Afya Limited Class A Common Shares M&A announcement

Good morning, everyone. I think that you are all well. I am very happy to be here to talk about this agreement for the merger between YDUQS and Afya. We have been working on this for a long time. We gave indications. We believe that the market should consolidate even more. This merger really reflects our pathway, our strategies, our vision to companies that are incredibly complementary that can potentialize the mission of both companies. This agreement is still subject to the approval of the governance of both companies and market regulation agencies. We will talk about the terms of this agreement and how we can obtain all the benefits and impacts of this business. We are going to go over the main points. This material has been widely published. It is in our portal.

We are very briefly going to go over the main points and obviously afterwards, we are going to have our traditional Q&A session. Now starting on the first slide, we are going to highlight the main points of this deal. Starting on this slide, now we are creating Brazilian largest higher education platform with nationwide reach. More than BRL 9 billion annual revenue, 176 campuses in all 26 states, almost 6,000 medical seats, and access to more than 200,000 physicians. We have access to premium exposure. It is going to go from 32% to 52% in the combined company. The company still has very significant growth leverage, more than 45%, which is an upside for Ibmec as we have been talking to the market. The platform of medical specialization for both companies has really potentialized the companies.

Afya has a very well-established platform of continuing education, medical specialization. We are aware that we have great potential for growth, and we still have many capacities, and we have significant business synergies. Two companies that have a proven track record of using synergies. We have something between BRL 2 billion and BRL 2.2 billion of synergy and NPV net of Pillar 2, and these synergies with 80% captured within the first three years. All this capacity and this track record of the companies to capture value, and you are going to hear the details. We are very confident in terms of the possibility of capturing these results. The other thing is that this transaction provides a premium for each of shareholders.

In August, the last unaffected date, when we announced that we had ongoing negotiations, in addition to the 45% premium to VWAP, there is an extraordinary dividend of BRL 750 million between signing and closing. Additionally, we believe that this transaction will provide a potential ADTV that is significant, and we are going to give details further ahead. As to the anchor shareholder leadership from both companies. Both Advent, as a committed long-term anchor shareholder, complemented by leadership from both Afya and YDUQS, very much committed with the governance of the Novo Mercado, the New Market in Brazil. Now moving on to the next slide. Here you can see the impact of this combination. You can see YDUQS in 25 states, 113 campuses, 19 medical schools with a very strong set of markets combined with Afya, with 63 new campuses, 32 campuses of medicine.

This is a powerhouse. In medicine, we are going to have 50 campuses of medicine with very complementary brands, with very complementary geographical footprint, one helping the other therefore. Now, once again, about the consolidation, and once again, you can see the numbers and the data by all governance agencies. The potential value created by the new company, we get almost 1 million undergrad students, almost 6,000 medical school seats, total net revenue of almost BRL 9.5, and adjusted EBITDA of BRL 3.5. And an amazing free cash flow to equity. There is strong cash generators and combination of the two companies, and you can see almost BRL 1.2 billion in the last 12 months. And here you can see what we're going to have, and this is very relevant and significant considering the last 12 months.

This is a comparison with the rest of the market positions, Afya as the unarguable or undisputed leader in this segment. And something else important about this merger, that this increase of the concentration of the portfolio in premium products. We have been evolving over the last few years, and we've talked a lot about this. 46% of our EBITDA is exposed to premium medicine and Ibmec combining with Afya, with more than 88% of its revenue coming from premium services. In the combined company, we're going to have more than 66% of the EBITDA exposed to premium products in the business segment that is very profitable, stable, with very good macroeconomic indicators, and this is thereby creating huge growth potential according to the strategy that we have been adopting for a while already.

Now here you see that the new company and its size places it on a different level of comparison. EBITDA is above the main global peers comparatively. It has very significant numbers. And also that this comparison, the global peers is undeserved considering the new company's multiple avenues for growth, and I'm going to highlight one of the main factors. We've been talking about our expansion potential in the medical education and continuing education. We are very small still in this segment, so there is a natural trend of gaining share with a huge potential in this combination with Afya. There is a platform that is well-developed, combined with the YDUQS business platform, can really leverage the whole potential that's still underused.

We have a very wide-ranging portfolio in-house to have a history of execution for a lifetime coming from Afya that is very significant for the new company. And also with Ibmec, there is a scalable premium platform, very strong brand, very well-known, not just geographically, but also in terms of its platform and outside medicine. It has a clear avenue for growth and 145% year-on-year, and the segment has been validated by the Ministry of Education. As we said, this business generates value and synergy and all the numbers that we have mapped, it's very well structured in terms of value capture. Here, you can see mapped line by line the main drivers. Here, the bottom line of the NPV is almost BRL 2.2 billion. Very significant amount considering the current numbers of companies.

It does not consider any new revenue upside. In addition, it is net of the negative impact of Pillar 2. You know that the controller of the consolidated company and what is generated is subject to Pillar 2, but with a limited impact as we are going to show. Below, the analytics. Just to give you an idea, 2026, if applied, there would be an increase of 2.2 percentage points getting close to 5%. The benefit that we have that reduce the rate, the discount that we can give, go down and down along the time gradually until 2033, but even in the limit, getting to the final amount, the final value projected is between 7% and 9% as the terminal rate, going from 5% if we apply 2026.