estácio apr corporativa 2 q09 eng

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Corporate Presentation 2Q09

Largest post-secondary Education group in Latin America

202k students spread throughout 77 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 in major centers

R$ 1 billion in LTM Net Revenues and R$ 110 million in LTM EBITDA, R$ 224 million in Net Cash

ESTÁCIO Highlights

Corporate Presentation 2Q09 2

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 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

Value Creation Going Forward


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

Career improvement to working adults

Value Creation Going Forward


Largest Student Base: 202 k undergraduate students

5

3.5 12.8

0.6

4.7

4.3

1.8

1.4

3.0 11.6

2.9

1.2

3.0 22.1

Market-Share per Municipal2

Source: SINAES/20062 – Undergraduate students enrolled (excludes public universities)

Average Ticket: R$424 (1H09;+3.1% yoy)

University University Center College

Upgrade to University Center(in process of approval with the

MEC)

110.2 2.7

1.5

4.3 3.0

1.4

5.8

Estácio Students per State (th.)

35,1%31,0%

18,5%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%

RJOURFOR

MACEJN

FLORJF

BHBEL

MCPVIT

ARACRECSAL

VVCG

NATGOSP

CTB


23 2635

51

70

118

141135

144

162 167178

207 202

History and Current Status

6

Begin National Expansion

1970/96 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

Turnaround andPreparation for IPO

Turnaround andPreparation for IPOStrong Organic GrowthStrong Organic Growth

National Leadership

North and Northeast: subsidiaries for profit status

Main subsidiary with for profit status (Feb/07)

(Accounting and Management Systems)

IPO (July/07)

GP (May/08)

Efficiency Gains and

Consolidation

Efficiency Gains and

Consolidation

CAGR of 25.7% - 1997/2005 (Vs 13.5% for Brazil)

Asset Light Model: Long Term Leasing Agreements (Campuses)

1H09

Un

de

rgra

du

ate

Stu

de

nts

(i

n t

ho

us

an

d)

Early Stages

Early Stages


Recent accreditation by Ministry of Education (MEC) of 54 Distance Learning units strategically located in major cities throughout Brazil

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


Recent Start-up of Shared Services Center (SSC):

Macro transactional / back office processes fully centralized

Streamlining of backoffice headcount

Lower transaction cost with higher quality (SLAs)

Key for scalability and profitable growth and acquisitions integration

Efficiency Gains Through Centralization of Business Processes


Investment in high quality, standardized academic offerings:

40 Core programs being updated and nationally integrated towards labor market demands and better integration of shared disciplines: lower 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 40 core programs included in tuitions

Quality Gains


Improved Students Support Services

New, fully integrated portal - prospects and students

Tracking of students performance for proactive support approach (“Gabaritando”)

Roll-out of national standardized students relationship support

Sourcing of new students

Renewals

Renegotiations

Internship programs

Quality Gains


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)

Building highly scalable platform for maximum optimization of acquisitions

Standard academic model Strong national brand with high quality

products and services Centralized back office (“plug and play”)

Growth


Result oriented management model and compensation scheme

Budgetary discipline in all business and support areas (Zero Base Budget and goals orientation)

Monthly tracking of results and acting upon deviations

“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 organization structure

Streamlined processes (process standardization / back office centralization)

Permanent Pursuit of Highest Quality Management Model and Professionals


KROT AEDU SEB ESTC

General and Administrative Expenses (G&A)Streamline of Organizational StructureShared Services CenterSystem Integration & Process ReviewZero Based /Matrix Budgeting

General and Administrative Expenses (G&A)Streamline of Organizational StructureShared Services CenterSystem Integration & Process ReviewZero Based /Matrix Budgeting

Cost of Services - Common Subjects- Course Standardization- Improved “Production Planning”

(Students per Teacher) - On-Line Programs

Distance LearningExtra-Class Activities

Cost of Services - Common Subjects- Course Standardization- Improved “Production Planning”

(Students per Teacher) - On-Line Programs

Distance LearningExtra-Class Activities

Widest Scope for Margin Improvement in the Indutsry

13

12%

22%

17%

EBITDA MARGIN (2Q09)

25% Drivers of Efficiency Gains


Financial Highlights

14

Adjusted Net Income2 60

(R$ million) 2005 2006 2007

EBITDA Margin ex-rental 16% 20% 20%

EBITDA ex-rental1 124 164

Net Revenue1 762 829 851

Net Cash

23

(4)

73

229(48)

Adjusted EBITDA1

Adjusted EBITDA Margin 11%

56 96 95

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(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(2) Excluding goodwill amortization from acquisitions and one-ff expenses

980

98

10%

182

19%

72

191

1H08 1H09

476 513

51 61

11% 12%

92 106

19% 21%

39 44

256 224


2008

Corporate Presentation – 2Q09

15

Appendix


12%22% 25% 26%

47%

64%72%

82%

Índia China Brasil México Chile Argentina Rússia EUA

31% 30% 29% 28% 27% 26% 25%

69% 70% 71% 72% 73% 74% 75%

2001 2002 2003 2004 2005 2006 2007

Private Public

3.0 4.74.23.9 4.53.5 4.9

183 195 207 224 231 248 249

1.208 1.442

1.652 1.789 1.934 2.022 2.032

2001 2002 2003 2004 2005 2006 2007

Private Public

Sector Overview – Significantly Untapped Demand

16

Fonte: INEP/MEC

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

Post-secondary Institutions in Brazil (units) Total Enrollments (million)


Up to 499

Sector Overview: Highly Fragmented Market

17

Top10 largest post-secondary institutions account for less than 25% of total enrollments1

High Potential for Consolidation

2,032 Institutions3.5 million enrollments

Top 10 Non-Government Institutions Market Share

Based on Number of Enrolled Students

Non-Government Institutions (number & Size)

2K < 4.9K

1,001

687

204

Numbe

r of i

nstit

utio

ns

500 < 1.9K

5K or more140

Number of students

22.6%

77.4%

10+ Others


Undergraduate Student Base and Revenue Growth

18

Students (thousand)Students (thousand) Net Revenue (R$ million)Net Revenue (R$ million)

CAGR: 8.5%

CAGR: 8.7%

+ 7.9%

+ 4.7%


162 167178

207

193202

2005 2006 2007 2008 1H08 1H09

762829 851

980

476513

2005 2006 2007 2008 1H08 1H09

Cost of Service and SG&A (R$ million)

19

Cost of Services

*NR = Net Revenue*NR = Net Revenue

SG&A

Gross Margin: 39.3%Gross Margin: 39.3% Gross Margin: 38.3% Gross Margin: 38.3%

R$111.2 M

R$28.4 M R$35.3 M

R$105.2 M


23.4% NR 20.5% NR

6.0% NR 6.9% NR

1H08 1H09

G&A Selling

R$ 139.6 M (29.4% NR)

R$ 140.6 M (27.4% NR)

46.3% NR 46.8% NR

9.4% NR 9.6% NR

5.0% NR 5.3% NR

1H08 1H09

Faculty Costs Rental Third-Party Services/Other

R$ 288.9 M R$ 316.3 M

23

60

73 72

3944

2005 2006 2007 2008 1H08 1H09

56

96 95 98

5161

2005 2006 2007 2008 1H08 1H09

Adjusted EBITDA and Net Income (R$ million)

20

Adjusted Net Income2Adjusted EBITDA1Adjusted EBITDA1

1 - Adjusted in 2007 to the payment of taxes in January 2007 , Law 11.638 in 2008 and to the one-off expenses in 2008/20091 - 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 expenses2 - Excluding goodwill amortization from acquisitions and one-off expenses

7.3%

11.6% 11.1% 10.0%

10.7%

11.9%


Capitalization and Market Data

21

Sound balance sheet and strong cash flow support our strategic positioning as one of the main players in sector consolidation in Brazil

R$ Million 06/30/09

Shareholders Equity

Debt

460.6

(8.1)

Net Cash 223.8

Stock Price (Aug - 12, 2009): R$23.20 / share

Number of Shares: 78.6 million

Market Cap: R$ 1.8 Billion

Enterprise Value: R$1.6 Billion

Daily Volume (3-month average): R$1.6 million

Free Float: 26%Market Data


Brazilian Investors

10%

Foreign Investors

90%

IR Contacts and Disclaimer

22

Visit our website: www.estacioparticipacoes.com

Investor Relations Team:

Lorival Luz – CFO

Daniella Guanabara – [email protected]

Fernando Santino – [email protected]

e-mail: [email protected]

Phone: (55) 21 3311 9789 / 9790 / 9791

Fax: (55) 21 3311 9700

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 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.

Av. Embaixador Abelardo Bueno, 199 – Office Park – 6th floorCep 22775-040 Barra da Tijuca - Rio de Janeiro Av. Embaixador Abelardo Bueno, 199 – Office Park – 6th floorCep 22775-040 Barra da Tijuca - Rio de Janeiro


estácio apr corporativa 2 q09 eng

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quality control

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larger students

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