2. ESTÁCIO Highlights
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
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
3. History and Current Status
Efficiency Gains
Early Turnaround and
Strong Organic Growth and
Stages Preparation for IPO
Consolidation
(Accounting and Management Systems)
CAGR of 14.3% - 2000/2007 (Vs 8.9% for Brazil)
207 201
Undergraduate Students
National 178 GP (May/08)
Leadership
(in thousand)
167
162
141 144 IPO (July/07)
135
118 North and Main subsidiary
Northeast: with for profit
subsidiaries for status (Feb/07)
profit status
Begin National
Expansion 70
51
35
23 26
Asset Light Model: Long Term Leasing Agreements (Campuses)
1970/96 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 9M09
Corporate Presentation 3
4. Largest Student Base: 201 k undergraduate students
Estácio Students per State (th.) Market-Share per Municipal1
CTB 1.8%
1.6 3.6 SP 3.8%
13.3 GO 4.0%
NAT 5.2%
0.7 CG 6.0%
VV 6.8%
SAL 8.1%
REC 8.4%
ARAC 9.1%
1.6 VIT 11.6%
MCP 11.8%
6.0 4.5 BEL 12.2%
BH 12.2%
4.2 JF 12.9%
2.9 FLOR 15.0%
3.3 11.0 JN 15,1%
MACE 16.1%
FOR 18.5%
OUR 31.0%
RJ 35.1%
3.1 1 – Undergraduate students enrolled (excludes public universities)
1.6 Source: SINAES/2006
2.0 Average Ticket: R$435 (9M09;+5.5% yoy)
1.4
University
21.3 3.2 University Center
4.6 108.2 College
2.5
Upgrade to University Center
(in process of approval with the MEC2)
2 – Ministry of Education
Corporate Presentation 4
5. Shareholder Structure and Corporate Governance
Founder
GP Investments
Shareholders
Active Management
Large Expertise in the Meritocracy Culture
Education Sector Proven track record in Free Float
the Brazilian Market
National Expansion (Gafisa, Lame, Ambev,
and Market Leadership Submarino, ALL,
Magnesita and others)
53% 20% 27%
Corporate Governance Standards
• Listed at Novo Mercado: Only Voting Shares • Fiscal Council
• Internal Audit and Risk Management
• 100% Tag Along Rights
• Audit and Compensation Committee
• Independent Board Members
• Clear Shareholder and Corporate Structure
Dividend Policy (Shareholder Agreement)
Corporate Presentation 5
6. 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
Long-Term Returns to its Investors Board Members 4 each party (being 2
and Shareholders independent)
Outstanding performance of invested Lockup period of 3 years
companies, with integrity, clear targets,
entrepreneurship, meritocracy and M&A Agreement
professionalism. Some examples:
IRR: 1,339%
Non-Competition Agreement
(3 year investment)
Minimum Dividend Payout (50% of Net Income)
IRR: 148%
(3 year investment)
IRR: 17%
(12 year investment)
IRR: 24%
(10 year investment)
Corporate Presentation 6
7. Value Creation Going Forward
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
Corporate Presentation 7
8. 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
Corporate Presentation 8
9. Distance Learning (DL)
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
1,201,046
1,198,506
1,151,102
1,108,600
1,015,868
995,873
924,649
792,069
664,474
430,259
302,525
212,246
127,014
25,006
20,685
14,233
6,618
5,287
2000 2001 2002 2003 2004 2005 2006 2007 2008
New Students (Onground) - Private Inst. New Students (Online / DL) Private Inst.
Corporate Presentation 9
10. Efficiency Gains Through Centralization of Business
Processes
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
Corporate Presentation 10
11. Quality Gains
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
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
12. 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
Corporate Presentation 12
13. Growth
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 backoffice (“plug and play”)
Corporate Presentation 13
14. Permanent Pursuit of Highest Quality Management
Model and Professionals
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
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
15. Widest Scope for Margin Improvement in the Industry
General and Administrative
Expenses (G&A)
Streamline of Organizational
Structure
EBITDA MARGIN (9M09) Shared Services Center
System Integration & Process
Review
22.4%
Zero Based /Matrix Budgeting
21.9%
20.3% Drivers of
Efficiency
Gains
Cost of Services
12.1%
- Common Subjects
- Course Standardization
- Improved “Production Planning”
(Students per Teacher)
- On-Line Programs
Distance Learning
Extra-Class Activities
AEDU KROT SEB ESTC
Corporate Presentation 15
16. Financial Highlights
(R$ million) 2005 2006 2007 2008 9M08 9M09
Net Revenue1 762 829 851 980 727 764
Adjusted EBITDA1 56 96 95 98 85 93
Adjusted EBITDA Margin 7% 12% 11% 10% 12% 12%
EBITDA ex-rental1 124 164 166 182 148 161
EBITDA Margin ex-rental 16% 20% 20% 19% 20% 21%
Adjusted Net Income2 23 60 73 72 68 66
Net Cash (48) (4) 229 191 271 229
(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
Corporate Presentation 16
18. Sector Overview – Significantly Untapped Demand
Largest market in Latin America, with low penetration rates and increasing demand for qualified labour
Post-secondary Enrollments – (Unesco – 2007, million) Gross Enrollment Rate (Unesco - 2007)
23.4 82%
17.5
High Growth Potential 64%
72%
12.9 47%
9.2
25% 26%
22%
4.9 4.1 12%
China USA India Russia Brazil Japan India China Brazil Mexico Chile Argentina Russia USA
Post-secondary Institutions in Brazil (units) Total Enrollments (million)
3.0 3.5 3.9 4.2 4.5 4.7 4.9 5.1
69% 70% 71% 72% 73% 74% 75% 75%
1,934 2,022 2,032 2,016
1,789
1,652
1,442
1,208
31% 30% 29% 28% 27% 26% 25% 25%
183 195 207 224 231 248 249 236
2001 2002 2003 2004 2005 2006 2007 2008 2001 2002 2003 2004 2005 2006 2007 2008
Private Public Private Public Source: INEP/MEC
Corporate Presentation 18
19. 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 Non-Government Institutions (number & Size)
Based on Number of Enrolled Students
22.6% 5K or more
140
204 2K < 4.9K
500 < 1.9K
687
Up to 499
1,001
77.4%
10+ Others
3.5 million enrollments 2,032 Institutions
High Potential for Consolidation
(1) Source: Hoper Educational , MEC
Corporate Presentation 19
20. 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
University city, subject to authorization by the Ministry of
offer 3 master programs with CAPES (ministry’s
graduate coordinator) recommendation
Education (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 1/3 of faculty must hold a master or PhD degree
for 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 hours of work ( full time regime)
or to register diplomas without the MEC
authorization
Corporate Presentation 20
22. Cost of Service and SG&A (R$ million)
Cost of Services SG&A
Gross Margin: 39.9% Gross Margin: 38.8%
R$ 211.0 M R$ 211,4 M
R$ 437.1 M R$ 467.8 M
(29.0% NR) (27.7% NR)
4.9% NR 5.2% NR
9.5% NR 9.8% NR 6.0% NR R$43.5 M 6.9% NR
R$52.8 M
45.7% NR 46.2% NR 23.0% NR R$167.5 M 20.7% NR R$158.5 M
9M08 9M09 9M08 9M09
Faculty Costs Rental Third-Party Services/Other G&A Selling
NR = Net Revenue
Corporate Presentation 22
23. Adjusted EBITDA and Net Income (R$ million)
Adjusted EBITDA1 Adjusted Net Income2
11.6% 11.1% 73 72
10.0% 12.1% 68 66
11.7% 60
96 98
95 93
7.3% 85
56
23
2005 2006 2007 2008 9M08 9M09 2005 2006 2007 2008 9M08 9M09
1 - Adjusted in 2007 to the payment of taxes in January 2007 , Law 11.638 in 2 - Excluding goodwill amortization from acquisitions and one-off expenses
2008 and to the one-off expenses in 2008/2009
Corporate Presentation 23
25. Analyst Coverage & Forecast
Analyst Coverage & Forecast
R$ million 2009 2010 2011 2012
Report Target Net Net Net EBITDA Net Net EBITDA Net Net EBITDA
Brokers EBITDA
Income Net
Date Price Revenue Revenue Income Revenue Income Revenue
Income
Bradesco 09/29 R$ 26.0 1,019 109 81 1,057 127 94 1,143 143 116 1,247 173 148
CS 08/31 R$ 27.0 1,065 120 87 1,207 164 119 1,300 187 133 1,415 218 157
ITAÚ 10/05 R$ 23.6 1,010 116 77 1,105 157 113 1,254 208 149 1,400 247 176
Morgan
Stanley
06/28 R$ 27.5 1,058 127 95 1,153 174 140 1,304 248 184 1,449 315 236
Santander 09/17 R$ 28.0 999 107 69 1,064 138 101 1,187 179 138 1,336 229 188
BES 11/06 R$ 25.0 1,011 99 65 1,121 152 131 1,269 171 154 1,428 215 199
BTG 11/27 R$ 30.0 1,011 104 63 1,087 131 94 1,221 176 137 1,298 220 176
Average 1,025 112 77 1,113 149 113 1,240 187 144 1,368 231 183
Corporate Presentation 25
26. Capitalization and Market Data
R$ Million 09/30/09
Shareholders Equity 476.7
Debt (6.8)
Net Cash 229.2
Sound balance sheet and strong cash flow support our strategic positioning as
one of the main players in sector consolidation in Brazil
Free Float: 27%
Market Data
BRA: 6%
Others: 16%
Stock Price (Dec - 08, 2009): R$23.89 / share
Number of Shares: 78.6 million
Market Cap: R$1.9 Billion
US: 38%
Enterprise Value: R$1.7 Billion Europe: 40%
Daily Volume (3-month average): R$1.5 million
Corporate Presentation 26
27. IR Contacts and Disclaimer
Investor Relations Team:
Lorival Luz – CFO
Fernando Santino – fernando.santino@estacio.br Av. Embaixador Abelardo Bueno, 199 – Office Park – 6th floor
Matheus Guimarães – matheus.guimaraes@estacio.br Cep 22775-040 - Barra da Tijuca - Rio de Janeiro
e-mail: ri@estacioparticipacoes.com
Phone: (55) 21 3311 9789 / 9790 / 9791
Fax: (55) 21 3311 9676
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 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, SESAL, SESSE, SESAP, UNEC, SESSA 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.
Corporate Presentation 27