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 2022
Commission File Number: 001-38353
PagSeguro Digital Ltd.
(Name of Registrant)
Av. Brigadeiro Faria Lima, 1384, 4º andar, parte A
São Paulo, SP, 01451-001, Brazil
+55 (11) 3038 8127
(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 ☒    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 ☒
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 ☐    o ☒



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PagSeguro Digital Ltd.
Unaudited condensed consolidated interim financial statements
As of June 30, 2022 and for the three and six-month periods ended June 30, 2022 and 2021

Contents
Unaudited condensed consolidated interim financial statements
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PagSeguro Digital Ltd.
Unaudited condensed consolidated interim balance sheet
As of June 30, 2022 and December 31, 2021
(All amounts in thousands of reais)
Note June 30, 2022 December 31, 2021
Assets  
Current assets  
Cash and cash equivalents 5 1,191,986 1,794,362
Financial investments 6 1,046,558 782,647
Accounts receivable 7 31,024,817 23,428,522
Derivative Financial Instruments 14 4,429
Inventories   47,890 49,537
Tax Receivable 8 440,231 469,490
Other receivables   199,111 194,776
Total current assets   33,955,022 26,719,334
Non-current assets
Accounts receivable 7 511,567 228,880
Judicial deposits   41,025 40,224
Deferred income tax and social contribution 19 103,133 120,762
Other receivables   24,296 11,710
Investment 14,728 15,666
Property and equipment 11 2,646,649 2,289,052
Intangible assets 12 1,899,372 1,650,176
Total non-current assets   5,240,769 4,356,470
Total assets   39,195,791 31,075,804
The accompanying notes are an integral part of these unaudited condensed consolidated interim financial statements.
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PagSeguro Digital Ltd.
Unaudited condensed consolidated interim balance sheet
As of June 30, 2022 and December 31, 2021
(All amounts in thousands of reais)
  Note June 30, 2022 December 31, 2021
Liabilities and equity    
Current Liabilities    
Payables to third parties 13 14,359,488 13,217,150
Trade payables   507,355 578,004
Payables to related parties 9 270,294 543,621
Deposits 14 7,689,233 3,056,444
Salaries and social security charges 15 251,430 259,724
Taxes and contributions 16 53,115 63,934
Provision for contingencies 17 33,159 27,653
Borrowings 18 1,205,570 1,005,787
Derivative Financial Instruments 18  143,485 14,317
Deferred revenue 137,639 162,566
Other liabilities   29,787 73,719
Total current liabilities   24,680,555 19,002,919
   
Non-current liabilities  
Deferred income tax and social contribution 19 1,482,530 1,391,760
Deposits 14 1,735,212 77,552
Provision for contingencies 17 14,116 13,910
Deferred revenue 19,813 17,300
Other liabilities   74,235 70,165
Total non-current liabilities   3,325,906 1,570,687
     
Total liabilities   28,006,461 20,573,606
 
Equity    
Share capital 20 26 26
Treasury shares 20 (280,205) (285,011)
Capital reserve 20 6,054,014 6,076,286
Retained earnings 20 5,449,468 4,732,624
Equity valuation adjustments 20 (22,372) (22,372)
Other comprehensive income 20 (11,601) 645
    11,189,330 10,502,198
     
Total equity 11,189,330 10,502,198
   
Total liabilities and equity   39,195,791 31,075,804
The accompanying notes are an integral part of these unaudited condensed consolidated interim financial statements.
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PagSeguro Digital Ltd.
Unaudited condensed consolidated interim statement of income
For the three and six-month periods ended June 30, 2022 and 2021
(All amounts in thousands of reais unless otherwise stated)
  Three-month period Six-month period
Note June 30, 2022 June 30, 2021 June 30, 2022 June 30, 2021
Revenue from transaction activities and other services 22 2,255,687 1,548,128 4,310,270 2,933,098
Financial income 22 1,610,102 786,610 2,940,895 1,443,593
Other financial income 22 44,769 34,861 86,344 60,108
 
Total revenue and income   3,910,558 2,369,599 7,337,509 4,436,799
 
Cost of sales and services 23 (1,900,300) (1,295,018) (3,639,679) (2,441,103)
Selling expenses 23 (499,101) (363,770) (979,751) (731,882)
Administrative expenses 23 (203,937) (225,899) (369,268) (414,969)
Financial expenses 23 (755,559) (133,784) (1,376,187) (178,172)
Other income (expenses), net 23 (108,950) (12,951) (113,441) 27,855
 
Profit before income taxes   442,711 338,177 859,183 698,528
 
Current income tax and social contribution 19 530 (1,672) (28,121) (21,638)
Deferred income tax and social contribution 19 (76,317) (64,361) (114,218) (133,420)
 
 
Income tax and social contribution   (75,787) (66,033) (142,339) (155,058)
         
Net income for the period   366,924 272,144 716,844 543,470
 
Attributable to:  
Equity holders of the parent
  366,924 272,047 716,844 543,313
Non-controlling interests
  97 157
 
Basic earnings per common share - R$ 21 1.1059 0.8242 2.1645 1.6459
Diluted earnings per common share - R$ 21 1.1012 0.8234 2.1513 1.6444
The accompanying notes are an integral part of these unaudited condensed consolidated interim financial statements.
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PagSeguro Digital Ltd.
Unaudited condensed consolidated interim statement of comprehensive income
For the three and six-month periods ended June 30, 2022 and 2021
(All amounts in thousands of reais)
Three-month period Six-month period
June 30, 2022 June 30, 2021 June 30, 2022 June 30, 2021
Net income for the period
366,924 272,144 716,844 543,470
Other comprehensive income that may be reclassified to the statement of income in subsequent periods
Currency translation adjustment (126) (582) (718) (504)
Loss on investments designated at fair value through OCI (752) 102 (413) 340
Derivative Financial Instruments through OCI (12,696) (17,053)
Income tax and social contribution 4,568 (35) 5,938 (115)
Other comprehensive income for the period 357,918 271,629 704,598 543,191
       
Attributable to
Equity holders of the parent 357,918 271,532 704,598 543,034
Non-controlling interests 97 97
Net income for the period 357,918 271,629 704,598 543,191
The accompanying notes are an integral part of these unaudited condensed consolidated interim financial statements.
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PagSeguro Digital Ltd.
Unaudited condensed consolidated interim statement of changes in equity
For the six-month periods ended June 30, 2022 and 2021
(All amounts in thousands of reais)
      Capital reserve Profit reserve          
  Note Share capital Treasury shares Capital reserve Share-based long-term incentive plan (LTIP) Retained earnings
Equity valuation
adjustments
Other comprehensive income Total Non-controlling interests Total equity
On December 31, 2020 26 (13,609) 5,690,089 94,199 3,566,522 (22,372) 491 9,315,346 12,113 9,327,459
Net income for the period 543,313 543,313 157 543,470
Currency translation adjustment (503) (503) (503)
Gain on financial assets through other OCI 225 225 225
Shares issued 53,612 (53,612)
Share based long term incentive plan (LTIP) 138,444 138,444 138,444
(LTIP) of treasury shares 12,739 (12,739)
On June 30, 2021 26 (870) 5,743,701 166,292 4,109,835 (22,372) 213 9,996,825 12,270 10,009,095
Net income for the period 622,789 622,789 25 622,814
Currency translation adjustment 386 386 386
Gain on financial assets through OCI 46 46 46
Non-controlling (12,295) (12,295)
Shares issued 85,053 (85,053)
Share based long term incentive plan (LTIP) 166,964 166,964 166,964
Acquisition of treasury shares (284,812) (284,812) (284,812)
(LTIP) of treasury shares 671 (671)
On December 31, 2021 26 (285,011) 5,828,754 247,532 4,732,624 (22,372) 645 10,502,198 10,502,198
Net income for the period 20 716,844 716,844 716,844
Currency translation adjustment
20 (718) (718) (718)
Loss on financial assets through OCI 20 (273) (273) (273)
Derivative Financial Instruments through OCI 20 (11,255) (11,255) (11,255)
Share based long term incentive plan (LTIP) 20 76,147 76,147 76,147
Acquisition of treasury shares 20 (93,613) (93,613) (93,613)
(LTIP) of treasury shares 20 98,419 (98,419)
On June 30, 2022 26 (280,205) 5,828,754 225,260 5,449,468 (22,372) (11,601) 11,189,330 11,189,330
The accompanying notes are an integral part of these unaudited condensed consolidated interim financial statements.
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PagSeguro Digital Ltd.
Unaudited condensed consolidated interim statement of cash flows
For the six-month periods ended June 30, 2022 and 2021
(All amounts in thousands of reais)
Six-month period
June 30, 2022 June 30, 2021
CASH FLOWS FROM OPERATING ACTIVITIES
Profit before income taxes 859,183 698,528
Expenses (revenues) not affecting cash:
Depreciation and amortization
529,588 339,826
Chargebacks and ECL
520,198 320,160
Accrual of provision for contingencies
10,522 12,577
Share based long term incentive plan (LTIP)
76, 147 185,425
Reversal of taxes and contributions
(29,114)
Loss on disposal of property, equipment and intangible assets
104,958 12,206
Interest accrued
554,438 42,659
Other (income) cost, net
(7,715) (4,376)
Changes in operating assets and liabilities
Accounts receivable
(9,956,814) (2,196,876)
Financial investments (mandatory guarantee)
(209,221) 20,606
Inventories
1,647 (42,542)
Taxes recoverable
88,802 (134,305)
Other receivables
(17,721) (4,133)
Deferred revenue
(22,413) 8,454
Other liabilities
(34,613) 23,088
Payables to third parties
795,991 (315,817)
Trade payables
(73,525) 9,200
Receivables from (payables to) related parties
(289,506) 229,833
Deposits
6,104,371 999,783
Salaries and social charges
(8,294) (4,344)
Taxes and contributions
14,524 38,048
Provision for contingencies
(5,994) (9,936)
(965,447) 198,950
Income tax and social contribution paid
(79,684) (54,302)
Interest income received
1,563,152 255,977
NET CASH PROVIDED BY OPERATING ACTIVITIES 518,019 400,625
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property and equipment
(780,456) (475,562)
Purchases and development of intangible assets
(475,758) (325,164)
Redemption (Acquisition) of financial investments
(3,779) (38,193)
NET CASH USED IN INVESTING ACTIVITIES
(1,259,993) (838,919)
CASH FLOWS FROM FINANCING ACTIVITIES
Borrowings
250,000
Payment of borrowings interests
(7,015)
Acquisition of treasury shares
(93,613)
Capital increase by non-controlling shareholders
157
Payment of leases
(9,775) (6,384)
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES
139,597 (6,227)
DECREASE IN CASH AND CASH EQUIVALENTS
(602,376) (444,521)
Cash and cash equivalents at the beginning of the period
1,794,362 1,640,065
Cash and cash equivalents at the end of the period
1,191,986 1,195,544
The accompanying notes are an integral part of these unaudited condensed consolidated interim financial statements
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PagSeguro Digital Ltd.
Notes to the unaudited condensed consolidated interim financial statements
As of June 30, 2022 and for the three and six-month periods ended June 30, 2022 and 2021
(All amounts in thousands of reais unless otherwise stated)
1.   General information
PagSeguro Digital Ltd. ("PagSeguro Digital" or the "Company") is a holding company, a subsidiary of Universo Online S.A. ("UOL"), referred to, together with its subsidiaries, as the "PagSeguro Group", and was incorporated on July 19, 2017. A total of 99.99% of the shares of PagSeguro Internet Instituição de Pagamento S.A. ("PagSeguro Brazil") were contributed to PagSeguro Digital on January 4, 2018 and PagSeguro Digital maintains control of PagSeguro Brazil.
PagSeguro Brazil is a privately held corporation established on January 20, 2006, with its headquarters located in the city of São Paulo, Brazil, and engages in providing financial technology solutions and services and corresponding related activities, focused principally on micro-merchants and small and medium-sized businesses ("SMEs").
On March 18, 2021, PagSeguro Group constituted a holding company incorporated under PagSeguro Digital called PagSeguro Holding Ltd (“PSHC”). Additionally, during the third quarter of 2021, Pagseguro Group established four new subsidiaries under PSHC: Pagseguro Chile SPA (“Pagseguro Chile”), Pagseguro Colombia S.A.S (“Pagseguro Colombia”), PSGP México S.A de C.V. (“PSGP Mexico”) and Pagseguro Peru S.A.C. (“Pagseguro Peru”).
The subsidiaries of PagSeguro Digital are PagSeguro Brazil, PagSeg Participações Ltda. (“PagSeg”), BS Holding and PSHC.
The group subsidiaries are as follows:
PagSeguro Brazil subsidiaries are PagSeguro Biva Securitizadora de Créditos Financeiras S.A. ("Biva Sec"), Fundo de Investimento em Direitos Creditórios - PagSeguro ("FIDC"), RegistraSeguro S.A. ("RegistraSeguro"), Wirecard Brazil Instituição de Pagamento S.A. ("MOIP") and Concil Inteligência em Negociação S.A (“Concil”).
PagSeg subsidiaries are Net+Phone Telecomunicações Ltda. ("Net+Phone"), Boa Compra Tecnologia Ltda. ("Boa Compra"), BCPS Online Services Lda. ("BCPS"), CDS Serviços Financeiros LTDA. ("CDS"), Pagseguro Biva Serviços Financeiros Ltda (“Biva Serviços”) and PagBank Participações Ltda (“PagBank”).
PagBank subsidiaries are Tilix Digital Ltda. ("TILIX"), YAMÍ Software & Inovação Ltda. ("YAMÍ") and Zygo Serviços de Tecnologia S.A. ("ZYGO").
PSHC subsidiaries are Pagseguro Chile, Pagseguro Colombia, Pagseguro Peru and PSGP México.
BS Holding subsidiary is BancoSeguro S.A. (“Bancoseguro”).
Biva Serviços subsidiary is Pagseguro Biva Correspondente Bancário Ltda (“Biva Corban”).
These consolidated financial statements include Pagseguro Brazil, PagSeg, PSHC, BS Holding and the corresponding subsidiaries.
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PagSeguro Digital Ltd.
Notes to the unaudited condensed consolidated interim financial statements
As of June 30, 2022 and for the three and six-month periods ended June 30, 2022 and 2021
(All amounts in thousands of reais unless otherwise stated)
1.1   Additional Information
During the year ended December 31, 2021, the Company observed that, in the first three months, there was an increase in the number of people infected by COVID-19 and consequently the return of partial shutdowns and social isolation in several cities and states of the country. In the second quarter of 2021, most of the cities in Brazil accelerated the vaccination of the population, and consequently, the Company saw a graduate reopening process, with the extension of opening hours of commercial activities. In the third quarter of 2021, the Company observed the return of social events of the public, and consequently the growth of TPV. In the fourth quarter of 2021, Brazil began to see an increase in infections mainly related to the Omicron variant, without causing an impact on PagSeguro business.
During the first semester of 2022, Brazil observed a decrease in the number of people infected and the total deaths by COVID-19 and the social events and commercial activities basically returned to a similar level before pandemic. This scenario resulted in higher transaction payment volume (“TPV”) and consequently higher revenues.
The Company has a significant variable cost structure mainly related to TPV, such as processing, interchange, card scheme fees and chargebacks. Marketing and sales expenses are also variable and depends on the Company’s strategy to leverage new products and services such as PagBank. The Company is also still accompanying the evolution of the Brazilian economy and reassessing, when necessary, the provisions for loss allowance for expected credit losses.
The Company has a solid position in terms of cash, liquidity and working capital levels and in the year ended December 31, 2021, as well as in the first six months of 2022, has not faced the necessity of impairment of assets due to COVID-19.
Furthermore, geopolitical instability arising from conflicts, such as the ongoing war in Ukraine, and the resulting imposition of sanctions, taxes or tariffs against Russia and Russia’s response to such sanctions (including retaliatory acts, such as cyberattacks and sanctions against other countries) could adversely affect the global economy or specific international, regional and domestic markets, including the Brazilian market. Such events could have an adverse effect on our business and financial performance through increased worldwide inflation, greater compliance costs, higher volatility in foreign currency exchange rates, destabilized supply chains and further market disruptions, including from cyberattacks targeting technologies that we rely on or the markets in which we or our customers operate. At this time the Company does not see any significant impact in its operations as a result of the conflict.
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PagSeguro Digital Ltd.
Notes to the unaudited condensed consolidated interim financial statements
As of June 30, 2022 and for the three and six-month periods ended June 30, 2022 and 2021
(All amounts in thousands of reais unless otherwise stated)
2.   Presentation and preparation of the unaudited condensed consolidated interim financial statements and significant accounting policies
These unaudited condensed consolidated interim financial statements do not include all of the information required for a complete set of financial statements prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standard Board. However, selected explanatory notes are included to explain events and transactions that are significant to an understanding of the changes in the Company’s financial position and performance since the last annual financial statements.
These unaudited condensed consolidated interim financial statements for three and six-month periods ended June 30, 2022 were authorized for issuance by the PagSeguro Digital’s Board of Directors on August 24, 2022.
2.1.   Basis of preparation of the condensed consolidated interim financial information
These unaudited condensed consolidated interim financial statements for the three and six-month periods ended June 30, 2022 have been prepared in accordance with International Accounting Standard 34, “Interim Financial Reporting” as issued by the International Accounting Standard Board and disclose all (and only) the applicable significant information related to the financial statements, which is consistent with the information utilized by management in the performance of its duties.
These unaudited condensed consolidated interim financial statements do not include all the notes of the type normally included in an annual consolidated financial statement. Accordingly, this report is to be read in conjunction with the annual consolidated financial statements for the year ended December 31, 2021 (the “Annual Financial Statements”).
The accounting policies and critical accounting estimates and judgments adopted are consistent with those of the previous financial year and corresponding interim reporting period.
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PagSeguro Digital Ltd.
Notes to the unaudited condensed consolidated interim financial statements
As of June 30, 2022 and for the three and six-month periods ended June 30, 2022 and 2021
(All amounts in thousands of reais unless otherwise stated)
2.2.   New accounting standards not yet effective
The new and amended standards and interpretations that are issued, but not yet effective, up to the date of issuance of the consolidated financial statements are disclosed below. The Company intends to adopt these new and amended standards and interpretations, if applicable, when they become effective.
IFRS 17 was issued in May 2017 as replacement for IFRS 4 Insurance Contracts. It requires a current measurement model where estimates are remeasured in each reporting period. Contracts are measured using the building blocks of discounted probability-weighted cash flows, an explicit risk adjustment and a contractual service margin (CSM) representing the unearned profit of the contract which is recognised as revenue over the coverage period.
The standard allows a choice between recognising changes in discount rates either in the statement of profit or loss or directly in other comprehensive income. The choice is likely to reflect how insurers account for their financial assets under IFRS 9. An optional, simplified premium allocation approach is permitted for the liability for the remaining coverage for short duration contracts, which are often written by non-life insurers.
There is a modification of the general measurement model called the ‘variable fee approach’ for certain contracts written by life insurers where policyholders share in the returns from underlying items. When applying the variable fee approach, the entity’s share of the fair value changes of the underlying items is included in the CSM. The results of insurers using this model are therefore likely to be less volatile than under the general model.
Targeted amendments made in July 2020 aimed to ease the implementation of the standard by reducing implementation costs and making it easier for entities to explain the results from applying IFRS 17 to investors and others. The amendments also deferred the application date of IFRS 17 to 1 January 2023. The group does not expect the new IFRS to materially impact its results of operations.
Amendment to IAS 1 "Presentation of Financial Statements": issued in May 2020, with the objective of clarifying that liabilities are classified as current or non-current, depending on the rights that exist at the end of the period. The classification is not affected by the entity's expectations or events after the reporting date (eg, receipt of a waiver or breach of covenant). The amendments also clarify what "settlement" of a liability refers to under IAS 1. The amendments to IAS 1 are effective as of January 1, 2023. The group does not expect the new amendment to materially impact its results of operations.
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PagSeguro Digital Ltd.
Notes to the unaudited condensed consolidated interim financial statements
As of June 30, 2022 and for the three and six-month periods ended June 30, 2022 and 2021
(All amounts in thousands of reais unless otherwise stated)
2.2.   New accounting standards not yet effective - Continued
Amendment to IAS 1 and IFRS Practice Statement 2 - Disclosure of Accounting Policies: in February 2021 the IASB issued a new amendment to IAS 1 on disclosure of "material" accounting policies rather than "significant" accounting policies. The amendments define what "material accounting policy information" is and explain how to identify it. It also clarifies that immaterial accounting policy information does not need to be disclosed, but if so, it should not obscure the relevant accounting information. To support this change, the IASB also amended the "IFRS Practice Statement 2 Making Materiality Judgments" to provide guidance on how to apply the concept of materiality to accounting policy disclosures. This amendment is effective as of January 1, 2023. The group does not expect the new amendment to materially impact its results of operations.
Amendment to IAS 8 - Accounting Policies, Change in Estimate and Error Rectification: the amendment issued in February 2021 clarifies how entities must distinguish changes in accounting policies from changes in accounting estimates, as changes in accounting estimates are applied prospectively to future transactions and other future events, but changes in accounting policies are generally applied retrospectively to past transactions and other past events, as well as to the current period. This amendment is effective as of January 1, 2023. The group does not expect the new amendment to materially impact its results of operations.
Amendment to IAS 12 - Income Taxes: the amendment issued in May 2021 requires entities to recognize deferred tax on transactions that, on initial recognition, give rise to equal amounts of taxable and deductible temporary differences. This typically applies to lease transactions (right-of-use assets and lease liabilities) and decommissioning and restoration obligations, as an example, and will require the recognition of additional deferred tax assets and liabilities. This amendment is effective as of January 1, 2023.
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PagSeguro Digital Ltd.
Notes to the unaudited condensed consolidated interim financial statements
As of June 30, 2022 and for the three and six-month periods ended June 30, 2022 and 2021
(All amounts in thousands of reais unless otherwise stated)
3.   Consolidation of subsidiaries
On June 30, 2022
Company Assets Liabilities Equity Net income (loss) for the period Ownership - % Level
Pagseguro Brazil 25,851,631  17,057,722  8,793,909  495,147  99.99  Direct
BS Holding 774,530  206,640  567,890  29,442  99.99  Direct
Pagseg Participações 738,270  870  737,400  33,197  99.99  Direct
Pagseguro Holding 4  355  (351) (355) 99.99  Direct
Pagbank Participações 184,185  18,328  165,857  (4,812) 99.99  Indirect
Net+Phone 400,698  104,588  296,110  24,186  99.99  Indirect
Boa Compra 355,696  131,289  224,407  11,378  99.99  Indirect
BCPS 1,297  31  1,266  (83) 99.99  Indirect
BSEC 1,669,156  1,661,001  8,155  1,060  99.99  Indirect
Biva Serviços 46,079  6,217  39,862  2,614  99.99  Indirect
Biva Corban 17,783  718  17,065  1,311  99.99  Indirect
FIDC 5,029,075  842,924  4,186,151  950,815  100.00  Indirect
TILIX 14,009  1,319  12,690  291  99.99  Indirect
BancoSeguro 16,596,598  16,064,547  532,051  19,508  100.00  Indirect
Yamí 3,599  2,109  1,490  264  99.99  Indirect
Registra Seguro 5,004  16  4,988  (4) 99.99  Indirect
CDS 9,969  551  9,418  (55) 99.99  Indirect
Zygo 3,718  7,866  (4,148) (7,883) 99.99  Indirect
Moip 731,313  547,475  183,838  (7,382) 100.00  Indirect
Concil 7,229  12,797  (5,568) (4,877) 100.00  Indirect
Pagseguro Chile 9  26  (17) (24) 100.00  Indirect
Pagseguro Colimbia 81  420  (339) (350) 100.00  Indirect
PSGP México (ii) 1    1    100.00  Indirect
Pagseguro Peru (ii) 15  1  14    100.00  Indirect
On December 31, 2021 (except for net income, that is presented to six-month period ended June 30, 2021)
On December 31, 2021
Company Assets Liabilities Equity Net income (loss) for the period Ownership - % Level
Pagseguro Brazil 23,863,783  15,250,100  8,613,683  536,326  99.99  Direct
BS Holding 545,693  7,019  538,674  12,634  99.99  Direct
Pagseg Participações (ii) 648,175  5,870  642,305  (1,789) 99.99  Direct
Pagseguro Holding (ii) 36  —  36  —  99.99  Direct
Pagbank Participações (ii) 180,053  9,385  170,668  (266) 99.99  Indirect
Net+Phone 375,347  103,424  271,923  37,069  99.99  Indirect
Boa Compra 456,934  243,905  213,029  4,674  99.99  Indirect
BCPS 2,022  (52) 2,074  515  99.99  Indirect
BSEC 1,446,640  1,439,545  7,095  1,141  99.99  Indirect
Biva Serviços 42,901  5,653  37,248  (5,221) 99.99  Indirect
Biva Corban 21,200  5,446  15,754  1,504  99.99  Indirect
FIDC 4,770,455  816,980  3,953,475  1,162,376  100.00  Indirect
TILIX 13,972  1,573  12,399  4,911  99.99  Indirect
BancoSeguro 10,320,430  9,807,767  512,663  12,645  100.00  Indirect
Yamí 2,087  861  1,226  (183) 99.99  Indirect
Registra Seguro 5,000  4,991  (3) 99.99  Indirect
CDS 10,057  5,583  4,474  (1,429) 99.99  Indirect
Zygo 2,013  4,278  (2,265) (4,472) 99.99  Indirect
Moip 787,659  596,429  191,230  2,282  100.00  Indirect
Concil (i) 2,390  3,080  (690) —  100.00  Indirect
Pagseguro Chile (i) —  —  100.00  Indirect
Pagseguro Colombia (i) 28  —  28  —  100.00  Indirect
PSGP México (i) —  —  100.00  Indirect
Pagseguro Peru (i) 13  —  13  —  100.00  Indirect
(i) Entities acquired/created after June 30, 2021.
(ii) Entities with very limited or no operation.
The operational context of the subsidiaries is to be read in conjunction with the annual financial statements for the year ended December 31, 2021.
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PagSeguro Digital Ltd.
Notes to the unaudited condensed consolidated interim financial statements
As of June 30, 2022 and for the three and six-month periods ended June 30, 2022 and 2021
(All amounts in thousands of reais unless otherwise stated)
4.   Segment reporting
Operating segments are determined based on the information reported and reviewed by the Board of Directors, which is responsible for allocating resources and assessing the performance of the business and to make PagSeguro Group's strategic decisions.
Considering that all decisions are based on consolidated reports, and that all decisions related to strategic and financial planning, purchases, investments and the allocation of funds are made on a consolidated basis, the PagSeguro Group and its subsidiaries operate in a single segment, as financial service agents.
The PagSeguro Group is domiciled in Brazil and has revenue arising from local customers and customers located abroad. The main revenue is related to sales from the domestic market. The revenue from international market represents 0.9%, and 1.1% for the three and six-month periods ended June 30, 2022, respectively (3.0% and 3.1% for three and six-month periods ended June 30, 2021 respectively).
5.   Cash and cash equivalents
June 30, 2022 December 31, 2021
Short-term bank deposits 296,682  569,816 
Short-term investment 895,304  1,224,546 
1,191,986  1,794,362 
Cash and cash equivalents are held for the purpose of meeting short-term cash needs and include cash on hand, deposits with banks and other short-term highly liquid investments with original maturities of six-month or less and with immaterial risk of change in value. Short-term investments consist mainly of investments in Brazilian Treasury Bonds ("LFTs") with an average return of 100% of the Basic Interest Rate (SELIC, 13.25% per year on June 30, 2022 and 9.25% per year on December 31, 2021).
6.   Financial investments
Consists of investments in Brazilian Treasury Bonds ("LFTs"), in the amount of R$1,046,558 in June 30, 2022 (R$782,647 in December 31, 2021) with an average return of 100% of the Basic Interest Rate (SELIC, 13.25% per year on June 30, 2022 and 9.25% per year on December 31, 2021), invested to comply with certain requirements for authorized payment institutions as set forth by the Brazilian Central Bank regulation. This financial asset was classified at fair value through other comprehensive income. Unrealized loss on LFTs in six-month period ended June 30, 2022 totaled R$273 (loss of R$497 in the three-month period ended June 30, 2022).
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PagSeguro Digital Ltd.
Notes to the unaudited condensed consolidated interim financial statements
As of June 30, 2022 and for the three and six-month periods ended June 30, 2022 and 2021
(All amounts in thousands of reais unless otherwise stated)
7.   Accounts receivable
June 30, 2022 December 31, 2021
Visa Master Hipercard Elo Amex Total Visa Master Hipercard Elo Amex Total
Legal obligors
Itaú 1,668,269 4,194,212 804,552 6,667,033 1,333,263 2,045,133 757,306 4,135,702
Bradesco 1,746,297 199,115 1,152,599 417,427 3,515,438 1,630,756 160,690 842,352 296,696 2,930,494
Nubank 3,083,556 3,083,556 2,045,699 2,045,699
Santander 811,495 2,018,397 7,416 2,837,308 818,937 1,464,314 3,253 2,286,504
Banco do Brasil 1,972,918 204,019 555,080 2,732,017 1,384,872 77,639 467,305 1,929,816
Banco Carrefour 414,749 882,626 1,297,375 121,398 744,030 865,428
Porto Seguro 595,537 133,781 729,318 550,352 141,924 692,276
CEF 242,269 114,955 323,394 680,618 206,969 136,125 257,929 601,023
Banco C6 645,617 645,617 481,017 481,017
Banco Cooperativo Sicoob 590,352 590,352 216,047 633,590 849,637
Sicredi 301,257 201,580 502,837
Banco Inter 458,594 458,594 407,601 407,601
Banco Bradescard 295,321 73,011 15,343 383,675 362,978 91,016 9,368 463,362
Midway 241,337 108,706 350,043 176,196 82,935 259,131
Votorantim 310,473 310,473 266,398 266,398
Other (iv) 2,320,966 2,392,934 319,914 656 5,034,470 1,714,505 1,739,151 215,378 770 3,669,804
Total card issuers (i) 10,610,415 15,611,928 804,552 2,366,330 425,499 29,818,724 8,516,273 10,517,262 757,306 1,792,332 300,719 21,883,892
Current card issuers 29,651,930 21,883,892
Non – Current card issuers 166,794
Cielo – Elo 1,083 42,662
Getnet 84,705 97,248
Other 6,008 11,716
Total acquirers (ii) 91,796 151,626
Working capital loans 918,604 1,069,671
Working capital loans ECL (iii) (426,521) (256,927)
Credit card receivables 919,047 726,095
Credit card receivables ECL (iii) (320,686) (174,046)
Other credit iniciatives 437,365 110,050
Other credit iniciatives ECL (iii) (7,688) (6,166)
Total credit receivables 1,520,121 1,468,677
Current 1,175,349 1,239,797
Non – Current 344,773 228,880
Other accounts receivable 109,007 156,700
Other accounts receivable ECL (3,264) (3,493)
Total accounts receivable 10,610,414 15,611,928 804,552 2,366,331 425,499 31,536,384 8,516,273 10,517,262 757,306 1,792,332 300,719 23,657,402
Current 31,024,817 23,428,522
Non – Current 511,567 228,880
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PagSeguro Digital Ltd.
Notes to the unaudited condensed consolidated interim financial statements
As of June 30, 2022 and for the three and six-month periods ended June 30, 2022 and 2021
(All amounts in thousands of reais unless otherwise stated)
7. Accounts receivable (continued)
(i) Card issuers: receivables derived from transactions where PagSeguro Brazil acts as the financial intermediary in operations with the issuing banks, related to the intermediation agreements between PagSeguro Brazil and Visa, Mastercard, Hipercard, Amex or Elo. However, PagSeguro Brazil’s contractual accounts receivable are with the financial institutions, which are the legal obligors on the accounts receivable payment. Additionally, amounts due within 27 days of the original transaction, including those that fall due with the first installment of installment receivables, are guaranteed by Visa, Mastercard, Hipercard, Amex or Elo, as applicable, if the legal obligors do not make the payment.
(ii) Acquirers: refers to card processing transactions to be received from the acquirers, which are a third parties acting as financial intermediaries between the issuing bank and PagSeguro Brazil.
(iii) The ECL (“expected credit losses”), are measured according to the IFRS 9. The provision rates are based on the internal credit rating that considers external information and are based on days past due. Every report date, PagSeguro reassesses the premises to adjust the historical credit loss experience with prospective information.
(iv) Refers to other dispersed receivables from legal obligors.
The maturity analysis of accounts receivable is as follows:
June 30, 2022 December 31, 2021
Past due after 91 days 591,211 325,263
Past due within 31 to 90 days 124,924 93,753
Past due within 30 days 99,822 84,447
Due within 30 days 9,278,458 3,924,671
Due within 31 to 120 days 12,232,077 12,033,372
Due within 121 to 180 days 4,639,971 3,457,830
Due within 181 to 360 days 4,816,516 3,808,539
Due after 360 days 511,566 370,128
Expected credit losses (758,159) (440,631)
31,536,384 23,657, 402
8.   Tax Receivable
June 30, 2022 December 31, 2021
Income tax and Social contribution (i) 370,793 294,955
Social integration program (ii) 62,483 167,701
Other 6,955 6,834
440,231 469,490
(i) The increase is mainly related to withholding taxes from FIDC quotas redeemed in March 2022 and June 2022, amounted to R$436,126 and R$282,013, representing withholding taxes of R$55,131 and R$36,677.
(ii) Refers to Social Integration Program (PIS) and Social Contribution on Revenues (COFINS) recoverable on transaction activities and other services.
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PagSeguro Digital Ltd.
Notes to the unaudited condensed consolidated interim financial statements
As of June 30, 2022 and for the three and six-month periods ended June 30, 2022 and 2021
(All amounts in thousands of reais unless otherwise stated)
9.   Related-party balances and transactions
i)    Balances and transactions with related parties
  June 30, 2022 December 31, 2021
  Payables Payables
Immediate parent  
UOL - sales of services (a)
16,126 16,216
UOL - shared service costs (b)
16,281 19,093
UOL – Deposits (c)
105,914 248,271
Affiliated companies
UOL Edtech Tecnologia - Deposits (c)
95,169 229,250
UOL Diveo - sales of services (d)
175 7,612
Compasso Informática S.A. (d)
16,567 12,853
Web Jump - Deposits (c)
9,104
Others
10,958 10,326
  270,294 543,621
(a) Sales of services refer mainly to the purchase of advertising services from UOL.
(b) Shared services costs mainly related to payroll costs that are incurred by the parent company UOL and are charged to PagSeguro Group.
(c) Certificate of deposits (CD) acquired by UOL, UOL Edtech and Web Jump from BancoSeguro with interest rate between 110% to 120% per year of CDI. The maturity analysis is as follows:
June 30, 2022 December 31, 2021
Due within 30 days 16,585
Due within 31 to 120 days 12,203
Due within 121 to 180 days 23,913 193,592
Due within 181 to 365 days 161,820 283,929
214,521 477,521
(d) This payable refers mainly to colocation and cloud services.
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PagSeguro Digital Ltd.
Notes to the unaudited condensed consolidated interim financial statements
As of June 30, 2022 and for the three and six-month periods ended June 30, 2022 and 2021
(All amounts in thousands of reais unless otherwise stated)
9.    Related-party balances and transactions (Continued)
ii)    Revenue and expense from transactions with related parties
Three-month period Six-month period
June 30, 2022 June 30, 2021 June 30, 2022 June 30, 2021
Revenue Expense Revenue Expense Revenue Expense Revenue Expense
Immediate parent
UOL - sales of services (a)
767 22,522 810 5,015 1,560 44,836 1,584 10,220
UOL - shared service costs (b)
33,618 42,249 56,084 77,060
UOL - deposits (c)
2,955 212 7,460 319
Affiliated companies
UOL Edtech Tecnologia (c)
8,415 8,415
UOL Diveo - sales of services (d)
596 726 1,214 1,742
Compasso Informática S.A.(d)
32,769 20,941 64,459 41,247
Transfolha Transportadora e
Distribuição Ltda.
3,314 8,887
Others
226 2,004 304 1,678 439 3,778 1,847
993 102,879 1,114 74,135 1,999 186,246 1,584 141,322
(a) Sale of services expenses is related to advertising services from UOL and revenue is related to intermediation fees.
(b) Shared services costs mainly related to payroll costs sharing that are incurred by the parent company UOL and are charged to PagSeguro. Such costs are included in administrative expenses.
(c) Expenses are related to UOL, UOL Edtech and Web Jump purchase of BancoSeguro's Certificate of Deposits (CD).
(d) Expenses related to colocation and cloud services.
iii)    Key management compensation
Key management compensation includes short and long-term benefits of PagSeguro Brazil's executive officers. The short and long-term compensation related to the executive officers for the three and six month periods ended June 30, 2022 amounted to R$1,708 and R$10,998 (R$10,290 and R$39,420 for the three and six month periods ended June 30, 2021).
10.   Business combinations
On August 12, 2021, PagSeguro Brazil acquired 100% of the share capital and obtained control of Concil. Total consideration amounted to R$43,896 and the total net assets acquired at fair value amounted to R$23,165. The consideration paid in cash amounted to R$35,000 and the remaining portion in amount of R$8,896 was recognized in other liabilities and will be retained for the achievement of metrics. Concil main activity is in the information technology industry, focused on the processing of back-office solutions, including reconciliation services for the capture of credit cards with acquirers and sub acquirers.
The preliminary purchase price allocation ("PPA") was completed on September 30, 2021, which included the recognition of a customer portfolio with a fair value of R$3,839, non-compete agreement of R$940 and software of R$33,136. The Company has also recognized a contingency liability and indemnification assets of R$7,848 resulting in the recognition of goodwill of R$20,731, which is attributable mainly to operational synergy and cost reductions.
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PagSeguro Digital Ltd.
Notes to the unaudited condensed consolidated interim financial statements
As of June 30, 2022 and for the three and six-month periods ended June 30, 2022 and 2021
(All amounts in thousands of reais unless otherwise stated)
10.   Business combinations (Continued)
The PPA was elaborated considering projections for the period of five years based on management's budgets for Concil and applying an inflation rate plus the estimated growth of GDP of services (fluctuating from 2.0% to 4.5% per year) in order to project future cash flows, discount rate based on WACC (fluctuating from 17.5% to 19.5% per year).
These acquisitions are in accordance with PagSeguro Group's business strategies, ramping up investments on new technologies, products, and services for the Group’s digital ecosystem. The fair value of assets and liabilities acquired is detailed in our annual financial statements for the year ended December 31, 2021.
11.   Property and equipment
a) Property and equipment are composed as follows:
June 30, 2022
Cost Accumulated depreciation Net
Data processing equipment 167,611 (58,078) 109,533
Machinery and equipment (i) 3,318,712 (869,195) 2,449,516
Buildings Leasing (ii) 98,544 (35,112) 63,432
Other 33,610 (9,443) 24,167
Total 3,618,476 (971,828) 2,646,649
December 31, 2021
Cost Accumulated depreciation Net
Data processing equipment 106,643 (51,294) 55,349
Machinery and equipment (i) 2,798,823 (654,360) 2,144,463
Buildings Leasing (ii) 94,048 (26,928) 67,120
Other 29,909 (7,789) 22,120
Total 3,029,423 (740,371) 2,289,052
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PagSeguro Digital Ltd.
Notes to the unaudited condensed consolidated interim financial statements
As of June 30, 2022 and for the three and six-month periods ended June 30, 2022 and 2021
(All amounts in thousands of reais unless otherwise stated)
11.    Property and equipment (Continued)
b) The changes in cost and accumulated depreciation were as follows:
Data processing equipment Machinery and equipment (i) Buildings Leasing (ii) Other Total
On December 31, 2020
Cost 77,413  1,881,556  79,890  22,114  2,060,973 
Accumulated depreciation (35,572) (204,154) (12,621) (6,013) (258,360)
Net book value 41,841  1,677,402  67,269  16,101  1,802,613 
On December 31, 2021
Opening balance
Cost 29,230  917,267  14,156  7,796  968,449 
Purchases
29,940  931,859  15,013  10,478  987,290 
Disposals
(1,226) (14,601) (857) (2,902) (19,586)
Acquisition of subsidiary
516  —  220  745 
Depreciation (15,722) (450,206) (14,305) (1,777) (482,010)
Depreciation
(16,407) (453,593) (14,804) (3,137) (487,941)
Disposals
1,063  3,389  499  1,445  6,396 
Acquisition of subsidiary
(378) (3) —  (85) (466)
Net book value 55,349  2,144,463  67,120  22,120  2,289,052 
         
On December 31, 2021          
Cost 106,643  2,798,823  94,048  29,909  3,029,423 
Accumulated depreciation (51,294) (654,360) (26,928) (7,789) (740,371)
Net book value 55,349  2,144,463  67,120  22,120  2,289,052 
On June 30, 2022
Opening balance
Cost 60,968  519,889  4,496  3,701  589,054 
Purchases
61,086  714,305  4,496  5,065  784,952 
Disposals (iii)
(118) (194,416)   (1,364) (195,898)
Depreciation (6,784) (214,835) (8,184) (1,654) (231,457)
Depreciation
(6,896) (308,594) (8,184) (1,873) (325,547)
Disposals (iii)
112  93,760    219  94,091 
Net book value 109,533  2,449,517  63,432  24,167  2,646,649 
On June 30, 2022          
Cost 167,611  3,318,712  98,544  33,610  3,618,476 
Accumulated depreciation (58,078) (869,195) (35,112) (9,443) (971,828)
Net book value 109,533  2,449,517  63,432  24,167  2,646,649 
(i) Net book value of POS devices are R$2,397,231 (R$2,091,671 as of December 31, 2021), which are depreciated over 5 years. The depreciation of POS in the six-month period ended June 30, 2022, amounted to R$305,410 (R$202,531 in the six-month period ended June 30, 2021). On June 30, 2022, PagSeguro have contractual obligations to acquire POS devices in the amount of R$1,120,054 (R$1,650,885 on December 31, 2021).
(ii) The leasing context is to be read in connection with the annual financial statements for the year ended December 31, 2021. As of June 30, 2022, PagSeguro had a lease liability presented in other current liabilities in the amount of R$16,707 (R$15,690 in December 31, 2021) and as non-current liability in the amount of R$46,814 (R$51,521 in December 31, 2021). In the six month period ended June 30, 2022, the Company incurred in financial expenses related to these leases of R$9,775 (R$6,384 in the six month period ended June 30, 2021).
(iii) The net book value of disposals are impacted by R$93,141 related to the write off of POS devices, of which R$182,591 are cost and R$89,450 are accumulated depreciation. During the quarter ended June 30, 2022, the Company revised its business strategy towards a specific group of merchants and observed no future economic benefit is expected from them, resulting in the write off of POS devices allocated to these merchants.
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PagSeguro Digital Ltd.
Notes to the unaudited condensed consolidated interim financial statements
As of June 30, 2022 and for the three and six-month periods ended June 30, 2022 and 2021
(All amounts in thousands of reais unless otherwise stated)
12.   Intangible assets
a)Intangible assets are composed as follows:
June 30, 2022
Cost Accumulated amortization Net
Expenditures related to software and technology (i) 2,449,471 (967,156) 1,482,315
Software licenses 234,855 (74,231) 160,624
Goodwill (ii) 209,908   209,908
Other 67,768 (21,243) 46,525
2,962,002 (1,062,630) 1,899,372
December 31, 2021
Cost Accumulated amortization Net
Expenditures related to software and technology (i) 2,016,541 (772,804) 1,243,737
Software licenses 196,854 (53,129) 143,725
Goodwill (ii) 209,908 —  209,908
Other 67,768 (14,962) 52,806
2,491,071 (840,895) 1,650,176
(i) The PagSeguro Group capitalizes expenses incurred with the development of platforms, which are amortized over their useful lives of approximately five years.
(ii) The balances comprise the goodwill arising from the acquisition of the companies Biva, BancoSeguro, Yamí, Zygo, Moip and Concil.
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PagSeguro Digital Ltd.
Notes to the unaudited condensed consolidated interim financial statements
As of June 30, 2022 and for the three and six-month periods ended June 30, 2022 and 2021
(All amounts in thousands of reais unless otherwise stated)
12.    Intangible assets (Continued)
(b) The changes in cost and accumulated amortization were as follows:
Expenditures with software and technology Software licenses Goodwill Other Total
On December 31, 2020
Cost 1,319,061  103,256  169,667  62,786  1,654,770 
Accumulated amortization (501,319) (29,060) —  (771) (531,150)
Net book value 817,742  74,196  169,667  62,015  1,123,620 
On December 31, 2021
Cost 697,480  93,597  40,241  4,983  836,301 
Additions (i) 715,382  97,103  40,589  4,983  858,057 
Disposals
(18,167) (3,645) (348) —  (22,160)
Acquisition of subsidiary
265  139  —  —  404 
Amortization (271,485) (24,068) —  (14,192) (309,745)
Amortization (278,220) (24,290) —  (14,192) (316,702)
Disposals 6,735  222  —  —  6,957 
Net book value 1,243,737  143,725  209,908  52,806  1,650,176 
On December 31, 2021
Cost 2,016,541  196,854  209,908  67,768  2,491,071 
Accumulated amortization (772,804) (53,129) —  (14,962) (840,895)
Net book value 1,243,737  143,725  209,908  52,806  1,650,176 
On June 30, 2022
Cost 432,929  38,001      470,930 
Additions (i)
437,757  38,001      475,758 
Disposals
(4,828)       (4,828)
Amortization (194,351) (21,102)   (6,281) (221,734)
Amortization
(196,029) (21,102)   (6,281) (223,412)
Disposals
1,678        1,678 
Net book value 1,482,315  160,624  209,908  46,525  1,899,372 
On June 30, 2022
Cost 2,449,471  234,855  209,908  67,768  2,962,002 
Accumulated amortization (967,156) (74,231)   (21,243) (1,062,630)
Net book value 1,482,315  160,624  209,908  46,525  1,899,372 
(i) Refers to pulverized expenditures with software and technology, mainly related to customer experience functionalities, such as, digital payment and digital banking account. Goodwill recorded in business combinations in 2021 are related to Concil and MOIP acquisitions.
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PagSeguro Digital Ltd.
Notes to the unaudited condensed consolidated interim financial statements
As of June 30, 2022 and for the three and six-month periods ended June 30, 2022 and 2021
(All amounts in thousands of reais unless otherwise stated)
13.   Payables to third parties
Payables to third parties, in the amount of R$14,359,488 (R$13,217,150 as of December 31, 2021) correspond mainly to amounts to be paid to merchants related to transactions carried out by their card holders, net of the intermediation fees and discounts applied. PagSeguro Brazil's average settlement terms agreed upon with commercial establishments is up to 14 days.
From the total amount of payable to third parties, R$786,657 (R$533,436 as of December 31, 2021) refer to the balance of transactions settled on merchant's payment account and available to be used by them and R$5,294,718 (R$5,167,577 as of December 31, 2021) are the balance of the clients maintained in their banking accounts that are invested by the Company in Certificate of Deposits with 30 days of maturity and interest average rate of 65% of CDI (59% of CDI in December 2021).
14.   Deposits
June 30, 2022 December 31, 2021
Certificate of Deposit (i) 6,998,757 2,510,818
Interbank deposits (ii) 2,190,853 404,998
Corporate securities (iii) 234,835 218,180
9,424,445 3,133,996
Current 7,689,233 3,056,444
Non - Current 1,735,212 77,552
(i) The average return is 119% of CDI (163% of CDI in December 2021). From the total amount, R$558,421 refer to certificate of deposits with interest rates correlated to the IPCA (Brazilian inflation rates) that started in 2022 . For these certificates of deposit, the Company entered into derivative financial instruments (“Swaps”) with the specific objective of protecting said deposit from fluctuations arising from inflation, changing IPCA rates for CDI rates. In June 2022, the Company recorded the net effects of the swap derivatives in the amount of R$4,429.
(ii) The average return is 113% of CDI (118% of CDI in December 2021).
(iii) The average return is 140% of CDI (152% of CDI in December 2021).
The maturity analysis of deposits is as follows:
June 30, 2022 December 31, 2021
Due within 30 days 768,847 646,232
Due within 31 to 120 days 1,574,758 1,029,936
Due within 121 to 180 days 834,802 313,008
Due within 181 to 360 days 4,510,826 1,067,268
Due to 361 days or more days 1,735,212 77,552
9,424,445 3,133,996
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PagSeguro Digital Ltd.
Notes to the unaudited condensed consolidated interim financial statements
As of June 30, 2022 and for the three and six-month periods ended June 30, 2022 and 2021
(All amounts in thousands of reais unless otherwise stated)
14. Deposits (continued)
The changes in deposits were as follows:
On December 31,2020 766,086
Additions 4,929,926
Withdraws (2,667,612)
Interest 105,596
On December 31,2021 3,133,996
Additions (i) 13,349,818
Withdraws (7,245,477)
Interest 186,078
On June 30,2022 9,424,445
(i) Increase is mainly related to higher volume of deposits issued due to attractiveness of interest rates paid.
15.   Salaries and social security charges
June 30, 2022 December 31, 2021
Profit sharing
50,384 75,076
Social charges
30,163 39,200
Payroll accruals (i)
125,348 75,151
Payroll taxes (LTIP) (ii)
35,407 61,359
Other
10,128 8,938
251,430 259,724
(i) Refers to 13th salary, provision for vacation, among others. Increase in June 30, 2022 is mainly related to the fact there was no 13th salary provision in Deceber 31, 2021.
(ii) Refers to social charges and income tax over LTIP and LTIP goals balances. A significant portion of the balances recorded as of December 31, 2021 was paid during the first quarter of 2022.
16.   Taxes and contributions
June 30, 2022
December 31, 2021
Taxes
Services tax and other (i)
173,251  171,902 
Value-added tax on sales and services
1,799  117 
Social integration program (ii)
28,395  26,832 
Social contribution on revenues (ii)
172,980  164,330 
Income tax and social contribution (iii)
3,489  31,865 
Other
21,617  12,479 
401,531  407,525 
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PagSeguro Digital Ltd.
Notes to the unaudited condensed consolidated interim financial statements
As of June 30, 2022 and for the three and six-month periods ended June 30, 2022 and 2021
(All amounts in thousands of reais unless otherwise stated)
16.   Taxes and contributions (Continued)
June 30, 2022 December 31, 2021
Judicial deposits (iv)
Services tax (i)
(157,056) (159,101)
Social integration program (ii)
(26,740) (25,789)
Social contribution on revenues (ii)
(164,620) (158,701)
(348,416) (343,591)
53,115  63,934 
(i) Refers to tax on revenues.
(ii) Refers mainly to Social Integration Program (PIS) and Social Contribution on Revenues (COFINS) charged on financial income.
(iii) Refers to the income tax and social contribution payable.
(iv) The PagSeguro Group obtained court decisions to deposit the amount related to the payments in escrow for matters discussed in items "i" and "ii" and above.
17.   Provision for contingencies
PagSeguro Group is party to labor and civil litigation in progress and are discussing such matters at the administrative and judicial levels, which in some cases the PagSeguro Group has made corresponding judicial deposits. The likelihood of a negative outcome is assessed periodically and adjusted by management, when appropriate. Such assessment considers the opinion of its external legal advisors.
June 30, 2022 December 31, 2021
Civil 34,542 33,343
Labor 23,526 18,387
58,068 51,730
Labor Deposits (10,793) (10,167)
(10,793) (10,167)
   
47,275 41,563
Current 33,159 27,653
Non-Current 14,116 13,910
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PagSeguro Digital Ltd.
Notes to the unaudited condensed consolidated interim financial statements
As of June 30, 2022 and for the three and six-month periods ended June 30, 2022 and 2021
(All amounts in thousands of reais unless otherwise stated)
17.   Provision for contingencies (Continued)
Below it is demonstrated the movements of the provision for contingencies in the six-month period ended June 30, 2022:
On December 31,2020 28,804
Accrual 25,907
Settlement (17,760)
Interest 4,610
On December 31,2021 41,563
Accrual 13,897
Settlement (9,369)
Interest 1,184
On June 30,2022 47,275
The movements of the labor deposits in the six-month period ended June 30, 2022 is mainly related to interest in the period.
The PagSeguro Group is party on tax and civil lawsuits involving risks classified as possible losses, for which no provision was recognized on June 30, 2022, totaling R$554,987 (December 31, 2021 - R$504,691), the increase is mainly related to interest in the period.
The PagSeguro Group is not a party to labor lawsuits involving risks classified by management as possible losses. The main tax and labor lawsuit are disclosed in our annual financial statements of the year ended December 2021.
18.   Borrowings
In November 2021, the Group entered in a US$180 million borrowing agreement with maturity in one-year from the execution date and the payment will occur in a single instalment at the due date. At the moment the agreement was signed, the foreign exchange rate was R$ 5.6227 per US dollar amounting in R$1,012,086. Interest on the borrowing is paid on the maturity of the financing, together with the total settlement of the financial instrument. On June 30, 2022, the borrowing amounted to R$ 951,926 (R$1,005,787 as of December 31, 2021). The main impact of this decrease in the borrowing is related to foreign exchange rate, which in June 30, 2022 is R$ 5.2380 per US dollar.
In the same financing, the Company entered into derivative financial instruments (“Swaps”) for the borrowing in foreign currency, with the specific objective of protecting said borrowing from fluctuations arising from exchange variation mentioned above. The final remuneration, considering all the costs of the operation, is equivalent to 109.4% of the CDI representing R$59,628 of interest recorded as financial expenses in 2022. In June 2022, the Company recorded the effects of the swap derivatives in the amount of R$ 143,485, basically represented by the different foreign exchange rates at the time of signing the borrowing agreement and June 2022 plus interest More details of financial instruments in note 26.
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PagSeguro Di