Table of Contents

 

 

 

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 October, 2019

 

Commission File Number: 001-38673

 

Arco Platform Ltd.

(Exact name of registrant as specified in its charter)

 

Rua Elvira Ferraz 250, Sala 716, Vila

Olímpia, São Paulo - SP, 04552-040, Brazil

(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

o

 

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

o

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

o

No

x

 

 

 


Table of Contents

 

TABLE OF CONTENTS

 

ITEM

 

 

 

1.

 

Positivo Soluções Didáticas - Unaudited Interim Condensed Combined Carve-Out Financial Statements as of June 30, 2019 and for the six months ended June 30, 2019 and 2018

 

2.

 

Positivo Soluções Didáticas - Combined Carve-Out Financial Statements as of December 31, 2018 and 2017 and for the years ended December 31, 2018, 2017 and 2016

 

3.

 

Arco Platform Limited - Unaudited pro forma condensed consolidated financial information as of and for the six months ended June 30, 2019 and for the year ended December 31, 2018

 

 


Table of Contents

 

Item 1

 

Positivo Soluções Didáticas

 

Unaudited interim condensed combined carve-out financial statements as of June 30, 2019

 

1-1


Table of Contents

 

Positivo Soluções Didáticas

Unaudited interim condensed combined carve-out financial statements

as of June 30, 2019

 

Contents

 

Unaudited interim condensed combined carve-out balance sheet

1-3

 

 

Unaudited interim condensed combined carve-out statements of comprehensive income

1-4

 

 

Unaudited interim condensed combined carve-out statements of changes in parent’s net investments

1-5

 

 

Condensed combined carve-out statements of cash flows - indirect method

1-6

 

 

Notes to the unaudited interim condensed combined carve-out financial statements

1-7

 

1-2


Table of Contents

 

Positivo Soluções Didáticas

 

Unaudited interim condensed combined carve-out balance sheets

 

(In thousands of Reais — R$ thousand)

 

Note

 

6/30/2019

 

12/31/2018

 

 

 

 

 

(Unaudited)

 

 

 

Assets

 

 

 

 

 

 

 

Current assets

 

 

 

 

 

 

 

Cash and cash equivalents

 

5

 

22,133

 

20,328

 

Trade accounts receivable

 

6

 

90,528

 

99,766

 

Inventories

 

7

 

3,139

 

5,909

 

Recoverable taxes

 

 

 

286

 

195

 

Recoverable income tax (IRPJ) and social contribution (CSLL)

 

 

 

5

 

126

 

Other receivables

 

 

 

685

 

1,457

 

 

 

 

 

 

 

 

 

 

 

 

 

116,776

 

127,781

 

 

 

 

 

 

 

 

 

Non-current assets

 

 

 

 

 

 

 

Judicial deposits

 

 

 

19

 

48

 

Deferred income tax and social contribution

 

7

 

8,843

 

15,934

 

Property, plant and equipment

 

8

 

10,638

 

4,095

 

Intangible assets

 

9

 

34,546

 

32,156

 

 

 

 

 

 

 

 

 

 

 

 

 

54,046

 

52,233

 

 

 

 

 

 

 

 

 

 

 

 

 

170,822

 

180,014

 

 

 

 

Note

 

6/30/2019

 

12/31/2018

 

 

 

 

 

(Unaudited)

 

 

 

Liabilities

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

 

Suppliers

 

 

 

12,034

 

14,039

 

Salaries, provisions and social contributions

 

 

 

19,024

 

19,964

 

Taxes payable

 

 

 

1,560

 

1,942

 

Income tax and social contribution payable

 

 

 

17,463

 

11,858

 

Advances from clients

 

 

 

183

 

183

 

Lease payable

 

3 and 10

 

2,782

 

 

Other liabilities

 

 

 

9,495

 

7,943

 

 

 

 

 

 

 

 

 

 

 

 

 

62,541

 

55,929

 

 

 

 

 

 

 

 

 

Non-current liabilities

 

 

 

 

 

 

 

Advances from clients

 

 

 

487

 

578

 

Taxes payable

 

 

 

438

 

518

 

Provision for tax, civil and labor risks

 

 

 

5,159

 

5,359

 

Lease payable

 

3 and 10

 

3,443

 

 

 

 

 

 

 

 

 

 

 

 

 

 

9,527

 

6,455

 

 

 

 

 

 

 

 

 

Parent’s net investments

 

 

 

98,754

 

117,630

 

 

 

 

 

 

 

 

 

 

 

 

 

170,822

 

180,014

 

 

See the accompanying notes to the unaudited interim condensed combined carve-out financial statements.

 

1-3


Table of Contents

 

Positivo Soluções Didáticas

 

Unaudited interim condensed combined carve-out statements of comprehensive income

 

For the six month ended June 30

 

(In thousands of Reais — R$ thousand)

 

Note

 

6/30/2019

 

6/30/2018

 

 

 

 

 

(Unaudited)

 

(Unaudited)

 

Net revenue from sales

 

13

 

234,423

 

231,808

 

 

 

 

 

 

 

 

 

Cost of sales

 

14

 

(62,930

)

(58,102

)

 

 

 

 

 

 

 

 

Gross profit

 

 

 

171,493

 

173,706

 

 

 

 

 

 

 

 

 

Operating expense

 

 

 

 

 

 

 

General and administrative expenses

 

14

 

(32,837

)

(31,254

)

Selling and distribution expenses

 

14

 

(35,064

)

(28,753

)

Other operating income, net

 

 

 

35

 

667

 

Impairment loss on accounts receivable

 

14

 

(132

)

(3,141

)

 

 

 

 

 

 

 

 

Income before financial income and taxes

 

 

 

103,495

 

111,225

 

 

 

 

 

 

 

 

 

Financial income

 

 

 

 

 

 

 

Financial revenues

 

15

 

3,610

 

1,822

 

Financial expenses

 

15

 

(694

)

(994

)

 

 

 

 

 

 

 

 

Income before income tax and social contribution

 

 

 

106,411

 

112,053

 

 

 

 

 

 

 

 

 

Income tax and social contribution

 

 

 

 

 

 

 

Current

 

7

 

(28,588

)

(39,675

)

Deferred

 

7

 

(7,091

)

1,590

 

 

 

 

 

 

 

 

 

Net income for the year

 

 

 

70,732

 

73,968

 

 

See the accompanying notes to the unaudited interim condensed combined carve-out financial statements.

 

1-4


Table of Contents

 

Positivo Soluções Didáticas

 

Unaudited interim condensed combined carve-out statements of changes in parent’s net investments

 

For the six month ended June 30

 

(In thousands of Reais — R$ thousand)

 

Note

 

Parent’s net
investments

 

 

 

 

 

 

 

Balances at December 31, 2017

 

 

 

54,537

 

 

 

 

 

 

 

Net income for the period

 

 

 

73,968

 

Net investments

 

 

 

(29,026

)

 

 

 

 

 

 

Balances at June 30, 2018 (unaudited)

 

 

 

99,480

 

 

 

 

 

 

 

Balances at December 31, 2018

 

 

 

117,630

 

 

 

 

 

 

 

Net income for the period

 

 

 

70,732

 

Profit distribution

 

11

 

(82,000

)

Net investments

 

 

 

(7,608

)

 

 

 

 

 

 

Balances at June 30, 2019

 

 

 

98,754

 

 

See the accompanying notes to the unaudited interim condensed combined carve-out financial statements.

 

1-5


Table of Contents

 

Positivo Soluções Didáticas

 

Condensed combined carve-out statements of cash flows - indirect method

 

For the six month ended June 30

 

(In thousands of Reais — R$ thousand)

 

Note

 

6/30/2019

 

6/30/2018

 

 

 

 

 

(Unaudited)

 

(Unaudited)

 

Cash flows from operating activities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income for the year

 

 

 

70,732

 

73,968

 

Adjustments to reconcile the net income for the year with cash generated by operating activities:

 

 

 

 

 

 

 

Depreciation and amortization

 

14

 

6,187

 

4,424

 

Impairment loss on accounts receivable

 

14

 

132

 

3,141

 

Provision (reversal) for obsolete inventories

 

13

 

247

 

30

 

Provision for tax, civil and labor risks

 

14

 

(175

)

1,556

 

Provision for interest on loans

 

 

 

 

524

 

Provision for interest on leases

 

10

 

224

 

 

Deferred income tax and social contribution

 

7

 

7,091

 

(1,590

)

 

 

 

 

 

 

 

 

(Increase) decrease in operating assets:

 

 

 

 

 

 

 

Trade accounts receivable

 

 

 

9,106

 

17,883

 

Inventories

 

 

 

(3,173

)

2,573

 

Recoverable taxes

 

 

 

(91

)

(5

)

Recoverable income tax (IRPJ) and social contribution (CSLL)

 

 

 

121

 

 

Miscellaneous credits

 

 

 

772

 

887

 

Judicial deposits

 

 

 

29

 

(19

)

 

 

 

 

 

 

 

 

Increase (decrease) in operating liabilities:

 

 

 

 

 

 

 

Suppliers

 

 

 

(2,005

)

(14,671

)

Salaries, provisions and social contributions

 

 

 

(940

)

1,900

 

Taxes payable

 

 

 

(462

)

(145

)

Income tax and social contribution payable

 

 

 

5,605

 

193

 

Advances from clients

 

 

 

(91

)

852

 

Other liabilities

 

 

 

1,552

 

(339

)

 

 

 

 

 

 

 

 

 

 

 

 

94,861

 

91,162

 

 

 

 

 

 

 

 

 

Lawsuits and proceedings paid

 

 

 

(25

)

48

 

 

 

 

 

 

 

 

 

Net cash generated in operating activities

 

 

 

94,836

 

91,210

 

 

 

 

 

 

 

 

 

Cash flows from investment activities

 

 

 

 

 

 

 

Acquisition of property, plant and equipment

 

8

 

(921

)

(632

)

Additions to intangible assets

 

9

 

(6,521

)

(4,517

)

 

 

 

 

 

 

 

 

Net cash used in investment activities

 

 

 

(7,442

)

(5,149

)

 

 

 

 

 

 

 

 

Cash flows from financing activities

 

 

 

 

 

 

 

Payment of principal on loans

 

 

 

 

(56,965

)

Payment of leases

 

10

 

(1,677

)

 

Dividends paid

 

 

 

(82,000

)

 

Parent´s net investment

 

 

 

(1,912

)

(29,026

)

 

 

 

 

 

 

 

 

Net cash invested in financing activities

 

 

 

(85,589

)

(85,991

)

 

 

 

 

 

 

 

 

Net increase in cash and cash equivalents

 

 

 

1,805

 

70

 

 

 

 

 

 

 

 

 

Cash and cash equivalents at the beginning of the year

 

5

 

20,328

 

351

 

Cash and cash equivalents at the end of the year

 

5

 

22,133

 

421

 

 

 

 

 

 

 

 

 

Net increase in cash and cash equivalents

 

 

 

1,805

 

70

 

 

 

 

 

 

 

 

 

 

See the accompanying notes to the unaudited interim condensed combined carve-out financial statements.

 

1-6


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Positivo Soluções Didáticas

Unaudited interim condensed combined carve-out financial statements

as of June 30, 2019

 

Notes to the unaudited interim condensed combined financial statements

 

(Amounts expressed in thousands of Reais, unless otherwise indicated)

 

1.                  General information

 

Positivo Soluções Didáticas (hereinafter referred to as the “Business” and “Positivo Soluções Didáticas”) represents the combination of the historical financial statements of Positivo Soluções Didáticas Ltda. and Editora Piá Ltda., and the carve-out of the financial position and results operations of the private sector (“K-12”) and those in the scope of National Program for Didactic Books (“PNLD”) carried out by Editora Positivo Ltda (hereinafter referred as “Parent Company”)

 

The Business’ activities include conception, production and commercial distribution of the Learning System comprised of integrated solutions of printed (integrated educational books, literature and pedagogical support) and digital (digital books and teaching-learning platform denominated: Positivo On) contents, training of teachers for each area of knowledge.

 

Accordingly, businesses conducted by Positivo Soluções Didáticas include:

 

·                  Sistema Positivo de Ensino (“SPE”) and Conquista: comprised of Teaching Systems in Portuguese provided to private schools throughout Brazil;

 

·                  Positivo English Solution (“PES”): comprised of Teaching Systems in English provided to private schools throughout Brazil; and

 

·                  Literature Books: editing and commercialization of didactic and literature books in the general market (distributors and resellers), and in the scope of the PNLD.

 

Under its articles of association, the three companies with operations that are included in these unaudited interim condensed combined carve-out financial statements are allowed to engaged in: (i) edition and trading of school material, especially books, handouts and maps, (ii) commercial distribution of authors’ property rights, (iii) phonographic production, recording and trading of musical compact disc (CD), (iv) provision of graphic creation and editing services, and (v) provision of courses, lectures, trainings, seminars and continued education for personal and professional development, sundry advisory, as well as conduction of operation denominated “factoring”.

 

Up to November 1, 2018, the activities related to private sector operations (“K-12”) and those in the scope of PNLD described in these financial statements were included in Editora Positivo Ltda. On November 1, 2018, a corporate restructuring was completed to spin-off of SPE, Conquista, PES and Literature Books operations to Positivo Soluções Didáticas Ltda. As the entities involved were under common control, this reorganization was accounted for using the historical basis of the assets and liabilities. Additionally, this reorganization did not result in a change in the shareholding structure of the entities.

 

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Positivo Soluções Didáticas

Unaudited interim condensed combined carve-out financial statements

as of June 30, 2019

 

On May 7, 2019, Arco Platform Limited, a U.S foreign private issuer entity, entered into a definitive agreement to acquire aforementioned operations included in these unaudited interim condensed combined carve-out financial statements. Acquisition will be concluded after compliance with precedent conditions, mainly CADE (Economic Defense Administrative Council) approval.

 

2.                  Preparation basis and presentation of the unaudited interim condensed  combined carve-out financial statements

 

These unaudited interim condensed combined carve-out financial statements have been prepared in accordance with IAS 34 - Interim Financial Reporting, and should be read in conjunction with the Business’ last annual combined carve-out financial statements as at and for the year ended 31 December 2018 (‘last annual combined carve-out financial statements’). However, selected explanatory notes are included to explain events and transactions that are significant to an understanding of the changes in the Business’ financial position and performance since the last annual financial statements.

 

The unaudited interim condensed combined carve-out financial statements are presented in thousands of Brazilian Real (“BRL”), which is the Business functional currency. All financial information presented in BRL has been rounded to the nearest thousand value, except otherwise indicated.

 

This is the first set of the Business’ financial statements in which IFRS 16 has been applied. Changes to significant accounting policies are described in Note 3.

 

These unaudited interim condensed combined carve-out financial statements were authorized for issue by Management on October 14, 2019.

 

3.                  Changes in significant accounting policies

 

Except as described below, the accounting policies applied in these unaudited interim condensed combined carve-out financial statements are the same as those applied in the last annual financial statements. The Business has not early adopted any other standard, interpretation or amendment that has been issued but is not yet effective.

 

The Business applies, as from January 1, 2019, IFRS 16 - Leases. As required by IAS 34, the nature and effect of these changes are disclosed below.

 

Other amendments and interpretations of IFRS became applicable as from January 1, 2019; however, these changes did not have an impact on the unaudited interim condensed combined carve-out financial statements of the Business.

 

IFRS 16 - Leases

 

IFRS 16 supersedes IAS 17 Leases, IFRIC 4 Determining whether an Arrangement contains a Lease, SIC-15 Operating Leases-Incentives and SIC-27 Evaluating the Substance of Transactions Involving the Legal Form of a Lease. The standard sets out the principles for the recognition, measurement, presentation and disclosure of leases and requires lessees to account for all leases under a single on-balance sheet model.

 

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Positivo Soluções Didáticas

Unaudited interim condensed combined carve-out financial statements

as of June 30, 2019

 

The Business has lease contracts for properties. Before the adoption of IFRS 16, the Business did not have finance lease prior to December 31, 2018. The leased property was not capitalized and the lease payments were recognized as rent expense in the unaudited interim condensed combined carve-out statement of comprehensive income on a straight-line basis over the lease term. Upon adoption of IFRS 16, the Business applied a single recognition and measurement approach for all leases, except for short-term leases and leases of low-value assets.

 

In the adoption of IFRS 16, the leases will impact the financial information due to:

 

a)             recognition of right-of-use assets and lease liabilities in the unaudited interim condensed combined carve-out balance sheet initially measured at present value of the future minimum lease payments;

 

b)             recognition of depreciation expenses of right-of-use assets and interest expense on lease liabilities in the unaudited interim condensed combined carve-out statement of comprehensive income; and

 

c)              separation of the total amount of cash paid on these transactions between principal (presented within financing activities) and interest (presented in operating activities) in the unaudited interim condensed combined carve-out statement of cash flow.

 

a.              The effect of adoption IFRS 16

 

The Business applied the forward-looking transition approach and did not restate comparative amounts for the year prior to first adoption. Right-of-use assets for property leases were measured on transition as if the new rules had always been applied. All other right-of-use assets were measured at the amount of the lease liability on adoption (adjusted for any prepaid or accrued lease expenses).

 

In the transition process, the Business chose to use the practical expedient that allows not to reevaluate whether a contract is or contains a lease. The main impacts are related to the leasing operations of third party real estate and leased vehicles.

 

As permitted, short-term leases (lease term of 12 months or less) and leases of low value assets (such as personal computers and office furniture) will maintain recognition of their lease expenses on a straight-line basis in the income statement.

 

The Business also applied the available practical expedients wherein it:

 

·                  Use of a single discount rate for each rental portfolio with reasonably similar characteristics. In this sense, the incremental funding rate, measured on January 1, 2019, applicable to each of the leased asset portfolios, was obtained. Through this methodology, the Business obtained a weighted average rate of 6.5%;

 

·                  Applied the short-term leases exemptions to leases with lease term that ends within 12 months at the date of initial application;

 

·                  Excluded the initial direct costs from the measurement of the right-of-use asset at the date of initial application;

 

·                  Used hindsight in determining the lease term where the contract contains options to extend or terminate the lease;

 

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Positivo Soluções Didáticas

Unaudited interim condensed combined carve-out financial statements

as of June 30, 2019

 

·      The Business did not separate non-lease components from contracts that also have lease components;

 

As a result of the above facts, the Business recognized the following amounts in the opening balances of its balance sheet:

 

 

 

December 31, 2018

 

Opening
adjustments

 

January 1, 2019

 

Non-current assets

 

 

 

 

 

 

 

Fixed assets

 

4,095

 

7,678

 

11,773

 

Deferred taxes

 

16,581

 

 

 16,581

 

Total assets

 

20,676

 

7,678

 

 28,354

 

 

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

 

Leases payable

 

 

2,952

 

2,952

 

Non-current assets

 

 

 

 

 

 

 

Leases payable

 

 

4,726

 

 4,726

 

Total liabilities

 

 

7,678

 

 7,678

 

 

Additionally, the table below summarizes the accounting impacts of the adoption of this new accounting pronouncement on the unaudited interim condensed combined carve-out statement of comprehensive income for the period of six months ended on June 30, 2019:

 

 

 

June 30, 2019

 

Statement of comprehensive income

 

 

 

Depreciation

 

(1,547

)

Financial expenses

 

(224

)

Deferred income tax and social contribution

 

 87

 

 

 

 (1,684

)

 

b.              Summary of new accounting policies

 

Set out below are the new accounting policies of the Business upon adoption of IFRS 16, which have been applied from the date of initial application:

 

(i)                                    Right-of-use assets

 

The Business recognizes right-of-use assets at the commencement date of the lease (i.e., the date the underlying asset is available for use). Right-of-use assets are measured at cost, less any accumulated depreciation and impairment losses, and adjusted for any remeasurement of lease liabilities. The cost of right-of-use assets includes the amount of lease liabilities recognized, initial direct costs incurred, and lease payments made at or before the commencement date less any lease incentives received. The recognized right-of-use assets are depreciated on a straight-line basis over the shorter of its estimated useful life and the lease term.

 

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Positivo Soluções Didáticas

Unaudited interim condensed combined carve-out financial statements

as of June 30, 2019

 

(ii)                                Lease liabilities

 

At the commencement date of the lease, the Business recognizes lease liabilities measured at the present value of lease payments to be made over the lease term. The lease payments include fixed payments (including in-substance fixed payments) less any lease incentives receivable, variable lease payments that depend on an index or a rate, and amounts expected to be paid under residual value guarantees. The lease payments also include the exercise price of a purchase option reasonably certain to be exercised by the Business and payments of penalties for terminating a lease, if the lease term reflects the Business exercising the option to terminate. The variable lease payments that do not depend on an index or a rate are recognized as expense in the period on which the event or condition that triggers the payment occurs.

 

In calculating the present value of lease payments, the Business uses the incremental borrowing rate at the lease commencement date if the interest rate implicit in the lease is not readily determinable. The accounting amount of the lease liabilities is remeasured if there is a change in the term of the lease, a change in fixed lease payments or a change in valuation to purchase the right-of-use asset.

 

(iii)                            Short-term leases and leases of low-value assets

 

The Business applies the short-term lease recognition exemption to its short-term leases of properties (i.e., those leases that have a lease term of 12 months or less from the commencement date and do not contain a purchase option). It also applies the lease of low-value assets recognition exemption to leases of office equipment that are considered of low value. Lease payments on short-term leases and leases of low-value assets are recognized as expense on a straight-line basis over the lease.

 

(iv)                              Significant judgement in determining the lease term of contracts with renewal options

 

The Business determines the lease term as the non-cancellable term of the lease, together with any periods covered by an option to extend the lease if it is reasonably certain to be exercised, or any periods covered by an option to terminate the lease, if reasonably certain to be exercised.

 

The Business has the option, under some of its leases to lease the assets for additional terms. The Business applies judgment in evaluating whether it is reasonably certain to exercise the option to renew. That is, it considers all relevant factors that create an economic incentive for it to exercise the renewal. After the commencement date, the Business reassesses the lease term if there is a significant event or change in circumstances that is within its control and affects its ability to exercise (or not to exercise) the option to renew (e.g., a change in business strategy).

 

4.                  Significant accounting judgments, estimates and assumptions

 

The preparation of the Business’ interim condensed combined carve-out financial statements requires Management to make judgments, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the disclosure of contingent liabilities at the end of the reporting period; however, uncertainties about these assumptions and estimates may result in outcomes that require adjustments to the carrying amount of the affected asset or liability in future periods. The significant assumptions and estimates used in the preparation of the interim condensed combined carve-out financial statements for the six-month period ended June 30, 2019 were the same as those adopted in the combined carve-out financial statements for the year ended December 31, 2018, except for the adoption of IFRS 16-Leases described in Note 3.

 

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Positivo Soluções Didáticas

Unaudited interim condensed combined carve-out financial statements

as of June 30, 2019

 

5.                  Cash and cash equivalents

 

Balances of cash and cash equivalents are broken down as follows:

 

 

 

June 30, 2019

 

December 31,
2018

 

Cash

 

1

 

4

 

Banks

 

1,356

 

1,071

 

Fixed income investments (a)

 

20,776

 

19,253

 

 

 

 

 

 

 

 

 

22,133

 

20,328

 

 


(a)         These mainly represent investments in Bank Deposit Certificates (CDBs) that earn interest of approximately 100% of CDI change (interest rates of Interbank Deposit Certificates), with immediate liquidity and subject to an insignificant risk of change in value.

 

6.                  Trade accounts receivable

 

The balance of account is comprised by the following amounts:

 

 

 

June 30, 2019

 

December 31,
2018

 

Learning Systems

 

110,505

 

111,023

 

Literature Books

 

17,267

 

25,855

 

(-) Impairment loss on accounts receivable

 

(37,244

)

(37,112

)

 

 

 

 

 

 

 

 

90,528

 

99,766

 

 

The breakdown of accounts receivable by maturity age is as follows:

 

 

 

June 30, 2019

 

December 31,
2018

 

Falling due

 

78,094

 

93,443

 

Overdue (days):

 

 

 

 

 

up to 30

 

5,416

 

2,302

 

31-60

 

4,125

 

3,792

 

61-90

 

2,196

 

2,734

 

91-180

 

3,111

 

3,474

 

181-360

 

6,548

 

5,434

 

>361

 

28,282

 

25,699

 

(-) Impairment loss on accounts receivable

 

(37,244

)

(37,112

)

 

 

90,528

 

99,766

 

 

Changes in impairment losses on accounts receivable are broken down as follows:

 

Balance at December 31, 2017

 

33,875

 

 

 

 

 

(+) Additions

 

3,141

 

 

 

 

 

Balance at June 30, 2018

 

37,016

 

 

 

 

 

(-) Receipt / reversal

 

(4,430

)

(+) Additions

 

4,526

 

 

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Unaudited interim condensed combined carve-out financial statements

as of June 30, 2019

 

Balance at December 31, 2018

 

37,112 

 

(-) Receipt / reversal

 

(2,184

)

(+) Additions

 

2,316

 

 

 

 

 

Balance at June 30, 2019

 

37,244

 

 

The impairment losses are formed based on criteria established by the Management and in an amount considered sufficient to cover estimated losses in the realization of these credits. The criterion for the allowance for doubtful accounts is based on a three year average of the default history of the client portfolio in relation to annual revenues.

 

7.                  Inventories

 

The balance of this account is comprised by the following amounts:

 

 

 

June 30, 2019

 

December 31,
2018

 

Goods for resale held by third-parties

 

1,482

 

1,211

 

Good for resale

 

2,317

 

2,223

 

Inventories in transit

 

601

 

3,489

 

(-) Provision for obsolete inventories

 

(1,261

)

(1,014

)

 

 

 

 

 

 

 

 

3,139

 

5,909

 

 

The provision for obsolete inventory is recognized based on the analysis of the history of turnover of inventory items, which classification as obsolete additionally comprised of inventory age, considering that Management also performs individual analysis of expected realization of inventory items, considering the product’s sales potential (based on sales history), the analysis of the book content, and the possibility of visual update.

 

Changes in provision for obsolete inventories is broken down as follows:

 

Balance at December 31, 2017

 

324

 

 

 

 

 

(+) Additions

 

30

 

 

 

 

 

Balance at June 30, 2018

 

354

 

 

 

 

 

(+) Additions

 

660

 

 

 

 

 

Balance at December 31, 2018

 

1,014 

 

(-) Reversal

 

(476

)

(+) Additions

 

723

 

 

 

 

 

Balance at June 30, 2019

 

1,261

 

 

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Positivo Soluções Didáticas

Unaudited interim condensed combined carve-out financial statements

as of June 30, 2019

 

8.                  Property, plant and equipment

 

The balance of this account is comprised by the following amounts:

 

 

 

 

 

June 30, 2019

 

December 31, 2018

 

 

 

Depreciation weighted
average rate

 

Cost

 

Accumulated
depreciation

 

Net Book value

 

Cost

 

Accumulated
depreciation

 

Net Book value

 

Leases

 

40

%

7,678

 

(1,547

)

6,131

 

 

 

 

Furniture, fixtures and facilities

 

15

%

1,875

 

(1,338

)

537

 

1,875

 

(1,264

)

611

 

Machinery and equipment

 

10

%

277

 

(129

)

148

 

277

 

(120

)

157

 

IT equipment

 

20

%

10,327

 

(8,168

)

2,159

 

9,450

 

(7,839

)

1,611

 

Leasehold improvements

 

4

%

2,647

 

(984

)

1,663

 

2,647

 

(931

)

1,716

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

22,804

 

(12,166

)

10,638

 

14,249

 

(10,154

)

4,095

 

 

The mainly increase in the Business’ property, plant and equipment was related to the adoption of IFRS 16 Leases, please refer to note 3.

 

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Positivo Soluções Didáticas

Unaudited interim condensed combined carve-out financial statements

as of June 30, 2019

 

Changes in fixed assets are as follows:

 

 

 

Leases

 

Leasehold
improvements

 

Machinery and
equipment

 

Furniture, fixtures
and facilities

 

IT
equipment

 

Total

 

Balance at December 31, 2017

 

 

1,554

 

91

 

660

 

1,489

 

3,794

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Additions

 

 

79

 

59

 

7

 

487

 

632

 

Depreciation

 

 

(47

)

(6

)

(70

)

(445

)

(568

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at June 30, 2018

 

 

1,586

 

144

 

597

 

1,531

 

3,858

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at December 31, 2018

 

 

1,716

 

157

 

611

 

1,611

 

4,095

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Initial adoption of IFRS 16

 

7,678

 

 

 

 

 

7,678

 

Additions

 

 

 

 

1

 

920

 

921

 

Depreciation

 

(1,547

)

(53

)

(9

)

(75

)

(372

)

(2,056

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at June 30, 2019

 

6,131

 

1,663

 

148

 

537

 

2,159

 

10,638

 

 

a)             Evaluation for impairment of assets

 

The Business assesses, at each reporting date, whether there is an indication that a property and equipment asset may be impaired. If any indication exists, the Business estimates the asset’s recoverable amount. There were no indications of impairment of property and equipment for the six-month periods ended June 30, 2019 and 2018.

 

b)             Useful life

 

The Business reviewed the estimate of useful life annually in the preparation of the combined carve-out financial statements. As of June 30, 2019 the Business did not identify any significant change in relation to the previously adopted useful life.

 

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Positivo Soluções Didáticas

Unaudited interim condensed combined carve-out financial statements

as of June 30, 2019

 

9.                  Intangible assets

 

The balance of this account is comprised by the following amounts:

 

 

 

 

 

June 30, 2019

 

December 31, 2018

 

 

 

Weighted
average rate of
amortization

 

Cost

 

Accumulated
amortization

 

Net Book value

 

Cost

 

Accumulated
amortization

 

Net Book value

 

Literature books

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Learning Systems

 

25

%

38,233

 

(33,145

)

5,088

 

38,240

 

(31,352

)

6,888

 

Educational books

 

25

%

28,205

 

(26,016

)

2,189

 

28,189

 

(24,940

)

3,249

 

Dictionaries

 

10

%

4,883

 

(4,876

)

7

 

4,883

 

(4,873

)

10

 

Literature books in progress

 

0

%

18,455

 

 

18,455

 

12,368

 

 

12,368

 

Software

 

20

%

15,627

 

(6,820

)

8,807

 

15,193

 

(5,552

)

9,641

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

105,403

 

(70,857

)

34,546

 

98,873

 

(66,717

)

32,156

 

 

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Positivo Soluções Didáticas

Unaudited interim condensed combined carve-out financial statements

as of June 30, 2019

 

The changes in intangible assets in the year is comprised as follows:

 

 

 

Literature books

 

Literature books
in progress

 

Software

 

Total

 

Balance at December 31, 2017

 

11,750

 

17,229

 

1,101

 

30,080

 

Additions

 

 

4,260

 

257

 

4,517

 

Transfers

 

5,209

 

(5,209

)

 

 

Amortization

 

(3,577

)

 

(279

)

(3,856

)

 

 

 

 

 

 

 

 

 

 

Balance at June 30, 2018

 

13,382

 

16,280

 

1,079

 

30,741

 

 

 

 

 

 

 

 

 

 

 

Balance at December 31, 2018

 

10,147

 

12,392

 

9,617

 

32,156

 

 

 

 

 

 

 

 

 

 

 

Additions

 

 

6,063

 

458

 

6,521

 

Amortization

 

(2,863

)

 

(1,268

)

(4,131

)

 

 

 

 

 

 

 

 

 

 

Balance at June 30, 2019

 

7,284

 

18,455

 

8,807

 

34,546

 

 

Evaluation for asset impairment

 

The Business assesses, at each reporting date, whether there is an indication that a intangibles may be impaired. If any indication exists, the Business estimates the asset’s recoverable amount. There were no indications of impairment of intangibles for the six-month periods ended June 30, 2019 and 2018.

 

Useful life

 

As of June 30, 2019 there was no write-offs related to discontinued projects.

 

10.           Lease payable

 

Changes in leases for the year are composed as follows:

 

 

 

Current

 

Non-current

 

Total

 

Balance at January 1, 2019

 

 

 

 

Initial adoption of IFRS 16

 

2,952

 

4,726

 

7,678

 

Transfers

 

1,412

 

(1,412

)

 

Interest

 

95

 

129

 

224

 

Amortization

 

(1,677

)

 

(1,677

)

 

 

 

 

 

 

 

 

Balance at June 30, 2019

 

2,782

 

3,443

 

6,225

 

 

11.           Related parties

 

The Positivo Group (hereinafter referred as “Group”) is composed by all entities owned by the quotaholders of the Parent Company and individual entities included in this unaudited interim condensed combined carve-out financial statements. Balances and transactions between the entities and operations included in the Business, have been eliminated in the unaudited interim condensed combined carve-out financial statements. Some of the Group’s transactions and arrangements are with related parties and the effect of these transactions using the basis determined between the parties is reflected in this unaudited interim condensed combined carve-out financial statements.

 

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Positivo Soluções Didáticas

Unaudited interim condensed combined carve-out financial statements

as of June 30, 2019

 

Transactions with these related parties are priced on an arm’s length basis and are to be settled in cash. None of the related party balances are secured. No expense has been recognized in the current year or prior year for losses in respect of amounts owed by related parties. Additionally, no guarantees have been given or received related to these balances.

 

On June 30, 2019 and December 31, 2018, the Business carried out transaction with related parties, as stated below:

 

 

 

Accounts receivable from
commercial transactions

 

Accounts payable from
commercial transactions

 

 

 

June 30, 2019

 

December 31,
2018

 

June 30, 2019

 

December 31,
2018

 

Positivo Educacional Ltda. (a)

 

2,388

 

1,479

 

1

 

 

Gráfica e Editora Posigraf Ltda. (b)

 

20

 

358

 

803

 

4,957

 

Centro de Estudos Superiores Positivo Ltda. (c)

 

2

 

566

 

2

 

13

 

Consórcio Positivo J Malucelli

 

 

3

 

 

 

Editora Positivo Ltda. (e)

 

 

 

1,947

 

578

 

Centro Educacional Opção Única Ltda. (a)

 

170

 

45

 

 

 

Sociedade Educacional Posiville Ltda. (a)

 

74

 

614

 

 

 

Positivo Tecnologia S.A. (d)

 

16

 

 142

 

 

30 

 

 

 

 

 

 

 

 

 

 

 

 

 

2,670

 

 3,207

 

2,753

 

5,578

 

 

During the periods presented below, the Business entered into the following transactions with related parties:

 

 

 

Sales

 

Purchases and services

 

 

 

June 30, 2019

 

June 30, 2018

 

June 30, 2019

 

June 30, 2018

 

Positivo Educacional Ltda. (a)

 

5,436

 

244

 

 

 

Gráfica e Editora Posigraf Ltda. (b)

 

130

 

2,718

 

44,200

 

42,907

 

Centro de Estudos Superiores Positivo Ltda. (c)

 

112

 

3

 

19

 

10

 

Editora Positivo Ltda. (e)

 

2,438

 

 

2,409

 

2,487

 

Positivo Tecnologia S.A. (d)

 

14

 

13

 

1,757

 

 

Centro Educacional Opção Única Ltda. (a)

 

291

 

46

 

 

 

Sociedade Educacional Posiville Ltda. (a)

 

314

 

175

 

 

 

Positivo Soluções Didáticas Ltda.

 

3,320

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

12,055

 

 3,199

 

48,385

 

45,404

 

 

(a)         Substantially refers to the amounts arising from the direct sales of learning system made by the Business to the students of Positivo Educacional Ltda., considering that the Positivo Educacional Ltda intermediates the financial receipt of such sales, and, later on, makes the financial transfer to Positivo Soluções Didáticas.

 

(b)         These are transactions of purchase of printed books and other products (inventories). These goods are acquired for resale by the Business to its customers.

 

(c)          Comprises transactions of space rentals, especially the Positivo Theater and Event Center, as well as service provision.

 

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Unaudited interim condensed combined carve-out financial statements

as of June 30, 2019

 

(d)         Purchases and services comprise the acquisition of computers and other IT equipment. Additionally, up to 2016, the Business made copyright payments related to the access to internet sites, called “Portal Positivo”, as well as the supply of CD-ROMs with educational contents to institutions that are members of the SPE System. There was also the engagement of Positivo Tecnologia for the production of Positivo ON, the software which substituted the former.

 

(e)          Sales comprise the Business transactions of catalog book sales. Purchase refers to the apportionment of expenses and shared service center, which are incurred by Editora Positivo Ltda. and later on apportioned with the other related parties benefitted by the provision of such services following the terms established between the parties. Such reimbursements are represented by the shared use of purchasing (especially indirect materials), human resources, marketing, legal, accounting, finance and IT departments. The apportionment amount is calculated at the effective cost, apportioned according to the use of available resources.

 

Profit distribution

 

During the first semester of 2019, Positivo Soluções Didáticas Ltda. distributed and paid dividends to its quotaholders in a total amount of R$ 82,000.

 

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Positivo Soluções Didáticas

Unaudited interim condensed combined carve-out financial statements

as of June 30, 2019

 

12.           Net revenue from sales

 

The breakdown of net sales of the Business as of June 30, 2019 and June 30, 2018 is as follows:

 

 

 

June 30, 2019

 

June 30, 2018

 

Learning system

 

245,293

 

243,052

 

(-) Commissions

 

(6,395

)

(4,411

)

(-) Sales taxes

 

(54

)

(48

)

(-) Sales return

 

(4,421

)

(6,785

)

 

 

 

 

 

 

Net revenue

 

234,423

 

231,808

 

 

The Business’s revenues from contracts with customers are all in Brazil. The Group recognized impairment losses on trade receivables arising from contracts with customers, included under selling expenses in the unaudited interim condensed combined carve-out statement of comprehensive income of R$ 253 and R$ 3,059 as of June 30, 2019 and 2018, respectively.

 

Seasonality

 

It’s important to highlight the revenue recognition and seasonality of our Business. The Business typically deliver the learning system SPE four times each year, in March, June, August and December. The learning system Conquista and PES are delivered twice, in June and December, usually two to three months prior to the start of each school quarter. The books are typically delivered by the end of the fourth quarter and during the first quarter. The amount of revenue recognized is proportional to the amount of content made available, which is not linearly distributed among the quarters. This causes revenue seasonality in our business, in which the third quarter revenue is the lowest point of the year.

 

Revenues tax benefits

 

The Business is not subjected to the payment of the social integration program tax (Programa de Integração Social, or PIS) and the social contribution on revenues tax (Contribuição para o Financiamento da Seguridade Social, or COFINS) on the sale of books. The sale of printed and digital books is also exempt from the Brazilian municipal taxes and from the Brazilian value added tax (Imposto sobre Operações relativas à Circulação de Mercadorias e sobre Prestações de Serviços de Transporte Interestadual e Intermunicipal e de Comunicação, or ICMS).

 

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Positivo Soluções Didáticas

Unaudited interim condensed combined carve-out financial statements

as of June 30, 2019

 

13.           Information on nature of expenses recognized in the statement of comprehensive income

 

The Business presents the statement of comprehensive income using a classification of operating expenses based on their function. The information on the nature of these expenses recognized is as follows:

 

 

 

June 30, 2019

 

June 30, 2018

 

Resale goods and consumption material used

 

51,536

 

46,568

 

Personnel and commissions

 

36,056

 

37,782

 

Advertising and publicity

 

10,650

 

5,301

 

Depreciation and amortization

 

6,187

 

4,424

 

Freight

 

6,133

 

4,684

 

Traveling

 

4,731

 

3,367

 

Promotion expenses

 

2,263

 

1,471

 

Third party services

 

2,161

 

2,395

 

Credit card expenses (commission)

 

1,572

 

1,348

 

Rentals

 

555

 

1,846

 

Provision (reversal) for obsolete inventories

 

247

 

30

 

Impairment loss on accounts receivable (a)

 

132

 

3,141

 

Provision for tax, civil and labor risks

 

(175

)

1,556

 

Other

 

8,915

 

7,337

 

 

 

 

 

 

 

 

 

130,963

 

121,250

 

 

(a)         At the beginning of 2019, the entire customer portfolio that gave rise to the impairment loss was sold to a third party, with no chance of recourse, and therefore the impairment loss was reversed.

 

The cost of sales mainly consists of the expenses related to the production and delivery of educational content, which mainly comprises printing costs and amortization of intellectual property in the long term. Operating expenses are comprised of sales expenses, general and administrative expenses and other expenses. The largest expense component comprises employees and labor, which includes salaries and bonuses, employee benefit expenses and contracted labor costs.

 

The cost of sales mainly consists of the expenses related to the resale goods and consumption material used, which mainly comprises printing costs and amortization of intellectual property in the long term. Operating expenses are comprised of sales expenses, general and administrative expenses and other expenses. The largest expense component comprises employees and labor, which includes salaries and bonuses, employee benefit expenses and contracted labor costs.

 

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Positivo Soluções Didáticas

Unaudited interim condensed combined carve-out financial statements

as of June 30, 2019

 

The breakdown of these accounts for reconciling with the unaudited interim condensed combined carve-out statement of comprehensive income is as follows:

 

 

 

June 30, 2019

 

June 30, 2018

 

Cost of sales and services rendered

 

(62,930

)

(58,102

)

Commercial expenses

 

(35,064

)

(28,753

)

Administrative and general expenses

 

(32,837

)

(31,254

)

Impairment loss of accounts receivable and contract assets

 

(132

)

(3,141

)

 

 

 

 

 

 

 

 

(130,963

)

(121,250

)

 

14.           Financial income

 

 

 

June 30, 2019

 

June 30, 2018

 

Financial revenues

 

 

 

 

 

Discounts obtained and other

 

82

 

61

 

Interest charged on accounts receivable and other

 

2,559

 

1,736

 

Yield from investments

 

969

 

25

 

 

 

 

 

 

 

 

 

3,610

 

1,822

 

 

 

 

 

 

 

Financial expenses

 

 

 

 

 

Discounts granted

 

(359

)

(332

)

Interest on loans and other

 

 

(524

)

Interest on leases

 

(208

)

 

Bank expenses

 

(124

)

(85

)

Other

 

(3

)

(53

)

 

 

 

 

 

 

 

 

(694

)

(994

)

 

 

 

 

 

 

 

 

2,916

 

828

 

 

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Positivo Soluções Didáticas

Unaudited interim condensed combined carve-out financial statements

as of June 30, 2019

 

15.           Financial instruments

 

Accounting classification and fair values

 

The following table shows the carrying amounts and fair values of financial assets and financial liabilities, including their fair values hierarchy. The amortized cost is reasonable approximated to the fair value due to the nature and liquidity level of the financial assets and liabilities held by the Business, are as follows:

 

June 30, 2019

 

Hierarchy

 

Amortized
cost

 

Fair value

 

Financial assets

 

 

 

 

 

 

 

Cash and cash equivalents

 

Level 2

 

22,133

 

22,133

 

Trade accounts receivable

 

Level 2

 

90,528

 

90,528

 

Other receivables

 

Level 2

 

685

 

685

 

 

 

 

 

113,346

 

113,346

 

 

 

 

 

 

 

 

 

Financial liabilities

 

 

 

 

 

 

 

Suppliers

 

Level 2

 

12,034

 

12,034

 

Other liabilities

 

Level 2

 

9,495

 

9,495

 

 

 

 

 

21,529

 

21,529

 

December 31, 2018

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Financial assets

 

 

 

 

 

 

 

Cash and cash equivalents

 

Level 2

 

20,328

 

20,328

 

Trade accounts receivable

 

Level 2

 

99,766

 

99,766

 

Other receivables

 

Level 2

 

1,457

 

1,457

 

 

 

 

 

121,551

 

121,551

 

 

 

 

 

 

 

 

 

Financial liabilities

 

 

 

 

 

 

 

Suppliers

 

Level 2

 

14,039

 

14,039

 

Other liabilities

 

Level 2

 

7,943

 

7,943

 

 

 

 

 

21,982

 

21,982

 

 

Financial risk management

 

Risk management structure

 

The main risk factors to which the Business is exposed reflect strategic operational and economic and financial aspects. Strategic operating risks (such as, demand behavior, competition and material changes in the structure of the industry) are addressed by the Business’ management model.

 

The economic and financial risks mainly reflect the behavior of macroeconomic variables such as exchange and interest rates as well as the characteristics of the financial instruments that the Business uses. These risks are managed through control and monitoring policies, specific strategies and limits.

 

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Table of Contents

 

Positivo Soluções Didáticas

Unaudited interim condensed combined carve-out financial statements

as of June 30, 2019

 

The Business has a policy for managing funds, instruments and financial risks monitored by top management and this practice of managing its existing risks in a manner, aiming mainly to preserve the value and liquidity of financial assets and to guarantee financial resources for the smooth running of business, including its expansions.

 

The Business is exposed to the following risks resulting from financial instruments:

 

·      Credit risk;

 

·      Liquidity risk;

 

·      Market risk.

 

This note presents information on the Business’ exposure to each of the risks above, the objectives of the Business, measurement policies, and the Business’s risk and capital management proceedings as of June 30, 2019 are the same as those disclosed in the last annual financial statements.

 

Concentration of credit risk

 

Credit risk is the risk of the Business incurring losses due to a customer or financial instrument counterparty, resulting from failure in complying with contract obligations. Risk is mainly due to financial investments and trade accounts receivable.

 

Accounts receivable and other credits

 

The Business’ exposure to credit risks is influenced mainly by the individual characteristics of each client. However, Management considers the geographical distribution of customers in its evaluation, including the risk of default of industry and in the country where it operates, as these factors may impact credit risk.

 

The quality of the credit of accounts receivable from other receivables is assessed with a basis on the credit policy established by the Business.

 

Cash and cash equivalents

 

The Business held cash and cash equivalents totaling R$ 22,133 as of June 30, 2019, which represent the maximum credit exposure on those assets. Cash and cash equivalents are maintained with major Brazilian banks and financial institutions.

 

Liquidity risk

Liquidity risk is the risk of the Business encountering difficulties in performing the obligations associated with its financial liabilities that are settled with cash payments or with another financial asset. The Business’ approach in liquidity management is to maintain, as much as possible, sufficient liquidity to perform its obligations upon maturity, under normal conditions or not, without causing unacceptable losses or risk to the Business’ reputation.

 

The Business’ Management is ultimately responsible for the liquidity risk management, which manages the needs of funding and liquidity management in short, medium and long terms. The Business manages liquidity risk by maintaining sufficient cash reserves and the ability to raise loans as it considers adequate, through continuous monitoring of foreseen and actual cash flows and through combination of financial assets and liabilities’ maturity profiles.

 

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Table of Contents

 

Positivo Soluções Didáticas

Unaudited interim condensed combined carve-out financial statements

as of June 30, 2019

 

Tables below show the remaining contractual maturities in details of Business’s non-derivative financial assets and liabilities and the amortization contractual terms:

 

Financial Assets

 

 

 

Weighted
average interest
rate per annum

 

<1
month

 

1-3
months

 

3-12
months

 

1-5
years

 

Total

 

June 30, 2019

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and banks

 

 

 

1,357

 

 

 

 

1,357

 

Interest earning bank deposits

 

6,40

%

20,776

 

 

 

 

20,776

 

Accounts receivable

 

 

 

11,198

 

44,953

 

25,270

 

9,107

 

90,528

 

 

 

 

 

33,331

 

44,953

 

25,270

 

9,107

 

112,661

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31, 2018

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and banks

 

 

 

1,075

 

 

 

 

1,075

 

Interest earning bank deposits

 

6,40

%

19,253

 

 

 

 

19,253

 

Accounts receivable

 

 

 

 12,175

 

56,129 

 

 22,068

 

 9,934

 

 99,766

 

 

 

 

 

 32,403

 

56,129 

 

 22,068

 

9,934

 

 120,094

 

 

Financial liabilities

 

 

 

Weighted average
interest rate per
annum

 

<1
month

 

1-3
months

 

3-12
months

 

1-5
years

 

Total

 

June 30, 2019

 

 

 

 

 

 

 

 

 

 

 

 

 

Suppliers

 

 

 

11,497

 

71

 

466

 

 

12,034

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

11,497

 

71

 

466

 

 

12,034

 

December 31, 2018

 

 

 

 

 

 

 

 

 

 

 

 

 

Suppliers

 

 

 

13,205

 

8

 

826

 

 

14,039

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

13,205

 

 8

 

 826

 

 

14,039

 

 

Market risk

Market risk is the risk that alterations in market prices, such as exchange rates and interest rates, have in the Business’ earnings, or in the value of its holdings of financial instruments. The objective of market risk management is to manage and control exposures to market risks according to acceptable parameters and optimize the return at the same.

 

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Positivo Soluções Didáticas

Unaudited interim condensed combined carve-out financial statements

as of June 30, 2019

 

16.           Non-cash transactions

 

The Business carried out the non-cash activities in the six-month period ended June 30, 2019, which are not reflected in the unaudited interim condensed combined carve-out statement of cash flows, mainly related to the recognition of right-of-use assets and lease liabilities as a result of the adoption of IFRS 16, please refer to note 3 and 8.

 

Lucas Raduy Guimarães

Luiz Cezar Teixeira

CEO

Administrative and Financial Director

 

Marco Aurélio Pitta

Accountant CRC-PR - 048.199/O-5

 

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Table of Contents

 

Positivo Soluções Didáticas

 

Combined carve-out financial statements as of December 31, 2018, 2017 and 2016

 


Table of Contents

 

Item 2

 

Positivo Soluções Didáticas

Combined carve-out financial statements as of

December 31, 2018, 2017 and 2016

 

Contents

 

Independent auditors’ report

2-2

 

 

Combined carve-out balance sheets

2-4

 

 

Combined carve-out statements of comprehensive income

2-5

 

 

Combined carve-out statements of changes in parent´s net investment

2-6

 

 

Combined carve-out statements of cash flows - Indirect method

2-7

 

 

Notes to the combined carve-out financial statements

2-8

 

2-1


Table of Contents

 

 

KPMG Auditores Independentes

The Five East Batel

Rua Nunes Machado, nº 68 - Batel

Caixa Postal 13533 - CEP: 80250-000 - Curitiba/PR - Brasil

Telefone +55 (41) 3304-2500

kpmg.com.br

 

Independent Auditors’ Report

 

The Board of Directors

Positivo Soluções Didáticas

 

Report on the Combined Carve-out Financial Statements

 

We have audited the accompanying combined carve-out financial statements of Positivo Soluções Didáticas, which comprise the combined carve-out balance sheets as of December 31, 2018 and 2017 and the related combined carve-out statements of comprehensive income, changes in parent´s net investment, and cash flows for the years ended December 31, 2018, 2017 and 2016, and the related notes to the combined carve-out financial statements.

 

Management’s Responsibility for the Combined Carve-out Financial Statements

 

Management is responsible for the preparation and fair presentation of these combined carve-out financial statements in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of combined carve-out financial statements that are free from material misstatement, whether due to fraud or error.

 

Auditors’ Responsibility

 

Our responsibility is to express an opinion on these combined carve-out financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the combined carve-out financial statements are free from material misstatement.

 

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the combined carve-out financial statements. The procedures selected depend on the auditors’ judgment, including the assessment of the risks of material misstatement of the combined carve-out financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the combined carve-out financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the combined carve-out financial statements.

 

KPMG Auditores Independentes, uma sociedade simples brasileira e firma-membro da rede KPMG de firmas-membro independentes e afiliadas à KPMG International Cooperative (“KPMG International”), uma entidade suíça.

 

KPMG Auditores Independentes, a Brazilian entity and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity.

 

2-2


Table of Contents

 

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

 

Opinion

 

In our opinion, the combined carve-out financial statements referred to above present fairly, in all material respects, the combined carve-out financial position of Positivo Soluções Didáticas as of December 31, 2018 and 2017, and its combined carve-out financial performance and its combined carve-out cash flows for the years ended December 31, 2018, 2017 and 2016 in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board.

 

Emphasis of Matter — Basis of Preparation

 

We draw attention to Note 2 to the combined carve-out financial statements, which describes their basis of preparation, including the approach to and the purpose for preparing them, and that the preparation involves allocations of income, expenses, assets and liabilities. Consequently, the combined carve-out financial statements may not necessarily be indicative of the financial performance that would have been achieved if Positivo Soluções Didáticas had operated as an independent entity, nor may they be indicative of the results of operations of Positivo Soluções Didáticas for any future period. Our opinion is not modified in respect of this matter.

 

KPMG Auditores Independentes

Curitiba - Brazil
October 14, 2019

 

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Table of Contents

 

Positivo Soluções Didáticas

 

Combined carve-out balance sheets

 

(In thousands of Reais — R$ thousand)

 

 

 

Note

 

2018

 

2017

 

Assets

 

 

 

 

 

 

 

Current assets

 

 

 

 

 

 

 

Cash and cash equivalents

 

7

 

20,328

 

351

 

Trade accounts receivable

 

8

 

99,766

 

111,824

 

Inventories

 

9

 

5,909

 

5,988

 

Recoverable taxes

 

 

 

195

 

10

 

Recoverable income tax (IRPJ) and social contribution (CSLL)

 

 

 

126

 

 

Other receivables

 

 

 

1,457

 

1,372

 

 

 

 

 

 

 

 

 

 

 

 

 

127,781

 

119,545

 

 

 

 

 

 

 

 

 

Non-current assets

 

 

 

 

 

 

 

Judicial deposits

 

 

 

48

 

 

Deferred income tax and social contribution

 

10

 

15,934

 

6,625

 

Property, plant and equipment

 

11

 

4,095

 

3,794

 

Intangible assets

 

12

 

32,156

 

30,080

 

 

 

 

 

 

 

 

 

 

 

 

 

52,233

 

40,499

 

 

 

 

 

 

 

 

 

 

 

 

 

180,014

 

160,044

 

 

 

 

 

 

 

 

 

Liabilities

 

 

 

 

 

 

 

Current liabilities