Good morning, ladies and gentlemen, and thank you for standing by. Welcome to the 4th Quarter earnings conference call of Copler E Ducasse. We would like to inform you that this event is being recorded and that all participants will be in listen only mode during the company's presentation. After the comments of Cognar, our guests will have a Q and A for analysts and investors. At that time, further instructions will be provided.
Should you need any help during the conference call, please press star to talk to the operator. We also have a live web cast with audio and slides that can be accessed in cognacostitichevitat ri.cogna.pr. The presentation will also be available for download from the website. The following presentation is stated in Brazilian Reais in accordance with Brazilian corporate law and generally accepted accounting principles, which now conform with international financial reporting standards, except where otherwise indicated. Before proceeding, let me mention that forward looking statements are based on the beliefs and assumptions of Cognar Management and on information currently available to the company.
They involve risks, uncertainties and assumptions because they relate to future events and therefore, depending on circumstances that may or may not occur in the future. Investors should understand that general economic conditions, industry conditions and other operating factors could also reflect the future results of the company and could cause results to differ materially from those expressed in such forward looking statements. Now I'll turn the conference over to Cognizant's CEO, Mr. Rodrigo Zavides, who will begin the presentation. Michalind, you may begin the conference.
Good morning, everyone, and thank you for participating in today's conference call to discuss the Q4 and the year 2019. With me today in this conference call are Bruno Giardino, our new Investor Relations Director Jean Luc Marquez, our CFO and Managing Director of our 4 business verticals, Bertrand Nader from Kraken, Paula De Salve, Slater, Paula De Salve, and Maria Viel Bastiat. Due to the severe situation caused by the pandemic of COVID-nineteen, we will dedicate the first part of today's presentation to comment on the effects of COVID-nineteen and our business and our actions to mitigate these effects. On Slide 4, we present the actions we've taken to protect our students and employees helped as well as to ensure the continuity of our services as defined by our strategy committee set up on March 9 specifically towards this end. First, we made a decision to migrate all corporate entities to home office so as to ensure they are safe and we keep online services for them through our structure.
We also provide health care services and psychological services online to our employees who may need these services. This is being offered by our occupational health and safety structure. Now on the post secondary segment, we suspended all along funded activities in our own and partner learning centers as of March 16 to avoid the propagation of coronavirus. And we suspended all on premise activities as of March 16. Since the renewal enrollment and renewal, this is operating more than beyond digital media.
Since January already had the online admission exam, which makes it easier to continue with our enrollment with the centers closed. Before the crisis, we made the decision to migrate on premises to digital platforms. So 100% of our 30 2,180 disciplines were migrated and now they're offered to 13,836 classes. So now classes can be synchronous or asynchronous when professors and teachers post their video classes or synchronize with live online activities. The teachers and professors can choose which model they will prefer.
We believe pre recorded solutions or asynchronous solutions are preferable for student phones because students can access academic contents from practically any Internet connection even if more limited. But for content where synchronicity is relevant, we also have a synchronous situation with live activities. 100% of all academic content were already available on virtual platform. Because of our academic model, KLS 2.0 based on flipped classrooms. So what were the materials that were already available?
Textbooks with 2 40 pages, web classes and additional content with video, summary, discussion forum, to be read. All of these contents are organized by our teachers and professors and the numbers are incredible. More than 400,000 learning objects, more than 300 pages of materials, video classes, exercises, lots of content available. We will see today the engagement of our students with these content, which is extremely important. And let me tell you the engagement is higher than it is for this quarter.
Now on k 12, we have a similar approach. All our own schools are closed. Decades of process, the decision is made by made by each school, but they can migrate on premise activities to our platform. In admission, we also have the digital school, which is a combination of 3 platforms, Lural, Luralnaestro and Google Hangout Suite. So all partner schools can offer digital educational services on digital media.
Since March 19, thousands of students are already using Sonos Digital School. They're using our own school and very successfully. The Digital School offered more than 400,000 marine launches. They accompanied epidemic material, with the appliances to the exercise of tests and many other functionalities. On the second platform, allows the live activities with teachers and students, ensuring a complete approach on digital media.
Pritagoras Bread, the CBA Digital Learning Platform makes the same functionalities available to partners since 20 18. Now our prep courses, IMO is providing their program online On Slide 5, let's look at student engagement in this initial phase as measured by our crisis committee. Beginning on the left, you can see the continued evaluation scores of our students until this is a gamified evaluation looking at our activities developed by students. So we have evaluation of until the 6th week of classes, that is March 23. As we compare that to the first half of twenty nineteen, the level of engagement has grown 13% of the academic engagement students.
As compared to the previous half, the increase in the employee's response, the student engagement and soliciting request. This indicator is important because we know there's a big correlation between staying in school and having a high level of engagement. In the middle point of the slide, we could see a pronounced increase in the number of students active, which is from 81% comparing before and after March 16 when on premise activities were suspended. And if students are truly migrating to the virtual environment. So all of our academic material, video classes, textbook, etcetera, has had an MPS score of 81% measured by 1,000,000 evaluations average rate 944 showing these materials have been well accepted by students.
Now slide 6. Let's look at some spontaneous statements of students and how happy they are about the actions we've taken. They post messages to colleagues on Facebook, they made compliments to our classes on Instagram and they congratulate teachers on WhatsApp or email, evidence that we are on the right track in the way we're mobilizing these materials and uploading these materials made available. On slide 7, we can see good numbers and current students evaluation. Our digital school as is the breadth of numbers, more than 4,000 schools, more than 41,000 classes, 53,000 teachers, 923,000 students, 16,000,000 activities until March 30 and the number is growing every day.
We have already set the webinars and we trained more than 40,000 teachers to use all the tools of the teachers of school. Cloudera, our app, our platform is the most advanced app that has the highest number of downloads and education in our home store and it ranks 3 ranked 3rd in all educational apps, which shows our strength. So we can also see very favorable evaluations of parents and teachers about the digital platform of our digital school. On Slide 8, another big concern about the uncertainties caused by COVID-nineteen, which is cash position and corporate debt. Naturally, we cannot predict the current fact that the timing of our follow on public offering was key to further strengthen our cash position.
February 11, we received BRL 2,600,000,000 adding to our cash position of the 4th quarter in addition to receivables from the National Tax Book Program. Our net debt to EBITDA ratio is now down at 1.9 times. That is below the company's ability to our debenture partners. In addition, on the right side of the chart, we can see the amortization of our debt is pretty comfortable. The next debt to 1st month will be only in August 2021.
Being conservative in the current situation, we decided for the first time not to take further lead However, in 2019, we had a payout of 68.6% higher than the minimum mandatory level. We still monitor the situation, the patient of our students. We continue to work on our collective committee and the market will be kept in Portugal. It is a difficult moment to reveal and we are 100% focused to get across in the best possible way. With the insight of this part of the presentation, I invite Bruno Chardin, our IR Officer, to present our financial highlights for the Q4 and the year of 2019.
Good morning to all. I would like to start by commenting that as of next quarter, we will be presenting the results broken down by the business verticals that we described in the Investor Day October 2019 study. From some chances, Sabiria and Boston, this will make it much easier to analyze the challenges and opportunities related to each of them. In Slide 11, we see that the net revenue of post secondary education dropped 14% in the year ago, therefore reflecting the decrease in the change in the student's gain profile. These effects were partly offset by the increase in revenues resulting from the 2019 student recruitment process in addition to the positive performance of the continued Education segment.
Growth profit retracted 20% with a decrease of 7.40 basis points in gross margin mainly due to the maturing of the 16,000,000 owned units and the impact coming from programs of engineering and health being given in late this semester. They are not costly. Finally, the operating results fell by 41% with a 14.6 percentage point drop in the operating margin mainly due to the additional provision for losses that was in place in the Q4. This effect was partly compensated for Vazalore, Vesto, General and Administrative expenses, thanks to the greater efficiency and slightly cost controls, in addition to the decrease in marketing expenses, which were brought forward to 3Q 'nineteen. In the next slide, we see pro form a number for that comparability.
For 4Q 2019, we moved the math related to the PMLD repurchase that we have considered in 3Q 2019. So we think the same seasonality pattern as in 2018. In addition for 4Q 2019, we included the TMD purchase proceeds that will be recognized in 2020, excluding the impact of reclassification carried out in this quarter with the reclassification we began to recognize as SolarCraft, CapEx amortization as a consequence of the impact affected the amortization line. We delivered net revenue, thanks to our new go to market implemented for the K-twelve. And also, we had a increase of 25% in annual after February 15, representing 25% as I said.
Now taking a look at the total slide. We delivered net revenue growth of 7 point 4%, and our operating results reached 270 basis points in the margin and thanks to the synergies we have seen in the period. Moving now to Slide 15, which is under consolidated performance similar to what we did with K-twelve. I will comment on the results of 2019 in the pro form a basis for better comparability. Looking at the bottom half of this slide, our annual consolidated revenue dropped 4% in 2019 due to the lower basis of higher education students, which ended up offsetting the growth in K-twelve net revenue.
However, EBITDA grew 4%. And in spite of all the pressures, we were able to maintain a healthy level. Finally, our adjusted net income registered a decrease of 33% with net margin of 4 70 basis points, I think higher indebted and higher depreciation amortization. Within I hand it over to our CFO General Market for his presentation. Thank you, Veronara, to Bruno.
Turning straight to Slide 17, I would like to discuss the decisions we took in relation to the provision for losses in higher education. The first point that I have to highlight is that our provisioning policy is based on the historical theme and also the outlook for the future. In the analysis of the historical series, we have 2 very important moments, the migration of our students to cost and systems and also the one off increase in work load adjustment or what we call PAMM. Cost prompted with a scenario with growing uncertainty in relation to economic recovery, we decided to increase provision for the next semester. What we have been doing in the last three quarters, so that everything is being provisioned for.
With the very uncertainty also related to the COVID-nineteen pandemic in relation to the ability to bring our students' health, it's very difficult to predict whether there will be an improvement in some areas. And that's why we had a complement of BRL 181 1,000,000. With this, the provisioning for this financial was up 17 percentage points, up 23.7 points in the out of pocket segment. It's important to highlight that in the annualized analysis, we were at 14.9%. This would be a reduction of 115 basis points in relation to the Q3, I think.
Moving on to the right side of the page, we had a reduction of 120 basis points, and then on comparison to support extraordinary positioning to account for deterioration related to judicial reorganization bookstores in the 4Q 'eighteen. And when you look at the 4Q 2019, we see also that the P and L, we also increased and it has lower provisioning. Now going to Slide 18, we're going to talk about the average term of receivables. For our profit, the average term of receivable is 41.0 million 15 days for Q 2019 of 11 days a year comparison which reflects the challenging macroeconomic scenario that put pressures on the dropout rate indicators. It's important to remind you that this number, 115 days, is pretty in comparison with the second quarter and Q3 of 2019.
As for the average Fiesta, there was a reduction of 22 days, reflecting the November receivable, we think the December. And finally, the average PP and PMT totaled 6 91 days in the quarter, up 2 0 8 days in the other comparison in the K-twelve. The average charge for total receivables was 39 days. This is above for Q 'eighteen. This is the postponement on the P and A National Tax Group Program receivables that were already accounted for in 1Q 2020.
Now on Slide 20, we will take a deeper look at CapEx, investment expansion and cash generation. In Slide 20, we will present CapEx evolution on the left side of the slide, and we can see that CapEx was BRL483 1,000,000, representing 6.9% of the net 100 in 2019, down 200 basis points of the total invested, 88% was channeled to the development of cost in the system, the extension and improvements in our units besides editorial CapEx. Now talking about investments. For expansion, they reached €195,000,000 in 2019. That is 2.8% of the net revenues, down 27% in comparison to 2018, which was the year in which we concentrated most of the expenses related to our organic growth.
For comparability purposes, on the right side of the slide, we presented operating cash generation analysis, including the PN23 receivables in 2018 as well as adding the receivables for PNLD that started being received in the beginning of 2020. In this analysis, our operating cash generation was BRL 634,000,000 in the year, up 30% vis a vis 2018 with an increase of cash of 26%, proving our focus on growing cash generation since 2019. And it's important also to mention that in the North reported analysis, our cash generation was very solid in the 4th quarter, BRL267,000,000 in short half of it, coming from the P and L of the receivables in the Q3 and also owing to the lower development in Propulsion to the previous semester, an effect that we have been signaling to you in recent months. Now moving on to Slide 21. Let's talk about our indebtedness.
We ended 4Q 'nineteen with total cash equivalent of BRL 843,000,000, an increase of 92% in the quarterly comparison, reflecting the lower operational disbursement and their P and L receivables. Besides that, we also received 1 of the UNYA self drilling installment and raised funds with the sale lease type of properties in the period. Those 2 non operating events were sufficient to neutralize the payment of interest on the debentures and the investments in extensions besides the payment of dividends in Q 2019. Our indebtedness, adding the debt obligations and civil command in short and long term, Before the BRL 7,200,000,000, it's important to state that this level doesn't take into account the capital increase of February 2020, which the company raised $2,600,000,000 reducing its leverage significantly including us in a very solid cash generation position. With this, I give it over to Rodrigo.
So we can see how we see the impact of corona bears in our business. Let's move on to Slide 23. Now looking at new developments in the first half of twenty twenty until March 16 when we decided 2% all on premise activities in our centers, we had already attained about 70% of our goal in terms of new enrollment. We continue with our enrollment efforts after closing this entrance using digital media including 1 entrance and online admission exams and enrollment. The admission exams have been online since January this year.
However, after March 16, as we closed our centers, we observed a slowdown in new enrollments after March 16. It is still early to assess the impact in new enrollments. There will be some impact, but the enrollment process continues until the end of April. Now on renewals, when we decided to close our centers, we had already delivered 80 percent of our target of renewals. As in previous years, this process was already digital.
Our feedback from students has been quite favorable. As I've shown earlier on, the students are engaged. They like the digital solutions we implemented and this is key to ensure a good performance and renewal. In the K-twelve segment, this is a more resilient segment to this crisis. So the acquisition of Somos was key to diversify our revenue stream.
Today, 26% of our revenue comes from this segment, not including the National Tax Cuts Program. Let me also emphasize our cash position in these final considerations. We continue to look at possible M and A opportunities. That's why we decided to conduct the follow on public offering next month. But until we have more clarity about the impact of COVID-nineteen, we will maintain our solid cash position.
We are already preparing a robust action plan to face the post COVID-nineteen scenario, including restructuring to optimize our operations, always based on our DNA of execution and efficiency. Thank you all very much for participating. We will now open the Q and A session. Let me tell you that all of us are quarantined, that is all of us are remote today. So we might have some delays between the question and the answer because of the physical distance.
Go ahead, I want to mention you all for being with us. And I now open the Q and A session. Thank you very much. Ladies and gentlemen, we will now initiate the question and answer session. Our first question is from Mr.
Samarao Abouc, BTG Pactual. Good afternoon, everyone. Good afternoon, Jamil, Rodrigo and other officers. I would like you to comment, please, on this migration of on campus students to the online platform. Could you tell us a little bit about this move which has seen about complaints, students asking for the tuition fees to be reduced?
Have you received any complaints of this kind in any of your brands? And also in relation to the PLT, do you have any indicators, even if prospective indicators that show a worsening of receivables for the future in relation to the provision for doubtful accounts. Do you have anything in that sense for March, for example. So I'm taking Rodrigo here. But we're going to get all the questions in the Q and A.
I will answer some of the questions, Robert. I will forward to the other officers and I'll call them via the conference call. So firstly, I would like to comment about tuition fee reduction rate. We had a few comments in that regard, mostly coming from K-twelve. But in our operations, we didn't see this yet.
And what's the main argument here? Because we are maintaining all the original costs from the On CapEx operation. We continue to pay the wages of our teachers and additionally we have more investments and expenses that will ensure the migration to online. So in addition to everything that we're already doing, we have this increase in infrastructure. And our clients, of course, our prices are based on a spreadsheet, a cost spreadsheet, and they are increasing rather than decreasing.
So that's why we cannot really accept any reduction in Now Well, in relation to the prospective indicated question, we don't see it happening because the social distancing went into effect after the payment date. So that's why we don't have any indicators or prospective indicators for now. What we have been observing prior to this new scenario is that while we had a complement of BRL 781,000,000, this was an adjustment relating to workload and also the effect of migration of students. And we have been observing on campus and online was really basically like a pie. But overall, one effect count to the other.
So we were counting on the improvements of 2020. Basically, just looking to the improvement in relation to contra payments that we have been observing since the second semester of 2019 in January February and also with the effect of that we don't have a business workload now, this, of course, was positive. And this trend of increasing the PDH and also with a shorter enrollment phase and then we have the social distancing in place. All of this is compensating for a very significant cost of $181,000,000 So the situation has been showing improvement before the social distancing. We saw improvements in timely payments.
But I still don't have more information about the future, what we can predict for this isolation scenario. Well, thank you very much, Jean Luc and Mr. Galindo. Our next question is from Goldman Sachs Businesses in Imancas. Good afternoon.
Thank you very much. I would like to go to the PPA question. I know it's very hard to predict the impact, but are you thinking of increasing housing available to students or extending the time line for payments to maintain your student base based on the previous comments that obviously from the side of the student, it's very likely that there will be a worsening in the means of payments, the possibility of payment. So do you predict an increase in the PDA line? And also another question, is there an impact of COVID-nineteen in the funds operation?
Well, Federico is here. I'll start answering the first question. And now for the second question, Marivid will answer. Hello, We will be creating new products that are suitable to the students and in a very organized way so that we don't see a worsening. So it could be a new financing model with discounts.
We're still trying to think of the best option. But we will really offer them to the students that have an impact because of COVID. For example, students who lost their jobs or who saw lost income. So we can say that we know, of course, there will be an increase in PDAs for 2020 because we want to preserve and support our students. But at the same time, we'll be doing this with intelligence, offering the benefits only to those students in need.
Now I'll hand it over to Bill so that he can answer about K-twelve. Thank you very much, Rodrigo. Thank you for the question. In relation to the synergies that will come from the synergies that comes in 2019, all of them were implemented as we have announced early in the year and based on our internal culture, the synergies are always considering the purchase for the following year. Now all synergies have been identified under part of the budget.
So I don't see in the current summer scenario that the synergies we have included in the budget will be left aside. They will continue to pursue them. So the synergies continue to be in line with the previous announcements. Now our next question comes from Marcelo Santos from JPMorgan. First, could you please compare the behavior of distance learning compared to the students who used to be on campus after the pandemic?
I mean, you showed that consolidated. Do you believe distance learning has an advantage or not? And the second question about provision for doubtful accounts. How comfortable do you feel about this level of provision? And do you have any more numbers that validate you?
Marcelo, thank you for your question. These two questions will be answered by our directors in CEP. So the difference in impact between distance learning maybe, I'd like to return the graph to repeat and the next one to Jean Luc, please. Hello, Marcia. Thank you for the question.
Now about new enrollments, Both segments, on campus and distance learning, already had a digital enrollment process. The admission example also online. But we can see that some of the tools are easier to understand for distance learning students, but the difference is very small due to our capacity to implement the tool also with our on campus students. We were very quick to provide these tools to our on campus students and teach them how to use them. The materials were already available only a few hours after the centers had to close and we maintain activities on the platform And our commercial team also uses this as an argument showing how our on campus students are learning to use the digital tools in our platforms.
Our goal is not to cause not to have any differences in terms of distance learning students and on campus students. And our commercial team is using this opportunity to show the advantages of our digital platforms. Actually, all of our on campus students already knew the tools of the platform. So they were used to doing some activity on the digital environment. Now on campus students have had a slightly bigger impact, but the impact was similar after March 2016 when we had all of our activities going virtual.
Thank you. Now Marcelo, thank you for the question. About PMT, the level is 50% PDA. We believe this is a comfortable this is an adequate level. We cannot yet mention impact of COVID.
The only thing about social distancing impacts is that the number of graduated students is more rapidly may see an impact, but we believe this will be a temporary impact. Thank you. Thank you. Our next question comes from Felicis de Beiro from UBS. Good morning, everyone.
Good afternoon. Thank you for taking my question. We'd like to have an idea of the impact. Now with COVID-nineteen, what do you believe is going to happen with the price of both segments on campus students and also potential for learning students. And what is your view for 2021 in terms of tuition fees?
Well, Finis, I did not understand your question. I could not really hear it. I just heard a few parts of your question. I will try and answer what I heard and then you tell me or you repeat the question please so that I can answer what I did not hear first time. You would like to know about organic growth and pricing now that we have the impact of COVID-nineteen.
So let me answer about this. Our organic expansion plan started in the last semester. And on the road show of the follow on public offering, we said we had no plans to open more on campus centers. The organic expansion was limited. So now we would have a combination of the 50 some centers that we already have.
They would grow, becoming a reference and the margins would grow because as we know, the newer, these centers, the more they consume margin and so they begin to generate margin. So we saw a positive impact. The plan, in fact, remains the same because our organic growth was already limited to these units we have. We usually have 2 investment ways. 1st, to ensure our units are up and running either in a smaller business or in the leased building.
And the second wave of investment is, after we tested the city, the market rate, we know there is a demand. We already know the size of the demand and the size of the real estate property. We will need when we usually build a new building and that's the second wave of investment. The only change that may happen is that we'll have 1 semester or 2 semesters where we will perhaps move from a smaller campus to a bigger campus. This year we had a reduction in expansion investment because after the first wave of Greenfield investment was completed and a good portion of the second wave had already been made.
So that's why we had a reduction in expansion investment. The only change that may happen, we believe in terms of expansion strategy is that we may take a longer time to move to bigger properties and we may have to make adjustments for the smaller buildings to continue to be adequate for our students. But these are minor changes. They don't impact the strategy. About pricing, it's too early to make pricing decisions for the next semester.
Meanwhile, we keep our prospects in terms of pricing for the next semester, but that will be defined early in the future when we have a clearer scenario of the COVID impact and we will be able to see whether there will be an impact on pricing. So far, we don't see any reason or any justification for any pricing reduction. Our cost was not reduced, so it doesn't really make any sense to reduce prices. We expect it to increase prices in the second semester. So far we keep the plan, but we will review that week after week depending on the impact of COVID-nineteen on the national scenario.
I'm sorry for my connection. That was not so good. Thank you. Our next question comes from Susana Sabu from Itau Bank. Good morning, everyone.
Thank you very much for taking our questions. We have 2 questions. I would like to know about the Vanta Pickup sales. Could this have an impact on the events of 2020? And will this repeat itself in 2021?
So in other words, when will the sales begin? Could you also elaborate on the views of online content by the on campus students and what's the range we should expect for the end of the year. Well, Mario Guil will answer the first question. And the second question, I'll answer to get a little bit better to Mario. Thank you, Susan, for your question.
By the way, I would like to answer the second question of Vinicius' question about Vasta that we ended up not responding. So all of our efforts to put the partner companies on the online school platform is, of course, based on the objective of helping them continue operating without any disruptions to the educational team. So up to now only some clients could use our digital course, but starting tomorrow, what we saw is that there is a long list of schools that are not our clients that wish to use Pudao. So we have started our commercial campaign this year in a different way. By making available put out to our prospect schools who might become partners next year.
So with this change scenario, of course, there was a big change. All of our commercial team is working from home to support schools. But at the same time, it opened up this huge opportunity of digital schools and we have seen a lot of demand coming from the top schools that are not part of Zoom, but we want to establish partnerships with them. So this is one of the points. I cannot really gauge if this is going to be better or worse than our expectations, but it's definitely a different scenario.
We also observed that there is demand coming from partner schools and new schools for county shift products Since children adolescents are spending a lot of time at home, we want to provide an option to parents. So we believe that this will create a very good incentive for cost sale. So I think that the outlook is bright for this year with support the change in procedures, but we are still feeling very optimistic. Here, Rodrigo Silva, please go ahead. Well, in relation to the sales cycle, what's happening in that sense?
Well, the ACV composition for the following year starts to be developed in March. This year, we started in February. That is 1.5 months before the previous year. So in February, there was no impact. We have agreements for next year.
But in March, we would have the natural rollout of the business CapEx. But as I said, it's unfolding in a very different way. By the way, just to add, tomorrow, we'll have our 1st commercial webinar in our history in which we will have all of our prospects clients participating in an online meeting. And interesting to say, we are completely sold out, no more seats available. Everybody is very interested.
And I think that the business way of working is very, positive. Well, here in Rodrigo, in the segment of K-twelve, schools need content for 2021. So regardless of the type of contract, whether digital or what we have in the schools, will need content and the current contracts for the following year. Now I'll now answer the second part of the question. On the on campus segment, I think you're talking about revolving around engagement of students and the use of digital solutions, right?
Okay. I have a few numbers to share with you, showing that engagement is very good. On campus, considering the students who used the environment, the number of academic so number of students that used the environment, there was growth of 60% in the number of accesses among on campus students and also a growth in single access. So this shows the migration that it shouldn't really adhere to the compactor at higher numbers and in the last semester, so they are more engaged. Use of exercises.
This is another very positive indicator of engagement of students. Of course, there are improvements to be made. There was a very significant increase in capacity and structure, but we are very happy with the results in the platform. I'm not seeing it perfect, but we have been able to meet the demands of our students. In grade 3, those are the indicators that show that engagement has increased substantially across on campus students.
If you have a follow-up question, just go ahead. Well, I just wanted to add some more information. Well, we were really quick. In just 24 hours, we were able to make the on campus content online, make it available online. And our teachers began recording their lessons at home using PowerPoint and other tools and video, using their own smartphone.
And also, we were able to quickly offer broadcast. So our on campus students are getting very satisfied in comparison to other students from other educational groups. So I think that the reaction was quick and the acceptance was very good as well. Thank you very much. Our next question is from Mr.
Leandro Basti, Citibank. Good afternoon, everyone. I would like to talk a little more about COVID-nineteen and its impact on K-twelve. I have two questions. In fact, first of all, do you see a risk of returns in relation to what has been contracted early in the year?
Could you make a few comments about it? Which would be the first question. And secondly, are you in this discussion or expecting a change in the P and L the cycle for this year? Well, Mario, you will answer the first question and the second question will be answered by Paul Celine, okay? Leandro, thank you very much for your question.
Well, returns is a process that takes place along the semester. So we don't see that the rate of returns will be above the numbers we have enough of 25%. And since now we have to release efforts for all students in classes, we are feeling much more confident about the number of students that are attending classes considering the number of children and distributing the communication we have received from SCORES, we don't expect returns to be higher than before. Federico, could you please answer about P and L D? Thank you.
Thank you, Leandro. And Rodrigo? Well, here we don't have any indication that things will be different from what's been done so far. Well, it's now under analysis by the government and probably by August that is within schedule. We'll be talking to the Ministry of Education in relation to the P and L and beyond health team changes.
So thank you very much for those answers. Our next question is from Mrs. Carla Casacocondo, Insider. Thank you. Thank you for answering my question.
Could you please tell us a little bit more about the investment? Could you give us a ballpark on the investments that were suspended? And also, could you give us a little more flavor on net debt over EBITDA? I'll hand it over to Jean Luc for him to answer the question. In relation to the investment plan Sorry about that.
In relation to the investment plan, we believe there will be a reduction along 2020. This was part of the guidance, but what I can say is that this is the full plan, especially in the area of expansion. Most of the investments have already been made since 2018. And also in current operations, we have implemented improvements. As for the leverage with the coming in after follow on plan, we now are at a loss of 1.9x.
So without considering any additional impact that we cannot foresee, this is the level we had expected for 2020 without considering any exceptional events or M and As for this year. Juan Rodrigo here to end in relation to investors. At the end of my presentation, I have mentioned that we are shaping up a very robust action plan for COVID with reduction of investments and also reduction of expenses. As we begin to understand the impact of COVID for our reenrollments and children recruitment rate, we'll take action to size the company or dimension the company in such a way that we'll continue to maintain the properties outlook. Of course, maybe the changes won't be needed, but if the scenario for asset group have to take stricter and more aggressive action, I think this is one of the characteristics of the company.
We're able to quickly adapt to new scenarios, whatever we are in the post COVID era. Thank you very much. If you have a question, please press star 1. Our next question comes from Mr. Rodrigo Gujesen Quijayo of Gericastou.
Hello, everyone. Thank you for taking my question. Good afternoon. My question is now with the let's go back to the macro scenario of post secondary education. The whole sector was under pressure.
Now how do you view I mean, let's try to forget COVID-nineteen a little bit, but what do you expect for 2020? Will there be a price war for distance learning? And what is the scenario you would expect? Well, I will ask Roberto Vallejo to answer his question. Hello, Rodrigo.
Thank you for the question. In this scenario of crisis for digital planning and also scenario, we are watching the market. We have discussions about this new regulation and it's now around about R150 per month. So that we try to avoid a price war. Less than doing less than doing 100 and 30 dollars that debt would not be adequate.
Now we believe there will be more competition on price. We look at prices in every market day. But as we look at pricing in detail using different tools, we actually make phone calls to try and understand the pricing in each marketplace. And we have been able to maintain our average ticket. So about the question, we don't we have not seen any difference in the price war that was already.
We do not see any difference in terms of price war. But if we see a more serious competition, we will have the right tools to overcome that situation. Our next question comes from Javier Martinez from Morgan Stanley. Hello. Good afternoon.
My question goes to Roberto still talking about pricing and beyond on campus business. I mean, looking at the model of the pricing tools that you use, I understand what you said that since you did not have any cost reduction, there will be no price reduction. I understand the concept, the philosophy. But now, I mean, if we have a simple reading, a simple benchmarking of your business and looking at pricing in the next few years, Clotrans has always performed above its peers in terms of trading. Now the prices are more similar.
I mean, earlier around the price was also similar, but then you had this very good pricing performance. And since 2016, you now have more crude and more market share. And you have this mix of out of pocket and paid and fee as students. But I'd like to understand your pricing position not in relation to cost but in relation to the competition. Is your pricing higher mean vis a vis the competition?
This is my question. Thank you, Javier, for your question. I will answer partially. The first thing about this is that for on campus students, we did not lose any market share. Looking at it, looking at each market flow, we do not move market share.
We lost market share in distance learning, but not revenue share. Let me remind you that what we want here is to maintain a high level of revenue because the cost we already have the cost and we have 450,000 students. So there is not a big cost change when we add more students. So additional revenue has a bigger impact on distance learning. But it's important also to note that we aligned our prices of distance learning to institute the market, about BRL160.
And we could see a big acceleration in the level of satisfaction, which proves that there is a high price sensitivity. So we can accelerate volume. But if you grow volume, it may even fit and so we have to make sure that the net impact will be positive. So it's not so obvious to reduce price to gain volume. So we conducted a few tests.
We could see a strong growth in the participation of students. I mean, until the beginning of the outbreak of COVID-nineteen. So it shows that price makes a difference. But I think it's important to make it really, very clear that in the distance learning, revenue has the biggest impact because having more students growing our market share is really important and we're working for that. So revenue share is the most important thing for us.
This year we did not have any losses. We keep it at 32%, 33%. If I may add, using your expression, I mean, like the company ready for distance learning, as soon as we had the regulation of distance learning, we knew there would be an increase in the number of distance learning centers and we needed a lot of discipline on pricing to avoid having a disorganization of prices. And this is what we did for 18 months. In 3 or 4 recruitment processes, we had a big discipline in prices trying to maintain our revenue share, implement we would lose market share.
But this is not a strategy that can remain forever. It had a goal which was for us to wait for the market to self discipline. Now we believe the market has self disciplined, so now we have a more balanced strategy between price and volume, which was particularly well until we had the COVID-nineteen outbreak. We don't know what the impact will be, but we're certain the strategy is right because of course there is an international growth impact. But before that, we had a growth in revenue and volume.
So we believe in this strategy that it's not going to be so visible now with the consequence Thank you very much. So in relation to the Pratential business, I'm not really sure. I think that in 2016, this was around 30%, but now it was close to 60%. So please correct me if I'm wrong. And now with the new regulation, if you make an adjustment to the level of capacity, it could go lower.
So there's a lot of capacity for more volume because the market is a market and we have a lot of idle capacity. One thing is to increase prices And now with the new regulation, this is maybe too low. This is my question. I'll start to answer, then Roberto will complete. So this discussion is more around on campus and here we talk more about the in relation to on campus, yes, there is an opportunity to increase the capacity, but there is limited potential in relation to our costs and expenses.
And this is based on the physical structure premiums because all of our costs come from classrooms and in classrooms I can, I don't know, put pay and sustain students? And what's going to tell me whether being efficient or not is the revenue being generated by this class. So there's no right or wrong strategy. What we try to find is the optimal point of revenue generation combined with volume and pricing. At every new semester, we make adjustments to strategy to get optimal results.
And for 2020 on On Campus, similar to DL, the numbers were going really well both in going and revenue on campus. But in the student recruitment revenue, this is a revenue that has been growing consistently for the last 3 semesters. So the strategy is driving revenue. We see that it's growing semester on semester. There was an increase 2 semesters ago now.
And with before COVID, we had 50% of the processes completed and was growing at an even steeper rate than in the past. So it's generating more revenue. But we still have room to grow. And I think that in relation to this low use, I think this is more an opportunity than anything else. We set up the structure at the time when there were other programs that are no longer in place and now we have room to continue growing our recruitment along these without longer investments.
I think this is being on broad line what is important to remark. Yes. No, unfortunately, I don't have anything to add. I think you're very complete, very thorough in your answer. Now I'll hand it over to Cosme for their final considerations.
Thank you all very much for participating in this conference call. Our Investor Relations officers will be available if you have any further questions. Good afternoon. Thank you all very much.