CI&T Inc 6-K, filed Nov 17, 2023
CI&T Inc (CINT)
About this 6-K
CI&T Inc filed this 6-K on November 17, 2023.
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 Of
The Securities Exchange Act Of 1934
For the month of November 2023
Commission File Number: 001-41035
CI&T Inc
(Exact Name of Registrant as Specified in its Charter)
N/A
(Translation of registrant’s name into English)
Estrada Guiseppina Vianelli De Napoli, 1455 – C,
Globaltech 13.100-000 - Brazil
Campinas-State of São Paulo
13086-902 - Brazil
+55 19 21024500
(Address of principal executive office))
Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F:
Form 20-F ____X____ Form 40-F ________
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):
Yes ________ No ____X____
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):
Yes ________ No ____X____
CI&T Inc
TABLE OF CONTENTS
ITEM
- 3Q23 Earnings Release
- Unaudited condensed consolidated interim financial information for the nine-month period ended September 30, 2023.
New York - November 17, 2023 /Business Wire/ - CI&T (NYSE: CINT, “Company”), a global digital specialist and fast-growing technology company, today announces its results for the third quarter of 2023 (3Q23) and the nine months ended on September 30, 2023 (9M23) in accordance with International Financial Reporting Standards (IFRS). For comparison purposes, we refer to the results for the third quarter of 2022 (3Q22) and nine months ended on September 30, 2022 (9M22).
Third Quarter of 2023 (3Q23) Operating and Financial Highlights
● Net Revenue was R$529.1 million compared to R$559.0 million in 3Q22.
● Net Profit was R$36.2 million compared to R$40.6 million in 3Q22.
● Adjusted EBITDA was R$97.7 million compared to R$105.2 million in 3Q22. The Adjusted EBITDA margin was 18.5%.
● Adjusted Net Profit was R$45.5 million versus R$67.4 million in 3Q22.
● The number of clients with annual revenue above R$1 million in the last twelve months rose to 187 from 147 in 3Q22.
● CI&T Board of Directors approved a new share repurchase program.
Nine months ended September 30, 2023 (9M23) Operating and Financial Highlights
● Net Revenue was R$1,710.9 million, an increase of 8.6% compared to 9M22 or a 9.9% growth at constant currency.
● Net Profit increased by 42.3% to R$136.4 million from R$95.8 million in 9M22.
● Adjusted EBITDA rose to R$328.5 million from R$290.1 million in 9M22, 13.2% higher. The Adjusted EBITDA margin was 19.2%.
● Adjusted Net Profit increased 10.5% to R$175.9 million from R$159.2 million in 9M22. The Adjusted Net Profit margin was 10.3%.
● Cash generated from operating activities rose to R$254.5 million in 9M23 from R$28.6 million in 9M22.
● CI&T ended 3Q23 with 6,114 CI&Ters.
Cesar Gon, founder and CEO of CI&T, commented, "In 2023, we navigated with a cautious approach, achieving sustainable profitability and robust cash generation. Looking ahead, we are at the forefront of an exciting new technological revolution driven by AI. This new chapter in digital disruption signifies an imminent redesign of competitive dynamics across all sectors and aspects of modern life. In paving the way for this future, we have effectively partnered with our clients, prepared our teams, and enhanced our AI capabilities to realize the vision of 'CI&T Powered by AI'. Building on this momentum, we aim to resume more aggressive growth in 2024 and beyond".
Comments on the 3Q23 financial performance
The net revenue was R$529.1 million in 3Q23, a decline of 5.4% compared to 3Q22, or a reduction of 1.7% at constant currency. In the third quarter of 2023, 44% of the revenue came from Latam, 42% from North America, 10% from Europe and 4% from Asia Pacific.
The cost of services provided in 3Q23 was R$356.8 million, 1.9% lower than in 3Q22, and the gross profit was R$172.3 million. The Adjusted Gross Profit in 3Q23 was R$184.4 million, with an Adjusted Gross Profit margin of 34.8%.
In 3Q23, selling, general and administrative (SG&A), and other operating expenses were R$101.8 million, 22.3% lower than in 3Q22. This reduction can be primarily attributed to the non-recurring M&A expenses incurred in 2022 and our efforts to optimize operational expenses in 2023.
Depreciation and amortization expenses totaled R$22.9 million in 3Q23, a decrease of 2.9% compared to 3Q22, explained by the reduction of real estate property leases. Amortization of intangible assets from acquired companies was R$10.7 million in 3Q23, a 4.6% increase compared to 3Q22.
In 3Q23, the Adjusted EBITDA was R$97.8 million, a reduction of 7.1% compared to 3Q22, mainly due to the decline in the gross profit margin, partially offset by the improvement in SG&A expenses. Adjusted EBITDA margin was 18.5% in the quarter.
In 3Q23, net financial expenses were R$20.3 million, R$12.8 million higher than in 3Q22, mainly driven by lower foreign exchange (FX) gains in the comparable period and a derivative gain from an interest rate swap that benefited our results in 3Q22.
In 3Q23, income tax expense was R$13.2 million, 20.4% lower than in 3Q22, mainly due to the amortization of goodwill for tax purposes from the Ntersol acquisition. The income tax paid (cash effect) was R$6.8 million, equivalent to a cash tax rate of 13.8%.
The net profit was R$36.2 million in 3Q23, 11% lower than 3Q22. Adjusted Net Profit was R$45.5 million, a decrease of 32.4% compared to 3Q22, mainly due to higher net financial expenses, as aforementioned. Consequently, the Adjusted Net Profit margin was 8.6%.
Business Outlook
We expect our net revenue in the fourth quarter of 2023 to be in the range of R$519 million to R$ 540 million on a reported basis (average FX rate of 4.95 BRL/USD in 4Q23).
For the full year of 2023, we expect our net revenue growth to be in the range of 4.0% to 5.0% year-over-year, assuming a constant currency outlook (average FX rate of 5.17 BRL/USD in 2022). In addition, we estimate our Adjusted EBITDA margin to be at least 19% for the full year of 2023.
These expectations are forward-looking statements, and actual results may differ materially. See "Cautionary Statement on Forward-Looking Statements" below.
Share Repurchase Program
On November 16, 2023, the Board of Directors approved a new share repurchase program, pursuant to which CI&T may repurchase up to 2.5 million of its outstanding class A common shares up to the end of 2024.
Conference Call Information
Cesar Gon, Bruno Guicardi, Stanley Rodrigues, and Eduardo Galvão will host a video conference call to discuss the 3Q23 financial and operating results on November 17, at 8:00 a.m. Eastern Time / 10:00 a.m. BRT. The earnings call can be accessed at the Company’s Investor Relations website at https://investors.ciandt.com or at the following link: https://www.youtube.com/watch?v=yEW4TBCbR1Q
About CI&T
CI&T (NYSE:CINT) is a global hyper digital specialist, a partner in AI-powered digital transformation and efficiency for 100+ large enterprises and fast growth clients. As digital natives, CI&T brings a 28-year track record of accelerating business impact through complete and scalable digital solutions. With a global presence in nine countries with a nearshore delivery model, CI&T provides strategy, data science, design, and engineering, unlocking top-line growth, improving customer experience and driving operational efficiency. Recognized by Forrester as a Leader in Modern Application Development Services, CI&T is the Employer of Choice for more than 6,100 professionals.
Basis of accounting and functional currency
CI&T maintains its books and records in Brazilian reais, the presentation currency for its unaudited condensed consolidated interim financial statements, and the functional currency of our operations in Brazil. CI&T prepares its unaudited condensed consolidated interim financial statements in accordance with IFRS, as issued by the IASB, and International Financial Reporting Standard No 34—Interim Financial Reporting (“IAS 34”).
Non-IFRS Financial Measures
We regularly monitor certain financial and operating metrics to evaluate our business, measure our performance, identify trends affecting our business, formulate financial projections and make strategic decisions. These non-IFRS financial measures include Adjusted Gross Profit, Adjusted Gross Profit Margin, Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted Net Profit, Adjusted Net Profit Margin, Net Revenue at Constant Currency, and Net Revenue Growth at Constant Currency, and should be considered in addition to results prepared in accordance with IFRS, but not as substitutes for IFRS results. In addition, our calculation of these non-IFRS financial measures may differ from those used by other companies, and therefore, comparability may be limited. These non-IFRS financial measures are provided as additional information to enhance investors’ overall understanding of our operations’ historical and current financial performance.
CI&T is not providing a quantitative reconciliation of forward-looking Non-IFRS Net Revenue Growth at Constant Currency and Adjusted EBITDA to the most directly comparable IFRS measure because it is unable to reasonably predict the ultimate outcome of certain significant items without unreasonable efforts. These items include but are not limited to, stock-based compensation expenses, acquisition-related expenses, the tax effect of non-IFRS adjustments, foreign currency exchange gains/losses, and other items. These items are uncertain, depend on various factors, and could have a material impact on IFRS-reported results for the guidance period.
We calculate Net Revenue at Constant Currency and Net Revenue Growth at Constant Currency by translating Net Revenue from entities reporting in foreign currencies into Brazilian reais using the comparable foreign currency exchange average rates from the prior period to show changes in our revenue without giving effect to period-to-period currency fluctuations.
In calculating Adjusted Gross Profit, we exclude cost components unrelated to the direct management of our services. For the periods herein, the adjustments applied were: (i) depreciation and amortization related to costs of services provided; and (ii) stock-based compensation expenses.
In calculating Adjusted EBITDA, we exclude components unrelated to the direct management of our services. For the periods herein, the adjustments were: (i) stock-based compensation expenses; (ii) government grants related to tax reimbursement in the Chinese subsidiary; and (iii) acquisition-related expenses, including present value and fair value adjustment on accounts payable for business acquired , consulting expenses, and retention packages.
In calculating Adjusted Net Profit, we exclude components unrelated to the direct management of our services. For the periods herein, the adjustments applied were acquisition-related expenses, including amortization of intangible assets from acquired companies, present value and fair value adjustment on accounts payable for business acquired , consulting expenses, and retention packages.
Cautionary Statement on Forward-Looking Statements
This press release includes "forward-looking statements" within the meaning of the "safe harbor" provisions of the United States Private Securities Litigation Reform Act of 1995. All statements other than statements of historical fact are statements that could be deemed forward-looking statements, which include but are not limited to: the statements under "Business outlook," including expectations relating to revenues and other financial or business metrics; statements regarding relationships with clients; and any other statements of expectation or belief. The words “believe,” “will,” “may,” “may have,” “would,” “estimate,” “continues,” “anticipates,” “intends,” “plans,” “expects,” “budget,” "scheduled,” “forecasts” and similar words are intended to identify estimates and forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking. Forward-looking statements represent our management's beliefs and assumptions only as of the date of this press release. You should read this press release with the understanding that our actual future results may be materially different from what we expect. These statements are subject to known and unknown risks, uncertainties, and other factors that may cause our actual results, levels of activity, performance, or achievements to differ materially from results expressed or implied in this press release. Such risk factors include, but are not limited to, those related to: the current and future impact of the COVID-19 pandemic, the ongoing war in Ukraine and economic sanctions imposed by Western economies over Russia on our business and industry; the effects of competition on our business; uncertainty regarding the demand for and market utilization of our services; the ability to maintain or acquire new client relationships; general business and economic conditions; our ability to successfully integrate the recent-acquired companies; and our ability to successfully execute our growth strategy and strategic plans. Additional information concerning these and other risks and uncertainties are contained in the "Risk Factors" section of CI&T's annual report on Form 20-F. Additional information will be made available in our annual reports on Form 20-F, and other filings and reports that CI&T may file from time to time with the SEC. Except as required by law, CI&T assumes no obligation and does not intend to update these forward-looking statements or to update the reasons actual results could differ materially from those anticipated in these forward-looking statements, even if new information becomes available in the future.
Contacts:
Investor Relations Contact:
Eduardo Galvão
investors@ciandt.com
Media Relations Contact:
Zella Panossian
ciandt@illumepr
Unaudited condensed consolidated statement of profit or loss
(In thousands of Brazilian Reais)
|
|
Quarter ended September 30, |
|
Nine months ended September 30, |
||||
|
|
2023 |
|
2022 |
|
2023 |
|
2022 |
|
|
|
|
|
|
|
|
|
|
Net Revenue |
529,083 |
|
559,018 |
|
1,710,907 |
|
1,575,905 |
|
Costs of services provided |
(356,779) |
|
(363,617) |
|
(1,138,836) |
|
(1,034,111) |
|
Gross Profit |
172,304 |
|
195,401 |
|
572,071 |
|
541,794 |
|
|
|
|
|
|
|
|
|
|
Selling expenses |
(40,405) |
|
(43,337) |
|
(132,243) |
|
(118,428) |
|
General and administrative expenses |
(64,807) |
|
(84,804) |
|
(207,968) |
|
(228,115) |
|
Impairment loss on trade receivables and contract assets |
(836) |
|
325 |
|
(2,573) |
|
(385) |
|
Other income (expenses) net |
3,363 |
|
(3,008) |
|
2,025 |
|
(7,492) |
|
Operating expenses net |
(102,685) |
|
(130,824) |
|
(340,759) |
|
(354,420) |
|
|
|
|
|
|
|
|
|
|
Operating profit before financial income and tax |
69,619 |
|
64,577 |
|
231,312 |
|
187,374 |
|
|
|
|
|
|
|
|
|
|
Finance income |
13,506 |
|
32,750 |
|
62,387 |
|
155,638 |
|
Finance cost |
(33,799) |
|
(40,182) |
|
(121,130) |
|
(197,315) |
|
Net finance costs |
(20,293) |
|
(7,432) |
|
(58,743) |
|
(41,677) |
|
|
|
|
|
|
|
|
|
|
Profit before Income tax |
49,326 |
|
57,145 |
|
172,569 |
|
145,697 |
|
|
|
|
|
|
|
|
|
|
Current |
(14,285) |
|
(22,273) |
|
(32,953) |
|
(44,796) |
|
Deferred |
1,120 |
|
5,736 |
|
(3,233) |
|
(5,071) |
|
Total Income tax expense |
(13,165) |
|
(16,537) |
|
(36,186) |
|
(49,867) |
|
|
|
|
|
|
|
|
|
|
Net profit for the period |
36,161 |
|
40,608 |
|
136,383 |
|
95,830 |
|
|
|
|
|
|
|
|
|
|
Earnings per share |
|
|
|
|
|
|
|
|
Earnings per share – basic (in R$) |
0.27 |
|
0.30 |
|
1.02 |
|
0.72 |
|
Earnings per share – diluted (in R$) |
0.26 |
|
0.30 |
|
0.99 |
|
0.72 |
|
|
|
|
|
|
|
|
|
|
Weighted average number of basic shares |
132,943,114 |
|
133,332,778 |
|
133,515,441 |
|
133,006,973 |
|
Weighted average number of diluted shares |
137,184,056 |
|
133,332,778 |
|
137,756,383 |
|
133,006,973 |
Unaudited condensed consolidated statement of financial position
(In thousands of Brazilian Reais)
|
Assets |
September 30, 2023 |
|
December 31, 2022 |
|
Liabilities and equity |
September 30, 2023 |
|
December 31, 2022 |
|
Cash and cash equivalents |
194,295 |
|
185,727 |
|
Suppliers and other payables |
16,958 |
|
33,376 |
|
Financial Investments |
39,192 |
|
96,299 |
|
Loans and borrowings |
224,579 |
|
231,296 |
|
Trade receivables |
422,218 |
|
501,671 |
|
Lease liabilities |
18,921 |
|
21,539 |
|
Contract assets |
239,796 |
|
217,250 |
|
Salaries and welfare charges |
216,606 |
|
260,156 |
|
Recoverable taxes |
19,739 |
|
7,619 |
|
Accounts payable for business acquired |
41,301 |
|
71,650 |
|
Tax assets |
6,319 |
|
2,959 |
|
Non-derivatives - hedge accounting |
34,721 |
|
35,169 |
|
Non-derivatives - hedge accounting |
26,525 |
|
19,637 |
|
Derivatives |
- |
|
4,109 |
|
Derivatives |
11,017 |
|
11,194 |
|
Tax liabilities |
6,796 |
|
3,890 |
|
Other assets |
38,259 |
|
38,269 |
|
Other taxes payable |
14,880 |
|
14,382 |
|
Total current assets |
997,360 |
|
1,080,625 |
|
Contract liability |
12,954 |
|
32,136 |
|
|
|
|
|
|
Other liabilities |
34,551 |
|
47,501 |
|
Recoverable taxes |
3,703 |
|
3,624 |
|
Total current liabilities |
622,267 |
|
755,204 |
|
Deferred tax assets |
29,633 |
|
35,138 |
|
|
|
|
|
|
Judicial deposits |
9,995 |
|
9,819 |
|
Loans and borrowings |
620,589 |
|
742,935 |
|
Restricted cash - Escrow account and indemnity asset |
31,013 |
|
31,552 |
|
Lease liabilities |
29,834 |
|
41,269 |
|
Other assets |
2,202 |
|
3,654 |
|
Provisions |
12,061 |
|
12,347 |
|
Property, plant and equipment |
41,674 |
|
55,266 |
|
Accounts payable for business acquired |
124,168 |
|
133,299 |
|
Intangible assets and goodwill |
1,690,801 |
|
1,750,898 |
|
Other liabilities |
8,595 |
|
3,530 |
|
Right-of-use assets |
43,236 |
|
56,187 |
|
Total non-current liabilities |
795,247 |
|
933,380 |
|
Total non-current assets |
1,852,257 |
|
1,946,138 |
|
|
|
|
|
|
|
|
|
|
|
Equity |
|
|
|
|
|
|
|
|
|
Share capital |
37 |
|
37 |
|
|
|
|
|
|
Share premium |
946,173 |
|
946,173 |
|
|
|
|
|
|
Treasury share reserve |
(37,827) |
|
- |
|
|
|
|
|
|
Capital reserves |
225,436 |
|
203,218 |
|
|
|
|
|
|
Profit reserves |
388,256 |
|
251,873 |
|
|
|
|
|
|
Other comprehensive income |
(89,972) |
|
(63,122) |
|
|
|
|
|
|
Total equity |
1,432,103 |
|
1,338,179 |
|
Total assets |
2,849,617 |
|
3,026,763 |
|
Total equity and liabilities |
2,849,617 |
|
3,026,763 |
Unaudited condensed consolidated statement of cash flows
(In thousands of Brazilian Reais)
|
|
September 30, 2023 |
|
September 30, 2022 |
|
Cash flows from operating activities |
|
|
|
|
Net profit for the period |
136,383 |
|
95,830 |
|
Adjustments for: |
|
|
|
|
Depreciation and amortization |
70,980 |
|
67,154 |
|
Loss on the sale of property, plant and equipment, intangible assets and leases |
875 |
|
2,137 |
|
Interest, monetary variation and exchange rate changes |
65,796 |
|
30,437 |
|
Unrealized gain on financial instruments |
(13,257) |
|
(5,709) |
|
Income tax expenses |
36,186 |
|
49,867 |
|
Impairment losses on trade receivables and contract assets |
2,573 |
|
385 |
|
(Reversal of) provision for labor risks |
(286) |
|
386 |
|
Stock-based plan |
21,740 |
|
1,894 |
|
Present/fair value/price adjustment - accounts payable for business combination |
2,783 |
|
7,240 |
|
Others |
(559) |
|
(1,824) |
|
Variation in operating assets and liabilities |
|
|
|
|
Trade receivables |
61,268 |
|
(107,311) |
|
Contract assets |
(26,934) |
|
(85,091) |
|
Recoverable taxes |
(23,279) |
|
(2,297) |
|
Tax assets |
935 |
|
930 |
|
Suppliers and other payables |
(16,185) |
|
(34,281) |
|
Salaries and welfare charges |
(42,070) |
|
7,448 |
|
Tax liabilities |
- |
|
1,568 |
|
Other taxes payable |
1,274 |
|
4,509 |
|
Contract liabilities |
(18,484) |
|
(4,893) |
|
Other receivables and payables, net |
(5,235) |
|
217 |
|
Cash generated from operating activities |
254,505 |
|
28,596 |
|
Income tax paid |
(25,516) |
|
(33,467) |
|
Interest paid on loans and borrowings |
(52,356) |
|
(51,152) |
|
Interest paid on lease |
(3,070) |
|
(4,796) |
|
Income tax refund |
4,198 |
|
- |
|
Net cash from (used in) operating activities |
177,761 |
|
(60,819) |
|
Cash flows from investment activities: |
|
|
|
|
Acquisition of property, plant and equipment and intangible assets |
(14,738) |
|
(20,163) |
|
Acquisition of subsidiary net of cash acquired (Somo, Box and Transpire) |
- |
|
(321,799) |
|
Escrow deposit (acquisition of Somo) |
- |
|
(23,061) |
|
Cash outflow on hedge accounting settlement |
- |
|
20,981 |
|
Redemption of financial investments |
54,214 |
|
582,367 |
|
Net cash from (used in) investment activities |
39,476 |
|
238,325 |
|
Cash flows from financing activities: |
|
|
|
|
Exercised stock options |
578 |
|
10,447 |
|
Payment of lease liabilities |
(18,465) |
|
(19,828) |
|
Proceeds from loans and borrowings |
47,950 |
|
186,239 |
|
Settlement of derivatives |
9,325 |
|
390 |
|
Payment of loans and borrowings |
(163,457) |
|
(279,940) |
|
Payment of investment obligations |
(47,461) |
|
(62,338) |
|
Repurchase of treasury shares |
(37,827) |
|
- |
|
Net cash used in financing activities |
(209,357) |
|
(165,030) |
|
Net increase in cash and cash equivalents |
7,880 |
|
12,476 |
|
Cash and cash equivalents as of January 1st |
185,727 |
|
135,727 |
|
Exchange variation effect on cash and cash equivalents |
688 |
|
3,647 |
|
Cash and cash equivalents as of September 30 |
194,295 |
|
151,850 |
Reconciliation of Non-IFRS financial measures to comparable IFRS financial measures
Reconciliation of revenue growth as reported on an IFRS basis to revenue growth on a constant currency basis:
|
Net Revenue (in BRL thousand) |
3Q23 |
3Q22 |
Var. 3Q23 x 3Q22 |
9M23 |
9M22 |
Var. 9M23 x 9M22 |
|||||
|
Net Revenue |
529,083 |
559,018 |
-5.4% |
1,710,907 |
1,575,905 |
8.6% |
|||||
|
Net Revenue at Constant Currency |
548,946 |
558,525 |
-1.7% |
1,739,972 |
1,583,792 |
9.9% |
|
Net Revenue by industry (in BRL thousand) |
3Q23 |
3Q22 |
Var. 3Q23 x 3Q22 |
9M23 |
9M22 |
Var. 9M23 x 9M22 |
|||||
|
Financial Services |
158,592 |
161,185 |
-1.6% |
492,406 |
479,172 |
2.8% |
|||||
|
Consumer goods |
105,562 |
127,097 |
-16.9% |
343,712 |
351,116 |
-2.1% |
|||||
|
Technology and telecommunications |
84,147 |
78,146 |
7.7% |
313,334 |
216,097 |
45.0% |
|||||
|
Retail and industrial goods |
64,438 |
79,226 |
-18.7% |
208,351 |
227,615 |
-8.5% |
|||||
|
Life sciences |
57,372 |
72,063 |
-20.4% |
185,040 |
202,791 |
-8.8% |
|||||
|
Others |
58,972 |
41,301 |
42.8% |
168,064 |
99,114 |
69.6% |
|||||
|
Total |
529,083 |
559,018 |
-5.4% |
1,710,907 |
1,575,905 |
8.6% |
|
Net Revenue by geography (in BRL thousand) |
3Q23 |
3Q22 |
Var. 3Q23 x 3Q22 |
9M23 |
9M22 |
Var. 9M23 x 9M22 |
|||||
|
North America |
222,860 |
232,697 |
-4.2% |
762,204 |
655,941 |
16.2% |
|||||
|
Europe |
54,045 |
57,061 |
-5.3% |
167,645 |
142,810 |
17.4% |
|||||
|
LATAM (Latin America) |
229,804 |
247,200 |
-7.0% |
698,478 |
724,480 |
-3.6% |
|||||
|
APJ (Asia, Pacific and Japan) |
22,374 |
22,060 |
1.4% |
82,580 |
52,674 |
56.8% |
|||||
|
Total |
529,083 |
559,018 |
-5.4% |
1,710,907 |
1,575,905 |
8.6% |
|
Reconciliation of various income statement amounts from IFRS to non-IFRS measures for the three months ended September 30, 2023 and 2022 and nine months ended September 30, 2023 and 2022: |
|
Gross Profit (in BRL thousand) |
3Q23 |
3Q22 |
Var. 3Q23 x 3Q22 |
9M23 |
9M22 |
Var. 9M23 x 9M22 |
|||||
|
Net Revenue |
529,083 |
559,018 |
-5.4% |
1,710,907 |
1,575,905 |
8.6% |
|||||
|
Cost of Services |
(356,779) |
(363,617) |
-1.9% |
(1,138,836) |
(1,034,111) |
10.1% |
|||||
|
Gross Profit |
172,304 |
195,401 |
-11.8% |
572,071 |
541,794 |
5.6% |
|||||
|
Adjustments |
|
|
|
|
|
|
|||||
|
Depreciation and amortization (cost of services provided) |
9,116 |
10,688 |
-14.7% |
27,248 |
30,302 |
-10.1% |
|||||
|
Stock-based compensation |
2,949 |
369 |
n.m |
10,361 |
1,190 |
770.7% |
|||||
|
Adjusted Gross Profit |
184,369 |
206,458 |
-10.7% |
609,680 |
573,286 |
6.3% |
|||||
|
Adjusted Gross Profit Margin |
34.8% |
36.9% |
-2.1p.p |
35.6% |
36.4% |
-0.7p.p |
|
Adjusted EBITDA (in BRL thousand) |
3Q23 |
3Q22 |
Var. 3Q23 x 3Q22 |
9M23 |
9M22 |
Var. 9M23 x 9M22 |
|||||
|
Net profit for the period |
36,161 |
40,608 |
-11.0% |
136,383 |
95,830 |
42.3% |
|||||
|
Adjustments |
|
|
|
|
|
|
|||||
|
Net financial cost |
20,293 |
7,432 |
173.0% |
58,743 |
41,677 |
40.9% |
|||||
|
Income tax expense |
13,165 |
16,537 |
-20.4% |
36,186 |
49,867 |
-27.4% |
|||||
|
Depreciation and amortization |
22,871 |
23,558 |
-2.9% |
70,980 |
67,154 |
5.7% |
|||||
|
Stock-based compensation |
6,627 |
761 |
771.3% |
21,740 |
1,894 |
1047.6% |
|||||
|
Government grants |
(29) |
(204) |
-85.6% |
(306) |
(378) |
-18.9% |
|||||
|
Acquisition-related expenses (1) |
(1,341) |
16,497 |
-108.1% |
4,748 |
34,051 |
-86.1% |
|||||
|
Adjusted EBITDA |
97,747 |
105,188 |
-7.1% |
328,474 |
290,095 |
13.2% |
|||||
|
Adjusted EBITDA Margin |
18.5% |
18.8% |
-0.3p.p |
19.2% |
18.4% |
0.8p.p |
| (1) | Includes present value and fair value adjustment on accounts payable for business acquired, consulting expenses, and retention packages. |
|
Net Profit (in BRL thousand) |
3Q23 |
3Q22 |
Var. 3Q23 x 3Q22 |
9M23 |
9M22 |
Var. 9M23 x 9M22 |
|||||
|
Net profit for the period |
36,161 |
40,608 |
-11.0% |
136,383 |
95,830 |
42.3% |
|||||
|
Adjustments |
|
|
|
|
|
|
|||||
|
Acquisition-related expenses (1) |
9,376 |
26,743 |
-64.9% |
39,486 |
63,321 |
-37.6% |
|||||
|
Adjusted Net Profit (2) |
45,537 |
67,351 |
-32.4% |
175,869 |
159,151 |
10.5% |
|||||
|
Adjusted Net Profit Margin (2) |
8.6% |
12.0% |
-3.4p.p |
10.3% |
10.1% |
0.2p.p |
| (1) | Includes amortization of intangible assets from acquired companies, present value and fair value adjustment on accounts payable for business acquired, consulting expenses and retention packages. | |
| (2) | Adjustments' amounts are gross of tax. Tax effects on non-IFRS adjustments totaled R$856 thousand in 3Q23, (R$1,877) thousand in 3Q22, R$23 thousand in 9M23 and (R$2,605) thousand in 9M22. |
CI&T
Inc.
CI&T Inc.
Unaudited condensed consolidated statement of financial position as of September 30, 2023 and December 31, 2022
(In thousands of Brazilian Reais - R$)
|
Assets |
Note |
September 30, 2023 |
|
December 31, 2022 |
|
Liabilities and equity |
Note |
September 30, 2023 |
|
December 31, 2022 |
||
|
Cash and cash equivalents |
7.1 |
194,295 |
|
185,727 |
|
Suppliers and other payables |
|
16,958 |
|
33,376 |
||
|
Financial investments |
7.2 |
39,192 |
|
96,299 |
|
Loans and borrowings |
12 |
224,579 |
|
231,296 |
||
|
Trade receivables |
8 |
422,218 |
|
501,671 |
|
Lease liabilities |
11.b |
18,921 |
|
21,539 |
||
|
Contract assets |
19 |
239,796 |
|
217,250 |
|
Salaries and welfare charges |
13 |
216,606 |
|
260,156 |
||
|
Recoverable taxes |
|
19,739 |
|
7,619 |
|
Accounts payable for business acquired |
14 |
41,301 |
|
71,650 |
||
|
Income tax assets |
|
6,319 |
|
2,959 |
|
Non-derivatives - hedge accounting |
23.2 |
34,721 |
|
35,169 |
||
|
Non-derivatives - hedge accounting |
23.2 |
26,525 |
|
19,637 |
|
Derivatives |
23.3 |
- |
|
4,109 |
||
|
Derivatives |
23.3 |
11,017 |
|
11,194 |
|
Income tax liabilities |
|
6,796 |
|
3,890 |
||
|
Other assets |
|
38,259 |
|
38,269 |
|
Other taxes payable |
|
14,880 |
|
14,382 |
||
|
|
|
|
|
|
|
Contract liability |
|
12,954 |
|
32,136 |
||
|
Total current assets |
|
997,360 |
|
1,080,625 |
|
Other liabilities |
|
34,551 |
|
47,501 |
||
|
Recoverable taxes |
|
3,703 |
|
3,624 |
|
Total current liabilities |
|
622,267 |
|
755,204 |
||
|
Deferred tax assets |
|
29,633 |
|
35,138 |
|
|
|
|
|
|
||
|
Judicial deposits |
15 |
9,995 |
|
9,819 |
|
Loans and borrowings |
12 |
620,589 |
|
742,935 |
||
|
Restricted cash - Escrow account and indemnity asset |
|
31,013 |
|
31,552 |
|
Lease liabilities |
11.b |
29,834 |
|
41,269 |
||
|
Other assets |
|
2,202 |
|
3,654 |
|
Provisions |
15 |
12,061 |
|
12,347 |
||
|
Property, plant and equipment |
9 |
41,674 |
|
55,266 |
|
Accounts payable for business acquired |
14 |
124,168 |
|
133,299 |
||
|
Intangible assets and goodwill |
10 |
1,690,801 |
|
1,750,898 |
|
Other liabilities |
|
8,595 |
|
3,530 |
||
|
Right-of-use assets |
11.a |
43,236 |
|
56,187 |
|
|
|
|
|
|
||
|
|
|
|
|
|
|
Total non-current liabilities |
|
795,247 |
|
933,380 |
||
|
Total non-current assets |
|
1,852,257 |
|
1,946,138 |
|
|
|
|
|
|
||
|
|
|
|
|
|
|
Equity |
|
|
|
|
||
|
|
|
|
|
|
|
Share capital |
18.a |
37 |
|
37 |
||
|
|
|
|
|
|
|
Share premium |
18.b |
946,173 |
|
946,173 |
||
|
|
|
|
|
|
|
Treasury share reserve |
18.c |
(37,827) |
|
- |
||
|
|
|
|
|
|
|
Capital reserves |
|
225,436 |
|
203,218 |
||
|
|
|
|
|
|
|
Profit reserves |
|
388,256 |
|
251,873 |
||
|
|
|
|
|
|
|
Other comprehensive income |
|
(89,972) |
|
(63,122) |
||
|
|
|
|
|
|
|
Total equity |
|
1,432,103 |
|
1,338,179 |
||
|
Total assets |
|
2,849,617 |
|
3,026,763 |
|
Total equity and liabilities |
|
2,849,617 |
|
3,026,763 |
The accompanying notes are an integral part of these unaudited condensed consolidated interim financial statements.
CI&T Inc.
For the three-month and nine-month periods ended on September 30, 2023 and 2022
(In thousands of Brazilian Reais – R$)
|
|
Note |
Nine month ended September 30, 2023 |
|
Three month ended September 30, 2023 |
|
Nine month ended September 30, 2022 |
|
Three month ended September 30, 2022 |
|
|
Net revenue |
19 |
1,710,907 |
|
529,083 |
|
1,575,905 |
|
559,018 |
|
|
Costs of services provided |
20 |
(1,138,836) |
|
(356,779) |
|
(1,034,111) |
|
(363,617) |
|
|
Gross profit |
|
572,071 |
|
172,304 |
|
541,794 |
|
195,401 |
|
|
Selling expenses |
20 |
(132,243) |
|
(40,405) |
|
(118,428) |
|
(43,337) |
|
|
General and administrative expenses |
20 |
(207,968) |
|
(64,807) |
|
(228,115) |
|
(84,804) |
|
|
Impairment loss on trade receivables and contract assets |
20 |
(2,573) |
|
(836) |
|
(385) |
|
325 |
|
|
Other income (expenses) net |
20 |
2,025 |
|
3,363 |
|
(7,492) |
|
(3,008) |
|
|
Operating expenses net |
|
(340,759) |
|
(102,685) |
|
(354,420) |
|
(130,824) |
|
|
Operating profit before financial income and tax |
|
231,312 |
|
69,619 |
|
187,374 |
|
64,577 |
|
|
Finance income |
21 |
62,387 |
|
13,506 |
|
155,638 |
|
32,750 |
|
|
Finance cost |
21 |
(121,130) |
|
(33,799) |
|
(197,315) |
|
(40,182) |
|
|
Net finance costs |
|
(58,743) |
|
(20,293) |
|
(41,677) |
|
(7,432) |
|
|
Profit before income tax |
|
172,569 |
|
49,326 |
|
145,697 |
|
57,145 |
|
|
Current |
|
(32,953) |
|
(14,285) |
|
(44,796) |
|
(22,273) |
|
|
Deferred |
|
(3,233) |
|
1,120 |
|
(5,071) |
|
5,736 |
|
|
Total income tax expense |
|
(36,186) |
|
(13,165) |
|
(49,867) |
|
(16,537) |
|
|
Net profit for the period |
|
136,383 |
|
36,161 |
|
95,830 |
|
40,608 |
|
|
Earnings per share |
|
|
|
|
|
|
|
|
|
|
Earnings per share – basic (in R$) |
|
1.02 |
|
0.27 |
|
0.72 |
|
0.30 |
|
|
Earnings per share – diluted (in R$) |
|
0.99 |
|
0.26 |
|
0.72 |
|
0.30 |
The accompanying notes are an integral part of these unaudited condensed consolidated interim financial statements.
CI&T Inc.
For the three-month and nine-month periods ended on September 30, 2023 and 2022
(In thousands of Brazilian Reais – R$)
|
|
Note |
Nine month ended September 30, 2023 |
|
Three month ended September 30, 2023 |
|
Nine month ended September 30, 2022 |
|
Three month ended September 30, 2022 |
|
|
Net profit for the period |
|
136,383 |
|
36,161 |
|
95,830 |
|
40,608 |
|
|
Other comprehensive income (OCI): |
|
|
|
|
|
|
|
|
|
|
Item that are or may be reclassified subsequently to profit or loss |
|
|
|
|
|
|
|
|
|
|
Exchange variation in foreign investments |
|
(34,186) |
|
17,453 |
|
(88,601) |
|
(18,913) |
|
|
Cash flow hedges - effective portion of changes in fair value |
23.2.a.1 |
7,336 |
|
(5,998) |
|
(37,287) |
|
2,448 |
|
|
Total comprehensive income (loss) for the period |
|
109,533 |
|
47,616 |
|
(30,058) |
|
24,143 |
|
|
Total comprehensive income (loss) attributed to |
|
|
|
|
|
|
|
|
|
|
Owners of the Company |
|
109,533 |
|
47,616 |
|
(30,058) |
|
24,143 |
|
|
Total comprehensive income (loss) for the period |
|
109,533 |
|
47,616 |
|
(30,058) |
|
24,143 |
The accompanying notes are an integral part of these unaudited condensed consolidated interim financial statements.
1.0
CI&T Inc.
Unaudited condensed consolidated statement of changes in equity
For the nine-month periods ended on September 30, 2023 and 2022
(In thousands of Brazilian Reais – R$)
|
|
|
|
|
|
|
|
|
|
|
Profit reserves |
|
|
|
|
||
|
|
Notes |
Share capital |
|
Share premium |
|
Treasury share reserve |
|
Capital reserve |
|
Retained earnings reserve |
|
Retained earnings |
|
Other comprehensive income |
|
Total equity |
|
Balances as of December 31, 2021 |
|
36 |
|
915,947 |
|
- |
|
10,105 |
|
125,957 |
|
- |
|
37,250 |
|
1,089,295 |
|
Net profit for the period |
|
- |
|
- |
|
- |
|
- |
|
- |
|
95,830 |
|
- |
|
95,830 |
|
Exchange variation in foreign investments |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
(88,601) |
|
(88,601) |
|
Cash flow hedges – effective portion of changes in fair value |
23.2.a.1 |
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
(37,287) |
|
(37,287) |
|
Total comprehensive income for the period |
|
- |
|
- |
|
- |
|
- |
|
- |
|
95,830 |
|
(125,888) |
|
(30,058) |
|
Transactions with the owner of the Group |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Contributions, distribution and constitution of reserves |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issues to ordinary shares related to business combinations (Somo) |
18.b |
- |
|
14,037 |
|
- |
|
- |
|
- |
|
- |
|
- |
|
14,037 |
|
Equity settled share-based compensation – Vested immediately (Box) |
|
- |
|
- |
|
- |
|
4,124 |
|
- |
|
- |
|
- |
|
4,124 |
|
Issues to ordinary shares related to business combinations (Transpire) |
18.b |
- |
|
16,189 |
|
- |
|
- |
|
- |
|
- |
|
- |
|
16,189 |
|
Exercise of share options |
|
1 |
|
- |
|
- |
|
10,446 |
|
- |
|
- |
|
- |
|
10,447 |
|
Stock-based compensation |
17.b |
- |
|
- |
|
- |
|
1,370 |
|
- |
|
- |
|
- |
|
1,370 |
|
Total contributions and distribution and constitution of reserves |
|
1 |
|
30,226 |
|
- |
|
15,940 |
|
- |
|
- |
|
- |
|
46,167 |
|
Balances as of September 30, 2022 |
|
37 |
|
946,173 |
|
- |
|
26,045 |
|
125,957 |
|
95,830 |
|
(88,638) |
|
1,105,404 |
|
Balances as of December 31, 2022 |
|
37 |
|
946,173 |
|
- |
|
203,218 |
|
251,873 |
|
- |
|
(63,122) |
|
1,338,179 |
|
Net profit for the period |
|
- |
|
- |
|
- |
|
- |
|
- |
|
136,383 |
|
- |
|
136,383 |
|
Exchange variation in foreign investments |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
(34,186) |
|
(34,186) |
|
Cash flow hedges - effective portion of changes in fair value |
23.2.a.1 |
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
7,336 |
|
7,336 |
|
Total comprehensive income for the period |
|
- |
|
- |
|
- |
|
- |
|
- |
|
136,383 |
|
(26,850) |
|
109,533 |
|
Transactions with the owner of the Group |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Contributions, distribution and constitution of reserves |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Treasury shares acquired |
18.c |
- |
|
- |
|
(37,827) |
|
- |
|
- |
|
- |
|
- |
|
(37,827) |
|
Equity settled stock options |
17.b |
- |
|
- |
|
- |
|
6,799 |
|
- |
|
- |
|
- |
|
6,799 |
|
Equity settled restricted stock units |
17.b |
- |
|
- |
|
- |
|
14,286 |
|
- |
|
- |
|
- |
|
14,286 |
|
Equity settled incentive stock options |
17.b |
- |
|
- |
|
- |
|
84 |
|
- |
|
- |
|
- |
|
84 |
|
Restricted stock units exercised |
|
- |
|
- |
|
- |
|
417 |
|
- |
|
- |
|
- |
|
471 |
|
Share options exercised |
|
- |
|
- |
|
- |
|
578 |
|
- |
|
- |
|
- |
|
578 |
|
Total contributions and distribution and constitution of reserves |
|
- |
|
- |
|
(37,827) |
|
22,218 |
|
- |
|
- |
|
- |
|
(15,609) |
|
Balances as of September 30, 2023 |
|
37 |
|
946,173 |
|
(37,827) |
|
225,436 |
|
251,873 |
|
136,383 |
|
(89,972) |
|
1,432,103 |
The accompanying notes are an integral part of these unaudited condensed consolidated interim financial statements.
CI&T Inc.
Unaudited condensed consolidated statement of cash flows
For the nine-month periods ended on September 30, 2023 and 2022
(In thousands of Brazilian Reais – R$)
|
|
Notes |
September 30, 2023 |
|
September 30, 2022 |
|
|
Cash flows from operating activities |
|
|
|
|
|
|
Net profit for the period |
|
136,383 |
|
95,830 |
|
|
Adjustments for: |
|
|
|
|
|
|
Depreciation and amortization |
9, 10, 11 |
70,980 |
|
67,154 |
|
|
Loss on the sale of property, plant and equipment, intangible assets and leases |
9, 10, 11, 12 |
875 |
|
2,137 |
|
|
Interest, monetary variation and exchange rate changes |
|
65,796 |
|
30,437 |
|
|
Unrealized gain on financial instruments |
|
(13,257) |
|
(5,709) |
|
|
Income tax expenses |
|
36,186 |
|
49,867 |
|
|
Impairment losses on trade receivables and contract assets |
8, 19 |
2,573 |
|
385 |
|
|
Provision for labor risks |
15 |
(286) |
|
386 |
|
|
Stock-based plan |
17.b |
21,740 |
|
1,894 |
|
|
Present/fair value/ price adjustment - accounts payable for business combination |
12 |
2,783 |
|
7,240 |
|
|
Others |
|
(559) |
|
(1,824) |
|
|
Variation in operating assets and liabilities |
|
|
|
|
|
|
Trade receivables |
|
61,268 |
|
(107,311) |
|
|
Contract assets |
|
(26,934) |
|
(85,091) |
|
|
Recoverable taxes |
|
(23,279) |
|
(2,297) |
|
|
Tax assets |
|
935 |
|
930 |
|
|
Suppliers and other payables |
|
(16,185) |
|
(34,281) |
|
|
Salaries and welfare charges |
|
(42,070) |
|
7,448 |
|
|
Tax liabilities |
|
- |
|
1,568 |
|
|
Other taxes payable |
|
1,274 |
|
4,509 |
|
|
Contract liabilities |
|
(18,484) |
|
(4,893) |
|
|
Other receivables and payables, net |
|
(5,234) |
|
217 |
|
|
Cash generated from operating activities |
|
254,505 |
|
28,596 |
|
|
Income tax paid |
|
(25,516) |
|
(33,467) |
|
|
Interest paid on loans and borrowings |
12 |
(52,356) |
|
(51,152) |
|
|
Interest paid on lease |
12 |
(3,070) |
|
(4,796) |
|
|
Income tax refund |
|
4,198 |
|
- |
|
|
Net cash from (used in) operating activities |
|
177,761 |
|
(60,819) |
|
|
Cash flows from investment activities |
|
|
|
|
|
|
Acquisition of property, plant and equipment and intangible assets |
9, 10 |
(14,738) |
|
(20,163) |
|
|
Acquisition of subsidiary net of cash acquired (Somo, Box and Transpire) |
|
- |
|
(321,799) |
|
|
Escrow deposit (acquisition of Somo) |
|
- |
|
(23,061) |
|
|
Cash outflow on hedge accounting settlement |
7.2 |
- |
|
20,981 |
|
|
Redemption of financial investments |
7.2 |
54,214 |
|
582,367 |
|
|
Net cash from investment activities |
|
39,476 |
|
238,325 |
|
|
Cash flows from financing activities |
|
|
|
|
|
|
Exercised stock options |
12 |
578 |
|
10,447 |
|
|
Payment of lease liabilities |
12 |
(18,465) |
|
(19,828) |
|
|
Proceeds from loans and borrowings |
12 |
47,950 |
|
186,239 |
|
|
Settlement of derivatives |
12 |
9,325 |
|
390 |
|
|
Payment of loans and borrowings |
12 |
(163,457) |
|
(279,940) |
|
|
Payment of investment obligations |
12 |
(47,461) |
|
(62,338) |
|
|
Repurchase of treasury shares |
12, 18.c |
(37,827) |
|
- |
|
|
Net cash used in financing activities |
|
(209,357) |
|
(165,030) |
|
|
Net increase in cash and cash equivalents |
|
7,880 |
|
12,476 |
|
|
Cash and cash equivalents as of January 1st |
|
185,727 |
|
135,727 |
|
|
Exchange variation effect on cash and cash equivalents |
|
688 |
|
3,647 |
|
|
Cash and cash equivalents as of September 30 |
|
194,295 |
|
151,850 |
The accompanying notes are an integral part of these unaudited condensed consolidated interim financial statements.
CI&T Inc.
Unaudited condensed consolidated interim financial statements
September 30, 2023
(Amounts in thousands of Brazilian Reais – R$, unless otherwise stated)
1 Reporting Entity
CI&T Inc. (“CI&T” and/or “Company”), is a publicly held company incorporated in the Cayman Islands in September 2021, headquartered at Estrada Giuseppina Vianelli Di Napoli, 1455, Polo II de Alta Tecnologia, in the City of Campinas, State of São Paulo, Brazil. As a holding Company, it is mainly engaged in the investment, as a partner or shareholder, in other companies, consortia or joint ventures in Brazil and other countries. The Company’s subsidiaries are mainly engaged in the development of customizable software through implementation of software solutions, including machine learning, artificial intelligence (AI), analytics, cloud migration and mobility technologies.
These unaudited condensed consolidated interim financial statements comprise the Company and its subsidiaries (collectively referred to as the “Group”).
2 Business combination
During 2022, the Company acquired several businesses for which we engaged independent valuation experts to assist in determining the fair value of the assets acquired and liabilities assumed and related deferred income tax impacts.
The summary of the prior period acquisitions on each acquisition date is as follows:
|
Companies |
Somo |
Box 1824 |
Transpire |
Ntersol |
|||
|
Acquisition/closing date |
January 27, 2022 |
June 1, 2022 |
September 1, 2022 |
November 1, 2022 |
|||
|
Cash, net of cash acquired in business combination |
247,764 |
19,040 |
55,724 |
400,137 |
|||
|
Cash acquired in business combination |
98,701 |
1,728 |
5,397 |
17,870 |
|||
|
Other adjustments |
(5,688) |
- |
(729) |
- |
|||
|
Cash transferred |
340,777 |
20,768 |
60,392 |
418,007 |
|||
|
Restricted cash in escrow account |
23,061 |
- |
- |
- |
|||
|
Earn-out |
59,868 |
- |
- |
- |
|||
|
Contingent consideration - Retained amount |
9,671 |
8,871 |
- |
75,096 |
|||
|
Class A common shares issued |
14,037 |
- |
16,189 |
- |
|||
|
Stock-based payment – vested immediately(i) |
- |
4,124 |
- |
170,774 |
|||
|
Other |
- |
974 |
- |
- |
|||
|
Price Adjustment |
- |
(558) |
729 |
5,993 |
|||
|
Total consideration transferred at the acquisition date |
447,414 |
34,179 |
77,310 |
669,870 |
|||
|
Total identifiable net assets acquired |
(130,235) |
(12,654) |
(8,115) |
(201,496) |
|||
|
Goodwill |
317,179 |
21,525 |
69,195 |
468,374 |
| (i) | Refers to the purchase price to be paid in common shares in connection with business combination, but considered as vested immediately at each acquisition date, and the amount was measured at fair value on the same date. |
CI&T Inc.
Unaudited condensed consolidated interim financial statements
September 30, 2023
3 Basis of accounting
These unaudited condensed consolidated interim financial statements for the nine-month ended September 30, 2023 have been prepared in accordance with IAS 34 – Interim Financial Reporting and should be read in conjunction with the Group’s last annual consolidated financial statements as at and for the year ended December 31, 2022. This financial information does not include all the information required for a complete set of financial statements prepared in accordance with IFRS Standards. However, selected explanatory notes are included to explain events and transactions that are significant to an understanding of the changes in the Group’s financial position and performance since the last annual financial statements.
The issuance of these unaudited condensed consolidated interim financial information were authorized for issue by the Company’s Management and Audit Committee on November 16, 2023.
4 Functional and presentation currency
These unaudited condensed consolidated interim financial statements are presented in Brazilian Reais (“R$”), which is the Company's functional currency. All balances are rounded to the nearest thousands, except when otherwise indicated.
The main exchange rates used in the preparation of the Company's financial statements are Brazilian Reais (“R$”), US dollar (“US$”), Euro (“€”), Australian dollar (“AU$”), Pound sterling (“£”), Yen (“¥”), Chinese Yuan (“¥”) and Colombian Peso (“COL$”) as the Company’s subsidiaries have their functional currencies.
5 Use of judgments and estimates
In preparing these unaudited condensed consolidated interim financial statements, Management has made judgments and estimates that affect the application of the Company's accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates.
The significant judgements made by Management in applying the Group’s accounting policies and the key sources of estimation uncertainty were the same as those described in the last annual financial statements.
a. Measurement of fair values
A number of the Group’s accounting policies and disclosures require the measurement of fair values, for both financial and non-financial assets and liabilities.
The Group has established a control framework with respect to the measurement of fair value. This includes the review of significant fair value measurements, significant unobservable data and valuation adjustments. If third-party information, such as broker quotes or pricing services, is used to measure fair values, the valuation team assesses the evidence obtained from third parties to support the conclusion that such valuations meet the requirements of the Accounting Standards, including the level in the fair value hierarchy in which the valuations should be classified.
When measuring the fair value of an asset or a liability, the Group uses observable market data as much as possible. Fair values are categorized into different levels in a fair value hierarchy based on the inputs used in the valuation techniques as follows:
- Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities.
- Level 2: Inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).
- Level 3: Inputs for the asset or liability that are not based on observable market data (unobservable inputs).
CI&T Inc.
Unaudited condensed consolidated interim financial statements
September 30, 2023
If the inputs used to measure the fair value of an asset or liability fall into different levels of the fair value hierarchy, then the fair value measurement is categorized in its entirety in the same level of fair value hierarchy as the lowest level input that is significant to the entire measurement.
The Group recognizes transfers between levels of the fair value hierarchy at the end of the reporting period during which the changes have occurred.
The significant information about the assumptions made in measuring fair values used by Management were the same as those described in the last annual financial statements.
6 Change in accounting policy
Except as described below, the accounting policies applied in these unaudited condensed consolidated interim financial statements are the same as those applied in the Group’s consolidated financial statements as at and for the year ended December 31, 2022.
(i) Deferred tax related to assets and liabilities arising from a single transaction
The Group has adopted ‘Deferred tax related to assets and liabilities arising from a single transaction – Amendments to IAS 12 – Income Tax’ from 1 January 2023. The amendments narrow the scope of the initial recognition exemption to exclude transactions that give rise to equal and offsetting temporary differences – e.g. leases and decommissioning liabilities. For leases and decommissioning liabilities, an entity is required to recognize the associated deferred tax assets and liabilities from the beginning of the earliest comparative period presented, with any cumulative effect recognized as an adjustment to retained earnings or other components of equity at that date. For all transactions, an entity applies the amendments to transactions that occur after the beginning of the earliest period presented.
The Group previously accounted for deferred tax on leases applying the integrally linked approach, resulting in a similar outcome to the amendments, except that the deferred tax asset or liability was recognized on a net basis. Following the amendments, the Group has recognized a separate deferred tax asset in relation to its lease liabilities and deferred tax liability in relation to its right-of-use assets. However, there was no impact on the statement of financial position because the balances qualify for offset under paragraph 74 of IAS 12. There was also no impact on the opening retained earnings as of 1 January 2022 as a result of the change. As of September 30, 2023, the amount of deferred tax assets is R$ 39,736 (R$ 29,637 as of December 31, 2022) and deferred tax liabilities is R$ 36,844 (R$ 27,025 as of December 31, 2022).
The change in accounting policy will also be reflected in the Group’s consolidated financial statements as at and for the year ending December 31, 2023.
7 Cash and cash equivalents and financial investments
7.1 Cash and cash equivalents
|
. |
September 30, 2023 |
December 31, 2022 |
|
|
Cash and cash equivalents |
112,819 |
127,263 |
|
|
Short-term financial investments |
81,476 |
58,464 |
|
|
Total |
194,295 |
185,727 |
Short-term financial investments are represented by fixed income securities, with interest rates ranging from 100% to 101.5% on September 30, 2023 (101% to 102% as of December 31, 2022) of the changes of Interbank Deposit Certificate (CDI) variation which (i) Management expects to use for short-term commitments; (ii) present daily liquidity; and (iii) are readily convertible into a known amount of cash, subject to an insignificant risk of change in value.
CI&T Inc.
Unaudited condensed consolidated interim financial statements
September 30, 2023
7.2 Financial investments
|
. |
September 30, 2023 |
December 31, 2022 |
|
|
Financial investments |
39,192 |
96,299 |
|
|
Total |
39,192 |
96,299 |
The changes in the balances are as follows:
|
Balance as of January 1, 2023 |
96,299 |
|
Effect of movements in exchange rates |
(3,296) |
|
Income on financial investments |
403 |
|
Redemption of financial investments(i) |
(54,214) |
|
Balance as of September 30, 2023 |
39,192 |
|
Balance as of January 1, 2022 |
798,786 |
|
Effect of movements in exchange rates |
(15,209) |
|
Income on financial investments |
1,628 |
|
Redemption of financial investments(ii) |
(582,367) |
|
Hedge accounting realization |
(20,981) |
|
Balance as of September 30, 2022 |
181,857 |
| (i) | Amounts used in short-term commitments. |
| (ii) | Amounts used in payments for businesses combination acquired and for short-term commitments. |
As of September 30, 2023 the balance of R$ 39,192 (R$ 96,299 as of December 31, 2022) is allocated between an interest-bearing account and Sweep. Both instruments are in US$ and £, and they bear interest rates ranging from 0.6% to 3.7% p.a. (from 0.57% to 4.2% p.a. on December 31, 2022), and such accounts present immediate liquidity. The Company holds US$ and £ amounts for short-term commitments in the same currencies. A foreign currency exposure arises from these financial investments held in US$ and £, since the amount may be subject to a significant exchange rate variation once translated to R$.
CI&T Inc.
Unaudited condensed consolidated interim financial statements
September 30, 2023
8 Trade receivables
The balances of trade receivables are presented, as follows:
|
|
September 30, 2023 |
December 31, 2022 |
|
|
Trade receivables - Dollar denominated – from US customers |
241,353 |
304,693 |
|
|
Trade receivables - Reais denominated – from Brazilian customers |
131,118 |
133,582 |
|
|
Trade receivables - from other customers |
52,311 |
64,049 |
|
|
(-) Expected credit losses |
(2,564) |
(653) |
|
|
Trade receivables, net |
422,218 |
501,671 |
The balances of trade receivables by maturity date are as follows:
|
|
September 30, 2023 |
December 31, 2022 |
|||||
|
|
Trade receivables |
(-) Expected credit losses |
Trade receivables |
(-) Expected credit losses |
|||
|
Not due |
395,713 |
(394) |
458,802 |
(146) |
|||
|
Overdue: |
|
|
|
|
|||
|
from 1 to 60 days |
23,780 |
(692) |
36,995 |
(261) |
|||
|
61 to 360 days |
5,170 |
(1,359) |
6,140 |
(119) |
|||
|
over 360 days |
119 |
(119) |
387 |
(127) |
|||
|
Total |
424,782 |
(2,564) |
502,324 |
(653) |
|||
The movement of impairment loss on trade receivables is as follows:
|
Balance as of January 1, 2023 |
(653) |
|
Provision |
(3,354) |
|
Reversal |
1,425 |
|
Write-off |
20 |
|
Exchange variation |
(2) |
|
Balance as of September 30, 2023 |
(2,564) |
|
Balance as of January 1, 2022 |
(1,059) |
|
Provision |
(603) |
|
Reversal |
400 |
|
Write-off |
655 |
|
Exchange variation |
192 |
|
Balance as of September 30, 2022 |
(415) |
9 Property, plant and equipment
|
|
September 30, 2023 |
December 31, 2022 |
|
|
IT equipment |
28,472 |
37,963 |
|
|
Furniture and fixtures |
3,427 |
5,064 |
|
|
Leasehold improvements |
9,320 |
12,226 |
|
|
Property, plant and equipment in progress |
455 |
13 |
|
|
Total |
41,674 |
55,266 |
CI&T Inc.
Unaudited condensed consolidated interim financial statements
September 30, 2023
The changes in the balances are as follows:
|
|
IT equipment |
Furniture and fixtures |
Leasehold improvements |
In progress |
Total |
||||
|
Cost: |
|
|
|
|
|
||||
|
Balance as of January 1, 2022 |
63,640 |
13,869 |
30,915 |
157 |
108,581 |
||||
|
Exchange rate changes |
(1,545) |
(237) |
(297) |
- |
(2,079) |
||||
|
Addition due to business combination |
2,812 |
468 |
313 |
- |
3,593 |
||||
|
Additions |
17,475 |
270 |
62 |
119 |
17,926 |
||||
|
Disposals |
(4,530) |
(646) |
(5,096) |
(19) |
(10,291) |
||||
|
Transfers |
6 |
- |
240 |
(246) |
- |
||||
|
Balance as of September 30, 2022 |
77,858 |
13,724 |
26,137 |
11 |
117,730 |
||||
|
Balance as of December 31, 2022 |
75,547 |
10,308 |
21,498 |
13 |
107,366 |
||||
|
Exchange rate changes |
(494) |
(213) |
(323) |
- |
(1,030) |
||||
|
Additions |
3,783 |
58 |
- |
538 |
4,379 |
||||
|
Disposals |
(3,350) |
(2,151) |
(954) |
(1) |
(6,456) |
||||
|
Transfers |
5 |
18 |
72 |
(95) |
- |
||||
|
Balance as of September 30, 2023 |
75,491 |
8,020 |
20,293 |
455 |
104,259 |
||||
|
Depreciation: |
|
|
|
|
|
||||
|
Balance as of January 1, 2022 |
(28,410) |
(7,586) |
(14,864) |
- |
(50,860) |
||||
|
Exchange rate changes |
854 |
89 |
72 |
- |
1,015 |
||||
|
Additions |
(12,282) |
(1,066) |
(2,540) |
- |
(15,888) |
||||
|
Disposals |
2,867 |
783 |
4,729 |
- |
8,379 |
||||
|
Balance as of September 30, 2022 |
(36,971) |
(7,780) |
(12,603) |
- |
(57,354) |
||||
|
Balance as of December 31, 2022 |
(37,584) |
(5,244) |
(9,272) |
- |
(52,100) |
||||
|
Exchange rate changes |
385 |
97 |
121 |
- |
603 |
||||
|
Additions |
(13,012) |
(787) |
(2,514) |
- |
(16,313) |
||||
|
Disposals |
3,192 |
1,350 |
683 |
- |
5,225 |
||||
|
Transfers |
- |
(9) |
9 |
- |
- |
||||
|
Balance as of September 30, 2023 |
(47,019) |
(4,593) |
(10,973) |
- |
(62,585) |
||||
|
Balance as of: |
|
|
|
|
|
||||
|
December 31, 2022 |
37,963 |
5,064 |
12,226 |
13 |
55,266 |
||||
|
September 30, 2023 |
28,472 |
3,427 |
9,320 |
455 |
41,674 |
The Group does not have property, plant or equipment pledged as collateral.
10 Intangible assets and goodwill
|
|
September 30, 2023 |
December 31, 2022 |
|
|
Software |
4,866 |
5,641 |
|
|
Internally developed software |
4,314 |
4,059 |
|
|
Software in progress |
9,031 |
1,032 |
|
|
Customer relationship |
253,114 |
288,943 |
|
|
Non-compete agreement |
8,591 |
10,865 |
|
|
Brands |
5,199 |
7,464 |
|
|
Subtotal |
285,115 |
318,004 |
|
|
Goodwill |
1,405,686 |
1,432,894 |
|
|
Total |
1,690,801 |
1,750,898 |
CI&T Inc.
Unaudited condensed consolidated interim financial statements
September 30, 2023
The change in the balances of intangible assets as follows:
|
|
Network software |
Internally developed software |
Software in progress |
Customer relationship |
Non-compete agreement |
Brands |
Goodwill |
Total |
|||||||
|
Cost: |
|
|
|
|
|
|
|
|
|||||||
|
Balance as of January 1, 2022 |
11,942 |
16,581 |
391 |
88,961 |
13,462 |
20,501 |
619,469 |
771,307 |
|||||||
|
Exchange rate changes |
(50) |
- |
- |
- |
- |
- |
(75,081) |
(75,131) |
|||||||
|
Additions |
805 |
5 |
1,447 |
62,139 |
- |
13,304 |
413,665 |
491,365 |
|||||||
|
Write-off |
(788) |
- |
(32) |
- |
- |
- |
- |
(820) |
|||||||
|
Transfers |
50 |
398 |
(448) |
- |
- |
- |
- |
- |
|||||||
|
Balance as of September 30, 2022 |
11,959 |
16,984 |
1,358 |
151,100 |
13,462 |
33,805 |
958,053 |
1,186,721 |
|||||||
|
Balance as of December 31, 2022 |
15,186 |
18,586 |
1,032 |
313,259 |
13,462 |
33,798 |
1,432,894 |
1,828,217 |
|||||||
|
Exchange rate changes |
(180) |
0 |
- |
(6,268) |
- |
(2) |
(32,304) |
(38,754) |
|||||||
|
Additions |
558 |
- |
9,801 |
- |
- |
- |
5,096 |
15,455 |
|||||||
|
Disposals |
(1) |
(4) |
- |
- |
- |
- |
- |
(5) |
|||||||
|
Transfers |
- |
1,802 |
(1,802) |
- |
- |
- |
- |
- |
|||||||
|
Balance as of September 30, 2023 |
15,563 |
20,384 |
9,031 |
306,991 |
13,462 |
33,796 |
1,405,686 |
1,804,913 |
|||||||
|
Amortization: |
|
|
|
|
|
|
|
|
|||||||
|
Balance as of January 1, 2022 |
(9,543) |
(12,670) |
- |
(4,766) |
435 |
(5,960) |
- |
(32,504) |
|||||||
|
Exchange rate changes |
84 |
- |
- |
- |
- |
- |
- |
84 |
|||||||
|
Additions |
(789) |
(1,365) |
- |
(11,224) |
(2,274) |
(15,771) |
- |
(31,423) |
|||||||
|
Write-off |
748 |
- |
- |
- |
- |
- |
- |
748 |
|||||||
|
Balance as of September 30, 2022 |
(9,500) |
(14,035) |
- |
(15,990) |
(1,839) |
(21,731) |
- |
(63,095) |
|||||||
|
Balance as of December 31, 2022 |
(9,545) |
(14,527) |
- |
(24,316) |
(2,597) |
(26,334) |
- |
(77,319) |
|||||||
|
Exchange rate changes |
39 |
- |
|
147 |
- |
- |
- |
186 |
|||||||
|
Additions |
(1,192) |
(1,543) |
- |
(29,708) |
(2,274) |
(2,263) |
- |
(36,980) |
|||||||
|
Disposals |
1 |
- |
- |
- |
- |
- |
- |
1 |
|||||||
|
Balance as of September 30, 2023 |
(10,697) |
(16,070) |
- |
(53,877) |
(4,871) |
(28,597) |
- |
(114,112) |
|||||||
|
Balance at: |
|
|
|
|
|
|
|
|
|||||||
|
December 31, 2022 |
5,641 |
4,059 |
1,032 |
288,943 |
10,865 |
7,464 |
1,432,894 |
1,750,898 |
|||||||
|
September 30, 2023 |
4,866 |
4,314 |
9,031 |
253,114 |
8,591 |
5,199 |
1,405,686 |
1,690,801 |
Impairment test – Goodwill
For the nine-month ended September 30, 2023, Management did not identify factors that could significantly change the assumptions used in the annual impairment analysis and, therefore, did not identify any indicator of impairment of intangible assets and goodwill.
CI&T Inc.
Unaudited condensed consolidated interim financial statements
September 30, 2023
11 Leases
- Right-of-use assets
|
September 30, 2023 |
December 31, 2022 |
||
|
Properties |
37,747 |
48,415 |
|
|
Vehicles |
5,489 |
7,772 |
|
|
Total |
43,236 |
56,187 |
The Group applies the short-term lease recognition exemption to its short-term leases of properties (those leases that have a lease term of 12 months or less). It also applies the low-value assets recognition exemption to leases that are considered of low value. Lease payments on short-term leases and leases of low-value assets are recognized as expenses on a straight-line basis. The remained rental expenses for the period totaled R$ 2,653 as of September 30, 2023 (R$ 4,424 as of September 30, 2022). The changes to balances of the right-of-use are:
|
|
Properties |
Vehicles |
IT equipment |
Total |
|||
|
Cost: |
|
|
|
|
|||
|
Balance as of January 1, 2022 |
107,640 |
6,372 |
851 |
114,863 |
|||
|
Additions due to business combination |
8,114 |
- |
- |
8,114 |
|||
|
Exchange rate changes |
(1,571) |
- |
- |
(1,571) |
|||
|
Additions |
5,682 |
5,775 |
- |
11,457 |
|||
|
Derecognition of right-of-use assets |
(3,708) |
(870) |
- |
(4,578) |
|||
|
Remeasurement of right-of-use assets |
(234) |
- |
- |
(234) |
|||
|
Balance on September 30, 2022 |
115,923 |
11,277 |
851 |
128,051 |
|||
|
Balance as of December 31, 2022 |
90,587 |
12,198 |
- |
102,785 |
|||
|
Exchange rate changes |
(2,336) |
- |
- |
(2,336) |
|||
|
Additions |
6,350 |
1,961 |
- |
8,311 |
|||
|
Derecognition of right-of-use assets |
(4,643) |
(2,548) |
- |
(7,191) |
|||
|
Balance on September 30, 2023 |
89,958 |
11,611 |
- |
101,569 |
|||
|
Depreciation: |
|
|
|
|
|||
|
Initial amount on January 1, 2022 |
(38,200) |
(2,199) |
(638) |
(41,037) |
|||
|
Exchange rate changes |
310 |
- |
- |
310 |
|||
|
Depreciation |
(17,314) |
(2,316) |
(213) |
(19,843) |
|||
|
Derecognition of right-of-use assets |
2,086 |
799 |
- |
2,885 |
|||
|
Balance on September 30, 2022 |
(53,118) |
(3,716) |
(851) |
(57,685) |
|||
|
Balance on December 31, 2022 |
(42,172) |
(4,426) |
- |
(46,598) |
|||
|
Exchange rate changes |
1,111 |
- |
- |
1,111 |
|||
|
Depreciation |
(14,643) |
(3,044) |
- |
(17,687) |
|||
|
Derecognition of right-of-use assets |
3,493 |
1,348 |
- |
4,841 |
|||
|
Balance on September 30, 2023 |
(52,211) |
(6,122) |
- |
(58,333) |
|||
|
Net balance at: |
|
|
|
|
|||
|
December 31, 2022 |
48,415 |
7,772 |
- |
56,187 |
|||
|
September 30, 2023 |
37,747 |
5,489 |
- |
43,236 |
CI&T Inc.
Unaudited condensed consolidated interim financial statements
September 30, 2023
|
|
Average discount rate (per year) |
September 30, 2023 |
December 31, 2022 |
||
|
Properties |
7.21% (2022: 8.26%) |
45,170 |
54,369 |
||
|
Vehicles |
17.19% (2022: 16.63%) |
3,585 |
8,439 |
||
|
Total |
|
48,755 |
62,808 |
||
|
Current |
|
18,921 |
21,539 |
||
|
Non-current |
|
29,834 |
41,269 |
||
|
Total |
|
48,755 |
62,808 |
The change in lease liabilities is disclosed in the reconciliation of change in liabilities to cash flows in note 12.
12 Loans and borrowings
Loans and borrowings operations can be summarized as follows:
|
|
Average interest rate (%) |
Year of maturity |
September 30, 2023 |
December 31, 2022 |
|||
|
In US$ |
|
|
|
|
|||
|
Advance on Foreign Exchange Contract (ACC) |
2.28% p.a. to 6.88% p.a. |
2023 to 2024 |
50,765 |
93,811 |
|||
|
Export credit note (NCE) |
SOFR Overnight + 2.07% p.a. |
2026 |
106,239 |
129,701 |
|||
|
Working Capital Loan |
5.02% p.a. / SOFR Overnight + 2.79% p.a. to 2.90% p.a. |
2026 to 2027 |
431,202 |
452,276 |
|||
|
Total |
|
|
588,206 |
675,788 |
|||
|
In R$ |
|
|
|
|
|||
|
Export credit note (NCE) |
CDI + 1.10% p.a. to 1.75% p.a. |
2023 to 2026 |
256,962 |
298,443 |
|||
|
Total |
|
|
256,962 |
298,443 |
|||
|
Total interest-bearing liabilities |
|
|
845,168 |
974,231 |
|
Current |
224,579 |
231,296 |
|
|
Non-current |
620,589 |
742,935 |
|
|
Total |
845,168 |
974,231 |
The principal balances of long-term loans and borrowings as of September 30, 2023, mature as follows:
|
2024 |
59,352 |
|
2025 |
235,383 |
|
2026 |
225,702 |
|
2027 |
100,152 |
|
Non-current liabilities |
620,589 |
CI&T Inc.
Unaudited condensed consolidated interim financial statements
September 30, 2023
The reconciliation of change in liabilities to cash flows arising from financing activities is shown below:
|
|
Liabilities |
|
Net Equity |
|
Total |
||||
|
|
Loans and borrowings |
|
Leases (note 11.b) |
|
Accounts payable for business combination acquired (note 14) |
|
Reserves |
|
|
|
Balance as of December 31, 2022 |
974,231 |
|
62,808 |
|
204,949 |
|
1,401,264 |
|
2,643,252 |
|
Changes in cash flow from financing activities |
|
|
|
|
|
|
|
|
|
|
Proceeds from loans and borrowings |
47,950 |
|
- |
|
- |
|
- |
|
47,950 |
|
Payments related to loans, borrowings, lease liabilities and business combination |
(163,457) |
|
(18,465) |
|
(47,461) |
|
- |
|
(229,383) |
|
Proceeds from exercise of share options |
- |
|
- |
|
- |
|
578 |
|
578 |
|
Repurchase of treasury shares |
- |
|
- |
|
- |
|
(37,827) |
|
(37,827) |
|
Settlement of derivatives |
9,325 |
|
- |
|
- |
|
- |
|
9,325 |
|
Total changes in cash flow from financing activities |
(106,182) |
|
(18,465) |
|
(47,461) |
|
(37,249) |
|
(209,357) |
|
Exchange rate changes |
(18,342) |
|
(1,334) |
|
(4,798) |
|
- |
|
(24,474) |
|
Other changes - liabilities |
|
|
|
|
|
|
|
|
|
|
New leases |
- |
|
8,311 |
|
- |
|
- |
|
8,311 |
|
Interest expenses |
61,153 |
|
3,215 |
|
- |
|
- |
|
64,368 |
|
Present/fair value adjustment |
- |
|
- |
|
2,783 |
|
- |
|
2,783 |
|
Interest paid |
(52,356) |
|
(3,070) |
|
- |
|
- |
|
(55,426) |
|
Lease write-offs |
- |
|
(2,710) |
|
- |
|
- |
|
(2,710) |
|
Other changes |
(13,336) |
|
- |
|
9,996 |
|
- |
|
(3,340) |
|
Total other changes - liabilities |
(4,539) |
|
5,746 |
|
12,779 |
|
- |
|
13,986 |
|
Total other changes - equity |
- |
|
- |
|
- |
|
195,850 |
|
195,850 |
|
Balance as of September 30, 2023 |
845,168 |
|
48,755 |
|
165,469 |
|
1,559,865 |
|
2,619,257 |
CI&T Inc.
Unaudited condensed consolidated interim financial statements
September 30, 2023
|
|
Liabilities |
|
Net Equity |
|
Total |
||||
|
|
Loans and borrowings |
|
Leases |
|
Accounts payable for business combination |
|
Reserves |
|
|
|
Balance as of January 1, 2022 |
788,709 |
|
81,888 |
|
85,726 |
|
1,052,045 |
|
2,008,368 |
|
Changes in cash flow from financing activities |
|
|
|
|
|
|
|
|
|
|
Proceeds from loans and borrowings |
186,239 |
|
- |
|
- |
|
- |
|
186,239 |
|
Payments related to loans, borrowings, lease liabilities and business combination |
(279,940) |
|
(19,828) |
|
(62,338) |
|
- |
|
(362,106) |
|
Proceeds from exercise of share options |
- |
|
- |
|
- |
|
10,447 |
|
10,447 |
|
Settlement of derivatives |
390 |
|
- |
|
- |
|
- |
|
390 |
|
Total changes in financing cash flows |
(93,311) |
|
(19,828) |
|
(62,338) |
|
10,447 |
|
(165,030) |
|
Effect of changes in exchange rates |
8,179 |
|
(1,485) |
|
- |
|
- |
|
6,694 |
|
Other changes - related to liabilities |
|
|
|
|
|
|
|
|
|
|
Additions due to business combination |
39,970 |
|
8,114 |
|
- |
|
- |
|
48,084 |
|
New leases |
- |
|
11,457 |
|
- |
|
- |
|
11,457 |
|
Interest expense |
48,853 |
|
6,306 |
|
- |
|
- |
|
55,159 |
|
Interest paid |
(51,152) |
|
(4,796) |
|
- |
|
- |
|
(55,948) |
|
Other borrowing costs |
(34,500) |
|
(195) |
|
- |
|
- |
|
(34,695) |
|
Settlement of derivatives |
(390) |
|
- |
|
- |
|
- |
|
(390) |
|
Lease write-offs |
- |
|
(1,540) |
|
- |
|
- |
|
(1,540) |
|
Other changes |
(34,500) |
|
(195) |
|
6,977 |
|
- |
|
(27,718) |
|
Total other changes related to liabilities |
2,781 |
|
19,346 |
|
6,977 |
|
- |
|
29,104 |
|
Total other changes related to equity |
- |
|
- |
|
- |
|
131,550 |
|
131,550 |
|
Balance as of September 30, 2022 |
706,358 |
|
79,921 |
|
30,365 |
|
1,194,042 |
|
2,010,686 |
The loans and borrowings are not secured over land and buildings, inventories and trade receivables.
Loans and borrowings covenants
The loans and borrowings are subject to covenants, which establish the early maturity of debts. Early maturity of the loans could be caused by:
- Disposal, merger, incorporation, spin-off, or any other corporate reorganization process that implies a change in the shareholding control, without prior consent from the creditor;
- Some of the debt contracts held by the Group include covenants that demand the maintenance of specific ratios, such as the Net Debt to EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) ratio.
The Group has complied with these covenants as of September 30, 2023 and December 31, 2022.
CI&T Inc.
Unaudited condensed consolidated interim financial statements
September 30, 2023
13 Salaries and welfare charges
|
|
September 30, 2023 |
December 31, 2022 |
|
|
Salaries |
30,779 |
30,551 |
|
|
Accrued vacation and charges |
111,522 |
107,801 |
|
|
Bonus |
15,934 |
64,815 |
|
|
Withholding income tax |
17,382 |
29,267 |
|
|
Payroll charges (social contributions) |
13,240 |
15,168 |
|
|
Others |
27,749 |
12,554 |
|
|
Total |
216,606 |
260,156 |
14 Accounts payable for business acquired
|
|
September 30, 2023 | ||||||||
|
|
Former owners of Dextra |
Former owners of Somo |
Former owners of Box 1824 |
Former owners of Ntersol |
Total |
||||
|
Year of maturity |
2024 |
2025 |
2025 |
2024 |
|
||||
|
Interest rate |
CDI |
N/A |
CDI |
T-Bills |
|
||||
|
Retained amount |
30,581 |
- |
6,987 |
75,622 |
113,190 |
||||
|
Earn-out |
- |
30,162 |
- |
- |
30,162 |
||||
|
Escrow account |
- |
19,051 |
- |
- |
19,051 |
||||
|
Other |
- |
2,092 |
974 |
- |
3,066 |
||||
|
Total |
30,581 |
51,305 |
7,961 |
75,622 |
165,469 |
||||
|
|
December 31, 2022 | ||||||||
|
|
Former owners of Dextra |
Former owners of Somo |
Former owners of Box 1824 |
Former owners of Ntersol |
Total |
||||
|
Year of maturity |
2024 |
2025 |
2025 |
2024 |
|
||||
|
Interest rate |
CDI |
N/A |
CDI |
T-Bills |
|
||||
|
Retained amount |
34,183 |
- |
9,165 |
76,084 |
119,432 |
||||
|
Earn-out |
- |
61,529 |
- |
- |
61,529 |
||||
|
Escrow account |
- |
20,091 |
- |
- |
20,091 |
||||
|
Other |
- |
2,148 |
974 |
775 |
3,897 |
||||
|
Total |
34,183 |
83,768 |
10,139 |
76,859 |
204,949 |
||||
|
|
September 30, 2023 |
December 31, 2022 |
|
|
Current |
41,301 |
71,650 |
|
|
Non-current |
124,168 |
133,299 |
|
|
Total |
165,469 |
204,949 |
The change in accounts payable for business combination is disclosed in the reconciliation of change in liabilities to cash flows in note 12.
CI&T Inc.
Unaudited condensed consolidated interim financial statements
September 30, 2023
15 Provisions
The Group is involved in tax and labor lawsuits that were considered probable losses and are provisioned according to the table below:
|
|
Tax |
Labor |
Total |
||
|
Balance as of January 1, 2022 |
131 |
502 |
633 |
||
|
Provisions |
77 |
582 |
659 |
||
|
Obligations assumed in a business combination (i) |
- |
13,583 |
13,583 |
||
|
Reversal |
(3) |
(270) |
(273) |
||
|
Payments |
- |
(15) |
(15) |
||
|
Balance as of September 30, 2022 |
205 |
14,382 |
14,587 |
||
|
Balance as of December 31, 2022 |
205 |
12,142 |
12,347 |
||
|
Provisions |
- |
18 |
18 |
||
|
Reversal |
(205) |
(99) |
(304) |
||
|
Balance as of September 30, 2023 |
- |
12,061 |
12,061 |
| (i) | In relation to the business combination with Box 1824, the Group has also assumed an amount of R$ 11,343 (R$ 13,583 on the acquisition date) related to labor contingencies liability. |
The Group is a party to civil, labor and tax lawsuits, whose likelihood of loss is regarded as possible, for which no provision was recorded, in the amount of R$ 10,350 as of September 30, 2023 (R$ 10,563 as of December 31, 2022).
Judicial deposits
As of September 30, 2023, the Group’s judicial deposits totaled R$ 9,995 (R$ 9,819 as of December 31, 2022), recognized in the statement of financial position, in non-current assets. Of this amount, R$ 9,723 (R$ 9,405 as of December 31, 2022) refer to tax lawsuits and R$ 272 (R$ 415 as of December 31, 2022) refer to labor lawsuits.
16 Employee benefits
The Group provides its employees with benefits that include medical care, dental care and life insurance during their employment. These benefits are paid by the Group and according to the category of health plans elected, with a consideration paid by the employee.
Additionally, the Group offers its employees the option to participate in a private pension plan to which voluntary contributions are made. For CI&T Inc. (“CI&T US”), CI&T UK Limited (“CI&T UK”) and CI&T Software Inc. (“CI&T Canada”), the subsidiaries contribute with the same amount as the participants up to 4% of the employee salary. In both scenarios there is no consideration to be paid by the subsidiaries, as there are no post-employment obligations. The nature of the plan allows employees to suspend or discontinue their contributions at any time and allows the Management to transfer the portfolio to another administrator.
The Group does not have additional post-employment obligations and none other long-term benefits, such as time-of-service leave, lifetime health plan and other time-service benefits.
CI&T Inc.
Unaudited condensed consolidated interim financial statements
September 30, 2023
17 Stock-based compensation
a. Outstanding share options and RSUs
The following shows the roll forward of the share options and RSUs for the period ended at September 30, 2023:
|
Grant date |
Exercise |
Number of granted options/RSUs |
(-) Canceled |
(-) Exercised |
Number of outstanding on 09/30/2023 |
Number of vested on 09/30/2023 |
|||||
|
Equity-settled |
|
|
|
|
|
|
|||||
|
Stock options plan (SOP) |
|
|
|
|
|
|
|||||
|
2020 |
R$ 9.58 |
3,940,478 |
(92,883) |
(997,326) |
2,850,269 |
1,317,706 |
|||||
|
2021 |
R$ 19.84 |
854,436 |
(19,900) |
(92,735) |
741,801 |
230,257 |
|||||
|
2022 |
US$ 4.10 |
440,434 |
- |
- |
440,434 |
88,087 |
|||||
|
2023 |
US$ 4.10-4.27 |
44,365 |
- |
- |
44,365 |
1,698 |
|||||
|
|
|
5,279,713 |
(112,783) |
(1,090,061) |
4,076,869 |
1,637,748 |
|||||
|
Incentive stock options (ISO) |
|
|
|
|
|
|
|||||
|
2022 |
US$ 15.88 |
93,896 |
- |
- |
93,896 |
18,779 |
|||||
|
|
|
93,896 |
- |
- |
93,896 |
18,779 |
|||||
|
Restricted stock units (RSU) |
|
|
|
||||||||
|
2022 |
N/A |
1,449,277 |
- |
(8,447) |
1,440,830 |
- |
|||||
|
2023 |
N/A |
154,950 |
- |
- |
154,950 |
- |
|||||
|
|
|
1,604,227 |
- |
(8,447) |
1,595,780 |
- |
|
Cash-settled |
|||||||||||||||
|
|
|
||||||||||||||
|
Grant date |
Exercise |
Number of granted options/RSUs |
(-) Canceled |
(-) Exercised |
Number of outstanding on 09/30/2023 |
Number of vested on 09/30/2023 |
Fair value at remeasured date September 30, 2023 |
Liabilities carrying amount as of September 30, 2023 R$ |
|||||||
|
Stock options plan (SOP) |
|||||||||||||||
|
2020 |
R$ 9.58 |
69,774 |
- |
(1,774) |
68,000 |
39,219 |
4.69 |
1,122 |
|||||||
|
2021 |
R$ 19.84 |
12,130 |
- |
(909) |
11,221 |
2,731 |
2.86 |
64 |
|||||||
|
2022 |
US$ 4.10 |
13,101 |
- |
- |
13,101 |
2,620 |
3.17 |
113 |
|||||||
|
95,005 |
- |
(2,683) |
92,322 |
44,570 |
- |
1,299 |
|||||||||
b. Expenses recognized in profit or loss
|
|
September 30, 2023 |
September 30, 2022 |
|
|
Plan in force: |
|
|
|
|
Equity settled – SOP |
6,504 |
1,175 |
|
|
Equity settled – RSU |
14,126 |
463 |
|
|
Equity settled – ISO |
76 |
256 |
|
|
Cash settled |
458 |
- |
|
|
Shares granted to executives’ officers |
576 |
- |
|
|
Expenses recognized in profit or loss (note 20) |
21,740 |
1,894 |
|
|
Total |
21,740 |
1,894 |
|
|
(-) Effect of cash settled |
(458) |
(463) |
|
|
Effect of movements in exchange rates |
(113) |
(61) |
|
|
Total shareholders’ equity |
21,169 |
1,370 |
CI&T Inc.
Unaudited condensed consolidated interim financial statements
September 30, 2023
18 Equity
a. Share capital
|
|
September 30, 2023 |
December 31, 2022 |
|
|
Number of ordinary nominative shares |
133,863,684 |
133,814,311 |
|
|
Class A |
20,612,552 |
19,969,110 |
|
|
Class B |
113,251,132 |
113,845,201 |
|
|
Par value |
0.00027 |
0.00027 |
|
|
Share capital |
37 |
37 |
As of September 30, 2023 the total issued share capital of R$ 37 (R$ 37 as of December 31, 2022) is divided into 133,863,684 common shares (133,814,311 as of December 31, 2022), including shares repurchased by the Company (see note 18.c).
The holders of the Class A common shares and Class B common shares have identical rights, except that (i) the holders of Class B common shares are entitled to ten votes per share, whereas holders of Class A common shares are entitled to one vote per share, (ii) Class B common shares have certain conversion rights and (iii) the holders of Class B common shares are entitled to maintain a proportional ownership interest in the event that additional Class A common shares are issued, however that such rights to purchase additional Class B common shares may only be exercised with Class B Shareholder Consent.
b. Share premium
After the Company has completed its initial public offering in November 2021, the share premium referred to the difference between the subscription price (US$ 15.00 per share) that the shareholders paid for the shares and their nominal value (US$ 0.00005 per share), as a total amount of R$ 915,947 (US$ 166,666).
In connection with the business combinations occurred in 2022, the share premium increased by R$ 30,226 from shares issued as part of the payment for the some acquisitions. As of September 30, 2023 and December 31, 2022, the total amount of share premium is R$ 946,173.
c. Treasury share reserve
On May 17, 2023, the Board of Directors approved a share repurchase program, pursuant to which the Company may repurchase up to 1.5 million of its outstanding class A common shares. As of 30 September 2023, the Group held 1,318,381 (R$ 37,827) of the Company’s shares, and the remaining balance of 181,619 shares will be repurchased during the fourth quarter of 2023. The Company’s treasury shares comprises the cost of the Company’s shares held by the Group.
d. Capital reserve
Stock-based compensation
The Group stock-based compensation plans in place were accounted as Capital reserve (see note 17).
CI&T Inc.
Unaudited condensed consolidated interim financial statements
September 30, 2023
19 Net revenue
The Group generates revenue primarily through the provision of services described in the table below, which is summarized by nature:
|
|
Nine month ended September 30, 2023 |
|
Three month ended September 30, 2023 |
|
Nine month ended September 30, 2022 |
|
Three month ended September 30, 2022 |
|
Software development revenue |
1,628,771 |
|
504,555 |
|
1,508,853 |
|
533,060 |
|
Software maintenance revenue |
47,285 |
|
14,469 |
|
42,093 |
|
15,136 |
|
Consulting revenue |
30,028 |
|
9,292 |
|
19,094 |
|
7,559 |
|
Revenue from software license agent |
1,708 |
|
449 |
|
882 |
|
357 |
|
Other revenue |
3,115 |
|
318 |
|
4,983 |
|
2,906 |
|
Total net revenue |
1,710,907 |
|
529,083 |
|
1,575,905 |
|
559,018 |
The following table sets forth the net revenue by industry vertical for the periods indicated:
|
|
Nine month ended September 30, 2023 |
|
Three month ended September 30, 2023 |
|
Nine month ended September 30, 2022 |
|
Three month ended September 30, 2022 |
|
By Industry Vertical |
|
|
|
|
|
|
|
|
Financial services |
492,406 |
|
158,592 |
|
479,173 |
|
161,185 |
|
Consumer goods |
343,712 |
|
105,562 |
|
351,116 |
|
127,097 |
|
Technology and telecommunications |
313,334 |
|
84,147 |
|
216,097 |
|
78,146 |
|
Retail and industrial goods |
208,351 |
|
64,438 |
|
227,615 |
|
79,226 |
|
Life sciences |
185,040 |
|
57,372 |
|
202,791 |
|
72,063 |
|
Others |
168,064 |
|
58,972 |
|
99,113 |
|
41,301 |
|
Total net revenue |
1,710,907 |
|
529,083 |
|
1,575,905 |
|
559,018 |
The table below summarizes net revenues by geographic region:
|
|
Nine month ended September 30, 2023 |
Three month ended September 30, 2023 |
Nine month ended September 30, 2022 |
Three month ended September 30, 2022 |
|||
|
North America |
762,204 |
222,860 |
655,941 |
232,697 |
|||
|
LATAM (Latin America) |
698,478 |
229,804 |
724,480 |
247,200 |
|||
|
Europe |
167,645 |
54,045 |
142,810 |
57,061 |
|||
|
APJ (Asia, Pacific and Japan) |
82,580 |
22,374 |
52,674 |
22,060 |
|||
|
Total |
1,710,907 |
529,083 |
1,575,905 |
559,018 |
Net revenues by geographic area were determined based on the country where the sale was made. The net revenue from a single customer represents 10% of the Company’s total net revenues as of September 30, 2023 (16% as of September 30, 2022).
Revenue by client concentration
The following table sets forth net revenue contributed by the top client, and top ten clients for the periods indicated:
|
|
Nine month ended September 30, 2023 |
Three month ended September 30, 2023 |
Nine month ended September 30, 2022 |
Three month ended September 30, 2022 |
|||
|
Top client |
166,798 |
37,428 |
249,356 |
86,748 |
|||
|
Top 10 clients |
705,773 |
208,305 |
812,754 |
283,999 |
CI&T Inc.
Unaudited condensed consolidated interim financial statements
September 30, 2023
Contract assets
Contract assets relate mainly to the Group’s rights to consideration for services performed, for which control has been transferred to the client, but not invoiced on the reporting date. Contract assets are transferred to receivables when the Group issues an invoice to the client.
The balances from contract assets are shown and segregated in the consolidated statements of financial position as follows:
|
. |
September 30, 2023 |
December 31, 2022 |
|
|
Contract assets – Reais denominated - Brazilian customers |
119,347 |
94,613 |
|
|
Contract assets – Dollar denominated - US customers |
86,153 |
104,836 |
|
|
Contract assets – from other customers |
35,626 |
18,474 |
|
|
(-) Expected credit losses from contract assets |
(1,330) |
(673) |
|
|
Total |
239,796 |
217,250 |
The movement of expected credit losses of contract assets, is as follows:
|
Balance as of January 1, 2022 |
(913) |
|
Reversal (provision) |
(182) |
|
Effect of movements in exchange rates |
131 |
|
Balance as of September 30, 2022 |
(964) |
|
Balance as of December 31, 2022 |
(673) |
|
Reversal (provision) |
(664) |
|
Effect of movements in exchange rates |
7 |
|
Balance as of September 30, 2023 |
(1,330) |
20 Expenses by nature
Information on the nature of expenses recognized in the unaudited condensed consolidated interim statement of profit or loss is presented below:
|
|
Nine month ended September 30, 2023 |
|
Three month ended September 30, 2023 |
|
Nine month ended September 30, 2022 |
|
Three month ended September 30, 2022 |
|
Employee expenses |
(1,239,867) |
|
(386,276) |
|
(1,146,315) |
|
(400,772) |
|
Third-party services and other inputs |
(99,104) |
|
(30,711) |
|
(83,994) |
|
(32,671) |
|
Depreciation and amortization |
(70,980) |
|
(22,871) |
|
(67,154) |
|
(23,558) |
|
Insurance |
(9,764) |
|
(3,248) |
|
(11,388) |
|
(3,701) |
|
Short-term leases |
(4,629) |
|
(1,236) |
|
(5,071) |
|
(1,736) |
|
Travel expenses |
(10,017) |
|
(3,871) |
|
(9,059) |
|
(3,940) |
|
Training |
(2,600) |
|
(745) |
|
(4,854) |
|
(1,925) |
|
Stock-based compensation (note 17) |
(21,740) |
|
(6,627) |
|
(1,894) |
|
(761) |
|
Expected credit losses |
(2,573) |
|
(836) |
|
(385) |
|
325 |
|
Consulting |
(878) |
|
(210) |
|
(14,818) |
|
(5,728) |
|
Other post-acquisition expenses |
(3,870) |
|
1,551 |
|
(19,233) |
|
(10,769) |
|
Others |
(13,573) |
|
(4,384) |
|
(24,366) |
|
(9,205) |
|
Total |
(1,479,595) |
|
(459,464) |
|
(1,388,531) |
|
(494,441) |
|
Disclosed as: |
|
|
|
|
|
|
|
|
Costs of services provided |
(1,138,836) |
|
(356,779) |
|
(1,034,111) |
|
(363,617) |
|
Selling expenses |
(132,243) |
|
(40,405) |
|
(118,428) |
|
(43,337) |
|
General and administrative expenses |
(207,968) |
|
(64,807) |
|
(228,115) |
|
(84,804) |
|
Impairment loss on trade receivables and contract assets |
(2,573) |
|
(836) |
|
(385) |
|
325 |
|
Other income (expenses) net |
2,025 |
|
3,363 |
|
(7,492) |
|
(3,008) |
|
Total |
(1,479,595) |
|
(459,464) |
|
(1,388,531) |
|
(494,441) |
CI&T Inc.
Unaudited condensed consolidated interim financial statements
September 30, 2023
21 Net finance costs
|
|
Nine month ended September 30, 2023 |
|
Three month ended September 30, 2023 |
|
Nine month ended September 30, 2022 |
|
Three month ended September 30, 2022 |
|
Finance income: |
|
|
|
|
|
|
|
|
Income from financial investments |
6,391 |
|
1,813 |
|
5,383 |
|
1,828 |
|
Foreign-exchange gain |
33,095 |
|
7,667 |
|
128,883 |
|
21,525 |
|
Gains on derivatives |
21,434 |
|
2,963 |
|
18,849 |
|
7,984 |
|
Monetary variation gain |
1,062 |
|
679 |
|
35 |
|
26 |
|
Other finance income |
405 |
|
384 |
|
2,488 |
|
1,387 |
|
Total |
62,387 |
|
13,506 |
|
155,638 |
|
32,750 |
|
Finance costs: |
|
|
|
|
|
|
|
|
Foreign-exchange loss |
(39,213) |
|
(5,367) |
|
(108,500) |
|
(15,791) |
|
Loss on derivatives |
(8,177) |
|
(3,629) |
|
(12,631) |
|
(1,961) |
|
Interest and charges on loans and leases (note 12) |
(64,368) |
|
(21,111) |
|
(55,159) |
|
(18,104) |
|
Monetary variation loss |
(4,051) |
|
(1,368) |
|
(7,786) |
|
(3,174) |
|
Other finance costs |
(5,321) |
|
(2,324) |
|
(13,239) |
|
(1,152) |
|
Total |
(121,130) |
|
(33,799) |
|
(197,315) |
|
(40,182) |
|
Net finance costs |
(58,743) |
|
(20,293) |
|
(41,677) |
|
(7,432) |
22 Income tax and social contribution
Income tax expenses are recognized at an amount determined by multiplying the profit (loss) before tax for interim reporting period based on the Management's best estimate of the weighted average annual income tax rate expected for the full financial year, adjusted for the tax effect of certain items recognized in full in the interim period. Income tax expenses include current and deferred tax and social contribution on net profit.
The Group’s consolidated effective tax rate in respect of continuing operations for the nine-month ended September 30, 2023 was 21% and for the nine-month ended September 30, 2022 was 34%.
23 Financial instruments and risk management
23.1 Financial instrument categories
The Group maintains operations with derivative and non-derivative financial instruments. These instruments are managed to assure liquidity and profitability. The control policy consists of monitoring the terms contracted against the terms and condition current in the market. The Company does not make investments of a speculative nature in derivatives or any other risk assets.
The estimated fair value of the Group's financial instruments considered the following methods and assumptions:
- Cash and cash equivalents and financial investment: recognized at cost plus income earned up to the closing date of the financial statements, which approximate their fair value.
- Trade receivables: arise directly from the Group's operations, classified at amortized cost, are recorded at their original values, adjusted based on the exchange rate changes, when applicable, and subject to an expected credit loss. Their carrying amount is a reasonable approximation of fair value.
CI&T Inc.
Unaudited condensed consolidated interim financial statements
September 30, 2023
- Loans and borrowings: classified as financial liabilities measured at amortized cost and are recorded at their contractual values. The contractual flow of loans and borrowings is adjusted to the future value of the liabilities considering the interest until maturity.
- Derivative financial instruments: The financial instruments were valued by calculating the present value using market curves that impact the specific instrument on the calculation dates. For this, future curves of CDI and SOFR), exchange coupon, and currency quotation are used. For interest rate swaps, the present value of the asset position and the liability position are both estimated by discounting cash flows at the interest rate of the currency in which the swap is denominated. The difference between the present value of the asset and the liability position of the swap generates its fair value. For exchange forward swaps, the present value of the asset position and the liability position are both estimated by discounting cash flows at the rate of currency in which the swap is denominated. The difference between the present value of the asset and the liability position of the swap generates its fair value.
- Non-derivatives financial instruments: Based on the Group's risk management and considering the existing natural hedge on exchange rate variations, the Group designated hedge relationships between “highly probable future transactions” (hedged item) and non-derivative financial instruments (hedging instruments), and their exchange effects were recognized at the same time in the other comprehensive income. The exchange rate variations in proportions of cash flows from non-derivative financial instruments were designated as hedging instruments. At the inception of designated hedging relationships, the Group documented the risk management objective and strategy for undertaking the hedge. The Group also documented the economic relationship between the hedged item and the hedging instrument, including identification of: (i) the hedging instrument; (ii) the hedged item; (iii) the nature of the risk being hedged; and (iv) the assessment whether the hedging relationship meets the hedge effectiveness requirements.
The following table shows the carrying amounts and fair values of financial assets and financial liabilities, segregated by category:
|
|
September 30, 2023 |
||||||
|
|
Amortized cost |
Assets / liabilities measured at FVTPL (i) |
Assets / liabilities measured at FVOCI (ii) |
Total |
|||
|
Financial assets |
|
|
|
|
|||
|
Cash and cash equivalents |
194,295 |
- |
- |
194,295 |
|||
|
Financial investments |
39,192 |
- |
- |
39,192 |
|||
|
Trade receivables |
422,218 |
- |
- |
422,218 |
|||
|
Contract assets |
239,796 |
- |
- |
239,796 |
|||
|
Derivatives |
- |
11,017 |
- |
11,017 |
|||
|
Non-derivatives – hedge accounting |
- |
- |
26,525 |
26,525 |
|||
|
Other assets |
40,461 |
- |
- |
40,461 |
|||
|
|
935,962 |
11,017 |
26,525 |
973,504 |
|||
|
|
|
|
|
|
|||
|
Financial liabilities |
|
|
|
|
|||
|
Suppliers and other payables |
16,958 |
- |
- |
16,958 |
|||
|
Loans and borrowings |
845,168 |
- |
- |
845,168 |
|||
|
Lease liabilities |
48,755 |
- |
- |
48,755 |
|||
|
Accounts payable for business acquired |
59,685 |
105,784 |
- |
165,469 |
|||
|
Non-derivatives – hedge accounting |
- |
- |
34,721 |
34,721 |
|||
|
Contract liabilities |
12,954 |
- |
- |
12,954 |
|||
|
Other liabilities |
43,146 |
- |
- |
43,146 |
|||
|
|
1,026,666 |
105,784 |
34,721 |
1,167,171 |
|||
CI&T Inc.
Unaudited condensed consolidated interim financial statements
September 30, 2023
|
|
December 31, 2022 |
||||||
|
|
Amortized cost |
Assets / liabilities measured at FVTPL(i) |
Assets / liabilities measured at FVOCI(ii) |
Total |
|||
|
Financial assets |
|
|
|
|
|||
|
Cash and cash equivalents |
185,727 |
- |
- |
185,727 |
|||
|
Financial investments |
96,299 |
- |
- |
96,299 |
|||
|
Trade receivables |
501,671 |
- |
- |
501,671 |
|||
|
Contract assets |
217,250 |
- |
- |
217,250 |
|||
|
Derivatives |
- |
11,194 |
- |
11,194 |
|||
|
Non-derivatives – hedge accounting |
- |
- |
19,637 |
19,637 |
|||
|
Other assets |
41,923 |
- |
- |
41,923 |
|||
|
|
1,042,870 |
11,194 |
19,637 |
1,073,701 |
|||
|
|
|
|
|
|
|||
|
Financial liabilities |
|
|
|
|
|||
|
Suppliers and other payables |
33,376 |
- |
- |
33,376 |
|||
|
Loans and borrowings |
974,231 |
- |
- |
974,231 |
|||
|
Lease liabilities |
62,808 |
- |
- |
62,808 |
|||
|
Accounts payable for business acquired |
68,561 |
136,388 |
- |
204,949 |
|||
|
Derivatives |
- |
4,109 |
- |
4,109 |
|||
|
Non-derivatives – hedge accounting |
- |
- |
35,169 |
35,169 |
|||
|
Contract liabilities |
32,136 |
- |
- |
32,136 |
|||
|
Other liabilities |
51,031 |
- |
- |
51,031 |
|||
|
|
1,222,143 |
140,497 |
35,169 |
1,397,809 |
|||
| (i) | FVTPL: Fair value through profit or loss. |
| (ii) | FVOCI: Fair value through other comprehensive income. |
a. Market risks
The Group is exposed to market risks resulting from the normal course of its activities, such as inflation, interest rates and exchange rate changes.
Thus, the Group's operating results may be affected by changes in nationals’ economics policies, especially regarding short and long-term interest rates, inflation targets and exchange rate policy. Exposures to market risk are measured by sensitivity analysis.
CI&T Inc.
Unaudited condensed consolidated interim financial statements
September 30, 2023
LIBOR to SOFR transition
According to some financial market facts, the Libor rate has become a less reliable reference. The main substitute for Libor is SOFR. Libor was discontinued on June 30, 2023, which was the deadline for financial institutions to deliver the last update for Libor. The clauses automatically change instruments from USD LIBOR to SOFR as USD LIBOR ceases. This replacement of rates did not impact on the Group's debt, as there is no relevant difference between the reference indexes.
a.1 Foreign currency – Exchange rate changes risk
The Group is exposed to foreign exchange risk to the extent that there is a mismatch between the currencies in which sales, purchases, receivables, and borrowings are denominated and the respective functional currencies of the Company and its subsidiaries.
Therefore, foreign exchange risk is inherent to the Group’s business model. The Group’s revenue is mainly denominated in foreign currency and, consequently, is exposed to exchange rate changes. The Group’s expenses, on the other hand, are mainly denominated in the Group’s functional currency (Brazilian Reais) and, consequently, are not exposed to exchange rate changes. The Group is exposed to exchange rate risk on its financial investments, suppliers and other payables, trade receivables, loans and borrowings, accounts payable for business combination, lease liabilities and derivatives. See below the total exposure to foreign currency:
|
|
September 30, 2023 |
December 31, 2022 |
|||||||||
|
|
US$ |
£ |
Other |
US$ |
£ |
Other |
|||||
|
Financial investments |
9,030 |
30,161 |
- |
96,299 |
- |
- |
|||||
|
Suppliers and other payables |
(4,959) |
(1,345) |
(1,510) |
(4,229) |
(2,264) |
(2,078) |
|||||
|
Trade receivables |
243,038 |
41,572 |
8,516 |
304,617 |
51,152 |
12,306 |
|||||
|
Loans and borrowings |
(157,004) |
- |
- |
(223,512) |
- |
- |
|||||
|
Lease liabilities |
(22,868) |
(2,330) |
(2,270) |
(29,147) |
(1,009) |
(2,493) |
|||||
|
Accounts payable for business combination |
(75,622) |
(51,304) |
- |
(76,859) |
(83,768) |
- |
|||||
|
Derivatives |
- |
- |
- |
(4,109) |
- |
- |
|||||
|
Net exposure |
(8,385) |
16,754 |
4,736 |
63,060 |
(35,889) |
7,735 |
|||||
See note 23.2.a.3 the sensitivity analysis for exchange rate risk.
Cash flow hedge for the Group's future Revenues
Considering the natural hedge and the risk management strategy, the Group designates hedging relationships to account for the effects of the existing hedge between a foreign exchange gain or loss from proportions of its long-term debt obligations (denominated in U.S. dollars) and foreign exchange gain or loss of its highly probable U.S. dollar denominated future export revenues, so that gains or losses associated with the hedged transaction (the highly probable future exports) and the hedging instrument (debt obligations) are recognized in the statement of profit or loss in the same periods in which they will occur.
CI&T Inc.
Unaudited condensed consolidated interim financial statements
September 30, 2023
The schedule of cash flow hedge involving the Company´s future exports as of September 30, 2023 is set below:
|
|
|
|
|
|
Present value of hedging instrument notional value at September 30, 2023 |
|
Hedging Instrument |
Hedged Transaction |
Nature of the Risk |
Maturity Date |
USD |
BRL |
|
Foreign exchange gains and losses on proportion of non-derivative financial instruments cash flows |
Foreign exchange gains and losses of highly probable future monthly exports revenues |
Foreign Currency - Real vs U.S. Dollar |
2024 to 2026 |
|
|
|
Export credit note (NCE) |
|
|
2026 |
22,500 |
112,671 |
|
Advance on Foreign Exchange Contract (ACC) |
|
|
2024 |
10,000 |
50,076 |
|
Total amounts designated as of September 30, 2023 |
|
|
|
32,500 |
162,747 |
Changes in the fair value of US$ foreign exchange debt obligation (non-derivative financial instruments) designated as effective cash flow hedges have their effective component recorded in equity, other comprehensive income and the ineffective component recorded in statement of profit or loss, in finance income (expense). The amounts accumulated in equity are recognized in the statement of profit or loss in the years in which the hedged item affects the result, the effects of which are appropriated to the result, in order to minimize the variations in the hedged item.
The individual hedge relationships are established on a one-to-one basis, that is, the “highly probable exports” of each month and the proportions of cash flows from foreign exchange debt obligation made abroad, used in each relationship and individual hedge, have the same face value in US dollars.
The exposure of the Group's future exports revenues in hard currency to the risk of variations in the R$/US$ exchange rate (liability position) is offset by an inverse exposure equivalent to its US dollars debt (asset position) to the same type of risk.
Hedge Accounting Effects
The movement of exchange variation accumulated in other comprehensive income as of September 30, 2023 and December 31, 2022, resulting from completed and expected transactions are set out below:
|
|
Exchange variation |
|
Balance as of January 1, 2022 |
- |
|
Recognized in Other comprehensive income – Future export revenues |
(33,104) |
|
Recognized in Other comprehensive income – Future M&A transactions |
(27,547) |
|
Reclassified to the statements of profit or loss - occurred exports |
2,383 |
|
Reclassified to the statements of profit or loss - occurred investments in acquisitions |
20,981 |
|
Balance as of September 30, 2022 |
(37,287) |
|
Balance as of January 1, 2023 |
(15,532) |
|
Recognized in Other comprehensive income – Future export revenues |
7,617 |
|
Reclassified to the statements of profit or loss - occurred exports |
2,162 |
|
Reclassified to the statements of profit or loss - ineffective portion |
(2,443) |
|
Balance as of September 30, 2023 |
(8,196) |
As of September 30, 2023, the annual expectation of realization of the exchange rate variation balance accumulated in equity is R$ 3,503.
CI&T Inc.
Unaudited condensed consolidated interim financial statements
September 30, 2023
a.2 Interest rate risk
Derives from the possibility of the Group incurring gains or losses resulting from changes in interest rates applicable to its financial assets and liabilities. The Group may also enter into derivative contracts in order to mitigate this risk. See note 23.2.a.3 the sensitivity analysis for interest rate risk.
a.3 Sensitivity analysis of non-derivative financial instruments
Exchange rate fluctuation and changes in interest rates may positively or adversely affect the financial statements.
The Group mitigates its risks relating to non-derivative financial assets and liabilities substantially through the contracting of derivative financial instruments. Accordingly, the Group identified the main risk factors that may generate losses for its operations with derivative financial instruments and this sensitivity analysis is based on three scenarios containing appreciation and depreciation that may impact the Group’s future results and cash flows, as described below:
| (i) | Probable scenario: The Group’s projections, based on internal and external data, considered the highest projection expected by the Company for the next 12 months: (i) the interest rate index in order to analyze the sensitivity of the index in short-term investments and loans and borrowings was 12.65% for CDI and 5.40% for SOFR; (ii) the exchange rate of R$ 4.98 for US$ and R$ 6.12 for £, related to the closing rate projected by the Company, for the purposes of analyzing the foreign exchange exposure. Based on these factors, variations (appreciation/depreciation and increase/decrease) were calculated in the adverse and remote scenarios. |
| (ii) | Adverse scenario: considered a variation of 25% in the main risk factor of each transaction. |
| (iii) | Remote scenario: considered a variation of 50% in the main risk factor of each transaction. |
For each scenario, the gross finance income or finance costs were calculated, excluding taxes and the maturity flow of each agreement. The base date considered was September 30, 2023, projecting the indexes for one year and verifying their sensitivity in each scenario.
Sensitivity analysis for exchange rate risk
| Income/(expense) in R$ | |||||||||
|
|
Risk |
Exposure in US$ |
Probable scenario (I) |
Adverse Scenario (II) |
Remote Scenario (III) |
||||
|
Exchange variation in the year |
Foreign currency appreciation - USD |
4.9830 |
5.0000 |
6.2500 |
7.5000 |
||||
|
Financial investments |
|
1,812 |
30 |
2,295 |
4,560 |
||||
|
Trade receivables |
|
48,773 |
827 |
61,793 |
122,760 |
||||
|
Suppliers and other payables |
|
(995) |
(16) |
(1,260) |
(2,504) |
||||
|
Loans and borrowings |
|
(29,863) |
(508) |
(37,837) |
(75,166) |
||||
|
Derivatives |
|
(1.645) |
(28) |
(2,084) |
(4,140) |
||||
|
Lease liabilities |
|
(4,589) |
(77) |
(5,813) |
(11,550) |
||||
|
Accounts payable for business combination |
|
(15,176) |
(258) |
(19,228) |
(38,198) |
||||
|
Net effect |
|
|
(30) |
(2,134) |
(4,238) |
||||
CI&T Inc.
Unaudited condensed consolidated interim financial statements
September 30, 2023
| Income/(expense) in R$ | |||||||||
|
|
Risk |
Exposure in US$ |
Probable scenario (I) |
Adverse Scenario (II) |
Remote Scenario (III) |
||||
|
Exchange variation in the year |
Foreign currency depreciation - USD |
4.9830 |
5.0000 |
3.7500 |
2.5000 |
||||
|
Financial investments |
|
1,812 |
30 |
(2,235) |
(4,500) |
||||
|
Trade receivables |
|
48,773 |
827 |
(60,139) |
(121,106) |
||||
|
Suppliers and other payables |
|
(995) |
(16) |
1,228 |
2,472 |
||||
|
Loans and borrowings |
|
(29,863) |
(508) |
36,821 |
74,150 |
||||
|
Derivatives |
|
(1,645) |
(28) |
2,028 |
4,085 |
||||
|
Lease liabilities |
|
(4,589) |
(77) |
5,659 |
11,396 |
||||
|
Accounts payable for business combination |
|
(15,176) |
(258) |
18,712 |
37,682 |
||||
|
Net effect |
|
|
(30) |
2,074 |
4,179 |
||||
| Income/(expense) in R$ | |||||||||
|
|
Risk |
Exposure in £ |
Probable scenario (I) |
Adverse Scenario (II) |
Remote Scenario (III) |
||||
|
Exchange variation in the year |
Foreign currency appreciation - GBP |
6.1211 |
6.3500 |
7.9375 |
9.5250 |
||||
|
Financial investments |
|
4,927 |
1,125 |
8,947 |
16,769 |
||||
|
Trade receivables |
|
6,792 |
1,557 |
12,340 |
23,122 |
||||
|
Suppliers and other payables |
|
(220) |
(52) |
(401) |
(751) |
||||
|
Lease liabilities |
|
(381) |
(89) |
(694) |
(1,299) |
||||
|
Accounts payable for business combination |
|
(8,382) |
(1,922) |
(15,228) |
(28,535) |
||||
|
Net effect |
|
|
619 |
4,964 |
9,306 |
||||
| Income/(expense) in R$ | |||||||||
|
|
Risk |
Exposure in £ |
Probable scenario (I) |
Adverse Scenario (II) |
Remote Scenario (III) |
||||
|
Exchange variation in the year |
Foreign currency depreciation - GBP |
6.1211 |
6.3500 |
4.7625 |
3.1750 |
||||
|
Financial investments |
|
4,927 |
1,125 |
(6,696) |
(14,518) |
||||
|
Trade receivables |
|
6,792 |
1,557 |
(9,225) |
(20,007) |
||||
|
Suppliers and other payables |
|
(220) |
(52) |
297 |
647 |
||||
|
Lease liabilities |
|
(381) |
(89) |
515 |
1,120 |
||||
|
Accounts payable for business combination |
|
(8,382) |
(1,922) |
11,385 |
24,691 |
||||
|
Net effect |
|
|
619 |
(3,724) |
(8,067) |
||||
CI&T Inc.
Unaudited condensed consolidated interim financial statements
September 30, 2023
Sensitivity analysis for interest rate risk
| Income/(expense) in R$ | |||||||||||
|
|
Risk |
Exposure in R$ |
Period rates |
Probable scenario (I) |
Adverse Scenario (II) |
Remote Scenario (III) |
|||||
|
Short-term financial investments |
Interest rate increase - CDI |
81,746 |
12.65% |
11.00% |
13.75% |
16.50% |
|||||
|
|
|
|
|
|
|
|
|||||
|
Loans and borrowings |
Interest rate increase - CDI |
(256,962) |
12.65% |
11.00% |
13.75% |
16.50% |
|||||
|
|
|
|
|
|
|
|
|||||
|
Accounts payable for business combination |
Interest rate increase - CDI |
(37,568) |
12.65% |
11.00% |
13.75% |
16.50% |
|||||
|
|
|
|
|
|
|
|
|||||
|
Loans and borrowings |
Interest rate increase - SOFR |
(445,135) |
5.40% |
5.47% |
6.84% |
8.21% |
|||||
|
|
|
|
|
|
|
|
|||||
|
Derivatives (interest rate swap) |
Interest rate increase - SOFR |
106,239 |
5.40% |
5.47% |
6.84% |
8.21% |
|||||
|
|
|
|
|
|
|
|
|||||
|
Net effect |
|
|
|
3,278 |
(7,224) |
(17,725) |
|||||
| Income/(expense) in R$ | |||||||||||
|
|
Risk |
Exposure in R$ |
Period rates |
Probable scenario (I) |
Adverse Scenario (II) |
Remote Scenario (III) |
|||||
|
Short-term financial investments |
Interest rate decrease - CDI |
81,746 |
12.65% |
11.00% |
8.25% |
5.50% |
|||||
|
|
|
|
|
|
|
|
|||||
|
Loans and borrowings |
Interest rate decrease - CDI |
(256,962) |
12.65% |
11.00% |
8.25% |
5.50% |
|||||
|
|
|
|
|
|
|
|
|||||
|
Accounts payable for business combination |
Interest rate decrease - CDI |
(37,568) |
12.65% |
11.00% |
8.25% |
5.50% |
|||||
|
|
|
|
|
|
|
|
|||||
|
Loans and borrowings |
Interest rate decrease - SOFR |
(445,135) |
5.40% |
5.47% |
4.10% |
2.74% |
|||||
|
|
|
|
|
|
|
|
|||||
|
Derivatives (interest rate swap) |
Interest rate decrease - SOFR |
106,239 |
5.40% |
5.47% |
4.10% |
2.74% |
|||||
|
|
|
|
|
|
|
|
|||||
|
Net effect |
|
|
|
3,278 |
13,780 |
24,248 |
|||||
b. Credit Risk
Credit risk refers to the risk that a counterparty will not comply with its contractual obligations, causing the Group to incur financial losses. Credit risk is the risk of a counterparty in a business transaction not complying with an obligation provided by a financial instrument or an agreement with a client, which would cause financial loss. To mitigate these risks, the Group analyzes the financial and equity condition of its counterparties, as well as the definition of credit limits and permanent monitoring of outstanding positions.
CI&T Inc.
Unaudited condensed consolidated interim financial statements
September 30, 2023
The Group applies the simplified standard approach to commercial financial assets, where the provision for losses is analyzed over the remaining life of the asset.
In addition, the Group is exposed to credit risk with respect to financial guarantees granted to banks.
The Group held cash and cash equivalents of R$ 194,295 on September 30, 2023 (R$ 185,727 as of December 31, 2022) and financial investments of R$ 39,192 on September 30, 2023 (R$ 96,299 as of December 31, 2022). The cash and cash equivalents and financial investments are held with bank and financial institution counterparties, which are rated BB- to A-, based on Standard & Poor’s ratings.
The carrying amount of financial assets represents the maximum credit exposure. The maximum credit risk exposure on the date of the financial statements is:
|
|
September 30, 2023 |
December 31, 2022 |
|
|
Hedge financial instruments – SWAP |
11,017 |
11,194 |
|
|
Cash and cash equivalents |
194,295 |
185,727 |
|
|
Financial investments |
39,192 |
96,299 |
|
|
Trade receivables |
422,218 |
501,671 |
|
|
Contract assets |
239,796 |
217,250 |
|
|
Other receivables (current and non-current) |
40,461 |
41,923 |
|
|
|
946,979 |
1,054,064 |
As of September 30, 2023, the exposure to credit risk for trade receivables, contract assets and other receivables by geographic region was as follows:
|
. |
September 30, 2023 |
December 31, 2022 |
|
|
North America |
339,654 |
426,166 |
|
|
Europe |
78,040 |
73,460 |
|
|
LATAM (Latin America) |
272,792 |
246,270 |
|
|
APJ (Asia, Pacific and Japan) |
11,989 |
14,948 |
|
|
Total |
702,475 |
760,844 |
c. Liquidity risk
The Group monitors liquidity risk by managing its cash resources and financial investments.
Liquidity risk is also managed by the Group through its cash flow projection, which aims to ensure the availability of funds to meet the Group’s both operational and financial obligations.
The Group also maintains approved credit limits with several financial institutions in order to adequate any level of liquidity arising from business demands, either in the short, medium or long term.
The maturities of the long-term installments of the loans are described in note 12.
The following are the remaining contractual maturities of financial liabilities on the reporting date. The amounts are gross and undiscounted, including contractual interest payments and excluding the impact of netting agreements:
CI&T Inc.
Unaudited condensed consolidated interim financial statements
September 30, 2023
|
|
September 30, 2023 |
||||||||||
|
|
Carrying amount |
Cash contractual cash flow |
6 months or less |
6-12 months |
1-2 years |
2-5 Years |
|||||
|
Non-derivative financial liabilities |
|
|
|
|
|
|
|||||
|
Trade payables |
16,958 |
16,958 |
16,958 |
- |
- |
- |
|||||
|
Loans and borrowings |
845,168 |
998,523 |
154,106 |
124,163 |
283,806 |
436,448 |
|||||
|
Lease liabilities |
48,755 |
54,270 |
12,224 |
9,780 |
13,878 |
18,388 |
|||||
|
Accounts payable for business combination |
165,469 |
180,676 |
30,162 |
12,164 |
112,835 |
25,515 |
|||||
|
Contract liabilities |
12,954 |
12,954 |
12,954 |
- |
- |
- |
|||||
|
Other payables (current and non-current) |
43,146 |
43,146 |
43,146 |
- |
- |
- |
|||||
|
Non-derivatives financial instruments |
34,721 |
34,721 |
34,721 |
- |
- |
- |
|||||
|
|
1,167,171 |
1,341,248 |
304,271 |
146,107 |
410,519 |
480,351 |
|||||
|
|
December 31, 2022 |
||||||||||
|
|
Carrying amount |
Cash contractual cash flow |
6 months or less |
6- 12 months |
1-2 years |
2-5 Years |
|||||
|
Non-derivative financial liabilities |
|
|
|
|
|
|
|||||
|
Trade payables |
33,376 |
33,376 |
33,376 |
- |
- |
- |
|||||
|
Loans and borrowings |
974,231 |
1,176,743 |
146,564 |
107,207 |
273,298 |
649,674 |
|||||
|
Lease liabilities |
62,808 |
70,837 |
13,903 |
11,480 |
17,981 |
27,473 |
|||||
|
Accounts payable for business combination |
204,949 |
229,547 |
64,888 |
7,484 |
95,858 |
61,317 |
|||||
|
Contract liabilities |
32,136 |
32,136 |
32,136 |
- |
- |
- |
|||||
|
Other payables (current and non-current) |
51,031 |
51,031 |
51,031 |
- |
- |
- |
|||||
|
Derivatives |
4,109 |
4,109 |
4,109 |
- |
- |
- |
|||||
|
Non-derivatives financial instruments |
35,169 |
35,169 |
35,169 |
- |
- |
- |
|||||
|
|
1,397,809 |
1,632,948 |
381,176 |
126,171 |
387,137 |
738,464 |
|||||
23.3 Derivative financial instruments
The Group held derivative financial instruments to hedge its foreign currency and interest rate risk exposures.
The Group entered into an interest rate swap transaction with the purpose of hedging the exposure to variable interest rate related to the Export Credit Note – NCE.
In May 2022, the Group entered a swap operation exchanging the CDI based rate to a US$ prefixed rate, related to a portion of an Export Credit Note - NCE.
The interest rate profile of the Group’s interest-bearing financial instruments, as reported to the Group’s Management, is as follows:
CI&T Inc.
Unaudited condensed consolidated interim financial statements
September 30, 2023
|
|
September 30, 2023 |
|||||||||
|
Maturity |
Notional (US$) |
Notional in R$ |
Floating rate receivable |
Fixed rate payable |
Fair value |
|||||
|
07/16/2026 |
30,000 |
152,100 |
SOFR Overnight |
3.07% |
9,739 |
|||||
|
07/07/2026 |
- |
100,000 |
CDI |
Foreign Exchange + 4.90% |
1,278 |
|||||
|
|
|
|
|
|
11,017 |
|||||
|
|
December 31, 2022 |
|||||||||
|
Maturity |
Notional (US$) |
Notional in R$ |
Floating rate receivable |
Fixed rate payable |
Fair value |
|||||
|
07/16/2026 |
30,000 |
152,100 |
3-months LIBOR |
3.07% |
11,194 |
|||||
|
07/07/2026 |
- |
100,000 |
CDI |
Foreign Exchange + 4.90% |
(4,109) |
|||||
|
|
|
|
|
|
7,085 |
|||||
23.4 Classification of financial instruments by type of measurement of fair value
The Group has financial instruments measured at fair value, which are qualified as defined below:
|
|
Carrying Amount |
Fair value |
|||||
|
|
September 30, 2023 |
December 31, 2022 |
September 30, 2023 |
December 31, 2022 |
|||
|
Level 2 |
|
|
|
|
|||
|
Derivatives: |
|
|
|
|
|||
|
Interest rate swap |
11,017 |
7,085 |
11,017 |
7,085 |
|||
|
Total |
11,017 |
7,085 |
11,017 |
7,085 |
|||
|
Non-derivatives: |
|
|
|
|
|||
|
Lease liabilities |
(48,755) |
(62,808) |
(48,755) |
(62,808) |
|||
|
Loans and borrowings |
(845,168) |
(974,231) |
(845,168) |
(974,231) |
|||
|
Accounts payable for business combination |
(165,469) |
(204,949) |
(165,469) |
(204,949) |
|||
|
Total |
(1,059,392) |
(1,241,988) |
(1,059,392) |
(1,241,988) |
|||
|
Total |
(1,048,375) |
(1,234,903) |
(1,048,375) |
(1,234,903) |
|||
Cash and cash equivalents, financial investments, trade receivables, suppliers and other payables were not included in the table above. The Group understands that these financial instruments have no classification, as the carrying amount of these items is a reasonable approximation of fair value.
CI&T Inc.
Unaudited condensed consolidated interim financial statements
September 30, 2023
24 Related parties
Transactions with key management personnel
The Group paid R$ 8,962 as of September 30, 2023 (R$ 8,788 as of September 30, 2022) as direct compensation to key management personnel. These amounts correspond to the executive board compensation, related social charges and short-term benefits and are recorded under line “General and administrative expenses”.
The executive officers also participate in the Group's stock-based compensation program (see note 17). For the period ended on September 30, 2023, R$ 128 (R$ 16 on September 30, 2022) were recognized in the statement of profit or loss.
The Group has no additional post-employment obligation, as well as no other long-term benefits, such as premium leave and other severance benefits. The Group also does not offer other benefits in connection with the dismissal of its Senior Management’s members.
25 Operating segments
Operating segments are defined based on business activities that reflect how CODM - Chief Operating Decision Maker reviews financial information for decision.
The Group's CODM is the Group's Board of Director. The CODM is in charge of the operational decisions of resource allocation and performance evaluation. The CODM considers the whole Group as a single operating and reportable segment, monitoring operations, making decisions on fund allocation and evaluating performance based on a single operating segment.
26 Subsequent events
Share repurchase program
On November 16, 2023, the Board of Directors approved a new share repurchase program, pursuant to which the Company may repurchase up to 2.5 million of its outstanding class A common shares until December 31, 2024.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Date: November 17, 2023
| CI&T Inc | |||
| By: | /s/ Stanley Rodrigues | ||
| Name: Stanley Rodrigues | |||
| Title: Chief Financial Officer | |||