UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 OR 15d-16 UNDER THE
SECURITIES EXCHANGE ACT OF 1934
For the month of March, 2022
Commission File Number: 001-34476
GETNET ADQUIRÊNCIA E SERVIÇOS PARA MEIOS DE PAGAMENTO S.A.
(Exact name of registrant as specified in its charter)
GETNET MERCHANT ACQUISITION AND PAYMENT SERVICES, INC.
(Translation of Registrant’s name into English)
Federative Republic of Brazil
(Jurisdiction of incorporation)
Avenida Presidente Juscelino Kubitschek, 2041, suite 121, Block A
Condomínio WTORRE JK, Vila Nova Conceição
São Paulo, São Paulo, 04543-011
Federative Republic of Brazil
(Address of principal executive office)
Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F:
Form 20-F ___X___ Form 40-F _______
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):
Yes _______ No ___X____
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):
Yes _______ No ___X____
Indicate by check mark whether by furnishing the information contained in this Form, the Registrant is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934:
Yes _______ No ___X____
If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): N/A
GETNET ADQUIRÊNCIA E SERVIÇOS PARA MEIOS DE PAGAMENTO S.A.
TABLE OF CONTENTS
Getnet Adquirência e Serviços para Meios de Pagamento S.A.
Financial Statements for the
Year Ended December 2021
and Report of Independent
Registered Public Accounting Firm
| 1 |
About Getnet
Getnet Adquirência e Serviços para Meios de Pagamento S.A. (“Getnet” or “Getnet S.A.”) is a technology company, focused on business solutions, founded in 2003, being the third acquirer in Brazil when it comes to greater market share. We ended 2021 with approximately 887,600 customers (including micro-entrepreneurs, large corporate customers and Small and Medium-Sized Enterprises - SMEs). We operate with the one stop shop concept, that offers our commercial establishments clients a complete range of physical and digital solutions for their businesses, from payment solutions to business process management.
We closed the year 2021 with a team made up of more than 1,300 employees, responsible for the results that will be presented below.
Corporate Result
Our revenue from services increased by 23.0%, from R$2,320.5 million in the year ended December 31, 2020 to R$2,853.1 million in the year ended December 31, 2021. The increase in our services revenue in the year ended 2021 mainly reflected:
- a 46.5% increase in acquiring revenue and contractual remuneration, from R$1,095.2 million in 2020 to R$1,604.4 million in 2021. This increase was due to (i) a 49% increase in our total TPV, which resulted in a 14.6% increase in our MDR revenue; and (ii) contractual remuneration income derived from our commercial partnership with Banco Santander (Brasil) S.A. ("Banco Santander"), started in the first half of 2021, which detailed in “Item 7. Major Shareholders and Related Party Transactions—B. Related Party Transactions—Major Related Party Transactions— commercial partnership with Banco Santander”. Although the commercial partnership started on April 15, 2021, we receive revenue from the commercial partnership as if it had been in effect since January 1, 2021;
- a 37.1% increase in our processing services and capture revenue, from R$149.6 million for the year ended December 31, 2020 to R$205.1 million for the year ended December 31, 2021, primarily due to an increase in the volume of e-commerce transactions (such as products sold through our marketplace and subacquirer services) processed in the year ended December 31, 2021 compared to the year ended December 31, 2020;
- a 51.0% decrease in Point of Sales - POS sales revenue, from R$59.0 million in the year ended December 31, 2020 to R$28.9 million in the year ended December 31, 2021, mainly due to a decrease in the number of our customers using these products as a result of a strategic decision to lease more POS devices instead of selling them;
- an 8.0% decrease in other income, from R$37.0 million for the year ended December 31, 2020 to R$34.0 million for the year ended December 31, 2021 primarily due to a decrease in revenue from prepaid cards;
- a 2.0% increase in our profit share revenue, from R$623.5 million for the year ended December 31, 2020 to R$635.8 million for the year ended December 31, 2021, primarily due to a 47% increase in the volume of transactions processed in the year ended December 31, 2021 compared to the year ended December 31, 2020, partially offset by the increase in funding costs due to the increase in the Basic Interest Rate - SELIC; and
- a 3.2% decrease in our POS rental revenue from R$571.3 million for the year ended December 31, 2020 to R$553.2 million for the year ended December 31, 2021, primarily due to a reduction in rental fees due to increased competition and changes in our pricing policy applicable to POS devices rented as part of a package of services, partially offset by an increase in the number of rental customers.
Costs of services increased by 23.3%, from R$1,426.2 million in the year ended December 31, 2020 to R$1,758.9 million in the year ended December 31, 2021, mainly due to:
- a 55.0% increase in fees and commissions, mainly due to the increase in the volume of transactions and the increase in the level of fees and commissions charged by operators of payment arrangements;
- a 38.0% decrease in POS sales costs and other fees due to a reduction in POS sales, which was partially offset by payments under our commercial partnership with Banco Santander in 2021;
- 14.0% increase in depreciation and amortization expenses, mainly due to the increase in the number of POS; and
- a 10.0% increase in personnel, technology, system and other costs, primarily due to a contractual adjustment of approximately 28% in the costs of our call center service and an increase in the cost to maintaining POS devices.
Selling, General and Administrative expenses increased by 27.0%, from R$348.5 million in the year ended December 31, 2020 to R$444.3 million in the year ended December 31, 2021, mainly due to (i) an increase in payroll costs due to an increase in the number of employees, and (ii) expenses incurred with external expert advisors hired to assist us in our listing on Nasdaq.
Our Other expenses, net increased by 71.3%, from R$55.8 million for the year ended December 31, 2020 to R$95.5 million for the year ended December 31, 2021, mainly due to (i) an increase in our provisions for customer losses as a result of increased default rates in our customer base due to the macroeconomic effects of the COVID-19 pandemic, (ii) an increase in provisions for losses on fixed assets due to the increase in the number of of our POS devices, (iii) an increase in provisions for losses on intangibles related to certain projects for which development is in progress and which may not materialize, and (iv) the write-off of fixed and intangible assets in the normal course of business. business (e.g. loss or destruction of POS devices).
Our Finance income, net increased by 37.7%, from an income of R$ 6.2 million in the year ended December 31, 2020 to a financial income of R$ 8.5 million in the year ended December 31, 2021, mainly because:
- increase in the debt balance of our financial investments due to the growth of our operations which generated an increase in income from financial investments; and
- the inclusion of financial income from prepayments made through our own channels (distinct Banco Santander), which was partially offset by raising funds to finance these operations. In 2021, we began to provide receivables prepayments directly, rather than through Banco Santander. We raised additional funds in the year ended December 31, 2021 compared to the year ended December 31, 2020 to finance these receivables prepayment operations.
Current income tax and social contribution decreased by 71.4%, from R$128.0 million in the year ended December 31, 2020 to R$36.6 million in the year ended December 31, 2021, mainly due to a benefit tax of R$101.3 million generated by the payment of interest on own capital to be paid in 2022, but which were approved in December 2021.
We recorded deferred income tax and social contribution as an expense of R$7.2 million for the year ended December 31, 2020 compared to an expense of R$50.5 million for the year ended December 31, 2021. primarily due to (i) an increase in profit before income taxes of R$66.8 million, from R$496.2 million in the year ended December 31, 2020 to R$563.2 million in the year ended December 31, 2021, and (ii) a deferred tax expense in the amount of R$101.3 million in connection with the payment of interest on own capital that will be paid in 2022, but which was approved on December 21, 2021.
Our net income for the period increased by 31.9%, from R$361.0 million in the year ended December 31, 2020 to R$476.0 million in the year ended December 31, 2021, mainly due to:
- a 23.0% increase in our revenue from services for the year ended December 31, 2021 compared to the year ended 31 December 2020, as detailed above under “—Revenue from services”;
- Measures we take to control our costs and expenses, including with respect to logistics and POS installation. Although our cost of services and our expenses increased in the year ended December 31, 2021 compared to the year ended December 31, 2020, these measures have allowed us to keep the increases in our costs and expenses below the increase in our revenue services; and
- tax benefit of R$ 101.3 million generated by the payment of interest on own capital approved in December 2021.
Message from the Administration
2021 was yet another challenging year for the country. In the first months of the year, the second wave of COVID-19 contamination began, which lasted mainly throughout the second half of the year, recording the highest numbers of infected and lethality since the beginning of the pandemic. However, in the same period, the vaccination campaign gained traction and the country ended the year with more than 143 million Brazilians with a complete vaccination cycle, representing 80% of the adult population, according to the Ministry of Health. to restrictive measures against the pandemic, boosting the economic recovery with the reopening of shops.
As for the impacts of the pandemic, Getnet's management created continuous measures for the resumption of the Company, ensuring business continuity and ensuring safety for its more than 1,300 employees.
During the second half of 2021, the reduction of social distancing measures directly impacted Getnet's operations, as the resumption of economic activities is fundamental for the payments market, which is closely related to the consumption of Brazilian families. The Company began to observe a recovery in volumes, mainly in the segments of large companies, which managed to recover quickly, while small companies are showing a more modest and gradual recovery. Our e-commerce segment is currently one of the main levers for our volume and market share growth, something that continued with a positive performance this year.
We observe that the receivables market has been increasing its representation in small and medium businesses in recent years. Therefore, we remain optimistic about the growth and development potential of the Brazilian payments market.
Likewise, on June 7, 2021, Resolution 4,734 and Circular 3,952 published by the Central Bank of Brazil (“BACEN”) came into force, which brought new rules for the registration of receivables in order to create facilities for customers to acquire credit. All information on card operations will pass through a receivables center, which will record data from commercial establishments. Thus, credit lenders are able to seek greater visibility on their customers or potential, thus offering an increase in the supply of credit to the market as a whole.
Another element that changed economic factors this year was the increase in the SELIC rate, which started from 2% in january, to close the year at 9.25%, according to data from the BACEN, which directly influences Getnet, through our products financial instruments, such as the anticipation rate, which is directly linked to the SELIC. This measure was adopted to contain the advance of inflation, which closed the year 2021 at 10.06%, well above the 4.52% recorded in 2020.
Acquisition of Eyemobile Tecnologia Ltda.
On August 3, 2021, Getnet completed the acquisition of Eyemobile, headquartered in Florianópolis (SC) and focused on developing solutions and technologies for small and medium businesses. With the transaction, the Company aims to strengthen its offer for the segment, reinforcing its technological expertise in interfaces and applications for managing sales and mobile payments. Eyemobile offers management technologies for entrepreneurs who start their sales over the internet and provides applications integrated with operating systems such as Android, iOS and browsers in payment machines with internet connection.
Spin-off of Getnet S.A.
On August 10, 2021, Banco Santander informed its shareholders and the market in general that Getnet was registered as a publicly-held company (category A) by the CVM. Previously, on August 5, 2021, B3 SA - Brasil, Bolsa, Balcão granted the listing request of Getnet and the admission to trading of the shares and Units issued by Getnet, which had the spin-off approved by the BACEN, pursuant to CMN Resolution No. 4,122/12. Furthermore, on November 16, 2020 and February 2, 2021, Banco Santander had also informed its shareholders and the market in general that the Executive Board of Directors of Banco Santander, at a meeting held on February 25, 2021, approved the proposal to separate the interests held by Banco Santander in its wholly-owned subsidiary Getnet, through a partial spin-off of Banco Santander, to be resolved by the shareholders of Banco Santander at an extraordinary shareholders' meeting. On February 25, 2021, the Fiscal Council of Banco Santander issued a favorable opinion on the spin-off proposal.
Leadership
In January 2022, the Company's Board of Directors elected of Mr. Cassio Schmitt as the company's new Chief Executive Officer (CEO), taking his new position in April 2022. Mr. Schmitt is Brazilian, holds a degree in economics from the Federal University of Rio Grande do Sul, a master's degree in corporate economics from Fundação Getúlio Vargas, and an MBA from the Sloan School of Business, Massachusetts Institute of Technology. He has extensive experience in the financial market, having worked at Unibanco, among other institutions. In 2004 he joined Banco Santander, having worked in different positions, such as Project Finance, Risks, Credit Recovery. His last role at Santander was that of director responsible for the Companies, Governments and Institutional Retail Sector.
In December 2021, Mr. Pedro Carlos Araújo Coutinho announced that he will leave the position of CEO of the Company on 03.31.2022, after more than 7 years acting as CEO of Getnet, having played a relevant role in several strategic operations that contributed to the Getnet's growth.
In March 2021, the Board of Directors elected Alberto de Souza Filho as Executive Vice President of Independent Channel. With more than 20 years of national and international career, with stints at Ambev, ZX Ventures and AB-Inbev, where he worked from 2017 to 2021 as Global Director at GHQ in New York. Graduated in Business Administration from Universidade Federal de Mato Grosso, with an MBA in Marketing from FIA (Fundação Instituto de Administração), Executive MBA from Insper and Innovation and Design Thinking from Columbia University.
In March 2021, the Board of Directors elected Luciano Decourt Ferrari as Vice President of Investor Relations. He joined Grupo Santander in 2003, having held various positions, including Investor Relations Deputy from 2013 to 2019 and Commercial Head at Santander Private Banking from 2019 to 2021. Luciano holds a degree in Economic Sciences from PUC-SP (Pontifical Catholic University of São Paulo), with a specialization in Financial Administration from INSPER (Instituto de Ensino e Pesquisa) and Certified Financial Planner from Planor (Brazilian Association of Financial Planning).
In August 2021, the Board of Directors elected André Parize Moraes as Executive Vice President of Finance. He joined Grupo Santander in 2016 and served as Executive Superintendent of Investor Relations at Banco Santander from 2016 to 2021. Previously, he worked at Banco Votorantim from 2008 to 2016, including as head of research, at E&Y from 2007 to 2008 and at Kroll Associates from 2005 to 2007. André holds a degree in business administration from Universidade Presbiteriana Mackenzie and an MBA in capital markets from Universidade de São Paulo - USP.
Board of Directors
On March 31, 2021, the company installed its board of directors, composed of six members, one of them an independent board member, in line with the company's objectives of adopting the best corporate governance practices.
Audit Committee
On October 4, 2021, Getnet's board of directors elected the members who will compose the Company's audit committee, which are:
João Guilherme de Andrade So Consiglio, independent board member, graduated in Economics from the Universidade de São Paulo - USP, with more than 25 years of experience in the financial market, as an economist and on Boards of Directors, working in several financial institutions throughout his career. He is currently a partner at Guilder Capital, a member of the Board of Directors of Unipar Carbocloro S.A., and member of the Board of Directors of You Inc. S.A.
Antonio Melchiades Baldisera, postgraduate in Accounting Management Control from Fundação Getúlio Vargas, with an MBA in Controlling, Auditing and Tax Management also from Fundação Getúlio Vargas, has extensive experience in the financial market working in several banks. He is currently a Consultant at AMB Consultoria Empresarial on Prevention and Treatment of Financial Fraud, Operational Security and Auditing.
Luis Carlos Nanini, graduated in accounting sciences, with several specialization courses in Brazil and abroad, including the Leadership Course at Harvard, with over 30 years of experience in providing independent audit services, also has significant experience in audit committees and fiscal councils of publicly traded Brazilian companies. He is currently a member and financial expert of our Audit Committee and a member of Eletrobrás' Statutory Audit and Risks Committee.
Renewal of working capital financing
In October 2021, Getnet renewed the working capital financing with Banco Santander in the amount of R$600 million.
Getnet listing on B3 and Nasdaq
On September 18, 2021, Getnet shares (GETT11, GETT3 and GETT4) began to be traded on B3, with October 15, 2021 being the cut-off date for holders of Banco Santander shares and on September 22, 2021, the ADRs (GET) were also listed on Nasdaq, with October 19, 2021 being the cut-off date for holders of Banco Santander ADSs, ending the Company's listing process, which began on 16 November 2020, after the decision of Banco Santander, the Company's controller until then.
Dividends (interest on capital) payment
In December 2021, Getnet announced the distribution of interest on own capital in the gross amount of BRL 298 million for the years 2016, 2019 and 2021, paid as of of February 18, 2022.
Corporate Governance
Corporate Governance is one of the main pillars within Getnet's management guidelines. Since 2014, the Company has consistently implemented a series of measures to improve its governance, always in line with Grupo Santander's corporate frameworks and in line with the best practices of the IBGC and regulatory bodies.
We are part of an international financial group with a strong culture of Corporate Governance, committed to the ethical conduct of the business, its strategic development and longevity, in line with good market practices.
Our relationship with all employees, customers, suppliers, shareholders and partners is guided by our code of ethics, because here we believe in integrity, transparency, responsibility, diversity and respect, which represent the desired behavior, guaranteeing the practice of ethical and sustainable conduct. in compliance with legislation and regulatory bodies.
We also have the Getnet conduct guide, which is composed of the main certification and legal topics that govern our business and guide the conduct of our employees: ethics, information security, anti-corruption, money maundering prevention and data protection.
We adhere to the best national and international practices for the efficient management of business risks, reinforcing our risk culture and training and encouraging each employee to be a risk manager, always attentive to day-to-day activities.
Our Governance structure is made up of the Executive Board and its Executive Committee made up of the CEO and Executive Vice-Presidents, in the phase of strengthening Governance through the formalization of a Board of Directors and its Advisory Committees, all with their own regulations.
Maximizing the efficiency and long-term value creation of Getnet's Corporate Governance is translated, for example, through (i) adoption of an adequate decision-making and monitoring system through the committees, (ii) management of a secretary of Corporate Governance, (iii) practice of the code of ethical conduct, (iv) annual calendar of events and annual agenda of committees, (v) matrix of the committees' agenda, (vi) Corporate Governance platform, (vii) sustainable practices, ( viii) policies for stakeholder transactions and conflicts of interest, (ix) Compensation and Nomination Committee (CRN) and (x) diversity program.
Reinforcing our commitment to a solid Governance model and our relationship and commitment to all stakeholders, our business strategy is guided by the principles of Environmental, Social, & Governance - ESG.
We built an ESG strategy aimed at generating value with stakeholders, strengthening our purpose of "contributing to people and businesses to prosper" focused on the axes of support for small entrepreneurs, financial education, promotion of diversity, talent development, responsibility for our environmental impact and transition to a low carbon economy.
Among the highlights of this performance we have (i) initiatives to reduce and offset Greenhouse Gases - GHG emissions and we have neutralized the carbon of our operation since 2016, (ii) 100% of our supply chain is evaluated in socio-environmental aspects; (iii) 100% of strategic suppliers develop social projects with local communities; (iv) we are signatories of the UN Compact for Gender Equality; (v) the “Advance” podcast to support entrepreneurs in the pandemic was played over 160,000; (vi) we started the POS delivery pilot with an electric motorcycle with an expectation of a reduction of 26 tons of CO² and (vii) 5 consecutive years certified as one of the “Best Companies to Work For” by GPTW.
For 2022, we are committed to new leaps in the ESG theme, (i) including materiality issues as the Company's goal, (ii) publication of the first Sustainability Report, (iii) adherence to pacts and public commitments in favor of the development agenda sustainability and diversity principles, (iv) expand the scope of financial education initiatives and support for small entrepreneurs.
The administration.
Sao Paulo, March 9, 2022.
As of December 31
(In thousands of Brazilian reais - R$, unless otherwise stated)
CURRENT ASSETS | Note | 2021 | 2020 |
Cash and cash equivalents | 5.1. a) | 670,441 | 265,096 |
Financial investments | 5.1. b) | 1,430,653 | 925,383 |
Accounts receivable | 5.1. c) | 54,578,684 | 39,968,233 |
Prepaid and recoverable taxes |
| 149,235 | 52,277 |
Inventories |
| 40,899 | 61,559 |
Other assets |
| 200,491 | 205,718 |
Total current assets |
| 57,070,403 | 41,478,266 |
NONCURRENT ASSETS |
|
|
|
Deferred income tax and social contribution | 10.2 | 422,034 | 73,859 |
Property and equipment | 8. | 631,598 | 613,861 |
Right-of-use assets | 6. | 25,703 | 21,905 |
Intangible assets | 7. | 885,083 | 833,807 |
Total noncurrent assets |
| 1,964,418 | 1,543,432 |
TOTAL ASSETS |
| 59,034,821 | 43,021,698 |
CURRENT LIABILITIES |
|
|
|
Accounts payable | 5.2. a) | 51,610,405 | 38,767,156 |
Loans and borrowings | 5.2. b) | 3,464,649 | 1,063,347 |
Lease liabilities | 6. | 9,742 | 4,265 |
Income taxes payables and other tax payables | 10.3 | 30,976 | 41,720 |
Dividends payable |
| 298,000 | 29,227 |
Other liabilities |
| 214,132 | 271,426 |
Total current liabilities |
| 55,627,904 | 40,177,141 |
NONCURRENT LIABILITIES |
|
|
|
Loans and borrowings | 5.2. b) | 25,209 | 27,810 |
Lease liabilities | 6. | 16,573 | 18,784 |
Provision for tax, civil and labor risks | 9. | 15,013 | 11,425 |
Deferred income tax and social contribution | 10.2 | 3,345 | 7,876 |
Other liabilities |
| 22,858 | 35,779 |
Total noncurrent liabilities |
| 82,998 | 101,674 |
EQUITY |
|
|
|
Share capital |
| 1,422,496 | 1,422,496 |
Capital reserve |
| 404,933 | 6,400 |
Accumulated other comprehensive income |
| (242) | (651) |
Retained earnings |
| 1,492,829 | 1,314,638 |
Participation of non-controlling shareholders |
| 3,903 | - |
Total equity |
| 3,323,919 | 2,742,883 |
TOTAL LIABILITIES AND EQUITY |
| 59,034,821 | 43,021,698 |
The accompanying notes are an integral part of these consolidated financial statements.
Getnet Adquirência e Serviços para Meios de Pagamento S.A.
Years ended December 31
(In thousands of Brazilian reais - R$, unless otherwise stated)
| Note | 2021 | 2020 | 2019 |
Revenue from services | 13. a) | 2,853,141 | 2,320,495 | 2,662,893 |
Costs of services | 13. b) | (1,758,858) | (1,426,192) | (1,086,511) |
Gross profit |
| 1,094,283 | 894,303 | 1,576,382 |
Selling, General and Administrative expenses | 14.a) | (444,281) | (348,540) | (440,668) |
Other expenses, net | 14.b) | (95,523) | (55,769) | (109,679) |
Operating profit |
| 554,479 | 489,994 | 1,026,035 |
Finance income, net | 15. | 8,529 | 6,193 | 73,826 |
Profit before income taxes |
| 563,008 | 496,187 | 1,099,861 |
Current income tax and social contribution | 10.1 | (36,551) | (127,984) | (330,012) |
Deferred income tax and social contribution | 10.1 | (50,533) | (7,190) | 24,183 |
Net income for the year |
| 475,924 | 361,013 | 794,032 |
Participation of non-controlling shareholders |
| 267 | - | - |
Net income attributable to controlling shareholders |
| 476,191 | 361,013 | 794,032 |
|
|
|
|
|
|
|
|
|
|
Basic and diluted earnings per share for profit attributable to common shareholders (in R$) | 16 | 0.24 | 0.19 | 0.43 |
Basic and diluted earnings per share for profit attributable to preferred shareholders (in R$) | 16 | 0.27 | NA | NA |
The accompanying notes are an integral part of these consolidated financial statements.
Getnet Adquirência e Serviços para Meios de Pagamento S.A.
Years ended December 31
(In thousands of Brazilian reais - R$, unless otherwise stated)
| 2021 | 2020 | 2019 |
Net income for the year | 475,924 | 361,013 | 794,032 |
Change in fair value of financial instruments classified as Fair Value Through Other Comprehensive Income | 620 | (705) | 202 |
Deferred income Tax | (211) | 240 | (69) |
Total comprehensive income for the year | 476,333 | 360,548 | 794,165 |
|
|
|
|
Total comprehensive income allocated to: |
|
|
|
Controlling shareholders | 476,600 | 360,548 | 794,165 |
Non-controlling interests | (267) | - | - |
Total comprehensive income for the year | 476,333 | 360,548 | 794,165 |
The accompanying notes are an integral part of these consolidated financial statements.
Getnet Adquirência e Serviços para Meios de Pagamento S.A.
Years ended December 31
(In thousands of Brazilian reais - R$, unless otherwise stated)
|
|
|
| Retained earnings |
|
|
|
| ||
| Note | Share capital | Capital reserves | Legal reserve | Statutory reserve | Accumulated profit | Accumulated other comprehensive income | Equity attributable to controlling interest | Participation of non-controlling shareholders | Total consolidated equity |
Balance at December 31, 2018 |
| 1,189,503 | 6,400 | 82,351 | 1,278,721 | - | (319) | 2,556,656 | - | 2,556,656 |
Net income for the year |
| - | - | - | - | 794,032 | - | 794,032 | - | 794,032 |
Allocation: |
|
|
|
|
|
|
|
|
|
|
Legal reserve |
| - | - | 29,269 | - | (29,269) | - | - | - | - |
Dividends |
| - | - | - | - | (139,022) | - | (139,022) | - | (139,022) |
Reserve for dividend equalization |
| - | - | - | 414,146 | (414,146) | - | - | - | - |
Reserve for working capital strengthening |
| - | - | - | 211,595 | (211,595) | - | - | - | - |
Other comprehensive income |
| - | - | - | - | - | 133 | 133 | - | 133 |
Balance at December 31, 2019 |
| 1,189,503 | 6,400 | 111,620 | 1,904,462 | - | (186) | 3,211,799 | - | 3,211,799 |
Net income for the year |
| - | - | - | - | 361,013 | - | 361,013 | - | 361,013 |
Capital increase | 12. a) | 232,993 | - | - | (232,993) | - | - | - | - | - |
Allocation: |
|
|
|
|
|
|
|
|
|
|
Legal reserve | 12. b) | - | - | 14,498 | - | (14,498) | - | - | - | - |
Dividends | 12. c) | - | - | - | (760,361) | (69,103) | - | (829,464) | - | (829,464) |
Reserve for dividend equalization | 12. b) | - | - | - | 138,706 | (138,706) | - | - | - | - |
Reserve for working capital strengthening | 12. b) | - | - | - | 138,706 | (138,706) | - | - | - | - |
Other comprehensive income |
| - | - | - | - | - | (465) | (465) | - | (465) |
Balance at December 31, 2020 |
| 1,422,496 | 6,400 | 126,118 | 1,188,520 | - | (651) | 2,742,883 | - | 2,742,883 |
Net income for the year |
| - | - | - | - | 476,191 | - | 476,191 | (267) | 475,924 |
Non-controlling interests on acquisition of subsidiary |
| - | - | - | - | - | - | - | 4,170 | 4,170 |
Allocation: |
|
|
|
|
|
|
|
|
|
|
Legal reserve | 12. b) | - | - | 23,688 | - | (23,688) | - | - | - | - |
Dividends and Interest on capital | 12. c) | - | - | - | (211,175) | (86,825) | - | (298,000) | - | (298,000) |
Reserve for dividend equalization | 12. b) | - | - | - | 182,839 | (182,839) | - | - | - | - |
Reserve for working capital strengthening | 12. b) | - | - | - | 182,839 | (182,839) | - | - | - | - |
Tax credit – spin-off | 12. b) | - | 398,533 | - | - | - | - | 398,533 | - | 398,533 |
Other comprehensive income |
| - | - | - | - | - | 409 | 409 | - | 409 |
Balance at December 31, 2021 |
| 1,422,496 | 404,933 | 149,806 | 1,343,023 | - | (242) | 3,320,016 | 3,903 | 3,323,919 |
The accompanying notes are an integral part of these consolidated financial statements.
Getnet Adquirência e Serviços para Meios de Pagamento S.A.
Years ended December 31
(In thousands of Brazilian reais - R$, unless otherwise stated)
Cash flows from operating activities |
| Note | 2021 | 2020 | 2019 |
| ||||
Net income for the year |
|
| 475,924 | 361,013 | 794,032 |
| ||||
Adjustments to reconcile net income for the year to net cash generated by operating activities: |
|
| 557,719 | 369,080 | 375,068 |
| ||||
Depreciation and amortization |
|
| 368,438 | 322,232 | 277,895 |
| ||||
Foreign exchange gain (loss) |
|
| 93 | (16,467 | ) | 3,772 |
| |||
Provision for expected credit losses |
|
| 3,408 | 21,517 | 73,338 |
| ||||
Provision for labor, tax and civil risks |
|
| 3,588 | 3,924 | 1,397 |
| ||||
Loss from the sale of property and equipment and intangible |
|
| 9,766 | 9,250 | 11,424 |
| ||||
Provision for impairment (reversal) |
| 7 e 8 | 9,121 | (9,032 | ) | 18,420 |
| |||
Interest on Loans and borrowings |
| 5.2 b) e 6 | 112,772 | 30,466 | 13,005 |
| ||||
Deferred taxes |
| 10.1 | 50,533 | 7,190 | (24,183 | ) | ||||
(Increase) decrease in operating assets: |
|
| (14,770,215 | ) | (16,375,812 | ) | (1,321,197 | ) | ||
Prepaid and recoverable taxes |
|
| (96,958 | ) | (21,085 | ) | (11,364 | ) | ||
Accounts receivable |
|
| (14,613,859 | ) | (16,254,164 | ) | (1,305,344 | ) | ||
Other assets |
|
| (59,398 | ) | (100,563 | ) | (4,489 | ) | ||
Increase (decrease) in operating liabilities: |
|
| 12,745,552 | 16,073,741 | (1,586,134 | ) | ||||
Accounts payable |
|
| 12,837,734 | 15,922,589 | (1,701,899 | ) | ||||
Income taxes payables and other tax payables (1) |
|
| 101,227 | (2,684 | ) | (51,558 | ) | |||
Other liabilities |
|
| (76,499 | ) | 278,752 | 451,924 |
| |||
Income taxes paid |
|
| (116,910 | ) | (124,916 | ) | (284,601 | ) | ||
Net cash (used in) generated by operating activities: |
|
| (991,020 | ) | 428,022 | (1,738,231 | ) | |||
Cash flows from investing activities |
|
|
|
|
|
| ||||
Financial investments |
|
| (414,238 | ) | 499,696 | 375,473 |
| |||
Disposal of subsidiary, net of cash sold |
|
| - | 1,100 | 3,000 |
| ||||
|
|
|
|
|
|
| ||||
Purchase of property and equipment |
| 8 | (375,335 | ) | (310,167 | ) | (491,819 | ) | ||
Purchase of intangible assets |
| 7 | (48,637 | ) | (92,760 | ) | (142,087 | ) | ||
Payment for acquisition of subsidiary, net of cash acquired |
| 7 | (9,260 | ) | - | - |
| |||
Disposal of property and equipment and intangible assets |
| 7 e 8 | 252 | 464 | 1 |
| ||||
Net cash (used in) generated by investing activities |
|
| (847,218 | ) | 98,333 | (255,432 | ) | |||
Cash flows from financing activities |
|
|
|
|
|
| ||||
Proceeds from Loans and Borrowings |
| 5.2 b) | 6,510,906 | 2,842,742 | 599,160 |
| ||||
Payment of Loans and borrowings |
| 5.2 b) | (4,164,474 | ) | (2,399,622 | ) | (50,054 | ) | ||
Payment of dividends |
|
| (29,227 | ) | (867,746 | ) | (131,339 | ) | ||
Interest on borrowings paid and lease liabilities |
| 5.2 b) | (59,213 | ) | (33,060 | ) | (5,271 | ) | ||
Net cash generated (used in) by financing activities |
|
| 2,257,992 | (457,686 | ) | 412,496 |
| |||
Effect of exchange rate changes on cash and cash equivalents |
|
| (14,409 | ) | (15,275 | ) | (1,068 | ) | ||
Increase in cash and cash equivalents |
|
| 405,345 | 53,394 | (1,582,235 | ) | ||||
Cash and cash equivalents at the beginning of the year |
| 5.1 a) | 265,096 | 211,702 | 1,793,937 |
| ||||
Cash and cash equivalents at the end of the year |
| 5.1 a) | 670,441 | 265,096 | 211,702 |
| ||||
Increase in cash and cash equivalents |
|
| 405,345 | 53,394 | (1,582,235 | ) |
(1) For better presentation purposes the disclosure items of "Deferred income tax and social contribution" and "Deferred taxes and contributions payable" have been reallocated to the item "Income taxes payables and other tax payables" in the operating activities.
The accompanying notes are an integral part of these consolidated financial statements.
Getnet Adquirência e Serviços para Meios de Pagamento S.A.
(In thousands of Brazilian reais - R$, unless otherwise stated)
1. General Information
Getnet Adquirência e Serviços para Meios de Pagamento S.A. ("Getnet" or "Company" or "Parent"), formerly controlled by Banco Santander (Brasil) S.A. ("Banco Santander"), on February 25, 2021 had its partial spin-off approved, becoming indirectly controlled by Banco Santander S.A. ("Banco Santander Spain"). After, on November 11, 2021, it became controlled by PagoNxt Merchant Solutions S.L., ("PagoNxt Spain"), company that is also part of Santander Business Group ("Santander Group"), from the partial spin-off of the former controlling shareholders' interests.
The change in the ownership interest is part of a corporate reorganization of the Santander Group and does not present any change in the final controlling shareholders or in the management structure of the Company.
Getnet, constituted in the form of a corporation, domiciled on Av. Pres. Juscelino Kubitschek, 2041 Vila Nova Conceição – São Paulo - SP, operates in the market of acquiring and services for means of payment, regulated by the National Monetary Council (“CMN”) and the Central Bank of Brazil (“BACEN”), and its operations are mainly aimed at:
- Merchant acquisition revenue related to the accreditation for retailer and service providers establishments to accept credit and debit cards;
- Processing services revenue related to the capture, transmission and processing of data and information using a network consisting of different types of equipment;
- POS rental revenue related to installing, uninstalling, monitoring, supplying, providing maintenance, and leasing equipment used in transaction capture networks, such as Point-of-Sales (“POS”) devices;
- Recharges sale revenue where it acts as a distributor of telecommunication operators for the commercialization of telephony and data recharge digital credits.
- Profit share revenue that are recognized at the time of transfer of the respective prepayments by Santander Brazil (further details note 11);
- Other revenue from: i) the management of payments and receipts in the establishments accredited to Getnet’s network; ii) developing and selling or licensing software, iii) selling products or distributing services from entities that provide registry information; iv) providing technical, commercial, and logistic infrastructure services for the businesses related to the receipt of bills from dealers, banks, and other collection documents and issuing electronic currency pursuant to the regulations of the BACEN by providing the following services: (a) management of prepaid payment accounts; (b) provision of payment transactions based on electronic currency transferred to prepaid payment accounts; and, (c) conversion of funds into physical or book currency, with the possibility of enabling its acceptance through the settlement in any prepaid payment account it manages.
The spin-off of Getnet from Banco Santander (Brasil) S.A.
On February 25, 2021, Banco Santander (Brasil) S.A. (“Santander Brazil”) informed its shareholders and the market of the approval by its Board of Executive Directors of the proposed segregation of the equity interests held by Santander Brazil in its wholly-owned subsidiary Getnet, through a spin-off from Santander Brazil, deliberated by its shareholders at an extraordinary shareholders’ meeting. Additionally, at the same date, Santander Brazil’s Supervisory Board issued a favorable opinion on the proposed spin-off.
After the approval of the studies and proposal from the Board of Directors of Santander Brazil, on March 31, 2021, the shareholders of Santander Brazil and Getnet approved the spin-off. As a result, Getnet registered in its shareholders equity the portion of the net assets contributed from Santander Brazil spin-off, which correspond to the deferred tax asset registered in the amount of R$398,533 thousand. The operation became effective immediately upon the approval by the shareholders of both companies on March 31, 2021.
Getnet Adquirência e Serviços para Meios de Pagamento S.A.
Notes to the Consolidated Financial Statement
(In thousands of Brazilian reais - R$, unless otherwise stated)
Approval of Getnet spin-off from Santander Brazil by BACEN
On July 14, 2021, through the published statement in the Official Gazette No. 131, Section 3 of the BACEN, the competent board approved the incorporation of Santander Brazil's assets portion related to its participation in Getnet. The delivery of Getnet shares and units to Santander Brazil shareholders in Brazil, took place after the cut-off date for delivering the shares and units on October 15, 2021, with the delivery of shares on October 18, 2021.
Brazilian Securities and Exchange Commission - CVM and Securities and Exchange Commission – SEC approval the grant registration of the Getnet
On August 10, 2021, Getnet obtained the grant of issuer registration dealing with CVM Instruction n°. 480/09, in category "A" (permission to trade shares in the Brazilian stock exchange market), and on that date the approval of Getnet's registration of a publicly interest entity by CVM. On August 5, 2021, B3 S.A. - Brasil, Bolsa, Balcão granted Getnet's listing request and admission to the trading of shares and Units issued by Getnet. In Brazil, the cut-off date for delivering the shares was October 15, 2021, with delivery of shares on October 18, 2021, before CVM and B3. The listing process on the U.S. Securities and Exchange Commission (“SEC”) and the National Association of Securities Dealers Automated Quotations (“Nasdaq”) was concluded in October 2021 and the beginning of negotiations in the American market began on October 22, 2021.
On October 18, 2021 the Getnet shares (GETT11, GETT3 and GETT4) started to be traded at B3, and on October 22, 2021 the ADRs (GET) also started to be listed at Nasdaq, thus ending the spin-off process resolved at the Extraordinary Shareholders' Meeting held on March 31, 2021, since the Company's shares and units were delivered to the shareholders of Santander Brazil.
New subsidiary - Getnet Sociedade de Crédito Direto S.A
On February 12, 2021, Getnet received the authorization from BACEN to operate as a Direct Credit Corporation (Sociedade de Crédito Direto – “SCD”), as defined by the BACEN Resolution 4,656/18, following the expansion of our business to offer financial products such as loans directly to merchants during 2021.
Seeking to provide greater legal certainty to this “new Brazilian credit market", the applicable regulation requires SCDs to select their clients based on consistent, verifiable and transparent criteria, including relevant aspects of credit risk assessment. The SCDs are authorized to provide ancillary credit services, limited to an exhaustive list set forth in the regulation, encompassing: (i) credit analysis for third parties; (ii) collection of debts owed by third parties; (iii) acting as insurance representative in distribution of insurance related to credit transactions; and (iv) issuance of electronic currency. Notwithstanding, SCDs are prohibited from having equity interest in financial institutions, and restricted from raising funds from the public, except for the issuance of its own shares.
Transaction with Eyemobile Tecnologia Ltda.
On August 3, 2021 after the satisfaction of the applicable preceding conditions, the Company closed the transaction relating to Getnet's acquisition of interest in Eyemobile Tecnologia Ltda. ("Eyemobile"), with the subsequent corporate conversion of Eyemobile's and an increase in Eyemobile's capital, fully subscribed by Getnet (respectively “Transaction” and "Closing"). Eyemobile is a technology company that operates through the offer of software solutions focused on the payment market, points of sale (“POS”), cash front and events. After the closing, Getnet holds a 60% interest, acquired through a total of R$21.5 million paid in cash for the acquisition of: (i) equity interest of 44% (R$ 11.5 million) and capital increase (R$ 10.0 million) resulting in an increase in the level of ownership interest of 16%. In addition, Getnet may disburse an additional maximum amount of R$ 3.5 million conditioned to certain financial and operational achievements up to 18 months after the closing.
Approval of the financial statements
The consolidated financial statements were authorized for issue by the board of directors on March 09, 2022. The directors have the power to amend and reissue the consolidated financial statements.
Getnet Adquirência e Serviços para Meios de Pagamento S.A.
Notes to the Consolidated Financial Statement
(In thousands of Brazilian reais - R$, unless otherwise stated)
2. Basis of preparation
The consolidated financial statements have been prepared taking into consideration the historical cost model as the base value, except in the case of certain financial assets and liabilities that are measured at fair value.
The preparation of consolidated financial statements requires the use of certain critical accounting estimates. It also requires Getnet’s management to exercise judgment in the process of applying the adopted accounting policies. Those areas involving a higher degree of judgment and complexity, as well as those where assumptions and estimates are significant to the consolidated financial statements, are disclosed in notes.
The consolidated financial statements have been prepared and are presented in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”).
(a) Other information
c.1) Adoption of new standards and interpretations
The following standard changes were adopted for the first time for the year beginning January 1, 2021:
• Amendments to IFRS 9, IAS 39, IFRS 7 “Financial Instruments”, IFRS 4 “Insurance Contracts” and IFRS 16 “Leases”:
The changes provided for in Phase 2 of the interbank offered rates (“IBOR)” reform address issues that may affect the Financial Statements during the reform of a benchmark interest rate, including the effects of changes in contractual cash flows or hedging relationships arising from the substitution of a rate for a alternative reference rate (replacement issues). The effective date of application of this change was January 1, 2021. Therefore, the implementations above had no significant impact on these Financial Statements.
Rules and interpretations that will come into effect after December 31, 2021
The IASB has disclosed some amendments to certain accounting standards that are not yet effective, and the Company and its subsidiaries have not early adopted for the preparation of these consolidated financial statements.
Amendments to IFRS 10 Consolidated Financial Statements and IAS 28 Sale or Contribution of Assets between an Investor and its Associate or Joint Venture
The amendments to IFRS 10 and IAS 28 deal with situations where there is a sale or contribution of assets between an investor and its associate or joint venture. Specifically, the amendments state that gains or losses resulting from the loss of control of a subsidiary that does not contain a business in a transaction with an associate or a joint venture that is accounted for using the equity method, are recognized in the parent’s profit or loss only to the extent of the unrelated investors’ interests in that associate or joint venture. Similarly, gains and losses resulting from the remeasurement of investments retained in any former subsidiary (that has become an associate or a joint venture that is accounted for using the equity method) to fair value are recognized in the former parent’s profit or loss only to the extent of the unrelated investors interests in the new associate or joint venture.
The effective date of the amendments has not been set by the IASB yet; however, early adoption of the changes is allowed. Getnet is assessing the possible impacts of adopting this standard.
Amendments to IAS 1 Classification of Liabilities as Current or Non-current
The amendments to IAS 1 affect only the presentation of liabilities as current or non-current in the statement of financial position and not the amount or timing of recognition of any asset, liability, income or expenses, or the information disclosed about those items.
The amendments clarify that the classification of liabilities as current or non-current is based on rights that are in existence at the end of the reporting period, specify that classification is unaffected by expectations about whether an entity will exercise its right to defer settlement of a liability, explain that rights are in existence if covenants are complied with at the end of the reporting period, and introduce a definition of settlement to make clear that settlement refers to the transfer to the counterparty of cash, equity instruments, other assets or services.
The amendments are effective retrospectively for annual periods beginning on or after January 1, 2023, with early adoption permitted. Getnet is assessing the possible impacts of adopting this standard.
Getnet Adquirência e Serviços para Meios de Pagamento S.A.
Notes to the Consolidated Financial Statement
(In thousands of Brazilian reais - R$, unless otherwise stated)
Amendments to IFRS 3 Business Combinations - Reference to the Conceptual Framework
The amendments update IFRS 3 so that it refers to the 2018 Conceptual Framework instead of the 1989 Framework. They also add to IFRS 3 requirement that, for obligations within the scope of IAS 37, an acquirer applies IAS 37 to determine whether at the acquisition date a present obligation exists as a result of past events. For a levy that would be within the scope of IFRIC 21 Levies, the acquirer applies IFRIC 21 to determine whether the obligating event that gives rise to a liability to pay the levy has occurred by the acquisition date.
Finally, the amendments add an explicit statement that an acquirer does not recognize contingent assets acquired in a business combination.
The amendments are effective for business combinations for which the date of acquisition is on or after the beginning of the first annual period beginning on or after January 1, 2022. Early application is permitted if an entity also applies all other updated references (published together with the updated Conceptual Framework) at the same time or earlier. Getnet is assessing the possible impacts of adopting this standard.
Amendments to IAS 16 Property, Plant and Equipment—Proceeds before Intended Use
The amendments prohibit deducting from the cost of an item of property, plant and equipment any proceeds from selling items produced before that asset is available for use, i.e. proceeds while bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management. Consequently, an entity recognizes such sales proceeds and related costs in profit or loss. The entity measures the cost of those items in accordance with IAS 2 Inventories.
The amendments also clarify the meaning of ‘testing whether an asset is functioning properly’.<0} IAS 16 now specifies this as assessing whether the technical and physical performance of the asset is such that it is capable of being used in the production or supply of goods or services, for rental to others, or for administrative purposes.<0}
If not presented separately in the comprehensive income statement, the financial statements should disclose the amounts of the resources and costs included in the income corresponding to the items produced that are not a product of the entity's ordinary activities, and whose item in the comprehensive income statement includes these resources and costs.
The amendments are applied retrospectively, but only to items of property, plant and equipment that are brought to the location and condition necessary for them to be capable of operating in the manner intended by management on or after the beginning of the earliest annual period presented in the financial statements in which the entity first applies the amendments.
The entity shall recognize the cumulative effect of initially applying the amendments as an adjustment to the opening balance of retained earnings (or other component of equity, as appropriate) at the beginning of that earliest annual period presented.
The amendments are effective for annual periods beginning on or after January 1, 2022, with early application permitted. Getnet is assessing the possible impacts of adopting this standard.
Amendments to IAS 37 Onerous contracts—cost of fulfilling a contract
The amendments specify that the ‘cost of fulfilling’ a contract comprises the ‘costs that relate directly to the contract’. Costs that relate directly to a contract consist of both the incremental costs of fulfilling that contract (examples would be direct labor or materials) and an allocation of other costs that relate directly to fulfilling contracts (an example would be the allocation of the depreciation charge for an item of property, plant and equipment used in fulfilling the contract).
The amendments apply to contracts for which the entity has not yet fulfilled all its obligations at the beginning of the annual period in which the entity first applies the amendments. Comparatives are not restated. Instead, the entity shall recognize the cumulative effect of initially applying the amendments as an adjustment to the opening balance of retained earnings or other component of equity, as appropriate, at the date of initial application.
The amendments are effective for annual periods beginning on or after January 1, 2022, with early application permitted. Getnet is assessing the possible impacts of adopting this standard.
Getnet Adquirência e Serviços para Meios de Pagamento S.A.
Notes to the Consolidated Financial Statement
(In thousands of Brazilian reais - R$, unless otherwise stated)
IFRS 17 Insurance Contracts
In May 2017, the IASB issued the IFRS for insurance contracts that aims to replace IFRS 4. The implementation date of IFRS 17 is January 1, 2023. This standard is intended to demonstrate greater transparency and information useful in financial statements, one of the main changes being the recognition of earnings as the measure of delivery of insurance services, in order to assess the performance of insurers over time. Getnet is evaluating the possible impacts when adopting the standard.
IAS 12 Income Taxes
The amendments to IAS 12 Income Taxes require companies to recognise deferred tax on transactions that, on initial recognition, give rise to equal amounts of taxable and deductible temporary differences. They will typically apply to transactions such as leases of lessees and decommissioning obligations and will require the recognition of additional deferred tax assets and liabilities. The amendments to IAS 12 are effective as of January 1, 2023.
IAS 8 Accounting Policies, changes in accounting estimates and errors
Changes in accounting estimates and errors, which use a consistent definition of materiality for the purpose of making material judgements and deciding on the information to be included in the financial statements. The amendments to IAS 1 are effective as of January 1, 2023.
Annual Improvements to IFRS Standards 2018 - 2020 - to be adopted beginning January 1, 2022
IFRS 9 Financial Instruments
The amendment clarifies that in applying the ‘10 percent’ test to assess whether to derecognize a financial liability, an entity includes only fees paid or received between the entity (the borrower) and the lender, including fees paid or received by either the entity or the lender on the other’s behalf.
The amendment is applied prospectively to modifications and exchanges that occur on or after the date the entity first applies the amendment.
The amendment is effective for annual periods beginning on or after January 1, 2022, with early application permitted. Getnet is assessing the possible impacts of adopting this standard.
According to management’s opinion, there are no other standards or interpretations issued and not yet adopted that could have a material impact on the profit or loss for the year or the equity disclosed by the Company and its subsidiaries.
Getnet Adquirência e Serviços para Meios de Pagamento S.A.
Notes to the Consolidated Financial Statement
(In thousands of Brazilian reais - R$, unless otherwise stated)
2.1. Consolidation
The Company consolidates all entities over which it has the capacity to exercise control, i.e., when it is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to direct the investee’s relevant operations.
The subsidiaries included in consolidation are the following:
Subsidiary | Type | Equity interest % |
Auttar H.U.T. Processamento de Dados Ltda. (“Auttar”) | Subsidiary | 100% |
Getnet Sociedade de Crédito Direto S.A (“SCD”) | Subsidiary | 100% |
Eyemobile Tecnologia S.A. (“Eyemobile”) (1) | Subsidiary | 60% |
(1) On May 12, 2021, Getnet Adquirência e Serviços para Meios de Pagamentos S.A. entered into an investment and other agreements with Eyemobile, as consenting intervening party, establishing the terms of the negotiation for the purchase and sale of the shares representing Eyemobile's capital stock. The control acquisition was concluded on August 3, 2021, so that Getnet now holds 60% of Eyemobile's voting shares for the amount of R$19,415, corresponding to the equity value of the shares on the purchase date, plus the amount of the contribution of the shares paid up upon subscription. The Company's corporate purpose is to explore the development and licensing of customizable computer programs, the rental of office machines and equipment, and the specialized retail trade of computer equipment and supplies.
| Accounting policy |
The accounting policies below are applied in the preparation of the consolidated financial statements:
Subsidiaries
Subsidiaries are all entities over which Getnet holds control. Subsidiaries are consolidated from the date on which control is transferred to Getnet. Consolidation is discontinued when control no longer exists.
Getnet Adquirência e Serviços para Meios de Pagamento S.A.
Notes to the Consolidated Financial Statement
(In thousands of Brazilian reais - R$, unless otherwise stated)
Identifiable assets acquired and liabilities and contingent liabilities assumed in the acquisition of a subsidiary are initially measured at their fair values at the acquisition date.
All intragroup transactions, balances and unrealized gains are eliminated on consolidation. Unrealized losses are also eliminated, unless the transaction provides evidence of impairment of the transferred asset. The subsidiaries’ accounting policies are amended according to Getnet’s accounting policies, as applicable.
2.2. Functional and presentation currency
Items included in the financial statements of each investee controlled by Getnet are measured using the currency of the main economic environment in which it operates (“functional currency”).
The consolidated financial statements are presented in Brazilian reais (R$), which is Getnet’s functional and presentation currency.
3. Segment Reporting
A business segment is an identifiable component of the entity that is intended to provide an individual product or service or a group of related products or services, and which is subject to risks and benefits that are distinguishable from other business segments.
Operating segment reporting is presented in a manner consistent with the internal reporting provided to the chief operating decision maker, in the case of Getnet, the Chief Executive Officer (“CEO”), in which he reviews items of the Consolidated Statement of Income and other comprehensive income. The CEO takes into consideration the entire Company as a single operating and reportable segment by monitoring operations, making decisions about resource allocation, financial and strategic planning, and performance evaluation based on a single operating segment. The CEO formally reviews financial data material for the Company and its subsidiaries.
The Company's revenue, profit or loss, and assets for this reportable segment can be determined by reference to the Consolidated Statement of Income, the Consolidated Statement of Comprehensive Income, and the Consolidated Balance Sheet.
4. Risk Management
Getnet’s shareholders and management consider risk management an essential tool for strategic decision making, including for maximizing efficiency in the use of capital in Getnet‘s operations.
Getnet established its policies, systems and internal control to ensure a continual mitigation of possible risks and/or the realization of losses arising from exposure to credit, liquidity, market, and operational risks.
a)Credit risk: Credit risk is the risk that a financial loss due to a counterparty failing to fulfill its obligations under a financial instrument or accounts receivable, leading to a financial loss for the Company. The Company is exposed to credit risk from its operating activities, mainly related to accounts receivable and also cash and cash equivalents and derivative financial instruments. c. In merchant acquisition transactions, the card issuers are required to pay Getnet the amounts arising on to the transactions carried out by the cardholders so that the payment of such amounts to the accredited merchants can be made; therefore, Getnet is exposed to the credit risk of the card issuers and the greatest exposure to credit risk is correlated to the transactions recorded in the Other customer receivables lines presented in note 5.1 c). For the management of loss risks arising from accounts receivable, Getnet applies a simplified approach in calculating expected credit losses (“ECLs”), therefore, the Company instead recognizes a loss allowance based on lifetime ECLs, provision matrix and days past due at each reporting date.
Getnet Adquirência e Serviços para Meios de Pagamento S.A.
Notes to the Consolidated Financial Statement
(In thousands of Brazilian reais - R$, unless otherwise stated)
b)Liquidity risk: The liquidity risk management policy aims at ensuring that the risks that affect the implementation of Getnet’s strategies and goals are continuously assessed. Getnet manages the liquidity risk by setting the necessary tools for its management in normal or crisis scenarios. The frequent monitoring aims at mitigating possible maturity mismatches by allowing corrective actions, if necessary. Getnet’s approach to liquidity management is to ensure that it always has enough funds to discharge its obligations on due date, under normal and stress conditions, in order to avoid unacceptable losses or losses resulting in undue exposure of Getnet’s reputation. The cash flow forecasting is performed by the treasury department which monitors rolling forecasts of the Company’s liquidity requirements to ensure it has sufficient cash to meet operational needs while maintaining sufficient headroom on its undrawn committed borrowing facilities at all times in order to the Company does not breach covenants (where applicable). The liquidity risk management is performed to : (i) measuring liquidity risk, the Company has tools to control the cash flow forecasting to ensure that Getnet has sufficient cash to meet operational needs; (ii) daily monitoring the cash needs, segregated into liquidity buffer and free movement cash, ensuring that they are consistent with the policies and minimum amounts decided by the management; (iii) limits and liquidity risk alerts, monitored monthly by the management and by the controller where the available amounts and the projection of possible gaps over a 90-day horizon are measured; (iv) contingency plan test is conducted every six months, whereby previously approved credit agreements with other financial institutions are contracted for possible emergency cover.
c)Interest rate risk: This risk arises from the possible losses of Getnet’s asset values due to fluctuations in sovereign interest rates. Getnet is exposed to interest rate risk due to short-term settlements of accounts receivable, mismatch between transaction settlements and the transfers from the credit card companies, and possible difficulty to raise funds. In addition to the financial risk generated by a possible decrease in the spreads due to a possible increase in borrowing costs. The Company manages the interest rate risk by maintaining a diversification of borrowing at fixed and variable rates.
d)Exchange rate risk: Corresponds to the possibility of loss of value due to exchange rate fluctuations from transactions or recognized assets or liabilities denominated in a currency different from the Getnet’s functional currency. The exposure to foreign exchange rate risk by Getnet arises substantially from receivables from international card issuers, cash and cash and equivalents in foreign exchange. Getnet has operating expenses that are settled in U.S. Dollars, mainly from purchasing equipment which are indexed to U.S. Dollars and resold in Brazilian reais and costs of hiring IT suppliers paid in U.S. Dollars. Due to the low volume of transactions subject to exchange rate fluctuation. At December 31, 2021 and 2020, Getnet is not materially exposed to the foreign exchange rate risk due the short-term and low amount outstanding at the end of each month.
e)Capital management: The current Liquidity and Market Risk Management Policy, Getnet follows the BACEN Resolution Nº 4,557, issued on February 23, 2017, which provides for Risk Management and Capital Management Structure, making efficient use of capital as an indispensable component of the business decision-making process, and its management is a factor of competitive differentiation. With integrated risk management, this practice supports the Company's projected growth, besides increasing its profitability, and has the following drivers (i) efficient use of capital, through allocation in businesses considering risk versus return; (ii) optimization of capital allocated in business and products of greater profitability; (iii) integrated risk management ensuring the position of soundness in the market, by adopting the best management practices and risk mitigation.
Getnet Adquirência e Serviços para Meios de Pagamento S.A.
Notes to the Consolidated Financial Statement
(In thousands of Brazilian reais - R$, unless otherwise stated)
5. Financial Instruments
A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity.
The Company’s classifies financial instruments into the following categories:
| December 31, 2021 |
| December 31, 2020 | ||||
| Amortized cost | Fair value through other comprehensive income | Total |
| Amortized cost | Fair value through other comprehensive income | Total |
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|
|
Cash and cash equivalents | 670,441 | - | 670,441 |
| 265,096 | - | 265,096 |
Financial investments | 875,240 | 555,413 | 1,430,653 |
| 393,783 | 531,600 | 925,383 |
Accounts receivable | 54,578,684 | - | 54,578,684 |
| 39,968,233 | - | 39,968,233 |
Other assets | 200,491 | - | 200,491 |
| 205,718 | - | 205,718 |
Total financial assets | 56,324,856 | 555,413 | 56,880,269 |
| 40,832,830 | 531,600 | 41,364,430 |
|
|
|
|
|
|
|
|
Financial liabilities |
|
|
|
|
|
|
|
Current/Non-current |
|
|
|
|
|
|
|
Accounts payable | 51,610,405 | - | 51,610,405 |
| 38,767,156 | - | 38,767,156 |
Loans and borrowings | 3,489,858 | - | 3,489,858 |
| 1,091,157 | - | 1,091,157 |
Lease liabilities | 26,315 | - | 26,315 |
| 23,049 | - | 23,049 |
Other liabilities | 236,990 | - | 236,990 |
| 307,205 | - | 307,205 |
Total financial liabilities | 55,363,568 | - | 55,363,568 |
| 40,188,567 | - | 40,188,567 |
5.1 Financial assets
(a) Cash and cash equivalents
| 12/31/2021 | 12/31/2020 |
Cash | 229 | 41 |
Short-term bank deposits | 646,304 | 255,407 |
Foreign currency cash and investments abroad(1) | 23,908 | 9,648 |
Total | 670,441 | 265,096 |
(1) Refers to highly liquid financial investments in U.S. Dollars.
(b) Financial investments
| 12/31/2021 | 12/31/2020 |
Brazilian treasury bonds (1) | 555,413 | 531,600 |
Short-term investment (2) | 875,240 | 393,783 |
Total | 1,430,653 | 925,383 |
(1) Consists of investments in Brazilian Treasury Bonds ("LFTs") with an interest rate of 99.04% of the Basic Interest Rate (SELIC –9.25% and 2.0% for the year ended December 31, 2021 and December 2020, respectively), invested to comply with certain requirements for authorized payment institutions as set forth by the BACEN regulation. This financial asset was classified at fair value through other comprehensive income.
(2) Refer to the amounts invested in the SBAC Investment Fund, remunerated at DI rate (the Brazilian interbank deposit rate), where Getnet holds participation units. The underlying assets of the fund comprises substantially in public securities and repo with high liquidity (Level 1 – Further details note 5.3).
Getnet Adquirência e Serviços para Meios de Pagamento S.A.
Notes to the Consolidated Financial Statement
(In thousands of Brazilian reais - R$, unless otherwise stated)
(c) Accounts receivable
| 12/31/2021 | 12/31/2020 |
Accounts receivable from card issuers | 54,131,057 | 39,610,114 |
Other accounts receivable from clients | 509,359 | 416,443 |
Provision for expected credit losses | (61,732) | (58,324) |
Total | 54,578,684 | 39,968,233 |
Movements in the provision for expected credit losses
| 12/31/2021 | 12/31/2020 | 12/31/2019 |
Opening balance | 58,324 | 66,564 | 75,109 |
Additions | 67,351 | 69,789 | 83,293 |
Reversals | (63,943) | (78,029) | (91,838) |
Closing balance | 61,732 | 58,324 | 66,564 |
Accounting policy
Financial assets are classified into the following categories: (i) amortized cost; (ii) fair value through other comprehensive income; and (iii) fair value through profit or loss. The basis for classification depends on the Company’s business financial assets management model and the contractual cash flow characteristics of the financial asset. The classifications of the financial assets are detailed below:
Amortized cost
Held within the business model in order to collect to collect contractual cash flows; these cash flows represent solely payments of principal and interest and are, therefore, initially recognized at fair value and subsequently measured at amortized cost using the effective interest rate method, less provisions for reduction to recoverable amount.
Interest income from these financial assets is recognized in finance income. Any gains or losses due to the write-off of the asset are recognized directly in the profit or loss, together with foreign exchange gains and losses. Impairment losses are presented separately in the Consolidated Statement of Income.
Fair value through other comprehensive income (FVOCI)
A financial asset is measured at fair value through comprehensive income if it meets the concept of principal and interest only payments and is held within the business model whose objective is to both, collecting contractual cash flows and selling the financial assets.
Changes in carrying amount are recognized in other comprehensive income, except for the recognition of impairment gains or losses, interest income, and foreign exchange gains and losses, which are recognized in the profit or loss. When the financial asset is derecognized, the cumulative gains or losses that had been previously recognized in other comprehensive income are reclassified from equity to profit or loss. Interest income from these financial assets is recognized in finance income using the effective interest method.
Fair value through profit or loss (FVPL)
Assets are measured at fair value through profit or loss when they do not meet the criteria to be classified at amortized cost or at fair value through other comprehensive income or when on initial recognition was designated to eliminate or reduce an accounting mismatch. Any exchange gains or losses are recognized in the Consolidate Statement of Income.
Getnet Adquirência e Serviços para Meios de Pagamento S.A.
Notes to the Consolidated Financial Statement
(In thousands of Brazilian reais - R$, unless otherwise stated)
Derecognition of financial assets
The Company derecognizes financial assets when the contractual rights to the cash flows from investing activities expire or when it transfers the investments and substantially all the risks and rewards of ownership to another entity.
Expected credit losses
Getnet assesses, on a prospective basis at each reporting date, the expected credit losses on financial assets carried at amortized cost and at fair value through other comprehensive income.
The impairment assessment methodology applied depends on whether there is a significant increase in credit risk and the loss is estimated as the difference between all contractual cash flows that are due to the Company in accordance with the contract and all the cash flows that the Company expects to receive, discounted at an approximation of the original effective interest rate. Expected cash flows will include cash flows from the sale of collaterals held or other credit enhancements that are integral to the contractual terms.
The Company recognizes an allowance for ECLs for all financial assets not measured at FVPL. ECLs are based on the difference between the contractual cash flows due in accordance with the contract and all the cash flows that Getnet expects to receive, discounted at an approximation of the original effective interest rate. Getnet applies a simplified approach in calculating ECLs, therefore, Getnet instead recognizes a loss allowance based on lifetime ECLs, provision matrix and days past due at each reporting date.
For accounts receivable, Getnet applies the simplified approach as permitted by IFRS 9 by recognizing lifetime expected credit losses from the initial recognition of the receivables.
Estimates and critical accounting judgments
Financial assets measured at amortized cost and fair value through other comprehensive income are tested for impairment at the end of each annual reporting period. The carrying amounts of these assets are adjusted by the loss allowance as a contra entry to the Consolidated Statement of Income. The reversal of previously recognized losses is recognized in the Consolidated Statement of Income in the year in which the impairment decreases and can be objectively related to a recovery event. The amount recorded in the Consolidated Statement of Income in the line item ‘Other expenses, net’ is disclosed in table ‘Movements in the provision for expected credit losses’ in the note 5.1(c).
5.2 Financial liabilities
a) Accounts payable
| 12/31/2021 | 12/31/2020 |
Payment transactions (1) | 50,980,629 | 38,241,934 |
Other financial liabilities (2) | 629,776 | 525,222 |
Total | 51,610,405 | 38,767,156 |
(1) Refers mainly to payment transactions with Santander Brazil (related party) in the amount of R$ 18,858,043 on December 31, 2021 and R$ 17,474,617 on December 31, 2020 (further details note 11) and commercial establishments.
(2) Amounts to be paid as an interchange fee and amounts that are under analysis for approval of settlement.
b) Loans and borrowings
| 12/31/2021 | 12/31/2020 |
Financial liabilities at amortized cost(1) | 3,489,858 | 1,091,157 |
Total | 3,489,858 | 1,091,157 |
Getnet Adquirência e Serviços para Meios de Pagamento S.A.
Notes to the Consolidated Financial Statement
(In thousands of Brazilian reais - R$, unless otherwise stated)
(1) Includes Brazilian real-denominated transactions with credit institutions resulting from loan and financing credit facilities and on lending in Brazil (BNDES/ FINAME).
The increase in loan obligations for the year was due to the raising of working capital to support the Company's operational activities, which had the strategy of expanding the offer of receivables anticipation products.
The types of operations and rates used are listed below:
| Rate | Maturity | 12/31/2021 | 12/31/2020 |
Working capital financing (1) | 110.63% of the CDI(2) | 02/22 | 2,993,507 | 1,051,358 |
Working capital financing | 9.16% of the CDI(2) | 01/22 | 457,416 | - |
BNDES/ FINAME | 3.75% p.y + Long Term Interest Rate | - | - | 2,957 |
Other financing | 11.11% - 11.15% p.y. | 05/24 - 02/25 | 38,935 | 36,842 |
Total |
|
| 3,489,858 | 1,091,157 |
(1) Related to Santander Brazil transaction. See note 11 for further details.
(2) CDI rate means the Brazilian interbank deposit (Certificado de Depósito Interbancário) rate, which is an average of interbank overnight rates in Brazil. Refer to note 19 for further details.
Movements in loans and borrowings in the year
Balance at December 31, 2018 | 96,570 |
Additions | 599,160 |
Principal payments | (50,054) |
Accrued interest | 12,140 |
Interest paid | (5,271) |
Balance at December 31, 2019 | 652,545 |
Additions | 2,842,742 |
Principal payments | (2,399,622) |
Accrued interest | 28,552 |
Interest paid | (33,060) |
Balance at December 31, 2020 | 1,091,157 |
Additions | 6,511,673 |
Principal payments | (4,164,474) |
Accrued interest | 110,715 |
Interest paid | (59,213) |
Balance at December 31, 2021 | 3,489,858 |
Debt breakdown (by maturity)
| December 31, 2021 | December 31, 2020 | ||||||
| Up to 3 months | 3-12 months | Over 12 months | Total | Up to 3 months | 3-12 months | Over 12 months | Total |
Loans and borrowings from domestic financial institutions | 3,454,903 | 9,813 | 25,142 | 3,489,858 | 1,058,034 | 5,313 | 27,810 | 1,091,157 |
Accounting policy
On initial recognition, financial liabilities are classified as (i) financial liabilities at fair value through profit or loss; or (ii) financial liabilities at amortized cost, as appropriate.
Amortized cost
Initially measured at fair value, net of transaction costs, and subsequently measured at amortized cost using the effective interest method, with interest expense recognized on a in profit or loss.
Getnet Adquirência e Serviços para Meios de Pagamento S.A.
Notes to the Consolidated Financial Statement
(In thousands of Brazilian reais - R$, unless otherwise stated)
Gains and losses from these financial liabilities are recognized in the Consolidated Statement of Income.
5.3 Fair value estimation
The table below presents a comparison by class between book value and fair value of the financial instruments:
| December 31, 2021 | |||||||||
| Book value |
| Fair value | |||||||
| Level 1 | Level 2 | Total |
| Level 1 | Level 2 | Total | |||
Financial assets |
|
|
|
|
|
|
| |||
Cash and cash equivalents | 670,441 | - | 670,441 |
| 670,441 | - | 670,441 | |||
Financial investments | 1,430,653 | - | 1,430,653 |
| 1,430,653 | - | 1,430,653 | |||
Accounts receivable | - | 54,578,684 | 54,578,684 |
| - | 54,578,684 | 54,578,684 | |||
Other assets | - | 200,491 | 200,491 |
| - | 200,491 | 200,491 | |||
Total financial assets | 2,101,094 | 54,779,175 | 56,880,269 |
| 2,101,094 | 54,779,175 | 56,880,269 | |||
|
|
|
|
|
|
|
| |||
Financial liabilities |
|
|
|
|
|
|
| |||
Accounts payable | - | 51,610,405 | 51,610,405 |
| - | 51,610,405 | 51,610,405 | |||
Loans and borrowings | - | 3,489,858 | 3,489,858 |
| - | 3,489,858 | 3,489,858 | |||
Lease liabilities | - | 26,315 | 26,315 |
| - | 26,315 | 26,315 | |||
Other liabilities | - | 236,990 | 236,990 |
| - | 236,990 | 236,990 | |||
Total financial liabilities | - | 55,363,568 | 55,363,568 |
| - | 55,363,568 | 55,363,568 | |||
| December 31, 2020 | ||||||
| Book value |
| Fair value | ||||
| Level 1 | Level 2 | Total |
| Level 1 | Level 2 | Total |
Financial assets |
|
|
|
|
|
|
|
Cash and cash equivalents | 265,096 | - | 265,096 |
| 265,096 | - | 265,096 |
Financial investments | 925,383 | - | 925,383 |
| 925,383 | - | 925,383 |
Accounts receivable | - | 39,968,233 | 39,968,233 |
| - | 39,968,233 | 39,968,233 |
Other assets | - | 205,718 | 205,718 |
| - | 205,718 | 205,718 |
Total financial assets | 1,190,479 | 40,173,951 | 41,364,430 |
| 1,190,479 | 40,173,951 | 41,364,430 |
|
|
|
|
|
|
|
|
Financial liabilities |
|
|
|
|
|
|
|
Accounts payable | - | 38,767,156 | 38,767,156 |
| - | 38,767,156 | 38,767,156 |
Loans and borrowings | - | 1,091,157 | 1,091,157 |
| - | 1,091,157 | 1,091,157 |
Lease liabilities | - | 23,049 | 23,049 |
| - | 23,049 | 23,049 |
Other liabilities | - | 307,205 | 307,205 |
| - | 307,205 | 307,205 |
Total financial liabilities | - | 40,188,567 | 40,188,567 |
| - | 40,188,567 | 40,188,567 |
(1) The carrying values of Other assets are measured at amortized cost, less the provision for impairment and adjustment to present value, when applicable. These amounts refer mainly to judicial deposit, protection deposit of BACEN.
(2) The carrying values of Other liabilities are measured at amortized cost. These amounts refer mainly to payables to suppliers.
Getnet Adquirência e Serviços para Meios de Pagamento S.A.
Notes to the Consolidated Financial Statement
(In thousands of Brazilian reais - R$, unless otherwise stated)
The fair value of the financial assets and the liabilities are substantially similar to their book value.
Accounting policy
Fair value is the price that would be received to sell an asset or paid to transfer a liability in the major or most advantageous market, in an orderly transaction between market participants at the measurement date. A three-level hierarchy is used to measure and disclose fair value, as shown below:
- Level 1—Prices quoted (unadjusted) in active markets for identical assets or liabilities. For investments in investment funds, the price of the fund unit share is an appropriate indicator of fair value and falls into this fair value hierarchy category. For the financial investments, fair value is determined based on the interbank deposit interest rate (DI), released to the market through official agencies (Cetip, BACEN, etc.), and from the fund unit value published by CVM, respectively.
- Level 2—Inputs, other than quoted prices included in Level 1, that are observable in the market for assets or liabilities, either directly (such as prices) or indirectly (derived from prices). This category includes (i) accounts receivable; (ii) loans and borrowings; and (iii) other assets and other liabilities. For loans and borrowings, fair value was determined using the expected payment of principal and interest until maturity at the contractual rates.
- Level 3—Inputs on assets or liabilities that are not based on observable data adopted by the market (i.e., unobservable inputs). The valuation technique for the fair values of the other financial instruments classified as Level 3 is the discounted cash flow method. Getnet does not have assets or liabilities measured at Level 3 fair value.
Estimates and critical accounting judgments
Financial assets and liabilities are subsequently measured at the end of each annual period using valuation techniques. This calculation is based on assumptions that take into consideration the Company’s judgment based on information and market conditions existing at the end of the reporting period.
Getnet classifies the fair value measurement using a hierarchy that reflects the model used in the measurement process, segregating the financial instruments into levels 1, 2 or 3.
5.4 Sensitivity analysis
The following analysis estimates the potential value of the financial instruments in hypothetical stress scenarios of the main market risk factors (fixed interest rate and foreign currency risk: exposure subject to exchange fluctuations) that impact each position. This analysis was performed according to topics presented in footnote 4 d).
Sensitivity analysis of changes in foreign exchange rates
| December 31, 2021 | December 31, 2020 |
Assets |
|
|
Cash and cash equivalents | 23,951 | 9,688 |
Accounts receivable | 22,181 | 20,707 |
Other assets | 139 | - |
Liabilities |
|
|
Accounts payable | - | - |
Net exposure | 46,271 | 30,395 |
Getnet Adquirência e Serviços para Meios de Pagamento S.A.
Notes to the Consolidated Financial Statement
(In thousands of Brazilian reais - R$, unless otherwise stated)
| December 31, 2021 | ||||
| Probable scenario |
| Possible scenario |
| Remote scenario |
| +/-10% |
| +/-25% |
| +/-50% |
Net effect on profit or loss | 4,627 |
| 11,568 |
| 23,136 |
|
|
|
|
|
|
| December 31, 2020 | ||||
| Probable scenario |
| Possible scenario |
| Remote scenario |
| +/-10% |
| +/-25% |
| +/-50% |
Net effect on profit or loss | 3,039 |
| 7,599 |
| 15,197 |
Translation rates in the year ended: | USD:BRL |
12/31/2021 | 5.5805 |
12/31/2020 | 5.1967 |
Analysis rates in the years ending in: | SELIC |
12/31/2021 | 9.15% p.y |
12/31/2020 | 1.90% p.y |
Sensitivity analysis of changes in interest rates
| December 31, 2021 | December 31, 2020 |
Assets |
|
|
Financial investments | 1,430,566 | 925,383 |
Accounts receivable and other assets | 182,245 | 72,575 |
Liabilities |
|
|
Loans and borrowings | (3,450,483) | (1,051,358) |
Net exposure | (1,837,672) | (53,400) |
|
| December 31, 2021 |
|
| Probable scenario | Possible scenario | Remote scenario |
| +/-10% | +/-25% | +/-50% |
Net effect on profit or loss | (16,815) | (42,037) | (84,073) |
|
|
|
|
|
| December 31, 2020 |
|
| Probable scenario | Possible scenario | Remote scenario |
| +/-10% | +/-25% | +/-50% |
Net effect on profit or loss | (101) | (254) | (507) |
Probable Scenario: taking into account a 10% deterioration in the associated risk variables.
Possible Scenario: taking into account a 25% deterioration in the associated risk variables.
Remote Scenario: taking into account a 50% deterioration in the associated risk variables.
Accounting policy
Sensitivity analysis to foreign currency
The sensitivity analysis includes outstanding monetary items and foreign currency-denominated transaction (U.S. Dollars), such as loans and borrowings, and adjusts their translation at the end of each year by the exchange rates, taking into account the changes shown above.
Sensitivity analysis to changes in interest rates
The yield on short-term investments and the interest from loans are mainly affected by changes in the interbank deposit interest rate (DI) and SELIC.
Getnet Adquirência e Serviços para Meios de Pagamento S.A.
Notes to the Consolidated Financial Statement
(In thousands of Brazilian reais - R$, unless otherwise stated)
6. Leases
| (a) | Balances recognized in the balance sheet |
The balance sheet discloses the following lease-related balances:
Right-of-use-asset |
|
December 31, 2018 | 21,172 |
Additions and contractual changes | 12,659 |
Depreciation | (3,829) |
December 31, 2019 | 30,002 |
Additions and contractual changes | (2,731) |
Depreciation | (5,366) |
December 31, 2020 | 21,905 |
|
|
December 31, 2020 | 21,905 |
Additions and contractual changes | 7,205 |
Depreciation | (3,407) |
December 31, 2021 | 25,703 |
|
|
Lease liabilities |
|
December 31, 2018 | 22,842 |
Additions and contractual changes | 15,121 |
Payments | (8,199) |
Interest | 865 |
December 31, 2019 | 30,629 |
Additions and contractual changes | (2,801) |
Payments | (6,693) |
Interest | 1,914 |
December 31, 2020 | 23,049 |
|
|
December 31, 2020 | 23,049 |
Additions and contractual changes | 5,364 |
Payments | (4,155) |
Interest | 2,057 |
December 31, 2021 | 26,315 |
Getnet Adquirência e Serviços para Meios de Pagamento S.A.
Notes to the Consolidated Financial Statement
(In thousands of Brazilian reais - R$, unless otherwise stated)
| (b) | Expenses recognized in the consolidated statement of income |
December 31, 2019 |
|
Depreciation | 3,829 |
Interest expense | 865 |
Total | 4,694 |
|
|
December 31, 2020 |
|
Depreciation | 5,366 |
Interest expense | 1,914 |
Total | 7,280 |
|
|
December 31, 2021 |
|
Depreciation | 3,407 |
Interest expense | 2,057 |
Total | 5,464 |
Payments of short-term leases
In December 31, 2021 and December 31, 2020 there were no short-term contract expenses (R$294 at December 31, 2019, recognized under ‘General and Administrative Expenses’).
Accounting policy
Getnet leases several floors of office buildings for its administrative departments. Leases are recognized as a right-of-use asset and a corresponding lease liability on the date the leased asset becomes available for use by Getnet.
Each lease payment is allocated between principal and finance costs. Finance costs are recognized in the Consolidated Statement of Income over the lease term. The right-of-use asset is depreciated over the lease term on a straight-line basis.
Assets and liabilities arising from a lease are initially measured at present value.
Lease liabilities include the net present value of the following lease payments:
- Fixed lease payments (including in-substance fixed payments), less any lease incentives receivable.
- Variable lease payments that depend on an index or rate.
- Amounts expected to be payable by the Getnet, under the residual value guarantees.
- The exercise price of purchase options, if Getnet is reasonably certain to exercise the options.
- Payments of penalties for terminating the lease, if the lease term reflects the exercise of an option to terminate the lease.
Lease payments are discounted using Getnet’s incremental borrowing rate, which is the rate Getnet would have to pay on a loan to obtain the funds necessary to acquire an asset of similar value, in a similar economic environment, under equivalent terms and conditions.
Getnet Adquirência e Serviços para Meios de Pagamento S.A.
Notes to the Consolidated Financial Statement
(In thousands of Brazilian reais - R$, unless otherwise stated)
Right-of-use assets are measured at cost, according to the following items:
- The initial measurement amount of the lease liability.
- Any lease payments made on or before the commencement date, less any lease incentives received.
- Any initial direct costs.
- Restoration costs.
Getnet’s property leases include extension options. These terms are used to maximize operational flexibility in terms of contract management.
Payments associated with short-term property leases are recognized on the straight-line basis as an expense in profit or loss. Short-term leases are leases with term of 12 months or less.
Estimates and critical accounting judgments
Incremental rate on the lessee’s borrowing
There is no identifiable implicit discount rate to be applied to Getnet’s lease contracts; therefore, Getnet’s incremental borrowing rate is used to calculate the present value of lease liabilities at initial contract recognition.
Getnet’s incremental borrowing rate is the interest rate Getnet would have to pay to borrow the funds necessary to obtain to acquire an asset similar to the leased asset, for a similar term, and with similar collateral, i.e., funds necessary to obtain to obtain an asset with similar value of the right-of-use asset, in a similar economic environment.
Obtaining this rate involves a high degree of judgment and the credit risk of Getnet, the term of the lease, the nature and quality of the collateral offered, and the economic environment in which the transaction is conducted must be taken into consideration. The rate-setting process preferably uses readily observable inputs, based on which the lessee must make the necessary adjustments to arrive at its incremental borrowing rate.
IFRS 16 allows the incremental rate to be determined for a group of contracts, since this option is associated with the validation that the grouped contracts have similar features.
Getnet has made use the aforementioned practical expedient of determining groupings for its leases within the same scoped, as it believes that the effects of its application do not differ materially from the application to individual leases.
Getnet’s criteria regarding the incremental interest rate were:
- Risk-free rate: benchmark rate of the market where the Company operates.
- Credit spread: the spread of the most recent borrowings and the same currency was used.
Determining the lease term
To determine the lease term, management takes into account all facts and circumstances that create an economic incentive to exercise an extension option or not to exercise a termination option. Extension options (or periods after termination options) are included in the lease term only when there is reasonable certainty that the lease will be extended (or will not be terminated).
Getnet Adquirência e Serviços para Meios de Pagamento S.A.
Notes to the Consolidated Financial Statement
(In thousands of Brazilian reais - R$, unless otherwise stated)
7. Intangible Assets
| 12/31/2021 | 12/31/2020 |
Goodwill Getnet Tecnologia | 669,831 | 669,831 |
Goodwill Eyemobile | 18,659 | - |
Other intangible assets | 196,593 | 163,976 |
Total | 885,083 | 833,807 |
| a) | Goodwill
Getnet Tecnologia – Refers to the acquisition of Getnet Tecnologia em Captura e Processamento de Transações H.U.A Ltda (“Getnet Tecnologia”). in 2014, which was subsequently legally merged with Getnet. Getnet Tecnologia was a subsidiary merchant acquisition and processing services company of Santander Brazil, which passed its merchant acquisition business to Getnet after the acquisition. The goodwill resulting from this operation is tax deductible and has been fully offset in the income tax and social contribution calculations until the end of the year December 31, 2020, see note 10.1. | |
| Eyemobile – As described in note 2, the amount paid for the acquisition of 60% of Eyemobile was R$ 19,415. In addition to this amount, an amount of R$ 5,500 was recorded as contingent consideration, a total consideration of R$ 24,915 as defined in IFRS 3. The acquired book value of net assets acquired from Eyemobile on the acquisition date was R$ 6,256, which generated a goodwill of R$ 18,659, as shown below: |
Goodwill Eyemobile |
|
|
|
Acquisition value paid in cash | 9,415 |
Paid-in capital at the time of subscription | 10,000 |
| Contingent consideration | 5,500 |
Total consideration (a) | 24,915 |
Total net book value | 10,426 |
Interest | 60% |
Net book value of the assets acquired and liabilities assumed (b) | 6,256 |
Goodwill to be allocated (a - b) | 18,659 |
Net cash outflow on acquisition of Eyemobile |
|
Consideration paid in cash | (9,415) |
Paid-in capital at the time of subscription | (10,000) |
Cash and cash equivalents acquired from Eyemobile | 10,155 |
Net consideration presented in the statement of cash flows | (9,260) |
Getnet Adquirência e Serviços para Meios de Pagamento S.A.
Notes to the Consolidated Financial Statement
(In thousands of Brazilian reais - R$, unless otherwise stated)
| b) | Other intangible assets |
Acquisition cost | 12/31/2020 | Additions | Disposals/ Transfers | Eyemobile Acquisition(1) | 12/31/2021 |
Software and software licenses | 369,239 | 1,968 | 26,799 | 605 | 398,611 |
Systems in development | 70,311 | 46,669 | (9,596) | - | 107,384 |
Provision for impairment | (1,077) | (3,376) | - | - | (4,453) |
Total | 438,473 | 45,261 | 17,203 | 605 | 501,542 |
|
|
|
|
|
|
Accumulated amortization | 12/31/2020 | Additions | Disposals/ Transfers | Eyemobile Acquisition(1) | 12/31/2021 |
Software and license amortization | (274,497) | (30,452) | - | - | (304,949) |
Total | (274,497) | (30,452) | - | - | (304,949) |
Total, net | 163,976 | 14,809 | 17,203 | 605 | 196,593 |
|
|
|
|
|
|
(1) Consolidated opening balances referring to the acquisition of Eyemobile.
Acquisition cost | 12/31/2019 | Additions | Disposals/ Transfers | 12/31/2020 |
Software and software licenses | 296,805 | 36,459 | 35,975 | 369,239 |
Systems in development | 48,512 | 56,301 | (34,502) | 70,311 |
Provision for impairment | (2,319) | (104) | 1,346 | (1,077) |
Total | 342,998 | 92,656 | 2,819 | 438,473 |
|
|
|
|
|
Accumulated amortization | 12/31/2019 | Additions | Disposals/ Transfers | 12/31/2020 |
Software and license amortization | (203,498) | (39,221) | (31,778) | (274,497) |
Total | (203,498) | (39,221) | (31,778) | (274,497) |
Total, net | 139,500 | 53,435 | (28,959) | 163,976 |
| c) | Software and licenses |
In-house developed software is represented by solutions for capturing and processing debit and credit card transactions and cellphone recharging, which are fully operational. The useful lives of the related intangible assets are five years. The use licenses have a useful life ranging from 5 to 10 years. Software and licenses are classified as intangible assets with finite useful lives, prospectively amortized on a straight-line basis, as shown in the table below:
| Useful life – 2020 (in years) |
Software | 5 |
Licenses | 5 to 10 years |
Accounting policy
Intangible assets represent identifiable non-monetary assets (separable from other assets), without physical substance, arising from business combinations, in-house developed software, or use licenses with finite or indefinite useful lives. Only assets whose cost can be reliably estimated and which the consolidated entities consider to be probable that they will generate future economic benefits are recognized.
Intangible assets are initially recognized at purchase or production cost and are subsequently measured less any accumulated amortization and any impairment losses.
Getnet Adquirência e Serviços para Meios de Pagamento S.A.
Notes to the Consolidated Financial Statement
(In thousands of Brazilian reais - R$, unless otherwise stated)
Other intangible assets are considered to have indefinite useful lives when, based on a review of all relevant factors, it is concluded that there is no foreseeable limit to the period over which an asset is expected to generate cash inflows for the Company.
Intangible assets with indefinite useful lives are not amortized, but rather at the end of each annual period, the entity reviews the remaining useful lives of the assets in order to determine whether they continue to be indefinite and, if this is not the case, the change should be accounted for as a change in accounting estimate. Goodwill impairment assessment is performed annually or more frequently if events or changes in circumstances indicate possible impairment.
Intangible assets with finite useful lives are amortized over those useful lives using methods similar to those used to depreciate property and equipment. Amortization expenses are recognized in line item ‘Depreciation and amortization’ in the Consolidated Statement of Income.
At the end of each year, Getnet assesses whether there is indication that its intangible assets might be impaired, i.e., whether the carrying amount of an asset exceeds its probable realizable value. If an impairment loss is identified, the recoverable amount is written down until it reaches the asset’s realizable value.
Assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognized when the asset's carrying amount exceeds its recoverable amount, which is the higher of an asset's fair value less costs of disposal or its value in use.
Goodwill on acquisitions
When an investment in a subsidiary is acquired, any difference between the investment cost and the investor’s share of the net fair value of the investee’s identifiable assets, liabilities, and contingent liabilities (subsidiary or associate) is accounted for in accordance with IFRS 3.
Goodwill is recognized only when the amount of the consideration transferred for an investee exceeds its fair value at the acquisition date, and therefore represents a payment made by the acquirer in anticipation of future economic benefits from assets of the acquiree that cannot be individually identified and separately recognized.
The net fair value adjustments to an investee’s identifiable assets, liabilities and contingent liabilities based on their carrying amounts are individually allocated to the identifiable assets acquired and liabilities assumed based on their respective fair values at the acquisition date.
Assets that have an indefinite useful life, such as goodwill, are not subject to amortization and are tested annually to identify any impairment. Impairment reviews of goodwill are performed annually or more frequently if events or changes in circumstances indicate possible impairment. At December 31, 2021 and December 31, 2020, Getnet has not identified the need to make any adjustments for impairment.
Internally generated intangible asset
Expenditure on research activities is recognized as an expense for the year when incurred. The expenses with projects that are not activated are recognized in the line of Selling, General and Administrative expenses.
When an internally generated intangible asset can be recognized, development expenditure is capitalized in intangible asset in the balance sheet, and amortized in the line item ‘Cost of services’ for POS software and in the line item ‘Selling, General and Administrative expenses’ for other intangible assets, in the ‘Consolidated Statement of Income’.
Getnet Adquirência e Serviços para Meios de Pagamento S.A.
Notes to the Consolidated Financial Statement
(In thousands of Brazilian reais - R$, unless otherwise stated)
Systems in development
Getnet capitalizes expenses that are directly related to the internal development of software for their own operations, provided that the aspects required for recognition are met. The main expenses are related to internal labor for the development of the systems used by Getnet. Research expenditure is recorded as expenses when incurred. These projects evolve through an assessment of the IT and Accounting areas in order to verify their adherence to IAS 38 and whether they should be classified as Intangible Assets or Expenses. For further details refer to note 14 – (technology and systems).
The provision for impairment of intangible assets is recognized according to the probable losses identified between the activated software and the systems in development. Getnet, through a technical team, monitors the performance of the systems taking into consideration technological and market aspects related to the continuity of the operation.
Estimates and critical accounting judgments
The goodwill recorded is subject to impairment testing at least once a year, or more frequently if there is any indication of impairment.
The basis used for the impairment test is the value in use and, for this purpose, the cash flow for a period of 5 years is estimated. Cash flow was prepared considering several factors, such as: (i) macroeconomic projections of interest rate, inflation, Gross Domestic Product - GDP and others; (ii) market growth and behavior and estimates; (iii) increased costs, returns, synergies and investment plan; (iv) customer behavior; and (v) growth rate and adjustments applied to perpetuity flows. The discount rate used is represented by the Weighted Average Capital Cost (WACC), which represents the minimum cost that the shareholder would be willing to invest in a similar sector company.
Main premises: | 2021 | 2020 |
Bases for determining recoverable value | Values in use: cash flows | |
Period of cash flow projections | 5 years | 5 years |
Perpetual growth rate | 3.00% | 3.00% |
Discount rate | 11.16% | 8.56% |
The adoption of these estimates involves the probability of occurrence of future events and the change of any of these factors could have a different result. The cash flow estimate is based on an appraisal prepared internally by an independent specialized firm, annually or whenever there are indications that the asset might be impaired, which is reviewed and approved by management.
Getnet uses an estimated useful life to calculate and record the amortization applied to its intangible assets.
The amortization of software and software licenses is defined based on the effective period of the license contracted. The amortization of internally developed software is defined based on the period over which the software will generate future economic benefits for Getnet.
Getnet Adquirência e Serviços para Meios de Pagamento S.A.
Notes to the Consolidated Financial Statement
(In thousands of Brazilian reais - R$, unless otherwise stated)
8. Property and Equipment
As at December 31, 2021 and 2020 and December 31, 2019 and 2020, property and equipment are broken down as follows:
| 12/31/2020 | Additions | Disposals/ Transfers | Eyemobile Acquisition(1) | 12/31/2021 |
Point of Sale (POS) terminals | 1,416,636 | 338,201 | (300,135) | - | 1,454,702 |
Computers and peripherals | 201,358 | 36,766 | 296 | 46 | 238,466 |
Own properties | 8,606 | - | - | - | 8,606 |
Furniture and fixtures | 7,513 | 261 | (264) | 118 | 7,628 |
Land | 2,766 | - | - | - | 2,766 |
Improvements in own properties | 1,088 | 107 | (55) | 10 | 1,150 |
Leasehold improvements | 6,203 | - | (36) | - | 6,167 |
Telecommunications equipment | 1,862 | - | (1,145) | 7 | 724 |
Provision for impairment | (29,685) | (6,143) | 398 | - | (35,430) |
Total | 1,616,347 | 369,192 | (300,941) | 181 | 1,684,779 |
|
|
|
|
|
|
| 12/31/2020 | Additions | Disposals/ Transfers | Eyemobile Acquisition(1) | 12/31/2021 |
Depreciation Point of Sale terminals | (900,901) | (289,270) | 282,905 | - | (907,266) |
Depreciation Computers and peripherals | (89,704) | (44,041) | 695 | - | (133,050) |
Depreciation of own properties | (1,950) | (345) | - | - | (2,295) |
Depreciation of furniture and fixtures | (2,890) | (720) | 223 | - | (3,387) |
Depreciation of improvements in own properties | (565) | (105) | - | - | (670) |
Depreciation of leasehold improvements | (5,715) | (82) | - | - | (5,797) |
Depreciation of telecommunications equipment | (761) | (16) | 61 | - | (716) |
Total | (1,002,486) | (334,579) | 283,884 | - | (1,053,181) |
Total, net | 613,861 | 34,613 | (17,057) | 181 | 631,598 |
|
|
|
|
|
|
(1) Consolidated opening balances referring to the acquisition of Eyemobile.
| 12/31/2019 | Additions | Disposals/ Transfers(1) | 12/31/2020 |
Point of Sale (POS) terminals | 1,314,027 | 251,317 | (148,708) | 1,416,636 |
Computers and peripherals | 203,590 | 56,249 | (58,481) | 201,358 |
Own properties | 8,606 | - | - | 8,606 |
Furniture and fixtures | 7,873 | 2,600 | (2,960) | 7,513 |
Land | 2,766 | - | - | 2,766 |
Improvements in own properties | 1,087 | 1 | - | 1,088 |
Leasehold improvements | 6,472 | - | (269) | 6,203 |
Telecommunications equipment | 2,234 | - | (372) | 1,862 |
Provision for impairment | (37,475) | (1,295) | 9,085 | (29,685) |
Total | 1,509,180 | 308,872 | (201,705) | 1,616,347 |
|
|
|
|
|
| 12/31/2019 | Additions | Disposals/ Transfers(1) | 12/31/2020 |
Depreciation Point of Sale terminals | (732,906) | (245,138) | 77,143 | (900,901) |
Depreciation Computers and peripherals | (106,296) | (30,874) | 47,466 | (89,704) |
Depreciation of own properties | (1,606) | (345) | 1 | (1,950) |
Depreciation of furniture and fixtures | (4,136) | (690) | 1,936 | (2,890) |
Depreciation of improvements in own properties | (460) | (103) | (2) | (565) |
Depreciation of leasehold improvements | (5,512) | (394) | 191 | (5,715) |
Depreciation of telecommunications equipment | (1,027) | (101) | 367 | (761) |
Total | (851,943) | (277,645) | 127,102 | (1,002,486) |
Total, net | 657,237 | 31,227 | (74,603) | 613,861 |
(1) Include transfers from Property and Equipment to Inventory.
Getnet Adquirência e Serviços para Meios de Pagamento S.A.
Notes to the Consolidated Financial Statement
(In thousands of Brazilian reais - R$, unless otherwise stated)
The useful life adopted for each class of property, plant and equipment is shown below:
| Average useful life | Annual depreciation rate |
Point of Sale (POS) terminals | 3 years | 33% |
Computers and peripherals | 5 years | 20% |
Own properties | 25 years | 4% |
Furniture and fixtures | 10 years | 10% |
Improvements in own properties | 10 years | 10% |
Leasehold improvements | 4 years | 25% |
Telecommunications equipment | 5 years | 20% |
Accounting policy
Property and equipment items are measured are the historical purchase or construction cost, less accumulated depreciation. When applicable, impairment losses are recognized directly in profit or loss for the year.
Costs include expenditure directly attributable to the purchase of an asset. The costs of internally generated assets include the costs of materials and direct labor, any other costs to bring the asset to the required location and conditions necessary to operate as expected by management. The replacement cost of a property and equipment item is recognized in its carrying value when it is probable that the economic benefits associated with such item will flow to the Company and its cost can be reliably measured. The costs of day-to-day maintenance of property and equipment are recognized in the Statement of Income as incurred, such as: removal of equipment from the point of sale, repair, reinstallation, freight, and other costs.
An item of property and equipment is written off when sold or when no future economic benefits are expected from its use or sale. Any gain or loss arising on the write-off of an asset (determined as the difference between sales proceeds and the carrying amount of the asset) is recognized in the income statement for the year in which the asset is written off.
Getnet’s main property and equipment are point-of-sale (“POS”) terminals, valued for a useful life of three years. This useful life was defined taking into consideration the maintenance performed during the use of the equipment, the lack of spare parts, the technological changes occurred and in progress, and the economic environment in which they operate, considering the planning and other idiosyncrasies of Getnet’s business and the increase in production (data capture and processing transactions by the merchants).
The costs incurred internally and with third parties directly attributable to the installation of the POSs are allocated as property and equipment.
Depreciation is calculated on the purchase cost of the asset, plus all costs incurred to bring the asset to the operating conditions expected by management, less its residual value, if any. To calculate depreciation, the Company’s estimates the useful life of each class of tangible assets. This estimate most appropriately reflects the pattern of consumption of the future economic benefits embodied in that class of assets. Depreciation expenses are recognized in the Statement of Income on a straight-line basis. Company doesn’t identify changes in the useful life of your assets comparing to last year.
Getnet Adquirência e Serviços para Meios de Pagamento S.A.
Notes to the Consolidated Financial Statement
(In thousands of Brazilian reais - R$, unless otherwise stated)
9. Provision for tax, civil and labor risks
Getnet is a party to tax, civil and labor proceedings. These proceedings are in progress and are being discussed at the administrative and judicial levels. The provisions were recognized based on the nature, complexity, and outcome history for similar proceedings, as well as on the loss assessment for Getnet’s proceedings, based on the opinions of the Company’s in-house and outside legal counsel. Getnet’s policy is to fully provide for the amount at risk in proceedings assessed as probable losses.
Labor lawsuits are related to claims mainly by former employees of the Company. Civil lawsuits refer to claims for damages from suppliers, damages caused to third parties and litigation in contractual matters.
| a) | Probable losses |
| 12/31/2021 | 12/31/2020 |
Civil | 2,895 | 1,872 |
Labor | 12,118 | 9,553 |
Total | 15,013 | 11,425 |
Getnet is party to lawsuits discussed at the administrative level which analyzing its nature, do not qualify has a probable loss risk. The main lawsuits that qualify as contingency with possible losses are listed below:
| b) | Possible losses |
| 12/31/2021 | 12/31/2020 |
Civil | 52,137 | 64,184 |
Labor | 26,382 | 24,215 |
Tax | 812,700 | 875,087 |
Total | 891,219 | 963,486 |
Tax - Tax on services
The Company is party to three lawsuits related to the collection of taxes on services, of which it was cited in 2016. The tax assessments issued by the Finance Department of the City of São Paulo, refer to the alleged existence of revenues from the provision of services, correlated to technical support services, such as installation, configuration and maintenance of computer programs, and currently amount to R$ 74,735. For all tax assessments received related to this subject, the Company believes that the likelihood of loss is possible.
Tax – Income taxes and social contributions
Federal Tax Office of Brazil issued infraction notices against Getnet and Santander Brazil related to income taxes and social contribution, including late payment charges, related to the tax deduction for the amortization of goodwill paid on the acquisition of Getnet Tecnologia referring to period from 2014 to 2018. In the Federal Tax Office of Brazil’s perspective, the Company would not have complied with the legal requirements for amortization. Getnet and Santander Brazil presented their respective defenses and are awaiting judgment at the administrative level. The amount of the potential loss was approximately R$ 812,7 million, not booked as a provision as of December 31, 2021.
Getnet Adquirência e Serviços para Meios de Pagamento S.A.
Notes to the Consolidated Financial Statement
(In thousands of Brazilian reais - R$, unless otherwise stated)
| c) | Judicial deposits |
| 12/31/2021 | 12/31/2020 |
Civil | 1,389 | 592 |
Labor | 17,788 | 15,625 |
Tax | 1,017 | 1,002 |
Total | 20,194 | 17,219 |
(1) Judicial deposits recognized in the balance sheet line "Other assets".
| d) | Provision movement |
| 12/31/2021 | 12/31/2020 | ||
| Civil | Labor | Civil | Labor |
Opening balance | 1,872 | 9,553 | 1,547 | 5,954 |
Additions | 5,455 | 4,070 | 1,296 | 4,791 |
Reversals/payments | (4,431) | (1,506) | (971) | (1,192) |
Closing balance | 2,896 | 12,117 | 1,872 | 9,553 |
Accounting policy
Provisions for risks (labor, civil, and tax) are recognized when: (a) there is a present obligation as a result of a past event; (b) it is probable that an outflow of funds will be required to settle the obligation; and (c) the amount has been reliably estimated. In case of a series of similar obligations, the likelihood that an outflow will be required to settle them is determined taking into consideration the class of obligations as a whole.
A provision for tax, civil and labor risks is recognized in the consolidated financial statements when the risk of loss in an administrative or judicial proceeding is considered probable, with a probable disbursement of funds to settle the obligations, and whenever the amounts involved can be reliably measured. The definition of the probability of loss is an estimate based on the opinion of legal advisors and management, the nature of the proceedings, similarity with previous cases, and the complexity of the courts.
Contingent assets are not recognized in consolidated financial statements since they refer to results that might never be realized. However, when the realization of the gain is virtually certain, then the related asset is no longer a contingent asset and its recognition becomes appropriate. Contingent assets with a probable favorable outcome are only disclosed in the notes to the consolidated financial statements. At December 31, 2021 and December 31, 2020, Getnet had no contingent assets.
Contingent liabilities assessed as possible losses are not recognized in consolidated financial statements and are instead only disclosed in explanatory notes. Contingent liabilities assessed as remote losses are neither recognized nor disclosed.
Estimates and critical accounting judgments
The risk of loss classification is an estimate that requires material judgment in accounting for and disclosing provisions for judicial and administrative proceedings, as well as the estimate of amounts, the complexity of the proceedings, and the history of the lawsuits and similar proceedings.
Getnet Adquirência e Serviços para Meios de Pagamento S.A.
Notes to the Consolidated Financial Statement
(In thousands of Brazilian reais - R$, unless otherwise stated)
10. Income Tax and social contribution and Other Taxes
10.1 Reconciliation of the income tax and social contribution expense:
| 12/31/2021 | 12/31/2020 | 12/31/2019 |
Net income before taxes | 563,008 | 496,187 | 1,099,861 |
Statutory rate | 34% | 34% | 34% |
Expected income tax and social contribution, calculated with statutory rate | (191,423) | (168,704) | (373,953) |
Permanent additions |
|
|
|
Non-deductible expenses | (483) | (604) | (1,559) |
Non-deductible management’ benefits | (3,476) | (2,256) | (2,591) |
Others | - | (3,010) | - |
Permanent exclusions |
|
|
|
Donations | - | 3,691 | 11,296 |
Tax incentive - Hunger Prevention Program | 952 | 1,264 | 1,293 |
Goodwill amortization | - | 23,532 | 70,673 |
| Dividends (interest on capital) | 101,320 | - | - |
Other | - | - | 15,660 |
Additions (reversal) of income taxes and social contribution temporary differences |
|
|
|
Additions (reversal) of income taxes and social contribution temporary differences | 6,026 | 10,913 | (26,648) |
Income tax in profit or loss for the year | (87,084) | (135,174) | (305,829) |
Effective tax rate | 15% | 27% | 28% |
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|
|
|
Current | (36,551) | (127,984) | (330,012) |
Deferred | (50,533) | (7,190) | 24,183 |
Under Brazilian tax law, temporary differences and tax losses can be carried forward indefinitely, however the loss carryforward can only be used to offset up to 30 % of taxable profit for the year.
10.2 Deferred income tax assets and liabilities
Breakdown of deferred tax assets | 12/31/2021 | 12/31/2020 |
Provision for tax, civil and labor risks | 5,105 | 3,884 |
Provision for investments losses | - | 80 |
Provision for personal bonuses | 21,849 | 23,144 |
Provision for other expenses (1) | 46,029 | 37,249 |
IFRS 16 adjustments | 7,969 | 6,112 |
Provisions for expected credit losses | 2,329 | 3,390 |
Tax credit - spin-off (2) | 338,753 | - |
Total | 422,034 | 73,859 |
(1) Refers substantially to accruals related to accounts payable and transfers costs to debit and credit cards brands.
(2) Refers tax credit related the spin-off. See note 1 “The spin-off of Getnet from Banco Santander (Brasil) S.A.” for further details.
Getnet Adquirência e Serviços para Meios de Pagamento S.A.
Notes to the Consolidated Financial Statement
(In thousands of Brazilian reais - R$, unless otherwise stated)
Estimate of tax credit realization | 12/31/2021 |
| Consolidated |
2022 | 152,173 |
2023 | 90,266 |
2024 | 79,962 |
2025 | 79,707 |
2026 to 2030 | 19,926 |
Total | 422,034 |
Breakdown of deferred tax liabilities | 12/31/2021 | 12/31/2020 |
Other temporary differences | 3,345 | 7,876 |
Total | 3,345 | 7,876 |
10.3 Income taxes payables and other tax payables
| 12/31/2021 | 12/31/2020 |
Taxes on revenue (PIS and COFINS) | 17,547 | 9,552 |
Income taxes | 6,534 | 22,276 |
Withholding income tax (IRRF) | 1,724 | 3,022 |
Tax on services (ISS) | 4,902 | 6,560 |
Other taxes | 269 | 310 |
Total | 30,976 | 41,720 |
Accounting policy
The provisions for current taxes are recognized at a 15% rate plus 10% surtax for income tax and a 9% rate for social contribution on profit adjusted according to the prevailing tax law.
Deferred income tax and social contribution are entirely recognized on temporary differences between assets and liabilities recognized for tax purposes and the carrying amounts of assets and liabilities in the consolidated financial statements. Deferred income tax and social contribution are determined based on the tax rates and tax law in effect at the date the consolidated financial statements are prepared and applicable when the related income tax and social contribution are realized. The recovery of the balance of deferred tax assets is reviewed on a quarterly basis and, when it is no longer probable that future taxable income will be available to allow the recovery of all or part of the assets, these are adjusted for the expected recoverable amount.
Current and deferred taxes are recognized in profit or loss unless they are related to items recognized directly in equity.
Taxes on revenue is related to PIS and COFINS that are contributions levied by the Brazilian Federal government on gross revenues. These amounts are invoiced to and collected from the Company’s customers and recognized as deductions to gross revenue (Note 13 a)) against tax liabilities, as we are acting as tax withholding agents on behalf of the tax authorities. PIS and COFINS paid on certain purchases may be claimed back as tax credits to offset PIS and COFINS payable. These amounts are recognized as Recoverable taxes and are offset on a monthly basis against Taxes payable (Note 10.3) and presented net, as the amounts are due to the same tax authority.
Taxes on services is related to ISS is a tax levied by municipalities on revenues from the provision of services. ISS tax is added to amounts invoiced to the Company’s customers for the services the Company renders. These are recognized as deductions to gross revenue (Note 13 a)) against tax liabilities, as the Group acts as agent collecting these taxes on behalf of municipal governments.
Estimates and critical accounting judgments
The amounts of provisions for deferred taxes arise from temporary differences caused mainly by temporarily non-deductible provisions and are classified in current and non-current assets and current and non-current liabilities, as applicable. Deferred taxes are recognized to reflect the future tax effects attributable to temporary differences between the tax base of assets and liabilities and their corresponding carrying amounts.
Getnet Adquirência e Serviços para Meios de Pagamento S.A.
Notes to the Consolidated Financial Statement
(In thousands of Brazilian reais - R$, unless otherwise stated)
The main balances with the related party are shown below:
| Assets (liabilities) December 31, 2021 | Assets (liabilities) December 31, 2020 |
Assets | 8,463,312 | 6,220,626 |
Cash and cash equivalents | 372,151 | 242,391 |
Financial investments | 839,427 | 384,027 |
Accounts receivable | 171,779 | 17,573 |
On lending of accounts receivable | 7,079,955 | 5,576,635 |
Liabilities | (22,308,966) | (18,495,855) |
Accounts payable | (18,858,043) | (17,474,617) |
other payables | - | 30,120 |
Loans and borrowings | (3,450,923) | (1,051,358) |
Total | (13,845,654) | (12,275,229) |
|
|
|
|
|
|
| Revenue (expenses) December 31, 2021 | Revenue (expenses) December 31, 2020 |
Finance income, net | 32,693 | 18,434 |
Revenue from services (1) | 1,038,017 | 623,500 |
Selling, General and Administrative expenses | (22,959) | (4,323) |
Total | 1,047,751 | 637,611 |
| (1) | This line includes the amounts recognized as revenue from contractual remuneration arising from the contract signed with Santander Brazil in the first semester of 2021. See note 13. |
Banco Santander (Brasil) S.A. - Related Party - On April 16, 2021, Santander Brazil and Getnet established a commercial partnership with each other, within the national territory, for the purpose of offering certain financial and payment services and solutions to their respective customers ("Partnership"). Among the services object of the Partnership, we highlight the anticipation of receivables for the benefit of commercial establishments, whose operations may be conducted and made feasible by Santander Brazil and/or Getnet, subject to the terms of the Partnership. Also within the scope of the Partnership, Santander Brazil will promote the distribution of certain services and products offered by Getnet to its customer base, in addition to providing funding to the credit operations to be conducted by Getnet and/or its subsidiaries. Getnet, in return, will take care of the origination of credit operations and leads for Santander Brazil, through the capture and indication of potential customers who have an interest in contracting credit operations and/or certain services offered by Santander Brazil.
Of the total amount of interest on equity, as of December 31, 2021, R$ 178,697 refers to the amounts payable to the controlling shareholders, as detailed in note 12.
Compensation of key management personnel
The Annual Shareholders’ Meeting held on February 24, 2021, approved an overall annual compensation of Getnet’s management (Executive Director’s and Executive Committee members) totaling up to R$23,500. The total expense paid to the key management personnel through December 31, 2021 was R$29,386 (December 31, 2020: R$17,306 and 2019: 17,139).
| 12/31/2021 | 12/31/2020 | 12/31/2019 |
Fixed compensation | 8,123 | 9,960 | 7,033 |
Variable compensation | 6,379 | 2,204 | 3,032 |
Total short-term benefits | 14,502 | 12,164 | 10,065 |
Variable compensation – Units | 10,632 | 3,673 | 5,053 |
Variable compensation – Cash | 4,253 | 1,469 | 2,021 |
Total long-term benefits | 14,884 | 5,142 | 7,074 |
Total | 29,386 | 17,306 | 17,139 |
Getnet Adquirência e Serviços para Meios de Pagamento S.A.
Notes to the Consolidated Financial Statement
(In thousands of Brazilian reais - R$, unless otherwise stated)
Getnet has a variable remuneration plan for its key executives which is paid in (i) units of Santander Brazil shares (SANB11), described in the table above as “Variable compensation – Units” and (ii) in cash, described in the table above as “Variable compensation – Cash”, in the form of a retained bonus as part of the executive retention program. The retained bonus amount is fixed in Brazilian reais where 50% will be paid in cash and 50% in units which are purchased at market value and delivered to the executive’ s broker account. The amount equivalent to 60% of the bonus is paid in cash after the closing of the fiscal year of acquisition and the remaining 40% is paid in three annual installments. Additionally, Getnet has long-term compensation programs, linked to performance based on the achievement of goals.
The amount of expenses recognized in the profit or loss statement in December 31, 2021, December 31, 2020 and December 31, 2019 is R$21,263, R$7,346 and R$10,106, respectively.
| Accounting policy |
The amount earned by the key executives during the year are reported in Selling, General and Administrative expenses in the Consolidated Statement of Income.
The provision regarding the retained bonus is recorded at cost, as the amount in cash and in Units is a fixed amount in Brazilians reais. The number of units will be based on the market value of the Santander Brazil ‘units at the date it is transferred to the key executives.
The amount regarding the retained bonuses is recorded in Other liabilities in the Balance Sheet. In case the key executive resigns prior the bonus schedule agreed, the equivalent amount is not paid, and equivalent provision is recorded as a credit in specific Selling, General and Administrative expenses. After the provision for the year is recorded in Other liabilities, no change in the provision related to individual or Company performance.
12. Share Capital and Reserves
(a) Share capital
At the Annual Shareholders’ Meeting held on April 30, 2020, a capital increase of R$232,993 was approved, without the issue of new shares, through the capitalization of reserves for future dividends and profit retention reserve, increasing capital to R$1,422,496 from R$1,189,503, represented by 69,565,000 registered common shares without par value.
On February 24, 2021, the shareholder on that date, Santander Brazil, approved: a stock split at a ratio of one to 26.83421551 as a result of which our capital stock was represented by 1,866,722,202 common shares, with no par value, and a conversion of 916,003,725 common shares into an equal number of preferred shares.
The preferred shares created as a result of the split will have dividends calculated with a value 10% higher than the dividends distributed to the holders of the common shares.
Capital at December 31, 2021 and December 31, 2020 is R$1,422,496, represented by 950,718,477 registered common shares and 916,003,725 preferred shares and 1,866,722,202 common shares, respectively.
The Company is authorized to increase the capital stock, by resolution of the Board of Directors, independent of statutory reform, up to the total limit of 5 billion common or preferred shares.
Getnet Adquirência e Serviços para Meios de Pagamento S.A.
Notes to the Consolidated Financial Statement
(In thousands of Brazilian reais - R$, unless otherwise stated)
(b) Retained earnings and other reserves
Legal reserve
The legal reserve is recognized annually with the allocation of 5% of net income for the year, without exceeding 20% of capital. The purpose of the legal reserve is to ensure the integrity of capital and can only be utilized to offset losses or increase the Company’s capital.
Statutory reserve
The statutory reserve consists of the balance of the remaining net income for the year, as proposed by the Executive of Director’s and approved by the Shareholders’ Meeting. The statutory reserve consists of: (i) fifty percent (50%) profit retention reserve strengthening for the purpose of guaranteeing financial means for Getnet’s operation; and (ii) fifty percent (50%) reserve for dividend equalization for the purpose of guaranteeing adequate funds to continue the semiannual distribution of dividends.
Capital reserve
The capital reserve was recognized for capital reserves can only be used to offset losses that exceed the retained earnings and other reserves; redeem, reimburse, or buyback of shares; added to the share capital; and other transactions allowed by the Brazilian Corporate Law. In the first quarter of 2021, tax credit of R$398,533 was recognized due to the contribution of tax basis from Santander Brazil. Refer to footnote 1 for details.
(c) Dividends and Interest on capital
Getnet defined in the bylaws the minimum 25% of the net income, in compliance with the provisions of the Brazilian Corporate Law 6,404/76. On December 31, 2021, the minimum dividends were absorbed by the distribution of interest on equity in the amount of R$ 298,000. The amount recorded regarding the fiscal year ended December 31, 2020 dividends was R$829,464.
| Accounting policy |
The distribution of dividends to the Company’s shareholders is recognized as a liability in the Company’s consolidated financial statements at the year end, pursuant to its bylaws. Any amount in excess of the mandatory minimum dividends is accrued on the date such dividends are approved by the Executive Director’s Meeting.
Pursuant to the Company’s bylaws, shareholders are entitled to annual minimum dividends equivalent to 25% of net income for the year, adjusted as provided for by the Brazilian Corporate Law.
At the end of the reporting period, the Company recognizes a liability for the payment dividends when this distribution becomes a present obligation, corresponding to the portion of unanticipated mandatory minimum dividends and/or additional dividends, the distribution of which has been duly approved by the relevant reporting date.
Getnet Adquirência e Serviços para Meios de Pagamento S.A.
Notes to the Consolidated Financial Statement
(In thousands of Brazilian reais - R$, unless otherwise stated)
a) Revenue from services
| 12/31/2021 | 12/31/2020 | 12/31/2019 |
Merchant acquisition (1) | 1,116,268 | 1,095,243 | 1,300,759 |
Profit share | 635,823 | 623,500 | 721,143 |
Contractual remuneration (2) | 488,089 | - | - |
Processing services revenue and capture | 205,086 | 149,606 | 84,985 |
POS sales(1) | 28,900 | 59,012 | 30,792 |
Recharges sales | 9,708 | 11,189 | 6,267 |
Other | 33,979 | 36,954 | 66,043 |
Taxes on services | (166,724) | (173,485) | (149,311) |
Subtotal | 2,351,129 | 1,802,019 | 2,060,678 |
POS rental(1) | 553,181 | 571,323 | 663,597 |
Taxes on services | (51,169) | (52,847) | (61,382) |
Subtotal | 502,012 | 518,476 | 602,215 |
Net revenue | 2,853,141 | 2,320,495 | 2,662,893 |
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Point in time, net of tax | 2,351,129 | 1,802,019 | 2,060,678 |
Over time, net of tax | 502,012 | 518,476 | 602,215 |
Net revenue | 2,853,141 | 2,320,495 | 2,662,893 |
| (1) | This item contains discounts related to POS sales incentive, unconditional discounts and other discounts granted. |
| (2) | The amount recognized in this line as revenue from contractual remuneration arises from the contract signed between Santander Brazil and Getnet in the first semester of 2021. |
b) Costs of services
| 12/31/2021 | 12/31/2020 | 12/31/2019 |
Fees and commissions | (903,777) | (582,919) | (471,983) |
Cost of POS sales and other fees | (106,125) | (171,199) | (84,602) |
Depreciation / amortization | (279,522) | (245,138) | (218,093) |
Personnel, technology, system and other | (469,434) | (426,936) | (311,833) |
Total | (1,758,858) | (1,426,192) | (1,086,511) |
| Accounting policy |
All revenues earned by the Company follow the revenue recognition concepts, according to the steps described below:
- Step 1: identify the contracts with a customer.
- Step 2: identify all the individual performance obligations within the contract.
- Step 3: determine the transaction price.
- Step 4: allocate the price to the performance obligations.
- Step 5: recognize revenue when (or as) the entity satisfies a performance obligation.
Revenue from contracts with customers is recognized as control of the goods or services are transferred to the customer at an amount that reflects the consideration to which the Getnet expects to be entitled in exchange for those goods or services in the ordinary course of Getnet.
Getnet Adquirência e Serviços para Meios de Pagamento S.A.
Notes to the Consolidated Financial Statement
(In thousands of Brazilian reais - R$, unless otherwise stated)
Getnet as a lessor operates in leases in which the Company does not transfer substantially all the risks and rewards incidental to ownership of an asset. POS rental revenues arising is accounted for on a straight-line basis over the lease terms and is included in Revenue from services in the Consolidated Statement of Income due to its operating nature. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognized over the lease term on the same basis as rental income. POS rental revenue is recognized in the period in which they are earned. Getnet has cancelable month-to-month lease contracts related to electronic transaction capture equipment to third parties. The leased assets are included in ‘Property and equipment’ in the Consolidated Statement of Income and are depreciated over their expected useful lives. Revenues from operating leases (net of any incentives given to the lessee) is recognized on a straight-line basis over the lease term in ‘Revenue from services’ in the line item ‘POS rental’ in the ‘Consolidated Statement of Income’.
Getnet revenue from contract with customers and the respective performance obligations and judgments substantially comprises:
- Merchant acquisition, processing services revenue and capture revenue are recognized at the time the purchase is approved by the financial institution. The performance obligation is satisfied once the electronic payment processing services including the capture, transmission, processing and settlement of transactions carried out using credit and debit cards are approved by the financial institution. Getnet has multiple arrangements with different clients in which consideration is variable upon the volume of transactions processed in a given period of time depending on the clients’ use (i.e., number of payment transactions processed, number of cards on file, etc.); as such, the total transaction price is variable. Getnet allocates the variable fees charged to the day in which it has the contractual right to bill its clients, therefore revenue is recognized at a point in time.
- Revenue from the rental of the POS to commercial establishments, which are recognized when the service contract obligation is fulfilled. The performance obligation is satisfied over the time of the contract considering the equipment availability upon delivery of the POS to clients. Getnet accounts for equipment rental as a separate performance obligation and recognizes the revenue at its standalone selling price, considering that rental is charged as a fixed monthly fee. Revenue is recognized within net revenue on a straight-line basis over time of the contract, net of tax, beginning when the client obtains control of the equipment lease. Getnet does not manufacture the equipment but purchases from third-party vendors.
- Resale recharge revenues, which are recognized when the respective credit is transferred to the customer. The performance obligation is satisfied when the digital phone recharge credit is transferred to the clients of commercial establishments. These recharges are sold through POS and the Company acts as an agent of telecommunication operators for the Commercialization of Telephony Recharge Digital Credits since these credits are acquired from telecommunication operators for a fixed price and subsequently sold to the clients through the acquisition cost plus a margin. Since the telecommunication operators has primary responsibility for fulfilling the services to the customer, Getnet account this transaction as an agent. The revenue is recognized at a point in time.
- Profit share revenue are recognized at the time of transfer of the respective prepayments by Santander Brazil. The performance obligation is satisfied when commercial establishments receive the anticipation of its accounts receivables (Getnet’s account payable) from Santander Brazil to the merchant (commercial establishments).
The transaction price is based on the terms and conditions in which Santander Brazil calculates the profit from prepayment of receivables transactions. In this context, the profit is reduced by the expenses incurred by Santander Brazil in order to provide prepayment of receivables to merchants, including: i) acquiring expenses, which are the costs incurred by Santander Brazil in transferring funds to other banks as a result of the prepayment of receivables and the provision of payment services by Getnet and ii) prepayment expenses.
Getnet Adquirência e Serviços para Meios de Pagamento S.A.
Notes to the Consolidated Financial Statement
(In thousands of Brazilian reais - R$, unless otherwise stated)
Prepayment expenses include the following components:
(a) the costs incurred by Santander Brazil to fund prepayment;
(b) the expenses incurred by Santander Brazil with technology systems to support the prepayment;
(c) taxes incurred in connection with the prepayment;
(d) costs incurred by Santander Brazil to transfer funds to commercial establishment’s bank account in connection with the prepayment of receivables to Getnet; and
(e) Santander Brazil operating losses in the provision of prepayment of receivables services to Getnet merchants.
- The Partnership Agreement provides that Santander Brazil will reimburse us the amount of discounts which we provide to attract and/or retain customers which are deemed to be of strategic importance to us and Santander Brazil.
- Other revenue from services rendered is recognized to the extent that Getnet satisfies the performance obligations, at a point in time, fulfilling the provision of services.
14. Expenses by Nature
a) Selling, General and Administrative expenses
| 12/31/2021 | 12/31/2020 | 12/31/2019 |
Personnel expenses and social charges | (187,329) | (160,309) | (222,367) |
Technical support | (99,229) | (63,517) | (45,301) |
Depreciation and amortization | (78,800) | (66,695) | (59,542) |
Advertising | (33,049) | (23,640) | (50,745) |
Provisions net of reversal | (16,096) | (15,754) | (14,927) |
Technology and systems | (5,378) | (2,844) | (10,284) |
Facilities and materials | (3,565) | (3,304) | (8,267) |
Communications | (1,159) | (1,273) | (4,424) |
Surveillance and cash transport services | (497) | (410) | (336) |
Taxes except income tax | (271) | (335) | (257) |
Other administrative expenses | (18,908) | (10,459) | (24,218) |
Total | (444,281) | (348,540) | (440,668) |
b) Other expenses, net
Other expenses net includes chargeback and refund expenses when our merchants refuse to or cannot reimburse chargebacks and refunds resolved in favor of their customers.
In the event that a billing dispute between a cardholder and a merchant is not resolved in favor of the merchant, including in situations in which the merchant is engaged in fraud, the transaction is typically “charged back” to the merchant and the purchase price is credited or otherwise refunded to the cardholder. If we are unable to collect chargeback from the merchant’s account, or if the merchant refuses to or is unable to reimburse us for a chargeback due to closure, bankruptcy or other reasons, we may bear the loss for the amounts paid to the cardholder.
In the years ended December 31, 2021, 2020 and 2019, Getnet recorded losses as a result of chargebacks net of refunds in the amount of R$33.4 million, R$37.7 million and R$47.0 million, respectively.
Getnet Adquirência e Serviços para Meios de Pagamento S.A.
Notes to the Consolidated Financial Statement
(In thousands of Brazilian reais - R$, unless otherwise stated)
| 12/31/2021 | 12/31/2020 | 12/31/2019 |
Finance income: |
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Income from short-term investments | 61,177 | 41,437 | 95,798 |
Other (1) | 81,526 | 14,712 | 1,584 |
Total | 142,703 | 56,149 | 97,382 |
Finance costs: |
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Interest and charges on borrowings | (110,715) | (28,552) | (12,140) |
Other finance costs | (7,086) | (3,023) | (14,323) |
Interest expenses incurred on lease liabilities | (2,057) | (1,914) | (865) |
Total | (119,858) | (33,489) | (27,328) |
Foreign exchange losses, net | (14,316) | (16,467) | 3,772 |
Total | 8,529 | 6,193 | 73,826 |
| (1) | The increase in the line of "Other" occurred due to the beginning of the prepayment transactions of amounts payable to commercial establishments, carried out by Getnet, which intensified at the end of the year due to the operation carried out by Getnet between SCD. |
16. Earnings per Share
Accounting policy
Basic earnings per share
The Company calculates the value of the basic result per share for the earning or loss attributable to the holders of common and preferred shares of the company and, if presented, the earning or loss resulting from continued operations attributable to the holders of these respective shares by dividing the earning or loss attributable to the holders of common and preferred shares by the weighted average number of common and preferred shares held by shareholders during the year.
Diluted earnings per share
The Company calculates the value of the basic result per share for the earning or loss attributable to the holders of common and preferred shares of the company and, if presented, the earning or loss resulting from continued operations attributable to the holders of these respective shares by dividing the earning or loss attributable to the holders of common and preferred shares by the weighted average number of common and preferred shares held by shareholders during the year that would be issued if all potential dilutive shares had been converted.
At December 31, 2021 and December 31, 2020, there is no difference between basic and diluted earnings per share as there were no potential dilutive rights on these shares. The Statement of Income includes a breakdown of earnings per share.
As mentioned in note 12.a, the preferred shares will have dividends calculated with a value 10% higher than the dividends distributed to the holders of the common shares.
Getnet Adquirência e Serviços para Meios de Pagamento S.A.
Notes to the Consolidated Financial Statement
(In thousands of Brazilian reais - R$, unless otherwise stated)
| December 31, 2021 | December 31, 2020 |
Net income for the year attributable to common shareholders (1) | 266,622 | 361,013 |
Weighted average number of common shares (in thousands of shares) | 1,088,746 | 1,866,722 |
Basic and diluted earnings per share for profit attributable to common shareholders (in R$) | 0.24 | 0.19 |
Net income for the year attributable to preferred shareholders (1) | 209,569 | NA |
Weighted average number of preferred shares (in thousands of shares) | 777,976 | NA |
Basic and diluted earnings per share for profit attributable to preferred shareholders (in R$) | 0.27 | NA |
(1) Net income attributable to common and preferred shareholders is based on the allocation of total net income based on the respective weighted average number of shares adjusted to reflect a 10% higher allocation of profit per share for preferred shareholders compared to common shareholders in line with the 10% higher preference in dividend distribution.
17. Items not affecting cash
In preparing the Company's statements of cash flows, the net cash generated by financing and investing activities include only those transactions that altered the Company’s cash. The table below shows all the other movements in the balances of investing and financing activities which did not involve the use of cash and/or cash equivalents:
| December 31, 2021 | December 31, 2020 | December 31, 2019 |
Additions and contractual changes (IFRS 16) | 7,205 | (2,731) | 12,659 |
Tax credit – spin-off (1) | 398,533 | - | - |
Dividends/interest on net equity declared and not yet paid | 298,000 | 29,227 | 67.518 |
(1) Refers tax credit related the spin-off. See note 1 “The spin-off of Getnet from Banco Santander (Brasil) S.A.” for further details.
18. Subsequent events
Appointment of the new Chief Executive Officer
The Company's Board of Directors met on January 31, 2022 and elected Mr. Cassio Schmitt as Getnet's new Chief Executive Officer (CEO), scheduled for April 1, 2022 and subject to approval by the Central Bank of Brazil. The announcement made to the market takes place in continuation of the Material Fact released on December 7, 2021 (when the resignation of the current CEO, Pedro Carlos Araújo Coutinho, responsible for executive functions until March 31, 2022 was announced).
Mr. Schmitt is Brazilian, with a degree in economics from the Federal University of Rio Grande do Sul, a master's degree in corporate economics from Fundação Getúlio Vargas, and an MBA from the Sloan School of Business, Massachusetts Institute of Technology. He has extensive experience in the financial market, having passed through Unibanco, among other financial institutions. In 2004 he joined Banco Santander Brasil, having gone through different positions, such as Project Finance, Risks and Credit Recovery. His last role at Santander was as director responsible for the Companies, Governments and Institutional Retail Sector.
UN Global Compact
On January 24, 2022, the Company informed the market of its agreement to the UN Global Compact. The Global Compact is a voluntary Initiative of the United Nations that aims to mobilize business practices of the business community in the areas of human rights, labor, environment and anti-corruption.
Getnet Adquirência e Serviços para Meios de Pagamento S.A.
Notes to the Consolidated Financial Statement
(In thousands of Brazilian reais - R$, unless otherwise stated)
Getnet's agreement endorses sustainability as a strategic and cultural pillar of the Company, integrating this initiative with the other fronts already in operation.
The Company since 2021 has focused on scaling ESG's actions from a perspective covering business, risk management, governance and fronts issues to engage stakeholders and generate value for customers and society. Getnet throughout 2021 made other public commitments such as the signing of the Women's Empowerment Principles, the UN's initiative for women's empowerment in companies, and the UN Free & Equal initiative, aimed at the LGBTQIA+ front.
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GETNET ADQUIRÊNCIA E SERVIÇOS PARA MEIOS DE PAGAMENTO S.A.
Public Company with Authorized Capital
Corporate Taxpayer ID (CNPJ/ME) No. 10.440.482/0001-54
Company Registration (NIRE) No. 35.300.567.064
Minutes of the Board of Directors Meeting held on March 9th, 2022
DATE, TIME AND PLACE: On March 9th, 2022, at 12:00 a.m., by audioconference, the Board of Directors of Getnet Adquirência e Serviços para Meios de Pagamentos S.A. (“Company” or “Getnet”) has met in its headquarters at Av. Pres. Juscelino Kubitschek, 2041, Bloco A - Cond. WTORRE JK - Vila Nova Conceição– CEP 04543-011 – São Paulo/SP.
CALL NOTICE AND ATTENDANCE: The call notice was dismissed due to the attendance of the Directors fully representing the Company’s Board of Directors.
MEETING BOARD: Carlos Rey de Vicente – Chairman; Daniela Mussolini Llorca Sanchez – Secretary.
AGENDA: To approve the Management Report and the Company's Financial Statements in IFRS for the fourth quarter and fiscal year 2021, together with the explanatory notes and the unqualified report issued by PricewaterhouseCoopers Auditores Independentes, as proposed by the Executive Board and with the favorable recommendation of the Audit Committee.
RESOLUTIONS: After examining and discussing the matter on the agenda, the members of the Board of Directors resolved, unanimously and without any restrictions, to approve the individual and consolidated Financial Statements for the fourth quarter and fiscal year 2021 in IFRS format, together with the explanatory notes and the unqualified report issued by PricewaterhouseCoopers Auditores Independentes, as proposed by the Executive Board and with the favorable recommendation of the Audit Committee.
ADJOURNMENT: There being no further matters to be resolved, the Meeting was finalized, and these minutes have been prepared, which were read, approved, and signed by all the attendees. Board: Carlos Rey de Vicente, President. Daniela Mussolini Llorca Sanchez, Secretary. Signatures: Mr. Carlos Rey de Vicente – Chairman; Mr. Pedro Carlos Araújo Coutinho – Vice President; Ignacio Narvarte Ichazo, Javier San Félix Garcia, João Guilherme de Andrade Só Consíglio and Marcelo Augusto Dutra Labuto – Directors. São Paulo, March 9th, 2022.
I certify that this is a true transcript of the minutes recorded in the Minutes of the Board of Directors Meetings Book of the Company.
Daniela Mussolini Llorca Sanchez Secretary |
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: March 10, 2022
| GETNET ADQUIRÊNCIA E SERVIÇOS PARA MEIOS DE PAGAMENTO S.A. |
| By: /s/ Luciano Decourt Ferrari |
| Name: Luciano Decourt Ferrari |
| Title: Investors Relations Officer |
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| GETNET ADQUIRÊNCIA E SERVIÇOS PARA MEIOS DE PAGAMENTO S.A. |
| By: /s/ André Parize Moraes |
| Name: André Parize Moraes |
| Title: Chief Financial Officer |