Microsoft Power Point EstáCio Apr Corporativa 4 Q08 (2) [Modo De Compatibilidade]

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Microsoft Power Point EstáCio Apr Corporativa 4 Q08 (2) [Modo De Compatibilidade]

  1. 1. Corporate Presentation 2008
  2. 2. Who we are Campus Rebouças Largest player in the undergraduate sector in Brazil 207k undergraduate students National Footprint: 78 campuses in 16 states Campus Tom Jobim 2 Universities, 2 University Centers and 27 Colleges Asset Light Model: ROE of 17.0% (2008) Revenues of R$980 million and EBITDA of R$98 million (2008) Campus R9 Labor Market Oriented Programs High Governance Standards: the only Educational Company in the Novo Mercado (voting shares only) 1 Who we are
  3. 3. History and Current Status 2008 Efficiency Gains Early Turnaround and and Strong Organic Growth Stages Preparation for IPO Consolidation (Accounting and Management Systems) 207 National Leadership 178 CAGR of 25.7% - 1997/2005 (Vs 13.5% for Brazil) 167 GP (May/08) 162 Undergraduate Students 144 IPO (July/07) 141 135 (in thousand) Main subsidiary North and 118 with for profit Northeast: status (Feb/07) subsidiaries for profit status Begin National 70 Expansion 51 35 26 23 Asset Light Model: Long Term Leasing Agreements (Campuses) 1970/96 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 Dec08 Who we are 2
  4. 4. Largest Student Base: 207 k undergraduate students – Dec/08 Estácio Students per State (th.) Market-Share per Municipal2 1.4 3.3 CTB 1,8% 12.2 SP 3,8% 0.7 GO 4,0% NAT 5,2% CG 6,0% VV 6,8% SAL 8,1% REC 8,4% 1.4 ARAC 9,1% VIT 11,6% MCP 11,8% 6.2 4.9 BEL 12,2% 4.6 BH 12,2% 2.4 JF 12,9% FLOR 15,0% 12.3 2.6 JN 15,1% MACE 16,1% FOR 18,5% OUR 31,0% RJ 35,1% 2.9 1.5 2 – Undergraduate students enrolled (excludes public universities) Source: SINAES/2006 1.8 1.3 Average Monthly Tuition: R$451 (08; +4.1% yoy) University 2.8 20.3 University Center 117.8 4.2 1.9 College Upgrade to University Center (in process of approval with the MEC3) 3 Largest Student Base 3 – Ministry of Education
  5. 5. Labor Market Oriented Programs Our Student Profile Self-financed students Young working adults (with family support) (~70%) Target Market • Convenience multi-campus • Location (work / home) • Internship Programs Family income up Living in Urban • Adequate Facilities to 10 minimum Centers (large cities) • Competitive Price salaries (~73%) • Perceived Quality (above average) • Focus on Labor-Market Searching for Career Searching for Salary improvement Who we are 4
  6. 6. ESTC3: Competitive Advantages Headquarter in RJ Highly Qualified Professional Management Aligned with Shareholders (Variable Compensation and Stock Option) Widest Scope for Margin Improvement in the Industry (Streamlining, Centralization of Back-Office Operations and Campus Tom Jobim Scalability) Significant Growth Opportunities (M&A / Organic) Huge Undergraduate Student Base (Scale) & Geographic Gastronomy Class Coverage (presence in different markets/regions) Sound Balance Sheet: No Leverage and Strong Cash Position 5 Competitive Advantages
  7. 7. Shareholder Structure and Corporate Governance Founder GP Investments Shareholders Active Management Meritocracy Culture Large Expertise in the F r e e F lo a t Proven track record in Education Sector the Brazilian Market National Expansion (Gafisa, Lame, Ambev, and Market Leadership Submarino, ALL, Magnesita and others) 25% 55% 20% Corporate Governance Standards • Listed at Novo Mercado: Only Voting Shares • Fiscal Council • 100% Tag Along Rights • Internal Audit and Risk Management • Independent Board Members Audit and Compensation Committee • Dividend Policy (Shareholder Agreement) • Clear Shareholder and Corporate Structure 6 Strong Shareholder Structure
  8. 8. Shareholder Agreement with GP Highlights of Shareholder Agreement Leading Private Equity Firm in LATAM / Co-Management 5 years (renewable for First Listed Stock 2+ years) Mission: Generate Exceptional Board Members 4 each party (being 2 Long-Term Returns to its Investors independent) and Shareholders Lockup period of 3 years Outstanding performance of invested companies, with integrity, clear targets, M&A Agreement entrepreneurship, meritocracy and professionalism. Some examples: Non-Competition Agreement IRR: 1,339% Minimum Dividend Payout (50% of Net Income) (3 year investment) IRR: 148% (3 year investment) IRR: 17% (12 year investment) IRR: 24% (10 year investment) 7 GP & Shareholders´ Agreement
  9. 9. Highly Qualified Professional Management Team Management Experience Variable compensation (Bonus + Stock Option) Eduardo Alcalay – CEO Align interests of shareholders and GP Partner; Former board member at Estácio, Cemar and management Equatorial; Partner at Singular Partners and Vice President at UOL Implement targets on global and individual Lorival Luz – CFO basis (cost cutting, quality goals) Treasury Director at Citibank - Banco Credicard; Corporate Bank Reconcile quality and long-term targets Chief of Staff Retain key managers and professionals Rogério Melzi – Economic and Operational Planning Head of Financial Planning in Suzano; Planning Officer in Maximum dilution of 4.15% Inbev/Labat and Ambev Miguel de Paula – People and Management People Development Head of Human Resources in Farmasa and Votorantim; HR Manager at Gerdau Rubens Vasconcelos – Academic Officer • Faculty Training Program Member of the Board of Directors at Cultura Inglesa; COO at • Máxima Consultoria; CFO at Cougar Trainee Program for Estácio´s students • Executive Development Plan Jessé Hollanda – Operations Principal of Estácio´s College in Ceará; Academic Director of CSN • Qualification for Course Coordinators Foundation and Executive Board member of CBS • Variable Compensation for Course Antonio Higino Viegas – Market Officer Coordinators & Teachers Head of Marketing and Sales in Anhanguera Educacional / AT, Regional Manager Brahma (Ambev). Marketing Manager (Infoglobo) Professional Team 8
  10. 10. Widest Scope for Margin Improvement in the Industry General and Administrative Expenses (G&A) EBITDA MARGIN (2008) Streamline of Organizational Structure Shared Services Center System Integration & Process Review Zero Based /Matrix Budgeting Drivers of Efficiency Gains 20% Cost of Services 18% 17% - Common Subjects - Course Standardization - Improved “Production Planning” 10% (Students per Teacher) - On-Line Programs Distance Learning Extra-Class Activities AEDU KROT SEB ESTC 9 Widest Scope for Margin Improvement in the Industry
  11. 11. Margin Improvement: Opportunities on G&A Expenses • Streamline of organizational structure • Process Standardization (Shared Services / Academic Content / Streamlined Processes Student Assistance / Corporate Centers) • BackOffice Centralization: Procurement / Accounting / HR / Legal / Accounts Payable / Treasury / IT / Real Estate Management Integrated • Management (SAP) and Academic (SIA) Systems – Already Systems running in all our units • Zero Based / Matrix Budget Zero Based • Internal / External Benchmarks (“Projeto Modelo”) Budgeting and Monitoring • Sharing of Best Practices • Monitoring and acting upon it 10 Margin Improvement Opportunities
  12. 12. Margin Improvement: Opportunities on COGS - Faculty Costs Increase wages below inflation Labor Agreement - Rio Increase the number of students Academic Reform per class COMMON COURSES: Same Course for Different Programs (Languages, Maths, etc) STANDARDIZED PROGRAMS in all our campuses DISTANCE LEARNING: Increasing usage of on-line activities (up to 20% of Schedule) 11 Margin Improvement Opportunities
  13. 13. Growth Opportunities • Undergraduate market highly untapped • Maximizing growth opportunities in São Paulo and NE Markets Organic • Upgrading Colleges to University Centers • Opening of new campuses, programs and seats • Market share relevance – expansion and consolidation • Strategic fit – compatible market positioning Acquisitions • Priority for university centers • Take advantage of potential synergies • Opening a new market; reaching new segments Distance • Produce and distribute Estácio´s own learning content Learning • Marginal CAPEX - sunk costs 12 Significant Growth Opportunities
  14. 14. Asset Light Model: Low Investment in Real Estate Best ROE in the Industry in Brazil Return on Equity (December/ 08)1 Best ROE In Industry Lowest Permanent Assets1 ESTC R$982 x Industry Average of ~R$2,700 per Student 17% 16% High Mobility to Grow 11% 9% 1 – Excluding investment / Goodwill / Deferred charges AEDU SEB KROT ESTC 1 – LTM Net Income / Shareholders Equity Source: Company Data Efficient Business Model 13
  15. 15. Financial Highlights 2005 2008 2006 2007 (R$ million) Net Revenue1 762 829 851 980 56 96 95 Adjusted EBITDA1 98 Adjusted EBITDA Margin 7% 12% 10% 11% EBITDA ex-rental1 164 166 182 124 20% EBITDA Margin ex-rental 16% 20% 19% Adjusted Net Income2 23 60 73 72 Net Cash 191 (48) (4) 229 (1) Adjusted in 2007, to the payment of taxes in January 07 (SESES became for profit in February 2007) and one-off expenses in 2008 (2) Excluding goodwill amortization from acquisitions and one-ff expenses Financial Highlights 14
  16. 16. Annex 15
  17. 17. Sector Overview – Significantly Untapped Demand Largest market in Latin America, with low penetration rates and increasing demand for qualified labour Gross Enrollment Rate (Unesco - 2007) Post-secondary Enrollments – (Unesco – 2007, million) 23.4 82% High Growth Potential 72% 17.5 64% 47% 12.9 9.2 26% 25% 22% 4.9 4.1 12% Índia China Brasil México Chile Argentina Rússia EUA China USA India Russia Brazil Japan Post-secondary Institutions in Brazil (units) Total Enrollments (million) 4.9 4.7 4.5 4.2 3.9 3.5 75% 74% 3.0 73% 2.032 72% 2.022 1.934 71% 1.789 1.652 70% 1.442 69% 1.208 25% 27% 28% 26% 29% 30% 31% 248 249 231 224 207 195 183 2001 2002 2003 2004 2005 2006 2007 2001 2002 2003 2004 2005 2006 2007 Source: INEP/MEC Private Public 16 Private Public Positive Sector Dynamics
  18. 18. Sector Overview: Highly Fragmented Market Top10 largest post-secondary institutions account for less than 25% of total enrollments1 Non-Government Institutions (number & Size) Top 10 Non-Government Institutions Market Share Based on Number of Enrolled Students 22.6% 5K or more 140 2K < 4.9K 204 500 < 1.9K 687 Up to 499 1,001 77.4% 10+ Others 2,032 Institutions 3.5 million enrollments High Potential for Consolidation (1) Source: Hoper Educational , MEC, INEP 17 Positive Sector Dynamics
  19. 19. Sector Overview - Regulatory Framework Institution Benefits Costs Autonomy, guaranteed by the constitution, to create programs within the city (except for 1/3 of faculty must hold a master or PhD degree Medicine, Law, Psychology and Odontology) 1/3 of faculty must be in full time regime or must Allowed to create campuses outside the city, University offer 3 master programs with CAPES (ministry’s subject to authorization by the Ministry of Education graduate coordinator) recommendation (MEC) Need to conduct research Ability to register diploma without the MEC authorization Autonomy, guaranteed by federal gov’t decree, to create programs inside the city, except for 1/3 of faculty must hold a master or PhD degree Medicine, Law, Psychology and Odontology 1/5 of faculty must be in full time regime University Centers Ability to register diploma without MEC Not allowed to create other campuses outside the authorization city No need to conduct research No autonomy to create new programs, vacancies No minimum requirements on faculty qualification Colleges or to register diplomas without the MEC or hours of work ( full time regime) authorization 18 Regulatory Framework
  20. 20. Undergraduate Student base and Revenue Growth Students (thousand) Net Revenue (R$ million) 207 980 178 167 851 162 829 762 2005 2006 2007 2008 2005 2006 2007 2008 Financial and Operational Performance 19
  21. 21. Cost of Services and SG&A (R$ million) Cost of Services SG&A Gross Margin: 39.6% Gross Margin: 39.0% R$591.5 M R$518.9 M R$299.1 M (30.5% NR*) R$245.3 (28.8% NR*) 4.9% 5.2% 3.5% 3.4% R$49.6 M R$83.8 M 20.2% 20.5% 14.9% 15.7% R$195.8 M R$215.3 M 79.8% 79.5% 76.5% 75.9% 2007 2008 2007 2008 *NR = Net Revenue Others Third-Party Services Rentals Faculty General and Administrative Selling 20 Financial and Operational Performance
  22. 22. Adjusted EBITDA and Net Income (R$ million) Adjusted EBITDA1 Adjusted Net Income2 11.6% 11.1% 10.0% 73 72 7.3% 98 96 95 60 56 23 2005 2006 2007 2008 2005 2006 2007 2008 1 - Adjusted in 2007 to the payment of taxes in January 2007 (SESES 2 - Excluding goodwill amortization from acquisitions and one-off expenses became for-profit in February 2007) and to the one-off expenses in 2008 Financial and Operational Performance 21
  23. 23. Capex (R$ million) 117.1 Acquisition 94.3 56.7 55.7 Organic 48.9 R$44 .7M : Operational Investments Acquisition R$9.0 M : Academic Reform / Distance Learning R$6.7 M : Integration Project 35.5 60.4(6.2% NR*) 38.6 (4.5% NR*) 11.0 Organic 13.4 (5.3%NR*) 11.0 (5.2% NR*) 4Q07 4Q08 2007 2008 (*) – Net Revenue 22 Financial and Operational Performance
  24. 24. Capitalization and Market Data R$ Million 12/31/08 421.1 Shareholders Equity Debt (11.6) Net Cash 190.6 Sound balance sheet and strong cash flow support our strategic positioning as one of the main players in sector consolidation in Brazil Market Data Free Float: 25.2% Brazilian Stock Price (Mar - 18, 2009): R$12.50 / share Investors 25% Number of Shares: 78.6 million Market Cap: R$982.3 million Enterprise Value: R$791.7 million Daily Volume (3-month average): R$1.9 million Foreign Investors 75% 23 Financial and Operating Performance
  25. 25. IR Contacts & Disclaimer Investor Relations Team: Av. das Américas, 3434 - Bloco 7 - 2º andar Lorival Luz – CFO Cep 22640-102 Barra da Tijuca - Rio de Janeiro Daniella Guanabara – daniella.guanabara@estacio.br Fernando Santino – fernando.santino@estacio.br e-mail: ri@estacioparticipacoes.com Phone: (55) 21 2433 9789 / 9790 / 9791 Fax: (55) 21 2433 9700 Visit our website: www.estacioparticipacoes.com Disclaimer: This presentation may contain forward-looking statements concerning the industry’s prospects and Estácio Participações’ estimated financial and operating results; these are mere 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 finance Estácio Participações’ business plan. These considerations depend substantially on changes in market conditions, government rules, competitive pressures and the performance of 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 are our interests in SESES, STB, SESPA, SESCE, SESPE and IREP, and we currently hold 99.9% of the capital stock of each of these subsidiaries. Considering that the Company was incorporated on March 31 2007, the information presented herein is for comparison purposes only, on a proforma unaudited basis, 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 order to 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 rules applied to the remaining subsidiaries, except for the exemptions arising out of the PROUNI – University for All Program (“PROUNI”). Information presented for comparison purposes should not be considered as a basis for calculation of dividends, taxes or for any other corporate purposes. IR Contact Info 24

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