PagSeguro Digital Ltd.
Unaudited condensed consolidated interim statement of income
For the three and nine-month periods ended September 30, 2021 and 2020
(All amounts in thousands of reais unless otherwise stated)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three-month period
|
|
Nine-month period
|
|
|
Note
|
|
September 30, 2021
|
|
September 30, 2020
|
|
September 30, 2021
|
|
September 30, 2020
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue from transaction activities and other services
|
21
|
|
1,792,161
|
|
1,211,971
|
|
4,725,259
|
|
3,035,237
|
|
Financial income
|
21
|
|
937,743
|
|
544,755
|
|
2,381,336
|
|
1,566,270
|
|
Other financial income
|
21
|
|
45,861
|
|
24,747
|
|
105,969
|
|
124,705
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenue and income
|
|
|
2,775,765
|
|
1,781,473
|
|
7,212,564
|
|
4,726,212
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of sales and services
|
22
|
|
(1,502,018)
|
|
(1,057,233)
|
|
(3,943,121)
|
|
(2,619,159)
|
|
Selling expenses
|
22
|
|
(367,893)
|
|
(151,626)
|
|
(1,099,775)
|
|
(451,850)
|
|
Administrative expenses
|
22
|
|
(273,029)
|
|
(197,109)
|
|
(687,998)
|
|
(377,145)
|
|
Financial expenses
|
22
|
|
(209,823)
|
|
(16,255)
|
|
(387,995)
|
|
(79,690)
|
|
Other income (expenses), net
|
22
|
|
(1,821)
|
|
(7,060)
|
|
26,034
|
|
62,413
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit before income taxes
|
|
|
421,181
|
|
352,190
|
|
1,119,709
|
|
1,260,781
|
|
|
|
|
|
|
|
|
|
|
|
|
Current income tax and social contribution
|
18
|
|
(7,652)
|
|
(13,349)
|
|
(29,290)
|
|
(35,117)
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred income tax and social contribution
|
18
|
|
(91,983)
|
|
(75,412)
|
|
(225,403)
|
|
(309,007)
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax and social contribution
|
|
|
(99,635)
|
|
(88,761)
|
|
(254,693)
|
|
(344,124)
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income for the period
|
|
|
321,546
|
|
263,429
|
|
865,016
|
|
916,657
|
|
|
|
|
|
|
|
|
|
|
|
|
Attributable to:
|
|
|
|
|
|
|
|
|
|
|
Equity holders of the parent
|
|
|
321,393
|
|
263,304
|
|
864,706
|
|
916,110
|
|
Non-controlling interests
|
|
|
153
|
|
125
|
|
310
|
|
547
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings per common share - R$
|
20
|
|
0.9727
|
|
0.8001
|
|
2.6188
|
|
2.7838
|
|
Diluted earnings per common share - R$
|
20
|
|
0.9669
|
|
0.7988
|
|
2.6019
|
|
2.7791
|
The accompanying notes are an integral part of these unaudited condensed consolidated interim financial statements.
PagSeguro Digital Ltd.
Unaudited condensed consolidated interim statement of comprehensive income
For the three and nine-month periods ended September 30, 2021 and 2020
(All amounts in thousands of reais unless otherwise stated)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three-month period
|
|
Nine-month period
|
|
|
September 30, 2021
|
|
September 30, 2020
|
|
September 30, 2021
|
|
September 30, 2020
|
|
|
|
|
|
|
|
|
|
|
Net income for the period
|
321,546
|
|
263,429
|
|
865,016
|
|
916,657
|
Other comprehensive income that may be reclassified to the
statement of income in subsequent periods
|
|
|
|
|
|
|
|
|
Currency translation adjustment
|
220
|
|
660
|
|
(284)
|
|
1,211
|
|
Gain (loss) on investments designated at fair value through OCI
|
221
|
|
(1,093)
|
|
561
|
|
(1,282)
|
|
Income tax and social contribution on the gain (loss) - OCI
|
(75)
|
|
372
|
|
(191)
|
|
436
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive income for the period
|
321,912
|
|
263,368
|
|
865,102
|
|
917,022
|
|
|
|
|
|
|
|
|
|
|
Attributable to
|
|
|
|
|
|
|
|
|
Equity holders of the parent
|
321,759
|
|
263,243
|
|
864,792
|
|
916,475
|
|
Non-controlling interests
|
153
|
|
125
|
|
310
|
|
547
|
|
Net income for the period
|
321,912
|
|
263,368
|
|
865,102
|
|
917,022
|
The accompanying notes are an integral part of these unaudited condensed consolidated interim financial statements.
PagSeguro Digital Ltd.
Unaudited condensed consolidated interim statement of changes in equity
For the nine-month periods ended September 30, 2021 and 2020
(All amounts in thousands of reais)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital reserve
|
|
Profit reserve
|
|
|
|
|
|
|
|
|
|
|
|
|
Note
|
|
Share capital
|
|
Treasury shares
|
|
Capital reserve
|
|
Share-based long-term incentive plan (LTIP)
|
|
Retained earnings
|
|
Equity valuation adjustments
|
|
Other comprehensive income
|
|
Total
|
|
Non-controlling interests
|
|
Total equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
On December 31, 2019
|
|
|
26
|
|
(41,267)
|
|
5,686,255
|
|
95,248
|
|
2,274,864
|
|
(22,372)
|
|
(190)
|
|
7,992,564
|
|
22,384
|
|
8,014,948
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income for the period
|
|
|
—
|
|
—
|
|
—
|
|
—
|
|
916,110
|
|
—
|
|
—
|
|
916,110
|
|
547
|
|
916,657
|
|
Currency translation adjustment
|
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
1,211
|
|
1,211
|
|
—
|
|
1,211
|
|
Loss on financial assets through OCI
|
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(846)
|
|
(846)
|
|
—
|
|
(846)
|
|
Non-controlling
|
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(267)
|
|
(267)
|
|
Shares issued
|
|
|
—
|
|
—
|
|
3,834
|
|
(3,834)
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
Share based long term incentive plan (LTIP)
|
|
|
—
|
|
—
|
|
—
|
|
62,140
|
|
—
|
|
—
|
|
—
|
|
62,140
|
|
—
|
|
62,140
|
|
Acquisition of treasury shares
|
|
|
—
|
|
(44,774)
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(44,774)
|
|
—
|
|
(44,774)
|
|
(LTIP) of treasury shares
|
|
|
—
|
|
|
70,443
|
|
—
|
|
|
(70,443)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
—
|
|
—
|
|
On September 30, 2020
|
|
|
26
|
|
(15,598)
|
|
5,690,089
|
|
83,111
|
|
3,190,974
|
|
(22,372)
|
|
175
|
|
8,926,405
|
|
22,664
|
|
8,949,069
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income for the period
|
|
|
—
|
|
—
|
|
—
|
|
—
|
|
375,548
|
|
—
|
|
—
|
|
375,548
|
|
95
|
|
375,643
|
|
Currency translation adjustment
|
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(252)
|
|
(252)
|
|
—
|
|
(252)
|
|
Loss on financial assets through OCI
|
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
568
|
|
568
|
|
—
|
|
568
|
|
Non-controlling
|
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(10,646)
|
|
(10,646)
|
|
Share based long term incentive plan (LTIP)
|
|
|
—
|
|
—
|
|
—
|
|
13,077
|
|
—
|
|
—
|
|
—
|
|
13,077
|
|
—
|
|
13,077
|
|
(LTIP) of treasury shares
|
|
|
—
|
|
1,989
|
|
—
|
|
(1,989)
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
On December 31, 2020
|
|
|
26
|
|
(13,609)
|
|
5,690,089
|
|
94,199
|
|
3,566,522
|
|
(22,372)
|
|
491
|
|
9,315,346
|
|
12,113
|
|
9,327,459
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income for the period
|
19
|
|
—
|
|
—
|
|
—
|
|
—
|
|
864,706
|
|
—
|
|
—
|
|
864,706
|
|
310
|
|
865,016
|
|
Currency translation adjustment
|
19
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(284)
|
|
(284)
|
|
—
|
|
(284)
|
|
Gain on financial assets through OCI
|
19
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
370
|
|
370
|
|
—
|
|
370
|
|
Shares issued
|
19
|
|
—
|
|
—
|
|
138,665
|
|
(138,665)
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
Share based long term incentive plan (LTIP)
|
19
|
|
—
|
|
—
|
|
—
|
|
264,232
|
|
—
|
|
—
|
|
—
|
|
264,232
|
|
—
|
|
264,232
|
|
(LTIP) of treasury shares
|
19
|
|
—
|
|
13,410
|
|
—
|
|
(13,410)
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
On September 30, 2021
|
|
|
26
|
|
(199)
|
|
5,828,754
|
|
206,356
|
|
4,431,228
|
|
(22,372)
|
|
577
|
|
10,444,370
|
|
12,423
|
|
10,456,793
|
The accompanying notes are an integral part of these unaudited condensed consolidated interim financial statements.
PagSeguro Digital Ltd.
Unaudited condensed consolidated interim statement of cash flows
For the nine-month periods ended September 30, 2021 and 2020
(All amounts in thousands of reais)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine-month period
|
|
|
September 30, 2021
|
|
September 30, 2020
|
|
|
|
|
|
|
CASH FLOWS FROM OPERATING ACTIVITIES
|
|
|
|
|
Profit before income taxes
|
1,119,709
|
|
1,260,781
|
|
Expenses (revenues) not affecting cash:
|
|
|
|
|
Depreciation and amortization
|
543,126
|
|
242,513
|
|
Chargebacks
|
450,051
|
|
212,969
|
|
Accrual of provision for contingencies
|
19,911
|
|
1,971
|
|
Share based long term incentive plan (LTIP)
|
326,282
|
|
47,499
|
|
Reversal of taxes and contributions
|
(29,114)
|
|
(84,294)
|
|
Loss on disposal of property, equipment and intangible assets
|
20,444
|
|
3,641
|
|
Interest accrued
|
84,400
|
|
4,713
|
|
Other (income) cost, net
|
1,480
|
|
20,394
|
|
Changes in operating assets and liabilities
|
|
|
|
|
Accounts receivable
|
(5,194,108)
|
|
(3,446,658)
|
|
Financial investments (mandatory guarantee)
|
2,069
|
|
(127,832)
|
|
Inventories
|
(64,403)
|
|
27,046
|
|
Taxes recoverable
|
(97,710)
|
|
(103,693)
|
|
Other receivables
|
2,512
|
|
16,785
|
|
Deferred revenue
|
(10,695)
|
|
122,851
|
|
Other liabilities
|
(13,821)
|
|
(242)
|
|
Payables to third parties
|
883,004
|
|
2,307,597
|
|
Trade payables
|
42,466
|
|
(44,914)
|
|
Receivables from (payables to) related parties
|
311,165
|
|
107,376
|
|
Deposits
|
1,854,936
|
|
193,642
|
|
Salaries and social charges
|
9,460
|
|
14,038
|
|
Taxes and contributions
|
31,358
|
|
(26,143)
|
|
Provision for contingencies
|
(12,994)
|
|
(1,100)
|
|
|
279,528
|
|
748,940
|
|
Income tax and social contribution paid
|
(57,412)
|
|
(26,053)
|
|
Interest income received
|
541,881
|
|
175,500
|
|
NET CASH PROVIDED BY OPERATING ACTIVITIES
|
763,997
|
|
898,387
|
|
CASH FLOWS FROM INVESTING ACTIVITIES
|
|
|
|
|
Amount paid on acquisitions, net of cash acquired
|
(44,471)
|
|
(5,351)
|
|
Purchases of property and equipment
|
(701,338)
|
|
(917,255)
|
|
Purchases and development of intangible assets
|
(527,555)
|
|
(373,605)
|
|
Redemption (Acquisition) of financial investments
|
2,293
|
|
636,432
|
|
NET CASH USED IN INVESTING ACTIVITIES
|
(1,271,071)
|
|
(659,779)
|
|
CASH FLOWS FROM FINANCING ACTIVITIES
|
|
|
|
|
Acquisition of treasury shares
|
—
|
|
(44,774)
|
|
Payment of leases
|
(10,603)
|
|
(2,640)
|
|
NET CASH USED IN FINANCING ACTIVITIES
|
(10,603)
|
|
(47,414)
|
|
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
|
(517,677)
|
|
191,193
|
|
Cash and cash equivalents at the beginning of the period
|
1,640,065
|
|
1,403,955
|
|
Cash and cash equivalents at the end of the period
|
1,122,388
|
|
1,595,148
|
The accompanying notes are an integral part of these unaudited condensed consolidated interim financial statements.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PagSeguro Digital Ltd.
Notes to the unaudited condensed consolidated interim financial statements
As of September 30, 2021 and for the three and nine-month periods ended September 30, 2021 and 2020
(All amounts in thousands of reais unless otherwise stated)
|
PagSeguro Digital Ltd. ("PagSeguro Digital" or the "Company") is a holding company, subsidiary of Universo Online S.A. ("UOL"), referred to, together with its subsidiaries, as the "PagSeguro Group", was incorporated on July 19, 2017. 99.99% of the shares of PagSeguro Internet S.A. ("PagSeguro Brazil") were contributed to PagSeguro Digital on January 4, 2018 and PagSeguro Digital maintains control of PagSeguro Brazil.
PagSeguro Brazil is a privately held corporation established on January 20, 2006, headquartered in the city of São Paulo, Brazil, and engaged in providing financial technology solutions and services and corresponding related activities, focused principally on micro-merchants and small and medium-sized businesses ("SMEs").
On July 15, 2020 PagSeguro Group constituted a holding company incorporated under PagSeguro Digital called PagSeg Participações Ltda. ("PagSeg") and on October 22, 2020, PagSeguro Group constituted another holding company incorporated under PagSeg called PagBank Participações Ltda. ("PagBank").
On March 18, 2021, PagSeguro Group constituted a holding company incorporated under PagSeguro Digital called PagSeguro Holding Ltd (“PSHC”). Additionally, in third quarter of 2021, Pagseguro Group established three new subsidiaries under PSHC: Pagseguro Chile SPA (“Pagseguro Chile”), Pagseguro Colombia S.A.S (“Pagseguro Colombia”) and PSGP México S.A de C.V. (“PSGP Mexico”), these companies do not yet operate in the period ended September 30, 2021.
In January 2021, PagSeguro Group submitted a request for Brazilian Central Bank approval of a corporate reorganization involving certain of its subsidiaries, this reorganization was approved by Brazilian Central Bank on August 16, 2021. The proposed PagSeguro Group reorganization is intended to improve administration of the corporate structure and to group the operating subsidiaries under appropriate holding companies based on the services provided by each one.
After this corporate reorganization, the group subsidiaries are as follows:
•PagSeguro Brazil subsidiaries are PagSeguro Biva Securitizadora de Créditos Financeiras S.A. ("Biva"), Fundo de Investimento em Direitos Creditórios - PagSeguro ("FIDC"), RegistraSeguro S.A. ("RegistraSeguro"), Wirecard Brazil S.A ("MOIP"), NETPOS Serviços de Informática S.A. (“NETPOS”) and Concil Inteligência em Negociação S.A (“Concil”). PagSeguro Brazil acquired 100.00% of the issued shares of Concil on August 12, 2021 as detailed in Note 10.
•.PagSeg subsidiaries are Net+Phone Telecomunicações Ltda. ("Net+Phone"), Boa Compra Tecnologia Ltda. ("Boa Compra"), BCPS Online Services Lda. ("BCPS"), R2TECH Informática Ltda. ("R2TECH"), BIVACO Holdings Ltda. ("BIVACO"), CDS Serviços Financeiros LTDA. ("CDS") and PagBank.
•PagBank subsidiaries are Tilix Digital Ltda. ("TILIX"), YAMÍ Software & Inovação Ltda. ("YAMÍ"), BoletoFlex Tecnologia e Serviços S.A. (“BoletoFlex”) and Zygo Serviços de Tecnologia S.A. ("ZYGO").
•PSHC subsidiaries are Pagseguro Chile, Pagseguro Colombia and PSGP México.
•BS Holding subsidiaries is BancoSeguro S.A. (“Bancoseguro”).
These consolidated financial statements include Pagseguro Brazil, PagSeg, PSHC, BS Holding and corresponding subsidiaries.
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PagSeguro Digital Ltd.
Notes to the unaudited condensed consolidated interim financial statements
As of September 30, 2021 and for the three and nine-month periods ended September 30, 2021 and 2020
(All amounts in thousands of reais unless otherwise stated)
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1. General information (continued)
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1.1 COVID-19
The Company have observed that the main impact of the COVID-19 pandemic in our total purchase volume (TPV) has occurred between March and June 2020. In the third and fourth quarter of 2020, most of the cities in Brazil started a reopening process, with a gradual recovery of important commercial activities such as shopping malls, general retail, restaurants, and bars, among other non-essential and in-store businesses.
During the nine-month period ended September 30, 2021, the Company observed that, in the first three months, there was an increase in the number of people infected by COVID-19 and consequently the return of partial shutdowns and social isolation in several cities and states of the country. In the second quarter of 2021, most of the cities in Brazil accelerated the vaccination of the population, and consequently, the Company saw a graduated reopening process, with extension of opening hours of commercial activities. In the third quarter of 2021, the Company observed the returning of social events with public. On September 30, 2021, 146 million inhabitants had received at least the first vaccine shot against COVID-19 in Brazil, equivalent to 68% of the Brazilian population and 90 million inhabitants received the second vaccine shot or vaccines with a unique shot, representing 42% of the Brazilian population.
The Company has a significant variable cost structure mainly related to TPV, such as processing, interchange, card scheme fees and chargebacks. Marketing and sales expenses are also variable and depends on our strategy to leverage new products and services such as PagBank. The Company is also still accompanying the evolution of the Brazilian economy and reassessing, when necessary, the provisions for loss allowance for expected credit losses.
The Company’s employees are its number one priority and almost 100% of its workforce is still working from home. The Company has a solid position in terms of cash, liquidity and working capital levels and in the nine‑month period ended September 30, 2021, the Company has not faced impairment of our assets due to COVID‑19.
1.2 Additional information
Wirecard Brazil S.A. (“MOIP”) is a subsidiary that PagSeguro acquired in October 2020, and which represented less than 3% of our consolidated assets as of September 30, 2021 and less than 2% of our consolidated revenue and less than 1% of our consolidated net income for the nine months ended September 30, 2021. MOIP was involved in a cyberattack between September 25 and September 29, 2021 (the “Incident”). The hackers demanded that we make a specified payment to prevent the public disclosure or sale of the targeted hacked data that was compromised in the Incident, which included personal profile information of MOIP customers. At the time of the Incident, MOIP had a distinct and separate IT server and operating environment from the rest of PagSeguro’s IT platform and systems, and therefore none of PagSeguro’s databases, customer information or systems were subject to the Incident, or formed part of the compromised data, beyond those independently within the MOIP IT environment. PagSeguro promptly followed the requirements of applicable Brazilian law, including the filing of a formal report to the Brazilian National Authority for Data Protection (Autoridade Nacional de Proteção de Dados) and Brazilian Central Bank on October 1, 2021.
PagSeguro’s technology security team continues to assess potential consequences of the Incident or public disclosure of the compromised data by the perpetrators. During our review of the Incident through November 11, 2021, PagSeguro has still not identified evidence of unauthorized access to sensitive information, such as passwords or credit card details. At this time, PagSeguro confirms that the Incident has not had a material adverse financial impact on the company or on its customers, and PagSeguro’s IT systems (including MOIP’s IT environment) are operating normally, with heightened security measures undertaken in response to the Incident. For more information about cybersecurity risks to PagSeguro, see our annual report on Form 20-F for the year ended December 31, 2020 available on the SEC website (www.sec.gov), including in particular “Risk Factors - Our business is subject to cyberattacks and security and privacy breaches."
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PagSeguro Digital Ltd.
Notes to the unaudited condensed consolidated interim financial statements
As of September 30, 2021 and for the three and nine-month periods ended September 30, 2021 and 2020
(All amounts in thousands of reais unless otherwise stated)
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2. Presentation and preparation of the unaudited condensed consolidated interim financial statements and significant accounting policies
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These unaudited condensed consolidated interim financial statements do not include all of the information required for a complete set of financial statements prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standard Board. However, selected explanatory notes are included to explain events and transactions that are significant to an understanding of the changes in the Company’s financial position and performance since the last annual financial statements.
These unaudited condensed consolidated interim financial statements for three and nine-month periods ended September 30, 2021 were authorized for issuance by the PagSeguro Digital’s Board of Directors on November 9, 2021.
2.1. Basis of preparation of condensed consolidated interim financial information
These unaudited condensed consolidated interim financial statements for the three and nine-month periods ended September 30, 2021 have been prepared in accordance with International Accounting Standard 34, “Interim Financial Reporting” as issued by the International Accounting Standard Board and disclose all (and only) the applicable significant information related to the financial statements, which is consistent with the information utilized by management in the performance of its duties.
These unaudited condensed consolidated interim financial statements do not include all the notes of the type normally included in an annual consolidated financial statement. Accordingly, this report is to be read in conjunction with the annual consolidated financial statements for the year ended December 31, 2020 (the “Annual Financial Statements”).
The accounting policies and critical accounting estimates and judgments adopted are consistent with those of the previous financial year and corresponding interim reporting period.
2.2. New accounting pronouncements
IFRS 17 Insurance Contracts
In May 2017, the IASB issued IFRS 17 Insurance Contracts (IFRS 17), a comprehensive new accounting standard for insurance contracts covering recognition and measurement, presentation, and disclosure, which became effective on January 1, 2021. IFRS 17 replace IFRS 4 Insurance Contracts (IFRS 4) that was issued in 2005. IFRS 17 applies to all types of insurance contracts (i.e., life, non-life, direct insurance, and re-insurance), regardless of the type of entities that issue them, as well as to certain guarantees and financial instruments with discretionary participation features. The Group analyzed their contracts and concluded that is not exposed to insurance contracts.
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PagSeguro Digital Ltd.
Notes to the unaudited condensed consolidated interim financial statements
As of September 30, 2021 and for the three and nine-month periods ended September 30, 2021 and 2020
(All amounts in thousands of reais unless otherwise stated)
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3. Consolidation of subsidiaries
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September 30, 2021
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Company
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Assets
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Liabilities
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Equity
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Net income (loss) for the period
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Ownership – %
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Level
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Pagseguro Brazil
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22,360,160
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13,721,024
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8,639,136
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773,576
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99.99
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Direct
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BS Holding
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473,979
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—
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473,979
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19,313
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99.99
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Direct
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Pagseg Participações
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768,350
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870
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767,480
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73,792
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99.99
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Direct
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Pagseguro Holding
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36
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—
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36
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—
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99.99
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Direct
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Pagbank Participações
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172,115
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2,095
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170,020
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(2,270)
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99.99
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Indirect
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Net+Phone
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382,654
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31,442
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351,212
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43,483
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99.99
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Indirect
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Boa Compra
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333,417
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160,312
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173,105
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10,494
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99.99
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Indirect
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BCPS
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1,766
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(105)
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1,871
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222
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99.99
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Indirect
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R2TECH
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33,987
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1,896
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32,091
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13,659
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99.99
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Indirect
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BSEC
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1,172,569
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1,168,474
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4,095
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3,727
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99.99
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Indirect
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BIVA
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34,314
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2,453
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31,861
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11,664
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99.99
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Indirect
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FIDC
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4,792,964
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986,688
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3,806,276
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1,728,015
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100.00
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Indirect
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TILIX
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13,746
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1,353
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12,393
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5,011
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99.99
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Indirect
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BancoSeguro
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7,834,444
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7,375,922
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458,522
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19,326
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100.00
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Indirect
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Yamí
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1,566
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563
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1,003
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44
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99.99
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Indirect
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Registra Seguro
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5,000
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7
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4,993
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(7)
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99.99
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Indirect
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CDS
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6,286
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6,498
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(212)
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(2,842)
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99.99
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Indirect
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Zygo
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3,749
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3,515
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|
234
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(7,099)
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99.99
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Indirect
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Moip
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752,253
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568,102
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184,151
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2,999
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|
100.00
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Indirect
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Concil
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3,192
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5,476
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(2,284)
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(424)
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100.00
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Indirect
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Pagseguro Chile
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7
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—
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7
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—
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100.00
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Indirect
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Pagseguro Colombia
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28
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—
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28
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—
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100.00
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Indirect
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PSGP México
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1
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—
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1
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—
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100.00
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Indirect
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December 31, 2020 (except for net income, that is presented to nine months period ended September 30, 2020)
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Company
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Assets
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Liabilities
|
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Equity
|
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Net income (loss) for the period
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Ownership – %
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Level
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Pagseguro Brazil
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20,089,735
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11,716,120
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8,373,615
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873,759
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99.99
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Direct
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BS Holding
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|
488,173
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—
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|
488,173
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40,378
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|
99.99
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Direct
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Pagseg Participações
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2
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—
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2
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—
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99.99
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Direct
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Pagbank Participações
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|
15,001
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15,000
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1
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|
—
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99.99
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Indirect
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Net+Phone
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340,829
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|
33,100
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307,729
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(99,430)
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99.99
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Indirect
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Boa Compra
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|
431,624
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|
268,731
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|
162,893
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|
26,223
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|
99.99
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|
Indirect
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|
BCPS
|
|
2,410
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|
477
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|
1,933
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|
410
|
|
99.99
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|
Indirect
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R2TECH
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|
12,511
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|
1,639
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|
10,872
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|
5,802
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|
99.99
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|
Indirect
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|
BSEC
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|
488,988
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|
488,616
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|
372
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|
—
|
|
99.99
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|
Indirect
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|
BIVA
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|
18,532
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|
660
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|
17,872
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|
(1,156)
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|
99.99
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|
Indirect
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|
FIDC
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|
3,422,207
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|
327,070
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|
3,095,137
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|
1,364,473
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|
100.00
|
|
Indirect
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|
TILIX
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|
8,361
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|
979
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|
7,382
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|
(1,591)
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|
99.99
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|
Indirect
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BancoSeguro
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|
5,364,406
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|
4,891,653
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|
472,753
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|
41,838
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|
100.00
|
|
Indirect
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|
Yamí
|
|
1,453
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|
489
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|
964
|
|
143
|
|
99.99
|
|
Indirect
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|
Registra Seguro
|
|
5,000
|
|
—
|
|
5,000
|
|
—
|
|
99.99
|
|
Indirect
|
|
CDS
|
|
4,724
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|
1,073
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|
3,651
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|
(546)
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|
99.99
|
|
Indirect
|
|
Zygo
|
|
2,310
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|
2,078
|
|
232
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|
(377)
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|
99.99
|
|
Indirect
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|
MOIP
|
|
741,689
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|
560,536
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|
181,153
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|
—
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|
100.00
|
|
Indirect
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The operational context of the subsidiaries is to be read in conjunction with the annual financial statements for the year ended December 31, 2020.
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|
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PagSeguro Digital Ltd.
Notes to the unaudited condensed consolidated interim financial statements
As of September 30, 2021 and for the three and nine-month periods ended September 30, 2021 and 2020
(All amounts in thousands of reais unless otherwise stated)
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Operating segments are determined based on the information reported and reviewed by the Board of Directors, which is responsible for allocating resources and assessing the performance of the business and to make PagSeguro Group’s strategic decisions.
Considering that all decisions are based on consolidated reports, and that all decisions related to strategic and financial planning, purchases, investments, and the allocation of funds are made on a consolidated basis, the PagSeguro Group and its subsidiaries operate in a single segment, as financial service agents.
The PagSeguro Group is mostly domiciled in Brazil and has revenue arising from local customers and customers located abroad. The main revenue is related to sales from the domestic market. The international market represents 2.3% and 2.8% for the three and nine-month periods ended September 30, 2021 (3.5% and 2.7% for the three and nine-month periods ended September 30, 2020.
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5. Cash and cash equivalents
|
|
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|
|
|
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|
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|
|
September 30, 2021
|
|
December 31, 2020
|
|
|
|
|
|
|
Short-term bank deposits
|
127,863
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|
415,387
|
|
Short-term investments
|
994,525
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|
1,224,678
|
|
|
1,122,388
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|
1,640,065
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Cash and cash equivalents are held for the purpose of meeting short-term cash needs and include cash on hand, deposits with banks and other short-term highly liquid investments with original maturities of three-month or less, and with immaterial risk of change in value. Short-term investments consist mainly of investments in Brazilian Treasury Bonds (“LFTs”) with an average return of 100% of the Basic Interest Rate (SELIC, which was at 6.25% per year as of September 30, 2021 and 2.0% as of December 31, 2020).
Consists of investments in Brazilian Treasury Bonds (“LFTs”) with an average return of 100% of the Basic Interest Rate (SELIC, which was at 6.25% per year as of September 30, 2021 and 2.0% per year as of December 2020), invested to comply with certain requirements for authorized payment institutions as set forth by the Brazilian Central Bank regulation. This financial asset was classified at fair value through other comprehensive income. Unrealized accumulated gain on LFTs as of September 30, 2021 totaled R$92 (a gain of R$370 in nine-month period ended September 30, 2021).
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PagSeguro Digital Ltd.
Notes to the unaudited condensed consolidated interim financial statements
As of September 30, 2021 and for the three and nine-month periods ended September 30, 2021 and 2020
(All amounts in thousands of reais unless otherwise stated)
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|
September 30, 2021
|
|
December 31, 2020
|
|
|
|
|
|
Visa
|
|
Master
|
|
Hipercard
|
|
Elo
|
|
Amex
|
|
Total
|
|
Visa
|
|
Master
|
|
Hipercard
|
|
Elo
|
|
Total
|
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|
|
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|
|
|
|
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|
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|
|
|
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|
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|
|
Legal obligors
|
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|
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|
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|
|
|
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|
|
|
|
|
|
|
|
|
|
Itaú
|
|
784,859
|
|
2,397,900
|
|
722,236
|
|
21,080
|
|
—
|
|
3,926,075
|
|
774,445
|
|
2,100,129
|
|
627,463
|
|
—
|
|
3,502,037
|
|
Santander
|
|
393,950
|
|
1,930,239
|
|
—
|
|
—
|
|
—
|
|
2,324,189
|
|
448,592
|
|
2,043,676
|
|
—
|
|
—
|
|
2,492,268
|
|
Bradesco
|
|
1,145,205
|
|
195,956
|
|
—
|
|
658,786
|
|
178,234
|
|
2,178,181
|
|
1,759,911
|
|
294,631
|
|
—
|
|
409,384
|
|
2,463,926
|
|
Nubank
|
|
—
|
|
1,852,026
|
|
—
|
|
—
|
|
—
|
|
1,852,026
|
|
—
|
|
1,421,074
|
|
—
|
|
—
|
|
1,421,074
|
|
Banco do Brasil
|
|
822,240
|
|
290,924
|
|
—
|
|
394,931
|
|
—
|
|
1,508,095
|
|
988,772
|
|
251,808
|
|
—
|
|
250,849
|
|
1,491,429
|
|
Banco Carrefour
|
|
114,900
|
|
668,274
|
|
—
|
|
—
|
|
—
|
|
783,174
|
|
107,927
|
|
543,513
|
|
—
|
|
—
|
|
651,440
|
|
Porto Seguro
|
|
506,546
|
|
115,694
|
|
—
|
|
—
|
|
—
|
|
622,240
|
|
407,688
|
|
87,882
|
|
—
|
|
—
|
|
495,570
|
|
CEF
|
|
123,976
|
|
188,473
|
|
—
|
|
227,492
|
|
—
|
|
539,941
|
|
158,879
|
|
238,196
|
|
—
|
|
223,354
|
|
620,429
|
|
Banco Bradescard
|
|
288,760
|
|
77,658
|
|
—
|
|
—
|
|
—
|
|
366,418
|
|
—
|
|
—
|
|
—
|
|
2,874
|
|
2,874
|
|
Banco C6
|
|
—
|
|
331,041
|
|
—
|
|
—
|
|
—
|
|
331,041
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
Banco Inter
|
|
—
|
|
312,678
|
|
—
|
|
—
|
|
—
|
|
312,678
|
|
—
|
|
685
|
|
—
|
|
—
|
|
685
|
|
Banco Cooperativo Sicoob
|
|
—
|
|
303,756
|
|
—
|
|
—
|
|
—
|
|
303,756
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
Other (iv)
|
|
1,534,209
|
|
1,950,775
|
|
—
|
|
177,518
|
|
178
|
|
3,662,680
|
|
702,021
|
|
1,212,651
|
|
—
|
|
95,200
|
|
2,009,872
|
|
Total card issuers(i)
|
|
5,714,645
|
|
10,615,394
|
|
722,236
|
|
1,479,807
|
|
178,412
|
|
18,710,494
|
|
5,348,235
|
|
8,194,245
|
|
627,463
|
|
981,661
|
|
15,151,603
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cielo - Elo
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
109,355
|
|
—
|
|
—
|
|
—
|
|
—
|
|
209,318
|
|
Getnet
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
98,836
|
|
—
|
|
—
|
|
—
|
|
—
|
|
56,799
|
|
Other
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
11,713
|
|
—
|
|
—
|
|
—
|
|
—
|
|
29,030
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total acquirers (ii)
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
219,904
|
|
—
|
|
—
|
|
—
|
|
—
|
|
295,147
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other current
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
1,192,294
|
|
—
|
|
—
|
|
—
|
|
—
|
|
596,220
|
|
Other non-current
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
179,855
|
|
—
|
|
—
|
|
—
|
|
—
|
|
33,570
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
|
Total(iii)
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
1,372,149
|
|
—
|
|
—
|
|
—
|
|
—
|
|
629,790
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total accounts receivable
|
|
5,714,645
|
|
10,615,394
|
|
722,236
|
|
1,479,807
|
|
178,412
|
|
20,302,547
|
|
5,348,235
|
|
8,194,244
|
|
627,463
|
|
981,661
|
|
16,076,540
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(i)
|
Card issuers: receivables derived from transactions where PagSeguro Brazil acts as the financial intermediary in operations with the issuing banks, related to the intermediation agreements between PagSeguro Brazil and Visa, Mastercard, Hipercard, Amex or Elo. However, PagSeguro Brazil’s contractual accounts receivable are with the financial institutions, which are the legal obligors on the accounts receivable payment. Additionally, amounts due within 27 days of the original transaction, including those that fall due with the first installment of installment receivables, are guaranteed by Visa, Mastercard, Hipercard, Amex or Elo, as applicable, if the legal obligors do not make the payment.
|
|
(ii)
|
Acquirers: refers to card processing transactions to be received from the acquirers, which are a third parties acting as financial intermediaries between the issuing bank and PagSeguro Brazil.
|
|
(iii)
|
Other accounts receivable are mainly related to loans and credit card receivables with our customers. This amount is presented net of the ECL (“expected credit losses”), which is measured according to the IFRS 9. The provision rates are based on the internal credit rating that considers external information and are based on days past due. Every report date, PagSeguro reassesses the premises to adjust the historical credit loss experience with prospective information.
|
|
(iv)
|
Refers to other dispersed receivables from legal obligors.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PagSeguro Digital Ltd.
Notes to the unaudited condensed consolidated interim financial statements
As of September 30, 2021 and for the three and nine-month periods ended September 30, 2021 and 2020
(All amounts in thousands of reais unless otherwise stated)
|
|
|
|
|
|
7. Accounts receivable (continued)
|
The maturity analysis of accounts receivable is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30, 2021
|
|
December 31, 2020
|
|
|
|
|
|
|
|
Due within 30 days
|
|
3,914,184
|
|
6,951,315
|
|
Due within 31 to 120 days
|
|
10,114,713
|
|
6,129,039
|
|
Due within 121 to 180 days
|
|
2,948,870
|
|
1,509,449
|
|
Due within 181 to 360 days
|
|
3,037,850
|
|
1,453,167
|
|
Due after 360 days
|
|
286,930
|
|
33,570
|
|
|
|
20,302,547
|
|
16,076,540
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30, 2021
|
|
December 31, 2020
|
|
|
|
|
|
|
|
Income tax and social contribution (i)
|
|
335,370
|
|
223,057
|
|
Social integration program (ii)
|
|
184,832
|
|
151,165
|
|
Value-added tax on sales and services (iii)
|
|
22,637
|
|
14,646
|
|
Other
|
|
2,843
|
|
107
|
|
|
|
545,682
|
|
388,975
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(i)
|
Refers to the income tax and social contribution. The increase is mainly related to FIDC quotas redeemed on June 28, 2021, amounted to R$1,016,865, representing withholding taxes of R$147,365.
|
|
(ii)
|
Refers to Social Integration Program (PIS) and Social Contribution on Revenues (COFINS) recoverable on transaction activities and other services and purchase of POS devices.
|
|
(iii)
|
Refers to the Value-added Tax on Sales and Services (ICMS) due to purchases of POS devices.
|
|
|
|
|
|
9. Related-party balances and transactions
|
i)Balances and transactions with related parties
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30, 2021
|
|
December 31, 2020
|
|
|
Payables
|
|
Payables
|
|
|
|
|
|
|
Immediate parent
|
|
|
|
|
UOL - sales of services (a)
|
17,175
|
|
15,720
|
|
UOL - shared service costs (b)
|
25,546
|
|
12,539
|
|
UOL – Deposits (c)
|
82,290
|
|
11,391
|
|
Affiliated companies
|
|
|
|
|
UOL Edtech Tecnologia - Deposits (c)
|
220,268
|
|
—
|
|
Compasso Informática S.A. (d)
|
13,568
|
|
—
|
|
Transfolha Transportadora e Distribuição Ltda.
|
781
|
|
1,933
|
|
UOL Diveo - sales of services (d)
|
92
|
|
10,218
|
|
Others
|
9,781
|
|
6,535
|
|
|
369,501
|
|
58,336
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
Sales of services refers mainly to the purchase of advertising services from UOL.
|
|
(b)
|
Shared services costs mainly related to payroll costs that are incurred by the parent company UOL and are charged to PagSeguro Group.
|
|
(c)
|
Certificate of deposits (CD) acquired by UOL and UOL Edtech from BancoSeguro, with due date of less than a year.
|
|
(d)
|
This payable refers mainly to colocation and cloud services. In 2020, these services were provided by UOL Diveo and in 2021 these services are provided by Compasso Informática S.A.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PagSeguro Digital Ltd.
Notes to the unaudited condensed consolidated interim financial statements
As of September 30, 2021 and for the three and nine-month periods ended September 30, 2021 and 2020
(All amounts in thousands of reais unless otherwise stated)
|
9. Related-party balances and transactions (continued)
ii)Balances and transactions with related parties
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three-month period
|
|
Nine-month period
|
|
|
September 30, 2021
|
|
September 30, 2020
|
|
September 30, 2021
|
|
September 30, 2020
|
|
|
Revenue
|
|
Expense
|
|
Revenue
|
|
Expense
|
|
Revenue
|
|
Expense
|
|
Revenue
|
|
Expense
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Immediate parent
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
UOL - shared service costs (a)
|
—
|
|
105,906
|
|
—
|
|
79,535
|
|
—
|
|
109,409
|
|
—
|
|
112,104
|
|
UOL - sales of services (b)
|
1,614
|
|
26,153
|
|
777
|
|
19,171
|
|
2,424
|
|
69,915
|
|
2,097
|
|
62,570
|
|
UOL - deposits (c)
|
—
|
|
735
|
|
—
|
|
553
|
|
—
|
|
947
|
|
|
|
2,760
|
|
Affiliated companies
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
UOL Edtech Tecnologia –
Deposits (c)
|
—
|
|
4,881
|
|
—
|
|
—
|
|
—
|
|
4,881
|
|
—
|
|
—
|
|
Compasso Informática S.A.(d)
|
—
|
|
44,340
|
|
—
|
|
—
|
|
—
|
|
65,281
|
|
—
|
|
—
|
|
Transfolha Transportadora e
Distribuição Ltda.
|
—
|
|
9,171
|
|
—
|
|
7,082
|
|
—
|
|
12,485
|
|
—
|
|
17,129
|
|
UOL Diveo - sales of services (d)
|
—
|
|
1,580
|
|
—
|
|
9,987
|
|
—
|
|
2,289
|
|
—
|
|
36,209
|
|
Others
|
470
|
|
1,608
|
|
5
|
|
278
|
|
768
|
|
1,630
|
|
13
|
|
2,830
|
|
|
2,084
|
|
194,374
|
|
782
|
|
116,606
|
|
3,192
|
|
266,837
|
|
2,110
|
|
233,602
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
Shared services costs mainly related to payroll costs that are incurred by the parent company UOL and are charged to PagSeguro. Such costs are included in administrative expenses and the increase in three-month period relates mainly to higher payroll costs (profit sharing).
|
|
(b)
|
Sale of services expenses is related to advertising services and software licenses from UOL and revenue is related to intermediation fees.
|
|
(c)
|
Expenses are related to UOL and Uol Edtech purchase of BancoSeguro’s Certificate of Deposits (CD).
|
|
(d)
|
Expenses related to colocation and cloud services. In 2020, these services were provided by UOL Diveo and in 2021 the same services are provided by the affiliated company Compasso. The increase in 2021 relates to higher volume of cloud services due to the increase in active merchants and PagBank users.
|
iii)Key management compensation
Key management compensation includes short and long-term benefits of PagSeguro Brazil’s executive officers. The short and long-term compensation related to the executive officers for the three and nine-month periods ended September 30, 2021 amounted to R$222 and R$39,642 (R$100,679 and R$104,446 for the three and nine-month periods ended September 30, 2020).
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PagSeguro Digital Ltd.
Notes to the unaudited condensed consolidated interim financial statements
As of September 30, 2021 and for the three and nine-month periods ended September 30, 2021 and 2020
(All amounts in thousands of reais unless otherwise stated)
|
|
|
|
|
|
10. Business combinations
|
On July 23, 2020, PagSeguro Brazil acquired 100% of the share capital and obtained control of Zygo. Total consideration amounted to R$8,000 and the total net assets acquired at fair value amounted to R$1,883, resulting in the preliminary recognition of goodwill of R$6,117. In July 2021, the Company concluded the purchase price allocation and as a result in the goodwill of R$5,769, with the allocation of R$348 as non-compete agreement and software. The consideration paid in cash amounted to R$5,053 and the remaining portion of purchase price will be retained for eventual debt.
On August 31, 2020, PagSeguro Brazil acquired 100% of the share capital and obtained control of CDS. Total consideration paid in cash amounted to R$2,379 and the total net assets acquired at fair value amounted to R$2,379, resulting in no goodwill.
On October 31, 2020, PagSeguro Brazil acquired 100% of the share capital and obtained control of MOIP. Purchase price amounted to R$358,609 and the total net assets acquired at fair value amounted to R$171,946. The initial consideration paid in cash amounted to R$307,855 and on March 8, 2021, paid additional amount of R$32,573. The remaining portion in amount of R$18,181 was recognized in other liabilities in non-current liabilities.
The preliminary purchase price allocation ("PPA") was completed on December 31, 2020, which included the recognition of a customer portfolio with a fair value of R$58,506, resulting in the recognition of goodwill of R$128,157, which is attributable mainly to operational synergy and cost reductions. The PPA was calculated using projections for the period of five years based on management's budgets for MOIP and applying a long-term growth rate based on the estimated gross domestic product ("GDP") plus the estimated growth of GDP of services (fluctuating from 5.7% to 6.3% per year) in order to project future cash flows, discount rate based on WACC (fluctuating from 11.7% to 13.3% per year).
On August 12, 2021, PagSeguro Brazil acquired 100% of the share capital and obtained control of Concil. Total consideration amounted to R$43,896 and the total net assets acquired at fair value amounted to R$36,056. The consideration paid in cash amounted to R$35,000 and the remaining portion of purchase price will be paid in installments and retained for eventual debt. Concil main activity is in the information technology industry, focused on the processing of back-office solutions, including reconciliation services for the capture of credit cards with acquirers and sub acquirers.
The preliminary purchase price allocation ("PPA") was completed on September 30, 2021, which included the recognition of a customer portfolio with a fair value of R$3,839, non-compete agreement of R$940 and software of R$33,136. The Company has also recognized a contingency liability and indemnification assets of R$7,848 resulting in the recognition of goodwill of R$7,840, which is attributable mainly to operational synergy and cost reductions.
The PPA was calculated using projections for the period of five years based on management's budgets for Concil and applying an inflation rate plus the estimated growth of GDP of services (fluctuating from 2.0% to 4.5% per year) in order to project future cash flows, discount rate based on WACC (fluctuating from 17.5% to 19.5% per year).
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PagSeguro Digital Ltd.
Notes to the unaudited condensed consolidated interim financial statements
As of September 30, 2021 and for the three and nine-month periods ended September 30, 2021 and 2020
(All amounts in thousands of reais unless otherwise stated)
|
10. Business combinations (continued)
These acquisitions are in accordance with PagSeguro Group's business strategies, ramping up investments on new technologies, products, and services for our digital ecosystem. The fair value of assets and liabilities acquired in 2021 (Concil) and 2020 (CDS, Zygo and MOIP) were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30, 2021
|
|
December 31, 2020
|
|
|
|
|
|
|
|
Fair value of assets and liabilities acquired
|
|
|
|
|
|
Cash and cash equivalents
|
|
529
|
|
38,385
|
|
Accounts receivable acquired
|
|
540
|
|
537,570
|
|
Financial investments acquired
|
|
—
|
|
177,772
|
|
Other assets acquired
|
|
1,092
|
|
30,988
|
|
Payables to third parties assumed
|
|
—
|
|
(566,244)
|
|
Liabilities assumed
|
|
(4,020)
|
|
(42,263)
|
|
Customer portfolio, expenditures with software and others
|
|
45,763
|
|
58,506
|
|
Contingency liability
|
|
(7,848)
|
|
—
|
|
Value of net assets
|
|
36,056
|
|
234,714
|
|
Goodwill
|
|
7,840
|
|
134,274
|
|
Purchase cost
|
|
43,896
|
|
368,988
|
|
Consideration for the purchase settled in cash
|
|
35,000
|
|
315,287
|
|
Cash and cash equivalents at the subsidiary acquired
|
|
(529)
|
|
(38,385)
|
|
Amount paid on acquisitions less cash and cash equivalents acquired
|
|
34,471
|
|
276,902
|
|
|
|
|
|
11. Property and equipment
|
a)Property and equipment are composed as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30, 2021
|
|
|
Cost
|
|
Accumulated depreciation
|
|
Net
|
|
Data processing equipment
|
98,364
|
|
(48,440)
|
|
49,924
|
|
Machinery and equipment (i)
|
2,541,714
|
|
(524,826)
|
|
2,016,888
|
|
Buildings Leasing
|
83,346
|
|
(22,739)
|
|
60,607
|
|
Other
|
28,262
|
|
(7,386)
|
|
20,876
|
|
Total
|
2,751,686
|
|
(603,391)
|
|
2,148,295
|
|
|
|
|
|
December 31, 2020
|
|
|
Cost
|
|
Accumulated depreciation
|
|
Net
|
|
Data processing equipment
|
77,413
|
|
(35,572)
|
|
41,841
|
|
Machinery and equipment (i)
|
1,881,556
|
|
(204,154)
|
|
1,677,402
|
|
Buildings Leasing
|
79,890
|
|
(12,623)
|
|
67,267
|
|
Other
|
22,115
|
|
(6,012)
|
|
16,103
|
|
Total
|
2,060,974
|
|
(258,360)
|
|
1,802,613
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PagSeguro Digital Ltd.
Notes to the unaudited condensed consolidated interim financial statements
As of September 30, 2021 and for the three and nine-month periods ended September 30, 2021 and 2020
(All amounts in thousands of reais unless otherwise stated)
|
11. Property and equipment (continued)
b)The changes in cost and accumulated depreciation were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Data processing equipment
|
|
Machinery and equipment (i)
|
|
Buildings Leasing
|
|
Other
|
|
Total
|
|
On December 31, 2020
|
46,538
|
|
343,229
|
|
—
|
|
10,223
|
|
399,990
|
|
Opening balance
|
|
|
|
|
|
|
|
|
|
|
Cost
|
12,297
|
|
1,509,815
|
|
79,890
|
|
9,609
|
|
1,611,610
|
|
Purchases
|
10,820
|
|
1,519,278
|
|
79,717
|
|
3,789
|
|
1,613,604
|
|
Disposals
|
(1,509)
|
|
(9,838)
|
|
(684)
|
|
(74)
|
|
(12,105)
|
|
Acquisition of subsidiary
|
2,986
|
|
374
|
|
857
|
|
5,894
|
|
10,111
|
|
Depreciation
|
(16,994)
|
|
(175,641)
|
|
(12,623)
|
|
(3,729)
|
|
(208,987)
|
|
Depreciation
|
(15,596)
|
|
(175,805)
|
|
(12,227)
|
|
(1)
|
|
(204,628)
|
|
Disposals
|
21
|
|
264
|
|
—
|
|
17
|
|
302
|
|
Acquisition of subsidiary
|
(1,419)
|
|
(100)
|
|
(396)
|
|
(2,746)
|
|
(4,661)
|
|
Net book value
|
41,841
|
|
1,677,402
|
|
67,267
|
|
16,103
|
|
1,802,613
|
|
On December 31, 2020
|
|
|
|
|
|
|
|
|
|
|
Cost
|
77,413
|
|
1,881,556
|
|
79,890
|
|
22,116
|
|
2,060,974
|
|
Accumulated depreciation
|
(35,572)
|
|
(204,154)
|
|
(12,623)
|
|
(6,013)
|
|
(258,360)
|
|
|
|
|
|
|
|
|
|
|
|
|
Net book value
|
41,841
|
|
1,677,402
|
|
67,267
|
|
16,103
|
|
1,802,613
|
|
On September 30, 2021
|
|
|
|
|
|
|
|
|
|
|
Opening balance
|
|
|
|
|
|
|
|
|
|
|
Cost
|
20,951
|
|
660,158
|
|
3,457
|
|
6,146
|
|
690,712
|
|
Purchases
|
20,696
|
|
672,689
|
|
4,314
|
|
7,952
|
|
705,652
|
|
Disposals
|
(261)
|
|
(12,540)
|
|
(857)
|
|
(2,026)
|
|
(15,684)
|
|
Acquisition of subsidiary
|
516
|
|
9
|
|
—
|
|
220
|
|
745
|
|
Depreciation
|
(12,868)
|
|
(320,672)
|
|
(10,116)
|
|
(1,374)
|
|
(345,030)
|
|
Depreciation
|
(12,613)
|
|
(323,461)
|
|
(10,719)
|
|
(2,253)
|
|
(349,046)
|
|
Disposals
|
123
|
|
2,792
|
|
603
|
|
964
|
|
4,482
|
|
Acquisition of subsidiary
|
(378)
|
|
(3)
|
|
—
|
|
(85)
|
|
(466)
|
|
Net book value
|
49,924
|
|
2,016,888
|
|
60,608
|
|
20,875
|
|
2,148,295
|
|
|
|
|
|
|
|
|
|
|
|
|
On September 30, 2021
|
|
|
|
|
|
|
|
|
|
|
Cost
|
98,364
|
|
2,541,714
|
|
83,346
|
|
28,262
|
|
2,751,686
|
|
Accumulated depreciation
|
(48,440)
|
|
(524,826)
|
|
(22,739)
|
|
(7,386)
|
|
(603,391)
|
|
Net book value
|
49,924
|
|
2,016,888
|
|
60,608
|
|
20,875
|
|
2,148,295
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(i)
|
Net book value of machinery and equipment are R$1,968,877 of POS devices (R$1,635,782, as of December 31, 2020), which are depreciated over 5 years. The depreciation of POS in the nine-month period ended September 30, 2021, amounted to R$319,703 (R$99,510 in the nine-month period ended September 30, 2020). On September 30, 2021, PagSeguro have contractual obligations to acquire POS Devices in the amount of R$1,536,271 (R$1,386,324 on December 31, 2020).
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PagSeguro Digital Ltd.
Notes to the unaudited condensed consolidated interim financial statements
As of September 30, 2021 and for the three and nine-month periods ended September 30, 2021 and 2020
(All amounts in thousands of reais unless otherwise stated)
|
a) Intangible assets are composed as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30, 2021
|
|
|
Cost
|
|
Accumulated amortization
|
|
Net
|
|
Expenditures related to software and technology (i)
|
1,852,540
|
|
(694,706)
|
|
1,157,834
|
|
Software licenses
|
119,935
|
|
(44,874)
|
|
75,061
|
|
Goodwill (ii)
|
178,263
|
|
—
|
|
178,263
|
|
Other
|
67,769
|
|
(11,648)
|
|
56,121
|
|
|
2,218,507
|
|
(751,228)
|
|
1,467,279
|
|
|
|
|
|
December 31, 2020
|
|
|
Cost
|
|
Accumulated amortization
|
|
Net
|
|
Expenditures related to software and technology (i)
|
1,319,061
|
|
(501,319)
|
|
817,742
|
|
Software licenses
|
103,256
|
|
(29,060)
|
|
74,196
|
|
Goodwill (ii)
|
169,667
|
|
—
|
|
169,667
|
|
Other
|
62,786
|
|
(771)
|
|
62,015
|
|
|
1,654,770
|
|
(531,150)
|
|
1,123,620
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(i)
|
The PagSeguro Group capitalizes expenses incurred with the development of platforms, which are amortized over their useful lives of approximately five years.
|
|
(ii)
|
The balances comprise the goodwill arising from the acquisition of the companies R2Tech, Biva, BancoSeguro, Yamí Zygo, MOIP and Concil.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PagSeguro Digital Ltd.
Notes to the unaudited condensed consolidated interim financial statements
As of September 30, 2021 and for the three and nine-month periods ended September 30, 2021 and 2020
(All amounts in thousands of reais unless otherwise stated)
|
12. Intangible assets (continued)
b) The changes in cost and accumulated amortization were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expenditures with software and technology
|
|
Software licenses
|
|
Goodwill
|
|
Other
|
|
Total
|
|
On December 31, 2020
|
485,939
|
|
44,755
|
|
54,858
|
|
4,001
|
|
589,553
|
|
Opening balance
|
|
|
|
|
|
|
|
|
|
|
Cost
|
531,092
|
|
45,010
|
|
114,809
|
|
58,199
|
|
749,110
|
|
Additions (i)
|
485,608
|
|
42,138
|
|
134,274
|
|
58,633
|
|
720,653
|
|
Disposals (ii)
|
(6,308)
|
|
—
|
|
(19,465)
|
|
(447)
|
|
(26,220)
|
|
Acquisition of subsidiary (iii)
|
51,791
|
|
2,871
|
|
—
|
|
13
|
|
54,675
|
|
Amortization
|
(199,289)
|
|
(15,569)
|
|
—
|
|
(185)
|
|
(215,043)
|
|
Amortization
|
(164,319)
|
|
(15,153)
|
|
—
|
|
(180)
|
|
(179,652)
|
|
Disposals
|
2,667
|
|
—
|
|
—
|
|
—
|
|
2,667
|
|
Acquisition of subsidiary (iii)
|
(37,636)
|
|
(416)
|
|
—
|
|
(5)
|
|
(38,056)
|
|
Net book value
|
817,742
|
|
74,196
|
|
169,667
|
|
62,015
|
|
1,123,620
|
|
On December 31, 2020
|
|
|
|
|
|
|
|
|
|
|
Cost
|
1,319,061
|
|
103,256
|
|
169,667
|
|
62,786
|
|
1,654,770
|
|
Accumulated amortization
|
(501,319)
|
|
(29,060)
|
|
—
|
|
(771)
|
|
(531,150)
|
|
Net book value
|
817,742
|
|
74,196
|
|
169,667
|
|
62,015
|
|
1,123,620
|
|
On September 30, 2021
|
|
|
|
|
|
|
|
|
|
|
Cost
|
533,479
|
|
16,679
|
|
8,596
|
|
4,983
|
|
563,737
|
|
Additions (iv)
|
542,590
|
|
18,245
|
|
8,596
|
|
4,983
|
|
574,414
|
|
Disposals
|
(9,376)
|
|
(1,705)
|
|
—
|
|
—
|
|
(11,081)
|
|
Acquisition of subsidiary (iii)
|
265
|
|
139
|
|
—
|
|
—
|
|
404
|
|
Amortization
|
(193,387)
|
|
(15,814)
|
|
—
|
|
(10,877)
|
|
(220,078)
|
|
Amortization
|
(195,004)
|
|
(16,036)
|
|
—
|
|
(10,877)
|
|
(221,917)
|
|
Disposals
|
1,617
|
|
222
|
|
—
|
|
—
|
|
1,839
|
|
Net book value
|
1,157,834
|
|
75,061
|
|
178,263
|
|
56,121
|
|
1,467,279
|
|
On September 30, 2021
|
|
|
|
|
|
|
|
|
|
|
Cost
|
1,852,540
|
|
119,935
|
|
178,263
|
|
67,769
|
|
2,218,507
|
|
Accumulated amortization
|
(694,706)
|
|
(44,874)
|
|
—
|
|
(11,648)
|
|
(751,228)
|
|
|
|
|
|
|
|
|
|
|
|
|
Net book value
|
1,157,834
|
|
75,061
|
|
178,263
|
|
56,121
|
|
1,467,279
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(i)
|
Refers to pulverized expenditures with software and technology, mainly related to customer experience, such as, digital payment and digital banking account. Goodwill recorded in business combinations acquisitions, mainly related to MOIP and other is related to purchase price allocation of MOIP (customer portfolio).
|
|
(ii)
|
Goodwill disposals refers to goodwill recorded in prior years related to business combinations acquisitions.
|
|
(iii)
|
Relates to intangible assets from Concil acquired in 2021 and MOIP, ZYGO and CDS, which were acquired in 2020.
|
|
(iv)
|
Refers to pulverized expenditures with software and technology, mainly related to customer experience functionalities, such as, digital payment and digital banking account. Goodwill recorded in business combinations acquisitions related to Concil.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PagSeguro Digital Ltd.
Notes to the unaudited condensed consolidated interim financial statements
As of September 30, 2021 and for the three and nine-month periods ended September 30, 2021 and 2020
(All amounts in thousands of reais unless otherwise stated)
|
|
|
|
|
|
13. Payables to third parties
|
Payables to third parties, in the amount of R$11,068,114 (R$10,101,510 as of December 31, 2020) correspond mainly to amounts to be paid to merchants related to transactions carried out by their card holders, net of the intermediation fees and discounts applied. PagSeguro Brazil's average settlement terms agreed upon with commercial establishments is up to 14 days.
From the total amount of payable to third parties, R$682,576 (R$739,951 as of December 31, 2020) refer to the balance of transactions settled on merchant's payment account and available to be used by them and R$3,810,758 (R$3,566,818 as of December 31, 2020) are the balance of our clients maintained in their banking accounts that are automatic invested by the Company in Certificate of Deposits with 30 days of maturity and interest average rate of 57% of CDI.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30, 2021
|
|
December 31, 2020
|
|
|
|
|
|
|
Certificate of Deposit (i)
|
2,157,342
|
|
604,916
|
|
Interbank deposits (ii)
|
300,163
|
|
—
|
|
Corporate securities (iii)
|
212,640
|
|
161,170
|
|
|
2,670,145
|
|
766,086
|
|
Current
|
2,458,376
|
|
571,996
|
|
Non – Current
|
211,769
|
|
194,090
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(i)
|
The average return is 169% of CDI (164% of CDI in December 2020). The increase is related to higher offer of CDBs products to our clients, considering this service began in 2020.
|
|
(ii)
|
The average return is 115% of CDI.
|
|
(iii)
|
The average return is 155% of CDI (158% of CDI in December 2020).
|
The maturity analysis of deposits is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30, 2021
|
|
December 31, 2020
|
|
|
|
|
|
|
Due within 30 days
|
214,553
|
|
5,231
|
|
Due within 31 to 120 days
|
1,282,133
|
|
77,812
|
|
Due within 121 to 180 days
|
307,648
|
|
53,000
|
|
Due within 181 to 360 days
|
654,042
|
|
435,953
|
|
Due to 361 days or more days
|
211,769
|
|
194,090
|
|
|
2,670,145
|
|
766,086
|
The changes in deposits were as follows:
|
|
|
|
|
|
|
|
On December 31, 2019
|
—
|
|
Additions
|
892,754
|
|
Withdraws
|
(130,460)
|
|
Interest
|
3,792
|
|
On December 31, 2020
|
766,086
|
|
Additions
|
3,012,217
|
|
Withdraws
|
(1,157,282)
|
|
Interest
|
49,124
|
|
On September 30, 2021
|
2,670,145
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PagSeguro Digital Ltd.
Notes to the unaudited condensed consolidated interim financial statements
As of September 30, 2021 and for the three and nine-month periods ended September 30, 2021 and 2020
(All amounts in thousands of reais unless otherwise stated)
|
|
|
|
|
|
15. Salaries and social security charges
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30, 2021
|
|
December 31, 2020
|
|
Profit sharing
|
45,771
|
|
80,665
|
|
Social charges
|
30,123
|
|
24,776
|
|
Payroll accruals
|
105,780
|
|
53,264
|
|
Payroll taxes (LTIP) (i)
|
57,791
|
|
11,029
|
|
Other
|
7,818
|
|
5,464
|
|
|
247,283
|
|
175,198
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(i)
|
Refers to social charges and income tax over LTIP and LTIP goals balances.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PagSeguro Digital Ltd.
Notes to the unaudited condensed consolidated interim financial statements
As of September 30, 2021 and for the three and nine-month periods ended September 30, 2021 and 2020
(All amounts in thousands of reais unless otherwise stated)
|
|
|
|
|
|
16. Taxes and contributions
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30, 2021
|
|
December 31, 2020
|
|
|
|
|
|
|
Taxes
|
|
|
|
|
Services tax and other (i)
|
167,412
|
|
157,066
|
|
Value-added tax on sales and services (ii)
|
192
|
|
29,678
|
|
Social integration program (iii)
|
26,786
|
|
24,984
|
|
Social contribution on revenues (iii)
|
164,446
|
|
153,626
|
|
Income tax and social contribution (iv)
|
4,682
|
|
6,336
|
|
Other
|
13,176
|
|
8,841
|
|
|
376,694
|
|
380,531
|
|
|
|
|
|
|
|
September 30, 2021
|
|
December 31, 2020
|
|
Judicial deposits (v)
|
|
|
|
|
Services tax (i)
|
(156,749)
|
|
(150,121)
|
|
Value-added tax on sales and services (ii)
|
—
|
|
(29,114)
|
|
Social integration program (iii)
|
(25,401)
|
|
(24,498)
|
|
Social contribution on revenues (iii)
|
(156,313)
|
|
(150,756)
|
|
|
(338,463)
|
|
(354,489)
|
|
|
38,231
|
|
26,042
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(i)
|
Refers to tax on revenues.
|
|
(ii)
|
In March 2021, there was a decision taken by Brazilian Supreme Court related to Value-added Tax on Sales and Services (ICMS), that beneficiated the Company. For this reason, the Company reversed the provision in the amount of R$29,114. Consequently, as the Company does not have this amount recorded in liability to make the offset with judicial deposits, the deposit is now being presented in the non-current assets as Judicial Deposits, until the withdrawal of these amounts.
|
|
(iii)
|
Refers mainly to Social Integration Program (PIS) and Social Contribution on Revenues (COFINS) charged on financial income.
|
|
(iv)
|
Refers to the income tax and social contribution payable.
|
|
(v)
|
The PagSeguro Group obtained court decisions to deposit the amount related to the payments in escrow for matters discussed in items “i”, “ii” and “iii” above.
|
|
|
|
|
|
17. Provision for contingencies
|
PagSeguro Group is party to labor and civil litigation in progress and are discussing such matters at the administrative and judicial levels, which in some cases the PagSeguro Group has made corresponding judicial deposits. The likelihood of a negative outcome is assessed periodically and adjusted by management, when appropriate. Such assessment includes the opinion of its external legal advisors.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30, 2021
|
|
December 31, 2020
|
|
|
|
|
|
|
Civil
|
34,034
|
|
23,238
|
|
Labor
|
3,180
|
|
5,566
|
|
|
37,214
|
|
28,804
|
|
Current
|
24,407
|
|
17,063
|
|
Non-Current
|
12,807
|
|
11,741
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PagSeguro Digital Ltd.
Notes to the unaudited condensed consolidated interim financial statements
As of September 30, 2021 and for the three and nine-month periods ended September 30, 2021 and 2020
(All amounts in thousands of reais unless otherwise stated)
|
|
|
|
|
|
17. Provision for contingencies (continued)
|
The PagSeguro Group is party on tax and civil lawsuits involving risks classified by management, with the assistance of its legal advisors, as possible losses, for which no provision was recognized on September 30, 2021, totaling approximately R$237,424 (December 31, 2020 - R$165,862). The PagSeguro Group is not a party to labor lawsuits involving risks classified by management as possible losses. The changes in provision for contingencies were as follows:
|
|
|
|
|
|
|
|
On December 31, 2019
|
11,849
|
|
Accrual
|
6,409
|
|
Acquisition of subsidiary
|
11,446
|
|
Settlement
|
(1,127)
|
|
Interest
|
227
|
|
On December 31, 2020
|
28,804
|
|
Accrual
|
19,911
|
|
Settlement
|
(12,994)
|
|
Interest
|
1,493
|
|
On September 30, 2021
|
37,214
|
|
|
|
|
|
18. Income tax and social contribution
|
a)Reconciliation of the deferred income tax and social contribution:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tax losses
|
|
Tax credit
|
|
Technological inovation (i)
|
|
Other temporary differences assets (ii)
|
|
Other temporary differences liability (iii)
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred tax
|
|
|
|
|
|
|
|
|
|
|
|
|
On December 31, 2019
|
50,134
|
|
5,618
|
|
(161,211)
|
|
153,632
|
|
(679,123)
|
|
(630,950)
|
|
Included in the statement of income
|
165,893
|
|
(541)
|
|
(79,447)
|
|
12,501
|
|
(407,414)
|
|
(309,008)
|
|
Other
|
2,550
|
|
—
|
|
—
|
|
5
|
|
—
|
|
2,555
|
|
On September 30,2020
|
218,577
|
|
5,077
|
|
(240,658)
|
|
166,138
|
|
(1,086,537)
|
|
(937,402)
|
|
Included in the statement of income
|
(149,738)
|
|
(180)
|
|
(37,313)
|
|
(5,538)
|
|
58,654
|
|
(134,115)
|
|
Other
|
—
|
|
—
|
|
—
|
|
22,218
|
|
—
|
|
22,218
|
|
On December 31, 2020
|
68,839
|
|
4,897
|
|
(277,971)
|
|
182,818
|
|
(1,027,883)
|
|
(1,049,300)
|
|
Included in the statement of income
|
152,809
|
|
(4,717)
|
|
(114,169)
|
|
65,940
|
|
(325,266)
|
|
(225,403)
|
|
Other
|
4,468
|
|
—
|
|
8,617
|
|
(93)
|
|
—
|
|
12,992
|
|
On September 30, 2021
|
226,116
|
|
180
|
|
(383,523)
|
|
248,665
|
|
(1,353,149)
|
|
(1,261,711)
|
|
Deferred tax asset
|
|
|
|
|
|
|
|
|
|
|
88,749
|
|
Deferred tax liability
|
|
|
|
|
|
|
|
|
|
|
(1,350,460)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(i)
|
Refers to the benefit granted by the Technological Innovation Law (Lei do Bem), which reduces the tax charges on the capitalized amount of intangible assets.
|
|
(ii)
|
The main other assets temporary difference refers to expected credit losses and taxes and contributions as detailed in Note 16.
|
|
(iii)
|
The main other liability temporary difference refers to gain on the ownership of FIDC quotas, that will be realized only in the redemption of such quotas.
|
Deferred tax assets are recognized for tax loss carry-forward to the extent that the realization of the related tax benefit through future taxable profits is probable. Tax losses do not have expiration date.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PagSeguro Digital Ltd.
Notes to the unaudited condensed consolidated interim financial statements
As of September 30, 2021 and for the three and nine-month periods ended September 30, 2021 and 2020
(All amounts in thousands of reais unless otherwise stated)
|
18. Income tax and social contribution (continued)
b) Reconciliation of the income tax and social contribution expense
PagSeguro Group computed income tax and social contribution under the taxable income method. The following is a reconciliation of the difference between the actual income tax and social contribution expenses and the expenses computed by applying the Brazilian federal statutory rate for the three and nine-month periods ended September 30, 2021, and 2020:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three-month period
|
|
Nine-month period
|
|
|
|
September 30, 2021
|
|
September 30, 2020
|
|
September 30, 2021
|
|
September 30, 2020
|
|
|
|
|
|
|
|
|
|
|
|
Profit for the period before taxes
|
|
421,181
|
|
352,190
|
|
1,119,709
|
|
1,260,781
|
|
Statutory rate
|
|
34%
|
|
34%
|
|
34%
|
|
34%
|
|
Expected income tax and social contribution
|
|
(143,202)
|
|
(119,745)
|
|
(380,701)
|
|
(428,666)
|
|
|
|
|
|
|
|
|
|
|
|
Income tax and social contribution effect on:
|
|
|
|
|
|
|
|
|
|
Permanent additions (exclusions)
|
|
|
|
|
|
|
|
|
|
Gifts
|
|
(714)
|
|
(4,745)
|
|
(1,080)
|
|
(6,615)
|
|
R&D and technological innovation benefit (i)
|
|
41,755
|
|
39,976
|
|
116,929
|
|
93,097
|
|
Taxation of income abroad
|
|
537
|
|
(163)
|
|
(600)
|
|
1,181
|
|
Unrecorded deferred taxes
|
|
139
|
|
—
|
|
7,765
|
|
—
|
|
Other additions
|
|
1,849
|
|
(4,084)
|
|
2,994
|
|
(3,121)
|
|
Income tax and social contribution expense
|
|
(99,635)
|
|
(88,761)
|
|
(254,693)
|
|
(344,124)
|
|
|
|
|
|
|
|
|
|
|
|
Effective rate
|
|
24%
|
|
25%
|
|
23%
|
|
27%
|
|
Income tax and social contribution – current
|
|
(7,652)
|
|
(13,349)
|
|
(29,290)
|
|
(35,117)
|
|
Income tax and social contribution - deferred
|
|
(91,983)
|
|
(75,412)
|
|
(225,403)
|
|
(309,007)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(i)
|
Refers to the benefit granted by the Technological Innovation Law 11.196/05 (Lei do Bem), which reduces the income tax charges, based on the amount invested by the PagSeguro Group on specific intangible assets, see Note 12.
|
a) Share capital
On September 30, 2021, share capital is represented by 329,592,676 common shares, per value of US$0,000025. Share capital is composed of the following shares for the nine-month period ended September 30, 2021:
|
|
|
|
|
|
|
|
|
|
|
December 31, 2019 shares outstanding
|
|
328,855,412
|
|
|
|
|
|
Treasury shares
|
|
(350,006)
|
|
Long-Term Incentive Plan
|
|
1,058,509
|
|
Repurchase of common shares
|
|
(547,543)
|
|
December 31, 2020 shares outstanding
|
|
329,016,372
|
|
|
|
|
|
Treasury shares
|
|
(166,170)
|
|
Long-Term Incentive Plan
|
|
742,474
|
|
September 30, 2021 shares outstanding
|
|
329,592,676
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PagSeguro Digital Ltd.
Notes to the unaudited condensed consolidated interim financial statements
As of September 30, 2021 and for the three and nine-month periods ended September 30, 2021 and 2020
(All amounts in thousands of reais unless otherwise stated)
|
19. Equity (continued)
b) Capital reserve
The capital reserve can only be used to increase capital, offset losses, redeem, reimburse, or purchase shares or pay cumulative dividends on preferred shares. For the nine-month period ended September 30, 2021, the Company recognize LTIP capital movement by issuing new shares of R$138,665 (R$3,834 in the nine-month period ended September 30, 2020).
c) Share based long-term incentive plan (LTIP and LTIP goals)
Members of the Company’s management participate in a Long-Term Incentive Plan, or LTIP, which was established by UOL for its group companies on July 29, 2015 and has been adopted by PagSeguro Digital. Beneficiaries under the LTIP are selected by UOL’s LTIP Committee, which consists of the Chairman and two officers of UOL and are submitted to our Board of Directors for adoption. In this plan, employees (including senior executives) of the Group receive remuneration in the form of share-based payments, whereby employees render services as consideration for equity instruments (equity-settled transactions). The cost of equity-settled transactions is determined by the fair value at the date when the grant is made.
That cost is recognized in personnel expenses (Note 22), together with a corresponding increase in equity over the period in which the service is fulfilled (the vesting period). The cumulative expense recognized for equity-settled transactions at each reporting date until the vesting date reflects the extent to which the vesting period has expired and the Group’s best estimate of the number of equity instruments that will ultimately vest. The expense in the statement of profit or loss represents the movement in cumulative expense recognized as at the beginning and end of the year. No expense is recognized for awards that do not ultimately vest because service conditions have not been met.
Under the terms of the LTIP, upon completion of the IPO, the vested portion of each beneficiary’s LTIP rights was converted into Class A common shares of PagSeguro Digital at the IPO price (US$21.50) which is the assessed fair value at the grant date. As a result, the beneficiaries of the LTIP received a total of 1,823,727 new Class A common shares upon completion of the IPO. The unvested portions of each beneficiary’s LTIP rights will be settled on each future annual vesting date in shares.
The LTIP-Goals plan was established at PagSeguro Brazil on December 18, 2018, as approved by the Company's board of directors, and last amended by the Company's board of directors on January 19, 2021. Beneficiaries under the LTIP-Goals plan are granted awards, which may be payable in cash, Class A common shares or a combination of the two, at the discretion of the LTIP-Goals Committee based on the goals established in the Company's corporate results-sharing plan for any given year. If any portion of an award is payable in cash, the relevant amount in Brazilian Reais was determined on the last business day of January for awards related to 2020. For awards related to 2021 and beyond, the LTIP-Goals Committee will set a determination date that falls no later than on the last business day of March following the year for which such amount was awarded. Under the LTIP-Goals plan, the relevant payment shall be made in cash and/or Class A common shares delivered within 10 business days of that determination date.
This arrangement is classified as equity settled. For the nine-month period ended September 30, 2021, the Company recognized in equity, costs related to the LTIP and LTIP Goals in the total amount of R$264,232 (R$62,140 in the nine-month period ended September 30, 2020). As of September 30, 2021, the amount of R$57,791 was accounted for LTIP and LTIP Goals social charges, including withholding income tax (Note 15) and the expected amount of cash disbursement with withholding income tax for LTIP in 2021 is R$45,388.
The maximum number of common shares that can be delivered to beneficiaries under the LTIP may not exceed 3% of our issued share capital at any time, On September 30, 2021 total shares granted were 7,780,913, and the total shares issued were 5,892,145.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PagSeguro Digital Ltd.
Notes to the unaudited condensed consolidated interim financial statements
As of September 30, 2021 and for the three and nine-month periods ended September 30, 2021 and 2020
(All amounts in thousands of reais unless otherwise stated)
|
19. Equity (continued)
d) OCI, equity valuation adjustments and non-controlling
The Company recognizes in this account the accumulated effect of the foreign exchange variation resulting from the conversion of the financial statements of the foreign subsidiary BCPS, which amounted to R$(284) in the nine-months ended on September 30, 2021 (positive value in R$959 as of December 31, 2020). This accumulated effect will be reverted to the result of the year as gain or loss only in case of disposal or write-off of the investment.
The Financial investments mentioned in Note 6 were classified at fair value through other comprehensive income. Unrealized gain on LFTs in the nine-month period ended September 30, 2021 totaled R$370 (R$306 accumulated loss in December 31, 2020).
The Company also recognized in this account the difference between the book value and the amounts paid in the acquisitions of additional interests from the non-controlling shareholders of the subsidiary represented by the accumulated amount of R$22,372 as of September 30, 2021 related to R2TECH, in the amount of R$11,663 (R$11,663 as of December 31, 2020) and BIVA, in the amount of 10,709 (R$10,709 as of December 31, 2020).
On November 3, 2020, third party investors withdrew their capital in the amount of R$10,646 related to the senior quotas of FIDC.As a result, as of September 30, 2021, the FIDC shared capital was comprised by third party mezzanine quotas in the amount of R$10,000 million, which pay 107% of the Brazilian Interbank Deposit Certificate (CDI) with annual amortization of interest. On September 30, 2021, the share capital of FIDC was comprised of subordinated quotas and mezzanine quotas. PagSeguro Brazil owns 100% of the subordinated quotas.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PagSeguro Digital Ltd.
Notes to the unaudited condensed consolidated interim financial statements
As of September 30, 2021 and for the three and nine-month periods ended September 30, 2021 and 2020
(All amounts in thousands of reais unless otherwise stated)
|
19. Equity (continued)
e) Treasury shares
On October 30, 2018, PagSeguro Digital’s board of directors authorized a share repurchase program, under which the PagSeguro Group may repurchase up to US$250 million in outstanding Class A common shares traded on the New York Stock Exchange (NYSE). The Company's management is responsible for defining the timing and the number of shares to be acquired, within authorized limits. Treasury shares are composed of the following shares as of September 30, 2021:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares
|
|
Amount
|
|
Average price per share
|
|
Repurchased shares
|
|
|
|
|
|
|
2018
|
503,642
|
|
39,532
|
|
US$20.09
|
|
2019
|
15,000
|
|
1,735
|
|
US$28.14
|
|
2020
|
547,543
|
|
44,775
|
|
US$16.13
|
|
|
|
|
|
|
|
|
Distributed shares to LTIP
|
|
|
|
|
|
|
2020
|
(897,549)
|
|
(72,433)
|
|
—
|
|
2021
|
(166,170)
|
|
(13,410)
|
|
—
|
|
|
|
|
|
|
|
|
Treasury Shares
|
2,466
|
|
199
|
|
—
|
a) Basic
Basic earnings per share is calculated by dividing the profit attributable to equity holders of PagSeguro Digital by the weighted average number of common shares issued and outstanding during the three and nine-month periods ended September 30, 2021 and 2020:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three-month period
|
|
Nine-month period
|
|
|
September 30, 2021
|
|
September 30, 2020
|
|
September 30, 2021
|
|
September 30, 2020
|
|
|
|
|
|
|
|
|
|
|
Profit attributable to stockholders of the Company
|
321,393
|
|
263,304
|
|
864,706
|
|
916,110
|
|
Weighted average number of outstanding common shares (thousands)
|
330,397,738
|
|
329,090,226
|
|
330,193,647
|
|
329,090,226
|
|
Basic earnings per share - R$
|
0.9727
|
|
0.8001
|
|
2.6188
|
|
2.7838
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PagSeguro Digital Ltd.
Notes to the unaudited condensed consolidated interim financial statements
As of September 30, 2021 and for the three and nine-month periods ended September 30, 2021 and 2020
(All amounts in thousands of reais unless otherwise stated)
|
20. Earnings per share (continued)
b) Diluted
Diluted earnings per share is calculated by dividing the profit attributable to equity holders of PagSeguro Digital by the weighted average number of common shares outstanding during the period plus the weighted average number of common shares that would be issued on conversion of all dilutive potential common shares into common shares. The shares in the LTIP are the only shares with potential dilutive effect. In this case, a calculation is done to determine the number of shares that could have been acquired at fair value.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three-month period
|
|
Nine-month period
|
|
|
September 30, 2021
|
|
September 30, 2020
|
|
September 30, 2021
|
|
September 30, 2020
|
|
Profit used to determine diluted earnings per share
|
321,393
|
|
263,304
|
|
864,706
|
|
916,110
|
|
Weighted average number of outstanding common shares (thousands)
|
330,397,738
|
|
329,090,226
|
|
330,193,647
|
|
329,090,226
|
|
Weighted average number of shares that would have been issued at average market price
|
2,014,239
|
|
547,465
|
|
2,137,950
|
|
547,465
|
|
Weighted average number of common shares for diluted earnings per share (thousands)
|
332,411,977
|
|
329,637,691
|
|
332,331,597
|
|
329,637,691
|
|
Diluted earnings per share - R$
|
0.9669
|
|
0.7988
|
|
2.6019
|
|
2.7791
|
|
|
|
|
|
21. Total revenue and income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three-month period
|
|
Nine-month period
|
|
|
September 30, 2021
|
|
September 30, 2020
|
|
September 30, 2021
|
|
September 30, 2020
|
|
|
|
|
|
|
|
|
|
|
Gross revenue from transaction activities and
other services (i)
|
1,997,972
|
|
1,359,683
|
|
5,284,579
|
|
3,409,776
|
|
Gross financial income (ii)
|
954,009
|
|
548,235
|
|
2,414,255
|
|
1,578,288
|
|
Other financial income (iii)
|
45,861
|
|
24,747
|
|
105,969
|
|
124,705
|
|
Total gross revenue and income
|
2,997,842
|
|
1,932,665
|
|
7,804,803
|
|
5,112,769
|
|
|
|
|
|
|
|
|
|
|
Deductions from gross revenue from transactions
activities and other services (iv)
|
(205,811)
|
|
(147,712)
|
|
(559,320)
|
|
(374,539)
|
|
Deductions from gross financial income (v)
|
(16,266)
|
|
(3,480)
|
|
(32,919)
|
|
(12,018)
|
|
Total deductions from gross revenue and income
|
(222,077)
|
|
(151,192)
|
|
(592,239)
|
|
(386,557)
|
|
|
|
|
|
|
|
|
|
|
Total revenue and income
|
2,775,765
|
|
1,781,473
|
|
7,212,564
|
|
4,726,212
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(i)
|
The amount of R$68,281 and R$200,479 for the three and nine-month periods ended September 30, 2021 (R$41,233 and R$86,638 in the three and nine-month periods ended September 30, 2020) corresponds to membership fee.
|
|
(ii)
|
Includes (a) interest income from early payment of notes payable to third parties.
|
|
(iii)
|
Includes (a) interest of financial investments and (b) gain on exchange variation.
|
|
(iv)
|
Deductions consist of transactions taxes. Additionally, the amount of R$6,316 and R$18,544 for the three and nine-month periods ended September 30, 2021 (R$3,927 and R$8,278 for the three and nine-month periods ended September 30, 2020) corresponds to membership fee taxes.
|
|
(v)
|
Deductions consist of taxes on financial income.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PagSeguro Digital Ltd.
Notes to the unaudited condensed consolidated interim financial statements
As of September 30, 2021 and for the three and nine-month periods ended September 30, 2021 and 2020
(All amounts in thousands of reais unless otherwise stated)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three-month period
|
|
Nine-month period
|
|
|
September 30, 2021
|
|
September 30, 2020
|
|
September 30, 2021
|
|
September 30, 2020
|
|
|
|
|
|
|
|
|
|
|
Transactions costs (i)
|
(1,112,151)
|
|
(801,853)
|
|
(2,923,130)
|
|
(1,947,708)
|
|
Marketing and advertising
|
(210,441)
|
|
(115,934)
|
|
(613,338)
|
|
(370,154)
|
|
Personnel expenses (ii)
|
(335,507)
|
|
(205,894)
|
|
(815,739)
|
|
(409,321)
|
|
Financial expenses (iii)
|
(209,823)
|
|
(16,256)
|
|
(387,995)
|
|
(79,690)
|
|
Chargebacks (iv)
|
(129,891)
|
|
(82,473)
|
|
(450,051)
|
|
(212,969)
|
|
Depreciation and amortization (vi)
|
(203,300)
|
|
(101,528)
|
|
(543,126)
|
|
(242,513)
|
|
Other (v)
|
(153,471)
|
|
(105,345)
|
|
(359,476)
|
|
(203,076)
|
|
|
(2,354,584)
|
|
(1,429,283)
|
|
(6,092,855)
|
|
(3,465,431)
|
|
|
|
|
|
|
|
|
|
|
Classified as:
|
|
|
|
|
|
|
|
|
Cost of services
|
(1,502,018)
|
|
(1,057,233)
|
|
(3,943,121)
|
|
(2,619,159)
|
|
Selling expenses
|
(367,893)
|
|
(151,626)
|
|
(1,099,775)
|
|
(451,850)
|
|
Administrative expenses
|
(273,029)
|
|
(197,109)
|
|
(687,998)
|
|
(377,145)
|
|
Financial expenses
|
(209,823)
|
|
(16,256)
|
|
(387,995)
|
|
(79,690)
|
|
Other income (expenses), net
|
(1,821)
|
|
(7,060)
|
|
26,034
|
|
62,413
|
|
|
(2,354,584)
|
|
(1,429,283)
|
|
(6,092,855)
|
|
(3,465,431)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(i)
|
The increase is mainly represented by: costs related to freight, maintenance of POS and storage costs in the amount of R$65,983 and R$189,564 for the three and nine-month periods ended September 30, 2021 (R$57,718 and R$183,037 for the three and nine-month periods ended September 30, 2020). Additionally, costs related to interchange fees of card issuers were the amount of R$820,272 and R$2,063,516 for the three and nine-month periods ended September 30, 2021 (R$475,813 and R$1,144,801 in the three and nine-month periods ended September 30, 2020) and card scheme fees in the amount of R$164,722 and R$455,353 for the three and nine-month periods ended September 30, 2021 (R$121,868 and R$304,858 in the three and nine-month periods ended September 30, 2020).
|
|
(ii)
|
Includes R$140,743 and R$326,282 of compensation expenses related to the LTIP and LTIP goals for the three and nine-month periods ended September 30, 2021 (R$101,381 and R$132,792 for the three and nine-month periods ended September 30, 2020). The increase in personnel expenses is mainly related to the LTIP and LTIP goals expenses and Hubs’ workforce expansion.
|
|
(iii)
|
Relates mainly to the early collection of receivables, which amounted to R$115,535 and R$198,525 in the three and nine-month periods ended September 30, 2021 (R$4,572 and R$37,394 in the three and nine-month periods ended September 30, 2020). Additionally, R$18,688 and R$64,073 are related to expenses with exchange rate in foreign currency in the three and nine-month periods ended September 30, 2021 (R$0 in the three and nine-month periods ended September 30, 2020).
|
|
(iv)
|
Chargebacks refer to losses recognized during the period related to card processing operations (acquiring and issuing), losses on digital accounts and provision for delinquency rate of credit portfolio, as detailed in Note 24. In the first quarter of 2021, the increase in the amount of R$73,356 is represented by inappropriate use of a system functionality implemented in the past, allowing unappropriated transactions by digital accounts customers and unexpected chargebacks on digital account losses for specific group of customers with higher credit risk for a new product. For all these facts, the corresponding root cause was identified and appropriately addressed by Pagseguro management, and there were no losses from these matters in second and third quarters of 2021.
|
|
(v)
|
In the nine-month period ended September 30, 2021, includes R$29,114 related to the reversal in the tax payable as detailed in Note 16. In the nine-month period ended September 30, 2020, includes R$84,294 related to the reversal of taxation of PIS/COFINS on financial income.
|
|
(vi)
|
Depreciation and amortization amounts incurred in the period are segregated between costs and expenses as presented below:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PagSeguro Digital Ltd.
Notes to the unaudited condensed consolidated interim financial statements
As of September 30, 2021 and for the three and nine-month periods ended September 30, 2021 and 2020
(All amounts in thousands of reais unless otherwise stated)
|
22. Expenses by nature (continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three-month period
|
|
Nine-month period
|
|
|
September 30, 2021
|
|
September 30, 2020
|
|
September 30, 2021
|
|
September 30, 2020
|
|
|
|
|
|
|
|
|
|
|
Depreciation
|
|
|
|
|
|
|
|
|
Cost of sales and services (i)
|
(121,758)
|
|
(52,310)
|
|
(331,988)
|
|
(110,406)
|
|
Selling expenses
|
(36)
|
|
(7)
|
|
(51)
|
|
(19)
|
|
Administrative expenses
|
(6,869)
|
|
(4,578)
|
|
(17,007)
|
|
(12,883)
|
|
|
(128,663)
|
|
(56,895)
|
|
(349,046)
|
|
(123,308)
|
|
Amortization
|
|
|
|
|
|
|
|
|
Cost of sales and services
|
(77,944)
|
|
(45,775)
|
|
(207,302)
|
|
(122,554)
|
|
Administrative expenses
|
(3,939)
|
|
(819)
|
|
(14,616)
|
|
(2,527)
|
|
|
(81,883)
|
|
(46,594)
|
|
(221,918)
|
|
(125,081)
|
|
|
|
|
|
|
|
|
|
|
PIS and COFINS credits (ii)
|
7,246
|
|
1,961
|
|
27,838
|
|
5,874
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization expense, net
|
(203,300)
|
|
(101,528)
|
|
(543,126)
|
|
(242,513)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(i)
|
The depreciation of POS in the three and nine-month periods ended September 30, 2021, amounted to R$117,172 and R$319,703 (R$48,486 and R$99,510 in the three and nine-month periods ended September 30, 2020).
|
|
(ii)
|
PagSeguro Brazil has a tax benefit on PIS and COFINS that allows it to reduce the depreciation and amortization expenses when incurred. This tax benefit is recognized directly as a reduction of depreciation and amortization expense.
|
|
|
|
|
|
23. Financial instruments by category
|
The PagSeguro Group estimates the fair value of its financial instruments using available market information and appropriate valuation methodologies for each situation.
The interpretation of market data, as regards the choice of methodologies, requires considerable judgment and the establishment of estimates to reach an amount considered appropriate for each situation. Therefore, the estimates presented may not necessarily indicate the amounts that could be obtained in the current market. The use of different hypotheses to calculate market value or fair value may have a material impact on the amounts obtained. The assets and liabilities presented in this Note were selected based on their relevance. The PagSeguro Group believes that the financial instruments recognized in these consolidated financial statements at their carrying amount are substantially similar to their fair value. However, since they do not have an active market (except for the LFT included in financial investments, which is actively traded in the market), variations could occur in the event the PagSeguro Group were to decide to settle or realize them in advance.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PagSeguro Digital Ltd.
Notes to the unaudited condensed consolidated interim financial statements
As of September 30, 2021 and for the three and nine-month periods ended September 30, 2021 and 2020
(All amounts in thousands of reais unless otherwise stated)
|
23. Financial instruments by category (continued)
The PagSeguro Group classifies its financial instruments into the following categories:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30, 2021
|
|
December 31, 2020
|
|
Financial assets
|
|
|
|
|
Amortized cost:
|
|
|
|
|
Cash and cash equivalents
|
1,122,388
|
|
1,640,065
|
|
Accounts receivables
|
20,302,547
|
|
16,076,540
|
|
Other receivables
|
143,699
|
|
164,805
|
|
Judicial deposits
|
38,413
|
|
7,449
|
|
Investment
|
1,420
|
|
1,400
|
|
|
|
|
|
|
Fair value through other comprehensive income
|
|
|
|
|
Financial investments
|
1,000,877
|
|
979,837
|
|
|
|
|
|
|
|
22,609,344
|
|
18,870,096
|
|
|
|
|
|
|
|
September 30, 2021
|
|
December 31, 2020
|
|
Financial liabilities
|
|
|
|
|
Amortized cost:
|
|
|
|
|
Payables to third parties
|
11,068,114
|
|
10,101,510
|
|
Trade payables
|
377,589
|
|
335,539
|
|
Trade payables to related parties
|
369,501
|
|
58,336
|
|
Deposits
|
2,670,145
|
|
766,086
|
|
Deferred revenue
|
202,860
|
|
213,555
|
|
Other liabilities
|
141,910
|
|
159,198
|
|
|
14,830,120
|
|
11,634,224
|
|
|
|
|
|
24. Financial risk management
|
The PagSeguro Group’s activities expose it to a variety of financial risks: market risk, fraud risk (chargebacks), credit risk and liquidity risk. The PagSeguro Group's overall risk management program focuses on the unpredictability of financial markets and seeks to minimize potential adverse effects on the PagSeguro Group's financial performance.
Market risk
Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices. In the Group, market risk comprises interest rate risk and foreign currency risk and other price risk, such as equity price risk.
Interest rate risk
Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Group's exposure to the risk of changes in market interest rates arises primarily from financial investments and deposits, both subject to variable interest rates, principally the CDI rate.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PagSeguro Digital Ltd.
Notes to the unaudited condensed consolidated interim financial statements
As of September 30, 2021 and for the three and nine-month periods ended September 30, 2021 and 2020
(All amounts in thousands of reais unless otherwise stated)
|
24. Financial risk management (continued)
The Group conducted a sensitivity analysis of the interest rate risks to which the financial instruments are exposed as of September 30, 2021. For this analysis, the Group adopted as a probable scenario for the future interest rates of 8.60% for the CDI (increase of 40%). As a result, financial income (with respect to financial investments) and financial expense (with respect to certificate of deposit and corporate securities) would be impacted as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Transaction
|
Interest rate risk
|
|
Book Value
|
|
Scenario with maintaining of CDI (6.15%)
|
|
Probable scenario with increase of 40% (to 8.6%)
|
|
Cash and cash equivalents
|
100% of CDI
|
|
1,122,388
|
|
69,027
|
|
96,525
|
|
Financial investments
|
100% of CDI
|
|
1,000,877
|
|
61,554
|
|
86,075
|
|
Certificate of Deposit
|
169% of CDI
|
|
2,157,342
|
|
(224,223)
|
|
(313,548)
|
|
Interbank deposits
|
115% of CDI
|
|
300,163
|
|
(31,197)
|
|
(43,626)
|
|
Corporate securities
|
155% of CDI
|
|
212,640
|
|
(20,270)
|
|
(28,345)
|
|
Bank accounts
|
57% of CDI
|
|
3,810,758
|
|
(133,586)
|
|
(186,803)
|
|
Total
|
|
|
|
|
(278,695)
|
|
(389,722)
|
Foreign exchange risk
Foreign currency risk is the risk that the fair value or future cash flows of an exposure will fluctuate because of changes in foreign exchange rates. The Group’s exposure to the risk when future commercial transactions or recognized assets or liabilities are denominated in a currency that is not the entity's functional currency. Our risk is mainly related to Boa Compra and BCPS that have revenues in other currencies and cash and cash equivalents maintained in other countries. PagSeguro Group is not materially exposed to foreign exchange risk.
Equity price risk
The Group’s non-listed equity investments are susceptible to market price risk arising from uncertainties about future values of the investment. As of September 30, 2021, and December 31, 2020, the exposure to equity price from such investments was not material.
Fraud risk (chargeback)
The PagSeguro Group's sales transactions are susceptible to potentially fraudulent or improper sales and it uses the following two processes to control the fraud risk:
(i)The first process consists of monitoring, on a real time basis, the transactions carried out with credit and debit cards and payment slips, through an anti-fraud system. This process approves or rejects suspicious transactions at the time of the authorization, based on statistical models that are revised on a periodic basis.
(ii)The second process detects chargebacks and disputes not identified by the first process. This is a supplemental process and increases the PagSeguro Group's ability to avoid new frauds. PagSeguro’s expenses with chargeback, which was impacted by specific events in the nine-month period ended September 30, 2021, are disclosed in Note 22.
Credit risk
Credit risk is the risk that a counterparty will not meet its obligations under a financial instrument or customer contract, leading to a financial loss. The Group is exposed to credit risk from its operating activities (primarily accounts receivable) and from its financing activities, including deposits with banks and financial institutions, and other financial instruments such as loans and credit card receivables with our customers.
Credit risk is managed on a group basis and for its accounts receivable is limited to the possibility of default by: (a) the card issuers, which have the obligation of transferring to the credit and debit card labels the fees charged for the transactions carried out by their card holders, (b) the acquirers, which are used by the PagSeguro Group to approve transactions with the issuers and (c) analyses for our customers background to provide access to credit portfolio.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PagSeguro Digital Ltd.
Notes to the unaudited condensed consolidated interim financial statements
As of September 30, 2021 and for the three and nine-month periods ended September 30, 2021 and 2020
(All amounts in thousands of reais unless otherwise stated)
|
24. Financial risk management (continued)
In order to mitigate this risk, PagSeguro Brazil has established a Credit and Liquidity Risk Committee, whose responsibility is to assess the level of risk of each of the card issuers served by PagSeguro Group, classifying them into three groups:
(i)Card issuers with a low level of risk, with credit ratings assigned by FITCH, S&P and Moody's, which do not require additional monitoring.
(ii)Card issuers with a medium level of risk, which are also monitored in accordance with the financial metrics and ratios; and
(iii) Card issuers with a high level of risk, which are assessed by the committee at monthly meetings.
PagSeguro has a rating process for loans and credit, based on statistical application models (in the early stages of customer relationships) and behavior scoring (used for customers who already have a relationship history). A process for designing, calibrating, and implementing policies and guidelines for granting credit and calibrating collection rules.
A process for monitoring the portfolio's risk profile, with a prospective view, which generates early warning feedbacks to the credit granting policies and risk classification models in a timely manner.
Liquidity risk
The PagSeguro Group manages liquidity risk by maintaining reserves, bank and credit lines for the obtaining borrowings, when deemed appropriate. The PagSeguro Group continuously monitors actual and projected cash flows and matches the maturity profile of its financial assets and liabilities in order to ensure that the PagSeguro Group has enough funds to comply with its obligations to third parties and meet its operational needs.
The PagSeguro Group invests surplus cash in interest bearings financial investments, choosing instruments with appropriate maturity or enough liquidity to provide adequate margin as determined by the forecasts. On September 30, 2021, PagSeguro Group held cash and cash equivalents of R$1,122,388 (R$1,640,065 on December 31, 2020).
The table below shows the PagSeguro Group's non-derivative financial liabilities divided into the relevant maturity group based on the remaining period from the balance sheet date and the contractual maturity date. The amounts disclosed in the table are the contractual undiscounted cash flows.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Due within 30 days
|
|
Due within 31 to 120 days
|
|
Due within 121 to 180 days
|
|
Due within 181 to 360 days
|
|
Due to 361 days or more days
|
|
|
|
|
|
|
|
|
|
|
|
|
On September 30, 2021
|
|
|
|
|
|
|
|
|
|
|
Payables to third parties
|
8,233,032
|
|
1,903,611
|
|
578,050
|
|
353,421
|
|
—
|
|
Trade payables
|
371,430
|
|
5,229
|
|
930
|
|
—
|
|
—
|
|
Trade payables to related parties
|
—
|
|
66,943
|
|
7
|
|
302,551
|
|
—
|
|
Deposits
|
214,553
|
|
1,282,133
|
|
307,648
|
|
654,042
|
|
211,769
|
|
|
|
|
|
|
|
|
|
|
|
|
On December 31, 2020
|
|
|
|
|
|
|
|
|
|
|
Payables to third parties
|
8,348,127
|
|
1,146,136
|
|
300,058
|
|
299,645
|
|
7,544
|
|
Trade payables
|
332,733
|
|
2,806
|
|
—
|
|
—
|
|
—
|
|
Trade payables to related parties
|
—
|
|
46,945
|
|
5,063
|
|
6,328
|
|
—
|
|
Deposits
|
5,231
|
|
77,812
|
|
53,000
|
|
435,953
|
|
194,090
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PagSeguro Digital Ltd.
Notes to the unaudited condensed consolidated interim financial statements
As of September 30, 2021 and for the three and nine-month periods ended September 30, 2021 and 2020
(All amounts in thousands of reais unless otherwise stated)
|
The PagSeguro Group monitors capital based on the gearing ratio which corresponds to net debt divided by total capital. Net debt is calculated as total borrowings (including current and non-current borrowings as shown in the consolidated balance sheet) less cash and cash equivalents. Total capital is calculated as equity as shown in the consolidated balance sheet plus net debt.
The PagSeguro Group had no loans outstanding as of September 30, 2021 or as of and December 31, 2020. Therefore, no gearing ratio is presented.
|
|
|
|
|
26. Non-cash Transactions
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30, 2021
|
|
September 30, 2020
|
|
Non-cash operation activities
|
|
|
|
|
Distribution of LTIP with treasury shares
|
13,410
|
|
70,443
|
|
|
|
|
|
|
Non-cash investing activities
|
|
|
|
|
Property and equipment acquired through lease
|
4,314
|
|
79,031
|
|
MTM of financial investments
|
370
|
|
(846)
|
|
|
|
|
|
27. Fair value measurement
|
Fair value is the price that would be received to sell an asset or paid to transfer a liability (exit price) in the principal or most advantageous market for the asset or liability, in an orderly transaction between market participants at the measurement date. A three-level hierarchy is used to measure fair value, as shown below:
•Level 1 - Quoted prices (unadjusted) in active markets for identical assets and liabilities.
•Level 2 - Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (that is, as prices) or indirectly (that is, derived from prices).
•Level 3 - Inputs for the assets and liabilities that are not based on observable market data (that is, unobservable inputs).
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PagSeguro Digital Ltd.
Notes to the unaudited condensed consolidated interim financial statements
As of September 30, 2021 and for the three and nine-month periods ended September 30, 2021 and 2020
(All amounts in thousands of reais unless otherwise stated)
|
|
|
|
|
|
27. Fair value measurement (continued)
|
The following table provides the fair value measurement hierarchy of PagSeguro Group’s financial assets and financial liabilities as of September 30, 2021:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30, 2021
|
|
|
Quoted prices in active markets (Level 1)
|
|
Significant observable inputs (Level 2)
|
|
Significant unobservable inputs (Level 3)
|
|
Financial assets
|
|
|
|
|
|
|
Cash and cash equivalents
|
421,917
|
|
700,471
|
|
—
|
|
Financial investments
|
1,000,877
|
|
—
|
|
—
|
|
Accounts receivable
|
—
|
|
20,302,547
|
|
—
|
|
Other receivables
|
—
|
|
143,699
|
|
—
|
|
Judicial deposits
|
—
|
|
38,413
|
|
—
|
|
Investment
|
—
|
|
—
|
|
1,420
|
|
|
|
|
|
|
|
|
Financial liabilities
|
|
|
|
|
|
|
Payables to third parties
|
—
|
|
11,068,114
|
|
—
|
|
Trade payables
|
—
|
|
377,589
|
|
—
|
|
Trade payables to related parties
|
—
|
|
369,501
|
|
—
|
|
Deposits
|
—
|
|
2,670,146
|
|
|
|
Deferred revenue
|
—
|
|
202,860
|
|
—
|
|
Other liabilities
|
—
|
|
141,910
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PagSeguro Digital Ltd.
Notes to the unaudited condensed consolidated interim financial statements
As of September 30, 2021 and for the three and nine-month periods ended September 30, 2021 and 2020
(All amounts in thousands of reais unless otherwise stated)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2020
|
|
|
Quoted prices in active markets (Level 1)
|
|
Significant observable inputs (Level 2)
|
|
Significant unobservable inputs (Level 3)
|
|
Financial assets
|
|
|
|
|
|
|
Cash and cash equivalents
|
321,674
|
|
1,318,391
|
|
—
|
|
Financial investments
|
979,837
|
|
—
|
|
—
|
|
Accounts receivable
|
—
|
|
16,076,540
|
|
—
|
|
Other receivables
|
—
|
|
164,805
|
|
—
|
|
Judicial deposits
|
—
|
|
7,449
|
|
—
|
|
Investment
|
—
|
|
—
|
|
1,400
|
|
|
|
|
|
|
|
|
Financial liabilities
|
|
|
|
|
|
|
Payables to third parties
|
—
|
|
10,101,510
|
|
—
|
|
Trade payables
|
—
|
|
335,539
|
|
—
|
|
Trade payables to related parties
|
—
|
|
58,336
|
|
—
|
|
Deposits
|
—
|
|
766,086
|
|
—
|
|
Deferred revenue
|
—
|
|
213,555
|
|
—
|
|
Other liabilities
|
—
|
|
159,198
|
|
—
|
The PagSeguro Group believes that the financial instruments recognized in these consolidated financial statements at their carrying amount are substantially similar to their fair value. For the financial assets that is basically due to the nature of the receivables that are due from top tier financial institutions subject to low credit risk and are mostly receivable in a short-term period and are measured based on the consideration that the Group expects to receive as part of the transaction processing services.
Financial assets also include the financial investments represented by government bonds with quoted prices in an active market and recognized in the balance sheet based on its fair value.
Financial liabilities are mostly represented by deposits and short-term payables to merchants which are paid in accordance with the contract set out with the merchant and other short-term payables to service providers in the normal course of business and, as such, also approximate from their fair values. There were no transfers between Levels 1, 2 and 3 during the nine-month period ended September 30, 2021.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Date: November 12, 2021
|
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|
|
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|
|
|
PagSeguro Digital Ltd.
|
|
|
|
|
|
By:
|
/s/ Artur Schunck
|
|
|
Name:
|
Artur Schunck
|
|
|
Title:
|
Chief Financial and Investor Relations Officer, Chief Accounting Officer and Director
|
PagSeguro Digital (NYSE:PAGS)
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