized the acquisition of an additional 1.51% interest in the equity of Geekie, increasing the Company's share from 6.54% to 8.05% through a capital increase of R$ 2,000. The capital increase was fully paid on July 3, 2018. The additional investment did not change the Company's influence in Geekie and had the purpose to support Geekie’s working capital needs. On September 20, 2019, Arco acquired an additional 0.96% interest in the share capital of Geekie through a capital increase of R$1,218 increasing the Company’s total interest to 9.01%. On October 14, 2019, Arco acquired an additional 1.92% interest in the share capital of Geekie through a capital increase of R$2,500 increasing its total interest to 10.92%. In addition, on October 25, 2019, Arco acquired an additional 18.44% interest in the share capital of Geekie from a minority shareholder for R$21,892 increasing its total interest to 29.36%. On November 15, 2019, Arco acquired an additional 1.17% interest in the share capital of Geekie through a capital increase of R$2,000 increasing its total interest to 30.53%. In December 2019, Arco acquired an additional 7.00% interest in the share capital of Geekie through a capital increase of R$ 4,282 and the purchase of minority shareholders for R$ 5,761 increasing its total interest to 37.53% as of December 31, 2019. On March 4, 2020, Arco acquired an additional 10.51% interest in the share capital of Geekie through the purchase of shares from minority shareholders in the amount of R$12.676, increasing its total interest to 48.04%. On July 06, 2020, Arco acquired an additional 4.62% interest in Geekie’s share capital from minority shareholders for R$5,782, increasing its total interest to 52.67%. Notwithstanding these acquisition, at that date, based on the shareholders’ agreement the Company has not yet acquired control of Geekie. On September 21, 2020, Arco acquired a 1.76% interest in the share capital of Geekie through a capital increase of R$4,500 increasing its total interest to 54.43%. On November 11, 2020, Arco acquired an additional 1.64% interest in Geekie’s share capital through a capital increase of R$4,500 increasing its total interest to 56.06%. In addition, on November 27, 2020, the Company signed a new shareholders’ agreement and based on the new terms defined, on that date the Company acquired control of Geekie. With the change in the composition of the Board of Directors the Company has power to decide on Geekie's operations. The financial statements of Geekie were consolidated from the date the Company acquired control and the acquisition was accounted for as a business combination. The shareholders entered into a firm commitment on the 43,94% of the remaining interest held by the non-controlling shareholders will be exercised until January 2023, because the terms are non-cancelable in any way. The terms of the firm commitment were assessed to determine as to whether or not they expose the Company to the risks and rewards associated with the actual ownership of such shares during the period of the firm commitment contract. The Company accounted for the firm commitment under the anticipated-acquisition method, and the non-controlling interest subject to that is deemed to have been acquired at the date of acquisition of the control. Accordingly, upon obtaining control, the Company also consolidated the interest currently legally held by the non-controlling shareholder and recognized a financial liability that will be eventually settled when the non-cancelable firm commitment option is exercised. The financial liability was recorded at the present value of the estimated amount payable to the non-controlling shareholder upon the exercise of the firm commitment discounted to present value using an estimated interest rate of 13.15%. Any dividends payable to non-controlling shareholder will recorded as interest expense. The purchase consideration transferred amounted to R$ 191,979, comprised of: (i) cash consideration in the amount of R$ 4,500 through capital contribution paid on the same month of acquisition; (ii) an additional payment of R$ 4,000 also related to capital increase; (iii) R$ 115,222 regarding a forward contract and; (iv) R$ 68,257 regarding a fair value of previously held interest in a step acquisition. At the date of acquisition, the carrying amount of the investment previously held interest was R$ 71,812, resulting in a loss in step acquisition of R$ 3,555. The exercise price is variable and conditioned to the performance of the entity and is based on multiples of 2022 ACV book value and revenue as described in Note 17.i). Goodwill The goodwill recorded on the acquisition was R$ 162,552 and it is expected to be deductible for tax purposes after the Company merges the acquiree. For the purposes of impairment testing, the goodwill has been allocated to the Core operating segment. The goodwill acquired is primarily attributable to the expected synergies and other benefits from combining the assets and activities of Geekie with those of the Company. The goodwill paid is based on the Business Plan prepared for purposes of the acquisition, and the principal business assumptions used were considered by the administration as appropriate. Transaction costs Transaction costs of R$ 762 were expensed and are included in general and administrative expenses on December 31, 2020. Measurement of fair value The valuation techniques used for measuring the fair value of separate identified intangible assets acquired were as follows: Asset acquired Valuation technique Trademarks Relief-from-royalty method The relief-from-royalty method considers the discount estimated royalty payments that are expected to be avoided as a result of the trademarks being owned. (d) Escola da Inteligência Cursos Educacionais Ltda. (“EI” or “Escola da Inteligência”) On August 28, 2020, the Company announced that it entered into a definitive agreement to acquire Escola da Inteligência, the leading solution in social-emotional learning (SEL) in Brazil. This transaction broadens Arco’s supplemental market presence by adding a strong brand to its portfolio. Arco believes there is a favorable market trend for SEL, pushed forward by the COVID-19 pandemic, and that EI is well positioned to capture this demand outside and within Arco’s school base. The acquisition involves only the private sector business of Escola da Inteligência and under the terms of the transaction, Arco will acquire 100% of EI’s shares for R$ 558,985, of which R$200,000 was paid at closing, the amount of R$ 83,264 will be paid in the second quarter of 2021, concluding the first stage of acquisition corresponding to 60% of EI’s shares. The remaining 40% of EI’s shares is estimated in R$ 271,101, subject to adjustments related to multiples of 2023 ACV book value plus cash generation multiplied by 40%. The amount will be paid in the second quarter of 2023. The amount of R$ 4,620 was determined as an "acquisition price adjustment", which was calculated based on the difference between net debt less the working capital and will be paid to the selling shareholders after the parties finalize the terms of payment. The transaction was subject to customary closing conditions, including antitrust and other regulatory approvals. After the preliminary antitrust approval from Brazil’s Administrative Council for Economic Defense – CADE, which occurred on November 13, 2020, Arco closed the acquisition of EI on December 2, 2020 becoming a subsidiary of Company. Goodwill The goodwill recorded on the acquisition was R$ 282,667 and it is expected to be deductible for tax purposes after the Company merges the acquiree. For the purposes of impairment testing, the goodwill has been allocated to the Supplemental operating segment. The goodwill acquired is primarily attributable to the expected synergies and other benefits from combining the assets and activities of Escola da Inteligência with those of the Company. The goodwill paid is based on the Business Plan prepared for purposes of the acquisition, and the principal business assumptions used were considered by the administration as appropriate. Transaction costs Transaction costs of R$ 6,510 were expensed and are included in general and administrative expenses on December 31, 2020. Measurement of fair value The valuation techniques used for measuring the fair value of separate identified intangible assets acquired were as follows: Asset acquired Valuation technique Customer relationship Multi-period excess earning method The method considers the present value of net cash flows expected to be generated by customer relationship, by excluding any cash flows related to contributory assets. Trademarks Relief-from-royalty method The relief-from-royalty method considers the discount estimated royalty payments that are expected to be avoided as a result of the trademarks being owned. Educational system Replacement cost The method considers the amount that an entity would have to pay to replace at the present time, according to its current worth. Non-compete agreement With-and-without method The With-and-Without method consists of estimating the fair value of an asset by the difference between the value of this asset in two scenarios: a scenario considering the existence of the asset in question and another, considering its non-existence. (e) EEM Licenciamento de Programas Educacionais S.A. (“Escola em Movimento”) On April 29, 2019, the Company agreed to acquire control of Escola em Movimento, by acquiring 100% of its outstanding ordinary shares and voting interests. The Company acquired Escola em Movimento to expand both its existing product portfolio and customer base. The acquisition was subject to CADE’s approval, the Brazilian anti-trust agency, which was a condition precedent for closing the acquisition. CADE approved the acquisition in May 2019, and the transaction closing date occurred on June 4, 2019. Escola em Movimento is an application developer that enhances communication between schools and parents. The purchase consideration transferred was R$ 18,285. The amount of R$ 16,095 was paid on the acquisition date; R$260 was paid on September 29, 2019 and R$ 1,930 was retained for the period of 2 years as a guarantee for the payment of any contingent liabilities that may arise. Any remaining balance will be transferred to the former owners of the acquired entity. The amount will be released in two equal annual installments R$ 965, adjusted by the Brazilian basic interest rate (SELIC). The Company did not recognize deferred taxes related to the business combination because the tax basis and accounting basis, including fair value adjustments, were the same at the acquisition date. Goodwill The goodwill recorded on the acquisition was R$ 13,069 and it is expected to be deductible for tax purposes after the Company merges the acquiree. For the purpose of impairment testing, the goodwill has been allocated to the Supplemental operating segment. The goodwill acquired is primarily attributable to the expected synergies and other benefits from combining the assets and activities of Escola em Movimento with those of the Company. The goodwill paid is based on the Business Plan prepared for purposes of the acquisition, and the principal business assumptions used were considered by the administration as appropriate. Transaction costs Transaction costs of R$ 649 were expensed and are included in general and administrative expenses on December 31, 2019. Measurement of fair value The valuation techniques used for measuring the fair value of separate identified intangible assets acquired were as follows: Asset acquired Valuation technique Customer relationship Multi-period excess earning method The method considers the present value of net cash flows expected to be generated by customer relationship, by excluding any cash flows related to contributory assets. Software Replacement cost The method considers the amount that an entity would have to pay to replace at the present time, according to its current worth. Trademarks Relief-from-royalty method The relief-from-royalty method considers the discount estimated royalty payments that are expected to be avoided as a result of the trademarks being owned. Non-compete agreement With-and-without method The With-and-Without method consists of estimating the fair value of an asset by the difference between the value of this asset in two scenarios: a scenario considering the existence of the asset in question and another, considering its non-existence. (f) Nave à Vela Ltda. (“Nave) Nave à Vela (“Nave”) is a 2019 Arco Platform acquisition. Based on the trend that education focuses more on the development of competence-based learning than the traditional content knowledge-based, Arco decided to invest in Nave. Nave offers a competence-based learning solution, with a proprietary, high-quality content and methodology fully integrated with K12 curriculum. Arco initially bought a 13,2% stake in the target entity in May 2019 for R$ 4,200. Included in the original purchase agreement, Arco agreed to acquire 100% of Nave over the next three years in three tranches (subject to price adjustments, net of debt at each closing date). Pursuant to the investment and share purchase agreement for the acquisition of Nave, Arco purchased an additional 37.8% on October 29, 2019. The Company therefore owned 51% interest and concluded it had control and consolidated Nave as a majority owned subsidiary. The purchase consideration transferred was R$ 58,194, of which R$ 21,098 paid at the acquisition date; R$ 29,728 related to a forward contract that will be paid over the next 2 years and R$ 7,368 regarding the fair value of previously held interest in a step acquisition. At the date of acquisition, the carrying amount of the investment previously held interest was R$ 3,660, resulting in a gain of R$ 3,708. The purchase price is variable and conditioned to the performance of the entity, the price of the option is based on a revenue multiple. The breakdown purchase consideration is as follows: At acquisition date Cash paid 21,098 Fair value of previously held investment 7,368 Fair value of forward contract 29,728 Consideration transferred 58,194 The Company did not recognize deferred taxes related to the business combination because the tax basis and the accounting basis, including fair value adjustments, were the same at the date of the business combination. Goodwill The goodwill acquired on the acquisition was R$ 37,557 and is expected to be deductible for tax purposes after the Company merges the acquiree. For the purpose of impairment testing, the goodwill has been allocated to the Supplemental operating segment. The goodwill recognized is primarily attributable to the expected synergies and other benefits from combining the assets and activities of Nave with those of the Company. The goodwill paid is based on the Business Plan prepared for purposes of the acquisition, and the principal business assumptions used were considered by the administration as appropriate. Transaction costs Transaction costs of R$ 467 were expensed and are included in general and administrative expenses on December 31, 2020. Measurement of fair value The valuation techniques used for measuring the fair value of separate identified intangible assets acquired were as follows: Asset acquired Valuation technique Customer relationship Multi-period excess earning method The method considers the present value of net cash flows expected to be generated by customer relationship, by excluding any cash flows related to contributory assets. Trademarks Relief-from-royalty method The relief-from-royalty method considers the discount estimated royalty payments that are expected to be avoided as a result of the trademarks being owned. Non-compete agreement With-and-without method The With-and-Without method consists of estimating the fair value of an asset by the difference between the value of this asset in two scenarios: a scenario considering the existence of the asset in question and another, considering its non-existence. Educational system Relief-from-royalty method The relief-from-royalty method considers the discount estimated royalty payments that are expected to be avoided as a result of the educational system being owned. (g) Sistema Positivo de Ensino (“Positivo”) On May 7, 2019, the Company announced that it entered into a definitive agreement to acquire Sistema Positivo de Ensino (Positivo), one of the largest K‑12 content providers to private schools in Brazil. The transaction was subject to customary closing conditions, including antitrust and other regulatory approvals in Brazil. After the final antitrust approval from Brazil’s Administrative Council for Economic Defense – CADE, which occurred on October 23, 2019, Arco concluded the transaction on November 1, 2019. Accordingly, in that date, the Company, through its subsidiary EAS, acquired control of Positivo. On November 1, 2019, the Company updated the amount of the contract by CDI from March 31 to October 31, 2019, to R$ 1,745,160. The 50% due on the closing date of the transaction, was reduced by restricted values (movements outside the normal course of business), corresponding to R$ 71,729. The acquisition has been approved by the Boards of Directors of both Arco and Positivo. The amount of R$ 800,851 was paid on the acquisition date, and net of the restricted values, this amount corresponds to 50% of the purchase. The remaining 50% will be paid over 5 years, 20% payable in 2021 and 2022, and 30% payable in 2023 and 2024, all adjusted by the Brazilian Interbank Certificate of Deposit rate (CDI). To guarantee the remaining debt, the Company signed a guarantee letter with Bradesco bank. The Company did not recognize deferred taxes related to business combination because the tax basis and the accounting basis, including fair value adjustments, were the same at the acquisition date. Goodwill The goodwill recorded on the acquisition was R$ 830,028 and it is expected to be deductible for tax purposes after the Company merges the acquiree. For the purpose of impairment testing, the goodwill has been allocated to the Core operating segment regarding operations of educational content and to the Supplemental operating segment for the activities from Positvo English School, the bilingual content. The goodwill recognized is primarily attributable to the expected synergies and other benefits from combining the assets and activities of Positivo with those of the Company. The goodwill paid is based on the Business Plan prepared for purposes of the acquisition, and the principal business assumptions used were considered by the administration as appropriate. Transaction costs Transaction costs of R$ 27,389 were expensed and are included in general and administrative expenses on December 31, 2019. Measurement of fair value The valuation techniques used for measuring the fair value of separate identified intangible assets acquired were as follows: Asset acquired Valuation technique Customer relationship Multi-period excess earning method The method considers the present value of net cash flows expected to be generated by customer relationship, by excluding any cash flows related to contributory assets. Trademarks Relief-from-royalty method The relief-from-royalty method considers the discount estimated royalty payments that are expected to be avoided as a result of the trademarks being owned. Non-compete agreement With-and-without method The With-and-Without method consists of estimating the fair value of an asset by the difference between the value of this asset in two scenarios: a scenario considering the existence of the asset in question and another, considering its non-existence. Educational system Relief-from-royalty method The relief-from-royalty method considers the discount estimated royalty payments that are expected to be avoided as a result of the educational system being owned. Educational platform Relief-from-royalty method The relief-from-royalty method considers the discount estimated royalty payments that are expected to be avoided as a result of the educational platform being owned. (h) Revenue and profit contribution The individual net revenue and net income from the acquisition date through each period end for all business combinations are presented below: 2020 2019 WPensar Studos Geekie EI EEM Nave Positivo Total net revenue 1,126 282 18,497 14,779 2,395 7,147 80,100 Profit (loss) before income taxes (89) (249) (11,035) 10,429 (2,918) 3,379 25,641 Total revenue and income and net income for the Company are presented below on a pro-forma basis assuming the acquisitions had occurred at the beginning of the year of each acquisition: 2020 2019 Pro-forma total net revenue 1,078,831 893,497 Pro-forma profit (loss) before income taxes 32,208 75,498 This pro-forma financial information is presented for informational purposes only and does not purport to represent what the Company's results of operations would have been had it completed the acquisition on the date assumed, nor is it necessarily indicative of the results that may be expected in future periods. |
Cash and cash equivalents
Cash and cash equivalents | 12 Months Ended |
Dec. 31, 2020 | |
Cash and cash equivalent | |
Cash and cash equivalents | 5 Cash and cash equivalents 2020 2019 Cash and bank deposits 7,536 2,838 Bank deposits in foreign currency (a) 28,327 23,346 Cash equivalents (b) 388,547 22,716 424,410 48,900 (a) Short-term deposits (mainly follow-on proceeds) maintained in U.S. dollar. (b) Cash equivalents correspond to financial investments in Bank Certificates of Deposit (“CDB”) of highly rated financial institutions. As of December 31, 2020, the average interest on these CDB is equivalent to 95.4% (2019: 30.0%) of the Interbank Certificates of Deposit (“CDI”). These financial investments are highly liquid and available for immediate use and have insignificant risk of changes in value. The increase in the balance is mainly due to follow-on public offering and loans acquired, as described in Notes 1.2 and 15. |
Financial investments
Financial investments | 12 Months Ended |
Dec. 31, 2020 | |
Financial investments | |
Financial investments | 6 Financial investments 2020 2019 Financial investments (a) 721,935 577,398 Financial investments in foreign currency 542 1,629 Other 517 467 722,994 579,494 Current 712,645 574,804 Non-current 10,349 4,690 (a) Financial investments correspond to investments managed by highly rated financial institutions. As of December 31, 2020, the average interest on these investments are equivalent to 101.3% (2019: 99.9%) of the CDI. The average CDI rate during the year was 0.38% per month. The increase in the balance is mainly due to follow-on public offering and loans acquired, as described in Notes 1.2 and 15. |
Trade receivables
Trade receivables | 12 Months Ended |
Dec. 31, 2020 | |
Trade receivable | |
Trade receivables | 7 Trade receivables 2020 2019 From sales of educational content 475,507 354,968 From related parties (Note 10) 3,209 4,511 478,716 359,479 (-) Allowance for doubtful accounts (63,434) (30,051) 415,282 329,428 As of December 31, 2020, and 2019, the aging of trade receivables was as follows: 2020 2019 Neither past due nor impaired 360,737 299,159 Past due 117,979 60,320 1 to 60 days 26,206 18,931 61 to 90 days 9,973 6,865 91 to 120 days 10,528 6,414 121 to 180 days 18,887 9,904 More than 180 days 52,385 18,206 478,716 359,479 The Company reviews its bad debt provision at least twice a year following a detailed review of receivable balances and historical payment profiles, and assessment of forward-looking risk factors. Management believes all the remaining receivable balances are fully recoverable. The movement in the allowance for doubtful accounts for the years ended December 31, 2020 and 2019, was as follows: 2020 2019 2018 Balance at beginning of the year (30,051) (13,419) (10,290) Additions (34,684) (17,392) (9,588) Receivables written off during the period as uncollectible 1,301 760 6,459 Balance at end of year (63,434) (30,051) (13,419) The increase in allowance for doubtful accounts for the year ended December 31, 2020 compared to the same period of the previous year, is mainly due to the inclusion of the companies acquired last year as mentioned in Note 4 and the impacts of the COVID-19 pandemic as described in Note 1.2. |
Inventories
Inventories | 12 Months Ended |
Dec. 31, 2020 | |
Inventories | |
Inventories | 8 Inventories 2020 2019 Educational content 30,167 24,535 Educational content in progress (a) 37,276 12,837 Consumables and supplies 1,198 835 Inventories held by third parties 5,435 1,899 74,076 40,106 (a) Costs being incurred to prepare educational content for delivery to customers. These costs include incurred personnel costs and third parties’ services for editing educational content and related activities (graphic design, editing, proofreading and layout, among others). Educational content is presented net of inventory reserve. The movement in the inventory reserve for the years ended December 31, 2020, 2019 and 2018 was as follows: 2020 2019 2018 Balance at beginning of the year (6,517) (4,403) (2,047) Inventory reserve (7,453) (8,476) (7,252) Write-off of inventories against reserve 6,460 6,362 4,896 Balance at end of year (7,510) (6,517) (4,403) |
Recoverable taxes
Recoverable taxes | 12 Months Ended |
Dec. 31, 2020 | |
Recoverable taxes | |
Recoverable taxes | 9 Recoverable taxes 2020 2019 Withholding Income Tax (IRRF) on financial investments (a) 2,027 637 Recoverable IRPJ and CSLL 8,573 17,456 Recoverable PIS and COFINS 7,250 2,501 Other recoverable taxes 2,575 1,631 20,425 22,225 Current 19,304 15,612 Non-current 1,121 6,613 (a) Withholding income tax (IRRF) will be utilized to offset federal taxes payable. |
Related parties
Related parties | 12 Months Ended |
Dec. 31, 2020 | |
Related parties | |
Related parties | 10 Related parties The table below summarizes the balances and transactions with related parties: 2020 2019 Assets Trade receivables Livraria ASC Ltda. and Educadora ASC Ltda. (a) 3,209 4,511 3,209 4,511 Other assets General Atlantic Arco (Bermuda), L.P. (b) — 4,109 — 4,109 Loans to related parties WPensar S.A. (c) — 1,298 Loans - Geekie Partners (d) 4,361 4,231 Debentures – Geekie (e) — 10,582 OISA Tecnologia e Serviços Ltda. (f) 5,018 — Former shareholders - EI (g) 11,099 — 20,478 16,111 Current 9,970 1,298 Non-current 10,508 14,813 Advances from customers Livraria ASC Ltda. and Educadora ASC Ltda. (a) (150) (1) (150) (1) Other liabilities OISA Tecnologia e Serviços Ltda. (i) 469 — 469 — 2020 2019 2018 Net revenue Livraria ASC Ltda. and Educadora ASC Ltda. (a) 7,230 8,805 8,234 OISA Tecnologia e Serviços Ltda. (i) 4 — — 7,234 8,805 8,234 Expenses ASC Empreendimentos Ltda. and OSC Empreendimentos Ltda. (h) (1) (8) (13) Finance income WPensar S.A. (c) 30 72 — Geekie (d) e (e) 453 813 — OISA Tecnologia e Serviços Ltda. (f) 18 — — Minority shareholders - EI (g) 18 — — 519 885 — (a) Arco Ventures S.A. and International School sell educational content to Livraria ASC Ltda. and Educadora ASC Ltda., entities under common control of the Company’s controlling shareholders. The transactions are priced based on contract price at the sales date. Sales price for these transactions are conducted at arm’s length, at similar observable market prices. (b) On June 04, 2020, General Atlantic Arco (Bermuda), L.P (“GA”). sold the entire interest held in the Company as described in Note 1.2. Accordingly, because of the mentioned follow-on public offering, as of December 31, 2020, GA is no longer a related party to the Company. The amounts due were settled in the third quarter. (c) On September 21, 2020, the Company acquired the control of WPensar and such investment became a consolidated subsidiary of the Company. During the nine-month period ended September 30, 2020, the Company recognized R$ 30 of interest income, before the consolidation. See Note 4.a) for further information. (d) On January 17, 2019, the Company loaned R$ 4,000 to Geekie Partners S.A., the current minority shareholder of Geekie, through a loan agreement with payment due in June 2022, interest of 110% of the CDI, and with their entire interest on Geekie’s shares as collateral to the transaction. During the year, the Company recognized R$ 130 of interest income. The transaction was intended to support Geekie’s working capital needs. (e) On November 27, 2020, the Company acquired the control of Geekie and such investment became a consolidated subsidiary of the Company. Before consolidation, the Company recognized R$ 323 of interest income. See Note 4.c) for further information. (f) On October 23, 2020, the Company loaned R$ 5,000 to the company OISA Tecnologia e Serviços Ltda. (“ISAAC”), an affiliated of the company which has member of the key management personnel under common with the Company. The entity is developing a project to assist schools in financial and administrative management. According to the contractual terms the amount is due in February 2021 and bear interest of 100% of the CDI. During 2020, the Company recognized R$ 18 of interest income. (g) Amount due by minority shareholders of Escola da Inteligência and bear interest rate of 100% CDI and maturing in May 2023. During the year, the Company recognized R$ 18 of interest income. (h) Arco Ventures S.A. leases a facility from OSC Empreendimentos Ltda., which are entities under common control of the Company’s controlling shareholder. The agreement was terminated in February 2020. (i) WPensar provides financial intermediation services to OISA which the amounts received through this intermediation are transferred to OISA discounted from the value of the service provided. As of December 31, 2020, the amount to be transferred to OISA is R$ 469 and during the year the recognized revenue from financial intermediation was R$ 4. Key management personnel compensation Key management personnel compensation comprised the following: 2020 2019 2018 Short-term employee benefits 39,628 13,732 9,436 Stock options — — 59,747 Restricted stock units 48,852 66,429 — 88,480 80,161 69,183 Compensation of the Company’s key management includes short-term employee benefits comprised by salaries, bonuses, labor and social charges, and other ordinary short-term employee benefits. Certain executive officers also participate in the Company’s share-based compensation plan (Note 18.b). |
Investments and interests in ot
Investments and interests in other entities | 12 Months Ended |
Dec. 31, 2020 | |
Investments and interests in other entities | |
Investments and interests in other entities | 11 Investments and interests in other entities (a) Investments Bewater Ventures I GA Fundo de Investimento em Participações Multiestratégia (“Bewater”) On July 24, 2020, the Company, through its subsidiary PSD Educação S.A. acquired 9,670,000 Class B quotas of Bewater Ventures I GA Fundo de Investimento em Participações Multiestratégia, a fund managed by Paraty Capital. On the date of transaction, the Company paid the total amount of R$ 9,670, corresponding to a total interest of 14.48% in Bewater. The fund made a minority investment in Group A, a company that provides educational solutions for higher education. The investment in Bewater is measured at fair value through profit and loss. When an investment in an associate or a joint venture is held by, or is held indirectly through, an entity that is a venture capital organization, a mutual fund, unit trust or similar entity including an investment-linked insurance fund, the entity may elect to measure investments in those associates and joint ventures at fair value through profit or loss in accordance with IFRS 9 – Financial Instruments. (i) Investments and interests in other entities Reconciliation of carrying amount: 2020 2019 WPensar Geekie Bewater Total Total At beginning of the year 3,049 45,525 — 48,574 11,862 Capital contributions — 4,500 9,670 14,170 14,200 Acquisition from a minority shareholder — 18,458 — 18,458 27,653 Fair value on investment — — (16) (16) — Loss of changes in ownership — — — — 319 Share of loss of equity-accounted investees (150) 559 — 409 (1,800) Consolidation on the acquisition of control (2,899) (69,042) — (71,941) (3,660) At end of the year — — 9,654 9,654 48,574 Percentage of ownership 100.0 % 56.06 % 14.48 % |
Property and equipment
Property and equipment | 12 Months Ended |
Dec. 31, 2020 | |
Property and equipment | |
Property and equipment | 12 Property and equipment Reconciliation of carrying amount: Machinery Furniture and and IT Leasehold equipment Vehicles fixtures equipment Facilities improvements Others Total Cost As of December 31, 2018 896 191 2,296 5,080 325 4,638 6,199 19,625 Additions 215 — 636 2,529 45 4,663 2,903 10,991 Disposals (17) (70) (895) (3,061) (290) (184) (1,076) (5,593) Business combination 213 — 517 2,775 — 1,627 — 5,132 Sale of Escola de Aplicação São José dos Campos Ltda. (50) — (201) (51) — (710) — (1,012) Write-offs — — — — — — (792) (792) As of December 31, 2019 1,257 121 2,353 7,272 80 10,034 7,234 28,351 Additions 146 — 1,365 4,612 38 4,239 422 10,822 Disposals — (114) — — (934) Business combination 625 186 325 2,300 5 205 — 3,646 As of December 31, 2020 1,991 307 3,929 12,895 123 14,478 6,722 40,445 Depreciation As of December 31, 2018 (254) (144) (527) (1,910) (100) (1,274) (2,069) (6,278) Depreciation charge for the period (91) (24) (254) (1,211) (34) (1,161) (1,580) (4,355) Depreciation of disposals 114 68 368 1,709 108 60 972 3,399 Sale of Escola de Aplicação São José dos Campos Ltda. 10 — 34 17 — 150 — 211 As of December 31, 2019 (221) (100) (379) (1,395) (26) (2,225) (2,677) (7,023) Depreciation charge for the period (26) (327) (9) (2,391) (2,284) Depreciation of disposals 104 — — 13 — — — 117 As of December 31, 2020 (126) (706) (35) (4,616) (4,961) Net book value As of December 31, 2018 642 47 1,769 3,170 225 3,364 4,130 13,347 As of December 31, 2019 1,036 21 1,974 5,877 54 7,809 4,557 21,328 As of December 31, 2020 1,738 181 3,223 9,234 88 9,862 1,761 26,087 The increase in the year ended December 31, 2020 is mainly due to purchase of new computers and printers and improvements to the offices located in São Paulo, Curitiba and Belo Horizonte. The Company assesses at each reporting date, whether there is an indication that a property and equipment asset may be impaired. If any indication exists, the Company estimates the asset’s recoverable amount. There were no indications of impairment of property and equipment as of and for the years ended December 31, 2020, 2019 and 2018. |
Leases
Leases | 12 Months Ended |
Dec. 31, 2020 | |
Leases | |
Leases | 13 Leases The balance sheet shows the following amounts relating to leases: 2020 2019 Right-of-use assets Properties 29,938 21,518 Machinery and equipment 84 113 30,022 21,631 2020 2019 Lease liabilities Current 12,742 6,845 Non-current 22,478 19,012 35,220 25,857 Set out below, are the carrying amounts of the Company’s right-of-use assets and lease liabilities and the movements during the period: Right-of-use assets – Lease Properties Liabilities As at January 1, 2019 18,225 20,089 Additions 4,502 4,502 Lease modification (a) (338) (338) Depreciation expense (5,999) — Business combination 5,241 5,374 Interest expense — 1,489 Payments of lease liabilities — (4,407) Interest paid — (852) As at December 31, 2019 21,631 25,857 Additions 12,391 12,391 Disposal (253) (244) Lease modification (a) 2,080 2,080 Depreciation expense (8,537) — Business combination 2,710 2,710 Interest expense — 3,036 Payments of lease liabilities — (8,160) Discounts on leases — (350) Interest paid — (2,100) As at December 31, 2020 30,022 35,220 Average annual depreciation rate 2019 % Average annual depreciation rate 2020 27.5 % (a) Refers to price adjustments that occur annually as defined in the lease agreements. The Company entered into fiduciary agreements with Banco Safra S.A. in the amount of R$ 10,903 to guarantee payment due in the lease agreements of the São Paulo office. These agreements are calculated considering rates of 1.30% and 1.95% per year and are adjusted annually by the General Market Price Index (IGP-M). The Company recognized rent expense from short-term leases and low-value assets of R$ 2,329 for the year ended December 31, 2020 (2019: R$ 2,613) |
Intangible assets and goodwill
Intangible assets and goodwill | 12 Months Ended |
Dec. 31, 2020 | |
Intangible assets and goodwill. | |
Intangible assets and goodwill | 14 Intangible assets and goodwill Rights on Customer Educational Software license and Educational Non-compete Goodwill contracts relationships system Copyrights development Trademarks platform agreement In Progress Total Cost As of December 31, 2018 89,634 15,263 23,045 36,656 12,692 2,808 19,177 21,911 1,097 2,213 224,496 Corporate restructuring (53,521) — — — — — — — — — (53,521) Acquisitions — — — — 8,377 4,441 — 23,634 309 6,341 43,102 Disposals — — — — — — — (1,841) — — (1,841) Acquisitions through business combinations 880,654 — 183,926 214,567 — 11,163 336,121 24,728 6,897 20,607 1,678,663 Transfer — — — — — — — 19,555 — (19,555) — As of December 31, 2019 916,767 15,263 206,971 251,223 21,069 18,412 355,298 87,987 8,303 9,606 1,890,899 Acquisitions — — — — 8,131 22,127 3 51,262 431 14,873 96,827 Disposals — — — — (3) (94) — (4,607) — — (4,704) Acquisitions through business combinations 477,584 — 115,172 29,775 14 5,103 121,053 13,102 3,122 — 764,925 Transfer — — — — 249 (231) — 22,604 — (22,622) — As of December 31, 2020 1,394,351 15,263 322,143 280,998 29,460 45,317 476,354 170,348 11,856 1,857 2,747,947 Amortization As of December 31, 2018 — (3,949) (7,560) (12,716) (3,939) (648) (3,810) (3,860) (274) — (36,756) Amortization — (1,342) (6,450) (9,518) (7,743) (2,307) (4,431) (10,449) (536) — (42,776) Amortization of disposals — — — — — — — 536 — — 536 As of December 31, 2019 — (5,291) (14,010) (22,234) (11,682) (2,955) (8,241) (13,773) (810) — (78,996) Amortization — (24,227) (26,941) (6,421) (6,789) (19,074) (35,072) (1,947) — (121,998) Amortization of disposals — — — — — 3 — 2,681 — — 2,684 As of December 31, 2020 — (6,818) (38,237) (49,175) (18,103) (9,741) (27,315) (46,164) (2,757) — (198,310) Net book value As of December 31, 2018 89,634 11,314 15,485 23,940 8,753 2,160 15,367 18,051 823 2,213 187,740 As of December 31, 2019 916,767 9,972 192,961 228,989 9,387 15,457 347,057 74,214 7,493 9,606 1,811,903 As of December 31, 2020 1,394,351 8,445 283,906 231,823 11,357 35,576 449,039 124,184 9,099 1,857 2,549,637 (a) Goodwill The carrying amount of goodwill by operating segment was: 2020 2019 Core 918,091 755,539 Supplemental 476,260 161,228 1,394,351 916,767 Impairment test for goodwill The Company performed its annual impairment test on December 31, 2020 and 2019. The Company tests at least annually the recoverability of the carrying amount of each operating segment. The process of estimating these values involves the use of assumptions, judgments and estimates of future cash flows that represent the Company’s best estimate. Goodwill is monitored by management at the level of cash generating unit, which is the same of the two operating segments. The Core and Supplemental operating segments had an important cash flow improvement as they have increased their number of students and achieved greater scale that positively impact the gross margin. The value-in-use calculation is based on cash flow projections and financial budgets approved by management for a period of five years. Cash flows beyond the five-year period were extrapolated using an estimated growth rate. The growth rate does not exceed the average long-term rate for the industry. The value-in-use of the Core operating segment calculated for 2020 was R$ 2,372,829 (R$ 2,130,003 in 2019), and the carrying amount was R$ 2,099,723. The value-in-use of the Supplemental operating segment for 2020 was R$ 1,349,754 (R$ 854,855 in 2019), and the carrying amount was R$ 812,614. The value-in-use calculations were based on the discounted cash flow model and are based on the following assumptions for those segments: Growth rate Budget period beyond budget growth rate period Discount rate 2020 2019 2020 2019 2020 2019 Core 9.2 % 11.1 % 3.2 % 4.3 % 11.1 % 12.7 % Supplemental 17.3 % 18.3 % 3.2 % 4.3 % 12.4 % 14.5 % Significant estimate: impact of possible changes in key assumptions A decrease of 180 basis points in management estimated gross margin used in the value-in-use calculation for the Core operating segment as of December 31, 2020 (73.0% instead of 74.8%), would have not resulted in the recognition of an impairment of goodwill. Also, the Company performed the same sensitivity analysis for the Supplemental operating segment (80.6% instead of 82.4%) and concluded it would have not resulted in the recognition of an impairment of goodwill. In addition, an increase of 180 basis points in management’s estimated discount rate applied to the cash flow projections of the Core operating segment for the year ended December 31, 2020 (12.9% instead of 11.1%), would have not resulted in the recognition of an impairment of goodwill. Also, the Company performed the same sensitivity analysis for the Supplemental operating segment (14.2% instead of 12.4%) and concluded it would have not resulted in the recognition of an impairment of goodwill. There was no goodwill impairment for the years ended December 31, 2020, 2019 and 2018. (b) Other intangible assets Intangible assets, other than goodwill, are valued separately for each acquisition and are amortized over their respective useful lives. The useful lives and methods of amortization of other intangibles are reviewed each financial year end and adjusted prospectively, if appropriate. The estimated useful lives of intangible assets for the years ended December 31, 2020, are as follows: Years Rights on contracts 10 Customer relationships 5 to 16 Educational system 3 to 10 Copyrights 3 Software license 2 a 5 Trademarks 10 to 20 Educational platform 3 a 10 Non-compete agreement 2 a 5 For the years ended December 31, 2020, 2019 and 2018 there were no indicators that the Company’s intangible assets with definite lives might be impaired. |
Loans and financing
Loans and financing | 12 Months Ended |
Dec. 31, 2020 | |
Loans and financing | |
Loans and financing | 15 Loans and financing Interest rate Maturity 2020 2019 Bank loan (a) 100% CDI + 0.7% pa October/2020 — 98,561 Bank loan (b) 100% CDI + 2.7% pa December/2021 100,395 — Bank loan (c) 100% CDI + 2.7% pa January/2022 200,788 — Bank loan (d) 8.1% pa March/2022 1,500 — Bank loan (e) 8.2% pa May/2022 8,373 — Bank loan (f) 3.8% pa November/2023 63 — 311,119 98,561 Current 107,706 98,561 Non-current 203,413 — (a) On October 25, 2019, the Company entered into a loan agreement in the amount of R$ 100,000, maturing in October 2020 (single installment). The loan was paid on September 21, 2020. (b) On July 1, 2020, the Company entered into a loan agreement in the amount of R$ 100,000. The loan accrues interest at a rate equal to 100% of the CDI rate plus 2.7% per annum. The loan matures in December 2021. (c) On July 1, 2020, the Company entered into two loans agreements in the amount of R$ 100,000 each, maturing in January 2022 (single installments) and an interest rate of 100% CDI plus 2.7%v per annum. Interest on loans is capitalized monthly to be settled in 17 installments from August 2020 to January 2022. (d) On February 17, 2020, Nave à Vela, the Company’s subsidiary, entered into a loan agreement in the amount of R$ 2,000 for working capital, to be settled in 21 installments from July 2020 to March 2022. (e) On May 29, 2020, Geekie, the Company’s subsidiary, entered into a loan agreement of R$ 10,000. The amount will be settled in 18 installments from December 2020 to May 2022 and bear interest at the rate of 8.2% per annum. (f) On October 30, 2020, WPensar, the Company’s subsidiary, entered into a loan agreement in the amount of R$ 63 for working capital, to be settled in 30 installments from June 2021 to November 2023. The loan accrues interest at a rate equal to 3.8% per annum. All financing arranged by Company is not subject to any financial covenants for the year ended December 31, 2020. Set out below the movements during the year: 2020 2019 Balance at beginning of the year 98,561 — Additions 502,063 100,000 Loan cost (3,629) (2,426) Business combination 8,836 548 Interest expense 19,862 1,002 Interest paid (13,423) — Payment of loans and financing (301,151) (563) Balance at end of year 311,119 98,561 |
Financial instruments from acqu
Financial instruments from acquisition of interests | 12 Months Ended |
Dec. 31, 2020 | |
Financial instruments from acquisition of interests | |
Financial instruments from acquisition of interests | 16 Financial instruments from acquisition of interests The breakdown of derivative instruments from acquisition of investments in associates and joint ventures is as follows: 2020 2019 Assets Derivative financial instruments Investment in Geekie (a) — 32,152 Investment in WPensar (b) — 3,794 — 35,946 Current — 3,794 Non-current — 32,152 2020 2019 Liabilities Derivative financial instruments Investment in Geekie (a) — 31,626 Investment in WPensar (b) — 2,314 — 33,940 Current — — Non-current — 33,940 (a) On November 27, 2020, the Company acquired control of Geekie and such investment became a consolidated subsidiary of the Company as described in Note 4.c). On the same date, the Company derecognized the derivative financial instrument and recognized a financial liability for the obligation to acquire the remaining interest in Geekie as described in Note 17. (b) On September 21, 2020, the company acquired the remaining 75% interest in WPensar as described in Note 4.a). On the same date, the Company derecognized the derivative financial instrument and recognized a financial liability for the obligation of the acquisition of control of WPensar as described in Note 17. |
Accounts payable to selling sha
Accounts payable to selling shareholders | 12 Months Ended |
Dec. 31, 2020 | |
Accounts payable to selling shareholders | |
Accounts payable to selling shareholders | 17 Accounts payable to selling shareholders The breakdown of the liabilities regarding balances of accounts payable from business combination and investments in associates is as follows: 2020 2019 Accounts payable to selling shareholders Acquisition of International School (a) 354,950 297,722 Acquisition of NS Educação Ltda. (b) 5,724 6,461 Acquisition of Escola em Movimento (c) 1,024 1,992 Acquisition of Nave à Vela (d) 21,941 30,946 Acquisition of Positivo (e) 903,428 879,111 Acquisition of WPensar (f) 3,605 — Acquisition of Studos (g) 11,349 — Acquisition of EI (h) 363,502 — Acquisition of Geekie (i) 120,992 — 1,786,515 1,216,232 Current 656,014 117,959 Non-current 1,130,501 1,098,273 (a) The financial liability is recorded at the present value of the estimated amount payable to the non-controlling shareholder upon the exercise of purchasing of the remaining interest using an estimated interest rate of 13.8% (14.5% in 2019). During the year ended December 31, 2020 the Company recognized R$ 34,627 of interest. The amount payable is based on realized EBITDA for the 2019 and 2020 school years. The first and second installments will be paid in the course of arbitration mentioned in Note 28. Based on the realized numbers for 2020, the accounts payable increased by R$ 32,121. (b) This amount was retained for any contingent liabilities that may arise, which will be released in annual installments until December 31, 2022. The amount is being adjusted by the interest from Interbank certificates of deposit (CDI). (c) This amount was retained for any contingent liabilities that may arise, which will be released in two annual installments on the first and second anniversary of the acquisition until June 2021. The amount is being adjusted by the Brazilian basic interest rate (SELIC). (d) This amount is related to the remaining acquisition of 49% interest in Nave and will occur over the next two years (subject to price adjustments, net of debt at each closing date). This amount is recorded at the present value using an estimated interest rate of 14,6% (14.5% in 2019). During the year ended December 31, 2020, the Company recognized R$ 2,802 of interest. The next tranche is payable on February 15, 2021, however the parties are negotiating the payment to be made in the second quarter of 2021. On this date Arco Ventures S.A. will acquire 24% interest, for the 24% of Nave’s revenues from October 1, 2019 to September 30, 2020 multiplied by 5.3, net of debt. The last tranche is payable on February 15, 2022. On this date, Arco Ventures S.A. will acquire 25% interest, for 25% of Nave’s revenues from October 1, 2020 to September 30, 2021 multiplied by 3, net of debt. Based on the realized numbers for 2020 school year and the new projected numbers for 2021 school year, the accounts payable decreased by R$ 11,807. (e) The amount of the contract is updated by CDI from November 1, 2019 to December 31, 2020. The amount will be paid over 4 years, 20% payable in 2021 and 2022 and 30% payable in 2023 and 2024 and the payment is secured by guarantee letter through a chattel mortgage of 20% of PSD shares and 100% of SAE shares. During the year ended December 31, 2020, the Company recognized R$ 24,317 of interest. (f) This amount corresponds to 20% of the acquisition price and is being retained until September 30, 2021, for any eventual inaccuracies in the fulfillment of the guarantees given in the purchase and sale agreement. The amount is updated considering 100% of the Interbank certificates of deposit (CDI) calculated from the date of acquisition until the maturity date. (g) The obligation is recognized at present value of the acquisition price using an estimated interest rate of 3,4% for the first installment that will be paid in September 2021 and 6,0% for the second installment due in September 2022. The first and second installments will be paid over the next two years on the anniversary of the acquisition date. (h) This amount is related to the remaining acquisition of 40% interest in EI and will occur over the next two years and subject to price adjustments. This amount is recorded at the present value using an estimated interest rate of 13.1%. The next installment is payable on May 14, 2021 by the greater between R$ 88,000 or 10 times EI’s ACV book value for 2021 multiplied by 48,43% and multiplied by 60,0% less installment paid in cash on the acquisition date. The last installment is payable on May 31, 2023 for 6 times EI’s ACV book value for 2023 plus cash generation and multiplied for 40%. During the year ended December 31, 2020 the Company recognized R$ 4,515 of interest. (i) The financial liability is recorded at the present value of the estimated amount payable to the non-controlling shareholder upon the exercise of purchasing of the remaining interest using an estimated interest rate of 13.1%. The exercise price will be calculated for two different content (“Geekie One” and “Geekie Others”) and is determined by the greater of: Geekie One: 8 times Geekie’s ACV book value for 2022 less net debt, multiplied by the remaining interest of sellers; or 0.65 times the multiple of the Company’s ACV book value for 2022, multiplied by Geekie’s ACV for 2022, less net debt, multiplied by the remaining interest of sellers. The amount is due on June 1, 2022. Geekie Others: 8 times Geekie’s revenue for 2022 multiplied by the remaining interest of sellers; or 0.65 times the multiple of the Company’s ACV book value for 2022, multiplied by Geekie’s revenue for 2022, multiplied by the remaining interest of sellers. The amount is due on January 6, 2023. During the year ended December 31, 2020 the Company recognized R$ 1,770 of interest.. |
Labor and social obligations
Labor and social obligations | 12 Months Ended |
Dec. 31, 2020 | |
Labor and Social Obligations | |
Labor and social obligations | 18 Labor and social obligations 2020 2019 Bonuses (a) 31,046 28,045 Payroll and social charges 53,462 17,763 Payroll accruals 25,582 18,998 Other labor 11,549 6,506 121,639 71,312 Current 85,069 68,511 Non-current 36,570 2,801 (a) Variable remuneration (bonuses) The Company recorded bonuses related to variable remuneration of employees and management in cost of sales, selling and administrative expenses in the amount of R$ 18,989, R$ 14,519 and R$ 4,224 for the years ended December 31, 2020, 2019, and 2018, respectively. (b) Share-based compensation plan Stock options - Arco plan Members of the Company’s management participated in the Arco share-based compensation plan. In 2019, all directors exercised their stock options. As of December 31, 2020, there were no outstanding share options. There was no share-based compensation expense as of December 31, 2020. The following table list the inputs to the model used for the Arco plan: Dividend yield (%) 2.41 Fair value of the option at grant date 72.63 Exercise price 11.13 Expected volatility (%) 186.61 Risk-free interest rate (%) 8.01 Expected life of share options (years) 6.00 Weighted average share price (R$) 12.67 Model used Black & Scholes Stock options - International School plan International School has its own stock option plan, approved by its shareholders on August 4, 2017. International School granted 294,735 stock options on its own shares in 2017 to selected key executives. The stock option plan was designed to attract and retain key executives. The fair value of the stock options was estimated at the grant date using the Black & Scholes pricing model, considering the terms and conditions on which the stock options were granted. The stock options vested on January 1, 2020 and the compensation expense recognized for the International School Plan in the statement of income (loss) for the years ended December 31, 2020 and 2019 was R$ 129 and R$ 549 respectively. On May 20, 2020, all Senior Executives exercised their 153,262 stock options pursuant to the International School Plan approved by its shareholders on August 4, 2017, with a updated unit value of R$ 1.39. As of December 31, 2020, there were no outstanding share options. The following table details the assumptions used to determine the fair value of the share options under the International School share option plans: Date of grant 08/04/2017 Fair value of the option at grant date Exercise price Dividend yield (%) 0.00 % Expected volatility (%) 380.36 % Risk-free interest rate (%) 8.62 % Expected life of share options (years) 2.74 Weighted average share price (reais) on the grant date 10.65 Model used Black & Scholes Stock options - Geekie plan Geekie has its own stock option plan that is granted to employees elected by Management and duly approved by the Board. On December 1, 2020, the Company approved, new conditions for granting stock options in the total amount of 31,763 shares. This stock option plan, in a full agreement between the Company and the beneficiaries, replaced the previous plan approved on December 19, 2017. The exercise price of the options granted to all beneficiaries is R$ 82.91 as determined in the grant agreements. The stock options are exercisable from the date of approval of the new grant agreement, with the vesting period on that date being considered fulfilled. The beneficiary has the maximum period for exercising the options is up to March 31, 2022, under penalty of forfeiture. The stock options plan is classified as cash settled since all Geekies´ employees have signed a mandatory contract to sell all the option to Arco at exercise date at the same price to be paid to non-controlling selling shareholders. Restricted stock units In 2019 the Company established a new share-based payment program called restricted stock units (“RSU”) of the holding company Arco Platfom Limited for employees registered with the Company's subsidiaries, which will be available for sale by the beneficiaries annually, on their anniversary dates, with the exception of the members of the Board, whose shares are blocked for sale for one year after the issue. The related compensation expense will be recognized over the following schedule. The restricted stock unit plan contemplates the issue of approximately 656,860 shares to be distributed to 39 beneficiaries. Final vesting Quantity of date stocks 28/09/2019 197,951 30/06/2020 3,086 28/09/2020 215,709 30/06/2021 3,086 28/09/2021 215,709 28/09/2022 17,757 30/06/2022 3,562 Total 656,860 The participant's right to effectively receive ownership of the restricted shares will be conditioned to the participant's continuance as an employee, director or director of any company in the business group from the grant date until the grace periods (“Vesting”). If a participant leaves the group, it will be considered as non-compliance with the “vesting” condition, not being a cancellation of the plan but a “forfeiture”. After the vesting period, the restricted shares have the same rights and privileges as any shareholder. The following table reflects the movements from the grant date until December 31, 2020: Number of restricted share units Outstanding at December 31, 2019 337,185 Granted 73,085 Restricted stocks units transferred (203,622) Effectively forfeited (45,417) Outstanding at December 31, 2020 161,231 The total compensation expense for the year ended December 31, 2020, including taxes and social charges, was R$ 48,852 (R$ 15,469 of principal and R$ 33,383 of taxes and contributions) net of estimated forfeiture. These awards are classified as equity settled. The fair value of these equity instruments was measured on the grant date as follows: Total shares Unit Total shares Total shares granted Average fair value at value Grant date granted vested outstanding grant date average 30/04/2019 542,760 111,435 68,800 126.76 30/06/2019 1,543 — 274 177.71 30/06/2019 1,543 — 319 206.66 15/10/2019 37,929 7,698 7,593 200.18 23/01/2020 13,000 7,580 2,788 214.48 02/03/2020 36,673 21,383 8,762 238.93 04/03/2020 13,164 4,388 3,346 254.21 03/09/2020 3,600 2,099 883 245.18 19/11/2020 3,562 3,562 772 216.63 19/11/2020 3,086 3,086 669 216.63 Total 656,860 161,231 94,206 The grant date is the date on which the entity and the counterparty (including employee) entered into a share-based payment agreement, that is, when the entity and the counterparty have a shared understanding of the terms and conditions of the agreement. |
Equity
Equity | 12 Months Ended |
Dec. 31, 2020 | |
Equity. | |
Equity | 19 Equity a. Share capital As of December 31, 2020, Arco’s share capital is represented by 57,587,563 (December 31, 2019: 54,939,088) common shares of par value of US$ 0.00005 each, comprised by 27,400,848 (December 31, 2019: 27,400,848) Class B common shares and 30,186,715 (December 31, 2019: 27,538,240) Class A common shares. December 31, 2019 shares outstanding 54,939,088 Restricted Stock Units Transferred (Note 18.b) 203,622 Restricted Stock Unit withheld (a) (55,147) Underwritten public offering of Class A common shares (Note 1.2) 2,500,000 December 31, 2020 shares outstanding 57,587,563 (a) A portion of the shares was withheld to pay income taxes of the beneficiaries. The Class B common shares are entitled to 10 votes per share and the Class A common shares, which are publicly traded, are entitled to one vote per share. The Class B common shares are convertible into an equivalent number of Class A common shares and generally convert into Class A common shares upon transfer subject to limited exceptions. The dual class structure will exist as long as the total number of issued and outstanding Class B common shares is at least 10% of the total number of shares outstanding. b. Capital reserve Capital reserve includes additional paid in capital amounts related to the difference between the subscription price that shareholders paid for the common shares and their nominal value. c. Dividends There was no distribution of dividends for the years ended December 31, 2020 and 2019, due to accumulated losses of the years. |
Earnings (loss) per share (EPS)
Earnings (loss) per share (EPS) | 12 Months Ended |
Dec. 31, 2020 | |
Earnings (loss) per share (EPS) | |
Earnings (loss) per share (EPS) | 20 Earnings (loss) per share (EPS) Basic Basic EPS is calculated by dividing profit (loss) attributable to the equity holders of the parent by the weighted average number of Class A and Class B common shares outstanding during the period. Diluted Diluted EPS is calculated by dividing profit (loss) attributable to the equity holders of the parent by the weighted average number of Class A and Class B common shares outstanding during the period plus the weighted average number of common shares that would be issued on conversion of all potential common shares with dilutive effects. The following table reflects the profit (loss) attributable to equity holders of the parent and the share data used in the basic and diluted EPS computations: 2020 2019 2018 Class A Class B Total Class A Class B Total Class A Class B Total Profit (loss) attributable to equity holders of the parent 8,534 8,246 16,780 (4,379) (5,052) (9,431) (37,047) (45,333) (82,380) Weighted average number of common shares outstanding (thousand) 28,357 27,401 23,938 27,614 22,603 27,658 Effects of dilution from: Share-based compensation plan (thousands) 161 — 337 — 153 — Basic earnings (loss) per share - R$ 0.30 0.30 (0.18) (0.18) (1.64) (1.64) Diluted earnings (loss) per share - R$ 0.30 0.30 (0.18) (0.18) (1.64) (1.64) Diluted profit per share is calculated by the weighted average number of outstanding shares, in order to assume the conversion of all potential dilutive shares. Diluted earnings per share is calculated considering the instruments that may have a potential dilutive effect in the future, such as share-based payment instruments, using the treasury shares method when the effect is dilutive. |
Revenue
Revenue | 12 Months Ended |
Dec. 31, 2020 | |
Revenue | |
Revenue | 21 Revenue The Company’s net revenue is as follows: 2020 2019 2018 Educational content 998,373 570,292 377,143 Other 4,534 2,820 4,102 Deductions: Taxes (1,197) (275) (264) Net revenue 1,001,710 572,837 380,981 2020 2019 2018 Segments Core Supplemental Total Core Supplemental Total Core Supplemental Total Type of goods or service Educational content 839,383 157,793 997,176 433,326 136,853 570,179 299,203 77,940 377,143 Other 1,762 2,772 4,534 46 2,612 2,658 3,828 10 3,838 Total net revenue from contracts with customers 841,145 160,565 1,001,710 433,372 139,465 572,837 303,031 77,950 380,981 Timing of revenue recognition Transferred at a point in time 841,145 160,565 1,001,710 433,372 139,465 572,837 303,031 77,950 380,981 Total net revenue from contracts with customers 841,145 160,565 1,001,710 433,372 139,465 572,837 303,031 77,950 380,981 The Company’s revenues from contracts with customers are all in Brazil. The Company recognized impairment losses on trade receivables arising from contracts with customers, included under selling expenses in the statement of income (loss) of R$ 34,684, R$ 17,392 and R$ 9,588 for the years ended December 31, 2020, 2019 and 2018, respectively. Revenue Indirect tax benefits The Company is not subjected to the payment of the social integration program tax ( Programa de Integração Social , or PIS) and the social contribution on revenues tax ( Contribuição para o Financiamento da Seguridade Social , or COFINS) on the sale of books. The sale of printed and digital books is also exempt from the Brazilian municipal taxes and from the Brazilian value added tax ( Imposto sobre Operações relativas à Circulação de Mercadorias e sobre Prestações de Serviços de Transporte Interestadual e Intermunicipal e de Comunicação , or ICMS). |
Expenses by nature
Expenses by nature | 12 Months Ended |
Dec. 31, 2020 | |
Expenses by Nature | |
Expenses by nature | 22 Expenses by nature 2020 2019 2018 Educational content material (122,401) (61,953) (41,551) Operations personnel (24,731) (12,500) (11,477) Inventory reserves (7,453) (8,476) (7,252) Freight (16,452) (14,569) (7,687) Depreciation and amortization (35,007) (15,311) (5,869) Other (15,086) (4,449) (6,909) Cost of sales (221,130) (117,258) (80,745) Sales personnel (167,300) (87,352) (49,041) Depreciation and amortization (77,343) (23,573) (11,939) Sales & marketing (24,104) (31,208) (17,931) Customer support (53,893) (30,755) (17,274) Allowance for doubtful accounts (34,684) (17,392) (9,588) Real estate rentals (965) (1,728) (1,923) Other (13,980) (7,772) (5,574) Selling expenses (372,269) (199,780) (113,270) Corporate personnel (74,437) (53,443) (39,382) Third party services (80,254) (43,415) (14,269) Real estate rents (1,623) (2,613) (3,429) Travel expenses (2,233) (3,439) (2,891) Tax expenses (7,341) (2,331) (2,858) Software licenses (5,909) (1,487) (1,098) Share-based compensation plan (69,846) (66,978) (60,297) Depreciation and amortization (15,105) (9,430) (1,786) Other (13,810) (8,302) (3,744) General and administrative expenses (270,558) (191,438) (129,754) Total (863,957) (508,476) (323,769) The increase in expenses for the year ended December 31, 2020 compared to the same period of the previous year, is mainly due to inclusion of the companies as mentioned in Note 4. During the year ended December 31, 2020 the companies acquired in 2019 contributed with R$ 115,285 (2019: R$ 28,059) of cost of sales and with R$ 168,374 (2019: R$ 37,738) of expenses. In the same period, the companies acquired in 2020 contributed with R$ 8,004 of cost of sales and with R$ 27,135 of expenses. |
Finance result
Finance result | 12 Months Ended |
Dec. 31, 2020 | |
Finance result | |
Finance result | 23 Finance result 2020 2019 2018 Income from financial investments 2,263 18,443 11,633 Changes in fair value of financial investments (a) 17,111 28,886 4,322 Changes in fair value of derivative instruments (b) 16,147 18,599 19,839 Foreign exchange gains 1,930 1,745 138 Interest income 4,721 1,042 — Other 3,039 3,332 686 Finance income 45,211 72,047 36,618 Changes in fair value of derivative instruments (b) (15,585) (18,126) (19,180) Changes in accounts payable to selling shareholders (Note 17) (20,330) (89,403) (130,378) Interest in acquisition of investments (c) (68,379) (42,206) (9,781) Financial discounts granted (2,248) (3,343) (1,911) Foreign exchange loss (1,742) (2,300) (34,573) Interest in lease liabilities (3,036) (1,489) — Interest on loans and financing (19,862) (1,002) — Other (10,831) (12,986) (2,972) Finance costs (142,013) (170,855) (198,795) Finance result (96,802) (98,808) (162,177) (a) Refers to gains on financial investments measured at FVPL. (b) Refers to changes in the fair value of derivative financial instruments, comprised of the put and call options from business acquisitions and investments in associates and joint ventures. (c) Refer to interest expense on liabilities related to business combinations and investments in associates. |
Income taxes
Income taxes | 12 Months Ended |
Dec. 31, 2020 | |
Income taxes | |
Income taxes | 24 Income taxes (a) Reconciliation of income taxes expense 2020 2019 2018 Profit (loss) before income taxes 39,102 (42,534) (100,901) Combined statutory income taxes rate - % (a) 34 % 34 % 34 % Income tax benefit (expense) at statutory rates (13,295) 14,462 34,306 Reconciliation adjustments: Share of profit (loss) of equity-accounted investees (b) 139 (612) (269) Effect of presumed profit of subsidiaries (c) 9,552 18,593 11,080 Non-deferred tax loss (d) (7,427) (1,714) (34,227) Stock option (d) (6,986) — — Other additions (exclusions), net (4,305) 2,374 7,095 (22,322) 33,103 17,985 Current (87,379) (46,850) (26,553) Deferred 65,057 79,953 44,538 Income taxes benefit (expense) (22,322) 33,103 17,985 Effective rate 57.1 % 77.8 % 17.8 % (a) Considering that Arco Platform Ltd. is domiciled in Cayman and there is no income tax in that jurisdiction, the combined tax rate of 34% demonstrated above is the current rate applied to Arco Brasil S.A. which is the holding company of all operating entities of Arco Platform, in Brazil. (b) Refers to the effect of 34% on the share of profit (loss) of investees for the year. (c) Brazilian tax law establishes that companies that generate gross revenues of up to R$ 78,000 in the prior fiscal year may calculate income taxes as a percentage of gross revenue, using the presumed profit income tax regime. The Company’s subsidiaries adopted this tax regime and the effect of the presumed profit of subsidiaries represents the difference between the taxation based on this method and the amount that would be due based on the statutory rate applied to the taxable profit of the subsidiaries. (d) Permanent differences of non-deductible expenses. (b) Deferred income taxes The changes in the deferred tax assets and liabilities are as follows: Change in As of accounting January 1, Profit Business Profit Business 2018 practice 2019 or loss combination Equity 2019 or loss combination 2020 Deferred tax assets Tax losses carryforward 4,364 — 4,364 11,919 — — 16,283 48,481 — 64,764 Temporary differences — Financial instruments from acquisition of interests 59,166 — 59,166 47,563 — — 106,729 10,664 — 117,393 Other temporary differences 6,585 613 7,198 14,610 — 29,325 2,392 15,098 46,815 Share base compensation — — — 7,960 — — 7,960 (1,487) — 6,473 Tax benefit from tax deductible goodwill 46,314 — 46,314 (2,009) — (29,417) 14,888 (3,341) — 11,547 Amortization of intangible assets 1,282 — 1,282 5,391 — — 6,673 10,148 — 16,821 Total deferred tax assets 117,711 613 118,324 85,434 (29,417) 181,858 66,857 15,098 263,813 Deferred tax liabilities Financial instruments from acquisition of interests (18,166) — (18,166) (5,707) — — (23,873) 14,642 — (9,231) Tax benefit from tax deductible goodwill — — — — — — — (15,678) — (15,678) Other temporary differences (1,463) — (1,463) 226 — — (1,237) (764) — (2,001) Total deferred tax liabilities (19,629) — (19,629) (5,481) — — (25,110) (1,800) — (26,910) Deferred tax assets (liabilities), net 98,082 613 98,695 79,953 (29,417) 156,748 65,057 15,098 236,903 Deferred tax assets 99,460 100,073 156,748 236,903 Deferred tax liabilities (1,378) (1,378) — — As of December 31, 2020, the Company had unrecognized deferred income tax assets in the amount of R$ 1,489 (2019: R$ 1,382) with respect to tax loss carryforward. The net operating losses carried forward do not expire, however, their compensation is limited to 30% of the annual taxable income. The recognition of the deferred income tax assets is supported by the Company’s forecasts of the future profitability and historical results. |
Segment information
Segment information | 12 Months Ended |
Dec. 31, 2020 | |
Segment information | |
Segment information | 25 Segment information Segment information is presented consistently with the internal reports provided to the Company’s main key executives and chief operating decision makers. They are responsible for allocating resources, assessing the performance of the operating segments, and making the Company’s strategic decisions. The Executive Officers have defined the operating segments based on the reports used to make structured strategic decisions, which allow for decision-making based on these structures: (i) Core : The Core Curriculum business segment provides solutions that address the Brazilian K‑12 curriculum requirements through a personalized and interactive learning experience. Students access content in various formats, such as digital, video, print, and other audiovisual formats that are aligned with the daily curriculum of their classes; ( ii) Supplemental : The Supplemental Solutions business segment provide additional value-added content that private schools can opt, in addition to the Core Curriculum solution. Currently, the Company’s primary Supplemental product is an English as a second language (ESL) bilingual teaching program. Technological solutions for communication with the students’ parents, learning laboratories that use the methodology of maker culture and content to develop socio-emotional skills on a platform of questions to students and teachers are also offered. The Executive Officers do not make strategic decisions or evaluate performance based on geographic regions. Also, based on the agreements signed with private schools as of December 31, 2020, none of the customers individually represented more than 5% of total revenue. 2020 Total Adjustments reportable and Core Supplemental segments eliminations Total Net revenue 841,145 160,565 1,001,710 — 1,001,710 Cost of sales (190,893) (221,130) — (221,130) Gross profit 650,252 130,328 780,580 — 780,580 Selling expenses (309,816) (62,453) (372,269) — (372,269) Segment profit 340,436 67,875 408,311 — 408,311 General and administrative expenses — — — — (270,558) Other income (expenses), net — — — — (2,258) Operating profit — — — — 135,495 Finance income — — — — 45,211 Finance costs — — — — (142,013) Share of loss of equity-accounted investees — — — — 409 Profit before income taxes — — — — 39,102 Income taxes expense — — — — (22,322) Net profit for the year — — — — 16,780 Other disclosures Depreciation and amortization 118,416 9,039 127,455 — 127,455 Investments in associates and joint ventures 9,654 - 9,654 — 9,654 Capital expenditures 95,672 11,977 107,649 — 107,649 2019 Total Adjustments reportable and Core Supplemental segments eliminations Total Net revenue 433,372 139,465 572,837 — 572,837 Cost of sales (97,513) (19,745) (117,258) — (117,258) Gross profit 335,859 119,720 455,579 — 455,579 Selling expenses — — — — (199,780) General and administrative expenses — — — — (191,438) Other income (expenses), net — — — — (6,287) Operating profit — — — — 58,074 Finance income — — — — 72,047 Finance costs — — — — (170,855) Share of loss of equity-accounted investees — — — — (1,800) Loss before income taxes — — — — (42,534) Income taxes expense — — — — 33,103 Net loss for the year — — — — (9,431) Other disclosures Depreciation and amortization 43,854 4,460 48,314 — 48,314 Investments in associates and joint ventures 48,574 — 48,574 — 48,574 Capital expenditures 45,851 8,242 54,093 — 54,093 2018 Total Adjustments reportable and Core Supplemental segments eliminations Total Net revenue 303,031 77,950 380,981 — 380,981 Cost of sales (70,903) (9,842) (80,745) — (80,745) Gross profit 232,128 68,108 300,236 — 300,236 Selling expenses (87,186) (26,084) (113,270) — (113,270) Segment profit 144,942 42,024 186,966 — 186,966 General and administrative expenses — — — — (129,754) Other income (expenses), net — — — — 4,856 Operating profit — — — — 62,068 Finance income — — — — 36,618 Finance costs — — — — (198,795) Share of loss of equity-accounted investees — — — — (792) Loss before income taxes — — — — (100,901) Income taxes expense — — — — 17,985 Net loss for the year — — — — (82,916) Other disclosures Depreciation and amortization 17,997 1,597 19,594 — 19,594 Investments in associates and joint ventures 11,862 — 11,862 — 11,862 Capital expenditures 28,165 8,092 36,257 — 36,257 Capital expenditures consist of additions of property and equipment and intangible assets. There were no inter-segment revenues in the years ended December 31, 2020, 2019 and 2018. Segment performance is evaluated based on segment profit and is measured consistently with profit or loss in the consolidated financial statements. General and administrative expenses, other income (expenses), net, finance result, share of profit (loss) of equity-accounted investees and income taxes are managed on a Company basis and are not allocated to operating segments. Segment profit or loss excludes general and administrative expenses, other income (expenses), net, finance result, share of profit (loss) of equity-accounted investees and income taxes in order to demonstrate the results without the influence of shared service center expenses or significant items of income and expenses which may have an impact on equality of earnings such as restructuring costs, legal expenses and impairments. There were no adjustments or eliminations in the profit or loss between segments. Segment assets and liabilities are measured in the same way as in the financial statements. These assets and liabilities are allocated based on the operations of the segment. Total Adjustments reportable and Core Supplemental segments eliminations Total As of December 31, 2020 Total assets 4,342,905 253,480 4,596,385 (20,105) 4,576,280 Total liabilities 2,316,545 78,956 2,395,501 (20,105) 2,375,396 As of December 31, 2019 Total assets 2,999,497 176,196 3,175,693 (14,270) 3,161,423 Total liabilities 1,535,695 45,188 1,580,883 (14,270) 1,566,613 |
Financial instruments
Financial instruments | 12 Months Ended |
Dec. 31, 2020 | |
Financial instruments | |
Financial instruments | 26 Financial instruments The Company holds the following financial instruments: Financial assets Assets at FVPL Assets at amortized cost Total December 31, 2020 Cash and cash equivalents — 424,410 424,410 Financial investments 17,645 705,349 722,994 Trade receivables — 415,282 415,282 Related parties — 20,478 20,478 Investments and interests in other entities 9,654 — 9,654 27,299 1,565,519 1,592,818 Assets at FVPL Assets at amortized cost Total December 31, 2019 Cash and cash equivalents — 48,900 48,900 Financial investments 498,584 80,910 579,494 Trade receivables — 329,428 329,428 Financial instruments from acquisition of interests 35,946 — 35,946 Related parties — 16,111 16,111 Other assets — 4,109 4,109 534,530 479,458 1,013,988 Liabilities at Financial liabilities Liabilities at FVPL amortized cost Total December 31, 2020 Trade payables — 40,925 40,925 Financial instruments from acquisition of interests — — — Accounts payable to selling shareholders 861,385 925,130 1,786,515 Leases liabilities — 35,220 35,220 Loans and financing — 311,119 311,119 861,385 1,312,394 2,173,779 December 31, 2019 Trade payables — 34,521 34,521 Financial instruments from acquisition of interests 33,940 — 33,940 Accounts payable to selling shareholders 328,668 887,564 1,216,232 Leases liabilities — 25,857 25,857 Loans and financing — 98,561 98,561 362,608 1,046,503 1,409,111 The Company’s exposure to certain risks associated with the financial instruments is discussed in Note 27. The maximum exposure to credit risk at the end of the reporting period is the carrying amount of each class of financial assets mentioned above. (a) Financial instruments at fair value through profit or loss Financial investments The Company designated part of its financial investments as financial assets at fair value through profit or loss, related to investment fund which investments were entered to achieve 82.9% of the CDI. The Company designated these investments at fair value through profit or loss, given the swaps exist solely for the counterparty to deliver a fixed return on CDI. See Note 6 for more details on the financial investments. Derivative instruments The Company acquired entities under business combinations and through the acquisition of interests in associates and joint ventures. The share purchase agreements contain put and call options and forward contracts that are also measured at fair value through profit or loss. As of December 31, 2020, the Company had derecognized the derivative financial instruments arising from the put and call options as described in Note 16. As of and for the years ended December 31, 2020, 2019 and 2018 none of the Company’s derivatives have been designated as hedges for accounting purposes. (ii) Amounts recognized in profit or loss Changes in fair values of financial instruments at fair value through profit or loss are recorded in finance income (costs) in profit or loss (gain of R$ 562, gain of R$ 473 and gain of R$ 659 for the years ended in December 31, 2020, 2019 and 2018, respectively). (b) Recognized fair value measurements (i) Fair value hierarchy The table below explains the judgements and estimates made in determining the fair values of the financial instruments that are recognized and measured at fair value through profit or loss in the consolidated financial statements. To provide an indication about the reliability of the inputs used in determining fair value, the Company has classified its financial instruments into the three levels. Assets and liabilities are measured and recognized at fair value as follows: Hierarchy 2020 2019 Financial assets Financial investments Level 2 17,645 498,584 Derivative financial instruments Level 3 — 35,946 Investments at fair value Level 1 9,654 — Financial liabilities Derivative financial instruments Level 3 — 33,940 Accounts payable to selling shareholders Level 3 861,385 328,668 As of December 31, 2020, and 2019, the Company assessed the fair values of its financial instruments. This assessment does not indicate fair values significantly different from the carrying amounts. The estimated realizable values of financial assets and liabilities were determined based on available market information and appropriate valuation methodologies. The Company’s policy is to recognize transfers into and transfers out of fair value hierarchy levels as at the end of the reporting period. There were no transfers between levels for recurring fair value measurements during the financial statements’ periods presented herein. (ii) Valuation techniques used to determine fair values Specific valuation techniques used to value financial instruments include: · the use of quoted market prices or dealer quotes for similar instruments; · the fair value of derivatives is calculated with Black & Scholes; and · the fair value of the remaining financial instruments is determined using discounted cash flow analysis. All of the resulting fair value estimates are included in level 2 except for contingent consideration and certain derivative contracts, where the fair values have been determined based on present values and the discount rates used were adjusted for counterparty or own credit risk. If the inputs used to measure the fair value of an asset or a liability fall into different levels of the fair value hierarchy, then the fair value measurement is categorized in its entirety in the same level of the fair value hierarchy as the lowest level input that is significant to the entire measurement. (iii) Fair value measurements using significant unobservable inputs (level 3) The following table presents the changes in level 3 items for the years ended December 31, 2020, 2019 and 2018. Financial instruments Financial instruments from acquisition of from acquisition of Accounts payable to Recurring fair value measurements interests (assets) interests (liabilities) selling shareholders Balance as of December 31, 2017 12,511 (13,637) (36,630) Payment of capital increase in Geekie — 2,000 — Changes in accounts payable to selling shareholders — — (129,430) Interest expense — — (8,350) Deferred revenue in Escola de Aplicação São José dos Campos — 50 — Gains (losses) recognized in statement of income (loss) 14,119 (13,510) — Balance as of December 31, 2018 26,630 (25,097) (174,410) Acquisition of Nave à Vela — — (58,194) Payment of acquisition of Nave à Vela — — 21,098 Changes in accounts payable to selling shareholders — — (89,403) Interest expense — — (35,127) Deferred revenue in Escola de Aplicação São José dos Campos Ltda. — 54 — Fair value held in step acquisitions — — 7,368 Gains (loss) recognized in statement of income 9,316 (8,897) — Balance as of December 31, 2019 35,946 (33,940) (328,668) Acquisitions — — (478,209) Payment — — 9,520 Changes in accounts payable to selling shareholders — — (20,314) Interest expense — — (43,714) Gains (loss) recognized in statement of income (35,946) 33,940 — Balance as of December 31, 2020 — — (861,385) (iv) Transfers between levels 2 and 3 In the years ended December 31, 2020, 2019 and 2018, the Company did not transfer any financial instruments from level 2 into level 3. (v) Valuation processes The finance department of the Company performs and reviews the valuations of items required for financial reporting purposes, including level 3 fair values. Discussions of valuation processes and results conform with the Company’s yearly reporting periods. Also, the Company hires specialists to measure fair value of certain financial assets and liabilities independently. The main level 3 inputs used by the Company are derived and evaluated as follows: · Discount rates for financial assets and financial liabilities are determined using a capital asset pricing model to calculate a pre-tax rate that reflects current market assessments of the time value of money and the risk specific to the asset. · Risk adjustments specific to the counterparties (including assumptions about credit default rates) are derived from observable market data of credit risk grading. · Earnings growth factors for unlisted equity securities are estimated based on market information for similar types of companies. · Contingent consideration – expected cash outflows are estimated based on the terms of the business combinations and the entity’s knowledge of the business as well as how the current economic environment is likely to impact it. |
Risk
Risk | 12 Months Ended |
Dec. 31, 2020 | |
Risk | |
Risk | 27 Risk (a) Financial risk management The Company monitors market, credit and operational risks in line with the objectives in capital management and counts with the support, monitoring and oversight of the Board of Directors in decisions related to capital management and its alignment with the objectives and risks. The Company monitors the effectiveness of the Company’s risk management. The sensitivity analyses in the following sections relate to the position as of December 31, 2020. Capital management The Company’s objectives when managing capital are to: · maximize shareholder value; · safeguard its ability to continue as a going concern, so that it can continue to provide returns for shareholders and benefits for other stakeholders; and · maintain an optimal capital structure to reduce the cost of capital. In order to maintain or alter the capital structure, the Company may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt. No changes were made in the objectives, policies or processes for managing capital during the years ended December 31, 2020, 2019 and 2018. (i) Foreign exchange risk Exposure The Company’s exposure to foreign currency risk as of December 31, 2020 and December 31, 2019, was as follows: 2020 2019 Cash and cash equivalents (Note 5) 28,327 23,346 Financial investments 542 1,629 The Company does not operate outside Brazil and does not have exposure to foreign exchange risk on commercial transactions, i.e., revenues or expenses. Sensitivity analysis The sensitivity analysis as of December 31, 2020 consider three scenarios of U.S. dollar exchange rate variation, as follows: · Base scenario - exchange rate as of December 31, 2020 of R$ 5.1961 per US$ 1.00; · Scenario I - a 20% increase in the U.S. dollar exchange rate to R$ 6.2353; and · Scenario II - a 20% decrease in the U.S. dollar exchange rate to R$ 4.1569. The table below set forth the sensitivity analysis as of December 31, 2020, for the amount of cash and cash equivalents and financial investments denominated in U.S. dollar of US$ 5,556 thousand: Base scenario Scenario I Scenario II Exchange rate: Exchange rate: Exchange rate: R$ 5.1961 R$ 6.2353 R$ 4.1569 Finance income (costs) — R$ 5,773 R$ (5,773) (ii) Liquidity risk Management of the Company has responsibility for mitigating liquidity risk. In order to achieve its goals, management regularly reviews the risk and maintains appropriate reserves, including bank credit facilities with first tier financial institutions. Management also continuously monitors projected and actual cash flows and the combination of the maturity profiles of the financial assets and liabilities. The main requirements for financial resources used by the Company arise from the need to make payments for printing educational content, freight expenses, operating expenses, labor and social obligations and other operating disbursements. The table below summarizes the maturity profile of the Company’s financial liabilities based on contractual undiscounted amounts: Less than 3 3 to 12 1 to 2 2 to 3 3 to 4 4 to 5 December 31, 2020 months months years years years years Total Trade payables 40,925 — — — — — 40,925 Lease liabilities 3,608 9,134 11,497 8,559 2,156 266 35,220 Loans and financing 1,855 105,851 203,413 — — — 311,119 Accounts payable to selling shareholders 152,057 503,957 585,663 273,810 271,028 — 1,786,515 198,445 618,942 800,573 282,369 273,184 266 2,173,779 Less than 3 3 to 12 1 to 2 2 to 3 3 to 4 4 to 5 December 31, 2019 months months years years years years Total Trade payables 34,521 — — — — — 34,521 Lease liabilities 2,037 4,808 9,696 7,225 1,901 190 25,857 Loans and financing — 98,561 — — — — 98,561 Financial instruments from acquisition of interests — — 33,940 — — — 33,940 Accounts payable to selling shareholders — 117,959 374,106 194,548 265,886 263,733 1,216,232 36,558 221,328 417,742 201,773 267,787 263,923 1,409,111 (iii) Financial counterparty risk This risk arises from the possibility that the Company may incur losses due to the default of its counterparties. To mitigate these risks, the Company adopts as practice the analysis of the financial and equity situation of its counterparties. Counterparty credit limits, which take published credit ratings and other factors into account, are set to cover the Company’s total aggregate exposure to a single financial institution. Exposures and limits applicable to each financial institution are approved by our treasury within guidelines approved by the board and are reviewed on a regular basis. (iv) Interest rate risk Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company’s exposure to the risk of changes in market interest rates relates primarily to the Company’s investments with floating interest rates. The Company is mainly exposed to fluctuations in CDI interest rates on financial investments, related parties, accounts payable to selling shareholders and loans and financing. Sensitivity analysis The Company has a significant portion of its financial investments indexed to the CDI variation. According to the reference rates obtained from the website of the Brazilian Stock Exchange – B3 S.A. - Brasil, Bolsa, Balcão (“B3”) and projected for 12 months, as of December 31, 2020 the CDI rate was 3.04%. As of December 31, 2019, the Company’s management estimated two scenarios of the CDI rates at +10% and -10%, which were used as a basis for the possible and remote scenarios, respectively. The table below shows a summary of the scenarios estimated by Management and the effect on profit before income taxes: December 31, 2020 Exposure +10% -10% Cash, bank deposits and cash equivalents 396,083 1,204 (1,204) Financial investments 722,452 2,196 (2,196) Accounts payable to selling shareholders 912,757 2,775 (2,775) Related parties 20,478 62 (62) Loans and financing 311,119 997 (997) The Company had derivatives (calls and put options) on non-controlling interests in associates and joint ventures acquired and described in Note 16. During the year, the fair value of these derivatives was calculated using multiple scenarios and intrinsic methods. The major inputs are: exercise price, exercise date, volatility and gross profit of the associates and joint ventures. The Company performed evaluation of their fair value at the end of each year in order to account for any changes to it, as disclosed in Note 26. These derivatives, which are not publicly traded, have specific conditions that do not enable the Company to present a sensitivity analysis in relation to specific interest rates or market indexes. Also, these derivatives are part of the Company’s strategy to acquire companies directly related to its continuous growth and are considered by the Company as a deferred payment to the previous shareholders of the acquirees. Changes in liabilities arising from financing activities Change in As of December 31, Cash December 31, accounting January Cash December Cash December 2017 flows Other 2018 practice 1, 2019 flows Other 31, 2019 flows Other 31, 2020 Dividends payable 10,511 (85,000) 74,489 — — — — — — — — — Leases — — — — 20,089 20,089 (5,259) 11,027 25,857 (10,610) 19,973 35,220 Loans and financing — — — — — — 97,011 1,550 98,561 183,860 28,698 311,119 Total 10,511 (85,000) 74,489 — 20,089 20,089 91,752 12,577 124,418 173,250 48,671 346,339 Other market risk The Company has a significant portion of its accounts payable whose exercise price is determined by multiples of ACV and revenue discounted to present value for the acquisition of the remaining interest of Geekie and EI as described in Note 17. Sensitivity analysis As of December 31, 2020, the Company’s management estimated two scenarios of the rates at +20% and -20% of ACV book value and revenue and +20% and -20% of Weighted Average Capital Cost (WACC), whose premises are used in the calculation of debt. The table below shows a summary of the scenarios estimated: 20 % -20 % ACV book value - Geekie 24,260 (24,260) ACV book value - EI 51,883 (51,883) 20 % -20 % WACC - Geekie 3,836 (3,836) WACC - EI 15,262 (15,262) |
Commitments and contingencies
Commitments and contingencies | 12 Months Ended |
Dec. 31, 2020 | |
Commitments and contingencies | |
Commitments and contingencies | 28 Commitments and contingencies (i) Legal proceedings The Company is party to labor and tax litigation in progress, which arise during the ordinary course of business. The provisions for probable losses arising from these matters are estimated and periodically adjusted by Management, supported by the opinion of its external legal advisors. Civil Labor Taxes Total Balance at December 31, 2018 — 17 114 131 Additions — 209 145 354 Reversals — (104) (130) (234) Balance at December 31, 2019 — 122 129 251 Additions 564 108 137 809 Business combination — — 599 599 Reversals (99) (178) (16) (293) Balance at December 31, 2020 465 52 849 1,366 As of December 31, 2020, the Company was party to lawsuits classified as possible losses totaling R$ 7,863 (2019: R$ 7,209), as shown below: 2020 2019 Civil (a) 6,367 6,113 Labor (b) 1,496 1,096 Total 7,863 7,209 (a) The civil proceedings relate mainly to customer claims, including those related to the early termination of certain agreements, among others. (b) The labor proceedings to which the Company is a party were filed by former employees or suppliers and third-party service providers’ employees seeking joint liability for the acts of the Company’s suppliers and service providers. On September 19, 2019, Mr. Ulisses Borges Cardinot, the non-controlling shareholder in our subsidiary, International School, filed a request for arbitration with the Center for Arbitration and Mediation of the Chamber of Commerce Brazil-Canada in Brazil against Arco Platform Limited, PSD Educação S.A. and Arco Educação S.A. This request for arbitration purporting to assert the non-controlling shareholder’s rights related to both the form of payment (shares) and the calculation of the purchase price under the Investment Agreement is still at an early stage. As the arbitration proceeding progresses the estimated amount payable by PSD to the non-controlling shareholder may be lower than the provision recorded, due to the disposition of the Investment Agreement that sets forth that the payment schedule of the purchase price shall be anticipated in case of an initial public offering. Conversely, the estimated amount payable by PSD to the non-controlling shareholder may be higher than the provision recorded in light of the claims asserted, and to be asserted, by the non-controlling shareholder. In light of the arbitration proceeding and based on standard IAS 37 Provisions, contingent liabilities and contingent assets, the Company understands that the circumstances, risks and uncertainties of the arbitration must be taken into consideration in order to reach the best estimate of the liability. Contingencies should be reevaluated at each balance sheet date and adjusted to reflect the best current estimate. Therefore, in light of the current early stage of the proceeding and the range of potential outcomes, the calculation methodology of the estimate has remained unchanged, consistent with the estimate previously calculated and reported. Based on this analysis, the Company has recorded the provision at the present value of the amount considered the appropriate estimate of the amount of the purchase price under the Investment Agreement payable to the non-controlling shareholder and discounted to present value. The provision is calculated based on the realized EBITDA for the school years of 2019 (first installment) and 2020 (second installment), both, net of debts, as determined in the agreement. The school year is defined as the twelve-month period starting in October of the previous year to September of the mentioned current year. The first and second installments will be paid in the course of the arbitration. Based on realized EBITDA for the school year 2020, the liability increased by R$ 32,121 in 2020 and was recorded as financial expense as described in Note 17.a). During the year ended December 31, 2020, the Company recognized R$ 34,627 of interest related to the liability. |
Transactions not involving cash
Transactions not involving cash | 12 Months Ended |
Dec. 31, 2020 | |
Transactions not involving cash | |
Transactions not involving cash | 29 Transactions not involving cash During the years ended December 31, 2020, 2019 and 2018, the Company carried out the following non-cash activities, which are not reflected in the statement of cash flows: 2020 2019 2018 Share issuance costs – unpaid — — 674 Tax benefit from tax deductible goodwill — (46,314) 46,314 Investing - derivative financial instruments — 14,597 — Business combinations - derivative financial instruments — 38,924 — Lease (Note 13) 14,471 1,251 — Forward contract (Note 4) 469,587 29,728 — Retained payments from business combination (Note 4) 14,821 874,440 — Capital contribution (Note 4) 4,000 — — Price adjustment from business combination (Note 4) 4,620 — — Acquisition from business combination (Note 4) 22,857 39,419 — |
Subsequent events
Subsequent events | 12 Months Ended |
Dec. 31, 2020 | |
Subsequent events | |
Subsequent events | 30 Subsequent events Buyback agreement On January 6, 2021, our Board of Directors approved a share repurchase program, or the Repurchase Program, to comply with management long-term incentive plan obligations. Pursuant to the Repurchase Program, we may repurchase up to 500,000 of our outstanding Class A common shares in the open market, based on prevailing market prices, or in privately negotiated transactions, over a period beginning on January 6, 2021 continuing until the earlier of the completion of the repurchase or January 6, 2023, depending upon market conditions. As of the date of this annual report, we had purchased an aggregate of 276,581 Class A common shares for a total of approximately US$ 9.8 million under the Repurchase Program. Acquisition of additional shares of Geekie On January 20, 2021, Arco acquired an additional 1.36% interest in Geekie’s share capital through a capital increase of R$4,000, increasing its total interest to 57.42%. Investment in INCO Limited (“INCO”) On January 25, 2021, we entered into a Shares Purchase Agreement with INCO Limited, or INCO, the controlling entity of OISA, a company that provides financial and administrative services to private schools, according to which we acquired 8,571,427 series B ordinary shares, equivalent to 30% of the total stock capital of INCO, for a total amount of R$25,000. Accordingly, based on the signed agreement, the Company does not have control of INCO and it has significative influence over the entity since it has one of the four members of Board of Directors. Acquisition of Nave Pursuant to the investment and share purchase agreement for the acquisition of Nave, on February 25, 2021 Arco paid the second tranche and anticipated the third one, corresponding to 49.0% of the outstanding share capital of Nave for the amount of R$22,646. At that date, the Company has 100.0% of Nave’s shares. Acquisition of COC and Dom Bosco learning systems On March 6, 2021, the Company announced that it has entered into a definitive agreement (the “Purchase Agreement”) with Pearson Education do Brasil Ltda. (“Pearson”) to acquire COC and Dom Bosco, two important K-12 learning systems in Brazil, for R$920 million in cash. COC and Dom Bosco have over 50 years of academic track record in Brazil, serving over 800 partner schools and around 210 thousand students in all regions of the country, from pre-K to high school and pre-university. The brands have a strong presence in the Southeast region of Brazil, especially in the state of São Paulo. Arco expects to accelerate the growth of COC and Dom Bosco by updating their content and technology, improving distribution and customer service capabilities, as well as to cross-sell supplemental solutions within the COC and Dom Bosco partner school base. Pursuant to the Purchase Agreement, Arco will acquire 100% of COC and Dom Bosco learning systems for R$920 million in cash, equivalent to 14.4x 2020 EBITDA, with (i) 80% of the purchase price payable at the time of closing, and (ii) the remaining 20% of the purchase price payable on the first anniversary of the closing date, as adjusted. The transaction also includes an agreement with Pearson to distribute some supplemental educational solutions for K-12 schools in Brazil. This transaction is not subject to any shareholder approvals, but is subject to customary closing conditions, including Brazilian antitrust approvals. Acquisition of Me Salva! On March 12, 2021, the Company announced that it has acquired Me Salva!, an online educational solution that prepares students to be admitted to the best universities in Brazil. Me Salva! was founded in 2011 with the mission of helping students to improve their ENEM scores and to be admitted to the best universities in the country. The online solution offers recorded and live video classes, comprehensive exercises, essay writing tools, assessment tests, 1-on-1 tutoring and personalized study plans. Over 900 thousand students have used Me Salva! in 2020, and the company has grown its revenues by 36% per year between 2016 and 2020. This transaction expands Arco’s supplemental solutions portfolio to test prep and tutoring, a vertical with an estimated addressable market of R$5 billion and favorable growth prospects. The deal rationale relies on accelerating Me Salva!’s growth by leveraging Arco’s resources, and strengthening Arco’s B2B2C winning factors with new digital capabilities. *** |
Significant accounting polici_2
Significant accounting policies (Policies) | 12 Months Ended |
Dec. 31, 2020 | |
Significant accounting policies | |
Basis for preparation of the consolidated financial statements | 2.1 Basis for preparation of the consolidated financial statements The Company’s consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB). The consolidated financial statements have been prepared on a historical cost basis, except for certain financial assets, derivative financial instruments and contingent consideration from business combinations that have been measured at fair value. Arco is a holding company and considers the currency of the local environment of the operational companies in Brazil as its functional currency, as this is the environment which drives the dividend income it receives, which is its primary source of revenue. Therefore, the functional currency of the Company is the Brazilian real and the consolidated financial statements are presented in Brazilian reais (“BRL” or “R$”). All amounts are rounded to the nearest thousands, except when otherwise indicated. The consolidated financial statements provide comparative information in respect of the previous period. |
Basis of consolidation and investments | 2.2 Basis of consolidation and investments The consolidated financial statements comprise the financial statements of the Company, its subsidiaries and investments as of December 31, 2020 and 2019 and for the years ended December 31, 2020, 2019 and 2018. The table below is a list of the Company’s subsidiaries and investments: Principal Investment Direct and indirect interest Name activities Country type 2020 2019 2018 Arco Educação S.A. Holding Brazil Subsidiary 100.0 % 100.0 % 100.0 % PSD Educação S.A. Educational content Brazil Subsidiary 100.0 % 100.0 % 100.0 % Barra Américas Editora Ltda. Educational content Brazil Subsidiary 100.0 % 100.0 % 100.0 % Distribuidora de Material Didático Desterro Ltda. Educational content Brazil Subsidiary 100.0 % 100.0 % 100.0 % Novagaúcha Editora e Livraria Ltda. Educational content Brazil Subsidiary — — 100.0 % SAS Sistema de Ensino Ltda. Educational content Brazil Subsidiary 100.0 % 100.0 % 100.0 % Arco Ventures S.A. Educational content Brazil Subsidiary 100.0 % 100.0 % 100.0 % SAS Livrarias Ltda. Educational content Brazil Subsidiary 100.0 % 100.0 % 100.0 % SAE Digital S.A. Educational content Brazil Subsidiary 100.0 % 100.0 % 100.0 % Escola de Aplicação São José dos Campos Ltda. Educational services Brazil Subsidiary — — 69.6 % International School Serviços de Ensino, Treinamento e Editoração, Franqueadora S.A. Educational content Brazil Subsidiary 51.5 % 51.5 % 51.5 % NS Ventures Participações Ltda. Educational content Brazil Subsidiary — — 100.0 % NS Educação Ltda. Educational content Brazil Subsidiary — — 100.0 % Nave à Vela Ltda. Educational content Brazil Subsidiary 51.0 % 51.0 % — EEM Licenciamento de Programas Educacionais Ltda. Educational technology Brazil Subsidiary 100.0 % 100.0 % — NLP Soluções Educacionais Ltda. Educational content Brazil Subsidiary 100.0 % 100.0 % — WPensar S.A. Educational technology Brazil Subsidiary 100.0 % 25.0 % 25.0 % Geekie Desenvolvimento de Softwares S.A. Educational technology Brazil Subsidiary 56.0 % 37.5 % 8.05 % Studos Software Ltda. Educational content Brazil Subsidiary 100.0 % — — Escola da Inteligência Cursos Educacionais Ltda. Educational content Brazil Subsidiary 60.0 % — — Bewater Ventures I GA Fundo de Investimento em Participações Multiestratégia Private equity Brazil Investee 14.48 % — — Control is achieved when the Company is exposed to, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. Consolidation of a subsidiary begins when the Company obtains control over the subsidiary and ceases when the Company loses control of the subsidiary. Assets, liabilities, income and expenses of a subsidiary acquired or disposed of during the year are included in the consolidated financial statements from the date the Company gains control until the date the Company ceases control of the subsidiary. Where necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies in line with the Company’s accounting policies. All intra-group assets and liabilities, equity, income, expenses and cash flows relating to transactions, and any unrealized income and expenses arising from intra-group transactions, are eliminated in full on consolidation. A change in the ownership interest of a subsidiary, without a loss of control, is accounted for as an equity transaction. If the Company loses control over a subsidiary, it derecognizes the related assets (including goodwill), liabilities, non-controlling interest and other components of equity, and any resulting gain or loss is recognized in profit or loss. Non-controlling interests in the results and equity of subsidiaries are shown separately in the consolidated statements of income (loss) and comprehensive income (loss), changes in equity and financial position, respectively. |
Business combinations and goodwill | a) Business combinations and goodwill Business combinations are accounted for using the acquisition method. The cost of an acquisition is measured as the aggregate of the consideration transferred, which is measured at acquisition date fair value, and the amount of any non-controlling interests in the acquiree. For each business combination, the Company elects whether to measure the non-controlling interests in the acquiree at fair value or at the proportionate share of the acquiree’s identifiable net assets. Acquisition-related costs are expensed as incurred and included in general and administrative expenses. The Company determines that it has acquired a business when the acquired set of activities and assets include an input and a substantive process that together significantly contribute to the ability to create outputs. The acquired process is considered substantive if it is critical to the ability to continue producing outputs, and the inputs acquired include an organized workforce with the necessary skills, knowledge, or experience to perform that process or it significantly contributes to the ability to continue producing outputs and is considered unique or scarce or cannot be replaced without significant cost, effort, or delay in the ability to continue producing outputs. When the Company acquires a business, it assesses the financial assets and liabilities assumed for appropriate classification and designation in accordance with the contractual terms, economic circumstances, and pertinent conditions as of the acquisition date. Any contingent consideration to be transferred by the acquirer is recognized at fair value at the acquisition date. Contingent consideration classified as an asset or liability that is a financial instrument and within the scope of IFRS 9 Financial Instruments, is measured at fair value with the changes in fair value recognized in the statement of income (loss) in accordance with IFRS 9. Other contingent consideration that is not within the scope of IFRS 9 is measured at fair value at each reporting date with changes in fair value recognized in profit or loss. Goodwill is initially measured at cost (being the excess of the aggregate of the consideration transferred and the amount recognized for non-controlling interests and any previous interest held over the net identifiable assets acquired and liabilities assumed). If the fair value of the net assets acquired is in excess of the aggregate consideration transferred, the Company re-assesses whether it has correctly identified all of the assets acquired and all of the liabilities assumed and reviews the procedures used to measure the amounts to be recognized at the acquisition date. If the reassessment still results in an excess of the fair value of net assets acquired over the aggregate consideration transferred, then the gain is recognized in profit or loss. After initial recognition, goodwill is measured at cost less any accumulated impairment losses. For the purpose of impairment testing, goodwill acquired in a business combination is, from the acquisition date, allocated to each segment that is expected to benefit from the combination. Where goodwill has been allocated to a segment and part of the operation within that segment is disposed of, the goodwill associated with the disposed operation is included in the carrying amount of the operation when determining the gain or loss on disposal. Goodwill disposed in these circumstances is measured based on the relative values of the disposed operation and the portion of the segment unit retained. The current Brazilian tax law allows the deductibility of the acquisition date goodwill and fair value of net assets acquired when a corporate reorganization occurs after acquisition by the Company (i.e. when the Company merges or spins off the businesses acquired). Until such action occurs, the tax and accounting bases of the net assets acquired are the same as of the acquisition date and no deferred tax effects are recognized. Certain acquired subsidiaries utilize the presumed profit regime as described in Note 24.a) to calculate income taxes. Under this regime, there is no difference between the carrying amount and related tax basis of assets and liabilities and therefore no deferred income taxes were recorded in these financial statements at acquisition date or any subsequent periods. |
Investment in associates and joint venture | b) Investment in associates and joint venture An associate is an entity over which the Company has significant influence. Significant influence is the power to participate in the financial and operating policy decisions of the investee but is not control or joint control over those policies. A joint venture is a type of joint arrangement whereby the parties that have joint control of the arrangement have rights to the net assets of the joint venture. Joint control is the contractually agreed sharing of control of an arrangement, which exists only when decisions about the relevant activities require the unanimous consent of the parties sharing control. The considerations made in determining significant influence or joint control are similar to those necessary to determine control over subsidiaries. The Company’s investments in its associate and joint venture are accounted for using the equity method. Under the equity method, the investment in an associate or a joint venture is initially recognized at cost. The carrying amount of the investment is adjusted to recognize changes in the Company’s share of net assets of the associate or joint venture since the acquisition date. Goodwill relating to the associate or joint ventures is included in the carrying amount of the investment and is not tested for impairment separately. The statement of income (loss) reflects the Company’s share of the results of operations of the associate or joint venture. In addition, when there has been a change recognized directly in the equity of the associate or joint venture, the Company recognizes its share of any changes, when applicable, in the statement of changes in equity. Unrealized gains and losses resulting from transactions between the Company and the associate or joint venture are eliminated to the extent of the interest in the associate or joint venture. The aggregate of the Company’s share of profit or loss of an associate and a joint venture is shown on the face of the statement of income (loss) outside operating profit and represents profit or loss after tax of the associate or joint venture. The financial statements of the associate or joint venture are prepared for the same reporting period as the Company. When necessary, adjustments are made to bring the accounting policies in line with those of the Company. After application of the equity method, the Company determines whether it is necessary to recognize an impairment loss on its investment in its associate or joint venture. At each reporting date, the Company determines whether there is objective evidence that the investment in the associate or joint venture is impaired. If there is such evidence, the Company calculates the amount of impairment as the difference between the recoverable amount of the associate or joint venture and its carrying value, and then recognizes the loss within share of profit (loss) of equity-accounted investees in the statement of income (loss). |
Current versus non-current classification | c) Current versus non-current classification The Company presents assets and liabilities in the statement of financial position based on current/non-current classification. An asset is current when it is: · Expected to be realized or intended to be sold or consumed in the normal operating cycle; · Held primarily for the purpose of trading; · Expected to be realized within twelve months after the reporting period; or · Cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period. All other assets are classified as non-current. A liability is current when: · It is expected to be settled in the normal operating cycle; · It is held primarily for the purpose of trading; · It is due to be settled within twelve months after the reporting period; or · There is no unconditional right to defer the settlement of the liability for at least twelve months after the reporting period. The terms of the liability that could, at the option of the counterparty, result in its settlement by the issue of equity instruments do not affect its classification. The Company classifies all other liabilities as non-current. Deferred tax assets and liabilities are classified as non-current assets and liabilities. |
Fair value measurement | d) Fair value measurement The Company measures certain financial instruments such as, financial assets, financial investments, derivatives and financial liabilities at fair value at each balance sheet date. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either: · in the principal market for the asset or liability; or · in the absence of a principal market, in the most advantageous market for the asset or liability. The principal or the most advantageous market must be accessible by the Company. The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their economic best interest. The Company uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximizing the use of relevant observable inputs and minimizing the use of unobservable inputs. All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorized within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole: · Level 1 — Quoted (unadjusted) market prices in active markets for identical assets or liabilities. · Level 2 — Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable. · Level 3 — Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable. For assets and liabilities that are recognized in the financial statements at fair value on a recurring basis, the Company determines whether transfers have occurred between levels in the hierarchy by re-assessing categorization (based on the lowest level input that is significant to the fair value measurement as a whole) at the end of each reporting period. At each reporting date, the Company analyzes the movements in the values of assets and liabilities which are required to be remeasured or re-assessed as per the Company’s accounting policies. For this analysis, the Company verifies the major inputs applied in the latest valuation by agreeing the information in the valuation computation to contracts and other relevant documents. The Company also compares the change in the fair value of each asset and liability with relevant external sources to determine whether the change is reasonable. For the purpose of fair value disclosures, the Company has determined classes of assets and liabilities based on the nature, characteristics and risks of the asset or liability and the level of the fair value hierarchy, as explained above. See Note 26 for further information. |
Financial instruments - initial recognition and measurement | e) Financial instruments – initial recognition and measurement A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity. f) Financial assets Initial recognition and measurement Financial assets are classified, at initial recognition, as subsequently measured at amortized cost, fair value through other comprehensive income (OCI), and fair value through profit or loss. The classification of financial assets at initial recognition depends on the financial asset’s contractual cash flow characteristics and the Company’s business model for managing them. Except for trade receivables that do not contain a significant financing component or for which the Company has applied the practical expedient, the Company initially measures a financial asset at its fair value plus, in the case of a financial asset not at fair value through profit or loss, transaction costs. Trade receivables that do not contain a significant financing component or for which the Company has applied the practical expedient are measured at the transaction price under IFRS 15. For a financial asset to be classified and measured at amortized cost or fair value through other comprehensive income (OCI), it should give rise to cash flows that are ‘solely payments of principal and interest (SPPI)’ on the principal amount outstanding. This assessment is referred to as the SPPI test and is performed at an instrument level. Financial assets with cash flows that are not SPPI are classified and measured at fair value through profit or loss, irrespective of the business model. The Company’s business model for managing financial assets refers to how it manages its financial assets to generate cash flows. The business model determines whether cash flows will result from collecting contractual cash flows, selling the financial assets, or both. Financial assets classified and measured at amortized cost are held within a business model with the objective to hold financial assets in order to collect contractual cash flows while financial assets classified and measured at fair value through OCI are held within a business model with the objective of both holding to collect contractual cash flows and selling. Subsequent measurement For purposes of subsequent measurement, financial assets are classified as: amortized cost or fair value through profit or loss. There are no financial assets designated as fair value through OCI. Financial assets at amortized cost Financial assets at amortized cost are subsequently measured using the effective interest (EIR) method and are subject to impairment. Gains and losses are recognized in profit or loss when the asset is derecognized, modified or impaired. The Company’s financial assets at amortized cost include trade receivables and certain financial investments. Financial assets at fair value through profit or loss Financial assets at fair value through profit or loss are carried in the statement of financial position at fair value with net changes in fair value recognized in the statement of profit or loss. This category includes derivative instruments. A derivative embedded in a hybrid contract, with a financial liability or non-financial host, is separated from the host and accounted for as a separate derivative if: the economic characteristics and risks are not closely related to the host; a separate instrument with the same terms as the embedded derivative would meet the definition of a derivative; and the hybrid contract is not measured at fair value through profit or loss. Embedded derivatives are measured at fair value with changes in fair value recognized in profit or loss. Reassessment only occurs if there is either a change in the terms of the contract that significantly modifies the cash flows that would otherwise be required or a reclassification of a financial asset out of the fair value through profit or loss category. Derecognition A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is primarily derecognized (i.e., removed from the Company’s consolidated statement of financial position) when: · The rights to receive cash flows from the asset have expired; or · The Company has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the received cash flows in full without material delay to a third party under a ‘pass-through’ arrangement‑and either (a) the Company has transferred substantially all the risks and rewards of the asset, or (b) the Company has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset. When the Company has transferred its rights to receive cash flows from an asset or has entered into a pass-through arrangement, it evaluates if, and to what extent, it has retained the risks and rewards of ownership. When it has neither transferred nor retained substantially all the risks and rewards of the asset, nor transferred control of the asset, the Company continues to recognize the transferred asset to the extent of its continuing involvement. In that case, the Company also recognizes an associated liability. The transferred asset and the associated liability are measured on a basis that reflects the rights and obligations that the Company has retained. Continuing involvement that takes the form of a guarantee over the transferred asset is measured at the lower of the original carrying amount of the asset and the maximum amount of consideration that the Company could be required to repay. Impairment Further disclosures relating to impairment of financial assets are also provided in the following notes: · Disclosures for significant assumptions - Note 3 · Trade receivables, including contract assets - Note 7 The Company recognizes an allowance for expected credit losses (ECLs) for all debt instruments not held at fair value through profit or loss. ECLs are based on the difference between the contractual cash flows due in accordance with the contract and all the cash flows that the Company expects to receive, discounted at an approximation of the original effective interest rate. The expected cash flows will include cash flows from the sale of collateral held or other credit enhancements that are integral to the contractual terms. For trade receivables, the Company applies a simplified approach in calculating ECLs. Therefore, the Company does not track changes in credit risk, but instead recognizes a loss allowance based on lifetime ECLs at each reporting date. The Company has established a provision matrix that is based on its historical credit loss experience, adjusted for forward-looking factors specific to the debtors and the economic environment. The Company considers a financial asset in default when contractual payments are 360 days past due. Management considers this period of maturity to be adequate considering the Company's business model and the historical customer's payment since the contracts are signed annually and during this period the Company can negotiate the payment of the security reducing the credit risk. However, in certain cases, the Company may also consider a financial asset to be in default when internal or external information indicates that the Company is unlikely to receive the outstanding contractual amounts in full before taking into account any credit enhancements held by the Company. A financial asset is written off when there is no reasonable expectation of recovering the contractual cash flows. g) Financial liabilities Initial recognition and measurement Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through profit or loss, loans and borrowings, or payables, as appropriate. All financial liabilities are recognized initially at fair value and, in the case of loans and borrowings and payables, net of directly attributable transaction costs. The Company’s financial liabilities include trade payables, loans and borrowings, financial instruments from acquisition of interests and accounts payable to selling shareholders. Subsequent measurement For purposes of subsequent measurement, financial liabilities are classified in two categories: · Financial liabilities at fair value through profit or loss · Financial liabilities at amortized cost (loans and borrowings) Financial liabilities at fair value through profit or loss Financial liabilities at fair value through profit or loss include financial liabilities held for trading and financial liabilities designated upon initial recognition as at fair value through profit or loss. Financial liabilities are classified as held for trading if they are incurred for the purpose of repurchasing in the near term. This category also includes derivative financial instruments entered by the Company that are not designated as hedging instruments in hedge relationships as defined by IFRS 9. Separated embedded derivatives are also classified as held for trading unless they are designated as effective hedging instruments. Gains or losses on liabilities held for trading are recognized in the statement of income (loss). Financial liabilities designated upon initial recognition at fair value through profit or loss are designated at the initial date of recognition, and only if the criteria in IFRS 9 are satisfied. Financial liabilities at amortized cost (loans and borrowings) After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortized cost using the effective interest rate (EIR) method. Gains and losses are recognized in profit or loss when the liabilities are derecognized as well as through the EIR amortization process. Amortized cost is calculated by considering any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortization is included as finance costs in the statement of income (loss). Derecognition A financial liability is derecognized when the obligation under the liability is discharged or cancelled or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as the derecognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognized in the statement of income (loss). h) Offsetting of financial instruments Financial assets and financial liabilities are offset and the net amount is reported in the consolidated statement of financial position if there is a currently enforceable legal right to offset the recognized amounts and there is an intention to settle on a net basis, to realize the assets and settle the liabilities simultaneously. |
Derivative financial instruments | i) Derivative financial instruments Initial recognition and subsequent measurement The Company has derivative financial instruments from call and put options from acquisitions of subsidiaries, associates and joint venture arrangements. Such derivative financial instruments are initially recognized at fair value on the date on which a derivative contract is entered into and are subsequently remeasured at fair value. Derivatives are carried as financial assets when the fair value is positive and as financial liabilities when the fair value is negative. Any gains or losses arising from changes in the fair value of derivatives are recorded directly to finance result. |
Cash and cash equivalents | j) Cash and cash equivalents Cash and cash equivalents in the statement of financial position comprise cash at banks and on hand and short-term highly liquid financial investments with an original maturity of three months or less, that are readily convertible to a known amount of cash and subject to an insignificant risk of changes in value. For the purpose of the consolidated statement of cash flows, cash and cash equivalents consist of cash and short-term financial investments, as they are considered an integral part of the Company’s cash management. |
Inventories | k) Inventories Inventories are measured at the lower of cost and net realizable value. The costs of inventories are based on the average cost method and include costs incurred on the purchase of inventories, editorial production costs and other costs incurred in bringing them to their current location and condition. Costs of purchased inventory are determined after deducting any discounts and recoverable taxes. Educational content in progress is considered as inventories in progress and comprises the costs incurred to produce educational content. This amount is measured based on the allocation of hours incurred by editorial production employees in the preparation of educational content. The inventory reserve for educational material is calculated based on their expected net realizable value. Inventory reserve corresponds to a reserve for inventory obsolescence and is recorded in cost of sales. It is estimated based on the amount of educational materials from prior collections which are no longer used for sale and educational materials which the Company expects will not be sold based on the actual sales. In determining the inventory reserve, the Company considers management’s current assessment of the marketplace, industry trends and projected product demand as compared to the number of units currently in stock. |
Property and equipment | l) Property and equipment Property and equipment is stated at cost, net of accumulated depreciation and accumulated impairment losses, if any. Subsequent expenditure is capitalized only if it is probable that the future economic benefits associated with the expenditure will flow to the Company. Depreciation is calculated on a straight-line basis over the estimated useful lives of the assets, as follows: Machinery and equipment 10 % Vehicles 20 % Furniture and fixtures 10 % IT equipment 20 % Facilities 10 % Leasehold improvements 20% to 33 % An item of property and equipment and any significant part initially recognized is derecognized upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the statement of income (loss) when the asset is derecognized. The residual values, useful lives and methods of depreciation of property and equipment are reviewed at each financial year end and adjusted prospectively, if appropriate. |
Leases | m) Leases The Company assesses at contract inception whether a contract is, or contains, a lease. That is, if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. Company as a lessee The Company applies a single recognition and measurement approach for all leases, except for short-term leases and leases of low-value assets. The Company recognizes lease liabilities to make lease payments and right-of-use assets representing the right to use the underlying assets. Right-of-use assets The Company recognizes right-of-use assets at the commencement date of the lease (i.e., the date the underlying asset is available for use). Right-of-use assets are measured at cost, less any accumulated depreciation and impairment losses, and adjusted for any remeasurement of lease liabilities. The cost of right-of-use assets includes the amount of lease liabilities recognized, initial direct costs incurred, and lease payments made at or before the commencement date less any lease incentives received. Unless the Company is reasonably certain to obtain ownership of the leased asset at the end of the lease term, the recognized right-of-use assets are depreciated on a straight-line basis over the shorter of its estimated useful life and the lease term, as follows: Buildings 1 to 10 years Equipment 4 years If ownership of the leased asset transfers to the Company at the end of the lease term or the cost reflects the exercise of a purchase option, depreciation is calculated using the estimated useful life of the asset. Right-of use assets are subject to impairment. Lease liabilities At the commencement date of the lease, the Company recognizes lease liabilities measured at the present value of lease payments to be made over the lease term. The lease payments include fixed payments (including in-substance fixed payments) less any lease incentives receivable, variable lease payments that depend on an index or a rate, and amounts expected to be paid under residual value guarantees. The lease payments also include the exercise price of a purchase option reasonably certain to be exercised by the Company and payments of penalties for terminating a lease, if the lease term reflects the Company exercising the option to terminate. The variable lease payments that do not depend on an index or a rate are recognized as expense in the period on which the event or condition that triggers the payment occurs. In calculating the present value of lease payments, the Company uses the incremental borrowing rate at the lease commencement date if the interest rate implicit in the lease is not readily determinable. After the commencement date, the amount of lease liabilities is increased to reflect the accretion of interest and reduced for the lease payments made. In addition, the carrying amount of lease liabilities is remeasured if there is a modification, a change in the lease term, a change in the in-substance fixed lease payments or a change in the assessment to purchase the underlying asset. Short-term leases and leases of low-value assets The Company applies the short-term lease recognition exemption to its short-term leases of properties (i.e., those leases that have a lease term of 12 months or less from the commencement date and do not contain a purchase option). It also applies the lease of low-value assets recognition exemption to leases of office equipment that are considered of low value. Lease payments on short-term leases and leases of low-value assets are recognized as expense on a straight-line basis over the lease term. |
Intangible assets | n) Intangible assets Intangible assets acquired separately are measured on initial recognition at cost. The cost of intangible assets acquired in a business combination is their fair value at the date of acquisition. Following initial recognition, intangible assets are carried at cost less any accumulated amortization and accumulated impairment losses. The Company capitalizes the costs directly related with the development of the educational platforms used to deliver content. These costs are substantially comprised of technology related services and payroll expenses, recorded as internally developed software in the educational platform accounting ledger. Development expenditure is capitalized only if the expenditure can be measured reliably, the product or process is technically and commercially feasible, future economic benefits are probable, and the Company intends to and has sufficient resources to complete development and to use or sell the asset. Otherwise, it is recognized in the statement of income (loss) as incurred. Subsequent to initial recognition, development expenditure is measured at cost less accumulated amortization and any accumulated impairment losses. Costs associated with maintaining internally developed software are recognized as an expense as incurred. The useful lives of intangible assets are assessed as finite. Intangible assets with finite lives are amortized over the useful economic life and assessed for impairment whenever there is an indication that the intangible asset may be impaired. The amortization period and the amortization method for an intangible asset with a finite useful life are reviewed at least at the end of each reporting period. Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in the asset are considered to modify the amortization period or method, as appropriate, and are treated as changes in accounting estimates. The amortization expense on intangible assets with finite lives is recognized in the statement of income (loss) in the expense category that is consistent with the function of the intangible assets. An intangible asset is derecognized upon disposal (i.e., at the date the recipient obtains control) or when no future economic benefits are expected from its use or disposal. Any gain or loss arising upon derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the statement of income (loss). |
Impairment of non-financial asset | o) Impairment of non-financial asset Further disclosures relating to impairment of non-financial assets are also provided in the following notes: · Disclosures for significant assumptions – Note 3 · Property and equipment – Note 12 · Intangible assets – Note 14 · Goodwill and intangible assets with indefinite lives – Note 14 The Company assesses at each reporting date, whether there is an indication that an asset may be impaired. If any indication exists, or when annual impairment testing for an asset is required, the Company estimates the asset’s recoverable amount. An asset’s recoverable amount is the higher of an asset’s or CGU’s fair value less costs of disposal and its value in use. The recoverable amount is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets. When the carrying amount of an asset or CGU exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. In determining fair value less costs of disposal, recent market transactions are taken into account. If no such transactions can be identified, an appropriate valuation model is used. These calculations are corroborated by valuation multiples, quoted share prices for publicly traded companies or other available fair value indicators. The Company bases its impairment calculation on detailed budgets and forecast calculations, which are prepared separately for each of the Company’s CGUs to which the individual assets are allocated. These budgets and forecast calculations generally cover a period of five years. A long-term growth rate is calculated and applied to project future cash flows after the fifth year. Impairment losses of continuing operations are recognized in the statement of income (loss) in expense categories consistent with the function of the impaired asset. For assets excluding goodwill, an assessment is made at each reporting date to determine whether there is an indication that previously recognized impairment losses no longer exist or have decreased. If such indication exists, the Company estimates the asset’s or CGU’s recoverable amount. A previously recognized impairment loss is reversed only if there has been a change in the assumptions used to determine the asset’s recoverable amount since the last impairment loss was recognized. The reversal is limited so that the carrying amount of the asset does not exceed its recoverable amount, nor exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognized for the asset in prior years. Such reversal is recognized in the statement of income (loss). Goodwill is tested for impairment annually as at December 31 and when circumstances indicate that the carrying value may be impaired. An operating segment is the lowest level within the Company at which the goodwill is monitored for internal management purposes and therefore impairment tests of goodwill have been carried out at each operating segment level. Impairment is determined for goodwill by assessing the recoverable amount of each operating segment to which the goodwill relates. When the recoverable amount is less than its carrying amount, an impairment loss is recognized. Impairment losses relating to goodwill cannot be reversed in future periods. |
Provisions | p) Provisions Provisions are recognized when the Company has a present obligation (legal or constructive) as a result of past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. The expense relating to a provision is presented in the statement of income (loss) net of any reimbursement, when applicable. |
Cash dividend | q) Cash dividend The Company recognizes a liability to pay a dividend when the distribution is authorized, and the distribution is no longer at the discretion of the Company. The distribution is authorized when it is required to pay a dividend of the profit for the year in accordance with the Company’s Articles of Association or is approved by the shareholders. A corresponding amount is recognized directly in equity. |
Labor and social obligations | r) Labor and social obligations Labor and social obligations are expensed as the related service is provided. A liability is recognized for the amount expected to be paid if the Company has a present legal or constructive obligation to pay this amount as a result of past service provided by the employee and the obligation can be estimated reliably. |
Share-based payments | s) Share-based payments Certain key executives of the Company receive remuneration in the form of share-based compensation, whereby the executives render services as consideration for equity instruments (equity-settled transactions). Equity-settled transactions The expenses of equity-settled transactions are determined by the fair value at the date when the grant is made using an appropriate valuation model. That expense is recognized in general and administrative expenses, together with a corresponding increase in equity (share-based compensation reserve), over the period in which the service and, where applicable, the performance conditions are fulfilled (the vesting period). The cumulative expense recognized for equity-settled transactions at each reporting date until the vesting date reflects the extent to which the vesting period has expired and the best estimate of the number of equity instruments that will ultimately vest. The expense or credit in the statement of income (loss) for a period represents the movement in cumulative expense recognized as at the beginning and end of that period. Service and non-market performance conditions are not taken into account when determining the grant date fair value of awards, but the likelihood of the conditions being met is assessed as part of the Company’s best estimate of the number of equity instruments that will ultimately vest. Market performance conditions are reflected within the grant date fair value. Any other conditions attached to an award, but without an associated service requirement, are considered to be non-vesting conditions. Non-vesting conditions are reflected in the fair value of an award and lead to an immediate expensing of an award unless there are also service and/or performance conditions. No expense is recognized for awards that do not ultimately vest because non-market performance and/or service conditions have not been met. Where awards include a market or non-vesting condition, the transactions are treated as vested irrespective of whether the market or non-vesting condition is satisfied, provided that all other performance and/or service conditions are satisfied. When the terms of an equity-settled award are modified, the minimum expense recognized is the grant date fair value of the unmodified award, provided the original vesting terms of the award are met. An additional expense, measured as at the date of modification, is recognized for any modification that increases the total fair value of the share-based payment transaction, or is otherwise beneficial to the employee. Where an award is cancelled by the entity or by the counterparty, any remaining element of the fair value of the award is expensed immediately through profit or loss. The dilutive effect of outstanding options is reflected as additional share dilution in the computation of diluted earnings per share. Cash-settled transactions A liability is recognized for the fair value of cash-settled transactions. The fair value is measured initially and at each reporting date up to and including the settlement date, with changes in fair value recognized in employee benefits expense. The fair value is expensed over the period until the vesting date with recognition of a corresponding liability. The fair value is determined using a Black & Scholes model. The approach used to account for vesting conditions when measuring equity-settled transactions also applies to cash-settled transactions. |
Revenue from contracts with customers | t) Revenue from contracts with customers Revenue from sale of education content The Company sells educational content to private schools, which is delivered through printed and digital formats to private school. Revenue from contracts with customers is recognized when control of the goods or services are transferred to the customer at an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services., i.e., at the moment it delivers the content to private schools in printed and digital format when the Company fulfills its performance obligation, and the revenue from these contracts is recognized at a point of time. Revenue is driven by the number of students enrolled in each school and is based on a value negotiated with each contract through the conditions contained in the terms of sales. The technology is provided solely in support of the best use of its content. Both printed and digital content are the same. Printed content The Company provides printed content capable of delivering the entire K-12 curriculum. The Company also provides digital content, including its features, and in this case, for the purpose of supporting the printed content, and it includes video lessons, online homework and assessments that are not customized and have no stand-alone value if used separately or outside of the main context. In this context, the digital content and related features are an evolution from a totally printed methodology to a broader approach and will continue to evolve and change in the coming years but are currently still deeply entwined with the printed content. Digital content The Company has been investing in technology and has solutions provided only in digital content due to the evolution to an educational platform capable of delivering entire K-12 curriculum content in a digital format and it includes video lessons, online homework and assessments for the purpose of supporting the digital content. The Company generates substantially all its revenue from contracts that have an average term from one to five years, pursuant to which the Company provides educational content in printed and digital format to private schools. The Company’s revenue is driven by the number of enrolled students at each customer using the solutions and the agreed price per student per year, all in accordance with the terms and conditions set forth in each contract. Each contract contemplates penalties ranging between 20% to 100% of the remaining total value of the contract in the event of termination. However, the content already delivered to the private schools is not returned to the Company unless the return conditions in the following paragraph are met. Revenue recognition of digital content only consists in providing the digital content to the class/year to the school that will provide that to the students. The Company recognizes the revenue at a point of time and the content be kept available to the students. Pursuant to the terms of the contracts with the schools, they are required, by the end of November of each year, to provide the Company with an estimate of the number of enrolled students that will access the content in the next school year (which typically starts in February of the following year), allowing the Company to start the delivery of its educational content. Since the contracts with the schools allows product returns or increase in the number of enrolled students up to a certain limit, the Company recognizes revenue for the amount that is expected to be received based on past experience, assuming that the other conditions for revenue recognition are met. A right of return asset (and corresponding adjustment to cost of sales) is also recognized for the right to recover the goods from the customer. The asset is measured at the former carrying amount of the inventory, less any expected costs to recover the goods and any potential decreases in value. The Company updates the measurement of the asset for any revisions to the expected level of returns and any additional decreases in the value of the returned products. The Company may enter into contracts with another party in addition to our customer. In making the determination as to whether revenue should be recognized on a gross or net basis, the contract with the customer is analyzed to understand which party controls the relevant good or service prior to transferring to the customer. This judgement is informed by facts and circumstances of the contract in determining whether the Company has promised to provide the specified good or service or whether the Company is arranging for the transfer of the specified good or service, including which party is responsible for fulfilment, has discretion to set the price to the customer and is responsible for inventory risk. On certain contracts, where the Company acts as an agent, only commissions and fees receivable for services rendered are recognized as revenue. Any third-party costs incurred on behalf of the principal that are rechargeable under the contractual arrangement are not included in revenue. Revenue from services The Company provides services related to school management for private schools and students, and technological solutions for communicating with students' parents and a learning platform for students and teachers, which are delivered through monthly software licenses. Revenue from contracts with customers is recognized when the control of services is transferred to the customer for an amount that reflects the consideration to which the Company expects to be entitled for the exchange of services, that is, when it releases the license to use services. software for private schools. The Company generates subscription revenue from the sale of user licenses, in which customers can use the services of online school management software. The services are sold directly to schools that bundle the subscription with their own services provided to end customers. The Company fulfills its performance obligation, and the revenue from these services is recognized on a straight-line basis during the subscription period. Subscription revenue is driven by the number of students enrolled in each customer and is based on a value negotiated with each subscriber through the conditions contained in the terms of use. Interest income For all financial instruments measured at amortized cost, interest income is recorded using the effective interest rate (EIR) method. The EIR is the rate that exactly discounts the estimated future cash receipts over the expected life of the financial instrument or a shorter period, where appropriate, to the net carrying amount of the financial asset. Interest income includes also gain from financial investments classified as financial assets at fair value through profit or loss. Interest income is included in finance income in the statement of income (loss). Cost to obtain a contract The Company incurs costs to obtain each sales contract and recognizes as an asset the incremental costs of obtaining a contract with a customer if the entity expects to recover those costs. The incremental costs of obtaining a contract are those costs that an entity incurs to obtain a contract with a customer that it would not have incurred if the contract had not been obtained. u |
Taxes | u) Taxes Current income tax Current income tax assets and liabilities are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted at the reporting date. Management periodically evaluates positions taken in the tax returns with respect to situations in which applicable tax regulations are subject to interpretation and establishes provisions where appropriate. Deferred tax Deferred tax is provided using the liability method on temporary differences between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes at the reporting date. Deferred tax liabilities are recognized for all taxable temporary differences, except: · When the deferred tax liability arises from the initial recognition of goodwill or an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; · In respect of taxable temporary differences associated with investments in subsidiaries, associates and interests in joint venture, when the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future. Deferred tax assets are recognized for all deductible temporary differences, the carry forward of unused tax credits and any unused tax losses. Deferred tax assets are recognized to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry forward of unused tax credits and unused tax losses can be utilized, except: · When the deferred tax asset relating to the deductible temporary difference arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; · In respect of deductible temporary differences associated with investments in subsidiaries, associates and interests in joint venture, deferred tax assets are recognized only to the extent that it is probable that the temporary differences will reverse in the foreseeable future and taxable profit will be available against which the temporary differences can be utilized. The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilized. Unrecognized deferred tax assets are re-assessed at each reporting date and are recognized to the extent that it has become probable that future taxable profits will allow the deferred tax asset to be recovered. Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year when the asset is realized or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the reporting date. The Company offsets deferred tax assets and deferred tax liabilities if and only if it has a legally enforceable right to set off current tax assets and current tax liabilities and the deferred tax assets and deferred tax liabilities relate to income taxes levied by the same taxation authority on either the same taxable entity or different taxable entities which intend either to settle current tax liabilities and assets on a net basis, or to realize the assets and settle the liabilities simultaneously, in each future period in which significant amounts of deferred tax liabilities or assets are expected to be settled or recovered. |
Changes in accounting policies and disclosures | 2.4 Changes in accounting policies and disclosures New and amended standards and interpretations The Company applied for the first-time certain standards and amendments, which are effective for annual periods beginning on or after 1 January 2020. The Company has not early adopted any other standard, interpretation or amendment that has been issued but is not yet effective. Amendments to IFRS 3: Definition of a Business The amendment to IFRS 3 Business Combinations clarifies that to be considered a business, an integrated set of activities and assets must include, at a minimum, an input and a substantive process that, together, significantly contribute to the ability to create output. Furthermore, it clarifies that a business can exist without including all of the inputs and processes needed to create outputs. These amendments did not have an impact on the Company’s consolidated financial statements for the business combinations entered into during the year, but may impact future periods should the Company enter into any business combinations. Amendments to IFRS 7, IFRS 9 and IAS 39 Interest Rate Benchmark Reform The amendments to IFRS 9 and IAS 39 Financial Instruments: Recognition and Measurement provide a number of reliefs, which apply to all hedging relationships that are directly affected by interest rate benchmark reform. A hedging relationship is affected if the reform gives rise to uncertainty about the timing and/or amount of benchmark-based cash flows of the hedged item or the hedging instrument. These amendments have no impact on the consolidated financial statements of the Company as it does not have any interest rate hedge relationships. Amendments to IAS 1 and IAS 8 Definition of Material The amendments provide a new definition of material that states, “information is material if omitting, misstating or obscuring it could reasonably be expected to influence decisions that the primary users of general-purpose financial statements make on the basis of those financial statements, which provide financial information about a specific reporting entity.” The amendments clarify that materiality will depend on the nature or magnitude of information, either individually or in combination with other information, in the context of the financial statements. A misstatement of information is material if it could reasonably be expected to influence decisions made by the primary users. These amendments had no impact on the consolidated financial statements of the Company, nor is there expected to be any future impact to the Company. Conceptual Framework for Financial Reporting issued on 29 March 2018 The Conceptual Framework is not a standard, and none of the concepts contained therein override the concepts or requirements in any standard. The purpose of the Conceptual Framework is to assist the IASB in developing standards, to help preparers develop consistent accounting policies where there is no applicable standard in place and to assist all parties to understand and interpret the standards. This will affect those entities which developed their accounting policies based on the Conceptual Framework. The revised Conceptual Framework includes some new concepts, updated definitions and recognition criteria for assets and liabilities and clarifies some important concepts. These amendments had no impact on the consolidated financial statements of the Company. Amendments to IFRS 16 Covid-19 Related Rent Concessions On May 28 2020, the IASB issued Covid-19-Related Rent Concessions - amendment to IFRS 16 Leases The amendments provide relief to lessees from applying IFRS 16 guidance on lease modification accounting for rent concessions arising as a direct consequence of the Covid-19 pandemic. As a practical expedient, a lessee may elect not to assess whether a Covid-19 related rent concession from a lessor is a lease modification. A lessee that makes this election accounts for any change in lease payments resulting from the Covid-19 related rent concession the same way it would account for the change under IFRS 16, if the change were not a lease modification. The amendment applies to annual reporting periods beginning on or after 1 June 2020. Earlier application is permitted. This amendment had an impact of R$ 350 on the consolidated financial statements of the Company due to the discounts obtained. |
Significant accounting judgements, estimates and assumptions | 3 Significant accounting judgements, estimates and assumptions The preparation of the Company’s consolidated financial statements requires management to make judgments, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the accompanying disclosures. Uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of assets or liabilities affected in future periods. 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. Revisions to estimates are recognized prospectively. Other disclosures relating to the Company’s exposure to risks and uncertainties includes: · Capital management – Note 27 · Financial instruments risk management – Notes 26 and 27 · Sensitivity analyses disclosures – Note 27 Estimates and assumptions The key assumptions about the future and other key sources of estimation uncertainty as of the reporting date that include a significant risk of a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are described below. The Company based its assumptions and estimates on parameters available when the consolidated financial statements were prepared. Existing circumstances and assumptions about future developments, however, may change due to market changes or circumstances that arise and that are beyond the Company’s control. Such changes are reflected in the assumptions where they occur. Impairment of non-financial assets Impairment exists when the carrying value of an asset or cash generating unit (“CGU”) or group of CGU exceeds its recoverable amount, defined as the higher of its fair value less costs of disposal and its value in use. The fair value less costs of disposal calculation is based on data available from binding sales transactions, conducted at arm’s length, for similar assets or observable market prices less incremental costs of disposing of the asset. The value in use calculation is based on a discounted cash flow model (“DCF” model). The cash flows are derived from the budget for the next five years and do not include restructuring activities to which the Company has not yet committed or significant future investments that will enhance the performance of the assets of the CGU being tested. The recoverable amount is sensitive to the discount rate used for the DCF model as well as to expected future cash-inflows and the growth rate used for extrapolation purposes. The Company determined that its operating segment is the cash generating unit. These estimates are most relevant to goodwill that are recognized by the Company. The key assumptions used to determine the recoverable amount for the different operating segments, including a sensitivity analysis, are disclosed and further explained in Note 14. Inventory reserve The Company recognizes a provision for disposal of inventory considering materials from previous collections not sold and a prospective model to estimate the forecast of obsolescence of products from current collections. The applied model considers the historical data of non-realization of products to obtain the expected loss percentages. Any significant changes between the observed losses compared to the historical loss pattern impact the expected loss percentages estimated by the Company. See Note 8 for further information. Provision for expected credit losses of trade receivables and contract assets The Company uses a provision matrix to calculate ECLs for trade receivables and contract assets. The provision rates are based on days past due for customer. The provision matrix is initially based on the Company’s historical observed default rates. The Company calibrates the matrix to adjust the historical credit loss experience with forward-looking information. The assessment of the correlation between historical observed default rates, forecast economic conditions and ECLs is a significant estimate. The amount of ECLs is sensitive to changes in circumstances and of forecast economic conditions. The Company’s historical credit loss experience and forecast of economic conditions may also not be representative of customer’s actual default in the future. The information about the ECLs on the Company’s trade receivables and contract assets is disclosed in Note 7. Share-based payment Estimating fair value for share-based payment transactions requires determination of the most appropriate valuation model, which depends on the terms and conditions of the grant. This estimate also requires determination of the most appropriate inputs to the valuation model including the expected life of the share option or appreciation right, volatility and dividend yield and making assumptions about them. For the measurement of the fair value of equity-settled transactions, the Company uses the Black & Scholes model. The assumptions and models used for estimating fair value for share-based payment transactions are disclosed in Note 18. b). Taxes Deferred tax assets are recognized for deductible temporary differences and unused tax credits from net operating losses carryforward to the extent that it is probable that taxable profit will be available against which the losses can be utilized. Significant management judgement is required to determine the amount of deferred tax assets that can be recognized, based upon the likely timing and the level of future taxable profits, together with future tax planning strategies. The Company has R$ 4,380 (2019: R$ 4,066) of unrecognized unused tax loss carryforwards as of December 31, 2020 related to a subsidiary that has a history of losses. Such unused tax loss carryforwards do not expire and may not be used to offset taxable income of other subsidiaries of the Company. See Note 24. Fair value measurement of financial instruments When the fair values of financial assets and financial liabilities recorded in the statement of financial position cannot be measured based on quoted prices in active markets, their fair value is measured using valuation techniques including the DCF model. The inputs into these models are taken from observable markets where possible, but where this is not feasible, a degree of judgement is required to estimate fair values. Judgements include considerations of inputs such as liquidity risk, credit risk and volatility. Changes in assumptions relating to these factors could affect the reported fair value of financial instruments. See Note 26 for further disclosures. Contingent consideration, resulting from business combinations, is valued at fair value as of the acquisition date as part of the business combination. When the contingent consideration meets the definition of a financial liability, it is subsequently remeasured at each reporting date. This determination of fair value is based on discounted cash flows. The key assumptions taken into consideration are the probability of meeting each performance target and the discount factor (see Notes 6 and 26 for additional information). Any contingent consideration is classified as financial instruments from acquisition of interests (see Note 16). |
Significant accounting polici_3
Significant accounting policies (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Significant accounting policies | |
Summary of Company's Subsidiaries, Associates and Joint Ventures | The table below is a list of the Company’s subsidiaries and investments: Principal Investment Direct and indirect interest Name activities Country type 2020 2019 2018 Arco Educação S.A. Holding Brazil Subsidiary 100.0 % 100.0 % 100.0 % PSD Educação S.A. Educational content Brazil Subsidiary 100.0 % 100.0 % 100.0 % Barra Américas Editora Ltda. Educational content Brazil Subsidiary 100.0 % 100.0 % 100.0 % Distribuidora de Material Didático Desterro Ltda. Educational content Brazil Subsidiary 100.0 % 100.0 % 100.0 % Novagaúcha Editora e Livraria Ltda. Educational content Brazil Subsidiary — — 100.0 % SAS Sistema de Ensino Ltda. Educational content Brazil Subsidiary 100.0 % 100.0 % 100.0 % Arco Ventures S.A. Educational content Brazil Subsidiary 100.0 % 100.0 % 100.0 % SAS Livrarias Ltda. Educational content Brazil Subsidiary 100.0 % 100.0 % 100.0 % SAE Digital S.A. Educational content Brazil Subsidiary 100.0 % 100.0 % 100.0 % Escola de Aplicação São José dos Campos Ltda. Educational services Brazil Subsidiary — — 69.6 % International School Serviços de Ensino, Treinamento e Editoração, Franqueadora S.A. Educational content Brazil Subsidiary 51.5 % 51.5 % 51.5 % NS Ventures Participações Ltda. Educational content Brazil Subsidiary — — 100.0 % NS Educação Ltda. Educational content Brazil Subsidiary — — 100.0 % Nave à Vela Ltda. Educational content Brazil Subsidiary 51.0 % 51.0 % — EEM Licenciamento de Programas Educacionais Ltda. Educational technology Brazil Subsidiary 100.0 % 100.0 % — NLP Soluções Educacionais Ltda. Educational content Brazil Subsidiary 100.0 % 100.0 % — WPensar S.A. Educational technology Brazil Subsidiary 100.0 % 25.0 % 25.0 % Geekie Desenvolvimento de Softwares S.A. Educational technology Brazil Subsidiary 56.0 % 37.5 % 8.05 % Studos Software Ltda. Educational content Brazil Subsidiary 100.0 % — — Escola da Inteligência Cursos Educacionais Ltda. Educational content Brazil Subsidiary 60.0 % — — Bewater Ventures I GA Fundo de Investimento em Participações Multiestratégia Private equity Brazil Investee 14.48 % — — |
Summary of Estimated Useful Life of the Assets | Depreciation is calculated on a straight-line basis over the estimated useful lives of the assets, as follows: Machinery and equipment 10 % Vehicles 20 % Furniture and fixtures 10 % IT equipment 20 % Facilities 10 % Leasehold improvements 20% to 33 % |
Summary of Estimated useful life and lease term of Right of use Assets | Buildings 1 to 10 years Equipment 4 years |
Business combinations and acq_2
Business combinations and acquisition of non-controlling interests (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Business combinations and acquisition of non-controlling interests | |
Summary of Fair Value of Identifiable Assets and liabilities as of Date of Each Acquisition | The fair value of the identifiable assets and liabilities as of the date of each acquisition was: Fair value as of the acquisition date 2020 2019 WPensar Studos Geekie EI EEM Nave Positivo Assets Cash and cash and equivalents 378 191 7,796 14,492 219 1,565 37,635 Trade receivables 75 126 1,120 11,129 126 896 72,780 Inventories — — 8,333 4,419 — 897 13,664 Recoverable taxes 108 — 524 — 12 7 99 Deferred taxes — — 15,098 — — — 7,518 Advance to employees — — — 11,484 — — — Other assets 1 — 710 697 14 284 1,526 Property and equipment 172 39 2,592 843 80 292 4,760 Right-of-use assets — — 292 2,418 — — 5,241 Intangible assets 6,192 5,996 36,328 238,825 5,866 19,009 773,134 6,926 6,352 72,793 284,307 6,317 22,950 916,357 Liabilities Trade payables 47 18 823 1,709 48 271 12,463 Labor and social obligations 385 79 21,584 3,097 240 1,444 29,607 Taxes and contributions payable 152 56 677 — 109 50 2,937 Income taxes payable 8 — — — — 2 22,643 Leases — — 292 2,418 — — 5,374 Loans and financing — — 8,836 — 548 — — Loans with related parties 1,285 — 10,885 — — — — Provision for legal proceedings — — — 599 — — — Advances from customers 100 27 269 — — — — Other liabilities 35 10 — 166 156 546 — 2,012 190 43,366 7,989 1,101 2,313 73,024 Total identifiable net assets at fair value 4,914 6,162 29,427 276,318 5,216 20,637 843,333 Goodwill arising on acquisition 18,994 13,371 162,552 282,667 13,069 37,557 830,028 Purchase consideration transferred 23,908 19,533 191,979 558,985 18,285 58,194 1,673,361 Cash paid 14,345 8,298 4,500 200,000 16,355 21,098 800,851 Capital contribution — — 4,000 — — — — Forward contract of non-controlling interest at acquisition — — 115,222 354,365 — 29,728 — Retained payments 3,586 11,235 — — 1,930 — 872,510 Price adjustment — — — 4,620 — — — Fair value of previously held interest in a step acquisition 5,977 — 68,257 — — 7,368 — Analysis of cash flows on acquisition: Transaction costs of the acquisition (included in cash flows from operating activities) (115) (275) (762) (6,510) (649) (467) (27,389) Cash paid and subscribed capital net of cash acquired with the subsidiary (included in cash flows from investing activities) (13,967) (8,107) 3,296 (185,508) (16,136) (19,533) (763,216) |
Summary of revenue and profit contribution | The individual net revenue and net income from the acquisition date through each period end for all business combinations are presented below: 2020 2019 WPensar Studos Geekie EI EEM Nave Positivo Total net revenue 1,126 282 18,497 14,779 2,395 7,147 80,100 Profit (loss) before income taxes (89) (249) (11,035) 10,429 (2,918) 3,379 25,641 |
Summary of total revenue and income and net income on proforma basis | Total revenue and income and net income for the Company are presented below on a pro-forma basis assuming the acquisitions had occurred at the beginning of the year of each acquisition: 2020 2019 Pro-forma total net revenue 1,078,831 893,497 Pro-forma profit (loss) before income taxes 32,208 75,498 |
WPensar S.A. | |
Business combinations and acquisition of non-controlling interests | |
Summary of Valuation Techniques Used for Measuring Fair Value of Separately Identified Intangible Assets | The valuation techniques used for measuring the fair value of separate identified intangible assets acquired were as follows: Asset acquired Valuation technique Customer relationship Multi-period excess earning method The method considers the present value of net cash flows expected to be generated by customer relationship, by excluding any cash flows related to contributory assets. Non-compete agreement With-and-without method The With-and-Without method consists of estimating the fair value of an asset by the difference between the value of this asset in two scenarios: a scenario considering the existence of the asset in question and another, considering its non-existence. Software Replacement cost The method considers the amount that an entity would have to pay to replace at the present time, according to its current worth. |
Studos Software Ltda. | |
Business combinations and acquisition of non-controlling interests | |
Summary of Valuation Techniques Used for Measuring Fair Value of Separately Identified Intangible Assets | The valuation techniques used for measuring the fair value of separate identified intangible assets acquired were as follows: Asset acquired Valuation technique Customer relationship Multi-period excess earning method The method considers the present value of net cash flows expected to be generated by customer relationship, by excluding any cash flows related to contributory assets. Non-compete agreement With-and-without method The With-and-Without method consists of estimating the fair value of an asset by the difference between the value of this asset in two scenarios: a scenario considering the existence of the asset in question and another, considering its non-existence. Educational system Relief-from-royalty method The relief-from-royalty method considers the discount estimated royalty payments that are expected to be avoided as a result of the educational platform being owned. |
Geekie | |
Business combinations and acquisition of non-controlling interests | |
Summary of Valuation Techniques Used for Measuring Fair Value of Separately Identified Intangible Assets | The valuation techniques used for measuring the fair value of separate identified intangible assets acquired were as follows: Asset acquired Valuation technique Trademarks Relief-from-royalty method The relief-from-royalty method considers the discount estimated royalty payments that are expected to be avoided as a result of the trademarks being owned. |
Escola da Inteligencia Cursos Educacionais Ltda. | |
Business combinations and acquisition of non-controlling interests | |
Summary of Valuation Techniques Used for Measuring Fair Value of Separately Identified Intangible Assets | The valuation techniques used for measuring the fair value of separate identified intangible assets acquired were as follows: Asset acquired Valuation technique Customer relationship Multi-period excess earning method The method considers the present value of net cash flows expected to be generated by customer relationship, by excluding any cash flows related to contributory assets. Trademarks Relief-from-royalty method The relief-from-royalty method considers the discount estimated royalty payments that are expected to be avoided as a result of the trademarks being owned. Educational system Replacement cost The method considers the amount that an entity would have to pay to replace at the present time, according to its current worth. Non-compete agreement With-and-without method The With-and-Without method consists of estimating the fair value of an asset by the difference between the value of this asset in two scenarios: a scenario considering the existence of the asset in question and another, considering its non-existence. |
EEM Licenciamento de Programas Educacionais S.A. ("Escola em Movimento") | |
Business combinations and acquisition of non-controlling interests | |
Summary of Valuation Techniques Used for Measuring Fair Value of Separately Identified Intangible Assets | The valuation techniques used for measuring the fair value of separate identified intangible assets acquired were as follows: Asset acquired Valuation technique Customer relationship Multi-period excess earning method The method considers the present value of net cash flows expected to be generated by customer relationship, by excluding any cash flows related to contributory assets. Software Replacement cost The method considers the amount that an entity would have to pay to replace at the present time, according to its current worth. Trademarks Relief-from-royalty method The relief-from-royalty method considers the discount estimated royalty payments that are expected to be avoided as a result of the trademarks being owned. Non-compete agreement With-and-without method The With-and-Without method consists of estimating the fair value of an asset by the difference between the value of this asset in two scenarios: a scenario considering the existence of the asset in question and another, considering its non-existence. |
Nave a Vela Ltda. ("Nave") | |
Business combinations and acquisition of non-controlling interests | |
Summary of Consideration Transferred | The breakdown purchase consideration is as follows: At acquisition date Cash paid 21,098 Fair value of previously held investment 7,368 Fair value of forward contract 29,728 Consideration transferred 58,194 |
Summary of Valuation Techniques Used for Measuring Fair Value of Separately Identified Intangible Assets | The valuation techniques used for measuring the fair value of separate identified intangible assets acquired were as follows: Asset acquired Valuation technique Customer relationship Multi-period excess earning method The method considers the present value of net cash flows expected to be generated by customer relationship, by excluding any cash flows related to contributory assets. Trademarks Relief-from-royalty method The relief-from-royalty method considers the discount estimated royalty payments that are expected to be avoided as a result of the trademarks being owned. Non-compete agreement With-and-without method The With-and-Without method consists of estimating the fair value of an asset by the difference between the value of this asset in two scenarios: a scenario considering the existence of the asset in question and another, considering its non-existence. Educational system Relief-from-royalty method The relief-from-royalty method considers the discount estimated royalty payments that are expected to be avoided as a result of the educational system being owned. |
Sistema Positivo de Ensino ("Positivo") | |
Business combinations and acquisition of non-controlling interests | |
Summary of Valuation Techniques Used for Measuring Fair Value of Separately Identified Intangible Assets | The valuation techniques used for measuring the fair value of separate identified intangible assets acquired were as follows: Asset acquired Valuation technique Customer relationship Multi-period excess earning method The method considers the present value of net cash flows expected to be generated by customer relationship, by excluding any cash flows related to contributory assets. Trademarks Relief-from-royalty method The relief-from-royalty method considers the discount estimated royalty payments that are expected to be avoided as a result of the trademarks being owned. Non-compete agreement With-and-without method The With-and-Without method consists of estimating the fair value of an asset by the difference between the value of this asset in two scenarios: a scenario considering the existence of the asset in question and another, considering its non-existence. Educational system Relief-from-royalty method The relief-from-royalty method considers the discount estimated royalty payments that are expected to be avoided as a result of the educational system being owned. Educational platform Relief-from-royalty method The relief-from-royalty method considers the discount estimated royalty payments that are expected to be avoided as a result of the educational platform being owned. |
Cash and cash equivalents (Tabl
Cash and cash equivalents (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Cash and cash equivalent | |
Summary of Cash and Cash Equivalents | 2020 2019 Cash and bank deposits 7,536 2,838 Bank deposits in foreign currency (a) 28,327 23,346 Cash equivalents (b) 388,547 22,716 424,410 48,900 (a) Short-term deposits (mainly follow-on proceeds) maintained in U.S. dollar. (b) Cash equivalents correspond to financial investments in Bank Certificates of Deposit (“CDB”) of highly rated financial institutions. As of December 31, 2020, the average interest on these CDB is equivalent to 95.4% (2019: 30.0%) of the Interbank Certificates of Deposit (“CDI”). These financial investments are highly liquid and available for immediate use and have insignificant risk of changes in value. The increase in the balance is mainly due to follow-on public offering and loans acquired, as described in Notes 1.2 and 15. |
Financial investments (Tables)
Financial investments (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Financial investments | |
Summary of Financial Investments | 2020 2019 Financial investments (a) 721,935 577,398 Financial investments in foreign currency 542 1,629 Other 517 467 722,994 579,494 Current 712,645 574,804 Non-current 10,349 4,690 (a) Financial investments correspond to investments managed by highly rated financial institutions. As of December 31, 2020, the average interest on these investments are equivalent to 101.3% (2019: 99.9%) of the CDI. The average CDI rate during the year was 0.38% per month. The increase in the balance is mainly due to follow-on public offering and loans acquired, as described in Notes 1.2 and 15. |
Trade receivables (Tables)
Trade receivables (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Trade receivable | |
Summary of Trade Receivables | 2020 2019 From sales of educational content 475,507 354,968 From related parties (Note 10) 3,209 4,511 478,716 359,479 (-) Allowance for doubtful accounts (63,434) (30,051) 415,282 329,428 |
Summary of Aging of Trade Receivables | As of December 31, 2020, and 2019, the aging of trade receivables was as follows: 2020 2019 Neither past due nor impaired 360,737 299,159 Past due 117,979 60,320 1 to 60 days 26,206 18,931 61 to 90 days 9,973 6,865 91 to 120 days 10,528 6,414 121 to 180 days 18,887 9,904 More than 180 days 52,385 18,206 478,716 359,479 |
Summary of Allowance for Doubtful Accounts | The movement in the allowance for doubtful accounts for the years ended December 31, 2020 and 2019, was as follows: 2020 2019 2018 Balance at beginning of the year (30,051) (13,419) (10,290) Additions (34,684) (17,392) (9,588) Receivables written off during the period as uncollectible 1,301 760 6,459 Balance at end of year (63,434) (30,051) (13,419) |
Inventories (Tables)
Inventories (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Inventories | |
Summary of Inventories | 2020 2019 Educational content 30,167 24,535 Educational content in progress (a) 37,276 12,837 Consumables and supplies 1,198 835 Inventories held by third parties 5,435 1,899 74,076 40,106 (a) Costs being incurred to prepare educational content for delivery to customers. These costs include incurred personnel costs and third parties’ services for editing educational content and related activities (graphic design, editing, proofreading and layout, among others). |
Summary of Movement in Inventory Reserve | 2020 2019 2018 Balance at beginning of the year (6,517) (4,403) (2,047) Inventory reserve (7,453) (8,476) (7,252) Write-off of inventories against reserve 6,460 6,362 4,896 Balance at end of year (7,510) (6,517) (4,403) |
Recoverable taxes (Tables)
Recoverable taxes (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Recoverable taxes | |
Summary of Recoverable taxes | 2020 2019 Withholding Income Tax (IRRF) on financial investments (a) 2,027 637 Recoverable IRPJ and CSLL 8,573 17,456 Recoverable PIS and COFINS 7,250 2,501 Other recoverable taxes 2,575 1,631 20,425 22,225 Current 19,304 15,612 Non-current 1,121 6,613 (a) Withholding income tax (IRRF) will be utilized to offset federal taxes payable. |
Related parties (Tables)
Related parties (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Related parties | |
Summary of Balances and Transactions with Related Parties | The table below summarizes the balances and transactions with related parties: 2020 2019 Assets Trade receivables Livraria ASC Ltda. and Educadora ASC Ltda. (a) 3,209 4,511 3,209 4,511 Other assets General Atlantic Arco (Bermuda), L.P. (b) — 4,109 — 4,109 Loans to related parties WPensar S.A. (c) — 1,298 Loans - Geekie Partners (d) 4,361 4,231 Debentures – Geekie (e) — 10,582 OISA Tecnologia e Serviços Ltda. (f) 5,018 — Former shareholders - EI (g) 11,099 — 20,478 16,111 Current 9,970 1,298 Non-current 10,508 14,813 Advances from customers Livraria ASC Ltda. and Educadora ASC Ltda. (a) (150) (1) (150) (1) Other liabilities OISA Tecnologia e Serviços Ltda. (i) 469 — 469 — 2020 2019 2018 Net revenue Livraria ASC Ltda. and Educadora ASC Ltda. (a) 7,230 8,805 8,234 OISA Tecnologia e Serviços Ltda. (i) 4 — — 7,234 8,805 8,234 Expenses ASC Empreendimentos Ltda. and OSC Empreendimentos Ltda. (h) (1) (8) (13) Finance income WPensar S.A. (c) 30 72 — Geekie (d) e (e) 453 813 — OISA Tecnologia e Serviços Ltda. (f) 18 — — Minority shareholders - EI (g) 18 — — 519 885 — (a) Arco Ventures S.A. and International School sell educational content to Livraria ASC Ltda. and Educadora ASC Ltda., entities under common control of the Company’s controlling shareholders. The transactions are priced based on contract price at the sales date. Sales price for these transactions are conducted at arm’s length, at similar observable market prices. (b) On June 04, 2020, General Atlantic Arco (Bermuda), L.P (“GA”). sold the entire interest held in the Company as described in Note 1.2. Accordingly, because of the mentioned follow-on public offering, as of December 31, 2020, GA is no longer a related party to the Company. The amounts due were settled in the third quarter. (c) On September 21, 2020, the Company acquired the control of WPensar and such investment became a consolidated subsidiary of the Company. During the nine-month period ended September 30, 2020, the Company recognized R$ 30 of interest income, before the consolidation. See Note 4.a) for further information. (d) On January 17, 2019, the Company loaned R$ 4,000 to Geekie Partners S.A., the current minority shareholder of Geekie, through a loan agreement with payment due in June 2022, interest of 110% of the CDI, and with their entire interest on Geekie’s shares as collateral to the transaction. During the year, the Company recognized R$ 130 of interest income. The transaction was intended to support Geekie’s working capital needs. (e) On November 27, 2020, the Company acquired the control of Geekie and such investment became a consolidated subsidiary of the Company. Before consolidation, the Company recognized R$ 323 of interest income. See Note 4.c) for further information. (f) On October 23, 2020, the Company loaned R$ 5,000 to the company OISA Tecnologia e Serviços Ltda. (“ISAAC”), an affiliated of the company which has member of the key management personnel under common with the Company. The entity is developing a project to assist schools in financial and administrative management. According to the contractual terms the amount is due in February 2021 and bear interest of 100% of the CDI. During 2020, the Company recognized R$ 18 of interest income. (g) Amount due by minority shareholders of Escola da Inteligência and bear interest rate of 100% CDI and maturing in May 2023. During the year, the Company recognized R$ 18 of interest income. (h) Arco Ventures S.A. leases a facility from OSC Empreendimentos Ltda., which are entities under common control of the Company’s controlling shareholder. The agreement was terminated in February 2020. (i) WPensar provides financial intermediation services to OISA which the amounts received through this intermediation are transferred to OISA discounted from the value of the service provided. As of December 31, 2020, the amount to be transferred to OISA is R$ 469 and during the year the recognized revenue from financial intermediation was R$ 4. |
Summary of Key Management Personnel Compensation | Key management personnel compensation comprised the following: 2020 2019 2018 Short-term employee benefits 39,628 13,732 9,436 Stock options — — 59,747 Restricted stock units 48,852 66,429 — 88,480 80,161 69,183 |
Investments and interests in _2
Investments and interests in other entities (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Investments and interests in other entities | |
Summary of Investment and Interests in Other Entities | (i) Investments and interests in other entities Reconciliation of carrying amount: 2020 2019 WPensar Geekie Bewater Total Total At beginning of the year 3,049 45,525 — 48,574 11,862 Capital contributions — 4,500 9,670 14,170 14,200 Acquisition from a minority shareholder — 18,458 — 18,458 27,653 Fair value on investment — — (16) (16) — Loss of changes in ownership — — — — 319 Share of loss of equity-accounted investees (150) 559 — 409 (1,800) Consolidation on the acquisition of control (2,899) (69,042) — (71,941) (3,660) At end of the year — — 9,654 9,654 48,574 Percentage of ownership 100.0 % 56.06 % 14.48 % |
Property and equipment (Tables)
Property and equipment (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Property and equipment | |
Summary of Property and Equipment | Reconciliation of carrying amount: Machinery Furniture and and IT Leasehold equipment Vehicles fixtures equipment Facilities improvements Others Total Cost As of December 31, 2018 896 191 2,296 5,080 325 4,638 6,199 19,625 Additions 215 — 636 2,529 45 4,663 2,903 10,991 Disposals (17) (70) (895) (3,061) (290) (184) (1,076) (5,593) Business combination 213 — 517 2,775 — 1,627 — 5,132 Sale of Escola de Aplicação São José dos Campos Ltda. (50) — (201) (51) — (710) — (1,012) Write-offs — — — — — — (792) (792) As of December 31, 2019 1,257 121 2,353 7,272 80 10,034 7,234 28,351 Additions 146 — 1,365 4,612 38 4,239 422 10,822 Disposals — (114) — — (934) Business combination 625 186 325 2,300 5 205 — 3,646 As of December 31, 2020 1,991 307 3,929 12,895 123 14,478 6,722 40,445 Depreciation As of December 31, 2018 (254) (144) (527) (1,910) (100) (1,274) (2,069) (6,278) Depreciation charge for the period (91) (24) (254) (1,211) (34) (1,161) (1,580) (4,355) Depreciation of disposals 114 68 368 1,709 108 60 972 3,399 Sale of Escola de Aplicação São José dos Campos Ltda. 10 — 34 17 — 150 — 211 As of December 31, 2019 (221) (100) (379) (1,395) (26) (2,225) (2,677) (7,023) Depreciation charge for the period (26) (327) (9) (2,391) (2,284) Depreciation of disposals 104 — — 13 — — — 117 As of December 31, 2020 (126) (706) (35) (4,616) (4,961) Net book value As of December 31, 2018 642 47 1,769 3,170 225 3,364 4,130 13,347 As of December 31, 2019 1,036 21 1,974 5,877 54 7,809 4,557 21,328 As of December 31, 2020 1,738 181 3,223 9,234 88 9,862 1,761 26,087 |
Leases (Tables)
Leases (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Leases | |
Summary of balance sheet showing the following amounts relating to leases | 2020 2019 Right-of-use assets Properties 29,938 21,518 Machinery and equipment 84 113 30,022 21,631 2020 2019 Lease liabilities Current 12,742 6,845 Non-current 22,478 19,012 35,220 25,857 |
Summary of carrying amounts of the Company's right-of-use assets and lease liabilities and the movements during the period | Right-of-use assets – Lease Properties Liabilities As at January 1, 2019 18,225 20,089 Additions 4,502 4,502 Lease modification (a) (338) (338) Depreciation expense (5,999) — Business combination 5,241 5,374 Interest expense — 1,489 Payments of lease liabilities — (4,407) Interest paid — (852) As at December 31, 2019 21,631 25,857 Additions 12,391 12,391 Disposal (253) (244) Lease modification (a) 2,080 2,080 Depreciation expense (8,537) — Business combination 2,710 2,710 Interest expense — 3,036 Payments of lease liabilities — (8,160) Discounts on leases — (350) Interest paid — (2,100) As at December 31, 2020 30,022 35,220 Average annual depreciation rate 2019 % Average annual depreciation rate 2020 27.5 % (a) Refers to price adjustments that occur annually as defined in the lease agreements. |
Intangible assets and goodwill
Intangible assets and goodwill (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Intangible assets and goodwill. | |
Summary of Intangible Assets and Goodwill | Rights on Customer Educational Software license and Educational Non-compete Goodwill contracts relationships system Copyrights development Trademarks platform agreement In Progress Total Cost As of December 31, 2018 89,634 15,263 23,045 36,656 12,692 2,808 19,177 21,911 1,097 2,213 224,496 Corporate restructuring (53,521) — — — — — — — — — (53,521) Acquisitions — — — — 8,377 4,441 — 23,634 309 6,341 43,102 Disposals — — — — — — — (1,841) — — (1,841) Acquisitions through business combinations 880,654 — 183,926 214,567 — 11,163 336,121 24,728 6,897 20,607 1,678,663 Transfer — — — — — — — 19,555 — (19,555) — As of December 31, 2019 916,767 15,263 206,971 251,223 21,069 18,412 355,298 87,987 8,303 9,606 1,890,899 Acquisitions — — — — 8,131 22,127 3 51,262 431 14,873 96,827 Disposals — — — — (3) (94) — (4,607) — — (4,704) Acquisitions through business combinations 477,584 — 115,172 29,775 14 5,103 121,053 13,102 3,122 — 764,925 Transfer — — — — 249 (231) — 22,604 — (22,622) — As of December 31, 2020 1,394,351 15,263 322,143 280,998 29,460 45,317 476,354 170,348 11,856 1,857 2,747,947 Amortization As of December 31, 2018 — (3,949) (7,560) (12,716) (3,939) (648) (3,810) (3,860) (274) — (36,756) Amortization — (1,342) (6,450) (9,518) (7,743) (2,307) (4,431) (10,449) (536) — (42,776) Amortization of disposals — — — — — — — 536 — — 536 As of December 31, 2019 — (5,291) (14,010) (22,234) (11,682) (2,955) (8,241) (13,773) (810) — (78,996) Amortization — (24,227) (26,941) (6,421) (6,789) (19,074) (35,072) (1,947) — (121,998) Amortization of disposals — — — — — 3 — 2,681 — — 2,684 As of December 31, 2020 — (6,818) (38,237) (49,175) (18,103) (9,741) (27,315) (46,164) (2,757) — (198,310) Net book value As of December 31, 2018 89,634 11,314 15,485 23,940 8,753 2,160 15,367 18,051 823 2,213 187,740 As of December 31, 2019 916,767 9,972 192,961 228,989 9,387 15,457 347,057 74,214 7,493 9,606 1,811,903 As of December 31, 2020 1,394,351 8,445 283,906 231,823 11,357 35,576 449,039 124,184 9,099 1,857 2,549,637 |
Summary of Carrying Amount of Goodwill by Operating Segment | The carrying amount of goodwill by operating segment was: 2020 2019 Core 918,091 755,539 Supplemental 476,260 161,228 1,394,351 916,767 |
Summary of Fair Value Calculations of Discounted Cash Flow Model | The value-in-use calculations were based on the discounted cash flow model and are based on the following assumptions for those segments: Growth rate Budget period beyond budget growth rate period Discount rate 2020 2019 2020 2019 2020 2019 Core 9.2 % 11.1 % 3.2 % 4.3 % 11.1 % 12.7 % Supplemental 17.3 % 18.3 % 3.2 % 4.3 % 12.4 % 14.5 % |
Summary of Estimated Useful lives of Intangible Assets | The estimated useful lives of intangible assets for the years ended December 31, 2020, are as follows: Years Rights on contracts 10 Customer relationships 5 to 16 Educational system 3 to 10 Copyrights 3 Software license 2 a 5 Trademarks 10 to 20 Educational platform 3 a 10 Non-compete agreement 2 a 5 |
Loans and financing (Tables)
Loans and financing (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Loans and financing | |
Schedule of loans and financing | Interest rate Maturity 2020 2019 Bank loan (a) 100% CDI + 0.7% pa October/2020 — 98,561 Bank loan (b) 100% CDI + 2.7% pa December/2021 100,395 — Bank loan (c) 100% CDI + 2.7% pa January/2022 200,788 — Bank loan (d) 8.1% pa March/2022 1,500 — Bank loan (e) 8.2% pa May/2022 8,373 — Bank loan (f) 3.8% pa November/2023 63 — 311,119 98,561 Current 107,706 98,561 Non-current 203,413 — (a) On October 25, 2019, the Company entered into a loan agreement in the amount of R$ 100,000, maturing in October 2020 (single installment). The loan was paid on September 21, 2020. (b) On July 1, 2020, the Company entered into a loan agreement in the amount of R$ 100,000. The loan accrues interest at a rate equal to 100% of the CDI rate plus 2.7% per annum. The loan matures in December 2021. (c) On July 1, 2020, the Company entered into two loans agreements in the amount of R$ 100,000 each, maturing in January 2022 (single installments) and an interest rate of 100% CDI plus 2.7%v per annum. Interest on loans is capitalized monthly to be settled in 17 installments from August 2020 to January 2022. (d) On February 17, 2020, Nave à Vela, the Company’s subsidiary, entered into a loan agreement in the amount of R$ 2,000 for working capital, to be settled in 21 installments from July 2020 to March 2022. (e) On May 29, 2020, Geekie, the Company’s subsidiary, entered into a loan agreement of R$ 10,000. The amount will be settled in 18 installments from December 2020 to May 2022 and bear interest at the rate of 8.2% per annum. (f) On October 30, 2020, WPensar, the Company’s subsidiary, entered into a loan agreement in the amount of R$ 63 for working capital, to be settled in 30 installments from June 2021 to November 2023. The loan accrues interest at a rate equal to 3.8% per annum. |
Summary of movement in loans and financing | 2020 2019 Balance at beginning of the year 98,561 — Additions 502,063 100,000 Loan cost (3,629) (2,426) Business combination 8,836 548 Interest expense 19,862 1,002 Interest paid (13,423) — Payment of loans and financing (301,151) (563) Balance at end of year 311,119 98,561 |
Financial instruments from ac_2
Financial instruments from acquisition of interests (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Financial instruments from acquisition of interests | |
Summary of Contingent Assets and Liabilities and Related Derivative Instruments | The breakdown of derivative instruments from acquisition of investments in associates and joint ventures is as follows: 2020 2019 Assets Derivative financial instruments Investment in Geekie (a) — 32,152 Investment in WPensar (b) — 3,794 — 35,946 Current — 3,794 Non-current — 32,152 2020 2019 Liabilities Derivative financial instruments Investment in Geekie (a) — 31,626 Investment in WPensar (b) — 2,314 — 33,940 Current — — Non-current — 33,940 (a) On November 27, 2020, the Company acquired control of Geekie and such investment became a consolidated subsidiary of the Company as described in Note 4.c). On the same date, the Company derecognized the derivative financial instrument and recognized a financial liability for the obligation to acquire the remaining interest in Geekie as described in Note 17. (b) On September 21, 2020, the company acquired the remaining 75% interest in WPensar as described in Note 4.a). On the same date, the Company derecognized the derivative financial instrument and recognized a financial liability for the obligation of the acquisition of control of WPensar as described in Note 17. |
Accounts payable to selling s_2
Accounts payable to selling shareholders (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Accounts payable to selling shareholders | |
Summary of Liabilities of Accounts Payable From Business Combination and Investments in Associates | The breakdown of the liabilities regarding balances of accounts payable from business combination and investments in associates is as follows: 2020 2019 Accounts payable to selling shareholders Acquisition of International School (a) 354,950 297,722 Acquisition of NS Educação Ltda. (b) 5,724 6,461 Acquisition of Escola em Movimento (c) 1,024 1,992 Acquisition of Nave à Vela (d) 21,941 30,946 Acquisition of Positivo (e) 903,428 879,111 Acquisition of WPensar (f) 3,605 — Acquisition of Studos (g) 11,349 — Acquisition of EI (h) 363,502 — Acquisition of Geekie (i) 120,992 — 1,786,515 1,216,232 Current 656,014 117,959 Non-current 1,130,501 1,098,273 (a) The financial liability is recorded at the present value of the estimated amount payable to the non-controlling shareholder upon the exercise of purchasing of the remaining interest using an estimated interest rate of 13.8% (14.5% in 2019). During the year ended December 31, 2020 the Company recognized R$ 34,627 of interest. The amount payable is based on realized EBITDA for the 2019 and 2020 school years. The first and second installments will be paid in the course of arbitration mentioned in Note 28. Based on the realized numbers for 2020, the accounts payable increased by R$ 32,121. (b) This amount was retained for any contingent liabilities that may arise, which will be released in annual installments until December 31, 2022. The amount is being adjusted by the interest from Interbank certificates of deposit (CDI). (c) This amount was retained for any contingent liabilities that may arise, which will be released in two annual installments on the first and second anniversary of the acquisition until June 2021. The amount is being adjusted by the Brazilian basic interest rate (SELIC). (d) This amount is related to the remaining acquisition of 49% interest in Nave and will occur over the next two years (subject to price adjustments, net of debt at each closing date). This amount is recorded at the present value using an estimated interest rate of 14,6% (14.5% in 2019). During the year ended December 31, 2020, the Company recognized R$ 2,802 of interest. The next tranche is payable on February 15, 2021, however the parties are negotiating the payment to be made in the second quarter of 2021. On this date Arco Ventures S.A. will acquire 24% interest, for the 24% of Nave’s revenues from October 1, 2019 to September 30, 2020 multiplied by 5.3, net of debt. The last tranche is payable on February 15, 2022. On this date, Arco Ventures S.A. will acquire 25% interest, for 25% of Nave’s revenues from October 1, 2020 to September 30, 2021 multiplied by 3, net of debt. Based on the realized numbers for 2020 school year and the new projected numbers for 2021 school year, the accounts payable decreased by R$ 11,807. (e) The amount of the contract is updated by CDI from November 1, 2019 to December 31, 2020. The amount will be paid over 4 years, 20% payable in 2021 and 2022 and 30% payable in 2023 and 2024 and the payment is secured by guarantee letter through a chattel mortgage of 20% of PSD shares and 100% of SAE shares. During the year ended December 31, 2020, the Company recognized R$ 24,317 of interest. (f) This amount corresponds to 20% of the acquisition price and is being retained until September 30, 2021, for any eventual inaccuracies in the fulfillment of the guarantees given in the purchase and sale agreement. The amount is updated considering 100% of the Interbank certificates of deposit (CDI) calculated from the date of acquisition until the maturity date. (g) The obligation is recognized at present value of the acquisition price using an estimated interest rate of 3,4% for the first installment that will be paid in September 2021 and 6,0% for the second installment due in September 2022. The first and second installments will be paid over the next two years on the anniversary of the acquisition date. (h) This amount is related to the remaining acquisition of 40% interest in EI and will occur over the next two years and subject to price adjustments. This amount is recorded at the present value using an estimated interest rate of 13.1%. The next installment is payable on May 14, 2021 by the greater between R$ 88,000 or 10 times EI’s ACV book value for 2021 multiplied by 48,43% and multiplied by 60,0% less installment paid in cash on the acquisition date. The last installment is payable on May 31, 2023 for 6 times EI’s ACV book value for 2023 plus cash generation and multiplied for 40%. During the year ended December 31, 2020 the Company recognized R$ 4,515 of interest. (i) The financial liability is recorded at the present value of the estimated amount payable to the non-controlling shareholder upon the exercise of purchasing of the remaining interest using an estimated interest rate of 13.1%. The exercise price will be calculated for two different content (“Geekie One” and “Geekie Others”) and is determined by the greater of: |
Labor and social obligations (T
Labor and social obligations (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Labor and Social Obligations | |
Summary of claims and benefits paid | 2020 2019 Bonuses (a) 31,046 28,045 Payroll and social charges 53,462 17,763 Payroll accruals 25,582 18,998 Other labor 11,549 6,506 121,639 71,312 Current 85,069 68,511 Non-current 36,570 2,801 |
Schedule of restricted stocks issued by vesting date | Final vesting Quantity of date stocks 28/09/2019 197,951 30/06/2020 3,086 28/09/2020 215,709 30/06/2021 3,086 28/09/2021 215,709 28/09/2022 17,757 30/06/2022 3,562 Total 656,860 |
Summary of movements of restricted stock | The following table reflects the movements from the grant date until December 31, 2020: Number of restricted share units Outstanding at December 31, 2019 337,185 Granted 73,085 Restricted stocks units transferred (203,622) Effectively forfeited (45,417) Outstanding at December 31, 2020 161,231 |
Summary of equity instruments on grant date fair value | Total shares Unit Total shares Total shares granted Average fair value at value Grant date granted vested outstanding grant date average 30/04/2019 542,760 111,435 68,800 126.76 30/06/2019 1,543 — 274 177.71 30/06/2019 1,543 — 319 206.66 15/10/2019 37,929 7,698 7,593 200.18 23/01/2020 13,000 7,580 2,788 214.48 02/03/2020 36,673 21,383 8,762 238.93 04/03/2020 13,164 4,388 3,346 254.21 03/09/2020 3,600 2,099 883 245.18 19/11/2020 3,562 3,562 772 216.63 19/11/2020 3,086 3,086 669 216.63 Total 656,860 161,231 94,206 |
Arco plan | |
Labor and Social Obligations | |
Summary of assumptions used to determine the fair value of options | The following table list the inputs to the model used for the Arco plan: Dividend yield (%) 2.41 Fair value of the option at grant date 72.63 Exercise price 11.13 Expected volatility (%) 186.61 Risk-free interest rate (%) 8.01 Expected life of share options (years) 6.00 Weighted average share price (R$) 12.67 Model used Black & Scholes |
International school plan | |
Labor and Social Obligations | |
Summary of assumptions used to determine the fair value of options | The following table details the assumptions used to determine the fair value of the share options under the International School share option plans: Date of grant 08/04/2017 Fair value of the option at grant date Exercise price Dividend yield (%) 0.00 % Expected volatility (%) 380.36 % Risk-free interest rate (%) 8.62 % Expected life of share options (years) 2.74 Weighted average share price (reais) on the grant date 10.65 Model used Black & Scholes |
Equity (Tables)
Equity (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Equity. | |
Schedule of share capital outstanding | December 31, 2019 shares outstanding 54,939,088 Restricted Stock Units Transferred (Note 18.b) 203,622 Restricted Stock Unit withheld (a) (55,147) Underwritten public offering of Class A common shares (Note 1.2) 2,500,000 December 31, 2020 shares outstanding 57,587,563 (a) A portion of the shares was withheld to pay income taxes of the beneficiaries. |
Earnings (loss) per share (EP_2
Earnings (loss) per share (EPS) (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Earnings (loss) per share (EPS) | |
Summary of Profit (Loss) Attributable to Equity Holders of the Parent and the Share Data Used in the Basic and Diluted EPS Computations | The following table reflects the profit (loss) attributable to equity holders of the parent and the share data used in the basic and diluted EPS computations: 2020 2019 2018 Class A Class B Total Class A Class B Total Class A Class B Total Profit (loss) attributable to equity holders of the parent 8,534 8,246 16,780 (4,379) (5,052) (9,431) (37,047) (45,333) (82,380) Weighted average number of common shares outstanding (thousand) 28,357 27,401 23,938 27,614 22,603 27,658 Effects of dilution from: Share-based compensation plan (thousands) 161 — 337 — 153 — Basic earnings (loss) per share - R$ 0.30 0.30 (0.18) (0.18) (1.64) (1.64) Diluted earnings (loss) per share - R$ 0.30 0.30 (0.18) (0.18) (1.64) (1.64) |
Revenue (Tables)
Revenue (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Revenue | |
Summary of Company's Net Revenue | 2020 2019 2018 Educational content 998,373 570,292 377,143 Other 4,534 2,820 4,102 Deductions: Taxes (1,197) (275) (264) Net revenue 1,001,710 572,837 380,981 2020 2019 2018 Segments Core Supplemental Total Core Supplemental Total Core Supplemental Total Type of goods or service Educational content 839,383 157,793 997,176 433,326 136,853 570,179 299,203 77,940 377,143 Other 1,762 2,772 4,534 46 2,612 2,658 3,828 10 3,838 Total net revenue from contracts with customers 841,145 160,565 1,001,710 433,372 139,465 572,837 303,031 77,950 380,981 Timing of revenue recognition Transferred at a point in time 841,145 160,565 1,001,710 433,372 139,465 572,837 303,031 77,950 380,981 Total net revenue from contracts with customers 841,145 160,565 1,001,710 433,372 139,465 572,837 303,031 77,950 380,981 |
Expenses by nature (Tables)
Expenses by nature (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Expenses by Nature | |
Summary of Expenses by Nature | 2020 2019 2018 Educational content material (122,401) (61,953) (41,551) Operations personnel (24,731) (12,500) (11,477) Inventory reserves (7,453) (8,476) (7,252) Freight (16,452) (14,569) (7,687) Depreciation and amortization (35,007) (15,311) (5,869) Other (15,086) (4,449) (6,909) Cost of sales (221,130) (117,258) (80,745) Sales personnel (167,300) (87,352) (49,041) Depreciation and amortization (77,343) (23,573) (11,939) Sales & marketing (24,104) (31,208) (17,931) Customer support (53,893) (30,755) (17,274) Allowance for doubtful accounts (34,684) (17,392) (9,588) Real estate rentals (965) (1,728) (1,923) Other (13,980) (7,772) (5,574) Selling expenses (372,269) (199,780) (113,270) Corporate personnel (74,437) (53,443) (39,382) Third party services (80,254) (43,415) (14,269) Real estate rents (1,623) (2,613) (3,429) Travel expenses (2,233) (3,439) (2,891) Tax expenses (7,341) (2,331) (2,858) Software licenses (5,909) (1,487) (1,098) Share-based compensation plan (69,846) (66,978) (60,297) Depreciation and amortization (15,105) (9,430) (1,786) Other (13,810) (8,302) (3,744) General and administrative expenses (270,558) (191,438) (129,754) Total (863,957) (508,476) (323,769) |
Finance result (Tables)
Finance result (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Finance result | |
Summary of Financial Result | 2020 2019 2018 Income from financial investments 2,263 18,443 11,633 Changes in fair value of financial investments (a) 17,111 28,886 4,322 Changes in fair value of derivative instruments (b) 16,147 18,599 19,839 Foreign exchange gains 1,930 1,745 138 Interest income 4,721 1,042 — Other 3,039 3,332 686 Finance income 45,211 72,047 36,618 Changes in fair value of derivative instruments (b) (15,585) (18,126) (19,180) Changes in accounts payable to selling shareholders (Note 17) (20,330) (89,403) (130,378) Interest in acquisition of investments (c) (68,379) (42,206) (9,781) Financial discounts granted (2,248) (3,343) (1,911) Foreign exchange loss (1,742) (2,300) (34,573) Interest in lease liabilities (3,036) (1,489) — Interest on loans and financing (19,862) (1,002) — Other (10,831) (12,986) (2,972) Finance costs (142,013) (170,855) (198,795) Finance result (96,802) (98,808) (162,177) (a) Refers to gains on financial investments measured at FVPL. (b) Refers to changes in the fair value of derivative financial instruments, comprised of the put and call options from business acquisitions and investments in associates and joint ventures. (c) Refer to interest expense on liabilities related to business combinations and investments in associates. |
Income taxes (Tables)
Income taxes (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Income taxes | |
Reconciliation of Income Tax Expense | 2020 2019 2018 Profit (loss) before income taxes 39,102 (42,534) (100,901) Combined statutory income taxes rate - % (a) 34 % 34 % 34 % Income tax benefit (expense) at statutory rates (13,295) 14,462 34,306 Reconciliation adjustments: Share of profit (loss) of equity-accounted investees (b) 139 (612) (269) Effect of presumed profit of subsidiaries (c) 9,552 18,593 11,080 Non-deferred tax loss (d) (7,427) (1,714) (34,227) Stock option (d) (6,986) — — Other additions (exclusions), net (4,305) 2,374 7,095 (22,322) 33,103 17,985 Current (87,379) (46,850) (26,553) Deferred 65,057 79,953 44,538 Income taxes benefit (expense) (22,322) 33,103 17,985 Effective rate 57.1 % 77.8 % 17.8 % (a) Considering that Arco Platform Ltd. is domiciled in Cayman and there is no income tax in that jurisdiction, the combined tax rate of 34% demonstrated above is the current rate applied to Arco Brasil S.A. which is the holding company of all operating entities of Arco Platform, in Brazil. (b) Refers to the effect of 34% on the share of profit (loss) of investees for the year. (c) Brazilian tax law establishes that companies that generate gross revenues of up to R$ 78,000 in the prior fiscal year may calculate income taxes as a percentage of gross revenue, using the presumed profit income tax regime. The Company’s subsidiaries adopted this tax regime and the effect of the presumed profit of subsidiaries represents the difference between the taxation based on this method and the amount that would be due based on the statutory rate applied to the taxable profit of the subsidiaries. (d) Permanent differences of non-deductible expenses. |
Summary of Changes in the Deferred Tax Assets and Liabilities | The changes in the deferred tax assets and liabilities are as follows: Change in As of accounting January 1, Profit Business Profit Business 2018 practice 2019 or loss combination Equity 2019 or loss combination 2020 Deferred tax assets Tax losses carryforward 4,364 — 4,364 11,919 — — 16,283 48,481 — 64,764 Temporary differences — Financial instruments from acquisition of interests 59,166 — 59,166 47,563 — — 106,729 10,664 — 117,393 Other temporary differences 6,585 613 7,198 14,610 — 29,325 2,392 15,098 46,815 Share base compensation — — — 7,960 — — 7,960 (1,487) — 6,473 Tax benefit from tax deductible goodwill 46,314 — 46,314 (2,009) — (29,417) 14,888 (3,341) — 11,547 Amortization of intangible assets 1,282 — 1,282 5,391 — — 6,673 10,148 — 16,821 Total deferred tax assets 117,711 613 118,324 85,434 (29,417) 181,858 66,857 15,098 263,813 Deferred tax liabilities Financial instruments from acquisition of interests (18,166) — (18,166) (5,707) — — (23,873) 14,642 — (9,231) Tax benefit from tax deductible goodwill — — — — — — — (15,678) — (15,678) Other temporary differences (1,463) — (1,463) 226 — — (1,237) (764) — (2,001) Total deferred tax liabilities (19,629) — (19,629) (5,481) — — (25,110) (1,800) — (26,910) Deferred tax assets (liabilities), net 98,082 613 98,695 79,953 (29,417) 156,748 65,057 15,098 236,903 Deferred tax assets 99,460 100,073 156,748 236,903 Deferred tax liabilities (1,378) (1,378) — — |
Segment information (Tables)
Segment information (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Segment information | |
Summary of Operating Segments | 2020 Total Adjustments reportable and Core Supplemental segments eliminations Total Net revenue 841,145 160,565 1,001,710 — 1,001,710 Cost of sales (190,893) (221,130) — (221,130) Gross profit 650,252 130,328 780,580 — 780,580 Selling expenses (309,816) (62,453) (372,269) — (372,269) Segment profit 340,436 67,875 408,311 — 408,311 General and administrative expenses — — — — (270,558) Other income (expenses), net — — — — (2,258) Operating profit — — — — 135,495 Finance income — — — — 45,211 Finance costs — — — — (142,013) Share of loss of equity-accounted investees — — — — 409 Profit before income taxes — — — — 39,102 Income taxes expense — — — — (22,322) Net profit for the year — — — — 16,780 Other disclosures Depreciation and amortization 118,416 9,039 127,455 — 127,455 Investments in associates and joint ventures 9,654 - 9,654 — 9,654 Capital expenditures 95,672 11,977 107,649 — 107,649 2019 Total Adjustments reportable and Core Supplemental segments eliminations Total Net revenue 433,372 139,465 572,837 — 572,837 Cost of sales (97,513) (19,745) (117,258) — (117,258) Gross profit 335,859 119,720 455,579 — 455,579 Selling expenses — — — — (199,780) General and administrative expenses — — — — (191,438) Other income (expenses), net — — — — (6,287) Operating profit — — — — 58,074 Finance income — — — — 72,047 Finance costs — — — — (170,855) Share of loss of equity-accounted investees — — — — (1,800) Loss before income taxes — — — — (42,534) Income taxes expense — — — — 33,103 Net loss for the year — — — — (9,431) Other disclosures Depreciation and amortization 43,854 4,460 48,314 — 48,314 Investments in associates and joint ventures 48,574 — 48,574 — 48,574 Capital expenditures 45,851 8,242 54,093 — 54,093 2018 Total Adjustments reportable and Core Supplemental segments eliminations Total Net revenue 303,031 77,950 380,981 — 380,981 Cost of sales (70,903) (9,842) (80,745) — (80,745) Gross profit 232,128 68,108 300,236 — 300,236 Selling expenses (87,186) (26,084) (113,270) — (113,270) Segment profit 144,942 42,024 186,966 — 186,966 General and administrative expenses — — — — (129,754) Other income (expenses), net — — — — 4,856 Operating profit — — — — 62,068 Finance income — — — — 36,618 Finance costs — — — — (198,795) Share of loss of equity-accounted investees — — — — (792) Loss before income taxes — — — — (100,901) Income taxes expense — — — — 17,985 Net loss for the year — — — — (82,916) Other disclosures Depreciation and amortization 17,997 1,597 19,594 — 19,594 Investments in associates and joint ventures 11,862 — 11,862 — 11,862 Capital expenditures 28,165 8,092 36,257 — 36,257 |
Summary of assets and liabilities are allocated based on the operations of the segment | These assets and liabilities are allocated based on the operations of the segment. Total Adjustments reportable and Core Supplemental segments eliminations Total As of December 31, 2020 Total assets 4,342,905 253,480 4,596,385 (20,105) 4,576,280 Total liabilities 2,316,545 78,956 2,395,501 (20,105) 2,375,396 As of December 31, 2019 Total assets 2,999,497 176,196 3,175,693 (14,270) 3,161,423 Total liabilities 1,535,695 45,188 1,580,883 (14,270) 1,566,613 |
Financial instruments (Tables)
Financial instruments (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Financial instruments | |
Summary of Financial Assets | The Company holds the following financial instruments: Financial assets Assets at FVPL Assets at amortized cost Total December 31, 2020 Cash and cash equivalents — 424,410 424,410 Financial investments 17,645 705,349 722,994 Trade receivables — 415,282 415,282 Related parties — 20,478 20,478 Investments and interests in other entities 9,654 — 9,654 27,299 1,565,519 1,592,818 Assets at FVPL Assets at amortized cost Total December 31, 2019 Cash and cash equivalents — 48,900 48,900 Financial investments 498,584 80,910 579,494 Trade receivables — 329,428 329,428 Financial instruments from acquisition of interests 35,946 — 35,946 Related parties — 16,111 16,111 Other assets — 4,109 4,109 534,530 479,458 1,013,988 |
Summary of Financial Liabilities | Liabilities at Financial liabilities Liabilities at FVPL amortized cost Total December 31, 2020 Trade payables — 40,925 40,925 Financial instruments from acquisition of interests — — — Accounts payable to selling shareholders 861,385 925,130 1,786,515 Leases liabilities — 35,220 35,220 Loans and financing — 311,119 311,119 861,385 1,312,394 2,173,779 December 31, 2019 Trade payables — 34,521 34,521 Financial instruments from acquisition of interests 33,940 — 33,940 Accounts payable to selling shareholders 328,668 887,564 1,216,232 Leases liabilities — 25,857 25,857 Loans and financing — 98,561 98,561 362,608 1,046,503 1,409,111 |
Summary of Financial Assets and Liabilities Recognized at Fair Value | Assets and liabilities are measured and recognized at fair value as follows: Hierarchy 2020 2019 Financial assets Financial investments Level 2 17,645 498,584 Derivative financial instruments Level 3 — 35,946 Investments at fair value Level 1 9,654 — Financial liabilities Derivative financial instruments Level 3 — 33,940 Accounts payable to selling shareholders Level 3 861,385 328,668 |
Summary of Fair Value Measurements using significant unobservable inputs (level 3) | The following table presents the changes in level 3 items for the years ended December 31, 2020, 2019 and 2018. Financial instruments Financial instruments from acquisition of from acquisition of Accounts payable to Recurring fair value measurements interests (assets) interests (liabilities) selling shareholders Balance as of December 31, 2017 12,511 (13,637) (36,630) Payment of capital increase in Geekie — 2,000 — Changes in accounts payable to selling shareholders — — (129,430) Interest expense — — (8,350) Deferred revenue in Escola de Aplicação São José dos Campos — 50 — Gains (losses) recognized in statement of income (loss) 14,119 (13,510) — Balance as of December 31, 2018 26,630 (25,097) (174,410) Acquisition of Nave à Vela — — (58,194) Payment of acquisition of Nave à Vela — — 21,098 Changes in accounts payable to selling shareholders — — (89,403) Interest expense — — (35,127) Deferred revenue in Escola de Aplicação São José dos Campos Ltda. — 54 — Fair value held in step acquisitions — — 7,368 Gains (loss) recognized in statement of income 9,316 (8,897) — Balance as of December 31, 2019 35,946 (33,940) (328,668) Acquisitions — — (478,209) Payment — — 9,520 Changes in accounts payable to selling shareholders — — (20,314) Interest expense — — (43,714) Gains (loss) recognized in statement of income (35,946) 33,940 — Balance as of December 31, 2020 — — (861,385) |
Risk (Tables)
Risk (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Risk | |
Summary of Company's Exposure to Foreign Currency Risk | The Company’s exposure to foreign currency risk as of December 31, 2020 and December 31, 2019, was as follows: 2020 2019 Cash and cash equivalents (Note 5) 28,327 23,346 Financial investments 542 1,629 |
Summary of Sensitivity Analysis for the Cash and Cash Equivalents With Subject to Foreign Exchange Rate | The table below set forth the sensitivity analysis as of December 31, 2020, for the amount of cash and cash equivalents and financial investments denominated in U.S. dollar of US$ 5,556 thousand: Base scenario Scenario I Scenario II Exchange rate: Exchange rate: Exchange rate: R$ 5.1961 R$ 6.2353 R$ 4.1569 Finance income (costs) — R$ 5,773 R$ (5,773) |
Maturity Profile of Financial Liabilities Based on Contractual Undiscounted Payments | The table below summarizes the maturity profile of the Company’s financial liabilities based on contractual undiscounted amounts: Less than 3 3 to 12 1 to 2 2 to 3 3 to 4 4 to 5 December 31, 2020 months months years years years years Total Trade payables 40,925 — — — — — 40,925 Lease liabilities 3,608 9,134 11,497 8,559 2,156 266 35,220 Loans and financing 1,855 105,851 203,413 — — — 311,119 Accounts payable to selling shareholders 152,057 503,957 585,663 273,810 271,028 — 1,786,515 198,445 618,942 800,573 282,369 273,184 266 2,173,779 Less than 3 3 to 12 1 to 2 2 to 3 3 to 4 4 to 5 December 31, 2019 months months years years years years Total Trade payables 34,521 — — — — — 34,521 Lease liabilities 2,037 4,808 9,696 7,225 1,901 190 25,857 Loans and financing — 98,561 — — — — 98,561 Financial instruments from acquisition of interests — — 33,940 — — — 33,940 Accounts payable to selling shareholders — 117,959 374,106 194,548 265,886 263,733 1,216,232 36,558 221,328 417,742 201,773 267,787 263,923 1,409,111 |
Summary of Changes in Liabilities Arising From Financing Activities | Changes in liabilities arising from financing activities Change in As of December 31, Cash December 31, accounting January Cash December Cash December 2017 flows Other 2018 practice 1, 2019 flows Other 31, 2019 flows Other 31, 2020 Dividends payable 10,511 (85,000) 74,489 — — — — — — — — — Leases — — — — 20,089 20,089 (5,259) 11,027 25,857 (10,610) 19,973 35,220 Loans and financing — — — — — — 97,011 1,550 98,561 183,860 28,698 311,119 Total 10,511 (85,000) 74,489 — 20,089 20,089 91,752 12,577 124,418 173,250 48,671 346,339 |
Interest rate risk | |
Risk | |
Summary of the Scenarios Estimated by Management and the Effect on Profit Before Income Taxes | The table below shows a summary of the scenarios estimated by Management and the effect on profit before income taxes: December 31, 2020 Exposure +10% -10% Cash, bank deposits and cash equivalents 396,083 1,204 (1,204) Financial investments 722,452 2,196 (2,196) Accounts payable to selling shareholders 912,757 2,775 (2,775) Related parties 20,478 62 (62) Loans and financing 311,119 997 (997) |
Other market risk | |
Risk | |
Summary of the Scenarios Estimated by Management and the Effect on Profit Before Income Taxes | The table below shows a summary of the scenarios estimated: 20 % -20 % ACV book value - Geekie 24,260 (24,260) ACV book value - EI 51,883 (51,883) 20 % -20 % WACC - Geekie 3,836 (3,836) WACC - EI 15,262 (15,262) |
Commitments and contingencies (
Commitments and contingencies (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Commitments and contingencies | |
Summary of Rollforward of Legal Proceedings | Civil Labor Taxes Total Balance at December 31, 2018 — 17 114 131 Additions — 209 145 354 Reversals — (104) (130) (234) Balance at December 31, 2019 — 122 129 251 Additions 564 108 137 809 Business combination — — 599 599 Reversals (99) (178) (16) (293) Balance at December 31, 2020 465 52 849 1,366 |
Summary of Litigation Settlement | 2020 2019 Civil (a) 6,367 6,113 Labor (b) 1,496 1,096 Total 7,863 7,209 (a) The civil proceedings relate mainly to customer claims, including those related to the early termination of certain agreements, among others. (b) The labor proceedings to which the Company is a party were filed by former employees or suppliers and third-party service providers’ employees seeking joint liability for the acts of the Company’s suppliers and service providers. |
Transactions not involving ca_2
Transactions not involving cash (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Transactions not involving cash | |
Summary of Non-cash Activities, Which Are Not Included in Statements of Cash Flow | During the years ended December 31, 2020, 2019 and 2018, the Company carried out the following non-cash activities, which are not reflected in the statement of cash flows: 2020 2019 2018 Share issuance costs – unpaid — — 674 Tax benefit from tax deductible goodwill — (46,314) 46,314 Investing - derivative financial instruments — 14,597 — Business combinations - derivative financial instruments — 38,924 — Lease (Note 13) 14,471 1,251 — Forward contract (Note 4) 469,587 29,728 — Retained payments from business combination (Note 4) 14,821 874,440 — Capital contribution (Note 4) 4,000 — — Price adjustment from business combination (Note 4) 4,620 — — Acquisition from business combination (Note 4) 22,857 39,419 — |
Corporate Information - Follow-
Corporate Information - Follow-on public offering (Details) $ / shares in Units, R$ in Thousands, $ in Thousands | Sep. 08, 2020USD ($)$ / sharesshares | Sep. 08, 2020BRL (R$)shares | Jun. 04, 2020$ / sharesshares | Dec. 31, 2020BRL (R$) | Dec. 31, 2019BRL (R$) | Dec. 31, 2018BRL (R$) |
Follow-on public offering | ||||||
Gross proceeds from issuance of shares | $ 112,000 | R$ 591900 | ||||
Audit, consulting and legal services incurred related to the offering | R$ | R$ 16291 | R$ 18223 | R$ 79205 | |||
Class A common shares | ||||||
Follow-on public offering | ||||||
Public offering price | $ / shares | $ 47.70 | |||||
Follow-on public offering | ||||||
Follow-on public offering | ||||||
Number of shares issued | shares | 5,563,203 | |||||
Net proceeds from issuance shares | 109,760 | 580,059 | ||||
Underwriting discounts and commissions | $ 2,240 | 11,839 | ||||
Audit, consulting and legal services incurred related to the offering | R$ | R$ 4452 | |||||
Follow-on public offering | Class A common shares | ||||||
Follow-on public offering | ||||||
Number of shares issued | shares | 2,500,000 | 2,500,000 | ||||
Public offering price | $ / shares | $ 44.80 |
Corporate Information - Interna
Corporate Information - Internal Restructurings (Details) - BRL (R$) R$ in Thousands | Aug. 01, 2020 | Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 |
Disclosure of detailed information about business combination [line items] | ||||
Tax rate | 34.00% | 34.00% | 34.00% | |
PSD Educacao S.A. ("PSD") | Positivo Soluoes Didaticas Ltda. and Editora Pia Ltda. | ||||
Disclosure of detailed information about business combination [line items] | ||||
Non tax deductible goodwill recognized | R$ 830028 | |||
Non tax deductible fair value adjustments recognized | 726,876 | |||
Tax benefits from the deductibility of the amortization of goodwill and fair value adjustments | R$ 529347 | |||
Tax rate | 34.00% | |||
Fair value adjustments, useful life | 7 years 6 months | |||
PSD Educacao S.A. ("PSD") | Minimum | Positivo Soluoes Didaticas Ltda. and Editora Pia Ltda. | ||||
Disclosure of detailed information about business combination [line items] | ||||
Fair value adjustments, amortization period | 5 years | |||
PSD Educacao S.A. ("PSD") | Maximum | Positivo Soluoes Didaticas Ltda. and Editora Pia Ltda. | ||||
Disclosure of detailed information about business combination [line items] | ||||
Fair value adjustments, amortization period | 20 years |
Corporate Information - Acquisi
Corporate Information - Acquisition of Investments (Details) R$ in Thousands | Jul. 24, 2020USD ($)item | Jul. 24, 2020BRL (R$)item | Sep. 21, 2020 | Apr. 30, 2015 |
WPensar S.A. | ||||
Investments and Interests in Other Entities | ||||
Equity interest acquired (as a percent) | 75.00% | 25.00% | ||
Studos Software Ltda. | ||||
Investments and Interests in Other Entities | ||||
Equity interest acquired (as a percent) | 100.00% | |||
Financial assets at fair value through profit or loss, | Bewater Ventures I GA Fundo de Investimento em Participaes Multiestratgia | ||||
Investments and Interests in Other Entities | ||||
Equity Interest Acquired | 14.48% | 14.48% | ||
Number of Class B quotas purchased | 9,670 | 9,670 | ||
Payments to acquire investments | $ 9,670,000 | R$ 9670 |
Corporate Information - Informa
Corporate Information - Information related Covid-19 pandemic (Details) - BRL (R$) R$ in Thousands | Mar. 28, 2020 | Dec. 31, 2020 |
Information Related To COVID-19 Pandemic [Line Items] | ||
Amount Of Discount Obtained For Leased Buildings, Due To COVID 19 Pandemic | R$ 350 | |
Additional loan agreement, due to COVID - 19 pandemic | ||
Information Related To COVID-19 Pandemic [Line Items] | ||
Increase in allowance for doubtful accounts, due to COVID - 19 pandemic | R$ 6996 | |
Additional expenses incurred, due to COVID - 19 pandemic | 7,707 | |
Incremental charge to inventory reserves, due to COVID - 19 pandemic | 287 | |
Amount Of Discount Obtained For Leased Buildings, Due To COVID 19 Pandemic | 350 | |
Notional amount | R$ 200000 |
Significant Accounting Polici_4
Significant Accounting Policies - Summary of Company's Subsidiaries, Associates and Joint Ventures (Details) | Sep. 21, 2020 | Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 |
Geekie | ||||
Significant Accounting Policies | ||||
Ownership interest held | 56.06% | |||
Arco Educacao S.A. | ||||
Significant Accounting Policies | ||||
Principal activities | Holding | |||
Country of Incorporation, Subsidiary | Brazil | |||
Ownership interest held | 100.00% | 100.00% | 100.00% | |
PSD Educao S.A. | ||||
Significant Accounting Policies | ||||
Principal activities | Educational content | |||
Country of Incorporation, Subsidiary | Brazil | |||
Ownership interest held | 100.00% | 100.00% | 100.00% | |
Barra Americas Editora Ltda. | ||||
Significant Accounting Policies | ||||
Principal activities | Educational content | |||
Country of Incorporation, Subsidiary | Brazil | |||
Ownership interest held | 100.00% | 100.00% | 100.00% | |
Distribuidora de Material Didatico Desterro Ltda. | ||||
Significant Accounting Policies | ||||
Principal activities | Educational content | |||
Country of Incorporation, Subsidiary | Brazil | |||
Ownership interest held | 100.00% | 100.00% | 100.00% | |
Novagaucha Editora e Livraria Ltda. | ||||
Significant Accounting Policies | ||||
Principal activities | Educational content | |||
Country of Incorporation, Subsidiary | Brazil | |||
Ownership interest held | 100.00% | |||
SAS Sistema de Ensino Ltda. | ||||
Significant Accounting Policies | ||||
Principal activities | Educational content | |||
Country of Incorporation, Subsidiary | Brazil | |||
Ownership interest held | 100.00% | 100.00% | 100.00% | |
Arco Ventures S.A. | ||||
Significant Accounting Policies | ||||
Principal activities | Educational content | |||
Country of Incorporation, Subsidiary | Brazil | |||
Ownership interest held | 100.00% | 100.00% | 100.00% | |
SAS Livrarias Ltda. | ||||
Significant Accounting Policies | ||||
Principal activities | Educational content | |||
Country of Incorporation, Subsidiary | Brazil | |||
Ownership interest held | 100.00% | 100.00% | 100.00% | |
SAE Digital S.A | ||||
Significant Accounting Policies | ||||
Principal activities | Educational content | |||
Country of Incorporation, Subsidiary | Brazil | |||
Ownership interest held | 100.00% | 100.00% | 100.00% | |
Escola de Aplicacao Sao Jose dos Campos Ltda. | ||||
Significant Accounting Policies | ||||
Principal activities | Educational services | |||
Country of Incorporation, Subsidiary | Brazil | |||
Ownership interest held | 69.60% | |||
International School Servicos de Ensino, Treinamento e Editoracao, Franqueadora S.A. ("International School") | ||||
Significant Accounting Policies | ||||
Principal activities | Educational content | |||
Country of Incorporation, Subsidiary | Brazil | |||
Ownership interest held | 51.50% | 51.50% | 51.50% | |
NS Ventures Participacoes Ltda. | ||||
Significant Accounting Policies | ||||
Principal activities | Educational content | |||
Country of Incorporation, Subsidiary | Brazil | |||
Ownership interest held | 100.00% | |||
NS Educacao Ltda. ("NS Educacao") | ||||
Significant Accounting Policies | ||||
Principal activities | Educational content | |||
Country of Incorporation, Subsidiary | Brazil | |||
Ownership interest held | 100.00% | |||
Nave a Vela Ltda. ("Nave") | ||||
Significant Accounting Policies | ||||
Principal activities | Educational content | |||
Country of Incorporation, Subsidiary | Brazil | |||
Ownership interest held | 51.00% | 51.00% | ||
EEM Licenciamento de Programas Educacionais Ltda | ||||
Significant Accounting Policies | ||||
Principal activities | Educational technology | |||
Country of Incorporation, Subsidiary | Brazil | |||
Ownership interest held | 100.00% | 100.00% | ||
NLP Solucoes Educacionais Ltda. | ||||
Significant Accounting Policies | ||||
Principal activities | Educational content | |||
Country of Incorporation, Subsidiary | Brazil | |||
Ownership interest held | 100.00% | 100.00% | ||
WPensar S.A | ||||
Significant Accounting Policies | ||||
Principal activities | Educational technology | |||
Country of Incorporation, Joint Venture | Brazil | |||
Ownership interest held | 100.00% | |||
Direct and indirect interest, Joint Venture | 100.00% | 25.00% | 25.00% | |
Geekie Desenvolvimento de Softwares S.A | ||||
Significant Accounting Policies | ||||
Principal activities | Educational technology | |||
Country of Incorporation, Associate | Brazil | |||
Percentage of share capital acquired | 56.00% | 37.50% | 8.05% | |
Studos Software Ltda. | ||||
Significant Accounting Policies | ||||
Principal activities | Educational content | |||
Country of Incorporation, Subsidiary | Brazil | |||
Ownership interest held | 100.00% | |||
Escola da Inteligencia Cursos Educacionais Ltda. | ||||
Significant Accounting Policies | ||||
Principal activities | Educational content | |||
Country of Incorporation, Subsidiary | Brazil | |||
Ownership interest held | 60.00% | |||
Bewater Ventures I GA Fundo de Investimento em Participaes Multiestratgia | ||||
Significant Accounting Policies | ||||
Principal activities | Private equity | |||
Country of Incorporation, Subsidiary | Brazil | |||
Ownership interest held | 14.48% |
Significant Accounting Polici_5
Significant Accounting Policies - Property and Equipment (Details) | 12 Months Ended |
Dec. 31, 2020 | |
Machinery and equipment | |
Significant Accounting Policies | |
Depreciation Rates over the estimated useful lives of the assets | 10.00% |
Vehicles | |
Significant Accounting Policies | |
Depreciation Rates over the estimated useful lives of the assets | 20.00% |
Furniture and fixture | |
Significant Accounting Policies | |
Depreciation Rates over the estimated useful lives of the assets | 10.00% |
IT equipment | |
Significant Accounting Policies | |
Depreciation Rates over the estimated useful lives of the assets | 20.00% |
Facilities | |
Significant Accounting Policies | |
Depreciation Rates over the estimated useful lives of the assets | 10.00% |
Leasehold improvements | Minimum | |
Significant Accounting Policies | |
Depreciation Rates over the estimated useful lives of the assets | 20.00% |
Leasehold improvements | Maximum | |
Significant Accounting Policies | |
Depreciation Rates over the estimated useful lives of the assets | 33.00% |
Significant Accounting Polici_6
Significant Accounting Policies - Right-of-use Assets (Details) | 12 Months Ended |
Dec. 31, 2020 | |
Buildings | Minimum | |
Significant Accounting Policies | |
Estimated useful life and lease term | 1 year |
Buildings | Maximum | |
Significant Accounting Policies | |
Estimated useful life and lease term | 10 years |
Equipment | |
Significant Accounting Policies | |
Estimated useful life and lease term | 4 years |
Significant Accounting Polici_7
Significant Accounting Policies - Revenue from contracts with customers and Amendments to IFRS 16 Covid-19 related rent concessions (Details) - BRL (R$) R$ in Thousands | Mar. 28, 2020 | Dec. 31, 2020 |
Significant Accounting Policies | ||
Amount of discount obtained for leased buildings, due to COVID - 19 pandemic | R$ 350 | |
Minimum | ||
Significant Accounting Policies | ||
Past due period | 1 year | |
Termination penalties as a percentage of revenue | 20.00% | |
Maximum | ||
Significant Accounting Policies | ||
Past due period | 5 years | |
Termination penalties as a percentage of revenue | 100.00% |
Significant accounting judgem_2
Significant accounting judgements, estimates and assumptions - Additional Information (Details) - BRL (R$) R$ in Thousands | Dec. 31, 2020 | Dec. 31, 2019 |
Significant accounting judgements, estimates and assumptions | ||
Unrecognized unused tax loss | R$ 4380 | R$ 4066 |
Business Combinations and Acq_3
Business Combinations and Acquisition of Non-controlling Interests - Summary of Fair Value of Identifiable Assets and liabilities as of Date of Each Acquisition (Details) - BRL (R$) R$ in Thousands | 12 Months Ended | |||||||||||||||
Dec. 31, 2020 | Dec. 31, 2019 | Nov. 27, 2020 | Sep. 21, 2020 | Aug. 28, 2020 | Jul. 06, 2020 | Mar. 04, 2020 | Nov. 01, 2019 | Oct. 29, 2019 | Oct. 25, 2019 | Sep. 29, 2019 | May 31, 2019 | May 07, 2019 | Apr. 29, 2019 | Jan. 31, 2017 | Apr. 30, 2015 | |
Analysis of cash flows on acquisition: | ||||||||||||||||
Transaction costs of the acquisition (included in cash flows from operating activities) | R$ 6510 | |||||||||||||||
WPensar S.A. | ||||||||||||||||
Liabilities | ||||||||||||||||
Goodwill arising on acquisition | 18,994 | |||||||||||||||
Purchase consideration transferred | 23,908 | R$ 5000 | ||||||||||||||
Cash paid | 14,345 | |||||||||||||||
Retained payments | 3,586 | |||||||||||||||
Fair value of previously held interest in a step acquisition | 5,977 | |||||||||||||||
Analysis of cash flows on acquisition: | ||||||||||||||||
Transaction costs of the acquisition (included in cash flows from operating activities) | 115 | |||||||||||||||
WPensar S.A. | At fair value | ||||||||||||||||
Assets | ||||||||||||||||
Cash and cash and equivalents | 378 | |||||||||||||||
Trade receivables | 75 | |||||||||||||||
Recoverable taxes | 108 | |||||||||||||||
Other assets | 1 | |||||||||||||||
Property and equipment | 172 | |||||||||||||||
Intangible assets | 6,192 | |||||||||||||||
Total Assets | 6,926 | |||||||||||||||
Liabilities | ||||||||||||||||
Trade payables | 47 | |||||||||||||||
Labor and social obligations | 385 | |||||||||||||||
Taxes and contributions payable | 152 | |||||||||||||||
Income taxes payable | 8 | |||||||||||||||
Loans with related parties | 1,285 | |||||||||||||||
Advances from customers | 100 | |||||||||||||||
Other liabilities | 35 | |||||||||||||||
Total Liabilities | 2,012 | |||||||||||||||
Total identifiable net assets at fair value | 4,914 | |||||||||||||||
Goodwill arising on acquisition | 18,994 | |||||||||||||||
Purchase consideration transferred | 23,908 | |||||||||||||||
Cash paid | 14,345 | |||||||||||||||
Retained payments | 3,586 | |||||||||||||||
Fair value of previously held interest in a step acquisition | 5,977 | |||||||||||||||
Analysis of cash flows on acquisition: | ||||||||||||||||
Transaction costs of the acquisition (included in cash flows from operating activities) | (115) | |||||||||||||||
Cash paid and subscribed capital net of cash acquired with the subsidiary (included in cash flows from investing activities) | (13,967) | |||||||||||||||
Studos Software Ltda. | ||||||||||||||||
Liabilities | ||||||||||||||||
Goodwill arising on acquisition | 13,371 | |||||||||||||||
Purchase consideration transferred | 19,533 | |||||||||||||||
Cash paid | 8,298 | |||||||||||||||
Retained payments | 11,235 | |||||||||||||||
Studos Software Ltda. | At fair value | ||||||||||||||||
Assets | ||||||||||||||||
Cash and cash and equivalents | 191 | |||||||||||||||
Trade receivables | 126 | |||||||||||||||
Property and equipment | 39 | |||||||||||||||
Intangible assets | 5,996 | |||||||||||||||
Total Assets | 6,352 | |||||||||||||||
Liabilities | ||||||||||||||||
Trade payables | 18 | |||||||||||||||
Labor and social obligations | 79 | |||||||||||||||
Taxes and contributions payable | 56 | |||||||||||||||
Advances from customers | 27 | |||||||||||||||
Other liabilities | 10 | |||||||||||||||
Total Liabilities | 190 | |||||||||||||||
Total identifiable net assets at fair value | 6,162 | |||||||||||||||
Goodwill arising on acquisition | 13,371 | |||||||||||||||
Purchase consideration transferred | 19,533 | |||||||||||||||
Cash paid | 8,298 | |||||||||||||||
Retained payments | 11,235 | |||||||||||||||
Analysis of cash flows on acquisition: | ||||||||||||||||
Transaction costs of the acquisition (included in cash flows from operating activities) | (275) | |||||||||||||||
Cash paid and subscribed capital net of cash acquired with the subsidiary (included in cash flows from investing activities) | (8,107) | |||||||||||||||
Geekie | ||||||||||||||||
Liabilities | ||||||||||||||||
Goodwill arising on acquisition | 162,552 | |||||||||||||||
Purchase consideration transferred | R$ 5761 | R$ 191979 | R$ 5782 | R$ 12676 | R$ 21892 | |||||||||||
Cash paid | R$ 8000 | |||||||||||||||
Capital contribution | 4,282 | R$ 4500 | ||||||||||||||
Fair value of previously held interest in a step acquisition | R$ 68257 | |||||||||||||||
Analysis of cash flows on acquisition: | ||||||||||||||||
Transaction costs of the acquisition (included in cash flows from operating activities) | 762 | |||||||||||||||
Geekie | At fair value | ||||||||||||||||
Assets | ||||||||||||||||
Cash and cash and equivalents | 7,796 | |||||||||||||||
Trade receivables | 1,120 | |||||||||||||||
Inventories | 8,333 | |||||||||||||||
Recoverable taxes | 524 | |||||||||||||||
Deferred taxes | 15,098 | |||||||||||||||
Other assets | 710 | |||||||||||||||
Property and equipment | 2,592 | |||||||||||||||
Right-of-use assets | 292 | |||||||||||||||
Intangible assets | 36,328 | |||||||||||||||
Total Assets | 72,793 | |||||||||||||||
Liabilities | ||||||||||||||||
Trade payables | 823 | |||||||||||||||
Labor and social obligations | 21,584 | |||||||||||||||
Taxes and contributions payable | 677 | |||||||||||||||
Leases | 292 | |||||||||||||||
Loans and financing | 8,836 | |||||||||||||||
Loans with related parties | 10,885 | |||||||||||||||
Advances from customers | 269 | |||||||||||||||
Total Liabilities | 43,366 | |||||||||||||||
Total identifiable net assets at fair value | 29,427 | |||||||||||||||
Goodwill arising on acquisition | 162,552 | |||||||||||||||
Purchase consideration transferred | 191,979 | |||||||||||||||
Cash paid | 4,500 | |||||||||||||||
Capital contribution | 4,000 | |||||||||||||||
Forward contract of noncontrolling interest at acquisition | 115,222 | |||||||||||||||
Fair value of previously held interest in a step acquisition | 68,257 | |||||||||||||||
Analysis of cash flows on acquisition: | ||||||||||||||||
Transaction costs of the acquisition (included in cash flows from operating activities) | (762) | |||||||||||||||
Cash paid and subscribed capital net of cash acquired with the subsidiary (included in cash flows from investing activities) | 3,296 | |||||||||||||||
Escola da Inteligencia Cursos Educacionais Ltda. | ||||||||||||||||
Liabilities | ||||||||||||||||
Goodwill arising on acquisition | R$ 282667 | |||||||||||||||
Purchase consideration transferred | 558,985 | |||||||||||||||
Cash paid | 200,000 | |||||||||||||||
Price adjustment | R$ 4620 | |||||||||||||||
Escola da Inteligencia Cursos Educacionais Ltda. | At fair value | ||||||||||||||||
Assets | ||||||||||||||||
Cash and cash and equivalents | 14,492 | |||||||||||||||
Trade receivables | 11,129 | |||||||||||||||
Inventories | 4,419 | |||||||||||||||
Advance to employees | 11,484 | |||||||||||||||
Other assets | 697 | |||||||||||||||
Property and equipment | 843 | |||||||||||||||
Right-of-use assets | 2,418 | |||||||||||||||
Intangible assets | 238,825 | |||||||||||||||
Total Assets | 284,307 | |||||||||||||||
Liabilities | ||||||||||||||||
Trade payables | 1,709 | |||||||||||||||
Labor and social obligations | 3,097 | |||||||||||||||
Leases | 2,418 | |||||||||||||||
Provision for legal proceedings | 599 | |||||||||||||||
Other liabilities | 166 | |||||||||||||||
Total Liabilities | 7,989 | |||||||||||||||
Total identifiable net assets at fair value | 276,318 | |||||||||||||||
Goodwill arising on acquisition | 282,667 | |||||||||||||||
Purchase consideration transferred | 558,985 | |||||||||||||||
Cash paid | 200,000 | |||||||||||||||
Forward contract of noncontrolling interest at acquisition | 354,365 | |||||||||||||||
Price adjustment | 4,620 | |||||||||||||||
Analysis of cash flows on acquisition: | ||||||||||||||||
Transaction costs of the acquisition (included in cash flows from operating activities) | (6,510) | |||||||||||||||
Cash paid and subscribed capital net of cash acquired with the subsidiary (included in cash flows from investing activities) | (185,508) | |||||||||||||||
EEM Licenciamento de Programas Educacionais S.A. ("Escola em Movimento") | ||||||||||||||||
Liabilities | ||||||||||||||||
Goodwill arising on acquisition | R$ 13069 | |||||||||||||||
Purchase consideration transferred | 18,285 | |||||||||||||||
Cash paid | R$ 260 | R$ 16095 | ||||||||||||||
EEM Licenciamento de Programas Educacionais S.A. ("Escola em Movimento") | At fair value | ||||||||||||||||
Assets | ||||||||||||||||
Cash and cash and equivalents | 219 | |||||||||||||||
Trade receivables | 126 | |||||||||||||||
Recoverable taxes | 12 | |||||||||||||||
Other assets | 14 | |||||||||||||||
Property and equipment | 80 | |||||||||||||||
Intangible assets | 5,866 | |||||||||||||||
Total Assets | 6,317 | |||||||||||||||
Liabilities | ||||||||||||||||
Trade payables | 48 | |||||||||||||||
Labor and social obligations | 240 | |||||||||||||||
Taxes and contributions payable | 109 | |||||||||||||||
Loans and financing | 548 | |||||||||||||||
Other liabilities | 156 | |||||||||||||||
Total Liabilities | 1,101 | |||||||||||||||
Total identifiable net assets at fair value | 5,216 | |||||||||||||||
Goodwill arising on acquisition | 13,069 | |||||||||||||||
Purchase consideration transferred | 18,285 | |||||||||||||||
Cash paid | 16,355 | |||||||||||||||
Retained payments | 1,930 | |||||||||||||||
Analysis of cash flows on acquisition: | ||||||||||||||||
Transaction costs of the acquisition (included in cash flows from operating activities) | (649) | |||||||||||||||
Cash paid and subscribed capital net of cash acquired with the subsidiary (included in cash flows from investing activities) | (16,136) | |||||||||||||||
Nave a Vela Ltda. ("Nave") | ||||||||||||||||
Liabilities | ||||||||||||||||
Goodwill arising on acquisition | R$ 37557 | |||||||||||||||
Purchase consideration transferred | 58,194 | R$ 4200 | ||||||||||||||
Cash paid | R$ 21098 | |||||||||||||||
Analysis of cash flows on acquisition: | ||||||||||||||||
Transaction costs of the acquisition (included in cash flows from operating activities) | R$ 467 | |||||||||||||||
Nave a Vela Ltda. ("Nave") | At fair value | ||||||||||||||||
Assets | ||||||||||||||||
Cash and cash and equivalents | 1,565 | |||||||||||||||
Trade receivables | 896 | |||||||||||||||
Inventories | 897 | |||||||||||||||
Recoverable taxes | 7 | |||||||||||||||
Other assets | 284 | |||||||||||||||
Property and equipment | 292 | |||||||||||||||
Intangible assets | 19,009 | |||||||||||||||
Total Assets | 22,950 | |||||||||||||||
Liabilities | ||||||||||||||||
Trade payables | 271 | |||||||||||||||
Labor and social obligations | 1,444 | |||||||||||||||
Taxes and contributions payable | 50 | |||||||||||||||
Income taxes payable | 2 | |||||||||||||||
Other liabilities | 546 | |||||||||||||||
Total Liabilities | 2,313 | |||||||||||||||
Total identifiable net assets at fair value | 20,637 | |||||||||||||||
Goodwill arising on acquisition | 37,557 | |||||||||||||||
Purchase consideration transferred | 58,194 | |||||||||||||||
Cash paid | 21,098 | |||||||||||||||
Forward contract of noncontrolling interest at acquisition | 29,728 | |||||||||||||||
Fair value of previously held interest in a step acquisition | 7,368 | |||||||||||||||
Analysis of cash flows on acquisition: | ||||||||||||||||
Transaction costs of the acquisition (included in cash flows from operating activities) | (467) | |||||||||||||||
Cash paid and subscribed capital net of cash acquired with the subsidiary (included in cash flows from investing activities) | (19,533) | |||||||||||||||
Sistema Positivo de Ensino ("Positivo") | ||||||||||||||||
Liabilities | ||||||||||||||||
Goodwill arising on acquisition | R$ 830028 | |||||||||||||||
Purchase consideration transferred | R$ 1745160 | R$ 800851 | ||||||||||||||
Analysis of cash flows on acquisition: | ||||||||||||||||
Transaction costs of the acquisition (included in cash flows from operating activities) | 27,389 | |||||||||||||||
Sistema Positivo de Ensino ("Positivo") | At fair value | ||||||||||||||||
Assets | ||||||||||||||||
Cash and cash and equivalents | 37,635 | |||||||||||||||
Trade receivables | 72,780 | |||||||||||||||
Inventories | 13,664 | |||||||||||||||
Recoverable taxes | 99 | |||||||||||||||
Deferred taxes | 7,518 | |||||||||||||||
Other assets | 1,526 | |||||||||||||||
Property and equipment | 4,760 | |||||||||||||||
Right-of-use assets | 5,241 | |||||||||||||||
Intangible assets | 773,134 | |||||||||||||||
Total Assets | 916,357 | |||||||||||||||
Liabilities | ||||||||||||||||
Trade payables | 12,463 | |||||||||||||||
Labor and social obligations | 29,607 | |||||||||||||||
Taxes and contributions payable | 2,937 | |||||||||||||||
Income taxes payable | 22,643 | |||||||||||||||
Leases | 5,374 | |||||||||||||||
Total Liabilities | 73,024 | |||||||||||||||
Total identifiable net assets at fair value | 843,333 | |||||||||||||||
Goodwill arising on acquisition | 830,028 | |||||||||||||||
Purchase consideration transferred | 1,673,361 | |||||||||||||||
Cash paid | 800,851 | |||||||||||||||
Retained payments | 872,510 | |||||||||||||||
Analysis of cash flows on acquisition: | ||||||||||||||||
Transaction costs of the acquisition (included in cash flows from operating activities) | (27,389) | |||||||||||||||
Cash paid and subscribed capital net of cash acquired with the subsidiary (included in cash flows from investing activities) | R$ 763216 |
Business Combinations and Acq_4
Business Combinations and Acquisition of Non-controlling Interests - Additional Information (Details) R$ in Thousands | Feb. 25, 2021 | Nov. 27, 2020BRL (R$) | Nov. 11, 2020BRL (R$) | Sep. 21, 2020BRL (R$) | Aug. 28, 2020BRL (R$) | Jul. 06, 2020BRL (R$) | Mar. 04, 2020BRL (R$) | Nov. 15, 2019BRL (R$) | Oct. 29, 2019BRL (R$) | Oct. 25, 2019BRL (R$) | Oct. 14, 2019BRL (R$) | Sep. 20, 2019BRL (R$) | Apr. 29, 2019BRL (R$)installment | Jul. 02, 2018BRL (R$) | Dec. 31, 2019BRL (R$) | May 31, 2019BRL (R$) | Jan. 31, 2017BRL (R$) | Dec. 31, 2016 | Dec. 31, 2020BRL (R$) | Dec. 31, 2019BRL (R$) | Jun. 30, 2021BRL (R$) | Dec. 31, 2020$ / shares | Dec. 31, 2020BRL (R$)installment | Nov. 26, 2020BRL (R$) | Nov. 01, 2019BRL (R$) | Sep. 29, 2019BRL (R$) | May 07, 2019BRL (R$) | Jun. 30, 2018BRL (R$) | Apr. 30, 2015BRL (R$) |
Business combinations and acquisition of non-controlling interests | |||||||||||||||||||||||||||||
Repayment term (in years) | 5 years | ||||||||||||||||||||||||||||
Goodwill | R$ 916767 | R$ 916767 | R$ 1394351 | ||||||||||||||||||||||||||
Nominal value per share | $ / shares | $ 0.00005 | ||||||||||||||||||||||||||||
Transaction costs | R$ 6510 | ||||||||||||||||||||||||||||
Equity interest held by noncontrolling shareholders (as a percent) | 43.94% | ||||||||||||||||||||||||||||
Estimated interest rate (as percent) | 13.15% | ||||||||||||||||||||||||||||
WPensar S.A. | |||||||||||||||||||||||||||||
Business combinations and acquisition of non-controlling interests | |||||||||||||||||||||||||||||
Cash consideration | 14,345 | ||||||||||||||||||||||||||||
Carrying Amount Of The Investment Previously Held Interest In Step Acquisition | 2,729 | ||||||||||||||||||||||||||||
Goodwill recorded on acquisition | 18,994 | ||||||||||||||||||||||||||||
Equity interest acquired (as a percent) | 75.00% | 25.00% | |||||||||||||||||||||||||||
Aggregate consideration | 23,908 | R$ 5000 | |||||||||||||||||||||||||||
Capital contribution | 4,777 | ||||||||||||||||||||||||||||
Initial recognition of asymmetrical put and call options | R$ 223 | ||||||||||||||||||||||||||||
Retained payments | 3,586 | ||||||||||||||||||||||||||||
Fair value of previously held interest in a step acquisition | 5,977 | ||||||||||||||||||||||||||||
Gain (loss) in step acquisition | R$ 3248 | ||||||||||||||||||||||||||||
Transaction costs | R$ 115 | ||||||||||||||||||||||||||||
Studos Software Ltda. | |||||||||||||||||||||||||||||
Business combinations and acquisition of non-controlling interests | |||||||||||||||||||||||||||||
Cash consideration | 8,298 | ||||||||||||||||||||||||||||
Escrow account deposit period | 2 years | ||||||||||||||||||||||||||||
Goodwill recorded on acquisition | R$ 13371 | ||||||||||||||||||||||||||||
Number of Equal Annual Installment | installment | 2 | ||||||||||||||||||||||||||||
Equity interest acquired (as a percent) | 100.00% | ||||||||||||||||||||||||||||
Aggregate consideration | R$ 19533 | ||||||||||||||||||||||||||||
Retained payments | 11,235 | ||||||||||||||||||||||||||||
Studos Software Ltda. | General and administrative expenses | |||||||||||||||||||||||||||||
Business combinations and acquisition of non-controlling interests | |||||||||||||||||||||||||||||
Transaction costs | R$ 275 | ||||||||||||||||||||||||||||
Geekie | |||||||||||||||||||||||||||||
Business combinations and acquisition of non-controlling interests | |||||||||||||||||||||||||||||
Cash consideration | R$ 8000 | ||||||||||||||||||||||||||||
Carrying Amount Of The Investment Previously Held Interest In Step Acquisition | R$ 71812 | ||||||||||||||||||||||||||||
Goodwill recorded on acquisition | R$ 162552 | ||||||||||||||||||||||||||||
Capital contribution | R$ 4500 | R$ 4282 | R$ 4282 | ||||||||||||||||||||||||||
Cash consideration paid to selling shareholders on acquisition date | 4,000 | ||||||||||||||||||||||||||||
Equity interest acquired (as a percent) | 1.64% | 1.76% | 4.62% | 10.51% | 1.17% | 18.44% | 1.92% | 0.96% | 1.51% | 7.00% | 6.54% | 7.00% | |||||||||||||||||
Aggregate consideration | 191,979 | R$ 5782 | R$ 12676 | R$ 21892 | R$ 5761 | R$ 5761 | |||||||||||||||||||||||
Capital contribution | 4,000 | R$ 4500 | R$ 2000 | R$ 2500 | R$ 1218 | R$ 2000 | 4,000 | R$ 4500 | |||||||||||||||||||||
Fair value of previously held interest in a step acquisition | 68,257 | ||||||||||||||||||||||||||||
Gain (loss) in step acquisition | 3,555 | ||||||||||||||||||||||||||||
Transaction costs | 762 | ||||||||||||||||||||||||||||
Number of times of acquiree's EBIDTA considered for calculation of option price | 10 | ||||||||||||||||||||||||||||
Consideration paid to selling shareholder | R$ 4000 | ||||||||||||||||||||||||||||
Threshold cash and cash equivalents | R$ 5000 | ||||||||||||||||||||||||||||
Capital to be subscribed if the cash and cash equivalents of the acquiree is less than the threshold amount | R$ 2000 | ||||||||||||||||||||||||||||
Equity interest held (as a percent) | 56.06% | 54.43% | 52.67% | 48.04% | 30.53% | 29.36% | 10.92% | 9.01% | 8.05% | 37.53% | |||||||||||||||||||
Forward contract of controlling interest at acquisition | R$ 115222 | ||||||||||||||||||||||||||||
Escola da Inteligencia Cursos Educacionais Ltda. | |||||||||||||||||||||||||||||
Business combinations and acquisition of non-controlling interests | |||||||||||||||||||||||||||||
Cash consideration | R$ 200000 | ||||||||||||||||||||||||||||
Goodwill recorded on acquisition | R$ 282667 | ||||||||||||||||||||||||||||
Equity interest acquired (as a percent) | 60.00% | ||||||||||||||||||||||||||||
Aggregate consideration | R$ 558985 | ||||||||||||||||||||||||||||
Equity interest to be acquired (as a percent) | 100.00% | ||||||||||||||||||||||||||||
Remaining equity interest to be acquired (as a percent) | 40.00% | ||||||||||||||||||||||||||||
Estimated value of remaining equity interest to be acquired | R$ 271101 | ||||||||||||||||||||||||||||
Price adjustment | R$ 4620 | ||||||||||||||||||||||||||||
Escola da Inteligencia Cursos Educacionais Ltda. | Forecast | |||||||||||||||||||||||||||||
Business combinations and acquisition of non-controlling interests | |||||||||||||||||||||||||||||
Consideration payable | R$ 83264 | ||||||||||||||||||||||||||||
EEM Licenciamento de Programas Educacionais S.A. ("Escola em Movimento") | |||||||||||||||||||||||||||||
Business combinations and acquisition of non-controlling interests | |||||||||||||||||||||||||||||
Cash consideration | R$ 16095 | R$ 260 | |||||||||||||||||||||||||||
Deferred payment | R$ 1930 | ||||||||||||||||||||||||||||
Escrow account deposit period | 2 years | ||||||||||||||||||||||||||||
Goodwill recorded on acquisition | R$ 13069 | ||||||||||||||||||||||||||||
Number of Equal Annual Installment | installment | 2 | ||||||||||||||||||||||||||||
Contingent liabilities, annual payment amount | R$ 965 | ||||||||||||||||||||||||||||
Equity interest acquired (as a percent) | 100.00% | ||||||||||||||||||||||||||||
Aggregate consideration | R$ 18285 | ||||||||||||||||||||||||||||
EEM Licenciamento de Programas Educacionais S.A. ("Escola em Movimento") | General and administrative expenses | |||||||||||||||||||||||||||||
Business combinations and acquisition of non-controlling interests | |||||||||||||||||||||||||||||
Transaction costs | 649 | ||||||||||||||||||||||||||||
Nave a Vela Ltda. ("Nave") | |||||||||||||||||||||||||||||
Business combinations and acquisition of non-controlling interests | |||||||||||||||||||||||||||||
Ownership interest held | 100.00% | 37.80% | 13.20% | ||||||||||||||||||||||||||
Remaining interest held by non-controlling shareholders | 100.00% | ||||||||||||||||||||||||||||
Cash consideration | R$ 21098 | ||||||||||||||||||||||||||||
Deferred payment | R$ 29728 | ||||||||||||||||||||||||||||
Escrow account deposit period | 2 years | ||||||||||||||||||||||||||||
Consideration Regarding Previously Held Interest In Step Acquisition | R$ 7368 | ||||||||||||||||||||||||||||
Carrying Amount Of The Investment Previously Held Interest In Step Acquisition | 3,660 | ||||||||||||||||||||||||||||
Gain In Step Acquisition | 3,708 | ||||||||||||||||||||||||||||
Goodwill recorded on acquisition | R$ 37557 | ||||||||||||||||||||||||||||
Equity interest acquired (as a percent) | 51.00% | ||||||||||||||||||||||||||||
Aggregate consideration | R$ 58194 | R$ 4200 | |||||||||||||||||||||||||||
Transaction costs | R$ 467 | ||||||||||||||||||||||||||||
Sistema Positivo de Ensino ("Positivo") | |||||||||||||||||||||||||||||
Business combinations and acquisition of non-controlling interests | |||||||||||||||||||||||||||||
Reduction Of Amount Of Transaction By Restricted Values Percentage | 50.00% | ||||||||||||||||||||||||||||
Reduction Of Amount Of Transaction By Restricted Values | R$ 71729 | ||||||||||||||||||||||||||||
Goodwill recorded on acquisition | R$ 830028 | ||||||||||||||||||||||||||||
Aggregate consideration | R$ 1745160 | R$ 800851 | |||||||||||||||||||||||||||
Transaction costs | R$ 27389 |
Business Combinations and Acq_5
Business Combinations and Acquisition of Non-controlling Interests - Summary of Consideration Transferred (Details) - Nave a Vela Ltda. ("Nave") - BRL (R$) R$ in Thousands | Oct. 29, 2019 | May 31, 2019 |
Business combinations and acquisition of non-controlling interests | ||
Cash paid | R$ 21098 | |
Fair value of previously held investment | 7,368 | |
Fair value of forward contract | 29,728 | |
Consideration transferred | 58,194 | R$ 4200 |
Goodwill arising on acquisition | R$ 37557 |
Business Combinations and Acq_6
Business Combinations and Acquisition of Non-controlling Interests - Summary of Valuation Techniques Used for Measuring Fair Value of Separately Identified Intangible Assets (Details) | 12 Months Ended |
Dec. 31, 2020 | |
EEM Licenciamento de Programas Educacionais S.A. ("Escola em Movimento") | Customer Relationship | |
Business Combinations and Acquisition of Non-controlling Interests | |
Valuation technique | Multi-period excess earning methodThe method considers the present value of net cash flows expected to be generated by customer relationship, by excluding any cash flows related to contributory assets. |
EEM Licenciamento de Programas Educacionais S.A. ("Escola em Movimento") | Software | |
Business Combinations and Acquisition of Non-controlling Interests | |
Valuation technique | Replacement costThe method considers the amount that an entity would have to pay to replace at the present time, according to its current worth. |
EEM Licenciamento de Programas Educacionais S.A. ("Escola em Movimento") | Trademarks | |
Business Combinations and Acquisition of Non-controlling Interests | |
Valuation technique | Relief-from-royalty methodThe relief-from-royalty method considers the discount estimated royalty payments that are expected to be avoided as a result of the trademarks being owned. |
EEM Licenciamento de Programas Educacionais S.A. ("Escola em Movimento") | Non-compete agreement | |
Business Combinations and Acquisition of Non-controlling Interests | |
Valuation technique | With-and-without methodThe With-and-Without method consists of estimating the fair value of an asset by the difference between the value of this asset in two scenarios: a scenario considering the existence of the asset in question and another, considering its non-existence. |
WPensar S.A. | Customer Relationship | |
Business Combinations and Acquisition of Non-controlling Interests | |
Valuation technique | Multi-period excess earning methodThe method considers the present value of net cash flows expected to be generated by customer relationship, by excluding any cash flows related to contributory assets. |
WPensar S.A. | Software | |
Business Combinations and Acquisition of Non-controlling Interests | |
Valuation technique | Replacement costThe method considers the amount that an entity would have to pay to replace at the present time, according to its current worth. |
WPensar S.A. | Non-compete agreement | |
Business Combinations and Acquisition of Non-controlling Interests | |
Valuation technique | With-and-without methodThe With-and-Without method consists of estimating the fair value of an asset by the difference between the value of this asset in two scenarios: a scenario considering the existence of the asset in question and another, considering its non-existence. |
Nave a Vela Ltda. ("Nave") | Customer Relationship | |
Business Combinations and Acquisition of Non-controlling Interests | |
Valuation technique | Multi-period excess earning methodThe method considers the present value of net cash flows expected to be generated by customer relationship, by excluding any cash flows related to contributory assets. |
Nave a Vela Ltda. ("Nave") | Educational system | |
Business Combinations and Acquisition of Non-controlling Interests | |
Valuation technique | Relief-from-royalty methodThe relief-from-royalty method considers the discount estimated royalty payments that are expected to be avoided as a result of the educational system being owned. |
Nave a Vela Ltda. ("Nave") | Trademarks | |
Business Combinations and Acquisition of Non-controlling Interests | |
Valuation technique | Relief-from-royalty methodThe relief-from-royalty method considers the discount estimated royalty payments that are expected to be avoided as a result of the trademarks being owned. |
Nave a Vela Ltda. ("Nave") | Non-compete agreement | |
Business Combinations and Acquisition of Non-controlling Interests | |
Valuation technique | With-and-without methodThe With-and-Without method consists of estimating the fair value of an asset by the difference between the value of this asset in two scenarios: a scenario considering the existence of the asset in question and another, considering its non-existence. |
Studos Software Ltda. | Customer Relationship | |
Business Combinations and Acquisition of Non-controlling Interests | |
Valuation technique | Multi-period excess earning methodThe method considers the present value of net cash flows expected to be generated by customer relationship, by excluding any cash flows related to contributory assets. |
Studos Software Ltda. | Educational system | |
Business Combinations and Acquisition of Non-controlling Interests | |
Valuation technique | Relief-from-royalty methodThe relief-from-royalty method considers the discount estimated royalty payments that are expected to be avoided as a result of the educational platform being owned. |
Studos Software Ltda. | Non-compete agreement | |
Business Combinations and Acquisition of Non-controlling Interests | |
Valuation technique | With-and-without methodThe With-and-Without method consists of estimating the fair value of an asset by the difference between the value of this asset in two scenarios: a scenario considering the existence of the asset in question and another, considering its non-existence. |
Geekie | Trademarks | |
Business Combinations and Acquisition of Non-controlling Interests | |
Valuation technique | Relief-from-royalty methodThe relief-from-royalty method considers the discount estimated royalty payments that are expected to be avoided as a result of the trademarks being owned. |
Escola da Inteligencia Cursos Educacionais Ltda. | Customer Relationship | |
Business Combinations and Acquisition of Non-controlling Interests | |
Valuation technique | Multi-period excess earning methodThe method considers the present value of net cash flows expected to be generated by customer relationship, by excluding any cash flows related to contributory assets. |
Escola da Inteligencia Cursos Educacionais Ltda. | Educational system | |
Business Combinations and Acquisition of Non-controlling Interests | |
Valuation technique | Replacement costThe method considers the amount that an entity would have to pay to replace at the present time, according to its current worth. |
Escola da Inteligencia Cursos Educacionais Ltda. | Trademarks | |
Business Combinations and Acquisition of Non-controlling Interests | |
Valuation technique | Relief-from-royalty methodThe relief-from-royalty method considers the discount estimated royalty payments that are expected to be avoided as a result of the trademarks being owned. |
Escola da Inteligencia Cursos Educacionais Ltda. | Non-compete agreement | |
Business Combinations and Acquisition of Non-controlling Interests | |
Valuation technique | With-and-without methodThe With-and-Without method consists of estimating the fair value of an asset by the difference between the value of this asset in two scenarios: a scenario considering the existence of the asset in question and another, considering its non-existence. |
Sistema Positivo de Ensino ("Positivo") | Customer Relationship | |
Business Combinations and Acquisition of Non-controlling Interests | |
Valuation technique | Multi-period excess earning methodThe method considers the present value of net cash flows expected to be generated by customer relationship, by excluding any cash flows related to contributory assets. |
Sistema Positivo de Ensino ("Positivo") | Educational system | |
Business Combinations and Acquisition of Non-controlling Interests | |
Valuation technique | Relief-from-royalty methodThe relief-from-royalty method considers the discount estimated royalty payments that are expected to be avoided as a result of the educational system being owned. |
Sistema Positivo de Ensino ("Positivo") | Educational platform | |
Business Combinations and Acquisition of Non-controlling Interests | |
Valuation technique | Relief-from-royalty methodThe relief-from-royalty method considers the discount estimated royalty payments that are expected to be avoided as a result of the educational platform being owned. |
Sistema Positivo de Ensino ("Positivo") | Trademarks | |
Business Combinations and Acquisition of Non-controlling Interests | |
Valuation technique | Relief-from-royalty methodThe relief-from-royalty method considers the discount estimated royalty payments that are expected to be avoided as a result of the trademarks being owned. |
Sistema Positivo de Ensino ("Positivo") | Non-compete agreement | |
Business Combinations and Acquisition of Non-controlling Interests | |
Valuation technique | With-and-without methodThe With-and-Without method consists of estimating the fair value of an asset by the difference between the value of this asset in two scenarios: a scenario considering the existence of the asset in question and another, considering its non-existence. |
Business Combinations and Acq_7
Business Combinations and Acquisition of Non-controlling Interests - Revenue and profit contribution from acquisition date (Details) - BRL (R$) R$ in Thousands | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
WPensar S.A. | ||
Disclosure of detailed information about business combination [line items] | ||
Total net revenue | R$ 1126 | |
Profit (loss) before income taxes | (89) | |
Studos Software Ltda. | ||
Disclosure of detailed information about business combination [line items] | ||
Total net revenue | 282 | |
Profit (loss) before income taxes | (249) | |
Geekie | ||
Disclosure of detailed information about business combination [line items] | ||
Total net revenue | 18,497 | |
Profit (loss) before income taxes | (11,035) | |
Escola da Inteligencia Cursos Educacionais Ltda. | ||
Disclosure of detailed information about business combination [line items] | ||
Total net revenue | 14,779 | |
Profit (loss) before income taxes | R$ 10429 | |
EEM Licenciamento de Programas Educacionais S.A. ("Escola em Movimento") | ||
Disclosure of detailed information about business combination [line items] | ||
Total net revenue | R$ 2395 | |
Profit (loss) before income taxes | (2,918) | |
Nave a Vela Ltda. ("Nave") | ||
Disclosure of detailed information about business combination [line items] | ||
Total net revenue | 7,147 | |
Profit (loss) before income taxes | 3,379 | |
Sistema Positivo de Ensino ("Positivo") | ||
Disclosure of detailed information about business combination [line items] | ||
Total net revenue | 80,100 | |
Profit (loss) before income taxes | R$ 25641 |
Business Combinations and Acq_8
Business Combinations and Acquisition of Non-controlling Interests - Revenue and profit contribution on proforma basis (Details) - BRL (R$) R$ in Thousands | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Business combinations and acquisition of non-controlling interests | ||
Pro-forma total net revenue | R$ 1078831 | R$ 893497 |
Pro-forma profit (loss) before income taxes | R$ 32208 | R$ 75498 |
Cash and Cash Equivalents - Sum
Cash and Cash Equivalents - Summary of Cash and Cash Equivalents (Details) R$ in Thousands, $ in Thousands | Dec. 31, 2020USD ($) | Dec. 31, 2020BRL (R$) | Dec. 31, 2019BRL (R$) | Dec. 31, 2018BRL (R$) | Dec. 31, 2017BRL (R$) |
Cash and cash equivalent | |||||
Cash and bank deposits | R$ 7536 | R$ 2838 | |||
Bank deposits in foreign currency | 28,327 | 23,346 | |||
Cash equivalents | 388,547 | 22,716 | |||
Cash and cash equivalents | $ 5,556 | R$ 424410 | R$ 48900 | R$ 12301 | R$ 834 |
Cash and Cash Equivalents - S_2
Cash and Cash Equivalents - Summary of Cash and Cash Equivalents - Additional information (Details) | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Cash and cash equivalent | ||
Average percentage on Bank Certificates of Deposit | 95.40% | 30.00% |
Financial Investments - Summary
Financial Investments - Summary of Financial Investments (Details) - BRL (R$) R$ in Thousands | Dec. 31, 2020 | Dec. 31, 2019 |
Financial investments | ||
Financial investments | R$ 721935 | R$ 577398 |
Financial investments in foreign currency | 542 | 1,629 |
Other | 517 | 467 |
Total financial investments | 722,994 | 579,494 |
Current | 712,645 | 574,804 |
Non-current | R$ 10349 | R$ 4690 |
Financial Investments - Summa_2
Financial Investments - Summary of Financial Investments - Additional information (Details) | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Financial investments | ||
Average interest on financial investment in highly rated financial institutions | 101.30% | 99.90% |
Average CDI rate per month on financial investment | 0.38% |
Trade Receivables - Summary of
Trade Receivables - Summary of Trade Receivables (Details) - BRL (R$) R$ in Thousands | Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 |
Trade receivable | ||||
From sales of educational content | R$ 475507 | R$ 354968 | ||
From related parties (Note 10) | 3,209 | 4,511 | ||
Gross trade receivables | 478,716 | 359,479 | ||
(-) Allowance for doubtful accounts | (63,434) | (30,051) | R$ 13419 | R$ 10290 |
Trade Receivables | R$ 415282 | R$ 329428 |
Trade Receivables - Summary o_2
Trade Receivables - Summary of Aging of Trade Receivables (Details) - BRL (R$) R$ in Thousands | Dec. 31, 2020 | Dec. 31, 2019 |
Trade receivables | ||
Gross trade receivables | R$ 478716 | R$ 359479 |
Neither past due nor impaired | ||
Trade receivables | ||
Gross trade receivables | 360,737 | 299,159 |
Past due | ||
Trade receivables | ||
Gross trade receivables | 117,979 | 60,320 |
1 to 60 days | ||
Trade receivables | ||
Gross trade receivables | 26,206 | 18,931 |
61 to 90 days | ||
Trade receivables | ||
Gross trade receivables | 9,973 | 6,865 |
91 to 120 days | ||
Trade receivables | ||
Gross trade receivables | 10,528 | 6,414 |
121 to 180 days | ||
Trade receivables | ||
Gross trade receivables | 18,887 | 9,904 |
More than 180 days | ||
Trade receivables | ||
Gross trade receivables | R$ 52385 | R$ 18206 |
Trade Receivables - Summary o_3
Trade Receivables - Summary of Allowance for Doubtful Accounts (Details) - BRL (R$) R$ in Thousands | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Movement in the allowance for doubtful accounts | |||
Balance at beginning of the year | R$ 30051 | R$ 13419 | R$ 10290 |
Additions | (34,684) | (17,392) | (9,588) |
Receivables written off during the year as uncollectible | 1,301 | 760 | 6,459 |
Balance at end of year | R$ 63434 | R$ 30051 | R$ 13419 |
Inventories - Summary of Invent
Inventories - Summary of Inventories (Details) - BRL (R$) R$ in Thousands | Dec. 31, 2020 | Dec. 31, 2019 |
Inventories | ||
Educational content | R$ 30167 | R$ 24535 |
Educational content in progress | 37,276 | 12,837 |
Consumables and supplies | 1,198 | 835 |
Inventories held by third parties | 5,435 | 1,899 |
Inventories | R$ 74076 | R$ 40106 |
Inventories - Summary of Moveme
Inventories - Summary of Movement in Inventory Reserve (Details) - BRL (R$) R$ in Thousands | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Inventories | |||
Beginning balance | R$ 6517 | R$ 4403 | R$ 2047 |
Inventory reserve | (7,453) | (8,476) | (7,252) |
Write-off of inventories against reserve | 6,460 | 6,362 | 4,896 |
Ending balance | R$ 7510 | R$ 6517 | R$ 4403 |
Recoverable taxes - Summary of
Recoverable taxes - Summary of Tax Recoverable (Details) - BRL (R$) R$ in Thousands | Dec. 31, 2020 | Dec. 31, 2019 |
Recoverable taxes | ||
Recoverable taxes | R$ 20425 | R$ 22225 |
Current | 19,304 | 15,612 |
Non-current | 1,121 | 6,613 |
Withholding Income Tax (IRRF) on financial investments | ||
Recoverable taxes | ||
Recoverable taxes | 2,027 | 637 |
Recoverable IRPJ and CSLL | ||
Recoverable taxes | ||
Recoverable taxes | 8,573 | 17,456 |
Recoverable PIS and COFINS | ||
Recoverable taxes | ||
Recoverable taxes | 7,250 | 2,501 |
Other recoverable taxes | ||
Recoverable taxes | ||
Recoverable taxes | R$ 2575 | R$ 1631 |
Related Parties - Summary of Ba
Related Parties - Summary of Balances and Transactions With Related Parties (Details) R$ in Thousands, $ in Thousands | Nov. 27, 2020BRL (R$) | Sep. 21, 2020BRL (R$) | Jan. 17, 2019BRL (R$) | Dec. 31, 2020BRL (R$) | Dec. 31, 2019BRL (R$) | Dec. 31, 2018BRL (R$) | Dec. 31, 2020USD ($) | Dec. 31, 2020BRL (R$) | Oct. 23, 2020BRL (R$) |
Related parties | |||||||||
Receivables from related parties | R$ 16111 | R$ 20478 | |||||||
Current | 1,298 | 9,970 | |||||||
Non-current | 14,813 | 10,508 | |||||||
Net revenue - Related party transaction | R$ 7234 | 8,805 | R$ 8234 | ||||||
Finance income - Related party transaction | 519 | 885 | |||||||
Advances from customers | |||||||||
Related parties | |||||||||
Advances from customers | (1) | (150) | |||||||
Other liabilities | |||||||||
Related parties | |||||||||
Other liabilities | 469 | ||||||||
Trade receivables | |||||||||
Related parties | |||||||||
Receivables from related parties | 4,511 | 3,209 | |||||||
Other assets | |||||||||
Related parties | |||||||||
Receivables from related parties | 4,109 | ||||||||
Loans to related parties | |||||||||
Related parties | |||||||||
Receivables from related parties | 16,111 | 20,478 | |||||||
Livraria ASC Ltda. and Educadora ASC Ltda. | |||||||||
Related parties | |||||||||
Net revenue - Related party transaction | 7,230 | 8,805 | 8,234 | ||||||
Livraria ASC Ltda. and Educadora ASC Ltda. | Advances from customers | |||||||||
Related parties | |||||||||
Advances from customers | (1) | (150) | |||||||
Livraria ASC Ltda. and Educadora ASC Ltda. | Trade receivables | |||||||||
Related parties | |||||||||
Receivables from related parties | 4,511 | 3,209 | |||||||
General Atlantic Arco (Bermuda), L.P. | Other assets | |||||||||
Related parties | |||||||||
Receivables from related parties | 4,109 | ||||||||
ASC Empreendimentos Ltda. and OSC Empreendimentos Ltda. | |||||||||
Related parties | |||||||||
Expenses - Related party transaction | (1) | (8) | R$ 13 | ||||||
WPensar S.A. | |||||||||
Related parties | |||||||||
Finance income - Related party transaction | R$ 30 | 30 | 72 | ||||||
WPensar S.A. | Loans to related parties | |||||||||
Related parties | |||||||||
Receivables from related parties | 1,298 | ||||||||
Geekie | |||||||||
Related parties | |||||||||
Finance income - Related party transaction | R$ 323 | 453 | 813 | ||||||
Loans to related party excluding finance income | R$ 4000 | ||||||||
Geekie | CDI | |||||||||
Related parties | |||||||||
Percentage of basis used to calculate interest rate | 110.00% | ||||||||
Geekie | Loans to related parties | |||||||||
Related parties | |||||||||
Finance income - Related party transaction | R$ 130 | ||||||||
Loans - Geekie | Loans to related parties | |||||||||
Related parties | |||||||||
Receivables from related parties | 4,231 | 4,361 | |||||||
Debentures - Geekie | Loans to related parties | |||||||||
Related parties | |||||||||
Receivables from related parties | R$ 10582 | ||||||||
OISA Tecnologia e Servios Ltda. | |||||||||
Related parties | |||||||||
Receivables from related parties | 5,018 | ||||||||
Net revenue - Related party transaction | 4 | ||||||||
Finance income - Related party transaction | R$ 18 | ||||||||
Loans to related party excluding finance income | R$ 5000 | ||||||||
Percentage of basis used to calculate interest rate | 100.00% | ||||||||
OISA Tecnologia e Servios Ltda. | Other liabilities | |||||||||
Related parties | |||||||||
Other liabilities | $ 469 | 469 | |||||||
Former Shareholders of EI | |||||||||
Related parties | |||||||||
Receivables from related parties | R$ 11099 | ||||||||
Minority shareholders - EI | |||||||||
Related parties | |||||||||
Finance income - Related party transaction | R$ 18 | ||||||||
Percentage of basis used to calculate interest rate | 100.00% |
Related Parties - Summary of Ke
Related Parties - Summary of Key Management Personnel Compensation (Details) - BRL (R$) R$ in Thousands | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Related parties | |||
Short-term employee benefits | R$ 39628 | R$ 13732 | R$ 9436 |
Stock options | 59,747 | ||
Restricted stock units | 48,852 | 66,429 | |
Key management personnel compensation | R$ 88480 | R$ 80161 | R$ 69183 |
Investments and Interests in _3
Investments and Interests in Other Entities - Summary of Investment and Interests in Other Entities (Details) R$ in Thousands | Jul. 24, 2020USD ($)item | Jul. 24, 2020BRL (R$)item | Dec. 31, 2020BRL (R$) | Dec. 31, 2019BRL (R$) |
Investments and Interests in Other Entities | ||||
Investments and interests in other entities, beginning balance | R$ 48574 | R$ 11862 | ||
Capital contributions | 14,170 | 14,200 | ||
Acquisition from a minority shareholder | 18,458 | 27,653 | ||
Fair value on investment | (16) | |||
Loss of changes in ownership | 319 | |||
Share of loss of equity-accounted investees | 409 | (1,800) | ||
Consolidation on the acquisition of control | (71,941) | (3,660) | ||
Investments and interests in other entities, ending balance | 9,654 | 48,574 | ||
Financial assets at fair value through profit or loss, | ||||
Investments and Interests in Other Entities | ||||
Investments and interests in other entities, ending balance | 9,654 | |||
Financial assets at fair value through profit or loss, | Bewater Ventures I GA Fundo de Investimento em Participaes Multiestratgia | ||||
Investments and Interests in Other Entities | ||||
Payments to acquire investments | $ 9,670,000 | R$ 9670 | ||
Number of Class B quotas purchased | 9,670 | 9,670 | ||
Percentage on acquisition of additional interest in equity | 14.48% | 14.48% | ||
Geekie | ||||
Investments and Interests in Other Entities | ||||
Investments and interests in other entities, beginning balance | 45,525 | |||
Capital contributions | 4,500 | |||
Acquisition from a minority shareholder | 18,458 | |||
Share of loss of equity-accounted investees | 559 | |||
Consolidation on the acquisition of control | R$ 69042 | |||
Investments and interests in other entities, ending balance | 45,525 | |||
Ownership interest held | 56.06% | |||
WPensar S.A. | ||||
Investments and Interests in Other Entities | ||||
Investments and interests in other entities, beginning balance | R$ 3049 | |||
Share of loss of equity-accounted investees | (150) | |||
Consolidation on the acquisition of control | R$ 2899 | |||
Investments and interests in other entities, ending balance | 3,049 | |||
Ownership interest held | 100.00% | |||
Bewater S.A. | ||||
Investments and Interests in Other Entities | ||||
Investments and interests in other entities, beginning balance | R$ 0 | |||
Capital contributions | 9,670 | |||
Fair value on investment | (16) | |||
Investments and interests in other entities, ending balance | R$ 9654 | R$ 0 | ||
Bewater S.A. | Financial assets at fair value through profit or loss, | Bewater Ventures I GA Fundo de Investimento em Participaes Multiestratgia | ||||
Investments and Interests in Other Entities | ||||
Equity interest held (as a percent) | 14.48% |
Property and Equipment - Summar
Property and Equipment - Summary of Property and Equipment (Details) - BRL (R$) R$ in Thousands | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Property and equipment | ||
Beginning balance | R$ 21328 | R$ 13347 |
Ending balance | 26,087 | 21,328 |
Gross carrying amount | ||
Property and equipment | ||
Beginning balance | 28,351 | 19,625 |
Additions | 10,822 | 10,991 |
Disposals | (2,374) | (5,593) |
Business combination | 3,646 | 5,132 |
Sale of Escola de Aplicacao Sao Jose dos Campos Ltda. | (1,012) | |
Write-offs | (792) | |
Ending balance | 40,445 | 28,351 |
Accumulated depreciation and amortisation | ||
Property and equipment | ||
Beginning balance | (7,023) | (6,278) |
Depreciation charge for the period | (7,452) | (4,355) |
Sale of Escola de Aplicacao Sao Jose dos Campos Ltda. | 211 | |
Depreciation of disposals | 117 | 3,399 |
Ending balance | (14,358) | (7,023) |
Machinery and equipment | ||
Property and equipment | ||
Beginning balance | 1,036 | 642 |
Ending balance | 1,738 | 1,036 |
Machinery and equipment | Gross carrying amount | ||
Property and equipment | ||
Beginning balance | 1,257 | 896 |
Additions | 146 | 215 |
Disposals | (37) | (17) |
Business combination | 625 | 213 |
Sale of Escola de Aplicacao Sao Jose dos Campos Ltda. | (50) | |
Ending balance | 1,991 | 1,257 |
Machinery and equipment | Accumulated depreciation and amortisation | ||
Property and equipment | ||
Beginning balance | (221) | (254) |
Depreciation charge for the period | (136) | (91) |
Sale of Escola de Aplicacao Sao Jose dos Campos Ltda. | 10 | |
Depreciation of disposals | 104 | 114 |
Ending balance | (253) | (221) |
Vehicles | ||
Property and equipment | ||
Beginning balance | 21 | 47 |
Ending balance | 181 | 21 |
Vehicles | Gross carrying amount | ||
Property and equipment | ||
Beginning balance | 121 | 191 |
Disposals | (70) | |
Business combination | 186 | |
Ending balance | 307 | 121 |
Vehicles | Accumulated depreciation and amortisation | ||
Property and equipment | ||
Beginning balance | (100) | (144) |
Depreciation charge for the period | (26) | (24) |
Depreciation of disposals | 68 | |
Ending balance | (126) | (100) |
Furniture and fixture | ||
Property and equipment | ||
Beginning balance | 1,974 | 1,769 |
Ending balance | 3,223 | 1,974 |
Furniture and fixture | Gross carrying amount | ||
Property and equipment | ||
Beginning balance | 2,353 | 2,296 |
Additions | 1,365 | 636 |
Disposals | (114) | (895) |
Business combination | 325 | 517 |
Sale of Escola de Aplicacao Sao Jose dos Campos Ltda. | (201) | |
Ending balance | 3,929 | 2,353 |
Furniture and fixture | Accumulated depreciation and amortisation | ||
Property and equipment | ||
Beginning balance | (379) | (527) |
Depreciation charge for the period | (327) | (254) |
Sale of Escola de Aplicacao Sao Jose dos Campos Ltda. | 34 | |
Depreciation of disposals | 368 | |
Ending balance | (706) | (379) |
IT equipment | ||
Property and equipment | ||
Beginning balance | 5,877 | 3,170 |
Ending balance | 9,234 | 5,877 |
IT equipment | Gross carrying amount | ||
Property and equipment | ||
Beginning balance | 7,272 | 5,080 |
Additions | 4,612 | 2,529 |
Disposals | (1,289) | (3,061) |
Business combination | 2,300 | 2,775 |
Sale of Escola de Aplicacao Sao Jose dos Campos Ltda. | (51) | |
Ending balance | 12,895 | 7,272 |
IT equipment | Accumulated depreciation and amortisation | ||
Property and equipment | ||
Beginning balance | (1,395) | (1,910) |
Depreciation charge for the period | (2,279) | (1,211) |
Sale of Escola de Aplicacao Sao Jose dos Campos Ltda. | 17 | |
Depreciation of disposals | 13 | 1,709 |
Ending balance | (3,661) | (1,395) |
Facilities | ||
Property and equipment | ||
Beginning balance | 54 | 225 |
Ending balance | 88 | 54 |
Facilities | Gross carrying amount | ||
Property and equipment | ||
Beginning balance | 80 | 325 |
Additions | 38 | 45 |
Disposals | (290) | |
Business combination | 5 | |
Ending balance | 123 | 80 |
Facilities | Accumulated depreciation and amortisation | ||
Property and equipment | ||
Beginning balance | (26) | (100) |
Depreciation charge for the period | (9) | (34) |
Depreciation of disposals | 108 | |
Ending balance | (35) | (26) |
Leasehold improvements | ||
Property and equipment | ||
Beginning balance | 7,809 | 3,364 |
Ending balance | 9,862 | 7,809 |
Leasehold improvements | Gross carrying amount | ||
Property and equipment | ||
Beginning balance | 10,034 | 4,638 |
Additions | 4,239 | 4,663 |
Disposals | (184) | |
Business combination | 205 | 1,627 |
Sale of Escola de Aplicacao Sao Jose dos Campos Ltda. | (710) | |
Ending balance | 14,478 | 10,034 |
Leasehold improvements | Accumulated depreciation and amortisation | ||
Property and equipment | ||
Beginning balance | (2,225) | (1,274) |
Depreciation charge for the period | (2,391) | (1,161) |
Sale of Escola de Aplicacao Sao Jose dos Campos Ltda. | 150 | |
Depreciation of disposals | 60 | |
Ending balance | (4,616) | (2,225) |
Others | ||
Property and equipment | ||
Beginning balance | 4,557 | 4,130 |
Ending balance | 1,761 | 4,557 |
Others | Gross carrying amount | ||
Property and equipment | ||
Beginning balance | 7,234 | 6,199 |
Additions | 422 | 2,903 |
Disposals | (934) | (1,076) |
Write-offs | (792) | |
Ending balance | 6,722 | 7,234 |
Others | Accumulated depreciation and amortisation | ||
Property and equipment | ||
Beginning balance | (2,677) | (2,069) |
Depreciation charge for the period | (2,284) | (1,580) |
Depreciation of disposals | 972 | |
Ending balance | R$ 4961 | R$ 2677 |
Leases - Summary of lease balan
Leases - Summary of lease balances (Details) - BRL (R$) R$ in Thousands | Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 |
Leases | |||
Right-of-use assets | R$ 30022 | R$ 21631 | R$ 18225 |
Lease liabilities | |||
Current lease liabilities | 12,742 | 6,845 | |
Non-current lease liabilities | 22,478 | 19,012 | |
Total lease liabilities | 35,220 | 25,857 | R$ 20089 |
Properties | |||
Leases | |||
Right-of-use assets | 29,938 | 21,518 | |
Machinery and equipment | |||
Leases | |||
Right-of-use assets | R$ 84 | R$ 113 |
Leases - Carrying amounts and m
Leases - Carrying amounts and movements of leases (Details) - BRL (R$) R$ in Thousands | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Right-of-use assets - Properties | ||
Balance at the beginning | R$ 21631 | R$ 18225 |
Additions | 12,391 | 4,502 |
Disposal | (253) | |
Lease modification (a) | 2,080 | (338) |
Depreciation expense | (8,537) | (5,999) |
Business combination | 2,710 | 5,241 |
Balance at the end | 30,022 | 21,631 |
Lease liabilities | ||
Balance at the beginning | 25,857 | 20,089 |
Additions | 12,391 | 4,502 |
Disposal | (244) | |
Lease modification (a) | 2,080 | (338) |
Business combination | 2,710 | 5,374 |
Interest expense | 3,036 | 1,489 |
Payments of lease liabilities | (8,160) | (4,407) |
Discounts on leases | (350) | |
Interest paid | (2,100) | (852) |
Balance at the end | R$ 35220 | R$ 25857 |
Average annual depreciation rate (as a percent) | 27.50% | 23.70% |
Guarantee payment due in lease agreements | R$ 10903 | |
Rent expense from short-term leases and low-value assets | R$ 2329 | R$ 2613 |
Minimum | ||
Lease liabilities | ||
Rate per year (as percent) | 1.30% | |
Maximum | ||
Lease liabilities | ||
Rate per year (as percent) | 1.95% |
Intangible Assets and Goodwil_2
Intangible Assets and Goodwill - Summary (Details) - BRL (R$) R$ in Thousands | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Intangible assets and goodwill | |||
Beginning Balance | R$ 1811903 | R$ 187740 | |
Corporate restructuring | (36,624) | R$ 74438 | |
Ending balance | 2,549,637 | 1,811,903 | 187,740 |
Gross carrying amount | |||
Intangible assets and goodwill | |||
Beginning Balance | 1,890,899 | 224,496 | |
Corporate restructuring | (53,521) | ||
Acquisitions | 96,827 | 43,102 | |
Disposals | (4,704) | (1,841) | |
Acquisitions through business combination | 764,925 | 1,678,663 | |
Ending balance | 2,747,947 | 1,890,899 | 224,496 |
Accumulated depreciation and amortisation | |||
Intangible assets and goodwill | |||
Beginning Balance | (78,996) | (36,756) | |
Amortization | (121,998) | (42,776) | |
Amortization of disposals | 2,684 | 536 | |
Ending balance | (198,310) | (78,996) | (36,756) |
Goodwill | |||
Intangible assets and goodwill | |||
Beginning Balance | 916,767 | 89,634 | |
Ending balance | 1,394,351 | 916,767 | 89,634 |
Goodwill | Gross carrying amount | |||
Intangible assets and goodwill | |||
Beginning Balance | 916,767 | 89,634 | |
Corporate restructuring | (53,521) | ||
Acquisitions through business combination | 477,584 | 880,654 | |
Ending balance | 1,394,351 | 916,767 | 89,634 |
Rights on contracts | |||
Intangible assets and goodwill | |||
Beginning Balance | 9,972 | 11,314 | |
Ending balance | 8,445 | 9,972 | 11,314 |
Rights on contracts | Gross carrying amount | |||
Intangible assets and goodwill | |||
Beginning Balance | 15,263 | 15,263 | |
Ending balance | 15,263 | 15,263 | 15,263 |
Rights on contracts | Accumulated depreciation and amortisation | |||
Intangible assets and goodwill | |||
Beginning Balance | (5,291) | (3,949) | |
Amortization | (1,527) | (1,342) | |
Ending balance | (6,818) | (5,291) | (3,949) |
Customer relationships | |||
Intangible assets and goodwill | |||
Beginning Balance | 192,961 | 15,485 | |
Ending balance | 283,906 | 192,961 | 15,485 |
Customer relationships | Gross carrying amount | |||
Intangible assets and goodwill | |||
Beginning Balance | 206,971 | 23,045 | |
Acquisitions through business combination | 115,172 | 183,926 | |
Ending balance | 322,143 | 206,971 | 23,045 |
Customer relationships | Accumulated depreciation and amortisation | |||
Intangible assets and goodwill | |||
Beginning Balance | (14,010) | (7,560) | |
Amortization | (24,227) | (6,450) | |
Ending balance | (38,237) | (14,010) | (7,560) |
Educational system | |||
Intangible assets and goodwill | |||
Beginning Balance | 228,989 | 23,940 | |
Ending balance | 231,823 | 228,989 | 23,940 |
Educational system | Gross carrying amount | |||
Intangible assets and goodwill | |||
Beginning Balance | 251,223 | 36,656 | |
Acquisitions through business combination | 29,775 | 214,567 | |
Ending balance | 280,998 | 251,223 | 36,656 |
Educational system | Accumulated depreciation and amortisation | |||
Intangible assets and goodwill | |||
Beginning Balance | (22,234) | (12,716) | |
Amortization | (26,941) | (9,518) | |
Ending balance | (49,175) | (22,234) | (12,716) |
Copy rights | |||
Intangible assets and goodwill | |||
Beginning Balance | 9,387 | 8,753 | |
Ending balance | 11,357 | 9,387 | 8,753 |
Copy rights | Gross carrying amount | |||
Intangible assets and goodwill | |||
Beginning Balance | 21,069 | 12,692 | |
Acquisitions | 8,131 | 8,377 | |
Disposals | (3) | ||
Acquisitions through business combination | 14 | ||
Transfer | 249 | ||
Ending balance | 29,460 | 21,069 | 12,692 |
Copy rights | Accumulated depreciation and amortisation | |||
Intangible assets and goodwill | |||
Beginning Balance | (11,682) | (3,939) | |
Amortization | (6,421) | (7,743) | |
Ending balance | (18,103) | (11,682) | (3,939) |
Software license and development | |||
Intangible assets and goodwill | |||
Beginning Balance | 15,457 | 2,160 | |
Ending balance | 35,576 | 15,457 | 2,160 |
Software license and development | Gross carrying amount | |||
Intangible assets and goodwill | |||
Beginning Balance | 18,412 | 2,808 | |
Acquisitions | 22,127 | 4,441 | |
Disposals | (94) | ||
Acquisitions through business combination | 5,103 | 11,163 | |
Transfer | (231) | ||
Ending balance | 45,317 | 18,412 | 2,808 |
Software license and development | Accumulated depreciation and amortisation | |||
Intangible assets and goodwill | |||
Beginning Balance | (2,955) | (648) | |
Amortization | (6,789) | (2,307) | |
Amortization of disposals | 3 | ||
Ending balance | (9,741) | (2,955) | (648) |
Trademarks | |||
Intangible assets and goodwill | |||
Beginning Balance | 347,057 | 15,367 | |
Ending balance | 449,039 | 347,057 | 15,367 |
Trademarks | Gross carrying amount | |||
Intangible assets and goodwill | |||
Beginning Balance | 355,298 | 19,177 | |
Acquisitions | 3 | ||
Acquisitions through business combination | 121,053 | 336,121 | |
Ending balance | 476,354 | 355,298 | 19,177 |
Trademarks | Accumulated depreciation and amortisation | |||
Intangible assets and goodwill | |||
Beginning Balance | (8,241) | (3,810) | |
Amortization | (19,074) | (4,431) | |
Ending balance | (27,315) | (8,241) | (3,810) |
Educational platform | |||
Intangible assets and goodwill | |||
Beginning Balance | 74,214 | 18,051 | |
Ending balance | 124,184 | 74,214 | 18,051 |
Educational platform | Gross carrying amount | |||
Intangible assets and goodwill | |||
Beginning Balance | 87,987 | 21,911 | |
Acquisitions | 51,262 | 23,634 | |
Disposals | (4,607) | (1,841) | |
Acquisitions through business combination | 13,102 | 24,728 | |
Transfer | 22,604 | 19,555 | |
Ending balance | 170,348 | 87,987 | 21,911 |
Educational platform | Accumulated depreciation and amortisation | |||
Intangible assets and goodwill | |||
Beginning Balance | (13,773) | (3,860) | |
Amortization | (35,072) | (10,449) | |
Amortization of disposals | 2,681 | 536 | |
Ending balance | (46,164) | (13,773) | (3,860) |
Non-compete agreement | |||
Intangible assets and goodwill | |||
Beginning Balance | 7,493 | 823 | |
Ending balance | 9,099 | 7,493 | 823 |
Non-compete agreement | Gross carrying amount | |||
Intangible assets and goodwill | |||
Beginning Balance | 8,303 | 1,097 | |
Acquisitions | 431 | 309 | |
Acquisitions through business combination | 3,122 | 6,897 | |
Ending balance | 11,856 | 8,303 | 1,097 |
Non-compete agreement | Accumulated depreciation and amortisation | |||
Intangible assets and goodwill | |||
Beginning Balance | (810) | (274) | |
Amortization | (1,947) | (536) | |
Ending balance | (2,757) | (810) | (274) |
in progress | |||
Intangible assets and goodwill | |||
Beginning Balance | 9,606 | 2,213 | |
Ending balance | 1,857 | 9,606 | 2,213 |
in progress | Gross carrying amount | |||
Intangible assets and goodwill | |||
Beginning Balance | 9,606 | 2,213 | |
Acquisitions | 14,873 | 6,341 | |
Acquisitions through business combination | 20,607 | ||
Transfer | (22,622) | (19,555) | |
Ending balance | R$ 1857 | R$ 9606 | R$ 2213 |
Intangible Assets and Goodwil_3
Intangible Assets and Goodwill - Goodwill (Details) - BRL (R$) R$ in Thousands | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Goodwill | |||
Goodwill, carrying amount | R$ 1394351 | R$ 916767 | |
Fair value assumptions | |||
Goodwill impairment | 0 | 0 | R$ 0 |
Core | |||
Goodwill | |||
Goodwill, carrying amount | 918,091 | 755,539 | |
Value -in-use | 2,372,829 | R$ 2130003 | |
Carrying amount | R$ 2099723 | ||
Fair value assumptions | |||
Discount rate (as a percent) | 11.10% | 12.70% | |
Core | Gross margin | |||
Fair value assumptions | |||
Gross margin (as a percent) | 74.80% | ||
Core | Gross margin | Decrease in basis points | |||
Fair value assumptions | |||
Increase (decrease) in basis points | (1.80%) | ||
Gross margin (as a percent) | 73.00% | ||
Core | Discount rate | |||
Fair value assumptions | |||
Discount rate (as a percent) | 11.10% | ||
Core | Discount rate | Increase in basis points | |||
Fair value assumptions | |||
Increase (decrease) in basis points | 1.80% | ||
Discount rate (as a percent) | 12.90% | ||
Core | Budget period | |||
Fair value assumptions | |||
Growth rate (as a percent) | 9.20% | 11.10% | |
Core | Beyond budget period | |||
Fair value assumptions | |||
Growth rate (as a percent) | 3.20% | 4.30% | |
Supplemental | |||
Goodwill | |||
Goodwill, carrying amount | R$ 476260 | R$ 161228 | |
Value -in-use | 1,349,754 | R$ 854855 | |
Carrying amount | R$ 812614 | ||
Fair value assumptions | |||
Discount rate (as a percent) | 12.40% | 14.50% | |
Supplemental | Gross margin | |||
Fair value assumptions | |||
Gross margin (as a percent) | 82.40% | ||
Supplemental | Gross margin | Decrease in basis points | |||
Fair value assumptions | |||
Gross margin (as a percent) | 80.60% | ||
Supplemental | Discount rate | |||
Fair value assumptions | |||
Discount rate (as a percent) | 12.40% | ||
Supplemental | Discount rate | Increase in basis points | |||
Fair value assumptions | |||
Discount rate (as a percent) | 14.20% | ||
Supplemental | Budget period | |||
Fair value assumptions | |||
Growth rate (as a percent) | 17.30% | 18.30% | |
Supplemental | Beyond budget period | |||
Fair value assumptions | |||
Growth rate (as a percent) | 3.20% | 4.30% |
Intangible Assets and Goodwil_4
Intangible Assets and Goodwill - Estimated Useful Lives (Details) | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Rights on contracts | |||
Intangible assets and goodwill | |||
Intangible assets, useful lives | 10 years | 10 years | 10 years |
Customer relationships | Minimum | |||
Intangible assets and goodwill | |||
Intangible assets, useful lives | 5 years | 5 years | 5 years |
Customer relationships | Maximum | |||
Intangible assets and goodwill | |||
Intangible assets, useful lives | 16 years | 16 years | 16 years |
Educational system | Minimum | |||
Intangible assets and goodwill | |||
Intangible assets, useful lives | 3 years | 3 years | 3 years |
Educational system | Maximum | |||
Intangible assets and goodwill | |||
Intangible assets, useful lives | 10 years | 10 years | 10 years |
Copy rights | |||
Intangible assets and goodwill | |||
Intangible assets, useful lives | 3 years | 3 years | 3 years |
Software license | Minimum | |||
Intangible assets and goodwill | |||
Intangible assets, useful lives | 2 years | 2 years | 2 years |
Software license | Maximum | |||
Intangible assets and goodwill | |||
Intangible assets, useful lives | 5 years | 5 years | 5 years |
Trademarks | Minimum | |||
Intangible assets and goodwill | |||
Intangible assets, useful lives | 10 years | 10 years | 10 years |
Trademarks | Maximum | |||
Intangible assets and goodwill | |||
Intangible assets, useful lives | 20 years | 20 years | 20 years |
Educational platform | Minimum | |||
Intangible assets and goodwill | |||
Intangible assets, useful lives | 3 years | 3 years | 3 years |
Educational platform | Maximum | |||
Intangible assets and goodwill | |||
Intangible assets, useful lives | 10 years | 10 years | 10 years |
Non-compete agreement | Minimum | |||
Intangible assets and goodwill | |||
Intangible assets, useful lives | 2 years | 2 years | 2 years |
Non-compete agreement | Maximum | |||
Intangible assets and goodwill | |||
Intangible assets, useful lives | 5 years | 5 years | 5 years |
Loans and financing (Details)
Loans and financing (Details) R$ in Thousands | Oct. 30, 2020BRL (R$)installment | Jul. 01, 2020BRL (R$)iteminstallment | May 29, 2020BRL (R$)installment | Feb. 17, 2020BRL (R$)installment | Dec. 31, 2020BRL (R$) | Dec. 31, 2019BRL (R$) | Oct. 25, 2019BRL (R$) |
Loans and financing | |||||||
Total borrowings | R$ 311119 | R$ 98561 | |||||
Current | 107,706 | 98,561 | |||||
Non-current | 203,413 | ||||||
Current borrowings | 107,706 | 98,561 | |||||
Balance at beginning of the year | 98,561 | 0 | |||||
Additions | 502,063 | 100,000 | |||||
Business combination | 8,836 | 548 | |||||
Loan cost | (3,629) | (2,426) | |||||
Interest expense | 19,862 | 1,002 | |||||
Interest paid | (13,423) | ||||||
Payment of loans and financing | (301,151) | (563) | |||||
Balance at end of year | R$ 311119 | R$ 98561 | |||||
Bank Loan, Maturity October 2020 | |||||||
Loans and financing | |||||||
Interest rate basis | 100% CDI | ||||||
Interest rate spread | 0.70% | ||||||
Bank Loan, Maturity October 2020 | CDI | |||||||
Loans and financing | |||||||
Total borrowings | R$ 98561 | ||||||
Loan agreement, face amount | R$ 100000 | ||||||
Bank Loan, Maturity December 2021 | |||||||
Loans and financing | |||||||
Interest rate basis | 100% CDI | ||||||
Interest rate spread | 2.70% | ||||||
Total borrowings | R$ 100395 | ||||||
Bank Loan, Maturity December 2021 | CDI | |||||||
Loans and financing | |||||||
Loan agreement, face amount | R$ 100000 | ||||||
Bank Loan, Maturity January 2022 | |||||||
Loans and financing | |||||||
Interest rate basis | 100% CDI | ||||||
Interest rate spread | 2.70% | ||||||
Total borrowings | R$ 200788 | ||||||
Bank Loan, Maturity January 2022 | CDI | |||||||
Loans and financing | |||||||
Loan agreement, face amount | R$ 100000 | ||||||
Number of loan agreements entered | item | 2 | ||||||
Number of installments for settlement of capitalized interest | installment | 17 | ||||||
Bank Loan, Maturity March 2022 | |||||||
Loans and financing | |||||||
Interest rate | 8.10% | ||||||
Total borrowings | R$ 1500 | ||||||
Loan agreement, face amount | R$ 2000 | ||||||
Number of installments for settlement of debt | installment | 21 | ||||||
Bank Loan, Maturity May 2022 | |||||||
Loans and financing | |||||||
Interest rate | 8.20% | ||||||
Total borrowings | R$ 8373 | ||||||
Loan agreement, face amount | R$ 10000 | ||||||
Number of installments for settlement of debt | installment | 18 | ||||||
Bank Loan, Maturity November 2023 | |||||||
Loans and financing | |||||||
Interest rate | 3.80% | ||||||
Total borrowings | R$ 63 | ||||||
Loan agreement, face amount | R$ 63 | ||||||
Number of installments for settlement of debt | installment | 30 |
Financial Instruments From Ac_3
Financial Instruments From Acquisition of Interests (Details) - BRL (R$) R$ in Thousands | Sep. 21, 2020 | Dec. 31, 2019 | Apr. 30, 2015 |
Fair value measurements using significant unobservable inputs | |||
Derivative financial assets | R$ 35946 | ||
Derivative financial assets, Current | 3,794 | ||
Derivative financial assets, Non-current | 32,152 | ||
Derivative financial liabilities | 33,940 | ||
Derivative financial liabilities, Non-current | 33,940 | ||
WPensar S.A. | |||
Fair value measurements using significant unobservable inputs | |||
Equity interest acquired (as a percent) | 75.00% | 25.00% | |
WPensar S.A. | |||
Fair value measurements using significant unobservable inputs | |||
Derivative financial assets | 3,794 | ||
Derivative financial liabilities | 2,314 | ||
Geekie | |||
Fair value measurements using significant unobservable inputs | |||
Derivative financial assets | 32,152 | ||
Derivative financial liabilities | R$ 31626 |
Accounts payable to selling s_3
Accounts payable to selling shareholders (Details) R$ in Thousands | May 31, 2023 | May 14, 2021BRL (R$) | Dec. 31, 2020BRL (R$)USD ($) | Dec. 31, 2019BRL (R$) |
Accounts payable to selling shareholders | ||||
Accounts payable to selling shareholders | R$ 1786515 | R$ 1216232 | ||
Accounts payable to selling shareholders, Current | 656,014 | 117,959 | ||
Accounts payable to selling shareholders, Non-current | R$ 1130501 | R$ 1098273 | ||
Accounts payable to shareholders estimated interest rate of derivatives | 13.15% | |||
Repayment term (in years) | 5 years | |||
International School Teaching Services, Training and Publishing, Franqueadora S.A. | ||||
Accounts payable to selling shareholders | ||||
Accounts payable to selling shareholders | R$ 354950 | R$ 297722 | ||
Accounts payable to shareholders estimated interest rate of derivatives | 13.80% | 14.50% | ||
Recognized interest expense | R$ 34627 | |||
Increase in accounts payable to sale of share holders | 32,121 | |||
NS Educacao Ltda. ("NS Educacao") | ||||
Accounts payable to selling shareholders | ||||
Accounts payable to selling shareholders | 5,724 | R$ 6461 | ||
Escola em Movimento | ||||
Accounts payable to selling shareholders | ||||
Accounts payable to selling shareholders | 1,024 | 1,992 | ||
Nave a Vela | ||||
Accounts payable to selling shareholders | ||||
Accounts payable to selling shareholders | 21,941 | R$ 30946 | ||
Recognized interest expense | 2,802 | |||
Decrease in accounts payable to selling shareholders | R$ 11807 | |||
Nave a Vela | Remaining acquisition period | ||||
Accounts payable to selling shareholders | ||||
Accounts payable to shareholders estimated interest rate of derivatives | 146.00% | 14.50% | ||
Remaining acquisition interest | 49.00% | |||
Period to acquire remaining acquisition interest | 2 years | |||
Nave a Vela | Tranche payable on February 15, 2021 | ||||
Accounts payable to selling shareholders | ||||
Percentage of interest to be acquired | 24.00% | |||
Revenue interest | 24.00% | |||
Multiple of revenue net of debt | 5.3 | |||
Nave a Vela | Tranche payable on February 15, 2022 | ||||
Accounts payable to selling shareholders | ||||
Percentage of interest to be acquired | 25.00% | |||
Revenue interest | 25.00% | |||
Multiple of revenue net of debt | 3 | |||
Positivo | ||||
Accounts payable to selling shareholders | ||||
Accounts payable to selling shareholders | R$ 903428 | R$ 879111 | ||
Recognized interest expense | R$ 24317 | |||
Repayment term (in years) | 4 years | |||
WPensar S.A | ||||
Accounts payable to selling shareholders | ||||
Accounts payable to selling shareholders | R$ 3605 | |||
Accounts payable to selling shareholders as a percentage of acquisition price | 20.00% | |||
Percentage of Interbank certificates of deposit (CDI) | 100.00% | |||
Studos Software Ltda. | ||||
Accounts payable to selling shareholders | ||||
Accounts payable to selling shareholders | R$ 11349 | |||
Accounts payable to selling shareholders, estimated interest rate, first installment | 34.00% | |||
Accounts payable to selling shareholders, estimated interest rate, second installment | 60.00% | |||
Period to pay the installments | 2 years | |||
Escola da Inteligencia Cursos Educacionais Ltda. | ||||
Accounts payable to selling shareholders | ||||
Accounts payable to selling shareholders | R$ 363502 | |||
Accounts payable to shareholders estimated interest rate of derivatives | 13.10% | |||
Recognized interest expense | R$ 4515 | |||
Remaining equity interest to be acquired (as a percent) | 40.00% | |||
Period to acquire remaining equity interest | 2 years | |||
Escola da Inteligencia Cursos Educacionais Ltda. | Forecast | ||||
Accounts payable to selling shareholders | ||||
Next installment payable amount, option one | R$ 88000 | |||
Number of times ACV book value for 2021 considered for next installment payment, option two | 10 | |||
Multiplier considered for next installment payment, option two | 4843.00% | |||
Multiplier considered for next installment payment | 600 | |||
Number of times ACV book value for 2023 considered for last installment payment | 6 | |||
Multiplier considered for last installment payment | 40.00% | |||
Geekie | ||||
Accounts payable to selling shareholders | ||||
Accounts payable to shareholders estimated interest rate of derivatives | 13.10% | |||
Recognized interest expense | R$ 1770 | |||
Number of different contents considered for calculation of exercise price | $ | 2 | |||
Geekie One | ||||
Accounts payable to selling shareholders | ||||
Accounts payable to selling shareholders | R$ 120992 | |||
Number of times ACV book value for 2022 considered for payment | 8 | |||
Number of times the multiple of the Company's ACV book value for 2022 considered for payment | 0.65 | |||
Geekie Others | ||||
Accounts payable to selling shareholders | ||||
Number of times the multiple of the Company's ACV book value for 2022 considered for payment | 0.65 | |||
Number of times revenue considered for payment | 8 |
Labor and Social Obligations -
Labor and Social Obligations - Summary (Details) - BRL (R$) R$ in Thousands | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Labor and Social Obligations | |||
Bonuses | R$ 31046 | R$ 28045 | |
Payroll and social charges | 53,462 | 17,763 | |
Payroll accruals | 25,582 | 18,998 | |
Other labor | 11,549 | 6,506 | |
Labor and social obligations | 121,639 | 71,312 | |
Current | 85,069 | 68,511 | |
Non-current | 36,570 | 2,801 | |
Bonus recorded | R$ 18989 | R$ 14519 | R$ 4224 |
Labor and Social Obligations _2
Labor and Social Obligations - Inputs Used for Arco Plan (Details) | 12 Months Ended |
Dec. 31, 2020BRL (R$)R$ / shares | |
Labor and Social Obligations | |
Number of share options outstanding in share-based payment arrangement | 0 |
Arco plan | |
Labor and Social Obligations | |
Dividend yield (%) | 2.41% |
Fair value of the option at grant date | R$ | R$ 72.63 |
Exercise price | R$ / shares | R$ 11.13 |
Expected volatility (%) | 186.61% |
Risk-free interest rate (%) | 8.01% |
Expected life of share options (years) | 6 |
Weighted average share price (R$) | R$ / shares | R$ 12.67 |
Number of share options outstanding in share-based payment arrangement | 0 |
Total compensation expense | R$ | R$ 0 |
Labor and Social Obligations _3
Labor and Social Obligations - Number and Movements of Share Options (Details) R$ / shares in Units, R$ in Thousands | May 20, 2020R$ / shares | Aug. 04, 2017 | Dec. 31, 2020BRL (R$) | Dec. 31, 2019BRL (R$) |
Labor and Social Obligations | ||||
Outstanding share options | 0 | |||
Arco plan | ||||
Labor and Social Obligations | ||||
Impact of share-based compensation reserve in Income Statement | R$ 0 | |||
Outstanding share options | 0 | |||
International school plan | ||||
Labor and Social Obligations | ||||
Impact of share-based compensation reserve in Income Statement | R$ 129 | R$ 549 | ||
Granted | 294,735 | |||
Share options exercised | 153,262 | |||
Unit value of options exercised | R$ / shares | R$ 1.39 |
Labor and Social Obligations _4
Labor and Social Obligations - Valuation Assumptions (Details) - International school plan | 12 Months Ended |
Dec. 31, 2020BRL (R$)R$ / shares | |
Labor and Social Obligations | |
Fair value of the option at grant date | R$ | R$ 10.66 |
Exercise price | R$ 1.37 |
Dividend yield (%) | 0.00% |
Expected volatility (%) | 380.36% |
Risk-free interest rate (%) | 8.62% |
Expected life of share options (years) | 2.74 |
Weighted average share price (reais) on the grant date | R$ 10.65 |
Labor and Social Obligations _5
Labor and Social Obligations - Stock options - Geekie plan (Details) - R$ / shares | 12 Months Ended | |
Dec. 31, 2020 | Dec. 01, 2020 | |
Disclosure of terms and conditions of share-based payment arrangement [line items] | ||
Exercise price | R$ 82.91 | |
Geekie plan | ||
Disclosure of terms and conditions of share-based payment arrangement [line items] | ||
Number of shares authorized | 31,763 |
Labor and Social Obligations _6
Labor and Social Obligations - Quantity Of Stock and Vesting Date (Details) | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019itemshares | |
Disclosure of terms and conditions of share-based payment arrangement [line items] | ||
Quantity of stocks | 73,085 | |
Restricted stock units | ||
Disclosure of terms and conditions of share-based payment arrangement [line items] | ||
Number of shares authorized | shares | 656,860 | |
Number of beneficiaries | item | 39 | |
Quantity of stocks | 656,860 | |
28/09/2019 | Restricted stock units | ||
Disclosure of terms and conditions of share-based payment arrangement [line items] | ||
Quantity of stocks | 197,951 | |
30/06/2020 | Restricted stock units | ||
Disclosure of terms and conditions of share-based payment arrangement [line items] | ||
Quantity of stocks | 3,086 | |
28/09/2020 | Restricted stock units | ||
Disclosure of terms and conditions of share-based payment arrangement [line items] | ||
Quantity of stocks | 215,709 | |
30/06/2021 | Restricted stock units | ||
Disclosure of terms and conditions of share-based payment arrangement [line items] | ||
Quantity of stocks | 3,086 | |
28/09/2021 | Restricted stock units | ||
Disclosure of terms and conditions of share-based payment arrangement [line items] | ||
Quantity of stocks | 215,709 | |
28/09/2022 | Restricted stock units | ||
Disclosure of terms and conditions of share-based payment arrangement [line items] | ||
Quantity of stocks | 17,757 | |
30/06/2022 | Restricted stock units | ||
Disclosure of terms and conditions of share-based payment arrangement [line items] | ||
Quantity of stocks | 3,562 |
Labor and Social Obligations _7
Labor and Social Obligations - Restricted Stock Units (Details) R$ in Thousands | 12 Months Ended |
Dec. 31, 2020BRL (R$)shares | |
Labor and Social Obligations | |
Outstanding at the beginning | 337,185 |
Granted | 73,085 |
Restricted stocks units transferred | shares | (203,622) |
Effectively forfeited | (45,417) |
Outstanding at the end | 161,231 |
Restricted stock units | |
Labor and Social Obligations | |
Granted | 656,860 |
Outstanding at the end | 161,231 |
Total compensation expense | R$ 48852 |
Total compensation expense, principal amount | 15,469 |
Total compensation expense, taxes and contributions amount | R$ 33383 |
Labor and Social Obligations _8
Labor and Social Obligations - Equity Instruments (Details) R$ / shares in Units, R$ in Thousands | 12 Months Ended | |
Dec. 31, 2020BRL (R$)R$ / shares | Dec. 31, 2019 | |
Disclosure of terms and conditions of share-based payment arrangement [line items] | ||
Total shares granted | 73,085 | |
Total granted shares outstanding | 161,231 | 337,185 |
Unit value average | R$ / shares | R$ 82.91 | |
Restricted stock units | ||
Disclosure of terms and conditions of share-based payment arrangement [line items] | ||
Total shares granted | 656,860 | |
Total shares vested | (435,330) | |
Total granted shares outstanding | 161,231 | |
Average fair value at grant date | R$ | R$ 94206 | |
Grant date: 30/04/2019 | Restricted stock units | ||
Disclosure of terms and conditions of share-based payment arrangement [line items] | ||
Total shares granted | 542,760 | |
Total shares vested | (375,532) | |
Total granted shares outstanding | 111,435 | |
Average fair value at grant date | R$ | R$ 68800 | |
Unit value average | R$ / shares | R$ 126.76 | |
Grant date: 30/06/2019, Series 1 | Restricted stock units | ||
Disclosure of terms and conditions of share-based payment arrangement [line items] | ||
Total shares granted | 1,543 | |
Total shares vested | (1,543) | |
Average fair value at grant date | R$ | R$ 274 | |
Unit value average | R$ / shares | R$ 177.71 | |
Grant date: 30/06/2019, Series 2 | Restricted stock units | ||
Disclosure of terms and conditions of share-based payment arrangement [line items] | ||
Total shares granted | 1,543 | |
Total shares vested | (1,543) | |
Average fair value at grant date | R$ | R$ 319 | |
Unit value average | R$ / shares | R$ 206.66 | |
Grant date: 15/10/2019 | Restricted stock units | ||
Disclosure of terms and conditions of share-based payment arrangement [line items] | ||
Total shares granted | 37,929 | |
Total shares vested | (23,711) | |
Total granted shares outstanding | 7,698 | |
Average fair value at grant date | R$ | R$ 7593 | |
Unit value average | R$ / shares | R$ 200.18 | |
Grant date: 23/01/2020 | Restricted stock units | ||
Disclosure of terms and conditions of share-based payment arrangement [line items] | ||
Total shares granted | 13,000 | |
Total shares vested | (5,449) | |
Total granted shares outstanding | 7,580 | |
Average fair value at grant date | R$ | R$ 2788 | |
Unit value average | R$ / shares | R$ 214.48 | |
Grant date: 02/03/2020 | Restricted stock units | ||
Disclosure of terms and conditions of share-based payment arrangement [line items] | ||
Total shares granted | 36,673 | |
Total shares vested | (15,372) | |
Total granted shares outstanding | 21,383 | |
Average fair value at grant date | R$ | R$ 8762 | |
Unit value average | R$ / shares | R$ 238.93 | |
Grant date: 04/03/2020 | Restricted stock units | ||
Disclosure of terms and conditions of share-based payment arrangement [line items] | ||
Total shares granted | 13,164 | |
Total shares vested | (9,906) | |
Total granted shares outstanding | 4,388 | |
Average fair value at grant date | R$ | R$ 3346 | |
Unit value average | R$ / shares | R$ 254.21 | |
Grant Date: 03/09/2020 | Restricted stock units | ||
Disclosure of terms and conditions of share-based payment arrangement [line items] | ||
Total shares granted | 3,600 | |
Total shares vested | (1,509) | |
Total granted shares outstanding | 2,099 | |
Average fair value at grant date | R$ | R$ 883 | |
Unit value average | R$ / shares | R$ 245.18 | |
Grant date: 19/11/2020, Series 1 | Restricted stock units | ||
Disclosure of terms and conditions of share-based payment arrangement [line items] | ||
Total shares granted | 3,562 | |
Total shares vested | (410) | |
Total granted shares outstanding | 3,562 | |
Average fair value at grant date | R$ | R$ 772 | |
Unit value average | R$ / shares | R$ 216.63 | |
Grant date: 19/11/2020, Series 2 | Restricted stock units | ||
Disclosure of terms and conditions of share-based payment arrangement [line items] | ||
Total shares granted | 3,086 | |
Total shares vested | (355) | |
Total granted shares outstanding | 3,086 | |
Average fair value at grant date | R$ | R$ 669 | |
Unit value average | R$ / shares | R$ 216.63 |
Equity (Details)
Equity (Details) R$ in Thousands | 12 Months Ended | ||
Dec. 31, 2020BRL (R$)Voteshares | Dec. 31, 2019BRL (R$)shares | Dec. 31, 2020$ / sharesshares | |
Share capital | |||
Number of shares issued | 54,939,088 | 57,587,563 | |
Share capital par value | $ / shares | $ 0.00005 | ||
Movement in shares outstanding | |||
Number of shares outstanding at beginning of period | 54,939,088 | ||
Restricted Stock Units Transferred (Note 18.b) | 203,622 | ||
Restricted Stock Unit withheld (a) | (55,147) | ||
Underwritten public offering of Class A common shares (Note 1.2) | 2,500,000 | ||
Number of shares outstanding at end of period | 57,587,563 | 54,939,088 | |
Dividends | |||
Dividend distribution | R$ | R$ 0 | R$ 0 | |
Class B common shares | |||
Share capital | |||
Number of shares issued | 27,400,848 | 27,400,848 | |
Movement in shares outstanding | |||
Votes per share | Vote | 10 | ||
Percentage of number shares issued and outstanding | 10.00% | ||
Class A common shares | |||
Share capital | |||
Number of shares issued | 27,538,240 | 30,186,715 | |
Movement in shares outstanding | |||
Votes per share | Vote | 1 |
Earnings (loss) per share (EP_3
Earnings (loss) per share (EPS) (Details) - BRL (R$) R$ / shares in Units, shares in Thousands, R$ in Thousands | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Earnings (loss) per share (EPS) | |||
Profit (loss) attributable to Equity holders of the parent | R$ 16780 | R$ 9431 | R$ 82380 |
Class A common shares | |||
Earnings (loss) per share (EPS) | |||
Profit (loss) attributable to Equity holders of the parent | R$ 8534 | R$ 4379 | R$ 37047 |
Weighted average number of common shares outstanding (thousand) | 28,357 | 23,938 | 22,603 |
Share-based compensation plan (thousands) | R$ 161 | R$ 337 | R$ 153 |
Basic earnings (loss) per share - R$ | R$ 0.30 | R$ 0.18 | R$ 1.64 |
Diluted earnings (loss) per share - R$ | R$ 0.30 | R$ 0.18 | R$ 1.64 |
Class B common shares | |||
Earnings (loss) per share (EPS) | |||
Profit (loss) attributable to Equity holders of the parent | R$ 8246 | R$ 5052 | R$ 45333 |
Weighted average number of common shares outstanding (thousand) | 27,401 | 27,614 | 27,658 |
Basic earnings (loss) per share - R$ | R$ 0.30 | R$ 0.18 | R$ 1.64 |
Diluted earnings (loss) per share - R$ | R$ 0.30 | R$ 0.18 | R$ 1.64 |
Revenue - Summary of Company's
Revenue - Summary of Company's Net Revenue (Details) - BRL (R$) R$ in Thousands | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Revenue | |||
Taxes | R$ 1197 | R$ 275 | R$ 264 |
Net revenue | 1,001,710 | 572,837 | 380,981 |
Revenue from contracts with customers | 1,001,710 | 572,837 | 380,981 |
Goods or services transferred at point in time | |||
Revenue | |||
Revenue from contracts with customers | 1,001,710 | 572,837 | 380,981 |
Educational content | |||
Revenue | |||
Gross revenue | 998,373 | 570,292 | 377,143 |
Revenue from contracts with customers | 997,176 | 570,179 | 377,143 |
Other | |||
Revenue | |||
Gross revenue | 4,534 | 2,820 | 4,102 |
Revenue from contracts with customers | 4,534 | 2,658 | 3,838 |
Core segments | |||
Revenue | |||
Revenue from contracts with customers | 841,145 | 433,372 | 303,031 |
Core segments | Goods or services transferred at point in time | |||
Revenue | |||
Revenue from contracts with customers | 841,145 | 433,372 | 303,031 |
Core segments | Educational content | |||
Revenue | |||
Revenue from contracts with customers | 839,383 | 433,326 | 299,203 |
Core segments | Other | |||
Revenue | |||
Revenue from contracts with customers | 1,762 | 46 | 3,828 |
Supplemental segments | |||
Revenue | |||
Revenue from contracts with customers | 160,565 | 139,465 | 77,950 |
Supplemental segments | Goods or services transferred at point in time | |||
Revenue | |||
Revenue from contracts with customers | 160,565 | 139,465 | 77,950 |
Supplemental segments | Educational content | |||
Revenue | |||
Revenue from contracts with customers | 157,793 | 136,853 | 77,940 |
Supplemental segments | Other | |||
Revenue | |||
Revenue from contracts with customers | R$ 2772 | R$ 2612 | R$ 10 |
Revenue - Additional Informatio
Revenue - Additional Information (Details) - BRL (R$) R$ in Thousands | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Revenue | |||
Impairment losses on trade receivables arising from contracts with customers | R$ 34684 | R$ 17392 | R$ 9588 |
Expenses by Nature - Summary of
Expenses by Nature - Summary of Expenses by Nature (Details) - BRL (R$) R$ in Thousands | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Expenses by Nature | |||
Cost of sales | R$ 221130 | R$ 117258 | R$ 80745 |
Selling expenses | (372,269) | (199,780) | (113,270) |
General and administrative expenses | (270,558) | (191,438) | (129,754) |
Total | (863,957) | (508,476) | (323,769) |
Educational content material | |||
Expenses by Nature | |||
Cost of sales | (122,401) | (61,953) | (41,551) |
Operations personnel | |||
Expenses by Nature | |||
Cost of sales | (24,731) | (12,500) | (11,477) |
Inventory reserves | |||
Expenses by Nature | |||
Cost of sales | (7,453) | (8,476) | (7,252) |
Freight | |||
Expenses by Nature | |||
Cost of sales | (16,452) | (14,569) | (7,687) |
Depreciation and amortization | |||
Expenses by Nature | |||
Cost of sales | (35,007) | (15,311) | (5,869) |
Selling expenses | (77,343) | (23,573) | (11,939) |
General and administrative expenses | (15,105) | (9,430) | (1,786) |
Other | |||
Expenses by Nature | |||
Cost of sales | (15,086) | (4,449) | (6,909) |
Selling expenses | (13,980) | (7,772) | (5,574) |
General and administrative expenses | (13,810) | (8,302) | (3,744) |
Sales personnel | |||
Expenses by Nature | |||
Selling expenses | (167,300) | (87,352) | (49,041) |
Sales and marketing | |||
Expenses by Nature | |||
Selling expenses | (24,104) | (31,208) | (17,931) |
Customer support | |||
Expenses by Nature | |||
Selling expenses | (53,893) | (30,755) | (17,274) |
Allowance For Doubtful Accounts | |||
Expenses by Nature | |||
Selling expenses | (34,684) | (17,392) | (9,588) |
Real estate rentals | |||
Expenses by Nature | |||
Selling expenses | (965) | (1,728) | (1,923) |
General and administrative expenses | (1,623) | (2,613) | (3,429) |
Corporate personnel | |||
Expenses by Nature | |||
General and administrative expenses | (74,437) | (53,443) | (39,382) |
Third party services | |||
Expenses by Nature | |||
General and administrative expenses | (80,254) | (43,415) | (14,269) |
Travel expenses | |||
Expenses by Nature | |||
General and administrative expenses | (2,233) | (3,439) | (2,891) |
Tax expenses | |||
Expenses by Nature | |||
General and administrative expenses | (7,341) | (2,331) | (2,858) |
Software licenses | |||
Expenses by Nature | |||
General and administrative expenses | (5,909) | (1,487) | (1,098) |
Share-Based Compensation Plan | |||
Expenses by Nature | |||
General and administrative expenses | R$ 69846 | R$ 66978 | R$ 60297 |
Expenses by Nature - Additional
Expenses by Nature - Additional Disclosures (Details) - BRL (R$) R$ in Thousands | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Expenses by Nature | |||
Cost of sales | R$ 221130 | R$ 117258 | R$ 80745 |
Expenses | 863,957 | 508,476 | R$ 323769 |
Companies acquired in 2019 | |||
Expenses by Nature | |||
Cost of sales | 115,285 | 28,059 | |
Expenses | 168,374 | R$ 37738 | |
Companies acquired in 2020 | |||
Expenses by Nature | |||
Cost of sales | 8,004 | ||
Expenses | R$ 27135 |
Finance result - Summary of Fin
Finance result - Summary of Financial Result (Details) - BRL (R$) R$ in Thousands | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Finance result | |||
Income from financial investments | R$ 2263 | R$ 18443 | R$ 11633 |
Changes in fair value of financial investments (a) | 17,111 | 28,886 | 4,322 |
Changes in fair value of derivative instruments (b) | 16,147 | 18,599 | 19,839 |
Foreign exchange gains | 1,930 | 1,745 | 138 |
Interest income | 4,721 | 1,042 | |
Other | 3,039 | 3,332 | 686 |
Finance income | 45,211 | 72,047 | 36,618 |
Changes in fair value of derivative instruments (b) | (15,585) | (18,126) | (19,180) |
Changes in accounts payable to selling shareholders (Note 17) | (20,330) | (89,403) | (130,378) |
Interest in acquisition of investments (c) | (68,379) | (42,206) | (9,781) |
Financial discounts granted | (2,248) | (3,343) | (1,911) |
Foreign exchange loss | (1,742) | (2,300) | (34,573) |
Interest in lease liabilities | (3,036) | (1,489) | |
Interest on loans and financing | (19,862) | (1,002) | |
Other | (10,831) | (12,986) | (2,972) |
Finance costs | (142,013) | (170,855) | (198,795) |
Finance result | R$ 96802 | R$ 98808 | R$ 162177 |
Income Taxes - Reconciliation o
Income Taxes - Reconciliation of Income Tax Expense (Details) - BRL (R$) R$ in Thousands | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Income taxes | |||
Profit (loss) before income taxes | R$ 39102 | R$ 42534 | R$ 100901 |
Combined statutory income taxes rate - % | 34.00% | 34.00% | 34.00% |
Income tax benefit (expense) at statutory rates | R$ 13295 | R$ 14462 | R$ 34306 |
Reconciliation adjustments: | |||
Share of profit (loss) of equity-accounted investees (b) | 139 | (612) | (269) |
Effect of presumed profit of subsidiaries (c) | 9,552 | 18,593 | 11,080 |
Non-deferred tax loss | (7,427) | (1,714) | (34,227) |
Stock options | (6,986) | ||
Other additions (exclusions), net | (4,305) | 2,374 | 7,095 |
Income taxes benefit (expense) | (22,322) | 33,103 | 17,985 |
Current | (87,379) | (46,850) | (26,553) |
Deferred | R$ 65057 | R$ 79953 | R$ 44538 |
Effective rate | 57.10% | 77.80% | 17.80% |
Prior gross revenue used to calculate presumed profit income tax | R$ 78000 | R$ 78000 | R$ 78000 |
Income Taxes - Deferred income
Income Taxes - Deferred income taxes (Details) - BRL (R$) R$ in Thousands | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Changes in the deferred tax assets and liabilities | |||
Deferred tax asset (liabilities) at beginning of period | R$ 156748 | R$ 98082 | |
Change in accounting practice | R$ 613 | ||
Deferred tax asset (liabilities), adjusted balance | 98,695 | ||
Profit or loss | 65,057 | 79,953 | |
Equity | (29,417) | ||
Business combination | 15,098 | 7,517 | |
Deferred tax asset (liabilities) at end of period | 236,903 | 156,748 | 98,082 |
Additional disclosures | |||
Deferred tax assets | 236,903 | 156,748 | 99,460 |
Deferred tax assets, adjusted balance | 100,073 | ||
Deferred tax liabilities | (1,378) | ||
Deferred tax liabilities, adjusted balance | (1,378) | ||
Unrecognized deferred income tax assets | R$ 1489 | 1,382 | |
Maximum | |||
Additional disclosures | |||
Maximum percentage of compensation limited to annual taxable income | 30.00% | ||
Deferred tax asset | |||
Changes in the deferred tax assets and liabilities | |||
Deferred tax asset (liabilities) at beginning of period | R$ 181858 | 117,711 | |
Change in accounting practice | 613 | ||
Deferred tax asset (liabilities), adjusted balance | 118,324 | ||
Profit or loss | 66,857 | 85,434 | |
Equity | (29,417) | ||
Business combination | 15,098 | 7,517 | |
Deferred tax asset (liabilities) at end of period | 263,813 | 181,858 | 117,711 |
Deferred tax asset | Tax losses carryforward | |||
Changes in the deferred tax assets and liabilities | |||
Deferred tax asset (liabilities) at beginning of period | 16,283 | 4,364 | |
Deferred tax asset (liabilities), adjusted balance | 4,364 | ||
Profit or loss | 48,481 | 11,919 | |
Deferred tax asset (liabilities) at end of period | 64,764 | 16,283 | 4,364 |
Deferred tax asset | Financial instruments from acquisition of interests | |||
Changes in the deferred tax assets and liabilities | |||
Deferred tax asset (liabilities) at beginning of period | 106,729 | 59,166 | |
Deferred tax asset (liabilities), adjusted balance | 59,166 | ||
Profit or loss | 10,664 | 47,563 | |
Deferred tax asset (liabilities) at end of period | 117,393 | 106,729 | 59,166 |
Deferred tax asset | Share base compensation | |||
Changes in the deferred tax assets and liabilities | |||
Deferred tax asset (liabilities) at beginning of period | 7,960 | ||
Profit or loss | (1,487) | 7,960 | |
Deferred tax asset (liabilities) at end of period | 6,473 | 7,960 | |
Deferred tax asset | Tax benefit from tax deductible goodwill | |||
Changes in the deferred tax assets and liabilities | |||
Deferred tax asset (liabilities) at beginning of period | 14,888 | 46,314 | |
Deferred tax asset (liabilities), adjusted balance | 46,314 | ||
Profit or loss | (3,341) | (2,009) | |
Equity | (29,417) | ||
Deferred tax asset (liabilities) at end of period | 11,547 | 14,888 | 46,314 |
Deferred tax asset | Other temporary differences | |||
Changes in the deferred tax assets and liabilities | |||
Deferred tax asset (liabilities) at beginning of period | 29,325 | 6,585 | |
Change in accounting practice | 613 | ||
Deferred tax asset (liabilities), adjusted balance | 7,198 | ||
Profit or loss | 2,392 | 14,610 | |
Business combination | 15,098 | 7,517 | |
Deferred tax asset (liabilities) at end of period | 46,815 | 29,325 | 6,585 |
Deferred tax asset | Amortization of intangible assets | |||
Changes in the deferred tax assets and liabilities | |||
Deferred tax asset (liabilities) at beginning of period | 6,673 | 1,282 | |
Deferred tax asset (liabilities), adjusted balance | 1,282 | ||
Profit or loss | 10,148 | 5,391 | |
Deferred tax asset (liabilities) at end of period | 16,821 | 6,673 | 1,282 |
Deferred income tax liabilities | |||
Changes in the deferred tax assets and liabilities | |||
Deferred tax asset (liabilities) at beginning of period | (25,110) | (19,629) | |
Deferred tax asset (liabilities), adjusted balance | (19,629) | ||
Profit or loss | (1,800) | (5,481) | |
Deferred tax asset (liabilities) at end of period | (26,910) | (25,110) | (19,629) |
Deferred income tax liabilities | Financial instruments from acquisition of interests | |||
Changes in the deferred tax assets and liabilities | |||
Deferred tax asset (liabilities) at beginning of period | (23,873) | (18,166) | |
Deferred tax asset (liabilities), adjusted balance | (18,166) | ||
Profit or loss | 14,642 | (5,707) | |
Deferred tax asset (liabilities) at end of period | (9,231) | (23,873) | (18,166) |
Deferred income tax liabilities | Tax benefit from tax deductible goodwill | |||
Changes in the deferred tax assets and liabilities | |||
Profit or loss | (15,678) | ||
Deferred tax asset (liabilities) at end of period | (15,678) | ||
Deferred income tax liabilities | Other temporary differences | |||
Changes in the deferred tax assets and liabilities | |||
Deferred tax asset (liabilities) at beginning of period | (1,237) | (1,463) | |
Deferred tax asset (liabilities), adjusted balance | (1,463) | ||
Profit or loss | (764) | 226 | |
Deferred tax asset (liabilities) at end of period | R$ 2001 | R$ 1237 | R$ 1463 |
Segment Information - Additiona
Segment Information - Additional Information (Details) - BRL (R$) | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Segment information | |||
Percentage of total revenue | 5.00% | 5.00% | |
Inter-segment revenue | R$ 0 | R$ 0 | R$ 0 |
Segment Information - Summary o
Segment Information - Summary of Operating Segments (Details) - BRL (R$) R$ in Thousands | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Segment Information | |||
Net revenue | R$ 1001710 | R$ 572837 | R$ 380981 |
Cost of sales | (221,130) | (117,258) | (80,745) |
Gross profit | 780,580 | 455,579 | 300,236 |
Selling expenses | (372,269) | (199,780) | (113,270) |
Segment profit | 408,311 | 186,966 | |
General and administrative expenses | (270,558) | (191,438) | (129,754) |
Other income (expenses), net | (2,258) | (6,287) | 4,856 |
Operating profit | 135,495 | 58,074 | 62,068 |
Finance income | 45,211 | 72,047 | 36,618 |
Finance costs | (142,013) | (170,855) | (198,795) |
Share of loss of equity-accounted investees | 409 | (1,800) | (792) |
Income (loss) before income taxes | 39,102 | (42,534) | (100,901) |
Income taxes expense | 22,322 | (33,103) | (17,985) |
Net profit for the year | 16,780 | (9,431) | (82,916) |
Total assets | 4,576,280 | 3,161,423 | |
Total liabilities | 2,375,396 | 1,566,613 | |
Other disclosures | |||
Depreciation and amortization | 127,455 | 48,314 | 19,594 |
Investments in associates and joint ventures | 9,654 | 48,574 | 11,862 |
Capital expenditures | 107,649 | 54,093 | 36,257 |
Operating segments | |||
Segment Information | |||
Net revenue | 1,001,710 | 572,837 | 380,981 |
Cost of sales | (221,130) | (117,258) | (80,745) |
Gross profit | 780,580 | 455,579 | 300,236 |
Selling expenses | (372,269) | (113,270) | |
Segment profit | 408,311 | 186,966 | |
Total assets | 4,596,385 | 3,175,693 | |
Total liabilities | 2,395,501 | 1,580,883 | |
Other disclosures | |||
Depreciation and amortization | 127,455 | 48,314 | 19,594 |
Investments in associates and joint ventures | 9,654 | 48,574 | 11,862 |
Capital expenditures | 107,649 | 54,093 | 36,257 |
Operating segments | Core segments | |||
Segment Information | |||
Net revenue | 841,145 | 433,372 | 303,031 |
Cost of sales | (190,893) | (97,513) | (70,903) |
Gross profit | 650,252 | 335,859 | 232,128 |
Selling expenses | (309,816) | (87,186) | |
Segment profit | 340,436 | 144,942 | |
Total assets | 4,342,905 | 2,999,497 | |
Total liabilities | 2,316,545 | 1,535,695 | |
Other disclosures | |||
Depreciation and amortization | 118,416 | 43,854 | 17,997 |
Investments in associates and joint ventures | 9,654 | 48,574 | 11,862 |
Capital expenditures | 95,672 | 45,851 | 28,165 |
Operating segments | Supplemental segments | |||
Segment Information | |||
Net revenue | 160,565 | 139,465 | 77,950 |
Cost of sales | (30,237) | (19,745) | (9,842) |
Gross profit | 130,328 | 119,720 | 68,108 |
Selling expenses | (62,453) | (26,084) | |
Segment profit | 67,875 | 42,024 | |
Total assets | 253,480 | 176,196 | |
Total liabilities | 78,956 | 45,188 | |
Other disclosures | |||
Depreciation and amortization | 9,039 | 4,460 | 1,597 |
Capital expenditures | 11,977 | 8,242 | R$ 8092 |
Elimination of intersegment amounts | |||
Segment Information | |||
Total assets | (20,105) | (14,270) | |
Total liabilities | R$ 20105 | R$ 14270 |
Financial Instruments - Summary
Financial Instruments - Summary of Financial Assets (Details) R$ in Thousands, $ in Thousands | Dec. 31, 2020USD ($) | Dec. 31, 2020BRL (R$) | Dec. 31, 2019BRL (R$) | Dec. 31, 2018BRL (R$) | Dec. 31, 2017BRL (R$) |
Financial Instruments | |||||
Cash and cash equivalents | $ 5,556 | R$ 424410 | R$ 48900 | R$ 12301 | R$ 834 |
Financial investments | 722,994 | 579,494 | |||
Trade receivables | 415,282 | 329,428 | |||
Financial instruments from acquisition of interests | 35,946 | ||||
Related parties | 20,478 | 16,111 | |||
Investments and interests in other entities | 9,654 | 48,574 | R$ 11862 | ||
Other assets | 4,109 | ||||
Total financial assets | 1,592,818 | 1,013,988 | |||
Financial assets at fair value through profit or loss, | |||||
Financial Instruments | |||||
Financial investments | 17,645 | 498,584 | |||
Financial instruments from acquisition of interests | 35,946 | ||||
Investments and interests in other entities | 9,654 | ||||
Total financial assets | 27,299 | 534,530 | |||
At Amortized Cost | |||||
Financial Instruments | |||||
Cash and cash equivalents | 424,410 | 48,900 | |||
Financial investments | 705,349 | 80,910 | |||
Trade receivables | 415,282 | 329,428 | |||
Related parties | 20,478 | 16,111 | |||
Other assets | 4,109 | ||||
Total financial assets | R$ 1565519 | R$ 479458 |
Financial Instruments - Summa_2
Financial Instruments - Summary of Financial Liabilities (Details) - BRL (R$) R$ in Thousands | Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 |
Financial Instruments | |||
Trade payables | R$ 40925 | R$ 34521 | |
Financial instruments from acquisition of interests | 33,940 | ||
Accounts payable to selling shareholders | 1,786,515 | 1,216,232 | |
Lease liabilities | 35,220 | 25,857 | R$ 20089 |
Loans and financing | 311,119 | 98,561 | R$ 0 |
Financial liabilities | 2,173,779 | 1,409,111 | |
Financial liabilities at fair value through profit or loss | |||
Financial Instruments | |||
Financial instruments from acquisition of interests | 33,940 | ||
Accounts payable to selling shareholders | 861,385 | 328,668 | |
Financial liabilities | 861,385 | 362,608 | |
At Amortized Cost | |||
Financial Instruments | |||
Trade payables | 40,925 | 34,521 | |
Accounts payable to selling shareholders | 925,130 | 887,564 | |
Lease liabilities | 35,220 | 25,857 | |
Loans and financing | 311,119 | 98,561 | |
Financial liabilities | R$ 1312394 | R$ 1046503 |
Financial Instruments - Additio
Financial Instruments - Additional Information (Details) - BRL (R$) R$ in Thousands | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Financial instruments | |||
Fixed rate of return on multimarket investment fund | 82.90% | ||
Finance income (costs) in profit and loss | R$ 562 | R$ 473 | R$ 659 |
Financial Instruments - Summa_3
Financial Instruments - Summary of Assets and Liabilities Recognized at Fair Value (Details) - BRL (R$) R$ in Thousands | Dec. 31, 2020 | Dec. 31, 2019 |
Financial assets | ||
Derivative financial instruments | R$ 35946 | |
Investment at fair value | R$ 9654 | |
Financial liabilities | ||
Derivative financial instruments | 33,940 | |
Accounts payable to selling shareholders | 1,786,515 | 1,216,232 |
Level 2 | ||
Financial assets | ||
Financial investments | 17,645 | 498,584 |
Level 3 | ||
Financial assets | ||
Derivative financial instruments | 35,946 | |
Financial liabilities | ||
Derivative financial instruments | 33,940 | |
Accounts payable to selling shareholders | R$ 861385 | R$ 328668 |
Financial Instruments - Summa_4
Financial Instruments - Summary of Recurring of Fair Value Measurements (Details) - Recurring - Level 3 - BRL (R$) R$ in Thousands | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Financial instruments from acquisition of interests (assets) | |||
Beginning balance | R$ 35946 | R$ 26630 | R$ 12511 |
Gains (losses) recognized in statement of income (loss) | (35,946) | 9,316 | 14,119 |
Ending balance | 35,946 | 26,630 | |
Financial instruments from acquisition of interests (liabilities) | |||
Beginning balance | (33,940) | (25,097) | (13,637) |
Payment of capital increase in Geekie | 2,000 | ||
Deferred revenue in Escola de Aplicao So Jos dos Campos | 54 | 50 | |
Gains (losses) recognized in statement of income (loss) | 33,940 | (8,897) | (13,510) |
Ending balance | (33,940) | (25,097) | |
Accounts payable to selling shareholders | |||
Beginning balance | (328,668) | (174,410) | (36,630) |
Acquisitions | (478,209) | (58,194) | |
Payment of acquisition | 9,520 | 21,098 | |
Changes in accounts payable to selling shareholders | (20,314) | (89,403) | (129,430) |
Interest expense | (43,714) | (35,127) | (8,350) |
Fair value held in step acquisition | 7,368 | ||
Ending balance | R$ 861385 | R$ 328668 | R$ 174410 |
Risk - Summary of Company's Exp
Risk - Summary of Company's Exposure to Foreign Currency Risk (Details) R$ in Thousands, $ in Thousands | Dec. 31, 2020USD ($) | Dec. 31, 2020BRL (R$) | Dec. 31, 2019BRL (R$) | Dec. 31, 2018BRL (R$) | Dec. 31, 2017BRL (R$) |
Risk | |||||
Cash and cash equivalents (Note 5) | $ 5,556 | R$ 424410 | R$ 48900 | R$ 12301 | R$ 834 |
Financial investments | 721,935 | 577,398 | |||
Currency risk | |||||
Risk | |||||
Cash and cash equivalents (Note 5) | 28,327 | 23,346 | |||
Financial investments | R$ 542 | R$ 1629 |
Risk - Additional Information (
Risk - Additional Information (Details) R$ in Thousands, $ in Thousands | 12 Months Ended | ||||
Dec. 31, 2020USD ($) | Dec. 31, 2020BRL (R$) | Dec. 31, 2019BRL (R$) | Dec. 31, 2018BRL (R$) | Dec. 31, 2017BRL (R$) | |
Risk | |||||
Cash and cash equivalents | $ 5,556 | R$ 424410 | R$ 48900 | R$ 12301 | R$ 834 |
CDI rate | 3.04% | ||||
Base scenario | |||||
Risk | |||||
Exchange rate | 5.1961 | 5.1961 | |||
Base scenario | U.S. Dollars | |||||
Risk | |||||
Exchange rate | 5.1961 | 5.1961 | |||
Scenario 1 | |||||
Risk | |||||
Exchange rate | 6.2353 | 6.2353 | |||
Percentage increase in foreign exchange rate | 20.00% | ||||
Foreign exchange gain | 6.2353 | ||||
Scenario 2 | |||||
Risk | |||||
Exchange rate | 4.1569 | 4.1569 | |||
Foreign exchange gain | 4.1569 | ||||
Percentage decrease in foreign exchange rate | 20.00% |
Risk - Summary of Sensitivity A
Risk - Summary of Sensitivity Analysis for the Cash and Cash Equivalents With Subject to Foreign Exchange Rate (Details) R$ in Thousands | 12 Months Ended | ||
Dec. 31, 2020BRL (R$) | Dec. 31, 2019BRL (R$) | Dec. 31, 2018BRL (R$) | |
Risk | |||
Finance income (costs) | R$ 96802 | R$ 98808 | R$ 162177 |
Base scenario | |||
Risk | |||
Exchange rate | 5.1961 | ||
Scenario 1 | |||
Risk | |||
Exchange rate | 6.2353 | ||
Finance income (costs) | R$ 5773 | ||
Scenario 2 | |||
Risk | |||
Exchange rate | 4.1569 | ||
Finance income (costs) | R$ 5773 |
Risk - Maturity Profile of the
Risk - Maturity Profile of the Company's Financial Liabilities Based on Contractual Undiscounted Amounts (Details) - Liquidity risk - BRL (R$) R$ in Thousands | Dec. 31, 2020 | Dec. 31, 2019 |
Risk | ||
Trade payables | R$ 40925 | R$ 34521 |
Lease liabilities | 35,220 | 25,857 |
Loans and financing | 311,119 | 98,561 |
Financial instruments from acquisition | 33,940 | |
Accounts payable to selling shareholders | 1,786,515 | 1,216,232 |
Total | 2,173,779 | 1,409,111 |
Less than 3 months | ||
Risk | ||
Trade payables | 40,925 | 34,521 |
Lease liabilities | 3,608 | 2,037 |
Loans and financing | 1,855 | |
Accounts payable to selling shareholders | 152,057 | |
Total | 198,445 | 36,558 |
3 to 12 months | ||
Risk | ||
Lease liabilities | 9,134 | 4,808 |
Loans and financing | 105,851 | 98,561 |
Accounts payable to selling shareholders | 503,957 | 117,959 |
Total | 618,942 | 221,328 |
1 to 2 years | ||
Risk | ||
Lease liabilities | 11,497 | 9,696 |
Loans and financing | 203,413 | |
Financial instruments from acquisition | 33,940 | |
Accounts payable to selling shareholders | 585,663 | 374,106 |
Total | 800,573 | 417,742 |
2 to 3 years | ||
Risk | ||
Lease liabilities | 8,559 | 7,225 |
Accounts payable to selling shareholders | 273,810 | 194,548 |
Total | 282,369 | 201,773 |
3 to 4 years | ||
Risk | ||
Lease liabilities | 2,156 | 1,901 |
Accounts payable to selling shareholders | 271,028 | 265,886 |
Total | 273,184 | 267,787 |
4 to 5 years | ||
Risk | ||
Lease liabilities | 266 | 190 |
Accounts payable to selling shareholders | 263,733 | |
Total | R$ 266 | R$ 263923 |
Risk - Summary of the Scenarios
Risk - Summary of the Scenarios Estimated by Management and the Effect on Profit Before Income Taxes (Details) - Interest rate risk R$ in Thousands | 12 Months Ended |
Dec. 31, 2020BRL (R$) | |
Exposure | Cash, bank deposits and cash equivalents | |
Risk | |
Effect of change in CDI rate on profit before income taxes | R$ 396083 |
Exposure | Financial Investments | |
Risk | |
Effect of change in CDI rate on profit before income taxes | 722,452 |
Exposure | Accounts payable to selling shareholders | |
Risk | |
Effect of change in CDI rate on profit before income taxes | 912,757 |
Exposure | Related parties | |
Risk | |
Effect of change in CDI rate on profit before income taxes | 20,478 |
Exposure | Loans and financing | |
Risk | |
Effect of change in CDI rate on profit before income taxes | 311,119 |
+ 10 % | Cash, bank deposits and cash equivalents | |
Risk | |
Effect of change in CDI rate on profit before income taxes | 1,204 |
+ 10 % | Financial Investments | |
Risk | |
Effect of change in CDI rate on profit before income taxes | 2,196 |
+ 10 % | Accounts payable to selling shareholders | |
Risk | |
Effect of change in CDI rate on profit before income taxes | 2,775 |
+ 10 % | Related parties | |
Risk | |
Effect of change in CDI rate on profit before income taxes | 62 |
+ 10 % | Loans and financing | |
Risk | |
Effect of change in CDI rate on profit before income taxes | 997 |
-10 % | Cash, bank deposits and cash equivalents | |
Risk | |
Effect of change in CDI rate on profit before income taxes | (1,204) |
-10 % | Financial Investments | |
Risk | |
Effect of change in CDI rate on profit before income taxes | (2,196) |
-10 % | Accounts payable to selling shareholders | |
Risk | |
Effect of change in CDI rate on profit before income taxes | (2,775) |
-10 % | Related parties | |
Risk | |
Effect of change in CDI rate on profit before income taxes | (62) |
-10 % | Loans and financing | |
Risk | |
Effect of change in CDI rate on profit before income taxes | R$ 997 |
Risk - Changes in liabilities a
Risk - Changes in liabilities arising from financing activities (Details) - BRL (R$) R$ in Thousands | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Risk | |||
Beginning balance | R$ 124418 | R$ 0 | R$ 10511 |
Change in accounting practice | 20,089 | ||
Adjusted balance | 20,089 | ||
Cash flows | 173,250 | 91,752 | (85,000) |
Other | 48,671 | 12,577 | 74,489 |
Ending balance | 346,339 | 124,418 | 0 |
Dividends payable | |||
Risk | |||
Beginning balance | 0 | 10,511 | |
Cash flows | (85,000) | ||
Other | 74,489 | ||
Ending balance | 0 | 0 | |
Leases | |||
Risk | |||
Beginning balance | 25,857 | 0 | |
Change in accounting practice | 20,089 | ||
Adjusted balance | 20,089 | ||
Cash flows | (10,610) | (5,259) | |
Other | 19,973 | 11,027 | |
Ending balance | 35,220 | 25,857 | 0 |
Loans and financing | |||
Risk | |||
Beginning balance | 98,561 | 0 | |
Cash flows | 183,860 | 97,011 | |
Other | 28,698 | 1,550 | |
Ending balance | R$ 311119 | R$ 98561 | R$ 0 |
Risk - Changes in liabilities_2
Risk - Changes in liabilities arising from investing activities under sensitivity analysis (Details) R$ in Thousands | 12 Months Ended |
Dec. 31, 2020BRL (R$) | |
+20% | |
Disclosure of nature and extent of risks arising from financial instruments [line items] | |
WACC | R$ 3836 |
-20% | |
Disclosure of nature and extent of risks arising from financial instruments [line items] | |
WACC | (3,836) |
Escola da Inteligencia Cursos Educacionais Ltda. | +20% | |
Disclosure of nature and extent of risks arising from financial instruments [line items] | |
ACV book value | 51,883 |
Escola da Inteligencia Cursos Educacionais Ltda. | -20% | |
Disclosure of nature and extent of risks arising from financial instruments [line items] | |
ACV book value | (51,883) |
Scenario 1 | Geekie | +20% | |
Disclosure of nature and extent of risks arising from financial instruments [line items] | |
ACV book value | 24,260 |
Scenario 1 | Geekie | -20% | |
Disclosure of nature and extent of risks arising from financial instruments [line items] | |
ACV book value | (24,260) |
Scenario 2 | +20% | |
Disclosure of nature and extent of risks arising from financial instruments [line items] | |
WACC | 15,262 |
Scenario 2 | -20% | |
Disclosure of nature and extent of risks arising from financial instruments [line items] | |
WACC | R$ 15262 |
Commitments and Contingencies -
Commitments and Contingencies - Summary of Rollforward of Legal Proceedings (Details) - BRL (R$) R$ in Thousands | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Commitments and contingencies | ||
Beginning balance | R$ 251 | R$ 131 |
Additions | 809 | 354 |
Business combination | 599 | |
Reversals | (293) | (234) |
Ending Balance | 1,366 | 251 |
Civil | ||
Commitments and contingencies | ||
Beginning balance | 0 | 0 |
Additions | 564 | |
Reversals | (99) | |
Ending Balance | 465 | 0 |
Labor | ||
Commitments and contingencies | ||
Beginning balance | 122 | 17 |
Additions | 108 | 209 |
Reversals | (178) | (104) |
Ending Balance | 52 | 122 |
Taxes | ||
Commitments and contingencies | ||
Beginning balance | 129 | 114 |
Additions | 137 | 145 |
Business combination | 599 | |
Reversals | (16) | (130) |
Ending Balance | R$ 849 | R$ 129 |
Commitments and Contingencies_2
Commitments and Contingencies - Summary of Litigation Settlement (Details) - BRL (R$) R$ in Thousands | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Commitments and contingencies | ||
Losses on litigation settlements | R$ 7863 | R$ 7209 |
International School Servicos de Ensino, Treinamento e Editoracao, Franqueadora S.A. ("International School") | ||
Commitments and contingencies | ||
Recognized interest expense | 34,627 | |
Increase in accounts payable to sale of share holders | 32,121 | |
Civil | ||
Commitments and contingencies | ||
Losses on litigation settlements | 6,367 | 6,113 |
Labor | ||
Commitments and contingencies | ||
Losses on litigation settlements | R$ 1496 | R$ 1096 |
Transactions Not Involving Ca_3
Transactions Not Involving Cash - Summary of Non-cash Activities, Which Are Not Included in Statements of Cash Flow (Details) - BRL (R$) R$ in Thousands | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Transactions not involving cash | |||
Share issuance costs - unpaid | R$ 674 | ||
Tax benefit from tax deductible goodwill | R$ 46314 | R$ 46314 | |
Investing - derivative financial instruments | 14,597 | ||
Business combinations - derivative financial instruments | 38,924 | ||
Lease | R$ 14471 | 1,251 | |
Forward contract | 469,587 | 29,728 | |
Retained payments from business combination | 14,821 | 874,440 | |
Capital contribution | 4,000 | ||
Price adjustment from business combination | 4,620 | ||
Acquisition from business combination | R$ 22857 | R$ 39419 |
Subsequent Events (Details)
Subsequent Events (Details) - Class A common shares - Buyback agreement $ in Millions | Jan. 06, 2021USD ($)shares |
Disclosure of non-adjusting events after reporting period [line items] | |
Number of shares authorised to be repurchased | 500,000 |
Number of shares repurchased | 276,581 |
Payments to acquire own shares | $ | $ 9.8 |
Subsequent Events - Acquisition
Subsequent Events - Acquisition of Additional Shares of Geekie (Details) - BRL (R$) R$ in Thousands | Jan. 20, 2021 | Dec. 31, 2020 | Dec. 31, 2019 |
Nave a Vela Ltda. ("Nave") | |||
Subsequent events | |||
Equity interest held in subsidiary | 51.00% | 51.00% | |
Acquisition of additional shares, equity interest | Geekie | |||
Subsequent events | |||
Percentage of equity interest acquired | 1.36% | ||
Value of additional shares acquired | R$ 4000 | ||
Equity interest held in subsidiary | 57.42% |
Subsequent Events - Investment
Subsequent Events - Investment in INCO Limited (Details) - Class B common shares - INCO Limited - Shares Purchase Agreement R$ in Thousands | Jan. 25, 2021BRL (R$)USD ($)shares |
Disclosure of non-adjusting events after reporting period [line items] | |
Number of shares acquired | shares | 8,571,427 |
Percentage of share capital acquired | 30.00% |
Payments for purchase agreement | R$ | R$ 25000 |
Number of director of entity in associate entity | 1 |
Total number of director | 4 |
Subsequent Events - Acquisiti_2
Subsequent Events - Acquisition of Nave (Details) - Nave a Vela Ltda. ("Nave") - BRL (R$) R$ in Thousands | Feb. 25, 2021 | Oct. 29, 2019 | May 31, 2019 |
Disclosure of non-adjusting events after reporting period [line items] | |||
Ownership interest held | 100.00% | 37.80% | 13.20% |
Acquisition | |||
Disclosure of non-adjusting events after reporting period [line items] | |||
Ownership interest held | 49.00% | ||
Outstanding share capital held | R$ 22646 |
Subsequent Events - Acquisiti_3
Subsequent Events - Acquisition of COC and Dom Bosco learning systems (Details) - Acquisition - COC and Dom Bosco learning systems R$ in Millions | Mar. 06, 2021BRL (R$)item |
Disclosure of detailed information about business combination [line items] | |
Cash paid | R$ | R$ 920 |
Academic track record period (in years) | 50 years |
Number of partner schools | 800 |
Number of students | 210,000 |
Equity interest acquired (as a percent) | 100.00% |
Purchase price payable at the time of closing | |
Disclosure of detailed information about business combination [line items] | |
Equity interest acquired (as a percent) | 80.00% |
Purchase price payable on the first anniversary of the closing date | |
Disclosure of detailed information about business combination [line items] | |
Equity interest acquired (as a percent) | 20.00% |
Subsequent Events - Acquisiti_4
Subsequent Events - Acquisition of Me Salva! (Details) - Acquisition - Me Salva! item in Thousands, R$ in Billions | Mar. 12, 2021BRL (R$)item |
Disclosure of detailed information about business combination [line items] | |
Number of students | item | 900 |
Percent of revenue grown per year | 36.00% |
Estimated addressable market | R$ | R$ 5 |