UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 20-F/A

(Amendment No. 1)

 

 

(Mark One)

☐	REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934

OR

 

☒	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2020

OR

 

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                      to                     .

OR

 

☐	SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Date of event requiring this shell company report                     

Commission file number: 001-39938

 

 

Vinci Partners Investments Ltd.

(Exact name of Registrant as specified in its charter)

 

 

Not applicable

(Translation of Registrant’s name into English)

Cayman Islands

(Jurisdiction of incorporation or organization)

Av. Bartolomeu Mitre, 336

Leblon – Rio de Janeiro

Brazil 22431-002

+55 (21) 2159-6240

(Address of principal executive offices)

Sergio Passos Ribeiro, Chief Financial Officer

Av. Bartolomeu Mitre, 336

Leblon – Rio de Janeiro

Brazil 22431-002

+55 (21) 2159-6240

(Name, Telephone, E-mail and/or Facsimile number and Address of Company Contact Person)

Copies to:

Manuel Garciadiaz

Davis Polk & Wardwell LLP

450 Lexington Avenue

New York, NY 10017

Phone: (212) 450-4000

Fax: (212) 450-6858

Securities registered or to be registered pursuant to Section 12(b) of the Act:

 

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
Class A common shares, par value US$0.00005 per share		VINP		Nasdaq Global Select Market

Securities registered or to be registered pursuant to Section 12(g) of the Act:

None

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act:

None

 

 

Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report.

The number of outstanding shares as of the date of this annual report was 42,447,349 Class A common shares and 14,466,239 Class B common shares.

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

Yes  ☐            No  ☒

If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.

Yes  ☐            No  ☒

Note – Checking the box above will not relieve any registrant required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 from their obligations under those Sections.

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes  ☒            No  ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes  ☒            No  ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):

 

Large Accelerated Filer		☐		Accelerated Filer		☐
Non-accelerated Filer		☐		Emerging growth company		☒

If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards† provided pursuant to Section 13(a) of the Exchange Act.  ☐

 

†	The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5, 2012.

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report:  ☒

Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this annual report:

 

☐

U.S. GAAP

 

☒

International Financial Reporting Standards as issued by the International Accounting Standards Board

 

☐

Other

If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow.

☐  Item 17            ☐  Item 18

If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes  ☐            No  ☒

 

 

 

Explanatory Note

This Amendment No. 1 to the annual report on Form 20-F of Vinci Partners Investments Ltd. (“Vinci Partners”, the “Company,” “we,” “our,” or “us”) amends the Company’s annual report on Form 20-F for the fiscal year ended December 31, 2020 (the “Original 20-F”), which was filed with the U.S. Securities and Exchange Commission on April 27, 2021. The Company is filing this Amendment No. 1 solely to furnish the Interactive Data File disclosure as Exhibit 101 in accordance with Rule 405 of Regulation S-T, which was not included in the Original 20-F. Exhibit 101 includes information about the Company in eXtensible Business Reporting Language (XBRL).

This Amendment No. 1 consists solely of the cover page and this explanatory note. Except as described above, this Amendment No. 1 does not amend any information set forth in the Original 20-F, and the Company has not updated disclosures included therein to reflect any events that occurred subsequent to April 27, 2021. Accordingly, this Amendment No. 1 should be read in conjunction with the Original 20-F and with our filings with the U.S. Securities Exchange Commission subsequent to the Original 20-F.

Pursuant to Rule 406T of Regulation S-T, these interactive data files are deemed furnished and not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, and are deemed not filed for purposes of Section 18 of the Securities and Exchange Act of 1934, as amended, and are otherwise not subject to liability under those sections.

PART III

ITEM 19. EXHIBITS

The following documents are filed as part of this annual report:

 

Exhibit No.		Exhibit
101.INS*		XBRL Instance Document
101.SCH*		XBRL Taxonomy Extension Schema Document
101.CAL*		XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF*		XBRL Taxonomy Extension Definition Linkbase Document
101.LAB*		XBRL Taxonomy Extension Label Linkbase Document
101.PRE*		XBRL Taxonomy Extension Presentation Linkbase Document

 

*	Filed herewith.

In accordance with Rule 406T(b)(2) of Regulation S-T, this eXtensible Business Reporting Language (XBRL) information is furnished and not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, are deemed not filed for purposes of Section 18 of the Exchange Act of 1934, as amended, and otherwise are not subject to liability under those sections.

SIGNATURES

The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized the undersigned to sign this annual report on its behalf.

May 24, 2021

 

 

Vinci Partners

Investimentos Ltda.

Report of independent registered

public accounting firm

Report of independent registered

public accounting firm

To the Quotaholders of Vinci Partners Investimentos Ltda.

Opinion on the financial statements

We have audited the accompanying consolidated balance sheets of Vinci Partners Investimentos Ltda. and its subsidiaries (the “Company”) as of December 31, 2020 and December 31, 2019, and the related consolidated statements of income, comprehensive income, changes in equity and cash flows for each of the three years in the period ended December 31, 2020, including the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2020 and December 31, 2019, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2020 in conformity with International Financial Reporting Standards as issued by the International Accounting Standards Board.

Basis for opinion

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

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

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

Rio de Janeiro, March 5, 2021

/s/ PricewaterhouseCoopers

Auditores Independentes

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

 

F-1

Vinci Partners Investimentos Ltda.

Consolidated balance sheets

All amounts in thousands of reais

 

 

Assets		Note				12/31/2020				12/31/2019
Current assets
Cash and cash equivalents			5(d)				83,449				3,896
Cash and bank deposits			5(d)				13,096				3,564
Financial instruments at fair value through profit or loss			5(d)				70,353				332
Financial instruments at fair value through profit or loss			5(c)				8,253				85,944
Trade receivables			5(a)				47,978				58,808
Sub-leases receivable			10				2,963				2,883
Taxes recoverable							1,153				789
Other assets			6				12,383				5,044
Total current assets							156,179				157,364
Non-current assets
Financial instruments at fair value through profit or loss			5(c)				31,596				24,164
Trade receivables			5(a)				27,545				15,961
Sub-leases receivable			10				—				2,717
Taxes recoverable							134				513
Deferred taxes			18				4,568				2,207
Other assets			6				1,540				1,330
							65,383				46,892
Property and equipment			8				15,043				16,412
Right of use - Leases			10				90,478				88,384
Intangible assets			9				1,441				2,720
							172,345				154,408
TOTAL							328,524				311,772

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

 

F-2

Vinci Partners Investimentos Ltda.

Consolidated balance sheets

All amounts in thousands of reais

 

 

Liabilities and equity		Note				12/31/2020				12/31/2019
Current liabilities
Trade payables							1,039				326
Leases			10 and 5(e)				19,828				17,738
Accounts payable			11				125,795				37,669
Labor and social security obligations			12				40,724				30,948
Taxes and contributions payable			13				22,878				16,297
Total current liabilities							210,264				102,978
Non-current liabilities
Accounts payable			11				33				33
Leases			10 and 5(e)				86,371				85,153
Deferred taxes			18				12,620				8,883
							99,024				94,069
Equity			14
Quota capital							8,730				8,595
Retained earnings							—				91,430
Other reserves							10,491				8,119
							19,221				108,144
Non-controlling interests in the equity of subsidiaries							15				6,581
Total equity							19,236				114,725
Total liabilities and equity							328,524				311,772

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

 

F-3

Vinci Partners Investimentos Ltda.

Consolidated statements of income

Years ended December 31

All amounts in thousands of reais unless otherwise stated

 

 

Statements of Income		Note				2020				2019				2018
Net revenue from services rendered			15				339,892				296,717				172,204
General and administrative expenses			16				(124,245	)			(113,287	)			(90,755	)
Operating profit							215,647				183,430				81,449
Finance income			17				10,050				21,161				8,723
Finance expenses			17				(13,097	)			(12,476	)			(12,472	)
Finance profit/(loss), net							(3,047	)			8,865				(3,749	)
Profit before income taxes							212,600				192,115				77,700
Income taxes			18				(43,446	)			(36,483	)			(21,022	)
Profit for the year							169,154				155,632				56,678
Attributable to the quotaholders of the parent company							170,199				151,373				56,613
Attributable to non-controlling interests							(1,045	)			4,259				65
Basic and diluted earnings per quota							19.60				17.41				6.54

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

 

F-4

Vinci Partners Investimentos Ltda.

Consolidated statements of comprehensive income

Years ended December 31

All amounts in thousands of reais

 

 

		2020				2019				2018
Profit for the year			169,154				155,632				56,678
Other comprehensive income
Items that may be reclassified to profit or loss:
Foreign exchange variation of investee located abroad
Vinci Financial Ventures (VF2) GP			—				16				39
Vinci Capital Partners GP Limited			69				326				670
Vinci USA LLC			2,284				(1	)			(2	)
Vinci Capital Partners F III GP Limited			19				2				12
Total comprehensive income for the year			171,526				155,975				57,397
Attributable to:
Quotaholders of the parent company			172,571				151,716				57,332
Non-controlling interests			(1,045	)			4,259				65
			171,526				155,975				57,397

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

 

F-5

Vinci Partners Investimentos Ltda.

Consolidated statements of changes in equity

All amounts in thousands of reais

 

 

		Quota capital				Retained earnings				Other reserves				Treasury quotas				Total				Non-controlling interests				Total equity
At January 01, 2018			8,550				38,857				7,057				—				54,464				1,635				56,099
Profit for the year			—				56,613				—				—				56,613				65				56,678
Other comprehensive income:
Foreign exchange variation of investee located abroad			—				—				719				—				719				—				719
Capital increase			270				—				—				—				270				266				536
Allocation of profit:
Dividends			—				(45,759	)			—				—				(45,759	)			(207	)			(45,966	)
At December 31, 2018			8,820				49,711				7,776				—				66,307				1,759				68,066
Profit for the year			—				151,373				—				—				151,373				4,259				155,632
Other comprehensive income:
Foreign exchange variation of investee located abroad			—				—				343				—				343				—				343
Capital increase			—				—				—				—				—				580				580
Treasury quotas bought			—				—				—				(225	)			(225	)			—				(225	)
Treasury quotas canceled			(225	)			—				—				225				—				—				—
Allocation of profit:
Dividends			—				(109,654	)			—				—				(109,654	)			(17	)			(109,671	)
At December 31, 2019			8,595				91,430				8,119				—				108,144				6,581				114,725
Profit for the year			—				170,199				—				—				170,199				(1,045	)			169,154
Other comprehensive income:
Foreign exchange variation of investee located abroad			—				—				2,372				—				2,372				—				2,372
Capital increase (deacrease)			135				—				—				—				135				(900	)			(765	)
Acquisition of non-controlling quotas																							(1,183	)			(1,183	)
Allocation of profit:
Dividends			—				(261,629	)			—				—				(261,629	)			(3,438	)			(265,067	)
At December 31, 2020			8,730				—				10,491				—				19,221				15				19,236

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

 

F-6

Vinci Partners Investimentos Ltda.

Consolidated statements of cash flows

Years ended December 31

All amounts in thousands of reais unless otherwise stated

 

 

		2020				2019				2018
Cash flows from operating activities
Profit before taxation			212,600				192,115				77,700
Adjustments to reconcile net income to cash flows from operations:
Depreciation and amortization			13,228				16,520				17,520
Unrealized gain of financial instruments at fair value through profit or loss			(8,251	)			(20,104	)			(7,103	)
Finance expense on liabilities at amortized cost			203				181				162
Allowance for expected credit loss			59				69				52
Financial result on lease agreements			11,691				11,180				10,584
			229,530				199,961				98,915
Changes in assets and liabilities
Accounts receivables			(813	)			(53,798	)			(4,762	)
Taxes recoverable			15				(639	)			439
Other assets			(7,549	)			(3,500	)			144
Trade payables			713				115				(2,629	)
Accounts payable			(858	)			1,899				(4,345	)
Labor and social security obligations			9,776				13,053				695
Taxes and contributions payable			(5,246	)			3,248				(1,362	)
Payables to related parties			—				(27	)			21
Other payables			—				(2,039	)			2,507
			(3,962	)			(41,687	)			(9,292	)
Cash generated from operations			225,568				158,274				89,623
Income tax paid			(30,242	)			(25,932	)			(16,339	)
Net cash inflow from operating activities			195,326				132,342				73,284
Cash flows from investing activities
Purchases of property and equipment and additions to intangible assets			(2,016	)			(1,737	)			(965	)
Acquisition of non-controlling quotas			(1,183	)			—				—
Purchase of financial instruments at fair value through profit or loss			(375,006	)			(273,051	)			(192,083	)
Sales of financial instruments at fair value through profit or loss			453,517				234,942				176,028
Net cash (outflow) from investing activities			75,312				(39,846	)			(17,020	)
Cash flows from financing activities
Issuance (purchase) of quotas			135				(225	)			112
Advance to capital increase			—				—				580
Capital increase (deacrease) of non-controlling interests in the equity of subsidiaries			(900	)			—				266
Lease payments, net of sublease received			(16,497	)			(15,483	)			(16,836	)
Borrowings acquisitions (payments)			—				(8,500	)			8,500
Dividends paid			(176,287	)			(76,226	)			(45,885	)
Net cash (outflow) from financing activities			(193,549	)			(100,434	)			(53,263	)
Net increase (decrease) in cash and cash equivalents			77,089				(7,938	)			3,001
Cash and cash equivalents at the beginning of the year			3,896				11,713				8,240
Foreign exchange variation of cash and cash equivalents in subsidiary abroad			2,464				121				472
Cash and cash equivalents at the end of the year (Notes 6 and 7)			83,449				3,896				11,713

Non-cash financing activities

Dividends declared and not yet paid was R$ 123,191 (Note 11)

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

 

F-7

Vinci Partners Investimentos Ltda.

Notes to the consolidated financial statements

All amounts in thousands of reais

 

 

1	Operations

Vinci Partners Investimentos Ltda. (referred to herein as “Entity”, “Group” or “Vinci”) started its activities in September 2009. Its objective is to hold investments in the capital of other companies as partner (quotaholder). The investees are specialized in rendering alternative investment management, asset allocation and financial advisory services. The actual quotaholders of the Entity are disclosed in Note 14.

The Entity is established and domiciled in Brazil, and its headquarters are located at Rua Bartolomeu Mitre nº 336, Leblon, in the city of Rio de Janeiro.

The issuance of these financial statements was authorized by the Entity’s management on March 5, 2021.

Corporate reorganization

Prior to the consummation of the initial public offering, on January 15, 2021 the individual partners of Vinci contributed the entirety of their quotas in Vinci to Vinci Partners Investments Ltd (referred to herein as “Vinci Partners Ltd”), a Cayman Islands exempted company incorporated with limited liability for purposes of effectuating the initial public offering of Vinci Partners Ltd.

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

The reorganization mentioned above is disclosed in these financial statements as a non-adjusting post balance sheet event, with the impacts to be reflected in financial statements for periods subsequent to December 31, 2020.

Initial Public Offering (IPO) – Vinci Partners Ltd

On January 28, 2021 Vinci Partners Ltd announced the price of its public offering of the Class A common shares. being offered 13,873,474 Class A common shares. The impact of the transaction is disclosed in these financial statements as a non-adjusting post balance sheet event, with the accounting impacts to be reflected in financial statements for periods subsequent to December 31, 2020. Prior to this offering, there has been no public market for our Class A common shares. The initial public offering price per Class A common share was US$18.00.

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

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

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

 

F-8

Vinci Partners Investimentos Ltda.

Notes to the consolidated financial statements

All amounts in thousands of reais

 

 

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

Vinci Partners Ltd intends to use the net proceeds from the offering to (1) to fund investments in its own products alongside its investors; (2) to pursue opportunities for strategic transactions; and (3) for other general corporate purposes.

Impacts of the coronavirus pandemic (COVID-19)

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

The COVID-19 pandemic and government measures taken in response thereto have caused disruptions in some of our funds’ portfolio companies’ businesses and could lead to long-term disruptions or closures. For instance, the COVID-19 pandemic has caused work stoppages and increased unemployment, including because of illness or travel or government restrictions in connection with the pandemic. Additionally, the COVID-19 pandemic has resulted in the temporary or permanent closure of many businesses and has required adjustments in how many businesses operate. For example, certain funds in our real estate segment were adversely impacted as a result of shopping mall closures in Brazil lasting over six months. In addition, there is uncertainty surrounding real estate funds with concentrated investments in office space as the real estate market adjusts to shifts in office space demand in response to changes in economic activity and remote working arrangements. These factors have adversely impacted certain companies in our investment portfolio and severely disrupted operations and economic conditions generally. Finally, significant market fluctuations driven by the COVID-19 pandemic have resulted in fluctuations in the fair value component of our Assets Under Management and could result in additional fluctuations in our Assets Under Management depending on the severity and extent of the ongoing crisis. However, despite the adverse impact, Vinci expanded its operations during the pandemic and had increased its total assets, net revenue, profits and did not record any impairment in 2020 as result of COVID-19. Additionally the Group completed its Initial Public Offering (“IPO”) on the Nasdaq Global Select Market in January 2021.

 

2	Summary of significant accounting policies

 

2.1	Basis of preparation and presentation

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

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

 

F-9

Vinci Partners Investimentos Ltda.

Notes to the consolidated financial statements

All amounts in thousands of reais

 

 

(a)	Consolidated financial statements

Ownership interest in subsidiaries at December 31 is as follows:

 

		Interest - %
		2020				2019				2018
Direct subsidiaries
Vinci Assessoria financeira Ltda. (*)			100				100				100
Vinci Equities Gestora de Recursos Ltda. (*)			100				100				100
Vinci Gestora de Recursos Ltda. (*)			100				100				100
Vinci Capital Gestora de Recursos Ltda. (*)			100				100				100
Vinci Gestão de Patrimônio Ltda.			100				100				100
Vinci Real Estate Gestora de Recursos Ltda. (**)			100				80				80
Vinci Capital Partners GP Limited.			100				100				100
Vinci USA LLC			100				100				100
Vinci GGN de Recursos Ltda. (*)			100				100				100
Vinci Infraestrutura Gestora de Recursos Ltda. (***)			100				80				80
Vinci Financial Ventures (VF2) GP (****)			—				100				100
Vinci Capital Partners GP III Limited.			100				100				100
GGN GP LLC			100				100				—
Amalfi Empreendimentos e Participações Ltda.			100				100				—

 

(*)	Minority interest represents less than 0.001%.

(**)

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

(***)

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

(****)

Vinci Financial Ventures (VF2) GP was terminated on June 2nd, 2020.

Subsidiaries are all entities (including structured entities) over which the Group has control. The Group controls an entity where the Group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power to direct the activities of the entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are deconsolidated from the date that control ceases.

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

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

The Group treats transactions with non-controlling interests that do not result in a loss of control as transactions with equity owners of the Group. A change in ownership interest results in an adjustment between the carrying amounts of

 

F-10

Vinci Partners Investimentos Ltda.

Notes to the consolidated financial statements

All amounts in thousands of reais

 

 

the controlling and non-controlling interests to reflect their relative interests in the subsidiary. Any difference between the amount of the adjustment to non-controlling interests and any consideration paid or received is recognized in another reserve within equity attributable to owners of Entity.

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

 

2.2	Segment reporting

The CEO is responsible for the decision-making process related to executive themes, resources allocation and strategic decisions of Vinci.

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

 

2.3	Foreign currency translation

Functional and presentation currency

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

Transactions and balances

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

Group companies

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

 

•

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

 

•

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

 

•

all resulting exchange differences are recognized in other comprehensive income.

 

F-11

Vinci Partners Investimentos Ltda.

Notes to the consolidated financial statements

All amounts in thousands of reais

 

 

2.4	Cash and cash equivalents

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

 

2.5	Financial assets

(i) Classification

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

 

•

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

 

•

those to be measured at amortized cost.

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

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

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

(ii) Recognition and derecognition

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

(iii) Measurement

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

(iv) Impairment

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

 

F-12

Vinci Partners Investimentos Ltda.

Notes to the consolidated financial statements

All amounts in thousands of reais

 

 

2.6	Trade receivables

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

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

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

 

2.7	Intangible assets

Computer software

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

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

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

 

•

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

 

•

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

 

•

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

 

•

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

 

•

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

 

•

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

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

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

 

F-13

Vinci Partners Investimentos Ltda.

Notes to the consolidated financial statements

All amounts in thousands of reais

 

 

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

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

Intangible assets with definite life are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognized for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. During the years ended December 31, 2020 and 2019 management do not identify any event that could impact the recoverable value of the intangible assets.

 

2.8	Property and equipment

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

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

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

 

2.9

Leases

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

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

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

The following factors are normally the most relevant:

 

•

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

 

•

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

 

•

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

 

F-14

Vinci Partners Investimentos Ltda.

Notes to the consolidated financial statements

All amounts in thousands of reais

 

 

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

 

2.10	Trade payables

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

 

2.11	Provisions

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

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

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

 

2.12	Profit-sharing and bonus plans

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

 

2.13	Income taxes

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

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

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

 

F-15

Vinci Partners Investimentos Ltda.

Notes to the consolidated financial statements

All amounts in thousands of reais

 

 

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

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

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

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

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

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

 

2.14

Capital

Ordinary quotas are classified as equity.

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

Dividends

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

Earnings per quota

(i) Basic earnings per quota

Basic earnings per quota is calculated by dividing:

 

•

the profit attributable to owners of the Entity;

 

•

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

 

F-16

Vinci Partners Investimentos Ltda.

Notes to the consolidated financial statements

All amounts in thousands of reais

 

 

(ii) Diluted earnings per quota

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

 

•

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

 

•

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

 

2.15	Revenue recognition

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

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

 

(a)	Management fees

Management fees are recognized in the period when the corresponding services are rendered, which generally consist of a percentage on the net asset value of each investment fund being managed. These customer contracts require Vinci to provide investment management services, which represents a performance obligation that the Group satisfies over time. Management fee percentages currently range between 0.1% and 2%.

 

(b)	Performance fees

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

 

•

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

 

•

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

 

•

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

 

•

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

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

For liquid funds such as equity funds, credit funds and hedge funds, we charge performance fees every semester based

 

F-17

Vinci Partners Investimentos Ltda.

Notes to the consolidated financial statements

All amounts in thousands of reais

 

 

on the performance of the fund above the benchmark or when the customer makes a redemption and a performance fee is due. For hedge funds and credit funds, performance fees are generally benchmarked to the Interbank Deposit Certificate index, or CDI, and for inflation-indexed funds, performance fees are generally indexed to the Amplified Consumer Price Index, or IPCA, plus a fixed real interest rate or a market index such as the Market Index Sub-Index B from the Brazilian Financial and Capital Markets Association, or IMA-B. For equity funds, the benchmark varies according to the strategy. For our “long only” and “long-biased” strategies, performance fees are assessed to the IBOVESPA index, under the dividend strategy performance fees are tied to the IDIV index, and for the small cap funds we use SMLL index.

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

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

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

The Entity recognize the revenue according to IFRS 15. Unrealized performance fees are recognized when the revenue is highly probable that they will not be reversed in the income statements, even if the established period given in the fund’s memorandum is not concluded.

 

(c)	Financial advisory services

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

 

3	Accounting estimates and judgments

The Entity makes estimates and assumptions concerning the future, based on historical experience and other factors, including expectations of future events. The resulting accounting estimates will, by definition, seldom equal the related actual results. The main estimations and assumptions made by the Entity comprises the provision for impairment of trade receivables, provision for profit sharing, and the revenue recognition of management fees for some funds abroad and the fair value measurement of financial assets.

 

F-18

Vinci Partners Investimentos Ltda.

Notes to the consolidated financial statements

All amounts in thousands of reais

 

 

4	Financial risk management

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

 

4.1	Financial risk factors

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

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

 

(a)	Credit risk

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

(i) Risk management

Vinci’s treasury manages credit risk on a group basis. As of December 31, 2020, and 2019 the expected credit losses is considered immaterial due to the short maturities of the deposits and the credit quality of the counterparty, which have a credit rating AAA evaluated by Fitch Ratings. The Entity has not suffered any losses from cash and cash equivalent since inception. Vinci’s treasury review expected credit losses on a regular basis.

(ii) Impairment of financial assets

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

 

•

trade receivables

 

•

debt investments carried at amortized cost, and

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

 

F-19

Vinci Partners Investimentos Ltda.

Notes to the consolidated financial statements

All amounts in thousands of reais

 

 

(b)	Market risk

(i) Foreign exchange risk

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

The amounts presented in the table below are originally presented in US Dollar and were converted into Brazilian Reais (R$) by the foreign exchange rate at the closing date.

 

		12/31/2020				12/31/2019
Balance sheet
Cash and cash equivalents			11,676				3,304
Trade receivable			3,151				3,846
Other receivables			1,206				935
Current assets			16,033				8,085
Leases, property and equipment			4,049				4,033
Non-current assets			4,049				4,033
Trade payables			9				124
Lease			1,008				782
Labor and social security obligations			7,527				5,410
Current liabilities			8,544				6,316
Lease			2,712				2,732
Non-current liabilities			2,712				2,732
Net Equity			8,826				3,070

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

 

		12/31/2020				12/31/2019				12/31/2019
Net foreign exchange result
Financial revenue			416				56				169
Financial expense			(193	)			(196	)			(225	)
Net foreign exchange result, net			223				(140	)			(56	)

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

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

(ii) interest rate risk

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

 

F-20

Vinci Partners Investimentos Ltda.

Notes to the consolidated financial statements

All amounts in thousands of reais

 

 

The table below summarize the sensitivity of changes in interest rates.

 

		Impact on post-tax profit
		2020				2019
Interest rates – increase by 70 basis points *			288				195
Interest rates – decreased by 100 basis points*			(412	)			(279	)

 

*	Holding all other variables constant

(iii) Price risk

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

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

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

 

(c)	Liquidity risk

Prudent liquidity risk management implies maintaining sufficient cash and marketable securities and the availability of funding through an adequate amount of committed credit facilities to meet obligations when due and to close out market positions. At the end of the reporting period the Group held bank deposits and certificate of deposits of R$ 83,449 (2019 – R$3,896) that are expected to readily generate cash inflows for managing liquidity risk.

Net debt reconciliation

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

 

		12/31/2020				12/31/2019
Cash and cash equivalents			83,449				3,896
Liquid investments (i)			8,253				85,944
Trade payables			(1,039	)			(326	)
Labor and social security obligations			(40,724	)			(30,948	)
Accounts payable			(125,828	)			(37,702	)
Lease liabilities			(106,199	)			(102,891	)
Net debt			(182,088	)			(82,027	)

 

(i)	Liquid investments comprise current investments that are traded in an active market, being the Group’s financial assets held at fair value through profit or loss.

 

F-21

Vinci Partners Investimentos Ltda.

Notes to the consolidated financial statements

All amounts in thousands of reais

 

 

		Financial liabilities								Other assets
		Payables				Lease liabilities				Cash and cash equivalents				Liquid investments
Net debt as at 1 January 2019			(30,846	)			(93,004	)			11,713				37,583
Cash flow and dividends provision			(37,949	)			19,027				(7,938	)			48,361
Amortization cost			(181	)			—				—				—
Addition and financial expenses accrual			—				(29,016	)			—				—
Foreign exchange adjustments			—				—				121				—
Other changes (ii)			—				102				—				—
31 December 2019			(68,976	)			(102,891	)			3,896				85,944
Cash flow and dividends provision			(98,412	)			19,652				77,203				(77,681	)
Amortization cost			(203	)			—				—				—
Addition and finance expenses accrual			—				(21,949	)			—				—
Foreign exchange adjustments			—				—				2,350				—
Other changes (ii)			—				(1,011	)			—				—
31 December 2020			(167,591	)			(106,199	)			83,449				8,253

 

(ii)	Other changes include non-cash movements, including CTA adjustments which will be presented as in other comprehensive income statement.

Maturities of financial liabilities

The tables below analyses the Group’s financial liabilities into relevant maturity groupings based on their contractual maturities for significant financial liabilities.

 

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

 

F-22

Vinci Partners Investimentos Ltda.

Notes to the consolidated financial statements

All amounts in thousands of reais

 

 

Contractual maturities of financial liabilities at 31 December 2019		Less than 1 year				Between 1 and 3 years				Over 3 years				Carrying amount
Trade payables			(326	)			—				—				(326	)
Labor and social security obligations			(30,948	)			—				—				(30,948	)
Lease liabilities			(17,738	)			(37,914	)			(120,884	)			(102,891	)
Accounts payable			(37,669	)			(33	)			—				(37,702	)
Total			(86,681	)			(37,947	)			(120,884	)			(171,867	)

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

 

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

 

F-23

Vinci Partners Investimentos Ltda.

Notes to the consolidated financial statements

All amounts in thousands of reais

 

 

Contractual maturities of financial liabilities At 31 December 2019		Rio de Janeiro Office (BM336)				São Paulo Office				NY Office (3rd Avenue)				Total contractual cash flows				Carrying amount non-current liabilities
2021			(15,617	)			(2,535	)			(805	)			(18,957	)			(15,819	)
2022			(15,617	)			(2,535	)			(805	)			(18,957	)			(14,065	)
2023			(15,617	)			(845	)			(805	)			(17,267	)			(11,401	)
2024			(15,617	)			—				(805	)			(16,422	)			(9,618	)
2025			(15,617	)			—				—				(15,617	)			(7,959	)
2026			(15,617	)			—				—				(15,617	)			(7,047	)
2027			(15,617	)			—				—				(15,617	)			(6,239	)
2028			(15,617	)			—				—				(15,617	)			(5,524	)
2029			(15,617	)			—				—				(15,617	)			(4,891	)
2030			(9,110	)			—				—				(9,110	)			(2,590	)
Total			(149,663	)			(5,915	)			(3,220	)			(158,798	)			(85,153	)

 

 

5	Financial instruments

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

 

•

an overview of all financial instruments held by the Group

 

•

specific information about each type of financial instrument

 

•

accounting policies

 

•

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

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

 

•

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

 

•

those measured at amortized cost.

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

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

Recognition and derecognition

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

 

F-24