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, 9th 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.

 

4


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.

 

5


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.

 

6


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.

 

7


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.

 

8


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.

 

9


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.

 

10


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.

 

11


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.

 

12


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.

 

13


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.

 

14


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.

 

15


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).

 

16


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.

 

17


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).

 

18


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.

 

19


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.

 

20


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.

 

21


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  

 

22


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  

 

23


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  

 

24


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  
  

 

 

 

 

25


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.

 

26


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  
  

 

 

    

 

 

    

 

 

 

 

27


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
 

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.

 

28


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.

 

29


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  
  

 

 

 

 

30


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.

 

31


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.

 

32


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.

 

33


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.

 

34


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.

 

35


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  

 

36


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  

 

37


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  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

38


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  
  

 

 

   

 

 

   

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 

 

39


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.

 

40


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  
  

 

 

    

 

 

    

 

 

    

 

 

 

 

41


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.

 

42