Nagarro group

Key figures – Quarterly

Q2	Q2	YoY	Q1	QoQ
2022	2021	Change	2022	Change
kEUR	kEUR	%	kEUR	%
210,049	127,322	65.0%	185,532	13.2%
149,903	89,328	67.8%	135,218	10.9%
60,190	38,038	58.2%	50,359	19.5%
40,170	18,960	111.9%	28,974	38.6%

41,856	30,754	36.1%	39,066	7.1%
84,034	45,413	85.0%	70,672	18.9%

40,032	21,123	89.5%	35,363	13.2%
13,999	10,875	28.7%	13,322	5.1%
27,184	14,687	85.1%	23,229	17.0%
20,935	12,020	74.2%	18,824	11.2%
15,606	9,149	70.6%	14,270	9.4%
15,739	7,889	99.5%	12,108	30.0%
17,335	11,107	56.1%	16,085	7.8%
27,566	17,715	55.6%	24,314	13.4%
12,110	9,483	27.7%	10,973	10.4%
19,543	13,273	47.2%	17,043	14.7%

Nagarro group

Key figures – Half-yearly

	H1	H1	YoY
	2022	2021	Change
	kEUR	kEUR	%
Revenue	395,581	243,046	62.8%

Cost of revenues	285,121	171,043	66.7%
Gross profit	110,549	72,092	53.3%
Adjusted EBITDA	69,144	37,519	84.3%
Revenue by country
Germany	80,922	61,309	32.0%
US	154,706	84,684	82.7%
Revenue by industry
Automotive, Manufacturing and Industrial	75,395	39,983	88.6%
Energy, Utilities and Building Automation	27,321	20,287	34.7%
Financial Services and Insurance	50,413	27,742	81.7%
Horizontal Tech	39,759	23,985	65.8%
Life Sciences and Healthcare	29,876	18,015	65.8%
Management Consulting and Business Information	27,847	15,792	76.3%
Public, Non-profit and Education	33,421	20,429	63.6%
Retail and CPG	51,880	33,782	53.6%
Telecom, Media and Entertainment	23,084	18,596	24.1%
Travel and Logistics	36,587	24,435	49.7%

	2022	2021
	%	%
Revenue concentration (by customer)
Top 5	15.4%	13.9%
Top 6-10	10.6%	10.8%
Outside of Top 10	74.0%	75.3%

Segment information

	H1	H1
	2022	2021	Change
	kEUR	kEUR	%

Central Europe
Revenue	110,624	84,822	30.4%
Cost of revenues	83,190	59,882	38.9%
Gross profit	27,434	24,939	10.0%

North America
Revenue	155,186	84,698	83.2%
Cost of revenues	108,447	59,691	81.7%
Gross profit	46,739	25,007	86.9%

Rest of Europe
Revenue	47,497	37,001	28.4%
Cost of revenues	34,113	26,775	27.4%
Gross profit	13,473	10,315	30.6%

Rest of World
Revenue	82,274	36,525	125.3%
Cost of revenues	59,371	24,694	140.4%
Gross profit	22,903	11,831	93.6%

Gross profit, gross margin and Adjusted EBITDA are neither required by, nor presented in accordance with, IFRS. Non-IFRS measures should not be considered in isolation or as a substitute for results under IFRS.

Gross profit is calculated on the basis of total performance which is sum of revenue and own work capitalized. Rounding differences may arise when individual amounts or percentages are added together.

1.	Overview 7
2.	General economic and industry conditions 7
3.	Financial performance 7
4.	Financial position as at the balance sheet date 9
5.	Non-financial KPIs 10
6.	Outlook for 2022 10
7.	Risks and opportunities 10
8.	Developments after June 30, 2022 11

Interim condensed consolidated statements of financial position14
Interim condensed consolidated statements of comprehensive income16
Interim condensed consolidated statements of changes in equity18
Interim condensed consolidated statements of cash flow 19
Notes to the interim condensed consolidated financial statements20

Responsibility statement40
Financial calendar41
Legal notice41

Section A

Interim group management report

for the half-year ended June 30, 2022

1. Overview

Among the portents of economic doom and gloom, Nagarro's business carried over its revenue momentum from Q1 2022 to Q2 2022. Following QoQ revenue growth of 14.5% in Q1 2022, we recorded QoQ revenue growth of 13.2% in Q2 2022. H1 2022 YoY revenue growth over H1 2021 was 62.8%, and the corresponding constant currency YoY revenue growth was 55.6%. Adjusted EBITDA as a percentage of revenue was 15.6% in Q1 2022 and 19.1% in Q2 2022, with a resulting H1 2022 number of 17.5%. The company added a net 2,263 professionals in Q1 2022 and 872 in Q2 2022 - a number that includes additions through acquisitions in Q1 2022, trainees and lateral hires.

We do not have any way of predicting how long we will continue to grow this fast. What we can do, and what we have been doing, is to focus on building a culturally outstanding and operationally agile company, comprised of excellent human beings around the world who are intellectually and emotionally engaged with each other. With these fundamentals in place, we feel confident of making the best of whatever external environment we are presented with.

2. General economic and industry conditions

The half year was marked by the Russia-Ukraine conflict and its fallout. Rising energy prices and supply chain disruptions added to pre-existing inflationary pressures.

In contrast, fears around Covid-19 faded somewhat. As the disease progressed from pandemic to endemic, the world continued its slow journey back to normalcy.

In our industry, demand remained strong regardless of geopolitical and macroeconomic concerns. Talent remained in short supply and companies continued to report high attrition levels.

The Russia-Ukraine conflict disrupted the operations of some IT companies with high exposure to the region. However, this only intensified the competition for talent elsewhere in the world.

3. Financial performance

Nagarro's financial performance in H1 2022 was satisfactory. The pressure on gross margins continued but we were able to steer towards our 2022 target Adjusted EBITDA margin while keeping our foot on the accelerator in terms of growth.

Nagarro's revenues grew to €395.6 million in H1 2022 from €243.0 million in H1 2021, a growth of 62.8% . In constant currency, H1 2022 YoY revenue growth was 55.6%. Gross profit grew to € 110.5 million in H1 2022 from € 72.1 million in H1 2021. Gross margin dropped, changing from 29.7% in H1 2021 to 27.9% in H1 2022. Adjusted EBITDA grew 84.3% from € 37.5 million (15.4% of revenue) in H1 2021 to €69.1 million (17.5% of revenue)in H1 2022. Wage inflation and the carrying of a large number of trainees affected the gross margin and the Adjusted EBITDA in H1 2022. Our most significant adjustments to EBITDA in H1 2022 are the expense of €1.6 million on stock options offered in Jan 2021 and the acquistion costs of €0.3 million. Please note that gross margin, gross profit and Adjusted EBITDA are non-IFRS KPIs, defined in the Annual Report 2021.

EBITDA increased by 105.7% from € 32.7 million in H1 2021 to € 67.2 million in H1 2022. EBIT increased by 141.2% from € 21.4 million in H1 2021 to € 51.6 million in H1 2022. Net profit increased by 172.4% to € 36.2 million in H1 2022 against € 13.3 million in H1 2021. Further, compared to H1 2021, in H1 2022 there was an increase in depreciation and amortization of €4.4 million and an increase in interest expense of €0.7 million.

Our financial KPIs for the segments are the same as for the company, except that we do not monitor or report Adjusted EBITDA for the segments. Items like sales expense, general and administrative expense, depreciation, results related to currency fluctuations, results unrelated to the accounting period, interest income and expense, goodwill, depreciation of assets, and income taxes, are not allocated to any segment but are used to reconcile the net income for the segments to the net income of the company.

In H1 2022, Nagarro generated 39.2% of its revenue from North America (H1 2021: 34.8%), 28.0% of its revenue from Central Europe (H1 2021: 34.9%), 20.8% of its revenue from Rest of World (H1 2021: 15.0%) and 12.0% of its revenue from Rest of Europe (H1 2021: 15.2%).

Among our segments, the standout performance was from the Rest of World, which grew 125.3% in revenues to €82.3 million in H1 2022 from €36.5 million in H1 2021. The maximum contribution to growth was from the "Financial Services and Insurance" and "Automotive, Manufacturing and Industrial" verticals. Gross margin decreased in Rest of World to 27.8% in H1 2022 from 32.4% in H1 2021.

The North America segment grew 83.2% in revenues to €155.2 million in H1 2022 from €84.7 million in H1 2021. This was primarily driven by growth in the "Automotive, Manufacturing and Industrial" and "Public, Non-profit, Education" verticals. Gross margin for the segment increased to 30.1% in H1 2022 from 29.5% in H1 2021.

Central Europe grew 30.4% in revenue to €110.6 million in H1 2022 from €84.8 million in H1 2021. "Automotive, Manufacturing and Industrial" and "Retail and CPG" were the verticals with the most growth. Gross margin for the segment decreased in Central Europe to 24.8% in H1 2022 from 29.4% in H1 2021.

The Rest of Europe grew 28.4% in revenues to €47.5 million in H1 2022 from €37.0 million in H1 2021. The most growth was registered in the "Retail and CPG" and "Travel and Logistics" verticals. Gross margin for the segment grew to 28.4% in H1 2022 from 27.9% in H1 2021.

Revenues from the USA grew 82.7% to €154.7 million in H1 2022 from €84.7 million in H1 2021, while those from Germany grew 32.0% to €80.9 million in H1 2022 from €61.3 million in H1 2021.

Nagarro operates across a variety of industries. The focus on consumer experience underlies the digital transformation of almost every industry, while the technology used for this also cuts across industries. Innovation occurs increasingly often at the overlaps of the traditional industry definitions. Yet, each industry also requires specialized knowledge, and we have been investing in developing such specialized knowledge in industry after industry.

Industries with robust growth in H1 2022 over H1 2021 included "Automotive, Manufacturing and Industrial" (88.6%), "Financial Services and Insurance" (81.7%), "Management Consulting and Business Information" (76.3%), "Life Sciences and Healthcare" (65.8%) and " Horizontal Tech" (65.8%).

Industries with the least growth in H1 2022 over H1 2021 were "Telecom, Media and Entertainment" (24.1%) and "Energy, Utilities and Building Automation" (34.7%).

The revenue from our top 5 clients as a percentage of total revenue in H1 2022 rose to 15.4% in H1 2022 from 13.9% in H1 2021. The revenue from the next 5 largest clients dropped marginally to 10.6% in H1 2022 from 10.8% in H1 2021, while the revenue from clients outside the top 10 dropped to 74.0% in H1 2022 from 75.3% in H1 2021.

Our clients in 58 countries chose to pay us in various currencies. The currencies that contributed more significantly to our revenues are listed below (in € million).

Six months period	2022	2021
ended June 30	mEUR	mEUR

USD	173.3	90.8
EUR	130.6	103.4
INR	45.8	15.3
ZAR	8.0	5.2
DKK	6.9	5.4
GBP	5.7	4.1
AED	5.4	4.0
NOK	5.1	3.2
CHF	3.7	2.0
JPY	3.0	2.2
AUD	3.0	1.7
SEK	2.1	2.4
MYR	1.3	1.1
THB	0.2	1.2

4. Financial position as at the balance sheet date

Cash flow

The basic principles of financial management at Nagarro are financial prudence and stability, ensuring a reasonable profitability and assuring adequate liquidity, even as the company grows via calculated entrepreneurial bets. The Finance Council works to ensure we have the right capital structure in place, that we are managing cash and liquidity carefully, and we are managing financial risks such as currency risks with the appropriate instruments.

We also target a balanced debt-to-equity ratio that preserves flexibility for the company, allowing it to react to business opportunities and to changes in macroeconomic conditions. Nagarro's syndicated loan also incorporates covenants on the ratio of net debt to Adjusted EBITDA, which the company monitors and complies with.

The company's liquidity position at the end of H1 2022 was comfortable. The current assets were €284.6 million, of which cash was €72.1 million. The current liabilities were €178.3 million, yielding a working capital of €106.3 million.

Total assets grew by €69.3 million to €594.1 million as of June 30, 2022, as against €524.9 million as of December 31, 2021. Of these, non-current assets increased by €44.5 million to €309.6 million as of June 30, 2022, as against €265.1 million as of December 31, 2021. Within non-current assets, goodwill grew by €43.7 million (mainly on account of the acquisitions of RipeConcepts by €23.3 million and, Techmill by €7.1 million, and currency differences of €13.3 million), and right of use from leases reduced by €4.8 million (mainly on account of amortization and expected early vacation of a leased property in the next two years). Intangible assets increased by €2.3 million to €17.7 million (mainly on account of the acquisitions of RipeConcepts by €2.3 million and, Techmill by €2.2 million, and currency differences and amortisation during the period).

Current assets grew by €24.8 million to €284.6 million as of June 30, 2022, as against €259.8 million as of December 31, 2021. Within current assets, contract assets, trade receivables, other current financial assets and other current assets together increased by €52.5 million (primarily due to increase in trade receivables by €36.3 million and contract assets by €11.4 million). Income tax receivable increased by €6.9 million to €19.2 million. Further, cash balance got decreased by €34.5 million to €72.1 million mainly on account of outflows of €37.1 million for expenses related to various acquisitions.

Non-current liabilities have increased by €8.3 million mainly on account of net addition of non-current loans (€11.7 million).

Current liabilities have increased by €14.8 million primarily due to increase in other current financial liablities by €8.7 million (mainly provisions for unbooked supplier invoices and leave obligations) and income tax liabilities by €10.3 million. The increase has been offset by reduction in contract liabilities by €3.3 million, other provisions by €2.4 million and trade payables by €2.2 million (primarily on account of settlement of payables).

Net assets represented by total equity grew by €46.1 million from €96.8 million as of December 31, 2021, to €143.0 million as of June 30, 2022. The increase is due to increase in total comprehensive income of €44.5 million and increase in capital reserve by €1.6 million (mainly from issuance of stock options under SOP 2020/II and SOP 2020/III).

Note that management does not review assets and liabilities at the reportable segment level, and therefore segment disclosure relating to total assets and liabilities is not included in the report.

Our total cashflow was negative €26.0 million in H1 2022 against negative €5.5 million in H1 2021. Our H1 2022 total cashflow was negative primarily due to expenses related to various acquisitions.

Our operating cash flow was €15.0 million in H1 2022 as compared to €7.8 million in H1 2021. Our rapid growth in H1 2022 led to an increase in trade receivables by €36.3 million and contract assets by €11.4 million, resulting in low operating cash flows.

The cash outflow from financing activities in H1 2022 was €1.8 million as compared to €7.3 million in H1 2021. Major items of cash outflow in H1 2022 were lease payments of €10.8 million and interest payment of €2.6 million. This is offset by net bank loans of €11.4 million.

The cash outflow from investing activities in H1 2022 was €39.2 million, mainly due to the payment of acquisition obligations of €37.1 million (€17.2 million for acquisition of RipeConcepts and €7.5 million for Techmill, and to meet contractual payment obligations from older acquisitions). The cash outflow from investing activities in H1 2021 was €6.0 million.

5. Non-financial KPIs

We use a standardized client satisfaction (CSAT) survey, which is sent every quarter to the person responsible for project success on the client side. The CSAT comprises a set of questions, and our measure of overall satisfaction is the percentage of responses that is "Always" or "Mostly". In Q2 2022, the company revised the CSAT format to sharpen it and make the feedback more actionable. As a result of this change in the survey, the Q2 2022 and subsequent scores will not be comparable with Q1 2022 and previous scores. To be fully correct and transparent, we are providing the Q1 2022 and Q2 2022 scores separately in this H1 2022 report. Our CSAT score was 95% in Q1 2022, using the old survey format, and 92.5% in Q2 2022, using the new survey format. Our CSAT score was 95% in H1 2021, using the old survey format. Note also that the CSAT does not cover very small engagements and at any point in time, may also not cover engagements via companies that recently became part of Nagarro.

On June 30, 2022, Nagarro had 16,819 professionals of which 15,595 were professionals in engineering. The comparable numbers for June 30, 2021 were 10,903 and 10,014 and for December 31, 2021 were 13,684 and 12,613, respectively. A number of the new joiners in this half year were engineers recently out of college, not expected to be immediately deployed in revenue-generating work.

6. Outlook for 2022

The most obvious immediate risk to Nagarro's business is from the global macroeconomic situation. How the global economy will evolve and how it will impact our business is very difficult to predict at this time. There are some initial indications that the demand for digital engineering services may prove at least somewhat resilient. However, this also increases the risk of continued wage inflation in our industry while the increases in our costs may temporarily be more difficult to fully pass on to our clients.

With these caveats, we currently expect Nagarro's revenue for 2022 to be in the region of €800 million, as against €546 million in 2021. We target gross margin in the region of 27%, as against 28% in 2021. We target Adjusted EBITDA margin to be in the region of 14%, as against 15% in 2021. Acquisitions made in 2022 are included in these projections.

The alternative performance measures in these management projections for 2022 have been consistently estimated with the accounting principles applied in the consolidated financial statements. All of the above management projections are forecasts and may be proved wrong and are especially uncertain because of the geopolitical conditions, the macroeconomic conditions and the Covid-19 pandemic. However, we are confident that in the medium term, our business has the potential to deliver years of strong organic revenue growth, with Adjusted EBITDA margin in the region of 15%.

Nagarro continues to evaluate potential acquisition targets. Acquisitions, if any, are more likely to be of a bolt-on nature than transformative. The primary strategy is to acquire for client access, so as to better leverage our existing capabilities and case studies. However, there is always the possibility of an opportunistic transaction that deviates from our current strategy.

7. Risks and opportunities

In the Annual Report for 2021, we have described our approach to risk management, as well as key risk and opportunity factors. In this section, we present only the relevant changes and new developments.

Since the publishing of the Annual Report, there has been a significant increase in the demand-side risk from the travails of the global economy. It is also possible that demand from certain industries or regions might have a slower or more painful recovery than others.

We believe that the demand for Nagarro's services is fairly price-inelastic, and so in the medium term, our clients will support price increases to offset these cost increases. However, the price increases may often lag the increase in wages by several months, especially when there is a slowdown in the broader economy.

The operational risk related to the supply of engineering talent continues still. The competition for top software engineers has spiralled in recent times as companies have rushed to build new digital products and services. Related to this, the wages sought by top talent have also been increasing. Attrition rates have increased for top talent. For the most part, these challenges remain. These factors may, in the short term, affect our ability to service customer demand, as well as our ability to do so profitably.

8. Developments after June 30, 2022

In the period after the balance sheet date of June 30, 2022, Nagarro's business has not been greatly impacted by either the macroeconomic conditions, the continuing conflict in Ukraine, or the Covid-19 pandemic.

Please consult the interim condensed consolidated financial statements note G.7 Events after the balance sheet date for more detail.

Section B

Interim condensed consolidated financial statements

for the half-year ended June 30, 2022 in accordance with IFRS

Interim condensed consolidated statements of financial position14
Interim condensed consolidated statements of comprehensive income 16
Interim condensed consolidated statements of changes in equity 18
Interim condensed consolidated statements of cash flow 19
Notes to the interim condensed consolidated financial statements 20
A. General information20
1. Basis of preparation20
B. General accounting principles 20
1. New standards, interpretations and amendments adopted by the Group20
2. Basis of consolidation 22
C. Notes to the interim condensed consolidated statements of financial position 23
1. Intangible assets23
2. Goodwill 23
3. Right-of-use assets and lease liabilities 23
4. Current contract assets24
5. Equity24
6. Financial instruments 26
D. Notes to the interim condensed consolidated statements of comprehensive income 29
1. Revenue29
2. Other operating income 29
3. Staff costs29
4. Other operating expenses 30
5. Finance costs 30
6. Income taxes30
7. Earnings per share (EPS)31
E. Notes to the interim condensed consolidated statements of cash flow32
1. Net Cash flows from business combinations 32
2. Reconciliation of cash and cash equivalents, and financial liabilities32
F. Other disclosures 33
1. Business combinations 33
2. Related party transactions34
3. Adjusted EBITDA 35
4. Segment information35
5. Contingent liabilities and guarantees37
6. Capital management37
7. Events after the balance sheet date37

Interim condensed consolidated statements of financial position

		June 30,	December 31,
Assets	Note	2022	2021
in kEUR
Intangible assets	C.1	17,685	15,342
Goodwill	C.2	207,063	163,401
Property, plant and equipment		12,097	11,139
Right of use assets	C.3	54,545	59,331
Non-current contract costs		208	208
Other non-current financial assets		4,584	3,745
Other non-current assets		871	876
Deferred tax assets		12,504	11,039
Non-current assets		309,557	265,081
Inventories		238	269
Current contract costs		11	121
Contract assets	C.4	33,228	21,823
Trade receivables		139,637	103,308
Other current financial assets		7,582	5,447
Other current assets		12,566	9,901
Income tax receivables		19,193	12,324
Cash		72,115	106,592
Current assets		284,570	259,785
Total assets		594,127	524,866

		June 30,	December 31,
Equity and Liabilities	Note	2022	2021
in kEUR
Share capital	C.5	13,776	13,776
Capital reserve	C.5	246,414	244,825
Profit carried forward		96,372	66,370
Net profit for the period, excluding non-controlling interests		36,197	30,003
Changes in equity recognized directly in equity	C.5	(260,612)	(260,612)
Other comprehensive income	C.5	10,803	2,468
Equity attributable to the shareholders of Nagarro		142,950	96,829
Equity attributable to non-controlling interests		-	-
Total equity		142,950	96,829
Non-current liabilities to banks		197,827	186,084
Non-current lease liabilities	C.3	37,395	43,343
Long-term provisions for post-employment benefits		10,538	9,082
Other long-term provisions		288	273
Other non-current financial liabilities		2,536	2,491
Non-current liabilities from acquisitions		17,640	18,939
Deferred tax liabilities		6,685	4,401
Non-current liabilities		272,909	264,614
Current liabilities to banks		19,277	23,778
Current lease liabilities	C.3	21,323	19,395
Short-term provisions for post-employment benefits		1,429	1,028
Other short-term provisions		16,640	19,036
Current contract liabilities		6,107	9,422
Trade payables		16,240	18,462
Current liabilities from acquisitions		22,270	17,341
Other current financial liabilities		40,129	31,425
Other current liabilities		8,726	7,681
Income tax liabilities		26,127	15,855
Current liabilities		178,267	163,424

Equity and liabilities		594,127	524,866

Interim condensed consolidated statements of comprehensive income

Profit or Loss

Six-month period ended June 30	Note	2022	2021
in kEUR
Revenue	D.1	395,581	243,046
Own work capitalized		89	89
Other operating income	D.2	11,641	7,539
Cost of materials		(38,343)	(26,389)
Staff costs	D.3	(265,431)	(163,997)
Impairment of trade receivables and contract assets		(970)	(824)
Other operating expenses	D.4	(35,317)	(26,771)
Earnings before interest, taxes, depreciation and amortization (EBITDA)		67,249	32,693
Depreciation, amortization and impairment		(15,693)	(11,314)
Earnings before interest and taxes (EBIT)		51,557	21,379
Finance income		237	245
Finance costs	D.5	(4,505)	(3,834)

Earnings before taxes (EBT)		47,289	17,790
Income taxes	D.6	(11,091)	(4,503)
Profit for the period		36,197	13,287
Profit for the period attributable to:
Shareholders of Nagarro		36,197	10,560
Non-controlling interests		-	2,727
Other comprehensive income
Six-month period ended June 30	Note	2022	2021
in kEUR
Items that will not be reclassified to profit or loss
Actuarial gains (losses)		46	(203)
Tax effects		(32)	50
		14	(153)
Items that may be reclassified to profit or loss
Foreign exchange differences		8,321	3,467
		8,321	3,467

Other comprehensive income for the period		8,335	3,314
Total comprehensive income for the period		44,532	16,601

Total comprehensive income for the period attributable to:
Shareholders of Nagarro		44,532	13,345
Non-controlling interests		-	3,257
Basic earnings per share:	D.7
Basic earnings per shares in EUR (based on weighted average)		2.63	0.92
Basic earnings per shares in EUR (based on outstanding shares)		2.63	0.91

Diluted earnings per share:	D.7
Diluted earnings per share in EUR (based on weighted average)		2.60	0.92
Diluted earnings per share in EUR (based on outstanding shares)		2.60	0.91

Interim condensed consolidated statements of changes in equity

							Other comprehensive income
	Share capital	Capital reserve	Profit carried forward	excluding non-controlling Net profit for the period, interests	Changes in equity recognized directly in equity	Foreign exchange differences	Actuarial gain or loss on pension provisions	Equity attributable to the shareholders of Nagarro	Equity attributable to non controlling interests	Total equity
in kEUR
Balance at January 1, 2021	11,383	232,410	47,922	18,447	(260,612)	(4,723)	(1,026)	43,800	2,728	46,528
Profit for the period	–	–	–	10,560	–	–	–	10,560	2,727	13,287
Other comprehensive income for the period	–	–	–	–	–	2,913	(128)	2,785	529	3,314
Total comprehensive income for the period	–	–	–	10,560	–	2,913	(128)	13,345	3,257	16,601
Transfer of profit or loss for the previous year to profit carried forward	–	–	18,447	(18,447)	–	–	–	–	–	–
Dividends	–	–	–	–	–	–	–	–	–	–
Share capital issued	194	–	–	–	–	–	–	194	–	194
Transfer of capital reserve	–	–	–	–	–	–	–	–	–	–
Stock option expense	–	2,908	–	–	–	–	–	2,908	–	2,908
Other transactions with shareholders	–	2,968	–	–	–	–	–	2,968	2,948	5,916
Balance at June 30, 2021	11,577	238,285	66,370	10,560	(260,612)	(1,810)	(1,154)	63,214	8,932	72,147

Balance at January 1, 2022	13,776	244,825	66,370	30,003	(260,612)	5,442	(2,974)	96,829	–	96,829
Profit for the period	–	–	–	36,197	–	–	–	36,197	–	36,197
Other comprehensive income for the period	–	–	–	–	–	8,321	14	8,335	–	8,335
Total comprehensive income for the period	–	–	–	36,197	–	8,321	14	44,532	–	44,532
Transfer of profit or loss for the previous year to profit carried forward	–	–	30,003	(30,003)	–	–	–	–	–	–
Dividends	–	–	–	–	–	–	–	–	–	–
Share capital issued	–	–	–	–	–	–	–	–	–	–
Transfer of capital reserve	–	–	–	–	–	–	–	–	–	–
Stock option expense	–	1,589	–	–	–	–	–	1,589	–	1,589
Balance at June 30, 2022	13,776	246,414	96,372	36,197	(260,612)	13,762	(2,960)	142,950	–	142,950

Interim condensed consolidated statements of cash flow

Cash flows

Six-month period ended June 30	Note	2022	2021
in kEUR
Cash flows from operating activities
EBIT		51,557	21,379
Depreciation, amortization and impairments of non-current assets		15,693	11,314
Change in long-term provisions		806	333
Other non-cash income and expenses		4,583	2,737
Income taxes paid		(8,258)	(4,856)
Cash flows from changes in net working capital		(58,139)	(24,068)
Net cash inflow (outflow) from factoring*		8,717	957
Net cash inflow from operating activities		14,958	7,796

Cash flows from investing activities
Payments for property, plant and equipment and intangible assets		(2,144)	(1,820)
Proceeds from sale of property, plant and equipment and intangible assets		11	4
Acquisition of subsidiaries, net of cash acquired	E.1	(37,051)	(4,165)
Net cash outflow from investing activities		(39,184)	(5,981)
Cash flows from financing activities

Proceeds from shareholders of Nagarro		-	3,162
Proceeds from bank loans		19,950	-
Repayment of bank loans		(8,570)	(2,045)
Principal elements of lease payments		(10,753)	(8,996)
Interest received		237	245
Interest paid		(2,624)	(2,619)
Other transactions with shareholders		-	2,948
Net cash inflow (outflow) from financing activities		(1,760)	(7,306)

Total cash flow		(25,986)	(5,490)
Effects of exchange rate changes on cash and cash equivalents		(3,932)	486
Total changes in cash and cash equivalents		(29,918)	(5,004)

Cash and cash equivalents at the beginning of period	E.2	94,969	103,173
Cash and cash equivalents at the end of period	E.2	65,051	98,169

*cash flow from factoring including the interest on factoring has been reclassified from financing activities to operating activities in restated H1 2021 cash flow statement.

Notes to the interim condensed consolidated financial statements

A. General information

1. Basis of preparation

The interim condensed consolidated financial statements of Nagarro SE and its subsidiaries (collectively, the Group) for the six months ended June 30, 2022 are unaudited and were authorized for issuance in accordance with the resolution of the management board on August 12, 2022.

The interim condensed consolidated financial statements for the six months ended June 30, 2022 have been prepared in accordance with IAS 34 Interim Financial Reporting.

The interim condensed consolidated financial statements do not include all the information and disclosures required in the annual financial statements, and should be read in conjunction with the Group's annual consolidated financial statements as at December 31, 2021, which were prepared in accordance with International Financial Reporting Standards (IFRS), as endorsed by the European Union (EU), and the supplementary requirements of §315e (1) of the German Commercial Code (HGB).

The interim condensed consolidated financial statements also comply with German Accounting Standard No. 16 (GAS 16) – Interim Financial Reporting –issued by the German Accounting Standards Committee e. V. (GASC).

The interim condensed consolidated financial statements are presented in euros. Amounts are stated in thousands of euros (kEUR), except where otherwise indicated. Rounding differences may arise when individual amounts or percentages are added together.

In the opinion of the management, the interim condensed consolidated financial statements reflect all accounting entries (in other words, normal recurring entries) necessary for a fair presentation of Nagarro's financial position and performance. Results presented for interim periods are not necessarily indicative of results that may be expected in future periods or for the full financial year.

In preparing the interim condensed consolidated financial statements according to IFRS, management has made discretionary decisions, estimates and assumptions. These may affect the amount and presentation of assets and liabilities recognized in the balance sheet, disclosures of contingent assets and liabilities as of the reporting date, as well as disclosed income and expenses for the reporting period. Due to the continuing conflict in Ukraine, or the macroeconomic conditions, or the Covid-19 pandemic, these estimates and discretionary decisions are subject to

uncertainty. Actual amounts may vary from these estimates and assumptions; changes can have a significant impact on the interim condensed consolidated financial statements.

The interim condensed consolidated financial statements of Nagarro SE for the half year ended June 30, 2022, have not been reviewed by an auditor or have not been audited according to section 115 (5) WpHG (German Securities Trading Act).

B. General accounting principles

1. New standards, interpretations and amendments adopted by the Group

The accounting policies adopted in the preparation of the interim condensed consolidated financial statements are consistent with those followed in the preparation of the Group's annual consolidated financial statements for the year ended December 31, 2021, except for the adoption of new standards effective as of January 1, 2022. The Group has not early adopted any standard, interpretation or amendment that has been issued but is not yet effective. Several amendments apply for the first time in 2022, which are described below, but do not have a significant impact on the interim condensed consolidated financial statements of the Group.

Amendments to IFRS 16 - Covid-19 Related Rent Concessions

The amendments to IFRS 16 in connection with COVID-19 grant lessee relief while accounting for changes to the lease contract (lease modifications) due to rental concessions as a result of the corona pandemic. As a practical workaround, a lessee may choose to suspend the assessment of whether a pandemic lease concession from a lessor constitutes an amendment to the lease. A lessee making this choice accounts for any qualified change in lease payments resulting from the rental concession in connection with the corona pandemic in the same way as it would account for the change under IFRS 16 if it were not a lease modification.