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KROT11

3Q12 Earnings Release

1

Belo Horizonte, November 8, 2012 – Kroton Educacional S.A. (BM&FBovespa: KROT11), “Kroton” or “Company”, announces today its results for the third quarter of 2012 (3Q12). The Company’s financial information is presented on a consolidated basis and in Brazilian real, in accordance with Brazilian Corporate Law and Generally Accepted Accounting Principles in Brazil (BRGAAP), and already conforms with International Financial Reporting Standards (IFRS), except where stated otherwise.

HIGHLIGHTS

1 Includes the impacts from the June results of Uniasselvi. 2 Excludes investments in M&A and Special Projects.

New enrollment and re-enrollment rates surpass the Company's targets. Admission of approximately 74,200 new On-Campus Undergraduate and Distance Learning students, representing growth of 21.4% from 3Q11. Total student base of around 411,000 at the end of 3Q12.

FIES student loans contracted by roughly 55,400 students, representing 43.2% of the total student base in the On-Campus Undergraduate business. Of the total number of new enrollments in 3Q12, 48.4% held FIES student loans. 40 new Distance Learning centers to be opened for the ongoing 1H13 enrollment cycle. Project to accredit 225 new Distance Learning centers submitted to the Ministry of Education (MEC).

Net revenue up 114.1% from 3Q11, driven by the growth in the number of Postsecondary students resulting from the Unopar and Uniasselvi acquisitions. Organic (same-unit) net revenue growth of 24.1% compared to 3Q11.

Gross income of R$189.6 million, increasing 179.0% from the same quarter last year. Gross margin of 49.2%, expanding 11.4 p.p. compared to 3Q11.

Operating result of R$137.8 million, increasing 224.4% from 3Q11. Operating margin of 35.7%, expanding 12.2 p.p. from the same quarter last year.

Adjusted EBITDA of R$115.9 million, growing 292.1% compared to 3Q11, with adjusted EBITDA margin of 30.1%, expanding 13.6 p.p. from the same quarter last year.

Adjusted net income of R$82.1 million in 3Q12, increasing 277.8% from the same quarter last year. Adjusted net margin of 21.3%, or 9.2 p.p. higher than in 3Q11. Operating cash flow before capex in 3Q12 of R$135.8 million and after recurring capex of R$123.3 million.

Institutional Investor magazine awards Kroton first place in 7 categories, consolidating the outstanding position achieved in its relationship with the financial community.

Values in R$ ('000) 3Q12 3Q11 Chg.% 2Q12 Chg.% 9M12 9M11 Chg.%

Gross Revenue 463,863 213,280 117.5% 397,791 16.6% 1,265,956 633,186 99.9%

Net Revenue 385,483 180,029 114.1% 314,537 22.6% 1,040,617 537,357 93.7%

Gross Income 189,563 67,954 179.0% 144,663 31.0% 529,970 205,051 158.5%

Gross Margin 49.2% 37.7% 11.4 p.p. 46.0% 3.2 p.p. 50.9% 38.2% 12.8 p.p.

Operating Result 137,809 42,482 224.4% 90,530 52.2% 373,726 131,861 183.4%

Operating Margin 35.7% 23.6% 12.2 p.p. 28.8% 7.0 p.p. 35.9% 24.5% 11.4 p.p.

Adjusted EBITDA 115,916 29,565 292.1% 73,341 58.0% 315,524 92,456 241.3%

Adjusted EBITDA Margin 30.1% 16.4% 13.6 p.p. 23.3% 6.8 p.p. 30.3% 17.2% 13.1 p.p.

Adjusted Net Income (Loss) 82,106 21,731 277.8% 48,760 68.4% 229,827 50,845 352.0%

Adjusted Net Margin 21.3% 12.1% 9.2 p.p. 15.5% 5.8 p.p. 22.1% 9.5% 12.6 p.p.

Operating Cash Generation (OCG) before Capex 135,782 247 n.a. 94,910 43.1% 282,307 22,772 n.a.

Operating Cash Generation (OCG) after Capex - Recurring2 123,258 (11,274) n.a. 75,604 63.0% 232,071 (10,099) n.a.

Tel: + 55 (11) 3775-2288 / 2249/ 2003 E-mail: [email protected]

Investor Relations

Carlos Lazar, IRO

José Eduardo Szuster, Coordinator

Carolina Igi, Analyst

KROT11


2

MESSAGE FROM MANAGEMENT In the third quarter, Kroton once again registered a very solid operating performance. We ended September with almost 411,000 Postsecondary students, which represents organic (same-unit) growth in the student base of over 20% from a year earlier. We are convinced that this level of performance was only made possible by the recognized quality of the institutions that form Kroton, by the efficient management of the FIES program and by the successful processes to integrate Unopar and Uniasselvi. As a result of this operating performance, in the first nine months of the year, we were able to surpass the mark of R$1 billion in net revenue and reach Adjusted EBITDA of R$315.5 million (EBITDA margin of 30.3%), which is more than three times the amount in the same period of 2011. No less important was the strong cash generation after capex of over R$230 million in 9M12. Clearly the acquisitions of Unopar and Uniasselvi made important contributions to these results. However, even if we exclude these two events, the improvement is still significant, with revenue growth of 34% and EBITDA margin above 25%, which is much higher than our initial projections. Going beyond the consistent improvement in results over recent years, we believe many opportunities exist for maintaining sustainable growth over the coming years. To ensure organic growth in the On-Campus Education business, we continue to promote the use of student loans under the government’s FIES program, which is one of the most important tools for social and educational inclusion ever implemented in Brazil. Meanwhile, growth in the Distance Learning business is based on two specific strategies: i) increasing the number of Distance Learning centers and ii) expanding the portfolio of educational services. To ensure the expansion of the Distance Learning distribution channel, in October, we submitted a project to obtain accreditation for 225 new centers, which combined with those already accredited that are in the process of being implemented, will result in a 60% increase in the total number of Distance Learning centers at Unopar. To expand the portfolio of services, 5 new Distance Learning undergraduate programs will be launched for the first enrollment process of 2013, along with 20 graduate programs and dozens of unregulated programs, which will all optimize Kroton’s Distance Learning platform. However, we believe that such growth will only be sustainable over the long term if it is grounded in a solid academic project that offers students concrete academic development and ensures they will have a job to go to after graduating. For this reason, we are implementing a series of academic initiatives and projects to guarantee that Kroton’s educational quality standards are upheld and improved. Today, 100% of Kroton’s academic programs and 98% of its educational institutions are rated by the Ministry of Education (MEC) from satisfactory to excellent, demonstrating the high quality of its programs and institutions. In the capital markets, we continue to pursue excellence in our relationship with the financial community, an objective now certified by the recognition received from the ranking published by Institutional Investor, in which Kroton placed first in 7 different categories. And this relationship will be further strengthened by Kroton’s migration to the Novo Mercado special corporate governance segment of the BM&FBovespa, a process that is advancing and should be concluded by the end of this year. In view of all these events – the exceptional operating and financial performance, the strong organic growth with a rigorous focus on quality and the high level of corporate governance – we reaffirm our belief that 2013 will be a very promising year.

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OPERATING PERFORMANCE

POSTSECONDARY EDUCATION

All analyses of operational data in the Postsecondary Education business adopt the following assumptions:

- On-Campus Postsecondary: considers all Undergraduate and Graduate students in Kroton's On-Campus Postsecondary business, including the students added by acquisitions (Unopar, Unirondon and Uniasselvi). - Distance Learning (DL): considers all Undergraduate and Graduate students in the Company's Distance Learning business, including the students added by acquisitions (Unopar and Uniasselvi).

Enrollment and Re-Enrollment - 3Q12 vs. 3Q11 New Enrollments

Re-Enrollments

Student Base

¹ Figures for 3Q11 are based, besides Kroton figures, on managerial data from Unopar and Uniasselvi and exclude data from the acquisitions of the institutions FAMA, União, FAIS and Unirondon.

17,677

24,266

3Q11¹ 3Q12

43,408

49,916

3Q11¹ 3Q12

61,085

74,182

3Q11¹ 3Q12

On-CampusNew enrollments

DLNew enrollments

TotalNew enrollments

37% 15% 21%

82,324

103,844

3Q11¹ 3Q12

161,183192,988

3Q11¹ 3Q12

243,507296,832

3Q11¹ 3Q12

On-CampusRe-enrollments

DL Re-enrollments

Total Re-enrollments

26% 20% 22%

100,001

128,110

3Q11¹ 3Q12

204,591242,904

3Q11¹ 3Q12

304,592371,014

3Q11¹ 3Q12

28% 19% 22%

On-CampusStudent Base

DL Student Base

Total Student Base

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As it was in the first semester of the year, the results achieved in new enrollments and re-enrollments in the On-Campus Undergraduate and Distance Learning Undergraduate businesses in the second semester of 2012, were notably better than in the same period last year, and even surpassed the targets set by the Company. As a result of the intense efforts of the sales team and the various commercial and marketing initiatives, Kroton added a total of around 74,200 new undergraduate students, representing growth of 21% from 3Q11. The highlight was the growth in new enrollments in the On-Campus Undergraduate business of 37% compared to the year-ago quarter. Analyzing strictly organic (same-unit) growth in new enrollments in the On-Campus Undergraduate business, this increase was 36%. This performance in the new students enrollment process, combined with the various actions implemented to maximize re-enrollments, supported growth in the Undergraduate student base of 22% in the last 12 months, or of 28% in the On-Campus Undergraduate business and 19% in the Distance Learning Undergraduate business.

Total Student Base - 3Q12 vs. 2Q12

1 Figures from Uniasselvi and Unirondon were updated based on figures as of June 30, 2012.

The evolution in the number of Postsecondary students, broken down by product (Undergraduate and Graduate) and teaching model (On-Campus and Distance Learning), is presented below.

1 Figures from Uniasselvi and Unirondon were updated based on figures as from June 30, 2012.

At the end of 3Q12, the number of Postsecondary students, considering both the On-Campus and Distance Learning businesses, was 410,996, stable in relation to 3Q11. Broken down by teaching model, the On-Campus student base represented 34.3% of the total student base, while the Distance Learning student base accounted for 65.7%.

411,923 410,996

79,513

( 32.976) (47.464)

2Q12 Students ¹ New Students Graduates Dropouts 3Q12 Students

Undergraduate Graduate Total Undergraduate Graduate Total

2Q12 Base 126,093 13,165 139,258 246,764 25,901 272,665

New Students 24,266 1,146 25,412 49,916 4,185 54,101

Graduates (8,156) (572) (8,728) (22,900) (1,348) (24,248)

Dropouts (14,093) (695) (14,788) (30,876) (1,800) (32,676)

3Q12 Base 128,110 13,044 141,154 242,904 26,938 269,842

% Change 3Q12 / 2Q12 1.6% -0.9% 1.4% -1.6% 4.0% -1.0%

2Q12 Base 372,857 39,066 411,923

New Students 74,182 5,331 79,513

Graduates (31,056) (1,920) (32,976)

Dropouts (44,969) (2,495) (47,464)

3Q12 Base 371,014 39,982 410,996

% Change 3Q12 / 2Q12 -0.5% 2.3% -0.2%

StudentsOn-Campus Distance Learning

StudentsTotal

Undergraduate

Total

GraduateTotal

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Student Loan Program (FIES)

* Considers data for Unopar as from 2H11 and for Uniasselvi as from 1H12.

Kroton continues to excel nationally in its offering of student loans under the federal government’s FIES program, due to the high rate with which its academic programs qualify for this program (reflecting the high quality of its educational services), as well as to the marketing, communication and sales actions it has implemented to promote this financing program at all of its Units. At the end of 3Q12, 55,403 students held FIES student loans, up 27.9% from the previous quarter. The increase mainly reflects the new enrollment process for the second semester of 2012, when 48.4% of all the Company’s freshmen students held FIES loans, up significantly from 27.6% in the second semester of 2011. Furthermore, the percentage of Kroton students who qualify for the program remained high, at 97.6%, compared to 97.4% in the previous quarter.

Language Courses Kroton also offers language courses at a number of its Postsecondary Education units, seeking to offer yet another opportunity for its students’ development. The initiative also works to attract students while they are still in Secondary Education and establish a relationship that could culminate in the selection of one of Kroton’s units for their Postsecondary Education. At the end of 3Q12, the number of students in this business was 6,457 (note that these students are not included in the figure for Postsecondary students informed above).

Unregulated Programs In the second semester of 2012, Kroton began offering short-duration distance learning programs, in line with its strategy of expanding the portfolio of services offered by the Distance Learning centers. These short-duration programs allow students to increase their knowledge in various fields, such as management, education and hard sciences. As of the end of October, Kroton had already promoted short-duration programs to 5,494 students (as with language courses, these students are not considered in the figure for Postsecondary Education students).

Opening of New Distance Learning Centers As part of its strategy to continue registering sustainable organic growth, Kroton is launching operations at 40 new Distance Learning centers in the Unopar platform for the 2013 new enrollment process. These centers have already been approved and accredited by the Ministry of Education (MEC) and will support the Institution’s entry into new regions. In October, the Company also submitted at the Ministry of Education (MEC) a request for accrediting another 225 centers. These additional centers are expected to be approved by early-2014, increasing even further the reach of Kroton’s Distance Learning operations, which will have a total of 712 centers, or nearly 60% more than today.

FIES* Enrollments Share of FIES in Total New Students in Intake Processes*

5.5%14.1%

27.6%

47.0% 48,4%

2H10 1H11 2H11 1H12 3Q12

% Base 4.4% 10.9% 18.2% 21.1% 33.9% 43.2%

3,5068,329

14,04820,494

43,321

55,403

1H10 2H10 1H11 2H11 1H12 3Q12

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Ministry of Education (MEC) Evaluations

At the end of 3Q12, around 99.5% of the academic programs and 97.9% of the Institutions that form Kroton had received evaluations ranging from satisfactory to excellent, which reinforces its commitment to teaching quality in all of the educational services offered to students.

Integration Processes

Unopar As already disclosed, the Unopar integration comprises four distinct phases, which are progressing in line with the original timetable. To date, the three first phases have been concluded, which included optimizing the corporate structure, developing revenue upside projects and fully implementing the new Academic Model for all on-campus students at Unopar (from freshmen to seniors), as of the start of classes for the second semester of 2012. Lastly, Phase 4, which focuses on fully integrating the systems and processes, is progressing and should be concluded by early 2013.

Uniasselvi The Uniasselvi integration process is also divided into four phases. Phase 1 was concluded in September and focused on integrating and restructuring the sales area and on integrating systems. Phase 2, which has also been concluded, sought to optimize the organizational structure. Phase 3 will focus on migrating to Kroton's Academic Model starting next semester (1H13). Lastly, Phase 4, which should be implemented between March and June 2013, will focus on fully integrating systems and processes.

PRIMARY AND SECONDARY EDUCATION

In the Primary and Secondary Education business, which operates through the Pitágoras Network, Kroton offers teaching book collections, teacher training, educational evaluations and other services to private schools in the Pre-School, Primary and Secondary Education businesses. For schools in the public school system, Kroton offers, under the brand Projecta-Melhor Escola, teaching materials for the Pre-School, Primary and Secondary Education segments, as well as educational management programs, continuous training and educational evaluations. Kroton serves some 289,000 students in this business, of which more than 272,000 are students in private schools, which is 3.4% higher than in 2011. Meanwhile, the number of Associated Schools increased by 5.1% to 810 during 2012 from the year-ago period, reflecting the successful commercial negotiations and the high level of service quality offered, as demonstrated by the strong renewal rate of around 90%.

447

712

40487

225

1H12 DLC New DLC 1H13 DLC New DLC submitted Total DLC

Course Concept (CC) 0.5% 44.1% 55.5% 99.5%

Institutional Concept (IC) 2.1% 70.2% 27.7% 97.9%

Ratio Below 3 Equal as 3 Above 3Total Equal or

Above 3

Number of Distance Learning Centers

Increase

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FINANCIAL PERFORMANCE

3Q12 RESULTS

Except where stated otherwise, all of the following analyses exclude impacts from nonrecurring events in the periods and consider the effects from Uniasselvi fully in 3Q12, partially in 2Q12 (1 month only) and therefore partially in the nine-month period (4 months).

3Q12% of Net

Revenue3Q12

% of Net

Revenue3Q12

% of Net

Revenue3Q12

% of Net

Revenue

Gross Revenue 288,075 124.5% 137,515 116.3% 38,274 107.1% 463,863 120.3%

(-) Gross Profit Deductions (56,607) -24.5% (19,235) -16.3% (2,540) -7.1% (78,381) -20.3%

Tax (6,819) -2.9% (2,267) -1.9% (1,157) -3.2% (10,243) -2.7%

ProUni (24,900) -10.8% (11,018) -9.3% - 0.0% (35,918) -9.3%

Returns - 0.0% - 0.0% (1,382) -3.9% (1,382) -0.4%

Total Discounts (24,887) -10.8% (5,950) -5.0% - 0.0% (30,837) -8.0%

Net Revenue 231,468 100.0% 118,280 100.0% 35,734 100.0% 385,483 100.0%

Costs (COGS) (146,230) -63.2% (30,788) -26.0% (18,901) -52.9% (195,919) -50.8%

Cost of Goods - 0.0% - 0.0% (7,768) -21.7% (7,768) -2.0%

Cost of Services (146,230) -63.2% (30,788) -26.0% (11,133) -31.2% (188,151) -48.8%

Faculty, Other Personnel and Third-Party Services (126,686) -54.7% (29,503) -24.9% (10,647) -29.8% (166,835) -43.3%

Rent (18,874) -8.2% (1,285) -1.1% (312) -0.9% (20,471) -5.3%

Other (670) -0.3% - 0.0% (174) -0.5% (844) -0.2%

Gross Income 85,238 36.8% 87,492 74.0% 16,833 47.1% 189,563 49.2%

Operating Expenses (24,704) -10.7% (10,990) -9.3% (9,061) -25.4% (44,755) -11.6%

Personnel, General and Administrative Expenses (17,137) -7.4% (7,692) -6.5% (3,806) -10.7% (28,636) -7.4%

Personnel (2,719) -1.2% (4,171) -3.5% (388) -1.1% (7,278) -1.9%

General and Administrative (14,418) -6.2% (3,521) -3.0% (3,419) -9.6% (21,358) -5.5%

Sales and Marketing Expenses (7,567) -3.3% (3,297) -2.8% (5,254) -14.7% (16,119) -4.2%

Provision for Doubtful Accounts - PDA (9,340) -4.0% (7,153) -6.0% (475) -1.3% (16,967) -4.4%

(+) Interest and Penalties on Tuition 6,327 2.7% 3,554 3.0% 86 0.2% 9,967 2.6%

Operating Result 57,522 24.9% 72,903 61.6% 7,384 20.7% 137,809 35.7%

(21,893) -5.7%

115,916 30.1%

(9,383) -2.4%

106,533 27.6%

(25,181) -6.5%

Financial Result (18,920) -4.9%

(1,526) -0.4%

60,906 15.8%

9,383 2.4%

11,817 3.1%

82,106 21.3%

Values in R$ ('000)

On-Campus Postsecondary

EducationDistance Learning

Primary and Secondary

EducationKroton Consolidated

Net Profit (Loss)

(+) Nonrecurring Costs and Expenses

(+) Intagible Amortization (Acquisitions)

Adjusted Net Profit (Loss)

Adjusted EBITDA

(-) Nonrecurring Costs and Expenses

EBITDA

Depreciation and Amortization

Income and Social Contribuition Tax

Corporate Expenses

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9M12 RESULTS

9M12% of Net

Revenue9M12

% of Net

Revenue9M12

% of Net

Revenue9M12

% of Net

Revenue

Gross Revenue 792,460 124.5% 338,011 121.9% 135,485 106.7% 1,265,956 121.7%

(-) Gross Profit Deductions (156,005) -24.5% (60,771) -21.9% (8,563) -6.7% (225,340) -21.7%

Tax (17,611) -2.8% (6,359) -2.3% (3,840) -3.0% (27,810) -2.7%

ProUni (67,403) -10.6% (26,960) -9.7% - 0.0% (94,363) -9.1%

Returns - 0.0% - 0.0% (4,723) -3.7% (4,723) -0.5%

Total Discounts (70,990) -11.2% (27,453) -9.9% - 0.0% (98,443) -9.5%

Net Revenue 636,455 100.0% 277,240 100.0% 126,922 100.0% 1,040,617 100.0%

Costs (COGS) (390,829) -61.4% (60,693) -21.9% (59,125) -46.6% (510,647) -49.1%

Cost of Goods - 0.0% - 0.0% (23,315) -18.4% (23,315) -2.2%

Cost of Services (390,829) -61.4% (60,693) -21.9% (35,810) -28.2% (487,331) -46.8%

Faculty, Other Personnel and Third-Party Services (335,235) -52.7% (58,532) -21.1% (33,500) -26.4% (427,268) -41.1%

Rent (53,466) -8.4% (2,160) -0.8% (920) -0.7% (56,546) -5.4%

Other (2,128) -0.3% - 0.0% (1,389) -1.1% (3,517) -0.3%

Gross Income 245,626 38.6% 216,547 78.1% 67,797 53.4% 529,970 50.9%

Operating Expenses (71,295) -11.2% (31,472) -11.4% (26,589) -20.9% (129,356) -12.4%

Personnel, General and Administrative Expenses (48,037) -7.5% (21,113) -7.6% (12,033) -9.5% (81,182) -7.8%

Personnel (7,188) -1.1% (11,824) -4.3% (1,756) -1.4% (20,768) -2.0%

General and Administrative (40,849) -6.4% (9,289) -3.4% (10,277) -8.1% (60,414) -5.8%

Sales and Marketing Expenses (23,258) -3.7% (10,358) -3.7% (14,557) -11.5% (48,173) -4.6%

Provision for Doubtful Accounts - PDA (29,044) -4.6% (17,632) -6.4% (1,968) -1.6% (48,644) -4.7%

(+) Interest and Penalties on Tuition 15,739 2.5% 5,662 2.0% 355 0.3% 21,756 2.1%

Operating Result 161,027 25.3% 173,105 62.4% 39,594 31.2% 373,726 35.9%

(58,202) -5.6%

315,524 30.3%

(24,827) -2.4%

290,696 27.9%

(62,822) -6.0%

Financial Result ex-Intereste and Penalties on Tuition (44,809) -4.3%

(4,938) -0.5%

178,126 17.1%

24,827 2.4%

26,874 2.6%

229,827 22.1%

Values in R$ ('000)

On-Campus Postsecondary

EducationDistance Learning

Primary and Secondary

EducationKroton Consolidated

Net Profit (Loss)

(+) Nonrecurring Costs and Expenses

(+) Intagible Amortization (Acquisitions)

Adjusted Net Profit (Loss)

Adjusted EBITDA

(-) Nonrecurring Costs and Expenses

EBITDA

Depreciation and Amortization

Income and Social Contribuition Tax

Corporate Expenses

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FINANCIAL PERFORMANCE – ON-CAMPUS POSTSECONDARY

On-Campus Postsecondary Education

Values in R$ ('000)

Gross Revenue 288,075 178,959 61.0% 262,961 9.6% 792,460 515,820 53.6%

(-) Deductions from Gross Revenue (56,607) (31,463) 79.9% (59,985) -5.6% (156,005) (91,414) 70.7%

Taxes (6,819) (3,915) 74.2% (5,621) 21.3% (17,611) (10,823) 62.7%

ProUni (24,900) (18,156) 37.1% (22,085) 12.7% (67,403) (52,594) 28.2%

Returns - - n.a. - n.a. - - n.a.

Total Discounts (24,887) (9,391) 165.0% (32,279) -22.9% (70,990) (27,997) 153.6%

Net Revenue 231,468 147,496 56.9% 202,976 14.0% 636,455 424,406 50.0%

Net Revenue - FIES 114,963 40,448 184.2% 81,293 41.4% 276,943 88,917 211.5%

Total of Costs (146,230) (96,648) 51.3% (132,681) 10.2% (390,829) (276,924) 41.1%

Cost of Goods (CG) - - n.a. - n.a. - - n.a.

Cost of Services (CS) (146,230) (96,648) 51.3% (132,681) 10.2% (390,829) (276,924) 41.1%

Faculty, Other Personnel and Third-Party Services (126,686) (81,961) 54.6% (114,075) 11.1% (335,235) (234,663) 42.9%

Rent (18,874) (14,236) 32.6% (17,824) 5.9% (53,466) (41,024) 30.3%

Other (670) (451) 48.7% (782) -14.3% (2,128) (1,237) 72.0%

Gross Income 85,238 50,848 67.6% 70,296 21.3% 245,626 147,482 66.5%


Total Operating Expenses (24,704) (16,736) 47.6% (22,863) 8.1% (71,295) (44,154) 61.5%

Personnel, General and Administrative Expenses (17,137) (10,117) 69.4% (14,807) 15.7% (48,037) (27,210) 76.5%

Personnel Expenses (2,719) (932) 191.9% (2,271) 19.7% (7,188) (1,692) 324.7%

General and Administrative Expenses (14,418) (9,185) 57.0% (12,536) 15.0% (40,849) (25,518) 60.1%

Selling and Marketing Expenses (7,567) (6,619) 14.3% (8,056) -6.1% (23,258) (16,944) 37.3%

Provision for Doubtfull Account - PDA (9,340) (7,443) 25.5% (10,009) -6.7% (29,044) (21,551) 34.8%

(+) Interest and Penalties on Tuition 6,327 4,994 26.7% 3,240 95.3% 15,739 11,580 35.9%


Operating Margin 24.9% 21.5% 3.4 p.p. 20.0% 4.8 p.p. 25.3% 22.0% 3.3 p.p.

9M12 9M11 Chg.%3Q12 3Q11 Chg.% 2Q12 Chg.%

31.7

57.5

21.5%

24.9%

3Q11 3Q12% Operating Margin

50.8

85.2

34.5%36.8%

3Q11 3Q12% Gross Margin

+57%

147.5

231.5

3Q11 3Q12

+68%+82%

% Business GI / Total GI

75% 45%

% Business NR / Total NR

82% 60%

% Business OR / Total OR

75% 42%

Net Revenue (NR)Quarterly - R$ million

Gross Income (GI)Quarterly - R$ million

Operating Result (OR)Quarterly - R$ million

93.4161.0

22.0%

25.3%

9M11 9M12% Operating Margin

147.5245.6

34.8%38.6%

9M11 9M12% Gross Margin

+50%424.4 636.5

9M11 9M12

+67%+72%

Net Revenue (NR)9 Months - R$ million

Gross Income (GI)9 Months- R$ million

Operating Results (OR)9 Months - R$ million


72% 46%


79% 61%


71% 43%

KROT11


10

Revenue and Deductions

Deductions As a percentage of gross revenue, deductions increased 2.1 p.p. in 3Q12 compared to 3Q11, reflecting the increase in the line discounts, which was impacted by the different discount practices adopted at the acquired institutions (Uniasselvi and Unirondon) and by the nonrecurring effect in September from the application of the Tuition Adjustment Process (“PAM”), which normally only occurs in the October-December period. Compared to 2Q12, deductions decreased 3.2 p.p. as a percentage of total gross revenue.

Net Revenue In 3Q12, net revenue grew 56.9% from the same quarter last year, reflecting the increase in the number of students due to both organic growth and acquisitions. Net revenue growth on a same-unit basis in the On-Campus Postsecondary Education segment was 24.1%.

Average Net Ticket

1 Amounts ex-Uniasselvi.

In the On-campus Post-Secondary segment, the average monthly tuition in 3Q12 of the courses and programs offered was R$546.61, increasing 2.1% from 2Q12, led by the 2.2% increase in On-campus Undergraduate products, which registered an average monthly tuition of R$581.86.

Costs


Values in R$ ('000)

Gross Revenue 288,075 178,959 61.0% 262,961 9.6%

(-) Deductions from Gross Revenue (56,607) (31,463) 79.9% (59,985) -5.6%

Taxes (6,819) (3,915) 74.2% (5,621) 21.3%

ProUni (24,900) (18,156) 37.1% (22,085) 12.7%

Returns - - n.a. - n.a.

Total Discounts (24,887) (9,391) 165.0% (32,279) -22.9%

Net Revenue 231,468 147,496 56.9% 202,976 14.0%

Net Revenue - FIES 114,963 40,448 184.2% 81,293 41.4%

3Q12 3Q11 Chg.% 2Q12 Chg.%


Values in R$

On-Campus Undergraduate 581.86 569.48 2.2%

On-Campus Graduate 200.36 203.74 -1.7%

Total 546.61 535.38 2.1%

3Q12 2Q121 Chg.%


Values in R$ ('000)

Total of Costs (146,230) (96,648) 51.3% (132,681) 10.2%

Cost of Goods (CG) - - n.a. - n.a.

Cost of Services (CS) (146,230) (96,648) 51.3% (132,681) 10.2%

Faculty, Other Personnel and Third-Party Services (126,686) (81,961) 54.6% (114,075) 11.1%

Rent (18,874) (14,236) 32.6% (17,824) 5.9%

Other (670) (451) 48.7% (782) -14.3%


% of Net Revenues

Total of Costs -63.2% -65.5% 2.4 p.p. -65.4% 2.2 p.p.


Cost of Services (CS) -63.2% -65.5% 2.4 p.p. -65.4% 2.2 p.p.

Faculty, Other Personnel and Third-Party Services -54.7% -55.6% 0.8 p.p. -56.2% 1.5 p.p.

Rent -8.2% -9.7% 1.5 p.p. -8.8% 0.6 p.p.

Other -0.3% -0.3% 0.0 p.p. -0.4% 0.1 p.p.

3Q12 3Q11 Chg.% 2Q12

3Q12 3Q11 Chg.% 2Q12 Chg.%

Chg.%

KROT11


11

Cost of services as a ratio of net revenue in this business decreased 2.4 p.p. in 3Q12 compared to the same quarter of 2011. The decrease was due to the higher number of students per class and the implementation of the Academic Model at the acquired units, including at Unopar as from 3Q12. Note that rent costs improved 1.5 p.p. from 3Q11, reflecting the effective management of contracts by the Company.

Gross Income

The better revenue performance, combined with the strict cost control maintained by the Company, supported gross income growth of 67.6%, with gross margin expansion of 2.4 p.p. compared to 3Q11.

Operating Expenses

Personnel, General and Administrative Expenses Total personnel, general and administrative expenses as a ratio of net revenue increased 0.5 p.p. in 3Q12 compared to 3Q11. This increase basically reflects the increase in payroll expenses due to the acquisition of Uniasselvi, whose organizational structure was still undergoing optimization during the quarter.

Selling and Marketing Expenses The 1.2 p.p. improvement in selling and marketing expenses as a ratio of net revenue in 3Q12 compared to 3Q11 reflects the efficient management of expenses by the Company. The reduction compared to 2Q12 is due to the lower volume of expenses after the conclusion of the new enrollment and re-enrollment processes for the second semester.

Provision for Doubtful Accounts (PDA)

Total PDA for the On-Campus Postsecondary Education business stood at 4.0% of net revenue in 3Q12, down from 2Q12 due to seasonality. Compared to 3Q11, PDA decreased 1.0 p.p., reflecting the growth in FIES students at the Company, for which the provisioning practice adopted remains at 2.25% of the net revenue derived from FIES students.


Values in R$ ('000)

Gross Income 85,238 50,848 67.6% 70,296 21.3%

Gross Margin 36.8% 34.5% 2.4 p.p. 34.6% 2.2 p.p.

Chg.%3Q12 3Q11 Chg.% 2Q12


Values in R$ ('000)

Total Operating Expenses (24,704) (16,736) 47.6% (22,863) 8.1%

General and Administrative Expenses (17,137) (10,117) 69.4% (14,807) 15.7%

Personnel Expenses (2,719) (932) 191.9% (2,271) 19.7%


Selling and Marketing Expenses (7,567) (6,619) 14.3% (8,056) -6.1%


% of Net Revenues

Total Operating Expenses -10.7% -11.3% 0.7 p.p. -11.3% 0.6 p.p.

General and Administrative Expenses -7.4% -6.9% -0.5 p.p. -7.3% -0.1 p.p.

Personnel Expenses -1.2% -0.6% -0.5 p.p. -1.1% -0.1 p.p.

General and Administrative Expenses -6.2% -6.2% 0.0 p.p. -6.2% -0.1 p.p.

Selling and Marketing Expenses -3.3% -4.5% 1.2 p.p. -4.0% 0.7 p.p.

Chg.%3Q12 3Q11 Chg.% 2Q12

3Q12 3Q11 Chg.% 2Q12 Chg.%


Values in R$ ('000)

Provision for Doubtfull Account - PDA (9,340) (7,443) 25.5% (10,009) -6.7%

PDA / Postsecondary Net Revenues -4.0% -5.0% 1.0 p.p -4.9% 0.9 p.p

Provision for Doubtfull Account - PDA ex-FIES (6,753) (6,533) 3.4% (8,180) -17.4%

PDA ex-FIES / Postsecondary Net Revenues ex-FIES -5.8% -6.1% 0.3 p.p -6.7% 0.9 p.p

2Q12 Chg.%3Q12 3Q11 Chg.%

KROT11


12

The decreases in PDA excluding FIES of 0.3 p.p. and 0.9 p.p. compared to 3Q11 and 2Q12, respectively, is related to the collection and recovery efforts being adopted by the Company.

Accounts Receivable

1 Includes R$44.2 million in the line FIES related to the repurchase scheduled for September that was made on October 2 due to the strike by bank employees in the period.

Total accounts receivable net of PDA decreased by 26.0% in 3Q12 compared to 2Q12, influenced by the seasonal reduction in short-term accounts receivable and by the improvements in Accounts Receivable from FIES, for which two events should be noted: (i) in 3Q12, Kroton paid R$4.1 million in federal taxes and received R$120.1 million in monthly

repurchases, with the highlight the R$79.6 million received after the release in July of the debt clearance certificate (CND) for Universidade de Cuiabá (UNIC); and

(ii) the balance of R$91.4 million at the end of 3Q12 considers as performed in September the repurchase of R$44.2 million for that month, which in fact was effected on October 2 due to the strike by employees in the banking industry during that period.

Average Accounts Receivable Term

For the calculation of the average term of accounts receivable in the Postsecondary business, Kroton presents three distinct analyses: 1. Accounts Receivable, excluding the balance of FIES receivables

Calculation base: net balance of short-term accounts receivable related solely to monthly tuition fees and agreements receivable (ex-FIES), divided by Postsecondary net revenue in the last 12 months, multiplied by 360 days. The average term registered a reduction of 18 days compared to 3Q11, due to the higher share of FIES students in the base. 2. Accounts Receivable, excluding the balances of FIES receivables and revenues

Calculation base: net balance of short-term accounts receivable related solely to monthly tuition fees and

agreements receivable, divided by Postsecondary net revenue (ex-FIES) in the last 12 months, multiplied by 360 days.

Post Secondary Education

Values in R$ ('000)

Net Accounts Receivable 188,823 181,295 4.2% 255,185 -26.0%

Short Term - Tuition and Agreements Receivable 81,690 83,882 -2.6% 94,412 -13.5%

Long Term Receivables 15,780 18,934 -16.7% 16,718 -5.6%

FIES 91,353 78,479 16.4% 144,055 -36.6%

2Q12 %Chg.3Q11 %Chg.3Q121

Post Secondary - Accounts Receivable Average

Turnover Days3Q12 3Q11 Chg. (days) 2Q12 Chg. (days)

Net Accounts Receivable (ex-FIES)

Net Revenues 35 53 - 18 days 47 - 12 days

Post Secondary - Accounts Receivable Average


Net Accounts Receivable (ex-FIES)

Net Revenues (ex-FIES) 55 66 - 11 days 70 - 15 days

KROT11


13

Analyzed using this method, the average term decreased compared to 2Q12, due to seasonality. Compared to 3Q11, the reduction of 11 days was due to the lower balance of accounts receivable resulting from the more effective provisioning, collection and recovery practices adopted.

3. FIES Accounts Receivable

1 FIES accounts receivable adjusted by R$44.2 million related to the repurchase scheduled for September, that was made on October 2 due to the strike by bank employees in the period. 2 Based on accounts receivable ex-adjustment of blocked CND, as disclosed in the 2Q12 earnings release.

Calculation base: net balance of short-term accounts receivable related solely to FIES, divided by net

revenue from monthly FIES payments in the last 12 months, and multiplied by 360 days. Considering the adjustment of FIES credits repurchased in October that were in fact related to September, the average term of FIES accounts receivable in 3Q12 was 102 days, 108 days less than 2Q12, due to, mainly, the unblocked CND and related to the operational improvements that the entire FIES process has undergone since last year. Note that the average term of FIES accounts receivable in 3Q12 without the aforementioned adjustment was 152 days.

Operating Result

Operating result was R$57.5 million in 3Q12, with operating margin of 24.9%, expanding by 3.4 p.p. from 3Q11. In the first nine months of the year, operating margin stood at 25.3%, increasing 3.3 p.p. from the same period of 2011.

Post Secondary -FIES Accounts Receivable

Average Turnover Days3Q121 3Q11 Chg. (days) 2Q122 Chg. (days)

FIES Net Accounts Receivable ex-blocked CND

FIES Net Revenues 102 166 - 64 days 210 -108 days


Values in R$ ('000)

Gross Income 85,238 50,848 67.6% 70,296 21.3%

(-) Total Operating Expenses (24,704) (16,736) 47.6% (22,863) 8.1%

(-) Provision for Doubtfull Account - PDA (9,340) (7,443) 25.5% (10,009) -6.7%

(+) Interest and Penalties on Tuition 6,327 4,994 26.7% 3,240 95.3%

Operating Result 57,522 31,663 81.7% 40,663 41.5%

Operating Margin 24.9% 21.5% 3.4 p.p. 20.0% 4.8 p.p.

3Q12 3Q11 Chg.% 2Q12 Chg.%

KROT11


14

FINANCIAL PERFORMANCE – DISTANCE LEARNING POSTSECONDARY

Distance Learning

Values in R$ ('000)

Gross Revenue 137,515 - n.a. 106,543 29.1% 338,011 - n.a.

(-) Deductions from Gross Revenue (19,235) - n.a. (20,994) -8.4% (60,771) - n.a.

Taxes (2,267) - n.a. (2,108) 7.5% (6,359) - n.a.

ProUni (11,018) - n.a. (8,161) 35.0% (26,960) - n.a.

Returns - - n.a. - n.a. - - n.a.

Total Discounts (5,950) - n.a. (10,725) -44.5% (27,453) - n.a.

Net Revenue 118,280 - n.a. 85,549 38.3% 277,240 - n.a.

Total of Costs (30,788) - n.a. (19,431) 58.5% (60,693) - n.a.

Cost of Goods (CG) - - n.a. - n.a. - - n.a.

Cost of Services (CS) (30,788) - n.a. (19,431) 58.5% (60,693) - n.a.

Faculty, Other Personnel and Third-Party Services (29,503) - n.a. (18,922) 55.9% (58,532) - n.a.

Rent (1,285) - n.a. (509) 152.5% (2,160) - n.a.

Other - - n.a. - n.a. - - n.a.

Gross Income 87,492 - n.a. 66,118 32.3% 216,547 - n.a.

Gross Margin 74.0% - n.a. 77.3% -3.3 p.p. 78.1% - n.a.

Total Operating Expenses (10,990) - n.a. (10,444) 5.2% (31,472) - n.a.

Personnel, General and Administrative Expenses (7,692) - n.a. (6,106) 26.0% (21,113) - n.a.

Personnel Expenses (4,171) - n.a. (2,974) 40.2% (11,824) - n.a.

General and Administrative Expenses (3,521) - n.a. (3,132) 12.4% (9,289) - n.a.

Selling and Marketing Expenses (3,297) - n.a. (4,338) -24.0% (10,358) - n.a.

Provision for Doubtfull Account - PDA (7,153) - n.a. (5,382) 32.9% (17,632) - n.a.

(+) Interest and Penalties on Tuition 3,554 - n.a. 715 397.3% 5,662 - n.a.

Operating Result 72,903 - n.a. 52,045 40.1% 173,105 - n.a.

Operating Margin 61.6% - n.a. 60.8% 0.8 p.p. 62.4% - n.a.

9M12 9M11 Chg.%3Q12 3Q11 Chg.% 2Q12 Chg.%

+38%

85.5

118.3

2Q12 3Q12

45% 46%26% 31% 56% 53%

52.0

72.9

60.8% 61.6%

2Q12 3Q12

% Operating Margin

66.1

87.5

77.3% 74.0%

2Q12 3Q12

% Gross Margin

+32%+40%




% Business GI / Total GI% Business NR / Total NR % Business OR / Total OR

+5%277.2

9M12

216.5

78.1%

9M12% Gross Margin

173.1

62.4%

9M12% Operating Margin


Gross Income (GI)9 Months- R$ million

Operating Results (OR)9 Months - R$ million


41%


27%


46%

KROT11


15


Deductions As demonstrated in previous releases, the main items in gross revenue deductions in the Distance Learning business are discounts and ProUni, which together corresponded to 13.5% of total gross revenue in the period. The increase in ProUni from 2Q12 is related to the integration of the Uniasselvi operation.

Net Revenue For recognizing the revenue from Distance Learning students at Uniasselvi, Kroton adopted criteria identical to that of Unopar, which is to account starting with gross revenue exclusively the services rendered already discounting the rebate to centers, respecting only the different commercial practices (level of rebates) of the Institutions. In 3Q12, net revenue in the Distance Learning business was R$118.3 million, which corresponded to 46.2% of Kroton’s total net revenue in the period. The net revenue growth of 38.3% compared to 2Q12 is explained by the contribution of 100% of the revenue from Uniasselvi over the entire quarter. Average Net Ticket

1 Amounts ex-Uniasselvi and using the same calculation criteria used for 3Q12.

Similar to net revenue, the average ticket in the Distance Learning business in 3Q12 also began to fully consider Uniasselvi. Therefore, for comparison purposes, Kroton now discloses only the ticket effectively paid by the student, without discounting the rebates. So, considering all (100%) revenue for both Institutions, the combined average ticket of the Undergraduate and Graduate segments was R$218.90, or 1.5% higher than in 2Q12.

Distance Learning

Values in R$ ('000)

Gross Revenue 137,515 - n.a. 106,543 29.1%

(-) Deductions from Gross Revenue (19,235) - n.a. (20,994) -8.4%

Taxes (2,267) - n.a. (2,108) 7.5%

ProUni (11,018) - n.a. (8,161) 35.0%

Returns - - n.a. - n.a.

Total Discounts (5,950) - n.a. (10,725) -44.5%

Net Revenue 118,280 - n.a. 85,549 38.3%

3Q12 3Q11 Chg.% 2Q12 Chg.%

Distance Learning

Values in R$

DL Undergraduate 231.74 221.64 4.6%

DL Graduate 103.17 117.70 -12.3%

Total (Student) 218.90 215.62 1.5%

3Q12 2Q121 Chg.%

KROT11


16

Costs

In 3Q12, cost of services rendered (CSR) was R$30.8 million, representing 15.7% of Kroton’s total costs in the period. Compared to 2Q12, the most relevant nominal increase was in the line faculty, other personnel and third-party services, which, like the other lines, was impacted by the acquisition of Uniasselvi, whose Academic Model differs from that of Unopar, since its on-campus services feature the physical presence of a professor in the classroom (at Unopar, on-campus services are offered through a class broadcast live via satellite from the Institution’s studios).

Gross Income

Gross income for the Distance Learning business was R$87.5 million, which represents 46.2% of the total registered by Kroton in 3Q12. Gross margin in 3Q12 decreased 3.3 p.p. from 2Q12, due to the Uniasselvi acquisition.

Operating Expenses

Distance Learning

Values in R$ ('000)

Total of Costs (30,788) - n.a. (19,431) 58.5%


Cost of Services (CS) (30,788) - n.a. (19,431) 58.5%

Faculty, Other Personnel and Third-Party Services (29,503) - n.a. (18,922) 55.9%

Rent (1,285) - n.a. (509) 152.5%

Other - - n.a. - n.a.

Distance Learning

% of Net Revenues

Total of Costs -26.0% - n.a. -22.7% -3.3 p.p.

Cost of Goods (CG) 0.0% - n.a. 0.0% 0.0 p.p.

Cost of Services (CS) -26.0% - n.a. -22.7% -3.3 p.p.

Faculty, Other Personnel and Third-Party Services -24.9% - n.a. -22.1% -2.8 p.p.

Rent -1.1% - n.a. -0.6% -0.5 p.p.

Other 0.0% - n.a. 0.0% 0.0 p.p.

3Q12 3Q11 Chg.% 2Q12

3Q12 3Q11 Chg.% 2Q12 Chg.%

Chg.%

Distance Learning

Values in R$ ('000)

Gross Income 87,492 - n.a. 66,118 32.3%

Gross Margin 74.0% - n.a. 77.3% -3.3 p.p.

Chg.%3Q12 3Q11 Chg.% 2Q12

Distance Learning

Values in R$ ('000)

Total Operating Expenses (10,990) - n.a. (10,444) 5.2%

General and Administrative Expenses (7,692) - n.a. (6,106) 26.0%

Personnel Expenses (4,171) - n.a. (2,974) 40.2%

General and Administrative Expenses (3,521) - n.a. (3,132) 12.4%

Selling and Marketing Expenses (3,297) - n.a. (4,338) -24.0%

Distance Learning

% of Net Revenues

Total Operating Expenses -9.3% - n.a. -12.2% 2.9 p.p.

General and Administrative Expenses -6.5% - n.a. -7.1% 0.6 p.p.

Personnel Expenses -3.5% - n.a. -3.5% 0.0 p.p.

General and Administrative Expenses -3.0% - n.a. -3.7% 0.7 p.p.

Selling and Marketing Expenses -2.8% - n.a. -5.1% 2.3 p.p.

Chg.%3Q12 3Q11 Chg.% 2Q12

3Q12 3Q11 Chg.% 2Q12 Chg.%

KROT11


17

Personnel, General and Administrative Expenses In 3Q12, these expenses corresponded to 6.5% as a ratio of net revenue. The reduction compared to 2Q12 reflects the ongoing integration processes, which enabled gains in the operating and administrative areas. Selling and Marketing Expenses Selling and marketing expenses represented 2.8% of total net revenue, decreasing from 2Q12 due to the seasonality of the business.


As in the On-Campus business, provisioning in the Distance Learning business is based on an analysis of historical data for write-offs of receivables overdue more than 365 days and assessments by Management of the default levels expected in the short term. Some of the collection and recovery practices that have proven efficient at Kroton have begun to be replicated at the Unopar and Uniasselvi operations, which should lead provisioning levels in the various Postsecondary businesses to converge. As a result, the level of provisioning in 3Q12 decreased to 6.0%, from 6.4% in 2Q12.

Accounts Receivable

In 3Q12, Distance Learning accounts receivable was R$30.7 million, increasing from 2Q12 due to the higher number of students as a result of the Uniasselvi acquisition.


Calculation base: net balance of short-term accounts receivable, divided by estimated Distance Learning net revenue in the last 12 months, and multiplied by 360 days. In 3Q12, the average receivables term in the Distance Learning business was 25 days, decreasing 12 days from 2Q12 due to seasonality and stable in relation to the 24 days recorded in 1Q12.

Distance Learning

Values in R$ ('000)

Provision for Doubtfull Account - PDA (7,153) - n.a. (5,382) 32.9%

PDA / Distance Learning Net Revenues -6.0% - n.a. -6.3% 0.2 p.p.

3Q12 3Q11 Chg.% 2Q12 Chg.%

Distance Leaning

Values in R$ ('000)

Net Accounts Receivable 30,712 - n.a. 25,991 18.2%

2Q12 %Chg.3Q12 3Q11 %Chg.

Distance Learning - Accounts Receivable Average


Net Accounts Receivable

Net Revenues 25 - n.a. 37 - 12 days

KROT11


18

Operating Result

The operating result in the Distance Learning business in 3Q12 was R$72.9 million, which corresponded to 52.9% of the Company’s total in the period. As was the case in previous quarters, the high operating margin sets the Distance Learning business apart in terms of profitability for Kroton.

Distance Learning

Values in R$ ('000)

Gross Income 87,492 - n.a. 66,118 32.3%

(-) Total Operating Expenses (10,990) - n.a. (10,444) 5.2%

(-) Provision for Doubtfull Account - PDA (7,153) - n.a. (5,382) 32.9%

(+) Interest and Penalties on Tuition 3,554 - n.a. 715 397.3%

Operating Result 72,903 - n.a. 52,045 40.1%

Operating Margin 61.6% - n.a. 60.8% 0.8 p.p.

3Q12 3Q11 Chg.% 2Q12 Chg.%

KROT11


19

FINANCIAL PERFORMANCE – PRIMARY AND SECONDARY

Primary and Secondary Education

Values in R$ ('000)

Gross Revenue 38,274 34,321 11.5% 28,287 35.3% 135,485 117,365 15.4%

(-) Deductions from Gross Revenue (2,540) (1,788) 42.0% (2,274) 11.7% (8,563) (4,414) 94.0%

Taxes (1,157) (1,074) 7.8% (1,409) -17.8% (3,840) (2,639) 45.5%

ProUni - - n.a. - n.a. - - n.a.

Returns (1,382) (714) 93.5% (866) 59.6% (4,723) (1,775) 166.1%

Total Discounts - - n.a. - n.a. - - n.a.

Net Revenue 35,734 32,533 9.8% 26,013 37.4% 126,922 112,951 12.4%

Management Contracts and Own Operations 12,385 10,134 22.2% 14,217 -12.9% 36,293 26,425 37.3%

Associated Schools Network 23,349 22,400 4.2% 11,795 98.0% 90,629 86,527 4.7%

Total of Costs (18,901) (15,428) 22.5% (17,763) 6.4% (59,125) (55,383) 6.8%

Cost of Goods (CG) (7,768) (3,266) 137.8% (4,026) 93.0% (23,315) (17,707) 31.7%

Cost of Services (CS) (11,133) (12,162) -8.5% (13,737) -19.0% (35,810) (37,675) -5.0%

Faculty, Other Personnel and Third-Party Services (10,647) (11,611) -8.3% (12,400) -14.1% (33,500) (35,788) -6.4%

Rent (312) (285) 9.3% (309) 0.9% (920) (952) -3.3%

Other (174) (266) -34.4% (1,028) -83.0% (1,389) (936) 48.5%

Gross Income 16,833 17,106 -1.6% 8,250 104.0% 67,797 57,569 17.8%

Management Contracts and Own Operations 4,573 2,570 78.0% 3,701 23.5% 10,671 2,573 n.a.

Associated Schools Network 12,260 14,536 -15.7% 4,549 169.5% 57,125 54,995 3.9%

Gross Margin 47.1% 52.6% -5.5 p.p. 31.7% 15.4 p.p. 53.4% 51.0% 2.4 p.p.

Management Contracts and Own Operations 12.8% 7.9% 4.9 p.p. 14.2% -1.4 p.p. 8.4% 2.3% 6.1 p.p.

Associated Schools Network 34.3% 44.7% -10.4 p.p. 17.5% 16.8 p.p. 45.0% 48.7% -3.7 p.p.

Total Operating Expenses (9,061) (6,188) 46.4% (9,109) -0.5% (26,589) (18,499) 43.7%

Personnel, General and Administrative Expenses (3,806) (2,853) 33.4% (4,185) -9.0% (12,033) (9,223) 30.5%

Personnel Expenses (388) (109) 254.3% (768) -49.5% (1,756) (1,095) 60.3%


Selling and Marketing Expenses (5,254) (3,335) 57.5% (4,924) 6.7% (14,557) (9,276) 56.9%

Provision for Doubtfull Account - PDA (475) (225) 111.0% (385) 23.5% (1,968) (759) 159.3%

(+) Interest and Penalties on Tuition 86 126 -31.7% 105 -17.6% 355 193 84.2%

Operating Result 7,384 10,819 -31.8% (1,139) n.a. 39,594 38,503 2.8%

Operating Margin 20.7% 33.3% -12.6 p.p. -4.4% 25.0 p.p. 31.2% 34.1% -2.9 p.p.

9M11 Chg.%9M123Q12 3Q11 Chg.% 2Q12 Chg.%

17.116.8

52,6%47,1%

3Q11 3Q12

% Gross Margin

10.87.4

33,3%

20,7%

3Q11 3Q12

% Operating Margin

+10%-2%

32.535.7

3Q11 3Q12

25% 9%18% 9% 25% 5%

-32%





57.6

67.8

51.0% 53.4%

9M11 9M12

% Gross Margin

38.5

39.6

34.1%31.2%

9M11 9M12

% Operating Margin

+12%+18%

113.0

126.9

9M11 9M12

28% 13%21% 12% 29% 11%

+3%


Gross Income (GI)9 Months - R$ million

Operating Result (OR)9 Months - R$ million


KROT11


20


Deductions In 3Q12, deductions as a ratio of net revenue increased 1.4 p.p. compared to 3Q11, basically due to the increase in the line material returns, which occur as a result of events such as cancellations or dropouts. Net Revenue The net revenue growth of 9.8% compared to 3Q11 reflects the growth in the number of management contracts in force, the higher average ticket and the increased number of students served by private associated school networks. Compared to 2Q12, the 35.3% increase is related to sales of schoolbooks for the second semester to the associated schools.

Average Net Ticket In the Primary and Secondary Education business, the average annual amount charged for the sale of teaching materials to the Associated Schools is R$393.16 per student, which represents an increase of 4.8% from R$375.19 in the previous year.

Costs

In 3Q12, cost of goods sold as a ratio of net revenue in the business increased by 11.7 p.p. compared to the same quarter of 2011, due to the discarding of past collections and the earlier delivery of book collections for the 2013 school year. Meanwhile, the 6.2 p.p. reduction in costs of services rendered as a ratio of net revenue is related to the reduction in headcount implemented at the start of 2012.


Values in R$ ('000)

Gross Revenue 38,274 34,321 11.5% 28,287 35.3%

(-) Deductions from Gross Revenue (2,540) (1,788) 42.0% (2,274) 11.7%

Taxes (1,157) (1,074) 7.8% (1,409) -17.8%

ProUni - - n.a. - n.a.

Returns (1,382) (714) 93.5% (866) 59.6%

Total Discounts - - n.a. - n.a.

Net Revenue 35,734 32,533 9.8% 26,013 37.4%

Management Contracts and Own Operations 12,385 10,134 22.2% 14,217 -12.9%

Associated Schools Network 23,349 22,400 4.2% 11,795 98.0%

Chg.%3Q12 3Q11 Chg.% 2Q12


Values in R$ ('000)

Total of Costs (18,901) (15,428) 22.5% (17,763) 6.4%

Cost of Goods (CG) (7,768) (3,266) 137.8% (4,026) 93.0%

Cost of Services (CS) (11,133) (12,162) -8.5% (13,737) -19.0%

Faculty, Other Personnel and Third-Party Services (10,647) (11,611) -8.3% (12,400) -14.1%

Rent (312) (285) 9.3% (309) 0.9%

Other (174) (266) -34.4% (1,028) -83.0%


% of Net Revenues

Total of Costs -52.9% -47.4% -5.5 p.p. -68.3% 15.4 p.p.

Cost of Goods (CG) -21.7% -10.0% -11.7 p.p. -15.5% -6.3 p.p.

Cost of Services (CS) -31.2% -37.4% 6.2 p.p. -52.8% 21.7 p.p.

Faculty, Other Personnel and Third-Party Services -29.8% -35.7% 5.9 p.p. -47.7% 17.9 p.p.

Rent -0.9% -0.9% 0.0 p.p. -1.2% 0.3 p.p.

Other -0.5% -0.8% 0.3 p.p. -4.0% 3.5 p.p.

3Q12 3Q11 Chg.% 2Q12 Chg.%

Chg.%3Q12 3Q11 Chg.% 2Q12

KROT11


21

Gross Income

The gross margin compression of 5.5 p.p. in 3Q12 compared to 3Q11 was influenced by the higher costs in the segment, resulting from the discarding of past collections and the earlier delivery of book collections for the 2013 school year, as commented before.

Operating Expenses

Personnel, General and Administrative Expenses The increase of 1.9 p.p. in General and Administrative Expenses as a ratio of net revenue in 3Q12 compared to 3Q11 was associated with the higher number of service agreements and the increase in the number of Associated Schools between the periods.

Selling and Marketing Expenses The Company adopted the strategy of strengthening the commercial structure in this segment over the course of the year in order to support stronger growth in 2013 and subsequent years. As a result, selling and marketing expenses as a ratio of net revenue increased by 4.5 p.p. in 3Q12 compared to 3Q11.


In 2012, Kroton has been adopting a more conservative provisioning policy, which led PDA as a ratio of net revenue to increase from 0.7% in 3Q11 to 1.3% in 3Q12. Note that this policy was adopted to compensate for the more restrictive posture adopted in renegotiations with the Associated Schools.


Values in R$ ('000)

Gross Income 16,833 17,106 -1.6% 8,250 104.0%

Management Contracts and Own Operations 4,573 2,570 78.0% 3,701 23.5%

Associated Schools Network 12,260 14,536 -15.7% 4,549 169.5%

Gross Margin 47.1% 52.6% -5.5 p.p. 31.7% 15.4 p.p.

Management Contracts and Own Operations 12.8% 7.9% 4.9 p.p. 14.2% -1.4 p.p.

Associated Schools Network 34.3% 44.7% -10.4 p.p. 17.5% 16.8 p.p.

3Q11 Chg.% 2Q12 Chg.%3Q12


Values in R$ ('000)

Total Operating Expenses (9,061) (6,188) 46.4% (9,109) -0.5%

General and Administrative Expenses (3,806) (2,853) 33.4% (4,185) -9.0%

Personnel Expenses (388) (109) 254.3% (768) -49.5%


Selling and Marketing Expenses (5,254) (3,335) 57.5% (4,924) 6.7%


% of Net Revenues

Total Operating Expenses -25.4% -19.0% -6.3 p.p. -35.0% 9.7 p.p.

General and Administrative Expenses -10.7% -8.8% -1.9 p.p. -16.1% 5.4 p.p.

Personnel Expenses -1.1% -0.3% -0.7 p.p. -3.0% 1.9 p.p.

General and Administrative Expenses -9.6% -8.4% -1.1 p.p. -13.1% 3.6 p.p.

Selling and Marketing Expenses -14.7% -10.3% -4.5 p.p. -18.9% 4.2 p.p.

3Q12 3Q11 Chg.% 2Q12 Chg.%

3Q12 3Q11 Chg.% 2Q12 Chg.%


Values in R$ ('000)

Provision for Doubtfull Account - PDA (475) (225) 111.0% (385) 23.5%

PDA / Primary and Secondary Education Net Revenues -1.3% -0.7% -0.6 p.p. -1.5% 0.1 p.p.

2Q12 Chg.%3Q12 3Q11 Chg.%

KROT11


22

Accounts Receivable

Accounts receivable in the Primary and Secondary Education segment remained stable compared to 3Q11 and increased by 3.1% compared to 2Q12 due to the sale of books for the second semester of 2012.


Calculation base: net balance of short-term accounts receivable, divided by Primary and Secondary Education net revenue in the last 12 months, multiplied by 360 days. With the adoption of a stricter policy for payments in installments, the average term of accounts receivable in the Primary and Secondary Education business decreased by 10 days from the same period last year.

Operating Result

The aforementioned variations in costs and expenses, especially those related to the discarding of past collections and the earlier delivery of book collections for the 2013 school year, impacted operating margin in 3Q12, which decreased by 12.6 p.p. from 3Q11. In the first nine months of the year, the operating margin of the Primary and Secondary Education business was 31.2%, compared to 34.1% in 9M11, while operating result grew by 2.8% to reach R$39.6 million in 9M12.


Values in R$ ('000)

Net Accounts Receivable 32,007 32,050 -0.1% 31,042 3.1%

3Q11 %Chg.3Q12 2Q12 %Chg.

Primary and Secondary Education - Accounts

Receivable Average Turnover Days3Q12 3Q11 Chg. (days) 2Q12 Chg. (days)

Net Accounts Receivable

Net Revenues 77 87 - 10 days 76 + 1 day


Values in R$ ('000)

Gross Income 16,833 17,106 -1.6% 8,250 104.0%

(-) Total Operating Expenses (9,061) (6,188) 46.4% (9,109) -0.5%

(-) Provision for Doubtfull Account - PDA (475) (225) 111.0% (385) 23.5%

(+) Interest and Penalties on Tuition 86 126 -31.7% 105 -17.6%

Operating Result 7,384 10,819 -31.8% (1,139) n.a.

Operating Margin 20.7% 33.3% -12.6 p.p. -4.4% 25.0 p.p.

3Q12 3Q11 Chg.% 2Q12 Chg.%

KROT11


23

FINANCIAL PERFORMANCE – KROTON

Consolidated

Values in R$ ('000)

Gross Revenue 463,863 213,280 117.5% 397,791 16.6% 1,265,956 633,186 99.9%

(-) Gross Revenue Deductions (78,381) (33,251) 135.7% (83,254) -5.9% (225,340) (95,828) 135.1%

Taxes (10,243) (4,989) 105.3% (9,137) 12.1% (27,810) (13,462) 106.6%

ProUni (35,918) (18,156) 97.8% (30,246) 18.8% (94,363) (52,594) 79.4%

Returns (1,382) (714) 93.5% (866) 59.6% (4,723) (1,775) 166.1%

Total Discounts (30,837) (9,391) 228.4% (43,005) -28.3% (98,443) (27,997) 251.6%

Net Revenue 385,483 180,029 114.1% 314,537 22.6% 1,040,617 537,357 93.7%

Total of Costs (195,919) (112,075) 74.8% (169,874) 15.3% (510,647) (332,306) 53.7%

Cost of Goods (CG) (7,768) (3,266) 137.8% (4,026) 93.0% (23,315) (17,707) 31.7%

Cost of Services (CS) (188,151) (108,809) 72.9% (165,848) 13.4% (487,331) (314,599) 54.9%

Faculty, Other Personnel and Third-Party Services (166,835) (93,572) 78.3% (145,397) 14.7% (427,268) (270,450) 58.0%

Rent (20,471) (14,521) 41.0% (18,642) 9.8% (56,546) (41,976) 34.7%

Other (844) (716) 17.9% (1,809) -53.3% (3,517) (2,173) 61.9%

Gross Income 189,563 67,954 179.0% 144,663 31.0% 529,970 205,051 158.5%


Total Operating Expenses (44,755) (22,925) 95.2% (42,416) 5.5% (129,356) (62,654) 106.5%


Personnel Expenses (7,278) (1,041) 599.1% (6,013) 21.0% (20,768) (2,788) 645.0%


Selling and Marketing Expenses (16,119) (9,955) 61.9% (17,318) -6.9% (48,173) (26,221) 83.7%

Provision for Doubtfull Account - PDA (16,967) (7,668) 121.3% (15,776) 7.6% (48,644) (22,310) 118.0%

(+) Interest and Penalties on Tuition 9,967 5,121 94.6% 4,060 145.5% 21,756 11,773 84.8% - - 0.0% - 0.0% - - 0.0%


Operating Margin 35.7% 23.6% 12.2 p.p. 28.8% 7.0 p.p. 35.9% 24.5% 11.4 p.p.0 0 0 0 0 0 0 0

Corporate Expenses (21,893) (12,917) 69.5% (17,189) 27.4% (58,202) (39,405) 47.7%0 0 0 0 0 0 0 0

Adjusted EBITDA 115,916 29,565 292.1% 73,341 58.0% 315,524 92,456 241.3%

Adjusted EBITDA Margin 30.1% 16.4% 13.6 p.p. 23.3% 6.8 p.p. 30.3% 17.2% 13.1 p.p.

(-) Non-Recurring Costs and Expenses (9,383) (1,079) 769.3% (7,854) 19.5% (24,827) (6,192) 301.0%

EBITDA 106,533 28,486 274.0% 65,488 62.7% 290,696 86,263 237.0%

Depreciation and Amortization (25,181) (10,630) 136.9% (19,417) 29.7% (62,822) (31,163) 101.6%

Financial Result (18,920) 3,725 -607.9% (15,096) 25.3% (44,809) (5,703) 685.7%

Income Tax / Social Contribution (3,366) (482) 599.0% (391) 759.8% (11,008) (2,703) 307.3%

Deferred Income Tax / Social Contribution 1,840 (447) -511.7% 1,860 -1.1% 6,069 (2,042) n.a.

Net Income (Loss) 60,906 20,652 194.9% 32,442 87.7% 178,126 44,653 298.9%

Net Margin 15.8% 11.5% 4.3 p.p. 10.3% 5.5 p.p. 17.1% 8.3% 8.8 p.p.

(+) Non Recurring Costs and Expenses 9,383 1,079 769.3% 7,854 19.5% 24,827 6,192 301.0%

(+) Intagible Amortization (Aquisitions) 11,817 - n.a. 8,464 39.6% 26,874 - n.a.

Adjusted Net Income (Loss) 82,106 21,731 277.8% 48,760 68.4% 229,827 50,845 352.0%

Adjusted Net Margin 21.3% 12.1% 9.2 p.p. 15.5% 5.8 p.p. 22.1% 9.5% 12.6 p.p.

9M12 9M11 Chg.%3Q12 3Q11 Chg.% 2Q12 Chg.%

68.0

189.6

37.7%

49.2%

3Q11 3Q12

% Gross Margin

42.5

137.823.6%

35.7%

3Q11 3Q12

% Operating Margin

+114% +179%

180.0

385.5

3Q11 3Q12

+224%




205.1

530.0

38.2%

50.9%

9M11 9M12

% Gross Margin

131.9

373.7

24.5%

35.9%

9M11 9M12

% Operating Margin

+94% +158%

537.4

1040.6

9M11 9M12

+183%


Gross Income (GI)9 Months - R$ million

Operating Result (OR)9 Months - R$ million

KROT11


24

CORPORATE EXPENSES

In 3Q12, corporate expenses as a ratio of net revenue decreased 1.5 p.p. compared to 3Q11 and remained stable compared to 2Q12, demonstrating the effects from scale gains and the rigorous control of expenses exercised by the Company.

NONRECURRING EVENTS

As mentioned above, Kroton already expected nonrecurring events during 2012, mainly those related to the acquisitions. In 3Q12, the Company recorded R$1.4 million in expenses related to the Unopar integration and R$3.7 million in expenses related to the Uniasselvi integration. In addition, another R$2.2 million was registered in expenses related to M&A projects (excluding Unopar and Uniasselvi), which included auditing and integration processes, especially at Unirondon. Lastly, R$2.1 million was recorded in expenses with consulting companies contracted to execute special and unique projects, such as the Pricing/Branding Project, which has nonrecurring characteristics.

EBITDA

Consolidated

Values in R$ ('000)

Corporate Expenses (21,893) (12,917) 69.5% (17,189) 27.4%

Personnel Expenses (17,660) (8,495) 107.9% (11,140) 58.5%

General and Administrative Expenses (4,233) (4,422) -4.3% (6,049) -30.0%

Consolidated

% of Net Revenue

Corporate Expenses -5.7% -7.2% 1.5 p.p. -5.5% -0.2 p.p.

Personnel Expenses -4.6% -4.7% 0.1 p.p. -3.5% -1.0 p.p.

General and Administrative Expenses -1.1% -2.5% 1.4 p.p. -1.9% 0.8 p.p.

2Q12 Chg.%

3Q12 3Q11 Chg.% 2Q12 Chg.%

3Q12 3Q11 Chg.%

Item (R$ '000) 1Q12 2Q12 3Q12 9M12

Unopar Integration (4,137) (5,255) (1,390) (10,782)

Uniasselvi Integration - (253) (3,727) (3,980)

M&A Projects (3,455) (2,345) (2,151) (7,951)

Consulting Projects - - (2,115) (2,115)

Total of Nonrecurring Items (7,591) (7,853) (9,383) (24,827)

Consolidated

Values in R$ ('000)

Operating Result 137,809 42,482 224.4% 90,530 52.2%

(-) Corporate Expenses (21,893) (12,917) 69.5% (17,189) 27.4%

Adjusted EBITDA 115,916 29,565 292.1% 73,341 58.0%

Adjusted EBITDA Margin 30.1% 16.4% 13.6 p.p. 23.3% 6.8 p.p.

(+) Nonrecurring Costs and Expenses (9,383) (1,079) 769.3% (7,854) 19.5%

EBITDA 106,533 28,486 274.0% 65,488 62.7%

EBITDA Margin 27.6% 15.8% 11.8 p.p. 20.8% 6.8 p.p.

3Q12 3Q11 Chg.% 2Q12 Chg.%

KROT11


25

In 3Q12, Adjusted EBITDA was R$115.9 million, increasing 292.1% from the same quarter of 2011, with Adjusted EBITDA margin of 30.1%. This strong performance was driven by the acquisitions made during 2011 and 2012, especially Unopar and Uniasselvi, the successful integration processes and the rigorous control of costs and expenses. In the first nine months of the year, Adjusted EBITDA was R$315.5 million, with Adjusted EBITDA margin of 30.3%. In 3Q12, after excluding the adjustments for nonrecurring costs and expenses, the Company generated EBITDA of R$106.5 million with 27.6% margin, for margin expansion of 11.8 p.p. compared to 3Q11.

FINANCIAL RESULT

In 3Q12, the net financial result was an expense of R$18.9 million, impacted by the higher interest on related loans, especially the R$550 million debentures issue maturing in seven years and restated by the variation in the CDI overnight rate + 2.0% per annum, as well as the interest on obligations related to acquisitions, especially Unopar and Uniasselvi. Compared to 2Q12, the deterioration in the financial result is explained by the lower interest received on financial investments due to the reduction in the Company’s average cash position following the R$335 million disbursement related to the Uniasselvi acquisition at the end of May, as well as the reduction in the CDI rate since 2Q12.

92.5

315.517.2%

30.3%

9M11 9M12

% Adjusted EBITDA Margin

+241%

29.6

115.916.4%

30.1%

3Q11 3Q12

% Adjusted EBITDA Margin

+292%

Quarterly - R$ million 9 Months - R$ million

Consolidated

Values in R$ ('000)

(+) Financial Revenues 4,806 7,810 -38.5% 8,767 -45.2%

Interest on Financial Investment 4,132 7,168 -42.3% 7,956 -48.1%

Others 673 642 4.9% 811 -16.9%

(-) Financial Expenses (23,726) (4,085) 480.9% (23,191) 2.3%

Banks Expenses (1,702) (784) 117.1% (1,308) 30.2%

Interest on Loans (14,175) (1,083) n.a. (15,634) -9.3%

Interest and Tax on Late Payment (1,188) (609) 95.0% (1,447) -17.9%

Interest on Loans for Acquisitions (6,280) (515) n.a. (4,263) 47.3%

Others (381) (1,093) -65.1% (538) -29.2%

Financial Result (18,920) 3,725 n.a. (14,424) 31.2%

Chg.%3Q12 3Q11 Chg.% 2Q12

Adjusted EBITDA / Adjusted EBITDA Margin R$ million

KROT11


26

NET INCOME

Adjusted net income for the Company in 3Q12 was R$82.1 million, increasing 277.8% from 3Q11. Note that the adjustments to net income include the amortization of intangible assets, which was negatively impacted by the acquisition of Unopar and also of Uniasselvi, which began to be amortized in 3Q12. In the first nine months of the year, adjusted net income increased by 352.0% compared to 9M11, to reach R$229.8 million. In 3Q12, net income, i.e., excluding adjustments for nonrecurring costs and expenses and the amortization of intangible assets, was R$60.9 million, increasing 194.9% from R$20.7 million in 3Q11.

INVESTMENT (CAPEX)

In 3Q12, Kroton invested R$12.5 million, allocated as follows:

(i) information technology and library equipment: R$3.8 million; (ii) content and systems development and software licenses: R$2.5 million; (iii) laboratory and similar equipment: R$2.9 million; (iv) expansions – construction and improvements: R$3.4 million. The amount of investment corresponded to 3.2% of net revenue in the quarter and to 4.9% of net revenue in the first nine months of the year. Note that this line does not include the investments made to acquire educational institutions. For 4Q12, we expect the level of recurring and maintenance investments to accelerate, but within the guidance for Capex of 6.5% of net revenues.

Consolidated

Values in R$ ('000)

Adjusted EBITDA 115,916 29,565 292.1% 73,341 58.0%

(+) Depreciation and Amortization ex-Intangible (13,363) (10,630) 25.7% (10,954) 22.0%

(+) Financial Result 1 (18,920) 3,725 n.a. (15,096) 25.3%

(+) Income Tax / Social Contribution (3,366) (482) n.a. (391) 759.8%

(+) Deferred Income Tax / Social Contribution 1,840 (447) n.a. 1,860 -1.1%

Adjusted Net Income (Loss) 82,106 21,731 277.8% 48,760 68.4%

Adjusted Net Margin 21.3% 12.1% 9.2 p.p. 15.5% 5.8 p.p.

(+) Nonrecurring Costs and Expenses (9,383) (1,079) n.a. (7,854) 19.5%

(+) Intangible Amortization (Aquisitions) (11,817) - n.a. (8,464) 39.6%

Net Income (Loss) 60,906 20,652 194.9% 32,442 87.7%

Net Margin 15.8% 11.5% 4.3 p.p. 10.3% 5.5 p.p.

3Q12 3Q11 Chg.% 2Q12 Chg.%

21.7

82.112.1%

21.3%

3Q11 3Q12

% Adjusted Net Margin

50.8

229.89.5%

22.1%

9M11 9M12

% Adjusted Net Margin

+352%+278%

Quarterly - R$ million 9 Months - R$ million

Adjusted Net Income /Adjusted Net Margin R$ million

KROT11


27

Kroton is also investing in special projects, which include the acquisition of properties and construction of brownfields to support stronger growth rates over the coming years. In 3Q12, these investments totaled R$12.0 million (not included in the above chart) and are basically related to ongoing construction projects. In the first nine months of the year, these investments came to R$42.3 million.

NET DEBT

1 Considers only bank obligations. 2 Net cash (debt) considering all short- and long-term obligations related to the tax liabilities and the acquisitions, including the last installment related to the Unopar acquisition coming due in December 2012 and the amount to be paid within 6 years related to the Uniasselvi acquisition.

At the end of 3Q12, Kroton’s cash and cash equivalents totaled R$318.6 million. The increase compared to 2Q12 is explained by the cash generation in the period, which was leveraged by the release of the debt clearance certificate (CND) in July and the associated cash inflow for the Company of R$79.6 million. As mentioned before, the Company's debt is directly related to the financing of the Unopar acquisition, given the R$550 million debentures issue. Therefore, considering solely the bank debt, net debt was R$250.7 million in 3Q12. Adding all short- and long-term obligations, which include the tax liabilities under the Refis tax amnesty program and the obligations related to the acquisitions made through 3Q12, net debt stood at R$666.4 million. Note that the bulk of this amount is represented by the last installment for the Unopar acquisition (R$139.8 million, considering restatement by CDI up to September), which should be settled by year-end 2012, and by the outstanding amount for the Uniasselvi acquisition (up to R$194.5 million, considering restatement by CDI up to September), which will be paid in six annual installments as from 2013.

CASH FLOW

The Company’s free cash flow stems from cash flow from operating activities, which is derived from net income adjusted for all non-cash effects in the profit and loss and comprises all variations in working capital, taxes paid (income tax and social contribution) and investments made (ex-acquisitions), and from cash flow from non-operating activities, which includes all financial flows not related to the operations.

17.411.5

12.5

5.8%6.4%

3.2%

-0, 4%

0,6%

1,6%

2,6%

3,6%

4,6%

5,6%

6,6%

2Q12 3Q11 3Q12

15%

30%37%

18%

Computer Equipment and

Library

System development andcontent and software

Laboratory and similarequipment

Expansion of physical

facilities

Consolidated

Values in R$ ('000)

Cash and Cash Equivalents 318,583 231,426

Cash 45,971 69,467

Securities 272,612 161,959

Loans and Financing 569,309 557,450

Short-term Debt 20,089 7,486

Long-term Debt 549,220 549,964

Net Cash (Debt)1 (250,726) (326,024)

Other Short and Long Term Debt 415,630 401,605

Net Cash (Debt)2 (666,356) (727,629)

3Q12 2Q12

3Q12 Capex Breakdown Capex / % of Net Revenue R$ million

KROT11


28

The above table provides a breakdown of the groups that form the Company’s free cash flow. In 3Q12, operating cash flow before capex was R$135.8 million, higher than in the same quarter of 2011, mainly due to the financial performance in the period and the increase in working capital, which reflects the FIES credit repurchases and the cash inflows from the Distance Learning and Primary and Secondary Education businesses. In the first nine months of the year, the performance of this line was also very positive, reaching R$282.3 million.

Considering the disbursements for recurring capex, operating cash flow was R$123.3 million in 3Q12. Adding the capex for special projects, operating cash flow was R$111.2 million. Free cash flow was positive R$87.2 million in 3Q12, mainly impacted by net income for the period and the increase in working capital.

As explained above, due to the strike by bank workers in September, we were unable to repurchase the R$44.2 million related to the FIES program. Note that if the repurchase had been made within the period, Kroton’s cash generation would have been positively impacted by this amount, further increasing the period’s already strong performance. In this analysis, cash flow after recurring capex was R$167.5 million.

Operating cash generation after capex corresponded to 115.7% of EBITDA in 3Q12 and to 79.8% in 9M12. Following the disbursements for capex, both recurring and for special projects, cash generation corresponded to 69.4% of EBITDA in the first nine months of the year.

* Total Capex = Recurring Capex + Special Projects

R$ million 3Q12 3Q11 Chg.% 2Q12 Chg.% 9M12 9M11 Chg.%

Net Income (Loss) before Income Interest 62,433 21,581 189.3% 30,974 101.6% 183,065 49,398 270.6%

(+) Net Income (Loss) adjustments before Income Interest 63,441 10,030 n.a. 47,341 34.0% 160,680 60,875 164.0%

Depreciation and Amortization 25,181 10,631 136.9% 19,418 29.7% 62,823 31,164 101.6%

Provision for Doubtful Accounts (PDA) 16,967 7,670 121.2% 15,776 7.5% 48,643 22,311 118.0%

Others 21,293 (8,271) n.a. 12,147 75.3% 49,214 7,400 n.a.

(+) Income Tax and Social Contribution (1,554) (590) n.a. (3,133) -50.4% (7,663) (590) n.a.

(+) Changes in Working Capital 11,462 (30,774) n.a. 19,728 -41.9% (53,775) (86,911) -38.1%

(Increase) Reduction in Accounts Receivable 6,765 (23,924) n.a. 1,299 420.8% (73,189) (88,608) -17.4%

Others 4,697 (6,850) n.a. 18,429 -74.5% 19,414 1,697 1043.7%

Operating Cash Generation before Capex 135,782 247 n.a. 94,910 43.1% 282,307 22,772 n.a.

Capex - Recurring (12,524) (11,521) 8.7% (19,306) -35.1% (50,236) (32,871) 52.8%

Operating Cash Generation after Capex - Recurring 123,258 (11,274) n.a. 75,604 63.0% 232,071 (10,099) n.a.

Capex - Special Projects (12,069) - n.a. (18,392) n.a. (30,442) - n.a.

Operating Cash Generation after Capex - Recurring and Special Projects 111,189 (11,274) n.a. 57,212 94.3% 201,629 (10,099) n.a.

(+) M&A Activities (16,110) (11,232) 43.4% (318,577) -94.9% (595,385) (7,668) n.a.

(+) Cash Flow from Financing Activities (7,922) 45,170 n.a. (38,589) -79.5% 560,992 31,109 1703.3%- - 0.0% - 0.0% - - 0.0%

Free Cash Flow 87,157 22,664 284.6% (299,954) n.a. 167,236 13,343 1153.4%

R$ million 3Q12 9M12135781.6

Operating Cash Generation (OCG) before Capex 135,782 282,307

OCG / EBITDA 127.5% 97.1%

Operating Cash Generation after Capex - Recurring 123,258 232,071

OCG / EBITDA 115.7% 79.8%

Operating Cash Generation after Capex - Recurring and Special Projects 111,189 201,629

OCG / EBITDA 104.4% 69.4%

Free Cash Flow 87,157 167,236

Quarterly - R$ million and % EBITDA 9 Months - R$ million and % EBITDA

0.2

135.8

-11.3

123.3

-11.3

111.21%

128%

-40%

116%

-40%

104%

- 20, 0

0, 0

20, 0

40, 0

60, 0

80, 0

100, 0

120, 0

140, 0

160, 0

3Q11 3Q12 3Q11 after

recurr.

Capex

3Q12 after

recurr.

Capex

3Q11 after total

Capex*

3Q12 after total

Capex*

22.7

282.3

-10.1

232.1

-10.1

201.626%

97%

-12%

80%

-12%

69%

- 20%

0%

20%

40%

60%

80%

100%

- 50, 0

0, 0

50, 0

100, 0

150, 0

200, 0

250, 0

300, 0

9M11 9M12 9M11 after

recurr.

Capex

9M12 after

recurr.

Capex

9M11 after total

Capex*

9M12 after total

Capex*

Operating Cash Flow / % EBITDA

R$ million

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29

FINANCIAL PERFORMANCE – KROTON (Ex-Unopar and Uniasselvi)

To ensure accurate analyses of the evolution in Kroton’s results (ex-Unopar and Uniasselvi), a managerial analysis presenting the revenue and EBITDA lines on a cumulative basis will be made available over the course of 2012. This analysis excludes all impacts related to Unopar and considers three different forms of allocating corporate expenses in Kroton’s profit or loss, as shown in the following tables:

1 – Considers 100% of corporate expenses allocated to Kroton

2 – Corporate expenses allocated in accordance with net revenue

3 – Corporate expenses in 9M11 restated by the IPCA

Even if expenses in 9M11 are allocated in accordance with net revenue (scenario 2) or restated by the IPCA inflation index (scenario 3), Kroton's performance in 9M12 was still significantly higher than in 9M11. Considering 100% of corporate expenses allocated to the Company's profit or loss, Kroton’s adjusted EBITDA (ex-Unopar and Uniasselvi) was R$159.1 million, with EBITDA margin of 22.9%, for margin expansion of 5.7 p.p. from the same period last year. These results demonstrate the improvement in Kroton’s financial and operating performance, especially in the On-Campus Postsecondary business.

Values in R$ ('000) 9M12 1 9M11 Chg.%

Net Revenue 694,409 537,357 29.2%

Adjusted EBITDA 159,120 92,457 72.1%

Adjusted EBITDA Margin 22.9% 17.2% 5.7 p.p.

Values in R$ ('000) 9M12 2 9M11 Chg.%

Net Revenue 694,409 537,357 29.2%

Adjusted EBITDA 178,484 92,457 93.0%


Values in R$ ('000) 9M12 3 9M11 Chg.%

Net Revenue 694,409 537,357 29.2%

Adjusted EBITDA 175,836 92,457 90.2%


KROT11


30

CAPITAL MARKETS AND SUBSEQUENT EVENTS PERFORMANCE OF KROTON UNITS

Kroton units (KROT11) have been listed on the Level 2 segment of the BM&FBovespa S.A. - Securities, Commodities and Futures Exchange since July 2007 and are a component of the Special Corporate Governance Stock Index (IGC), Special Tag-Along Stock Index (ITAG), Consumption Sector Index (ICON), Small Cap Index (SMLL) and MSCI Brazil Small Cap.

The units were negotiated in 100% of trading sessions during 3Q12, registering trading volume of R$739.2 million and 56,099 orders in the period, which represents average daily trading volume of R$11.8 million. On September 28, 2012, the units were quoted at R$34.70 per unit, which corresponds to market capitalization of R$4.2 billion.

During 3Q12, the price of the units increased 19.4%, while in the same period the Ibovespa gained 8.9%, the IGC 6.0%, the ITAG 8.7%, the ICON 11.2% and the SMLL 13.4%. Kroton’s units are currently covered by research analysts at 16 different local and international institutions.

OWNERSHIP STRUCTURE

The Extraordinary Shareholders' Meeting held on September 28, 2012 approved the merger of companies holding an ownership interest of 20% in Unopar (“Merger”) that were not part of the first phase of the acquisition of said company. As a result, 13,877,460 new units were issued by the Company at a price of R$18.74 per unit, which represented 10.33% of its capital stock, already including the effects of dilution arising from the capital increase and the merger. The following table presents the current ownership structure of Kroton following the issuance of shares to the sellers of Unopar:

Highlights

3Q12 9M12

Average Daily Trade Volume (quarter average) R$ 11.8 million R$ 10.2 million

Maximum (R$ per unit) R$ 35.24 R$ 35.24

Minimun (R$ per unit) R$ 27.81 R$ 17.58

Average (R$ por unit) R$ 31.71 R$ 26.97

Closing Quote R$ 34.70 R$ 34.70

Variation in the period (%) 19.4% 88.7%

# Total of Shares Quantity %

Controlling Group 325,665,651 34.6%

Treasury Stocks 3,761,786 0.4%

Free-Float 611,036,138 65.0%Unopar Sellers 97,142,220 10.3%

Total 940,463,575 100.0%

Current OwnershipKroton Ownership Structure

KROT11


31

AWARDS

In September, the awards sponsored by Institutional Investor were announced. The magazine is one of the most important in world financial markets and is widely known for its rankings, which feature not only Brazil but all of Latin America, and this year also began to include a specific sector for the education industry. Kroton ranked first in 7 of the 8 categories in which it participated. The awards received by Kroton follow:

Best Investor Relations - elected by sell side and buy side analysts;

Best CEO for Rodrigo Calvo Galindo - elected by sell side and buy side analysts;

Best CFO for Frederico Brito e Abreu - elected by sell side analysts;

Best IR Professional for Carlos Alberto B. Lazar - elected by sell side and buy side analysts; In addition to these awards, Kroton Also ranked second in the category “Best CFO for Frederico Brito e Abreu - elected by buy side analysts”.

ABOUT KROTON EDUCACIONAL

Kroton Educacional S.A. (BM&FBovespa: KROT11) is one of the largest for-profit private educational organizations in the world. Operating in Brazil’s education sector for over 45 years, Kroton has a nationwide presence in all of Brazil’s states and boasts a unique business model that covers educational offerings that range from pre-school to doctorates. As of September 2012, Kroton had approximately 411,000 Postsecondary students in both the On-Campus and Distance Learning formats, primarily through its 53 Postsecondary units and 447 active Undergraduate Distance Learning centers. In the Primary and Secondary Education segment, Kroton serves around 289,000 students both in the private sector through 810 Associated Schools and in the public school system with operations in three cities.

DISCLAIMER

This document contains forward-looking statements and information. These forward-looking statements and information are merely forecasts and not guarantees of future performance. All stakeholders are cautioned that such forward-looking statements and information involve risks, uncertainties and factors relating to the operations and business environments of Kroton and its subsidiaries and affiliates, and that the actual results of the companies could differ materially from the future results anticipated explicitly or implicitly by such forward-looking statements and information.

KROT11


32

APPENDIX 1 – CONSOLIDATED BALANCE SHEET

R$ thousand 3Q12 % AV 2Q12 % AV

Assets

Current Assets 662,214 16.8% 592,185 15.6%

Cash and Banks 45,971 1.2% 69,467 1.8%

Financial Investments 272,612 6.9% 161,959 4.3%

Accounts Receivable 279,061 7.1% 301,013 7.9%

Inventories 6,213 0.2% 11,913 0.3%

Advances 16,579 0.4% 14,315 0.4%

Recoverable Taxes 30,678 0.8% 28,440 0.7%

Other Accounts Receivable 11,100 0.3% 5,078 0.1%

Non current Assets 3,286,866 83.2% 3,214,962 84.4%

Long Term Assets 326,397 8.3% 300,120 7.9%

Securities 2,679 0.1% 1,297 0.0%

Accounts Receivables 15,781 0.4% 16,718 0.4%

Deferred Taxes 1,599 0.0% 1,519 0.0%

Judicial Escrow Deposits 9,501 0.2% 9,267 0.2%

Advances to Suppliers 8,952 0.2% 10,084 0.3%

Judicial Escrow Deposits 9,396 0.2% 7,686 0.2%

Right of withdrawal from Contingencies of Acquired Companies 275,533 7.0% 250,658 6.6%

Other 2,956 0.1% 2,891 0.1%

Investments 1,600 0.0% 1,600 0.0%

Fixed Assets 356,345 9.0% 317,112 8.3%

Intangible 2,602,524 65.9% 2,596,130 68.2%

Total Assets 3,949,080 100.0% 3,807,147 100.0%

Liabilities and Shareholders' Equity

Current Liabilities 467,904 11.8% 432,629 11.4%

Suppliers 59,180 1.5% 65,431 1.7%

Loans and Financing 4,286 0.1% 5,078 0.1%

Debenture 15,803 0.4% 2,408 0.1%

Payroll and Related Charges 115,691 2.9% 91,074 2.4%

Income Tax and Social Contribuition 11,181 0.3% 10,021 0.3%

Taxes and Contribuition 16,856 0.4% 15,768 0.4%

Advances to Clients 16,302 0.4% 16,088 0.4%

Tax and Contribuion Payment Installments 6,750 0.2% 7,911 0.2%

Accounts Payable - Acquisitions 207,387 5.3% 202,252 5.3%

Other 14,468 0.4% 16,598 0.4%

Non current Liabilities 1,216,546 30.8% 1,183,442 31.1%

Suppliers 941 0.0% 0 0.0%

Loans and Financing 7,438 0.2% 8,257 0.2%

Debenture 541,782 13.7% 541,707 14.2%

Provision for Tax, Labor and Civil Lawsuit Losses 361,922 9.2% 335,543 8.8%

Tax and Contribuion Payment Installments 39,434 1.0% 38,075 1.0%

Accounts Payable - Acquisitions 168,842 4.3% 161,979 4.3%

Deferred Taxes 93,984 2.4% 95,743 2.5%

Others 2,203 0.1% 2,138 0.1%

Shareholder´s Equity 2,264,630 57.3% 2,191,076 57.6%

Paid up Capital 1,867,228 47.3% 1,851,101 48.6%

Capital Reserve (2,130) -0.1% (5,805) -0.2%

Treasury Stock (9,068) -0.2% (18,041) -0.5%

Equity instruments deriving from business agreements 243,873 6.2% 260,000 6.8%

Income (Loss) in the Period 164,727 4.2% 103,821 2.7%

Total Liabilities and Shareholders' Equity 3,949,080 100.0% 3,807,147 100.0%

KROT11


33

APPENDIX 2 – QUARTERLY INCOME STATEMENT RECONCILIATION

3Q12

Results

(Book)

Interest and

Penalties

on Tuition

Depre-

ciation

Intangible

Amortization

(Aquisitions)

Non-

recurring

Costs and

Expenses

3Q12

Results

(Release)

Gross Revenue 463,863 463,863

Postsecondary 425,590 - - - - 425,590

Primary and Secondary 38,274 - - - - 38,274

Deductions from Gross Revenue (78,381) (78,381)

Postsecondary (75,841) - - - - (75,841)

Primary and Secondary (2,540) - - - - (2,540)

Net Revenue 385,483 385,483

Postsecondary 349,748 - - - - 349,748


Costs of Goods/Services (210,413) (195,919)

Cost of Goods Sold (7,768) - - - - (7,768)

Cost of Services Rendered (202,645) - 10,256 - 4,238 (188,151)

Gross Income 175,070 189,563

Operating Expenses (103,683) (83,615)

Selling Expenses (16,292) - - - 173 (16,119)

Provision for Doubtful Accounts (16,967) - - - - (16,967)

Personnel Expenses (26,146) - - - 1,208 (24,938)

General and Administrative Expenses (44,278) - 14,924 - 3,763 (25,591)

Other Operating Income (Expenses) - - - - - -

Income (Loss) before Financial Result 71,386 105,948

Interest and Penalties on Tuition - 9,967 - - - 9,967

Depreciation and Amortization - - (13,363) (11,817) - (13,363)

Financial Result (8,953) (18,920)

Financial Expenses (23,726) - - - - (23,726)

Financial Revenues 14,773 (9,967) - - - 4,806

Income (Loss) from Operations 62,433 83,633

Income and Social Contribuition Tax (1,526) - - - - (1,526)

Current (3,366) - - - - (3,366)

Deferred 1,840 - - - - 1,840

Net Income (Loss) 60,906 82,106

(In thousand reais, except otherwise indicated)

KROT11


34

APPENDIX 3 – NINE-MONTH INCOME STATEMENT RECONCILIATION

9M12

Results

(Book)

Interest and

Penalties

on Tuition

Depre-

ciation

Intangible

Amortization

(Aquisitions)

Non-

recurring

Costs and

Expenses

9M12

Results

(Release)

Gross Revenue 1,265,956 1,265,956

Postsecondary 1,130,471 - - - - 1,130,471


Deductions from Gross Revenue (225,340) (225,340)

Postsecondary (216,776) - - - - (216,776)

Primary and Secondary (8,563) - - - - (8,563)

Net Revenue 1,040,617 1,040,617

Postsecondary 913,695 - - - - 913,695


Costs of Goods/Services (549,289) (510,647)

Cost of Goods Sold (23,315) - - - - (23,315)

Cost of Services Rendered (525,974) - 28,735 - 9,907 (487,331)

Gross Income 491,328 529,970

Operating Expenses (285,210) (236,203)

Selling Expenses (48,382) - - - 209 (48,173)

Provision for Doubtful Accounts (48,644) - - - - (48,644)

Personnel Expenses (64,303) - - - 2,654 (61,649)

General and Administrative Expenses (123,629) - 34,086 - 11,806 (77,737)

Other Operating Income (Expenses) (251) - - - 251 -

Income (Loss) before Financial Result 206,118 293,768

Interest and Penalties on Tuition - 21,756 - - - 21,756

Depreciation and Amortization - - (35,949) (26,874) - (35,949)

Financial Result (23,053) (44,809)

Financial Expenses (71,722) - - - - (71,722)

Financial Revenues 48,669 (21,756) - - - 26,913

Income (Loss) from Operations 183,065 234,765

Income and Social Contribuition Tax (4,938) - - - - (4,938)

Current (11,008) - - - - (11,008)

Deferred 6,069 - - - - 6,069

Net Income (Loss) 178,126 229,827

Non-accounting adjustments


KROT11


35

APPENDIX 4 – QUARTERLY INCOME STATEMENT

3Q12 % Net Rev. 3Q11 % Net Rev. 3Q12 / 3Q11 2Q12 % Net Rev. 3Q12 / 2Q12

Gross Revenue 463,863 120.3% 213,281 118.5% 117.5% 397,791 126.5% 16.6%

Postsecondary 425,590 110.4% 178,959 99.4% 137.8% 369,504 117.5% 15.2%

Primary and Secondary 38,274 9.9% 34,321 19.1% 11.5% 28,287 9.0% 35.3%

Deductions from Gross Revenue (78,381) -20.3% (33,251) -18.5% 135.7% (83,254) -26.5% -5.9%

Postsecondary (75,841) -19.7% (31,463) -17.5% 141.0% (80,980) -25.7% -6.3%

Primary and Secondary (2,540) -0.7% (1,788) -1.0% 42.0% (2,274) -0.7% 11.7%

Net Revenue 385,483 100.0% 180,029 100.0% 114.1% 314,537 100.0% 22.6%

Postsecondary 349,748 90.7% 147,496 81.9% 137.1% 288,525 91.7% 21.2%

Primary and Secondary 35,734 9.3% 32,533 18.1% 9.8% 26,013 8.3% 37.4%

Costs of Goods/Services (210,413) -54.6% (119,553) -66.4% 76.0% (179,805) -57.2% 17.0%

Cost of Goods Sold (7,768) -2.0% (3,266) -1.8% 137.8% (4,026) -1.3% 93.0%

Cost of Services Rendered (202,645) -52.6% (116,287) -64.6% 74.3% (175,779) -55.9% 15.3%

Gross Income 175,070 45.4% 60,476 33.6% 189.5% 134,732 42.8% 29.9%

Operating Expenses (103,683) -26.9% (47,742) -26.5% 117.2% (92,723) -29.5% 11.8%

Selling Expenses (16,292) -4.2% (10,294) -5.7% 58.3% (17,327) -5.5% -6.0%

Provision for Doubtful Accounts (16,967) -4.4% (7,669) -4.3% 121.2% (15,776) -5.0% 7.6%

Personnel Expenses (26,146) -6.8% (9,094) -5.1% 187.5% (19,420) -6.2% 34.6%

General and Administrative Expenses (44,278) -11.5% (25,232) -14.0% 75.5% (40,079) -12.7% 10.5%

Other Operating Income (Expenses) - 0.0% 4,547 2.5% -100.0% (121) 0.0% n.a.

Income (Loss) before Financial Result 71,386 39.7% 12,734 7.1% 460.6% 42,010 13.4% 69.9%

Financial Result (8,953) -2.3% 8,846 4.9% -201.2% (11,036) -3.5% -18.9%

Financial Expenses (23,726) -6.2% (4,085) -2.3% 480.9% (23,901) -7.6% -0.7%

Financial Revenues 14,773 3.8% 12,930 7.2% 14.3% 12,865 4.1% 14.8%

Income (Loss) from Operations 62,433 16.2% 21,580 12.0% 189.3% 30,974 9.8% 101.6%

Income and Social Contribuition Tax (1,526) -0.4% (929) -0.5% 64.4% 1,468 0.5% n.a.

Current (3,366) -0.9% (482) -0.3% n.a. (391) -0.1% 759.9%

Deferred 1,840 0.5% (447) -0.2% n.a. 1,860 0.6% -1.1%

Net Income (Loss) 60,906 15.8% 20,652 11.5% 194.9% 32,442 10.3% 87.7%


KROT11


36

APPENDIX 5 – NINE-MONTH INCOME STATEMENT

9M12 % Net Rev. 9M11 % Net Rev. 9M12 / 9M11

Gross Revenue 1,265,956 121.7% 633,187 117.8% 99.9%

Postsecondary 1,130,471 108.6% 515,822 96.0% 119.2%

Primary and Secondary 135,485 13.0% 117,365 21.8% 15.4%

Deductions from Gross Revenue (225,340) -21.7% (95,829) -17.8% 135.1%

Postsecondary (216,776) -20.8% (91,415) -17.0% 137.1%

Primary and Secondary (8,563) -0.8% (4,414) -0.8% 94.0%

Net Revenue 1,040,617 100.0% 537,358 100.0% 93.7%

Postsecondary 913,695 87.8% 424,407 79.0% 115.3%

Primary and Secondary 126,922 12.2% 112,951 21.0% 12.4%

Costs of Goods/Services (549,289) -52.8% (354,693) -66.0% 54.9%

Cost of Goods Sold (23,315) -2.2% (17,708) -3.3% 31.7%

Cost of Services Rendered (525,974) -50.5% (336,985) -62.7% 56.1%

Gross Income 491,328 47.2% 182,665 34.0% 169.0%

Operating Expenses (285,209) -27.4% (139,338) -25.9% 104.7%

Selling Expenses (48,382) -4.6% (27,360) -5.1% 76.8%

Provision for Doubtful Accounts (48,644) -4.7% (22,311) -4.2% 118.0%

Personnel Expenses (64,303) -6.2% (29,506) -5.5% 117.9%

General and Administrative Expenses (123,629) -11.9% (61,387) -11.4% 101.4%

Other Operating Income (Expenses) (251) 0.0% 1,226 0.2% n.a.

Income (Loss) before Financial Result 206,118 38.4% 43,327 8.1% 375.7%

Financial Result (23,053) -2.2% 6,070 1.1% -479.8%

Financial Expenses (71,722) -6.9% (15,303) -2.8% 368.7%

Financial Revenues 48,669 4.7% 21,373 4.0% 127.7%

Income (Loss) from Operations 183,065 17.6% 49,397 9.2% 270.6%

Income and Social Contribuition Tax (4,938) -0.5% (4,745) -0.9% 4.1%

Current (11,008) -1.1% (2,703) -0.5% 307.3%

Deferred 6,069 0.6% (2,042) -0.4% n.a.

Net Income (Loss) 178,126 17.1% 44,653 8.3% 298.9%


KROT11


37

APPENDIX 6 – CASH FLOW STATEMENT

R$ million

3Q11 3Q12

Net Income (Loss) before Income Interest 21,581 62,433 - -

Net Income (Loss) adjustments before Income Interest

Depreciation and Amortization 10,631 25,181

Capital Reserve - (Stock Option) 694 3,353

Provision for Doubtful Accounts 7,670 16,967

Provision for Tax, Labor and Civil Losses 3,169 635

Provision for Losses in Inventory (1,426) 1,284

Financial Charges 1,007 20,095

Income from Financial Investments (7,168) (4,132)

Losses with Other Long Term Asset Write offs (4,547) 58

Changes in Working Capital (30,774) 11,462

(Increase) Reduction in Accounts Receivable (ex-FIES) 2,775 763

(Increase) Reduction in Accounts Receivable FIES (26,699) 6,002

(Increase) Reduction in Inventories 1,600 4,416

(Increase) Reduction in Other Receivables (261) (9,847)

Increase (Reduction) in Suppliers (1,191) (8,916)

Increase (Reduction) in Advances to Clients 2,220 187

Increase (Reduction) in Other Payables (9,218) 18,857

Income Tax and Social Contribution (590) (1,554)

Capex - Recurring (11,521) (12,524)

Additions to Fixed Assets (8,053) (10,123)

Additions to Intangible Assets (3,468) (2,401)

Cash Flow from Operating Activities after Capex - Recurring (11,274) 123,258

Cash Flow from Operating Activities (ex-FIES) after Capex - Recurring 15,425 117,255

Capex - Special Projects - (12,069)

Asset acquisiton -

Browfields (12,069) 0 0

Cash Flow from Operating Activities after total Capex (11,274) 111,189 - -

(+) M&A Activities (11,232) (16,110)

Acquisition of New Units (21,254) (16,110) - -

(+) Cash Flow from Financing Activities 45,170 (7,922) - -

Treasury Stocks - 9,295

Loans and Financing (70,599) (12,981)

Payment of Interest (3,619) (915)

Income from Financial Investments 7,168 4,132

Redemption (investment) of securities (245,869) (1,382)

Net of Costs Capital Increase 359,662 -

Refis Payment (1,573) (6,071)

(=) Cash Flow from Non-Operating Activities 33,938 (24,032)

Total Cash Generation 22,664 87,157

Net Increase (Reduction) in Cash and Cash Equivalents

Cash and Cash Equivalents at the Start of the Period 16,847 231,426

Cash and Cash Equivalents at the End of the Period 39,511 318,583

Net Increase (Reduction) in Cash and Cash Equivalents 22,664 87,157

Date post:	30-Aug-2019
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