6-K 1 MainDocument.htm 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 November 2021

 

Commission File Number: 001-14950

 

ULTRAPAR HOLDINGS INC.

(Translation of Registrant’s Name into English)

 

Brigadeiro Luis Antonio Avenue, 1343, 9th floor

São Paulo, SP, Brazil 01317-910

(Address of Principal Executive Offices)

 

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

 

Form 20-F ____X____     Form 40-F ________

 

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

 

Yes ________      No ____X____

 

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

 

Yes ________      No ____X____

 

 




 




  

 

 

 

 

(Convenience Translation into English from

the Original Previously Issued in Portuguese)

 

 

Ultrapar Participações S.A.

 

 

Interim Financial Information as of and the Nine-month Period

Ended September 30, 2021 and

Report on Review of Interim Financial Information

 

 

KPMG Auditores Independentes

 

  

 


 

  


Ultrapar Participações S.A. and Subsidiaries

Parent’s Separate and Consolidated  

Interim Financial Information

As of and the Nine-month Period Ended September 30, 2021  


Table of Content


Report on the Review of Quarterly Information 1-2
Statements of Financial Position 3-4
Statements of Profit or Loss 5-6
Statements of Comprehensive Income 7-8
Statements of Changes in Equity 9-10
Statements of Cash Flows – Indirect Method 11-12
Statements of Value Added 13
Notes to the Interim Financial Information 14-133


 


 

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

 

Graphics

KPMG Auditores Independentes Ltda.

Rua Arquiteto Olavo Redig de Campos, 105, 6º andar - Torre A

04711-904 - São Paulo/SP - Brasil

Caixa Postal 79518 - CEP 04707-970 - São Paulo/SP - Brasil

Telefone +55 (11) 3940-1500

kpmg.com.br


Report on the review of quarterly

information – ITR 

To the Shareholders, Directors and Management of

Ultrapar Participações S.A.

São Paulo, SP

Introduction

We have reviewed the accompanying individual and consolidated interim financial information of Ultrapar Participações S.A. (“Company”), comprised in the Quarterly Financial Information - ITR Form for the quarter ended September 30, 2021, which comprise the statements of financial position as of September 30, 2021,  and related statements of income, comprehensive income for the three and nine-month period then ended and changes in shareholders’ equity and cash flows for the nine-month period then ended, including the explanatory notes.

 

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

Scope of the review

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




Conclusion on the individual and consolidated interim financial information

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

Other matters - Interim statements of value added

The individual and consolidated interim statements of value added (DVA) for the nine-month period ended September 30, 2021, prepared under the responsibility of the Company's management, and presented as supplementary information for the purposes of IAS 34, were submitted to the same review procedures followed together with the review of the Company's interim financial information. In order to form our conclusion, we evaluated whether these statements are reconciled to the interim financial information and to the accounting records, as applicable, and whether their form and content are in accordance with the criteria set on Technical Pronouncement CPC 09 - Statement of Value Added. Based on our review, nothing has come to our attention that causes us to believe that the accompanying statements of value added are not prepared, in all material respects, according to the criteria defined in this Standard and consistently in accordance with the individual and consolidated interim financial information taken as a whole.

 

 

São Paulo, November 3, 2021

 

 

KPMG Auditores Independentes Ltda.

CRC 2SP014428/O-6

(Original report in Portuguese signed by)

Márcio Serpejante Peppe

Accountant CRC 1SP233011/O-8



Ultrapar Participações S.A. and Subsidiaries

As of September 30, 2021 and December 31, 2020

(In thousands of Brazilian Reais)

 

 

 

Parent

 

Consolidated

 

Note

09/30/2021

 

12/31/2020

 

09/30/2021

 

12/31/2020

Assets

 

 

 

 

 

 

 

 

Current assets

 

 

 

 

 

 

 

 

Cash and cash equivalents

4.a

4,697

 

948,649

 

2,826,300

 

2,661,494

Financial investments and hedging instruments

4.b

139,363

 

88,100

 

2,914,869

 

5,033,258

Trade receivables

5.a

-

 

-

 

4,118,972

 

3,318,927

Reseller financing

5.b

-

 

-

 

505,419

 

549,129

Inventories

6

-

 

-

 

5,574,224

 

3,846,196

Recoverable taxes

7.a

-

 

154

 

1,176,707

 

1,044,850

Recoverable income and social contribution taxes

7.b

58,375

 

47,913

 

364,007

 

366,080

Dividends receivable

 

213

 

150,301

 

1,010

 

1,152

Other receivables

 

122,946

 

58,300

 

108,390

 

56,955

Prepaid expenses

10

9,957

 

3,684

 

141,227

 

132,122

Non-current assets held for sale

12.b

-

 

-

 

78,099

 

-

Contractual assets with customers – exclusive rights

11

-

 

-

 

533,688

 

478,908

Total current assets

 

335,551

 

1,297,101

 

18,342,912

 

17,489,071

Non-current assets

 

 

 

 

 

 

 

 

Financial investments and hedging instruments

4.b

-

 

-

 

847,266

 

977,408

Trade receivables

5.a

-

 

-

 

65,509

 

72,195

Reseller financing

5.b

-

 

-

 

415,929

 

419,255

Related parties

8.a

400,000

 

753,459

 

24,413

 

2,824

Deferred income and social contribution taxes

9.a

59,631

 

64,993

 

1,245,527

 

974,711

Recoverable taxes

7.a

656

 

-

 

1,480,804

 

1,474,808

Recoverable income and social contribution taxes

7.b

19,794

 

39,446

 

334,397

 

261,205

Escrow deposits

22.a

18

 

2

 

868,370

 

949,796

Indemnification asset – business combination

22.c

-

 

-

 

123,581

 

204,439

Other receivables

 

-

 

-

 

24,094

 

20,238

Prepaid expenses

10

2,522

 

3,888

 

84,286

 

70,507

Contractual assets with customers – exclusive rights

11

-

 

-

 

1,385,185

 

1,227,423

Total long term assets

 

482,621

 

861,788

 

6,899,361

 

6,654,809

Investments

 

 

 

 

 

 

 

 

In subsidiaries

12.a

10,613,431

 

10,530,177

 

-

 

-

In joint ventures

12.a; 12.b

-

 

-

 

66,500

 

139,100

In associates

12.c

-

 

-

 

25,034

 

25,588

Others

 

-

 

-

 

2,793

 

2,793

 

 

10,613,431

 

10,530,177

 

94,327

 

167,481

Right-of-use assets

13

33,078

 

35,062

 

2,093,041

 

2,150,286

Property, plant, and equipment

14

21,425

 

14,328

 

8,235,038

 

8,005,860

Intangible assets

15

252,952

 

254,242

 

1,707,656

 

1,782,655

Total non-current assets

 

11,403,507

 

11,695,597

 

19,029,423

 

18,761,091

Total assets

 

11,739,058

 

12,992,698

 

37,372,335

 

36,250,162

 

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


3


Ultrapar Participações S.A. and Subsidiaries

Statements of Financial Position

As of September 30, 2021 and December 31, 2020

(In thousands of Brazilian Reais)

 

 

Parent

 

Consolidated

 

Note

09/30/2021

 

12/31/2020

 

09/30/2021

 

12/31/2020

Liabilities

 

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

 

 

Loans, financing and hedge derivative financial instruments

16

-

 

1,038,499

 

945,603

 

2,306,036

Debentures

16.f

5,754

 

9,996

 

1,475,381

 

949,908

Trade payables

17.a

21,901

 

16,870

 

3,283,125

 

2,745,019

Trade payables – reverse factoring

17.b

-

 

-

 

3,080,991

 

1,295,633

Salaries and related charges

18

44,834

 

42,400

 

549,003

 

468,630

Taxes payable

19

706

 

812

 

283,493

 

286,014

Dividends payable

25.h

11,056

 

439,094

 

13,239

 

442,133

Income and social contribution taxes payable

 

-

 

4,264

 

113,000

 

169,317

Post-employment benefits

20.b

-

 

-

 

27,221

 

27,077

Provision for asset retirement obligation

21

-

 

-

 

4,512

 

4,267

Provision for tax, civil, and labor risks

22.a

-

 

-

 

21,273

 

43,660

Leases payable

13

5,472

 

4,688

 

269,498

 

260,189

Other payables

 

8,511

 

10,157

 

277,735

 

224,676

Deferred revenue

23

-

 

-

 

1,156

 

18,282

Total current liabilities

 

98,234

 

1,566,780

 

10,345,230

 

9,240,841

Non-current liabilities

 

 

 

 

 

 

 

 

Loans, financing and hedge derivative financial instruments

16

-

 

-

 

8,458,938

 

8,526,064

Debentures

16.f

1,724,677

 

1,724,117

 

5,529,186

 

5,594,208

Related parties

8.a

4,636

 

5,272

 

3,558

 

3,711

Deferred income and social contribution taxes

9.a

-

 

-

 

14,155

 

12,732

Post-employment benefits

20.b

2,824

 

2,527

 

262,781

 

257,647

Provision for asset retirement obligation

21

-

 

-

 

50,763

 

49,168

Provision for tax, civil, and labor risks

22.a; 22.c

280

 

280

 

797,162

 

854,385

Leases payable

13

31,187

 

33,246

 

1,546,254

 

1,573,099

Subscription warrants – indemnification

24

52,036

 

86,439

 

52,036

 

86,439

Provision for short-term liabilities of subsidiaries and joint ventures

12.a; 12.b

22,306

 

35,794

 

3,305

 

2,096

Other payables

 

6,977

 

4,497

 

123,997

 

139,507

Total non-current liabilities

 

1,844,923

 

1,892,172

 

16,842,135

 

17,099,056

Equity

 

 

 

 

 

 

 

 

Share capital

25.a; 25.f

5,171,752

 

5,171,752

 

5,171,752

 

5,171,752

Equity instrument granted

25.b

30,950

 

22,404

 

30,950

 

22,404

Capital reserve

25.d

595,868

 

594,049

 

595,868

 

594,049

Treasury shares

25.c

(489,068)

 

(489,068)

 

(489,068)

 

(489,068)

Revaluation reserve on subsidiaries

25.e

4,202

 

4,337

 

4,202

 

4,337

Profit reserves

25.f

4,408,275

 

4,408,275

 

4,408,275

 

4,408,275

Retained earnings

 

259,701

 

-

 

259,701

 

-

Valuation adjustments

25.g.1

(449,612)

 

(464,990)

 

(449,612)

 

(464,990)

Cumulative translation adjustments

25.g.2

263,833

 

231,596

 

263,833

 

231,596

Additional dividends to the minimum mandatory dividends

25.h

-

 

55,391

 

-

 

55,391

Equity attributable to:

 

 

 

 

 

 

 

 

Shareholders of the Company

 

9,795,901

 

9,533,746

 

9,795,901

 

9,533,746

Non-controlling interests in subsidiaries

 

-

 

-

 

389,069

 

376,519

Total equity

 

9,795,901

 

9,533,746

 

10,184,970

 

9,910,265

Total liabilities and equity

 

11,739,058

 

12,992,698

 

37,372,335

 

36,250,162


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


4

Ultrapar Participações S.A. and Subsidiaries

For the nine-month period ended September 30, 2021 and 2020

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

 

 

 

Parent

 

Consolidated

 

Note

09/30/2021

 

09/30/2020

 

09/30/2021

 

09/30/2020

Net revenue from sales and services

26

-

 

-

 

84,387,464

 

58,025,450

Cost of products and services sold

27

-

 

-

 

(79,376,849)

 

(53,925,516)

Gross profit

 

-

 

-

 

5,010,615

 

4,099,934

 

 

 

 

 

 

 

 

 

Operating income (expenses)

 

 

 

 

 

 

 

 

Selling and marketing

27

-

 

-

 

(2,151,038)

 

(1,854,841)

Reversion expected (losses) on doubtful accounts

 

-

 

-

 

10,792

 

(29,078)

General and administrative

27

(19,840)

 

-

 

(1,439,564)

 

(1,076,974)

Gain (loss) on disposal of property, plant and equipment and intangibles

28

32

 

-

 

58,185

 

35,926

Impairment

3.c.1; 28

-

 

-

 

(394,675)

 

-

Other operating income

29

1,075

 

2,186

 

350,365

 

282,747

Other operating expenses

29

(123)

 

(994)

 

(248,880)

 

(168,500)

 

 

 

 

 

 

 

 

 

Operating income (loss) before finance income (expenses) and share of profit (loss) of subsidiaries, joint ventures and associates

 

(18,856)

 

1,192

 

1,195,800

 

1,289,214

Share of profit (loss) of subsidiaries, joint ventures and associates

12

503,890

 

503,960

 

(22,023)

 

(30,515)

Operating income before finance income (expenses) and income and social contribution taxes

 

485,034

 

505,152

 

1,173,777

 

1,258,699

Finance income

30

55,800

 

33,850

 

339,102

 

306,813

Finance expenses

30

(65,186)

 

(80,427)

 

(971,551)

 

(712,639)

Financial result, net

30

(9,386)

 

(46,577)

 

(632,449)

 

(405,826)

Profit before income and social contribution taxes

 

475,648

 

458,575

 

541,328

 

852,873

Income and social contribution taxes

 

 

 

 

 

 

 

 

Current

9.b; 9.c

-

 

(170)

 

(317,671)

 

(403,482)

Deferred

9.b

(5,362)

 

8,953

 

269,787

 

46,804

 

 

(5,362)

 

8,783

 

(47,884)

 

(356,678)

Profit for the period

 

470,286

 

467,358

 

493,444

 

496,195

Income attributable to:

 

 

 

 

 

 

 

 

    Shareholders of the Company

 

470,286

 

467,358

 

470,286

 

467,358

    Non-controlling interests in subsidiaries

 

-

 

-

 

23,158

 

28,837

Earnings per share (based on weighted average number of shares outstanding) – R$

 

 

 

 

 

 

 

 

    Basic

31

0.4313

 

0.4291

 

0.4313

 

0.4291

    Diluted

31

0.4288

 

0.4265

 

0.4288

 

0.4265

 

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

 


Ultrapar Participações S.A. and Subsidiaries

Statements of Profit or Loss

For the three-month period ended September 30, 2021 and 2020

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

 

 

 

Parent

 

Consolidated

 

Note

09/30/2021

 

09/30/2020

 

09/30/2021

 

09/30/2020

Net revenue from sales and services

26

-

 

-

 

31,911,126

 

20,762,078

Cost of products and services sold

27

-

 

-

 

(30,112,185)

 

(19,123,322)

Gross profit

 

-

 

-

 

1,798,941

 

1,638,756

 

 

 

 

 

 

 

 

 

Operating income (expenses)

 

 

 

 

 

 

 

 

Selling and marketing

27

-

 

-

 

(785,922)

 

(658,104)

Reversion expected (losses) on doubtful accounts

 

-

 

-

 

4,452

 

27,438

General and administrative

27

(7,721)

 

-

 

(497,728)

 

(373,853)

Gain (loss) on disposal of property, plant and equipment and intangibles

28

30

 

-

 

18,037

 

15,016

Impairment

3.c.1; 28

-

 

-

 

-

 

-

Other operating income

29

1,075

 

636

 

121,667

 

53,756

Other operating expenses

29

(104)

 

-

 

(86,086)

 

(99,663)

 

 

 

 

 

 

 

 

 

Operating income (loss) before finance income (expenses) and share of profit (loss) of subsidiaries, joint ventures and associates

 

(6,720)

 

636

 

573,361

 

603,346

Share of profit (loss) of subsidiaries, joint ventures and associates

12

381,556

 

285,818

 

(11,082)

 

(4,817)

Operating income before finance income (expenses) and income and social contribution taxes

 

374,836

 

286,454

 

562,279

 

598,529

Finance income

30

21,242

 

2,081

 

128,821

 

71,649

Finance expenses

30

(24,148)

 

(28,794)

 

(424,834)

 

(229,517)

Financial result, net

30

(2,906)

 

(26,713)

 

(296,013)

 

(157,868)

Profit before income and social contribution taxes

 

371,930

 

259,741

 

266,266

 

440,661

Income and social contribution taxes

 

 

 

 

 

 

 

 

Current

9.b; 9.c

-

 

-

 

12,104

 

(183,850)

Deferred

9.b

(2,727)

 

5,692

 

95,887

 

20,490

 

 

(2,727)

 

5,692

 

107,991

 

(163,360)

Profit for the period

 

369,203

 

265,433

 

374,257

 

277,301

Income attributable to:

 

 

 

 

 

 

 

 

    Shareholders of the Company

 

369,203

 

265,433

 

369,203

 

265,433

    Non-controlling interests in subsidiaries

 

-

 

-

 

5,054

 

11,868

Earnings per share (based on weighted average number of shares outstanding) – R$

 

 

 

 

 

 

 

 

    Basic

31

0.3386

 

0.2435

 

0.3386

 

0.2435

    Diluted

31

0.3366

 

0.2421

 

0.3366

 

0.2421

 

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

 


Ultrapar Participações S.A. and Subsidiaries

For the nine-month period ended September 30, 2021 and 2020

(In thousands of Brazilian Reais)

 

 

 

Parent

 

Consolidated

 

Note

09/30/2021

 

09/30/2020

 

09/30/2021

 

09/30/2020

Net income for the period

 

470,286

 

467,358

 

493,444

 

496,195

Items that are subsequently reclassified to profit or loss:

 

 

 

 

 

 

 

 

Fair value adjustments of financial instruments, net

25.g.1

(120)

 

274

 

(120)

 

274

Fair value adjustments of financial instruments of subsidiaries, net

25.g.1

12,513

 

(491,544)

 

12,537

 

(491,544)

Fair value adjustments of financial instruments of joint ventures, net

25.g.1

2,306

 

786

 

2,306

 

786

Cumulative translation adjustments and hedge of net investments in foreign operations, net

25.g.2

32,237

 

198,678

 

32,237

 

198,678

Items that are not subsequently reclassified to profit or loss:

 

 

 

 

 

 

 

 

Actuarial gain of post-employment benefits, net

25.g.1

679

 

-

 

679

 

-

Total comprehensive income for the period

 

517,901

 

175,552

 

541,083

 

204,389

Total comprehensive income for the period attributable to shareholders of the Company

 

517,901

 

175,552

 

517,901

 

175,552

Total comprehensive income for the period attributable to non-controlling interest in subsidiaries

 

-

 

-

 

23,182

 

28,837

 

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

 


Ultrapar Participações S.A. and Subsidiaries

Statements of Comprehensive Income

For the three-month period ended September 30, 2021 and 2020

(In thousands of Brazilian Reais)

 

 

 

Parent

 

Consolidated

 

Note

09/30/2021

 

09/30/2020

 

09/30/2021

 

09/30/2020

Net income for the period

 

369,203

 

265,433

 

374,257

 

277,301

Items that are subsequently reclassified to profit or loss:

 

 

 

 

 

 

 

 

Fair value adjustments of financial instruments, net

25.g.1

-

 

(158)

 

-

 

(158)

Fair value adjustments of financial instruments of subsidiaries, net

25.g.1

(94,851)

 

(14,771)

 

(94,834)

 

(14,771)

Fair value adjustments of financial instruments of joint ventures, net

25.g.1

3,644

 

(1,075)

 

3,644

 

(1,075)

Cumulative translation adjustments and hedge of net investments in foreign operations, net

25.g.2

69,676

 

62,556

 

69,676

 

62,556

Items that are not subsequently reclassified to profit or loss:

 

 

 

 

 

 

 

 

Actuarial gain of post-employment benefits, net

25.g.1

118

 

-

 

118

 

-

Total comprehensive income for the period

 

347,790

 

311,985

 

352,861

 

323,853

Total comprehensive income for the period attributable to shareholders of the Company

 

347,790

 

311,985

 

347,790

 

311,985

Total comprehensive income for the period attributable to non-controlling interest in subsidiaries

 

-

 

-

 

5,071

 

11,868

 

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



Ultrapar Participações S.A. and Subsidiaries

For the nine-month period ended September 30, 2021 and 2020

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

 

 

 

 

 

 

 

 

 

 

 

 

 

Profit reserve

 

 

 

 

 

 

 

 

 

Equity attributable to:

 

 

 

Note

 

Share capital

 

Equity instrument granted

 

Capital reserve

 

Treasury shares

 

Revaluation reserve on subsidiaries

 

Legal reserve

 

Investments statutory reserve

 

Valuation adjustments

 

Cumulative translation adjustments

 

Retained earnings

 

Additional dividends to the minimum mandatory dividends

 

Shareholders of the Company

 

Non-controlling interests in subsidiaries

 

Consolidated equity

Balance as of December 31, 2020

 

 

 5,171,752

 

 22,404

 

 594,049

 

(489,068)

 

 4,337

 

 750,010

 

 3,658,265

 

(464,990)

 

 231,596

 

- 

 

 55,391

 

 9,533,746

 

 376,519

 

 9,910,265

Net income for the period

 

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

470,286

 

-

 

470,286

 

 23,158

 

493,444

Other comprehensive income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fair value adjustments of available for financial instruments, net of income taxes:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Company

25.g.1

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

(120)

 

-

 

-

 

-

 

(120)

 

-

 

(120)

Subsidiaries

12.a; 25.g.1

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

 12,513

 

-

 

-

 

-

 

 12,513

 

 24

 

 12,537

Joint ventures

12.a; 25.g.1

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

2,306

 

-

 

-

 

-

 

2,306

 

-

 

2,306

Actuarial gain of post-employment benefits, net of income taxes

12.a; 25.g.1

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

 679

 

-

 

-

 

-

 

 679

 

-

 

 679

Currency translation of foreign subsidiaries and the effect of net investments hedge, net of income taxes

12.a; 25.g.2

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

32,237

 

-

 

-

 

32,237

 

-

 

32,237

Total comprehensive income for the period

 

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

 15,378

 

32,237

 

470,286

 

-

 

517,901

 

 23,182

 

541,083

Issuance of shares related to the subscription warrants - indemnification - Extrafarma acquisition

25.d

 

-

 

-

 

 1,819

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

 1,819

 

-

 

 1,819

Equity instrument granted

25.b

 

-

 

 5,214

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

 5,214

 

-

 

 5,214

Equity instrument granted of subsidiaries

12.a; 25.b

 

-

 

 3,332

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

 3,332

 

-

 

 3,332

Income and social contribution taxes on realization of revaluation reserve of subsidiaries

25.e

 

-

 

-

 

-

 

-

 

(135)

 

-

 

-

 

-

 

-

 

 135

 

-

 

-

 

-

 

-

Prescribed dividends

 

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

 7,137

 

-

 

 7,137

 

-

 

 7,137

Gains due to the payments fixed dividends to preferred shares of subsidiaries

 

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

 138

 

-

 

 138

 

(138)

 

-

Shareholder transaction – changes of investments

 

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

 79

 

-

 

 79

 

(79)

 

-

Dividends attributable to non-controlling interests

 

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

(10,415)

 

(10,415)

Approval of additional dividends by the Shareholders’ Meeting

25.h

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

(55,391)

 

(55,391)

 

-

 

(55,391)

Intermediary dividends (R$ 0.20 per share)

25.h
-
-
-
-
-
-
-
-
-
(218,074)
-
(218,074)
-
(218,074)

Balance as of September 30, 2021

 

 

 5,171,752

 

 30,950

 

 595,868

 

(489,068)

 

 4,202

 

 750,010

 

 3,658,265

 

(449,612)

 

 263,833

 

 259,701

 

- 

 

9,795,901

 

 389,069

 

10,184,970

   

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



Ultrapar Participações S.A. and Subsidiaries

Statements of Changes in Equity

For the nine-month period ended September 30, 2021 and 2020

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

 


 

 

 

 

 

 

 

 

 

 

 

 

Profit reserve

 

 

 

 

 

 

 

 

 

Equity attributable to:

 

 

 

Note

 

Share

capital

 

Equity instrument granted

 

Capital reserve

 

Treasury shares

 

Revaluation reserve on subsidiaries

 

Legal reserve

 

Investments statutory reserve

 

Valuation adjustments

 

Cumulative translation adjustments

 

Retained

earnings

 

Additional dividends to the minimum mandatory dividends

 

Shareholders of the Company

 

Non-controlling interests in subsidiaries

 

Consolidated

equity

Balance as of December 31, 2019

 

 

5,171,752

 

11,970

 

542,400

 

(485,383)

 

4,522

 

705,341

 

3,290,073

 

(146,317)

 

102,427

 

 

261,470

 

9,458,255

 

376,920

 

9,835,175

Net income for the period

 

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

467,358

 

-

 

467,358

 

28,837

 

496,195

Other comprehensive income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fair value adjustments of available for financial instruments, net of income taxes:




























Company

25.g.1

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

274

 

-

 

-

 

-

 

274

 

-

 

274

Subsidiaries and joint ventures

12.a; 25.g.1

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

(490,758)

 

-

 

-

 

-

 

(490,758)

 

-

 

(490,758)

Currency translation of foreign subsidiaries, including the effect of net investments hedge

25.g.2

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

198,678

 

-

 

-

 

198,678

 

-

 

198,678

Total comprehensive income for the period

 

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

(490,484)

 

198,678

 

467,358

 

-

 

175,552

 

28,837

 

204,389

Issuance of shares related to the subscription warrants - indemnification - Extrafarma acquisition

25.d

 

-

 

-

 

54,763

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

54,763

 

-

 

54,763

Stock plan

8.c

 

-

 

-

 

(3,114)

 

(3,685)

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

(6,799)

 

-

 

(6,799)

Equity instrument granted

25.b

 

-

 

2,906

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

2,906

 

-

 

2,906

Equity instrument granted of subsidiaries

12.a; 25.b

 

-

 

1,603

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

1,603

 

-

 

1,603

Income and social contribution taxes on realization of revaluation reserve of subsidiaries


 

-

 

-

 

-

 

-

 

(139)

 

-

 

-

 

-

 

-

 

139

 

-

 

-

 

-

 

-

Loss due to the payments fixed dividends to preferred shares

 

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

(516)

 

-

 

(516)

 

-

 

(516)

Shareholder transaction – changes of investments

 

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

41

 

-

 

41

 

-

 

41

Dividends attributable to non-controlling interests

 

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

(2,792)

 

(2,792)

Approval of additional dividends by the Shareholders’ Meeting

25.h

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

(261,470)

 

(261,470)

 

-

 

(261,470)

Balance as of September 30, 2020

 

 

5,171,752

 

16,479

 

594,049

 

(489,068)

 

4,383

 

705,341

 

3,290,073

 

(636,801)

 

301,105

 

467,022

 

 

9,424,335

 

402,965

 

9,827,300

 

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



Ultrapar Participações S.A. and Subsidiaries

For the nine-month period ended September 30, 2021 and 2020

(In thousands of Brazilian Reais)

 

 

 

Parent

 

Consolidated

 

Note

09/30/2021

 

09/30/2020

 

09/30/2021

 

09/30/2020

Cash flows from operating activities

 

 

 

 

 

 

 

 

Profit for the period

 

470,286

 

467,358

 

493,444

 

496,195

Adjustments to reconcile net income to cash provided by operating activities

 

 

 

 

 

 

 

 

Share of loss (profit) of subsidiaries, joint ventures and associates

12

(503,890)

 

(503,960)

 

22,023

 

30,515

Amortization of contractual assets with customers – exclusive rights

11

-

 

-

 

199,757

 

224,441

Amortization of right-of-use assets

13.a

4,501

 

3,238

 

264,696

 

242,147

Depreciation and amortization

14; 15

6,046

 

1,877

 

749,843

 

698,363

PIS and COFINS credits on depreciation

14; 15

-

 

-

 

13,094

 

11,487

Interest and foreign exchange rate variations

 

10,522

 

68,251

 

1,043,609

 

768,843

Deferred income and social contribution taxes

9.b

5,362

 

(8,953)

 

(269,787)

 

(46,804)

Current income and social contribution taxes

9.b

-

 

170

 

317,671

 

403,482

Loss on disposal of property, plant, and equipment and intangibles

28

(32)

 

-

 

(58,185)

 

(35,926)

Impairment

3.c.1; 28

-

 

-

 

394,675

 

-

Reversion expected (losses) on doubtful accounts

5

-

 

-

 

(10,792)

 

29,078

Provision for losses in inventories

6

-

 

-

 

(5,472)

 

(829)

Provision for post-employment benefits

20.b

297

 

(1,490)

 

3,713

 

(18,626)

Equity instrument granted

8.c

5,214

 

2,906

 

8,546

 

4,509

Provision of decarbonization – CBIO

29

-

 

-

 

111,220

 

-

Provision for tax, civil, and labor risks

22.a

-

 

386

 

(59,438)

 

(343)

Other provisions and adjustments

 

1,846

 

1,164

 

998

 

(1,044)

 

 

152

 

30,947

 

3,219,615

 

2,805,488

(Increase) decrease in current assets

 

 

 

 

 

 

 

 

Trade receivables and reseller financing

5

-

 

-

 

(737,303)

 

255,238

Inventories

6

-

 

-

 

(1,718,526)

 

180,834

Recoverable taxes

7

(14,572)

 

(1,977)

 

(447,215)

 

71,514

Dividends received from subsidiaries and joint ventures

 

697,758

 

299,746

 

142

 

4,718

Other receivables

 

(64,649)

 

(24,575)

 

(51,435)

 

(32,371)

Prepaid expenses

10

(6,273)

 

(4,378)

 

(52,456)

 

(65,045)

Increase (decrease) in current liabilities

 

 

 

 

 

 

 

 

Trade payables

17

5,031

 

2,212

 

2,125,549

 

607,361

Salaries and related charges

18

2,434

 

35,329

 

80,373

 

108,351

Taxes payable

19

(106)

 

453

 

(2,521)

 

40,410

Post-employment benefits

20.b

-

 

-

 

144

 

571

Other payables

 

(1,647)

 

3,089

 

(3,687)

 

66,381

Deferred revenue

23

-

 

-

 

(17,126)

 

(725)

(Increase) decrease in non-current assets

 

 

 

 

 

 

 

 

Trade receivables and reseller financing

5

-

 

-

 

10,012

 

(96,784)

Recoverable taxes

7

18,996

 

-

 

(104,112)

 

(700,778)

Escrow deposits

 

(16)

 

15

 

81,426

 

(30,953)

Other receivables

 

-

 

-

 

76,995

 

436

Prepaid expenses

10

1,367

 

(4,162)

 

8,262

 

5,264

 

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

 


Ultrapar Participações S.A. and Subsidiaries

Statements of Cash Flows Indirect Method

For the nine-month period ended September 30, 2021 and 2020

(In thousands of Brazilian Reais)

 

 

 

Parent

 

Consolidated

 

 

09/30/2021

 

09/30/2020

 

09/30/2021

 

09/30/2020

Increase (decrease) in non-current liabilities

 

 

 

 

 

 

 

 

Post-employment benefits

20.b

-

 

5,602

 

1,539

 

9,118

Other payables

 

2,482

 

4,618

 

(15,487)

 

(37,011)

Acquisition of CBIO

15

-

 

-

 

(121,908)

 

-

Payments of contractual assets with customers – exclusive rights

11

-

 

-

 

(222,623)

 

(296,765)

Payments of contingencies

22.a

-

 

-

 

(20,172)

 

(37,663)

Income and social contribution taxes paid

 

-

 

-

 

(207,043)

 

(227,269)

Net cash provided by operating activities

 

640,957

 

346,919

 

1,882,443

 

2,630,320

Cash flows from investing activities

 

 

 

 

 

 

 

 

Financial investments, net of redemptions

4.b

(33,192)

 

(14,059)

 

2,209,204

 

(1,567,079)

Acquisition of property, plant, and equipment

14

(11,756)

 

(7,575)

 

(877,739)

 

(587,087)

Acquisition of intangible assets

15

(97)

 

(10,071)

 

(157,467)

 

(112,335)

Revenue on disposal of investments

 

-

 

-

 

1,131

 

-

Capital increase in subsidiary

12.a

(89,236)

 

(90,580)

 

-

 

-

Capital increase in joint ventures

12.b

-

 

-

 

(25,699)

 

(20,000)

Capital decrease in associates

12.c

-

 

-

 

1,500

 

-

Initial direct costs of right-of-use assets

13

-

 

-

 

(14,905)

 

-

Related parties

8.a

353,459

 

-

 

(21,589)

 

-

Proceeds from disposal of property, plant, and equipment and intangibles

28

-

 

-

 

99,609

 

86,012

Net cash provided by (used in) investing activities

 

219,178

 

(122,285)

 

1,214,045

 

(2,200,489)

Cash flows from financing activities

 

 

 

 

 

 

 

 

Loans and debentures

 

 

 

 

 

 

 

 

Proceeds

16

-

 

994,996

 

1,441,388

 

3,591,624

Repayments

16

(1,000,000)

 

-

 

(2,909,064)

 

(2,280,152)

Interest paid

16

(102,871)

 

(68,788)

 

(463,203)

 

(478,755)

Payments of lease

 

 

 

 

 

 

 

 

Principal

13

(5,999)

 

(4,164)

 

(320,660)

 

(261,262)

Interest paid

13

(215)

 

(92)

 

(12,564)

 

(5,228)

Dividends paid

25.h

(694,366)

 

(261,409)

 

(705,637)

 

(264,487)

Related parties

8.a

(636)

 

9,123

 

(153)

 

(72)

Net cash provided by (used in) in financing activities

 

(1,804,087)

 

669,666

 

(2,969,893)

 

301,668

Effect of exchange rate changes on cash and cash equivalents in foreign currency

 

-

 

-

 

38,211

 

149,455

Increase (decrease) in cash and cash equivalents

 

(943,952)

 

894,300

 

164,806

 

880,954

Cash and cash equivalents at the beginning of the year

4.a

948,649

 

42,580

 

2,661,494

 

2,115,379

Cash and cash equivalents at the end of the year

4.a

4,697

 

936,880

 

2,826,300

 

2,996,333

Transactions without cash effect:

 

 

 

 

 

 

 

 

Addition on right-of-use assets and leases payable

13.a

2,618

 

33,890

 

252,207

 

407,148

Addition on contractual assets with customers – exclusive rights

11

-

 

-

 

197,915

 

139,960

Reversion fund – private pension

10; 20.a

-

 

-

 

3,706

 

47,088

Issuance of shares related to the subscription warrants – indemnification – Extrafarma acquisition

25.d

1,819

 

54,763

 

1,819

 

54,763


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


12


Ultrapar Participações S.A. and Subsidiaries

For the nine-month period ended September 30, 2021 and 2020

(In thousands of Brazilian Reais, except percentages)

 

 

 

Parent

 

Consolidated

 

Note

09/30/2021

 

%

 

09/30/2020

 

%

 

09/30/2021

 

%

 

09/30/2020

 

%

Revenue

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross revenue from sales and services, except rents and royalties

26

-

 

 

 

-

 

 

 

88,859,650

 

 

 

62,473,739

 

 

Rebates, discounts, and returns

26

-

 

 

 

-

 

 

 

(1,030,727)

 

 

 

(1,237,466)

 

 

Expected reversion (losses) on doubtful accounts

5

-

 

 

 

-

 

 

 

10,792

 

 

 

(29,078)

 

 

Amortization of contractual assets with customers – exclusive rights

11

-

 

 

 

-

 

 

 

(199,757)

 

 

 

(224,441)

 

 

Provision for loss on disposal of property, plant, and equipment and intangibles and other operating income, net

28; 29

984

 

 

 

1,192

 

 

 

159,670

 

 

 

150,173

 

 

 

 

984

 

 

 

1,192

 

 

 

87,799,628

 

 

 

61,132,927

 

 

Materials purchased from third parties

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Raw materials used

 

-

 

 

 

-

 

 

 

(5,669,075)

 

 

 

(4,344,264)

 

 

Cost of goods, products, and services sold

 

-

 

 

 

-

 

 

 

(74,276,224)

 

 

 

(49,526,025)

 

 

Third-party materials, energy, services, and others

 

112,966

 

 

 

120,325

 

 

 

(2,294,791)

 

 

 

(1,926,454)

 

 

Impairment

3.c.1; 28

-

 

 

 

-

 

 

 

(394,675)

 

 

 

-

 

 

Provision for losses of assets

 

-

 

 

 

-

 

 

 

(24,350)

 

 

 

(35,038)

 

 

 

 

112,966

 

 

 

120,325

 

 

 

(82,659,115)

 

 

 

(55,831,781)

 

 

Gross value added

 

113,950

 

 

 

121,517

 

 

 

5,140,513

 

 

 

5,301,146

 

 

Deductions

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation and amortization

13.a; 14; 15

(10,547)

 

 

 

(5,115)

 

 

 

(1,014,539)

 

 

 

(940,510)

 

 

PIS and COFINS credits on depreciation

14; 15

-

 

 

 

-

 

 

 

(13,094)

 

 

 

(11,487)

 

 

 

 

(10,547)

 

 

 

(5,115)

 

 

 

(1,027,633)

 

 

 

(951,997)

 

 

Net value added by the Company

 

103,403

 

 

 

116,402

 

 

 

4,112,880

 

 

 

4,349,149

 

 

Value added received in transfer

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Share of profit (loss) of subsidiaries, joint ventures, and associates

12

503,890

 

 

 

503,960

 

 

 

(22,023)

 

 

 

(30,515)

 

 

Rents and royalties

26

-

 

 

 

-

 

 

 

82,516

 

 

 

82,147

 

 

Financial income

30

55,800

 

 

 

33,850

 

 

 

339,102

 

 

 

306,813

 

 

 

 

559,690

 

 

 

537,810

 

 

 

399,595

 

 

 

358,445

 

 

Total value added available for distribution

 

663,093

 

 

 

654,212

 

 

 

4,512,475

 

 

 

4,707,594

 

 

Distribution of value added

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Labor and benefits

 

103,372

 

16

 

93,657

 

15

 

1,595,102

 

35

 

1,432,270

 

30

Taxes, fees, and contributions

 

23,241

 

4

 

6,913

 

1

 

1,630,824

 

36

 

2,195,537

 

47

Financial expenses and rents

 

66,194

 

10

 

86,284

 

13

 

793,105

 

18

 

583,592

 

12

Dividends

 

218,074

 

33

 

-

 

-

 

228,489

 

5

 

-

 

Retained earnings

 

252,212

 

37

 

467,358

 

71

 

264,955

 

6

 

496,195

 

11

Value added distributed

 

663,093

 

100

 

654,212

 

100

 

4,512,475

 

100

 

4,707,594

 

100

 

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


13


Ultrapar Participações S.A. and Subsidiaries

 

 

(In thousands of Brazilian Reais, unless otherwise stated)

1. Operations

 

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

 

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

 

a. Clarifications on the impacts of COVID-19

 

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

 

Since the beginning of the coronavirus pandemic, the Company and its subsidiaries acted in numerous initiatives to ensure the safety and security of its employees and the stability and continuity of its operations and partners, the financial solidity of the Company. All the activities of the companies controlled by the Company are classified as essential in the context of the measures adopted to face the pandemic.

 

The Company and its subsidiaries quickly adopted the work at home (expressed by home office) for the administrative public, with all the necessary support for the operational continuity. In addition to basic safety concerns with employees, companies implemented several initiatives aimed at welfare, such as virtual meetings, psychological support and concern for ergonomics, following the principle of valuing people.

 

The emergency measures and speed in answer to the first effects of the crisis, as well as initiatives to support the supply chain, were effective to keep the activities of the subsidiaries in operation, ensuring the delivery of essential services to the population and preserving the health and security of employees and partners.

 

Uncertainty remains uncertain to what extent the financial information, after September 30, 2021, may be affected by the commercial, operational and financial impacts of the pandemic, because it will depend on its duration and the impacts on economic activities, as well as government, business in response to the crisis. In this context, some financial risk assessments, projections and impairment tests, in connection with the preparation of these financial statements, may be impacted by the pandemic, and may adversely affect the financial position of the Company and its subsidiaries.

 

14


Ultrapar Participações S.A. and Subsidiaries

 

Notes to the Parent’s Separate and Consolidated Interim Financial Information

 

(In thousands of Brazilian Reais, unless otherwise stated)


Operational impacts

 

The implemented measures of social isolation, restrictions on the movement of people and to the operation of certain businesses due to COVID-19 pandemic affected economic activity in Brazil in the last two years, however, with the advance of vaccination the negative impacts have been reduced in the last months. No significant effects were observed on the operations of the Company and its subsidiaries in the third quarter of 2021.

 

Main risks and associated measures

 

Credit risk - The actions taken by the Company and its subsidiaries throughout 2020 and 2021 softened the impacts of the pandemic on the financial condition and its customers and, consequently, mitigated its potential effects on default rates, that are at lower level than in 2020. The effects of expected losses on doubtful accounts of quarter ended September 30, 2021 are disclosed in Notes 5 and 33.d.

 

Risk of realization of deferred tax assets - the Company and its subsidiaries annually realize technical feasibility study of the constitution and realization of deferred tax credits, considering the current projections approved by the Board of Directors for each business segment and did not identify the need for write-offs for the period ended on September 30, 2021.

 

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

 

Liquidity risk The Company and its subsidiaries presented variations in their net debt position compatible with the results and the seasonality of their businesses.

 

The management of the Company and its subsidiaries continue maintaining discipline in control of costs and expenses to preserve cash in all business and selectivity in the allocation of capital without compromising sustainable business growth.

 

b. Clarifications on the cyber incident

 

According communication sent to the market on January 12, 2021 and January 25, 2021, the Company suffered on January 11, 2021 a cyber incident of type ransomware in its information technology environment.

 

As a precautionary measure, the Company interrupted its systems, affecting for a short period of time, the operations of its subsidiaries. Immediately, all security and control measures were adopted to remedy the situation and as of January 14, 2021 the operational systems of the Company and its subsidiaries began to be gradually restored, with caution and security, according with the priority and relevance of each affected process. Since January 25, 2021, as communicated to the market on that date, all the critical information systems of the Company and its subsidiaries are in full operation.

 

The Company had a specific insurance policy for cyber incidents, which has already been duly activated, being that such claim is under regulation.

 


Ultrapar Participações S.A. and Subsidiaries

 

Notes to the Parent’s Separate and Consolidated Interim Financial Information

 

(In thousands of Brazilian Reais, unless otherwise stated)

2. Presentation of interim financial information and summary of significant accounting policies

 

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

 

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

 

The presentation currency of the Company’s interim financial information is the Brazilian Real, which is the Company’s functional currency.

 

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

 

a. Recognition of revenue

 

Revenue of sales and services rendered is measured at the value of the consideration that the Company's subsidiaries expect to be entitled to, net of sales returns, discounts, amortization of contractual assets with customers and other deductions, if applicable, being recognized as the entity fulfills its performance obligation and freight mode of delivery. 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. At Ultracargo, the revenue provided from storage services is recognized as services are performed. At Abastece aí, the revenue provided from storage services of digital payments is recognized as services are performed. The breakdowns of revenues from sales and services are shown in Notes 26 and 32.

 

Amortization of contractual assets with customers for the exclusive rights in 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 is recognized in profit or loss as the entity fulfills each performance obligation throughout the terms of the agreements with the franchisees. For more information, see Note 23.a.

 

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


16


Ultrapar Participações S.A. and Subsidiaries

 

Notes to the Parent’s Separate and Consolidated Interim Financial Information

 

(In thousands of Brazilian Reais, unless otherwise stated)


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

 

Exchange variations and the results of derivative finance 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$ 48,282 for the nine-month period ended September 30, 2021 (R$ 44,829 for the nine-month period ended September 30, 2020).

 

b. Cash and cash equivalents

 

Includes cash, banks deposits, and short-term up to 90 days of maturity, 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 more information on cash and cash equivalents of the Company and its subsidiaries, see Note 4.a.

 

c. Financial assets  

 

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

 

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

 

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

 

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

 


Ultrapar Participações S.A. and Subsidiaries

 

Notes to the Parent’s Separate and Consolidated Interim Financial Information

 

(In thousands of Brazilian Reais, unless otherwise stated)


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

 

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

 

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

 

  • Hedge accounting – hedge of net investments in foreign operation: financial instruments used to hedge exposure on net investments in foreign subsidiaries due to the fact that the local functional currency is different from the functional currency of the Company. The portion of the gain or loss on the hedging instrument that is determined to be effective, referring to the exchange rate effect, is recognized directly in equity in accumulated other comprehensive income as cumulative translation adjustments, while the ineffective portion and the operating costs are recognized 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 more information on financial instruments, see Note 33.

 


Ultrapar Participações S.A. and Subsidiaries

 

Notes to the Parent’s Separate and Consolidated Interim Financial Information

 

(In thousands of Brazilian Reais, unless otherwise stated)

 

d. Trade receivables and reseller financing

 

Trade receivables are recognized at the amount invoiced to the counterparty that the Company subsidiaries are entitled (see Notes 5.a and 33.d.3). The expected losses on doubtful accounts consider the expected losses for the next 12 months take into account 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 loss on realization of trade receivables.

 

Reseller financing is provided at subsidized rate for renovation and upgrading of service stations, purchase of products and development of the automotive fuels and lubricants distribution market (see Notes 5.b and 33.d.3). The terms of reseller financing range between 12 and 60 months, with an average term of 40 months. The minimum and maximum subsisted interest rates are 0% per month and 1% per month respectively. These financing are remeasured at a market rate for working capital loans and the remeasurement adjustment between the market rate and the rate subsidized is recognized as a reduction to the reseller’s revenue at the beginning of the contract. Throughout the contract, the interest appropriated by the market rate is recognized to the financial result.

 

e. Inventories

 

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

 

f. Contractual assets with customers – exclusive rights

 

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

 

 

Ultrapar Participações S.A. and Subsidiaries

 

Notes to the Parent’s Separate and Consolidated Interim Financial Information

 

(In thousands of Brazilian Reais, unless otherwise stated)

 

g. Investments

 

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

 

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

 

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

 

h. Right-of-use assets and leases payable

 

The Company and its subsidiaries recognized in the financial position, a right-of-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-of-use assets is recognized in statement of profit or loss over the lease contract term. When the right-of-use asset is used in the construction of the property, plant, and equipment (“PP&E”), its amortization is capitalized until the asset under construction is completed. The liability is increased for interest and decreased by lease payments made. The interests are recognized in the statement of profit or loss using the effective interest rate method. The remeasurement of assets and liabilities based on the contractual index is recognized in the financial position, not having an effect in the result. In case of cancellation of the contract, the assets and respective liabilities are written off to the result, considering, if it is the case, any penalties provided in contractual clauses. The Company and its subsidiaries have no intention in purchasing the underlying asset. The Company and its subsidiaries periodically review the existence of an indication that the right-of-use assets may be impaired (see Note 2.u).

 

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

 

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

 

 

Ultrapar Participações S.A. and Subsidiaries

 

Notes to the Parent’s Separate and Consolidated Interim Financial Information

 

(In thousands of Brazilian Reais, unless otherwise stated)

 

i. Property, plant, and equipment

 

PP&E is recognized at acquisition or construction cost, including capitalization of right-of-use assets amortization and 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.

 

Leases hold 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, and are recognized 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 identifiable 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 softwares, 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 decarbonization credits (CBIOS) acquired are recorded at historical cost in intangible assets, retired in the year to fulfillment the individual target set by the National Agency of Petroleum, Natural Gas and Biofuels (“ANP”) and are not amortized. These assets are used to settle of the annual decarbonization obligation adopted by Brazilian National Biofuels Policy (“RenovaBio”), implemented by Law No. 13,576/2017, with additional regulations established by Decree No. 9,888/2019 and Ordinance No. 419 of November 20, 2019 issued by the Brazilian Ministry of Mines and Energy.

 

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

 

k. Other assets

 

Other assets are stated at the lower of cost and realizable value, including, if applicable, interest earned, monetary changes and changes in exchange rates incurred, less the provisions for losses and, if applicable, adjusted to present value.

 


Ultrapar Participações S.A. and Subsidiaries

 

Notes to the Parent’s Separate and Consolidated Interim Financial Information

 

(In thousands of Brazilian Reais, unless otherwise stated)

 

l. Financial liabilities

 

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

 

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

 

m. Income and social contribution taxes on income

 

Current and deferred income tax (“IRPJ”) and social contribution on net income tax (“CSLL”) are calculated based on their current rates. For the calculation of current IRPJ, the value of tax incentives is also considered. At the end of the fiscal year the portion of the profit corresponding to these investment grants is allocated to the constitution of a tax incentive reserve in subsidiaries shareholders' equity, and is excluded from the dividend calculation base and subsequently capitalized. Taxes are recognized based on the rates of IRPJ and CSLL provided for by the laws enacted on the last day of the interim financial information. The current rates in Brazil are 25% for IRPJ and 9% for CSLL. For more 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 asset. The amounts recognized as a liability accrue inflation effect using the Amplified Consumer Price Index (“IPCA”) until the tank is removed (see Note 21). The estimated removal cost is reviewed and updated annually or when there is significant change in its amount and change in the estimated costs are recognized in statements of profit or loss when they become known.

 

o. Provisions for tax, civil, and labor risks

 

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

 


Ultrapar Participações S.A. and Subsidiaries

 

Notes to the Parent’s Separate and Consolidated Interim Financial Information

 

(In thousands of Brazilian Reais, unless otherwise stated)


p. Post-employment benefits

 

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

 

q. Other liabilities

 

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

 

r. Foreign currency transactions

 

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

 

s. Basis for translation of interim financial information of foreign subsidiaries

 

s.1 Subsidiaries with administrative autonomy

 

Assets and liabilities of the foreign subsidiaries denominated in currencies other than Brazilian Real which have administrative autonomy are translated using the exchange rate at the date of the interim financial information. Revenues and expenses are translated using the average exchange rate of each year and equity is translated at the historical exchange rate of each transaction affecting equity. Gains and losses resulting from changes in these foreign investments are directly recognized in equity in the “cumulative translation adjustments and will be recognized in profit or loss if and when these investments are disposed of. The balance in cumulative translation adjustments on September 30, 2021 was a gain of R$ 263,833 (gain of R$ 231,596 on December 31, 2020), see Note 25.g.2.

 

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

 

Subsidiary

Functional currency

Location

Oxiteno México S.A. de C.V.

Mexican Peso

Mexico

   Oxiteno Servicios Corporativos S.A. de C.V.

Mexican Peso

Mexico

   Oxiteno Servicios Industriales S.A. de C.V.

Mexican Peso

Mexico

   Oxiteno USA LLC

U.S. Dollar

United States

Oxiteno Uruguay S.A. (i)

U.S. Dollar

Uruguay

 

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


23


Ultrapar Participações S.A. and Subsidiaries

 

Notes to the Parent’s Separate and Consolidated Interim Financial Information

 

(In thousands of Brazilian Reais, unless otherwise stated)


s.2 Subsidiaries without self-administrative autonomy

 

Assets and liabilities of the other foreign subsidiaries, which do not have administrative autonomy, are considered an extension of the activities of their parent company and are translated using the exchange rate at the date of the financial statements. Gains and losses resulting from changes in these foreign investments are directly recognized as financial result. The gain recognized in income for the nine-month period ended September 30, 2021 amounted to R$ 5,865 (gain of R$ 40,747 for the nine-month period ended September 30, 2020).

 

t. Use of estimates, assumptions and judgments

 

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

 

t.1 Judgments

 

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

 

t.2 Uncertainties related to the assumptions and estimates

 

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

 

 

Ultrapar Participações S.A. and Subsidiaries

 

Notes to the Parent’s Separate and Consolidated Interim Financial Information

 

(In thousands of Brazilian Reais, unless otherwise stated)


u. Impairment of assets

 

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

 

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

 

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

 

On September 30, 2021, the Company updated the calculation made of the impairment of assets realized on June 30, 2021, for the subsidiary Imifarma Produtos Farmacêuticos e Cosméticos S.A. (“Extrafarma”) in the amounts of R$ 394,675 and deferred income and social contribution taxes effects of R$ 87,917, resulting in a net loss of R$ 306,758 (net loss of R$ 308,668 on June 30, 2021. See Note 3.c.1).

 

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 acquired company is measured based on its interest in net assets identified in the acquired company. Goodwill is measured as the excess of the consideration transferred and to be transferred over the fair value of net assets acquired (identifiable assets and liabilities assumed, net). After the initial recognition, goodwill is measured at cost less any accumulated impairment losses. For impairment testing purposes, goodwill is allocated to the Company’s operating segments. When the cost of the acquisition is lower than the fair value of net assets acquired, a gain is recognized directly in the statement of profit or loss. Costs related to the acquisitions are recorded in the statement of profit or loss when incurred. For the three-month period ended on September 30, 2021 there are not business combination.


25


Ultrapar Participações S.A. and Subsidiaries

 

Notes to the Parent’s Separate and Consolidated Interim Financial Information

 

(In thousands of Brazilian Reais, unless otherwise stated)


w. Statements of value added

 

The statements of value added (“DVA”) are presented as an integral part of the interim financial information as applicable to publicly traded companies in Brazil, according to Law 11,638/07 and as supplemental information for the International Financial Reporting Standards (“IFRS”), which does not require the presentation of DVA.

 

x. Statements of cash flows indirect method  

 

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

 

y. Adoption of the pronouncements issued by CPC and IASB

 

There are not standards, amendments and interpretations to IFRS issued by the IASB which are effective and could have impact in these interim financial information to September 30, 2021 that have not been adopted by the Company.

 

Some of the Company's subsidiaries have debts and derivative instruments indexed to LIBOR (see Notes 16.c.1, 16.d and 33.g). In order to be prepared for the transition of the IBORs, the Company is monitoring the pronouncements of the authorities, as well as the measures that have been adopted, aiming at the adaptation of the various financial instruments to the new benchmarks. Currently there are no impacts of the change in LIBOR on the Company's operations.

 

z. Authorization for issuance of the financial statements

 

These interim financial information were authorized for issuance by the Board of Directors on November 3, 2021.

 

3. Principles of consolidation and investments in subsidiaries

 

a. Principles of consolidation

 

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

 

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

 

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

 

Ultrapar Participações S.A. and Subsidiaries

 

Notes to the Parent’s Separate and Consolidated Interim Financial Information

 

(In thousands of Brazilian Reais, unless otherwise stated)


b. Investments in subsidiaries

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

 

 

 

 

% interest in the share

 

 

 

 

09/30/2021

 

12/31/2020

 

 

 

 

Control

 

Control

 

Location

Segment

 

Direct

 

Indirect

 

Direct

 

Indirect

Ipiranga Produtos de Petróleo S.A.

Brazil

Ipiranga

 

100

 

-

 

100

 

-

am/pm Comestíveis Ltda.

Brazil

Ipiranga

 

-

 

100

 

-

 

100

Icorban – Correspondente Bancário Ltda.

Brazil

Ipiranga

 

-

 

100

 

-

 

100

Ipiranga Trading Limited

British Virgin Islands

Ipiranga

 

-

 

100

 

-

 

100

Tropical Transportes Ipiranga Ltda.

Brazil

Ipiranga

 

-

 

100

 

-

 

100

Ipiranga Imobiliária Ltda.

Brazil

Ipiranga

 

-

 

100

 

-

 

100

Ipiranga Logística Ltda.

Brazil

Ipiranga

 

-

 

100

 

-

 

100

Oil Trading Importadora e Exportadora Ltda.

Brazil

Ipiranga

 

-

 

100

 

-

 

100

Iconic Lubrificantes S.A.

Brazil

Ipiranga

 

-

 

56

 

-

 

56

Integra Frotas Ltda.

Brazil

Ipiranga

 

-

 

100

 

-

 

100

Companhia Ultragaz S.A.

Brazil

Ultragaz

 

-

 

99

 

-

 

99

Ultragaz Comercial Ltda.

Brazil

Ultragaz

 

-

 

100

 

-

 

100

Nova Paraná Distribuidora de Gás Ltda. (1)

Brazil

Ultragaz

 

-

 

100

 

-

 

100

Utingás Armazenadora S.A. (2)

Brazil

Ultragaz

 

-

 

57

 

-

 

57

Bahiana Distribuidora de Gás Ltda.

Brazil

Ultragaz

 

-

 

100

 

-

 

100

LPG International Inc.

Cayman Islands

Ultragaz

 

-

 

100

 

-

 

100

Imaven Imóveis Ltda.

Brazil

Others

 

-

 

100

 

-

 

100

Imifarma Produtos Farmacêuticos e Cosméticos S.A. (3)

Brazil

Extrafarma

 

-

 

100

 

-

 

100

UVC Investimentos Ltda. (4)

Brazil

Others

 

-

 

99

 

-

 

99

Centro de Conveniências Millennium Ltda. and subsidiaries (5)

Brazil

Ipiranga

 

100

 

-

 

100

 

-

Oxiteno S.A. Indústria e Comércio (6)

Brazil

Oxiteno

 

100

 

-

 

100

 

-

Oxiteno Argentina Sociedad de Responsabilidad Ltda.

Argentina

Oxiteno

 

-

 

100

 

-

 

100

Oleoquímica Indústria e Comércio de Produtos Químicos Ltda.

Brazil

Oxiteno

 

-

 

100

 

-

 

100

Oxiteno Uruguay S.A.

Uruguay

Oxiteno

 

-

 

100

 

-

 

100

Oxiteno México S.A. de C.V.

Mexico

Oxiteno

 

-

 

100

 

-

 

100

Oxiteno Servicios Corporativos S.A. de C.V.

Mexico

Oxiteno

 

-

 

100

 

-

 

100

Oxiteno Servicios Industriales S.A. de C.V.

Mexico

Oxiteno

 

-

 

100

 

-

 

100

Oxiteno USA LLC

United States

Oxiteno

 

-

 

100

 

-

 

100

Global Petroleum Products Trading Corp.

Virgin Islands

Oxiteno

 

-

 

100

 

-

 

100

Oxiteno Europe SPRL

Belgium

Oxiteno

 

-

 

100

 

-

 

100

Oxiteno Colombia S.A.S.

Colombia

Oxiteno

 

-

 

100

 

-

 

100

Oxiteno Shanghai LTD.

China

Oxiteno

 

-

 

100

 

-

 

100

Empresa Carioca de Produtos Químicos S.A.

Brazil

Oxiteno

 

-

 

100

 

-

 

100

Ultracargo – Operações Logísticas e Participações Ltda.

Brazil

Ultracargo

 

100

 

-

 

100

 

-

Ultracargo Logística S.A. (7)

Brazil

Ultracargo

 

-

 

99

 

-

 

99

TEAS – Terminal Exportador de Álcool de Santos Ltda.

Brazil

Ultracargo

 

-

 

100

 

-

 

100

Tequimar Vila do Conde Logística Portuária S.A.

Brazil

Ultracargo

 

-

 

100

 

-

 

100

Ultrapar International S.A.

Luxembourg

Others

 

100

 

-

 

100

 

-

SERMA – Ass. dos usuários equip. proc. de dados

Brazil

Others

 

-

 

100

 

-

 

100

UVC – Fundo de investimento em participações multiestratégia investimento no exterior (8)

Brazil

Others

 

100

 

-

 

100

 

-

Eaí Clube Automobilista S.A. (9)

Brazil

Abastece aí

 

100

 

-

 

100

 

-

The percentages in the table above are rounded.

(1) Non-operating company in closing phase.
(2) In October 2020 there was a change in the share capital of the company Utingás, which became controlled by Companhia Ultragaz S.A. (“Cia Ultragaz”).
(3) On May 18, 2021 the Company announced the signing of an agreement for the sale of all shares of Extrafarma to Empreendimentos Pague Menos S.A. (“Pague Menos”). For more details, see note 3.c.1.


Ultrapar Participações S.A. and Subsidiaries

 

Notes to the Parent’s Separate and Consolidated Interim Financial Information

 

(In thousands of Brazilian Reais, unless otherwise stated)


(4) Subsidiary created in January 2020 to provide valuation, business management and financial advisory services to UVC - Fundo de investimento em participações multiestratégia investimento no exterior (“UVC – Fundo de investimento”). In September 2020 the Company’s name was changed to UVC Investimentos Ltda (“UVC Investimentos”).
(5) In May 2020 there was a change in the participation of the capital of the subsidiary Millennium which became a direct subsidiary of the Company.
(6) On August 16, 2021, the Company announced the signature of agreement for the sale of its interest in Oxiteno S.A. – Indústria e Comércio (“Oxiteno S.A.”) to Indorama Ventures PLC (“Indorama”). For more details, see Note 3.c.3.
(7) In April 2021 the name of subsidiary Terminal Químico de Aratu S.A – Tequimar was changed to Ultracargo Logística S.A. (“Ultracargo Logística”).
(8 Fund constituted on January 2020, the UVC has the purpose to invest in promising companies that can leverage or complement the Company's business, besides to supporting the mapping and sharing of startups and new technologies.
(9) Subsidiary created in July 2020, focused on digital payments and electronic retail, uniting the abastece aí app and the Km de Vantagens program.


c. Corporate reorganizations

 

Consistent with what the Company has been informing its shareholders and to the capital markets, the Company is in the process of review its business portfolio, seeking greater complementarity and synergies, with investments focused on existing opportunities in the energy and infrastructure segments in Brazil, in which has strong operational scale and structural competitive advantages, allowing greater efficiency and value generation potential. The management focus and the reduction of the financial leverage are additional benefits of such process for the Company. In the context, the Company announced the signatures of contracts described below:

 

c.1 Extrafarma share sale and purchase agreement and other agreements

 

On May 18, 2021 the Company announced the signing of a share purchase agreement for the sale of all shares of Extrafarma to Pague Menos. The total sale price (EV enterprise value) is R$ 700 million, subject to adjustments due mainly to changes in working capital and Extrafarma's net debt position on the closing date of the transaction.

 

The payment of the transaction will be in three installments: 50% on the closing date and 25% on each the first and the second anniversary of the closing date. A guarantee will be provided by a shareholder of the Pague Menos for the last two installments. The completion of this transaction is subject to usual conditions precedent in such deals, including approval by the Brazilian antitrust authority and by the general shareholders meeting of Pague Menos, pursuant to the terms of article 256 of the Brazilian Corporate Law, which was already held by the purchasing company. Furthermore, preemptive rights were granted to Company's shareholders who wished to acquire Extrafarma's shares, proportionally to their respective participation in the Company's share capital and for the same price per share to be paid by Pague Menos, pursuant to article 253 of the Brazilian Corporate Law. The shareholders of the Company that exercised such right will become direct shareholders of Extrafarma after closing of the transaction. The company realized a general shareholders meeting on June 25, 2021 in which was formalized the offering of the aforementioned preemptive rights, detailing the procedures for its exercise, as applicable. The exercise period ended on July 29, 2021 and the total exercised was less than 1% of the Company's capital.

 

Extrafarma and Pague Menos will maintain their regular course of business, on an independent manner, until the closing date of the transaction. The transaction will be highly probable, for purposes of classification as "assets and liabilities held for sale", after the approvals by the Brazilian competition authorities, moment in which uncertainties will be eliminated for the corporate reorganization and separation of assets and liabilities that will be sold.

 

 

Ultrapar Participações S.A. and Subsidiaries

 

Notes to the Parent’s Separate and Consolidated Interim Financial Information

 

(In thousands of Brazilian Reais, unless otherwise stated)

 

On September 30, 2021, the Company realized the update of the calculation of impairment test of assets taking into account the amount of transaction and recognized a reduction in the amount of the subsidiary's assets in the amount of R$ 306,758 (R$ 308,668 on June 30, 2021), net of the effects of deferred income and social contribution taxes, as allocated below:

 

 

Note

 

Amount

     Goodwill

15

 

68,273

     Intangibles assets arising from business combination

15

 

76,571

     Property, plant, and equipment

14

 

62,442

     Right-of-use assets

13

 

11,980

     Taxes to recover

7.a.1

 

175,409

Impairment

 

 

394,675

     Deferred income and social contribution taxes

9.a, b and d

 

(87,917)

Net reduction

 

 

306,758

 

c.2 ConectCar share sale and purchase agreement

 

On June 25, 2021 the Company announced the signature of an agreement for the sale of its equity interest in ConectCar Soluções de Mobilidade Eletrônica S.A. (“ConectCar”), through its subsidiary Ipiranga Produtos de Petróleo S.A. (“IPP”), to Porto Seguro S.A., through its subsidiary Portoseg S.A. – Crédito, Financiamento e Investimento.

 

ConectCar was created in 2012 and operates in the electronic toll and parking payment segment. On September 30, 2021 it was currently controlled by IPP and Redecard S.A., that belongs to Itaú Unibanco Holding S.A., both with equal share capital of 50%. In addition to contributing to a more complementary and synergistic business portfolio, with additional benefits of greater management focus and Company profitability,  the sale of ConectCar contributes to the concentration of efforts and investments in Abastece Aí, company fully controlled by the Company that combines the abastece aí app and the Km de Vantagens loyalty program in a payment and digital relationship platform focused on the driver's ecosystem.

 

The sale price of the 50% interest in subsidiary IPP is R$165 million, subject to adjustments mainly for working capital variations and ConectCar's net debt position on the closing date of the transaction. On October 1, 2021, the Company, announced the completion of the sale of its interest in ConectCar through the subsidiary IPP. For more information, see Note 35.

 

ConectCar's interim financial information are presented in Note 12.b, with said investment being classified as “available for sale”.


 

Ultrapar Participações S.A. and Subsidiaries

 

Notes to the Parent’s Separate and Consolidated Interim Financial Information

 

(In thousands of Brazilian Reais, unless otherwise stated)


c.3 Oxiteno S.A. share purchase and sale agreement

 

On August 16, 2021, the Company announced the signature of an agreement for the sale of its interest in Oxiteno S.A. to Indorama group. The total sale value (EV – enterprise value) was US$ 1,300 million, of which US$ 1,150 million will be paid at the closing of the transaction, subject to usual adjustments, such as changes in working capital and net debt position, and US$ 150 million will be paid on the second anniversary after closing.

 

Oxiteno S.A. is controlled by the Company, which holds 100% interest. The sale of Oxiteno S.A. is aligned with the portfolio review that Ultrapar has been informing its shareholders and the capital market.

 

According to the Notice to Shareholders issued on September 30, 2021 by the Company, Ultrapar’s shareholders will have a period of 30 (thirty) days (from October 5, 2021 inclusive, to November 3, 2021, inclusive) to exercise their Rights of First Refusal to acquire shares of Oxiteno S.A. The effective receipt of shares issued and sold object of the exercise of Rights of First Refusal is subject to the conclusion of the transaction and will be realized on a date to be timely disclosed by the Company through a Notice to Shareholders. Oxiteno is a privately-held company and does not have marketable securities in the securities market (stock exchange or over-the-counter market). As a result, Oxiteno's shares have limited liquidity, and shall remain as such upon completion of the transaction.

 

Oxiteno S.A. will maintain its regular and independent course of business until the closing of the transaction. The transaction is subject to prior approval by the competition authorities of Brazil, the United States, Mexico and Colombia, in addition to the fulfillment of other conditions precedent to the business, as set out in the sales contract. On September 28, 2021, the transaction was approved by the Superintendencia de Industria y Comercio of Colombia and, on October 15, 2021, by the Federal Trade Commission USA ("FTC"), both without restrictions. Approvals by the Comisión Federal de Competencia Económica do México (“COFECE”) and the Administrative Council for Economic Defense (“CADE”) remain pending.

 

The transaction will be highly probable for purposes of classification as "assets and liabilities held for sale" only after obtaining the pending approvals from the Brazilian and Mexican competition authorities, starting after said approvals the effective corporate reorganization and separation of assets and liabilities to be sold.

Ultrapar Participações S.A. and Subsidiaries

 

Notes to the Parent’s Separate and Consolidated Interim Financial Information

 

(In thousands of Brazilian Reais, unless otherwise stated)

4. Cash and cash equivalents, financial investments and hedge derivative financial instruments

 

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

 

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

 

Cash, cash equivalents and financial investments (consolidated) amounted to R$ 6,588,435 as of September 30, 2021 (R$ 8,672,160 as of December 31, 2020) are as follows:

 

a. Cash and cash equivalents

 

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

 

 

Parent

 

Consolidated

 

09/30/2021

 

12/31/2020

 

09/30/2021

 

12/31/2020

Cash and bank deposits

 

 

 

 

 

 

 

In local currency

4,697

 

9,419

 

230,305

 

285,306

In foreign currency

-

 

-

 

125,280

 

119,775

Financial investments considered cash equivalents

 

 

 

 

 

 

 

In local currency

 

 

 

 

 

 

 

Fixed-income securities

-

 

939,230

 

2,406,122

 

2,241,852

In foreign currency

 

 

 

 

 

 

 

Fixed-income securities

-

 

-

 

64,593

 

14,561

Total cash and cash equivalents

4,697

 

948,649

 

2,826,300

 

2,661,494

 

 


Ultrapar Participações S.A. and Subsidiaries

 

Notes to the Parent’s Separate and Consolidated Interim Financial Information

 

(In thousands of Brazilian Reais, unless otherwise stated)

 

b. Financial investments and currency and interest rate hedging instruments

 

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

 

 

Parent

 

Consolidated

 

09/30/2021

 

12/31/2020

 

09/30/2021

 

12/31/2020

Financial investments

 

 

 

 

 

 

 

In local currency

 

 

 

 

 

 

 

Fixed-income securities and funds

139,363

 

88,100

 

1,261,537

 

3,749,852

In foreign currency

 

 

 

 

 

 

 

Fixed-income securities and funds

-

 

-

 

1,531,383

 

1,278,940

Currency and interest rate hedging instruments (a)

-

 

-

 

969,215

 

981,874

Total financial investments

139,363

 

88,100

 

3,762,135

 

6,010,666

Current

139,363

 

88,100

 

2,914,869

 

5,033,258

Non-current

-

 

-

 

847,266

 

977,408

 

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

5. Trade receivables and reseller financing (Consolidated)

 

a. Trade receivables

 

The composition of trade receivables is as follows:

 

 

 

09/30/2021

 

12/31/2020

Domestic customers

 

 4,068,887

 

 3,443,641

Domestic customers – related parties (see Note 8.a.2)

 

 238

 

 151

Foreign customers

 

 476,828

 

 326,442

Foreign customers – related parties (see Note 8.a.2)

 

 2,853

 

 2,984

(-) Expected losses on doubtful accounts

 

(364,325)

 

(382,096)

 

 

 4,184,481

 

 3,391,122

Current

 

 4,118,972

 

 3,318,927

Non-current

 

 65,509

 

 72,195

 

 

 

Ultrapar Participações S.A. and Subsidiaries

 

Notes to the Parent’s Separate and Consolidated Interim Financial Information

 

(In thousands of Brazilian Reais, unless otherwise stated)


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

 

 

 

 

 

Past due

 

Total

 

Current

less than 30 days

31-60 days

61-90 days

91-180 days

more than 180 days

09/30/2021

 4,548,806

 

 3,793,510

 123,552

 34,125

 25,589

 29,643

 542,387

12/31/2020

 3,773,218

 

 2,963,163

 124,606

 27,970

 21,389

 47,169

 588,921

 

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

 

 

 

 

 

Past due

 

Total

 

Current

less than 30 days

31-60 days

61-90 days

91-180 days

more than 180 days

09/30/2021

 364,325

 

 17,418

 1,122

 2,730

 2,563

 10,923

 329,569

12/31/2020

 382,096

 

 21,219

 2,154

 1,751

 2,233

 13,378

 341,361

 

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

 

Balance as of December 31, 2020

 

 382,096

Additions

 

 111,890

Reversals

 

(120,216)

Write-offs

 

(9,445)

Balance as of September 30, 2021

 

 364,325

 

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

 

 

Ultrapar Participações S.A. and Subsidiaries

 

Notes to the Parent’s Separate and Consolidated Interim Financial Information

 

(In thousands of Brazilian Reais, unless otherwise stated)


b. Reseller financing

 

The composition of reseller financing is as follows:

 

 

 

09/30/2021

 

12/31/2020

Reseller financing – Ipiranga

 

 1,126,576

 

 1,165,395

(-) Expected losses on doubtful accounts

 

(205,228)

 

(197,011)

 

 

921,348

 

968,384

Current

 

505,419

 

549,129

Non-current

 

415,929

 

419,255

 

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

 

 

 

 

 

Past due

 

Total

 

Current

less than 30 days

31-60 days

61-90 days

91-180 days

more than 180 days

09/30/2021

1,126,576

 

735,874

6,826

15,211

6,037

27,399

335,229

12/31/2020

1,165,395

 

787,904

10,230

15,237

21,200

28,989

301,835

 

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

 

 

 

 

 

Past due

 

Total

 

Current

less than 30 days

31-60 days

61-90 days

91-180 days

more than 180 days

09/30/2021

205,228

 

16,147

988

4,854

967

12,182

170,090

12/31/2020

197,011

 

22,872

785

1,812

2,397

14,684

154,461

 

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

 

Balance as of December 31, 2020

 

 197,011

Additions

 

 63,586

Reversals

 

(53,187)

Write-offs

 

(2,182)

Balance as of September 30, 2021

 

 205,228

 

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

 

 

Ultrapar Participações S.A. and Subsidiaries

 

Notes to the Parent’s Separate and Consolidated Interim Financial Information

 

(In thousands of Brazilian Reais, unless otherwise stated)

6. Inventories (Consolidated)

 

 The composition of inventories is as follows:

 

 

09/30/2021

 

12/31/2020

 

Cost

 

Provision for losses

 

Net balance

 

Cost

 

Provision for losses

 

Net balance

Fuels, lubricants and greases

2,789,441

 

(3,999)

 

2,785,442

 

1,682,841

 

(5,344)

 

1,677,497

Finished goods

872,407

 

(17,641)

 

854,766

 

646,180

 

(22,281)

 

623,899

Work in process

1,901

 

-

 

1,901

 

1,450

 

-

 

1,450

Raw materials

798,294

 

(1,891)

 

796,403

 

568,185

 

(1,827)

 

566,358

Liquefied petroleum gas (LPG)

137,876

 

(5,761)

 

132,115

 

110,767

 

(5,761)

 

105,006

Consumable materials and other items for resale

163,305

 

(3,586)

 

159,719

 

129,559

 

(2,598)

 

126,961

Pharmaceutical, hygiene, and beauty products

525,999

 

(2,073)

 

523,926

 

521,689

 

(2,611)

 

519,078

Purchase for future delivery (1)

294,905

 

(463)

 

294,442

 

198,986

 

(464)

 

198,522

Properties for resale

25,617

 

(107)

 

25,510

 

27,532

 

(107)

 

27,425

 

5,609,745

 

(35,521)

 

5,574,224

 

3,887,189

 

(40,993)

 

3,846,196

 

(1) Refers substantially to ethanol, biodiesel and advances for fuel acquisition.

 

Movements in the provision for losses are as follows:

 

Balance as of December 31, 2020

40,993

Reversal to net realizable value adjustment

(465)

Reversal of obsolescence and other losses

(5,007)

Balance as of September 30, 2021

35,521

 

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

 

 

09/30/2021

 

12/31/2020

Net realizable value adjustment

17,023

 

17,488

Obsolescence and other losses

18,498

 

23,505

Total

35,521

 

40,993

 

 

Ultrapar Participações S.A. and Subsidiaries

 

Notes to the Parent’s Separate and Consolidated Interim Financial Information

 

(In thousands of Brazilian Reais, unless otherwise stated)

7. Taxes to recover

 

a. Recoverable taxes (Consolidated)

 

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

 

 

09/30/2021

 

12/31/2020

ICMS (a.1)

 1,188,058

 

 1,129,325

PIS and COFINS (a.2) (a.3)

 1,397,638

 

 1,297,029

Value-added tax (IVA) of foreign subsidiaries

 28,727

 

 35,600

Others

 43,088

 

 57,704

Total

 2,657,511

 

 2,519,658

Current

 1,176,707

 

 1,044,850

Non-current

 1,480,804

 

 1,474,808

 

a.1 The recoverable ICMS net of provision for losses is substantially related to the following subsidiaries and operations:


(i) The subsidiaries Oxiteno S.A., Empresa Carioca de Produtos Químicos S.A. (“EMCA”) and Oleoquímica Indústria e Comércio de Produtos Químicos Ltda. (“Oleoquímica”) accumulated credits in the amount of R$ 292,151 (R$ 195,037 as of December 31, 2020) once predominantly carried out export operations, interstate outflow or deferred ICMS of products purchased within the State of Bahia;


(ii)  The subsidiaries IPP, Bahiana Distribuidora de Gás Ltda. (“Bahiana”), Cia. Ultragaz, AMPM and Iconic Lubrificantes S.A. (“Iconic”) have credits in the amount of R$ 873,127 (R$ 754,882 as of December 31, 2020) recognized, mainly, of the following nature: a) transactions of inputs and outputs of products subject to taxation of the own ICMS; b) interstate outflows of oil-related products, whose ICMS was prepaid by the supplier (Petróleo Brasileiro S.A. (“Petrobras”)), in the case of the subsidiaries IPP, Bahiana and Cia. Ultragaz and c) credits for refunds of the ICMS-ST (tax substitution) overpaid when the estimated calculation base is used higher than the actual operation practiced by the subsidiary IPP;


(iii) The subsidiary Extrafarma has ICMS credits and ICMS-ST (tax substitution) advances in the amount of R$ 198,189 (R$ 179,405 as of December 31, 2020)reduced to R$ 22,780 due to the partial allocation of the provision for impairment of assets on the inflow and outflow of operations carried out by its distribution centers, mostly in the North and Northeast, as well as refunds of the ICMS-ST portion overpaid when the estimated calculation base is used higher than the actual operation.


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



Ultrapar Participações S.A. and Subsidiaries

 

Notes to the Parent’s Separate and Consolidated Interim Financial Information

 

(In thousands of Brazilian Reais, unless otherwise stated)


The estimated recovery of ICMS assets is stated as follows:

 

Up to 1 year

 545,859

From 1 to 2 years

 362,892

From 2 to 3 years

 213,362

From 3 to 5 years

 65,945

Total of recoverable ICMS, net of provision

 1,188,058

 

The provision for ICMS losses, in the amount of R$ 233,636 (R$ 52,338 as of December 31, 2020), relates to tax credits of the subsidiaries whose amounts are not included within the term determined by its policy and by the allocation of the provision for impairment of assets in the amount of R$ 175,409 of the subsidiary Extrafarma (see note 3.c.1).

 

a.2 The balance of PIS and COFINS includes credits recorded under Laws 10,637/2002 and 10,833/2003 in the amount of R$ 645,594 (R$ 651,051 as of December 31, 2020), whose consumption will occur through the offset of debts administered by the Brazilian Federal Revenue Service (“RFB”) in an estimated term of up to 2 years by management. The subsidiaries IPP, Extrafarma, Tropical Transportes Ipiranga Ltda (“Tropical”), EMCA, Oleoquímica and Oxiteno S.A. have credits in the amount of R$ 752,044 (R$ 645,978 as of December 31, 2020) resulting from a favorable decision on the exclusion of ICMS from the calculation basis of PIS and COFINS (see item a.3 below). The management estimates the realization of these credits within up to 5 years.

 

The credit balance of PIS and COFINS is realized through the settlement of own debts in subsequent months or with other debts managed by the Receita Federal and social security for cases that the law allows.

 

The estimated recovery of PIS and COFINS credits is stated as follows:

 

Up to 1 year

 559,033

From 1 to 2 years

 629,716

From 2 to 3 years

 193,320

From 3 to 5 years

 15,569

Total of recoverable PIS and COFINS

 1,397,638

 

a.3 On March 15, 2017, due to general repercussions, the STF decided that ICMS does not compose the basis for calculating PIS and COFINS. After filing the Union's Embargoes for Clarification, the STF definitively ruled about the thesis on May 13, 2021, reaffirming the exclusion of the highlighted ICMS from the PIS and COFINS calculation basis and modulating the effects of the decision for the lawsuits filed after March 15, 2017. Certain subsidiaries have credits originated from favorable decisions on the exclusion of ICMS from the PIS and COFINS calculation base, having been the respective subsidies to prove the amounts to be refunded properly confirmed by management and recorded in results, up to the present period of 2021, the amount of R$ 1,051,714, of which R$ 579,961 of principal and R$ 471,752 of monetary variation (R$ 746,962, of which R$ 409,019 of principal and R$ 337,943 of monetary variation up to 2020).

 


Ultrapar Participações S.A. and Subsidiaries

 

Notes to the Parent’s Separate and Consolidated Interim Financial Information

 

(In thousands of Brazilian Reais, unless otherwise stated)


b. Recoverable income tax and social contribution taxes

 

Relates to IRPJ and CSLL to be recovered by the Company and its subsidiaries, arising from the tax advances of previous years, as well as referring to lawsuits the non-incidence of IRPJ and CSLL on the monetary variation (SELIC) in the repetition of undue payments (see note 9.e), with management estimating the realization of these credits within up to 5 years.

 

 

Parent

 

Consolidated

 

09/30/2021

 

12/31/2020

 

09/30/2021

 

12/31/2020

IRPJ and CSLL

78,169

 

87,359

 

698,404

 

627,285

Current

58,375

 

47,913

 

364,007

 

366,080

Non-current

19,794

 

39,446

 

334,397

 

261,205


8. Related parties

 

a. Related parties

 

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

 

a.1 Parent

 

 

Assets

 

Liabilities

 

 

 

Debentures

 

Other receivables

 

Related parties

 

Other payables

 

Financial income

Ipiranga Produtos de Petróleo S.A.

 400,000 (2)

 

 86,172

 

- 

 

 249

 

 13,470 (2)

Cia Ultragaz S.A.

- 

 

 8,165

 

- 

 

 6,799

 

- 

Imifarma Produtos Farmacêuticos e Cosméticos S.A.

- 

 

 9,850

 

 4,636

 

 365

 

- 

Oxiteno S.A. Indústria e Comércio

- 

 

 6,707

 

- 

 

 548

 

- 

Ultracargo Logística S.A.

- 

 

 2,608

 

- 

 

- 

 

- 

Eaí Clube Automobilista S.A.

- 

 

 167

 

- 

 

- 

 

- 

UVC Investimentos Ltda

- 

 

 12

 

- 

 

- 

 

- 

am/pm Comestíveis Ltda.

- 

 

 81

 

- 

 

- 

 

- 

Iconic Lubrificantes S/A

- 

 

 13

 

- 

 

- 

 

- 

SERMA - Ass. dos usuários equip. proc. de dados

- 

 

- 

 

- 

 

 524

 

- 

Others

- 

 

 11

 

- 

 

 23

 

- 

Total as of September 30, 2021

 400,000

 

 113,786

 

 4,636

 

 8,508

 

 13,470




Ultrapar Participações S.A. and Subsidiaries

 

Notes to the Parent’s Separate and Consolidated Interim Financial Information

 

(In thousands of Brazilian Reais, unless otherwise stated)


 

Assets

 

Liabilities

 

 

 

Debentures

 

Other receivables

 

Related parties

 

Other payables

 

Financial income

Ipiranga Produtos de Petróleo S.A.

753,459 (1)

 

 15,545

 

- 

 

- 

 

19,742 (1)

Cia Ultragaz S.A.

- 

 

 10,147

 

- 

 

 8,469

 

- 

SERMA - Ass. dos usuários equip. proc. de dados

- 

 

 9,635

 

- 

 

- 

 

- 

Imifarma Produtos Farmacêuticos e Cosméticos S.A.

- 

 

 3,785

 

 5,272

 

 142

 

- 

Oxiteno S.A. Indústria e Comércio

- 

 

 4,476

 

- 

 

 548

 

- 

Centro de Conveniências Millennium Ltda.

- 

 

 3,700

 

- 

 

- 

 

- 

Ultracargo Logística S.A.

- 

 

 1,695

 

- 

 

 277

 

- 

Bahiana Distribuidora de Gás Ltda.

- 

 

 831

 

- 

 

- 

 

- 

UVC Investimentos Ltda

- 

 

 69

 

- 

 

- 

 

- 

Eaí Clube Automobilista S.A.

- 

 

- 

 

- 

 

 35

 

- 

am/pm Comestíveis Ltda.

- 

 

 13

 

- 

 

- 

 

- 

Total as of December 31, 2020

 753,459

 

 49,896

 

 5,272

 

 9,471

 

 

Total as of September 30, 2020

 

 

 

 

 

 

 

 

19,742

 

(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, with maturity on March 31, 2021 and semiannual interest linked to DI being subscribed the total by the Company. The debentures were paid off on the maturity date.
(2)  In March 2021 the subsidiary IPP made ​​its ninth private offering in one single series of 400,000 debentures at face value of R$ 1,000.00 (one thousand Brazilian Reais) each, nonconvertible into shares and unsecured, with maturity on March 31, 2024 and semiannual interest linked to DI being subscribed the total by the Company.


Ultrapar Participações S.A. and Subsidiaries

 

Notes to the Parent’s Separate and Consolidated Interim Financial Information

 

(In thousands of Brazilian Reais, unless otherwise stated)


a.2 Consolidated

 

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

 

 

Loans

 

Assets

 

Liabilities

Química da Bahia Indústria e Comércio S.A. (1)

-

 

2,875

Routeasy Serviços de Assessoria Logística Ltda. (2) (*)

4,464

 

-

HS Intermediação de Compras Coletivas e Tecnologia Ltda. (3) (*)

5,000

 

-

Voltz Co Ltd (4) (*)

5,138

 

-

ConectCar Soluções de Mobilidade Eletrônica S.A. (5)

9,321

 

-

Others (1)

490

 

683

Total as of September 30, 2021

24,413

 

3,558

 

 

Loans

 

Assets

 

Liabilities

Química da Bahia Indústria e Comércio S.A. (1)

-

 

2,875

Routeasy Serviços de Assessoria Logística Ltda. (2)

2,334

 

-

Others (1)

490

 

836

Total as of December 31, 2020

2,824

 

3,711

 

(1) Loans contracted have indefinite terms and do not contain remuneration clauses.
(2)  The loan contracted has a term of 36 months, can be extended by mutual agreement between the parties, being remunerated by the DI plus 3% p.a.
(3) The loan contracted has a term of 24 months, can be extended by mutual agreement between the parties and does not contain remuneration clauses.
(4) The loan contracted was made in foreign currency (dollar), has a term of 36 months, and can be extended by mutual agreement between the parties, being remunerated by the DI plus 3% p.a.
(5) The loan contracted has a term of 36 months, can be extended by mutual agreement between the parties and does not contain remuneration clauses. The other shareholder of ConectCar lent the same amount, under the same conditions. Said amount was settled on October 1, 2021, as a result of the completion of the purchase and sale transaction of the subsidiary IPP interest in ConectCar (see note 3.c.2).
(*) Reflect negotiated conditions for investment in startups.

 


Ultrapar Participações S.A. and Subsidiaries

 

Notes to the Parent’s Separate and Consolidated Interim Financial Information

 

(In thousands of Brazilian Reais, unless otherwise stated)

 

 

 

Commercial transactions

 

Receivables (1)

 

Right-of-use assets

 

Payables (1)

 

Leases payable

 

Sales and services

 

Purchases

 

Expenses

Oxicap Indústria de Gases Ltda.

- 

 

- 

 

 1,501

 

- 

 

 1,080

 

 12,904

 

- 

Refinaria de Petróleo Riograndense S.A.

- 

 

- 

 

 178,652

 

- 

 

- 

 

 513,382

 

- 

ConectCar Soluções de Mobilidade Eletrônica S.A.

 181

 

- 

 

 139

 

- 

 

 1,469

 

 112

 

- 

LA’7 Participações e Empreend. Imob. Ltda. (a)

- 

 

 10,460

 

- 

 

 10,146

 

- 

 

- 

 

 1,661

União Vopak Armazéns Gerais Ltda.

 57

 

- 

 

- 

 

- 

 

 52

 

- 

 

- 

Chevron (Thailand) Limited

 212

 

- 

 

- 

 

- 

 

 462

 

 1,072

 

- 

Chevron Lubricants Lanka PLC

- 

 

- 

 

- 

 

- 

 

 164

 

- 

 

- 

Chevron Lubricants Oils S.A.

- 

 

- 

 

- 

 

- 

 

 415

 

- 

 

- 

Chevron Marine Products

 2,249

 

- 

 

- 

 

- 

 

 9,581

 

- 

 

- 

Chevron Oronite Brasil LTDA.

- 

 

- 

 

 35,805

 

- 

 

 302

 

 113,081

 

- 

Chevron Products Company

- 

 

- 

 

 126,527

 

- 

 

- 

 

 550,367

 

- 

Chevron Belgium NV

- 

 

- 

 

 1,518

 

- 

 

- 

 

 6,353

 

- 

Chevron Petroleum CO Colombia          

 392

 

- 

 

- 

 

- 

 

 392

 

- 

 

- 

Total as of September 30, 2021

 3,091

 

 10,460

 

 344,142

 

 10,146

 

 13,917

 

 1,197,271

 

 1,661

 


Ultrapar Participações S.A. and Subsidiaries

 

Notes to the Parent’s Separate and Consolidated Interim Financial Information

 

(In thousands of Brazilian Reais, unless otherwise stated)


 

Commercial transactions

 

Receivables (1)

 

Right-of-use assets

 

Payables (1)

 

Leases payable

 

Sales and services

 

Purchases

 

Expenses

Oxicap Indústria de Gases Ltda.

-

 

-

 

 1,772

 

-

 

 45

 

 14,246

 

-

Refinaria de Petróleo Riograndense S.A.

-

 

-

 

 65,215

 

-

 

-

 

 227,455

 

-

ConectCar Soluções de Mobilidade Eletrônica S.A.

 151

 

-

 

 104

 

-

 

 2,283

 

 118

 

-

LA’7 Participações e Empreend. Imob. Ltda. (a)

-

 

 8,635

 

-

 

 8,044

 

-

 

-

 

 1,206

Chevron (Thailand) Limited

 166

 

- 

 

 6

 

- 

 

- 

 

 527

 

- 

Chevron Brasil Oleos Basicos LTDA

- 

 

- 

 

 6

 

- 

 

- 

 

- 

 

- 

Chevron Latin America Marketing LLC

 118

 

- 

 

- 

 

- 

 

- 

 

- 

 

- 

Chevron Lubricants Lanka PLC

 3

 

- 

 

- 

 

- 

 

- 

 

- 

 

- 

Chevron Lubricants Oils S.A.

 823

 

- 

 

- 

 

- 

 

- 

 

- 

 

- 

Chevron Marine Products

 1,873

 

- 

 

- 

 

- 

 

- 

 

- 

 

- 

Chevron Oronite Brasil LTDA.

- 

 

- 

 

 37,482

 

- 

 

- 

 

 83,219

 

- 

Chevron Products Company

- 

 

- 

 

 87,754

 

- 

 

- 

 

 185,738

 

- 

Chevron Belgium NV

- 

 

- 

 

 785

 

- 

 

- 

 

 5,938

 

- 

Chevron Petroleum CO Colombia

 1

 

- 

 

- 

 

- 

 

- 

 

- 

 

- 

Total as of December 31, 2020

 3,135

 

 8,635

 

 193,124

 

 8,044

 

 

 

 

 

 

Total as of September 30, 2020

 

 

 

 

 

 

 

 

 2,328

 

 517,241

 

 1,206

 

(1)

Included in “domestic trade receivables”, “domestic trade payables” and “domestic trade payables – reverse factoring”, respectively.

(a)
Refers to rental contracts of 15 drugstores owned by LA’7 as of September 30, 2021 and December 31, 2020, 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 operations of 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, therefore, no provision for expected losses on accounts receivable or guarantees are recorded. Guarantees 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’s Separate and Consolidated Interim Financial Information

 

(In thousands of Brazilian Reais, unless otherwise stated)

 

 b. Key executives (Consolidated)

 

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

 

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

 

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

 

 

09/30/2021

 

09/30/2020

Short-term compensation

33,201

 

34,470

Stock compensation

10,839

 

1,714

Post-employment benefits

2,002

 

2,029

Total

46,042

 

38,213

 

c. Deferred stock plan (Consolidated)

 

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

 


Ultrapar Participações S.A. and Subsidiaries

 

Notes to the Parent’s Separate and Consolidated Interim Financial Information

 

(In thousands of Brazilian Reais, unless otherwise stated)

 

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

 

Grant date

Balance of number of shares granted

Vesting period

Market price of shares on the grant date (in R$ per share)

Total grant costs, including taxes

 

Accumulated recognized grant costs

 

Accumulated unrecognized grant costs

March 4, 2016

 253,330

2022 to 2023

 32.72

 17,147

 

(15,594)

 

 1,553

December 10, 2014

 266,660

2021

 25.32

 28,405

 

(27,724)

 

 681

 

 519,990

 

 

 45,552

 

(43,318)

 

 2,234

 

For the nine-month period ended September 30, 2021 the amortization in the amount of R$ 2,564 (R$ 963 for the nine-month period ended September 30, 2020) was recognized as a general and administrative expense.

 

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

 

Balance on December 31, 2020

 

702,260

Shares vested and transferred

 

(182,270)

Balance on September 30, 2021

 

519,990

 

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

 

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

 


Ultrapar Participações S.A. and Subsidiaries

 

Notes to the Parent’s Separate and Consolidated Interim Financial Information

 

(In thousands of Brazilian Reais, unless otherwise stated)

 

The table below summarizes the restricted and performance stock programs:

 

Program

Grant date

Balance of number of shares granted

Vesting period

Market price of shares on the grant date (in R$ per share)

Total grant costs, including taxes

 

Accumulated recognized grant costs

 

Accumulated unrecognized grant costs

Restricted

October 1, 2017

 240,000

2023

 38.19

 12,642

 

(8,428)

 

 4,214

Restricted and performance

November 8, 2017

 15,778

2021 to 2022

 38.19

 1,759

 

(1,636)

 

 123

Restricted and performance

April 4, 2018

 74,602

2022 to 2023

 34.35

 6,313

 

(5,287)

 

 1,026

Restricted

September 19, 2018

 80,000

2024

 19.58

 1,020

 

(1,020)

 

-

Restricted

September 24, 2018

 80,000

2024

 18.40

 3,171

 

(1,075)

 

 2,096

Restricted and performance

April 3, 2019

 391,560

2022 to 2024

 23.25

 16,417

 

(10,187)

 

 6,230

Restricted

September 2, 2019

 440,000

2025

 16.42

 9,965

 

(3,460)

 

 6,505

Restricted and performance

April 1, 2020

 754,896

2023 to 2025

 12.53

 17,640

 

(6,923)

 

 10,717

Restricted

September 16, 2020

 700,000

2026

 23.03

 22,236

 

(4,015)

 

 18,221

Restricted and performance

April 7, 2021

 1,386,504

2024

 20.85

 54,446

 

(9,074)

 

 45,372

Restricted

September 22, 2021

 1,000,000

 2027

 14.17

 19,545

 

(271)

 

 19,274

 

 

 5,163,340

 

 

 165,154

 

(51,376)

 

 113,778

 

For the nine-month period ended September 30, 2021, a general and administrative expense in the amount of R$ 19,196 was recognized in relation to the Plan (R$ 8,362 for the nine-month period ended September 30, 2020).

 

Balance on December 31, 2020

 

2,910,162

Shares granted on April 7, 2021

 

1,386,504

Shares granted on September 22, 2021

 

1,000,000

Performance shares (i)

 

(133,326)

Balance on September 30, 2021

 

5,163,340

 

(i)  Refers to the reversal of the provision constituted in view of the significant probability that performance indicators will not be achieved.

 


Ultrapar Participações S.A. and Subsidiaries

 

Notes to the Parent’s Separate and Consolidated Interim Financial Information

 

(In thousands of Brazilian Reais, unless otherwise stated)

9. Income and social contribution taxes

 

a. Deferred income (IRPJ) and social contribution taxes (CSLL)

 

The Company and its subsidiaries recognize deferred tax assets and liabilities, which are not subject to the statute of limitations, mainly resulting from provision for differences between cash and accrual basis, tax loss carryforwards, negative tax bases and provisions for tax, civil, and labor risks. Deferred tax assets are sustained by the continued profitability of their operations. Deferred IRPJ and CSLL are recognized under the following main categories:

 

 

Parent

 

Consolidated

 

09/30/2021

 

12/31/2020

 

09/30/2021

 

12/31/2020

Assets - deferred income and social contribution taxes on:

 

 

 

 

 

 

 

Provision for impairment of assets

-

 

-

 

196,847

 

75,231

Provisions for tax, civil, and labor risks

-

 

-

 

138,671

 

138,516

Provision for post-employment benefits

1,259

 

1,078

 

98,791

 

96,108

Provision for differences between cash and accrual basis (i)

-

 

-

 

783,497

 

606,054

Goodwill

-

 

-

 

4,903

 

5,161

Business combination – tax basis vs. accounting basis of goodwill

95

 

-

 

18,623

 

75,515

Provision for asset retirement obligation

-

 

-

 

16,458

 

15,728

Provision for suppliers

5,825

 

4,284

 

77,108

 

49,501

Provision for profit sharing and bonus

6,935

 

9,445

 

56,234

 

56,873

Leases payable

1,218

 

976

 

92,822

 

41,932

Change in fair value of subscription warrants

11,787

 

22,833

 

11,787

 

22,833

Provision for deferred revenue

-

 

-

 

14,058

 

25,770

Other provisions

-

 

95

 

21,892

 

14,917

Tax losses and negative basis for social contribution carryforwards (9.d)

38,569

 

26,730

 

423,604

 

363,862

Total

65,688

 

65,441

 

1,955,295

 

1,588,001

Offset liability balance of deferred IRPJ and CSLL

(6,057)

 

(448)

 

(709,768)

 

(613,290)

Net balance of deferred taxes assets

59,631

 

64,993

 

1,245,527

 

974,711

 

 

 

 

 

 

 

 

Liabilities - deferred income and social contribution taxes on:

 

 

 

 

 

 

 

Revaluation of PP&E

-

 

-

 

1,710

 

1,776

Leases payable

-

 

-

 

29,194

 

1,895

Provision for differences between cash and accrual basis (i)

-

 

448

 

573,456

 

402,780

Provision for goodwill

-

 

-

 

28,676

 

92,242

Business combination – fair value of assets

-

 

-

 

68,933

 

111,832

Temporary differences of foreign subsidiaries

5,977

 

-

 

9,033

 

-

Provision for deferred revenue

-

 

-

 

7,338

 

12,196

Other provisions

80

 

-

 

5,583

 

3,301

Total

6,057

 

448

 

723,923

 

626,022

Offset asset balance of deferred IRPJ and CSLL

(6,057)

 

(448)

 

(709,768)

 

(613,290)

Net balance of deferred taxes liabilities

-

 

-

 

14,155

 

12,732

 

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


 



Ultrapar Participações S.A. and Subsidiaries

 

Notes to the Parent’s Separate and Consolidated Interim Financial Information

 

(In thousands of Brazilian Reais, unless otherwise stated)


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

 

 

Parent

 

Consolidated

 

09/30/2021

 

09/30/2020

 

09/30/2021

 

09/30/2020

Initial balance

64,993

 

41,613

 

961,979

 

646,163

Deferred IRPJ and CSLL recognized in income of the period

(5,362)

 

8,953

 

269,787

 

46,804

Deferred IRPJ and CSLL recognized in other comprehensive income

-

 

-

 

1,098

 

305,204

Others

-

 

-

 

(1,492)

 

17,896

Final balance

59,631

 

50,566

 

1,231,372

 

1,016,067

 

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

 

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 Company and its subsidiaries of R$ 1,955,295 and parent of R$ 65,688 was supported by the technical study on taxable profit projections for the realization of deferred tax assets.

 


Ultrapar Participações S.A. and Subsidiaries

 

Notes to the Parent’s Separate and Consolidated Interim Financial Information

 

(In thousands of Brazilian Reais, unless otherwise stated)

 

b. Reconciliation of income and social contribution taxes

 

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

 

 

Parent

 

Consolidated

 

09/30/2021

 

09/30/2020

 

09/30/2021

 

09/30/2020

Income before taxes

475,648

 

458,575

 

541,328

 

852,873

Statutory tax rates – %

34

 

34

 

34

 

34

Income and social contribution taxes at the statutory tax rates

(161,720)

 

(155,916)

 

(184,052)

 

(289,977)

Adjustments to the statutory income and social contribution taxes:

 

 

 

 

 

 

 

Nondeductible expenses (i)

(14,965)

 

(6,657)

 

(56,941)

 

(25,991)

Nontaxable revenues (ii)

-

 

-

 

31,757

 

22,398

Monetary variation (SELIC) on repetition of tax undue payments (iii)

-

 

-

 

195,907

 

-

Adjustment to estimated income (iv)

-

 

-

 

3,314

 

6,908

Unrecorded deferred income and social contribution taxes carryforwards deferred (v)

-

 

-

 

(119,714)

 

(119,686)

Share of profit (loss) of subsidiaries, joint ventures and associates

171,323

 

171,347

 

(7,488)

 

(10,375)

Write-offs of deferred IRPJ and CSLL on impairment of tax goodwill

-

 

-

 

26,046

 

-

Other adjustments

-

 

9

 

(2,975)

 

3,415

Income and social contribution taxes before tax incentives

(5,362)

 

8,783

 

(114,146)

 

(413,308)

Tax incentives - SUDENE

-

 

-

 

66,262

 

56,630

Income and social contribution taxes in the income statement

(5,362)

 

8,783

 

(47,884)

 

(356,678)

 

 

 

 

 

 

 

 

Current

-

 

(170)

 

(317,671)

 

(403,482)

Deferred

(5,362)

 

8,953

 

269,787

 

46,804

Effective IRPJ and CSLL rates – %

1.1

 

(1.9)

 

8.8

 

41.8

 

(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)  Refers to amounts related to non-taxation of IRPJ/CSLL on monetary variation (SELIC) in the repetition of undue tax lawsuits (see note 9.e).
(iv) 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.
(v)   See Note 9.d.

   



Ultrapar Participações S.A. and Subsidiaries

 

Notes to the Parent’s Separate and Consolidated Interim Financial Information

 

(In thousands of Brazilian Reais, unless otherwise stated)


c. Tax incentives – SUDENE

 

For belonging to the sectors of the economy considered priority for the subsidized areas, under the terms of the development program of region operated by the Superintendence for the Development of the Northeast (“SUDENE”), the following subsidiaries, in compliance with the current law have entitled to federal tax benefits providing for IRPJ reduction under:

 

Subsidiary

Units

Incentive - %

Expiration

Bahiana Distribuidora de Gás Ltda.

Mataripe base

75

2024

 

Caucaia base

75

2025

 

Juazeiro base

75

2026

 

Aracaju base

75

2027

 

Suape base

75

2027

Ultracargo Logística S.A.

Suape terminal (1)

75

2030

 

Aratu terminal

75

2022

 

Itaqui terminal

75

2025

Oleoquímica Indústria e Comércio de Produtos Químicos Ltda. (2)

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)  On August 18, 2021, SUDENE issued the report recognizing the renewal of the benefit, which was homologated by the SRF on October 5, 2021, with the respective benefit being retroactive to January 2021.
(2 In view of Oleoquímica's successful historic in complying with the requirements for maintenance and renewal of the incentive, on August 31, 2021, a request for a new claim to grant the benefit for another 10 years, as of 2022, was filed by SUDENE.
(3 On September 24, 2021, SUDENE issued a report recognizing the request to transfer the benefit to Oxiteno S.A. The request was submitted to Receita Federal and waits homologation.


d. Income and social contribution taxes carryforwards

 

In September 30, 2021, the Company and some subsidiaries had tax loss carryforwards related to income tax (IRPJ) and negative basis of CSLL, whose compensations are limited to 30% of taxable income in a given tax year, which do not expire.

 


Ultrapar Participações S.A. and Subsidiaries

 

Notes to the Parent’s Separate and Consolidated Interim Financial Information

 

(In thousands of Brazilian Reais, unless otherwise stated)


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

 

 

09/30/2021

 

12/31/2020

Oxiteno S.A.

290,434

 

205,604

Oil Trading

61,254

 

-

Ultrapar

38,569

 

27,736

Abastece aí

28,550

 

7,362

Tequimar Vila do conde

4,643

 

489

Ultracargo

117

 

107

Ipiranga Logística

37

 

-

Ipiranga

-

 

44,537

Iconic

-

 

5,691

Extrafarna

-

 

72,318

UVC Investimentos

-

 

18

 

423,604

 

363,862

 

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

 

 

09/30/2021

 

12/31/2020

Extrafarma

378,874

 

294,400

Integra Frotas

11,133

 

7,802

Millennium

2,639

 

640

UVC – Fundo de Investimento

2,316

 

-

 

394,962

 

302,842

 

In addition, certain foreign subsidiaries have income tax loss carryforwards, as shown below, subject to local compensation rules.

 

 

09/30/2021

 

12/31/2020

 

09/30/2021

 

12/31/2020

 

US$

 

US$

 

R$

 

R$

Oxiteno USA

236,375

 

217,837

 

1,285,740

 

1,132,035

Oxiteno Uruguay

2,753

 

7,943

 

14,974

 

41,279

Ultrapar International

2,702

 

6,261

 

14,696

 

32,535

 

241,830

 

232,041

 

1,315,410

 

1,205,849

 

e. Non-incidence of IRPJ/CSLL on the update by Selic of tax undue payments received from the Federal Government

 

The Company and its subsidiaries have lawsuits claiming the non-incidence of IRPJ and CSLL on monetary variation (SELIC) on tax credits. On September 27, 2021, the Federal Supreme Court judged that the incidence of IRPJ and CSLL on amounts related to monetary variation (SELIC) received by taxpayers in the repetition of tax undue payments is unconstitutional. Some of the Company's subsidiaries recognized R$ 195,907 in the third quarter of 2021 related to this topic.

 


Ultrapar Participações S.A. and Subsidiaries

 

Notes to the Parent’s Separate and Consolidated Interim Financial Information

 

(In thousands of Brazilian Reais, unless otherwise stated)

10. Prepaid expenses

 

 

Parent

 

Consolidated

 

09/30/2021

 

12/31/2020

 

09/30/2021

 

12/31/2020

Rents

-

 

-

 

46,601

 

30,400

Advertising and publicity

-

 

-

 

21,040

 

17,752

Deferred stock plan, net (see Note 8.c)

2,942

 

2,970

 

7,602

 

9,900

Insurance premiums

4,557

 

971

 

73,608

 

58,675

Software maintenance

4,138

 

3,105

 

22,431

 

24,233

Employee benefits

584

 

526

 

10,366

 

8,924

IPVA and IPTU

258

 

-

 

5,364

 

2,632

Contribution - private pension fund (see Note 20.a)

-

 

-

 

26,806

 

36,068

Other prepaid expenses

-

 

-

 

11,695

 

14,045

 

12,479

 

7,572

 

225,513

 

202,629

Current

9,957

 

3,684

 

141,227

 

132,122

Non-current

2,522

 

3,888

 

84,286

 

70,507

 

11. Contractual assets with customers – exclusive rights (Consolidated)

 

Refers to exclusive rights disbursements of Ipiranga’s agreements with reseller service stations and major consumers that are recognized at the time of their occurrence and recognized as a reductions of the revenue from sales and services in the statement of profit or loss according to the conditions established in the agreement, being reviewed as changes occur under the terms of the agreements. In September 30, 2021, the contracts amortization weighted average term was five years.

 

Balance and changes are shown below: 

 

Balance as of December 31, 2019

 

1,465,989

Additions

 

436,725

Amortization

 

(224,441)

Transfer

 

(13,695)

Balance as of September 30, 2020

 

1,664,578

Current

 

481,130

Non-current

 

1,183,448

 

 

 

Balance as of December 31, 2020

 

1,706,331

Additions

 

420,538

Amortization

 

(199,757)

Transfer

 

(8,239)

Balance as of September 30, 2021

 

1,918,873

Current

 

533,688

Non-current

 

1,385,185


 

Ultrapar Participações S.A. and Subsidiaries

 

Notes to the Parent’s Separate and Consolidated Interim Financial Information

 

(In thousands of Brazilian Reais, unless otherwise stated)

12. Investments

 

The table below presents the amount reconciliation of share of profit (loss) of subsidiaries, joint ventures and associates:

 

 

 

Parent

 

Consolidated

 

Note

09/30/2021

 

09/30/2020

 

09/30/2021

 

09/30/2020

Subsidiaries

12.a

507,405

 

524,257

 

-

 

-

Joint ventures

12.b

(3,515)

 

(20,297)

 

(23,715)

 

(31,910)

Associates

12.c

-

 

-

 

1,692

 

1,395

 

 

503,890

 

503,960

 

(22,023)

 

(30,515)

 

a. Subsidiaries and joint venture (Parent)

 

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

 

 

09/30/2021

 

Subsidiaries

 

 

 

Joint venture

 

Ultracargo - Operações Logísticas e Participações Ltda.

Oxiteno S.A. Indústria e Comércio 

Ipiranga Produtos de Petróleo S.A.

Ultrapar International S.A.

 

UVC

Centro de Conveniências Millennium Ltda. (**)

Eaí Clube Automobilista S.A.

 

Refinaria de Petróleo Riograndense S.A.

Number of shares or units held

11,839,764

35,102,127

224,467,228,244

49,995

 

150

15,194,789

80,000,000

 

5,078,888

Assets

1,426,302

8,857,022

21,017,266

7,702,229

 

30,411

11,123

125,835

 

596,135

Liabilities

2,765

7,065,097

13,739,924

7,721,230

 

30

3,813

42,899

 

606,085

Equity

1,423,537

1,791,925 (*)

7,277,342 (*)

(19,001)

 

30,381

7,310

82,936

 

(9,950)

Net revenue from sales and services

-

3,925,300

67,373,249

-

 

-

20,903

57,456

 

1,664,996

Net income (loss)

130,151

252,364 (*)

153,734 (*)

14,697

 

(3,213)

(2,278)

(38,050)

 

(10,585)

% of capital held

100

100

100

100

 

100

100

100

 

33



Ultrapar Participações S.A. and Subsidiaries

 

Notes to the Parent’s Separate and Consolidated Interim Financial Information

 

(In thousands of Brazilian Reais, unless otherwise stated)


 

12/31/2020

 

Subsidiaries

 

Joint venture

 

Ultracargo - Operações Logísticas e Participações Ltda.

Oxiteno S.A. Indústria e Comércio 

Ipiranga Produtos de Petróleo S.A.

Ultrapar International S.A.

 

UVC

Centro de Conveniências Millennium Ltda.

Eaí Clube Automobilista S.A.

 

Refinaria de Petróleo Riograndense S.A.

Number of shares or units held

11,839,764

35,102,127

224,467,228,244

49,995

 

150

15,194,789

80,000,000

 

5,078,888

Assets

1,423,217

8,142,503

20,612,986

7,239,492

 

4,385

14,902

85,858

 

462,990

Liabilities

2,861

6,435,367

13,288,033

7,273,193

 

27

5,314

22,072

 

469,300

Equity

1,420,356

 1,707,136 (*)

 7,324,953 (*)

(33,701)

 

4,358

9,588

63,786

 

(6,310)

% of capital held

100

100

100

100

 

100

100

100

 

33

 

 

09/30/2020

 

Subsidiaries

 

 

 

Joint venture

 

Ultracargo - Operações Logísticas e Participações Ltda.

Oxiteno S.A. Indústria e Comércio 

Ipiranga Produtos de Petróleo S.A.

Ultrapar International S.A.

 

UVC

Centro de Conveniências Millennium Ltda.

Eaí Clube Automobilista S.A.

 

Refinaria de Petróleo Riograndense S.A.

Number of shares or units held

11,839,764

35,102,127

224,467,228,244

49,995

 

150

15,194,789

100

 

5,078,888

Net revenue from sales and services

-

2,864,775

46,022,827

-

 

-

5,511

3,893

 

1,081,968

Net income (loss)

127,883

 38,691 (*)

 384,804 (*)

(19,590)

 

(2,413)

(1,055)

(4,065)

 

(61,129)

% of capital held

100

100

100

100

 

100

100

100

 

33

 

(*) Adjusted for intercompany unrealized profits.
(**) Balances are valued using the equity method based on information as of August 31, 2021.

 

The percentages in the table above are rounded.

 

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



Ultrapar Participações S.A. and Subsidiaries

 

Notes to the Parent’s Separate and Consolidated Interim Financial Information

 

(In thousands of Brazilian Reais, unless otherwise stated)

 

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

 

 

 

Subsidiaries

 

Joint venture

 

 

 

 

Ultracargo - Operações Logísticas e Participações Ltda.

 

Oxiteno S.A. Indústria e Comércio 

 

Ipiranga Produtos de Petróleo S.A.

 

UVC

 

Centro de Conveniências Millennium Ltda.

 

Eaí Clube Automobilista S.A.

 

Ultrapar International S.A.

 

Total

 

Refinaria de Petróleo Riograndense S.A.

 

Total

Balance as of December 31, 2020

 

1,420,356

 

1,707,136

 

7,324,953

 

4,358

 

9,588

 

63,786

 

 

10,530,177

 

 

10,530,177

Share of profit (loss) of subsidiaries and joint venture

 

130,151

 

252,364

 

153,734

 

(3,213)

 

(2,278)

 

(38,050)

 

14,697

 

507,405

 

(3,515)

 

503,890

Dividends

 

(128,032)

 

(215,112)

 

(204,524)

 

-

 

-

 

-

 

-

 

(547,668)

 

-

 

(547,668)

Equity instrument granted

 

1,062

 

987

 

4,083

 

-

 

-

 

(2,800)

 

-

 

3,332

 

-

 

3,332

Valuation adjustment of subsidiaries (i)

 

-

 

14,195

 

(1,682)

 

-

 

-

 

-

 

-

 

12,513

 

2,306

 

14,819

Gain due to the payments fixed dividends to preferred shares

 

-

 

-

 

138

 

-

 

-

 

-

 

-

 

138

 

-

 

138

Shareholder transaction – changes of investments

 

-

 

-

 

79

 

-

 

-

 

-

 

-

 

79

 

-

 

79

Translation adjustments of foreign-based subsidiaries

 

-

 

32,237

 

-

 

-

 

-

 

-

 

-

 

32,237

 

-

 

32,237

Actuarial gain of post-employment benefits, net

 

-

 

118

 

561

 

-

 

-

 

-

 

-

 

679

 

-

 

679

Capital increase in cash

 

-

 

-

 

-

 

29,236

 

-

 

60,000

 

-

 

89,236

 

-

 

89,236

Transfer to provision for short-term liabilities

 

-

 

-

 

-

 

-

 

-

 

-

 

(14,697)

 

(14,697)

 

1,209

 

(13,488)

Balance as of September 30, 2021

 

1,423,537

 

1,791,925

 

7,277,342

 

30,381

 

7,310

 

82,936

 

-

 

10,613,431

 

-

 

10,613,431

 


Ultrapar Participações S.A. and Subsidiaries

 

Notes to the Parent’s Separate and Consolidated Interim Financial Information

 

(In thousands of Brazilian Reais, unless otherwise stated)


 

 

Subsidiaries

 

 

 

Joint venture

 

 

 

 

Ultracargo Operações Logísticas e Participações Ltda.

 

Oxiteno S.A. Indústria e Comércio 

 

Ipiranga Produtos de Petróleo S.A.

 

UVC

 

Centro de Conveniências Millennium Ltda.

 

Eaí Clube Automobilista S.A.

 

Total

 

Refinaria de Petróleo Riograndense S.A.

 

Total

Balance as of December 31, 2019

 

1,261,997

 

1,803,209

 

7,020,747

 

-

 

-

 

-

 

10,085,953

 

18,792

 

10,104,745

Share of profit (loss) of subsidiaries and joint venture

 

127,883

 

38,691

 

384,804

 

(2,413)

 

(1,055)

 

(4,065)

 

543,845

 

(20,297)

 

523,548

Dividends

 

-

 

(86,954)

 

(209,249)

 

-

 

-

 

-

 

(296,203)

 

(165)

 

(296,368)

Tax charges on revaluation reserve

 

-

 

-

 

(6)

 

-

 

-

 

-

 

(6)

 

-

 

(6)

Equity instrument granted

 

303

 

484

 

816

 

-

 

-

 

-

 

1,603

 

-

 

1,603

Valuation adjustment of subsidiaries (i)

 

42

 

(491,549)

 

(31)

 

-

 

-

 

(6)

 

(491,544)

 

786

 

(490,758)

Translation adjustments of foreign-based subsidiaries

 

-

 

198,678

 

-

 

-

 

-

 

-

 

198,678

 

-

 

198,678

Capital increase in cash

 

-

 

-

 

-

 

4,280

 

6,300

 

80,000

 

90,580

 

-

 

90,580

Loss due to the payments fixed dividends to preferred shares

 

(35)

 

-

 

(481)

 

-

 

-

 

-

 

(516)

 

-

 

(516)

Shareholder transaction – changes of investments

 

-

 

-

 

(1,189)

 

-

 

1,189

 

-

 

-

 

-

 

-

Transfer to provision for short-term liabilities

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

884

 

884

Balance as of September 30, 2020

 

1,390,190

 

1,462,559

 

7,195,411

 

1,867

 

6,434

 

75,929

 

10,132,390

 

-

 

10,132,390

 

(i)  Refers, substantially to the income on the hedging instruments of exchange rate related to firm commitment and highly probable transactions designated as cash flow hedges, see Note 33.h.2.


 


Ultrapar Participações S.A. and Subsidiaries

 

Notes to the Parent’s Separate and Consolidated Interim Financial Information

 

(In thousands of Brazilian Reais, unless otherwise stated)

 

 

 

 

Provision for short-term liabilities

 

 

 

 

Investments in subsidiaries

 

Joint venture

 

 

 

 

Ultrapar International S.A.

 

Refinaria de Petróleo Riograndense S.A.

 

Total

Balance as of December 31, 2020

 

33,698

 

2,096

 

35,794

Transfer to provision for short-term liabilities

 

(14,697)

 

1,209

 

(13,488)

Balance as of September 30, 2021

 

19,001

 

3,305

 

22,306

 

 

 

Provision for short-term liabilities

 

 

 

 

Investments in subsidiaries

 

Joint venture

 

 

 

 

Ultrapar International S.A.

 

Refinaria de Petróleo Riograndense S.A.

 

Total

Balance as of December 31, 2019

 

(27,497)

 

-

 

(27,497)

Share of profit (loss) of subsidiaries and joint venture

 

(19,588)

 

-

 

(19,588)

Transfer to provision for short-term liabilities

 

-

 

(884)

 

(884)

Balance as of September 30, 2020

 

(47,085)

 

(884)

 

(47,969)

 

b. Joint ventures and held for sale (Consolidated)

 

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

 

The subsidiary Ultracargo Logística 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 June 25, 2021, the sale of ConectCar, completed on October 1, 2021. Thus, said investment was classified as "held for sale" was announced according Note 3.c.2 and 35.

 

The subsidiary IPP participates in the port concession BEL02A at the port of Miramar, in Belém (PA), through Latitude Logística Portuária S.A. (“Latitude”); for the port of Vitória (ES), participates through Navegantes Logística Portuária S.A. (“Navegantes”); in Cabedelo (PB), has participation in the 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 34.c).

 

These investments of joint ventures are accounted for under the equity method of accounting based on their interim financial information as of September 30, 2021


 

Ultrapar Participações S.A. and Subsidiaries

 

Notes to the Parent’s Separate and Consolidated Interim Financial Information

 

(In thousands of Brazilian Reais, unless otherwise stated)

  

Balances and changes in joint ventures are as follows:

 

 

União Vopak

 

RPR

 

ConectCar (ii)

 

Latitude Logística

 

Navegantes Logística

 

Nordeste Logística I

 

Nordeste Logística II

 

Nordeste Logística III

 

Total

Balance as of December 31, 2020

7,734

 

-

 

81,180

 

10,351

 

21,624

 

824

 

7,676

 

9,711

 

139,100

Capital increase

-

 

-

 

15,000

 

-

 

3,700

 

-

 

6,399

 

600

 

25,699

Valuation adjustments

-

 

2,306

 

-

 

-

 

-

 

-

 

-

 

-

 

2,306

Share of profit (loss) of joint ventures

683

 

(3,515)

 

(18,081)

 

(900)

 

(2,283)

 

821

 

(674)

 

234

 

(23,715)

Transfer to non-current assets held for sale

-

 

-

 

(78,099)

 

-

 

-

 

-

 

-

 

-

 

(78,099)

Transfer to provision for short-term liabilities

-

 

1,209

 

-

 

-

 

-

 

-

 

-

 

-

 

1,209

Balance as of September 30, 2021

8,417

 

-

 

-

 

9,451

 

23,041

 

1,645

 

13,401

 

10,545

 

66,500

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

União Vopak

 

RPR

 

ConectCar

 

Latitude Logística

 

Navegantes Logística

 

Nordeste Logística I

 

Nordeste Logística II

 

Nordeste Logística III

 

Total

Balance as of December 31, 2019

7,342

 

18,792

 

82,818

 

10,351

 

23,581

 

1,930

 

4,183

 

4,079

 

153,076

Capital increase

-

 

-

 

20,000

 

-

 

-

 

303

 

-

 

-

 

20,303

Capital decrease (i)

-

 

-

 

-

 

-

 

(363)

 

-

 

-

 

-

 

(363)

Valuation adjustments

-

 

786

 

-

 

-

 

-

 

-

 

-

 

-

 

786

Proposed dividends

-

 

(165)

 

-

 

-

 

-

 

-

 

-

 

-

 

(165)

Share of profit (loss) of joint ventures

574

 

(20,297)

 

(12,187)

 

-

 

-

 

-

 

-

 

-

 

(31,910)

Transfer to provision for short-term liabilities

-

 

884

 

-

 

-

 

-

 

-

 

-

 

-

 

884

Balance as of September 30, 2020

7,916

 

-

 

90,631

 

10,351

 

23,218

 

2,233

 

4,183

 

4,079

 

142,611

 

(i)  Refers to reimbursement of expenses that preceded the port area auctions and that were apportioned among the other members of the consortium.
(ii)  Due to the completion of the sale of ConectCar, the investment of R$ 78,099 was transferred to “held for sale”.

  

 

Provision for short-term liabilities

 

RPR

Balance as of December 31, 2020

2,096

Transfer to provision for short-term liabilities

1,209

Balance as of September 30, 2021

3,305

 


Ultrapar Participações S.A. and Subsidiaries

 

Notes to the Parent’s Separate and Consolidated Interim Financial Information

 

(In thousands of Brazilian Reais, unless otherwise stated)


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

 

 

09/30/2021

 

União Vopak

 

RPR

 

ConectCar

 

Latitude Logística

 

Navegantes Logística

 

Nordeste Logística I

 

Nordeste Logística II

 

Nordeste Logística III

Current assets

9,274

 

422,964

 

171,894

 

16,012

 

6,349

 

36,127

 

37,295

 

12,184

Non-current assets

9,404

 

173,171

 

177,217

 

50,224

 

166,878

 

18,334

 

17,269

 

49,949

Current liabilities

1,582

 

498,336

 

174,030

 

7,575

 

293

 

32,988

 

1,485

 

9,504

Non-current liabilities

262

 

107,749

 

18,883

 

39,759

 

103,811

 

16,537

 

12,877

 

20,992

Equity

16,834

 

(9,950)

 

156,198

 

18,902

 

69,123

 

4,936

 

40,202

 

31,637

Net revenue from sales and services

14,378

 

1,664,996

 

60,436

 

3,073

 

-

 

6,574

 

1,142

 

4,827

Costs, operating expenses and income

(12,196)

 

(1,675,151)

 

(97,095)

 

(3,777)

 

(1,097)

 

(2,155)

 

(2,856)

 

(2,819)

Net finance income and income and social contribution taxes

(816)

 

(430)

 

497

 

(1,096)

 

(5,752)

 

(1,956)

 

(309)

 

(1,306)

Net income (loss)

1,366

 

(10,585)

 

(36,162)

 

(1,800)

 

(6,849)

 

2,463

 

(2,023)

 

702

Number of shares or units held

29,995

 

5,078,888

 

263,768,000

 

4,383,881

 

22,298,195

 

681,637

 

3,933,265

 

4,871,241

% of capital held

50

 

33

 

50

 

50

 

33

 

33

 

33

 

33

 

The percentages in the table above are rounded.

  


Ultrapar Participações S.A. and Subsidiaries

 

Notes to the Parent’s Separate and Consolidated Interim Financial Information

 

(In thousands of Brazilian Reais, unless otherwise stated)

 

 

12/31/2020

 

União Vopak

 

RPR

 

ConectCar

 

Navegantes Logística

 

Nordeste Logística I

 

Nordeste Logística II

 

Nordeste Logística III

Current assets

8,510
291,720
161,371
24,691
972
18,531
21,513

Non-current assets

9,796
171,270
169,843
166,389
6,021
18,005
30,503

Current liabilities

2,698
363,388
168,854
8
4
5
6

Non-current liabilities

140
105,912
-
126,201
4,516
13,504
22,877

Equity

15,468
(6,310)
162,360
64,871
2,473
23,027
29,133

Number of shares or units held

29,995
5,078,888
248,768,000
22,298,195
681,637
3,933,265
4,871,241

% of capital held

50
33
50
33
33
33
33

 

 

09/30/2020

 

União Vopak

 

RPR

 

ConectCar

Net revenue from sales and services

12,318
1,081,968
68,665

Costs, operating expenses and income

(10,704)

(1,153,200)


(93,568)

Net finance income and income and social contribution taxes

(466)
10,103
530

Net income (loss)

1,148
(61,129)
(24,373)

Number of shares or units held

29,995
5,078,888
248,768,000

% of capital held

50
33
50

 

The percentages in the table above are rounded.


 

Ultrapar Participações S.A. and Subsidiaries

 

Notes to the Parent’s Separate and Consolidated Interim Financial Information

 

(In thousands of Brazilian Reais, unless otherwise stated)

 

c. Associates (Consolidated)

 

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

 

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

 

Subsidiary Cia. Ultragaz holds an interest in Metalúrgica Plus S.A. (“Metalplus”), 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. (“Plenogás”), which is primarily engaged in the marketing of LPG. The operations of this associate are currently suspended.

 

These investments are accounted for under the equity method of accounting based on the financial statements as of September 30, 2021.

  


Ultrapar Participações S.A. and Subsidiaries

 

Notes to the Parent’s Separate and Consolidated Interim Financial Information

 

(In thousands of Brazilian Reais, unless otherwise stated)

  

Balances and changes in associates are as follows:

 

 

Transportadora Sulbrasileira de Gás S.A.

 

Oxicap Indústria de Gases Ltda.

 

Química da Bahia Indústria e Comércio S.A.

 

Metalúrgica Plus S.A.

 

Plenogás Distribuidora de Gás S.A.

 

Total

Balance as of December 31, 2020

5,150

 

16,348

 

3,542

 

47

 

501

 

25,588

Capital decrease

(1,500)

 

-

 

-

 

-

 

-

 

(1,500)

Dividends

(746)

 

-

 

-

 

-

 

-

 

(746)

Share of profit (loss) of associates

1,533

 

133

 

(14)

 

(68)

 

108

 

1,692

Balance as of September 30, 2021

4,437

 

16,481

 

3,528

 

(21)

 

609

 

25,034

 

 

Transportadora Sulbrasileira de Gás S.A.

 

Oxicap Indústria de Gases Ltda.

 

Química da Bahia Indústria e Comércio S.A.

 

Metalúrgica Plus S.A.

 

Plenogás Distribuidora de Gás S.A.

 

Total

Balance as of December 31, 2019

5,661

 

15,934

 

3,554

 

138

 

463

 

25,750

Dividends

(1,357)

 

 

 

 

 

(1,357)

Share of profit (loss) of associates

848

 

607

 

(12)

 

(67)

 

19

 

1,395

Balance as of September 30, 2020

5,152

 

16,541

 

3,542

 

71

 

482

 

25,788


 

Ultrapar Participações S.A. and Subsidiaries

 

Notes to the Parent’s Separate and Consolidated Interim Financial Information

 

(In thousands of Brazilian Reais, unless otherwise stated)

 

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

 

 

09/30/2021

 

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

8,235

 

81,193

 

19

 

66

 

542

Non-current assets

11,916

 

68,860

 

10,145

 

198

 

2,194

Current liabilities

1,803

 

34,499

 

-

 

25

 

173

Non-current liabilities

601

 

6,305

 

3,109

 

302

 

737

Equity

17,747

 

109,249

 

7,055

 

(63)

 

1,826

Net revenue from sales and services

10,916

 

51,086

 

-

 

-

 

-

Costs, operating expenses and income

(4,377)

 

(49,236)

 

(28)

 

(159)

 

349

Net finance income and income and social contribution taxes

(401)

 

(966)

 

-

 

(47)

 

(27)

Net income (loss)

6,138

 

884

 

(28)

 

(206)

 

322

Number of shares or units held

20,124,996

 

1,987

 

1,493,120

 

3,000

 

1,384,308

% of capital held

25

 

15

 

50

 

33

 

33

 

 

12/31/2020

 

Transportadora Sulbrasileira de Gás S.A.

 

Oxicap Indústria de Gases Ltda.

 

Química da Bahia Indústria e Comércio S.A.

 

Metalúrgica Plus S.A.

 

Plenogás Distribuidora de Gás S.A.

Current assets

10,570

 

65,136

 

47

 

58

 

352

Non-current assets

12,822

 

77,339

 

10,146

 

414

 

2,196

Current liabilities

2,189

 

26,116

 

 

28

 

154

Non-current liabilities

602

 

7,994

 

3,109

 

302

 

890

Equity

20,601

 

108,365

 

7,084

 

142

 

1,504

Number of shares or units held

20,124,996

 

1,987

 

1,493,120

 

3,000

 

1,384,308

% of capital held

25

 

15

 

50

 

33

 

33

 

 

09/30/2020

 

Transportadora Sulbrasileira de Gás S.A.

 

Oxicap Indústria de Gases Ltda.

 

Química da Bahia Indústria e Comércio S.A.

 

Metalúrgica Plus S.A.

 

Plenogás Distribuidora de Gás S.A.

Net revenue from sales and services

8,629

 

45,240

 

-

 

-

 

-

Costs, operating expenses and income

(4,891)

 

(38,791)

 

(24)

 

(154)

 

327

Net finance income and income and social contribution taxes

(346)

 

(2,427)

 

-

 

(46)

 

(28)

Net income (loss)

3,392

 

4,022

 

(24)

 

(200)

 

299

Number of shares or units held

20,124,996

 

1,987

 

1,493,120

 

3,000

 

1,384,308

% of capital held

25

 

15

 

50

 

33

 

33

 

The percentages in the table above are rounded.

  

 

Ultrapar Participações S.A. and Subsidiaries

 

Notes to the Parent’s Separate and Consolidated Interim Financial Information

 

(In thousands of Brazilian Reais, unless otherwise stated)

13. Right-of-use assets and leases payable

 

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

 

a. Right-of-use assets

 

  •                  Parent

 

 

Weighted average useful life (years)

Balance on 12/31/2020

 

Additions and remeasurement

 

Write-offs

 

Amortization

 

Balance on 09/30/2021

Cost:

 

 

 

 

 

 

 

 

 

 

Real estate

7

41,923

 

2,286

 

-

 

-

 

44,209

Vehicles

3

2,591

 

332

 

(128)

 

-

 

2,795

 

 

44,514

 

2,618

 

(128)

 

-

 

47,004

Accumulated amortization:

 

 

 

 

 

 

 

 

 

 

Real estate

 

(8,963)

 

-

 

-

 

(3,816)

 

(12,779)

Vehicles

 

(489)

 

-

 

27

 

(685)

 

(1,147)

 

 

(9,452)

 

-

 

27

 

(4,501)

 

(13,926)

Net amount

 

35,062

 

2,618

 

(101)

 

(4,501)

 

33,078

  

 

Ultrapar Participações S.A. and Subsidiaries

 

Notes to the Parent’s Separate and Consolidated Interim Financial Information

 

(In thousands of Brazilian Reais, unless otherwise stated) 


  •                  Consolidated

 

 

Weighted average useful life (years)

Balance on 12/31/2020

 

Additions and remeasurement

 

Write-offs

 

Transfer (i)

 

Effect of foreign currency exchange rate variation

 

Amortization

 

Balance on 09/30/2021

Cost:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Real estate (ii)

10

2,254,432

 

241,995

 

(108,185)

 

-

 

575

 

-

 

2,388,817

Port area

20

268,534

 

16,191

 

-

 

-

 

-

 

-

 

284,725

Vehicles

4

139,843

 

25,651

 

(8,864)

 

-

 

37

 

-

 

156,667

Equipment

6

44,936

 

4,584

 

(4,335)

 

-

 

957

 

-

 

46,142

Others

20

27,846

 

-

 

-

 

-

 

-

 

-

 

27,846

 

 

2,735,591

 

288,421

 

(121,384)

 

-

 

1,569

 

-

 

2,904,197

Accumulated amortization:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Real estate

 

(481,975)

 

-

 

50,615

 

-

 

(222)

 

(210,781)

 

(642,363)

Port area

 

(3,962)

 

-

 

-

 

(10,759)

 

-

 

(5,234)

 

(19,955)

Vehicles

 

(63,091)

 

-

 

6,937

 

-

 

(15)

 

(36,019)

 

(92,188)

Equipment

 

(19,619)

 

-

 

4,646

 

-

 

(377)

 

(11,747)

 

(27,097)

Others

 

(16,658)

 

-

 

-

 

-

 

-

 

(915)

 

(17,573)

 

 

(585,305)

 

-

 

62,198

 

(10,759)

 

(614)

 

(264,696)

 

(799,176)

Impairment (iii)

 

-

 

-

 

-

 

-

 

-

 

-

 

-

Real estate

 

-

 

(11,980)

 

-

 

-

 

-

 

-

 

(11,980)

 

 

-

 

(11,980)

 

-

 

-

 

-

 

-

 

(11,980)

Net amount

 

2,150,286

 

276,441

 

(59,186)

 

(10,759)

 

955

 

(264,696)

 

2,093,041


(i) Refers to the amortization of right-of-use assets in the subsidiary Tequimar Vila do Conde Logística Portuária S.A. (“Tequimar Vila do Conde”), which is being capitalized as Construction in progress, as the terminal is under construction.
(ii)  Includes lease contracts as presented in Note 8.a.
(iii)  Refers to the allocation of the provision for the impairment of Extrafarma's assets (see Note 3.c.1).


 

Ultrapar Participações S.A. and Subsidiaries

 

Notes to the Parent’s Separate and Consolidated Interim Financial Information 

 

(In thousands of Brazilian Reais, unless otherwise stated)

 

b. Leases payable

 

The changes in leases payable are shown below:

 

 

Parent

 

Consolidated

Balance as of December 31, 2020

37,934

 

1,833,288

Interest accrued

2,425

 

112,561

Payments (i)

(6,214)

 

(333,224)

Additions and remeasurement

2,618

 

252,207

Write-offs

(104)

 

(64,371)

Effect of foreign currency exchange rate variation

-

 

15,291

Balance as of September 30, 2021

36,659

 

1,815,752

Current

5,472

 

269,498

Non-current

31,187

 

1,546,254

 

(i)  Includes the amount of R$ 29,237 paid by subsidiary Tequimar Vila do Conde related to port concession grants.


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

 

 

09/30/2021

 

Parent

 

Consolidated

Up to 1 year

8,335

 

421,271

From 1 to 2 years

8,177

 

368,746

From 2 to 3 years

7,377

 

334,227

From 3 to 4 years

7,192

 

299,019

From 4 to 5 years

6,995

 

221,502

More than 5 years

10,942

 

1,165,907

Total

49,018

 

2,810,672

 

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).

 

b.1. Discount rates

 

The weighted average discount rates for the lease contracts of the Company are:

 

Contracts for maturity date and discount rate

Maturity date of the contracts

Discount rates (% p.a.)

Up to 5 years

4.81

From 6 to 10 years

7.34

From 11 to 15 years

7.30

More than 15 years

8.28

 


Ultrapar Participações S.A. and Subsidiaries

 

Notes to the Parent’s Separate and Consolidated Interim Financial Information

 

(In thousands of Brazilian Reais, unless otherwise stated)


c. Lease contracts of low amount assets

 

Subsidiaries Cia. Ultragaz, Bahiana, Extrafarma, IPP, Serma and Oxiteno S.A. have operating lease contracts consider as low value, short term and variable payments for the use of factory and IT equipments, vehicles and real states. The subsidiaries have the option to purchase the assets referring to IT equipment at a price equal to the fair value on the date of option, and management does not intend to exercise such option. The future disbursements (payments), assumed as a result of these contracts amount approximately to:

 

 

Up to 1 year

Between 1 and 5 years

Total

09/30/2021

1,350

-

1,350

 

The amount of lease considered as of low value, short term and variable payments, recognized as an expense for the nine-month period ended September 30, 2021 was R$ 41,174 (R$ 14,184 for the nine-month period ended September 30, 2020).

 

d. Inflation effect

 

The effects of inflation are as follows:

 

Right to use asset, net

Parent

 

Consolidated

Nominal base

33,078

 

2,093,041

Inflated base

39,415

 

2,499,548

 

19.2%

 

19.4%

 

Lease liability

Parent

 

Consolidated

Nominal base

36,659

 

1,815,752

Inflated base

42,995

 

2,210,283

 

17.3%

 

21.7%

 

Financial expense

Parent

 

Consolidated

Nominal base

2,425

 

112,561

Inflated base

2,856

 

131,576

 

17.8%

 

16.9%

 

Amortization expense

Parent

 

Consolidated

Nominal base 

4,501

 

264,696

Inflated base

4,966

 

286,392

 

10.3%

 

8.2%

 


Ultrapar Participações S.A. and Subsidiaries

 

Notes to the Parent’s Separate and Consolidated Interim Financial Information

 

(In thousands of Brazilian Reais, unless otherwise stated)

14. Property, plant, and equipment

 

Balances and changes in PP&E are as follows:

 

  •                  Parent

 

 

Weighted average useful life (years)

Balance on 12/31/2020

 

Additions

 

Depreciation

 

Balance on 09/30/2021

Cost:

 

 

 

 

 

 

 

 

Buildings

35

-

 

144

 

-

 

144

Leasehold improvements

1

2,194

 

9,741

 

-

 

11,935

Machinery and equipment

2

82

 

42

 

-

 

124

Furniture and utensils

1

502

 

1,811

 

-

 

2,313

IT equipment

5

13,293

 

18

 

-

 

13,311

 

 

16,071

 

11,756

 

-

 

27,827

Accumulated depreciation:

 

 

 

 

 

 

 

 

Buildings

 

-

 

-

 

(23)

 

(23)

Leasehold improvements

 

(178)

 

-

 

(2,188)

 

(2,366)

Machinery and equipment

 

(6)

 

-

 

(15)

 

(21)

Furniture and utensils

 

(37)

 

-

 

(424)

 

(461)

IT equipment

 

(1,522)

 

-

 

(2,009)

 

(3,531)

 

 

(1,743)

 

-

 

(4,659)

 

(6,402)

Net amount

 

14,328

 

11,756

 

(4,659)

 

21,425

 


Ultrapar Participações S.A. and Subsidiaries

 

Notes to the Parent’s Separate and Consolidated Interim Financial Information

 

(In thousands of Brazilian Reais, unless otherwise stated)

 

  •                  Consolidated

 

 

Weighted average useful life (years)

Balance on 12/31/2020

 

Additions

 

Depreciation

 

Transfer (i) (ii)

 

Write-offs and disposals

 

Effect of foreign currency exchange rate variation

 

Balance on 09/30/2021

Cost:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Land

-

687,108

 

1,599

 

-

 

-

 

(11,298)

 

1,849

 

679,258

Buildings

33

2,154,710

 

37,853

 

-

 

41,098

 

(21,563)

 

14,583

 

2,226,681

Leasehold improvements

9

1,222,822

 

13,332

 

-

 

57,897

 

(26,996)

 

11

 

1,267,066

Machinery and equipment

13

6,498,362

 

123,514

 

-

 

270,162

 

(9,057)

 

50,018

 

6,932,999

Automotive fuel/lubricant distribution equipment and facilities

13

3,169,320

 

62,574

 

-

 

32,118

 

(26,548)

 

-

 

3,237,464

LPG tanks and bottles

9

776,479

 

80,326

 

-

 

1,567

 

(24,249)

 

-

 

834,123

Vehicles

8

310,836

 

10,291

 

-

 

4,433

 

(22,651)

 

41

 

302,950

Furniture and utensils

8

316,712

 

19,576

 

-

 

905

 

(10,008)

 

664

 

327,849

IT equipment

5

444,844

 

17,403

 

-

 

1,529

 

(3,750)

 

371

 

460,397

Construction in progress (ii)

-

580,695

 

514,047

 

-

 

(376,506)

 

-

 

2,170

 

720,406

Advances to suppliers

-

34,642

 

128

 

-

 

(18,686)

 

-

 

-

 

16,084

Imports in progress

-

866

 

3,942

 

-

 

(3,735)

 

-

 

39

 

1,112

 

 

16,197,396

 

884,585

 

-

 

10,782

 

(156,120)

 

69,746

 

17,006,389

 

 

Ultrapar Participações S.A. and Subsidiaries

 

Notes to the Parent’s Separate and Consolidated Interim Financial Information 

 

(In thousands of Brazilian Reais, unless otherwise stated)

 

 

 

Balance on 12/31/2020

 

Additions

 

Depreciation

 

Transfer (i) (ii)

 

Write-offs and disposals

 

Effect of foreign currency exchange rate variation

 

Balance on 09/30/2021

Accumulated depreciation:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Buildings

 

(851,397)

 

-

 

(50,912)

 

(94)

 

13,776

 

(3,503)

 

(892,130)

Leasehold improvements

 

(689,161)

 

-

 

(59,838)

 

94

 

23,854

 

(30)

 

(725,081)

Machinery and equipment

 

(3,598,304)

 

-

 

(258,943)

 

-

 

8,506

 

(10,266)

 

(3,859,007)

Automotive fuel/lubricant distribution equipment and facilities

 

(1,906,953)

 

-

 

(134,362)

 

(273)

 

19,811

 

-

 

(2,021,777)

LPG tanks and bottles

 

(454,651)

 

-

 

(46,152)

 

-

 

15,510

 

-

 

(485,293)

Vehicles

 

(143,854)

 

-

 

(17,189)

 

195

 

13,650

 

7

 

(147,191)

Furniture and utensils

 

(191,713)

 

-

 

(17,057)

 

129

 

9,858

 

(431)

 

(199,214)

IT equipment

 

(352,256)

 

-

 

(26,797)

 

(40)

 

3,267

 

(130)

 

(375,956)

 

 

(8,188,289)

 

-

 

(611,250)

 

11

 

108,232

 

(14,353)

 

(8,705,649)

Provision for losses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Land

 

(146)

 

-

 

-

 

-

 

-

 

-

 

(146)

Leasehold improvements

 

(61)

 

(43,860) (*)

 

-

 

-

 

-

 

(2)

 

(43,923)

Machinery and equipment

 

(2,857)

 

(356) (*)

 

-

 

-

 

-

 

(28)

 

(3,241)

Automotive fuel/lubricant distribution equipment and facilities

 

(73)

 

-

 

-

 

-

 

17

 

-

 

(56)

Vehicles

 

-

 

(161) (*)

 

-

 

-

 

-

 

-

 

(161)

Furniture and utensils

 

-

 

(16,038) (*)

 

-

 

-

 

-

 

-

 

(16,038)

IT equipment

 

-

 

(2,027) (*)

 

-

 

-

 

-

 

-

 

(2,027)

Advances to suppliers

 

(110)

 

-

 

-

 

-

 

-

 

-

 

(110)

 

 

(3,247)

 

(62,442)

 

-

 

-

 

17

 

(30)

 

(65,702)

Net amount

 

8,005,860

 

822,143

 

(611,250)

 

10,793

 

(47,871)

 

55,363

 

8,235,038


(i) Refers to R$ 34 transferred from intangible assets.
(ii)  Includes R$ 10,759 transferred from right-of-use assets.
(* Refers to the allocation of the provision for the impairment of Extrafarma's assets (see Note 3.c.1).


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. 

 


Ultrapar Participações S.A. and Subsidiaries

 

Notes to the Parent’s Separate and Consolidated Interim Financial Information

 

(In thousands of Brazilian Reais, unless otherwise stated) 

 

15. Intangible assets

 

Balances and changes in intangible assets are as follows

 

  •                  Parent

 

 

Weighted average useful life (years)

Balance on 12/31/2020

 

Additions

 

Amortization

 

Balance on 09/30/2021

Cost:

 

 

 

 

 

 

 

 

Goodwill (a)

-

246,163

 

-

 

-

 

246,163

Software (b)

5

9,111

 

97

 

-

 

9,208

 

 

255,274

 

97

 

-

 

255,371

Accumulated amortization:

 

 

 

 

 

 

 

 

Software

 

(1,032)

 

-

 

(1,387)

 

(2,419)

 

 

(1,032)

 

-

 

(1,387)

 

(2,419)

Net amount

 

254,242

 

97

 

(1,387)

 

252,952

 


Ultrapar Participações S.A. and Subsidiaries

 

Notes to the Parent’s Separate and Consolidated Interim Financial Information

 

(In thousands of Brazilian Reais, unless otherwise stated) 


  •                  Consolidated

 

 

Weighted average useful life (years)

Balance on 12/31/2020

 

Additions

 

Amortization

 

Transfer (i)

 

Write-offs and disposals

 

Effect of foreign currency exchange rate variation

 

Balance on 09/30/2021

Cost:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Goodwill (a)

-

1,525,088

 

-

 

-

 

-

 

-

 

-

 

1,525,088

Software (b)

4

1,395,046

 

156,560

 

-

 

(33)

 

(18,117)

 

744

 

1,534,200

Technology (c)

-

32,617

 

-

 

-

 

-

 

-

 

-

 

32,617

Distribution rights

12

133,599

 

-

 

-

 

-

 

-

 

-

 

133,599

Brands (d)

-

136,962

 

-

 

-

 

-

 

-

 

3,008

 

139,970

Trademark rights (d)

39

114,792

 

-

 

-

 

-

 

-

 

-

 

114,792

Others (e)

10

50,698

 

907

 

-

 

-

 

-

 

(156)

 

51,449

Decarbonization credits (f)

-

-

 

121,908

 

-

 

-

 

(56,661)

 

-

 

65,247

 

 

3,388,802

 

279,375

 

-

 

(33)

 

(74,778)

 

3,596

 

3,596,962

Accumulated amortization:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Software

 

(825,024)

 

-

 

(151,101)

 

(1)

 

18,117

 

(606)

 

(958,615)

Technology

 

(32,616)

 

-

 

-

 

-

 

-

 

-

 

(32,616)

Distribution rights

 

(113,326)

 

-

 

(2,403)

 

-

 

-

 

-

 

(115,729)

Trademark rights

 

(9,056)

 

-

 

(2,203)

 

-

 

-

 

-

 

(11,259)

Others

 

(32,845)

 

-

 

(118)

 

-

 

-

 

-

 

(32,963)

 

 

(1,012,867)

 

-

 

(155,825)

 

(1)

 

18,117

 

(606)

 

(1,151,182)

Provision for losses and impairment:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Goodwill (a)

 

(593,280)

 

(68,273) (*)

 

-

 

-

 

-

 

-

 

(661,553)

Distribution rights

 

-

 

(4,047) (*)

 

-

 

-

 

-

 

-

 

(4,047)

Brands (d)

 

-

 

(72,524) (*)

 

-

 

-

 

-

 

-

 

(72,524)

 

 

(593,280)

 

(144,844)

 

-

 

-

 

-

 

-

 

(738,124)

Net amount

 

1,782,655

 

134,531

 

(155,825)

 

(34)

 

(56,661)

 

2,990

 

1,707,656

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

(*) Refers to the allocation of the provision for the impairment of Extrafarma's assets (see Note 3.c.1).


 

Ultrapar Participações S.A. and Subsidiaries

 

Notes to the Parent’s Separate and Consolidated Interim Financial Information

 

(In thousands of Brazilian Reais, unless otherwise stated)

 

 a. Goodwill

 

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

 

 

Segment

09/30/2021

 

12/31/2020

Goodwill on the acquisition of:

 

 

 

 

Extrafarma

Extrafarma

661,553

 

661,553

Extrafarma – impairment

Extrafarma

(661,553)

 

(593,280)

Extrafarma – net

Extrafarma

-

 

68,273

Ipiranga (1)

Ipiranga

276,724

 

276,724

União Terminais

Ultracargo

211,089

 

211,089

Texaco

Ipiranga

177,759

 

177,759

Iconic (CBLSA)

Ipiranga

69,807

 

69,807

Oxiteno Uruguay

Oxiteno

44,856

 

44,856

Temmar

Ultracargo

43,781

 

43,781

DNP

Ipiranga

24,736

 

24,736

Repsol

Ultragaz

13,403

 

13,403

TEAS

Ultracargo

797

 

797

Others

Oxiteno

583

 

583

 

 

863,535

 

931,808

 

(1) Including R$ 246,163 at Ultrapar.

 

On December 31, 2020, the Company tested the balances of goodwill shown in the table above for impairment. The determination of value in use involves assumptions, judgments, and estimates of cash flows, such as growth rates of revenues, costs and expenses, estimates of investments and working capital, and discount rates. The assumptions about growth projections and future cash flows are based on the Company’s business plan of its operating segments, as well as comparable market data, and represent management’s best estimate of the economic conditions that will exist over the economic life of the various CGUs, to which goodwill is related. The main key-assumptions used by the Company to calculate the value in use are described below:

 

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

 

Discount and real growth rates: on December 31, 2020, the discount and real growth rates used to extrapolate the projections ranged from 8.5% to 11.0% 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 2021 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’s Separate and Consolidated Interim Financial Information

 

(In thousands of Brazilian Reais, unless otherwise stated)


On June 30, 2021, the Company realized the recovery test of the balance of goodwill and net assets of the subsidiary Extrafarma, considering the amount of the transaction mentioned in Note 3.c.1. The test indicated the need to recognize a loss in that quarter for the goodwill balance in that amount of R$ 68,273.

 

b. Software

 

Includes user licenses and costs for the implementation of the various systems used by the Company and its subsidiaries: integrated management and control, financial management, foreign trade, industrial automation, operational and storage management, accounting information, and other systems. Also include expenses related to software in progress in the amount of R$ 42,566 on September 30, 2021 (R$ 35,718 on December 31, 2020).

 

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.

 

f. Decarbonization credits

 

Represent the CBIOS acquired and recorded at acquisition cost. The amount in the “write-offs” column refers to CBIOS retired in the period, that can not be the object of future negotiation.


 

Ultrapar Participações S.A. and Subsidiaries

 

Notes to the Parent’s Separate and Consolidated Interim Financial Information 

 

(In thousands of Brazilian Reais, unless otherwise stated)

16. Loans, financing, debentures and hedge derivative financial instruments

 

a. Composition

 

  •                  Parent

 

Description

09/30/2021

 

12/31/2020

 

Index/ Currency

Weighted average financial charges 09/30/2021 – % p.a.

Maturity

Brazilian Reais:

 

 

 

 

 

 

 

Debentures – 6th issuance (f.5)

1,730,431

 

1,734,113

 

DI

105.3

2023

Notes – Ultrapar (g.1)

-

 

1,038,499

 

R$ + DI

-

2021

Total

1,730,431

 

2,772,612

 

 

 

 

Current

5,754

 

1,048,495

 

 

 

 

Non-current

1,724,677

 

1,724,117

 

 

 

 

 


Ultrapar Participações S.A. and Subsidiaries

 

Notes to the Parent’s Separate and Consolidated Interim Financial Information

 

(In thousands of Brazilian Reais, unless otherwise stated)


  •                  Consolidated

 

Description

09/30/2021

 

12/31/2020

 

Index/ Currency

Weighted average financial charges 09/30/2021 – % p.a.

Maturity

Foreign currency:

 

 

 

 

 

 

 

Notes in the foreign market (b) (*)

7,716,139

 

7,267,687

 

US$

5.3

2026 to 2029

Foreign loan (c.1) (*)

732,331

 

1,047,644

 

US$

4.0

2023

Foreign loan (c.1) (*)

274,542

 

261,284

 

US$ + LIBOR (1)

1.0

2022

Financial institutions (d)

167,459

 

154,783

 

US$

2.3

2021 to 2022

Financial institutions (d)

48,188

 

39,350

 

MX$ (2)

7.3

2021

Financial institutions (d)

-

 

312,200

 

US$ + LIBOR (1)

-

2021

Advances on foreign exchange contracts

-

 

105,579

 

US$

-

2021

Total foreign currency

8,938,659

 

9,188,527

 

 

 

 

 

 

 

 

 

 

 

 

Brazilian Reais:

 

 

 

 

 

 

 

Debentures – CRA (f.2, f.4 and f.6)

 2,072,431

 

 2,037,602

 

DI

95.8

2022 to 2023

Debentures – 6ª issuance (f.5)

 1,730,432

 

 1,734,113

 

DI

105.3

2023

Debentures – CRA (f.2, f.4, f.6 and f.10) (*) 

 1,904,586

 

 1,000,824

 

IPCA

4.7

2024 to 2028

Debentures – Ipiranga (f.1 and f.3)

 756,816

 

 1,679,036

 

DI

105.0

2022

Debentures – Ultracargo Logística and Tequimar Vila do Conde (f.8 and f.9) (*)

 457,687

 

-

 

IPCA

4.1

2028

Banco do Brasil (e)

 204,033

 

 407,420

 

DI

110.9

2022

Debentures – Ultracargo Logística (f.7) (*)

 82,615

 

 92,541

 

R$

6.5

2024

Bank Credit Bill

 50,000

 

 50,692

 

R$ + DI

2.0

2022

FINEP

 21,160

 

 29,803

 

TJLP (3)

1.6

2021 to 2023

Notes - Ultrapar (g.1)

-

 

 1,038,499

 

R$ + DI

-

2021

Total in Brazilian Reais

 7,279,760

 

 8,070,530

 

 

 

 

Total foreign currency and Brazilian Reais

 16,218,419

 

 17,259,057

 

 

 

 

Currency and interest rate hedging instruments (**)

 190,689

 

 117,159

 

 

 

 

Total

 16,409,108

 

 17,376,216

 

 

 

 

Current

 2,420,984

 

 3,255,944

 

 

 

 

Non-current

 13,988,124

 

 14,120,272

 

 

 

 

 

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

 

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

 

(1)   LIBOR = London Interbank Offered Rate.

 

(2)   MX$ = Mexican Peso.

 

(3)   TJLP (Long-term Interest Rate) = set by the National Monetary Council, TJLP is the basic financing cost of Banco Nacional de Desenvolvimento Econômico e Social (“BNDES”), the Brazilian Development Bank. On September 30, 2021, TJLP was fixed at 4.88% p.a.

 

 

Ultrapar Participações S.A. and Subsidiaries

 

Notes to the Parent’s Separate and Consolidated Interim Financial Information 

 

(In thousands of Brazilian Reais, unless otherwise stated)


The changes in loans, financing, debentures and hedge derivative financial instruments are shown below:

 

 

Parent

 

Consolidated

Balance as of December 31, 2020

2,772,612

 

17,376,216

New loans and debentures with cash effect

-

 

1,441,388

Interest accrued

60,690

 

559,307

Principal payment

(1,000,000)

 

(2,909,064)

Interest payment

(102,871)

 

(463,203)

Monetary and exchange rate variation

-

 

487,476

Change in fair value

-

 

(156,542)

Hedge result

-

 

73,530

Balance as of September 30, 2021

1,730,431

 

16,409,108

 

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

 

 

Parent

 

Consolidated

 

09/30/2021

 

12/31/2020

 

09/30/2021

 

12/31/2020

From 1 to 2 years

1,724,677

 

(750)

 

3,124,689

 

2,702,626

From 2 to 3 years

-

 

1,724,867

 

1,124,522

 

3,091,641

From 3 to 4 years

-

 

-

 

330,120

 

784,778

From 4 to 5 years

-

 

-

 

261,378

 

231,271

More than 5 years

-

 

-

 

9,147,415

 

7,309,956

 

1,724,677

 

1,724,117

 

13,988,124

 

14,120,272

 

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

 

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



Ultrapar Participações S.A. and Subsidiaries

 

Notes to the Parent’s Separate and Consolidated Interim Financial Information

 

(In thousands of Brazilian Reais, unless otherwise stated)


b.  Notes in the foreign market

 

On October 6, 2016 the subsidiary Ultrapar International S.A. (“Ultrapar International”) issued US$ 750,000 (equivalent to R$ 4,079,550 as of September 30, 2021) 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 Notes 33.h.2 and 33.h.3).

 

On June 6, 2019 the subsidiary Ultrapar International issued US$ 500,000 (equivalent to R$ 2,719,700 as of September 30, 2021) in notes in the foreign market, maturing in June 2029, with interest rate of 5.25% p. a., paid semiannually. The issue price was 100% of the face value of the note. The notes were guaranteed by the Company and its subsidiary IPP. The Company has designated hedge relationships for part of this transaction (see Note 33.h.3).

 

On June 21, 2019, the subsidiary Ultrapar International repurchased US$ 200,000 (equivalent to R$ 1,087,880 as of September 30, 2021) in notes in the foreign market maturing in October 2026.

 

On July 13, 2020 the subsidiary Ultrapar International made the reopening of notes in the foreign market issued in 2019, realizing new issuance in the amount of US$ 350,000 (equivalent to R$ 1,903,790 as of September 30, 2021) maturing in June 2029, to the coupon (interest) and yield of 5.25% per year, paid semiannually. The issue price was 99.994% of face value of the note. The notes were guaranteed by the Company and the subsidiary IPP.

 

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

 

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

 

  • Restriction on encumbrance of assets exceeding US$ 150,000 (equivalent to R$ 815,910 as of September 30, 2021) 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.

 


Ultrapar Participações S.A. and Subsidiaries

 

Notes to the Parent’s Separate and Consolidated Interim Financial Information

 

(In thousands of Brazilian Reais, unless otherwise stated)


c. Foreign loans

 

c.1. The subsidiary IPP has foreign loans in the amount of US$ 175,000 (equivalent to R$ 951,895 as of September 30, 2021). 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 104.9% of DI. IPP designated these hedging instruments as a fair value hedge (see Note 33.h.1). Therefore, loans and hedging instruments are both measured at fair value from inception, with changes in fair value recognized through profit or loss. The foreign loans are secured by the Company.

 

The foreign loans have the maturity distributed as follows:

 

Maturity

US$

 

R$

 

Cost in % of DI

Charges (1)

10,107

 

54,978

 

-

Jun/2022

50,000

 

271,970

 

104.8

Sep/2023

60,000

 

326,364

 

104.9

Sep/2023

65,000

 

353,561

 

105.0

Total / average cost

185,107

 

1,006,873

 

104.9

 

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

 

d. 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 had loan with bearing interest of LIBOR + 1.4% and maturity in September 2021. The loan was fully settled on maturity.

 

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

 

The subsidiary of Oxiteno México S.A de C.V has a contracted loan of US$ 20,000 (equivalent to R$ 108,788 on September 30, 2021) with maturity in April 2022. The other maturities of this item are represented by Oxiteno Uruguay with maturity between October 2021 and July 2022.

 


Ultrapar Participações S.A. and Subsidiaries

 

Notes to the Parent’s Separate and Consolidated Interim Financial Information

 

(In thousands of Brazilian Reais, unless otherwise stated)


e. Banco do Brasil

 

The subsidiary IPP has floating interest rate loans with Banco do Brasil to marketing, processing, or manufacturing of agricultural goods (ethanol).

 

These loans mature, as follows (includes accrued interest through September 30, 2021):

 

Maturity

 

09/30/2021

May/2022

 

204,033

Total

 

204,033

 

f. Debentures

 

f.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

 

Subsidiary IPP paid in advance its fourth public issuance of debentures upon maturity.

 

f.2 In April 2017 the subsidiary IPP carried out its fifth issuance of debentures, in two series, being one of 660,139 and another of 352,361, simple, nonconvertible into shares, nominative, book-entry and unsecured debentures. The debentures have been subscribed by Eco Consult – Consultoria de Operações Financeiras Agropecuárias Ltda. The proceeds from this issuance were used exclusively for the purchase of ethanol by subsidiary IPP.

 

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

 

Amount:

660,139

Face value unit:

R$ 1,000.00

Final maturity:

April 18, 2022

Payment of the face value:

Lump sum at final maturity

Interest:

95.0% of DI

Payment of interest:

Semiannually

Reprice:

Not applicable

 


Ultrapar Participações S.A. and Subsidiaries

 

Notes to the Parent’s Separate and Consolidated Interim Financial Information

 

(In thousands of Brazilian Reais, unless otherwise stated)


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.

 

f.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

 

f.4 In October 2017 the subsidiary IPP carried out its seventh issuance of debentures in the amount of R$ 944,077, in two series, being on of 730,384 and another of 213,693, simple, nonconvertible into shares, nominative, book-entry and unsecured debentures. The debentures have been subscribed by Vert Companhia Securitizadora. The proceeds from this issuance were used exclusively for the purchase of ethanol by subsidiary IPP.

 

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

 

Amount:

730,384

Face value unit:

R$ 1,000.00

Final maturity:

October 24, 2022

Payment of the face value:

Lump sum at final maturity

Interest:

95.0% of DI

Payment of interest:

Semiannually

Reprice:

Not applicable

 

Amount:

213,693

Face value unit:

R$ 1,000.00

Final maturity:

October 24, 2024

Payment of the face value:

Lump sum at final maturity

Interest:

IPCA + 4.34%

Payment of interest:

Annually

Reprice:

Not applicable

 


Ultrapar Participações S.A. and Subsidiaries

 

Notes to the Parent’s Separate and Consolidated Interim Financial Information

 

(In thousands of Brazilian Reais, unless otherwise stated)


The subsidiary 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.

 

f.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

 

f.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.

 


Ultrapar Participações S.A. and Subsidiaries

 

Notes to the Parent’s Separate and Consolidated Interim Financial Information

 

(In thousands of Brazilian Reais, unless otherwise stated)

 

f.7 In November 2019 the subsidiary Ultracargo Logística made its first issuance of debentures, in a single series of 90,000 simple, nonconvertible into shares and unsecured debentures, which main characteristics are as follows:

 

Face value unit:

R$ 1,000.00

Final maturity:

November 19, 2024

Payment of the face value:

Lump sum at final maturity

Interest:

6.47%

Payment of interest:

Semiannually

Reprice:

Not applicable

 

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

 

f.8 In March 2021 the subsidiary Tequimar Vila do Conde made its first issuance of debentures, in a single series of 360,000 simple, nonconvertible into shares and unsecured debentures, which main characteristics are as follows:

 

Face value unit:

R$ 1,000.00

Final maturity:

March 15, 2028

Payment of the face value:

Lump sum at final maturity

Interest:

IPCA + 4.04%

Payment of interest:

Semiannually

Reprice:

Not applicable

 

The subsidiary Tequimar Vila do Conde contracted hedging instruments subjected interest rate variation changing the debentures fixed for 111.4% of the DI. Tequimar Vila do Conde designated these hedging instruments as fair value hedges therefore debentures and hedging instruments are both measured at fair value from inception with changes in fair value recognized in profit or loss.

 

f.9 In March 2021 the subsidiary Ultracargo Logística made its second issuance of debentures, in a single series of 100,000 simple, nonconvertible into shares and unsecured debentures, which main characteristics are as follows:

 

Face value unit:

R$ 1,000.00

Final maturity:

March 15, 2028

Payment of the face value:

Lump sum at final maturity

Interest:

IPCA + 4.37%

Payment of interest:

Semiannually

Reprice:

Not applicable

 

The subsidiary Ultracargo Logística contracted hedging instruments subjected interest rate variation changing the debentures fixed for 111.4% of the DI. Ultracargo Logística designated these hedging instruments as fair value hedges therefore debentures and hedging instruments are both measured at fair value from inception with changes in fair value recognized in profit or loss.

 


Ultrapar Participações S.A. and Subsidiaries

 

Notes to the Parent’s Separate and Consolidated Interim Financial Information

 

(In thousands of Brazilian Reais, unless otherwise stated)

 

f.10 In September 2021, subsidiary IPP carried out its tenth issue of debentures in the total amount of R$ 960,000, in a single series of 960,000 simple, nonconvertible, registered, book-entry and unsecured debentures, privately placed by Vert Companhia Securitizadora. The funds were used exclusively for the purchase of ethanol by the subsidiary IPP. The debentures were subscribed for the purpose to bind the issuance of CRA. The financial settlement ocurred on September 16, 2021. The debentures have an additional guarantee from Ultrapar and the main characteristics are as follows:

 

Amount:

960,000

Face value unit:

R$ 1,000.00

Final maturity:

September 15, 2028

Payment of the face value:

Lump sum at final maturity

Interest:

IPCA + 4.83%

Payment of interest:

Semiannually

Reprice:

Not applicable

 

The subsidiary IPP contracted hedging instruments subjected to IPCA variation, changing the debentures charges linked to the IPCA to 102.75% of the 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.

 

The debentures have maturity dates distributed as shown below (includes accrued interest through September 30, 2021):

 

Maturity

 

09/30/2021

Charges (1)

 

(23,286)

Apr/2022

 

660,139

Jul/2022

 

750,000

Oct/2022

 

730,384

Mar/2023

 

1,725,000

Dec/2023

 

660,000

Apr/2024

 

429,172

Oct/2024

 

258,420

Nov/2024

 

90,000

Dec/2025

 

278,866

Mar/2028

 

481,904

Sep/2028

 

963,968

Total

 

7,004,567

 

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

 


Ultrapar Participações S.A. and Subsidiaries

 

Notes to the Parent’s Separate and Consolidated Interim Financial Information

 

(In thousands of Brazilian Reais, unless otherwise stated)


g. Notes

 

g.1 In April 2020 the Company made its second public issuance of notes in a single series of 40 commercial notes, not convertible into shares, of unsecured type, whose main characteristics are:

 

Face value unit:

R$ 25,000,000.00

Final maturity:

April 6, 2021

Payment of the face value:

Lump sum at final maturity

Interest:

DI + 3.10%

Payment of interest:

Lump sum at final maturity

Reprice:

Not applicable

 

The Company paid in advance its second public issuance of notes on maturity.

 

h. Transaction costs

 

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

 

 

Effective rate of transaction costs (% p.a.)

 

Balance on 12/31/2020

 

Incurred cost

 

Amortization

 

Balance on 09/30/2021

Debentures (f)

0.2

 

28,348

 

40,953

 

(10,323)

 

58,978

Notes in the foreign market (b)

0.1

 

37,112

 

-

 

(3,657)

 

33,455

Notes (g)

0.5

 

1,318

 

-

 

(1,318)

 

-

Banco do Brasil (e)

0.1

 

332

 

-

 

(211)

 

121

Total

 

 

67,110

 

40,953

 

(15,509)

 

92,554


 

Ultrapar Participações S.A. and Subsidiaries

 

Notes to the Parent’s Separate and Consolidated Interim Financial Information

 

(In thousands of Brazilian Reais, unless otherwise stated)


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

 

 

Up to 1 year

 

1 to 2 years

 

2 to 3 years

 

3 to 4 years

 

4 to 5 years

 

More than 5 years

 

Total

Debentures (f)

16,375

 

11,633

 

8,072

 

6,136

 

5,926

 

10,836

 

58,978

Notes in the foreign market (b)

4,892

 

4,896

 

4,912

 

4,902

 

4,905

 

8,948

 

33,455

Banco do Brasil (e)

121

 

-

 

-

 

-

 

-

 

-

 

121

Total

21,388

 

16,529

 

12,984

 

11,038

 

10,831

 

19,784

 

92,554

 

i. Guarantees

 

The financings are guaranteed by collateral in the amount of R$ 76,901 as of September 30, 2021 (R$ 75,251 as of December 31, 2020) and by guarantees and promissory notes in the amount of R$ 14,051,237 as of September 30, 2021 (R$ 13,758,033 as of December 31, 2020). 

 

The Company and its subsidiaries offer collateral in the form of letters of credit for commercial and legal proceedings in the amount of R$ 119,497 as of September 30, 2021 (R$ 129,139 as of December 31, 2020).

 

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

 

IPP

 

09/30/2021

 

12/31/2020

Maximum amount of future payments related to these collaterals

466,096

 

330,944

Maturities of up to

49 months

 

46 months

Fair value of collaterals

8,797

 

5,496

 

If a subsidiary is required to make any payment under these collaterals, this subsidiary may recover the amount paid directly from its customers through commercial collection. Until September 30, 2021 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.  

 

 

Ultrapar Participações S.A. and Subsidiaries

 

Notes to the Parent’s Separate and Consolidated Interim Financial Information

 

(In thousands of Brazilian Reais, unless otherwise stated)

17. Trade payables

 

a. Trade payables

 

 

Parent

 

Consolidated

 

09/30/2021

 

12/31/2020

 

09/30/2021

 

12/31/2020

Domestic suppliers

21,901

 

16,870

 

2,631,602

 

2,306,398

Domestic suppliers – related parties (see Note 8.a.2)

-

 

-

 

8,081

 

5,102

Foreign suppliers

-

 

-

 

479,592

 

307,486

Foreign suppliers - related parties (see Note 8.a.2)

-

 

-

 

163,850

 

126,033

 

21,901

 

16,870

 

3,283,125

 

2,745,019

 

b. Trade payables – reverse factoring

 

 

Consolidated

 

09/30/2021

 

12/31/2020

Domestic suppliers – reverse factoring

2,556,207

 

1,021,424

Domestic suppliers – reverse factoring - related parties (see Note 8.a.2)

172,211

 

61,989

Foreign suppliers – reverse factoring

352,573

 

212,220

 

3,080,991

 

1,295,633

 

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

 

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

18. Salaries and related charges

 

 

Parent

 

Consolidated

 

09/30/2021

 

12/31/2020

 

09/30/2021

 

12/31/2020

Provisions on salaries

15,229

 

7,886

 

273,137

 

195,286

Profit sharing, bonus and premium

20,396

 

27,779

 

179,544

 

184,306

Social charges

8,780

 

5,632

 

78,479

 

73,267

Others

429

 

1,103

 

17,843

 

15,771

 

44,834

 

42,400

 

549,003

 

468,630



Ultrapar Participações S.A. and Subsidiaries

 

Notes to the Parent’s Separate and Consolidated Interim Financial Information

 

(In thousands of Brazilian Reais, unless otherwise stated)

19. Taxes payable

 

 

 

Parent

 

Consolidated

 

 

09/30/2021

 

12/31/2020

 

09/30/2021

 

12/31/2020

ICMS

 

-

 

-

 

168,594

 

180,522

IPI

 

-

 

-

 

17,508

 

8,952

PIS and COFINS

 

444

 

569

 

5,907

 

13,187

ISS

 

47

 

49

 

44,340

 

38,328

Value-added tax (IVA) of foreign subsidiaries

 

-

 

-

 

22,766

 

27,322

Others

 

215

 

194

 

24,378

 

17,703

 

 

706

 

812

 

283,493

 

286,014

20. Employee benefits and private pension plan (Consolidated)

 

a. ULTRAPREV - Associaçăo de Previdência Complementar

 

In February 2001 the Company’s Board of Directors approved the adoption of a defined contribution pension plan to be sponsored by the Company and its subsidiaries. Participating employees have been contributing to this plan, managed by Ultraprev - Associação de Previdência Complementar (“Ultraprev”), since August 2001. Under the terms of the plan, every year each participating employee chooses his or her basic contribution to the plan. Each sponsoring company provides a matching contribution in an amount equivalent to each basic contribution, up to a limit of 11% of the employee’s reference salary, according to the rules of the plan. As participating employees retire, they may choose to receive either (i) a monthly sum ranging between 0.3% and 1.0% of their respective accumulated fund in Ultraprev or (ii) a fixed monthly amount, which will exhaust their respective accumulated fund over a period of 5 to 35 years. The Company and its subsidiaries do not take responsibility for guaranteeing amounts or the duration of the benefits received by the retired employee.

 

In May 2020 the Deliberative Council of Ultraprev approved the use of the reversion fund in the amount of R$ 47,088, and in May 2021 the additional use in the amount of R$ 3,706. The amount of R$ 23,988 was used to deduct the sponsors’ normal contributions. The balance of R$ 26,806 on September 30, 2021 will be used to deduct normal sponsor contributions in a period up to 66 months depending on the sponsor.

 

For the nine-month period ended September 30, 2021, the subsidiaries contributed to Ultraprev with R$ 17,675, including the use of the reversion fund of R$ 12,968 (for the nine-month period ended September 30, 2021 the subsidiaries contributed to Ultraprev with R$ 15,924, including the use of the reversion fund of R$ 6,439, for the nine-month period ended September 30, 2020), which is recognized as expense in the income statement. The total number of participating employees as of September 30, 2021 was 6,690 active participants and 375 retired participants. In addition Ultraprev had 23 former employees receiving benefits under the rules of a previous plan whose reserves are fully constituted.

 


Ultrapar Participações S.A. and Subsidiaries

 

Notes to the Parent’s Separate and Consolidated Interim Financial Information

 

(In thousands of Brazilian Reais, unless otherwise stated)


b. Post-employment benefits

 

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

 

The amounts related to such benefits were determined based on a valuation conducted by an independent actuary and reviewed by management as of September 30, 2021.

 

 

Parent

 

Consolidated

 

09/30/2021

 

12/31/2020

 

09/30/2021

 

12/31/2020

Health and dental care plan (1)

-

 

-

 

208,568

 

200,318

Indemnification of FGTS

2,824

 

2,527

 

53,769

 

53,952

Seniority bonus

-

 

-

 

12,949

 

16,336

Life insurance (1)

-

 

-

 

14,716

 

14,118

Total

2,824

 

2,527

 

290,002

 

284,724

Current

-

 

-

 

27,221

 

27,077

Non-current

2,824

 

2,527

 

262,781

 

257,647

 

(1) Only IPP, Tropical and Iconic.

 

21. Provision for asset retirement obligation – fuel tanks (Consolidated)

 

The provision corresponds to the legal obligation to remove the subsidiary IPP’s underground fuel tanks located at by 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, 2020

53,435

Additions (new tanks)

301

Expenditure with tanks removed

(2,186)

Accretion expense

3,725

Balance as of September 30, 2021

55,275

Current

4,512

Non-current

50,763


 

Ultrapar Participações S.A. and Subsidiaries

 

Notes to the Parent’s Separate and Consolidated Interim Financial Information

 

(In thousands of Brazilian Reais, unless otherwise stated)

22. Provisions and contingencies (Consolidated)

 

a. Provisions for tax, civil, and labor risks

 

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

 

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

 

Provisions

Balance on 12/31/2020

 

Additions

 

Reversals

 

Payments

 

Interest

 

Balance on 09/30/2021

IRPJ and CSLL (a.1.1)

547,862

 

-

 

-

 

-

 

6,480

 

554,342

ICMS (c)

108,568

 

2,236

 

(82,149)

 

-

 

96

 

28,751

Civil, environmental and regulatory claims (a.2.1)

57,772

 

12,846

 

(5,805)

 

(7,789)

 

696

 

57,720

Labor litigation (a.3.1)

90,675

 

5,894

 

(2,004)

 

(12,383)

 

1,922

 

84,104

Others

93,168

 

71

 

(294)

 

-

 

573

 

93,518

Total

898,045

 

21,047

 

(90,252)

 

(20,172)

 

9,767

 

818,435

Current

43,660

 

 

 

 

 

 

 

 

 

21,273

Non-current

854,385

 

 

 

 

 

 

 

 

 

797,162

 

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

 

Balances of escrow deposits are as follows:

 

 

09/30/2021

 

12/31/2020

Tax matters

716,368

 

789,624

Labor litigation

56,778

 

57,603

Civil and others

95,224

 

102,569

Total – non-current assets

868,370

 

949,796

 

a.1 Provisions for tax matters

 

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$ 529,857 as of September 30, 2021 (R$ 523,136 as of December 31, 2020). On July 18, 2014 a second instance unfavorable decision was published, and the subsidiaries suspended the escrow deposits, and started to pay income taxes from that date. To revert the court decision the subsidiaries presented a writ of prevention which was dismissed on December 30, 2014 and the subsidiaries appealed this decision on February 3, 2015. Appeals were also presented to the respective higher courts Superior Court of Justice (STJ”) and Federal Supreme Court (“STF) whose final trial are pending.



Ultrapar Participações S.A. and Subsidiaries

 

Notes to the Parent’s Separate and Consolidated Interim Financial Information

 

(In thousands of Brazilian Reais, unless otherwise stated)


a.2 Provisions for civil, environmental and regulatory claims

 

a.2.1 The Company and its subsidiaries maintain provisions for lawsuits and administrative proceedings, mainly derived from contracts entered into with customers and former services providers, as well as proceedings related to environmental and regulatory issues in the amount of R$ 57,720 as of September 30, 2021 (R$ 57,772 as of December 31, 2020).

 

a.3 Provisions for labor matters

 

a.3.1 The Company and its subsidiaries maintain provisions of R$ 84,104 as of September 30, 2021 (R$ 90,675 as of December 31, 2020) for labor litigation filed by former employees and by employees of our service providers mainly contesting the non-payment of labor rights.

 

b. Contingent liabilities

 

The Company and its subsidiaries are parties in tax, civil, environmental, regulatory, and labor claims whose loss 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 these assessments, these claims were not recognized in the financial statements. The estimated amount of this contingency is R$ 3,929,251 as of September 30, 2021 (R$ 3,236,982 as of December 31, 2020).

 

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$ 2,875,726 as of September 30, 2021 (R$ 2,419,000 as of December 31, 2020), 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$ 178,398 as of September 30, 2021 (R$ 176,390 as of December 31, 2020).

 

b.1.2 The subsidiary IPP and its subsidiaries have legal proceedings related to ICMS. The total amount involved in these proceedings, was R$ 1,051,575 as of September 30, 2021 (R$ 958.134 as of December 31, 2020). Such proceedings arise mostly of the disregard of ICMS credits amounting to R$ 277,807 as of September 30, 2021 (R$ 300,707 as of December 31, 2020), of which R$ 78,473 (R$ 92,687 as of December 31, 2020) refer to proportional reversal requirement of ICMS credits related to the acquisition of hydrated alcohol; of alleged non-payment in the amount of R$ 106,889 as of September 30, 2021 (R$ 98,157 as of December 31, 2020); of conditioned fruition of fiscal incentive in the amount of R$ 143,033 as of September 30, 2021 (R$ 119,894 as of December 31, 2020); of inventory differences in the amount of R$ 278,171 as of September 30, 2021 (R$ 269,581 as of December 31, 2020); and of fiscal equilibrium fund in the amount of R$ 59,063 related to the leftovers or faults due to temperature changes or product handling.

 

b.1.3 The subsidiary Oxiteno S.A. received, tax assessment notices referring to ICMS of the State of Bahia in the amount of R$ 138,492 on September 30, 2021, arising from alleged differences found in the inventory audit and divergences in the calculation of imported content that would imply an ICMS rate higher than applied by the subsidiary.



Ultrapar Participações S.A. and Subsidiaries

 

Notes to the Parent’s Separate and Consolidated Interim Financial Information

 

(In thousands of Brazilian Reais, unless otherwise stated)


b.1.4 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$ 849,960 as of September 30, 2020 (R$ 709,338 as of December 31, 2020), mainly represented by:

 

b.1.4.1 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$ 215,936 as of September 30, 2021 (R$ 212,350 as of December 31, 2020), 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. Management assessed the likelihood of loss in this case as "possible", supported by the opinion of its legal advisors, 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$ 791,167 as of September 30, 2021 (R$ 561,713 as of December 31, 2020), 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$ 34,162 as of September 30, 2021 (R$ 33,895 as of December 31, 2020). The imposition of such administrative decision was suspended by a court order and its merit is being judicially reviewed.

 

b.2.2 The subsidiary Cia. Ultragaz has lawsuits totaling the amount of R$ 234,322 (R$ 186,381 on December 31, 2020) filed by resellers seeking the declaration of nullity and termination of distribution contracts, in addition to indemnities for losses and damages.

 

b.2.3 The subsidiary IPP became party to two administrative proceedings filed by CADE, related to allegations of anti-competitive practices in the city of Joinville, State of Santa Catarina and in the Distrito Federal. The process related to the anti-competitive acts of Joinville, established in October 2015, is under judgment (until now two favorable votes and one unfavorable vote have been pronounced) while the lawsuit related to the Distrito Federal, from an administrative inquiry initiated in May 2012, which was converted into an administrative proceeding in June 2020, is in the stage of presentation of defense. Besides these, in April 2019, IPP received an administrative fine in the amount of R$ 40,693, for allegedly influencing uniform commercial conduct among fuel resellers around the city of Belo Horizonte, state of Minas Gerais. In this case, there was an option for the judicial discussion of the assessment and penalty applied, which has as last relevant movement the presentation of a reply by IPP, and it is certain that a decision has already been issued granting protection to suspend the enforceability of the fine. Management did not recognize a provision for these contingencies, supported by the opinion of external legal counsel that classified the probability of loss as remote. Management did not recognize a provision for these contingencies, supported by the opinion of external lawyers, who classify the likelihood of loss as remote.



Ultrapar Participações S.A. and Subsidiaries

 

Notes to the Parent’s Separate and Consolidated Interim Financial Information

 

(In thousands of Brazilian Reais, unless otherwise stated)

 

b.2.4 On November 29, 2016 a technical opinion was issued by the Operational Support Center for Execution (Centro de Apoio Operacional à Execução CAEX), a technical body linked to the São Paulo State Public Prosecutor (“MPE”), presenting a proposal of compensation for the alleged environmental damages caused by the fire on April 2nd, 2015 at the Santos Terminal of the subsidiary Ultracargo Logística. 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 Ultracargo Logística 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 negotiation on compensation for other alleged damages are still ongoing and once concluded, the payments related to the project costs may affect the future Company’s financial statements.

 

In the criminal sphere, the MPF denounced the subsidiary Ultracargo Logística, 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 Ultracargo Logística agreed, and the judicial authority approved, the conditional suspension of the criminal proceedings for a period of 2 years, when Ultracargo Logística shall then prove compliance with the execution of the Partial TAC signed, with the obligation of a complementary allocation of R$ 13,000 to TAC and the Fisheries Management Project, to obtain the definitive filing of the process. On February 4, 2021, the subsidiary paid the remaining balance referring to the TAC, without pending and/or additional financial obligation arising from such commitment assumed. In addition, as of September 30, 2021, there are contingent liabilities not recognized related to lawsuits in the amount of R$ 2,350 (R$ 4,428 as of December 31, 2020). Between December 31, 2020 and September 30, 2021, there were not extrajudicial claims.

 

b.3 Contingent liabilities for labor matters

 

The Company and its subsidiaries have contingent liabilities for labor matters in the amount of R$ 262,359 as of September 30, 2021 (R$ 256,269 as of December 31, 2020), mainly represented by:

 

b.3.1 The Petrochemical Industry Labor Union (Sindiquímica), of which the employees of Oxiteno S.A. and EMCA, companies located in the Camaçari Petrochemical Complex, are members, filed, in 1990, collective lawsuits against the subsidiaries, demanding the compliance of the fourth section of the collective labor agreement 1989/1990 (CCT 1989/1990), which provided for a salary, adjustment in lieu of the salary policies practiced. The collective actions against the subsidiaries, which have already become final, were judged in a favorable way to Oxiteno Nordeste and EMCA. At the same time, in 1990, there was the proposal for a collective agreement of, which appeared in the collective action, the Union of Employees and the Union of Companies (SINPEQ), discussing the same object (validity of the fourth clause of CCT 1989/1990). This action that transit judged only in October 2019, and remained unfavorable to SINPEQ, having the STF declared valid the fourth clause. During the process of collective agreement between the Unions, some companies in the Camaçari Petrochemical Complex signed an agreement with Sindiquímica. In October 2015 Sindiquímica filed enforcement lawsuits against Oxiteno Nordeste and, in 2017, EMCA, because these companies did not sign the agreement of 2010 with Sindiquímica. In addition to collective actions, individual claims containing the same object have been filed. In all the ongoing lawsuits whose object is the fourth clause, all applicable legal measures have been taken to defend companies and there are not new final decisions in addition to those judged in favor of companies in the 1990s.



Ultrapar Participações S.A. and Subsidiaries

 

Notes to the Parent’s Separate and Consolidated Interim Financial Information

 

(In thousands of Brazilian Reais, unless otherwise stated)


c. Lubricants operation between IPP and Chevron

 

In the process of transaction of the lubricants' operation in Brazil between Chevron and subsidiary IPP (see Note 3.c of Interim Financial Information of 2018 filed on CVM February 20, 2019), it was agreed that each shareholder is responsible for any claims arising out of acts, facts or omissions that occurred prior to the transaction. The liability provisions of the Chevron shareholder in the amount of R$ 20,804 (R$ 101,663 as of December 31, 2020) 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$ 102,777 as of September 30, 2021 (R$ 102,777 as of December 31, 2020. The amounts of provisions of Chevron's liability recognized in the business combination will be reimbursed to subsidiary Iconic in the event of losses and an indemnity asset was hereby constituted in the same amount, without the need to establish a provision for uncollectible amounts.

 

Part of the provision of the Chevron related to the ICMS tax assessment (R$ 81,060), for the period from July 1996 to December 1997, was definitively extinguished through the payment made by the Chevron in the tax amnesty program, established by the Agreement ICMS/RJ No. 51/2020 (Decree/RJ No. 47,332/2020 and State Law of RJ No. 9,041/2020) on April 16, 2021.

 

The value of the provision of the Chevron in the amount of R$ 20,804, refers to: (i) R$ 17,024 ICMS assessments on sales for industrial purposes, in which the STF closed the judgment of the thesis unfavorably to taxpayers; (ii) R$ 3,498 labor claims and (iii) R$ 282 civil, regulatory and environmental claims.



Ultrapar Participações S.A. and Subsidiaries

 

Notes to the Parent’s Separate and Consolidated Interim Financial Information

 

(In thousands of Brazilian Reais, unless otherwise stated)

23. Deferred revenue (Consolidated)

 

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

 

 

09/30/2021

 

12/31/2020

‘am/pm’ and Jet Oil franchising upfront fee (a)

-

 

814

Loyalty program “Km de Vantagens” (b)

-

 

15,424

Loyalty program “Clube Extrafarma” (b)

1,156

 

2,044

Total current

1,156

 

18,282

 

a. Franchising upfront fee

 

am/pm is the convenience stores chain of the Ipiranga service stations and Jet Oil is lubricant-changing and automotive service specialized network. On December 31, 2020, had 58 stores with initial deferred franchising upfront fee for am/pm and 45 stores for Jet Oil, which had their performance obligations fulfilled during the current year. For more information see Note 2.a.

 

b. Loyalty programs

 

The loyalty program called Km de Vantagens (www.kmdevantagens.com.br) under which registered customers are rewarded with points when they buy products in several partners, including the Ipiranga’s service station, was transferred to Abastece aí (www.abasteceai.com.br). The subsidiary IPP remains a partner in the program, offering cashback to its customers based on the limits negotiated under the terms of the partnership, where, after the customer meet the requirements for the right to the benefit, Abastece aí immediately credits the amount to the customer's virtual wallet and charges IPP, which reimburses Abastece and recognizes the same amount as reduction in sales.

 

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

 

Deferred revenue is estimated based on the fair value of the points granted, considering the value of the prizes and the expected redemption of these points. For more information on deferred revenue from loyalty program, see Note 2.a. 

 

 

Ultrapar Participações S.A. and Subsidiaries

 

Notes to the Parent’s Separate and Consolidated Interim Financial Information

 

(In thousands of Brazilian Reais, unless otherwise stated)

24. Subscription warrants – indemnification

 

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

 

On February 19, 2020, August 12, 2020, February 24, 2021 and August 11, 2020, the Company’s Board of Directors confirmed, the issuance of, respectively, 2,108,542, 86,978, 70,939 and 31,032 common shares within the authorized capital limit provided by the art. 6 of the Bylaws, due to the partial exercise of the rights conferred by the subscription warrants issued by the Company when the merger of all Extrafarma shares by the Company, approved by the extraordinary general meeting of the Company held in January 31, 2014.

 

In the association agreement between the Company and Extrafarma on January 31, 2014 and due to the unfavorable decisions of some processes with triggering events prior to January 31, 2014, 578,538 shares linked to the subscription warrants indemnification were canceled and not issued. On September 30, 2021, 3,530,257 shares were retained linked to subscription warrants indemnification which will be issued or canceled according as the final decision of the processes are favorable or unfavorable, respectively, being this the maximum number of shares that can be issued in the future, totaling R$ 52,036

 

25. Equity

 

a. Share capital

 

On September 30, 2021 the subscribed and paid-in capital stock consists of 1,115,107,683 (1,115,005,712 as of December 31, 2020) 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 outstanding shares as of September 30, 2021, on B3 was R$ 14.74 (R$ 23.74 as of December 31, 2020).

 

On February 19, 2020, August 12, 2020, February 24, 2021 and August 11, 2021, the Board of Directors confirmed the issuance of 2,108,542, 86,978, 70,939 and 31,032 common shares, respectively, with the same rights attributed to the other shares of the Company already issued, due to the partial exercise of the rights conferred by the subscription warrants – indemnification into shares by the Company in the merger of Extrafarma shares. For more information on the changes in share capital, see Note 24.

 

As of September 30, 2021 there were 50,374,275 common shares outstanding abroad in the form of ADRs (47,413,094 shares as of December 31, 2020).

 


Ultrapar Participações S.A. and Subsidiaries

 

Notes to the Parent’s Separate and Consolidated Interim Financial Information

 

(In thousands of Brazilian Reais, unless otherwise stated)

 

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

 

b.  Equity instrument granted

 

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

 

c.  Treasury shares

 

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

 

As of September 30, 2021, 24,739,626 common shares (24,739,626 as of December 31, 2020) were held in the Company's treasury, acquired at an average cost of R$ 19.77.

 

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 issuance, deducted by R$ 2,260 related to the incurred costs directly attributable to issuing new shares. Additionally, on February 19, 2020, August 12, 2020, February 24, 2021 and August 11, 2021, there was an increase in the reserve in the amount of R$ 53,072, R$ 1,691, R$ 1,371 and R$ 448, respectively, due to the partial exercise of the subscription warrants – indemnification (see note 24).

 

e.  Revaluation reserve

 

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

 


Ultrapar Participações S.A. and Subsidiaries

 

Notes to the Parent’s Separate and Consolidated Interim Financial Information

 

(In thousands of Brazilian Reais, unless otherwise stated)

 

f.  Profit reserves

 

f.1 Legal reserve

 

Under Brazilian Corporate Law, the Company is required to allocate 5% of net annual earnings to a legal reserve, until the balance reaches 20% of share capital. As of September 30, 2021, the legal reserve totaled R$ 750,010. 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 54.b) of the Bylaws this reserve is aimed to protect the integrity of the Company’s assets and to supplement its capital stock, in order to allow new investments to be made. As provided in its Bylaws, the Company may allocate up to 50% of the annual net income, after deducting the legal reserve, 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$ 3,658,265 as of September 30, 2021 (R$ 3,658,265 as of December 31, 2020).

 

g.  Other comprehensive income

 

g.1 Valuation adjustments

 

(i)    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 recognized in statements of profit or loss at the moment of paid off of the hedge instrument.

 

(ii)   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 earned income 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 paid off.

 

(iii)  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.

 

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

 


Ultrapar Participações S.A. and Subsidiaries

 

Notes to the Parent’s Separate and Consolidated Interim Financial Information

 

(In thousands of Brazilian Reais, unless otherwise stated)

 

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

 

 

Fair value of cash flow hedging instruments (i)

 

Fair value of financial instruments (ii)

 

Actuarial (loss) gain of post-employment benefits (iii)

 

Non-controlling shareholders interest change (iv)

 

Total

Balance as of December 31, 2020

(609,277)

 

269

 

(53,351)

 

197,369

 

(464,990)

Changes in fair value of financial instruments

23,784

 

(1,783)

 

-

 

-

 

22,001

IRPJ and CSLL on fair value

(7,302)

 

-

 

-

 

-

 

(7,302)

Actuarial gain of post-employment benefits of subsidiaries, net

-

 

-

 

679

 

-

 

679

Balance as of September 30, 2021

(592,795)

 

(1,514)

 

(52,672)

 

197,369

 

(449,612)

 

 

Fair value of cash flow hedging instruments (i)

 

Fair value of financial instruments (ii)

 

Actuarial gain (loss) of post-employment benefits (iii)

 

Non-controlling shareholders interest change (iv)

 

Total

Balance as of December 31, 2019

(296,132)

 

205

 

(47,759)

 

197,369

 

(146,317)

Changes in fair value of financial instruments

(743,922)

 

238

 

-

 

-

 

(743,684)

IRPJ and CSLL on fair value

253,200

 

-

 

-

 

-

 

253,200

Balance as of September 30, 2020

(786,854)

 

443

 

(47,759)

 

197,369

 

(636,801)

 

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 management (see Note 2.s.1) and the exchange rate variation on notes in the foreign market, net of income taxes (see Note 33.h.3) is directly recognized in the equity. This cumulative effect is reflected in profit or loss as a gain or loss only in case of disposal or write-off of the investment.

 

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

 

 

09/30/2021

 

09/30/2020

Initial balance

231,596

 

102,427

Currency translation adjustment of foreign subsidiaries

47,455

 

299,625

Effect of foreign currency exchange rate variation on financial instruments

(23,057)

 

(152,950)

IRPJ and CSLL on foreign currency exchange rate variation on financial instruments

7,839

 

52,003

Final balance

263,833

 

301,105

 


Ultrapar Participações S.A. and Subsidiaries

 

Notes to the Parent’s Separate and Consolidated Interim Financial Information

 

(In thousands of Brazilian Reais, unless otherwise stated)

 

h.  Dividends and allocation of net income

 

The shareholders of the Company are entitled under the Bylaws to a minimum annual dividend of 50% of adjusted net income, after allocation of 5% to the legal reserve, 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 that refers of the exercise of 2020, the amount of which on as of December 31, 2020 totaled R$ 479,748 (R$ 0.44 – forty-four cents of Brazilian Real per share), were approved by the Board of Directors on February 24, 2021, and were paid from March 12, 2021. On August 11, 2021, the interim dividends were approved in the amount of R$ 218,074 (R$ 0.20 – twenty cents per share), paid on August 27, 2021.

 

Balances and changes in dividends payable are as follows:

 

 

Parent

 

Consolidated

Balance as of December 31, 2020

439,094

 

442,133

Provisions

273,465

 

283,880

Prescribed dividends

(7,137)

 

(7,137)

Payments

(694,366)

 

(705,637)

Balance as of September 30, 2021

11,056

 

13,239

 

26. Net revenue from sale and services (Consolidated)

 

 

09/30/2021

 

09/30/2020

Gross revenue from sale

88,140,406

 

61,874,881

Gross revenue from services

784,634

 

679,488

Sales taxes

(3,324,218)

 

(3,068,529)

Discounts and sales returns

(1,030,727)

 

(1,237,466)

Amortization of contractual assets with customers (see Note 11)

(199,757)

 

(224,441)

Deferred revenue (see Note 23)

17,126

 

1,517

Net revenue from sales and services

84,387,464

 

58,025,450

 


Ultrapar Participações S.A. and Subsidiaries

 

Notes to the Parent’s Separate and Consolidated Interim Financial Information

 

(In thousands of Brazilian Reais, unless otherwise stated)

 

27. Costs and expenses by nature

 

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

 

 

Parent

 

Consolidated

 

09/30/2021

 

09/30/2020

 

09/30/2021

 

09/30/2020

Raw materials and materials for use and consumption

-

 

 

78,514,559

 

52,686,638

Personnel expenses

118,532

 

108,039

 

1,847,645

 

1,647,883

Freight and storage

-

 

 

980,382

 

1,030,089

Depreciation and amortization

6,046

 

1,877

 

749,843

 

698,363

Amortization of right-of-use assets

4,501

 

3,238

 

264,696

 

242,147

Advertising and marketing

16

 

278

 

71,698

 

114,059

Services provided by third parties

80,646

 

17,800

 

400,632

 

236,358

Other expenses

17,760

 

12,506

 

137,996

 

201,794

Allocation of SSC/Holding expenses

(207,661)

 

(143,738)

 

-

 

-

Total

19,840

 

-

 

82,967,451

 

56,857,331

Classified as:

 

 

 

 

 

 

 

Cost of products and services sold

-

 

-

 

79,376,849

 

53,925,516

Selling and marketing

-

 

-

 

2,151,038

 

1,854,841

General and administrative

19,840

 

-

 

1,439,564

 

1,076,974

Total

19,840

 

-

 

82,967,451

 

56,857,331

28. Gain (loss) on disposal of PP&E and intangibles 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, and intangible asset. For the nine-month period ended September 30, 2021 the gain was R$ 58,185 (gain of R$ 35,926 for the nine-month period ended September 30, 2020), represented primarily from sale of PP&E. Additionally, on June 30, 2021, considering the transaction mentioned in Note 3.c.1, the Company recognized a provision for impairment of assets of the interest in the subsidiary Extrafarma in the amount of R$ 394,675. 

 


Ultrapar Participações S.A. and Subsidiaries

 

Notes to the Parent’s Separate and Consolidated Interim Financial Information

 

(In thousands of Brazilian Reais, unless otherwise stated)

 

29. Other operating income, net (Consolidated)

 

 

09/30/2021

 

09/30/2020

Other operating income, net:

 

 

 

Commercial partnerships (1)

22,614

 

19,813

Merchandising (2)

18,473

 

22,147

Extraordinary tax credits (3)

170,942

 

138,120

Property rental (4)

22,759

 

21,867

Revenue from miscellaneous services (administrative, commercial and IT services)

75,543

 

68,497

Insurance indemnity (7)

20,739

 

-

Contractual fine and gas voucher

13,493

 

12,303

Others

5,802

 

-

 

350,365

 

282,747

Other operating expenses, net:

 

 

 

Property rental (4)

(71,110)

 

(69,988)

Taxes on other operating income (5)

(18,494)

 

(19,487)

Fines for tax infractions

(2,840)

 

(5,603)

Decarbonization obligation (6)

(111,220)

 

(66,374)

Others

(45,216)

 

(7,048)

 

(248,880)

 

(168,500)

Other operating income, net

101,485

 

114,247

 

(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 substantially to PIS and COFINS credits (see Note 7.a.3), registered in the second and third quarters of 2021 and in the first quarter of 2020.

 

(4) Refers to Ipiranga’s income and expenses with property rentals and sublease, especially for establishment of own gas stations, linked to contractual requirements for the preservation of the brand.

 

(5) Refers substantially to ICMS, ISS, PIS and COFINS.

 

(6) Refers to the obligation adopted by the RenovaBio to set decarbonization targets for its sector.

 

(7) Refers to reimbursement of claim of subsidiary Oleoquímica.

 


Ultrapar Participações S.A. and Subsidiaries

 

Notes to the Parent’s Separate and Consolidated Interim Financial Information

 

(In thousands of Brazilian Reais, unless otherwise stated)

30. Finance income (Expense)

 

 

Parent

 

Consolidated

 

09/30/2021

 

09/30/2020

 

09/30/2021

 

09/30/2020

Finance income:

 

 

 

 

 

 

 

Interest on financial investments

23,122

 

33,646

 

83,927

 

110,314

Interest from customers

-

 

-

 

81,169

 

106,796

Changes in subscription warrants – indemnification (see Note 24)

32,490

 

-

 

32,490

 

-

Selic interest on extraordinary PIS/COFINS credits (see Note 7.a.3)

-

 

-

 

133,809

 

82,429

Other finance income

188

 

204

 

7,707

 

7,274

 

55,800

 

33,850

 

339,102

 

306,813

Finance expenses:

 

 

 

 

 

 

 

Interest on loans

(14,801)

 

(29,551)

 

(362,801)

 

(281,010)

Interest on debentures

(46,369)

 

(44,686)

 

(147,530)

 

(250,156)

Interest on leases payable

(2,425)

 

(3,416)

 

(126,788)

 

(109,994)

Bank charges, financial transactions tax, and other charges

(1,591)

 

(1,452)

 

(79,983)

 

(62,272)

Exchange variation, net of gains and losses with derivative financial instruments

-

 

-

 

(239,595)

 

3,162

Changes in subscription warranty – indemnification (see Note 24)

-

 

(1,322)

 

-

 

(1,322)

Interest of provisions and other expenses

-

 

-

 

(14,854)

 

(11,047)

 

(65,186)

 

(80,427)

 

(971,551)

 

(712,639)

Finance income (expense)

(9,386)

 

(46,577)

 

(632,449)

 

(405,826)

  



Ultrapar Participações S.A. and Subsidiaries

 

Notes to the Parent’s Separate and Consolidated Interim Financial Information

 

(In thousands of Brazilian Reais, unless otherwise stated)

31. Earnings per share (Parent and Consolidated)

 

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

 

 

09/30/2021

 

09/30/2020

Basic earnings per share

 

 

 

Net income for the year of the Company

470,286

 

467,358

Weighted average shares outstanding (in thousands)

1,090,340

 

1,089,170

Basic earnings per share – R$

0.4313

 

0.4291

Diluted earnings per share

 

 

 

Net income for the year of the Company

470,286

 

467,358

Weighted average shares outstanding (in thousands), including dilution effects

1,096,801

 

1,095,727

Diluted earnings per share – R$

0.4288

 

0.4265

Weighted average shares outstanding (in thousands)

 

 

 

Weighted average shares outstanding for basic per share

1,090,340

 

1,089,170

Dilution effect

 

 

 

     Subscription warrants – indemnification

3,559

 

3,782

     Deferred stock plan

2,902

 

2,775

Weighted average shares outstanding for diluted per share

1,096,801

 

1,095,727

 

Earnings per share were adjusted retrospectively by the issuance of 2,297,491 common shares due to the partial exercise of the rights conferred by the subscription warrants disclosed in note 24.

32. Segment information

 

The Company operates six main business segments: gas distribution, fuel distribution, chemicals, storage, drugstores and digital payments. 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 digital payments segment (Abastece aí) offers digital payments services, combining the “abastece aí” app and the loyalty program “Km de Vantagens”. 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’s Separate and Consolidated Interim Financial Information

 

(In thousands of Brazilian Reais, unless otherwise stated)

 

a. Financial information related to segments

 

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

 

 

09/30/2021

Income

Ipiranga

Ultragaz

Oxiteno

Ultracargo

Extrafarma

Abastece aí

Subtotal

Others

Elimination

Total

Segments

(1) (2)

Net revenue from sales and services

 70,322,561

 7,062,956

 5,090,252

 525,702

 1,487,107

 57,456

 84,546,034

 20,015

(178,585)

 84,387,464

Transactions with third parties

 70,322,506

 7,059,476

 5,071,858

 384,220

 1,487,107

 57,456

 84,382,623

 4,841

-

 84,387,464

Intersegment transactions

 55

 3,480

 18,394

 141,482

-

-

 163,411

 15,174

(178,585)

-

Cost of products and services sold

(68,106,819)

(6,279,996)

(3,909,391)

(207,753)

(1,032,083)

-

(79,536,042)

 54

 159,139

(79,376,849)

Gross profit

 2,215,742

 782,960

 1,180,861

 317,949

 455,024

 57,456

 5,009,992

 20,069

(19,446)

 5,010,615

Operating income (expenses)

 

 

 

 

 

 

 

 

 

 

Selling and marketing

(1,006,060)

(315,547)

(337,721)

(6,283)

(438,177)

(42,673)

(2,146,461)

(4,577)

-

(2,151,038)

Expected reversion (losses) on doubtful accounts

 24,603

(13,686)

(182)

 53

 4

-

 10,792

-

-

 10,792

General and administrative

(544,698)

(150,701)

(365,930)

(93,938)

(81,863)

(76,312)

(1,313,442)

(145,568)

 19,446

(1,439,564)

Gain (loss) on disposal of property, plant and equipment and intangibles

 55,416

 2,533

 149

 2

 150

(2)

 58,248

 (63)

-

 58,185

Impairment

-

-

-

-

(394,675)

-

(394,675)

-

-

(394,675)

Other operating income, net

 59,099

 10,275

 23,751

 4,038

 11

 3,563

 100,737

 748

-

 101,485

Operating income before finance income (expenses) and share of profit (loss) of subsidiaries, joint ventures and associates

 804,102

 315,834

 500,928

 221,821

(459,526)

(57,968)

 1,325,191

(129,391)

-

 1,195,800

Share of profit (loss) of subsidiaries, joint ventures and associates

(1,269)

 40

 119

 683

-

-

(427)

(21,596)

-

(22,023)

Operating income before finance income (expenses) and income and social contribution taxes

 802,833

 315,874

 501,047

 222,504

(459,526)

(57,968)

 1,324,764

(150,987)

-

 1,173,777

Depreciation of PP&E and amortization of intangible assets charges

 244,045

 156,079

 206,107

 55,902

 59,096

 10,375

 731,604

 18,239

-

 749,843

Amortization of contractual assets with customers – exclusive rights

 198,572

 1,185

-

-

-

-

 199,757

-

-

 199,757

Amortization of right-of-use assets

 137,437

 34,113

 16,039

 16,390

 55,945

 195

 260,119

 4,577

-

 264,696

Total of depreciation and amortization

 580,054

 191,377

 222,146

 72,292

 115,041

 10,570

 1,191,480

 22,816

-

 1,214,296

 


Ultrapar Participações S.A. and Subsidiaries

 

Notes to the Parent’s Separate and Consolidated Interim Financial Information

 

(In thousands of Brazilian Reais, unless otherwise stated)


 

09/30/2020

Income

Ipiranga

Ultragaz

Oxiteno

Ultracargo

Extrafarma

Abastece

Subtotal

Others

Elimination

Total

Segments

(1) (2)

Net revenue from sales and services

 47,017,149

 5,439,739

 3,733,888

 478,191

 1,469,473

 3,893

 58,142,333

 36,594

(153,477)

 58,025,450

Transactions with third parties

 47,016,984

 5,436,202

 3,722,534

 376,127

 1,469,473

 3,893

 58,025,213

 237

-

 58,025,450

Intersegment transactions

 165

 3,537

 11,354

 102,064

-

-

 117,120

 36,357

(153,477)

-

Cost of products and services sold

(45,195,523)

(4,602,045)

(3,002,328)

(196,174)

(1,035,790)

-

(54,031,860)

 165

 106,179

(53,925,516)

Gross profit

 1,821,626

 837,694

 731,560

 282,017

 433,683

 3,893

 4,110,473

 36,759

(47,298)

 4,099,934

Operating income (expenses)

 

 

 

 

 

 

 

 

 

 

Selling and marketing

(833,551)

(296,971)

(281,127)

(5,424)

(431,842)

(2,396)

(1,851,311)

(3,530)

-

(1,854,841)

Expected reversion (losses) on doubtful accounts

(12,472)

(18,153)

 1,293

 348

(94)

-

(29,078)

-

-

(29,078)

General and administrative

(390,496)

(134,199)

(312,341)

(90,724)

(64,676)

(30,305)

(1,022,741)

(101,531)

 47,298

(1,076,974)

Gain (loss) on disposal of property, plant and equipment and intangibles

 33,362

 5,952

(605)

(447)

(2,336)

-

 35,926

-

-

 35,926

Other operating income, net

 20,822

 7,127

 73,995

 11,159

(656)

-

 112,447

 1,800

-

 114,247

Operating income before finance income (expenses) and share of profit (loss) of subsidiaries, joint ventures and associates

 639,291

 401,450

 212,775

 196,929

(65,921)

(28,808)

 1,355,716

(66,502)

-

 1,289,214

Share of profit (loss) of subsidiaries, joint ventures and associates

 848

(48)

 595

 574

-

-

 1,969

(32,484)

-

(30,515)

Operating income before finance income (expenses) and income and social contribution taxes

 640,139

 401,402

 213,370

 197,503

(65,921)

(28,808)

 1,357,685

(98,986)

-

 1,258,699

Depreciation of PP&E and amortization of intangible assets charges

 229,773

 142,356

 194,397

 48,659

 62,491

 6,708

 684,384

 13,979

-

 698,363

Amortization of contractual assets with customers – exclusive rights

 223,217

 1,224

-

-

-

-

 224,441

-

-

 224,441

Amortization of right-of-use assets

 131,145

 29,792

 9,638

 14,351

 53,675

 15

 238,616

 3,531

-

 242,147

Total of depreciation and amortization

 584,135

 173,372

 204,035

 63,010

 116,166

 6,723

 1,147,441

 17,510

-

 1,164,951

 (1) Includes in the line “General and administrative” and revenue on disposal of PP&E and intangibles the amount of R$ 108,882 in 2021 (R$ 67,386 in 2020) of expenses related to Ultrapar's holding structure, including the Presidency, Financial Board, Legal Board, Board of Directors and Fiscal Council, Risk, Compliance and Audit Board and Sustainability Board

(2) The “Others” column consists of financial income and expenses, income tax and social contribution of the segments, the parent company Ultrapar and the subsidiaries Serma, Imaven Imóveis Ltda. (“Imaven”), Ultrapar International, UVC Investimentos, UVC - Fundo de investimento and equity of joint ventures of ConectCar and RPR. 



Ultrapar Participações S.A. and Subsidiaries

 

Notes to the Parent’s Separate and Consolidated Interim Financial Information

 

(In thousands of Brazilian Reais, unless otherwise stated)  

 

 

09/30/2021

Cash flow

Ipiranga

Ultragaz

Oxiteno

Ultracargo

Extrafarma

Abastece aí

Subtotal

Others

Elimination

Total

Segments

(3)

Acquisition of property, plant, and equipment

 210,197

 268,300

 149,689

 234,035

 13,178

 552

 875,951

 1,788

-

 877,739

Acquisition of intangible assets

 200,421

 17,231

 13,740

 8,710

 13,957

 25,219

 279,278

 97

-

 279,375

Payments of contractual assets with customers – exclusive rights

 222,623

-

-

-

-

-

 222,623

-

-

 222,623

 

 

 

 

 

 

 

 

 

 

 

 

09/30/2020

Cash flow

Ipiranga

Ultragaz

Oxiteno

Ultracargo

Extrafarma

Abastece aí

Subtotal

Others

Elimination

Total

Segments

(3)

Acquisition of property, plant, and equipment

 142,586

 183,788

 122,644

 116,037

 13,279

 388

 578,722

 8,365

-

 587,087

Acquisition of intangible assets

 50,983

 23,198

 5,716

 216

 15,162

-

 95,275

 17,060

-

 112,335

Payments of contractual assets with customers – exclusive rights

 291,953

 4,812

-

-

-

-

 296,765

-

-

 296,765

 

 

 

 

 

 

 

 

 

 

 

 

09/30/2021

Assets

Ipiranga

Ultragaz

Oxiteno

Ultracargo

Extrafarma

Abastece aí

Subtotal

Others

Elimination

Total

Segments

(3)

Total assets (excluding intersegment transactions)

 19,993,116

 3,176,075

 9,326,104

 2,650,447

 1,475,416

 116,620

 36,737,778

 634,557

-

 37,372,335

 

 

 

 

 

 

 

 

 

 

 

 

12/31/2020

Assets

Ipiranga

Ultragaz

Oxiteno

Ultracargo

Extrafarma

Abastece aí

Subtotal

Others

Elimination

Total

Segments

(3)

Total assets (excluding intersegment transactions)

 18,761,207

 2,927,061

 8,892,850

 2,197,675

 1,845,038

 85,787

 34,709,618

 1,540,544

-

 36,250,162

(3) The “Others” column comprises the parent company Ultrapar (including goodwill from certain acquisitions) and the subsidiaries Serma, Imaven, Ultrapar International, UVC Investimentos and UVC - Fundo de investimento.

 


Ultrapar Participações S.A. and Subsidiaries

 

Notes to the Parent’s Separate and Consolidated Interim Financial Information

 

(In thousands of Brazilian Reais, unless otherwise stated) 

 

 

 

09/30/2021

 

09/30/2020

Income before financial result, income and social contribution taxes

 

 1,173,777

 

 1,258,699

Financial result, net

 

(632,449)

 

(405,826)

Income before income and social contribution taxes

 

 541,328

 

 852,873

Additions to PP&E and intangible assets (excluding intersegment account balances):

 

 

 

 

Ultragaz

 

 285,531

 

 206,986

Ipiranga

 

 293,380

 

 200,113

Oxiteno

 

 164,171

 

 131,906

Ultracargo

 

 244,180

 

 118,268

Extrafarma

 

 27,135

 

 28,441

Abastece aí

 

 2,963

 

 388

 

 

 1,017,360

 

 686,102

Others (1)

 

 24,692

 

 25,425

Total additions to PP&E and intangible assets, excluding decarbonization credits (see Notes 14 and 15)

 

 1,042,052

 

 711,527

Decarbonization credits (see Note 15)

 

 121,908

 

-

Asset retirement obligation – fuel tanks (see Note 21)

 

(301)

 

(122)

Provision for demobilization of machinery and equipment

 

 24

 

(406)

Capitalized borrowing costs

 

(6,569)

 

(11,577)

Total investments in PP&E and intangible assets (cash flow)

 

 1,157,114

 

 699,422

Addition on contractual assets with customers – exclusive rights (see Note 11):

 

 

 

 

Ipiranga

 

 420,538

 

 431,913

Ultragaz

 

-

 

 4,812

Total

 

 420,538

 

 436,725

 

(1) The “Others” column comprises the parent company Ultrapar (including goodwill from certain acquisitions) and the subsidiaries Serma, Imaven, Ultrapar International, UVC Investimentos and UVC Fundo de investimento.

 


Ultrapar Participações S.A. and Subsidiaries

 

Notes to the Parent’s Separate and Consolidated Interim Financial Information

 

(In thousands of Brazilian Reais, unless otherwise stated)

 

b. Geographic area information

 

The right-of-use assets, PP&E and intangible assets of the Company and its subsidiaries are located in Brazil, except those related to Oxiteno’ plants abroad, as shown below: 

 

 

09/30/2021

 

12/31/2020

United States of America

 1,158,529

 

 1,152,876

Mexico

 151,433

 

 163,042

Uruguay

 93,554

 

 90,347

 

 1,403,516

 

 1,406,265

 

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

 

 

09/30/2021

 

09/30/2020

Net revenue from sale and services:

 

 

 

Brazil

 82,617,693

 

 56,622,321

United States of America and Canada

 576,584

 

 445,594

Argentina

 504,998

 

 333,024

Other Latin American countries

 224,520

 

 124,572

Mexico

 201,144

 

 179,287

Far East

 49,922

 

 75,979

Europe

 144,032

 

 117,597

Uruguay

 17,430

 

 49,937

Others

 51,141

 

 77,139

Total

 84,387,464

 

 58,025,450

 

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

 


Ultrapar Participações S.A. and Subsidiaries

 

Notes to the Parent’s Separate and Consolidated Interim Financial Information

 

(In thousands of Brazilian Reais, unless otherwise stated) 

 

33. Risks and financial instruments (Consolidated)

 

a. Risk management and financial instruments – governance

 

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

 

The Company has a policy for the management of resources, financial instruments, and risks approved by its Company’s Board of Directors (“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 Chief Financial Officer (“CFO”), Treasury Director, Controller and other directors designated by the CFO and which meet quarterly. The monthly monitoring of Policy standards is responsibility of the CFO.

 

Approval of the Policy and the periodic assessment of Company exposure to financial risks are subject to the approval of the Company’s Board of Directors of Ultrapar.

 

The Audit and Risks Committee advises the Company’s Board of Directors 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 Audit and Risks Committee the risks exposure and compliance or noncompliance of the Policy. 

 


Ultrapar Participações S.A. and Subsidiaries

 

Notes to the Parent’s Separate and Consolidated Interim Financial Information 

 

(In thousands of Brazilian Reais, unless otherwise stated)

 

b. Currency risk

 

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

 

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

 

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

 

b.1 Assets and liabilities in foreign currencies

 

 

09/30/2021

 

12/31/2020

Assets in foreign currency

 

 

 

Cash, cash equivalents and financial investments in foreign currency (except hedging instruments)

1,721,256

 

1,413,276

Foreign trade receivables, net of allowance for doubtful accounts and advances to foreign customers

449,386

 

307,829

Other assets

2,088,369

 

1,767,626

 

4,259,011

 

3,488,731

Liabilities in foreign currency

 

 

 

Financing in foreign currency, gross of transaction costs and discount

(8,990,477)

 

(9,246,707)

Payables arising from imports, net of advances to foreign suppliers

(988,916)

 

(633,013)

 

(9,979,393)

 

(9,879,720)

Foreign currency hedging instruments

4,206,164

 

4,837,554

Net liability position – total

(1,514,218)

 

(1,553,435)

Net (liability) asset position – income statement effect

(342,182)

 

186,306

Net liability position – equity effect

(1,172,036)

 

(1,739,741)



Ultrapar Participações S.A. and Subsidiaries

 

Notes to the Parent’s Separate and Consolidated Interim Financial Information 

 

(In thousands of Brazilian Reais, unless otherwise stated)


b.2 Sensitivity analysis of assets and liabilities in foreign currency

 

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

 

The table below shows, in the three scenarios, the effects of exchange rate changes on the net liability position of R$ 1,514,218 in foreign currency as of September 30, 2021:

 

 

Risk

Scenario I


Scenario II


Scenario III

 

 

Base


25%


50%

(1) Income statement effect

Real devaluation

(34,218)


(85,545)


(171,091)

(2) Equity effect

(117,204)


(293,009)


(586,018)

   (1) + (2)

Net effect

(151,422)


(378,554)


(757,109)

 

 

 


 


 

(3) Income statement effect

Real appreciation

34,218


85,545


171,091

(4) Equity effect

117,204


293,009


586,018

   (3) + (4)

Net effect

151,422


378,554


757,109

 

The table below shows, in the three scenarios, the effects of exchange rate changes on the net liability position of R$ 1,553,435 in foreign currency as of December 31, 2020:

 

 

Risk

Scenario I


Scenario II


Scenario III

 

 

Base


25%


50%

(1) Income statement effect

Real devaluation

18,631


46,577


93,153

(2) Equity effect

(173,974)


(434,935)


(869,871)

   (1) + (2)

Net effect

(155,343)


(388,358)


(776,718)

 

 

 


 


 

(3) Income statement effect

Real appreciation

(18,631)


(46,577)


(93,153)

(4) Equity effect

173,974


434,935


869,871

   (3) + (4)

Net effect

155,343


388,358


776,718

 

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

 

c. Interest rate risk

 

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

 

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



Ultrapar Participações S.A. and Subsidiaries

 

Notes to the Parent’s Separate and Consolidated Interim Financial Information 

 

(In thousands of Brazilian Reais, unless otherwise stated)


c.1 Assets and liabilities exposed to floating interest rates

 

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

 

 

Note

09/30/2021

 

12/31/2020

DI

 

 

 

 

Cash equivalents

4.a

2,406,122

 

2,241,852

Financial investments

4.b

1,261,537

 

3,749,852

Loans and debentures

16.a

(4,813,712)

 

(6,947,362)

Liability position of foreign exchange hedging instruments – DI

33.g

(1,912,928)

 

(2,124,146)

Liability position of fixed interest instruments + IPCA – DI

33.g

(2,339,247)

 

(2,203,705)

Net liability position in DI

 

(5,398,228)

 

(5,283,509)

TJLP

 

 

 

 

Loans – TJLP

16.a

(21,160)

 

(29,803)

Net liability position in TJLP

 

(21,160)

 

(29,803)

LIBOR

 

 

 

 

Asset position of foreign exchange hedging instruments – LIBOR

33.g

271,980

 

260,958

Loans – LIBOR

16.a

(274,542)

 

(573,484)

Net liability position in LIBOR

 

(2,562)

 

(312,526)

Total net liability position exposed to floating interest

 

(5,421,950)

 

(5,625,838)

 


Ultrapar Participações S.A. and Subsidiaries

 

Notes to the Parent’s Separate and Consolidated Interim Financial Information 

 

(In thousands of Brazilian Reais, unless otherwise stated)


c.2 Sensitivity analysis of floating interest rate risk

 

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

 

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

 

 

 

09/30/2021

 

Risk

Scenario I


Scenario II


Scenario III

 

 

Base


25%


50%

Exposure of interest rate risk

 

 


 


 

Interest effect on cash equivalents and financial

Increase in DI

7,875


19,688


39,375

Interest effect on debt in DI

Increase in DI

(14,081)


(35,202)


(70,405)

Interest rate hedging instruments (liabilities in DI) effect

Increase in DI

(13,165)


(28,207)


(53,278)

Incremental expenses

 

(19,371)


(43,721)


(84,308)

 

 

 


 


 

Interest effect on debt in TJLP

Increase in TJLP

(86)


(215)


(430)

Incremental expenses

 

(86)


(215)


(430)

 

 

 


 


 

Foreign exchange hedging instruments (assets in LIBOR) effect

Increase in LIBOR

1,031


1,126


1,283

Interest effect on debt in LIBOR

Increase in LIBOR

(145)


(363)


(726)

Incremental expenses

 

886


763


557

 

 

 

12/31/2020

 

Risk

Scenario I


Scenario II


Scenario III

 

 

Base


25%


50%

Exposure of interest rate risk

 

 


 


 

Interest effect on cash equivalents and financial

Increase in DI

13,175


32,937


65,875

Interest effect on debt in DI

Increase in DI

(19,674)


(49,184)


(98,368)

Interest rate hedging instruments (liabilities in DI) effect

Increase in DI

(1,137)


(11,934)


(29,929)

Incremental expenses

 

(7,636)


(28,181)


(62,422)

 

 

 


 


 

Interest effect on debt in TJLP

Increase in TJLP

(301)


(752)


(1,503)

Incremental expenses

 

(301)


(752)


(1,503)

 

 

 


 


 

Foreign exchange hedging instruments (assets in LIBOR) effect

Increase in LIBOR

528


1,320


2,640

Interest effect on debt in LIBOR

Increase in LIBOR

(1,410)


(3,525)


(7,050)

Incremental expenses

 

(882)


(2,205)


(4,410)

 

 

 


 


 

Interest effect on debt in SELIC

Increase in SELIC

(41)


(102)


(203)

Incremental expenses

 

(41)


(102)


(203)

 


Ultrapar Participações S.A. and Subsidiaries

 

Notes to the Parent’s Separate and Consolidated Interim Financial Information 

 

(In thousands of Brazilian Reais, unless otherwise stated)


d. Credit risks

 

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

 

d.1 Credit risk of financial institutions

 

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

 

d.2 Government credit risk

 

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

 

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

 

 

 

Fair value

Counterparty credit rating

 

09/30/2021

 

12/31/2020

AAA

 

5,472,867

 

8,190,428

AA

 

949,428

 

317,894

A

 

166,140

 

163,838

Total

 

6,588,435

 

8,672,160

 


Ultrapar Participações S.A. and Subsidiaries

 

Notes to the Parent’s Separate and Consolidated Interim Financial Information 

 

(In thousands of Brazilian Reais, unless otherwise stated)


d.3 Customer credit risk

 

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

 

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

 

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

 

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

 

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

 

 

09/30/2021

 

12/31/2020

Ipiranga

422,788

 

447,389

Ultragaz

128,356

 

113,621

Oxiteno

16,800

 

16,430

Extrafarma

69

 

73

Ultracargo

1,540

 

1,594

Total

569,553

 

579,107

 


Ultrapar Participações S.A. and Subsidiaries

 

Notes to the Parent’s Separate and Consolidated Interim Financial Information 

 

(In thousands of Brazilian Reais, unless otherwise stated)


The table below presents information about credit risk exposure:

 

 

09/30/2021

 

12/31/2020

 

Weighted average rate of losses

 

Accounting balance

 

Provision for losses

 

Weighted average rate of losses

 

Accounting balance

 

Provision for losses

Current

0.7%

 

4,529,384

 

33,565

 

1.2%

 

3,751,067

 

44,091

less than 30 days

1.6%

 

130,378

 

2,110

 

2.2%

 

134,836

 

2,939

31-60 days

15.4%

 

49,336

 

7,584

 

8.2%

 

43,207

 

3,563

61-90 days

11.2%

 

31,626

 

3,530

 

10.9%

 

42,589

 

4,630

91-180 days

40.5%

 

57,042

 

23,105

 

36.8%

 

76,158

 

28,062

more than 180 days

56.9%

 

877,616

 

499,659

 

55.7%

 

890,756

 

495,822

 

 

 

5,675,382

 

569,553

 

 

 

4,938,613

 

579,107

 

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

 

 

09/30/2021

 

12/31/2020

Brazil

558,496

 

568,461

Uruguay

50

 

76

Other Latin American countries

336

 

271

United States of America and Canada

1,101

 

1,146

Europe

9,556

 

9,120

Others

14

 

33

 

569,553

 

579,107

 

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

 

 

Ultrapar Participações S.A. and Subsidiaries

 

Notes to the Parent’s Separate and Consolidated Interim Financial Information 

 

(In thousands of Brazilian Reais, unless otherwise stated)

 

d.4 Price risk

 

The Company and its subsidiaries are exposed to commodity price risk, due the fluctuation in prices for diesel and gasoline, among others. These products are traded on the stock exchange and are subjected to the impacts of macroeconomic and geopolitical factors outside the control of the Company and its subsidiaries. 

 

To mitigate the risk of the fluctuation of diesel and gasoline prices, the Company and its subsidiaries permanently monitor the market, seeking to protection of price movements through hedge transactions for cargo purchased in the international market, used contracts of derivative for heating oil (diesel) traded on the stock exchange.

 

The table below shows the positions of derivative financial instruments to hedge commodity price risk at September 30, 2021:

 

Derivative

 

Contract

 

Notional amount (m3)

 

Notional amount (USD thousands)

 

Fair value (R$ thousands)

 

 

Position

 

Product

 

Maturity

 

09/30/2021

 

12/31/2020

 

09/30/2021

 

12/31/2020

 

09/30/2021

 

12/31/2020

Term

 

Sold

 

Heating Oil

 

oct-21

 

147,858

 

108,429

 

87,494

 

42,399

 

(20,928)

 

(563)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(20,928)

 

(563)

 

Ultrapar Participações S.A. and Subsidiaries

 

Notes to the Parent’s Separate and Consolidated Interim Financial Information 

 

(In thousands of Brazilian Reais, unless otherwise stated)


e. Liquidity risk

 

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

 

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

 

The Company and its subsidiaries believe to have sufficient working capital and sources of financing to meet their current needs. On September 2021, the gross indebtedness due over the next twelve months totaled R$ 3,061,864, including estimated interests on loans (for quantitative information, see Note 16.a). Furthermore, the investments for 2021 totaled R$ 1,890,763. Until the first, second and third quarters, R$ 1,167,776 were realized. On September 30, 2021, the Company and its subsidiaries had R$ 5,741,169 in cash, cash equivalents, and short-term financial investments (for quantitative information, see Note 4).

 

The table below presents a summary of financial liabilities as of September 30, 2021 by the Company and its subsidiaries, listed by maturity. The amounts disclosed in this table are the contractual undiscounted cash outflows, and, therefore, these amounts ​​may be different from the amounts disclosed on the balance sheet.

 

Financial liabilities

Total

Less than 1 year

Between 1 and 3 years

Between 3 and 5 years

More than 5 years

Loans including future contractual interest (1) (2)

20,078,332

3,061,864

5,551,763

1,533,058

9,931,647

Currency and interest rate hedging instruments (3)

1,177,301

144,375

419,945

339,444

273,537

Trade payables

6,364,116

6,364,116

-

-

-

Leases payable

2,810,672

421,271

702,973

520,521

1,165,907

 

(1) To calculate the estimated interest on loans some macroeconomic assumptions were used, including averaging for the period the following: (i) DI of % 4.32% to 2021, 9.67% to 2022 and 10.72% to 2023; (ii) exchange rate of the Real against the U.S. dollar of R$ 5.29 in 2021, R$ 5.58 in 2022, R$ 5.38 in 2023, R$ 5.10 in 2024, R$ 4.90 in 2025, R$ 4.82 in 2026, R$ 4.87 in 2027, R$ 4.92 in 2028 and R$ 4.97 in 2029; (iii) TJLP of 5.32%; (iv) IPCA of 9.12% in 2021, 4.22% in 2022, 3.14% in 2023, 3.1% in 2024 and 3.0% as from 2025; (v) exchange rate of the Real against the Mexican peso of R$ 0.26; (vii) exchange rate of the Mexican peso against the U.S. dollar of MXN 20.01 in 2021 and MXN 20.08 in 2022. (source: B3, Bulletin Focus and financial institutions).

  

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

 

(3) The currency and interest rate hedging instruments were estimated based on projected U.S dollar futures contracts and the futures curves of DI x Pre and DI x IPCA contracts quoted on B3 on September 30, 2021 and on the futures curve of LIBOR (ICE Intercontinental Exchange) and commodities heating oil contracts quoted on New York Mercantile Exchange (“NYMEX”) on September 30, 2021. In the table above, only the hedging instruments with negative results at the time of settlement were considered.


118


Ultrapar Participações S.A. and Subsidiaries

 

Notes to the Parent’s Separate and Consolidated Interim Financial Information 

 

(In thousands of Brazilian Reais, unless otherwise stated)


f. Capital management

 

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

 

g. Selection and use of financial instruments

 

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

 

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

 

 

Ultrapar Participações S.A. and Subsidiaries

 

Notes to the Parent’s Separate and Consolidated Interim Financial Information 

 

(In thousands of Brazilian Reais, unless otherwise stated)

 

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

 

Designated as hedge accounting

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Product

 

Hedged object

 

Rates agreement

 

Maturity

 

Note

 

Notional amount 1

 

Fair value

 

 

 

 

Assets

Liabilities

 

 

 

 

 

09/30/2021

 

12/31/2020

 

09/30/2021

 

12/31/2020

Foreign exchange swap

 

Debt

 

USD + 4.65 %

104.87% DI

 

sep-23

 

33.h.1

 

USD 125,000

 

USD 185,000

 

220,478

 

298,889

Foreign exchange swap

 

Debt

 

USD + LIBOR-3M + 1.14%

105.00% DI

 

jun-22

 

33.h.1

 

USD 50,000

 

USD 50,000

 

108,102

 

94,782

Interest rate swap

 

Debt

 

4.59% + IPCA

102.00% DI

 

sep-28

 

33.h.1

 

R$ 2,226,054

 

R$ 806,054

 

157,323

 

203,837

Interest rate swap

 

Debt

 

6.47%

99.94% DI

 

nov-24

 

33.h.1

 

R$ 90,000

 

R$ 90,000

 

(8,518)

 

3,498

Term

 

Firm commitments

 

BRL

Heating Oil

 

oct-21

 

33.h.1

 

USD 87,494

 

USD 42,399

 

(20,928)

 

(563)

NDF

 

Firm commitments

 

BRL

USD

 

oct-21

 

33.h.1

 

USD 10,910

 

USD 23,124

 

(971)

 

(733)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

455,486

 

599,710

 

Not designated as hedge accounting

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Product

 

Hedged object

 

Rates agreement

 

Maturity

 

Notional amount 1

 

Fair value

 

 

 

 

Assets

Liabilities

 

 

 

09/30/2021

 

12/31/2020

 

09/30/2021

 

12/31/2020

Foreign exchange swap

 

Debt

 

USD + 0.18%

55.5% DI

 

jun-29

 

USD 320,000

 

USD 320,000

 

540,451

 

519,260

NDF

 

Firm commitments

 

USD

USD

 

feb-22

 

USD 465,468

 

USD 378,550

 

53,235

 

(112,152)

Interest rate swap

 

Debt

 

2.67%

100% DI

 

-

 

-

 

R$ 1,300,000

 

-

 

(5)

Interest rate swap

 

Debt

 

5.25%

DI - 1.36%

 

jun-29

 

USD 300,000

 

-

 

(117,427)

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

476,259

 

407,103

 

 (1) Currency as indicated.

 

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


 

Ultrapar Participações S.A. and Subsidiaries

 

Notes to the Parent’s Separate and Consolidated Interim Financial Information 

 

(In thousands of Brazilian Reais, unless otherwise stated)

 

h. Hedge accounting 

 

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

 

h.1 Fair value hedge

 

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

 

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

 

In thousands, except the DI %

09/30/2021

 

12/31/2020

Notional amount – US$

175,000

 

235,000

Result of hedging instruments – gain/(loss) – R$

30,761

 

574,378

Fair value adjustment of debt – R$

18,553

 

(13,131)

Finance expense in the statements of profit or loss – R$

(71,125)

 

(597,735)

Average effective cost – DI %

104.9

 

104.1

 

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

 

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

 

In thousands, except the DI %

09/30/2021

 

12/31/2020

Notional amount – US$

2,226,054

 

806,054

Result of hedging instruments – gain/(loss) – R$

(34,534)

 

67,446

Fair value adjustment of debt – R$

125,498

 

(18,446)

Finance expense in the statements of profit or loss – R$

(132,294)

 

(99,555)

Average effective cost – DI %

102.0

 

95.8

 

For more information, see Notes 16.f.2, 16.f.4, 16.f.6, 16.f.8, 16.f.9 and f.10.

 

In thousands, except the DI %

09/30/2021

 

12/31/2020

Notional amount – US$

90,000

 

90,000

Result of hedging instruments – gain/(loss) – R$

(10,186)

 

6,528

Fair value adjustment of debt – R$

11,506

 

3,250

Finance expense in the statements of profit or loss – R$

(7,132)

 

(8,968)

Average effective cost – DI %

99.9

 

99.9

 

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

 


Ultrapar Participações S.A. and Subsidiaries

 

Notes to the Parent’s Separate and Consolidated Interim Financial Information 

 

(In thousands of Brazilian Reais, unless otherwise stated) 

 

The foreign exchange hedging instruments and commodities designated as fair value hedge are as described below. The purpose of this relationship is to transform the cost of the imported product from fixed to variable until the moment of blend the fuel, as occurs with the price practiced in its sales. The subsidiary IPP realizes these operations with over-the-counter derivatives that are designated in a hedge accounting relationship, as a fair value hedge in an amount equivalent to the inventories of imported product.

 

In thousands, except the DI %

09/30/2021

 

12/31/2020

Notional amount – US$

98,404

 

65,523

Result of hedging instruments – gain/(loss) – R$

(127,130)

 

(87,448)

Fair value adjustment of inventories – R$

28,828

 

18,468

 

h.2 Cash flow hedge

 

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

 

On September 30, 2021, 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$ 407,144 (US$ 468,215 on December 31, 2020). On September 30, 2021, the unrealized gain of Other comprehensive income is R$ 14,175 (loss of R$ 315,403 on December 31, 2020), 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 September 30, 2021 the balance of foreign exchange hedging instruments designated as net investments hedge in foreign entities, related to part of the investments made in entities which functional currency is other than the Brazilian Real, totaled US$ 95,000 (US$ 95,000 on December 31, 2020), being recognized a loss in “Other comprehensive income” of R$ 15,217 on September 30, 2021 (loss of R$ 73,108 on December 31, 2020), net of deferred income and social contribution taxes. The effects of exchange variation on investments and notes in the foreign market were offset in shareholders' equity.



Ultrapar Participações S.A. and Subsidiaries

 

Notes to the Parent’s Separate and Consolidated Interim Financial Information 

 

(In thousands of Brazilian Reais, unless otherwise stated)


i. Gains (losses) on hedging instruments

 

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

 

 

09/30/2021

 

Profit or loss

 

Equity

a – Exchange rate derivates receivable in U.S. dollars (i) and (ii) and commodities

(165,553)

 

-

b – Interest rate swaps in R$ (iii)

(48,632)

 

-

c – Non-derivative financial instruments (iv)

(68,885)

 

(738,513)

Total

(283,070)

 

(738,513)

 

 

09/30/2020

 

12/31/2020

 

Profit or loss

 

Equity

a – Exchange rate derivates receivable in U.S. dollars (i) and (ii) and commodities

577,332

 

-

b – Exchange rate derivates payable in U.S. dollars (ii)

(349,399)

 

80

c – Interest rate swaps in R$ (iii)

33,575

 

-

d – Non-derivative financial instruments (iv)

(1,153,107)

 

(737,471)

Total

(891,599)

 

(737,391)

 

(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 more information see Note 16.b).



Ultrapar Participações S.A. and Subsidiaries

 

Notes to the Parent’s Separate and Consolidated Interim Financial Information 

 

(In thousands of Brazilian Reais, unless otherwise stated)

 

j. Fair value of financial instruments

 

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

 

 

 

 

09/30/2021

 

12/31/2020

 

Category

Note

Carrying value

 

Fair

value

 

Carrying value

 

Fair

value

Financial assets:

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

 

 

 

 

 

 

 

 

Cash and bank

Measured at amortized cost

4.a

355,585

 

355,585

 

405,081

 

405,081

Financial investments in local currency

Measured at fair value through other comprehensive income

4.a

2,406,122

 

2,406,122

 

2,241,852

 

2,241,852

Financial investments in foreign currency

Measured at fair value through profit or loss

4.a

64,593

 

64,593

 

14,561

 

14,561

Financial investments:

 

 

 

 

 

 

 

 

 

Fixed-income securities and funds in local currency

Measured at fair value through profit or loss

4.b

1,143,796

 

1,143,796

 

3,643,286

 

3,643,286

Fixed-income securities and funds in local currency

Measured at fair value through other comprehensive income

4.b

40,840

 

40,840

 

31,315

 

31,315

Fixed-income securities (guarantee of loans)

Measured at amortized cost

4.b

76,901

 

76,901

 

75,251

 

75,251

Fixed-income securities and funds in foreign currency

Measured at fair value through other comprehensive income

4.b

1,531,383

 

1,531,383

 

1,278,940

 

1,278,940

Currency and interest rate hedging and commodities instruments

Measured at fair value through profit or loss

4.b

969,215

 

969,215

 

981,874

 

981,874

Trade Receivables

Measured at amortized cost

5.a

4,184,481

 

4,149,321

 

3,391,122

 

3,369,766

Reseller Financing

Measured at amortized cost

5.b

921,348

 

917,629

 

968,384

 

965,645

Total

 

 

11,694,264

 

11,655,385

 

13,031,666

 

13,007,571

 

 

 

 

 

 

 

 

 

 

Financial liabilities:

 

 

 

 

 

 

 

 

 

Financing

Measured at fair value through profit or loss

16.a

1,006,873

 

1,006,873

 

1,308,928

 

1,308,928

Financing

Measured at amortized cost

16.a

8,206,979

 

8,684,444

 

9,406,013

 

10,186,947

Debentures

Measured at amortized cost

16.a

4,559,679

 

4,488,791

 

5,450,751

 

5,363,621

Debentures

Measured at fair value through profit or loss

16.a

2,444,888

 

2,444,888

 

1,093,365

 

1,093,365

Leases payable

Measured at amortized cost

13

1,815,752

 

1,815,752

 

1,833,288

 

1,833,288

Commodities, currency and interest rate hedging instruments

Measured at fair value through profit or loss

16.a

190,689

 

190,689

 

117,159

 

117,159

Trade payables

Measured at amortized cost

17

6,364,116

 

6,305,758

 

4,040,652

 

4,008,457

Subscription warrants – indemnification

Measured at fair value through profit or loss

24

52,036

 

52,036

 

86,439

 

86,439

Total

 

 

24,641,012

 

24,989,231

 

23,336,595

 

23,998,204




Ultrapar Participações S.A. and Subsidiaries

 

Notes to the Parent’s Separate and Consolidated Interim Financial Information 

 

(In thousands of Brazilian Reais, unless otherwise stated)

 

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

 

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

 

  • Financial investments in investment funds are valued at the value of the fund unit as of the date of the 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 and the Company calculates its fair value through methodologies commonly used in the market.

 

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

 

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

 

The fair value of other financial investments, financing and leases payable was determined using calculation methodologies commonly used for mark-to-market reporting, which consist of calculating future cash flows associated with each instrument adopted and adjusting them to present value at the market rates as of the date of the 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 24). Cash, banks, trade receivables and reseller financing are classified as measured at amortized cost. Trade payables, leases payable and other payables are classified as financial liabilities measured at amortized cost.



Ultrapar Participações S.A. and Subsidiaries

 

Notes to the Parent’s Separate and Consolidated Interim Financial Information 

 

(In thousands of Brazilian Reais, unless otherwise stated)


j.1 Fair value hierarchy of financial instruments

 

The financial instruments are classified in the following categories:

 

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

 

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

 

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

 

 

Category

Note

09/30/2021

 

Level 1

 

Level 2

Financial assets:

 

 

 

 

 

 

 

Cash and cash equivalents

 

 

 

 

 

 

 

Cash and bank

Measured at amortized cost

4.a

355,585

 

-

 

-

Financial investments in local currency

Measured at fair value through other comprehensive income

4.a

2,406,122

 

-

 

2,406,122

Financial investments in foreign currency

Measured at fair value through profit or loss

4.a

64,593

 

64,593

 

-

Financial investments:

 

 

 

 

 

 

 

Fixed-income securities and funds in local currency

Measured at fair value through profit or loss

4.b

1,143,796

 

1,143,796

 

-

Fixed-income securities and funds in local currency

Measured at fair value through other comprehensive income

4.b

40,840

 

-

 

40,840

Fixed-income securities (guarantee of loans)

Measured at amortized cost

4.b

76,901

 

-

 

-

Fixed-income securities and funds in foreign currency

Measured at fair value through other comprehensive income

4.b

1,531,383

 

-

 

1,531,383

Currency and interest rate hedging and commodities instruments

Measured at fair value through profit or loss

4.b

969,215

 

-

 

969,215

Trade Receivables

Measured at amortized cost

5.a

4,149,321

 

-

 

-

Reseller Financing

Measured at amortized cost

5.b

917,629

 

-

 

-

Total

 

 

11,655,385

 

 

 

 

 

 

 

 

 

 

 

 

Financial liabilities:

 

 

 

 

 

 

 

Financing

Measured at fair value through profit or loss

16.a

1,006,873

 

-

 

1,006,873

Financing

Measured at amortized cost

16.a

8,684,444

 

-

 

-

Debentures

Measured at amortized cost

16.a

4,488,791

 

-

 

-

Debentures

Measured at fair value through profit or loss

16.a

2,444,888

 

-

 

2,444,888

Leases payable

Measured at amortized cost

13

1,815,752

 

-

 

-

Commodities, currency and interest rate hedging instruments

Measured at fair value through profit or loss

16.a

190,689

 

-

 

190,689

Trade payables

Measured at amortized cost

17

6,305,758

 

-

 

-

Subscription warrants – indemnification (1)

Measured at fair value through profit or loss

24

52,036

 

-

 

52,036

Total

 

 

24,989,231

 

 

 

 

 


Ultrapar Participações S.A. and Subsidiaries

 

Notes to the Parent’s Separate and Consolidated Interim Financial Information 

 

(In thousands of Brazilian Reais, unless otherwise stated)


 

Category

Note

12/31/2020

 

Level 1

 

Level 2

Financial assets:

 

 

 

 

 

 

 

Cash and cash equivalents

 

 

 

 

 

 

 

Cash and bank

Measured at amortized cost

4.a

405,081

 

-

 

-

Financial investments in local currency

Measured at fair value through other comprehensive income

4.a

2,241,852

 

-

 

2,241,852

Financial investments in foreign currency

Measured at fair value through profit or loss

4.a

14,561

 

14,561

 

-

Financial investments:

 

 

 

 

 

 

 

Fixed-income securities and funds in local currency

Measured at fair value through profit or loss

4.b

3,643,286

 

3,643,286

 

-

Fixed-income securities and funds in local currency

Measured at fair value through other comprehensive income

4.b

31,315

 

-

 

31,315

Fixed-income securities (guarantee of loans)

Measured at amortized cost

4.b

75,251

 

-

 

-

Fixed-income securities and funds in foreign currency

Measured at fair value through other comprehensive income

4.b

1,278,940

 

30,245

 

1,248,695

Currency and interest rate hedging and commodities instruments

Measured at fair value through profit or loss

4.b

981,874

 

-

 

981,874

Trade Receivables

Measured at amortized cost

5.a

3,369,766

 

-

 

-

Reseller Financing

Measured at amortized cost

5.b

965,645

 

-

 

-

Total

 

 

13,007,571

 

 

 

 

 

 

 

 

 

 

 

 

Financial liabilities:

 

 

 

 

 

 

 

Financing

Measured at fair value through profit or loss

16.a

1,308,928

 

-

 

1,308,928

Financing

Measured at amortized cost

16.a

10,186,947

 

-

 

-

Debentures

Measured at amortized cost

16.a

5,363,621

 

-

 

-

Debentures

Measured at fair value through profit or loss

16.a

1,093,365

 

-

 

1,093,365

Leases payable

Measured at amortized cost

13

1,833,288

 

-

 

-

Commodities, currency and interest rate hedging instruments

Measured at fair value through profit or loss

16.a

117,159

 

-

 

117,159

Trade payables

Measured at amortized cost

17

4,008,457

 

-

 

-

Subscription warrants – indemnification (1)

Measured at fair value through profit or loss

24

86,439

 

-

 

86,439

Total

 

 

23,998,204

 

 

 

 

 

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

 


Ultrapar Participações S.A. and Subsidiaries

 

Notes to the Parent’s Separate and Consolidated Interim Financial Information 

 

(In thousands of Brazilian Reais, unless otherwise stated)

 

k. Sensitivity analysis of derivative financial instruments

 

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

 

For the sensitivity analysis of foreign exchange hedging instruments as of September 30, 2021, management adopted as a base scenario the Real/U.S. dollar exchange rates at maturity of each swap, projected by U.S dollar futures contracts quoted on B3. As a reference, the exchange rate for the last maturity of foreign exchange hedging instruments is R$ 10.37 (R$ 8.23 as of December 31, 2020) in the base scenario. Scenarios II and III were estimated with a 25% and 50% additional appreciation or depreciation of the Brazilian Real against the base scenario, according to the risk to which the hedged item is exposed.

 

Based on the balances of the hedging instruments and hedged items as of September 30, 2021 and December 31, 2020, the exchange rates were replaced, and the changes between the new balance in Brazilian Reais and the original balance in Brazilian Reais were calculated in each of the three scenarios. The table below shows the change in the values of the main derivative instruments and their hedged items, considering the changes in the exchange rate in the different scenarios:

 

09/30/2021

Risk

Scenario I Base

 

Scenario II

 

Scenario III

Currency swaps receivable in U.S. dollars

 

 

 

 

 

 

(1) U.S. Dollar / Real swaps

Dollar appreciation

 

1,620,758

 

3,510,362

 

4,945,306

(2) Debts / firm commitments in dollars

(1,620,859)

 

(3,510,463)

 

(4,945,408)

(1)+(2)

Net effect in result

(101)

 

(101)

 

(102)

 

 

 

 

 

 

 

Currency swaps payable in U.S. dollars

 

 

 

 

 

 

(3) Real / U.S. Dollar swaps

Dollar devaluation

16,901

 

(373,739)

 

(764,379)

(4) Gross margin of Oxiteno/Ipiranga

(16,901)

 

373,739

 

764,379

(3)+(4)

Net effect in result

-

 

-

 

-

 

 

 

 

 

 

 

Cash Flow Hedge

 

 

 

 

 

 

(1) Cash Flow Hedge

Dollar devaluation

561,483

 

1,255,509

 

1,949,534

(2) Debts

(561,483)

 

(1,255,509)

 

(1,949,534)

(1)+(2)

Net effect in equity

-

 

-

 

-

 

 

 

 

 

 

 

Net Investment

 

 

 

 

 

 

(1) Net Investment Hedge

Dollar devaluation

269,826

 

466,468

 

663,110

(2) Debts

(269,826)

 

(466,468)

 

(663,110)

(1)+(2)

Net effect in equity

-

 

-

 

-

 


Ultrapar Participações S.A. and Subsidiaries

 

Notes to the Parent’s Separate and Consolidated Interim Financial Information 

 

(In thousands of Brazilian Reais, unless otherwise stated)

 

12/31/2020

Risk

Scenario I Base

 

Scenario II

 

Scenario III

Currency swaps receivable in U.S. dollars

 

 

 

 

 

 

(1) U.S. Dollar / Real swaps

Dollar appreciation

 

1,013,826

 

1,522,343

 

2,030,860

(2) Debts / firm commitments in dollars

(1,013,824)

 

(1,522,330)

 

(2,030,835)

(1)+(2)

Net effect in result

2

 

13

 

25

 

 

 

 

 

 

 

Currency swaps payable in U.S. dollars

 

 

 

 

 

 

(3) Real / U.S. Dollar swaps

Dollar devaluation

59

 

17,877

 

35,694

(4) Gross margin of Oxiteno

(59)

 

(17,877)

 

(35,694)

(3)+(4)

Net effect in result

-

 

-

 

-

 

 

 

 

 

 

 

Cash Flow Hedge

 

 

 

 

 

 

(1) Cash Flow Hedge

Dollar devaluation

368,439

 

1,042,394

 

1,716,350

(2) Debts

(368,439)

 

(1,042,394)

 

(1,716,350)

(1)+(2)

Net effect in equity

-

 

-

 

-

 

 

 

 

 

 

 

Net Investment

 

 

 

 

 

 

(1) Net Investment Hedge

Dollar devaluation

170,315

 

336,315

 

502,316

(2) Debts

(170,315)

 

(336,315)

 

(502,316)

(1)+(2)

Net effect in equity

-

 

-

 

-

 

For sensitivity analysis of hedging instruments for interest rates in Brazilian Reais as of September 30, 2021 and December 31, 2020, the Company used the futures curve of the DI x Pre contract quoted on B3 as of September 30, 2021 for each of the swap and debt (hedged item) maturities, to determine the base scenario. Scenarios II and III were estimated based on a 25% and 50% deterioration, respectively, of the base scenario pre-fixed interest rate.

 


Ultrapar Participações S.A. and Subsidiaries

 

Notes to the Parent’s Separate and Consolidated Interim Financial Information 

 

(In thousands of Brazilian Reais, unless otherwise stated)

 

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

 

09/30/2021

Risk

Scenario I Base

 

Scenario II

 

Scenario III

Interest rate swap (Real) – Debentures - CRA

 

 

 

 

 

 

(1) Fixed rate swap - DI

Decrease in Pre-fixed rate

(19,777)

 

(19,672)

 

(19,551)

(2) Fixed rate debt

19,777

 

19,672

 

19,551

(1)+(2)

Net effect in result

-

 

-

 

-

 

12/31/2020

Risk

Scenario I Base

 

Scenario II

 

Scenario III

Interest rate swap (Real) – Debentures - CRA

 

 

 

 

 

 

(1) Fixed rate swap - DI

Decrease in Pre-fixed rate

(39,412)

 

(230,705)

 

(187,597)

(2) Fixed rate debt

39,412

 

230,705

 

187,597

(1)+(2)

Net effect in result

-

 

-

 

-

 

For the sensitivity analysis of the commodity price swings hedging instruments on September 30, 2021 and December 31, 2020, the Company used the futures heating oil contracts quoted on NYMEX. Scenarios II and III were estimated based on 25% and 50% deterioration, respectively, of the base scenario commodity price. 

 

Based on the balances of the hedging instruments and the objects hedged on September 30, 2021 and December 31, 2020, prices were substituted and the variations between the new balance in Reais and the balance in Reais in the report date were calculated in each of the three scenarios. The table below shows the variation of the amounts of the derivative instruments and their objects of hedge, considering the variations in commodity prices in the different scenarios:

 

09/30/2021

Risk

Scenario I Base

 

Scenario II

 

Scenario III

NDF Commodities

 

 

 

 

 

 

(1) NDF Commodities

Decrease in Commodities Price

-

 

1,372,009

 

2,744,018

(2) Gross margin from Ipiranga

-

 

(1,372,009)

 

(2,744,018)

(1)+(2)

Net effect in result

-

 

-

 

-

 

12/31/2020

Risk

Scenario I Base

 

Scenario II

 

Scenario III

NDF Commodities

 

 

 

 

 

 

(1) NDF Commodities

Decrease in Commodities Price

-

 

551,794

 

1,103,589

(2) Gross margin from Ipiranga

-

 

(551,794)

 

(1,103,589)

(1)+(2)

Net effect in result

-

 

-

 

-

 

 

Ultrapar Participações S.A. and Subsidiaries

 

Notes to the Parent’s Separate and Consolidated Interim Financial Information

 

(In thousands of Brazilian Reais, unless otherwise stated)

34. Commitments (Consolidated)

 

a. Contracts 

 

a.1 Subsidiary Ultracargo Logística has agreements with CODEBA, with the Complexo Industrial Portuário Governador Eraldo Gueiros and with the company Empresa Maranhense de Administração Portuária, in connection with its port facilities in Aratu, Suape and Itaqui, respectively. Such agreements establish a minimum cargo movement of products, as shown below:

 

Port

Minimum movement per year

Maturity

Aratu

900,000 ton.

2022

Suape

250,000 ton.

2027

Suape

400,000 ton.

2029

Aratu

465,403 ton.

2031

Itaqui

1,222,377 m³

2049

 

If the annual movement is less than the minimum contractual movement, the subsidiary is liable to pay the difference between the effective movement and the minimum contractual movement, based on the port tariff rates in effect on the date established for payment. As of September 30, 2021, these rates were R$ 8.37 and R$ 2.67 per ton for Aratu and Suape, respectively and R$ 0.85 per m³ for Itaqui. According to contractual conditions and tolerances, on September 30, 2021 there were not material pending issues regarding the minimum purchase limits of the contract.

 

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

 

Plant

Minimum purchase (tons) per year

Maturity

Camaçari

205,000

2021

Mauá

44,100

2023

 

Should the minimum purchase commitment not be met, the subsidiary would be liable for a fine based on the current ethylene price for the quantity not purchased. According to contractual conditions and tolerances, on September 30, 2021 there are no material issues regarding the minimum purchase commitment.

 

 

Ultrapar Participações S.A. and Subsidiaries

 

Notes to the Parent’s Separate and Consolidated Interim Financial Information

 

(In thousands of Brazilian Reais, unless otherwise stated)

 

b. Insurance coverage

 

The Company is supported by insurance policies with the objective of covering several risks to which it is exposed.

 

In the insurance policies the maximum compensation values based on the risk analysis of certain locations.

 

The General Liability Insurance program covers the Ultrapar and its subsidiaries with a maximum aggregate coverage of US$ 250 million.

 

The Company maintains liability insurance policies for directors, executive officers and council to indemnify Ultrapar and its subsidiaries in the total amount of US$ 80 million.

 

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, being the type and amounts of insurance are considered by management to be sufficient to cover potential losses based that may occur in view of the nature of the activities conducted by the companies.

 

 

 

Ultrapar Participações S.A. and Subsidiaries

 

Notes to the Parent’s Separate and Consolidated Interim Financial Information

 

(In thousands of Brazilian Reais, unless otherwise stated)

  

c. Area port lease

 

On March 22, 2019, Ultrapar, through its subsidiary IPP, won the port concessions of three areas with minimum storage capacity of 64 thousand m³ (not reviewed) located at the port of Cabedelo, in the state of Paraíba, and one area with minimum storage capacity of 66 thousand m³ (not reviewed) at the port of Vitória, in the state of Espírito Santo, which will be designated for handling, storage and distribution of fuels. These concessions were carried out by two consortiums of which IPP holds one third of the total participation. For the port of Cabedelo, the companies Nordeste Logística I, Nordeste Logística II and Nordeste Logística III were incorporated, in partnership with Raízen Combustível S.A. and Petrobrás Distribuidora S.A. For the port of Vitória, the company Navegantes was incorporated, in partnership with Raízen Combustível S.A. and Petrobrás Distribuidora S.A. The total investments regarding IPP’s stake sums up to R$160 million (not reviewed) for a concession term of 25 years.

 

On April 5, 2019, Company, through its subsidiary IPP and Ultracargo Logística, also won three concessions. IPP won two concessions in the port of Miramar, in Belém, state of Pará: (i) area BEL02A, through a consortium 50% owned by IPP, that shall have minimum storage capacity of 41 thousand m³, and (ii) area BEL04, which is currently operated by IPP with minimum storage capacity of 23 thousand m³. Such areas will be operated for at least 15 years, according to the auction notice. For the area BEL02A, Latitude was incorporated, together with Petróleo Sabbá S.A. Ultracargo Logística 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 Ultracargo Logística for at least 25 years, according to the auction notice. For the area VDC12, Tequimar Vila do Conde was incorporated (see Note 3.b). The estimated investments regarding the participation of IPP and Ultracargo Logística sums up to R$ 450 million, approximately, to be disbursed throughout the five years subsequent to the auction, including the auction grants and the minimum investment required for these areas.

 

On April 9, 2021, the Company, through its subsidiary Ultracargo Logística, won the auction for leasing the IQI13 area in the Itaqui port, State of Maranhão, for storage and handling of liquid bulk products, specially fuels. In the leased area, a new terminal will be built with a minimum installed capacity of 79 thousand cubic meters. The lease will have a minimum duration of 20 years according to the auction notice. For this capacity, an investment of approximately R$ 310 million is estimated, including the amount related to the grant, to be disbursed in up to six years after signature of the contract.

 

35. Subsequent events

 

a. The conclusion of the sale of interest in ConectCar

 

On October 1, 2021, the Company, in addition to the notice to the market dated June 25, 2021, announced the conclusion of the sale of its interest in ConectCar.

 

The value of the sale of the 50% interest in ConectCar was R$ 165 million, paid on October 1, 2021, and is still subject to possible adjustments arising from variations in working capital and net debt position. The contractual term for the presentation of the price adjustment calculations by Portoseg is 120 days from the date of completion of the sale.

Image1

ULTRAPAR PARTICIPAÇÕES S.A.

Ultrapar reviews its financial guidance for 2021

São Paulo, November 3, 2021 – Ultrapar Participações S.A. (B3: UGPA3 / NYSE: UGP, “Ultrapar” or “Company”), pursuant to CVM Resolution 44/21 and CVM Instruction 480/09, hereby announces the review of its financial guidance for 2021 disclosed in the Material Notice of February 24, 2021:

EBITDA 2021 Initial guidance Revised guidance
(R$ million)
 Ultrapar1 3,800 ≤ ∆ ≤ 4,650 3,710 ≤ ∆ ≤ 4,090
Ipiranga1 2,100 ≤ ∆ ≤ 2,500 1,750 ≤ ∆ ≤ 1,950
Oxiteno1 800 ≤ ∆ ≤ 1,100 1,050 ≤ ∆ ≤ 1,150
Ultragaz1 670 ≤ ∆ ≤ 750 700 ≤ ∆ ≤ 740
Ultracargo 340 ≤ ∆ ≤ 370 380 ≤ ∆ ≤ 400
Extrafarma 100 ≤ ∆ ≤ 140 60 ≤ ∆ ≤ 80
Holding and Others (210) (230)
                 

  

1 Adjusted EBITDA, according to CVM Instruction 527/12

At Ipiranga, the EBITDA guidance was cut mainly due to more pressured margins resulting from inventory positions taken and the pass-through of cost increases, and a lower volume compared to the original guidance.

At Oxiteno, the EBITDA guidance was raised to reflect higher-than-expected sales volume and more favorable margins.

At Ultracargo, the improvement in the EBITDA guidance results from the start-up of operations of the Itaqui and Vila do Conde terminals ahead of schedule, in addition to productivity gains above those projected for the year.

At Extrafarma, the competitive environment in the North and Northeast regions combined with lower sales drove the reduction in the EBITDA guidance. Extrafarma's projection excludes the non-recurring effect of the impairment registered in 2Q21. The lower result of the Holding and Others reflects mainly increased expenses with M&A transactions and lower-than-expected results of the Refinaria de Petróleo Riograndense.

The projections are based in information currently available, estimates and assumptions of the Company’s Executive Board, and do not include the effects of potential acquisitions or divestments. Such estimates are not guarantee of performance and involve risks and uncertainties, since they refer to future events and depend on circumstances which may or may not occur. General economic conditions and market conditions, among other factors, may lead to results which differ materially from the figures disclosed.

 

Rodrigo de Almeida Pizzinatto

Chief Financial and Investor Relations Officer

Ultrapar Participações S.A




Graphics


São Paulo, November 3, 2021Ultrapar Participações S.A. (“Company”, “Ultra Group” or “Ultrapar”, B3: UGPA3 / NYSE: UGP), a company engaged in energy and infrastructure through Ipiranga, Ultragaz and Ultracargo, specialty chemicals through Oxiteno and retail pharmacy with Extrafarma, today announces its results for the third quarter of 2021.

 

Net revenues

EBITDA

Net income

R$ 32

billion

R$ 1,017
million

R$ 374

million

 

 

 

Investments

Cash flow from operations 9M21

Market cap

R$ 491
million

R$ 1.9
billion

R$ 16

billion

 

Highlights

 

  • Announcement of the succession plan of the leadership of Ultrapar’s Board of Directors. As from January 2022, Marcos Lutz will assume the position of Chief Executive Officer of Ultrapar, as part of the process to succeed Pedro Wongtschowski as Chairman of the Board of Directors as from April 2023. Also, as from January 2022, Frederico Curado, current Chief Executive Officer of Ultrapar, will take over as Vice-Chairman, succeeding Lúcio de Castro Andrade Filho, who will retire at the end of 2021.
  • Election of Leonardo Linden as the new Chief Executive Officer of Ipiranga and of Marcelo Araújo as Chief Corporate Development & Advocacy Officer of Ultrapar Holding (changes effective from October 2021).
  • Marcos Lutz became a signatory of Ultrapar’s August 2020 Shareholders’ Agreement, with a holding of 2.4% of Ultra S.A. capital stock.
  • Evolution on Ultrapar’s portfolio review process, with the announcement of the divestment of Oxiteno and the conclusion of the sale of the equity interest in ConectCar, consistent with the strategy disclosed by the Company.
  • End of negotiations for the acquisition of REFAP.
  • Record quarterly results registered at Ultracargo and Oxiteno.
  • Issuance of Agribusiness Receivables Certificate (tax incentive bonds - CRA) by Ipiranga in September 2021, in the total amount of R$ 960 million and cost of 102.75% of the CDI.
  • Review of the financial guidance for Ultrapar and its businesses for 2021 to reflect expected results for the year.



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Considerations on the financial and operational information

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

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

Information denominated EBITDA – Earnings Before Interest, Taxes on Income and Social Contribution on Net Income, Depreciation and Amortization; Adjusted EBITDA – adjusted by the amortization of contractual assets with customers – exclusive rights and by the cash flow hedge from bonds; and EBIT – Earnings Before Interest and Taxes on Income and Social Contribution on Net Income are presented in accordance to Instruction No. 527, issued by the Brazilian Securities and Exchange Commission – CVM on October 4, 2012. The calculation of EBITDA based on net income is shown below:


   Quarter     Accumulated 
         
R$ million    3Q21     3Q20     2Q21    9M21   9M20
         
Net income             374.3           277.3           (18.2)             493.4           496.2
(+) Income and social contribution taxes           (108.0)           163.4              54.9              47.9           356.7
(+) Net financial (income) expenses             296.0           157.9                2.8             632.4           405.8
(+) Depreciation and amortization             346.1           323.4             335.7          1,014.5           940.5
                   
EBITDA             908.4             921.9             375.1          2,188.3          2,199.2
         
Adjustments          
(+) Amortization of contractual assets with customers - exclusive rights (Ipiranga)              70.5            73.2              80.3             198.6           223.2
(+) Amortization of contractual assets with customers - exclusive rights (Ultragaz)                0.4              0.4                0.4                1.2              1.2
(+) Cash flow hedge from bonds (Oxiteno)              38.0            42.9              47.7
          129.0           105.6
         
Adjusted EBITDA          1,017.3          1,038.3             503.5          2,517.1          2,529.2
Ultragaz             220.5           222.2           136.5           507.2           574.8
Ultracargo             102.1            78.4           100.2           294.8           260.5
Oxiteno             351.5           168.8           273.8           852.2           523.0
Ipiranga             398.1           565.7           421.8        1,382.9        1,224.3
Extrafarma              17.0            27.7         (373.0)         (344.5)            50.2
Holding1/Others             (71.8)           (24.5)           (55.9)         (175.6)         (103.6)
         
Non-recurring items that affected EBITDA          
(-) Tax credits (Oxiteno)                  -                  -                  -                    -             (70.9)
(-) Tax credits (Ultracargo)                  -                  -                  -                    -             (11.7)
(+) Impairment (Extrafarma)                  -                  -             394.7             394.7                -  
     
Recurring EBITDA          1,017.3          1,038.3             898.1          2,911.8          2,446.6
Ultragaz             220.5           222.2           136.5           507.2           574.8
Ultracargo             102.1            78.4           100.2           294.8           248.8
Oxiteno             351.5           168.8           273.8           852.2           452.1
Ipiranga             398.1           565.7           421.8        1,382.9        1,224.3
Extrafarma              17.0            27.7            21.6            50.2            50.2
Holding1/Others             (71.8)           (24.5)           (55.9)         (175.6)         (103.6)

 

1 Mainly expenses related to the governance bodies (Board of Directors, Fiscal Council, Committees), to the Presidency, Financial Department and areas linked to the Group's strategy, risk management, portfolio management and capital allocation, such as IR and M&A

 

 

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Ultrapar

 

Amounts in R$ million

3Q21

3Q20

2Q21

Δ

Δ

9M21

9M20

Δ

3Q21 v 3Q20

3Q21 v 2Q21

9M21 v 9M20

Net revenues

31,911

20,762

28,526

54%

12%

84,387

58,025

45%

Adjusted EBITDA

1,017

1,038

503

(2%)

102%

2,517

2,529

0%

Recurring EBITDA1

1,017

1,038

898

(2%)

13%

2,912

2,447

19%

Depreciation and amortization2

417

397

416

5%

0%

1,214

1,165

4%

Financial result3

(334)

(201)

(50)

(66%)

n/a

(761)

(511)

(49%)

Net income

374

277

(18)

35%

n/a

493

496

(1%)

Recurring net income4

178

277

289

(36%)

(38%)

604

496

22%

Investments5

491

313

398

57%

24%

1,183

1,024

16%

Cash flow from operations

604

828

1,150

(27%)

(47%)

1,882

2,630

(28%)

 

1 Non-recurring items described in the EBITDA calculation table – page 2
2 Includes amortization of contractual assets with customers  exclusive rights
3 Includes the result of the cash flow hedge from bonds
Does not include the impairment of Extrafarma of R$ 395 million in 2Q21 and the income tax reversion over the SELIC’s adjustments of tax credits of R$ 196 million in 3Q21
5 Includes R$ 29 million related to the grant of Ultracargo's terminal in Vila do Conde in 1Q21, R$ 15 million related to the grant oUltracargo’s IQI-13 terminal in Itaqui in 3Q21 and R$ 14 million related to the grant of Ipiranga's terminal in Belém in 3Q21


Net revenues Total of R$ 31,911 million, an increase of 54% and 12% in relation to 3Q20 and 2Q21, respectively, due to revenues growth in Ipiranga, Ultragaz, Oxiteno and Ultracargo.

Recurring EBITDA Total of R$ 1,017 million, a decrease of 2% in relation to 3Q20, mainly due to lower EBITDA at Ipiranga and abastece aí and higher expenses of the Holding, attenuated by the growth of Oxiteno and Ultracargo. In relation to 2Q21, excluding Extrafarma’s impairment registered in the last quarter, there was an increase of 13%, resulting from the growth of Ultragaz and Oxiteno, partially offset by the EBITDA reduction at Ipiranga, abastece aí and affiliates.

Results from the Holding, affiliates and abastece In addition to the results of the five main businesses, Ultrapar recorded a negative result of R$ 72 million, composed of (i) R$ 38 million of negative EBITDA with the Holding, R$ 18 million higher than in 3Q20, mainly due to the concentration of expenses with M&A projects and the effects of inflation on personnel expenses, (ii) R$ 22 million of negative EBITDA with abastece aí (new digital payment company), due to expenses with technology and marketing to consolidate the performance and expansion of the application and loyalty program and (iii) R$ 11 million of negative EBITDA with affiliates, of which R$ 6 million refer to ConectCar, which will no longer compose Ultrapar’s results from 4Q21.

Depreciation and amortization Total of R$ 417 million (+5%), due to investments made over the last twelve months. In relation to 2Q21, total costs and expenses with depreciation and amortization remained stable.

Financial result (including cash flow hedge) Ultrapar recognized net financial expenses of R$ 334 million in 3Q21, compared to net financial expenses of R$ 201 million in 3Q20. This deterioration is mainly a result of the temporary negative effect of mark-to-market of hedges of the bonds, attenuated by the accrued interest from extraordinary tax credits related to the ICMS exclusion from the PIS/Cofins calculation base in the amount of R$ 60 million in 3Q21. Compared to 2Q21, when Ultrapar recognized net financial expenses of R$ 50 million, the difference is mainly explained by the deterioration of mark-to-market result of the hedges, which was positive in 2Q21 and negative in 3Q21.

Recurring net income Total of R$ 178 million, a reduction of 36% and 38% compared to 3Q20 and 2Q21, respectively, mainly due to the deterioration in the financial result.

Cash flow from operations Generation of R$ 1.9 billion in 9M21, compared to the generation of R$ 2.6 billion in 9M20, due to increased investment in working capital in the period, mainly as a result of strong price hikes in fuel and raw materials, attenuated by the EBITDA growth.


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Ultragaz

 

 

3Q21

3Q20

2Q21

Δ

Δ

9M21

9M20

Δ

3Q21 v 3Q20

3Q21 v 2Q21

9M21 v 9M20

Total volume (000 tons)

453

453

439

0%

3%

1,298

1,307

(1%)

Bottled

304

309

299

(2%)

2%

876

909

(4%)

Bulk

149

144

140

4%

7%

421

398

6%

EBITDA (R$ million)

220

222

137

(1%)

61%

507

575

(12%)

 

Operational performance The volume sold by Ultragaz in 3Q21 remained stable compared to 3Q20. Volumes in the bottled segment decreased by 2%, mainly due to effects of the pandemic over demand growth for LPG bottles in 3Q20. Volumes in the bulk segment, in turn, increased 4%, due to sales growth in the industrial, commercial and services segments that were the most impacted by the pandemic in 2020. Compared to 2Q21, the volume sold increased by 3%, reflecting the typical seasonality between the quarters.

Net revenues Total of R$ 2,680 million (+37%), mainly due to the increases in LPG cost. In relation to 2Q21, net revenues were 14% higher, for the same reason mentioned above and because of higher volume sold.

Cost of goods sold Total of R$ 2,353 million (+44%), due to the readjustments of LPG cost by Petrobras, resulting from the increases in the international prices of oil and its derivatives and exchange rate variation, in addition to the effects of inflation on materials (mainly fuel and materials for requalification of bottles). Compared to 2Q21, the cost of goods sold rose 11%, due to the same factors mentioned and the sales volume growth.

Sales, general and administrative expenses Total of R$ 174 million (+10%), as a result of higher one-off expenses with information technology to improve commercial relationship, marketing expenses related to the new brand launched in the first semester and higher provision for doubtful accounts. In relation to 2Q21, the sales, general and administrative expenses increased by 9%, due to higher expenses with personnel and marketing.

EBITDA – Total of R$ 220 million, R$ 2 million lower than that in 3Q20. Compared to 2Q21, EBITDA grew by 61%, due to sales volume growth and pass throughs of LPG cost increases, attenuated by higher expenses.

Investments – R$ 99 million were invested in this quarter, mainly allocated to equipment installed in new customers in the bulk segment, to the acquisition and replacement of bottles, to the new plants in Belém (state of Pará) and Fortaleza (state of Ceará), and to security and information technology projects.


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Ultracargo

 

 

3Q21

3Q20

2Q21

Δ

Δ

9M21

9M20

Δ

3Q21 v 3Q20

3Q21 v 2Q21

9M21 v 9M20

Installed capacity1 (000 m³)

878

838

859

5%

2%

860

831

4%

m³ sold (000 m³)

3,089

3,062

3,155

1%

(2%)

9,381

9,174

2%

EBITDA (R$ million)

102

78

100

30%

2%

295

261

13%

Recurring EBITDA2 (R$ million)

102

78

100

30%

2%

295

249

19%



1 Monthly average
2 Does not include the effect of tax credits of R$ 12 million in 2Q20


Operational performance Ultracargo’s average installed capacity increased 5% from 3Q20, due to the commissioning of capacity expansions in Itaqui in the last twelve months. The m³ sold increased 1%, mainly due to the increase in fuels handling in Aratu and Itaqui, attenuated by lower fuels handling in Suape. In relation to 2Q21, the m³ sold decreased by 2%, due to lower activity in Suape and Santos terminals.

Net revenues Total of R$ 178 million (+11%), due to the contractual readjustments and a richer mix of products and terminals, in addition to the capacity expansions in Itaqui terminal. In relation to 2Q21, net revenues remained practically stable.

Cost of services provided Total of R$ 69 million (+2%), mainly due to an increase in depreciation, arising from the capacity expansions. In relation to 2Q21, the cost of services provided decreased by 1%, due to optimization of products handling among the terminals.

Sales, general and administrative expenses Total of R$ 33 million (-6%), arising from the efficiency gains, despite increased inflationary pressure, in addition to lower expenses with consultancy and IT services. SG&A per m³ sold showed a reduction of 7% year on year, evidencing significant productivity gains. In relation to 2Q21, the sales, general and administrative expenses reduced by 3%.

EBITDA – Ultracargo reached a record EBITDA level of R$ 102 million (+30%), due to expansions with profitability gains, contractual readjustments, reduction of expenses, and productivity gains. In relation to 2Q21, EBITDA increased 2%, due to contractual readjustments and lower expenses.

Investments – Investments in the period amounted to R$ 74 million, directed to the conclusion of the construction of the new terminal in Vila do Conde (state of Pará), the expansion of the Itaqui terminal and projects for efficiency gains, maintenance and operational safety of the terminals.


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Oxiteno

 

 

3Q21

3Q20

2Q21

Δ

Δ

9M21

9M20

Δ

3Q21 v 3Q20

3Q21 v 2Q21

9M21 v 9M20

Average exchange rate (R$/US$)

5.23

5.38

5.30

(3%)

(1%)

5.33

5.08

5%

Total volume (000 tons)

216

202

192

7%

13%

588

549

7%

Commodities

35

37

32

(4%)

10%

86

97

(11%)

Specialty chemicals/Others

181

166

160

9%

13%

502

453

11%

Sales in Brazil

154

143

136

8%

13%

417

381

9%

International sales

62

60

55

3%

12%

171

169

2%

EBITDA (R$ million)

352

169

274

108%

28%

852

523

63%

Recurring EBITDA1 (R$ million)

352

169

274

108%

28%

852

452

89%


1 Does not include the effect of tax credits of R$ 71 million in 1Q20

 

Operational performance Total volume sold by Oxiteno increased by 7% in relation to 3Q20, with a 9% growth in specialty chemicals, boosted by increased sales mainly in crop solutions and coatings segments, in addition to the increase in volumes in the United States (ramp up of the plant). The volume of commodities had a 4% reduction, mainly due to increased spot sales in 2020. Compared to 2Q21, the volume rose 13%, with volume growth in all segments in the domestic market, mainly home and personal care, crop solutions and coatings, in addition to the recovery in export volumes after the scheduled shutdown in 2Q21.

Net revenues Total of R$ 1,982 million (+39%), due to the increase in sales volume and in average dollar prices, as a result of the rise in raw materials costs and a product mix with lower share of commodities. Compared to 2Q21, net revenues increased 18%, due mainly to volume growth.

Cost of goods sold Total of R$ 1,515 million (+31%), due to the increase in sales volume and in raw material costs, in addition to the increase in personnel costs (variable remuneration), attenuated by the effect of the Zero Cost Collar in 3Q20 (margin hedge, discontinued as from 2021) and lower expenses with maintenance. In relation to 2Q21, the cost of goods sold increased 17%, due to the increase in sales volume and increase in personnel costs, attenuated by lower maintenance expenses, due to the scheduled shutdown in Mauá in 2Q21.

Sales, general and administrative expenses Total of R$ 252 million (+15%), due to the increase in freight and storage expenses, as a result of sales volume growth and higher unit costs, in addition to higher personnel expenses (collective wage adjustment and variable remuneration). Compared to 2Q21, the sales, general and administrative expenses increased 10%, due to increased freight and personnel expenses.

Other operating results Total of R$ 22 million in 3Q21, mainly due to the insurance reimbursement for business interruption losses from an incident at Oleoquímica, in Camaçari, in 2017.

EBITDA – Oxiteno reached a record EBITDA level of R$ 352 million (+108%), reflecting higher sales volume and margins improvement, in addition to the effect of the Zero Cost Collar in 3Q20 (margin hedge, discontinued as from 2021), attenuated by increased costs and expenses. In relation to 2Q21, EBITDA increased 28%, mainly due to higher specialty chemicals sales volume.

Investments – Investments in the period amounted to R$ 58 million, mainly directed to the maintenance and safety of production units.


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Ipiranga

 

 

3Q21

3Q20

2Q21

Δ

Δ

9M21

9M20

Δ

3Q21 v 3Q20

3Q21 v 2Q21

9M21 v 9M20

Total volume (000 m³)

5,855

5,530

5,585

6%

5%

16,807

15,646

7%

Diesel

3,121

2,999

3,024

4%

3%

8,896

8,303

7%

Otto cycle

2,623

2,421

2,453

8%

7%

7,577

7,048

8%

Others1

110

110

109

1%

2%

334

295

13%

EBITDA (R$ million)

398

566

422

(30%)

(6%)

1,383

1,224

13%

1 Fuel oilsarla 32, kerosene, lubricants and greases

 

Operational performance Ipiranga reported a 6% growth in the volume sold compared to 3Q20, composed of 8% growth in the Otto cycle and 4% in diesel, mainly due to impacts of the pandemic in 3Q20. The volume sold was 5% higher than that in 2Q21, due to the gradual recovery in fuel consumption especially in the branded network, with a growth of 7% in the Otto cycle and 3% in diesel.

Net revenues Total of R$ 26,614 million (+59%), due to sales volume growth and increase in the average costs of oil derivatives and ethanol. In relation to 2Q21, net revenues increased 12%, arising from the same factors.

Cost of goods sold Total of R$ 25,892 million (+62%), due to the increase in costs practiced by Petrobras, arising from the diesel and gasoline international prices hikes, and in ethanol costs, in addition to the increase in sales volume. Compared to 2Q21, the increase of 11% resulted from the same factors mentioned above.

Sales, general and administrative expenses Total of R$ 546 million (+34%), due to increased expenses with (i) commercial rebates at Iconic, due to an increase in sales for car manufacturers, (ii) reversal of provisions for doubtful accounts in 3Q20, (iii) freight (higher volume sold and increase in unit cost) and (iv) AmPm’s company-operated stores, in addition to expense saving implemented in several fronts in 2020, as a result of the pandemic. Compared to 2Q21, the sales, general and administrative expenses increased 11%, due to increased expenses with freight, marketing and provision for doubtful accounts.

Other operating results Total of R$ 5 million, an increase of R$ 51 million compared to 3Q20, mainly due to an increase of R$ 29 million in tax credits (R$ 38 million of which was registered in 3Q21) and R$ 20 million lower costs with CBios related to the goals defined by RenovaBio. Compared to 2Q21, the reduction totaled R$ 69 million, due to the net amount of R$ 97 million in extraordinary credits reported in 2Q21, partially offset by higher costs with CBios in 3Q21.

Results from disposal of assets Total of R$ 18 million (+39%), due to higher results from sales of real estate assets, pumps and tanks. Compared to 2Q21, the reduction of 44% resulted from lower results from sales of real estate assets.

EBITDA – Total of R$ 398 million (-30%), mainly due to lower commercial margins in July 2021 and SG&A increase, despite the growth in sales volume. The reduction of 6% from 2Q21 is due to lower tax credits registered and higher expenses, attenuated by gradual volume and unit gross profit recovery, which increased from R$ 107/m³ in 2Q21 to R$ 123/m³ in 3Q21.

Investments – R$ 244 million were invested in the quarter, directed to expansion and maintenance of Ipiranga’s service stations and franchise network and to logistics infrastructure. Out of the total investments, R$ 124 million refers to additions to fixed and intangible assets and R$ 139 million to contractual assets with customers (exclusive rights). These amounts were reduced by the receipt of a R$ 20 million installments from sale of real estate assets, net of financings offered to customers.


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Extrafarma

 

 

3Q21

3Q20

2Q21

Δ

Δ

9M21

9M20

Δ

3Q21 v 3Q20

3Q21 v 2Q21

9M21 v 9M20

Number of stores (end of the period)

399

408

400

(2%)

0%

399

408

(2%)

 % of mature stores (+3 years)

85%

68%

83%

17 p.p.

2 p.p.

85%

68%

17 p.p.

Gross revenues (R$ million)

510

523

542

(3%)

(6%)

1,569

1,558

1%

EBITDA (R$ million)

17

28

(373)

(39%)

n/a

(344)

50

n/a

Recurring EBITDA1 (R$ million)

17

28

22

(39%)

(21%)

50

50

0%


1 Does not include the impairment of assets of R$ 395 million in 2Q21

 

Operational performance Extrafarma ended 3Q21 with 399 pharmacies, with 1 opening and 10 closures in the last twelve months, a reduction of 2% in its network, resulting from greater selectivity in expansion and a more rigorous approach to underperforming stores. At the end of the quarter, maturing stores (with up to three years of operation) represented 15% of the network.

Gross revenues Total of R$ 510 million (-3%), due to the lower number of stores (-2%) and the strong comparison base in mobile phone sales in 3Q20 (-73%), due to the temporary shutdown of commercial activities by virtue of the pandemic in that period, partially offset by the 3% increase in the same stores sales (excluding mobile phone sales). In relation to 2Q21, gross revenues decreased 6%, due to higher competition and lower wholesale sales.

Cost of goods sold and gross profit The cost of goods sold totaled R$ 334 million (-3%), aligned with the decrease in sales. The gross profit totaled R$ 150 million (+1%), equivalent to the gross margin of 29.4%, 1.2 p. p. above the 3Q20. In relation to 2Q21, the cost of goods sold decreased 5%, practically in line with sales reduction, while the gross profit decreased 7%.

Sales, general and administrative expenses Total of R$ 175 million (+10%), due to the impacts of inflation in personnel expenses and the savings obtained in 3Q20, as a result of the pandemic. In relation to 2Q21, the sales, general and administrative expenses decreased 1%, mainly due to lower revenues.

Recurring EBITDA Total of R$ 17 million (-39%), due to lower sales and impacts of inflation and savings on expenses. In relation to 2Q21, excluding the effect of the impairment, the decrease of 21% resulted mainly from lower margins, due to the inventory renewal after annual readjustment in the medicine prices.

Investments In 3Q21, investments totaled R$ 6 million, mainly directed to the maintenance of technology, refurbishments and improvements in stores.

 
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Indebtedness (R$ million)

 

Ultrapar consolidated

3Q21

3Q20

2Q21

Gross debt

(16,409)

(18,756)

(16,106)

Cash and cash equivalents

6,588

9,798

6,979

Net debt (ex-IFRS 16)

(9,821)

(8,958)

(9,127)

Leases payable

(1,816)

(1,832)

(1,796)

Net debt

(11,636)

(10,790)

(10,923)

Net debt/LTM Adjusted EBITDA1 (ex-IFRS 16)

2.9x

2.9x

2.6x

Net debt/LTM Adjusted EBITDA1

3.0x

3.1x

2.8x

Average cost of debt (curve)

105% DI

193% DI

114% DI

DI + 0.2%

DI + 1.9%

DI + 0.5%

Average cash yield

61% DI

68% DI

76% DI

Average debt duration (years)

4.9

4.8

4.4

1 LTM Adjusted EBITDA does not include the impairment of Extrafarma of R$ 593 million for 3Q20 (registered in 4Q19) and of R$ 395 million for 2Q21 and 3Q21 (registered in 2Q21)

 

Ultrapar ended 3Q21 with net financial debt totaling R$ 9.8 billion, composed of gross indebtedness of R$ 16.4 billion and cash position of R$ 6.6 billion. Considering the leases payable (IFRS 16) of R$ 1.8 billion, the total net debt was R$ 11.6 billion (3.0x LTM Adjusted EBITDA) compared to R$ 10.9 billion on June 30, 2021 (2.8x LTM Adjusted EBITDA). The increase in net debt compared to the position at the end of 2Q21 resulted mainly from (i) the deterioration of the financial result, mainly the negative temporary effect of mark-to-market of hedge from the bonds, (ii) the net debt exchange rate variation on the portion of bonds designated for hedge accounting and (iii) the payment of interim dividends in August 2021. The increase in financial leverage results from the increase in net debt, due to the reasons explained above.

 

Maturity profile and debt breakdown:


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Updates on ESG themes

In August 2021, a climate survey was carried out for the Holding company, in partnership with Great Place to Work (GPTW), with the participation of 84% of the employees. The result of 80 in the favorability index ensured the Ultrapar Holding the certification of Best Companies to Work for by GPTW.

In July, in the CDP Supply Chain program, Ultragaz participated in the Climate Change and Water Security questionnaires, with 95% of the company’s suppliers participating in both programs. During the quarter, Ultragaz transported 2 thousand oxygen cylinders from suppliers to hospitals in the state of São Paulo on the social responsibility front. In addition, through an educational campaign on the prevention and care for hypertension issues, in partnership with the Brazilian Society of Hypertension, information folders were distributed by Ultragaz resellers. It is estimated that the campaign impacted more than 3 million people in 11 states. In partnership with Childhood Brasil, UNICEF and Canal Futura, Ultragaz promoted the distribution of folders to spread the series “What Body is This?”, a part of the Growing Up Without Violence Project. The series deals with the importance of self-protection, open dialogue, knowledge of one's own body and respect. In September, Ultragaz conducted a survey with its employees on Diversity and Inclusion, with participation of 84% of its workforce.

In September, Ultracargo launched the SOUL+ Innovative Ideas Program for Santos, Aratu, and Suape terminals, focused on sustainability and productivity. In addition, Ultracargo partnered with the Ayrton Senna Institute to support the Socio-Emotional Dialogues project to be implemented in municipal schools in São Luís (state of Maranhão).

In August, Oxiteno signed the UN Global Compact’s Gender Equality program, a movement that aims to establish clear goals for companies that are members of the Global Compact’s Brazil Network to increase the number of women in senior leadership positions. In addition, Oxiteno promoted an event called Seeding Ideas to its customers in the crop solutions segment, with sustainability as the main topic.

In September, Oxiteno and Ipiranga participated in the second edition of Inova 2030, a project linked to the UN Global Compact that encourages entrepreneurship among young professionals in business projects and solutions to achieve the Sustainable Development Goals (SDGs).

Aiming to expand the number of vehicular electrical recharge spots in its network, Ipiranga established a partnership agreement with CPFL to participate in the Electric Mobility R&D project of the Brazilian Electric Energy Agency (ANEEL), which provides for the installation of more than 40 chargers for electric vehicles in Campinas (state of São Paulo) and Gramado (state of Rio Grande do Sul), as well as road corridors in the countryside of São Paulo and Rio Grande do Sul. Furthermore, together with other companies and Grupo Ultra, Ipiranga signed the letter “Business Leaders for the Climate”, a movement led by the Brazilian Business Council for Sustainable Development (CEBDS) in partnership with other entities in the sector, defending ambitious climate goals, in addition to Brazil’s leading role against the aggravation and effects of climate change. Ipiranga also launched the second cycle of its internship program, with 50% of the vacancies allocated to afro-descendant professionals. The first edition on the first half of 2021 received more than 5 thousand applications, with approximately 70% of those selected declaring themselves black people. In addition, the Health in the Road Program, whose 2021 edition ended in September, with 120 scheduled events and offering primary health care for truck drivers and populations around Ipiranga highway stations, surpassed the record of serviced people reported in June, with more than 1,045 consultations in a single day in Santarém (state of Pará), with the structure of the program being used to make available the application of the vaccine against COVID-19.

During the quarter, using Extrafarma stores as collection points, more than 6 thousand hygiene items were collected for the NGO Jardim das Borboletas Association, and almost 2 thousand hygiene items were collected for the Lucas Dantas Community Association (Lar ACOLD).


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Capital markets

Ultrapar’s combined average daily financial volume on B3 and NYSE totaled R$ 153 million/day in 3Q21 (-9%). Ultrapar’s shares ended the quarter quoted at R$ 14.74 on B3, a depreciation of 20% in the quarter, while the Ibovespa stock index fell by 12%. In NYSE, Ultrapar’s shares decreased 28% in 3Q21, while the Dow Jones stock index depreciated 2%. Ultrapar ended 3Q21 with a market cap of R$ 16 billion.

 Capital markets

3Q21

3Q20

2Q21

9M21

9M20

Number of shares (000)

1,115,108

1,115,006

1,115,077

1,115,108

1,115,006 

Market capitalization1 (R$ million)

16,437 

21,486

20,506

16,437

21,486 

B3

 

 

 

 

 

Average daily trading volume (000 shares)

8,210 

7,415

5,732

6,934

8,793 

Average daily financial volume (R$ 000)

133,350

149,324

116,073

131,489

158,259 

Average share price (R$/share)

16.24 

20.14

20.25

18.96

18.00 

NYSE

 

 

 

 

 

Quantity of ADRs² (000 ADRs)

50,374 

47,480

50,363

50,374

47,480

Average daily trading volume (000 ADRs)

1,205 

958

1,533

1,669

1,458

Average daily financial volume (US$ 000)

3,744 

3,594

5,951

6,118

5,639

Average share price (US$/ADRs)

3.11

3.76

3.88

3.67

3.88

Total

 

 

 

 

 

Average daily trading volume (000 shares)

9,415 

8,373

7,265

8,602

10,251

Average daily financial volume (R$ 000)

152,939

168,661

147,500

164,371

185,681


1 Calculated on the closing share price for the period

2 1 ADR = 1 common share


 

UGPA3 x Ibovespa Performance 3Q21

(Jun 30, 2021 = 100)



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Guidance for 2021

According to the Material Notice disclosed on this date, Ultrapar announces the review of its financial guidance for 2021.

EBITDA 2021

(R$ million)



Initial guidance


Revised guidance










 Ultrapar1  3,800 4,650 3,750 ≤ ∆ ≤ 4,130
Ipiranga1 2,100 ≤ ∆ ≤ 2,500 1,800 ≤ ∆ ≤ 2,000
Oxiteno1 800 ≤ ∆ ≤ 1,100 1,050 ≤ ∆ ≤ 1,150
Ultragaz1 670 ≤ ∆ ≤ 750 700 ≤ ∆ ≤ 740
Ultracargo 340 ≤ ∆ ≤ 370 380 ≤ ∆ ≤ 400
Extrafarma 100 ≤ ∆ ≤ 140 60 ≤ ∆ ≤ 80
Holding and Others (210) (240)
                 
1 Adjusted EBITDA, according to CVM Instruction 527/12

 

At Ipiranga, the EBITDA guidance was cut mainly due to more pressured margins resulting from inventory positions taken and the pass-through of cost increases, and a lower volume compared to the original guidance.

At Oxiteno, the EBITDA guidance was raised to reflect higher-than-expected sales volume and more favorable margins.

At Ultracargo, the improvement in the EBITDA guidance results from the start-up of operations of the Itaqui and Vila do Conde terminals ahead of schedule, in addition to productivity gains above those projected for the year.

At Extrafarma, the competitive environment in the North and Northeast regions combined with lower sales drove the reduction in the EBITDA guidance. Extrafarma's projection excludes the non-recurring effect of the impairment registered in 2Q21.

The lower result of the Holding and Others reflects mainly increased expenses with M&A transactions and lower-than-expected results of the Refinaria de Petróleo Riograndense.

The projections are based in information currently available, estimates and assumptions of the Company’s Executive Board, and do not include the effects of potential acquisitions or divestments. Such estimates are not guarantee of performance and involve risks and uncertainties, since they refer to future events and depend on circumstances which may or may not occur. General economic conditions and market conditions, among other factors, may lead to results which differ materially from the figures disclosed.

 

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3Q21 Conference call

Ultrapar will host a conference call for analysts and investors on November 4, 2021 to comment on the Company’s performance in the third quarter of 2021 and outlook. The presentation will be available for download in the Company’s website 30 minutes prior to the conference call.

The conference call will be transmitted via WEBCAST and held in Portuguese with simultaneous translation into English. The access link is available at ri.ultra.com.br. Please connect 10 minutes in advance.

 

Conference call in Portuguese with simultaneous translation into English

Time: 11:00 a.m. (BRT) / 10:00 a.m. (EDT)

 

Participants in Brazil: +55 (11) 4090-1621

Code: Ultrapar – in Portuguese
 

Replay: +55 (11) 3193-1012 (available for seven days)

Code: 3167603#

 

International participants: +1 (844) 204-8942 or +1 (412) 717-9627

Code: Ultrapar – in English

 

Replay: +55 (11) 3193-1012 (available for seven days)

Code: 9792937#

 


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ULTRAPAR
CONSOLIDATED BALANCE SHEET
     
    In million of Reais    SEP 21     SEP 20     JUN 21 
     
ASSETS
     
Cash and cash equivalents             2,826.3          2,996.3          2,860.3
Financial investments and hedging instruments             2,914.9          5,582.7          3,356.0
Trade receivables and reseller financing             4,624.4          3,801.5          4,363.1
Inventories             5,574.2          3,539.6          4,888.8
Recoverable taxes             1,540.7          1,144.6          1,423.1
Prepaid expenses                141.2             136.4             159.8
Contractual assets with customers - exclusive rights                533.7             481.1             514.4
Other receivables                106.4              69.4             112.9
Total Current Assets             18,261.8          17,751.6          17,678.5
     
Financial investments and hedging instruments                847.3          1,218.8             762.5
Trade receivables and reseller financing                481.4             515.2             500.8
Deferred income and social contribution taxes             1,245.5          1,068.2          1,081.6
Recoverable taxes             1,815.2          1,573.1          1,657.2
Escrow deposits                 868.4             952.4             862.7
Prepaid expenses                  84.3              79.8              66.8
Contractual assets with customers - exclusive rights             1,385.2          1,183.4          1,297.2
Other receivables                175.1             197.0             171.3
Investments                172.4             170.3             175.1
Right to use assets             2,093.0          2,163.0          2,057.5
Property, plant and equipment             8,235.0          7,976.1          8,030.9
Intangible assets             1,707.7          1,762.2          1,631.2
Total Non-Current Assets             19,110.5          18,859.5          18,294.7
     
TOTAL ASSETS             37,372.3          36,611.2          35,973.2
     
LIABILITIES
     
Loans, financing and hedge derivative financial instruments                945.6          3,004.4          1,548.7
Debentures             1,475.4             960.1          1,480.6
Trade payables             6,364.1          3,447.4          5,492.6
Salaries and related charges                549.0             514.0             434.2
Taxes payable                396.5             419.7             496.1
Leases payable                269.5             247.7             286.6
Other payables                345.1             409.9             314.2
Total Current Liabilities             10,345.2            9,003.1          10,053.1
     
Loans, financing and hedge derivative financial instruments             8,458.9          9,240.6          7,698.6
Debentures             5,529.2          5,550.9          5,377.7
Provisions for tax, civil and labor risks                797.2             844.6             768.6
Post-employment benefits                262.8             234.4             260.0
Leases payable             1,546.3          1,584.1          1,509.1
Other payables                247.8             326.2             257.3
Total Non-Current Liabilities             16,842.1          17,780.8          15,871.3
     
TOTAL LIABILITIES             27,187.4          26,783.9          25,924.4
     
EQUITY
     
Share capital             5,171.8          5,171.8          5,171.8
Reserves             5,008.3          4,593.8          5,007.9
Treasury shares               (489.1)           (489.1)           (489.1)
Other                104.9             147.8             (25.9)
Non-controlling interests in subsidiaries                389.1             403.0             384.1
Total Equity             10,185.0            9,827.3          10,048.8
     
TOTAL LIABILITIES AND EQUITY             37,372.3          36,611.2          35,973.2
     
Cash and financial investments             6,588.4          9,797.8          6,978.7
Loans and debentures          (16,409.1)       (18,755.9)       (16,105.6)
Leases payable            (1,815.8)         (1,831.8)         (1,795.7)
Net Cash (debt)            (11,636.4)         (10,789.9)         (10,922.6)
     
Net Cash (debt) ex-IFRS 16              (9,820.7)          (8,958.1)          (9,126.9)



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ULTRAPAR
CONSOLIDATED INCOME STATEMENT
                   
     In million of Reais     3Q21     3Q20     2Q21  9M21   9M20
         
       
Net revenues from sales and services          31,911.1          20,762.1          28,526.1        84,387.5          58,025.5
       
Cost of products and services sold         (30,112.2)         (19,123.3)         (27,030.3)       (79,376.8)         (53,925.5)
       
Gross profit            1,798.9            1,638.8            1,495.8          5,010.6            4,099.9
       
Operating expenses
Selling and marketing             (781.5)             (630.7)             (700.3)         (2,140.2)           (1,883.9)
General and administrative             (497.7)             (373.9)             (473.1)         (1,439.6)           (1,077.0)
         
Other operating income, net                35.6               (45.9)                78.3             101.5               114.2
Gain (loss) on disposal of property, plant and equipment and intangibles                18.0                15.0                32.1              58.2                35.9
Impairment                    -                      -               (394.7)           (394.7)                    -  
       
Operating income (loss)               573.4               603.3                38.1          1,195.8            1,289.2
       
Financial result        
   Financial income               127.0                71.6               150.6             339.1               306.8
   Financial expenses             (423.0)             (229.5)             (153.3)           (971.6)             (712.6)
Share of profit (loss) of subsidiaries, joint ventures and associates               (11.1)                 (4.8)                  1.3             (22.0)               (30.5)
         
Income before income and social contribution taxes               266.3               440.7                36.6             541.3               852.9
       
Provision for income and social contribution taxes









   Current               (20.2)             (205.2)             (245.5)           (383.9)             (460.1)
   Deferred                95.9                20.5               168.5             269.8                46.8
   Tax incentives                32.3                21.3                22.2              66.3                56.6
       
Net income (loss)               374.3               277.3               (18.2)             493.4               496.2
       
Net income attributable to:        
    Shareholders of the Company               369.2               265.4               (31.1)             470.3               467.4
    Non-controlling interests in subsidiaries                  5.1                11.9                12.8              23.2                28.8
       
Adjusted EBITDA            1,017.3            1,038.3               503.5          2,517.1            2,529.2
       
Depreciation and amortization1               417.0               397.0               416.4            1,214.3            1,165.0
Cash flow hedge bonds                38.0                42.9                47.7             129.0               105.6
       
Total investments2               491.4             312.8             397.6            1,182.8          1,023.7
       
Ratios
       
Earnings per share (R$)                0.34              0.24              0.26              0.43              0.43
Net debt (ex-IFRS 16) / Stockholders' equity                0.96              0.91              0.91              0.96              0.91
Net debt / Stockholders' equity                1.14                1.10              1.09                1.14                1.10
Net debt / LTM Adjusted EBITDA3 (ex-IFRS16)                2.87                2.91                2.64              2.87                2.91
Net debt / LTM Adjusted EBITDA3                3.01                3.10                2.81              3.01                3.10
Net interest expense / Adjusted EBITDA                0.29                0.15                0.01              0.25                0.16
Gross margin (%)   5.6% 7.9% 5.2% 5.9%   7.1%
Operating margin (%)   1.8% 2.9% 0.1% 1.4%   2.2%
Adjusted EBITDA margin (%)   3.2% 5.0% 1.8% 3.0%   4.4%
       
Number of employees           16,218           15,759           16,458           16,218           15,759


1 Includes amortization with contractual assets with customers – exclusive rights
2 Includes property, plant and equipment and additions to intangible assets, contractual assets with customers (exclusive rights), initial direct costs of assets with right of use, financing of clients and rental advances (net of repayments) and acquisition of shareholdings
3 LTM adjusted EBITDA does not include impairment of Extrafarma for 3Q21, 3Q20, 2Q21, 9M21 and 9M20

 

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ULTRAPAR
CONSOLIDATED CASH FLOW
   
    In million of Reais   JAN - SEP    JAN - SEP 
  2021   2020
Cash flows from operating activities    
Net income for the period               493.4               496.2
Adjustments to reconcile net income to cash provided by operating activities



Share of loss (profit) of subsidiaries, joint ventures and associates                22.0                30.5
Amortization of contractual assets with customers - exclusive rights               199.8               224.4
Amortization of right to use assets               264.7               242.1
Depreciation and amortization               749.8               698.4
PIS and COFINS credits on depreciation                13.1                11.5
Interest and foreign exchange rate variations            1,043.6               768.8
Deferred income and social contribution taxes             (269.8)               (46.8)
Current income and social contribution taxes               317.7               403.5
(Gain) loss on disposal of property, plant and equipment and intangibles               (58.2)               (35.9)
Impairment               394.7                    -  
Expected losses on doubtful accounts               (10.8)                29.1
Provision for losses in inventories                 (5.5)                 (0.8)
Provision for post-employment benefits                  3.7               (18.6)
Equity instrument granted                  8.5                  4.5
Provision for decarbonization - CBIOs               111.2                    -  
Provision for tax, civil, and labor risks               (59.4)               (0.3)
Other provisions and adjustments                  1.0               (1.0)
   
             3,219.6          2,805.5
         
(Increase) decrease in current assets



Trade receivables and reseller financing             (737.3)               255.2
Inventories           (1,718.5)               180.8
Recoverable taxes             (447.2)                71.5
Dividends received from subsidiaries and joint-ventures                  0.1                  4.7
Other receivables               (51.4)               (32.4)
Prepaid expenses               (52.5)               (65.0)
   
Increase (decrease) in current liabilities



Trade payables            2,125.5               607.4
Salaries and related charges                80.4               108.4
Taxes payable                 (2.5)                40.4
Post-employment benefits                  0.1                  0.6
Other payables                 (3.7)                66.4
Deferred revenue               (17.1)                 (0.7)
   
(Increase) decrease in non-current asset



Trade receivables and reseller financing                10.0               (96.8)
Recoverable taxes             (104.1)             (700.8)
Escrow deposits                81.4               (31.0)
Other receivables                77.0                  0.4
Prepaid expenses                  8.3                  5.3
   
Increase (decrease) in non-current liabilities



Post-employment benefits                  1.5                  9.1
Other payables               (15.5)               (37.0)
   
CBIOs acquisition             (121.9)                    -  
Payments of contractual assets with customers - exclusive rights             (222.6)             (296.8)
Contingency payments               (20.2)               (37.7)
Income and social contribution taxes paid             (207.0)             (227.3)
   
Net cash provided by (used in) operating activities            1,882.4            2,630.3
   
Cash flows from investing activities



Financial investments, net of redemptions            2,209.2           (1,567.1)
Acquisition of property, plant and equipment             (877.7)             (587.1)
Acquisition of intangible assets             (157.5)             (112.3)
Proceeds from disposal of investments                  1.1                    -  
Capital increase in joint ventures               (25.7)               (20.0)
Capital decrease in associates                  1.5                    -  
Initial direct costs of right to use assets               (14.9)                    -  
Related parties               (21.6)                    -  
Proceeds from disposal of property, plant and equipment and intangibles                99.6              86.0
   
Net cash provided by (used in) investing activities            1,214.0          (2,200.5)
   
Cash flows from financing activities



Loans and debentures    
Proceeds            1,441.4            3,591.6
Repayments           (2,909.1)           (2,280.2)
Interest paid             (463.2)             (478.8)
Payments of leases1             (333.2)           (266.5)
Dividends paid             (705.6)             (264.5)
Related parties                 (0.2)                 (0.1)
   
Net cash provided by (used in) financing activities          (2,969.9)               301.7
   
Effect of exchange rate changes on cash and cash equivalents in foreign currency                38.2               149.5
   
Increase (decrease) in cash and cash equivalents               164.8               881.0
   
Cash and cash equivalents at the beginning of the period            2,661.5            2,115.4
   
Cash and cash equivalents at the end of the period            2,826.3            2,996.3
   
Transactions without cash effect:    
   
Addition on right to use assets and leases payable               252.2               407.1
Addition on contractual assets with costumers - exclusive rights               197.9               140.0
Reversion fund - private pension                  3.7                47.1
Issuance of shares related to the subscription warrants - indemnification - Extrafarma acquisition                  1.8                54.8

 

1 Includes R$ 29 million related to the grant of Ultracargo's terminal in Vila do Conde in 1Q21 and R$ 14 million related to the grant of Ipiranga's terminal in Belém in 3Q21

 

 

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ULTRAGAZ
CONSOLIDATED BALANCE SHEET        
               
    In million of Reais    SEP 21   SEP 20     JUN 21         
             
OPERATING ASSETS        
Trade receivables               472.4             366.9               449.3        
Non-current trade receivables                29.9              31.7                32.8        
Inventories               177.3             122.3               154.2    
Taxes                86.0              97.9                79.1    
Escrow deposits               220.0             218.9               219.9    
Other                79.1              63.0                79.2    
Right to use assets                89.4             110.7                92.6    
Property, plant and equipment / Intangibles            1,181.2          1,045.0            1,135.9    
                   
TOTAL OPERATING ASSETS            2,335.2          2,056.4            2,242.9        
                   
OPERATING LIABILITIES        
Suppliers               119.5              88.7               112.2        
Salaries and related charges                99.0             105.9                80.4        
Taxes                15.8              25.2                14.4        
Judicial provisions               124.2             127.3               130.0        
Leases payable               141.4             150.7               144.7        
Other                53.9              80.0                54.0        
                   
TOTAL OPERATING LIABILITIES               553.8             577.8               535.7        


CONSOLIDATED INCOME STATEMENT
             
     In million of Reais     3Q21     3Q20     2Q21    9M21   9M20
           
Net revenues            2,679.5            1,954.9            2,345.6            7,063.0            5,439.7
         
Cost of products sold           (2,352.7)         (1,636.8)           (2,115.3)           (6,280.0)           (4,602.0)
         
Gross profit               326.8               318.0               230.3               783.0               837.7
         
Operating expenses        
      Selling             (120.8)           (104.4)             (112.2)             (329.2)             (315.1)
      General and administrative               (53.1)             (54.4)               (47.1)             (150.7)             (134.2)
         
Other operating income                  2.9                0.5                  1.8                10.3                  7.1
Gain (loss) on disposal of property, plant and equipment and intangibles                 (0.4)                2.8                  0.3                  2.5                  6.0
         
Operating income (loss)               155.3               162.5                73.1               315.8               401.4
         
Share of profit of subsidiaries, joint ventures and associates                 (0.0)               (0.1)                  0.0                  0.0                 (0.0)
         
Adjusted EBITDA               220.5               222.2               136.5               507.2               574.8
         
Depreciation and amortization1                65.1              59.7                63.4               191.4               173.4
       
Ratios
     
   Gross margin (R$/ton)                 721               702                 525                 603               641
   Operating margin (R$/ton)                 343               359                 166                 243               307
   Adjusted EBITDA margin (R$/ton)                 486               491                 311                 391               440
                 
Number of employees             3,409             3,421             3,419             3,409             3,421

  

1 Includes amortization with contractual assets with customers - exclusive rights

 

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ULTRACARGO
CONSOLIDATED BALANCE SHEET        
               
    In million of Reais    SEP 21     SEP 20     JUN 21         
           
OPERATING ASSETS        
Trade receivables                25.3              43.4                22.3        
Inventories                  8.7                7.8                  7.9        
Taxes                24.1              15.2                29.2        
Other                23.8              30.0                27.3        
Right to use assets               536.8             473.1               458.5        
Property, plant and equipment / Intangibles / Investments            1,659.9          1,381.9            1,618.0        
           
TOTAL OPERATING ASSETS            2,278.7            1,951.3            2,163.1        
           
OPERATING LIABILITIES        
Suppliers                44.9              64.7                38.7        
Salaries and related charges                44.6              41.9                36.8        
Taxes                  5.2              15.4                  5.3        
Judicial provisions                10.1                9.4                10.3        
Leases payable               481.4             438.2               415.2        
Other1                61.0              94.9                68.9        
           
TOTAL OPERATING LIABILITIES               647.3               664.4               575.3        


1 Includes the long term obligations with clients account


CONSOLIDATED INCOME STATEMENT
                   
     In million of Reais     3Q21     3Q20     2Q21    9M21   9M20
       
Net revenues               177.8               159.9               175.8               525.7               478.2
         
Cost of services provided               (69.2)             (68.1)               (69.8)             (207.8)             (196.2)
       
Gross profit               108.7                91.8               106.0               317.9               282.0
       
Operating expenses        
      Selling                 (2.2)               (1.7)                 (2.0)                 (6.2)                 (5.1)
      General and administrative               (30.5)             (33.1)               (31.7)               (93.9)               (90.7)
       
Other operating income                  0.8               (1.4)                  4.1                  4.0                11.2
Gain (loss) on disposal of property, plant and equipment and intangibles                 (0.0)               (0.2)                 (0.0)                  0.0                 (0.4)
       
Operating income (loss)                76.7                55.4                76.3               221.8               196.9
       
Share of profit of subsidiaries, joint ventures and associates                  0.1                0.2                  0.1                  0.7                  0.6
       
EBITDA               102.1                78.4               100.2               294.8               260.5
       
Depreciation and amortization                25.2              22.9                23.8                72.3                63.0
     
Ratios
     
   Gross margin (%)   61.1% 57.4%   60.3%   60.5% 59.0%
   Operating margin (%)   43.2% 34.6%   43.4%   42.2% 41.2%
   EBITDA margin (%)   57.4% 49.1%   57.0%   56.1% 54.5%
     
Number of employees               736               911               888               736                 911

 

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OXITENO
CONSOLIDATED BALANCE SHEET        
       
    In million of Reais    SEP 21     SEP 20     JUN 21     
       
OPERATING ASSETS    
Trade receivables               987.7             738.4               870.8    
Inventories            1,424.6             941.2            1,227.8    
Taxes               648.2             642.4               688.5    
Other                72.0             158.3                74.6    
Right to use assets                36.5              41.7                35.8    
Property, plant and equipment / Intangibles / Investments            2,880.2          2,994.1            2,785.5    
         
TOTAL OPERATING ASSETS            6,049.2            5,516.2            5,683.0    
         
OPERATING LIABILITIES    
Suppliers            1,203.9             638.6            1,075.0    
Salaries and related charges               159.9             148.0               118.4    
Taxes                62.9              62.5                64.3    
Judicial provisions                30.4              27.4                29.7    
Leases payable                41.3              44.3                42.0    
Other                70.8              41.5                71.8    
               
TOTAL OPERATING LIABILITIES            1,569.3               962.2            1,401.3    
               

  

CONSOLIDATED INCOME STATEMENT
                   
     In million of Reais     3Q21     3Q20     2Q21    9M21   9M20
         
Net revenues            1,981.5            1,425.0            1,672.3            5,090.3            3,733.9
       
Cost of products sold        
       Variable           (1,320.3)           (964.8)           (1,093.2)           (3,319.4)           (2,492.3)
       Fixed             (137.2)           (134.2)             (143.1)             (425.2)             (361.0)
       Depreciation and amortization               (57.0)             (53.3)               (53.6)             (164.8)             (149.0)
       
Gross profit               467.0               272.7               382.3            1,180.9               731.6
       
Operating expenses        
      Selling             (127.5)           (105.5)             (109.7)             (337.9)             (279.8)
      General and administrative             (124.4)           (113.4)             (118.7)             (365.9)             (312.3)
       
Other operating income                22.0                0.8                  0.2                23.8                74.0
Gain (loss) on disposal of property, plant and equipment and intangibles                 (0.2)               (0.4)                  0.1                  0.1                 (0.6)
       
Operating income (loss)               236.8                54.1               154.3               500.9               212.8
                   
Share of profit of subsidiaries, joint ventures and associates                  0.2                0.2                  0.0                  0.1                  0.6
       
Adjusted EBITDA               351.5               168.8               273.8               852.2               523.0
       
Depreciation and amortization                76.5              71.6                71.7               222.1               204.0
       
Cash flow hedge from bonds                38.0              42.9                47.7               129.0               105.6
       
Ratios
       
   Gross margin (R$/ton)               2,163             1,347               1,996               2,007               1,332
   Gross margin (US$/ton)                 414               250                 377                 376                 262
   Operating margin (R$/ton)               1,097               267                 805                 852                 387
   Operating margin (US$/ton)                 210                 50                 152                 160                   76
   Adjusted EBITDA margin (R$/ton)               1,628               834               1,429               1,449                 952
   Adjusted EBITDA margin (US$/ton)                 311               155                 270                 272                 188
       
Number of employees             1,873             1,849             1,885             1,873             1,849

 

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IPIRANGA
CONSOLIDATED BALANCE SHEET        
       
    In million of Reais    SEP 21   SEP 20     JUN 21     
       
OPERATING ASSETS    
Trade receivables            3,119.6          2,584.9            2,980.6    
Non-current trade receivables               451.4             483.2               467.8    
Inventories            3,436.6          2,000.1            2,988.6    
Taxes            1,820.3          1,226.0            1,644.7    
Contractual assets with customers - exclusive rights            1,914.4          1,658.5            1,806.7    
Other               481.2             511.5               473.0    
Right to use assets            1,043.8          1,098.3            1,086.8    
Property, plant and equipment / Intangibles / Investments            3,669.5          3,534.7            3,558.2      
           
TOTAL OPERATING ASSETS          15,936.6        13,097.1          15,006.4      
         
OPERATING LIABILITIES      
Suppliers            4,773.3          2,484.3            4,037.0      
Salaries and related charges               130.9             117.9               108.1      
Post-employment benefits               269.0             230.1               267.6      
Taxes               178.2             184.9               182.6      
Judicial provisions               212.9             298.0               212.2      
Leases payable               730.4             752.1               766.1      
Other               370.3             347.6               281.0      
         
TOTAL OPERATING LIABILITIES            6,665.0          4,414.9            5,854.6      

  

CONSOLIDATED INCOME STATEMENT
       
     In million of Reais     3Q21     3Q20     2Q21    9M21   9M20
         
Net revenues          26,613.8          16,767.4          23,863.8          70,322.6          47,017.1
       
Cost of products and services sold         (25,891.8)       (15,955.9)         (23,267.2)         (68,106.8)         (45,195.5)
       
Gross profit               722.0               811.5               596.6            2,215.7            1,821.6
       
Operating expenses        
      Selling             (361.2)           (272.5)             (314.8)             (981.5)             (853.4)
      General and administrative             (184.9)           (134.5)             (178.1)             (544.7)             (382.0)
       
Other operating income                  5.2             (46.3)                73.7                59.1                19.7
Gain (loss) on disposal of property, plant and equipment and intangibles                17.9              12.9                31.7                55.4                33.4
       
Operating income (loss)               199.0               371.1               209.1               804.1               639.3
       
Share of profit of subsidiaries, joint ventures and associates                  0.6               (0.3)                  4.7                 (1.3)                  0.8
       
Adjusted EBITDA               398.1               565.7               421.8            1,382.9            1,224.3
       
Depreciation and amortization1               198.5             194.9               208.1               580.1               584.1
       
Ratios
         
   Gross margin (R$/m³)                 123               147                 107                 132                 116
   Operating margin (R$/m³)                   34                 67                   37                   48                   41
   Adjusted EBITDA margin (R$/m³)                   68               102                   76                   82                   78
   Adjusted EBITDA margin (%)   1.5% 3.4%   1.8%   2.0%   2.6%
                   
Number of service stations             7,088             7,107             7,110             7,088             7,107
Number of employees             3,778             3,276             3,723             3,778             3,276

  

1 Includes amortization with contractual assets with customers - exclusive rights

 

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EXTRAFARMA
BALANCE SHEET        
               
    In million of Reais    SEP 21     SEP 20     JUN 21   
       
OPERATING ASSETS  
Trade receivables                35.0              54.0                41.4  
Inventories               527.0             468.2               510.4  
Taxes                74.8             227.4                87.6  
Other                33.3              26.6                34.6  
Right to use assets               352.8             402.4               348.8  
Property, plant and equipment / Intangibles               247.4             497.9               256.0  
     
TOTAL OPERATING ASSETS            1,270.4            1,676.5            1,278.9  
     
OPERATING LIABILITIES  
Suppliers               194.2             167.1               191.7  
Salaries and related charges                62.4              60.4                53.1  
Taxes                14.9              20.4                16.4  
Judicial provisions                10.2                9.7                  9.9  
Leases payable               383.9             407.1               389.2  
Other                19.2              15.7                17.0  
     
TOTAL OPERATING LIABILITIES               684.8               680.4               677.3  

 

INCOME STATEMENT
                   
     In million of Reais     3Q21     3Q20     2Q21    9M21   9M20
         
Gross revenues               509.6               522.9               541.8            1,568.6            1,558.4
       
Sales returns, discounts and taxes               (26.2)             (30.8)               (27.9)               (81.5)               (88.9)
       
Net revenues               483.4               492.0               513.9            1,487.1            1,469.5
       
Cost of products and services sold             (333.7)           (344.6)             (352.4)           (1,032.1)           (1,035.8)
       
Gross profit               149.7               147.5               161.5               455.0               433.7
       
Operating expenses             (175.3)           (158.9)             (177.3)             (520.0)             (496.6)
Other operating income                  2.7                0.3                 (1.2)                  0.0                 (0.7)
Gain (loss) on disposal of property, plant and equipment and intangibles                  0.8                0.0                 (0.0)                  0.2                 (2.3)
Impairment                    -                    -               (394.7)             (394.7)                    -  
       
Operating income (loss)               (22.1)               (11.1)             (411.7)             (459.5)               (65.9)
         
EBITDA                17.0                27.7             (373.0)             (344.5)                50.2
         
Depreciation and amortization                39.1              38.8                38.6               115.0               116.2
       
Ratios1
         
   Gross margin (%)   29.4% 28.2% 29.8% 29.0% 27.8%
   Operating margin (%)   (4.3%) (2.1%) (76.0%) (29.3%) (4.2%)
   EBITDA margin (%)   3.3% 5.3% (68.8%) (22.0%) 3.2%
                     
Number of employees             5,838             5,893             6,025             5,838             5,893

  

1 Calculated based on gross revenues

 

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Date: November 3, 2021    


ULTRAPAR HOLDINGS INC.


By: /s/ Rodrigo de Almeida Pizzinatto


Name: Rodrigo de Almeida Pizzinatto


Title: Chief Financial and Investor Relations Officer

 

(Parent and Consolidated Interim Financial Information as of and the Three-month period Ended September 30, 2021 and Report on Review of Interim Financial Information, Material Notice, 3Q21 Earnings Release)