Vitru : 4Q23 Financial Statements

VITRU LIMITED

Consolidated financial statements and independent auditor's report

December 31, 2023

Report of Independent Registered

Public Accounting Firm

To the Board of Directors and Shareholders of

Vitru Limited

Opinion on the Financial Statements

We have audited the accompanying consolidated statements of financial position of Vitru Limited and its subsidiaries (the "Company") as of December 31, 2023, and 2022, and the related consolidated statements of profit or loss and other comprehensive income, changes in equity and cash flows for each of the three years in the period ended December 31, 2023, including the related notes (collectively referred to as the "consolidated financial statements"). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2023, and 2022, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2023, in conformity with International Financial Reporting Standards as issued by the International Accounting Standards Board.

Basis for Opinion

These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits of these consolidated financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud.

Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.

"/s/" PricewaterhouseCoopers Auditores Independentes Ltda.

Florianópolis, Brazil,

March 22, 2024

We have served as the Company's auditor since 2016

Vitru Limited

Consolidated statements of financial position at (In thousands of Brazilian Reais)

		Note		December 31, 2023		December 31, 2022
ASSETS
CURRENT ASSETS
Cash and cash equivalents	9	21,302	47,187
Short-term investments		9		220,301		26,389
Trade receivables	10	235,560	224,128
Income taxes recoverable				2,423		6,994
Prepaid expenses	12	19,710	20,010
Receivable from hub partners		13		39,351		31,979
Other current assets			40,459	14,853
TOTAL CURRENT ASSETS				579,106		371,540
NON-CURRENT ASSETS
Trade receivables	10	69,127	47,012
Indemnification assets				28,426		9,853
Deferred tax assets	11	226,959	203,043
Receivable from hub partners		13		57,277		48,117
Other non-current assets			11,100	6,903
Right-of-use assets		14		349,683		350,393
Property and equipment	15	205,852	194,575
Intangible assets		16		4,342,190		4,427,643
TOTAL NON-CURRENT ASSETS			5,290,614	5,287,539
TOTAL ASSETS				5,869,720		5,659,079

The accompanying notes are an integral part of the consolidated financial statements.

1

Vitru Limited

Consolidated statements of financial position at (In thousands of Brazilian Reais)

		Note		December 31, 2023		December 31, 2022
LIABILITIES
CURRENT LIABILITIES
Trade payables			112,073	99,697
Loans and financing		17		151,120		131,158
Lease liabilities	14	51,621	51,310
Labor and social obligations		18		90,426		43,105
Taxes payable			17,370	16,006
Prepayments from customers				45,331		43,606
Other current liabilities			24,640	7,484
TOTAL CURRENT LIABILITIES				492,581		392,366
NON-CURRENT
Loans and financing	17	2,030,699	1,489,088
Lease liabilities		14		276,213		272,029
Payables from acquisition of subsidiaries	19	-	507,361
Taxes payable				6,075		-
Provisions for contingencies	20	41,878	29,182
Deferred tax liabilities		11		730,896		773,394
Share-based compensation	7	1,974	19,805
Other non-current liabilities				4,696		1,465
TOTAL NON-CURRENT LIABILITIES			3,092,431	3,092,324
TOTAL LIABILITIES			3,585,012	3,484,690
EQUITY	21
Share capital				8		8
Capital reserves			2,056,054	2,054,527
Retained earnings				228,646		119,854
TOTAL EQUITY			2,284,708	2,174,389
TOTAL LIABILITIES AND EQUITY				5,869,720		5,659,079

The accompanying notes are an integral part of the consolidated financial statements.

2

Vitru Limited

Consolidated statements of profit or loss and other comprehensive income for the years ended December 31

(In thousands of Brazilian Reais, except earnings per share)

						Year Ended
						December 31,
		Note	2023	2022	2021
NET REVENUE		25		1,962,525		1,317,346		631,147
Cost of services rendered		26		(669,480)		(502,331)		(240,924)
GROSS PROFIT				1,293,045		815,015		390,223
General and administrative expenses		26		(259,086)		(179,335)		(89,344)
Selling expenses	26		(360,401)	(244,836)	(111,490)
Net impairment losses on financial assets		10		(263,541)		(187,534)		(110,689)
Other income (expenses), net	27		(8,453)	(2,320)	65
Operating expenses				(891,481)		(614,025)		(311,458)
OPERATING PROFIT				401,564		200,990		78,765
Financial income		28		60,970		64,566		45,520
Financial expenses	28		(366,545)	(264,437)	(74,879)
Financial results				(305,575)		(199,871)		(29,359)
PROFIT BEFORE TAXES				95,989		1,119		49,406
Current income taxes		11		(53,611)		(18,023)		(11,333)
Deferred income taxes	11		66,414	110,224	32,575
Income taxes				12,803		92,201		21,242
NET INCOME FOR THE YEAR				108,792		93,320		70,648
Other comprehensive income (loss)				-		-		-
TOTAL COMPREHENSIVE INCOME				108,792		93,320		70,648
Basic earnings per share (R$)		22		3.23		3.52		3.08
Diluted earnings per share (R$)	22		2.97	3.23	2.89

The accompanying notes are an integral part of the consolidated financial statements.

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Vitru Limited

Consolidated statement of changes in equity (In thousands of Brazilian Reais)

					Capital reserves
			Additional paid-		Share-based				Retained
	Share capital	in capital		compensation		Treasury Shares		earnings		Total
DECEMBER 31, 2020	6		1,020,541		1,515		-		(44,114)		977,948
										-
Profit for the year	-		-		-		-		70,648		70,648
Capital contributions	-		9,722	-	-	-	9,722
Issue of shares to employees	-		529		(529)		-		-		-
Value of employee services	-		-	7,810	-	-	7,810
DECEMBER 31, 2021	6		1,030,792	8,796	-	26,534	1,066,128
Profit for the year	-		-	-	-	93,320	93,320
Issuance of shares for business combination	2		560,544		-		-		-		560,546
Employee share program										-
Capital contributions	-		428,375		-		-		-		428,375
Issue of shares to employees	-		21,853	(21,853)	-	-	-
Value of employee services	-		-		26,020		-		-		26,020
DECEMBER 31, 2022	8		2,041,564		12,963		-		119,854		2,174,389
Profit for the year	-		-		-		-		108,792		108,792
Treasury Shares	-		-	-	(16,144)	-	(16,144)
Employee share program	-		-		-		-		-		-
Capital contributions	-		10,396	-	-	-	10,396
Issue of shares to employees	-		6,144		(6,144)		-		-		-
Value of employee services	-		-	7,275	-	-	7,275
DECEMBER 31, 2023	8		2,058,104		14,094		(16,144)		228,646		2,284,708

The accompanying notes are an integral part of the consolidated financial statements.

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Vitru Limited

Consolidated statement of cash flows for the year ended December 31,

(In thousands of Brazilian Reais)

				Year Ended December 31,
		Note	2023		2022			2021
Cash flows from operating activities
Profit before taxes				95,989		1,119			49,406
Adjustments to reconcile income before taxes to cash provided on
operating activities
Depreciation and amortization	14 / 15 / 16		212,658		127,343			54,479
Net impairment losses on financial assets		10		263,541		187,533			110,689
Provision for revenue cancellation	10		5,638		2,321			1,055
Provision for contingencies		20		1,561		(1,294)			4,905
Accrued interests				339,587		232,889			23,275
Share-based compensation		23		(9,389)		(6,458)			14,728
Rent concessions				-		-			(210)
Loss on sale or disposal of non-current assets		15 / 16		9,436		11,365			9
Modification of lease contracts	14		610		1,691			(169)
Changes in operating assets and liabilities:
Trade receivables				(302,726)		(235,541)			(117,096)
Prepayments				300		26,246			(782)
Other assets				(43,823)		(25,869)			5,569
Trade payables				12,376		53,612			9,466
Labor and social obligations				47,321		(19,732)			(1,770)
Other taxes payable				7,439		4,814			849
Prepayments from customers				1,725		15,529			664
Other payables				20,387		465			411
Cash from operations				662,630		376,033			155,478
Income tax paid				(49,040)		(17,270)			(18,486)
Interest paid		14 / 17 / 19		(371,894)		(236,393)			(64,104)
Contingencies paid				(12,231)		(906)			(7,853)
Net cash provided by operating activities				229,465		121,464			65,035
Cash flows from investing activities
Purchase of property and equipment	15		(51,300)		(40,316)			(25,995)
Purchase and capitalization of intangible assets		16		(71,285)		(56,722)			(32,320)
Payments for the acquisition of interests in subsidiaries, net of cash	19		(487,326)		(2,291,688)			(127,804)
Acquisition of short-term investments, net				(193,912)		226,653			286,141
Net cash provided (used) by investing activities				(803,823)		(2,162,073)			100,022
Cash flows from financing activities
Payments of lease liabilities		14		(20,738)		(18,374)			(11,170)
Payments of loans and financing				(100,869)		(296,262)			(150,000)
Proceeds from loans and financing , net of transaction costs				675,828		1,905,851			-
Costs related to future issuances	12		-		(7,381)			(23,952)
Shares repurchase				(16,144)		-			-
Capital contributions net of treasury shares				10,396		428,375			9,722
Net cash provided (used) by financing activities				548,473		2,012,209			(175,400)
Net decrease in cash and cash equivalents				(25,885)		(28,400)			(10,343)
Cash and cash equivalents at the beginning of the year				47,187		75,587			85,930
Cash and cash equivalents at the end of the year				21,302		47,187			75,587
				(25,885)		(28,400)			(10,343)

See Note 29 for the main transactions in investing and financing activities not affecting cash.

The accompanying notes are an integral part of the consolidated financial statements.

5

Vitru Limited

Notes to the financial statements.

December 31, 2023 and 2022.

(In thousands of Brazilian Reais, except as otherwise indicated)

1. Corporate information

Vitru Limited ("Vitru") and its subsidiaries (collectively, the "Company") is a holding company incorporated under the laws of the Cayman Islands on March 05, 2020 and whose shares are publicly traded on the National Association of Securities Dealers Automated Quotations Payments exchange (NASDAQ) under the ticker symbol "VTRU". Vitru became the parent company of Vitru Brasil Empreendimentos, Participações e Comércio S.A. (hereafter referred to as "Vitru Brazil") formerly denominated

Treviso Empreendimentos, Participações e Comércio S.A., through the completion of the corporate reorganization.

Vitru is a holding company jointly controlled by Vinci Partners, through the investments funds "Vinci Capital Partners II FIP Multiestratégia", "Agresti Investments LLC", "Botticelli Investments LLC", Raffaello Investments LLC", and the Carlyle Group, through the investment funds "Mundi Holdings I LLC", "Mundi Holdings Ii LLC" and "Crescera Growth Capital V Coinvestimento III Fundo de Investimento em Participações Multiestratégia" (Note 1.4).

The Company is principally engaged in providing educational services in Brazil, mainly undergraduate and continuing education courses, presentially through its eight campuses in two states, or via digital education, through 2,499 (December 31, 2022 - 2,170) learning centers ("hubs") across the country.

These consolidated financial statements were authorized for issue by the Board of Directors on March 21, 2024.

1.1. Significant changes in the current reporting year

a) Share-based compensation (Note 23)

In the period between February and September 2023, Stock Options Program (SOP) participants exercised 138,986 share options. The impact caused by this operation was a reversal of R$ 12,155 in liabilities and a constitution of reserve in equity of R$ 2,321, which is included in the amount of R$ 5,083 on the Statements of Changes in Equity. The capital contribution from the participants (exercise price) was R$ 10,396.

b) Issuance of debenture (Note 17)

On May 5th, 2023, the Company issued a new series of debentures through its subsidiary Vitru Brasil, in the amount of R$ 190,000 comprising 190,000 bonds maturing between May 2025 and May 2028

On November 16th, 2023, the Company issued a new series of debentures through its subsidiary Vitru Brasil, in the amount of R$ 500,000 comprising 500,000 bonds maturing between November 2028 and November 2030.

2. Material accounting policies

The material accounting policies applied in the preparation of these consolidated financial statements of the Company are set out below. These policies have been consistently applied to all periods presented, unless otherwise stated. The financial statements are for the group consisting of Vitru and its subsidiaries.

2.1. Basis of preparation

The consolidated financial statements of the Company have been prepared in accordance with the International Financial

Reporting Standards as issued by the International Accounting Standards Board ("IFRS Accounting Standards") and disclose all (and only) the applicable significant information related to the financial statements, which is consistent with the information utilized by Management in the performance of its duties.

The financial statements have been prepared under the historical cost convention, except for share-based compensation, which are adjusted to reflect fair value measurement.

The preparation of financial statements requires the use of certain critical accounting estimates. It also requires Management to exercise its judgment in the process of applying the Company's accounting policies.

The areas involving a higher degree of judgment or complexity, or areas where assumptions and estimates are significant to the financial statements, are disclosed in note 3. Actual results may differ from estimates.

All amounts disclosed in the financial statements and notes have been rounded off to the nearest thousand currency units unless otherwise stated.

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Vitru Limited

Notes to the financial statements.

December 31, 2023 and 2022.

(In thousands of Brazilian Reais, except as otherwise indicated)

2.2. Basis of consolidation

The consolidated financial statements comprise the financial statements of the Company December 31, 2023, 2022 and 2021.

The table below list the Company's subsidiaries:

Name		Main activities		Location		Investment
			type
Vitru Brasil
Empreendimentos,		Continuing education courses		Florianópolis -		Subsidiary
Participações e			SC
Comércio S.A
UNIASSELVI -
Sociedade Educacional		Distance learning, on-campus undergraduate		Indaial - SC		Subsidiary
Leonardo da Vinci S/S		and continuing education courses
Ltda
Sociedade Educacional		On-campus undergraduate and continuing
do Vale do Itapocu S/S			Guaramirim - SC		Subsidiary
	education courses
Ltda.

for the years ended

Direct and indirect interest

2023	2022	2021
100%	100%	100%
100%	100%	100%
100%	100%	100%

FAIR Educacional Ltda.		On-campus undergraduate and continuing
	education courses
FAC Educacional Ltda.		On-campus undergraduate and continuing
	education courses
CESUMAR-Centro de		Distance learning, on-campus undergraduate
Ensino Superior de
	and continuing education courses
Maringá Ltda.
Rede Enem Serviços
	Preparatory courses
de Internet Ltda

Rondonópolis - Subsidiary

MT

Cuiabá - MS Subsidiary

Maringá - PR

Subsidiary

Florianópolis - Subsidiary

SC

100%	100%	100%
100%	100%	100%
100%	100%	-
100%	100%	-

The Company consolidates the financial information for all entities it controls. Control is achieved when the Company is exposed to, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee.

1. Subsidiaries

Consolidation of a subsidiary begins when the Company obtains control over the subsidiary and it ceases when the Company loses control of the subsidiary. Assets, liabilities, income and expenses of a subsidiary acquired or disposed of during the year are included in the consolidated financial statements from the date the Company gains control until the date the Company ceases to control the subsidiary.

When necessary, adjustments are made to the financial statements of subsidiaries in order to bring their accounting policies in line with the Company's accounting policies. All intra-group assets and liabilities, equity, income, expenses and cash flows relating to transactions are eliminated in full on consolidation.

A change in the ownership interest of a subsidiary, without a loss of control, is accounted for as an equity transaction. If the Company loses control over a subsidiary, it derecognized the related assets (including goodwill), liabilities, non-controlling interest and other components of equity, while any resulting gain or loss is recognized in the statement of profit or loss.

1. Joint arrangements

Investments in joint arrangements are classified as either joint operations or joint ventures, depending on the contractual rights and obligations of each investor, rather than the legal structure of the joint arrangement. The Company has only joint operations.

Joint operations

The Company recognizes its direct right to the assets, liabilities, revenues and expenses of joint operations and its share of any jointly held or incurred assets, liabilities, revenues and expenses. These have been incorporated in the financial statements under the appropriate headings. Details of the joint operation are set out in Note 2.5.m.

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Vitru Limited

Notes to the financial statements.

December 31, 2023 and 2022.

(In thousands of Brazilian Reais, except as otherwise indicated)

1. Functional and presentation currency
   The items included in the consolidated financial statements are measured using the currency of the primary economic environment in which the entity operates ("the functional currency"). The financial statements are presented in Brazilian Reais (R$), which is the Company's functional currency and the Company's presentation currency.
   Transactions and balances
   Foreign currency transactions are initially recorded by each entity in the Company at their respective functional currency spot rates at the date the transaction is recognized. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation of monetary assets and liabilities denominated in foreign currencies at the functional currency spot rates at the end of each reporting period are recognized in the income statement. Non-monetary items that are measured at historical cost in a foreign currency are translated using the exchange rates at the dates of the initial transaction. Translation differences on assets and liabilities carried at fair value are reported as part of the fair value gain or loss.
2. Current versus non-current classification
   The Company presents assets and liabilities in the statement of financial position based on current/non-current classification. An asset is current when it is:
3. • Expected to be realized or intended to be sold or consumed in the normal operating cycle;
   • Held primarily for the purpose of trading;
   • Expected to be realized within twelve months after the reporting period; or
   • Cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period.

All other assets are classified as non-current.

A liability is current when:

• It is expected to be settled in the normal operating cycle;
• It is held primarily for the purpose of trading;
• It is due to be settled within twelve months after the reporting period; or
• There is no unconditional right to defer the settlement of the liability for at least twelve months after the reporting period.

The Company classifies all other liabilities as non-current.

Deferred tax assets and liabilities are classified as non-current assets and liabilities.

2.5. Summary of material accounting policies

1. Fair value measurement

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either: (i) in the principal market for the asset or liability; or (ii) in the absence of a principal market, in the most advantageous market for the asset or liability.

The principal or the most advantageous market must be accessible by the Company.

The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their economic best interest.

A fair value measurement of a non-financial asset takes into account a market participant's ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use.

The Company uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximizing the use of relevant observable inputs and minimizing the use of unobservable inputs.

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:

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