Good morning, ladies and gentlemen, and thank you for waiting. At this time, we would like to welcome everyone to Kratos Education 1st Quarter 2018 Earnings Conference Call. We would like to inform you that this event is being recorded and all participants will be in listen only mode during the company's presentation. After the company's remarks are completed, there will be a question and answer session. At that time, further instructions will be given.
Also, today's live webcast, both audio and slide show, may be accessed through Quaro Educational Investor Relations website, www. Tratn.com.brir by clicking on the banner 1Q 'eighteen webcast. The following presentation is also available to download on the company's website. The following information is available in Brazilian in accordance with Brazilian corporate law and generally accepted accounting principles, BR GAAP, which now conform with International Financial Reporting Standards, IFRS, except where otherwise indicated. Before proceeding, let me mention that forward looking statements are based on the beliefs and assumptions of cost of management and on information currently available to the company.
They involve risks, uncertainties and assumptions because they relate to future events and therefore depends on circumstances that may or may not occur in the future. Investors should understand that general economic conditions, industry conditions and other operation factors could also affect the future results of company and could cause results to differ materially from those expressed in such forward looking statements. Now, I will turn the conference over to Mr. Rato, CEO Mr. Rodrigo Galindo, who will begin the presentation.
Mr. Galindo, you may begin your conference.
Good morning, everyone, and welcome to the earnings conference call of Cotonou Educational for the Q1 of 2018. With me today are our IRO, Carlos Lazar and our CFO, Jamil Buang. This presentation will cover our operation and financial results for the Q1 of 2018, which show how Croton continued to deliver solid results while implementing a good boost for Get it Growth products, with the first deliveries of these products already being seen. As you know, 2018 should be another challenging year for the industry as a whole, given a combination of factors. 1st, unemployment remain tight.
2nd, we registered a high number of graduations on Fieri students, which were admitted in 2013 2014 and classes are graduating now and third, a more competitive scenario. However, despite all of these challenges, we are very confident in Croppant's capacity to continue generating sustainable results. The results for the Q1 and the guidance that we will provide and will be giving later today later that period. And most importantly, we are delivering these results while significantly improving on the quality of education offered with a stronger focus in student success and implementing a deep digital transformation. And at the same time, we are laying a solid foundation for that growth.
I will now hand the presentation over to our IRO, Carlos Lazar, who will analyze our operational and financial results. Carlos? Thank you, Rodrigo. So let's start the implementation of Slide 4 with the main operational highlights of the quarter. And starting on the left hand side of the slide, you can see the results of our student enrollment and the enrollment process for the 1st semester of the year with very good results in both the on campus and the concurring segments.
We included enrollment in both segments even with the headwinds that Rodrigo just mentioned. The more challenging competitive scenario, the high end points in the market and the significant reduction in the sales volume. Despite less than 700 students enrolled in FIES, we were able to grow our total enrollments without pressuring our average ticket in the period. This reinforces our company's resilience and the capacity to deliver a consistent and sustainable result. We were also able to achieve this because we have a fair and clear value proposition that is recognized by our students.
The academic quality with regionally strong brands, commercial efficiency and solutions that support students, such as our employability channel called Connecta, which continues to demonstrate its role as an important competitive advantage. In all, we enrolled 323,000 new undergraduate students, up by 3.4% from a year ago, closing the quarter with a little bit less than 1,000,000 undergraduate students, with an increase nearly to 14% compared to the previous quarter and a decrease of only 1.6% year over year despite a twelve percent growth in evaluations during the period. In the Ontario segment, new enrollment totaled 116,000 students, up 4.2% year over year, reflecting the continued efforts to improve the quality of the education we offer as well as the portfolio of programs, which is always aligned with the market demand. Another factor supporting this growth were the 10 new units opened in this semester, which included 1,200 new students approximately, beating even our initial estimate for these units. And all the units here demonstrated the viability and the demand that just to fight the formation of prices, which also indicates that the process to implement the greenfield project was very well structured.
This process involved several factors such as selecting the ceiling, identifying the best location for the campus, an intense training program for the teams and also the decision of the best initial programs portfolio, preparing the sales team and finally, implementing systems and process of the new units. This entire effort is what effectively ensure the success of the opening of the Banco Greenfields in the 1st semester of this year. And I should remind that the opening of new units is just the beginning because in the next semester, we're going to be adding 20 more units to and then next year, I'm going to be showing 38 new units. So it's going to be fully started by the end of next year, more than 100 and 80 units. Even after excluding the figures related to the expansion products this year, the On Campus segment continued to be positive growing 3.1%.
As a new enrollment in the Q3 of last year, one of the main highlights was the behavior of the student paying out of pocket, which grew 24% to 76,000 students. This result is even more notable considering that we maintain the same pricing policy with trends similar to previous processes, seeking to preserve profitability in the segment. Meanwhile, the PEC program accounted for 21% of the new enrollments in the Oncannon segment, which shares continued to be present in the decline, with a decline in share accounting for only 2% of the new enrollments in the segment. After adding the 200 and almost 300,000 new enrollments in the On campus segment, The student base ended in the quarter at 406,000, down 4% year over year, which reflects basically the high number of evaluations given the valuation of the prices admitted in the process of 2013 2014 and partially offset by the improvement in the dropout rates as we showed just in that slide. Turning now to the different credit segments.
The new enrollment also recorded a very solid performance, especially given the more competitive scenario following the new regulatory framework. The second enrolled at 207,000 new students with an increase of 3% compared to the same period of 707. The new distance learning centers contributed to by enrolling approximately 10,000 students. And if we exclude the impact, we have almost a 3% contraction in enrollments. This is a very satisfactory result in our view because it shows that Croppin is very ready to face new competitive dynamics in the segment, supported by a highly effective platform, which consists in the quality indicators, highly dedicated partners, the efficiency of very high level technology and content and a rigorous control of our portfolio and offers.
Here, I should mention also that once again the importance of our premium business volume improvements, which not only expanded rest of the market, but also strengthened our competitive advantage. This semester, 10% of new students enrolled in this premium programs, an increase of 400 basis points compared to the last week of growing sales. The 100% online programs were also represented this accounting for 23% of the new students, in line with the last process. Finally, enrollment in the DL segment remained quarterly stable. So we could close the quarter with 552,000 students, an increase of 1% year over year.
So generally speaking, our expectation is very positive considering this scenario. And turning to the middle of this slide, we're very pleased to report a strong improvement in dropouts in both segments. In the Oncanto segment, the dropout rate stood at 11.2%, down even in relation to the Q1 starting 2015. And in the Distance Learning segment, the dropouts stood at 13%, also decreasing nearly 200 basis points from a year ago. This improvement directly reflects the expansion and consolidation of our initiatives under the retention program.
2 years ago, we announced the launch of this program and made it clear that it would generate results only in the middle of the return. First, we implemented the pilot product. And only after we saw a subsequent level of results, we moved to a rollout phase. This quarter, we have already begun to observe a very concrete results in the reduction of dropouts. This call itself includes an extension team at all units and also models for dropouts that try to understand better the profile of our students to identify an academic capability of dropping out in order to treat the needs causes before the dropout deal occurs.
The success of these initiatives become even clear when we consider the important change in the student base profile in both segments, with fewer CLL students in the end campus and also more online students in the digital learning. There are still several opportunities in our view to be capturing the student retention study, and we are working very, very hard to capture them. Now, on the last part of this slide, the right hand, you can see the evolution of the average ticket for the post secondary education in the period. And in the on counter segments, the average ticket increased by 2.4%, which is explained by the improvement in the mix of products with a greater share of health and engineering courses and also by the annual tuition increase. The average ticket increased despite the seasonal effects of Carulli, which has a faster new enrollment and new enrollment target than other Spanish students, impacting the average ticket in the 1st and third quarters of the year.
This means that the trend in Saudi Arabia should improve further in the Q2. And in our view, this is a very successful result since it demonstrates the company's capacity to preserve credit relations and maintain its consistency for some policy despite the reduced offer of PS and also the higher competition. In this case, the average ticket increased 1.4%, which is also very positive given the concern due to the new competition environment. Factors that contributed for this result was the annual increase and also the higher share of 100 percent to our data programs and also different learning programs as well. We managed to grow the other ticket despite the 100% student just for acting what I just said.
So, and here, we also see the same effect from the accelerated course of pro uni students, which also can benefit the trend in the 2nd period of the semester. To close the first section, I just want to say that the performance in the student enrollment and dropouts and also in the other tickets are very effectively and shows that we are delivering again a very consistent performance in these results and that we provided the capability to deliver again a very solid year in 2018 as we will provide some more details by the end of this presentation with the guidance. Let's turn now to slide 6, where I want to talk about the main lines of our consolidated results for the Q1 2018 and talking about more in the financial area. As part of our constant efforts to ensure the transparency and comparability of our results, here we are presenting 2 perspectives consolidated board. The first one currently excludes the results of the assets sold during 2017 and as you are doing even in the previous quarters.
And the second perspective is, it's true, not also that, but also the impact from the new on campus units since that requires a series of costs and expenses without the necessary corresponding revenues in the same proportion since they are just in the start of their maturation cycle. Bear in mind that the behavior is totally expected and that the initial reports of the student recruiting process of these units boost our confidence regarding our organic growth plan. So starting with the consolidated restructuring, in the top of the slide, Cosmo delivered a net revenue of almost BRL1.4 billion in the Q1. So it's stable, benefiting from the new enrollment and re enrollment process in the on campus and distance learning studies and from the initial results of the recently opened greenfield products. These effects were partially offset by lower net revenue on the K-twelve business given to the higher anticipation of sales in the previous quarter.
Now in the middle of the right, the adjusted EBITDA was R650 million with a margin of 45.1%, which represents an addition of 2.1 percent and 160 basis points, respectively, mainly due to the costs associated with our organic work plan. As we already noted, this is a short term trend since the beginning is premature as I did comment before. On the right side of the slide, you can see the adjusted net income in the quarter was BRL439 million. And here, the margin was 39.5 percent, down 5.8 percent and 2 60 basis points from the same period last year due to the same reason I already mentioned and also because of the lower financial results due to the lower interest rates in the group and the higher depreciation amounts due to the investments in content prediction and technology that we put in place over the last year or so. At the bottom of this slide, we can go to the other scenario when we also have the net revenue coming practically stable in relation to the same quarter of last year, which we believe is a very good result bearing the amount of the high number of valuation and PICs.
And just to quantify a little bit more than the impact, I mean, our customer base runs by 32%. So, it's a great result that we can achieve. The results also impact the level of the EBITDA. And here, we were able to keep margins structurally stable over the year. So this is, I would say, the highlight is the highlight of this one.
And lastly, the adjusted net income ex revenues was BRL555 million with a margin of 14.8 percent, basically with the same trend extended previously. Turning to slide 7. You can see the main lines of the results, 5 segments in the first one. And starting with the comments of the Oncenote SCORC SEC, the net revenue grew 0.5%, reflecting mainly the solid results of our student recruiting process, as we commented before. And we saw highlights of the new enrollment of this unit paying out of profits and the contribution of the new units opening this semester.
Net revenue growth was also I'm sorry, net revenue growth was also driven by a higher average ticket, which reflects the improvement of our proven mix and the annual tuition increase. This quarter, we recorded declines in gross profit and margin and the gross margin, which mainly reflects the increase in cost is required to support the organic expansion plan. That and the lower also reversal of contingencies. Note that these initial impacts are required to enable us to deliver higher growth in the middle term as we come up in the last Investor Day event. It's also important to remember all the efficiency initiatives we continue to implement, which should mitigate some of these impacts, which will include the rollout of the operational research system together with our academic model and the higher penetration of digital content plus the strategic sourcing product that is currently in the Wave 5 among other initiatives.
Let's move now to Q1, the year end term grew 0.5%, driven by the student enrollments and the enrollments, which were supported by the higher number of U. S. Centers and by the expansion of the present portfolio, especially the deal players. I already mentioned increase in the average ticket of 1.4% also contributed for these results. DIAL was relatively by 2% and its gross margin expanding 220 basis points, benefiting from the realization of the tutoring model, which had the proposal of improving the customer services and the quality of resources, while also improving the productivity in the segment.
The higher share of 100% online students also benefit the margin gain, given to the much lower cost structure that the insurance carries. So, this is another point to be highlighted. Last, the overall results before marketing expenses grew 6.1 percent with operating margin expanding 4 20 basis points, capturing the operational efficiency gains and economies of scale in the business. And also, you can see the primary and second bullet segment in the last part of this slide, where net revenue fell 3.7%, affected by the high anticipation of collection sales in the Q4 last year. However, we offset this revenue gap with a series of initiatives to optimize cost and expense in this segment.
So, the gross income grew 5.1% and gross margin also increased 540 basis points, which is some very interesting and positive effects in this business. Now, I would like to turn the call to Mr. Gianmarco, our CFO, to continue the presentation. Thank you, Carlos. Good morning, good afternoon, everyone.
Well, let's take a look now at the level of provisioning for losses in our evidence receivable terms. For that, let's turn on to Slide 9, where you can see the provision for loss to the ratio of net revenue for each of our segments. This analysis remind you, excluding the results from Faiza, FAMACHA and Novatek, which affect only the on campus segment. Starting with the on campus segment, the total PDA stood at 13% in this quarter. This is up 60 basis points year over year, reflecting the higher share of BEST and P and students in our base, remembering that the provision rate for these products remained at 50%.
Comparing this to the 4th quarter, the total PDA increased by 4.90 basis points, reflecting the seasonality of PMT plants, which are mainly offered in outnumbered quarters, so Q1 and Q3, which concentrate most of our newest enrollments. If we look only at our out of pocket students, the PBA provision once again remained stable over the previous quarter with a decrease of 10 basis points on the year over year analysis, continuing the positive trend already up to last quarter, which is essentially due to our more effective collection actions, including for part of the including that for the part of the portfolio, which has already been written off for no longer active tier. Moving on to the Distance Learning segment. The total PDA stood at 9.7% in the quarter. This is down 50 basis points on a year over year basis, reflecting the smaller data P and T C and P this quarter.
If we compare to the 4th quarter, the total PDA in the segment increased 60 basis points as in the on campus side, reflecting the seasonality of P and C plans and healthy enrollments in the Q1 of 2018. Last, looking only at our out of the pocket PDA, there was an increase of 20 basis points, which is explained mainly by the large mix of 100% online students and that is still challenging economic scenario, which with high unemployment and its effect on the drop off rates. Turning now to the right hand side of the slide. You can see PDA in the Primary and Secondary Education segment, which once again remained stable at 0.8 percent and demonstrated the company's effective net on provisioning for the segment. And I invite everyone to turn on to Slide 10, where we're going to speak a little bit more about the average receivable terms for each of the business also excluding any impact from Faiza, Famache and Novatex.
If we look into the on campus segment, the average term in the quarter stood at 163 days, which is an increase of 17 days year over year, essentially due to the higher average term for TMC and TMC plans. If we look only solely for our out of pocket students, the average term was 89 days, practically stable in relation to the Q1 of last year with an increase of only one day. If we compare to the Q4, the average term decreased by 5 days, which is in line with the seasonality, but also demonstrates that we convert to a more stable scenario. This reinforces the effectiveness of our collections management, which after being assimilated in 2017, starting to show results with an excellent potential for generating value for the company. Looking to the Fiat, the average term was 146 days in this quarter, which is down 5 days on a year over year basis, supported normalization of PS payment flow and by the receipt of another 25% of the installments both under the PM 20 3 back in August 2017.
Lastly, looking to the past and PMT receivables, the average turns to 3.93 days, increasing by 112 days year over year in line with the expected immaculation of each product. Moving on now to the VL segment. The average term for our out of pocket clearance was 87 days. This is up 9 days year over year, reflecting the challenging economic scenario to high unemployment and also the higher penetration of 100% aligned students with both of these factors pressuring the higher dropouts as we already mentioned in the previous slide. If we compare to the Q4, the average churn in the Beal segment decreased by 7 days, mainly due to seasonality, but also as on the on campus case, reflecting signs of converging to more stability.
The average term for the Eastern Front T and T of 242 days, an increase of 53 days from the Q1 of last year, also reflecting the natural maturation expected for this target. And lastly, looking to the receivables for Primary Impact Education, we stood at 141 days, which is a decrease of 12 days sequentially and by 33 days year over year due to the higher volume of textbooks collected in the 4th quarter. As we've just seen, the results of this quarter were extremely positive, especially with stability in our out of pocket ED and the on campus segment. The average receivables term also demonstrated a very satisfactory behavior and provided additional guarantees to the Solirisa for our operations. Moving on now to Slide 12, which shows our CapEx in the Q1.
If you consider only the recurring CapEx, our investments came to BRL102 1,000,000 in the Q1 or if you look at it as a ratio for net revenue, 7 point 4%, a growth of 26% on a year over year basis. Out of this amount, it's important to highlight 72% was allocated to the development of content, systems and license and also to the expansions and improvement at our end given the growth in programs in the field such as mining and engineering, which require laboratories for practical classes on the moment due terms of the course. If you also include in Brazil special and related projects, the CapEx for the quarter came to BRL 115,000,000 or 8.4 percent as a ratio of net revenue, growing by 22% on a year over year basis. And here, I'd like to highlight our organic growth plan and additional transformation at a competitive line. Let's now go on to Slide 13, which shows our operating cash generation.
The cash generation for this quarter was mainly affected by a lower receivables from Tiete students due to the later start of the Tiete's enrollment process when compared to 2017 and also by the contraction of the FIES students, which was not fully affected by the higher receivables from our profit students and students using strong plans, given here that this form of payment has a longer average payment term. Another factor that impacted the cash generation was the higher CapEx, which as you've seen in the previous slide as well Some other one off impacts such as the adoption of collective vacations in December, which was the first time implemented back last year and resulted in a typical seasonality in expenses in December and January. And also the increasing share buybacks under our repatriated plan, important to the end of this year. Lastly, we also were adversely affected by the interest in our cash, because we have a net cash position and there was a significant drop on Brazilian base rate. Note, it's important to note that as of 20 16, the government notified the timetable for the payment of TxRail, so the schedule was changed with the installment of the November competence, which were BRL280 1,000,000 being made already in December instead of January.
As a result, the Q1 of the year now presents naturally a lower cash generation with the second half of the year concentrating a higher share of the asset purchase. In Araceli, we raised reduced cash flow in the Q1 and it appeared with a negative free cash flow of BRL 190,000,000. For the coming quarters, we expect higher flows of cash payments and consequently a higher cash generation. To speak a little bit more about all this seasonal effect, I invite you on to Slide 14, which has a more detailed comparative analysis of operating cash generation free CapEx for the Q4 of this year, excluding here any seasonal or no recurring effects, which more accurate comparisons. In these analysis, we compared the reported cash generation with a pro form a cash generation, adjusting here essentially by 4 major events that had a downward effect in Q3.
We chart these effects. So the first is the late payment of the ad credits under the administrative rule 23 or PM 23, which adversely affected our receivables in the Q1 of 2016 by approximately BRL200 1,000,000. Important to highlight here that the receipt of this late installment has been also in line with a pre established schedule and the same dates on August 16, August 17 and August 18. The second event was the anticipation of the FIES payment from January of the FIES November confidence from January to December, which adversely affected the payment for the Q1 of 2017, 2019 the amount of BRL192 million and BRL 180 million, respectively. The third event is the time table for the reenrollment of the contracts for the 2nd semester of 2016 and the 1st semester of 'seventeen, which are typically and temporarily increased with you within Q1 of 'seventeen by BRL 100,000,000.
In this case, what happened was that FIES contract enrollment for the 2nd semester of 'sixteen, which typically occurred between August October, occurred between the end of October December. We generated a higher volume of contract renewals in December and January with and consequently affecting the cash flow of the Q1 of 'seventeen. On the other hand, the cycle of CSA enrollment for the first semester of 2017, which typically begins in February, began on January 10, leading to a higher volume of reenrollments already in January. The receivables of these reenrollments have been registered already in the Q1 of 'seventeen. The last effect is the introduction of collective vacations in the company in the Q4 of 'seventeen, which I mentioned in the previous slide, which led to our higher volume of payments to be shifted from December to January and was the impact in payments in the Q1 by BRL 80,000,000.
Now in the Q1 of sector 15, our reported cash generation so looking to the chart, if you start with the Q1 of 'sixteen, looking to these adjusted analysis, our reported cash generation was only BRL9.1 million, reflecting here the impact by the delays of cash payments under PM 23. If the payment flow had been normalized this quarter, the cash generation would have been BRL202.8 million, a net debt to cash conversion rate of 26.6%. Last year, if you look into the data last year, there was a change in the schedule for the payment of the CIES November installment with a receipt of BRL191.7 million being anticipated from that in January to December. In addition, there was a the Q1 of 2017 also received a one off benefit with the receipt of an additional BRL 100,600,000 essentially due to the postponement of Tietze enrollments from the 2nd semester of 'sixteen and also due to the anticipation of Tietra enrollments for the 1st semester of 'seventeen. If we consider all these adjustments, the cash generation was BRL 2 24,000,000 with a conversion of 37.7 percent of EBITDA, and this compares to a reported BRL 133 1,000,000.
Lastly, let's take a look at the Q1 of this year, which requires 2 essentially two main adjustments in order to make cash generation compared the repeat of the SEI installment of the November 12, so BRL180 million, which was received in December 2017 and the BRL80 1,000,000 in payments in December that were postponed because of the collective acquisition. If we adjust for these two factors, the cash generation free CapEx was BRL 174.7 million in this quarter, which would lead to an EBITDA conversion of 30.7%. So essentially, overall, with this analysis, we can conclude that cash generation in the Q1 of this year was heavily affected by the seasonal events mentioned above And mostly eliminating the effects, the expectations become clear that cash generation should accelerate over the coming quarters and to reach a conversion rate more in line with what we like to do last year. To reinforce this fact, we are receiving around BRL 500,000,000 from FIESB Purchases already during the Q2. Turning now to Slide 15.
You can see our net debt position continued solid. At the close of the Q1, our cash and equivalents stood at BRL1.5 billion, which is down 11% from the end of 4th quarter, reflecting the cash flow already mentioned this year. And if you compare that to a year earlier, the cash position grew by 13.7%. If you consider as well our financial liabilities and short- and long term obligations, we ended the quarter with a net cash position of BRL 1,100,000,000. Another thing I'd like to highlight is that our short- and long term accounts receivables also include a couple of other factors.
The remaining 50% of the P and L installments not paid in 2016 under the PN23, which we expect to receive now now with 2018. Secondly, the second part of the unit sale we paid in adjusted to 20 value, which we will receive in 5 annual installments between 2018 and 2022. And the payment coming from the sale of Bahir and Parcamax that was concluded back in August last year. If you consider all these repimals, if you hold a net cash position of over BRL 3,000,000,000, it's BRL 2,100,000,000, which is extremely robust and 20.5% higher if you compare to last year. This cash position will will play a very important role in sustaining our growth plan.
Well, now I'd like to pass the call back over to Carlos for his closing remarks. Thank you, Ramon. Actually, let's start the closing part of this presentation. And to say that, I'd like to announce the final the guidance here that we put out so much of today. And as we did comment in the beginning of the presentation, 2018 brings important challenges.
The year we recall the highest number of generation of Yale students from the large classes admitted in 13, 14. Also, the macroeconomic scenario that remains challenging with the employment rate above 12% and the competitive and the competitive scenario results become somehow more intense. So, we will work internally to find levers that could allow us to mitigate most of these issues. While always ensuring the improvement of our academic quality with a strong focus in our students' success. Seeking efficiency is large.
Seeking efficiency at whatever cost is somehow totally responsible to our sustainable growth. And Crofton's commitment is not just to create value in the short term, but also to strike the best balance in terms of our front end results while building the foundation for generating value in the long run. Today, we look extremely present so the 2018 guidance. And as we have widely disclosed and repeated in today's presentation, we have a robust organic growth plan in both post secondary education segments. And we hope to open about 112,000,000 units and almost 1,800,000 business units with partners until 2028.
This expansion plan is making good progress based on our initial results for the enrollment and the engagement of our partners. And we will, of course, further expand our geographic footprint. Initially, however, this loss will negatively impact the margins since Chantenides units have negative margins or lower than average margin in the 1st other hand, the rates of return of these investments for these organic growth are highly attractive, which justifies these initiatives. For this reason and to ensure the comparability of our past results with our future results, we are adopting to present 2 perspectives of our guidance. 1, consolidating the perspective that encompass the company and all its organic growth products and one excluding the greenfield products, which facilitates the comprehension and the comparability.
So starting with the retail strategy perspective, our guidance for 2018 calls for a net revenue of BRL5.44 million, down 1.8% from 2017. Adjusted EBITDA will be about BRL 2.3 150,000,000, down 3.7%, mainly due to the impact from the maturation of our past dividend base. And here, should recall that we adopted a provisioning for a loss of 50% for this group of students. And in this scenario, our BPA margin should contrasted by only 80 basis points, which is completely aligned with our plans to protect margins despite all the adversities and while maintaining and improving the quality of our service. So our guidance for adjusted net income is BRL 2 point 0.30 million with net margin of 37.3 percent, which represents a decline of 8 point 6% and 280 basis points year over year.
The net profit for 2018, recall that it's the effect of the reduction of the financial results, which lowered the remuneration of the cash position due to the lower interest rates and also the higher level of depreciation due to the high the recent investment gains, especially in content and technology. Now, if you look on the right side, you can see the consolidated guidance, which includes other companies with any growth. And note here that none of these figures include the acquisition of Solvos since the transaction came in of 2 things, revenue and commissions, especially the approval for Carli. So on the consolidated basis, we project a net revenue of BRL 5 point 5,000,000,000,480,000, by 1.1% compared to 2017. As you can see, the initial contribution to revenue from our new units is not very relevant, but its growth should be gradually and commodity since we have these three effects at the same time, an increase in the number of greenfields, the expansion of the proven portfolio at each greenfield and finally, the maturation of the proven until the graduation of the first classes in each program.
And this is true that we will grow altogether. Our guidance for adjusted EBITDA is BRL2.375 billion, down 6.7 percent and the adjusted EBITDA margin of 41.5 percent, down 2 50 basis points year over year, reflecting all the higher costs required for the growth for such projects, which includes expanding workforce, rent, utilities, credit quality services, etcetera. Guidance for adjusted net income was BRL1.940, down a little bit less than 13% with net margin of 35.4%, following the same trend of my previous comments. And last, given the investments required to support this project, we still have increased CapEx a ratio of net revenue in the year of around 280 basis points to 13.5%. And as we commented, the rate of return of investment in the organic growth products are more than attractive.
So we are confident to continue that. Of return investments mainly for the year, around BRL 150 million, between R150 million, R200 million should be more clear, is related to greenfield projects. So therefore, if we exclude that, the CapEx guidance of 2018 would be around 8.6% of net revenue, even lower than last year. The guidance reflects our belief that we will continue to deliver a robust but effective results without adversely affecting our capacity to create value in the future. And we are confident in reaching these guidance, especially after results of this first quarter and first intake process.
Thank you very much. I would like to pass the word again to Mr. Rodrigo. Thank you, Carlos. Moving on to Slide 18, I want to comment briefly on Fabriz, our new holding company that will be dedicated exclusively to the primary and secondary education markets.
Saver is the result of an internal restructuring of our current primary and secondary education business, including the learning systems and own schools. Saver also will encompass all of the company's future businesses in the segment, including any acquisitions of assets and their subsequent expansions via greenfields or brownfield projects. And even after just one month, Saverio already has a lot of talk to talk about, with its most noteworthy achievements being the announcement of the acquisition of 73.35 percent of Somos Verdecacao for BRL 23.75 per share. This is a strategic acquisition of an important player in the primary and secondary education market that offers an enormous avenue of opportunities and reach operations that perfectly complement Abert's offering of products and services. We are very happy to announce this acquisition, and we are working to approve that in Qazi.
Another highlight of the transaction is the synergies, which we would estimate will reach BRL300 million to be kept weighted within 4 years with a potential margin gain of 16 percentage points. It is important to remember that the conclusion of this operation is subject to certain conditions precedent, particularly the examination and approval by the antitrust body in Brazil, CADE. The transaction is completely aligned with our growth strategy since it will enable us to advance by large strides in our products for the Primary and Secondary Education segment, creating a new avenue for future growth. I also should mention that the acquisition of Leonardo da Vinci Educational Center, which is located which is a college a school located in Victoria Espirito Espiritu Santo, which has a strong focus in academic quality, has placed the 1st in the main exam in the stage for 6 of the 7 last years. The school is completely aligned with our growth plan in the premium segment of primary and secondary education, and we are very confident in the value of the brand and its potential to expand.
In every case, our strategy for school management is to preserve the attributes to ensure the quality of the acquired schools, including the advisory product, the teaching product and teams. Moving on to the last slide, Slide 19. I want to begin with an update of our growth targets in the Postsecondary Education segment. For the 2nd semester of this year, we hope to inaugurate another 20 new campuses and 100 new different learning centers. In 'nineteen, we will spend even further the number of new units by opening 38 campuses, while taking advantage of our autonomy in the Distance Learning segment to open the 200 new centers authorized for 2019.
That means that by the end of the next year, we expected to have 186 campuses and 1510 distance learning centers, which represents very strong growth and will further expand Croppon's geographic footprint, laying the foundation for sustainable value creation for in the future. Turning to the middle of the year. Of probably in the very early stage, we have already begun our extended recruiting process for the 2nd semester of this year with new sales campaigns and a highly engaged team to once again deliver growing results. Considering our stock price over the past few months and our differentiated cash position, we carried out a series of shares buybacks in the first and second quarters under our current buyback program, which is in the 4th until the end of this year. In the Q1, we repurchased 1,100,000 shares, while in the Q2, we repurchased another 12,400,000 shares.
Since the start of the program, we have purchased 13,800,000 shares at an average price of BRL13.83, which corresponds to 28.2% of the total permitted under the program. Turning to the last column in this slide, I want to update you on the status of our digital transformation project and it's with great satisfaction that I reported that we have made significant progress today. We have approximately 150 professionals with its business profile already working and organized into 3 trains of agile deliveries and another 150 professionals are being trained and reorganized into 3 new trains, which will be launched in June. By the end of the year of 2018, 100% of the system development teams will be working on a scalable agile framework, the SAIF methodology, which will make Kraken one of the few companies in Brazil to have the entire development structure based on agile methodologies, ensuring complete alignment between the business and technology areas, which is an essential step on our digital transformation journey. And last, our Board of Directors approved a distribution of BRL180.7 million in dividend, which corresponds to BRL0.11 per share for a payout ratio of 40%, as we anticipated in our last call.
The payment of dividends is scheduled for this May 28. And in closing, I want to reinforce that in a challenging year such as 2018, I am certain that we are in the right path, maintaining the right high levels of educational systems, services, thinking of a disruptive movement of a digital transformation and striking the ideal balance between the short and long term. And in parallel, we are building the foundation for solid organic growth in the post secondary segment and have made an important and strategic acquisition in the Primary and Second Education segment. For all of these reasons, we believe that 2018 will be a great year for Costa. Once again, thank you for participating in today's call, and I invite you now to participate in the question and answer questions.
Thank you.
We will now initiate the question and We don't have any questions. At this time, I would like to turn the call over back to Mr. Rodrigo Galindo for any closing remarks.
Once again, I'd like to thank you everybody for participating on this call and I help my the company's IR area to answer further questions. Thank you very much.