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 February 2022

 

 

Commission File Number: 001-39938

 

Vinci Partners Investments Ltd.

(Exact name of registrant as specified in its charter)

 

Av. Bartolomeu Mitre, 336
Leblon – Rio de Janeiro
Brazil 22431-002
+55 (21) 2159-6240

 

(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

 

 

 

 

 

 

TABLE OF CONTENTS

 

EXHIBIT  
99.1 Vinci Partners Investments Ltd. Audited Consolidated Financial Statements as of and for the Years Ended December 31, 2021 and 2020
99.2 Press release dated February 24, 2022 – Vinci Partners Reports Fourth Quarter and Full Year 2021 Earnings Conference Call
99.3 Vinci Partners Investments Ltd. Fourth Quarter and Full Year 2021 Earnings Presentation

 

 

 

 

SIGNATURE

 

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.

 

    Vinci Partners Investments Ltd.
     
     
      By: /s/ Sergio Passos Ribeiro
        Name: Sergio Passos Ribeiro
        Title: Chief Financial Officer

 

Date: February 24, 2022

 

 

 

 

 

 

 

 

Exhibit 99.1

 

Vinci Partners
Investments Ltd.

Report of independent registered
public accounting firm

 

 

 

 

 

 

 

 

 

Report of independent registered
public accounting firm

 

 

To the Shareholders and Board of Directors of
Vinci Partners Investments Ltd.

 

 

 

 

Opinion on the financial statements

 

We have audited the accompanying consolidated balance sheets of Vinci Partners Investments Ltd. and its subsidiaries (the "Company") as of December 31, 2021 and December 31, 2020, and the related consolidated statements of income, comprehensive income, changes in equity and cash flows for each of the three years in the period ended December 31, 2021, including the related notes (collectively referred to as the "consolidated financial statements"). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2021 and December 31, 2020, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2021 in conformity with International Financial Reporting Standards as issued by the International Accounting Standards Board.

 

Basis for opinion

 

These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the US federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

 

We conducted our audits of these consolidated financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud.

 

Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.

 

Rio de Janeiro, February 23, 2022

 

 

 

 

/s/PricewaterhouseCoopers

Auditores Independentes Ltda.

 

We have served as the Company's auditor since 2010.

 

 

2 of 2

 

PricewaterhouseCoopers, Rua do Russel 804, 6º e 7º, Edifício Manchete, Rio de Janeiro, RJ, Brasil, 22210-907,

T: +55 (21) 3232 6112, www.pwc.com.br

 

 

 

Vinci Partners Investments Ltd.

 

Consolidated Financial Statements as of December 31, 2021

 

 

 

 

1

 

 

Vinci Partners Investments Ltd.

 

Consolidated balance sheet

All amounts in thousands of Brazilian Reais

 

Assets

  

 

Note  12/31/2021  12/31/2020
          
Current assets         
Cash and cash equivalents  5(d)   102,569    83,449 
Cash and bank deposits  5(d)   21,679    13,096 
Financial instruments at fair value through profit or loss  5(d)   80,890    70,353 
Financial instruments at fair value through profit or loss  5(c)   1,372,926    8,253 
Accounts receivable  5(a)   44,316    47,978 
Sub-leases receivable  10   -    2,963 
Taxes recoverable      3,199    1,153 
Other assets  6   4,193    12,383 
Total current assets      1,527,203    156,179 
              
Non-current assets             
Financial instruments at fair value through profit or loss  5(c)   8,593    31,596 
Accounts receivable  5(a)   19,368    27,545 
Taxes recoverable      80    134 
Deferred taxes  18   4,970    4,568 
Other assets  6   2,011    1,540 
       35,022    65,383 
              
Property and equipment  8   14,294    15,043 
Right of use - Leases  10   69,329    90,478 
Intangible assets  9   1,157    1,441 
Total non-current assets      119,802    172,345 
              
Total assets      1,647,005    328,524 

 

The accompanying notes are an integral part of these consolidated financial statements.

 

F-2

 

Vinci Partners Investments Ltd.

 

Consolidated balance sheet

All amounts in thousands of Brazilian Reais 

 

Liabilities and equity  Note  12/31/2021  12/31/2020
          
Current liabilities         
Trade payables      831    1,039 
Leases  10 and 5(e)   22,304    19,828 
Accounts payable  11   10,677    125,795 
Labor and social security obligations  12   106,299    40,724 
Taxes and contributions payable  13   23,762    22,878 
Total current liabilities      163,873    210,264 
              
Non-current liabilities             
Accounts payable  11   -    33 
Leases  10 and 5(e)   63,240    86,371 
Deferred taxes  18   5,016    12,620 
Total non-current liabilities      68,256    99,024 
              
Total liabilities      232,129    309,288 
              
Equity  14          
Share capital      15    8,730 
Additional paid-in capital      1,382,038    - 
Treasury shares  14(f)   (52,585)   - 
Retained earnings      70,183    - 
Other reserves      15,182    10,491 
       1,414,833    19,221 
              
Non-controlling interests in the equity of subsidiaries  7   43    15 
              
Total equity      1,414,876    19,236 
              
Total liabilities and equity      1,647,005    328,524 

 

The accompanying notes are an integral part of these consolidated financial statements.

 

F-3

 

Vinci Partners Investments Ltd.

 

Consolidated statement of income

Years ended December 31

All amounts in thousands of Brazilian Reais unless otherwise stated

 

Statements of Income  Note  2021  2020  2019
             
             
Net revenue from services rendered  15   465,458    339,892    296,717 
                   
General and administrative expenses  16   (222,998)   (124,245)   (113,287)
                   
Operating profit      242,460    215,647    183,430 
                   
Finance income  17   28,511    10,050    21,161 
Finance expenses  17   (13,129)   (13,097)   (12,476)
                   
Finance profit/(loss), net      15,382    (3,047)   8,865 
                   
Profit before income taxes      257,842    212,600    192,115 
                   
Income taxes  18   (49,227)   (43,446)   (36,483)
                   
Profit for the year      208,615    169,154    155,632 
                   
Attributable to the shareholders of the parent company      208,615    170,199    151,373 
Attributable to non-controlling interests      -    (1,045)   4,259 
                   
Basic and diluted earnings per share/quota  14(g)   3.77    19.60    17.41 

 

The accompanying notes are an integral part of these consolidated financial statements.

 

F-4

 

Vinci Partners Investments Ltd.

 

Consolidated statement of comprehensive income

Years ended December 31

All amounts in thousands of Brazilian Reais

 

   2021  2020  2019
          
Profit for the year   208,615    169,154    155,632 
                
Other comprehensive income               
                
Items that may be reclassified to profit or loss:
               
Foreign exchange variation of investees               
Vinci Financial Ventures (VF2) GP   -    -    16 
Vinci Capital Partners GP Limited   14    69    326 
Vinci USA LLC   988    2,284    (1)
Vinci Capital Partners F III GP Limited   5    19    2 
GGN GP LLC   13    -    - 
                
                
Total comprehensive income for the year   209,635    171,526    155,975 
                
Attributable to:               
Shareholders of the parent company   209,635    172,571    151,716 
Non-controlling interests   -    (1,045)   4,259 
                
    209,635    171,526    155,975 

 

The accompanying notes are an integral part of these consolidated financial statements.

 

F-5

 

Vinci Partners Investments Ltd.

 

Consolidated statement of changes in equity

All amounts in thousands of Brazilian Reais

 

      Share  Additional paid-in  Retained  Other  Treasury     Non-controlling  Total
   Notes  capital  capital  earnings  reserves  shares  Total  interests  equity
                            
                            
                            
At January 01, 2019      8,820    -    49,711    7,776    -    66,307    1,759    68,066 
                                            
Profit for the year      -    -    151,373    -    -    151,373    4,259    155,632 
Other comprehensive income:                                           
Foreign exchange variation of investee located abroad      -    -    -    343    -    343    -    343 
Capital increase (decrease)      -    -    -    -    -    -    580    580 
Treasury quotas bought      -    -    -    -    (225)   (225)   -    (225)
Treasury quotas cancelled      (225)   -    -    -    225    -    -    - 
Acquisition of non-controlling quotas      -    -    -    -    -    -    -    - 
Allocation of profit:                                           
Dividends      -    -    (109,654)   -    -    (109,654)   (17)   (109,671)
                                            
At December 31, 2019      8,595    -    91,430    8,119    -    108,144    6,581    114,725 
                                            
                                            
Profit for the year      -    -    170,199    -    -    170,199    (1,045)   169,154 
Other comprehensive income:                                           
Foreign exchange variation of investee located abroad  14(d)   -    -    -    2,372    -    2,372    -    2,372 
Capital increase (decrease)  14(a)   135    -    -    -    -    135    (900)   (765)
Acquisition of non-controlling quotas           -    -    -    -    -    (1,183)   (1,183)
Allocation of profit:                                           
Dividends      -    -    (261,629)   -    -    (261,629)   (3,438)   (265,067)
                                            
At December 31, 2020      8,730    -    -    10,491    -    19,221    15    19,236 
                                            
                                            
Corporate reorganization  14(a)   (8,719)   8,719    -    -    -    -    -    - 
Profit for the year      -    -    208,615    -    -    208,615    -    208,615 
Other comprehensive income:                                           
Foreign exchange variation of investee located abroad  14(d)   -    -    -    1,021    -    1,021    (1)   1,020 
Capital increase  14(a)   4    1,392,370    -         -    1,392,374    29    1,392,403 
Share based payments  22   -    -    -    3,670    -    3,670    -    3,670 
Treasury shares  14(f)   -    -    -    -    (52,585)   (52,585)   -    (52,585)
Transaction costs from capital increase  14(b)   -    (19,051)   -    -    -    (19,051)   -    (19,051)
Allocation of profit:                                           
Dividends  14(e)   -    -    (138,432)   -    -    (138,432)   -    (138,432)
                                            
                                            
At December 31, 2021      15    1,382,038    70,183    15,182    (52,585)   1,414,833    43    1,414,876 

 

The accompanying notes are an integral part of these consolidated financial statements.

 

F-6

 

Vinci Partners Investments Ltd.

 

Consolidated statement of cash flows

Years ended December 31

All amounts in thousands of Brazilian Reais unless otherwise stated

 

   Notes  2021  2020  2019
Cash flows from operating activities            
             
Profit before taxation      257,842    212,600    192,115 
Adjustments to reconcile net income to cash flows from operations:                  
Depreciation and amortization  16   13,729    13,228    16,520 
Unrealized gain of financial instruments at fair value through profit or loss      (24,787)   (8,251)   (20,104)
Finance expense on liabilities at amortized cost      -    203    181 
Allowance for expected credit loss  16   21    59    69 
Share based payments  16   3,670    -    - 
Financial result on lease agreements  17   12,084    11,691    11,180 
       262,559    229,530    199,961 
Changes in assets and liabilities                  
Accounts receivables      11,819    (813)   (53,798)
Taxes recoverable      (1,992)   15    (639)
Other assets      7,716    (7,549)   (3,500)
Trade payables      (208)   713    115 
Deferred revenue      -    -    - 
Accounts payable      (667)   (858)   1,899 
Labor and social security obligations      65,575    9,776    13,053 
Taxes and contributions payable      1,105    (5,246)   3,248 
Payables to related parties      -    -    (27)
Other payables      -    -    (2,039)
       83,348    (3,962)   (41,687)
                   
Cash generated from operations      345,907    225,568    158,274 
Income tax paid      (57,215)   (30,242)   (25,932)
Net cash inflow from operating activities      288,692    195,326    132,342 
                   
Cash flows from investing activities                  
Purchases of property and equipment and additions to intangible assets      (3,091)   (2,016)   (1,737)
Acquisition of non-controlling quotas      -    (1,183)   - 
Purchase of financial instruments at fair value through profit or loss      (1,420,834)   (375,006)   (273,051)
Sales of financial instruments at fair value through profit or loss      103,953    453,517    234,942 
                   
Net cash (outflow) from investing activities      (1,319,972)   75,312    (39,846)
                   
Cash flows from financing activities                  
Proceeds from the issuance of shares/quotas  14(a)   1,392,403    135    (225)
Capital decrease of non-controlling interests in the equity of subsidiaries      -    (900)   - 
    Transactions costs paid  14(d)   (19,051)   -    - 
    Treasury shares acquisition paid  14(f)   (50,831)   -    - 
    Lease payments, net of sublease received      (18,534)   (16,497)   (15,483)
    Borrowings acquisitions (payments)      -    -    (8,500)
    Dividends paid  14(e)   (255,963)   (176,287)   (76,226)
                   
Net cash (outflow) from financing activities      1,048,024    (193,549)   (100,434)
                   
Net increase (decrease) in cash and cash equivalents      16,744    77,089    (7,938)
                   
Cash and cash equivalents at the beginning of the year  5(d)   83,449    3,896    11,713 
                   
Foreign exchange variation of cash and cash equivalents in subsidiary      2,376    2,464    121 
                   
Cash and cash equivalents at the end of the year (Notes 6 and 7)  5(d)   102,569    83,449    3,896 

 

Non-cash financing activities

Dividends declared and not yet paid until December 31, 2021 and 2020 was R$ 6,833, R$ 123,191, respectively (Note 11). 

Acquisition of non-controlling quotas not yet paid until December 31, 2020 was R$ 657 (Note 11).

 

The accompanying notes are an integral part of these consolidated financial statements.

 

F-7

 

Vinci Partners Investments Ltd.

 

Notes to the consolidated financial statements

All amounts in thousands of Brazilian Reais, unless otherwise stated

 

1Operations

 

Vinci Partners Investments Ltd., an exempted company incorporated in the Cayman Islands (referred to herein as "Entity", "Group" or "Vinci"). The Group started its activities in September 2009. Its objective is to hold investments in the capital of other companies as partner (shareholder). The investees are specialized in rendering alternative investment management, asset allocation and financial advisory services. The actual shareholders of the Entity are disclosed in Note 14.

 

The registered office of the Entity is at Harneys Fiduciary (Cayman) Limited, 4th Floor, Harbour Place, 103 South Church Street, P.O. Box 10240, Grand Cayman KY1-1002, Cayman Islands.

 

Corporate reorganization

 

Prior to the consummation of the initial public offering, on January 15, 2021, the individual partners of Vinci Partners Investimentos Ltda. (“Vinci Investimentos”) contributed the entirety of their quotas into the Entity.

 

In return for this contribution the Entity issued (1) new Class B common shares to Gilberto Sayão da Silva and (2) new Class A common shares to all other shareholders of Vinci Investimentos in exchange for the quotas of Vinci Investimentos contributed to the Entity, or the Contribution, exchanging 1 quota into 4.77 common shares. Until the Contribution, the Entity did not commence operations and had only nominal assets and liabilities and no material contingent liabilities or commitments.

 

Initial Public Offering (IPO)

 

On January 28, 2021, Vinci announced the price of its public offering of the Class A common shares being offered 13,873,474 Class A common shares. Prior to this offering, there has been no public market for our Class A common shares. The initial public offering price per Class A common share was US$18.00.

 

The Class A common shares have been approved for listing on the Nasdaq Global Select Market, or Nasdaq, under the symbol "VINP." Vinci has two classes of common shares: Class A common shares and Class B common shares.

 

Class B common shares carry rights that are identical to the Class A common shares, except that (1) holders of Class B common shares are entitled to 10 votes per share, whereas holders of our Class A common shares are entitled to one vote per share; (2) holders of Class B common shares may convert Class B common shares at any time into Class A common shares on a share-for-share basis; (3) holders of Class B common shares are entitled to preemptive rights in the event that additional Class A common shares are issued in order to maintain their proportional ownership interest; and (4) Class B common shares shall not be listed on any stock exchange and will not be publicly traded.

 

On February 1, 2021, Vinci announced the closing of its initial public offering. The net proceeds from the offering were US$ 232 million (R$ 1,266,926), after deducting underwriting discounts and commissions. The Class A common shares began trading on the Nasdaq Global Select Market on January 28, 2021, under the ticker symbol "VINP."

 

In connection with the offering, Vinci has granted the underwriters a 30-day option to purchase up to an additional 2,081,021 Class A common shares at the initial public offering price, less underwriting discounts and commissions. On February 8, 2021, Vinci received net proceeds of US$ 23 million (R$ 125,448) in respect of the additional 1,398,014 Class A common shares issued.

 

Vinci Partners Ltd used the net proceeds from the offering to fund investments in its own products alongside its investors. The Entity continues to pursue opportunities for strategic transactions and for other general corporate purposes.

 

F-8

 

Vinci Partners Investments Ltd.

 

Notes to the consolidated financial statements

All amounts in thousands of Brazilian Reais, unless otherwise stated

 

Impacts of the coronavirus pandemic (COVID-19)

 

Since January 2020, the outbreak of coronavirus has impacted global commercial activities. The rapid development of the pandemic generated significant uncertainty of the real consequences of an ultimate impact. During the period there was a continued adverse effect on economic and market conditions that triggered a period of global economic slowdown.

 

The COVID-19 pandemic and government measures taken in response thereto have caused disruptions in some of our funds' portfolio companies' businesses and could lead to long-term disruptions or closures. For instance, the COVID-19 pandemic has caused work stoppages because of illness or travel or government restrictions in connection with the pandemic.

 

Additionally, the COVID-19 pandemic has resulted in the temporary or permanent closure of many businesses and has required adjustments in how many businesses operate. For example, certain funds in our real estate segment were adversely impacted as a result of shopping mall closures in Brazil for some months during the pandemic. In addition, there is uncertainty surrounding real estate funds with concentrated investments in office space as the real estate market adjusts to shifts in office space demand in response to changes in economic activity and remote working arrangements. These factors have adversely impacted certain companies in our investment portfolio and severely disrupted operations and economic conditions generally. Finally, significant market fluctuations driven by the COVID-19 pandemic have resulted in fluctuations in the fair value component of our Assets Under Management and could result in additional fluctuations in our Assets Under Management depending on the severity and extent of the ongoing crisis. However, despite the adverse impact, Vinci expanded its operations during the pandemic and had increased its total assets, net revenue, profits and did not record any impairment in 2021 and 2020 as result of COVID-19.

 

Additionally, the Group completed its Initial Public Offering ("IPO") on the Nasdaq Global Select Market in January 2021. Despite the ultimate extent of the impact of COVID-19, including the outbreak of more transmissible variants as has occurred in Brazil in 2021 and 2020, Vinci has increased its asset under management.

 

Brazil is at an advanced stage of vaccination, which generates security that new waves of contagion have a smaller impact on the economy, as observed recently with Omicron.

 

Even sectors such as services and commerce, which were more sensitive to waves in the past, have shown resilience in subsequent waves. In fact, retail is already above the pre-pandemic level, as is most of the service sector.

 

2Summary of significant accounting policies

 

2.1Basis of preparation and presentation

 

The consolidated financial statements of the Group have been prepared in accordance with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB).

 

The consolidated financial statements have been prepared on a historical cost basis, except for the financial instruments assets that have been measured at fair value.

 

The consolidated financial statements are presented in Brazilian reais (“R$”), and all amounts disclosed in the financial statements and notes have been rounded off to the nearest thousand currency units unless otherwise stated.

 

As mentioned in the Note 1, the Group carried out a corporate reorganization in order to prepare the structure for the Initial Public Offering of its shares. As result, the partners of Vinci Partners Investimentos Ltda. contributed their quotas to Vinci Partners Investments Ltd in January 2021. Vinci Partners Investments Ltd is currently the entity which is registered with the Securities Exchange Commission and for which these financial statements are presented. The comparative historical figures presented in these consolidated financial statements are the ones of the predecessor entity, Vinci Partners Investimentos Ltda.

 

F-9

 

Vinci Partners Investments Ltd.

 

Notes to the consolidated financial statements

All amounts in thousands of Brazilian Reais, unless otherwise stated

 

The issuance of these consolidated financial statements was authorized by the Entity's management on February 23, 2022.

 

(a)Consolidated financial statements

 

Vinci operates as an asset management firm. The Group focuses on private markets, liquid strategies, financial advisory, and investment products and solutions, which comprise the main activity of the Group.

 

The Group controls an entity where the Group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power to direct the activities of the entity.

 

Also, the Entity holds interest in subsidiaries whose main purpose and activities are providing services that relate to the Entity’s activities. Therefore, the Entity consolidates these subsidiaries.

 

Ownership interest in subsidiaries on December 31, 2021 and 2020 are as follows:

 

   Interest - %
       
   12/31/2021  12/31/2020
       
Direct subsidiaries      
Vinci Partners Investimentos Ltda. (1)   100    - 
Vinci Assessoria financeira Ltda. (2)   100    100 
Vinci Equities Gestora de Recursos Ltda. (2)   100    100 
Vinci Gestora de Recursos Ltda. (2)   100    100 
Vinci Capital Gestora de Recursos Ltda. (2)   100    100 
Vinci Soluções de Investimentos Ltda. (7)   100    100 
Vinci Real Estate Gestora de Recursos Ltda. (3)   100    80 
Vinci Capital Partners GP Limited.   100    100 
Vinci USA LLC   100    100 
Vinci GGN Gestora de Recursos Ltda. (2)   100    100 
Vinci Infraestrutura Gestora de Recursos Ltda. (4)   100    80 
Vinci Capital Partners GP III Limited.   100    100 
GGN GP LLC   100    100 
Amalfi Empreendimentos e Participações Ltda.   100    100 
Vinci APM Ltda. (5)   100    - 
Vinci Monalisa FIM Crédito Privado IE (6)   100    - 
Vinci Asset Allocation Ltda.   65    - 

 

(1)Prior to the consummation of the initial public offering, on January 15, 2021, the consolidated financial statements were prepared on behalf of Vinci Partners Investimentos Ltda., as presented in the Group’s annual consolidated financial statements as of December 31, 2020.

(2)Minority interest represents less than 0.001%.

(3)On August 31, 2020, Vinci acquired the remaining interest of its investee Vinci Real Estate Gestora de Recursos Ltda from the minority quotaholder, by the price of R$ 1.00 per quota. The transaction was settled by the nominal value of the quota, in the amount of R$ 657 for the acquisition of 657,200 quotas.

(4)On November 21, 2020, Vinci acquired the remaining interest of its investee Vinci Infraestrutura Gestora de Recursos Ltda from the minority quotaholder, by the price of R$ 1.00 per quota. The transaction was settled by the nominal value of the quota, in the amount of R$ 526 for the acquisition of 526.020 quotas.

(5)Company incorporated in Brazil on December 9, 2020. Minority interest represents less than 0.001%.

(6)Under the terms of IFRS10, the Entity does not consolidate its investment in Vinci Monalisa FIM Crédito Privado IE and measures at fair value through profit or loss in accordance with IFRS 9.

(7)On February 18, 2021, Vinci Gestão de Patrimônio Ltda changed its name to Vinci Soluções de Investimentos Ltda.

 

F-10

 

Vinci Partners Investments Ltd.

 

Notes to the consolidated financial statements

All amounts in thousands of Brazilian Reais, unless otherwise stated

 

Subsidiaries are all entities (including structured entities) over which the Group has control. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are deconsolidated from the date that control ceases.

 

Inter-company transactions, balances and unrealized gains on transactions between Group companies are eliminated. Unrealized losses are also eliminated unless the transaction provides evidence of an impairment of the transferred asset. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Group.

 

Non-controlling interests in the results and equity of subsidiaries are shown separately in the consolidated statement of profit or loss, consolidated statement of comprehensive income, consolidated statement of changes in equity and consolidated balance sheet respectively.

 

The Group treats transactions with non-controlling interests that do not result in a loss of control as transactions with equity owners of the Group. A change in ownership interest results in an adjustment between the carrying amount of the controlling and non-controlling interests to reflect their relative interests in the subsidiary. Any difference between the amount of the adjustment to non-controlling interests and any consideration paid or received is recognized in another reserve within equity attributable to owners of Entity.

 

When the Group ceases to consolidate an investment or account for it under equity method because of a loss of control, joint control or significant influence, any retained interest in the entity is remeasured to its fair value, with the change in carrying amount recognized in profit or loss. This fair value becomes the initial carrying amount for the purposes of subsequently accounting for the retained interest as an associate, joint venture or financial asset. In addition, any amounts previously recognized in other comprehensive income in respect of that entity are accounted for as if the group had directly disposed of the related assets or liabilities. This may mean that amounts previously recognized in other comprehensive income are reclassified to profit or loss.

 

2.2Segment reporting

 

During January 2021, the members of the Board of Directors of Vinci Partners Investments Ltd were appointed. Under the supervision of the Board of Directors, the CEO is responsible for the decision-making process related to executive themes, resources allocation and strategic decisions of Vinci.

 

Until December 31, 2020, the strategic decisions of Group comprised eight distinct business segments: (i) hedge funds; (ii) public equities; (iii) private equity; (iv) financial advisory services, (v) Investment products and solutions; (vi) real estate; (vii) infrastructure and (viii) Credit (Note 20).

 

Since 2021 the decision-making process and decision related to resources allocation changed and part of the segments were grouped in four different segments: (i) Private market strategies (Private equity, Real Estate, Infrastructure and Credit funds), (ii) Liquid strategies (Public Equities and Hedge Funds), (iii) Investment products and solutions; and (iv) Financial advisory (Note 20).

 

The change was motivated by the way how the CEO monitors and manages the business, as well as the way how the shareholders and investors evaluate Vinci’s investment vehicles, to present financial and strategic information in a more cohesive manner.

 

Strategies were sorted out within business segments following technical and strategic similarities among funds’ attributes, such as management and performance fee structures, liquidity constraints, targeted returns and investor profile.

 

2.3Foreign currency translation

 

Functional and presentation currency

 

F-11

 

Vinci Partners Investments Ltd.

 

Notes to the consolidated financial statements

All amounts in thousands of Brazilian Reais, unless otherwise stated

 

Items included in the financial statements are measured using the currency of the primary economic environment in which the entity operates (the "functional currency"). The financial statements are presented in thousands of Brazilian reais, which is the Entity's functional currency and also its presentation currency. All amounts disclosed in the financial statements and notes have been rounded off to the nearest thousand currency units unless otherwise stated.

 

Transactions and balances

 

Foreign currency transactions are translated into the functional currency using the exchange rates at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions, and from the translation of monetary assets and liabilities denominated in foreign currencies at year end exchange rates, are recognized in profit or loss.

 

Group companies

 

The results and financial position of foreign operations (none of which has the currency of a hyperinflationary economy) that have a functional currency different from the presentation currency are translated into the presentation currency as follows:

 

·assets and liabilities for each balance sheet presented are translated at the closing rate at the date of that balance sheet;

·income and expenses for each statement of profit or loss and statement of comprehensive income are translated at average exchange rates (unless this is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are translated at the dates of the transactions), and

·all resulting exchange differences are recognized in other comprehensive income.

 

2.4Cash and cash equivalents

 

For the purpose of presentation in the statement of cash flows, cash and cash equivalents includes cash on hand, bank deposits held with financial institutions, other short-term, highly liquid investments with original maturities of three months or less, that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.

 

2.5Financial assets

 

(i) Classification

 

The Group classifies its financial assets in the following measurement categories:

 

∙ those to be measured subsequently at fair value (either through OCI or through profit or loss), and

 

∙ those to be measured at amortized cost.

 

The classification depends on the Entity's business model for managing the financial assets and the contractual terms of the cash flows.

 

For assets measured at fair value, gains and losses will either be recorded in profit or loss or OCI. For investments in equity instruments that are not held for trading, this will depend on whether the group has made an irrevocable election at the time of initial recognition to account for the equity investment at fair value through other comprehensive income (FVOCI).

 

F-12

 

Vinci Partners Investments Ltd.

 

Notes to the consolidated financial statements

All amounts in thousands of Brazilian Reais, unless otherwise stated

 

The Group reclassifies debt investments when and only when its business model for managing those assets changes.

 

(ii) Recognition and derecognition

 

Regular way purchases and sales of financial assets are recognized on trade date, being the date on which the Group commits to purchase or sell the asset. Financial assets are derecognized when the rights to receive cash flows from the financial assets have expired or have been transferred and the Group has transferred substantially all the risks and rewards of ownership.

 

(iii) Measurement

 

At initial recognition, the Group measures a financial asset at its fair value plus, in the case of a financial asset not at fair value through profit or loss (FVPL), transaction costs that are directly attributable to the acquisition of the financial asset. Transaction costs of financial assets carried at FVPL are expensed in profit or loss.

 

(iv) Impairment

 

The group assesses on a forward-looking basis the expected credit loss associated with its debt instruments carried at amortized cost and FVOCI. The impairment methodology applied depends on whether there has been a significant increase in credit risk. For accounts receivables, the group applies the simplified approach permitted by IFRS 9, which requires expected lifetime losses to be recognized from initial recognition of the receivables.

 

2.6Accounts receivables

 

Receivables are amounts due for financial advisory services and for investment fund management services rendered in the ordinary course of Group's business. Except for unrealized performance fee, collection is expected in less than one year; therefore, they are classified as current assets.

 

Accounts receivables are recognized initially at the amount of consideration that is unconditional, unless they contain significant financing components when they are recognized at fair value. They are subsequently measured at amortized cost using the effective interest method, less allowance for expected credit losses. See note 5 for further information about the Group's accounting for accounts receivables.

 

The Group use a provision matrix to calculate expected credit losses, for accounts receivables When applicable, the Group calibrate the matrix to adjust the historical credit loss experience with forward-looking information. The assessment of the correlation between historical observed default rates, forecast economic conditions and expected credit losses is a significant estimate. The amount of expected credit losses is sensitive to changes in circumstances and of forecast economic conditions. Our historical credit loss experience and forecast of economic conditions may also not be representative of customer's actual default in the future. The information about the expected credit losses on our accounts receivables and contract assets is disclosed in note 5.

 

F-13

 

Vinci Partners Investments Ltd.

 

Notes to the consolidated financial statements

All amounts in thousands of Brazilian Reais, unless otherwise stated

 

2.7Intangible assets

 

Computer software

 

Computer software licenses purchased are capitalized on the basis of the costs incurred to acquire and bring to use the specific software. These costs are amortized over their estimated useful lives of five years.

 

Costs associated with maintaining computer software programs are recognized as an expense as incurred.

 

Development costs that are directly attributable to the design and testing of identifiable and unique software products controlled by the Group are recognized as intangible assets when the following criteria are met:

 

It is technically feasible to complete the software product so that it will be available for use.

 

Management intends to complete the software product and use or sell it.

 

There is an ability to use or sell the software product.

 

It can be demonstrated how the software product will generate probable future economic benefits.

 

Adequate technical, financial and other resources to complete the development and to use or sell the software product are available.

 

The expenditure attributable to the software product during its development can be reliably measured.

 

Directly attributable costs that are capitalized as part of the software product include the software development employee costs and an appropriate portion of applicable overheads.

 

Capitalized development costs are recorded as intangible assets and amortized from the point at which the asset is ready for use. Refer to note 9 for details about amortization methods and periods used by the Group for intangible assets.

 

Other development expenditures that do not meet these criteria are recognized as an expense as incurred.

 

Development costs previously recorded as an expense are not recognized as an asset in a subsequent period.

 

Intangible assets with definite life are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognized for the amount by which the asset's carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset's fair value less costs to sell and value in use. During the years ended December 31, 2021 and 2020 management do not identify any event that could impact the recoverable value of the intangible assets.

 

2.8Property and equipment

 

Property and equipment are stated at cost, less depreciation calculated on the straight-line method, based on the estimated economic useful lives of the assets, using the following annual rates: furniture and fixtures, telephony equipment and facilities have a useful life of 10 years; IT equipment has a useful life 5 years.

 

The assets' residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each reporting period. An asset's carrying amount is written down immediately to its recoverable amount if the asset's carrying amount is greater than its estimated recoverable amount.

 

F-14

 

Vinci Partners Investments Ltd.

 

Notes to the consolidated financial statements

All amounts in thousands of Brazilian Reais, unless otherwise stated

 

Gains and losses on disposals are determined by comparing proceeds with carrying amount. These are included in profit or loss. When revalued assets are sold, it is Group policy to transfer any amounts included in other reserves in respect of those assets to retained earnings.

 

2.9Leases

 

The Group leases various offices. Rental contracts are typically made for fixed periods of 5 years to 10 years but may have extension options.

 

Extension and termination options are included in a number of property leases across the Group. These are used to maximize operational flexibility in terms of managing the assets used in the Group's operations. The majority of extension and termination options held are exercisable only by the Group and not by the respective lessor.

 

In determining the lease term, management considers all facts and circumstances that create an economic incentive to exercise an extension option, or not exercise a termination option. Extension options (or periods after termination options) are only included in the lease term if the lease is reasonably certain to be extended (or not terminated).

 

The following factors are normally the most relevant:

 

-If there are significant penalties to terminate (or not extend), the Group is typically reasonably certain to extend (or not terminate).

-If any leasehold improvements are expected to have a significant remaining value, the Group is typically reasonably certain to extend (or not terminate).

-Otherwise, the Group considers other factors including historical lease durations and the costs and business disruption required to replace the leased asset.

 

Contracts may contain both lease and non-lease components. The Group allocates the consideration in the contract to the lease and non-lease components based on their relative stand-alone prices. However, for leases of real estate for which the Group is a lessee, it has elected not to separate lease and non-lease components and instead accounts for these as a single lease component. Lease terms are negotiated on an individual basis and contain a wide range of different terms and conditions. The lease agreements do not impose any covenants other than the security interests in the leased assets that are held by the lessor. Leased assets may not be used as security for borrowing purposes.

 

2.10Trade payables

 

These amounts represent liabilities for goods and services provided to the Group prior to the end of the financial year which are unpaid. The amounts are unsecured and are usually paid within 30 days of recognition. Trade and other payables are presented as current liabilities unless payment is not due within 12 months after the reporting period. They are recognized initially at their fair value and subsequently measured at amortized cost using the effective interest method.

 

2.11Provisions

 

Provisions for legal claims are recognized when the Group has a present legal or constructive obligation as a result of past events, it is probable that an outflow of resources will be required to settle the obligation, and the amount can be reliably estimated.

 

Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement is determined by considering the class of obligations as a whole. A provision is recognized even if the likelihood of an outflow with respect to any one item included in the same class of obligations may be small.

 

Provisions are measured at the present value of the expenditures expected to be required to settle the obligation using a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the obligation. The increase in the provision due to passage of time is recognized as interest expense.

 

F-15

 

Vinci Partners Investments Ltd.

 

Notes to the consolidated financial statements

All amounts in thousands of Brazilian Reais, unless otherwise stated

 

2.12Profit-sharing and bonus plans

 

The Group recognizes a liability and an expense for bonuses and profit-sharing based on a formula that takes into consideration the profit attributable to the company's shareholders after certain adjustments. The Group recognizes a provision where contractually obliged or where there is a past practice that has created a constructive obligation. The provision is recognized in labor and social security obligations and the related expense in general and administrative expense.

 

2.13Income taxes

 

The income tax and social contribution expenses for the year comprise current taxes. Taxes on income are recognized in the statement of income.

 

The current income tax and social contribution are calculated on the basis of the tax laws enacted by the balance sheet date. Management periodically evaluates positions taken by the Entity in income tax returns with respect to situations in which applicable tax regulation is subject to interpretation. It establishes provisions where appropriate on the basis of amounts expected to be paid to the tax authorities.

 

The Entity recognizes liabilities for situations where it is probable that additional taxes will be due. Where the final tax outcome of these matters is different from the amounts that were initially recorded, such differences will impact the current and deferred tax assets and liabilities in the period in which such determination is made.

 

Deferred income tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated financial statements. However, deferred tax liabilities are not recognized if they arise from the initial recognition of goodwill. Deferred income tax is also not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that, at the time of the transaction, affects neither accounting nor taxable profit or loss. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the end of the reporting period and are expected to apply when the related deferred income tax asset is realized or the deferred income tax liability is settled.

 

Deferred tax assets are recognized only if it is probable that future taxable amounts will be available to utilize those temporary differences and losses.

 

Deferred tax liabilities and assets are not recognized for temporary differences between the carrying amount and tax bases of investments in foreign operations where the company is able to control the timing of the reversal of the temporary differences and it is probable that the differences will not reverse in the foreseeable future.

 

Deferred tax assets and liabilities are offset where there is a legally enforceable right to offset current tax assets and liabilities and where the deferred tax balances relate to the same taxation authority. Current tax assets and tax liabilities are offset where the entity has a legally enforceable right to offset and intends either to settle on a net basis, or to realize the asset and settle the liability simultaneously.

 

Current and deferred tax is recognized in profit or loss, except to the extent that it relates to items recognized in other comprehensive income or directly in equity. In this case, the tax is also recognized in other comprehensive income or directly in equity, respectively.

 

As permitted by tax legislation, certain of the Entity's investees opted for the deemed profit regime, according to which the income tax calculation basis is 32% of revenues from service rendering and 100% of finance income, on which regular rates of 15% are levied, plus an additional 10% for income tax over a certain limit and 9% for social contribution. The Entity opted for the actual taxable profit regime. The entities that opted for the deemed profit regime evaluates their

 

F-16

 

Vinci Partners Investments Ltd.

 

Notes to the consolidated financial statements

All amounts in thousands of Brazilian Reais, unless otherwise stated

 

income tax and social contribution expenses based on the services revenue and realized investment income recognized on monthly basis.

 

2.14Capital

 

Ordinary shares are classified as equity.

 

Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds.

 

Dividends

 

Provision is made for the amount of any dividend declared, being appropriately authorized and no longer at the discretion of the entity, on or before the end of the reporting period but not distributed at the end of the reporting period.

 

Earnings per share

 

(i) Basic earnings per share

 

Basic earnings per share is calculated by dividing:

 

• the profit attributable to owners of the Entity;

• by the weighted average number of shares outstanding during the financial year, adjusted for bonus elements in shares issued during the year and excluding treasury shares.

 

(ii) Diluted earnings per share

 

Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account:

 

• the after-income tax effect of interest and other financing costs associated with dilutive potential ordinary shares, and;

• the weighted average number of additional ordinary shares that would have been outstanding assuming the conversion of all dilutive potential ordinary shares.

 

2.15Revenue recognition

 

Accordingly to IFRS 15, revenue is recognized when the performance obligation is satisfied. Revenue comprises the fair value of the consideration received or receivable for financial advisory and investment fund management services rendered in the ordinary course of the Group's activities. Revenue is shown net of taxes, returns, rebates and discounts.

 

Management fees and performance fees are accounted for as contracts with customers. Under the guidance for contracts with customers, an Entity is required to (a) identify the contract(s) with a customer, (b) identify the performance obligations in the contract, (c) determine the transaction price, (d) allocate the transaction price to the performance obligations in the contract, and (e) recognize revenue when (or as) the entity satisfies a performance obligation. In determining the transaction price, an entity may include variable consideration only to the extent that it is probable that a significant reversal in the amount of cumulative revenue recognized would not occur when the uncertainty associated with the variable consideration is resolved. See Note 20 "Segment Reporting" for a disaggregated presentation of revenues from contracts with customers, as follows:

 

(a)Management fees

 

Management fees are recognized in the period when the corresponding services are rendered, which generally consist of a percentage on the net asset value of each investment fund being managed. These customer contracts require Vinci to

 

F-17

 

Vinci Partners Investments Ltd.

 

Notes to the consolidated financial statements

All amounts in thousands of Brazilian Reais, unless otherwise stated

 

provide investment management services, which represents a performance obligation that the Group satisfies over time. Management fee percentages currently range between 0.05% and 2.93%.

 

(b)Performance fees

 

Brazilian regulation set forth certain minimum criteria for the performance fee structures of fund managed by Vinci, as described below:

 

•     Performance fee must be assessed based on a verifiable index, the benchmark, obtained from an independent source, and compatible with the corresponding fund investment policy.

 

•     Performance fee may not be calculated at a percentage lower than 100.0% of the index.

 

•     The performance fee cannot be charged in a period less than 6 months (except for private asset funds).

 

•     The performance fee shall be calculated based on net asset value, including management fees and all other expenses and may consider any distribution for shareholders in the calculation.

 

As a multi-asset-class asset management firm, Vinci manage a number of funds with different performance fee structures that may be classified in three main categories: (1) liquid funds, (2) closed-ended funds focused on value generation, and (3) closed-ended funds focused on income generation.

 

For liquid funds such as equity funds, credit funds and hedge funds, we charge performance fees usually every semester based on the performance of the fund above the benchmark or when the customer makes a redemption and a performance fee is due. For hedge funds and credit funds, performance fees are generally benchmarked to the Interbank Deposit Certificate index, or CDI, and for inflation-indexed funds, performance fees are generally indexed to the Amplified Consumer Price Index, or IPCA, plus a fixed real interest rate or a market index such as the Market Index Sub-Index B from the Brazilian Financial and Capital Markets Association, or IMA-B. For equity funds, the benchmark varies according to the strategy. For our "long only" and "long-biased" strategies, performance fees are assessed mainly to the IBOVESPA index. Other funds and strategies can be addressed to other index, as for example, IDIV index, SMLL index and Brazil ETF Index.

 

For closed-ended funds focused on value generation, such as the private equity and infrastructure funds, we follow a European-style waterfall structure and the threshold and carry is different between the Brazilian funds and the foreign investor funds. For the Brazilian funds we use a threshold of IPCA plus 8% and a carried interest over capital invested plus the return of IPCA. For the foreign investor funds, the threshold is an 8% return in U.S. dollars and the carried interest is on excess return over the capital contribution.

 

For the closed-ended funds focused on income such as real estate funds, we charge a performance fee every semester over the excess return between the amount distributed to investors and the benchmark of the relevant fund, which can vary according to the fund strategy.

 

The performance revenue is determined and recorded at the end of the reporting period and are not subject to clawback once paid.

 

The Entity recognizes the performance revenue according to IFRS 15. Unrealized performance fees are recognized only when is highly probable that the revenue will not be reversed in the income statement.

 

(c)Financial advisory services

 

Financial advisory fees are related to the service provided by the Group on the support of mergers and acquisitions transactions. Substantially, the fees are recognized when the transaction is concluded, based on success fees.

 

F-18

 

Vinci Partners Investments Ltd.

 

Notes to the consolidated financial statements

All amounts in thousands of Brazilian Reais, unless otherwise stated

 

3Accounting estimates and judgments

 

The Entity makes estimates and assumptions concerning the future, based on historical experience and other factors, including expectations of future events. The resulting accounting estimates will, by definition, seldom equal the related actual results. The main estimations and assumptions made by the Entity comprises the allowance of expected credit losses of accounts receivable, provision for profit sharing, consolidation of subsidiaries, and the fair value measurement of financial assets.

 

4Financial risk management

 

The main risks related to the financial instruments are credit risk, market risk, and liquidity risk, as defined below: The management of such risks involves various levels in the Entity and comprehends a number of policies and strategies. The Group's risk management focuses on the unpredictability of financial markets and seeks to mitigate potential adverse impacts on the Group's financial performance.

 

4.1Financial risk factors

 

This note explains the Group's exposure to financial risks and how these risks could affect the Group's future financial performance. Current year profit and loss information has been included where relevant to add further context.

 

The Group's risk management is predominantly controlled by a risk assessment department under process and controls approved by the management. The management provides written process and controls for overall risk management, as well as policies covering specific areas, such as foreign exchange risk, interest rate risk, credit risk, use of derivative financial instruments and non-derivative financial instruments, and investment of excess liquidity.

 

(a)Credit risk

 

Credit risk arises from cash and cash equivalents, contractual cash flows of debt investments carried at amortized cost, at fair value through profit or loss (FVTPL), and deposits with banks and financial institutions, as well as credit exposures to wholesale and retail customers, including outstanding receivables.

 

(i) Risk management

 

Vinci's treasury manages credit risk on a group basis. As of December 31, 2021, and 2020 the expected credit losses are considered immaterial due to the short maturities of the deposits and the credit quality of the counterparty, which have a credit rating AAA evaluated by Fitch Ratings. The Entity has not suffered any losses from cash and cash equivalents since inception. Vinci's treasury review expected credit losses on a regular basis.

 

(ii) Impairment of financial assets

 

The Group has the following types of financial assets that are subject to the expected credit loss model:

 

> accounts receivable

> debt investments carried at amortized cost

 

While cash and cash equivalents are also subject to the impairment requirements of IFRS 9, the identified impairment loss was immaterial.

 

F-19

 

Vinci Partners Investments Ltd.

 

Notes to the consolidated financial statements

All amounts in thousands of Brazilian Reais, unless otherwise stated

 

(b)Market risk

 

(i) Foreign exchange risk

 

The Group's exposure to foreign currency risk at the end of the reporting period, expressed in functional currency units, was as follows:

 

At the reporting date, the carrying amount value of the Group’s financial assets and liabilities held in US Dollars were as follows:

 

Balance sheet  12/31/2021  12/31/2020
       
Cash and cash equivalents   20,990    11,676 
Accounts receivable   9,477    3,151 
Other receivables   15,411    1,206 
Current assets   45,878    16,033 
           
Leases, property and equipment   3,216    4,049 
Non-current assets   3,216    4,049 
           
Trade payables   2,011    9 
Deferred revenue   -    - 
Lease   -    1,008 
Labor and social security obligations   9,521    7,527 
Current liabilities   11,532    8,544 
           
Payables to related parties   282    - 
Lease   3,104    2,712 
Non-current liabilities   3,386    2,712 
           
           
Net Equity   34,176    8,826 

 

The aggregate net foreign exchange gains/losses recognized in profit or loss were:

 

Net foreign exchange result  12/31/2021  12/31/2020  12/31/2019
          
Financial revenue   -    416    56 
Financial expense   (372)   (193)   (196)
                
Net foreign exchange result, net   (372)   223    (140)

 

The Group operates internationally and is exposed to foreign exchange risk, exclusively the US dollar.

 

Foreign exchange risk arises from future commercial transactions and recognized assets and liabilities denominated in a currency that is not the functional currency of the Group.

 

F-20

 

Vinci Partners Investments Ltd.

 

Notes to the consolidated financial statements

All amounts in thousands of Brazilian Reais, unless otherwise stated

 

(ii) interest rate risk

 

The Group's profit or loss is sensitive to higher/lower interest income from cash equivalents and fixed income funds as a result of changes in interest rates.

 

(iii) Price risk

 

The Group's exposure to investment securities price risk arises from investments held by the group and classified in the balance sheet at fair value through profit or loss (note 5).

 

To manage its price risk arising from investments in investment securities, the group diversifies its portfolio. Diversification of the portfolio is done in accordance with the limits set by the Group.

 

The majority of the Group's financial investments, that are exposed to significantly price risk are the private equity investments. Note 5(d) demonstrate the sensitivity analyses of impact for the assets held by the Group.

 

(c)Liquidity risk

 

Prudent liquidity risk management implies maintaining sufficient cash and marketable securities and the availability of funding through an adequate amount of committed credit facilities to meet obligations when due and to close out market positions. At the end of the reporting period the Group held bank deposits and certificate of deposits of R$ 102,569 (12/31/2020 – R$ 83,449) that are expected to readily generate cash inflows for managing liquidity risk.

 

Net debt reconciliation

 

This section sets out an analysis of net debt and the movements in net debt for each of the years presented.

 

   12/31/2021  12/31/2020
Cash and cash equivalents   102,569    83,449 
Financial instruments at fair value through profit or loss (i)   1,372,926    8,253 
Trade payables   (831)   (1,039)
Labor and social security obligations   (106,299)   (40,724)
Accounts payable   (10,677)   (125,828)
Lease liabilities   (85,544)   (106,199)
Net debt   1,272,144    (182,088)
           
(i)Comprised of liquid and illiquid investments. Liquid investments are current assets that are traded in an active market. Illiquid investments are comprised of assets that trade infrequently.

 

F-21

 

Vinci Partners Investments Ltd.

 

Notes to the consolidated financial statements

All amounts in thousands of Brazilian Reais, unless otherwise stated

 

   Financial liabilities  Other assets
   Payables  Lease liabilities  Cash and cash equivalents  Financial instruments at fair value through profit or loss
Net debt as at            
December 31, 2019   (68,976)   (102,891)   3,896    85,944 
Cash flow and dividends provision (ii)   (98,412)   19,652    76,735    (78,959)
                     
Fair value adjustment (ii)   -    -    468    1,278 
                     
Amortization cost   (203)   -    -    - 
Addition and finance expenses accrual
   -    (21,949)   -    - 
Foreign exchange adjustments
   -    -    2,350    - 
Other changes (iii)   -    (1,011)   -    - 
December 31, 2020   (167,591)   (106,199)   83,449    8,253 
                     
Cash flow and dividends provision   49,784    21,790    15,999    1,340,393 
                     
Fair value adjustment   -    -    3,121    24,280 
Addition and finance expenses accrual
   -    (823)   -    - 
Foreign exchange adjustments
   -    -    -    - 
Other changes (iii)   -    (312)   -    - 
December 31, 2021   (117,807)   (85,544)   102,569    1,372,926 

 

(ii) Amounts restated for better presentation and comparable purposes.

 

(iii) Other changes include non-cash movements, including Cumulative Translation Adjustments (“CTA”) which will be presented as in other comprehensive income statement.

 

Maturities of financial liabilities

 

The tables below analyze the Group's financial liabilities into relevant maturity groupings based on

 

their contractual maturities for significant financial liabilities.

 

Contractual maturities of
financial liabilities
at December 31, 2021
  Less than 1 year  Between 1 and 3 years  Over 3 years  Total  Carrying amount
                
Trade payables   (831)   -    -    (831)   (831)
Labor and social security obligations   (106,299)   -    -    (106,299)   (106,299)
Lease liabilities   (22,304)   (41,452)   (57,008)   (120,764)   (85,544)
Accounts payable   (10,677)   -    -    (10,677)   (10,677)
Total   (140,111)   (41,452)   (57,008)   (238,571)   (203,351)

F-22

 

Vinci Partners Investments Ltd.

 

Notes to the consolidated financial statements

All amounts in thousands of Brazilian Reais, unless otherwise stated

 

Contractual maturities of
financial liabilities
at December 31, 2020
  Less than 1 year  Between 1 and 3 years  Over 3 years  Total  Carrying amount
Trade payables   (1,039)   -    -    (1,039)   (1,039)
Labor and social security obligations   (40,724)   -    -    (40,724)   (40,724)
Lease liabilities   (19,828)   (40,279)   (113,929)   (174,036)   (106,199)
Accounts payable   (125,795)   (33)   -    (125,828)   (125,828)
Total   (187,386)   (40,312)   (113,929)   (341,627)   (273,790)

 

The amounts disclosed in the table below are the lease liabilities contractual undiscounted cash flows. Balances due within 12 months equal their carrying balances as the impact of discounting is not significant.

 

Contractual maturities of
financial liabilities
At 31 December 2021
  Rio de Janeiro
Office (BM336)
  São Paulo
Office
  NY Office
(3rd Avenue)
  Total
contractual
cash flows
  Carrying amount
non-current
liabilities
                
 2023    (18,990)   (1,216)   (1,116)   (21,322)   (18,788)
 2024    (18,990)   -    (1,140)   (20,130)   (14,940)
 2025    (14,905)   -    -    (14,905)   (9,784)
 2026    (9,186)   -    -    (9,186)   (5,288)
 2027    (9,186)   -    -    (9,186)   (4,682)
 2028    (9,186)   -    -    (9,186)   (4,145)
 2029    (9,186)   -    -    (9,186)   (3,670)
 2030    (5,359)   -    -    (5,359)   (1,943)
 Total    (94,988)   (1,216)   (2,256)   (98,460)   (63,240)

F-23

 

Vinci Partners Investments Ltd.

 

Notes to the consolidated financial statements

All amounts in thousands of Brazilian Reais, unless otherwise stated

 

Contractual maturities of
financial liabilities
At 31 December 2020
  Rio de Janeiro
Office (BM336)
  São Paulo
Office
  NY Office
(3rd Avenue)
  Total
contractual
cash flows
  Carrying amount
non-current
liabilities
                
 2022    (17,148)   (2,930)   (1,038)   (21,116)   (17,635)
 2023    (17,148)   (977)   (1,038)   (19,163)   (14,254)
 2024    (17,148)   -    (1,038)   (18,186)   (12,004)
 2025    (17,148)   -    -    (17,148)   (9,871)
 2026    (17,148)   -    -    (17,148)   (8,740)
 2027    (17,148)   -    -    (17,148)   (7,738)
 2028    (17,148)   -    -    (17,148)   (6,851)
 2029    (17,148)   -    -    (17,148)   (6,066)
 2030    (10,003)   -    -    (10,003)   (3,212)
 Total    (147,187)   (3,907)   (3,114)   (154,208)   (86,371)

 

(d)Sensitivity analysis

 

The Group monitors and evaluates the market risk related to its financial investments portfolio periodically to assess its volatility, through changes that can significantly impact its financial results. Considering a period of one day and the historical results over the past year, the following Value at Risk (VAR) parameters were used:

 

0.16% (or R$ 2.26 million) of the financial investment portfolio for a confidence interval of 95%

0.23% (or R$ 3.31 million) of the financial investment portfolio for a confidence interval of 99%

 

Additionally, the Group evaluated the financial investment portfolio on December 31, 2021, through stress scenarios according to the main risk factors related to its investments, as presented in the table below:

 

Risk Factor Variation in Stress Scenario (*) Financial Impact (**)
Current inflation inflation index  -100bps    15.3  
Exchange traded real estate funds Share prices  -10%   (10.9)
Brazilian stock prices Share prices  -10%   (7.4)
Fixed-rate offshore rates US yield curve  -100bps   (7.7)
Foreign exchange rate Foreign exchange rates  10% (***)    5.0  
Domestic base overnight rate Domestic base overnight rate  -100bps   (8.0)

(*) bps - basis point (1bps = 0,01%)

(**) In millions of Brazilian reais

(***) Brazilian reais devaluation against US Dollars

 

An equal change in the opposite direction of the stress scenario would have affected the financial investment portfolio by a similar amount, on the basis that all other variables remain constant.

 

F-24

 

Vinci Partners Investments Ltd.

 

Notes to the consolidated financial statements

All amounts in thousands of Brazilian Reais, unless otherwise stated

 

5Financial instruments

 

This note provides information about the group's financial instruments, including:

 

- an overview of all financial instruments held by the Group

- specific information about each type of financial instrument 

- accounting policies

- information about determining the fair value of the instruments, including judgements and estimation uncertainty involved.

 

The Group classifies its financial assets in the following measurement categories:

 

those measured at fair value or through profit or loss, and

those measured at amortized cost.

 

The classification depends on the entity's business model for managing the financial assets and the contractual terms of the cash flows.

 

For assets measured at fair value, gains and losses will be recorded in profit or loss.

 

Recognition and derecognition

 

Regular way purchases and sales of financial assets are recognized on trade date, being the date on which the group commits to purchase or sell the asset. Financial assets are derecognized when the rights to receive cash flows from the financial assets have expired or have been transferred and the group has transferred substantially all the risks and rewards of ownership.

 

Measurement

 

At initial recognition, the group measures a financial asset at its fair value plus, in the case of a financial asset not at fair value through profit or loss (FVPL), transaction costs that are directly attributable to the acquisition of the financial asset. Transaction costs of financial assets carried at FVPL are expensed in profit or loss.

 

The Group holds the following financial instruments:

 

Financial assets  Section  12/31/2021  12/31/2020
          
Accounts receivable  (a)   63,684    75,523 
Other financial assets at amortized cost  (b)   638    474 
Cash and cash equivalents  (d)   102,569    83,449 
Financial assets at fair value through profit or loss (FVPL)  (c)   1,381,519    39,849 
       1,548,410    199,295 
              
Financial liabilities             
              
Liabilities at amortized cost  (e)   117,807    167,591 
Lease liabilities  (e)   85,544    106,199 
       203,351    273,790 

 

The Group's exposure to risks associated with the financial instruments is discussed in note 4. The maximum exposure to credit risk at the end of the reporting period is the carrying amount of each class of financial assets mentioned above.

 

F-25

 

Vinci Partners Investments Ltd.

 

Notes to the consolidated financial statements

All amounts in thousands of Brazilian Reais, unless otherwise stated

 

a)Accounts receivable

 

Current assets

  12/31/2021  12/31/2020
Accounts receivable from contracts with customers   44,486    48,127 
Loss allowance   (170)   (149)
           
Non-current assets          
Accounts receivable from contracts with customers   19,368    27,545 
    63,684    75,523 

 

Accounts receivable are recognized initially at the amount of consideration that is unconditional and are not submitted to any financial components. They are subsequently measured at amortized cost, less loss allowance.

 

Current accounts receivable are amounts due from customers for services performed in the ordinary course of business. They are generally due for settlement within 30 days and are therefore all classified as current. Due to the short-term nature of the current receivables, their carrying amount is considered to be the same as their fair value.

 

Non-current accounts receivable are unrealized performance fees that management, with accumulated experience, estimate that it is highly probable that a significant reversal will not occur.

 

The Entity use a provision matrix to calculate expected credit losses and the exposure to credit risk from receivables are reviewed on a regular basis. Accounts receivable allowance for expected credit losses are presented in general and administrative expense.

 

The loss allowances for accounts receivable as of December 31, 2021 and 2020 reconcile to the opening loss allowances as follows:

 

   12/31/2021  12/31/2020
Opening loss allowance on January 1   (149)   (90)
Increase in accounts receivable allowance recognized in profit or loss   (21)   (59)
Closing loss allowance on December 31   (170)   (149)

 

Accounts receivable are written off when there is no reasonable expectation of recovery. Indicators that there is no reasonable expectation of recovery include, among others, the failure of a debtor to engage in a repayment plan with the group, and a failure to make contractual payments. The Entity have not written any amount of accounts receivable during 2021 and 2020. Subsequent recoveries of amounts previously written off are credited against the same line item.

 

b)Other financial assets at amortized cost

 

Financial assets at amortized cost include the following debt instruments:

 

   12/31/2021  12/31/2020
       
Prepayments to employees (Note 6 (i))   638    474 

 

These amounts generally arise from transactions outside the usual operating activities of the group. Interest is charged at commercial rates and collateral is not normally obtained.

 

F-26

 

Vinci Partners Investments Ltd.

 

Notes to the consolidated financial statements

All amounts in thousands of Brazilian Reais, unless otherwise stated

 

All the financial assets at amortized cost are denominated in Brazilian currency units. As a result, there is no exposure to foreign currency risk. There is also no exposure to price risk as the investments will be held to maturity.

 

See note 6 for more details.

 

c)Financial assets at fair value through profit or loss

 

The group classifies the following financial assets at fair value through profit or loss (FVPL):

 

-Mutual funds;

-Private markets funds.

 

Financial assets measured at FVPL include the following categories:

 

   12/31/2021  12/31/2020
       
Current assets   1,372,926    8,253 
Mutual funds   1,372,926    8,253 
           
Non-current assets   8,593    31,596 
Private markets funds   8,593    31,596 

 

The following tables demonstrate the funds invested included in each category mentioned above.

 

Mutual funds      
   12/31/2021  12/31/2020
       
Vinci Monalisa FIM Crédito Privado IE (1)   1,233,828    - 
Vinci Multiestratégia FIM   109,717    - 
Vinci International Master Portfolio SPC - Reflation SP   11,161    - 
FI Vinci Renda Fixa CP   18,220    8,253 
    1,372,926    8,253 

 

Private markets      
   12/31/2021  12/31/2020
       
Vinci Capital Partners III Feeder FIP Multiestratégia   1,891    768 
Nordeste III FIP Multiestratégia   2,848    2,652 
Vinci Impacto Ret IV FIP Multiestratégia   -    830 
Vinci Infra Transmissão FIP - Infraestrutura (i)   3,854    6,128 
Vinci Infra Coinvestimento I FIP - Infraestrutura (i)   -    21,218 
Total Private markets funds   8,593    31,596 

F-27

 

Vinci Partners Investments Ltd.

 

Notes to the consolidated financial statements

All amounts in thousands of Brazilian Reais, unless otherwise stated

 

1)Vinci Monalisa FIM Crédito Privado IE (“Vinci Monalisa”) is a mutual fund incorporated in Brazil and wholly owned by the Entity. Vinci Monalisa’s balances are the following:

 

   12/31/2021  12/31/2020
Net Asset Value   1,233,828    - 
Real estate funds   137,519    - 
Mutual funds   1,080,108    - 
Private equity funds   18,768    - 
Other assets/liabilities   (2,567)   - 

 

The Vinci Monalisa’s portfolio is comprised of liquid and illiquid investee funds with different redemption criteria. Over 92% of its investments are liquid and may be redeemed and 8% are non-redeemable investments. The following tables demonstrate the funds invested by Vinci Monalisa:

 

Mutual funds

 

Vinci Monalisa holds investments in several mutual funds to seek profitability through investments in various classes of financial assets such as fixed income assets, Brazilian government bonds, public equities, derivatives financial instruments, investment funds and other short-term liquid securities. As of December 31, 2021, Vinci Monalisa holds R$ 1,080,108 of investments in mutual funds, which are distributed in the following classification:

 

   12/31/2021  12/31/2020
Mutual Funds’ classification      
Interest and foreign exchange (a)   46.20%   - 
Multistrategy (b)   46.69%   - 
Foreign investments (c)   5.23%   - 
Macro (d)   1.88%   - 
    100.00%   - 

 

(a)Funds that seek long-term returns via investments in fixed-income assets, admitting strategies that imply interest risk, price index risk and foreign currency risk.

(b)Funds without commitment to concentration in any specific strategy.

(c)Funds that invest in financial assets abroad in a portion greater than 40% of their net asset values.

(d)Funds that operate in various asset classes (fixed income, variable income, foreign exchange, etc.), with investment strategies based on medium and long-term macroeconomic scenarios.

 

Real Estate funds      
   12/31/2021  12/31/2020
       
Vinci Imóveis Urbanos FII (i)   52,537    - 
Other real estate funds   84,982    - 
    137,519    - 

 

(i) The Fund’s investment strategy is to acquire properties in the retail, general markets, health and education sectors located in large urban centers that, in the Manager's view, generate long-term value.

 

F-28

 

Vinci Partners Investments Ltd.

 

Notes to the consolidated financial statements

All amounts in thousands of Brazilian Reais, unless otherwise stated

 

Private markets funds

 

   12/31/2021  12/31/2020
       
Vinci Impacto Ret IV FIP Multiestratégia   2,042    - 
Vinci Infra Coinvestimento I FIP - Infraestrutura (i)   13,446    - 
Vinci Infra Água e Saneamento Strategy FIP - Infraestrutura   1,023    - 
Other funds   2,257    - 
Total private markets funds   18,768    - 

 

(i) Fund focused on the acquisition of shares, share bonuses subscriptions, debentures convertible or not into shares, or other securities issued by publicly-held, publicly-traded or private corporations that develop new projects of infrastructure in the development sector and operations of electric power transmission lines, participating in the decision-making process of the investee, with effective influence. In 2021, the fund sold its investment in Linhas de Energia do Sertão Transmissora S.A. ("LEST"). As of December 31, 2021, the fund held investment in Água Vermelha Transmissora de Energia S.A.

 

During the year, the following gains/(losses) were recognized in profit or loss:

 

   12/31/2021  12/31/2020  12/31/2019
Fair value gains (losses) on investments at FVPL recognized in finance income   27,982    9,066    20,244 

 

d)Cash and cash equivalents

 

Current assets  12/31/2021  12/31/2020
Cash and bank deposits   21,679    13,096 
Financial instruments at fair value through profit or loss (i)   80,890    70,353 
    102,569    83,449 

 

For the purpose of presentation in the statement of cash flows, cash and cash equivalents includes cash on hand, bank deposits held at financial institutions, other short-term, highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.

 

(i) Comprises certificates of deposits issued by Banco Bradesco (credit rating AAA evaluated by Fitch Ratings) with interest rates variable from 99.50% to 100.50% of CDI (interbank deposit rate). The certificates are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.

 

F-29

 

Vinci Partners Investments Ltd.

 

Notes to the consolidated financial statements

All amounts in thousands of Brazilian Reais, unless otherwise stated

 

e)Financial liabilities

 

   12/31/2021  12/31/2020
       
Current   140,111    187,386 
Trade payables   831    1,039 
Labor and social security obligations (Note 12)   106,299    40,724 
Lease liabilities   22,304    19,828 
Accounts payable (Note 11)   10,677    125,795 
           
Non-current   63,240    86,404 
Lease liabilities   63,240    86,371 
Accounts payable (Note 11)   -    33 
           
    203,351    273,790 

 

(a)Fair value hierarchy

 

This section explains the judgements and estimates made in determining the fair values of the financial instruments that are recognized and measured at fair value through profit or loss in the financial statements. To provide an indication about the reliability of the inputs used in determining fair value, the group has classified its financial instruments into the three levels prescribed under the accounting standards. An explanation of each level follows underneath the table.

 

   On December 31, 2021
Recurring fair value measurements  Level 1  Level 2  Level 3  Total
Financial Assets                    
Certificate of deposits   -    80,890    -    80,890 
Mutual funds   -    1,372,926    -    1,372,926 
Private equity funds   -    -    8,593    8,593 
Total Financial Assets   -    1,453,816    8,593    1,462,409 

 

   On December 31, 2020
Recurring fair value measurements  Level 1  Level 2  Level 3  Total
Financial Assets                    
Certificate of deposits   -    70,353    -    70,353 
Mutual funds   -    8,253    -    8,253 
Private equity funds   -    -    31,596    31,596 
Total Financial Assets   -    78,606    31,596    110,202 

 

Level 1: The fair value of financial instruments traded in active markets (such as publicly traded real estate funds) is based on quoted market prices at the end of the reporting period. The quoted market price used for financial assets held by the group is the current bid price. These instruments are included in level 1.

 

Level 2: The fair value of financial instruments that are not traded in an active market is determined using valuation techniques which maximize the use of observable market data and rely as little as possible on entity-specific estimates. If all significant inputs required to fair value an instrument are observable, the instrument is included in level 2.

 

Vinci Monalisa is a financial instrument classified as level 2. Its portfolio is comprised of items that could be classified as level 1, level 2 and level 3, in the amount of R$ 57,006, R$ 1,080,108 and R$ 96,714, respectively.

 

F-30

 

Vinci Partners Investments Ltd.

 

Notes to the consolidated financial statements

All amounts in thousands of Brazilian Reais, unless otherwise stated

 

Level 3: If one or more of the significant inputs is not based on observable market data, the instrument is included in level 3. This is the case for unlisted equity securities.

 

(b)Valuation techniques used to determine fair values

 

Specific valuation techniques used to value financial instruments include:

 

- the use of quoted market prices

 

- for level 3 financial instruments – discounted cash flow analysis.

 

All non-listed assets fair value estimates are included in level 2, except for private equity funds, where the fair values have been determined based on fair value appraisals for fund's investments, performed by the fund's management or a third party hired by the Administration. The most part of the level 3 financial instruments evaluation uses discount cash flows techniques to evaluate the fair value of the Fund's investments. The appraisals performed by a third party are reviewed by Vinci or its subsidiaries (fund's management).

 

(c)Fair value measurements using significant unobservable inputs (level 3)

 

The following table presents the changes in level 3 items for the years ended December 31, 2021 and 2020:

 

   Fair Value
Opening balance January 1, 2020   24,164 
Capital deployment   1,748 
Sales and distributions   (778)
Gain recognized in finance income   6,462 
Closing balance December 31, 2020   31,596 
Capital deployment   932 
Transfer (a)   (22,746)
Sales and distributions   (3,481)
Gain recognized in finance income   2,292 
Closing balance December 31, 2021   8,593 

 

(a) During the year ended December 31, 2021, Vinci Impacto Ret IV FIP Multiestratégia and Vinci Infra Coinvestimento I FIP - Infraestrutura were transferred to Vinci Monalisa.

 

F-31

 

Vinci Partners Investments Ltd.

 

Notes to the consolidated financial statements

All amounts in thousands of Brazilian Reais, unless otherwise stated

 

(d) Valuation inputs and relationships to fair value

 

The following table summarizes the quantitative information about the significant unobservable inputs used in level 3 fair value measurements:

 

 

Fair value at

 

           
Description 12/31/2021 12/31/2020

Valuation Technique

 

Unobservable inputs

 

Reasonable
possible shift +/-

 

2021 Gain / (Losses) 2020 Gain / (Losses) Possible shift in Gain and losses
Vinci Infra Coinvestimento I FIP – Infraestrutura -    21,218 Discounted cash flow Discount rate 0.5% / 1% 559 4,548 In 2020, lower discount rate in 50 basis points would increase fair value by R$ 1,095 and higher discount rate in 100 basis points would decrease fair value by R$ 1,920
Vinci Infra Transmissão FIP - Infraestrutura 3,854 6,128 Discounted cash flow Discount rate 0.5% / 1% 703 1,253 Lower discount rate in 50 basis points would increase fair value by R$ 1,272 (R$ 656 – 2020) and higher discount rate in 100 basis points would decrease fair value by R$ 1,411 (R$ 682 – 2020)
Nordeste III FIP Multiestratégia 2,848 2,652 Discounted cash flow Discount rate 0.5% / 1% 497 702 Lower discount rate in 50 basis points would increase fair value by R$ 28 (R$ 9 - 2020) and higher discount rate in 100 basis points would decrease fair value by R$ 57 (R$ 18)
Others 1,891 1,598 NAV Valuation NAV 1% / 2% 533 (41) Increased NAV in 100 basis points would increase fair value by R$ 19 (R$ 26 – 2020) and lower NAV in 200 basis points would decrease fair value by R$ 38 (R$ 52 – 2020)

F-32

 

Vinci Partners Investments Ltd.

 

Notes to the consolidated financial statements

All amounts in thousands of Brazilian Reais, unless otherwise stated

 

6       Other assets

 

   12/31/2021  12/31/2020
       
Prepayments to employees (i)   638    474 
Sundry advances   288    159 
Advances to projects in progress (ii)   2,784    7,882 
Transaction costs (iii)   -    3,571 
Other prepayments   365    81 
Related parties receivables (iv)   265    260 
Guarantee deposits   1,525    1,040 
Rent receivables   252    398 
Others   87    58 
           
    6,204    13,923 
           
Current   4,193    12,383 
Non-current   2,011    1,540 
           
    6,204    13,923 

 

(i)Refers to amounts receivable from employees, in which the amount is rated at the interest rate of the Interbank Deposit Certificate (CDI).

 

(ii)Refers to costs incurred by projects related to funds administered by Vinci, that are initially paid by the Group and subsequently reimbursed.

 

(iii)Refers to transaction costs incurred by Vinci related to the initial public offering. After the closing of the initial public offering the amount was transferred to the shareholders equity.

 

(iv)Refers to an intercompany transaction. See note 19 for more details.

 

F-33

 

Vinci Partners Investments Ltd.

 

Notes to the consolidated financial statements

All amounts in thousands of Brazilian Reais, unless otherwise stated

 

7Investments

 

 

(a)Non-controlling interests (NCI)

 

Set out below is summarized financial information for each subsidiary that has non-controlling interests that are material to the group. The amounts disclosed for each subsidiary are before inter-company eliminations.

 

   Vinci Int'l Real Estate  Total
   12/31/2021  12/31/2020  12/31/2021  12/31/2020
Summarized Balance Sheet            
             
Current assets   575    270    575    270 
Current liabilities   (401)   (209)   (401)   (209)
Current net assets   174    61    174    61 
                     
Non-current assets   -    -    -    - 
Non-current liabilities   -    -    -    - 
Non-current net assets   -    -    -    - 
                     
Net assets   174    61    174    61 
                     
Accumulated NCI   43    15    43    15 

F-34

 

Vinci Partners Investments Ltd.

 

Notes to the consolidated financial statements

All amounts in thousands of Brazilian Reais, unless otherwise stated

 

Summarized statement  Vinci Real Estate  Vinci Infraestrutura  Vinci International Real Estate  Total
of comprehensive income  2021(*)  2020(*)  2021(**)  2020(**)  2021  2020  2021  2020
                         
Revenue   -    21,367    -    23,394    190    237    190    44,998 
                                         
Profit for the period   -    15,020    -    16,865    -    -    -    31,885 
                                         
Other comprehensive income   -    -    -         -    -    -    - 
                                         
Total comprehensive income   -    15,020    -    16,865    -    -    -    31,885 
                                         
Profit allocated to NCI before dividends   -    3,004    -    3,373    -    -    -    6,377 
                                         
Disproportionate dividends distributions   -    (2,037)   -    (5,385)   -    -    -    (7,422)
                                         
Profit/(loss) allocated to NCI   -    967    -    (2,012)   -    -    -    (1,045)

 

(*) The statement of comprehensive income is presented up to August 31, 2020 once Vinci acquired the remaining interest of its investee Vinci Real Estate Investimentos Ltda. from the minority at this date, as informed in note 2.1.

 

(**) The statement of comprehensive income is presented up to October 31, 2020 once Vinci acquired the remaining interest of its investee Vinci Infraestrutura Gestora de Recursos Ltda from the minority on November 21, 2020, as informed in note 2.1.

 

F-35

 

Vinci Partners Investments Ltd.

 

Notes to the consolidated financial statements

All amounts in thousands of Brazilian Reais, unless otherwise stated

 

8Property and equipment

 

                  12/31/2021
  

Furniture

and fittings

stuffs

 

Improvements in properties

of third

parties

 

Computers

and peripherals -

improvements

 

Equipaments

and tools

  Work of arts and others  Total
                   
Cost                  
At January 1, 2021   10,465    46,895    5,802    9,985    861    74,008 
Acquisitions, net of disposals   1,155    666    577    127    (72)   2,453 
Foreign Exchange variations of property and equipment abroad   -    1,463    -    420    -    1,883 
                               
At December 31, 2021   11,620    49,024    6,379    10,532    789    78,344 
                               
Accumulated depreciation
At January 1, 2021
   (6,795)   (37,831)   (5,264)   (9,075)   -    (58,965)
Annual depreciation   (849)   (2,119)   (227)   (222)   -    (3,417)
Disposals   -    -    168    -    -    168 
Foreign Exchange variations of  property and equipment abroad   -    (1,439)   -    (397)   -    (1,839)
                               
At December 31, 2021   (7,644)   (41,839)   (5,323)   (9,694)   -    (64,050)
                               
Net book value                              
At January 1, 2021   3,670    9,064    538    910    861    15,043 
                               
At December 31, 2021   3,976    7,635    1,056    838    789    14,294 
                               
Annual depreciation rate - %   10    From 10 to 20    20    10           

 

Extension options in offices leases have not been included in the lease liability, because the Group could replace the assets without significant cost or business disruption.

 

F-36

 

Vinci Partners Investments Ltd.

 

Notes to the consolidated financial statements

All amounts in thousands of Brazilian Reais, unless otherwise stated

 

                  12/31/2020
  

Furniture

and fittings

stuffs

 

Improvements in properties

of third

parties

 

Computers

and peripherals -

improvements

 

Equipaments

and tools

  Work of arts and others  Total
                   
Cost                  
At January 1, 2020   9,003    42,534    5,560    8,459    785    66,341 
Aquisitions   1,462    -    242    235    76    2,015 
Foreign Exchange variations of property and equipment abroad   -    4,361    -    1,291    -    5,652 
                               
At December 31, 2020   10,465    46,895    5,802    9,985    861    74,008 
                               
Accumulated depreciation
At January 1, 2020
   (6,008)   (31,751)   (4,913)   (7,257)   -    (49,929)
Annual depreciation   (787)   (1,580)   (351)   (638)   -    (3,356)
Foreign Exchange variations of property and equipment abroad   -    (4,500)   -    (1,180)   -    (5,680)
                               
At December 31, 2020   (6,795)   (37,831)   (5,264)   (9,075)   -    (58,965)
                               
Net book value                              
At January 1, 2020   2,995    10,783    647    1,202    785    16,412 
                               
At December 31, 2020   3,670    9,064    538    910    861    15,043 
                               
Annual depreciation rate - %   10    From 10 to 20    20    10           

F-37

 

Vinci Partners Investments Ltd.

 

Notes to the consolidated financial statements

All amounts in thousands of Brazilian Reais, unless otherwise stated

 

9Intangible assets

 

Intangible assets include expenditures with the development of the software product for Risk System and Portfolio Allocation, whose purpose is to evaluate the risk of the funds and to allocate the clients' portfolio.

 

Economic benefits will flow to the Group from the service fees charged to the clients for the sale of advisory services on market risks or through a service which the Vinci's managers named Wealth Management.

 

The Entity assesses at each reporting date whether there is an indication that an intangible asset may be impaired. If any indication exists, the Entity estimates the asset's recoverable amount. There were no indications of impairment of intangible assets for the years ended December 31, 2021 and 2020.

 

   12/31/2021
   Software development  Total
       
Cost      
At January 1, 2021   23,723    23,723 
Purchases   470    470 
Foreign exchange variation of intangible assets abroad   597    597 
           
At December 31, 2021   24,790    24,790 
           
Accumulated amortization          
At January 1, 2021   (22,282)   (22,282)
Annual amortization   (740)   (740)
Foreign exchange variation of intangible assets abroad   (611)   (611)
           
At December 31, 2021   (23,633)   (23,633)
           
           
At January 1, 2021   1,441    1,441 
           
At December 31, 2021   1,157    1,157 
           
Amortization rate (per year) - %   20%     

F-38

 

Vinci Partners Investments Ltd.

 

Notes to the consolidated financial statements

All amounts in thousands of Brazilian Reais, unless otherwise stated

 

   12/31/2020
   Software development  Total
       
Cost      
At January 1, 2020   21,908    21,908 
Purchases   -    - 
Foreign exchange variation of intangible assets abroad   1,815    1,815 
           
At December 31, 2020   23,723    23,723 
           
Accumulated amortization          
At January 1, 2020   (19,188)   (19,188)
Annual amortization   (1,286)   (1,286)
Foreign exchange variation of intangible assets abroad   (1,808)   (1,808)
           
At December 31, 2020   (22,282)   (22,282)
           
           
At January 1, 2020   2,720    2,720 
           
At December 31, 2020   1,441    1,441 
           
Amortization rate (per year) - %   20%     
           
           

F-39

 

Vinci Partners Investments Ltd.

 

Notes to the consolidated financial statements

All amounts in thousands of Brazilian Reais, unless otherwise stated

 

10Leases

 

This note provides information for leases where the Group is a lessee. The notes also provide the information of subleases agreements where the Group is a lessor, once part of the assets leased by the Group is subleased to third parties.

 

(i)Amount recognized in the balance sheet

 

The balance sheet shows the following amounts relating to leases:

 

   12/31/2021  12/31/2020
Sub-lease receivable      
Rio de Janeiro Office – BM 336   -    2,963 
Total   -    2,963 
           
Current   -    2,963 
Total   -    2,963 
           
Right of use assets          
Rio de Janeiro Office – BM 336   61,907    82,117 
São Paulo Office – JRA   4,700    4,987 
NY Office – third Avenue   2,722    3,374 
Total   69,329    90,478 
           
Lease liabilities          
Rio de Janeiro Office – BM 336   (76,996)   (96,507)
São Paulo Office – JRA   (5,444)   (5,972)
NY Office – third Avenue   (3,104)   (3,720)
Total   (85,544)   (106,199)
           
Current   (22,304)   (19,828)
Non-current   (63,240)   (86,371)
Total   (85,544)   (106,199)

 

Vinci and its direct subsidiaries did not have any rent concessions or modifications on their lease contracts as a direct consequence of the Covid-19. Therefore, the amendment to IFRS 16 issued by The International Accounting Standards Board (“IASB”) does not apply to the Entity.

 

Deductions to the right-of-use assets until December 31, 2021 were R$ 11,555 (additions of R$ 9,740 during 2020 financial year).

 

F-40

 

Vinci Partners Investments Ltd.

 

Notes to the consolidated financial statements

All amounts in thousands of Brazilian Reais, unless otherwise stated

 

(ii)Amount recorded in the statement of profit or loss

 

The statement of profit or loss shows the following amounts relating to leases:

 

   2021  2020  2019
          
Right of use assets depreciation   (9,812)   (8,586)   (10,521)
Financial expense   (12,281)   (12,209)   (11,980)
    (22,093)   (20,795)   (22,501)

 

The total cash outflow for leases in 2021 was R$ 21,790 (R$ 20,141 in 2020 and R$ 19,027 in 2019).

 

(iii)The Group’s leasing activities and how these are accounted for

 

The Group leases various offices. Rental contracts are typically made for fixed periods of 5 years to 10 years, but may have extension options as described in (iv) below.

 

Contracts may contain both lease and non-lease components. The Group allocates the consideration in the contract to the lease and non-lease components based on their relative stand-alone prices.

 

For all periods presented, the sub-leases were classified as finance leases on a lessor perspective. Therefore, the Group account the sub-leases on a lease-by-lease basis, subtracting the right of use assets and recognizing a receivable related to the present value of the receivables of the sub-lease.

 

Lease terms are negotiated on an individual basis and contain a wide range of different terms and conditions. The lease agreements do not impose any covenants other than the security interests in the leased assets that are held by the lessor. Leased assets may not be used as security for borrowing purposes.

 

Assets and liabilities arising from a lease are initially measured on a present value basis. Lease liabilities include the net present value of the following lease payments:

 

- fixed payments (including in-substance fixed payments), less any lease incentives receivable

- variable lease payment that are based on an index or a rate, initially measured using the index or rate as at the commencement date 

- amounts expected to be payable by the group under residual value guarantees

- the exercise price of a purchase option if the group is reasonably certain to exercise that option, and 

- payments of penalties for terminating the lease, if the lease term reflects the group exercising that option.

 

Lease payments to be made under reasonably certain extension options are also included in the measurement of the liability. The lease payments are discounted using the interest rate implicit in the lease. If that rate cannot be readily determined, which is generally the case for leases in the Group, the lessee’s incremental borrowing rate is used, being the rate that the individual lessee would have to pay to borrow the funds necessary to obtain an asset of similar value to the right-of-use asset in a similar economic environment with similar terms, security and conditions.

 

F-41

 

Vinci Partners Investments Ltd.

 

Notes to the consolidated financial statements

All amounts in thousands of Brazilian Reais, unless otherwise stated

 

To determine the incremental borrowing rate, the Group:

 

- where possible, uses recent third-party financing received by the individual lessee as a starting point, adjusted to reflect changes in financing conditions since third party financing was received

- uses a build-up approach that starts with a risk-free interest rate adjusted for credit risk for leases, which does not have recent third party financing, and 

- make adjustments specific to the lease, e.g. term, country, currency and security.

 

The Group is exposed to potential future increases in variable lease payments based on an index, which are not included in the lease liability until they take effect. When adjustments to lease payments based on an index or rate take effect, the lease liability is reassessed and adjusted against the right-of-use asset.

 

Lease payments are allocated between principal and finance cost. The finance cost is charged to profit or loss over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period.

 

Right-of-use assets are measured at cost comprising the following:

 

- the amount of the initial measurement of lease liability

- any lease payments made at or before the commencement date less any lease incentives received 

- any initial direct costs, and

- restoration costs.

 

Right-of-use assets are generally depreciated over the shorter of the asset’s useful life and the lease term on a straight-line basis. If the Group is reasonably certain to exercise a purchase option, the right-of-use asset is depreciated over the underlying asset’s useful life.

 

(iv)Extension and termination options

 

Extension and termination options are included in a number of property and equipment leases across the Group. These are used to maximize operational flexibility in terms of managing the assets used in the group’s operations. The majority of extension and termination options held are exercisable only by the Group and not by the respective lessor.

 

11Accounts payable

 

   12/31/2021  12/31/2020
       
Dividends payable (i)   6,833    123,191 
Treasury shares      acquired (ii)   1,874    - 
Rent payable – prior month expense   1,887    1,673 
Other payables   83    964 
           
    10,677    125,828 
           
Current   10,677    125,795 
Non-current   -    33 

F-42

 

Vinci Partners Investments Ltd.

 

Notes to the consolidated financial statements

All amounts in thousands of Brazilian Reais, unless otherwise stated

 

(i)On November 30, 2020, the partners approved a distribution of dividends in the amount of R$ 133,194, based on the available retained earnings and results for the accumulated period as a base or balance until the available data. As of December 31, 2020, the amount of R$ 37,426 was paid, with the outstanding balance of R$ 95,768 remaining on December 31, 2020. During the year of 2021 the outstanding balance was settled by Vinci.

 

On December 31, 2020, the partners approved a distribution of dividends for the results of the current month. Based on the balance until the available data, Vinci settled an additional provision for dividends payable of R$ 27,423. As of December 3, 2021, the amount of R$ 20,590 was paid, with an outstanding balance of R$ 6,833 remaining. On January 21, 2022, the amount of R$ 2,470 were paid, remaining outstanding the amount of R$ 4,363.

 

(ii)As informed in Note 14(f), on May 6, 2021, Vinci started its share repurchase program. The shares repurchased were totally settled on January 5, 2022.

 

12Labor and social security obligations

 

   12/31/2021  12/31/2020
       
Profit sharing   101,880    37,802 
Labor provisions   4,419    2,922 
           
    106,299    40,724 

 

Except for the profit sharing related to the unrealized performance fees, the accrual for profits sharing payable on December 31, 2021 was entirely paid in January 2022. Profit sharing is calculated based on the performance review of each employee plus the area performance, in accordance with an Entity policy. Vinci Management estimated the profit sharing as of December 31, 2021 based on the management and advisory net revenue recognized and the realized performance fee up to December 31, 2021. Profit sharing is calculated accordingly to Vinci internal policy and after the Management approval.

 

Since 2021 Vinci change its dividends distribution policy and implement a profit-sharing scheme to its employees and personnel responsible for asset management services, increasing the estimate of the profit-sharing accrual in 2021.

 

13Taxes and contributions payable

 

   12/31/2021  12/31/2020
       
Income tax   14,375    14,063 
Social contribution   5,128    5,082 
Social Contribution on
     revenues (COFINS)
   2,280    1,882 
Social Integration Program (PIS)   489    407 
Service tax (ISS) on billing   1,348    1,160 
Withholding Income Tax (IRRF)
     deducted from third parties
   40    80 
Others   102    204 
           
    23,762    22,878 

F-43

 

Vinci Partners Investments Ltd.

 

Notes to the consolidated financial statements

All amounts in thousands of Brazilian Reais, unless otherwise stated

 

14Equity

 

a)Capital

 

The capital comprises 42,447,349 Class A shares and 14,446,239 Class B shares with a par value of US$ 0.00005 each (12/31/2020 – 8,730,000 quotas with a par value of R$ 1.00 each quota of Vinci Partners Investimentos Ltda).

 

On March 16, 2020, the quotaholders of Vinci Partners Investimentos Ltda unanimously approved a capital increase of R$ 90. Accordingly, capital was increased from R$ 8,595 to R$ 8,685 through the issue of 90,000 quotas at R$ 1.00 each.

 

On August 8, 2020, the quotaholders unanimously approved a capital increase of R$ 45. Accordingly, capital was increased from R$ 8,685 to R$ 8,730 through the issue of 45,000 quotas at R$ 1.00 each.

 

On January 15, 2021, the individual partners of Vinci Partners Investimentos Ltda. contributed the entirety of their quotas into the Entity. In return for this contribution the Entity issued (1) new Class B common shares to Gilberto Sayão da Silva and (2) new Class A common shares to all other quotaholders of Vinci Partners Investimentos Ltda. in exchange for the quotas, in each case in a one-to-4.77 exchange for the quotas, of Vinci Partners Investimentos Ltda. contributed to the Entity, or the Contribution.

 

On January 28, 2021, Vinci issued 13,873,474 Class A common shares. Prior to this offering, there has been no public market for our Class A common shares. The initial public offering price per Class A common share was US$18.00, resulting in net proceeds of US$ 232,243 thousand (or R$ 1,266,926), after the deducting of underwriting discounts and commissions to Vinci.

 

On February 8, 2021, Vinci issued additional 1,398,014 Class A common shares. The price of the additional shares was US$18.00, resulting in net proceeds of US$ 28,636 thousand (or R$ 125,448), after the deducting of underwriting discounts and commissions to Vinci.

 

The Class A common shares have been approved for listing on the Nasdaq Global Select Market, or Nasdaq, under the symbol “VINP.” Vinci has two classes of common shares: Class A common shares and our Class B common shares.

 

Class B common shares carry rights that are identical to the Class A common shares, except that (1) holders of Class B common shares are entitled to 10 votes per share, whereas holders of our Class A common shares are entitled to one vote per share; (2) holders of Class B common shares have certain conversion rights; (3) holders of Class B common shares are entitled to preemptive rights in the event that additional Class A common shares are issued in order to maintain their proportional ownership interest; and (4) Class B common shares shall not be listed on any stock exchange and will not be publicly traded.

 

F-44

 

Vinci Partners Investments Ltd.

 

Notes to the consolidated financial statements

All amounts in thousands of Brazilian Reais, unless otherwise stated

 

The Entity’s shareholders as of December 31, 2021 and 2020 are presented in the table below:

 

Shareholders  12/31/2019 Quantity  Subscribed  Transferred  12/31/2020 Quantity
Salzburg Empreendimentos e Participações Ltda.   1,206,000.00    -    -    1,206,000.00 
Vinci Partners Participações Ltda.   4,194,000.00    -    -    4,194,000.00 
Others Shareholders   3,195,000.00    135,000    -    3,330,000.00 
Total   8,595,000.00    135,000    -    8,730,000.00 

 

Shareholders  12/31/2020 Quantity  Subscribed  Transferred (*)  Repurchased  12/31/2021 Quantity
Gilberto Sayão da Silva (Class B)   -    -    14,466,239    -    14,466,239 
Alessandro Monteiro Morgado Horta (Class A)   -    -    8,226,422    -    8,226,422 
Paulo Fernando Carvalho de Oliveira (Class A)   -    -    2,066,605    -    2,066,605 
Bruno Augusto Sacchi Zaremba (Class A)   -    -    1,446,624    -    1,446,624 
Sergio Passos Ribeiro (Class A)   -    -    1,239,963    -    1,239,963 
Lywal Salles Filho (Class A)   -    -    206,661    -    206,661 
Public Float (Class A)   -    15,271,488    -    (758,011)   14,513,477 
Other Shareholders (Class A)   -    -    13,989,586    -    13,989,586 
Treasury shares (Class A)   -    -    -    758,011    758,011 
Total   -    15,271,488    41,642,100    -    56,913,588 

 

(*) All of the quotaholders of Vinci Partners Investimentos Ltda contributed the entirety of their quotas to Vinci Partners Investments Ltd. In return for this contribution, the Entity issued 14,466,239 new Class B common shares and 27,175,861 new Class A common shares, in each case in a one-to-4.77 exchange for the quotas of Vinci Partners Investimentos Ltda to the quotas of Vinci Partners Investments Ltd.

 

b)Transactions costs

 

Transactions costs comprises the expenses incurred by the Entity in connection with the IPO.

 

c)Retained earnings

 

Earning reserves comprises the net profit generated by the Entity which were not distributed to their shareholders or approved to be distributed by the Entity management.

 

d)Other reserves

 

Comprises the exchange variation in investments made on investees which have a functional currency other than Brazilian Reais, the Entity functional currency. When a foreign operation is sold, the associated exchange differences are reclassified to profit or loss, as part of the gain or loss on sale.

 

F-45

 

Vinci Partners Investments Ltd.

 

Notes to the consolidated financial statements

All amounts in thousands of Brazilian Reais, unless otherwise stated

 

e)Dividends

 

On August 18, 2021, Vinci declared a semiannual dividend distribution of US$ 0.30 per common share to shareholders as of September 01, 2021, totalizing US$ 17,021 thousand (R$ 89,487), paid on September 16, 2021.

 

On November 17, 2021, Vinci declared a quarterly dividend distribution of US$ 0.16 per common share to shareholders as of December 1, 2021, totalizing US$ 9,019 thousand (R$ 48,945), paid on December 16, 2021.

 

Once dividends are declared and approved by the board of directors, they will be paid on proportional basis to the owners of the common shares.

 

In 2021, dividends were paid in the amount of R$ 255,963, being R$ 116,358 related to the net profit earned until 2020 and the remaining amount of R$ 139,605 related to the net profit for the current year (R$ 176,287 in 2020).

 

f)Treasury shares

 

When shares recognized as equity are repurchased, the amount of the consideration paid, which includes directly attributable costs, is recognized as a deduction from equity. Repurchased shares are classified as treasury shares and are presented in the treasury share reserve. When treasury shares are sold or reissued subsequently, the amount received is recognized as an increase in equity and the resulting surplus or deficit on the transaction is presented within share premium.

 

On May 6, 2021, the Company announced the adoption of its share repurchase program in an aggregate amount of up to R$ 85 million (the “Repurchase Program”). The Repurchase Program may be executed in compliance with Rule 10b-18 under the Exchange Act. The program shall be permitted to commence after the date it is publicly disclosed and does not have a specified expiration date. Buybacks shall be made from time-to-time in open market and negotiated purchases. The specific prices, numbers of shares and timing of purchase transactions shall be determined by the Company from time to time in its sole discretion.

 

On September 14, 2021, the Company intended to benefit from the affirmative defense provided by Rule 10b5-1 promulgated by the Securities and Exchange Commission under the Securities Exchange Act of 1934. The Repurchase Program previously approved comply with the requirements of Rule 10b5-1 and was prepared under the following terms:

 

The program is permitted to commence on October 1, 2021 and does not have a specified expiration date

 

Buybacks shall be made in compliance with Rule 10b5-1(c)(1) under the Exchange Act

 

The Repurchase Program respects the total amount of up to R$85 million, as previously approved.

 

As of December 31, 2021, 758,011 Class A common shares were repurchased, in the amount of R$ 52,585.

 

In December 2021, the Company holds 758,011 Class A common shares in treasury.

 

F-46

 

Vinci Partners Investments Ltd.

 

Notes to the consolidated financial statements

All amounts in thousands of Brazilian Reais, unless otherwise stated

 

g)Basic and diluted earnings per share/quota

 

a) Basic earning per share/quota  2021  2020  2019
From continuing operations attributable to the ordinary equity holders of the Entity   3.77    19.60    17.41 
Total basic earning per share/quota attributable to the ordinary equity holders of the Entity   3.77    19.60    17.41 

 

b) Diluted earning per share/quota  2021  2020  2019
From continuing operations attributable to the ordinary equity holders of the Entity   3.77    19.60    17.41 
Total basic earning per share/quota attributable to the ordinary equity holders of the Entity   3.77    19.60    17.41 

 

c)Reconciliations of earnings used in calculating earnings per share/quota

 

Basic earnings per share/quota:  2021  2020  2019
Profit attributable to the ordinary equity holders of the Entity used in calculating basic earnings per share/quota:         
From continuing operations   208,615    170,199    151,373 
    208,615    170,199    151,373 

 

Diluted earnings per share/quota:  2021  2020  2019
Profit from continuing operations attributable to the ordinary equity holders of the Entity         
Used in calculating basic earnings per share/quota   208,615    170,199    151,373 
Used in calculating diluted earnings per share/quota   208,615    170,199    151,373 

 

d)Weighted average number of share/quotas used as the denominator

 

   Number 2021  Number 2020  Number 2019
Weighted average number of ordinary share/quotas used as the denominator in calculating basic earnings per share/quota:   55,387,859    8,683,893    8,688,082 
Adjustments for calculation of diluted earnings per share/quota:   -    -    - 
Weighted average number of ordinary share/quotas and potential ordinary share/quotas used as the denominator in calculating diluted earnings per share/quota   55,387,859    8,683,893    8,688,082 

F-47

 

Vinci Partners Investments Ltd.

 

Notes to the consolidated financial statements

All amounts in thousands of Brazilian Reais, unless otherwise stated

 

15Revenue from services rendered

 

   2021  2020  2019
          
Gross revenue from fund management   384,321    285,798    233,826 
Gross revenue from performance fees (i)   38,649    41,869    65,328 
Gross revenue from financial advisory services   73,066    31,569    11,939 
                
Gross revenue from services rendered   496,036    359,236    311,093 
                
In Brazil   378,147    264,493    215,941 
Abroad   117,889    94,743    95,152 
                
Taxes and contributions               
COFINS   (15,438)   (9,488)   (6,494)
PIS   (3,348)   (2,057)   (1,407)
ISS   (11,792)   (7,799)   (6,475)
                
Net revenue from services rendered   465,458    339,892    296,717 
                
Net revenue from fund management   361,070    271,266    223,808 
Net revenue from performance fees   37,633    39,784    62,020 
Net revenue from advisory   66,755    28,842    10,889 

 

(i) In 2021 Vinci recognized realized performance fee of R$ 10,898, previously recognized as unrealized performance fee in past years.

 

F-48

 

Vinci Partners Investments Ltd.

 

Notes to the consolidated financial statements

All amounts in thousands of Brazilian Reais, unless otherwise stated

 

16General and administrative expenses

 

   2021  2020  2019
          
Personnel (a)   (55,057)   (37,175)   (33,748)
Stock Option Plan (b)   (3,670)   -    - 
Profit sharing (a)   (98,970)   (37,198)   (28,788)
    (157,697)   (74,373)   (62,536)
Third party expense (c)   (38,891)   (24,651)   (19,497)
Right of use depreciation (d)   (9,812)   (8,586)   (10,521)
Depreciation and amortization (e)   (3,917)   (4,642)   (5,998)
Other operating expenses (f)   (4,240)   (5,199)   (5,021)
Travel and representations   (1,271)   (933)   (3,589)
Condominium expenses   (2,598)   (2,818)   (2,953)
Payroll taxes   (3,669)   (2,132)   (2,230)
Rental expense   (540)   (428)   (313)
Telephony services   (242)   (278)   (315)
Legal   (99)   (146)   (204)
Accounts receivables allowance   (21)   (59)   (69)
Office consumables   (1)   -    (41)
                
    (222,998)   (124,245)   (113,287)

 

(a) Personnel and profit-sharing

 

Since 2021, as part of the Company reorganization before the IPO, the personnel of Vinci Partners Investimentos Ltda. were hired by Vinci and its subsidiaries and will be remunerated accordingly to the rules applied to other professionals of the Group, which includes the profit-sharing program. Therefore, the increase in the profit-sharing and personnel expenses are due to the inclusion of the personnel in the estimated amount in 2021.

 

According to the profit-sharing program and based on Brazilian Law 10,101 of December 19, 2000 and on objectives established at the beginning of each year, management estimated the payment of profit sharing in the amount of R$ 98,973 (R$ 37,198 in 2020 and R$ 28,788 in 2019) for the year ended December 31, 2021.

 

(b) Share-based payments

 

See note 22 for more details.

 

(c) Third party expense

 

Third party expense is composed for accounting, advisory, information technology, marketing, and other contracted services. The increase is mainly related to investments in Vinci branding through marketing expenses, IT expenses in connection to the growth of Vinci’s operation, as well as audit services.

 

(d) Right of use depreciation

 

See note 10 for more details.

 

(e) Depreciation and amortization

 

F-49

 

Vinci Partners Investments Ltd.

 

Notes to the consolidated financial statements

All amounts in thousands of Brazilian Reais, unless otherwise stated

 

The amount is mainly comprised by property and equipment depreciation.

 

(f) Other operating expenses

 

The amount is mainly comprised by office expenses, including energy, cleaning, maintenance and conservation, among others several expenses.

 

17Finance profit/(loss)

 

   2021  2020  2019
          
Investment income (i)   27,892    9,066    20,244 
Foreign currency variation income   -    416    56 
Financial revenue on sublease agreements   197    519    800 
Other finance income   332    49    61 
                
Finance income   28,511    10,050    21,161 
                
Financial expense on lease agreements   (12,281)   (12,209)   (11,980)
Bank fees   (119)   (258)   (86)
Interest and arrears   (80)   -    - 
Investment losses (i)   -    (234)   - 
Fines on taxes   (65)   -    (3)
Financial expense on liabilities at amortized cost   -    (203)   (181)
Interest on taxes   (208)   -    (30)
Foreign currency variation expense   (372)   (193)   (196)
Other financial expenses   (4)   -    - 
                
Finance costs   (13,129)   (13,097)   (12,476)
                
Finance profit/(loss), net   15,382    (3,047)   8,865 

 

(i)Investment income and losses comprises the fair value changes on the financial instruments at fair value through profit or loss. Segregated investment income result is demonstrated below:

 

   2021  2020  2019
Mutual funds and fixed income investments   25,620    2,604    2,819 
Private equity funds   2,362    6,462    16,803 
Real Estate listed funds   -    -    99 
Public equities funds   -    -    523 
    27,892    9,066    20,244 
                
Mutual funds   -    -    - 
Private equity funds   -    (71)   - 
Real Estate listed funds   -    (77)   - 
Public equities funds   -    (86)   - 
    -    (234)   - 

 

F-50

 

Vinci Partners Investments Ltd.

 

Notes to the consolidated financial statements

All amounts in thousands of Brazilian Reais, unless otherwise stated

 

18Income tax and social contribution

 

As an exempted company incorporated in the Cayman Islands, Vinci Partners Ltd is subject to Cayman Islands laws, which currently levy no taxes on individuals or corporations based upon profits, income, gains or appreciation and there is no taxation in the nature of inheritance tax or estate duty or withholding tax applicable to us.

 

Vinci Partners Ltd subsidiaries, except for Vinci Partners Ltda, Vinci Capital Gestora Ltda and Vinci Equities Gestora de Recursos Ltda are taxed based on the deemed profit. Vinci Equities was taxed on deemed profit until 2020 and changed to profit regime since January 1st, 2021.

 

Vinci has tax losses and negative basis resulting from previous years and deferred income tax and social contribution credits are recognized since there is expectation of future tax results for these companies. The tax credit arising from the tax loss and negative basis under the taxable profit regime on December 31, 2021 is R$ 2,494 (R$ 2,769 on December 31, 2020).

 

No foreign subsidiaries presented net income for taxation of income and social contribution taxes in 2021, 2020 and 2019.

 

The income tax and social contribution charge on the results for the year can be summarized as follows:

 

   2021  2020  2019
          
Current income tax   (41,510)   (11,462)   (23,738)
Current social contribution   (15,260)   (31,204)   (8,621)
                
    (56,770)   (42,666)   (32,359)
                
Deferred income tax   5,546    (206)   (3,033)
Deferred social contribution   1,997    (574)   (1,091)
                
    7,543    (780)   (4,124)

F-51

 

Vinci Partners Investments Ltd.

 

Notes to the consolidated financial statements

All amounts in thousands of Brazilian Reais, unless otherwise stated

 

Deferred tax balances

 

   12/31/2021  12/31/2020
Deferred tax assets      
Tax losses   2,494    2,769 
Leases   2,476    1,799 
Total   4,970    4,568 
Deferred tax liabilities          
Financial revenue   (1,815)   (7,842)
Estimated revenue   (2,107)   (2,997)
Leases   -    (224)
Total Income Tax   (3,922)   (11,063)
           
Estimated revenue   (1,094)   (1,557)
Total (Taxes and contribution)   (1,094)   (1,557)
           
Total deferred tax liabilities   (5,016)   (12,620)

F-52

 

Vinci Partners Investments Ltd.

 

Notes to the consolidated financial statements

All amounts in thousands of Brazilian Reais, unless otherwise stated

 

Movements  Tax losses  Leases  Total
Deferred tax assets         
As at December 31, 2019   1,161    1,046    2,207 
to profit and loss   1,608    753    2,361 
As at December 31, 2020   2,769    1,799    4,568 
to profit and loss   (275)   677    402 
As at December 31, 2021   2,494    2,476    4,970 

 

Movements  Financial Revenue  Estimated Revenue  Leases  Total
Deferred tax liabilities            
As at December 31, 2019   (5,731)   (2,816)   (336)   (8,883)
to profit and loss   (2,111)   (1,738)   112    (3,737)
As at December 31, 2020   (7,842)   (4,554)   (224)   (12,620)
to profit and loss   6,027    1,353    224    7,604 
As at December 31, 2021   (1,815)   (3,201)   -    (5,016)

F-53

 

Vinci Partners Investments Ltd.

 

Notes to the consolidated financial statements

All amounts in thousands of Brazilian Reais, unless otherwise stated

 

(a)Tax effective rate

 

   2021  2020  2019
          
Profit (loss) before income taxes   257,842    212,600    192,115 
Combined statutory income taxes rate - %   34%   34%   34%
Income tax benefit (expense) at statutory rates   (87,666)   (72,284)   (65,319)
Reconciliation adjustments:               
Expenses not deductible   (392)   (93)   (323)
Tax loss compensation   -    -    361 
Tax loss accrual   -    -    1,161 
Tax benefits   825    440    - 
Share based payments   (371)   -    - 
Effect of presumed profit of subsidiaries (i)   38,279    28,435    27,812 
                
Other additions (exclusions), net   98    56    (175)
                
Income taxes expenses   (49,227)   (43,446)   (36,483)
Current   (56,770)   (42,666)   (32,360)
Deferred   7,543    (780)   (4,123)
                
Effective rate   19%   20%   19%

 

(i)Brazilian tax law establishes that companies that generate gross revenues of up to R$ 78,000 in the prior fiscal year may calculate income taxes as a percentage of gross revenue, using the presumed profit income tax regime. The Entity's subsidiaries adopted this tax regime and the effect of the presumed profit of subsidiaries represents the difference between the taxation based on this method and the amount that would be due based on the statutory rate applied to the taxable profit of the subsidiaries.

 

19Related parties

 

(a)Key management remuneration

 

The total remuneration (salaries and benefits) of key management personnel, including the Executive Committee, amounted t