Abril Educação S.A. Pro Forma Information as of June 30, 2011

Transcription

1 Abril Educação S.A. Pro Forma Information as of June 30, 2011

2 ABRIL EDUCAÇÃO UNAUDITED CONSOLIDATED PRO FORMA RESULTS Abril Educação s unaudited consolidated pro forma financial information as of June 30, 2011 for the six month periods ended June 30, 2010 and 2011 reflect our consolidated financial information in order to record the effect of the acquisitions of Grupo Anglo (learning systems and preparatory courses for university admission and civil service entrance exams) and Colégio ph (own primary and secondary schools, excluding the ph preparatory courses for university admission exams). This financial information is for illustrative and informative purposes only and is not intended to represent or be an indicator of our financial situation or operating results if the acquisitions of Grupo Anglo and Colégio ph had taken place on the dates in question. Below are our comments on the main aspects of Abril Educação s consolidated pro forma results, comparing the first half of 2011 with the first half of Results In the first half of 2011, Abril Educação s consolidated net revenue, EBITDA and net income increased by 33%, 67% and 26%, respectively. Net revenue totaled R$308.8 million, 33% up on the same period last year. The R$76.8 million improvement underlined the organic growth of all the business lines through increases in the number of textbooks sold, the number of students and associated schools using the Company s learning systems, and the number of students enrolled in schools and preparatory courses. Their contributions to the revenue upturn were as follows: (i) Editora Ática and Editora Scipione (R$47.7 million), (ii) Grupo Anglo (R$14.2 million), (iii) SER (R$7.7 million), (iv) Colégio ph (R$6.4 million) and (v) ETB (R$0.9 million). 1

3 R$ mm Income Statement Abril Educação Pro Forma 1H11 1H10 % Chg. Net revenue 308,8 232,0 33% ( ) COGS (103,0) (92,8) 11% (=) Gross profit 205,8 139,2 48% Margin (%) 67% 60% 7 p.p ( ) Selling, general and administrative expenses (144,2) (113,0) 28% (=) Operating income 61,7 26,2 135% Margin (%) 20% 11% 9 p.p ( ) Financial result (36,6) (28,1) 30% (=) Income before Income and Social Contribution Taxes 25,1 (1,8) n/a Margin (%) 8% 1% 9 p.p ( ) Income and Social Contribution Taxes (17,7) 7,7 n/a (=) Net income 7,4 5,9 26% Margin (%) 2% 3% 1 p.p (=) Operating income 61,7 26,2 135% (+) Depreciation and amortization 15,0 15,7 n/a (+) Amortization of publishing investment 15,7 13,4 17% (=) EBITDA 92,4 55,4 67% Margin (%) 30% 24% 6 p.p (+) Non recurring items 3,3 3,0 8% Commissions / fees from the acquisition of Anglo/pH/ETB 3,3 0,0 n/a Non recurring commercial projects 0,0 3,0 n/a (=) Adjusted EBITDA 95,6 58,4 64% Margin (%) 31% 25% 6 p.p The cost of goods sold (COGS) moved up by 11%, less than period revenue growth, due to: Lower paper and printing costs thanks to more advantageous negotiations with local suppliers and gains in scale by Editora Ática and Editora Scipione, as well as SER; Lower paper costs due to Grupo Anglo taking advantage of synergies and the critical mass provided by Abril Educação s unified purchases; Taking advantage of PIS/Cofins tax credits in relation to the purchase of paper and printing and publishing services in Grupo Anglo, which was not done prior to the acquisition; Better production planning on the part of Editora Ática and Editora Scipione As a result, consolidated gross profit climbed by 48% over the first six months of 2010 to R$205.8 million, while the gross margin widened by 7 p.p. to 67%. All the business lines recorded an increase in their gross margins, as shown in the table below: 2

4 Gross Margin 1H11 1H10 pp Chg. Editora Ática and Editora Scipione 65% 54% 11 pp SER Learning System 47% 36% 11 pp Grupo Anglo 73% 58% 15 pp Colégio PH 67% 66% 1 pp SG&A expenses totaled R$144.2 million, 28% more than in the same period last year, also lagging net revenue growth, favorably impacted by: (i) reduced authors royalties related to Grupo Anglo s activities, and (ii) the dilution of fixed costs due to higher sales volume by Editora Ática and Editora Scipione, as well as SER; and unfavorably by: (i) the recognition of the granting of stock options to management, with no cash disbursement (R$7.8 million), and (ii) expenses associated with the new Abril Educação corporate center, established in June 2010 to run the holding company s various business units. The great majority of business lines recorded a reduction in their SG&A expenses as a percentage of net revenue, as shown below: SG&A Expenses / Net Revenue 1H11 1H10 pp Chg. Editora Ática and Editora Scipione 47% 54% 7 pp SER Learning System 43% 60% 17 pp Grupo Anglo 20% 27% 7 pp Colégio PH 36% 35% 1 pp As a result, the Company posted operating income of R$61.7 million, more than double the amount reported in the first half of The operating margin stood at 20%, up by 9 p.p. Net income was negatively impacted by the 1H11 net financial expense, which increased by R$8.5 million due to higher market interest rates. As a result of all the above, net income grew from R$5.9 million, in the first six months of 2010, to R$7.4 million. Operating cash flow measured by EBITDA adjusted for non recurring items (R$3.3 million) totaled R$95.6 million, a R$37.2 million improvement over the same period last year, while the adjusted EBITDA margin widened from 25% to 31% in the same period. 3

5 Operating Information Thanks to efforts on the sales and marketing fronts, all our business lines recorded growth, with a favorable impact on revenue. Publishers 1H11 1H10 % Chg. No. of books ('000) % Learning System No. of students ('000) 1H11 1H10 % Chg. SER % ANGLO % Learning System No. of schools ('000) 1H11 1H10 % Chg. SER % ANGLO % Own Schools and Preparatory Courses No. of students 1H11 1H10 % Chg. Anglo and Siga Pre university Course % Colégio ph (*) % (*) excluding pre university course 4

6 All values in thousands of reais Abril Abril Pro forma Educação Assets Educação (i) adjustments (pro forma) Current Cash and cash equivalents 192, ,440 Trade receivables 41,821-41,821 Inventories 195, ,068 Recoverable taxes 44,045-44,045 Dividends receivable - - Advances and prepaid expenses 7,854-7, , ,228 Non-current Loans and other credits with related parties - Recoverable taxes 4,092-4,092 Deferred income tax and social contribution - 13,005-13,005 Judicial deposits 4,314-4,314 Advances and prepaid expenses 1,527 1,527 Intangible assets 897, ,532 Property, plant and equipment 59,910-59, , ,380 Total assets 1,461,608-1,461,608 (i) This information derives from Abril Educação S.A. s audited consolidated historical financial statements as of June 30, 2011, in accordance with the IFRS. 5

7 All values in thousands of reais Abril Abril Pro forma Educação Liabilities Educação (i) adjustments (pro forma) Current Trade and other payables 110, ,209 Loans and financing 19,648-19,648 Taxes and contributions payable 3,700-3,700 Income tax and social contribution payable 12,519-12,519 Dividends payable Accounts payable for acquisition of - equity interest 85,176-85, , ,252 Non-current Trade and other payables Accounts payable for acquisition of equity interest 263, ,339 Loans and financing 359, ,493 Taxes and contributions payable 10,992-10,992 Provision for contingencies 13,273-13,273 Deferred income tax and social contribution - 5,149-5, , ,155 Shareholders Equity Share capital 370, ,420 Capital reserve 141, ,482 Recognized granted options 7,836 7,836 Profit reserves 51,554-51,554 Retained Earnings/Accumulated Losses 5,803-5,803 Total shareholders equity attributed to the owners of the parent company 577, ,095 Non-controlling interest Total liabilities and shareholders equity 1,461,608-1,461,608 (i) This information derives from Abril Educação S.A. s audited consolidated historical financial statements as of June 30, 2011, in accordance with the IFRS. 6

8 Pro forma Statement of Income (All values in thousands of reais) Six-month period ended on June 30, 2011 Abril Educação (i) Six-month period 6/30/2011 Colégio PH (ii) Three-month period 3/31/2011 Financial PPA Financial revenue expense from the Adjustment Abril Educação amortization(*) from the acquisition of 30-day pro adjustments acquisition of Colégio PH period forma of PH (A) Colégio PH (B) (B) April 6/30/2011 6/30/2011 6/30/2011 PH (E) 6/30/2011 Net Revenue from Sales 283,818 19,617 5, ,830 Cost of products and services (95,393) (5,400) (2,196) (102,989) Gross Profit 188,425 14, , ,841 Operating expenses Selling expenses (81,806) (758) (956) (793) (84,313) Administrative expenses (54,730) (5,160) (114) (1,098) (61,102) Other operating income/(expenses) 1,247 (19) ,246 Operating income 53,136 8,280 (1,070) - - 1,326 61,671 Financial income 14, (4,141) ,330 Financial expenses (45,093) (39) - - (1,741) (27) (46,900) Profit before income tax and social contribution 22,293 8,405 (1,070) (4,141) (1,741) 1,356 25,101 Income tax and social contribution (16,655) (2,778) 364 1, (623) (17,692) Net income for the period 5,638 5,627 (706) (2,733) (1,149) 733 7,408 Company s shareholders 5,803 5,627 (706) (2,733) (1,149) 733 7,574 Non-controlling interest (165) (165) (*) Purchase price allocation (PPA) refers to purchase price allocation adjustments. (i) This information derives from Abril Educação S.A. s audited consolidated historical financial statements for the six-month period ended June 30, 2011, in accordance with the IFRS. (ii) This information derives from the revised historical financial information of Colégio PH for the three-month period ended March 31, 2011, in accordance with the IFRS. 7

9 Pro forma Statement of Income (All values in thousands of reais) Six-month period ended on June 30, 2010 Abril Educação June 30, 2010 (iii) Anglo Half-year ended June 30, 2010 (iv ) Colégio PH Half-year ended June 30, 2010 (v ) PPA amortization adjustments of Anglo (C ) Financial expense from the acquisition of Anglo (D) PPA amortization adjustments of Colégio PH (A) Financial revenue/ expense fom the acquisition of ColégioPH (B) Abril Educação (pro forma) Net Revenue from Sales 122,198 76,394 33, ,019 Cost of products and services (57,751) (23,537) (11,495) (92,783) Gross Profit 64,447 52,857 21, ,235 Operating expenses Selling expenses (51,529) (14,043) (1,101) (8,935) - (1,435) - (77,043) Administrative expenses (16,665) (6,947) (10,700) (1,638) - (171) - (36,122) Other operating income/(expenses) (166) Operating income (3,914) 32,136 10,168 (10,573) - (1,606) - 26,211 Financial income 6,564 10, (4,767) 12,375 Financial expenses (5,886) (357) (145) - (31,874) - (2,005) (40,266) Income before income tax and social contribution (3,236) 42,105 10,275 (10,573) (31,874) (1,606) (6,772) (1,680) Income tax and social contribution 7,059 (14,219) (2,486) 3,595 10, ,302 7,634 Net income for the period 3,823 27,885 7,789 (6,978) (21,037) (1,060) (4,469) 5,954 Company s shareholders 3,823 28,398 7,789 (6,978) (21,037) (1,060) (4,469) 6,465 Non-controlling interest (512) (512) (iii) This information derived from Abril Educação S.A. s audited consolidated historical financial statements for the six-month period ended June 30, 2010, in accordance with the IFRS. (iv) This information derives from Anglo s revised historical financial information for the six-month period ended June 30, 2010, pursuant to BR GAAP, and no adjustments to the compliance with the IFRS were identified. (v) This information derives from Colégio PH s audited consolidated historical financial statements for the six-month period ended June 30, 2010, in accordance with the IFRS. 8

10 Pro forma Statement of Income (All values in thousands of reais) Three-month period ended June 30, 2011 Abril Educação Three-month period ended June 30, 2011 (vi ) PPA amortization (*) adjustments of Colégio PH (A) 6/30/2011 Financial revenue from the acquisition of PH (B) Financial expense from the acquisition of PH (B) Adjustment 30-day period April Abril Educação (pro forma) Net Revenue from Sales 80,011 5,395 85,406 Cost of products and services (35,378) (2,196) (37,574) Gross Profit 44,633-3,199 47,832 Operating expenses Selling expenses (33,795) (296) (793) (34,883) Administrative expenses (35,278) (29) (1,098) (36,404) Other operating income/(expenses) Operating income (23,498) (324) 1,326 (22,498) Financial income 6,077 - (1,035) ,099 Financial expenses (24,601) - - (435) (27) (25,063) Income before income tax and social contribution (42,022) (324) (1,035) (435) 1,356 (42,460) Income tax and social contribution 4, (623) 4,802 Net income for the period (37,207) (215) (683) (287) 773 (37,659) Company s shareholders (37,041) (215) (683) (287) 773 (37,493) Non-controlling interest (165) (165) (vi) This information derives from Abril Educação S.A. s audited consolidated historical financial statements for the three-month period ended March 31, 2010, in accordance with the IFRS. 9

11 Pro forma Statement of Income (All values in thousands of reais) Three-month period ended June 30, 2010 Abril Educação Three-month period ended June (vi) Anglo Three-month period ended June (vii ) Colégio PH Three-month period ended June (viii ) PPA amortization adjustments of Anglo (C) Financial Expense from the acquisition of Anglo (D ) PPA Amortization adjustments of Colégio PH (A) Financial revenues/ expenses from the acquisition of PH (B) Abril Educação (pro forma ) Net Revenue from Sales 16,821 34,106 15,039 65,966 Cost of products and services (21,210) (12,127) (6,511) (39,848) Gross Profit (4,390) 21,979 8, ,118 Operating expenses Selling expenses (20,362) (6,578) (228) (4,467) - (774) - (32,409) Administrative expenses (9,148) (3,204) (5,557) (819) - (86) - (18,813) Other operating income/(expenses) Operating income (33,858) 12,274 2,763 (5,286) - (859) - (24,967) Financial income 3,578 5, (2,383) 6,795 Financial expenses (2,757) 42 (30) - (15,937) - (1,002) (19,684) Income before income tax and social contribution (33,038) 17,788 2,862 (5,286) (15,937) (859) (3,386) (37,856) Income tax and social contribution 12,438 (2,022) (150) (1,797) 5, ,151 18,925 Net income for the period (20,600) 15,766 2,712 (3,489) (10,518) (567) (2,235) (18,931) Company s shareholders (20,600) 15,922 2,712 (3,489) (10,518) (567) (2,235) (18,775) Non-controlling interest (156) (156) (vi) This information derives from Abril Educação S.A. s audited consolidated historical financial statements for the three-month period ended March 31, 2010, in accordance with the IFRS. (vii) This information derives from Anglo s revised historical financial information for the six-month period ended March 31, 2010, pursuant to BR GAAP, and no adjustments to the compliance with the IFRS were identified. (viii) This information derives from the revised historical financial information of Colégio PH for the three-month period ended March 31, 2010, in accordance with the IFRS. 10

12 1 Basis for preparation of the Pro-forma Financial Statements (All values in thousands of reais) The unaudited pro-forma financial information presented derives from the historical financial statements of Abril Educação S.A. ( Abril Educação ), Simão e Gabriades Vestibulares Ltda. ( Grupo Anglo or Anglo ) and Sistemas P.H. de Ensino Ltda. ( Colégio PH ). The historical financial statements of Abril Educação and PH were prepared in accordance with the International Financing Reporting Standards ( IFRS ), and Anglo s historic financial statements were prepared in accordance with the former BR GAAP; however, we evaluated those financial statements and no adjustments to align them to the IFRS were deemed necessary. Therefore, the pro-forma financial information was prepared in a consistent and comparative manner, and all the historical financial information follows similar accounting criteria. The unaudited pro-forma financial statements were prepared so as to reflect: (a) The acquisition of 100% of the quotas representing Anglo s capital, as if it had taken place on January 1, 2010; (b) (c) The acquisition, through the subsidiary CAEP Central Abril de Educação e Participações Ltda., of 100% of Colégio PH s capital, as if it had taken place on March 31, 2011, for balance sheet purposes, and on January 1, 2010, for purposes of income for the fiscal year; The R$100,000 capital increase conducted at Abril Educação on July 27, 2010, and the capital contribution made on August 11, 2010 in the amount of R$226,274, R$85,314 of which was earmarked for capital increase, and the remaining R$140,960 was allocated to the capital reserve. From the cash inflow of R$326,274, the Company used R$200,000 to settle the first two installments of Anglo s acquisition. This unaudited pro-forma financial information should be read along with, is fully based on and derives from: (a) Abril Educação s historical revised financial statements, prepared in accordance with IFRS, for the six-month periods and quarters ended on June 30, 2011 and 2010; (b) Anglo s historical revised financial statements, prepared in accordance with the former BR GAAP, for the six-month periods and quarters ended on June 30, 2011 and 2010; and (c) PH s historical revised financial statements, prepared in accordance with the IFRS, for the six-month periods ended on June 30, 2011 and the sixmonth period and quarter ended on June 30, This unaudited pro-forma financial information is for illustrative purposes only and does not purport to represent the current consolidated operating results of Anglo and Colégio PH if they had not been acquired by Abril Educação on the dates in question, nor is it necessarily an indicator of Abril Educação s future consolidated results. Accordingly, the unaudited pro-forma financial information does not reflect, for instance (a) any synergy, operational efficiency and cost savings that may result from the acquisition of Anglo/Colégio PH; or (b) any possible benefits generated by the companies combined growth. 11

13 2 Acquisition process (a) Anglo acquisition On July 6, 2010, the Company, through its subsidiary Greentree Educacional S.A. ( Greentree Educacional ), acquired 100% of the quotas representing the capital stock of each of the companies that composed Grupo Anglo: Simão e Gabriades Vestibulares Ltda. ("Anglo Vestibulares"); Gráfica e Editora Anglo Ltda.; SIGA Educacional Ltda.; and Editora Anglo Ltda., the business of which focuses on the preparation for civil service entrance exams. On September 10, 2010, the Company became the owner of all the quotas of the companies that composed Grupo Anglo. However, as early as July 6, 2010, the date of execution of the purchase agreement, the Company acquired the control of the company s executive boards and made its first operational and financial decisions. As a result of the acquisition, the Company is expected to increase its presence in the education market, especially in the learning systems segment. Additionally, economies of scale are expected to lead to cost reduction. Goodwill of R$231,178 arising from the acquisition may be attributed to the future profitability and the economies of scale expected to be obtained from the Company's and Anglo's combined operations. Furthermore, there was an adjustment of R$425,006 to reflect the fair value of acquired identifiable intangible assets (including trademark, customer portfolios, textbook portfolios and non-compete clause) and of R$39,447 to the fair value of property, plant and equipment. A contingent liability of R$1,879 was recognized for any possible future challenges of tax procedures adopted by the acquired company in the past. The table below summarizes the consideration paid to Anglo's former owners and the values of assets acquired and liabilities assumed recognized on the acquisition date, as well as the fair value on the date of the Anglo acquisition. 12

14 Position on July 6, 2010 Carrying amounts Fair value adjustments Fair values Recognized amounts of identifiable assets acquired and liabilities assumed Cash and cash equivalents 22,178 22,178 Property, plant and equipment 9,464 39,447 48,911 Intangible assets customer portfolio 248, ,352 Intangible assets textbook portfolio 25,435 25,435 Intangible assets - non-compete clause 2,436 2,436 Intangible assets - trademark 1, , ,191 Trade receivables 10,819 10,819 Inventories 11,104 11,104 Other assets 10,279 10,279 Deferred income tax and social contribution assets 9, , ,934 Trade Payables (3,097 ) (3,097 ) Salaries and social charges (13,747 ) (13,747 ) Other liabilities (15,069 ) (15,069 ) Provision for contingencies (3,339 ) (3,339 ) Contingent liabilities (1,879 ) (1,879 ) Provision for income tax and social liabilities (15,981 ) (15,981 ) Deferred income tax and social contribution liabilities (157,275 ) (157,275 ) Total identifiable net assets 23, , ,252 Goodwill 231,178 Total purchase price 717,430 Amount payable in installments on acquisition 249,704 Amount paid in ,726 Cash acquired (22,178 ) Purchase price, net of cash acquired 445,548 Amount paid in ,726 Debentures issue (264,750 ) Amount paid cash 202,976 (b) PH acquisition On April 15, 2011, the Company, through its subsidiary CAEP Central Abril Educação e Participações Ltda., acquired 100% of the quotas representing the capital stock of each of the companies Curso P.H. Ltda. and Sistema P.H. de Ensino Ltda. ( Colégio PH ), companies that operate in the Brazilian education market, chiefly by means of preparatory courses for university admission exams and primary and secondary schools. Below are the details of the net assets acquired and the goodwill: 13

15 Purchase consideration Cash payment 160,500 Balance of purchase price 67,500 Total purchase consideration 228,000 Carrying amount of assets acquired (7,871 ) Preliminary goodwill 220,129 For purposes of preparing the pro-forma financial information, given its relevance, only the acquisition of the Sistema PH de Ensino Ltda. ( Colégio PH ) was considered. The purchase price paid for Colégio PH was R$171,000, R$120,375 of which was paid cash and R$50,625 was financed over a three-year period, with an interest rate of 100% of the Interbank Deposit Rate (CDI). 3 Pro-forma adjustments The unaudited pro-forma financial information was prepared to reflect the effects of the following transactions as if they had taken place: (a) On January 1, 2010 (i) (ii) The effect of the Anglo Acquisition on the fiscal year result, due to the recognition of both the surplus value of assets and liabilities at fair value and the financial expense resulting from the debt arising from the acquisition of Anglo s capital. The effect the Colégio PH acquisition on the fiscal year result, due to the recognition of both the surplus value of assets and liabilities at fair value and the financial impact of the amount paid cash, as well as the debt arising from the acquisition. (b) On January 1, 2011 (i) (ii) The effect of the Colégio PH acquisition on the fiscal year result, due to the recognition of both the surplus value of assets and liabilities at fair value and the financial impact of the amount paid, as well as the debt arising from the acquisition. The effect on the fiscal year result caused by the recognition of the result from 30 days of operations between April 1 and 30, which was not covered by Colégio PH s historical financial information and not included in Abril Educação's historical consolidated result. The unaudited pro-forma financial information is based on estimates, which we believe to be reasonable. This information included the following adjustments: (A) (i) Adjustment arising from the recognition of intangible assets identified in the allocation of the purchase price paid for Colégio PH. For purposes of this adjustment, we considered that there was no change in the sale price, and any variation was allocated as goodwill. This adjustment creates the following impacts: the expense from amortization of intangible assets increases the cost of sales by R$956 and R$1,435 and the administrative expenses by R$114 and R$171 for the six-month periods ended on June 30, 2011 and 2010, respectively, and increases the cost of sales by R$296 and R$774 and the administrative expenses by R$29 and R$86 for the quarters ended on June 30, 2011 and 2010, respectively; (B) The purchase price paid for Colégio PH is R$171,000, R$120,375 of which was paid cash and the 14

16 remaining R$50,625 generated a debt obligation to be paid in five years, with an interest rate of 100% of the CDI. The recognition of these transactions creates the following impacts: (i) (ii) (C) (i) (D) (E) (F) An increase in the interest expense referring to a R$50,625 debt. Financial expenses increased by R$1,742 and R$2,005 in the six-month periods ended on June 30, 2011 and 2010, respectively, and by R$435 and R$1,002 in the quarters ended on June 30, 2011 and 2010, respectively. A decrease in the interest income referring to the portion of the debt paid cash in the amount of R$120,375, considering that the average yield of the Company s investment portfolio is 100% of the CDI. Financial income decreased by R$4,141 and R$4,767 in the six-month periods ended on June 30, 2011 and 2010, respectively, and by R$1,035 and R$2.383 in the quarters ended on June 30, 2011 and 2010, respectively. Adjustment arising from the recognition of intangible assets identified in the allocation of the purchase price paid for Anglo. For purposes of this adjustment, we considered that there was no change in the sale price, and any variation was allocated as goodwill. This adjustment creates the following impacts: The expense from amortization and depreciation of assets increases the cost of sales by R$8,935 and the administrative expenses by R$1,638 for the six-month periods ended on June 30, 2010, and increases the cost of sales by R$4,467 and the administrative expenses by R$819 for the quarter ended on June 30, The purchase price paid for Anglo was R$717,430, R$202,976 of which was paid with funds obtained mostly from an increase in Abril Educação s capital. The remaining balance of R$515 million generated a debt with an interest rate of CDI + 2% p.a. The recognition of this debt creates an impact on interest expense. This increases financial expenses by R$31,874 for the six-month period ended June 30, 2010 and by R$15,937 for the quarter ended on June 30, Adjustment to reflect the 30 days of Colégio PH s operations between March 31, 2011 (the date of PH's historical financial information) and May 1, 2011 (the period as of which Colégio PH's results were added to Abril Educação's consolidated fiscal year result). Current and deferred income tax and social contribution are calculated based on tax rates of 34% on the pro-forma adjustments. * * * 15