ULTRAPAR HOLDINGS INC

6-K 1 d855293d6k.htm 6-K 6-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 6-K

Report Of Foreign Private Issuer

Pursuant To Rule 13a-16 Or 15d-16 Of

The Securities Exchange Act Of 1934

For the month of February, 2020

Commission File Number: 001-14950

ULTRAPAR HOLDINGS INC.

(Translation of Registrants Name into English)

Brigadeiro Luis Antonio Avenue, 1343, 9 th Floor

São Paulo, SP, Brazil 01317-910

(Address of Principal Executive Offices)

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

Form 20-F 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.	2019 Financial Report
2	4Q19 and 2019 Earnings Release
3	Board of Directors minutes
4	Fiscal Council minutes
5	Notice to shareholders
6	Material Notice Disclosure Policy and Securities Trading Policy

(Convenience Translation into English from

the Original Previously Issued in Portuguese)

Ultrapar Participações S.A.

Parent and Consolidated

Financial Statements

for the Year Ended

December 31, 2019 and

Independent Auditors Report

Financial Information

KPMG Auditores Independentes

Ultrapar Participações S.A. and Subsidiaries

Parent and Consolidated

Financial Statements

for the Years Ended December 31, 2019 and 2018

Table of Contents

| Report in the Individual and Consolidated Financial
Statements | 3 4 |
| --- | --- |
| Statements of Financial Position | 78 |
| Statements of Profit or Loss | 9 |
| Statements of Comprehensive Income | 10 |
| Statements of Changes in Equity | 1112 |
| Statements of Cash FlowsIndirect Method | 1314 |
| Statements of Value Added | 15 |
| Notes to the Financial Statements | 16104 |

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

Independent Auditors Report in the Individual and Consolidated Financial Statements

To the Shareholders of the

Ultrapar Participações S.A.

São Paulo SP

Opinion

We have audited the individual and consolidated financial statements of Ultrapar Participações S.A. (the Company), respectively referred to as Parent and Consolidated, which comprise the statement of financial position as at December 31, 2019, the statements of income and other comprehensive income, changes in equity and cash flows for the year then ended, and notes, comprising significant accounting policies and other explanatory information.

In our opinion, the accompanying financial statements present fairly, in all material respects, the individual and consolidated financial position of the Ultrapar Participações S.A. as at December 31, 2019, and of its individual and consolidated financial performance and its cash flows for the year then ended in accordance with Accounting Practices Adopted in Brazil and with International Financial Reporting Standards (IFRS), issued by the International Accounting Standards Board (IASB).

Basis for Opinion

We conducted our audit in accordance with Brazilian and International Standards on Auditing. Our responsibilities under those standards are further described in the Auditors Responsibilities for the Audit of the Individual and Consolidated Financial Statements section of our report. We are independent of the Company and its subsidiaries in accordance with the relevant ethical requirements included in the Accountant Professional Code of Ethics (Código de Ética Profissional do Contador) and in the professional standards issued by the Brazilian Federal Accounting Council (Conselho Federal de Contabilidade) and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Key audit matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the current period. These matters were addressed in the context of our audit of the individual and consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

Valuation of recoverable amount of goodwill on business combination

In accordance with accounting practices adopted in Brazil and with international financial reporting standards, the Company is required to annually perform the impairment test of the amounts recorded as intangible assets with indefinite useful lives, including goodwill for future profitability (goodwill). The acquisition of the operations of Imifarma Produtos Farmacêuticos S.A. (Extrafarma), resulted on the recognition of goodwill in the amount of R$ 661,553 thousand, as disclosed in the explanatory note 15, the recoverable amount of which must be evaluated annually. On December 31, 2019, the Company recorded an impairment of the recoverable amount of R$ 593,280 related to the goodwill recorded in Extrafarma.

The assessment of the need or not to reduce the recoverable amount is supported by an estimate of future profitability based on the business plan and budget prepared by the Company and approved by the Board of Directors, which are based on methodologies and assumptions involving estimates, such as: revenue growth rate, costs and expenses, investments, future working capital and discount rates. Assumptions about projected growth in future cash flows are based on the business plan of the Companys segments, as well as on comparable market data.

Due to uncertainties related to assumptions and estimates that have a significant risk of resulting in a material adjustment to the accounting balances of the individual and consolidated financial statements, we consider this matter to be significant for our audit.

Our response

Our audit procedures included, among others:

Evaluation of the design, implementation and effectiveness of the internal control of financial projections related to the identification and measurement of the recoverable value of the cash-generating unit where the goodwill is allocated.

Within the involvement of our corporate finance specialists, for the methodology adopted by the Company and the assumptions used in the calculation of discounted cash flows, including growth and discount rates, comparison with historical information and testing of the arithmetic accuracy of the formulas used in discounted cash flow models.

Evaluation of the sensitivity analysis of significant assumptions and comparison with the budgets approved in the previous period with the actual values calculated in the current year.

Comparison of the recoverable amount calculated based on discounted cash flows, with the book value and evaluation of the disclosures made in the financial statements.

As a result of the evidence obtained through the audit procedures summarized above, we consider that the amount of goodwill on business combinations and the respective disclosures are acceptable in the context of the individual and consolidated financial statements taken as a whole.

Realization of deferred tax assets

As of December 31, 2019, the individual and consolidated financial statements include deferred tax asset amounts equivalent to R $ 1,076,223 thousand, of which R$ 278,140 thousand are related to temporary differences and R$ 798,083 thousand are related to tax losses, considered recoverable based on the generation of future taxable profits.

Estimates of future taxable income generation include the use of assumptions, judgments and estimates on cash flows, such as growth rates of revenues, costs and expenses, estimates of future investments and working capital and discount rates, which involve high degree of complexity and judgments that impact the expectation of realization of deferred tax assets in the coming years. Therefore, we consider this matter to be significant for our audit.

Our Response

Our audit procedures included, among others:

Evaluation of the design, implementation and effectiveness of the internal control of financial projections related to the realization of the registered deferred taxes.

Within the involvement of our corporate finance specialists, for the assumptions and data used by the Company in preparing the study of future taxable profits considering the projections of future cash flows. Also to assess the accuracy of the recorded balances.

Comparison of the budgets approved in the previous year with the actual values calculated in the current year.

Assessment whether the disclosures in the individual and consolidated financial statements consider all relevant information regarding deferred tax assets.

As a result of the evidence obtained through the audit procedures summarized above, we consider that the amount of deferred tax assets recorded and the respective disclosures are acceptable in the context of the individual and consolidated financial statements taken as a whole.

Other matters - Statements of value added

The individual and consolidated statements of value added (DVA) for the year ended December 31, 2019 prepared under the responsibility of the Companys management, and presented herein as supplementary information for IFRS purposes, have been subject to audit procedures jointly performed with the audit of the Companys financial statements. In order to form our opinion, we assessed whether those statements are reconciled with the financial statements and accounting records, as applicable, and whether their format and contents are in accordance with criteria determined in the Technical Pronouncement 09 (CPC 09) - Statement of Value Added. In our opinion, the statements of value added have been fairly prepared, in all material respects, in accordance with the criteria determined by the aforementioned Technical Pronouncement and are consistent with the overall individual and consolidated financial statements.

Other information accompanying the individual and consolidated financial statements and the auditors report

Management is responsible for the other information comprising the management report.

Our opinion on the individual and consolidated financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.

In connection with our audit of the individual and consolidated financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the individual and consolidated financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

Responsibilities of Management and Those Charged with Governance for the Individual and Consolidated Financial Statements

Management is responsible for the preparation and fair presentation of the individual and consolidated financial statements in accordance with Accounting Practices Adopted in Brazil and with International Financial Reporting Standards (IFRS), issued by the International Accounting Standards Board (IASB) and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the individual and consolidated financial statements, management is responsible for assessing the Companys ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company and subsidiaries or to cease operations, or has no realistic alternative but to do so.

Those charged with governance are responsible for overseeing the Companys and subsidiaries financial reporting process.

Auditors Responsibilities for the Audit of the Individual and Consolidated Financial Statements

Our objectives are to obtain reasonable assurance about whether the individual and consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with Brazilian and international standards on auditing will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

As part of an audit in accordance with Brazilian and international standards on auditing, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

Identify and assess the risks of material misstatement of the individual and consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Companys and its subsidiaries internal control.

Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.

Conclude on the appropriateness of managements use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Companys and its subsidiaries ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors report to the related disclosures in the individual and consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors report. However, future events or conditions may cause the Company and subsidiaries to cease to continue as a going concern.

Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the individual and consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence and communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the individual and consolidated financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditors report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

São Paulo, February 19, 2020

KPMG Auditores Independentes

CRC 2SP014428/O-6

Original report in Portuguese signed by

Marcio Serpejante Peppe

Accountant CRC 1SP233011/O-8

Ultrapar Participações S.A. and Subsidiaries

Statements of Financial Position

as of December 31, 2019 and December 31, 2018

(In thousands of Brazilian Reais)

Assets	Note	Parent — 12/31/2019	12/31/2018	Consolidated — 12/31/2019	12/31/2018
Current assets
Cash and cash equivalents	4.a	42,580	172,315	2,115,379	3,938,951
Financial investments and hedging instruments	4.b	95,829	565,930	3,090,212	2,853,106
Trade receivables	5.a			3,635,834	4,069,307
Reseller financing	5.b			436,188	367,262
Inventories	6			3,715,560	3,354,532
Recoverable taxes	7.a			1,122,335	639,699
Recoverable income and social contribution taxes	7.b	49,750	39,705	325,343	257,182
Dividends receivable		3,074	260,483	3,630	1,064
Other receivables		4,258	1,527	36,765	58,561
Prepaid expenses	10	2,135	1,962	111,355	187,570
Contractual assets with customers exclusive rights	11			465,454	484,473
Total current assets		197,626	1,041,922	15,058,055	16,211,707
Non-current assets
Financial investments and hedging instruments	4.b			506,506	202,349
Trade receivables	5.a			53,666	81,569
Reseller financing	5.b			364,748	348,268
Related parties	8.a	759,123	761,288	490	490
Deferred income and social contribution taxes	9.a	41,613	14,034	653,694	514,187
Recoverable taxes	7.a			767,360	747,180
Recoverable income and social contribution taxes	7.b	39,447	48,685	104,947	105,602
Escrow deposits	22.a	17		921,443	881,507
Indemnification asset business combination	22.c			193,496	194,719
Other receivables				3,430	1,411
Prepaid expenses	10	255	30	69,216	399,095
Contractual assets with customers exclusive rights	11			1,000,535	1,034,004
Total long term assets		840,455	824,037	4,639,531	4,510,381
Investments
In subsidiaries	12.a	10,058,456	9,509,480
In joint-ventures	12.b	18,792	20,118	153,076	101,954
In associates	12.c			25,750	24,338
Other				2,793	2,795
		10,077,248	9,529,598	181,619	129,087
Right to use assets	13	5,799		1,980,912
Property, plant, and equipment	14	2,532		7,572,762	7,278,865
Intangible assets	15	246,163	246,163	1,762,593	2,369,355
Total non-current assets		11,172,197	10,599,798	16,137,417	14,287,688
Total assets		11,369,823	11,641,720	31,195,472	30,499,395

The accompanying notes are an integral part of the financial statements.

Ultrapar Participações S.A. and Subsidiaries

Statements of Financial Position

as of December 31, 2019 and December 31, 2018

(In thousands of Brazilian Reais)

Liabilities	Note	Parent — 12/31/2019	12/31/2018		12/31/2019		12/31/2018
Current liabilities
Loans and hedging instruments	16					867,871		2,007,430
Debentures	16.g	28,713		34,504		249,570		263,718
Trade payables	17	2,173		272		2,158,478		2,551,607
Trade payables agreement	17					541,593		180,070
Salaries and related charges	18	958		228		405,636		428,192
Taxes payable	19	389		11,563		269,922		268,005
Dividends payable	26.h	14,689		282,334		16,694		284,024
Income and social contribution taxes payable				9,238		164,757		55,477
Post-employment benefits	20.b					28,951		45,655
Provision for asset retirement obligation	21					3,847		4,382
Provision for tax, civil, and labor risks	22.a					40,455		77,822
Trade payables customers and third parties indemnification	23							3,501
Leases payable	13	144				206,396		2,849
Other payables		3		3,975		213,273		137,494
Deferred revenue	24					27,626		26,572
Total current liabilities		47,069		342,114		5,195,069		6,336,798
Non-current liabilities
Loans and hedging instruments	16					6,907,113		6,487,400
Debentures	16.g	1,723,368		1,722,450		6,368,168		6,401,535
Related parties	8.a	4,220		5,158		3,925		4,071
Deferred income and social contribution taxes	9.a					7,531		9,297
Post-employment benefits	20.b					243,916		204,160
Provision for asset retirement obligation	21					47,395		50,285
Provision for tax, civil, and labor risks	22.a; 22.c	399		798		884,140		865,249
Leases payable	13	5,855				1,382,277		43,217
Deferred revenue	24							11,850
Subscription warrants indemnification	25	130,657		123,095		130,657		123,095
Other payables						190,106		162,409
Total non-current liabilities		1,864,499		1,851,501		16,165,228		14,362,568
Equity
Share capital	26.a; 26.f	5,171,752		5,171,752		5,171,752		5,171,752
Equity instrument granted	26.b	11,970		4,309		11,970		4,309
Capital reserve	26.d	542,400		542,400		542,400		542,400
Treasury shares	26.c	(485,383	)	(485,383	)	(485,383	)	(485,383	)
Revaluation reserve on subsidiaries	26.e	4,522		4,712		4,522		4,712
Profit reserves	26.f	3,995,414		4,099,092		3,995,414		4,099,092
Valuation adjustments	26.g.1	(146,317	)	(63,989	)	(146,317	)	(63,989	)
Cumulative translation adjustments	26.g.2	102,427		65,857		102,427		65,857
Additional dividends to the minimum mandatory dividends	26.h	261,470		109,355		261,470		109,355
Equity attributable to:
Shareholders of the Company		9,458,255		9,448,105		9,458,255		9,448,105
Non-controlling interests in subsidiaries						376,920		351,924
Total equity		9,458,255		9,448,105		9,835,175		9,800,029
Total liabilities and equity		11,369,823		11,641,720		31,195,472		30,499,395

The accompanying notes are an integral part of the financial statements.

Ultrapar Participações S.A. and Subsidiaries

Statements of Profit or Loss

For the years ended December 31, 2019 and 2018

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

Note	12/31/2019		12/31/2018		12/31/2019		12/31/2018
Net revenue from sales and services	27					89,297,975		90,697,983
Cost of products and services sold	28					(83,187,109	)	(84,537,368	)
Gross profit						6,110,866		6,160,615
Operating income (expenses)
Selling and marketing	28					(2,610,384	)	(2,601,617	)
Estimated losses on doubtful accounts						(30,003	)	(69,250	)
General and administrative	28					(1,726,253	)	(1,625,839	)
Loss on disposal of property, plant and equipment and intangibles	29					(30,019	)	(22,088	)
Impairment of assets	15.a; 29					(593,280	)
Other operating income, net	30	312		(313	)	179,625		57,533
Operating income before financial income (expenses) and share of profit (loss) of
subsidiaries, joint ventures and associates		312		(313	)	1,300,552		1,899,354
Share of profit (loss) of subsidiaries, joint ventures and associates	12	394,793		1,174,985		(12,145	)	(14,779	)
Operating income before financial income (expenses) and income and social contribution
taxes		395,105		1,174,672		1,288,407		1,884,575
Financial income	31	73,201		146,137		457,289		681,235
Financial expenses	31	(122,359	)	(119,900	)	(964,143	)	(794,771	)
Financial result, net		(49,158	)	26,237		(506,854	)	(113,536	)
Income before income and social contribution taxes		345,947		1,200,909		781,553		1,771,039
Income and social contribution taxes
Current	9.b; 9.c			(35,363	)	(476,074	)	(476,302	)
Deferred	9.b	27,579		(15,125	)	97,465		(162,417	)
		27,579		(50,488	)	(378,609	)	(638,719	)
Net income for the year		373,526		1,150,421		402,944		1,132,320
Net income for the year attributable to:
Shareholders of the Company		373,526		1,150,421		373,526		1,150,421
Non-controlling interests in subsidiaries						29,418		(18,101	)
Earnings per share (based on weighted average number of shares outstanding)
R$
Basic	32	0.3438		1.0611		0.3438		1.0611
Diluted	32	0.3422		1.0541		0.3422		1.0541

The accompanying notes are an integral part of the financial statements.

Ultrapar Participações S.A. and Subsidiaries

Statements of Comprehensive Income

For the years ended December 31, 2019 and 2018

(In thousands of Brazilian Reais)

Note	12/31/2019		12/31/2018		12/31/2019		12/31/2018
Net income for the year		373,526		1,150,421		402,944		1,132,320
Items that are subsequently reclassified to profit or loss:
Fair value adjustments of financial instruments of subsidiaries, net	26.g.1	(51,340	)	(213,916	)	(51,319	)	(213,937	)
Fair value adjustments of financial instruments of joint ventures, net	26.g.1	(978	)	(2,329	)	(978	)	(2,329	)
Cumulative translation adjustments, net of hedge of net investments in foreign operations and
income and social contribution taxes	26.g.2	36,570		12,796		36,570		12,796
Items that are not subsequently reclassified to profit or loss:
Actuarial gain (losses) of post-employment benefits of subsidiaries, net	26.g.1	(23,219	)	(1,193	)	(29,996	)	(5,282	)
Actuarial gain (losses) of post-employment benefits of joint-ventures, net	26.g.1	(6,791	)	(1,375	)	(6,791	)	(1,375	)
Total comprehensive income for the year		327,768		944,404		350,430		922,193
Total comprehensive income for the year attributable to shareholders of the Company		327,768		944,404		327,768		944,404
Total comprehensive income for the year attributable to non-controlling interest in subsidiaries						22,662		(22,211	)

The accompanying notes are an integral part of the financial statements.

Ultrapar Participações S.A. and Subsidiaries

Statements of Changes in Equity

For the years ended December 31, 2019 and 2018

(In thousands of Brazilian Reais)

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 shareholders 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 year															373,526				373,526		29,418		402,944
Other comprehensive income:
Fair value adjustments of available for sale, net of income taxes	26.g.1											(52,318	)						(52,318	)	21		(52,297	)
Actuarial gain of post-employment benefits, net of income taxes	26.g.1											(30,010	)						(30,010	)	(6,777	)	(36,787	)
Currency translation of foreign subsidiaries, including the effect of net investments
hedge	26.g.2													36,570					36,570				36,570
Total comprehensive income for the year												(82,328	)	36,570	373,526				327,768		22,662		350,430
Shareholder transaction gain in reimbursement of shares pref. B from Oxiteno
Nordeste	3.b.2														1,489				1,489		(1,489	)
Equity instrument granted	26.b		7,661																7,661				7,661
Realization of revaluation reserve of subsidiaries	26.e						(190	)							190
Income and social contribution taxes on realization of revaluation reserve of subsidiaries	26.e														(31	)			(31	)			(31	)
Transfer to statutory reserve										1,648					(1,648	)
Additional dividends attributable to non-controlling interests																					(993	)	(993	)
Redemption of non-controlling shares of Oxiteno Nordeste	3.b.2																				(2,180	)	(2,180	)
Capital increase from Iconic non-controlling shareholders																					6,996		6,996
Approval of additional dividends by the Shareholders Meeting	26.h																(109,355	)	(109,355	)			(109,355	)
Allocation of net income:
Legal reserve	26.f; 26.h								18,676						(18,676	)
Interim dividends (R$ 0.20 per share of the Company)	26.h														(217,382	)			(217,382	)			(217,382	)
Proposed dividends (R$ 0.24 per share of the Company)	26.h									(124,002	)				(137,468	)	261,470
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		9,835,176

The accompanying notes are an integral part of the financial statements.

Ultrapar Participações S.A. and Subsidiaries

Statements of Changes in Equity

For the years ended December 31, 2019 and 2018

(In thousands of Brazilian Reais)

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 shareholders equity
Balance as of December 31, 2017		5,171,752	536	549,778		(482,260	)	4,930		629,144	3,000,707	154,824		53,061			163,742		9,246,214		377,824		9,624,038
Net income for the year															1,150,421				1,150,421		(18,101	)	1,132,320
Other comprehensive income:
Fair value adjustments of financial assets, net of income taxes	26.g.1											(216,245	)						(216,245	)	(21	)	(216,266	)
Actuarial losses of post-employment benefits, net of income taxes	26.g.1											(2,568	)						(2,568	)	(4,089	)	(6,657	)
Currency translation of foreign subsidiaries, including the effect of net investments
hedge	26.g.2													12,796					12,796				12,796
Total comprehensive income for the year												(218,813	)	12,796	1,150,421				944,404		(22,211	)	922,193
Equity instrument granted	26.b		3,773																3,773				3,773
Stock plan	8.c; 26.c			(7,378	)	(3,123	)												(10,501	)			(10,501	)
Realization of revaluation reserve of subsidiaries	26.e							(218	)						218
Income and social contribution taxes on realization of revaluation reserve of subsidiaries	26.e														(3	)			(3	)			(3	)
Expired dividends															3,170				3,170				3,170
Transfer to investments reserve											3,385				(3,385	)
Additional dividends attributable to non-controlling interests																					(3,689	)	(3,689	)
Approval of additional dividends by the Shareholders Meeting	26.h																(163,742	)	(163,742	)			(163,742	)
Allocation of net income:
Legal reserve	26.f; 26.h									57,521					(57,521	)
Interim dividends (R$ 0.56 per share of the Company)	26.f; 26.h														(304,241	)			(304,241	)			(304,241	)
Proposed dividends (R$ 0.70 per share of the Company)	26.h														(380,324	)	109,355		(270,969	)			(270,969	)
Statutory reserve	26.h										408,335				(408,335	)
Balance as of December 30, 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

The accompanying notes are an integral part of the financial statements.

Ultrapar Participações S.A. and Subsidiaries

Statements of Cash FlowsIndirect Method

For the years ended December 31, 2019 and 2018

(In thousands of Brazilian Reais)

Note	12/31/2019		12/31/2018		12/31/2019		12/31/2018
Cash flows from operating activities
Net income for the year		373,526		1,150,421		402,944		1,132,320
Adjustments to reconcile net income to cash provided by operating activities
Share of loss (profit) of subsidiaries, joint ventures and associates	12	(394,793	)	(1,174,985	)	12,145		14,779
Amortization of contractual assets with customers exclusive rights	11					355,250		371,825
Amortization of right to use assets	13.a					300,058
Depreciation and amortization	14; 15					844,647		812,489
PIS and COFINS credits on depreciation	14; 15					14,918		15,721
Interest and foreign exchange rate variations		65,346		1,776		1,248,741		1,026,515
Deferred income and social contribution taxes	9.b	(27,579	)	15,125		(97,465	)	162,417
Loss on disposal of property, plant, and equipment and intangibles	29					30,019		22,088
Impairment of assets	15.a; 29					593,280
Estimated losses on doubtful accounts	5					30,003		69,250
Provision for losses in inventories	6					(816	)	(1,498	)
Provision for post-employment benefits	20.b					10,682		4,854
Equity instrument granted	8.c					7,661		3,773
Other provisions and adjustments				(6	)	2,364		(3,908	)
		16,500		(7,669	)	3,754,431		3,630,625
(Increase) decrease in current assets
Trade receivables and reseller financing	5					361,563		(355,854	)
Inventories	6					(357,553	)	168,704
Recoverable taxes	7	(10,045	)	(6,635	)	(550,805	)	(11,467	)
Dividends received from subsidiaries and joint-ventures		1,521,209		528,778		4,108		42,436
Insurance and other receivables		(2,731	)	877		21,737		(14,536	)
Prepaid expenses	10	(173	)	(365	)	(15,507	)	(37,525	)
Increase (decrease) in current liabilities
Trade payables	17	1,901		(190	)	(31,605	)	576,164
Salaries and related charges	18	730		(16	)	(22,556	)	40,074
Taxes payable	19	(11,174	)	11,220		1,917		46,476
Income and social contribution taxes		(9,238	)	9,238		250,486		166,527
Post-employment benefits	20.b					(16,704	)	15,596
Provision for tax, civil, and labor risks	22.a					(37,367	)	13,272
Insurance and other payables		(3,970	)	(3,466	)	66,819		(59,237	)
Deferred revenue	24					1,054		8,159
(Increase) decrease in non-current assets
Trade receivables and reseller financing	5					11,422		(99,622	)
Recoverable taxes	7	9,238				(19,526	)	(539,539	)
Escrow deposits		(17	)	148		(39,936	)	(58,757	)
Other receivables						(797	)	6,350
Prepaid expenses	10	(225	)	(30	)	(4,379	)	(58,735	)
Increase (decrease) in non-current liabilities
Post-employment benefits	20.b					(15,415	)	(8,457	)
Provision for tax, civil, and labor risks	22.a; 22.c	(399	)	(184	)	18,891		11,811
Other payables		(939	)	(2,818	)	27,698		(4,397	)
Deferred revenue	24					(11,850	)	(1,046	)
Payments of contractual assets with customers exclusive rights	11					(330,068	)	(390,177	)
Income and social contribution taxes paid						(141,206	)	(197,886	)
Net cash provided by operating activities		1,510,667		528,888		2,924,852		2,888,959

The accompanying notes are an integral part of the financial statements.

Ultrapar Participações S.A. and Subsidiaries

Statements of Cash FlowsIndirect Method

For the years ended December 31, 2019 and 2018

(In thousands of Brazilian Reais)

Note	12/31/2019		12/31/2018		12/31/2019		12/31/2018
Cash flows from investing activities
Financial investments, net of redemptions	4b	470,101		(544,273	)	(555,378	)	(1,669,937	)
Cash and cash equivalents of subsidiary acquired	3.c							3,662
Acquisition of property, plant, and equipment	14	(2,532	)			(1,020,042	)	(1,178,312	)
Acquisition of intangible assets	15					(151,997	)	(237,593	)
Acquisition of companies	3.c							(103,373	)
Capital increase in subsidiary	12.a	(1,453,964	)
Capital increase in joint ventures	12.b					(79,124	)	(31,908	)
Capital reduction in associates	12.c							1,250
Initial direct costs of right to use assets	13.a					(68,007	)
Proceeds from disposal of property, plant, and equipment and intangibles	29					39,287		38,578
Net cash used in investing activities		(986,395	)	(544,273	)	(1,835,261	)	(3,177,633	)
Cash flows from financing activities
Loans and debentures
Proceeds	16			1,721,596		2,105,737		4,461,112
Repayments	16			(800,336	)	(2,644,704	)	(3,710,718	)
Interest paid	16	(112,675	)	(86,806	)	(1,469,780	)	(737,564	)
Payments of lease	13.b					(321,716	)	(5,120	)
Dividends paid	26.h	(594,381	)	(789,378	)	(596,436	)	(808,603	)
Redemption of non-controlling shares of Oxiteno
Nordeste	3.b.2					(2,180	)
Capital increase from Iconic non-controlling shareholders						6,996
Acquisition of treasury shares	24.c			(6,526	)
Related parties	8.a	53,049		55,976		(146	)	(114	)
Net cash (used in) provided by financing activities		(654,007	)	94,526		(2,922,229	)	(801,007	)
Effect of exchange rate changes on cash and cash equivalents in foreign currency						9,066		26,628
Decrease (increase) in cash and cash equivalents		(129,735	)	79,141		(1,823,572	)	(1,063,053	)
Cash and cash equivalents at the beginning of the year	4.a	172,315		93,174		3,938,951		5,002,004
Cash and cash equivalents at the end of the year	4.a	42,580		172,315		2,115,379		3,938,951
Transactions without cash effect:
Addition on right to use assets and leases payable	13.a					334,857

The accompanying notes are an integral part of the financial statements.

Ultrapar Participações S.A. and Subsidiaries

Statements of Value Added

For the years ended December 31, 2019 and 2018

(In thousands of Brazilian Reais, except percentages)

Note	12/31/2019		%		12/31/2018	%	12/31/2019		%	12/31/2018	%
Revenue
Gross revenue from sales and services, except rents and royalties	27							95,034,980		95,297,114
Rebates, discounts, and returns	27							(1,494,814	)	(1,342,799	)
Estimated losses on doubtful accounts								(30,003	)	(69,250	)
Amortization of contractual assets with customers exclusive rights	11							(355,250	)	(371,825	)
Gain (loss) on disposal of property, plant, and equipment and intangibles and other operating
income, net	29; 30							149,606		35,445
								93,304,519		93,548,685
Materials purchased from third parties
Raw materials used								(5,621,164	)	(6,173,615	)
Cost of goods, products, and services sold								(77,651,614	)	(78,330,739	)
Third-party materials, energy, services, and
others		12,255				7,306		(2,657,370	)	(2,351,100	)
Impairment of assets	15.a; 29							(593,280	)
Provisions for losses of assets								29,876		(23,141	)
		12,255				7,306		(86,553,304	)	(86,878,595	)
Gross value added		12,255				7,306		6,751,215		6,670,090
Deductions
Depreciation and amortization	14; 15							(1,144,705	)	(812,489	)
PIS and COFINS credits on depreciation	14; 15							(14,918	)	(15,721	)
								(1,159,623	)	(828,210	)
Net value added by the Company		12,255				7,306		5,591,592		5,841,880
Value added received in transfer
Share of profit (loss) of subsidiaries, joint-ventures, and associates	12	394,793				1,174,985		(12,145	)	(14,779	)
Rents and royalties	27							144,354		143,090
Financial income	31	73,201				146,137		457,289		681,235
		467,994				1,321,122		589,498		809,546
Total value added available for distribution		480,249				1,328,428		6,181,090		6,651,426
Distribution of value added
Labor and benefits		9,890		2		6,218		2,098,706	34	2,187,994	33
Taxes, fees, and contributions		(23,016	)	(5	)	66,114	5	2,798,355	45	2,312,328	35
Financial expenses and rents		119,849		25		105,675	8	881,085	14	1,018,784	15
Dividends distributed		354,850		74		684,565	52	355,843	6	688,254	10
Retained earnings		18,676		4		465,856	35	47,101	1	444,066	7
Value added distributed		480,249		100		1,328,428	100	6,181,090	100	6,651,426	100

The accompanying notes are an integral part of the financial statements.

Ultrapar Participações S.A. and Subsidiaries

Notes to the Parent and Consolidated Financial Statements

(In thousands of Brazilian Reais, unless otherwise stated)

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 33.

Presentation of Financial Statements and Summary of Significant Accounting Policies

The Companys Parent and consolidated financial statements (financial statements) were prepared in accordance with the International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board (IASB) and the accounting policies adopted in Brazil.

The accounting policies adopted in Brazil include those in the Brazilian corporate law and in the Pronouncements, Orientations and Interpretations issued by the Accounting Pronouncements Committee (CPC) and approved by the Brazilian Federal Accounting Council (CFC) and the Brazilian Securities and Exchange Commission (CVM).

All relevant specific information of the financial statements, and only this information, were presented and correspond to that used by the Companys and its subsidiaries Management.

The presentation currency of the Companys financial statements is the Brazilian Real (R$), which is the Companys functional currency.

The Company and its subsidiaries applied the accounting policies described below in a consistent manner for all years presented in this financial statements except for the adoption of IFRS 16/CPC 06 (R2), as of January 1, 2019 as described in Note 2.h and y.

a. Recognition of Revenue

Revenue of sales and services rendered is measured at the value of the consideration that the Companys 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 27 and 33.

Amortization of contractual assets with customers for the exclusive rights in Ipirangas 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 24.a.

Ultrapar Participações S.A. and Subsidiaries

Notes to the Parent and Consolidated Financial Statements

(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 24.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 filling 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$ 61,589 in 2019 (R$ 63,085 in 2018).

b. Cash and Cash Equivalents

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

c. Financial Assets

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

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

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

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

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

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

Ultrapar Participações S.A. and Subsidiaries

Notes to the Parent and Consolidated Financial Statements

(In thousands of Brazilian Reais, unless otherwise stated)

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

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

For further information on financial instruments, see Note 34.

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 34.d.3). The estimated losses take into account, (i) at the initial recognition of the contract, the expected losses for the next 12 months or (ii) for the lifetime of the contract when the deterioration or improvement of the customers credit quality, considering the customers characteristics in each business segment. The amount of the expected credit losses is deemed by management to be sufficient to cover any probable loss on realization of trade receivables.

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 Ipirangas 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).

Ultrapar Participações S.A. and Subsidiaries

Notes to the Parent and Consolidated Financial Statements

(In thousands of Brazilian Reais, unless otherwise stated)

g. Investments

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

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

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

h. Right to Use Assets and Lease Payable

The Company and its subsidiaries recognized in the financial position, a right to use assets and the respective lease liabilities initially measured at the present value of future lease payments, considering the related contract costs (see Note 13). The amortization expenses of right to use assets is recognized in statement of profit or loss over the lease contract term. The liability is increased for interest and net of payments. The charges 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.

Right to use assets include amounts related to port concession grants (see Note 35.c).

The subsidiaries of the Company apply the exemptions for recognition of 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:

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

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

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

Ultrapar Participações S.A. and Subsidiaries

Notes to the Parent and Consolidated Financial Statements

(In thousands of Brazilian Reais, unless otherwise stated)

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 account 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 financial statements. The current rates in Brazil are 25% for IRPJ and 9% for CSLL. For further information about recognition and realization of IRPJ and CSLL, see Note 9.

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

n. Provision for Asset Retirement Obligation Fuel Tanks

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

o. Provisions for Tax, Civil, and Labor Risks

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

p. Post-Employment Benefits

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

Ultrapar Participações S.A. and Subsidiaries

Notes to the Parent and Consolidated Financial Statements

(In thousands of Brazilian Reais, unless otherwise stated)

q. Other Liabilities

Other liabilities are stated at known or measurable amounts plus, if applicable, related charges, 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 financial statements. The effect of the difference between those exchange rates is recognized in financial results until the conclusion of each transaction.

s. Basis for Translation of Financial Statements 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 financial statements. 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 December 31, 2019 was a gain of R$ 102,427 (gain of R$ 65,857 in 2018) see Note 26.g.2.

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

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

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

s.2. Subsidiaries without self-administrative autonomy

Assets and liabilities of the other foreign subsidiaries, which do not have administrative autonomy, are considered an extension of the activities of their parent company and are translated using the exchange rate at the date of the financial statements. Gains and losses resulting from changes in these foreign investments are directly recognized as financial result. The gain recognized in income in 2019 amounted to R$ 2,444 (gain of R$ 4,090 in 2018).

t. Use of Estimates, Assumptions and Judgments

The preparation of the financial statements 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 financial statements, as well as the experience of past and current events, also considering assumptions regarding future events. The estimates and assumptions are reviewed periodically.

Ultrapar Participações S.A. and Subsidiaries

Notes to the Parent and Consolidated Financial Statements

(In thousands of Brazilian Reais, unless otherwise stated)

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).

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 34), the determination of the estimated losses on doubtful accounts (Notes 2.d, 5 and 34.d.3), the determination of provisions for losses of inventories (Notes 2.e and 6), 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 25 and 34.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 report 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, the Company and its subsidiaries estimate the recoverable amount of the asset. Assets that cannot be evaluated individually are grouped in the smallest group of assets that generate cash inflow from continuous use and that are largely independent of cash flows of other assets (cash generating units CGU). The recoverable amount of assets or CGUs corresponds to the greater of their fair value net of applicable direct selling costs and their value in use.

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

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

On December 31, 2019, the Company recognized an impairment loss for the subsidiary Imifarma Produtos Farmacêuticos e Cosméticos S.A. (Extrafarma) (see Note 15.a).

v. Business Combination

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

Ultrapar Participações S.A. and Subsidiaries

Notes to the Parent and Consolidated Financial Statements

(In thousands of Brazilian Reais, unless otherwise stated)

w. Statements of Value Added

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

x. Statements of Cash Flows Indirect Method

The Company and its subsidiaries present the interest paid on loans, debentures, and leases payable in financing activities. The Company and its subsidiaries 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

The following standards, amendments, and interpretations to IFRS were issued by the IASB, which are effective as of January 1, 2019:

(i) IFRS 16/CPC 06 (R2) Lease:

With the adoption of IFRS 16/CPC 06 (R2), the leases contracted by the Companys subsidiaries, identified and effective at the date of transition and with maturities of more than 12 months, were accounted in the financial statements:

recognition of right to use assets and lease liabilities in financial position, initially measured at the present value of future lease payments; and
recognition of amortization expenses of right to use assets and interest expenses on the lease payable in the financial result in the statements of profits or loss.

The Company selected as transition method the modified retrospective approach, with the cumulative effect of initial application of this new pronouncement recorded as an adjustment to the opening balance of equity and without restatement of comparative periods.

In the analysis of the adoption, the Companys management, with the assistance of specialized consulting, carried out the inventory of the contracts, evaluating whether or not each agreement contains a lease in accordance with IFRS 16/CPC 06 (R2). This analysis identified impacts mainly related to the lease of properties from third parties, port areas and lower amounts arising from other operations where the existence of leased assets individually or combined in service contracts was identified.

As allowed in the standard, short-term leases with a term of 12 months or less, variable amounts, indefinite term and leases of low amount assets such as computers and office furniture, are recognized as lease expenses on a straight-line basis in the statements of profit or loss.

In addition, the following practical expedients were used to transition to new lease accounting requirements:

application of the IFRS 16/CPC 06 (R2) to all contracts initiated before January 1, 2019 that were identified as leases in accordance with IAS 7/CPC 06 (R1) and IFRIC 4/ICPC 03;

use of discount rate according to the lease term and similar characteristics;

contracts with a term of 12 months from the date of the initial adoption of the standard or with indefinite term were not recorded;

exclusion of the initial direct costs of the measurement of the opening balance from right to use asset; and

options for extension of the term or termination were considered, when applicable.

Ultrapar Participações S.A. and Subsidiaries

Notes to the Parent and Consolidated Financial Statements

(In thousands of Brazilian Reais, unless otherwise stated)

The table below summarizes the effects on the initial adoption of the IFRS 16/CPC 06 (R2):


Current assets
Prepaid expenses	(39,066	)
Non-current assets
Prepaid expenses	(288,630	)
Right to use assets	1,731,427
Intangible assets	(39,928	)
Total assets	1,363,803
Current liabilities
Leases payable	13,827
Non-current liabilities
Leases payable	1,349,976
Total liabilities	1,363,803

The analysis associated with the measurement and accounting of the lease agreements are completed.

To measurement, the Company used a nominal discount rate, and estimated the payment flows for the gross portion of taxes.

(ii) IFRIC 23/ICPC 22Uncertainty over income tax treatments:

IFRS 23 (ICPC 22) clarifies how to apply the recognition and measurement when there is uncertainty over income tax treatments, that means, there are doubts about acceptance of the treatments adopted by the fiscal authority, applying the requirements in IAS 12 (CPC 32).

In the evaluation of management, no significant impacts were identified as a result of the adoption of IFRIC 23/ICPC 22, since all the procedures adopted for the determination and collection of income taxes are supported by the legislation and precedents from Administrative and Judicial Courts.

z. Authorization for Issuance of the Financial Statements

This financial statements were authorized for issue by the Board of Directors on February 19, 2020.

Principles of Consolidation and Investments in Subsidiaries

a. Principles of Consolidation

In the preparation of the consolidated financial statements 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 financial statements of subsidiaries to bring their accounting policies into line with the Companys accounting policies.

Ultrapar Participações S.A. and Subsidiaries

Notes to the Parent and Consolidated Financial Statements

(In thousands of Brazilian Reais, unless otherwise stated)

b. Investments in Subsidiaries

The consolidated financial statements includes the following direct and indirect subsidiaries:

			% interest in the share
			12/31/2019		12/31/2018
			Control		Control
	Location	Segment	Direct	Indirect	Direct	Indirect
Ipiranga Produtos de Petróleo S.A.	Brazil	Ipiranga	100		100
am/pm Comestíveis Ltda.	Brazil	Ipiranga		100		100
Centro de Conveniências Millennium Ltda.	Brazil	Ipiranga		100		100
Icorban Correspondente Bancário Ltda.	Brazil	Ipiranga		100		100
Ipiranga Trading Limited	Virgin Islands	Ipiranga		100		100
Tropical Transportes Ipiranga Ltda.	Brazil	Ipiranga		100		100
Ipiranga Imobiliária Ltda.	Brazil	Ipiranga		100		100
Ipiranga Logística Ltda.	Brazil	Ipiranga		100		100
Oil Trading Importadora e Exportadora Ltda.	Brazil	Ipiranga		100		100
Iconic Lubrificantes S.A.	Brazil	Ipiranga		56		56
Integra Frotas Ltda.	Brazil	Ipiranga		100		100
Companhia Ultragaz S.A.	Brazil	Ultragaz		99		99
Ultragaz Comercial Ltda.	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
Oxiteno S.A. Indústria e Comércio	Brazil	Oxiteno	100		100
Oxiteno Nordeste S.A. Indústria e Comércio (2)	Brazil	Oxiteno				99
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 Andina, C.A. (3)	Venezuela	Oxiteno				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. (4)	Brazil	Ultracargo		100
Ultrapar International S.A.	Luxembourg	Others	100		100
SERMA Ass. dos usuários equip. proc. de dados	Brazil	Others		100		100

The percentages in the table above are rounded.

(1) Non operating company in closing phase.

(2) On April 30, 2019, the shareholders of Oxiteno Nordeste S.A. Indústria e Comércio (Oxiteno Nordeste) approved the rescue of all of its preferred shares class B, with consequent cancellation. On December 2, 2019, in order to simplify the corporate structure, the subsidiary Oxiteno Nordeste was incorporated by its parent Oxiteno S.A. Indústria e Comércio (Oxiteno S.A.).

(3) On October 15, 2019, the subsidiary Oxiteno S.A. approved the asset write-offs of Oxiteno Andina C.A. (Oxiteno Andina).

(4) Company constituted on May 20, 2019 due the concession of the port of Vila do Conde (see Note 35.c).

Ultrapar Participações S.A. and Subsidiaries

Notes to the Parent and Consolidated Financial Statements

(In thousands of Brazilian Reais, unless otherwise stated)

c. TEAS Terminal Exportador de Álcool de Santos Ltda. Acquisition

The Company through its subsidiary Terminal Químico de Aratu S.A. Tequimar (Tequimar) acquired 100% of the quotas of TEAS Terminal Exportador de Álcool de Santos Ltda. (TEAS). On March 29, 2018, the acquisition was concluded through the closing of the operation. For further details of TEAS business combination, see Note 3.d of financial statements as of and for the year ended December 31, 2018 filed on CVM on February 20, 2019.

Cash and Cash Equivalents and Financial Investments

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

The financial assets were classified in Note 34.j, based on business model of financial assets of the Company and its subsidiaries.

Cash, cash equivalents and financial investments (consolidated) amounted to R$ 5,712,097 as of December 31, 2019 (R$ 6,994,406 as of December 31, 2018) are as follows:

a. Cash and Cash Equivalents

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

12/31/2019	12/31/2018	12/31/2019	12/31/2018
Cash and bank deposits
In local currency	381	381	182,237	117,231
In foreign currency			102,755	88,251
Financial investments considered cash equivalents
In local currency
Fixed-income securities	42,199	171,934	1,780,939	3,722,308
In foreign currency
Fixed-income securities			49,448	11,161
Total cash and cash equivalents	42,580	172,315	2,115,379	3,938,951

Ultrapar Participações S.A. and Subsidiaries

Notes to the Parent and Consolidated Financial Statements

(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:

12/31/2019	12/31/2018	12/31/2019	12/31/2018
Financial investments
In local currency
Fixed-income securities and funds	95,829	565,930	2,610,686	2,537,315
In foreign currency
Fixed-income securities and funds			303,417	154,811
Currency and interest rate hedging instruments (a)			682,615	363,329
Total financial investments	95,829	565,930	3,596,718	3,055,455
Current	95,829	565,930	3,090,212	2,853,106
Non-current			506,506	202,349

(a) Accumulated gains, net of income tax (see Note 34.j).

Trade Receivables and Reseller Financing (Consolidated)

a. Trade Receivables

The composition of trade receivables is as follows:

Domestic customers	3,867,902		4,290,996
Foreign customers	226,484		244,960
(-) Estimated losses on doubtful accounts	(404,886	)	(385,080	)
	3,689,500		4,150,876
Current	3,635,834		4,069,307
Non-current	53,666		81,569

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

Total	Current	less than 30 days	31-60 days	61-90 days	91-180 days	more than 180 days
12/31/2019	4,094,386	3,199,315	159,350	27,320	12,245	61,489	634,667
12/31/2018	4,535,956	3,739,601	121,622	53,864	49,629	84,920	486,320

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

Total	Current	less than 30 days	31-60 days	61-90 days	91-180 days	more than 180 days
12/31/2019	404,886	28,861	1,456	1,625	3,749	23,698	345,497
12/31/2018	385,080	39,226	4,094	3,754	5,533	46,783	285,690

Ultrapar Participações S.A. and Subsidiaries

Notes to the Parent and Consolidated Financial Statements

(In thousands of Brazilian Reais, unless otherwise stated)

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

Balance as of December 31, 2017	347,801
Additions	287,566
Write-offs	(250,287	)
Balance as of December 31, 2018	385,080
Additions	189,192
Write-offs	(169,386	)
Balance as of December 31, 2019	404,886

For further information about the allowance for estimated losses on doubtful accounts, see Note 34.d.3.

b. Reseller financing

The composition of reseller financing is as follows:

Reseller financing Ipiranga	956,942		855,229
(-) Estimated losses on doubtful accounts	(156,006	)	(139,699	)
800,936		715,530
Current	436,188		367,262
Non-current	364,748		348,268

Reseller financing is provided for renovation and upgrading of service stations, purchase of products, and development of the automotive fuels and lubricants distribution market. The terms of reseller financing range substantially from 12 months to 60 months, with an average term of 40 months. The minimum and maximum interest rates are 0% per month and 1% per month, respectively.

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

Total	Current	less than 30 days	31-60 days	61-90 days	91-180 days	more than 180 days
12/31/2019	956,942	644,488	26,262	10,481	12,616	30,144	232,951
12/31/2018	855,229	633,183	11,262	14,869	9,377	20,783	165,755

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

Total	Current	less than 30 days	31-60 days	61-90 days	91-180 days	more than 180 days
12/31/2019	156,006	21,337	2,519	1,063	1,313	14,639	115,135
12/31/2018	139,699	26,982	1,250	1,642	1,131	12,176	96,518

Ultrapar Participações S.A. and Subsidiaries

Notes to the Parent and Consolidated Financial Statements

(In thousands of Brazilian Reais, unless otherwise stated)

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

Balance as of December 31, 2017	104,977
Additions	34,722
Balance as of December 31, 2018	139,699
Additions	30,601
Write-offs	(14,294	)
Balance as of December 31, 2019	156,006

For further information about the allowance for estimated losses on doubtful accounts, see Note 34.d.3.

6. Inventories (Consolidated)

The composition of inventories is as follows:

Cost	Provision for losses		Net balance	Cost	Provision for losses		Net balance
Fuels, lubricants and greases	1,843,257	(2,073	)	1,841,184	1,367,015	(1,804	)	1,365,211
Finished goods	541,689	(22,048	)	519,641	581,504	(20,923	)	560,581
Work in process	1,971			1,971	1,412			1,412
Raw materials	365,960	(2,552	)	363,408	383,161	(1,894	)	381,267
Liquefied petroleum gas (LPG)	101,715	(5,761	)	95,954	109,362	(5,761	)	103,601
Consumable materials and other items for resale	140,058	(2,587	)	137,471	150,188	(3,770	)	146,418
Pharmaceutical, hygiene, and beauty products	549,191	(2,877	)	546,314	583,060	(5,364	)	577,696
Purchase for future delivery (1)	183,170	(2,719	)	180,451	193,928	(2,964	)	190,964
Properties for resale	29,273	(107	)	29,166	27,489	(107	)	27,382
3,756,284	(40,724)		3,715,560	3,397,119	(42,587)		3,354,532

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

Movements in the provision for losses are as follows:

Balance as of December 31, 2017	37,099
Additions to net realizable value adjustment	600
Additions of obsolescence and other losses	3,903
Oxiteno Andina (i)	985
Balance as of December 31, 2018	42,587
Reversals to net realizable value adjustment	(5,174	)
Additions of obsolescence and other losses	4,296
Oxiteno Andina (ii)	(985	)
Balance as of December 31, 2019	40,724

(i) Refers to the impairment for subsidiary Oxiteno Andina (see Note 2.s.1.ii of financial statements as of and for the year ended December 31, 2018 filed on CVM on February 20, 2019).

(ii) Refers to the asset write-offs of Oxiteno Andina (see Note nº 3.b.3).

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

Net realizable value adjustment	15,243	21,402
Obsolescence and other losses	25,481	21,185
Total	40,724	42,587

Ultrapar Participações S.A. and Subsidiaries

Notes to the Parent and Consolidated Financial Statements

(In thousands of Brazilian Reais, unless otherwise stated)

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).

ICMS (a.1)	914,066		710,669
Provision for ICMS losses (a.1)	(41,396	)	(99,187	)
PIS and COFINS (a.2)	930,570		720,731
Value-Added Tax (IVA) of foreign subsidiaries	29,707		31,678
Others	56,748		22,988
Total	1,889,695		1,386,879
Current	1,122,335		639,699
Non-current	767,360		747,180

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

(i) The subsidiary Oxiteno Nordeste predominantly carries out export operations, interstate outflow or deferred ICMS of products purchased within the State of Bahia;

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

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

Management estimates the realization of these credits within up to 10 years.

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 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 20.d.1).

Ultrapar Participações S.A. and Subsidiaries

Notes to the Parent and Consolidated Financial Statements

(In thousands of Brazilian Reais, unless otherwise stated)

b. Recoverable Income Tax and Social Contribution Taxes

Represented by recoverable IRPJ and CSLL.

12/31/2019	12/31/2018	12/31/2019	12/31/2018
IRPJ and CSLL	89,197	88,390	430,290	362,784
Total	89,197	88,390	430,290	362,784
Current	49,750	39,705	325,343	257,182
Non-current	39,447	48,685	104,947	105,602

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

8. Related Parties

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

a. Related Parties

a.1 Parent

Debentures (1)	Account payable	Financial income (1)
Ipiranga Produtos de Petróleo S.A.	759,123		50,884
Imifarma Produtos Farmacêuticos e Cosméticos S.A.		4,220
Total as of December 31, 2019	759,123	4,220	50,884

Debentures (1)	Other payables (2)	Account payable
Ipiranga Produtos de Petróleo S.A.	761,288			54,702
Companhia Ultragaz S.A.		3,975
Imifarma Produtos Farmacêuticos e Cosméticos S.A.			5,158
Total as of December 31, 2018	761,288	3,975	5,158	54,702

(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.

(2) Refers to the Deferred Stock Plan (see Note 8.c).

Ultrapar Participações S.A. and Subsidiaries

Notes to the Parent and Consolidated Financial Statements

(In thousands of Brazilian Reais, unless otherwise stated)

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:

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

Assets	Liabilities
Química da Bahia Indústria e Comércio S.A.		2,925
Others	490	1,146
Total as of December 31, 2018	490	4,071

Loans agreements have indeterminate terms and do not contain interest clauses. These are carried out due temporary excess or necessity cash of the Company, its subsidiaries, and its associates.

Receivables (1)	Payables (1)	Sales and services	Purchases	Expenses
Oxicap Indústria de Gases Ltda.		1,545	1	18,565
Refinaria de Petróleo Riograndense S.A.		264,602		1,019,108
ConectCar Soluções de Mobilidade Eletrônica S.A.	739	113	7,385	121
LA7 Participações e Empreend. Imob. Ltda. (a)		124			1,477
Chevron Latin America Marketing LLC
Total as of December 31, 2019	739	266,384	7,386	1,037,794	1,477

Receivables (1)	Payables (1)	Sales and services	Purchases	Expenses
Oxicap Indústria de Gases Ltda.		567	6	9,032
Refinaria de Petróleo Riograndense S.A.		24,630		1,008,860
ConectCar Soluções de Mobilidade Eletrônica S.A.	1,042	136	3,844	186
LA7 Participações e Empreend. Imob. Ltda. (a)		117			1,469
Total as of December 31, 2018	1,042	25,450	3,850	1,018,078	1,469

(1) Included in domestic trade receivables, domestic trade payables and domestic trade payables agreement, respectively.

(a) Refers to rental contracts of 15 drugstores owned by LA7 as of December 31, 2019 (15 drugstores as of December 31, 2018), a company of the former shareholders of Extrafarma that are current shareholders of Ultrapar.

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

Ultrapar Participações S.A. and Subsidiaries

Notes to the Parent and Consolidated Financial Statements

(In thousands of Brazilian Reais, unless otherwise stated)

b. Key executives (Consolidated)

The Companys 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 executives experience, responsibility, and his/her positions 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 executives and the Companys 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 (Companys directors and executive officers) as shown below:

Short-term compensation	41,659	36,504
Stock compensation	9,881	1,407
Post-employment benefits	2,640	2,278
Termination benefit		905
Total	54,180	41,094

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. Ultrapars Board of Directors does not have a stock plan. The fair value of the awards were determined on the grant date based on the market value of the shares on the B3, the Brazilian Securities, Commodities and Futures Exchange and the amounts are amortized between five to seven years from the grant date.

Ultrapar Participações S.A. and Subsidiaries

Notes to the Parent and Consolidated Financial Statements

(In thousands of Brazilian Reais, unless otherwise stated)

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

Grant date — March 13, 2017	200,000	2022 to 2024	34.00	9,378	(4,513	)	4,865
March 4, 2016	380,000	2021 to 2023	32.72	17,147	(11,164	)	5,983
December 10, 2014	533,324	2019 to 2021	25.32	27,939	(23,967	)	3,972
March 5, 2014	111,200	2020 to 2021	26.08	5,999	(5,610	)	389
November 7, 2012		2019	21.45	16,139	(16,139	)
1,224,524			76,602	(61,393)		15,209

In 2019, the amortization in the amount of R$ 10,321 (R$ 3,922 in 2018) was recognized as a general and administrative expense.

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

Balance on December 31, 2017	2,366,796
Cancellation of granted shares due to termination of executive employment	(433,332	)
Shares vested and transferred	(233,336	)
Balance on December 31, 2018	1,700,128
Shares vested and transferred	(475,604	)
Balance on December 31, 2019	1,224,524

The information above were adjusted retrospectively as disclosure in Note 26.a.

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 Companys 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 and Consolidated Financial Statements

(In thousands of Brazilian Reais, unless otherwise stated)

The table below summarizes the restricted and performance stock programs:

Program — Restricted	Grant date — October 1, 2017	240,000	Vesting period — 2023	38.19	12,642	(4,741	)	7,901
Restricted and performance	November 8, 2017	75,876	2020 to 2022	38.19	5,014	(2,850	)	2,164
Restricted and performance	April 4, 2018	184,076	2021 to 2023	34.35	12,066	(5,539	)	6,527
Restricted	September 19, 2018	160,000	2024	19.58	4,321	(900	)	3,421
Restricted	September 24, 2018	80,000	2024	18.40	2,030	(423	)	1,607
Restricted and performance	April 3, 2019	558,708	2022 to 2024	23.25	24,096	(4,729	)	19,367
Restricted	September 2, 2019	440,000	2025	16.42	10,074	(560	)	9,514
	1,738,660			70,243	(19,742)		50,501

In 2019, a general and administrative expense in the amount of R$ 12,893 was recognized in relation to the Plan (R$ 6,001 in 2018).

Balance on December 31, 2017	332,540
Shares granted on April 9, 2018	207,184
Shares granted on September 19, 2018	160,000
Shares granted on September 24, 2018	80,000
Cancellation of granted shares due to termination of executive employment	(39,772	)
Balance on December 31, 2018	739,952
Shares granted on April, 3, 2019	567,876
Shares granted on September 2, 2019	440,000
Cancellation of granted shares due to termination of executive employment	(9,168	)
Balance on December 31, 2019	1,738,660

The information above were adjusted retrospectively as disclosure in Note 26.a.

Ultrapar Participações S.A. and Subsidiaries

Notes to the Parent and Consolidated Financial Statements

(In thousands of Brazilian Reais, unless otherwise stated)

9. Income and Social Contribution Taxes

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

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

12/31/2019	12/31/2018	12/31/2019		12/31/2018
Assets Deferred income and social contribution taxes on:
Provision for impairment of assets			72,377		116,191
Provisions for tax, civil, and labor risks			150,085		154,516
Provision for post-employment benefits			92,199		85,575
Provision for differences between cash and accrual basis			224,065		147,376
Goodwill			8,161		12,258
Business combination fiscal basis vs. accounting basis of goodwill			75,745		75,838
Provision for asset retirement obligation			14,762		15,801
Provision for suppliers	439		35,214		38,339
Provision for profit sharing and bonus			44, 818		49,621
Leases payable			19,003
Change in fair value of subscription warrants			16,338		13,700
Other provisions	16,542	14,034	45,316		42,694
Tax losses and negative basis for social contribution carryforwards (d)	24,632		278,140		208,036
Total	41,613	14,034	1,076,223		959,945
Offset the liabilities balance			(422,529	)	(445,758	)
Net balance of deferred taxes assets	41,613	14,034	653,694		514,187
Liabilities Deferred income and social contribution taxes on:
Revaluation of PP&E			1,866		1,981
Lease payable			2,356		2,858
Provision for differences between cash and accrual basis			257,718		138,332
Provision for goodwill			39,186		187,845
Business combination fair value of assets			114,125		117,352
Other provisions			14,809		6,687
Total			430,060		455,055
Offset the assets balance			(422,529	)	(445,758	)
Net balance of deferred taxes liabilities			7,531		9,297

Ultrapar Participações S.A. and Subsidiaries

Notes to the Parent and Consolidated Financial Statements

(In thousands of Brazilian Reais, unless otherwise stated)

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

12/31/2019	12/31/2018		12/31/2019	12/31/2018
Initial balance	14,034	29,159		504,890	530,419
Deferred IRPJ and CSLL recognized in income of the year	27,579	(15,125	)	97,465	(162.417	)
Deferred IRPJ and CSLL recognized in other comprehensive income				40,497	133,124
Deferred IRPJ and CSLL recognized in business combination (i)					1,054
Others				3,311	2,710
Final balance	41,613	14,034		646,163	504,890

(i) For further details of TEAS business combination, see Note 3.d of financial statements filed on CVM on February 20, 2019.

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

Up to 1 Year	13,209	178,127
From 1 to 2 Years	4,211	54,814
From 2 to 3 Years	4,265	141,105
From 3 to 5 Years	8,652	136,029
From 5 to 7 Years	6,354	353,806
From 7 to 10 Years	4,922	212,342
Total of deferred tax assets relating to IRPJ and CSLL	41,613	1,076,223

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

The main key assumptions used to calculate the realization of deferred tax assets are: growth in Gross Domestic Product (GDP), exchange rate, basic interest rate (SELIC) and DI, inflation rate, commodity price index , among others. The balance of R$ 1,076,223 was supported by the technical study on taxable income projections for the realization of deferred tax assets, reviewed by the Fiscal Council and by the Audit and Risks Committee and approved by Companys Board of Directors.

Ultrapar Participações S.A. and Subsidiaries

Notes to the Parent and Consolidated Financial Statements

(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:

	12/31/2019		12/31/2018		12/31/2019		12/31/2018
Income before taxes and share of profit (loss) of subsidiaries, joint ventures, and
associates	(48,846	)	25,924		793,698		1,785,818
Statutory tax rates %	34		34		34		34
Income and social contribution taxes at the statutory tax rates	16,608		(8,814	)	(269,857	)	(607,178	)
Adjustments to the statutory income and social contribution taxes:
Nondeductible expenses (i)	11,023		(372	)	(68,795	)	(82,784	)
Nontaxable revenues (ii)	11		13		28,235		32,523
Adjustment to estimated income (iii)					10,511		9,706
Interest on equity (iv)			(41,338	)			(538	)
Unrecorded deferred Income and Social Contribution Taxes Carryforwards deferred (v)					(146,820	)	(95,480	)
Other adjustments	(63	)	23		24,873		(2,634	)
Income and social contribution taxes before tax incentives	27,579		(50,488	)	(421,853	)	(746,385	)
Tax incentives SUDENE					43,244		107,666
Income and social contribution taxes in the income statement	27,579		(50,488	)	(378,609	)	(638,719	)
Current			(35,363	)	(476,074	)	(476,302	)
Deferred	27,579		(15,125	)	97,465		(162,417	)
Effective IRPJ and CSLL rates %	56.5		194.8		47.7		35.8

(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) Interest on equity is an option foreseen in Brazilian corporate law to distribute profits to shareholders, calculated based on the long-term interest rate (TJLP), which does not affect the income statement, but is deductible for purposes of IRPJ and CSLL, being taxable to the beneficiary and deductible to the entity that pays;

(v) See Note 9.d.

Ultrapar Participações S.A. and Subsidiaries

Notes to the Parent and Consolidated Financial Statements

(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 (1)	75	2027
	Suape base (2)	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 (3)	Camaçari plant	75	2026
Empresa Carioca de Produtos Químicos S.A.	Camaçari plant	75	2026

(1) The subsidiary Bahiana Distribuidora de Gás Ltda. (Bahiana), obtained 75% income tax reduction incentive recognized by SUDENE, through an appraisal report on October 22, 2018, until 2027, due to the modernization for its Aracaju plant Sergipe. Due to the tacit approval by the RFB the constitutive benefit appraisal report the subsidiary recognized income tax reduction retroactive effect in January 2018 in the amount of R$ 1,067.

(2) The subsidiary Bahiana had the 75% income tax reduction incentive recognized by SUDENE, through an appraisal report on January 14, 2019, until 2027, due to the modernization for its Suape plant Pernambuco. The constitutive benefit appraisal report was approved in May 2019 by the RFB.

(3) The request to transfer the right to reduce the IRPJ to Oxiteno S.A. will be submitted to SUDENE due to the incorporation of the subsidiary Oxiteno Nordeste.

d. Income and Social Contribution Taxes Carryforwards

In December 31, 2019, the Company and certain subsidiaries had tax loss carryforwards related to income tax (IRPJ) of R$ 1,268,964 (R$ 873,718 as of December 31, 2018) and negative basis of CSLL of R$ 1,270,714 (R$ 876,315 as of December 31, 2018), whose compensations are limited to 30% of taxable income in a given tax year, which do not expire.

In addition, certain offshore subsidiaries had tax loss carryforwards of R$ 878,470 (R$ 620,906 as of December 31, 2018).

The amount of deferred income and social contribution tax assets are as follows:

Cia. Ultragaz	12,808	37,332
Oxiteno S.A.	148,306	43,645
Iconic	17,657	28,256
Extrafarma	72,318	98,803
Ultrapar	24,632
Ultrapar International	2,419
278,140	208,036

Ultrapar Participações S.A. and Subsidiaries

Notes to the Parent and Consolidated Financial Statements

(In thousands of Brazilian Reais, unless otherwise stated)

The amount of deferred income and social contribution and social contribution tax assets are as follows:

Extrafarma	237,664	94,115
Integra Frotas	4,636	1,365
Oxiteno Argentina		22
Oxiteno USA	127,992	124,864
Oxiteno Andina		466
370,292	220,832

The technical study of the realization of deferred tax assets was approved by the Companys CA, according Note 9.a.

10. Prepaid Expenses (Consolidated)

	12/31/2019	12/31/2018
Rents (1)	37,106	413,799
Advertising and publicity	24,857	54,011
Deferred Stock Plan, net (see Note 8.c)	15,965	22,737
Insurance premiums	61,884	52,607
Software maintenance	21,759	21,667
Other prepaid expenses	19,000	21,844
180,571	586,665
Current	111,355	187,570
Non-current	69,216	399,095

(1) After the adoption of IFRS16/CPC 06 (R2), some agreements were transferred to right to use assets (see Note 2.y).

11. Contractual Assets with Customers Exclusive Rights (Consolidated)

Refers to exclusive rights disbursements of Ipirangas 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, 2017	1,502,360
Additions	390,177
Amortization	(371,825	)
Transfer	(2,235	)
Balance as of December 31, 2018	1,518,477
Additions	330,068
Amortization	(355,250	)
Transfer	(27,306	)
Balance as of December 31, 2019	1,465,989
Current	465,454
Non-current	1,000,535

Ultrapar Participações S.A. and Subsidiaries

Notes to the Parent and Consolidated Financial Statements

(In thousands of Brazilian Reais, unless otherwise stated)

12. Investments

a. Subsidiaries and Joint Venture (Parent Company)

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


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
Net revenue from sales and services		1,514,022	73,679,913			2,156,432
Net income (loss)	35,529	23,895 (*)	365,680 (*)	(41,055	)	32,346
% of capital held	100	100	100	100		33


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	1,279,932	6,222,795	17,850,422	2,904,188		517,304
Liabilities	2,509	3,416,140	12,434,610	2,894,598		456,714
Equity	1,277,423	2,806,655 (*)	5,415,812 (*)	9,590		60,590
Net revenue from sales and services		1,380,519	74,312,071			2,092,548
Net income (loss)	111,145	553,236 (*)	512,987 (*)	(3,531	)	8,695
% 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 33.

Ultrapar Participações S.A. and Subsidiaries

Notes to the Parent and Consolidated Financial Statements

(In thousands of Brazilian Reais, unless otherwise stated)

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

Ultracargo Operações Logísticas e Participações Ltda.		Oxiteno S.A. Indústria e Comércio		Ipiranga Produtos de Petróleo S.A.		Ultrapar International S.A.		Total		Refinaria de Petróleo Riograndense S.A.		Total
Balance as of December 31, 2017	1,165,426		2,682,015		5,402,880		13,121		9,263,442		54,739		9,318,181
Share of profit (loss) of subsidiaries and joint venture	111,145		553,236		512,987		(3,531	)	1,173,837		1,148		1,174,985
Dividends and interest on equity (gross)			(229,243	)	(500,023	)			(729,266	)	(32,065	)	(761,331	)
Tax liabilities on equity method revaluation reserve					(7	)			(7	)			(7	)
Equity instrument granted	65		269		3,439				3,773				3,773
Valuation adjustment of subsidiaries	787		(212,698	)	(3,184	)			(215,095	)	(3,704	)	(218,799	)
Translation adjustments of foreign-based subsidiaries			13,076		(280	)			12,796				12,796
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	35,529		23,895		365,680		(41,051	)	384,053		10,740		312
Dividends and interest on equity (gross)	(50,015	)	(1,011,490	)	(198,000	)			(1,259,505	)	(4,295	)	(1,263,800	)
Tax liabilities on equity method revaluation reserve					(31	)			(31	)			(31	)
Equity instrument granted	303		687		6,671				7,661				7,661
Valuation adjustment of subsidiaries	(1,605	)	(52,854	)	(19,385	)			(73,844	)	(7,771	)	(81,615	)
Translation adjustments of foreign-based subsidiaries			36,570						36,570				36,570
Capital increase in cash					1,450,000		3,964		1,453,964				1,453,964
Redemption of subsidiary shares of Oxiteno Nordeste	362		(254	)					108				108
Balance as of December 31, 2019	1,261,997		1,803,209		7,020,747		(27,497	)	10,058,456		18,792		10,077,248

Ultrapar Participações S.A. and Subsidiaries

Notes to the Parent and Consolidated Financial Statements

(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 constituted. On August 5, 2019, Navegantes Logística Portuária S.A. (Navegantes) was constituted 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) (see Note 35.c) were constituted.

These investments are accounted for under the equity method of accounting based on their financial statements as of December 31, 2019.

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, 2017	6,096		54,739		61,226							122,061
Capital increase					31,908							31,908
Valuation adjustments			(3,704	)								(3,704	)
Dividends and interest on equity (gross)			(32,065	)								(32,065	)
Share of profit (loss) of joint ventures	1,350		1,148		(18,744	)						(16,246	)
Balance as of December 31, 2018	7,446		20,118		74,390							101,954
Capital increase					35,000		10,351	23,581	1,930	4,183	4,079	79,124
Valuation adjustments			(7,771	)								(7,771	)
Dividends and interest on equity (gross)	(1,474	)	(4,295	)								(5,769	)
Share of profit (loss) of joint ventures	1,370		10,740		(26,572	)						(14,462	)
Balance as of December 31, 2019	7,342		18,792		82,818		10,351	23,581	1,930	4,183	4,079	153,076

Ultrapar Participações S.A. and Subsidiaries

Notes to the Parent and Consolidated Financial Statements

(In thousands of Brazilian Reais, unless otherwise stated)

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

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
Net revenue from sales and services	15,400		2,156,432		80,387
Costs, operating expenses and income	(12,083	)	(2,130,323	)	(136,764	)
Net financial income and income and social contribution taxes	(577	)	6,237		3,234
Net income (loss)	2,740		32,346		(53,143	)
Number of shares or units held	29,995		5,078,888		228,768,000
% of capital held	50		33		50

União Vopak		RPR		ConectCar
Current assets	8,432		370,250		129,152
Non-current assets	8,552		147,054		150,054
Current liabilities	1,814		385,079		130,414
Non-current liabilities	280		71,635		14
Equity	14,890		60,590		148,778
Net revenue from sales and services	16,938		2,092,548		57,506
Costs, operating expenses and income	(13,154	)	(2,083,592	)	(114,336	)
Net financial income and income and social contribution taxes	(1,084	)	(261	)	19,343
Net income (loss)	2,700		8,695		(37,487	)
Number of shares or units held	29,995		5,078,888		193,768,000
% of capital held	50		33		50

The percentages in the table above are rounded.

Ultrapar Participações S.A. and Subsidiaries

Notes to the Parent and Consolidated Financial Statements

(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.

Due to incorporation of the subsidiary Oxiteno Nordeste, the subsidiary Oxiteno S.A. holds an interest in Química da Bahia Indústria e Comércio S.A., which is primarily engaged in manufacturing, marketing, and processing of chemicals. The operations of this associate are currently suspended.

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

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

The investment of subsidiary Oxiteno S.A. in the associate Oxicap is accounted for under the equity method of accounting based on its financial information as of November 30, 2019, while the other associates are valued based on the financial statements as of December 31, 2019.

Balances and changes in associates are as follows:

Balance as of December 31, 2017	Transportadora Sulbrasileira de Gás S.A. — 6,348		Oxicap Indústria de Gases Ltda. — 14,458	Química da Bahia Indústria e Comércio S.A. — 3,618		Metalúrgica Plus S.A. — 340		Plenogás Distribuidora de Gás S.A. — 577		Total — 25,341
Capital reduction	(1,250	)								(1,250	)
Dividends	(984	)						(236	)	(1,220	)
Share of profit (loss) of associates	575		908	(28	)	(112	)	124		1,467
Balance as of December 31, 2018	4,689		15,366	3,590		228		465		24,338
Dividends	(818	)						(87	)	(905	)
Share of profit (loss) of associates	1,790		568	(36	)	(90	)	85		2,317
Balance as of December 31, 2019	5,661		15,934	3,554		138		463		25,750

Ultrapar Participações S.A. and Subsidiaries

Notes to the Parent and Consolidated Financial Statements

(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:

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
Net revenue from sales and services	12,348		43,463
Costs, operating expenses and income	(4,815	)	(36,791	)	(84	)	(213	)	285
Net financial income and income and social contribution taxes	(157	)	(2,483	)	12		(57	)	(29	)
Net income (loss)	7,376		4,189		(72	)	(270	)	256
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

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	7,803		38,714		51		19		64
Non-current assets	15,254		85,395		10,238		990		2,791
Current liabilities	3,963		9,777				21		123
Non-current liabilities	332		8,888		3,109		302		1,334
Equity	18,762		105,444		7,180		686		1,398
Net revenue from sales and services	10,595		53,288
Costs, operating expenses and income	(7,957	)	(43,814	)	(78	)	(266	)	399
Net financial income and income and social contribution taxes	(211	)	(3,453	)	22		(69	)	(27	)
Net income (loss)	2,427		6,021		(56	)	(335	)	372
Number of shares or units held	20,124,996		1,987		1,493,120		3,000		1,384,308
% of capital held	25		15		50		33		33

The percentages in the table above are rounded.

Ultrapar Participações S.A. and Subsidiaries

Notes to the Parent and Consolidated Financial Statements

(In thousands of Brazilian Reais, unless otherwise stated)

Right to Use Assets and Leases payable (Consolidated)

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

a. Right to Use Assets


Cost:
Real estate	7	1,636,330	308,622	(55,605	)	98,043		80,930			2,068,320
Port area (*)			68,007								68,007
Other	4	95,097	26,235	(1,981	)	27,847		4,272			151,470
		1,731,427	402,864	(57,586	)	125,890		85,202			2,287,797
Accumulated amortization:
Real estate				6,682				36	(262,750	)	(256,032	)
Port area
Other				442		(14,068	)	81	(37,308	)	(50,853	)
				7,124		(14,068	)	117	(300,058	)	(306,885	)
Net amount		1,731,427	402,864	(50,462	)	111,822		85,319	(300,058	)	1,980,912

(*) Refers to the port concession grants, of which R$ 68,007 was paid by subsidiaries of the Company until the 4 th quarter of 2019 (see Note 35.c).

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

Inventories and cost of products and services sold	48,134
Selling and marketing	244,974
General and administrative	6,950
	300,058

b. Leases Payable

The changes in leases payable are shown below:

Balance as of December 31, 2018	46,066
Adoption IFRS 16/CPC 06 (R2)	1,363,803
Interest accrued	128,996
Payments	(321,716	)
Additions and remeasurement	334,857
Write-offs	(52,129	)
Effect of foreign currency exchange rate variation	88,796
Balance as of December 31, 2019	1,588,673
Current	206,396
Non-current	1,382,277

Ultrapar Participações S.A. and Subsidiaries

Notes to the Parent and Consolidated Financial Statements

(In thousands of Brazilian Reais, unless otherwise stated)

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

Up to 1 year	309,977
From 1 to 2 years	508,976
From 2 to 3 years	395,743
From 3 to 4 years	316,682
From 4 to 5 years	192,017
More than 5 years	320,357
Total	2,043,752

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).

c. Lease Contracts of Low Amount Assets

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

12/31/2019	3,474	6,028		9,502

The expense recognized in 2019 was R$ 11,400 (R$ 11.386 in 2018).

d. Inflation effect

The effects of inflation are as follows:

Net right to use assets — Nominal base	5,799	1,980,912
Inflated base	7,012	2,220,614
	20.9%	14.8%

Lease liability — Nominal base	5,999	1,588,673
Inflated base	7,012	1,828,870
	16.9%	18.6%

Financial expenses — Nominal base	200	128,996
Inflated base	280	159,135
	39.8%	23.4%

Depreciation expenses — Real base		300,058
Inflated base		301,284
		0.4%

Ultrapar Participações S.A. and Subsidiaries

Notes to the Parent and Consolidated Financial Statements

(In thousands of Brazilian Reais, unless otherwise stated)

Property, Plant, and Equipment (Consolidated)

Balances and changes in PP&E are as follows:


Cost:
Land		620,879		43,420			4,785		(2,017	)	1,059		(261	)	667,865
Buildings	32	1,801,073		18,117			105,861		(4,339	)	7,023		(1,789	)	1,925,946
Leasehold improvements	10	1,015,640		19,191			129,234		(42,552	)	15				1,121,528
Machinery and equipment	13	5,219,256		131,831			365,953		(4,967	)	9,596		(13,948	)	5,707,721
Automotive fuel/lubricant distribution equipment and facilities	14	2,864,333		103,288			81,038		(57,187	)					2,991,472
LPG tanks and bottles	10	743,016		65,351			(6,993	)	(45,914	)					755,460
Vehicles	7	308,756		24,686			7,564		(20,353	)	(394	)	(98	)	320,161
Furniture and utensils	9	279,016		15,009			4,399		(2,665	)	198		(353	)	295,604
Construction in progress		922,799		591,525			(695,301	)	(108	)	8,344		(173	)	827,086
Advances to suppliers		14,088		7,378			(8,921	)			(1	)			12,544
Imports in progress		41		9,513			(9,304	)							250
IT equipment	5	395,063		21,771			872		(5,249	)	352				412,809
		14,183,960		1,051,080			(20,813	)	(185,351	)	26,192		(16,622	)	15,038,446
Accumulated depreciation:
Buildings		(743,117	)		(58,158	)	187		4,681		893		1,679		(793,835	)
Leasehold improvements		(558,042	)		(84,664	)	2,040		26,291		(4	)			(614,379	)
Machinery and equipment		(2,969,209	)		(298,767	)	2,983		3,510		16,340		13,516		(3,231,627	)
Automotive fuel/lubricant distribution equipment and facilities		(1,657,608	)		(159,961	)			50,691						(1,766,878	)
LPG tanks and bottles		(401,056	)		(57,890	)	4,467		28,925						(425,554	)
Vehicles		(123,650	)		(27,106	)	28		11,274		311		98		(139,045	)
Furniture and utensils		(155,339	)		(18,944	)	(12	)	2,280		204		336		(171,475	)
IT equipment		(288,083	)		(34,782	)	50		5,061		(309	)			(318,063	)
		(6,896,104	)		(740,272	)	9,743		132,713		17,435		15,629		(7,460,856	)

Ultrapar Participações S.A. and Subsidiaries

Notes to the Parent and Consolidated Financial Statements

(In thousands of Brazilian Reais, unless otherwise stated)


Provision for losses:
Advances to suppliers	(83	)	(27	)									(110	)
Buildings	(306	)										306
Land	(827	)										681	(146	)
Leasehold improvements	(1,385	)	(1,528	)					111		1,203		(1,599	)
Machinery and equipment	(6,117	)							769		1,138	1,335	(2,875	)
Automotive fuel/lubricant distribution equipment and facilities	(165	)							67				(98	)
Construction in progress	(38	)										38
Furniture and utensils	(70	)							1			69
	(8,991	)	(1,555	)					948		2,341	2,429	(4,828	)
Net amount	7,278,865		1,049,525		(740,272	)	(11,070	)	(51,690	)	45,968	1,436	7,572,762

(*) Refers to the asset write-offs of Oxiteno Andina (see Note nº 3.b.3).

Ultrapar Participações S.A. and Subsidiaries

Notes to the Parent and Consolidated Financial Statements

(In thousands of Brazilian Reais, unless otherwise stated)


Cost:
Land		576,642	3,994	9,261		(895	)	(1,238	)	33,115	620,879
Buildings	32	1,637,871	7,041	151,937		(2,929	)	(10,914	)	18,067	1,801,073
Leasehold improvements	8	912,555	11,931	103,371		(12,273	)	56			1,015,640
Machinery and equipment	13	4,721,931	115,171	588,696		(4,895	)	(261,955	)	60,308	5,219,256
Automotive fuel/lubricant distribution equipment and facilities	13	2,729,522	98,478	98,573		(62,240	)				2,864,333
LPG tanks and bottles	8	692,856	78,995	2,552		(31,387	)				743,016
Vehicles	6	287,295	29,141	18,061		(23,996	)	(1,745	)		308,756
Furniture and utensils	8	265,909	18,417	6,078		(863	)	(10,570	)	45	279,016
Construction in progress		929,000	796,909	(883,994	)	(578	)	81,462			922,799
Advances to suppliers		112,167	6,317	(100,233	)			(4,163	)		14,088
Imports in progress		786	699	(1,446	)			2			41
IT equipment	5	352,986	34,921	7,942		(1,953	)	1,161		6	395,063
		13,219,520	1,202,014	798		(142,009	)	(207,904	)	111,541	14,183,960

Ultrapar Participações S.A. and Subsidiaries

Notes to the Parent and Consolidated Financial Statements

(In thousands of Brazilian Reais, unless otherwise stated)


Accumulated depreciation:
Buildings	(724,408	)		(53,462	)	10,046		2,608		26,533		(4,434	)	(743,117	)
Leasehold improvements	(475,651	)		(83,208	)	(4,574	)	5,398		(7	)			(558,042	)
Machinery and equipment	(2,980,166	)		(271,867	)	1,143		3,449		288,461		(10,229	)	(2,969,209	)
Automotive fuel/lubricant distribution equipment and facilities	(1,545,806	)		(162,815	)	(7,232	)	58,245						(1,657,608	)
LPG tanks and bottles	(328,384	)		(88,308	)	(2,347	)	17,983						(401,056	)
Vehicles	(112,200	)		(28,792	)	498		15,002		1,842				(123,650	)
Furniture and utensils	(148,575	)		(18,482	)	(292	)	513		11,517		(20	)	(155,339	)
IT equipment	(260,859	)		(30,659	)	2,702		1,819		(1,080	)	(6	)	(288,083	)
	(6,576,049	)		(737,593	)	(56	)	105,017		327,266		(14,689	)	(6,896,104	)
Provision for losses:
Advances to suppliers	(83	)												(83	)
Buildings			(306) (*)											(306	)
Land	(104	)	(723) (*)											(827	)
Leasehold improvements	(564	)	(733)					2		(90	)			(1,385	)
Machinery and equipment	(4,724	)	(1,532) (*)					444		(305	)			(6,117	)
Automotive fuel/lubricant distribution equipment and facilities	(169	)						4						(165	)
Construction in progress			(38) (*)											(38	)
Furniture and utensils	(1	)	(69) (*)											(70	)
	(5,645	)	(3,401)					450		(395	)			(8,991	)
Net amount	6,637,826		1,198,613	(737,593	)	742		(36,542	)	118,967		96,852		7,278,865

(i) Refers to amounts transferred to intangible assets, inventories and right to use assets, stating in 2019.

(ii) See Note 3.c.

(*) Refers to the impairment for subsidiary Oxiteno Andina (see Note 2.s.1.ii of financial statements as of and for the year ended December 31, 2018 filed on CVM on February 20, 2019).

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 financial statements as shown below:

Inventories and cost of products and services sold	405,966	406,002
Selling and marketing	285,671	279,023
General and administrative	48,635	52,568
	740,272	737,593

Ultrapar Participações S.A. and Subsidiaries

Notes to the Parent and Consolidated Financial Statements

(In thousands of Brazilian Reais, unless otherwise stated)

Intangible Assets (Consolidated)

Balances and changes in intangible assets are as follows:


Cost:
Goodwill (a)		1,525,088																1,525,088
Software (b)	3	1,062,486				145,004				2,553		(784	)	1,551		(281	)	1,210,529
Technology (c)	5	32,617																32,617
Commercial property rights	10	64,032		(56,114	)	3,820				(1,401	)	(2,403	)					7,934
Distribution rights	6	142,989				1,505				(10,895	)							133,599
Brands (d)		120,571												1,933				122,504
Trademark rights (d)	35	114,792																114,792
Others (e)	10	43,281				1,668				(355	)			306				44,900
		3,105,856		(56,114	)	151,997				(10,098	)	(3,187	)	3,790		(281	)	3,191,963
Accumulated amortization:
Software		(537,438	)					(110,088	)	13		(611	)	(998	)	261		(648,861	)
Technology		(32,613	)					(3	)									(32,616	)
Commercial property rights		(23,931	)	16,186				(848	)	(669	)	2,878						(6,384	)
Distribution rights		(106,597	)					(6,511	)	4,176								(108,932	)
Trademark rights		(3,182	)					(2,937	)									(6,119	)
Others		(32,740	)					(105	)	136				(4	)			(32,713	)
		(736,501	)	16,186				(120,492	)	3,656		2,267		(1,002	)	261		(835,625	)
Provision for losses and impairment:
Goodwill (a)						(593,280	)											(593,280	)
Commercial property rights						(465	)											(465	)
						(593,745	)											(593,745	)
Net amount		2,369,355		(39,928	)	(441,748	)	(120,492	)	(6,442	)	(920	)	2,788		(20	)	1,762,593

(*) Refers to the asset write-offse of Oxiteno Andina (see Note 3.b.3).

Ultrapar Participações S.A. and Subsidiaries

Notes to the Parent and Consolidated Financial Statements

(In thousands of Brazilian Reais, unless otherwise stated)


Cost:
Goodwill (a)		1,524,291											797		1,525,088
Software (b)	5	853,079		223,964			(1,258	)	(15,401	)	2,053		49		1,062,486
Technology (c)	5	32,617													32,617
Commercial property rights (d)	10	55,069		11,117					(2,154	)					64,032
Distribution rights	8	142,669		690			(350	)			(20	)			142,989
Brands (e)		113,543									7,028				120,571
Trademark rights (e)	39	114,792													114,792
Others (f)	10	40,514		1,822							945				43,281
		2,876,574		237,593			(1,608	)	(17,555	)	10,006		846		3,105,856
Accumulated amortization:
Software		(456,799	)		(79,845	)	59		28		(832	)	(49	)	(537,438	)
Technology		(32,541	)		(72	)									(32,613	)
Commercial property rights		(21,292	)		(4,679	)			2,040						(23,931	)
Distribution rights		(96,704	)		(10,018	)	125								(106,597	)
Trademark rights					(3,182	)									(3,182	)
Others		(31,196	)		(1,538	)					(6	)			(32,740	)
		(638,532	)		(99,334	)	184		2,068		(838	)	(49	)	(736,501	)
Net amount		2,238,042		237,593	(99,334	)	(1,424	)	(15,487	)	9,168		797		2,369,355

(i) Refers to amounts transferred to PP&E and right to use assets as from 2019.

(ii) See Note 3.c.

Ultrapar Participações S.A. and Subsidiaries

Notes to the Parent and Consolidated Financial Statements

(In thousands of Brazilian Reais, unless otherwise stated)

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

Inventories and cost of products and services sold	11,183	15,044
Selling and marketing	3,872	8,920
General and administrative	105,437	75,370
	120,492	99,334

a. Goodwill

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


Goodwill on the acquisition of:
Extrafarma	Extrafarma	661,553		661,553
Extrafarma impairment	Extrafarma	(593,280	)
Extrafarma net	Extrafarma	68,273		661,553
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		1,525,088

(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 Companys business plan of its operating segments, as well as comparable market data, and represent managements best estimate of the economic conditions that will exist over the economic life of the various CGUs, to which goodwill is related.

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

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

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

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.

Ultrapar Participações S.A. and Subsidiaries

Notes to the Parent and Consolidated Financial Statements

(In thousands of Brazilian Reais, unless otherwise stated)

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

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

b. Software

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

c. Technology

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

d. Brands and Trademark rights

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

e. Other intangibles

Refers mainly to the loyalty program Clube Extrafarma.

Ultrapar Participações S.A. and Subsidiaries

Notes to the Parent and Consolidated Financial Statements

(In thousands of Brazilian Reais, unless otherwise stated)

Loans and Debentures

a. Composition

a.1 Parent

Description
Brazilian Reais:
Debentures 6 th issuance (g.5)	1,752,081	1,756,954	DI	105.3	2023
Current	28,713	34,504
Non-current	1,723,368	1,722,450

a.2 Consolidated

Description
Foreign currency denominated loans:
Notes in the foreign market (b) (*)	4,213,662	2,889,631	US$	5.3	2026 to 2029
Foreign loan (c.1) (*)	1,057,407	985,268	US$	3.9	2021 to 2023
Foreign loan (c.1) (*)	608,685	582,106	US$ + LIBOR	0.9	2022 to 2023
Financial institutions (e)	604,741	620,605	US$ + LIBOR	2.0	2020 to 2023
Foreign loan (c.2)	243,837	234,363	US$ + LIBOR	2.0	2020
Financial institutions (e)	132,417	127,288	US$	2.8	2020 to 2022
Financial institutions (e)	41,164	27,845	MX$ (2)	8.9	2020
BNDES (d)	208	2,596	US$	7.0	2020
Financial institutions (e)		3,950	MX$ + TIIE (2)
Foreign currency advances delivered		1,485	US$
Advances on foreign exchange contracts		11,702	US$
Total foreign currency	6,902,121	5,486,839

Ultrapar Participações S.A. and Subsidiaries

Notes to the Parent and Consolidated Financial Statements

(In thousands of Brazilian Reais, unless otherwise stated)

Description	12/31/2019
Brazilian Reais denominated loans:
Debentures CRA (g.2, g.4 and g.6)	2,036,647	2,029,545	DI	95.8	2022 to 2023
Debentures Ipiranga (g.1 and g.3)	1,868,612	2,039,743	DI	105.0	2020 to 2022
Debentures 6 th issuance (g.5)	1,752,080	1,756,954	DI	105.3	2023
Banco do Brasil floating rate (f)	611,276	2,614,704	DI	110.9	2020 to 2022
Debentures CRA (g.2, g.4 and g.6) (*)	941,614	833,213	IPCA	4.6	2024 to 2025
Debentures Tequimar (g.7)	89,278		R$	6.5	2024
BNDES (d)	62,578	147,922	TJLP (3)	2.3	2020 to 2023
FINEP	41,345	53,245	TJLP (3)	1.6	2020 to 2023
BNDES (d)	30,392	51,467	SELIC (5)	2.3	2020 to 2023
FINEP	12,820	22,553	R$	4.0	2020 to 2021
Banco do Nordeste do Brasil	10,039	15,776	R$ (4)	8.5	2020 to 2021
BNDES (d)	3,913	14,071	R$	7.6	2020 to 2022
FINAME	22	32	TJLP (3)	5.7	2020 to 2022
Bank Credit Bill		50,075	DI	124.0	2019
Total Brazilian Reais	7,460,616	9,629,300
Total foreign currency and Brazilian Reais	14,362,737	15,116,139
Currency and interest rate hedging instruments (**)	29,985	43,944
Total	14,392,722	15,160,083
Current	1,117,441	2,271,148
Non-current	13,275,281	12,888,935

(*) These transactions were designated for hedge accounting (see Note 34.h).

(**) Accumulated losses (see Note 34.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 December 31, 2019, TJLP was fixed at 5.57% 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 December 31, 2019, the FNE interest rate was 10% p.a. FNE grants a discount of 15% on the interest rate for timely payments.

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

Ultrapar Participações S.A. and Subsidiaries

Notes to the Parent and Consolidated Financial Statements

(In thousands of Brazilian Reais, unless otherwise stated)

The changes in loans and debentures are shown below:

Balance as of December 31, 2017	13,426,845
New loans and debentures with cash effect	4,461,112
Interest accrued	873,202
Principal payment/ installments for financial leasing	(3,715,838	)
Interest payment	(737,564	)
Monetary and exchange rate variation	804,273
Change in fair value	50,175
Adoption IFRS 16/CPC 06 (R2) transfer to Note 13.b	(46,066	)
Balance as of December 31, 2018	15,116,139
New loans and debentures with cash effect	2,105,737
Interest accrued	845,844
Principal payment	(2,644,704	)
Interest payment	(1,469,780	)
Monetary and exchange rate variation	296,441
Change in fair value	113,060
Balance as of December 31, 2019	14,362,737

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

From 1 to 2 years	1,424,775	960,038
From 2 to 3 years	3,115,495	1,548,092
From 3 to 4 years	3,451,988	3,216,293
From 4 to 5 years	765,263	3,428,130
More than 5 years	4,517,760	3,736,382
	13,275,281	12,888,935

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

The Companys management entered into hedging instruments against foreign exchange and interest rate variations for a portion of its debt obligations (see Note 34.h).

b. Notes in the Foreign Market

On October 6, 2016, the subsidiary Ultrapar International S.A. (Ultrapar International) issued US$ 750 million (equivalent to R$ 3,023.0 million as of December 31, 2019) 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 34.h.3).

Ultrapar Participações S.A. and Subsidiaries

Notes to the Parent and Consolidated Financial Statements

(In thousands of Brazilian Reais, unless otherwise stated)

On June 6, 2019, the subsidiary Ultrapar International issued US$ 500 million (equivalent to R$ 2,015.4 million as of December 31, 2019) 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 34.h.3).

On June 21, 2019, the subsidiary Ultrapar International repurchased US$ 200 million (equivalent to R$ 806.1 million as of December 31, 2019) in notes in the foreign market maturing in October 2026. As a result of the issuance of the notes in the foreign market, the Company and its subsidiaries are required to perform certain obligations, including:

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

Restriction on encumbrance of assets exceeding US$ 150 million (equivalent to R$ 604.6 million as of December 31, 2019) or 15% of the amount of the consolidated tangible assets.

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

c. Foreign Loans

c.1 The subsidiary IPP has foreign loans in the amount of US$ 395,000 (equivalent to R$ 1,592,127 as of December 31, 2019). 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 34.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 — Charges (1)	18,351	73,965
Jul/2021	60,000	241,842	101.8
Jun/2022	100,000	403,070	105.0
Jul/2023	50,000	201,535	104.8
Sep/2023	60,000	241,842	105.0
Sep/2023	65,000	261,996	104.7
Nov/2023	60,000	241,842	104.5
Total / average cost	413,351	1,666,092	104.4

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

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

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

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

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

Ultrapar Participações S.A. and Subsidiaries

Notes to the Parent and Consolidated Financial Statements

(In thousands of Brazilian Reais, unless otherwise stated)

c.2 The subsidiary Global Petroleum Products Trading Corporation has a foreign loan in the amount of US$ 60 million (equivalent to R$ 241.8 million as of December 31, 2019) 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. (by the incorporation of Oxiteno Nordeste).

d. BNDES

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

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

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

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

e. Financial Institutions

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

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

	US$	R$
Maturity	Thousands	Thousands
Charges (1)	156	627
Feb/2020	10,000	40,274
Aug/2020	10,000	40,274
Sep/2020	20,000	80,549
Feb/2021	10,000	40,274
Mar/2022	30,000	120,823
Oct/2022	40,000	161,097
Mar/2023	30,000	120,823
Total	150,156	604,741

(1) Includes interest and transaction costs.

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

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

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

Ultrapar Participações S.A. and Subsidiaries

Notes to the Parent and Consolidated Financial Statements

(In thousands of Brazilian Reais, unless otherwise stated)

f. Banco do Brasil

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

These loans mature, as follows (includes accrued interest through December 31, 2019):

Maturity
May/2020	205,274
May/2021	202,910
May/2022	203,092
Total	611,276

Ultrapar Participações S.A. and Subsidiaries

Notes to the Parent and Consolidated Financial Statements

(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% 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 and Consolidated Financial Statements

(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% 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 and Consolidated Financial Statements

(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 and Consolidated Financial Statements

(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 through profit or loss.

The debentures have maturity dates distributed as shown below (includes accrued interest through December 31, 2019).

Maturity
Charges (1)	183,304
May/2020	166,650
May/2021	166,700
Jul/2021	750,000
Apr/2022	660,139
Jul/2022	750,000
Oct/2022	730,384
Mar/2023	1,725,000
Dec/2023	660,000
Apr/2024	352,361
Oct/2024	213,693
Nov/2024	90,000
Dec/2025	240,000
Total	6,688,231

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

h. Transaction Costs

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

Debentures (g)	0.2	56,376	692	(15,662	)	41,406
Notes in the foreign market (b)	0.1	13,881	18,442	(4,209	)	28,114
Banco do Brasil (f)	0.2	3,437		(2,667	)	770
Foreign loans (c)	0.0	331		(237	)	94
Other	0.2	2,432		(1,050	)	1,382
Total		76,457	19,134	(23,825	)	71,766
Effective rate of transaction costs (% p.a.)	Balance on 12/31/2017	Incurred cost	Amortization		Balance on 12/31/2018
Debentures (g)	0.2	44,709	21,308	(9,641	)	56,376
Notes in the foreign market (b)		15,298		(1,417	)	13,881
Banco do Brasil (f)	0.2	8,065		(4,628	)	3,437
Foreign loans (c)	0.1	1,213		(882	)	331
Other	0.2	2,801	366	(735	)	2,432
Total		72,086	21,674	(17,303	)	76,457

Ultrapar Participações S.A. and Subsidiaries

Notes to the Parent and Consolidated Financial Statements

(In thousands of Brazilian Reais, unless otherwise stated)

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

Debentures (g)	13,058	12,403	9,274	5,318	1,139	214	41,406
Notes in the foreign market (b)	3,428	3,421	3,423	3,425	3,437	10,980	28,114
Banco do Brasil (f)	439	256	75				770
Foreign loans (c)	94						94
Other	597	416	367	2			1,382
Total	17,616	16,496	13,139	8,745	4,576	11,194	71,766

i. Guarantees

The financings are guaranteed by collateral in the amount of R$ 73,536 as of December 31, 2019 (R$ 69,822 as of December 31, 2018) and by guarantees and promissory notes in the amount of R$ 11,833,294 as of December 31, 2019 (R$ 10,667,175 as of December 31, 2018).

The Company and its subsidiaries offer collateral in the form of letters of credit for commercial and legal proceedings in the amount of R$ 293,509 as of December 31, 2019 (R$ 271,162 as of December 31, 2018).

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:

12/31/2019	12/31/2018	12/31/2018
Maximum amount of future payments related to these collaterals	81,344	2,753	2,750
Maturities of up to	60 months	4 months	3 months
Fair value of collaterals	1,237	68	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 December 31, 2019, 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.

Trade Payables (Consolidated)

Domestic suppliers	1,897,256	2,079,010
Domestic suppliers agreement (i)	455,950	73,169
Foreign suppliers	261,222	472,597
Foreign suppliers agreement (i)	85,643	106,901
	2,700,071	2,731,677

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

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

Ultrapar Participações S.A. and Subsidiaries

Notes to the Parent and Consolidated Financial Statements

(In thousands of Brazilian Reais, unless otherwise stated)

Salaries and Related Charges (Consolidated)

Provisions on salaries	184,716	186,200
Profit sharing, bonus and premium	133,533	147,170
Social charges	70,228	67,043
Others	17,159	27,779
	405,636	428,192

Taxes Payable (Consolidated)

ICMS	149,547	166,038
PIS and COFINS	40,676	38,055
ISS	26,986	22,339
Value-Added Tax (IVA) of foreign subsidiaries	25,619	21,306
Others	27,094	20,267
	269,922	268,005

Employee Benefits and Private Pension Plan (Consolidated)

a. ULTRAPREV - Associaçăo de Previdência Complementar

In February 2001, the Companys 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 employees 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 2019, the subsidiaries contributed R$ 21,357 (R$ 24,323 in 2018) to Ultraprev, which is recognized as expense in the income statement. The total number of participating employees as of December 31, 2019 was 8,008 active participants and 328 retired participants. In addition, Ultraprev had 26 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 December 31, 2019.

Health and dental care plan (1)	154,142	112,628
Indemnification of FGTS	66,309	83,781
Seniority bonus	34,485	37,397
Life insurance (1)	17,931	16,009
Total	272,867	249,815
Current	28,951	45,655
Non-current	243,916	204,160

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

Ultrapar Participações S.A. and Subsidiaries

Notes to the Parent and Consolidated Financial Statements

(In thousands of Brazilian Reais, unless otherwise stated)

The change in the present value of the post-employment benefit obligation is as follows:

Opening balance	249,815		237,523
Current service cost	(10,704	)	6,092
Interest cost	21,386		21,466
Expense for the year	10,682		27,558
Losses from changes in actuarial assumptions	44,489		7,934
Benefits paid directly by Company and its subsidiaries	(33,510	)	(23,604	)
Exchange rates from post employment benefits	1,391		404
Ending balance	272,867		249,815

The total of expense in each period is presented below:

Health and dental care plan	10,442		9,559
Indemnification of FGTS	(5,818	)	11,159
Seniority bonus	4,765		5,460
Life insurance	1,293		1,380
Total	10,682		27,558

The main actuarial assumptions used are:

Economic factors — % a.a.	%a.a.
Discount rate for the actuarial obligation at present value	8.79	9.00
Average projected salary growth rate	7.64	7.85
Inflation rate (long term)	3.80	4.00
Growth rate of medical services	7.95	8.16

Demographic factors
Mortality Table for the life insurance benefit CSO-80
Mortality Table for other benefitsAT 2000 Basic decreased by 10%
Disabled Mortality TableRRB 1983
Disability Table Weak light

Sensitivity analysis

The significant actuarial assumptions to determine the provision for post-employment benefits are: discount rate, wage and medical costs increases. The following sensitivity analyses on December 31, 2019 were determined based on reasonably possible changes of assumptions occurring at the reporting date of the financial statements, keeping all other assumptions constant.

Assumption — Discount rate	increase by 1.0 p.p	26,741	decrease by 1.0 p.p	49,344
Wage growth rate	decrease by 1.0 p.p	34,978	increase by 1.0 p.p	39,030
Medical services growth rate	decrease by 1.0 p.p	7,137	increase by 1.0 p.p	8,492

Ultrapar Participações S.A. and Subsidiaries

Notes to the Parent and Consolidated Financial Statements

(In thousands of Brazilian Reais, unless otherwise stated)

The sensitivity analyses presented may not represent the real change in the post-employment benefits obligation, since it is unlikely that changes occur in just one assumption alone, considering that some of these assumptions may be correlated.

Inherent risks related to post-employment benefits

Interest rate risk: a long-term interest rate is used to calculate the present value of post-employment liabilities. A reduction in this interest rate will increase the corresponding liability.

Wage growth risk: the present value of the liability is calculated using as reference the wages of the plan participants, projected with the average nominal wage growth rate. An increase in the real wages of plan participants will increase the corresponding liability.

Medical costs growth risk: the present value of the liability is calculated using as reference the medical cost by age based on actual healthcare costs, projected based on the growth rate of medical services costs. An increase in the real medical costs will increase the corresponding liability.

Provision for Asset Retirement Obligation Fuel Tanks (Consolidated)

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

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

Balance as of December 31, 2017	64,774
Additions (new tanks)	264
Expense with tanks removed	(12,752	)
Accretion expense	2,381
Balance as of December 31, 2018	54,667
Additions (new tanks)	290
Expense with tanks removed	(5,456	)
Accretion expense	1,741
Balance as of December 31, 2019	51,242
Current	3,847
Non-current	47,395

Provisions and Contingencies (Consolidated)

a. Provisions for tax, civil, and labor risks

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

Ultrapar Participações S.A. and Subsidiaries

Notes to the Parent and Consolidated Financial Statements

(In thousands of Brazilian Reais, unless otherwise stated)

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

Provisions — IRPJ and CSLL (a.1.1)	532,341	221	(6,600	)			15,319	541,281
PIS and COFINS	26,271		(16,771	)			655	10,155
ICMS	100,823	1,204	(5,521	)	(614	)	580	96,472
Civil, environmental and regulatory claims (a.2.1)	90,932	18,009	(17,318	)	(8,979	)	3,211	85,855
Labor litigation (a.3.1)	101,173	29,103	(19,970	)	(15,487	)	3,191	98,010
Others	91,531	1,355	(2,190	)			2,126	92,822
Total	943,071	49,892	(68,370	)	(25,080	)	25,082	924,595
Current	77,822							40,455
Non-current	865,249							884,140

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

Balances of escrow deposits are as follows:

Tax matters	753,810	727,493
Labor litigation	71,605	69,978
Civil and other	96,028	84,036
Total non-current assets	921,443	881,507

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$ 515,825 as of December 31, 2019 (R$ 500,260 as of December 31, 2018). 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 maintained 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$ 85,855 as of December 31, 2019 (R$ 90,932 as of December 31, 2018).

a.3 Provisions for Labor Matters

a.3.1 The Company and its subsidiaries maintained provisions of R$ 98,010 as of December 31, 2019 (R$ 101,173 as of December 31, 2018) for labor litigation filed by former employees and by employees of our service providers, mainly, contesting the non-payment of labor rights.

Ultrapar Participações S.A. and Subsidiaries

Notes to the Parent and Consolidated Financial Statements

(In thousands of Brazilian Reais, unless otherwise stated)

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 interim financial information. The estimated amount of this contingency is R$ 2,840,086 as of December 31, 2019 (R$ 2,839,219 as of December 31, 2018).

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$ 2,028,159 as of December 31, 2019 (R$ 1,941,749 as of December 31, 2018), 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$ 173,738 as of December 31, 2019 (R$ 168,391 as of December 31, 2018).

b.1.2 The subsidiary IPP and its subsidiaries have legal proceedings related to ICMS. The total amount involved in these proceedings, was R$ 836,822 as of December 31, 2019 (R$ 836,393 as of December 31, 2018), Such proceedings arise mostly of the disregard of ICMS credits amounting to R$ 319,849 as of December 31, 2019 (R$ 318,550 as of December 31, 2018), of which R$ 126,772 (R$ 126,639 as of December 31, 2018) refer to proportional reversal requirement of ICMS credits related to the acquisition of hydrated alcohol; of alleged non-payment in the amount of R$ 92,567 as of December 31, 2019 (R$ 125,703 as of December 31, 2018); of conditioned fruition of fiscal incentive in the amount of R$ 117,753 as of December 31, 2019 (R$ 121,745 as of December 31, 2018); and inventory differences in the amount of R$ 172,736 as of December 31, 2019 (R$ 185,512 as of December 31, 2018) 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$ 699,360 as of December 31, 2019 (R$ 674,126 as of December 31, 2018), 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$ 208,449 as of December 31, 2019 (R$ 193,771 as of December 31, 2018), 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$ 549,664, totaling 3,109 lawsuits as of December 31, 2019 (R$ 624,457, totaling 3,520 lawsuits as of December 31, 2018), 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$ 33,603 as of December 31, 2019 (R$ 32,983 as of December 31, 2018). The imposition of such administrative decision was suspended by a court order and its merit is being judicially reviewed.

Ultrapar Participações S.A. and Subsidiaries

Notes to the Parent and Consolidated Financial Statements

(In thousands of Brazilian Reais, unless otherwise stated)

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

b.2.3 The subsidiary IPP became party to two administrative proceedings filed by CADE, related to allegations of anti-competitive practices in the city of Joinville, State of Santa Catarina and around the city of Belo Horizonte, State of Minas Gerais, and for the latter, an administrative award was imposed for allegedly influencing uniform commercial conduct among fuel resellers, in the amount of R$ 40,693. The subsidiary IPP will continue to exercise its defense by appealing in all administrative and judicial instances. Supported by the opinion of external legal counsel that classified the probability of loss as remote, Management did not recognize a provision for this contingency as of December 31, 2019.

b.2.4 On November 29, 2016, a technical opinion was issued by the Operational Support Center for Execution (Centro de Apoio Operacional à ExecuçãoCAEX), a technical body linked to the São Paulo State Public Prosecutor (MPE), presenting a proposal of compensation for the alleged environmental damages caused by the fire on April 2 nd , 2015 at the Santos Terminal of the subsidiary Tequimar. This technical opinion is non-binding, with no condemnatory or sanctioning nature, and will still be evaluated by the authorities and parties. The subsidiary disagrees with the methodology and the assumptions adopted in the proposal and is negotiating an agreement with the MPE and the Brazilian Federal Public Prosecutor (MPF), since the beginning of the investigation and currently there is no civil lawsuit filed on the matter. The negotiations relate to in natura repair of the any damages. Thus, on May 15, 2019, the subsidiary Tequimar signed a Partial Conduct Adjustment Commitment Agreement (TAC) in the amount of R$ 67,539 with the MPE and MPF to compensate for diffuse and collective damages of any kind arising from the fish mortality and the damage caused to the ichthyofauna. The negotiations on compensation for other alleged damages are still ongoing and once concluded, the payments related to the project costs may affect the future Companys 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, in December 31, 2019, there are contingent liabilities not recognized related to lawsuits in the amount of R$ 11,403 (R$ 62,930 as of December 31, 2018). On December 31, 2019 there are no extrajudicial lawsuits (R$ 3,426 as of December 31,2018). For more information, see Note 23.

b.3 Contingent Liabilities for Labor Matters

The Company and its subsidiaries have contingent liabilities for labor matters in the amount of R$ 262,263, totaling 1,649 lawsuits as of December 31, 2019 (R$ 273,013, totaling 1,726 lawsuits as of December 31, 2018), mainly represented by:

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

Ultrapar Participações S.A. and Subsidiaries

Notes to the Parent and Consolidated Financial Statements

(In thousands of Brazilian Reais, unless otherwise stated)

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 financial statements 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$ 5,423 (R$ 3,609 as of December 31, 2018) are reflected in the consolidation of these financial statements. 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 December 31, 2019 (R$ 191,110 as of December 31, 2018). The amounts of provisions of Chevrons liability recognized in the business combination will be reimbursed to subsidiary Iconic in the event of losses and an indemnity asset was hereby constituted in the same amount, without the need to establish a provision for uncollectible amounts.

d. Contingent Assets

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

In March 15, 2017, STF decided that ICMS is not included in the PIS and COFINS basis. All subsidiaries have actions aimed at obtaining this right, as long as applicable. For the subsidiaries Oxiteno S.A., Extrafarma and Tequimar, have final and unappealable decision, and the respective subsidies to prove the amounts to be refunded were duly confirmed by management and recorded in results, up to the present year of 2019, the amount of R $ 338,110 (up to R $ 291,278 in 2018). As a result of injunctions obtained, some subsidiaries have already excluded ICMS from the PIS and COFINS calculation base in the amount of R $ 141,618 until December 31, 2019. The amounts to be recovered from the other subsidiaries will be recognized to the extent that concomitantly, there are the final and unappealable decision of the individual action and confirmation of the evidences.

The Companys 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 Companys management will assess the impact on the shares of its subsidiaries, which may result in a reduction in the claimed tax credits.

Trade payables customers and third parties indemnification

In April 2015, a fire occurred in six ethanol and gasoline tanks operated by Ultracargo in Santos. The tanks that were affected by the fire, obtained, in phases, the necessary licenses for the return to operation. Therefore the area rehabilitation process ended in August 2019.

The balance of customers and third parties indemnification as of December 31, 2018 in the amount of R$ 3,501 were settled on 2 nd quarter of 2019.

Deferred Revenue (Consolidated)

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

am/pm and Jet Oil franchising upfront fee (a)	956	18,668
Loyalty program Km de Vantagens (b)	25,096	18,465
Loyalty program Clube Extrafarma (b)	1,574	1,289
	27,626	38,422
Current	27,626	26,572
Non-current		11,850

a. Franchising Upfront Fee

am/pm is the convenience stores chain of the Ipiranga service stations. Ipiranga ended December 31, 2019 with 2,377 stores (2,493 as of December 31, 2018). Jet Oil is Ipirangas lubricant-changing and automotive service specialized network. Ipiranga ended December 31, 2019 with 1,492 stores (1,772 stores as of December 31, 2018).

Ultrapar Participações S.A. and Subsidiaries

Notes to the Parent and Consolidated Financial Statements

(In thousands of Brazilian Reais, unless otherwise stated)

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 Ipirangas customers that may be used with the partner Multiplus Fidelidade and for discounts of fuel in Ipirangas 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 Extrafarmas 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.

Subscription warrants indemnification

Because of the association between the Company and Extrafarma on January 31, 2014, 7 subscription warrants indemnification could be issued, corresponding to up to 6,411,244 shares of the Company. The subscription warrants indemnification may be exercised beginning 2020 by the former shareholders of Extrafarma and are adjusted according to the changes in the amounts of provisions for tax, civil, and labor risks and contingent liabilities related to the period prior to January 31, 2014. The subscription warrants indemnifications 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. As of December 31, 2019, the subscription warrants indemnification were represented by 5,192,919 shares and amounted to R$ 130,657 (as of December 31, 2018, they were represented by 4,824,238 that totaled R$ 123,095). Due to the final adverse decision of some of these lawsuits, on December 31, 2019, the maximum number of shares that could be issued in 2020 related to the subscription warrants indemnification was up to 5,920,425 (5,976,316 shares as of December 31, 2018).

The information above were adjusted retrospectively as disclosure in Note 26.a.

In February 19, 2020, the Companys Board of Directors confirmed the issuance of 2,108,542 common shares due to the partial exercise of the rights conferred by the subscription warrants. For more information on the partial issue, see note 36.

Equity

a. Share Capital

On December 31, 2019, the subscribed and paid-in capital stock consists of 1,112,810,192 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 December 31, 2019, on B3 was R$ 25.48 (R$ 26.60 as of December 31, 2018).

As of December 31, 2019, 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. In February 19, 2020, the Companys Board of Directors confirmed the issuance of 2,108,542 common shares due to the partial exercise of the rights conferred by the subscription warrants. For more information on the partial issue, see note 36.

As of December 31, 2019, there were 46,518,315 common shares outstanding abroad in the form of ADRs (55,725,974 shares as of December 31, 2018).

On April 10, 2019, the Companys 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 Ultrapars 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. All information was adjusted retrospectively in this financial statements.

Ultrapar Participações S.A. and Subsidiaries

Notes to the Parent and Consolidated Financial Statements

(In thousands of Brazilian Reais, unless otherwise stated)

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 December 31, 2019, and December 31, 2018, 26,780,298 common shares were held in the Companys 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 Extrafarmas 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.

e. Revaluation Reserve

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

f. Profit Reserves

f.1 Legal Reserve

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

f.2 Investments Reserve

In compliance with Article 194 of the Brazilian Corporate Law and Article 55.c) of the Bylaws this reserve is aimed to protect the integrity of the Companys 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 December 31, 2019 (R$ 3,412,427 as of December 31, 2018).

Ultrapar Participações S.A. and Subsidiaries

Notes to the Parent and Consolidated Financial Statements

(In thousands of Brazilian Reais, unless otherwise stated)

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.

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, 2017	(27,364	)			(15,181	)	197,369	154,824
Changes in fair value of financial instruments	(326,030	)	(273	)				(326,303	)
Income and social contribution taxes on fair value	110,058							110,058
Actuarial losses of post-employment benefits					(2,810	)		(2,810	)
Income and social contribution taxes on actuarial losses					242			242
Balance as of December 31, 2018	(243,336	)	(273	)	(17,749	)	197,369	(63,989	)
Changes in fair value of financial instruments	(76,479	)	478					(76,001	)
IRPJ and CSLL on fair value	23,683							23,683
Actuarial losses of post-employment benefits					(41,794	)		(41,794	)
Income and social contribution taxes on actuarial losses					11,784			11,784
Balance as of December 31, 2019	(296,132	)	205		(47,759	)	197,369	(146,317	)

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 34.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 and Consolidated Financial Statements

(In thousands of Brazilian Reais, unless otherwise stated)

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

Balance as of December 31, 2017	53,061
Currency translation of foreign subsidiaries	52,531
Effect of foreign currency exchange rate variation on financial instruments	(60,204	)
IRPJ and CSLL IRPJ and CSLL on exchange variation	20,469
Balance as of December 31, 2018	65,857
Currency translation of foreign subsidiaries	46,330
Effect of foreign currency exchange rate variation on financial instruments	(14,788	)
IRPJ and CSLL IRPJ and CSLL on exchange variation	5,028
Balance as of December 31, 2019	102,427

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, 2018 in the amount of R$ 380,324 (R$ 0.70 seventy cents of Brazilian Real per share), were approved by the Board of Directors on February 20, 2019, and paid beginning March 13, 2019. On August 14, 2019, the Board of Directors approved the anticipation of dividends of 2019, in the amount of R$ 217,382 (R$ 0.20 twenty cents of Brazilian Real per share), paid as from August 30, 2019. The proposed dividends payable as of December 31, 2019, in the amount of R $ 261,470 (R $ 0.24 twenty-four cents of Brazilian Real per share), were approved by the Board of Directors on February 19, 2020, and will be paid as of March 06, 2020.

Balances and changes in dividends payable are as follows:

Balance as of December 31, 2018	282,334		284,024
Provisions	326,736		329,106
Payments	(594,381	)	(596,436	)
Balance as of December 31, 2019	14,689		16.694

The management proposal for the allocation of net income for 2019 and for distribution of dividends is as follow:


Allocation of net income
Net income for the period attributable to shareholders of Ultrapar	373,526
Minimum mandatory dividends for the period (50% of the net income)	177,425
Legal reserve (5% of the net income)	217,382
Additional dividends to minimum mandatory dividends	(39,957	)
Total allocation of net income	354,850
Allocation of dividends
Minimum mandatory dividends for the period (50% of the net income)	177,425
Additional dividends to minimum mandatory dividends	(39,957	)
Dividends on statutory reserve
Total allocation	137,468
(-) Interim dividends paid (R$ 0.20 per share)	(137,468	)
Dividends payable (R$ 0.24 per share) - Equity	261,470

Ultrapar Participações S.A. and Subsidiaries

Notes to the Parent and Consolidated Financial Statements

(In thousands of Brazilian Reais, unless otherwise stated)

Net Revenue from Sale and Services (Consolidated)

Gross revenue from sale	94,296,759		94,693,178
Gross revenue from services	869,084		750,791
Sales taxes	(4,031,295	)	(3,027,597	)
Discounts and sales returns	(1,494,814	)	(1,342,799	)
Amortization of contractual assets with customers (see Note 11)	(355,250	)	(371,825	)
Deferred revenue (see Note 24)	13,491		(3,765	)
Net revenue from sales and services	89,297,975		90,697,983

Expenses by Nature (Consolidated)

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

Raw materials and materials for use and consumption	81,819,820	83,116,950
Personnel expenses	2,415,581	2,513,586
Freight and storage	1,170,870	1,178,990
Depreciation and amortization	844,647	812,489
Amortization of right to use assets	300,058
Advertising and marketing	206,103	173,988
Services provided by third parties	322,589	328,361
Other expenses	474,081	709,710
Total	87,553,749	88,834,074
Classified as:
Cost of products and services sold	83,187,109	84,537,368
Selling and marketing	2,640,387	2,670,867
General and administrative	1,726,253	1,625,839
Total	87,553,749	88,834,074

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

The gain or loss is determined as the difference between the selling price and residual book value of the investment, PP&E, or intangible asset disposed of. In 2019, the loss was R$ 30,019 (loss of R$ 22,088 as of December 31, 2018), represented primarily from sale of PP&E and closing stores of Extrafarma. Additionally, in 2019, impairment testing purposes identify the recognition of impairment in the amount of R$ 593,280 for goodwill of Extrafarma.

Ultrapar Participações S.A. and Subsidiaries

Notes to the Parent and Consolidated Financial Statements

(In thousands of Brazilian Reais, unless otherwise stated)

Other Operating Income, Net (Consolidated)

Commercial partnerships (1)	40,816		53,671
Merchandising (2)	44,396		52,092
Loyalty program (3)	12,943		25,682
Ultracargo fire accident in Santos (4)	(3,733	)	(4,951	)
Fine for unrealized acquisition (5)			(286,160	)
Extraordinary tax credits (6)	144,949		208,038
Conduct adjustment commitment Tequimar (7)	(65,539	)
Others	5,793		9,161
Other operating income, net	179,625		57,533

(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 Notes 22.b.2.4 and 23.

(5) Refers to a contractual fine paid in 2018 by Cia. Ultragaz in favor of Petrobras due to the non-closing of the acquisition of Liquigás Distribuidora S.A (Liquigás) transaction rejected to the CADE.

(6) Refers substantially to Extrafarma and Ipiranga credits (see Note 7.a.2) and Iconic.

(7) For more information see Note 22.b.2.4.

Financial Income (Expense)

12/31/2019		12/31/2018		12/31/2019		12/31/2018
Financial income:
Interest on financial investments	73,201		101,653		302,793		328,625
Interest from customers					138,462		135,514
Changes in subscription warranty indemnification (see Note 25)			44,484				44,484
Selic interest over PIS and COFINS credits (see Note 22.d.1)							168,564
Other financial income					16,034		4,048
	73,201		146,137		457,289		681,235
Financial expenses:
Interest on loans					(388,897	)	(440,641	)
Interest on debentures	(111,732	)	(105,424	)	(482,361	)	(441,394	)
Interest on leases payable	(200	)			(132,994	)	(2,670	)
Bank charges, financial transactions tax, and other charges	(2,692	)	(14,476	)	(62,687	)	(92,558	)
Exchange variation, net of gains and losses with derivative financial instruments	25				134,544		172,701
Changes in subscription warranty indemnification (see Note 25)	(7,760	)			(7,760	)
Interest of provisions, net, and other financial expenses					(23,988	)	9,791
	(122,359	)	(119,900	)	(964,143	)	(794,771	)
Financial income (expense)	(49,158	)	26,237		(506,854	)	(113,536	)

Ultrapar Participações S.A. and Subsidiaries

Notes to the Parent and Consolidated Financial Statements

(In thousands of Brazilian Reais, unless otherwise stated)

Earnings per Share (Parent and Consolidated)

The table below presents a reconciliation of numerators and denominators used in computing earnings per share. The Company has a deferred stock plan and subscription warrants indemnification, as mentioned in Notes 8.c and 25, respectively.


Basic Earnings per Share
Net income for the year of the Company	373,526	1,150,421
Weighted average shares outstanding (in thousands)	1,086,485	1,086,237
Basic earnings per share R$	0.3438	1.0591
Diluted Earnings per Share
Net income for the year of the Company	373,526	1,150,421
Weighted average shares outstanding (in thousands), including dilution effects	1,091,653	1,091,335
Diluted earnings per share R$	0.3422	1.0541
Weighted Average Shares Outstanding (in thousands)
Weighted average shares outstanding for basic per share calculation	1,086,485	1,086,237
Dilution effect
Subscription warrants indemnification	2,554	2,496
Deferred Stock Plan	2,614	2,602
Weighted average shares outstanding for diluted per share calculation	1,091,653	1,091,335

Earnings per share were adjusted retrospectively as disclosure in Note 26.a. and by the issue of 2,108,542 common shares due to the partial exercise of the rights conferred by the subscription warrants disclosed in note 36.

Segment Information

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

Ultrapar Participações S.A. and Subsidiaries

Notes to the Parent and Consolidated Financial Statements

(In thousands of Brazilian Reais, unless otherwise stated)

a. Financial information related to segments

The main financial information of each of the Companys segments are stated as follows:


Net revenue from sales and services:
Ultragaz	7,094,823		7,043,246
Ipiranga	75,452,481		76,477,640
Oxiteno	4,254,237		4,748,428
Ultracargo	540,758		493,649
Extrafarma	2,060,568		2,027,988
	89,402,867		90,790,951
Others (1)	44,770		46,937
Intersegment sales	(149,662	)	(139,905	)
Total	89,297,975		90,697,983
Intersegment sales:
Ultragaz	3,794		2,879
Ipiranga	535		2,919
Oxiteno	22,265		6,325
Ultracargo	78,390		82,573
Extrafarma
	104,984		94,696
Others (1)	44,678		45,209
Total	149,662		139,905
Net revenue from sales and services, excluding intersegment sales:
Ultragaz	7,091,029		7,040,367
Ipiranga	75,451,946		76,474,721
Oxiteno	4,231,971		4,742,103
Ultracargo	462,368		411,076
Extrafarma	2,060,569		2,027,988
	89,297,883		90,696,255
Others (1)	92		1,728
Total	89,297,975		90,697,983
Operating income (expense):
Ultragaz	368,975		35,567
Ipiranga	1,674,439		1,396,574
Oxiteno	(12,833	)	457,128
Ultracargo	83,171		124,720
Extrafarma	(720,252	)	(118,329	)
Corporation (2)	(96,432	)
	1,297,068		1,895,660
Others (1)	3,484		3,694
Total	1,300,552		1,899,354

Ultrapar Participações S.A. and Subsidiaries

Notes to the Parent and Consolidated Financial Statements

(In thousands of Brazilian Reais, unless otherwise stated)


Share of profit (loss) of joint-ventures and associates:
Ultragaz	(5	)	12
Ipiranga	(24,782	)	(18,169	)
Oxiteno	532		880
Ultracargo	1,370		1,350
	(22,885	)	(15,927	)
Others (1)	10,740		1,148
Total	(12,144	)	(14,779	)
Income before financial result, income and social contribution taxes	1,288,407		1,884,575
Financial result, net	(506,854	)	(113,536	)
Income before income and social contribution taxes	781,553		1,771,039
Additions to PP&E and intangible assets (excluding intersegment account balances):
Ultragaz	249,784		245,069
Ipiranga	370,864		417,519
Oxiteno	255,016		473,026
Ultracargo	217,377		167,034
Extrafarma	89,850		118,577
	1,182,891		1,421,225
Others (1)	20,186		18,382
Total additions to PP&E and intangible assets (see Notes 14 and 15)	1,203,077		1,439,607
Asset retirement obligation fuel tanks (see Note 21)	(290	)	(264	)
Capitalized borrowing costs	(30,748	)	(23,438	)
Total investments in PP&E and intangible assets (cash flow)	1,172,039		1,415,905
Payments of contractual assets with customers exclusive rights (see Note 11):
Ipiranga	330,068		390,177

Ultrapar Participações S.A. and Subsidiaries

Notes to the Parent and Consolidated Financial Statements

(In thousands of Brazilian Reais, unless otherwise stated)


Depreciation of PP&E and amortization of intangible assets charges:
Ultragaz	186,221	222,527
Ipiranga	290,747	283,426
Oxiteno	212,328	167,357
Ultracargo	59,618	52,414
Extrafarma	80,550	71,552
	829,464	797,276
Others (1)	15,183	15,213
Total	844,647	812,489
Amortization of contractual assets with customers exclusive rights (see Note 11):
Ipiranga	355,055	371,825
Ultragaz	195
	355,250	371,825
Amortization of right to use assets:
Ultragaz	31,264
Ipiranga	164,543
Oxiteno	9,676
Ultracargo	20,673
Extrafarma	73,774
	299,930
Others (1)	128
Total	300,058
Total assets (excluding intersegment account balances):
Ultragaz	2,998,623	2,719,425
Ipiranga	16,278,320	15,381,887
Oxiteno	7,453,476	7,452,331
Ultracargo	1,871,799	1,478,697
Extrafarma	2,060,182	2,107,901
	30,662,400	29,140,241
Others (1)	533,072	1,359,154
Total	31,195,472	30,499,395

(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 Ultrapars holding structure, including the Presidency, Board of Directors and, fiscal council, advisory committees to Board of Directors and Human Capital and Audit and Compliance directories.

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:

United States of America	909,787	857,049
Mexico	124,809	124,037
Uruguay	74,732	72,345
Venezuela (*)		2,427
	1,109,328	1,055,858

(*) See Note 3.b.3.

Ultrapar Participações S.A. and Subsidiaries

Notes to the Parent and Consolidated Financial Statements

(In thousands of Brazilian Reais, unless otherwise stated)

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


Net revenue from sale and services:
Brazil	87,927,198	89,183,342
Mexico	220,021	207,615
Uruguay	41,648	48,096
Venezuela (*)	2,293	68,877
Other Latin American countries	418,368	425,973
United States of America and Canada	437,669	465,840
Far East	74,093	96,394
Europe	118,917	138,347
Others	57,768	63,499
Total	89,297,975	90,697,983

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

(*) See Note 3.b.3.

Risks and Financial Instruments (Consolidated)

a. Risk Management and Financial InstrumentsGovernance

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 Companys 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 others directors designated by the CFO. The Committee holds quartely 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 CAof 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 and Consolidated Financial Statements

(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 transactional, accounting, and operational 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 and the short-term flow of net sales in foreign currency of Oxiteno.

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

In millions of Brazilian Reais
Assets in foreign currency
Cash, cash equivalents and financial investments in foreign currency (except hedging
instruments)	455.6		254.2
Foreign trade receivables, net of allowance for doubtful accounts and advances to foreign
customers	213.5		235.1
Other net assets in foreign (except cash, cash equivalents, financial investments, trade
receivables, financing, and payables)	1,445.0		1,384.9
	2,114.1		1,874.2
Liabilities in foreign currency
Financing in foreign currency, gross of transaction costs and discount	(6,895.1	)	(5,515.6	)
Payables arising from imports, net of advances to foreign suppliers	(344.5	)	(567.7	)
	(7,239.6	)	(6,083.3	)
Foreign currency hedging instruments	3,636.4		2,483.0
Net liability position Total	(1,489.1	)	(1,726.1	)
Net asset (liability) position Income statement effect	452.0		282.7
Net liability position Equity effect	(1,941.1	)	(2,008.8	)

Ultrapar Participações S.A. and Subsidiaries

Notes to the Parent and Consolidated Financial Statements

(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$ 1,489.1 million in foreign currency as of December 31, 2019:

In millions of Brazilian Reais	Risk
	Likely		25%		50%
(1) Income statement effect (2) Equity effect	Real devaluation	45.2 (194.1	)	113.0 (485.3	)	226.0 (970.6	)
(1) + (2)	Net effect	(148.9	)	(372.3	)	(744.6	)
(3) Income statement effect (4) Equity effect	Real appreciation	(45.2 194.1	)	(113.0 485.3	)	(226.0 970.6	)
(3) + (4)	Net effect	148.9		372.3		744.6

The table below shows, in the three scenarios, the effects of exchange rate changes on the net liability position of R$ 1,726.1 million in foreign currency as of December 31, 2018:

In millions of Brazilian Reais	Risk
	Likely		25%		50%
(1) Income statement effect (2) Equity effect	Real devaluation	28.3 (200.9	)	70.7 (502.2	)	141.4 (1.004.4	)
(1) + (2)	Net effect	(172.6	)	(431.5	)	(863.0	)
(3) Income statement effect (4) Equity effect	Real appreciation	(28.3 200.9	)	(70.7 502.2	)	(141.4 1.004.4	)
(3) + (4)	Net effect	172.6		431.5		863.0

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 26.g.2), net investments hedge in foreign entities, cash flow hedge of firm commitment and highly probable transaction (see Note 2.c and h. Hedge Accounting below).

c. Interest Rate Risk

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

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

Ultrapar Participações S.A. and Subsidiaries

Notes to the Parent and Consolidated Financial Statements

(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:

In millions of Brazilian Reais
DI
Cash equivalents	4.a	1,780.9		3,722.3
Financial investments	4.b	2,610.7		2,537.3
Asset position of foreign exchange hedging instruments DI	34.g	19.3		33.9
Loans and debentures	16.a	(6,268.6	)	(8,440.9	)
Liability position of foreign exchange hedging instruments DI	34.g	(3,318.3	)	(2,205.5	)
Liability position of fixed interest instruments + IPCA DI	34.g	(821.9	)	(823.5	)
Net liability position in DI		(5,997.9	)	(5,176.4	)
TJLP
Loans TJLP	16.a	(103.9	)	(201.2	)
Net liability position in TJLP		(103.9	)	(201.2	)
LIBOR
Asset position of foreign exchange hedging instruments LIBOR	34.g	850.3		811.6
Loans LIBOR	16.a	(1,457.3	)	(1,437.1	)
Net liability position in LIBOR		(607.0	)	(625.5	)
TIIE
Loans TIIE	16.a			(4.0	)
Net liability position in TIIE				(4.0	)
SELIC
Loans SELIC	16.a	(30.4	)	(51.5	)
Net liability position in SELIC		(30.4	)	(51.5	)
Total net liability position exposed to floating interest		(6,739.2	)	(6,058.6	)

c.2 Sensitivity Analysis of Floating Interest Rate Risk

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

Ultrapar Participações S.A. and Subsidiaries

Notes to the Parent and Consolidated Financial Statements

(In thousands of Brazilian Reais, unless otherwise stated)

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.

In millions of Brazilian Reais	Risk	12/31/2019 — Scenario I	Scenario II		Scenario III
		Likely	25%		50%
Exposure of interest rate risk
Interest effect on cash equivalents and financial investments	Increase in DI	29.3		73.3		146.5
Foreign exchange hedging instruments (assets in DI) effect	Increase in DI	0.1		0.1		0.3
Interest effect on debt in DI	Increase in DI	(44.5	)	(111.2	)	(222.3	)
Interest rate hedging instruments (liabilities in DI) effect	Increase in DI	(39.2	)	(85.6	)	(162.9	)
Incremental expenses		(54.3	)	(123.4	)	(238.4	)
Interest effect on debt in TJLP	Increase in TJLP	(1.2	)	(3.0	)	(6.1	)
Incremental expenses		(1.2	)	(3.0	)	(6.1	)
Foreign exchange hedging instruments (assets in LIBOR) effect	Increase in LIBOR	1.7		4.3		8.6
Interest effect on debt in LIBOR	Increase in LIBOR	(3.6	)	(8.9	)	(17.8	)
Incremental expenses		1.9		4.6		9.2
Interest effect on debt in TIIE	Increase in TIIE
Incremental expenses
Interest effect on debt in SELIC	Increase in SELIC	(0.3	)	(0.6	)	(1.3	)
Incremental expenses		(0.3	)	(0.6	)	(1.3	)

In millions of Brazilian Reais	Risk	12/31/2018 — Scenario I	Scenario II		Scenario III
		Likely	25%		50%
Exposure of interest rate risk
Interest effect on cash equivalents and financial investments	Increase in DI	32.7		81.7		163.3
Foreign exchange hedging instruments (assets in DI) effect	Increase in DI	0.1		0.2		0.5
Interest effect on debt in DI	Increase in DI	(55.0	)	(137.4	)	(274.9	)
Interest rate hedging instruments (liabilities in DI) effect	Increase in DI	(33.7	)	(73.4	)	(139.6	)
Incremental expenses		(55.9	)	(128.9	)	(250.7	)
Interest effect on debt in TJLP	Increase in TJLP	(1.7	)	(4.2	)	(8.3	)
Incremental expenses		(1.7	)	(4.2	)	(8.3	)
Foreign exchange hedging instruments (assets in LIBOR) effect	Increase in LIBOR	2.8		6.9		13.9
Interest effect on debt in LIBOR	Increase in LIBOR	(3.6	)	(9.1	)	(18.1	)
Incremental expenses		(0.8	)	(2.2	)	(4.2	)
Interest effect on debt in TIIE	Increase in TIIE	(0.1	)	(0.3	)	(0.5	)
Incremental expenses		(0.1	)	(0.3	)	(0.5	)
Interest effect on debt in SELIC	Increase in SELIC	(0.4	)	(1.0	)	(2.0	)
Incremental expenses		(0.4	)	(1.0	)	(2.0	)

Ultrapar Participações S.A. and Subsidiaries

Notes to the Parent and Consolidated Financial Statements

(In thousands of Brazilian Reais, unless otherwise stated)

d. Credit Risks

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

d.1 Credit risk of financial institutions

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

d.2 Government credit risk

The Companys policy allows investments in government securities from countries classified as investment grade AAA or aaa by specialized credit rating agencies (S&P, Moodys 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:

Counterparty credit rating	Fair Value — 12/31/2019	12/31/2018
AAA	4,906,077	5,933,671
AA	331,512	707,358
A	418,020	262,553
BBB	56,488	90,824
Total	5,712,097	6,994,406

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 estimates 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 and Consolidated Financial Statements

(In thousands of Brazilian Reais, unless otherwise stated)

The subsidiaries of the Company maintained the following allowance for estimated losses on doubtful accounts balances on trade receivables:

Ipiranga	447,235	442,486
Ultragaz	94,985	61,975
Oxiteno	13,252	12,371
Extrafarma	3,419	5,858
Ultracargo	2,001	2,089
Total	560,892	524,779

The table below presents information about credit risk exposure:

Weighted average rate of losses	Accouting balance	Provision for losses	Weighted average rate of losses	Accouting balance	Provision for losses
Current	1.3%	3,843,803	50,198	1.5%	4,372,784	66,208
less than 30 days	2.1%	185,612	3,975	4.0%	132,884	5,344
31-60 days	7.1%	37,801	2,688	7.9%	68,733	5,396
61-90 days	20.4%	24,861	5,062	11.3%	59,006	6,664
91-180 days	41.8%	91,633	38,337	55.8%	105,703	58,959
more than 180 days	53.1%	867,618	460,632	58.6%	652,075	382,208
		5,051,328	560,892		5,391,185	524,779

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

Brasil	550,928	513,136
México	1,123	621
Uruguai	267	257
Outros paĺses da América Latina	561	1,750
Estados Unidos e Canadá	889	1,394
Europa	7,075	6,842
Outros	49	779
	560,892	524,779

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

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.

Ultrapar Participações S.A. and Subsidiaries

Notes to the Parent and Consolidated Financial Statements

(In thousands of Brazilian Reais, unless otherwise stated)

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 totals R$ 1,532.0 million, including estimated interests on loans (for quantitative information, see Note 16.a). Furthermore, the investment plan for 2020 totals R$ 1,771 million. On December 31, 2019, the Company and its subsidiaries had R$ 5,205.6 million 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 December 31, 2019 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	In millions of Brazilian Reais — 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)	17,224.8	1,532.0	5,954.9	4,686.3	5,051.5
Currency and interest rate hedging instruments (3)	588.4	131.1	143.7	129.3	184.3
Trade payables	2,700.1	2,700.1
Leases payable	2,043.8	310.0	904.7	508.7	320.4

(1) To calculate the estimated interest on loans some macroeconomic assumptions were used, including averaging for the period the following: (i) DI of % 4.40% to 2020, 4.95% to 2021, 5.57% to 2022 and 6.01% to 2023, (ii) exchange rate of the Real against the U.S. dollar of R$ 4.05 in 2020, R$ 4.17 in 2021, R$ 4.33 in 2022, R$ 4.52 in 2023, R$ 4.73 in 2024, R$ 4.93 in 2025, R$ 5.13 in 2026, R$ 5.34 in 2027, R$ 5.56 in 2028 and R$ 5.78 in 2029 (iii) TJLP of 5.57%, (iv) IGP-M of 4.18% in 2020, 3.99% in 2021, 3.75% in 2022, 3.58% as from 2023 and (v) IPCA of 3.46% in 2020, 3.45% in 2021, 3.50% in 2022 and 3.25% as from 2023(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 28, 2019 and on the futures curve of LIBOR (ICE IntercontinentalExchange) and commodities heating oil contracts and RBOB quoted on New York Mercantile Exchange (NYMEX) on December 31, 2019. In the table above, only the hedging instruments with negative results at the time of settlement were considered.

f. Capital Management

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

g. Selection and Use of Financial Instruments

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

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

Ultrapar Participações S.A. and Subsidiaries

Notes to the Parent and Consolidated Financial Statements

(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 — Assets	Liabilities	Maturity	Notional amount 1 — 12/31/2019	12/31/2018	Fair value — 12/31/2019		12/31/2018
							R$ million		R$ million
Foreign exchange swap	Debt	USD + 4.51 %	104.0% DI	nov-23	USD 245.0	USD 245.0	69.3		(10.3	)
Foreign exchange swap	Debt	LIBOR-3M + 1.11% = 4.1%	105.0% DI	jul-23	USD 150.0	USD 150.0	75.0		45.6
Interest rate swap	Debt	4.57% + IPCA	95.8% DI	oct-24	R$ 806.1	R$ 806.1	144.1		35.6
Interest rate swap	Debt	6.47%	100% DI	nov-24	R$ 90.0		0.6
Zero Cost Collar	Operating margin	Put USD 3.68	Call USD 4.60	dec-20	USD 60.0	USD 149.4	(0.1	)	0.3
							288.9		71.2

Not designated as hedge accounting

Product	Hedged object	Rates agreement — Assets	Liabilities	Maturity	Notional amount 1 — 12/31/2019	12/31/2018	Fair value — 12/31/2019		12/31/2018
							R$ million		R$ million
Foreign exchange swap	Debt	USD + 3.60%	65.0% DI	jun-29	USD 853.0	USD 758.3	353.5		246.5
Foreign exchange swap	Debt	LIBOR-3M + 2.0% = 4.3%	105.9% DI	jun-20	USD 60.0	USD 60.0	48.5		38.0
Foreign exchange swap	Firm commitments	USD + 0.00%	39.9% DI	oct-19	USD 17.9	USD 98.5	(2.2	)	(8.6	)
Foreign exchange swap	Operating margin	34.8% DI	USD + 0.00%	feb-20	USD 4.7	USD 8.9	0.6		0.1
NDF	Firm commitments	BRL	USD	jan-20	USD 71.6		(1.1	)
Term	Firm commitments	BRL	Heating oil / RBOB	jan-20	USD 56.0		(1.3	)
							398.0		276.0

(1) In million. Currency as indicated.

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

Ultrapar Participações S.A. and Subsidiaries

Notes to the Parent and Consolidated Financial Statements

(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 millions, except the DI % — Notional amount US$	12/31/2019 — 395.0		12/31/2018 — 395.0
Result of hedging instruments gain/(loss) R$	79.5		149.2
Fair value adjustment of debt R$	(36.8	)	(28.5	)
Financial expense in the statements of profit or loss R$	(130.3	)	(215.9	)
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 millions, except the DI % — Notional amount R$	12/31/2019 — 806.1		12/31/2018 — 806.1
Result of hedging instruments gain/(loss) R$	73.0		25.8
Fair value adjustment of debt R$	(77.0	)	(13.3	)
Financial expense in the statements of profit or loss R$	(68.1	)	(50.2	)
Average effective cost DI %	95.8		95.8

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

In millions, except the DI %	12/31/2019
Notional amount R$	90.0
Result of hedging instruments gain/(loss) R$	0.6
Fair value adjustment of debt R$	(0.2	)
Financial expense in the statements of profit or loss R$	(0.4	)
Average effective cost DI %	99.9

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

Ultrapar Participações S.A. and Subsidiaries

Notes to the Parent and Consolidated Financial Statements

(In thousands of Brazilian Reais, unless otherwise stated)

h.2 Cash flow hedge

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

On December 31, 2019, the Company had no exchange rate and commodities hedging instruments of firm commitments designated as cash flow hedges. For the exchange rate and commodities hedging instruments settled in 2019, a loss of R$ 29.1 million (a gain of R$ 10.7 million for the period ended on December 31, 2018) was recognized in the statement of profit or loss.

On December 31, 2019, 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$ 550.0 million (US$ 570.0 million on December 31, 2018). On December 31, 2019, the unrealized loss of Other comprehensive income is R$ 293.3 million (loss of R$ 243.7 million on December 31, 2018), net of deferred IRPJ and CSLL.

On December 31, 2019, 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$ 60.0 million (US$ 149.4 million on December 31, 2018). On December 31, 2019, the unrealized loss of Other comprehensive income is R$ 0.1 million (gain of R$ 0.2 million on December 31, 2018), net of deferred IRPJ and CSLL.

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 December 31, 2019, 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$ 95.0 million (US$ 96.0 million on December 31, 2018). On December 31, 2019, the unrealized loss of Other comprehensive income is R$ 55.7 million (loss of R$ 45.9 million on December 31, 2018), net of deferred income and social contribution taxes. The effects of exchange rate changes on investments and hedging instruments were offset in equity.

Ultrapar Participações S.A. and Subsidiaries

Notes to the Parent and Consolidated Financial Statements

(In thousands of Brazilian Reais, unless otherwise stated)

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:


R$ million
Profit or loss		Equity
a Exchange rate swaps receivable in U.S. dollars (i) (ii)	230.0		0.0
b Exchange rate swaps payable in U.S. dollars (ii)	(1.7	)	(0.1	)
c Interest rate swaps in R$ (iii)	(4.0	)
d Non-derivative financial instruments (iv)	(262.1	)	(349.0	)
Total	(37.8	)	(349.0	)


R$ million
Profit or loss		Equity
a Exchange rate swaps receivable in U.S. dollars (i) (ii)	181.5
b Exchange rate swaps payable in U.S. dollars (ii)	(3.8	)	0.2
c Interest rate swaps in R$ (iii)	12.5
d Non-derivative financial instruments (iv)	(134.0	)	(289.6	)
Total	56.2		(289.4	)

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

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

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

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

Ultrapar Participações S.A. and Subsidiaries

Notes to the Parent and Consolidated Financial Statements

(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:

	Category	Note	12/31/2019 — Carrying value	Fair value	12/31/2018 — Carrying value	Fair value
Financial assets:
Cash and cash equivalents
Cash and bank deposits	Measured at amortized cost	4.a	284,992	284,992	205,482	205,482
Financial investments in local currency	Measured at fair value through other comprehensive income	4.a	1,780,939	1,780,939	3,722,308	3,722,308
Financial investments in foreign currency	Measured at fair value through profit or loss	4.a	49,448	49,448	11,161	11,161
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	2,462,018	2,462,018
Fixed-income securities and funds in local currency	Measured at fair value through other comprehensive income	4.b	595,816	595,816	2,208	2,208
Fixed-income securities and funds in local currency	Measured at amortized cost	4.b	76,904	76,904	73,089	73,089
Fixed-income securities and funds in foreign currency	Measured at fair value through other comprehensive income	4.b	303,417	303,417	154,811	154,811
Currency and interest rate hedging and commodities instruments	Measured at fair value through profit or loss	4.b	682,615	682,615	363,329	363,329
Reseller Financing	Measured at amortized cost	5.b	800,936	839,090	715,530	752,471
Total			10,202,533	10,214,435	11,860,812	11,858,848
Financial liabilities:
Financing	Measured at fair value through profit or loss	16.a	1,666,092	1,666,092	1,567,374	1,567,374
Financing	Measured at amortized cost	16.a	6,008,415	7,268,742	6,889,310	6,840,079
Debentures	Measured at amortized cost	16.a	5,657,339	5,603,669	5,826,242	5,770,979
Debentures	Measured at fair value through profit or loss	16.a	1,030,892	1,030,891	833,213	833,213
Leases payable	Measured at amortized cost	13	1,588,673	1,588,673	46,066	46,066
Commodities, currency and interest rate hedging instruments	Measured at fair value through profit or loss	16	29,985	29,985	43,944	43,944
Trade payables	Measured at amortized cost	17	2,700,071	2,678,808	2,731,677	2,710,352
Subscription warrants indemnification	Measured at fair value through profit or loss	25	130,657	130,657	123,095	123,095
Total			18,812,123	19,997,517	18,060,921	17,935,102

Ultrapar Participações S.A. and Subsidiaries

Notes to the Parent and Consolidated Financial Statements

(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 financial statements, 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 were measured based on the share price of Ultrapar (UGPA3) at the financial statements date and are adjusted to the Companys 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 25).

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

The fair value of other financial investments, financing and leases payable was determined using calculation methodologies commonly used for mark-to-market reporting, which consist of calculating future cash flows associated with each instrument adopted and adjusting them to present value at the market rates as of the date of the financial statements. 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 25). 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.

j.1 Fair Value Hierarchy of Financial Instruments

The financial instruments are classified in the following categories:

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

(b) Level 2inputs 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 and Consolidated Financial Statements

(In thousands of Brazilian Reais, unless otherwise stated)

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


Financial assets:
Cash equivalents
Cash and banks	Measured at amortized cost	4.a	284,992	284,992
Financial investments in local currency	Measured at fair value through other comprehensive income	4.a	1,780,939		1,780,939
Financial investments in foreign currency	Measured at fair value through profit or loss	4.a	49,448	49,448
Financial investments:
Fixed-income securities and funds in local currency	Measured at fair value through profit or loss	4.b	1,937,967	1,937,967
Fixed-income securities and funds in local currency	Measured at fair value through other comprehensive income	4.b	595,816		595,816
Fixed-income securities and funds in local currency	Measured at amortized cost	4.b	76,904		76,904
Fixed-income securities and funds in foreign currency	Measured at fair value through other comprehensive income	4.b	303,417	18,985	284,432
Currency and interest rate hedging instruments	Measured at fair value through profit or loss	4.b	682,615		682,615
Trade Receivables	Measured at amortized cost	5.a	3,663,247		3,663,247
Reseller Financing	Measured at amortized cost	5.b	839,090		839,090
Total			10,214,435	2,291,392	7,923,043
Financial liabilities:
Financing	Measured at fair value through profit or loss	16	1,666,092		1,666,092
Financing	Measured at amortized cost	16	7,268,742	4,587,932	2,680,810
Debentures	Measured at amortized cost	16	5,603,669		5,603,669
Debentures	Measured at fair value through profit or loss	16	1,030,891		1,030,891
Leases payable	Measured at amortized cost	13	1,588,673		1,588,673
Currency and interest rate hedging instruments	Measured at fair value through profit or loss	16	29,985		29,985
Trade payables	Measured at amortized cost	17	2,678,808		2,678,808
Subscription warrants indemnification (1)	Measured at fair value through profit or loss	25	130,657		130,657
Total			19,997,517	4,587,932	15,409,585

Ultrapar Participações S.A. and Subsidiaries

Notes to the Parent and Consolidated Financial Statements

(In thousands of Brazilian Reais, unless otherwise stated)


Financial assets:
Cash equivalents
Cash and banks	Measured at amortized cost	4.a	205,482	205,482
Financial investments in local currency	Measured at fair value through other comprehensive income	4.a	3,722,308		3,722,308
Financial investments in foreign currency	Measured at fair value through profit or loss	4.a	11,161	11,161
Financial investments:
Fixed-income securities and funds in local currency	Measured at fair value through profit or loss	4.b	2,462,018	2,462,018
Fixed-income securities and funds in local currency	Measured at fair value through other comprehensive income	4.b	2,208		2,208
Fixed-income securities and funds in local currency	Measured at amortized cost	4.b	73,089		73,089
Fixed-income securities and funds in foreign currency	Measured at fair value through other comprehensive income	4.b	154,811	1,666	153,145
Currency and interest rate hedging instruments	Measured at fair value through profit or loss	4.b	363,329		363,329
Trade Receivables	Measured at amortized cost	5.a	4,111,971		4,111,971
Reseller Financing	Measured at amortized cost	5.b	752,471		752,471
Total			11,858,848	2,680,327	9,178,521
Financial liabilities:
Financing	Measured at fair value through profit or loss	16.a	1,567,374		1,567,374
Financing	Measured at amortized cost	16.a	6,840,079	2,841,436	3,998,643
Debentures	Measured at amortized cost	16.a	5,770,979		5,770,979
Debentures	Measured at fair value through profit or loss	16.a	833,213		833,213
Leases payable	Measured at amortized cost	13	46,066		46,066
Currency and interest rate hedging instruments	Measured at fair value through profit or loss	16.a	43,944		43,944
Trade payables	Measured at amortized cost	17	2,710,352		2,710,352
Subscription warrants indemnification (1)	Measured at fair value through profit or loss	25	123,095		123,095
Total			15,935,102	2,841,436	15,093,666

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

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

100

Ultrapar Participações S.A. and Subsidiaries

Notes to the Parent and Consolidated Financial Statements

(In thousands of Brazilian Reais, unless otherwise stated)

k. Sensitivity Analysis of Derivative Financial Instruments

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

For the sensitivity analysis of foreign exchange hedging instruments as of December 31, 2019 and December 31, 2018, management adopted as a likely scenario the Real/U.S. dollar exchange rates at maturity of each swap, projected by U.S dollar futures contracts quoted on B3. As a reference, the exchange rate for the last maturity of foreign exchange hedging instruments is R$ 5.76 (R$ 5.86 as of December 31, 2018) in the likely scenario. Scenarios II and III were estimated with a 25% and 50% additional appreciation or depreciation of the Brazilian Real against the likely scenario, according to the risk to which the hedged item is exposed.

Based on the balances of the hedging instruments and hedged items as of December 31, 2019 and December 31, 2018, 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:

12/31/2019
Currency swaps receivable in U.S. dollars
(1) U.S. Dollar / Real swaps (2) Debts/firm commitments in dollars	Dollar appreciation	700,499 (700,465	)	1,668,202 (1,668,031	)	2,635,905 (2,635,596	)
(1)+(2)	Net effect	34		172		309
Currency swaps payable in U.S. dollars
(3) Real / U.S. Dollar swaps (4) Gross margin of Oxiteno	Dollar devaluation	376 (376	)	62,559 (62,559	)	124,742 (124,742	)
(3)+(4)	Net effect
Options
(5) Options Real / U.S. Dollar swaps (6) Gross margin of Oxiteno	Dollar devaluation			42,101 (42,101	)	102,917 (102,917	)
(5)+(6)	Net effect

101

Ultrapar Participações S.A. and Subsidiaries

Notes to the Parent and Consolidated Financial Statements

(In thousands of Brazilian Reais, unless otherwise stated)

12/31/2018
Currency swaps receivable in U.S. dollars
(1) U.S. Dollar / Real swaps (2) Debts/firm commitments in dollars	Dollar appreciation	372,022		1,039,669		1,707,316
		(372,019	)	(1,039,661	)	(1,707,303	)
(1)+(2)	Net effect	3		8		13
Currency swaps payable in U.S. dollars
(3) Real / U.S. Dollar swaps (4) Gross margin of Oxiteno	Dollar devaluation	(65	)	8,545		17,154
		65		(8,545	)	(17,154	)
(3)+(4)	Net effect
Options
(5) Options Real / U.S. Dollar swaps (6) Gross margin of Oxiteno	Dollar devaluation			97,938		244,572
				(97,938	)	(244,572	)
(5)+(6)	Net effect

For sensitivity analysis of hedging instruments for interest rates in Brazilian Reais as of December 31, 2019 and 2018, the Company used the futures curve of the DI x Pre contract quoted on B3 as of December 31, 2019 for each of the swap and debt (hedged item) maturities, to determine the likely scenarios. Scenarios II and III were estimated based on a 25% and 50% deterioration, respectively, of the likely scenario pre-fixed interest rate.

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

12/31/2019
Interest rate swap (in Brazilian Reais) DebenturesCRA
(1) Fixed rate swapDI (2) Fixed rate debt	Decrease in Pre-fixed rate	(195,123	)	(137,260	)	(74,027	)
		195,123		137,260		74,027
(1) + (2)	Net effect

12/31/2018
Interest rate swap (in Brazilian Reais) DebenturesCRA
(1) Fixed rate swapDI (2) Fixed rate debt	Decrease in Pre-fixed rate	(311,993	)	(254,409	)	(188,047	)
		311,993		254,409		188,047
(1) + (2)	Net effect

102

Ultrapar Participações S.A. and Subsidiaries

Notes to the Parent and Consolidated Financial Statements

(In thousands of Brazilian Reais, unless otherwise stated)

For the sensitivity analysis of the commodity price swings hedging instruments on 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 likely scenario commodity price.

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

12/31/2019
NDF Commodities
(1) NDF of Commodities (2) Gross margin from Ipiranga	Decrease in Commodities Price	100,542 (100,542	)	1,490,893 (1,490,893	)	2,881,245 (2,881,245	)
(1)+(2)	Net effect

Commitments (Consolidated)

a. Contracts

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

Port — Aratu	397,000	2031
Aratu	900,000	2022
Suape	250,000	2027
Suape	400,000	2029

If the annual movement is less than the minimum contractual movement, the subsidiary is liable to pay the difference between the effective movement and the minimum contractual movement, based on the port tariff rates in effect on the date established for payment. As of December 31, 2019, these rates were R$ 8.37 per ton for Aratu and R$ 2.54 per ton for Suape. The subsidiary has met the minimum cargo movement required since the beginning of the contractual agreements.

a.2 Subsidiary Oxiteno S.A. has a supply agreements 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 — Camaçari	205,000	2021
Mauá	44,100	2023

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

103

Ultrapar Participações S.A. and Subsidiaries

Notes to the Parent and Consolidated Financial Statements

(In thousands of Brazilian Reais, unless otherwise stated)

b. Insurance Coverage

The Company maintains 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:

Oxiteno	Maximum compensation value (*) — US$	1,142
Ipiranga	R$	1,025
Ultracargo	R$	949
Ultragaz	R$	266
Extrafarma	R$	160

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

The General Liability Insurance program covers the Company and its subsidiaries with a maximum aggregate coverage of US$ 400 million (equivalent to R$ 1,612 million as of December 31, 2019), 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 (D&O), fiscal council, directors and executive officers of Ultrapar and its subsidiaries (Insured) in the total amount of US$ 80 million (equivalent to R$ 322 million as of December 31, 2019), 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 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.

c. Port concessions

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 constituted, together with Raízen Combustível S.A. and Petrobrás Distribuidora S.A. For the port of Vitória, Navegantes was constituted, together with Raízen Combustível S.A. and Petrobrás Distribuidora S.A. The total investments regarding IPPs stake sums up to R$160 million for a concession term of 25 years.

On April 5, 2019, Company, through its subsidiary IPP and Tequimar, also won three concessions. IPP won two concessions in the port of Miramar, in Belém, state of Pará: (i) area BEL02A, through a consortium 50% owned by IPP, that shall have minimum storage capacity of 41 thousand m³, and (ii) area BEL04A, which is currently operated by IPP with minimum storage capacity of 23 thousand m³. Such areas will be operated for at least 15 years, according to the auction notice. For the area BEL02, Latitude was constituted, 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 constituted (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.

Subsequent Events

In February 19, 2020, the Companys Board of Directors confirmed the issuance of 2,108,542 common shares within the authorized capital limit provided by the art. 6 of the Bylaws, due to the partial exercise of the rights conferred by the subscription warrants (see note 25) 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. The share capital of the Company will therefore be represented by 1,114,918,734 common shares, all of which are registered and with no par value.

104

ANNUAL REPORT OF THE AUDIT AND RISK COMMITTEE

THE COMMITTEES DUTIES

The Ultrapar Audit and Risk Committee is a permanent statutory advisory body directly linked to the Board of Directors, with operational independence and own budget, and subject to applicable laws and regulations, in particular the Regulation of the Novo Mercado segment of B3 S.A. - Brasil, Bolsa, Balcão, the Companys Bylaws and its Internal Regulations.

According to the Bylaws, the Committee aims to assist the Board of Directors in overseeing (1) the integrity and quality of the Companys financial statements, (2) the Companys compliance with the legal and regulatory requirements, (3) the qualifications and independence of the independent auditor, (4) the performance of the functions of the Companys internal audit and independent auditors, and (5) the Companys risk management.

The Ultrapar Audit and Risks Committee currently has three independent members of the Board of Directors and one independent external member, who is the Committee Coordinator.

The Committee provides its opinion on the hiring and dismissal of independent auditors and advises the Board of Directors in the supervision of its activities, qualifications and independence, evaluating and previously approving the provision of services permitted by law that are not related to the audit. KPMG Auditores Independentes is the company currently responsible for the annual audit of the financial statements, their quarterly reviews and the evaluation of the structure of internal controls applicable to the preparation of the financial statements in order to comply with the rules of the Brazilian Securities Commission (CVM - Comissão de Valores Imobiliários) and B3 Brasil, Bolsa, Balcão, in Brazil, and the SEC - Security Exchange Commission and NYSE - New York Stock Exchange, in the United States of America, including in relation to compliance with the requirements of the Sarbanes-Oxley Act. The Committee is responsible for reviewing, together with the independent auditors, the quality and integrity of the financial statements, and reporting the relevant issues to the Board of Directors.

The Committee is responsible for following-up the activities of the Risk, Compliance and Audit Executive Board, evaluating its structure, procedures and effectiveness of the internal audit. The Committee shall review, together with the Board of Directors, its performance and any recommendations for improving the Companys procedures.

In addition, the Audit and Risk Committee analyzes and monitors the risk exposures identified by the Companys Executive Board, under the provisions of the Corporate Risk Management Policy, commenting on any revision of said policy, advising the Board of Directors in the definition of acceptable risk levels and assessing the quality and effectiveness of risk management procedures.

The Committee shall also ensure that the Company has specific means for receiving and confidentially handling information and complaints about non-compliance with legal provisions, code of conduct and other internal regulations applied to the Company, its employees and other stakeholders.

Quarterly, on an ordinary basis and extraordinarily whenever necessary, the Audit and Risk Committee attends a joint meeting with the Board of Directors, and reports the progress of their works. This activity report is prepared annually and sent to the Board of Directors and disclosed by the Company to the market. At each term of office, the Committee self-assesses its performance, and the findings are presented and discussed with the Board of Directors.

Since its establishment in May 2019, the Audit and Risk Committee has met ten times. During this period, the Committee was granted free access to all of the Companys governance bodies, as well as to all of its officers, and, whenever necessary, the representatives of KPMG Auditores Independentes were requested to attend their meetings.

THE COMMITTEES ACTIVITIES

Governance

Investiture of members elected by the Board of Directors into their respective offices

Preparation and submission of the Internal Regulations of the Audit and Risks Committee to the Board of Directors for approval

Election of the Chief Risk, Compliance and Audit Officer as Secretary of the Committee

Development of the Committees thematic calendar of activities

Discussion and approval of the Committees annual budget

Analysis of changes in the Reference Form sent to the CVM

Preparation and presentation of quarterly activity reports to the Board of Directors, including recommendations for approving interim financial statements

Preparation, submission and discussion of this Annual Report of the Audit and Risks Committee with the Board of Directors

105

Independent Auditors

Verification of the qualification and independence of the independent auditor

Analysis of the annual work planning of the independent auditors

Discussion and recommendation on the fees of independent auditors

Joint work meetings and private sessions with independent auditors

Internal Controls and Financial Statements

Monitoring the environment of internal controls for the preparation of financial statements, together with external and internal audits

Analysis of the letter on internal controls issued by KPMG Auditores Independentes with recommendations for improvements and discussion with management about the action plans to address the identified issues

Periodic and specific monitoring of IT action plans for the implementation of new access management controls and interventions in systems and databases

Assessment of the adequacy of accounting practices and estimates used in the preparation of the Companys financial statements

Analysis and discussion of the tax, civil and labor litigation of the Company and its subsidiaries

Review and discussion of the assumptions used by the Companys management in the preparation of financial projections to identify the need for asset impairment and tax recovery

Analysis of the corporate and tax effects resulting from the merger of Oxiteno Nordeste by Oxiteno S.A.

Quarterly reviews of the interim financial statements together with the Companys management and independent auditors

Review of the audited annual financial statements, management report and independent auditors report, with the presence of representatives of the Company and KPMG Auditores Independentes for the presentation and discussion of comments and analyses on the main audit matters and other issues that are relevant for the quality and integrity of said financial statements

Internal Audit

Evaluation of the organizational structure and annual budget of the Risk, Compliance and Audit Executive Board

Follow-up of the results of the internal audit work carried out in the period and any action plans in order to forward the recommendations presented

Follow-up of specific audits on transactions with related parties

Evaluation of the annual internal audit work plan for 2020

Integrated Risk Management

Analysis of the Corporate Risk Management Policy

Review and referral of the new General Risk System ( Matriz Sistêmica de Riscos ) for approval by the Board of Directors

Analysis of the update of the Impact and Vulnerability of the General Risk System of businesses and Ultrapar, after approval of the new General Risk System

Meeting with the Coordinator of the Financial Risk Committee

Review of the Corporate Financial Risk Management Policy and its subsequent forwarding to the Board of Directors for approval

Compliance

Follow-up of the number, distribution and types of complaints received by the Ultra Complaint Channel ( Canal Aberto Ultra )

Analysis and discussion on the results of investigations of complaints and measures taken to address the identified issues

Follow-up of the Companys Compliance Program

Analysis of the Companys compliance plan with the General Data Protection Law

106

CONCLUSION OF THE REPORT

Considering the responsibilities of the Audit and Risks Committee, described in the Companys Bylaws and in the Committees Internal Regulations, with the natural restrictions of the scope of its performance in the activities that are carried out, the Committee provides its opinion below:

The coverage and quality of the internal audit work carried out with adequate independence are satisfactory;

The internal control environment, the compliance policies and the integrated risk management are consistent with the size and complexity of the Company;

The information provided by management and the independent auditors was sufficient for the recommendations of this Committee. There has been no divergence between the teams and auditors carried out their work independently.

Based on the work and analyses carried out and the unqualified report of KPMG Auditores Independentes, the Audit and Risk Committee recommends the Board of Directors approves the Financial Statements of Ultrapar S.A. for the year ended as of December 31, 2019.

São Paulo, February 19, 2020

Flavio Cesar Maia Luz

Coordinator, Audit and Risk Committee

Ana Paula Vitali Janes Vescovi

Member of the Audit and Risks Committee

Joaquim Pedro Monteiro de Carvalho Collor de Mello

Member of the Audit and Risks Committee

José Maurĺcio Pereira Coelho

Member of the Audit and Risks Committee

107

Message from the Management

We began 2019 with an optimistic outlook regarding Brazils economic growth and its positive impact on the business environment, expectation which in the first few months of the year proved distant from reality given the pace of the structural reforms. Nevertheless, despite the lower than expected growth, some important moves were made in the direction of a more dynamic macroeconomic scenario, with lower interest rates, inflation under control and new announcements of privatizations and public biddings.

In this context, we worked to strengthen our management structure and governance, consolidating the pillars supporting the longevity of Ultrapar. In April, the Board of Directors underwent an important process of renewal, with the election of four new members that bring complementary experiences and competencies to the Company. In addition to the People Committee, in place since 2011, we created a Strategy Committee and restructured the Audit and Risks Committee, which now has independent members of Ultrapars Board of Directors.

At the business level, we have installed Advisory Boards formed by Ultrapars CEO and CFO and two external specialists in the respective sector of activity. The Advisory Boards have contributed to raise the quality of supervision and monitoring of each business through deeper analysis of strategy, investments, people and results.

Continuing our planned succession process for the Executive Board, we made the leadership succession at Ultracargo and we remain committed to building a pipeline of enterprise leaders both at Ultrapar as well as at our businesses.

We are improving our strategic planning process initiated in 2018, aiming the long-term prospects of our businesses and strengthening our portfolio strategy at Ultrapar. The alterations implemented in our governance were key to this objective being reached, particularly given the new dynamic among the Advisory Boards, the Executive Board, the Strategy Committee and the Board of Directors.

At Ipiranga, we have seen a notable progression in the management model organized by business units introduced in early 2019, that focuses on maximizing value in the initiatives which previously had as their main objective to boost fuel sales. In this sense, we began a pilot project for company-operated am/pm stores, enabling us to deepen our knowledge of the business and add value to our franchisees. The Abastece Aí app continues to grow exponentially and reached more than R$ 4.0 billion annualized payment transactions, while the Km de Vantagens , Brazils leading loyalty program, continues to add new users and surpassed the mark of 32 million participants.

As to Ipirangas core business fuel distribution we are bolstering our logistics infrastructure and implementing initiatives for reducing costs and expenses, allowing us to keep growing more efficiently, even in a tough competitive environment. In addition, we have improved our pricing tools introducing data analytics and we remain committed to the satisfaction of our resellers through a closer and more transparent commercial relationship. We have established an innovation hub known as Turbo for leveraging our digital platforms and maintaining Ipiranga in the vanguard of innovation in the sector.

At Oxiteno, narrower margins in the international petrochemical commodities market had a major impact on results, in addition to a harder than expected start in our operations at our U.S. plant. To counteract these factors, Oxitenos management adapted its cost structure and kept investing in research and development and in the launch of new products, enhancing the performance of our formulations to our clients, with reduced environmental impact. The ramp-up of the U.S. plant continues to be an important lever for generating value for Oxiteno, which will benefit from more attractive conditions for raw materials and infrastructure in the largest surfactants market in the world.

Ultragaz continues to be a reference in operational excellence and innovation in the LPG sector and is investing in the expansion to less urbanized areas, in new sales channels and in the differentiation of its services. In August of 2019, the National Energy Policy Council (CNPE) ruled to cease the practice of differentiating prices for bottled and bulk LPG, thus eliminating a historical distortion and increasing LPGs competitiveness compared to other energy sources. Despite the market contraction in the first half of the year, we observed an important rebound in sales in the second half, underscoring our conviction of a good year for Ultragaz in 2020.

At Ultracargo, we concluded the capacity expansions at the Santos and Itaqui terminals, both of them started operation in the second half of the year, and we won the tender bidding for building a new liquid bulk storage terminal at the port of Vila do Conde, state of Pará, thus expanding our geographic footprint. We signed a Conduct Adjustment Agreement with the Public Prosecutors Office with respect to the fire at the Santos terminal in 2015, which includes projects to offset impacts caused to the Santos estuary and we are implementing continuous improvements in safety at all our terminals. We envision a growing demand for the services provided by Ultracargo and certainly we are well placed to benefit from these opportunities.

At Extrafarma, we migrated from an accelerated expansion strategy across several regions to consolidate our presence in higher profitability regions. In addition, we invested to improve our logistics infrastructure and IT systems, thus increasing efficiency, reducing working capital and improving the level of service to our customers. We have begun the sale of private label products, implemented personalized promotions and unveiled a new distribution center in São Paulo. With these initiatives, Extrafarma reported a positive cash generation in the second half of the year.

We set up a Shared Services Center to serve all businesses with a level of excellence and competitive costs as part of the process of optimizing the structure of the holding company. The Center is sited in the city of Campinas and began operations in January 2020.

We ended 2019 with Adjusted EBITDA of R$ 3.1 billion, practically stable compared to 2018, with an operational cash generation after investments of R$ 1.7 billion and a net income of R$ 906 million, of which R$ 479 million were paid out via dividends to our shareholders. These amounts do not consider the impairment of R$ 593 million of goodwill from the acquisition of Extrafarma, the asset write-off of R$ 14 million for the sale of Oxiteno Andina and the Conduct Adjustment Agreement of R$ 66 million of Ultracargo.

In 2019, we extended our debt profile, raising US$ 500 million in notes in the international market with a ten-year maturity, and using the proceeds for liability management. The reduction in our financial leverage remains an important objective and, in this context, we continue to be selective in the allocation of capital, albeit without sacrificing growth.

Given this context, in December, we announced our investment plan for 2020 of more than R$ 1.7 billion. The plan incorporates logistics infrastructure and expansion projects and productivity gains, as well as investments in maintenance and safety.

We would like to thank our clients, consumers, partners, suppliers, shareholders and the society as a whole for placing your trust and confidence in us and especially our employees for the commitment and dedication in the development of Ultra Group.

Pedro Wongtschowski	Frederico Fleury Curado
Chairman of the Board of Directors	Chief Executive Officer

Company Profile

Ultrapar has more than 80 years of history with its origins going back to 1937 when Ernesto Igel founded Ultragaz, a pioneer company in the use of Liquified Petroleum Gas (LPG) as cooking gas. The constant pursue for growth transformed the Company into one of the largest corporate groups in Brazil. Today, Ultrapar occupies an outstanding position in all segments in which it operates: the Oil & Gas value chain, through Ultragaz, Ipiranga and Ultracargo, specialty chemicals through Oxiteno and retail pharmacy with Extrafarma. Since 1999, Ultrapars shares have traded under an ADR Level III program on the New York Stock Exchange NYSE, and on the São Paulo Stock Exchange (Brasil, Bolsa, Balcão B3). Since 2011, the Companys shares have been listed on B3s Novo Mercado.

Ultragaz

A pioneer and leader in the domestic market for LPG distribution, it is a reference in innovation and in the constant development of applications for the use of the product. It also has a modern research and development laboratory for special gases, a segment in which it has a leadership position.

Ipiranga

One of the largest fuel distribution companies in the Brazil, incorporating a network of more than 7 thousand service stations, each one of them increasingly more complete and digital, in addition to the largest convenience store franchise, the am/pm network, with 2.4 thousand stores. Ipiranga also operates one of the largest loyalty programs in the country, the Km de Vantagens , which ended 2019 with more than 32 million participants.

Oxiteno

A leader in the production of surfactants and specialty chemicals in Latin America with more than 20% of the ethoxylation capacity in the Americas, it unveiled a plant in the United States in 2018 for expanding its international footprint. The new industrial unit was added to a further six in Brazil, three in Mexico and one in Uruguay. Oxiteno also has commercial offices in Argentina, Belgium, China and Colombia, as well as Research and Development centers in Brazil, Mexico and the USA.

Ultracargo

The largest private company of liquid bulk storage in Brazil, with a presence in six ports at strategic locations in the Northeast, Southeast and South regions. In 2019, Ultracargo successfully bid at an auction for the installation of a terminal at Porto de Vila do Conde, state of Pará, and the startup of its operations is scheduled for 2023.

Extrafarma

Retail pharmacy network with its origins in the North of Brazil, today with a presence in 11 Brazilian states with 416 drugstores with six thousand employees.

Governance in Risks, Compliance and Audit

Ultrapar has an organized structure of governance for handling the themes of risks, compliance and audit, covering all the businesses.

In May 2019, the Statutory Audit and Risks Committee was set up to advise the Board of Directors in the supervision of: (1) the integrity and quality of the Companys financial statements, (2) compliance of the Company with legal and regulatory requirements, (3) qualification and independence of the independent auditor, (4) the performance of the Companys internal auditing functions (represented by the Risks, Compliance and Audit Department) and of the independent auditors, and (5) risk management including meeting with Management whenever it is deemed necessary. Up to the establishment of the committee, its functions were performed by the Fiscal Council, in line with the practices accepted by the SEC Securities and Exchange Commission. As from May, the Fiscal Council began to exercise its functions exclusively as set out in the Brazilian Corporate Law.

The current composition of the Statutory Audit and Risks Committee has three members who are also independent directors sitting on Ultrapars Board of Directors, and one external and independent member who exercises the functions of Committee Coordinator.

With specific reference to compliance themes, Ultrapar has a Conduct Committee with an independent chairman, its members elected by the Board of Directors, and responsible for the management of the Companys Compliance Program.

Integrated Risk Management

Ultrapar has an integrated management which consolidates and organizes the principal risks of its businesses in a matrix system, classifying them by impact and vulnerability, permitting discussion on risks in an organized manner at all levels of the Companys management. This system and its metrics as well as the governance for updating and monitoring are officialized in the Corporate Risks Policy approved by the Board of Directors. In 2019, the Risks and Audit Committee reviewed the Risks Matrix System, which forms the basis of the risks specified in the Impact and Vulnerability Matrix having been submitted to and approved by the Board of Directors.

Complementary to the Corporate Risks Policy, the Company has specific policies for managing relevant themes, such as Conflict of Interests, Anticorruption, Financial Risks Management, Investments, Mergers and Acquisitions, Insurance and Anti-Trust issues.

Internal and External Audit

The Company has an internal audit area reporting to the Risks, Compliance and Audit Department and responsible for conducting the Sarbanes-Oxley certification, focused on controls over financial reporting, involving the annual update of several levels of control, including general IT controls and management controls. In addition, the internal audit is responsible for the execution of the Annual Activities Planning approved by the Risks and Audit Committee.

The External Audit is responsible for validating the internal controls environment for the preparation of the financial statements, validating and certifying it as established under the Sarbanes-Oxley Law, as well as being responsible for the auditing of the financial statements and guaranteeing their integrity and formalizing its opinion by issuing its quarterly and annual audit reports.

Compliance

Ultrapar has a Compliance Program supervised by the Conduct Committee, comprising guidelines approved by the Board of Directors, among which the Code of Ethics. The program establishes annual themes for communication and training, such as fighting corruption, fair competition practices, conflicts of interest and harassment, among others, always aiming at strengthening the Companys culture of integrity.

Ultra Groups Compliance Program is evaluated biannually through a behavior assessment, carried out by an independent consultancy firm, the result being a rating of each of the businesses according to the level of maturity in compliance and including recommendation on additional measures of training and communication.

The Program also establishes a whistleblowing channel to all stakeholders where whistleblowers are guaranteed anonymity and exemption from retaliation.

The development of the Program as well as the whistleblowing channel is systematically reported to the Conduct Committee and, from time to time, to the Audit and Risks Committee, Fiscal Council and Board of Directors.

Sustainability and Safety

The Groups companies are present in the daily lives of millions of Brazilians through Ipiranga service stations, am/pm stores, Extrafarma pharmacies, Ultragazs gas bottles and Oxiteno, which provide the raw materials for an infinite number of consumer goods. For fuels to be delivered at the service stations, Ultracargo has an important duty in providing the logistics infrastructure in Brazil. With such coverage, all companies conduct socio-environmental initiatives, both to minimize the specific impact of their activities, as well as to contribute to building a more sustainable society.

In 2019, Ultrapar completed its first materiality assessment from the point of view of its different stakeholders with the aim of identifying the Companys critical issues in the environmental, social and governance dimensions (ESG). On the basis of this assessment, a Sustainability Policy will be elaborated and the priorities for action will be redefined. From 2020 we intend to adopt a new reporting structure, making for greater transparency and objectivity. In this context, Ipiranga, Ultracargo and Extrafarma have also begun their respective materiality assessments, while Ultragaz and Oxiteno have already done so in previous years.

Ultragaz

The socio-environmental projects conducted by Ultragaz can be divided into education, culture and environmental preservation with the focus on two audiences: children and young people from public institutions and women from less favored social classes.

In 2019, Ultragaz invested in more than 20 social projects with their focus on education and culture for underprivileged children and adolescents, including: Recriarte, ASA, Vocação, Pluga Cuca, Escola de Música e Informática, Ultragaz Cultural , among others. Particular mention should be made to the launch of the Project Memória Local , in partnership with the Museu da Pessoa and Instituto Avisa Lá . In this case, through the training of the teams at the education departments of seven cities in different states, local history is transformed into books. This project involved 1,474 students from 56 public schools and 142 educators.

Ultragaz also conducts outreach work for women implementing female empowerment projects in partnership with the Associação Feminina de Estudos Sociais e Universitários (Afesu), with the aim of supporting socially vulnerable adolescents. In conjunction with Rede Mulher Empreendedora (RME) , the company sponsored training for fostering entrepreneurship and redeeming the self esteem among women victims of domestic violence.

In the Corporate Volunteer Program, worthy of mention is the participation of employees in projects run by the Junior Achievement, one of the most important entrepreneurial, environmental and business organizations in the world for the development of children and adolescents and providing guidance on such themes as education and sustainability, personal finance and ethics. Ultragaz was able to engage 357 volunteers during the year to participate in the Ler é Presente, Horta na Escola, Mãos à Obra na Escola, Lendo e Aprendendo and Abre Portas Ultragaz projects, besides participating in Junior Achievements activities per se.

Ultragaz continued its Collect Oil Campaign: Ultragaz Collects and Soya Recycles ( Campanha Junte Óleo: Ultragaz Coleta e Soya Recicla ) in partnership with Bunge and Instituto Triângulo . Some of the cooking oil which is collected is used in soap manufacture and the remainder goes for the production of biodiesel. The campaign is run in the states of Ceará, Bahia, Minas Gerais, Pernambuco, Rio Grande do Sul and São Paulo, thanks to the capillarity of the Ultragaz operation and its reach among Brazilian households.

Ultragaz offsets carbon emissions from the itinerant projects it sponsors, in conjunction with the Green Initiative NGO ( Iniciativa Verde ), and as part of the Carbon Free Program, promoting the planting of trees to neutralize CO2 gas emissions.

As a result of its consistent work, 92% of its employees in the latest organizational climate survey recognized Ultragaz as a sustainable company concerned with social and environmental issues.

Ipiranga

Through its SIGA+ (Ipiranga Management System applied to Health, Safety, Environment and Social Responsibility), Ipiranga monitors and manages performance indicators for these themes for minimizing the impact of its activities, guaranteeing alignment with the benchmarks for integrated management and continuous improvement. The system is being restructured to guarantee greater efficacy and agility.

Additionally, Ipiranga has been implementing initiatives for energy efficiency. For more than 10 years now, it has an exclusive program audited by an independent party for managing its Greenhouse Gas Emissions (GHG), the Ipiranga Zero Carbon Program. Compensation for own emissions which cannot be reduced is conducted through the acquisition of carbon credits with international certification. Similarly, the Program offers Ipirangas customers the opportunity to compensate their emissions and has a dedicated site providing transparency of information therein.

Compliance with the laws, the commitment to sustainability and ethics in business relations are reflected in the Code of Ethics, and is reinforced in every relationship with the stakeholders. In alignment to these principles, Ipiranga signed up in 2013 to the National Pact for the Eradication of Slave Labor (InPACTO), in which it commits not to have commercial relations with those employing slave labor or analogous thereto in its supply chain. Ipiranga also runs awareness campaigns with truckers to combat the sexual exploitation of children and adolescents on the highways through the intermediary of the Programa Na Mão Certa , of the international Childhood Brasil organization of which it is a sponsor.

Also operating in this important link in the supply chain, Ipiranga has Saúde na Estrada , an itinerant program for promoting health which since inception has attended more than 500 thousand people in 180 municipalities in 23 states, offering free medical services such as vaccinations, body composition analysis, among others. Again, in line with the commitment to its social role, the company invests in social projects in the areas surrounding its business based on its Social Responsibility and Private Social Investment Policies.

Ipiranga fosters the strengthening of its occupational safety and valorization of life culture through a program which endeavors to guarantee adequate physical conditions, efficient procedures and safe behavior in its operations. The Occupational Safety Program includes a structured plan of investments in the reliability of the assets, engagement and training of stakeholders, making them catalysts for change. In 2019, Ipiranga launched its Communication Plan Safety 360°, with the Controlled Risk, Preserved Life theme, engaging employees, outsourced personnel and drivers through cultural activities during the year. In addition, it has developed a Business Continuity Plan with the objective of consolidating the process of crisis management, emergency attendance and operational contingency in a single structure.

Oxiteno

In 2019, Oxiteno validated its Sustainability 2030 Strategic Plan. Comprising 8 ambitions, subdivided into 28 environmental, social and economic goals, the plan is aligned to the requirements of clients, society and the United Nations Organizations sustainable development goals (SDGs). The strategic plan can be found by accessing the website http://www.oxiteno.com.br/sustentabilidade/.

In its quest for more sustainable solutions, Oxiteno uses the Life Cycle Evaluation methodology to assist in the development of its products. Normatized under ISOs 14040 and 14044, the methodology permits the quantification of the environmental impact of a product throughout its existence from the extraction of raw materials, through the production process, during its entire existence to final disposal. In 2019, three life cycle studies were run and whenever possible, substituting the use of synthetic raw materials and petrochemical derivatives for others of vegetable origin. The company prioritizes the preparation of concentrated, biodegradable products combined with the reduction in the use of energy, water consumption and packaging.

On social issues, Oxiteno supports sponserships and private social investments for the development of communities surrounding its operations. In addition to musical ensembles, volunteer programs in schools, Oxiteno supports the Integrate Art and Life ( Integrar Arte e Vida ) social project in Mauá (SP) at the Cora Coralina Municiple School in partnership with the Municiple Education Department. This initiative involves about 220 students every month, stimulating the children and young people to stay on at school and complete their education through the offer of cultural as well as sporting workshops for dancing, indoor soccer and judo as extracurricular activities.

Finally, for the second consecutive year, Oxiteno is supporting the Baú das Artes project, an initiative which delivers collections with more than 300 childrens books, educational games, toys, fancy dress and musical instruments, besides training teachers to link the materials with the National Curricular Parameters. In 2019, 22 schools in the municipalities of Camaçari (BA), Mauá and Tremembé (SP), enjoyed the benefits of this project while 367 educators were trained and a potencial 8,000 children were impacted by this project.

Ultracargo

In 2019, Ultracargo launched the Environmental Code of Conduct establishing good practices to be adopted by the company and partners. The document was distributed to employees through a comprehensive communication campaign using an e-learning app. The content of the training encourages the employee to reflect on behavioral changes in the building of a society more aware. To establish and maintain the processes and tools in the areas of Health, Safety, Environment and Quality, Ultracargo has established the Management System for HSEQ, known as Vital.

Ultracargo invests to ensure its operations have the least possible impact on the environment, monitoring indicators for greenhouse gas emissions, water and energy consumption, disposal of waste and effluent and leakages. All the companys units are ISO 14001 certified.

As social aspects, Ultracargo continues to support the Tribuna de Santos newspapers Community in Action project, which gives visibility to projects contributing to the improvement in the lives of thousands of people living in the greater Santos area. Just as in the case of Ipiranga, Ultracargo is now also sponsoring the Childhood Brasils Programa Na Mão Certa initiative with the aim of combatting the sexual exploitation of children and adolescents in the Brazilian highways.

Extrafarma

In 2019, Extrafarma implemented a program for substituting lamps used in its drugstore network for LED technology, more economic and durable. As a result of this measure, the company has succeeded in reducing energy consumption for store lighting by almost 30%.

The company has also implemented a distributed energy generation project using solar energy and biogas. This initiative incentivizes the generation of clean and renewable energy with savings of approximately 15% in total energy expenditure. In 2019, the contracting of partners in the states of Maranhão, Pará and Pernambuco was concluded. The system will be installed in the state of Ceará before the end of the first half of 2020 covering 70% of the store network with distributed energy generation.

For the 4th consecutive year, in 2019 Extrafarma sponsored the CowParade event, on this occasion held in the city of Salvador, promoting local culture and social responsibility. At the end of this years edition, the arts were auctioned off and the entire amount raised was donated to the institutions of Sister Dulces Social Works ( Obras Sociais Irmã Dulce ), a local philanthropic entity, which is an umbrella organization for one of the largest health complexes, and Hospital da Criança Martagão Gesteira , the largest exclusively pediatrics hospital in the North and the Northeast.

People

People are the greatest differential of the Company and a determining factor in the success of each business. The following initiatives are part of a management model that involves a system of variable remuneration linked to meritocracy and creation of value of its companies. All the businesses have programs dedicated to their employees with the aim of attracting, retaining, developing and engaging.

Ultrapars People Committee has the function of evaluating and supporting the Board of Directors in the appointment of Ultrapars Statutory Officers, evaluating long-term incentives to be granted to the executives, opining on the Officers evaluation program, monitoring programs for the development of talents and potential leaders of the Company. In turn, the leadership of Ultrapar and its companies undertake the implementation of the Ultrapars principles in the management of people, ensuring they are present at all levels of the Company, respecting the specifics and autonomy of each business in their execution.

# of employees — Ipiranga	3,289	3,318	-1 %
Oxiteno	1,844	1,943	-5 %
Ultragas	3,414	3,511	-3 %
Ultracargo	792	710	12 %
Extrafarma	6,292	7,112	-12 %
Holding	393	440	-11 %
Ultrapar	16,024	17,034	-6 %

Attraction

In order to strengthen employer branding among young people, identify qualified professionals and train them using a consistent conceptual framework, Ultrapars companies use various talent attraction programs (Regular, Vacation, Summer Undergrad and Junior Achievement) with a structured development process and job rotation in different areas. The objectives of each program are:

Regular Internship to train professionals using a consistent conceptual framework, through the attraction and development of qualified students;

Vacation Internship to offer internship opportunities to students at Brazilian Universities during the vacation period, so strengthening employer branding among young people;

Summer Undergrad to offer internships to students at International Universities during the vacation period (Summer Job), also with the aim to strengthen employer branding;

Junior Achievement program for young apprentices for fostering concepts of employability, education and qualification as well as stimulating reflections on the future, preparation for the labor market and guidance on career prospects.

Every year, the programs show a growth in the number of interested candidates with retention levels remaining above 70%.

Reten tion

During 2019, Ultrapar approved a new Corporate Executive Compensation Policy. The principles of alignment, meritocracy and sustainable creation of value are essential items in the policy. In accordance with the improvements in the Companys strategic planning process, the executive remuneration system has also been revised to be more in line with the strategy, increasing the participation of the long-term incentive in the composition of remuneration and including revised performance indicators.

Development

The culture of innovation is being implemented in the businesses through strategic tools for formation, training and self-development. The Succession and Career Process enables the joint evaluation of goals, behaviors and growth potential, resulting in specific career development decisions (development of skills / behaviors, transfers between areas, promotions, mentoring, coaching, etc). Future leaders are being trained to accelerate the preparedness of potential employees to feed the leadership pipeline.

In order to train the greatest number of people possible, the Ultra companies use tools for remote training in addition to developing their employees onsite. The nimble methodology used, for example, was developed at Ipiranga through learning initiatives in partnership with Turbo (an innovation hub) and Garagem Digital . The objective was to map the challenges and support the development of new innovative businesses with transformational potential for Ipiranga and its clients. At Ultracargo, digital technologies such as IoT (Internet of Things) solutions, focused on the monitoring of the operations are designed to meet client requirements in the course of their interactions with the terminals and at other stages along the logistics chain.

Recognizing efforts made in training, Extrafarma was ranked 1st in the 14th LOréals Counselling in the Pharmacy 2019 award, held annually with the participation of the leading drugstore chains in Brazil, the aim being to recognize those companies offering the best customer service in the dermo cosmetics category. At Ultragaz, protagonism is strategic. The incentive for self-development of employee competencies using the online Academia system remains in place. In 2019, 50 new courses were made available involving more than 37,000 classroom hours. Ultragaz sees this process as extremely important, given that it prepares employees to grow in their careers.

Engagement

During the year, Ultrapars companies implemented Workplace, a mobile Facebook platform for internal communication with the employees, introducing greater modernity to the relations through technology, permitting connection and reliability in a flexible, practical, interactive, attractive and open way, democratic to all.

Aiming to accelerate the implementation of the strategy, Ultragaz has revised its organizational structure and merged the household divisions as well as creating a new diversification and expansion division. The Human Resources area, currently Organization and People Management, now reports directly to Ultragazs Chief Executive Officer. In addition to these changes, new forms of working are being tested, namely in the form of squads made up of multidisciplinary teams, fostering an agile methodology at Ultragaz and training more than 120 leaders.

At Ipiranga, to develop an agile and adaptable organizational culture, promote diversity and engage people with the companys proposition, the Organization and People area have begun a cultural transformation process involving various activities. These included flexible time working for employees, installation of wifi, the launching of the Diversity Program, among others.

At the end of each quarter, Oxitenos leadership broadcasts to employees the results and strategy, its key achievements in the period and the next steps via a live transmission. The event is transmitted in Portuguese with simultaneous translation in English and Spanish. The transmission is watched on average by 1,700 employees. Another initiative is the XLead for Oxitenos executives worldwide, a meeting for aligning the principal strategic themes. In all, approximately 100 people from different countries were present at the event which is held annually. In 2019, the core themes of the presentations of company executives and guest speakers were the digital and cultural transformation.

At Ultracargo, safety is a shared responsibility and taken onboard by all employees. In this context, the Ultracargo DNA program seeks to reinforce the safety culture and operational discipline among employees so that the company can reach the Interdependent stage on the Bradley Curve.

In 2019, Extrafarma launched its Diversity Program to improve empathy with the customers and enrich the decision-making process. More diverse teams and a set of skills, experiences and broader points of view were instrumental in better understanding the customers, broadening visions through the exchange of ideas and delivering better and better services and solutions. The program was launched on four fronts: People with Special Needs, Gender, Generations and Cultural Diversity.

Capital markets

Ultrapars shares reported a closing price in 2019 of R$ 25.48 on B3, a decline of 4% in the year while the Ibovespa stock index recorded appreciation of 32% in the same period. On the NYSE, Ultrapars shares recorded a depreciation of 8% at year-end closing at US$ 6.26, while the Dow Jones Industrial Average rose 22% in the same period. Ultrapars average trading volume including trading on both B3 and NYSE, was R$ 154 million/day in 2019 (+11%). Ultrapar closed the year with a market capitalization of R$ 28 billion.

On April 2019, the Companys Extraordinary and Annual General Meeting approved a stock split of Ultrapars common shares, whereby one existing share now represents two shares of the same class and type. The stock split implies no alteration in Ultrapars capital stock and was effective on April 24, 2019.The figures in this report reflect the stock split.

In 2019, Ultrapar was a component of 11 of B3 stock indices as follows: IBOV (Bovespa), IBrA (Brasil Amplo), IBrX-50 (Brasil 50), IBrX (Brasil), ICO2 (Carbon Efficient), IGCT (Corporate Governance Trade), IGC (Shares with Corporate Governance), IGNM (Corporate Governance Novo Mercado), ITAG (Special Tag Along), IVBX-2 (Valor BM&F Bovespa) and MLCX (Mid-Large Cap).

Dividends

Dividend history — Fiscal year	Total amount (R$ million)	Dividend per share (R$)	Payout
2019	479	0.44	119 %
2018	685	0.63	60 %
2017	951	0.88	62 %
2016	907	0.84	58 %
2015	871	0.80	58 %

Ultrapars Corporate Bylaws requires the distribution of a minimum mandatory dividend to its shareholders of 50% of the adjusted net income. Over the past years, net income allocated to the payment of dividends averaged 60%.

In 2019, Ultrapar declared dividends of R$ 479 million, a payout of 119% on net income for the year and equivalent to a dividend yield of 2.1% on the average Ultrapar stock price. The increase in payout reflects the reduction in net income due to the non-recurring and non-cash effect relative to the impairment of goodwill at Extrafarma, as described in the Financial Performance Analysis section.

2019 FINANCIAL PERFORMANCE ANALYSIS

Economic and operational environment

Indicators — GDP*	1.1 %	1.3 %	D (%) 2019v2018 — (0.2)pp
Inflation in the period	4.3 %	3.8 %	0.6pp
Accumulated Selic rate	5.9 %	6.4 %	(0.5)pp
Average exchange rate (R$/US$)	3.95	3.65	8%
Average Brent crude oil (US$/barril)	64	71	-10%

Focus projection from 02/07/2020 for 2019

2019 marked the first year of the new federal administration. The items of privatization, de-bureaucratization and structural reforms are indicative of the new economic teams commitment to adjust the principal elements in the fiscal result. Congressional approval of social security reform was a major advance in this direction.

Weak inflation permitted four consecutive cuts in the Selic basic interest rate, closing 2019 at 4.50%, its lowest level on record. The IBOVESPA stock index posted an appreciation of 32%, driven by the increased demand for higher yielding assets. The average exchange rate for the year was R$ 3.95/US$ compared with R$ 3.65/US$ in 2018, an increase of 8%.

The macroeconomic scenario proved to be a challenging one in 2019. Brazilian economic activity took time to gain momentum and is expected to report a growth in GDP of 1.1%, below the 2.5% forecasted by the market early in the year. Gross debt is expected to reach 81% of the GDP compared with 77% at the end of 2018, illustrating that despite the initiatives adopted, debt is still growing faster than GDP, continuing to pressure the country risk.

Market outlook for 2020 is a GDP growth of 2.3% with a benign inflation in the region of 3.3% and a low Selic rate.

In relation to the fuel distribution market, ANP (Brazilian Oil, Natural Gas and Biofuels Agency) data shows sales volume rising by 4% in 2019, after remaining flat from 2013 to 2018, a reflection of the macroeconomic scenario. The recovery in the economy brings with it an outlook for an increase in the vehicle fleet and a decline in unemployment, both variables bearing a close correlation with fuel demand for light vehicles (Otto cycle).

In retail pharmacy, Abrafarma (Brazilian Association of Pharmacies and Drugstores) reported gross revenues of R$ 53 billion compared with R$ 48 billion in 2018 (+11%), with a net addition of 354 drugstores in Brazil.

At Oxiteno, prices of the principal commodities continue to be influenced by growing global supply and reflected in decreasing prices. In 2019, ethylene, palm kernel oil and MEG (Far East) reported declines of 13%, 36% and 33%, respectively.

The LPG market which had recorded stability in the past few years remained flat in 2019, volumes largely unchanged, with a slight drop of 0.4% year on year, comprising a decline of 2.4% in the first half of the year but an increase of 1.6% in the second half of the year.

Ipiranga

Ipirangas sales volume fell 1% in 2019, reflecting greater competition in the market, especially in the large customers segment, with a decline in diesel volumes of 4%, attenuated by an increase of 3% in fuel for light vehicles (Otto cycle). Ethanol sales volume recorded growth of 14%, while gasoline volumes were off 3%.

Net revenues at Ipiranga declined 1%, principally due to lower sales volume. Cost of goods sold was also down by 1%, due to oscillations in the average unit prices of fuels.

Sales, general and administrative expenses fell 3%, due mainly to management initiatives to reduce costs and expenses, notably freight, provisioning for losses on doubtful accounts and marketing programs in addition to lower expenses at ICONIC, where additional expenses were incurred in 2018 with the integration of the businesses.

Other operating results increased 50%, mainly reflecting extraordinary PIS/COFINS tax credits registered in 2019.

Ipirangas EBITDA in 2019 amounted to R$ 2,231 million, a year-over-year growth of 9%, mainly due to the reduction in expenses and non-recurring PIS/COFINS tax credits. Considering IFRS 16 adjustments and the segregation of the Holdings expenses, Ipirangas EBITDA in 2019 was R$ 2,487 million.

Ipiranga invested a total of R$ 738 million in 2019, allocated to maintenance and expansion of the service station and franchise network as well as expansion of the companys logistics infrastructure. Out of total investments, R$ 341 million was expended on property, plant and equipment and on intangible assets, R$ 327 million on contractual assets with clients (exclusive rights) and R$ 26 million on acquisitions, R$ 22 million in initial upfront costs of entitlement assets and R$ 21 million in drawdowns of financing to clients and advance payments of rentals, net of repayments.

Oxiteno

Specialty chemicals sales volume dropped 4% with lower sales across various segments due to the modest performance of the economy in Oxitenos Latin American markets, in addition to a decrease in exports. Commodities sales volume was 7% lower compared with 2018, when Oxiteno posted above average sales in this segment.

Oxiteno reported net revenues 10% lower due to a 13% decline in average dollar prices, combined with lower sales volume and in spite of the 8% devaluation of the Real against the US Dollar (R$ 0.29/US$).

Cost of goods sold decreased 6% in 2019 due to a decline in US Dollar costs of raw materials particularly ethylene and palm kernel oil combined with a reduction in sales volume, attenuated by the 8% devaluation of the Real against the US Dollar (R$ 0.29/US$).

Sales, general and administrative expenses were flat in 2019, due to lower payroll expenses and international freight charges in line with the decline in volumes in the period, attenuated by the effect of the 8% devaluation of the Real against the US Dollar on expenses of the international operations.

Oxiteno recorded an asset write-off at the Venezuelan unit of R$ 14 million in 2019 due to its decision to exit local operations. The mentioned amount impacted the results from disposal of property, plant and equipment line.

Oxitenos EBITDA amounted to R$ 197 million in 2019. Excluding the effect of the extraordinary tax credits in the net amount of R$ 186 million in 2018 and the asset write-off at Oxiteno Andina of R$ 14 million in 2019, the reduction on an annual comparative basis was 52% due principally to the lower level of unit margins in US Dollars in the period and the decrease in sales volume. Considering IFRS 16 adjustments and the segregation of the Holdings expenses, Oxitenos EBITDA in 2019 was R$ 222 million.

Oxiteno invested R$ 249 million in 2019, mainly allocated to investments in the new specialty chemicals plant in the United States and to maintenance of its productive units.

Ultragaz

Total sales volume fell 1% in 2019, reflecting weaker demand and the temporary interruption in the supply of LPG, partially offset by the addition of new resellers and growth in the sale of special gases.

Net revenues at Ultragaz increased 1% in 2019, mainly due to LPG price readjustments. The cost of goods sold registered a reduction of 1%, due to lower sales volume in the period.

Sales, general and administrative expenses recorded an increase of 14% in the year due to provisions for losses on doubtful accounts in 2019 compared to a reversal in 2018.

Ultragazs EBITDA amounted to R$ 536 million in 2019. Excluding the effect of the payment of a fine following the decision by the Brazilian Anti-Trust Authority - CADE to reject the proposed acquisition of Liquigás in 2018, there was a year-over-year reduction of 2%, principally due to lower sales volume in the period and higher provisioning for losses on doubtful debts. Considering IFRS 16 adjustments and the segregation of the Holdings expenses, Ultragazs EBITDA in 2019 was R$ 587 million.

Ultragaz invested R$ 230 million in 2019, allocated mainly to clients in the bulk segment, replacement and acquisition of gas bottles and maintenance of the logistics infrastructure and filling stations.

Ultracargo

Ultracargos average storage in 2019 increased 3% year-over-year mainly due to greater fuel handling at Suape, Itaqui and Santos.

Net revenues grew 10% in 2019, driven by the increase in handling and contractual readjustments. The cost of services provided posted a growth of 11% due to higher one-off expenditures with maintenance, materials, services and payroll linked to the expansion in capacity at the Santos terminal.

Sales, general and administrative expenses were 18% up due mainly to higher payroll expenses and the non-recurring effect of receipt of credits in 2018 relating to the incorrect collection of a port management fee in the amount of R$ 8 million.

The other operating results line amounted to R$ 62 million negative in 2019, the result of the provision for the payment of the Conduct Adjustment Agreement (TAC), signed with the Public Prosecutors Office in 2019 of R$ 66 million.

Ultracargo reported an EBITDA of R$ 130 million in 2019, impacted by the R$ 66 million of the TAC. Excluding the effect of the TAC, Ultracargos EBITDA was R$ 196 million, a growth of 10% compared to 2018, reflecting increased handling and average price, in turn due to contractual readjustments, despite the higher costs and expenses with the startup of operations in expanded capacity at the Santos terminal. Considering IFRS 16 adjustments and the segregation of the Holdings expenses, EBITDA in 2019 was R$ 165 million.

Ultracargo invested R$ 252 million in 2019, mainly allocated to the expansion of the Itaqui and Santos terminals, the Vila do Conde terminal concession grant, the acquisition of land in Santos and the adaptation and maintenance of existing infrastructure.

Extrafarma

Extrafarma opened 29 new stores and closed 46 in 2019, a reduction of 4% in the network. At the end of the period maturing stores (with three years or less of operations) accounted for 45% of the network, a reflection of the pace of expansion in recent years.

Gross revenues increased by 2% in 2019 as a result of sales growth both in the wholesale and retail segments due mainly to the annual readjustment in medicine prices and a greater average number of stores, partially offset by the intensely competitive trading environment and the closing down of underperforming stores.

The cost of goods sold rose 3% in 2019 due to sales growth and the annual readjustment in medicine prices. Gross profit reached R$ 598 million, a drop of 1%, due to a very competitive trading environment.

Sales, general and administrative expenses increased 6% in 2019, reflecting higher levels of depreciation, following investments made in recent years and the impact of closing down underperforming stores. Excluding these effects, sales, general and administrative expenses would have risen 4% year-over-year.

The other operating results totaled R$ 31 million in 2019, largely due to the booking of non-recurring PIS/COFINS tax credits and credits arising from social security contributions.

Extrafarma recorded the write-off of investments due to the closing of stores in the amount of R$ 19 million, which impacted result from disposal of plant property and equipment.

Moreover, it was also recorded an impairment of goodwill on the acquisition amounting to R$ 593 million in 2019, with no cash effect, as a consequence of the worse than expected results compared to the original business plan.

EBITDA at Extrafarma amounted to R$ 660 million negative. Excluding the effects of impairment and the closing of underperforming stores, EBITDA would be R$ 47 million negative, in line with the same item for 2018, a function mainly of the effects related to the stabilization of the new retailing system in 2018 and non-recurring credits in 2019, attenuated by the competitive environment. Considering IFRS 16 adjustments and the segregation of the Holdings expenses, EBITDA in 2019 would have been R$ 566 million negative or R$ 47 million, excluding impairment charges and the write-off of investments.

Extrafarma invested R$ 89 million in the year. The amount was allocated in large part to the new distribution center in São Paulo unveiled in August translating into reduced logistics expenses and a better level of service for operations in the state. Investment was also expended on store opening and remodeling together with IT projects.

Ultrapar

Performance comparision — R$ million	2019 IFRS 16	2019		2018		D (%) 2019v2018
Net revenue from sales and services	89,298		89,298		90,698		-2 %
(-) Cost of goods sold and services provided	(83,187	)	(83,201	)	(84,537	)	-2 %
(=) Gross profit	6,111		6,097		6,161		-1 %
(-) Selling, marketing, general and administrative expenses	(4,367	)	(4,421	)	(4,297	)	3 %
(-) Other operating income, net	180		180		58		212 %
(-) Income from disposal of property	(30	)	(32	)	(22	)	-43 %
(-) Impairment	(593	)	(593	)			na
(=) Operating income	1,301		1,230		1,899		-35 %
(-) Financial result	(507	)	(380	)	(114	)	235 %
(-) Share of profit of subsidiaries, joint ventures and associates	(12	)	(12	)	(15	)	-18 %
(=) Income before income and social contribution taxes	782		838		1,771		-53 %
(-) Income before income and social contribution taxes	(379	)	(398	)	(639	)	-38 %
(=) Net income	403		440		1,132		-61 %
(=) Net income ex non-recurring*	869		906		1,046		-13 %

Excluding non-recurring effects:

2018: break up fee of R$ 286 million following the rejection of the proposed acquisition of Liquigás and tax credits due to the exclusion of ICMS from the PIS/COFINS tax calculation base at Oxiteno for the net amount of R$ 186 million in EBITDA and R$ 153 million in financial result

2019: TAC of R$ 66 million at Ultracargo , impairment at Extrafarma of R$ 593 million and asset write-off at Oxiteno Andina of R$ 14 million

Net revenues from sales and services

Ultrapar reported net revenues from sales and services of R$ 89,298 million in 2019, a decline of 2% compared with 2018, mainly the result of a decrease in revenues at Ipiranga and Oxiteno.

Cost of goods sold and services provided

Ultrapar recorded a cost of goods sold and services provided of R$ 83,201 million in 2019, a reduction of 2% in relation to 2018, due to the decrease in costs at Ipiranga, Oxiteno and Ultragaz.

Gross profit

Ultrapar registered a gross profit of R$ 6,097 million in 2019, a 1% reduction compared to 2018, due to reduced aggregate profit of Oxiteno and Extrafarma.

General and administrative expenses, with sales and marketing

Ultrapars general, administrative expenses with sales and marketing recorded an increase of 3%, due to the effects of inflation on expenses and factors specific to each one of the businesses.

Other operating income

Ultrapar reported net revenue of R$ 180 million in 2019, an increase of 212% compared with 2018, reflecting the booking of tax credits, attenuated by the TAC at Ultracargo.

Result from the disposal of plant, property and equipment

A total of R$ 32 million with expenses on the sale of plant, property and equipment due mainly to the write-off of investments due to the closing of stores in the amount of R$ 19 million and to the asset write-off at Oxiteno Andina of R$ 14 million in 2019.

Impairment

The record of R$ 593 million in this line refers to impairment of goodwill on the acquisition of Extrafarma.

EBITDA calculation from net income R$ million

Performance comparision — R$ million	2019 IFRS 16	2019	2018	D (%) 2019v2018
(=) Net income	403	440	1,132	-61 %
(=) Net income ex non-recurring*	869	906	1,046	-13 %
(+) Income and social contribution taxes	379	398	639	-38 %
(+) Financial result	507	380	114	235 %
(+) Depreciation and Amortization	1,145	851	812	5 %
(=) EBITDA	2,433	2,069	2,697	-23 %
(+) Cash flow hedge of bonds	12	12		na
(+) Amortization of contractual assets with customers exclusive rights (Ipiranga)	355	355	372	-4 %
(=) Adjusted EBITDA	2,800	2,436	3,069	-21 %
(=) Adjusted EBITDA ex non-recurring*	3,473	3,109	3,169	-2 %

Excluding non-recurring effects:

2018: penalty fee of R$ 286 million following the rejection of the proposed acquisition of Liquigás and tax credits due to the exclusion of ICMS from the PIS/COFINS tax calculation base at Oxiteno for the net amount of R$ 186 million in EBITDA and R$ 153 million in financial result

2019: TAC of R$ 66 million at Ultracargo , impairment at Extrafarma of R$ 593 million and asset write-off at Oxiteno Andina of R$ 14 million

Adjusted EBITDA

Adjusted EBITDA excluding non-recurring items was R$ 3,109 million in 2019, a reduction of 2% in relation to 2018. Considering the IFRS 16, Adjusted EBITDA excluding non-recurring items in 2019 was R$ 3,473 million.

Depreciation and amortizations¹

Total costs and expenses with depreciation and amortization in 2019 was R$ 1,207 million, a growth of 2% compared with 2018, due to investments in the period.

¹ Includes amortization of contractual assets with clients exclusive rights

Operating profit

Ultrapar posted an operating profit of R$ 1,230 million in 2019, 35% less than 2018, due to lower operating profits at Oxiteno, Ultracargo and Extrafarma.

Financial result

Ultrapars financial result was a net expense of R$ 380 million in 2019, R$ 267 million greater than recorded in 2018, due principally to the booking in 2018 of interest on tax credits with respect to the exclusion of ICMS from the PIS/COFINS tax calculation, in the amount of R$ 153 million, and the effects of FX variation.

Net income

In 2019, Ultrapar posted net income, excluding non-recurring items, of R$ 906 million, a year-over-year reduction of 13%, mainly reflecting the reduction in EBITDA in the period and higher financial expenses. Considering IFRS 16, Ultrapars net income excluding non-recurring items in 2019 was R$ 869 million.

Debt

Ultrapar ended the fiscal year 2019 with a gross debt of R$ 14,393 million and R$ 5,712 million in cash/cash equivalents, translating into net debt of R$ 8,681 million, an increase of R$ 469 million compared with 2018. Net debt at the end of 2019 corresponds to 2.9x EBITDA for the last 12 months, excluding Extrafarmas impairment costs, compared with 2.7x at year-end 2018.

Investments and outlook

Organic investments by business - R$ million

Ultrapars investments in 2019, net of divestments and repayments, amounted to R$ 1.6 billion, a reduction of 19% compared to the amount invested in 2018.

The Companys 2020 investment plan totaled R$ 1.8 billion and reinforces the commitment to sustainable growth of the businesses and selectivity in capital allocation.

At Ipiranga, the approved investment limit is R$ 873 million, approximately 60% of this directed towards expansion of: (i) the service station network, (ii) the logistics infrastructure, with the construction of two logistics facilities and the concessions won in Belém (PA), Cabedelo (PB) and Vitória (ES), and (iii) company-operated stores and new franchises at am/pm and Jet Oil. The remaining 40% will be expended on maintenance and modernization of its activities, mainly in the renewal of contracts with clients, logistics infrastructure and technology to support the operations.

The approved investment of R$ 228 million for Oxiteno will be allocated mainly to maintenance and safety of its industrial units, R&D and improvements of information technology systems.

Investments at Ultragaz will amount to R$ 314 million to attract new clients in the bottled and bulk segments, for replacement and acquisition of LPG bottles to support the volume growth, expansion and maintenance of the filling plants and information technology.

Ultracargo is expected to invest R$ 238 million, mainly in the construction of the Vila do Conde (PA) terminal as well as expansion of the Itaqui (MA) and Suape (PE) terminals together with investments in ongoing improvements in safety, infrastructure and maintenance at the terminals.

Extrafarma plans on investing R$ 53 million mainly in technology platform, in the network expansion and logistics infrastructure, notably with the opening of a new distribution center in the Northeast region, as well as drugstore maintenance and renovation.

Relationship with the Independent Auditors

The Company has a policy for hiring services of the independent auditors, attached to the Audit and Risks Committees internal bylaws, which guarantees that there is no conflict of interest, loss of independence or objectivity of the auditing services of the financial statements rendered by the independent auditors.

Pursuant to CVM Instruction 381/2003, we inform that during the fiscal year of 2019, we contracted work from our independent auditors unrelated to the auditing of the financial statements, which represented 17% of the global remuneration in fees for the external audit services. Services rendered relate to the revision of the Tax Accounting Bookkeeping, auditing for the issuance of comfort letter in connection with the notes offering process, issuance of appraisal report for corporate transaction and revision of extemporaneous tax credits, which totaled an amount of R$ 1,693 thousand. The period for rendering these services was less than one year. Such services did not affect the independence and objectivity necessary for the performance of the financial statement audit services.

Our independent auditors declared to the Management of the Company that the services rendered did not affect the independence and objectivity necessary for the performance of the financial statement audit services

São Paulo, February 19, 2020 Ultrapar Participações S.A. (Company, B3: UGPA3/NYSE: UGP), a Company engaged in the Oil & Gas sector through Ipiranga, Ultragaz and Ultracargo, specialty chemicals through Oxiteno and retail pharmacy with Extrafarma, announces today its results for the fourth quarter of 2019.

Net revenues	Adjusted EBITDA 1	Net income 1
R$24 billion	R$969 million	R$133 million
Investments	Cash flow from operating	Market Cap
R$555 million	R$2.9 billion	R$28 billion

1 Excludes impairment at Extrafarma of R$ 593 million and write-off of Oxiteno Andinas assets of R$ 14 million.

Highlights

During the fourth quarter of 2019, we announced our organic investments plan for 2020 of R$ 1.8 billion, to be allocated mainly for the expansion of logistics infrastructure, maintenance, technology and safety of our businesses, and we also approved the payout of R$ 261 million in dividends for 2H19.

At Ipiranga , we began a pilot project of company-operated stores in the am/pm network, which will allow us to deepen our knowledge of the business and add value to our franchisees. In addition, we are strengthening our logistics infrastructure and implementing initiatives to reduce costs and expenses, allowing us to keep growing more efficiently, even in a tough competitive market environment. Ultragaz again reported good results in the quarter, achieving the expected earnings recovery throughout the second semester and continues to be a reference in operational excellence and innovation.

Oxiteno still faces the challenge of squeezed margins in a commodity chemicals and is committed to adjust its cost structure and improve the product mix in order to counter such challenge. At Ultracargo , we started operating the expansion of the Itaqui terminal in October and increased volumes at the Santos terminal during the quarter. Extrafarma reported positive cash generation for the second consecutive quarter, thanks to operating improvements and a change in strategy, with investments in information systems and logistics infrastructure, more selective store openings and closure of underperforming units.

Message from the Management

At Ipiranga, we have seen a notable progression in the management model organized by business units introduced in early 2019, that focuses on maximizing value in the initiatives which previously had as their main objective to boost fuel sales. In this sense, we began a pilot project for company-operated am/pm stores, enabling us to deepen our knowledge of the business and add value to our franchisees. The Abastece Aĺ app continues to grow exponentially and reached more than R$ 4.0 billion annualized payment transactions, while the Km de Vantagens, Brazils leading loyalty program, continues to add new users and surpassed the mark of 32 million participants.

Pedro Wongtschowski	Frederico Fleury Curado
Chairman of the Board of Directors	Chief Executive Officer

Considerations on the financial and operational information

The financial information presented in this document has been prepared according to International Financial Reporting Standards (IFRS) norms. The financial information of Ultrapar corresponds to the Companys consolidated information. The information on Ipiranga, Oxiteno, Ultragaz, Ultracargo, Extrafarma and Holding (formerly Corporate) is reported without the elimination of intersegment transactions. Therefore, the sum of such information may not correspond to Ultrapars 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.

As from 2019, two changes have been introduced in the presentation of Ultrapars financial information: (i) the adoption of IFRS 16 published by the IASB International Accounting Standards Board prospectively; and (ii) the segregation of certain expenses of the Holding, previously shared among Ultrapars businesses, in a new managerial segment denominated Holding (formerly Corporate). In order to maintain comparability of 4Q19 and 2019 with information of 4Q18 and 2018, the discussion of results is shown without adjustments related to IFRS 16 and the Holding and references to 4Q19 and 2019 adopt the same criterion . Any mention of information incorporating these changes will be identified as IFRS 16.

Information denominated EBITDAEarnings Before Interest, Taxes on Income and Social Contribution on Net Income, Depreciation and Amortization; Adjusted EBITDAadjusted for amortization of contractual assets with customersexclusive rights and cash flow hedge; and EBITEarnings Before Interest and Taxes on Income and Social Contribution on Net Income is presented in accordance with Instruction 527, issued by the Brazilian Securities and Exchange CommissionCVM on October 4, 2012. The calculation of EBITDA based on net earnings is shown below:

R$ million	Quarter — 4Q19 IFRS 16	4Q19		4Q18		3Q19	2019 IFRS 16	2019	2018
Net income	(267.7	)	(259.5	)	495.6		321.4	402.9	440.0	1,132.3
(+) Income and social contribution taxes	(18.6	)	(14.4	)	314.5		147.6	378.6	397.7	638.7
(+) Financial (income) expenses, net	252.1		218.7		(116.7	)	114.6	506.9	380.2	113.5
(+) Depreciation and amortization	301.9		222.7		210.2		208.6	1,144.7	851.2	812.5
EBITDA	267.7		167.5		903.6		792.2	2,433.1	2,069.0	2,697.1
Adjustments
(+) Amortization of contractual assets with customersexclusive rights (Ipiranga)	81.9		81.9		89.4		95.6	355.2	355.2	371.8
(+) Cash flow hedge	11.9		11.9					11.9	11.9
Adjusted EBITDA	361.5		261.4		993.0		887.8	2,800.3	2,436.2	3,068.9
Non recurent
(+) Break-up fee for non-acquisition of Liquigás										286.2
(+) Tax credits in Oxiteno					(186.0	)				(186.0	)
(+) TAC in Ultracargo							13.0	65.5	65.5
(+) Impairment at Extrafarma	593.3		593.3					593.3	593.3
(+) Write-off of Oxiteno Andinas assets	14.0		14.0					14.0	14.0

Adjusted EBITDA ex-non-recurring items	968.8		868.6		807.0		900.8	3,473.1	3,109.0	3,169.0

2020 Update Ultrapar Holding

In order to transform the functions of the Holding into a lighter structure, focused on strategy and governance as well as to seek opportunities for greater efficiency and quality in the operational processes, during 2019, the Company developed the Ultrapar Shared Services Center. Some of the functions previously centralized on the group and certain new processes, as from January 2020, are now being performed by the Center. With this, we have established a new form of report for the Holdings expenses aggregating areas which in 2019 comprised the expenses of our five businesses. To maintain comparability of information to be disclosed in 2020, we have revised retroactively the criteria for allocation of expenses between the businesses and the Holding.

The effects from this restatement are shown in the following table. The expenses bellow were registered under the Administrative Expenses line in the respective income statements:

EBITDA IFRS 16 (R$ million)
1Q19
Ipiranga	593.9		10.3		3.1		597.0
Oxiteno	38.6		2.0		1.1		39.6
Ultragaz	108.2		2.2		1.3		109.5
Ultracargo	59.2		0.7		0.3		59.6
Extrafarma	0.6		0.3		0.6		1.2
Holding	(15.5	)	(15.5	)	(6.5	)	(22.0	)
Ultrapar	782.3						782.3
2Q19
Ipiranga	508.1		12.6		2.7		510.7
Oxiteno	43.8		2.5		0.9		44.7
Ultragaz	120.6		2.7		1.1		121.7
Ultracargo	6.3		0.8		0.3		6.5
Extrafarma	17.6		0.4		0.5		18.1
Holding	(19.1	)	(19.1	)	(5.5	)	(24.6	)
Ultrapar	677.2						677.2
3Q19
Ipiranga	675.9		12.6		3.5		679.4
Oxiteno	79.3		2.5		1.2		80.5
Ultragaz	186.0		2.7		1.5		187.5
Ultracargo	44.7		0.8		0.4		45.0
Extrafarma	17.5		0.4		0.7		18.2
Holding	(19.0	)	(19.0	)	(7.1	)	(26.1	)
Ultrapar	979.3						979.3

Ipiranga

| Total
volume (000 m³) | 6,112 | 6,160 | 6,185 | (1% | ) | (1% | ) | 23,494 | 2018 — 23,680 | D 2019 v 2018 — (1%) |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Diesel | 2,905 | 2,971 | 3,167 | (2% | ) | (8% | ) | 11,533 | 11,964 | (4%) |
| Otto
cycle | 3,116 | 3,087 | 2,903 | 1% | | 7% | | 11,550 | 11,265 | 3% |
| Others¹ | 92 | 101 | 115 | (10% | ) | (20% | ) | 411 | 450 | (9%) |
| EBITDA
(R$ million) | 631 | 569 | 615 | 11% | | 3% | | 2,231 | 2,052 | 9% |
| EBITDA
IFRS 16² (R$ million) | 699 | n/a | 679 | n/a | | 3% | | 2,487 | n/a | n/a |

¹ Fuel oils, arla 32, kerosene, lubricants and greases

² Considers segregation of the Holdings expenses

Operational performance  Ipiranga reported sales volume 1% down in relation to 4Q18 due to the 2% decline in diesel volumes, mainly in the large consumers segment, while there was an increase of 1% in Otto cycle volume, with a greater share of gasoline in the sales mix. In relation to 3Q19, volume fell 1% due to the decrease of 8% in diesel, once again affected by the reduction in volumes in the segments of large consumers and reflecting seasonal variations between quarters, partially offset by an increase of 7% in Otto cycle volume, with market share gains in gasoline and ethanol. In 2019, Ipiranga sold 23,494 thousand m³, 1% less than in 2018.

Net revenues  Total of R$ 20,233 million (+2%), due to the increase in average unit costs of oil derivatives and ethanol, in addition to better results at ICONIC despite the reduction in volumes. In relation to 3Q19, net revenues increased by 3%, for the same reasons already mentioned. In 2019, Ipirangas net revenues were R$ 75,452 million, a decrease of 1% compared with 2018, in line with the lower sales volume.

Cost of goods sold  Total of R$ 19,289 million (+2%), mainly due to the increase in Ipirangas average unit cost, reflecting the impact of the Reals devaluation on the reference prices of oil derivatives. In relation to 3Q19, cost of goods sold rose 3% for the same reasons mentioned above. In 2019, the cost of goods sold amounted to R$ 71,963 million, 1% less than in 2018.

Sales, general and administrative expenses (SG&A)  Total of R$ 546 million (+6% vs. 4Q18 and +11% vs. 3Q19), due principally to the reversal of provisioning for losses on doubtful debts in the comparative base periods and higher expenses with studies and expansion projects in 4Q19, attenuated by initiatives for reducing expenses. In 2019, SG&A totaled R$ 2,092 million, a reduction of 3% in relation to 2018, mainly due to management initiatives for reducing costs and expenses.

Other operating results  Increase of R$ 26 million (+52%) in relation to 4Q18 due to extraordinary PIS/COFINS tax credits registered in the amount of R$ 42 million, attenuated by lower merchandising fees from suppliers.

EBITDA  Total of R$ 631 million (+11%), evidencing the continuity of the profitability expansion initiatives, despite the slight decline in volumes, positively influenced by the growth in results at ICONIC and costs and expenses reduction initiatives. Compared to 3Q19, EBITDA rose 3%, mainly due to the improvement in average margin, a reflection of the mix with greater share of Otto cycle, and the increase in merchandising fees from suppliers. In 2019, Ipiranga reported an EBITDA of R$ 2,231 million, an increase of 9% compared to 2018. Considering IFRS 16 adjustments and the segregation of the Holdings expenses, Ipirangas EBITDA in 4Q19 and in 2019 was R$ 699 million and R$ 2,487 million, respectively.

Investments  Ipiranga invested a total of R$ 238 million, allocated to expansion and maintenance of the service stations and franchise network as well as expansion of Ipirangas logistics infrastructure. Out of total investments, R$ 136 million was spent on property, plant and equipment and on intangible assets, R$ 96 million on contractual assets with clients (exclusive rights) and R$ 6 million as drawdowns of financing to clients and advance payments of rentals, net of receipts. Ipiranga ended 2019 with 7,090 service stations, a reduction of 61 service stations compared with 3Q19. Total investments in 2019 were R$ 738 million.

Oxiteno

| Average
exchange rate (R$/US$) | 4.12 | 3.81 | 3.97 | 8% | | 4% | | 3.95 | 3.65 | 8% | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Total
volume (000 tons) | 175 | 190 | 195 | (8% | ) | (11% | ) | 734 | 769 | (5% | ) |
| Specialty
Chemicals | 142 | 148 | 153 | (4% | ) | (7% | ) | 589 | 613 | (4% | ) |
| Commodities | 33 | 42 | 42 | (21% | ) | (21% | ) | 145 | 156 | (7% | ) |
| Sales in
Brazil | 125 | 141 | 147 | (11% | ) | (15% | ) | 528 | 557 | (5% | ) |
| International sales | 50 | 49 | 49 | 2% | | 2% | | 206 | 211 | (3% | ) |
| EBITDAex-non-recurring items¹ (R$ million) | 64 | 94 | 74 | (31% | ) | (13% | ) | 211 | 439 | (52% | ) |
| EBITDAIFRS 16² (R$ million) | 57 | n/a | 80 | n/a | | (29% | ) | 222 | n/a | n/a | |

¹ Excludes the effect of extraordinary tax credits in 4Q18 and write-off of Oxiteno Andinas assets in 4Q19

² Considers segregation of the Holdings expenses

Operational performance  Specialty chemicals volume decreased by 4%, despite the increase in exports, with lower sales across various segments in the domestic market, mainly due to a fall of 7.5% in apparent demand for chemicals according to ABIQUIM (Brazilian Association of Chemical Industries) data. The commodity volumes reported was 21% lower than in 4Q18, a period in which Oxiteno posted sales above the average for the segment. When compared with 3Q19, total sales volume fell by 11% due to seasonal variations between periods in specialty chemical sales and the reduction in sales of glycols. Sales volume totaled 734 thousand tons in 2019, 5% less than the previous year.

Net revenues  Total of R$ 1,012 million (-16%) due to a decline of 15% in average dollar prices, following the drop in the prices of glycols in the international market, combined with lower sales volume and in spite of the 8% weaker Real (R$ 0.31/US$). In relation to 3Q19, net revenues declined 10% for the same reasons as already mentioned. In 2019, net revenues totaled R$ 4,254 million, a year-over-year reduction of 10%.

Cost of goods sold  Total of R$ 828 million (-15%) due to a reduction in US Dollar costs of the main raw materials, notably ethylene and palm kernel oil (PKO) together with lower sales volume, offset by the devaluation of the Real. Compared with 3Q19, the cost of goods sold fell 9%, in line with the reduction in sales volume. In 2019, cost of goods sold totaled R$ 3,539 million, 6% lower than 2018.

Sales, general and administrative expenses (SG&A)  Total of R$ 200 million (+1%), less than inflation in the period, a reflection of lower payroll expenses and initiatives for reducing expenses, attenuated by higher expenses with indemnities. With respect to 3Q19, sales, general and administrative expenses increased 7%, due to higher payroll expenses, principally in the form of severance indemnities. In 2019, SG&A totaled R$ 738 million, stable compared with 2018.

Other operations  Reduction of R$ 204 million in relation to 4Q18, a result of the tax credits related to the exclusion of the ICMS sales tax from the PIS/COFINS calculation base registered in 4Q18.

Result from the disposal of PP&E  Total of R$ 14 million negative in the quarter due to the write-off of Oxiteno Andinas assets, in the light of the decision to exit the local operations in October 2019.

EBITDA  Oxitenos EBITDA, excluding non-recurring items (write-off at Andina), totaled R$ 64 million (-31%) due to lower unit margins in US Dollars in the period, the result of lower petrochemical commodity (glycols) prices on the international market and lower sales volume, attenuated by the 8% devaluation of the Real against the US Dollar (R$ 0.31/US$). In 2019, Oxitenos EBITDA excluding non-recurring effects totaled R$ 211 million, a reduction of 52% in relation to 2018. Considering IFRS 16 adjustments and the segregation of the Holdings expenses, Oxitenos EBITDA in 4Q19 and 2019 was R$ 57 million and R$ 222 million, respectively.

Investments  Investments were R$ 68 million, mainly allocated to the maintenance of the companys industrial units. In 2019, total investments amounted to R$ 249 million.

Ultragaz

| Total
volume (000 tons) | 432 | 421 | 458 | 3% | (6% | ) | 1,706 | 2018 — 1,725 | D 2019 v 2018 — (1%) |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Bottled | 300 | 297 | 315 | 1% | (5% | ) | 1,174 | 1,198 | (2%) |
| Bulk | 132 | 124 | 143 | 6% | (8% | ) | 532 | 527 | 1% |
| EBITDAex-non-recurring items¹ (R$ million) | 154 | 121 | 174 | 28% | (12% | ) | 536 | 544 | (2%) |
| EBITDAIFRS 16² (R$ million) | 168 | n/a | 187 | n/a | (10% | ) | 587 | n/a | n/a |

¹ Excluding the fined following rejection of the acquisition of Liquigás in 1Q18

² Considers segregation of the Holdings expenses

Operational performance  Sales volume in the bottled segment increased by 1% in relation to 4Q18, in line with the market performance. In the bulk segment, volumes grew by 6% mainly due to stronger sales of special gases (propellants) to the industrial sector. Compared to 3Q19, sales volume fell 6%, a reflection of seasonal variations between quarters. In 2019, sales volume amounted to 1,706 thousand tons, a 1% reduction compared with 2018, mainly the result of the temporary interruption of LPG supply at some refineries in the first half of the year and the market contraction in 2019.

Net revenues  Total of R$ 1,788 million, flat compared with 4Q18. In relation to 3Q19, net revenues declined 6%, due to the seasonal decline in volumes. In 2019, net revenues amounted to R$ 7,095 million, 1% higher than 2018.

Cost of goods sold  Total of R$ 1,519 million (-2%) due to readjustment in LPG costs, mainly the bulk segment, and despite the higher sales volume. Compared to 3Q19, the cost of goods sold fell 5% due to the seasonally lower sales volume, but partially compensated by readjustments in LPG costs. In 2019, cost of goods sold totaled R$ 6,108 million, 1% down from 2018.

Sales, general and administrative expenses (SG&A)  Total of R$ 168 million (+2%) mainly due to the increase in freight expenses, in turn reflecting higher sales volume and payroll expenses. In relation to 3Q19, sales, general and administrative expenses rose 3% due to the higher concentration of expenses with legal proceedings involving tax issues. In 2019, sales, general and administrative expenses amounted to R$ 654 million, 14% more than in 2018, principally due to higher provisioning for doubtful debts (PDD) versus PDD reversals in the previous year.

EBITDA  Total of R$ 154 million (+28%) due to higher sales volume in the bulk segment, notably special gases with the consequent improvement in margins. In relation to 3Q19, EBITDA was 12% down, largely due to seasonal variations between periods. In 2019, Ultragazs EBITDA totaled R$ 536 million, a 2% reduction in relation to 2018, due to lower sales volume, excluding the non-recurring effect of the breakup fee following the rejection of the acquisition of Liquigás. Considering IFRS 16 adjustments and the segregation of the Holdings expenses, Ultragazs EBITDA in 4Q19 and in 2019 was R$ 168 million and R$ 587 million, respectively.

Investments  Ultragaz invested R$ 87 million, allocated to the replacement and acquisition of gas bottles, maintenance of the filling plants and corporate clients. In 2019, the company invested R$ 230 million.

Ultracargo

| Effective
storage 1 (000 m³) | 847 | 756 | 778 | 12% | D 4Q19 v 3Q19 — 9% | 782 | 2018 — 757 | D 2019 v 2018 — 3% |
| --- | --- | --- | --- | --- | --- | --- | --- | --- |
| EBITDA ex-non-recurring 2 (R$ million) | 45 | 40 | 49 | 13% | (9%) | 196 | 178 | 10% |
| EBITDA
IFRS 16 3 (R$ million) | 54 | n/a | 45 | n/a | 19% | 165 | n/a | n/a |

1 Monthly average

² Excludes the effect of the TAC in 2Q19 and 3Q19

³ Considers segregation of the Holdings expenses

Operational performance  Ultracargos average storage increased 12% compared to 4Q18, due to greater handling of fuel following the startup of the expanded operations at the Santos and Itaqui terminals. In relation to 3Q19, average storage in the port terminals increased by 9%, for the same reasons mentioned before. In 2019, average storage increased by 3% year-over-year.

Net revenues  Total of R$ 153 million in 4Q19 (+21%), driven by increased handling of fuels and contractual readjustments. In relation to 3Q19, net revenues rose 13% due to greater fuel handling and higher spot sale volume. In 2019, net revenues totaled R$ 541 million, 10% greater than in 2018.

Cost of services provided  Total of R$ 78 million (+22%), due to higher costs with payroll, materials, maintenance and services associated with the capacity expansion at the Santos terminal. In relation to 3Q19, the cost of services provided increased by 8%, due to higher payroll expenses. In 2019, the cost of services provided amounted to R$ 271 million, a growth of 11% relative to the previous year.

Sales, general and administrative expenses (SG&A)  Total of R$ 44 million (+30%) due to higher non-recurring expenses with the startup of the expanded operations of the Santos and Itaqui terminals, and with payroll expenses, principally indemnity payments. In relation to 3Q19, sales, general and administrative expenses rose 33%, due to higher expenses with payroll and maintenance. In 2019, SG&A totaled R$ 138 million, 18% greater than in 2018.

EBITDA  Total of R$ 45 million, a growth of 13% compared with 4Q18, due to greater volumes and a higher average price, reflecting contractual readjustments and the change in the product mix, despite the higher costs and expenses due to the startup of the expended operations at the Santos and Itaqui port terminals. Excluding the additional TAC which impacted results by R$ 13 million in the preceding quarter, in relation to 3Q19, EBITDA would be 9% lower, due to the increase in costs and expenses. In 2019 and excluding the effect of the TAC, EBITDA totaled R$ 196 million, an increase of 10% in relation to 2018. Considering IFRS 16 adjustments and the segregation of the Holdings expenses, Ultracargos EBITDA in 4Q19 and in 2019 was R$ 54 million and R$ 165 million, respectively.

Investments  Investments at Ultracargo in the period were R$ 87 million, allocated to the acquisition of land in Santos, expansion at the Itaqui terminal and to maintenance. In 2019, Ultracargo invested R$ 252 million.

Extrafarma

									D			2018	D
							4Q19 v 4Q18		4Q19 v 3Q19				2019 v 2018
Drugstores (end of period)	416		433		423		(4%	)	(2%)	416		433	(4%)
% mature
stores (+3 years)	55%		45%		51%		9.5 p.p.		3.5 p.p.	55%		45%	9.5 p.p.
Gross
Revenues (R$ million)	528		526		541		0%		(2%)	2,174		2,141	2%
EBITDA ex-non-recurring items¹ (R$ million)	(36	)	(15	)	(5	)	(130%	)	n/a	(67	)	(47)	(43%)
EBITDA
IFRS 16² (R$ million)	(603	)	n/a		18		n/a		n/a	(566	)	n/a	n/a

¹ Excluding impairment of goodwill of the acquisition in 4Q19

² Considers segregation of the Holdings expenses

Operational performance  Extrafarma ended 2019 with 416 stores, 29 openings and 46 closures throughout the year, a net reduction of 4% in its network, result of greater selectivity in investments and a more rigorous approach to closing underperforming stores. At the end of 4Q19, non-mature stores (up to three years of operations) represented 45% of the network. Compared to 3Q19, Extrafarma opened 7 stores and closed 14.

Gross revenues  Total of R$ 528 million, stable in relation to 4Q18, mainly due to effects related to the stabilization of the new retailing system in 2018, neutralized by the closing of underperforming stores. In relation to 3Q19, gross revenue fell 2%, because of the smaller number of stores. In 2019, gross revenue totaled R$ 2,174 million, 2% above that of last year.

Cost of goods sold and gross profit  The cost of goods sold totaled R$ 347 million in line with 4Q18. Gross profit reached R$ 154 million (+3%), equivalent to a gross margin of 29%, mainly due to better commercial terms negotiated. Compared to 3Q19, cost of goods sold fell 4% and gross profit increased 2%, largely the result of the increase in sales in the period and reflecting promotional initiatives in the stores as well as seasonal variations between quarters. In 2019, cost of goods sold totaled R$ 1,462 million (+3%) and gross profit was R$ 598 million (-1%), mainly by the intensified competitive environment.

Sales, general and administrative expenses (SG&A)  Total of R$ 184 million (-1%), due mainly to the lower average number of stores and initiatives to increase productivity, notably the reduction in payroll expenses. In relation to 3Q19, sales, general and administrative expenses fell 5% due to the reasons mentioned above. In 2019, sales, general and administrative expenses totaled R$ 763 million, 6% higher than 2018, reflecting the higher level of depreciation, as a result of investments made in recent years and the higher average number of stores.

Other operating results  Total R$ 9 million negative in 4Q19, the result of the writing off tax credits of R$ 16 million, partially compensated by the booking of extraordinary PIS/COFINS tax credits and social security contributions registered in the quarter.

Result from disposal of PP&E  Total of R$ 19 million negative due to the closing of underperforming stores, reflecting a more rigorous approach to closing underperforming stores.

Impairment  Total of R$ 593 million negative due to impairment of the goodwill from the acquisition of Extrafarma.

EBITDA  Total of R$ 36 million negative, excluding the impairment, compared to R$ 15 million negative in 4Q18. The 4Q19 result was also influenced by a write down of assets of R$ 20 million, due to the closure of stores with low performance, and by a negative result of R$ 9 million in the line of other operating results related to extraordinary tax credits. In relation to 3Q19, the result was lower for the same reasons mentioned above. In 2019, Extrafarmas EBITDA, excluding the effects of impairment, totaled R$ 67 million negative, a 43% reduction compared to 2018. Considering the adjustments of IFRS 16 and the segregation of Holding expenses. Extrafarmas EBITDA in 4Q19 and in 2019 was R$ 603 million negative and R$ 566 million negative, respectively.

Investments  In 4Q19, Extrafarma invested R$ 30 million, allocated mainly to IT, especially on the implementation of the new point of sale system, as well as opening and renewal of drugstores. In 2019, investments totaled R$ 89 million.

Cash flow from operating activities  Positive cash flow generation of R$ 22 million in 4Q19, compared to a consumption of R$ 86 million in 4Q18 due to the optimization of working capital and CAPEX reduction.

Ultrapar

R$ million	4Q19		4Q18	3Q19	D		D		2019	2018	D
					4Q19 v 4Q18		4Q19 v 3Q19				2019 v 2018
Net
revenues	23,663		23,467	23,203	1%		2%		89,298	90,698	(2%	)
Net income ex-non-recurring items¹	141		220	334	(36%	)	(58%	)	906	1,046	(13%	)
Net income Post-IFRS 16	(268	)	n/a	307	n/a		(187%	)	403	n/a	n/a
Earnings per share attributable to the shareholders² Post-IFRS 16	(0.25	)	n/a	0.27	n/a		(189%	)	0.34	n/a	n/a
Adjusted EBITDA ex-non-recurring items¹	869		807	901	8%		(4%	)	3,109	3,169	(2%	)
Adjusted EBITDA Post-IFRS 16	362		n/a	979	n/a		(63%	)	2,800	n/a	n/a
Investments	555		548	472	1%		17%		1,631	2,081	(22%	)
Operating cash flow	476		1,446	922	(67%	)	(48%	)	2,925	2,889	1%

¹ Excludes the effects of the TAC of Ultracargo in 2Q19 and in 3Q19, impairment of Extrafarma and the write-off of Oxiteno Andinas assets in 4Q19, penalty fee for the non-acquisition of Liquigás in 1Q18 and tax credits of Oxiteno in 4Q18

² Calculated in Reais based on the weighted average number of shares over the period, net of shares held as treasury stock. Per share information was adjusted to reflect the stock split in April 2019

Net revenues  Total of R$ 23,663 million (+1%) due to the reduction in net revenues at Ipiranga, Ultragaz, Ultracargo and Extrafarma. In relation to 3Q19, net revenues increased by 2%, the result of increased revenue at Ipiranga and Ultracargo.

Adjusted EBITDA  Total of R$ 869 million (+8%) excluding the effects of non-recurring items, reflecting the increase in EBITDA of Ipiranga, Ultragaz and Ultracargo. Compared with 3Q19, Adjusted EBITDA was 4% lower (excluding the effects of non-recurring items), due to the decline in EBITDA at Oxiteno, Ultragaz, Ultracargo and Extrafarma, mainly a reflection of seasonal variations between quarters. Considering IFRS 16 adjustments, Adjusted EBITDA at Ultrapar in 4Q19 and 2019 was R$ 362 million and R$ 2,800 million, respectively.

Depreciation and amortization 3 Total of R$ 305 million (+2%) due to the depreciation in investments made during the year. Compared with 3Q19, total costs and expenses with depreciation and amortization remained stable.

Financial results  Ultrapar ended 2019 with net debt of R$ 8.7 billion (2.87x LTM Adjusted EBITDA, excluding impairment at Extrafarma) compared with R$ 8.6 billion as of September 30, 2019 (2.72x LTM Adjusted EBITDA), mainly the result of lower EBITDA for the period. Ultrapar posted a net financial expenses of R$ 219 million in 4Q19 compared to a net financial income of R$ 117 million in 4Q18, the result of (i) the accrual of interest on tax credits generated from the exclusion of the ICMS sales tax from the PIS/COFINS calculation base in the amount of R$ 153 million in 4Q18 and (ii) a lower results from mark to market of exchange rate hedging instruments due to exchange rate volatility in the period. Compared with 3Q19, financial expenses increased R$ 104 million, principally due to a reduction in mark to market results from the exchange rate hedging instruments, a function of exchange rate variation in the period.

Net income  Total of R$ 141 million (-36%), excluding the effects of the non-recurring items, due to the increase in financial expenses and higher depreciation costs, attenuated by higher EBITDA. In relation to 3Q19, net income reported a reduction of 58% due to higher financial expenses and lower EBITDA. Considering IFRS 16 adjustments, net income at Ultrapar in 4Q19 and in 2019 was R$ 268 million negative and R$ 403 million, respectively.

Cash flow from operating activities  Cash generation of R$ 2,925 million in 2019, practically in line compared with R$ 2,889 million in 2018.

3 Includes amortization of contractual assets with clients exclusive rights

Capital markets

Ultrapar reported an average daily trading volume (ADTV) of R$ 159 million/day in 4Q19 (-4%) and of R$ 154 million/day in 2019 (+11%), incorporating trading on both B3 and NYSE. Ultrapars shares ended the quarter at R$ 25.48 on B3, an increase of 38% for the quarter and a reduction of 4% for the year. By comparison, the Ibovespa stock index appreciated 10% in 4Q19 and 32% in 2019. On the NYSE, Ultrapars shares reported appreciation of 40% in 4Q19 and a depreciation of 8% in full year 2019, while the Dow Jones index rose 6% and 22%. Ultrapars market capitalization at the end of 4Q19 was R$ 28 billion.

On April 10, 2019, the Companys Extraordinary and Annual General Meeting approved a stock split of Ultrapars common shares at the ratio of one existing share for two shares of the same class and type. The stock split implies no alteration in Ultrapars capital stock and became effective on April 24, 2019.

The share price, as well as ADTV of shares and ADRs traded and shown in the table below have been adjusted to reflect the stock split.

| Capital markets — Number
of shares (000) | 1,112,810 | 1,112,810 | 1,112,810 | 1,112,810 | 1,112,810 |
| --- | --- | --- | --- | --- | --- |
| Market
capitalization¹ (R$ million) | 28,354 | 29,601 | 20,576 | 28,354 | 29,601 |
| B3 | | | | | |
| ADTV
(shares) | 6,589,426 | 5,512,295 | 6,561,583 | 5,935,920 | 3,930,495 |
| ADTV (R$
000) | 136,804 | 121,971 | 121,997 | 127,377 | 99,248 |
| Average
share price (R$/share) | 20.76 | 22.13 | 18.59 | 21.46 | 25.25 |
| NYSE | | | | | |
| Number of
ADRs² (000 ADRs) | 46,518 | 55,726 | 46,518 | 46,518 | 55,726 |
| Average
volume/day (ADRs) | 1,067,105 | 1,951,614 | 1,050,775 | 1,192,737 | 1,533,180 |
| Average
financial volume/day (US$ 000) | 5,453 | 11,388 | 4,887 | 6,821 | 10,854 |
| Average
share price (US$/ADR) | 5.11 | 5.84 | 4.65 | 5.72 | 7.08 |
| Total | | | | | |
| ADTV
(shares) | 7,656,531 | 7,463,909 | 7,612,358 | 7,128,657 | 5,463,674 |
| ADTV (R$
000) | 159,205 | 165,305 | 141,380 | 154,019 | 138,598 |

¹ Calculated on the closing price for the period

² 1 ADR = 1 common share

Debt (R$ million)

Ultrapar consolidated	4Q19	3Q19	4Q18
Gross debt	(14,392.7)	(15,069.2)	(15,206.1)
Cash/cash equivalents	5,712.1	6,438.5	6,994.4
Net debt	(8,680.6)	(8,630.7)	(8,211.7)
Net Debt/LTM adjusted
EBITDA¹	2.87x	2.72x	2.68x
Average cost of debt (% CDI)	103.3%	99.2%	97.5%
Average cash yield (% CDI)	93.6%	94.1%	97.0%
Duration (years)	4.7	5.0	4.4

¹ LTM Adjusted EBITDA excludes R$ 593 million of Extrafarmas impairment

Maturity profile:

Debt breakdown:

Local currency	6,902.1
Foreign currency	7,460.6
Result from currency and interest hedging instruments	30.0
Total	14,392.7

Conference Call 4Q19

Ultrapar will be holding a conference call for analysts and investors on February 20, 2020 to comment on the Companys performance in the fourth quarter of 2019 and outlook. The presentation will be available for download to the Companys website 30 minutes prior to the conference call.

The WEBCAST live will be available via the internet at ri.ultra.com.br. Please connect 15 minutes in advance.

English: 12:30 p.m. (Brasília time) / 10:30 a.m. (US EST)

International Participants: +1 (844) 802-0962

Code: Ultrapar

Replay: +1 (877) 344-7529 (available for seven days)

Code: 10138140

Portuguese: 11:00 a.m. (Brasília time) / 09:00 a.m. (US EST)

Telephone for connection: +55 (11) 2188-0155

Code: Ultrapar

Replay: +55 (11) 2188-0400 (available for seven days)

Code: Ultrapar

ULTRAPAR

CONSOLIDATED BALANCE SHEET

In millions of Reais	DEC 19 IFRS 16
ASSETS
Cash and cash equivalents	2,115.4			2,115.4		3,939.0		2,553.3
Financial investments and hedging instruments	3,090.2				3,090.2		2,853.1		3,339.7
Trade receivables and reseller financing	4,072.0				4,072.0		4,436.6		4,201.0
Inventories	3,715.6				3,715.6		3,354.5		3,285.6
Recoverable taxes	1,447.7				1,447.7		896.9		1,303.2
Prepaid expenses	111.4		46.0		157.4		187.6		144.8
Contractual assets with customers - exclusive rights	465.5				465.5		484.5		481.5
Other receivable	40.4				40.4		59.6		76.6
Total Current Assets	15,058.1		46.0		15,104.1		16,211.7		15,385.7
Financial investments and hedging instruments	506.5				506.5		202.3		545.5
Trade receivables and reseller financing	418.4				418.4		429.8		389.9
Deferred income and social contribution taxes	653.7		(19.0	)	634.7		514.2		585.1
Recoverable taxes	872.3				872.3		747.2		845.7
Escrow deposits	921.4				921.4		881.5		920.1
Prepaid expenses	69.2		334.3		403.5		399.1		410.9
Contractual assets with customers - exclusive rights	1,000.5				1,000.5		1,034.0		977.6
Other receivables	197.4				197.4		302.2		196.6
Investments	181.6				181.6		129.1		125.6
Right to use assets	1,980.9		(1,980.9	)					-
Property, plant and equipment	7,572.8		6.1						7,460.0
Intangible assets	1,762.6		108.6						2,462.4
Total Non-Current Assets	16,137.4		(1,550.9	)	14,586.5		14,287.7		14,919.6
TOTAL ASSETS	31,195.5		(1,504.9	)	29,690.5		30,499.4		30,305.2
LIABILITIES
Loans and hedging instruments	867.9				867.9		2,007.4		1,131.9
Debentures	249.6				249.6		263.7		257.4
Trade payables	2,700.1				2,700.1		2,731.7		2,407.9
Salaries and related charges	405.6				405.6		428.2		432.1
Taxes payable	269.9				269.9		268.0		270.2
Leases payable	206.4		(203.2	)	3.2		2.8		3.2
Other payables	495.6				495.6		634.9		464.0
Total Current Liabilities	5,195.1				4,991.9		6,336.8		4,966.7
Loans and hedging instruments	6,907.1				6,907.1		6,487.4		7,410.5
Debentures	6,368.2				6,368.2		6,401.5		6,269.4
Provisions for tax, civil and labor risks	884.1				884.1		865.2		852.5
Post-employment benefits	243.9				243.9		204.2		202.3
Leases payable	1,382.3		(1,338.5	)	43.7		43.2		44.5
Other payables	379.6				379.6		361.0		457.6
Total Non-Current Liabilities	16,165.2				14,826.7		14,362.6		15,236.7
TOTAL LIABILITIES	21,360.3				19,818.6		20,699.4		20,203.4
EQUITY
Share capital	5,171.8				5,171.8		5,171.8		5,171.8
Reserves	4,542.3				4,542.3		4,646.2		4,646.1
Treasury shares	(485.4	)			(485.4	)	(485.4	)	(485.4	)
Other	229.5		36.8		266.3		115.5		383.8
Non-controlling interests in subsidiaries	376.9		(0.0	)	376.9		351.9		385.6
Total equity	9,835.2		36.8		9,872.0		9,800.0		10,101.8
TOTAL LIABILITIES AND EQUITY	31,195.5		(1,504.9	)	29,690.5		30,499.4		30,305.2
Cash and financial investments	5,712.1				5,712.1		6,994.4		6,438.5
Debt	(14,392.7	)			(14,392.7	)	(15,206.1	)	(15,069.2	)
Net cash (debt)	(8,680.6	)			(8,680.6	)	(8,211.7	)	(8,630.7	)

ULTRAPAR

CONSOLIDATED INCOME STATEMENT

In million of Reais — Net revenue from sales and services	23,662.8				23,662.8		23,467.0		23,203.3		89,298.0		90,698.0
Cost of products and services sold	(22,025.4	)	(5.3	)	(22,030.6	)	(21,911.9	)	(21,585.4	)	(83,201.4	)	(84,537.4	)
Gross profit	1,637.4		(5.3	)	1,632.2		1,555.2		1,617.8		6,096.6		6,160.6
Operating expenses
Selling and marketing	(651.9	)	(13.4	)	(665.3	)	(653.6	)	(634.5	)	(2,692.3	)	(2,670.9	)
General and administrative	(481.2	)	(0.8	)	(482.1	)	(448.6	)	(446.6	)	(1,729.0	)	(1,625.8	)
Other operating income (expenses)	79.6		(0.0	)	79.6		261.0		53.2		179.6		57.5
Gain (loss) on disposal of property, plant and equipment and intangibles	(30.9	)	(1.5	)	(32.4	)	(15.0	)	1.9		(31.7	)	(22.1	)
Impairment	(593.3	)			(593.3	)					(593.3	)
Operating income	(40.3	)	(21.1	)	(61.3	)	699.0		591.9		1,229.9		1,899.4
Financial result
Financial income	55.4				55.4		231.6		125.6		457.3		681.2
Financial expenses	(307.5	)	33.4		(274.1	)	(115.0	)	(240.2	)	(837.5	)	(794.8	)
Share of profit (loss) of subsidiaries, joint ventures and associates	6.2				6.2		(5.6	)	(8.2	)	(12.1	)	(14.8	)
Income before income and social contribution taxes	(286.2	)	12.4		(273.9	)	810.1		469.0		837.6		1,771.0
Provision for income and social contribution taxes
Current	(181.7	)			(181.7	)	(211.9	)	(58.7	)	(519.3	)	(584.0	)
Deferred	188.0		(4.2	)	183.8		(134.2	)	(100.3	)	78.4		(162.4	)
Benefit of tax holidays	12.4				12.4		31.6		11.4		43.2		107.7
Net income	(267.7	)	8.2		(259.5	)	495.6		321.4		440.0		1,132.3
Net income attributable to:
Shareholders of the Company	(266.5	)	8.2		(258.4	)	507.6		311.9		410.1		1,150.4
Non-controlling interests in subsidiaries	(1.1	)	(0.0	)	(1.1	)	(12.1	)	9.5		29.8		(18.1	)
Adjusted EBITDA	361.5		(100.2	)	261.4		993.0		887.8		2,436.2		3,068.9
Depreciation and amortization¹	383.7		(79.1	)	304.6		299.6		304.1		1,206.5		1,184.3
Cash flow hedge bonds	11.9				11.9						11.9
Total investments²	554.6				554.6		548.1		472.4		1,630.5		2,080.8
RATIOS
Earnings per shareR$	(0.25	)			(0.24	)	0.47		0.29		0.62		1.06
Net debt / Stockholders equity	0.88				0.88		0.84		0.85		0.88		0.84
Net debt / LTM Adjusted EBITDA³	2.87				2.87		2.68		2.72		2.87		2.68
Net interest expense / Adjusted EBITDA	0.70				0.84		na		0.13		0.16		0.04
Gross margin	6.9	%			6.9	%	6.6	%	7.0	%	6.8	%	6.8	%
Operating margin	(0.2	%)			(0.3	%)	3.0	%	2.6	%	1.4	%	2.1	%
Adjusted EBITDA margin	1.5	%			1.1	%	4.2	%	3.8	%	2.7	%	3.4	%
Number of employees	16,024				16,024		17,034		16,529		16,024		17,034

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 Excludes impairment of Extrafarma

ULTRAPAR

CONSOLIDATED CASH FLOW

In million of Reais — 2019		2018
Cash flows from operating activities
Net income for the period	402.9		1,132.3
Adjustments to reconcile net income to cash provided by operating activities
Share of loss (profit) of subsidiaries, joint ventures and associates	12.1		14.8
Amortization of contractual assets with customersexclusive rights	355.3		371.8
Amortization of right to use assets	300.1
Depreciation and amortization	844.6		812.5
PIS and COFINS credits on depreciation	14.9		15.7
Interest and foreign exchange rate variations	1,248.7		1,026.5
Deferred income and social contribution taxes	(97.5	)	162.4
(Gain) loss on disposal of property, plant and equipment and intangibles	30.0		22.1
Impairment	593.3
Estimated losses on doubtful accounts	30.0		69.3
Provision for losses in inventories	(0.8	)	(1.5	)
Provision for post-employment benefits	10.7		4.9
Equity instrument granted	7.7		3.8
Other provisions and adjustments	2.4		(3.9	)
	3,754.4		3,630.6
(Increase) decrease in current assets
Trade receivables and reseller financing	361.6		(355.9	)
Inventories	(357.6	)	168.7
Recoverable taxes	(550.8	)	(11.5	)
Dividends received from subsidiaries and joint-ventures	4.1		42.4
Insurance and other receivables	21.7		(14.5	)
Prepaid expenses	(15.5	)	(37.5	)
Increase (decrease) in current liabilities
Trade payables	(31.6	)	576.2
Salaries and related charges	(22.6	)	40.1
Taxes payable	1.9		46.5
Income and social contribution taxes	250.5		166.5
Post-employment benefits	(16.7	)	15.6
Provision for tax, civil, and labor risks	(37.4	)	13.3
Insurance and other payables	66.8		(59.2	)
Deferred revenue	1.1		8.2
(Increase) decrease in non-current assets
Trade receivables and reseller financing	11.4		(99.6	)
Recoverable taxes	(19.5	)	(539.5	)
Escrow deposits	(39.9	)	(58.8	)
Other receivables	(0.8	)	6.4
Prepaid expenses	(4.4	)	(58.7	)
Increase (decrease) in non-current liabilities
Post-employment benefits	(15.4	)	(8.5	)
Provision for tax, civil, and labor risks	18.9		11.8
Other payables	27.7		(4.4	)
Deferred revenue	(11.9	)	(1.0	)
Payments of contractual assets with customersexclusive rights	(330.1	)	(390.2	)
Income and social contribution taxes paid	(141.2	)	(197.9	)
Net cash provided by operating activities	2,924.9		2,889.0
Cash flows from investing activities
Financial investments, net of redemptions	(555.4	)	(1,669.9	)
Cash and cash equivalents of subsidiary acquired			3.7
Acquisition of property, plant, and equipment	(1,020.0	)	(1,178.3	)
Acquisition of intangible assets	(152.0	)	(237.6	)
Acquisition of companies			(103.4	)
Capital increase in joint ventures	(79.1	)	(31.9	)
Capital reduction in associates			1.3
Initial upfront costs of entitlement assets	(68.0	)
Proceeds from disposal of property, plant and equipment and intangibles	39.3		38.6
Net cash used in investing activities	(1,835.3	)	(3,177.6	)
Cash flows from financing activities
Loans and debentures
Proceeds	2,105.7		4,461.1
Repayments	(2,644.7	)	(3,710.7	)
Interest paid	(1,469.8	)	(737.6	)
Payments of lease	(321.7	)	(5.1	)
Dividends paid	(596.4	)	(808.6	)
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	(2,922.2	)	(801.0	)
Effect of exchange rate changes on cash and cash equivalents in foreign currency	9.1		26.6
Increase (decrease) in cash and cash equivalents	(1,823.6	)	(1,063.1	)
Cash and cash equivalents at the beginning of the period	3,939.0		5,002.0
Cash and cash equivalents at the end of the period	2,115.4		3,939.0
Transactions without cash effect:
Addition on right to use assets and leases payable	334.9
Initial upfront costs of entitlement assets and suppliers

IPIRANGA

BALANCE SHEET

In million of Reais
OPERATING ASSETS
Trade receivables	3,017.4			3,017.4	3,263.4	3,010.3
Non-current trade receivables	407.6			407.6	393.2	376.2
Inventories	2,251.1			2,251.1	1,768.4	1,850.2
Taxes	960.1			960.1	576.9	821.0
Contractual assets with customersexclusive rights	1,463.5			1,463.5	1,518.5	1,458.6
Other	459.4	379.7		839.1	906.5	878.4
Right to use assets	1,027.6	(1,027.6	)
Property, plant and equipment / Intangibles / Investments	3,610.9	22.5		3,633.3	3,501.1	3,549.4
TOTAL OPERATING ASSETS	13,197.4	(625.4	)	12,572.0	11,928.0	11,944.0
OPERATING LIABILITIES
Suppliers	1,975.3			1,975.3	1,892.8	1,714.5
Salaries and related charges	124.9			124.9	122.7	120.1
Post-employment benefits	233.5			233.5	204.3	202.3
Taxes	178.7			178.7	177.8	186.6
Judicial provisions	332.0			332.0	327.9	333.3
Leases payable	650.2	(650.2	)
Other accounts payable	271.6			271.6	242.0	246.7
TOTAL OPERATING LIABILITIES	3,766.3	(650.2	)	3,116.1	2,967.4	2,803.4

INCOME STATEMENT

In million of Reais — Net sales	20,232.5						20,232.5		19,883.0		19,568.5		75,452.5		76,473.4
Cost of products and services sold	(19,289.1	)					(19,289.1	)	(19,002.8	)	(18,676.3	)	(71,962.7	)	(73,053.2	)
Gross profit	943.4						943.4		880.1		892.2		3,489.7		3,420.2
Operating expenses
Selling	(304.8	)	(8.0	)			(312.8	)	(305.9	)	(271.8	)	(1,263.4	)	(1,341.1	)
General and administrative	(218.6	)			(14.3	)	(232.8	)	(210.2	)	(219.6	)	(829.1	)	(808.7	)
Other operating income (expenses)	76.6						76.6		50.5		45.2		187.0		124.7
Gain (loss) on disposal of property, plant and equipment and intangibles	1.9		(0.3	)			1.6		(9.7	)	0.5		(0.7	)	1.5
Operating income	498.5		(8.3	)	(14.3	)	475.9		404.9		446.6		1,583.6		1,396.6
Share of profit of subsidiaries, joint ventures and associates	0.5						0.5		(0.3	)	0.4		1.8		0.6
Adjusted EBITDA	699.5		(54.5	)	(14.3	)	630.7		568.7		614.8		2,231.1		2,052.4
Depreciation and amortization¹	200.5		(46.2	)			154.3		164.2		167.8		645.8		655.3
Ratios
Gross margin (R$/m³)	154						154		143		144		149		144
Operating margin (R$/m³)	82						78		66		72		67		59
Adjusted EBITDA margin (R$/m³)	114						103		92		99		95		87
Adjusted EBITDA margin (%)	3.5	%					3.1	%	2.9	%	3.1	%	3.0	%	2.7	%
Number of service stations	7,090						7,090		7,218		7,151		7,090		7,218
Number of employees	3,289						3,289		3,318		3,287		3,289		3,318

¹ Includes amortization with contractual assets with customersexclusive rights

OXITENO

BALANCE SHEET

In million of Reais
OPERATING ASSETS
Trade receivables	537.8			537.8	605.1	607.5
Inventories	768.2			768.2	861.2	741.5
Taxes	586.0			586.0	578.7	585.8
Other	162.7			162.7	140.6	154.7
Right to use assets	37.1	(37.1	)
Property, plant and equipment / Intangibles / Investments	2,635.4			2,635.4	2,556.2	2,660.1
TOTAL OPERATING ASSETS	4,727.3	(37.1	)	4,690.1	4,741.8	4,749.6
OPERATING LIABILITIES
Suppliers	354.8			354.8	444.2	422.7
Salaries and related charges	108.3			108.3	140.9	107.2
Taxes	34.6			34.6	36.7	36.8
Judicial provisions	23.1			23.1	26.9	28.3
Leases payable	38.4	(38.4	)
Other accounts payable	45.7			45.7	75.2	52.2
TOTAL OPERATING LIABILITIES	605.0	(38.4	)	566.6	723.9	647.2

INCOME STATEMENT

In million of Reais — Net sales	1,011.7						1,011.7		1,199.9		1,120.6		4,254.2		4,748.4
Cost of products and services sold
Variable	(662.0	)					(662.0	)	(811.5	)	(759.6	)	(2,883.6	)	(3,144.9	)
Fixed	(118.1	)	(2.3	)			(120.5	)	(122.3	)	(106.2	)	(474.3	)	(463.6	)
Depreciation and amortization	(47.1	)	1.9				(45.2	)	(39.9	)	(45.1	)	(181.0	)	(149.2	)
Gross profit	184.4		(0.4	)			184.0		226.2		209.7		715.3		990.7
Operating expenses
Selling	(77.7	)	0.1				(77.6	)	(77.5	)	(86.5	)	(328.7	)	(333.1	)
General and administrative	(118.4	)	(0.2	)	(3.4	)	(121.9	)	(119.8	)	(99.9	)	(409.4	)	(402.4	)
Other operating income (expenses)	5.1						5.1		208.9		0.8		8.1		213.8
Gain (loss) on disposal of property, plant and equipment and intangibles	(13.8	)					(13.8	)	(2.5	)	(0.1	)	(13.4	)	(11.8	)
Operating income (loss)	(20.4	)	(0.5	)	(3.4	)	(24.3	)	235.3		24.0		(28.2	)	457.1
Share of profit of subsidiaries, joint ventures and associates	(0.1	)					(0.1	)	(0.1	)	0.3		0.5		0.9
EBITDA	56.8		(3.2	)	(3.4	)	50.3		279.8		73.6		196.6		625.4
Depreciation and amortization	65.3		(2.7	)			62.7		44.6		49.3		212.3		167.4
Cash flow hedge bonds	11.9						11.9						11.9
Ratios
Gross margin (R$/ton)	1,055						1,053		1,191		1,074		975		1,289
Gross margin (US$/ton)	256						256		313		270		247		353
Operating margin (R$/ton)	(117	)					(139	)	1,239		123		(38	)	595
Operating margin (US$/ton)	(28	)					(34	)	325		31		(10	)	163
EBITDA margin (R$/ton)	325						288		1,474		377		268		814
EBITDA margin (US$/ton)	79						70		387		95		68		223
Number of employees	1,844						1,844		1,943		1,894		1,844		1,943

ULTRAGAZ

BALANCE SHEET

In million of Reais
OPERATING ASSETS
Trade receivables	379.3			379.3	386.3	393.3
Non-current trade receivables	10.6			10.6	36.3	13.5
Inventories	142.9			142.9	140.7	172.6
Taxes	86.7			86.7	88.2	80.9
Escrow deposits	217.5			217.5	217.9	221.6
Other	60.6			60.6	58.4	55.5
Right to use assets	133.8	(133.8	)
Property, plant and equipment / Intangibles	994.6	12.6		1,007.2	964.5	968.4
TOTAL OPERATING ASSETS	2,026.0	(121.3	)	1,904.8	1,892.4	1,905.9
OPERATING LIABILITIES
Suppliers	76.9			76.9	74.2	81.6
Salaries and related charges	96.8			96.8	92.9	118.7
Taxes	11.6			11.6	8.3	9.9
Judicial provisions	125.3			125.3	113.4	119.4
Leases payable	172.0	(125.0	)	47.0	46.1	47.7
Other accounts payable	99.7			99.7	128.6	119.1
TOTAL OPERATING LIABILITIES	582.3	(125.0	)	457.3	463.5	496.5

INCOME STATEMENT

In million of Reais — Net sales	1,787.7						1,787.7		1,782.6		1,894.4		7,094.8		7,043.2
Cost of products and services sold	(1,518.1	)	(0.9	)			(1,519.0	)	(1,551.8	)	(1,606.0	)	(6,107.6	)	(6,153.0	)
Gross profit	269.6		(0.9	)			268.7		230.8		288.4		987.2		890.2
Operating expenses
Selling	(105.5	)	(0.2	)			(105.7	)	(105.9	)	(107.5	)	(426.7	)	(366.2	)
General and administrative	(58.1	)	(0.6	)	(3.9	)	(62.6	)	(58.9	)	(56.3	)	(227.7	)	(209.5	)
Other operating income (expenses)	7.4						7.4		1.4		2.5		13.0		(277.7	)
Gain (loss) on disposal of property, plant and equipment and intangibles	(0.1	)	(0.0	)			(0.1	)	(1.0	)	1.6		2.7		(1.2	)
Operating income	113.2		(1.6	)	(3.9	)	107.7		66.5		128.7		348.4		35.6
Share of profit of subsidiaries, joint ventures and associates	(0.0	)					(0.0	)	(0.0	)	(0.0	)	(0.0	)	0.0
EBITDA	167.9		(10.0	)	(3.9	)	154.0		120.8		174.2		535.8		258.1
Depreciation and amortization	54.7		(8.4	)			46.3		54.2		45.5		187.4		222.5
Ratios
Gross margin (R$/ton)	624						622		548		630		579		516
Operating margin (R$/ton)	262						249		158		281		204		21
EBITDA margin (R$/ton)	389						357		287		380		314		150
Number of employees	3,414						3,414		3,511		3,401		3,414		3,511

ULTRACARGO

BALANCE SHEET

In million of Reais
OPERATING ASSETS
Trade receivables	34.4			34.4	37.1	38.4
Inventories	6.1			6.1	5.6	6.3
Taxes	28.3			28.3	3.7	27.0
Other	12.9	(0.0	)	12.9	28.4	15.1
Right to use assets	350.2	(350.2	)
Property, plant and equipment / Intangibles / Investments	1,317.3	55.4		1,372.6	1,175.3	1,301.8
TOTAL OPERATING ASSETS	1,749.2	(294.8	)	1,454.3	1,250.2	1,388.6
OPERATING LIABILITIES
Suppliers	33.8			33.8	50.5	28.2
Salaries and related charges	28.7			28.7	25.8	24.5
Taxes	9.7			9.7	9.1	7.6
Judicial provisions	10.3			10.3	24.1	8.6
Leases payable	304.2	(304.2	)
Other accounts payable¹	107.0			107.0	59.9	140.6
TOTAL OPERATING LIABILITIES	493.6	(304.2	)	189.4	169.4	209.5

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 payablesindemnification clients and third parties

INCOME STATEMENT

In million of Reais — Net sales	152.9						152.9		126.8		135.3		540.8		493.6
Cost of products and services sold	(73.6	)	(4.0	)			(77.6	)	(63.4	)	(72.1	)	(271.3	)	(245.1	)
Gross profit	79.3		(4.0	)			75.3		63.4		63.2		269.5		248.6
Operating expenses
Selling	(2.6	)					(2.6	)	(3.2	)	(2.4	)	(8.6	)	(9.0	)
General and administrative	(40.3	)			(1.1	)	(41.4	)	(30.5	)	(30.6	)	(129.1	)	(107.6	)
Other operating income (expenses)	(1.4	)					(1.4	)	(1.5	)	(10.3	)	(62.4	)	(5.0	)
Gain (loss) on disposal of property, plant and equipment and intangibles	(0.8	)					(0.8	)	(2.1	)	(0.1	)	(0.8	)	(2.2	)
Operating income	34.1		(4.0	)	(1.1	)	29.0		26.0		19.9		68.6		124.7
Share of profit of subsidiaries, joint ventures and associates	(0.4	)					(0.4	)	(0.1	)	0.6		1.4		1.3
EBITDA	53.7		(8.0	)	(1.1	)	44.6		39.6		35.8		130.1		178.5
Depreciation and amortization	20.0		(4.0	)			15.9		13.7		15.3		60.2		52.4
Ratios
Gross margin	51.9	%					49.3	%	50.0	%	46.7	%	49.8	%	50.4	%
Operating margin	22.3	%					19.0	%	20.5	%	14.7	%	12.7	%	25.3	%
EBITDA margin	35.1	%					29.2	%	31.2	%	26.5	%	24.1	%	36.2	%
Number of employees	792						792		710		751		792		710

EXTRAFARMA

BALANCE SHEET

In million of Reais
OPERATING ASSETS
Trade receivables	105.3			105.3	154.4	155.1
Inventories	547.2			547.2	578.7	515.0
Taxes	225.7			225.7	136.7	213.0
Other	21.2	0.6		21.8	21.6	22.7
Right to use assets	425.9	(425.9	)
Property, plant and equipment / Intangibles	535.9	24.3		560.1	1,169.3	1,164.4
TOTAL OPERATING ASSETS	1,861.2	(401.1	)	1,460.2	2,060.8	2,070.2
OPERATING LIABILITIES
Suppliers	247.9			247.9	267.9	162.9
Salaries and related charges	45.9			45.9	45.8	60.6
Taxes	34.2			34.2	24.0	28.7
Judicial provisions	20.5			20.5	43.8	40.1
Leases payable	417.4	(417.4	)
Other accounts payable	20.8			20.8	11.1	14.3
TOTAL OPERATING LIABILITIES	786.7	(417.4	)	369.3	392.5	306.6

INCOME STATEMENT

In million of Reais — Gross Revenues	528.1						528.1		525.7		540.9		2,174.2		2,141.0
Sales returns, discounts and taxes	(26.6	)					(26.6	)	(27.0	)	(28.0	)	(113.6	)	(113.0	)
Net sales	501.5						501.5		498.7		512.9		2,060.6		2,028.0
Cost of products and services sold	(347.0	)					(347.0	)	(348.0	)	(362.0	)	(1,462.3	)	(1,421.1	)
Gross profit	154.5						154.5		150.7		151.0		598.3		606.9
Operating expenses	(177.2	)	(5.5	)	(1.1	)	(183.8	)	(185.8	)	(193.7	)	(762.9	)	(716.7	)
Other operating income (expenses)	(8.6	)					(8.6	)	0.3		14.9		31.5		(0.1	)
Gain (loss) on disposal of property, plant and equipment and intangibles	(18.1	)	(1.2	)			(19.3	)	0.3		(0.0	)	(19.4	)	(8.4	)
Impairment	(593.3	)					(593.3	)					(593.3	)
Operating loss	(642.7	)	(6.7	)	(1.1	)	(650.5	)	(34.6	)	(27.8	)	(745.8	)	(118.3	)
EBITDA	(603.5	)	(24.3	)	(1.1	)	(628.9	)	(15.5	)	(5.4	)	(660.3	)	(46.8	)
Depreciation and amortization	39.2		(17.7	)			21.6		19.1		22.3		85.6		71.6
Ratios¹
Gross margin	29.3	%					29.3	%	28.7	%	27.9	%	27.5	%	28.3	%
Operating margin	(121.7	%)					(123.2	%)	(6.6	%)	(5.1	%)	(34.3	%)	(5.5	%)
EBITDA margin	(114.3	%)					(119.1	%)	(2.9	%)	(1.0	%)	(30.4	%)	(2.2	%)
Number of employees	6,292						6,292		7,112		6,811		6,292		7,112

¹ Calculated based on gross revenues

ULTRAPAR PARTICIPAÇÕES S.A.

Publicly Traded Company

CNPJ n r 33.256.439/0001-39 NIRE 35.300.109.724

MINUTES OF THE MEETING OF THE BOARD OF DIRECTORS

Date, Hour and Location :

February 19, 2020, at 10:00 a.m., at the Company´s headquarters, located at Av. Brigadeiro Luís Antônio, n r 1,343 9th floor, in the City and State of São Paulo.

Attendance :

(i) Members of the Board of Directors undersigned; (ii) the secretary of the Board of Directors, Mr. André Brickmann Areno; (iii) Chief Executive Officer, Mr. Frederico Pinheiro Fleury Curado; (iv) Chief Financial and Investor Relations Officer, Mr. André Pires de Oliveira Dias; (v) other executive officers of the Company, Mrs. Décio de Sampaio Amaral, João Benjamin Parolin, Marcelo Pereira Malta de Araújo, Rodrigo de Almeida Pizzinatto and Tabajara Bertelli Costa; (vi) in relation to items 1 and eight of the agenda, the coordinator of the Audit and Risks Committee, Mr. Flávio Cesar Maia Luz; and (vii) in relation to item 1 of the agenda, the president of the Fiscal Council, Mr. Geraldo Toffanello.

Agenda and Decisions :

To approve, after being examined and discussed, the financial statements of the Company, including the balance sheet and the management report for the fiscal year ended on December 31, 2019, as well as the destination of net earnings for the year and the distribution of dividends, supported by the independent auditors report, and recommend its approval by the shareholders meeting.
To approve, ad referendum to the Annual General Shareholders Meeting, the following destination of net earnings for the year ended on December 31, 2019, in the amount of R$ 373,526,310.58 (three hundred and seventy-three million, five hundred and twenty-six thousand. Three hundred and 10 Reais and fifty-eight cents of Real), as described below:

a) R$ 18,676,315.53 (eighteen million, six hundred and seventy-six thousand, three hundred and fifteen Reais and fifty-three cents of Real) will be allocated to the legal reserve;

b) R$ 354,849,995.05 (three hundred and fifty-four million, eight hundred and forty-nine thousand and nine hundred and ninety-five Reais and five cents of Real) will be allocated to the payment of dividends to holders of common shares, of which R$ 217,381,649.20 (two hundred and seventeen million, three hundred and eighty-one thousand, six hundred and forty-nine Reais and twenty cents), equivalents to R$ 0.20 per share, were paid as interim dividends as approved by the Board of Directors on August 14, 2019. The outstanding amount of the dividends approved herein, in the amount of R$ 137,468,345.85 (one hundred and thirty-seven million, four hundred and sixty-eight thousand, three hundred and forty-five Reais and eighty-five cents of Real) will be increased of R$ 124,001,283.27 (one hundred and twenty-four million, one thousand and two hundred and eighty-three Reais and twenty-seven cents of Real) from the statutory reserve for investments. The amount of R$ 261,469,629.12 (two hundred and sixty-one, four hundred and sixty-nine thousand, six hundred and twenty-nine Reais and twelve cents of Real) shall be paid to the shareholders as of March 6, 2020, without remuneration or monetary adjustment. The shareholders are entitled to receive dividends equivalent to R$ 0.24 (twenty-four cents of Real) per share.

The record dates for receiving the dividends approved herein will be February 27, 2020 in Brasil and March 4, 2020 in the United States of America. The Companys shares will be traded ex-dividends on B3 S.A. Brasil, Bolsa, Balcão and on the New York Stock Exchange from and including February 28, 2020 onwards.

The members of the Board of Directors approved the technical study about the projection of taxable income for realization of deferred tax assets, in line with the CVM Instruction nº 371/02.

(Minutes of the Meeting of the Board of Directors of Utrapar Participações S.A., held on February 19, 2020)

The members of the Board of Directors confirmed the issuance of 2,108,542 (two million, one hundred and eight thousand, five hundred and forty-two) common shares within the limits of the authorized capital stock pursuant to Article 6 of the Companys Bylaws, due to partial exercise of the subscription warrants issued by the Company as of the approval of the merger of shares issued by Imifarma Produtos Farmacêuticos e Cosméticos S.A. by the Company, approved on the Extraordinary Shareholders Meeting held in January 31, 2014. The management of the Company shall provide the necessary subscription bulletins for signing and formalization of the new shares subscription by the referred subscription warrants holders. The common shares will have the same rights assigned to the other shares previously issued by the Company.

The Companys capital stock will be represented by 1,114,918,734 (one billion, one hundred and fourteen million, nine hundred and eighteen thousand and seven hundred and thirty-four) common shares, all of them nominative with no par value. The adaptation of Article 5 of the Companys Bylaws to reflect the new number of shares in which the capital stock of the Company is divided, shall be subject to a resolution of the Annual General Shareholders Meeting, to be called in due course.

The members of the Board of Directors were updated on the proposals that will be submitted for shareholders approval upon the calling of the Annual General and Extraordinary Shareholders´ Meeting. The Board manifested positively to these proposals.
The members of the Board of Directors approved the calling of the Annual General and Extraordinary Shareholders Meeting, that shall be held on April 15, 2020.
The members of the Board of Directors approved the changes of the Material Notice Disclosure Policy and Securities Trading Policy, as proposed by the Board of Officers.
The members of the Board of Directors were updated of the annual report of the Audit and Risk Committee, as well as its recommendations to the Board of Directors.
At last, Mr. Pedro Wongtschowski informed that Mr. Paulo Guilherme Aguiar Cunha, Chairman Emeritus of the Board of Directors, has decided to leave the positions occupied in the Company. On behalf of the Management, Mr. Pedro Wongtschowski expressed its gratitude for the inestimable contributions of Mr. Paulo Guilherme Aguiar Cunha throughout these decades.

Note : All the members of the Board of Directors approved the above items, with no reservations or amendments.

As there were no further matters to be discussed, the meeting was closed, the minutes of this meeting were written, read and approved by all the undersigned members present.

Pedro Wongtschowski Chairman

Lucio de Castro Andrade Filho Vice-Chairman

Alexandre Gonçalves Silva

Ana Paula Janes Vescovi

Flávia Buarque de Almeida

Joaquim Pedro de Mello

Jorge Marques de Toledo Camargo

José Galló

José Maurício Pereira Coelho

Nildemar Secches

ULTRAPAR PARTICIPAÇÕES S.A.

Publicly Traded Company

CNPJ nº 33.256.439/0001- 39 NIRE 35.300.109.724

MINUTES OF THE FISCAL COUNCILS MEETING (03/2020)

Date, Time and Location:

February 19, 2020, at 10:30 a.m., at the Companys headquarters, located at Av. Brigadeiro Luis Antônio, nr 1343, 9th floor, in the City and State of São Paulo.

Attendance:

Members of the Fiscal Council undersigned.

Discussed and approved matters:

The members of the Fiscal Council unanimously expressed a favorable opinion about the Companys financial statements and management report for the year 2019, as well as the proposal for the destination of net earnings of the year and distribution of dividends to shareholders, after the approval by the Board of Directors of the Company.
The members of the Fiscal Council discussed the technical study about the projection of the taxable earnings to carry out the deferred tax assets, in accordance to CVM Instruction 371/02.
Pursuant to legal requirements and to the Internal Bylaws of The Fiscal Council, and based on the opinion, with no reservations or amendments, of the independent auditors, dated February 19, 2020, the Fiscal Council issued its report, as attached (Annex A).

As there were no further matters to be discussed, the meeting was closed and the minutes of this meeting were read, approved and signed by all the members present.

Geraldo Toffanello
William Bezerra Cavalcanti
Filho

(Minutes of the Fiscal Councils meeting of Ultrapar Participações S.A. held on February 19, 2020)

ANNEX A

REPORT OF THE FISCAL COUNCIL

The Fiscal Council of Ultrapar Participações S.A., pursuant to legal and statutory provisions, analyzed the Management Report and the Financial Statements (parent company and consolidated) prepared in accordance with Brazilian accounting practices and International Financial Reporting Standards (IFRS), issued by the International Accounting Standards Board (IASB) for the year ended December 31, 2019, duly approved by the Board of Directors of the Company on February 19, 2020.

Based on the assessment made and considering the report with an unqualified opinion by the independent auditors, KPMG Independent Auditors, dated February 19, 2020, as well as the information and clarifications received during the year, the Fiscal Council attests that the mentioned documents, as well as the proposal for destination of net earnings for the period, including dividend distribution, are ready to be presented in the Annual General Shareholders Meeting, to be realized at an opportune moment, within the legal timeframe.

ULTRAPAR PARTICIPAÇÕES S.A.

NOTICE TO SHAREHOLDERS

Distribution of dividends

Ultrapar Participações S.A. informs that the Board of Directors, at the meeting held today, approved the distribution of dividends, payable from the net earnings account for the fiscal year of 2019 and the statutory reserve for investments, in the amount of R$ 261,469,629.12 (two hundred and sixty-one million, four hundred and sixty-nine thousand, six hundred and twenty-nine Reais and twelve cents), equivalent to R$ 0.24 per common share, to be paid from March 6, 2020 onwards, without remuneration or monetary adjustment.

The record date that establish the right to receive the dividend will be February 27, 2020 in Brazil, and March 2, 2020 in the United States. Therefore, from February 28, 2020 onwards, the shares will be traded ex-dividend on both the São Paulo Stock Exchange (B3 S.A. Brasil, Bolsa, Balcão) and the New York Stock Exchange (NYSE).

The number of shares considered to calculate the dividend per share considers the issuance of 2,108,542 common shares confirmed by the Board of Directors on this date.

São Paulo, February 19, 2020.

André Pires de Oliveira Dias

Chief Financial and Investor Relations Officer

ULTRAPAR PARTICIPAÇÕES S.A.

MATERIAL NOTICE DISCLOSURE POLICY AND SECURITIES TRADING POLICY

TABLE OF CONTENT

» SECTION I GENERAL RULES
1.1. - INTRODUCTION
1.2. - GENERAL PURPOSES
1.3. PEOPLE SUBJECT TO THE POLICIES
1.4. - DISCLOSURE AND TRADING COMMITTEE
» SECTION II - DISCLOSURE POLICY
2.1. - SPECIFIC PURPOSES
2.2. - DISCLOSURE OF MATERIAL NOTICES
2.3. - EXCEPTION FOR IMMEDIATE DISCLOSURE
2.4. - DUTIES OF THE INVESTOR RELATIONS OFFICER
2.5. - DUTY OF CONFIDENTIALITY
2.6. - COMMUNICATION AND DISCLOSURE WITH RESPECT TO DISPOSAL OR ACQUISITION OF MATERIAL
OWNERSHIP INTEREST
» SECTION III - TRADING POLICY
3.1. - SPECIFIC PURPOSES
3.2. - GENERAL RULES
3.3. - TRADING PROHIBITIONS
3.4. - EXCEPTIONS FOR TRADING PROHIBITIONS
3.5. - INDIVIDUAL INVESTMENT PROGRAMS
» SECTION IV - INFRACTIONS AND SANCTIONS
» SECTION V - FINAL PROVISIONS
EXHIBIT I DEFINITIONS
EXHIBIT II - INSTRUMENT OF ADHESION

Ultrapar Participações S.A. Material Fact Disclosure Policy and Securities Trading Policy Approved on 02.19.20202

I. GENERAL RULES

1.1. INTRODUCTION

1.1.1. This document sets forth the Material Notice Disclosure Policy and Trading Policy of Securities issued by Ultrapar (Policies), which were prepared pursuant to Instruction No. 358/02 and the best market practices, which must be acknowledged, adhered and complied with by all People Subject to the Policies.

1.1.2. Capitalized terms used herein, in plural or singular, shall have the meaning attributed to them in Exhibit IDefinitions.

1.2. GENERAL PURPOSES

1.2.1. The general purpose of the Policies is to establish the rules with respect to disclosure of information and trading of Securities by any person holding or who may hold information owned by or of the interest of Ultra Group.

1.2.2. For purposes of the Policies, information that may be held by People Subject to the Policies or third parties are classified as follows:

Material Notice: any decision made by the controlling shareholder, if any, resolution made by the General Shareholders´ Meeting or the management bodies of Ultra Group or any other political-administrative, technical, business or economic-financial act or fact occurred or related to Ultra Groups businesses, that may reasonably influence: (a) the price of the Securities; (b) the decision of investors to buy, sell or maintain the Securities; or (c) the decision of investors to exercise any rights inherent to their condition as holders of Securities. Potentially material acts or facts are, amongst others, described in article 2 of Instruction No. 358/02. For purposes of the Policies, and without prejudice to the provisions set forth in items 3.2 and 3.3., the Arrangements shall not be deemed Material Notices;

Privileged Information: (i) undisclosed Material Notices; and (ii) undisclosed information not related to a Material Notice, but which may become a Material Notice, such as the Arrangements and other events of this nature; and

Sensitive Information: any sensitive information, which does not constitute a Privileged Information and is still not disclosed to the public or which is usually not disclosed to the public, such as information on sales per unit, distributor or region. A Sensitive Information may become a Privileged Information if the content of such Sensitive Information has no longer the standard or expectation of a Sensitive Information and if such Sensitive Information materially impacts, or may impact, Ultra Groups businesses.

1.2.2.1. For purposes of the Policies, Arrangements refer to the understandings for the execution of agreements or other legal transactions before their conclusion, including the execution of related instruments, such as confidentiality agreements, unbinding proposals, powers of attorneys to third parties and assistants. Without prejudice to the provisions set forth in items 3.2. and 3.3., the Arrangements are not deemed Material Notices.

1.2.3. The Policies set forth several consequences by virtue of the existence and holding of information, depending on the classification of such information. Thus, in sum:

(i) all Material Notices must be immediately disclosed, except when the postponing of such disclosure is permitted;

(ii) Privileged Information shall only be disclosed when they become Material Notices or in other special events in which such information, to the best interest of Ultra Group, must be disclosed to the public;

(iii) knowledge of undisclosed Material Notice or Privileged Information (a) prevents the person holding or aware of such information from trading and (b) authorizes the Committee to establish an Extraordinary Trading Restriction to the People Subject to the Policies; and

(iv) knowledge of Sensitive Information (a) does not prevent the person holding or aware of such information from trading, but (b) subjects the disclosure of such information to third parties to the execution of a confidentiality agreement.

Ultrapar Participações S.A. Material Fact Disclosure Policy and Securities Trading Policy Approved on 02.19.20203

1.3. PEOPLE SUBJECT TO THE POLICIES

1.3.1. The following people (People Subject to the Policies) shall comply with the rules and guidelines established in the Policies:

(a) the Company;

(b) Controlling Shareholders, if any;

(d) all people that hold management positions at Ultra Group or Ultra Groups affiliates; and

(e) other people indicated by the Committee, at its sole discretion, holding or that may hold information related to Ultra Group, including third parties.

1.3.2. The People Subject to the Policies must represent to be fully of and adhere to the terms of the Policies as sets forth in item 5.2.; however, potential omission to represent such awareness and perform such adhesion does not exempt the People Subject to the Policies from the duty to comply with the Policies.

1.3.3. The People Subject to the Policies may only share information related to Ultra Group, which they have access to, with other People Subject to the Policies.

1.3.4. Exceptionally, the People Subject to the Policies may share information with other people, at the sole discretion of the Committee, and upon prior authorization by the Committee, who evidently adopt their own policy having substantially a similar content and effects to these Policies, always subject to Ultra Groups convenience that such sharing of information may occur.

1.3.5. The People Subject to the Policies must ensure that the rules of the Policies are complied with by the people under their influence, including companies or investment funds controlled by them, affiliated to or under common control, directly or indirectly, by Spouses and Dependents, provided that the People Subject to the Policies shall be held jointly liable with those people in the event of non-compliance with the Policies arising out of failure of compliance with such duty.

1.4. DISCLOSURE AND TRADING COMMITTEE

1.4.1. The Company shall have a Disclosure and Trading Committee (Committee) with the following duties:

(a) assist the Investor Relations Officer as to the decision to disclose information to the market, through any means, amongst which the Reference Form, forms to be filed with SEC, material notices, notices to the market, notice to shareholders and press releases;

(b) advise the Investor Relations Officer with respect to decisions attributed to him/her by the Policies or Regulation;

(c) resolve on non-disclosure of Material Notices, for the events set forth in item 2.3., with the consequent communication of trading prohibition to the People Subject to the Policies;

(d) resolve on the establishment of Extraordinary Trading Restrictions, as provided for in item 3.3.2.;

(e) provide clarifications as to the application or interpretation of the provisions set forth in the Policies, law and Regulation, including with respect to the necessary disclosure of certain information;

(f) analyze the content of Individual Investment Programs received from by People Subject to the Policies, in order to safekeep and ensure compliance with the purposes set forth in the Policies;

(g) analyze, at the request of the Investor Relations Officer, doubts related to compliance with the Policies;

Ultrapar Participações S.A. Material Fact Disclosure Policy and Securities Trading Policy Approved on 02.19.20204

(h) resolve on the applicable measures in cases of non-compliance with the Policies, as well as on the need to inform of this matter to the Board of Directors of the Company in order to adopt additional measures potentially applicable, as set forth in item 4.2.;

(i) indicate other people that have or may have access to information related to Ultra Group, who must be subject to the terms set forth in these Policies, as provided for in item 1.3.1.(d);

(j) authorize, at its sole discretion, provided that convinced on Ultra Groups convenience, the People Subject to the Policies to share information with third parties, as provided for in items 1.3.3. and 1.3.4.; and

(k) submit semiannual report to the Board of Directors of the Company in order to verify if the transactions performed by the beneficiaries are in accordance with the Individual Investment Program duly filed by them within the Company.

1.4.2. The Committee shall be comprised up to six (6) members, including the Chief Financial and Investor Relations Officer, who shall appoint the other members.

1.4.3. The Committee shall hold ordinary meetings every 2 (two) months and extraordinary meetings whenever called by the Investor Relations Officer, or any other member, provided that all decisions of the Committee shall depend on the majority of the members of the Committee, without prejudice to the prerogatives set forth in the Policies and Regulation to the Investor Relations Officer.

1.4.4. Call notices shall be made through electronic communication to be sent with the advance required and permitted by the subject matter of the meeting, and the meetings shall be held at the Companys headquarters, except when another place is required by exceptional conditions. Meetings may be attended through conference call, video conference or through any other remote mean of communication, being the electronic vote permitted.

Ultrapar Participações S.A. Material Fact Disclosure Policy and Securities Trading Policy Approved on 02.19.20205

II. DISCLOSURE POLICY

2.1. SPECIFIC PURPOSES

2.1.1. The purposes of the Disclosure Policy are to:

(a) rule the disclosure to the market of information which, according to its nature and characteristics, must be classified as Material Notice, setting forth the rules and guidelines to be complied with by the Investor Relations Officer and by the other People Subject to the Policies with respect to the disclosure of such information and secrecy of such information, while not disclosed;

(b) establish the general and conduct rules to be adopted by the Company in order to classify information as Material Notices, and to disclose such information, constituting, for the benefit of investors and the market in general, predictability to the conducts to be adopted by the Company; and

2.2. DISCLOSURE OF MATERIAL NOTICES

2.2.1. The verification of the occurrence of Material Notices shall always consider: (i) the materiality of such Material Notices under Ultra Groups activities and size, and not individually, (ii) the presence of reasonable influence criteria described in the definition of Material Notice, (iii) the historical of disclosure of material information by the Company and not unspecifically, in order to avoid the non-relevant disclosure of Material Notices to the detriment of the quality of the analysis, by the market, of Ultra Groups perspectives.

2.2.2. The Investor Relations Officer and the Committee shall ensure that the Material Notices will be disclosed as provided by law, the Regulation and this Disclosure Policy, in a clear and accurate form, in accessible language to investors, as well as ensure that Material Notices will be widely and immediately disclosed to all markets in which the Securities are traded.

2.2.2.1. The Material Notice will be disclosed to the appropriate authorities and to Stock Markets and/or Over-The-Counter Market electronically, as well as in the Companys website and the following news website chosen by the Company, according to art. 3º, § 4º of CVM Instruction n.º 358 of January 3, 2002: http://www.valor.com.br/fatosrelevantes.

2.2.2.2. The Market Announcements will be disclosed to the appropriate authorities and to Stock Markets and/or Over-The-Counter Market electronically, as well as the Companys website.

The disclosures regulated by this Policy will be done in Portuguese and English.

2.2.3. Whenever possible, the disclosure of any Material Notices shall occur before the commencement or after the closure of business at Stock Markets, provided that, in the event of incompatible times with other markets, the time of operation of the Brazilian Stock Market shall prevail.

2.2.4. The People Subject to the Policies shall inform any Material Notices they are aware of, in writing, to the Investor Relations Officer, so his/her may take the measures necessary in order to disclose the information, as provided by law, Regulation and in this Disclosure Policy, except for the events in which such information must not be disclosed, as set forth in item 2.3.

2.2.4.1 If the People Subject to the Policies are personally aware of a Material Notice and verify the omission, by the Investor Relations Officer, in complying with his/her duty of communication and disclosure, including in the event set forth in the sole paragraph of article 6 of Instruction No. 358/02, they shall only be exempt from liability if they immediately notify such Material Notice to CVM.

2.2.4.2. The communication referred to in item 2.2.4. shall be dismissed upon proven awareness of such Material Notice by the Investor Relations Officer and the decision of not disclose such information, taken pursuant to the provisions set forth in this Disclosure Policy.

2.2.5. The Company does not comment, rumors or speculations originated in the market, except under extreme situations that imply or may imply the significant volatility of the Companys Securities.

Ultrapar Participações S.A. Material Fact Disclosure Policy and Securities Trading Policy Approved on 02.19.20206

2.2.6. When the information to be disclosed is not classified as a Material Notice, other disclosure means shall be used such as notices to the market, press releases, notices to shareholders, as the case may be, subject to, to the extent possible, item 2.2.3.

2.2.7. The Company may release guidance and future projections in the terms and limits of applicable rules, publishing premises and expectations that support such projections.

2.3. EXCEPTION FOR IMMEDIATE DISCLOSURE

2.3.1. The disclosure of Material Notices may be postponed in exceptional situations if such disclosure implies in putting Ultra Groups lawful interest at risk.

2.3.2. The postponing of disclosure of Material Notices shall be subject to the decision (a) by Controlling Shareholders, if any, and provided that such information is restricted to such shareholders, or (b) by the Committee.

2.3.3. If information related to an undisclosed Material Notice gets out of control, or in the events of atypical fluctuation of the price of the Securities or traded volume, such Material Notice must be disclosed to the market, subject to, to the extent possible, item 2.2.3.

2.3.4. If an information is restricted to the Controlling Shareholders, if any, and such Controlling Shareholders decide not to disclose such information, they shall notify the Investor Relations Officer, and he/she shall notify the Committee, with respect to the existing Material Notice, whether due to atypical fluctuation of the price or traded volume of the Securities or due to examination by the Investor Relations Officer, so that the necessary immediate disclosure is analyzed.

2.4. DUTIES OF THE INVESTOR RELATIONS OFFICER

2.4.1. The Investor Relations Officer shall:

(a) disclose the Material Notice, simultaneously to the CVM, SEC and the Stock Markets and markets in general, immediately after the occurrence thereof, subject to item 2.2.3.;

(b) ensure the wide and immediate dissemination of such Material Notices in all markets where the Securities are authorized to trade, except for the provision of item 2.3.;

(c) render all additional clarifications as to such Material Notice, when requested to do so by the appropriate authorities or by any Stock Markets;

(d) should there be an unusual oscillation in the price or trading volume of the Companys Securities, the Investor Relations Officer must question the people with potential access to Privileged Information in order to establish whether they are aware of any information that must be disclosed to the market;

(e) electronically communicate any existing Ordinary and Extraordinary Trading Restrictions; and

(f) provide the Stock Market with information related to any disposal or acquisition of Material Ownership Interest, as provided for in item 2.6.3.;

2.5. DUTY OF CONFIDENTIALITY

2.5.1. The People Subject to the Policies and all people that may have access to Privileged Information or Sensitive Information must keep the confidentiality of such Privileged Information or Sensitive Information still not disclosed by the Company.

2.5.2. The People Subject to the Policies and all people that may have access to Privileged Information or Sensitive Information must not discuss any Privileged Information or Sensitive Information at public places or in the presence of third parties.

2.5.3. Privileged Information or Sensitive Information may only be discussed with those who are required to be aware of them, subject to item 2.5.5., and to the extent legally permitted.

Ultrapar Participações S.A. Material Fact Disclosure Policy and Securities Trading Policy Approved on 02.19.20207

2.5.4. The People Subject to the Policies who, inadvertently or without authorization, communicate, in any way, personally or through third parties, any Privileged Information or Sensitive Information to any third party, before such Privileged Information or Sensitive Information is disclosed to the market, must immediately inform such act to the Investor Relations Officer so that he/she may take the applicable measures.

2.5.5. Sensitive Information may only be disclosed to third parties upon the execution of agreements that obligate the receiving party (i) to keep the confidentiality of such information, and (ii) not to trade Securities based on such information. This provision is not applicable to the disclosure of information to a person who is required by law to comply with such duties.

2.5.6. In addition to the People Subject to the Policies, all people that have access to information owned by or of the interest of Ultra Group must keep the confidentiality of such information and adopt discretion and sobriety when such information has to be disclosed to third parties at Ultra Groups interest, or when such information has to be disclosed as provided by the Disclosure Policy, by law or Regulation.

2.6. COMMUNICATION AND DISCLOSURE WITH RESPECT TO DISPOSAL OR ACQUISITION OF MATERIAL OWNERSHIP INTEREST

2.6.1. The Controlling Shareholders, if any, and the shareholders who elect members of the Board of Directors or member of the Fiscal Council of the Company, as well as any individual or legal entity, or group of people, acting jointly or representing the same interest, that held a Material Ownership Interest, must inform the Company with respect to the disposal or acquisition of Material Ownership Interest.

2.6.2. Upon the intention to change the composition of the shareholding control or administrative structure of the Company, or upon an acquisition that results in the obligation to perform a public offer, the acquirer must disclose the information required by Instruction No. 358/02 by the press.

2.6.3. The Investor Relations Officer shall send information to the CVM, SEC and the Stock Market.

Ultrapar Participações S.A. Material Fact Disclosure Policy and Securities Trading Policy Approved on 02.19.20208

III. TRADING POLICY

3.1. SPECIFIC PURPOSES

3.1.1. The purposes of the Trading Policy are to:

(a) prevent and prohibit the improper use of Privileged Information and Sensitive Information owned by Ultra Group; and

(b) provide the rules and guidelines to be adopted for Securities traded by the People Subject to the Policies, including with respect to periods of trading restriction or conditions to be complied with for the trading of Securities to be permitted in such periods.

3.2. - GENERAL RULES

3.2.1. The People Subject to the Policies may not use Privileged Information in order to obtain, directly or indirectly, for themselves or to third parties, any pecuniary advantages, including through the trading of Securities.

3.2.2. Before the disclosure to the public of Privileged Information pursuant to the Policies, Securities may not be traded by People Subject to the Policies that are aware of such Privileged Information or of the date of disclosure thereof.

3.2.3. The Securities may not be traded by People Subject to the Policies (i) in the event of public offer for distribution of Securities, until the disclosure of the announcement of its closing, subject to the exceptions set forth in Instruction No. 400/03; and (ii) in the event of public offering for distribution of Securities with restricted efforts, during the period of ninety (90) days counted as from the subscription or acquisition of certain Securities by the investor, pursuant to the terms of Instruction No. 476/09.

3.2.4. Short swing transaction with the Securities may not be carried out by the People Subject to the Policies, who may not dispose the Securities acquired by them over the last three (3) months.

3.2.5. The restrictions set forth in this Trading Policy are not applicable to trading performed by investment funds whose People Subject to the Policies are quotaholders of, provided that:

(a) such investment funds are not exclusive; and

(b) trading decisions made by the manager of such investment fund are not influenced by quotaholders.

3.2.6. The repurchase of shares issued by the Company shall be subject to previous approval by general shareholders meeting whenever:

(a) performed outside organized markets of Securities, (i) involves, even by several single operations, more than five per cent (5%) of type or class of shares in less than eighteen (18) months; (ii) the price is ten per cent (10%) over, in case of acquiring, or ten per cent (10%) less in case of disposal, than the average weight for last stock exchange prices; or (iii) the counterparty is related to the Company; or

(b) if it has the purpose to modify or to preserve the composition of the shareholding control or administrative structure of the Company.

3.3. - TRADING RESTRICTIONS

3.3.1. The People Subject to the Policies and the Company itself may not trade Securities, regardless of determination by the Investor Relations Officer or the Committee (Ordinary Trading Restrictions):

(a) whenever any Material Notice which the People Subject to the Policies and the Company are aware of is pending of disclosure;

(b) in the period of fifteen (15) days prior to the disclosure of ITR and SFS forms;

(c) whenever any periods of trading restriction related to the event of public offering for distribution of Securities, as provided for in item 3.2.3.;

Ultrapar Participações S.A. Material Fact Disclosure Policy and Securities Trading Policy Approved on 02.19.20209

(d) as from the time they have access to information with respect to the intention to perform a merger, total or partial spin-off, transformation or consolidation involving the Company; and

(e) during any share acquisition or disposal program undertaken by the Company itself.

3.3.1.1. The restriction set forth in item e above shall only be effective during the days in which repurchase is actually performed by the Company, provided that: (i) the week days in which the Company will trade in the market are established; and (ii) the Investor Relations Officer informs the People Subject to the Policies of the days the restriction will be effective.

3.3.2. Without prejudice to the Ordinary Trading Restrictions, the Committee may establish other Securities trading restriction periods (Extraordinary Trading Restrictions), applicable to the People Subject to the Policies or to a part of them, whether due to the holding of Privileged Information, or to protect Ultra Groups image.

3.3.3. In the event of an Extraordinary Trading Restriction, the Investor Relations Officer shall immediately electronically communicate the People Subject to the Policies or those subject to the restriction, the period in which the trading of Securities will be restricted, without providing the reasons for such restriction.

Ultrapar Participações S.A. Material Fact Disclosure Policy and Securities Trading Policy Approved on 02.19.202010

3.3.4. The Committee will not be required to justify the decision to establish an Extraordinary Trading Restriction, and information on the existence of such Extraordinary Trading Restriction must be treated with confidentiality by the people subject to such restriction.

3.3.5. The Board of Directors of the Company may not deliberate on the acquisition or disposal of shares issued by the Company itself in the event any agreement or contract has been entered into in order to transfer shareholding control (direct or indirect) of the Company, or in the event an option or power of attorney has been granted for this purpose, as well as upon the existence of the firm intention to promote a merger, total or partial spin-off, consolidation, transformation or corporate reorganization of the Company, and while such transaction is not disclosed to the public as Material Notice.

3.3.6. During Ordinary and Extraordinary Trading Restrictions stock lending and renting operations are not allowed when People Subject to the Policies act as borrowers, receiving the lent stock.

3.4. - EXCEPTIONS TO TRADING PROHIBITIONS

3.4.1. The trading restrictions shall not apply to: (a) transactions with shares held in treasury, through a private trading, or the subscription of new shares, provided that such private trading or subscription result from the exercise of a call option arising out of, and pursuant to, the stock option plan approved at general shareholders meeting; and (b) potential repurchases by the Company, also through a private trading, of shares referred to in sub-item a of this item.

3.4.2. The trading restrictions set forth in item 3.3.1. shall not apply to Persons Subject to the Policies when their transactions are carried out as long-term investment through Individual Investment Programs approved by the Committee, and as from the date of its approval.

3.5 - INDIVIDUAL INVESTMENT PROGRAMS

3.5.1. The People Subject to the Policies may request Individual Investment Programs to be filed at the Company, which shall be submitted to the analysis of the Committee with respect to their compatibility with the provisions set forth in the Policies and Regulation, provided that such programs are submitted when no Material Notice is pending disclosure

3.5.2. The Individual Investment Programs will be duly filed at the Company and shall follow the specifications below:

(a) before the Individual Investment Programs are filed, the calendar including the specific disclosure dates of ITR and SFS forms must be approved;

(b) the Individual Investment Programs may not be filed during (a) the period of any trading restriction, respecting item 3.5.3., and (b) the period of fifteen (15) days before disclosure of ITR and SFS forms;

(c) the beneficiaries may only trade the Securities covered by Individual Investment Programs, or by a modification in a program, six (6) months after the Committees approval;

(d) the Individual Investment Programs shall establish:

(i) the irrevocable and irreversible commitment of participants to trade Securities as of the dates established in the Individual Investment Programs, previously indicating the volume of proper funds to be traded;

(ii) the type and the class of Securities subject to the investment or divestiture; and

(iii) the obligation of the beneficiaries of the Individual Investment Program to revert to the Company any losses prevented or gains at trading with Securities, arising out of the potential change of the disclosure dates of ITR and SFS forms, ascertained based on reasonable criteria to be established by such Individual Investment Program.

(e) the beneficiaries shall not:

(i) maintain simultaneously more than one Individual Investment Program; and

(ii) perform transactions that shall nullify or mitigate economic effects of the transactions determined by the Individual Investment Program.

3.5.3. The Individual Investment Programs may be filed at the Company during the effectiveness of a stock repurchase program approved by the Company, provided that participants must comply with all trading rules applicable according to these Policies.

Ultrapar Participações S.A. Material Fact Disclosure Policy and Securities Trading Policy Approved on 02.19.202011

IV. INFRACTIONS AND SANCTIONS

4.1. Any violations to the rules set forth in the Policies verified by the People Subject to the Policies must be immediately reported to the Investor Relations Officer.

4.2. Without prejudice of legal sanctions (administrative, civil or criminal), the Committee shall adopt applicable measures, upon non-compliance with the Policies, including, as the case may be, (a) communication to the competent authorities, (b) dismissal of the People Subject to the Policies, without prejudice to the other legal applicable measures, and (c) reporting such matter to the Board of Directors, so that additional measures potentially applicable may be adopted.

4.3. Without prejudice of the applicable sanctions, the People Subject to the Policies responsible for non-compliance with any provision set forth in the Policies shall reimburse Ultra Group, fully and without limitation, of all losses resulting from such non-compliance.

V. FINAL PROVISIONS

5.1. The Policies shall be in full force as of the date they are approved by the Board of Directors of the Company for indefinite term. These Policies may only be amended upon resolution by the Board of Directors of the Company, provided that no amendments may be performed during a pending Material Notice to be disclosed to the market.

5.2. After the approval of the Policies by the Board of Directors, the Company must obtain the express adhesion by the People Subject to the Policies upon the execution of the Instrument of Adhesion, pursuant to Exhibit II.

5.2.1. The Investor Relations Officer shall maintain a file with the name, qualification, position, function or relation to the Company, address, e-mail, Individual Taxpayer Registry (CPF) or Corporate Taxpayer Registry (CNPJ) of the People Subject to the Policies, which file must be updated whenever changes occur.

5.2.2. The file referred to in item 5.2.1. must be kept at Companys headquarters and must be made available to the CVM.5.3.

5.3. In case the Management cease to be subject to the Policies before the disclosure of Material Notice related to the business or to the fact initiated during their relationship with Ultra Group, he/she must refrain from trading Securities, (i) for six (6) months counted as of their removal of the Company, or (ii) until disclosure of the referred material fact, whichever occurs first.

5.4. The rules set forth in the Policy:

I apply both to trading carried out at stock market or over the counter market, organized or not, and to trading carried out without the intermediation by an institution comprising the distribution system; and

II apply to trading directly or indirectly carried out by the People Subject to the Policy, whether such trading occur through a controlled company, or a third party with whom a fiduciary or share or portfolio management agreement is entered into.

5.5. The Company will adopt the proceedings and actions mentioned below, without prejudice to other claimed necessary to control and avoid potential violations to the Policy:

I instrument of adhesion to be signed by PSP, pursuant Exhibit II;

II announcements made by the Investor Relations Officer to PSP informing on opening and closing of trading window periods; and

III regular training, which frequency and content that will be defined by the Committee.

Ultrapar Participações S.A. Material Fact Disclosure Policy and Securities Trading Policy Approved on 02.19.202012

EXHIBIT IDEFINITIONS

For purposes of the Policy the following terms shall have the following meaning:

Controlling Shareholders: Shareholder or Group of Shareholders holding and exercising control of the Company directly or indirectly, as defined in the Bylaws;

Managers: with respect to the Company and its Subsidiaries, the members of the Board of Directors, statutory officers, the members of the Fiscal Council, if any, and the members of any other bodies with technical or advisory functions eventually constituted by statutory provision;

Stock Market:B3, NYSE and any other Stock Market or organized over the counter market in which Companys Securities are admitted for trading, in Brazil or abroad;

B3: B3 S.A. Brasil, Bolsa e Balcão

Committee: is the Disclosure and Trading Committee, defined in item 1.4.1.;

Company or Ultrapar: Ultrapar Participações S.A.;

Spouse: the spouses or companion(s);

CVM: Brazilian Securities and Exchange Commission (Comissão de Valores Mobiliários);

Dependents: any dependent included in the annual tax return provided by People Subject to the Policies;

SFS: the Standard Financial Statements of the Company;

Investor Relations Officer: Ultrapars Investor Relations Officer;

Bylaws: Ultrapars bylaws.

Material Notice: has the meaning attributed to it in item 1.2.2.;

Privileged Information: has the meaning attributed to it in item 1.2.2.;

Sensitive Information: has the meaning attributed to it in item 1.2.2.;

ITR: Companys quarterly information;

Instruction No. 358/02: means CVM Instruction No. 358, dated January 3, 2002;

Instruction No. 400/03: means CVM Instruction No. 400, dated December 29, 2003;

Instruction No. 476/09: means CVM Instruction No. 476, dated January 16, 2009;

NYSE: the New York Stock Exchange;

Material Ownership Interest: direct or indirect interest corresponding to 5% (five percent) or more of shares issued by the Company, as well as the rights attributed to the shares and other Securities issued by the Company;

People Subject to the Policies: has the meaning attributed to it in item 1.3.;

Ultrapar Participações S.A. Material Fact Disclosure Policy and Securities Trading Policy Approved on 02.19.202013

Policies: has the meaning attributed to it in item 1.1.1.;

Disclosure Policy: Ultra Groups Material Notice Disclosure Policy;

Trading Policy: Ultra Groups Securities Trading Policy;

Individual Investment Programs: the written instrument through which a Person Subject to the Policies undertakes to, voluntarily, irrevocably and irreversibly, invest or divest Securities at pre-established dates or periods, or upon the occurrence of certain conditions which implementation it not under its control, prepared pursuant to the provisions set forth in 15-A of Instruction No. 358/02;

Regulation: the rules issued by CVM and other regulatory and self-regulatory bodies which the Company is subject to;

SEC: the U.S. Securities and Exchange Commission;

Instrument of Adhesion: the document to be entered into pursuant to Exhibit II;

Arrangements: has the meaning attributed to it in item 1.2.2.;

Ultra Group: Ultrapar and its subsidiaries in Brazil and abroad;

Ultrapar: Ultrapar Participações S.A.;

Securities: all and any securities issued by the Company or related to such Securities, including derivatives;

Ordinary Trading Restrictions: has the meaning attributed to it in item 3.3.1.; and

Extraordinary Trading Restrictions: has the meaning attributed to it in item 3.3.2.

Ultrapar Participações S.A. Material Fact Disclosure Policy and Securities Trading Policy Approved on 02.19.202014

EXHIBIT II INSTRUMENT OF ADHESION

INSTRUMENT OF ADHESION

By this instrument (Instrument of Adhesion) [name, qualification and e-mail], undersigned below, as [indicated relation with Ultra Group], hereby adheres to the MATERIAL NOTICE DISCLOSURE POLICY and the TRADING POLICY OF SECURITIES ISSUED BY ULTRAPAR PARTICIPAÇÕES S.A. (Policies and Company, respectively), which copies are hereby delivered, and represents:

(i) to be fully aware of all terms set forth in the Policies, and to comply with the rules set forth therein;

(ii) to be aware that Trading Restrictions of securities issued by the Company will be informed, pursuant to the Policies, through the e-mail indicated in this Instrument of Adhesion; and

(iii) to be aware that he/she is responsible for non-compliance with any provision set forth in the Policies, and that he/she shall reimburse, without prejudice to the applicable sanctions, Ultra Group, as defined in the Policies, fully and without limitation, of all losses arising out of such non-compliance.

..................., ................... .........., ..........

XXXXXXXXXXXXXXXXXXXXXX

Ultrapar Participações S.A. Material Fact Disclosure Policy and Securities Trading Policy Approved on 02.19.202015

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: February 19, 2020

ULTRAPAR HOLDINGS INC.
By:	/s/ Andre Pires de Oliveira Dias
Name: Andre Pires de Oliveira Dias Title: Chief Financial and Investor Relations Officer

(2019 Financial Report, 4Q19 and 2019 Earnings Release, Board of Directors minutes, Fiscal Council minutes, Notice to shareholders and Material Notice Disclosure Policy and Securities Trading Policy)

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