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 August, 2019
Commission
File Number: 001-38714
STONECO LTD.
(Exact
name of registrant as specified in its charter)
R. Fidêncio
Ramos, 308, 10th floor—Vila Olímpia
São
Paulo—SP, 04551-010, Brazil
+55 (11)
3004-9680
(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:
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):
☐
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):
☐
STONECO
LTD.
INCORPORATION
BY REFERENCE
This report on Form 6-K shall
be deemed to be incorporated by reference into the registration statement on Form S-8 (Registration Number: 333-230629) of StoneCo
Ltd. and to be a part thereof from the date on which this report is filed, to the extent not superseded by documents or reports
subsequently filed or furnished.
Unaudited
Interim Condensed
Consolidated
Financial Statements
StoneCo
Ltd.
June
30, 2019
StoneCo Ltd.
Unaudited interim condensed consolidated
statement of financial position
As of June 30, 2019 and December 31,
2018
(In thousands of Brazilian Reais)
|
|
Notes
|
|
June 30,
2019
|
|
December 31, 2018
|
Assets
|
|
|
|
|
|
|
Current assets
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
5
|
|
|
160,635
|
|
|
|
297,929
|
|
Short-term investments
|
|
6
|
|
|
2,704,844
|
|
|
|
2,770,589
|
|
Accounts receivable from card issuers
|
|
7
|
|
|
12,518,915
|
|
|
|
9,244,608
|
|
Trade accounts receivable
|
|
|
|
|
52,773
|
|
|
|
44,616
|
|
Recoverable taxes
|
|
|
|
|
90,798
|
|
|
|
56,918
|
|
Prepaid expenses
|
|
|
|
|
22,623
|
|
|
|
15,066
|
|
Derivative financial instruments
|
|
|
|
|
9,053
|
|
|
|
1,195
|
|
Other accounts receivable
|
|
|
|
|
16,813
|
|
|
|
6,860
|
|
|
|
|
|
|
15,576,454
|
|
|
|
12,437,781
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-current assets
|
|
|
|
|
|
|
|
|
|
|
Receivables from related parties
|
|
13
|
|
|
7,916
|
|
|
|
8,095
|
|
Deferred tax assets
|
|
8
|
|
|
261,994
|
|
|
|
262,668
|
|
Other accounts receivable
|
|
|
|
|
10,998
|
|
|
|
8,507
|
|
Investment in associate
|
|
|
|
|
19,161
|
|
|
|
2,237
|
|
Property and equipment
|
|
9
|
|
|
375,782
|
|
|
|
266,273
|
|
Intangible assets
|
|
10
|
|
|
323,404
|
|
|
|
307,657
|
|
|
|
|
|
|
999,255
|
|
|
|
855,437
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
|
|
|
16,575,709
|
|
|
|
13,293,218
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities and equity
|
|
|
|
|
|
|
|
|
|
|
Current liabilities
|
|
|
|
|
|
|
|
|
|
|
Accounts payable to clients
|
|
11
|
|
|
5,796,019
|
|
|
|
4,996,102
|
|
Trade accounts payable
|
|
|
|
|
95,648
|
|
|
|
117,836
|
|
Loans and financing
|
|
12
|
|
|
984,298
|
|
|
|
761,056
|
|
Obligations to FIDC senior quota holders
|
|
12
|
|
|
1,139,831
|
|
|
|
16,646
|
|
Labor and social security liabilities
|
|
|
|
|
105,069
|
|
|
|
96,732
|
|
Taxes payable
|
|
|
|
|
60,826
|
|
|
|
51,569
|
|
Derivative financial instruments
|
|
|
|
|
829
|
|
|
|
586
|
|
Other accounts payable
|
|
|
|
|
23,543
|
|
|
|
14,248
|
|
|
|
|
|
|
8,206,063
|
|
|
|
6,054,775
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-current liabilities
|
|
|
|
|
|
|
|
|
|
|
Loans and financing
|
|
12
|
|
|
268,728
|
|
|
|
1,395
|
|
Obligations to FIDC senior quota holders
|
|
12
|
|
|
2,562,609
|
|
|
|
2,057,925
|
|
Deferred tax liabilities
|
|
8
|
|
|
97,134
|
|
|
|
80,223
|
|
Provision for contingencies
|
|
|
|
|
2,995
|
|
|
|
1,242
|
|
Other accounts payable
|
|
|
|
|
4,722
|
|
|
|
4,667
|
|
|
|
|
|
|
2,936,188
|
|
|
|
2,145,452
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities
|
|
|
|
|
11,142,251
|
|
|
|
8,200,227
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
|
|
14
|
|
|
|
|
|
|
|
|
Issued capital
|
|
|
|
|
62
|
|
|
|
62
|
|
Capital reserve
|
|
|
|
|
5,368,886
|
|
|
|
5,351,873
|
|
Other comprehensive income
|
|
|
|
|
(81,769
|
)
|
|
|
(56,334
|
)
|
Retained earnings (Accumulated losses)
|
|
|
|
|
146,819
|
|
|
|
(202,276
|
)
|
Equity attributable to owners of the parent
|
|
|
|
|
5,433,998
|
|
|
|
5,093,325
|
|
Non-controlling interests
|
|
|
|
|
(540
|
)
|
|
|
(334
|
)
|
Total equity
|
|
|
|
|
5,433,458
|
|
|
|
5,092,991
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and equity
|
|
|
|
|
16,575,709
|
|
|
|
13,293,218
|
|
|
|
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of these unaudited
interim condensed consolidated financial statements.
StoneCo Ltd.
Unaudited interim consolidated statement
of profit and other comprehensive income
For the six months ended June 30,
2019 and 2018
(In thousands of Brazilian Reais, unless
otherwise stated)
|
|
|
|
Six months ended June 30
|
|
Three months ended June 30
|
|
|
Notes
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
|
|
|
|
|
|
|
|
|
|
Net revenue from transaction activities and other services
|
|
|
|
|
346,014
|
|
|
|
204,093
|
|
|
|
177,251
|
|
|
|
113,850
|
|
Net revenue from subscription services and equipment rental
|
|
|
|
|
145,786
|
|
|
|
84,999
|
|
|
|
74,608
|
|
|
|
46,546
|
|
Financial income
|
|
|
|
|
548,633
|
|
|
|
333,062
|
|
|
|
297,239
|
|
|
|
183,515
|
|
Other financial income
|
|
|
|
|
81,532
|
|
|
|
13,574
|
|
|
|
37,094
|
|
|
|
3,789
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenue and income
|
|
16
|
|
|
1,121,965
|
|
|
|
635,728
|
|
|
|
586,192
|
|
|
|
347,700
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of services
|
|
|
|
|
(186,164
|
)
|
|
|
(141,061
|
)
|
|
|
(100,784
|
)
|
|
|
(70,230
|
)
|
Administrative expenses
|
|
|
|
|
(142,141
|
)
|
|
|
(117,366
|
)
|
|
|
(77,381
|
)
|
|
|
(58,447
|
)
|
Selling expenses
|
|
|
|
|
(149,959
|
)
|
|
|
(81,406
|
)
|
|
|
(87,260
|
)
|
|
|
(43,747
|
)
|
Financial expenses, net
|
|
|
|
|
(145,411
|
)
|
|
|
(142,581
|
)
|
|
|
(78,771
|
)
|
|
|
(74,021
|
)
|
Other operating expenses, net
|
|
|
|
|
(43,785
|
)
|
|
|
(20,796
|
)
|
|
|
(32,325
|
)
|
|
|
(15,672
|
)
|
|
|
17
|
|
|
(667,460
|
)
|
|
|
(503,210
|
)
|
|
|
(376,521
|
)
|
|
|
(262,117
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss on investment in associates
|
|
|
|
|
(529
|
)
|
|
|
(378
|
)
|
|
|
(529
|
)
|
|
|
(255
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit (loss) before income taxes
|
|
|
|
|
453,976
|
|
|
|
132,140
|
|
|
|
209,142
|
|
|
|
85,328
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current income tax and social contribution
|
|
8
|
|
|
(74,646
|
)
|
|
|
(49,570
|
)
|
|
|
(1,593
|
)
|
|
|
(23,059
|
)
|
Deferred income tax and social contribution
|
|
8
|
|
|
(30,441
|
)
|
|
|
5,144
|
|
|
|
(35,696
|
)
|
|
|
754
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income for the period
|
|
|
|
|
348,889
|
|
|
|
87,714
|
|
|
|
171,853
|
|
|
|
63,023
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive income that may be reclassified to profit or loss in subsequent periods (net of tax):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts receivable from card issuers at fair value through other comprehensive income
|
|
|
|
|
(25,108
|
)
|
|
|
7,525
|
|
|
|
(16,882
|
)
|
|
|
(582
|
)
|
Other comprehensive income that will not be reclassified to profit or loss in subsequent periods (net of tax):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss on equity instruments designated at fair value through other comprehensive income
|
|
|
|
|
(327
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive income for the period, net of tax
|
|
|
|
|
(25,435
|
)
|
|
|
7,525
|
|
|
|
(16,882
|
)
|
|
|
(582
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total comprehensive income for the period, net of tax
|
|
|
|
|
323,454
|
|
|
|
95,239
|
|
|
|
154,971
|
|
|
|
62,441
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income attributable to:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Owners of the parent
|
|
|
|
|
349,095
|
|
|
|
85,029
|
|
|
|
171,946
|
|
|
|
61,398
|
|
Non-controlling interests
|
|
|
|
|
(206
|
)
|
|
|
2,685
|
|
|
|
(93
|
)
|
|
|
1,624
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total comprehensive income attributable to:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Owners of the parent
|
|
|
|
|
323,660
|
|
|
|
92,312
|
|
|
|
155,064
|
|
|
|
60,841
|
|
Non-controlling interests
|
|
|
|
|
(206
|
)
|
|
|
2,927
|
|
|
|
(93
|
)
|
|
|
1,599
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings per share for the period attributable to owners of the parent
|
|
15
|
|
|
R$ 1.26
|
|
|
|
R$ 0.38
|
|
|
|
R$ 0.62
|
|
|
|
R$ 0.27
|
|
Diluted earnings per share for the period attributable to owners of the parent
|
|
15
|
|
|
R$ 1.24
|
|
|
|
R$ 0.38
|
|
|
|
R$ 0.61
|
|
|
|
R$ 0.27
|
|
The accompanying notes are an integral
part of these unaudited interim condensed consolidated financial statements.
StoneCo Ltd.
Unaudited interim consolidated statement
of changes in equity
For the six months ended June 30,
2019 and 2018
(In thousands of Brazilian Reais)
|
|
|
|
Attributable
to owners of the parent
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital
reserve
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issued
capital
|
|
Additional
paid-in capital
|
|
Transactions
among shareholders
|
|
Other
reserves
|
|
Total
|
|
Other
comprehensive income
|
|
Retained
earnings (Accumulated losses)
|
|
Total
|
|
Non-controlling
interest
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as of January 1, 2018
|
|
|
|
|
46
|
|
|
|
1,190,902
|
|
|
|
(237,517
|
)
|
|
|
14,364
|
|
|
|
967,749
|
|
|
|
(43,063
|
)
|
|
|
(503,508
|
)
|
|
|
421,224
|
|
|
|
14,059
|
|
|
|
435,283
|
|
Capital increase
|
|
|
|
|
-
|
|
|
|
3,240
|
|
|
|
-
|
|
|
|
-
|
|
|
|
3,240
|
|
|
|
-
|
|
|
|
-
|
|
|
|
3,240
|
|
|
|
-
|
|
|
|
3,240
|
|
Reclassification of share-based payments liability
to equity
|
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
199,665
|
|
|
|
199,665
|
|
|
|
-
|
|
|
|
-
|
|
|
|
199,665
|
|
|
|
-
|
|
|
|
199,665
|
|
Net income for the period
|
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
85,029
|
|
|
|
85,029
|
|
|
|
2,685
|
|
|
|
87,714
|
|
Other comprehensive income for the period
|
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
7,283
|
|
|
|
-
|
|
|
|
7,283
|
|
|
|
242
|
|
|
|
7,525
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as of June 30,
2018 (unaudited)
|
|
|
|
|
46
|
|
|
|
1,194,142
|
|
|
|
(237,517
|
)
|
|
|
214,029
|
|
|
|
1,170,654
|
|
|
|
(35,780
|
)
|
|
|
(418,479
|
)
|
|
|
716,441
|
|
|
|
16,986
|
|
|
|
733,427
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as of December 31, 2018
|
|
|
|
|
62
|
|
|
|
5,440,047
|
|
|
|
(223,676
|
)
|
|
|
135,502
|
|
|
|
5,351,873
|
|
|
|
(56,334
|
)
|
|
|
(202,276
|
)
|
|
|
5,093,325
|
|
|
|
(334
|
)
|
|
|
5,092,991
|
|
Share-based payments
|
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
17,013
|
|
|
|
17,013
|
|
|
|
-
|
|
|
|
-
|
|
|
|
17,013
|
|
|
|
-
|
|
|
|
17,013
|
|
Net income for the period
|
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
349,095
|
|
|
|
349,095
|
|
|
|
(206
|
)
|
|
|
348,889
|
|
Other comprehensive income for the period
|
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(25,435
|
)
|
|
|
-
|
|
|
|
(25,435
|
)
|
|
|
-
|
|
|
|
(25,435
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as of June 30,
2019 (unaudited)
|
|
|
|
|
62
|
|
|
|
5,440,047
|
|
|
|
(223,676
|
)
|
|
|
152,515
|
|
|
|
5,368,886
|
|
|
|
(81,769
|
)
|
|
|
146,819
|
|
|
|
5,433,998
|
|
|
|
(540
|
)
|
|
|
5,433,458
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral
part of these unaudited interim condensed consolidated financial statements.
StoneCo Ltd.
Unaudited interim consolidated statement
of cash flows
For the six months ended June 30,
2019 and 2018
(In thousands of Brazilian Reais)
|
|
|
|
Six months ended June 30
|
|
|
Notes
|
|
2019
|
|
2018
|
Operating activities
|
|
|
|
|
|
|
Net income for the period
|
|
|
|
|
348,889
|
|
|
|
87,714
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjustments to reconcile net income (loss) for the period to net cash flows:
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization
|
|
17
|
|
|
63,849
|
|
|
|
40,025
|
|
Deferred income tax expenses
|
|
8
|
|
|
30,441
|
|
|
|
(5,144
|
)
|
Loss on investment in associates
|
|
|
|
|
529
|
|
|
|
378
|
|
Other financial costs and foreign exchange, net
|
|
|
|
|
27,281
|
|
|
|
72,012
|
|
Provision for contingencies
|
|
|
|
|
1,666
|
|
|
|
299
|
|
Share-based payments expense
|
|
|
|
|
17,013
|
|
|
|
-
|
|
Allowance for doubtful accounts
|
|
|
|
|
20,217
|
|
|
|
8,982
|
|
Loss on disposal of property, equipment and intangible assets
|
|
9/10
|
|
|
2,880
|
|
|
|
18,838
|
|
Onerous contract
|
|
|
|
|
-
|
|
|
|
(415
|
)
|
Fair value adjustment in derivatives
|
|
|
|
|
(7,615
|
)
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
Working capital adjustments:
|
|
|
|
|
|
|
|
|
|
|
Accounts receivable from card issuers
|
|
|
|
|
(3,302,774
|
)
|
|
|
(683,375
|
)
|
Receivables from related parties
|
|
|
|
|
2,963
|
|
|
|
(1,027
|
)
|
Recoverable taxes
|
|
|
|
|
(59,377
|
)
|
|
|
(59,111
|
)
|
Prepaid expenses
|
|
|
|
|
(7,557
|
)
|
|
|
(5,941
|
)
|
Trade and other accounts receivable
|
|
|
|
|
(40,093
|
)
|
|
|
(23,053
|
)
|
Accounts payable to clients
|
|
|
|
|
241,412
|
|
|
|
(32,071
|
)
|
Taxes payable
|
|
|
|
|
127,655
|
|
|
|
51,211
|
|
Labor and social security liabilities
|
|
|
|
|
8,337
|
|
|
|
27,292
|
|
Provision for contingencies
|
|
|
|
|
87
|
|
|
|
(10
|
)
|
Other Liabilities
|
|
|
|
|
(22,610
|
)
|
|
|
6,548
|
|
Interest paid
|
|
12
|
|
|
(86,626
|
)
|
|
|
(75,611
|
)
|
Interest income received, net of costs
|
|
|
|
|
547,853
|
|
|
|
217,290
|
|
Income tax paid
|
|
|
|
|
(92,901
|
)
|
|
|
(17,835
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Net cash used in operating activities
|
|
|
|
|
(2,178,481
|
)
|
|
|
(373,004
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Investing activities
|
|
|
|
|
|
|
|
|
|
|
Purchases of property and equipment
|
|
9
|
|
|
(117,004
|
)
|
|
|
(92,476
|
)
|
Purchases and development of intangible assets
|
|
10
|
|
|
(29,684
|
)
|
|
|
(24,280
|
)
|
Proceeds from (acquisition of) short-term investments, net
|
|
|
|
|
138,445
|
|
|
|
(7,351
|
)
|
Proceeds from the disposal of non-current assets
|
|
|
|
|
871
|
|
|
|
1,108
|
|
Acquisition of interest in associates
|
|
|
|
|
(7,033
|
)
|
|
|
(386
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Net cash (used in) provided by investing activities
|
|
|
|
|
(14,405
|
)
|
|
|
(123,385
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Financing activities
|
|
|
|
|
|
|
|
|
|
|
Proceeds from borrowings
|
|
12
|
|
|
450.000
|
|
|
|
-
|
|
Payment of borrowings
|
|
12
|
|
|
(1,386
|
)
|
|
|
(526
|
)
|
Proceeds from FIDC senior quota holders
|
|
12
|
|
|
1,620,000
|
|
|
|
-
|
|
Payment of leases
|
|
12
|
|
|
(11,365
|
)
|
|
|
(5,333
|
)
|
Capital increase, net of transaction costs
|
|
14
|
|
|
-
|
|
|
|
3,240
|
|
Acquisition of non-controlling interests
|
|
|
|
|
(455
|
)
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash used in financing activities
|
|
|
|
|
2,056,794
|
|
|
|
(2,619
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Effect of foreign exchange on cash and cash equivalents
|
|
|
|
|
(1,202
|
)
|
|
|
(50
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Change in cash and cash equivalents
|
|
|
|
|
(137,294
|
)
|
|
|
(499,058
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents at beginning of period
|
|
5
|
|
|
297,929
|
|
|
|
641,952
|
|
Cash and cash equivalents at end of period
|
|
5
|
|
|
160,635
|
|
|
|
142,894
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in cash and cash equivalents
|
|
|
|
|
(137,294
|
)
|
|
|
(499,058
|
)
|
The accompanying notes are an integral part of these unaudited
interim condensed consolidated financial statements.
StoneCo Ltd.
Notes to unaudited interim condensed consolidated
financial statements
June 30, 2019
(In thousands of Brazilian Reais, unless
otherwise stated)
StoneCo Ltd. (the “Company”),
formerly known as DLP Payments Holdings Ltd., is a Cayman Islands exempted company with limited liability, incorporated on March 11,
2014. The registered office of the Company is Harbour Place, 103 South Church Street in George Town, Grand Cayman. The Company’s
principal executive office is located in the city of São Paulo, Brazil.
The Company is controlled by
HR Holdings, LLC, which owns 61.44% of Class B common shares, whose ultimate parent is an investment fund, VCK Investment Fund
Limited SAC, owned by the co-founding individuals.
The Company and its subsidiaries
(collectively, the “Group”) are principally engaged in providing financial technology solutions to clients and integrated
partners to conduct electronic commerce seamlessly across in-store, online, and mobile channels, which include integration to cloud-based
technology platforms, offering services for acceptance of various forms of electronic payment, automation of business processes
at the point-of-sale and working capital solutions.
The Group controls three
investment funds known as Fundo de Investimento em Direitos Creditórios (“FIDC”): (i) TAPSO FIDC
(“FIDC TAPSO”) which provides working capital solution to clients, (ii) FIDC Bancos Emissores de Cartão de
Crédito — Stone (“FIDC AR 1”) and (iii) FIDC Bancos Emissores de Cartão de
Crédito — Stone II (“FIDC AR 2”) used as funding sources to raise capital. A FIDC is legally an
investment fund authorized by the Brazilian Monetary Council, and specifically designed as investment vehicle for investing
in Brazilian credit receivables, such as credit card receivable.
The interim condensed consolidated
financial statements of the Group for the six months ended June 30, 2019 and 2018 were approved at the Board of Directors’
meeting on August 13, 2019.
|
1.1.
|
Initial Public Offering and Follow On
|
The Company completed its Initial
Public Offering (“IPO”) in October 2018, and in additional to simultaneous transaction, received net proceeds of R$
4,299,695, with R$ 75,774 of offering expenses.
On April 1, 2019 the Company
filed a follow-on prospectus
declared effective
by the Securities and Exchange Commission
(”SEC”) On April 2, 2019 in which selling shareholders offered 19,500,000 Class A common shares of the Company. The
Company did not offer any Class A common shares and did not receive any proceeds from the sale of this shares.
|
1.2.
|
Seasonality of operations
|
The Group’s revenues
are subject to seasonal fluctuations as a result of consumer spending patterns. Historically, revenues have been strongest during
the last quarter of the year as a result of higher sales during the Brazilian holiday season. This is due to the increase in the
number and amount of electronic payment transactions related to seasonal retail events. Adverse events that occur during these
months could have a disproportionate effect on the results of operations for the entire fiscal year. As a result of seasonal fluctuations
caused by these and other factors, results for an interim period may not be indicative of those expected for the full fiscal year.
The
interim condensed consolidated financial statements of the Group include the following subsidiaries and structured entities:
|
|
|
|
|
|
% Group’s equity interest
|
Entity name
|
|
Country of
incorporation
|
|
Principal activities
|
|
June 30,
2019
|
|
December 31,
2018
|
|
|
|
|
|
|
|
|
|
DLP Capital LLC (“DLP Capital”)
|
|
USA
|
|
Holding company
|
|
100.00
|
|
100.00
|
DLPPar Participações S.A. (“DLP Par”)
|
|
Brazil
|
|
Employee trust
|
|
100.00
|
|
100.00
|
MPB Capital LLC (“MPB Capital”)
|
|
USA
|
|
Investment company
|
|
100.00
|
|
100.00
|
StoneCo Brasil Participações S.A. (“StoneCo Brasil”)
|
|
Brazil
|
|
Holding company
|
|
100.00
|
|
100.00
|
Stone Pagamentos S.A. (“Stone”)
|
|
Brazil
|
|
Merchant acquiring
|
|
100.00
|
|
100.00
|
MNLT Soluções de Pagamento S.A. (“MNLT”)
|
|
Brazil
|
|
Merchant acquiring
|
|
100.00
|
|
100.00
|
Pagar.me Pagamentos S.A. (“Pagar.me”)
|
|
Brazil
|
|
Merchant acquiring
|
|
100.00
|
|
100.00
|
Buy4 Processamento de Pagamentos S.A. (“Buy4”)
|
|
Brazil
|
|
Processing card transactions
|
|
100.00
|
|
99.99
|
Buy4 Sub LLC (“Buy4 LLC”)
|
|
USA
|
|
Cloud store card transactions
|
|
100.00
|
|
99.99
|
Cappta S.A. (“Cappta”)
|
|
Brazil
|
|
Electronic fund transfer
|
|
61.79
|
|
61.79
|
Mundipagg Tecnologia em Pagamentos S.A. (“Mundipagg”)
|
|
Brazil
|
|
Technology services
|
|
99.70
|
|
99.70
|
Equals S.A. (“Equals”)
|
|
Brazil
|
|
Reconciliation services
|
|
100.00
|
|
100.00
|
Stone Franchising Ltda. (“Stone Franchising”)
|
|
Brazil
|
|
Franchising management
|
|
99.99
|
|
99.99
|
TAG Tecnologia para o Sistema Financeiro S.A. (“TAG”)
|
|
Brazil
|
|
Financial assets register
|
|
99.98
|
|
99.98
|
FIDC TAPSO
|
|
Brazil
|
|
Receivables investment fund
|
|
100.00
|
|
100.00
|
FIDC AR 1
|
|
Brazil
|
|
Receivables investment fund
|
|
100.00
|
|
100.00
|
FIDC AR 2
|
|
Brazil
|
|
Receivables investment fund
|
|
100.00
|
|
100.00
|
On June 21, 2018, the Group
acquired a 27.06% interest in Linked Gourmet Soluções para Restaurantes S.A. (“Linked”) for R$ 2,366
payable by December 2018. On April, 2019, the Group acquired additional 9,38% interest to 36,44% through capital increase of R$
2,000 in the company payable until December 2019. Linked is an unlisted company based in São Paulo, Brazil, that develops
software and services for the food service market. The Group also holds an option to acquire an additional interest, exercisable
in the period from 2 to 3 years from the date of the initial acquisition, which would allow the Group to obtain control of Linked.
Through this acquisition, the Group expects to obtain synergies in servicing its clients.
On February 6, 2019, the Group
acquired a 25.0% interest in Collact Serviços Digitais Ltda. (“Collact”), a private company based in São
Paulo, Brazil, that develops customer relationship management (“CRM”) software for customer engagement, focused mainly
in the food service segment, with which the Company expects to obtain synergies in its services to clients. The Group will pay
R$ 1,667 until April 2020 for the acquisition of such interest. The Group also holds an option to acquire an additional interest
in the period from 2 to 3 years from the date of the initial acquisition, which will allow the Group to acquire an additional 25%
interest in Collact.
On June 4, 2019, the Group
acquired a 33,33% interest in VHSYS Sistema de Gestão, S.A. (“VHSYS”) for R$ 13,785 payable until January 2020.
The Group also holds an option to acquire an additional interest in the period from 1 to 2 years from the date of the initial acquisition.
VHSYS is an omni-channel, cloud-based, API driven, POS and ERP platform built to serve an array of service and retail businesses.
The self-service platform consists of over 40 applications, accessible a la carte, such as order and sales management, invoicing,
dynamic inventory management, cash and payments management, CRM, mobile messaging, along with marketplace, logistics, and e-commerce
integrations, among others.
|
3.
|
Basis of preparation and changes to the Group’s accounting policies
|
|
3.1.
|
Basis of preparation
|
The interim condensed consolidated
financial statements for the six months ended June 30, 2019 have been prepared in accordance with IAS 34 –
Interim
Financial Reporting
as issued by the International Accounting Standards Board (“IASB”).
The interim condensed consolidated
financial statements do not include all the information and disclosures required in the annual financial statements and should
be read in conjunction with the Group’s annual consolidated financial statements as of December 31, 2018.
The accounting policies adopted
are consistent with those of the previous financial year and corresponding interim reporting period, except for the adoption of
new and amended standards as set out below.
The interim condensed consolidated
financial statements are presented in Brazilian reais (“R$”), and all values are rounded to the nearest thousand (R$
000), except when otherwise indicated.
|
3.2.
|
New and amended standards and interpretations
|
|
(i)
|
New and amended standards and interpretations adopted
|
The accounting policies adopted
in the preparation of the interim condensed consolidated financial statements are consistent with those followed in the preparation
of the Group’s annual consolidated financial statements for the year ended December 31, 2018, except for the adoption
of new standards effective as of January 1, 2019.
The Group has adopted IFRS
16 – Leases from January 1, 2019, applying the simplified transition approach, and has not restated comparatives for the
2018 reporting period, as permitted under the specific transitional provisions in the standard. The reclassifications and the adjustments
arising from the new leasing rules are therefore recognized in the opening balance sheet on January 1, 2019.
The Group elected to use the
transition practical expedient allowing the standard to be applied only to contracts that were previously identified as leases
applying IAS 17 – Leases and IFRIC 4 - Determining Whether an Arrangement Contains a Lease at the date of initial application.
The Group also elected to use the recognition exemptions for lease contracts that, at the commencement date, have a lease term
of 12 months or less and do not contain a purchase option (‘short-term leases’), and lease contracts for which the
underlying asset is of low value (‘low-value assets’).
On adoption of IFRS 16, the
group recognized lease liabilities in relation to leases which had previously been classified as ‘operating leases’
under the principles of IAS 17. These liabilities were measured at the present value of the remaining lease payments, discounted
using the lessee’s incremental borrowing rate as of January 1, 2019. The weighted average lessee’s incremental borrowing
rate applied to the lease liabilities on January 1, 2019 was 6.8% per year.
Impact of adoption on the
statement of financial position (increase/(decrease)) as of January 1, 2019 is as follows:
|
|
2019
|
Assets
|
|
|
Property and equipment (Offices)
|
|
|
35,213
|
|
Property and equipment (Vehicles)
|
|
|
5,722
|
|
Total assets
|
|
|
40,935
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
Loans and financing
|
|
|
40,935
|
|
Deferred tax liabilities
|
|
|
-
|
|
Total liabilities
|
|
|
40,935
|
|
Impact of adoption on the
statement of profit or loss (increase/(decrease)) for the six and three months ended June 30, 2019 is as follows:
|
|
Six months
|
|
Three months
|
Depreciation expense (included in Cost of services)
|
|
|
(233
|
)
|
|
|
(117
|
)
|
Depreciation expense (included in Administrative expenses)
|
|
|
(5,485
|
)
|
|
|
(2,831
|
)
|
Depreciation expense (included in Selling expenses)
|
|
|
(3,896
|
)
|
|
|
(2,136
|
)
|
Financial expenses, net
|
|
|
(1,331
|
)
|
|
|
(664
|
)
|
Deferred income tax and social contribution
|
|
|
210
|
|
|
|
103
|
|
Rent expense (included in Cost of services and Administrative expenses)
|
|
|
10,328
|
|
|
|
5,446
|
|
Profit for the period
|
|
|
(407
|
)
|
|
|
(199
|
)
|
Attributable to:
|
|
|
|
|
|
|
|
|
Equity holders of the parent
|
|
|
(407
|
)
|
|
|
(199
|
)
|
Non-controlling interests
|
|
|
-
|
|
|
|
-
|
|
From January 1, 2019, the payments
of leases (principal and interest) were classified as financing activities, except short-term lease and lease of low-value assets
(classified in operating activity), in accordance with IFRS 16 and IAS 6 – Statement of Cash Flows, reducing the cash flows
of this activity. The impact of adoption on the statement of cash flows (increase/(decrease)) for the six months ended June 30,
2019 is as follows:
|
|
June 30,
2019
|
Net cash flows from operating activities
|
|
|
10,735
|
|
Net cash flows from financing activities
|
|
|
(10,328
|
)
|
There is no impact on other
comprehensive income and the basic and diluted EPS.
a) Nature of the effect of
adoption of IFRS 16
The Group has lease contracts
for various items of Offices, Pin Pads & POS, software, vehicles and other equipment.
Before the adoption of IFRS
16, the Group classified each of its leases (as lessee) at the inception date as either a finance lease or an operating lease.
A lease was classified as a finance lease if it transferred substantially all the risks and rewards incidental to ownership of
the leased asset to the Group; otherwise it was classified as an operating lease. Finance leases were capitalized at the commencement
of the lease at the inception date fair value of the leased property or, if lower, at the present value of the minimum lease payments.
Lease payments were apportioned between interest (recognized as finance costs) and reduction of the lease liability. In an operating
lease, the leased property was not capitalized and the lease payments were recognized as rent expense in the statement of profit
or loss on a straight-line basis over the lease term.
Upon adoption of IFRS 16, the
Group applied a single recognition and measurement approach for all leases that it is the lessee, except for short-term leases
and leases of low-value assets. The Group recognized lease liabilities to make lease payments and right-of-use assets representing
the right to use the underlying assets.
b) Summary of new accounting
policies
Set out below are the new accounting
policies of the Group upon adoption of IFRS 16:
• Right-of-use assets
The Group recognizes right-of-use
assets at the commencement date of the lease. Right-of-use assets are measured at cost, less any accumulated depreciation and impairment
losses, and adjusted for any remeasurement of lease liabilities. The cost of right-of-use assets includes the amount of lease liabilities
recognized, initial direct costs incurred, and lease payments made at or before the commencement date less any lease incentives
received. Unless the Group is reasonably certain to obtain ownership of the leased asset at the end of the lease term, the recognized
right-of-use assets are depreciated on a straight-line basis over the shorter of its estimated useful life and the lease term.
Right-of-use assets are subject to impairment. The Group has also reclassified for better presentation the assets under finance
leases according with IAS 17 previously classified in each of the classes mentioned on item a).
• Lease liabilities
At the commencement date of
the lease, the Group recognizes lease liabilities measured at the present value of lease payments to be made over the lease term.
The lease payments include fixed payments (including in-substance fixed payments) less any lease incentives receivable and amounts
expected to be paid under residual value guarantees. The lease payments also include the exercise price of a purchase option reasonably
certain to be exercised by the Group and payments of penalties for terminating a lease, if the lease term reflects the Group exercising
the option to terminate. The variable lease payments are recognized as expense in the period on which the event or condition that
triggers the payment occurs.
In calculating the present
value of lease payments, the Group uses the incremental borrowing rate at the lease commencement date if the interest rate implicit
in the lease is not readily determinable. After the commencement date, the amount of lease liabilities is increased to reflect
the accretion of interest and reduced for the lease payments made. In addition, the carrying amount of lease liabilities is remeasured
if there is a modification, a change in the lease term, a change in the in-substance fixed lease payments or a change in the assessment
to purchase the underlying asset.
• Short-term leases and
leases of low-value assets
The Group applies the short-term
lease recognition exemption to its short-term leases of Offices, Pin Pads & POS, software, vehicles and equipment (i.e., those
leases that have a lease term of 12 months or less from the commencement date and do not contain a purchase option). It also applies
the lease of low-value assets recognition exemption to leases of office equipment that are considered of low value (i.e., below
US$ 5,000). Lease payments on short-term leases and leases of low-value assets are recognized as expense on a straight-line basis
over the lease term.
c) Amounts recognized in the
statement of financial position and profit or loss
Set out below, are the carrying
amounts of the Group’s right-of-use assets and lease liabilities and the movements during the period:
|
|
Right-of-use assets
|
|
|
|
|
Offices
|
|
Vehicles
|
|
Total
|
|
Lease liabilities
|
As of December 31, 2018
|
|
-
|
|
-
|
|
-
|
|
-
|
Initial adoption of IFRS 16
|
|
|
35,213
|
|
|
|
5,722
|
|
|
|
40,935
|
|
|
|
40,935
|
|
As of January 1, 2019
|
|
|
35,213
|
|
|
|
5,722
|
|
|
|
40,935
|
|
|
|
40,935
|
|
Additions
|
|
|
3,313
|
|
|
|
2,010
|
|
|
|
5,323
|
|
|
|
5,323
|
|
Depreciation expense
|
|
|
(7,228
|
)
|
|
|
(2,386
|
)
|
|
|
(9,614
|
)
|
|
|
-
|
|
Interest expense
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1,331
|
|
Payments
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(10,328
|
)
|
As of June 30, 2019
|
|
|
31,298
|
|
|
|
5,346
|
|
|
|
36,644
|
|
|
|
37,261
|
|
The Group has not early adopted
any other standard, interpretation or amendment that has been issued but is not yet effective.
Several other amendments and
interpretations were applied for the first time in 2019, but do not have an impact on the interim condensed consolidated financial
statements of the Group.
The preparation of interim
condensed financial statements of the Company and its subsidiaries requires management to make judgments and estimates and to adopt
assumptions that affect the amounts presented referring to revenues, expenses, assets and liabilities at the financial statement
date. Actual results may differ from these estimates.
In preparing these interim
condensed consolidated financial statements, the significant judgements and estimates made by management in applying the Group’s
accounting policies and the key sources of estimation uncertainty were the same as those that are set the consolidated financial
statements for the year ended December 31, 2018 and no retrospective adjustments were made.
In
reviewing the operational performance of the Group and allocating resources, the chief operating decision maker of the Group (“CODM”),
who is the Group’s Chief Executive Officer (“CEO”) and the Board of Directors (“BoD”), reviews selected
items of the statement of profit or loss and other comprehensive income.
The
CODM considers the whole Group as a single operating and reportable segment, monitoring operations, making decisions on fund allocation
and evaluating performance based on a single operating segment. The CODM reviews relevant financial data on a combined basis for
all subsidiaries and associates.
The
Group’s revenue, results and assets for this one reportable segment can be determined by reference to the interim condensed
consolidated statement of profit or loss and other comprehensive income and interim condensed consolidated statement of financial
position.
|
5.
|
Cash and cash equivalents
|
|
|
June 30,
2019
|
|
December 31,
2018
|
|
|
|
|
|
Short-term bank deposits—denominated in R$
|
|
|
139,047
|
|
|
|
235,488
|
|
Short-term bank deposits—denominated in US$
|
|
|
21,588
|
|
|
|
62,441
|
|
|
|
|
160,635
|
|
|
|
297,929
|
|
Cash
and cash equivalents in the statement of financial position comprise cash at banks and on hand and short-term deposits with a
maturity of three months or less, which are subject to an insignificant risk of changes in value, readily convertible into cash.
|
6.
|
Short-term investments
|
|
|
June 30,
2019
|
|
December 31,
2018
|
Listed securities (a)
|
|
|
|
|
Bonds
|
|
|
2,687,380
|
|
|
|
2,752,743
|
|
Unlisted securities (b)
|
|
|
|
|
|
|
|
|
Investment funds
|
|
|
9,222
|
|
|
|
9,328
|
|
Equity securities
|
|
|
8,242
|
|
|
|
8,518
|
|
|
|
|
2,704,844
|
|
|
|
2,770,589
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
Listed securities are comprised of public and private
bonds with maturities greater than three months, indexed to fixed and floating rates. As of June 30, 2019, listed securities are
mainly indexed to 100% CDI rate (2018 – 95% CDI rate).
|
|
(b)
|
Unlisted securities are comprised of foreign investment
fund shares, and ordinary shares in entities that are not traded in an active market and whose fair value is determined using
valuation techniques. The Group uses its judgment to select a method and makes assumptions that are mainly based on market conditions
existing at the end of each reporting period. The Group elected to recognize the changes in fair value of the existing equity
instruments through OCI.
|
Short-term investments are
classified as financial assets measured at fair value through profit or loss, unless otherwise elected and indicated, and as Level 1
and 2 under the fair value level hierarchy, as described in Note 19. Short-term investments are denominated in Brazilian Reais,
U.S. dollars and EURO.
|
7.
|
Accounts receivable from card issuers
|
|
|
June 30,
2019
|
|
December 31,
2018
|
|
|
|
|
|
Accounts receivable from card issuers (a)
|
|
|
12,442,270
|
|
|
|
9,195,466
|
|
Accounts receivable from other acquirers (b)
|
|
|
83,195
|
|
|
|
54,968
|
|
Allowance for expected credit losses
|
|
|
(6,550
|
)
|
|
|
(5,826
|
)
|
|
|
|
12,518,915
|
|
|
|
9,244,608
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
Accounts receivable from card issuers, net of interchange
fees, as a result of processing transactions with clients.
|
|
(b)
|
Accounts receivable from other acquirers related to
PSP (Payment Service Provider) transactions.
|
As of June 30, 2019,
R$ 4,076,643 of the total Accounts receivable from card issuers are held by FIDC AR 1 and FIDC AR 2 (December 31, 2018
— R$ 2,166,132). Accounts receivable held by FIDCs guarantee the obligations to FIDC senior quota holders.
Income taxes are comprised
of taxation over operations in Brazil, related to Corporate Income Tax (“IRPJ”) and Social Contribution on Net Profit
(“CSLL”). According to Brazilian tax law, income taxes and social contribution are assessed and paid by legal entity
and not on a consolidated basis.
(a)
Reconciliation of
income tax expense
The following is a reconciliation
of income tax expense to profit for the period, calculated by applying the combined Brazilian statutory rates at 34% for the six
months ended June 30, 2019 and 2018:
|
|
Six months ended June 30
|
|
Three months ended June 30
|
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
|
|
|
|
|
|
|
|
Profit before income taxes
|
|
|
453,976
|
|
|
|
132,140
|
|
|
|
209,142
|
|
|
|
85,327
|
|
Brazilian statutory rate
|
|
|
34
|
%
|
|
|
34
|
%
|
|
|
34
|
%
|
|
|
34
|
%
|
Tax (expense) at the statutory rate
|
|
|
(154,352
|
)
|
|
|
(44,927
|
)
|
|
|
(71,108
|
)
|
|
|
(29,011
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additions (exclusions):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gain (loss) from entities not subject to the payment of income taxes
|
|
|
20,838
|
|
|
|
(3,674
|
)
|
|
|
8,211
|
|
|
|
1,925
|
|
Other permanent differences
|
|
|
7,075
|
|
|
|
(501
|
)
|
|
|
5,702
|
|
|
|
305
|
|
Equity pickup on associates
|
|
|
(180
|
)
|
|
|
(129
|
)
|
|
|
(180
|
)
|
|
|
(171
|
)
|
Unrecorded deferred taxes
|
|
|
(477
|
)
|
|
|
475
|
|
|
|
(191
|
)
|
|
|
800
|
|
Use of tax losses previously unrecorded
|
|
|
5,585
|
|
|
|
-
|
|
|
|
5,585
|
|
|
|
(146
|
)
|
Previously unrecognized deferred income tax
|
|
|
653
|
|
|
|
234
|
|
|
|
653
|
|
|
|
234
|
|
Tax incentives
|
|
|
4,124
|
|
|
|
829
|
|
|
|
2,392
|
|
|
|
492
|
|
Interest on capital
|
|
|
6,994
|
|
|
|
-
|
|
|
|
6,994
|
|
|
|
-
|
|
Research and development tax benefit
|
|
|
4,653
|
|
|
|
3,267
|
|
|
|
4,653
|
|
|
|
3,267
|
|
Total income tax and social contribution (expense)
|
|
|
(105,087
|
)
|
|
|
(44,426
|
)
|
|
|
(37,289
|
)
|
|
|
(22,305
|
)
|
Effective tax rate
|
|
|
23
|
%
|
|
|
34
|
%
|
|
|
18
|
%
|
|
|
26
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current income tax and social contribution
|
|
|
(74,646
|
)
|
|
|
(49,570
|
)
|
|
|
(1,593
|
)
|
|
|
(23,059
|
)
|
Deferred income tax and social contribution
|
|
|
(30,441
|
)
|
|
|
5,144
|
|
|
|
(35,696
|
)
|
|
|
754
|
|
Total income tax and social contribution (expense)
|
|
|
(105,087
|
)
|
|
|
(44,426
|
)
|
|
|
(37,289
|
)
|
|
|
(22,305
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(b)
Deferred income taxes
Net
changes in deferred income taxes relate to the following:
|
|
2019
|
Begining balance
|
|
|
182,445
|
|
Losses available for offsetting against future taxable income
|
|
|
(23,842
|
)
|
Tax credit carryforward
|
|
|
(923
|
)
|
Temporary differences under FIDC
|
|
|
(17,300
|
)
|
Amortization of intangible assets acquired in business combinations
|
|
|
2,781
|
|
Changes in FVOCI
|
|
|
12,856
|
|
Share based compensation
|
|
|
10,166
|
|
Technological innovation benefit
|
|
|
(2,724
|
)
|
Others
|
|
|
1,401
|
|
Final balance
|
|
|
164,860
|
|
|
|
|
|
|
Deferred tax assets on tax losses
|
|
|
150,538
|
|
Deferred tax assets on temporary differences (a)
|
|
|
111,456
|
|
Deferred tax liabilities (b)
|
|
|
(97,134
|
)
|
Deferred tax, net
|
|
|
164,860
|
|
(a)
The main temporary differences are the tax credit on assets measured at FVOCI and under expenses carryforward.
(b)
The main deferred tax liabilities are under intangible assets acquired in business combination and FIDC.
Under
Brazilian tax law, temporary differences and tax losses can be carried forward indefinitely. However, the loss carryforward can
only be used to offset up to 30% of taxable profit for the year.
Unrecognized
deferred taxes
The
Group has accumulated tax loss carryforwards in StoneCo Brasil of R$ 19 (December 31, 2018 – R$ 3,397) for which a
deferred tax asset was not recognized, and in the Group’s other subsidiaries of R$ 1,587 (December 31, 2018 – R$ 2,042)
that are
available
indefinitely for offsetting against future taxable profits of the companies in which the losses arose. Deferred tax assets have
not been recognized with respect of these losses as they cannot be used to offset taxable profits between subsidiaries of the
Group, and there is no other evidence of recoverability in the near future.
|
9.
|
Property and equipment
|
|
|
Balance at 31/12/2018
|
|
Right-of-use assets
(a)
|
|
Additions
|
|
Disposals
|
|
Balance at 30/06/2019
|
|
|
|
|
|
|
|
|
|
|
|
Cost
|
|
|
372,601
|
|
|
|
46,258
|
|
|
|
116,914
|
|
|
|
(6,135
|
)
|
|
|
529,638
|
|
Depreciation
|
|
|
(106,328
|
)
|
|
|
(9,614
|
)
|
|
|
(40,674
|
)
|
|
|
2,760
|
|
|
|
(153,856
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property and equipment, net
|
|
|
266,273
|
|
|
|
36,644
|
|
|
|
76,240
|
|
|
|
(3,375
|
)
|
|
|
375,782
|
|
(a) Refers to IFRS 16 adoption.
More details on Note 3.2.
Assets with a net book value
of R$ 3,375 and R$ 1,744 were disposed off by the Group during the six and three months ended June 30, 2019, for proceeds of R$
871 and R$ 640 resulting in a net loss on disposal of R$ 2,504 and R$ 1,104, respectively.
|
i)
|
Depreciation and amortization charges
|
Depreciation and amortization
expense has been charged in the following line items of the consolidated statement of profit or loss:
|
|
Six months ended June 30
|
|
Three months ended June 30
|
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
|
|
|
|
|
|
|
|
Cost of services
|
|
|
34,340
|
|
|
|
22,526
|
|
|
|
18,022
|
|
|
|
13,069
|
|
General and administrative expenses
|
|
|
29,509
|
|
|
|
17,499
|
|
|
|
16,104
|
|
|
|
9,654
|
|
Depreciation and Amortization charges
|
|
|
63,849
|
|
|
|
40,025
|
|
|
|
34,126
|
|
|
|
22,723
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation charge
|
|
|
50,288
|
|
|
|
27,912
|
|
|
|
27,549
|
|
|
|
16,021
|
|
Amortization charge (Note 10)
|
|
|
13,561
|
|
|
|
12,113
|
|
|
|
6,577
|
|
|
|
6,702
|
|
Depreciation and Amortization charges
|
|
|
63,849
|
|
|
|
40,025
|
|
|
|
34,126
|
|
|
|
22,723
|
|
|
|
Balance at 31/12/2018
|
|
Additions
|
|
Disposals
|
|
Balance at 30/06/2019
|
|
|
|
|
|
|
|
|
|
Cost
|
|
|
381,779
|
|
|
|
29,684
|
|
|
|
(14,614
|
)
|
|
|
396,849
|
|
Amortization
|
|
|
(74,122
|
)
|
|
|
(13,561
|
)
|
|
|
14,238
|
|
|
|
(73,445
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Intangible assets, net
|
|
|
307,657
|
|
|
|
16,123
|
|
|
|
(376
|
)
|
|
|
323,404
|
|
Impairment of intangible
assets
As of June 30, 2019, there
were no indicators of impairment of finite-life intangible assets.
The Group performs its goodwill
impairment testing at the Group’s single CGU level, which is also a single operating and reportable segment.
The Group performed its annual
impairment test in December 2018, concluding that there was no need to recognize impairment losses on the carrying value of goodwill
and intangible assets with indefinite lives. The Group’s impairment tests are based on value-in-use calculations. The key
assumptions used to determine the recoverable amount for the cash generating unit were disclosed in the annual consolidated financial
statements for the year ended December 31, 2018.
As of June 30, 2019, there
were no indicators of a potential impairment of goodwill. Additionally, there are no significant changes to the assumptions in
the annual consolidated financial statements for the year ended December 31, 2018.
|
11.
|
Accounts payable to clients
|
Accounts payable to clients
represents amounts due to accredited clients related to credit and debit card transactions, net of interchange fees retained by
card issuers and assessment fees paid to payment scheme networks as well as the Group’s net merchant discount rate fees which
are collected by the Group as an agent.
As of June 30, 2019, accounts
payable to clients was R$ 5,796,019 (December 31, 2018 – 4,996,102).
|
|
Balance at December 31, 2018
|
|
Funding
|
|
Payment
|
|
Interest
|
|
Balance at
June 30,
2019
|
|
|
|
|
|
|
|
|
|
|
|
Obligations to FIDC AR senior quota holders (a)
|
|
|
2,064,333
|
|
|
|
1,620,000
|
|
|
|
(67,868
|
)
|
|
|
75,740
|
|
|
|
3,692,205
|
|
Obligations to FIDC TAPSO senior quota holders
|
|
|
10,238
|
|
|
|
-
|
|
|
|
(367
|
)
|
|
|
364
|
|
|
|
10,235
|
|
Leases (b)
|
|
|
3,674
|
|
|
|
46,258
|
|
|
|
(11,365
|
)
|
|
|
1,686
|
|
|
|
40,253
|
|
Bank borrowings (c)
|
|
|
750
|
|
|
|
200,000
|
|
|
|
(651
|
)
|
|
|
292
|
|
|
|
200,391
|
|
Debentures (d)
|
|
|
-
|
|
|
|
250,000
|
|
|
|
(922
|
)
|
|
|
127
|
|
|
|
249,205
|
|
Loans with private entities
|
|
|
758,027
|
|
|
|
-
|
|
|
|
(18,204
|
)
|
|
|
23,354
|
|
|
|
763,177
|
|
Total
|
|
|
2,837,022
|
|
|
|
2,116,258
|
|
|
|
(99,377
|
)
|
|
|
101,563
|
|
|
|
4,955,466
|
|
Current
|
|
|
777,702
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,124,129
|
|
Non-current
|
|
|
2,059,320
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,831,337
|
|
|
(a)
|
Includes third series of senior quotas for FIDC AR
II issued in June 2019 for 24 months
|
|
(b)
|
Includes IFRS 16 R$ 40,935 initial impact (see Note
3.2) and R$ 5,323 for the period of six months ended in June 30, 2019
|
|
(c)
|
On June 21, 2019 a Cédula de Crédito
Bancário (“CCB”), one type of bank borrowing, was contracted in the amount of R$ 200,000 maturing in July,
2019
|
|
(d)
|
On June 12, 2019 the Company approved the issuance
of simple, secured and non-convertible debentures, sole series, for public distribution, with restricted distribution efforts,
as amended, in the total amount of up to four hundred million reais (R$ 400,000,000.00) maturing in 2022. By June, R$ 250,000,000.00
were issued. The Debentures will be secured by Stone’s accounts receivable from card issuers and will bear interest at a
rate of 101.4% of the Brazilian interbank deposit (Certificado de Depósito Interbancário) rate
|
|
13.
|
Transactions with related parties
|
Related parties comprise the
Group’s parent companies, shareholders, key management personnel and any businesses which are controlled, directly or indirectly
by the shareholders and directors over which they exercise significant management influence. Related party transactions are entered
in the normal course of business at prices and terms approved by the Group’s management.
|
(a)
|
Transactions with
related parties
|
The following transactions
were carried out with related parties:
|
|
Six months ended June 30
|
|
Three months ended June 30
|
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
Sales of services
|
|
|
|
|
|
|
|
|
Associates (legal and administration services)*
|
|
|
-
|
|
|
|
41,336
|
|
|
|
-
|
|
|
|
295
|
|
|
|
|
-
|
|
|
|
41,336
|
|
|
|
-
|
|
|
|
295
|
|
Purchases of goods and services
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Entity controlled management personnel**
|
|
|
(8,458
|
)
|
|
|
(2,899
|
)
|
|
|
(6,671
|
)
|
|
|
(2,280
|
)
|
Associates (transaction services)*
|
|
|
-
|
|
|
|
(125
|
)
|
|
|
-
|
|
|
|
(85
|
)
|
|
|
|
(8,458
|
)
|
|
|
(3,024
|
)
|
|
|
(6,671
|
)
|
|
|
(2,365
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
*
|
Related to cost-sharing and checking account agreements
with Equals S.A. incurred until the acquisition date.
|
|
**
|
Related to consulting and management services with
Genova Consultoria e Participações Ltda., and travel services provided by Zurich Consultoria e Participações
Ltda.
|
Services provided to related
parties include legal and administrative services provided under normal trade terms and reimbursement of other expenses incurred
in their respect.
The Group acquired under normal
trade terms the following goods and services from entities that are controlled by members of the Group’s management personnel:
|
•
|
management and consulting services;
|
|
•
|
services related to card transactions.
|
|
(b)
|
Balances at the end of the period
|
The following balances are
outstanding at the end of the reporting period in relation to transactions with related parties:
|
|
June 30,
2019
|
|
December 31,
2018
|
Receivables from related parties
|
|
|
|
|
Associates
|
|
|
13
|
|
|
|
13
|
|
Loans to key management personnel
|
|
|
7,903
|
|
|
|
8,082
|
|
|
|
|
7,916
|
|
|
|
8,095
|
|
As of June 30, 2019, there
is no allowance for expected credit losses on related parties receivables. No guarantees were provided or received in relation
to any accounts receivable or payable involving related parties.
The Group has outstanding loans
with certain management personnel. The loans are payable in three to seven years from the date of issuance and accrue interest
according to the National Consumer Price Index, the Brazilian Inter-Bank Rate or Libor plus an additional spread.
The
Company has an authorized share capital of USD 50 thousand, corresponding to 630,000,000 authorized shares with a par value of
USD 0.000079365 each. Therefore, the Company is authorized to increase capital up to this limit, subject to approval of the Board
of Directors. The liability of each member is limited to the amount from time to time unpaid on such member’s shares.
|
ii.
|
Subscribed and paid-in capital and capital reserve
|
In
October, 2018, in connection with the IPO, the Company’s shareholders approved a capital stock share split with a ratio to
be determined by the Board of Directors. On October 14, 2018, the Board of Directors of the Company approved the 126:1 (one hundred
twenty-six for one) share split ratio. As a result of the share split, the Company’s historical financial statements have
been revised to reflect number of shares and per share data as if the share split had been in effect for all periods presented.
The
Articles of Association provide that at any time when there are Class A common shares in issue, Class B common shares may only
be issued pursuant to: (a) a share split, subdivision or similar transaction or as contemplated in the Articles of Association;
or (b) a business combination involving the issuance of Class B common shares as full or partial consideration. A business combination,
as defined in the Articles of Association, would include, amongst other things, a statutory amalgamation, merger, consolidation,
arrangement or other reorganization.
The
additional paid-in capital refers to the difference between the purchase price that the shareholders pay for the shares and their
par value. Under Cayman Law, the amount in this type of account may be applied by the Company to pay distributions or dividends
to members, pay up unissued shares to be issued as fully paid, for redemptions and repurchases of own shares, for writing off preliminary
expenses, recognized expenses, commissions or for other reasons. All distributions are subject to the Cayman Solvency Test which
addresses the Company’s ability to pay debts as they fall due in the natural course of business.
Below
are the issuances and reclassifications of shares during the six months ended in June 30, 2019:
|
|
Number of shares
|
|
|
Class A (former Ordinary non-voting)
|
|
Class B (former Ordinary voting)
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At December 31, 2018
|
|
|
125,697,438
|
|
|
|
151,482,561
|
|
|
|
277,179,999
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance
|
|
|
35,655
|
|
|
|
-
|
|
|
|
35,655
|
|
Vested awards
|
|
|
151,182
|
|
|
|
-
|
|
|
|
151,182
|
|
Conversion
|
|
|
40,004,775
|
|
|
|
(40,004,775
|
)
|
|
|
-
|
|
At June 30, 2019
|
|
|
165,889,050
|
|
|
|
111,477,786
|
|
|
|
277,366,836
|
|
In April, 2019, during the
follow-on public offering, some of RSU vested awards were accelerated. Accordingly, to this,
Class A
common shares were issued to our founder shareholders, as anti-dilutive shares.
Also in April, 2019, upon a
lock-up period end, some shareholders converted Class B shares to Class A shares.
Basic
earnings per share is calculated by dividing net income for the period attributed to the owners of the parent by the weighted
average number of ordinary shares outstanding during the period.
During
2019 and 2018, the Group had outstanding grants and subsidiary preferred shares, which participated in profit or loss as follows:
|
•
|
A subsidiary of the Group has outstanding liability
classified preferred shares to certain employees and business partners. These preferred shares participate evenly with ordinary
shareholders of the subsidiary in dividends of the subsidiary when declared.
|
As
these awards participate in dividends, the numerator of the Earnings per Share (“EPS”) calculation is adjusted to
allocate undistributed earnings as if all earnings for the period had been distributed. In determining the numerator of basic
EPS, earnings attributable to the Group is allocated as follows:
|
|
Six months ended June 30
|
|
Three months ended June 30
|
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
|
|
|
|
|
|
|
|
Profit attributable to Owners of the parent
|
|
|
349,095
|
|
|
|
85,029
|
|
|
|
171,946
|
|
|
|
61,398
|
|
Less: Loss allocated to participating shares of Group companies
|
|
|
-
|
|
|
|
(70
|
)
|
|
|
-
|
|
|
|
(59
|
)
|
Numerator of basic and diluted EPS
|
|
|
349,095
|
|
|
|
85,099
|
|
|
|
171,946
|
|
|
|
61,457
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
On
September 1, 2018, the Group granted RSU and stock options (Note 18), which are included in diluted EPS calculation for the six-month
period then ended and for the three-month period ended in June 30, 2019.
The
following table contains the earnings per share of the Group for the six and three months ended June 30, 2019 and 2018 (in
thousands except share and per share amounts):
|
|
Six months ended in June 30
|
|
Three months ended in June 30
|
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
Numerator of basic EPS
|
|
|
349,095
|
|
|
|
85,099
|
|
|
|
171,946
|
|
|
|
61,457
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of outstanding shares
|
|
|
277,264,857
|
|
|
|
223,261,416
|
|
|
|
277,366,250
|
|
|
|
223,266,330
|
|
Denominator of basic EPS
|
|
|
277,264,857
|
|
|
|
223,261,416
|
|
|
|
277,366,250
|
|
|
|
223,266,330
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings per share - R$
|
|
|
1.26
|
|
|
|
0.38
|
|
|
|
0.62
|
|
|
|
0.27
|
|
|
|
Six months ended in June 30
|
|
Three months ended in June 30
|
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
Numerator of diluted EPS
|
|
|
349,095
|
|
|
|
85,099
|
|
|
|
171,946
|
|
|
|
61,457
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Share-based payments
|
|
|
5,105,581
|
|
|
|
-
|
|
|
|
5,015,766
|
|
|
|
-
|
|
Weighted average number of outstanding shares
|
|
|
277,264,857
|
|
|
|
223,261,416
|
|
|
|
277,366,250
|
|
|
|
223,266,330
|
|
Denominator of diluted EPS
|
|
|
282,370,438
|
|
|
|
223,261,416
|
|
|
|
282,382,438
|
|
|
|
223,266,330
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per share - R$
|
|
|
1.24
|
|
|
|
0.38
|
|
|
|
0.61
|
|
|
|
0.27
|
|
|
16.
|
Total revenue and income
|
|
|
Six months ended June 30
|
|
Three months ended June 30
|
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
|
|
|
|
|
|
|
|
Transaction activities and other services
|
|
|
386,332
|
|
|
|
235,613
|
|
|
|
197,404
|
|
|
|
128,535
|
|
(-) Taxes and contributions on revenue
|
|
|
(40,304
|
)
|
|
|
(31,518
|
)
|
|
|
(20,140
|
)
|
|
|
(14,685
|
)
|
(-) Other deductions
|
|
|
(14
|
)
|
|
|
(2
|
)
|
|
|
(13
|
)
|
|
|
-
|
|
Net revenue from transaction activities and other services
|
|
|
346,014
|
|
|
|
204,093
|
|
|
|
177,251
|
|
|
|
113,850
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equipment rental and subscription services
|
|
|
161,620
|
|
|
|
94,174
|
|
|
|
82,597
|
|
|
|
52,004
|
|
(-) Taxes and contributions on revenue
|
|
|
(15,128
|
)
|
|
|
(8,664
|
)
|
|
|
(7,568
|
)
|
|
|
(5,200
|
)
|
(-) Other deductions
|
|
|
(706
|
)
|
|
|
(511
|
)
|
|
|
(421
|
)
|
|
|
(258
|
)
|
Net revenue from subscription services and equipment rental
|
|
|
145,786
|
|
|
|
84,999
|
|
|
|
74,608
|
|
|
|
46,546
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial income
|
|
|
577,761
|
|
|
|
350,355
|
|
|
|
314,083
|
|
|
|
192,620
|
|
(-) Taxes and contributions on financial income
|
|
|
(29,128
|
)
|
|
|
(17,293
|
)
|
|
|
(16,844
|
)
|
|
|
(9,105
|
)
|
Net Financial income
|
|
|
548,633
|
|
|
|
333,062
|
|
|
|
297,239
|
|
|
|
183,515
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other financial income (a)
|
|
|
81,532
|
|
|
|
13,574
|
|
|
|
37,094
|
|
|
|
3,789
|
|
Total revenue and income
|
|
|
1,121,965
|
|
|
|
635,728
|
|
|
|
586,192
|
|
|
|
347,700
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Timing of revenue recognition
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Transferred at a point in time
|
|
|
346,014
|
|
|
|
204,093
|
|
|
|
177,251
|
|
|
|
113,850
|
|
Transferred over time
|
|
|
775,951
|
|
|
|
431,635
|
|
|
|
408,941
|
|
|
|
233,850
|
|
Total revenue and income
|
|
|
1,121,965
|
|
|
|
635,728
|
|
|
|
586,192
|
|
|
|
347,700
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
Other financial income mainly includes interest accrued in bank saving accounts and judicial deposits
held by Brazilian courts for judicial disputes.
|
|
|
Six months ended June 30
|
|
Three months ended June 30
|
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
|
|
|
|
|
|
|
|
Personnel expenses
|
|
|
276,948
|
|
|
|
163,577
|
|
|
|
159,751
|
|
|
|
85,638
|
|
Financial expenses (a)
|
|
|
145,411
|
|
|
|
142,581
|
|
|
|
78,771
|
|
|
|
74,021
|
|
Transaction and client services costs (b)
|
|
|
85,946
|
|
|
|
73,062
|
|
|
|
46,656
|
|
|
|
34,747
|
|
Depreciation and amortization
|
|
|
63,849
|
|
|
|
40,025
|
|
|
|
34,126
|
|
|
|
22,723
|
|
Third parties services
|
|
|
33,564
|
|
|
|
18,236
|
|
|
|
19,745
|
|
|
|
9,412
|
|
Marketing expenses and sales commissions (c)
|
|
|
25,242
|
|
|
|
17,477
|
|
|
|
13,674
|
|
|
|
8,291
|
|
Facilities expenses
|
|
|
14,592
|
|
|
|
15,862
|
|
|
|
9,251
|
|
|
|
7,985
|
|
Travel expenses
|
|
|
14,986
|
|
|
|
8,986
|
|
|
|
9,591
|
|
|
|
4,518
|
|
Other
|
|
|
6,922
|
|
|
|
23,404
|
|
|
|
4,956
|
|
|
|
14,782
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total expenses
|
|
|
667,460
|
|
|
|
503,210
|
|
|
|
376,521
|
|
|
|
262,117
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
Financial expenses include discounts on the sale of
receivables to banks, interest expense on borrowings, foreign currency exchange variances, net and the cost of derivatives covering
interest and foreign exchange exposure.
|
|
(b)
|
Transaction and client services costs include card
transaction capturing services, card transaction and settlement processing services, logistics costs, payment scheme fees and
other costs.
|
|
(c)
|
Marketing expenses and sales commissions relate to
marketing and advertising expenses, and commissions paid to sales related partnerships.
|
The Group provides benefits
to employees (including executive directors) of the Group through share-based incentives. The following items refer to the outstanding
plans at June 30, 2019.
Incentive Shares
In 2017, certain key employees
have been granted incentive shares, or the Co-Investment Shares, that entitle participants to receive a cash bonus which they,
at their option, may use to purchase a specified number of preferred shares in StoneCo Brasil which were then exchanged for common
shares in DLP Par. These incentive shares are subject to a 10 years lock-up period and a discounted buy-back feature retained by
the Group if the employee leaves prior to lockup expiration.
These incentive shares were
exchanged for StoneCo Ltd. Class A common shares upon the consummation of the IPO, but remain with the previous lock-up period.
Restricted share units and
stock options
In September 2018, the Group
granted new awards of restricted share units (“RSUs”) and stock options. In addition, all outstanding Phantom Shares,
which were originally granted on December 1, 2017, were converted to RSU awards. These awards are equity classified, the majority
of the awards are subject to performance conditions, and the related compensation expense will be recognized over the vesting period.
The Company issued 5,406,786 awards (including Phantom Shares converted to RSUs) as RSU, and 135,198 awards as stock options, of
which approximately 6% are vested until the IPO, 9% vest in 4 years, 18% vest in 5 years, 21% vest in 7 years, and 46% vest in
10 years. The total expense, including taxes and social charges, recognized for the programs for the six and three months period
ended June 30, 2019 was R$ 38,475 and R$ 28,366, respectively.
In April 2019 in connection
with the follow-on offering, the company accelerated the vesting of 151,182 Class A common shares, net of withholding taxes, underlying
RSU awards. This relates to the acceleration of certain awards to allow recipients to participate in the offering and/or to sell
Class A common shares in the open market on or around the closing of this offering.
|
19.
|
Financial instruments
|
The
Group’s activities expose it to a variety of financial risks: credit risk, market risk (including foreign exchange risk,
cash flow or fair value interest rate risk, and price risk), liquidity risk and fraud risk. The Group’s overall risk management
program focuses on the unpredictability of financial markets and seeks to minimize potential adverse effects on the Group’s
financial performance. The Group uses derivative financial instruments to mitigate certain risk exposures. It is the Group’s
policy that no trading in derivatives for speculative purposes may be undertaken.
Risk
management is carried out by a central treasury department (“Group treasury”) under policies approved by the Board
of Directors. Group treasury identifies, evaluates and hedges financial risks in close co-operation with the Group’s operating
units. The Board provides written principles for overall risk management, as well as written policies covering specific areas,
such as foreign exchange risk, interest rate risk, credit risk, anti-fraud, use of derivative financial instruments and non-derivative
financial instruments, and investment of surplus liquidity.
The
interim condensed consolidated financial statements do not include all financial risk management information and disclosures required
in the annual financial statements; they should be read in conjunction with the Group’s annual financial statements as of
December 31, 2018. There have been no changes in the risk management department or in any risk management policies since the year
end.
|
(ii)
|
Financial instruments by category
|
|
a)
|
Assets as per statement of financial position
|
|
|
Amortized cost
|
|
FVPL
|
|
FVOCI
|
|
Total
|
At June 30, 2019
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
160,635
|
|
|
|
-
|
|
|
|
-
|
|
|
|
160,635
|
|
Short-term investments
|
|
|
-
|
|
|
|
2,696,602
|
|
|
|
8,242
|
|
|
|
2,704,844
|
|
Accounts receivable from card issuers
|
|
|
-
|
|
|
|
-
|
|
|
|
12,518,915
|
|
|
|
12,518,915
|
|
Trade accounts receivable
|
|
|
52,773
|
|
|
|
-
|
|
|
|
-
|
|
|
|
52,773
|
|
Derivative financial instruments
|
|
|
-
|
|
|
|
9,053
|
|
|
|
-
|
|
|
|
9,053
|
|
Other accounts receivable
|
|
|
27,811
|
|
|
|
-
|
|
|
|
-
|
|
|
|
27,811
|
|
|
|
|
241,219
|
|
|
|
2,705,655
|
|
|
|
12,527,157
|
|
|
|
15,474,031
|
|
|
|
Amortized cost
|
|
FVPL
|
|
FVOCI
|
|
Total
|
At December 31, 2018
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
297,929
|
|
|
|
-
|
|
|
|
-
|
|
|
|
297,929
|
|
Short-term investments
|
|
|
-
|
|
|
|
2,762,071
|
|
|
|
8,518
|
|
|
|
2,770,589
|
|
Accounts receivable from card issuers
|
|
|
-
|
|
|
|
-
|
|
|
|
9,244,608
|
|
|
|
9,244,608
|
|
Trade accounts receivable
|
|
|
44,616
|
|
|
|
-
|
|
|
|
-
|
|
|
|
44,616
|
|
Derivative financial instruments
|
|
|
-
|
|
|
|
1,195
|
|
|
|
-
|
|
|
|
1,195
|
|
Other accounts receivable
|
|
|
15,367
|
|
|
|
-
|
|
|
|
-
|
|
|
|
15,367
|
|
|
|
|
357,912
|
|
|
|
2,763,266
|
|
|
|
9,253,126
|
|
|
|
12,374,304
|
|
|
b)
|
Liabilities as per statement of financial position
|
|
|
Amortized cost
|
|
FVPL
|
|
Total
|
At June 30, 2019
|
|
|
|
|
|
|
Accounts payable to clients
|
|
|
5,796,019
|
|
|
|
-
|
|
|
|
5,796,019
|
|
Trade accounts payable
|
|
|
95,648
|
|
|
|
-
|
|
|
|
95,648
|
|
Loans and financing
|
|
|
1,253,026
|
|
|
|
-
|
|
|
|
1,253,026
|
|
Obligations to FIDC senior quota holders
|
|
|
3,702,440
|
|
|
|
-
|
|
|
|
3,702,440
|
|
Derivative financial instruments
|
|
|
-
|
|
|
|
829
|
|
|
|
829
|
|
Other accounts payable
|
|
|
28,265
|
|
|
|
-
|
|
|
|
28,265
|
|
|
|
|
10,875,398
|
|
|
|
829
|
|
|
|
10,876,227
|
|
|
|
Amortized cost
|
|
FVPL
|
|
Total
|
At December 31, 2018
|
|
|
|
|
|
|
Accounts payable to clients
|
|
|
4,996,102
|
|
|
|
-
|
|
|
|
4,996,102
|
|
Trade accounts payable
|
|
|
117,836
|
|
|
|
-
|
|
|
|
117,836
|
|
Loans and financing
|
|
|
762,451
|
|
|
|
-
|
|
|
|
762,451
|
|
Obligations to FIDC senior quota holders
|
|
|
2,074,571
|
|
|
|
-
|
|
|
|
2,074,571
|
|
Derivative financial instruments
|
|
|
-
|
|
|
|
586
|
|
|
|
586
|
|
Other accounts payable
|
|
|
14,248
|
|
|
|
-
|
|
|
|
14,248
|
|
|
|
|
7,965,208
|
|
|
|
586
|
|
|
|
7,965,794
|
|
|
(iii)
|
Fair value estimation
|
The Group uses the following
hierarchy to determine and disclose the fair value of financial instruments through measurement technique:
|
•
|
Level I—quoted prices in active markets for identical assets or liabilities;
|
|
•
|
Level II—other techniques for which all inputs that have a significant effect on the recorded
fair value are observable, either directly or indirectly; and
|
|
•
|
Level III—techniques using inputs that have a significant effect on the recorded fair value
that are not based on observable market data.
|
For the six months ended June 30,
2019, there were no transfers between Level I and Level II fair value measurements and between Level II and Level III fair value
measurements.
|
b)
|
Fair value measurement
|
The table below presents a
comparison by class between book value and fair value of the financial instruments of the Group:
|
|
June 30, 2019
|
|
December 31, 2018
|
|
|
Book value
|
|
Fair value
|
|
Hierarchy
level
|
|
Book value
|
|
Fair value
|
|
Hierarchy
level
|
Financial assets
|
|
|
|
|
|
|
|
|
|
|
|
|
Short-term investments (1)
|
|
|
8,002
|
|
|
|
8,002
|
|
|
I
|
|
|
8,278
|
|
|
|
8,278
|
|
|
I
|
Short-term investments (1)
|
|
|
2,696,842
|
|
|
|
2,696,842
|
|
|
II
|
|
|
2,762,310
|
|
|
|
2,762,310
|
|
|
II
|
Accounts receivable from card issuers (2)
|
|
|
12,518,915
|
|
|
|
12,518,915
|
|
|
II
|
|
|
9,244,608
|
|
|
|
9,244,608
|
|
|
II
|
Trade accounts receivable (3)
|
|
|
52,773
|
|
|
|
52,773
|
|
|
II
|
|
|
44,616
|
|
|
|
44,616
|
|
|
II
|
Derivative financial instruments (4)
|
|
|
9,053
|
|
|
|
9,053
|
|
|
II
|
|
|
1,195
|
|
|
|
1,195
|
|
|
II
|
Other accounts receivable (3)
|
|
|
27,811
|
|
|
|
27,811
|
|
|
II
|
|
|
15,367
|
|
|
|
15,367
|
|
|
II
|
|
|
|
15,313,396
|
|
|
|
15,313,396
|
|
|
|
|
|
12,076,374
|
|
|
|
12,076,374
|
|
|
|
Financial liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts payable to clients (5)
|
|
|
5,796,019
|
|
|
|
5,703,154
|
|
|
II
|
|
|
4,996,102
|
|
|
|
4,898,949
|
|
|
II
|
Trade accounts payable (3)
|
|
|
95,648
|
|
|
|
95,648
|
|
|
II
|
|
|
117,836
|
|
|
|
117,836
|
|
|
II
|
Loans and financing (5)
|
|
|
1,253,026
|
|
|
|
1,247,408
|
|
|
II
|
|
|
762,451
|
|
|
|
747,651
|
|
|
II
|
Obligations to FIDC senior quota holders (5)
|
|
|
3,702,440
|
|
|
|
3,630,440
|
|
|
II
|
|
|
2,074,571
|
|
|
|
2,045,397
|
|
|
II
|
Derivative financial instruments (4)
|
|
|
829
|
|
|
|
829
|
|
|
II
|
|
|
586
|
|
|
|
586
|
|
|
II
|
Other accounts payable (3)
|
|
|
28,265
|
|
|
|
28,265
|
|
|
II
|
|
|
18,916
|
|
|
|
18,916
|
|
|
II
|
|
|
|
10,876,227
|
|
|
|
10,705,745
|
|
|
|
|
|
7,970,462
|
|
|
|
7,829,335
|
|
|
|
|
(1)
|
The carrying values of short-term investments approximate
their fair values due to their short-term nature.
|
|
(2)
|
Accounts receivable from card issuers are measured
at FVOCI as they are held to collect contractual cash flows and can sell the receivable. Fair value is estimated by discounting
future cash flows using market rates for similar items.
|
|
(3)
|
The carrying values of trade accounts receivable,
other accounts receivable, trade accounts payable and other accounts payable are measured at amortized cost and are recorded at
their original amount, less the provision for impairment and adjustment to present value, when applicable. The carrying values
is assumed to approximate their fair values, taking into consideration the realization of these balances, and settlement terms
do not exceed 60 days.
|
|
(4)
|
The Group enters into derivative financial instruments
with financial institutions with investment grade credit ratings. Non-deliverable forward contracts are valued using valuation
techniques, which employ the use of market observable inputs.
|
|
(5)
|
Accounts payable to clients, loans and financing,
and obligations to FIDC senior quota holders are measured at amortized cost. Fair values are estimated by discounting future cash
flows using weighted average cost of capital rate.
|
For
disclosure purposes, the fair value of financial liabilities is estimated by discounting future contractual cash flows at the
interest rates available in the market that are available to the Group for similar financial instruments. The effective interest
rates at the balance sheet dates are usual market rates and their fair value does not significantly differ from the balances in
the accounting records.
|
(iv)
|
Offsetting of financial instruments
|
Financial
asset and liability balances are offset (i.e. reported in the consolidated statement of financial position at their net amount)
only if the Company and its subsidiaries currently have a legally enforceable right to set off the recognized amounts and intend
either to settle on a net basis, or to realize the asset and settle the liability simultaneously.
As
of June 30, 2019, and December 31, 2018, the Group has no financial instruments that meet the conditions for recognition
on a net basis.
|
i.
|
On July 22, 2019, the Company obtained a license from
Brazillian Central Bank to offer credit as Sociedade de Crédito Direto (SCD). A SCD is a financial institution with the
purpose to lending, financing and credit action by exclusively access to electronic platform.
|
|
ii.
|
On July 30, 2019, the Company announced a memorandum
of understanding to create a partnership with Grupo Globo, the largest media conglomerate in Brazil. The partnership will
combine Stone’s experience in technology and payments with Grupo Globo’s deep expertise in media and marketing to
create a heavyweight contender in the micro-merchant space.
|
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.
|
|
StoneCo Ltd.
|
|
|
|
|
|
|
|
|
|
By:
|
/s/ Thiago dos Santos Piau
|
|
|
|
|
Name:
|
Thiago dos Santos Piau
|
|
|
|
|
Title:
|
Chief Executive Officer
|
Date:
August 14, 2019
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