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 2022

 

Commission File Number: 001-39415 

 

Vasta Platform Limited

(Exact name of registrant as specified in its charter)

 

Av. Paulista, 901, 5th Floor

Bela Vista

São Paulo – SP, 01310-100

Brazil
+55 (11) 3047-2655

(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

 

ITEM  
99.1 Vasta Platform Limited Unaudited Interim Condensed Consolidated Financial Statements as of March 31, 2022, and for the three-month periods ended March 31, 2022 and 2021.

 

 

 

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.

 

    Vasta Platform Limited
     
     
      By: /s/ Mario Ghio Junior
        Name: Mario Ghio Junior
        Title: Chief Executive Officer

 

 

Date: May 31, 2022

 

 

 

 

 

Exhibit 99.1

 

 

VASTA Platform Limited

 

 

 

 

 

 

Unaudited Interim Condensed Consolidated Financial Statements 

Three-month period ended March 31, 2022

 

 

 

 

 

 

 

 

VASTA Platform Limited

Unaudited Interim Condensed Consolidated

Financial Statements

Three-month period ended March 31, 2022

 

Content

 

 

Consolidated statement of financial position 3
   
Consolidated interim statement of profit or loss and other comprehensive income 5
   
Consolidated interim statement of changes in equity 6
   
Consolidated interim statement of cash flows 7
   
Notes to the condensed consolidated interim financial statements    9
   

2 

VASTA Platform Limited

 

Condensed Consolidated Interim Statement of Financial Position

As of March 31, 2022 and December 31, 2021 

In thousands of R$, unless otherwise stated

 

Assets  Note 

March 31, 2022

  December 31, 2021
Current assets         
Cash and cash equivalents  7   145,998    309,893 
Marketable securities  8   303,675    166,349 
Trade receivables  9   576,388    505,514 
Inventories  10   208,744    242,363 
Taxes recoverable      27,040    24,564 
Income tax and social contribution recoverable      9,689    8,771 
Prepayments      57,335    40,069 
Other receivables      982    2,105 
Related parties – other receivables  18   1,126    501 
Total current assets      1,330,977    1,300,129 
              
Non-current assets             
Judicial deposits and escrow accounts  19   177,579    178,824 
Deferred income tax and social contribution      129,453    130,405 
Property, plant and equipment  11   222,265    185,682 
Intangible assets and goodwill  12   5,542,991    5,538,367 
              
Total non-current assets      6,072,288    6,033,278 
              
Total Assets      7,403,265    7,333,407 

 

 

The accompanying notes are an integral part of this Unaudited Condensed Consolidated Interim Financial Statements

 

3 

VASTA Platform Limited

 

Condensed Consolidated Interim Statement of Financial Position

As of March 31, 2022 and December 31, 2021

 

In thousands of R$, unless otherwise stated

 

Liabilities  Note 

March 31, 2022

  December 31, 2021
         
Current liabilities         
Bonds and financing  13   267,568    281,491 
Lease liabilities  15   27,915    26,636 
Suppliers  14   261,219    264,787 
Income tax and social contribution payable      16,644    16,666 
Salaries and social contributions  17   75,952    62,829 
Contractual obligations and deferred income      44,812    46,037 
Accounts payable for business combination  16   59,296    20,502 
Other liabilities      25,350    20,033 
Other liabilities - related parties  18   30,393    39,271 
Total current liabilities      809,149    778,252 
              
Non-current liabilities             
Bonds and financing  13   549,948    549,735 
Lease liabilities  15   139,640    133,906 
Accounts payable for business combination  16   511,364    511,811 
Provision for tax, civil and labor losses  19   652,015    646,850 
Contract liabilities and deferred income      4,544    128 
Other liabilities      47,080    47,516 
Total non-current liabilities      1,904,591    1,889,946 
              
Shareholder's Equity             
Share Capital  21   4,820,815    4,820,815 
Capital reserve      65,614    61,488 
Treasury shares      (23,880)   (23,880)
Accumulated losses      (173,024)   (193,214)
Total Shareholder's Equity      4,689,525    4,665,209 
              
 Total Liabilities and Shareholder's Equity      7,403,265    7,333,407 

 

The accompanying notes are an integral part of this Unaudited Condensed Consolidated Interim Financial Statements

 

4 

VASTA Platform Limited

 

Unaudited Condensed Consolidated Interim Statement of Profit or Loss and Other Comprehensive Income for the three-month period ended March 31, 2022 and 2021 

In thousands of R$, except earnings for share

 

   Note  March 31, 2022  March 31, 2021
          
Net revenue from sales and services  22   380,581    280,832 
Sales      371,886    274,884 
Services      8,695    5,948 
              
Cost of goods sold and services  23   (129,237)   (113,982)
              
Gross profit      251,344    166,850 
              
Operating income (expenses)             
General and administrative expenses  23   (126,088)   (109,876)
Commercial expenses  23   (47,933)   (49,509)
Other operating income, net  23   933    2,467 
Impairment losses on trade receivables  9 and 23   (8,896)   (2,609)
              
Profit before finance result and taxes      69,360    7,323 
              
Finance result             
Finance income  24   15,269    5,463 
Finance costs  24   (57,963)   (19,715)
              
              
Profit (Loss) before income tax and social contribution      26,666    (6,929)
              
Income tax and social contribution  20   (6,476)   1,412 
              
Profit (Loss) for the period      20,190    (5,517)
Basic earnings (loss) per share – R$  21   0,242    (0,066)
Diluted earnings (loss) per share – R$  21   0,239    (0,065)

 

The accompanying notes are an integral part of this Unaudited Condensed Consolidated Interim Financial Statements

 

5 

VASTA Platform Limited

 

Condensed Consolidated Interim Statement of Changes in Equity

For the three-month periods ended March 31, 2022 and 2021 

In thousands of R$, unless otherwise stated

 

   Share Capital  Share issuance costs  Share-based
compensation
reserve (granted)
  Share-based
compensation
reserve (vested)
  Treasury shares  Accumulated
losses
  Total Shareholders'
Equity/ Net Investment
Balance as of December 31,2020   4,961,988    (141,173)   38,962    -    -    (74,460)   4,785,317 
Loss for the period                            (5,517)   (5,517)
Share based compensations granted and issued             5,271                   5,271 
Balance as of March 31, 2021    4,961,988    (141,173)   44,233    -    -    (79,977)   4,785,071 
                                    
                                    
Balance as of December 31, 2021   4,961,988    (141,173)   30,445    31,043    (23,880)   (193,214)   4,665,209 
Profit for the period                            20,190    20,190 
Share based compensations granted and issued             4,126                   4,126 
Balance as of March 31, 2022    4,961,988    (141,173)   34,571    31,043    (23,880)   (173,024)   4,689,525 

 

The accompanying notes are an integral part of this Unaudited Condensed Consolidated Interim Financial Statements

 

6 

VASTA Platform Limited

 

Unaudited Condensed Consolidated Interim Statement of Cash Flows

For the three-month periods ended March 31, 2022 and 2021

 

In thousands of R$ unless otherwise stated

 

     Three-month period ended March 31,
   Notes  2022  2021
          
CASH FLOWS FROM OPERATING ACTIVITIES         
 Profit (loss) before income tax and social contribution      26,666    (6,929)
 Adjustments for:             
Depreciation and amortization  11 and 12   64,287    48,585 
Impairment losses on trade receivables  9   8,896    2,609 
Reversal of provision for tax, civil and labor losses  19   (6,109)   (740)
Interest on provision for tax, civil and labor losses  19   11,454    5,630 
Provision for obsolete inventories  10   6,780    4,838 
Interest on bonds and financing     23,975    6,077 
Contractual obligations and right to returned goods      (10,732)   (6,220)
Imputed interest on suppliers      -    1,452 
Interest on accounts payable for business combination      13,694    167 
Share-based payment expense      4,126    5,271 
Interest on lease liabilities  15   3,596    4,022 
Interest on marketable securities incurred  24   (11,459)   (3,298)
Disposals of right of use assets and lease liabilities  11 and 15   (1,285)   14 
              
Changes in      133,889    61,478 
 Trade receivables  9   (79,574)   3,133 
 Inventories  10   26,787    4,564 
 Prepayments      (17,266)   1,588 
 Taxes recoverable      (2,434)   (184)
 Judicial deposits and escrow accounts  19   1,245    644 
 Other receivables      1,123    - 
 Suppliers  14   (3,568)   (16,804)
 Salaries and social charges  17   13,153    (6)
 Tax payable      (5,852)   (2,000)
 Contractual obligations and deferred income      13,976    (3,128)
 Other receivables and liabilities from related parties  18   (9,504)   20,281 
 Other liabilities      4,880    2,287 
 Cash from operating activities      76,855    71,853 
Income tax and social contribution paid      (523)   - 
Interest on liabilities paid  15   (3,750)   (4,021)
Payment of interest on bonds and financing     (37,640)   (12,215)
Payment of provision for tax, civil and labor losses  19   (180)   (9)
Net cash generated by operating activities      34,762    55,608 
CASH FLOWS FROM INVESTING ACTIVITIES             
Acquisition of property, plant and equipment  11   (34,435)   (2,481)
Additions of intangible assets  12   (19,716)   (9,107)
Acquisition of subsidiaries net of cash acquired  5   (8,475)   (36,663)
Proceeds from (purchase of) investment in marketable securities  8   (125,866)   234,819 
 Net cash (applied in) from investing activities      (188,492)   186,568 
              

7 

VASTA Platform Limited

 

Unaudited Condensed Consolidated Interim Statement of Cash Flows

For the three-month periods ended March 31, 2022 and 2021 

In thousands of R$ unless otherwise stated

 

CASH FLOWS FROM FINANCING ACTIVITIES         
          
Payments of loans from related parties     -  (20,884)
Lease liabilities paid  15   (5,654)   (4,977)
Payments of bonds and financing     -    (100,000)
Payments of accounts payable for business combination  16   (4,511)   (12,378)
 Net cash applied in financing activities      (10,165)   (138,239)
              
 NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS     (163,895)   103,937 
             
 Cash and cash equivalents at beginning of period  7   309,893    311,156 
 Cash and cash equivalents at end of period  7   145,998    415,093 
              
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS      (163,895)   103,937 

 

The accompanying notes are an integral part of this Unaudited Condensed Consolidated Interim Financial Statements

 

8 

VASTA Platform Limited

 

Notes to the Unaudited Interim Condensed Consolidated Financial Statements

(Amounts in thousands of R$, unless otherwise stated)

 

1.Corporate information

 

1.1 The Company

 

Vasta Platform Ltd. (herein referred to as the “Company”, or previously named “Vasta Platform”, “Vasta’s Parent Company” or “Business”) is a publicly held company incorporated in the Cayman Islands on October 16, 2019, with headquarters in the city of São Paulo, Brazil. The Company is a technology-powered education content providing end-to-end educational and digital solutions that cater to all needs of private schools operating in the K-12 educational segment. Vasta’s fiscal year begins on January 1 of each year and ends on December 31 of the same year.

 

The Company has built a “Platform as a Service” solution or PaaS, with two main modules: Content & EdTech Platform and Digital Services. The Company’s Content & EdTech Platform combines a multi-brand and tech-enabled array with printed and digital content through long-term contracts with partner schools.

 

Since July 31, 2020, Vasta Platform Ltd. has been a publicly-held company registered with SEC (“The US Securities and Exchange Commission) and its shares are traded on Nasdaq Global Select Market under ticker symbol “VSTA”.

 

1.2 Significant events during the period

 

(a) Business Combination

 

On January 14, 2022, the Company acquired the companies Phidelis Tecnologia Desenvolvimento de Sistemas Ltda. and MVP Consultoria e Sistemas Ltda. (“Phidelis”), when the control over the entity was transferred upon all conditions established on the share purchase agreement and the liquidation was completed.

 

Phidelis is a complete platform of academic and financial management for K-12 schools, providing (i) software licensing and development, and (ii) messaging, retention, enrollment and default management for schools and students. In addition to aggregating a digital solution and bringing in new clients, Phidelis’ team will support the development of Vasta’s digital services platform.

 

The Consolidated Financial Statements comprise the following entities, which are all fully owned by the Company:

 

Company 

March 31, 2022

  December 31, 2021
   Interest %  Interest %
Somos Sistemas de Ensino S.A (“Somos Sistemas”)   100%   100%
Livraria Livro Fácil Ltda. (“Livro Fácil”)   100%   100%
A & R Comercio e Serviços de Informática Ltda. (“Pluri”)   100%   100%
Mind Makers Editora Educacional (“Mind Makers”)   100%   100%
Colégio Anglo São Paulo   100%   100%
Meritt Informação Educacional Ltda (“Meritt”)   100%   100%
Sociedade Educacional da Lagoa Ltda (“SEL”)   100%   100%
Nota 1000 Serviços Educacionais Ltda (“Redação Nota 1000”)   100%   100%
EMME – Produções de Materiais em Multimídia Ltda (“EMME”).   100%   100%
Editora De Gouges S.A (“De Gouges”)   100%   100%
Phidelis Tecnologia Desenvolvimento de Sistemas Ltda (“Phidelis”)   100%   - 
MVP Consultoria e Sistemas Ltda. (“MVP”)   100%   - 

 

9 

VASTA Platform Limited

 

2.Basis of accounting

 

These interim financial statements for the three-month period ended 31 March 2022 have been prepared in accordance with IAS 34 Interim Financial Reporting and should be read in conjunction with the Group’s last annual consolidated financial statements as at and for the year ended 31 December 2021 (‘last annual financial statements’). They do not include all of the information required for a complete set of financial statements prepared in accordance with IFRS Standards. However, selected explanatory notes are included to explain events and transactions that are significant to an understanding of the changes in the Group’s financial position and performance since the last annual financial statements.

 

These Condensed Consolidated Interim Financial Statements are presented in thousands of Brazilian Reais (“R$”), which is the Company functional currency. All financial information presented in R$ has been rounded to the nearest thousand, except as otherwise indicated.

 

3.Use of judgements and estimates

 

In preparing these interim financial statements, management has made judgements and estimates that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expense. Actual results may differ from these estimates.

 

The significant judgements made by management in applying the Group’s accounting policies and the key sources of estimation uncertainty were the same as those described in the last annual financial statements.

 

Measurement of fair values

 

A number of the Group’s accounting policies require the measurement of fair values, for both financial and non-financial assets and liabilities.

 

In estimating the fair value of an asset or a liability, the Company uses market-observable data to the extent it is available. All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorized within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole:

 

·Level 1 - quoted prices (unadjusted) in active markets for identical assets or liabilities.

 

·Level 2 - valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable.

 

·Level 3 - valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable.

 

Where Level 1 inputs are not available, if needed, the Company engages third party qualified appraisers to perform the valuation using Level 2 and / or Level 3 inputs. If the inputs used to measure the fair value of an asset or a liability are categorized in different levels of the fair value hierarchy, then the fair value measurement is categorized in its entirety in the same level of the fair value hierarchy as the lowest level input that is significant to the entire measurement.

 

The Company’s management establishes the appropriate valuation techniques and inputs to the model, working closely with the qualified external advisors when they are engaged in such activities.

 

The valuations of identifiable assets and contingent liabilities in business combinations could be particularly sensitive to changes in one or more unobservable inputs considered in the valuation process. Further information on the assumptions used in the valuation process of such items is provided in Note 5.

 

Fair value measurement assumptions are also used for determination of expenses with Share-based Compensation, which are disclosed in Note 21.

 

10 

VASTA Platform Limited

 

4.Significant accounting policies

 

The accounting policies applied in these interim financial statements are the same as those applied in the Group’s consolidated financial statements as at and for the year ended 31 December 2021. The accounting policies have been consistently applied to all consolidated companies. There are no new accounting policies that could be applicable since January 1, 2022 or early adopted in the Unaudited Consolidated Interim Financial Statements.

 

5Business Combinations

 

As mentioned in Note 1.2, on January 14, 2022, the Company acquired the companies Phidelis Tecnologia Desenvolvimento de Sistemas Ltda. and MVP Consultoria e Sistemas Ltda. (“Phidelis”), when the control over the entity was transferred upon all conditions established on the share purchase agreement and the liquidation was completed.

 

The Company will pay the total amount of R$17,057, of which R$8,854 was paid in cash on the acquisition date and the remaining amount of R$8,203 to be paid in 2-year installments. The contract has an earn-out clause of R$20,637, which will be paid in 3 installments adjusted by the IPCA, linked to the achievement of performance targets between 2022 and 2025. Phidelis is a complete platform of academic and financial management for K-12 schools, providing (i) software licensing and development, and (ii) messaging, retention, enrollment and default management for schools and students. In addition to aggregating a digital solution and bringing in new clients, Phidelis’ team will support the development of Vasta’s digital services platform.

 

The acquisitions were accounted for using the acquisition method of accounting, i.e., the consideration transferred, and the net identifiable assets acquired, and liabilities assumed were measured at fair value, while goodwill is measured as the excess of consideration paid over those items. The following table presents the net identifiable assets acquired and liabilities assumed for each business combination in 2022:

 

   Phidelis  MVP  Total
Current assets         
Cash and cash equivalents   162    217    379 
Trade receivables   65    131    196 
Taxes recoverable   1    4    5 
Total current assets   228    352    580 
                
Non-current assets               
Property, plant and equipment   -    73    73 
Intangible assets - Software   510    2,635    3,145 
Total non-current assets   510    2,708    3,218 
Total Assets   738    3,060    3,798 
                
Current liabilities               
Salaries and social contributions   24    6    30 
Taxes payable   34    10    44 
Income tax and social contribution payable   -    80    80 
Other liabilities   2    10    12 
Total current liabilities   60    106    166 
Total liabilities   60    106    166 
                
Net identifiable assets at fair value (A)   678    2,954    3,632 
Total of Consideration transferred (B)   5,944    31,751    37,695 
Goodwill (B – A)   5,266    28,797    34,063 

 

 

From the date of acquisition to March 31, 2022, MVP and Phidelis contributed to the Condensed Consolidated Interim Financial Statements net sales and services the amount of R$834 and R$344, respectively, and net profit in the amount of R$15 and R$388, respectively.

 

11 

VASTA Platform Limited

 

6Financial Instruments and risk management

 

The Company holds the following financial instruments:

 

       
   March 31, 2022  December 31, 2021
      
Assets - Amortized cost          
 Cash and cash equivalents   145,998    309,893 
 Marketable Securities   303,675    166,349 
 Trade receivables   576,388    505,514 
 Other receivables   982    2,105 
 Related parties – other receivables   1,126    501 
    1,028,169    984,362 
           
Liabilities - Amortized cost          
 Bonds and financing   817,516    831,226 
 Lease liabilities   167,555    160,542 
 Reverse Factoring   98,953    97,619 
 Suppliers   162,266    167,168 
 Accounts payable for business combination   570,660    532,313 
 Other liabilities - related parties   30,393    39,271 
    1,847,343    1,828,139 

 

The Company’s financial instruments are recorded in the Condensed Consolidated Interim Statement of Financial Position at amounts that are consistent with their fair values.

 

Credit Risk

 

The maximum exposure to credit risk at the end of the reporting period is the carrying amount of each class of financial assets mentioned above.

 

Credit risk arises from the potential default of a counterparty on an agreement or financial instrument, resulting in financial loss. The Company is exposed to credit risk in its operating activities (mainly in connection with trade receivables, see Note 9) and financial activities that include reverse factoring deposits with banks and other financial institutions and other financial instruments contracted.

 

The Company mitigates its exposure to credit risks associated with financial instruments, deposits in banks and short-term investments by investing in prime financial institutions and in accordance with limits previously set in the Company’s policy. See Notes 7 and 8.

 

To mitigate risks associated with trade receivables, the Company adopts a sales policy and an analysis of the financial and equity condition of its counterparties. The sales policy is directly associated with the level of credit risk the Company is willing to accept in the normal course of its business.

 

The diversification of its receivable’s portfolio, the selectivity of its customers, as well as the monitoring of sales financing terms and individual position limits are procedures adopted to minimize defaults or losses in the realization of trade receivables. Thus, the Company does not have significant credit risk exposure to any single counterparty or any group of counterparties having similar characteristics.

 

Furthermore, the Company reviews the recoverable amount of its trade receivables at the end of each reporting period to ensure that adequate credit losses are recorded. See Note 9.

 

7Cash and cash equivalents

 

a.Composition

 

12 

VASTA Platform Limited

 

The balance of this account comprises the following amounts:

 

   March 31, 2022  December 31, 2021
Cash   117    100 
Bank account   7,439    17,772 
Financial investments (i)   138,442    292,021 
    145,998    309,893 

 

(i)The Company invests in short-term fixed income investment funds with daily liquidity and no material risk of change in value. Financial investments presented an average gross yield of 104,1% of the annual CDI rate on March 31, 2022 (105,2% on December 31, 2021). All investments are highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value and correspond to the cash obligations for the period.

 

8Marketable securities

 

a.Composition

 

The balance of this account comprises the following amounts:

 

   Credit risk  March 31, 2022  December 31, 2021
          
Financial bills (LF)  AAA   5,298    1,640 
National treasury notes (NTN)  AAA   17,413    - 
National treasury notes (NTN)  AA   37,737    - 
Financial treasury bills (LFT)  AAA   243,227    164,709 
Financial treasury bills (LFT)  AA   -    - 
       303,675    166,349 

 

The average gross yield of securities is based on 102,8% CDI on March 31, 2022 (101% CDI on December 31, 2021).

 

9Trade receivables

 

a.Composition

 

   March 31, 2022  December 31, 2021
Trade receivables   623,337    505,190 
Related Parties (Note 18)   5,434    46,824 
( - ) Impairment losses on trade receivables   (52,383)   (46,500)
    576,388    505,514 

 

b.Maturities of trade receivables

 

13 

VASTA Platform Limited

 

   March 31, 2022  December 31, 2021
Not yet due   509,340    417,233 
Past due          
Up to 30 days   37,591    9,657 
From 31 to 60 days   10,700    10,331 
From 61 to 90 days   357    7,366 
From 91 to 180 days   20,849    21,154 
From 181 to 360 days   27,602    23,852 
Over 360 days   16,898    15,597 
Total past due   113,997    87,957 
           
 Related parties (note 18)   5,434    46,824 
( - ) Provision for impairment of trade receivables   (52,383)   (46,500)
    576,388    505,514 

 

The gross book value of trade receivables is written off when the Company has no reasonable expectations of recovering the financial asset in its entirety or a portion thereof. Collection efforts continue to be made, even for the receivables that have been written off, and amounts recoverable are recognized directly in the Condensed Consolidated Interim Statement of Profit or Loss and Other Comprehensive Income upon collection.

 

c.Changes on provision

 

   March 31, 2022  March 31, 2021
Opening balance   46,500    32,055 
Additions   8,896    2,609 
Write offs   (3,013)   (3,678)
Closing balance   52,383    30,986 

 

10Inventories

 

The balance of this account comprises the following amounts:

 

a.Composition

 

   March 31, 2022  December 31, 2021
Finished products (i)   117,814    160,318 
Work in process   51,698    51,152 
Raw materials   37,154    27,081 
Imports in progress   -    1,681 
Right to returned goods (ii)   2,078    2,131 
    208,744    242,363 

 

(i)These amounts are net of slow-moving items and net realizable value.

 

(ii)Represents the Company’s right to recover products from customers when customers exercise their right of return under the Company’s returns policies, where the Company estimates the volume of goods returned based on experience and foreseen expectations.

 

14 

VASTA Platform Limited

 

b.Changes in provision

 

Changes in provision for losses with slow-moving inventories, net realizable value and provision for goods returned are broken down as follows:

 

   March 31, 2022  March 31, 2021
Opening balance   58,723    62,210 
Additions   6,904    5,910 
(Reversals)   (124)   (1,072)
   Inventory losses   -    (5,591)
Closing balance   65,503    61,457 

 

11Property, plant and Equipment

 

The changes in property, plant and equipment are as follows:

 

Cost 

IT

equipment

  Furniture, equipment, and fittings  Property, buildings and improvements  In progress  Rights of use assets  Land  Total
As of December 31, 2021   44,180    38,116    54,508    677    251,694    391    389,566 
Additions   31,849    2,015    282    289    15,929    -    50,364 
Additions by business combination   54    78    -    7    -    -    139 
Disposals   -    (6)   -    (18)   (4,103)   -    (4,127)
Transfers   21    2,118    (2,139)   -    -    -    - 
As of March 31, 2022   76,104    42,321    52,651    955    263,520    391    435,942 
Depreciation                                   
As of December 31, 2021   (27,565)   (29,726)   (36,636)   -    (109,957)   -    (203,884)
Depreciation charge for the period   (2,951)   (109)   (1,381)   -    (7,547)   -    (11,988)
Additions by business combination   -    (66)   -    -    -    -    (66)
Depreciation of disposals   -    -    -    -    2,261    -    2,261 
Transfers   -    (1,684)   1,684    -    -    -    - 
As of March 31, 2022   (30,516)   (31,585)   (36,333)   -    (115,243)   -    (213,677)

 

Net book value                     
As of December 31, 2021   16,615    8,390    17,872    677    141,737    391    185,682 
As of March 31, 2022   45,588    10,736    16,318    955    148,277    391    222,265 
Annual depreciation rates
   10% - 33%    10% - 33%    5% - 20%    -    12%   -      

 

 

Cost 

IT

equipment

  Furniture, equipment, and fittings  Property, buildings and improvements  In progress  Rights of use assets  Land  Total
As of December 31, 2020   27,036    36,314    51,407    315    241,906    453    357,431 
Additions   1,269    962    166    84    13,731    -    16,212 
Additions by business combination   107    504    -    -    -    -    611 
Disposals   -    (14)   -    -    -    -    (14)
As of March 31, 2021   28,412    37,766    51,573    399    255,637    453    374,240 
Depreciation                                   
As of December 31, 2020   (25,557)   (26,406)   (31,429)   -    (82,033)   -    (165,425)
Depreciation charge for the period   (292)   (811)   (1,277)   -    (6,918)   -    (9,297)
As of March 31, 2021   (25,849)   (27,217)   (32,706)   -    (88,951)   -    (174,722)

 

Net book value                     
As of December 31, 2020   1,479    9,908    19,978    315    159,873    453    192,006 
As of March 31, 2021   2,564    10,549    18,867    399    166,687    453    199,518 
Annual depreciation rates
   10% - 33%    10% - 33%    5% - 20%    -    12%   -      

 

 The Company assesses at each reporting date, whether there is an indication that a property, plant and equipment asset may be impaired. If any indication exists, the Company estimates the asset’s recoverable amount. There were no indications of impairment of property, plant and equipment as of and for the three-month periods ended March 31, 2022 and 2021.

 

12Intangible Assets and Goodwill

 

The changes in intangible assets and goodwill were as follows:

 

15 

VASTA Platform Limited

 

 

 

Cost  Software  Customer Portfolio  Trademarks 

Trade Agreement

  Platform content production  Other Intangible assets  In progress  Goodwill  Total
As of December 31, 2021   247,325    1,197,381    631,935    247,622    73,877    39,421    3,991    3,694,879    6,136,431 
Additions   7,940    -    -    -    8,779    -    2,039    958    19,716 
Additions by business combination   3,145    -    -    -    -    -    -    34,063    37,208 
Transfer   (2,085)   (140)   -    -    -    (1,099)   -    3,324    - 
As of March 31, 2022   256,325    1,197,241    631,935    247,622    82,656    38,322    6,030    3,733,224    6,193,355 

 

Amortization                           
As of December 31, 2021   (151,281)   (275,276)   (85,658)   (4,127)   (49,583)   (32,140)   -    -    (598,065)
Amortization charge for the period   (7,850)   (25,393)   (6,827)   (6,191)   (5,988)   (50)   -    -    (52,299)
As of March 31, 2022   (159,131)   (300,669)   (92,485)   (10,318)   (55,571)   (32,190)   -    -    (650,364)

 

Net book value                           
As of December 31, 2021   96,045    922,105    546,277    243,495    24,294    7,281    3,991    3,694,879    5,538,367 
As of March 31, 2022   97,194    896,572    539,450    237,304    27,085    6,132    6,030    3,733,224    5,542,991 
Weighted average amortization rate   15%   8%   5%   8%   33%   33%   -    -      

 

 

 

 

Cost  Software  Customer Portfolio  Trademarks 

Trade Agreement

  Platform content production  Other Intangible assets  In progress  Goodwill  Total
As of December 31, 2020   204,213    1,113,792    631,935    -    53,069    38,283    999    3,307,805    5,350,096 
Additions   2,031    -    -    -    5,595    -    1,481    -    9,107 
Additions by business combination   1,810    -    -    -    -    -    -    60,988    62,798 
Transfer   1,674    18,783                   -         (20,457)   - 
As of March 31, 2021   209,728    1,132,575    631,935    -    58,664    38,283    2,480    3,348,336    5,422,001 

 

Amortization                           
As of December 31, 2020   (120,798)   (184,934)   (58,349)   -    (29,248)   (32,040)   -    -    (425,369)
Amortization charge for the period   (6,686)   (21,473)   (6,827)   -    (4,301)   (1)   -    -    (39,288)
As of March 31, 2021   (127,484)   (206,407)   (65,176)   -    (33,549)   (32,041)   -    -    (464,657)

 

Net book value                           
As of December 31, 2020   83,415    928,858    573,586    -    23,821    6,243    999    3,307805    4,924,727 
As of March 31, 2021   82,244    926,168    566,759    -    25,115    6,242    2,480    3,348,336    4,957,344 
Weighted average amortization rate   15%    8%    5%    8%    33%    33%   -    -      

 

 

Impairment test for goodwill

 

The Company performs its annual impairment test in December and whenever circumstances indicate that the carrying value may be impaired. The Company’s impairment test for goodwill is assessed by comparing it carrying amount with its recoverable amount. The key assumptions used to determine the recoverable amount for the different cash generating units were disclosed in the annual consolidated financial statements for the year ended December 31, 2021.

 

There were no indications of impairment for the three-month periods ended March 31, 2022.

 

16 

VASTA Platform Limited

 

13Bonds and financing

 

The balance of bonds and financing comprises the following amounts:

 

  

March 31, 2022

  December 31, 2021  Interest rate
  Private Bonds – 5th Issuance - series 2   103,162    104,844   CDI + 1.00% p.a.
  Private Bonds – 6th Issuance - series 2   206,962    210,920   CDI + 1.70% p.a.
  Bonds – 1st Issuance - single   506,549    514,574   CDI + 2.30% p.a.
Financing and Lease Liabilities - Mind Makers   843    888   TJLP + 5% p.a.
    817,516    831,226    
Current   267,568    281,491    
Non-current   549,948    549,735    

 

See below the bonds outstanding on March 31, 2022:

 

Subscriber   Related Parties   Related Parties   Third parties
Issuance   5th   6th   1st
Series   2nd Series   2nd Series   Single Series
Date of issuance   08/15/2018   08/15/2017   08/06/2021
Maturity Date   08/15/2023   08/15/2022   08/05/2024
First payment after   60 months   60 months   35 months
Remuneration payment   Semi-annual interest   Semi-annual interest   Semi-annual interest
Financials charges   CDI + 1,00% p.a.   CDI + 1,70% p.a.   CDI + 2,30% p.a.
Principal amount (in millions of R$)   100   200   500

 

14Suppliers

 

The balance of this account comprises the following amounts:

 

  

March 31, 2022

  December 31, 2021
Local suppliers   136,588    132,124 
Related parties (note 18)   9,106    19,534 
Copyright   16,572    15,510 
Reverse Factoring (i)   98,953    97,619 
    261,219    264,787 

 

(i)Some of the Company’s domestic suppliers sell their products with extended payment terms and may subsequently transfer their receivables due by the Company to financial institutions without right of recourse, in a transaction characterized as “Reverse Factoring”. The Company charged interest over the payment term at a rate that is commensurate with its own credit risk. The reverse factoring presents maturity dates from one year.

 

17 

VASTA Platform Limited

 

15Lease liabilities

 

The lease agreements have an average term of 7 years and weighted average rate of 14.32% p.a.

 

  

March 31, 2022

  December 31, 2021
Opening balance   160,542    173,103 
Additions for new lease agreements (i)   1,268    25,513 
Renegotiation   14,661    (12,439)
Cancelled contracts   (3,151)   (3,481)
Renegotiation   -    (448)
Interest   3,596    14,984 
Payment of interest   (3,750)   (14,692)
Payment of principal   (5,611)   (21,998)
Closing balance   167,555    160,542 
           
Current liabilities   27,915    26,636 
Non-current liabilities   139,640    133,906 
    167,555    160,542 

 

(i)Refers to new lease agreements which the Company has embedded part of its digital learning solutions. Those lease agreements (digital learning) refer to lease terms of 36 months, with rates negotiated in the range from 10,3% p.a to 10,88% p.a.

 

Short-term leases (lease period of 12 months or less) and leases of low-value assets (such as personal computers and office furniture) are recognized on a straight-line basis in rent expenses for the period and are not included in lease liabilities.

 

The Company recognized rent expense from short-term leases and low-value assets of R$ 10,157 for the three-month period ended March 31, 2022 (March 31, 2021: R$ 9,777).

 

16Accounts payable for business combination

 

  

March 31, 2022

  December 31, 2021
Pluri   3,330    3,251 
Mind Makers   7,213    7,044 
Livro Fácil   9,686    14,055 
Meritt   3,368    3,347 
SEL   27,588    26,935 
Redação Nota 1000   7,396    7,230 
EMME   14,096    12,780 
Editora De Gouges   468,768    457,671 
Phidelis (i)   29,215    - 
    570,660    532,313 
           
Current   59,296    20,502 
Non-current   511,364    511,811 
    570,660    532,313 

 

(i)The liability is composed of the remaining amount to be paid due to acquisition of Phidelis including the earn-out clause as per Note 5.

 

18 

VASTA Platform Limited

 

17Salaries and Social Contribution

 

  

March 31, 2022

  December 31, 2021
Salaries payable   31,635    22,348 
Social contribution payable (i)   21,983    23,926 
Provision for vacation pay and 13th salary   15,356    10,616 
Provision for profit sharing (ii)   6,894    5,923 
Others   84    16 
    75,952    62,829 

 

(i)Refers to the effect of social contribution over restricted share unit’s compensation plans. The Company records the taxes over the shares on a monthly basis according to the Company’s share price.

 

(ii)The provision for profit sharing is based on qualitative and quantitative metrics determined by Management.

 

18Related parties

 

As presented in note 1, the Company is part of Cogna and some of the Company’s transactions and arrangements involve entities that belong to the Cogna. The effect of these transactions is reflected in these Consolidated Financial Statements, with these related parties segregated by nature of transaction measured on an arm’s length basis and determined by intercompany agreements and approved by the Company’s Management.

 

The balances and transactions between the Company and its affiliates have been eliminated in the Company’s Consolidated Financial Statements. The balances and transactions between related parties are shown below:

 

19 

VASTA Platform Limited

 

   March 31, 2022
   Other receivables (i) 

Trade receivables

(Note 9)

  Indemnification asset  Other payments (ii)  Suppliers (note 14)  Bonds
(note 13)
Anhanguera Educacional Participacoes SA.   -    413    -    -    -    - 
Cogna Educação S.A.   -    -    164,361    3,583    -    310,305 
Editora Atica S.A.   -    1,540    -    12,772    5,859    - 
Editora E Distribuidora Educacional S.A.   -    436    -    14,038    88    - 
Editora Scipione S.A.   -    412    -    -    18    - 
Maxiprint Editora Ltda.   -    329    -    -    25    - 
Pitagoras Sistema De Educacao Superior Ltda.   -    76    -    -    -    - 
Saber Serviços Educacionais S.A.   14    861    -    -    327    - 
Saraiva Educacao S.A.   755    1,367    -    -    2,156    - 
SGE Comercio De Material Didatico Ltda.   -    -    -    -    633    - 
Somos Idiomas SA   357    -    -    -    -    - 
    1,126    5,434    164,361    30,393    9,106    310,315 

 

(i)Refers substantially to accounts receivable generated from sharing costs e.g., IT services shared by the Company to Cogna.

 

(ii)Refers substantially to accounts payable by sharing expenses e.g., property leasing, personnel and IT licenses shared with Cogna.

 

20 

VASTA Platform Limited

 

   December 31, 2021
   Other receivables (i) 

Trade receivables

(Note 9)

  Indemnification asset  Other payments (ii)  Suppliers (note 14)  Bonds
(note 13)
Acel Adminstração de Cursos Educacionais Ltda   -    6,482    -    -    474    - 
Anhanguera Educacional Participacoes SA.   -    413    -    -    -    - 
Centro Educacional Leonardo Da Vinci SS   -    -    -    -    6    - 
Cogna Educação S.A.   -    -    160,470    3,021    -    315,764 
Colégio Ambiental Ltda   -    805    -    -    -    - 
Colégio JAO Ltda.   -    4,974    -    -    33    - 
Colegio Manauara Lato Sensu Ltda.   -    3,291    -    -    458    - 
Colegio Manauara Cidade Nova Ltda.        395              -      
Colegio Visao Eireli   -    132    -    -    13    - 
Colégio Cidade Ltda   -    397    -    -    15    - 
Colégio do Salvador Ltda        1              -      
Curso e Colégio Coqueiro Ltda   -    434    -    -    20    - 
ECSA  Escola A Chave do Saber Ltda   -    1,444    -    -    16    - 
Editora Atica S.A.   -    2,207    -    20,040    9,239    - 
Editora E Distribuidora Educacional S.A.   -    436    -    15,754    88    - 
Editora Scipione S.A.   -    445    -    211    556    - 
Educação Inovação e Tecnologia S.A.   -    -    -    128    -    - 
Escola Mater Christi Ltda.   -    765    -    -    139    - 
Escola Riacho Doce Ltda   -    -    -    -    24    - 
Maxiprint Editora Ltda.   -    1,205    -    117    76    - 
Nucleo Brasileiro de Estudos Avançados Ltda   -    420    -    -    45    - 
Papelaria Brasiliana Ltda   -    644    -    -    -    - 
Pitagoras Sistema De Educacao Superior Ltda.   -    76    -    -    -    - 
Saber Serviços Educacionais S.A.   14    7,269    -    -    578    - 
Saraiva Educacao S.A.   365    1,179    -    -    5,136    - 
SGE Comercio De Material Didatico Ltda.   -    -    -    -    1,687    - 
Sistema P H De Ensino Ltda.   -    4,421    -    -    177    - 
Sociedade Educacional Alphaville Ltda   -    1,257    -    -    1    - 
Sociedade Educacional Doze De Outubro Ltda.   -    734    -    -    47    - 
Sociedade Educacional Parana Ltda.   -    91    -    -    11    - 
Somos Idiomas SA   122    -    -    -    -    - 
Somos Operações Escolares S.A.   -    3,305    -    -    29    - 
SSE Serviços Educacionais Ltda.   -    3,602    -    -    665    - 
    501    46,824    160,470    39,271    19,533    315,764 

 

(iii)Refers substantially to accounts receivable generated from sharing costs e.g., IT services shared by the Company to Cogna.

 

(iv)Refers substantially to accounts payable by sharing expenses e.g., property leasing, personnel and IT licenses shared with Cogna.

 

   Three months ended March 31, 2022  Three months ended March 31, 2021
Transactions held:  Revenues  Finance costs (i)  Cost Sharing (note 20d)  Sublease (note 20f)  Revenues  Finance costs  Cost Sharing (note 20d)  Sublease (note 20f)
                         
 Acel Administracao De Cursos Educacionais Ltda.   -    -    -    -    271    -    -    - 
 Centro Educacional Leonardo Da Vinci SS   -    -    -    -    35    -    -    - 
 Cogna Educação S.A.   -    8,611    -    -    -    5,929    -    - 
 Colégio Ambiental Ltda   -    -    -    -    242    -    -    - 
 Colégio Cidade Ltda   -    -    -    -    75    -    -    - 
 Colegio JAO Ltda.   -    -    -    -    432    -    -    - 
 Colégio Manauara Lato Sensu Ltda.   -    -    -    -    174    -    -    - 
 Colégio Motivo Ltda.   -    -         -    9    -    -    - 
 Colégio Visão Ltda   -    -    -    -    158    -    -    - 
 Cursos e Colégio Coqueiros Ltda   -    -    -    -    121    -    -    - 
 Ecsa  Escola A Chave Do Saber Ltda.   -    -    -    -    50    -    -    - 
 Editora Atica S.A.   3,415    -    1,183    2,109    780    -    1,396    856 

21 

VASTA Platform Limited

 

 Editora E Distribuidora Educacional SA.   -    -    6,059    -    -    -    7,149    - 
 Editora Scipione SA.   737    -    -    -    641    -    -    - 
 Escola Mater Christi   -    -    -    -    26    -    -    - 
 Escola Riacho Doce Ltda   -    -    -    -    38    -    -    - 
 Maxiprint Editora Ltda.   2,203    -    -    -    -    -    -    - 
 Nucleo Brasileiro de Estudos Avancados Ltda   -    -    -    -    23    -    -    - 
 Saber Serviços Educacionais S.A.   41    -    -    -    17    -    -    - 
 Saraiva Educacao SA.   1,215    -    -    728    1,064    -    -    914 
 Sistema P H De Ensino Ltda.   -    -    -    -    967    -    -    - 
 Sociedade Educacional Alphaville SA   -    -    -    -    71    -    -    - 
 Sociedade Educacional Doze De Outubro Ltda   -    -    -    -    101    -    -    - 
 Sociedade Educacional Neodna Cuiaba Ltda.   -    -    -    -    75    -    -    - 
 SOE Operações Escolares SA.   -    -    -    -    50    -    -    - 
 Somos Idiomas Ltda   -    -    -    123    -    -    -    65 
 Somos Operações Escolares SA.   -    -    -    -    167    -    -    - 
 SSE Serviços Educacionais Ltda.   -    -    -    -    83    -    -    - 
    7,611    8,611    7,242    2,960    5,670    5,929    8,545    1,835 

22 

VASTA Platform Limited

 

a.Compensation of key management personnel

 

Key management personnel includes the members of the Board of Directors, Audit Committee, the CEO and the vice-presidents, for which the nature of the tasks performed were related to the activities of the Company.

 

The Key management personnel compensation expenses comprised the following:

 

  

March, 31 2022

 

March, 31 2021

Short-term employee benefits   2,135    1,376 
Share-based compensation plan   2,136    1,745 
    4,271    3,121 

 

19Provision for tax, civil and labor losses and Judicial deposits and escrow accounts

 

The Company classifies the likelihood of loss in judicial/administrative proceedings in which it is a defendant. Provisions are recorded for contingencies classified as probable loss in an amount that Management, in conjunction with its legal advisors, believes is enough to cover probable losses or when related to contingences resulting from business combinations.

 

a.Composition of contingent liabilities

 

  

March 31, 2022

  December 31, 2021
Proceedings whose likelihood of loss is probable      
Tax proceedings (i)   616,455    607,084 
Labor proceedings (ii)   33,947    38,159 
Civil proceedings   1,613    376 
    652,015    645,619 
           
Liabilities assumed in Business Combination          
Civil proceedings   -    1,231 
    -    1,231 
Total of provision for tax, civil and labor losses   652,015    646,850 

 

(i) Primarily refers to income tax positions taken by Somos (Vasta Predecessor) and the Company (Successor) in connection with a corporate restructuring held by the predecessor in 2010. In 2018, given a tax assessment via an Infraction Notice received by the predecessor for certain periods opened for tax audit coupled with unfavorable case law on a similar tax case also reached in 2018, the Company reassessed this income tax position and recorded a liability, including interest and penalties,

 

(ii) The Company is a party to labor demands, which mostly refer to proportional vacation, salary difference, night shift premium, overtime and social charges, among others. There are no individual labor demands with material amounts that require specific disclosure.

 

23 

VASTA Platform Limited

 

The changes in provision for the three months period ended March 31, 2022 and 2021 were as follows:

 

   December 31, 2021  Additions  Reversals  Interest  Total effect on the result  Payments  March 31, 2022
Tax proceedings   607,084    -    (1,356)   10,728    9,372    -    616,456 
Labor proceedings   38,159    165    (4,916)   718    (4,033)   (180)   33,946 
Civil proceedings   1,607    4    (6)   8    6    -    1,613 
Total   646,850    169    (6,278)   11,454    5,345    (180)   652,015 

 

   December 31, 2020  Additions  Reversals  Interest  Total effect on the result  Payments  March 31, 2021
Tax proceedings   575,724    92    -    4,843    4,935    -    580,659 
Labor proceedings   37,896    126    (866)   781    41    (9)   37,929 
Civil proceedings   313    2    (2)   6    6    -    319 
Total   613,933    220    (868)   5,630    4,982    (9)   618,907 

 

b.Judicial Deposits and Escrow Accounts

 

Judicial deposits and escrow accounts recorded as non-current assets are as follows:

 

  

March 31, 2022

  December 31, 2021
       
Tax proceedings   2,390    2,300 
Indemnification asset -Former owner   1,142    1,998 
Indemnification asset – Related Parties (i)   164,361    160,470 
Escrow-account (ii)   9,686    14,055 
    177,579    178,824 

 

(i) Refers to an indemnification asset of the seller in connection with the acquisition of Somos (Vasta’s Predecessor) by Cogna Group (Vasta’s Parent Company) and recognized at the date of the business combination, in order to indemnify the Company for any and all losses that may be incurred in connection with all contingencies or lawsuits, substantially tax proceedings related to business combinations.

 

(ii) Refers to guarantees received as a consequence of business combinations, in connection with contingencies whose likelihood of loss is probable, and for which the former owners are liable. According to the Sale Agreement, these former owners will reimburse the Company in case payments are required and if those contingencies materialize.

 

20.Current and Deferred Income Tax and Social Contribution

 

Income tax expense is recognized at an amount determined by multiplying profit (loss) before tax for the interim reporting period by the Company’s best estimate of the weighted-average annual income tax rate expected for the full financial year, adjusted for the tax effect of certain items recognized in full in the interim period. As such, the effective rate in the Unaudited Condensed Consolidated Interim Financial statements may differ from the Consolidated estimate of the effective tax rate for the annual financial statements. The Company’s effective tax rates for the period ended March 31, 2022 and 2021 were 24% and 20% respectively (Combined nominal statutory rate of income tax and social contribution is 34%).

 

24 

VASTA Platform Limited

 

21Shareholder’s Equity

 

a.Share Capital

 

As of March 31, 2022 and December 31, 2021, the Company’s share capital is represented by 83,393,851 of which 64,436,093 are Class B shares held by Cogna Group (which holds 97,1% of the combined voting power) and 18,957,758 are shares held by others (which represents 2,9% of the combined voting power).

 

As a result, Cogna continues to control the outcome of all decisions at our shareholders’ meetings and to elect a majority of the members of our board of directors.

 

The Company’s shareholders on March 31, 2022 and December 31, 2021 are as follows:

 

In units

 

Company Shareholders  Class A  Class B  Total
          
Cogna Group   -    64,436,093    64,436,093 
Free Float   17,957,758    -    17,957,758 
Treasury shares   1,000,000    -    1,000,000 
                
Total (%)   22,73%   77,27%   83,393,851 

 

b.Earnings per share

 

The basic earnings (loss) per share is measured by dividing the profit attributable to the Company’s shareholders by the weighted average common shares issued during the year. The Company considers as diluted earnings per share, the number of common shares calculated added by the weighted average number of common shares that should be issued upon conversion of all potentially dilutive shares into common shares; potentially dilutive shares were deemed to have been converted into common shares at the beginning of the period.

 

  

March 31, 2022

 

March 31, 2021

Profit (Loss) Attributable to Shareholder´s   20,190    (5,517)
           
 Weighted average number of ordinary shares outstanding (thousands) (i)   83,394    83,012 
Effects of dilution of ordinary potential shares- weighted averaged (thousands)          
Share based- compensation ("Long term Plan") (ii)   1,036    829 
Share based- compensation ("Bonus IPO") (ii)   -    411 
Share based plan Migrated from Cogna to Vasta (iii)   20    22 
Total dilution effect   1,056    1,262 
           
 Basic earning (loss) per share - R$   0.2421    (0,0665)
 Diluted earning (loss) per share - R$   0.2391    (0,0655)

 

(i)The Company has not changed its number of voting rights since the IPO on July 31, 2020.

(ii)Refers to the share-based payments plans (“ILP”) and Bonus IPO.

(iii)Refers to the Cogna Plan migrated to the Vasta Plan as a result of the restructuring in 2020.

 

25 

VASTA Platform Limited

 

c.Capital reserve - Share-based compensation

 

The Company as of March 31, 2022 had 2 (two) share based compensation plans and 1 (one) bonus plan paid in restricted share units, being:

 

a)Cogna Plan - On September 3, 2018, Cogna’s shareholders approved a restricted share-based compensation plan, which may grant rights to receive a maximum number of restricted shares not exceeding 19,416,233 shares, corresponding to 1.2% of Cogna’s total share capital at the Plan’s approval date, excluding shares held in treasury on such date. This program should be wholly settled with delivery of Cogna’s shares. Cogna’s obligation to transfer the restricted shares under the Plan, in up to 10 days from the end of the vesting period, is contingent upon the continuing employment relationship of the employee or officer, as appropriate, for a period of three years from the date the respective agreement is signed. The number of outstanding restricted shares as of March 31, 2022 and December 31, 2021 was 155,919.

 

b)Long Term Investment – (“ILP”) – Refers to two tranches granted being the first issued on July 23, 2020 and November 10, 2020. The Company compensates part of its employees and management. This plan will grant up to 3% of the Company’s class A share units. The Company will grant the limit of five tranches approved by the Company’s Board of Directors. The fair value of share units is measured at fair value quoted on the grant date. The plan has a vesting period corresponding to 5 years added by expected volatility of 30% and will be settled with Company’s shares. All taxes and contributions are paid by the Company without additional costs to employees and management. This program should be wholly settled with the delivery of the shares.

 

c)Bonus paid in restricted share units – “Premium recognized” - The Company granted and vested 38,564 shares on April 12, 2021 to certain members of management based on performance recognized. This program was wholly settled with the delivery of the shares.

 

22Net Revenue from sales and Services

 

The breakdown of net sales of the Company for the three months periods ended March 31, 2022 and 2021 is shown below. Revenue is broken down into the categories that, according to the Company the nature, amount, timing and uncertainty of revenue through provisions as follows:

 

For three-month period  March 31, 2022  March 31, 2021
Content & EdTech Platform      
Learning Systems   203,676    146,129 
Textbooks   53,721    42,346 
Complementary Education Services   56,272    29,201 
Other services   8,487    5,948 
    322,156    223,624 
           
Digital Service platform          
E-commerce   58,217    57,208 
Other digital services   208    - 
    58,425    57,208 
           
Sales   371,886    274,884 
Service   8,695    5,948 
Net Revenue   380,581    280,832 

 

a.Seasonality

 

The Company’s revenue is subject to seasonality since the main deliveries of printed materials and digital materials to customers occur in the last quarter of each year (typically in November and December), and in the first quarter of each subsequent year (typically in February and March), and revenue is recognized when the customers obtain control over the materials. In addition, the printed and digital materials delivered in the fourth quarter are used by customers in the following school year and, therefore, fourth quarter results reflect the

 

26 

VASTA Platform Limited

 

growth in the number of students from one school year to the next, leading to higher revenue in general in the fourth quarter compared with the preceding quarters in each year. Consequently, on aggregate, the seasonality of revenue generally produces higher revenue in the first and fourth quarters of our fiscal year. In addition, the Company generally bills its customers during the first half of each school year (which starts in January), which generally results in a higher cash position in the first half of each year compared to the second half. A significant part of the Company’s expenses is also seasonal. Due to the nature of the business cycle, the Company needs significant working capital, typically in September or October of each year, in order to cover costs related to production and inventory accumulation, selling and marketing expenses, and delivery of the teaching materials at the end of each year in preparation for the beginning of each school year. As a result, these operating expenses are generally incurred between September and December of each year. Purchases through the Livro Fácil e-commerce platform are also very intense during the back-to-school period, between November, when school enrollment takes place and families plan to anticipate the purchase of products and services, and February of the following year, when classes are about to start. Thus, e-commerce revenue is mainly concentrated in the first and fourth quarters of the year.

 

23Costs and Expenses by Nature

 

  

March 31, 2022

 

March 31, 2021

Salaries and payroll charges   (72,480)   (70,154)
Raw materials and productions costs   (71,532)   (52,804)
Editorial costs   (12,278)   (19,968)
Depreciation and amortization   (64,286)   (48,585)
Copyright   (20,763)   (17,111)
Advertising and publicity   (27,472)   (25,500)
Utilities, cleaning and security   (6,505)   (5,034)
Rent and condominium fees   (10,157)   (9,777)
Third-party services   (3,789)   (8,976)
Travel   (3,971)   (1,132)
Consulting and advisory services   (10,857)   (11,114)
Impairment losses on trade receivables   (8,896)   (2,609)
Material   (1,457)   (563)
Taxes and contributions   -    (385)
Reversal for tax, civil and labor losses   6,109    740 
Provision for obsolete inventories   (6,780)   (4,838)
Income from lease and sublease agreements with related parties   2,960    1,835 
Other income, net   933    2,467 
    (311,221)   (273,509)
           
           
Cost of sales and services   (129,237)   (113,982)
Commercial expenses   (47,933)   (49,509)
General and administrative expenses   (126,088)   (109,876)
Impairment loss on accounts receivable   (8,896)   (2,609)
Other operating income, net   933    2,467 
    (311,221)   (273,509)

 

27 

VASTA Platform Limited

 

24Finance result

 

  

March 31, 2022

 

March 31, 2021

Finance income      
Income from financial investments and marketable securities   11,459    3,298 
Other finance income   3,810    2,165 
    15,269    5,463 
           
Finance costs          
Interest on bonds and financing   (23,772)   (6,077)
Imputed interest on suppliers   (15,561)   (1,452)
Bank and collection fees   (2,393)   (1,676)
Interest on provision for tax, civil and labor risks   (11,430)   (5,684)
Interest on Lease Liabilities   (3,596)   (4,021)
Other finance costs   (1,210)   (805)
    (57,962)   (19,715)
           
Financial Result (net)   (42,693)   (14,252)

 

25Segment Reporting

 

Information reported to the Chief Operating Decision Maker (CODM) for the purposes of resource allocation and assessment of segment performance is focused on revenue, “profit (loss) before finance result and tax”, assets and liabilities segregated by the nature of the services provided to the Company’ customers. Thus, the reportable segments are: (i) Content & EdTech Platform; and (ii) Digital Platform.

 

·Content & EdTech platform derives its results from core and complementary educational content solutions through digital and printed content, including textbooks, learning systems and other complementary educational services.

 

·Digital Platform aims to unify the entire school administrative ecosystem, allowing private schools to add multiple learning strategies and help them to focus on education, through the physical and digital e-commerce platform (Livro Fácil) and other digital services of the Company. Operations related to this segment began with the acquisition of Livro Fácil. In August 2021, the Company acquired EMME, which has its digital platform aimed at the production of educational marketing material for the Company's partner schools.

 

Due to the nature of the Company’s e-commerce platform, the Content & EdTech Platform segment sells its printed and digital content to the Digital Services segment. These transactions are priced on an arm’s length basis and are to be settled in cash. However, the eliminations made in preparing the consolidated financial statements are included in the measure of the segment’s profit or loss that is used by the CODM, and therefore the amounts presented herein are net of such intersegment transactions.

 

The following table presents the Company’s revenue, its reconciliation to “profit (loss) before finance result and tax”, assets and liabilities by reportable segment. No other information is used by the CODM when assessing segment performance:

 

28 

VASTA Platform Limited

 

   March 31, 2022
   Content & EdTech Platform  Digital Services Platform  Total
          
Net revenue from sales and services   322,156    58,425    380,581 
Cost of goods sold and services   (84,497)   (44,740)   (129,237)
                
Operating income (expenses)               
General and administrative expenses   (112,894)   (13,194)   (126,088)
Commercial expenses   (38,633)   (9,300)   (47,933)
Other operating income   933    -    933 
Impairment losses on trade receivables   (8,896)   -    (8,896)
Profit before finance result and taxes   78,169    8,809   69,360 
                
Assets   7,268,326    134,939    7,403,265 
Current and non-current liabilities   2,640,755    72,985    2,713,740 

 

   March 31, 2021 (unaudited)
   Content & EdTech Platform  Digital Services Platform  Total
          
Net revenue from sales and services   223,624    57,208    280,832 
Cost of goods sold and services   (76,867)   (37,115)   (113,982)
                
Operating income (expenses)               
General and administrative expenses   (101,809)   (8,066)   (109,876)
Commercial expenses   (38,839)   (10,670)   (49,509)
Other operating income   648    1,819    2,467 
Impairment losses on trade receivables   (2,609)   -    (2,609)
Profit before finance result and taxes   4,147    3,176    7,323 
                
Assets   6,698,464    168,524    6,866,988 
Current and non-current liabilities   1,992,252    89,665    2,081,917 

 

The Segments’ profit represents the profit earned by each segment without finance results and income tax expense. This is the measure reported to the CODM for the purpose of resource allocation and assessment of segment performance.

 

The Company operates in Brazil, with no revenue from foreign customers. Additionally, no single customer contributed ten per cent or more to the Company and Segments revenue for the three-month periods ended on March 31, 2022 and 2021.

 

26Non-cash transactions

 

Non-cash transactions for the three-month periods ended March 31, 2022 and 2021 are, respectively: (i) Additions of right of use assets and lease liabilities in the amount of R$15,929 and R$ 13,731 and (ii) Disposals of contracts of right of use assets and lease liabilities in the amount of R$ 3,151, and R$ 3,331 and Accounts payable assumed in the acquisition of Phidelis and MVP, in the amount of R$ 28,841. (see note 5).

 

27Subsequent events

 

Pursuant to our corporate reorganization plan, the subsidiaries Mind Makers Editora Educacional (“Mind Makers”), Nota 1000 Serviços Educacionais Ltda (“Redação Nota 1000”) and Meritt Informação Educacional Ltda. (“Meritt”), had their operational activities, assets and liabilities, merged into Somos Sistemas, the main company of the group, on April 1, 2022. As a result, Mind Makers, Redação Nota 1000 and Meritt ceased to exist as separate legal entities.

 

***

 

29 

 

 

 

VASTA Platform Limited

Unaudited Interim Condensed Consolidated

Financial Statements

Three-month period ended March 31, 2022

 

 

Mario Ghio Junior

Chief Executive Officer

 

 

 

Bruno Giardino Roschel de Araujo

Chief Financial Officer

 

 

 

Marcelo Vieira Werneck

Accountant – CRC: RJ-091570/0-1