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Ser Educacional Records an Improvement in its Operating Indicators and Adjusted EBITDA Reaches R$81.4 million in 3Q16

Year-to-date net income totals R$198.3 million and the net margin widens by 3.5 p.p.

Recife, November 4, 2016 - Ser Educacional S.A. (BM&FBOVESPA SEER3, Bloomberg SEER3:BZ and Reuters SEER3.SA) announces its results for the third quarter of 2016 (3Q16). All information is presented in accordance with international financial reporting standards (IFRS) and consolidated in Brazilian reais (R$). All comparisons refer to the third quarter of 2015, unless otherwise indicated.

HIGHLIGHTS

Undergraduate intake increased by 15.2% over 3Q15 to 18,400 new students, versus 16,000 in the same period last year. The distance learning segment was the undoubted highlight, with growth of 127.2%, having enrolled 3,200 students, versus 1,400 in 3Q15. The on-campus undergraduate segment recorded an upturn of 4.2% with intake of 15,200 students.

Net revenue totaled R$273.3 million, 13.3% up on 3Q15, due to the 5.2% increase in the student base, the pass through of inflation to prices, and the higher average ticket of the new courses approved during the period, especially in the health, engineering and law segments, as well as the improved enrollment mix in units located in areas with greater brand recognition.

Adjusted EBITDA came to R$81.4 million, 32.5% higher than in 3Q15. The adjusted EBITDA margin stood at 29.8%, versus 25.5% in the same period last year, chiefly due to the Company’s organic growth and operating efficiency gains as a result of the projects to increase efficiency, and synergies from the acquisitions of UNG and UNAMA.

Net income came to R$48.6 million, 101.3% more than the R$24.2 million recorded in 3Q15, thanks to the results of the summer and winter intake processes in 2016, the operating efficiency projects, and the improved financial result due to the higher average cash position.

Operating cash generation amounted to R$148.3 million, 131.7% up on the R$64.0 million posted in 3Q15, while year-to-date cash generation totaled R$205.2 million, 142.5% more than the R$84.6 million reported in 9M15. The improvement was due to the combined effect of recurring cash flow from paying students and net inflow of R$166 million related to amounts due from FIES for 1H16 and the first installment of 2015 debt.

Grupo Ser Educacional was elected the country’s best education company and received the Corporate Governance award from the newspaper O Estado de S. Paulo in association with the Management Institute Foundation (FIA). Created with the aim of electing Brazil’s most efficient companies, the ranking assesses the economic performance and best management practices of around 1,500 companies in 22 sectors.

UNAMA was elected the Best Private University in the North of Brazil by the Guia do Estudante 2016, an Editora Abril publication that has been assessing Brazilian universities and undergraduate courses for 26 years, employing one of the country’s most respected post-secondary education evaluation methodologies. This represents further recognition of UNAMA’s academic quality and that of the Ser Educacional group as a whole, which has invested substantially in the institution’s teaching quality, exemplified by the introduction of the comprehensive written examination, the new curriculum matrix, investments in and reorganization of the stricto sensu projects (master’s and doctoral) and campus reforms. The Best Universities Ranking Award has existed for 12 years and the assessment also identifies the University of the Year (public and private) and the Best Institutions (with the highest scores in eight spheres of knowledge). In order to participate, the institutions must submit at least five courses for evaluation. In the 2016 edition, 595 institutions competed throughout Brazil.

In August, the Mauricio de Nassau in Maceió, in Alagoas state was accredited as a University Center by the Ministry of Education (MEC), thereby expanding the institution’s recognition by society and the local job market and allowing it to adopt the UNINASSAU brand, the same one used in Recife. The UNINASSAU brand is synonymous with transformation through quality education and privileged and well-located infrastructure to Maceió. Accreditation also gives the institution autonomy to launch new courses and units without the need for prior MEC approval.

The MEC also accredited the Faculdade Joaquim Nabuco in Jaboatão dos Guararapes, which will begin operations in the first half of 2017 and is part of the Company’s organic growth strategy, which is designed to expand its activities in cities with high economic growth potential.

The Company launched the UNIVERITAS brand to operate in the South, Southeast and Midwest of Brazil, representing the Faculdade Universus Veritas and the Centro Universitário Universus Veritas which will be accredited in these regions. UNIVERITAS will be part of the Company’s long-term strategy of becoming the dominant player in the North and Northeast and a relevant one in Brazil’s other regions.

In October, Ser Educacional announced the launch of its operations in Belo Horizonte, the capital of Minas Gerais state, through the signature of a Non-Onerous Assignment Agreement for the Maintenance of Faculdade São Camilo (FASC), which will now be known as Faculdade Universus Veritas - UNIVERITAS. The Group’s new unit, which currently offers Radiology and Business Administration programs only, currently has more than 30 courses in the process of accreditation in order to complete its portfolio and gradually increase its presence in the city. This is a long-term project which, in addition to building a student base in the city, will help construct the UNIVERITAS brand in the South, Southeast and Midwest regions.

A total of 71 new courses were approved in 3Q16, giving a total of 1,062 in the first nine months. The highlight was the state of Pará, which obtained authorization for 12 new courses, four of which in FIT (Faculdades Integradas do Tapajós), seven in UNAMA (Universidade da Amazônia) and one in Maurício de Nassau in Belém, including Nursing, Nutrition, Physical Education, and Electrical and Mechanical Engineering. Through these brands, Ser Educacional already has a portfolio of more than 135 courses, 35 of which approved within the last 12 months.

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