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Corporate Presentation
� Largest post-secondary education group in Latin America
� 201k students spread throughout 76 campuses in all major cities in Brazil
� 78 programs tailored to large and underserved middle and lower income individuals
� 54 Distance Learning accredited units strategically located
ESTÁCIO Highlights
� 54 Distance Learning accredited units strategically located in major centers
� R$1 billion in LTM Net Revenues and R$107 million in LTM EBITDA, R$229 million in Net Cash
Corporate Presentation 2
141135
144
162167
178
207 201
History and Current Status
Turnaround andPreparation for IPO
Turnaround andPreparation for IPOStrong Organic GrowthStrong Organic Growth
National Leadership
(Accounting and Management Systems)
IPO (July/07)
GP (May/08)
Efficiency Gains and
Consolidation
Efficiency Gains and
Consolidation
CAGR of 14.3% - 2000/2007 (Vs 8.9% for Brazil)
Un
der
gra
du
ate
Stu
den
ts
(in
th
ou
san
d)
Early StagesEarly
Stages
23 2635
51
70
118
141135
144
3
Begin National Expansion
1970/96 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
North and Northeast: subsidiaries for profit status
Main subsidiary with for profit status (Feb/07)
IPO (July/07)
Asset Light Model: Long Term Leasing Agreements (Campuses)
9M09
Un
der
gra
du
ate
Stu
den
ts
(in
th
ou
san
d)
Corporate Presentation
16.1%15,1%15.0%
12.9%12.2%12.2%
11.8%11.6%
9.1%8.4%8.1%
6.8%6.0%
5.2%4.0%3.8%
1.8%
MACEJN
FLORJF
BHBEL
MCPVIT
ARACRECSAL
VVCG
NATGOSP
CTB
Largest Student Base: 201 k undergraduate students
3.6 13.3
0.7
4.5
3.3 11.0
Market-Share per Municipal1
1.6
4.2 2.9
1.6
6.0
Estácio Students per State (th.)
35.1%31.0%
18.5%16.1%
RJOURFOR
MACE
4
4.6
2.0
1.6 3.1
1.4
3.2 21.3
Source: SINAES/20061 – Undergraduate students enrolled (excludes public universities)
� Average Ticket: R$435 (9M09;+5.5% yoy)
University
University Center
College
Upgrade to University Center(in process of approval with the MEC2)
108.2 2.5
Corporate Presentation
2 – Ministry of Education
Shareholder Structure and Corporate Governance
Large Expertise in the Education Sector
National Expansion and Market Leadership
Active Management Meritocracy CultureProven track record in the Brazilian Market (Gafisa, Lame, Ambev, Submarino, ALL, Magnesita and others)
Founder Shareholders
GP Investments
53% 20% 27%
Free Float
5
Corporate Governance Standards
• Listed at Novo Mercado: Only Voting Shares
• 100% Tag Along Rights
• Independent Board Members
Dividend Policy (Shareholder Agreement)
• Fiscal Council
• Internal Audit and Risk Management
• Audit and Compensation Committee
• Clear Shareholder and Corporate Structure
Corporate Presentation
� Co-Management ���� 5 years (renewable for 2+ years)
� Board Members ���� 4 each party (being 2 independent)
� Lockup period of 3 years
� Leading Private Equity Firm in LATAM /First Listed Stock
� Mission: Generate Exceptional Long-Term Returns to its Investorsand Shareholders
� Outstanding performance of invested
Shareholder Agreement with GP
Highlights of Shareholder Agreement
� Lockup period of 3 years
� M&A Agreement
� Non-Competition Agreement
� Minimum Dividend Payout (50% of Net Income)
� Outstanding performance of investedcompanies, with integrity, clear targets,entrepreneurship, meritocracy and professionalism. Some examples:
IRR: 1,339%(3 year investment)
IRR: 148%
(3 year investment)
IRR: 17%(12 year investment)
IRR: 24%
(10 year investment)
6Corporate Presentation
� Scale and strong balance sheet pave the way for profitable growth, with major levers being:
� Efficiency gains through centralization of business processes
� Quality gains through investments in standardized high quality academic offerings
Value Creation Going Forward
standardized high quality academic offerings and differentiated student support services
� More impactful branding and marketing, coupled with selective M&A approach (“can´t miss” add-ons)
� Attraction and retention of high quality talents
Corporate Presentation 7
� Focused on growing and underserved addressable market: middle and low income groups
� 1.9 million students graduating from High School every year
� 7% net enrollment growth (CAGR 2002-2007)
� Quality at affordable cost / location
Value Creation Going Forward
� Quality at affordable cost / location
� Career improvement to working adults
Corporate Presentation 8
� Recent accreditation by Ministry of Education (MEC) of 54 Distance Learning units strategically located in major cities throughout Brazil (ranked with grades “Very Good” and “Good”)
� Satelite units for sales and infra structure support in advanced negotiations
� High growth, high margin with low incremental investment
� Lower prices and flexible schedules to access larger students prospects base
Distance Learning (DL)
92
4,6
49
99
5,8
73
1,0
15
,86
8
1,1
08
,60
0
1,1
51
,10
2
1,2
01
,04
6
1,1
98
,50
6
Corporate Presentation 9
66
4,4
74
79
2,0
69
92
4,6
49
99
5,8
73
1,0
15
,86
8
1,1
08
,60
0
1,1
51
,10
2
1,2
01
,04
6
1,1
98
,50
6
5,2
87
6,6
18
20
,68
5
14
,23
3
25
,00
6
12
7,0
14
21
2,2
46
30
2,5
25
43
0,2
59
2000 2001 2002 2003 2004 2005 2006 2007 2008
New Students (Onground) - Private Inst. New Students (Online / DL) Private Inst.
� Recent Start-up of Shared Services Center (SSC):
�Macro transactional / back office processes fully centralized
�Streamlining of backoffice headcount
Efficiency Gains Through Centralization of Business Processes
�Lower transaction cost with higher quality (SLAs)
�Key for scalability and profitable growth and acquisitions integration
Corporate Presentation 10
� Investment in high quality, standardized academic offerings:
� 41 Core programs being updated and nationally integrated towards labor market demands and better integration of shared disciplines: lower faculty costs
Quality Gains
faculty costs
� Better quality control with standardized lectures outlines, content, exercises and exams banks
� Digital platform aimed at quality self-learning activities at minimized costs
� Reference books and printed materials tailored made granted in all 41 core programs included in tuitions
Corporate Presentation 11
� Improved Students Support Services
� New, fully integrated portal - prospects and students
� Tracking of students performance for proactive support approach (“Gabaritando”)
Quality Gains
� Roll-out of national standardized students relationship support
� Sourcing of new students
� Renewals
� Renegotiations
� Internship programs
Corporate Presentation 12
� More impactful branding, marketing and sales efforts
� National branding� Research oriented new media choices� Structured “on-the-road” sales team for cost
effective and more resilient student sourcing (companies and schools)
Growth
Building highly scalable platform for maximum optimization of acquisitions
� Standard academic model� Strong national brand with high quality
products and services� Centralized backoffice (“plug and play”)
Corporate Presentation 13
� Result oriented management model and compensation scheme
� Budgetary discipline in all business and support areas (Zero Based Budget and goals orientation)
� Monthly tracking of results and acting upon deviations
� “On-the-Road” management and leadership by CEO and
Permanent Pursuit of Highest Quality Management Model and Professionals
� “On-the-Road” management and leadership by CEO and executive officers
� Zero Based and Matrix Budget / internal and external benchmarks
� Integrated systems (SAP and academic systems)
� Streamline of organizational structure and processes (process standardization / back office centralization)
Corporate Presentation 14
General and Administrative Expenses (G&A)Streamline of Organizational Structure
Shared Services Center
System Integration & Process Review
Zero Based /Matrix Budgeting
General and Administrative Expenses (G&A)Streamline of Organizational Structure
Shared Services Center
System Integration & Process Review
Zero Based /Matrix Budgeting
Widest Scope for Margin Improvement in the Industry
21.9%20.3%
EBITDA MARGIN (9M09)
22.4%
Drivers of
AEDU KROT SEB ESTC
Cost of Services - Common Subjects
- Course Standardization
- Improved “Production Planning” (Students per Teacher)
- On-Line Programs
Distance Learning
Extra-Class Activities
Cost of Services - Common Subjects
- Course Standardization
- Improved “Production Planning” (Students per Teacher)
- On-Line Programs
Distance Learning
Extra-Class Activities
15
12.1%
Drivers ofEfficiencyGains
Corporate Presentation
Financial Highlights
(R$ million) 2005 2006 2007
Net Revenue1 762 829 851
Adjusted EBITDA1
Adjusted EBITDA Margin 11%
56 96 95
12%7%
980
98
10%
9M08 9M09
727 764
85 93
12% 12%
2008
16
Adjusted Net Income2 60
EBITDA Margin ex-rental 16% 20% 20%
EBITDA ex-rental1 124 164
Net Cash
23
(4)
73
229(48)
11%
166
12%7%
(1) Adjusted in 2007, to the payment of taxes in January 07 (SESES became for profit in February 2007), Law 11.638 in 2008 and one-off expenses in 2008 and 2009
(2) Excluding goodwill amortization from acquisitions and one-ff expenses
10%
182
19%
72
191
12% 12%
148 161
20% 21%
68 66
271 229
Corporate Presentation
Corporate Presentation
Appendix
17Corporate Presentation
12%
22%25% 26%
47%
64%
72%
82%
Sector Overview – Significantly Untapped Demand
Post-secondary Enrollments – (Unesco – 2007, million) Gross Enrollment Rate (Unesco - 2007)
Largest market in Latin America, with low penetration rates and increasing demand for qualified labour
High Growth Potential
23.4
17.5
12.9
9.2
4.9 4.1
31% 30% 29% 28% 27% 26% 25% 25%
69% 70% 71% 72% 73% 74% 75% 75%
2001 2002 2003 2004 2005 2006 2007 2008
Private Public
3.0 4.74.23.9 4.53.5 4.9 5.1
183 195 207 224 231 248 249 236
1,208 1,442
1,652 1,789 1,934 2,022 2,032 2,016
2001 2002 2003 2004 2005 2006 2007 2008
Private Public
India China Brazil Mexico Chile Argentina Russia USA
18
Source: INEP/MEC
Post-secondary Institutions in Brazil (units) Total Enrollments (million)
Corporate Presentation
China USA India Russia Brazil Japan
Sector Overview: Highly Fragmented Market
Top10 largest post-secondary institutions account for less than 25% of total enrollments1
Top 10 Non-Government Institutions Market Share
Based on Number of Enrolled Students
Non-Government Institutions (number & Size)
2K < 4.9K
687
204
500 < 1.9K
5K or more140
22.6%
Up to 499
19
High Potential for Consolidation
2,032 Institutions3.5 million enrollments
1,001
Corporate Presentation
(1) Source: Hoper Educational , MEC
77.4%
10+ Others
Sector Overview – Regulatory Framework
University
� Autonomy, guaranteed by the constitution, to create programs within the city (except for Medicine, Law, Psychology and Odontology)
�Allowed to create campuses outside the city, subject to authorization by the Ministry of Education (MEC)
� Ability to register diploma without the MEC authorization
� Autonomy, guaranteed by federal gov’t decree, to create programs inside the city, except
� 1/3 of faculty must hold a master or PhD degree
� 1/3 of faculty must be in full time regime or must offer 3 master programs with CAPES (ministry’s graduate coordinator) recommendation
� Need to conduct research
� 1/3 of faculty must hold a master or PhD degree
CostsBenefitsInstitution
20
University Centers
decree, to create programs inside the city, except for Medicine, Law, Psychology and Odontology
� Ability to register diploma without MEC authorization
� No need to conduct research
Colleges � No minimum requirements on faculty qualification or hours of work ( full time regime)
� 1/3 of faculty must hold a master or PhD degree
� 1/5 of faculty must be in full time regime
� Not allowed to create other campuses outside the city
� No autonomy to create new programs, vacancies or to register diplomas without the MEC authorization
Corporate Presentation
6
762829 851
980
727764
Undergraduate Student Base and Revenue Growth
Students (thousand) Net Revenue (R$ million)
201
162 167 178
207 196 195
2005 2006 2007 2008 9M08 9M09
onground DL
2005 2006 2007 2008 9M08 9M09
21Corporate Presentation
9.5% NR 9.8% NR
4.9% NR 5.2% NR
R$ 437.1 M R$ 467.8 M
6.0% NR 6.9% NR
R$ 211.0 M (29.0% NR)
R$ 211,4 M (27.7% NR)
Cost of Service and SG&A (R$ million)
Cost of Services SG&A
Gross Margin: 39.9% Gross Margin: 38.8%
R$43.5 M R$52.8 M
45.7% NR 46.2% NR
9M08 9M09
Faculty Costs Rental Third-Party Services/Other
23.0% NR 20.7% NR
9M08 9M09
G&A Selling
22
NR = Net Revenue
R$167.5 M R$158.5 M
Corporate Presentation
60
73 7268 66
56
96 95 98
8593
Adjusted EBITDA and Net Income (R$ million)
Adjusted Net Income2Adjusted EBITDA1
7.3%
11.6% 11.1% 10.0%
11.7%
12.1%
23
2005 2006 2007 2008 9M08 9M09
56
2005 2006 2007 2008 9M08 9M09
23
1 - Adjusted in 2007 to the payment of taxes in January 2007 , Law 11.638 in 2008 and to the one-off expenses in 2008/2009
2 - Excluding goodwill amortization from acquisitions and one-off expenses
Corporate Presentation
Organic Capex (R$ million)
24Corporate Presentation
20.413.5
47.0
35.0
3Q08 3Q09 9M08 9M09
Analyst Coverage & Forecast
CS 08/31 R$ 27.0
1,019R$ 26.0
Brokers
Analyst Coverage & Forecast
2009 2010 2011 2012R$ million
Report Date
TargetPrice
Bradesco
NetRevenue
EBITDANet
Income
09/29 109 81
1,065 120 87
NetRevenue
EBITDA NetIncome
1,057 127 94
1,207 164 119
1,143 143
NetRevenue
EBITDA NetIncome
NetRevenue
EBITDANet
Income
116 1,247 173 148
1,300 187 133 1,415 218 157
25Corporate Presentation
Santander
Average
10/05
09/17
R$ 23.6
R$ 28.0
11/06 R$ 25.0
06/28 R$ 27.5MorganStanley
ITAÚ
BES
1,010 116 77
1,058 127 95
999 107 69
1,011 99 65
164
1,105 157 113
1,153 174 140
1,064 138 101
1,121 152 131
1,254 208 149
1,304
1,187
1,269
248
179
171
184
138
154
1,415
1,400
1,449
1,428
218
247
315
215
157
176
236
199
1,240 1871,113 149 113771121,025 144
1,336 229 188
1,368 231 183
11/27 R$ 30.0BTG 1,011 104 63 1,087 131 94 1,221 176 137 1,298 220 176
Capitalization and Market Data
Sound balance sheet and strong cash flow support our strategic positioning as one of the main players in sector consolidation in Brazil
R$ Million 09/30/09
Shareholders Equity
Debt
476.7
(6.8)
Net Cash 229.2
Stock Price (Dec - 08, 2009): R$23.89 / share
Number of Shares: 78.6 million
Market Cap: R$1.9 Billion
Enterprise Value: R$1.7 Billion
Daily Volume (3-month average): R$1.5 million
BRA: 6%
US: 38%
Europe: 40%
Others: 16%
26
Free Float: 27%Market Data
Corporate Presentation
IR Contacts and Disclaimer
Visit our website: www.estacioparticipacoes.com
Investor Relations Team:
Lorival Luz – CFO
Fernando Santino – [email protected]
Matheus Guimarães – [email protected]
e-mail: [email protected]
Phone: (55) 21 3311 9789 / 9790 / 9791
Fax: (55) 21 3311 9676
Av. Embaixador Abelardo Bueno, 199 – Office Park – 6th floorCep 22775-040 - Barra da Tijuca - Rio de Janeiro
27
Disclaimer:
This presentation may contain forward-looking statements concerning the industry’s prospects and Estácio Participações’ estimated financial and operating results; these are ere
projections and, as such, are based solely on the Company management’s expectations regarding the future of the business and its continuous access to capital to financeEstácio Participações’ business plan. These considerations depend substantially on changes in market conditions, government rules, competitive pressures and the performanceof the sector and the Brazilian economy as well as other factors and are, therefore, subject to changes without previous notice. We are a holding company, and our only assets areour interests in SESES, STB, SESPA, SESCE, SESPE, SESAL, SESSE, SESAP, UNEC, SESSA and IREP, and we currently hold 99.9% of the capital stock of each of thesesubsidiaries. Considering that the Company was incorporated on March 31 2007, the information presented herein is for comparison purposes only, on a proforma unauditedbasis, relative to the first three months of 2007, as if the Company had been organized on January 1 2007. Additionally, information was presented on an adjusted basis, in orderto reflect the payment of taxes on SESES, our largest subsidiary, which from February 2007, after becoming a for-profit company, is subject to the applicable taxation rulesapplied to the remaining subsidiaries, except for the exemptions arising out of the PROUNI – University for All Program (“PROUNI”). Information presented for comparisonpurposes should not be considered as a basis for calculation of dividends, taxes or for any other corporate purposes.
Corporate Presentation