Afya Limited
Consolidated financial statements
as of December 31, 2019 and 2018 and for the three years ended December 31, 2019, 2018 and 2017
F-1
Report of Independent Registered Public Accounting Firm
To the Shareholders and the Board of Directors of
Afya Limited
Opinion on the Financial Statements
We have audited the accompanying consolidated statements of financial position of Afya Limited (the Company) as of December 31, 2019 and 2018, the related consolidated statements of income and comprehensive income, changes in equity and cash flows for each of the three years in the period ended December 31, 2019, and the related notes (collectively referred to as the "consolidated financial statements"). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2019 and 2018, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2019, in conformity with International Financial Reporting Standards as issued by the International Accounting Standards Board - IASB.
Adoption of IFRS 16
As discussed in Note 2.4 to the consolidated financial statements, the Company changed its method for recognizing leases in 2019, due to the adoption of IFRS 16 - Leases using the modified retrospective method of adoption.
Basis for Opinion
These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
/s/ ERNST & YOUNG Auditores Independentes S.S.
We have served as the Company's auditor since 2016.
Belo Horizonte, Brazil
March 26, 2020
F-2
Afya Limited
Consolidated statements of financial position
As of December 31, 2019 and 2018
(In thousands of Brazilian reais)
Notes | 2019 | 2018 | |
Assets | |||
Current assets | |||
Cash and cash equivalents | 6 | 943,209 | 62,260 |
Restricted cash | 7 | 14,788 | - |
Trade receivables | 8 | 125,439 | 58,445 |
Inventories | 3,932 | 1,115 | |
Recoverable taxes | 6,485 | 2,265 | |
Derivatives | 13.1 | - | 556 |
Other assets | 17,912 | 8,859 | |
Total current assets | 1,111,765 | 133,500 | |
Non-current assets | |||
Restricted cash | 7 | 2,053 | 18,810 |
Trade receivables | 8 | 9,801 | 5,235 |
Related parties | 9 | - | 1,598 |
Derivatives | 13.1 | - | 663 |
Other assets | 17,267 | 10,380 | |
Property and equipment | 11 | 139,320 | 65,763 |
Investment in associate | 10 | 45,634 | - |
Right-of-use assets | 13.2.2 | 274,275 | - |
Intangible assets | 12 | 1,312,338 | 682,469 |
Total non-current assets | 1,800,688 | 784,918 | |
Total assets | 2,912,453 | 918,418 | |
Liabilities | |||
Current liabilities | |||
Trade payables | 17,628 | 8,104 | |
Loans and financing | 13.2.1 | 53,607 | 26,800 |
Derivatives | 13.2 | 757 | - |
Lease liabilities | 13.2.2 | 22,693 | - |
Accounts payable to selling shareholders | 13.2.3 | 131,883 | 88,868 |
Advances from customers | 36,860 | 13,737 | |
Labor and social obligations | 46,770 | 31,973 | |
Taxes payable | 19,442 | 6,468 | |
Income taxes payable | 3,213 | 282 | |
Dividends payable | - | 4,107 | |
Other liabilities | 376 | 1,993 | |
Total current liabilities | 333,229 | 182,332 | |
Non-current liabilities | |||
Loans and financing | 13.2.1 | 6,750 | 51,029 |
Lease liabilities | 13.2.2 | 261,822 | - |
Accounts payable to selling shareholders | 13.2.3 | 168,354 | 88,862 |
Taxes payable | 21,304 | 150 | |
Provision for legal proceedings | 23 | 5,269 | 3,465 |
Other liabilities | 1,999 | 2,226 | |
Total non-current liabilities | 465,498 | 145,732 | |
Total liabilities | 798,727 | 328,064 | |
Equity | |||
Share capital | 17 | 17 | 315,000 |
Additional paid-in capital | 1,931,047 | 125,014 | |
Share-based compensation reserve | 18,114 | 2,161 | |
Earnings reserves | 115,916 | 59,807 | |
Equity attributable to equity holders of the parent | 2,065,094 | 501,982 | |
Non-controlling interests | 48,632 | 88,372 | |
Total equity | 2,113,726 | 590,354 | |
Total liabilities and equity | 2,912,453 | 918,418 |
The accompanying notes are an integral part of the consolidated financial statements.
F-3
Afya Limited
Consolidated statements of income and comprehensive income
For the years ended December 31, 2019, 2018 and 2017
(In thousands of Brazilian reais, except earnings per share)
Notes | 2019 | 2018 | 2017 | |
Net revenue | 19 | 750,630 | 333,935 | 216,008 |
Cost of services | 20 | (308,853) | (168,052) | (124,065) |
Gross profit | 441,777 | 165,883 | 91,943 | |
General and administrative expenses | 20 | (239,120) | (70,034) | (45,355) |
Other income, net | 2,594 | 599 | 2,755 | |
Operating income | 205,251 | 96,448 | 49,343 | |
Finance income | 21 | 51,689 | 10,428 | 5,222 |
Finance expenses | 21 | (72,365) | (8,154) | (3,586) |
Finance result | (20,676) | 2,274 | 1,636 | |
Share of income of associate | 10 | 2,362 | - | - |
Income before income taxes | 186,937 | 98,722 | 50,979 | |
Income taxes expense | 22 | (14,175) | (3,988) | (2,500) |
Net income | 172,762 | 94,734 | 48,479 | |
Other comprehensive income | - | - | - | |
Total comprehensive income | 172,762 | 94,734 | 48,479 | |
Income attributable to | ||||
Equity holders of the parent | 153,916 | 86,353 | 45,393 | |
Non-controlling interests | 18,846 | 8,381 | 3,086 | |
172,762 | 94,734 | 48,479 | ||
Basic earnings per share | ||||
Per common share | 18 | 2.03 | 1.84 | 1.41 |
Diluted earnings per share | ||||
Per common share | 18 | 2.02 | 1.81 | 1.41 |
The accompanying notes are an integral part of the consolidated financial statements.
F-4
Afya Limited
Consolidated statements of changes in equity
For the years ended December 31, 2019, 2018 and 2017 (In thousands of Brazilian reais)
Equity attributable to equity holders of the parent | |||||||||
Additional | Share-based | Earnings reserves | Non- | ||||||
Retained | |||||||||
Share | paid-in | compensation | Legal | earnings | Retained | controlling | |||
capital | capital | reserve | reserve | reserve | earnings | Total | interests | Total equity | |
Balances at January 1, 2017 | 66,485 | (63,588) | - | 636 | 7,966 | - | 11,499 | 71 | 11,570 |
- | |||||||||
Net income | - | - | - | - | 45,393 | 45,393 | 3,086 | 48,479 | |
Total comprehensive income | - | - | - | - | - | 45,393 | 45,393 | 3,086 | 48,479 |
Legal reserve | - | - | - | 2,269 | - | (2,269) | - | - | - |
Minimum mandatory dividends | - | - | - | - | - | (10,781) | (10,781) | (2,506) | (13,287) |
Earnings retention | - | - | - | - | 32,343 | (32,343) | - | - | - |
Balances at December 31, 2017 | 66,485 | (63,588) | - | 2,905 | 40,309 | - | 46,111 | 651 | 46,762 |
Net income | - | - | - | - | - | 86,353 | 86,353 | 8,381 | 94,734 |
Total comprehensive income | - | - | - | - | - | 86,353 | 86,353 | 8,381 | 94,734 |
Capital increase with cash | 156,304 | - | - | - | - | - | 156,304 | - | 156,304 |
Capital increase with reserves | 80,541 | - | - | - | (40,312) | (40,229) | - | - | - |
Capital increase with contribution of IPTAN and IESVAP | 11,670 | 188,602 | - | - | - | - | 200,272 | - | 200,272 |
Dividends cancelled | - | - | - | - | - | 10,781 | 10,781 | - | 10,781 |
Share-based compensation | - | - | 2,161 | - | - | - | 2,161 | - | 2,161 |
Legal reserve | - | - | - | 4,318 | - | (4,318) | - | - | - |
Dividends declared to non-controlling interests | - | - | - | - | - | - | - | (5,845) | (5,845) |
Non controling interests arising on business combination | - | - | - | - | - | - | - | 85,185 | 85,185 |
Earnings retention | - | - | - | 52,587 | (52,587) | - | - | - | |
Balances at December 31, 2018 | 315,000 | 125,014 | 2,161 | 7,223 | 52,584 | - | 501,982 | 88,372 | 590,354 |
Net income | - | - | - | - | - | 153,916 | 153,916 | 18,846 | 172,762 |
Total comprehensive income | - | - | - | - | - | 153,916 | 153,916 | 18,846 | 172,762 |
Capital increase with cash | 150,000 | - | - | - | - | - | 150,000 | - | 150,000 |
Capital increase from shares contribution of shareholders | 48,768 | 36,358 | - | - | - | - | 85,126 | (44,774) | 40,352 |
Capital increase from the corporate reorganization | 122,062 | 137,051 | - | - | - | - | 259,113 | - | 259,113 |
Share-based compensation | 1 | 17,627 | 18,114 | - | - | - | 35,742 | - | 35,742 |
Allocation to additional paid-in capital | - | 33,001 | - | - | (33,001) | - | - | - | - |
Dividends declared | - | - | - | - | - | (38,000) | (38,000) | (13,812) | (51,812) |
Dividends cancelled | - | - | - | - | 4,107 | - | 4,107 | - | 4,107 |
Corporate reorganization | (635,830) | 668,904 | (2,161) | (7,223) | (23,690) | - | - | - | - |
Issuance of common shares in initial public offering | 16 | 992,762 | - | - | - | - | 992,778 | - | 992,778 |
Shares issuance cost | - | (79,670) | - | - | - | - | (79,670) | - | (79,670) |
Balances at December 31, 2019 | 17 | 1,931,047 | 18,114 | - | - | 115,916 | 2,065,094 | 48,632 | 2,113,726 |
The accompanying notes are an integral part of the consolidated financial statements.
F-5
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Afya Ltd. published this content on 02 June 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 02 June 2021 14:36:04 UTC.