Exhibit 99.2
VASTA Platform Limited
Unaudited Condensed Interim Consolidated Financial Statements
Three-month period ended March 31, 2024
CONTENT
Unaudited Condensed Interim Consolidated Statements of Financial Position as of March 31, 2024 and December 31, 2023
In thousands of R$, unless otherwise stated
| Assets | Note | March 31, 2024 | December 31, 2023 | ||||||||
| Current assets | |||||||||||
| Cash and cash equivalents | 7 | 67,214 | 95,864 | ||||||||
| Marketable securities | 8 | 242,799 | 245,942 | ||||||||
| Trade receivables | 9 | 771,022 | 697,512 | ||||||||
| Inventories | 10 | 293,308 | 300,509 | ||||||||
| Prepayments | 76,339 | 71,870 | |||||||||
| Taxes recoverable | 21,257 | 19,041 | |||||||||
| Income tax and social contribution recoverable | 18,846 | 16,841 | |||||||||
| Other receivables | 2,760 | 2,085 | |||||||||
| Related parties – other receivables | 20 | 12,137 | 7,157 | ||||||||
| Total current assets | 1,505,682 | 1,456,821 | |||||||||
| Non-current assets | |||||||||||
| Judicial deposits and escrow accounts | 21.c | 212,597 | 207,188 | ||||||||
| Deferred income tax and social contribution | 22.b | 197,644 | 205,453 | ||||||||
| Equity accounted investees | 11 | 61,424 | 64,484 | ||||||||
| Other investments and interests in entities | 9,879 | 9,879 | |||||||||
| Property, plant and equipment | 12 | 137,607 | 151,492 | ||||||||
| Intangible assets and goodwill | 13 | 5,283,706 | 5,307,563 | ||||||||
| Total non-current assets | 5,902,857 | 5,946,059 | |||||||||
| Total Assets | 7,408,539 | 7,402,880 |
The accompanying notes are an integral part of this Unaudited Condensed Interim Consolidated Financial Statements.
F-3
Unaudited Condensed Interim Consolidated Statements of Financial Position as of March 31, 2024 and December 31, 2023
In thousands of R$, unless otherwise stated
| Liabilities | Note | March 31, 2024 | December 31, 2023 | ||||||||
| Current liabilities | |||||||||||
| Bonds | 14 | 512,985 | 541,763 | ||||||||
| Suppliers | 15 | 214,082 | 221,291 | ||||||||
| Reverse factoring | 15 | 262,337 | 263,948 | ||||||||
| Lease liabilities | 16 | 11,485 | 17,078 | ||||||||
| Income tax and social contribution payable | 8,676 | — | |||||||||
| Taxes payable | 10,896 | 7,821 | |||||||||
| Salaries and social contributions | 19 | 120,946 | 104,406 | ||||||||
| Contractual obligations and deferred income | 17 | 46,307 | 32,815 | ||||||||
| Accounts payable for business combination and acquisition of associates | 18 | 211,444 | 216,728 | ||||||||
| Other liabilities | 20,667 | 26,382 | |||||||||
| Other liabilities - related parties | 20 | 21,472 | 15,060 | ||||||||
| Total current liabilities | 1,441,297 | 1,447,292 | |||||||||
| Non-current liabilities | |||||||||||
| Bonds | 14 | 250,000 | 250,000 | ||||||||
| Lease liabilities | 16 | 67,982 | 79,579 | ||||||||
| Accounts payable for business combination and acquisition of associates | 18 | 404,803 | 397,392 | ||||||||
| Provision for tax, civil and labor losses | 21.a | 710,448 | 697,990 | ||||||||
| Other liabilities | 10,868 | 9,836 | |||||||||
| Total non-current liabilities | 1,444,101 | 1,434,797 | |||||||||
| Total current and non-current liabilities | 2,885,398 | 2,882,089 | |||||||||
| Shareholder's Equity | |||||||||||
| Share capital | 23.1 | 4,820,815 | 4,820,815 | ||||||||
| Capital reserve | 23.3 | 91,005 | 89,627 | ||||||||
| Treasury shares | 23.4 | (80,495 | ) | (59,525 | ) | ||||||
| Accumulated losses | (309,387 | ) | (331,559 | ) | |||||||
| 4,521,938 | 4,519,358 | ||||||||||
| Interest of non-controlling shareholders | 1,203 | 1,433 | |||||||||
| Total Shareholder's Equity | 4,523,141 | 4,520,791 | |||||||||
| Total Liabilities and Shareholder's Equity | 7,408,539 | 7,402,880 |
The accompanying notes are an integral part of this Unaudited Condensed Interim Consolidated Financial Statements.
F-4
Unaudited Condensed Interim Consolidated Statements of Profit or Loss and Other Comprehensive Profit or Loss for the three-month period ended March 31, 2024 and 2023
In thousands of R$, except for profit (loss) per share
| Note | March 31, 2024 | March 31, 2023 | |||||||||
| Net revenue from sales and services | 24 | 460,716 | 402,835 | ||||||||
| Sales | 442,545 | 393,688 | |||||||||
| Services | 18,171 | 9,147 | |||||||||
| Cost of goods sold and services | 25 | (140,083 | ) | (155,126 | ) | ||||||
| Gross profit | 320,633 | 247,709 | |||||||||
| Operating income (expenses) | (224,582 | ) | (187,728 | ) | |||||||
| General and administrative expenses | 25 | (139,902 | ) | (127,281 | ) | ||||||
| Commercial expenses | 25 | (73,260 | ) | (51,061 | ) | ||||||
| Impairment losses on trade receivables | 25 | (13,205 | ) | (10,380 | ) | ||||||
| Other operating income | 25 | 1,980 | 994 | ||||||||
| Other operating expenses | 25 | (195 | ) | — | |||||||
| Share of loss equity-accounted investees | 11 | (3,060 | ) | (528 | ) | ||||||
| Profit before finance result and taxes | 92,991 | 59,453 | |||||||||
| Finance result | (56,267 | ) | (59,185 | ) | |||||||
| Finance income | 26 | 13,543 | 16,631 | ||||||||
| Finance costs | 26 | (69,810 | ) | (75,816 | ) | ||||||
| Profit before income tax and social contribution | 36,724 | 268 | |||||||||
| Income tax and social contribution | |||||||||||
| Current | 22.a | (6,973 | ) | (1,454 | ) | ||||||
| Deferred | 22.a | (7,809 | ) | (1,038 | ) | ||||||
| (14,782 | ) | (2,492 | ) | ||||||||
| Profit (loss) for the period | 21,942 | (2,224 | ) | ||||||||
| Allocated to: | |||||||||||
| Controlling shareholders | 22,172 | (2,278 | ) | ||||||||
| Non-controlling shareholders | (230 | ) | 54 | ||||||||
| Profit (loss) per share | |||||||||||
| Basic | 23.2 | 0.27 | (0.03 | ) | |||||||
| Diluted | 23.2 | 0.30 | (0.03 | ) |
The accompanying notes are an integral part of this Unaudited Condensed Interim Consolidated Financial Statements.
F-5
Unaudited Condensed Interim Consolidated Statements of Changes in Equity for the three-month period ended March 31, 2024 and 2023
In thousands of R$, unless otherwise stated
| Share Capital | Capital Reserve | |||||||||||||||||
| Share Capital | Share issuance costs | Share-based compensation reserve (granted) | Share-based compensation reserve (vested) | Treasury shares | Accumulated losses | Total Shareholders' Equity | Non-controlling shareholders | Total Shareholders' Equity | ||||||||||
| Balance as of December 31, 2022 | 4,961,988 | (141,173) | 46,245 | 34,286 | (23,880) | (247,787) | 4,629,679 | - | 4,629,679 | |||||||||
| Loss for the period | - | - | - | - | - | (2,278) | (2,278) | 54 | (2,224) | |||||||||
| Share based compensation granted and issued | - | - | 2,658 | - | - | - | 2,658 | - | 2,658 | |||||||||
| Share based compensation vested | - | - | (36) | 36 | - | - | - | 3,493 | 3,493 | |||||||||
| Acquisition of shares | - | - | - | - | - | - | - | - | - | |||||||||
| Balance as of March 31, 2023 | 4,961,988 | (141,173) | 48,867 | 34,322 | (23,880) | (250,065) | 4,630,059 | 3,547 | 4,633,606 | |||||||||
| Balance as of December 31, 2023 | 4,961,988 | (141,173) | 55,341 | 34,286 | (59,525) | (331,559) | 4,519,358 | 1,433 | 4,520,791 | |||||||||
| Profit for the period | - | - | - | - | - | 22,172 | 22,172 | (230) | 21,942 | |||||||||
| Share based compensation granted and issued | - | - | 2,939 | - | - | - | 2,939 | - | 2,939 | |||||||||
| Share based compensation vested | - | - | (1,561) | - | 1,561 | - | - | - | - | |||||||||
| Purchase of treasury shares (note 23.4) | - | - | - | - | (22,531) | - | (22,531) | - | (22,531) | |||||||||
| Balance as of March 31, 2024 | 4,961,988 | (141,173) | 56,719 | 34,286 | (80,495) | (309,387) | 4,521,938 | 1,203 | 4,523,141 | |||||||||
The accompanying notes are an integral part of this Unaudited Condensed Interim Consolidated Financial Statements.
F-6
Unaudited Condensed Interim Consolidated Statements for the three-month period ended March 31, 2024 and 2023
In thousands of R$ unless otherwise stated
| Notes | 2024 | 2023 | |||||||||
| CASH FLOWS FROM OPERATING ACTIVITIES | |||||||||||
| Profit before income tax and social contribution | 36,724 | 268 | |||||||||
| Adjustments for: | |||||||||||
| Depreciation and amortization | 12 and 13 | 69,534 | 70,832 | ||||||||
| Share of loss profit of equity-accounted investees | 11 | 3,060 | 528 | ||||||||
| Impairment losses on trade receivables | 25 | 13,205 | 10,380 | ||||||||
| Provision (reversal) for tax, civil and labor losses net | 25 | 289 | (4,423 | ) | |||||||
| Interest on provision for tax, civil and labor losses | 26 | 12,273 | 8,485 | ||||||||
| Interest on bonds | 14 | 24,366 | 30,591 | ||||||||
| Contractual obligations and right to returned goods | 9,293 | 4,762 | |||||||||
| Interest on accounts payable for business combination and acquisition of associates | 26 | 15,664 | 18,031 | ||||||||
| Interest on suppliers | 26 | 12,500 | 7,074 | ||||||||
| Share-based payment expense | 2,939 | 2,658 | |||||||||
| Interest on lease liabilities | 16 | 2,113 | 3,385 | ||||||||
| Interest on marketable securities | 26 | (5,786 | ) | (9,417 | ) | ||||||
| Cancellations of right-of-use contracts | (1,951 | ) | 3,053 | ||||||||
| Residual value of disposals of property and equipment and intangible assets | 12 and 13 | 943 | 3 | ||||||||
| 195,166 | 146,210 | ||||||||||
| Changes in | |||||||||||
| Trade receivables | (86,715 | ) | (72,466 | ) | |||||||
| Inventories | 7,201 | 3,579 | |||||||||
| Prepayments | (4,469 | ) | (20,520 | ) | |||||||
| Taxes recoverable | (11,194 | ) | (17,220 | ) | |||||||
| Judicial deposits and escrow accounts | (5,379 | ) | 5,132 | ||||||||
| Other receivables | (675 | ) | (16 | ) | |||||||
| Related parties – other receivables | (4,980 | ) | 766 | ||||||||
| Suppliers | (21,320 | ) | 2,125 | ||||||||
| Salaries and social charges | 16,540 | 32,097 | |||||||||
| Tax payable | 11,751 | (5,474 | ) | ||||||||
| Contractual obligations and deferred income | 4,199 | 20,464 | |||||||||
| Other liabilities | (4,191 | ) | (406 | ) | |||||||
| Other liabilities - related parties | 6,412 | 376 | |||||||||
| Cash generated from operating activities | 102,346 | 94,647 | |||||||||
| Payment of interest on leases | 16 | (2,029 | ) | (3,668 | ) | ||||||
| Payment of interest on bonds | 14 | (53,423 | ) | (57,914 | ) | ||||||
| Payment of interest on business combinations | 18 | (2,590 | ) | (15,820 | ) | ||||||
| Income tax and social contribution paid | — | (331 | ) | ||||||||
| Payment of provision for tax, civil and labor losses | 21 | (134 | ) | (190 | ) | ||||||
| Net cash from operating activities | 44,170 | 16,724 | |||||||||
| CASH FLOWS FROM INVESTING ACTIVITIES | |||||||||||
| Acquisition of property and equipment | 12 | (8,982 | ) | (5,256 | ) | ||||||
| Additions of intangible assets | 12 | (34,776 | ) | (38,638 | ) | ||||||
| Acquisition of subsidiaries net of cash acquired | — | (3,205 | ) | ||||||||
| Proceeds from investment in marketable securities | (266,215 | ) | (362,606 | ) | |||||||
| Purchase of investment in marketable securities | 275,143 | 421,427 | |||||||||
| Net cash (used in) from investing activities | (34,830 | ) | 11,722 | ||||||||
| CASH FLOWS FROM FINANCING ACTIVITIES | |||||||||||
| Repurchase shares on treasury | 23.4 | (22,531 | ) | — | |||||||
| Lease liabilities paid | 16 | (4,300 | ) | (10,334 | ) | ||||||
| Payments of accounts payable for business combination and acquisition of associates | 18 | (11,159 | ) | (21,197 | ) | ||||||
| Net cash used in financing activities | (37,990 | ) | (31,531 | ) | |||||||
| NET DECREASE IN CASH AND CASH EQUIVALENTS | (28,650 | ) | (3,085 | ) | |||||||
| Cash and cash equivalents at beginning of period | 7 | 95,864 | 45,765 | ||||||||
| Cash and cash equivalents at end of period | 7 | 67,214 | 42,680 | ||||||||
| NET DECREASE IN CASH AND CASH EQUIVALENTS | (28,650 | ) | (3,085 | ) | |||||||
The accompanying notes are an integral part of this Unaudited Condensed Interim Consolidated Financial Statements.
F-7
Notes to the Unaudited Condensed Interim Consolidated Financial Statements
(Amounts in thousands of R$, unless otherwise stated)
1. The Company and Basis of Presentation
1.1. The Company
Vasta Platform Limited, together with its subsidiaries (the Company or Group) is a publicly held company incorporated in the Cayman Islands on October 16, 2019, with headquarters in the city of São Paulo, Brazil. The Company is a technology-powered education content providing end-to-end educational and digital solutions that cater to all needs of private schools operating in the K-12 educational segment. Vasta’s fiscal year begins on January 1 of each year and ends on December 31 of the same year.
The Company is a subsidiary of Cogna Educação S.A. (Cogna Educação S.A. and its subsidiaries defined as “Cogna Group”), and since July 31, 2020, VASTA Platform Limited. has been a publicly-held company registered with SEC (“The US Securities and Exchange Commission) and its shares are traded on Nasdaq Global Select Market under ticker symbol “VSTA”.
2. Basis of accounting
These Interim Financial Statements for the three-month period ended March 31, 2024, have been prepared in accordance with the IAS 34 – Interim Financial reporting – and should be read in conjunction with the Group’s last annual Consolidated Financial Statements as at and for the year ended December 31, 2023 (‘last annual financial statements’). They do not include all the information required for a complete set of financial statements prepared in accordance with International Financial Reporting Standards (IFRS) standards. However, selected explanatory notes are included to explain events and transactions that are significant to an understanding of the changes in the Company’s financial position and performance since the last annual financial statements.
The Unaudited Condensed Interim Consolidated Financial Statements as of March 31, 2024 are presented in thousands of Brazilian Reais (“R$”), which is the Company functional currency. All financial information presented in R$ has been rounded to the nearest thousands, except as otherwise indicated.
(a) Basis of consolidation and investments in other companies
| Interest | |||||||
| Company | March 31, 2024 | December 31, 2023 | |||||
| Somos Sistemas de Ensino S.A. (“Somos Sistemas”) | 100 | % | 100 | % | |||
| A & R Comercio e Serviços de Informática Ltda. (“Pluri”) | 100 | % | 100 | % | |||
| Colégio Anglo São Paulo Ltda. (“Anglo São Paulo”) | 100 | % | 100 | % | |||
| Phidelis Tecnologia Desenvolvimento de Sistemas Ltda. (“Phidelis”) | 100 | % | 100 | % | |||
| MVP Consultoria e Sistemas Ltda. (“MVP”) | 100 | % | 100 | % | |||
| Sociedade Educacional da Lagoa Ltda (“SEL”) | 100 | % | 100 | % | |||
| EMME – Produções de Materiais em Multimídia Ltda (“EMME”) | 100 | % | 100 | % | |||
| Escola Start Ltda. (“Start”) | 51 | % | 51 | % | |||
These Unaudited Condensed Interim Consolidated Financial Statements were authorized for issue by the Executive Board on May 03, 2024.
F-8
3. Use of estimates and judgements
In preparing the Interim Financial Statements, Management has made judgements and estimates that affect the application of Company´s accounting policies and the reported amounts of assets, liabilities, income, and expenses. Actual results may differ from these estimates.
The significant judgments made by management in applying the Group’s accounting policies and the key sources of estimation uncertainty were the same as those described in the last annual financial statements.
Those estimates and assumptions are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable and relevant under the circumstances. Revisions to estimates are recognized prospectively.
In estimating the fair value of an asset or a liability, the Company uses market-observable data to the extent it is available. 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:
Measurement of fair values
| · | 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. |
Where Level 1 inputs are not available, if needed, the Company engages third party qualified appraisers to perform the valuation using Level 2 and / or Level 3 inputs. The Company’s management establishes the appropriate valuation techniques and inputs to the model, working closely with the qualified external advisors when they are engaged in such activities.
The valuations of identifiable assets and contingent liabilities in business combinations could be particularly sensitive to changes in one or more unobservable inputs considered in the valuation process.
4. Material accounting policies and new and not yet effective accounting standards
The accounting policies applied in these interim financial statements are the same as those applied in the Company’s consolidated financial statements as at and for the year ended December 31, 2023. The accounting policies have been consistently applied to all consolidated companies. There are no new accounting policies that could be applicable since January 1, 2024, or early adopted in the Unaudited Condensed Interim Consolidated Financial Statements.
5. Financial Risk Management
The Company has a risk management policy for monitoring and managing the nature and overall position of financial risks and to assess its financial results and impacts on its cash flows. Counterparty credit limits are also reviewed periodically or whenever the Company identifies significant changes in financial risk.
The economic and financial risks reflect the behavior of macroeconomic variables such as interest rates as well as other characteristics of the financial instruments maintained by the Company. These risks are managed through control and monitoring policies, specific strategies, and limits.
F-9
| a. | Financial risk factors |
The Company’s activities expose it to certain financial risks mainly related to market risk, credit risk and liquidity risk. Management and the Group’s Board of Directors monitor such risks in line with their capital management policy objectives.
This Note presents information on the Company’s exposure to each of the risks above, the objectives of the Company, measurement policies, and the Company’s risk and capital management process. The Company has no derivative transactions.
| a. | Market risk – cash flow interest rate risk |
This risk arises from the possibility that the Company incurs losses because of interest rate fluctuations that increase finance costs related to bonds raised in the market and obligations for acquisitions from third parties payable in installments. The Company continuously monitors market interest rates in order to assess the need to contract financial instruments to hedge against volatility of these rates. Additionally, financial assets also indexed to CDI and IPCA (broad consumer price index) partially mitigate any interest rate exposures. Interest rates contracted are as follows:
| March 31, 2024 | December 31, 2023 | Interest rate | |||||||
| Bonds | |||||||||
| Private bonds – 9th Issuance – series 2 | 253,985 | 263,904 | CDI + 2.40% p.a. | ||||||
| Bonds – 1st Issuance – single | 509,000 | 527,859 | CDI + 2.30% p.a. | ||||||
| Lease liabilities | 79,467 | 96,657 | IPCA | ||||||
| Accounts payable for business combination and acquisition of associates | 616,247 | 614,120 | 100% CDI | ||||||
| 1,458,699 | 1,502,540 |
| b. | Credit risk |
Credit risk arises from the potential default of a counterparty on an agreement or financial instrument, resulting in financial loss. The Company is exposed to credit risk in its operating activities (mainly in connection with trade receivables), financial activities that include reverse factoring deposits with banks and other financial institutions, and other financial instruments contracted.
The Company mitigates its exposure to credit risks associated with financial instruments, deposits in banks and short-term investments by investing in prime financial institutions and in accordance with limits previously set in the Company’s policy. See notes 7 and 8.
To mitigate risks associated with trade receivables, the Company adopts a sales policy and an analysis of the financial and equity condition of its counterparties. The sales policy is directly associated with the level of credit risk the Company is willing to accept in the normal course of its business.
The diversification of its receivable’s portfolio, the selectivity of its customers, as well as the monitoring of sales financing terms and individual position limits are procedures adopted to minimize defaults or losses in the realization of trade receivables. Thus, the Company does not have significant credit risk exposure to any single counterparty or any group of counterparties having similar characteristics.
Furthermore, the Company reviews the recoverable amount of its trade receivables at the end of each reporting period to ensure that expected credit losses have been recorded (note 9).
| c. | Liquidity risk |
F-10
To cover possible liquidity deficiencies or mismatches between cash and cash equivalents and short-term debt and financial obligations, the Company continues to operate with reverse factoring if this credit line is offered by banks and accepted by Company suppliers. This is the risk of the Company not having enough funds and or bank credit limits to meet its short-term financial commitments, due to mismatching terms in expected receipts and payments.
The Company continuously monitors its cash balance and indebtedness level and implemented measures to allow access to the capital markets, when necessary. It also endeavors to assure they remain within existing credit limits. Management also monitors projected and actual cash flows and the combination of the maturity profiles of the financial assets, liabilities and takes into consideration its debt financing plans, covenant compliance, internal liquidity targets and, if applicable, regulatory requirements.
Financial liabilities by maturity ranges
| March 31, 2024 | Less than one year | Between one and two years | Over two years | Total | ||||
| Bonds (Note 14) | 512,985 | 250,000 | - | 762,985 | ||||
| Lease liabilities (Note 16) | 11,485 | 9,251 | 58,731 | 79,467 | ||||
| Accountspayable for business combination and acquisition of associates (Note 18) | 211,444 | 200,112 | 204,691 | 616,247 | ||||
| Suppliers (Note 15) | 214,082 | - | - | 214,082 | ||||
| Reverse factoring (Note 15) | 262,337 | - | - | 262,337 | ||||
| Other liabilities - related parties (Note 20) | 21,472 | - | - | 21,472 | ||||
| 1,233,805 | 459,363 | 263,422 | 1,956,590 |
The table below reflects the estimated interest rate based on CDI and IPCA for 12 months (12.52% p.a. and 3.93% p.a., respectively), in according to contractual rates on March 31, 2024. Amounts payable refer to principal and interest based on undiscounted contractual amounts and, therefore, do not reflect the financial position presented as of March 31, 2024:
| March 31, 2024 | Less than one year | Between one and two years | Over two years | Total | ||||
| Bonds | 577,211 | 281,300 | - | 858,511 | ||||
| Lease liabilities | 11,936 | 9,614 | 61,039 | 82,589 | ||||
| Accounts payable for business combination and acquisition of associates | 237,917 | 225,166 | 230,318 | 693,401 | ||||
| Suppliers | 240,885 | - | - | 240,885 | ||||
| Reversefactoring | 295,182 | - | - | 295,182 | ||||
| Other liabilities - related parties | 24,160 | - | - | 24,160 | ||||
| 1,387,291 | 516,080 | 291,357 | 2,194,728 |
Capital management
The Company’s objectives when managing capital are to safeguard its ability to continue as a going concern to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital.
In order to maintain or adjust the capital structure of the Company, management can make, or may propose to the shareholders when their approval is required, adjustments to the amount of dividends paid to shareholders, return capital to shareholders, issue new shares or sell assets to reduce, for example, debt.
The Company monitors capital based on the gearing ratio. This ratio corresponds to the net debt expressed as a percentage of total capitalization. Net debt comprises financial liabilities less cash and cash equivalents. Total capitalization is calculated as shareholders’ equity as shown in the consolidated balance sheet plus net debt.
F-11
The Company’s main capital management objectives are to safeguard its ability to continue as a going concern, optimize returns, allow consistency of operations to other stakeholders, and maintain an optimal capital structure reducing financial costs and maximizing the returns. In addition, the Company monitors financial leverage adequacy, and mitigates risks that may affect the availability of capital for Company development.
| March 31, 2024 | December 31, 2023 | ||
| Net debt (i) | 1,889,376 | 1,906,975 | |
| Total shareholder’' equity | 4,523,141 | 4,520,791 | |
| Total capitalization (ii) | 2,633,765 | 2,613,816 | |
| Gearing ratio - % - (iii) | 72% | 73% |
| (i) | Net debt comprises financial liabilities (note 6) net of cash and cash equivalents. |
| (ii) | Refers to the difference between Shareholders’ Equity and Net debt. |
| (iii) | The Gearing Ratio is calculated based on Net Debt/Total Capitalization |
Sensitivity analysis
The following table presents the sensitivity analysis of potential losses from financial instruments, according to Management’s assessment of relevant market risks presented above.
A probable scenario (base scenario) over a 12-month horizon was used, with a projected rate of 12.52% p.a. as per DI Interest Deposit rate (“CDI”), and 3.93% p.a. as per IPCA reference rates disclosed by B3 S.A. (Brazilian stock exchange). Two further scenarios are presented, respectively, a 15% interest rate drop in scenario I and 30% interest rate drop in scenario II, of the projected rates.
| Index - % per year | Balance as of March 31,2024 | Base scenario | Scenario I | Scenario II | ||||||
| Financial investments | 103% of CDI | 63,417 | 7,940 | 6,749 | 5,558 | |||||
| Marketable securities | 102% of CDI | 242,799 | 30,398 | 25,839 | 21,279 | |||||
| 306,216 | 38,338 | 32,588 | 26,837 | |||||||
| Accounts payable for business combination and acquisition of associates | 100% of CDI | (616,247) | (77,154) | (65,581) | (54,008) | |||||
| Lease liabilities | 100% of IPCA | (79,467) | (3,123) | (2,655) | (2,186) | |||||
| Bonds | CDI + 2.40% | (762,985) | (95,526) | (81,197) | (66,868) | |||||
| (1,458,699) | (175,803) | (149,433) | (123,062) | |||||||
| Net exposure | (1,152,483) | (137,465) | (116,845) | (96,225) | ||||||
| Interest rate -% p.a. (CDI) | - | - | 12.52% | 10.64% | 8.76% | |||||
| Interest rate -% p.a. (IPCA) | - | - | 3.93% | 3.34% | 2.75% | |||||
| Stressing scenarios | - | - | - | (15%) | (30%) |
F-12
6. Financial Instruments by Category
The Company holds the following financial instruments. The Company has not disclosed the fair values of the financial instruments, because their carrying amounts approximates fair value.
| Level | March 31, 2024 | December 31, 2023 | |||
| Assets - Amortized cost | |||||
| Cash and cash equivalents | 67,214 | 95,864 | |||
| Trade receivables | 771,022 | 697,512 | |||
| Other receivables | 2,760 | 2,085 | |||
| Related parties – other receivables | 12,137 | 7,157 | |||
| 853,133 | 802,618 | ||||
| Assets - Fair value through profit or loss | |||||
| Marketable securities | 1 | 242,799 | 245,942 | ||
| Other investments and interests in entities | 3 | 9,879 | 9,879 | ||
| 252,678 | 255,821 | ||||
| Liabilities - Amortized cost | |||||
| Bonds | 762,985 | 791,763 | |||
| Lease liabilities | 79,467 | 96,657 | |||
| Reverse factoring | 262,337 | 263,948 | |||
| Suppliers | 214,082 | 221,291 | |||
| Accounts payable for business combination and acquisition of associates | 598,611 | 587,917 | |||
| Other liabilities - related parties | 21,472 | 15,060 | |||
| 1,938,954 | 1,976,636 | ||||
| Liabilities - Fair value through profit or loss | |||||
| Accounts payable for business combination and acquisition of associates (i) | 3 | 17,636 | 26,203 | ||
| 17,636 | 26,203 |
| (i) | Refers to a earn out remeasured based on economic activity of the acquired entity (post-closing price adjustments). Valuation techniques and significant unobservable inputs related to measurement are consistent with disclosures described in last annual financial statements. |
Fair Value Measurements – Level 3
| a. | Reconciliation to the closing balances |
The following table shows the changes during the period in measuring level 3 fair values:
| Accounts payable for business combination- Level 3 | December 31, 2023 | Interest | Payment | March 31, 2024 | ||||
| Sociedade Educacional da Lagoa | 17,920 | 328 | (9,022) | 9,226 | ||||
| Phidelis | 8,283 | 127 | - | 8,410 | ||||
| 26,203 | 455 | (9,022) | 17,636 |
F-13
7. Cash and cash equivalents
| a. | Composition |
The balance of this account comprises the following amounts:
| March 31, 2024 | December 31, 2023 | ||
| Cash | 2 | 2 | |
| Bank account | 3,795 | 3,407 | |
| Financial investments (i) | 63,417 | 92,455 | |
| 67,214 | 95,864 |
| (i) | The Company invests in short-term fixed income investment funds with daily liquidity and no material risk of change in value. Financial investments presented an average gross yield of 103% of the annual CDI rate on March 31, 2024 (104% on December 31, 2023). All investments are highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value and correspond to the cash obligations for the period. |
8. Marketable securities
| a. | Composition |
| Credit Risk | March 31, 2024 | December 31, 2023 | |||
| Private investment fund | AAA | 242,799 | 245,942 |
The average gross yield of securities is based on 102% CDI on March 31, 2024 (102% CDI on December 31, 2023).
9. Trade receivables
The balance of this account comprises the following amounts:
| a. | Composition |
| March 31, 2024 | December 31, 2023 | ||
| Trade receivables | 847,765 | 771,392 | |
| Related parties (note 20) | 16,746 | 18,137 | |
| (-) Impairment losses on trade receivables | (93,489) | (92,017) | |
| 771,022 | 697,512 |
| b. | Maturities of trade receivables |
| March 31, 2024 | December 31, 2023 | ||
| Not yet due | 622,027 | 541,656 | |
| Past due | |||
| Up to 30 days | 49,263 | 33,749 | |
| From 31 to 60 days | 26,750 | 22,933 | |
| From 61 to 90 days | 10,351 | 25,584 | |
| From 91 to 180 days | 36,759 | 52,404 | |
| From 181 to 360 days | 70,865 | 61,782 | |
| Over 360 days | 31,750 | 33,284 | |
| Total past due | 225,738 | 229,736 | |
| Related parties (note 20) | 16,746 | 18,137 | |
| Impairment losses on trade receivables | (93,489) | (92,017) | |
| 771,022 | 697,512 |
F-14
The gross carrying amount of trade receivables is written off when the Company has no reasonable expectations of recovering the financial asset in its entirety or a portion thereof. Collection efforts continue to be made, even for the receivables that have been written off, and amounts recoverable are recognized directly in Consolidated Statement of Profit or Loss and Other Comprehensive Income upon collection.
| c. | Changes on provision |
| March 31, 2024 | December 31, 2023 | |||
| Opening balance | 92,017 | 69,481 | ||
| Additions | 27,796 | 62,390 | ||
| Reversals | (14,590) | (6,619) | ||
| Write offs | (11,734) | (33,235) | ||
| Closing balance | 93,489 | 92,017 |
10. Inventories
The balance of this account comprises the following amounts:
| a. | Composition |
| March 31, 2024 | December 31, 2023 | ||
| Finished products | 196,873 | 218,600 | |
| Work in process | 60,260 | 59,659 | |
| Raw materials | 28,134 | 16,663 | |
| Right to returned goods (i) | 8,041 | 5,587 | |
| 293,308 | 300,509 |
| (i) | Represents the Company’s right to recover products from customers when customers exercise their right of return under the Company’s returns policies, where the Company estimates the volume of goods returned based on experience and foreseen expectations. |
11. Equity accounted investees
| a. | Composition of investments |
| Investment type | Interest % | Equity | Fair value | Goodwill | March 31, 2024 | |||||||
| Educbank | Associate | 45% | 21,263 | 6,375 | 33,786 | 61,424 | ||||||
| 21,263 | 6,375 | 33,786 | 61,424 |
| Investment type | Interest % | Equity | Fair value | Goodwill | December 31, 2023 | |||||||
| Educbank | Associate | 45% | 24,026 | 6,672 | 33,786 | 64,484 | ||||||
| 24,026 | 6,672 | 33,786 | 64,484 |
F-15
| b. | Investments in associates |
| Educbank | ||
| December 31, 2022 | 83,139 | |
| Share of loss equity-accounted investees | (528) | |
| March 31, 2023 | 82,611 | |
December 31, 2023
| 64,484 | |
| Share of loss equity-accounted investees | (3,060) | |
| March 31, 2024 | 61,424 |
12. Property, plant and equipment
The cost, weighted average depreciation rates and accumulated depreciation are as follows:
| March 31, 2024 | December 31, 2023 | ||||||||||||
| Weighted average depreciation rate | Cost | Accumulated depreciation | Net book value | Cost | Accumulated depreciation | Net book value | |||||||
| IT equipment | 10%-33% | 82,620 | (66,413) | 16,207 | 83,461 | (61,849) | 21,612 | ||||||
| Furniture, equipment and fittings | 10%-33% | 62,983 | (34,652) | 28,331 | 54,987 | (32,740) | 22,247 | ||||||
| Property, buildings and improvements | 5%-20% | 53,717 | (42,772) | 10,945 | 54,372 | (43,555) | 10,817 | ||||||
| In progress | - | 17,209 | - | 17,209 | 16,765 | - | 16,765 | ||||||
| Right of use assets | 12% | 147,264 | (82,392) | 64,872 | 178,940 | (98,932) | 80,008 | ||||||
| Land | - | 43 | - | 43 | 43 | - | 43 | ||||||
| Total | 363,836 | (226,229) | 137,607 | 388,568 | (237,076) | 151,492 | |||||||
Changes in property, plant and equipment are as follows:
| IT equipment | Furniture, equipment and fittings | Property, buildings and improvements | In progress | Right of use assets | Land | Total | |||||||
| As of December 31, 2022 | 36,969 | 24,102 | 12,646 | 4,494 | 119,086 | 391 | 197,688 | ||||||
| Additions | 1,211 | 3,784 | - | 261 | 11,804 | - | 17,060 | ||||||
| Additions through business combinations | - | 613 | 183 | - | - | - | 796 | ||||||
| Disposals / Cancelled contracts | - | - | - | - | (5,471) | - | (5,471) | ||||||
| Depreciation | (4,457) | (1,438) | (1,424) | - | (7,642) | - | (14,961) | ||||||
| Transfers | - | (3,920) | - | - | - | - | (3,920) | ||||||
| As of March 31, 2023 | 33,723 | 23,141 | 11,405 | 4,755 | 117,777 | 391 | 191,192 | ||||||
| As of December 31, 2023 | 21,612 | 22,247 | 10,817 | 16,765 | 80,008 | 43 | 151,492 | ||||||
| Additions | 10 | 8,012 | 509 | 451 | - | - | 8,982 | ||||||
| Disposals / Cancelled contracts | (840) | - | (100) | - | (11,023) | - | (11,963) | ||||||
| Depreciation | (4,619) | (1,401) | (771) | - | (4,113) | - | (10,904) | ||||||
| Transfers | 44 | (527) | 490 | (7) | - | - | - | ||||||
| As of March 31, 2024 | 16,207 | 28,331 | 10,945 | 17,209 | 64,872 | 43 | 137,607 |
F-16
13. Intangible Assets and Goodwill
The cost, weighted average amortization rates and accumulated amortization of intangible assets and goodwill comprise the following amounts:
| March 31, 2024 | December 31, 2023 | ||||||||||||
| Weighted average depreciation rate | Cost | Accumulated depreciation | Net book value | Cost | Accumulated depreciation | Net book value | |||||||
| Software | 20% | 352,047 | (230,747) | 121,300 | 336,687 | (221,986) | 114,701 | ||||||
| Customer Portfolio | 8% | 1,198,505 | (501,476) | 697,029 | 1,198,455 | (475,803) | 722,652 | ||||||
| Trademarks | 5% | 633,154 | (146,852) | 486,302 | 633,154 | (140,025) | 493,129 | ||||||
| Trade Agreement | 8% | 243,113 | (55,239) | 187,874 | 243,114 | (49,049) | 194,065 | ||||||
| Platform content production | 33% | 191,957 | (132,982) | 58,975 | 178,033 | (121,932) | 56,101 | ||||||
| Other Intangible assets | 33% | 11,236 | (5,027) | 6,209 | 11,236 | (5,029) | 6,207 | ||||||
| In progress | 0% | 12,154 | - | 12,154 | 6,845 | - | 6,845 | ||||||
| Goodwill | 0% | 3,713,863 | - | 3,713,863 | 3,713,863 | - | 3,713,863 | ||||||
| 6,356,029 | (1,072,323) | 5,283,706 | 6,321,387 | (1,013,824) | 5,307,563 | ||||||||
F-17
Changes in intangible assets and goodwill were as follows:
Changes in intangible assets and goodwill were as follows:
| Software | Customer Portfolio | Trademarks | Trade Agreement | Platform content production | Other Intangible assets | In progress | Goodwill | Total | |||||||||
| As of December 31, 2022 | 80,722 | 823,183 | 518,615 | 218,827 | 48,370 | 7,280 | 18,958 | 3,711,721 | 5,427,676 | ||||||||
| Additions | 10,140 | - | - | - | 20,344 | - | 8,153 | - | 38,637 | ||||||||
| Additions through business combinations | - | 1,510 | 4,740 | - | - | - | - | 847 | 7,097 | ||||||||
| Amortization | (8,073) | (25,351) | (6,827) | (6,191) | (9,429) | (1) | - | - | (55,872) | ||||||||
| Transfers | 1,960 | - | - | - | - | - | 1,960 | - | 3,920 | ||||||||
| As of March 31, 2023 | 84,749 | 799,342 | 516,528 | 212,636 | 59,285 | 7,279 | 29,071 | 3,712,568 | 5,421,458 | ||||||||
| As of December 31, 2023 | 114,701 | 722,652 | 493,129 | 194,065 | 56,101 | 6,207 | 6,845 | 3,713,863 | 5,307,563 | ||||||||
| Additions | 10,338 | - | - | - | 16,802 | - | 7,636 | - | 34,776 | ||||||||
| Disposals | - | - | - | - | (2) | - | (1) | - | (3) | ||||||||
| Amortization | (8,736) | (25,623) | (6,827) | (6,191) | (11,253) | - | - | - | (58,630) | ||||||||
| Transfers | 4,997 | - | - | - | (2,673) | 2 | (2,326) | - | - | ||||||||
| As of March 31, 2024 | 121,300 | 697,029 | 486,302 | 187,874 | 58,975 | 6,209 | 12,154 | 3,713,863 | 5,283,706 |
F-18
Goodwill impairment test
The Company performs its annual impairment test in December and whenever circumstances indicate that the carrying value may be impaired. The Company’s impairment test for goodwill is assessed by comparing it carrying amount with its recoverable amount. The key assumptions used to determine the recoverable amount for the different cash generating units were disclosed in the annual consolidated financial statements for the year ended December 31, 2023.
There were no indications of impairment for three-month periods ended March 31, 2024 and 2023.
14. Bonds
The balance of bonds comprises the following amounts:
The balance of bonds comprises the following amounts:
| December 31, 2023 | Payment of interest (i) | Interest accrued | Transaction cost of bonds | Transfers | March 31, 2024 | ||||||
| Bonds with related parties | 13,904 | (17,922) | 8,185 | - | (182) | 3,985 | |||||
| Bonds | 527,859 | (35,501) | 16,181 | 279 | 182 | 509,000 | |||||
| Current liabilities | 541,763 | (53,423) | 24,366 | 279 | - | 512,985 | |||||
| Bonds with related parties | 250,000 | - | - | - | - | 250,000 | |||||
| Non-current liabilities | 250,000 | - | - | - | - | 250,000 | |||||
| Total | 791,763 | (53,423) | 24,366 | 279 | - | 762,985 |
| (i) | We present below the composition of interest and principal payments considering the issues made: |
| Issuance | Payments | Interest | ||
| SEDU21 – 9th. SOMOS 2nd. series | 02/15/2024 | (17,922) | ||
| GAGL11 - Somos Sistemas | 02/05/2024 | (35,501) | ||
| Total | (53,423) |
| December 31, 2022 | Payment of interest | Interest accrued | Transaction cost of bonds | Transfers | March 31, 2023 | ||||||
| Bonds with related parties | 63,325 | (18,463) | 11,397 | - | - | 56,259 | |||||
| Bonds | 30,454 | (39,451) | 19,194 | 254 | (255) | 10,196 | |||||
| Current liabilities | 93,779 | (57,914) | 30,591 | 254 | (255) | 66,455 | |||||
| Bonds with related parties | 250,206 | - | - | - | - | 250,206 | |||||
| Bonds | 499,011 | - | - | - | 255 | 499,266 | |||||
| Non-current liabilities | 749,217 | - | - | - | 255 | 749,472 | |||||
| Total | 842,996 | (57,914) | 30,591 | 254 | - | 815,927 |
F-19
| a. | Bonds’ description |
See below the bonds outstanding on March 31, 2024:
| Subscriber | Related Parties | Third parties | |
| Issuance | 9th | 1st | |
| Series | 2nd Series | Single Series | |
| Date of issuance | 09/28/2022 | 08/06/2021 | |
| Maturity date | 09/28/2025 | 08/05/2024 | |
| First payment after | 36 months | 35 months | |
| Remuneration payment | Semi-annual interest | Semi-annual interest | |
| Financials charges | CDI + 2.40% p.a. | CDI + 2.30% p.a. | |
| Principal amount (in millions of R$) | 250 | 500 |
| b. | Bond’s maturities |
The maturities range of these accounts, considering related and third parties are as follow:
| Maturity of installments | March 31, 2024 | % | December 31, 2023 | % | ||||
| One year or less | 512,985 | 67.2 | 541,763 | 68.4 | ||||
| One to two years | 250,000 | 32.8 | 250,000 | 31.6 | ||||
| Total non-current liabilities | 250,000 | 32.8 | 250,000 | 31.6 | ||||
| 762,985 | 100.0 | 791,763 | 100.0 |
| c. | Debit commitments |
The maintenance of the contractual maturity of debentures at their original maturities is subject to financial covenants, which are being complied with. The main assumptions adopted in this calculation are described in the Financial Statements as of December 31, 2023. Additionally, the Company complied with all debt commitments in the period applicable on December 31, 2023.
15. Suppliers
The balance of this account comprises the following amounts:
| a. | Composition |
| March 31, 2024 | December 31, 2023 | |||
| Local suppliers | 179,516 | 188,815 | ||
| Related parties (note 20) | 11,859 | 11,247 | ||
| Copyright | 22,707 | 21,230 | ||
| Suppliers | 214,082 | 221,291 | ||
| Reverse factoring (i) | 262,337 | 263,948 |
| (i) | As of March 31, 2024, the balance of reverse factoring was R$ 262,337 (R$ 263,948 as of December 31, 2023), and the discount rates of assignment operations carried out by our suppliers with financial institutions had a weighted average of 1.02% per month (as of December 31, 2023, the weighted average was 1.05% per month) and a maximum payment term of 360 days. The balance is initially recognized net of the present value adjustment, which is subsequently recognized as a financial expense. |
F-20
16. Lease liabilities
The lease agreements have an average term of 12 years and weighted average rate of 9.58% p.a.
The lease agreements have an average term of 12 years and weighted average rate of 9.58% p.a.
| March 31, 2024 | March 31, 2023 | ||
| Opening balance | 96,657 | 140,563 | |
| Additions for new lease agreements | - | 11,808 | |
| Cancelled contracts | (12,974) | (2,418) | |
| Interest | 2,113 | 3,385 | |
| Payment of interest | (2,029) | (3,668) | |
| Payment of principal | (4,300) | (10,334) | |
| 79,467 | 139,336 | ||
| Current liabilities | 11,485 | 24,196 | |
| Non-current liabilities | 67,982 | 115,140 | |
| 79,467 | 139,336 |
Short-term leases (lease period of 12 months or less) and leases of low-value assets (such as personal computers and office furniture) are recognized on a straight-line basis in rent expenses for the period and are not included in lease liabilities. Fixed and variable lease payments, including those related to short-term contracts and to low-value assets, were the following for the period ended March 31, 2024 and March 31, 2023:
| March 31, 2024 | March 31, 2023 | |||
| Fixed payments | 6,329 | 14,002 | ||
| Payments related to short-term contracts and low value assets, variable price contracts (note 25) | 12,076 | 14,456 | ||
| 18,405 | 28,458 |
17. Contractual obligations and deferred income
| March 31, 2024 | December 31, 2023 | |||
| Refund liability (i) | 46,199 | 32,613 | ||
| Contract of exclusivity for processing payroll | 108 | 202 | ||
| Current liabilities | 46,307 | 32,815 |
| (i) | Refers to the customer’s right to return goods. The Company business cycle is from October to September for each year. |
18. Accounts payable for business combination and acquisition of associates
| March 31, 2024 | December 31, 2023 | |||
| Meritt | 300 | 300 | ||
| SEL | 9,226 | 17,920 | ||
| Redação Nota 1000 | 4,694 | 4,610 | ||
| EMME | 8,655 | 8,500 | ||
| Editora De Gouges | 584,962 | 570,027 | ||
| Phidelis | 8,410 | 12,763 | ||
| 616,247 | 614,120 | |||
| Current | 211,444 | 216,728 | ||
| Non-current | 404,803 | 397,392 | ||
| 616,247 | 614,120 |
F-21
The changes in the balance are as follows:
| March 31, 2024 | March 31, 2023 | |||
| Opening balance | 614,120 | 625,277 | ||
| Additions | - | 4,482 | ||
| Cash payment | - | (4,100) | ||
| Payments in installments | (11,159) | (21,197) | ||
| Interest payment | (2,590) | (15,820) | ||
| Interest adjustment | 15,664 | 18,031 | ||
| Remeasurement | 212 | (6,960) | ||
| Closing balance | 616,247 | 599,713 |
The maturity years of such balances as of March 31, 2024 are shown in the table below:
| March 31, 2024 | December 31, 2023 | |||||||
| Maturity of installments | Total | % | Total | % | ||||
| In up to one year | 211,444 | 34.3% | 216,728 | 35.3% | ||||
| One to two years | 200,112 | 32.5% | 196,406 | 32.0% | ||||
| Two to three years | 204,691 | 33.2% | 200,986 | 32.7% | ||||
| 404,803 | 65.7% | 397,392 | 64.7% | |||||
| 616,247 | 100.0% | 614,120 | 100.0% |
| 19. | Salaries and Social Contributions |
| March 31, 2024 | December 31, 2023 | |||
| Salaries payable | 38,083 | 28,108 | ||
| Social contribution payable (i) | 20,012 | 25,327 | ||
| Provision for vacation pay | 27,305 | 22,379 | ||
| Provision for profit sharing (ii) | 35,545 | 28,592 | ||
| 120,945 | 104,406 |
| (i) | Refers to the effect of social contribution over restricted share units' compensation plans issued on July 31 and November 10, 2020. The Company records the taxes over the shares on a monthly basis according to the Company’s share price. |
| (ii) | The provision for profit sharing is based on qualitative and quantitative metrics determined by Board of Directors. |
20. Related parties
As presented in note 1, the Company is a subsidiary of Cogna Educação S.A. and some of the Company’s transactions and arrangements involve entities that are subsidiaries of Cogna Group. The effect of these transactions is reflected in these Interim Statements, with these related parties segregated by nature of transaction measured on an arm’s length basis and determined by intercompany agreements and approved by the Company’s Management.
F-22
The balances and transactions between the Company and its associates have been eliminated in the Company’s Consolidated Financial Statements. The balances and transactions between related parties are shown below:
| March 31, 2024 | ||||||||||||||||||||||||
| Other receivables (i) | Trade receivables (note 9) | Indemnification asset (note 21c) | Other payments (ii) | Suppliers (note 15) | Bonds (note 14) | |||||||||||||||||||
| Cogna Educação S.A. | — | — | 209,287 | 3,021 | — | 253,985 | ||||||||||||||||||
| Editora Ática S.A. | 7,709 | 8,464 | — | 18,337 | 6,575 | — | ||||||||||||||||||
| Editora E Distribuidora Educacional S.A. | 2,211 | 598 | — | — | — | — | ||||||||||||||||||
| Editora Scipione S.A. | 87 | 660 | — | — | 40 | — | ||||||||||||||||||
| Maxiprint Editora Ltda. | 1 | 5,069 | — | — | — | — | ||||||||||||||||||
| Saber Serviços Educacionais S.A. | — | 175 | — | 48 | — | — | ||||||||||||||||||
| Saraiva Educação S.A. | 1,731 | 911 | — | 25 | 4,090 | — | ||||||||||||||||||
| SGE Comercio De Material Didatico Ltda. | — | — | — | — | 658 | — | ||||||||||||||||||
| Somos Idiomas S.A. | 18 | 102 | — | 13 | 496 | — | ||||||||||||||||||
| Anhanguer Educacional Participações S.A. | 346 | 424 | — | 16 | — | — | ||||||||||||||||||
| Others | 34 | 343 | — | 12 | — | — | ||||||||||||||||||
| 12,137 | 16,746 | 209,287 | 21,472 | 11,859 | 253,985 | |||||||||||||||||||
| (i) | Refers substantially to accounts receivable generated from sharing costs e.g IT services shared by the Company to Cogna Group. |
| (ii) | Refers substantially to accounts payable by sharing expenses e.g property leasing, personnel and IT licenses shared with Cogna Group |
| December 31, 2023 | ||||||||||||||||||||||||
| Other receivables | Trade receivables (note 9) | Indemnification asset (note 21c) | Other payments | Suppliers (note 15) | Bonds (note 14) | |||||||||||||||||||
| Cogna Educação S.A. | — | — | 203,942 | 2,696 | — | 263,904 | ||||||||||||||||||
| Editora Ática S.A. | 4,424 | 6,536 | — | 12,334 | 6,286 | — | ||||||||||||||||||
| Editora E Distribuidora Educacional S.A. | 1,256 | 477 | — | — | — | — | ||||||||||||||||||
| Editora Scipione S.A. | 87 | 2,112 | — | — | 40 | — | ||||||||||||||||||
| Maxiprint Editora Ltda. | 1 | 4,659 | — | — | — | — | ||||||||||||||||||
| Saraiva Educação S.A. | 1,099 | 3,495 | — | 19 | 4,262 | — | ||||||||||||||||||
| Somos Idiomas S.A. | 146 | 2 | — | — | — | — | ||||||||||||||||||
| Others | 144 | 856 | — | 11 | 659 | — | ||||||||||||||||||
| 7,157 | 18,137 | 203,942 | 15,060 | 11,247 | 263,904 | |||||||||||||||||||
F-23
| March 31, 2024 | March 31, 2023 | |||||||||||||||||||||||||||||||
| Transactions held: | Revenues | Finance costs, note 14 | Cost Sharing | Sublease | Revenues | Finance costs | Cost Sharing | Sublease | ||||||||||||||||||||||||
| Cogna Educação S.A. | — | (8,185 | ) | — | — | — | (11,397 | ) | — | — | ||||||||||||||||||||||
| Editora Atica S.A. | 8,117 | — | (14,779 | ) | 1,875 | 4,610 | — | (3,200 | ) | 2,246 | ||||||||||||||||||||||
| Editora E Distribuidora Educacional SA. | 209 | — | — | — | 258 | — | — | — | ||||||||||||||||||||||||
| Editora Scipione SA. | 757 | — | — | — | 1,436 | — | — | — | ||||||||||||||||||||||||
| Maxiprint Editora Ltda. | 6,088 | — | — | — | 2,727 | — | — | — | ||||||||||||||||||||||||
| Saraiva Educacao SA. | 1,117 | — | — | 580 | 1,448 | — | — | 725 | ||||||||||||||||||||||||
| Somos Idiomas Ltda | — | — | — | — | — | — | — | 188 | ||||||||||||||||||||||||
| SSE Serviços Educacionais Ltda. | 443 | — | — | — | 533 | — | — | — | ||||||||||||||||||||||||
| 16,731 | (8,185 | ) | (14,779 | ) | 2,455 | 11,012 | (11,397 | ) | (3,200 | ) | 3,159 | |||||||||||||||||||||
F-24
| a) | Compensation of key management personnel |
Key management personnel include the members of the Board of Directors, Audit Committee, the CEO and the vice-presidents, for which the nature of the tasks performed were related to the activities of the Company.
For the period ended March 31, 2024, key management compensation, including charges and variable compensation amounted to R$ 2,504 (R$ 3,477 for the period ended March 31, 2024). The Audit Committee and Board of Directors were established in July 2020.
The Key management personnel compensation expenses comprised the following:
| March 31, 2024 | March 31, 2023 | |||
| Short-term employee benefits | 1,940 | 2,591 | ||
| Share-based compensation plan | 564 | 886 | ||
| 2,504 | 3,477 |
21. Provision for tax, civil and labor losses and Judicial deposits and escrow accounts
The Company classifies the likelihood of loss in judicial/administrative proceedings in which it is a defendant. Provisions are recorded for contingencies classified as probable loss in an amount that Management, in conjunction with its legal advisors, believes is enough to cover probable losses or when related to contingences resulting from business combinations.
The contingent liabilities are composed as follows:
| a. | Composition |
The changes in provision for the years ended March 31, 2024 and December 31, 2023 were as follows:
| December 31, 2023 | Additions | Reversals | Interest | Payments | March 31, 2024 | |||||||
| Tax proceedings (i) | 676,255 | - | (88) | 11,913 | - | 688,080 | ||||||
| Labor proceedings (ii) | 21,615 | 818 | (438) | 386 | (116) | 22,265 | ||||||
| Civil proceedings | 120 | 40 | (43) | 4 | (18) | 103 | ||||||
| Total | 697,990 | 858 | (569) | 12,303 | (134) | 710,448 | ||||||
| Finance expense | - | - | (12,273) | |||||||||
| General and administrative expenses | (856) | 567 | - | |||||||||
| Total | (856) | 567 | (12,273) | |||||||||
| Indemnification asset - Former owner | (2) | 2 | (30) | |||||||||
| Total | (858) | 569 | (12,303) | |||||||||
| (i) | Primarily refers to income tax positions taken by Somos and the Company in connection with a corporate restructuring held by the predecessor in 2010, In 2018, given a tax assessment via an Infraction Notice received by the predecessor for certain periods opened for tax audit coupled with unfavorable case law on a similar tax case also reached in 2018, the Company reassessed this income tax position and recorded a liability, including interest and penalties. |
| (ii) | The Company is a party to labor demands, which mostly refer to proportional vacation, salary difference, night shift premium, overtime and social charges, among others. There are no individual labor demands with material amounts that require specific disclosure. |
F-25
| December 31, 2022 | Additions | Reversals | Interest | Payments | March 31, 2023 | |||||||
| Tax proceedings | 623,189 | - | (119) | 9,318 | - | 632,388 | ||||||
| Labor proceedings | 27,567 | 63 | (4,367) | (842) | (188) | 22,233 | ||||||
| Civil proceedings | 496 | 13 | (13) | 8 | (2) | 502 | ||||||
| Total | 651,252 | 76 | (4,499) | 8,484 | (190) | 655,123 | ||||||
| Finance expense | - | - | (8,484) | |||||||||
| General and administrative expenses | (76) | 4,499 | - | |||||||||
| Total | (76) | 4,499 | (8,484) | |||||||||
| b. | Contingencies with possible losses |
As of March 31, 2024, the Company was party to lawsuits classified as possible losses totaling R$ 48,162 (R$41,015 as of December 31, 2023), as shown below:
| March 31,2024 | December 31, 2023 | |||
| Taxes | 5,509 | 5,413 | ||
| Labor (i) | 30,532 | 24,988 | ||
| Civil | 12,121 | 10,614 | ||
| Total | 48,162 | 41,015 |
| (i) | The most relevant lawsuit involves a labor claim related to the payment of termination benefits and other labor charges amounting to R$19,102. The Company was included in the legal process by the Court, on the allegation that it was part of an Economic Group. There has never been any corporate, legal, or hierarchical relationship between the Company and the defendant. |
| c. | Judicial Deposits and Escrow Accounts |
Judicial deposits and escrow accounts recorded as non-current assets are as follows:
| March 31, 2024 | December 31, 2023 | |||
| Tax proceedings | 1,933 | 1,899 | ||
| Indemnification asset -Former owner | 1,377 | 1,347 | ||
| Indemnification asset – Related parties (i) | 209,287 | 203,942 | ||
| 212,597 | 207,188 |
| (i) | Refers to an indemnification asset of the seller (Cogna) and recognized at the date of the business combination, of the acquisition of Somos, in order to indemnify the Company for all losses that may be incurred in connection with all contingencies or lawsuits, substantially tax proceedings related to business combinations up to the maximum amount of R$209,287 (R$ 203,942 on December 31, 2023). This asset is indexed to CDI (Certificates of Interbank Deposits). |
F-26
22. Current and Deferred Income Tax and Social Contribution
| a. | Reconciliation of income tax and social contribution |
The reconciliation of income tax and social contribution expense is as follows:
As of March 31, 2024 | As of March 31, 2023 | |||
| Profit before income tax and social contribution for the period | 36,724 | 268 | ||
| Nominal statutory rate of income tax and social contribution | 34% | 34% | ||
| IRPJ and CSLL calculated at the nominal rates | (12,486) | (91) | ||
| Share of loss equity-accounted investees | (1,040) | (179) | ||
| Permanent additions | 83 | 425 | ||
| Net (exclusions) additions without contribution of deferred assets | 30 | (1,850) | ||
| Difference in presumed (loss) profit rate of subsidiary | (211) | 133 | ||
| Impairment write-off on tax loss carryforward | (1,158) | (929) | ||
| Total IRPJ and CSLL | (14,782) | (2,492) | ||
| Current IRPJ and CSLL in the result | (6,973) | (1,454) | ||
| Deferred IRPJ and CSLL in the result | (7,809) | (1,038) | ||
| (14,782) | (2,492) | |||
| Effective tax rate of Income and social contribution tax benefit | (40%) | (930%) |
| b. | Deferred taxes |
Changes in deferred income tax and social contribution assets and liabilities are as follows:
| i. | March 31, 2024 |
As of December 31, 2023 | Effect on profit loss | As of March 31, 2024 | ||||||||||
| Income tax/social contribution: | ||||||||||||
| Income tax and social contribution losses carryforwards (ii) | 594,361 | (845 | ) | 593,516 | ||||||||
| Temporary differences: | ||||||||||||
| Impairment losses on trade receivables | 28,012 | 361 | 28,373 | |||||||||
| Provision for obsolete inventories | 3,099 | (416 | ) | 2,683 | ||||||||
| Imputed interest on suppliers | (1,206 | ) | 842 | (364 | ) | |||||||
| Provision for risks of tax, civil and labor losses | (10,937 | ) | 4,076 | (6,861 | ) | |||||||
| Refund liabilities and right to returned goods | 8,421 | 3,161 | 11,582 | |||||||||
| Right of use assets | 31,301 | (5,820 | ) | 25,481 | ||||||||
| Lease liabilities | (25,684 | ) | 5,105 | (20,579 | ) | |||||||
| Fair value adjustments on business combination and goodwill amortization (i) | (470,342 | ) | (27,174 | ) | (497,516 | ) | ||||||
| Other temporary difference | 48,428 | 12,901 | 61,329 | |||||||||
| Deferred Assets, net | 205,453 | (7,809 | ) | 197,644 |
| (i) | Goodwill and fair value adjustments on business combination comprise three components, being (i) goodwill and fair value adjustment of prior business combination by Somos; (ii) amortization of fair value adjustment related to acquisition of the company; and (iii) deductibility of the acquisition goodwill for tax purposes as allowed by tax law. |
| (ii) | The Company’s income tax and social contribution loss carryforwards are primarily the result of tax |
F-27
amortization of goodwill and the amortization of certain intangibles recognized related to the business combination in 2018. In accordance with Brazilian tax regulation, tax loss carryforwards have a limitation for use of 30% of taxable profit generated in each year and do not expire. The tax benefit is expected to be realized over an estimated 6-year period beginning in 2026.
| ii. | March 31, 2023 |
Changes in deferred income tax and social contribution assets and liabilities are as follows:
| As of December 31, 2022 | Effect on profit (loss) | As of March 31, 2023 | ||||||||||
| Income tax/social contribution: | ||||||||||||
| Income tax and social contribution losses carryforwards | 422,240 | 25,079 | 447,319 | |||||||||
| Temporary Differences: | ||||||||||||
| Impairment losses on trade receivables | 20,472 | 808 | 21,280 | |||||||||
| Provision for obsolete inventories | 3,346 | 793 | 4,139 | |||||||||
| Imputed interest on suppliers | (5,548 | ) | 2,693 | (2,855 | ) | |||||||
| Provision for risks of tax, civil and labor losses | 20,445 | 1,492 | 21,937 | |||||||||
| Refund liabilities and right to returned goods | 15,818 | 1,581 | 17,400 | |||||||||
| Lease Liabilities | 7,936 | (988 | ) | 6,948 | ||||||||
| Fair value adjustments on business combination and goodwill amortization (i) | (358,454 | ) | (26,320 | ) | (384,775 | ) | ||||||
| Other temporary difference | 44,596 | (6,176 | ) | 38,420 | ||||||||
| Deferred Assets, net | 170,851 | (1,038 | ) | 169,812 |
| (i) | Goodwill and fair value adjustments on business combination comprise three components, being (i) goodwill and fair value adjustment of prior business combination by predecessor Somos Anglo; (ii) amortization of fair value adjustment related to acquisition of the predecessor Somos Anglo by the successor Vasta; and (iii) deductibility of the acquisition goodwill for tax purpose allowed by tax law. |
23. Shareholder’s Equity
23.1. Share Capital
The Company holds Class A shares in addition to Class B shares (owned by Cogna).
On September 14, 2023, we announced a share repurchase program, approved by our board of directors considering that it was in the commercial interests of the Company to enter the Repurchase Plan. Under the repurchase program, we were entitled to repurchase up to R$ 62,500 (or US$12,500) in Class A common shares in the open market, based on prevailing market prices, or in privately negotiated transactions, over a period that began on September 18, 2023, continuing until the earlier of the completion of the repurchase or September 30, 2024, depending upon market conditions. On March 31, 2024, the program was concluded with the repurchase of all shares.
As a result, the Company's share capital outstanding on March 31, 2024, which excludes a total of 3,713,289 treasury shares, totals 79,936,598 shares, in amount of R$ 4,820,815, of which 64,436,093 Class B shares are owned by the Cogna Group and 15,500,505 are owned by third parties.
The Company’s Shareholders Agreement authorizes the Board of Directors to grant restricted share units to certain executives and employees and other service providers with respect to up to 3% (three per cent) of the issued and outstanding shares of the Company. Thus, on March 31, 2024, the Company has the following position in Class A and B shares:
F-28
| Class A Shares (units) | Class B Shares (units) | Total | ||||||||||||||
| Free float | Treasury shares (note 23.4) | |||||||||||||||
| December 31,2023 | 16,566,142 | 2,647,652 | 64,436,093 | 83,649,887 | ||||||||||||
| ILP exercised | 6,815 | — | — | 6,815 | ||||||||||||
| Treasury shares | — | (6,815 | ) | — | (6,815 | ) | ||||||||||
| Treasury shares purchased | (1,072,452 | ) | 1,072,452 | — | — | |||||||||||
| March 31,2024 | 15,500,505 | 3,713,289 | 64,436,093 | 83,649,887 | ||||||||||||
The Company’s shareholders on March 31, 2024 are as follows:
| In units | ||||||||||||
| Company Shareholders | Class A | Class B | Total | |||||||||
| Cogna Group | — | 64,436,093 | 64,436,093 | |||||||||
| Free Float | 15,500,505 | — | 15,500,505 | |||||||||
| Treasury shares (Note 23.4) | 3,713,289 | — | 3,713,289 | |||||||||
| Total (%) | 23 | % | 77 | % | 83,649,887 | |||||||
23.2. Loss per share
The basic loss per share is measured by dividing the profit attributable to the Company’s shareholders by the weighted average common shares outstanding during the year. The Company considers as diluted earnings per share, the number of common shares calculated added by the weighted average number of common shares that should be issued upon conversion of all potentially dilutive shares into common shares; potentially dilutive shares were deemed to have been converted into common shares at the beginning of the period.
| March 31, 2024 | March 31, 2023 | |||
| Profit (loss) Attributable to Shareholder´s | 22,172 | (2,278) | ||
| Weighted average number of ordinary shares outstanding (thousands) | 83,649 | 83,651 | ||
| Share based- compensation ("Long term Plan") | 3,334 | - | ||
| Total dilution effect | 3,334 | - | ||
| Basic profit (loss) per share - R$ | 0.27 | (0.03) | ||
| Diluted profit (loss) per share - R$ | 0.30 | (0.03) |
23.3. Capital reserve - Share-based compensation (granted)
The Company as of March 31, 2024 had one share based compensation plans, being:
| a) | Long Term Investment – (“ILP”) – Refers to two tranches granted being the first issued on July 23, 2020 and November 10, 2020. The Company compensates part of its employees and management. This plan will grant up to 3% of the Company’s class A share units. The Company will grant the limit of five tranches approved by the Company’s Board of Directors. The fair value of share units is measured at fair value quoted on the grant date. The plan has a vesting period corresponding to 5 years added by expected volatility of 30% and will be settled with Company’s shares. All taxes and contributions are paid by the Company without additional costs to employees and management. This program should be wholly settled with the delivery of the shares. The effect of events on share-based compensation in the Consolidated Statement of Profit or Loss for the period ended March 31, 2024 was R$ 1,768, being R$ 1,941 in Shareholder’s the Equity and a debit of R$ 173 as labor charges in liabilities, due to share price fluctuation (R$ 2,476 being R$ 2,666 in Shareholder’s the Equity and a debit of R$ 190 as labor charges in liabilities for the period ended March 31, 2023). |
F-29
| b) | Long Term Investment – (“ILP”) – Performance Shares Units (PSU) – On August, 2023, the Board of Directors has approved a new long-term incentive plan (ILP), based on meeting certain targets, with granting in 2023 and vesting in 2026, 2027 and 2028, that generated dilution of 1.75% in Vasta shares. The effect of events on share-based compensation in the Consolidated Statement of Profit or Loss for the period ended March 31, 2024 was R$ 1,566, being R$ 1,054 in Shareholder’s the Equity and a credit of R$ 512 as labor charges in liabilities, due to share price fluctuation (There was on impact for the period ended March 31, 2023). |
23.4. Treasury Shares
In 2021 the Company carried out the repurchase 1,000,000 in Class A common shares in the open market, based on prevailing market prices, or in privately negotiated transactions, over the period beginning on August 17, 2021, continuing until February 17, 2022. The Company concluded the Repurchase Program on December 10, 2021, using its existing funds to finance the repurchase, and on December 31, 2021 and 2022, the Company had a balance of R$23,880 or 1,000,000 shares in its possession.
In 2023 the Board of Directors has approved a share repurchase program, or the Repurchase Program. Under the Repurchase Program, Vasta could repurchase up to R$ 62,500 (or US$12,500) in Class A common shares in the open market, based on prevailing market prices, or in privately negotiated transactions, over a period started on September 18, 2023, continuing until the earlier of the completion of the repurchase or September 30, 2024, depending upon market conditions. On March 1, 2024, the program concluded with the repurchase of 1,072,452 shares, corresponding to R$22,531.
Considering the above information, the amount of the treasury shares on March 31, 2024 total R$80,945 (R$59,525 on December 31, 2023), corresponding to 3,713,289 treasury shares (2,647,652 on December 31,2023).
24. Net Revenue from sales and Services
The breakdown of net sales of the Company is shown below:
| March 31,2024 | March 31,2023 | |||
| Net revenue | ||||
| Learning Systems | 257,552 | 269,678 | ||
| Textbooks | 50,730 | 31,360 | ||
| Complementary Education Services | 49,095 | 56,173 | ||
| Other products and services (i) | 103,339 | 45,624 | ||
| Total | 460,716 | 402,835 | ||
| Sale | 442,545 | 393,688 | ||
| Service | 18,171 | 9,147 | ||
| 460,716 | 402,835 |
| (i) | In 2024 includes sales to public government customers, amounting to R$ 69,031. |
| a. | Seasonality |
The Company’s revenue is subject to seasonality since the main deliveries of printed materials and digital materials to customers occur in the last quarter of each year (typically in November and December), and in the first quarter of each subsequent year (typically in February and March), and revenue is recognized when the customers obtain control over the materials. In addition, the printed and digital materials delivered in the fourth quarter are used by customers in the following school year and, therefore, fourth quarter results reflect the growth in the number of students from one school year to the next, leading to higher revenue in general in the fourth
F-30
quarter compared with the preceding quarters in each year. Consequently, on aggregate, the seasonality of revenue generally produces higher revenue in the first and fourth quarters of our fiscal year. In addition, the Company generally bills its customers during the first half of each school year (which starts in January), which generally results in a higher cash position in the first half of each year compared to the second half. A significant part of the Company’s expenses is also seasonal. Due to the nature of the business cycle, the Company needs significant working capital, typically in September or October of each year, in order to cover costs related to production and inventory accumulation, selling and marketing expenses, and delivery of the teaching materials at the end of each year in preparation for the beginning of each school year. As a result, these operating expenses are generally incurred between September and December of each year.
25. Costs and Expenses by Nature
| March 31, 2024 | March 31, 2023 | |||
| Raw materials and productions costs | (85,016) | (96,296) | ||
| Salaries and payroll charges | (83,555) | (76,032) | ||
| Depreciation and amortization | (69,534) | (70,832) | ||
| Advertising and publicity | (24,754) | (15,875) | ||
| Copyright | (23,539) | (25,288) | ||
| Impairment losses on trade receivables | (13,205) | (10,380) | ||
| Other general and administrative expenses | (14,773) | (6,553) | ||
| Rent and condominium fees | (12,076) | (14,456) | ||
| Editorial costs | (10,187) | (15,414) | ||
| Third-party services | (8,691) | (5,160) | ||
| Consulting and advisory services | (8,101) | (4,035) | ||
| Travel | (6,902) | (3,583) | ||
| Utilities, cleaning, and security | (3,650) | (4,175) | ||
| Obsolete inventories | (2,878) | (3,023) | ||
| Taxes and contributions | (899) | - | ||
| Material | (856) | (328) | ||
| Provision (reversal) for tax, civil and labor losses | (289) | 4,423 | ||
| Other operating expenses | (195) | - | ||
| Other operating income | 1,980 | 994 | ||
| Income from lease and sublease agreements with related parties | 2,455 | 3,159 | ||
| (364,665) | (342,854) | |||
| Cost of goods sold and services | (140,083) | (155,126) | ||
| Commercial expenses | (73,260) | (51,061) | ||
| General and administrative expenses | (139,902) | (127,281) | ||
| Impairment losses on trade receivables | (13,205) | (10,380) | ||
| Other operating income | 1,980 | 994 | ||
| Other operating expenses | (195) | - | ||
| (364,665) | (342,854) |
F-31
26. Finance result
| March 31, 2024 | March 31, 2023 | |||
| Finance income | ||||
| Income from financial investments and marketable securities (i) | 5,786 | 9,417 | ||
| Finance income from indemnification assets and contingencies (ii) | 5,384 | 4,112 | ||
| Other finance income | 2,373 | 3,102 | ||
| 13,543 | 16,631 | |||
| Finance costs | ||||
| Interest on bonds | (24,366) | (30,591) | ||
| Interest on account payables for business combinations | (15,664) | (18,031) | ||
| Interest on suppliers | (12,500) | (7,074) | ||
| Bank and collection fees | (841) | (3,280) | ||
| Interest on provision for tax, civil and labor losses | (12,273) | (8,484) | ||
| Interest on Lease Liabilities | (2,113) | (3,385) | ||
| Other finance costs | (2,053) | (4,971) | ||
| (69,810) | (75,816) | |||
| Financial Result (net) | (56,267) | (59,185) |
| (i) | Refers to income from marketable securities indexed at CDI. |
| (ii) | Refers to finance income from indemnification asset in the amount of R$209,287 (presented in note 21.c), in connection with the acquisition of Somos (Vasta’s Predecessor) by Cogna Group (Vasta’s Parent Company). |
27. Non-cash transactions
Non-cash transactions for the periods ended March 31, 2024 and March 31, 2023 are respectively:
| (i) | Disposals of contracts of right of use assets and lease liabilities in the amount of R$12,974 and R$2,418 (note 16). |
| (ii) | Accounts payable assumed in the acquisition of Start, during year 2023, in the amount of R$1,608. |
* * * * * * * * * * * * * * * * * * *
Guilherme Melega
Chief Executive Officer
Cesar Augusto Silva
Chief Financial Officer
Marcelo Vieira Werneck
Accountant - CRC: RJ – 091570/0-1
F-32
