UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 OR 15d-16 UNDER THE SECURITIES EXCHANGE ACT OF 1934
For the month of November 2022
Commission File Number: 001-39415
Vasta Platform Limited
(Exact name of registrant as specified in its charter)
Av. Paulista, 901, 5th Floor
Bela Vista
São Paulo – SP, 01310-100
Brazil
+55 (11) 3047-2655
(Address of principal executive office)
Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F:
Form 20-F | X |
Form 40-F |
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):
Yes | No | X |
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):
Yes | No | X |
TABLE OF CONTENTS
ITEM | |
99.1. | Press release dated November 10, 2022 – Vasta Platform Limited announces today its financial and operating results for the third quarter of 2022. |
99.2 | Vasta Platform Limited Unaudited Condensed Interim Consolidated Financial Statements as of September 30, 2022, and for the nine-month periods ended September 30, 2022 and 2021. |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Vasta Platform Limited | |||
By: | /s/ Mario Ghio Junior | ||
Name: | Mario Ghio Junior | ||
Title: | Chief Executive Officer |
Date: November 10, 2022
Exhibit 99.1
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São Paulo, Nov 10, 2022 – Vasta Platform Limited (NASDAQ: VSTA) – “Vasta” or the “Company” announces today its financial and operating results for the third quarter of 2022 (3Q22) ended September 30, 2022. Financial results are expressed in Brazilian Reais and are presented in accordance with International Financial Reporting Standards (IFRS).
HIGHLIGHTS
![]() | Vasta’s accumulated subscription revenue during the 2022 sales cycle (from 4Q21 to 3Q22) totaled R$1,024 million, a 38% increase compared to the previous sales cycle (from 4Q20 to 3Q21), exceeding our 2022 ACV guidance by 2.4%. Subscription revenue, excluding our hybrid subscription textbook products (PAR), increased 47% and total net revenue increased 30%. |
![]() | In the third quarter, subscription revenue grew 76%, mainly led by traditional learning systems and complementary solutions. The 2022 ACV revenue has been comprised of higher quality sources, as Vasta managed to increase growth in its premium brands and to continue the migration from PAR to digital subscription products (Textbook as a Service Platform), aligned with the company’s strategy. |
![]() | In the third quarter, Adjusted EBITDA totaled R$23 million, a relevant increase compared to 3Q21, when Adjusted EBITDA was negative R$29 million. This improvement was mainly driven by operating leverage gains, cost savings and an improved sales mix with the growth of subscription products, in addition to the contribution of Eleva. In the 2022 cycle, Adjusted EBITDA has grown 99.6%, to R$336 million, with a margin increase of 1,016 bps, to 29%. |
![]() | Vasta recorded Adjusted Net Profit of R$20 million in the 2022 cycle, a 25% increase compared to the 2021 cycle when Adjusted Net Profit was R$16 million. |
![]() | Free cash flow (FCF) totaled R$17 million in 3Q22, a significant improvement from negative R$6 million in 3Q21. In the 2022 cycle, FCF totaled R$55 million (or R$75 million on a normalized basis), also an improvement compared to previous cycle, which had a consumption of R$119 million. |
![]() | The 2023 ACV guidance is R$ 1,230 million, which projects a 20% growth in comparison to the 2022 cycle total subscription revenue, or 22.4% growth excluding paper-based PAR. Nearly 100% of our new sales have come from traditional learning systems and complementary solutions. |
![]() | Since last quarter, Vasta has reported updates on its ESG standards, including a panel of key ESG indicators aligned with the topics identified during materiality review process. Quarterly highlights include: (i) the Afro Internship Program, which created exclusive internship positions for black people in the organization; (ii) the launch of the first Greenhouse Gas (GHG) Emissions Compensation Program for its operations and the increased use of renewable energy sources in our day-to-day activities; and (iii) the achievement of targets for diversity in leadership and board of directors. |
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MESSAGE FROM MANAGEMENT
In the third quarter, we concluded the 2022 sales cycle (4Q21 to 3Q22) with subscriptions revenues showing a 38% increase over the 2021 sales cycle (from 4Q20 to 3Q21) subscriptions revenues, exceeding our 2022 ACV guidance of R$1 billion by 2.4%. We have confidence that the worst has passed, and the results of our operations not only demonstrates the return to business as usual following a 2021 cycle severely hit by the COVID-19 pandemic, but also confirms that Vasta is steadily growing with predictable and recurrent revenue, with subscription products representing 88% of the total revenues of the company.
Moreover, we see the normalization of the company’s profitability and cash flow generation as the main highlight of the quarter. Adjusted EBITDA was R$23 million in 3Q22, recovering from negative R$29 million in the same quarter of the previous year. In the 2022 cycle, adjusted EBITDA increased 99%, to R$336 million, with an expansion of 1,016 bps in margin (from 18.8% to 29%). We attribute this increase not only to the normalization of the business and a higher quality sales mix, but also to our budgetary discipline. Vasta’s operating cash flow totaled R$17 million in 3Q22, a significant improvement from negative R$6 million in 3Q21, reducing the net debt/adjusted EBITDA ratio to 2.92x and maintaining a downward trend for the third consecutive quarter.
During the year, we have announced the acquisition of a relevant minority interest in Educbank, the first financial ecosystem dedicated to K-12 schools, delivering to educational institutions services such as management and financial support by providing payment guaranty for tuitions. We have also announced the acquisition of Phidelis, a complete enterprise resource planning (ERP) software for K-12 schools with both academic and managerial features. The combination of Educbank and Phidelis, our academic and financial ERP, proved a powerful tool to provide schools all the information they need to be more efficient, adding key advantages to our platform as a service for K-12 schools. Since its acquisition, Educbank has more than doubled its student-base, totaling 40 thousand students as of October 31, 2022, and delivering excellent customer experience due to its frictionless business model, as highlighted by a Net Promoter Score (NPS) of 85.
Our preliminary guidance for 2023 ACV is R$1,230 million, which projects a 20% organic growth in comparison to the 2022 cycle total subscription revenue, or 22.4% growth excluding paper-based PAR. Nearly 100% of our new sales have come from traditional learning systems and complementary solutions, or from the digital textbook platform offered on a fee-per-student basis, highlighting our focus on reducing exposure on the paper-based textbook channel. Our premium brands such Anglo and Eleva are showing a strong performance during this sales cycle, reassuring our perception that quality and reputation remain decisive in our business. Complementary solutions have continued to ramp-up penetration across our client base. In the 2022 sales cycle, Vasta added more than 92 thousand students of complementary solutions, a 30% growth compared to the previous cycle, evidencing the potential of the segment. As of the end of the 2022 cycle, only 25% of our partner schools adopted complementary solutions, 84% of them having adopted only one solution in our portfolio.
Finally, since last quarter, we have dedicated a section of our earnings release for Environmental, Social and Governance (ESG) matters, including a panel of key indicators that will be updated on a quarterly basis, reinforcing our commitment to the highest ESG standards.
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OPERATING PERFORMANCE
Student base – subscription models
2022 | 2021 | % Y/Y | ||||
Partner schools – Core content | 5,351 | 4,508 | 18.7% | |||
Partner schools – Complementary solutions | 1,301 | 1,114 | 16.8% | |||
Students – Core content | 1,540,391 | 1,335,152 | 15.4% | |||
Students – Complementary content | 400,192 | 307,941 | 30.0% |
Note: Students enrolled in partner schools.
In the 2022 cycle, Vasta added 843 new partner schools compared to the 2021 cycle, serving more than 1.5 million students with core content solutions. The partner school base of complementary solutions increased by 187 new schools, growing 30% in the number of students served compared to the previous cycle.
FINANCIAL PERFORMANCE
Net revenue
Values in R$ ‘000 | 3Q22 | 3Q21 | % Y/Y | 2022 Cycle | 2021 Cycle | % Y/Y | ||||||
Subscription | 169,609 | 96,207 | 76.3% | 1,024,051 | 740,709 | 38.3% | ||||||
Subscription ex-PAR | 153,574 | 86,647 | 77.2% | 897,986 | 609,083 | 47.4% | ||||||
Traditional learning systems | 148,843 | 87,256 | 70.6% | 787,217 | 546,342 | 44.1% | ||||||
Complementary solutions | 4,731 | (609) | n.m | 110,769 | 62,741 | 76.5% | ||||||
PAR | 16,035 | 9,560 | 67.7% | 126,065 | 131,626 | -4.2% | ||||||
Non-subscription | 19,115 | 30,985 | -38.3% | 133,469 | 152,013 | -12.2% | ||||||
Total net revenue | 188,724 | 127,192 | 48.4% | 1,157,520 | 892,722 | 29.7% | ||||||
% ACV | 17.0% | 13.0% | 4.0 | 102.4% | 100.0% | 2.4 | ||||||
% Subscription | 89.9% | 75.6% | 14.2 | 88.5% | 83.0% | 5.5 |
In the third quarter, net revenue increased 48.5% year-on-year, to R$189 million. Subscription revenue grew 76.3%, driven by the recognition of 17% of 2022 ACV (within the range of 16% to 18% expected for the quarter), with upside in traditional learning systems, complementary solutions, and textbook subscription products (“PAR”). The 2022 ACV revenue has been comprised of higher quality sources, as Vasta managed to increase growth in its premium brands and to continue the migration from PAR to digital subscription products (Textbook as a Service Platform), aligned with the company’s strategy.
In the third quarter, we concluded
the 2022 commercial cycle (4Q21 to 3Q22), and subscription revenue grew 38%, or 47% excluding PAR. This growth represented 102.4% of 2022
ACV, versus 87% in the 2021 cycle, a challenging period of our history owing to unexpected dropouts at our partner schools. Moreover,
variations in the seasonality of new brands (Eleva and Mackenzie) have led to a less concentrated distribution of subscription revenue
along the 2022 cycle when compared to previous cycles, a trend we believe will continue during the upcoming cycle.
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EBITDA
Values in R$ ‘000 | 3Q22 | 3Q21 | % Y/Y | 2022 Cycle | 2021 Cycle | % Y/Y | ||||||
Net revenue | 188,724 | 127,192 | 48.4% | 1,157,521 | 892,722 | 29.7% | ||||||
Cost of goods sold and services | (91,855) | (79,381) | 15.7% | (436,977) | (360,928) | 21.1% | ||||||
General and administrative expenses | (98,511) | (96,402) | 2.2% | (477,809) | (444,807) | 7.4% | ||||||
Commercial expenses | (48,917) | (33,947) | 44.1% | (189,238) | (167,772) | 12.8% | ||||||
Other operating income | 1,301 | 698 | 86.4% | 6,293 | 3,548 | 77.4% | ||||||
(Loss) profit of equity-accounted investees | (2,150) | - | 0.0% | (2,150) | - | 0.0% | ||||||
Impairment losses on trade receivables | (4,692) | (3,790) | 23.8% | (27,859) | (34,309) | -18.8% | ||||||
Profit before financial income and taxes | (56,100) | (85,630) | -34.5% | 29,782 | (111,546) | -126.7% | ||||||
(+) Depreciation and amortization | 66,953 | 50,593 | 32.3% | 260,498 | 194,446 | 34.0% | ||||||
EBITDA | 10,853 | (35,037) | -131.0% | 290,280 | 82,899 | 250.2% | ||||||
EBITDA Margin | 5.8% | -27.5% | 33.3 p.p. | 25.1% | 9.3% | 15.8 p.p. | ||||||
(+) Layoff related to internal restructuring | 869 | 603 | 44.1% | 12,126 | 6,324 | 91.8% | ||||||
(+) IPO-related expenses | - | - | 0.0% | - | 50,580 | -100.0% | ||||||
(+) Share-based compensation plan | 11,172 | 5,834 | 91.5% | 33,376 | 28,461 | 17.3% | ||||||
Adjusted EBITDA | 22,894 | (28,600) | -180.0% | 335,782 | 168,264 | 99.6% | ||||||
Adjusted EBITDA Margin | 12.1% | -22.5% | 34.6 p.p. | 29.0% | 18.8% | 10.2 p.p. |
Note: n.m.: not meaningful
In the third quarter, Adjusted EBITDA totaled R$23 million, a relevant increase from negative R$29 million in 3Q21. This improvement was mainly driven by operating leverage gains, cost savings and a better sales mix with the growth of subscription products and the contribution of Eleva. In the 2022 commercial cycle, Adjusted EBITDA has grown 99%, with a margin increase of 1,016 bps to 29%.
In proportion with net revenue, gross margin grew 1,374 bps in the quarter (from 37.6% to 51.3%). Moreover, adjusted cash G&A expenses and commercial expenses were up 1,962 bps and 80 bps, respectively, due to workforce optimization and budgetary discipline. The impairment on trade receivables decreased 50 bps in the quarter, reflecting the hike in the provision for doubtful accounts executed during 2021 to face the increased delinquency caused by the pandemic. As a result, adjusted EBITDA margin reached 12.1% in 3Q22, versus negative margin of 22.5% in 3Q21.
(%) Net Revenue | 3Q22 | 3Q21 | Y/Y (p.p.) | 2022 Cycle | 2021 Cycle | Y/Y (p.p.) | ||||||
Gross margin | 51.3% | 37.6% | 13.7 | 62.2% | 59.6% | 2.68 | ||||||
Adjusted cash G&A expenses(1) | -10.8% | -30.4% | 19.6 | -14.5% | -18.1% | 3.60 | ||||||
Commercial expenses | -25.9% | -26.7% | 0.8 | -16.3% | -18.8% | 2.44 | ||||||
Impairment on trade receivables | -2.5% | -3.0% | 0.5 | -2.4% | -3.8% | 1.44 | ||||||
Adjusted EBITDA margin | 12.1% | -22.5% | 34.6 | 29.0% | 18.8% | 10.16 |
(1) Sum of general and administrative expenses, other operating income and profit (loss) of equity-accounted investees, less: depreciation and amortization, layoffs related to internal restructuring, IPO-related expenses, and share-based compensation plan.
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Finance Results
Values in R$ ‘000 | 3Q22 | 3Q21 | % Y/Y | 2022 Cycle | 2021 Cycle | % Y/Y | ||||||
Finance income | 19,174 | 10,532 | 82.1% | 70,186 | 28,197 | 148.9% | ||||||
Finance costs | (68,426) | (28,686) | 138.5% | (247,300) | (87,184) | 183.7% | ||||||
Total | (49,252) | (18,154) | 171.3% | (177,114) | (58,987) | 200.3% |
In the third quarter finance income totaled R$19 million, from R$10 million in 3Q21, mainly due to higher interest rates on financial investments and marketable securities. In the 2022 commercial cycle, finance income increased 149% to R$28 million.
Finance costs increased 138% quarter-on-quarter, to R$68 million, motivated by higher interest rates applicable to bonds and financing, accounts payable on business combination and, provision for tax, civil and labor losses. In the 2022 commercial cycle, finance costs increased 183% to R$247 million.
Net profit (loss)
Values in R$ ‘000 | 3Q22 | 3Q21 | % Y/Y | 2022 Cycle | 2021 Cycle | % Y/Y | ||||||
Net profit (loss) | (75,994) | (70,821) | 7.3% | (110,684) | (116,286) | -4.8% | ||||||
(+) Layoffs related to internal restructuring | 869 | 603 | 44.1% | 12,126 | 6,324 | 91.8% | ||||||
(+) Share-based compensation plan | 11,172 | 5,834 | 91.5% | 33,376 | 28,461 | 17.3% | ||||||
(+) IPO-related expenses | - | - | 0% | - | 50,580 | -100.0% | ||||||
(+) Amortization of intangible assets(1) | 38,778 | 28,987 | 33.8% | 152,205 | 114,794 | 32.6% | ||||||
(-) Tax shield(2) | (17,278) | (12,044) | 43.5% | (67,220) | (68,054) | -1.2% | ||||||
Adjusted net profit (loss) | (42,454) | (47,440) | -10.5% | 19,803 | 15,819 | 25.2% | ||||||
Adjusted net margin | -22.5% | -37.3% | 14.8 | 1.7% | 1.8% | (0,1) |
(1) From business combinations. (2) Tax shield (34%) generated by the expenses that are being deducted as net (loss) profit adjustments. Note: n.m.: not meaningful
In the third quarter, adjusted net loss totaled R$42 million, impacted by higher financial leverage and interest rates. In the 2022 commercial cycle, adjusted net profit increased 25% to R$20 million.
Accounts receivable and PDA
Values in R$ ‘000 | 3Q22 | 3Q21 | % Y/Y | 2Q21 | % Q/Q | |||||
Gross accounts receivable | 378,587 | 249,628 | 51.7% | 477,282 | -20.7% | |||||
Provision for doubtful accounts (PDA) | (49,250) | (39,103) | 25.9% | (50,098) | -1.7% | |||||
Coverage index | 13.0% | 15.7% | (2.7) | 10.5% | 2.5 | |||||
Net accounts receivable | 329,337 | 210,525 | 56.4% | 427,184 | -22.9% | |||||
Average days of accounts receivable(1) | 102 | 85 | 17 | 140 | (38) |
(1) Balance of net accounts receivable divided by the last-twelve-month net revenue, multiplied by 360.
During the pandemic, the credit issues faced by our partner schools pressured our receivable collection and impacted our operating results by requiring a higher level of provisions for doubtful accounts. We have seen a gradual normalization in payments during 2022, aligned with the restoration of partner schools’ regular activities, although this is still ongoing. The average payment term of Vasta’s accounts receivable portfolio was 102 days in the 3Q22, 17 days in excess of same quarter of the previous year. By adding Eleva’s last-twelve-month (“LTM”) net revenue, the average term decreased to 100 days.
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Free cash flow
Values in R$ ‘000 | 3Q22 | 3Q21 | % Y/Y | 2022 Cycle | 2021 Cycle | % Y/Y | ||||||
Cash from operating activities(1) | 61,814 | 22,885 | 170.1% | 247,762 | (28,770) | -961.2% | ||||||
(-) Income tax and social contribution paid | (1,247) | - | 0.0% | (2,736) | (1,167) | 134.5% | ||||||
(-) Payment of provision for tax, civil and labor losses | 52 | (439) | -111.9% | (1,421) | (515) | 175.8% | ||||||
(-) Interest lease liabilities paid | (3,655) | (3,542) | 3.2% | (13,941) | (15,339) | -9.1% | ||||||
(-) Acquisition of property, plant, and equipment | (2,374) | (3,108) | -23.6% | (62,060) | (7,364) | 742.7% | ||||||
(-) Additions of intangible assets | (30,892) | (17,295) | 78.6% | (85,934) | (47,330) | 81.6% | ||||||
(-) Lease liabilities paid | (6,682) | (4,949) | 35.0% | (27,099) | (18,936) | 43.1% | ||||||
Free cash flow (FCF) | 17,016 | (6,447) | -363.9% | 54,573 | (119,421) | -145.7% | ||||||
FCF/Adjusted EBITDA | 74.3% | 22.5% | 51.8 | 16.3% | -71.0% | 87.2 |
(1) Net (loss) profit less non-cash items less and changes in working capital. Note: n.m.: not meaningful
In 3Q22, Free Cash Flow (FCF) totaled R$17 million, a significant improvement when compared to 3Q21, which had a negative R$6.5 million FCF. In the 2022 cycle, FCF totaled R$55 million, or R$75 million excluding the early payment of royalties (R$20 million) to content providers, up from negative R$119 million in the same period of 2021.
Financial leverage
Values in R$ ‘000 | 3Q22 | 2Q22 | 1Q22 | 4Q21 | 3Q21 | ||||||
Financial debt | 811,612 | 844,778 | 817,517 | 831,226 | 812,016 | ||||||
Accounts payable from business combinations | 647,466 | 585,503 | 570,660 | 532,313 | 73,713 | ||||||
Total debt | 1,459,078 | 1,430,281 | 1,388,177 | 1,363,539 | 885,729 | ||||||
Cash and cash equivalents | 44,343 | 147,762 | 145,998 | 309,893 | 377,862 | ||||||
Marketable securities | 433,803 | 417,770 | 303,675 | 166,349 | 317,178 | ||||||
Net debt | 980,932 | 864,749 | 938,504 | 887,297 | 190,689 | ||||||
Net debt/LTM adjusted EBITDA(1) | 2,92 | 3,04 | 3,67 | 4,87 | 0,90 |
(1) LTM adjusted EBITDA includes Eleva. Eleva’s LTM adjusted EBITDA prior to November 2021 may not reflect Vasta’s accounting standards.
Vasta ended the quarter with a net debt position of R$981 million, mainly due to the minority acquisition of Educbank in July 2022, leading to a net debt/LTM adjusted EBITDA of 2.92x. After adding Eleva’s LTM EBITDA, this indicator stood at 2.87x.
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ESG
Since last quarter, Vasta reports updates about its ESG standards, including a panel of key ESG indicators, in line with the topics identified in the materiality process. Information about 2021 can be found in Vasta’s Sustainability Report, which can be found here.
Check below the main highlights of ESG in the third quarter of 2022.
Vasta launches its GHG emissions inventory
Committed to accountability and transparency, Vasta launched the first Greenhouse Gas (GHG) Emissions Inventory for its operations. This inventory is aligned with international guidelines from the GHG Protocol methodology and measures the atmospheric emissions from its corporate office, its three distribution centers and its vehicle fleet.
The inventory covers direct emissions from the operations (Scope 1) and indirect emissions (Scope 2) from the consumption of electricity. Regarding electricity, the inventory included the impact according to two methods: location and market based. The second method considers the purchase of renewable energy certificates (REC) or free market purchases, in which the renewable origin of the energy consumed by the company is proven, in turn reducing the organization’s carbon footprint. The purchase of renewable energy reduced the company’s total emissions by 14%. According to the inventory, Vasta’s direct emissions (Scope 1) totaled 1,133 tCO2e in 2021, corresponding to 97.6% of the total. Indirect emissions (Scope 2) totaled 27.54 tCO2e. If the location-based approach is applied without deducting emissions from renewable sources, Scope 2 would represent 16.4% of the company’s emissions.
Afro Internship Program
In July, Vasta launched the Afro Internship Program, which will create exclusive intern positions for African-Brazilian youth. The positions are reserved for young people enrolled in undergraduate or technical courses, and include hybrid and remote work, providing provide benefits such as transportation vouchers, food or meal vouchers, life insurance, tuition grants, psychological counseling, and a day off in the month of a candidate’s birthday. As a result, 13 people were hired for areas such as technology, human resources, data engineering, editorial, finance, production planning and CX (customer experience), among others.
Somos Futuro 2023
Launch of the Somos Futuro 2023 Selection Process. Somos Futuro is a program maintained by Vasta’s social arm, Instituto SOMOS, and consists of an acceleration initiative for public school students, who receive full study scholarships for secondary education in Vasta’s partner private schools. The participants also receive educational and para-educational materials, online tutoring, mentoring and access to the entire program support network, which includes psychological counseling. Today 365 students are enrolled in the current edition of the program – which has benefited almost 600 people since it began in 2018.
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Key Indicators
ENVIRONMENT
SDGs | GRI | Water withdrawn by source2 (m³) | Unit | 1Q22 | 2Q22 | 3Q22 |
6 | 303-3 | Ground water | m³ | 1,786 | 2,674 | 3,438 |
Utility supply | m³ | 840 | 187 | 127 | ||
Total | m³ | 2,626 | 2,861 | 3,565 | ||
SDGs | GRI | Internal energy consumption | Unit | 1Q22 | 2Q22 | 3Q22 |
12 and 13 | 302-1 | Total energy consumed | GJ | 1,569 | 1,348 | 1,523 |
Percentage of energy from renewable sources3 | % | 92% | 97% | 98% |
· | 98% of the energy consumed by the Company comes from renewable sources; |
· | 100% of the energy consumed in our largest distribution center in São José dos Campos, comes from renewable sources; and |
· | 100% of our suppliers are FSC certified, which guarantees sustainable handling in the paper chain of custody. We also have maintained the certification since 2008. |
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SOCIAL
SDGs | GRI | Diversity in the work force by functional category | Unit | 1Q22 | 2Q22 | 3Q22 |
5 | 405-1 | C-level - Women | % of people | 20% | 20% | 25% |
C-level - Men | % of people | 80% | 80% | 75% | ||
Total - C-level4 | No. of people | 5 | 5 | 4 | ||
Leaders - Women (≥ management level) | % of people | 45% | 47% | 48% | ||
Leaders - Men (≥ management level) | % of people | 55% | 53% | 52% | ||
Total - Leaders (≥ management level)5 | No. of people | 130 | 131 | 134 | ||
Academic faculty - Women | % of people | 14% | 31% | 80% | ||
Academic faculty - Men | % of people | 86% | 69% | 20% | ||
Total - Academic faculty6 | No. of people | 71 | 100 | 84 | ||
Coordinators and Administrative - Women | % of people | 56% | 57% | 57% | ||
Coordinators and Administrative - Men | % of people | 44% | 43% | 43% | ||
Total - Coordinators and Administrative7 | No. of people | 1,576 | 1,521 | 1,539 | ||
Total - Women | % of people | 53% | 54% | 54% | ||
Total - Men | % of people | 47% | 46% | 46% | ||
Total - Employees | No. of people | 1,782 | 1,757 | 1,761 | ||
SDGs | GRI | Indirect economic impact | Unit | 1Q22 | 2Q22 | 3Q22 |
11 | - | Scholarship holders in Somos Futuro program | nº | 373 | 371 | 365 |
SDGs | GRI | Occupational Health and Safety | Unit | 1Q22 | 2Q22 | 3Q22 |
3 | 403-5, 403-9 | % of units covered by the Environmental Risk Prevention Program | % | 100% | 100% | 100% |
Total employees trained in health and safety8 | No. of people | 90 | 110 | 346 | ||
Total number of hours training in health and safety | No. | 491 | 2,871 | 375 | ||
Average number of hours training in health and safety per participant9 | No. | 5.5 | 4.4 | 1.1 | ||
Total number of hours of on-site training for fire brigade | No. | 248 | 408 | 56 | ||
Average number of hours of on-site training for fire brigade per participant9 | No. | 7.7 | 8.0 | 8 | ||
Employees - Injury frequency rate10 | rate | 0.92 | 3.75 | 4.06 | ||
Employees - High-consequence injuries rate11 | rate | 0.00 | 0.00 | 0,00 | ||
Employees - Recordable injuries rate12 | rate | 0.92 | 0.94 | 3.04 | ||
Employees - Fatality rate13 | rate | 0.00 | 0.00 | 0.00 |
Diversity
48% of leaders (management level and above) and 20% of the teaching faculty at Vasta are women. We are also committed to other measures that promote diversity and inclusion, such as the Somos Futuro project, from the Instituto Somos, to accelerate talents from public schools, in which almost 40% of the participants are black or mixed.
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Health and Safety
Vasta invested in enhancing controls and communication on occupational health and safety for employees. This contributed to an increase in accident reporting rates, boosting the accuracy of control and management systems
GOVERNANCE
SDGs | GRI | Ethical behavior | Unit | 1Q22 | 2Q22 | 3Q22 |
8, 16 | 205-1, 205-2, 205-3 | Employees trained in anti-corruption policies and procedures | % of people | 100% | 100% | 100% |
Operations submitted to corruption-related risk assessment | % of operations | 100% | 100% | 100% | ||
Number of confirmed cases of corruption | No. of cases | 0 | 0 | 0 | ||
SDGs | GRI | Data privacy and infrastructure | Unit | 1Q22 | 2Q22 | 3Q22 |
16 | 418-1 | Substantiated complaints received from outside parties | No. | 6 | 28 | 20 |
Substantiated complaints received from regulatory bodies | No. | 0 | 0 | 0 | ||
Identified leaks, thefts, or losses of customer data | No. | 0 | 0 | 0 | ||
SDGs | GRI | Diversity in the Board of Directors | Unit | 1Q22 | 2Q22 | 3Q22 |
5 | 405-1 | Women | % of people | 29% | 29% | 29% |
Men | % of people | 71% | 71% | 71% | ||
Total | nº of people | 7 | 7 | 7 |
FOOTNOTES:
| |
SDG | Sustainable Development Goal. Indicates goal to which the actions monitored contribute. |
GRI | Global Reporting Initiative. Lists the GRI standard indicators related to the data monitored. |
NA | Indicator discontinued or not measured in the quarter. |
1 | Quarterly monitoring of a selection of material indicators. For further information, consult our Sustainability Report, available here. |
2 | Based on invoices from sanitation concessionaires. |
3 | Acquired from the free energy market. |
4 | CEO, vice presidents reporting directly to the CEO and all directors. |
5 | Management, senior management and leadership positions not reporting directly to the CEO (regional directors, unit directors and vice presidents). |
6 | Course coordinators, teachers, and tutors. |
7 | Corporate coordination, academic coordination, specialists, adjuncts, assistants, and analysts. |
8 | All the employees undergoing training in the period. |
9 | Total hours of training/employees trained. |
10 | Total accidents (with and without leave)/ Total man/hours worked (MHW) x 1,000,000. |
11 | Work-related injury (excluding fatalities) from which the worker cannot recover fully to pre-injury health status within 6 months. Formula: Number of injuries/MHW x 1.000.000. |
12 | (Accidents with leave + Fatalities)/ MHT x 1,000,000. |
13 | Fatalities/ MHW x 1,000,000. |
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CONFERENCE CALL INFORMATION
Vasta will discuss its third quarter 2022 results on Nov 10, 2022, via a conference call at 5:00 p.m. Eastern Time. To access the call (ID: 3871721), please dial: +1 (888) 660-6819 or +1 (929) 203-1989. A live and archived webcast of the call will be available on the Investor Relations section of the Company’s website at https://ir.vastaplatform.com.
ABOUT VASTA
Vasta is a leading, high-growth education company in Brazil powered by technology, providing end-to-end educational and digital solutions that cater to all needs of private schools operating in the K-12 educational segment, ultimately benefiting all of Vasta’s stakeholders, including students, parents, educators, administrators and private school owners. Vasta’s mission is to help private K-12 schools to be better and more profitable, supporting their digital transformation. Vasta believes it is uniquely positioned to help schools in Brazil undergo the process of digital transformation and bring their education skill-set to the 21st century. Vasta promotes the unified use of technology in K-12 education with enhanced data and actionable insight for educators, increased collaboration among support staff and improvements in production, efficiency and quality. For more information, please visit ir.vastaplatform.com.
CONTACT
Investor Relations
ir@vastaplatform.com
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FORWARD-LOOKING STATEMENTS
This press release contains forward-looking statements that can be identified by the use of forward-looking words such as “anticipate,” “believe,” “could,” “expect,” “should,” “plan,” “intend,” “estimate” and “potential,” among others. Forward-looking statements appear in a number of places in this press release and include, but are not limited to, statements regarding our intent, belief or current expectations. Forward-looking statements are based on our management’s beliefs and assumptions and on information currently available to our management. Such statements are subject to risks and uncertainties, and actual results may differ materially from those expressed or implied in the forward-looking statements due to of various factors, including (i) general economic, financial, political, demographic and business conditions in Brazil, as well as any other countries we may serve in the future and their impact on our business; (ii) fluctuations in interest, inflation and exchange rates in Brazil and any other countries we may serve in the future; (iii) our ability to implement our business strategy and expand our portfolio of products and services; (iv) our ability to adapt to technological changes in the educational sector; (v) the availability of government authorizations on terms and conditions and within periods acceptable to us; (vi) our ability to continue attracting and retaining new partner schools and students; (vii) our ability to maintain the academic quality of our programs; (viii) the availability of qualified personnel and the ability to retain such personnel; (ix) changes in the financial condition of the students enrolling in our programs in general and in the competitive conditions in the education industry; (x) our capitalization and level of indebtedness; (xi) the interests of our controlling shareholder; (xii) changes in government regulations applicable to the education industry in Brazil; (xiii) government interventions in education industry programs, that affect the economic or tax regime, the collection of tuition fees or the regulatory framework applicable to educational institutions; (xiv) cancellations of contracts within the solutions we characterize as subscription arrangements or limitations on our ability to increase the rates we charge for the services we characterize as subscription arrangements; (xv) our ability to compete and conduct our business in the future; (xvi) our ability to anticipate changes in the business, changes in regulation or the materialization of existing and potential new risks; (xvii) the success of operating initiatives, including advertising and promotional efforts and new product, service and concept development by us and our competitors; (xviii) changes in consumer demands and preferences and technological advances, and our ability to innovate to respond to such changes; (xix) changes in labor, distribution and other operating costs; our compliance with, and changes to, government laws, regulations and tax matters that currently apply to us; (xx) the effectiveness of our risk management policies and procedures, including our internal control over financial reporting; (xxi) health crises, including due to pandemics such as the COVID-19 pandemic and government measures taken in response thereto; (xxii) other factors that may affect our financial condition, liquidity and results of operations; and (xxiii) other risk factors discussed under “Risk Factors.” Forward-looking statements speak only as of the date they are made, and we do not undertake any obligation to update them in light of new information or future developments or to release publicly any revisions to these statements in order to reflect later events or circumstances or to reflect the occurrence of unanticipated events.
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NON-GAAP FINANCIAL MEASURES
This press release presents our EBITDA, Adjusted EBITDA and Adjusted net (loss) profit and Free cash flow (FCF), which is information provided for the convenience of investors. EBITDA and Adjusted EBITDA are among the key performance indicators used by us to measure financial operating performance. Our management believes that these Non-GAAP financial measures provide useful information to investors and shareholders. We also use these measures internally to establish budgets and operational goals to manage and monitor our business, evaluate our underlying historical performance and business strategies and to report our results to the board of directors.
We calculate EBITDA as net (loss) profit for the period/year plus income taxes and social contribution plus/minus net finance result plus depreciation and amortization. The EBITDA measure provides useful information to assess our operational performance.
We calculate Adjusted EBITDA as EBITDA plus/minus: (a) income tax and social contribution; (b) net finance result; (c) depreciation and amortization; (d) share-based compensation expenses, mainly due to the grant of additional shares to Somos’ employees in connection with the change of control of Somos to Cogna (for further information refer to note 23 to the audited consolidated financial statements); (e) provision for risks of tax, civil and labor losses regarding penalties, related to income tax positions taken by the Predecessor Somos – Anglo and Vasta in connection with a corporate reorganization carried out by the Predecessor Somos – Anglo; (f) Bonus IPO, which refers to bonus paid to certain executives and employees based on restricted share units; and (g) expenses with contractual termination of employees due to organizational restructuring. We understand that such adjustments are relevant and should be considered when calculating our Adjusted EBITDA, which is a practical measure to assess our operational performance that allows us to compare it with other companies that operates in the same segment.
We calculate Adjusted net (loss) profit as the (loss) profit for the period/year as presented in Statement of Profit or Loss and Other Comprehensive Income adjusted by the same Adjusted EBITDA items, however, added by (a) Amortization of intangible assets from Business Combination and (b) Tax shield of 34% generated by the aforementioned adjustments.
We calculate Operating cash flow (OCF) as the cash from operating activities as presented in the Statement of Cash Flows less (a) income tax and social contribution paid; (b) tax, civil and labor proceedings paid; (c) interest lease liabilities paid; (d) acquisition of property, plant and equipment; (e) additions to intangible assets; and (f) lease liabilities paid.
We understand that, although Adjusted net (loss) profit, EBITDA, Adjusted EBITDA, and Operating cash flow (OCF) are used by investors and securities analysts in their evaluation of companies, these measures have limitations as analytical tools, and you should not consider them in isolation or as substitutes for analysis of our results of operations as reported under IFRS. Additionally, our calculations of Adjusted net (loss) profit, Adjusted EBITDA, and Operating cash flow (OCF) may be different from the calculation used by other companies, including our competitors in the education services industry, and therefore, our measures may not be comparable to those of other companies.
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REVENUE RECOGNITION AND SEASONALITY
Our main deliveries of printed and digital materials to our 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 we provide in the fourth quarter are used by our customers in the following school year and, therefore, our fourth quarter results reflect the growth in the number of our students from one school year to the next, leading to higher revenue in general in our fourth quarter compared with the preceding quarters in each year. Consequently, in aggregate, the seasonality of our revenues generally produces higher revenues in the first and fourth quarters of our fiscal year. Thus, the numbers for the second quarter and third quarter are usually less relevant. In addition, we generally bill our 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 our expenses is also seasonal. Due to the nature of our business cycle, we need significant working capital, typically in September or October of each year, to cover costs related to production and inventory accumulation, selling and marketing expenses, and delivery of our 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.
Purchases through our Livro Fácil e-commerce platform are also very intense during the back-to-school period, between November, when school enrollment takes place and families plan to anticipate the purchase of products and services, and February of the following year, when classes are about to start. Thus, e-commerce revenue is mainly concentrated in the first and fourth quarters of the year.
KEY BUSINESS METRICS
ACV Bookings is a non-accounting managerial metric and represents our partner schools’ commitment to pay for our solutions offerings. We believe it is a meaningful indicator of demand for our solutions. We consider ACV Bookings is a helpful metric because it is designed to show amounts that we expect to be recognized as revenue from subscription services for the 12-month period between October 1 of one fiscal year through September 30 of the following fiscal year. We define ACV Bookings as the revenue we would expect to recognize from a partner school in each school year, based on the number of students who have contracted our services, or “enrolled students,” that will access our content at such partner school in such school year. We calculate ACV Bookings by multiplying the number of enrolled students at each school with the average ticket per student per year; the related number of enrolled students and average ticket per student per year are each calculated in accordance with the terms of each contract with the related school. Although our contracts with our schools are typically for 4-year terms, we record one year of revenue under such contracts as ACV Bookings. ACV Bookings are calculated based on the sum of actual contracts signed during the sales period and assumes the historical rates of returned goods from customers for the preceding 24-month period. Since the actual rates of returned goods from sales during the period may be different from the historical average rates and the actual volume of merchandise ordered by our customers may be different from the contracted amount, the actual revenue recognized during each period of a sales cycle may be different from the ACV Bookings for the respective sales cycle. Our reported ACV Bookings are subject to risks associated with, among other things, economic conditions and the markets in which we operate, including risks that our contracts may be canceled or adjusted (including as a result of the COVID-19 pandemic).
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FINANCIAL STATEMENTS
Consolidated Statements of Financial Position
Assets | September 30, 2022 | December 31, 2021 | ||
Current assets | ||||
Cash and cash equivalents | 44,343 | 309,893 | ||
Marketable securities | 433,803 | 166,349 | ||
Trade receivables | 329,337 | 505,514 | ||
Inventories | 242,261 | 242,363 | ||
Taxes recoverable | 43,747 | 24,564 | ||
Income tax and social contribution recoverable | 9,923 | 8,771 | ||
Prepayments | 54,243 | 40,069 | ||
Other receivables | 724 | 2,105 | ||
Related parties – other receivables | 1,010 | 501 | ||
Total current assets | 1,159,391 | 1,300,129 | ||
Non-current assets | ||||
Judicial deposits and escrow accounts | 188,099 | 178,824 | ||
Deferred income tax and social contribution | 205,302 | 130,405 | ||
Investments accounted for using the equity method | 85,501 | |||
Other Investments and interests in entities | 8,271 | |||
Property, Plant and Equipment | 201,182 | 185,682 | ||
Intangible assets and goodwill | 5,481,268 | 5,538,367 | ||
Total non-current assets | 6,169,623 | 6,033,278 | ||
Total assets | 7,329,014 | 7,333,407 |
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Consolidated Statements of Financial Position (continued)
Liabilities | September 30, 2022 | December 31, 2021 | ||
Current liabilities | ||||
Bonds and financing | 62,649 | 281,491 | ||
Lease liabilities | 28,426 | 26,636 | ||
Suppliers | 264,427 | 264,787 | ||
Income tax and social contribution payable | 17,820 | 16,666 | ||
Salaries and social contributions | 106,422 | 62,829 | ||
Contractual obligations and deferred income | 32,159 | 46,037 | ||
Accounts payable for business combination | 91,147 | 20,502 | ||
Other liabilities | 5,059 | 20,033 | ||
Other liabilities - related parties | 25,371 | 39,271 | ||
Total current liabilities | 633,480 | 778,252 | ||
Non-current liabilities | ||||
Bonds and financing | 748,963 | 549,735 | ||
Lease liabilities | 118,719 | 133,906 | ||
Accounts payable for business combination | 556,319 | 511,811 | ||
Provision for tax, civil and labor losses | 676,030 | 646,850 | ||
Contractual obligations and deferred income | 4,317 | 128 | ||
Other liabilities | 40,006 | 47,516 | ||
Total non-current liabilities | 2,144,354 | 1,889,946 | ||
Shareholder’s equity | ||||
Share capital | 4,820,815 | 4,820,815 | ||
Capital reserve | 77,924 | 61,488 | ||
Treasury shares | (23,880) | (23,880) | ||
Accumulated losses | (323,679) | (193,214) | ||
Total shareholder's equity | 4,551,180 | 4,665,209 | ||
Total liabilities and shareholder's equity | 7,329,014 | 7,333,407 |
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Consolidated Income Statement
Jul 01, to Sep 30, 2022 |
Jan 01, to Sep 30, 2022 |
Jul 01, to Sep 30, 2021 |
Jan 01, to Sep 30, 2021 | |||
Net revenue from sales and services | 188,724 | 759,261 | 127,192 | 549,159 | ||
Sales | 180,422 | 732,647 | 124,125 | 526,697 | ||
Services | 8,302 | 26,614 | 3,067 | 22,462 | ||
Cost of goods sold and services | (91,855) | (301,058) | (79,381) | (260,910) | ||
Gross profit | 96,869 | 458,203 | 47,811 | 288,249 | ||
Operating income (expenses) | ||||||
General and administrative expenses | (98,511) | (351,738) | (96,402) | (304,208) | ||
Commercial expenses | (48,917) | (143,838) | (33,947) | (119,040) | ||
Other income | 1,301 | 2,941 | 698 | 2,202 | ||
Impairment losses on trade receivables | (4,692) | (17,131) | (3,790) | (21,998) | ||
Share of (loss) profit of equity-accounted investees | (2,150) | (2,150) | - | - | ||
(Loss) before finance result and taxes | (56,100) | (53,713) | (85,630) | (154,795) | ||
Finance income | 19,174 | 56,339 | 10,532 | 21,793 | ||
Finance costs | (68,426) | (196,291) | (28,686) | (69,174) | ||
Finance result | (49,252) | (139,952) | (18,154) | (47,381) | ||
(Loss) before income tax and social contribution | (105,352) | (193,665) | (103,784) | (202,176) | ||
Income tax and social contribution | 29,358 | 63,200 | 32,963 | 63,641 | ||
(Loss) for the period | (75,994) | (130,465) | (70,821) | (138,535) | ||
Net (loss) per share | ||||||
Basic | (0.91) | (1.56) | (0.85) | (1.67) | ||
Diluted | (0.91) | (1.56) | (0.85) | (1.67) |
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Consolidated Statement of Cash Flow
For the nine months ended September | ||||
2022 | 2021 | |||
CASH FLOWS FROM OPERATING ACTIVITIES | ||||
Profit (Loss) before income tax and social contribution | (193,665) | (202,176) | ||
Adjustments for: | ||||
Depreciation and amortization | 198,841 | 149,492 | ||
Share of loss (profit) of equity-accounted investees | 2,150 | - | ||
Impairment losses on trade receivables | 17,131 | 21,998 | ||
Reversal Tax, civil and labor losses | (9,151) | (775) | ||
Interest on provision for tax, civil and labor losses | 39,639 | 17,681 | ||
Provision for obsolete inventories | 27,896 | 13,936 | ||
Interest on bonds and financing | 77,636 | 24,272 | ||
Contractual obligations and right to returned goods | (12,875) | 2,115 | ||
Interest on accounts payable for business combination | 47,511 | 811 | ||
Imputed interest on suppliers | 13,730 | 3,213 | ||
Bank and collection fees | 6,056 | - | ||
Other financial expenses and net interest | (15,710) | - | ||
Share-based payment expense | 16,436 | 17,503 | ||
Interest on lease liabilities | 10,799 | 11,602 | ||
Interest on marketable securities incurred | (39,709) | (15,937) | ||
Cancellations of right-of-use contracts | 3,393 | (3,481) | ||
Residual value of disposals of property, plant and equipment and intangible assets | 3,718 | 3,411 | ||
Changes in | ||||
Trade receivables | 159,242 | 262,120 | ||
Inventories | (31,994) | (5,618) | ||
Prepayments | (14,174) | (10,157) | ||
Taxes recoverable | (20,329) | (3,049) | ||
Judicial deposits and escrow accounts | (9,275) | (2,929) | ||
Other receivables | 1,381 | (1,185) | ||
Suppliers | (14,090) | (92,912) | ||
Salaries and social charges | 43,563 | 1,062 | ||
Tax payable | 6,502 | 7,775 | ||
Contractual obligations and deferred income | 7,387 | (42,105) | ||
Other receivables and liabilities from related parties | (509) | - | ||
Other liabilities | (22,494) | (1,880) | ||
Other liabilities – related parties | (13,901) | (96,041) | ||
Interest on liabilities paid | (10,813) | (11,564) | ||
Payment of interest on bonds and financing | (92,722) | (24,946) | ||
Income tax and social contribution paid | (2,736) | (1,167) | ||
Payment of provision for tax, civil and labor losses | (1,308) | (515) | ||
Net cash generated by operating activities | 177,556 | 20,553 | ||
CASH FLOWS FROM INVESTING ACTIVITIES | ||||
Acquisition of property, plant and equipment | (50,602) | (9,452) | ||
Additions of intangible assets | (66,819) | (36,763) | ||
Acquisition of subsidiaries net of cash acquired | (53,686) | (33,591) | ||
Proceeds from (purchase of) investment in marketable securities | (227,745) | 189,861 | ||
Net cash (applied in) generated in investing activities | (398,852) | 110,055 | ||
CASH FLOWS FROM FINANCING ACTIVITIES | ||||
Suppliers – related parties | - | (3,676) | ||
Payments of loans from related parties | (254,885) | (20,884) | ||
Lease liabilities paid | (20,409) | (15,308) | ||
Acquisition of treasury shares | - | (11,765) | ||
Payments of bonds and financing | (759) | (477,651) | ||
Issuance of securities with related parties net of issuance costs | 250,000 | - | ||
Issuance of public bonds net off issuance costs | - | 497,000 | ||
Payments of accounts payable for business combination | (18,201) | (31,617) | ||
Net cash (applied in) financing activities | (44,254) | (63,901) | ||
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS | (265,550) | 66,706 | ||
Cash and cash equivalents at beginning of period | 309,893 | 311,156 | ||
Cash and cash equivalents at end of period | 44,343 | 377,862 |
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Exhibit 99.2
VASTA PLATFORM LIMITED | |
Unaudited Condensed Interim Consolidated Financial Statements
Nine-month period ended September 30, 2022 |
|
1
VASTA Platform Limited
Unaudited Condensed Interim Consolidated
Financial Statements
Content
Consolidated statement of financial position | 3 |
Consolidated interim statement of profit or loss and other comprehensive income | 5 |
Consolidated interim statement of changes in equity | 6 |
Consolidated interim statement of cash flows | 7 |
Notes to the condensed interim consolidated financial statements | 9 |
2
VASTA Platform Limited
Unaudited Condensed Interim Consolidated
Financial Statements
Unaudited Condensed Interim Consolidated Statement of Financial Position
As of September 30, 2022 and December 31, 2021
In thousands of R$, unless otherwise stated
Assets | Note |
September 30, 2022 |
December 31, 2021 | ||
Current assets | |||||
Cash and cash equivalents | 7 | 44,343 | 309,893 | ||
Marketable securities | 8 | 433,803 | 166,349 | ||
Trade receivables | 9 | 329,337 | 505,514 | ||
Inventories | 10 | 242,261 | 242,363 | ||
Taxes recoverable | 43,747 | 24,564 | |||
Income tax and social contribution recoverable | 9,923 | 8,771 | |||
Prepayments | 54,243 | 40,069 | |||
Other receivables | 724 | 2,105 | |||
Related parties – other receivables | 19 | 1,010 | 501 | ||
Total current assets | 1,159,391 | 1,300,129 | |||
Non-current assets | |||||
Judicial deposits and escrow accounts | 20.b | 188,099 | 178,824 | ||
Deferred income tax and social contribution | 205,302 | 130,405 | |||
Investments accounted for using the equity method | 11 | 85,501 | - | ||
Other Investments and interests in entities | 1.2.b | 8,271 | - | ||
Property, plant and equipment | 12 | 201,182 | 185,682 | ||
Intangible assets and goodwill | 13 | 5,481,268 | 5,538,367 | ||
Total non-current assets | 6,169,623 | 6,033,278 | |||
Total Assets | 7,329,014 | 7,333,407 |
The accompanying notes are an integral part of this Unaudited Condensed Interim Consolidated Financial Statements.
3
VASTA Platform Limited
Unaudited Condensed Interim Consolidated
Financial Statements
Unaudited Condensed Interim Consolidated Statement of Financial Position
As of September 30, 2022 and December 31, 2021
In thousands of R$, unless otherwise stated
Liabilities | Note |
September 30, 2022 |
December 31, 2021 | ||
Current liabilities | |||||
Bonds and financing | 14 | 62,649 | 281,491 | ||
Lease liabilities | 16 | 28,426 | 26,636 | ||
Suppliers | 15 | 264,427 | 264,787 | ||
Income tax and social contribution payable | 17,820 | 16,666 | |||
Salaries and social contributions | 18 | 106,422 | 62,829 | ||
Contractual obligations and deferred income | 32,159 | 46,037 | |||
Accounts payable for business combination | 17 | 91,147 | 20,502 | ||
Other liabilities | 5,059 | 20,033 | |||
Other liabilities - related parties | 19 | 25,371 | 39,271 | ||
Total current liabilities | 633,480 | 778,252 | |||
Non-current liabilities | |||||
Bonds and financing | 14 | 748,963 | 549,735 | ||
Lease liabilities | 16 | 118,719 | 133,906 | ||
Accounts payable for business combination | 17 | 556,319 | 511,811 | ||
Provision for tax, civil and labor losses | 20 | 676,030 | 646,850 | ||
Contractual obligations and deferred income | 4,317 | 128 | |||
Other liabilities | 40,006 | 47,516 | |||
Total non-current liabilities | 2,144,354 | 1,889,946 | |||
Shareholder's Equity | |||||
Share capital | 22 | 4,820,815 | 4,820,815 | ||
Capital reserve | 77,924 | 61,488 | |||
Treasury shares | (23,880) | (23,880) | |||
Accumulated losses | (323,679) | (193,214) | |||
Total Shareholder's Equity | 4,551,180 | 4,665,209 | |||
Total Liabilities and Shareholder's Equity | 7,329,014 | 7,333,407 |
The accompanying notes are an integral part of this Unaudited Condensed Interim Consolidated Financial Statements.
4
VASTA Platform Limited
Unaudited Condensed Interim Consolidated
Financial Statements
Unaudited Condensed Interim Consolidated Statement of Profit or Loss and Other Comprehensive Income for the three and nine-month periods ended September 30, 2022 and 2021
In thousands of R$, except earnings for share
Note |
July 01 to September 30, 2022 |
September 30, 2022 |
July 01 to September 30, 2021 |
September 30, 2021 | |||||
Net revenue from sales and services | 23 | 188,724 | 759,261 | 127,192 | 549,159 | ||||
Sales | 180,422 | 732,647 | 124,125 | 526,697 | |||||
Services | 8,302 | 26,614 | 3,067 | 22,462 | |||||
Cost of goods sold and services | 24 | (91,855) | (301,058) | (79,381) | (260,910) | ||||
Gross profit | 96,869 | 458,203 | 47,811 | 288,249 | |||||
Operating income (expenses) | |||||||||
General and administrative expenses | 24 | (98,511) | (351,738) | (96,402) | (304,208) | ||||
Commercial expenses | 24 | (48,917) | (143,838) | (33,947) | (119,040) | ||||
Other income | 24 | 1,301 | 2,941 | 698 | 2,202 | ||||
Impairment losses on trade receivables | 9 and 24 | (4,692) | (17,131) | (3,790) | (21,998) | ||||
(150,819) | (509,766) | (133,441) | (443,044) | ||||||
Share of (loss) profit of equity-accounted investees | 11 | (2,150) | (2,150) | - | - | ||||
(Loss) before finance result and taxes | (56,100) | (53,713) | (85,630) | (154,795) | |||||
Finance result | |||||||||
Finance income | 25 | 19,174 | 56,339 | 10,532 | 21,793 | ||||
Finance costs | 25 | (68,426) | (196,291) | (28,686) | (69,174) | ||||
(49,252) | (139,952) | (18,154) | (47,381) | ||||||
Loss before income tax and social contribution | (105,352) | (193,665) | (103,784) | (202,176) | |||||
Income tax and social contribution | 21 | 29,358 | 63,200 | 32,963 | 63,641 | ||||
Loss for the period | (75,994) | (130,465) | (70,821) | (138,535) | |||||
Basic (loss) per share – R$ | 22.b | (0.91) | (1.56) | (0.85) | (1.67) | ||||
Diluted (loss) per share – R$ | 22.b | (0.91) | (1.56) | (0.85) | (1.67) |
The accompanying notes are an integral part of this Unaudited Condensed Interim Consolidated Financial Statements.
5
VASTA Platform Limited
Unaudited Condensed Interim Consolidated
Financial Statements
Unaudited Condensed Interim Consolidated Statement of Changes in Equity
For the nine-month periods ended September 30, 2022 and 2021
In thousands of R$, unless otherwise stated
Share capital | Share issuance costs | Share-based compensation reserve (granted) |
Share-based compensation reserve (vested) |
Treasury shares | Accumulated losses |
Total Shareholders' Equity/ Net Investment | |||||||
Balance as of December 31, 2021 | 4,961,988 | (141,173) | 30,445 | 31,043 | (23,880) | (193,214) | 4,665,209 | ||||||
Loss for the period | - | - | - | - | - | (130,465) | (130,465) | ||||||
Share based compensations granted and issued | - | - | 16,436 | - | - | - | 16,436 | ||||||
Share based compensation vested | - | - | (2,636) | 2,636 | - | - | - | ||||||
Balance as of September 30, 2022 (unaudited) | 4,961,988 | (141,173) | 44,245 | 33,679 | (23,880) | (323,679) | 4,551,180 | ||||||
Balance as of December 31,2020 | 4,961,988 | (141,173) | 38,962 | - | - | (74,460) | 4,785,317 | ||||||
Loss for the period | (138,535) | (138,535) | |||||||||||
Share based compensations granted and issued | - | - | 17,503 | - | - | - | 17,503 | ||||||
Share based compensation vested | - | - | (31,043) | 31,043 | - | - | - | ||||||
Acquisition of shares | (11,765) | - | (11,765) | ||||||||||
Balance as of September 30, 2021 (unaudited) | 4,961,988 | (141,173) | 25,442 | 31,043 | (11,765) | (212,995) | 4,652,520 |
The accompanying notes are an integral part of this Unaudited Condensed Interim Consolidated Financial Statements.
6
VASTA Platform Limited
Unaudited Condensed Interim Consolidated
Financial Statements
Unaudited Condensed Interim Consolidated Statement of Cash Flows
For the nine-month period ended September 30, 2022 and 2021
For the nine-month period ended September 30, |
||||||
Notes | 2022 | 2021 | ||||
CASH FLOWS FROM OPERATING ACTIVITIES | ||||||
Loss before income tax and social contribution | (193,665) | (202,176) | ||||
Adjustments for: | ||||||
Depreciation and amortization | 12 and 13 | 198,841 | 149,492 | |||
Share of loss (profit) of equity-accounted investees | 11 | 2,150 | - | |||
Impairment losses on trade receivables | 9 | 17,131 | 21,998 | |||
Reversal Tax, civil and labor losses | 20.a | (9,151) | (775) | |||
Interest on provision for tax, civil and labor losses | 20.a and 25 | 39,639 | 17,681 | |||
Provision for obsolete inventories | 10 | 27,896 | 13,936 | |||
Interest on bonds and financing | 25 | 77,636 | 24,272 | |||
Contractual obligations and right to returned goods | (12,875) | 2,115 | ||||
Interest on accounts payable for business combination | 25 | 47,511 | 811 | |||
Imputed interest on suppliers | 25 | 13,730 | 3,213 | |||
Bank and collection fees | 25 | 6,056 | - | |||
Other financial expenses and net interest | 25 | (15,710) | - | |||
Share-based payment expense | 16,436 | 17,503 | ||||
Interest on lease liabilities | 25 | 10,799 | 11,602 | |||
Interest on marketable securities incurred | 25 | (39,709) | (15,937) | |||
Cancellations of right-of-use contracts | 12 and 16 | 3,393 | (3,481) | |||
Residual value of disposals of property, plant and equipment and intangible assets | 12 and 13 | 3,718 | 3,411 | |||
193,826 | 43,665 | |||||
Changes in: | ||||||
Trade receivables | 159,242 | 262,120 | ||||
Inventories | (31,994) | (5,618) | ||||
Prepayments | (14,174) | (10,157) | ||||
Taxes recoverable | (20,329) | (3,049) | ||||
Judicial deposits and escrow accounts | (9,275) | (2,929) | ||||
Other receivables | 1,381 | (1,185) | ||||
Suppliers | (14,090) | (92,912) | ||||
Salaries and social charges | 43,563 | 1,062 | ||||
Tax payable | 6,502 | 7,775 | ||||
Contractual obligations and deferred income | 7,387 | (42,105) | ||||
Other receivables and liabilities from related parties | (509) | - | ||||
Other liabilities | (22,494) | (1,880) | ||||
Other liabilities - related parties | (13,901) | (96,041) | ||||
Interest on liabilities paid | 16 | (10,813) | (11,564) | |||
Payment of interest on bonds and financing | (92,722) | (24,946) | ||||
Income tax and social contribution paid | (2,736) | (1,167) | ||||
Payment of provision for tax, civil and labor losses | 20.a | (1,308) | (515) | |||
Net cash generated by operating activities | 177,556 | 20,553 | ||||
CASH FLOWS FROM INVESTING ACTIVITIES | ||||||
Acquisition of property, plant and equipment | 12 | (50,602) | (9,452) | |||
Additions of intangible assets | 13 | (66,819) | (36,763) | |||
Acquisition of subsidiaries net of cash acquired | 5 | (53,686) | (33,591) | |||
Proceeds from (purchase of) investment in marketable securities | 8 | (227,745) | 189,861 | |||
Net cash (applied in) generated in investing activities | (398,852) | 110,055 |
7
VASTA Platform Limited
Unaudited Condensed Interim Consolidated
Financial Statements
Unaudited Condensed Interim Consolidated Statement of Cash Flows
For the nine-month periods ended September30, 2022 and 2021
In thousands of R$, unless otherwise stated
CASH FLOWS FROM FINANCING ACTIVITIES | |||||
Suppliers- related parties | - | (3,676) | |||
Payments of loans from related parties | (254,885) | (20,884) | |||
Lease liabilities paid | 16 | (20,409) | (15,308) | ||
Acquisition of treasury shares | - | (11,765) | |||
Payments of bonds and financing | (759) | (477,651) | |||
Issuance of securities with related parties net of issuance costs | 250,000 | - | |||
Issuance of public bonds net of issuance costs | - | 497,000 | |||
Payments of accounts payable for business combination | 17 | (18,201) | (31,617) | ||
Net cash (applied in) financing activities | (44,254) | (63,901) | |||
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS | (265,550) | 66,706 | |||
Cash and cash equivalents at beginning of period | 7 | 309,893 | 311,156 | ||
Cash and cash equivalents at end of period | 7 | 44,343 | 377,862 | ||
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS | (265,550) | 66,706 |
The accompanying notes are an integral part of this Unaudited Condensed Interim Consolidated Financial Statements.
8
VASTA Platform Limited
Unaudited Condensed Interim Consolidated
Financial Statements
Notes to the Unaudited Condensed Interim Consolidated Financial Statements
(Amounts in thousands of R$, unless otherwise stated)
1. | Corporate information |
1.1. | The Company |
Vasta Platform Ltd. (herein referred to as the “Company”, or previously named “Vasta Platform”, “Vasta’s Parent Company” or “Business”) 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 has built a “Platform as a Service” solution or PaaS, with two main modules: Content & EdTech Platform and Digital Services. The Company’s Content & EdTech Platform combines a multi-brand and tech-enabled array with printed and digital content through long-term contracts with partner schools.
Since July 31, 2020, Vasta Platform Ltd. 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”.
1.2. | Significant events during the period |
(a) | Business Combination |
On January 14, 2022, the Company acquired the companies Phidelis Tecnologia Desenvolvimento de Sistemas Ltda. and MVP Consultoria e Sistemas Ltda., when the control over the entity was transferred upon all conditions established on the share purchase agreement and the liquidation was completed.
Phidelis is a complete platform of academic and financial management for K-12 schools, providing (i) software licensing and development, and (ii) messaging, retention, enrollment and default management for schools and students. In addition to aggregating a digital solution and bringing in new clients, Phidelis’ team will support the development of Vasta’s digital services platform.
(b) | Investments in other companies, without majority control |
b1. Investment in Educbank
On July 19, 2022, the Company completed through its wholly owned subsidiary, Somos Sistemas de Ensino S.A. (“Somos”), the acquisition of a minority investment in Educbank Gestão de Pagamentos Educacionais S.A. (“Educbank”). Vasta invested a total of R$87,651, for a 45% stake in Educbank, of which R$12,085 was paid in cash on the acquisition date, R$35,151 will be paid in 2-year installments (R$24,855 already paid to date) and R$40,415 was recorded at fair value and paid conditioned to the growth of students served by Educbank. Vasta does not have control, but it has significant influence over Educbank.
Educbank is the first financial ecosystem dedicated to K-12 schools, intended to expand access to quality education in Brazil, through services’ management and financial support to educational institutions by providing payment guaranty to school tuitions. This investment will enable Vasta to capture great value potential in the following years, by tapping the K-12 tuitions payment means, which total payment volume (TPV) surpasses R$70 billion per year. Educbank’s services complement Vasta’s digital services platform, which provides access to data, management tools and now working capital management, releasing time for school partners to focus on delivering education.
b2. Investment in Flex Flix
On July 5, 2022, the Company completed through its wholly owned subsidiary, Somos Sistemas de Ensino S.A. (“Somos”), the acquisition of a minority investment in Flex Flix Limited (“Flex Flix”). Vasta invested a total of R$ 8,271, for a 10% stake in Flex Flix, which was fully paid in cash as of the closing date. Vasta has no control and no significant influence.
9
VASTA Platform Limited
Unaudited Condensed Interim Consolidated
Financial Statements
Flex Flix is an internet-based education/edutainment company that operates a video streaming service, streaming in 3 languages (Spanish, English and Portuguese). The products on this platform cover high resolution, big data and artificial intelligence solutions.
2. | Basis of accounting |
These interim financial statements for the nine-month period ended September 30, 2022, have been prepared in accordance with 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, 2021 (‘last annual financial statements’). They do not include all of the information required for a complete set of financial statements prepared in accordance with 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.
These Unaudited Condensed Interim Consolidated Financial Statements 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 thousand, except as otherwise indicated.
(a) | Basis of consolidation and investments in other companies |
Company |
September 30, 2022 |
December 31, 2021 | ||||
Investment type | Interest % | Interest % | ||||
Somos Sistemas de Ensino S.A (“Somos Sistemas”) | Subsidiary | 100% | 100% | |||
Livraria Livro Fácil Ltda. (“Livro Fácil”) | Subsidiary | 100% | 100% | |||
A & R Comercio e Serviços de Informática Ltda. (“Pluri”) | Subsidiary | 100% | 100% | |||
Colégio Anglo São Paulo | Subsidiary | 100% | 100% | |||
Sociedade Educacional da Lagoa Ltda. (“SEL”) | Subsidiary | 100% | 100% | |||
EMME – Produções de Materiais em Multimídia Ltda. (“EMME”). | Subsidiary | 100% | 100% | |||
Editora De Gouges S.A (“De Gouges”) | Subsidiary | 100% | 100% | |||
Phidelis Tecnologia Desenvolvimento de Sistemas Ltda. (“Phidelis”) | Subsidiary | 100% | - | |||
MVP Consultoria e Sistemas Ltda. (“MVP”) | Subsidiary | 100% | - | |||
Educbank Gestão de Pagamentos Educacionais S.A. | Associate | 45% | - | |||
Flex Flix Limited | Investment | 10% | - |
3. | Use of judgements and estimates |
In preparing these interim financial statements, management has made judgements and estimates that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expense. Actual results may differ from these estimates.
The significant judgements 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.
10
VASTA Platform Limited
Unaudited Condensed Interim Consolidated
Financial Statements
Measurement of fair values
A number of the Group’s accounting policies require the measurement of fair values, for both financial and non-financial assets and liabilities.
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:
· | Level 1 - quoted prices (unadjusted) 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. If the inputs used to measure the fair value of an asset or a liability are categorized in 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.
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. Further information on the assumptions used in the valuation process of such items is provided in Note 5.
Fair value measurement assumptions are also used for determination of expenses with Share-based Compensation, which are disclosed in Note 22.
4. | Significant accounting policies |
The accounting policies applied in these interim financial statements are the same as those applied in the Group’s consolidated financial statements as at and for the year ended December 31, 2021. The accounting policies have been consistently applied to all consolidated companies. There are no new accounting policies that could be applicable since January 1, 2022, or early adopted in the Unaudited Condensed Interim Consolidated Financial Statements.
5. | Business Combinations |
As mentioned in Note 1.2, on January 14, 2022, the Company acquired the companies Phidelis Tecnologia Desenvolvimento de Sistemas Ltda. and MVP Consultoria e Sistemas Ltda. (“Phidelis”), when the control over the entity was transferred upon all conditions established on the share purchase agreement and the liquidation was completed.
The Company will pay the total amount of R$17,057, of which R$8,854 was paid in cash on the acquisition date and the remaining amount of R$8,203 to be paid in 2-year installments. The contract has an earn-out clause of R$20,751, which will be paid in 3 installments adjusted by the IPCA, linked to the achievement of performance targets between 2022 and 2025. Phidelis is a complete platform of academic and financial management for K-12 schools, providing (i) software licensing and development, and (ii) messaging, retention, enrollment and default management for schools and students. In addition to aggregating a digital solution and bringing in new clients, Phidelis’ team will support the development of Vasta’s digital services platform.
11
VASTA Platform Limited
Unaudited Condensed Interim Consolidated
Financial Statements
The acquisitions were accounted for using the acquisition method of accounting, i.e., the consideration transferred, and the net identifiable assets acquired, and liabilities assumed were measured at fair value, while goodwill is measured as the excess of consideration paid over those items. The following table presents the net identifiable assets acquired and liabilities assumed for each business combination in 2022:
Phidelis | MVP | Total | ||||
Current assets | ||||||
Cash and cash equivalents | 162 | 217 | 379 | |||
Trade receivables | 65 | 131 | 196 | |||
Taxes recoverable | 1 | 5 | 6 | |||
Total current assets | 228 | 353 | 581 | |||
Non-current assets | ||||||
Property, plant and equipment | 72 | 72 | ||||
Intangible assets - Software | 510 | 2,635 | 3,145 | |||
Total non-current assets | 510 | 2,707 | 3,217 | |||
Total Assets | 738 | 3,060 | 3,798 | |||
Current liabilities | ||||||
Salaries and social contributions | 24 | 6 | 30 | |||
Taxes payable | 34 | 10 | 44 | |||
Income tax and social contribution payable | - | 80 | 80 | |||
Other liabilities | 2 | 10 | 12 | |||
Total current liabilities | 60 | 106 | 166 | |||
Total liabilities | 60 | 106 | 166 | |||
Net identifiable assets at fair value (A) | 678 | 2,954 | 3,632 | |||
Total of Consideration transferred (B) | 5,999 | 31,809 | 37,808 | |||
Goodwill (B – A) | 5,321 | 28,855 | 34,176 |
From the date of acquisition to September 30, 2022, MVP and Phidelis contributed to the Unaudited Condensed Interim Consolidated Financial Statements net sales and services the amount of R$2,676 and R$1.152, respectively, and net profit in the amount of R$1.217 and R$414, respectively.
6. | Financial Instruments and risk management |
The Company holds the following financial instruments:
September 30, 2022 |
December 31, 2021 | |||
Assets - Amortized cost | ||||
Cash and cash equivalents | 44,343 | 309,893 | ||
Marketable Securities | 433,803 | 166,349 | ||
Trade receivables | 329,337 | 505,514 | ||
Other receivables | 724 | 2,105 | ||
Related parties – other receivables | 1,010 | 501 | ||
809,217 | 984,362 | |||
Liabilities - Amortized cost | ||||
Bonds and financing | 811,612 | 831,226 | ||
Lease liabilities | 147,145 | 160,542 | ||
Reverse Factoring | 129,256 | 97,619 | ||
Suppliers | 135,171 | 167,168 | ||
Accounts payable for business combination | 647,466 | 532,313 | ||
Other liabilities - related parties | 25,371 | 39,271 | ||
1,896,021 | 1,828,139 |
The Company’s financial instruments are recorded in the Unaudited Condensed Interim Consolidated Statement of Financial Position at amounts that are consistent with their fair values.
Credit Risk
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.
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, see Note 9) and financial activities that include reverse factoring deposits with banks and other financial institutions and other financial instruments contracted.
12
VASTA Platform Limited
Unaudited Condensed Interim Consolidated
Financial Statements
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 adequate credit losses are recorded. See Note 9.
7. | Cash and cash equivalents |
The balance of this account comprises the following amounts:
September 30, 2022 |
December 31, 2021 | |||
Cash | 124 | 100 | ||
Bank account | 6,709 | 17,772 | ||
Financial investments (i) | 37,510 | 292,021 | ||
44,343 | 309,893 |
(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 September 30, 2022 (105.2% on December 31, 2021). 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 |
The balance of this account comprises the following amounts:
Credit Risk |
September 30, 2022 |
December 31, 2021 | ||||
Financial bills (LF) | AAA | 8,061 | 1,640 | |||
National Treasury Notes (NTN) | AA | 49,871 | - | |||
National Treasury Notes (NTN) | AAA | 23,442 | - | |||
Financial treasury bills (LFT) and funds | AAA | 352,429 | 164,709 | |||
433,803 | 166,349 |
The average gross yield of securities is based on 105% CDI on September 30, 2022 (101% CDI on December 31, 2021).
13
VASTA Platform Limited
Unaudited Condensed Interim Consolidated
Financial Statements
9. | Trade receivables |
The balance of this account comprises the following amounts:
September 30, 2022 |
December 31, 2021 | |||
Trade receivables | 375,553 | 505,190 | ||
Related Parties (Note 19) | 3,034 | 46,824 | ||
( - ) Impairment losses on trade receivables | (49,250) | (46,500) | ||
329,337 | 505,514 |
a. | Maturities of trade receivables |
September 30, 2022 |
December 31, 2021 | |||
Not yet due | 236,507 | 417,233 | ||
Past due | ||||
Up to 30 days | 28,904 | 9,657 | ||
From 31 to 60 days | 21,430 | 10,331 | ||
From 61 to 90 days | 13,572 | 7,366 | ||
From 91 to 180 days | 32,075 | 21,154 | ||
From 181 to 360 days | 26,106 | 23,852 | ||
Over 360 days | 16,959 | 15,597 | ||
Total past due | 139,046 | 87,957 | ||
Related parties (note 19) | 3,034 | 46,824 | ||
( - ) Provision for impairment of trade receivables | (49,250) | (46,500) | ||
329,337 | 505,514 |
The gross book value 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 the Interim Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income upon collection.
b. | Changes on provision |
September 30, 2022 |
September 30, 2021 | |||
Opening balance | 46,500 | 32,055 | ||
Additions | 17,131 | 21,998 | ||
Write offs | (14,381) | (14,950) | ||
Closing balance | 49,250 | 39,103 |
14
VASTA Platform Limited
Unaudited Condensed Interim Consolidated
Financial Statements
10. | Inventories |
The balance of this account comprises the following amounts:
September 30, 2022 |
December 31, 2021 | |||
Finished products (i) | 138,920 | 160,318 | ||
Work in process | 73,559 | 51,152 | ||
Raw materials | 25,215 | 27,081 | ||
Imports in progress | 871 | 1,681 | ||
Right to returned goods (ii) | 3,696 | 2,131 | ||
242,261 | 242,363 |
(i) | These amounts are net of slow-moving items and net realizable value. |
(ii) | 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. |
a. | Changes in provision |
Changes in provision for losses with slow-moving inventories, net realizable value and provision for goods returned are broken down as follows:
September 30, 2022 |
September 30, 2021 | |||
Opening balance | 58,723 | 62,210 | ||
Additions | 27,896 | 13,936 | ||
Write-off of inventories | (15,490) | (14,429) | ||
Closing balance | 71,129 | 61,717 |
11. | Investments accounted for using the equity method |
The balance of this account comprises the following amounts:
September 30, 2022 | ||||||||||
Investment type | Interest % | Investment | Goodwill | Total | ||||||
Educbank | Associate | 45% | 54,406 | 31,095 | 85,501 |
Investments accounted for using the equity method:
EducBank | ||
As of December 31, 2021 | - | |
Acquisition | 87,651 | |
Equity method. | (2,150) | |
As of September 30, 2022 | 85,501 |
15
VASTA Platform Limited
Unaudited Condensed Interim Consolidated
Financial Statements
12. | Property, plant and Equipment |
The changes in property, plant and equipment are as follows:
September 30, 2022 | |||||||||||||
Cost |
IT equipment |
Furniture, equipment, and fittings | Property, buildings, and improvements | In progress | Rights of use assets | Land | Total | ||||||
As of December 31, 2021 | 44,180 | 38,116 | 54,508 | 677 | 251,694 | 391 | 389,566 | ||||||
Additions | 34,190 | 13,301 | 657 | 2,454 | 9,618 | - | 60,220 | ||||||
Additions by business combination | 54 | 78 | - | 7 | - | - | 139 | ||||||
Disposals / Cancelled contracts | - | (6) | - | (18) | (5,985) | - | (6,009) | ||||||
Transfers | 941 | 1,197 | (2,138) | - | - | - | - | ||||||
As of September 30, 2022 | 79,365 | 52,686 | 53,027 | 3,120 | 255,327 | 391 | 443,916 | ||||||
Depreciation |
|||||||||||||
As of December 31, 2021 | (27,565) | (29,726) | (36,636) | - | (109,957) | - | (203,884) | ||||||
Depreciation charge for the period | (11,245) | (3,798) | (4,031) | - | (22,223) | - | (41,296) | ||||||
Additions by business combination | - | (66) | - | - | - | - | (66) | ||||||
Depreciation of disposals | - | - | - | - | 2,513 | - | 2,512 | ||||||
Transfers | (108) | (1,575) | 1,683 | - | - | - | - | ||||||
As of September 30, 2022 | (38,918) | (35,165) | (38,984) | - | (129,667) | - | (242,734) |
Net book value | |||||||||||||
As of December 31, 2021 | 16,615 | 8,390 | 17,872 | 677 | 141,737 | 391 | 185,682 | ||||||
As of September 30,2022 | 40,447 | 17,521 | 14,043 | 3,120 | 125,660 | 391 | 201,182 | ||||||
Annual depreciation rates |
10% - 33% | 10% - 33% | 5% - 20% | - | 12% | - |
September 30, 2021 | |||||||||||||
Cost |
IT equipment |
Furniture, equipment, and fittings | Property, buildings, and improvements | In progress | Rights of use assets | Land | Total | ||||||
As of December 31, 2020 | 27,036 | 36,314 | 51,407 | 315 | 241,906 | 453 | 357,431 | ||||||
Additions | 5,317 | 1,168 | 877 | 2,062 | 15,361 | - | 24,785 | ||||||
Additions by business combination | 152 | 587 | - | - | - | - | 739 | ||||||
Renegotiation | (21,638) | - | - | ||||||||||
Disposals / Cancelled contracts | - | (124) | - | - | (3,287) | - | (3,411) | ||||||
Transfers | - | 62 | 400 | (400) | - | (62) | - | ||||||
As of September 30, 2021 | 32,505 | 38,007 | 52,684 | 1,977 | 232,342 | 391 | 379,544 | ||||||
Depreciation | |||||||||||||
As of December 31, 2020 | (25,557) | (26,406) | (31,429) | - | (82,033) | - | (165,425) | ||||||
Depreciation charge for the period | (1,226) | (2,484) | (3,888) | - | (19,894) | - | (27,492) | ||||||
As of September 30, 2021 | (26,783) | (28,890) | (35,317) | - | (101,927) | - | (192,917) |
Net book value | |||||||||||||
As of December 31, 2020 | 1,479 | 9,908 | 19,978 | 315 | 159,873 | 453 | 192,006 | ||||||
As of September 30, 2021 | 5,722 | 9,117 | 17,367 | 1,977 | 130,415 | 391 | 164,989 | ||||||
Annual depreciation rates | 10% - 33% | 10% - 33% | 5% - 20% | - | 12% | - | - |
The Company assesses at each reporting date, whether there is an indication that a property, plant 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, plant and equipment as of and for the nine-month periods ended September 30, 2022 and 2021.
16
VASTA Platform Limited
Unaudited Condensed Interim Consolidated
Financial Statements
13. | Intangible Assets and Goodwill |
The changes in intangible assets and goodwill were as follows:
September 30, 2022 | |||||||||||||||||
Software | Customer Portfolio | Trademarks | Trade Agreement |
Platform content production | Other Intangible assets | In progress | Goodwill | Total | |||||||||
As of December 31, 2021 | 247,325 | 1,197,381 | 631,935 | 247,622 |
73,877 | 39,421 | 3,991 | 3,694,879 | 6,136,431 | ||||||||
Additions | 11,725 | - | - | - | 41,803 | 19 | 9,672 | 3,600 | 66,819 | ||||||||
Additions by business combination | 3,145 | - | - | - | - | - | 34,176 | 37,321 | |||||||||
Disposals | - | - | - | - | - | (17) | - | (3,677) | (3,694) | ||||||||
Transfer | (2,085) | 1,281 | - | 1,353 | - | (1,100) | - | 551 | - | ||||||||
As of September 30, 2022 | 260,110 | 1,198,662 | 631,935 | 248,975 | 115,680 | 38,323 | 13,663 | 3,729,529 | 6,236,877 |
Amortization | |||||||||||||||||
As of December 31, 2021 | (151,281) | (275,276) | (85,658) | (4,127) | (49,583) | (32,139) | - | - | (598,064) | ||||||||
Amortization charge for the period | (23,623) | (76,190) | (20,482) | (18,572) | (18,627) | (50) | - | - | (157,544) | ||||||||
As of September 30, 2022 | (174,904) | (351,466) | (106,140) | (22,699) | (68,210) | (32,189) | - | - | (755,608) |
Net book value | |||||||||||||||||
As of December 31, 2021 | 96,044 | 922,105 | 546,277 | 243,495 | 24,294 | 7,282 | 3,991 | 3,694,879 | 5,538,367 | ||||||||
As of September 30, 2022 | 85,206 | 847,196 | 525,795 | 226,276 | 47,470 | 6,134 | 13,663 | 3,729,528 | 5,481,268 | ||||||||
Weighted average amortization rate | 15% | 8% | 5% | 8% | 33% | 33% | - | - |
September 30, 2021 | |||||||||||||||||
Software | Customer Portfolio | Trademarks | Trade Agreement
|
Platform content production | Other Intangible assets | In progress | Goodwill | Total | |||||||||
As of December 31, 2020 | 204,213 | 1,113,792 | 631,935 | - |
53,069 | 38,283 | 999 | 3,307,805 | 5,350,096 | ||||||||
Additions | 16,019 | - | - | - | 15,252 | - | 5,492 | - | 39,763 | ||||||||
Additions by business combination | 11,036 | 18,783 | - | - | - | 1,100 | - | 68,746 | 99,665 | ||||||||
Transfer | 2,996 | - | - | - | - | - | (2,996) | - | - | ||||||||
As of September 30, 2021 | 234,263 | 1,132,575 | 631,935 | - | 68,321 | 39,383 | 3,495 | 3,376,551 | 5,486,523 |
Amortization | |||||||||||||||||
As of December 31, 2020 | (120,798) | (184,934) | (58,349) | - | (29,248) | (32,040) | - | - | (425,369) | ||||||||
Amortization charge for the period | (20,733) | (66,022) | (20,482) | - | (14,712) | (51) | - | - | (122,000) | ||||||||
As of September 30, 2021 | (141,531) | (250,956) | (78,831) | - | (43,960) | (32,091) | - | - | (547,369) |
Net book value | |||||||||||||||||
As of December 31, 2020 | 83,414 | 928,858 | 573,586 | - | 23,821 | 6,243 | 999 | 3,307,805 | 4,924,726 | ||||||||
As of September 30, 2021 | 92,732 | 881,619 | 553,104 | - | 24,361 | 7,293 | 3,495 | 3,376,551 | 4,942,155 |
Weighted average amortization rate |
15% | 8% | 5% | 8% | 33% | 33% | - | - |
Impairment test for goodwill
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, 2021.
There were no indications of impairment for the nine-month periods ended September 30, 2022.
17
VASTA Platform Limited
Unaudited Condensed Interim Consolidated
Financial Statements
14. | Bonds and financing |
The balance of bonds and financing comprises the following amounts:
September 30, 2022 |
December 31, 2021 | Interest rate | ||||
Bonds | ||||||
Private Bonds – 5th Issuance - series 2 (Related parties – note 19) | 51,869 | 104,844 | CDI + 1.00% p.a. | |||
Private Bonds – 6th Issuance - series 2 | - | 210,920 | CDI + 1.70% p.a. | |||
Private Bonds – 9th Issuance - series 2 (Related parties – note 19) | 250,000 | - | CDI + 2,40% p.a. | |||
Bonds – 1st Issuance – single | 509,743 | 514,574 | CDI + 2.30% p.a. | |||
Financing and Lease Liabilities - Mind Makers | - | 888 | TJLP + 5% p.a. | |||
811,612 | 831,226 | |||||
Current | 62,649 | 281,491 | ||||
Non-current | 748,963 | 549,735 |
See below the bonds outstanding on September 30, 2022:
Subscriber | Related Parties | Related Parties | Third parties | Related Parties | ||||
Issuance | 5th | 6th | 1st | 9th | ||||
Series | 2nd Series | 2nd Series | Single Series | 2nd Series | ||||
Date of issuance | 08/15/2018 | 08/15/2017 | 08/06/2021 | 28/09/2022 | ||||
Maturity Date | 08/15/2023 | 08/15/2022 | 08/05/2024 | 28/09/2025 | ||||
First payment after | 60 months | 60 months | 35 months | 36 months | ||||
Remuneration payment | Semi-annual interest | Semi-annual interest | Semi-annual interest | Semi-annual interest | ||||
Financials charges | CDI + 1.00% p.a. | CDI + 1.70% p.a. | CDI + 2.30% p.a. | CDI + 2.40% p.a. | ||||
Principal amount (in millions of R$) | 100 | 200 | 500 | 250 |
15. | Suppliers |
The balance of this account comprises the following amounts:
September 30, 2022 |
December 31, 2021 | |||
Local suppliers | 120,979 | 132,124 | ||
Related parties (note 19) | 6,067 | 19,534 | ||
Copyright | 8,125 | 15,510 | ||
Reverse Factoring (i) | 129,256 | 97,619 | ||
264,427 | 264,787 |
(i) | Some of the Company’s domestic suppliers sell their products with extended payment terms and may subsequently transfer their receivables due by the Company to financial institutions without right of recourse, in a transaction characterized as “Reverse Factoring”. The Company charged interest over the payment term at a rate that is commensurate with its own credit risk. The reverse factoring presents maturity dates from one year. |
18
VASTA Platform Limited
Unaudited Condensed Interim Consolidated
Financial Statements
16. | Lease liabilities |
The lease agreements have an average term of 7 years and weighted average rate of 14.32% p.a.
September 30, 2022 |
September 30, 2021 | |||
Opening balance | 160,542 | 173,103 | ||
Additions for new lease agreements (i) | 1,268 | 15,361 | ||
Renegotiation | 8,350 | (21,638) | ||
Cancelled contracts | (2,592) | (3,481) | ||
Renegotiation | - | (28) | ||
Interest | 10,799 | 11,602 | ||
Payment of interest | (10,813) | (11,564) | ||
Payment of principal | (20,409) | (15,308) | ||
Closing balance | 147,145 | 148,047 | ||
Current liabilities | 28,426 | 18,672 | ||
Non-current liabilities | 118,719 | 129,375 | ||
147,145 | 148,047 |
(i) | Refers to new lease agreements which the Company has embedded part of its digital learning solutions. Those lease agreements (digital learning) refer to lease terms of 36 months, with rates negotiated in the range from 10.3% p.a. to 10.88% p.a. |
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.
The Company recognized rent expense from short-term leases and low-value assets of R$ 16,413 for the nine-month period ended September 30, 2022 (September 30, 2021: R$ 14,459).
17. | Accounts payable for business combination |
The balance of this account comprises the following amounts:
September 30, 2022 |
December 31, 2021 | |||
Pluri | 3,540 | 3,251 | ||
Mind Makers | 7,670 | 7,044 | ||
Livro Fácil | 10,222 | 14,055 | ||
Meritt | 426 | 3,347 | ||
SEL | 29,329 | 26,935 | ||
Redação Nota 1000 | 5,988 | 7,230 | ||
EMME | 10,751 | 12,780 | ||
Editora De Gouges | 498,361 | 457,671 | ||
Phidelis | 30,149 | - | ||
Educbank | 51,030 | - | ||
647,466 | 532,313 | |||
Current | 91,147 | 20,502 | ||
Non-current | 556,319 | 511,811 | ||
647,466 | 532,313 |
19
VASTA Platform Limited
Unaudited Condensed Interim Consolidated
Financial Statements
18. | Salaries and Social Contribution |
The balance of this account comprises the following amounts:
September 30, 2022 |
December 31, 2021 | |||
Salaries payable | 25,792 | 22,348 | ||
Social contribution payable (i) | 29,670 | 23,926 | ||
Provision for vacation pay and 13th salary | 32,794 | 10,616 | ||
Provision for profit sharing (ii) | 18,166 | 5,923 | ||
Others | - | 16 | ||
106,422 | 62,829 |
(i) | Refers to the effect of social contribution over restricted share unit’s compensation plans. The Company records the taxes over the shares monthly according to the Company’s share price. |
(ii) | The provision for profit sharing is based on qualitative and quantitative metrics determined by Management. |
19. | Related parties |
The Company is part of Cogna group and some of the Company’s transactions and arrangements involve entities that belong to the Cogna. The effect of these transactions is reflected in these Unaudited Condensed Interim Consolidated Financial 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.
The balances and transactions between the Company and its affiliates have been eliminated in the Company’s Unaudited Condensed Interim Consolidated Financial Statements. The balances and transactions between related parties are shown below:
20
VASTA Platform Limited
Unaudited Condensed Interim Consolidated
Financial Statements
September 30, 2022 | ||||||||||||
Other receivables (i) |
Trade receivables (Note 9) |
Indemnification asset (Note 20.b) |
Other liabilities - related parties (ii) | Suppliers (note 15) | Bonds (note 14) |
|||||||
Cogna Educação S.A. | - | - | 174,737 | 3,828 | - | 301,869 | ||||||
Editora Atica S.A. | - | 826 | - | 5,797 | 3,929 | - | ||||||
Editora E Distribuidora Educacional S.A. | - | - | - | 15,746 | - | - | ||||||
Editora Scipione S.A. | - | 672 | - | - | 419 | - | ||||||
Educação Inovação e Tecnologia S.A. | - | - | - | - | - | - | ||||||
Maxiprint Editora Ltda. | - | 105 | - | - | 2 | - | ||||||
Saber Serviços Educacionais S.A. | 15 | - | - | - | 99 | - | ||||||
Saraiva Educacao S.A. | 635 | 1,431 | - | - | 1,039 | - | ||||||
SGE Comercio De Material Didatico Ltda. | - | - | - | - | 579 | - | ||||||
Somos Idiomas S.A. | 108 | - | - | - | - | - | ||||||
Others | 252 | |||||||||||
1,010 | 3,034 | 174,737 | 25,371 | 6,067 | 301,869 |
(i) | Refers substantially to accounts receivable generated from sharing costs e.g., IT services shared by the Company to Cogna. |
(ii) | Refers substantially to accounts payable by sharing expenses e.g., property leasing, personnel and IT licenses shared with Cogna. |
21
VASTA Platform Limited
Unaudited Condensed Interim Consolidated
Financial Statements
December 31, 2021 | ||||||||||||
Other receivables (i) | Trade receivables (Note 9) |
Indemnification asset (Note 20.b) | Other liabilities - related parties (ii) | Suppliers (note 15) | Bonds
(note 14) |
|||||||
Acel Adminstração de Cursos Educacionais Ltda. | - | 6,482 | - | - | 474 | - | ||||||
Anhanguera Educacional Participacoes S.A. | - | 413 | - | - | - | - | ||||||
Centro Educacional Leonardo Da Vinci SS | - | - | - | - | 6 | - | ||||||
Cogna Educação S.A. | - | - | 160,470 | 3,021 | - | 315,764 | ||||||
Colégio Ambiental Ltda. | - | 805 | - | - | - | - | ||||||
Colégio JAO Ltda. | - | 4,974 | - | - | 33 | - | ||||||
Colegio Manauara Lato Sensu Ltda. | - | 3,291 | - | - | 458 | - | ||||||
Colegio Manauara Cidade Nova Ltda. | 395 | - | ||||||||||
Colegio Visao Eireli | - | 132 | - | - | 13 | - | ||||||
Colégio Cidade Ltda. | - | 397 | - | - | 15 | - | ||||||
COLEGIO DO SALVADOR LTDA. | 1 | - | ||||||||||
Curso e Colégio Coqueiro Ltda. | - | 434 | - | - | 20 | - | ||||||
ECSA Escola A Chave do Saber Ltda. | - | 1,444 | - | - | 16 | - | ||||||
Editora Atica S.A. | - | 2,207 | - | 20,040 | 9,240 | - | ||||||
Editora E Distribuidora Educacional S.A. | - | 436 | - | 15,754 | 88 | - | ||||||
Editora Scipione S.A. | - | 445 | - | 211 | 556 | - | ||||||
Educação Inovação e Tecnologia S.A. | - | - | - | 128 | - | - | ||||||
Escola Mater Christi Ltda. | - | 765 | - | - | 139 | - | ||||||
Escola Riacho Doce Ltda. | - | - | - | - | 24 | - | ||||||
Maxiprint Editora Ltda. | - | 1,205 | - | 117 | 76 | - | ||||||
Nucleo Brasileiro de Estudos Avançados Ltda. | - | 420 | - | - | 45 | - | ||||||
Papelaria Brasiliana Ltda. | - | 644 | - | - | - | - | ||||||
Pitagoras Sistema De Educacao Superior Ltda. | - | 76 | - | - | - | - | ||||||
Saber Serviços Educacionais S.A. | 14 | 7,269 | - | - | 578 | - | ||||||
Saraiva Educacao S.A. | 365 | 1,179 | - | - | 5,136 | - | ||||||
SGE Comercio De Material Didatico Ltda. | - | - | - | - | 1,687 | - | ||||||
Sistema P H De Ensino Ltda. | - | 4,421 | - | - | 177 | - | ||||||
Sociedade Educacional Alphaville Ltda. | - | 1,257 | - | - | 1 | - | ||||||
Sociedade Educacional Doze De Outubro Ltda. | - | 734 | - | - | 47 | - | ||||||
Sociedade Educacional Parana Ltda. | - | 91 | - | - | 11 | - | ||||||
Somos Idiomas S.A. | 122 | - | - | - | - | - | ||||||
Somos Operações Escolares S.A. | - | 3,305 | - | - | 29 | - | ||||||
SSE Serviços Educacionais Ltda. | - | 3,602 | - | - | 665 | - | ||||||
501 | 46,824 | 160,470 | 39,271 | 19,534 | 315,764 |
(i) | Refers substantially to accounts receivable generated from sharing costs e.g., IT services shared by the Company to Cogna. |
(ii) | Refers substantially to accounts payable by sharing expenses e.g., property leasing, personnel and IT licenses shared with Cogna. |
22
VASTA Platform Limited
Unaudited Condensed Interim Consolidated
Financial Statements
Nine months ended September 30, 2022 | Nine months ended September 30, 2021 | |||||||||||||||
Transactions held: | Revenues | Finance costs | Cost Sharing | Sublease (note 24) | Revenues | Finance costs | Cost Sharing | Sublease (note 24) | ||||||||
Acel Administracao De Cursos Educacionais Ltda. | - | - | - | - | 1,204 | - | - | - | ||||||||
Centro Educacional Leonardo Da Vinci SS | - | - | - | - | 41 | - | - | - | ||||||||
Cogna Educação S.A. | - | 25,315 | - | - | - | 18,844 | - | - | ||||||||
Colégio Ambiental Ltda. | - | - | - | - | 443 | - | - | - | ||||||||
Colégio Cidade Ltda. | - | - | - | - | 108 | - | - | - | ||||||||
Colegio JAO Ltda. | - | - | - | - | 546 | - | - | - | ||||||||
Colégio Manauara Lato Sensu Ltda. | - | - | - | - | 641 | - | - | - | ||||||||
Colégio Motivo Ltda. | - | - | - | - | 35 | - | - | - | ||||||||
Colégio Visão Ltda. | - | - | - | - | 287 | - | - | - | ||||||||
Cursos e Colégio Coqueiros Ltda. | - | - | - | - | 242 | - | - | - | ||||||||
Ecsa Escola A Chave Do Saber Ltda. | - | - | - | - | 148 | - | - | - | ||||||||
Editora Atica S.A. | 9,919 | - | 4,327 | 6,165 | 2,852 | - | 4,602 | 8,901 | ||||||||
Editora E Distribuidora Educacional SA. | - | - | 22,155 | - | - | - | 23,561 | - | ||||||||
Editora Scipione SA. | 1,908 | - | - | - | 1,076 | - | - | - | ||||||||
Escola Mater Christi | - | - | - | - | 35 | - | - | - | ||||||||
Escola Riacho Doce Ltda. | - | - | - | - | 39 | - | - | - | ||||||||
Maxiprint Editora Ltda. | 3,882 | - | - | - | - | - | - | - | ||||||||
Nucleo Brasileiro de Estudos Avancados Ltda. | - | - | - | - | 63 | - | - | - | ||||||||
Papelaria Brasiliana Ltda. | - | - | - | - | 46 | - | - | - | ||||||||
Saber Serviços Educacionais S.A. | 41 | - | - | - | 189 | - | - | - | ||||||||
Saraiva Educacao SA. | 3,226 | - | - | 1,484 | 2,077 | - | - | 2,271 | ||||||||
Sistema P H De Ensino Ltda. | - | - | - | - | 2,628 | - | - | - | ||||||||
Sociedade Educacional Alphaville Ltda. | - | - | - | - | 196 | - | - | - | ||||||||
Sociedade Educacional Doze De Outubro Ltda. | - | - | - | - | 237 | - | - | - | ||||||||
Sociedade Educacional Neodna Cuiaba Ltda. | - | - | - | - | 224 | - | - | - | ||||||||
SOE Operações Escolares SA. | - | - | - | - | 543 | - | - | - | ||||||||
Somos Idiomas Ltda. | - | - | - | 1,158 | - | - | - | 195 | ||||||||
Somos Operações Escolares SA. | - | - | - | - | 243 | - | - | - | ||||||||
SSE Serviços Educacionais Ltda. | 437 | - | - | - | 164 | - | - | - | ||||||||
19,413 | 25,315 | 26,482 | 8,807 | 14,307 | 18,844 | 28,163 | 11,367 |
23
VASTA Platform Limited
Unaudited Condensed Interim Consolidated
Financial Statements
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.
The Key management personnel compensation expenses comprised the following:
July 01, to September 30, 2022 |
July 01, to September 30, 2021 | |||
Short-term employee benefits | 2,728 | 2,749 | ||
Share-based compensation plan | 4,406 | 5,367 | ||
7,134 | 8,116 |
20. | 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.
a. | Composition of contingent liabilities |
September
30, 2022 |
December 31, 2021 | |||
Proceedings whose likelihood of loss is probable | ||||
Tax proceedings (i) | 642,651 | 607,084 | ||
Labor proceedings (ii) | 31,748 | 38,159 | ||
Civil proceedings | 1,631 | 376 | ||
676,030 | 645,619 | |||
Liabilities assumed in Business Combination | ||||
Civil proceedings | - | 1,231 | ||
- | 1,231 | |||
Total of provision for tax, civil and labor losses | 676,030 | 646,850 |
(i) Primarily refers to income tax positions taken by Somos (Vasta Predecessor) and the Company (Successor) 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.
24
VASTA Platform Limited
Unaudited Condensed Interim Consolidated
Financial Statements
The changes in provision for the nine months period ended September 30, 2022, and 2021 were as follows:
December 31, 2021 |
Additions | Reversals | Interest | Payments |
September 30, 2022 | |||||||
Tax proceedings | 607,084 | 1,019 | (2,461) | 38,028 | (1,019) | 642,651 | ||||||
Labor proceedings | 38,159 | 1,773 | (9,670) | 1,595 | (109) | 31,748 | ||||||
Civil proceedings | 1,607 | 212 | (24) | 16 | (180) | 1,631 | ||||||
Total | 646,850 | 3,004 | (12,155) | 39,639 | (1,308) | 676,030 |
December 31, 2020 |
Additions By Business Combination |
Additions | Reversals | Interest | Payments | September 30, 2021 | ||||||||
Tax proceedings | 575,724 | 7,217 | - | (13) | 15,141 | (13) | 598,056 | |||||||
Labor proceedings | 37,896 | 3,766 | 3,528 | (4,327) | 2,507 | (439) | 42,931 | |||||||
Civil proceedings | 313 | - | 58 | (21) | 33 | (63) | 320 | |||||||
Total | 613,933 | 10,983 | 3,586 | (4,361) | 17,681 | (515) | 641,307 |
b. | Judicial Deposits and Escrow Accounts |
Judicial deposits and escrow accounts recorded as non-current assets are as follows:
September 30, 2022 |
December 31, 2021 | |||
Tax proceedings | 1,448 | 2,300 | ||
Indemnification asset -Former owner | 1,692 | 1,998 | ||
Indemnification asset – Related Parties – note 19 (i) | 174,737 | 160,470 | ||
Escrow-account (ii) | 10,222 | 14,055 | ||
188,099 | 178,824 |
(i) Refers to an indemnification asset of the seller in connection with the acquisition of Somos (Vasta’s Predecessor) by Cogna Group (Vasta’s Parent Company) and recognized at the date of the business combination, to indemnify the Company for any and all losses that may be incurred in connection with all contingencies or lawsuits, substantially tax proceedings related to business combinations.
(ii) Refers to guarantees received because of business combinations, in connection with contingencies whose likelihood of loss is probable, and for which the former owners are liable. According to the Sale Agreement, these former owners will reimburse the Company in case payments are required and if those contingencies materialize.
21. | Current and Deferred Income Tax and Social Contribution |
Income tax expense is recognized at an amount determined by multiplying profit (loss) before tax for the interim reporting period by the Company’s best estimate of the weighted-average annual income tax rate expected for the full financial year, adjusted for the tax effect of certain items recognized in full in the interim period. As such, the effective rate in the Unaudited Interim Condensed Consolidated Financial statements may differ from the Consolidated estimate of the effective tax rate for the annual financial statements. The Company’s effective tax rates for the period ended September 30, 2022 and 2021 were 33% and 31% respectively (Combined nominal statutory rate of income tax and social contribution is 34%).
25
VASTA Platform Limited
Unaudited Condensed Interim Consolidated
Financial Statements
22. | Shareholder’s Equity |
a. | Share Capital |
As of September 30, 2022, the Company’s share capital is represented by 83,604,793 (83,393,851 on December 31, 2021), of which 64.436,093 are Class B shares held by Cogna Group (which holds 97.1% of the combined voting power) and 19,168,700 are shares held by others (which represents 2.9% of the combined voting power).
As a result, Cogna continues to control the outcome of all decisions at our shareholders’ meetings and to elect a majority of the members of our board of directors.
The Company’s shareholders on September 30, 2022 are as follows:
In units | ||||||
Company Shareholders | Class A | Class B | Total | |||
Cogna Group | - | 64,436,093 | 64,436,093 | |||
Free Float | 18,168,700 | - | 18,168,700 | |||
Treasury shares | 1,000,000 | - | 1,000,000 | |||
Total (%) | 22.93% | 77.07% | 83,604,793 |
b. | Earnings per share |
The basic earnings (loss) per share is measured by dividing the profit attributable to the Company’s shareholders by the weighted average common shares issued 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.
July 01 to September 30, 2022 |
September 30, 2022 |
July 01 to September 30, 2021 |
September 30, 2021 | |||||
Loss Attributable to Shareholder´s | (75,994) | (130,465) | (70,821) | (138,535) | ||||
Weighted average number of ordinary shares outstanding (thousands) (i) | 83,605 | 83,605 | 83,068 | 83,068 | ||||
Effects of dilution of ordinary potential shares- weighted averaged (thousands) | ||||||||
Share based- compensation ("Long term Plan") (ii) | 815 | 815 | 829 | 829 | ||||
Share based plan Migrated from Cogna to Vasta (iii) | 20 | 20 | 22 | 22 | ||||
Total dilution effect | 835 | 835 | 851 | 851 | ||||
Basic loss per share - R$ | (0.91) | (1.56) |
(0.85)
|
(1.67)
| ||||
Diluted loss per share - R$ | (0.91) | (1.56) | (0.85) | (1.67) |
(i) The Company has not changed its number of voting rights since the IPO on September 31, 2020.
(ii) Refers to the share-based payments plans (“ILP”) and Bonus IPO.
(iii) Refers to the Cogna Plan migrated to the Vasta Plan as a result of the restructuring in 2020.
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VASTA Platform Limited
Unaudited Condensed Interim Consolidated
Financial Statements
c. | Capital reserve - Share-based compensation |
The Company as of September30, 2022 had 2 (two) share based compensation plans and 1 (one) bonus plan paid in restricted share units, being:
a) | Cogna Plan - On September 3, 2018, Cogna’s shareholders approved a restricted share-based compensation plan, which may grant rights to receive a maximum number of restricted shares not exceeding 19,416,233 shares, corresponding to 1.2% of Cogna’s total share capital at the Plan’s approval date, excluding shares held in treasury on such date. This program should be wholly settled with delivery of Cogna’s shares. Cogna’s obligation to transfer the restricted shares under the Plan, in up to 10 days from the end of the vesting period, is contingent upon the continuing employment relationship of the employee or officer, as appropriate, for a period of three years from the date the respective agreement is signed. The number of outstanding restricted shares as of September30, 2022 and December 31, 2021, was 155,919. |
b) | 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. |
c) | Bonuses paid in quotas of restricted shares – “Recognized Award” - The Company granted and assigned 210,942 in 2022 to certain managers based on recognized performance. This program was fully settled with the delivery of shares. |
23. | Net Revenue from Sales and Services |
The breakdown of net sales of the Company for the three months periods ended September 30, 2022 and 2021 is shown below. Revenue is broken down into the categories that, according to the Company the nature, amount, timing and uncertainty of revenue through provisions as follows:
July 01, to September 30, 2022 |
September 30, 2022 |
July 01, to September 30, 2021 |
September 30, 2021 | |||||
Content & EdTech Platform | ||||||||
Learning Systems | 133,966 | 480,104 | 64,080 | 308,839 | ||||
Textbooks | 23,239 | 87,109 | 14,454 | 72,184 | ||||
Complementary Education | 4,291 | 72,530 | 25,262 | 58,495 | ||||
Other services | 7,892 | 25,611 | 10,701 | 25,357 | ||||
169,388 | 665,354 | 114,496 | 464,874 | |||||
Digital Service platform | ||||||||
E-commerce | 18,926 | 92,904 | 12,483 | 84,072 | ||||
Other digital services | 410 | 1,003 | 213 | 213 | ||||
19,336 | 93,907 | 12,696 | 84,285 | |||||
Sales | 180,422 | 732,647 | 124,125 | 526,697 | ||||
Service | 8,302 | 26,614 | 3,067 | 22,462 | ||||
Net Revenue | 188,724 | 759,261 | 127,192 | 549,159 |
27
VASTA Platform Limited
Unaudited Condensed Interim Consolidated
Financial Statements
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 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. Purchases through the Livro Fácil e-commerce platform are also very intense during the back-to-school period, between November, when school enrollment takes place and families plan to anticipate the purchase of products and services, and February of the following year, when classes are about to start. Thus, e-commerce revenue is mainly concentrated in the first and fourth quarters of the year.
24. | Costs and Expenses by Nature |
July 01 to September 30, 2022 |
September 30, 2022 |
July 01 to September 30, 2021 |
September 30, 2021 | |||||
Salaries and payroll charges | (69,519) | (216,692) | (57,440) | (193,286) | ||||
Raw materials and productions costs | (23,581) | (124,557) | (28,745) | (108,203) | ||||
Editorial costs | (8,369) | (28,743) | (25,431) | (55,805) | ||||
Depreciation and amortization | (66,949) | (198,841) | (50,593) | (149,492) | ||||
Copyright | (8,311) | (41,877) | (9,846) | (34,694) | ||||
Advertising and publicity | (18,364) | (67,750) | (15,445) | (56,590) | ||||
Utilities, cleaning and security | (5,267) | (16,972) | (7,269) | (21,636) | ||||
Rent and condominium fees | (2,756) | (16,413) | (3,055) | (14,459) | ||||
Third-party services | (1,626) | (25,278) | (6,515) | (25,152) | ||||
Travel | (5,934) | (18,078) | (2,659) | (4,908) | ||||
Consulting and advisory services | (10,302) | (26,255) | (3,287) | (14,749) | ||||
Impairment losses on trade receivables | (4,692) | (17,131) | (3,790) | (21,998) | ||||
Material | (1,407) | (4,164) | (593) | (1,858) | ||||
Taxes and contributions | (546) | (1,076) | (309) | (1,532) | ||||
Reversal for tax, civil and labor losses, net | 2,290 | 9,151 | (74) | 775 | ||||
Provision (reverse) for obsolete inventories, net | (21,786) | (27,896) | (5,289) | (13,936) | ||||
Income from lease and sublease agreements with related parties | 3,145 | 8,807 | 6,820 | 11,367 | ||||
Other income | 1,300 | 2,941 | 698 | 2,202 | ||||
(242,674) | (810,824) | (212,822) | (703,954)) | |||||
Cost of sales and services | (91,855) | (301,058) | (79,381) | (260,910) | ||||
Commercial expenses | (48,917) | (143,838) | (33,947) | (119,040) | ||||
General and administrative expenses | (98,511) | (351,738) | (96,402) | (304,208) | ||||
Impairment loss on accounts receivable | (4,692) | (17,131) | (3,790) | (21,998) | ||||
Other operating income | 1,301 | 2,941 | 698 | 2,202 | ||||
(242,674) | (810,824) | (212,822) | (703,954) |
28
VASTA Platform Limited
Unaudited Condensed Interim Consolidated
Financial Statements
25. | Finance result |
July 01 to September 30, 2022 |
September 30, 2022 |
July 01 to September 30, 2021 |
September 30, 2021 | |||||
Finance income | ||||||||
Income from financial investments and marketable securities | 12,905 | 39,709 | 7,860 | 15,937 | ||||
Other finance income | 6,269 | 16,630 | 2,672 | 5,856 | ||||
19,174 | 56,339 | 10,532 | 21,973 | |||||
Finance costs | ||||||||
Interest on bonds and financing | (25,997) | (77,636) | (11,332) | (24,272) | ||||
Interest on accounts payable for business combination | (17,720) | (47,511) | - | - | ||||
Imputed interest on suppliers | (5,327) | (13,730) | (430) | (3,213) | ||||
Bank and collection fees | (446) | (6,056) | (5,871) | (8,368) | ||||
Interest on provision for tax, civil and labor losses | (14,052) | (39,639) | (7,406) | (17,681) | ||||
Interest on Lease Liabilities | (3,535) | (10,799) | (2,542) | (10,602) | ||||
Other finance costs | (1,349) | (920) | (1,105) | (5,038) | ||||
(68,426) | (196,291) | (28,686) | (69,174) | |||||
Financial Result (net) | (49,252) | (139,952) | (18,154) | (47,381) |
26. | Segment Reporting |
Information reported to the Chief Operating Decision Maker (CODM) for the purposes of resource allocation and assessment of segment performance is focused on revenue, “profit (loss) before finance result and tax”, assets and liabilities segregated by the nature of the services provided to the Company’ customers. Thus, the reportable segments are: (i) Content & EdTech Platform; and (ii) Digital Platform.
· | Content & EdTech platform derives its results from core and complementary educational content solutions through digital and printed content, including textbooks, learning systems and other complementary educational services. |
· | Digital Platform aims to unify the entire school administrative ecosystem, allowing private schools to add multiple learning strategies and help them focus on education, through the physical and digital e-commerce platform (Livro Fácil) and other digital services from Company. Operations related to this segment began with the acquisition of Livro Fácil. In August 2021, the Company acquired EMME, which has its digital platform focused on the production of educational marketing material for the Company's partner schools, the companies MVP Consultoria e Sistemas Ltda. and Phidelis Tecnologia Desenvolvimento de Systems Ltd. |
Due to the nature of the Company’s e-commerce platform, the Content & EdTech Platform segment sells its printed and digital content to the Digital Services segment. These transactions are priced on an arm’s length basis and are to be settled in cash. However, the eliminations made in preparing the consolidated financial statements are included in the measure of the segment’s profit or loss that is used by the CODM, and therefore the amounts presented herein are net of such intersegment transactions.
29
VASTA Platform Limited
Unaudited Condensed Interim Consolidated
Financial Statements
The following table presents the Company’s revenue, its reconciliation to “profit (loss) before finance result and tax”, assets and liabilities by reportable segment. No other information is used by the CODM when assessing segment performance:
July 01 to September 30, 2022 | ||||||
Content & EdTech Platform | Digital Services Platform | Total | ||||
Net revenue from sales and services | 169,388 | 19,336 | 188,724 | |||
Cost of goods sold and services | (60,654) | (31,201) | (91,855) | |||
Operating income (expenses) | ||||||
General and administrative expenses | (97,589) | (922) | (98,511) | |||
Commercial expenses | (48,647) | (270) | (48,917) | |||
Other operating income (expenses) | 1,328 | (27) | 1,301 | |||
Impairment losses on trade receivables | (4,643) | (49) | (4,692) | |||
Segment results before equity, financial results and taxes | (40,817) | (13,133) | (53,950) |
September 30, 2022 | ||||||
Content & EdTech Platform | Digital Services Platform | Total | ||||
Net revenue from sales and services | 665,354 | 93,907 | 759,261 | |||
Cost of goods sold and services | (209,604) | (91,454) | (301,058) | |||
Operating income (expenses) | ||||||
General and administrative expenses | (341,337) | (10,401) | (351,738) | |||
Commercial expenses | (132,975) | (10,863) | (143,838) | |||
Other operating income (expenses) | 2,994 | (53) | 2,941 | |||
Impairment losses on trade receivables | (17,082) | (49) | (17,131) | |||
Segment results before equity, financial results and taxes | (32,650) | (18,913) | (51,563) | |||
Assets | 7,210,137 | 118,877 | 7,329,014 | |||
Current and non-current liabilities | 2,720,811 | 57,023 | 2,777,834 |
July 01 to September 30, 2021 | ||||||
Content & EdTech Platform | Digital Services Platform | Total | ||||
Net revenue from sales and services | 114,496 | 12,696 | 127,192 | |||
Cost of goods sold and services | (69,295) | (10,087) | (79,381) | |||
Operating income (expenses) | ||||||
General and administrative expenses | (81,643) | (14,759) | (96,402) | |||
Commercial expenses | (33,025) | (923) | (33,948) | |||
Other operating income | 612 | 86 | 698 | |||
Impairment losses on trade receivables | (3,737) | (53) | (3,790) | |||
Segment results before equity, financial results and taxes | (72,591) | (13,039) | (85,630) |
30
VASTA Platform Limited
Unaudited Condensed Interim Consolidated
Financial Statements
September 30, 2021 | ||||||
Content & EdTech Platform | Digital Services Platform | Total | ||||
Net revenue from sales and services | 464,874 | 84,285 | 549,159 | |||
Cost of goods sold and services | (203,590) | (57,320) | (260,910) | |||
Operating income (expenses) | ||||||
General and administrative expenses | (279,702) | (24,506) | (304,208) | |||
Commercial expenses | (106,733) | (12,307) | (119,040) | |||
Other operating income | 2,116 | 86 | 2,202 | |||
Impairment losses on trade receivables | (21,945) | (53) | (21,998) | |||
Segment results before equity, financial results and taxes | (144,979) | (9,815) | (154,794) | |||
Assets | 6,506,524 | 134,100 | 6,640,624 | |||
Current and non-current liabilities | 1,932,565 | 55,539 | 1,988,104 |
The Segment´s profit/(loss) represents the earnings by each segment without finance results and income tax expense. This is the measure reported to the CODM for the purpose of resource allocation and assessment of segment performance.
The Company operates in Brazil, with no revenue from foreign customers. Additionally, no single customer contributed ten per cent or more to the Company and Segments revenue for the nine-month periods ended on September 30, 2022, and 2021.
27. | Non-cash transactions |
Non-cash transactions for the nine-month periods ended September 30, 2022 and 2021 are, respectively: (i) Additions of right of use assets and lease liabilities in the amount of R$9,618 (Note 12), and (ii) Disposals of contracts of right of use assets and lease liabilities in the amount of R$3,473 (Note 12) and R$2,591 (Note 16) , and Accounts payable assumed in the acquisition of Phidelis and MVP, in the amount of R$28,954 (see Note 5) Accounts payable assumed in the acquisition of Educbank, in the amount of R$50,711.
***
Mario Ghio Junior
Chief Executive Officer
Cesar Augusto Silva
Chief Financial Officer
Marcelo Vieira Werneck
Accountant – CRC: RJ – 091570/0-1
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