KROT11

Unopar December 2011

2 2

Important Notes

The forward-looking statements contained in this document, including financial data and other estimates and assessments of the fiscal year

ending in 2011, relating to business prospects, projections of operating and financial results, and those related to the growth prospects of

Kroton are merely estimates and as such are based exclusively on the Management's expectations about the future of the business. These

forward-looking statements depend substantially on the approvals and licenses necessary for the projects, market conditions, and

performance of the Brazilian economy, the sector and international markets and hence are subject to change without prior notice. This

performance report includes accounting data and non-accounting data such as operating, pro forma financial data and projections based on

the Management's expectations. Non-accounting data has not been reviewed by the Company's independent auditors.

In the preparation of this document, Kroton assumed and relied, without assuming any responsibility for independent verification, on the

accuracy and completeness of all financial and other information and data publicly available regarding Unopar or provided to or otherwise

reviewed by or discussed with Unopar’s Management. With respect to financial forecasts and other information and data provided to or

otherwise reviewed by or discussed with Kroton related to Unopar, Kroton assumed that the forecasts and other information and data were

reasonably prepared by Unopar on basis reflecting the best currently available estimates and judgments of Unopar’s management as to the

future financial performance of Unopar, subjected to the same uncertainty factors as above.

Holders of shares of Kroton should take into account the information contained herein, in addition to other information made available by the

Company to the Brazilian Securities and Exchange Commission (CVM), notably its Reference Form and periodic financial information, also

under the acquisition of Unopar’s shares, capital increase and migration to the “Novo Mercado” of BM&FBovespa, in order to understand

their rights and what they should do to exercise these rights.

3 3

Main Events Since IPO

Source: Kroton and Unopar Notes: 1 LTM Net Revenues until June 30th, 2011 2 LTM growth until respective dates 3 Market cap on the end of the period. The end of 2011/1 considers the primary offer of the company’s follow on 4 Considers Kroton’s units @ R$19,50 (last price of December, 14th, 2011), a capital increase of R$600 mm (assuming 100% of float’s subscription) and R$260 mm in shares to Unopar’s Sellers 5 Combined company based on 1H11 for Unopar and November 2011 for Kroton 6 Combined company Net Revenues projected to 2011

2007 2009 2010 1H2011 2H2011

Post Secondary Students (‘000)

Net Revenues (R$ mm)

Event

Net Revenues Growth

Market Cap (R$ mm)

IPO Advent Investment and Capital Increase

Acquisition of IUNI Integration and Turnaround Follow-on Acquisition of Unopar

44 85 92 264

148 343 642 667 1,115

54% 26% 87% 47% 74%

881 1,106 1,428 1,701 2,544

18

1

4

2

3

5

6

4 4 4 4

Investment Highlights: Unopar’s Acquisition

Distance Learning is a business with strong cash generation and high growth Kroton becomes the leader of the Brazilian education market after Unopar’s acquisition The transaction is highly accretive for Kroton’s shareholders Kroton has a relevant integration track record with efficient use of synergies Controlling Shareholders and Unopar’s Founders are aligned with the transaction

5 5

Unopar: Largest Distance Learning Institution in Brazil

Source: Kroton and Unopar Notes: 1 For the non listed companies, # of students according to CM consultoria studies for 2010 (except Unopar, which is based on company’s numbers as of 1H11) 2 # of students as of 3Q11 to: Anhanguera and Estácio. Considers only students in high education

Distance Learning Students of Unopar DL Ranking in Brazil1,2

• 469 Accredited DLCs

• 422 Cities

• 399 Active DLCs

• 5 Onsite Campuses

1.8 11.9

38.8

70.1

102.6

104.6

111.2

123.4 145.6

2003 2004 2005 2006 2007 2008 2009 2010 1H11

DL Students (‘000) DL Students (‘000)

146

83

60 5753

49 4641

28 27

An

han

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ra

Un

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i

Ulb

ra

Fate

c In

tern

acio

nal

Un

ip

Cas

telo

Bra

nco

Esta

cio

Un

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b

FTC

• In-class Undergrad: 10.3 • Graduation: 6.0

Total: 161.9

6 6

DL: High Growth and Under Penetrated Market

Source: MEC, Kroton and CM Consultoria Note: 1 2009 Numbers

Historical Growth

Low Penetration

Growth Potential

1.9x

15%

29%

DL Students (‘000)

Share of DL as % of higher education students

DL students (mm)

1

CM Consultoria 370

728

838 930

2007 2008 2009 2010

0.9

2.1

3.1

2010 2016E 2020E

7 7

Unopar is a First-Class Cash Generator

• High EBITDA margin

• Low CAPEX as a percentage of net revenues ̶ Most of CAPEX is responsibility of each DLC

• Low Working Capital needs ̶ DLCs are paid every fifth working day of the month

subsequent to the effective cash receivable from students tuition by Unopar

Unopar’s Operational Cash Flow

Source: Kroton and Unopar

R$ million 2010 2011E

EBITDA 105 117

EBITDA Margin (%) 28% 28%

Operational Cash Flow 82 109

% of EBITDA 78% 93%

Adjusted operational Cash Flow to non- recurring items of CAPEX and Working Capital

82 94

% of EBITDA 78% 80%

EBITDA to cash = 75 - 80%

• Low taxation, average effective tax rate of 1.5%

8 8

Kroton + Unopar

Unopar’s Acquisition is Complementary to Kroton

Merger of two leader and complementary platforms

Geographical Complementarity

Unopar Kroton

Business Complementarity3

Campuses (#) 45

DLCs (#) 616

=

422 Cities

Campuses (#) 5

DLCs (#) 4692

467 Cities

1 + =

128 Cities 1

Campuses (#) 40

DLCs (#) 147

Post Secondary In-Class

K12

Kroton

20%

80%

Unopar

12%

88%

In-class

Distance Learning +

In-class

Distance Learning 55% 33%

12%

K12

Source: Kroton and Unopar Notes: 1 Not considering Basic Education schools which are not currently part of Kroton’s DLC 2 Certified DLCs 3 Participation of each business line in terms of Net Revenues (In-Class, Distance Learning and K-12)

9 9

111

162

2010 2011E

12

54

2010 2011E

+45.9%

10.9% 14.5%

Margin

168

220

2010 2011E

Kroton – EBITDA (R$ mm)¹

99108

2010 2011E

63

103

2010 2011E

375416

2010 2011E

1,016 1,115

2010 2011E

642 699

2010 2011E

Sustainable Growth of Revenues and Margins

Kroton – Net Revenues (R$ mm) Unopar – Net Revenues (R$ mm)2 Combined – Net Revenues (R$ mm)

Unopar – EBITDA (R$ mm)3 Combined – EBITDA (R$ mm)

Kroton – Net Income (R$ mm)¹ Unopar – Net Income (R$ mm)3 Combined – Net Income (R$ mm)

+ =

+ =

+ =

Source: Kroton and Unopar Notes: 1 According to company’s release criteria 2 Adjusted for Unopar reflecting Kroton`s accounting practices 3 EBITDA and Net Income for Unopar were adjusted and reduced compared to Unopar`s Financial Statements, in order to reflect Kroton`s accounting practices

+9.0%

+64.1%

+350.0%

9.8%

14.8%

1.9%

7.7%

Margin

Margin

105117

2010 2011E

+11.6%

28.1% 28.2%

Margin

+10.9%

26.4% 26.0%

+9.1%

Margin

+9.7%

+30.9%

Margin

16.5% 19.7%

10 10 10 10

The Acquisition Consolidates Kroton as a Leader in the Education Market

Kroton becomes the 6th largest company of the sector in the world3 in terms of market cap

+

#2295

226

157

123 103

Ranking – Post Secondary Students1

+

#2295

226

157

123 103

+

#2295

226

157

123 103

+

#2295

226

157

123 103

#3 398

292

264 248

162

122 102

Post Secondary Students (‘000)

EBITDA2

+

#2295

226

157

123 103

#2

+

#2295

226

157

123 103

+

#2295

226

157

123 103

+

#2295

226

157

123 103

+

#2295

226

157

123 103

2011E R$ (mm)

Source: Kroton, Unopar, Bloomberg, Capital IQ (Market Cap as of December 14th, 2011) and BMO Capital Markets Notes: 1 According to 3Q11 or last data available. Considers only publicly traded institutions 2 For Anhanguera and Estacio, based on the market consensus of the Capital IQ. For Kroton and Unopar, based on companies` forecasts 3 Considers Kroton`s units price as of December, 14th, 2011 , capital increase of R$600 mm (assuming 100% of float subscription) and R$260 mm of Kroton`s units issue to Unopar. For the other

companies market cap as of December 14th, 2011 based on Bloomberg and Capital IQ data

287

220

152

117

103

11 11

Kroton has Expertise in Relevant Integration Processes

Largest acquisition of

education sector in Brazil

2011

1o

Successful Integration: Post Secondary Impacts - 2010

Operational Margin (%)

0.5%

21.3%

Jan -Jul Aug-Dec

Dif. %: +20.8 p.p.

Average Monthly Net Revenues (R$ million)

41.7

45.9

+10%

Jan -Jul Aug-Dec

IUNI’s integration process was implemented in a fast and efficient way, successfully impacting results in the subsequent 12 months

Second largest acquisition

of education sector in Brazil

2010

2o

Source: Kroton

Integration challenges of Kroton / IUNI performed

in 2010:

40 Post Secondary units integrated at

the same time

80 thousand In-class

students integrated

8,000 employees and teachers involved

Largest Integration Process of the

Education Sector in Brazil

12 12

Unopar Integration Plan

Post Merger Integration methodology (PMI)

18 Integration teams

49 Projects

HR, Process, Systems and Projects Consultancies

Integration Structure

Integration Committee

Integration PMO

Integration Teams

Short-Term Management

Indicators

HR

Budget

Legal

Communication

Diagnosis Finance

Academic

Accounting

Students Managment

Distance Learning

Integration Managment

Marketing /Commercial

Operations

Regulatory

Supply

• Integration directions

• Decision making

• Methodology and mediation

• Consolidation and works alignment

IT

Source: Kroton

13 13 Source: Kroton and Unopar

New Businesses

DLCs Expansion

Business and Courses

Expansion

In-class

1 Distance Learning technical courses 2 Distance Learning corporate courses

3 High synergies with Kroton’s 777 Primary and Secondary Education schools 4 Opening of 70 new DLCs which are already certified

5 Distance Learning Graduation courses 6 Introduction of new courses in distance learning

7 New in-class courses 8 FIES expansion (low penetration in Unopar) 9 Faster implementation of the 20% of DL on Kroton’s In-class courses 10 Synergies between Kroton and Unopar Londrina’s campuses

Synergies already quantified to be captured in the short term

Top 10 Upsides and Synergies

Costs and Expenses Annual Synergies (R$ mm)

2012 2013

6.7 14.6

14 14

Transaction Overview

Notes: 1 Based on a discount of 6.39% over the weighted average of Kroton’s unit price of the last 60 days, until December 14th, 2011 2 Commitment to subscribe US$110 million at the exchange rate of the liquidation date 3 An amendment to Shareholders` Agreement of the controlling shareholders approved the migration to Novo Mercado in 2012

Acquisition Price and

Payment Conditions

Acquisition’s Financing

Migration to Novo Mercado

Acquisition of Unopar for R$1.3 billion

• Represents 9.9x EV/EBITDA 2011E and 10.6 x P/E 2011E (post synergies)

Payment Conditions:

• R$260 million in Kroton’s units

• R$650 million at closing

• R$260 million until March 14th, 2012

• R$130 million in 12 months (Seller’s Note)

• Controlling Shareholders approved to vote favorably for the migration to Novo Mercado in 20123

• Higher market cap after the transaction and migration to Novo Mercado should increase significantly shares liquidity

Highlights Description

Cash

Capital Increase

New Financial

Debt

• R$100 million

• R$600 million

• R$17.50 per unit1

• Controlling shareholders will subscribe a minimum amount of US$110 million (R$206 million at the exchange rate of December, 14th, 2011)2

• R$210 million

• Additional credit line of up to R$340 million pre-approved in case of partial subscription of the Capital Increase

• Cost of CDI + 2% p.y.

• 7 year term, with 36 months grace period

15 15

Transaction Structure

Unopar

Sellers

100% of Unopar’s Equity

R$ 1.3 billion R$ 910 mm – Cash¹

R$ 260 mm – Kroton`s Units

R$ 130 mm – Seller’s Note2

R$ 100 mm – Kroton Cash

R$ 600 mm – Capital Increase3

R$ 210 mm – New Debt3

Transaction Structure

Shareholder Structure Before the Transaction Shareholder Structure After the Transaction3,4

Controlling Shareholders Float

40.1% 58.4%

Controlling Shareholders

Unopar

Sellers

+

Addition of 2 members on the Board of Directors nominated by Unopar – Total of 11 members

Float

+ Treasury Shares: 1.0%

+ Treasury Shares: 1.5%

Source: Kroton Notes: 1 R$650 million in cash at the closing and R$260 million until March, 14th, 2012 2 Maturing in 12 months, adjusted by CDI 3 Assuming 100% of float subscription on the capital increase 4 New shares of the capital increase are issued @ R$17,50 per unit

34.5% 54.2% 10.3%

16 16

Capital Increase Description

Events Schedule of the Capital Increase

Notes: 1 Kroton’s cash used for the operation. For leverage analysis a net cash position of zero was considered 2 Of the float

Acquisition Financing and Debt

Adequate funding in any scenario

Source Scenario

50% of subscription2

100% of subscription2

Cash1 100 100

Capital Increase (R$ mm) 422 600

New Financial Debt (R$ mm) 388 210

Leverage (net financial debt / EBITDA 2011E)

1.8x 1.0x

Seller´s Note Maturing in Dec/2012 (R$ mm)

130 130

Leverage Considering

Seller´s Note (net debt / EBITDA 2011E)

2.4x 1.5x

Cash Total Payment: R$910 million

Cost: CDI + 2 % p.y. Grace Period: 36 months for amortization

Maturity: 7 years

Value

Unit Price

Commitment of Controlling Shareholders

• Maximum of R$600 million

• R$17.50 per unit, equivalent to a discount of 6.39% over the weighted average of the last 60 days

• Controlling shareholders will subscribe a minimum amount of US$110 million (R$206 million at the exchange rate of December, 14th, 2011)

12/19/2011 to 01/23/2012

• Period for subscription of the Capital Increase

01/26/2012 to 02/14/2012

• Period for “sobras” subscription

02/16/2012 to 03/02/2012

• Cancelation period

03/12/2012 • Issue of new units

17 17

Consistent Results Delivery by Kroton O

rgan

ic

Ne

w B

usi

nes

ses

Follow-On Guidance What happened? After Acquisition of

Unopar

M&A

DL Segment

• 60 thousand students until 2013

• Acquisition of 3 institutions with a total of 8,000 students

• Unopar: 162 thousand students

• Target: 80,000 students

• Delivered : 173,500 students

• Excelled in 117% the target

• 20 thousand students until 2013

• Entrance in the segment through organic growth (3,500 students)

• Unopar: 146 thousand students

K-12 Growth

In-class

Growth

• 10 – 15% annually

• Not impacted by the acquisition of Unopar

• 6 – 9% annually • Not impacted by the

acquisition of Unopar

• Growth of 11.9% in 9M11

• Growth of 8.4% in 9M11

18 18 18 18

Investment Highlights: Unopar’s Acquisition

Distance Learning is a business with strong cash generation and high growth Kroton becomes the leader of the Brazilian education market after Unopar’s acquisition The transaction is highly accretive for Kroton’s shareholders Kroton has a relevant integration track record with efficient use of synergies Controlling Shareholders and Unopar’s Founders are aligned with the transaction

19 19

Investor Relations www.kroton.com.br/ri Carlos Lazar

carlos.lazar@kroton.com.br

+55 11 3775-2288

Carolina Igi

carolina.igi@kroton.com.br

+55 11 3775-2003