UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 6-K |
Report Of Foreign Private Issuer
Pursuant To Rule 13a-16 Or 15d-16 Of
The Securities Exchange Act Of 1934
For the month of November, 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 ____X____ Form 40-F ________
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):
Yes ________ No ____X____
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):
Yes ________ No ____X____
ULTRAPAR HOLDINGS INC.
TABLE OF CONTENTS
ITEM
1. |
Parent’s Separate and Consolidated Interim Financial Information as of and the Three-month period Ended September 30, 2020 and Report on Review of Interim Financial Information |
|
2. | 3Q20 Earnings Release | |
3. | Board of Directors minutes | |
4. | Corporate Nomination Policy for Members of The Board Of Directors, Advisory Committees and Executive Officers Board | |
(Convenience Translation into English from
the Original Previously Issued in Portuguese)
Ultrapar Participações S.A.
Parent’s Separate and Consolidated
Interim Financial Information
as of and the Nine-month Period
Ended September 30, 2020 and
Report on Review of Interim
Financial Information
KPMG Auditores Independentes
Ultrapar Participações S.A. and Subsidiaries
Parent’s Separate and Consolidated
Interim Financial Information
As of and the Nine-month Period Ended September 30, 2020
(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 September 30, 2020, which comprise the statements of financial position as of September 30, 2020 and related statements of income, comprehensive income for the three and nine-month period then ended and changes in shareholder´s equity and cash flows for the nine-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 nine-month period ended September 30, 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, November 04, 2020
KPMG Auditores Independentes
CRC 2SP014428/O-6
(Original report in Portuguese signed by)
Márcio Serpejante Peppe
Accountant CRC 1SP233011/O-8
Ultrapar Participações S.A. and Subsidiaries
As of September 30, 2020 and December 31, 2019
(In thousands of Brazilian Reais)
|
|
Parent |
|
Consolidated |
||||
|
Note |
09/30/2020 |
|
12/31/2019 |
|
09/30/2020 |
|
12/31/2019 |
Assets |
|
|
|
|
|
|
|
|
Current assets |
|
|
|
|
|
|
|
|
Cash and cash equivalents |
4.a |
936,880 |
|
42,580 |
|
2,996,333 |
|
2,115,379 |
Financial investments and hedging instruments |
4.b |
109,888 |
|
95,829 |
|
5,582,703 |
|
3,090,212 |
Trade receivables |
5.a |
- |
|
- |
|
3,303,691 |
|
3,635,834 |
Reseller financing |
5.b |
- |
|
- |
|
497,853 |
|
436,188 |
Inventories |
6 |
- |
|
- |
|
3,539,607 |
|
3,715,560 |
Recoverable taxes |
7.a |
- |
|
- |
|
890,852 |
|
1,122,335 |
Recoverable income and social contribution taxes |
7.b |
51,557 |
|
49,750 |
|
253,700 |
|
325,343 |
Dividends receivable |
|
213 |
|
3,074 |
|
269 |
|
3,630 |
Other receivables |
|
30,896 |
|
6,321 |
|
69,134 |
|
36,765 |
Prepaid expenses |
10 |
4,450 |
|
72 |
|
136,357 |
|
111,355 |
Contractual assets with customers – exclusive rights |
11 |
- |
|
- |
|
481,130 |
|
465,454 |
Total current assets |
|
1,133,884 |
|
197,626 |
|
17,751,629 |
|
15,058,055 |
|
|
|
|
|
|
|
|
|
Non-current assets |
|
|
|
|
|
|
|
|
Financial investments and hedging instruments |
4.b |
- |
|
- |
|
1,218,753 |
|
506,506 |
Trade receivables |
5.a |
- |
|
- |
|
86,864 |
|
53,666 |
Reseller financing |
5.b |
- |
|
- |
|
428,334 |
|
364,748 |
Related parties |
8.a |
750,000 |
|
759,123 |
|
490 |
|
490 |
Deferred income and social contribution taxes |
9.a |
50,566 |
|
41,613 |
|
1,068,244 |
|
653,694 |
Recoverable taxes |
7.a |
- |
|
- |
|
1,321,336 |
|
767,360 |
Recoverable income and social contribution taxes |
7.b |
39,447 |
|
39,447 |
|
251,749 |
|
104,947 |
Escrow deposits |
22.a |
2 |
|
17 |
|
952,396 |
|
921,443 |
Indemnification asset – business combination |
22.c |
- |
|
- |
|
193,738 |
|
193,496 |
Other receivables |
|
- |
|
- |
|
2,753 |
|
3,430 |
Prepaid expenses |
10 |
4,417 |
|
255 |
|
79,819 |
|
69,216 |
Contractual assets with customers – exclusive rights |
11 |
- |
|
- |
|
1,183,448 |
|
1,000,535 |
Total long term assets |
|
844,432 |
|
840,455 |
|
6,787,924 |
|
4,639,531 |
Investments |
|
|
|
|
|
|
|
|
In subsidiaries |
12.a |
10,132,390 |
|
10,085,953 |
|
- |
|
- |
In joint ventures |
12.a; 12.b |
- |
|
18,792 |
|
142,611 |
|
153,076 |
In associates |
12.c |
- |
|
- |
|
25,788 |
|
25,750 |
Others |
|
- |
|
- |
|
2,793 |
|
2,793 |
|
|
10,132,390 |
|
10,104,745 |
|
171,192 |
|
181,619 |
Right to use assets |
13 |
36,281 |
|
5,799 |
|
2,162,951 |
|
1,980,912 |
Property, plant, and equipment |
14 |
12,948 |
|
2,532 |
|
7,976,109 |
|
7,572,762 |
Intangible assets |
15 |
251,516 |
|
246,163 |
|
1,762,248 |
|
1,762,593 |
Total non-current assets |
|
11,277,567 |
|
11,199,694 |
|
18,860,424 |
|
16,137,417 |
Total assets |
|
12,411,451 |
|
11,397,320 |
|
36,612,053 |
|
31,195,472 |
The accompanying notes are an integral part of the interim financial information
Ultrapar Participações S.A. and Subsidiaries
Statements of Financial Position
As of September 30, 2020 and December 31, 2019
(In thousands of Brazilian Reais)
|
|
Parent |
|
Consolidated |
||||
|
Note |
09/30/2020 |
|
12/31/2019 |
|
09/30/2020 |
|
12/31/2019 |
Liabilities |
|
|
|
|
|
|
|
|
Current liabilities |
|
|
|
|
|
|
|
|
Loans, financing and hedge derivative financial instruments |
16 |
1,024,548 |
|
- |
|
3,004,368 |
|
867,871 |
Debentures |
16.g |
1,422 |
|
28,713 |
|
960,088 |
|
249,570 |
Trade payables |
17 |
4,385 |
|
2,173 |
|
2,578,498 |
|
2,158,478 |
Trade payables – reverse factoring |
17 |
- |
|
- |
|
868,894 |
|
541,593 |
Salaries and related charges |
18 |
36,287 |
|
958 |
|
513,987 |
|
405,636 |
Taxes payable |
19 |
842 |
|
389 |
|
310,332 |
|
269,922 |
Dividends payable |
25.h |
14,750 |
|
14,689 |
|
16,469 |
|
16,694 |
Income and social contribution taxes payable |
|
- |
|
- |
|
109,358 |
|
164,757 |
Post-employment benefits |
20.b |
- |
|
- |
|
29,522 |
|
28,951 |
Provision for asset retirement obligation |
21 |
- |
|
- |
|
4,655 |
|
3,847 |
Provision for tax, civil, and labor risks |
22.a |
505 |
|
- |
|
41,968 |
|
40,455 |
Leases payable |
13 |
4,585 |
|
144 |
|
247,678 |
|
206,396 |
Other payables |
|
9,891 |
|
3 |
|
290,370 |
|
213,273 |
Deferred revenue |
23 |
- |
|
- |
|
26,901 |
|
27,626 |
Total current liabilities |
|
1,097,215 |
|
47,069 |
|
9,003,088 |
|
5,195,069 |
|
|
|
|
|
|
|
|
|
Non-current liabilities |
|
|
|
|
|
|
|
|
Loans, financing and hedge derivative financial instruments |
16 |
- |
|
- |
|
9,240,591 |
|
6,907,113 |
Debentures |
16.g |
1,723,928 |
|
1,723,368 |
|
5,550,879 |
|
6,368,168 |
Related parties |
8.a |
5,199 |
|
4,220 |
|
3,853 |
|
3,925 |
Deferred income and social contribution taxes |
9.a |
- |
|
- |
|
52,177 |
|
7,531 |
Post-employment benefits |
20.b |
4,111 |
|
- |
|
234,408 |
|
243,916 |
Provision for asset retirement obligation |
21 |
- |
|
- |
|
47,866 |
|
47,395 |
Provision for tax, civil, and labor risks |
22.a; 22.c |
280 |
|
399 |
|
844,621 |
|
884,140 |
Leases payable |
13 |
34,294 |
|
5,855 |
|
1,584,095 |
|
1,382,277 |
Subscription warrants – indemnification |
24 |
70,481 |
|
130,657 |
|
70,481 |
|
130,657 |
Provision for short-term liabilities of subsidiaries and joint venture |
12.a; 12.b |
47,969 |
|
27,497 |
|
884 |
|
- |
Other payables |
|
3,639 |
|
- |
|
151,810 |
|
190,106 |
Total non-current liabilities |
|
1,889,901 |
|
1,891,996 |
|
17,781,665 |
|
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 |
16,479 |
|
11,970 |
|
16,479 |
|
11,970 |
Capital reserve |
25.d |
594,049 |
|
542,400 |
|
594,049 |
|
542,400 |
Treasury shares |
25.c |
(489,068) |
|
(485,383) |
|
(489,068) |
|
(485,383) |
Revaluation reserve on subsidiaries |
25.e |
4,383 |
|
4,522 |
|
4,383 |
|
4,522 |
Profit reserves |
25.f |
3,995,414 |
|
3,995,414 |
|
3,995,414 |
|
3,995,414 |
Retained earnings |
|
467,022 |
|
- |
|
467,022 |
|
- |
Valuation adjustments |
25.g.1 |
(636,801) |
|
(146,317) |
|
(636,801) |
|
(146,317) |
Cumulative translation adjustments |
25.g.2 |
301,105 |
|
102,427 |
|
301,105 |
|
102,427 |
Additional dividends to the minimum mandatory dividends |
25.h |
- |
|
261,470 |
|
- |
|
261,470 |
Equity attributable to: |
|
|
|
|
|
|
|
|
Shareholders of the Company |
|
9,424,335 |
|
9,458,255 |
|
9,424,335 |
|
9,458,255 |
Non-controlling interests in subsidiaries |
|
- |
|
- |
|
402,965 |
|
376,920 |
Total equity |
|
9,424,335 |
|
9,458,255 |
|
9,827,300 |
|
9,835,175 |
Total liabilities and equity |
|
12,411,451 |
|
11,397,320 |
|
36,612,053 |
|
31,195,472 |
The accompanying notes are an integral part of the interim financial information.
Ultrapar Participações S.A. and Subsidiaries
For the nine-month period ended September 30, 2020 and 2019
(In thousands of Brazilian Reais, except earnings per share)
|
|
Parent |
|
Consolidated |
||||
|
Note |
09/30/2020 |
|
09/30/2019 |
|
09/30/2020 |
|
09/30/2019 |
Net revenue from sales and services |
26 |
- |
|
- |
|
58,025,450 |
|
65,635,188 |
Cost of products and services sold |
27 |
- |
|
- |
|
(53,925,516) |
|
(61,161,756) |
Gross profit |
|
- |
|
- |
|
4,099,934 |
|
4,473,432 |
|
|
|
|
|
|
|
|
|
Operating income (expenses) |
|
|
|
|
|
|
|
|
Selling and marketing |
27 |
- |
|
- |
|
(1,854,841) |
|
(1,961,011) |
Expected reversion (losses) on doubtful accounts |
|
- |
|
- |
|
(29,078) |
|
(27,505) |
General and administrative |
27 |
- |
|
- |
|
(1,076,974) |
|
(1,245,013) |
Gain (loss) on disposal of property, plant and equipment and intangibles |
28 |
- |
|
- |
|
35,926 |
|
908 |
Other operating income, net |
29 |
1,192 |
|
316 |
|
114,247 |
|
100,034 |
|
|
|
|
|
|
|
|
|
Operating income before financial income (expenses) and share of profit (loss) of subsidiaries, joint ventures and associates |
|
1,192 |
|
316 |
|
1,289,214 |
|
1,340,845 |
Share of profit (loss) of subsidiaries, joint ventures and associates |
12 |
503,960 |
|
627,153 |
|
(30,515) |
|
(18,295) |
Operating income before financial income (expenses) and income and social contribution taxes |
|
505,152 |
|
627,469 |
|
1,258,699 |
|
1,322,550 |
Financial income |
30 |
33,850 |
|
100,451 |
|
306,813 |
|
401,880 |
Financial expenses |
30 |
(80,427) |
|
(90,967) |
|
(712,639) |
|
(656,629) |
Financial result, net |
30 |
(46,577) |
|
9,484 |
|
(405,826) |
|
(254,749) |
Income before income and social contribution taxes |
|
458,575 |
|
636,953 |
|
852,873 |
|
1,067,801 |
Income and social contribution taxes |
|
|
|
|
|
|
|
|
Current |
9.b; 9.c |
(170) |
|
- |
|
(403,482) |
|
(306,692) |
Deferred |
9.b |
8,953 |
|
3,109 |
|
46,804 |
|
(90,500) |
|
|
8,783 |
|
3,109 |
|
(356,678) |
|
(397,192) |
Net income for the period |
|
467,358 |
|
640,062 |
|
496,195 |
|
670,609 |
Income attributable to: |
|
|
|
|
|
|
|
|
Shareholders of the Company |
|
467,358 |
|
640,062 |
|
467,358 |
|
640,062 |
Non-controlling interests in subsidiaries |
|
- |
|
- |
|
28,837 |
|
30,547 |
Earnings per share (based on weighted average number of shares outstanding) – R$ |
|
|
|
|
|
|
|
|
Basic |
31 |
0.4293 |
|
0.5903 |
|
0.4293 |
|
0.5903 |
Diluted |
31 |
0.4268 |
|
0.5869 |
|
0.4268 |
|
0.5869 |
The accompanying notes are an integral part of the interim financial information.
Ultrapar Participações S.A. and Subsidiaries
Statements of Profit or Loss
For the three-month period ended September 30, 2020 and 2019
(In thousands of Brazilian Reais, except earnings per share)
|
|
Parent |
|
Consolidated |
||||
|
Note |
09/30/2020 |
|
09/30/2019 |
|
09/30/2020 |
|
09/30/2019 |
Net revenue from sales and services |
26 |
- |
|
- |
|
20,762,078 |
|
23,203,290 |
Cost of products and services sold |
27 |
- |
|
- |
|
(19,123,322) |
|
(21,580,190) |
Gross profit |
|
- |
|
- |
|
1,638,756 |
|
1,623,100 |
|
|
|
|
|
|
|
|
|
Operating income (expenses) |
|
|
|
|
|
|
|
|
Selling and marketing |
27 |
- |
|
- |
|
(658,104) |
|
(651,592) |
Expected reversion (losses) on doubtful accounts |
|
- |
|
- |
|
27,438 |
|
38,135 |
General and administrative |
27 |
- |
|
- |
|
(373,853) |
|
(445,539) |
Gain (loss) on disposal of property, plant and equipment and intangibles |
28 |
- |
|
- |
|
15,016 |
|
1,963 |
Other operating income, net |
29 |
636 |
|
(104) |
|
(45,907) |
|
53,214 |
|
|
|
|
|
|
|
|
|
Operating income before financial income (expenses) and share of profit (loss) of subsidiaries, joint ventures and associates |
|
636 |
|
(104) |
|
603,346 |
|
619,281 |
Share of profit (loss) of subsidiaries, joint ventures and associates |
12 |
285,818 |
|
302,596 |
|
(4,817) |
|
(8,247) |
Operating income before financial income (expenses) and income and social contribution taxes |
|
286,454 |
|
302,492 |
|
598,529 |
|
611,034 |
Financial income |
30 |
2,081 |
|
24,112 |
|
71,649 |
|
125,592 |
Financial expenses |
30 |
(28,794) |
|
(31,504) |
|
(229,517) |
|
(288,993) |
Financial result, net |
30 |
(26,713) |
|
(7,392) |
|
(157,868) |
|
(163,401) |
Income before income and social contribution taxes |
|
259,741 |
|
295,100 |
|
440,661 |
|
447,633 |
Income and social contribution taxes |
|
|
|
|
|
|
|
|
Current |
9.b; 9.c |
- |
|
- |
|
(183,850) |
|
(47,244) |
Deferred |
9.b |
5,692 |
|
2,700 |
|
20,490 |
|
(93,066) |
|
|
5,692 |
|
2,700 |
|
(163,360) |
|
(140,310) |
Net income for the period |
|
265,433 |
|
297,800 |
|
277,301 |
|
307,323 |
Income attributable to: |
|
|
|
|
|
|
|
|
Shareholders of the Company |
|
265,433 |
|
297,800 |
|
265,433 |
|
297,800 |
Non-controlling interests in subsidiaries |
|
- |
|
- |
|
11,868 |
|
9,523 |
Earnings per share (based on weighted average number of shares outstanding) – R$ |
|
|
|
|
|
|
|
|
Basic |
31 |
0.2437 |
|
0.2746 |
|
0.2437 |
|
0.2746 |
Diluted |
31 |
0.2422 |
|
0.2730 |
|
0.2422 |
|
0.2730 |
The accompanying notes are an integral part of the interim financial information.
Ultrapar Participações S.A. and Subsidiaries
For the nine-month period ended September 30, 2020 and 2019
(In thousands of Brazilian Reais)
|
Note |
Parent |
|
Consolidated |
||||
|
|
09/30/2020 |
|
09/30/2019 |
|
09/30/2020 |
|
09/30/2019 |
Net income for the period |
|
467,358 |
|
640,062 |
|
496,195 |
|
670,609 |
Items that are subsequently reclassified to profit or loss: |
|
|
|
|
|
|
|
|
Fair value adjustments of financial instruments, net |
25.g.1 |
274 |
|
(57) |
|
274 |
|
(57) |
Fair value adjustments of financial instruments of subsidiaries, net |
25.g.1 |
(491,544) |
|
(103,062) |
|
(491,544) |
|
(103,041) |
Fair value adjustments of financial instruments of joint ventures, net |
25.g.1 |
786 |
|
83 |
|
786 |
|
83 |
Cumulative translation adjustments, net of hedge of net investments in foreign operations and income and social contribution taxes |
25.g.2 |
198,678 |
|
23,388 |
|
198,678 |
|
23,388 |
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 |
|
175,552 |
|
560,652 |
|
204,389 |
|
591,220 |
Total comprehensive income for the period attributable to shareholders of the Company |
|
175,552 |
|
560,652 |
|
175,552 |
|
560,652 |
Total comprehensive income for the period attributable to non-controlling interest in subsidiaries |
|
- |
|
- |
|
28,837 |
|
30,568 |
The accompanying notes are an integral part of the interim financial information.
Ultrapar Participações S.A. and Subsidiaries
Statements of Comprehensive Income
For the three-month period ended September 30, 2020 and 2019
(In thousands of Brazilian Reais)
|
Note |
Parent |
|
Consolidated |
||||
|
|
09/30/2020 |
|
09/30/2019 |
|
09/30/2020 |
|
09/30/2019 |
Net income for the period |
|
265,433 |
|
297,800 |
|
277,301 |
|
307,323 |
Items that are subsequently reclassified to profit or loss: |
|
|
|
|
|
|
|
|
Fair value adjustments of financial instruments, net |
25.g.1 |
(158) |
|
238 |
|
(158) |
|
238 |
Fair value adjustments of financial instruments of subsidiaries, net |
25.g.1 |
(14,771) |
|
(119,042) |
|
(14,771) |
|
(119,042) |
Fair value adjustments of financial instruments of joint ventures, net |
25.g.1 |
(1,075) |
|
2,450 |
|
(1,075) |
|
2,450 |
Cumulative translation adjustments, net of hedge of net investments in foreign operations and income and social contribution taxes |
25.g.2 |
62,556 |
|
29,274 |
|
62,556 |
|
29,274 |
Items that are not subsequently reclassified to profit or loss: |
|
|
|
|
|
|
|
|
Actuarial gain (losses) of post-employment benefits of subsidiaries, net |
25.g.1 |
- |
|
- |
|
- |
|
- |
Total comprehensive income for the period |
|
311,985 |
|
210,720 |
|
323,853 |
|
220,243 |
Total comprehensive income for the period attributable to shareholders of the Company |
|
311,985 |
|
210,720 |
|
311,985 |
|
210,720 |
Total comprehensive income for the period attributable to non-controlling interest in subsidiaries |
|
- |
|
- |
|
11,868 |
|
9,523 |
The accompanying notes are an integral part of the interim financial information.
Ultrapar Participações S.A. and Subsidiaries
For the nine-month period ended September 30, 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 |
|
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
467,358 |
|
- |
|
467,358 |
|
28,837 |
|
496,195 |
Other comprehensive income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair value adjustments of available for financial instruments, net of income taxes |
25.g.1 |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
274 |
|
- |
|
- |
|
- |
|
274 |
|
- |
|
274 |
Fair value adjustments of available for financial instruments, net of income taxes (subsidiaries) |
12.a; 25.g.1 |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
(490,758) |
|
- |
|
- |
|
- |
|
(490,758) |
|
- |
|
(490,758) |
Currency translation of foreign subsidiaries, including the effect of net investments hedge |
25.g.2 |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
198,678 |
|
- |
|
- |
|
198,678 |
|
- |
|
198,678 |
Total comprehensive income for the period |
|
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
(490,484) |
|
198,678 |
|
467,358 |
|
- |
|
175,552 |
|
28,837 |
|
204,389 |
Issuance of shares related to the subscription warrants - indemnification - Extrafarma acquisition |
25.d |
|
- |
|
- |
|
54,763 |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
54,763 |
|
- |
|
54,763 |
Stock plan |
8.c |
|
- |
|
- |
|
(3,114) |
|
(3,685) |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
(6,799) |
|
- |
|
(6,799) |
Equity instrument granted |
25.b |
|
- |
|
2,906 |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
2,906 |
|
- |
|
2,906 |
Equity instrument granted (subsidiaries) |
12.a; 25.b |
|
- |
|
1,603 |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
1,603 |
|
- |
|
1,603 |
Income and social contribution taxes on realization of revaluation reserve of subsidiaries |
25.e |
|
- |
|
- |
|
- |
|
- |
|
(139) |
|
- |
|
- |
|
- |
|
- |
|
139 |
|
- |
|
- |
|
- |
|
- |
Loss due to the payments fixed dividends to preferred shares |
|
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
(516) |
|
- |
|
(516) |
|
- |
|
(516) |
Shareholder transaction – changes of investiments |
|
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
41 |
|
- |
|
41 |
|
- |
|
41 |
Additional dividends attributable to non-controlling interests |
|
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
(2,792) |
|
(2,792) |
Approval of additional dividends by the Shareholders’ Meeting |
25.h |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
(261,470) |
|
(261,470) |
|
- |
|
(261,470) |
Balance as of September 30, 2020 |
|
|
5,171,752 |
|
16,479 |
|
594,049 |
|
(489,068) |
|
4,383 |
|
705,341 |
|
3,290,073 |
|
(636,801) |
|
301,105 |
|
467,022 |
|
- |
|
9,424,335 |
|
402,965 |
|
9,827,300 |
The accompanying notes are an integral part of the interim financial information.
Ultrapar Participações S.A. and Subsidiaries
Statements of Changes in Equity
For the nine-month period ended September 30, 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 |
|
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
640,062 |
|
- |
|
640,062 |
|
30,547 |
|
670,609 |
Other comprehensive income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair value adjustments of available for financial instruments, net of income taxes |
25.g.1 |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
(57) |
|
- |
|
- |
|
- |
|
(57) |
|
- |
|
(57) |
Fair value adjustments of available for financial instruments, net of income taxes (subsidiaries) |
25.g.1 |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
(102,979) |
|
- |
|
- |
|
- |
|
(102,979) |
|
21 |
|
(102,958) |
Actuarial gain of post-employment benefits, net of income taxes |
12.a; 25.g.1 |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
238 |
|
- |
|
- |
|
- |
|
238 |
|
- |
|
238 |
Currency translation of foreign subsidiaries, including the effect of net investments hedge |
25.g.1 |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
23,388 |
|
- |
|
- |
|
23,388 |
|
- |
|
23,388 |
Total comprehensive income for the period |
|
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
(102,798) |
|
23,388 |
|
640,062 |
|
- |
|
560,652 |
|
30,568 |
|
591,220 |
Equity instrument granted |
25.b |
|
- |
|
5,387 |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
5,387 |
|
- |
|
5,387 |
Shareholder transaction - gain in reimbursement of shares pref. B from Oxiteno Nordeste |
|
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
208 |
|
- |
|
208 |
|
(208) |
|
- |
Realization of revaluation reserve of subsidiaries |
25.e |
|
- |
|
- |
|
- |
|
- |
|
(144) |
|
- |
|
- |
|
- |
|
- |
|
144 |
|
- |
|
- |
|
- |
|
- |
Income and social contribution taxes on realization of revaluation reserve of subsidiaries |
25.e |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
(27) |
|
- |
|
(27) |
|
- |
|
(27) |
Additional dividends attributable to non-controlling interests |
|
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
(1,521) |
|
(1,521) |
Redemption of non-controlling shares of Oxiteno Nordeste |
|
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
(2,180) |
|
(2,180) |
Capital increase from Iconic non-controlling shareholders |
|
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
6,996 |
|
6,996 |
Approval of additional dividends by the Shareholders’ Meeting |
25.h |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
(109,355) |
|
(109,355) |
|
- |
|
(109,355) |
Interim dividends (R$ 0.20 per share of the Company) |
25.h |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
(217,382) |
|
- |
|
(217,382) |
|
- |
|
(217,382) |
Balance as of September 30, 2019 |
|
|
5,171,752 |
|
9,696 |
|
542,400 |
|
(485,383) |
|
4,568 |
|
686,665 |
|
3,412,427 |
|
(166,787) |
|
89,245 |
|
423,005 |
|
- |
|
9,687,588 |
|
385,579 |
|
10,073,167 |
The accompanying notes are an integral part of the interim financial information.
17
Ultrapar Participações S.A. and Subsidiaries
For the nine-month period ended September 30, 2020 and 2019
(In thousands of Brazilian Reais)
|
Note |
Parent |
|
Consolidated |
||||
|
|
09/30/2020 |
|
09/30/2019 |
|
09/30/2020 |
|
09/30/2019 |
Cash flows from operating activities |
|
|
|
|
|
|
|
|
Net income for the period |
|
467,358 |
|
640,062 |
|
496,195 |
|
670,609 |
Adjustments to reconcile net income to cash provided by operating activities |
|
|
|
|
|
|
|
|
Share of loss (profit) of subsidiaries, joint ventures and associates |
12 |
(503,960) |
|
(627,153) |
|
30,515 |
|
18,295 |
Amortization of contractual assets with customers – exclusive rights |
11 |
- |
|
- |
|
224,441 |
|
273,383 |
Amortization of right to use assets |
13.a |
3,238 |
|
- |
|
242,147 |
|
219,225 |
Depreciation and amortization |
14; 15 |
1,877 |
|
- |
|
698,363 |
|
623,620 |
PIS and COFINS credits on depreciation |
14; 15 |
- |
|
- |
|
11,487 |
|
11,134 |
Interest and foreign exchange rate variations |
|
68,251 |
|
4,433 |
|
768,843 |
|
1,083,929 |
Deferred income and social contribution taxes |
9.b |
(8,953) |
|
(3,109) |
|
(46,804) |
|
90,500 |
(Loss) Gain on disposal of property, plant, and equipment and intangibles |
28 |
- |
|
- |
|
(35,926) |
|
(908) |
Expected losses on doubtful accounts |
5 |
- |
|
- |
|
29,078 |
|
27,505 |
Provision for losses in inventories |
6 |
- |
|
- |
|
(829) |
|
3,039 |
Provision for post-employment benefits |
20.b |
(1,490) |
|
- |
|
(18,626) |
|
(1,888) |
Equity instrument granted |
8.c |
2,906 |
|
- |
|
4,509 |
|
5,387 |
Other provisions and adjustments |
|
1,164 |
|
657 |
|
(1,044) |
|
(2,098) |
|
|
30,391 |
|
14,890 |
|
2,402,349 |
|
3,021,732 |
(Increase) decrease in current assets |
|
|
|
|
|
|
|
|
Trade receivables and reseller financing |
5 |
- |
|
- |
|
255,238 |
|
225,745 |
Inventories |
6 |
- |
|
- |
|
180,834 |
|
71,197 |
Recoverable taxes |
7 |
(1,807) |
|
1,617 |
|
303,126 |
|
(406,277) |
Dividends received from subsidiaries and joint ventures |
|
299,746 |
|
1,521,209 |
|
4,718 |
|
3,729 |
Other receivables |
|
(24,575) |
|
(1,794) |
|
(32,371) |
|
(17,950) |
Prepaid expenses |
10 |
(4,378) |
|
(114) |
|
(65,045) |
|
12,681 |
Increase (decrease) in current liabilities |
|
|
|
|
|
|
|
|
Trade payables |
17 |
2,212 |
|
766 |
|
607,361 |
|
(344,167) |
Salaries and related charges |
18 |
35,329 |
|
730 |
|
108,351 |
|
3,889 |
Taxes payable |
19 |
453 |
|
(11,238) |
|
40,410 |
|
2,207 |
Income and social contribution taxes |
|
- |
|
(9,238) |
|
171,870 |
|
118,411 |
Post-employment benefits |
20.b |
- |
|
- |
|
571 |
|
(3,418) |
Provision for tax, civil, and labor risks |
22.a |
505 |
|
- |
|
1,513 |
|
15,014 |
Other payables |
|
3,089 |
|
(3,975) |
|
66,381 |
|
87,063 |
Deferred revenue |
23 |
- |
|
- |
|
(725) |
|
(5,692) |
(Increase) decrease in non-current assets |
|
|
|
|
|
|
|
|
Trade receivables and reseller financing |
5 |
- |
|
- |
|
(96,784) |
|
39,915 |
Recoverable taxes |
7 |
- |
|
9,238 |
|
(700,778) |
|
7,067 |
Escrow deposits |
|
15 |
|
(16) |
|
(30,953) |
|
(38,636) |
Other receivables |
|
- |
|
- |
|
436 |
|
51 |
Prepaid expenses |
10 |
(4,162) |
|
(1) |
|
5,264 |
|
(11,772) |
The accompanying notes are an integral part of the interim financial information.
Ultrapar Participações S.A. and Subsidiaries
Statements of Cash Flows – Indirect Method
For the nine-month period ended September 30, 2020 and 2019
(In thousands of Brazilian Reais)
|
|
Parent |
|
Consolidated |
||||
|
|
09/30/2020 |
|
09/30/2019 |
|
09/30/2020 |
|
09/30/2019 |
Increase (decrease) in non-current liabilities |
|
|
|
|
|
|
|
|
Post-employment benefits |
20.b |
5,602 |
|
- |
|
9,118 |
|
257 |
Provision for tax, civil, and labor risks |
22.a; 22.c |
(119) |
|
(399) |
|
(39,519) |
|
(12,753) |
Other payables |
|
4,618 |
|
213 |
|
(37,011) |
|
43,283 |
Deferred revenue |
23 |
- |
|
- |
|
- |
|
(11,850) |
Payments of contractual assets with customers – exclusive rights |
11 |
- |
|
- |
|
(296,765) |
|
(231,737) |
Income and social contribution taxes paid |
|
- |
|
- |
|
(227,269) |
|
(118,924) |
Net cash provided by operating activities |
|
346,919 |
|
1,521,888 |
|
2,630,320 |
|
2,449,065 |
Cash flows from investing activities |
|
|
|
|
|
|
|
|
Financial investments, net of redemptions |
4.b |
(14,059) |
|
487,073 |
|
(1,567,079) |
|
(841,235) |
Acquisition of property, plant, and equipment |
14 |
(7,575) |
|
(641) |
|
(587,087) |
|
(669,805) |
Acquisition of intangible assets |
15 |
(10,071) |
|
- |
|
(112,335) |
|
(75,839) |
Capital increase in subsidiary |
12.a |
(90,580) |
|
(1,453,964) |
|
- |
|
- |
Capital increase in joint venture |
12.b |
- |
|
- |
|
(20,000) |
|
(22,939) |
Initial direct costs of right to use assets |
13 |
- |
|
- |
|
- |
|
(69,490) |
Proceeds from disposal of property, plant, and equipment and intangibles |
28 |
- |
|
- |
|
86,012 |
|
28,661 |
Net cash used in investing activities |
|
(122,285) |
|
(967,532) |
|
(2,200,489) |
|
(1,650,647) |
Cash flows from financing activities |
|
|
|
|
|
|
|
|
Loans and debentures |
|
|
|
|
|
|
|
|
Proceeds |
16 |
994,996 |
|
- |
|
3,591,624 |
|
2,016,429 |
Repayments |
16 |
- |
|
- |
|
(2,280,152) |
|
(2,160,567) |
Interest paid |
16 |
(68,788) |
|
(112,675) |
|
(478,755) |
|
(1,220,707) |
Payments of lease |
13 |
(4,256) |
|
- |
|
(266,490) |
|
(237,225) |
Dividends paid |
25.h |
(261,409) |
|
(594,380) |
|
(264,487) |
|
(596,479) |
Redemption of non-controlling shares of Oxiteno Nordeste |
3.b.2 |
- |
|
- |
|
- |
|
(2,180) |
Capital increase from Iconic non-controlling shareholders |
|
- |
|
- |
|
- |
|
6,996 |
Related parties |
8.a |
9,123 |
|
51,439 |
|
(72) |
|
(122) |
Net cash provided by (used in) financing activities |
|
669,666 |
|
(655,616) |
|
301,668 |
|
(2,193,855) |
Effect of exchange rate changes on cash and cash equivalents in foreign currency |
|
- |
|
- |
|
149,455 |
|
9,780 |
Increase (decrease) in cash and cash equivalents |
|
894,300 |
|
(101,260) |
|
880,954 |
|
(1,385,657) |
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 |
936,880 |
|
71,055 |
|
2,996,333 |
|
2,553,294 |
Transactions without cash effect: |
|
|
|
|
|
|
|
|
Addition on right to use assets and leases payable |
13.a |
33,890 |
|
- |
|
407,148 |
|
244,650 |
Initial direct costs of right to use assets |
13.a |
- |
|
- |
|
- |
|
20,374 |
Addition on contractual assets with customers – exclusive rights |
11 |
- |
|
- |
|
139,960 |
|
- |
Reversion fund – private pension |
10 |
- |
|
- |
|
47,088 |
|
- |
The accompanying notes are an integral part of the interim financial information.
Ultrapar Participações S.A. and Subsidiaries
For the nine-month period ended September 30, 2020 and 2019
(In thousands of Brazilian Reais, except percentages)
|
Note |
Parent |
|
Consolidated |
||||||||||||
|
|
09/30/2020 |
|
% |
|
09/30/2019 |
|
% |
|
09/30/2020 |
|
% |
|
09/30/2019 |
|
% |
Revenue |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross revenue from sales and services, except rents and royalties |
26 |
- |
|
|
|
- |
|
|
|
62,473,739 |
|
|
|
69,823,702 |
|
|
Rebates, discounts, and returns |
26 |
- |
|
|
|
- |
|
|
|
(1,237,466) |
|
|
|
(1,114,791) |
|
|
Expected losses on doubtful accounts |
|
- |
|
|
|
- |
|
|
|
(29,078) |
|
|
|
(27,505) |
|
|
Amortization of contractual assets with customers – exclusive rights |
11 |
- |
|
|
|
- |
|
|
|
(224,441) |
|
|
|
(273,383) |
|
|
Gain (loss) on disposal of property, plant, and equipment and intangibles and other operating income, net |
28; 29 |
- |
|
|
|
- |
|
|
|
150,173 |
|
|
|
100,942 |
|
|
|
|
- |
|
|
|
- |
|
|
|
61,132,927 |
|
|
|
68,508,965 |
|
|
Materials purchased from third parties |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Raw materials used |
|
- |
|
|
|
- |
|
|
|
(4,344,264) |
|
|
|
(4,278,154) |
|
|
Cost of goods, products, and services sold |
|
- |
|
|
|
- |
|
|
|
(49,526,025) |
|
|
|
(57,022,478) |
|
|
Third-party materials, energy, services, and others |
|
121,517 |
|
|
|
8,065 |
|
|
|
(1,926,454) |
|
|
|
(2,009,651) |
|
|
Provisions for losses of assets |
|
- |
|
|
|
- |
|
|
|
(35,038) |
|
|
|
(20,007) |
|
|
|
|
121,517 |
|
|
|
8,065 |
|
|
|
(55,831,781) |
|
|
|
(63,330,290) |
|
|
Gross value added |
|
121,517 |
|
|
|
8,065 |
|
|
|
5,301,146 |
|
|
|
5,178,675 |
|
|
Deductions |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization |
14; 15 |
(5,115) |
|
|
|
- |
|
|
|
(940,510) |
|
|
|
(842,845) |
|
|
PIS and COFINS credits on depreciation |
14; 15 |
- |
|
|
|
- |
|
|
|
(11,487) |
|
|
|
(11,134) |
|
|
|
|
(5,115) |
|
|
|
- |
|
|
|
(951,997) |
|
|
|
(853,979) |
|
|
Net value added by the Company |
|
116,402 |
|
|
|
8,065 |
|
|
|
4,349,149 |
|
|
|
4,324,696 |
|
|
Value added received in transfer |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Share of profit (loss) of subsidiaries, joint ventures, and associates |
12 |
503,960 |
|
|
|
627,153 |
|
|
|
(30,515) |
|
|
|
(18,295) |
|
|
Rents and royalties |
26 |
- |
|
|
|
- |
|
|
|
82,147 |
|
|
|
111,861 |
|
|
Financial income |
30 |
33,850 |
|
|
|
100,451 |
|
|
|
306,813 |
|
|
|
401,880 |
|
|
|
|
537,810 |
|
|
|
727,604 |
|
|
|
358,445 |
|
|
|
495,446 |
|
|
Total value added available for distribution |
|
654,212 |
|
|
|
735,669 |
|
|
|
4,707,594 |
|
|
|
4,820,142 |
|
|
Distribution of value added |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Labor and benefits |
|
93,657 |
|
15 |
|
6,369 |
|
1 |
|
1,432,270 |
|
30 |
|
1,609,804 |
|
34 |
Taxes, fees, and contributions |
|
6,913 |
|
1 |
|
655 |
|
- |
|
2,195,537 |
|
47 |
|
1,941,113 |
|
40 |
Financial expenses and rents |
|
86,284 |
|
13 |
|
88,583 |
|
12 |
|
583,592 |
|
12 |
|
598,616 |
|
12 |
Dividends distributed |
|
- |
|
- |
|
217,382 |
|
30 |
|
- |
|
- |
|
218,903 |
|
5 |
Retained earnings |
|
467,358 |
|
71 |
|
422,680 |
|
57 |
|
496,195 |
|
11 |
|
451,706 |
|
9 |
Value added distributed |
|
654,212 |
|
100 |
|
735,669 |
|
100 |
|
4,707,594 |
|
100 |
|
4,820,142 |
|
100 |
The accompanying notes are an integral part of the interim financial information.
Ultrapar Participações S.A. and Subsidiaries
(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.
a. Clarifications on the impacts of COVID-19
The World Health Organization (“WHO”) declared a coronavirus pandemic (COVID-19) on March 11, 2020. To contain a spread of the virus in Brazil, the Ministry of Health (“MH”) and the state governments announced several actions to reduce the agglomeration and movement of people, including the closing of commerce, parks and common areas. In this context, the Company created a Crisis Committee to keep up with it and monitor the main risks and adopt preventive and emergency measures to reduce the pandemic effects.
Since the beginning of the crisis, the Company and its subsidiaries have been working on numerous initiatives to ensure the safety of its employees, the stability and continuity of its operations and the financial solidity of the Company. All the activities of the companies controlled by the Company are classified as essential in the context of the measures adopted to face the pandemic, in the terms to Decree No. 10,282/20.
The Company and its subsidiaries quickly adopted the work at home (expressed by home office) for the administrative public, offering all the necessary support for the progress of activities. In addition to basic safety concerns with employees, companies realizes several initiatives aimed at welfare, such as virtual meetings, psychological support and concern for ergonomics, following our principle of valuing people.
Through a multidisciplinary committee, a plan for the gradual resumption of employees from administrative areas to offices was structured, due to adoption of numerous preventive measures and intensification of cleaning and safety, according to the guidelines of the state governments and municipal.
For the purpose to preserve the commitment to keep their employees in their respective jobs and mitigate the impacts of the crisis, use resources made available by the government, such as reduced working hours and/or wages, suspension of contracts and reorganization of the vacation plan, as required.
The management of the Company and its subsidiaries finished the third quarter of 2020 confirming the expectation that the worst moment of the crisis is over. The emergency measures and speed in answer to the first effects of the crisis, as well as initiatives to support the supply chain, were effective to keep the activities of the subsidiaries in operation, ensuring the delivery of essential services to the population and preserving the health of employees.
Ultrapar Participações S.A. and Subsidiaries
Notes to the Parent’s Separate and Consolidated Interim Financial Information
(In thousands of Brazilian Reais, unless otherwise stated)
Remains uncertain to what extent the quarterly information, after September 30, 2020, may still be affected by the commercial, operational and financial impacts of the pandemic, because it will depend on its duration and the impacts on economic activities, as well as government, business in response to the crisis. In this context, some financial risk assessments, projections and impairment tests, in connection with the preparation of this quarterly information, may be impacted by the pandemic, and may adversely affect the financial position of the Company and its subsidiaries.
Operational impacts
The restrictions on the movement of people and the operation of certain businesses significantly impacted economic activity in Brazil.
Ultragaz presented in the second quarter a reduction in the volume sold in the bulk segment, because to the lower demand from industries and small and medium-sized companies, that were directly impacted by the social isolation measures. However, this effect was compensated by the increase in sales in the bottled segment, due to the higher demand for LPG for residential use. In terms of costs and expenses, Ultragaz incurred additional freight expenses, due to the need to remove LPG on more distant supply bases, protection materials and temporary workers, in addition to numerous donations to hospitals focused in the pandemic and needy communities. There was no record of an increase in defaults in the period. In the third quarter, Ultragaz had a recovery in volume in the bulk segment, due the resumption of the industry, while sales in the bottled segment continued resilient, gradually returning to pre-pandemic levels.
Ultracargo recorded a lower movement of fuels in the second quarter, due to the retraction in demand, and a reduction in spot contracts. Addittionaly, approximately R$ 2 million was recorded in extra expenses with protective materials and donations. The performance of measures to increase productivity and recover tax credits contributed to the improvement in results in the second quarter. In the third quarter, Ultracargo showed an increase in product movement and m3 invoiced compared to the previous quarter.
At Oxiteno, the paint, automotive and oil & gas segments suffered a retraction in demand in the second quarter, an effect that was partially compensated by the higher sales volume in the Home & Personal Care and Crop Solutions segments. To minimize the effects of the pandemic, Oxiteno's management operated quickly in measures to limit costs and expenses, contributing to an improvement in results. In the third quarter, Oxiteno had a recovery in sales volume for the automotive fluids, paint and varnishes with maintenance of increasing volumes for the hygiene and beauty sector.
Ipiranga was the business most impacted by the crisis due to the measures of social distance. In April, volumes sold for the Otto cycle and diesel registered a reduction of 37% and 17%, respectively, compared to the same period of the last year. In May and June, volumes sold improved gradually compared to April. In addition, the strong volatility in the prices of oil and oil products since the end of March, combined with a abrupt fall in the price of ethanol in April, caused significant inventories losses in the quarter. To mitigate these effects, the company and their subsidiaries realized initiatives to contain cash and reduce expenses in several areas, which made it possible to reduce general, administrative and sales expenses by 32% in the annual comparison. The level of default recorded a slight increase and remained at acceptable levels for the period. In the third quarter, it is observed a gradual evolution in the volumes sold of fuels over the quarter and an improvement in the operating environment, which enabled a significant recovery of the results compared to the second quarter.
Ultrapar Participações S.A. and Subsidiaries
Notes to the Parent’s Separate and Consolidated Interim Financial Information
(In thousands of Brazilian Reais, unless otherwise stated)
Extrafarma presented a reduction in revenues approximately of R$ 45 million in the second quarter, mainly due to the temporary closure of stores located in malls, and of the reduction of operation hours in stores that remained open. To oppose this effect, sales were implemented through alternative delivery channels and partnerships with delivery applications. In addition, the extension of Provisional Measure 936 by the government, involving the suspension of contracts and temporary reduction in wages, other internal productivity gain initiatives, contributed to the reduction of expenses in the amount of R$ 8 million, minimizing the impact on the quarter’s result. In the third quarter, Extrafarma reopened the stores located in malls, contributing to an increase in revenue and cost dilution.
Main risks and associated measures
Credit risk - the subsidiary Ipiranga implemented a help package for Ipiranga resellers, including anticipation of sales credits through the Abastece Aí application, postponement of lease and financing payments and temporary suspension of volume performance clauses. These actions softened the impacts of the pandemic on your clients' financial condition and, consequently, mitigated its potential effects on Ipiranga's default rates. The effects of expected losses on doubtful accounts as of and the nine-month period ended September 30, 2020 are disclosed in Notes 5 and 33.d.
Risk of impairment and intangible assets of indefinite useful life - the Company reviewed the projections used in impairment tests and assets allocated to cash generation units, considering the current impacts of the pandemic. The review did not result in the need for additional recognition of a provision for losses as of September 30, 2020.
Risk of realization of deferred tax assets - the Company reviewed the constitution and realization of deferred tax credits, considering the current revised projections for each business segment due to the pandemic, and did not identify the need for write-offs for the period ended on September 30, 2020.
Risks in financial instruments - the increase in volatility in financial markets may impact financial results according to sensitivity analyzes presented in Note 33.
Liquidity risk - the impact on the volumes of operations and on the results of the Company and its subsidiaries may adversely affect the generation of operating cash. Thus, in order to strengthen the Company's liquidity and cash position, in view of the uncertainty generated by the pandemic, at the end of March and start April 2020, the Company and the subsidiary IPP contracted R$ 1.5 billion in new financing maturing in one year. Of this total, R$ 1.3 billion was obtained through the issuance of promissory notes with credit in April. In addition, as a measure of cash containment, the Company announced in April a reduction of approximately 30% in its investment plan for 2020 and in August, the management opted to not pay interim dividends for the current year. As stated in the Bylaws, the minimum mandatory dividends will be paid after the disclosure of the year's results.
In July 2020, the Company reopened bonds issued on the market maturing in 2029 and raised US$ 350 million with a coupon of 5.25% per year. The proceeds will be used to pay debts maturing in the short term, allowing the Company's debt profile to be lengthened, in addition to strengthening its cash position.
Ultrapar Participações S.A. and Subsidiaries
Notes to the Parent’s Separate and Consolidated Interim Financial Information
(In thousands of Brazilian Reais, unless otherwise stated)
The management of the Company and its subsidiaries maintained discipline in control of costs and expenses to preserve cash in all business and selectivity in the allocation of capital. As a result, the Company had a quarter of strong operating cash generation, with reduced leverage, reinforcing its commitment to financial strength and demonstrating the resilience of our portfolio.
2. Presentation of interim financial information and summary of significant accounting policies
The parent’s separate 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 periods presented in this interim financial information.
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.
Ultrapar Participações S.A. and Subsidiaries
Notes to the Parent’s Separate and Consolidated Interim Financial Information
(In thousands of Brazilian Reais, unless otherwise stated)
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.
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$ 44,829 for the nine-month period ended September 30, 2020 (R$ 44,793 for the nine-month period ended September 30, 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:
Ultrapar Participações S.A. and Subsidiaries
Notes to the Parent’s Separate 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:
For further information on financial instruments, see Note 33.
Ultrapar Participações S.A. and Subsidiaries
Notes to the Parent’s Separate and Consolidated Interim Financial Information
(In thousands of Brazilian Reais, unless otherwise stated)
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) the lifetime of the contract considering the deterioration or improvement of the customers’ credit quality and its 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.
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’s separate 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.
Ultrapar Participações S.A. and Subsidiaries
Notes to the Parent’s Separate and Consolidated Interim Financial Information
(In thousands of Brazilian Reais, unless otherwise stated)
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 periodically review the existence of an indication that the rights to use assets may be impaired (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.
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:
Ultrapar Participações S.A. and Subsidiaries
Notes to the Parent’s Separate and Consolidated Interim Financial Information
(In thousands of Brazilian Reais, unless otherwise stated)
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).
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.
Ultrapar Participações S.A. and Subsidiaries
Notes to the Parent’s Separate and Consolidated Interim Financial Information
(In thousands of Brazilian Reais, unless otherwise stated)
n. Provision for asset retirement obligation – fuel tanks
The subsidiary Ipiranga has the legal obligation to remove the underground fuel tanks owned by Ipiranga-branded located at 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 Amplified 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.
o. Provisions for tax, civil, and labor risks
A provision for tax, civil and labor risks is recognized for quantifiable risks, when the chance of loss is more-likely-than-not in the opinion of management and internal and external legal counsel, and the amounts are recognized based on the evaluation of the outcomes of the legal proceedings (see Note 22).
p. Post-employment benefits
Post-employment benefits granted and to be granted to employees, retirees, and pensioners are based on an actuarial calculation prepared by an independent actuary and reviewed by management, using the projected unit credit method (see Note 20.b). The actuarial gains and losses are recognized in equity in cumulative other comprehensive income in the “Valuation adjustments”.
q. Other liabilities
Other liabilities are stated at known or measurable amounts and changes in exchange rates incurred. When applicable, other liabilities are recognized at present value, based on interest rates that reflect the term, currency, and risk of each transaction.
r. Foreign currency transactions
Foreign currency transactions carried out by the Company or its subsidiaries are remeasured into their functional currency at the exchange rate prevailing at the date of each transaction. Outstanding monetary assets and liabilities of the Company and its subsidiaries are translated using the exchange rate at the date of the interim financial information. The effect of the difference between those exchange rates is recognized in financial results until the conclusion of each transaction.
Ultrapar Participações S.A. and Subsidiaries
Notes to the Parent’s Separate 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 September 30, 2020 was a gain of R$ 301,105 (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$”), as its inventory sales, purchases of raw material inputs, and financing activities are performed substantially in this currency.
s.2 Subsidiaries without self-administrative autonomy
Assets and liabilities of the other foreign subsidiaries, which do not have administrative autonomy, are considered an extension of the activities of their parent company and are translated using the exchange rate at the date of the interim financial information. Gains and losses resulting from changes in these foreign investments are directly recognized as financial result. The gain recognized in income for the nine-month period ended September 30, 2020 amounted to R$ 40,747 (gain of R$ 5,005 for the nine-month period ended September 30, 2019).
t. Use of estimates, assumptions and judgments
The preparation of the interim financial information requires the use of estimates, assumptions, and judgments for the accounting and disclosure of certain assets, liabilities, and profit or loss. Therefore, the Company and subsidiaries’ management use the best information available at the date of preparation of the interim financial information, as well as the experience of past and current events, also considering assumptions regarding future events. The estimates and assumptions are reviewed periodically.
t.1 Judgments
Information on the judgments is included: in the determination of control in subsidiaries (Notes 2.g, 2.s.1, 3 and 12.a), the determination of joint control in joint venture (Notes 2.g, 12.a and 12.b) and the determination of significant influence in associates (Notes 2.g and 12.c).
Ultrapar Participações S.A. and Subsidiaries
Notes to the Parent’s Separate 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 are not 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 are 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 nine-month period ended September 30, 2020 and 2019. 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).
Ultrapar Participações S.A. and Subsidiaries
Notes to the Parent’s Separate and Consolidated Interim Financial Information
(In thousands of Brazilian Reais, unless otherwise stated)
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.
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 in Brazil 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, financing, 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 standards, amendments and interpretations to IFRS issued by the IASB, which are effective, that have not been adopted by the Company and could have impact in this interim financial information to September 30, 2020.
z. Authorization for issuance of the interim financial information
This interim financial information was authorized for issue by the Board of Directors on November 4, 2020.
Ultrapar Participações S.A. and Subsidiaries
Notes to the Parent’s Separate and Consolidated Interim Financial Information
(In thousands of Brazilian Reais, unless otherwise stated)
3. Principles of consolidation and investments in subsidiaries
a. Principles of consolidation
In the preparation of the consolidated interim financial information the investments of one company in another, balances of asset and liability accounts, revenues transactions, costs and expenses were eliminated, as well as the effects of transactions conducted between the companies. Non-controlling interests in subsidiaries are presented within consolidated equity and net income.
Consolidation of a subsidiary begins when the parent company obtains direct or indirect control over a company and ceases when the parent company loses control of a company. Income and expenses of a subsidiary acquired are included in the consolidated statement of profit or loss and comprehensive income from the date the parent company gains the control. Income and expenses of a subsidiary, in which the parent company loses control, are included in the consolidated statement of profit or loss and comprehensive income until the date the parent company loses control.
When necessary, adjustments are made to the interim financial information of subsidiaries to bring their accounting policies into line with the Company’s accounting policies.
Ultrapar Participações S.A. and Subsidiaries
Notes to the Parent’s Separate 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 |
||||||
|
|
|
|
09/30/2020 |
|
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 |
Icorban – Correspondente Bancário Ltda. |
Brazil |
Ipiranga |
|
- |
|
100 |
|
- |
|
100 |
Ipiranga Trading Limited |
British 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. |
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 |
Others |
|
- |
|
99 |
|
- |
|
- |
Centro de Conveniências Millennium Ltda. and subsidiaries (3) |
Brazil |
Ipiranga |
|
100 |
|
- |
|
- |
|
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. |
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 (4) |
Brazil |
Others |
|
100 |
|
- |
|
- |
|
- |
Eai Clube Automobilista S.A. (5) |
Brazil |
Abastece Aí |
|
100 |
|
- |
|
- |
|
- |
The percentages in the table above are rounded.
(1) Non operating company in closing phase.
(2) Subsidiary constituted in January 2020, the L.I.Z.S.P.E has as finality the consulting in valuation, business management, economic and financial advisory, among other.
(3) In May 2020, there was a change in the participation of the capital of the Subsidiary Millennium becoming a direct subsidiary of the Company.
(4) 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.
(5) Subsidiary created in July 2020 in the basis of the Abastece Aí and Km de Vantagens programs to operate in the digital payments segment under the Abastece Aí brand.
Ultrapar Participações S.A. and Subsidiaries
Notes to the Parent’s Separate 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 Interest Rate (“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$ 9,797,789 as of September 30, 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 |
||||
|
09/30/2020 |
|
12/31/2019 |
|
09/30/2020 |
|
12/31/2019 |
Cash and bank deposits |
|
|
|
|
|
|
|
In local currency |
1,429 |
|
381 |
|
194,385 |
|
182,237 |
In foreign currency |
- |
|
- |
|
112,399 |
|
102,755 |
Financial investments considered cash equivalents |
|
|
|
|
|
|
|
In local currency |
|
|
|
|
|
|
|
Fixed-income securities |
935,451 |
|
42,199 |
|
2,639,355 |
|
1,780,939 |
In foreign currency |
|
|
|
|
|
|
|
Fixed-income securities |
- |
|
- |
|
50,194 |
|
49,448 |
Total cash and cash equivalents |
936,880 |
|
42,580 |
|
2,996,333 |
|
2,115,379 |
Ultrapar Participações S.A. and Subsidiaries
Notes to the Parent’s Separate and Consolidated Interim Financial Information
(In thousands of Brazilian Reais, unless otherwise stated)
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 |
||||
|
09/30/2020 |
|
12/31/2019 |
|
09/30/2020 |
|
12/31/2019 |
Financial investments |
|
|
|
|
|
|
|
In local currency |
|
|
|
|
|
|
|
Fixed-income securities and funds |
109,888 |
|
95,829 |
|
3,073,361 |
|
2,610,686 |
In foreign currency |
|
|
|
|
|
|
|
Fixed-income securities and funds |
- |
|
- |
|
2,425,276 |
|
303,417 |
Currency and interest rate hedging instruments (a) |
- |
|
- |
|
1,302,819 |
|
682,615 |
Total financial investments |
109,888 |
|
95,829 |
|
6,801,456 |
|
3,596,718 |
Current |
109,888 |
|
95,829 |
|
5,582,703 |
|
3,090,212 |
Non-current |
- |
|
- |
|
1,218,753 |
|
506,506 |
(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:
|
|
09/30/2020 |
|
12/31/2019 |
Domestic customers |
|
3,447,352 |
|
3,867,163 |
Domestic customers – related parties (see Note 8.a.2) |
|
356 |
|
739 |
Foreign customers |
|
349,841 |
|
226,484 |
(-) Expected losses on doubtful accounts |
|
(406,994) |
|
(404,886) |
|
|
3,390,555 |
|
3,689,500 |
Current |
|
3,303,691 |
|
3,635,834 |
Non-current |
|
86,864 |
|
53,666 |
Ultrapar Participações S.A. and Subsidiaries
Notes to the Parent’s Separate and Consolidated Interim Financial Information
(In thousands of Brazilian Reais, unless otherwise stated)
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 |
09/30/2020 |
3,797,549 |
|
2,916,452 |
130,293 |
29,572 |
41,111 |
56,397 |
623,724 |
12/31/2019 |
4,094,386 |
|
3,199,315 |
159,350 |
27,320 |
12,245 |
61,489 |
634,667 |
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 |
09/30/2020 |
406,994 |
|
28,540 |
1,561 |
1,869 |
1,982 |
12,921 |
360,121 |
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 |
|
159,757 |
Reversals |
|
(148,585) |
Write-offs |
|
(9,064) |
Balance as of September 30, 2020 |
|
406,994 |
For further information about the allowance for expected losses on doubtful accounts, see Note 33.d.3.
Ultrapar Participações S.A. and Subsidiaries
Notes to the Parent’s Separate and Consolidated Interim Financial Information
(In thousands of Brazilian Reais, unless otherwise stated)
b. Reseller financing
The composition of reseller financing is as follows:
|
|
09/30/2020 |
|
12/31/2019 |
Reseller financing – Ipiranga |
|
1,115,098 |
|
956,942 |
(-) Expected losses on doubtful accounts |
|
(188,911) |
|
(156,006) |
|
|
926,187 |
|
800,936 |
Current |
|
497,853 |
|
436,188 |
Non-current |
|
428,334 |
|
364,748 |
Reseller financing is provided at subsidized rate 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 between 12 and 60 months, with an average term of 40 months. The minimum and maximum subsisted 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 adjustment between the market rate and the rate subsidized is recognized as a reduction to the reseller’s revenue at the beginning of the contract. Throughout the contract, the interest appropriated by the market rate is recognized to the financial result.
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 |
09/30/2020 |
1,115,098 |
|
764,660 |
9,243 |
13,809 |
9,848 |
27,465 |
290,073 |
12/31/2019 |
956,942 |
|
644,488 |
26,262 |
10,481 |
12,616 |
30,144 |
232,951 |
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 |
09/30/2020 |
188,911 |
|
30,078 |
812 |
1,406 |
1,046 |
13,826 |
141,743 |
12/31/2019 |
156,006 |
|
21,337 |
2,519 |
1,063 |
1,313 |
14,639 |
115,135 |
Ultrapar Participações S.A. and Subsidiaries
Notes to the Parent’s Separate and Consolidated Interim Financial Information
(In thousands of Brazilian Reais, unless otherwise stated)
Movements in the allowance for expected losses on doubtful accounts are as follows:
Balance as of December 31, 2019 |
|
156,006 |
Additions |
|
58,323 |
Reversals |
|
(23,733) |
Write-offs |
|
(1,685) |
Balance as of September 30, 2020 |
|
188,911 |
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:
|
09/30/2020 |
|
12/31/2019 |
||||||||
|
Cost |
|
Provision for losses |
|
Net balance |
|
Cost |
|
Provision for losses |
|
Net balance |
Fuels, lubricants and greases |
1,612,005 |
|
(2,283) |
|
1,609,722 |
|
1,843,257 |
|
(2,073) |
|
1,841,184 |
Finished goods |
560,415 |
|
(22,195) |
|
538,220 |
|
541,689 |
|
(22,048) |
|
519,641 |
Work in process |
927 |
|
- |
|
927 |
|
1,971 |
|
- |
|
1,971 |
Raw materials |
508,942 |
|
(3,436) |
|
505,506 |
|
365,960 |
|
(2,552) |
|
363,408 |
Liquefied petroleum gas (LPG) |
92,544 |
|
(5,761) |
|
86,783 |
|
101,715 |
|
(5,761) |
|
95,954 |
Consumable materials and other items for resale |
136,725 |
|
(2,516) |
|
134,209 |
|
140,058 |
|
(2,587) |
|
137,471 |
Pharmaceutical, hygiene, and beauty products |
469,971 |
|
(3,133) |
|
466,838 |
|
549,191 |
|
(2,877) |
|
546,314 |
Purchase for future delivery (1) |
170,363 |
|
(464) |
|
169,899 |
|
183,170 |
|
(2,719) |
|
180,451 |
Properties for resale |
27,610 |
|
(107) |
|
27,503 |
|
29,273 |
|
(107) |
|
29,166 |
|
3,579,502 |
|
(39,895) |
|
3,539,607 |
|
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 |
(540) |
Reversals of obsolescence and other losses |
(289) |
Balance as of September 30, 2020 |
39,895 |
The breakdown of provisions for losses related to inventories is shown in the table below:
|
09/30/2020 |
|
12/31/2019 |
Net realizable value adjustment |
14,703 |
|
15,243 |
Obsolescence and other losses |
25,192 |
|
25,481 |
Total |
39,895 |
|
40,724 |
Ultrapar Participações S.A. and Subsidiaries
Notes to the Parent’s Separate and Consolidated Interim Financial Information
(In thousands of Brazilian Reais, unless otherwise stated)
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”).
|
09/30/2020 |
|
12/31/2019 |
ICMS (a.1) |
1,108,425 |
|
914,066 |
Provision for ICMS losses (a.1) |
(50,372) |
|
(41,396) |
PIS and COFINS (a.2) |
1,056,154 |
|
930,570 |
Value-added tax (IVA) of foreign subsidiaries |
37,396 |
|
29,707 |
Others |
60,585 |
|
56,748 |
Total |
2,212,188 |
|
1,889,695 |
Current |
890,852 |
|
1,122,335 |
Non-current |
1,321,336 |
|
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 subsidiaries Ipiranga Produtos de Petróleo S.A. (“IPP”) and Cia Ultragaz S.A. (“Cia Ultragaz”) have 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; |
(iii) | The subsidiary Extrafarma has ICMS credits 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.
Ultrapar Participações S.A. and Subsidiaries
Notes to the Parent’s Separate and Consolidated Interim Financial Information
(In thousands of Brazilian Reais, unless otherwise stated)
The estimated recovery of ICMS credits assets is stated as follows:
Up to 1 year |
346,990 |
From 1 to 2 years |
364,216 |
From 2 to 3 years |
196,479 |
From 3 to 5 years |
86,154 |
From 5 to 7 years |
30,070 |
From 7 to 10 years |
34,144 |
Total of recoverable ICMS |
1,058,053 |
The provision for ICMS losses relates to tax credits of the subsidiaries whose amounts are not included within the term determined by its policy.
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, Tropical 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 |
||||
|
09/30/2020 |
|
12/31/2019 |
|
09/30/2020 |
|
12/31/2019 |
IRPJ and CSLL |
91,004 |
|
89,197 |
|
505,449 |
|
430,290 |
Current |
51,557 |
|
49,750 |
|
253,700 |
|
325,343 |
Non-current |
39,447 |
|
39,447 |
|
251,749 |
|
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.
Ultrapar Participações S.A. and Subsidiaries
Notes to the Parent’s Separate and Consolidated Interim Financial Information
(In thousands of Brazilian Reais, unless otherwise stated)
8. Related parties
a. Related parties
The balances and transactions between the Company and its related parties are disclosed below:
a.1 Parent
|
Assets |
|
Liabilities |
|
Financial income (1) |
|
Debentures (1) |
|
Account payable |
|
|
Ipiranga Produtos de Petróleo S.A. |
750,000 |
|
- |
|
19,742 |
Imifarma Produtos Farmacêuticos e Cosméticos S.A. |
- |
|
5,199 |
|
- |
Total as of September 30, 2020 |
750,000 |
|
5,199 |
|
19,742 |
|
Assets |
|
Liabilities |
|
Financial income (1) |
|
Debentures (1) |
|
Account payable |
|
|
Ipiranga Produtos de Petróleo S.A. |
759,123 |
|
‐ |
|
40,151 |
Imifarma Produtos Farmacêuticos e Cosméticos S.A. |
‐ |
|
4,220 |
|
‐ |
Total as of December 31, 2019 |
759,123 |
|
4,220 |
|
|
Total as of September 30, 2019 |
|
|
|
|
40,151 |
(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 |
Others |
490 |
|
978 |
Total as of September 30, 2020 |
490 |
|
3,853 |
Ultrapar Participações S.A. and Subsidiaries
Notes to the Parent’s Separate and Consolidated Interim Financial Information
(In thousands of Brazilian Reais, unless otherwise stated)
|
Loans |
||
|
Assets |
|
Liabilities |
Química da Bahia Indústria e Comércio S.A. |
- |
|
2,875 |
Others |
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 |
|
Payables |
|
Other payables (1) |
|
Sales and services |
|
Purchases |
|
Expenses |
Oxicap Indústria de Gases Ltda. |
- |
|
3,217 |
|
- |
|
45 |
|
14,246 |
|
- |
Refinaria de Petróleo Riograndense S.A. |
- |
|
62,943 |
|
- |
|
- |
|
227,455 |
|
- |
ConectCar Soluções de Mobilidade Eletrônica S.A. |
356 |
|
104 |
|
250 |
|
2,283 |
|
118 |
|
- |
LA’7 Participações e Empreend. Imob. Ltda. (a) |
- |
|
- |
|
- |
|
- |
|
- |
|
1,206 |
Total as of September 30, 2020 |
356 |
|
66,264 |
|
250 |
|
2,328 |
|
241,819 |
|
1,206 |
|
Commercial transactions |
||||||||
|
Receivables |
|
Payables |
|
Sales and |
|
Purchases |
|
Expenses |
Oxicap Indústria de Gases Ltda. |
- |
|
1,545 |
|
2 |
|
14,240 |
|
‐ |
Refinaria de Petróleo Riograndense S.A. |
- |
|
264,602 |
|
‐ |
|
733,806 |
|
‐ |
ConectCar Soluções de Mobilidade Eletrônica S.A. |
739 |
|
113 |
|
3,657 |
|
109 |
|
‐ |
LA’7 Participações e Empreend. Imob. Ltda. (a) |
- |
|
124 |
|
‐ |
|
‐ |
|
1,106 |
Total as of December 31, 2019 |
739 |
|
266,384 |
|
|
|
|
|
|
Total as of September 30, 2019 |
|
|
|
|
3,659 |
|
748,155 |
|
1,106 |
(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 September 30, 2020 and December 31, 2019, a company owned by Extrafarma’s former shareholders and current shareholders of Ultrapar.
Ultrapar Participações S.A. and Subsidiaries
Notes to the Parent’s Separate 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.j.
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:
|
09/30/2020 |
|
09/30/2019 |
Short-term compensation |
34,470 |
|
36,944 |
Stock compensation |
1,714 |
|
7,313 |
Post-employment benefits |
2,029 |
|
1,934 |
Total |
38,213 |
|
46,191 |
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. The members of the Ultrapar’s Board of Directors do not eligible for the stock plan. The fair value of the awards was determined on the grant date based on the market value of the shares on the B3, the Brazilian Securities, Commodities and Futures Exchange and the amounts are amortized between five to seven years from the grant date.
Ultrapar Participações S.A. and Subsidiaries
Notes to the Parent’s Separate 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 4, 2016 |
380,000 |
2021 to 2023 |
32.72 |
17,147 |
|
(13,348) |
|
3,799 |
December 10, 2014 |
533,324 |
2020 to 2021 |
25.32 |
27,939 |
|
(26,128) |
|
1,811 |
March 5, 2014 |
55,600 |
2021 |
26.08 |
5,999 |
|
(5,880) |
|
119 |
|
968,924 |
|
|
51,085 |
|
(45,356) |
|
5,729 |
For the nine-month period ended September 30, 2020, the amortization in the amount of R$ 963 (R$ 7,955 for the nine-month period ended September 30, 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 |
Cancellation of granted shares due to termination of executive employment |
|
(200,000) |
Shares vested and transferred |
|
(55,600) |
Balance on September 30, 2020 |
|
968,924 |
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.
Ultrapar Participações S.A. and Subsidiaries
Notes to the Parent’s Separate and Consolidated Interim Financial Information
(In thousands of Brazilian Reais, unless otherwise stated)
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 |
|
(6,321) |
|
6,321 |
Restricted and performance |
November 8, 2017 |
33,638 |
2020 to 2022 |
38.19 |
2,723 |
|
(1,751) |
|
972 |
Restricted and performance |
April 4, 2018 |
126,360 |
2021 to 2023 |
34.35 |
8,451 |
|
(5,132) |
|
3,319 |
Restricted |
September 19, 2018 |
80,000 |
2024 |
19.58 |
3,691 |
|
(1,350) |
|
2,341 |
Restricted |
September 24, 2018 |
80,000 |
2024 |
18.40 |
2,030 |
|
(677) |
|
1,353 |
Restricted and performance |
April 3, 2019 |
494,202 |
2022 to 2024 |
23.25 |
20,900 |
|
(8,330) |
|
12,570 |
Restricted |
September 2, 2019 |
440,000 |
2025 |
16.42 |
9,965 |
|
(1,800) |
|
8,165 |
Restricted and performance |
April 1, 2020 |
790,455 |
2023 to 2025 |
12.53 |
18,653 |
|
(2,428) |
|
16,225 |
Restricted |
September 16, 2020 |
700,000 |
2026 |
23.03 |
22,236 |
|
(309) |
|
21,927 |
|
|
2,984,655 |
|
|
101,291 |
|
(28,098) |
|
73,193 |
For the nine-month period ended September 30, 2020, a general and administrative expense in the amount of R$ 8,362 was recognized in relation to the Plan (R$ 9,048 for the nine-month period ended September 30, 2019).
Balance on December 31, 2019 |
|
1,738,660 |
Shares granted on April 1, 2020 |
|
877,788 |
Shares granted on September 16, 2020 |
|
700,000 |
Cancellation of granted shares due to termination of executive employment |
|
(278,801) |
Cancellation of performance shares |
|
(52,992) |
Balance on September 30, 2020 |
|
2,984,655 |
Ultrapar Participações S.A. and Subsidiaries
Notes to the Parent’s Separate 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, negative tax bases, temporary additions, 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 |
||||
|
09/30/2020 |
|
12/31/2019 |
|
09/30/2020 |
|
12/31/2019 |
Assets - deferred income and social contribution taxes on: |
|
|
|
|
|
|
|
Provision for impairment of assets |
- |
|
- |
|
51,900 |
|
72,377 |
Provisions for tax, civil, and labor risks |
172 |
|
- |
|
138,115 |
|
150,085 |
Provision for post-employment benefits |
1,398 |
|
- |
|
88,893 |
|
92,199 |
Provision for differences between cash and accrual basis (i) |
- |
|
- |
|
711,208 |
|
224,065 |
Goodwill |
- |
|
- |
|
6,039 |
|
8,161 |
Business combination – tax basis vs. accounting basis of goodwill |
- |
|
- |
|
75,707 |
|
75,745 |
Provision for asset retirement obligation |
- |
|
- |
|
15,355 |
|
14,762 |
Provision for suppliers |
928 |
|
439 |
|
65,503 |
|
35,214 |
Provision for profit sharing and bonus |
5,284 |
|
- |
|
46,623 |
|
44,818 |
Leases payable |
884 |
|
- |
|
37,174 |
|
19,003 |
Change in fair value of subscription warrants |
13,699 |
|
16,338 |
|
13,699 |
|
16,338 |
Other provisions |
94 |
|
204 |
|
42,085 |
|
45,316 |
Tax losses and negative basis for social contribution carryforwards (9.d) |
32,063 |
|
24,632 |
|
405,440 |
|
278,140 |
Total |
54,522 |
|
41,613 |
|
1,697,741 |
|
1,076,223 |
Offset the liability balance of deferred IRPJ and CSLL |
(3,956) |
|
- |
|
(629,497) |
|
(422,529) |
Net balance of deferred taxes assets |
50,566 |
|
41,613 |
|
1,068,244 |
|
653,694 |
|
|
|
|
|
|
|
|
Liabilities - deferred income and social contribution taxes on: |
|
|
|
|
|
|
|
Revaluation of PP&E |
- |
|
- |
|
1,799 |
|
1,866 |
Leases payable |
- |
|
- |
|
2,034 |
|
2,356 |
Provision for differences between cash and accrual basis (i) |
877 |
|
- |
|
461,229 |
|
257,718 |
Provision for goodwill |
- |
|
- |
|
78,978 |
|
39,186 |
Business combination – fair value of assets |
- |
|
- |
|
112,284 |
|
114,125 |
Temporary differences in foreign subsidiary |
3,079 |
|
- |
|
9,371 |
|
- |
Other provisions |
- |
|
- |
|
15,979 |
|
14,809 |
Total |
3,956 |
|
- |
|
681,674 |
|
430,060 |
Offset the asset balance of deferred IRPJ and CSLL |
(3,956) |
|
- |
|
(629,497) |
|
(422,529) |
Net balance of deferred taxes liabilities |
- |
|
- |
|
52,177 |
|
7,531 |
(i) Refers mainly to the income tax on the exchange variation of the derivate hedging instruments.
Ultrapar Participações S.A. and Subsidiaries
Notes to the Parent’s Separate 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 |
||||
|
09/30/2020 |
|
09/30/2019 |
|
09/30/2020 |
|
09/30/2019 |
Initial balance |
41,613 |
|
14,034 |
|
646,163 |
|
504,890 |
Deferred IRPJ and CSLL recognized in income of the period |
8,953 |
|
3,109 |
|
46,804 |
|
(90,500) |
Deferred IRPJ and CSLL recognized in other comprehensive income |
- |
|
- |
|
305,204 |
|
64,310 |
Others |
- |
|
- |
|
17,896 |
|
3,248 |
Final balance |
50,566 |
|
17,143 |
|
1,016,067 |
|
481,948 |
The estimated recovery of deferred tax assets relating to IRPJ and CSLL is stated as follows:
|
Parent |
|
Consolidated |
Up to 1 year |
19,154 |
|
254,651 |
From 1 to 2 years |
12,070 |
|
81,529 |
From 2 to 3 years |
2,869 |
|
141,760 |
From 3 to 5 years |
5,710 |
|
156,334 |
From 5 to 7 years |
8,572 |
|
660,802 |
From 7 to 10 years |
6,147 |
|
402,665 |
Total of deferred tax assets relating to IRPJ and CSLL |
54,522 |
|
1,697,741 |
In order to evaluate the realization of deferred tax assets, the taxable income projections from business plans of each segment of the Company, which indicates trends and perspectives, demand effects, competition and other economic factors that represent the management’s best estimate about the economic conditions existing during the period of realization of the deferred tax asset were taken into account.
Ultrapar Participações S.A. and Subsidiaries
Notes to the Parent’s Separate 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 |
||||
|
09/30/2020 |
|
09/30/2019 |
|
09/30/2020 |
|
09/30/2019 |
Income (loss) before taxes and share of profit (loss) of subsidiaries, joint ventures, and associates |
(45,385) |
|
9,800 |
|
883,388 |
|
1,086,096 |
Statutory tax rates – % |
34 |
|
34 |
|
34 |
|
34 |
Income and social contribution taxes at the statutory tax rates |
15,431 |
|
(3,332) |
|
(300,352) |
|
(369,273) |
Adjustments to the statutory income and social contribution taxes: |
|
|
|
|
|
|
|
Nondeductible expenses (i) |
(6,657) |
|
(594) |
|
(25,991) |
|
(41,228) |
Nontaxable revenues (ii) |
- |
|
7,098 |
|
22,398 |
|
24,568 |
Adjustment to estimated income (iii) |
- |
|
- |
|
6,908 |
|
8,245 |
Unrecorded deferred income and social contribution taxes carryforwards deferred (iv) |
- |
|
- |
|
(119,686) |
|
(64,769) |
Other adjustments |
9 |
|
(63) |
|
3,415 |
|
14,374 |
Income and social contribution taxes before tax incentives |
8,783 |
|
3,109 |
|
(413,308) |
|
(428,083) |
Tax incentives - SUDENE |
- |
|
- |
|
56,630 |
|
30,891 |
Income and social contribution taxes in the income statement |
8,783 |
|
3,109 |
|
(356,678) |
|
(397,192) |
|
|
|
|
|
|
|
|
Current |
(170) |
|
- |
|
(403,482) |
|
(306,692) |
Deferred |
8,953 |
|
3,109 |
|
46,804 |
|
(90,500) |
Effective IRPJ and CSLL rates – % |
19.4 |
|
(31.7) |
|
40.4 |
|
36.6 |
(i) | Consist of certain expenses that cannot be deducted for tax purposes under applicable tax legislation, such as expenses with fines, donations, gifts, losses of assets, negative effects of foreign subsidiaries and certain provisions. |
(ii) | Consist of certain gains and income that are not taxable under applicable tax legislation, such as the reimbursement of taxes and the reversal of certain provisions. |
(iii) | Brazilian tax law allows for an alternative method of taxation for companies that generated gross revenues of up to R$ 78 million in their previous fiscal year. Certain subsidiaries of the Company adopted this alternative form of taxation, whereby income and social contribution taxes are calculated on a basis equal to 32% of operating revenues, as opposed to being calculated based on the effective taxable income of these subsidiaries. The adjustment to estimated income represents the difference between the taxation under this alternative method and the income and social contribution taxes that would have been paid based on the effective statutory rate applied to the taxable income of these subsidiaries. |
(iv) | See Note 9.d. |
Ultrapar Participações S.A. and Subsidiaries
Notes to the Parent’s Separate 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 September 30, 2020, the Company and certain subsidiaries had tax loss carryforwards related to income tax (IRPJ) of R$ 1,823,039 (R$ 1,268,964 as of December 31, 2019) and negative basis of CSLL of R$ 1,824,789 (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.
Ultrapar Participações S.A. and Subsidiaries
Notes to the Parent’s Separate 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:
|
09/30/2020 |
|
12/31/2019 |
Oxiteno S.A. |
223,061 |
|
148,306 |
Extrafarma |
72,318 |
|
72,318 |
Ipiranga |
65,388 |
|
- |
Ultrapar |
33,591 |
|
27,051 |
Iconic |
9,020 |
|
17,657 |
Abastece Aí |
1,601 |
|
- |
Tequimar Vila do Conde |
327 |
|
- |
Ultracargo |
108 |
|
- |
LIZSPE |
26 |
|
- |
Cia Ultragaz |
- |
|
12,808 |
|
405,440 |
|
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:
|
09/30/2020 |
|
12/31/2019 |
Extrafarma |
304,604 |
|
237,664 |
Millennium |
455 |
|
96 |
Integra Frotas |
6,965 |
|
4,636 |
|
312,024 |
|
242,396 |
In addition, certain foreign subsidiaries have tax loss carryforwards, as shown below, subject to local compensation rules.
|
09/30/2020 |
|
12/31/2019 |
|
US$ (thousands) |
|
US$ (thousands) |
Oxiteno USA |
210,882 |
|
184,781 |
Oxiteno Uruguai |
8,057 |
|
7,444 |
Ultrapar International |
8,487 |
|
10,420 |
|
227,426 |
|
202,645 |
Ultrapar Participações S.A. and Subsidiaries
Notes to the Parent’s Separate and Consolidated Interim Financial Information
(In thousands of Brazilian Reais, unless otherwise stated)
10. Prepaid expenses
|
Parent |
|
Consolidated |
||||
|
09/30/2020 |
|
12/31/2019 |
|
09/30/2020 |
|
12/31/2019 |
Rents |
- |
|
- |
|
37,901 |
|
37,106 |
Advertising and publicity |
- |
|
- |
|
28,500 |
|
24,857 |
Deferred stock plan, net (see Note 8.c) |
2,844 |
|
- |
|
9,871 |
|
15,965 |
Insurance premiums |
2,235 |
|
327 |
|
46,165 |
|
61,884 |
Software maintenance |
3,216 |
|
- |
|
21,495 |
|
23,216 |
Employee benefits |
538 |
|
- |
|
9,376 |
|
3,425 |
IPVA and IPTU |
34 |
|
- |
|
5,288 |
|
937 |
Contribution - private pension fund (see Note 20.a) |
- |
|
- |
|
40,649 |
|
- |
Other prepaid expenses |
- |
|
- |
|
16,931 |
|
13,181 |
|
8,867 |
|
327 |
|
216,176 |
|
180,571 |
|
|
|
|
|
|
|
|
Current |
4,450 |
|
72 |
|
136,357 |
|
111,355 |
Non-current |
4,417 |
|
255 |
|
79,819 |
|
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.
Balance and changes are shown below:
Balance as of December 31, 2019 |
|
1,465,989 |
Additions |
|
436,725 |
Amortization |
|
(224,441) |
Transfer |
|
(13,695) |
Balance as of September 30, 2020 |
|
1,664,578 |
|
|
|
Current |
|
481,130 |
Non-current |
|
1,183,448 |
|
|
|
Balance as of December 31, 2018 |
|
1,518,477 |
Additions |
|
231,737 |
Amortization |
|
(273,383) |
Transfer |
|
(17,717) |
Balance as of September 30, 2019 |
|
1,459,114 |
|
|
|
Current |
|
481,498 |
Non-current |
|
977,616 |
Ultrapar Participações S.A. and Subsidiaries
Notes to the Parent’s Separate and Consolidated Interim Financial Information
(In thousands of Brazilian Reais, unless otherwise stated)
12. Investments
a. Subsidiaries and joint venture (Parent)
The table below presents the full amounts of statements of financial position and statements of profit or loss of subsidiaries and joint venture:
|
09/30/2020 |
|||||||||
|
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 |
Centro de Conveniências Millennium Ltda. |
Eaí Clube Automobilista 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 |
|
150 |
15,194,789 |
100 |
|
5,078,888 |
Assets |
1,393,573 |
8,343,242 |
19,475,325 |
7,953,709 |
|
1,893 |
7,691 |
84,167 |
|
402,176 |
Liabilities |
3,383 |
6,880,683 |
12,279,914 |
8,000,799 |
|
26 |
1,257 |
8,238 |
|
404,839 |
Equity |
1,390,190 |
1,462,559(*) |
7,195,411(*) |
(47,090) |
|
1,867 |
6,434 |
75,929 |
|
(2,663) |
Net revenue from sales and services |
- |
2,864,775 |
46,022,827 |
- |
|
- |
5,511 |
3,893 |
|
1,081,968 |
Net income (loss) |
127,883 |
38,691(*) |
384,804(*) |
(19,590) |
|
(2,413) |
(1,055) |
(4,065) |
|
(61,129) |
% of capital held |
100 |
100 |
100 |
100 |
|
100 |
100 |
100 |
|
33 |
Ultrapar Participações S.A. and Subsidiaries
Notes to the Parent’s Separate and Consolidated Interim Financial Information
(In thousands of Brazilian Reais, unless otherwise stated)
|
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 |
|
09/30/2019 |
|||||
|
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 |
- |
1,059,174 |
53,795,806 |
- |
|
1,530,851 |
Net income (loss) |
13,770 |
120,744(*) |
532,042(*) |
(36,711) |
|
(8,274) |
% 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.
Ultrapar Participações S.A. and Subsidiaries
Notes to the Parent’s Separate and Consolidated Interim Financial Information
(In thousands of Brazilian Reais, unless otherwise stated)
Balances and changes in subsidiaries and joint venture are as follows:
|
|
Subsidiaries |
|
Joint venture |
|
|
||||||||||||
|
|
Ultracargo Operações Logísticas e Participações Ltda. |
|
Oxiteno S.A. Indústria e Comércio |
|
Ipiranga Produtos de Petróleo S.A. |
|
UVC |
|
Centro de Conveniências Millennium Ltda. |
|
Eaí Clube Automobilista S.A. |
|
Total |
|
Refinaria de Petróleo Riograndense S.A. |
|
Total |
Balance as of December 31, 2019 |
|
1,261,997 |
|
1,803,209 |
|
7,020,747 |
|
- |
|
- |
|
- |
|
10,085,953 |
|
18,792 |
|
10,104,745 |
Share of profit (loss) of subsidiaries and joint venture |
|
127,883 |
|
38,691 |
|
384,804 |
|
(2,413) |
|
(1,055) |
|
(4,065) |
|
543,845 |
|
(20,297) |
|
523,548 |
Dividends |
|
- |
|
(86,954) |
|
(209,249) |
|
- |
|
- |
|
- |
|
(296,203) |
|
(165) |
|
(296,368) |
Tax liabilities on equity - method revaluation reserve |
|
- |
|
- |
|
(6) |
|
- |
|
- |
|
- |
|
(6) |
|
- |
|
(6) |
Equity instrument granted |
|
303 |
|
484 |
|
816 |
|
- |
|
- |
|
- |
|
1,603 |
|
- |
|
1,603 |
Valuation adjustment of subsidiaries (i) |
|
42 |
|
(491,549) |
|
(31) |
|
- |
|
- |
|
(6) |
|
(491,544) |
|
786 |
|
(490,758) |
Translation adjustments of foreign-based subsidiaries |
|
- |
|
198,678 |
|
- |
|
- |
|
- |
|
- |
|
198,678 |
|
- |
|
198,678 |
Capital increase in cash |
|
- |
|
- |
|
- |
|
4,280 |
|
6,300 |
|
80,000 |
|
90,580 |
|
- |
|
90,580 |
Loss due to the payments fixed dividends to preferred shares |
|
(35) |
|
- |
|
(481) |
|
- |
|
- |
|
- |
|
(516) |
|
- |
|
(516) |
Shareholder transaction - changes of investiments |
|
- |
|
- |
|
(1,189) |
|
- |
|
1,189 |
|
- |
|
- |
|
- |
|
- |
Transfer to provision for short-term liabilities | - | - | - | - | - |
- | - |
884 | 884 | |||||||||
Balance as of September 30, 2020 |
|
1,390,190 |
|
1,462,559 |
|
7,195,411 |
|
1,867 |
|
6,434 |
|
75,929 |
|
10,132,390 |
|
- |
|
10,132,390 |
(i) Refers, substantially to losses on the hedging instruments of exchange rate related to firm commitment and highly probable transactions designated as cash flows hedges, see Note 33.h.2.
Ultrapar Participações S.A. and Subsidiaries
Notes to the Parent’s Separate and Consolidated Interim Financial Information
(In thousands of Brazilian Reais, unless otherwise stated)
|
|
Provision for short-term liabilities |
|
|
||
|
|
Investiments in subsidiaries |
|
Joint venture |
|
|
|
|
Ultrapar International S.A. |
|
Refinaria de Petróleo Riograndense S.A. |
|
Total |
Balance as of December 31, 2019 |
|
(27,497) |
|
- |
|
(27,497) |
Share of profit (loss) of subsidiaries and joint venture |
|
(19,588) |
|
- |
|
(19,588) |
Transfer to provision for short-term liabilities |
|
- |
|
(884) |
|
(884) |
Balance as of September 30, 2020 |
|
(47,085) |
|
(884) |
|
(47,969) |
|
|
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. (i) |
|
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 |
|
13,770 |
|
120,744 |
|
532,094 |
|
(36,708) |
|
629,900 |
|
(2,747) |
|
627,153 |
Dividends |
|
(50,015) |
|
(1,011,490) |
|
(198,000) |
|
- |
|
(1,259,505) |
|
(1,221) |
|
(1,260,726) |
Tax liabilities on equity - method revaluation reserve |
|
- |
|
- |
|
(27) |
|
- |
|
(27) |
|
- |
|
(27) |
Equity instrument granted |
|
178 |
|
486 |
|
4,723 |
|
- |
|
5,387 |
|
- |
|
5,387 |
Valuation adjustment of subsidiaries |
|
25 |
|
(103,587) |
|
738 |
|
- |
|
(102,824) |
|
83 |
|
(102,741) |
Translation adjustments of foreign-based subsidiaries |
|
- |
|
23,328 |
|
- |
|
- |
|
23,328 |
|
- |
|
23,328 |
Capital increase in cash |
|
- |
|
- |
|
1,450,000 |
|
3,964 |
|
1,453,964 |
|
- |
|
1,453,964 |
Redemption of non-controlling shares of Oxiteno Nordeste |
|
402 |
|
(856) |
|
- |
|
- |
|
(454) |
|
- |
|
(454) |
Balance as of September 30, 2019 |
|
1,241,783 |
|
1,835,280 |
|
7,205,340 |
|
(23,154) |
|
10,259,249 |
|
16,233 |
|
10,275,482 |
(i) Negative balance corresponds to the provision for short-term liabilities.
Ultrapar Participações S.A. and Subsidiaries
Notes to the Parent’s Separate 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 September 30, 2020.
Ultrapar Participações S.A. and Subsidiaries
Notes to the Parent’s Separate 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 |
Capital increase |
- |
|
- |
|
20,000 |
|
- |
|
- |
|
303 |
|
- |
|
- |
|
20,303 |
Capital decrease (i) |
- |
|
- |
|
- |
|
- |
|
(363) |
|
- |
|
- |
|
- |
|
(363) |
Valuation adjustments |
- |
|
786 |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
786 |
Dividends |
- |
|
(165) |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
(165) |
Share of profit (loss) of joint ventures |
574 |
|
(20,297) |
|
(12,187) |
|
- |
|
- |
|
- |
|
- |
|
- |
|
(31,910) |
Transfer to provision for short-term liabilities | - | 884 | - | - | - | - | - |
- | 884 | ||||||||
Balance as of September 30, 2020 |
7,916 |
|
- |
|
90,631 |
|
10,351 |
|
23,218 |
|
2,233 |
|
4,183 |
|
4,079 |
|
142,611 |
(i) Refers to reimbursement of expenses that preceded the port auctions and that were apportioned among the other members of the consortium.
|
Provision for short-term liabilities |
|
RPR |
Balance as of December 31, 2019 |
- |
Transfer to provision for short-term liabilities |
(884) |
Balance as of September 30, 2020 |
(884) |
Ultrapar Participações S.A. and Subsidiaries
Notes to the Parent’s Separate and Consolidated Interim Financial Information
(In thousands of Brazilian Reais, unless otherwise stated)
|
União Vopak |
|
RPR |
|
ConectCar |
|
Latitude Logística |
|
Total |
Balance as of December 31, 2018 |
7,446 |
|
20,118 |
|
74,390 |
|
- |
|
101,954 |
Capital increase |
- |
|
- |
|
17,500 |
|
5,439 |
|
22,939 |
Valuation adjustments |
- |
|
83 |
|
- |
|
- |
|
83 |
Dividends |
(1,473) |
|
(1,221) |
|
- |
|
- |
|
(2,694) |
Share of profit (loss) of joint ventures |
1,728 |
|
(2,747) |
|
(19,200) |
|
- |
|
(20,219) |
Balance as of September 30, 2019 |
7,701 |
|
16,233 |
|
72,690 |
|
5,439 |
|
102,063 |
The table below presents the statements of financial position and statements of profit or loss of joint ventures:
|
09/30/2020 |
||||
|
União Vopak |
|
RPR |
|
ConectCar |
Current assets |
8,910 |
|
262,608 |
|
157,500 |
Non-current assets |
9,080 |
|
139,568 |
|
169,324 |
Current liabilities |
2,022 |
|
335,565 |
|
145,323 |
Non-current liabilities |
136 |
|
69,274 |
|
239 |
Equity |
15,832 |
|
(2,663) |
|
181,262 |
Net revenue from sales and services |
12,318 |
|
1,081,968 |
|
68,665 |
Costs, operating expenses and income |
(10,704) |
|
(1,153,200) |
|
(93,568) |
Net financial income and income and social contribution taxes |
(466) |
|
10,103 |
|
530 |
Net income (loss) |
1,148 |
|
(61,129) |
|
(24,373) |
|
|
|
|
|
|
Number of shares or units held |
29,995 |
|
5,078,888 |
|
248,768,000 |
% of capital held |
50 |
|
33 |
|
50 |
|
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 |
|
09/30/2019 |
||||
|
União Vopak |
|
RPR |
|
ConectCar |
Net revenue from sales and services |
12,602 |
|
1,530,851 |
|
57,320 |
Costs, operating expenses and income |
(8,338) |
|
(1,544,816) |
|
(98,185) |
Net financial income and income and social contribution taxes |
(808) |
|
5,691 |
|
2,466 |
Net income (loss) |
3,456 |
|
(8,274) |
|
(38,399) |
|
|
|
|
|
|
Number of shares or units held |
29,995 |
|
5,078,888 |
|
228,768,000 |
% of capital held |
50 |
|
33 |
|
50 |
The percentages in the table above are rounded.
Ultrapar Participações S.A. and Subsidiaries
Notes to the Parent’s Separate and Consolidated Interim Financial Information
(In thousands of Brazilian Reais, unless otherwise stated)
c. Associates (Consolidated)
Subsidiary IPP holds an interest in Transportadora Sulbrasileira de Gás S.A., which is primarily engaged in natural gas transportation services.
Subsidiary Oxiteno S.A. holds an interest in Oxicap Indústria de Gases Ltda. (“Oxicap”), which is primarily engaged in the supply of nitrogen and oxygen for its shareholders in the Mauá petrochemical complex. The subsidiary Oxiteno S.A. holds an interest in Química da Bahia Indústria e Comércio S.A., which is primarily engaged in manufacturing, marketing, and processing of chemicals. The operations of this associate are currently suspended.
Subsidiary Cia. Ultragaz holds an interest in Metalúrgica Plus S.A., which is primarily engaged in the manufacture and trading of LPG containers. The operations of this associate are currently suspended.
Subsidiary Cia. Ultragaz holds an interest in Plenogás Distribuidora de Gás S.A., which is primarily engaged in the marketing of LPG. The operations of this associate are currently suspended.
These investments are accounted for under the equity method of accounting based on the interim financial information as of September 30, 2020.
Balances and changes in associates are as follows:
|
Transportadora Sulbrasileira de Gás S.A. |
|
Oxicap Indústria de Gases Ltda. |
|
Química da Bahia Indústria e Comércio S.A. |
|
Metalúrgica Plus S.A. |
|
Plenogás Distribuidora de Gás S.A. |
|
Total |
Balance as of December 31, 2019 |
5,661 |
|
15,934 |
|
3,554 |
|
138 |
|
463 |
|
25,750 |
Dividends |
(1,357) |
|
- |
|
- |
|
- |
|
- |
|
(1,357) |
Share of profit (loss) of associates |
848 |
|
607 |
|
(12) |
|
(67) |
|
19 |
|
1,395 |
Balance as of September 30, 2020 |
5,152 |
|
16,541 |
|
3,542 |
|
71 |
|
482 |
|
25,788 |
Ultrapar Participações S.A. and Subsidiaries
Notes to the Parent’s Separate and Consolidated Interim Financial Information
(In thousands of Brazilian Reais, unless otherwise stated)
|
Transportadora Sulbrasileira de Gás S.A. |
|
Oxicap Indústria de Gases Ltda. |
|
Química da Bahia Indústria e Comércio S.A. |
|
Metalúrgica Plus S.A. |
|
Plenogás Distribuidora de Gás S.A. |
|
Total |
Balance as of December 31, 2018 |
4,689 |
|
15,366 |
|
3,590 |
|
228 |
|
465 |
|
24,338 |
Dividends |
(381) |
|
- |
|
- |
|
- |
|
(87) |
|
(468) |
Share of profit (loss) of associates |
1,323 |
|
632 |
|
(35) |
|
(65) |
|
69 |
|
1,924 |
Balance as of September 30, 2019 |
5,631 |
|
15,998 |
|
3,555 |
|
163 |
|
447 |
|
25,794 |
Ultrapar Participações S.A. and Subsidiaries
Notes to the Parent’s Separate and Consolidated Interim Financial Information
(In thousands of Brazilian Reais, unless otherwise stated)
The table below presents the statements of financial position and statements of profit or loss of associates:
|
09/30/2020 |
||||||||
|
Transportadora Sulbrasileira de Gás S.A. |
|
Oxicap Indústria de Gases Ltda. |
|
Química da Bahia Indústria e Comércio S.A. |
|
Metalúrgica Plus S.A. |
|
Plenogás Distribuidora de Gás S.A. |
Current assets |
9,043 |
|
64,642 |
|
47 |
|
59 |
|
324 |
Non-current assets |
13,127 |
|
78,503 |
|
10,146 |
|
486 |
|
2,196 |
Current liabilities |
960 |
|
25,222 |
|
- |
|
27 |
|
170 |
Non-current liabilities |
602 |
|
8,280 |
|
3,109 |
|
304 |
|
904 |
Equity |
20,609 |
|
109,643 |
|
7,084 |
|
214 |
|
1,446 |
Net revenue from sales and services |
8,629 |
|
45,240 |
|
- |
|
- |
|
- |
Costs, operating expenses and income |
(4,891) |
|
(38,791) |
|
(24) |
|
(154) |
|
327 |
Net financial income and income and social contribution taxes |
(346) |
|
(2,427) |
|
- |
|
(46) |
|
(28) |
Net income (loss) |
3,392 |
|
4,022 |
|
(24) |
|
(200) |
|
299 |
|
|
|
|
|
|
|
|
|
|
Number of shares or units held |
20,124,996 |
|
1,987 |
|
1,493,120 |
|
3,000 |
|
1,384,308 |
% of capital held |
25 |
|
15 |
|
50 |
|
33 |
|
33 |
|
12/31/2019 |
||||||||
|
Transportadora Sulbrasileira de Gás S.A. |
|
Oxicap Indústria de Gases Ltda. |
|
Química da Bahia Indústria e Comércio S.A. |
|
Metalúrgica Plus S.A. |
|
Plenogás Distribuidora de Gás S.A. |
Current assets |
12,172 |
|
45,178 |
|
71 |
|
40 |
|
151 |
Non-current assets |
14,041 |
|
84,705 |
|
10,147 |
|
703 |
|
2,440 |
Current liabilities |
2,944 |
|
11,041 |
|
- |
|
25 |
|
34 |
Non-current liabilities |
626 |
|
9,634 |
|
3,110 |
|
302 |
|
1,167 |
Equity |
22,643 |
|
109,208 |
|
7,108 |
|
416 |
|
1,390 |
|
|
|
|
|
|
|
|
|
|
Number of shares or units held |
20,124,996 |
|
1,987 |
|
1,493,120 |
|
3,000 |
|
1,384,308 |
% of capital held |
25 |
|
15 |
|
50 |
|
33 |
|
33 |
|
09/30/2019 |
||||||||
|
Transportadora Sulbrasileira de Gás S.A. |
|
Oxicap Indústria de Gases Ltda. |
|
Química da Bahia Indústria e Comércio S.A. |
|
Metalúrgica Plus S.A. |
|
Plenogás Distribuidora de Gás S.A. |
Net revenue from sales and services |
9,322 |
|
43,463 |
|
- |
|
- |
|
- |
Costs, operating expenses and income |
(3,700) |
|
(36,791) |
|
(81) |
|
(152) |
|
226 |
Net financial income and income and social contribution taxes |
(116) |
|
(2,483) |
|
12 |
|
(43) |
|
(19) |
Net income (loss) |
5,506 |
|
4,189 |
|
(69) |
|
(195) |
|
207 |
|
|
|
|
|
|
|
|
|
|
Number of shares or units held |
20,124,996 |
|
1,987 |
|
1,493,120 |
|
3,000 |
|
1,384,308 |
% of capital held |
25 |
|
15 |
|
50 |
|
33 |
|
33 |
The percentages in the table above are rounded.
Ultrapar Participações S.A. and Subsidiaries
Notes to the Parent’s Separate and Consolidated Interim Financial Information
(In thousands of Brazilian Reais, unless otherwise stated)
13. Right to use assets and leases payable
Some of the subsidiaries of the Company have real estate leases, substantially related to: (i) Ipiranga: fuel stations and distribution center; (ii) Extrafarma: pharmacies and distribution center; (iii) Ultragaz: points of sale and bottling base; (iv) Ultracargo: port areas; and (v) Oxiteno: industrial plant. Some subsidiaries also have lease agreements relating to vehicles.
a. Right to use assets
|
Weighted average useful life (years) |
Balance on 12/31/2019 |
|
Additions and remeasurement |
|
Assignment of contract (i) |
|
Amortization |
|
Balance on 09/30/2020 |
Cost: |
|
|
|
|
|
|
|
|
|
|
Real estate |
7 |
5,799 |
|
1,123 |
|
35,001 |
|
- |
|
41,923 |
Vehicles |
3 |
- |
|
2,358 |
|
- |
|
- |
|
2,358 |
|
|
5,799 |
|
3,481 |
|
35,001 |
|
- |
|
44,281 |
Accumulated amortization: |
|
|
|
|
|
|
|
|
|
|
Real estate |
|
- |
|
- |
|
(4,762) |
|
(2,965) |
|
(7,727) |
Vehicles |
|
- |
|
- |
|
- |
|
(273) |
|
(273) |
- | - | (4,762) | (3,238) | (8,000) | ||||||
Net amount |
|
5,799 |
|
3,481 |
|
30,239 |
|
(3,238) |
|
36,281 |
(i) Assignment of contract of the Company Ultragaz to Ultrapar due implantation of Shared Service Center (“SSC”).
Ultrapar Participações S.A. and Subsidiaries
Notes to the Parent’s Separate and Consolidated Interim Financial Information
(In thousands of Brazilian Reais, unless otherwise stated)
|
Weighted average useful life (years) |
Balance on 12/31/2019 |
|
Additions and remeasurement |
|
Write-offs |
|
Effect of foreign currency exchange rate variation |
|
Amortization |
|
Balance on 09/30/2020 |
Cost: |
|
|
|
|
|
|
|
|
|
|
|
|
Real estate |
10 |
2,068,254 |
|
183,872 |
|
(43,213) |
|
5,934 |
|
- |
|
2,214,847 |
Port area (i) |
20 |
68,006 |
|
200,506 |
|
- |
|
- |
|
- |
|
268,512 |
Vehicles |
4 |
91,868 |
|
47,103 |
|
(7,187) |
|
263 |
|
- |
|
132,047 |
Equipment |
6 |
31,822 |
|
822 |
|
(250) |
|
6,541 |
|
- |
|
38,935 |
Others |
20 |
27,847 |
|
- |
|
- |
|
- |
|
- |
|
27,847 |
|
|
2,287,797 |
|
432,303 |
|
(50,650) |
|
12,738 |
|
- |
|
2,682,188 |
Accumulated amortization: |
|
|
|
|
|
|
|
|
|
|
|
|
Real estate |
|
(256,430) |
|
- |
|
27,683 |
|
(997) |
|
(202,207) |
|
(431,951) |
Port area (i) |
|
- |
|
- |
|
- |
|
- |
|
(2,265) |
|
(2,265) |
Vehicles |
|
(27,492) |
|
- |
|
5,025 |
|
229 |
|
(29,568) |
|
(51,806) |
Equipment |
|
(7,600) |
|
- |
|
250 |
|
(2,395) |
|
(7,134) |
|
(16,879) |
Others |
|
(15,363) |
|
- |
|
- |
|
- |
|
(973) |
|
(16,336) |
|
|
(306,885) |
|
- |
|
32,958 |
|
(3,163) |
|
(242,147) |
|
(519,237) |
Net amount |
|
1,980,912 |
|
432,303 |
|
(17,692) |
|
9,575 |
|
(242,147) |
|
2,162,951 |
(i) Refers to the area port lease (see Note 34.c).
Ultrapar Participações S.A. and Subsidiaries
Notes to the Parent’s Separate and Consolidated Interim Financial Information
(In thousands of Brazilian Reais, unless otherwise stated)
The amortization expenses were recognized in the financial statements as shown below:
|
Parent |
|
Consolidated |
||||
|
09/30/2020 |
|
09/30/2019 |
|
09/30/2020 |
|
09/30/2019 |
Cost of products and services sold |
- |
|
- |
|
47,411 |
|
36,212 |
Selling and marketing |
- |
|
- |
|
191,720 |
|
177,879 |
General and administrative |
3,238 |
|
- |
|
3,016 |
|
5,134 |
|
3,238 |
|
- |
|
242,147 |
|
219,225 |
b. Leases payable
The changes in leases payable are shown below:
|
Parent |
|
Consolidated |
Balance as of December 31, 2019 |
5,999 |
|
1,588,673 |
Interest accrued |
3,416 |
|
106,955 |
Payments |
(4,256) |
|
(266,490) |
Additions and remeasurement |
3,481 |
|
407,148 |
Write-offs |
- |
|
(17,610) |
Effect of foreign currency exchange rate variation |
- |
|
13,097 |
Assignment of contract (i) |
30,239 |
|
- |
Balance as of September 30, 2020 |
38,879 |
|
1,831,773 |
|
|
|
|
Current |
4,585 |
|
247,678 |
Non-current |
34,294 |
|
1,584,095 |
(i) Assignment of contract of the Company Ultragaz to Ultrapar due implantation of SSC.
The future disbursements (installments) assumed under leases contracts are presented below:
|
09/30/2020 |
||
|
Parent |
|
Consolidated |
Up to 1 year |
5,806 |
|
303,766 |
From 1 to 2 years |
15,135 |
|
682,635 |
From 2 to 3 years |
13,547 |
|
554,156 |
From 3 to 4 years |
13,526 |
|
374,311 |
From 4 to 5 years |
3,870 |
|
233,157 |
More than 5 years |
- |
|
604,426 |
Total |
51,884 |
|
2,752,451 |
The contracts related to the leases payable are substantially indexed by the IGP-M (General Market Price Index is a measure of Brazilian inflation, calculated by the Getúlio Vargas Foundation).
Ultrapar Participações S.A. and Subsidiaries
Notes to the Parent’s Separate and Consolidated Interim Financial Information
(In thousands of Brazilian Reais, unless otherwise stated)
c. Lease contracts of low amount assets
Subsidiaries Cia. Ultragaz, Bahiana, Extrafarma, Ipiranga, Serma and Oxiteno S.A. have operating lease contracts consider as low value, short term and variable payments for the use of factory and IT equipment's, vehicles and real states. The subsidiaries have the option to purchase the assets referring to IT equipment at a price equal to the fair value on the date of option, and management does not intend to exercise such option. The future disbursements (payments), assumed as a result of these contracts, amount approximately to:
|
Up to 1 year |
Between 1 and 5 years |
More than 5 years |
Total |
09/30/2020 |
4,609 |
1,338 |
- |
5,947 |
The amount of lease considered as of low value, short term and variable payments, recognized as an expense for the nine-month period ended September 30, 2020 was R$ 14,184 (R$ 10,172 for the nine-month period ended September 30, 2019).
d. Inflation effect
The effects of inflation are as follows:
Right to use asset, net |
Parent |
|
Consolidated |
Nominal base |
36,281 |
|
2,162,951 |
Inflated base |
43,786 |
|
2,584,274 |
|
20.7% |
|
19.5% |
|
|
|
|
Lease liability |
Parent |
|
Consolidated |
Nominal base |
38,879 |
|
1,831,773 |
Inflated base |
46,384 |
|
2,253,096 |
|
19.3% |
|
23.0% |
|
|
|
|
Financial expense |
Parent |
|
Consolidated |
Nominal base |
3,416 |
|
106,955 |
Inflated base |
4,445 |
|
143,791 |
|
30.1% |
|
34.4% |
|
|
|
|
Amortization expense |
Parent |
|
Consolidated |
Nominal base |
3,238 |
|
242,147 |
Inflated base |
3,954 |
|
272,422 |
|
22.1% |
|
12.5% |
Ultrapar Participações S.A. and Subsidiaries
Notes to the Parent’s Separate and Consolidated Interim Financial Information
(In thousands of Brazilian Reais, unless otherwise stated)
14. Property, plant, and equipment
Balances and changes in PP&E are as follows:
|
Weighted average useful life (years) |
Balance on 12/31/2019 |
|
Additions |
|
Depreciation |
|
Transfer (i) |
|
Balance on 09/30/2020 |
Cost: |
|
|
|
|
|
|
|
|
|
|
Leasehold improvements |
9 |
- |
|
105 |
|
- |
|
2,052 |
|
2,157 |
Machinery and equipment |
10 |
- |
|
- |
|
- |
|
82 |
|
82 |
Furniture and utensils |
10 |
- |
|
96 |
|
- |
|
398 |
|
494 |
Construction in progress |
- |
2,532 |
|
- |
|
- |
|
(2,532) |
|
- |
IT equipment |
5 |
- |
|
7,374 |
|
- |
|
3,997 |
|
11,371 |
|
|
2,532 |
|
7,575 |
|
- |
|
3,997 |
|
14,104 |
|
|
|
|
|
|
|
|
|
|
|
Accumulated depreciation: |
|
|
|
|
|
|
|
|
|
|
Leasehold improvements |
|
- |
|
- |
|
(167) |
|
- |
|
(167) |
Machinery and equipment |
|
- |
|
- |
|
(6) |
|
- |
|
(6) |
Furniture and utensils |
|
- |
|
- |
|
(34) |
|
- |
|
(34) |
IT equipment |
|
- |
|
- |
|
(949) |
|
- |
|
(949) |
|
|
- |
|
- |
|
(1,156) |
|
- |
|
(1,156) |
Net amount |
|
2,532 |
|
7,575 |
|
(1,156) |
|
3,997 |
|
12,948 |
Ultrapar Participações S.A. and Subsidiaries
Notes to the Parent’s Separate and Consolidated Interim Financial Information
(In thousands of Brazilian Reais, unless otherwise stated)
|
Weighted average useful life (years) |
Balance on 12/31/2019 |
|
Additions |
|
Depreciation |
|
Transfer (i) |
|
Write-offs and disposals |
|
Effect of foreign currency exchange rate variation |
|
Balance on 09/30/2020 |
Cost: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Land |
- |
667,865 |
|
21,300 |
|
- |
|
241 |
|
(7,994) |
|
14,264 |
|
695,676 |
Buildings |
32 |
1,925,946 |
|
11,205 |
|
- |
|
122,873 |
|
(14,747) |
|
110,953 |
|
2,156,230 |
Leasehold improvements |
10 |
1,121,528 |
|
12,192 |
|
- |
|
46,941 |
|
(3,628) |
|
414 |
|
1,177,447 |
Machinery and equipment |
13 |
5,707,721 |
|
88,527 |
|
- |
|
158,206 |
|
(2,113) |
|
372,872 |
|
6,325,213 |
Automotive fuel/lubricant distribution equipment and facilities |
13 |
2,991,472 |
|
53,433 |
|
- |
|
128,852 |
|
(36,880) |
|
- |
|
3,136,877 |
LPG tanks and bottles |
10 |
755,460 |
|
54,634 |
|
- |
|
19 |
|
(29,271) |
|
- |
|
780,842 |
Vehicles |
8 |
320,161 |
|
14,711 |
|
- |
|
7,887 |
|
(30,373) |
|
447 |
|
312,833 |
Furniture and utensils |
9 |
295,604 |
|
7,742 |
|
- |
|
1,466 |
|
(2,654) |
|
4,884 |
|
307,042 |
Construction in progress |
- |
827,086 |
|
303,075 |
|
- |
|
(460,823) |
|
(448) |
|
18,702 |
|
687,592 |
Advances to suppliers |
- |
12,544 |
|
15,913 |
|
- |
|
(6,185) |
|
(56) |
|
- |
|
22,216 |
Imports in progress |
- |
250 |
|
1,008 |
|
- |
|
(559) |
|
- |
|
6 |
|
705 |
IT equipment |
5 |
412,809 |
|
15,449 |
|
- |
|
4,424 |
|
(2,264) |
|
2,850 |
|
433,268 |
|
|
15,038,446 |
|
599,189 |
|
- |
|
3,342 |
|
(130,428) |
|
525,392 |
|
16,035,941 |
Ultrapar Participações S.A. and Subsidiaries
Notes to the Parent’s Separate and Consolidated Interim Financial Information
(In thousands of Brazilian Reais, unless otherwise stated)
|
|
Balance on 12/31/2019 |
|
Additions |
|
Depreciation |
|
Transfer (i) |
|
Write-offs and disposals |
|
Effect of foreign currency exchange rate variation |
|
Balance on 09/30/2020 |
Accumulated depreciation: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Buildings |
|
(793,835) |
|
- |
|
(48,445) |
|
(1) |
|
11,153 |
|
(20,491) |
|
(851,619) |
Leasehold improvements |
|
(614,379) |
|
- |
|
(60,374) |
|
(29) |
|
2,209 |
|
(123) |
|
(672,696) |
Machinery and equipment |
|
(3,231,627) |
|
- |
|
(235,626) |
|
59 |
|
1,380 |
|
(69,627) |
|
(3,535,441) |
Automotive fuel/lubricant distribution equipment and facilities |
|
(1,766,878) |
|
- |
|
(131,862) |
|
- |
|
28,533 |
|
- |
|
(1,870,207) |
LPG tanks and bottles |
|
(425,554) |
|
- |
|
(41,634) |
|
(30) |
|
17,883 |
|
- |
|
(449,335) |
Vehicles |
|
(139,045) |
|
- |
|
(18,796) |
|
48 |
|
15,136 |
|
(320) |
|
(142,977) |
Furniture and utensils |
|
(171,475) |
|
- |
|
(15,682) |
|
- |
|
2,106 |
|
(2,657) |
|
(187,708) |
IT equipment |
|
(318,063) |
|
- |
|
(26,253) |
|
295 |
|
2,140 |
|
(2,491) |
|
(344,372) |
Construction in progress |
|
(7,460,856) |
|
- |
|
(578,672) |
|
342 |
|
80,540 |
|
(95,709) |
|
(8,054,355) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision for losses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Advances to suppliers |
|
(110) |
|
- |
|
- |
|
- |
|
- |
|
- |
|
(110) |
Land |
|
(146) |
|
- |
|
- |
|
- |
|
- |
|
- |
|
(146) |
Leasehold improvements |
|
(1,599) |
|
(1,082) |
|
- |
|
- |
|
618 |
|
(14) |
|
(2,077) |
Machinery and equipment |
|
(2,875) |
|
- |
|
- |
|
- |
|
- |
|
(189) |
|
(3,064) |
Automotive fuel/lubricant distribution equipment and facilities |
|
(98) |
|
- |
|
- |
|
- |
|
18 |
|
- |
|
(80) |
|
|
(4,828) |
|
(1,082) |
|
- |
|
- |
|
636 |
|
(203) |
|
(5,477) |
Net amount |
|
7,572,762 |
|
598,107 |
|
(578,672) |
|
3,684 |
|
(49,252) |
|
429,480 |
|
7,976,109 |
(i) Refers to amounts transferred from intangible assets.
Ultrapar Participações S.A. and Subsidiaries
Notes to the Parent’s Separate and Consolidated Interim Financial Information
(In thousands of Brazilian Reais, unless otherwise stated)
Construction in progress relates substantially to expansions, renovations, constructions and upgrade of industrial facilities, terminals, stores, service stations and distribution bases.
Advances to suppliers is related, basically, to manufacturing of assets for expansion of plants, terminals, stores, service stations and bases and acquisition of real estate.
The depreciation expenses were recognized in the interim financial information as shown below:
|
|
Parent |
|
Consolidated |
||||
|
|
09/30/2020 |
|
09/30/2019 |
|
09/30/2020 |
|
09/30/2019 |
Inventories and cost of products and services sold |
|
- |
|
- |
|
318,873 |
|
304,157 |
Selling and marketing |
|
- |
|
- |
|
222,354 |
|
214,959 |
General and administrative |
|
1,156 |
|
- |
|
37,445 |
|
36,338 |
|
|
1,156 |
|
- |
|
578,672 |
|
555,454 |
Ultrapar Participações S.A. and Subsidiaries
Notes to the Parent’s Separate and Consolidated Interim Financial Information
(In thousands of Brazilian Reais, unless otherwise stated)
15. Intangible assets
Balances and changes in intangible assets are as follows:
|
Weighted average useful life (years) |
Balance on 12/31/2019 |
|
Additions |
|
Amortization |
|
Transfer (i) |
|
Balance on 09/30/2020 |
Cost: |
|
|
|
|
|
|
|
|
|
|
Goodwill (a) |
- |
246,163 |
|
- |
|
- |
|
- |
|
246,163 |
Software (b) |
5 |
- |
|
10,071 |
|
- |
|
(3,998) |
|
6,073 |
|
|
246,163 |
|
10,071 |
|
- |
|
(3,998) |
|
252,236 |
|
|
|
|
|
|
|
|
|
|
|
Accumulated amortization: |
|
|
|
|
|
|
|
|
|
|
Software |
|
- |
|
- |
|
(720) |
|
- |
|
(720) |
|
|
- |
|
- |
|
(720) |
|
- |
|
(720) |
|
|
|
|
|
|
|
|
|
|
|
Net amount |
|
246,163 |
|
10,071 |
|
(720) |
|
(3,998) |
|
251,516 |
Ultrapar Participações S.A. and Subsidiaries
Notes to the Parent’s Separate and Consolidated Interim Financial Information
(In thousands of Brazilian Reais, unless otherwise stated)
|
Weighted average useful life (years) |
Balance on 12/31/2019 |
|
Additions |
|
Amortization |
|
Transfer (i) |
|
Write-offs and disposals |
|
Effect of foreign currency exchange rate variation |
|
Balance on 09/30/2020 |
Cost: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Goodwill (a) |
- |
1,525,088 |
|
- |
|
- |
|
- |
|
- |
|
- |
|
1,525,088 |
Software (b) |
4 |
1,210,529 |
|
111,648 |
|
- |
|
(20,261) |
|
(3,337) |
|
6,912 |
|
1,305,491 |
Technology (c) |
- |
32,617 |
|
- |
|
- |
|
- |
|
- |
|
- |
|
32,617 |
Commercial property rights |
5 |
7,934 |
|
21 |
|
- |
|
1,440 |
|
(1,480) |
|
- |
|
7,915 |
Distribution rights |
10 |
133,599 |
|
- |
|
- |
|
- |
|
- |
|
- |
|
133,599 |
Brands (d) |
- |
122,504 |
|
- |
|
- |
|
- |
|
- |
|
19,964 |
|
142,468 |
Trademark rights (d) |
39 |
114,792 |
|
- |
|
- |
|
- |
|
- |
|
- |
|
114,792 |
Others (e) |
10 |
44,900 |
|
666 |
|
- |
|
- |
|
- |
|
5,415 |
|
50,981 |
|
|
3,191,963 |
|
112,335 |
|
- |
|
(18,821) |
|
(4,817) |
|
32,291 |
|
3,312,951 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated amortization: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Software |
|
(648,861) |
|
- |
|
(129,325) |
|
16,577 |
|
3,337 |
|
(5,066) |
|
(763,338) |
Technology |
|
(32,616) |
|
- |
|
- |
|
- |
|
- |
|
- |
|
(32,616) |
Commercial property rights |
|
(6,384) |
|
- |
|
(65) |
|
(1,440) |
|
112 |
|
- |
|
(7,777) |
Distribution rights |
|
(108,932) |
|
- |
|
(3,399) |
|
- |
|
- |
|
- |
|
(112,331) |
Trademark rights |
|
(6,119) |
|
- |
|
(2,203) |
|
- |
|
- |
|
- |
|
(8,322) |
Others |
|
(32,713) |
|
- |
|
(89) |
|
- |
|
- |
|
(10) |
|
(32,812) |
|
|
(835,625) |
|
- |
|
(135,081) |
|
15,137 |
|
3,449 |
|
(5,076) |
|
(957,196) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision for losses and impairment: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Goodwill (a) |
|
(593,280) |
|
- |
|
- |
|
- |
|
- |
|
- |
|
(593,280) |
Commercial property rights |
|
(465) |
|
(112) |
|
- |
|
- |
|
350 |
|
- |
|
(227) |
|
|
(593,745) |
|
(112) |
|
- |
|
- |
|
350 |
|
- |
|
(593,507) |
Net amount |
|
1,762,593 |
|
112,223 |
|
(135,081) |
|
(3,684) |
|
(1,018) |
|
27,215 |
|
1,762,248 |
(i) Refers to amounts transferred to PP&E.
Ultrapar Participações S.A. and Subsidiaries
Notes to the Parent’s Separate and Consolidated Interim Financial Information
(In thousands of Brazilian Reais, unless otherwise stated)
The amortization expenses were recognized in the interim financial information as shown below:
|
|
Parent |
|
Consolidated |
||||
|
|
09/30/2020 |
|
09/30/2019 |
|
09/30/2020 |
|
09/30/2019 |
Inventories and cost of products and services sold |
|
- |
|
- |
|
7,293 |
|
8,473 |
Selling and marketing |
|
- |
|
- |
|
5,798 |
|
2,284 |
General and administrative |
|
720 |
|
- |
|
121,990 |
|
69,023 |
|
|
720 |
|
- |
|
135,081 |
|
79,780 |
a. Goodwill
The balance of the goodwill is tested annually for impairment and is represented by the following acquisitions:
|
Segment |
09/30/2020 |
|
12/31/2019 |
Goodwill on the acquisition of: |
|
|
|
|
Extrafarma |
Extrafarma |
661,553 |
|
661,553 |
Extrafarma – impairment |
Extrafarma |
(593,280) |
|
(593,280) |
Extrafarma – net |
Extrafarma |
68,273 |
|
68,273 |
Ipiranga (1) |
Ipiranga |
276,724 |
|
276,724 |
União Terminais |
Ultracargo |
211,089 |
|
211,089 |
Texaco |
Ipiranga |
177,759 |
|
177,759 |
Iconic (CBLSA) |
Ipiranga |
69,807 |
|
69,807 |
Oxiteno Uruguay |
Oxiteno |
44,856 |
|
44,856 |
Temmar |
Ultracargo |
43,781 |
|
43,781 |
DNP |
Ipiranga |
24,736 |
|
24,736 |
Repsol |
Ultragaz |
13,403 |
|
13,403 |
TEAS |
Ultracargo |
797 |
|
797 |
Others |
Oxiteno |
583 |
|
583 |
|
|
931,808 |
|
931,808 |
(1) Including R$ 246,163 at Ultrapar.
On December 31, 2019, the Company tested the balances of goodwill shown in the table above for impairment. The determination of value in use involves assumptions, judgments, and estimates of cash flows, such as growth rates of revenues, costs and expenses, estimates of investments and working capital, and discount rates. The assumptions about growth projections and future cash flows are based on the Company’s business plan of its operating segments, as well as comparable market data, and represent management’s best estimate of the economic conditions that will exist over the economic life of the various CGUs, to which goodwill is related. The main key-assumptions used by the Company to calculate the value in use are described below:
Period of evaluation: the evaluation of the value in use is calculated for a period of five years (except the Extrafarma segment), after which the Company calculated the perpetuity, considering the possibility of carrying the business on indefinitely. For the Extrafarma segment, a period of ten years was used due to a four-year period to maturity of new stores were considered.
Ultrapar Participações S.A. and Subsidiaries
Notes to the Parent’s Separate and Consolidated Interim Financial Information
(In thousands of Brazilian Reais, unless otherwise stated)
Discount and real growth rates: on December 31, 2019, the discount and real growth rates used to extrapolate the projections ranged from 8.9% to 12.1% and from 0% to 1% p.a., respectively, depending on the CGU analyzed.
Revenue from sales and services, costs and expenses, and gross margin considers the budget prepared for 2020 and the long-term strategic plan prepared by management and approved by the Board of Directors.
The goodwill impairment tests and net assets of the Company and its subsidiaries result in the recognition of impairment in the amount of R$ 593,280 for subsidiary Extrafarma for the year ended December 31, 2019 (see Note 2.u).
The Company assessed a sensitivity analysis of discount and growth rate of perpetuity, due to their significant impact on cash flows and value in use. An increase of 0.5 percentage points in the discount rate or a decrease of 0.5 percentage points in the growth rate of the perpetuity of the cash flow of each business segment would not result in the recognition of impairment.
b. Software
Includes user licenses and costs for the implementation of the various systems used by the Company and its subsidiaries, such as: integrated management and control, financial management, foreign trade, industrial automation, operational and storage management, accounting information, and other systems. Also include expenses related to software in progress in the amount of R$ 39,296 on September 30, 2020 and R$ 56,472 on December 31, 2019.
c. Technology
The subsidiaries Oxiteno S.A. and Oleoquímica recognize as technology certain rights of use held by them. Such licenses include the production of ethylene oxide, ethylene glycols, ethanolamines, glycol ethers, ethoxylates, solvents, fatty acids from vegetable oils, fatty alcohols, and specialty chemicals, which are products that are supplied to various industries.
d. Brands and trademark rights
Brands are represented by the acquisition cost of the ‘am/pm’ brand in Brazil and of the Extrafarma brand, acquired in the business combination, and Chevron and Texaco trademark rights.
e. Other intangibles
Refers mainly to the loyalty program “Clube Extrafarma”.
Ultrapar Participações S.A. and Subsidiaries
Notes to the Parent’s Separate and Consolidated Interim Financial Information
(In thousands of Brazilian Reais, unless otherwise stated)
16. Loans, financing, debentures and hedge derivative financial instruments
a. Composition
Description |
09/30/2020 |
|
12/31/2019 |
|
Index/ Currency |
Weighted average financial charges 09/30/2020 – % p.a. |
Maturity |
Brazilian Reais: |
|
|
|
|
|
|
|
Debentures – 6th issuance (g.5) |
1,725,350 |
|
1,752,081 |
|
DI |
105.3 |
2023 |
Notes – Ultrapar (h.1) |
1,024,548 |
|
- |
|
R$ + DI |
3.1 |
2021 |
Total |
2,749,898 |
|
1,752,081 |
|
|
|
|
|
|
|
|
|
|
|
|
Current |
1,025,970 |
|
28,713 |
|
|
|
|
Non-current |
1,723,928 |
|
1,723,368 |
|
|
|
|
Description |
09/30/2020 |
|
12/31/2019 |
|
Index/ Currency |
Weighted average financial charges 09/30/2020 – % p.a. |
Maturity |
Foreign currency – denominated loans: |
|
|
|
|
|
|
|
Notes in the foreign market (b) (*) |
7,995,112 |
|
4,213,662 |
|
US$ |
5.3 |
2026 to 2029 |
Foreign loan (c.1) (*) |
1,127,494 |
|
1,057,407 |
|
US$ |
3.9 |
2021 to 2023 |
Financial institutions (e) |
342,522 |
|
604,741 |
|
US$ + LIBOR (1) |
1.4 |
2021 |
Foreign loan (c.1) (*) |
282,081 |
|
608,685 |
|
US$ + LIBOR (1) |
1.0 |
2022 |
Financial institutions (e) |
175,481 |
|
132,417 |
|
US$ |
2.6 |
2020 to 2022 |
Advances on foreing exchange contracts |
113,533 |
|
- |
|
US$ |
3.7 |
2021 |
Financial institutions (e) |
38,480 |
|
41,164 |
|
MX$ (2) |
8.7 |
2020 |
Foreign loan (c.2) |
- |
|
243,837 |
|
US$+ LIBOR (1) |
- |
2020 |
BNDES (d) |
- |
|
208 |
|
US$ |
- |
2020 |
Total foreign currency |
10,074,703 |
|
6,902,121 |
|
|
|
|
Ultrapar Participações S.A. and Subsidiaries
Notes to the Parent’s Separate and Consolidated Interim Financial Information
(In thousands of Brazilian Reais, unless otherwise stated)
Description |
09/30/2020 |
|
12/31/2019 |
|
Index/ Currency |
Weighted average financial charges 09/30/2020 – % p.a. |
Maturity |
Brazilian Reais – denominated loans: |
|
|
|
|
|
|
|
Debentures – CRA (g.2, g.4 and g.6) |
2,048,013 |
|
2,036,647 |
|
DI |
95.8 |
2022 to 2023 |
Debentures – 6ª issuance (g.5) |
1,725,350 |
|
1,752,080 |
|
DI |
105.3 |
2023 |
Debentures – Ipiranga (g.1 and g.3) |
1,672,323 |
|
1,868,612 |
|
DI |
105.0 |
2021 to 2022 |
Notes - Ultrapar (h.1) |
1,024,548 |
|
- |
|
R$ + DI |
3.1 |
2021 |
Debentures – CRA (g.2, g.4 and g.6) (*) |
973,785 |
|
941,614 |
|
IPCA |
4.6 |
2024 to 2025 |
Banco do Brasil (f) |
406,618 |
|
611,276 |
|
DI |
110.9 |
2021 to 2022 |
Notes – Ipiranga (h.2) |
305,459 |
|
- |
|
R$ + DI |
2.0 |
2021 |
Bank Credit Bill |
230,218 |
|
- |
|
R$ + DI |
3.5 |
2021 |
Debentures – Tequimar (g.7) |
91,494 |
|
89,278 |
|
R$ |
6.5 |
2024 |
FINEP |
32,684 |
|
41,345 |
|
TJLP (3) |
1.6 |
2020 to 2023 |
BNDES (d) |
9,706 |
|
62,578 |
|
TJLP (3) |
2.5 |
2021 |
Banco do Nordeste do Brasil |
8,461 |
|
10,039 |
|
R$ (4) |
10.0 |
2021 |
FINEP |
8,011 |
|
12,820 |
|
R$ |
4.0 |
2020 to 2021 |
BNDES (d) |
442 |
|
30,392 |
|
SELIC (5) |
2.2 |
2020 |
BNDES (d) |
118 |
|
3,913 |
|
R$ |
6.5 |
2020 to 2022 |
FINAME |
7 |
|
22 |
|
TJLP (3) |
5.7 |
2020 to 2022 |
Total in Brazilian Reais |
8,537,237 |
|
7,460,616 |
|
|
|
|
Total foreign currency and Brazilian Reais |
18,611,940 |
|
14,362,737 |
|
|
|
|
Currency and interest rate hedging instruments (**) |
143,986 |
|
29,985 |
|
|
|
|
Total |
18,755,926 |
|
14,392,722 |
|
|
|
|
Current |
3,964,456 |
|
1,117,441 |
|
|
|
|
Non-current |
14,791,470 |
|
13,275,281 |
|
|
|
|
(*) These transactions were designated for hedge accounting (see Note 33.h).
(**) Accumulated losses (see Note 33.i).
(1) LIBOR = London Interbank Offered Rate.
(2) MX$ = Mexican Peso; TIIE = the Mexican interbank balance interest rate.
(3) TJLP (Long-term Interest Rate) = set by the National Monetary Council, TJLP is the basic financing cost of Banco Nacional de Desenvolvimento Econômico e Social (“BNDES”), the Brazilian Development Bank. On September 30, 2020, TJLP was fixed at 4.91% p.a.
(4) Contract linked to the rate of FNE (Northeast Constitutional Financing Fund) fund whose purpose is to promote the development of the industrial sector, managed by Banco do Nordeste do Brasil. On September 30, 2020, the FNE interest rate was 10% p.a. FNE grants a discount of 15% on the interest rate for timely payments.
(5) SELIC = basic interest rate set by the Brazilian Central Bank.
Ultrapar Participações S.A. and Subsidiaries
Notes to the Parent’s Separate and Consolidated Interim Financial Information
(In thousands of Brazilian Reais, unless otherwise stated)
The changes in loans and debentures are shown below:
Balance as of December 31, 2019 |
14,362,737 |
New loans and debentures with cash effect |
3,591,624 |
Interest accrued |
575,220 |
Principal payment |
(2,280,152) |
Interest payment |
(478,755) |
Monetary and exchange rate variation |
2,816,759 |
Change in fair value |
24,507 |
Balance as of September 30, 2020 |
18,611,940 |
The long-term consolidated debt had the following principal maturity schedule:
|
09/30/2020 |
|
12/31/2019 |
From 1 to 2 years |
2,004,114 |
|
1,424,775 |
From 2 to 3 years |
3,223,295 |
|
3,115,495 |
From 3 to 4 years |
1,074,977 |
|
3,451,988 |
From 4 to 5 years |
333,975 |
|
765,263 |
More than 5 years |
8,155,109 |
|
4,517,760 |
|
14,791,470 |
|
13,275,281 |
The transaction costs and issuance premiums associated with debt issuance were added to their financial liabilities, as shown in Note 16.i.
The Company’s management entered into hedging instruments against foreign exchange and interest rate variations for a portion of its debt obligations (see Note 33.h).
b. Notes in the foreign market
On October 6, 2016, the subsidiary Ultrapar International S.A. (“Ultrapar International”) issued US$ 750,000 (equivalent to R$ 4,230,525 as of September 30, 2020) in notes in the foreign market, maturing in October 2026, with interest rate of 5.25% p.a., paid semiannually. The issue price was 98.097% of the face value of the note. The notes were guaranteed by the Company and its subsidiary IPP. The Company has designated hedge relationships for this transaction (see Note 33.h.3).
On June 6, 2019, the subsidiary Ultrapar International issued US$ 500,000 (equivalent to R$ 2,820,350 as of September 30, 2020) in notes in the foreign market, maturing in June 2029, with interest rate of 5.25% p. a., paid semiannually. The issue price was 100% of the face value of the note. The notes were guaranteed by the Company and its subsidiary IPP. The Company has designated hedge relationships for part of this transaction (see Note 33.h.3).
On June 21, 2019, the subsidiary Ultrapar International repurchased US$ 200,000 (equivalent to R$ 1,128,140 as of September 30, 2020) in notes in the foreign market maturing in October 2026.
Ultrapar Participações S.A. and Subsidiaries
Notes to the Parent’s Separate and Consolidated Interim Financial Information
(In thousands of Brazilian Reais, unless otherwise stated)
On July 13, the subsidiary Ultrapar International made the reopening of notes in the foreign market issued in 2019, in the amount of US$ 350,000 (equivalent to R$ 1,974,245 on September, 2020) maturing in June 2029, to the coupon (interest) and yield of 5.25% per year, paid semiannually. The issue price was 99.994% of face value of the note. The notes were guaranteed by the Company and the subsidiary IPP.
As a result of the issuance of the notes in the foreign market, the Company and its subsidiaries are required to perform certain obligations, including:
The Company and its subsidiaries are in compliance with the levels of covenants required by this debt. The restrictions imposed on the Company and its subsidiaries are customary in transactions of this nature and have not limited their ability to conduct their business to date.
c. Foreign loans
c.1. The subsidiary IPP has foreign loans in the amount of US$ 235,000 (equivalent to R$ 1,325,565 as of September 30, 2020). IPP also contracted hedging instruments with floating interest rate in U.S. dollar and exchange rate variation, changing the foreign loans charges, on average, to 104.4% of DI. IPP designated these hedging instruments as a fair value hedge (see Note 33.h.1); therefore, loans and hedging instruments are both measured at fair value from inception, with changes in fair value recognized through profit or loss. The foreign loans are secured by the Company.
The foreign loans have the maturity distributed as follows:
Maturity |
US$ (thousands) |
|
R$ (thousands) |
|
Cost in % of DI |
Charges (1) |
14,894 |
|
84,010 |
|
- |
Jul/2021 |
60,000 |
|
338,442 |
|
101.8 |
Jun/2022 |
50,000 |
|
282,035 |
|
105.0 |
Sep/2023 |
60,000 |
|
338,442 |
|
105.0 |
Sep/2023 |
65,000 |
|
366,646 |
|
104.8 |
Total / average cost |
249,894 |
|
1,409,575 |
|
104.1 |
(1) Includes interest, transaction costs and mark to market.
The subsidiary IPP paid off in advance of such financing in the amount of US$ 160,000 in the third quarter of 2020. From the third quarter, the subsidiary IPP does does have contracts of foreign loans with covenants.
Ultrapar Participações S.A. and Subsidiaries
Notes to the Parent’s Separate and Consolidated Interim Financial Information
(In thousands of Brazilian Reais, unless otherwise stated)
c.2 The subsidiary Global Petroleum Products Trading Corporation (“GPPTC”) contracted a foreign loan in the amount of US$ 60,000 with maturity on June 22, 2020 and interest of LIBOR + 2.0% p.a., paid quarterly. The Company, through the subsidiary Cia. Ultragaz, contracted hedging instruments subject to floating interest rates in dollar and exchange rate variation, changing the foreign loan charge to 105.9% of DI. The foreign loan is guaranteed by the Company and its subsidiary Oxiteno S.A. The foreign loan was settled by sudsidiary GPPTC on the maturity date.
d. BNDES
The subsidiaries have financing from BNDES for some of their investments and for working capital.
During the term of these agreements, the Company must maintain the following capitalization and current liquidity levels, as determined in the annual consolidated audited balance sheet:
The Company complies with the levels of covenants required by these loans. The restrictions imposed on the Company and its subsidiaries are usual for this type of transaction and have not limited their ability to conduct their business to date.
The subsidiaries paid off in advance of such loans in the amount of R$ 32,964 on September 2020.
e. Financial institutions
The subsidiaries Oxiteno Mexico S.A. de C.V., Oxiteno USA LLC (“Oxiteno USA”) and Oxiteno Uruguay have loans for investments and working capital.
The subsidiary Oxiteno USA has loans with bearing interest of LIBOR + 1.4% and maturity as shown below:
Maturity |
US$ (thousands) |
|
R$ (thousands) |
Charges (1) |
3 |
|
15 |
Mar/2021 |
60,000 |
|
342,507 |
Total |
60,003 |
|
342,522 |
(1) Includes interest and transaction costs.
Ultrapar Participações S.A. and Subsidiaries
Notes to the Parent’s Separate and Consolidated Interim Financial Information
(In thousands of Brazilian Reais, unless otherwise stated)
The proceeds of this loan were used in the working capital and to fund the construction of a new alkoxylation plant in the state of Texas.
The subsidiary Oxiteno USA paid off in advance of such financing in the amount of US$ 60,000 in the third quarter of 2020. The Company does not have the need to maintain the levels of covenants required by these loans.
f. Banco do Brasil
The subsidiary IPP has floating interest rate loans with Banco do Brasil to marketing, processing, or manufacturing of agricultural goods (ethanol). The subsidiary IPP paid off in advance the amount of R$ 400,000 of such loans in December 2019.
These loans mature, as follows (includes accrued interest through September 30, 2020):
Maturity |
|
09/30/2020 |
May/2021 |
|
203,572 |
May/2022 |
|
203,046 |
Total |
|
406,618 |
Ultrapar Participações S.A. and Subsidiaries
Notes to the Parent’s Separate and Consolidated Interim Financial Information
(In thousands of Brazilian Reais, unless otherwise stated)
g. Debentures
g.1. In May 2016, the subsidiary IPP made its fourth issuance of public debentures, in one single series of 500 simple, nominative, registered debentures, nonconvertible into shares and unsecured, which main characteristics are as follows:
Face value unit: |
R$ 1,000,000.00 |
Final maturity: |
May 25, 2021 |
Payment of the face value: |
Annual as from May 2019 |
Interest: |
105.0% of DI |
Payment of interest: |
Semiannually |
Reprice: |
Not applicable |
g.2. In April 2017, the subsidiary IPP carried out its fifth issuance of debentures, in two series, being one of 660,139 and another of 352,361, simple, nonconvertible into shares, nominative, book-entry and unsecured debentures. The debentures have been subscribed by Eco Consult – Consultoria de Operações Financeiras Agropecuárias Ltda. The proceeds from this issuance were used exclusively for the purchase of ethanol by subsidiary IPP.
The debentures were later assigned and transferred to Eco Securitizadora de Direitos Creditórios do Agronegócio S.A. that acquired these agribusiness credit rights with the purpose to bind the issuance of Certificates of Agribusiness Receivables (CRA). The debentures have an additional guarantee from Ultrapar and the main characteristics of the debentures are as follows:
Amount: |
660,139 |
Face value unit: |
R$ 1,000.00 |
Final maturity: |
April 18, 2022 |
Payment of the face value: |
Lump sum at final maturity |
Interest: |
95.0% of DI |
Payment of interest: |
Semiannually |
Reprice: |
Not applicable |
Amount: |
352,361 |
Face value unit: |
R$ 1,000.00 |
Final maturity: |
April 15, 2024 |
Payment of the face value: |
Lump sum at final maturity |
Interest: |
IPCA + 4.68% |
Payment of interest: |
Annually |
Reprice: |
Not applicable |
The subsidiary IPP contracted hedging instruments subjected to IPCA variation, changing the debentures charges linked to IPCA to 93.9% of DI. IPP designated these hedging instruments as fair value hedges; therefore, debentures and hedging instruments are both measured at fair value from inception, with changes in fair value recognized through profit or loss.
Ultrapar Participações S.A. and Subsidiaries
Notes to the Parent’s Separate and Consolidated Interim Financial Information
(In thousands of Brazilian Reais, unless otherwise stated)
g.3. In July 2017, the subsidiary IPP made its sixth issuance of public debentures, in one single series of 1,500,000 simple, nonconvertible into shares and unsecured debentures, which main characteristics are as follows:
Face value unit: |
R$ 1,000.00 |
Final maturity: |
July 28, 2022 |
Payment of the face value: |
Annual as from July 2021 |
Interest: |
105.0% of DI |
Payment of interest: |
Annually |
Reprice: |
Not applicable |
g.4. In October 2017, the subsidiary IPP carried out its seventh issuance of debentures in the amount of R$ 944,077, in two series, being on of 730,384 and another of 213,693, simple, nonconvertible into shares, nominative, book-entry and unsecured debentures. The debentures have been subscribed by Vert Companhia Securitizadora. The proceeds from this issuance were used exclusively for the purchase of ethanol by subsidiary IPP.
The debentures were later assigned and transferred to Vert Créditos Ltda., that acquired these agribusiness credit rights with the purpose to bind the issuance of Certificates of Agribusiness Receivables (CRA). The financial settlement occurred on November 1, 2017. The debentures have an additional guarantee from Ultrapar and the main characteristics of the debentures are as follows:
Amount: |
730,384 |
Face value unit: |
R$ 1,000.00 |
Final maturity: |
October 24, 2022 |
Payment of the face value: |
Lump sum at final maturity |
Interest: |
95.0% of DI |
Payment of interest: |
Semiannually |
Reprice: |
Not applicable |
Amount: |
213,693 |
Face value unit: |
R$ 1,000.00 |
Final maturity: |
October 24, 2024 |
Payment of the face value: |
Lump sum at final maturity |
Interest: |
IPCA + 4.34% |
Payment of interest: |
Annually |
Reprice: |
Not applicable |
The subsidiary IPP contracted hedging instruments subjected to IPCA variation, changing the debentures charges linked to IPCA to 97.3% of DI. IPP designated these hedging instruments as fair value hedges; therefore, debentures and hedging instruments are both measured at fair value from inception, with changes in fair value recognized through profit or loss.
Ultrapar Participações S.A. and Subsidiaries
Notes to the Parent’s Separate and Consolidated Interim Financial Information
(In thousands of Brazilian Reais, unless otherwise stated)
g.5. In March 2018, the Company made its sixth issuance of public debentures, in a single series of 1,725,000 simple, nonconvertible into shares and unsecured debentures, which main characteristics are as follows:
Face value unit: |
R$ 1,000.00 |
Final maturity: |
March 5, 2023 |
Payment of the face value: |
Lump sum at final maturity |
Interest: |
105.25% of DI |
Payment of interest: |
Semiannually |
Reprice: |
Not applicable |
g.6. In December 2018, the subsidiary IPP carried out its eighth issuance of debentures in the amount of R$ 900,000, in two series, being one of 660,000 and another of 240,000, simple, nonconvertible into shares, nominative, book-entry and unsecured debentures. The debentures have been subscribed by Vert Companhia Securitizadora. The proceeds from this issuance were used exclusively for the purchase of ethanol by subsidiary IPP. The debentures were subscribed with the purpose to bind the issuance of CRA. The financial settlement occurred on December 21, 2018. The debentures have an additional guarantee from Ultrapar and the main characteristics of the debentures are as follows:
Amount: |
660,000 |
Face value unit: |
R$ 1,000.00 |
Final maturity: |
December 18, 2023 |
Payment of the face value: |
Lump sum at final maturity |
Interest: |
97.5% of DI |
Payment of interest: |
Semiannually |
Reprice: |
Not applicable |
Amount: |
240,000 |
Face value unit: |
R$ 1,000.00 |
Final maturity: |
December 15, 2025 |
Payment of the face value: |
Lump sum at final maturity |
Interest: |
IPCA + 4.61% |
Payment of interest: |
Annually |
Reprice: |
Not applicable |
The subsidiary IPP contracted hedging instruments subjected to IPCA variation, changing the debentures charges linked to IPCA to 97.1% of DI. IPP designated these hedging instruments as fair value hedges; therefore, debentures and hedging instruments are both measured at fair value from inception, with changes in fair value recognized through profit or loss.
g.7. In November 2019, the subsidiary Tequimar made its first issuance of debentures, in a single series of 90,000 simple, nonconvertible into shares and unsecured debentures, which main characteristics are as follows:
Face value unit: |
R$ 1,000.00 |
Final maturity: |
November 19, 2024 |
Payment of the face value: |
Lump sum at final maturity |
Interest: |
6.47% |
Payment of interest: |
Semiannually |
Reprice: |
Not applicable |
Ultrapar Participações S.A. and Subsidiaries
Notes to the Parent’s Separate and Consolidated Interim Financial Information
(In thousands of Brazilian Reais, unless otherwise stated)
The subsidiary Tequimar contracted hedging instruments subjected interest rate variation, changing the debentures fixed for 99.94% of the DI. Tequimar designated these hedging instruments as fair value hedges; therefore, debentures and hedging instruments are both measured at fair value from inception, with changes in fair value recognized in profit or loss.
The debentures have maturity dates distributed as shown below (includes accrued interest through September 30, 2020).
Maturity |
|
09/30/2020 |
Charges (1) |
|
172,688 |
May/2021 |
|
166,700 |
Jul/2021 |
|
750,000 |
Apr/2022 |
|
660,139 |
Jul/2022 |
|
750,000 |
Oct/2022 |
|
730,384 |
Mar/2023 |
|
1,725,000 |
Dec/2023 |
|
660,000 |
Apr/2024 |
|
352,361 |
Oct/2024 |
|
213,693 |
Nov/2024 |
|
90,000 |
Dec/2025 |
|
240,000 |
Total |
|
6,510,965 |
(1) Includes interest, transaction cost and mark to market.
h. Notes
h.1 In April 2020, the Company made its second public issuance of notes in a single series of 40 commercial notes, not convertible into shares, of unsecured type, whose main characteristics are:
Face value unit: |
R$ 25,000,000.00 |
Final maturity: |
April 6, 2021 |
Payment of the face value: |
Lump sum at final maturity |
Interest: |
DI + 3.10% |
Payment of interest: |
Lump sum at final maturity |
Reprice: |
Not applicable |
h.2 In April 2020, the subsidiary IPP made its first public issuance of notes in a single series of 15 commercial notes, not convertible into shares, of unsecured type, whose main characteristics are:
Face value unit: |
R$ 20,000,000.00 |
Final maturity: |
April 3, 2021 |
Payment of the face value: |
Lump sum at final maturity |
Interest: |
DI + 2.00% |
Payment of interest: |
Lump sum at final maturity |
Reprice: |
Not applicable |
Ultrapar Participações S.A. and Subsidiaries
Notes to the Parent’s Separate and Consolidated Interim Financial Information
(In thousands of Brazilian Reais, unless otherwise stated)
i. Transaction costs
Transaction costs incurred in issuing debt were deducted from the value of the related financial instruments and are recognized as an expense according to the effective interest rate method, as follows:
|
Effective rate of transaction costs (% p.a.) |
|
Balance on 12/31/2019 |
|
Incurred cost |
|
Amortization |
|
Balance on 09/30/2020 |
Debentures (g) |
0.2 |
|
41,406 |
|
- |
|
(9,825) |
|
31,581 |
Notes in the foreign market (b) |
0.0 |
|
28,114 |
|
13,263 |
|
(3,033) |
|
38,344 |
Notes (h) |
0.5 |
|
- |
|
6,802 |
|
(3,291) |
|
3,511 |
Banco do Brasil (f) |
0.2 |
|
770 |
|
- |
|
(347) |
|
423 |
Foreign loans (c) |
0.2 |
|
94 |
|
- |
|
(94) |
|
- |
Others |
0.2 |
|
1,382 |
|
- |
|
(1,361) |
|
21 |
Total |
|
|
71,766 |
|
20,065 |
|
(17,951) |
|
73,880 |
The amount to be appropriated to profit or loss in the future is as follows:
|
Up to 1 year |
|
1 to 2 years |
|
2 to 3 years |
|
3 to 4 years |
|
4 to 5 years |
|
More than 5 years |
|
Total |
Debentures (g) |
12,602 |
|
10,595 |
|
5,828 |
|
2,227 |
|
281 |
|
48 |
|
31,581 |
Notes in the foreign market (b) |
4,889 |
|
4,892 |
|
4,896 |
|
4,912 |
|
4,902 |
|
13,853 |
|
38,344 |
Notes (h) |
3,511 |
|
- |
|
- |
|
- |
|
- |
|
- |
|
3,511 |
Banco do Brasil (f) |
302 |
|
121 |
|
- |
|
- |
|
- |
|
- |
|
423 |
Others |
21 |
|
- |
|
- |
|
- |
|
- |
|
- |
|
21 |
Total |
21,325 |
|
15,608 |
|
10,724 |
|
7,139 |
|
5,183 |
|
13,901 |
|
73,880 |
j. Guarantees
The financings are guaranteed by collateral in the amount of R$ 74,870 as of September 30, 2020 (R$ 73,536 as of December 31, 2019) and by guarantees and promissory notes in the amount of R$ 14,632,975 as of September 30, 2020 (R$ 11,833,294 as of December 31, 2019).
The Company and its subsidiaries offer collateral in the form of letters of credit for commercial and legal proceedings in the amount of R$ 140,887 as of September 30, 2020 (R$ 293,509 as of December 31, 2019).
Ultrapar Participações S.A. and Subsidiaries
Notes to the Parent’s Separate and Consolidated Interim Financial Information
(In thousands of Brazilian Reais, unless otherwise stated)
Some subsidiaries of Company issue collateral to financial institutions in connection with the amounts owed by some of their customers to such institutions (vendor financing) as follows:
|
IPP |
|
Oxiteno |
||||
|
09/30/2020 |
|
12/31/2019 |
|
09/30/2020 |
|
12/31/2019 |
Maximum amount of future payments related to these collaterals |
250,363 |
|
81,344 |
|
- |
|
2,753 |
Maturities of up to |
46 months |
|
60 months |
|
- |
|
4 months |
Fair value of collaterals |
4,220 |
|
1,237 |
|
- |
|
68 |
If a subsidiary is required to make any payment under these collaterals, this subsidiary may recover the amount paid directly from its customers through commercial collection. Until September 30, 2020, the subsidiaries did not have losses in connection with these collaterals. The fair value of collaterals is recognized in current liabilities as “other payables”, which is recognized in the statement of profit or loss as customers settle their obligations with the financial institutions.
17. Trade payables
|
Parent |
|
Consolidated |
||||
|
09/30/2020 |
|
12/31/2019 |
|
09/30/2020 |
|
12/31/2019 |
Domestic suppliers |
4,385 |
|
2,173 |
|
1,769,269 |
|
1,823,952 |
Domestic suppliers – related parties (see Note 8.a.2) |
- |
|
- |
|
5,141 |
|
73,304 |
Domestic suppliers – reverse factoring (i) |
- |
|
- |
|
593,888 |
|
262,870 |
Domestic suppliers – reverse factoring (i) - related parties (see Note 8.a.2) |
- |
|
- |
|
61,123 |
|
193,080 |
Foreign suppliers |
- |
|
- |
|
804,088 |
|
261,222 |
Foreign suppliers – reverse factoring (i) |
- |
|
- |
|
213,883 |
|
85,643 |
|
4,385 |
|
2,173 |
|
3,447,392 |
|
2,700,071 |
(i) Suppliers – reverse factoring: some subsidiaries of the Company entered into an agreements with a financial institutions. These agreements consist in the anticipation of the receipt of trade payables by the supplier, in which the financial institutions prepay a certain amount from the supplier, and receives on the maturity date the amount payable by the subsidiaries of the Company. The decision to join this type of transaction is solely and exclusively of the supplier. The agreement does not substantially change the main characteristics of the commercial conditions previously established between the subsidiaries of the Company and the suppliers. These transactions are presented in operating activities in the statements of cash flow.
Some Company’s subsidiaries acquire oil-based fuels and LPG from Petrobras and its subsidiaries and ethylene from Braskem S.A. These suppliers control almost all the markets for these products in Brazil.
Ultrapar Participações S.A. and Subsidiaries
Notes to the Parent’s Separate and Consolidated Interim Financial Information
(In thousands of Brazilian Reais, unless otherwise stated)
|
Parent |
|
Consolidated |
||||
|
09/30/2020 |
|
12/31/2019 |
|
09/30/2020 |
|
12/31/2019 |
Provisions on salaries |
11,686 |
|
- |
|
253,602 |
|
184,716 |
Profit sharing, bonus and premium |
15,542 |
|
- |
|
138,383 |
|
133,533 |
Social charges |
8,993 |
|
958 |
|
95,340 |
|
70,228 |
Others |
66 |
|
- |
|
26,662 |
|
17,159 |
|
36,287 |
|
958 |
|
513,987 |
|
405,636 |
|
|
09/30/2020 |
|
12/31/2019 |
ICMS |
|
183,611 |
|
149,547 |
PIS and COFINS |
|
32,146 |
|
40,676 |
ISS |
|
35,981 |
|
26,986 |
Value-added tax (IVA) of foreign subsidiaries |
|
31,050 |
|
25,619 |
Others |
|
27,544 |
|
27,094 |
|
|
310,332 |
|
269,922 |
a. ULTRAPREV - Associaçăo de Previdência Complementar
In February 2001, the Company’s Board of Directors approved the adoption of a defined contribution pension plan to be sponsored by the Company and each of its subsidiaries. Participating employees have been contributing to this plan, managed by Ultraprev - Associação de Previdência Complementar (“Ultraprev”), since August 2001. Under the terms of the plan, every year each participating employee chooses his or her basic contribution to the plan. Each sponsoring company provides a matching contribution in an amount equivalent to each basic contribution, up to a limit of 11% of the employee’s reference salary, according to the rules of the plan. As participating employees retire, they may choose to receive either (i) a monthly sum ranging between 0.3% and 1.0% of their respective accumulated fund in Ultraprev or (ii) a fixed monthly amount, which will exhaust their respective accumulated fund over a period of 5 to 35 years. The sponsoring company does not take responsibility for guaranteeing amounts or the duration of the benefits received by the retired employee.
In May 2020, the Deliberative Council of Ultraprev approved the use of the reversion fund in the amount of R$ 47,088, which R$ 6,439 used to deduct the sponsors’ normal contributions. The balance of R$ 40,649 on September 30, 2020 will be used in an average period between 10 and 70 months depending on the sponsor.
Ultrapar Participações S.A. and Subsidiaries
Notes to the Parent’s Separate and Consolidated Interim Financial Information
(In thousands of Brazilian Reais, unless otherwise stated)
For the nine-month period ended September 30, 2020, the subsidiaries contributed R$ 15,924, including the use of the reversion fund of R$ 6,439 (R$ 16,179 for the nine-month period ended September 30, 2019) to Ultraprev, which is recognized as expense in the income statement. The total number of participating employees as of September 30, 2020 was 7,469 active participants and 353 retired participants. In addition, Ultraprev had 24 former employees receiving benefits under the rules of a previous plan whose reserves are fully constituted.
b. Post-employment benefits
The subsidiaries recognized a provision for post-employment benefits mainly related to seniority bonus, payment of Government Severance Indemnity Fund (“FGTS”), and health, dental care, and life insurance plan for eligible retirees.
The amounts related to such benefits were determined based on a valuation conducted by an independent actuary and reviewed by management as of September 30, 2020.
|
Parent |
|
Consolidated |
||||
|
06/30/2020 |
|
12/31/2019 |
|
06/30/2020 |
|
12/31/2019 |
Health and dental care plan (1) |
- |
|
- |
|
158,540 |
|
154,142 |
Indemnification of FGTS |
3,213 |
|
- |
|
66,954 |
|
66,309 |
Seniority bonus (2) |
898 |
|
- |
|
19,668 |
|
34,485 |
Life insurance (1) |
- |
|
- |
|
18,768 |
|
17,931 |
Total |
4,111 |
|
- |
|
263,930 |
|
272,867 |
|
|
|
|
|
|
|
|
Current |
- |
|
- |
|
29,522 |
|
28,951 |
Non-current |
4,111 |
|
- |
|
234,408 |
|
243,916 |
(1) Only IPP and Iconic Lubrificantes S.A. (“Iconic”).
(2) In September 2020, there was a change in the bonus policy to retirement with reduced benefit.
The provision corresponds to the legal obligation to remove the subsidiary IPP’s underground fuel tanks owned by Ipiranga-branded located at service stations after a certain use period (see Note 2.n).
Changes in the provision for asset retirement obligation are as follows:
Balance as of December 31, 2019 |
51,242 |
Additions (new tanks) |
121 |
Expense with tanks removed |
(3,918) |
Accretion expense |
5,076 |
Balance as of September 30, 2020 |
52,521 |
|
|
Current |
4,655 |
Non-current |
47,866 |
Ultrapar Participações S.A. and Subsidiaries
Notes to the Parent’s Separate and Consolidated Interim Financial Information
(In thousands of Brazilian Reais, unless otherwise stated)
a. Provisions for tax, civil, and labor risks
The Company and its subsidiaries are parties in tax, civil, environmental, regulatory, and labor disputes at the administrative and judiciary levels, which, when applicable, are backed by escrow deposits. Provisions for losses are estimated and updated by management based on the opinion of the Company’s legal department and its external legal advisors.
The table below demonstrates the breakdown of provisions by nature and its movement:
Provisions |
Balance on 12/31/2019 |
|
Additions |
|
Reversals |
|
Payments |
|
Interest |
|
Balance on 09/30/2020 |
IRPJ and CSLL (a.1.1) |
541,281 |
|
- |
|
(537) |
|
- |
|
5,900 |
|
546,644 |
PIS and COFINS |
10,155 |
|
- |
|
(10,264) |
|
- |
|
109 |
|
- |
ICMS |
96,472 |
|
4,156 |
|
(1,022) |
|
(4,085) |
|
102 |
|
95,623 |
Civil, environmental and regulatory claims (a.2.1) |
85,855 |
|
4,780 |
|
(12,924) |
|
(20,765) |
|
150 |
|
57,096 |
Labor litigation (a.3.1) |
98,010 |
|
7,080 |
|
(563) |
|
(12,813) |
|
2,664 |
|
94,378 |
Others |
92,822 |
|
- |
|
(414) |
|
- |
|
440 |
|
92,848 |
Total |
924,595 |
|
16,016 |
|
(25,724) |
|
(37,663) |
|
9,365 |
|
886,589 |
|
|
|
|
|
|
|
|
|
|
|
|
Current |
40,455 |
|
|
|
|
|
|
|
|
|
41,968 |
Non-current |
884,140 |
|
|
|
|
|
|
|
|
|
844,621 |
Some of the provisions above involve, in whole or in part, escrow deposits.
Balances of escrow deposits are as follows:
|
09/30/2020 |
|
12/31/2019 |
Tax matters |
786,012 |
|
753,810 |
Labor litigation |
63,093 |
|
71,605 |
Civil and other |
103,291 |
|
96,028 |
Total – non-current assets |
952,396 |
|
921,443 |
Ultrapar Participações S.A. and Subsidiaries
Notes to the Parent’s Separate and Consolidated Interim Financial Information
(In thousands of Brazilian Reais, unless otherwise stated)
a.1 Provisions for tax matters and social security
a.1.1 On October 7, 2005, the subsidiaries Cia. Ultragaz and Bahiana filed for and obtained a preliminary injunction to recognize and offset PIS and COFINS credits on LPG purchases, against other taxes levied by the RFB, notably IRPJ and CSLL. The decision was confirmed by a trial court on May 16, 2008. Under the preliminary injunction, the subsidiaries made escrow deposits for these debits which amounted to R$ 521,873 as of September 30, 2020 (R$ 515,825 as of December 31, 2019). On July 18, 2014, a second instance unfavorable decision was published, and the subsidiaries suspended the escrow deposits, and started to pay income taxes from that date. To revert the court decision, the subsidiaries presented a writ of prevention which was dismissed on December 30, 2014, and the subsidiaries appealed this decision on February 3, 2015. Appeals were also presented to the respective higher courts Superior Court of Justice (“STJ”) and Federal Supreme Court (“STF”) whose final trial are pending.
a.2 Provisions for civil, environmental and regulatory claims
a.2.1 The Company and its subsidiaries maintain provisions for lawsuits and administrative proceedings, mainly derived from contracts entered into with customers and former services providers, as well as proceedings related to environmental and regulatory issues in the amount of R$ 57,096 as of September 30, 2020 (R$ 85,855 as of December 31, 2019). The subsidiary IPP entered into an agreement in two civil lawsuits that were provisioned for the expected loss in the amount of R$ 27,995. Reason why, with the closing of the cases, this provision was written-off in the period.
a.3 Provisions for labor matters
a.3.1 The Company and its subsidiaries maintain provisions of R$ 94,378 as of September 30, 2020 (R$ 98,010 as of December 31, 2019) for labor litigation filed by former employees and by employees of our service providers, mainly, contesting the non-payment of labor rights.
b. Contingent liabilities (possible)
The Company and its subsidiaries are parties in tax, civil, environmental, regulatory, and labor claims whose loss prognosis is assessed as possible (proceedings whose chance of loss is more than 25% and less or equal than 50%) by the Company and its subsidiaries’ legal departments, based on the opinion of its external legal advisors and, based on this assessment, these claims were not recognized in the financial statements. The estimated amount of this contingency is R$ 3,270,901 as of September 30, 2020 (R$ 2,840,086 as of December 31, 2019).
b.1 Contingent liabilities for tax matters and social security
The Company and its subsidiaries have contingent liabilities for tax matters and social security in the amount of R$ 2,355,879 as of September 30, 2020 (R$ 2,028,159 as of December 31, 2019), mainly represented by:
b.1.1 The subsidiary IPP and its subsidiaries have assessments invalidating the offset of excise tax (“IPI”) credits in connection with the purchase of raw materials used in the manufacturing of products which sales are not subject to IPI under the protection of tax immunity. The amount of this contingency is R$ 177,864 as of September 30, 2020 (R$ 173,738 as of December 31, 2019).
Ultrapar Participações S.A. and Subsidiaries
Notes to the Parent’s Separate and Consolidated Interim Financial Information
(In thousands of Brazilian Reais, unless otherwise stated)
b.1.2 The subsidiary IPP and its subsidiaries have legal proceedings related to ICMS. The total amount involved in these proceedings, was R$ 969,956 as of September 30, 2020 (R$ 836,822 as of December 31, 2019), Such proceedings arise mostly of the disregard of ICMS credits amounting to R$ 304,141 as of September 30, 2020 (R$ 319,849 as of December 31, 2019), of which R$ 91,987 (R$ 126,772 as of December 31, 2019) refer to proportional reversal requirement of ICMS credits related to the acquisition of hydrated alcohol; of alleged non-payment in the amount of R$ 97,788 as of September 30, 2020 (R$ 92,567 as of December 31, 2019); of conditioned fruition of fiscal incentive in the amount of R$ 119,551 as of September 30, 2020 (R$ 117,753 as of December 31, 2019); and inventory differences in the amount of R$ 278,261 as of September 30, 2020 (R$ 172,736 as of December 31, 2019) related to the leftovers or faults due to temperature changes or product handling.
b.1.3 The Company and its subsidiaries are parties to administrative and judicial suits involving Income Tax, Social Security Contribution, PIS and COFINS, substantially about denials of offset claims and credits disallowance which total amount is R$ 724,328 as of September 30, 2020 (R$ 699,360 as of December 31, 2019), mainly represented by:
b.1.3.1 The subsidiary IPP received a tax assessment related to the IRPJ and CSLL resulting from the supposedly undue amortization of the goodwill paid on acquisition of a subsidiary, in the amount of R$ 211,676 as of September 30, 2020 (R$ 208,449 as of December 31, 2019), which includes the amount of the income taxes, interest and penalty. Management assessed the likelihood of the tax assessment, supported by the opinion of its legal advisors, as “possible”, and therefore did not recognize a provision for this contingent liability.
b.2 Contingent liabilities for civil, environmental and regulatory claims
The Company and its subsidiaries have contingent liabilities for civil, environmental and regulatory claims in the amount of R$ 634,479, totaling 2,862 lawsuits as of September 30, 2020 (R$ 549,664, totaling 3,109 lawsuits as of December 31, 2019), mainly represented by:
b.2.1 The subsidiary Cia. Ultragaz is party to an administrative proceeding before CADE based on alleged anti-competitive practices in the State of Minas Gerais in 2001. The CADE entered a decision against Cia. Ultragaz and imposed a penalty of R$ 33,844 as of September 30, 2020 (R$ 33,603 as of December 31, 2019). The imposition of such administrative decision was suspended by a court order and its merit is being judicially reviewed.
b.2.2 In 2016, the subsidiary Cia. Ultragaz became party to two administrative proceedings filed by CADE, related to allegations of anti-competitive practices: i) one of the proceedings relate to practices in the State of Paraíba and other Northeast States, in which the subsidiary Bahiana is part along with Cia. Ultragaz. On this proceeding, Cia. Ultragaz and Bahiana signed a Cessation Commitment Agreement (“TCC”) with CADE, approved on November 22, 2017, in the amount of R$ 95,987, paid in 8 (eight) equal installments updated semiannually by SELIC, with maturity of the first one in 180 (one hundred and eighty) days from the date of publication of the approval. Three employees and one former employee signed TCC in the total amount of R$ 1,100. With the TCC, the administrative proceeding will be suspended in relation to the Cia. Ultragaz and Bahiana until final decision; ii) the second proceeding relate to practices in the Federal District and around, in which only Cia. Ultragaz is part. On this proceeding, Cia. Ultragaz signed a TCC with CADE, approved on September 6, 2017, in the amount of R$ 2,154, paid in a single installment in March 8, 2018. Two former employees signed TCC in the amount of R$ 50 each. With the TCC, the administrative proceeding will be suspended in relation to the Cia. Ultragaz until final decision.
Ultrapar Participações S.A. and Subsidiaries
Notes to the Parent’s Separate and Consolidated Interim Financial Information
(In thousands of Brazilian Reais, unless otherwise stated)
b.2.3 The subsidiary IPP became party to two administrative proceedings filed by CADE, related to allegations of anti-competitive practices in the city of Joinville, State of Santa Catarina and in the Distrito Federal. The process related to the anti-competitive acts of Joinville, established in October 2015, is under judgment (until now two favorable votes and one unfavorable vote have been pronounced) while the lawsuit related to the Distrito Federal, from an administrative inquiry initiated in May 2012, which was converted into an administrative proceeding in June 2020, is in the stage of presentation of defense. Besides these, in April, 2019 an administrative award was imposed in the amount of R$ 40,693 for allegedly influencing uniform commercial conduct among fuel resellers around the city of Belo Horizonte, state of Minas Gerais. In this case, there was an option for the judicial discussion of the assessment and penalty applied, which has as last relevant movement the presentation of a reply by IPP, and it is certain that a decision has already been issued granting protection to suspend the enforceability of the fine. Management did not recognize a provision for these contingencies, supported by the opinion of external legal counsel that classified the probability of loss as remote.
b.2.4 On November 29, 2016, a technical opinion was issued by the Operational Support Center for Execution (Centro de Apoio Operacional à Execução - CAEX), a technical body linked to the São Paulo State Public Prosecutor (“MPE”), presenting a proposal of compensation for the alleged environmental damages caused by the fire on April 2nd, 2015 at the Santos Terminal of the subsidiary Tequimar. This technical opinion is non-binding, with no condemnatory or sanctioning nature, and will still be evaluated by the authorities and parties. The subsidiary disagrees with the methodology and the assumptions adopted in the proposal and is negotiating an agreement with the MPE and the Brazilian Federal Public Prosecutor (“MPF”), since the beginning of the investigation and currently there is no civil lawsuit filed on the matter. The negotiations relate to in natura repair of the any damages. Thus, on May 15, 2019, the subsidiary Tequimar signed a Partial Conduct Adjustment Commitment Agreement (“TAC”) in the amount of R$ 67,539 with the MPE and MPF to compensate for diffuse and collective damages of any kind arising from the fish mortality and the damage caused to the ichthyofauna. The negotiations on compensation for other alleged damages are still ongoing and once concluded, the payments related to the project costs may affect the future Company’s Financial statements. In the criminal sphere, the MPF denounced the subsidiary Tequimar, which was summoned and replied to the complaint on June 19, 2018. On September 12, 2019, at a hearing in the federal court of Santos, the MPF and Tequimar agreed, and the judicial authority approved, the conditional suspension of the criminal proceedings for a period of 2 years, when Tequimar shall then prove compliance with the execution of the Partial TAC signed, with the obligation of a complementary allocation of R$ 13,000 to the Fisheries Management Project, to obtain the definitive filing of the process. In addition, as of September 30, 2020, there are contingent liabilities not recognized related to lawsuits in the amount of R$ 4,494 (R$ 11,403 as of December 31, 2019). On September 30 and December 31, 2019, there were not extrajudicial lawsuits.
b.3 Contingent liabilities for labor matters
The Company and its subsidiaries have contingent liabilities for labor matters in the amount of R$ 280,543, totaling 1,472 lawsuits as of September 30, 2020 (R$ 262,263, totaling 1,649 lawsuits as of December 31, 2019), mainly represented by:
Ultrapar Participações S.A. and Subsidiaries
Notes to the Parent’s Separate and Consolidated Interim Financial Information
(In thousands of Brazilian Reais, unless otherwise stated)
b.3.1 The Petrochemical Industry Labor Union (Sindiquímica), of which the employees of Oxiteno Nordeste and Empresa Carioca de Produtos Químicos S.A. (“EMCA”), companies located in the Camaçari Petrochemical Complex, are members, filed, in 1990, collective lawsuits against the subsidiaries, demanding the compliance of the fourth section of the collective labor agreement 1989/1990 (CCT 1989/1990), which provided for a salary, adjustment in lieu of the salary policies practiced. The collective actions against the subsidiaries, which have already become final, were judged in a favorable way to Oxiteno Nordeste and EMCA. At the same time, in 1990, there was the proposal for a collective agreement of legal nature, which appeared in the collective action, the Union of Employees and the Union of Companies (SINPEQ), discussing the same object (validity of the fourth clause of CCT 1989/1990). This action that transit judged only in October 2019, and remained unfavorable to SINPEQ, having the STF declared valid the fourth clause. During the process of collective agreement between the Unions, some companies in the Camaçari Petrochemical Complex signed an agreement with Sindiquímica. In October 2015, Sindiquímica filed enforcement lawsuits against Oxiteno Nordeste and, in 2017, EMCA, because these companies did not sign the agreement of 2010 with Sindiquímica. In addition to collective actions, individual claims containing the same object have been filed. In all the ongoing lawsuits whose object is the fourth clause, all applicable legal measures have been taken to defend companies and there are not new final decisions in addition to those judged in favor of companies in the 1990s.
c. Lubricants operation between IPP and Chevron
In the process of transaction of the lubricants' operation in Brazil between Chevron and subsidiary IPP (see Note 3.c of Interim Financial Information of 2018 filed on CVM February 20, 2019), it was agreed that each shareholder is responsible for any claims arising out of acts, facts or omissions prior to the transaction. The liability provisions of the Chevron shareholder in the amount of R$ 5,665 (R$ 5,423 as of December 31, 2019) are reflected in the consolidation of these interim financial information. Additionally, in connection with the business combination, a provision in the amount of R$ 198,900 was recognized on December 1, 2017 due contingent liabilities, amounted to R$ 188,073 as of September 30, 2020 (R$ 188,073 as of December 31, 2019. The amounts of provisions of Chevron's liability recognized in the business combination will be reimbursed to subsidiary Iconic in the event of losses and an indemnity asset was hereby constituted in the same amount, without the need to establish a provision for uncollectible amounts.
d. Contingent assets
d.1 Exclusion of ICMS from the calculation basis of PIS and COFINS
In March 15, 2017, STF decided that ICMS is not included in the PIS and COFINS basis. All subsidiaries have actions aimed at obtaining this right, as long as applicable. For the subsidiaries Oxiteno S.A., Extrafarma, Tequimar and Tropical have final and unappealable decision, and the respective subsidies to prove the amounts to be refunded were duly confirmed by management and recorded in results, up to the present year of 2020, the amount of R$ 497,764 (up to R$ 338,110 in 2019). As a result of injunctions obtained, some subsidiaries have already excluded ICMS from the PIS and COFINS calculation base in the amount of R$ 198,334 until September 30, 2020 (R$ 141,618 as of December 31, 2019). The amounts to be recovered from the other subsidiaries will be recognized to the extent that concomitantly, there are the final and unappealable decision of the individual action and confirmation of the evidences.
Ultrapar Participações S.A. and Subsidiaries
Notes to the Parent’s Separate and Consolidated Interim Financial Information
(In thousands of Brazilian Reais, unless otherwise stated)
The Company's management emphasizes that it is possible for the STF to modulate the effects of the judgment, either by restricting its effectiveness or determining when the decision will become effective, or by reinterpreting the value of ICMS to be excluded. After the decision of the STF has become final and unappealable, the Company's management will assess the impact on the shares of its subsidiaries, which may result in a reduction in the claimed tax credits.
The subsidiaries of the Company have recognized the following deferred revenue:
|
09/30/2020 |
|
12/31/2019 |
‘am/pm’ and Jet Oil franchising upfront fee (a) |
915 |
|
956 |
Loyalty program “Km de Vantagens” (b) |
24,219 |
|
25,096 |
Loyalty program “Clube Extrafarma” (b) |
1,767 |
|
1,574 |
Total current |
26,901 |
|
27,626 |
a. Franchising upfront fee
am/pm is the convenience stores chain of the Ipiranga service stations and, on September 30, 2020, had 26 stores with initial deferred franchising upfront fee (31 stores as of December 31, 2019). Jet Oil is Ipiranga’s lubricant-changing and automotive service specialized network and, on September 30, 2020 had 17 stores with initial deferred franchising upfront fee (20 stores as of December 31, 2019). For more information on the deferred revenue from the franchising upfront fee, see Note 2.a.
b. Loyalty programs
Subsidiary Ipiranga has a loyalty program called Km de Vantagens (www.kmdevantagens.com.br) under which registered customers are rewarded with points when they buy products at Ipiranga service stations or at its partners. The customers may exchange these points, during the period of one year, for discounts on products and services offered by Ipiranga and its partners. Points received by Ipiranga’s customers that may be used with the partner Multiplus Fidelidade and for discounts of fuel in Ipiranga’s website (www.postoipiranganaweb.com.br) and recognized as a reduction of revenue from sales and services.
Subsidiary Extrafarma has a loyalty program called Clube Extrafarma (www.clubeextrafarma.com.br) under which registered customers are rewarded with points when they buy products at its drugstore chain. The customers may exchange these points, during the period of six months, for discounts in products at its drugstore chain, recharge credit on a mobile phone, and prizes offered by partners Multiplus Fidelidade and Ipiranga, through Km de Vantagens. Points received by Extrafarma’s customers are recognized as a reduction of revenue from sales and services.
Deferred revenue is estimated based on the fair value of the points granted, considering the value of the prizes and the expected redemption of these points. For more information on deferred revenue from loyalty program, see Note 2.a.
Ultrapar Participações S.A. and Subsidiaries
Notes to the Parent’s Separate and Consolidated Interim Financial Information
(In thousands of Brazilian Reais, unless otherwise stated)
Because of the association between the Company and Extrafarma on January 31, 2014, 7 subscription warrants – indemnification could be issued, corresponding to up to 6,411,244 shares of the Company. The subscription warrants – indemnification may be exercised beginning 2020 by the former shareholders of Extrafarma and are adjusted according to the changes in the amounts of provisions for tax, civil, and labor risks and contingent liabilities related to the period prior to January 31, 2014. The subscription warrants – indemnification’s fair value is measured based on the share price of Ultrapar (UGPA3) and is reduced by the dividend yield until 2020, since the exercise is possible only from 2020, and they are not entitled to dividends until that date.
On February 19 and August 12, 2020, the Company’s Board of Directors confirmed the issuance of, respectively, 2,108,542 and 86,978 common shares within the authorized capital limit provided by the art. 6 of the Bylaws, due to the partial exercise of the rights conferred by the subscription warrants issued by the Company when the merger of all Extrafarma shares by the Company, approved by the extraordinary general meeting of the Company held in January 31, 2014.
In the association agreement between the Company and Extrafarma on January 31, 2014 and due to the unfavorable decisions of some processes prior on January 31, 2014, 574,648 shares linked to the subscription warrants - indemnification were canceled and didn’t issue. 3,641,075 shares remain retained, linked to subscription warrants - indemnification which may be issued or canceled as the final decision of the processes is favorable or unfavorable, respectively. On September 30, 2020, the maximum number of shares, which could be issued in the future, linked to the subscription warrants - indemnification, were up to 3,657,550 shares, totaling R$ 70,841 on September 30, 2020.
a. Share capital
On September 30, 2020, the subscribed and paid-in capital stock consists of 1,115,005,712 (1,112.810,192 as of December 31, 2019) common shares with no par value and the issuance of preferred shares and participation certificates is prohibited. Each common share entitles its holder to one vote at Shareholders’ Meetings.
The price of the shares issued by the Company as of September 30, 2020, on B3 was R$ 19.27 (R$ 25.48 as of December 31, 2019).
As of September 30, 2020, the Company is authorized to increase capital up to the limit of 1,600,000,000 common shares, without amendment to the Bylaws, by resolution of the Board of Directors. On February 19 and August 12, 2020, the Company’s Board of Directors confirmed the issuance of 2,108,542 and 86,978 common shares due to the partial exercise of the rights conferred by the subscription warrants – idemnification. For more information on the partial issue, see note 24.
As of September 30, 2020, there were 47,479,723 common shares outstanding abroad in the form of ADRs (46,518,315 shares as of December 31, 2019).
Ultrapar Participações S.A. and Subsidiaries
Notes to the Parent’s Separate and Consolidated Interim Financial Information
(In thousands of Brazilian Reais, unless otherwise stated)
On April 10, 2019, the Company’s extraordinary and annual general meeting approved the stock split of common shares issued by Ultrapar, at a ratio of one currently existing share to two shares of the same class and type as well as the changing of the number of shares in which the capital stock of the Company is divided. The stock split approved herein shall not imply in any change in the Ultrapar’s capital stock. The new shares and ADRs resulting from the stock split approved herein are of the same class and type and granted to its holders the same rights of the current shares and ADRs.
b. Equity instrument granted
The Company has a share-based incentive plan, which establishes the general terms and conditions for the concession of common shares issued by the Company held in treasury (see Note 8.c).
c. Treasury shares
The Company acquired its own shares at market prices, without capital reduction, to be held in treasury and to be subsequently disposed of or cancelled, in accordance with CVM Instructions 10, issued on February 14, 1980 and 268, issued on November 13, 1997.
As of September 30, 2020, and December 31, 2019, 26,780,298 common shares were held in the Company's treasury, acquired at an average cost of R$ 18.12.
d. Capital reserve
The capital reserve reflects the gain on the transfer of shares at market price used in the Deferred Stock Plan granted to executives of the subsidiaries of the Company, as mentioned in Note 8.c.
Because of Extrafarma’s association in 2014, the Company recognized an increase in the capital reserves in the amount of R$ 498,812, due to the difference between the value attributable to share capital and the market value of the Ultrapar shares on the date of issue, deducted by R$ 2,260 related to the incurred costs directly attributable to issuing new shares. Additionally, on February 19 and August 12, 2020, there was an increase in the reserve totaled amount of R$ 53,072 and R$ 1,691, respectively, due to the partial exercise of the subscription warrants – indemnification (see note 24).
e. Revaluation reserve
The revaluation reserve, recognized prior to the adoption of the international accounting standards (CPC / IFRS) instituted by Law 11,638/07, reflects the revaluation of assets of subsidiaries and is based on depreciation, write-off, or disposal of the revalued assets of the subsidiaries, as well as the tax effects recognized by these subsidiaries.
Ultrapar Participações S.A. and Subsidiaries
Notes to the Parent’s Separate and Consolidated Interim Financial Information
(In thousands of Brazilian Reais, unless otherwise stated)
f. Profit reserves
f.1 Legal reserve
Under Brazilian Corporate Law, the Company is required to allocate 5% of net annual earnings to a legal reserve, until the balance reaches 20% of capital stock. This reserve may be used to increase capital or to absorb losses but may not be distributed as dividends.
f.2 Investments reserve
In compliance with Article 194 of the Brazilian Corporate Law and Article 55.c) of the Bylaws this reserve is aimed to protect the integrity of the Company’s assets and to supplement its capital stock, in order to allow new investments to be made. As provided in its Bylaws, the Company may allocate up to 45% of the annual net income to the investments reserve, up to the limit of 100% of the share capital.
The investments reserve is free of distribution restrictions and totaled R$ 3,290,073 as of September 30, 2020 (R$ 3,290,073 as of December 31, 2019).
g. Valuation adjustments and cumulative translation adjustments
g.1 Valuation adjustments
(i) Actuarial gains and losses relating to post-employment benefits, calculated based on a valuation conducted by an independent actuary, are recognized in equity under the title “valuation adjustments”. Actuarial gains and losses recorded in equity are not reclassified to profit or loss in subsequent periods.
(ii) Gains and losses on the hedging instruments of exchange rate related to firm commitment and highly probable transactions designated as cash flows hedges are recognized in equity as “valuation adjustments”. Gains and losses are reclassified to initial cost of non-financial assets.
(iii) The differences between the fair value of financial investments measured at fair value through other comprehensive income and the initial amount of financial investments plus the interest earned and the foreign currency exchange variation are recognized in equity as valuation adjustments. Gains and losses are reclassified to statements of profit or loss when the financial investment is settled.
(iv) The Company also recognizes in this item the effect of changes in the non-controlling interest in subsidiaries that do not result in loss of control. This amount corresponds to the difference between the amount by which the non-controlling interest was adjusted and the fair value of the consideration received or paid and represents a transaction with shareholders.
Ultrapar Participações S.A. and Subsidiaries
Notes to the Parent’s Separate and Consolidated Interim Financial Information
(In thousands of Brazilian Reais, unless otherwise stated)
Balance and changes in valuation adjustments of the Company are as follows:
|
Fair value of cash flow hedging instruments |
|
Fair value of financial instruments |
|
Actuarial gains (losses) of post-employment benefits |
|
Non-controlling shareholders interest change |
|
Total |
Balance as of December 31, 2019 |
(296,132) |
|
205 |
|
(47,759) |
|
197,369 |
|
(146,317) |
Changes in fair value of financial instruments |
(743,922) |
|
238 |
|
- |
|
- |
|
(743,684) |
IRPJ and CSLL on fair value |
253,200 |
|
- |
|
- |
|
- |
|
253,200 |
Balance as of September 30, 2020 |
(786,854) |
|
443 |
|
(47,759) |
|
197,369 |
|
(636,801) |
|
Fair value of cash flow hedging instruments |
|
Fair value of financial instruments |
|
Actuarial gains (losses) of post-employment benefits |
|
Non-controlling shareholders interest change |
|
Total |
Balance as of December 31, 2018 |
(243,336) |
|
(273) |
|
(17,749) |
|
197,369 |
|
(63,989) |
Changes in fair value of financial instruments |
(157,231) |
|
719 |
|
- |
|
- |
|
(156,512) |
IRPJ and CSLL on fair value |
53,476 |
|
- |
|
- |
|
- |
|
53,476 |
Actuarial gain of post-employment benefits |
- |
|
- |
|
238 |
|
- |
|
238 |
Balance as of September 30, 2019 |
(347,091) |
|
446 |
|
(17,511) |
|
197,369 |
|
(166,787) |
g.2 Cumulative Translation Adjustments
The change in exchange rates on assets, liabilities, and income of foreign subsidiaries that have functional currency other than the presentation currency of the Company and an independent administration (see Note 2.s.1) and the exchange rate variation on notes in the foreign market (see Note 33.h.3) is directly recognized in the equity. This accumulated effect is reflected in profit or loss as a gain or loss only in case of disposal or write-off of the investment.
Ultrapar Participações S.A. and Subsidiaries
Notes to the Parent’s Separate and Consolidated Interim Financial Information
(In thousands of Brazilian Reais, unless otherwise stated)
Balance and changes in cumulative translation adjustments of the Company are as follows:
|
09/30/2020 |
|
09/30/2019 |
Initial balance |
102,427 |
|
65,857 |
Currency adjustment translation of foreign subsidiaries |
299,625 |
|
44,418 |
Effect of foreign currency exchange rate variation on financial instruments |
(152,950) |
|
(31,864) |
IRPJ and CSLL on exchange variation |
52,003 |
|
10,834 |
Final balance |
301,105 |
|
89,245 |
h. Dividends and allocation of net income
The shareholders are entitled, under the Bylaws, to a minimum annual dividend of 50% of adjusted net income calculated in accordance with Brazilian Corporate Law. The dividends and interest on equity in excess of the obligation established in the Bylaws are recognized in equity until the Shareholders approve them. The proposed dividends payable as of December 31, 2019 in the amount of R $ 261,470 (R $ 0.24 – twenty-four cents of Brazilian Real per share), were approved by the Board of Directors on February 19, 2020, and were paid as of March 6, 2020.
Balances and changes in dividends payable are as follows:
|
Parent |
|
Consolidated |
Balance as of December 31, 2019 |
14,689 |
|
16,694 |
Provisions |
261,470 |
|
264,262 |
Payments |
(261,409) |
|
(264,487) |
Balance as of September 30, 2020 |
14,750 |
|
16,469 |
Ultrapar Participações S.A. and Subsidiaries
Notes to the Parent’s Separate and Consolidated Interim Financial Information
(In thousands of Brazilian Reais, unless otherwise stated)
|
09/30/2020 |
|
09/30/2019 |
Gross revenue from sale |
61,874,881 |
|
69,274,939 |
Gross revenue from services |
679,488 |
|
640,879 |
Sales taxes |
(3,068,529) |
|
(2,912,201) |
Discounts and sales returns |
(1,237,466) |
|
(1,114,791) |
Amortization of contractual assets with customers (see Note 11) |
(224,441) |
|
(273,383) |
Deferred revenue (see Note 23) |
1,517 |
|
19,745 |
Net revenue from sales and services |
58,025,450 |
|
65,635,188 |
The Company presents its expenses by function in the consolidated statement of profit or loss and presents below its expenses by nature:
|
Parent |
|
Consolidated |
||||
|
09/30/2020 |
|
09/30/2019 |
|
09/30/2020 |
|
09/30/2019 |
Raw materials and materials for use and consumption |
- |
|
- |
|
52,686,638 |
|
60,068,058 |
Personnel expenses |
108,039 |
|
7,556 |
|
1,647,883 |
|
1,840,508 |
Freight and storage |
- |
|
- |
|
1,030,089 |
|
872,565 |
Depreciation and amortization |
1,877 |
|
- |
|
698,363 |
|
623,620 |
Amortization of right to use assets |
3,238 |
|
- |
|
242,147 |
|
219,225 |
Advertising and marketing |
278 |
|
13 |
|
114,059 |
|
143,398 |
Services provided by third parties |
17,800 |
|
9,600 |
|
236,358 |
|
250,457 |
Other expenses |
12,506 |
|
2,238 |
|
201,794 |
|
349,949 |
Allocation of corporate expenses |
(143,738) |
|
(19,407) |
|
- |
|
- |
Total |
- |
|
- |
|
56,857,331 |
|
64,367,780 |
Classified as: |
|
|
|
|
|
|
|
Cost of products and services sold |
- |
|
- |
|
53,925,516 |
|
61,161,756 |
Selling and marketing |
- |
|
- |
|
1,854,841 |
|
1,961,011 |
General and administrative |
- |
|
- |
|
1,076,974 |
|
1,245,013 |
Total |
- |
|
- |
|
56,857,331 |
|
64,367,780 |
The gain or loss is determined as the difference between the selling price and residual book value of the investment, PP&E, and intangible asset disposed of. For the nine-month period ended September 30, 2020, the gain was R$ 35,926 (gain of R$ 908 as of September 30, 2019), represented primarily from sale of PP&E.
Ultrapar Participações S.A. and Subsidiaries
Notes to the Parent’s Separate and Consolidated Interim Financial Information
(In thousands of Brazilian Reais, unless otherwise stated)
|
09/30/2020 |
|
09/30/2019 |
Commercial partnerships (1) |
19,813 |
|
32,668 |
Merchandising (2) |
22,147 |
|
20,001 |
Loyalty program (3) |
128 |
|
4,833 |
Ultracargo – fire accident in Santos (4) |
- |
|
(2,822) |
Extraordinary tax credits (5) |
138,120 |
|
98,496 |
Conduct adjustment commitment – Tequimar (6) |
- |
|
(65,539) |
Provision for decarbonization obligation (7) |
(66,374) |
|
- |
Others |
412 |
|
12,397 |
Other operating income, net |
114,247 |
|
100,034 |
(1) Refers to contracts with service providers and suppliers, which establish trade agreements for convenience stores and gas stations.
(2) Refers to contracts with suppliers of convenience stores, which establish, among other agreements, promotional campaigns.
(3) Refers to sales of “Km de Vantagens” to partners of the loyalty program. Revenue is recognized at the time that the partners transfer the points to their customers.
(4) For more information about the fire accident in Ultracargo, see Note 22.b.2.4.
(5) Refers substantially to Oxiteno S.A., Ipiranga, Oleoquimica, EMCA, Tequimar, Ultracargo and Tropical PIS and COFINS credits (see Note 7.a.2), and 2019 substantially to Extrafarma, Ipiranga and Iconic credits.
(6) For more information, see Note 22.b.2.4.
(7) Refers to the obligation adopted by the Brazilian National Biofuels Policy – RenovaBio (implemented by Law No. 13,576/2017, with additional regulations established by Decree No. 9,888/2019 and Ordinance No. 419 of November 20, 2019 issued by the Brazilian Ministry of Mines and Energy) to set decarbonization targets for its sector.
Ultrapar Participações S.A. and Subsidiaries
Notes to the Parent’s Separate and Consolidated Interim Financial Information
(In thousands of Brazilian Reais, unless otherwise stated)
|
Parent |
|
Consolidated |
||||
|
09/30/2020 |
|
09/30/2019 |
|
09/30/2020 |
|
09/30/2019 |
Financial income: |
|
|
|
|
|
|
|
Interest on financial investments |
33,646 |
|
60,868 |
|
110,314 |
|
245,099 |
Interest from customers |
- |
|
- |
|
106,796 |
|
100,921 |
Changes in subscription warranty – indemnification (see Note 24) |
- |
|
39,583 |
|
- |
|
39,583 |
Selic interest on extraordinary PIS/COFINS credits (see Note 7.a.2) |
- |
|
- |
|
82,429 |
|
11,146 |
Other financial income |
204 |
|
- |
|
7,274 |
|
5,131 |
|
33,850 |
|
100,451 |
|
306,813 |
|
401,880 |
Financial expenses: |
|
|
|
|
|
|
|
Interest on loans |
(29,551) |
|
- |
|
(281,010) |
|
(266,630) |
Interest on debentures |
(44,686) |
|
(88,550) |
|
(250,156) |
|
(387,900) |
Interest on leases payable |
(3,416) |
|
- |
|
(109,994) |
|
(98,934) |
Bank charges, financial transactions tax, and other charges |
(1,452) |
|
(2,442) |
|
(62,272) |
|
(47,042) |
Exchange variation, net of gains and losses with derivative financial instruments |
- |
|
25 |
|
3,162 |
|
165,361 |
Changes in subscription warranty – indemnification (see Note 24) |
(1,322) |
|
- |
|
(1,322) |
|
- |
Interest of provisions, net, and other financial |
- |
|
- |
|
(11,047) |
|
(21,484) |
|
(80,427) |
|
(90,967) |
|
(712,639) |
|
(656,629) |
Financial income (expense) |
(46,577) |
|
9,484 |
|
(405,826) |
|
(254,749) |
Ultrapar Participações S.A. and Subsidiaries
Notes to the Parent’s Separate and Consolidated Interim Financial Information
(In thousands of Brazilian Reais, unless otherwise stated)
The table below presents a reconciliation of numerators and denominators used in computing earnings per share. The Company has a deferred stock plan and subscription warrants - indemnification, as mentioned in Notes 8.c and 24, respectively.
|
09/30/2020 |
|
09/30/2019 |
Basic earnings per share |
|
|
|
Net income for the period of the Company |
467,358 |
|
640,062 |
Weighted average shares outstanding (in thousands) |
1,088,600 |
|
1,084,373 |
Basic earnings per share – R$ |
0.4293 |
|
0.5903 |
Diluted earnings per share |
|
|
|
Net income for the period of the Company |
467,358 |
|
640,062 |
Weighted average shares outstanding (in thousands), including dilution effects |
1,095,033 |
|
1,090,529 |
Diluted earnings per share – R$ |
0.4268 |
|
0.5869 |
Weighted average shares outstanding (in thousands) |
|
|
|
Weighted average shares outstanding for basic per share |
1,088,600 |
|
1,084,373 |
Dilution effect |
|
|
|
Subscription warrants – indemnification |
3,658 |
|
3,658 |
Deferred stock plan |
2,775 |
|
2,498 |
Weighted average shares outstanding for diluted per share |
1,095,033 |
|
1,090,529 |
Earnings per share were adjusted retrospectively by the issue of 2,195,520 common shares due to the partial exercise of the rights conferred by the subscription warrants disclosed in note 24.
The Company operates five main business segments: gas distribution, fuel distribution, chemicals, storage and drugstores. The gas distribution segment (Ultragaz) distributes LPG to residential, commercial, and industrial consumers, especially in the South, Southeast, and Northeast regions of Brazil. The fuel distribution segment (Ipiranga) operates the distribution and marketing of gasoline, ethanol, diesel, fuel oil, kerosene, natural gas for vehicles, and lubricants and related activities throughout all the Brazilian territory. The chemicals segment (Oxiteno) produces ethylene oxide and its main derivatives and fatty alcohols, which are raw materials used in the home and personal care, agrochemical, paints, varnishes, and other industries. The storage segment (Ultracargo) operates liquid bulk terminals, especially in the Southeast and Northeast regions of Brazil. The drugstores segment (Extrafarma) trades pharmaceutical, hygiene, and beauty products through its own drugstore chain in the North, Northeast and Southeast regions of the country. The segments shown in the interim financial information are strategic business units supplying different products and services. Intersegment sales are at prices similar to those that would be charged to third parties.
Ultrapar Participações S.A. and Subsidiaries
Notes to the Parent’s Separate and Consolidated Interim Financial Information
(In thousands of Brazilian Reais, unless otherwise stated)
a. Financial information related to segments
The main financial information of each of the Company’s segments are stated as follows:
|
|
09/30/2020 |
|
09/30/2019 |
Net revenue from sales and services: |
|
|
|
|
Ultragaz |
|
5,439,739 |
|
5,307,121 |
Ipiranga |
|
47,017,149 |
|
55,219,957 |
Oxiteno |
|
3,733,888 |
|
3,242,583 |
Ultracargo |
|
478,191 |
|
387,900 |
Extrafarma |
|
1,469,473 |
|
1,559,087 |
Abastece Aí |
|
3,893 |
|
- |
|
|
58,142,333 |
|
65,716,648 |
Others (1) |
|
36,594 |
|
33,299 |
Intersegment sales |
|
(153,477) |
|
(114,759) |
Total |
|
58,025,450 |
|
65,635,188 |
Intersegment sales: |
|
|
|
|
Ultragaz |
|
3,537 |
|
2,894 |
Ipiranga |
|
165 |
|
440 |
Oxiteno |
|
11,354 |
|
17,434 |
Ultracargo |
|
102,064 |
|
60,759 |
|
|
117,120 |
|
81,527 |
Others (1) |
|
36,357 |
|
33,232 |
Total |
|
153,477 |
|
114,759 |
Net revenue from sales and services, excluding intersegment sales: |
|
|
|
|
Ultragaz |
|
5,436,202 |
|
5,304,227 |
Ipiranga |
|
47,016,984 |
|
55,219,517 |
Oxiteno |
|
3,722,534 |
|
3,225,149 |
Ultracargo |
|
376,127 |
|
327,141 |
Extrafarma |
|
1,469,473 |
|
1,559,087 |
Abastece Aí |
|
3,893 |
|
- |
|
|
58,025,213 |
|
65,635,121 |
Others (1) |
|
237 |
|
67 |
Total |
|
58,025,450 |
|
65,635,188 |
Operating income (expense): |
|
|
|
|
Ultragaz |
|
401,450 |
|
251,823 |
Ipiranga |
|
639,291 |
|
1,166,702 |
Oxiteno |
|
212,775 |
|
4,454 |
Ultracargo |
|
196,929 |
|
48,105 |
Extrafarma |
|
(65,921) |
|
(79,389) |
Abastece Aí |
|
(28,808) |
|
- |
Corporation (2) |
|
(67,386) |
|
(53,543) |
|
|
1,288,330 |
|
1,338,152 |
Others (1) |
|
884 |
|
2,693 |
Total |
|
1,289,214 |
|
1,340,845 |
Ultrapar Participações S.A. and Subsidiaries
Notes to the Parent’s Separate and Consolidated Interim Financial Information
(In thousands of Brazilian Reais, unless otherwise stated)
|
|
09/30/2020 |
|
09/30/2019 |
Share of profit (loss) of joint ventures and associates: |
|
|
|
|
Ultragaz |
|
(48) |
|
4 |
Ipiranga |
|
848 |
|
1,323 |
Oxiteno |
|
595 |
|
597 |
Ultracargo |
|
574 |
|
1,728 |
|
|
1,969 |
|
3,652 |
Others (3) |
|
(32,484) |
|
(21,947) |
Total |
|
(30,515) |
|
(18,295) |
Income before financial result, income and social contribution taxes |
|
1,258,699 |
|
1,322,550 |
Financial result, net |
|
(405,826) |
|
(254,749) |
Income before income and social contribution taxes |
|
852,873 |
|
1,067,801 |
Additions to PP&E and intangible assets (excluding intersegment account balances): |
|
|
|
|
Ultragaz |
|
206,986 |
|
160,250 |
Ipiranga |
|
200,113 |
|
226,246 |
Oxiteno |
|
131,906 |
|
185,454 |
Ultracargo |
|
118,268 |
|
128,316 |
Extrafarma |
|
28,441 |
|
59,457 |
Abastece Aí |
|
388 |
|
- |
|
|
686,102 |
|
759,723 |
Others (1) |
|
25,425 |
|
10,130 |
Total additions to PP&E and intangible assets (see Notes 14 and 15) |
|
711,527 |
|
769,853 |
Asset retirement obligation – fuel tanks (see Note 21) |
|
(122) |
|
(248) |
Provision for demobilization of machinery and equipment |
|
(406) |
|
- |
Capitalized borrowing costs |
|
(11,577) |
|
(23,961) |
Total investments in PP&E and intangible assets (cash flow) |
|
699,422 |
|
745,644 |
Addition on contractual assets with customers – exclusive rights (see Note 11): |
|
|
|
|
Ipiranga |
|
291,953 |
|
231,737 |
Ultragaz |
|
4,812 |
|
- |
Total |
|
296,765 |
|
231,737 |
Ultrapar Participações S.A. and Subsidiaries
Notes to the Parent’s Separate and Consolidated Interim Financial Information
(In thousands of Brazilian Reais, unless otherwise stated)
|
|
09/30/2020 |
|
09/30/2019 |
Depreciation of PP&E and amortization of intangible assets charges: |
|
|
|
|
Ultragaz |
|
142,356 |
|
140,394 |
Ipiranga |
|
229,773 |
|
218,171 |
Oxiteno |
|
194,397 |
|
149,663 |
Ultracargo |
|
48,659 |
|
43,861 |
Extrafarma |
|
62,491 |
|
60,197 |
Abastece Aí |
|
6,708 |
|
- |
|
|
684,384 |
|
612,286 |
Others (1) |
|
13,979 |
|
11,334 |
Total |
|
698,363 |
|
623,620 |
Amortization of contractual assets with customers – exclusive rights (see Note 11): |
|
|
|
|
Ipiranga |
|
223,217 |
|
273,327 |
Ultragaz |
|
1,224 |
|
56 |
Total |
|
224,441 |
|
273,383 |
Amortization of right to use assets: |
|
|
|
|
Ultragaz |
|
29,792 |
|
22,522 |
Ipiranga |
|
131,145 |
|
118,305 |
Oxiteno |
|
9,638 |
|
7,008 |
Ultracargo |
|
14,351 |
|
16,468 |
Extrafarma |
|
53,675 |
|
54,890 |
Abastece Aí |
|
15 |
|
- |
|
|
238,616 |
|
219,193 |
Others (1) |
|
3,531 |
|
32 |
Total |
|
242,147 |
|
219,225 |
|
|
09/30/2020 |
|
12/31/2019 |
Total assets (excluding intersegment account balances): |
|
|
|
|
Ultragaz |
|
2,907,019 |
|
2,998,623 |
Ipiranga |
|
18,917,916 |
|
16,278,320 |
Oxiteno |
|
9,204,465 |
|
7,453,476 |
Ultracargo |
|
2,173,578 |
|
1,871,799 |
Extrafarma |
|
1,824,683 |
|
2,060,182 |
Abastece Aí |
|
84,167 |
|
- |
|
|
35,111,828 |
|
30,662,400 |
Others (1) |
|
1,500,225 |
|
533,072 |
Total |
|
36,612,053 |
|
31,195,472 |
(1) Composed of the parent company Ultrapar (including goodwill of certain acquisitions) and subsidiaries Serma - Associação dos Usuários de Equipamentos de Processamento de Dados e Serviços Correlatos (“Serma”) and Imaven Imóveis Ltda.
(2) Expenses related to Ultrapar’s holding structure, including the Presidency, CA and CF, advisory comittees to the CA and Human Capital board and Risks, Compliance and Audit.
(3) Includes the share of profit (loss) in the joint ventures ConectCar and RPR.
Ultrapar Participações S.A. and Subsidiaries
Notes to the Parent’s Separate and Consolidated Interim Financial Information
(In thousands of Brazilian Reais, unless otherwise stated)
b. Geographic area information
The fixed and intangible assets of the Company and its subsidiaries are located in Brazil, except those related to Oxiteno’ plants abroad, as shown below:
|
09/30/2020 |
|
12/31/2019 |
United States of America |
1,262,006 |
|
909,787 |
Mexico |
170,355 |
|
124,809 |
Uruguay |
100,178 |
|
74,732 |
|
1,532,539 |
|
1,109,328 |
The subsidiaries generate revenue from operations in Brazil, United Stated of America, Mexico and Uruguay, as well as from exports of products to foreign customers, as disclosed below:
|
09/30/2020 |
|
09/30/2019 |
Net revenue from sale and services: |
|
|
|
Brazil |
56,622,321 |
|
64,606,946 |
Mexico |
179,287 |
|
164,619 |
Uruguay |
49,937 |
|
29,988 |
Other Latin American countries |
457,596 |
|
317,937 |
United States of America and Canada |
445,594 |
|
326,999 |
Far East |
75,979 |
|
55,783 |
Europe |
117,597 |
|
85,968 |
Other |
77,139 |
|
46,948 |
Total |
58,025,450 |
|
65,635,188 |
Sales to the foreign market are made substantially by the Oxiteno segment.
Ultrapar Participações S.A. and Subsidiaries
Notes to the Parent’s Separate and Consolidated Interim Financial Information
(In thousands of Brazilian Reais, unless otherwise stated)
a. Risk management and financial instruments – governance
The main risks to which the Company and its subsidiaries are exposed reflect strategic/operational and economic/financial aspects. Operational/strategic risks (including, but not limited to, demand behavior, competition, technological innovation, and material changes in the industry structure) are addressed by the Company’s management model. Economic/financial risks primarily reflect default of customers, behavior of macroeconomic variables, such as exchange and interest rates, as well as the characteristics of the financial instruments used by the Company and its subsidiaries and their counterparties. These risks are managed through control policies, specific strategies, and the establishment of limits.
The Company has a policy for the management of resources, financial instruments, and risks approved by its CA (“Policy”). In accordance with the Policy, the main objectives of financial management are to preserve the value and liquidity of financial assets and ensure financial resources for the development of the business, including expansions. The main financial risks considered in the Policy are market risks (currencies, interest rates and commodities), liquidity and credit. The governance of the management of financial risks follows the segregation of duties below:
The execution of the Policy has done by corporate financial board, through its treasury department, with the assistance of the accounting, legal and tax departments.
The monitoring of compliance of the Policy and possible issues is the responsibility of the Risk and Investment Committee, (“Committee”), which is composed of CFO, Treasury Director, Controller and other directors designated by the CFO. The Committee holds quarterly meetings and monitors the risk standards established by the Policy through a monitoring map on a monthly basis.
Approval of the Policy and the periodic assessment of Company exposure to financial risks are subject to the approval of the CA of Ultrapar.
The Audit and Risks Committee (“CAR”) advises the CA in the assessment of controls, management and exposure of financial risks and revision of Policy. The Risk, Compliance and Audit board monitors of standards compliance of the Policy and reports to the CAR the risks exposure and compliance or noncompliance of the Policy.
Ultrapar Participações S.A. and Subsidiaries
Notes to the Parent’s Separate and Consolidated Interim Financial Information
(In thousands of Brazilian Reais, unless otherwise stated)
b. Currency risk
Most transactions of the Company, through its subsidiaries, are located in Brazil and, therefore, the reference currency for risk management is the Brazilian Real. Currency risk management is guided by neutrality of currency exposures and considers the risks of the Company and its subsidiaries and their exposure to changes in exchange rates. The Company considers as its main currency exposures the changes in assets and liabilities in foreign currency.
The Company and its subsidiaries use exchange rate hedging instruments (especially between the Brazilian Real and the U.S. dollar) available in the financial market to protect their assets, liabilities, receipts, and disbursements in foreign currency and net investments in foreign operations. Hedge is used in order to reduce the effects of changes in exchange rates on the Company´s income and cash flows in Brazilian Reais within the exposure limits under its Policy. Such foreign exchange hedging instruments have amounts, periods, and rates substantially equivalent to those of assets, liabilities, receipts, and disbursements in foreign currencies to which they are related.
Assets and liabilities in foreign currencies are stated below, translated into Brazilian Reais:
b.1 Assets and liabilities in foreign currencies
|
09/30/2020 |
|
12/31/2019 |
Assets in foreign currency |
|
|
|
Cash, cash equivalents and financial investments in foreign currency (except hedging instruments) |
2,587,869 |
|
455,620 |
Foreign trade receivables, net of allowance for doubtful accounts and advances to foreign customers |
331,487 |
|
213,544 |
Other assets |
1,851,043 |
|
1,445,022 |
|
4,770,399 |
|
2,114,186 |
Liabilities in foreign currency |
|
|
|
Financing in foreign currency, gross of transaction costs and discount |
(10,135,021) |
|
(6,895,052) |
Payables arising from imports, net of advances to foreign suppliers |
(996,653) |
|
(344,523) |
|
(11,131,674) |
|
(7,239,575) |
Foreign currency hedging instruments |
4,322,379 |
|
3,636,418 |
Net liability position – total |
(2,038,896) |
|
(1,488,971) |
Net asset (liability) position – income statement effect |
(27,610) |
|
452,178 |
Net liability position – equity effect |
(2,011,286) |
|
(1,941,149) |
Ultrapar Participações S.A. and Subsidiaries
Notes to the Parent’s Separate and Consolidated Interim Financial Information
(In thousands of Brazilian Reais, unless otherwise stated)
b.2 Sensitivity analysis of assets and liabilities in foreign currency
Scenarios I, II and III were based on 10%, 25% and 50% variations, respectively, applied on the net position of the Company exposed to the currency risk, simulating the effects of appreciation and devaluation of the Real in the income statement and the equity:
The table below shows, in the three scenarios, the effects of exchange rate changes on the net liability position of R$ 2,038,896 in foreign currency as of September 30, 2020:
|
Risk |
Scenario I |
Scenario II |
Scenario III |
||
|
|
Base |
25% |
50% |
||
(1) Income statement effect |
Real devaluation |
(2,761) |
(6,903) |
(13,805) |
||
(2) Equity effect |
(201,129) |
(502,821) |
(1,005,643) |
|||
(1) + (2) |
Net effect |
(203,890) |
(509,724) |
(1,019,448) |
||
(3) Income statement effect |
Real appreciation |
2,761 |
6,903 |
13,805 |
||
(4) Equity effect |
201,129 |
502,821 |
1,005,643 |
|||
(3) + (4) |
Net effect |
203,890 |
509,724 |
1,019,448 |
The table below shows, in the three scenarios, the effects of exchange rate changes on the net liability position of R$ 1,488,971 in foreign currency as of December 31, 2019:
|
Risk |
Scenario I |
Scenario II |
Scenario III |
||
|
|
Base |
25% |
50% |
||
(1) Income statement effect |
Real devaluation |
45,218 |
113,045 |
226,089 |
||
(2) Equity effect |
(194,115) |
(485,287) |
(970,575) |
|||
(1) + (2) |
Net effect |
(148,897) |
(372,242) |
(744,486) |
||
(3) Income statement effect |
Real appreciation |
(45,218) |
(113,045) |
(226,089) |
||
(4) Equity effect |
194,115 |
485,287 |
970,575 |
|||
(3) + (4) |
Net effect |
148,897 |
372,242 |
744,486 |
The equity effect refers to cumulative translation adjustments of changes in the exchange rate on equity of foreign subsidiaries (see Notes 2.s.1 and 25.g.2), net investments hedge in foreign entities, cash flow hedge of firm commitment and highly probable transaction (see Note 2.c and “h. Hedge Accounting” below).
c. Interest rate risk
The Company and its subsidiaries adopt policies for borrowing and investing financial resources and for capital cost minimization. The financial investments of the Company and its subsidiaries are primarily held in transactions linked to the DI, as set forth in Note 4. Borrowings primarily relate to financing from Banco do Brasil, as well as debentures and borrowings in foreign currency, as shown in Note 16.
The Company attempts to maintain most of its financial interest assets and liabilities at floating rates.
Ultrapar Participações S.A. and Subsidiaries
Notes to the Parent’s Separate and Consolidated Interim Financial Information
(In thousands of Brazilian Reais, unless otherwise stated)
c.1 Assets and liabilities exposed to floating interest rates
The financial assets and liabilities exposed to floating interest rates are demonstrated below:
|
Note |
09/30/2020 |
|
12/31/2019 |
DI |
|
|
|
|
Cash equivalents |
4.a |
2,639,355 |
|
1,780,939 |
Financial investments |
4.b |
3,073,361 |
|
2,610,686 |
Asset position of foreign exchange hedging instruments – DI |
33.g |
- |
|
19,323 |
Loans and debentures |
16.a |
(7,412,529) |
|
(6,268,615) |
Liability position of foreign exchange hedging instruments – DI |
33.g |
(2,124,304) |
|
(3,318,289) |
Liability position of fixed interest instruments + IPCA – DI |
33.g |
(1,312,870) |
|
(821,902) |
Net liability position in DI |
|
(5,136,987) |
|
(5,997,858) |
TJLP |
|
|
|
|
Loans –TJLP |
16.a |
(42,397) |
|
(103,945) |
Net liability position in TJLP |
|
(42,397) |
|
(103,945) |
LIBOR |
|
|
|
|
Asset position of foreign exchange hedging instruments – LIBOR |
33.g |
281,622 |
|
850,307 |
Loans – LIBOR |
16.a |
(624,603) |
|
(1,457,263) |
Net liability position in LIBOR |
|
(342,981) |
|
(606,956) |
SELIC |
|
|
|
|
Loans – SELIC |
16.a |
(442) |
|
(30,392) |
Net liability position in SELIC |
|
(442) |
|
(30,392) |
Total net liability position exposed to floating interest |
|
(5,522,807) |
|
(6,739,151) |
Ultrapar Participações S.A. and Subsidiaries
Notes to the Parent’s Separate and Consolidated Interim Financial Information
(In thousands of Brazilian Reais, unless otherwise stated)
c.2 Sensitivity analysis of floating interest rate risk
For sensitivity analysis of floating interest rate risk, the Company used the accumulated amount of the reference indexes (DI, TJLP, LIBOR and SELIC) as a base scenario. Scenarios I, II and III were based on 10%, 25% and 50% variations, respectively, applied in the floating interest rate of the base scenario:
The tables below show the incremental expenses and income that would be recognized in financial income, due to the effect of floating interest rate changes in different scenarios.
|
|
09/30/2020 |
||
|
Risk |
Scenario I |
Scenario II |
Scenario III |
|
|
Base |
25% |
50% |
Exposure of interest rate risk |
|
|
|
|
Interest effect on cash equivalents and financial |
Increase in DI |
10,523 |
26,307 |
52,614 |
Interest effect on debt in DI |
Increase in DI |
(16,233) |
(40,581) |
(81,163) |
Interest rate hedging instruments (liabilities in DI) effect |
Increase in DI |
(1,645) |
(11,428) |
(27,733) |
Incremental expenses |
|
(7,355) |
(25,702) |
(56,282) |
Interest effect on debt in TJLP |
Increase in TJLP |
(280) |
(700) |
(1,400) |
Incremental expenses |
|
(280) |
(700) |
(1,400) |
Foreign exchange hedging instruments (assets in LIBOR) effect |
Increase in LIBOR |
605 |
1,512 |
3,023 |
Interest effect on debt in LIBOR |
Increase in LIBOR |
(1,340) |
(3,350) |
(6,700) |
Incremental expenses |
|
(735) |
(1,838) |
(3,677) |
Interest effect on debt in SELIC |
Increase in SELIC |
(44) |
(111) |
(222) |
Incremental expenses |
|
(44) |
(111) |
(222) |
Ultrapar Participações S.A. and Subsidiaries
Notes to the Parent’s Separate and Consolidated Interim Financial Information
(In thousands of Brazilian Reais, unless otherwise stated)
|
|
12/31/2019 |
||
|
Risk |
Scenario I |
Scenario II |
Scenario III |
|
|
Base |
25% |
50% |
Exposure of interest rate risk |
|
|
|
|
Interest effect on cash equivalents and financial |
Increase in DI |
29,304 |
73,261 |
146,522 |
Foreign exchange hedging instruments (assets in DI) |
Increase in DI |
55 |
137 |
274 |
Interest effect on debt in DI |
Increase in DI |
(44,469) |
(111,173) |
(222,345) |
Interest rate hedging instruments (liabilities in DI) effect |
Increase in DI |
(39,175) |
(85,571) |
(162,897) |
Incremental expenses |
|
(54,285) |
(123,346) |
(238,446) |
Interest effect on debt in TJLP |
Increase in TJLP |
(1,213) |
(3,033) |
(6,065) |
Incremental expenses |
|
(1,213) |
(3,033) |
(6,065) |
Foreign exchange hedging instruments (assets in LIBOR) effect |
Increase in LIBOR |
1,722 |
4,305 |
8,609 |
Interest effect on debt in LIBOR |
Increase in LIBOR |
(3,551) |
(8,876) |
(17,753) |
Incremental expenses |
|
(1,829) |
(4,571) |
(9,144) |
Interest effect on debt in SELIC |
Increase in SELIC |
(251) |
(628) |
(1,257) |
Incremental expenses |
|
(251) |
(628) |
(1,257) |
d. Credit risks
The financial instruments that would expose the Company and its subsidiaries to credit risks of the counterparty are basically represented by cash and bank deposits, financial investments, hedging instruments (see Note 4), and trade receivables (see Note 5).
d.1 Credit risk of financial institutions
Such risk results from the inability of financial institutions to comply with their financial obligations to the Company and its subsidiaries due to insolvency. The Company and its subsidiaries regularly conduct a credit review of the institutions with which they hold cash and cash equivalents, financial investments, and hedging instruments through various methodologies that assess liquidity, solvency, leverage, portfolio quality, etc. Cash and cash equivalents, financial investments, and hedging instruments are held only with institutions with a solid credit history, chosen for safety and soundness. The volume of cash and cash equivalents, financial investments, and hedging instruments are subject to maximum limits by each institution and, therefore, require diversification of counterparties.
Ultrapar Participações S.A. and Subsidiaries
Notes to the Parent’s Separate and Consolidated Interim Financial Information
(In thousands of Brazilian Reais, unless otherwise stated)
d.2 Government credit risk
The Company's policy allows investments in government securities from countries classified as investment grade AAA or aaa by specialized credit rating agencies (S&P, Moody’s and Fitch) and in Brazilian government bonds. The volume of such financial investments is subject to maximum limits by each country and, therefore, requires diversification of counterparties.
The credit risk of financial institution and government of cash, cash equivalents and financial investments is summarized below:
|
|
Fair value |
||
Counterparty credit rating |
|
09/30/2020 |
|
12/31/2019 |
AAA |
|
7,353,934 |
|
4,906,077 |
AA |
|
136,453 |
|
331,512 |
A |
|
2,201,853 |
|
418,020 |
BBB |
|
105,549 |
|
56,488 |
Total |
|
9,797,789 |
|
5,712,097 |
d.3 Customer credit risk
The credit policy establishes the analysis of the profile of each new customer, individually, regarding their financial condition. The review carried out by the subsidiaries of the Company includes the evaluation of external ratings, when available, financial statements, credit bureau information, industry information and, when necessary, bank references. Credit limits are established for each customer and reviewed periodically, in a shorter period the greater the risk, depending on the approval of the responsible area in cases of sales that exceed these limits.
In monitoring credit risk, customers are grouped according to their credit characteristics and depending on the business the grouping takes into account, for example, whether they are natural or legal clients, whether they are wholesalers, resellers or final customers, considering also the geographic area.
The expected of credit losses are calculated by the expected loss approach based on the probability of default rates. Loss rates are calculated on the basis of the average probability of a receivable amount to advance through successive stages of default until full write-off. The probability of default calculation takes into account a credit risk score for each exposure, based on data considered to be capable of foreseeing the risk of loss (external classifications, audited financial statements, cash flow projections, customer information available in the press, for example), with addition of the credit assessment based on experience.
Such credit risks are managed by each business unit through specific criteria for acceptance of customers and their credit rating and are additionally mitigated by the diversification of sales. No single customer or group accounts for more than 10% of total revenue.
Ultrapar Participações S.A. and Subsidiaries
Notes to the Parent’s Separate and Consolidated Interim Financial Information
(In thousands of Brazilian Reais, unless otherwise stated)
The subsidiaries of the Company request guarantees related to trade receivables and other receivables in specific situations to customers, but these guarantees don’t influence in the calculation of risk of loss. The subsidiaries of the Company maintained the following allowance for expected losses on doubtful accounts balances on trade receivables:
|
09/30/2020 |
|
12/31/2019 |
Ipiranga |
462,944 |
|
447,235 |
Ultragaz |
113,473 |
|
94,985 |
Oxiteno |
17,778 |
|
13,252 |
Extrafarma |
94 |
|
3,419 |
Ultracargo |
1,616 |
|
2,001 |
Total |
595,905 |
|
560,892 |
The table below presents information about credit risk exposure:
|
09/30/2020 |
|
12/31/2019 |
||||||||
|
Weighted average rate of losses |
|
Accounting balance |
|
Provision for losses |
|
Weighted average rate of losses |
|
Accounting balance |
|
Provision for losses |
Current |
1.6% |
|
3,681,112 |
|
58,618 |
|
1.3% |
|
3,843,803 |
|
50,198 |
less than 30 days |
1.7% |
|
139,536 |
|
2,373 |
|
2.1% |
|
185,612 |
|
3,975 |
31-60 days |
7.5% |
|
43,381 |
|
3,275 |
|
7.1% |
|
37,801 |
|
2,688 |
61-90 days |
5.9% |
|
50,959 |
|
3,028 |
|
20.4% |
|
24,861 |
|
5,062 |
91-180 days |
31.9% |
|
83,862 |
|
26,747 |
|
41.8% |
|
91,633 |
|
38,337 |
more than 180 days |
54.9% |
|
913,797 |
|
501,864 |
|
53.1% |
|
867,618 |
|
460,632 |
|
|
|
4,912,647 |
|
595,905 |
|
|
|
5,051,328 |
|
560,892 |
The information about expected losses on doubtful accounts balances by geographic area are as follows:
|
09/30/2020 |
|
12/31/2019 |
Brazil |
583,826 |
|
550,928 |
Mexico |
- |
|
1,123 |
Uruguay |
89 |
|
267 |
Other Latin American countries |
713 |
|
561 |
United States of America and Canada |
1,281 |
|
889 |
Europe |
9,913 |
|
7,075 |
Others |
83 |
|
49 |
|
595,905 |
|
560,892 |
For further information about the allowance for expected losses on doubtful accounts, see Notes 5.a and 5.b.
Ultrapar Participações S.A. and Subsidiaries
Notes to the Parent’s Separate and Consolidated Interim Financial Information
(In thousands of Brazilian Reais, unless otherwise stated)
d.4 Price risk
The Company and its subsidiaries are exposed to commodity price risk, due the fluctuation in prices for diesel and gasoline, among others.
To mitigate the risk of the fluctuation of diesel and gasoline prices, the Company and its subsidiaries permanently monitor the market, seeking to protection of price movements through hedge transactions for cargo purchased in the international market, used contracts of derivative for heating oil (diesel) and RBOB (gasoline) traded on the stock exchange. These products are traded on the stock exchange and are subjected to the impacts of macroeconomic and geopolitical factors outside the control of the Company and its subsidiaries.
The table below shows the positions of derivative financial instruments to hedge commodity price risk at September 30, 2020:
Derivative |
|
Contract |
|
Notional amount (m3) |
|
Notional amount (USD thousands) |
|
Fair value |
||||||||||
|
|
Position |
|
Product |
|
Maturity |
|
09/30/2020 |
|
12/31/2019 |
|
09/30/2020 |
|
12/31/2019 |
|
09/30/2020 |
|
12/31/2019 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
R$ thousands |
|
R$ thousands |
Term |
|
Sold |
|
Heating Oil |
|
oct-20 |
|
184,743 |
|
76,950 |
|
55,227 |
|
40,529 |
|
(5,671) |
|
(2,378) |
Term |
|
Sold |
|
RBOB |
|
oct-20 |
|
74,246 |
|
64,867 |
|
23,224 |
|
29,243 |
|
269 |
|
1,107 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(5,402) |
|
(1,271) |
Ultrapar Participações S.A. and Subsidiaries
Notes to the Parent’s Separate and Consolidated Interim Financial Information
(In thousands of Brazilian Reais, unless otherwise stated)
e. Liquidity risk
The Company and its subsidiaries’ main sources of liquidity derive from (i) cash, cash equivalents, and financial investments, (ii) cash generated from operations and (iii) financing. The Company and its subsidiaries believe that these sources are sufficient to satisfy their current funding requirements, which include, but are not limited to, working capital, capital expenditures, amortization of debt, and payment of dividends.
The Company and its subsidiaries periodically examine opportunities for acquisitions and investments. They consider different types of investments, either directly, through joint ventures, or through associated companies, and finance such investments using cash generated from operations, debt financing, through capital increases, or through a combination of these methods.
The Company and its subsidiaries believe to have enough working capital and sources of financing to satisfy their current needs. The gross indebtedness due over the next twelve months totaled R$ 4,266,065, including estimated interests on loans (for quantitative information, see Note 16.a). Furthermore, the investment initially planned for 2020 totaled R$ 1,770,714. Until third quarter, the amount of R$ 1,003,656 had been realized. On September 30, 2020, the Company and its subsidiaries had R$ 8,579,036 in cash, cash equivalents, and short-term financial investments (for quantitative information, see Note 4).
The table below presents a summary of financial liabilities as of September 30, 2020 by the Company and its subsidiaries, listed by maturity. The amounts disclosed in this table are the contractual undiscounted cash outflows, and, therefore, these amounts may be different from the amounts disclosed on the balance sheet.
Financial liabilities |
Total |
Less than 1 year |
Between 1 and 3 years |
Between 3 and 5 years |
More than 5 years |
Loans including future contractual interest (1) (2) |
21,731,066 |
4,266,065 |
6,609,060 |
2,067,551 |
8,788,390 |
Currency and interest rate hedging instruments (3) |
803,953 |
367,344 |
87,218 |
139,905 |
209,486 |
Trade payables |
3,447,392 |
3,447,392 |
- |
- |
- |
Leases payable |
2,752,451 |
303,766 |
1,236,791 |
607,468 |
604,426 |
(1) To calculate the estimated interest on loans some macroeconomic assumptions were used, including averaging for the period the following: (i) DI of % 1.96% to 2020, 2.76% to 2021, 4.22% to 2022 and 5.51% to 2023; (ii) exchange rate of the Real against the U.S. dollar of R$ 5.09 in 2020, R$ 4.75 in 2021, R$ 4.32 in 2022, R$ 4.17 in 2023, R$ 4.20 in 2024, R$ 4.22 in 2025, R$ 4.24 in 2026, R$ 4.26 in 2027, R$ 4.28 in 2028 and R$ 4.30 in 2029; (iii) TJLP of 4.55%; (iv) IGP-M of 16.80% in 2020, 4.11% in 2021, 3.50% in 2022, 3.37% as from 2023; (v) IPCA of 2.5% in 2020, 2.8% in 2021, 3.0% as from 2022 (source: B3, Bulletin Focus and financial institutions).
(2) Includes estimated interest payments on short-term and long-term loans until the payment date.
(3) The currency and interest rate hedging instruments were estimated based on projected U.S dollar futures contracts and the futures curves of DI x Pre and Pre x IPCA contracts quoted on B3 on September 30, 2020 and on the futures curve of LIBOR (ICE – Intercontinental Exchange) and commodities heating oil contracts and RBOB quoted on New York Mercantile Exchange (“NYMEX”) on September 30, 2020. In the table above, only the hedging instruments with negative results at the time of settlement were considered.
Ultrapar Participações S.A. and Subsidiaries
Notes to the Parent’s Separate and Consolidated Interim Financial Information
(In thousands of Brazilian Reais, unless otherwise stated)
f. Capital management
The Company manages its capital structure based on indicators and benchmarks. The key performance indicators related to the capital structure management are the weighted average cost of capital, net debt / EBITDA, interest coverage, and indebtedness / equity ratios. Net debt is composed of cash, cash equivalents, and financial investments (see Note 4) and loans, including debentures (see Note 16). The Company can change its capital structure depending on the economic and financial conditions, in order to optimize its financial leverage and capital management. The Company seeks to improve its return on invested capital by implementing efficient working capital management and a selective investment program.
g. Selection and use of financial instruments
In selecting financial investments and hedging instruments, an analysis is conducted to estimate rates of return, risks involved, liquidity, calculation methodology for the carrying value and fair value, and a review is conducted of any documentation applicable to the financial instruments. The financial instruments used to manage the financial resources of the Company and its subsidiaries are intended to preserve value and liquidity.
The Policy contemplates the use of derivative financial instruments only to cover identified risks and in amounts consistent with the risk (limited to 100% of the identified risk). The risks identified in the Policy are described in the above sections and are subject to risk management. In accordance with the Policy, the Company and its subsidiaries can use forward contracts, Swaps, options, and futures contracts to manage identified risks. Leveraged derivative instruments are not permitted. Because the use of derivative financial instruments is limited to the coverage of identified risks, the Company and its subsidiaries use the term “hedging instruments” to refer to derivative financial instruments.
Ultrapar Participações S.A. and Subsidiaries
Notes to the Parent’s Separate and Consolidated Interim Financial Information
(In thousands of Brazilian Reais, unless otherwise stated)
The table below summarizes the position of hedging instruments entered by the Company and its subsidiaries:
Designated as hedge accounting |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Product |
|
Hedged object |
|
Rates agreement |
|
Maturity |
|
Note |
|
Notional amount 1 |
|
Fair value |
|||||
|
|
|
|
Assets |
Liabilities |
|
|
|
|
|
09/30/2020 |
|
12/31/2019 |
|
09/30/2020 |
|
12/31/2019 |
Foreign exchange swap |
|
Debt |
|
USD + 4.58 % |
103.9% DI |
|
nov-23 |
|
33.h.1 |
|
USD 185,000 |
|
USD 245,000 |
|
381,483 |
|
69,298 |
Foreign exchange swap |
|
Debt |
|
USD + LIBOR-3M + 1.14% |
105.0% DI |
|
jun-22 |
|
33.h.1 |
|
USD 50,000 |
|
USD 150,000 |
|
115,459 |
|
74,970 |
Interest rate swap |
|
Debt |
|
4.57% + IPCA |
95.8% DI |
|
dec-25 |
|
33.h.1 |
|
R$ 806,054 |
|
R$ 806,054 |
|
178,412 |
|
144,123 |
Interest rate swap |
|
Debt |
|
6.47% |
99.9% DI |
|
nov-24 |
|
33.h.1 |
|
R$ 90,000 |
|
R$ 90,000 |
|
2,103 |
|
584 |
Term |
|
Firm commitments |
|
BRL |
Heating Oil / RBOB |
|
oct-20 |
|
33.h.1 |
|
USD 78,450 |
|
- |
|
(5,402) |
|
- |
NDF |
|
Firm commitments |
|
BRL |
USD |
|
oct-20 |
|
33.h.1 |
|
USD 67,711 |
|
- |
|
(7,385) |
|
- |
Zero Cost Collar |
|
Operating margin |
|
Put USD 3.86 |
Call USD 4.33 |
|
dec-20 |
|
33.h.2 |
|
USD 97,500 |
|
USD 60,000 |
|
(129,811) |
|
(121) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
534,859 |
|
288,854 |
Ultrapar Participações S.A. and Subsidiaries
Notes to the Parent’s Separate and Consolidated Interim Financial Information
(In thousands of Brazilian Reais, unless otherwise stated)
Not designated as hedge accounting |
|
|
|
|
|
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Product |
|
Hedged object |
|
Rates agreement |
|
Maturity |
|
Notional amount 1 |
|
Fair value |
|||||
|
|
|
|
Assets |
Liabilities |
|
|
|
09/30/2020 |
|
12/31/2019 |
|
09/30/2020 |
|
12/31/2019 |
Foreign exchange swap |
|
Debt |
|
USD + 0.18% |
55.5% DI |
|
jun-29 |
|
USD 320,000 |
|
USD 853,000 |
|
647,658 |
|
353,451 |
NDF |
|
Firm commitments |
|
BRL |
USD |
|
mar-21 |
|
USD 243,619 |
|
USD 71,600 |
|
61,105 |
|
(1,080) |
NDF |
|
Operating margin |
|
MXN |
USD |
|
dec-20 |
|
USD 1,500 |
|
- |
|
(23) |
|
- |
Interest rate swap |
|
Debt |
|
BRL |
BRL |
|
oct-20 |
|
R$ 400,000 |
|
- |
|
- |
|
- |
Foreign exchange swap |
|
Debt |
|
LIBOR-3M + 2.0% |
105.9% DI |
|
jun-20 |
|
- |
|
USD 60,000 |
|
- |
|
48,535 |
Foreign exchange swap |
|
Firm commitments |
|
USD + 0.00% |
33.5% DI |
|
may-20 |
|
- |
|
USD 17,896 |
|
- |
|
(2,203) |
Foreign exchange swap |
|
Operating margin |
|
34.8% DI |
USD + 0.00% |
|
feb-20 |
|
- |
|
USD 4,680 |
|
- |
|
612 |
Term |
|
Firm commitments |
|
BRL |
Heating oil / RBOB |
|
may-20 |
|
- |
|
USD 56,000 |
|
- |
|
(1,271) |
|
|
|
|
|
|
|
|
|
|
|
|
|
708,740 |
|
398,044 |
(1) Currency as indicated.
All transactions mentioned above were properly registered with CETIP S.A.
Ultrapar Participações S.A. and Subsidiaries
Notes to the Parent’s Separate and Consolidated Interim Financial Information
(In thousands of Brazilian Reais, unless otherwise stated)
h. Hedge accounting
The Company and its subsidiaries use derivative and non-derivative financial instruments for hedging purposes and test, throughout the duration of the hedge, their effectiveness, as well as the changes in their fair value.
h.1 Fair value hedge
The Company and its subsidiaries designate as fair value hedges certain financial instruments used to offset the variations in interest and exchange rates, which are based on the market value of financing contracted in Brazilian Reais and U.S. dollars.
The foreign exchange hedging instruments designated as fair value hedge are:
In thousands, except the DI % |
09/30/2020 |
|
12/31/2019 |
Notional amount – US$ |
235,000 |
|
395,000 |
Result of hedging instruments – gain/(loss) – R$ |
676,657 |
|
79,466 |
Fair value adjustment of debt – R$ |
(20,416) |
|
(36,764) |
Financial expense in the statements of profit or loss – R$ |
(585,417) |
|
(130,320) |
Average effective cost – DI % |
104.4 |
|
104.4 |
For more information, see Note 16.c.1.
The interest rate hedging instruments designated as fair value hedge are:
In thousands, except the DI % |
09/30/2020 |
|
12/31/2019 |
Notional amount – US$ |
806,054 |
|
806,054 |
Result of hedging instruments – gain/(loss) – R$ |
33,560 |
|
72,957 |
Fair value adjustment of debt – R$ |
(3,455) |
|
(76,992) |
Financial expense in the statements of profit or loss – R$ |
(613) |
|
(68,054) |
Average effective cost – DI % |
95.8 |
|
95.8 |
For more information, see Notes 16.g.2, 16.g.4 and 16.g.6.
Ultrapar Participações S.A. and Subsidiaries
Notes to the Parent’s Separate and Consolidated Interim Financial Information
(In thousands of Brazilian Reais, unless otherwise stated)
In thousands, except the DI % |
09/30/2020 |
|
12/31/2019 |
Notional amount – US$ |
90,000 |
|
90,000 |
Result of hedging instruments – gain/(loss) – R$ |
1,027 |
|
584 |
Fair value adjustment of debt – R$ |
922 |
|
(208) |
Financial expense in the statements of profit or loss – R$ |
3,445 |
|
(377) |
Average effective cost – DI % |
99.9 |
|
99.9 |
For more information, see Note 16.g.7.
The foreign exchange hedging instruments and commodities designated as fair value hedge are as described below. The purpose of this relationship is to transform the cost of the imported product from fixed to variable until the moment of blend the fuel, as occurs with the price practiced in its sales. The subsidiary Ipiranga realizes these operations with over-the-counter derivatives that are designated in a hedge accouting relationship, as a fair value hedge in an amount equivalent to the inventories of imported product.
In thousands, except the DI % |
09/30/2020 |
|
12/31/2019 |
Notional amount – US$ |
146,161 |
|
- |
Result of hedging instruments – gain/(loss) – R$ |
(32,031) |
|
- |
Fair value adjustment of inventories – R$ |
5,493 |
|
- |
h.2 Cash flow hedge
The Company and its subsidiaries designate, as cash flow hedge of firm commitment and highly probable transactions, derivative financial instruments to hedge firm commitments and non-derivative financial instruments to hedge highly probable future transactions, to hedge against fluctuations arising from changes in exchange rate.
On September 30, 2020, the notional amount of foreign exchange hedging instruments for highly probable future transactions designated as cash flow hedge, related to notes in the foreign market totaled US$ 488,572 (US$ 550,000 on December 31, 2019). On September 30, 2020, the unrealized loss of “Other comprehensive income” is R$ 485,039 (loss of R$ 293,277 on December 31, 2019), net of deferred IRPJ and CSLL.
On September 30, 2020, the notional amount of foreign exchange hedging instruments for highly probable future transactions designated as cash flow hedge, related to future sales revenues of Oxiteno (zero cost collars) totaled US$ 97,500 (US$ 60,000 on December 31, 2019). On September 30, 2020, the unrealized loss of “Other comprehensive income” is R$ 6,468 (loss of R$ 74 on December 31, 2019), net of deferred IRPJ and CSLL and a expense in the amount of R$ 119,890 in the financial income.
Ultrapar Participações S.A. and Subsidiaries
Notes to the Parent’s Separate and Consolidated Interim Financial Information
(In thousands of Brazilian Reais, unless otherwise stated)
h.3 Net investment hedge in foreign entities
The Company and its subsidiaries designate, as net investment hedge in foreign entities, notes in the foreign market, for hedging net investment in foreign entities, to offset changes in exchange rates.
On September 30, 2020, the balance of foreign exchange hedging instruments designated as net investments hedge in foreign entities, related to part of the investments made in entities which functional currency is other than the Brazilian Real, totaled US$ 95,000 (US$ 95,000 on December 31, 2019).On September 30, 2020, the unrealized loss of “Other comprehensive income” is R$ 100,947 (loss of R$ 55,682 on December 31, 2019), net of deferred income and social contribution taxes. The effects of exchange rate changes on investments and hedging instruments were offset in equity.
i. Gains (losses) on hedging instruments
The following tables summarize the value of gains (losses) recognized, which affected the equity of the Company and its subsidiaries:
|
09/30/2020 |
||
|
Profit or loss |
|
Equity |
a – Exchange rate derivates receivable in U.S. dollars (i) and (ii) |
577,332 |
|
- |
b – Exchange rate derivates payable in U.S. dollars (ii) |
(349,399) |
|
(6,468) |
c – Interest rate swaps in R$ (iii) |
33,575 |
|
- |
d – Non-derivative financial instruments (iv) |
(1,153,107) |
|
(934,945) |
Total |
(891,599) |
|
(941,413) |
|
09/30/2019 |
|
12/31/2019 |
|
Profit or loss |
|
Equity |
a – Exchange rate derivates receivable in U.S. dollars (i) and (ii) |
307,963 |
|
- |
b – Exchange rate derivates payable in U.S. dollars (ii) |
(1,792) |
|
(80) |
c – Interest rate swaps in R$ (iii) |
(1,872) |
|
- |
d – Non-derivative financial instruments (iv) |
(244,400) |
|
(348,959) |
Total |
59,899 |
|
(349,039) |
(i) Does not consider the effect of exchange rate variation of exchange Swaps receivable in U.S. dollars when this effect is offset in the gain or loss of the hedged item (debt/firm commitments).
(ii) Considers the designation effect of foreign exchange hedging.
(iii) Considers the designation effect of interest rate hedging in Brazilian Reais; and
(iv) Considers the results of notes in the foreign market (for further information see Note 16.b).
Ultrapar Participações S.A. and Subsidiaries
Notes to the Parent’s Separate and Consolidated Interim Financial Information
(In thousands of Brazilian Reais, unless otherwise stated)
j. Fair value of financial instruments
The fair values and the carrying values of the financial instruments, including currency and interest rate hedging instruments, are stated below:
|
|
|
09/30/2020 |
|
12/31/2019 |
||||
|
Category |
Note |
Carrying value |
|
Fair value |
|
Carrying value |
|
Fair value |
Financial assets: |
|
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
|
|
|
|
|
|
|
|
Cash and bank |
Measured at amortized cost |
4.a |
306,784 |
|
306,784 |
|
284,992 |
|
284,992 |
Financial investments in local currency |
Measured at fair value through other comprehensive income |
4.a |
2,639,355 |
|
2,639,355 |
|
1,780,939 |
|
1,780,939 |
Financial investments in foreign currency |
Measured at fair value through profit or loss |
4.a |
50,194 |
|
50,194 |
|
49,448 |
|
49,448 |
Financial investments: |
|
|
|
|
|
|
|
|
|
Fixed-income securities and funds in local currency |
Measured at fair value through profit or loss |
4.b |
2,847,119 |
|
2,847,119 |
|
1,937,967 |
|
1,937,967 |
Fixed-income securities and funds in local currency |
Measured at fair value through other comprehensive income |
4.b |
147,874 |
|
147,874 |
|
595,816 |
|
595,816 |
Fixed-income securities and funds in local currency |
Measured at amortized cost |
4.b |
78,368 |
|
78,368 |
|
76,904 |
|
76,904 |
Fixed-income securities and funds in foreign currency |
Measured at fair value through other comprehensive income |
4.b |
2,425,276 |
|
2,425,276 |
|
303,417 |
|
303,417 |
Currency and interest rate hedging and commodities instruments |
Measured at fair value through profit or loss |
4.b |
1,302,819 |
|
1,302,819 |
|
682,615 |
|
682,615 |
Trade Receivables |
Measured at amortized cost |
5.a |
3,390,555 |
|
3,372,613 |
|
3,689,500 |
|
3,663,247 |
Reseller Financing |
Measured at amortized cost |
5.b |
926,187 |
|
923,359 |
|
800,936 |
|
839,090 |
Total |
|
|
14,114,531 |
|
14,093,761 |
|
10,202,534 |
|
10,214,435 |
Financial liabilities: |
|
|
|
|
|
|
|
|
|
Financing |
Measured at fair value through profit or loss |
16.a |
1,409,575 |
|
1,409,575 |
|
1,666,092 |
|
1,666,092 |
Financing |
Measured at amortized cost |
16.a |
10,691,400 |
|
10,687,310 |
|
6,008,414 |
|
7,268,742 |
Debentures |
Measured at amortized cost |
16.a |
5,445,686 |
|
5,331,188 |
|
5,657,339 |
|
5,603,669 |
Debentures |
Measured at fair value through profit or loss |
16.a |
1,065,279 |
|
1,065,279 |
|
1,030,892 |
|
1,030,891 |
Leases payable |
Measured at amortized cost |
13 |
1,831,773 |
|
1,831,773 |
|
1,588,673 |
|
1,588,673 |
Commodities, currency and interest rate hedging instruments |
Measured at fair value through profit or loss |
16.a |
143,986 |
|
143,986 |
|
29,985 |
|
29,985 |
Trade payables |
Measured at amortized cost |
17 |
3,447,392 |
|
3,422,092 |
|
2,700,071 |
|
2,678,808 |
Subscription warrants – indemnification |
Measured at fair value through profit or loss |
24 |
70,481 |
|
70,481 |
|
130,657 |
|
130,657 |
Total |
|
|
24,105,572 |
|
23,961,684 |
|
18,812,123 |
|
19,997,517 |
Ultrapar Participações S.A. and Subsidiaries
Notes to the Parent’s Separate and Consolidated Interim Financial Information
(In thousands of Brazilian Reais, unless otherwise stated)
The fair value of financial instruments, including currency and interest hedging instruments, was determined as follows:
• | The fair value of cash and bank deposit balances are identical to their carrying values. |
• |
Financial investments in investment funds are valued at the value of the fund unit as of the date of the interim financial information, which corresponds to their fair value. |
• |
Financial investments in CDBs (Bank Certificates of Deposit) and similar investments offer daily liquidity through repurchase at the “yield curve” and the Company calculates their fair value through methodologies commonly used for mark to the market. |
• |
The fair value of trade receivables and trade payables are approximate to their carrying values. |
• |
The subscription warrants – indemnification was measured based on the share price of Ultrapar (UGPA3) at the interim financial information date and are adjusted to the Company’s dividend yield, since the exercise is only possible starting in 2020 onwards and they are not entitled to dividends until then. The number of shares of subscription warrants – indemnification is also adjusted according to the changes in the amounts of provision for tax, civil, and labor risks and contingent liabilities related to the period prior to January 31, 2014 (see Note 24). |
• |
The fair value calculation of notes in the foreign market is based on the quoted price in an active market (see Note 16.b). |
The fair value of other financial investments, financing and leases payable was determined using calculation methodologies commonly used for mark-to-market reporting, which consist of calculating future cash flows associated with each instrument adopted and adjusting them to present value at the market rates as of the date of the interim financial information. For some cases where there is no active market for the financial instrument, the Company and its subsidiaries can use quotes provided by the transaction counterparties.
The interpretation of market information on the choice of calculation methodologies for the fair value requires considerable judgment and estimates to obtain a value deemed appropriate to each situation. Consequently, the estimates presented do not necessary indicate the amounts that may be realizable in the current market.
Financial instruments were classified as financial assets or liabilities measured at amortized cost, except (i) all exchange rate and interest rate hedging instruments, which are measured at fair value through profit or loss, financial investments classified as measured at fair value through profit or loss and financial investments that are classified as measured at fair value through other comprehensive income (see Note 4.b), (ii) loans and financing measured at fair value through profit or loss (see Note 16.a), (iii) guarantees to customers that have vendor arrangements (see Note 16.i), which are measured at fair value through profit or loss, and (iv) subscription warrants – indemnification, which are measured at fair value through profit or loss (see Note 24). Cash, banks, trade receivables and reseller financing are classified as measured at amortized cost. Trade payables, leases payable and other payables are classified as financial liabilities measured at amortized cost.
Ultrapar Participações S.A. and Subsidiaries
Notes to the Parent’s Separate and Consolidated Interim Financial Information
(In thousands of Brazilian Reais, unless otherwise stated)
j.1 Fair value hierarchy of financial instruments
The financial instruments are classified in the following categories:
(a) Level 1 – prices negotiated (without adjustment) in active markets for identical assets or liabilities;
(b) Level 2 – inputs other than prices negotiated in active markets included in Level 1 and observable for the asset or liability, either directly (as prices) or indirectly (derived from prices).
Ultrapar Participações S.A. and Subsidiaries
Notes to the Parent’s Separate and Consolidated Interim Financial Information
(In thousands of Brazilian Reais, unless otherwise stated)
The table below shows the categories of the financial assets and financial liabilities:
|
Category |
Note |
09/30/2020 |
|
Level 1 |
|
Level 2 |
Financial assets: |
|
|
|
|
|
|
|
Cash and cash equivalents |
|
|
|
|
|
|
|
Cash and bank |
Measured at amortized cost |
4.a |
306,784 |
|
306,784 |
|
- |
Financial investments in local currency |
Measured at fair value through other comprehensive income |
4.a |
2,639,355 |
|
- |
|
2,639,355 |
Financial investments in foreign currency |
Measured at fair value through profit or loss |
4.a |
50,194 |
|
50,194 |
|
- |
Financial investments: |
|
|
|
|
|
|
|
Fixed-income securities and funds in local currency |
Measured at fair value through profit or loss |
4.b |
2,847,119 |
|
2,847,119 |
|
- |
Fixed-income securities and funds in local currency |
Measured at fair value through other comprehensive income |
4.b |
147,874 |
|
- |
|
147,874 |
Fixed-income securities and funds in local currency |
Measured at amortized cost |
4.b |
78,368 |
|
- |
|
78,368 |
Fixed-income securities and funds in foreign currency |
Measured at fair value through other comprehensive income |
4.b |
2,425,276 |
|
953,013 |
|
1,472,263 |
Currency and interest rate hedging and commodities instruments |
Measured at fair value through profit or loss |
4.b |
1,302,819 |
|
- |
|
1,302,819 |
Trade Receivables |
Measured at amortized cost |
5.a |
3,372,613 |
|
- |
|
3,372,613 |
Reseller Financing |
Measured at amortized cost |
5.b |
923,359 |
|
- |
|
923,359 |
Total |
|
|
14,093,761 |
|
4,157,110 |
|
9,936,651 |
Financial liabilities: |
|
|
|
|
|
|
|
Financing |
Measured at fair value through profit or loss |
16.a |
1,409,575 |
|
- |
|
1,409,575 |
Financing |
Measured at amortized cost |
16.a |
10,687,310 |
|
7,995,113 |
|
2,692,197 |
Debentures |
Measured at amortized cost |
16.a |
5,331,188 |
|
- |
|
5,331,188 |
Debentures |
Measured at fair value through profit or loss |
16.a |
1,065,279 |
|
- |
|
1,065,279 |
Leases payable |
Measured at amortized cost |
13 |
1,831,773 |
|
- |
|
1,831,773 |
Commodities, currency and interest rate hedging instruments |
Measured at fair value through profit or loss |
16.a |
143,986 |
|
- |
|
143,986 |
Trade payables |
Measured at amortized cost |
17 |
3,422,092 |
|
- |
|
3,422,092 |
Subscription warrants – indemnification (1) |
Measured at fair value through profit or loss |
24 |
70,481 |
|
- |
|
70,481 |
Total |
|
|
23,961,684 |
|
7,995,113 |
|
15,966,571 |
Ultrapar Participações S.A. and Subsidiaries
Notes to the Parent’s Separate and Consolidated Interim Financial Information
(In thousands of Brazilian Reais, unless otherwise stated)
|
Category |
Note |
12/31/2019 |
|
Level 1 |
|
Level 2 |
Financial assets: |
|
|
|
|
|
|
|
Cash and cash equivalents |
|
|
|
|
|
|
|
Cash and bank |
Measured at amortized cost |
4.a |
284,992 |
|
284,992 |
|
- |
Financial investments in local currency |
Measured at fair value through other comprehensive income |
4.a |
1,780,939 |
|
- |
|
1,780,939 |
Financial investments in foreign currency |
Measured at fair value through profit or loss |
4.a |
49,448 |
|
49,448 |
|
- |
Financial investments: |
|
|
|
|
|
|
|
Fixed-income securities and funds in local currency |
Measured at fair value through profit or loss |
4.b |
1,937,967 |
|
1,937,967 |
|
- |
Fixed-income securities and funds in local currency |
Measured at fair value through other comprehensive income |
4.b |
595,816 |
|
- |
|
595,816 |
Fixed-income securities and funds in local currency |
Measured at amortized cost |
4.b |
76,904 |
|
- |
|
76,904 |
Fixed-income securities and funds in foreign currency |
Measured at fair value through other comprehensive income |
4.b |
303,417 |
|
18,985 |
|
284,432 |
Currency and interest rate hedging and commodities instruments |
Measured at fair value through profit or loss |
4.b |
682,615 |
|
- |
|
682,615 |
Trade Receivables |
Measured at amortized cost |
5.a |
3,663,247 |
|
- |
|
3,663,247 |
Reseller Financing |
Measured at amortized cost |
5.b |
839,090 |
|
- |
|
839,090 |
Total |
|
|
10,214,435 |
|
2,291,392 |
|
7,923,043 |
Financial liabilities: |
|
|
|
|
|
|
|
Financing |
Measured at fair value through profit or loss |
16.a |
1,666,092 |
|
- |
|
1,666,092 |
Financing |
Measured at amortized cost |
16.a |
7,268,742 |
|
4,587,932 |
|
2,680,810 |
Debentures |
Measured at amortized cost |
16.a |
5,603,669 |
|
- |
|
5,603,669 |
Debentures |
Measured at fair value through profit or loss |
16.a |
1,030,891 |
|
- |
|
1,030,891 |
Leases payable |
Measured at amortized cost |
13 |
1,588,673 |
|
- |
|
1,588,673 |
Commodities, currency and interest rate hedging instruments |
Measured at fair value through profit or loss |
16.a |
29,985 |
|
- |
|
29,985 |
Trade payables |
Measured at amortized cost |
17 |
2,678,808 |
|
- |
|
2,678,808 |
Subscription warrants – indemnification (1) |
Measured at fair value through profit or loss |
24 |
130,657 |
|
- |
|
130,657 |
Total |
|
|
19,997,517 |
|
4,587,932 |
|
15,409,585 |
(1) Refers to subscription warrants issued by the Company in the Extrafarma acquisition.
The fair value of trade receivables and trade payables are classified as level 2.
Ultrapar Participações S.A. and Subsidiaries
Notes to the Parent’s Separate and Consolidated Interim Financial Information
(In thousands of Brazilian Reais, unless otherwise stated)
k. Sensitivity analysis of derivative financial instruments
The Company and its subsidiaries use derivative financial instruments only to hedge against identified risks and in amounts consistent with the risk (limited to 100% of the identified risk). Thus, for purposes of sensitivity analysis of market risks associated with financial instruments, the Company analyzes the hedging instrument and the hedged item together, as shown on the charts below.
For the sensitivity analysis of foreign exchange hedging instruments as of September 30, 2020 and December 31, 2019, management adopted as a base scenario the Real/U.S. dollar exchange rates at maturity of each swap, projected by U.S dollar futures contracts quoted on B3. As a reference, the exchange rate for the last maturity of foreign exchange hedging instruments is R$ 9.62 (R$ 5.76 as of December 31, 2019) in the base scenario. Scenarios II and III were estimated with a 25% and 50% additional appreciation or depreciation of the Brazilian Real against the base scenario, according to the risk to which the hedged item is exposed.
Based on the balances of the hedging instruments and hedged items as of September 30, 2020 and December 31, 2019, the exchange rates were replaced, and the changes between the new balance in Brazilian Reais and the original balance in Brazilian Reais were calculated in each of the three scenarios. The table below shows the change in the values of the main derivative instruments and their hedged items, considering the changes in the exchange rate in the different scenarios:
09/30/2020 |
Risk |
Scenario I Base |
|
Scenario II |
|
Scenario III |
Currency swaps receivable in U.S. dollars |
|
|
|
|
|
|
(1) U.S. Dollar / Real swaps |
Dollar appreciation
|
1,300,263 |
|
2,409,286 |
|
3,518,309 |
(2) Debts / firm commitments in dollars |
(1,300,260) |
|
(2,409,256) |
|
(3,518,252) |
|
(1)+(2) |
Net effect |
3 |
|
30 |
|
57 |
Currency swaps payable in U.S. dollars |
|
|
|
|
|
|
(3) Real / U.S. Dollar swaps |
Dollar devaluation |
532 |
|
(440,746) |
|
(882,024) |
(4) Gross margin of Oxiteno/Ipiranga |
(532) |
|
440,746 |
|
882,024 |
|
(3)+(4) |
Net effect |
- |
|
- |
|
- |
Options |
|
|
|
|
|
|
(5) Options Real / U.S. Dollar swaps |
Dollar devaluation |
(127,899) |
|
- |
|
111,378 |
(6) Gross margin of Oxiteno |
127,899 |
|
- |
|
(111,378) |
|
(5)+(6) |
Net effect |
- |
|
- |
|
- |
Ultrapar Participações S.A. and Subsidiaries
Notes to the Parent’s Separate and Consolidated Interim Financial Information
(In thousands of Brazilian Reais, unless otherwise stated)
12/31/2019 |
Risk |
Scenario I Base |
|
Scenario II |
|
Scenario III |
Currency swaps receivable in U.S. dollars |
|
|
|
|
|
|
(1) U.S. Dollar / Real swaps |
Dollar appreciation
|
700,499 |
|
1,668,202 |
|
2,635,905 |
(2) Debts / firm commitments in dollars |
(700,465) |
|
(1,668,031) |
|
(2,635,596) |
|
(1)+(2) |
Net effect |
34 |
|
172 |
|
309 |
Currency swaps payable in U.S. dollars |
|
|
|
|
|
|
(3) Real / U.S. Dollar swaps |
Dollar devaluation |
376 |
|
62,559 |
|
124,742 |
(4) Gross margin of Oxiteno |
(376) |
|
(62,559) |
|
(124,742) |
|
(3)+(4) |
Net effect |
- |
|
- |
|
- |
Options |
|
|
|
|
|
|
(5) Options Real / U.S. Dollar swaps |
Dollar devaluation |
- |
|
42,101 |
|
102,917 |
(6) Gross margin of Oxiteno |
- |
|
(42,101) |
|
(102,917) |
|
(5)+(6) |
Net effect |
- |
|
- |
|
- |
For sensitivity analysis of hedging instruments for interest rates in Brazilian Reais as of September 30, 2020 and December 31, 2019, the Company used the futures curve of the DI x Pre contract quoted on B3 as of September 30, 2020 for each of the swap and debt (hedged item) maturities, to determine the base scenario. Scenarios II and III were estimated based on a 25% and 50% deterioration, respectively, of the base scenario pre-fixed interest rate.
Based on the three scenarios of interest rates in Brazilian Reais, the Company estimated the values of its debt and hedging instruments according to the risk which is being hedged (variations in the pre-fixed interest rates in Brazilian Reais), by projecting them to future value at the contracted rates and bringing them to present value at the interest rates of the estimated scenarios. The results are shown in the table below:
09/30/2020 |
Risk |
Scenario I Base |
|
Scenario II |
|
Scenario III |
Interest rate swap (Real) – Debentures - CRA |
|
|
|
|
|
|
(1) Fixed rate swap - DI |
Decrease in Pre-fixed rate |
(4,688) |
|
(231,204) |
|
(181,254) |
(2) Fixed rate debt |
4,688 |
|
231,204 |
|
181,254 |
|
(1)+(2) |
Net effect |
- |
|
- |
|
- |
12/31/2019 |
Risk |
Scenario I Base |
|
Scenario II |
|
Scenario III |
Interest rate swap (Real) – Debentures - CRA |
|
|
|
|
|
|
(1) Fixed rate swap - DI |
Decrease in Pre-fixed rate |
(195,123) |
|
(137,260) |
|
(74,027) |
(2) Fixed rate debt |
195,123 |
|
137,260 |
|
74,027 |
|
(1)+(2) |
Net effect |
- |
|
- |
|
- |
Ultrapar Participações S.A. and Subsidiaries
Notes to the Parent’s Separate and Consolidated Interim Financial Information
(In thousands of Brazilian Reais, unless otherwise stated)
For the sensitivity analysis of the commodity price swings hedging instruments on September 30, 2020 and December 31, 2019, the Company used the futures heating oil and gasoline (RBOB) contracts quoted on NYMEX. Scenarios II and III were estimated based on 25% and 50% deterioration, respectively, of the base scenario commodity price.
Based on the balances of the hedging instruments and the objects hedged on September 30, 2020 and December 31, 2019, prices were substituted and the variations between the new balance in Reais and the balance in Reais in the report date were calculated in each of the three scenarios. The table below shows the variation of the amounts of the derivative instruments and their objects of hedge, considering the variations in commodity prices in the different scenarios:
09/30/2020 |
Risk |
Scenario I Base |
|
Scenario II |
|
Scenario III |
NDF Commodities |
|
|
|
|
|
|
(1) NDF Commodities |
Decrease in Commodities Price |
- |
|
1,118,378 |
|
2,236,757 |
(2) Gross margin from Ipiranga |
- |
|
(1,118,378) |
|
(2,236,757) |
|
(1)+(2) |
Net effect |
- |
|
- |
|
- |
12/31/2019 |
Risk |
Scenario I Base |
|
Scenario II |
|
Scenario III |
NDF Commodities |
|
|
|
|
|
|
(1) NDF Commodities |
Decrease in Commodities Price |
100,542 |
|
1,490,893 |
|
2,881,245 |
(2) Gross margin from Ipiranga |
(100,542) |
|
(1,490,893) |
|
(2,881,245) |
|
(1)+(2) |
Net effect |
- |
|
- |
|
- |
a. Contracts
a.1 Subsidiary Tequimar has agreements with CODEBA, with the Complexo Industrial Portuário Governador Eraldo Gueiros and with the company Empresa Maranhense de Administração Portuária, in connection with its port facilities in Aratu, Suape and Itaqui, respectively. Such agreements establish a minimum cargo movement of products, as shown below:
Port |
Minimum movement per year |
Maturity |
Aratu |
900,000 ton. |
2022 |
Suape |
250,000 ton. |
2027 |
Suape |
400,000 ton. |
2029 |
Aratu |
397,000 ton. |
2031 |
Itaqui |
1,222,377 m³ |
2049 |
If the annual movement is less than the minimum contractual movement, the subsidiary is liable to pay the difference between the effective movement and the minimum contractual movement, based on the port tariff rates in effect on the date established for payment. As of September 30, 2020, these rates were R$ 8.37 and R$ 2.67 per ton for Aratu and Suape, respectively and R$ 0.78 per m³ for Itaqui. According to contractual conditions and tolerances, there are not material pending issues regarding the minimum purchase limitsof the contract.
Ultrapar Participações S.A. and Subsidiaries
Notes to the Parent’s Separate and Consolidated Interim Financial Information
(In thousands of Brazilian Reais, unless otherwise stated)
a.2 Subsidiary Oxiteno S.A. has a supply agreement with Braskem S.A. which establishes and regulates the conditions for the supply of ethylene to Oxiteno based on the international market for this product. These contracts establish a minimum commitment to according to the table below:
Plant |
Minimum purchase (tons) per year |
Maturity |
Camaçari |
205,000 |
2021 |
Mauá |
44,100 |
2023 |
Should the minimum purchase commitment not be met, the subsidiary would be liable for a fine based on the current ethylene price for the quantity not purchased. According to contractual conditions and tolerances, there are no material issues regarding the minimum purchase commitment.
b. Insurance coverage
The Company is supported by insurance policies with the objective of covering several risks to which it is exposed, including loss of profits, losses and damage from fire, lightning, explosion of any kind, gale, aircraft crash, electric damage, and other risks, covering the industrial plants and distribution bases and branches of all subsidiaries. The maximum compensation values based on the risk analysis of certain locations are shown below:
|
Maximum compensation value (*) |
|
Oxiteno |
US$ 1,142 |
(equivalent to R$ 6,442 milion as of 09/30/2020) |
Ipiranga |
R$ 1,530 |
|
Ultracargo |
R$ 1,000 |
|
Ultragaz |
R$ 272 |
|
Extrafarma |
R$ 160 |
|
(*) In millions. In accordance with policy conditions.
The General Liability Insurance program covers the Company and its subsidiaries with a maximum aggregate coverage of US$ 400 million (equivalent to R$ 2,256 million as of September 30, 2020), against losses caused to third parties as a result of accidents related to commercial and industrial operations and/or distribution and sale of products and services.
The Company maintains liability insurance policies for directors and executive officers to indemnify the members of the Board of Directors, fiscal council, directors and executive officers of Ultrapar and its subsidiaries (“Insured”) in the total amount of US$ 80 million (equivalent to R$ 451 million as of September 30, 2020), which cover any of the Insured liabilities resulting from wrongful acts, including any act or omission committed or attempted, except if the act, omission or the claim is consequence of gross negligence or willful misconduct.
In addition, group life and personal accident, health and national and international transportation, cyber risks and other insurance policies are also maintained.
The coverage and limit of the insurance policies are based on a careful study of risks and losses conducted by independent insurance advisors. The type of insurance is considered by management to be sufficient to cover potential losses based on the nature of the business conducted by the companies.
Ultrapar Participações S.A. and Subsidiaries
Notes to the Parent’s Separate and Consolidated Interim Financial Information
(In thousands of Brazilian Reais, unless otherwise stated)
c. Area port lease
On March 22, 2019, Ultrapar, through its subsidiary IPP, won the port concessions of three areas with minimum storage capacity of 64 thousand m³ located at the port of Cabedelo, in the state of Paraíba, and one area with minimum storage capacity of 66 thousand m³ at the port of Vitória, in the state of Espírito Santo, which will be designated for handling, storage and distribution of fuels. These concessions were carried out by two consortiums of which IPP holds one third of the total participation. For the port of Cabedelo, the companies Nordeste Logística I, Nordeste Logística II and Nordeste Logística III were incorporated, in partnership with Raízen Combustível S.A. and Petrobrás Distribuidora S.A. For the port of Vitória, the company Navegantes was incorporated, in partnership with Raízen Combustível S.A. and Petrobrás Distribuidora S.A. The total investments regarding IPP’s stake sums up to R$160 million for a concession term of 25 years.
On April 5, 2019, Company, through its subsidiary IPP and Tequimar, also won three concessions. IPP won two concessions in the port of Miramar, in Belém, state of Pará: (i) area BEL02A, through a consortium 50% owned by IPP,that shall have minimum storage capacity of 41 thousand m³, and (ii) area BEL04, which is currently operated by IPP with minimum storage capacity of 23 thousand m³. Such areas will be operated for at least 15 years, according to the auction notice. For the area BEL02A, Latitude was incorporated, together with Petróleo Sabbá S.A.. Tequimar won the concession of area VDC12 in the port of Vila do Conde, in Barcarena, state of Pará. The minimum storage capacity will be 59 thousand m³. The area will be operated by Tequimar for at least 25 years, according to the auction notice. For the area VDC12, Tequimar Vila do Conde Logística Portuária S.A. was incorporated (see Note 3.b). The estimated investments regarding the participation of IPP and Tequimar sums up to R$ 450 million, approximately, to be disbursed throughout the next five years including the auction grants and the minimum investment required for these areas.
São Paulo, November 4, 2020 – Ultrapar Participações S.A. (“Company” or “Ultrapar”, B3: UGPA3 / NYSE: UGP), a company engaged in the Oil & Gas sector through Ipiranga, Ultragaz and Ultracargo, specialty chemicals through Oxiteno and retail pharmacy with Extrafarma, today announces its results for the third quarter 2020.
Net revenues |
Adjusted EBITDA |
Net income |
R$ 21 billion |
R$ 1,038 |
R$ 277 million |
|
|
|
Investments |
Cash flow from operations – 9M20 |
Market cap |
R$ 313 |
R$ 2.6 |
R$ 21 billion |
Highlights
In this quarter, Ultrapar reported EBITDA growth both in relation to the third quarter of 2019 and to the second quarter of 2020, confirming our expectations that the worst moment of the crisis is behind. Our emergency measures and quick response to the first effects of the crisis, combined with initiatives taken to support our value chain, proved effective in maintaining our activities operational, ensuring the delivery of essential services to the population, and preserving the health of our employees.
At Ipiranga, our business most affected by the pandemic, we saw a gradual evolution in sales volumes of fuel during the quarter, as well as an improvement in the operating environment, which contributed to a significant recovery in the results compared to 2Q20. Extrafarma was able to reopen stores in shopping malls, contributing to increased revenues and dilution of costs. Ultragaz posted a recovery in sales volume in the bulk segment, driven by the resumption in industrial activities, while sales to the bottled segment remained resilient and gradually reverting to pre-pandemic levels. Oxiteno reported a similar trend: sales volume recovering for the automotive and coatings segments, while it maintained volume growth for the home and personal care segment. Just as in the second quarter, Ultracargo registered increased product handling and m³ sold compared to the previous quarter.
We maintained a disciplined control over costs and expenses for cash preservation purposes at all our businesses, in addition to selectivity in capital allocation. With this, we saw one more quarter of strong operating cash generation with a reduction in our leverage, reinforcing our commitment to financial soundness and demonstrating the resilience of our portfolio.
As from this quarter, we are including an update section on environmental, social and governance (ESG) themes in this earnings release to share the progress and achievements of Ultrapar and its businesses on these topics, enhancing transparency and fostering the dialog with our stakeholders.
3rd QUARTER 2020 |
Considerations on the financial and operational information |
The financial information presented in this document has been prepared according to International Financial Reporting Standards (IFRS). The financial information of Ultrapar corresponds to the Company’s consolidated information. The information on Ultragaz, Ultracargo, Oxiteno, Ipiranga and Extrafarma is reported without the elimination of intersegment transactions. Therefore, the sum of such information may not correspond to Ultrapar’s consolidated information. Additionally, the financial and operational information presented in this document is subject to rounding and, consequently, the total amounts presented in the tables and charts may differ from the direct sum of the amounts that precede them.
We emphasize that all the financial information shown in this document includes the adoption of the IFRS 16 norm and the segregation of certain expenses pertaining to the Holding.
Information denominated EBITDA – Earnings Before Interest, Taxes on Income and Social Contribution on Net Income, Depreciation and Amortization; Adjusted EBITDA – adjusted for amortization of contractual assets with customers – exclusive rights and cash flow hedge of the bonds; and EBIT – Earnings Before Interest and Taxes on Income and Social Contribution on Net Income are presented in accordance with Instruction 527, issued by the Brazilian Securities and Exchange Commission - CVM on October 4, 2012. The calculation of EBITDA based on net earnings is shown below:
Quarter | Semester | ||||||||||
R$ million | 3Q20 | 3Q19 | 2Q20 | 9M20 | 9M19 | ||||||
Net income | 277.3 | 307.3 | 50.0 | 496.2 | 670.6 | ||||||
(+) Income and social contribution taxes | 163.4 | 140.3 | 56.2 | 356.7 | 397.2 | ||||||
(+) Financial (income) expenses, net | 157.9 | 163.4 | 80.3 | 405.8 | 254.7 | ||||||
(+) Depreciation and amortization | 323.4 | 272.7 | 313.4 | 940.5 | 842.8 | ||||||
EBITDA | 921.9 | 883.8 | 500.0 | 2,199.2 | 2,165.4 | ||||||
Adjustments | |||||||||||
(+) Amortization of contractual assets with customers - exclusive rights (Ipiranga and Ultragaz) | 73.6 | 95.6 | 68.0 | 224.4 | 273.4 | ||||||
(+) Cash flow hedge from bonds | 42.9 | - | 43.1 | 105.6 | - | ||||||
Adjusted EBITDA | 1,038.3 | 979.3 | 611.0 | 2,529.2 | 2,438.8 | ||||||
Non-recurring items | |||||||||||
(+) TAC in Ultracargo | - | 13.0 | - | - | 65.5 | ||||||
(+) Tax credits in Oxiteno | - | - | - | (70.9) | - | ||||||
(+) Tax credits in Ultracargo | - | - | (11.7) | (11.7) | - | ||||||
Adjusted EBITDA ex-non-recurring items | 1,038.3 | 992.3 | 599.3 | 2,446.6 | 2,504.3 |
3rd QUARTER 2020 |
Ultragaz |
|
3Q20 |
3Q19 |
2Q20 |
Δ |
Δ |
9M20 |
9M19 |
Δ |
3Q20 v 3Q19 |
3Q20 v 2Q20 |
9M20 v 9M19 |
||||||
Total volume (000 tons) |
453 |
458 |
432 |
(1%) |
5% |
1,307 |
1,274 |
3% |
Bottled |
309 |
315 |
313 |
(2%) |
(1%) |
909 |
874 |
4% |
Bulk |
144 |
143 |
120 |
1% |
20% |
398 |
400 |
(1%) |
EBITDA (R$ million) |
222 |
187 |
206 |
18% |
8% |
575 |
419 |
37% |
Operational performance – Sales volume at Ultragaz in 3Q20 fell by 1% compared to 3Q19, mainly due to the reduction of 2% in sales to the bottled segment, reflecting lower sales volume to the Southeast region. In the bulk segment, volumes were up by 1%, driven largely by the increase in sales to industries and special gases (propellant), although partially offset by lower demand from commercial and service segments in connection with the pandemic. Compared to 2Q20, sales volume grew by 5%, due to the sales recovery in the bulk segment.
Net revenues – Total of R$ 1,955 million (+3%), mainly due to LPG costs readjustments by Petrobras. Compared to 2Q20, net revenues grew 13% for the same reason mentioned above and due to increased sales volume.
Cost of goods sold – Total of R$ 1,637 million (+2%), largely due to price readjustments of LPG by Petrobras and increases in freight costs, despite lower sales volume, due to the need to source LPG from more distant supply bases. Compared to 2Q20, cost of goods sold increased by 13%, driven by LPG price readjustments and greater sales volume.
Sales, general and administrative expenses – Total of R$ 159 million, stable compared to 3Q19. There was an increase in variable compensation, in line with the earnings progression, and in consultancies for operational efficiency gains. However, these factors were compensated by initiatives implemented for controlling expenses and effects of the pandemic. In relation to 2Q20, sales, general and administrative expenses grew by 16%, reflecting seasonal increases in freight expenditures, higher provisioning for variable compensation and increased expenses with consultancies.
EBITDA – Total of R$ 222 million (+18%), a record quarterly result for Ultragaz, mainly due to the better sales mix and improved operational efficiency. Compared to 2Q20, there was an increase of 8%, due to stronger sales volume, partially offset by higher expenses.
Investments – Ultragaz invested R$ 68 million, allocated largely to the replacement and acquisition of gas bottles, in the setting up of new clients in the bulk segment and operational safety.
3rd QUARTER 2020 |
Ultracargo |
|
3Q20 |
3Q19 |
2Q20 |
Δ |
Δ |
9M20 |
9M19 |
Δ |
3Q20 v 3Q19 |
3Q20 v 2Q20 |
9M20 v 9M19 |
||||||
Installed capacity¹ (000 m³) |
838 |
753 |
832 |
11% |
1% |
831 |
717 |
16% |
m³ sold (000 m³) |
3,062 |
2,676 |
2,963 |
14% |
3% |
9,174 |
7,819 |
17% |
EBITDA ex-non-recurring items² (R$ million) |
78 |
58 |
80 |
35% |
(2%) |
249 |
177 |
41% |
EBITDA (R$ million) |
78 |
45 |
92 |
74% |
(14%) |
261 |
111 |
134% |
1Monthly average
² Excluding the effect of the TAC in 2Q19 and 3Q19 and tax credits in 2Q20
Operational performance – Ultracargo’s average installed capacity increased 11% compared to 3Q19, due to the expanded tankage capacity at the terminals in Santos and Itaqui over the last twelve months. Consequently, m³ sold grew by 14%, with greater fuel handling operations and a higher number of spot operations. Compared to 2Q20, there was a 3% increase in m³ sold, mainly due to greater fuel handling activities at the terminals in Itaqui and Suape.
Net revenues – Total of R$ 160 million in 3Q20 (+18%), driven by increased fuel handling, contractual readjustments, new agreements and spot operations. In relation to 2Q20, net revenues were up 3%, due to increased fuel handling at the Itaqui and Suape terminals, partially offset by reduced sales at the Aratu terminal.
Cost of services provided – Total of R$ 68 million (-1%), due to lower maintenance and payroll costs, attenuated by increased costs with insurance policies, which have also increased in scope. The cost of services provided per m³ sold posted a reduction of 13%, an even greater improvement in productivity than that recorded in the last quarter. Compared to 2Q20, the cost of services provided was up by 4%, mainly due to higher expenditure with insurance policies and indemnities, but in line when related to m³ sold.
Sales, general and administrative expenses – Total of R$ 35 million (+9%), due to increased payroll expenses and to information systems for reinforcing Ultracargo’s technological platform. In relation to 2Q20, the increase was 22%, a result of higher expenses with information systems, payroll and consultancy.
Other operating results – An improvement of R$ 9 million compared to 3Q19, mainly due to the additional amount of R$ 13 million complementary to the Conduct Adjustment Agreement (“TAC”) booked in 3Q19. Compared to 2Q20, there was a decrease of R$ 11 million, due to non-recurring PIS/Cofins tax credits reported in the previous quarter.
EBITDA – Total of R$ 78 million. Excluding the effect of the TAC in 3Q19, Ultracargo posted an increase of 35%, as a result of increased handling of products enabled by the expanded capacity and to efficiency gains at the terminals, as well as contractual readjustments and improved productivity. In relation to 2Q20, excluding the non-recurring effect of the PIS/Cofins tax credits, EBITDA was 2% lower, mainly due to an increase in expenses.
Investments – Ultracargo recorded investments in the period of R$ 70 million, mainly allocated to the beginning of the construction of the new Vila do Conde terminal (state of Pará), the acquisition of land in Santos and expansion at the Itaqui terminal.
3rd QUARTER 2020 |
Oxiteno |
|
3Q20 |
3Q19 |
2Q20 |
Δ |
Δ |
9M20 |
9M19 |
Δ |
3Q20 v 3Q19 |
3Q20 v 2Q20 |
9M20 v 9M19 |
||||||
Average exchange rate (R$/US$) |
5.38 |
3.97 |
5.39 |
35% |
0% |
5.08 |
3.89 |
31% |
Total volume (000 tons) |
202 |
195 |
166 |
4% |
22% |
549 |
559 |
(2%) |
Commodities |
37 |
42 |
28 |
(13%) |
33% |
97 |
112 |
(14%) |
Specialty chemicals/others |
166 |
153 |
139 |
8% |
19% |
453 |
447 |
1% |
Sales in Brazil |
143 |
147 |
111 |
(3%) |
29% |
381 |
403 |
(5%) |
International sales |
60 |
49 |
56 |
23% |
7% |
169 |
156 |
8% |
EBITDA ex-non-recurring¹ (R$ million) |
169 |
80 |
162 |
110% |
5% |
452 |
165 |
174% |
EBITDA (R$ million) |
169 |
80 |
162 |
110% |
5% |
523 |
165 |
217% |
¹Excluding tax credits in 1Q20
Operational performance – Specialty chemicals volume grew 8% compared to 3Q19, boosted by robust sales in the home and personal care segment in the domestic market, a trend seen since 2Q20, by an increase of sales from the United States plant (+41%) and by higher exports. Commodity volumes decreased 13%, due to lower market demand. In relation to 2Q20, total volume rose by 22%, mainly following a recovery of sales in the automotive fluids and coatings segments.
Net revenues – Total of R$ 1,425 million (+27%), due to an average devaluation of 35% of the Real (R$ 1.41/US$) and an increase in sales volume, offset by the reduction of 7% in average prices in dollars. Compared to 2Q20, net revenues increased by 19%, as a result of greater sales volume and despite the reduction of 3% in average prices in dollars.
Cost of goods sold – Total of R$ 1,152 million (+27%), due to an average devaluation of 35% of the Real (R$ 1.41/US$) and increased sales volume, partially offset by the reduction of 10% in the cost of goods sold in dollars per ton. In relation to 2Q20, the cost of goods sold was up by 18%, a result of higher sales volume, partially offset by the reduction of 3% in the cost of goods sold in dollars per ton.
Sales, general and administrative expenses – Total of R$ 219 million (+20%), due to the foreign exchange translation effect of the international units, besides increased freight expenses (due to greater sales volume, exports and storage) and variable compensation, in line with the earnings progression. Compared to 2Q20, sales, general and administrative expenses were up by 22%, for the same reasons described previously, in addition to the effects of the initiatives to contain expenses adopted in the second quarter 2020.
EBITDA – Total of R$ 169 million (+110%), in light of increased sales volume, the ramp up of the plant in the United States and the 35% devaluation of the average Real (R$ 1.41/US$), partially offset by the increase in expenses. In relation to 2Q20, EBITDA was 5% higher, due to greater sales volume, despite the lower unitary margin in dollars per ton.
Investments – Investments in the period were R$ 39 million, mainly spent in maintenance CAPEX, operational continuity and safety at the manufacturing units.
3rd QUARTER 2020 |
Ipiranga |
|
3Q20 |
3Q19 |
2Q20 |
Δ |
Δ |
9M20 |
9M19 |
Δ |
3Q20 v 3Q19 |
3Q20 v 2Q20 |
9M20 v 9M19 |
||||||
Total volume (000 m³) |
5,530 |
6,185 |
4,626 |
(11%) |
20% |
15,646 |
17,382 |
(10%) |
Diesel |
2,999 |
3,167 |
2,582 |
(5%) |
16% |
8,303 |
8,628 |
(4%) |
Otto cycle |
2,421 |
2,903 |
1,958 |
(17%) |
24% |
7,048 |
8,434 |
(16%) |
Others¹ |
110 |
115 |
86 |
(5%) |
28% |
295 |
319 |
(8%) |
EBITDA (R$ million) |
566 |
679 |
179 |
(17%) |
217% |
1,224 |
1,787 |
(31%) |
¹ Fuel oils, arla 32, kerosene, lubricants and greases
Operational performance – Ipiranga reported a reduction of 11% in sales volume in relation to 3Q19, due to the major impact of the pandemic on fuel consumption in Brazil since the end of March. Otto cycle was the most affected segment and registered a 17% reduction in volume in the quarter, while diesel volume was down by 5%. Despite the decrease compared to the previous year, Ipiranga posted a 20% improvement in volumes compared to 2Q20, with the Otto cycle recovering by 24% and diesel by 16%, thanks to a gradual improvement in demand over the months.
Net revenues – Total of R$ 16,767 million (-14%), mainly due to lower sales volume. In relation to 2Q20, net revenues grew by 36%, reflecting the gradual recovery in volume and price readjustments by Petrobras.
Cost of goods sold – Total of R$ 15,956 million (-15%), largely due to lower sales volume. Compared to 2Q20, there was an increase of 33%, due to the increase in sales volume and the price readjustments by Petrobras.
Sales, general and administrative expenses – Total of R$ 407 million (-12%), mainly reflecting the reduction in expenses with payroll, freight (lower sales volume) and the reversal of provisions for doubtful accounts. Compared to 2Q20, there was an increase of 12% in sales, general and administrative expenses, due to higher freight expenses (greater sales volumes) and the recovery of recurring levels for some of the expenses reduced in the previous quarter.
Other operating results – Total of a negative R$ 46 million, a reduction of R$ 91 million compared to the same period of 2019, due to the cost relative to the RenovaBio program of R$ 66 million in 3Q20 and non-recurring PIS/Cofins tax credits of R$ 32 million in 3Q19.
Disposal of property – Total of R$ 13 million, due to the sale of real estate properties in the period.
EBITDA – Total of R$ 566 million (-17%), in light of lower sales volume and other operating results, partially offset by the reduction in expenses. Compared to 2Q20, there was an increase of 217%, driven by a gradual recovery in volume and an improvement in margins.
Investments – Ipiranga invested R$ 109 million in the expansion and maintenance of the service stations and franchise networks and in the company’s logistics infrastructure. Out of the total investments, R$ 36 million was expended on plant, property and equipment and additions to intangible assets, R$ 60 million on contractual assets with clients (exclusivity rights) and R$ 13 million in the form of drawdowns of financing to clients and advanced payments of rentals, net of receipts. Ipiranga ended 3Q20 with 7,107 service stations, practically in line with the number in 2Q20.
AmPm – As from 2019, a comprehensive project for reviewing the AmPm’s business and management model has begun. The first stage involved the revision of the physical store with a new layout to provide the consumer with a more fluid and intuitive experience and a larger area for consuming products instore, in an even more pleasant ambience. In addition, AmPm created a digital section in the Abastece Aí application, as well as proprietary solutions via WhatsApp and QR Code and developed partnerships with the leading delivery platforms.
The second stage of the project involved the revision of brand positioning, exploring proximity marketing concepts and new habits of consumption, combined with a review of the product mix, expanding the offer of food service (bakeries and ready-to-eat meals), groceries and home and personal care products.
Early findings of this new model have been promising, with higher sales and better margins. To ensure the feasibility of implementing the rollout of the new model, a careful revision of those stores remaining under the AmPm brand name has been undertaken based on aspects as size, location and profitability. Under this revision AmPm identified 486 stores not suitable to the new business model. In addition, 81 stores ceased its activities during the pandemic. Therefore, the AmPm network ended 3Q20 with 1,778 units.
3rd QUARTER 2020 |
Extrafarma |
|
3Q20 |
3Q19 |
2Q20 |
Δ |
Δ |
9M20 |
9M19 |
Δ |
3Q20 v 3Q19 |
3Q20 v 2Q20 |
9M20 v 9M19 |
||||||
Drugstores (end of period) |
408 |
423 |
410 |
(4%) |
0% |
408 |
423 |
(4%) |
% mature stores (+3 years) |
68% |
51% |
62% |
16.6 p.p. |
5.2 p.p. |
68% |
51% |
16.6 p.p. |
Gross revenues (R$ million) |
523 |
541 |
515 |
(3%) |
2% |
1,558 |
1,646 |
(5%) |
EBITDA (R$ million) |
28 |
18 |
14 |
52% |
103% |
50 |
38 |
34% |
Operational performance – Extrafarma ended 3Q20 with 408 stores, 8 store openings and 23 closures in the past twelve months, a reduction of 4% in its network, and the result of greater selectivity in expansion and a more rigorous approach to underperforming stores. Over the course of 3Q20, the stores located in shopping malls resumed operations, although with limitations on opening hours and with customer flow still below pre-pandemic levels. At the end of 3Q20, stores still ramping-up (with up to three years of operations) represented 32% of the network.
Gross revenues – Total of R$ 523 million (-3%), due to the lower number of stores (-4%) and reduced customer flow in stores based in shopping malls, attenuated by higher same-store-sales excluding stores located in malls (+3%), driven by the annual readjustment in medicine prices and by expanded sales through digital channels. In relation to 2Q20, gross revenues registered a growth of 2%, due to the gradual resumption of mall-based store operations during the pandemic.
Cost of goods sold and gross profit – The cost of goods sold totaled R$ 345 million (-5%) due to lower sales. Gross profit reached R$ 147 million (-2%), equivalent to a gross margin of 28.2%, 0.3 p.p. higher than 3Q19, mainly due to the improvement in retail margins, helped by the postponement of the annual readjustment in medicine prices from April to June, and the lower share of sales in the wholesale segment, where margins are lower. Compared to 2Q20, the cost of goods sold increased by 1%, reflecting the recovery in sales, while gross profit rose by 4%, mainly due to the annual readjustment in medicine prices.
Sales, general and administrative expenses – Total of R$ 159 million (-14%) due to the lower number of stores, expense reduction initiatives, productivity gains and logistics optimization. Compared to the preceding quarter, sales, general and administrative expenses decreased by 3%, resulting from lower payroll expenses.
Other operating results – Reduction of R$ 15 million in relation to 3Q19, mainly due to extraordinary credits from PIS/COFINS taxes and from social security contributions registered in 3Q19.
EBITDA – Total of R$ 28 million (+52%), despite the decline of 3% in sales and extraordinary tax credits in 3Q19. This growth is a consequence of (i) the closure of underperforming stores and higher profitability from the existing network, (ii) initiatives to increase productivity and reduce expenses and (iii) improved margins. Compared to 2Q20, the growth was 103%, mainly reflecting a recovery in sales, the annual readjustment in medicine prices and measures taken to reduce expenses and increase productivity.
Investments – In 3Q20, Extrafarma invested R$ 10 million, largely in the construction of the distribution center in the state of Maranhão, scheduled to be concluded at the end of 2020, in IT and store maintenance.
3rd QUARTER 2020 |
Ultrapar |
Amounts in R$ million |
3Q20 |
3Q19 |
2Q20 |
Δ |
Δ |
9M20 |
9M19 |
Δ |
3Q20 v 3Q19 |
3Q20 v 2Q20 |
9M20 v 9M19 |
||||||
Net revenues |
20,762 |
23,203 |
15,876 |
(11%) |
31% |
58,025 |
65,635 |
(12%) |
Net income |
277 |
307 |
50 |
(10%) |
n/a |
496 |
671 |
(26%) |
Earnings per share attributable to shareholders² |
0.24 |
0.27 |
0.04 |
(11%) |
n/a |
0.43 |
0.59 |
(27%) |
EBITDA ex-non-recurring¹ |
1,038 |
992 |
599 |
5% |
73% |
2,447 |
2,504 |
(2%) |
Adjusted EBITDA |
1,038 |
979 |
611 |
6% |
70% |
2,529 |
2,439 |
4% |
Investments |
313 |
472 |
361 |
(34%) |
(13%) |
1,024 |
1,076 |
(5%) |
Operating cash flow |
828 |
922 |
871 |
(10%) |
(5%) |
2,630 |
2,449 |
7% |
¹ Excludes the effect of the TAC of Ultracargo in 2Q19 and 3Q19, tax credits at Oxiteno in 1Q20 and at tax credits at Ultracargo in 2Q20
² Calculated in Reais based on the weighted average number of shares over the period, net of shares held as treasury
Net revenues – Total of R$ 20,762 million (-11%), mainly due to the decrease in net revenues at Ipiranga impacted by the pandemic. In relation to 2Q20, net revenues increased by 31%, due to higher sales at all the businesses.
Adjusted EBITDA – Total of R$ 1,038 million (+6%), due to EBITDA growth at Oxiteno, Ultragaz, Ultracargo and Extrafarma. Compared to 2Q20, there was an increase of 70%, principally due to the recovery in results at Ipiranga.
Depreciation and amortization3 – Total of R$ 397 million (+8%), the result of greater amortization of software, vehicles and investments executed over the past twelve months. In relation to 2Q20, total costs and expenses with depreciation and amortization increased 4%, due to increased amortization of contractual assets with clients at Ipiranga and vehicles.
Financial result – Ultrapar recorded a net financial expense of R$ 158 million in 3Q20, a slight improvement of R$ 6 million in relation to 3Q19, mainly due to the decrease in interest rates, in spite of higher net debt, greater carrying costs of the gross debt and the concentration of expenses with the mark to market of interest rates. Compared to 2Q20, there was an increase of 97%, due to higher interest expenses on debt, as mentioned above, and to a worsening result of exchange rate variation quarter on quarter.
Net income – Total of R$ 277 million (-10%), as a result of higher costs and expenses with depreciation and amortization and income tax, as well as the negative result of the cash flow hedge from bonds in 3Q20. In relation to 2Q20, net income registered an increase of R$ 227 million, due to the EBITDA growth, partially offset by an increase in financial expenses.
Cash flow from operational activities – Cash generation of R$ 2,630 million in 9M20 compared to R$ 2,449 million in 9M19, mainly due to greater divestment in working capital and to the increased EBITDA in the period.
Results from the Holding, affiliates and abastece aí – In addition to the five principal businesses, Ultrapar recorded a negative impact on its EBITDA of R$ 25 million, comprised of (i) R$ 20 million of the Holding’s expenses and (ii) R$ 6 million of negative EBITDA from abastece aí (new digital payment business), due to payroll and technology expenses for the structuring and growth of the business, partially offset by (iii) R$ 2 million of positive EBITDA with affiliates.
³ Includes amortization of contractual assets with clients – exclusive rights
135 |
3rd QUARTER 2020 |
Updates on ESG themes |
Oxiteno became a company member of UN’s Global Compact (Ultragaz and Ipiranga were already signatories), an initiative aligned with its Strategic Sustainability Plan of 2030, based on eight pillars that balance economic prosperity, environmental protection and attendance of the society needs. Another achievement of Oxiteno this quarter was to become the first Brazilian chemical company to establish a partnership with EcoVadis, a global leader player in sustainability assessment, aiming to boost sustainable practices along its entire supply chain.
In August, Ipiranga launched its new Sustainability Policy aligned with the principles established by the UN’s Global Compact and Sustainable Development Goals (SDGs). The policy includes new strategic guidelines for sustainability with orientation for acting in material themes such as urban mobility, climate change and ecoefficiency, aiming to generate and protect the value of the business over the long term, applied along its entire value chain. The preparation of the policy arose from a materiality assessment carried out by Ipiranga in 2019 with its stakeholders and the inhouse launch was accompanied by a new visual identity, as well as online events promoted by Ipiranga’s executives and think-tanks in the sector. The policy is available for consultation on Company’s Investor Relations website.
In addition, Ipiranga established a partnership with GDSolar for building and operating five solar energy/photovoltaic power plants to reduce electricity costs in its service stations and franchises and increase the share of renewable energy sources in its energy matrix. The forecast is to generate more than 50 thousand MWh/year from April 2021, sufficient energy to supply approximately 300 service stations with savings of up to 15% in cost of electric energy, totaling an economy of more than R$ 70 million annually in the participating network.
As from September, the Company’s Board of Directors is composed of eleven members with the election of Alexandre Saigh, cofounder and a member of the Executive Committee of Pátria Investimentos. Saigh has a vast experience in portfolio management, infrastructure and capital allocation, themes which are on Ultrapar’s strategic agenda.
In the same month, the Board of Directors elected Rodrigo Pizzinatto as Chief Financial and Investor Relations Officer. Rodrigo Pizzinatto has had a long career of 21 years in the Ultra Group, where he started as an intern, working in several financial areas such as Treasury, M&A, Corporate Planning and IR. In the past years he has been a member of the Executive Board of Extrafarma, where he held the position of Chief Executive Officer between June 2018 and October 2020.
In October, Marcelo Bazzali was elected as Chief Executive Officer of Extrafarma. Bazzali built a solid career of over 25 years in retail, including leadership positions in operations, marketing, commercial, e-commerce and business management in Grupo Pão de Açúcar.
3rd QUARTER 2020 |
Capital markets |
Ultrapar’s combined average daily trading volume on B3 and NYSE totaled R$ 169 million/day in 3Q20 (+19% YoY). Ultrapar’s shares closed the quarter quoted at R$ 19.27 on B3, an appreciation of 5% in the quarter, while the Ibovespa stock index remained stable over the same period. In NYSE, Ultrapar’s shares posted an appreciation of 1% in 3Q20, while the Dow Jones stock index registered growth of 8%. Ultrapar closed 3Q20 with a market cap of R$ 21 billion.
Capital markets |
3Q20 |
3Q19 |
2Q20 |
9M20 |
9M19 |
Number of shares (000) |
1,115,006 |
1,112,810 |
1,114,919 |
1,115,006 |
1,112,810 |
Market capitalization¹ (R$ million) |
21,486 |
20,576 |
20,492 |
21,486 |
20,576 |
B3 |
|
|
|
|
|
Average daily trading volume (000 shares) |
7,415 |
6,562 |
9,136 |
8,793 |
5,723 |
Average daily trading volume (R$ 000) |
149,324 |
121,997 |
141,452 |
158,259 |
124,301 |
Average share price (R$/share) |
20.14 |
18.59 |
15.48 |
18.00 |
21.72 |
NYSE |
|
|
|
|
|
Quantity of ADRs² (000 ADRs) |
47,480 |
46,518 |
47,480 |
47,480 |
46,518 |
Average daily trading volume (000 ADRs) |
958 |
1,051 |
1,494 |
1,458 |
1,236 |
Average daily trading volume (US$ 000) |
3,594 |
4,887 |
4,341 |
5,639 |
7,286 |
Average share price (US$/ADRs) |
3.76 |
4.65 |
2.91 |
3.88 |
5.90 |
Total |
|
|
|
|
|
Average daily trading volume (000 shares) |
8,373 |
7,612 |
10,630 |
10,251 |
6,958 |
Average daily trading volume (R$ 000) |
168,661 |
141,380 |
164,769 |
185,681 |
152,387 |
¹ Calculated based on the closing share price for the period
² 1 ADR = 1 common share
Performance UGPA3 x Ibovespa – 3Q20
(Jun 30, 2020 = 100)
3rd QUARTER 2020 |
Debt (R$ million) |
Ultrapar consolidated |
3Q20 |
2Q20 |
3Q19 |
Gross debt |
(18,756) |
(17,764) |
(15,069) |
Cash and cash equivalents |
9,798 |
8,448 |
6,439 |
Net debt (ex-IFRS 16) |
(8,958) |
(9,317) |
(8,631) |
Leases payable |
(1,832) |
(1,775) |
(1,568) |
Net debt |
(10,790) |
(11,092) |
(10,199) |
Net debt/LTM Adjusted EBITDA¹ (ex-IFRS 16) |
2.9x |
3.1x |
2.7x |
Net debt/LTM Adjusted EBITDA¹ |
3.1x |
3.2x |
n/a |
Average cost of debt |
193% DI |
141% DI |
99% DI |
DI + 1.9% |
DI + 1.2% |
DI - 0.0% |
|
Average cash yield (% DI) |
68% |
87% |
94% |
Duration (years) |
4.8 |
4.4 |
5.0 |
¹ LTM Adjusted EBITDA excludes the impairment of Extrafarma of R$ 593 million in 2Q20 and in 3Q20
Ultrapar ended 3Q20 with net financial debt of R$ 9.0 billion, comprised of a gross debt of R$ 18.8 billion and a cash position of R$ 9.8 billion. The effect of exchange rate variation on the net debt for the portion of the notes designated for hedge accounting was R$ 93 million in 3Q20. Considering leases payable (IFRS 16) of R$ 1.8 billion, the Company’s total net debt was R$ 10.8 billion (3.1x LTM Adjusted EBITDA) compared to R$ 11.1 billion on June 30, 2020 (3.2x LTM Adjusted EBITDA), mainly due to the improvement in EBITDA.
Maturity profile and debt breakdown:
3rd QUARTER 2020 |
3Q20 Conference Call |
Ultrapar will host a conference call for analysts and investors on November 5, 2020 to comment on the Company’s performance in the third quarter of 2020 and its outlook. The presentation will be available for download in the Company’s website 30 minutes prior to the conference call.
The conference call will be transmitted via WEBCAST and held in Portuguese with simultaneous translation into English. The link for access will be available at ri.ultra.com.br. Please connect 15 minutes in advance.
Conference call in Portuguese with simultaneous translation into English
Time: 11:00 a.m. (BRT) / 9:00 a.m. (EST)
Participants in Brazil: +55 (11) 3181-8565 (HD Web Phone) or +55 (11) 4118-4632
Code: Ultrapar – in Portuguese
Replay: +55 (11) 3193-1012 (available for seven days)
Code: 0785935#
International Participants: +1 (844) 204-8942 (HD Web Phone) or +1 (412) 717-9627
Code: Ultrapar – in English
Replay: +55 (11) 3193-1012 (available for seven days)
Code: 9792937#
3rd QUARTER 2020 |
ULTRAPAR | ||||||
CONSOLIDATED BALANCE SHEET |
||||||
In million of Reais | SEP 20 | SEP 19 | JUN 20 | |||
ASSETS | ||||||
Cash and cash equivalents | 2,996.3 | 2,553.3 | 3,805.2 | |||
Financial investments and hedging instruments | 5,582.7 | 3,339.7 | 3,174.9 | |||
Trade receivables and reseller financing | 3,801.5 | 4,201.0 | 3,505,6 | |||
Inventories | 3,539.6 | 3,285.6 | 2,970.2 | |||
Recoverable taxes | 1,144.6 | 1,303.2 | 1,476.1 | |||
Prepaid expenses | 136.4 | 133.3 | 158.2 | |||
Contractual assets with customers - exclusive rights | 481.1 | 481.5 | 473.0 | |||
Other receivable | 69.4 | 76.6 | 87.3 | |||
Total Current Assets | 17,751.6 | 15,374.2 | 15,650.4 | |||
Financial investments and hedging instruments | 1,218.8 | 545.5 | 1,467.5 | |||
Trade receivables and reseller financing | 515.2 | 389.9 | 470.7 | |||
Deferred income and social contribution taxes | 1,068.2 | 599.9 | 1,016.6 | |||
Recoverable taxes | 1,573.1 | 845.7 | 1,149.1 | |||
Escrow deposits | 952.4 | 920.1 | 949.7 | |||
Prepaid expenses | 79.8 | 94.9 | 87.8 | |||
Contractual assets with customers - exclusive rights | 1,183.4 | 977.6 | 1,127.4 | |||
Other receivables | 197.0 | 196.6 | 197.2 | |||
Investments | 170.3 | 130.6 | 165.8 | |||
Right to use assets | 2,163.0 | 1,945.0 | 2,135.5 | |||
Property, plant and equipment | 7,976.1 | 7,453.7 | 7,899.3 | |||
Intangible assets | 1,762.2 | 2,323.0 | 1,770.5 | |||
Total Non-Current Assets | 18,859.5 | 16,422.6 | 18,437.0 | |||
TOTAL ASSETS | 36,611.2 | 31,796.8 | 34,087.4 | |||
LIABILITIES | ||||||
Loans and hedging instruments | 3,004.4 | 1,131.9 | 2,335.1 | |||
Debentures | 960.1 | 257.4 | 262.1 | |||
Trade payables | 3,447.4 | 2,407.9 | 2,538.3 | |||
Salaries and related charges | 514.0 | 432.1 | 439.1 | |||
Taxes payable | 419.7 | 325.2 | 316.6 | |||
Leases payable | 247.7 | 205.3 | 238.5 | |||
Other payables | 409.9 | 409.0 | 355.3 | |||
Total Current Liabilities | 9,003.1 | 5,168.7 | 6,485.0 | |||
Loans and hedging instruments | 9,240.6 | 7,410.5 | 8,951.8 | |||
Debentures | 5,550.9 | 6,269.4 | 6,215.2 | |||
Provisions for tax, civil and labor risks | 844.6 | 852.5 | 846.7 | |||
Post-employment benefits | 234.4 | 202.3 | 247.1 | |||
Leases payable | 1,584.1 | 1,362.7 | 1,536.7 | |||
Other payables | 326.2 | 457.6 | 297.0 | |||
Total Non-Current Liabilities | 17,780.8 | 16,554.9 | 18,094.5 | |||
TOTAL LIABILITIES | 26,783.9 | 21,723.6 | 24,579.4 | |||
EQUITY | ||||||
Share capital | 5,171.8 | 5,171.8 | 5,171.8 | |||
Reserves | 4,593.8 | 4,646.1 | 4,595.3 | |||
Treasury shares | (489.1) | (485.4) | (485.4) | |||
Other | 147.8 | 355.2 | (163.3) | |||
Non-controlling interests in subsidiaries | 403.0 | 385.6 | 391.6 | |||
Total equity | 9,827.3 | 10,073.2 | 9,508.0 | |||
TOTAL LIABILITIES AND EQUITY | 36,611.2 | 31,796.8 | 34,087.4 | |||
Cash and financial investments | 9,797.8 | 6,438.5 | 8,447.5 | |||
Loans and debentures | (18,755.9) | (15,069.2) | (17.764.2) | |||
Leases payable | (1,831.8) | (1,567.9) | (1,775.3) | |||
Net cash (debt) | (10,789.9) | (10,198.7) | (11,091.9) | |||
Net cash (debt) ex-IFRS 16 | (8,958.1) | (8,630.7) | (9,316.6) |
3rd QUARTER 2020 |
ULTRAPAR | |||||||||
CONSOLIDATED INCOME STATEMENT | |||||||||
In million of Reais | 3Q20 | 3Q19 | 3Q20 | 9M20 | 9M19 | ||||
Net revenue from sales and services | 20,762.1 | 23,203.3 | 15,876.2 | 58,025.5 | 65,635.2 | ||||
Cost of products and services sold | (19,123.3) | (21,580.2) | (14,825.0) | (53,925.5) | (61,161.8) | ||||
Gross profit | 1,638.8 | 1,623.1 | 1,051.2 | 4,099.9 | 4,473.4 | ||||
Operating expenses | |||||||||
Selling and marketing | (630.7) | (613.5) | (608.3) | (1,883.9) | (1,988.5) | ||||
General and administrative | (373.9) | (445.5) | (293.2) | (1,077.0) | (1,245.0) | ||||
Other operating income | (45.9) | 53.2 | 36.2 | 114.2 | 100.0 | ||||
Gain (loss) on disposal of property, plant and equipment and intangibles |
15.0 | 2.0 | 14.0 | 35.9 | (0.9) | ||||
Operating income (loss) | 603.3 | 619.3 | 199.8 | 1,289.2 | 1,340.8 | ||||
Financial result | |||||||||
Financial income | 71.6 | 125.6 | 53.1 | 306.8 | 401.9 | ||||
Financial expenses | (299.5) | (289.0) | (133.4) | (712.6) | (656.6) | ||||
Share of profit (loss) of subsidiaries, joint ventures and associates |
(4.8) | (8.2) | (13.3) | (30.5) | (18.3) | ||||
Income before income and social contribution taxes |
440.7 | 447.6 | 106.2 | 852.9 | 1,067.8 | ||||
Provision for income and social contribution taxes |
|||||||||
Current | (250.2) | (58.7) | (130.7) | (460.1) | (337.6) | ||||
Deferred | 20.5 | (93.1) | 55.1 | 46.8 | (90.5) | ||||
Benefit of tax holidays | 21.3 | 11.4 | 19.3 | 56.6 | 30.9 | ||||
Net income | 277.3 | 307.3 | 50.0 | 496.2 | 670.6 | ||||
Net income attributable to: | |||||||||
Shareholders of the Company | 265.4 | 297.8 | 41.1 | 467.4 | 640.1 | ||||
Non-controlling interests in subsidiaries | 11.9 | 9.5 | 9.0 | 28.8 | 30.5 | ||||
Adjusted EBITDA | 1,038.3 | 979.3 | 611.0 | 2,529.2 | 2,438.8 | ||||
Depreciation and amortization¹ | 397.0 | 368.3 | 381.4 | 1,165.0 | 1,116.2 | ||||
Cash flow hedge bonds | 42.9 | - | 43.1 | 105.6 | - | ||||
Total investments² | 312.8 | 472.4 | 360.8 | 1,023.7 | 1,076.0 | ||||
RATIOS | |||||||||
Earnings per share - R$ | 0.24 | 0.27 | 0.04 | 0.43 | 0.59 | ||||
Net debt / Stockholders' equity | 0.91 | 0.86 | 0.98 | 0.91 | 0.86 | ||||
Net debt / LTM Adjusted EBITDA³ (ex-IFRS16) | 2.91 | 2.72 | 3.07 | 2.91 | 2.72 | ||||
Net debt / LTM Adjusted EBITDA³ | 3.10 | n/a | 3.24 | 3.10 | n/a | ||||
Net interest expense / Adjusted EBITDA | 0.15 | 0.17 | 0.13 | 0.16 | 0.10 | ||||
Gross margin | 7.9% | 7.0% | 6.6% | 7.1% | 6.8% | ||||
Operating margin | 2.9% | 2.7% | 1.3% | 2.2% | 2.0% | ||||
Adjusted EBITDA margin | 5.0% | 4.2% | 3.8% | 4.4% | 3.7% | ||||
Number of employees | 15,759 | 16,529 | 16,003 | 15,759 | 16,529 | ||||
¹ Includes amortization with contractual assets with customers – exclusive rights | |||||||||
² Includes property, plant and equipment and additions to intangible assets,contractual assets with customers (exclusive rights), initial direct costs of assets with right of use, financing of clients and rental advances (net of repayments) and acquisition of shareholdings |
|||||||||
³ LTM adjusted EBITDA does not consider impairment of Extrafarma for 2Q20, 3Q20 and 9M20 |
3rd QUARTER 2020 |
ULTRAPAR | ||||
CONSOLIDATED CASH FLOW | ||||
In million of Reais | JAN - SEP | JAN - SEP | ||
2020 | 2019 | |||
Cash flows from operating activities | ||||
Net income for the period | 496.2 | 670.6 | ||
Adjustments to reconcile net income to cash provided by operating activities | ||||
Share of loss (profit) of subsidiaries, joint ventures and associates | 30.5 | 18.3 | ||
Amortization of contractual assets with customers - exclusive rights | 224.4 | 273.4 | ||
Amortization of right to use assets | 242.1 | 219.2 | ||
Depreciation and amortization | 698.4 | 623.6 | ||
PIS and COFINS credits on depreciation | 11.5 | 11.1 | ||
Interest and foreign exchange rate variations | 768.8 | 1,083.9 | ||
Deferred income and social contribution taxes | (46.8) | 90.5 | ||
(Gain) loss on disposal of property, plant and equipment and intangibles | (35.9) | (0.9) | ||
Expected losses on doubtful accounts | 29.1 | 27.5 | ||
Provision for losses in inventories | (0.8) | 3.0 | ||
Provision for post-employment benefits | (18.6) | (1.9) | ||
Equity instrument granted | 4.5 | 5.4 | ||
Other provisions and adjustments | (1.0) | (2.1) | ||
2,402.3 | 3,021.7 | |||
(Increase) decrease in current assets | ||||
Trade receivables and reseller financing | 255.2 | 225.7 | ||
Inventories | 180.8 | 71.2 | ||
Recoverable taxes | 303.1 | (406.3) | ||
Dividends received from subsidiaries and joint-ventures | 4.7 | 3.7 | ||
Insurance and other receivables | (32.4) | (18.0) | ||
Prepaid expenses | (65.0) | 12.7 | ||
Increase (decrease) in current liabilities | ||||
Trade payables | 607.4 | (344.2) | ||
Salaries and related charges | 108.4 | 3.9 | ||
Taxes payable | 40.4 | 2.2 | ||
Income and social contribution taxes | 171.9 | 118.4 | ||
Post-employment benefits | 0.6 | (3.4) | ||
Provision for tax, civil, and labor risks | 1.5 | 15.0 | ||
Insurance and other payables | 66.4 | 87.1 | ||
Deferred revenue | (0.7) | (5.7) | ||
(Increase) decrease in non-current assets | ||||
Trade receivables and reseller financing | (96.8) | 39.9 | ||
Recoverable taxes | (700.8) | 7.1 | ||
Escrow deposits | (31.0) | (38.6) | ||
Other receivables | 0.4 | 0.1 | ||
Prepaid expenses | 5.3 | (11.8) | ||
Increase (decrease) in non-current liabilities | ||||
Post-employment benefits | 9.1 | 0.3 | ||
Provision for tax, civil, and labor risks | (39.5) | (12.8) | ||
Other payables | (37.0) | 43.3 | ||
Deferred revenue | - | (11.9) | ||
Payments of contractual assets with customers - exclusive rights | (296.8) | (231.7) | ||
Income and social contribution taxes paid | (227.3) | (118.9) | ||
Net cash provided by operating activities | 2,630.3 | 2,449.1 | ||
Cash flows from investing activities | ||||
Financial investments, net of redemptions | (1,567.1) | (841.2) | ||
Acquisition of property, plant, and equipment | (587.1) | (669.8) | ||
Acquisition of intangible assets | (112.3) | (75.8) | ||
Capital increase in joint ventures | (20.0) | (22.9) | ||
Initial upfront costs of entitlement assets | - | (65.5) | ||
Proceeds from disposal of property, plant and equipment and intangibles | 86.0 | 28.7 | ||
Net cash used in investing activities | (2,200.5) | (1,650.6) | ||
Cash flows from financing activities | ||||
Loans and debentures | ||||
Proceeds | 3,591.6 | 2,016.4 | ||
Repayments | (2,280.2) | (2,160.6) | ||
Interest paid | (478.8) | (1,220.7) | ||
Payments of lease | (266.5) | (237.2) | ||
Dividends paid | (264.5) | (596.5) | ||
Redemption of non-controlling shares of Oxiteno Nordeste | - | (2.2) | ||
Capital increase from Iconic non-controlling shareholders | - | 7.0 | ||
Related parties | (0.1) | (0.1) | ||
Net cash provided by (used in) financing activities |
(301.7) | (2,193.9) | ||
Effect of exchange rate changes on cash and cash equivalents in foreign currency | 149.5 | 9.8 | ||
Increase (decrease) in cash and cash equivalents | 881.0 | (1,385.7) | ||
Cash and cash equivalents at the beginning of the period | 2,115.4 | 3,939.0 | ||
Cash and cash equivalents at the end of the period | 2,996.3 | 2,553.3 | ||
Transactions without cash effect: | ||||
Addition on right to use assets and leases payable | 407.1 | 244.7 | ||
Initial direct costs of right to use assets |
- | 20.4 | ||
Addition on contractual assets with costumers - exclusive rights | 140.0 | - | ||
Reversion fund - private pension | 47.1 | - |
3rd QUARTER 2020 |
ULTRAGAZ | ||||||
BALANCE SHEET | ||||||
In million of Reais | SEP 20 | SEP 19 | JUN 20 | |||
OPERATING ASSETS | ||||||
Trade receivables | 366.9 | 393.3 | 336.9 | |||
Non-current trade receivables | 31.7 | 13.5 | 31.3 | |||
Inventories | 122.3 | 172.6 | 132.6 | |||
Taxes | 97.9 | 80.9 | 96.1 | |||
Escrow deposits | 218.9 | 221.6 | 220.4 | |||
Other | 63.0 | 55.5 | 73.7 | |||
Right to use assets | 110.7 | 128.8 | 107.0 | |||
Property, plant and equipment / Intangibles | 1,045.0 | 955.2 | 1,022.4 | |||
TOTAL OPERATING ASSETS | 2,056.4 | 2,021.5 | 2,020.5 | |||
OPERATING LIABILITIES | ||||||
Suppliers | 88.7 | 81.6 | 93.1 | |||
Salaries and related charges | 105.9 | 118.7 | 90.3 | |||
Taxes | 25.2 | 9.9 | 13.0 | |||
Judicial provisions | 127.3 | 119.4 | 129.4 | |||
Leases payable | 150.7 | 166.2 | 144.3 | |||
Other accounts payable | 80.0 | 119.1 | 83.1 | |||
TOTAL OPERATING LIABILITIES | 577.8 | 614.9 | 553.2 |
INCOME STATEMENT | ||||||||||
In million of Reais | 3Q20 | 3Q19 | 2Q20 | 9M20 | 9M19 | |||||
Net sales | 1,954.9 | 1,894.4 | 1,723.4 | 5,439.7 | 5,307.1 | |||||
Cost of products sold | (1,636.8) | (1,604.8) | (1,442.3) | (4,602.0) | (4,586.8) | |||||
Gross profit | 318.0 | 289.6 | 281.1 | 837.7 | 720.3 | |||||
Operating expenses | ||||||||||
Selling | (104.4) | (107.2) | (104.2) | (315.1) | (320.6) | |||||
General and administrative | (54.4) | (51.4) | (32.3) | (134.2) | (152.3) | |||||
Other operating income | 0.5 | 2.5 | 1.8 | 7.1 | 5.5 | |||||
Gain (loss) on disposal of property, plant and equipment and intangibles |
2.8 | 1.6 | 2.3 | 6.0 | 2.8 | |||||
Operating income (loss) | 162.5 | 135.0 | 148.7 | 401.4 | 255.7 | |||||
Share of profit of subsidiaries, joint ventures and associates |
(0.1) | (0.0) | 0.0 | (0.0) | 0.0 | |||||
Adjusted EBITDA | 222.2 | 187.5 | 205.7 | 574.8 | 418.7 | |||||
Depreciation and amortization¹ | 59.7 | 52.5 | 56.9 | 173.4 | 163.0 | |||||
Ratios | ||||||||||
Gross margin (R$/ton) | 702 | 632 | 650 | 641 | 565 | |||||
Operating margin (R$/ton) | 359 | 295 | 344 | 307 | 201 | |||||
EBITDA margin (R$/ton) | 491 | 409 | 476 | 440 | 329 | |||||
Number of employees | 3,421 | 3,401 | 3,428 | 3,421 | 3,401 | |||||
¹ Includes amortization with contractual assets with customers - exclusive rights |
3rd QUARTER 2020 |
ULTRACARGO | ||||||
BALANCE SHEET | ||||||
In million of Reais | SEP 20 | SEP 19 | JUN 20 | |||
OPERATING ASSETS | ||||||
Trade receivables | 43.4 | 38.4 | 62.0 | |||
Inventories | 7.8 | 6.3 | 8.1 | |||
Taxes | 15.2 | 27.0 | 17.4 | |||
Other | 30.0 | 15.0 | 30.1 | |||
Right to use assets | 473.1 | 307.9 | 475.1 | |||
Property, plant and equipment / Intangibles / Investments | 1,381.9 | 1,246.3 | 1,329.3 | |||
TOTAL OPERATING ASSETS | 1,951.3 | 1,640.8 | 1,922.1 | |||
OPERATING LIABILITIES | ||||||
Suppliers | 64.7 | 28.2 | 25.0 | |||
Salaries and related charges | 41.9 | 24.5 | 37.5 | |||
Taxes | 15.4 | 7.6 | 11.6 | |||
Judicial provisions | 9.4 | 8.6 | 9.9 | |||
Leases payable | 438.2 | 259.1 | 436.0 | |||
Other accounts payable¹ | 94.9 | 140.6 | 97.7 | |||
TOTAL OPERATING LIABILITIES | 664.4 | 468.5 | 617.8 | |||
'¹ Includes the long term obligations with clients account and the extra amount related to the acquisition of Temmar, in the port of Itaqui and payables - indemnification clients and third parties |
||||||
INCOME STATEMENT | ||||||||||
In million of Reais | 3Q20 | 3Q19 | 2Q20 | 9M20 | 9M19 | |||||
Net sales | 159.9 | 135.3 | 155.0 | 478.2 | 387.9 | |||||
Cost of services sold | (68.1) | (68.6) | (65.6) | (196.2) | (187.4) | |||||
Gross profit | 91.8 | 66.8 | 89.4 | 282.0 | 200.5 | |||||
Operating expenses | ||||||||||
Selling | (1.7) | (2.4) | (1.7) | (5.1) | (6.0) | |||||
General and administrative | (33.1) | (29.4) | (26.8) | (90.7) | (84.4) | |||||
Other operating income | (1.4) | (10.3) | 9.7 | 11.2 | (60.9) | |||||
Gain (loss) on disposal of property, plant and equipment and intangibles |
(0.2) | (0.1) | (0.0) | (0.4) | (0.0) | |||||
Operating income (loss) | 55.4 | 24.6 | 70.6 | 196.9 | 49.1 | |||||
Share of profit of subsidiaries, joint ventures and associates |
0.2 | 0.6 | 0.3 | 0.6 | 1.7 | |||||
EBITDA | 78.4 | 45.0 | 91.5 | 260.5 | 111.1 | |||||
Depreciation and amortization | 22.9 | 19.8 | 20.6 | 63.0 | 60.3 | |||||
Ratios | ||||||||||
Gross margin | 57.4% | 49.3% | 57.7% | 59.0% | 51.7% | |||||
Operating margin | 34.6% | 18.1% | 45.6% | 41.2% | 12.7% | |||||
EBITDA margin | 49.1% | 33.3% | 59.1% | 54.5% | 28.7% | |||||
Number of employees | 911 | 751 | 878 | 911 | 751 |
3rd QUARTER 2020 |
OXITENO | ||||||
BALANCE SHEET | ||||||
In million of Reais | SEP 20 | SEP 19 | JUN 20 | |||
OPERATING ASSETS | ||||||
Trade receivables | 738.4 | 607.5 | 707.8 | |||
Inventories | 941.2 | 741.5 | 951.9 | |||
Taxes | 642.4 | 585.8 | 665.1 | |||
Other | 158.3 | 154.7 | 173.1 | |||
Right to use assets | 41.7 | 40.1 | 40.1 | |||
Property, plant and equipment / Intangibles / Investments | 2,994.1 | 2,660.1 | 2,962.4 | |||
TOTAL OPERATING ASSETS | 5,516.2 | 4,789.7 | 5,500.2 | |||
OPERATING LIABILITIES | ||||||
Suppliers | 638.6 | 422.7 | 545.9 | |||
Salaries and related charges | 148.0 | 107.2 | 114.7 | |||
Taxes | 62.5 | 36.8 | 36.4 | |||
Judicial provisions | 27.4 | 28.3 | 26.8 | |||
Leases payable | 44.3 | 41.1 | 42.4 | |||
Other accounts payable | 41.5 | 52.2 | 43.3 | |||
TOTAL OPERATING LIABILITIES | 962.2 | 688.3 | 809.6 | |||
INCOME STATEMENT | ||||||||||
In million of Reais | 3Q20 | 3Q19 | 2Q20 | 9M20 | 9M19 | |||||
Net sales | 1,425.0 | 1,120.6 | 1,201.0 | 3,733.9 | 3,242.6 | |||||
Cost of products sold | ||||||||||
Variable | (964.8) | (759.6) | (798.4) | (2,492.3) | (2,221.6) | |||||
Fixed | (134.2) | (103.9) | (124.5) | (361.0) | (347.9) | |||||
Depreciation and amortization | (53.3) | (46.9) | (50.2) | (149.0) | (140.8) | |||||
Gross profit | 272.7 | 210.2 | 227.9 | 731.6 | 532.2 | |||||
Operating expenses | ||||||||||
Selling | (105.5) | (86.4) | (89.8) | (279.8) | (251.1) | |||||
General and administrative | (113.4) | (96.0) | (89.2) | (312.3) | (277.0) | |||||
Other operating income | 0.8 | 0.8 | 1.3 | 74.0 | 3.0 | |||||
Gain (loss) on disposal of property, plant and equipment and intangibles |
(0.4) | (0.1) | (0.0) | (0.6) | 0.3 | |||||
Operating income (loss) | 54.1 | 28.5 | 50.1 | 212.8 | 7.6 | |||||
Share of profit of subsidiaries, joint ventures and associates |
0.2 | 0.3 | 0.1 | 0.6 | 0.6 | |||||
Adjusted EBITDA | 168.8 | 80.5 | 161.6 | 523.0 | 164.8 | |||||
Depreciation and amortization | 71.6 | 51.7 | 68.2 | 204.0 | 156.7 | |||||
Cash flow hedge bonds | 42.9 | - | 43.1 | 105.6 | - | |||||
Ratios | ||||||||||
Gross margin (R$/ton) | 1,347 | 1,076 | 1,371 | 1,332 | 952 | |||||
Gross margin (US$/ton) | 250 | 271 | 254 | 262 | 245 | |||||
Operating margin (R$/ton) | 267 | 146 | 302 | 387 | 14 | |||||
Operating margin (US$/ton) | 50 | 37 | 56 | 76 | 3 | |||||
EBITDA margin (R$/ton) | 834 | 412 | 972 | 952 | 295 | |||||
EBITDA margin (US$/ton) | 155 | 104 | 180 | 188 | 76 | |||||
Number of employees | 1,849 | 1,894 | 1,834 | 1,849 | 1,894 |
3rd QUARTER 2020 |
IPIRANGA | ||||||
BALANCE SHEET | ||||||
In million of Reais | SEP 20 | SEP 19 | JUN 20 | |||
OPERATING ASSETS | ||||||
Trade receivables | 2,584.9 | 3,010.3 | 2,335.9 | |||
Non-current trade receivables | 483.2 | 376.2 | 439.2 | |||
Inventories | 2,000.1 | 1,850.2 | 1,385.7 | |||
Taxes | 1,226.0 | 821.0 | 1,089.6 | |||
Contractual assets with customers - exclusive rights | 1,658.5 | 1,458.6 | 1,593.9 | |||
Other | 511.5 | 551.8 | 533.6 | |||
Right to use assets | 1,098.3 | 1,003.3 | 1,073.8 | |||
Property, plant and equipment / Intangibles / Investments | 3,534.7 | 3,505.0 | 3,593.3 | |||
TOTAL OPERATING ASSETS | 13,097.1 | 12,576.4 | 12,044.9 | |||
OPERATING LIABILITIES | ||||||
Suppliers | 2,484.3 | 1,714.5 | 1,690.3 | |||
Salaries and related charges | 117.9 | 120.1 | 108.0 | |||
Post-employment benefits | 230.1 | 202.3 | 234.6 | |||
Taxes | 184.9 | 186.6 | 140.6 | |||
Judicial provisions | 298.0 | 333.3 | 299.8 | |||
Leases payable | 752.1 | 651.5 | 709.9 | |||
Other accounts payable | 347.6 | 246.7 | 286.4 | |||
TOTAL OPERATING LIABILITIES | 4,414.9 | 3,454.9 | 3,469.7 |
INCOME STATEMENT | ||||||||||
In million of Reais | 3Q20 | 3Q19 | 2Q20 | 9M20 | 9M19 | |||||
Net sales | 16,767.4 | 19,568.5 | 12,350.2 | 47,017.1 | 55,220.0 | |||||
Cost of products and services sold | (15,955.9) | (18,676.3) | (12,035.0) | (45,195.5) | (52,673.6) | |||||
Gross profit | 811.5 | 892.2 | 315.2 | 1,821.6 | 2,546.3 | |||||
Operating expenses | ||||||||||
Selling | (272.5) | (259.2) | (273.2) | (853.4) | (927.3) | |||||
General and administrative | (134.5) | (203.5) | (88.6) | (382.0) | (551.5) | |||||
Other operating income | (46.3) | 45.2 | 21.9 | 19.7 | 110.4 | |||||
Gain (loss) on disposal of property, plant and equipment and intangibles |
12.9 | 0.7 | 14.0 | 33.4 | (2.0) | |||||
Operating income (loss) | 371.1 | 475.4 | (10.8) | 639.3 | 1,176.0 | |||||
Share of profit of subsidiaries, joint ventures and associates |
(0.3) | 0.4 | 0.8 | 0.8 | 1.3 | |||||
Adjusted EBITDA | 565.7 | 679.4 | 178.7 | 1,224.3 | 1,787.1 | |||||
Depreciation and amortization¹ | 194.9 | 203.6 | 188.7 | 584.1 | 609.8 | |||||
Ratios | ||||||||||
Gross margin (R$/m³) | 147 | 144 | 68 | 116 | 146 | |||||
Operating margin (R$/m³) | 67 | 77 | (2) | 41 | 68 | |||||
Adjusted EBITDA margin (R$/m³) | 102 | 110 | 39 | 78 | 103 | |||||
Adjusted EBITDA margin (%) | 3.4% | 3.5% | 1.4% | 2.6% | 3.2% | |||||
Number of service stations | 7,107 | 7,151 | 7,105 | 7,107 | 7,151 | |||||
Number of employees | 3,276 | 3,287 | 3,351 | 3,276 | 3,287 | |||||
¹ Includes amortization with contractual assets with customers - exclusive rights |
3rd QUARTER 2020 |
EXTRAFARMA | ||||||
BALANCE SHEET | ||||||
In million of Reais | SEP 20 | SEP 19 | JUN 20 | |||
OPERATING ASSETS | ||||||
Trade receivables | 54.0 | 155.1 | 66.5 | |||
Inventories | 468.2 | 515.0 | 491.9 | |||
Taxes | 227.4 | 213.0 | 213.7 | |||
Other | 26.6 | 22.0 | 29.6 | |||
Right to use assets | 402.4 | 464.4 | 402.5 | |||
Property, plant and equipment / Intangibles | 497.9 | 1,136.7 | 508.8 | |||
TOTAL OPERATING ASSETS | 1,676.5 | 2,506.2 | 1,713.0 | |||
OPERATING LIABILITIES | ||||||
Suppliers | 167.1 | 162.9 | 179.0 | |||
Salaries and related charges | 60.4 | 60.6 | 58.6 | |||
Taxes | 20.4 | 28.7 | 27.5 | |||
Judicial provisions | 9.7 | 40.1 | 9.7 | |||
Leases payable | 407.1 | 449.6 | 403.4 | |||
Other accounts payable | 15.7 | 14.3 | 11.1 | |||
TOTAL OPERATING LIABILITIES | 680.4 | 756.1 | 689.3 |
INCOME STATEMENT | ||||||||||
In million of Reais | 3Q20 | 3Q19 | 2Q20 | 9M20 | 9M19 | |||||
Gross revenues | 522.9 | 540.9 | 514.7 | 1,558.4 | 1,646.1 | |||||
Sales returns, discounts and taxes | (30.8) | (28.0) | (30.6) | (88.9) | (87.0) | |||||
Net sales | 492.0 | 512.9 | 484.1 | 1,469.5 | 1,559.1 | |||||
Cost of products and services sold | (344.6) | (362.0) | (342.7) | (1,035.8) | (1,115.3) | |||||
Gross profit | 147.5 | 151.0 | 141.3 | 433.7 | 443.8 | |||||
Operating expenses | (158.9) | (184.4) | (163.3) | (496.6) | (561.3) | |||||
Other operating income | 0.3 | 14.9 | (0.6) | (0.7) | 40.1 | |||||
Gain (loss) on disposal of property, plant and equipment and intangibles |
0.0 | (0.2) | (2.3) | (2.3) | (0.2) | |||||
Impairment | - | - | - | - | - | |||||
Operating income (loss) | (11.1) | (18.6) | (24.8) | (65.9) | (77.6) | |||||
EBITDA | 27.7 | 18.2 | 13.7 | 50.2 | 37.5 | |||||
Depreciation and amortization | 38.8 | 36.9 | 38.5 | 116.2 | 115.1 | |||||
Ratios¹ | ||||||||||
Gross margin | 28.2% | 27.9% | 27.5% | 27.8% | 27.0% | |||||
Operating margin | (2.1%) | (3.4%) | (4.8%) | (4.2%) | (4.7%) | |||||
EBITDA margin | 5.3% | 3.4% | 2.7% | 3.2% | 2.3% | |||||
Number of employees | 5,893 | 6,811 | 6,095 | 5,893 | 6,811 | |||||
¹ Calculated based on gross revenues |
ULTRAPAR PARTICIPAÇÕES S.A.
Publicly Traded Company
CNPJ nr 33.256.439/0001-39 |
NIRE 35.300.109.724 |
MINUTES OF THE MEETING OF THE BOARD OF DIRECTORS
Date, Time and Location:
November 4, 2020, at 2:30 p.m., at the Company’s headquarters, located at Av. Brigadeiro Luís Antônio, nr 1343, 9th floor, in the City and State of São Paulo, also contemplating participation through Microsoft Teams.
Attendance:
(i) Members of the Board of Directors undersigned; (ii) Secretary of the Board of Directors, Mr. André Brickmann Areno; (iii) Chief Executive Officer, Mr. Frederico Pinheiro Fleury Curado; (iv) Chief Financial and Investor Relations Officer, Mr. Rodrigo de Almeida Pizzinatto; (v) other executive officers of the Company, Mrs. Décio de Sampaio Amaral, João Benjamin Parolin, Marcelo Pereira Malta de Araújo and Tabajara Bertelli Costa; (vi) in relation to item 1 below, the coordinator of the Audit and Risks Committee, Mr. Flávio Cesar Maia Luz, and the president of the Fiscal Council, Mr. Geraldo Toffanello.
Agenda and decisions:
1. |
After having analyzed and discussed the performance of the Company in the third quarter of the current fiscal year, the respective financial statements were approved. |
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2. | The members of the Board of Directors approved the Personal Data Protection and Privacy Corporate Policy, and authorized the Company's Executive Officers to take the necessary measures to implement the Privacy Program established herein. | |
3. |
The Board members approved the Corporate Appointment Policy for Members of the Board of Directors, its Advisory Committees and Executive Officers Board, under the terms proposed by the Company's management. |
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4. |
Considering the Conduct Committee currently vacant position, the members of the Board elected Mr. Julio Cesar Nogueira to occupy the position. The composition of the Conduct Committee is namely Mrs. Marcelo Fernandez Trindade, as President, Lucio de Castro Andrade Filho, Cristiane Silva Leite, Julio Cesar Nogueira and André Brickmann Areno. |
Observation: The resolutions were approved, with no amendments or qualifications, by all the Board Members.
As there were no further matters to be discussed, the meeting was closed, the minutes of this meeting were written, read and approved by all the undersigned members present.
Pedro Wongtschowski – Chairman
Lucio de Castro Andrade Filho – Vice-Chairman
Alexandre Gonçalves Silva
Alexandre Teixeira de Assumpção Saigh
Ana Paula Janes Vescovi
Flávia Buarque de Almeida
Joaquim Pedro de Mello
Jorge Marques de Toledo Camargo
José Galló
José Maurício Pereira Coelho
Nildemar Secches
André Brickmann Areno – Secretary
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SUMMARY |
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1. | PURPOSE | 151 |
2. | PRINCIPLES AND GROUNDS | 151 |
3. | PEOPLE COMMITTEE | 151 |
4. | BOARD OF DIRECTORS | 152 |
5. | EXECUTIVE OFFICERS BOARD | 155 |
6. | ADVISORY COMMITTEES | 157 |
7. | ASSESSMENT PROCESS | 158 |
8. | GENERAL PROVISIONS | 159 |
The purpose of this Corporate Nomination Policy for Members of the Board of Directors (“Board”), Advisory Committees (“Committees”) and Executive Officers Board (“Policy”) is to establish the criteria for composition of such Ultrapar’s bodies, as well as procedures for appointment and evaluation of the respective members, in accordance with the best corporate governance practices.
2.1 The Policy is based on the guidelines and provisions set forth in: (i) the Bylaws; (ii) Law 6404/76; (iii) the Brazilian Corporate Governance Code; (iv) the B3’s Novo Mercado Listing Regulation; and (v) the legislation and regulation in force applicable to the Company.
2.2 The Board of Directors and its Committees and Executive Officers Board thereof shall be composed of highly qualified professionals, with proved professional or academic experience, in conformity with the Company’s values and Code of Ethics.
2.3 The appointment shall consider the time of experience, academic background, available time to perform the duties and diversity. Such criteria shall ensure that the Company benefits from a wide range of visions, experiences and arguments, in order to undertake the decisions with greater quality and security.
Under the Bylaws, the People Committee shall support the Board of Directors in the nomination process, so that the Company is able to be properly prepared in advance for the succession of these positions and monitor the actions that ensure the adoption of a model for attraction, retention and motivation of the management members with the required qualifications, aligned with the Company’s strategic plans.
A. Composition Criteria
4.1 The Board of Directors shall be composed of, at least, five (5) and, at most, eleven (11) members, elected and subject to removal by the Shareholders' Meeting, for unified term of office of two (2) years, reelection permitted, under the terms of the Company’s Bylaws.1
4.2 The Board of Directors shall be mandatorily composed of, at least, thirty percent (30%) or two (2) independent members, whichever is higher, under the terms of the Company’s Bylaws.2
4.2.1 When, as a result of compliance with the percentage referred to in the caput hereof, the number of directors results in a fraction, such number will be rounded to the immediately higher whole number, as established in the Company’s Bylaws.3
4.2.2 The appointment of the independent directors shall comply with the rules and procedures set forth in the Novo Mercado Listing Regulation and the Ultrapar’s Bylaws, subject to approval at the Shareholders' Meeting held to elect such independent directors.
4.3 The appointment of the Board of Directors’ members shall comply with the following criteria, without prejudice to the legal and regulatory requirements, as well as those set forth in the Bylaws:
(i) | do not hold any Officer position in the Company; | |
(ii) | comply with the values and culture of the Company and the Company’s Code of Ethics; | |
(iii) | have well-regarded reputation, as set forth in article 147, paragraph 3, of Law 6404/76; |
1 As set forth in article 17 of the Bylaws.
2 As set forth in article 18 of the Bylaws.
3 As set forth in article 18, paragraph 1, of the Bylaws.
(iv) | have educational qualification compatible with the Board of Directors’ duties; | |
(v) | have professional experience in areas or subjects of interest of the Company; | |
(vi) | do not be a party to any final decision, ruled by CVM, which had suspended, disqualified or designated the member as non-eligible to the Company’s management position, as provided for in article 147, paragraph 2, of Law 6404/76; | |
(vii) | do not be prohibited, by specific law, or be convicted for bankruptcy crime, improper administration, active or passive corruption, embezzlement, crime against popular economy, public faith, public property or national financial system, or crime that prohibits the access to governmental positions, as provided for in article 147, paragraph 1, of Law 6404/76; | |
(viii) | do not have conflict of interests with the Company and its subsidiaries and associated companies (the conflict of interest with the Company is characterized by the person who, on a cumulative basis: (a) has been elected by any shareholder who has also been elected as a management member of a competitor; and (b) has any subordination relationship with the shareholder who have elected such person), as set forth in article 147, paragraph 3, of Law 6404/76; and | |
(ix) | have available time to properly exercise the position and comply with the assumed responsibility, including, but not limited to, attendance to the Board of Directors’ meetings and previous reading of the documentation. |
4.4 The proposed reelection of the Board of Directors’ members shall take into account the results from the assessments conducted during the previous terms of office of such members.
B. Appointment Procedures
4.5 The appointment of the Board of Directors’ members at the Shareholders' Meeting may be performed by the Board of Directors itself or any other
4.6 At the date the Shareholders' Meeting for electing the members of the Board of Directors is called, the Board shall make available at the Company’s headquarters a statement signed by each of the members of the slate of candidates nominated by it, containing: (a) their full identification; (b) a complete description of their professional experience, describing the professional activities previously performed, as well as their professional and academic qualifications; and (c) information about disciplinary and judicial proceedings for which a final judgment was rendered and in which any such members have been convicted, as well as inform, if the case may be, the existence of events of limitations or conflict of interest provided for in Article 147, Paragraph 3 of Law no. 6,404/76.5
4.7. Whenever there are Shareholders' Meeting for election of directors, the Board shall include, in the respective proposal of the management, its expression including: (i) confirmation of the adhesion of each candidate to the position of member of the Board to this Policy; and (ii) the reasons, in accordance with the provisions of the Novo Mercado Listing Regulation and the declaration of independence submitted by the candidate, by which the qualification of each applicant as independent director is verified.6
4.8. Pursuant to the Bylaws, the shareholders or group of shareholders desiring to propose another slate of candidates to be elected to the Board of Directors shall, at least five (5) days prior the date of the Shareholders' Meeting, send to the Board statements individually signed by the candidates nominated by them, containing the information mentioned in item 4.7 above; the Board of Directors shall immediately disclose such information, by notice posted on the Company’s internet website and sent by electronic means to the CVM and the B3 notifying them that the documents with respect to the other slate of candidates are available to the shareholders at the Company’s headquarters.7
4 As set forth in article 20, paragraph 1, of the Bylaws.
5 As set forth in article 20, paragraph 2, of the Bylaws.
6 As set forth in article 15 of the Board of Directors’ Internal Regulation.
7 As set forth in article 20, Paragraph 3, of the Bylaws.
4.8.1 The Board of Directors shall confirm whether the requirements set forth in items 4.2, 4.3 and 4.8 of this Policy have been complied and, in the case, the names of the candidates shall be voted at the Shareholders' Meeting.
4.9 The other rules on the appointment, election, vacancy and replacements shall comply with the provisions set forth in the Bylaws, Board of Directors’ Internal Bylaws and applicable legislation in force.
A. Composition Criteria
5.1 Under the terms of the Company’s Bylaws, the Executive Officers Board shall be composed of up to eight (8) Officers, shareholders or not, resident in Brazil, elected by the Board of Directors, without specific designation, except for the Chief Executive Officer and the Investor Relations Officer, which duties are described in the Bylaws.8
5.2. The Officers’ term of office shall be 2 (two) years, with reelection permitted, and shall continue until each successor is elected.9
5.3 The Board of Directors shall appoint for executive positions professionals who are able to combine the interests of the Company, shareholders, managers and employees, in addition to the Company’s social and environmental responsibility, based on the principles of lawfulness and ethics.
5.4 The Executive Officers Board’s members shall be appointed in conformity with the following criteria, without prejudice to the legal and regulatory requirements and the provisions set forth in the Bylaws:
(i) | do not hold any position in the Company’s Board of Directors; |
8 As set forth in article 31 of the Bylaws.
9 As set forth in article 31, sole paragraph, of the Bylaws.
(ii) | comply with the values and culture of the Company and the Company’s Code of Ethics; | |
(iii) | have well-regarded reputation, as set forth in article 147, paragraph 3, of Law 6404/76; | |
(iv) | have educational qualification compatible with the Officer’s duties; | |
(v) | have professional experience compatible with the Officer’s duties; | |
(vi) | do not be a party to any final decision, ruled by CVM, which had suspended, disqualified or designated the member as non-eligible to the Company’s management position, as provided for in article 147, paragraph 2, of Law 6404/76; | |
(vii) | do not be prohibited, by specific law, or be convicted for bankruptcy crime, improper administration, active or passive corruption, embezzlement, crime against popular economy, public faith, public property or national financial system, or crime that prohibits the access to governmental positions, as provided for in article 147, paragraph 1, of Law 6404/76; and | |
(viii) | do not have any conflict of interest with the Company and its subsidiaries or associated companies, as set forth in article 147, paragraph 3, of Law 6404/76. |
5.5 The proposed reelection of the Executive Officers Board’s members shall take into account the results from the assessments conducted during the exercise of the activities.
B. Nomination Procedure
5.6 The appointment of the Executive Board’s members, including the Chief Executive Officer, shall be approved by the Board of Directors, supported by the People Committee.
5.7 The performance of the requirements set forth in items 5.4 and 5.5 of this Policy shall be verified by the People Committee and, if complied indeed, the name of the candidate shall be voted at the Board of Directors’ meeting and the election, shall be conducted as set forth in the applicable legislation in force.
5.8 The contracting of the Company’s and its subsidiaries’ non-statutory Officers shall also comply with the criteria set forth in items 2.3 and 5.4 of this Policy.
A. Composition Criteria
6.1 The Board of Directors shall have mandatorily the following advisory committees:
a) Audit and Risk Committee;
b) People Committee; and
c) Strategy Committee.
6.1.1. The Board of Directors may establish additional advisory committees[10], in conformity with the appointment criteria established in this Policy, including the definition of the guidelines and duties upon installation and indication of the respective members thereof.
6.2 The composition of the Committees, including the term of office of its members, shall comply with the provisions set forth in the Bylaws, applicable legislation in force and respective Internal Bylaws, in addition to the principles and criteria provided for in items 2.2 and 2.3 of this Policy.
6.3 The proposed reelection of the Committees’ members shall take into account the results from the assessments conducted during the previous terms of office of such members.
B. Nomination Procedure
10 As set forth in article 38, paragraph 2, of the Bylaws.
6.5 The performance of the requirements set forth in items 6.2 and 6.3 of this Policy shall be verified by the Board of Directors and the appointed candidate shall be approved by the Board of Directors.
A. Board of Directors
7.1 In order to ensure the effective dynamics and operation of the Board of Directors and related Committees and advisory bodies thereof, the Company shall conduct a periodical assessment at least once per term of office.
7.2 The assessment shall be approved by the Board of Directors and be composed of the assessment of the Board of Directors itself and the related Committees, as well as the individual members, conducted internally or by a specialized company.
7.3 The purpose of the assessment is to measure the dimensions related to the composition, operation, qualification, dedication and effectiveness, which is an essential element in the appointment process set forth in this Policy.
B. Executive Officers Board
7.4 The Company’s Chief Executive Officer shall be annually evaluated by the Chairman of the Board of Directors, inclusive with respect to the compliance with the individual and economic goals. The other members of the Statutory Executive
Officers Board shall be similarly evaluated by the Chief Executive Officer, which results shall be reported and approved by the People Committee.
7.5 The results from the assessments referred to above shall be reported to the Board of Directors.
8.1 This Policy shall become effective on the date of approval by the Board of Directors and shall solely be modified in conformity with the provisions set forth in the Company’s Bylaws.
8.2 This Policy is available for consultation in the Company’s Investor Relations website.
EXHIBIT I – DEFINITIONS
For the purposes of this Regulation, the terms below shall have the following meanings:
“B3”: B3 S.A. - Brasil, Bolsa, Balcão;
“Company” or “Ultrapar”: Ultrapar Participações S.A.;
“CVM”: Brazilian Securities and Exchange Commission;
“Executive Officers Board”: Ultrapar’s Statutory Executive Officers Board;
“Bylaws”: Ultrapar’s Bylaws;
“Novo Mercado Listing Regulation”: is the B3’s Novo Mercado Listing Rules;
“Ultra Group”: Ultrapar and its subsidiaries in Brazil and abroad.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Date: November 04, 2020
ULTRAPAR HOLDINGS INC. | ||
By | /s/ Rodrigo de Almeida Pizzinatto | |
Name: | Rodrigo de Almeida Pizzinatto | |
Title: | Chief Financial and Investor Relations Officer |
(Parent’s Separate and Consolidated Interim Financial Information as of and the Three-month period Ended September 30, 2020 and Report on Review of Interim Financial Information, 3Q20 Earnings Release, Board of Directors minutes and Corporate Appointment Policy for Members Of The Board Of Directors, Advisory Committees and Executive Board)