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Financial assets and financial liabilities (Tables)
 12 Months Ended
Dec. 31, 2021
Schedule of financial assets

 

13.1Financial assets

 

Financial assets 2021 2020
At amortized cost    
Cash and cash equivalents 748,562 1,045,042
Restricted cash - 2,053
Trade receivables 405,793 309,944
Total 1,154,355 1,357,039
Current 1,126,913 1,347,359
Non-current 27,442 9,680
Schedule of financial liabilities

 

13.2Financial liabilities

 

Financial liabilities 2021 2020
At amortized cost    
Trade payables 59,098 35,743
Loans and financing 1,374,876 617,485
Lease liabilities 714,085 447,703
Accounts payable to selling shareholders 679,826 518,240
Notes payable 72,726 76,181
Advances from customers 114,585 63,839
Total 3,015,196 1,759,191
Current 581,685 467,643
Non-current 2,433,511 1,291,548
Schedule of loans and financing

 

Financial institution Currency Interest rate Maturity 2021 2020
Banco Itaú Unibanco S.A. (a) Brazilian real CDI + 1.62% p.y. 2023 510,972 504,365
Banco Votorantim (b) Brazilian real CDI + 1.65% p.y. 2021 - 101,785
BNDES (c) Brazilian real 10.03% p.y. 2024 - 471
FINEP (d) Brazilian real TJLP p.y. 2027 10,145 10,864
Softbank (f) Brazilian real 6.5% p.y. 2026 822,560 -
Banco Itaú Unibanco S.A. (e) Brazilian real CDI + 1.75% p.y. 2024 31,199 -
        1,374,876 617,485
Current       128,720 107,162
Non-current       1,246,156 510,323

 

(a)On October 1, 2020, Afya Brazil entered into a loan with Banco Itaú Unibanco S.A. in the amount of R$ 500,000 adjusted by the CDI rate plus an interest rate of 1.62% per year and is repayable in three installments in October 2022, April 2023 and October 2023.

 

(b)On July 3, 2020, Afya Brazil entered into a loan agreement with Banco Votorantim S.A. in the amount of R$ 100,000 adjusted by the CDI rate plus an interest rate of 1.65% per year and was repaid at maturity on July 5, 2021.

 

(c)On May 5, 2020, as a result of the acquisition of UniSL, the Company assumed loans agreements with BNDES which has an interest rate of 10.03% per year and maturity in 2024. This amount was prepaid in September 2021.

 

(d)On July 23, 2019, Medcel entered into a loan of R$ 16,153 with Financiadora de Estudos e Projetos (“FINEP”), a governmental agency focused on financing investments on R&D, which has an interest rate based on TJLP (Long term interest rate), and maturity in 2027. The first and second tranches of R$6,734 and R$4,130, respectively, were drawdown in October 2019 and December 2020, respectively, in order to develop the Medical web series and other digital content. There is no financial covenant related to this agreement. The total balance is guaranteed by a bank warranty.

 

(e)On October 28, 2020, UNIFIPmoc entered into a loan with Banco Itaú Unibanco S.A. in the amount of R$ 30,000. On June 30, 2021 this agreement was amended and is now adjusted by the CDI rate plus an interest rate of 1.75% per year and is repayable in three installments in July 2023, January 2024 and July 2024.

 

(f)On April 26, 2021, the Company issued and sold 150,000 shares of perpetual convertible preferred shares designated as Series A perpetual convertible preferred shares, with a par value of U.S.$0.00005 per share of the Company for US$150,000 thousands, equivalent to R$ 821,805 on the issuance date. The Series A perpetual convertible preferred shares is a class of equity security that ranks senior to the common shares with respect to dividend rights or rights upon liquidation.
Schedule of right-of-use assets and lease liabilities

 

Set out below are the carrying amounts of right-of-use assets and lease liabilities and the movements during the period

 

  Right-of-use assets Lease liabilities
As of January 1, 2020 274,275 284,515
Additions 64,743 64,743
Remeasurement 34,161 34,161
Business combinations 76,855 76,855
Depreciation expense (29,386) -
Interest expense - 44,458
Payments of lease liabilities - (55,455)
Disposals (1,574) (1,574)
As of December 31, 2020 419,074 447,703
Additions 62,689 62,689
Remeasurement 95,962 95,962
Business combinations 139,514 139,514
Depreciation expense (43,237) -
Interest expense - 67,212
Payments of lease liabilities - (87,751)
Disposals (10,316) (11,244)
As of December 31, 2021 663,686 714,085
     
As of December 31, 2020    
Current - 61,976
Non-current 419,074 385,727
As of December 31, 2021    
Current - 24,955
Non-current 663,686 689,130
Schedule of accounts payable to selling shareholders

 

  2021 2020
     
Acquisition of IESP (a) - 38,771
Acquisition of FASA (b) 41,581 70,356
Acquisition of IPEMED (c) 30,233 38,622
Acquisition of IPEC (d) - 28,307
Acquisition of UniRedentor (e) 85,506 97,773
Acquisition of UniSãoLucas (f) 42,672 53,386
Acquisition of FCMPB (g) 149,175 189,420
Acquisition of FESAR (h) - 1,569
Acquisition of MEDPHONE (i) - 36
Acquisition of Medicinae (j) 3,887 -
Acquisition of Medical Harbour (k) 6,801 -
Acquisition of Cliquefarma (l) 3,050 -
Acquisition of Shosp (m) 2,141 -
Acquisition of Unigranrio (n) 249,979 -
Acquisition of RXPRO (o) 10,245 -
Acquisition of Guaranhuns (p) 54,556 -
  679,826 518,240
Current 239,849 188,420
Non-current 439,977 329,820

 

  2021 2020 2019
       
Opening balance 518,240 300,237 177,730
Cash flows (192,681) (134,518) (92,688)
Acquisition of IPEC and Guaranhus 54,000 - 54,000
Interest 31,915 13,884 17,977
Installments on Business combinations 243,816 343,140 144,538
Contingent consideration on Business combinations 24,536 - -
Compensation of legal proceedings disbursement - (4,503) (1,320)
Closing balance 679,826 518,240 300,237

 

(a)On November 27, 2018, Afya Brazil acquired 80% of IESP and R$106,200 is payable in three equal installments of R$35,400, each adjusted by the CDI rate through the payment date. The remaining installment was paid in November 2021.

 

(b)On April 3, 2019, Afya Brazil acquired 90% of FASA and R$ 39,695 was paid in April 2020, R$ 29,770 was paid in April, 2021, and R$ 29,770 is payable in April 2022; each installment adjusted by the IPCA rate + 4.1% per year.

 

(c)On May 9, 2019, Afya Brazil acquired 100% of IPEMED and R$ 45,303 is payable in five equal installments of R$ 9,061, adjusted by the CDI rate, and due annually in February 2020, 2021, 2022, 2023 and 2024.

 

(d)On August 13, 2019, Afya Brazil acquired 100% of IPEC and R$54,000 is payable in two equal installments, adjusted by the CDI rate, and due annually at the end of the first and the second year from the transaction closing date.

 

(e)On January 31, 2020, Afya Brazil acquired 100% of UniRedentor and R$100,000 is payable in five equal installments from January 2021 through July 2024, adjusted by the CDI rate. The purchase consideration was adjusted by R$4,503 and such amount was deducted from the first installment paid in February 2021.

 

(f)On May 5, 2020, Afya Brazil acquired 100% of UniSL and R$ 60,456 is payable in three equal installments through May 2023, adjusted by the CDI rate. The purchase consideration was adjusted by R$7,816 and such amount was deducted from the first installment paid on May 5, 2021.

 

(g)On November 9, 2020, Afya Brazil acquired 100% of FCMPB and R$ 188,894 is payable in four installments through November 2024, adjusted by the CDI rate.

 

(h)On November 3, 2020, Afya Brazil acquired 100% of FESAR paid in cash and R$1,569 of price adjustment was paid on February 25, 2021.

 

(i)On November 4, 2020, Afya Brazil acquired 100% of MedPhone paid in cash and R$36 of price adjustment was paid on February 2, 2021.

 

(j)On March 25, 2021, Afya Brazil acquired 100% of Medicinae and an earn-out (“contingent consideration”) of up of R$ 4,400 is payable in connection with product development goals for 2021 and revenue achievements for 2022. The contingent consideration of R$3,887 is based on the present value of the obligation considering the facts and circumstances at the acquisition date, and no relevant impacts were identified by management from the acquisition date.

 

(k)On April 8, 2021, Afya Brazil acquired 100% of Medical Harbour and an earn-out (“contingent consideration”) of R$ 9,000 is payable in relation to product development goals for 2021 and 2022 and revenue achievements for 2023. The contingent consideration of R$6,801 is based on the present value of the obligation considering the facts and circumstances at the acquisition date, and no relevant impacts were identified by management from the acquisition date.

 

(l)On April 16, 2021, Afya Brazil acquired 100% of Cliquefarma and an earn-out (“contingent consideration”) of R$ 3,000, adjusted by the CDI rate, is payable in relation to product development. The contingent consideration of R$3,050 is based on the present value of the obligation considering the facts and circumstances at the acquisition date, and no relevant impacts were identified by management from the acquisition date.

 

(m)On May 13, 2021, Afya Brazil acquired 100% of Shosp and R$ 454 will be paid, and an earn-out (“contingent consideration”) of up to R$ 1,793 is payable in relation to product development. The contingent consideration of R$ 2,141 is based on the present value of the obligation considering the facts and circumstances at the acquisition date, and no relevant impacts were identified by management from the acquisition date.

 

(n)On August 4, 2021, Afya Brazil acquired 100% of Unigranrio. The adjusted aggregate purchase price is R$ 618,956 of which 60% was paid in cash on the transaction closing date, and 40% is payable in cash in four equal installments through 2022 to 2025, adjusted by the CDI rate.

 

(o)On October 01, 2021, Afya Brazil acquired 100% of RXPRO and an earn-out (“contingent consideration”) of up to R$ 21,000 is payable in relation to revenue achievements until 2024. The contingent consideration of R$ 10,245 is based on the present value of the obligation considering the facts and circumstances at the acquisition date, and no relevant impacts were identified by management from the acquisition date.

 

(p)On November 05, 2021, Afya Brazil concluded the acquisition of 100% of ITPAC Garanhuns and R$54,000 was paid in cash on the transaction closing date, and (ii) R$54,000 is payable in two equal installments, adjusted by the CDI rate, and due annually at the end of the first and the second year from the transaction closing date.
Set out below are the carrying amount of notes payable and the movements during the years ended December 31, 2021 and 2020

Set out below are the carrying amount of notes payable and the movements during the years ended December 31, 2021 and 2020:

 

  Notes payable
   
As of January 1, 2020 -
Business combinations 80,526
Payments (5,974)
Monetary indexation 1,629
As of December 31, 2020 76,181
   
As of January 1, 2021 76,181
Payments (11,068)
Monetary indexation 7,613
As of December 31, 2021 72,726
   
As of December 31, 2020  
Current liabilities 10,503
Non-current liabilities 65,678
   
As of December 31, 2021  
Current liabilities 14,478
Non-current liabilities 58,248
The table below is a comparison of the carrying amounts and fair values of the Company’s financial instruments, other than those carrying amounts that are reasonable approximation of fair values:

The table below is a comparison of the carrying amounts and fair values of the Company’s financial instruments, other than those carrying amounts that are reasonable approximation of fair values:

 

  2021   2020
  Carrying amount Fair value   Carrying amount Fair value
Financial assets        
Restricted cash - -   2,053 2,053
Trade receivables (non-current) 27,442 27,442   7,627 7,627
Total 27,442 27,442   9,680 9,680
           
Financial liabilities          
Loans and financing 1,374,876 1,387,136   617,485 637,723
Lease liabilities 714,085 714,085   447,703 447,703
Accounts payable to selling shareholders 679,826 679,826   518,240 518,240
Notes payable 72,726 72,726   76,181 76,181
Total 2,841,513 2,853,773   1,659,609 1,679,847
Schedule of sensitivity analysis effects on income statement

 

        Increase / decrease in basis points
  Balance as of December, 31, 2021 Index – % per year Base rate +75 -75  +150  -150
Cash equivalents 636,847 100.38% CDI 58,440 4,776 (4,776) 9,553 (9,553)
Loans and financing (510,972) CDI + 1,62% (55,032) (3,832) 3,832 (7,665) 7,665
Loans and financing (31,199) CDI + 1,75% (3,401) (234) 234 (468) 468
Loans and financing (10,145) TJLP (617) (76) 76 (152) 152
Accounts payable to selling shareholders (612,121) CDI (56,009) (4,591) 4,591 (9,182) 9,182
Accounts payable to selling shareholders (41,581) IPCA + 4,1% (1,708) (312) 312 (624) 624
Notes payable (72,726) IPCA (531) (545) 545 (1,091) 1,091
Schedule of currencies used in sensitivity analysis

 

The following table demonstrates the sensitivity in the Company’s income before income taxes of a 10% change in the U.S. dollar exchange rate (R$5.5799 to U.S. dollar 1.00) as of December 31, 2021, with all other variables held constant.

 

  Exposure +10% -10%
As of December 31, 2021      
Cash equivalents 23,228 2,323 (2,323)
       
The tables below summarize the maturity profile of the Company’s financial liabilities based on contractual undiscounted amounts:

The tables below summarize the maturity profile of the Company’s financial liabilities based on contractual undiscounted amounts:

 

As of December 31, 2021 Less than 1 year 1 to 3 years 3 to 5 years More than 5 years Total
Trade payables 59,098 - - - 59,098
Loans and financing 217,903 585,686 948,503 1,212 1,753,304
Lease liabilities 103,003 211,894 204,744 1,108,555 1,628,196
Accounts payable to selling shareholders 246,059 445,066 88,989 - 780,114
Notes payable 15,644 74,306 - - 89,950
Advances from customers 114,585 - - - 114,585
  756,292 1,316,952 1,242,236 1,109,767 4,425,247

 

As of December 31, 2020 Less than 1 year 1 to 3 years 3 to 5 years More than 5 years Total
Trade payables 35,743 - - - 35,743
Loans and financing 125,137 566,157 4,010 3,094 698,398
Lease liabilities 63,092 131,225 124,114 705,115 1,023,546
Accounts payable to selling shareholders 191,145 262,340 81,153 - 534,638
Notes payable 11,083 83,803 - - 94,886
Advances from customers 63,839 - - - 63,839
  490,039 1,043,525 209,277 708,209 2,451,050
Schedule of changes in liabilities arising from financing activities

 

13.5Changes in liabilities arising from financing activities

 

  January 1, 2021 Payments Additions * Interest Foreign exchange movement Business combinations Other December 31, 2021
Loans and financing 617,485 (158,076) 809,539 68,909 - 36,591 428 1,374,876
Lease liabilities 447,703 (87,751) 158,651 67,212 - 139,514 (11,244) 714,085
Dividends payable - (18,648) 18,648 - - - - -
Total 1,065,188 (264,475) 986,838 136,121 - 176,105 (10,816) 2,088,961

 

  January 1, 2020 Payments Additions Interest Foreign exchange movement Business combinations Other December 31, 2020
Loans and financing 60,357 (155,090) 605,041 10,031 21,279 75,815 52 617,485
Lease liabilities 284,515 (55,455) 98,904 44,458 - 76,855 (1,574) 447,703
Dividends payable - (12,984) 12,984 - - - - -
Total 344,872 (223,529) 716,929 54,489 21,279 152,670 (1,522) 1,065,188

 

  January 1, 2019 Payments Additions Interest Foreign exchange movement Business combinations Other December 31, 2019
Loans and financing 77,829 (75,093) 7,383 6,025 1,126 43,087 - 60,357
Lease liabilities 212,360 (39,779) 19,100 31,469 - 61,365 - 284,515
Dividends payable 4,107 (51,812) 51,812 - - - (4,107) -
Total 294,296 (166,684) 78,295 37,494 1,126 104,452 (4,107) 344,872

 

*The additions of loans and financing include proceeds from the SoftBank transaction of R$822,569, net of the transaction costs of R$13,030.