6-K

6-K 1 d908133d6k.htm 6-K 6-K

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 May, 2020

Commission File Number: 001-14950

ULTRAPAR HOLDINGS INC.

(Translation of Registrant’s Name into English)

Brigadeiro Luis Antonio Avenue, 1343, 9^th Floor

São Paulo, SP, Brazil 01317-910

(Address of Principal Executive Offices)

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F:

Form 20-F ☒ Form 40-F ☐

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):

Yes ☐ No ☒

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):

Yes ☐ No ☒

ULTRAPAR HOLDINGS INC.

TABLE OF CONTENTS

ITEM


1.		Parent and Consolidated Interim Financial Information as of and the Three-month period Ended March 31, 2020 and Report on Review of Interim Financial Information
2.		1Q20 Earnings Release
3.		Board of Directors minutes

(Convenience Translation into English from

the Original Previously Issued in Portuguese)

Ultrapar Participações S.A.

Parent and Consolidated

Interim Financial Information

as of and the Three-month period

Ended March 31, 2020 and

Report on Review of Interim

Financial Information

KPMG Auditores Independentes

Ultrapar Participações S.A. and Subsidiaries

Parent and Consolidated

Interim Financial Information

As of and the Three-month period Ended March 31, 2020

Table of Contents


Report on the Review of Quarterly Information			3

Statements of Financial Position			4-5

Statements of Profit or Loss			6

Statements of Comprehensive Income			7

Statements of Changes in Equity			8

Statements of Cash Flows - Indirect Method			9-10

Statements of Value Added			11

Notes to the Interim Financial Information			12-106

(Convenience Translation into English from the Original Previously Issued in Portuguese)

Report on the Review of quarterly Information - ITR

To the Shareholders, Directors and Management of

Ultrapar Participações S.A.

São Paulo, SP

Introduction

We have reviewed the accompanying individual and consolidated interim financial information of Ultrapar Participações S.A. (“Company”), comprised in the Quarterly Financial Information - ITR Form for the quarter ended March 31, 2020, which comprise the statements of financial position as of March 31, 2020 and related statements of income, comprehensive income, changes in shareholder´s equity and cash flows for the three-month period then ended, including explanatory notes.

The Company´s Management is responsible for the preparation of the interim financial information in accordance with Technical Pronouncement CPC 21 (R1) Interim Financial Information and with International Standard IAS 34 – Interim Financial Reporting, issued by the International Accounting Standards Board - IASB, such as for the presentation of these information in a manner consistent with the standards issued by the Brazilian Securities and Exchange Commission, applicable to the preparation of the Quarterly Financial Information - ITR. Our responsibility is to express a conclusion on these interim financial information based on our review.

Scope of Review

Our review was conducted in accordance with the Brazilian and International Review Standards of interim information (NBC TR 2410 - Review of Interim Financial Information Performed by the Independent Auditor of the Entity and ISRE 2410 - Review of Interim Financial Information Performed by the Independent Auditor of the Entity, respectively). A review of interim information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with the auditing standards and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion on the individual and consolidated interim financial information

Based on our review, nothing has come to our attention that causes us to believe that the individual and consolidated interim financial information included in the quarterly information referred to above was not prepared, in all material respects, in accordance with CPC 21 (R1) and IAS 34, issued by the Accounting Committee and by IASB applicable to the preparation of Quarterly Financial Information – ITR and presented in accordance with the standards issued by the Brazilian Securities Exchange Commission - CVM.

Other matters

Interim statements of value added

The individual and consolidated interim statements of value added (DVA) for the three-month period ended March 31, 2020, prepared under the responsibility of the Company’s management, and presented as supplementary information for the purposes of IAS 34, were submitted to the same review procedures followed together with the review of the Company’s interim financial information. In order to form our conclusion, we evaluated whether these statements are reconciled to the interim financial information and to the accounting records, as applicable, and whether their form and content are in accordance with the criteria set on Technical Pronouncement CPC 09 - Statement of Value Added. Based on our review, nothing has come to our attention that causes us to believe that the accompanying statements of value added are not prepared, in all material respects, according to the criteria defined in this Standard and consistently in accordance with the individual and consolidated interim financial information taken as a whole.

São Paulo, May 13, 2020

KPMG Auditores Independentes

CRC 2SP014428/O-6

Original report in Portuguese signed by

Marcio Serpejante Peppe

Accountant CRC 1SP233011/O-8

Ultrapar Participações S.A. and Subsidiaries

Statements of Financial Position

As of March 31, 2020 and December 31, 2019

(In thousands of Brazilian Reais)


			Parent				Consolidated
Assets	Note		03/31/2020		12/31/2019		03/31/2020		12/31/2019
Current assets
Cash and cash equivalents		4.a		17,456		42,580		2,494,001		2,115,379
Financial investments and hedging instruments		4.b		28,471		95,829		3,460,708		3,090,212
Trade receivables		5.a		—		—		3,187,717		3,635,834
Reseller financing		5.b		—		—		441,641		436,188
Inventories		6		—		—		3,394,838		3,715,560
Recoverable taxes		7.a		—		—		1,010,344		1,122,335
Recoverable income and social contribution taxes		7.b		50,352		49,750		426,188		325,343
Dividends receivable				3,074		3,074		3,630		3,630
Other receivables				28,880		4,258		79,701		36,765
Prepaid expenses		10		2,258		2,135		157,097		111,355
Contractual assets with customers – exclusive rights		11		—		—		473,483		465,454

Total current assets				130,491		197,626		15,129,348		15,058,055


Non-current assets
Financial investments and hedging instruments		4.b		—		—		1,294,030		506,506
Trade receivables		5.a		—		—		39,987		53,666
Reseller financing		5.b		—		—		361,213		364,748
Related parties		8.a		750,000		759,123		490		490
Deferred income and social contribution taxes		9.a		35,592		41,613		916,132		653,694
Recoverable taxes		7.a		—		—		982,611		767,360
Recoverable income and social contribution taxes		7.b		39,447		39,447		103,331		104,947
Escrow deposits		22.a		2		17		957,177		921,443
Indemnification asset – business combination		22.c		—		—		193,577		193,496
Other receivables				—		—		3,158		3,430
Prepaid expenses		10		237		255		62,384		69,216
Contractual assets with customers – exclusive rights		11		—		—		1,065,830		1,000,535

Total long term assets				825,278		840,455		5,979,920		4,639,531

Investments
In subsidiaries		12.a		9,712,155		10,058,456		—		—
In joint-ventures		12.b		12,757		18,792		142,568		153,076
In associates		12.c		—		—		26,331		25,750
Other				—		—		2,793		2,793

				9,724,912		10,077,248		171,692		181,619

Right to use assets		13		36,533		5,799		2,069,725		1,980,912
Property, plant, and equipment		14		4,614		2,532		7,884,696		7,572,762
Intangible assets		15		256,992		246,163		1,780,500		1,762,593

Total non-current assets				10,848,329		11,172,197		17,886,533		16,137,417

Total assets				10,978,820		11,369,823		33,015,881		31,195,472

The accompanying notes are an integral part of the interim financial information.

Ultrapar Participações S.A. and Subsidiaries

Statements of Financial Position

As of March 31, 2020 and December 31, 2019

(In thousands of Brazilian Reais)


			Parent						Consolidated
Liabilities	Note		03/31/2020			12/31/2019			03/31/2020			12/31/2019
Current liabilities
Loans and hedging instruments		16		—			—			1,529,496			867,871
Debentures		16.g		4,254			28,713			276,824			249,570
Trade payables		17		3,738			2,173			1,541,758			2,158,478
Trade payables – reverse factoring		17		—			—			863,589			541,593
Salaries and related charges		18		21,048			958			340,052			405,636
Taxes payable		19		192			389			245,165			269,922
Dividends payable		25.h		16,222			14,689			17,957			16,694
Income and social contribution taxes payable				47			—			97,922			164,757
Post-employment benefits		20.b		—			—			29,849			28,951
Provision for asset retirement obligation		21		—			—			4,427			3,847
Provision for tax, civil, and labor risks		22.a		36			—			44,175			40,455
Leases payable		13		3,707			144			230,489			206,396
Other payables				1,316			3			196,637			213,273
Deferred revenue		23		—			—			26,131			27,626

Total current liabilities				50,560			47,069			5,444,471			5,195, 069

Non-current liabilities
Loans and hedging instruments		16		—			—			8,771,534			6,907,113
Debentures		16.g		1,723,552			1,723,368			6,384,192			6,368,168
Related parties		8.a		4,892			4,220			3,901			3,925
Deferred income and social contribution taxes		9.a		634			—			32,282			7,531
Post-employment benefits		20.b		—			—			245,805			243,916
Provision for asset retirement obligation		21		—			—			47,482			47,395
Provision for tax, civil, and labor risks		22.a; 22.c		445			399			887,187			884,140
Leases payable		13		34,766			5,855			1,473,754			1,382,277
Subscription warrants – indemnification		24		47,293			130,657			47,293			130,657
Other payables				—			—			176,287			190,106

Total non-current liabilities				1,811,582			1,864,499			18,069,717			16,165,228

Equity
Share capital		25.a; 25.f		5,171,752			5,171,752			5,171,752			5,171,752
Equity instrument granted		25.b		14,105			11,970			14,105			11,970
Capital reserve		25.d		595,472			542,400			595,472			542,400
Treasury shares		25.c		(485,383	)		(485,383	)		(485,383	)		(485,383	)
Revaluation reserve on subsidiaries		25.e		4,476			4,522			4,476			4,522
Profit reserves		25.f		3,995,414			3,995,414			3,995,414			3,995,414
Retained earnings				160,389			—			160,389			—
Valuation adjustments		25.g.1		(563,848	)		(146,317	)		(563,848	)		(146,317	)
Cumulative translation adjustments		25.g.2		224,301			102,427			224,301			102,427
Additional dividends to the minimum mandatory dividends		25.h		—			261,470			—			261,470

Equity attributable to:
Shareholders of the Company				9,116,678			9,458,255			9,116,678			9,458,255
Non-controlling interests in subsidiaries				—			—			385,015			376,920

Total equity				9,116,678			9,458,255			9,501,693			9,835,175

Total liabilities and equity				10,978,820			11,369,823			33,015,881			31,195,472

The accompanying notes are an integral part of the interim financial information.

Ultrapar Participações S.A. and Subsidiaries

Statements of Profit or Loss

For the three-month period ended March 31, 2020 and 2019

(In thousands of Brazilian Reais, except earnings per share)


			Parent						Consolidated
	Note		03/31/2020			03/31/2019			03/31/2020			03/31/2019
Net revenue from sales and services		26		—			—			21,387,138			20,739,253
Cost of products and services sold		27		—			—			(19,977,191	)		(19,294,673	)

Gross profit				—			—			1,409,947			1,444,580
Operating income (expenses)
Selling and marketing		27		—			—			(614,631	)		(650,309	)
Expected losses on doubtful accounts		27		—			—			(30,275	)		(28,193	)
General and administrative		27		—			—			(409,881	)		(383,845	)
Loss on disposal of property, plant and equipment and intangibles		28		—			—			6,938			(2,082	)
Other operating income, net		29		(245	)		431			123,939			36,713


Operating income before financial income (expenses) and share of profit (loss) of subsidiaries, joint ventures and associates				(245	)		431			486,037			416,864

Share of profit (loss) of subsidiaries, joint ventures and associates		12		154,849			225,697			(12,428	)		(6,970	)

Operating income before financial income (expenses) and income and social contribution taxes				154,604			226,128			473,609			409,894
Financial income		30		34,134			41,167			182,051			144,149
Financial expenses		30		(21,053	)		(29,145	)		(349,681	)		(143,321	)

Financial result, net				13,081			12,022			(167,630	)		828

Income before income and social contribution taxes				167,685			238,150			305,979			410,722
Income and social contribution taxes
Current		9.b; 9.c		(170	)		—			(108,289	)		(139,387	)
Deferred		9.b		(6,656	)		(4,489	)		(28,824	)		(28,782	)

				(6,826	)		(4,489	)		(137,113	)		(168,169	)
Net income for the period				160,859			233,661			168,866			242,553

Net income for the period attributable to:
Shareholders of the Company				160,859			233,661			160,859			233,661
Non-controlling interests in subsidiaries				—			—			8,007			8,892
Earnings per share (based on weighted average number of shares outstanding) – R$
Basic		31		0.1480			0.2208			0.1480			0.2208
Diluted		31		01471			0.2194			0.1471			0.2194

The accompanying notes are an integral part of the interim financial information.

Ultrapar Participações S.A. and Subsidiaries

Statements of Comprehensive Income

For the three-month period ended March 31, 2020 and 2019

(In thousands of Brazilian Reais)


			Parent						Consolidated
	Note		03/31/2020			03/31/2019			03/31/2020			03/31/2019
Net income for the period				160,859			233,661			168,866			242,553
Items that are subsequently reclassified to profit or loss:
Fair value adjustments of financial instruments of subsidiaries, net		25.g.1		(420,032	)		(5,920	)		(420,032	)		(5,899	)
Fair value adjustments of financial instruments of joint ventures, net		25.g.1		2,501			46			2,501			46
Cumulative translation adjustments, net of hedge of net investments in foreign operations and income and social contribution taxes		25.g.2		121,874			4,543			121,874			4,543
Items that are not subsequently reclassified to profit or loss:
Actuarial gain (losses) of post-employment benefits of subsidiaries, net		25.g.1		—			238			—			238

Total comprehensive income for the period				(134,798	)		232,568			(126,791	)		241,481

Total comprehensive income for the period attributable to shareholders of the Company				(134,798	)		232,568			(134,798	)		232,568
Total comprehensive income for the period attributable to non-controlling interest in subsidiaries				—			—			8,007			8,913

The accompanying notes are an integral part of the interim financial information.

Ultrapar Participações S.A. and Subsidiaries

Statements of Changes in Equity

For the three-month period ended March 31, 2020 and 2019

(In thousands of Brazilian Reais)


															Profit reserve															Equity attributable to:
	Note		Share capital		Equity instrument granted		Capital reserve		Treasury shares			Revaluation reserve on subsidiaries			Legal reserve		Investments statutory reserve		Valuation adjustments			Cumulative translation adjustments		Retained earnings			Additional dividends to the minimum mandatory dividends			Shareholders of the Company			Non-controlling interests in subsidiaries			Consolidated equity
Balance as of December 31, 2019				5,171,752		11,970		542,400		(485,383	)		4,522			705,341		3,290,073		(146,317	)		102,427		—			261,470			9,458,255			376,920			9,835,175
Net income for the period				—		—		—		—			—			—		—		—			—		160,859			—			160,859			8,007			168,866
Other comprehensive income:
Fair value adjustments of available for financial instruments, net of income taxes		25.g.1		—		—		—		—			—			—		—		(417,531	)		—		—			—			(417,531	)		—			(417,531	)
Currency translation of foreign subsidiaries, including the effect of net investments hedge		25.g.2		—		—		—		—			—			—		—		—			121,874		—			—			121,874			—			121,874

Total comprehensive income for the period				—		—		—		—			—			—		—		(417,531	)		121,874		160,859			—			(134,798	)		8,007			(126,791	)
Issuance of shares related to the subscription warrants – indemnification – Extrafarma acquisition		—		—		—		53,072		—			—			—		—		—			—		—			—			53,072			—			53,072
Equity instrument granted		25.b		—		2,135		—		—			—			—		—		—			—		—			—			2,135			—			2,135
Income and social contribution taxes on realization of revaluation reserve of subsidiaries		25.e		—		—		—		—			(46	)		—		—		—			—		46			—			—			—			—
Loss due to the payments fixed dividends to preferred shares				—		—		—		—			—			—		—		—			—		(516	)		—			(516	)		516			—
Additional dividends attributable to non-controlling interests				—		—		—		—			—			—		—		—			—		—			—			—			(428	)		(428	)
Approval of additional dividends by the Shareholders’ Meeting		25.h		—		—		—		—			—			—		—		—			—		—			(261,470	)		(261,470	)		—			(261,470	)

Balance as of March 31, 2020				5,171,752		14,105		595,472		(485,383	)		4,476			705,341		3,290,073		(563,848	)		224,301		160,389			—			9,116,678			385,015			9,501,693

Ultrapar Participações S.A. and Subsidiaries Statements of Changes in Equity For the three-month period ended March 31, 2020 and 2019 (In thousands of Brazilian Reais)

															Profit reserve															Equity attributable to:
	Note		Share capital		Equity instrument granted		Capital reserve		Treasury shares			Revaluation reserve on subsidiaries			Legal reserve		Investments statutory reserve		Valuation adjustments			Cumulative translation adjustments		Retained earnings			Additional dividends to the minimum mandatory dividends			Shareholders of the Company			Non-controlling interests in subsidiaries			Consolidated equity
Balance as of December 31, 2018				5,171,752		4,309		542,400		(485,383	)		4,712			686,665		3,412,427		(63,989	)		65,857		—			109,355			9,448,105			351,924			9,800,029
Net income for the period				—		—		—		—			—			—		—		—			—		233,661			—			233,661			8,892			242,553
Other comprehensive income:
Fair value adjustments of available for financial instruments, net of income taxes		25.g.1		—		—		—		—			—			—		—		(5,874	)		—		—			—			(5,874	)		21			(5,853	)
Actuarial gain of post-employment benefits, net of income taxes		25.g.1		—		—		—		—			—			—		—		238			—		—			—			238			—			238

Currency translation of foreign subsidiaries, including the effect of net investments hedge		25.g.2		—		—		—		—			—			—		—		—			4,543		—			—			4,543			—			4,543

Total comprehensive income for the period				—		—		—		—			—			—		—		(5,636	)		4,543		233,661			—			232,568			8,913			241,481
Equity instrument granted		25.b		—		1,002		—		—			—			—		—		—			—		—			—			1,002			—			1,002
Realization of revaluation reserve of subsidiaries		25.e		—		—		—		—			(49	)		—		—		—			—		49			—			—			—			—
Income and social contribution taxes on realization of revaluation reserve of subsidiaries		25.e		—		—		—		—			—			—		—		—			—		3			—			3			—			3
Additional dividends attributable to non-controlling interests				—		—		—		—			—			—		—		—			—		—			—			—			(3,231	)		(3,231	)
Approval of additional dividends by the Shareholders’ Meeting		25.h		—		—		—		—			—			—		—		—			—		—			(109,355	)		(109,355	)		—			(109,355	)

Balance as of March 31, 2019				5,171,752		5,311		542,400		(485,383	)		4,663			686,665		3,412,427		(69,625	)		70,400		233,713			—			9,572,323			357,606			9,929,929

The accompanying notes are an integral part of the interim financial information.

Ultrapar Participações S.A. and Subsidiaries

Statements of Cash Flows - Indirect Method

For the three-month period ended March 31, 2020 and 2019

(In thousands of Brazilian Reais)


			Parent						Consolidated
	Note		03/31/2020			03/31/2019			03/31/2020			03/31/2019
Cash flows from operating activities
Net income for the period				160,859			233,661			168,866			242,553
Adjustments to reconcile net income to cash provided by operating activities
Share of loss (profit) of subsidiaries, joint ventures and associates		12		(154,849	)		(225,697	)		12,428			6,970
Amortization of contractual assets with customers – exclusive rights		11		—			—			82,860			83,608
Amortization of right to use assets		13.a		512			—			77,867			78,149
Depreciation and amortization		14;15		293			—			225,860			210,644
PIS and COFINS credits on depreciation		14;15		—			—			4,527			3,640
Interest and foreign exchange rate variations				(627	)		(2,390	)		505,410			236,124
Deferred income and social contribution taxes		9.b		6,656			4,489			28,824			28,782
Loss on disposal of property, plant, and equipment and intangibles		28		—			—			(6,938	)		2,082
Expected losses on doubtful accounts		5		—			—			30,275			28,193
Provision for losses in inventories		6		—			—			(4,586	)		2,115
Provision for post-employment benefits		20.b		—			—			5,156			(3,868	)
Equity instrument granted		8.c		—			—			2,136			1,002
Other provisions and adjustments				—			—			(3,221	)		(2,210	)

				12,844			10,063			1,129,464			917,784
(Increase) decrease in current assets
Trade receivables and reseller financing		5		—			—			416,525			226,052
Inventories		6		—			—			328,554			107,086
Recoverable taxes		7		(602	)		7,441			11,146			(61,653	)
Dividends received from subsidiaries and joint ventures				216,156			401,098			—			—
Insurance and other receivables				(24,622	)		(1,982	)		(42,936	)		(12,371	)
Prepaid expenses		10		(123	)		(269	)		(45,742	)		(14,655	)
Increase (decrease) in current liabilities
Trade payables		17		1,565			(58	)		(309,616	)		(648,268	)
Salaries and related charges		18		20,090			—			(65,584	)		(101,661	)
Taxes payable		19		(197	)		(11,150	)		(24,757	)		(28,207	)
Income and social contribution taxes				47			(9,238	)		(28,054	)		109,292
Post-employment benefits		20.b		—			—			898			—
Provision for tax, civil, and labor risks		22.a		36			—			3,720			7,058
Insurance and other payables				1,313			(3,974	)		(16,830	)		(8,344	)
Deferred revenue		23		—			—			(1,495	)		6,923
(Increase) decrease in non-current assets
Trade receivables and reseller financing		5		—			—			17,214			45,512
Recoverable taxes		7		—			9,121			(213,635	)		23,177
Escrow deposits				15			—			(35,734	)		(11,433	)
Other receivables				—			—			191			105
Prepaid expenses		10		18			2			6,912			(2,121	)
Increase (decrease) in non-current liabilities
Post-employment benefits		20.b		—			—			(3,267	)		127
Provision for tax, civil, and labor risks		22.a; 22.c		46			(400	)		3,047			(1,222	)
Other payables				672			256			(13,819	)		14,888
Deferred revenue		23		—			—			—			(820	)
Payments of contractual assets with customers – exclusive rights		11		—			—			(145,429	)		(64,056	)
Income and social contribution taxes paid				—			—			(38,781	)		(40,790	)

Net cash provided by operating activities				227,258			400,910			931,992			462,403

The accompanying notes are an integral part of the interim financial information.

Ultrapar Participações S.A. and Subsidiaries

Statements of Cash Flows - Indirect Method

For the three-month period ended March 31, 2020 and 2019

(In thousands of Brazilian Reais)


			Parent						Consolidated
	Note		03/31/2020			03/31/2019			03/31/2020			03/31/2019
Cash flows from investing activities
Financial investments, net of redemptions		4b		67,358			32,983			(143,310	)		7,739
Acquisition of property, plant, and equipment		14		(2,220	)		—			(177,378	)		(199,220	)
Acquisition of intangible assets		15		(10,985	)		—			(43,191	)		(14,885	)
Capital increase in subsidiary		12.a		(3,010	)		—			—			—
Proceeds from disposal of property, plant, and equipment and intangibles		28		—			—			19,655			8,983

Net cash provided by (used in) investing activities				51,143			32,983			(344,224	)		(197,383	)

Cash flows from financing activities
Loans and debentures
Proceeds		16		—			—			240,674			60,067
Repayments		16		—			—			(89,535	)		(247,405	)
Interest paid		16		(43,083	)		(55,385	)		(90,361	)		(113,813	)
Payments of lease		13		(505	)		—			(85,654	)		(76,845	)
Dividends paid		25.h		(259,937	)		(378,445	)		(260,635	)		(380,587	)
Related parties		8.a		—			1,994			(24	)		(24	)

Net cash (used in) financing activities				(303,525	)		(431,836	)		(285,535	)		(758,607	)

Effect of exchange rate changes on cash and cash equivalents in foreign currency				—			—			76,389			954
(Decrease) increase in cash and cash equivalents				(25,124	)		2,057			378,622			(492,633	)

Cash and cash equivalents at the beginning of the period		4.a		42,580			172,315			2,115,379			3,938,951
Cash and cash equivalents at the end of the period		4.a		17,456			174,372			2,494,001			3,446,318
Transactions without cash effect:
Addition on right to use assets and leases payable		13.a		—			—			169,417			26,964
Addition on contractual assets with customers – exclusive rights		11		—			—			14,892			—

The accompanying notes are an integral part of the interim financial information.

Ultrapar Participações S.A. and Subsidiaries

Statements of Value Added

For the three-month period ended March 31, 2020 and 2019

(In thousands of Brazilian Reais, except percentages)


			Parent									Consolidated
	Note		03/31/2020			%		03/31/2019		%		03/31/2020			%		03/31/2019			%
Revenue
Gross revenue from sales and services, except rents and royalties		26		—					—				22,966,345					22,090,686
Rebates, discounts, and returns		26		—					—				(472,125	)				(399,871	)
Expected losses on doubtful accounts				—					—				(30,275	)				(28,245	)
Amortization of contractual assets with customers – exclusive rights		11		—					—				(82,860	)				(83,608	)
Gain (loss) on disposal of property, plant, and equipment and intangibles and other operating income, net		28; 29		—					—				130,877					34,631

				—					—				22,511,962					21,613,593
Materials purchased from third parties
Raw materials used				—					—				(1,334,286	)				(1,444,895	)
Cost of goods, products, and services sold				—					—				(18,919,208	)				(17,883,890	)
Third-party materials, energy, services, and others				36,501					2,234				(537,057	)				(622,277	)
Provisions for losses of assets				—					—				(7,890	)				(5,084	)

				36,501					2,234				(20,798,441	)				(19,956,146	)
Gross value added				36,501					2,234				1,713,521					1,657,447

Deductions
Depreciation and amortization		14;15		(805	)				—				(303,727	)				(288,793	)
PIS and COFINS credits on depreciation		14;15		—					—				(4,527	)				(3,640	)

				(805	)				—				(308,254	)				(292,433	)
Net value added by the Company				35,696					2,234				1,405,267					1,365,014

Value added received in transfer
Share of profit (loss) of subsidiaries, joint ventures, and associates		12		154,849					225,697				(12,428	)				(6,970	)
Rents and royalties		26		—					—				34,762					37,773
Financial income		30		34,134					41,167				182,051					144,149

				188,983					266,864				204,385					174,952
Total value added available for distribution				224,679					269,098				1,609,652					1,539,966

Distribution of value added
Labor and benefits				27,987			12		1,505		1		449,143			28		514,257			34
Taxes, fees, and contributions				12,718			6		5,791		2		689,730			43		637,401			41
Financial expenses and rents				23,115			10		28,141		10		301,913			19		145,755			9
Retained earnings				160,859			72		233,661		87		168,866			10		242,553			16

Value added distributed				224,679			100		269,098		100		1,609,652			100		1,539,966			100

The accompanying notes are an integral part of the interim financial information.

Ultrapar Participações S.A. and Subsidiaries

Notes to the Parent and Consolidated Interim Financial Information

(In thousands of Brazilian Reais, unless otherwise stated)

1.	Operations

Ultrapar Participações S.A. (“Ultrapar” or “Company”) is a publicly traded company headquartered at the Brigadeiro Luis Antônio Avenue, 1343 in the city of São Paulo – SP, Brazil, listed on B3 S.A. – Brasil, Bolsa, Balcão (“B3”), in the Novo Mercado listing segment under the ticker “UGPA3” and on the New York Stock Exchange (“NYSE”) in the form of level III American Depositary Receipts (“ADRs”) under the ticker “UGP”.

The Company engages in the investment of its own capital in services, commercial, and industrial activities, through the subscription or acquisition of shares of other companies. Through its subsidiaries, it operates in the segments of liquefied petroleum gas—LPG distribution (“Ultragaz”), fuel distribution and related businesses (“Ipiranga”), production and marketing of chemicals (“Oxiteno”), and storage services for liquid bulk (“Ultracargo”) and retail distribution of pharmaceutical, hygiene, beauty, and skincare products (“Extrafarma”). The information about segments are disclosed in Note 32.

2.	Presentation of Interim Financial Information and Summary of Significant Accounting Policies

The Company’s parent and consolidated interim financial information (“interim financial information”) were prepared in accordance with the International Accounting Standard (“IAS”) 34 – Interim Financial Reporting issued by the International Accounting Standards Board (“IASB”) and in accordance with the pronouncement CPC 21 (R1) issued by the Accounting Pronouncements Committee (“CPC”) and approved by the Brazilian Securities and Exchange Commission (“CVM”).

All relevant specific information of the interim financial information , and only this information, were presented and correspond to that used by the Company’s and its subsidiaries’ Management.

The presentation currency of the Company’s interim financial information is the Brazilian Real (“R$”), which is the Company’s functional currency.

The Company and its subsidiaries applied the accounting policies described below in a consistent manner for all years presented in this interim financial information.

The impacts caused by the COVID-19 pandemic are presented in Note 35.

a.	*Recognition of Revenue*

Revenue of sales and services rendered is measured at the value of the consideration that the Company’s subsidiaries expect to be entitled to, net of sales returns, discounts, amortization of contractual assets with customers and other deductions, if applicable, being recognized as the entity fulfills its performance obligation. At Ipiranga, the revenue from sales of fuels and lubricants is recognized when the products are delivered to gas stations and to large consumers. At Ultragaz, revenue from sales of LPG is recognized when the products are delivered to customers at home, to independent dealers and to industrial and commercial customers. At Extrafarma, the revenue from sales of pharmaceuticals is recognized when the products are delivered to end user customers in own drugstores and when the products are delivered to independent resellers. At Oxiteno, the revenue from sales of chemical products is recognized when the products are delivered to industrial customers, depending of the freight mode of delivery. At Ultracargo, the revenue provided from storage services is recognized as services are performed. The breakdowns of revenues from sales and services are shown in Notes 26 and 32.

Amortization of contractual assets with customers for the exclusive rights in Ipiranga’s reseller service stations and the bonuses paid in performance obligation sales are recognized in the income statement as a deduction of the revenue from sale according to the conditions established in the agreements which is reviewed as per the changes occurred in the agreements (see Notes 2.f and 11).

The am/pm franchising upfront fee received by Ipiranga is deferred and recognized in profit or loss as the entity fulfills its performance obligation throughout the terms of the agreements with the franchisees. For more information, see Note 23.a.

Deferred revenue from loyalty program is recognized in the income statement when the points are redeemed, on which occasion the costs incurred are also recognized in profit or loss. Deferred revenue of unredeemed points is also recognized in profit or loss when points expire. For more information, see Note 23.b.

Ultrapar Participações S.A. and Subsidiaries

Notes to the Parent and Consolidated Interim Financial Information

(In thousands of Brazilian Reais, unless otherwise stated)

Costs of products sold and services provided include goods (mainly fuels, lubricants, LPG, and pharmaceutical products), raw materials (chemicals and petrochemicals) and production, distribution, storage, and fulfillment costs.

Exchange variations and the results of derivative financial instruments are presented in the statement of profit and loss on financial expenses.

Research and development expenses are recognized in the statements of profit or loss in general and administrative expenses and amounted to R$ 14,110 for the three-month period ended March 31, 2020 (R$ 15,454 for the three-month period ended March 31, 2019).

b.	*Cash and Cash Equivalents*

Includes cash, banks deposits, and short-term, highly liquid investments that are readily convertible into a known amount of cash and are subject to an insignificant risk of change in value. For further information on cash and cash equivalents of the Company and its subsidiaries, see Note 4.a.

c.	*Financial Assets*

The Company and its subsidiaries evaluated the classification and measurement of financial assets based on its business model of financial assets as follows:

•

Amortized cost: financial assets held in order to collect contractual cash flows, solely principal and interest. The interest earned and the foreign currency exchange variation are recognized in profit or loss, and balances are stated at acquisition cost plus the interest earned, using the effective interest rate method. Financial investments in guarantee of loans are classified as amortized cost.

•

Measured at fair value through other comprehensive income: financial assets that are acquired or originated for the purpose of collecting contractual cash flows or selling financial assets. The balances are stated at fair value, and the interest earned, and the foreign currency exchange variation are recognized in profit or loss. Differences between fair value and initial amount of financial investments plus the interest earned are recognized in equity in other comprehensive income in the “Valuation adjustments”. Accumulated gains and losses recognized in equity are reclassified to profit or loss at the time of their settlement. Substantially the financial investments in Bank Certificates of Deposit (“CDB”) and repurchase agreements are classified as measured at fair value through other comprehensive income.

•

Measured at fair value through profit or loss: financial assets that were not classified as amortized cost or measured at fair value through other comprehensive income. The balances are stated at fair value and both the interest earned and the exchange variations and changes in fair value are recognized in the income statement. Investment funds and derivatives are classified as measured at fair value through profit or loss.

Ultrapar Participações S.A. and Subsidiaries

Notes to the Parent and Consolidated Interim Financial Information

(In thousands of Brazilian Reais, unless otherwise stated)

The Company and its subsidiaries use financial instruments for hedging purposes, applying the concepts described below:

•

Hedge accounting - fair value hedge: financial instruments used to hedge exposure to changes in the fair value of an item, attributable to a particular risk, which can affect the entity’s statements of profit or loss. In the initial designation of the fair value hedge, the relationship between the hedging instrument and the hedged item is documented, including the objectives of risk management, the strategy in conducting the transaction, and the methods to be used to evaluate its effectiveness. Once the fair value hedge has been qualified as effective, the hedge item is also measured at fair value. Gains and losses from hedge instruments and hedge items are recognized in the statements of profit or loss. The hedge accounting must be discontinued when the hedge becomes ineffective.

•

Hedge accounting - cash flow hedge: financial instruments used to hedge the exposure to variability in cash flows that is attributable to a risk associated with an asset or liability or highly probable transaction or firm commitment that may affect the statements of profit or loss. The portion of the gain or loss on the hedging instrument that is determined to be effective relating to the effects of exchange rate effect, is recognized directly in equity in accumulated other comprehensive income as “Valuation adjustments” while the ineffective portion is recognized in the statements of profit or loss. Gains or losses on the hedging instrument relating to the effective portion of this hedge that had been recognized directly in accumulated other comprehensive income shall be recognized in profit or loss in the period in which the hedged item is recognized in profit or loss or as initial cost of non- financial assets, in the same line of the statement that the hedged item is recognized. The hedge accounting shall be discontinued when (i) the hedging relationship is canceled; (ii) the hedging instrument expires; and (iii) the hedging instrument no longer qualifies for hedge accounting. When hedge accounting is discontinued, gains and losses recognized in equity in other comprehensive income are reclassified to the statements of profit or loss in the period which the hedged item is recognized in profit or loss. If the transaction hedged is canceled or is not expected to occur, the cumulative gains and losses in equity in other comprehensive income shall be recognized immediately in profit or loss.

•

Hedge accounting - hedge of net investments in foreign operation: financial instruments used to hedge exposure on net investments in foreign subsidiaries due to the fact that the local functional currency is different from the functional currency of the Company. The portion of the gain or loss on the hedging instrument that is determined to be effective, referring to the exchange rate effect, is recognized directly in equity in accumulated other comprehensive income as cumulative translation adjustments, while the ineffective portion and the operating costs are recognized in the statements of profit or loss. The gain or loss on the hedging instrument that has been recognized directly in accumulated other comprehensive income shall be recognized in the statements of profit or loss when the disposal of the foreign subsidiary occurs.

For further information on financial instruments, see Note 33.

d.	*Trade receivables and reseller financing*

Trade receivables are recognized at the amount invoiced of the counterparty that the Company subsidiaries are entitled (see Notes 5 and 33.d.3). The expected losses take into account, (i) at the initial recognition of the contract, the expected losses for the next 12 months or (ii) for the lifetime of the contract when the deterioration or improvement of the customers’ credit quality, considering the customers’ characteristics in each business segment. The amount of the expected credit losses is deemed by management to be sufficient to cover any probable loss on realization of trade receivables.

Ultrapar Participações S.A. and Subsidiaries

Notes to the Parent and Consolidated Interim Financial Information

(In thousands of Brazilian Reais, unless otherwise stated)

e.	*Inventories*

Inventories are stated at the lower of acquisition cost or net realizable value (see Note 6). The cost value of inventory is measured using the weighted average cost and includes the costs of acquisition and processing directly and indirectly related to the units produced based on the normal capacity of production. Estimates of net realizable value are based on the average selling prices at the end of the reporting period, net of applicable direct selling expenses. Subsequent events related to the fluctuation of prices and costs are also considered, if relevant. If net realizable values are below inventory costs, a provision corresponding to this difference is recognized. Provisions are also made for obsolescence of products, materials, or supplies that (i) do not meet its subsidiaries’ specifications, (ii) have exceeded their expiration date, or (iii) are considered slow-moving inventory. This classification is made by management with the support of its industrial and operations teams.

f.	*Contractual assets with customers – exclusive rights*

Exclusive rights disbursements as provided in Ipiranga’s agreements with reseller service stations and major consumers are recognized as contractual assets when paid and amortized according to the conditions established in the agreements (see Note 2.a and 11).

g.	*Investments*

Investments in subsidiaries are accounted for under the equity method of accounting in the interim financial information of the parent company (see Notes 3.b and 12.a). A subsidiary is an investee in which the investor is entitled to variable returns on investment and has the ability to interfere in its financial and operational activities. Usually the equity interest in a subsidiary is more than 50%.

Investments in associates and joint ventures are accounted for under the equity method of accounting in the interim financial information (see Note 12 items b and c). An associate is an investment, in which an investor has significant influence, that is, has the power to participate in the financial and operating decisions of the investee but does not exercise control. A joint venture is an investment in which the shareholders have the right to net assets on behalf of a joint control. Joint control is the agreement, which establish that decisions about the relevant activities of the investee require the consent from the parties that share control.

Other investments are stated at acquisition cost less provision for losses, unless the loss is considered temporary

h.	*Right to Use Assets and Lease Payable*

The Company and its subsidiaries recognized in the financial position, a right to use assets and the respective lease liabilities initially measured at the present value of future lease payments, considering the related contract costs (see Note 13). The amortization expenses of right to use assets is recognized in statement of profit or loss over the lease contract term. The Company and its subsidiaries have no intention of purchasing the underlying asset. The liability is increased for interest and decreased by lease payments made. The interests are recognized in the statement of profit or loss using the effective interest rate method. The remeasurement of assets and liabilities based on the contractual index is recognized in the financial position, not having an effect in the result. In case of cancellation of the contract, the assets and respective liabilities are written off to the result, considering, if it is the case, any penalties provided in contractual clauses. The Company and its subsidiaries review the existence of an indication that the rights to use assets may have devaluation or impairment (see note 2.u).

Right to use assets include amounts related to area port leases grants (see Note 34.c).

The Company and its subsidiaries apply the recognition’s exemptions to short-term leases of 12 months or less, and leases of low amount assets such. In these cases, the recognition of the lease expense in the statements of profit or loss is on a straight-line basis.

Ultrapar Participações S.A. and Subsidiaries

Notes to the Parent and Consolidated Interim Financial Information

(In thousands of Brazilian Reais, unless otherwise stated)

i.	*Property, Plant, and Equipment*

Property, plant, and equipment (“PP&E”) is recognized at acquisition or construction cost, including financial charges incurred on PP&E under construction, as well as qualifying maintenance costs resulting from scheduled plant outages and estimated costs to remove, to decommission, or to restore assets (see Notes 2.n and 21), less accumulated depreciation and, when applicable, less provision for losses (see Note 14).

Depreciation is calculated using the straight-line method, over the periods mentioned in Note 14, taking into account the estimated useful lives of the assets, which are reviewed annually.

Leasehold improvements are depreciated over the shorter of the lease contract term and useful life of the property.

j.	*Intangible Assets*

Intangible assets include assets acquired by the Company and its subsidiaries from third parties, according to the criteria below:

•

Goodwill is shown as intangible assets corresponding to the positive difference between the amount paid or payable to the seller and the fair value of the identified assets and liabilities assumed of the acquired entity. Goodwill is tested annually for impairment. Goodwill is allocated to the business segments, which represent the lowest level that goodwill is monitored for impairment testing purposes (see Note 15.a).

•

Other intangible assets acquired from third parties, such as software, technology, and commercial property rights, are measured at the total acquisition cost and amortized using straight-line method, over the periods mentioned in Note 15, taking into account their useful lives, which are reviewed annually.

The Company and its subsidiaries have not recognized intangible assets that were generated internally. The Company and its subsidiaries have goodwill and brands acquired in business combinations, which are evaluated as intangible assets with indefinite useful life (see Note 15 items a and e).

k.	*Other Assets*

Other assets are stated at the lower of cost and realizable value, including, if applicable, interest earned, monetary changes and changes in exchange rates incurred or less a provision for loss and, if applicable, adjustment to present value.

l.	*Financial Liabilities*

The financial liabilities include trade payables and other payables, loans, debentures, leases payable and derivative financial instruments. Financial liabilities are classified as “financial liabilities at fair value through profit or loss” or “financial liabilities at amortized cost”. The financial liabilities at fair value through profit or loss refer to derivative financial instruments, subscription warrants—indemnification, and financial liabilities designated as hedged items in a fair value hedge relationship upon initial recognition (see Note 2.c – Fair Value Hedge). The financial liabilities at amortized cost are stated at the initial transaction amount plus related charges and net of amortization and transaction costs. The charges are recognized in the statement of profit or loss using the effective interest rate method.

Transaction costs incurred and directly attributable to the activities necessary for contracting loans or for issuing bonds, as well as premiums and discounts upon issuance of debentures and other debt, are allocated to the instrument and amortized in the statement of profit or loss taking into its term, using the effective interest rate method (see Note 16.h).

Ultrapar Participações S.A. and Subsidiaries

Notes to the Parent and Consolidated Interim Financial Information

(In thousands of Brazilian Reais, unless otherwise stated)

m.	*Income and Social Contribution Taxes on Income*

Current and deferred income tax (“IRPJ”) and social contribution on net income tax (“CSLL”) are calculated based on their current rates. For the calculation of current IRPJ, the value of tax incentives is also considered. Taxes are recognized based on the rates of IRPJ and CSLL provided for by the laws enacted on the last day of the interim financial information. The current rates in Brazil are 25% for IRPJ and 9% for CSLL. For further information about recognition and realization of IRPJ and CSLL, see Note 9.

For purposes of disclosure, deferred tax assets were offset against the deferred tax liability, IRPJ and CSLL, in the same taxable entity and the same tax authority.

n.	*Provision for Asset Retirement Obligation – Fuel Tanks*

The subsidiary Ipiranga has the legal obligation to remove the underground fuel tanks located at Ipiranga-branded service stations after a certain period. The estimated cost of the obligation to remove these fuel tanks is recognized as a liability when the tanks are installed. The estimated cost is recognized in PP&E and depreciated over the respective useful lives of the tanks. The amounts recognized as a liability accrue interest using the National Consumer Price Index (“IPCA”) until the tank is removed (see Note 21). The estimated removal cost is reviewed and updated annually or when there is significant change in its amount and change in the estimated costs are recognized in statements of profit or loss when they become known. An increase in the estimated cost of the obligation to remove the tanks could result in negative impact in future results.

o.	*Provisions for Tax, Civil, and Labor Risks*

A provision for tax, civil and labor risks is recognized for quantifiable risks, when the chance of loss is more-likely-than-not in the opinion of management and internal and external legal counsel, and the amounts are recognized based on the evaluation of the outcomes of the legal proceedings (see Note 22).

p.	*Post-Employment Benefits*

Post-employment benefits granted and to be granted to employees, retirees, and pensioners are based on an actuarial calculation prepared by an independent actuary and reviewed by management, using the projected unit credit method (see Note 20.b). The actuarial gains and losses are recognized in equity in cumulative other comprehensive income in the “Valuation adjustments”.

q.	*Other Liabilities*

Other liabilities are stated at known or measurable amounts and changes in exchange rates incurred. When applicable, other liabilities are recognized at present value, based on interest rates that reflect the term, currency, and risk of each transaction.

r.	*Foreign Currency Transactions*

Foreign currency transactions carried out by the Company or its subsidiaries are remeasured into their functional currency at the exchange rate prevailing at the date of each transaction. Outstanding monetary assets and liabilities of the Company and its subsidiaries are translated using the exchange rate at the date of the interim financial information. The effect of the difference between those exchange rates is recognized in financial results until the conclusion of each transaction.

Ultrapar Participações S.A. and Subsidiaries

Notes to the Parent and Consolidated Interim Financial Information

(In thousands of Brazilian Reais, unless otherwise stated)

s.	*Basis for Translation of Interim Financial Information of Foreign Subsidiaries*

s.1. Subsidiaries with administrative autonomy

Assets and liabilities of the foreign subsidiaries, denominated in currencies other than Brazilian Real, which have administrative autonomy, are translated using the exchange rate at the date of the interim financial information. Revenues and expenses are translated using the average exchange rate of each year and equity is translated at the historical exchange rate of each transaction affecting equity. Gains and losses resulting from changes in these foreign investments are directly recognized in equity in cumulative other comprehensive income in the “cumulative translation adjustments” and will be recognized in profit or loss if these investments are disposed of. The balance in cumulative other comprehensive income on March 31, 2020 was a gain of R$ 224,301 (gain of R$ 102,427 on December 31, 2019) - see Note 25.g.2.

The foreign subsidiaries with functional currency different from the Company and which have administrative autonomy are listed below:


Subsidiary	Functional currency	Location
Oxiteno México S.A. de C.V.	Mexican Peso	Mexico
Oxiteno Servicios Corporativos S.A. de C.V.	Mexican Peso	Mexico
Oxiteno Servicios Industriales S.A. de C.V.	Mexican Peso	Mexico
Oxiteno USA LLC	U.S. Dollar	United States
Oxiteno Uruguay S.A. (i)	U.S. Dollar	Uruguay

(i)	The subsidiary Oxiteno Uruguay S.A. (“Oxiteno Uruguay”) determined its functional currency as the U.S. dollar (“US$”), as its inventory sales, purchases of raw material inputs, and financing activities are performed substantially in this currency.

s.2.

Subsidiaries without self-administrative autonomy

Assets and liabilities of the other foreign subsidiaries, which do not have administrative autonomy, are considered an extension of the activities of their parent company and are translated using the exchange rate at the date of the Financial statements. Gains and losses resulting from changes in these foreign investments are directly recognized as financial result. The gain recognized in income for the three-month period ended March 31, 2020 amounted to R$ 28,021 (gain of R$ 1,520 for the three-month period ended March 31, 2019).

t.	*Use of Estimates, Assumptions and Judgments*

The preparation of the interim financial information requires the use of estimates, assumptions, and judgments for the accounting and disclosure of certain assets, liabilities, and profit or loss. Therefore, the Company and subsidiaries’ management use the best information available at the date of preparation of the interim financial information, as well as the experience of past and current events, also considering assumptions regarding future events. The estimates and assumptions are reviewed periodically.

t.1

Judgments

Information on the judgments is included: in the determination of control in subsidiaries (Notes 2.g, 2.s.1, 3 and 12.a), the determination of joint control in joint venture (Notes 2.g, 12.a and 12.b) and the determination of significant influence in associates (Notes 2.g and 12.c).

Ultrapar Participações S.A. and Subsidiaries

Notes to the Parent and Consolidated Interim Financial Information

(In thousands of Brazilian Reais, unless otherwise stated)

t.2 Uncertainties related to the assumptions and estimates

The information regarding uncertainties related to the assumptions and estimates are included: in determining the fair value of financial instruments (Notes 2.c, 2.l, 4, 16 and 33), the determination of the expected losses on doubtful accounts (Notes 2.d, 5 and 33.d.3), the determination of provisions for losses of inventories (Notes 2.e and 6), the estimative of realization of deferred IRPJ and CSLL amounts (Notes 2.m and 9.a), the useful lives and discount rate of right to use assets (Notes 2.h and 13), the useful lives of PP&E (Notes 2.i and 14), the useful lives of intangible assets, and the determination of the recoverable amount of goodwill (Notes 2.j and 15.a), provisions for assets retirement obligations (Notes 2.n and 21), provisions for tax, civil, and labor risks (Notes 2.o and 22), estimates for the preparation of actuarial reports (Notes 2.p and 20.b) and the determination of fair value of subscription warrants – indemnification (Notes 24 and 33.j). The actual result of the transactions and information may differ from their estimates.

u.	*Impairment of Assets*

The Company and its subsidiaries review, in every reporting period, the existence of any indication that an asset may be impaired and annually test intangible assets with undefined useful life. If there is an indication of impairment, the Company and its subsidiaries estimate the recoverable amount of the asset. Assets that cannot be evaluated individually are grouped in the smallest group of assets that generate cash inflow from continuous use and that are largely independent of cash flows of other assets (cash generating units “CGU”). The recoverable amount of assets or CGUs corresponds to the greater of their fair value net of applicable direct selling costs and their value in use.

The fair value less costs to sell is determined by the price that would be received to sell an asset in an orderly transaction between market participants at the measurement date, net of costs of removing the asset, and direct incremental costs to bring an asset into condition for its sale, legal costs, and taxes.

To assess the value in use, the projections of future cash flows, trends, and outlooks, as well as the effects of obsolescence, demand, competition, and other economic factors were considered. Such cash flows are discounted to their present values using the discount rate before tax that reflects market conditions for the period of impairment testing and the specific risks of the asset or CGU being evaluated. In cases where the expected discounted future cash flows are less than their carrying amount, an impairment loss is recognized for the amount by which the carrying value exceeds the fair value of these assets. Losses for impairment of assets are recognized in profit or loss. In case goodwill has been allocated to a CGU, the recognized losses are first allocated to reduce the corresponding goodwill. If the goodwill is not enough to absorb such losses, the surplus is allocated to the assets on a pro-rata basis. An impairment of goodwill cannot be reversed. For other assets, impairment losses may be reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortization, if the impairment had not been recognized.

No impairment was recognized for the three-month period ended March 31, 2020. On December 31, 2019, the Company recognized an impairment loss for the subsidiary Imifarma Produtos Farmacêuticos e Cosméticos S.A. (“Extrafarma”) (see Note 15.a).

v.	*Business Combination*

A business combination is accounted applying the acquisition method. The cost of the acquisition is measured based on the consideration transferred and to be transferred, measured at fair value at the acquisition date. In a business combination, the assets acquired, and liabilities assumed are measured in order to classify and allocate them accordingly to the contractual terms, economic circumstances and relevant conditions on the acquisition date. The non-controlling interest in the acquire is measured based on its interest in identifiable net assets acquired. Goodwill is measured as the excess of the consideration transferred and to be transferred over the fair value of net assets acquired (identifiable assets and liabilities assumed, net). After the initial recognition, goodwill is measured at cost less any accumulated impairment losses. For impairment testing purposes, goodwill is allocated to the Company’s operating segments. When the cost of the acquisition is lower than the fair value of net assets acquired, a gain is recognized directly in the statement of profit or loss. Costs related to the acquisition are recorded in the statement of profit or loss when incurred.

Ultrapar Participações S.A. and Subsidiaries

Notes to the Parent and Consolidated Interim Financial Information

(In thousands of Brazilian Reais, unless otherwise stated)

w.	*Statements of Value Added*

The statements of value added (“DVA”) are presented as an integral part of the interim financial information as applicable to publicly traded companies, and as supplemental information for the IFRS, which does not require the presentation of DVA.

x.	*Statements of Cash Flows Indirect Method*

The Company and its subsidiaries present the interest paid on loans, debentures, and leases payable in financing activities and present financial investments on a net basis of income and redemptions in the investing activities.

y.	*Adoption of the Pronouncements Issued by CPC and IASB*

There are not other standards, amendments and interpretations to IFRS were by the IASB, which are effective and could have significant impact in period subsequent to March 31, 2020.

z.	*Authorization for Issuance of the Interim Financial Information*

This interim financial information was authorized for issue by the Board of Directors on May 13, 2020.

3.	Principles of Consolidation and Investments in Subsidiaries

a.	*Principles of Consolidation*

In the preparation of the consolidated interim financial information the investments of one company in another, balances of asset and liability accounts, revenues transactions, costs and expenses were eliminated, as well as the effects of transactions conducted between the companies. Non-controlling interests in subsidiaries are presented within consolidated equity and net income.

Consolidation of a subsidiary begins when the parent company obtains direct or indirect control over a company and ceases when the parent company loses control of a company. Income and expenses of a subsidiary acquired are included in the consolidated statement of profit or loss and comprehensive income from the date the parent company gains the control. Income and expenses of a subsidiary, in which the parent company loses control, are included in the consolidated statement of profit or loss and comprehensive income until the date the parent company loses control.

When necessary, adjustments are made to the interim financial information of subsidiaries to bring their accounting policies into line with the Company’s accounting policies.

Ultrapar Participações S.A. and Subsidiaries

Notes to the Parent and Consolidated Interim Financial Information

(In thousands of Brazilian Reais, unless otherwise stated)

b.	*Investments in Subsidiaries*

The consolidated interim financial information includes the following direct and indirect subsidiaries:


			% interest in the share
			03/31/2020				12/31/2019
			Control				Control
	Location	Segment	Direct		Indirect		Direct		Indirect
Ipiranga Produtos de Petróleo S.A.	Brazil	Ipiranga		100		—		100		—
am/pm Comestíveis Ltda.	Brazil	Ipiranga		—		100		—		100
Centro de Conveniências Millennium Ltda.	Brazil	Ipiranga		—		100		—		100
Icorban - Correspondente Bancário Ltda.	Brazil	Ipiranga		—		100		—		100
Ipiranga Trading Limited	Virgin Islands	Ipiranga		—		100		—		100
Tropical Transportes Ipiranga Ltda.	Brazil	Ipiranga		—		100		—		100
Ipiranga Imobiliária Ltda.	Brazil	Ipiranga		—		100		—		100
Ipiranga Logística Ltda.	Brazil	Ipiranga		—		100		—		100
Oil Trading Importadora e Exportadora Ltda.	Brazil	Ipiranga		—		100		—		100
Iconic Lubrificantes S.A.	Brazil	Ipiranga		—		56		—		56
Integra Frotas Ltda.	Brazil	Ipiranga		—		100		—		100
Companhia Ultragaz S.A.	Brazil	Ultragaz		—		99		—		99
Ultragaz Comercial Ltda. ⁽¹⁾	Brazil	Ultragaz		—		100		—		100
Nova Paraná Distribuidora de Gás Ltda. ⁽¹⁾	Brazil	Ultragaz		—		100		—		100
Bahiana Distribuidora de Gás Ltda.	Brazil	Ultragaz		—		100		—		100
Utingás Armazenadora S.A.	Brazil	Ultragaz		—		57		—		57
LPG International Inc.	Cayman Islands	Ultragaz		—		100		—		100
Imaven Imóveis Ltda.	Brazil	Others		—		100		—		100
Imifarma Produtos Farmacêuticos e Cosméticos S.A.	Brazil	Extrafarma		—		100		—		100
L.I.Z.S.P.E. Empreendimentos e Participações Ltda.⁽²⁾	Brazil	Outros		—		100		—		—
Oxiteno S.A. Indústria e Comércio	Brazil	Oxiteno		100		—		100		—
Oxiteno Argentina Sociedad de Responsabilidad Ltda.	Argentina	Oxiteno		—		100		—		100
Oleoquímica Indústria e Comércio de Produtos Químicos Ltda.	Brazil	Oxiteno		—		100		—		100
Oxiteno Uruguay S.A.	Uruguay	Oxiteno		—		100		—		100
Oxiteno México S.A. de C.V.	Mexico	Oxiteno		—		100		—		100
Oxiteno Servicios Corporativos S.A. de C.V.	Mexico	Oxiteno		—		100		—		100
Oxiteno Servicios Industriales S.A. de C.V.	Mexico	Oxiteno		—		100		—		100
Oxiteno USA LLC	United States	Oxiteno		—		100		—		100
Global Petroleum Products Trading Corp.	Virgin Islands	Oxiteno		—		100		—		100
Oxiteno Europe SPRL	Belgium	Oxiteno		—		100		—		100
Oxiteno Colombia S.A.S	Colombia	Oxiteno		—		100		—		100
Oxiteno Shanghai LTD.	China	Oxiteno		—		100		—		100
Empresa Carioca de Produtos Químicos S.A.	Brazil	Oxiteno		—		100		—		100
Ultracargo - Operações Logísticas e Participações Ltda.	Brazil	Ultracargo		100		—		100		—
Terminal Químico de Aratu S.A. – Tequimar	Brazil	Ultracargo		—		99		—		99
TEAS - Terminal Exportador de Álcool de Santos Ltda.	Brazil	Ultracargo		—		100		—		100
Tequimar Vila do Conde Logística Portuária S.A. ⁽²⁾	Brazil	Ultracargo		—		100		—		100
Ultrapar International S.A.	Luxembourg	Others		100		—		100		—
SERMA - Ass. dos usuários equip. proc. de dados	Brazil	Others		—		100		—		100
UVC - Fundo de investimento em participações multiestratégia investimento no exterior ⁽³⁾	Brazil	Others		100		—		—		—

The percentages in the table above are rounded.

⁽¹⁾	Non operating company in closing phase.

⁽²⁾	Company constituted on January 2020, the L.I.Z.P.E has as finality the consulting in valuation, business management, economic and financial advisory, among other.

⁽³⁾	Fund constituted on January 2020, the UVC has as purpose to provide capital resources for disruptive technological initiatives that are related to the Company’s business lines.

Ultrapar Participações S.A. and Subsidiaries

Notes to the Parent and Consolidated Interim Financial Information

(In thousands of Brazilian Reais, unless otherwise stated)

4.	Cash and Cash Equivalents, Financial Investments and Hedge Derivative Financial Instruments

Cash equivalents and financial investments, excluding cash and bank deposits, are substantially represented by investments: (i) in Brazil, in certificates of deposit of financial institutions linked to interest rate of the Interbank Deposits (“DI”), in repurchase agreement, financial bills, and in short term investments funds, whose portfolio comprised of Brazilian Federal Government bonds and in certificates of deposit of financial institutions; (ii) outside Brazil, in certificates of deposit of financial institutions and in short term investments funds, whose portfolio comprised of Federal Government bonds; and (iii) in currency and interest rate hedging instruments.

The financial assets were classified in Note 33.j, based on business model of financial assets of the Company and its subsidiaries.

Cash, cash equivalents and financial investments (consolidated) amounted to R$ 7,248,739 as of March 31, 2020 (R$ 5,712,097 as of December 31, 2019) are as follows:

a.	*Cash and Cash Equivalents*

Cash and cash equivalents of the Company and its subsidiaries are presented as follows:


	Parent				Consolidated
	03/31/2020		12/31/2019		03/31/2020		12/31/2019
Cash and bank deposits
In local currency		1,106		381		154,888		182,237
In foreign currency		—		—		73,943		102,755
Financial investments considered cash equivalents
In local currency
Fixed-income securities		16,350		42,199		2,205,626		1,780,939
In foreign currency
Fixed-income securities		—		—		59,544		49,448

Total cash and cash equivalents		17,456		42,580		2,494,001		2,115,379

b.	*Financial Investments and Currency and Interest Rate Hedging Instruments*

The financial investments, which are not classified as cash and cash equivalents, are presented as follows:


	Parent				Consolidated
	03/31/2020		12/31/2019		03/31/2020		12/31/2019
Financial investments
In local currency
Fixed-income securities and funds		28,471		95,829		2,824,621		2,610,686
In foreign currency
Fixed-income securities and funds		—		—		590,485		303,417
Currency and interest rate hedging instruments (a)		—		—		1,339,632		682,615

Total financial investments		28,471		95,829		4,754,738		3,596,718

Current		28,471		95,829		3,460,708		3,090,212
Non-current		—		—		1,294,030		506,506

Ultrapar Participações S.A. and Subsidiaries

Notes to the Parent and Consolidated Interim Financial Information

(In thousands of Brazilian Reais, unless otherwise stated)

(a) Accumulated gains, net of income tax (see Note 33.i).

5.	Trade Receivables and Reseller Financing (Consolidated)

a.	*Trade Receivables*

The composition of trade receivables is as follows:


	03/31/2020			12/31/2019
Domestic customers		3,307,840			3,867,902
Foreign customers		340,906			226,484
(-) Expected losses on doubtful accounts		(421,042	)		(404,886	)

		3,227,704			3,689,500

Current		3,187,717			3,635,834
Non-current		39,987			53,666

The breakdown of trade receivables, gross of expected losses on doubtful accounts, is as follows:


					Past due
	Total		Current		less than 30 days		31-60 days		61-90 days		91-180 days		more than 180 days
03/31/2020		3,648,746		2,682,441		230,031		40,016		25,950		58,800		611,508
12/31/2019		4,094,386		3,199,315		159,350		27,320		12,245		61,489		634,667

Ultrapar Participações S.A. and Subsidiaries

Notes to the Parent and Consolidated Interim Financial Information

(In thousands of Brazilian Reais, unless otherwise stated)

The breakdown of expected losses on doubtful accounts, is as follows:


					Past due
	Total		Current		less than 30 days		31-60 days		61-90 days		91-180 days		more than 180 days
03/31/2020		421,042		30,302		3,739		2,038		2,871		22,390		359,702
12/31/2019		404,886		28,861		1,456		1,625		3,749		23,698		345,497

Movements in the allowance for expected losses on doubtful accounts are as follows:


Balance as of December 31, 2019	404,886
Additions	33,851
Write-offs	(17,695	)

Balance as of March 31, 2020	421,042

For further information about the allowance for expected losses on doubtful accounts, see Note 33.d.3.

b.	*Reseller financing*

The composition of reseller financing is as follows:


	03/31/2020			12/31/2019
Reseller financing – Ipiranga		977,086			956,942
(-) Expected losses on doubtful accounts		(174,232	)		(156,006	)

		802,854			800,936

Current		441,641			436,188
Non-current		361,213			364,748

Reseller financing is provided for renovation and upgrading of service stations, purchase of products, and development of the automotive fuels and lubricants distribution market. The terms of reseller financing range substantially from 12 months to 60 months, with an average term of 40 months. The minimum and maximum interest rates are 0% per month and 1% per month, respectively. These financing are remeasured at a market rate for working capital loans and the remeasurement adjusment is recognized as a reduction to the reseller’s revenue. At the beginning of the contract, the adjustment to present value is made between the rate subsidized and the market rate with the adjustement to present value allocated to the revenue as a reduction from the sale price. The adjustement to present value is appropriated to the result throughout the term of the contract.

The breakdown of reseller financing, gross of expected losses on doubtful accounts, is as follows:


					Past due
	Total		Current		less than 30 days		31-60 days		61-90 days		91-180 days		more than 180 days
03/31/2020		977,086		643,610		12,248		8,844		7,668		47,072		257,644
12/31/2019		956,942		644,488		26,262		10,481		12,616		30,144		232,951

Ultrapar Participações S.A. and Subsidiaries

Notes to the Parent and Consolidated Interim Financial Information

(In thousands of Brazilian Reais, unless otherwise stated)

The breakdown of expected losses on doubtful accounts, is as follows:


					Past due
	Total		Current		less than 30 days		31-60 days		61-90 days		91-180 days		more than 180 days
03/31/2020		174,232		22,752		1,002		1,094		761		21,733		126,890
12/31/2019		156,006		21,337		2,519		1,063		1,313		14,639		115,135

Movements in the allowance for expected losses on doubtful accounts are as follows:


Balance as of December 31, 2019			156,006
Additions			18,226

Balance as of March 31, 2020			174,332

For further information about the allowance for expected losses on doubtful accounts, see Note 33.d.3.

6.	Inventories (Consolidated)

The composition of inventories is as follows:


	03/31/2020							12/31/2019
	Cost		Provision for losses			Net balance		Cost		Provision for losses			Net balance
Fuels, lubricants and greases		1,481,107		(2,138	)		1,478,969		1,843,257		(2,073	)		1,841,184
Finished goods		567,554		(18,360	)		549,194		541,689		(22,048	)		519,641
Work in process		1,586		—			1,586		1,971		—			1,971
Raw materials		382,646		(1,547	)		381,099		365,960		(2,552	)		363,408
Liquefied petroleum gas (LPG)		79,151		(5,761	)		73,390		101,715		(5,761	)		95,954
Consumable materials and other items for resale		146,213		(2,501	)		143,712		140,058		(2,587	)		137,471
Pharmaceutical, hygiene, and beauty products		540,789		(3,005	)		537,784		549,191		(2,877	)		546,314
Purchase for future delivery ⁽¹⁾		202,657		(2,719	)		199,938		183,170		(2,719	)		180,451
Properties for resale		29,273		(107	)		29,166		29,273		(107	)		29,166

	3,430,976		(36,138)			3,394,838		3,756,284		(40,724)			3,715,560

⁽¹⁾	Refers substantially to ethanol, biodiesel and advance of fuels.

Movements in the provision for losses are as follows:


Balance as of December 31, 2019	40,724
Reversals to net realizable value adjustment	(3,787	)
Reversals of obsolescence and other losses	(799	)

Balance as of March 31, 2020	36,138

Ultrapar Participações S.A. and Subsidiaries

Notes to the Parent and Consolidated Interim Financial Information

(In thousands of Brazilian Reais, unless otherwise stated)

The breakdown of provisions for losses related to inventories is shown in the table below:


	03/31/2020		12/31/2019
Net realizable value adjustment		11,456		15,243
Obsolescence and other losses		24,682		25,481

Total		36,138		40,724

7.	Taxes to Recover

a.	*Recoverable Taxes (Consolidated)*

Recoverable taxes are substantially represented by credits of Tax on Goods and Services (“ICMS”, the Brazilian VAT), Contribution for Social Security Financing (“COFINS”) and Social Integration Program (“PIS”).


	03/31/2020			12/31/2019
ICMS (a.1)		952,443			914,066
Provision for ICMS losses (a.1)		(41,957	)		(41,396	)
PIS and COFINS (a.2)		1,005,885			930,570
Value-Added Tax (IVA) of foreign subsidiaries		26,082			29,707
Other		50,502			56,748

Total		1,992,955			1,889,695

Current		1,010,344			1,122,335
Non-current		982,611			767,360

a.1 The recoverable ICMS is substantially related to the following subsidiaries and operations:

(i) The subsidiary Oxiteno S.A. accumulates credits once predominantly carries out export operations, interstate outflow or deferred ICMS of products purchased within the State of Bahia;

(ii) The subsidiary Ipiranga Produtos de Petróleo S.A. (“IPP”) has credits arising from interstate outflows of oil-related products, whose ICMS was prepaid by the supplier (Petróleo Brasileiro S.A. (“Petrobras”)), and credits arising from the difference between transactions of inflows and outflows of products subject to ICMS taxation (mainly ethanol);

(iii) The subsidiary Extrafarma has credits of ICMS and ICMS-ST (tax substitution) advances on the inflow and outflow of operations carried out by its distribution centers, mostly in the North and Northeast.

The amounts of recoverable ICMS credits are classified as current assets and consumed by the operations itself, being a revolving credit, which means that the credits are monthly offset with the tax payable on sales and new credits are generated by the acquisition of inputs, as well as by the State’s refund on tax substitution operations. Management estimates the realization of the credits classified in non-current assets within up to 10 years.

The estimated recovery of ICMS assets is stated as follows:


Up to 1 Year			441,394
From 1 to 2 Years			293,573
From 2 to 3 Years			111,647
From 3 to 5 Years			51,588
From 5 to 7 Years			22,666
From 7 to 10 Years			31,575

Total of recoverable ICMS			952,443

The provision for ICMS losses relates to tax credits of the subsidiaries whose amounts are not included within the term determined by its policy.

Ultrapar Participações S.A. and Subsidiaries

Notes to the Parent and Consolidated Interim Financial Information

(In thousands of Brazilian Reais, unless otherwise stated)

a.2 Refers, mainly, to the PIS and COFINS credits recorded under Laws 10,637/2002 and 10,833/2003, whose consumption will occur through the offset of debts administered by the Brazilian Federal Revenue Service (“RFB”) in an estimated term of 2 years by management. The subsidiaries Extrafarma, Tequimar and Oxiteno S.A. have credits resulting from a definitive favorable decision on the exclusion of ICMS from the calculation basis of PIS and COFINS. For these cases, management estimates the realization of these credits within up to 5 years. (see Note 22.d.1).

b.	*Recoverable Income Tax and Social Contribution Taxes*

Represented by recoverable IRPJ and CSLL.


	Parent				Consolidated
	03/31/2020		12/31/2019		03/31/2020		12/31/2019
IRPJ and CSLL		89,799		89,197		529,519		430,290

Current		50,352		49,750		426,188		325,343
Non-current		39,447		39,447		103,331		104,947

Relates to IRPJ and CSLL to be recovered by the Company and its subsidiaries arising from the tax advances of previous periods, with management estimating the realization of these credits within up to 5 years.

8.	Related Parties

The balances and transactions between the Company and its related parties are disclosed below:

a.	*Related Parties*

a.1 Parent


	Assets		Liabilities
	Debentures ⁽¹⁾		Account payable		Financial income ⁽¹⁾
Ipiranga Produtos de Petróleo S.A.		750,000		—		8,886
Imifarma Produtos Farmacêuticos e Cosméticos S.A.		—		4,892		—

Total as of March 31, 2020		750,000		4,892		8,886

Ultrapar Participações S.A. and Subsidiaries

Notes to the Parent and Consolidated Interim Financial Information

(In thousands of Brazilian Reais, unless otherwise stated)


	Assets		Liabilities		Financial income ⁽¹⁾
	Debentures ⁽¹⁾		Account payable		Financial income ⁽¹⁾
Ipiranga Produtos de Petróleo S.A.		759,123		—		13,295
Imifarma Produtos Farmacêuticos e Cosméticos S.A.		—		4,220		—

Total as of December 31, 2019		759,123		4,220

Total as of March 31, 2019						13,295

⁽¹⁾

In March 2016, the subsidiary IPP made its second private offering in one single series of 75 debentures at face value of R$ 10,000,000.00 (ten million Brazilian Reais) each, nonconvertible into shares and unsecured. The Company subscribed the total debentures with maturity on March 31, 2021 and semiannual interest linked to DI.

a.2 Consolidated

Balances and transactions between the Company and its subsidiaries and between subsidiaries have been eliminated in consolidation and are not disclosed in this note. The balances and transactions between the Company and its subsidiaries with other related parties are disclosed below:


	Loans
	Assets		Liabilities
Química da Bahia Indústria e Comércio S.A.		—		2,875
Other		490		1,026

Total as of March 31, 2020		490		3,901


	Loans
	Assets		Liabilities
Química da Bahia Indústria e Comércio S.A.		—		2,875
Other		490		1,050

Total as of December 31, 2019		490		3,925

Loans agreements have indeterminate terms and do not contain interest clauses.


	Commercial transactions
	Receivables ⁽¹⁾		Payables ⁽¹⁾		Sales and services		Purchases		Expenses
Oxicap Indústria de Gases Ltda.		—		1,670		—		4,857		—
Refinaria de Petróleo Riograndense S.A.		—		53,657		—		75,313		—
ConectCar Soluções de Mobilidade Eletrônica S.A.		498		400		562		30		—
LA’7 Participações e Empreend. Imob. Ltda. (a)		—		135		—		—		394

Total as of March 31, 2020		498		55,862		562		80,200		394


	Commercial transactions
	Receivables ⁽¹⁾		Payables ⁽¹⁾		Sales and services		Purchases		Expenses
Oxicap Indústria de Gases Ltda.		—		1,545		1		162		—
Refinaria de Petróleo Riograndense S.A.		—		264,602		—		247,198		—
ConectCar Soluções de Mobilidade Eletrônica S.A.		739		113		1,202		42		—
LA’7 Participações e Empreend. Imob. Ltda. (a)		—		124		—		—		304

Total as of December 31, 2019		739		266,384

Total as of March 31, 2019						1,203		247,402		304

⁽¹⁾	Included in “domestic trade receivables”, “domestic trade payables” and “domestic trade payables—reverse factoring”, respectively.

(a)	Refers to rental contracts of 15 drugstores owned by LA’7 as of March 31, 2020 and December 31, 2019, a company of the former shareholders of Extrafarma that are current shareholders of Ultrapar.

Ultrapar Participações S.A. and Subsidiaries

Notes to the Parent and Consolidated Interim Financial Information

(In thousands of Brazilian Reais, unless otherwise stated)

Purchase and sale transactions relate substantially to the purchase of raw materials, feedstock, transportation, and storage services based on similar market prices and terms with customers and suppliers with comparable operational performance. The above operations related to ConectCar Soluções de Mobilidade Eletrônica S.A. (“ConectCar”) refer to services provided. In the opinion of the Company and its subsidiaries’ management, transactions with related parties are not subject to credit risk, which is why no an estimated loss or collateral is provided. Collateral provided by the Company in loans of subsidiaries and affiliates are mentioned in Note 16.i.

b.	*Key executives (Consolidated)*

The Company’s compensation strategy combines short and long-term elements, following the principles of alignment of interests and of maintaining a competitive compensation, and is aimed at retaining key officers and remunerating them adequately according to their attributed responsibilities and the value created to the Company and its shareholders.

Short-term compensation is comprised of: (a) fixed monthly compensation paid with the objective of rewarding the executive’s experience, responsibility, and his/her position’s complexity, and includes salary and benefits such as medical coverage, check-up, life insurance, and others; (b) variable compensation paid annually with the objective of aligning the executive’s and the Company’s objectives, which is linked to: (i) the business performance measured through its economic value creation and (ii) the fulfillment of individual annual goals that are based on the strategic plan and are focused on expansion and operational excellence projects, people development and market positioning, among others. Further details about the Deferred Stock Plan are contained in Note 8.c and about post-employment benefits in Note 20.b.

The expenses for compensation of its key executives (Company’s directors and executive officers) as shown below:


	03/31/2020		03/31/2019
Short-term compensation		11,107		11,315
Stock compensation		2,657		1,711
Post-employment benefits		617		580

Total		14,381		13,606

c.	*Deferred Stock Plan (Consolidated)*

Since 2003, Ultrapar has adopted a stock plan in which the executive has the usufruct of shares held in treasury until the transfer of the full ownership of the shares to those eligible members of management after five to seven years from the initial concession of the rights subject to uninterrupted employment of the participant during the period. The volume of shares and the executives eligible are determined by the Board of Directors, and there is no mandatory annual grant. The total number of shares to be used in the plan is subject to the number of shares in treasury. Ultrapar’s Board of Directors does not have a stock plan. The fair value of the awards was determined on the grant date based on the market value of the shares on the B3, the Brazilian Securities, Commodities and Futures Exchange and the amounts are amortized between five to seven years from the grant date.

Ultrapar Participações S.A. and Subsidiaries

Notes to the Parent and Consolidated Interim Financial Information

(In thousands of Brazilian Reais, unless otherwise stated)

The table below summarizes shares granted to the Company and its subsidiaries’ management:


Grant date	Balance of number of shares granted		Vesting period		Market price of shares on the grant date (in R$ per share)		Total grant costs, including taxes		Accumulated recognized grant costs			Accumulated unrecognized grant costs
March 13, 2017		200,000		2022 to 2024		34.00		9,378		(4,911	)		4,467
March 4, 2016		380,000		2021 to 2023		32.72		17,147		(11,892	)		5,255
December 10, 2014		533,324		2020 to 2021		25.32		27,939		(24,687	)		3,252
March 5, 2014		55,600		2021		26.08		5,999		(5,737	)		262

		1,168,924						60,463		(47,227	)		13,236

For the three-month period ended March 31, 2020, the amortization in the amount of R$ 1,974 (R$ 2,696 for the three-month period ended March 31, 2019) was recognized as a general and administrative expense.

The table below summarizes the changes of number of shares granted:


Balance on December 31, 2019	1,224,524
Shares vested and transferred	(55,600	)

Balance on March 31, 2020	1,168,924

In addition, on April 19, 2017, the Ordinary and Extraordinary General Shareholders’ Meeting (“OEGM”) of approved a new incentive plan based on shares (”Plan”), which establishes the general terms and conditions for the concession of common shares issued by the Company and held in treasury, that may or may not involve the granting of usufruct of part of these shares for later transfer of the ownership of the shares, in periods of three to six years, to directors or employees of the Company or its subsidiaries.

As a result of the Plan, common shares representing at most 1% of the Company’s share capital may be delivered to the participants, which corresponds, at the date of approval of this Plan, to 11,128,102 common shares.

The table below summarizes the restricted and performance stock programs:


Program	Grant date	Balance of number of shares granted		Vesting period	Market price of shares on the grant date (in R$ per share)		Total grant costs, including taxes		Accumulated recognized grant costs			Accumulated unrecognized grant costs
Restricted	October 1, 2017		240,000	2023		38.19		12,642		(5,268	)		7,374
Restricted and performance	November 8, 2017		72,684	2020 to 2022		38.19		4,820		(3,053	)		1,767
Restricted and performance	April 4, 2018		177,868	2021 to 2023		34.35		11,668		(6,116	)		5,552
Restricted	September 19, 2018		160,000	2024		19.58		4,321		(1,080	)		3,241
Restricted	September 24, 2018		80,000	2024		18.40		2,030		(508	)		1,522
Restricted and performance	April 3, 2019		549,096	2022 to 2024		23.25		23,682		(6,197	)		17,485
Restricted	September 2, 2019		440,000	2025		16.42		9,965		(969	)		8,996

			1,719,648					69,128		(23,191	)		45,937

For the three-month period ended March 31, 2020, a general and administrative expense in the amount of R$ 3,455 was recognized in relation to the Plan (R$ 1,902 for the three-month period ended March 31, 2019).


Balance on December 31, 2019	1,738,660
Cancellation of granted shares due to termination of executive employment	(19,012	)

Balance on March 31, 2020	1,719,648

Ultrapar Participações S.A. and Subsidiaries

Notes to the Parent and Consolidated Interim Financial Information

(In thousands of Brazilian Reais, unless otherwise stated)

9.	Income and Social Contribution Taxes

a. Deferred Income (IRPJ) and Social Contribution Taxes (CSLL)

The Company and its subsidiaries recognize deferred tax assets and liabilities, which are not subject to the statute of limitations, resulting from tax loss carryforwards, temporary differences, negative tax bases and revaluation of PP&E, among others. Deferred tax assets are sustained by the continued profitability of their operations. Deferred IRPJ and CSLL are recognized under the following main categories:


	Parent				Consolidated
	03/31/2020		12/31/2019		03/31/2020			12/31/2019
Assets - Deferred income and social contribution taxes on:
Provision for impairment of assets		—		—		74,264			72,377
Provisions for tax, civil, and labor risks		69		—		153,542			150,085
Provision for post-employment benefits		—		—		93,150			92,199
Provision for differences between cash and accrual basis (i)		—		—		644,224			224,065
Goodwill		—		—		7,787			8,161
Business combination – tax basis vs. accounting basis of goodwill		—		—		75,409			75,745
Provision for asset retirement obligation		—		—		15,027			14,762
Provision for suppliers		706		439		42,113			35,214
Provision for profit sharing and bonus		1,690		—		23,191			44,818
Leases payable		—		—		22,982			19,003
Change in fair value of subscription warrants		8,118		16,338		8,118			16,338
Other provisions		755		204		46,109			45,316
Tax losses and negative basis for social contribution carryforwards (9.d)		24,254		24,632		277,985			278,140

Total		35,592		41,613		1,483,901			1,076,223

Offset the liability balance of deferred IRPJ and CSLL		—		—		(567,769	)		(422,529	)

Net balance of deferred taxes assets		35,592		41,613		916,132			653,694

Liabilities - Deferred income and social contribution taxes on:
Revaluation of PP&E		—		—		1,844			1,866
Lease payable		—		—		2,258			2,356
Provision for differences between cash and accrual basis (i)		—		—		412,981			257,718
Provision for goodwill		—		—		52,450			39,186
Business combination – fair value of assets		—		—		113,376			114,125
Temporary differences in foreign subsidiary		634		—		1,958			—
Other provisions		—		—		15,184			14,809

Total		634		—		600,051			430,060

Offset the asset balance of deferred IRPJ and CSLL		—		—		(567,769	)		(422,529	)

Net balance of deferred taxes liabilities		634		—		32,282			7,531

(i)	Refers mainly to the income tax on the exchange variation of the derivate hedging instruments.

Ultrapar Participações S.A. and Subsidiaries

Notes to the Parent and Consolidated Interim Financial Information

(In thousands of Brazilian Reais, unless otherwise stated)

Changes in the net balance of deferred IRPJ and CSLL are as follows:


	Parent						Consolidated
	03/31/2020			03/31/2019			03/31/2020			12/31/2019
Initial balance		41,613			14,034			646,163			504,890
Deferred IRPJ and CSLL recognized in income of the period		(6,656	)		(4,489	)		(28,824	)		(28,782	)
Deferred IRPJ and CSLL recognized in other comprehensive income		—			—			254,201			4,684
Other		1			—			12,310			120

Final balance		34,958			9,545			883,850			480,912

The estimated recovery of deferred tax assets relating to IRPJ and CSLL is stated as follows:


	Parent		Consolidated
Up to 1 Year		15,102		307,780
From 1 to 2 Years		2,333		65,127
From 2 to 3 Years		2,688		129,580
From 3 to 5 Years		13,630		141,559
From 5 to 7 Years		1,641		554,741
From 7 to 10 Years		198		285,114

Total of deferred tax assets relating to IRPJ and CSLL		35,592		1,483,901

In order to evaluate the realization of deferred tax assets, the taxable income projections from business plans of each segment of the Company, which indicates trends and perspectives, demand effects, competition and other economic factors that represent the management’s best estimate about the economic conditions existing during the period of realization of the deferred tax asset were taken into account.

Ultrapar Participações S.A. and Subsidiaries

Notes to the Parent and Consolidated Interim Financial Information

(In thousands of Brazilian Reais, unless otherwise stated)

b.	*Reconciliation of Income and Social Contribution Taxes*

IRPJ and CSLL are reconciled to the statutory tax rates as follows:


	Parent						Consolidated
	03/31/2020			03/31/2019			03/31/2020			03/31/2019
Income before taxes and share of profit (loss) of subsidiaries, joint ventures, and associates		12,836			12,453			318,407			417,692
Statutory tax rates - %		34			34			34			34

Income and social contribution taxes at the statutory tax rates		(4,364	)		(4,234	)		(108,258	)		(142,015	)

Adjustments to the statutory income and social contribution taxes:
Nondeductible expenses (i)		(2,470	)		(203	)		39,684			(21,596	)
Nontaxable revenues (ii)		—			11			6,935			7,866
Adjustment to estimated income (iii)		—			—			2,002			2,762
Unrecorded deferred Income and Social Contribution Taxes Carryforwards deferred (iv)		—			—			(93,407	)		(23,604	)
Other adjustments		8			(63	)		(76	)		(5,130	)

Income and social contribution taxes before tax incentives		(6,826	)		(4,489	)		(153,120	)		(181,717	)

Tax incentives - SUDENE		—			—			16,007			13,548

Income and social contribution taxes in the income statement		(6,826	)		(4,489	)		(137,113	)		(168,169	)

Current		(170	)		—			(108,289	)		(139,387	)
Deferred		(6,656	)		(4,489	)		(28,824	)		(28,782	)
Effective IRPJ and CSLL rates - %		53.2			36.0			43.1			40.3

(i)	Consist of certain expenses that cannot be deducted for tax purposes under applicable tax legislation, such as expenses with fines, donations, gifts, losses of assets, negative effects of foreign subsidiaries and certain provisions;

(ii)	Consist of certain gains and income that are not taxable under applicable tax legislation, such as the reimbursement of taxes and the reversal of certain provisions;

(iii)

Brazilian tax law allows for an alternative method of taxation for companies that generated gross revenues of up to R$ 78 million in their previous fiscal year. Certain subsidiaries of the Company adopted this alternative form of taxation, whereby income and social contribution taxes are calculated on a basis equal to 32% of operating revenues, as opposed to being calculated based on the effective taxable income of these subsidiaries. The adjustment to estimated income represents the difference between the taxation under this alternative method and the income and social contribution taxes that would have been paid based on the effective statutory rate applied to the taxable income of these subsidiaries;

(iv)	See Note 9.d.

Ultrapar Participações S.A. and Subsidiaries

Notes to the Parent and Consolidated Interim Financial Information

(In thousands of Brazilian Reais, unless otherwise stated)

c.	*Tax Incentives - SUDENE*

The following subsidiaries are entitled to federal tax benefits providing for IRPJ reduction under the program for development of northeastern Brazil operated by the Superintendence for the Development of the Northeast (“SUDENE”), as shown below:


Subsidiary	Units	Incentive - %		Expiration
Bahiana Distribuidora de Gás Ltda.	Mataripe base		75		2024
	Caucaia base		75		2025
	Juazeiro base		75		2026
	Aracaju base		75		2027
	Suape base		75		2027
Terminal Químico de Aratu S.A. – Tequimar	Suape terminal		75		2020
	Aratu terminal		75		2022
	Itaqui terminal		75		2025
Oleoquímica Indústria e Comércio de Produtos Químicos Ltda.	Camaçari plant		75		2021
Oxiteno S.A. Indústria e Comércio ⁽¹⁾	Camaçari plant		75		2026
Empresa Carioca de Produtos Químicos S.A.	Camaçari plant		75		2026

⁽¹⁾	The request to transfer the right to reduce the IRPJ to Oxiteno S.A. was submitted to SUDENE and waits decision.

d.	*Income and Social Contribution Taxes Carryforwards*

In March 31, 2020, the Company and certain subsidiaries had tax loss carryforwards related to income tax (IRPJ) of R$ 1,316,994 (R$ 1,268,964 as of December 31, 2019) and negative basis of CSLL of R$ 1,318,744 (R$ 1,270,714 as of December 31, 2019), whose compensations are limited to 30% of taxable income in a given tax year, which do not expire.

In addition, certain offshore subsidiaries had tax loss carryforwards of R$ 1,231,919 (R$ 878,470 as of December 31, 2019), which are R$ 1,150,729 of the Oxiteno USA (US$ 221,349), R$ 40,556 of the Ultrapar International (US$ 10,062) and R$ 40,634 of the Oxiteno Uruguai (US$ 7,816), subject to local compensation rules.

Ultrapar Participações S.A. and Subsidiaries

Notes to the Parent and Consolidated Interim Financial Information

(In thousands of Brazilian Reais, unless otherwise stated)

The balances which are constituted of deferred taxes related to income tax loss carryforwards and negative basis of social contribution base are as follows:


	03/31/2020		12/31/2019
Cia. Ultragaz		19,844		12,808
Oxiteno S.A.		142,766		148,306
Iconic		15,978		17,657
Extrafarma		72,318		72,318
Vila do Conde		38		—
Ultrapar		24,254		24,632
Ultrapar International		2,787		2,419

		277,985		278,140

The balances which are not constituted of deferred taxes related to income tax loss carryforwards and negative basis of social contribution base are as follows:


	03/31/2020		12/31/2019
Extrafarma		264,003		237,664
Integra Frotas		5,481		4,636
Oxiteno USA		194,215		127,992

		463,699		370,292

10.

Prepaid Expenses (Consolidated)


	03/31/2020		12/31/2019
Rents		41,005		37,106
Advertising and publicity		49,770		24,857
Deferred stock plan, net (see Note 8.c)		13,832		15,965
Insurance premiums		51,840		61,884
Software maintenance		28,208		23,216
Employee benefits		7,135		3,425
IPVA and IPTU		12,888		937
Other prepaid expenses		14,803		13,181

		219,481		180,571

Current		157,097		111,355
Non-current		62,384		69,216

11.

Contractual Assets with Customers – Exclusive Rights (Consolidated)

Refers to exclusive rights disbursements of Ipiranga’s agreements with reseller service stations and major consumers that are recognized at the time of their occurrence and recognized as a reduction of the revenue from sales and services in the statement of profit or loss according to the conditions established in the agreement (amortization in weighted average term of five years), being reviewed as changes occur under the terms of the agreements.

Ultrapar Participações S.A. and Subsidiaries

Notes to the Parent and Consolidated Interim Financial Information

(In thousands of Brazilian Reais, unless otherwise stated)

Balance and changes are shown below:


Balance as of December 31, 2019	1,465,989
Additions	160,321
Amortization	(82,860	)
Transfer	(4,137	)

Balance as of March 31, 2020	1,539,313

Current	473,483
Non-current	1,065,830

Balance as of December 31, 2018	1,518,477
Additions	64,056
Amortization	(83,608	)
Transfer	(1,448	)

Balance as of March 31, 2019	1,497,477

Current	489,634
Non-current	1,007,843

Ultrapar Participações S.A. and Subsidiaries

Notes to the Parent and Consolidated Interim Financial Information

(In thousands of Brazilian Reais, unless otherwise stated)

12.

Investments

a.	*Subsidiaries and Joint Venture (Parent Company)*

The table below presents the full amounts of statements of financial position and statements of profit or loss of subsidiaries and joint venture:


	03/31/2020
	Subsidiaries														Joint-venture
	Ultracargo - Operações Logísticas e Participações Ltda.		Oxiteno S.A. Indústria e Comércio			Ipiranga Produtos de Petróleo S.A.			Ultrapar International S.A.			UVC			Refinaria de Petróleo Riograndense S.A.
Number of shares or units held		11,839,764		35,102,127			224,467,228,244			49,995			150			5,078,888
Assets		1,314,084		7,722,226			18,380,444			5,482,548			1,375			439,090
Liabilities		4,673		6,328,861			11,325,539			5,529,390			22			400,670
Equity		1,309,411		1,393,365	(*)		7,054,905	(*)		(46,842	)		1,353			38,420
Net revenue from sales and services		—		852,587			17,542,475			—			—			477,360
Net income (loss)		47,264		(24,640	) (*)		161,752	(*)		(19,342	)		(1,657	)		(25,704	)
% of capital held		100		100			100			100			100			33


	12/31/2019
	Subsidiaries											Joint-venture
	Ultracargo - Operações Logísticas e Participações Ltda.		Oxiteno S.A. Indústria e Comércio			Ipiranga Produtos de Petróleo S.A.			Ultrapar International S.A.			Refinaria de Petróleo Riograndense S.A.
Number of shares or units held		11,839,764		35,102,127			224,467,228,244			49,995			5,078,888
Assets		1,264,707		6,475,473			18,052,890			4,192,235			562,445
Liabilities		2,710		4,672,264			11,032,143			4,219,735			505,851
Equity		1,261,997		1,803,209	(*)		7,020,747	(*)		(27,500	)		56,594
% of capital held		100		100			100			100			33

Ultrapar Participações S.A. and Subsidiaries

Notes to the Parent and Consolidated Interim Financial Information

(In thousands of Brazilian Reais, unless otherwise stated)


	03/31/2019
	Subsidiaries										Joint-venture
	Ultracargo - Operações Logísticas e Participações Ltda.		Oxiteno S.A. Indústria e Comércio			Ipiranga Produtos de Petróleo S.A.			Ultrapar International S.A.		Refinaria de Petróleo Riograndense S.A.
Number of shares or units held		11,839,764		35,102,127			224,467,228,244			49,995		5,078,888
Net revenue from sales and services		—		336,579			16,963,584			—		501,070
Net income (loss)		29,591		2,721	(*)		193,528	(*)		551		(2,067	)
% of capital held		100		100			100			100		33

(*)	adjusted for intercompany unrealized profits.

The percentages in the table above are rounded.

The financial information from our business segments is detailed in Note 32.

Balances and changes in subsidiaries and joint venture are as follows:


																			Joint-venture
	Ultracargo - Operações Logísticas e Participações Ltda.			Oxiteno S.A. Indústria e Comércio			Ipiranga Produtos de Petróleo S.A.			Ultrapar International S.A.			UVC			Total			Refinaria de Petróleo Riograndense S.A.			Total
Balance as of December 31, 2019		1,261,997			1,803,209			7,020,747			(27,497	)					10,058,456			18,792			10,077,248
Share of profit (loss) of subsidiaries and joint venture		47,264			(24,640	)		161,758			(19,340	)		(1,657	)		163,385			(8,536	)		154,849
Dividends		—			(86,907	)		(129,249	)		—			—			(216,156	)		—			(216,156	)
Equity instrument granted		125			201			1,809			—			—			2,135			—			2,135
Valuation adjustment of subsidiaries		60			(420,414	)		321			—			—			(420,033	)		2,501			(417,532	)
Translation adjustments of foreign-based subsidiaries		—			121,874			—			—			—			121,874			—			121,874
Capital increase in cash		—			—			—			—			3,010			3,010			—			3,010
Loss due to the payments fixed dividends to preferred shares		(35	)		—			(481	)		—			—			(516	)		—			(516	)

Balance as of March 31, 2020		1,309,411			1,393,323			7,054,905			(46,837	)		1,353			9,712,155			12,757			9,724,912

Ultrapar Participações S.A. and Subsidiaries

Notes to the Parent and Consolidated Interim Financial Information

(In thousands of Brazilian Reais, unless otherwise stated)


	Investments in subsidiaries													Joint-venture
	Ultracargo - Operações Logísticas e Participações Ltda.			Oxiteno S.A. Indústria e Comércio			Ipiranga Produtos de Petróleo S.A.		Ultrapar International S.A.		Total			Refinaria de Petróleo Riograndense S.A.			Total
Balance as of December 31, 2018		1,277,423			2,806,655			5,415,812		9,590		9,509,480			20,118			9,529,598
Share of profit (loss) of subsidiaries and joint venture		29,591			2,721			193,520		551		226,383			(686	)		225,697
Dividends		(50,016	)		(91,489	)		—		—		(141,505	)		—			(141,505	)
Tax liabilities on equity- method revaluation reserve		—			—			3		—		3			—			3
Equity instrument granted		19			83			900		—		1,002			—			1,002
Valuation adjustment of subsidiaries		16			(8,513	)		2,808		—		(5,689	)		46			(5,643	)
Translation adjustments of foreign-based subsidiaries		—			4,543			—		—		4,543			—			4,543

Balance as of March 31, 2019		1,257,033			2,714,000			5,613,043		10,141		9,594,217			19,478			9,613,695

Ultrapar Participações S.A. and Subsidiaries

Notes to the Parent and Consolidated Interim Financial Information

(In thousands of Brazilian Reais, unless otherwise stated)

b.	*Joint Ventures (Consolidated)*

The Company holds an interest in Refinaria de Petróleo Riograndense (“RPR”), which is primarily engaged in oil refining.

The subsidiary Ultracargo – Operações Logísticas e Participações Ltda. (“Ultracargo Participações”) holds an interest in União Vopak – Armazéns Gerais Ltda. (“União Vopak”), which is primarily engaged in liquid bulk storage in the port of Paranaguá.

The subsidiary IPP holds an interest in ConectCar, which is primarily engaged in automatic payment of tolls and parking in the States of Bahia, Ceará, Espírito Santo, Goiás, Mato Grosso, Mato Grosso do Sul, Minas Gerais, Paraná, Pernambuco, Rio de Janeiro, Rio Grande do Sul, Santa Catarina, São Paulo and Distrito Federal.

On September 23, 2019, for the port concession BEL02A at the port of Miramar, Latitude Logística Portuária S.A. (“Latitude”) was incorporated. On August 5, 2019, Navegantes Logística Portuária S.A. (“Navegantes”) was incorporated for the port of Vitória. On August 19, 2019, in the city of Cabedelo, Nordeste Logística I S.A. (“Nordeste Logística I”), Nordeste Logística II S.A. (“Nordeste Logística II”) and Nordeste Logística III S.A. (“Nordeste Logística III”) were incorporated (see Note 34.c).

These investments are accounted for under the equity method of accounting based on their interim financial information as of March 31, 2020.

Ultrapar Participações S.A. and Subsidiaries

Notes to the Parent and Consolidated Interim Financial Information

(In thousands of Brazilian Reais, unless otherwise stated)

Balances and changes in joint ventures are as follows:


	União Vopak		RPR			ConectCar			Latitude Logística		Navegantes Logística		Nordeste Logística I		Nordeste Logística II		Nordeste Logística III		Total
Balance as of December 31, 2019		7,342		18,792			82,818			10,351		23,581		1,930		4,183		4,079		153,076
Valuation adjustments		—		2,501			—			—		—		—		—		—		2,501
Share of profit (loss) of joint ventures		65		(8,536	)		(4,538	)		—		—		—		—		—		(13,009	)

Balance as of March 31, 2020		7,407		12,757			78,280			10,351		23,581		1,930		4,183		4,079		142,568


	União Vopak		RPR			ConectCar			Total
Balance as of December 31, 2018		7,446		20,118			74,390			101,954
Valuation adjustments		—		46			—			46
Share of profit (loss) of joint ventures		474		(686	)		(7,162	)		(7,374	)

Balance as of March 31, 2019		7,920		19,478			67,228			94,626

Ultrapar Participações S.A. and Subsidiaries

Notes to the Parent and Consolidated Interim Financial Information

(In thousands of Brazilian Reais, unless otherwise stated)

The table below presents the statements of financial position and statements of profit or loss of joint ventures:


	03/31/2020
	União Vopak			RPR			ConectCar
Current assets		7,052			293,601			120,346
Non-current assets		9,106			145,491			163,367
Current liabilities		1,138			309,925			126,671
Non-current liabilities		206			90,745			482
Equity		14,814			38,422			156,560
Net revenue from sales and services		3,624			477,360			23,652
Costs, operating expenses and income		(3,419	)		(500,926	)		(35,961	)
Net financial income and income and social contribution taxes		(75	)		(2,138	)		3,234
Net income (loss)		130			(25,704	)		(9,075	)
Number of shares or units held		29,995			5,078,888			228,768,000
% of capital held		50.00			33.20			50.00


	12/31/2019
	União Vopak		RPR		ConectCar
Current assets		6,818		428,880		159,972
Non-current assets		9,182		133,565		161,817
Current liabilities		1,116		418,289		155,542
Non-current liabilities		200		87,562		612
Equity		14,684		56,594		165,635
Number of shares or units held		29,995		5,078,888		228,768,000
% of capital held		50		33		50


	03/31/2019
	União Vopak			RPR			ConectCar
Net revenue from sales and services		3,484			501,070			17,464
Costs, operating expenses and income		(2,465	)		(505,215	)		(32,515	)
Net financial income and income and social contribution taxes		(71	)		2,078			726
Net income (loss)		948			(2,067	)		(14,325	)
Number of shares or units held		29,995			5,078,888			193,768,000
% of capital held		50			33			50

The percentages in the table above are rounded.

Ultrapar Participações S.A. and Subsidiaries

Notes to the Parent and Consolidated Interim Financial Information

(In thousands of Brazilian Reais, unless otherwise stated)

c.	*Associates (Consolidated)*

Subsidiary IPP holds an interest in Transportadora Sulbrasileira de Gás S.A., which is primarily engaged in natural gas transportation services.

Subsidiary Oxiteno S.A. holds an interest in Oxicap Indústria de Gases Ltda. (“Oxicap”), which is primarily engaged in the supply of nitrogen and oxygen for its shareholders in the Mauá petrochemical complex. The subsidiary Oxiteno S.A. holds an interest in Química da Bahia Indústria e Comércio S.A., which is primarily engaged in manufacturing, marketing, and processing of chemicals. The operations of this associate are currently suspended.

Subsidiary Companhia Ultragaz S.A. (“Cia. Ultragaz”) holds an interest in Metalúrgica Plus S.A., which is primarily engaged in the manufacture and trading of LPG containers. The operations of this associate are currently suspended.

Subsidiary Cia. Ultragaz holds an interest in Plenogás Distribuidora de Gás S.A., which is primarily engaged in the marketing of LPG. The operations of this associate are currently suspended.

These investments are accounted for under the equity method of accounting based on theirinterim financial information as of March 31, 2020.

Balances and changes in associates are as follows:


	Transportadora Sulbrasileira de Gás S.A.		Oxicap Indústria de Gases Ltda.		Química da Bahia Indústria e Comércio S.A.		Metalúrgica Plus S.A.			Plenogás Distribuidora de Gás S.A.		Total
Balance as of December 31, 2019		5,661		15,934		3,554		138			463		25,750
Share of profit (loss) of associates		376		200		—		(23	)		28		581

Balance as of March 31, 2020		6,037		16,134		3,554		115			491		26,331


	Transportadora Sulbrasileira de Gás S.A.		Oxicap Indústria de Gases Ltda.		Química da Bahia Indústria e Comércio S.A.			Metalúrgica Plus S.A.			Plenogás Distribuidora de Gás S.A.		Total
Balance as of December 31, 2018		4,689		15,366		3,590			228			465		24,338
Dividends		—		—		—			—			31		31
Share of profit (loss) of associates		386		10		(9	)		(24	)		41		404

Balance as of March 31, 2019		5,075		15,376		3,581			204			537		24,773

Ultrapar Participações S.A. and Subsidiaries

Notes to the Parent and Consolidated Interim Financial Information

(In thousands of Brazilian Reais, unless otherwise stated)

The table below presents the statements of financial position and statements of profit or loss of associates:


	03/31/2020
	Transportadora Sulbrasileira de Gás S.A.			Oxicap Indústria de Gases Ltda.			Química da Bahia Indústria e Comércio S.A.		Metalúrgica Plus S.A.			Plenogás Distribuidora de Gás S.A.
Current assets		13,707			46,827			71		48			172
Non-current assets		13,736			81,307			10,147		630			2,440
Current liabilities		2,696			11,384			—		31			204
Non-current liabilities		602			9,805			3,110		302			933
Equity		24,146			106,945			7,108		345			1,475
Net revenue from sales and services		2,987			15,795			—		—			—
Costs, operating expenses and income		(1,382	)		(13,619	)		—		(57	)		94
Net financial income and income and social contribution taxes		(114	)		(852	)		—		(15	)		(9	)
Net income (loss)		1,491			1,324			—		(72	)		85
Number of shares or units held		20,124,996			1,987			1,493,120		3,000			1,384,308
% of capital held		25.0			15.1			50.0		33.3			33.3


	12/31/2019
	Transportadora Sulbrasileira de Gás S.A.		Oxicap Indústria de Gases Ltda.		Química da Bahia Indústria e Comércio S.A.		Metalúrgica Plus S.A.		Plenogás Distribuidora de Gás S.A.
Current assets		12,172		45,178		71		40		151
Non-current assets		14,041		84,705		10,147		703		2,440
Current liabilities		2,944		11,041		—		25		34
Non-current liabilities		626		9,634		3,110		302		1,167
Equity		22,643		109,208		7,108		416		1,390
Number of shares or units held		20,124,996		1,987		1,493,120		3,000		1,384,308
% of capital held		25		15		50		33		33


	03/31/2019
	Transportadora Sulbrasileira de Gás S.A.			Oxicap Indústria de Gases Ltda.			Química da Bahia Indústria e Comércio S.A.			Metalúrgica Plus S.A.			Plenogás Distribuidora de Gás S.A.
Net revenue from sales and services		2,986			7,421			—			—			—
Costs, operating expenses and income		(1,170	)		(7,353	)		(22	)		(59	)		130
Net financial income and income and social contribution taxes		(55	)		(5	)		5			(14	)		(7	)
Net income (loss)		1,761			63			(17	)		(73	)		123
Number of shares or units held		20,124,996			1,987			1,493,120			3,000			1,384,308
% of capital held		25			15			50			33			33

The percentages in the table above are rounded.

Ultrapar Participações S.A. and Subsidiaries

Notes to the Parent and Consolidated Interim Financial Information

(In thousands of Brazilian Reais, unless otherwise stated)

13.

Right to Use Assets and Leases payable (Consolidated)

Some of the subsidiaries of the Company have real estate leases, substantially related to: (i) Ipiranga: fuel stations and distribution center; (ii) Extrafarma: pharmacies and distribution center; (iii) Ultragaz: points of sale and bottling base; (iv) Ultracargo: port areas; and (v) Oxiteno: industrial plant. Some subsidiaries also have lease agreements relating to vehicles.

a.	Right to Use Assets


	Weighted average useful life (years)		Balance on 12/31/2019			Additions and remeasurement		Write-offs			Effect of foreign currency exchange rate variation			Amortization			Balance on 03/31/2020
Cost:
Real estate		10		2,068,320			38,284		(15,019	)		3,079			—			2,094,664
Port area (i)		25		68,007			120,574		—			—			—			188,581
Other		4		151,470			10,559		(698	)		4,765			—			166,096

				2,287,797			169,417		(15,717	)		7,844			—			2,449,341
Accumulated amortization:
Real estate				(256,032	)		—		6,287			(554	)		(67,118	)		(317,417	)
Other				(50,853	)		—		384			(981	)		(10,749	)		(62,199	)

				(306,885	)		—		6,671			(1,535	)		(77,867	)		(379,616	)

Net amount				1,980,912			169,417		(9,046	)		6,309			(77,867	)		2,069,725

(i)	Refers to the area port lease (see Note 34.c).

Ultrapar Participações S.A. and Subsidiaries

Notes to the Parent and Consolidated Interim Financial Information

(In thousands of Brazilian Reais, unless otherwise stated)

The amortization expenses were recognized in the Financial statements as shown below:


	03/31/2020
Cost of products and services sold		13,521
Selling and marketing		62,732
General and administrative		1,614

		77,867

b.	Leases Payable

The changes in leases payable are shown below:


Balance as of December 31, 2019	1,588,673
Interest accrued	33,978
Payments	(85,654	)
Additions and remeasurement	169,417
Write-offs	(8,757	)
Effect of foreign currency exchange rate variation	6,586

Balance as of March 31, 2020	1,704,243

Current	230,489
Non-current	1,473,754

The future disbursements (installments) assumed under leases contracts are presented below:


Up to 1 year			358,459
From 1 to 2 years			603,067
From 2 to 3 years			490,824
From 3 to 4 years			348,641
From 4 to 5 years			215,852
More than 5 years			571,078

Total			2,587,921

The contracts related to the leases payable are substantially indexed by the IGP-M (General Market Price Index is a measure of Brazilian inflation, calculated by the Getúlio Vargas Foundation).

Ultrapar Participações S.A. and Subsidiaries

Notes to the Parent and Consolidated Interim Financial Information

(In thousands of Brazilian Reais, unless otherwise stated)

c.	*Lease Contracts of Low Amount Assets*

Subsidiaries Cia. Ultragaz, Bahiana, Extrafarma, Ipiranga, Serma, and Oxiteno S.A. have operating lease contracts for the use of IT equipment. These contracts have terms from 36 to 48 months. The subsidiaries have the option to purchase the assets at a price equal to the fair market price on the date of option, and management does not intend to exercise such option. The future disbursements (installments), assumed under these contracts, amount approximately to:


	Up to 1 year		Between 1 and 5 years		More than 5 years		Total
03/31/2020		3,608		20,084		17,064		40,756

The expense recognized for the three-month period ended March 31, 2020 was R$ 5,305 (R$ 3,607 for the three-month period ended March 31, 2019).

d.	Inflation effect

The effects of inflation are as follows:


Net right to use asset	Parent			Consolidated
Nominal base		36,533			2,069,725
Inflated base		43,615			2,440,562

		19.4	%		17.9	%


Lease liability	Parent			Consolidated
Nominal base		38,473			1,704,243
Inflated base		45,555			2,075,080

		18.4	%		21.8	%


Financial expense	Parent			Consolidated
Nominal base		360			33,978
Inflated base		632			43,042

		75.6	%		26.7	%


Amortization expense	Parent			Consolidated
Nominal base		512			77,867
Inflated base		729			80,939

		42.4	%		3.9	%

Ultrapar Participações S.A. and Subsidiaries

Notes to the Parent and Consolidated Interim Financial Information

(In thousands of Brazilian Reais, unless otherwise stated)

14.

Property, Plant, and Equipment (Consolidated)

Balances and changes in PP&E are as follows:


	Weighted average useful life (years)		Balance on 12/31/2019			Additions		Depreciation			Transfer (i)			Write- offs and disposals			Effect of foreign currency exchange rate variation			Balance on 03/31/2020

Cost:
Land		—		667,865			—		—			—			(2,341	)		11,092			676,616
Buildings		32		1,925,946			4,822		—			21,024			(3,729	)		82,670			2,030,733
Leasehold improvements		10		1,121,528			4,633		—			16,214			(2,732	)		286			1,139,929
Machinery and equipment		13		5,707,721			23,642		—			39,438			(482	)		278,644			6,048,963
Automotive fuel/lubricant distribution equipment and facilities		12		2,991,472			23,465		—			26,524			(14,721	)		—			3,026,740
LPG tanks and bottles		10		755,460			16,574		—			72			(6,671	)		—			765,435
Vehicles		7		320,161			3,363		—			355			(10,324	)		331			313,886
Furniture and utensils		9		295,604			2,098		—			631			(2,191	)		2,930			299,072
Construction in progress		—		827,086			98,907		—			(99,731	)		(31	)		14,227			840,458
Advances to suppliers		—		12,544			816		—			(4,562	)		—			—			8,798
Imports in progress		—		250			271		—			(1	)		—			—			520
IT equipment		5		412,809			4,981		—			93			(2,070	)		2,008			417,821

				15,038,446			183,572		—			57			(45,292	)		392,188			15,568,971

Accumulated depreciation:
Buildings				(793,835	)		—		(15,332	)		—			3,041			(15,060	)		(821,186	)
Leasehold improvements				(614,379	)		—		(19,946	)		—			1,833			(100	)		(632,592	)
Machinery and equipment				(3,231,627	)		—		(77,478	)		5			372			(42,905	)		(3,351,633	)
Automotive fuel/lubricant distribution equipment and facilities				(1,766,878	)		—		(43,296	)		—			12,256			—			(1,797,918	)
LPG tanks and bottles				(425,554	)		—		(13,281	)		(22	)		4,019			—			(434,838	)
Vehicles				(139,045	)		—		(6,481	)		—			6,589			(238	)		(139,175	)
Furniture and utensils				(171,475	)		—		(5,124	)		—			1,856			(1,571	)		(176,314	)
IT equipment				(318,063	)		—		(8,515	)		—			1,919			(1,610	)		(326,269	)

				(7,460,856	)		—		(189,453	)		(17	)		31,885			(61,484	)		(7,679,925	)

Ultrapar Participações S.A. and Subsidiaries

Notes to the Parent and Consolidated Interim Financial Information

(In thousands of Brazilian Reais, unless otherwise stated)


	Balance on 12/31/2019			Additions		Depreciation			Transfer (i)		Write- offs and disposals			Effect of foreign currency exchange rate variation			Balance on 03/31/2020

Provision for losses:
Advances to suppliers		(110	)		—		—			—		—			—			(110	)
Buildings		—			—		—			—		—			—			—
Land		(146	)		—		—			—		—			—			(146	)
Leasehold improvements		(1,599	)		—		—			—		618			(10	)		(991	)
Machinery and equipment		(2,875	)		—		—			—		—			(136	)		(3,011	)
Automotive fuel/lubricant distribution equipment and facilities		(98	)		—		—			—		6			—			(92	)
Construction in progress		—			—		—			—		—			—			—
Furniture and utensils		—			—		—			—		—			—			—

		(4,828	)		—		—			—		624			(146	)		(4,350	)

Net amount		7,572,762			183,572		(189,453	)		40		(12,783	)		330,558			7,884,696

(i)	Refers to amounts transferred to intangible assets.

Ultrapar Participações S.A. and Subsidiaries

Notes to the Parent and Consolidated Interim Financial Information

(In thousands of Brazilian Reais, unless otherwise stated)

Construction in progress relates substantially to expansions, renovations, constructions and upgrade of industrial facilities, terminals, stores, service stations and distribution bases.

Advances to suppliers is related, basically, to manufacturing of assets for expansion of plants, terminals, stores, service stations and bases and acquisition of real estate.

The depreciation expenses were recognized in the interim financial information as shown below:


	03/31/2020		31/03/2019
Inventories and cost of products and services sold		101,508		101,053
Selling and marketing		73,568		71,433
General and administrative		14,377		12,707

		189,453		185,193

15.

Intangible Assets (Consolidated)

Balances and changes in intangible assets are as follows:


	Weighted average useful life (years)		Balance on 12/31/2019			Additions		Amortization			Transfer (i)			Write-offs and disposals			Effect of foreign currency exchange rate variation			Balance on 03/31/2020
Cost:
Goodwill (a)		—		1,525,088			—		—			—			—			—			1,525,088
Software (b)		4		1,210,529			43,110		—			(58	)		(3,337	)		3,984			1,254,228
Technology (c)		—		32,617			—		—			—			—			—			32,617
Commercial property rights		5		7,934			—		—			741			(205	)		—			8,470
Distribution rights		9		133,599			—		—			—			—			—			133,599
Brands (d)		—		122,504			—		—			—			—			14,483			136,987
Trademark rights (d)		39		114,792			—		—			—			—			—			114,792
Others (e)		10		44,900			81		—			—			—			3,148			48,129

				3,191,963			43,191		—			683			(3,542	)		21,615			3,253,910

Accumulated amortization:
Software				(648,861	)		—		(42,177	)		18			3,337			(2,860	)		(690,543	)
Technology				(32,616	)		—		—			—			—			—			(32,616	)
Commercial property rights				(6,384	)		—		(17	)		(741	)		112			—			(7,030	)
Distribution rights				(108,932	)		—		(1,297	)		—			—			—			(110,229	)
Trademark rights				(6,119	)		—		(734	)		—			—			—			(6,853	)
Others				(32,713	)		—		(28	)		—			—			(3	)		(32,744	)

				(835,625	)		—		(44,253	)		(723	)		3,449			(2,863	)		(880,015	)

Provision for losses and impairment:
Goodwill (a)				(593,280	)		—		—			—			—			—			(593,280	)
Commercial property rights				(465	)		—		—			—			350			—			(115	)

				(593,745	)		—		—			—			350			—			(593,395	)

Net amount				1,762,593			43,191		(44,253	)		(40	)		257			18,752			1,780,500

Ultrapar Participações S.A. and Subsidiaries

Notes to the Parent and Consolidated Interim Financial Information

(In thousands of Brazilian Reais, unless otherwise stated)

(i)	Refers to amounts transferred to PP&E.

The amortization expenses were recognized in the interim financial information as shown below:


	03/31/2020		12/31/2019
Inventories and cost of products and services sold		2,604		3,121
Selling and marketing		1,724		738
General and administrative		39,925		22,650

		44,253		26,509

a.	*Goodwill*

The balance of the goodwill is tested annually for impairment and is represented by the following acquisitions:


	Segment		03/31/2020			12/31/2019
Goodwill on the acquisition of:
Extrafarma		Extrafarma		661,553			661,553
Extrafarma – impairment		Extrafarma		(593,280	)		(593,280	)
Extrafarma – net		Extrafarma		68,273			68,273
Ipiranga ⁽¹⁾		Ipiranga		276,724			276,724
União Terminais		Ultracargo		211,089			211,089
Texaco		Ipiranga		177,759			177,759
Iconic (CBLSA)		Ipiranga		69,807			69,807
Oxiteno Uruguay		Oxiteno		44,856			44,856
Temmar		Ultracargo		43,781			43,781
DNP		Ipiranga		24,736			24,736
Repsol		Ultragaz		13,403			13,403
TEAS		Ultracargo		797			797
Oxiteno México		Oxiteno		583			583

				931,808			931,808

⁽¹⁾	Including R$ 246,163 at Ultrapar.

Ultrapar Participações S.A. and Subsidiaries

Notes to the Parent and Consolidated Interim Financial Information

(In thousands of Brazilian Reais, unless otherwise stated)

On December 31, 2019, the Company tested the balances of goodwill shown in the table above for impairment. The determination of value in use involves assumptions, judgments, and estimates of cash flows, such as growth rates of revenues, costs and expenses, estimates of investments and working capital, and discount rates. The assumptions about growth projections and future cash flows are based on the Company’s business plan of its operating segments, as well as comparable market data, and represent management’s best estimate of the economic conditions that will exist over the economic life of the various CGUs, to which goodwill is related.

The main key-assumptions used by the Company to calculate the value in use are described below:

Period of evaluation: the evaluation of the value in use is calculated for a period of five years (except the Extrafarma segment), after which the Company calculated the perpetuity, considering the possibility of carrying the business on indefinitely. For the Extrafarma segment, a period of ten years was used due to a four-year period to maturity of new stores were considered.

Discount and real growth rates: on December 31, 2019, the discount and real growth rates used to extrapolate the projections ranged from 8.9% to 12.1% and from 0% to 1% p.a., respectively, depending on the CGU analyzed.

Ultrapar Participações S.A. and Subsidiaries

Notes to the Parent and Consolidated Interim Financial Information

(In thousands of Brazilian Reais, unless otherwise stated)

Revenue from sales and services, costs and expenses, and gross margin: considers the budget prepared for 2020 and the long-term strategic plan prepared by management and approved by the Board of Directors.

The goodwill impairment tests and net assets of the Company and its subsidiaries result in the recognition of impairment in the amount of R$ 593,280 for subsidiary Extrafarma for the year ended December 31, 2019 (see Note 2.u).

The Company assessed a sensitivity analysis of discount and growth rate of perpetuity, due to their significant impact on cash flows and value in use. An increase of 0.5 percentage points in the discount rate or a decrease of 0.5 percentage points in the growth rate of the perpetuity of the cash flow of each business segment would not result in the recognition of impairment.

b. Software

Includes user licenses and costs for the implementation of the various systems used by the Company and its subsidiaries, such as: integrated management and control, financial management, foreign trade, industrial automation, operational and storage management, accounting information, and other systems.

c. Technology

The subsidiaries Oxiteno S.A. and Oleoquímica recognize as technology certain rights of use held by them. Such licenses include the production of ethylene oxide, ethylene glycols, ethanolamines, glycol ethers, ethoxylates, solvents, fatty acids from vegetable oils, fatty alcohols, and specialty chemicals, which are products that are supplied to various industries.

d. Brands and Trademark rights

Brands are represented by the acquisition cost of the ‘am/pm’ brand in Brazil and of the Extrafarma brand, acquired in the business combination, and Chevron and Texaco trademark rights.

e. Other intangibles

Refers mainly to the loyalty program “Clube Extrafarma”.

Ultrapar Participações S.A. and Subsidiaries

Notes to the Parent and Consolidated Interim Financial Information

(In thousands of Brazilian Reais, unless otherwise stated)

16.

Loans, Financing, Debentures and Hedge Derivative Financial Instruments

a. Composition

a.1 Parent


Description	03/31/2020		12/31/2019		Index/ Currency		Weighted average financial charges 03/31/2020 – % p.a.		Maturity
Brazilian Reais:
Debentures – 6^th issuance (g.5)		1,727,806		1,752,081		DI		105.3		2023

Current		4,254		28,713
Non-current		1,723,552		1,723,368

a.2 Consolidated


Description	03/31/2020		12/31/2019		Index/ Currency		Weighted average financial charges 03/31/2020 – % p.a.		Maturity
Foreign currency – denominated loans:
Notes in the foreign market (b) (*)		5,523,379		4,213,662		US$		5.3		2026 to 2029
Foreign loan (c.1) (*)		1,405,012		1,057,407		US$		3.9		2021 to 2023
Foreign loan (c.1) (*)		786,420		608,685		US$ + LIBOR		0.9		2022 to 2023
Financial institutions (e)		754,398		604,741		US$ + LIBOR		1.9		2020 to 2023
Foreign loan (c.2)		314,498		243,837		US$ + LIBOR		2.0		2020
Financial institutions (e)		170,166		132,417		US$		2.8		2020 to 2022
Financial institutions (e)		40,498		41,164		MX$ (2)		8.8		2020
BNDES (d)		—		208		US$				2020

Total foreign currency		8,994,371		6,902,121

Ultrapar Participações S.A. and Subsidiaries

Notes to the Parent and Consolidated Interim Financial Information

(In thousands of Brazilian Reais, unless otherwise stated)


Description	03/31/2020		12/31/2019		Index/ Currency		Weighted average financial charges 09/30/2019 – % p.a.		Maturity
Brazilian Reais – denominated loans:
Debentures – CRA (g.2, g.4 and g.6)		2,058,958		2,036,647		DI		95.8		2022 to 2023
Debentures – Ipiranga (g.1 and g.3)		1,888,971		1,868,612		DI		105.0		2020 to 2022
Debentures – 6^th issuance (g.5)		1,727,806		1,752,080		DI		105.3		2023
Banco do Brasil floating rate (f)		611,166		611,276		DI		110.9		2020 to 2022
Debentures – CRA (g.2, g.4 and g.6) (*)		964,527		941,614		IPCA		4.6		2024 to 2025
Bank Credit Bill		230,206		—		R$ + DI		3.5		2021
Debentures – Tequimar (g.7)		89,737		89,278		R$		6.5		2024
BNDES (d)		49,342		62,578		TJLP (3)		2.2		2020 to 2023
FINEP		38,455		41,345		TJLP (3)		1.6		2020 to 2023
BNDES (d)		24,595		30,392		SELIC (5)		2.4		2020 to 2023
FINEP		11,217		12,820		R$		4.0		2020 to 2021
Banco do Nordeste do Brasil		8,605		10,039		R$ (4)		8.5		2020 to 2021
BNDES (d)		2,525		3,913		R$		8.4		2020 to 2022
FINAME		10		22		TJLP (3)		5.7		2020 to 2022

Total Brazilian Reais		7,706,120		7,460,616

Total foreign currency and Brazilian Reais		16,700,491		14,362,737

Currency and interest rate hedging instruments (**)		261,555		29,985

Total		16,962,046		14,392,722

Current		1,806,320		1,117,441
Non-current		15,155,726		13,275,281

(*)	These transactions were designated for hedge accounting (see Note 33.h).

(**)	Accumulated losses (see Note 33.i).

(1)	LIBOR = London Interbank Offered Rate.

(2)	MX$ = Mexican Peso; TIIE = the Mexican interbank balance interest rate.

(3)	TJLP (Long-term Interest Rate) = set by the National Monetary Council, TJLP is the basic financing cost of Banco Nacional de Desenvolvimento Econômico e Social (“BNDES”), the Brazilian Development Bank. On March 31, 2020, TJLP was fixed at 5.09% p.a.

(4)

Contract linked to the rate of FNE (Northeast Constitutional Financing Fund) fund whose purpose is to promote the development of the industrial sector, managed by Banco do Nordeste do Brasil. On March 31, 2020, the FNE interest rate was 10% p.a. FNE grants a discount of 15% on the interest rate for timely payments.

(5)	SELIC = basic interest rate set by the Brazilian Central Bank.

Ultrapar Participações S.A. and Subsidiaries

Notes to the Parent and Consolidated Interim Financial Information

(In thousands of Brazilian Reais, unless otherwise stated)

The changes in loans and debentures are shown below:


Balance as of December 31, 2019	14,362,737
New loans and debentures with cash effect	240,674
Interest accrued	178,919
Principal payment	(89,535	)
Interest payment	(90,361	)
Monetary and exchange rate variation	2,031,943
Change in fair value	66,114

Balance as of March 31, 2020	16,700,491

The long-term consolidated debt had the following principal maturity schedule:


	03/31/2020		12/31/2019

From 1 to 2 years		1,622,875		1,424,775
From 2 to 3 years		5,073,241		3,115,495
From 3 to 4 years		1,988,537		3,451,988
From 4 to 5 years		717,730		765,263
More than 5 years		5,753,343		4,517,760

		15,155,726		13,275,281

The transaction costs and issuance premiums associated with debt issuance were added to their financial liabilities, as shown in Note 16.h.

The Company’s management entered into hedging instruments against foreign exchange and interest rate variations for a portion of its debt obligations (see Note 33.h).

Ultrapar Participações S.A. and Subsidiaries

Notes to the Parent and Consolidated Interim Financial Information

(In thousands of Brazilian Reais, unless otherwise stated)

b.	*Notes in the Foreign Market*

On October 6, 2016, the subsidiary Ultrapar International S.A. (“Ultrapar International”) issued US$ 750,000 (equivalent to R$ 3,899,025.0 as of March 31, 2020) in notes in the foreign market, maturing in October 2026, with interest rate of 5.25% p. a., paid semiannually. The issue price was 98.097% of the face value of the note. The notes were guaranteed by the Company and its subsidiary IPP. The Company has designated hedge relationships for this transaction (see Note 33.h.3).

On June 6, 2019, the subsidiary Ultrapar International issued US$ 500,000 (equivalent to R$ 2,599,350 as of March 31, 2020) in notes in the foreign market, maturing in June 2029, with interest rate of 5.25% p. a., paid semiannually. The issue price was 100% of the face value of the note. The notes were guaranteed by the Company and its subsidiary IPP. The Company has designated hedge relationships for part of this transaction (see Note 33.h.3).

On June 21, 2019, the subsidiary Ultrapar International repurchased US$ 200,000 (equivalent to R$ 1,039,740 as of March 31, 2020) in notes in the foreign market maturing in October 2026.

As a result of the issuance of the notes in the foreign market, the Company and its subsidiaries are required to perform certain obligations, including:

•

Restriction on sale of all or substantially all assets of the Company and subsidiaries Ultrapar International and IPP.

•

Restriction on encumbrance of assets exceeding US$ 150,000 (equivalent to R$ 779,805 as of March 31, 2020) or 15% of the amount of the consolidated tangible assets.

The Company and its subsidiaries are in compliance with the levels of covenants required by this debt. The restrictions imposed on the Company and its subsidiaries are customary in transactions of this nature and have not limited their ability to conduct their business to date.

c.	*Foreign Loans*

c.1. The subsidiary IPP has foreign loans in the amount of US$ 395,000 (equivalent to R$ 2,053,487 as of March 31, 2020). IPP also contracted hedging instruments with floating interest rate in U.S. dollar and exchange rate variation, changing the foreign loans charges, on average, to 104.4% of DI. IPP designated these hedging instruments as a fair value hedge (see Note 33.h.1); therefore, loans and hedging instruments are both measured at fair value from inception, with changes in fair value recognized through profit or loss. The foreign loans are secured by the Company.

The foreign loans have the maturity distributed as follows:


Maturity	US$ (thousands)		R$ (thousands)		Cost in % of DI
Charges⁽¹⁾		26,535		137,945		—
Jul/2021		60,000		311,922		101.8
Jun/2022		100,000		519,870		105.0
Jul/2023		50,000		259,935		104.8
Sep/2023		60,000		311,922		105.0
Sep/2023		65,000		337,916		104.7
Nov/2023		60,000		311,922		104.5

Total / average cost		421,535		2,191,432		104.4

⁽¹⁾	Includes interest, transaction costs and mark to market.

Ultrapar Participações S.A. and Subsidiaries

Notes to the Parent and Consolidated Interim Financial Information

(In thousands of Brazilian Reais, unless otherwise stated)

During these contracts, the Company shall maintain the following financial ratios, calculated based on its audited consolidated Financial statements:

•

Maintenance of a financial ratio, determined by the ratio between consolidated net debt and consolidated Earnings before Interest, Taxes, Depreciation, and Amortization (EBITDA), at less than or equal to 3.5.

•

Maintenance of a financial ratio determined by the ratio between consolidated EBITDA and consolidated net financial expenses, higher than or equal to 1.5.

The Company complies with the levels of covenants required by these loans. The restrictions imposed on the Company and its subsidiaries are usual for this type of transaction and have not limited their ability to conduct their business to date.

c.2 The subsidiary Global Petroleum Products Trading Corporation has a foreign loan in the amount of US$ 60,000 (equivalent to R$ 311,922 as of March 31, 2020) with maturity on June 22, 2020 and interest of LIBOR + 2.0% p.a., paid quarterly. The Company, through the subsidiary Cia. Ultragaz, contracted hedging instruments subject to floating interest rates in dollar and exchange rate variation, changing the foreign loan charge to 105.9% of DI. The foreign loan is guaranteed by the Company and its subsidiary Oxiteno S.A.

d.	*BNDES*

The subsidiaries have financing from BNDES for some of their investments and for working capital.

During the term of these agreements, the Company must maintain the following capitalization and current liquidity levels, as determined in the annual consolidated audited balance sheet:

•

Capitalization level: equity / total assets equal to or above 0.3; and

•

Current liquidity level: current assets / current liabilities equal to or above 1.3.

e.	*Financial Institutions*

The subsidiaries Oxiteno Mexico S.A. de C.V., Oxiteno USA LLC (“Oxiteno USA”) and Oxiteno Uruguay have loans for investments and working capital.

The subsidiary Oxiteno USA has loans with bearing interest of LIBOR + 2.0% and maturity as shown below:


Maturity	US$ (thousands)		R$ (thousands)
Charges ⁽¹⁾		117		629
Aug/2020		10,000		53,841
Sep/2020		20,000		107,681
Feb/2021		10,000		53,841
Mar/2022		30,000		161,522
Oct/2022		40,000		215,362
Mar/2023		30,000		161,522

Total		140,117		754,398

⁽¹⁾	Includes interest and transaction costs.

Ultrapar Participações S.A. and Subsidiaries

Notes to the Parent and Consolidated Interim Financial Information

(In thousands of Brazilian Reais, unless otherwise stated)

The proceeds of this loan were used in the working capital and to fund the construction of a new alkoxylation plant in the state of Texas.

During these contracts, the Company shall maintain the following financial ratios, calculated based on its audited consolidated interim financial information:

•

Maintenance of a financial ratio determined by the ratio between consolidated EBITDA and consolidated net financial expenses, higher than or equal to 1.5.

f.	*Banco do Brasil*

The subsidiary IPP has floating interest rate loans with Banco do Brasil to marketing, processing, or manufacturing of agricultural goods (ethanol). The subsidiary IPP paid off in advance the amount of R$ 400 million of such loans in December 2019.

These loans mature, as follows (includes accrued interest through March 31, 2020):


Maturity	03/31/2020
May/2020		205,075
May/2021		202,955
May/2022		203,136

Total		611,166

g.	*Debentures*

g.1.

In May 2016, the subsidiary IPP made its fourth issuance of public debentures, in one single series of 500 simple, nominative, registered debentures, nonconvertible into shares and unsecured, which main characteristics are as follows:


Face value unit:		R$ 1,000,000.00
Final maturity:		May 25, 2021
Payment of the face value:		Annual as from May 2019
Interest:		105.0% of DI
Payment of interest:		Semiannually
Reprice:		Not applicable

Ultrapar Participações S.A. and Subsidiaries

Notes to the Parent and Consolidated Interim Financial Information

(In thousands of Brazilian Reais, unless otherwise stated)

g.2.

In April 2017, the subsidiary IPP carried out its fifth issuance of debentures, in two series, being one of 660,139 and another of 352,361, simple, nonconvertible into shares, nominative, book-entry and unsecured debentures. The debentures have been subscribed by Eco Consult – Consultoria de Operações Financeiras Agropecuárias Ltda. The proceeds from this issuance were used exclusively for the purchase of ethanol by subsidiary IPP.

The debentures were later assigned and transferred to Eco Securitizadora de Direitos Creditórios do Agronegócio S.A. that acquired these agribusiness credit rights with the purpose to bind the issuance of Certificates of Agribusiness Receivables (CRA). The debentures have an additional guarantee from Ultrapar and the main characteristics of the debentures are as follows:


Amount:		660,139
Face value unit:		R$ 1,000.00
Final maturity:		April 18, 2022
Payment of the face value:		Lump sum at final maturity
Interest:		95% of DI
Payment of interest:		Semiannually
Reprice:		Not applicable

Amount:		352,361
Face value unit:		R$ 1,000.00
Final maturity:		April 15, 2024
Payment of the face value:		Lump sum at final maturity
Interest:		IPCA + 4.68%
Payment of interest:		Annually
Reprice:		Not applicable

The subsidiary IPP contracted hedging instruments subjected to IPCA variation, changing the debentures charges linked to IPCA to 93.9% of DI. IPP designated these hedging instruments as fair value hedges; therefore, debentures and hedging instruments are both measured at fair value from inception, with changes in fair value recognized through profit or loss.

g.3.

In July 2017, the subsidiary IPP made its sixth issuance of public debentures, in one single series of 1,500,000 simple, nonconvertible into shares and unsecured debentures, which main characteristics are as follows:


Face value unit:		R$ 1,000.00
Final maturity:		July 28, 2022
Payment of the face value:		Annual as from July 2021
Interest:		105.0% of DI
Payment of interest:		Annually
Reprice:		Not applicable

Ultrapar Participações S.A. and Subsidiaries

Notes to the Parent and Consolidated Interim Financial Information

(In thousands of Brazilian Reais, unless otherwise stated)

g.4.

In October 2017, the subsidiary IPP carried out its seventh issuance of debentures in the amount of R$ 944,077, in two series, being on of 730,384 and another of 213,693, simple, nonconvertible into shares, nominative, book-entry and unsecured debentures. The debentures have been subscribed by Vert Companhia Securitizadora. The proceeds from this issuance were used exclusively for the purchase of ethanol by subsidiary IPP.

The debentures were later assigned and transferred to Vert Créditos Ltda., that acquired these agribusiness credit rights with the purpose to bind the issuance of Certificates of Agribusiness Receivables (CRA). The financial settlement occurred on November 1, 2017. The debentures have an additional guarantee from Ultrapar and the main characteristics of the debentures are as follows:


Amount:		730,384
Face value unit:		R$ 1,000.00
Final maturity:		October 24, 2022
Payment of the face value:		Lump sum at final maturity
Interest:		95% of DI
Payment of interest:		Semiannually
Reprice:		Not applicable

Amount:		213,693
Face value unit:		R$ 1,000.00
Final maturity:		October 24, 2024
Payment of the face value:		Lump sum at final maturity
Interest:		IPCA + 4.34%
Payment of interest:		Annually
Reprice:		Not applicable

The subsidiary IPP contracted hedging instruments subjected to IPCA variation, changing the debentures charges linked to IPCA to 97.3% of DI. IPP designated these hedging instruments as fair value hedges; therefore, debentures and hedging instruments are both measured at fair value from inception, with changes in fair value recognized through profit or loss.

g.5.

In March 2018, the Company made its sixth issuance of public debentures, in a single series of 1,725,000 simple, nonconvertible into shares and unsecured debentures, which main characteristics are as follows:


Face value unit:		R$ 1,000.00
Final maturity:		March 5, 2023
Payment of the face value:		Lump sum at final maturity
Interest:		105.25% of DI
Payment of interest:		Semiannually
Reprice:		Not applicable

Ultrapar Participações S.A. and Subsidiaries

Notes to the Parent and Consolidated Interim Financial Information

(In thousands of Brazilian Reais, unless otherwise stated)

g.6.

In December 2018, the subsidiary IPP carried out its eighth issuance of debentures in the amount of R$ 900,000, in two series, being one of 660,000 and another of 240,000, simple, nonconvertible into shares, nominative, book-entry and unsecured debentures. The debentures have been subscribed by Vert Companhia Securitizadora. The proceeds from this issuance were used exclusively for the purchase of ethanol by subsidiary IPP. The debentures were subscribed with the purpose to bind the issuance of CRA. The financial settlement occurred on December 21, 2018. The debentures have an additional guarantee from Ultrapar and the main characteristics of the debentures are as follows:


Amount:		660,000
Face value unit:		R$ 1,000.00
Final maturity:		December 18, 2023
Payment of the face value:		Lump sum at final maturity
Interest:		97.5% of DI
Payment of interest:		Semiannually
Reprice:		Not applicable

Amount:		240,000
Face value unit:		R$ 1,000.00
Final maturity:		December 15, 2025
Payment of the face value:		Lump sum at final maturity
Interest:		IPCA + 4.61%
Payment of interest:		Annually
Reprice:		Not applicable

The subsidiary IPP contracted hedging instruments subjected to IPCA variation, changing the debentures charges linked to IPCA to 97.1% of DI. IPP designated these hedging instruments as fair value hedges; therefore, debentures and hedging instruments are both measured at fair value from inception, with changes in fair value recognized through profit or loss.

g.7.

In November 2019, the subsidiary Tequimar made its first issuance of debentures, in a single series of 90,000 simple, nonconvertible into shares and unsecured debentures, which main characteristics are as follows:


Face value unit:		R$ 1,000.00
Final maturity:		November 19, 2024
Payment of the face value:		Lump sum at final maturity
Interest:		6.47%
Payment of interest:		Semiannually
Reprice:		Not applicable

The subsidiary Tequimar contracted hedging instruments subjected interest rate variation, changing the debentures fixed for 99.94% of the DI. Tequimar designated these hedging instruments as fair value hedges; therefore, debentures and hedging instruments are both measured at fair value from inception, with changes in fair value recognized in profit or loss.

Ultrapar Participações S.A. and Subsidiaries

Notes to the Parent and Consolidated Interim Financial Information

(In thousands of Brazilian Reais, unless otherwise stated)

The debentures have maturity dates distributed as shown below (includes accrued interest through March 31, 2020).


Maturity	03/31/2020
Charges ⁽¹⁾		225,072
May/2020		166,650
May/2021		166,700
Jul/2021		750,000
Apr/2022		660,139
Jul/2022		750,000
Oct/2022		730,384
Mar/2023		1,725,000
Dec/2023		660,000
Apr/2024		352,361
Oct/2024		213,693
Nov/2024		90,000
Dec/2025		240,000

Total		6,729,999

⁽¹⁾	Includes interest, transaction cost and mark to market.

h.	*Transaction Costs*

Transaction costs incurred in issuing debt were deducted from the value of the related financial instruments and are recognized as an expense according to the effective interest rate method, as follows:


	Effective rate of transaction costs (% p.a.)		Balance on 12/31/2019		Incurred cost		Amortization			Balance on 03/31/2020
Debentures (g)		0.2		41,406		—		(3,322	)		38,084
Notes in the foreign market (b)		0.1		28,114		—		(852	)		27,262
Banco do Brasil (f)		0.2		770		—		(135	)		635
Foreign loans (c)		0.0		94		—		(36	)		58
Other		0.2		1,382		—		81			1,463

Total				71,766		—		(4,264	)		67,502

The amount to be appropriated to profit or loss in the future is as follows:


	Up to 1 year		1 to 2 years		2 to 3 years		3 to 4 years		4 to 5 years		More than 5 years		Total
Debentures (g)		12,901		12,208		7,749		4,389		678		159		38,084
Notes in the foreign market (b)		3,419		3,422		3,424		3,435		3,428		10,134		27,262
Banco do Brasil (f)		393		212		30		—		—		—		635
Foreign loans (c)		58		—		—		—		—		—		58
Other		611		496		355		1		—		—		1,463

Total		17,382		16,338		11,558		7,825		4,106		10,293		67,502

Ultrapar Participações S.A. and Subsidiaries

Notes to the Parent and Consolidated Interim Financial Information

(In thousands of Brazilian Reais, unless otherwise stated)

i.	*Guarantees*

The financings are guaranteed by collateral in the amount of R$ 74,170 as of March 31, 2020 (R$ 73,536 as of December 31, 2019) and by guarantees and promissory notes in the amount of R$ 13,955,521 as of March 31, 2020 (R$ 11,833,294 as of December 31, 2019).

The Company and its subsidiaries offer collateral in the form of letters of credit for commercial and legal proceedings in the amount of R$ 209,583 as of March 31, 2020 (R$ 293,509 as of December 31, 2019).

Some subsidiaries of Company issue collateral to financial institutions in connection with the amounts owed by some of their customers to such institutions (vendor financing) as follows:

IPP

Oxiteno

03/31/2020

12/31/2019

03/31/2020

12/31/2019

Maximum amount of future payments related to these collaterals

96,448

81,344

2,937

2,753

Maturities of up to

55 months

60 months

3 months

4 months

Fair value of collaterals

1,424

1,237

If a subsidiary is required to make any payment under these collaterals, this subsidiary may recover the amount paid directly from its customers through commercial collection. Until March 31, 2020, the subsidiaries did not have losses in connection with these collaterals. The fair value of collaterals is recognized in current liabilities as “other payables”, which is recognized in the statement of profit or loss as customers settle their obligations with the financial institutions.

17.

Trade Payables (Consolidated)


	03/31/2020		12/31/2019
Domestic suppliers		1,187,989		1,897,256
Domestic suppliers – reverse factoring (i)		747,759		455,950
Foreign suppliers		353,769		261,222
Foreign suppliers – reverse factoring (i)		115,830		85,643

		2,405,347		2,700,071

(i) Suppliers – reverse factoring: some subsidiaries of the Company entered into an agreements with a financial institutions, which consists of the anticipation of receipt of the trade payables by the supplier, in which the financial institutions prepay a certain amount from the supplier, and receives on the maturity date the amount payable by the subsidiaries of the Company. The decision to join this transaction is solely and exclusively of the supplier. The agreement does not substantially change the main characteristics of the commercial conditions previously established between the subsidiaries of the Company and the suppliers. These transactions are presented in operating activities in the statements of cash flow.

Some Company’s subsidiaries acquire oil-based fuels and LPG from Petrobras and its subsidiaries and ethylene from Braskem S.A. These suppliers control almost all the markets for these products in Brazil.

Ultrapar Participações S.A. and Subsidiaries

Notes to the Parent and Consolidated Interim Financial Information

(In thousands of Brazilian Reais, unless otherwise stated)

18.

Salaries and Related Charges (Consolidated)


	03/31/2020		12/31/2019
Provisions on salaries		188,690		184,716
Profit sharing, bonus and premium		68,183		133,533
Social charges		69,623		70,228
Others		13,556		17,159

		340,052		405,636

19.

Taxes Payable (Consolidated)


	03/31/2020		12/31/2019
ICMS		155,173		149,547
PIS and COFINS		13,079		40,676
ISS		28,506		26,986
Value-Added Tax (IVA) of foreign subsidiaries		17,151		25,619
Others		31,256		27,094

		245,165		269,922

20.

Employee Benefits and Private Pension Plan (Consolidated)

a.	*ULTRAPREV- Associaçăo de Previdência Complementar*

In February 2001, the Company’s Board of Directors approved the adoption of a defined contribution pension plan to be sponsored by the Company and each of its subsidiaries. Participating employees have been contributing to this plan, managed by Ultraprev—Associação de Previdência Complementar (“Ultraprev”), since August 2001. Under the terms of the plan, every year each participating employee chooses his or her basic contribution to the plan. Each sponsoring company provides a matching contribution in an amount equivalent to each basic contribution, up to a limit of 11% of the employee’s reference salary, according to the rules of the plan. As participating employees retire, they may choose to receive either (i) a monthly sum ranging between 0.3% and 1.0% of their respective accumulated fund in Ultraprev or (ii) a fixed monthly amount, which will exhaust their respective accumulated fund over a period of 5 to 35 years. The sponsoring company does not take responsibility for guaranteeing amounts or the duration of the benefits received by the retired employee. For the three-month period ended March 31, 2020, the subsidiaries contributed R$ 5,476 (R$ 5,471 for the three-month period ended March 31, 2019) to Ultraprev, which is recognized as expense in the income statement. The total number of participating employees as of March 31, 2020 was 7,774 active participants and 335 retired participants. In addition, Ultraprev had 25 former employees receiving benefits under the rules of a previous plan whose reserves are fully constituted.

Ultrapar Participações S.A. and Subsidiaries

Notes to the Parent and Consolidated Interim Financial Information

(In thousands of Brazilian Reais, unless otherwise stated)

b.	*Post-employment Benefits*

The subsidiaries recognized a provision for post-employment benefits mainly related to seniority bonus, payment of Government Severance Indemnity Fund (“FGTS”), and health, dental care, and life insurance plan for eligible retirees.

The amounts related to such benefits were determined based on a valuation conducted by an independent actuary and reviewed by management as of March 31, 2020.


	03/31/2020		12/31/2019
Health and dental care plan ⁽¹⁾		155,021		154,142
Indemnification of FGTS		67,498		66,309
Seniority bonus		34,873		34,485
Life insurance ⁽¹⁾		18,262		17,931

Total		275,654		272,867

Current		29,849		28,951
Non-current		245,805		243,916

(1)	Only IPP and Iconic Lubrificantes S.A. (“Iconic”).

21.

Provision for Asset Retirement Obligation – Fuel Tanks (Consolidated)

The provision corresponds to the legal obligation to remove the subsidiary IPP’s underground fuel tanks located at Ipiranga-branded service stations after a certain use period (see Note 2.n).

Changes in the provision for asset retirement obligation are as follows:


Balance as of December 31, 2019	51,242
Additions (new tanks)	37
Expense with tanks removed	(196	)
Accretion expense	826

Balance as of March 31, 2020	51,909

Current	4,427
Non-current	47,482

Ultrapar Participações S.A. and Subsidiaries

Notes to the Parent and Consolidated Interim Financial Information

(In thousands of Brazilian Reais, unless otherwise stated)

22.

Provisions and Contingencies (Consolidated)

a.	*Provisions for tax, civil, and labor risks*

The Company and its subsidiaries are parties in tax, civil, environmental, regulatory, and labor disputes at the administrative and judiciary levels, which, when applicable, are backed by escrow deposits. Provisions for losses are estimated and updated by management based on the opinion of the Company’s legal department and its external legal advisors.

The table below demonstrates the breakdown of provisions by nature and its movement:


Provisions	Balance on 12/31/2019		Additions		Write-offs			Payments			Interest		Balance on 03/31/2020
IRPJ and CSLL (a.1.1)		541,281		—		—			—			2,329		543,610
PIS and COFINS		10,155		—		—			—			38		10,193
ICMS		96,472		4,067		(113	)		(4,067	)		39		96,398
Civil, environmental and regulatory claims (a.2.1)		85,855		1,759		(55	)		(385	)		20		87,194
Labor litigation (a.3.1)		98,010		3,557		(895	)		(770	)		1,095		100,997
Others		92,822		—		—			—			148		92,970

Total		924,595		9,383		(1,063	)		(5,222	)		3,669		931,362

Current		40,455												44,175
Non-current		884,140												887,187

Some of the provisions above involve, in whole or in part, escrow deposits.

Balances of escrow deposits are as follows:


	03/31/2020		12/31/2019
Tax matters		765,557		753,810
Labor litigation		75,548		71,605
Civil and other		116,072		96,028

Total – non-current assets		957,177		921,443

a.1 Provisions for Tax Matters and Social Security

a.1.1 On October 7, 2005, the subsidiaries Cia. Ultragaz and Bahiana filed for and obtained a preliminary injunction to recognize and offset PIS and COFINS credits on LPG purchases, against other taxes levied by the RFB, notably IRPJ and CSLL. The decision was confirmed by a trial court on May 16, 2008. Under the preliminary injunction, the subsidiaries made escrow deposits for these debits which amounted to R$ 518,539 as of March 31, 2020 (R$ 515,825 as of December 31, 2019). On July 18, 2014, a second instance unfavorable decision was published, and the subsidiaries suspended the escrow deposits, and started to pay income taxes from that date. To revert the court decision, the subsidiaries presented a writ of prevention which was dismissed on December 30, 2014, and the subsidiaries appealed this decision on February 3, 2015. Appeals were also presented to the respective higher courts Superior Court of Justice (“STJ”) and Federal Supreme Court (“STF”) whose final trial are pending.

Ultrapar Participações S.A. and Subsidiaries

Notes to the Parent and Consolidated Interim Financial Information

(In thousands of Brazilian Reais, unless otherwise stated)

a.2 Provisions for Civil, Environmental and Regulatory Claims

a.2.1 The Company and its subsidiaries maintain provisions for lawsuits and administrative proceedings, mainly derived from contracts entered into with customers and former services providers, as well as proceedings related to environmental and regulatory issues in the amount of R$ 87,194 as of March 31, 2020 (R$ 85,855 as of December 31, 2019).

a.3 Provisions for Labor Matters

a.3.1 The Company and its subsidiaries maintain provisions of R$ 100,997 as of March 31, 2020 (R$ 98,010 as of December 31, 2019) for labor litigation filed by former employees and by employees of our service providers, mainly, contesting the non-payment of labor rights.

b. Contingent Liabilities (Possible)

The Company and its subsidiaries are parties in tax, civil, environmental, regulatory, and labor claims whose loss prognosis is assessed as possible (proceedings whose chance of loss is more than 25% and less or equal than 50%) by the Company and its subsidiaries’ legal departments, based on the opinion of its external legal advisors and, based on this assessment, these claims were not recognized in the financial statements. The estimated amount of this contingency is R$ 3,136,397 as of March 31, 2020 (R$ 2,840,086 as of December 31, 2019).

b.1 Contingent Liabilities for Tax Matters and Social Security

The Company and its subsidiaries have contingent liabilities for tax matters and social security in the amount of R$ 2,263,776 as of March 31, 2020 (R$ 2,028,159 as of December 31, 2019), mainly represented by:

b.1.1 The subsidiary IPP and its subsidiaries have assessments invalidating the offset of excise tax (“IPI”) credits in connection with the purchase of raw materials used in the manufacturing of products which sales are not subject to IPI under the protection of tax immunity. The amount of this contingency is R$ 174,680 as of March 31, 2020 (R$ 173,738 as of December 31, 2019).

b.1.2 The subsidiary IPP and its subsidiaries have legal proceedings related to ICMS. The total amount involved in these proceedings, was R$ 926,744 as of March 31, 2020 (R$ 836,822 as of December 31, 2019), Such proceedings arise mostly of the disregard of ICMS credits amounting to R$ 330,196 as of March 31, 2020 (R$ 319,849 as of December 31, 2019), of which R$ 127,935 (R$ 126,772 as of December 31, 2019) refer to proportional reversal requirement of ICMS credits related to the acquisition of hydrated alcohol; of alleged non-payment in the amount of R$ 97,572 as of March 31, 2020 (R$ 92,567 as of December 31, 2019); of conditioned fruition of fiscal incentive in the amount of R$ 118,513 as of March 31, 2020 (R$ 117,753 as of December 31, 2019); and inventory differences in the amount of R$ 233,032 as of March 31, 2020 (R$ 172,736 as of December 31, 2019) related to the leftovers or faults due to temperature changes or product handling.

b.1.3 The Company and its subsidiaries are parties to administrative and judicial suits involving Income Tax, Social Security Contribution, PIS and COFINS, substantially about denials of offset claims and credits disallowance which total amount is R$ 749,766 as of March 31, 2020 (R$ 699,360 as of December 31, 2019), mainly represented by:

b.1.3.1 The subsidiary IPP received a tax assessment related to the IRPJ and CSLL resulting from the supposedly undue amortization of the goodwill paid on acquisition of a subsidiary, in the amount of R$ 209,410 as of March 31, 2020 (R$ 208,449 as of December 31, 2019), which includes the amount of the income taxes, interest and penalty. Management assessed the likelihood of the tax assessment, supported by the opinion of its legal advisors, as “possible”, and therefore did not recognize a provision for this contingent liability.

Ultrapar Participações S.A. and Subsidiaries

Notes to the Parent and Consolidated Interim Financial Information

(In thousands of Brazilian Reais, unless otherwise stated)

b.2 Contingent Liabilities for Civil, Environmental and Regulatory Claims

The Company and its subsidiaries have contingent liabilities for civil, environmental and regulatory claims in the amount of R$ 583,618, totaling 2,944 lawsuits as of March 31, 2020 (R$ 549,664, totaling 3,109 lawsuits as of December 31, 2019), mainly represented by:

b.2.1 The subsidiary Cia. Ultragaz is party to an administrative proceeding before CADE based on alleged anti-competitive practices in the State of Minas Gerais in 2001. The CADE entered a decision against Cia. Ultragaz and imposed a penalty of R$ 33,712 as of March 31, 2020 (R$ 33,603 as of December 31, 2019). The imposition of such administrative decision was suspended by a court order and its merit is being judicially reviewed.

b.2.2 In 2016, the subsidiary Cia. Ultragaz became party to two administrative proceedings filed by CADE, related to allegations of anti-competitive practices: i) one of the proceedings relate to practices in the State of Paraíba and other Northeast States, in which the subsidiary Bahiana is part along with Cia. Ultragaz. On this proceeding, Cia. Ultragaz and Bahiana signed a Cessation Commitment Agreement (“TCC”) with CADE, approved on November 22, 2017, in the amount of R$ 95,987, paid in 8 (eight) equal installments updated semiannually by SELIC, with maturity of the first one in 180 (one hundred and eighty) days from the date of publication of the approval. Three employees and one former employee signed TCC in the total amount of R$ 1,100. With the TCC, the administrative proceeding will be suspended in relation to the Cia. Ultragaz and Bahiana until final decision; ii) the second proceeding relate to practices in the Federal District and around, in which only Cia. Ultragaz is part. On this proceeding, Cia. Ultragaz signed a TCC with CADE, approved on September 6, 2017, in the amount of R$ 2,154, paid in a single installment in March 8, 2018. Two former employees signed TCC in the amount of R$ 50 each. With the TCC, the administrative proceeding will be suspended in relation to the Cia. Ultragaz until final decision.

b.2.3 The subsidiary IPP became party to two administrative proceedings filed by CADE, related to allegations of anti-competitive practices in the city of Joinville, State of Santa Catarina and around the city of Belo Horizonte, State of Minas Gerais, and for the latter, an administrative award was imposed for allegedly influencing uniform commercial conduct among fuel resellers, in the amount of R$ 40,693. The subsidiary IPP will continue to exercise its defense by appealing in all administrative and judicial instances. Supported by the opinion of external legal counsel that classified the probability of loss as “remote”, Management did not recognize a provision for this contingency as of March 31, 2020.

b.2.4 On November 29, 2016, a technical opinion was issued by the Operational Support Center for Execution (Centro de Apoio Operacional à Execução—CAEX), a technical body linked to the São Paulo State Public Prosecutor (“MPE”), presenting a proposal of compensation for the alleged environmental damages caused by the fire on April 2^nd, 2015 at the Santos Terminal of the subsidiary Tequimar. This technical opinion is non-binding, with no condemnatory or sanctioning nature, and will still be evaluated by the authorities and parties. The subsidiary disagrees with the methodology and the assumptions adopted in the proposal and is negotiating an agreement with the MPE and the Brazilian Federal Public Prosecutor (“MPF”), since the beginning of the investigation and currently there is no civil lawsuit filed on the matter. The negotiations relate to in natura repair of the any damages. Thus, on May 15, 2019, the subsidiary Tequimar signed a Partial Conduct Adjustment Commitment Agreement (“TAC”) in the amount of R$ 67,539 with the MPE and MPF to compensate for diffuse and collective damages of any kind arising from the fish mortality and the damage caused to the ichthyofauna. The negotiations on compensation for other alleged damages are still ongoing and once concluded, the payments related to the project costs may affect the future Company’s Financial statements. In the criminal sphere, the MPF denounced the subsidiary Tequimar, which was summoned and replied to the complaint on June 19, 2018. On September 12, 2019, at a hearing in the federal court of Santos, the MPF and Tequimar agreed, and the judicial authority approved, the conditional suspension of the criminal proceedings for a period of 2 years, when Tequimar shall then prove compliance with the execution of the Partial TAC signed, with the obligation of a complementary allocation of R$ 13,000 to the Fisheries Management Project, to obtain the definitive filing of the process. In addition, as of March 31, 2020, there are contingent liabilities not recognized related to lawsuits in the amount of R$ 7,734 (R$ 11,403 as of December 31, 2019). On March 31, 2020 there were not extrajudicial lawsuits.

Ultrapar Participações S.A. and Subsidiaries

Notes to the Parent and Consolidated Interim Financial Information

(In thousands of Brazilian Reais, unless otherwise stated)

b.3 Contingent Liabilities for Labor Matters

The Company and its subsidiaries have contingent liabilities for labor matters in the amount of R$ 289,002, totaling 1,633 lawsuits as of March 31, 2020 (R$ 262,263, totaling 1,649 lawsuits as of December 31, 2019), mainly represented by:

b.3.1 In 1990, the Petrochemical Industry Labor Union (Sindiquímica), of which the employees of Oxiteno S.A and Empresa Carioca de Produtos Químicos S.A. (“EMCA”), companies located in the Camaçari Petrochemical Complex, are members, filed collective lawsuits against the subsidiaries demanding the compliance with the fourth section of the collective labor agreement, which provided for a salary adjustment in lieu of the salary policies practiced. In the same year, a collective labor dispute was also filed by the Union of Employers (SINPEQ) against Sindiquímica, requiring the recognition of the loss of effectiveness of such fourth section. The decisions rendered on the collective claims which were favorable to the subsidiaries Oxiteno S.A. and EMCA are final and unappealable. The collective labor from Sindiquímica against SINPEQ became final in STF in October 2019 and remained unfavorable to SINPEQ. In 2010, some companies in the Camaçari Petrochemical Complex signed an agreement with Sindiquímica. In October 2015, Sindiquímica filed enforcement lawsuits against Oxiteno S.A and, in 2017, EMCA, as these companies did not sign the 2010 agreement with Sindiquímica. A favorable decision was issued for Oxiteno S.A., awaiting judgment of the Sindiquimica appeal and Oxiteno S.A adhesive appeal. At the Regional Labor Court of the 5^th Region. For EMCA, the decision of 1^st instance favorable to the company was reversed at the Regional Labor Court of the 5^th Region, it’s pending a final judgment in this instance. In addition to collective actions, individual claims containing the same object have been filed.

c. Lubricants operation between IPP and Chevron

In the process of transaction of the lubricants’ operation in Brazil between Chevron and subsidiary IPP (see Note 3.c of Interim Financial Information of 2018 filed on CVM February 20, 2019), it was agreed that each shareholder is responsible for any claims arising out of acts, facts or omissions prior to the transaction. The liability provisions of the Chevron shareholder in the amount of R$ 5,504 (R$ 5,423 as of December 31, 2019) are reflected in the consolidation of these interim financial information. Additionally, in connection with the business combination, a provision in the amount of R$ 198,900 was recognized on December 1, 2017 due contingent liabilities, amounted to R$ 188,073 as of March 31, 2020 (R$ 188,073 as of December 31, 2019. The amounts of provisions of Chevron’s liability recognized in the business combination will be reimbursed to subsidiary Iconic in the event of losses and an indemnity asset was hereby constituted in the same amount, without the need to establish a provision for uncollectible amounts.

d. Contingent Assets

d.1 Exclusion of ICMS from the calculation basis of PIS and COFINS

In March 15, 2017, STF decided that ICMS is not included in the PIS and COFINS basis. All subsidiaries have actions aimed at obtaining this right, as long as applicable. For the subsidiaries Oxiteno S.A., Extrafarma and Tequimar, have final and unappealable decision, and the respective subsidies to prove the amounts to be refunded were duly confirmed by management and recorded in results, up to the present year of 2020, the amount of R$ 487,203 (up to R$ 338,110 in 2019). As a result of injunctions obtained, some subsidiaries have already excluded ICMS from the PIS and COFINS calculation base in the amount of R $ 154,593 until March 31, 2020 (R$ 141,618 as of December 31, 2019). The amounts to be recovered from the other subsidiaries will be recognized to the extent that concomitantly, there are the final and unappealable decision of the individual action and confirmation of the evidences.

The Company’s management emphasizes that it is possible for the STF to modulate the effects of the judgment, either by restricting its effectiveness or determining when the decision will become effective, or by reinterpreting the value of ICMS to be excluded. After the decision of the STF has become final and unappealable, the Company’s management will assess the impact on the shares of its subsidiaries, which may result in a reduction in the claimed tax credits.

Ultrapar Participações S.A. and Subsidiaries

Notes to the Parent and Consolidated Interim Financial Information

(In thousands of Brazilian Reais, unless otherwise stated)

23.

Deferred Revenue (Consolidated)

The subsidiaries of the Company have recognized the following deferred revenue:


	03/31/2020		12/31/2019
‘am/pm’ and Jet Oil franchising upfront fee (a)		658		956
Loyalty program “Km de Vantagens” (b)		23,873		25,096
Loyalty program “Clube Extrafarma” (b)		1,600		1,574

		26,131		27,626

Current		26,131		27,626

a. Franchising Upfront Fee

am/pm is the convenience stores chain of the Ipiranga service stations. Ipiranga ended March 31, 2020 with 2,373 stores (2,377 as of December 31, 2019). Jet Oil is Ipiranga’s lubricant-changing and automotive service specialized network. Ipiranga ended March 31, 2020 with 1,488 stores (1,492 stores as of December 31, 2019).

b. Loyalty Programs

Subsidiary Ipiranga has a loyalty program called Km de Vantagens (www.kmdevantagens.com.br) under which registered customers are rewarded with points when they buy products at Ipiranga service stations or at its partners. The customers may exchange these points, during the period of one year, for discounts on products and services offered by Ipiranga and its partners. Points received by Ipiranga’s customers that may be used with the partner Multiplus Fidelidade and for discounts of fuel in Ipiranga’s website (www.postoipiranganaweb.com.br) and recognized as a reduction of revenue from sales and services.

Subsidiary Extrafarma has a loyalty program called Clube Extrafarma (www.clubeextrafarma.com.br) under which registered customers are rewarded with points when they buy products at its drugstore chain. The customers may exchange these points, during the period of six months, for discounts in products at its drugstore chain, recharge credit on a mobile phone, and prizes offered by partners Multiplus Fidelidade and Ipiranga, through Km de Vantagens. Points received by Extrafarma’s customers are recognized as a reduction of revenue from sales and services.

Deferred revenue is estimated based on the fair value of the points granted, considering the value of the prizes and the expected redemption of these points.

Ultrapar Participações S.A. and Subsidiaries

Notes to the Parent and Consolidated Interim Financial Information

(In thousands of Brazilian Reais, unless otherwise stated)

24.

Subscription warrants – indemnification

Because of the association between the Company and Extrafarma on January 31, 2014, 7 subscription warrants – indemnification could be issued, corresponding to up to 6,411,244 shares of the Company. The subscription warrants – indemnification may be exercised beginning 2020 by the former shareholders of Extrafarma and are adjusted according to the changes in the amounts of provisions for tax, civil, and labor risks and contingent liabilities related to the period prior to January 31, 2014. The subscription warrants – indemnification’s fair value is measured based on the share price of Ultrapar (UGPA3) and is reduced by the dividend yield until 2020, since the exercise is possible only from 2020, and they are not entitled to dividends until that date.

On February 19, 2020, the Company’s Board of Directors confirmed the issuance of 2,108,542 common shares within the authorized capital limit provided by the art. 6 of the Bylaws, due to the partial exercise of the rights conferred by the subscription warrants issued by the Company when the merger of all Extrafarma shares by the Company, approved by the extraordinary general meeting of the Company held in January 31, 2014.

In the association agreement between the Company and Extrafarma on January 31, 2014 and due to the unfavorable decisions of some processes prior on January 31, 2014, 528,344 shares linked to the subscription warrants – indemnification were canceled and didn’t issue on 19 February 2020. Also, 3,774,388 shares were retained, linked to subscription warrants - indemnification, which will be issued as the processes will be favorable in a final decision to the Extrafarma. Thus, the maximum number of shares, which may be issued in the future, linked to the subscription warrants – indemnification, is up to 3,774,388 shares, totaling R$ 47,293 on March 31, 2020.

Ultrapar Participações S.A. and Subsidiaries

Notes to the Parent and Consolidated Interim Financial Information

(In thousands of Brazilian Reais, unless otherwise stated)

25.

Equity

a.	*Share Capital*

On March 31, 2020, the subscribed and paid-in capital stock consists of 1,114,918,734 (1,112.810,192 as of December 31, 2019) common shares with no par value and the issuance of preferred shares and participation certificates is prohibited. Each common share entitles its holder to one vote at Shareholders’ Meetings.

The price of the shares issued by the Company as of March 31, 2020, on B3 was R$ 12.53 (R$ 25.48 as of December 31, 2019).

As of March 31, 2020, the Company is authorized to increase capital up to the limit of 1,600,000,000 common shares, without amendment to the Bylaws, by resolution of the Board of Directors. On February 19, 2020, the Company’s Board of Directors confirmed the issuance of 2,108,542 common shares due to the partial exercise of the rights conferred by the subscription warrants – idemnification. For more information on the partial issue, see note 24.

As of March 31, 2020, there were 47,479,723 common shares outstanding abroad in the form of ADRs (46,518,315 shares as of December 31, 2019).

On April 10, 2019, the Company’s extraordinary and annual general meeting approved the stock split of common shares issued by Ultrapar, at a ratio of one currently existing share to two shares of the same class and type as well as the changing of the number of shares in which the capital stock of the Company is divided. The stock split approved herein shall not imply in any change in the Ultrapar’s capital stock. The new shares and ADRs resulting from the stock split approved herein are of the same class and type and granted to its holders the same rights of the current shares and ADRs.

b.	*Equity instrument granted*

The Company has a share-based incentive plan, which establishes the general terms and conditions for the concession of common shares issued by the Company held in treasury (see Note 8.c).

c.	*Treasury Shares*

The Company acquired its own shares at market prices, without capital reduction, to be held in treasury and to be subsequently disposed of or cancelled, in accordance with CVM Instructions 10, issued on February 14, 1980 and 268, issued on November 13, 1997.

As of March 31, 2020, and December 31, 2019, 26,780,298 common shares were held in the Company’s treasury, acquired at an average cost of R$ 18.12.

d.	*Capital Reserve*

The capital reserve reflects the gain on the transfer of shares at market price used in the Deferred Stock Plan granted to executives of the subsidiaries of the Company, as mentioned in Note 8.c.

Because of Extrafarma’s association in 2014, the Company recognized an increase in the capital reserves in the amount of R$ 498,812, due to the difference between the value attributable to share capital and the market value of the Ultrapar shares on the date of issue, deducted by R$ 2,260 related to the incurred costs directly attributable to issuing new shares. Additionally, on February 19, 2020, there was an increase in the reserve totaled amount of R$ 53,072, due to the partial exercise of the subscription warrants – indemnification (see note 24).

Ultrapar Participações S.A. and Subsidiaries

Notes to the Parent and Consolidated Interim Financial Information

(In thousands of Brazilian Reais, unless otherwise stated)

e.	*Revaluation Reserve*

The revaluation reserve, recognized prior to the adoption of the international accounting standards (CPC / IFRS) instituted by Law 11,638/07, reflects the revaluation of assets of subsidiaries and is based on depreciation, write-off, or disposal of the revalued assets of the subsidiaries, as well as the tax effects recognized by these subsidiaries.

f.	*Profit Reserves*

f.1 Legal Reserve

Under Brazilian Corporate Law, the Company is required to allocate 5% of net annual earnings to a legal reserve, until the balance reaches 20% of capital stock. This reserve may be used to increase capital or to absorb losses but may not be distributed as dividends.

f.2 Investments Reserve

In compliance with Article 194 of the Brazilian Corporate Law and Article 55.c) of the Bylaws this reserve is aimed to protect the integrity of the Company’s assets and to supplement its capital stock, in order to allow new investments to be made. As provided in its Bylaws, the Company may allocate up to 45% of the annual net income to the investments reserve, up to the limit of 100% of the share capital.

The investments reserve is free of distribution restrictions and totaled R$ 3,290,073 as of March 31, 2020 (R$ 3,290,073 as of December 31, 2019).

g.	*Valuation Adjustments and Cumulative Translation Adjustments*

g.1 Valuation Adjustments

(i)

Actuarial gains and losses relating to post-employment benefits, calculated based on a valuation conducted by an independent actuary, are recognized in equity under the title “valuation adjustments”. Actuarial gains and losses recorded in equity are not reclassified to profit or loss in subsequent periods.

(ii)	Gains and losses on the hedging instruments of exchange rate related to firm commitment and highly probable transactions designated as cash flows hedges are recognized in equity as “valuation adjustments”. Gains and losses are reclassified to initial cost of non-financial assets.

(iii)

The differences between the fair value of financial investments measured at fair value through other comprehensive income and the initial amount of financial investments plus the interest earned and the foreign currency exchange variation are recognized in equity as valuation adjustments. Gains and losses are reclassified to statements of profit or loss when the financial investment is settled.

(iv)

The Company also recognizes in this item the effect of changes in the non-controlling interest in subsidiaries that do not result in loss of control. This amount corresponds to the difference between the amount by which the non-controlling interest was adjusted and the fair value of the consideration received or paid and represents a transaction with shareholders.

Ultrapar Participações S.A. and Subsidiaries

Notes to the Parent and Consolidated Interim Financial Information

(In thousands of Brazilian Reais, unless otherwise stated)

Balance and changes in valuation adjustments of the Company are as follows:


	Valuation adjustments
	Fair value of cash flow hedging instruments			Fair value of financial instruments		Actuarial gains (losses) of post- employment benefits			Non-controlling shareholders interest change		Total
Balance as of December 31, 2019		(296,132	)		205		(47,759	)		197,369		(146,317	)
Changes in fair value of financial instruments		(634,188	)		183		—			—		(634,005	)
IRPJ and CSLL on fair value		216,474			—		—			—		216,474

Balance as of March 31, 2020		(713,846	)		388		(47,759	)		197,369		(563,848	)


	Valuation adjustments
	Fair value of cash flow hedging instruments			Fair value of financial instruments			Actuarial gains (losses) of post- employment benefits			Non-controlling shareholders interest change		Total
Balance as of December 31, 2018		(243,336	)		(273	)		(17,749	)		197,369		(63,989	)
Changes in fair value of financial instruments		(10,439	)		73			—			—		(10,366	)
IRPJ and CSLL on fair value		4,492			—			—			—		4,492
Actuarial losses of post-employment benefits		—			—			238			—		238

Balance as of March 31, 2019		(249,283	)		(200	)		(17,511	)		197,369		(69,625	)

Ultrapar Participações S.A. and Subsidiaries

Notes to the Parent and Consolidated Interim Financial Information

(In thousands of Brazilian Reais, unless otherwise stated)

g.2 Cumulative Translation Adjustments

The change in exchange rates on assets, liabilities, and income of foreign subsidiaries that have functional currency other than the presentation currency of the Company and an independent administration (see Note 2.s.1) and the exchange rate variation on notes in the foreign market (see Note 33.h.3) is directly recognized in the equity. This accumulated effect is reflected in profit or loss as a gain or loss only in case of disposal or write-off of the investment.

Balance and changes in cumulative translation adjustments of the Company are as follows:


Balance as of December 31, 2019	102,427
Currency translation of foreign subsidiaries	195,107
Effect of foreign currency exchange rate variation on financial instruments	(110,960	)
IRPJ and CSLL on exchange variation	37,727
Balance as of March 31, 2020	224,301
Balance as of December 31, 2018	65,857
Currency translation of foreign subsidiaries	5,931
Effect of foreign currency exchange rate variation on financial instruments	(2,102	)
IRPJ and CSLL on exchange variation	714
Balance as of March 31, 2019	70,400

h.	*Dividends and Allocation of Net Income*

The shareholders are entitled, under the Bylaws, to a minimum annual dividend of 50% of adjusted net income calculated in accordance with Brazilian Corporate Law. The dividends and interest on equity in excess of the obligation established in the Bylaws are recognized in equity until the Shareholders approve them. The proposed dividends payable as of December 31, 2019 in the amount of R $ 261,470 (R $ 0.24 – twenty-four cents of Brazilian Real per share), were approved by the Board of Directors on February 19, 2020, and will be paid as of March 06, 2020.

Balances and changes in dividends payable are as follows:


	Parent		Consolidated
Balance as of December 31, 2019		14,689		16,694
Provisions		261,470		261,898
Payments		(259,937)		(260,635)
Balance as of March 31, 2020		16,222		17,957

Ultrapar Participações S.A. and Subsidiaries

Notes to the Parent and Consolidated Interim Financial Information

(In thousands of Brazilian Reais, unless otherwise stated)

26.

Net Revenue from Sale and Services (Consolidated)


	03/31/2020			03/31/2019
Gross revenue from sale		22,770,778			21,940,145
Gross revenue from services		228,042			193,659
Sales taxes		(1,058,984	)		(905,726	)
Discounts and sales returns		(472,125	)		(399,872	)
Amortization of contractual assets with customers (see Note 11)		(82,860	)		(83,608	)
Deferred revenue (see Note 23)		2,287			(5,345)
Net revenue from sales and services		21,387,138			20,739,253

27.

Expenses by Nature (Consolidated)

The Company presents its expenses by function in the consolidated statement of profit or loss and presents below its expenses by nature:


	03/31/2020		03/31/2019
Raw materials and materials for use and consumption		19,737,611		18,933,386
Personnel expenses		526,661		594,845
Freight and storage		268,518		279,551
Depreciation and amortization		225,860		210,644
Amortization of right to use assets		77,867		78,149
Advertising and marketing		45,261		53,393
Services provided by third parties		58,891		71,133
Expected losses on doubtful accounts		30,275		28,193
Other expenses		61,034		107,726
Total		21,031,978		20,357,020
Classified as:
Cost of products and services sold		19,977,191		19,294,673
Selling and marketing		614,631		650,309
Expected losses on doubtful accounts		30,275		28,193
General and administrative		409,881		383,845
Total		21,031,978		20,357,020

28.

Gain (loss) on Disposal of PP&E and Intangibles (Consolidated)

The gain or loss is determined as the difference between the selling price and residual book value of the investment, PP&E, and intangible asset disposed of. For the three-month period ended March 31, 2020, the gain was R$ 6,938 (loss of R$ 2,082 as of March 31, 2019), represented primarily from sale of PP&E.

Ultrapar Participações S.A. and Subsidiaries

Notes to the Parent and Consolidated Interim Financial Information

(In thousands of Brazilian Reais, unless otherwise stated)

29.

Other Operating Income, Net (Consolidated)


	03/31/2020		03/31/2019
Commercial partnerships ⁽¹⁾		2,560		13,738
Merchandising ⁽²⁾		6,733		5,306
Loyalty program ⁽³⁾		62		88
Extraordinary tax credits ⁽⁴⁾		114,402		8,841
Other		182		8,740

Other operating income, net		123,939		36,713

⁽¹⁾	Refers to contracts with service providers and suppliers, which establish trade agreements for convenience stores and gas stations.

⁽²⁾	Refers to contracts with suppliers of convenience stores, which establish, among other agreements, promotional campaigns.

⁽³⁾	Refers to sales of “Km de Vantagens” to partners of the loyalty program. Revenue is recognized at the time that the partners transfer the points to their customers.

⁽⁴⁾	Refers substantially to Oxiteno S.A., Ipiranga and Ultracargo PIS and COFINS credits (see Note 7.a.2).

30.

Financial Income (Expense)


	Parent						Consolidated
	03/31/2020			03/31/2019			03/31/2020			03/31/2019
Financial income:
Interest on financial investments		9,938			24,593			43,062			90,060
Interest from customers		—			—			29,140			34,461
Changes in subscription warranty – indemnification (see Note 24)		24,176			16,574			24,176			16,574
Selic interest on extraordinary PIS/COFINS credits (see Note 7.a.2)		—			—			77,760			—
Other financial income		20			—			7,913			3,054

		34,134			41,167			182,051			144,149

Financial expenses:
Interest on loans		—			—			(100,608	)		(106,327	)
Interest on debentures		(18,945	)		(28,078	)		(88,966	)		(113,090	)
Interest on leases payable		(1,733	)		—			(33,983	)		(21,122	)
Bank charges, financial transactions tax, and other charges		(375	)		(1,067	)		(27,584	)		(19,085	)
Exchange variation, net of gains and losses with derivative financial instruments		—			—			(97,076	)		101,205
Interest of provisions, net, and other financial expenses		—			—			(1,464	)		15,098

		(21,053	)		(29,145	)		(349,681	)		(143,321	)

Financial income (expense)		13,081			12,022			(167,630	)		828

Ultrapar Participações S.A. and Subsidiaries

Notes to the Parent and Consolidated Interim Financial Information

(In thousands of Brazilian Reais, unless otherwise stated)

31.

Earnings per Share (Parent and Consolidated)

The table below presents a reconciliation of numerators and denominators used in computing earnings per share. The Company has a deferred stock plan and subscription warrants—indemnification, as mentioned in Notes 8.c and 24, respectively.


	03/31/2020		03/31/2019
Basic Earnings per Share
Net income for the period of the Company		160,859		233,661
Weighted average shares outstanding (in thousands)		1,086,652		1,060,324
Basic earnings per share – R$		0.1480		0.2204
Diluted Earnings per Share
Net income for the period of the Company		160,859		233,661
Weighted average shares outstanding (in thousands), including dilution effects		1,093,226		1,066,353
Diluted earnings per share – R$		0.1471		0.2191
Weighted Average Shares Outstanding (in thousands)
Weighted average shares outstanding for basic per share calculation		1,086,652		1,060,324
Dilution effect
Subscription warrants—indemnification		3,774		3,774
Deferred Stock Plan		2,800		2,255

Weighted average shares outstanding for diluted per share calculation		1,093,226		1,066,353

Earnings per share were adjusted retrospectively by the issue of 2,108,542 common shares due to the partial exercise of the rights conferred by the subscription warrants disclosed in note 24.

32.

Segment Information

The Company operates five main business segments: gas distribution, fuel distribution, chemicals, storage and drugstores. The gas distribution segment (Ultragaz) distributes LPG to residential, commercial, and industrial consumers, especially in the South, Southeast, and Northeast regions of Brazil. The fuel distribution segment (Ipiranga) operates the distribution and marketing of gasoline, ethanol, diesel, fuel oil, kerosene, natural gas for vehicles, and lubricants and related activities throughout all the Brazilian territory. The chemicals segment (Oxiteno) produces ethylene oxide and its main derivatives and fatty alcohols, which are raw materials used in the home and personal care, agrochemical, paints, varnishes, and other industries. The storage segment (Ultracargo) operates liquid bulk terminals, especially in the Southeast and Northeast regions of Brazil. The drugstores segment (Extrafarma) trades pharmaceutical, hygiene, and beauty products through its own drugstore chain in the North, Northeast and Southeast regions of the country. The segments shown in the interim financial information are strategic business units supplying different products and services. Intersegment sales are at prices similar to those that would be charged to third parties.

Ultrapar Participações S.A. and Subsidiaries

Notes to the Parent and Consolidated Interim Financial Information

(In thousands of Brazilian Reais, unless otherwise stated)

a. Financial information related to segments

The main financial information of each of the Company’s segments are stated as follows:


	03/31/2020			03/31/2019
Net revenue from sales and services:
Ultragaz		1,761,500			1,640,223
Ipiranga		17,899,585			17,427,989
Oxiteno		1,107,862			1,055,690
Ultracargo		163,321			126,524
Extrafarma		493,348			516,330

		21,425,616			20,766,756
Others ⁽¹⁾		12,726			8,487
Intersegment sales		(51,204	)		(35,990	)

Total		21,387,138			20,739,253

Intersegment sales:
Ultragaz		973			809
Ipiranga		83			289
Oxiteno		6,501			6,076
Ultracargo		32,343			20,352

		39,900			27,526
Others ⁽¹⁾		11,304			8,464

Total		51,204			35,990

Net revenue from sales and services, excluding intersegment sales:
Ultragaz		1,760,527			1,639,414
Ipiranga		17,899,502			17,427,700
Oxiteno		1,101,361			1,049,614
Ultracargo		130,978			106,172
Extrafarma		493,348			516,330

		21,385,716			20,739,230
Others ⁽¹⁾		1,422			23

Total		21,387,138			20,739,253

Operating income (expense):
Ultragaz		90,233			50,856
Ipiranga		272,780			394,900
Oxiteno		108,501			(14,774	)
Ultracargo		70,955			38,042
Extrafarma		(29,944	)		(38,045	)
Corporation ⁽²⁾		(25,651	)		(15,494	)

		486,874			415,485
Others ⁽¹⁾		(837	)		1,379

Total		486,037			416,864

Ultrapar Participações S.A. and Subsidiaries

Notes to the Parent and Consolidated Interim Financial Information

(In thousands of Brazilian Reais, unless otherwise stated)


	03/31/2020			03/31/2019
Share of profit (loss) of joint-ventures and associates:
Ultragaz		5			17
Ipiranga		376			386
Oxiteno		200			1
Ultracargo		65			474

		646			878
Others ⁽¹⁾		(13,074	)		(7,848	)

Total		(12,428	)		(6,970	)

Income before financial result, income and social contribution taxes		473,609			409,894
Financial result, net		(167,630	)		828

Income before income and social contribution taxes		305,979			410,722

Additions to PP&E and intangible assets (excluding intersegment account balances):
Ultragaz		57,416			35,253
Ipiranga		75,186			66,302
Oxiteno		45,574			61,732
Ultracargo		20,621			38,663
Extrafarma		11,645			15,911

		210,442			217,861
Others ⁽¹⁾		16,321			2,402

Total additions to PP&E and intangible assets (see Notes 14 and 15)		226,763			220,263
Asset retirement obligation – fuel tanks (see Note 21)		(37	)		(133	)
Capitalized borrowing costs		(6,157	)		(6,025	)

Total investments in PP&E and intangible assets (cash flow)		220,569			214,105

Addition on contractual assets with customers – exclusive rights (see Note 11):
Ipiranga		156,509			64,056
Ultragaz		3,812			—

Total		160,321			64,056

Ultrapar Participações S.A. and Subsidiaries

Notes to the Parent and Consolidated Interim Financial Information

(In thousands of Brazilian Reais, unless otherwise stated)


	03/31/2020		03/31/2019
Depreciation of PP&E and amortization of intangible assets charges:
Ultragaz		46,964		49,335
Ipiranga		77,253		73,224
Oxiteno		61,393		51,176
Ultracargo		15,146		14,273
Extrafarma		20,782		18,837

		221,538		206,845
Others ⁽¹⁾		4,322		3,799

Total		225,860		210,644

Amortization of contractual assets with customers – exclusive rights (see Note 11):
Ipiranga		82,509		83,608
Ultragaz		351		—

Total		82,860		83,608

Amortization of right to use assets:
Ultragaz		9,415		7,985
Ipiranga		42,625		41,762
Oxiteno		2,839		2,154
Ultracargo		4,359		6,446
Extrafarma		18,021		19,802

		77,259		78,149
Others ⁽¹⁾		608		—

Total		77,867		78,149


	03/31/2020		12/31/2019
Total assets (excluding intersegment account balances):
Ultragaz		3,076,856		2,998,623
Ipiranga		16,559,428		16,278,320
Oxiteno		8,904,400		7,453,476
Ultracargo		2,022,512		1,871,799
Extrafarma		1,985,567		2,060,182

		32,548,763		30,662,400
Others ⁽¹⁾		467,118		533,072

Total		33,015,881		31,195,472

⁽¹⁾	Composed of the parent company Ultrapar (including goodwill of certain acquisitions) and Subsidiaries Serma—Associação dos Usuários de Equipamentos de Processamento de Dados e Serviços Correlatos (“Serma”) and Imaven Imóveis Ltda. It also includes the share of loss in the joint-venture ConectCar.

⁽²⁾	Expenses related to Ultrapar’s holding structure, including the Presidency, CA and CF, advisory comittees to the CA and Human Capital board and Risks, Compliance and Audit.

Ultrapar Participações S.A. and Subsidiaries

Notes to the Parent and Consolidated Interim Financial Information

(In thousands of Brazilian Reais, unless otherwise stated)

b.	*Geographic Area Information*

The fixed and intangible assets of the Company and its subsidiaries are located in Brazil, except those related to Oxiteno’ plants abroad, as shown below:


	03/31/2020		12/31/2019
United States of America		1,163,021		909,787
Mexico		168,637		124,809
Uruguay		93,871		74,732

		1,425,529		1,109,328

The subsidiaries generate revenue from operations in Brazil, United Stated of America, Mexico and Uruguay, as well as from exports of products to foreign customers, as disclosed below:


	03/31/2020		03/31/2019
Net revenue from sale and services:
Brazil		20,990,486		20,373,842
Mexico		55,041		57,875
Uruguay		8,277		12,650
Venezuela		—		603
Other Latin American countries		132,126		109,431
United States of America and Canada		129,115		112,283
Far East		13,781		22,910
Europe		41,446		29,815
Other		16,866		19,844

Total		21,387,138		20,739,253

Sales to the foreign market are made substantially by the Oxiteno segment.

Ultrapar Participações S.A. and Subsidiaries

Notes to the Parent and Consolidated Interim Financial Information

(In thousands of Brazilian Reais, unless otherwise stated)

33.

Risks and Financial Instruments (Consolidated)

a.	*Risk Management and Financial Instruments—Governance*

The main risks to which the Company and its subsidiaries are exposed reflect strategic/operational and economic/financial aspects. Operational/strategic risks (including, but not limited to, demand behavior, competition, technological innovation, and material changes in the industry structure) are addressed by the Company’s management model. Economic/financial risks primarily reflect default of customers, behavior of macroeconomic variables, such as exchange and interest rates, as well as the characteristics of the financial instruments used by the Company and its subsidiaries and their counterparties. These risks are managed through control policies, specific strategies, and the establishment of limits.

The Company has a policy for the management of resources, financial instruments, and risks approved by its CA (“Policy”). In accordance with the Policy, the main objectives of financial management are to preserve the value and liquidity of financial assets and ensure financial resources for the development of the business, including expansions. The main financial risks considered in the Policy are market risks (currencies, interest rates and commodities), liquidity and credit. The governance of the management of financial risks follows the segregation of duties below:

The execution of the Policy has done by corporate financial board, through its treasury department, with the assistance of the accounting, legal and tax departments.

The monitoring of compliance of the Policy and possible issues is the responsibility of the Risk and Investment Committee, (“Committee”), which is composed of CFO, Treasury Director, Controller and other directors designated by the CFO. The Committee holds quarterly meetings and monitors the risk standards established by the Policy through a monitoring map on a monthly basis.

Approval of the Policy and the periodic assessment of Company exposure to financial risks are subject to the approval of the CA of Ultrapar.

The Audit and Risks Committee (“CAR”) advises the CA in the assessment of controls, management and exposure of financial risks and revision of Policy. The Risk, Compliance and Audit board monitors of standards compliance of the Policy and reports to the CAR the risks exposure and compliance or noncompliance of the Policy.

b.	*Currency Risk*

Most transactions of the Company, through its subsidiaries, are located in Brazil and, therefore, the reference currency for risk management is the Brazilian Real. Currency risk management is guided by neutrality of currency exposures and considers the risks of the Company and its subsidiaries and their exposure to changes in exchange rates. The Company considers as its main currency exposures the changes in assets and liabilities in foreign currency.

The Company and its subsidiaries use exchange rate hedging instruments (especially between the Brazilian Real and the U.S. dollar) available in the financial market to protect their assets, liabilities, receipts, and disbursements in foreign currency and net investments in foreign operations. Hedge is used in order to reduce the effects of changes in exchange rates on the Company´s income and cash flows in Brazilian Reais within the exposure limits under its Policy. Such foreign exchange hedging instruments have amounts, periods, and rates substantially equivalent to those of assets, liabilities, receipts, and disbursements in foreign currencies to which they are related.

Ultrapar Participações S.A. and Subsidiaries

Notes to the Parent and Consolidated Interim Financial Information

(In thousands of Brazilian Reais, unless otherwise stated)

Assets and liabilities in foreign currencies are stated below, translated into Brazilian Reais:

b.1 Assets and Liabilities in Foreign Currencies


	03/31/2020			03/31/2019
Assets in foreign currency
Cash, cash equivalents and financial investments in foreign currency (except hedging instruments)		723,972			455,620
Foreign trade receivables, net of allowance for doubtful accounts and advances to foreign customers		521,625			213,544
Other net assets in foreign (except cash, cash equivalents, financial investments, trade receivables, financing, and payables)		1,760,162			1,445,022

		3,005,759			2,114,186

Liabilities in foreign currency
Financing in foreign currency, gross of transaction costs and discount		(8,917,926	)		(6,895,052	)
Payables arising from imports, net of advances to foreign suppliers		(643,822	)		(344,523	)

		(9,561,748	)		(7,239,575	)

Foreign currency hedging instruments		4,113,970			3,636,418


Net liability position – Total		(2,442,019	)		(1,488,971	)

Net asset (liability) position – Income statement effect		(24,007	)		452,178
Net liability position –Equity effect		(2,418,012	)		(1,941,149	)

b.2 Sensitivity Analysis of Assets and Liabilities in Foreign Currency

Scenarios I, II and III were based on 10%, 25% and 50% variations, respectively, applied on the net position of the Company exposed to the currency risk, simulating the effects of appreciation and devaluation of the Real in the income statement and the equity:

The table below shows, in the three scenarios, the effects of exchange rate changes on the net liability position of R$ 2,442,019 in foreign currency as of March 31, 2020:


	Risk	Scenario I			Scenario II			Scenario III
		Likely			25%			50%
(1) Income statement effect	Real devaluation		(2,405	)		(6,012	)		(12,023	)
(2) Equity effect			(241,801	)		(604,503	)		(1,209,006	)

(1) + (2)	Net effect		(244,206	)		(610,515	)		(1,221,029	)

(3) Income statement effect	Real appreciation		2,405			6,012			12,023
(4) Equity effect			241,801			604,503			1,209,006

(3) + (4)	Net effect		244,206			610,515			1,221,029

Ultrapar Participações S.A. and Subsidiaries

Notes to the Parent and Consolidated Interim Financial Information

(In thousands of Brazilian Reais, unless otherwise stated)

The table below shows, in the three scenarios, the effects of exchange rate changes on the net liability position of R$ 1,488,971 in foreign currency as of December 31, 2019:


	Risk	Scenario I Likely			Scenario II 25%			Scenario III 50%
(1) Income statement effect	Real devaluation		45,218			113,045			226,089
(2) Equity effect			(194,115	)		(485,287	)		(970,575	)

(1) + (2)	Net effect		(148,897	)		(372,242	)		(744,486	)

(3) Income statement effect	Real appreciation		(45,218	)		(113,045	)		(226,089	)
(4) Equity effect			194,115			485,287			970,575

(3) + (4)	Net effect		148,897			372,242			744,486

The equity effect refers to cumulative translation adjustments of changes in the exchange rate on equity of foreign subsidiaries (see Notes 2.s.1 and 25.g.2), net investments hedge in foreign entities, cash flow hedge of firm commitment and highly probable transaction (see Note 2.c and “h. Hedge Accounting” below).

c. Interest Rate Risk

The Company and its subsidiaries adopt policies for borrowing and investing financial resources and for capital cost minimization. The financial investments of the Company and its subsidiaries are primarily held in transactions linked to the DI, as set forth in Note 4. Borrowings primarily relate to financing from Banco do Brasil, as well as debentures and borrowings in foreign currency, as shown in Note 16.

The Company attempts to maintain most of its financial interest assets and liabilities at floating rates.

Ultrapar Participações S.A. and Subsidiaries

Notes to the Parent and Consolidated Interim Financial Information

(In thousands of Brazilian Reais, unless otherwise stated)

c.1 Assets and liabilities exposed to floating interest rates

The financial assets and liabilities exposed to floating interest rates are demonstrated below:


	Note		03/31/2020			12/31/2019
DI
Cash equivalents		4.a		2,205,626			1,780,939
Financial investments		4.b		2,824,621			2,610,686
Asset position of foreign exchange hedging instruments—DI		33.g		—			19,323
Loans and debentures		16.a		(6,517,107	)		(6,268,615	)
Liability position of foreign exchange hedging instruments—DI		33.g		(2,935,747	)		(3,318,289	)
Liability position of fixed interest instruments + IPCA – DI		33.g		(921,193	)		(821,902	)

Net liability position in DI				(5,343,800	)		(5,997,858	)

TJLP
Loans –TJLP		16.a		(87,807	)		(103,945	)

Net liability position in TJLP				(87,807	)		(103,945	)

LIBOR
Asset position of foreign exchange hedging instruments—LIBOR		33.g		1,105,959			850,307
Loans—LIBOR		16.a		(1,855,316	)		(1,457,263	)

Net liability position in LIBOR				(749,357	)		(606,956	)

SELIC
Loans – SELIC		16.a		(24,595	)		(30,392	)

Net liability position in SELIC				(24,595	)		(30,392	)

Total net liability position exposed to floating interest				(6,205,559	)		(6,739,151	)

Ultrapar Participações S.A. and Subsidiaries

Notes to the Parent and Consolidated Interim Financial Information

(In thousands of Brazilian Reais, unless otherwise stated)

c.2 Sensitivity Analysis of Floating Interest Rate Risk

For sensitivity analysis of floating interest rate risk, the Company used the accumulated amount of the reference indexes (DI, TJLP, LIBOR, TIIE and SELIC) as a base scenario. Scenarios I, II and III were based on 10%, 25% and 50% variations, respectively, applied in the floating interest rate of the base scenario:

The tables below show the incremental expenses and income that would be recognized in financial income, due to the effect of floating interest rate changes in different scenarios.


			03/31/2020
	Risk		Scenario I			Scenario II			Scenario III
			Likely			25%			50%
Exposure of interest rate risk
Interest effect on cash equivalents and financial investments		Increase in DI		4,079			10,197			20,394
Foreign exchange hedging instruments (assets in DI) effect		Increase in DI		3			6			12
Interest effect on debt in DI		Increase in DI		(6,580	)		(16,449	)		(32,898	)
Interest rate hedging instruments (liabilities in DI) effect		Increase in DI		(3,442	)		(9,219	)		(18,847	)

Incremental expenses				(5,940	)		(15,465	)		(31,339	)

Interest effect on debt in TJLP		Increase in TJLP		(117	)		(293	)		(585	)

Incremental expenses				(117	)		(293	)		(585	)

Foreign exchange hedging instruments (assets in LIBOR) effect		Increase in LIBOR		387			968			1,937
Interest effect on debt in LIBOR		Increase in LIBOR		(786	)		(1,964	)		(3,929	)

Incremental expenses				(399	)		(996	)		(1,992	)

Interest effect on debt in SELIC		Increase in SELIC		(27	)		(67	)		(133	)

Incremental expenses				(27	)		(67	)		(133	)


			12/31/2019
	Risk		Scenario I			Scenario II			Scenario III
			Likely			25%			50%
Exposure of interest rate risk
Interest effect on cash equivalents and financial investments		Increase in DI		29,304			73,261			146,522
Foreign exchange hedging instruments (assets in DI) effect		Increase in DI		55			137			274
Interest effect on debt in DI		Increase in DI		(44,469	)		(111,173	)		(222,345	)
Interest rate hedging instruments (liabilities in DI) effect		Increase in DI		(39,175	)		(85,571	)		(162,897	)

Incremental expenses				(54,285	)		(123,346	)		(238,446	)

Interest effect on debt in TJLP		Increase in TJLP		(1,213	)		(3,033	)		(6,065	)

Incremental expenses				(1,213	)		(3,033	)		(6,065	)

Foreign exchange hedging instruments (assets in LIBOR) effect		Increase in LIBOR		1,722			4,305			8,609
Interest effect on debt in LIBOR		Increase in LIBOR		(3,551	)		(8,876	)		(17,753	)

Incremental expenses				(1,829	)		(4,571	)		(9,144	)

Interest effect on debt in SELIC		Increase in SELIC		(251	)		(628	)		(1,257	)

Incremental expenses				(251	)		(628	)		(1,257	)

Ultrapar Participações S.A. and Subsidiaries

Notes to the Parent and Consolidated Interim Financial Information

(In thousands of Brazilian Reais, unless otherwise stated)

d.	Credit Risks

The financial instruments that would expose the Company and its subsidiaries to credit risks of the counterparty are basically represented by cash and bank deposits, financial investments, hedging instruments (see Note 4), and trade receivables (see Note 5).

d.1 Credit risk of financial institutions

Such risk results from the inability of financial institutions to comply with their financial obligations to the Company and its subsidiaries due to insolvency. The Company and its subsidiaries regularly conduct a credit review of the institutions with which they hold cash and cash equivalents, financial investments, and hedging instruments through various methodologies that assess liquidity, solvency, leverage, portfolio quality, etc. Cash and cash equivalents, financial investments, and hedging instruments are held only with institutions with a solid credit history, chosen for safety and soundness. The volume of cash and cash equivalents, financial investments, and hedging instruments are subject to maximum limits by each institution and, therefore, require diversification of counterparties.

d.2 Government credit risk

The Company’s policy allows investments in government securities from countries classified as investment grade AAA or aaa by specialized credit rating agencies (S&P, Moody’s and Fitch) and in Brazilian government bonds. The volume of such financial investments is subject to maximum limits by each country and, therefore, requires diversification of counterparties.

The credit risk of financial institution and government of cash, cash equivalents and financial investments is summarized below:


	Fair Value
Counterparty credit rating	03/31/2020		12/31/2019
AAA		6,084,345		4,906,077
AA		115,966		331,512
A		707,887		418,020
BBB		340,541		56,488

Total		7,248,739		5,712,097

d.3 Customer credit risk

The credit policy establishes the analysis of the profile of each new customer, individually, regarding their financial condition. The review carried out by the subsidiaries of the Company includes the evaluation of external ratings, when available, financial statements, credit bureau information, industry information and, when necessary, bank references. Credit limits are established for each customer and reviewed periodically, in a shorter period the greater the risk, depending on the approval of the responsible area in cases of sales that exceed these limits.

In monitoring credit risk, customers are grouped according to their credit characteristics and depending on the business the grouping takes into account, for example, whether they are natural or legal clients, whether they are wholesalers, resellers or final customers, considering also the geographic area.

The expected of credit losses are calculated by the expected loss approach based on the probability of default rates. Loss rates are calculated on the basis of the average probability of a receivable amount to advance through successive stages of default until full write-off. The probability of default calculation takes into account a credit risk score for each exposure, based on data considered to be capable of foreseeing the risk of loss (external classifications, audited financial statements, cash flow projections, customer information available in the press, for example), with addition of the credit assessment based on experience.

Ultrapar Participações S.A. and Subsidiaries

Notes to the Parent and Consolidated Interim Financial Information

(In thousands of Brazilian Reais, unless otherwise stated)

Such credit risks are managed by each business unit through specific criteria for acceptance of customers and their credit rating and are additionally mitigated by the diversification of sales. No single customer or group accounts for more than 10% of total revenue.

The subsidiaries of the Company request guarantees related to trade receivables and other receivables in specific situations to customers, but these guarantees don’t influence in the calculation of risk of loss. The subsidiaries of the Company maintained the following allowance for expected losses on doubtful accounts balances on trade receivables:


	03/31/2020		12/31/2019
Ipiranga		473,340		447,235
Ultragaz		104,194		94,985
Oxiteno		15,597		13,252
Extrafarma		164		3,419
Ultracargo		1,979		2,001

Total		595,274		560,892

The table below presents information about credit risk exposure:


	03/31/2020							12/31/2019
	Weighted average rate of losses			Accounting balance		Provision for losses		Weighted average rate of losses			Accounting balance		Provision for losses
Current		2	%		3,326,051		53,054		1	%		3,843,803		50,198
less than 30 days		2	%		242,279		4,741		2	%		185,612		3,975
31-60 days		6	%		48,860		3,132		7	%		37,801		2,688
61-90 days		11	%		33,618		3,632		20	%		24,861		5,062
91-180 days		42	%		105,872		44,123		42	%		91,633		38,337
more than 180 days		56	%		869,152		486,592		53	%		867,618		460,632

					4,625,832		595,274					5,051,328		560,892

The information about expected losses on doubtful accounts balances by geographic area are as follows:


	03/31/2020		12/31/2019
Brasil		582,907		550,928
México		1,159		1,123
Uruguai		173		267
Outros países da América Latina		401		561
Estados Unidos e Canadá		1,146		889
Europa		9,162		7,075
Outros		326		49

		595,274		560,892

For further information about the allowance for expected losses on doubtful accounts, see Notes 5.a and 5.b.

Ultrapar Participações S.A. and Subsidiaries

Notes to the Parent and Consolidated Interim Financial Information

(In thousands of Brazilian Reais, unless otherwise stated)

e. Liquidity Risk

The Company and its subsidiaries’ main sources of liquidity derive from (i) cash, cash equivalents, and financial investments, (ii) cash generated from operations and (iii) financing. The Company and its subsidiaries believe that these sources are sufficient to satisfy their current funding requirements, which include, but are not limited to, working capital, capital expenditures, amortization of debt, and payment of dividends.

The Company and its subsidiaries periodically examine opportunities for acquisitions and investments. They consider different types of investments, either directly, through joint ventures, or through associated companies, and finance such investments using cash generated from operations, debt financing, through capital increases, or through a combination of these methods.

The Company and its subsidiaries believe to have enough working capital and sources of financing to satisfy their current needs. The gross indebtedness due over the next twelve months totaled R$ 2,198,633, including estimated interests on loans (for quantitative information, see Note 16.a). Furthermore, the investment initially planned for 2020 totaled R$ 1,771 million (see Note 35). Until March 31, 2020, the amount of R$ 350,086 had been realized. On March 31, 2020, the Company and its subsidiaries had R$ 5,954,709 in cash, cash equivalents, and short-term financial investments (for quantitative information, see Note 4).

The table below presents a summary of financial liabilities as of March 31, 2020 by the Company and its subsidiaries, listed by maturity. The amounts disclosed in this table are the contractual undiscounted cash outflows, and, therefore, these amounts may be different from the amounts disclosed on the balance sheet.


Financial liabilities	Total		Less than 1 year		Between 1 and 3 years		Between 3 and 5 years		More than 5 years
Loans including future contractual interest ^(1) (2)		20,218,691		2,198,633		8,384,119		3,376,671		6,259,268
Currency and interest rate hedging instruments ⁽³⁾		265,735		265,735		—		—		—
Trade payables		2,405,347		2,405,347		—		—		—
Leases payable		2,587,921		358,459		1,093,891		564,493		571,078

⁽¹⁾

To calculate the estimated interest on loans some macroeconomic assumptions were used, including averaging for the period the following: (i) DI of % 3.36% to 2020, 3.60% to 2021, 4.73% to 2022 and 5.78% to 2023, (ii) exchange rate of the Real against the U.S. dollar of R$ 4.90 in 2020, R$ 4.05 in 2021, R$ 4.09 in 2022, R$ 4.11 in 2023, R$ 4.13 in 2024, R$ 4.15 in 2025, R$ 4.17 in 2026, R$ 4.19 in 2027, R$ 4.21 in 2028 and R$ 4.23 in 2029 (iii) TJLP of 4.94%, (iv) IGP-M of 4.44% in 2020, 3.98% in 2021, 3.63% in 2022, 3.38% as from 2023 and (v) IPCA of 2.46% in 2020, 3.12% in 2021, 3.27% in 2022, 3.01% as from 2023, 3.08% in 2024 (source:B3, Bulletin Focus and financial institutions).

⁽²⁾	Includes estimated interest payments on short-term and long-term loans until the payment date.

⁽³⁾

The currency and interest rate hedging instruments were estimated based on projected U.S dollar futures contracts and the futures curves of DI x Pre and Pre x IPCA contracts quoted on B3 on March 31, 2020 and on the futures curve of LIBOR (ICE—IntercontinentalExchange) and commodities heating oil contracts and RBOB quoted on New York Mercantile Exchange (“NYMEX”) on March 31, 2020. In the table above, only the hedging instruments with negative results at the time of settlement were considered.

Ultrapar Participações S.A. and Subsidiaries

Notes to the Parent and Consolidated Interim Financial Information

(In thousands of Brazilian Reais, unless otherwise stated)

f. Capital Management

The Company manages its capital structure based on indicators and benchmarks. The key performance indicators related to the capital structure management are the weighted average cost of capital, net debt / EBITDA, interest coverage, and indebtedness / equity ratios. Net debt is composed of cash, cash equivalents, and financial investments (see Note 4) and loans, including debentures (see Note 16). The Company can change its capital structure depending on the economic and financial conditions, in order to optimize its financial leverage and capital management. The Company seeks to improve its return on invested capital by implementing efficient working capital management and a selective investment program.

g. Selection and Use of Financial Instruments

In selecting financial investments and hedging instruments, an analysis is conducted to estimate rates of return, risks involved, liquidity, calculation methodology for the carrying value and fair value, and a review is conducted of any documentation applicable to the financial instruments. The financial instruments used to manage the financial resources of the Company and its subsidiaries are intended to preserve value and liquidity.

The Policy contemplates the use of derivative financial instruments only to cover identified risks and in amounts consistent with the risk (limited to 100% of the identified risk). The risks identified in the Policy are described in the above sections and are subject to risk management. In accordance with the Policy, the Company and its subsidiaries can use forward contracts, Swaps, options, and futures contracts to manage identified risks. Leveraged derivative instruments are not permitted. Because the use of derivative financial instruments is limited to the coverage of identified risks, the Company and its subsidiaries use the term “hedging instruments” to refer to derivative financial instruments.

Ultrapar Participações S.A. and Subsidiaries

Notes to the Parent and Consolidated Interim Financial Information

(In thousands of Brazilian Reais, unless otherwise stated)

The table below summarizes the position of hedging instruments entered by the Company and its subsidiaries:

Designated as hedge accounting

Product

Hedged object

Rates agreement

Maturity

Notional amount¹

Fair value

Assets

Liabilities

03/31/2020

12/31/2019

03/31/2020

12/31/2019

Foreign exchange swap

Debt

USD + 4.54 %

104.0% DI

nov-23

USD

245,000

USD

245,000

431,823

69,298

Foreign exchange swap

Debt

LIBOR-3M + 1.11% = 2.86%

104.9% DI

jul-23

USD

150,000

USD

150,000

260,716

74,970

Interest rate swap

Debt

4.57% + IPCA

95.8% DI

oct-24

806,054

158,692

144,123

Interest rate swap

Debt

6.47%

99.9% DI

nov-24

90,000

510

584

Zero Cost Collar

Operating margin

Put USD 3.96

Call USD 4.33

dec-20

USD

292,500

USD

60,000

(252,822

)

(121

)

598,919

288,854

Not designated as hedge accounting

Product

Hedged object

Rates agreement

Maturity

Notional amount¹

Fair value

Assets

Liabilities

03/31/2020

12/31/2019

03/31/2020

12/31/2019

Foreign exchange swap

Debt

USD + 0.18%

55.0% DI

jun-29

USD

320,000

USD

853,000

441,598

353,451

Foreign exchange swap

Debt

LIBOR-3M + 2.0% = 3.85%

105.9% DI

jun-20

USD

60,000

USD

60,000

119,133

48,535

Foreign exchange swap

Firm
commitments

USD + 0.00%

33.5% DI

ago-20

USD

6,190

USD

17,896

6,895

(2,203

)

Foreign exchange swap

Operating
margin

34.8% DI

USD + 0.00%

feb-20

—

USD

4,680

—

612

NDF

Operating
margin

MXN

USD

dez-20

USD

4,500

—

(1,949

)

—

NDF

Firm
commitments

BRL

USD

mai-20

USD

124,945

USD

71,600

21,173

(1,080

)

Term

Firm
commitments

BRL

Heating oil / RBOB

mai-20

USD

55,440

USD

56,000

19,069

(1,271

)

605,919

398,044

⁽¹⁾	Currency as indicated.

All transactions mentioned above were properly registered with CETIP S.A.

Ultrapar Participações S.A. and Subsidiaries

Notes to the Parent and Consolidated Interim Financial Information

(In thousands of Brazilian Reais, unless otherwise stated)

h. Hedge Accounting

The Company and its subsidiaries use derivative and non-derivative financial instruments for hedging purposes and test, throughout the duration of the hedge, their effectiveness, as well as the changes in their fair value.

h.1 Fair value hedge

The Company and its subsidiaries designate as fair value hedges certain financial instruments used to offset the variations in interest and exchange rates, which are based on the market value of financing contracted in Brazilian Reais and U.S. dollars.

The foreign exchange hedging instruments designated as fair value hedge are:


In thousands, except the DI %	03/31/2020			12/31/2019
Notional amount – US$		395,000			395,000
Result of hedging instruments – gain/(loss) – R$		549,334			79,466
Fair value adjustment of debt – R$		(67,623	)		(36,764	)
Financial expense in the statements of profit or loss – R$		(484,430	)		(130,320	)
Average effective cost – DI %		104.4			104.4

For more information, see Note 16.c.1.

The interest rate hedging instruments designated as fair value hedge are:


In thousands, except the DI %	03/31/2020			12/31/2019
Notional amount – R$		806,054			806,054
Result of hedging instruments – gain/(loss) – R$		13,105			72,957
Fair value adjustment of debt – R$		525			(76,992	)
Financial expense in the statements of profit or loss – R$		(22,962	)		(68,054	)
Average effective cost – DI %		95.8			95.8

For more information, see Notes 16.g.2, 16.g.4 and 16.g.6.


In millions, except the DI %	03/31/2020			12/31/2019
Notional amount – R$		90,000			90,000
Result of hedging instruments – gain/(loss) – R$		(395	)		584
Fair value adjustment of debt – R$		391			(208	)
Financial expense in the statements of profit or loss – R$		(1,408	)		(377	)
Average effective cost – DI %		99.9			99.9

For more information, see Note 16.g.7.

Ultrapar Participações S.A. and Subsidiaries

Notes to the Parent and Consolidated Interim Financial Information

(In thousands of Brazilian Reais, unless otherwise stated)

h.2 Cash flow hedge

The Company and its subsidiaries designate, as cash flow hedge of firm commitment and highly probable transactions, derivative financial instruments to hedge firm commitments and non-derivative financial instruments to hedge highly probable future transactions, to hedge against fluctuations arising from changes in exchange rate.

On March 31, 2020, the notional amount of foreign exchange hedging instruments for highly probable future transactions designated as cash flow hedge, related to notes in the foreign market totaled US$ 529,643 (US$ 550,000 on December 31, 2019). On March 31, 2020, the unrealized loss of “Other comprehensive income” is R$ 395,340 million (loss of R$ 293,277 on December 31, 2019), net of deferred IRPJ and CSLL.

On March 31, 2020, the notional amount of foreign exchange hedging instruments for highly probable future transactions designated as cash flow hedge, related to future sales revenues of Oxiteno (zero cost collars) totaled US$ 292,500 (US$ 60,000 on March 31, 2019). On March 31, 2020, the unrealized loss of “Other comprehensive income” is R$ 24,873 (loss of R$ 74 on December 31, 2019), net of deferred IRPJ and CSLL and a expense in the amount of R$ 214,769 in the financial income.

h.3 Net investment hedge in foreign entities

The Company and its subsidiaries designate, as net investment hedge in foreign entities, notes in the foreign market, for hedging net investment in foreign entities, to offset changes in exchange rates.

On March 31, 2020, the balance of foreign exchange hedging instruments designated as net investments hedge in foreign entities, related to part of the investments made in entities which functional currency is other than the Brazilian Real, totaled US$ 95,000 (US$ 95,000 on December 31, 2019).On March 31, 2020, the unrealized loss of “Other comprehensive income” is R$ 73,234 (loss of R$ 55,682 on December 31, 2019), net of deferred income and social contribution taxes. The effects of exchange rate changes on investments and hedging instruments were offset in equity.

i. Gains (losses) on Hedging Instruments

The following tables summarize the value of gains (losses) recognized, which affected the equity of the Company and its subsidiaries:


	31/03/2020
	Profit or loss			Equity
a – Exchange rate derivates receivable in U.S. dollars (i) (ii)		413,158			—
b – Exchange rate derivates payable in U.S. dollars (ii)		(238,750	)		(26,818	)
c – Interest rate swaps in R$ (iii)		13,235			—
d – Non-derivative financial instruments (iv)		(598,001	)		(817,533	)

Total		(410,358	)		(844,351	)

Ultrapar Participações S.A. and Subsidiaries

Notes to the Parent and Consolidated Interim Financial Information

(In thousands of Brazilian Reais, unless otherwise stated)


	31/03/2019			12/31/2019
	Profit or loss			Equity
a – Exchange rate derivates receivable in U.S. dollars (i) (ii)		107,297			—
b – Exchange rate derivates payable in U.S. dollars (ii)		(720	)		(80	)
c – Interest rate swaps in R$ (iii)		6,767			—
d – Non-derivative financial instruments (iv)		(40,399	)		(348,959	)

Total		72,945			(349,039	)

(i)	Does not consider the effect of exchange rate variation of exchange Swaps receivable in U.S. dollars when this effect is offset in the gain or loss of the hedged item (debt/firm commitments);

(ii)	Considers the designation effect of foreign exchange hedging;

(iii)

Considers the designation effect of interest rate hedging in Brazilian Reais; and

(iv)	Considers the results of notes in the foreign market (for further information see Note 16.b).

Ultrapar Participações S.A. and Subsidiaries

Notes to the Parent and Consolidated Interim Financial Information

(In thousands of Brazilian Reais, unless otherwise stated)

j. Fair Value of Financial Instruments

The fair values and the carrying values of the financial instruments, including currency and interest rate hedging instruments, are stated below:


				03/31/2020				12/31/2019
	Category	Note		Carrying value		Fair value		Carrying value		Fair value
Financial assets:
Cash and cash equivalents
Cash and bank deposits	Measured at amortized cost		4.a		228,831		228,831		284,992		284,992
Financial investments in local currency	Measured at fair value through other comprehensive income		4.a		2,205,626		2,205,626		1,780,939		1,780,939
Financial investments in foreign currency	Measured at fair value through profit or loss		4.a		59,544		59,554		49,448		49,448
Financial investments:
Fixed-income securities and funds in local currency	Measured at fair value through profit or loss		4.b		2,165,064		2,165,064		1,937,967		1,937,967
Fixed-income securities and funds in local currency	Measured at fair value through other comprehensive income		4.b		582,003		582,003		595,816		595,816
Fixed-income securities and funds in local currency	Measured at amortized cost		4.b		77,554		77,554		76,904		76,904
Fixed-income securities and funds in foreign currency	Measured at fair value through other comprehensive income		4.b		590,485		590,485		303,417		303,417
Currency and interest rate hedging and commodities instruments	Measured at fair value through profit or loss		4.b		1,339,632		1,339,632		682,615		682,615
Trade Receivables	Measured at amortized cost		5.a		3,227,704		3,204,605		3,689,500		3,663,247
Reseller Financing	Measured at amortized cost		5.b		802,854		799,966		800,936		839,090

Total					11,279,297		11,253,320		10,202,534		10,214,435

Financial liabilities:
Financing	Measured at fair value through profit or loss		16.a		2,191,432		2,191,432		1,666,092		1,666,092
Financing	Measured at amortized cost		16.a		7,779,060		6,702,591		6,008,415		7,268,742
Debentures	Measured at amortized cost		16.a		5,675,735		5,291,026		5,657,339		5,603,669
Debentures	Measured at fair value through profit or loss		16.a		1,054,264		1,054,264		1,030,892		1,030,891
Leases payable	Measured at amortized cost		13		1,704,243		1,704,243		1,588,673		1,588,673
Commodities, currency and interest rate hedging instruments	Measured at fair value through profit or loss		16		261,555		261,555		29,985		29,985
Trade payable	Measured at amortized cost		17		2,405,347		2,385,308		2,700,071		2,678,808
Subscription warrants – indemnification	Measured at fair value through profit or loss		24		47,293		47,293		130,657		130,657

Total					21,118,929		19,637,712		18,812,123		19,997,517

Ultrapar Participações S.A. and Subsidiaries

Notes to the Parent and Consolidated Interim Financial Information

(In thousands of Brazilian Reais, unless otherwise stated)

The fair value of financial instruments, including currency and interest hedging instruments, was determined as follows:

•

The fair value of cash and bank deposit balances are identical to their carrying values.

•

Financial investments in investment funds are valued at the value of the fund unit as of the date of the interim financial information, which corresponds to their fair value.

•

Financial investments in CDBs (Bank Certificates of Deposit) and similar investments offer daily liquidity through repurchase at the “yield curve” and the Company calculates their fair value through methodologies commonly used for mark to the market.

•

The fair value of trade receivables and trade payables are approximate to their carrying values.

•

The subscription warrants – indemnification was measured based on the share price of Ultrapar (UGPA3) at the interim financial information date and are adjusted to the Company’s dividend yield, since the exercise is only possible starting in 2020 onwards and they are not entitled to dividends until then. The number of shares of subscription warrants – indemnification is also adjusted according to the changes in the amounts of provision for tax, civil, and labor risks and contingent liabilities related to the period prior to January 31, 2014. (See Note 24).

•

The fair value calculation of notes in the foreign market (see Note 16.b) is based on the quoted price in an active market.

The fair value of other financial investments, financing and leases payable was determined using calculation methodologies commonly used for mark-to-market reporting, which consist of calculating future cash flows associated with each instrument adopted and adjusting them to present value at the market rates as of the date of the interim financial information. For some cases where there is no active market for the financial instrument, the Company and its subsidiaries can use quotes provided by the transaction counterparties.

The interpretation of market information on the choice of calculation methodologies for the fair value requires considerable judgment and estimates to obtain a value deemed appropriate to each situation. Consequently, the estimates presented do not necessary indicate the amounts that may be realizable in the current market.

Financial instruments were classified as financial assets or liabilities measured at amortized cost, except (i) all exchange rate and interest rate hedging instruments, which are measured at fair value through profit or loss, financial investments classified as measured at fair value through profit or loss and financial investments that are classified as measured at fair value through other comprehensive income (see Note 4.b), (ii) loans and financing measured at fair value through profit or loss (see Note 16.a), (iii) guarantees to customers that have vendor arrangements (see Note 16.i), which are measured at fair value through profit or loss, and (iv) subscription warrants – indemnification, which are measured at fair value through profit or loss (see Note 24). Cash, banks, trade receivables and reseller financing are classified as measured at amortized cost. Trade payables, leases payable and other payables are classified as financial liabilities measured at amortized cost.

Ultrapar Participações S.A. and Subsidiaries

Notes to the Parent and Consolidated Interim Financial Information

(In thousands of Brazilian Reais, unless otherwise stated)

j.1 Fair Value Hierarchy of Financial Instruments

The financial instruments are classified in the following categories:

(a)

Level 1 - prices negotiated (without adjustment) in active markets for identical assets or liabilities;

(b)

Level 2 - inputs other than prices negotiated in active markets included in Level 1 and observable for the asset or liability, either directly (as prices) or indirectly (derived from prices).

The table below shows the categories of the financial assets and financial liabilities:


	Category	Note		03/31/2020		Level 1		Level 2
Financial assets:
Cash equivalents
Cash and banks	Measured at amortized cost		4.a		228,831		228,831		—
Financial investments in local currency	Measured at fair value through other comprehensive income		4.a		2,205,626		—		2,205,626
Financial investments in foreign currency	Measured at fair value through profit or loss		4.a		59,554		59,554		—
Financial investments:
Fixed-income securities and funds in local currency	Measured at fair value through profit or loss		4.b		2,165,064		2,165,064		—
Fixed-income securities and funds in local currency	Measured at fair value through other comprehensive income		4.b		582,003		—		582,003
Fixed-income securities and funds in local currency	Measured at amortized cost		4.b		77,554		—		77,554
Fixed-income securities and funds in foreign currency	Measured at fair value through other comprehensive income		4.b		590,485		21,158		569,327
Currency and interest rate hedging instruments	Measured at fair value through profit or loss		4.b		1,339,632		—		1,339,632
Trade Receivables	Measured at amortized cost		5.a		3,204,605		—		3,204,605
Reseller Financing	Measured at amortized cost		5.b		799,966		—		799,966

Total					11,253,320		2,474,607		8,778,713

Financial liabilities:
Financing	Measured at fair value through profit or loss		16		2,191,432		—		2,191,432
Financing	Measured at amortized cost		16		6,702,591		4,780,715		1,921,876
Debentures	Measured at amortized cost		16		5,291,026		—		5,291,026
Debentures	Measured at fair value through profit or loss		16		1,054,264		—		1,054,264
Leases payable	Measured at amortized cost		13		1,704,243		—		1,704,243
Currency and interest rate hedging instruments	Measured at fair value through profit or loss		16		261,555		—		261,555
Trade payables	Measured at amortized cost		17		2,385,308		—		2,385,308
Subscription warrants – indemnification ⁽¹⁾	Measured at fair value through profit or loss		24		47,293		—		47,293

Total					19,637,712		4,780,715		14,856,997

Ultrapar Participações S.A. and Subsidiaries

Notes to the Parent and Consolidated Interim Financial Information

(In thousands of Brazilian Reais, unless otherwise stated)


	Category	Note		12/31/2019		Level 1		Level 2
Financial assets:
Cash equivalents
Cash and banks	Measured at amortized cost		4.a		284,992		284,992		—
Financial investments in local currency	Measured at fair value through other comprehensive income		4.a		1,780,939		—		1,780,939
Financial investments in foreign currency	Measured at fair value through profit or loss		4.a		49,448		49,448		—
Financial investments:
Fixed-income securities and funds in local currency	Measured at fair value through profit or loss		4.b		1,937,967		1,937,967		—
Fixed-income securities and funds in local currency	Measured at fair value through other comprehensive income		4.b		595,816		—		595,816
Fixed-income securities and funds in local currency	Measured at amortized cost		4.b		76,904		—		76,904
Fixed-income securities and funds in foreign currency	Measured at fair value through other comprehensive income		4.b		303,417		18,985		284,432
Currency and interest rate hedging instruments	Measured at fair value through profit or loss		4.b		682,615		—		682,615
Trade Receivables	Measured at amortized cost		5.a		3,663,247		—		3,663,247
Reseller Financing	Measured at amortized cost		5.b		839,090		—		839,090

Total					10,214,435		2,291,392		7,923,043

Financial liabilities:
Financing	Measured at fair value through profit or loss		16		1,666,092		—		1,666,092
Financing	Measured at amortized cost		16		7,268,742		4,587,932		2,680,810
Debentures	Measured at amortized cost		16		5,603,669		—		5,603,669
Debentures	Measured at fair value through profit or loss		16		1,030,891		—		1,030,891
Leases payable	Measured at amortized cost		13		1,588,673		—		1,588,673
Currency and interest rate hedging instruments	Measured at fair value through profit or loss		16		29,985		—		29,985
Trade payables	Measured at amortized cost		17		2,678,808		—		2,678,808
Subscription warrants – indemnification ⁽¹⁾	Measured at fair value through profit or loss		24		130,657		—		130,657

Total					19,997,517		4,587,932		15,409,585

⁽¹⁾	Refers to subscription warrants issued by the Company in the Extrafarma acquisition.

The fair value of trade receivables and trade payables are classified as level 2.

100

Ultrapar Participações S.A. and Subsidiaries

Notes to the Parent and Consolidated Interim Financial Information

(In thousands of Brazilian Reais, unless otherwise stated)

k. Sensitivity Analysis of Derivative Financial Instruments

The Company and its subsidiaries use derivative financial instruments only to hedge against identified risks and in amounts consistent with the risk (limited to 100% of the identified risk). Thus, for purposes of sensitivity analysis of market risks associated with financial instruments, as required by CVM Instruction 475/08, the Company analyzes the hedging instrument and the hedged item together, as shown on the charts below.

For the sensitivity analysis of foreign exchange hedging instruments as of March 31, 2020 and December 31, 2019, management adopted as a likely scenario the Real/U.S. dollar exchange rates at maturity of each swap, projected by U.S dollar futures contracts quoted on B3. As a reference, the exchange rate for the last maturity of foreign exchange hedging instruments is R$ 8.57 (R$ 5.76 as of December 31, 2019) in the likely scenario. Scenarios II and III were estimated with a 25% and 50% additional appreciation or depreciation of the Brazilian Real against the likely scenario, according to the risk to which the hedged item is exposed.

Based on the balances of the hedging instruments and hedged items as of March 31, 2020 and December 31, 2019, the exchange rates were replaced, and the changes between the new balance in Brazilian Reais and the original balance in Brazilian Reais were calculated in each of the three scenarios. The table below shows the change in the values of the main derivative instruments and their hedged items, considering the changes in the exchange rate in the different scenarios:


03/31/2020	Risk	Scenario I Likely			Scenario II			Scenario III
Currency swaps receivable in U.S. dollars
(1) U.S. Dollar / Real swaps	Dollar appreciation		1,267,931			2,541,443			3,814,955
(2) Debts/firm commitments in dollars			(1,267,951	)		(2,541,505	)		(3,815,059	)

(1)+(2)	Net effect		(20	)		(62	)		(104	)

Currency swaps payable in U.S. dollars
(3) Real / U.S. Dollar swaps	Dollar devaluation		(339	)		19,437			39,213
(4) Gross margin of Oxiteno/Ipiranga			339			(19,437	)		(39,213	)

(3)+(4)	Net effect		—			—			—

Options
(5) Options Real / U.S. Dollar swaps	Dollar devaluation		(265,377	)		18,888			393,294
(6) Gross margin of Oxiteno			265,377			(18,888	)		(393,294	)

(5)+(6)	Net effect		—			—			—


12/31/2019	Risk	Scenario I Likely			Scenario II			Scenario III
Currency swaps receivable in U.S. dollars
(1) U.S. Dollar / Real swaps	Dollar appreciation		700,499			1,668,202			2,635,905
(2) Debts/firm commitments in dollars			(700,465	)		(1,668,031	)		(2,635,596	)

(1)+(2)	Net effect		34			172			309

Currency swaps payable in U.S. dollars
(3) Real / U.S. Dollar swaps	Dollar devaluation		376			62,559			124,742
(4) Gross margin of Oxiteno			(376	)		(62,559	)		(124,742	)

(3)+(4)	Net effect		—			—			—

Options
(5) Options Real / U.S. Dollar swaps	Dollar devaluation		—			42,101			102,917
(6) Gross margin of Oxiteno			—			(42,101	)		(102,917	)

(5)+(6)	Net effect		—			—			—

101

Ultrapar Participações S.A. and Subsidiaries

Notes to the Parent and Consolidated Interim Financial Information

(In thousands of Brazilian Reais, unless otherwise stated)

For sensitivity analysis of hedging instruments for interest rates in Brazilian Reais as of March 31, 2020 and December 31, 2019, the Company used the futures curve of the DI x Pre contract quoted on B3 as of March 31, 2020 for each of the swap and debt (hedged item) maturities, to determine the likely scenarios. Scenarios II and III were estimated based on a 25% and 50% deterioration, respectively, of the likely scenario pre-fixed interest rate.

Based on the three scenarios of interest rates in Brazilian Reais, the Company estimated the values of its debt and hedging instruments according to the risk which is being hedged (variations in the pre-fixed interest rates in Brazilian Reais), by projecting them to future value at the contracted rates and bringing them to present value at the interest rates of the estimated scenarios. The results are shown in the table below:


03/31/2020	Risk	Scenario I Likely			Scenario II			Scenario III
Swap de taxa de juros (em Reais) – Debentures—CRA
(1) Fixed rate swap—DI	Decrease in Pre-fixed rate		(245,922	)		(189,331	)		(127,428	)
(2) Fixed rate debt			245,922			189,331			127,428

(1) + (2)	Net effect		—			—			—


12/31/2019	Risk		Scenario I Likely			Scenario II			Scenario III
Swap de taxa de juros (em Reais) – Debentures—CRA
(1) Fixed rate swap—DI		Decrease in Pre-fixed rate		(195,123	)		(137,260	)		(74,027	)
(2) Fixed rate debt				195,123			137,260			74,027

(1) + (2)		Net effect		—			—			—

For the sensitivity analysis of the commodity price swings hedging instruments on March 31, 2020, the Company used the futures heating oil and gasoline (RBOB) contracts quoted on NYMEX. Scenarios II and III were estimated based on 25% and 50% deterioration, respectively, of the likely scenario commodity price.

Based on the balances of the hedging instruments and the objects hedged on December 31, 2019, prices were substituted and the variations between the new balance in Reais and the balance in Reais in the report date were calculated in each of the three scenarios. The table below shows the variation of the amounts of the derivative instruments and their objects of hedge, considering the variations in commodity prices in the different scenarios:


03/31/2020	Risk	Scenario I Likely		Scenario II			Scenario III
NDF Commodities
(1) NDF of Commodities	Decrease in Commodities Price		—		569,874			1,139,748
(2) Gross margin from Ipiranga			—		(569,874	)		(1,139,748	)

(1) + (2)	Net effect		—		—			—


12/31/2019	Risk	Scenario I Likely			Scenario II			Scenario III
NDF Commodities
(1) NDF of Commodities	Decrease in Commodities Price		100,542			1,490,893			2,881,245
(2) Gross margin from Ipiranga			(100,542	)		(1,490,893	)		(2,881,245	)

(1) + (2)	Net effect		—			—			—

102

Ultrapar Participações S.A. and Subsidiaries

Notes to the Parent and Consolidated Interim Financial Information

(In thousands of Brazilian Reais, unless otherwise stated)

34.

Commitments (Consolidated)

a.	*Contracts*

a.1 Subsidiary Tequimar has agreements with CODEBA and Complexo Industrial Portuário Governador Eraldo Gueiros, in connection with its port facilities in Aratu and Suape, respectively. Such agreements establish a minimum cargo movement of products, as shown below:


Port	Minimum movement in tons per year	Maturity
Aratu	397,000	2031
Aratu	900,000	2022
Suape	250,000	2027
Suape	400,000	2029

If the annual movement is less than the minimum contractual movement, the subsidiary is liable to pay the difference between the effective movement and the minimum contractual movement, based on the port tariff rates in effect on the date established for payment. As of March 31, 2020, these rates were R$ 8.37 per ton for Aratu and R$ 2.54 per ton for Suape. The subsidiary has met the minimum cargo movement required since the beginning of the contractual agreements.

a.2 Subsidiary Oxiteno S.A. has a supply agreement with Braskem S.A. which establishes and regulates the conditions for the supply of ethylene to Oxiteno based on the international market for this product. These contracts establish a minimum commitment to according to the table below:


Plant	Minimum purchase (tons) per year	Maturity
Camaçari	205,000	2021
Mauá	44,100	2023

Should the minimum purchase commitment not be met, the subsidiary would be liable for a fine based on the current ethylene price for the quantity not purchased. According to contractual conditions and tolerances, there are no material issues regarding the minimum purchase commitment.

103

Ultrapar Participações S.A. and Subsidiaries

Notes to the Parent and Consolidated Interim Financial Information

(In thousands of Brazilian Reais, unless otherwise stated)

b.	*Insurance Coverage*

The Company is supported by insurance policies with the objective of covering several risks to which it is exposed, including loss of profits, losses and damage from fire, lightning, explosion of any kind, gale, aircraft crash, electric damage, and other risks, covering the industrial plants and distribution bases and branches of all subsidiaries. The maximum compensation values based on the risk analysis of certain locations are shown below:


*Maximum compensation value ()**
Oxiteno		US$ 1,142 (equivalent to R$ 5,937 milion as of 03/31/2020) (*)
Ipiranga		R$ 1,469
Ultracargo		R$ 949
Ultragaz		R$ 266
Extrafarma		R$ 160

(*)	In millions. In accordance with policy conditions.

The General Liability Insurance program covers the Company and its subsidiaries with a maximum aggregate coverage of US$ 400 million (equivalent to R$ 2,079 million as of March 31, 2020), against losses caused to third parties as a result of accidents related to commercial and industrial operations and/or distribution and sale of products and services.

The Company maintains liability insurance policies for directors and executive officers to indemnify the members of the Board of Directors, fiscal council, directors and executive officers of Ultrapar and its subsidiaries (“Insured”) in the total amount of US$ 80 million (equivalent to R$ 416 million as of March 31, 2020), which cover any of the Insured liabilities resulting from wrongful acts, including any act or omission committed or attempted, except if the act, omission or the claim is consequence of gross negligence or willful misconduct.

In addition, group life and personal accident, health and national and international transportation, cyber risks and other insurance policies are also maintained.

The coverage and limit of the insurance policies are based on a careful study of risks and losses conducted by independent insurance advisors. The type of insurance is considered by management to be sufficient to cover potential losses based on the nature of the business conducted by the companies.

104

Ultrapar Participações S.A. and Subsidiaries

Notes to the Parent and Consolidated Interim Financial Information

(In thousands of Brazilian Reais, unless otherwise stated)

c.	*Area port lease*

On March 22, 2019, Ultrapar, through its subsidiary IPP, won the port concessions of three areas with minimum storage capacity of 64 thousand m³ located at the port of Cabedelo, in the state of Paraíba, and one area with minimum storage capacity of 66 thousand m³ at the port of Vitória, in the state of Espírito Santo, which will be designated for handling, storage and distribution of fuels. These concessions were carried out by two consortiums of which IPP holds one third of the total participation. For the port of Cabedelo, the companies Nordeste Logística I, Nordeste Logística II and Nordeste Logística III were incorporated, in partnership with Raízen Combustível S.A. and Petrobrás Distribuidora S.A. For the port of Vitória, the company Navegantes was incorporated, in partnership with Raízen Combustível S.A. and Petrobrás Distribuidora S.A. The total investments regarding IPP’s stake sums up to R$160 million for a concession term of 25 years.

On April 5, 2019, Company, through its subsidiary IPP and Tequimar, also won three concessions. IPP won two concessions in the port of Miramar, in Belém, state of Pará: (i) area BEL02A, through a consortium 50% owned by IPP,that shall have minimum storage capacity of 41 thousand m³, and (ii) area BEL04A, which is currently operated by IPP with minimum storage capacity of 23 thousand m³. Such areas will be operated for at least 15 years, according to the auction notice. For the area BEL02, Latitude was incorporated, together with Petróleo Sabbá S.A.. Tequimar won the concession of area VDC12 in the port of Vila do Conde, in Barcarena, state of Pará. The minimum storage capacity will be 59 thousand m³. The area will be operated by Tequimar for at least 25 years, according to the auction notice. For the area VDC12, Tequimar Vila do Conde Logística Portuária S.A. was incorporated (see Note 3.b). The estimated investments regarding the participation of IPP and Tequimar sums up to R$ 450 million, approximately, to be disbursed throughout the next five years including the auction grants and the minimum investment required for these areas.

35. Clarifications on the impacts of COVID-19

The World Health Organization (“WHO”) declared a coronavirus pandemic (COVID-19) on March 11, 2020. To contain a spread of the virus in Brazil, the Ministry of Health (“MH”) and the state governments announced several actions to reduce the agglomeration and movement of people, including the closing of commerce, parks and common areas. In this context, the Company created a Crisis Committee to keep up with it and monitor the main risks and adopt preventive and emergency measures to reduce the pandemic effects.

In the terms of Decree n° 10,282/20, which regulates Law n° 13,979/20 and define public services and essential activities in the context of the actions adopted to face the pandemic, the operational activities of the Company and its subsidiaries are classified as essential and remain in normal operation. In this case, the Company and its subsidiaries are following the orientations of the MH and the WHO to preserve the integrity of its employees, collaborators and continuity of operations.

It is also unclear the extent to which the interim financial information for periods after March 31, 2020 may be affected by the commercial, operational and financial impacts of the COVID-19 pandemic. Certain of the financial risk assessments and impairment tests, in connection with the preparation of interim financial information, may be impacted by the COVID-19 pandemic, which may adversely impact the financial position of the Company and subsidiaries.

105

Ultrapar Participações S.A. and Subsidiaries

Notes to the Parent and Consolidated Interim Financial Information

(In thousands of Brazilian Reais, unless otherwise stated)

Operational impacts

The restrictions on the movement of people and the operation of certain businesses significantly impacted economic activity in Brazil.

Among the Company’s businesses, Ipiranga was the most affected by the immediate effects of the pandemic and, starting in the second half of March, it registered an abrupt decline in the volume of fuel sales, with a more significant impact on the Otto cycle. In addition, the decrease in world demand for oil and oil products caused the marked volatility in the prices of these commodities, leading to margin losses for Ipiranga.

Oxiteno Brasil suffered a reduction in demand from Asian countries, in contrast to an increase in domestic sales in the Home & Personal Care segment. In addition, Oxiteno benefited from the effect of the depreciation of the Real against the dollar on its results.

In relation to Ultragaz, there was an increase in the demand for LPG for residential use, boosting sales in the bottled segment. The bulk segment began to feel the initial effects of the pandemic in the last days of March, especially in volumes for small and medium-sized companies. The decrease in demand for fuels led to a reduction in capacity utilization at Brazilian refineries, reducing LPG production. To guarantee the continuity of the product offer, Petrobras, the main supplier of LPG, increased imports. As a result, Ultragaz incurred higher freight costs, due to the need to remove products from more distant hubs.

At Ultracargo, there were no impacts resulting from the pandemic in the first quarter of 2020, since the volume of liquid bulk movimented in ports remained stable.

Extrafarma presented an increase in billing throughout March, mainly due to an anticipated sales in the medication segments, an effect related to the pandemic, which was offset by the reduction in the movement of customers in stores from the last week of March and in the number stores in operation. Due to the social distancing, 7% of Extrafarma stores are not operating, as they are located mainly in shoppings centers, and about 85% of stores are operating with reduced hours. To minimize the impact of the lower flow of customers in stores, Extrafarma has been operating through a partnership with applications, telesales and delivery.

In view of the impacts on its business and given the uncertainties resulting from the pandemic, the Company suspended the financial projections for 2020 disclosed in a material fact of March 3, 2020, since the main assumptions used for such projections, such as GDP growth and exchange rate, no longer represented market consensus. The volatility and speed of change in scenarios do not allow, at this moment, a new projection to be established.

Main risks and associated measures

Credit risk - the subsidiary Ipiranga implemented a help package for Ipiranga resellers, including anticipation of sales credits through the Abastece Aĺ application, postponement of rent and financing payments and temporary suspension of volume performance clauses. These actions aim to mitigate potential effects on default rates. However, if the effects of the pandemic worsen on our customers’ operations, there may be growth of the expected losses on doubtful debts in the next quarters. The effects of expected losses on doubtful debts for the three-month period ended March 31, 2020 are disclosed in Notes 5 and 33.d.

Risk of impairment of goodwill and intangible assets of indefinite useful life - the Company reviewed the projections used in the impairment tests of goodwill and assets allocated to cash-generating units, considering the current impacts of the pandemic. The review did not result in the need for additional recognition of a provision for losses on March 31, 2020. If the impacts of the pandemic worsen on the operations, the subsidiary Extrafarma may present an additional provision for the balance of goodwill in the amount of R $ 68,273 in quarters future.

Risk of realization of deferred tax assets - the Company revised the constitution and realization of deferred tax credits, considering the current revised projections for each business segment as a result of the pandemic, and did not identify the need for write-offs for the period ended March 31 2020. If the effects of the pandemic worsen, the subsidiaries Oxiteno and Extrafarma may need to partially lower their deferred tax assets, in the portion that exceeds the 10 year term in future quarters.

Risks in financial instruments - the increase in volatility in financial markets may impact financial results according to sensitivity analysis presented in note 33.

Liquidity risk - the impact on the volumes of operations and on the results of the Company and its subsidiaries may affect negatively the generation of operating cash. Thus, as a measure of cash containment, the Company announced on April 1 the reduction of approximately 30% in its investment plan for 2020. Additionally, with the objective of reinforce liquidity and cash position, at the end of March and beginning as of April 2020, the Company and the subsidiary IPP contracted R$ 1.5 billion in new financing maturing in one year. Of this total, R $ 1.3 billion was obtained through the issuance of promissory notes with a credit of R$ 1.0 billion on April 6, R$ 0.3 billion on April 8 and R$ 180 million through a bank credit bill on March 25.

36.

Subsequent Event (Consolidated)

Issued of promissory notes

On April 2020, the Company issued notes in the amount of R$ 1 billion, with maturity in April 2021 and interest of DI + 3.10% p.a., paid in the maturity. In the same period, the subsidiary IPP issued notes in the amount of R$ 300 milion with maturity in April 2021 and interest of DI + 2.00% p.a., paid in the maturity.

106

LOGO

São Paulo, May 13, 2020 – Ultrapar Participações S.A. (“Company”, B3: UGPA3/NYSE: UGP), a Company engaged in the Oil & Gas sector through Ipiranga, Ultragaz and Ultracargo, specialty chemicals through Oxiteno and retail pharmacy with Extrafarma, today announces its results for the first quarter of 2020.


Net revenues	Adjusted EBITDA	Net income
R$ 21 billion	R$ 880 million	R$ 169 million
Investments	Cash flow from operations	Market Cap
R$ 350 million	R$ 0.9 billion	R$ 14 billion

Highlights

The year of 2020 in Brazil began on a promising note as well as in our businesses, with the outlook for growth across practically all our segments. However, Brazil and the world have since been stricken by the novel coronavirus pandemic, creating an unprecedented crisis in the health system with grave consequences for the world economy in view of the need for measures of social distancing and restrictions on the mobility of people. In March at Ultrapar we proceeded to set up a Crisis Committee to act along three fronts: the health and safety of our employees and partners; our operations and their respective links in the value chain; and our financial soundness. In addition, we have been undertaking social initiatives on a regional basis for contributing to the combat of the pandemic. We are confident that we will successfully outcome this challenge and emerge stronger from the crisis.

The activities of Ultrapar’s wholly owned subsidiaries are classified as essential in the combat of the pandemic and consequently they remain fully operational, despite the challenges presented to operations and people alike in maintaining business continuity. The fallout from the pandemic had immediate impacts more especially on our fuels distribution business both in the form a 27% year-on-year decline in sales volume and in terms of losses in the final weeks of March due to the sharp decline in the prices of oil and its derivatives. In this scenario of greater uncertainty, we have adopted some emergency measures such as a 30% reduction in our investment plan for 2020, an increase in our cash position through further credit facilities worth a total of R$ 1.5 billion and the withdrawal of our guidance on results for 2020. We closed the quarter with a cash balance in excess of R$ 7.0 billion and average duration for debt amortization of approximately five years. In addition to financial liquidity, the stronger cash position was crucial to the implementation of a comprehensive assistance package to our partners in Ipiranga’s value chain and thereby providing greater soundness to the fuels distribution system in Brazil as a whole.

In 1Q20, Ipiranga was the only business to experience significant impacts from the pandemic. In contrast, we were able to report improvements in results at Ultragaz, Oxiteno, Ultracargo and Extrafarma compared with the first quarter of 2019.

LOGO

LOGO

The financial information presented in this document has been prepared according to International Financial Reporting Standards (IFRS) norms. The financial information of Ultrapar corresponds to the Company’s consolidated information. The information on Ipiranga, Oxiteno, Ultragaz, Ultracargo and Extrafarma is reported without the elimination of intersegment transactions. Therefore, the sum of such information may not correspond to Ultrapar’s consolidated information. Additionally, the financial and operational information presented in this document is subject to rounding and, consequently, the total amounts presented in the tables and charts may differ from the direct sum of the amounts that precede them.

We emphasize that all the financial information presented in this document includes the adoption of the IFRS 16 norm and the segregation of certain expenses pertaining to the Holding.

Information denominated EBITDA – Earnings Before Interest, Taxes on Income and Social Contribution on Net Income, Depreciation and Amortization; Adjusted EBITDA – adjusted for amortization of contractual assets with customers - exclusive rights and cash flow hedge; and EBIT – Earnings Before Interest and Taxes on Income and Social Contribution on Net Income is presented in accordance with Instruction 527, issued by the Brazilian Securities and Exchange Commission – CVM on October 4, 2012. The calculation of EBITDA based on net earnings is shown below:


R$ million	1Q20		1Q19		4Q20
Net income	168.9		242.6		(267.7	)
(+) Income and social contribution taxes	137.1		168.2		(18.6	)
(+) Financial (income) expenses, net	167.6		(0.8	)	252.1
(+) Depreciation and amortization	303.7		288.8		301.9
EBITDA	777.3		698.7		267.7
Adjustments
(+) Amortization of contractual assets with customers - exclusive rights (Ipiranga and Ultragaz)	82.9		83.6		81.9
(+) Cash flow hedge from bonds	19.6		—		11.9
Adjusted EBITDA	879.8		782.3		361.5
Non-recurring items
(+) Tax credits in Oxiteno	(70.9	)	—		—
(+) Impairment at Extrafarma	—		—		593.3
(+) Write-off of Oxiteno Andina’s assets	—		—		14.0
Adjusted EBITDA ex-non-recurring items	808.9		782.3		968.8

COVID-19

Initiatives for combatting the crisis

Since the outset of the crisis, Ultrapar and its subsidiaries have been operating on multiple fronts to ensure the safety of their employees, the stability and continuity of their operations and the financial soundness of the Company. All the activities of the subsidiaries are classified as essential in the context of the measures implemented to face the pandemic pursuant to Decree 10,282/20, which regulates Law 13,979/20, and, therefore, the Group’s companies remain fully operational.

In addition to the efforts to maintain operational continuity and to attend our clients, the Company has implemented several initiatives as a contribution to the national front for combatting the crisis, such as:

•

Donation by Ipiranga for the construction of a hospital in the city of Porto Alegre, jointly with Gerdau, Hospital Moinhos de Vento, Grupo Zaffari and other companies - which will remain as an important legacy in the future for the entire population;

•

Donation via Instituto Brasileiro de Petróleo for the construction of a field hospital in Rio de Janeiro and donation of 70º alcohol to public hospitals in the country, in addition to the purchase of masks and alcohol gel for distribution by Ipiranga;

•

An assistance package for Ipiranga resellers, including the anticipation of credits from sales through the Abastece Aí app, postponement of rental payments and financings and temporary suspension of volume-related sales performance clauses;

•

Distribution of 100 thousand liters of alcohol gel sanitizer at cost price to franchisees, as well as an increased product assortment and partnerships with iFood and Uber Eats, all implemented by am/pm;

•

Donation of 335 thousand liters of diesel fuel in the support of the distribution of 70º alcohol and support for truckers through the donation of hygiene kits by Ipiranga;

•

Concession of a 10% discount on fuels for healthcare personnel through the Abastece Aí app;

•

Collective donation of ventilators from companies in the Camaçari Petrochemical Complex including Oxiteno, Ultragaz and Ultracargo;

•

Donation of (i) 6 thousand basic food baskets in Salvador, (ii) 650 thousand soap bars to over 30 cities, (iii) 8 thousand P-13 bottles in São Paulo and (iv) 50 thousand masks and 10 thousand tubes of alcohol gel for resellers, by Ultragaz;

•

Support for the construction of the Grajaú hospital (Sírio Libanês) in São Paulo, as well as installations and supply of LPG in several hospitals in São Paulo and Bahia, by Ultragaz;

•

Distribution of informative flyers from the Ministry of Health in 18 states, by Ultragaz;

•

Donation of 100 beds to the health department of the State of Maranhão, to build a field hospital, by Ultracargo;

•

Donation to support the reactivation of Hospital Alfa in Recife, by Ultracargo;

•

Disposal of space and infrastructure for the vaccination of ten thousand people in the state of Pará by Extrafarma in partnership with the state government; and

•

Donation of 45 thousand face masks and 45 thousand gloves to the state of Maranhão by Extrafarma and Ultracargo and 65 thousand face masks and 65 thousand gloves to the states of Pará and Ceará by Extrafarma.

Operational impacts

To soften the effects of the pandemic on the national healthcare system, the state governments have introduced social distancing measures, restricting the mobility of people and the operation of certain businesses (“lockdown”), with a significant impact on the country’s economic activities.

Among Ultra Group’s businesses, Ipiranga was the most immediately affected by the pandemic and, as from the second half of March, recorded a sharp drop in fuel sales volume, with the most significant impact being the Otto cycle segment. In addition, a sharp reduction in global demand for oil and its derivatives led to an high volatility in prices for these commodities, causing inventory losses at Ipiranga.

Oxiteno Brasil experienced a reduction in demand from Asian countries, while there was an increase in domestic sales in the Home & Personal Care segment. In addition, Oxiteno benefited from the effect of the depreciation of the Real against the dollar on its results.

For Ultragaz, there was an increase in demand for residential LPG, driving sales in the bottled gas segment. On the other hand, in the final days of March, the initial effects of the pandemic began to impact the bulk segment, more notably in volumes to small and medium size companies. The drop in demand for fuels led to a reduction in capacity utilization at Brazilian refineries, reducing LPG production. To secure the continuity of product supply, Petrobras, the leading supplier of LPG, increased imports. Thereby, Ultragaz incurred higher freight costs given the need to source products from more distant supply bases.

At Ultracargo, the pandemic had no impact on business in 1Q20 as handling activity of liquid bulk cargo at the ports remained stable.

Extrafarma posted an increase in sales throughout March, mainly due to an anticipation in sales in the pharmaceutical segment, as a result of the pandemic, which was counteracted by a reduction in customer traffic through the stores in the final week of that month and in the number of stores open for business. With the lockdown, 7% of Extrafarma’s stores - mostly those in shopping centers - are not operating, while about 85% of the units have shortened operating periods. In order to minimize the impacts of lower store traffic, Extrafarma have been operating through partnerships with delivery apps, telemarketing and delivery.

Liquidity

In the light of the uncertainty arising from the pandemic, at the end of March and in early April, the Company and its subsidiaries strengthened their liquidity and cash position, contracting R$ 1.5 billion in new financing with a 12-month term. Of this total, on April 6, R$ 1.3 billion was raised through the issuance of promissory notes amounting to R$ 1.0 billion and on April 8, a further R$ 0.3 billion. In order to preserve cash, the Company also announced on April 1 a reduction of approximately 30% in its investment plan for 2020.

In addition, as announced in a material notice to the market on March 3, 2020, Ultrapar has withdrawn its financial guidance for 2020, considering that the principal assumptions used in the forecasts such as GDP growth and exchange rates no longer represent the market consensus. The volatility and speed of changing scenarios at this time no longer allow new projections to be made.

Ipiranga


	1Q20		1Q19		4Q19		D 1Q20 v 1Q19			D 1Q20 v 4Q19
Total volume (000 m³)		5,490		5,587		6,112		(2%	)	(10%)
Diesel		2,722		2,674		2,905		2%		(6%)
Otto cycle		2,669		2,810		3,116		(5%	)	(14%)
Others¹		99		102		92		(3%	)	9%
EBITDA (R$ million)		480		597		699		(20%	)	(31%)

¹	Fuel oils, arla 32, kerosene, lubricants and greases

Operational performance – Ipiranga reported a decline of 2% in sales volume in relation to 1Q19, due to a 5% drop in Otto cycle sales with the onset of the COVID-19 pandemic, which had a significant impact on sales volume in the second half of March. This was attenuated by a 2% growth in diesel sales mainly driven by demand from the reseller and TRR segments. Ipiranga’s sales volume in January and February 2020 increased 0.7% in comparison with the same period in 2019, while the volume for March 2020 posted a reduction of 6.4% vs. March 2019. In relation to 4Q19, volumes were 10% lower, reflecting both a 14% reduction in Otto cycle and 6% in diesel sales, again due the impacts of the COVID-19 pandemic and also the seasonal variation between periods.

Net revenues – Total R$ 17,900 million (+3%) due mainly to the increase in average unit costs of oil derivatives and ethanol in addition to higher sales at ICONIC, despite lower sales volume. Compared to 4Q19, net revenues fell 12%, as a result of lower sales volume and a decrease in the average unit costs of fuels during 1Q20.

Cost of goods sold – Total of R$ 17,205 million (+4%), mainly due to the increase in Ipiranga’s average unit cost, reflecting the impact of the devaluation of the Real on the reference prices of oil derivatives, despite price reductions at Petrobras over the course of the quarter. In relation to 4Q19, the cost of goods sold fell 11%, due to lower sales volume and fuel handling costs in the period.

Sales, general and administrative expenses (“SG&A”) – Total of R$ 467 million (-4%), principally due to lower freight expenditures, marketing programs and initiatives taken for reducing expenses. In relation to 4Q19, sales, general and administrative expenses fell by 11% due to lower expenditure with freights, administrative expenses and lower expenses at ICONIC, in spite of the increase in PDD.

Other operating results – Increase of R$ 20 million (+83%) in relation to 1Q19, due to the constitution of extraordinary PIS/COFINS tax credits amounting to R$ 39 million, attenuated partially by lower merchandizing fees from suppliers.

EBITDA – Total of R$ 480 million (-20%), reflecting lower sales volume and squeezed margins worsened by inventory losses during the period, attenuated by the management of costs and expenses and by improved results at ICONIC. In relation to 4Q19, EBITDA posted a decrease of 31%, due to seasonal variation between periods and the initial impacts of the pandemic on volumes and margins as already mentioned.

Investments – Ipiranga invested a total of R$ 196 million in the expansion and maintenance of the service station and franchise networks, as well as in Ipiranga logistical infrastructure. Out of total investments, R$ 51 million was expended on plant, property and equipment and additions to intangible assets, R$ 142 million on contractual assets with clients (exclusive rights) and R$ 4 million in the form of drawdowns of financing to clients and advance payments of rentals, net of receipts. Ipiranga closed 1Q20 with 7,106 service stations, a net addition of 16 in relation to 4Q19.

Oxiteno


	1Q20		1Q19		4Q19		D 1Q20 v 1Q19			D 1Q20 v 4Q19
Average exchange rate (R$/US$)		4.46		3.77		4.12		18%			8%
Total volume (000 tons)		181		180		175		0%			3%
Specialty chemicals		148		148		142		0%			5%
Commodities		32		32		33		2%			(3%	)
Sales in Brazil		128		124		125		3%			2%
International sales		53		56		50		(6%	)		7%
EBITDA ex-non-recurring items¹ (R$ million)		122		40		71		207%			72%
EBITDA (R$ million)		193		40		57		386%			239%

¹	Excludes the effects of the write-off of Oxiteno Andina’s assets in 4Q19 and the tax credits in 1Q20

Operational performance – Specialty chemical volume was flat in relation to 1Q19, with higher sales from the Crop Solutions and Home & Personal Care segments in the domestic market, combined with greater sales volume in the United States, with the ramp up of the Pasadena plant. This result was achieved despite a reduction in the export of solvents to Asian markets, a reflection of the COVID-19 pandemic. Sales volume of commodities was 2% up in relation to 1Q19, principally due to opportunities for spot exports of glycols. In relation to 4Q19, total sales volume increased by 3%, boosted by a 5% growth in specialty chemicals, principally due to higher sales in the United States, partially offset by the reduction of 3% in commodities’ sales.

Net revenues – Total of R$ 1,108 million (+5%) due to the devaluation of 18% in the Real against the US Dollar (R$ 0.69/US$), despite a 10% reduction in average prices in USD, following the decline of prices on the international market. In relation to 4Q19, net revenues increased by 10% for the same reasons as already described.

Cost of goods sold – Total of R$ 877 million (-2%) due to a reduction in the costs of some raw materials, notably ethylene and palm kernel oil (PKO), in spite of the Real suffering a further devaluation of 18% against the US dollar (R$ 0.69/US$). Compared with 4Q19, the cost of goods sold increased by 6%, mainly due to higher sales volume and an 8% devaluation of the Real in relation to the US dollar (R$ 0.34/US$).

Sales, general and administrative expenses (“SG&A”) – Total of R$ 194 million (+13%), due to higher expenditures with freights, the impact from foreign exchange variation at the international units and amortization of software, attenuated by lower expenditures with payroll, IT, consultancies and maintenance, in the light of postponed plant shutdowns. In relation to 4Q19, sales, general and administrative expenses fell by 1%, due to the reduction of payroll expenditure in Brazil (principally in the form of severance indemnities) and in the USA. These effects were compensated by an increase in expenses with freight and higher sales volume.

Other operations – Total of R$ 72 million in 1Q20, a result of the constitution of one-off tax credits related to the exclusion of the ICMS tax from the PIS/COFINS tax calculation in the amount of R$ 71 million.

EBITDA – Oxiteno reported a total of R$ 193 million (+386%), or R$ 122 million (+207%), excluding the non-recurring effect of the constitution of tax credits in 1Q20, due to higher contribution margins in US$/ton and a further 18% devaluation in the Real against the US Dollar (R$ 0.69/US$). In relation to 4Q19, excluding non-recurring effects, EBITDA increased by 72%, due mainly to a greater sales volume and the exchange rate variation.

Investments – Investments in the period were R$ 44 million, allocated mainly for maintenance and safety of the industrial units.

Ultragaz

1Q20

1Q19

4Q19

D
1Q20 v 1Q19

D
1Q20 v 4Q19

Total volume (000 tons)

421

395

432

(2%)

Bottled

288

270

300

(4%)

Bulk

134

126

132

EBITDA (R$ million)

147

110

168

34%

(12%)

Operational performance – Sales volume at Ultragaz in 1Q20 grew 7% compared with 1Q19 - a better performance than the 5% growth reported by the market as a whole for the quarter - with gains in market share both for the bottled and bulk segments. In the bottled segment, volumes were up by 7% YoY, driven at the end of the quarter by higher residential consumption due to the pandemic, with emphasis on the increase in sales in the Midwest and Southeast regions. In the bulk segment, despite the early signs of the crisis’ effect at the end of March, volumes were 6% higher principally due to stronger sales to industries, condominiums and of special gases (propellants). In relation to 4Q19, sales volume was 2% lower, a reflection of the seasonal variation between periods.

Net revenues – Total of R$ 1,762 million (+7%), in line with the higher sales volume. In relation to 4Q19, net revenues fell 1%, due to lower sales volume and readjustments in the costs of LPG.

Cost of goods sold – Total of R$ 1,523 million (+6%), mainly due to higher sales volume. In relation to 4Q19, the cost of goods sold was stable, due to readjustments in LPG costs and greater disbursement for the requalification of gas bottles, these effects were mitigated by lower sales volume.

Sales, general and administrative expenses (“SG&A”) – Total of R$ 154 million (-4%), due to lower expenses with payroll, lawsuits and reduced expenses with provisions for doubtful accounts, despite of an increase in freight charges. Compared with 4Q19, sales, general and administrative expenses fell 6%, due to higher expenses related to legal proceedings involving tax issues in 4Q19, besides the factors described above.

EBITDA – Total of R$ 147 million (+34%), due to higher sales volume and a reduction in expenses. Compared with 4Q19, EBITDA was 12% lower due largely to the seasonal variation between periods.

Investments – Ultragaz invested R$ 57 million in the replacement and acquisition of gas bottles, set up of new Ultrasystem clients and the maintenance of filling plants. Out of total investments, R$ 53 million was expended on plant, property and equipment and additions to intangible assets and R$ 4 million on contractual assets with clients (exclusive rights).

Ultracargo


	1Q20		1Q19		4Q19		D 1Q20 v 1Q19		D 1Q20 v 4Q19
Effective storage¹ (000 m³)		907		758		847		20%	7%
m³ sold (000 m³)		3,149		2,594		2,959		21%	6%
EBITDA (R$ million)		91		60		54		52%	69%

¹	Monthly average

Operational performance – Ultracargo’s average storage and m³ sold increased 20% and 21%, respectively, in relation to 1Q19, largely due to the greater handling of fuels following the startup of the expanded capacity at the Santos and Itaqui terminals over the LTM, as well as increased handling at Suape and Aratu. In relation to 4Q19, average terminal storage rose 7% and m³ sold were up 6% due to higher handling of ethanol and fuels at Aratu and Suape, offset by lower ethanol handling in Santos.

Net revenues – Total of R$ 163 million in 1Q20 (+29%), driven by the increase in fuels handling, new agreements and contractual readjustments. In relation to 4Q19, net revenues rose 7% in line with greater storage.

Cost of services provided – Total of R$ 63 million (+6%) due to higher costs of payroll and maintenance, following the expanded capacity at the Santos and Itaqui terminals. In relation to 4Q19, the cost of services provided fell 15% due to the concentration of expenditure with payroll, materials, maintenance and services associated with the increase in capacity at the Santos terminal in 4Q19.

Sales, general and administrative expenses (“SG&A”) – Total of R$ 33 million (+14%), mainly due to higher payroll and asset depreciation expenses. Relative to 4Q19, sales, general and administrative expenses decreased 24%, due to non-recurring expenditures incurred with the startup of the expanded operations of the Santos and Itaqui port terminals as well as payroll expenditures, principally severance indemnities, both in 4Q19.

Other operating results – Total of R$ 3 million related mainly to a favorable ruling on the repayment of the compulsory loan to Eletrobrás amounting to R$ 4 million.

EBITDA – Total of R$ 91 million (+52%), reflecting the capacity expansion and contractual readjustments, attenuated by the increase in costs and expenses. In relation to 4Q19, EBITDA was 69% greater due to increased handling activity and a reduction in costs and expenses.

Investments – Ultracargo recorded investments in the quarter of R$ 18 million, largely related to the expansion at Itaqui, operational safety and maintenance at the terminals.

Extrafarma


	1Q20		1Q19		4Q19			D 1Q20 v 1Q19			D 1Q20 v 4Q19
Drugstores (end of period)		411		440		416			(7%	)	(1%)
% mature stores (+3 years)		60%		46%		55%			13.9 p.p.		5.3 p.p.
Gross revenues (R$ million)		521		546		528			(5%	)	(1%)
EBITDA ex-non-recurring items¹ (R$ million)		9		1		(10	)		630%		n/a
EBITDA (R$ million)		9		1		(603	)		630%		n/a

¹	Excluding impairment of goodwill of the acquisition in 4Q19

Operational performance – Extrafarma ended 1Q20 with 411 stores, 20 store openings and 49 closures in the past 12 months, a reduction of 7% in its network, the result of greater selectivity in investments and a more rigorous approach to closing down underperforming stores. At the end of 1Q20, stores in the process of maturation (with up to three years of operations) represented 40% of the network. Relative to 4Q19, Extrafarma reported a net reduction of 5 stores.

Gross revenues – Total of R$ 521 million, a reduction of 5% compared with 1Q19, mainly due to lower number of stores and lower sales in the wholesale segment, partially offset by the maturation of new stores. Compared with 4Q19, the company reported a 1% reduction in gross revenue, a reflection of lower store numbers and revenue in the wholesale segment.

Cost of goods sold and gross profit – The cost of goods sold totaled R$ 349 million (-7%), a reflection of lower sales. Extrafarma reported gross profits of R$ 145 million (+2%), equivalent to a gross margin of 28% due mainly to better margins in the retail segment, and lower participation in the wholesale segment, that presents lower sales margin. Compared with 4Q19, the cost of goods sold remained unchanged and gross profit fell 6%, as a result of the seasonal variation between periods.

Sales, general and administrative expenses (“SG&A”) – Total of R$ 174 million (-6%), mainly due to lower number of stores and to the initiatives for ramping up productivity and logistical optimization, highlighting the reduction in the payroll expenses and the unveiling of the Distribution Center in Guarulhos. In relation to 4Q19, sales, general and administrative expenses fell by 2% due to decreased payroll expenses and operational improvements at the distribution centers.

Other operating results – Reduction of R$ 9 million vs. 1Q19 due to non-recurring tax credits reported in 1Q19. In relation to 4Q19, there was an increase of R$ 8 million following the one-time tax credits reversal in the compared period.

EBITDA – Total of R$ 9 million compared to R$ 1 million posted in 1Q19 due to improved margins and gains in productivity, partially neutralized by non-recurring tax credits in 1Q19. In relation to 4Q19, the improvement in the results is due mainly to the impairment of the goodwill from the acquisition of Extrafarma and the writing down of investments due to the closure of stores, both in 4Q19.

Investments – In 1Q20, Extrafarma invested R$ 11 million, allocated mainly to IT, maintenance and revitalization of stores.

Ultrapar


Amounts in R$ million	1Q20	1Q19	4Q19		D		D
Amounts in R$ million	1Q20	1Q19	4Q19		1Q20 v 1Q19		1Q20 v 4Q19
Net revenues	21,387	20,739	23,663		3%		(10%	)
Net income ex-non-recurring¹	71	243	133		(71%	)	(47%	)
Net income	169	243	(268	)	(30%	)	n/a
Earnings per share attributable to shareholders²	0.15	0.22	(0.25	)	(33%	)	n/a
EBITDA ex-non-recurring¹	809	782	969		3%		(17%	)
Adjusted EBITDA	880	782	362		12%		143%
Investments	350	268	555		31%		(37%	)
Operating cash flow	932	462	476		102%		96%

¹	Excludes the impairment at Extrafarma and the write-off of Oxiteno Andina, both in 4Q19, and tax credits at Oxiteno in 1Q20

²	Calculated in Reais based on the weighted average number of shares over the period, net of shares held as treasury stock. These amounts consider the stock split in April/2019

Net revenues – Total of R$ 21.387 million (+3%) due to the increase in net revenues at Ipiranga, Oxiteno, Ultragaz and Ultracargo. In relation to 4Q19, net revenues fell 10%, due to a decline in revenues at Ipiranga, Ultragaz and Extrafarma.

Adjusted EBITDA – Total of R$ 880 million (+12%) or R$ 809 million (+3%), excluding the non-recurring effect of tax credits at Oxiteno, reflecting the increase in EBITDA of Oxiteno, Ultragaz, Ultracargo and Extrafarma. Compared with 4Q19 and excluding the effects of non-recurring items, Adjusted EBITDA fell 17%, due to the decline in EBITDA at Ipiranga and Ultragaz, mainly the result of seasonal variations between periods and the impact of COVID-19 on Ipiranga in 1Q20.

Depreciation and amortization³ – Total of R$ 387 million (+4%), mainly the result of greater amortization of software at Oxiteno. Compared with 4Q19, total costs and expenses with depreciation and amortization increased by 1%.

Financial result – Ultrapar reported a net financial expense of R$ 168 million in 1Q20 compared with a net financial income of R$ 1 million in 1Q19. This reflected the deterioration in the result for the exchange rate hedging instruments, attenuated by the tax credits generated from the exclusion of the ICMS sales tax from the PIS/COFINS calculation base amounting to R$ 78 million. The negative result from the mark-to-market of FX hedges refers mainly to the derivative instruments contracted in 1Q20 for protecting Oxiteno’s operating margins in Reais from the fluctuation of the exchange rate (Zero Cost Collar). This was partially attenuated by the positive result from the mark-to-market of the hedging instruments for protecting the exchange rate variation on US Dollar denominated bonds. In relation to 4Q19, financial expenses fell R$ 84 million, explained largely by the appropriation of interest from tax credits with respect to the exclusion of ICMS from the above-mentioned PIS/COFINS calculation base and the depreciation of Ultrapar’s shares relative to the subscription bonus, despite the negative result from the exchange rate hedges.

Net income – Total of R$ 169 million (-30%) or R$ 71 million (-71%), excluding the non-recurring effect of tax credits at Oxiteno, due to the impacts of the COVID-19 pandemic on the result for 1Q20 and the increase in financial expense, as explained above, attenuated by the higher EBITDA. In relation to 4Q19 and excluding the non-recurring effects, net income fell 47%, due to a lower EBITDA, offset by a lower financial expense.

Cash flow from operational activities – Cash generation of R$ 932 million in 1Q20, compared to a generation of R$ 462 million in 1Q19, largely due to the greater divestment in working capital in the quarter.

Result of Holding, affiliates and digital initiatives – In addition to the five principal businesses, Ultrapar reported a negative EBITDA of R$ 39 million, comprising of R$ 26 million of the Holding’s expenses, R$ 4 million negative EBITDA from the digital initiatives and R$ 9 million negative EBITDA from affiliates. In relation to the digital initiatives, the negative EBITDA is the result of payroll and technology expenses, while the negative EBITDA at affiliates relates primarily to lower margins and inventory losses at the Riograndense refinery following the sharp drop in oil and oil derivative prices.

³ Includes amortization of contractual assets with clients – exclusive rights

Capital markets

Incorporating trading on B3 and NYSE, Ultrapar reported an average daily trading volume of R$ 224 million/day in 1Q20 (+20%). Ultrapar’s shares closed the quarter quoted at R$ 12.53 on B3, a reduction of 51% in the quarter while the Ibovespa stock index was down 37% in 1Q20. In NYSE, Ultrapar’s shares posted a devaluation of 61% in 1Q20, while the Dow Jones stock index registered a depreciation of 23%. Ultrapar closed 1Q20 with a market cap of R$ 14 billion.

On February 19, 2020, the Board of Directors confirmed the issue of 2,108,542 common shares, within authorized capital limits, due to the partial exercising of the subscription warrants delivered to the former shareholders of Extrafarma at the time of the incorporation of shares of this company approved in 2014.

Share prices as well as the average daily volume of shares and ADRs traded and shown in the table below, already reflect this issue.


Capital markets	1Q20		1Q19		4Q20
Number of shares (000)		1,114,919		1,112,810		1,112,810
Market capitalization¹ (R$ million)		13,970		26,151		28,354
B3
Average daily volume (shares)		9,901,834		5,464,850		6,589,426
Average daily volume (R$ 000)		184,163		143,814		136,804
Average share price (R$/share)		18.60		26.32		20.76
NYSE
Quantity of ADRs² (000 ADRs)		47,480		48,192		46,518
Average daily volume (ADRs)		1,934,532		1,639,683		1,067,105
Average daily volume (US$ 000)		9,031		11,507		5,453
Average share price (US$/ADR)		4.67		7.02		5.11
Total
Average daily volume (shares)		11,836,366		7,104,533		7,656,531
Average daily volume (R$ 000)		223,771		187,235		159,205

¹	Calculated based on the closing share price for the period

²	1 ADR = 1 common share

Performance UGPA3 x Ibovespa – 1Q20

(Dec 31, 2019 = 100)

LOGO

Source: Bloomberg

Debt (R$ million)


Ultrapar consolidated	1Q20	4Q19	1Q19
Gross debt	(16,962.0)	(14,392.7)	(15,112.0)
Cash and cash equivalents	7,248.7	5,712.1	6,492.0
Net debt (ex-IFRS 16)	(9,713.3)	(8,680.6)	(8,620.0)
Leases payable	(1,704.2)	(1,588.7)	(1,622.2)
Net debt	(11,417.6)	(10,269.3)	(10,242.2)
Net debt/LTM Adjusted EBITDA¹ (ex-IFRS 16)	3.12x	2.87x	2.65x
Net debt/LTM Adjusted EBITDA¹	3.27x	3.03x	n/a
Average cost of debt (% CDI)	121.4%	103.3%	97.5%
Average cash yield (% CDI)	90.3%	93.6%	97.4%
Duration (years)	4.7	4.7	4.3

¹	LTM Adjusted EBITDA does not consider Extrafarma impairment of R$ 593 million for 4Q19 and 1Q20

Ultrapar ended 1Q20 with net financial debt of R$ 9.7 billion, comprising of gross debt of R$ 17.0 billion and a cash position of R$ 7.2 billion. Considering leases payable (IFRS 16) of R$ 1.7 billion, the Company ended the quarter with a total net debt of R$ 11.4 billion (3.27x LTM adjusted EBITDA, excluding the impairment of Extrafarma) compared to R$ 10.3 billion as at December 31, 2019 (3.03x LTM Adjusted EBITDA, excluding the impairment of Extrafarma). The increase in net debt reflects mainly the effect of exchange rate variation of the portion of the bonds designated by hedge accounting in the period. Excluding this impact of exchange rate variation on net debt, corresponding to R$ 730 million, leverage would have been 3.06x.

Maturity profile:

LOGO

In order to reinforce the Company’s liquidity and cash position and in the light of the uncertainty due to the pandemic prevailing in Brazil since March 2020, Ultrapar and its subsidiaries have contracted a total of R$ 1.5 billion in new credit facilities maturing in one year, comprising of R$ 1.3 billion in promissory notes issued in the Brazilian capital markets and bank credit securities worth a further R$ 0.2 billion.

Debt breakdown:


Local currency			7,706.1
Foreign currency			8,994.4
Result from currency and interest hedging instruments			261.6
Total			16,962.0

LOGO

1Q20 Conference Call

Ultrapar will host a conference call for analysts and investors on May 14, 2020 to comment on the Company’s performance in the first quarter of 2020 and outlook. The presentation will be available for download to the Company’s website 30 minutes prior to the conference call.

The WEBCAST live will be available via the internet at ri.ultra.com.br. Please connect 15 minutes in advance.

English: 12:30 p.m. (Brasília time) / 11:30 a.m. (US EST)

International Participants: +1 (844) 802-0962

Code: Ultrapar

Replay: +1 (412) 317-0088 (available for seven days)

Code: 10143086

Portuguese: 11:00 a.m. (Brasília time) / 10:00 a.m. (US EST)

Telephone for connection: +55 (11) 2188-0155

Code: Ultrapar

Replay: +55 (11) 2188-0400 (available for seven days)

Code: Ultrapar

ULTRAPAR

CONSOLIDATED BALANCE SHEET


In millions of Reais	MAR 20			MAR 19			DEC 19
ASSETS
Cash and cash equivalents	2,494.0			3,446.3			2,115.4
Financial investments and hedging instruments		3,460.7			2,791.1			3,090.2
Trade receivables and reseller financing		3,629.4			4,183.8			4,072.0
Inventories		3,394.8			3,243.4			3,715.6
Recoverable taxes		1,436.5			958.5			1,447.7
Prepaid expenses		157.1			163.2			111.4
Contractual assets with customers - exclusive rights		473.5			489.6			465.5
Other receivable		83.3			72.0			40.4
Total Current Assets		15,129.3			15,347.8			15,058.1
Financial investments and hedging instruments		1,294.0			254.6			506.5
Trade receivables and reseller financing		401.2			384.3			418.4
Deferred income and social contribution taxes		916.1			500.8			653.7
Recoverable taxes		1,085.9			829.6			872.3
Escrow deposits		957.2			892.9			921.4
Prepaid expenses		62.4			112.6			69.2
Contractual assets with customers - exclusive rights		1,065.8			1,007.8			1,000.5
Other receivables		197.2			196.5			197.4
Investments		171.7			122.2			181.6
Right to use assets		2,069.7			1,921.3			1,980.9
Property, plant and equipment		7,884.7			7,295.3			7,572.8
Intangible assets		1,780.5			2,321.0			1,762.6
Total Non-Current Assets		17,886.5			15,839.0			16,137.4
TOTAL ASSETS		33,015.9			31,186.9			31,195.5
LIABILITIES
Loans and hedging instruments		1,529.5			1,937.3			867.9
Debentures		276.8			308.5			249.6
Trade payables		2,405.3			2,083.4			2,700.1
Salaries and related charges		340.1			326.5			405.6
Taxes payable		343.1			363.8			434.7
Leases payable		230.5			226.7			206.4
Other payables		319.2			315.3			330.8
Total Current Liabilities		5,444.5			5,561.5			5,195.1
Loans and hedging instruments		8,771.5			6,453.3			6,907.1
Debentures		6,384.2			6,412.9			6,368.2
Provisions for tax, civil and labor risks		887.2			864.0			884.1
Post-employment benefits		245.8			200.2			243.9
Leases payable		1,473.8			1,395.5			1,382.3
Other payables		307.2			369.5			379.6
Total Non-Current Liabilities		18,069.7			15,695.4			16,165.2
TOTAL LIABILITIES		23,514.2			21,256.9			21,360.3
EQUITY
Share capital		5,171.8			5,171.8			5,171.8
Reserves		4,595.4			4,646.2			4,542.3
Treasury shares		(485.4	)		(485.4	)		(485.4	)
Other		(165.1	)		239.8			229.5
Non-controlling interests in subsidiaries		385.0			357.6			376.9
Total equity		9,501.7			9,929.9			9,835.2
TOTAL LIABILITIES AND EQUITY		33,015.9			31,186.9			31,195.5
Cash and financial investments		7,248.7			6,492.0			5,712.1
Debt		(16,962.0	)		(15,112.0	)		(14,392.7	)
Leases payable		(1,704.2	)		(1,622.2	)		(1,588.7	)
Net cash (debt)		(11,417.6	)		(10,242.2	)		(10,269.3	)
Net cash (debt) ex-IFRS 16		(9,713.3	)		(8,620.0	)		(8,680.6	)


ULTRAPAR CONSOLIDATED INCOME STATEMENT
In million of Reais	1Q20			1Q19			4Q19
Net revenue from sales and services		21,387.1			20,739.3			23,662.8
Cost of products and services sold		(19,977.2	)		(19,294.7	)		(22,025.4	)
Gross profit		1,409.9			1,444.6			1,637.4
Operating expenses
Selling and marketing		(644.9	)		(678.5	)		(651.9	)
General and administrative		(409.9	)		(383.8	)		(481.2	)
Other operating income		123.9			36.7			79.6
Gain (loss) on disposal of property, plant and equipment and intangibles		6.9			(2.1	)		(30.9	)
Impairment		—			—			(593.3	)
Operating income (loss)		486.0			416.9			(40.3	)
Financial result
Financial income		182.1			144.1			55.4
Financial expenses		(349.7	)		(143.3	)		(307.5	)
Share of profit (loss) of subsidiaries, joint ventures and associates		(12.4	)		(7.0	)		6.2
Income before income and social contribution taxes		306.0			410.7			(286.2	)
Provision for income and social contribution taxes
Current		(124.3	)		(152.9	)		(181.7	)
Deferred		(28.8	)		(28.8	)		188.0
Benefit of tax holidays		16.0			13.5			12.4
Net income		168.9			242.6			(267.7	)
Net income attributable to:
Shareholders of the Company		160.9			233.7			(266.5	)
Non-controlling interests in subsidiaries		8.0			8.9			(1.1	)
Adjusted EBITDA		879.8			782.3			361.5
Depreciation and amortization¹		386.6			372.4			383.7
Cash flow hedge bonds		19.6			—			11.9
Total investments²		350.1			267.8			554.6
RATIOS
Earnings per share—R$		0.15			0.22			(0.25	)
Net debt / Stockholders’ equity		1.02			0.87			0.88
Net debt / LTM Adjusted EBITDA³ (ex-IFRS16)		3.12			2.65			2.87
Net debt / LTM Adjusted EBITDA³		3.27			n/a			3.03
Net interest expense / Adjusted EBITDA		0.19			(0.00	)		0.70
Gross margin		6.6	%		7.0	%		6.9	%
Operating margin		2.3	%		2.0	%		(0.2	%)
Adjusted EBITDA margin		4.1	%		3.8	%		1.5	%
Number of employees		15,887			17,027			16,024

¹	Includes amortization with contractual assets with customers – exclusive rights

²	Includes property, plant and equipment and additions to intangible assets, contractual assets with customers (exclusive rights), initial direct costs of assets with right of use, financing of clients and rental advances (net of repayments) and acquisition of shareholdings

³	LTM adjusted EBITDA does not consider impairment of Extrafarma for 4Q19 and 1Q20

ULTRAPAR

CONSOLIDATED CASH FLOW


In million of Reais	JAN—MAR			JAN—MAR
	2020			2019
Cash flows from operating activities
Net income for the period		168.9			242.6
Adjustments to reconcile net income to cash provided by operating activities
Share of loss (profit) of subsidiaries, joint ventures and associates		12.4			7.0
Amortization of contractual assets with customers—exclusive rights		82.9			83.6
Amortization of right to use assets		77.9			78.1
Depreciation and amortization		225.9			210.6
PIS and COFINS credits on depreciation		4.5			3.6
Interest and foreign exchange rate variations		505.4			236.1
Deferred income and social contribution taxes		28.8			28.8
(Gain) loss on disposal of property, plant and equipment and intangibles		(6.9	)		2.1
Estimated losses on doubtful accounts		30.3			28.2
Provision for losses in inventories		(4.6	)		2.1
Provision for post-employment benefits		5.2			(3.9	)
Equity instrument granted		2.1			1.0
Other provisions and adjustments		(3.2	)		(2.2	)
		1,129.5			917.8
(Increase) decrease in current assets
Trade receivables and reseller financing		416.5			226.1
Inventories		328.6			107.1
Recoverable taxes		11.1			(61.7	)
Insurance and other receivables		(42.9	)		(12.4	)
Prepaid expenses		(45.7	)		(14.7	)
Increase (decrease) in current liabilities
Trade payables		(309.6	)		(648.3	)
Salaries and related charges		(65.6	)		(101.7	)
Taxes payable		(24.8	)		(28.2	)
Income and social contribution taxes		(28.1	)		109.3
Post-employment benefits		0.9			—
Provision for tax, civil, and labor risks		3.7			7.1
Insurance and other payables		(16.8	)		(8.3	)
Deferred revenue		(1.5	)		6.9
(Increase) decrease in non-current assets
Trade receivables and reseller financing		17.2			45.5
Recoverable taxes		(213.6	)		23.2
Escrow deposits		(35.7	)		(11.4	)
Other receivables		0.2			0.1
Prepaid expenses		6.9			(2.1	)
Increase (decrease) in non-current liabilities
Post-employment benefits		(3.3	)		0.1
Provision for tax, civil, and labor risks		3.0			(1.2	)
Other payables		(13.8	)		14.9
Deferred revenue		—			(0.8	)
Payments of contractual assets with customers—exclusive rights		(145.4	)		(64.1	)
Income and social contribution taxes paid		(38.8	)		(40.8	)
Net cash provided by operating activities		932.0			462.4
Cash flows from investing activities
Financial investments, net of redemptions		(143.3	)		7.7
Acquisition of property, plant, and equipment		(177.4	)		(199.2	)
Acquisition of intangible assets		(43.2	)		(14.9	)
Proceeds from disposal of property, plant and equipment and intangibles		19.7			9.0
Net cash used in investing activities		(344.2	)		(197.4	)
Cash flows from financing activities
Loans and debentures
Proceeds		240.7			60.1
Repayments		(89.5	)		(247.4	)
Interest paid		(90.4	)		(113.8	)
Payments of lease		(85.7	)		(76.8	)
Dividends paid		(260.6	)		(380.6	)
Related parties		(0.0	)		(0.0	)
Net cash provided by (used in) financing activities		(285.5	)		(758.6	)
Effect of exchange rate changes on cash and cash equivalents in foreign currency		76.4			1.0
Increase (decrease) in cash and cash equivalents		378.6			(492.6	)
Cash and cash equivalents at the beginning of the period		2,115.4			3,939.0
Cash and cash equivalents at the end of the period		2,494.0			3,446.3
Transactions without cash effect:
Addition on right to use assets and leases payable		169.4			27.0
Initial upfront costs of entitlement assets and suppliers		14.9			—

IPIRANGA

BALANCE SHEET


In million of Reais	MAR 20		MAR 19		DEC 19
OPERATING ASSETS
Trade receivables		2,431.9		2,995.9		3,017.4
Non-current trade receivables		388.3		361.5		407.6
Inventories		1,910.9		1,793.5		2,251.1
Taxes		946.2		598.2		960.1
Contractual assets with customers—exclusive rights		1,533.3		1,497.5		1,463.5
Other		539.9		595.3		459.4
Right to use assets		1,002.4		1,076.2		1,027.6
Property, plant and equipment / Intangibles / Investments		3,615.8		3,491.5		3,610.9
TOTAL OPERATING ASSETS		12,368.8		12,409.5		13,197.4
OPERATING LIABILITIES
Suppliers		1,575.5		1,463.0		1,975.3
Salaries and related charges		76.3		91.3		124.9
Post-employment benefits		235.0		201.6		233.5
Taxes		153.3		171.0		178.7
Judicial provisions		334.0		330.0		332.0
Leases payable		642.5		765.2		650.2
Other accounts payable		275.7		248.0		271.6
TOTAL OPERATING LIABILITIES		3,292.3		3,270.0		3,766.3

INCOME STATEMENT


In million of Reais	1Q20			1Q19			4Q19
Net sales		17,899.6			17,428.0			20,232.5
Cost of products and services sold		(17,204.6	)		(16,565.5	)		(19,289.1	)
Gross profit		695.0			862.5			943.4
Operating expenses
Selling		(307.8	)		(326.9	)		(304.8	)
General and administrative		(158.9	)		(160.7	)		(218.6	)
Other operating income		44.1			24.1			76.6
Gain (loss) on disposal of property, plant and equipment and intangibles		6.5			(0.9	)		1.9
Operating income		279.0			398.0			498.5
Share of profit of subsidiaries, joint ventures and associates		0.4			0.4			0.5
Adjusted EBITDA		479.9			597.0			699.5
Depreciation and amortization¹		200.5			198.6			200.5
Ratios
Gross margin (R$/m³)		127			154			154
Operating margin (R$/m³)		51			71			82
Adjusted EBITDA margin (R$/m³)		87			107			114
Adjusted EBITDA margin (%)		2.7	%		3.4	%		3.5	%
Number of service stations		7,106			7,218			7,090
Number of employees		3,341			3,368			3,289

^¹	Includes amortization with contractual assets with customers—exclusive rights

OXITENO

BALANCE SHEET


In million of Reais	MAR 20		MAR 19		DEC 19
OPERATING ASSETS
Trade receivables		700.1		560.4		537.8
Inventories		829.1		778.7		768.2
Taxes		712.1		582.5		586.0
Other		164.4		137.3		162.7
Right to use assets		38.2		37.2		37.1
Property, plant and equipment / Intangibles / Investments		2,948.3		2,577.1		2,635.4
TOTAL OPERATING ASSETS		5,392.2		4,673.2		4,727.3
OPERATING LIABILITIES
Suppliers		469.9		356.9		354.8
Salaries and related charges		110.5		89.3		108.3
Taxes		34.8		28.6		34.6
Judicial provisions		26.3		25.2		23.1
Leases payable		39.8		37.4		38.4
Other accounts payable		39.6		30.6		45.7
TOTAL OPERATING LIABILITIES		721.0		568.0		605.0

INCOME STATEMENT


In million of Reais	1Q20			1Q19			4Q19
Net sales		1,107.9			1,055.7			1,011.7
Cost of products sold
Variable		(729.0	)		(738.5	)		(662.0	)
Fixed		(102.4	)		(111.9	)		(118.1	)
Depreciation and amortization		(45.5	)		(48.2	)		(47.1	)
Gross profit		231.0			157.0			184.4
Operating expenses
Selling		(84.5	)		(81.4	)		(77.7	)
General and administrative		(109.7	)		(90.9	)		(118.4	)
Other operating income		71.9			1.3			5.1
Gain (loss) on disposal of property, plant and equipment and intangibles		(0.2	)		0.3			(13.8	)
Operating income (loss)		108.5			(13.7	)		(20.4	)
Share of profit of subsidiaries, joint ventures and associates		0.2			0.0			(0.1	)
Adjusted EBITDA		192.6			39.6			56.8
Depreciation and amortization		64.2			53.3			65.3
Cash flow hedge bonds		19.6			—			11.9
Ratios
Gross margin (R$/ton)		1,279			872			1,055
Gross margin (US$/ton)		287			231			256
Operating margin (R$/ton)		601			(76	)		(117	)
Operating margin (US$/ton)		135			(20	)		(28	)
EBITDA margin (R$/ton)		1,066			220			325
EBITDA margin (US$/ton)		239			58			79
Number of employees		1,813			1,941			1,844

ULTRAGAZ

BALANCE SHEET


In million of Reais	MAR 20		MAR 19		DEC 19
OPERATING ASSETS
Trade receivables		386.5		412.8		379.3
Non-current trade receivables		12.6		22.5		10.6
Inventories		109.6		102.9		142.9
Taxes		84.4		89.5		86.7
Escrow deposits		219.6		220.1		217.5
Other		68.0		61.6		60.6
Right to use assets		110.4		155.6		133.8
Property, plant and equipment / Intangibles		1,001.9		945.2		994.6
TOTAL OPERATING ASSETS		1,993.0		2,010.3		2,026.0
OPERATING LIABILITIES
Suppliers		89.0		73.2		76.9
Salaries and related charges		65.3		79.7		96.8
Taxes		12.1		8.1		11.6
Judicial provisions		128.4		115.3		125.3
Leases payable		147.6		156.5		172.0
Other accounts payable		97.3		123.0		99.7
TOTAL OPERATING LIABILITIES		539.7		555.9		582.3

INCOME STATEMENT


In million of Reais	1Q20			1Q19			4Q19
Net sales		1,761.5			1,640.2			1,787.7
Cost of products sold		(1,522.9	)		(1,432.0	)		(1,518.1	)
Gross profit		238.6			208.3			269.6
Operating expenses
Selling		(106.6	)		(107.7	)		(105.5	)
General and administrative		(47.5	)		(52.7	)		(58.1	)
Other operating income		4.9			3.4			7.4
Gain (loss) on disposal of property, plant and equipment and intangibles		0.9			0.9			(0.1	)
Operating income		90.2			52.2			113.2
Share of profit of subsidiaries, joint ventures and associates		0.0			0.0			(0.0	)
Adjusted EBITDA		147.0			109.5			167.9
Depreciation and amortization¹		56.7			57.3			54.7
Ratios
Gross margin (R$/ton)		566			527			624
Operating margin (R$/ton)		214			132			262
EBITDA margin (R$/ton)		349			277			389
Number of employees		3,420			3,508			3,414

¹	Includes amortization with contractual assets with customers—exclusive rights

ULTRACARGO

BALANCE SHEET


In million of Reais	MAR 20			MAR 19			DEC 19
OPERATING ASSETS
Trade receivables		42.1			47.5			34.4
Inventories		6.5			5.9			6.1
Taxes		23.4			4.8			28.3
Other		20.8			17.3			12.9
Right to use assets		466.0			138.8			350.2
Property, plant and equipment / Intangibles / Investments		1,320.1			1,188.7			1,317.3
TOTAL OPERATING ASSETS		1,878.9			1,403.0			1,749.2
OPERATING LIABILITIES
Suppliers		29.4			28.9			33.8
Salaries and related charges		24.2			17.9			28.7
Taxes		10.4			6.9			9.7
Judicial provisions		10.2			24.0			10.3
Leases payable		422.7			129.9			304.2
Other accounts payable¹		96.4			61.7			107.0
TOTAL OPERATING LIABILITIES		593.4			269.2			493.6
¹ Includes the long term obligations with clients account and the extra amount related to the acquisition of Temmar, in the port of Itaqui and payables—indemnification clients and third parties INCOME STATEMENT
In million of Reais	1Q20			1Q19			4Q19
Net sales		163.3			126.5			152.9
Cost of services sold		(62.5	)		(58.8	)		(73.6	)
Gross profit		100.8			67.7			79.3
Operating expenses
Selling		(1.7	)		(1.7	)		(2.6	)
General and administrative		(30.8	)		(26.8	)		(40.3	)
Other operating income		2.9			(1.0	)		(1.4	)
Gain (loss) on disposal of property, plant and equipment and intangibles		(0.2	)		0.0			(0.8	)
Operating income		71.0			38.4			34.1
Share of profit of subsidiaries, joint ventures and associates		0.1			0.5			(0.4	)
EBITDA		90.5			59.6			53.7
Depreciation and amortization		19.5			20.7			20.0
Ratios
Gross margin		61.7	%		53.5	%		51.9	%
Operating margin		43.4	%		30.3	%		22.3	%
EBITDA margin		55.4	%		47.1	%		35.1	%
Number of employees		809			707			792

EXTRAFARMA

BALANCE SHEET


In million of Reais	MAR 20			MAR 19			DEC 19
OPERATING ASSETS
Trade receivables		71.2			176.9			105.3
Inventories		538.7			562.3			547.2
Taxes		223.9			155.0			225.7
Other		31.6			25.9			21.2
Right to use assets		415.9			513.6			425.9
Property, plant and equipment / Intangibles		526.5			1,134.4			535.9
TOTAL OPERATING ASSETS		1,807.7			2,568.1			1,861.2
OPERATING LIABILITIES
Suppliers		232.2			171.8			247.9
Salaries and related charges		42.1			48.2			45.9
Taxes		33.6			24.7			34.2
Judicial provisions		20.3			44.8			20.5
Leases payable		412.9			487.7			417.4
Other accounts payable		18.1			13.6			20.8
TOTAL OPERATING LIABILITIES		759.1			790.8			786.7
INCOME STATEMENT
In million of Reais	1Q20			1Q19			4Q19
Gross revenues		520.9			545.7			528.1
Sales returns, discounts and taxes		(27.5	)		(29.3	)		(26.6	)
Net sales		493.3			516.3			501.5
Cost of products and services sold		(348.5	)		(374.8	)		(347.0	)
Gross profit		144.8			141.5			154.5
Operating expenses		(174.4	)		(185.4	)		(177.2	)
Other operating income		(0.3	)		8.8			(8.6	)
Gain (loss) on disposal of property, plant and equipment and intangibles		(0.0	)		(2.4	)		(18.1	)
Impairment		—			—			(593.3	)
Operating loss		(29.9	)		(37.4	)		(642.7	)
EBITDA		8.9			1.2			(603.5	)
Depreciation and amortization		38.8			38.6			39.2
Ratios¹
Gross margin		27.8	%		25.9	%		29.3	%
Operating margin		(5.7	%)		(6.9	%)		(121.7	%)
EBITDA margin		1.7	%		0.2	%		(114.3	%)
Number of employees		6,108			7,095			6,292

¹	Calculated based on gross revenues

ULTRAPAR PARTICIPAÇÕES S.A.

Publicly Traded Company


CNPJ n^r 33.256.439/0001-39		NIRE 35.300.109.724

MINUTES OF THE MEETING OF THE BOARD OF DIRECTORS

Date, Time and Location:

May 13, 2020, at 2:30 p.m., at the Company’s headquarters, located at Av. Brigadeiro Luís Antônio, n^r 1343, 9^th floor, in the City and State of São Paulo, also contemplating participation through Microsoft Teams.

Attendance:

(i) Members of the Board of Directors undersigned; (ii) Secretary of the Board of Directors, Mr. André Brickmann Areno; (iii) Chief Executive Officer, Mr. Frederico Pinheiro Fleury Curado; (iv) Chief Financial and Investor Relations Officer, Mr. André Pires de Oliveira Dias; (v) other executive officers of the Company, Mrs. Décio de Sampaio Amaral, João Benjamin Parolin, Marcelo Pereira Malta de Araújo, Rodrigo de Almeida Pizzinatto and Tabajara Bertelli Costa; and (vi) in relation to item 1 and 2 of the agenda, the coordinator of the Audit and Risks Committee, Mr. Flávio Cesar Maia Luz; (vii) in relation to item 1 of the agenda, the president of the Fiscal Council, Mr. Geraldo Toffanello; and (viii) in relation to item 3 of the agenda, the Director of the Risks, Compliance and Audit Department, Mr. Denis Celso Marques Cuenca.

Agenda and decisions:

After having analyzed and discussed the performance of the Company in the first quarter of the current fiscal year, the respective financial statements were approved.

The members of the Board of Directors approved the fees proposal of KPMG Auditores Independentes to provide auditing services for the 2020 financial statements, as proposed by the Executive Board and the Company’s Audit and Risks Committee.

The Board Members discussed the effects of COVID-19 on employees, on society and on the Company’s activities, as well as the crisis exit scenarios.

Observation: The resolutions were approved, with no amendments or qualifications, by all the Board Members.

As there were no further matters to be discussed, the meeting was closed, the minutes of this meeting were written, read and approved by all the undersigned members present.

Pedro Wongtschowski – Chairman

Lucio de Castro Andrade Filho – Vice-Chairman

Alexandre Gonçalves Silva

Ana Paula Janes Vescovi

Flávia Buarque de Almeida

Joaquim Pedro de Mello

Jorge Marques de Toledo Camargo

José Galló

José Maurício Pereira Coelho

Nildemar Secches

André Brickmann Areno – Secretary

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: May 14, 2020


		ULTRAPAR HOLDINGS INC.

		By:		/s/ Andre Pires de Oliveira Dias
		Name:		Andre Pires de Oliveira Dias
		Title:		Chief Financial and Investor Relations Officer

(Parent and Consolidated Interim Financial Information as of and the Three-month period Ended March 31, 2020 and Report on Review of Interim Financial Information, 1Q20 Earnings Release and Board of Directors minutes)