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 May 2023
Commission File Number: 001-39519
Vitru Limited
(Exact name of registrant as specified in its charter)
Rodovia José Carlos Daux, 5500, Torre Jurerê A,
2nd floor, Saco Grande, Florianópolis, State of
Santa Catarina, 88032-005, Brazil
+55 (47) 3281-9500
(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
Exhibit No. | Description |
99.1 |
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.
| Vitru Limited. | |
| | |
| | |
| By: | /s/ Carlos Henrique Boquimpani de Freitas |
| Name: | Carlos Henrique Boquimpani de Freitas |
| Title: | Chief Financial and Investor Relations Officer |
| | |
Date: May 15, 2023 | | |
Exhibit 99.1
Vitru Limited
Unaudited interim
condensed consolidated
financial statements
March 31, 2023
Vitru Limited
Unaudited interim condensed consolidated statements of financial position at
(In thousands of Brazilian Reais)
| |
| | March 31, | | December 31, |
| | Note | | 2023 | | 2022 |
ASSETS | | | | | | |
| | | | | | |
CURRENT ASSETS | | | |
| |
|
Cash and cash equivalents | | 6 | | 16,030 | | 47,187 |
Short-term investments | | 6 | | 150,606 | | 26,389 |
Trade receivables | | 7 | | 238,919 | | 224,128 |
Income taxes recoverable | | | | 6,053 | | 6,994 |
Prepaid expenses | | 9 | | 29,106 | | 20,010 |
Receivables from hub partners | | 10 | | 42,402 | | 31,979 |
Other current assets | | | | 10,689 | | 14,853 |
TOTAL CURRENT ASSETS | | | | 493,805 | | 371,540 |
| | | | | | |
NON-CURRENT ASSETS | | | | | | |
Trade receivables | | 7 | | 44,103 | | 47,012 |
Indemnification assets | | | | 10,557 | | 9,853 |
Deferred tax assets | | 8 | | 226,131 | | 203,043 |
Receivables from hub partners | | 10 | | 53,002 | | 48,117 |
Other non-current assets | | | | 1,824 | | 6,903 |
Right-of-use assets | | 11 | | 346,575 | | 350,393 |
Property and equipment | | 12 | | 191,795 | | 194,575 |
Intangible assets | | 13 | | 4,405,723 | | 4,427,643 |
TOTAL NON-CURRENT ASSETS | | | | 5,279,710 | | 5,287,539 |
| | | | | | |
TOTAL ASSETS | | | | 5,773,515 | | 5,659,079 |
The accompanying notes are an integral part of the unaudited interim condensed consolidated financial statements.
1
Vitru Limited
Unaudited interim condensed consolidated statements of financial position at
(In thousands of Brazilian Reais)
| | | | March 31, | | December 31, |
| | Note | | 2023 | | 2022 |
LIABILITIES | | | | | | |
| | | | | | |
CURRENT LIABILITIES | | | | | |
|
Trade payables | | | | 71,670 | | 99,697 |
Loans and financing | | 14 | | 186,961 | | 131,158 |
Lease liabilities | | 11 | | 50,469 | | 51,310 |
Labor and social obligations | | 15 | | 55,019 | | 43,105 |
Taxes payable | | | | 13,403 | | 16,006 |
Prepayments from customers | | | | 52,931 | | 43,606 |
Other current liabilities | | | | 4,244 | | 7,484 |
TOTAL CURRENT LIABILITIES | | | | 434,697 | | 392,366 |
| | | | | | |
NON-CURRENT | | | | | | |
Lease liabilities | | 11 | | 270,996 | | 272,029 |
Loans and financing | | 14 | | 1,491,991 | | 1,489,088 |
Share-based compensation | | 5 | | 15,945 | | 19,805 |
Payables from acquisition of subsidiaries | | 16 | | 519,566 | | 507,361 |
Provisions for contingencies | | 17 | | 32,348 | | 29,182 |
Deferred tax liabilities | | 8 | | 762,768 | | 773,394 |
Other non-current liabilities | | | | 3,794 | | 1,465 |
TOTAL NON-CURRENT LIABILITIES | | | | 3,097,408 | | 3,092,324 |
| | | | | |
|
TOTAL LIABILITIES | | | | 3,532,105 | | 3,484,690 |
| | | | | |
|
EQUITY | | 18 | | | |
|
Share capital | | | | 8 | | 8 |
Capital reserves | | | | 2,065,337 | | 2,054,527 |
Retained earnings | | | | 176,065 | | 119,854 |
TOTAL EQUITY | | | | 2,241,410 | | 2,174,389 |
| | | | | |
|
TOTAL LIABILITIES AND EQUITY | | | | 5,773,515 | | 5,659,079 |
The accompanying notes are an integral part of the unaudited interim condensed consolidated financial statements.
2
Vitru Limited
Unaudited interim condensed consolidated statements of profit or loss and other comprehensive income for the three months periods ended March 31 2023 and 2022.
(In thousands of Brazilian Reais, except earnings per share)
| | | | | | |
| |
| | Three Months Ended | ||
| | | | March 31, | ||
| | Note | | 2023 |
| 2022 |
NET REVENUE | | 22 | | 444,224 | | 177,789 |
| | | | | | |
Cost of services rendered | | 23 | | (151,273) | | (65,148) |
| | | | | | |
GROSS PROFIT | | | | 292,951 | | 112,641 |
| | | | | | |
General and administrative expenses | | 23 | | (54,367) | | (13,830) |
Selling expenses | | 23 | | (90,139) | | (47,956) |
Net impairment losses on financial assets | | 7 | | (47,677) | | (25,720) |
Other income (expenses), net | | 24 | | 313 | | 265 |
Operating expenses | | | | (191,870) | | (87,241) |
| | | | | | |
OPERATING PROFIT | | | | 101,081 | | 25,400 |
| | | | | | |
Financial income | | 25 | | 11,476 | | 15,020 |
Financial expenses | | 25 | | (85,989) | | (14,018) |
Financial results | | | | (74,513) |
| 1,002 |
| | | | | | |
PROFIT BEFORE TAXES | | | | 26,568 | | 26,402 |
| | | | | | |
Current income taxes | | 8 | | (4,070) | | (2,856) |
Deferred income taxes | | 8 | | 33,713 | | 392 |
Income taxes | | | | 29,643 |
| (2,464) |
| | | | | | |
NET INCOME FOR THE PERIOD | | | | 56,211 |
| 23,938 |
| | | | | | |
TOTAL COMPREHENSIVE INCOME | | | | 56,211 |
| 23,938 |
| | | | | | |
Basic earnings per share (R$) | | 19 | | 1.67 | | 1.04 |
Diluted earnings per share (R$) | | 19 | | 1.57 | | 0.98 |
The accompanying notes are an integral part of the unaudited interim condensed consolidated financial statements.
3
Vitru Limited
Unaudited interim condensed consolidated statement of changes in equity for the three months period ended March 31, 2023 and 2022.
(In thousands of Brazilian Reais)
Capital reserves |
|
|
| |||||||
Note | Share capital | Additional | Share-based compensation | Retained | Total | |||||
DECEMBER 31, 2021 | 6 |
| 1,030,792 |
| 8,796 |
| 26,534 |
| 1,066,128 | |
Profit for the period |
| - |
| - |
| - |
| 23,938 |
| 23,938 |
Employee share program |
| | | | | | | | | |
Capital contributions | - | 579 | - | - | 579 | |||||
Issue of shares to employees |
| - |
| 5,199 |
| (5,199) |
| - |
| - |
Value of employee services | - | - | 5,217 | - | 5,217 | |||||
MARCH 31, 2022 |
| 6 |
| 1,036,570 |
| 8,814 |
| 50,472 |
| 1,095,862 |
DECEMBER 31, 2022 |
| 8 |
| 2,041,564 |
| 12,963 |
| 119,854 |
| 2,174,389 |
Profit for the period |
| - |
| - |
| - |
| 56,211 |
| 56,211 |
Employee share program |
| | | | | | | | | |
Issue of shares to employees |
| - |
| 12,769 |
| (12,769) |
| - |
| - |
Value of employee services | 20 | - | - | 10,810 | - | 10,810 | ||||
MARCH 31, 2023 |
| 8 |
| 2,054,333 |
| 11,004 |
| 176,065 |
| 2.241,410 |
The accompanying notes are an integral part of the unaudited interim condensed consolidated financial statements.
4
Vitru Limited
Unaudited interim condensed consolidated statement of cash flows for the three months period ended March 31 2023 and 2022.
(In thousands of Brazilian Reais)
| | | | Three Months Ended March 31, | ||
| | Note | | 2023 | | 2022 |
Cash flows from operating activities | | | | | | |
Profit before taxes | | | | 26,568 | | 26,402 |
Adjustments to reconcile income before taxes to cash provided on operating activities | | | | | | |
Depreciation and amortization | | 11 / 12 / 13 | | 52,306 | | 14,873 |
Net impairment losses on financial assets | | 7 | | 47,677 | | 25,720 |
Provision for revenue cancellation | | 7 | | 252 | | 242 |
Provision for contingencies | | 17 | | 2,437 | | 726 |
Accrued interests | | 11 / 14 / 16 / 17 / 25 | | 78,916 | | (5,637) |
Share-based compensation | | 20 | | 74 | | (5,495) |
Loss on sale or disposal of non-current assets | | 12 | | 44 | | - |
Modification/Disposal of lease contracts | | | | (628) | | (257) |
Changes in operating assets and liabilities: | | | | | | |
Trade receivables | | | | (59,811) | | (31,743) |
Prepayments | | | | (1,847) | | (414) |
Other assets | | | | (4,539) | | (43) |
Trade payables | | | | (28,027) | | 19,273 |
Labor and social obligations | | | | 11,914 | | 4,653 |
Other taxes payable | | | | (2,603) | | 362 |
Prepayments from customers | | | | 9,325 | | 1,968 |
Other payables | | | | (908) | | 80 |
Cash from operations | | | | 131,150 | | 50,710 |
| | | | | | |
Income tax paid | | | | (3,129) | | (3,835) |
Interest paid | | 11 | | (8,351) | | (4,139) |
Contingencies paid | | 17 | | (1,526) | | (1,097) |
Net cash provided by operating activities | | | | 118,144 | | 41,639 |
| | | | | | |
Cash flows from investing activities | | | | | | |
Purchase of property and equipment | | 12 | | (4,886) | | (2,121) |
Purchase and capitalization of intangible assets | | 13 | | (15,027) | | (8,057) |
Payments for the acquisition of interests in subsidiaries, net of cash | | 16 | | - | | (1,278) |
Acquisition of short-term investments, net | | 6 | | (124,217) | | 1,362 |
Net cash used in investing activities | | | | (144,130) | | (10,094) |
| | | | | | |
Cash flows from financing activities | | | | | | |
Payments of lease liabilities | | 11 | | (5,171) | | (3,588) |
Costs related to issuances | | | | - | | (7,302) |
Capital contributions | | | | - | | 579 |
Net cash provided by (used in) financing activities | | | | (5,171) | | (10,311) |
| | | | | | |
Net increase in cash and cash equivalents | | | | (31,157) | | 21,234 |
| | | | | |
|
Cash and cash equivalents at the beginning of the period | | | | 47,187 | | 75,587 |
Cash and cash equivalents at the end of the period | | | | 16,030 | | 96,821 |
| | | | (31,157) | | 21,234 |
See Note 26 for the main transactions in investing and financing activities not affecting cash.
The accompanying notes are an integral part of the unaudited interim condensed consolidated financial statements.
5
Vitru Limited
Notes to the unaudited interim condensed consolidated financial statements.
March 31, 2023 and 2022.
(In thousands of Brazilian Reais, except as otherwise indicated)
1. | Corporate information |
Vitru Limited ("Vitru”) and its subsidiaries (collectively, the "Company” or "Group”) is a holding company incorporated under the laws of the Cayman Islands on March 05, 2020 and whose shares are publicly traded on the National Association of Securities Dealers Automated Quotations Payments exchange (NASDAQ) under the ticker symbol "VTRU”.
Until the contribution of Vitru Brasil shares to Vitru Limited, in March 2020, Vitru Limited did not have commenced operations and had only nominal assets and liabilities and no material contingent liabilities or commitments.
Vitru is a holding company whose principal shareholders are Vinci Partners, through the investments funds "Vinci Capital Partners II FIP Multiestratégia”, "Agresti Investments LLC”, "Botticelli Investments LLC”, Raffaello Investments LLC”, the Carlyle Group, through the fund "Mundi Holdings I, L.L.C.”, SPX Capital, through the investment fund "Mundi Holdings II, L.L.C.” and Neuberger
Berman, through the investment fund NB Verrochio LP.
The Company is principally engaged in providing educational services in Brazil, mainly undergraduate and continuing education courses, presentially through its eight campuses in three states, or via digital education, through 2,248 (December 31, 2022 – 2,170) learning centers ("hubs”) across the country.
These unaudited interim consolidated financial statements were authorized for issue by the Board of Directors on May 9, 2023.
1.1. | Significant events during the period |
a) | Operating events |
Seasonality:
The distance learning undergraduate courses are structured around separate monthly modules. This enables students to enroll in distance learning courses at any time during a semester. Despite this flexibility, generally a higher number of enrollments in distance learning courses occurs in the first and third quarters of each year. These periods coincide with the beginning of academic semesters in Brazil. Furthermore, there is a higher number of enrollments at the beginning of the first semester of each year than at the beginning of the second semester of each year. In order to attract and encourage potential new students to enroll in undergraduate courses later in the semester, the Group often offers discounts, generally equivalent to the number of months that have passed in the semester. As a result, given revenue from semiannual contracts are recorded over the time in a semester, revenue is generally higher in the second and fourth quarters of each year, as additional students enroll in later in the semester. Revenue is also higher later in the semester due to lower dropout rates during that same period.
2. | Basis of preparation of the unaudited interim condensed consolidated financial statements |
The unaudited interim condensed consolidated financial statements of the Group as of March 31, 2023, and for the three months ended March 31, 2023 have been prepared in accordance with IAS 34 – Interim Financial Reporting as issued by the International Accounting Standards Board ("IASB”). The information does not meet all disclosure requirements for the presentation of full annual consolidated financial statements and thus should be read in conjunction with the Group’s consolidated financial statements for the year ended December 31, 2022, prepared in accordance with International Financial Reporting Standards ("IFRS”).
The accounting policies adopted are consistent with those of the previous fiscal year and corresponding interim reporting period. The Group has not early adopted any other standard, interpretation or amendment that has been issued but is not yet effective.
The unaudited interim condensed consolidated financial statements are presented in Brazilian reais ("R$”), and all amounts disclosed in the financial statements and notes have been rounded off to the nearest thousand currency units unless otherwise stated.
There were no changes since December 31, 2022 in the accounting practices adopted for consolidation and in the direct and indirect interests of the Company in its subsidiaries for the purposes of these unaudited interim condensed consolidated financial statements.
2.1. | Significant accounting estimates and assumptions |
The preparation of unaudited interim condensed consolidated financial statements of the Group requires management to make judgments and estimates and to adopt assumptions that affect the amounts presented referring to revenues, expenses, assets and liabilities at the reporting date. Actual results may differ from these estimates.
6
Vitru Limited
Notes to the unaudited interim condensed consolidated financial statements.
March 31, 2023 and 2022.
(In thousands of Brazilian Reais, except as otherwise indicated)
In preparing these unaudited interim condensed consolidated financial statements, the significant judgements and estimates made by management in applying the Group’s accounting policies and the key sources of estimation uncertainty were the same as those that are set the consolidated financial statements for the year ended December 31, 2022.
2.2. | Financial instruments risk management objectives and policies |
The unaudited interim condensed consolidated financial statements do not include all financial risk management information and disclosures required in the annual consolidated financial statements; they should be read in conjunction with the Group’s annual consolidated financial statements as of December 31, 2022. There have been no changes in the risk management department or in any risk management policies since the year-end.
3. | Business combinations |
The Group uses the accounting allocation method of acquisition cost to record business combinations. The consideration transferred in a business combination is measured at fair value, which is calculated by adding the fair values at the acquisition date of the assets transferred, the liabilities incurred to the former owners of the acquiree, and the equity interests issued in exchange for control of the acquiree.
Acquisition-related costs are recognized in the income statement when incurred. The excess i) of the consideration transferred; ii) of the amount of any non-controlling interests in the acquiree (when applicable); and iii) of the fair value, at the acquisition date, of any pre-existing equity interest in the acquiree, over the fair value of the net assets acquired is recognized as goodwill. When the sum of the three items above is less than the fair value of the net assets acquired, the gain is recognized directly in the income statement for the period as a "Bargain purchase".
If the initial accounting for a business combination is incomplete at the end of the period in which the combination occurred, provisional values for the items with incomplete accounting are recorded. These provisional values are adjusted during the measurement period (which cannot exceed one year from the acquisition date), or additional assets and liabilities are recognized to reflect new information obtained related to facts and circumstances existing at the acquisition date that, if known, would have affected the values recognized on that date.
Acquisition of Unicesumar
Unicesumar is a leading and fast-growing higher education institution in Brazil focused on the distance learning market, founded 30 years ago in Maringá - Paraná. Unicesumar has 999 centers and approximately 331 thousand students, of which 314 thousand are in digital education. Unicesumar also has significant on-site courses in the health area, mainly Medicine, with more than 1,600 students in the 348 courses.
On August 23, 2021, we entered into a purchase agreement with the shareholders of CESUMAR - Centro de Ensino Superior de Maringá Ltda, or "Unicesumar”, to acquire the entire share capital of Unicesumar. The transaction was closed on May 20, 2022 (transaction date), when the consideration provided for in the purchase and sale agreement was transferred and control of Unicesumar was transferred to the Company, after usual conditions precedent, including appreciation by a regulatory agency antitrust and other regulatory approvals.
7
Vitru Limited
Notes to the unaudited interim condensed consolidated financial statements.
March 31, 2023 and 2022.
(In thousands of Brazilian Reais, except as otherwise indicated)
The acquisitions were accounted for using the acquisition method where the consideration transferred and the identifiable assets and liabilities acquired were measured at fair value, while goodwill is measured as the excess of consideration paid over those items.
ASSETS |
| 494,439 |
Cash and cash equivalents | | 62,017 |
Trade receivables | | 78,929 |
Financial assets | | 62,385 |
Income taxes recoverable | | 3,617 |
Prepaid expenses | | 3,918 |
Deferred tax assets | | 17,580 |
Other assets | | 4,984 |
Right-of-use assets | | 170,980 |
Property and equipment | | 78,096 |
Intangible assets | | 11,933 |
| | |
LIABILITIES | | 357,389 |
Trade payables | | 70,067 |
Lease liabilities | | 171,829 |
Labor and social obligations | | 37,781 |
Income taxes payable | | 11,556 |
Prepayments from customers | | 17,731 |
Dividends | | 30,000 |
Provisions for contingencies | | 12,510 |
Other liabilities | | 5,915 |
| | |
Total acquired net assets at book value | | 137,050 |
Total identifiable net assets at fair value | | 1,516,987 |
Purchase price consideration | | 3,210,373 |
| | |
Goodwill arising on acquisition | | 1,556,336 |
Purchase price consideration
The total of consideration transferred was calculated based on the terms of the agreement with the former owners of Unicesumar shares. They received cash and Vitru Ltd shares just like determined in the terms of the business combination agreement.
The consideration consists of R$ 2,688 million paid in cash, 7,182 thousand of Vitru Ltd shares at US$ 16.00 per share, issued at the closing date and a contingent consideration where an additional of R$ 1 million will be paid for each new license to operate medical courses get in the next 5 years, with a maximum value of R$ 50 million:
Purchase price consideration |
| 3,210,373 |
| % |
Cash payable at the acquisition date | | 2,162,500 | | 67.36 % |
Amount to be payable after 12 months | | 456,721 | | 14.23 % |
Contingent consideration (i) | | 30,608 | | 0.95 % |
Payable through the issuance of new Vitru shares | | 560,544 | | 17.46% |
(i) | The contingent consideration was estimated through a technical analysis by an education professional in the area of medicine, which concluded that it is possible to authorize 40 additional licenses by the MEC according to the proportion of new license to operate medical courses available in the region of Corumbá in the period of 5 years. The amount of 30,608 recognized corresponds to the present value of the authorization of 40 additional license in the next 5 years. |
(ii) | In September, there was a contractual amendment in the amount of R$ 73,134 and the payment period was changed from 12 months to 24 months. |
8
Vitru Limited
Notes to the unaudited interim condensed consolidated financial statements.
March 31, 2023 and 2022.
(In thousands of Brazilian Reais, except as otherwise indicated)
The company estimated the likelihood to obtain new licenses to operate medical courses in the next 5 years based on Unicesumar’s history for the consideration purpose.
Fair value adjustments |
| 1,516,987 |
Customer relationships (i) | | 294,525 |
Brand (ii) | | 352,189 |
Non-compete agreement (iii) | | 272,416 |
Software (iv) | | 33,379 |
Teaching-learning material (TLM) (v) | | 26,584 |
Operation licenses for distance learning (vi) | | 1,206,641 |
Leasing contracts (vii) | | 57,278 |
Licenses to operate medical courses (viii) | | 55,454 |
Deferred taxes on temporary differences | | (781,479) |
Goodwill | | 1,556,336 |
Total fair value of the identifiable assets + goodwill | | 3,210,373 |
The assumptions, critical judgments, methods and hypotheses used by the Company to determine the fair value of the intangible assets identified in the business combination were as follows:
(i) | Customer relationships: Valued using the MEEM method ("Multi-period Excess Earnings Method”), which is based on a calculation of discounting cash flows from future economic benefits attributable to the customer base, net of eliminations of the implied contribution obligations. The remaining useful life of the customer base was estimated by analyzing the average duration of courses of each segment. |
The main assumptions used in assessing the customer relationships were:
a. | Revenue: Projected in accordance with historical data obtained by the Company, and expectations observed in competition tendencies related to course offering and geographic coverage. |
b. | Costs and expenses: Projected in accordance with historical data obtained by the Company and expectations of normalization of the operating margin in the long term and operating synergies to be realized by the merger of Unicesumar’s operations within the Company. |
c. | Tax rate: 34%, pursuant to Brazilian tax legislation; and |
d. | After-tax discount rate: the after-tax discount rate was applied properly on each Cash Generating Unit ("CGU”), due to their differences in regards to risk assessment and each CGU’s discount rate. |
(ii) | Brand: Valued using the Relief from Royalty method. The method determines the value of an intangible asset based on the value of hypothetical royalty payments that would be saved through owning the asset, compared to licensing the asset to a third party. It involves the estimation of generating future cash flows to the business for the greatest possible deadline. |
The main assumptions used in assessing the brand were:
a. | Remaining useful life: Adopted as the point where the discounted cash flows reach 90% of the total projected value. |
b. | Royalties’ percentage: Estimated as 3.48%, but applied for each segment, depending on the expected margin of each CGU. |
(iii) | Non-Compete Agreement: Valued using the With-or-Without method. This method uses the profit or loss originated from the projection of the business as a whole. |
The main assumptions used in assessing the brand were:
a. | Revenue: Considers a revenue loss for the first 4 years. For the following years, it’s expected that the sellers are already part of the market. |
b. | Competition probability: Different assumptions for each CGU: |
● | Digital and Continuing Education – 85% due to the relative easiness to reach the student (virtually). |
● | On-Campus Undergraduate Courses – 50%, due to the necessity of a more robust physical structure to accommodate the students. |
(iv) | Software: Valued using the Replacement Cost method. Management estimated the costs related to the development of systems with similar characteristics using providers external to Unicesumar. Because it is an auxiliary asset in generating cash from other intangible assets when applying the MEEM approach (in this case, only Customer Relationships), through the Costs of Contributing Assets. |
The main assumptions used in assessing the software were:
a. | Remaining useful life: 5 years. |
b. | Taxes: Applied the effective average rate of income taxes for the Company. |
(v) | Teaching-Learning Material: Valued using the Replacement Cost method. Management estimated the costs related to the development of similar products, as well as the degree of obsolescence (75)%. Because it is an auxiliary asset in generating cash |
9
Vitru Limited
Notes to the unaudited interim condensed consolidated financial statements.
March 31, 2023 and 2022.
(In thousands of Brazilian Reais, except as otherwise indicated)
from other intangible assets when applying the MEEM approach (in this case, only Customer Relationships), through the Costs of Contributing Assets. |
The main assumptions used in assessing the teaching-learning material were:
a. | Remaining useful life: 3 years. |
b. | Taxes: Applied the effective average rate of income taxes for the Company. |
(vi) | Operation licenses for distance learning: Valued using the With-or-Without method. This method uses the profit or loss originated from the projection of the business as a whole. |
The main assumptions used in assessing the operation licenses for distance learning were:
a. | Discount rate: The applied discount rate was WACC for each CGU. |
b. | Estimated useful life: It’s assumed that the effects of not relying on the operation licenses from the beginning, having the need to construct the network, will be seen indefinitely. |
c. | Operation: The operating licenses is given through authorization, that gives to Unicesumar the right to operate in a determined geographical area, which, in some cases, comes through a local partner. However, each authorization allows Unicesumar to change partner in each area, if necessary, substituting the structure for an equivalent one. Partners are not attached to the authorizations. |
(vii) | Leasing contracts: Valued using the Cost Savings method, that consists of calculating the savings measured by the Company, corrected by the duration of the contract by a discount rate. |
The main assumptions used in assessing the leasing contracts were:
a. | After-tax discount rate: the after-tax discount rate was applied properly on each Cash Generating Unit ("CGU”), due to their differences regarding risk assessment and each CGU’s discount rate. |
b. | Remaining useful life: Based on the duration of the leasing contract: 20 years. |
(viii) Licenses to operate medical courses: Valued using the Income Approach method, with an emphasis on marginal fluctuations to the projected CGUs.
The main assumptions used in assessing the licenses to operate medical courses include the initial process of enrolling a student (duration, new students, evasion, graduation), amount of the course, profitability, investments and working capital, as well as growth in perpetuity.
The goodwill amount is based mainly on the workforce and its synergies from academic, commercial, and costs perspectives, considering that we are adding up the 15-year experience and track-record of both institutions as leading players in Digital Education, which is allowing us to improve even further the high-quality services to our students and to sustain our differentiated academic delivery.
Acquisition of Rede Enem
On Setember 1, 2022, the company acquired 100% of the share capital of Rede Enem Serviços de Internet Ltda through its subsidiary Vitru Brasil Empreendimentos, Participações e Comércio e S.A. or "Vitru Brasil”. Rede enem it’s a platform that provides free content through an ecosystem that includes blogs, free preparatory courses, and social media profiles.
The aggregate purchase price of R$ 1,400 was paid in cash at the closing date. The following table presents the assets acquired and liabilities assumed at book value in the business combination:
ASSETS | | 90 |
Cash and cash equivalents | | 23 |
Trade receivables | | 32 |
Other assets | | 7 |
Property and equipment | | 28 |
LIABILITIES | | 97 |
Loans and financing | | 12 |
Labor and social obligations | | 41 |
Prepayments from customers | | 25 |
Other liabilities | | 19 |
| | |
Total acquired net assets at book value | | (7) |
Total identifiable assets at fair value | | - |
Purchase price consideration | | 1,400 |
| | |
Goodwill arising on acquisition | | 1,407 |
10
Vitru Limited
Notes to the unaudited interim condensed consolidated financial statements.
March 31, 2023 and 2022.
(In thousands of Brazilian Reais, except as otherwise indicated)
These are preliminary disclosure, the effects on the financial statements are in review process for issue of the purchase price allocation report that is in progress and in the measurement period, as described in IFRS 3.
4. | Segment reporting |
Segment information is presented consistently with the internal reports provided to the Senior management team, consisting of the chief executive officer, the chief financial officer and other executives, which is the Chief Operating Decision Maker (CODM) and is responsible for allocating resources, assessing the performance of the Company's operating segments, and making the Company’s strategic decisions.
In reviewing the operational performance of the Company and allocating resources, the CODM reviews selected items of the statement of profit or loss and of comprehensive income, based on relevant financial data for each of the Company’s operating segments, represented by the Company’s main lines of service from which it generates revenue, as follows:
● | Digital education undergraduate courses |
● | Continuing education courses |
● | On-campus undergraduate courses |
Segment performance is primarily evaluated based on net revenue and on adjusted earnings before interest, tax, depreciation and amortization (Adjusted EBITDA). The Adjusted EBITDA is calculated as operating profit plus depreciation and amortization plus interest received on late payments of monthly tuition fees and adjusted by the elimination of effects from share-based compensation plus/minus exceptional expenses. General and administrative expenses (except for intangible assets’ amortization and impairment expenses), finance results (other than interest on tuition fees paid in arrears) and income taxes are managed on a Company’s consolidated basis and are not allocated to operating segments.
There were no inter-segment revenues in the period ended March 31, 2023 and 2022. There were no adjustments or eliminations in the profit or loss between segments.
The CODM do not make strategic decisions or evaluate performance based on geographic regions. Currently, the Company operates solely in Brazil and all the assets, liabilities and results are located in Brazil.
a) | Measures of performance |
| | Digital | | | | | | |
| | education | | Continuing | | On-campus | | |
| | undergraduate | | education | | undergraduate | | |
Three Months Ended March 31, | | courses | | courses | | courses | | Total allocated |
2023 | | | | | | | |
|
Net revenue | | 320,660 | | 20,900 | | 102,664 | | 444,224 |
Adjusted EBITDA | | 127,539 | | 10,105 | | 59,251 | | 196,895 |
% Adjusted EBITDA margin | | 39.77% | | 48.35% | | 57.71% | | 44.32% |
| | | | | | | | |
2022 | |
| |
| |
| |
|
Net revenue | | 155,966 | | 11,845 | | 9,978 | | 177,789 |
Adjusted EBITDA | | 50,115 | | 6,891 | | 4,032 | | 61,038 |
% Adjusted EBITDA margin | | 32.13% | | 58.18% | | 40.41% | | 34.33% |
The total of the reportable segments’ net revenues represents the Company’s net revenue. A reconciliation of the Company’s loss before taxes to the allocated Adjusted EBITDA is shown below:
| | Three Months Ended | ||
| | March 31, | ||
| | 2023 | | 2022 |
Income before taxes | | 26,568 | | 26,402 |
(+) Financial result | | 74,513 | | (1,002) |
(+) Depreciation and amortization | | 52,306 | | 14,873 |
(+) Interest on tuition fees paid in arrears | | 7,244 | | 5,875 |
(+) Share-based compensation plan | | 74 | | (5,495) |
(+) Other income (expenses), net | | (313) | | (265) |
(+) Restructuring expenses (i) | | 2,156 | | 6,426 |
(+) M&A and Offering Expenses (ii) | | 5,974 | | 534 |
(+) Other operational expenses unallocated (iii) | | 28,372 | | 13,690 |
Adjusted EBITDA allocated to segments | | 196,895 | | 61,038 |
(i) | Expenses related to the restructuring of the areas and special projects in the support areas. |
11
Vitru Limited
Notes to the unaudited interim condensed consolidated financial statements.
March 31, 2023 and 2022.
(In thousands of Brazilian Reais, except as otherwise indicated)
(ii)Expenses related to the acquisition project and Follow-on projects.
(iii) | Expenses with depreciation and amortization, marketing and corporate expenses |
b) | Other profit and loss disclosure |
| | Digital | | | | | | | | |
| | education | | Continuing | | On-campus | | | | |
| | undergraduate | | education | | undergraduate | | | | |
Three Months Ended March 31, | | courses | | courses | | courses | | Unallocated | | Total |
2023 | |
| |
| |
| |
| |
|
Net impairment losses on financial assets | | 45,048 | | 3,229 | | (600) | | - | | 47,677 |
Depreciation and amortization | | 27,140 | | 1,252 | | 18,383 | | 5,531 | | 52,306 |
Interest on tuition fees paid in arrears | | 6,578 | | 212 | | 454 | | - | | 7,244 |
| | | | | | | | | | |
2022 | |
| |
| |
| |
| |
|
Net impairment losses on financial assets | | 22,533 | | 2,535 | | 652 | | - | | 25,720 |
Depreciation and amortization | | 10,872 | | 222 | | 2,749 | | 1,030 | | 14,873 |
Interest on tuition fees paid in arrears | | 5,074 | | 228 | | 573 | | - | | 5,875 |
5. | Fair Value Measurement |
As of March 31, 2023, the Company has only Share-based compensation liabilities measured at fair value, in the amount of R$ 15,945 which are classified in Level 3 of fair value measurement hierarchy given significant unobservable inputs used.
There were no transfers between Levels during the three months ended March 31, 2023.
The following table presents the changes in level 3 items for the months ended March 31, 2023 and 2022 for recurring fair value measurements:
| | Share-based compensation | ||
| | 2023 | | 2022 |
At the beginning of the year | | 19,805 | | 52,283 |
Adjusted through profit and loss – general and administrative | | (3,860) | | (12,047) |
As of March 31, | | 15,945 | | 40,236 |
The Company assessed that the fair values of financial instruments at amortized cost such as cash and cash equivalents, short-term investments, current trade receivables and trade payables approximate their carrying amounts largely due to the short-term maturities of these instruments. Non-current trade receivables, lease liabilities, accounts payable from acquisition of subsidiaries and loans and financing have their carrying amount adjusted by their respective effective interest rate in order to be presented as close as possible to its fair value.
The following table summarizes the quantitative information about the significant inputs used in level 3 fair value measurements:
| | | | | | |
| | Weighted | | | ||
| | As of March 31, | | | ||
Unobservable inputs | | 2023 | | 2022 | | Relationship of unobservable inputs to fair value |
Net operating revenue growth rate (i) | | 22.84% | | 22.84% | | 2023: Increased growth rate (+200 basis points (bps)) and lower discount rate (-100 bps) would increase FV by R$ 435; lower growth rate (-200 bps) and higher discount rate (+100 bps) would decrease FV by R$ 433. |
Pre-tax discount rate (ii) | | 13.35% | | 13.35% | | 2022: Increased growth rate (+200 basis points (bps)) and lower discount rate (-100 bps) would increase FV by R$ 553; lower growth rate (-200 bps) and higher discount rate (+100 bps) would decrease FV by R$ 548. |
(i) The growth rate of net operating revenue is based on the historical growth of the student base and management’s expectations of market development.
(ii) Pre-tax discount rate reflects specific risks relating to the segment and country in which the Company operates.
12
Vitru Limited
Notes to the unaudited interim condensed consolidated financial statements.
March 31, 2023 and 2022.
(In thousands of Brazilian Reais, except as otherwise indicated)
6. | Cash and cash equivalents and short-term investments |
| | March 31, | | December 31, |
| | 2023 | | 2022 |
Cash equivalents and bank deposits in foreign currency (i) | | 10,372 | | 12,057 |
Cash and cash equivalents (i) | | 5,658 | | 35,130 |
| | 16,030 | | 47,187 |
| | | |
|
Investment funds (ii) | | 150,606 | | 26,389 |
(i) | Cash equivalents are comprised of short-term deposits with a maturity of three months or less, which are subject to an insignificant risk of changes in value, readily convertible into cash. |
(ii) | Short-term investments correspond to financial investments in Investment Funds, with highly rated financial institutions. As of March 31, 2023, the average interest on these investments was 16.93% p.y., corresponding to 124% of the CDI. Despite the fact that these investments have high liquidity and have insignificant risk of changes in value, they do not qualify as cash equivalents given the nature of the investment portfolio and their maturity. Due to the short-term nature of these investments, their carrying amount is the same as their fair value. |
7. | Trade receivables |
| | March 31, | | December 31, |
| | 2023 | | 2022 |
Tuition fees | | 424,800 | | 410,393 |
FIES and UNIEDU Guaranteed Credits | | 33,633 | | 27,710 |
PEP - Special Installment Payment (i) | | 13,159 | | 22,365 |
CREDIN - Internal Educational Credit (ii) | | 38,885 | | 29,170 |
Provision for revenue cancellation | | (6,764) | | (6,512) |
Allowance for expected credit losses of trade receivables | | (220,691) | | (211,986) |
Total trade receivables | | 283,022 | | 271,140 |
| | | | |
Current | | 238,919 | | 224,128 |
Non-current | | 44,103 | | 47,012 |
(i) | In 2015, a special private installment payment program (PEP) was introduced to facilitate the entry of students who could not qualify for FIES, due to changes occurred to the program at the time. These receivables bear interests of 1.34% and, given the long term of the installments, they have been discounted at an interbank rate of 2.76%. |
(ii) | Unicesumar has a program similar to PEP, where the students receive a deduction from gross tuition based on services provided during the student’s undergraduate program. The deduction is based on a fixed percentage and, after graduation, the students pay back the deduction on the current value of tuition. |
The aging list of trade receivables is as follows:
| | March 31, | | December 31, |
| | 2023 | | 2022 |
Receivables falling due | | 164,810 | | 99,088 |
| | | |
|
Receivables past due | | | |
|
From 1 to 30 days | | 56,927 | | 59,718 |
From 31 to 60 days | | 41,888 | | 44,827 |
From 61 to 90 days | | 17,353 | | 47,174 |
From 91 to 180 days | | 95,828 | | 85,358 |
From 181 to 365 days | | 133,671 | | 153,473 |
Provision for revenue cancellation | | (6,764) | | (6,512) |
Allowance for estimated credit losses | | (220,691) | | (211,986) |
| | 283,022 | | 271,140 |
Cancellations consist of deductions of the revenue to adjust it to the extension it is probable that it will not be reversed, generally related to students that have not attended classes and do not recognize the service provided or are dissatisfied with the services being provided. A provision for cancellation is estimated using the expected value method, which considers accumulated experience and is updated at the end of each period for changes in expectations.
13
Vitru Limited
Notes to the unaudited interim condensed consolidated financial statements.
March 31, 2023 and 2022.
(In thousands of Brazilian Reais, except as otherwise indicated)
Changes in the Company’s revenue cancellation provision are as follows:
| | 2023 | | 2022 |
At the beginning of the year |
| (6,512) |
| (4,191) |
Additions |
| (5,454) |
| (4,214) |
Reversals |
| 5,202 |
| 3,972 |
As of March 31, |
| (6,764) |
| (4,433) |
The Company records the allowance for expected credit losses of trade receivables on a monthly basis by analyzing the amounts invoiced in the month, the monthly volume of receivables and the respective outstanding amounts by late payment range, calculating the recovery performance. Under this methodology, the monthly billed amount and each late payment range is assigned a percentage of probability of loss that is accrued for on a recurring basis.
When the delay exceeds 365 days, the receivable is written off. Even for written-off receivables, collection efforts continue, and their receipt is recognized directly in the statement of profit or loss, when incurred, as recovery of losses.
Changes in the Company’s allowance for expected credit losses are as follows:
| | 2023 | | 2022 |
At the beginning of the year |
| (211,986) |
| (113,934) |
Write-off of uncollectible receivables |
| 38,972 |
| 18,155 |
Reversal |
| 16,455 |
| 3,483 |
Allowance for expected credit losses |
| (64,132) |
| (29,203) |
As of March 31, |
| (220,691) |
| (121,499) |
8. | Current and deferred income tax |
a) | Reconciliation of income tax in the statement of profit or loss |
Income taxes differs from the theoretical amount that would have been obtained by using the nominal income tax rates applicable to the income of the Company entities, as follows:
|
| Three Months Ended March 31, | ||
| | 2023 |
| 2022 |
Earnings before taxes |
| 26,568 |
| 26,402 |
Statutory combined income tax rate - % |
| 34% | | 34% |
Income tax at statutory rates |
| (9,033) |
| (8,977) |
| | | | |
Income exempt from taxation - ProUni benefit (i) |
| 43,881 |
| 6,826 |
Unrecognized deferred tax asset on tax losses (ii) |
| (432) | | (392) |
Difference on tax rates from offshore companies |
| (198) |
| 1,043 |
Non-deductible expenses |
| (4,618) |
| (332) |
Other |
| 43 |
| (632) |
Total income tax and social contribution |
| 29,643 |
| (2,464) |
Effective tax rate - % |
| (112)% | | 9% |
| | | | |
Current income tax expense |
| (4,070) |
| (2,856) |
Deferred income tax income |
| 33,713 |
| 392 |
(i) | The University for All Program - ProUni, establishes, through Law 11,096, dated January 13, 2005, exemption from certain federal taxes for higher education institutions that provide full and partial scholarships to low-income students enrolled in traditional undergraduate and technological undergraduate programs. The Company's higher education companies are included in this program. |
(ii) | Some of the Company's subsidiaries have tax losses that are not expected to be realized. Difference on tax rates from offshore companies e Considering that the Company is domiciled in Cayman and there is no income tax in that jurisdiction, the combined tax rate of 34% demonstrated above is the current rate applied to all Company’s subsidiaries, operating entities in Brazil. |
14
Vitru Limited
Notes to the unaudited interim condensed consolidated financial statements.
March 31, 2023 and 2022.
(In thousands of Brazilian Reais, except as otherwise indicated)
b)Deferred income tax
| | Balance sheet | | Profit or loss | ||||
| | March 31, 2023 | | December 31 2022 | | March 31, 2023 |
| March 31, 2022 |
Tax loss carryforward |
| 114,926 |
| 93,242 | | 21,684 |
| 1,434 |
Allowance for expected credit losses |
| 80,935 |
| 59,739 | | 21,196 |
| 5,117 |
Labor provisions |
| 12,006 |
| 2,303 | | 9,703 |
| (6,140) |
Lease contracts |
| 6,735 |
| 7,147 | | (412) |
| 132 |
Provision for revenue cancellation |
| - |
| 990 | | (990) |
| 80 |
Provision for contingencies |
| 7,055 |
| 923 | | 6,132 |
| (65) |
Other provisions |
| 4,475 |
| 38,699 | | (34,407) |
| (470) |
Total |
| 226,132 |
| 203,043 | | 22,906 |
| 88 |
| | | | | | | | |
Deferred tax assets |
| 226,132 |
| 203,043 | | |
| |
| | Balance sheet | | Profit or loss | ||||
| | March 31, 2023 | | December 31 2022 | | March 31, 2023 |
| March 31, 2022 |
Intangible assets on business combinations |
| (762,768) |
| (773,394) |
| 10,807 |
| 304 |
Total |
| (762,768) |
| (773,394) |
| 10,807 |
| 304 |
| | | | | | | | |
Deferred tax liabilities |
| (762,768) |
| (773,394) | | |
| |
The above deferred taxes were recorded at the nominal rate of 34%. Under Brazilian tax law, temporary differences and tax losses can be carried forward indefinitely, however tax loss carryforwards can only be used to offset up to 30% of taxable profit for the year.
9. | Prepaid expenses |
| | March 31, | | December 31, |
| | 2023 | | 2022 |
Costs related to future issuances | | 17,145 | | 8,514 |
Prepayments to suppliers | | 6,072 | | 4,303 |
Prepayments to hub partners | | - | | 5,109 |
Software licensing | | 3,235 | | 389 |
Insurance | | 134 | | 208 |
Others | | 2,520 | | 1,487 |
Prepaid expenses | | 29,106 | | 20,010 |
10. | Receivables from hub partners |
The receivables from hub partners are amounts of cash transferred to hub partners centers as follows:
|
| March 31, |
| December 31, |
| | 2023 | | 2022 |
Credit to hub partners – distance learning centers | | 98,313 | | 82,650 |
Allowance for expected credit losses of Receivables from hub partners | | (2,909) | | (2,554) |
Receivables from hub partners | | 95,404 | | 80,096 |
Current | | 42,402 | | 31,979 |
Non-current | | 53,002 | | 48,117 |
15
Vitru Limited
Notes to the unaudited interim condensed consolidated financial statements.
March 31, 2023 and 2022.
(In thousands of Brazilian Reais, except as otherwise indicated)
11. | Leases |
Set out below, are the carrying amounts of the Company’s right-of-use assets related to buildings used as offices and hubs and lease liabilities and the movements during the period:
| | 2023 | | 2022 | | 2023 | | 2022 | |
As of December 31 | | 350,393 | | 136,104 | | 323,339 | | 161,532 | |
New contracts | | — | | 949 | | — | | 949 | |
Re-measurement by index (i) | | 3,297 | | 10,613 | | 3,297 | | 10,613 | |
Lease modification/Low | | 623 | | (3,036) | | — | | (3,293) | |
Depreciation expense | | (7,738) | | (4,479) | | — | | — | |
Accrued interest | | — | | — | | 8,351 | | 4,139 | |
Payment of principal | | — | | — | | (5,171) | | (3,588) | |
Payment of interest | | — | | — | | (8,351) | | (4,139) | |
As of March 31 | | 346,575 | | 140,151 | | 321,465 | | 166,213 | |
| | | |
| | | |
| |
Current | | - | | - | | 50,469 | | 29,693 | |
Non-current | | 346,575 | | 140,151 | | 270,996 | | 136,520 | |
(i) Lease liabilities and right-of-use assets were increased due to lease payments that depend on an index or rate, such as annual rental prices contractually adjusted by the General Market Price Index or IGP-M.
The Group recognized a rental expense for short-term leases and low-value assets of R$ 1,713 in the quarter ended March 31, 2023 (2022 - R$ 1,120), mainly represented by leases of telecommunications and information technology equipment.
16
Vitru Limited
Notes to the unaudited interim condensed consolidated financial statements.
March 31, 2023 and 2022.
(In thousands of Brazilian Reais, except as otherwise indicated)
12. | Property and equipment |
|
| IT equipment |
| Furniture, equipment and facilities |
| Library books |
| Vehicles |
| Lands |
| Construction in progress |
| Leasehold improvements |
| TOTAL |
As of December 31, 2021 | | | | | | | | | | | | | | | | |
Net book value | | 15,446 | | 32,518 | | 2,976 | | — | | — | | 1,180 | | 54,719 | | 106,839 |
Cost | | 33,650 | | 61,177 | | 20,994 | | — | | — | | 1,180 | | 76,494 | | 193,495 |
Accumulated depreciation | | (18,204) | | (28,659) | | (18,018) | | — | | — | | — | | (21,775) | | (86,656) |
| | | | | | | | | | | | | | | | |
Purchases | | 327 | | 296 | | — | | — | | — | | 928 | | 570 | | 2,121 |
Depreciation | | (1,162) | | (1,031) | | (255) | | — | | — | | — | | (2,078) | | (4,526) |
As of March 31, 2022 | | | | | | | | | | | | | | | | |
Net book value | | 14,611 | | 31,783 | | 2,721 | | — | | — | | 2,108 | | 53,211 | | 104,434 |
Cost | | 33,977 | | 61,473 | | 20,994 | | — | | — | | 2,108 | | 77,064 | | 195,616 |
Accumulated depreciation | | (19,366) | | (29,690) | | (18,273) | | — | | — | | — | | (23,853) | | (91,182) |
| | | | | | | | | | | | | | | | |
As of December 31, 2022 | | | | | | | | | | | | | | | | |
Net book value | | 33,287 | | 79,990 | | 4,208 | | 1,160 | | 4,566 | | 10,648 | | 60.716 | | 194,575 |
Cost | | 90,947 | | 156,004 | | 37,719 | | 5,215 | | 4,566 | | 10,648 | | 85.432 | | 390,531 |
Accumulated depreciation | | (57,660) | | (76,014) | | (33,511) | | (4,055) | | — | | — | | (24.716) | | (195,956) |
| | | | | | | | | | | | | | | | |
Purchases | | 256 | | 3,748 | | 43 | | — | | — | | 751 | | 88 | | 4,886 |
Disposals | | (44) | | — | | — | | — | | — | | — | | — | | (44) |
Depreciation | | (2,479) | | (3,019) | | (401) | | (77) | | — | | — | | (1,646) | | (7,622) |
As of March 31, 2023 | | | | | | | | | | | | | | | | |
Net book value | | 31,020 | | 80,719 | | 3,850 | | 1,083 | | 4,566 | | 11,399 | | 59,158 | | 191,795 |
Cost | | 91,159 | | 159,752 | | 37,762 | | 5,215 | | 4,566 | | 11,399 | | 85,520 | | 395,373 |
Accumulated depreciation | | (60,139) | | (79,033) | | (33,912) | | (4,132) | | — | | — | | (26,362) | | (203,578) |
The Group performs its impairment test when circumstances indicates that the carrying value may be impaired or annually when required. The Group’s impairment tests are based on value-in-use calculations. The key assumptions used to determine the recoverable amount for the cash generating units were disclosed in the annual consolidated financial statements for the year ended December 31, 2022.
As of March 31, 2023, there were no indicators of a potential impairment of goodwill. Additionally, there are no significant changes to the assumptions used for the impairment test in the annual consolidated financial statements for the year ended December 31, 2022. Also, there has been no evidence that the carrying amounts of property and equipment and finite-life intangible assets exceed their recoverable amounts as of March 31, 2023.
17
Vitru Limited
Notes to the unaudited interim condensed consolidated financial statements.
March 31, 2023 and 2022.
(In thousands of Brazilian Reais, except as otherwise indicated)
13. | Intangible assets |
|
|
| Software |
| Internal project development |
| Trademarks |
| Operation licenses for distance learning |
| Licenses to operate medical courses |
| Non-compete agreements |
| Customer relationship |
| Teaching/ learning material - TLM |
| Goodwill |
| TOTAL |
As of December 31, 2021 | | | | | | | | | | | | | | | | | | | | | |
Net book value | | | 20,670 | | 44,887 | | 53,985 | | 245,721 | | — | | 292 | | — | | 218 | | 304,815 | | 670,588 |
Cost | | | 66,575 | | 65,216 | | 85,163 | | 245,721 | | — | | 10,826 | | — | | 7,344 | | 372,268 | | 853,113 |
Accumulated amortization and impairment | | | (45,905) | | (20,329) | | (31,178) | | — | | — | | (10,534) | | — | | (7,126) | | (67,453) | | (182,525) |
| | | — | | — | | | | | | | | | | | | | | | | — |
Purchase and capitalization | | | 1,136 | | 6,921 | | — | | — | | — | | — | | — | | — | | — | | 8,057 |
Amortization | | | (1,959) | | (3,014) | | (890) | | — | | — | | (292) | | — | | (218) | | — | | (6,373) |
Impairment losses | | | — | | — | | | | | | | | — | | | | | | — | | — |
As of March 31, 2022 | | | | | | | | | | | | | | | | | | | | | |
Net book value | | | 19,847 | | 48,794 | | 53,095 | | 245,721 | | — | | — | | — | | — | | 304,815 | | 672,272 |
Cost | | | 67,711 | | 72,137 | | 85,163 | | 245,721 | | — | | 10,826 | | — | | 7,344 | | 372,268 | | 861,170 |
Accumulated amortization and impairment | | | (47,864) | | (23,343) | | (32,068) | | — | | — | | (10,826) | | — | | (7,344) | | (67,453) | | (289,593) |
| | | — | | | | | | | | | | | | | | | | | | — |
As of December 31, 2022 | | | | | | | | | | | | | | | | | | | | | |
Net book value | | | 60,071 | | 64,721 | | 393,863 | | 1,458,209 | | 55,454 | | 250,378 | | 261,190 | | 21,168 | | 1,862 |