Edgar Filing: ULTRAPAR HOLDINGS INC

6-K

Form 6-K

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Report Of Foreign Private Issuer

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

The Securities Exchange Act Of 1934

For the month of August, 2017

Commission File Number: 001-14950

ULTRAPAR HOLDINGS INC.

(Translation of Registrant’s Name into English)

Avenida Brigadeiro Luis Antonio, 1343, 9º Andar

São Paulo, SP, Brazil 01317-910

(Address of Principal Executive Offices)

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


Form 20-F X		Form 40-F

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


Yes		No X

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


Yes		No X

ULTRAPAR HOLDINGS INC.

TABLE OF CONTENTS


ITEM
1.		Individual and Consolidated Interim Financial Information for the Three-Month Period Ended June 30, 2017 Report on Review of Interim Financial Information
2.		2Q17 Earnings release
3.		Board of Directors Minutes
4.		Notice to shareholders

(Convenience Translation into English from

the Original Previously Issued in Portuguese)

Ultrapar Participações S.A.

Individual and Consolidated

Interim Financial Information

for the Six-Month Period

Ended June 30, 2017 and

Report on Review of Interim

Financial Information

KPMG Auditores Independentes

Ultrapar Participações S.A. and Subsidiaries

Individual and Consolidated

Interim Financial Information

for the Six-Month Period Ended June 30, 2017

Table of Contents


Report on the Review of Quarterly Information			3 – 4
Balance Sheets			5 – 6
Income Statements			7 – 8
Statements of Comprehensive Income			9 – 10
Statements of Changes in Equity			11 – 12
Statements of Cash Flows—Indirect Method			13 – 14
Statements of Value Added			15
Notes to the Interim Financial Information			16 – 94

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

Report on the review of quarterly information—ITR

To the Shareholders, Directors and Management of

Ultrapar Participações S.A.

São Paulo, SP

Introduction

We have reviewed the accompanying individual and consolidated interim financial information of Ultrapar Participações S.A. (“Company”), comprised in the Quarterly Financial Information—ITR Form for the quarter ended June 30, 2017, which comprise the balance sheet as of June 30, 2017 and related statements of income, comprehensive income for the three and six-month period then ended and changes in shareholders’ equity and cash flows for the six-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 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 carried out in accordance with the Brazilian and international review standards for 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 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 IASB applicable to the preparation of Quarterly Financial Information – ITR and presented in accordance with the standards issued by the Brazilian Securities Commission—CVM.

Other matters

Interim statements of value added

The individual and consolidated statements of value added for the six-month period ended June 30, 2017, 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, in accordance with the individual and consolidated interim financial information taken as a whole.

Corresponding amounts

The corresponding amounts for the balance sheets, individual and consolidated, as of December 31, 2016 were previously audited by other auditors who issued an unqualified opinion dated February 22, 2017. The corresponding amounts for the individual and consolidated statements of income, comprehensive income for the three and six-month, changes in shareholders’ equity and cash flows for the six-month period ended June 30, 2016 were previously reviewed by other independent auditors who issued an unqualified conclusion dated August 10, 2016. The corresponding amounts for the statements of value added (DVA), both individual and consolidated, for the six-month period ended June 30, 2016, were submitted to the same review procedures by those independent auditors and, based on its review, those auditors issued an unqualified conclusion that nothing has come to their attention of any facts that would lead them to believe that the DVA was not prepared, in all material respects, consistently with the individual and consolidated Quarterly Financial Information taken as whole.

São Paulo, August 9, 2017

KPMG Auditores Independentes

CRC 2SP014428/O-6

Original report in Portuguese signed by

Wagner Bottino

Accountant CRC 1SP196907/O-7

Ultrapar Participações S.A. and Subsidiaries

Balance Sheets

as of June 30, 2017 and December 31, 2016

(In thousands of Brazilian Reais)


			Parent				Consolidated
Assets	Note		06/30/2017		12/31/2016		06/30/2017		12/31/2016
Current assets
Cash and cash equivalents		4		52,550		127,944		4,589,358		4,274,158
Financial investments		4		66,356		1,052		1,535,026		1,412,587
Trade receivables, net		5		—		—		3,380,817		3,502,322
Inventories, net		6		—		—		2,588,119		2,761,207
Recoverable taxes, net		7		27,469		37,620		554,919		541,772
Dividends receivable				14,358		354,150		14,358		8,616
Other receivables				1,830		3,884		90,756		20,573
Trade receivables – insurer’s indemnification		33		—		—		—		366,678
Prepaid expenses, net		10		174		98		153,427		123,883

Total current assets				162,737		524,748		12,906,780		13,011,796
Non-current assets
Financial investments		4		—		—		17,886		15,104
Trade receivables, net		5		—		—		252,295		227,085
Related parties		8.a		774,959		772,425		490		490
Deferred income and social contribution taxes		9.a		30,784		22,462		411,481		417,344
Recoverable taxes, net		7		50,859		35,010		258,405		182,617
Escrow deposits		20.a		148		148		801,893		778,770
Other receivables				—		—		1,405		2,678
Prepaid expenses, net		10		—		—		297,952		222,518

Total long term assets				856,750		830,045		2,041,807		1,846,606
Investments
In subsidiaries		11.a		8,693,927		8,190,100		—		—
In joint-ventures		11.a; 11.b		47,103		45,409		109,768		116,142
In associates		11.c		—		—		23,879		22,731
Other				—		—		2,792		2,814
Property, plant, and equipment, net		12		—		—		5,997,612		5,787,982
Intangible assets, net		13		246,163		246,163		3,456,046		3,371,599

				8,987,193		8,481,672		9,590,097		9,301,268
Total non-current assets				9,843,943		9,311,717		11,631,904		11,147,874

Total assets				10,006,680		9,836,465		24,538,684		24,159,670

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

Ultrapar Participações S.A. and Subsidiaries

Balance Sheets

as of June 30, 2017 and December 31, 2016

(In thousands of Brazilian Reais)


			Parent						Consolidated
Liabilities	Note		06/30/2017			12/31/2016			06/30/2017			12/31/2016
Current liabilities
Loans		14		—			—			1,641,172			1,821,398
Debentures		14.g		826,266			32,479			1,447,935			651,591
Finance leases		14.i		—			—			2,668			2,615
Trade payables		15		121			330			1,165,424			1,709,653
Salaries and related charges		16		243			204			325,261			362,718
Taxes payable		17		592			726			162,395			171,033
Dividends payable		23.g		11,562			316,848			13,223			320,883
Income and social contribution taxes payable				—			—			45,267			139,981
Post-employment benefits		18.b		—			—			23,211			24,940
Provision for asset retirement obligation		19		—			—			4,831			4,563
Provision for tax, civil, and labor risks		20.a		—			—			50,472			52,694
Trade payables – customers’ indemnification		33		—			—			96,401			99,863
Other payables				2,359			2,359			140,808			102,714
Deferred revenue		21		—			—			21,277			22,300

Total current liabilities				841,143			352,946			5,140,345			5,486,946
Non-current liabilities
Loans		14		—			—			6,928,146			6,800,135
Debentures		14.g		—			799,904			2,291,391			2,095,290
Finance leases		14.i		—			—			47,090			46,101
Related parties		8.a		1,137			679			4,264			4,272
Deferred income and social contribution taxes		9.a		—			—			3,676			7,645
Post-employment benefits		18.b		—			—			127,362			119,811
Provision for asset retirement obligation		19		—			—			73,575			73,001
Provision for tax, civil, and labor risks		20.a		1,295			1,884			648,170			727,088
Deferred revenue		21		—			—			12,855			12,510
Subscription warrants – indemnification		22		177,479			153,429			177,479			153,429
Other payables				—			—			72,005			74,884

Total non-current liabilities				179,911			955,896			10,386,013			10,114,166
Shareholders’ equity
Share capital		23.a; 23.e		5,171,752			3,838,686			5,171,752			3,838,686
Capital reserve		23.c		555,152			552,038			555,152			552,038
Treasury shares		23.b		(480,194	)		(483,879	)		(480,194	)		(483,879	)
Revaluation reserve on subsidiaries		23.d		5,054			5,339			5,054			5,339
Profit reserves		23.e		3,133,326			4,466,392			3,133,326			4,466,392
Additional dividends to the minimum mandatory dividends		23.g		—			165,515			—			165,515
Retained earnings				614,480			—			614,480			—
Valuation adjustments		2.c; 2.o; 23.f		(25,407	)		(23,987	)		(25,407	)		(23,987	)
Cumulative translation adjustments		2.c; 2.r; 23.f		11,463			7,519			11,463			7,519

Shareholders’ equity attributable to:
Shareholders of the Company				8,985,626			8,527,623			8,985,626			8,527,623
Non-controlling interests in subsidiaries				—			—			26,700			30,935

Total shareholders’ equity				8,985,626			8,527,623			9,012,326			8,558,558

Total liabilities and shareholders’ equity				10,006,680			9,836,465			24,538,684			24,159,670

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

Ultrapar Participações S.A. and Subsidiaries

Income Statements

For the six-month period ended June 30, 2017 and 2016

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


		Parent						Consolidated
	Note	01/01/2017 to 06/30/2017			01/01/2016 to 06/30/2016			01/01/2017 to 06/30/2017			01/01/2016 to 06/30/2016
Net revenue from sales and services	24		—			—			37,900,928			38,822,521
Cost of products and services sold	25		—			—			(34,631,410	)		(35,410,967	)

Gross profit			—			—			3,269,518			3,411,554
Operating income (expenses)
Selling and marketing	25		—			—			(1,424,447	)		(1,290,071	)
General and administrative	25		—			—			(751,820	)		(678,129	)
Gain (loss) on disposal of property, plant and equipment and intangibles	26		—			—			(150	)		(2,008	)
Other operating income, net	27		—			2			62,911			75,602

Operating income before financial income (expenses) and share of profit of subsidiaries, joint ventures and associates			—			2			1,156,012			1,516,948
Financial income	28		55,416			73,387			301,299			220,927
Financial expenses	28		(76,367	)		(107,568	)		(535,319	)		(659,843	)
Share of profit of subsidiaries, joint ventures and associates	11		629,086			772,405			12,087			3,041

Income before income and social contribution taxes			608,135			738,226			934,079			1,081,073

Income and social contribution taxes
Current	9.b; 9c		(2,187	)		(4,412	)		(308,416	)		(402,726	)
Deferred	9.b		8,322			15,564			(8,149	)		76,623

			6,135			11,152			(316,565	)		(326,103	)
Net income for the period			614,270			749,378			617,514			754,970

Net income for the period attributable to:
Shareholders of the Company			614,270			749,378			614,270			749,378
Non-controlling interests in subsidiaries			—			—			3,244			5,592
Earnings per share (based on weighted average number of shares outstanding) – R$
Basic	29		1.1338			1.3843			1.1338			1.3843
Diluted	29		1.1255			1.3741			1.1255			1.3741

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

Ultrapar Participações S.A. and Subsidiaries

Income Statements

For the three-month period ended June 30, 2017 and 2016

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


		Parent						Consolidated
	Note	04/01/2017 to 06/30/2017			04/01/2016 to 06/30/2016			04/01/2017 to 06/30/2017			04/01/2016 to 06/30/2016
Net revenue from sales and services	24		—			—			19,173,040			19,298,198
Cost of products and services sold	25		—			—			(17,590,559	)		(17,604,887	)

Gross profit			—			—			1,582,481			1,693,311
Operating income (expenses)
Selling and marketing	25		—			—			(721,108	)		(648,869	)
General and administrative	25		—			—			(389,242	)		(356,309	)
Gain (loss) on disposal of property, plant and equipment and intangibles	26		—			—			6,203			(2,083	)
Other operating income, net	27		(1	)		5			6,576			40,176

Operating income before financial income (expenses) and share of profit of subsidiaries, joint ventures and associates			(1	)		5			484,910			726,226
Financial income	28		24,662			32,430			136,938			105,798
Financial expenses	28		(39,402	)		(49,084	)		(249,783	)		(328,258	)
Share of profit of subsidiaries, joint ventures and associates	11		256,797			375,567			5,659			6,308

Income before income and social contribution taxes			242,056			358,918			377,724			510,074

Income and social contribution taxes
Current	9.b; 9c		(1,066	)		(987	)		(118,226	)		(197,488	)
Deferred	9.b		5,110			6,229			(12,322	)		54,531

			4,044			5,242			(130,548	)		(142,957	)
Net income for the period			246,100			364,160			247,176			367,117

Net income for the period attributable to:
Shareholders of the Company			246,100			364,160			246,100			364,160
Non-controlling interests in subsidiaries			—			—			1,076			2,957
Earnings per share (based on weighted average number of shares outstanding) – R$
Basic	29		0.4542			0.6727			0.4542			0.6727
Diluted	29		0.4509			0.6676			0.4509			0.6676

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

Ultrapar Participações S.A. and Subsidiaries

Statements of Comprehensive Income

For the six-month period ended June 30, 2017 and 2016

(In thousands of Brazilian Reais)


		Parent						Consolidated
	Note	01/01/2017 to 06/30/2017			01/01/2016 to 06/30/2016			01/01/2017 to 06/30/2017			01/01/2016 to 06/30/2016
Net income for the period attributable to shareholders of the Company			614,270			749,378			614,270			749,378
Net income for the period attributable to non-controlling interests in subsidiaries			—			—			3,244			5,592

Net income for the period			614,270			749,378			617,514			754,970

Items that are subsequently reclassified to profit or loss:
Fair value adjustments of financial instruments, net	2.c; 23.f		(1,396	)		(97,697	)		(1,396	)		(97,697	)
Cumulative translation adjustments, net of hedge of net investments in foreign operations and income and social contribution taxes	2.c; 2.r; 23.f		3,944			(76,175	)		3,944			(76,175	)
Items that are not subsequently reclassified to profit or loss:
Actuarial gains (losses) of post-employment benefits, net	2.o; 23.f		(24	)		2,856			(24	)		2,856

Total comprehensive income for the period			616,794			578,362			620,038			583,954

Total comprehensive income for the period attributable to shareholders of the Company			616,794			578,362			616,794			578,362
Total comprehensive income for the period attributable to non-controlling interest in subsidiaries			—			—			3,244			5,592

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 June 30, 2017 and 2016

(In thousands of Brazilian Reais)


		Parent						Consolidated
	Note	04/01/2017 to 06/30/2017			04/01/2016 to 06/30/2016			04/01/2017 to 06/30/2017			04/01/2016 to 06/30/2016
Net income for the period attributable to shareholders of the Company			246,100			364,160			246,100			364,160
Net income for the period attributable to non-controlling interests in subsidiaries			—			—			1,076			2,957

Net income for the period			246,100			364,160			247,176			367,117

Items that are subsequently reclassified to profit or loss:
Fair value adjustments of financial instruments, net	2.c; 23.f		(50,352	)		(20,369	)		(50,352	)		(20,369	)
Cumulative translation adjustments, net of hedge of net investments in foreign operations and income and social contribution taxes	2.c; 2.r; 23.f		2,622			(39,187	)		2,622			(39,187	)
Items that are not subsequently reclassified to profit or loss:
Actuarial gains (losses) of post-employment benefits, net	2.o; 23.f		—			—			—			—

Total comprehensive income for the period			198,370			304,604			199,446			307,561

Total comprehensive income for the period attributable to shareholders of the Company			198,370			304,604			198,370			304,604
Total comprehensive income for the period attributable to non-controlling interest in subsidiaries			—			—			1,076			2,957

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 six-month period ended June 30, 2017 and 2016

(In thousands of Brazilian Reais)


									Profit reserve							Cumulative other comprehensive income														Shareholders’ equity attributable to:
	Note	Share capital		Capital reserve		Revaluation reserve on subsidiaries			Legal reserve		Investments statutory reserve		Retention of profits			Valuation adjustments			Cumulative translation adjustments		Retained earnings			Treasury shares			Additional dividends to the minimum mandatory dividends			Shareholders of the Company			Non-controlling interests in subsidiaries			Consolidated shareholders’ equity
Balance as of December 31, 2016			3,838,686		552,038		5,339			550,428		2,582,898		1,333,066			(23,987	)		7,519		—			(483,879	)		165,515			8,527,623			30,935			8,558,558
Net income for the period			—		—		—			—		—		—			—			—		614,270			—			—			614,270			3,244			617,514
Other comprehensive income:
Fair value adjustments of available for sale, net	2.c; 23.f		—		—		—			—		—		—			(1,396	)		—		—			—			—			(1,396	)		—			(1,396	)
Actuarial losses of post-employment benefits, net	2.o; 23.f		—		—		—			—		—		—			(24	)		—		—			—			—			(24	)		—			(24	)
Currency translation of foreign subsidiaries hedge of net investments in foreign operation	2.c; 2.r; 23.f		—		—		—			—		—		—			—			3,944		—			—			—			3,944			—			3,944

Total comprehensive income for the period			—		—		—			—		—		—			(1,420	)		3,944		614,270			—			—			616,794			3,244			620,038
Capital increase through reserves	23.e		1,333,066		—		—			—		—		(1,333,066	)		—			—		—			—			—			—			—			—
Sale of treasury shares	8.c; 23.b		—		3,114		—			—		—		—			—			—		—			3,685			—			6,799			—			6,799
Realization of revaluation reserve of subsidiaries	23.d		—		—		(285	)		—		—		—			—			—		285			—			—			—			—			—
Income and social contribution taxes on realization of revaluation reserve of subsidiaries	23.d		—		—		—			—		—		—			—			—		(75	)		—			—			(75	)		—			(75	)
Dividends attributable to non-controlling interests			—		—		—			—		—		—			—			—		—			—			—			—			(7,479	)		(7,479	)
Approval of additional dividends by the Shareholders’ Meeting	23.g		—		—		—			—		—		—			—			—		—			—			(165,515	)		(165,515	)		—			(165,515	)

Balance as of June 30, 2017			5,171,752		555,152		5,054			550,428		2,582,898		—			(25,407	)		11,463		614,480			(480,194	)		—			8,985,626			26,700			9,012,326

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 six-month period ended June 30, 2017 and 2016

(In thousands of Brazilian Reais)


									Profit reserve						Cumulative other comprehensive income															Shareholders’ equity attributable to:
	Note	Share capital		Capital reserve		Revaluation reserve on subsidiaries			Legal reserve		Investments statutory reserve		Retention of profits		Valuation adjustments			Cumulative translation adjustments			Retained earnings			Treasury shares			Additional dividends to the minimum mandatory dividends			Shareholders of the Company			Non-controlling interests in subsidiaries			Consolidated shareholders’ equity
Balance as of December 31, 2015			3,838,686		546,607		5,590			472,350		1,996,583		1,333,066		18,953			66,925			—			(490,881	)		157,162			7,945,041			29,088			7,974,129
Net income for the period			—		—		—			—		—		—		—			—			749,378			—			—			749,378			5,592			754,970
Other comprehensive income:
Fair value adjustments of available for sale, net	2.c; 23.f		—		—		—			—		—		—		(97,697	)		—			—			—			—			(97,697	)		—			(97,697	)
Actuarial gains of post-employment benefits, net	2.o; 23.f		—		—		—			—		—		—		2,856			—			—			—			—			2,856			—			2,856
Currency translation of foreign subsidiaries	2.c; 2.r; 23.f		—		—		—			—		—		—		—			(76,175	)		—			—			—			(76,175	)		—			(76,175	)

Total comprehensive income for the period			—		—		—			—		—		—		(94,841	)		(76,175	)		749,378			—			—			578,362			5,592			583,954
Sale of treasury shares	8.c; 23.b		—		5,431		—			—		—		—		—			—			—			7,002			—			12,433			—			12,433
Realization of revaluation reserve of subsidiaries	23.d		—		—		(126	)		—		—		—		—			—			126			—			—			—			—			—
Income and social contribution taxes on realization of revaluation reserve of subsidiaries	23.d		—		—		—			—		—		—		—			—			(21	)		—			—			(21	)		—			(21	)
Dividends attributable to non-controlling interests			—		—		—			—		—		—		—			—			—			—			—			—			(6,328	)		(6,328	)
Approval of additional dividends by the Shareholders’ Meeting	23.g		—		—		—			—		—		—		—			—			—			—			(157,162	)		(157,162	)		—			(157,162	)

Balance as of June 30, 2016			3,838,686		552,038		5,464			472,350		1,996,583		1,333,066		(75,888	)		(9,250	)		749,483			(483,879	)		—			8,378,653			28,352			8,407,005

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 six-month period ended June 30, 2017 and 2016

(In thousands of Brazilian Reais)


		Parent						Consolidated
	Note	06/30/2017			06/30/2016			06/30/2017			06/30/2016
Cash flows from operating activities
Net income for the period			614,270			749,378			617,514			754,970
Adjustments to reconcile net income to cash provided by operating activities
Share of loss (profit) of subsidiaries, joint ventures and associates	11		(629,086	)		(772,405	)		(12,087	)		(3,041	)
Depreciation and amortization	12; 13		—			—			589,216			545,363
PIS and COFINS credits on depreciation	12; 13		—			—			6,510			6,215
Asset retirement obligation	19		—			—			(1,329	)		(1,425	)
Interest, monetary, and foreign exchange rate variations			73,511			103,400			397,423			159,770
Deferred income and social contribution taxes	9.b		(8,322	)		(15,564	)		8,149			(76,623	)
(Gain) loss on disposal of property, plant and equipment and intangibles	26		—			—			150			2,008
Other provisions and adjustments			2			—			145			443
Dividends received from subsidiaries and joint-ventures			465,804			475,949			15,333			6,645
(Increase) decrease in current assets
Trade receivables	5		—			—			126,254			19,841
Inventories	6		—			—			177,473			63,415
Recoverable taxes	7		10,151			(1,044	)		(13,147	)		130,505
Other receivables			2,054			3,994			296,486			(94,508	)
Prepaid expenses	10		(76	)		67			(26,430	)		(31,670	)
Increase (decrease) in current liabilities
Trade payables	15		(209	)		(2,577	)		(544,229	)		(441,739	)
Salaries and related charges	16		39			1			(37,457	)		(101,861	)
Taxes payable	17		(134	)		(250	)		(8,638	)		(6,104	)
Income and social contribution taxes			—			66			271,360			216,520
Post-employment benefits	18.b		—			—			(1,729	)		—
Provision for tax, civil, and labor risks	20.a		—			—			(2,222	)		6,903
Other payables			—			(1,261	)		34,632			(88,032	)
Deferred revenue	21		—			—			(1,023	)		(2,500	)
(Increase) decrease in non-current assets
Trade receivables	5		—			—			(25,210	)		(36,327	)
Recoverable taxes	7		(15,849	)		(8,774	)		(75,788	)		(13,076	)
Escrow deposits			—			—			(23,123	)		(17,757	)
Other receivables			—			—			1,273			2,182
Prepaid expenses	10		—			—			(71,749	)		(901	)
Increase (decrease) in non-current liabilities
Post-employment benefits	18.b		—			—			7,527			3,223
Provision for tax, civil, and labor risks	20.a		(589	)		10			(78,918	)		15,608
Other payables			—			—			(2,879	)		(2,490	)
Deferred revenue	21		—			—			345			(402	)
Income and social contribution taxes paid			—			(301	)		(366,074	)		(322,274	)

Net cash provided by operating activities			511,566			530,689			1,257,758			692,881

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 six-month period ended June 30, 2017 and 2016

(In thousands of Brazilian Reais)


		Parent						Consolidated
	Note	06/30/2017			06/30/2016			06/30/2017			06/30/2016
Cash flows from investing activities
Financial investments, net of redemptions			(65,304	)		(13,265	)		(124,153	)		350,060
Acquisition of property, plant, and equipment	12		—			—			(513,808	)		(409,923	)
Acquisition of intangible assets	13		—			—			(379,487	)		(226,034	)
Capital increase in joint ventures	11.b		—			—			—			(25,781	)
Proceeds from disposal of property, plant and equipment and intangibles	26		—			—			32,899			13,346

Net cash used in investing activities			(65,304	)		(13,265	)		(984,549	)		(298,332	)

Cash flows from financing activities
Loans and debentures
Proceeds	14		—			—			1,697,757			948,388
Repayments	14		—			—			(796,114	)		(411,219	)
Interest paid	14		(55,578	)		(58,369	)		(410,442	)		(669,901	)
Payments of financial lease	14.i		—			—			(2,612	)		(2,429	)
Dividends paid			(470,801	)		(432,750	)		(480,477	)		(441,085	)
Sale of treasury shares	23.b		6,799			12,433			—			—
Related parties	8.a		(2,076	)		9,210			—			—

Net cash provided by (used in) financing activities			(521,656	)		(469,476	)		8,112			(576,246	)

Effect of exchange rate changes on cash and cash equivalents in foreign currency			—			—			33,879			(18,040	)

Increase (decrease) in cash and cash equivalents			(75,394	)		47,948			315,200			(199,737	)

Cash and cash equivalents at the beginning of the period	4		127,944			48,061			4,274,158			2,702,893
Cash and cash equivalents at the end of the period	4		52,550			96,009			4,589,358			2,503,156

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

Ultrapar Participações S.A. and Subsidiaries

Statements of Value Added

For the six-month period ended June 30, 2017 and 2016

(In thousands of Brazilian Reais, except percentages)


		Parent												Consolidated
	Note	06/30/2017			%			06/30/2016			%			06/30/2017			%		06/30/2016			%
Revenue
Gross revenue from sales and services, except rents and royalties	24		—						—						39,159,509					39,980,384
Rebates, discounts, and returns	24		—						—						(461,002	)				(259,028	)
Allowance for doubtful accounts— Allowance			—						—						(35,226	)				(20,203	)
Gain (loss) on disposal of property, plant and equipment and intangibles and other operating income, net	26; 27		—						—						62,761					73,594

			—						—						38,726,042					39,774,747
Materials purchased from third parties
Raw materials used			—						—						(2,421,112	)				(2,163,186	)
Cost of goods, products, and services sold			—						—						(32,045,917	)				(33,176,692	)
Third-party materials, energy, services, and others			(7,745	)					(5,671	)					(1,161,441	)				(1,073,556	)
Reversal of impairment losses			11,291						8,773						(7,688	)				(4,685	)

			3,546						3,102						(35,636,158	)				(36,418,119	)
Gross value added			3,546						3,102						3,089,884					3,356,628

Deductions
Depreciation and amortization	12;13		—						—						(589,216	)				(545,363	)
PIS and COFINS credits on depreciation	12;13		—						—						(6,510	)				(6,215	)

			—						—						(595,726	)				(551,578	)
Net value added by the Company			3,546						3,102						2,494,158					2,805,050

Value added received in transfer
Share of profit (loss) of subsidiaries, joint-ventures, and associates	11		629,086						772,405						12,087					3,041
Rents and royalties	24		—						—						67,255					60,591
Financial income	28		55,416						73,387						301,299					220,927

			684,502						845,792						380,641					284,559
Total value added available for distribution			688,048						848,894						2,874,799					3,089,609

Distribution of value added
Labor and benefits			2,968			—			2,583			—			936,860			33		859,603			28
Taxes, fees, and contributions			(4,971	)		(1	)		(7,555	)		(1	)		666,988			23		763,781			25
Financial expenses and rents			75,781			12			104,488			12			653,437			23		711,255			23
Retained earnings			614,270			89			749,378			89			617,514			21		754,970			24

Value added distributed			688,048			100			848,894			100			2,874,799			100		3,089,609			100

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

Ultrapar Participações S.A. and Subsidiaries

Notes to the Individual and Consolidated Interim Financial Information

(In thousands of Brazilian Reais, unless otherwise stated)

1.	Operations

Ultrapar Participações S.A. (“Ultrapar” or “Company”) is a publicly-traded company headquartered at the Brigadeiro Luis Antônio Avenue, 1343 in the city of Săo Paulo – SP, Brazil.

The Company engages in the investment of its own capital in services, commercial, and industrial activities, through the subscription or acquisition of shares of other companies. Through its subsidiaries, it operates in the segments of liquefied petroleum gas—LPG distribution (“Ultragaz”), fuel distribution and related businesses (“Ipiranga”), production and marketing of chemicals (“Oxiteno”), and storage services for liquid bulk (“Ultracargo”) and retail distribution of pharmaceutical, hygiene, beauty, and skincare products, through Imifarma Produtos Farmacêuticos e Cosméticos S.A. (“Extrafarma”). For further information about segments see Note 30.

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

The Company’s individual and consolidated interim financial information were prepared in accordance with the International Accounting Standards (“IAS”) 34 – Interim Financial Information as issued by the International Accounting Standards Board (“IASB”), and in accordance with CPC 21 (R1)—Interim Financial Reporting issued by the Accounting Pronouncements Committee (“CPC”) and presented in accordance with standards established by the Brazilian Securities and Exchange Commission (“CVM”).

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

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

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

a.	*Recognition of Income*

Revenue is measured at the fair value of the consideration received or receivable, net of sales returns, discounts, and other deductions, if applicable.

Revenue from sales of fuels and lubricants is recognized when the products are delivered to gas stations and to large consumers. 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. 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. Revenue from sales of chemical products is recognized when the products are delivered to industrial customers, depending of the freight mode of delivery. The revenue provided from storage services is recognized as services are performed. Costs of products sold and services provided include goods (mainly fuels, lubricants, LPG, and pharmaceutical products), raw materials (chemicals and petrochemicals) and production, distribution, storage, and filling costs.

b.	*Cash and Cash Equivalents*

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

Ultrapar Participações S.A. and Subsidiaries

Notes to the Individual and Consolidated Interim Financial Information

(In thousands of Brazilian Reais, unless otherwise stated)

c.	*Financial Assets*

In accordance with IAS 32, IAS 39, and International Financial Reporting Standards (“IFRS”) 7 (CPC 38, 39 and 40 (R1)), the financial assets of the Company and its subsidiaries are classified in accordance with the following categories:

•

Measured at fair value through profit or loss: financial assets held for trading, that is, acquired or incurred principally for the purpose of selling or repurchasing in the near term, and derivatives. The balances are stated at fair value. The interest earned, the exchange variation, and changes in fair value are recognized in profit or loss.

•

Held to maturity: non-derivative financial assets with fixed or determinable payments, and fixed maturities for which the entity has the positive intention and ability to hold to maturity. 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.

•

Available for sale: non-derivative financial assets that are designated as available for sale or that are not classified into other categories at initial recognition. 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 acquisition cost plus the interest earned are recognized in other comprehensive income in the “Valuation adjustments”. Accumulated gains and losses recognized in shareholders’ equity are reclassified to profit or loss in case of prepayment.

•

Loans and receivables: non-derivative financial assets with fixed or determinable payments or receipts, not quoted in an active market, except: (i) those which the entity intends to sell immediately or in the near term and which the entity classified as measured at fair value through profit or loss; (ii) those classified as available for sale; or (iii) those for which the Company may not recover substantially all of its initial investment for reasons other than credit deterioration. The interest earned and the foreign currency exchange variation are recognized in profit or loss. The balances are stated at acquisition cost plus interest, using the effective interest rate method. Loans and receivables include cash and banks, trade receivables, dividends receivable, and other trade receivables.

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 profit or loss. In the initial designation of the fair value hedge, the relationship between the hedging instrument and the hedged item is documented, including the objectives of risk management, the strategy in conducting the transaction, and the methods to be used to evaluate its effectiveness. Once the fair value hedge has been qualified as effective, the hedge item is also measured at fair value. Gains and losses from hedge instruments and hedge items are recognized in 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 income statements. 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 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 Company cancels the hedging relationship; (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 other comprehensive income in equity are reclassified to 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 other comprehensive income in equity shall be recognized immediately in profit or loss.

Ultrapar Participações S.A. and Subsidiaries

Notes to the Individual and Consolidated Interim Financial Information

(In thousands of Brazilian Reais, unless otherwise stated)

•

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

For further detail on financial instruments of the Company and its subsidiaries, see Note 31.

d.	*Trade Receivables*

Trade receivables are recognized at the amount invoiced, adjusted to present value if applicable, and includes all direct taxes attributable to the Company and its subsidiaries. An allowance for doubtful accounts is recorded based on estimated losses and is set at an amount deemed by management to be sufficient to cover any probable loss on realization of trade receivables (see Notes 5 and 31—Customer Credit Risk).

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 the Company and 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.	*Investments*

Investments in subsidiaries are accounted for under the equity method of accounting in the individual interim financial information of the parent company (see Notes 3.b and 11).

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 individual and consolidated interim financial information (see Note 11).

An associate is an investment, in which an investor has significant influence, that is, has the power to participate in the financial and operating decisions of the investee but does not exercise control.

A joint venture is an investment in which the shareholders have the right to net assets on behalf of a joint control. Joint control is the agreement which establish that decisions about the relevant activities of the investee require the consent from the parties that share control.

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

Ultrapar Participações S.A. and Subsidiaries

Notes to the Individual and Consolidated Interim Financial Information

(In thousands of Brazilian Reais, unless otherwise stated)

g.	*Property, Plant, and Equipment*

Property, plant, and equipment is recognized at acquisition or construction cost, including financial charges incurred on property, plant, and equipment under construction, as well as maintenance costs resulting from scheduled plant outages and estimated costs to remove, to decommission, or to restore assets (see Notes 2.m and 19), less accumulated depreciation and, when applicable, less provision for losses.

Depreciation is calculated using the straight-line method, over the periods mentioned in Note 12, taking into account the estimated useful lives of the assets, which are reviewed annually.

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

h.	*Leases*

•

Finance Leases

Certain lease contracts transfer substantially all the risks and benefits associated with the ownership of an asset to the Company and its subsidiaries. These contracts are characterized as finance leases, and assets thereunder are capitalized at lease commencement at their fair value or, if lower, present value of the minimum lease payments under the contracts. The items recognized as assets are depreciated and amortized using the lower of the straight-line method over the lower of the useful lives applicable to each group of assets or the contract terms, as mentioned in Notes 12 and 13. Financial charges under the finance lease contracts are allocated to profit or loss over the lease contract term, based on the amortized cost and the effective interest rate method of the related lease obligation (see Note 14.i).

•

Operating Leases

There are lease transactions where the risks and benefits associated with the ownership of the asset are not transferred and where there is no purchase option, or the purchase option at the end of the contract is equivalent to the market value of the leased asset. Payments made under an operating lease contract are recognized as cost or expense in the income statement on a straight-line basis over the term of the lease contract (see Note 32.c).

i.	*Intangible Assets*

Intangible assets include assets acquired by the Company and its subsidiaries from third parties, according to the criteria below (see Note 13):

•

Goodwill is carried net of accumulated amortization as of December 31, 2008, when it ceased to be amortized. Goodwill generated since January 1, 2009 is shown as intangible assets corresponding to the positive difference between the amount paid or payable to the seller and the fair value of the identified assets and liabilities assumed of the acquired entity, and is tested annually for impairment. Goodwill is allocated to the business segments, which represent the lowest level that goodwill is monitored by the Company for impairment testing purposes.

•

Bonus disbursements as provided in Ipiranga’s agreements with reseller service stations and major consumers are recognized as distribution rights when paid and amortized using the straight-line method according to the term of the agreement (see Note 13.v).

•

Other intangible assets acquired from third parties, such as software, technology, and commercial property rights, are measured at the total acquisition cost and amortized using straight-line method, over the periods mentioned in Note 13, taking into account their useful life, which is reviewed annually.

The Company and its subsidiaries have not recognized intangible assets that were generated internally. The Company and its subsidiaries have goodwill and brands acquired in business combinations, which are evaluated as intangible assets with indefinite useful life (see Note 13 items i and vi).

Ultrapar Participações S.A. and Subsidiaries

Notes to the Individual and Consolidated Interim Financial Information

(In thousands of Brazilian Reais, unless otherwise stated)

j.	*Other Assets*

Other assets are stated at the lower of cost and realizable value, including, if applicable, interest earned, monetary changes and changes in exchange rates incurred or less a provision for loss and, if applicable, adjustment to present value (see Note 2.u).

k.	*Financial Liabilities*

The Company and its subsidiaries’ financial liabilities include trade payables and other payables, loans, debentures, finance leases 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, 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 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 to profit or loss over its term, using the effective interest rate method (see Note 14.j). Transaction costs incurred and directly attributable to the issue of shares or other equity instruments are recognized in equity and are not amortized.

l.	*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, considering the value of tax incentives. 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 income tax and 9% for social contribution on net income tax. For further details 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, income tax and social contribution, in the same taxable entity and the same taxation authority.

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

The Company and its subsidiaries have the legal obligation to remove Ipiranga’s 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 property, plant, and equipment and depreciated over the respective useful lives of the tanks. The amounts recognized as a liability are monetarily restated using the National Consumer Price Index (“IPCA”) until the respective tank is removed (see Note 19). An increase in the estimated cost of the obligation to remove the tanks could result in negative impact in future results. 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 income when they become known.

n.	*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 20).

o.	*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, using the projected unit credit method (see Note 18.b). The actuarial gains and losses are recognized in cumulative other comprehensive income in the “Valuation adjustments” and presented in the statement of shareholders’ equity. Past service cost is recognized in the income statement.

Ultrapar Participações S.A. and Subsidiaries

Notes to the Individual and Consolidated Interim Financial Information

(In thousands of Brazilian Reais, unless otherwise stated)

p.	*Other Liabilities*

Other liabilities are stated at known or measurable amounts plus, if applicable, related charges, monetary restatement, 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.

q.	*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 reporting period. The effect of the difference between those exchange rates is recognized in profit or loss until the conclusion of each transaction.

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

Assets and liabilities of the foreign subsidiaries, denominated in currencies other than that of the Company (functional currency: Brazilian Real), which have administrative autonomy, are translated using the exchange rate at the end of the reporting period. Revenues and expenses are translated using the average exchange rate of each period and shareholders’ equity is translated at the historic exchange rate of each transaction affecting shareholders’ equity. Gains and losses resulting from changes in these foreign investments are directly recognized in shareholders’ equity in cumulative other comprehensive income in the “cumulative translation adjustments” and will be recognized in profit or loss if these investments are disposed of. The balance in cumulative other comprehensive income and presented in the shareholders’ equity as cumulative translation adjustments as of June 30, 2017 was a gain of R$ 11,463 (gain of R$ 7,519 as of December 31, 2016)—see Note 23.f—Cumulative Translation Adjustments.

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 de C.V.	Mexican Peso	Mexico
Oxiteno USA LLC	U.S. Dollar	United States
Oxiteno Andina, C.A.	Bolivar	Venezuela
Oxiteno Uruguay S.A.	U.S. Dollar	Uruguay

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.

According to IAS 29, Venezuela is classified as a hyperinflationary economy. As a result, the financial information of Oxiteno Andina, C.A. (“Oxiteno Andina”) was adjusted by the Venezuelan Consumer Price Index.

On May 19, 2017, the Venezuelan Central Bank issued Foreign Exchange Regulation No. 38, altering the Venezuelan foreign exchange markets and regulating the legally recognized types of exchange rates:

a) DIPRO—Tipo de Cambio Protegido (Exchange Protected): Bolivar (“VEF”) is traded at an exchange rate of 9.975 VEF/US$ for purchase and 10.00 VEF/US$ for sale. This rate is applied to importation of essential goods (medicines and food) and raw materials and inputs related to the production of these sectors, which transactions are channeled through CENCOEX—Centro Nacional de Comercio Exterior en Venezuela;

b) DICOM—Tipo de Cambio Complementario Flotante de Mercado Supplemental (Floating Market Exchange): Bolivar is traded at the variable exchange rate of 2,640.00 VEF/US$ for sale and 2,633.40 VEF/US$ for purchase on June 30, 2017. This rate is applied to all unforeseen currency settlement transactions not expressly set forth in the Foreign Exchange Regulation, which transactions are processed through alternative currency markets.

Ultrapar Participações S.A. and Subsidiaries

Notes to the Individual and Consolidated Interim Financial Information

(In thousands of Brazilian Reais, unless otherwise stated)

Due to the political and economic situation in Venezuela, the Company’s management uses the DICOM exchange rate in the translation.

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 end of the reporting period. Gains and losses resulting from changes in these foreign investments are directly recognized as financial income or loss. The gain recognized in income for the six-month period ended June 30, 2017 amounted to R$ 3,455 (R$ 5,170 gain for the six-month period ended June 30, 2016).

s.	*Use of Estimates, Assumptions and Judgments*

The preparation of the interim financial information requires the use of estimates, assumptions, and judgments for the accounting of certain assets, liabilities, and income. Therefore, the Company’s and subsidiaries’ management use the best information available at the time of preparation of the interim financial information, as well as the experience of past and current events, also considering assumptions regarding future events. The interim financial information therefore include estimates, assumptions, and judgments related mainly to determining the fair value of financial instruments (Notes 2.c, 2.k, 4, 14 and 31), the determination of the allowance for doubtful accounts (Notes 2.d, 5 and 31), the determination of provisions for losses of inventories (Notes 2.e and 6), the determination of deferred income taxes amounts (Notes 2.l and 9), the determination of control in subsidiaries (Notes 2.f, 2.r, 3 and 11.a), the determination of joint control in joint venture (Notes 2.f, 11.a and 11.b), the determination of significant influence in associates (Notes 2.f and 11.c), the determination of exchange rate used to translation of Oxiteno Andina’ information (Note 2.r), the useful lives of property, plant, and equipment (Notes 2.g and 12), the useful lives of intangible assets, and the determination of the recoverable amount of goodwill (Notes 2.i and 13), provisions for assets retirement obligations (Notes 2.m and 19), provisions for tax, civil, and labor risks (Notes 2.n and 20), estimates for the preparation of actuarial reports (Notes 2.o and 18.b) and the determination of fair value of subscription warrants – indemnification (Notes 22 and 31). The actual result of the transactions and information may differ from their estimates.

t.	*Impairment of Assets*

The Company and its subsidiaries review, at least annually, the existence of any indication that an asset may be impaired. If there is an indication, the Company and its subsidiaries estimate the recoverable amount of the asset. Assets that cannot be evaluated individually are grouped in the smallest group of assets that generate cash flow 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 of disposal 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 Company and its subsidiaries consider the projections of future cash flows, trends, and outlooks, as well as the effects of obsolescence, demand, competition, and other economic factors. Such cash flows are discounted to their present values using the discount rate before tax that reflects market conditions for the period of impairment testing and the specific risks of the asset or CGU being evaluated. In cases where the expected discounted future cash flows are less than their carrying amount, an impairment loss is recognized for the amount by which the carrying value exceeds the fair value of these assets. Losses for impairment of assets are recognized in profit or loss. In case goodwill has been allocated to a CGU, the recognized losses are first allocated to reduce the corresponding goodwill. If the goodwill is not enough to absorb such losses, the surplus is allocated to the assets on a pro-rata basis. An impairment of goodwill cannot be reversed. For other assets, impairment losses may be reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortization, if the impairment had not been recognized.

No impairment was recognized in the periods presented (see Note 13.i).

Ultrapar Participações S.A. and Subsidiaries

Notes to the Individual and Consolidated Interim Financial Information

(In thousands of Brazilian Reais, unless otherwise stated)

u.	*Adjustment to Present Value*

The Company and its subsidiaries reviewed all items classified as non-current and, when relevant, current assets and liabilities. No recognition of present value adjustments that would have relevant effects were identified.

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 is measured at fair value or based on its interest in identifiable net assets acquired. Goodwill is measured as the excess of the consideration transferred and to be transferred over the fair value of net assets acquired (identifiable assets and liabilities assumed, net). After the initial recognition, goodwill is measured at cost less any accumulated impairment losses. For impairment testing purposes, goodwill is allocated to the Company’s operating segments. When the cost of the acquisition is lower than the fair value of net assets acquired, a gain is recognized directly in the income statement. Costs related to the acquisition are recorded in the income statement when incurred.

w.	*Statements of Value Added*

As required by Brazilian Corporate Law, the Company and its subsidiaries prepare the individual and consolidated statements of value added (“DVA”) according to CPC 09 – Statement of Value Added, as an integral part of the interim financial information as applicable to publicly-traded companies, and as supplemental information for IFRS, which does not require the presentation of DVA.

x.	*Statements of Cash Flows*

The Company and its subsidiaries prepared its individual and consolidated statements of cash flows in accordance with IAS 7 (CPC 03)—Cash Flow Statement. The Company and its subsidiaries present the interest paid on loans and debentures in financing activities.

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

The following standards, amendments, and interpretations to IFRS were issued by the IASB but are not yet effective and were not adopted as of June 30, 2017:


	Equivalent CPC		Effective date
• IAS 7 – Disclosure Initiative – Amendments to IAS 7: clarifications made by the IASB related to liabilities arising from financing activities.		03 (R2)		2017
• IAS 12 – Recognition of Deferred Tax Assets for Unrealised Losses – Amendments to IAS 12: clarifications made by the IASB on the recognition of deferred tax assets on unrealised losses.		32		2017
• IFRS 9 – Financial instrument classification and measurement: includes new requirements for the classification and measurement of financial assets and liabilities, derecognition requirements, new impairment methodology for financial instruments, and new hedge accounting guidance.		48		2018
• IFRS 15—Revenue from contracts with customers: establish the principles of nature, amount, timing and uncertainty of revenue and cash flow arising from a contract with a customer.		47		2018
• IFRS 16—Lease: requires lessees record, in the financial statements, a liability reflecting future payments of a lease and the right to use an asset for the lease contracts, except for certain short-term leases and low asset value contracts. The criteria for recognition and measurement of leases in the financial statements of lessors are substantially maintained.		*		2019

(*) CPC has not yet issued pronouncements equivalent to this IFRS, but is expected to do so before the date it becomes effective. The adoption of IFRS is subject to prior approval by the CVM.

Ultrapar Participações S.A. and Subsidiaries

Notes to the Individual and Consolidated Interim Financial Information

(In thousands of Brazilian Reais, unless otherwise stated)

The Company is assessing the potential effects of these standards.

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

These interim financial information were authorized for issue by the Board of Directors on August 9, 2017.

3.	Principles of Consolidation, Investments in Subsidiaries and Acquisition Under Approval

Principles of Consolidation

The consolidated interim financial information were prepared following the basic principles of consolidation established by IFRS 10 (CPC 36 (R3)). Investments of one company in another, balances of asset and liability accounts, and revenues and expenses were eliminated, as well as the effects of transactions conducted between the companies. Non-controlling interests in subsidiaries are presented within consolidated shareholders’ 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 income statement and other 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 income statement and other 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 Individual and Consolidated Interim Financial Information

(In thousands of Brazilian Reais, unless otherwise stated)

Investments in Subsidiaries

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


			% interest in the share
			06/30/2017				12/31/2016
			Control				Control
	Location	Segment	Direct control		Indirect control		Direct control		Indirect control
Ipiranga Produtos de Petróleo S.A.	Brazil	Ipiranga		100		—		100		—
am/pm Comestíveis Ltda.	Brazil	Ipiranga		—		100		—		100
Centro de Conveniências Millennium Ltda.	Brazil	Ipiranga		—		100		—		100
Icorban—Correspondente Bancário Ltda.	Brazil	Ipiranga		—		100		—		100
Ipiranga Trading Limited	Virgin Islands	Ipiranga		—		100		—		100
Tropical Transportes Ipiranga Ltda.	Brazil	Ipiranga		—		100		—		100
Ipiranga Imobiliária Ltda.	Brazil	Ipiranga		—		100		—		100
Ipiranga Logística Ltda.	Brazil	Ipiranga		—		100		—		100
Oil Trading Importadora e Exportadora Ltda.	Brazil	Ipiranga		—		100		—		100
Ipiranga Lubrificantes S.A.	Brazil	Ipiranga		—		100		—		100
Companhia Ultragaz S.A.	Brazil	Ultragaz		—		99		—		99
Ultragaz Comercial Ltda. ⁽¹⁾	Brazil	Ultragaz		—		100		—		—
Bahiana Distribuidora de Gás Ltda.	Brazil	Ultragaz		—		100		—		100
Utingás Armazenadora S.A.	Brazil	Ultragaz		—		57		—		57
LPG International Inc.	Cayman Islands	Ultragaz		—		100		—		100
Imaven Imóveis Ltda.	Brazil	Others		—		100		—		100
Imifarma Produtos Farmacêuticos e Cosméticos S.A.	Brazil	Extrafarma		—		100		—		100
Oxiteno S.A. Indústria e Comércio	Brazil	Oxiteno		100		—		100		—
Oxiteno Nordeste S.A. Indústria e Comércio	Brazil	Oxiteno		—		99		—		99
Oxiteno Argentina Sociedad de Responsabilidad Ltda.	Argentina	Oxiteno		—		100		—		100
Oleoquímica Indústria e Comércio de Produtos Químicos Ltda.	Brazil	Oxiteno		—		100		—		100
Oxiteno Uruguay S.A.	Uruguay	Oxiteno		—		100		—		100
Barrington S.L.	Spain	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 Overseas Corp.⁽²⁾	Virgin Islands	Oxiteno		—		—		—		100
Oxiteno Andina, C.A.	Venezuela	Oxiteno		—		100		—		100
Oxiteno Europe SPRL	Belgium	Oxiteno		—		100		—		100
Oxiteno Colombia S.A.S	Colombia	Oxiteno		—		100		—		100
Oxiteno Shanghai LTD.	China	Oxiteno		—		100		—		100
Empresa Carioca de Produtos Químicos S.A.	Brazil	Oxiteno		—		100		—		100
Ultracargo—Operações Logísticas e Participações Ltda.	Brazil	Ultracargo		100		—		100		—
Terminal Químico de Aratu S.A. – Tequimar	Brazil	Ultracargo		—		99		—		99
Ultrapar International S.A.	Luxembourg	Others		100		—		100		—
SERMA—Ass. dos usuários equip. proc. de dados	Brazil	Others		—		100		—		100

The percentages in the table above are rounded.

⁽¹⁾

In June 2017, Ultragaz Comercial Ltda. was formed, which may concentrate some activities currently executed by its quotaholders.

⁽²⁾

In April 2017, in order to simplify the corporate structure, the Oxiteno Overseas Corp. was merged into Global Petroleum Products Trading Corporation (“GPPTC”).

Ultrapar Participações S.A. and Subsidiaries

Notes to the Individual and Consolidated Interim Financial Information

(In thousands of Brazilian Reais, unless otherwise stated)

Association in progress

On August 4, 2016, the Company through its subsidiary Ipiranga Produtos de Petróleo S.A. (“IPP”) entered into an association agreement with Chevron Brasil Lubrificantes Ltda. (“Chevron”) to create a new company in the lubricants market. Under this agreement, the association will be formed by Ipiranga’s and Chevron’s lubricants operations in Brazil. Ipiranga and Chevron will hold 56% and 44%, respectively, of the new company’s capital. On February 9, 2017, this transaction was approved without restrictions through an opinion issued by the General Superintendence (“SG”) of the Brazilian Antitrust Authority (“CADE”). The decision of the SG was published in the Brazilian Federal Official Gazette on February 10, 2017. On March 2, 2017, CADE issued a certificate approving the decision published on February 10, 2017. The closing of the association is in progress and is subject to certain usual conditions precedent in transactions of similar nature.

Acquisitions Under Approval

On June 12, 2016, the Company through its subsidiary IPP entered into a sale and purchase agreement for the acquisition of 100% of Alesat Combustíveis S.A. (“ALE”) and the assets comprising its operations. The total transaction amount was R$ 2,168 million, which would be reduced by ALE’s net debt as of December 31, 2015 and is subject to working capital and net debt adjustments on the closing date of the transaction. On August 3, 2016, the extraordinary general shareholders’ meeting of Ultrapar approved the transaction. The closing of the acquisition was subject to certain usual conditions precedent in transactions of similar nature, mainly the approval by CADE. On August 2, 2017, the Court of Appeals of CADE voted and decided to block the transaction (see Note 34.b).

On November 17, 2016, the Company through its subsidiary Companhia Ultragaz S.A. (“Cia Ultragaz”), entered into a sale and purchase agreement for the acquisition of 100% of the capital stock of Liquigás Distribuidora S.A (“Liquigás”). The total transaction amount is R$ 2,665 million and will be adjusted by the Interbank Certificate of Deposit (“CDI”), between the execution date and transaction closing date. The amount will still be subject to adjustments related to the variations in Liquigás’ working capital and net debt between December 31, 2015 and the closing date of the transaction. On January 23, 2017, the extraordinary general shareholders’ meeting of Ultrapar approved the transaction. The closing of the acquisition is subject to certain usual conditions precedent in transactions of similar nature, mainly the approval by CADE.

Ultrapar Participações S.A. and Subsidiaries

Notes to the Individual and Consolidated Interim Financial Information

(In thousands of Brazilian Reais, unless otherwise stated)

4.	Cash and Cash Equivalents and Financial Investments

Cash equivalents and financial investments, excluding cash and bank deposits, are substantially represented by investments: (i) in Brazil, in certificates of deposit of first-rate financial institutions linked to the CDI, in repurchase agreement and in short term investments funds, whose portfolio comprised exclusively of Brazilian Federal Government bonds; (ii) outside Brazil, in certificates of deposit of first-rate 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 31, according to their characteristics and intention of the Company and its subsidiaries.

The balance of cash, cash equivalents and financial investments (consolidated) amounted to R$ 6,142,270 as of June 30, 2017 (R$ 5,701,849 as of December 31, 2016) and are distributed as follows:

•

Cash and Cash Equivalents

Cash and cash equivalents are considered: (i) cash and bank deposits, and (ii) highly-liquid short-term investments that are readily convertible into a known amount of cash and are subject to an insignificant risk of change in value.


	Parent				Consolidated
	06/30/2017		12/31/2016		06/30/2017		12/31/2016
Cash and bank deposits
In local currency		146		84		46,526		47,177
In foreign currency		—		—		76,907		66,141
Financial investments considered cash equivalents
In local currency
Fixed-income securities		52,404		127,860		4,374,575		3,837,807
In foreign currency
Fixed-income securities		—		—		91,350		323,033

Total cash and cash equivalents		52,550		127,944		4,589,358		4,274,158

Ultrapar Participações S.A. and Subsidiaries

Notes to the Individual and Consolidated Interim Financial Information

(In thousands of Brazilian Reais, unless otherwise stated)

•

Financial Investments

The financial investments of the Company and its subsidiaries, which are not classified as cash and cash equivalents, are distributed as follows:


	Parent				Consolidated
	06/30/2017		12/31/2016		06/30/2017		12/31/2016
Financial investments
In local currency
Fixed-income securities and funds		66,356		1,052		1,244,727		1,174,458
In foreign currency
Fixed-income securities and funds		—		—		150,137		34,775
Currency and interest rate hedging instruments (a)		—		—		158,048		218,458

Total financial investments		66,356		1,052		1,552,912		1,427,691

Current		66,356		1,052		1,535,026		1,412,587

Non-current		—		—		17,886		15,104

(a) Accumulated gains, net of income tax (see Note 31).

Ultrapar Participações S.A. and Subsidiaries

Notes to the Individual and Consolidated Interim Financial Information

(In thousands of Brazilian Reais, unless otherwise stated)

5.	Trade Receivables (Consolidated)

The composition of trade receivables is as follows:


	06/30/2017			12/31/2016
Domestic customers		3,150,414			3,315,783
Reseller financing—Ipiranga		539,380			466,277
Foreign customers		210,534			180,679
(-) Allowance for doubtful accounts		(267,216	)		(233,332	)

Total		3,633,112			3,729,407

Current		3,380,817			3,502,322

Non-current		252,295			227,085

Reseller financing is provided for renovation and upgrading of service stations, purchase of products, and development of the automotive fuels and lubricants distribution market.

The breakdown of trade receivables, gross of allowance for 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
06/30/2017		3,900,328		3,144,854		122,371		65,152		45,387		94,192		428,372
12/31/2016		3,962,739		3,326,934		167,790		44,152		23,738		60,150		339,975

Movements in the allowance for doubtful accounts are as follows:


Balance as of December 31, 2016	233,332
Additions	37,958
Write-offs	(4,074	)

Balance as of June 30, 2017	267,216

For further information about allowance for doubtful accounts see Note 31 – Customer credit risk.

Ultrapar Participações S.A. and Subsidiaries

Notes to the Individual and Consolidated Interim Financial Information

(In thousands of Brazilian Reais, unless otherwise stated)

6.	Inventories (Consolidated)

The composition of inventories is as follows:


	06/30/2017							12/31/2016
	Cost		Provision for losses			Net balance		Cost		Provision for losses			Net balance
Finished goods		416,728		(17,969	)		398,759		425,335		(19,801	)		405,534
Work in process		1,338		—			1,338		2,011		—			2,011
Raw materials		305,883		(1,801	)		304,082		246,974		(1,147	)		245,827
Liquefied petroleum gas (LPG)		65,823		(5,761	)		60,062		71,466		(5,761	)		65,705
Fuels, lubricants, and greases		1,244,302		(3,493	)		1,240,809		1,317,042		(2,851	)		1,314,191
Consumable materials and other items for resale		123,743		(7,468	)		116,275		138,610		(7,619	)		130,991
Pharmaceutical, hygiene, and beauty products		350,534		(9,574	)		340,960		352,187		(9,985	)		342,202
Advances to suppliers		99,959		—			99,959		228,871		—			228,871
Properties for resale		25,982		(107	)		25,875		25,982		(107	)		25,875

		2,634,292		(46,173	)		2,588,119		2,808,478		(47,271	)		2,761,207

Movements in the provision for losses are as follows:


Balance as of December 31, 2016	47,271
Reversal to net realizable value adjustment	(4,645	)
Additions of obsolescence and other losses	3,547

Balance as of June 30, 2017	46,173

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


	06/30/2017		12/31/2016
Net realizable value adjustment		21,885		26,530
Obsolescence and other losses		24,288		20,741

Total		46,173		47,271

Ultrapar Participações S.A. and Subsidiaries

Notes to the Individual and Consolidated Interim Financial Information

(In thousands of Brazilian Reais, unless otherwise stated)

7.	Recoverable Taxes

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


	Parent				Consolidated
	06/30/2017		12/31/2016		06/30/2017			12/31/2016
IRPJ and CSLL		78,328		72,630		228,873			195,276
ICMS		—		—		505,387			459,255
Provision for ICMS losses ⁽¹⁾		—		—		(69,620	)		(68,683	)
PIS and COFINS		—		—		116,887			109,552
Value-Added Tax (IVA) of subsidiaries Oxiteno Mexico, Oxiteno Andina, Oxiteno Uruguay and Ultrapar International		—		—		21,716			22,121
Others		—		—		10,081			6,868

Total		78,328		72,630		813,324			724,389

Current		27,469		37,620		554,919			541,772

Non-current		50,859		35,010		258,405			182,617

⁽¹⁾ The provision for ICMS losses relates to tax credits that the subsidiaries believe will not be utilized or offset in the future, based on its estimative, and its movements are as follows:


Balance as of December 31, 2016			68,683
Write-offs, additions and reversals, net			937

Balance as of June 30, 2017			69,620

Ultrapar Participações S.A. and Subsidiaries

Notes to the Individual and Consolidated Interim Financial Information

(In thousands of Brazilian Reais, unless otherwise stated)

8.	Related Parties

a.	*Related Parties*

•

Parent Company


	Assets						Liabilities
	Receivables⁽¹⁾		Debentures⁽²⁾		Total		Account payable		Financial income⁽²⁾
Ipiranga Produtos de Petróleo S.A.		—		768,160		768,160		—		49,220
Companhia Ultragaz S.A.		6,799		—		6,799		—		—
Imifarma Produtos Farmacêuticos e Cosméticos S.A.		—		—		—		1,137		—

Total as of June 30, 2017		6,799		768,160		774,959		1,137		49,220


	Assets		Liabilities
	Debentures⁽¹⁾		Account payable		Financial income⁽²⁾⁽³⁾
Ipiranga Produtos de Petróleo S.A.		772,425		—		67,790
Imifarma Produtos Farmacêuticos e Cosméticos S.A.		—		679		—

Total as of December 31, 2016		772,425		679

Total as of June 30, 2016						67,790

⁽¹⁾Refers to the Deferred Stock Plan (see Note 8.c).

⁽²⁾In March 2016, the subsidiary IPP made its third private offering in one single series of 75 debentures at face value of R$ 10,000,000.00 (ten million Brazilian Reais) each, nonconvertible into shares and unsecured. The Company subscribed the total debentures with maturity on March 31, 2021 and semiannual interest linked to CDI.

⁽³⁾In March 2009, the subsidiary IPP made its first private offering in a single series of 108 debentures at face value of R$ 10,000,000.00 (ten million Brazilian Reais), nonconvertible into shares, unsecured debentures. The Company subscribed 75 debentures with maturity on March 31, 2016 and semiannual remuneration linked to CDI. The debentures subscribed by Ultrapar were settled on the maturity date.

Ultrapar Participações S.A. and Subsidiaries

Notes to the Individual and Consolidated Interim Financial Information

(In thousands of Brazilian Reais, unless otherwise stated)

•

Consolidated

Balances and transactions between the Company and its 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				Commercial transactions
	Assets		Liabilities		Receivables⁽¹⁾		Payables⁽¹⁾
Oxicap Indústria de Gases Ltda.		—		—		—		1,512
Química da Bahia Indústria e Comércio S.A.		—		2,946		—		—
ConectCar Soluções de Mobilidade Eletrônica S.A.		—		—		4,112		874
Refinaria de Petróleo Riograndense S.A.		—		—		—		6,796
Others		490		1,318		—		—

Total as of June 30, 2017		490		4,264		4,112		9,182


	Loans				Commercial transactions
	Assets		Liabilities		Receivables⁽¹⁾		Payables⁽¹⁾
Oxicap Indústria de Gases Ltda.		—		—		—		1,534
Química da Bahia Indústria e Comércio S.A.		—		2,946		—		—
ConectCar Soluções de Mobilidade Eletrônica S.A.		—		—		7,259		5,820
Refinaria de Petróleo Riograndense S.A.		—		—		—		18,186
Others		490		1,326		—		—

Total as of December 31, 2016		490		4,272		7,259		25,540

(1)

Included in “trade receivables” and “trade payables,” respectively.


	Commercial transactions
	Sales and services		Purchases
Oxicap Indústria de Gases Ltda		3		8,681
Refinaria de Petróleo Riograndense S.A.		—		417,788
ConectCar Soluções de Mobilidade Eletrônica S.A.		1,099		771

Total as of June 30, 2017		1,102		427,240


	Commercial transactions
	Sales and services		Purchases
Oxicap Indústria de Gases Ltda.		3		8,922
Refinaria de Petróleo Riograndense S.A.		—		542,157
ConectCar Soluções de Mobilidade Eletrônica S.A.		5,757		—

Total as of June 30, 2016		5,760		551,079

Ultrapar Participações S.A. and Subsidiaries

Notes to the Individual and Consolidated Interim Financial Information

(In thousands of Brazilian Reais, unless otherwise stated)

Purchase and sale transactions relate substantially to the purchase of raw materials, feedstock, transportation, and storage services based on similar market prices and terms with customers and suppliers with comparable operational performance. The above operations related to ConectCar Soluções de Mobilidade Eletrônica S.A. (“ConectCar”) refer to services provided. Borrowing agreements are for an indeterminate period and do not contain interest clauses. In the opinion of the Company and its subsidiaries’ management, transactions with related parties are not subject to credit risk, which is why no allowance for doubtful accounts or collateral is provided. Collateral provided by the Company in loans of subsidiaries and affiliates are mentioned in Note 14.k). Intercompany loans are contracted in light of temporary cash surpluses or deficits of the Company, its subsidiaries, and its associates.

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. In addition, the chief executive officer is entitled to additional long term variable compensation relating to the Company’s shares performance between 2013 and 2018, reflecting the target of more than doubling the share value of the Company in 5 years. Further details about the Deferred Stock Plan are contained in Note 8.c) and about post-employment benefits in Note 18.b).

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


	06/30/2017		06/30/2016
Short-term compensation		22,695		21,053
Stock compensation		2,746		2,758
Post-employment benefits		1,690		1,674
Long-term compensation		1,770		1,220

Total		28,901		26,705

Ultrapar Participações S.A. and Subsidiaries

Notes to the Individual and Consolidated Interim Financial Information

(In thousands of Brazilian Reais, unless otherwise stated)

c.	*Deferred Stock Plan (Consolidated)*

On April 27, 2001, the General Shareholders’ Meeting approved a benefit plan to members of management and employees in executive positions in the Company and its subsidiaries. On November 26, 2003, the Extraordinary General Shareholders’ Meeting approved certain amendments to the original plan of 2001 (the “Deferred Stock Plan”). In the Deferred Stock Plan, certain members of management of the Company and its subsidiaries have the voting and economic rights of shares and the ownership of these shares is retained by the subsidiaries of the Company. The Deferred Stock Plan provides for the transfer of the 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 total number of shares to be used for the Deferred Stock Plan is subject to the availability in treasury of such shares. It is incumbent on Ultrapar’s executive officers to select the members of management eligible for the plan and propose the number of shares in each case for approval by the Board of Directors. The fair value of the awards were determined on the grant date based on the market value of the shares on the B3 S.A. – Brasil, Bolsa, Balcão (“B3”), the Brazilian Securities, Commodities and Futures Exchange and the amounts are amortized between five and seven years from the grant date.

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


Grant date	Balance of number of shares granted		Vesting period		Market price of shares on the grant date (in R$ per share)		Total grant costs, including taxes		Accumulated recognized grant costs			Accumulated unrecognized grant costs
March 13, 2017		100,000		2022 to 2024		67.99		9,378		(531	)		8,847
March 4, 2016		190,000		2021 to 2023		65.43		17,147		(3,883	)		13,264
December 9, 2014		590,000		2019 to 2021		50.64		41,210		(18,081	)		23,129
March 5, 2014		83,400		2019 to 2021		52.15		5,999		(3,396	)		2,603
February 3, 2014		150,000		2018 to 2020		55.36		11,454		(8,044	)		3,410
November 7, 2012		320,000		2017 to 2019		42.90		19,098		(15,171	)		3,927
December 14, 2011		80,000		2016 to 2018		31.85		5,272		(4,794	)		478
November 10, 2010		86,672		2015 to 2017		26.78		9,602		(9,450	)		152

		1,600,072						119,160		(63,350	)		55,810

For the six-month period ended June 30, 2017, the amortization in the amount of R$ 9,281 (R$ 9,045 for the six-month period ended June 30, 2016) was recognized as a general and administrative expense.

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


Balance as of December 31, 2016			1,500,072
Shares granted on March 13, 2017			100,000

Balance as of June 30, 2017			1,600,072

Ultrapar Participações S.A. and Subsidiaries

Notes to the Individual and Consolidated Interim Financial Information

(In thousands of Brazilian Reais, unless otherwise stated)

9.	Income and Social Contribution Taxes

a.	*Deferred Income and Social Contribution Taxes*

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


	Parent					Consolidated
	06/30/2017			12/31/2016		06/30/2017			12/31/2016
Assets—Deferred income and social contribution taxes on:
Provision for impairment of assets		—			—		58,077			46,254
Provisions for tax, civil, and labor risks		—			29		135,582			163,096
Provision for post-employment benefits		—			—		56,024			54,185
Provision for differences between cash and accrual basis		—			—		736			18,452
Goodwill		—			—		16,029			17,823
Business combination – fiscal basis vs. accounting basis of goodwill		—			—		68,159			68,064
Provision for asset retirement obligation		—			—		23,713			23,419
Other provisions		31,235			22,433		136,306			136,463
Tax losses and negative basis for social contribution carryforwards (d)		—			—		128,985			78,682

Total		31,235			22,462		623,611			606,438
Offset the liabilities balance		(451	)		—		(212,130	)		(189,094	)

Net balance of assets		30,784			22,462		411,481			417,344

Liabilities—Deferred income and social contribution taxes on:
Revaluation of property, plant, and equipment		—			—		2,578			2,640
Lease		—			—		3,646			3,899
Provision for differences between cash and accrual basis		—			—		48,430			59,264
Provision for goodwill/negative goodwill		—			—		103,353			74,895
Business combination – fair value of assets		—			—		45,808			46,202
Temporary differences of foreign subsidiaries		—			—		4,125			2,290
Other provisions		451			—		7,866			7,549

Total		451			—		215,806			196,739
Offset the assets balance		(451	)		—		(212,130	)		(189,094	)

Net balance of liabilities		—			—		3,676			7,645

Ultrapar Participações S.A. and Subsidiaries

Notes to the Individual 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:


	06/30/2017			06/30/2016
Initial balance		409,699			292,989
Deferred IRPJ and CSLL recognized in income of the period		(8,149	)		76,623
Deferred IRPJ and CSLL recognized in other comprehensive income		4,876			—
Others		1,379			(3,370	)

Final balance		407,805			366,242

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


	Parent		Consolidated
Up to 1 Year		20		138,966
From 1 to 2 Years		10,405		77,727
From 2 to 3 Years		10,405		64,325
From 3 to 5 Years		10,405		158,437
From 5 to 7 Years		—		127,722
From 7 to 10 Years		—		56,434

		31,235		623,611

Ultrapar Participações S.A. and Subsidiaries

Notes to the Individual 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
	06/30/2017			06/30/2016			06/30/2017			06/30/2016
Income (loss) before taxes and share of profit (loss) of subsidiaries, joint ventures, and associates		(20,951	)		(34,179	)		921,992			1,078,032
Statutory tax rates—%		34			34			34			34

Income and social contribution taxes at the statutory tax rates		7,123			11,621			(313,477	)		(366,531	)

Adjustments to the statutory income and social contribution taxes:
Nondeductible expenses (i)		(451	)		(109	)		(27,021	)		(23,944	)
Nontaxable revenues (ii)		—			—			1,439			2,290
Adjustment to estimated income (iii)		—			—			6,117			7,271
Interest on equity (iv)		(550	)		(364	)		(550	)		(364	)
Other adjustments		13			4			2,712			2,575

Income and social contribution taxes before tax incentives		6,135			11,152			(330,780	)		(378,703	)

Tax incentives—SUDENE		—			—			14,215			52,600

Income and social contribution taxes in the income statement		6,135			11,152			(316,565	)		(326,103	)

Current		(2,187	)		(4,412	)		(308,416	)		(402,726	)
Deferred		8,322			15,564			(8,149	)		76,623
Effective IRPJ and CSLL rates—%		29.3			32.6			34.3			30.2

(i)	Nondeductible expenses 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)	Nontaxable revenues consist of certain gains and income that are not taxable under applicable tax legislation, such as the reimbursement of taxes and the reversal of certain provisions;

(iii)

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

(iv)	Interest on equity is an option foreseen in Brazilian corporate law to distribute profits to shareholders, calculated based on the long-term interest rate (“TJLP”), which does not affect the income statement, but is deductible for purposes of IRPJ and CSLL.

Ultrapar Participações S.A. and Subsidiaries

Notes to the Individual and Consolidated Interim Financial Information

(In thousands of Brazilian Reais, unless otherwise stated)

c.	*Tax Incentives—SUDENE*

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


Subsidiary	Units	Incentive—%		Expiration
Bahiana Distribuidora de Gás Ltda.	Aracaju base		75		2017
	Suape base		75		2018
	Mataripe base		75		2024
	Caucaia base		75		2025
Terminal Químico de Aratu S.A. – Tequimar	Suape terminal		75		2020
	Aratu terminal		75		2022
	Itaqui terminal⁽¹⁾		75		2025
Oleoquímica Indústria e Comércio de Produtos Químicos Ltda.	Camaçari plant		75		2021
Oxiteno Nordeste S.A. Indústria e Comércio	Camaçari plant⁽²⁾		75		2016

⁽¹⁾

Due to the implementation of the Itaqui Terminal, in São Luis – Maranhão, SUDENE approved the 75% income tax reduction until 2025 through an appraisal report issued on November 4, 2016. On November 28, 2016, the constitutive benefit appraisal report was forwarded to the Brazilian Federal Revenue Service for approval within a term of 120 days. As a result of the expiration of the statutes of limitation for the Brazilian Federal Revenue Service to approve the constitutive benefit appraisal report, the income tax reduction was recognized by the subsidiary in the income statement in 2017, in the total amount of R$ 1,620 with retroactive effect to January 2016.

⁽²⁾	On April 10, 2017 the subsidiary requested to SUDENE the extension of recognition of the tax incentive for another 10 years, due to modernizations realized in Camaçari plant.

On June 12, 2017 the subsidiary Empresa Carioca de Produtos Químicos S.A. (“EMCA”) filed a request at SUDENE requiring the 75% income tax reduction incentive for its Camaçari plant – Bahia.

On July 3, 2017, the subsidiary Bahiana Distribuidora de Gás Ltda. (“Bahiana”), filed a request at SUDENE requiring the 75% income tax reduction incentive for its Juazeiro plant – Bahia.

d.	*Income and Social Contribution Taxes Carryforwards*

As of June 30, 2017, certain subsidiaries of the Company had tax loss carryforwards related to income tax (IRPJ) of R$ 384,989 (R$ 236,956 as of December 31, 2016) and negative basis of CSLL of R$ 363,754 (R$ 216,036 as of December 31, 2016), whose compensations are limited to 30% of taxable income in a given tax year, which do not expire. Based on these values, the Company and its subsidiaries recognized deferred income and social contribution tax assets in the amount of R$ 128,985 as of June 30, 2017 (R$ 78,682 as of December 31, 2016).

Ultrapar Participações S.A. and Subsidiaries

Notes to the Individual and Consolidated Interim Financial Information

(In thousands of Brazilian Reais, unless otherwise stated)

10.

Prepaid expenses (Consolidated)


	06/30/2017		12/31/2016
Rents⁽¹⁾		262,793		196,944
Deferred Stock Plan, net (see Note 8.c)		44,695		44,719
Advertising and publicity		61,492		37,833
Insurance premiums		59,318		46,896
Software maintenance		11,041		12,478
Purchases of meal and transportation tickets		1,749		1,526
Taxes and other prepaid expenses		10,291		6,005

		451,379		346,401

Current		153,427		123,883

Non-current		297,952		222,518

⁽¹⁾	Refers substantially to the rental advance of service stations of IPP, which are subsequently subleased and operated by the resellers.

11.

Investments

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

The table below presents the full amounts of balance sheets and income statements of subsidiaries and joint venture:


	06/30/2017
	Subsidiaries										Joint-venture
	Ultracargo—Operações Logísticas e Participações Ltda.		Oxiteno S.A. Indústria e Comércio			Ipiranga Produtos de Petróleo S.A.		Ultrapar International S.A.			Refinaria de Petróleo Riograndense S.A.
Number of shares or units held		11,839,764		35,102,127			224,467,228,244		49,995			5,078,888
Assets		1,118,373		5,383,173			14,776,165		2,468,080			457,737
Liabilities		2,490		2,719,565			9,872,257		2,457,552			315,875
Shareholders’ equity		1,115,883		2,663,608	(*)		4,903,908		10,528			141,862
Net revenue from sales and services		—		560,357			32,067,934		—			726,145
Net income (loss) for the period		27,058		128,300	(*)		455,716		(20	)		54,319
% of capital held		100		100			100		100			33


	12/31/2016
	Subsidiaries									Joint-venture
	Ultracargo—Operações Logísticas e Participações Ltda.		Oxiteno S.A. Indústria e Comércio			Ipiranga Produtos de Petróleo S.A.		Ultrapar International S.A.		Refinaria de Petróleo Riograndense S.A.
Number of shares or units held		11,839,764		35,102,127			224,467,228,244		49,995		5,078,888
Assets		1,197,373		5,320,676			14,180,685		2,428,309		403,847
Liabilities		2,634		2,770,876			9,745,731		2,417,761		267,086
Shareholders’ equity		1,194,739		2,549,859	(*)		4,434,954		10,548		136,761
% of capital held		100		100			100		100		33

Ultrapar Participações S.A. and Subsidiaries

Notes to the Individual and Consolidated Interim Financial Information

(In thousands of Brazilian Reais, unless otherwise stated)


	06/30/2016
	Subsidiaries						Joint-venture
	Ultracargo–Operações Logísticas e Participações Ltda.		Oxiteno S.A. Indústria e Comércio		Ipiranga Produtos de Petróleo S.A.		Refinaria de Petróleo Riograndense S.A.
Number of shares or units held		11,839,764		35,102,127		224,467,228,244		5,078,888
Net revenue from sales and services		—		605,353		33,377,445		745,845
Net income for the period		40,373		198,859(*)		520,428		38,384
% of capital held		100		100		100		33

(*)	adjusted for intercompany unrealized profits.

The percentages in the table above are rounded.

The financial information from our business segments is detailed in Note 30.

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


	Investments in subsidiaries															Joint-venture
	Ultracargo – Operações Logísticas e Participações Ltda.			Oxiteno S.A. Indústria e Comércio			Ipiranga Produtos de Petróleo S.A.			Ultrapar International S.A.			Total			Refinaria de Petróleo Riograndense S.A.			Total
Balance as of December 31, 2016		1,194,739			2,549,859			4,434,954			10,548			8,190,100			45,409			8,235,509
Share of profit (loss) of subsidiaries and joint venture		27,058			128,300			455,716			(20	)		611,054			18,032			629,086
Dividends and interest on equity (gross)		(105,914	)		—			—			—			(105,914	)		(20,100	)		(126,014	)
Tax liabilities on equity- method revaluation reserve		—			—			(75	)		—			(75	)		—			(75	)
Valuation adjustment of subsidiaries		—			(18,495	)		13,313			—			(5,182	)		3,762			(1,420	)
Translation adjustments of foreign-based subsidiaries		—			3,944			—			—			3,944			—			3,944

Balance as of June 30, 2017		1,115,883			2,663,608			4,903,908			10,528			8,693,927			47,103			8,741,030


	Investments in subsidiaries											Joint-venture
	Ultracargo—Operações Logísticas e Participações Ltda.		Oxiteno S.A.— Indústria e Comércio			Ipiranga Produtos de Petróleo S.A.			Total			Refinaria de Petróleo Riograndense S.A.			Total
Balance as of December 31, 2015		1,089,092		2,935,315			3,595,034			7,619,441			31,514			7,650,955
Share of profit of subsidiaries and joint venture		40,373		198,859			520,428			759,660			12,745			772,405
Dividends and interest on equity (gross)		—		(79,523	)		—			(79,523	)		(4,299	)		(83,822	)
Tax liabilities on equity- method revaluation reserve		—		—			(21	)		(21	)		—			(21	)
Valuation adjustment of subsidiaries		—		—			(84,932	)		(84,932	)		(9,909	)		(94,841	)
Translation adjustments of foreign-based subsidiaries		—		(76,175	)		—			(76,175	)		—			(76,175	)

Balance as of June 30, 2016		1,129,465		2,978,476			4,030,509			8,138,450			30,051			8,168,501

Ultrapar Participações S.A. and Subsidiaries

Notes to the Individual and Consolidated Interim Financial Information

(In thousands of Brazilian Reais, unless otherwise stated)

b.	*Joint Ventures (Consolidated)*

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

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

The subsidiary IPP holds an interest in ConectCar, established in November 2012, which is primarily engaged in electronic payment of tolls and parking in the States of Alagoas, Bahia, Ceará, Espírito Santo, Goiás, Maranhão, Mato Grosso, Mato Grosso do Sul, Minas Gerais, Paraná, Pernambuco, Rio de Janeiro, Rio Grande do Sul, Santa Catarina, São Paulo and Distrito Federal, and in the electronic fuel payment segment throughout the Brazilian territory.

These investments are accounted for under the equity method of accounting based on their interim financial information as of June 30, 2017.

Balances and changes in joint ventures are as follows:


	Movements in investments
	União Vopak		RPR			ConectCar			Total
Balance as of December 31, 2016		4,518		45,409			66,215			116,142
Valuation adjustments		—		3,762			—			3,762
Dividends and interest on equity (gross)		—		(20,100	)		—			(20,100	)
Share of profit (loss) of joint ventures		852		18,032			(8,920	)		9,964

Balance as of June 30, 2017		5,370		47,103			57,295			109,768


	Movements in investments
	União Vopak			RPR			ConectCar			Total
Balance as of December 31, 2015		4,545			31,514			43,318			79,377
Capital increase		—			—			25,781			25,781
Valuation adjustments		—			(9,909	)		—			(9,909	)
Dividends and interest on equity (gross)		—			(4,299	)		—			(4,299	)
Share of profit (loss) of joint ventures		(262	)		12,745			(10,643	)		1,840

Balance as of June 30, 2016		4,283			30,051			58,456			92,790

Ultrapar Participações S.A. and Subsidiaries

Notes to the Individual and Consolidated Interim Financial Information

(In thousands of Brazilian Reais, unless otherwise stated)

The table below presents the full amounts of balance sheets and income statements of joint ventures:


	06/30/2017
	União Vopak			RPR			ConectCar
Current assets		6,512			339,394			69,809
Non-current assets		6,377			118,343			123,297
Current liabilities		1,376			252,840			78,516
Non-current liabilities		774			63,035			—
Shareholders’ equity		10,739			141,862			114,590
Net revenue from sales and services		7,898			726,145			11,527
Costs, operating expenses and income		(5,436	)		(652,203	)		(40,198	)
Net financial income and income and social contribution taxes		(758	)		(19,623	)		10,831
Net income (loss)		1,704			54,319			(17,840	)
Number of shares or units held		29,995			5,078,888			145,860,500
% of capital held		50			33			50


	12/31/2016
	União Vopak		RPR		ConectCar
Current assets		4,228		286,916		93,634
Non-current assets		6,383		116,931		116,243
Current liabilities		700		198,619		77,448
Non-current liabilities		876		68,467		—
Shareholders’ equity		9,035		136,761		132,429
Number of shares or units held		29,995		5,078,888		145,860,500
% of capital held		50		33		50


	06/30/2016
	União Vopak			RPR			ConectCar
Net revenue from sales and services		6,098			745,845			18,811
Costs and operating expenses		(7,088	)		(689,924	)		(51,397	)
Net financial income and income and social contribution taxes		466			(17,537	)		11,300
Net income (loss)		(524	)		38,384			(21,286	)
Number of shares or units held		29,995			5,078,888			124,360,500
% of capital held		50			33			50

The percentages in the table above are rounded.

Ultrapar Participações S.A. and Subsidiaries

Notes to the Individual and Consolidated Interim Financial Information

(In thousands of Brazilian Reais, unless otherwise stated)

c.	*Associates (Consolidated)*

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

Subsidiary Oxiteno S.A. Indústria e Comércio (“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.

Subsidiary Oxiteno Nordeste S.A. Indústria e Comércio (“Oxiteno Nordeste”) holds an interest in Química da Bahia Indústria e Comércio S.A., which is primarily engaged in manufacturing, marketing, and processing of chemicals. The operations of this associate are currently suspended.

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

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

The investment of subsidiary Oxiteno S.A. in the associate Oxicap is accounted for under the equity method of accounting based on its financial information as of May 31, 2017, while the other associates are valued based on the interim financial information as of June 30, 2017.

Balances and changes in associates are as follows:


	Movements in investments
	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, 2016		6,001			12,981		3,678			71			—			22,731
Dividends received		(576	)		—		—			—			(399	)		(975	)
Share of profit (loss) of associates		548			698		(14	)		(55	)		946			2,123

Balance as of June 30, 2017		5,973			13,679		3,664			16			547			23,879


	Movements in investments
	Transportadora Sulbrasileira de Gás S.A.			Oxicap Indústria de Gases Ltda.		Química da Bahia Indústria e Comércio S.A.			Metalúrgica Plus S.A.			Total
Balance as of December 31, 2015		5,743			12,000		3,684			110			21,537
Dividends received		(352	)		—		—			—			(352	)
Share of profit (loss) of associates		594			614		(6	)		(1	)		1,201

Balance as of June 30, 2016		5,985			12,614		3,678			109			22,386

Ultrapar Participações S.A. and Subsidiaries

Notes to the Individual and Consolidated Interim Financial Information

(In thousands of Brazilian Reais, unless otherwise stated)

The table below presents the full amounts of balance sheets and income statements of associates:


	06/30/2017
	Transportadora Sulbrasileira de Gás S.A.			Oxicap Indústria de Gases Ltda.			Química da Bahia Indústria e Comércio S.A.			Metalúrgica Plus S.A.			Plenogás Distribuidora de Gás S.A.
Current assets		7,949			37,792			179			84			477
Non-current assets		17,039			72,128			10,266			1,658			2,821
Current liabilities		762			8,211			8			35			74
Non-current liabilities		332			7,479			3,109			1,660			1,584
Shareholders’ equity		23,894			94,230			7,328			47			1,640
Net revenue from sales and services		5,211			25,651			—			—			—
Costs, operating expenses and income		(3,019	)		(21,680	)		(54	)		(102	)		534
Net financial income and income and social contribution taxes		28			632			26			(21	)		23
Net income (loss)		2,220			4,603			(28	)		(123	)		557
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


	12/31/2016
	Transportadora Sulbrasileira de Gás S.A.		Oxicap Indústria de Gases Ltda.		Química da Bahia Indústria e Comércio S.A.		Metalúrgica Plus S.A.		Plenogás Distribuidora de Gás S.A.
Current assets		7,524		28,358		220		169		1,178
Non-current assets		17,570		70,034		10,246		1,682		2,821
Current liabilities		759		7,125		1		21		53
Non-current liabilities		332		5,226		3,109		1,616		1,667
Shareholders’ equity		24,003		86,041		7,356		214		2,279
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


	06/30/2016
	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		5,006			25,559			—			—			—
Costs, operating expenses and income		(2,637	)		(19,669	)		(35	)		(89	)		472
Net financial income and income and social contribution taxes		5			(2,202	)		24			(6	)		28
Net income (loss)		2,374			3,688			(11	)		(95	)		500
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 Individual and Consolidated Interim Financial Information

(In thousands of Brazilian Reais, unless otherwise stated)

12.

Property, Plant, and Equipment (Consolidated)

Balances and changes in property, plant, and equipment are as follows:


	Weighted average useful life (years)		Balance on 12/31/2016			Additions			Depreciation			Transfer			Write-offs and disposals			Effect of foreign currency exchange rate variation			Balance on 06/30/2017
Cost:
Land		—		520,575			2,688			—			6,179			(963	)		348			528,827
Buildings		30		1,440,204			5,804			—			25,864			(11,562	)		4,305			1,464,615
Leasehold improvements		8		796,521			6,192			—			69,066			(11,240	)		—			860,539
Machinery and equipment		12		4,225,056			70,670			—			45,901			(13,038	)		3,695			4,332,284
Automotive fuel/lubricant distribution equipment and facilities		13		2,429,079			66,929			—			30,413			(5,898	)		—			2,520,523
LPG tanks and bottles		11		619,511			51,003			—			(594	)		(19,247	)		—			650,673
Vehicles		7		271,133			11,629			—			3,301			(9,144	)		11			276,930
Furniture and utensils		9		204,550			10,365			—			5,588			(269	)		288			220,522
Construction in progress		—		523,285			259,813			—			(179,260	)		—			4,210			608,048
Advances to suppliers		—		96,423			24,469			—			(10,358	)		—			2,434			112,968
Imports in progress		—		58			576			—			(314	)		—			(3	)		317
IT equipment		5		288,705			16,592			—			2,225			(296	)		301			307,527

				11,415,100			526,730			—			(1,989	)		(71,657	)		15,589			11,883,773

Accumulated depreciation:
Buildings				(632,908	)		—			(22,672	)		83			4,824			74			(650,599	)
Leasehold improvements				(412,449	)		—			(34,637	)		(16	)		6,706			1			(440,395	)
Machinery and equipment				(2,474,504	)		—			(125,188	)		(156	)		8,200			7,998			(2,583,650	)
Automotive fuel/lubricant distribution equipment and facilities				(1,383,069	)		—			(71,057	)		(29	)		5,115			—			(1,449,040	)
LPG tanks and bottles				(276,414	)		—			(22,643	)		52			8,903			—			(290,102	)
Vehicles				(101,082	)		—			(11,068	)		79			5,380			28			(106,663	)
Furniture and utensils				(120,747	)		—			(7,037	)		(10	)		233			363			(127,198	)
IT equipment				(220,421	)		—			(11,585	)		(2	)		255			(233	)		(231,986	)

				(5,621,594	)		—			(305,887	)		1			39,616			8,231			(5,879,633	)

Provision for losses:
Advances to suppliers				(83	)		—			—			—			—			—			(83	)
Land				(197	)		—			—			—			197			—			—
Leasehold improvements				(560	)		(1,324	)		—			—			—			(7	)		(1,891	)
Machinery and equipment				(4,347	)		—			—			—			8			(27	)		(4,366	)
Automotive fuel/lubricant distribution equipment and facilities				(336	)		—			—			—			149			—			(187	)
Furniture and utensils				(1	)		—			—			—			—			—			(1	)

				(5,524	)		(1,324	)		—			—			354			(34	)		(6,528	)

Net amount				5,787,982			525,406			(305,887	)		(1,988	)		(31,687	)		23,786			5,997,612

Ultrapar Participações S.A. and Subsidiaries

Notes to the Individual and Consolidated Interim Financial Information

(In thousands of Brazilian Reais, unless otherwise stated)

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

Advances to suppliers of property, plant, and equipment relate basically to manufacturing of assets for expansion of plants, terminals, stores and bases, and acquisition of real estate.

13.

Intangible Assets (Consolidated)

Balances and changes in intangible assets are as follows:


	Weighted average useful life (years)		Balance on 12/31/2016			Additions		Amortization			Transfer			Write-offs and disposals			Effect of foreign currency exchange rate variation			Balance on 06/30/2017
Cost:
Goodwill (i)		—		1,454,484			—		—			—			—			—			1,454,484
Software (ii)		5		641,691			70,176		—			1,747			(1,063	)		1,903			714,454
Technology (iii)		5		32,617			—		—			—			—			—			32,617
Commercial property rights (iv)		10		43,258			6,611		—			255			—			10			50,134
Distribution rights (v)		6		3,651,316			302,414		—			—			—			—			3,953,730
Brands (vi)		—		112,936			—		—			—			—			609			113,545
Others (vii)		4		39,172			286		—			—			—			581			40,039

				5,975,474			379,487		—			2,002			(1,063	)		3,103			6,359,003

Accumulated amortization:
Software				(396,702	)		—		(27,722	)		(4	)		1,061			(1,158	)		(424,525	)
Technology				(32,469	)		—		(36	)		—			—			—			(32,505	)
Commercial property rights				(19,568	)		—		(1,737	)		(1	)		—			—			(21,306	)
Distribution rights				(2,131,826	)		—		(260,795	)		(4,749	)		—			—			(2,397,370	)
Others				(23,310	)		—		(3,934	)		—			—			(7	)		(27,251	)

				(2,603,875	)		—		(294,224	)		(4,754	)		1,061			(1,165	)		(2,902,957	)

				3,371,599			379,487		(294,224	)		(2,752	)		(2	)		1,938			3,456,046

Ultrapar Participações S.A. and Subsidiaries

Notes to the Individual and Consolidated Interim Financial Information

(In thousands of Brazilian Reais, unless otherwise stated)

i) The net remaining balance of the goodwill is tested annually for impairment and presents the following balances:


	Segment		06/30/2017		12/31/2016
Goodwill on the acquisition of:
Extrafarma		Extrafarma		661,553		661,553
Ipiranga ⁽¹⁾		Ipiranga		276,724		276,724
Uniăo Terminais		Ultracargo		211,089		211,089
Texaco		Ipiranga		177,759		177,759
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
Others		Oxiteno		583		583

				1,454,484		1,454,484

⁽¹⁾	Including R$ 246,163 in the parent.

On December 31, 2016, 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 we calculate the perpetuity, considering the possibility of carrying the business on indefinitely. For the Extrafarma segment, a period of 10 years was used due to its expansion plan and considering a three-year period to maturity of new stores.

Discount and real growth rates: on December 31, 2016, the discount and real growth rates used to extrapolate the projections ranged from 10.4% to 16.6% and from 0% to 1% p.a., respectively, depending on the CGU analyzed. For the subsidiary Oxiteno Andina, due to the macroeconomic scenario in Venezuela, the discount rate used was 287.9%.

Revenue from sales and services, costs and expenses, and gross margin: for 2017, the budget prepared by management and approved by the Board of Directors was considered. In subsequent periods, the Company considers the forecast of the general inflation or price index predicted in the contracts.

Opening of new commercial points (investments): for 2017, the budget prepared by the management and approved by the Board of Directors was considered. In subsequent periods, the Company considers the expansion plans of each business unit, which also considers the commercial establishments closed in the previously years.

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

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

Ultrapar Participações S.A. and Subsidiaries

Notes to the Individual and Consolidated Interim Financial Information

(In thousands of Brazilian Reais, unless otherwise stated)

iii) The subsidiaries Oxiteno S.A., Oxiteno Nordeste and Oleoquímica Indústria e Comércio de Produtos Químicos Ltda. (“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.

iv) Commercial property rights include those described below:

•

Subsidiary Terminal Químico de Aratu S.A. – Tequimar (“Tequimar”) has an agreement with CODEBA – Companhia das Docas do Estado da Bahia, which allows it to explore the area in which the Aratu Terminal is located for 20 years, renewable for a similar period. The price paid by Tequimar was R$ 12,000, which is being amortized from August 2002 to July 2042.

•

Subsidiary Tequimar has a lease contract for an area adjacent to the Port of Santos for 20 years from December 2002, renewable for a similar period, which allows the construction, operation, and use of a terminal for liquid bulk unloading, tank storage, handling, and distribution. The price paid by Tequimar was R$ 4,334, which is being amortized from August 2005 to December 2022.

•

Subsidiary Extrafarma pays key money to obtain certain commercial establishments to open drugstores which is stated at the cost of acquisition, amortized using the straight-line method, considering the lease contract terms. In the case of the closedown of stores, the residual amount is written off.

v) Distribution rights refer mainly to bonus disbursements as provided in Ipiranga’s agreements with resellers and large customers. Bonus disbursements are recognized when paid and recognized as an expense in the income statement over the term of the agreement (typically 5 years), which is reviewed as per the changes occurred in the agreements.

vi) Brands are represented by the acquisition cost of the ‘am/pm’ brand in Brazil and of the Extrafarma brand.

vii) Other intangibles refer mainly to the loyalty program “Clube Extrafarma”.

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


	06/30/2017		06/30/2016
Inventories and cost of products and services sold		9,047		7,322
Selling and marketing		258,503		243,216
General and administrative		26,674		23,425

		294,224		273,963

Ultrapar Participações S.A. and Subsidiaries

Notes to the Individual and Consolidated Interim Financial Information

(In thousands of Brazilian Reais, unless otherwise stated)

14.

Loans, Debentures, and Finance Leases (Consolidated)

a.	*Composition*


Description	06/30/2017		12/31/2016		Index/Currency	Weighted average financial charges 06/30/2017 – % p.a.		Maturity
Foreign currency – denominated loans:
Notes in the foreign market (b) (*)		2,451,808		2,412,112	US$		+5.3	2026
Foreign loan (c.1) (*)		1,282,532		942,456	US$ + LIBOR (i)		+0.8	2017 to 2022
Foreign loan (c.2, c.3 and c.4)		338,492		332,650	US$ + LIBOR (i)		+1.9	2018 to 2020
Foreign loan (c.1) (*)		260,447		486,451	US$		+2.2	2018
Financial institutions (e)		197,255		195,021	US$ + LIBOR (i)		+3.0	2019 to 2021
Financial institutions (e)		109,693		109,859	US$		+2.9	2017 to 2022
Financial institutions (e)		36,230		24,586	MX$ (ii)		+8.0	2017
Foreign currency advances delivered		23,984		32,582	US$		+2.7	< 59 days
Advances on foreign exchange contracts		15,185		111,066	US$		+2.4	< 102 days
BNDES (d)		5,754		7,137	US$		+6.2	2017 to 2020
Financial institutions (e)		3,679		9,569	MX$ + TIIE (ii)		+1.5	2017
Financial institutions (e)		125		435	Bs$ (vii)		+24.0	2017

Subtotal		4,725,184		4,663,924

Brazilian Reais – denominated loans:
Banco do Brasil – floating rate (f)		3,021,290		2,956,547	CDI		107.3	2017 to 2022
Debentures—IPP (g.1, g.2 and g.4)		1,910,545		1,914,498	CDI		107.1	2017 to 2021
Debentures—5th issuance (g.3)		826,266		832,383	CDI		108.3	2018
Debentures – CRA (g.5)		654,366		—	CDI		95.0	2022
Debentures – CRA (g.5) (*)		332,852		—	IPCA		+4.7	2024
BNDES (d)		242,420		307,593	TJLP (iii)		+2.4	2017 to 2021
Export Credit Note – floating rate (h)		158,159		158,753	CDI		101.5	2018
BNDES (d)		67,410		71,430	SELIC (vi)		+2.3	2017 to 2021
BNDES EXIM		62,422		62,084	TJLP (iii)		+3.5	2018
Finance leases (i)		49,737		48,566	IGP-M (v)		+5.6	2017 to 2031
FINEP		42,134		48,667	R$		+4.0	2017 to 2021
Banco do Nordeste do Brasil		37,618		47,120	R$ (iv)		+8.5	2017 to 2021
BNDES (d)		33,084		40,309	R$		+5.5	2017 to 2022
FINEP		33,665		34,613	TJLP (iii)		+0.9	2017 to 2023
BNDES EXIM		29,640		28,056	SELIC (vi)		+3.9	2018
FINAME		60		80	TJLP (iii)		+5.7	2017 to 2022
Fixed finance leases (i)		21		41	R$		+15.6	2017
Floating finance leases (i)		—		109

Subtotal		7,501,689		6,550,849

Currency and interest rate hedging instruments (**)		131,529		202,357

Total		12,358,402		11,417,130

Current		3,091,775		2,475,604

Non-current		9,266,627		8,941,526

(*)	These transactions were designated for hedge accounting (see Note 31 – Hedge Accounting).

(**)	Accumulated losses (see Note 31).

Ultrapar Participações S.A. and Subsidiaries

Notes to the Individual and Consolidated Interim Financial Information

(In thousands of Brazilian Reais, unless otherwise stated)

(i)	LIBOR = London Interbank Offered Rate.

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

(iii)

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 June 30, 2017, TJLP was fixed at 7.0% p.a.

(iv)

Contract linked to the rate of FNE (Northeast Constitutional Financing Fund) fund whose purpose is to promote the development of the industrial sector, managed by Banco do Nordeste do Brasil. On June 30, 2017, the FNE interest rate was 10% p.a. FNE grants a discount of 15% on the interest rate for timely payments.

(v)	IGP-M = General Market Price Index is a measure of Brazilian inflation, calculated by the Getúlio Vargas Foundation.

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

(vii)

Bs$ = Bolívar.

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


	06/30/2017		12/31/2016
From 1 to 2 years		3,508,297		3,203,383
From 2 to 3 years		853,656		1,699,009
From 3 to 4 years		669,144		693,993
From 4 to 5 years		1,405,518		554,162
More than 5 years		2,830,012		2,790,979

		9,266,627		8,941,526

As provided in IAS 39 (CPC 8 (R1)), the transaction costs and issuance premiums associated with debt issuance by the Company and its subsidiaries were added to their financial liabilities, as shown in Note 14.j).

The Company’s management entered into hedging instruments against foreign exchange and interest rate variations for a portion of its debt obligations (see Note 31).

b.	*Notes in the Foreign Market*

On October 6, 2016, the subsidiary Ultrapar International S.A. (“Ultrapar International”) issued US$ 750 million in notes in the foreign market, maturing in October 2026, with interest rate of 5.25% p. a., paid semiannually. The issue price was 98.097% of the face value of the note. The notes were guaranteed by the Company and its subsidiary IPP. The Company has designated hedge relationships for this transaction (see Note 31 – Hedge accounting: cash flow hedge and net investment hedge in foreign entities).

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

•

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

•

Restriction on encumbrance of assets exceeding US$ 150 million 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 Individual and Consolidated Interim Financial Information

(In thousands of Brazilian Reais, unless otherwise stated)

c.	*Foreign Loans*

1) The subsidiary IPP has foreign loans in the amount of US$ 470 million. 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 103.1% of CDI (see Note 31). IPP designated these hedging instruments as a fair value hedge; 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$ (million)		Cost in % of CDI
Sep/17		150.0		103.7
Jul/18		60.0		103.0
Sep/18		80.0		101.5
Nov/18		80.0		101.4
Jun/22		100.0		105.0

Total / average cost		470.0		103.1

2) The subsidiary LPG International Inc. has a foreign loan in the amount of US$ 30 million with maturity in December 2018 and interest rate of LIBOR + 1.85% p.a., paid quarterly. The foreign loan is guaranteed by the Company and its subsidiary IPP.

3) The subsidiary GPPTC has a foreign loan in the amount of US$ 12 million with maturity in December 2018 and interest rate of LIBOR + 1.85% p.a., paid quarterly. The foreign loan is guaranteed by the Company and its subsidiary IPP.

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

•

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

•

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

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

4) The subsidiary GPPTC has a foreign loan in the amount of US$ 60 million with maturity on June 22, 2020 and interest of LIBOR + 2.0% p.a., paid quarterly. The Company, through the subsidiary Cia. Ultragaz, contracted hedging instruments subject to floating interest rates in dollar and exchange rate variation, changing the foreign loan charge to 105.9% of CDI. The foreign loan is guaranteed by the Company and its subsidiary Oxiteno Nordeste.

Ultrapar Participações S.A. and Subsidiaries

Notes to the Individual and Consolidated Interim Financial Information

(In thousands of Brazilian Reais, unless otherwise stated)

d.	*BNDES*

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

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

•

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

•

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

e.	*Financial Institutions*

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

The subsidiary Oxiteno USA has a loan agreement in the amount of US$40 million, due in February 2021 and bearing interest of LIBOR + 3% p.a., paid quarterly. The loan is guaranteed by Ultrapar and the subsidiary Oxiteno Nordeste and the proceeds of this loan are being used to fund the construction of a new alkoxylation plant in the state of Texas.

The subsidiary Oxiteno USA has a loan in the notional amount of US$20 million, due in September 2021, with interest of LIBOR + 3% p.a., paid quarterly. The loan is guaranteed by Ultrapar and the subsidiary Oxiteno S.A.

f.	*Banco do Brasil*

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

These loans mature, as follows (including interest until June 30, 2017):


Maturity
2017-Jul			175,202
2017-Nov			101,103
2018-Jan			175,202
2018-Apr			101,103
2019-Feb			169,356
2019-May			1,282,747
2020-May			338,859
2021-May			338,859
2022-May			338,859

Total			3,021,290

Ultrapar Participações S.A. and Subsidiaries

Notes to the Individual and Consolidated Interim Financial Information

(In thousands of Brazilian Reais, unless otherwise stated)

g.	*Debentures*

1)	In December 2012, the subsidiary IPP made its first issuance of public debentures, in a single series of 60,000 simple, nominative, registered debentures, nonconvertible into shares and unsecured, which main characteristics are as follows:


Face value unit:		R$ 10,000.00
Final maturity:		November 16, 2017
Payment of the face value:		Lump sum at final maturity
Interest:		107.9% of CDI
Payment of interest:		Semiannually
Reprice:		Not applicable

2)	In January 2014, the subsidiary IPP made its second issuance of public debentures, in a single series of 80,000 simple, nominative, registered debentures, nonconvertible into shares and unsecured, which main characteristics are as follows:


Face value unit:		R$ 10,000.00
Final maturity:		December 20, 2018
Payment of the face value:		Lump sum at final maturity
Interest:		107.9% of CDI
Payment of interest:		Semiannually
Reprice:		Not applicable

3)	In March 2015, the Company made its fifth issuance of debentures, in a single series of 80,000 simple, nonconvertible into shares, unsecured debentures, which main characteristics are as follows:


Face value unit:		R$ 10,000.00
Final maturity:		March 16, 2018
Payment of the face value:		Lump sum at final maturity
Interest:		108.25% of CDI
Payment of interest:		Semiannually
Reprice:		Not applicable

4)	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 CDI
Payment of interest:		Semiannually
Reprice:		Not applicable

Ultrapar Participações S.A. and Subsidiaries

Notes to the Individual and Consolidated Interim Financial Information

(In thousands of Brazilian Reais, unless otherwise stated)

In April 2017, IPP carried out its fifth issuance of debentures, in two single series of 660,139 and 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. IPP will use the net proceeds from this issuance for the purchase of ethanol.

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:


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


Face value unit:		R$ 1,000.00
Final maturity:		April 15, 2024
Payment of the face value:		Lump sum at final maturity
Interest:		IPCA + 4.7%
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 CDI. 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.

h.	*Export Credit Note*

The subsidiary Oxiteno Nordeste has export credit note contract in the amount of R$ 156.8 million, with maturity in May 2018, and floating rate of 101.5% of CDI, paid quarterly.

i.	*Finance Leases*

The subsidiary Cia. Ultragaz has a finance lease contract related to LPG bottling facilities, maturing in April 2031.

Subsidiary Extrafarma has finance lease contracts related to software, with term of 48 months.

Ultrapar Participações S.A. and Subsidiaries

Notes to the Individual and Consolidated Interim Financial Information

(In thousands of Brazilian Reais, unless otherwise stated)

The amounts of equipment and intangible assets, net of depreciation and amortization, and the amounts of the corresponding liabilities are shown below:


	06/30/2017
	LPG bottling facilities		Software		Total
Equipment and intangible assets, net of depreciation and amortization		16,182		38		16,220
Financing (present value)		49,737		21		49,758

Current		2,647		21		2,668
Non-current		47,090		—		47,090


	12/31/2016
	LPG bottling facilities		Software		Total
Equipment and intangible assets, net of depreciation and amortization		17,078		223		17,301
Financing (present value)		48,566		150		48,716

Current		2,465		150		2,615
Non-current		46,101		—		46,101

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


	06/30/2017
	LPG bottling facilities		Software		Total
Up to 1 year		5,113		22		5,135
From 1 to 2 years		5,113		—		5,113
From 2 to 3 years		5,113		—		5,113
From 3 to 4 years		5,113		—		5,113
From 4 to 5 years		5,113		—		5,113
More than 5 years		45,167		—		45,167

Total		70,732		22		70,754


	12/31/2016
	LPG bottling facilities		Software		Total
Up to 1 year		4,876		156		5,032
From 1 to 2 years		4,876		—		4,876
From 2 to 3 years		4,876		—		4,876
From 3 to 4 years		4,876		—		4,876
From 4 to 5 years		4,876		—		4,876
More than 5 years		45,516		—		45,516

Total		69,896		156		70,052

The above amounts include Services Tax (“ISS”) payable on the monthly installments, except for disbursements for the LPG bottling facilities.

Ultrapar Participações S.A. and Subsidiaries

Notes to the Individual and Consolidated Interim Financial Information

(In thousands of Brazilian Reais, unless otherwise stated)

j.	*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 12/31/2016		Incurred cost		Amortization			Balance on 06/30/2017
Notes in the foreign market (b)		0.0		16,612		—		(648	)		15,964
Banco do Brasil (f)		0.2		12,182		—		(1,974	)		10,208
Debentures (g)		0.1		6,835		22,643		(1,306	)		28,172
Foreign Loans (c)		0.2		2,211		563		(857	)		1,917
Other		0.2		1,952		—		(283	)		1,669

Total				39,792		23,206		(5,068	)		57,930

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
Notes in the foreign market (b)		1,349		1,425		1,505		1,589		1,677		8,419		15,964
Banco do Brasil (f)		4,372		4,380		695		496		265		—		10,208
Debentures (g)		5,674		5,691		5,327		5,098		4,237		2,145		28,172
Foreign Loans (c)		1,271		449		174		23		—		—		1,917
Other		504		521		479		165		—		—		1,669

Total		13,170		12,466		8,180		7,371		6,179		10,564		57,930

k.	*Guarantees*

The financings are guaranteed by collateral in the amount of R$ 64,315 as of June 30, 2017 (R$ 56,570 as of December 31, 2016) and by guarantees and promissory notes in the amount of R$ 8,155,437 as of June 30, 2017 (R$ 7,069,482 as of December 31, 2016).

In addition, the Company and its subsidiaries offer collaterals in the form of letters of credit for commercial and legal proceedings in the amount of R$ 229,782 as of June 30, 2017 (R$ 215,988 as of December 31, 2016) and guarantees related to raw materials imported by the subsidiary IPP in the amount of R$ 112,793 as of June 30, 2017 (R$ 59,316 as of December 31, 2016).

Some subsidiaries of Oxiteno issue collateral to financial institutions in connection with the amounts owed by some of their customers to such institutions (vendor financing). 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. The maximum amount of future payments related to these collaterals is R$ 24,030 as of June 30, 2017 (R$ 30,764 as of December 31, 2016), with maturities of up to 211 days. Until June 30, 2017, the subsidiaries did not have losses in connection with these collaterals. The fair value of collaterals recognized in current liabilities as other payables is R$ 586 as of June 30, 2017 (R$ 743 as of December 31, 2016), which is recognized as profit or loss as customers settle their obligations with the financial institutions.

Ultrapar Participações S.A. and Subsidiaries

Notes to the Individual and Consolidated Interim Financial Information

(In thousands of Brazilian Reais, unless otherwise stated)

15.

Trade Payables (Consolidated)


	06/30/2017		12/31/2016
Domestic suppliers		1,048,592		1,620,388
Foreign suppliers		116,832		89,265

		1,165,424		1,709,653

Some Company’s subsidiaries acquire oil based fuels and LPG from Petróleo Brasileiro S.A.—Petrobras and its subsidiaries and ethylene from Braskem S.A. These suppliers control almost all of the markets for these products in Brazil. The Company’s subsidiaries depend on the ability of those suppliers to deliver products in a timely manner and at acceptable prices and terms. The loss of any major supplier or a significant reduction in product availability from these suppliers could have a significant adverse effect on the Company and its subsidiaries. The Company and its subsidiaries believe that their relationship with suppliers is satisfactory.

16.

Salaries and Related Charges (Consolidated)


	06/30/2017		12/31/2016
Provisions on payroll		190,367		162,216
Profit sharing, bonus and premium		83,387		140,504
Social charges		41,961		49,812
Salaries and related payments		6,783		7,893
Benefits		1,837		1,938
Others		926		355

		325,261		362,718

17.

Taxes Payable (Consolidated)


	06/30/2017		12/31/2016
ICMS		100,795		105,160
PIS and COFINS		19,286		25,287
Value-Added Tax (IVA) of subsidiaries Oxiteno Mexico, Oxiteno USA, Oxiteno Andina and Oxiteno Uruguay		21,713		16,148
Income Tax Withholding (IRRF)		2,754		3,620
ISS		7,018		8,074
IPI		6,259		5,965
National Institute of Social Security (INSS)		3,663		5,305
Others		907		1,474

		162,395		171,033

Ultrapar Participações S.A. and Subsidiaries

Notes to the Individual and Consolidated Interim Financial Information

(In thousands of Brazilian Reais, unless otherwise stated)

18.

Employee Benefits and Private Pension Plan (Consolidated)

a.	*ULTRAPREV- Associaçăo de Previdência Complementar*

In February 2001, the Company’s Board of Directors approved the adoption of a defined contribution pension plan to be sponsored by the Company and each of its subsidiaries. Participating employees have been contributing to this plan, managed by Ultraprev—Associaçăo 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 0.5% 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 25 years. The sponsoring company does not guarantee the amounts or the duration of the benefits received by each employee that retires. For the six-month period ended June 30, 2017, the Company and its subsidiaries contributed R$ 12,262 (R$ 11,444 for the six-month period ended June 30, 2016) to Ultraprev, which is recognized as expense in the income statement. The total number of participating employees as of June 30, 2017 was 8,751 active participants and 227 retired participants. In addition, Ultraprev had 27 former employees receiving benefits under the rules of a previous plan whose reserves are fully constituted.

b.	*Post-employment Benefits*

The Company and its 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 as of December 31, 2016 and are recognized in the interim financial information in accordance with IAS 19 R2011 (CPC 33 R2).


	06/30/2017		12/31/2016
Health and dental care plan ⁽¹⁾		34,656		32,826
FGTS Penalty		66,944		64,654
Bonus		33,746		32,815
Life insurance ⁽¹⁾		15,227		14,456

Total		150,573		144,751

Current		23,211		24,940
Non-current		127,362		119,811

⁽¹⁾	Only Ipiranga.

Ultrapar Participações S.A. and Subsidiaries

Notes to the Individual and Consolidated Interim Financial Information

(In thousands of Brazilian Reais, unless otherwise stated)

19.

Provision for Asset Retirement Obligation – Fuel Tanks (Consolidated)

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

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


	06/30/2017			06/30/2016
Initial balance		77,564			74,716
Additions (new tanks)		280			160
Expense with tanks removed		(767	)		(1,425	)
Accretion expense		1,329			3,739

Final balance		78,406			77,190

Current		4,831			4,481
Non-current		73,575			72,709

20.

Provisions, Contingencies and Commitments (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 12/31/2016		Additions		Write-offs			Monetary restatement		Balance on 06/30/2017
IRPJ and CSLL (a.1.1)		473,490		—		(589	)		14,720		487,621
PIS and COFINS (a.1.2)		141,112		—		(109,463	)		2,643		34,292
ICMS		17,099		1,724		(918	)		322		18,227
Social security		13,022		152		(270	)		321		13,225
Civil, environmental and regulatory claims (a.2.1)		69,350		10,462		(1,242	)		227		78,797
Labor litigation (a.3.1)		65,162		7,191		(7,011	)		581		65,923
Other		547		—		(3	)		13		557

Total		779,782		19,529		(119,496	)		18,827		698,642

Current		52,694									50,472
Non-current		727,088									648,170

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

Ultrapar Participações S.A. and Subsidiaries

Notes to the Individual and Consolidated Interim Financial Information

(In thousands of Brazilian Reais, unless otherwise stated)

Balances of escrow deposits are as follows:


	06/30/2017		12/31/2016
Tax matters		663,137		643,423
Labor litigation		73,452		70,392
Civil and other		65,304		64,955

Total – non-current assets		801,893		778,770

a.1)

Provisions for Tax Matters and Social Security

a.1.1) On October 7, 2005, the subsidiaries Cia. Ultragaz and Bahiana filed for and obtained a preliminary injunction to recognize and offset PIS and COFINS credits on LPG purchases, against other taxes levied by the Brazilian Federal Revenue Service, 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$ 472,760 as of June 30, 2017 (R$ 457,868 as of December 31, 2016). 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 Company appealed this decision on February 3, 2015. Appeals were also presented to the respective higher courts (STJ and STF) whose trials are pending.

a.1.2) The subsidiaries Oxiteno S.A., Oxiteno Nordeste, Cia. Ultragaz, Tequimar, Tropical Transportes Ipiranga Ltda., EMCA, IPP and Extrafarma filed for a preliminary injunction seeking the deduction of ICMS from their PIS and COFINS tax bases. On March 15, 2017, in a decision with general repercussion, the Federal Supreme Court (STF) decided that the ICMS does not make up the calculation of PIS and COFINS tax bases. Therefore, supported by its legal advisors, on March 31, 2017, Oxiteno Nordeste and IPP reversed the provision in the amount of R$ 109,463.

The Company emphasizes that it is possible for the STF to restrict the effects of the judgment or to decide that the effectiveness will be reached after its final decision or other time that may be fixed. Despite the favorable context, until there is effective final decision, the causes may be reassessed, which could result in the recognition of new provisions in the future.

a.2)

Provisions for Civil, Environmental and Regulatory Claims

a.2.1) The Company and its subsidiaries maintained provisions for lawsuits and administrative proceedings, mainly derived from contracts entered into with customers and former services providers, as well as proceedings related to environmental and regulatory issues in the amount of R$ 78,797 as of June 30, 2017 (R$ 69,350 as of December 31, 2016).

a.3)

Provisions for Labor Matters

a.3.1) The Company and its subsidiaries maintained provisions of R$ 65,923 as of June 30, 2017 (R$ 65,162 as of December 31, 2016) for labor litigation filed by former employees and by employees of our service providers mainly contesting the non-payment of labor rights.

Ultrapar Participações S.A. and Subsidiaries

Notes to the Individual and Consolidated Interim Financial Information

(In thousands of Brazilian Reais, unless otherwise stated)

b.	*Contingent Liabilities (Possible)*

The Company and its subsidiaries have other pending administrative and legal proceedings of tax, civil, environmental, regulatory, and labor nature, which are individually less relevant, and were estimated by their legal counsel as having possible and/or remote risks (proceedings whose chance of loss is 50% or less). As such, the related potential losses were not provided for by the Company and its subsidiaries based on these opinions. The Company and its subsidiaries are also litigating for recovery of taxes and contributions, which were not recognized in the interim financial information due to their contingent nature. The estimated amount of this contingency is R$ 2,558,444 as of June 30, 2017 (R$ 2,252,637 as of December 31, 2016).

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$ 1,728,470 as of June 30, 2017 (R$ 1,519,658 as of December 31, 2016), 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$ 175,826 as of June 30, 2017 (R$ 169,889 as of December 31, 2016).

b.1.2) The subsidiary IPP and its subsidiaries have legal proceedings related to ICMS. The total amount involved as of June 30, 2017 in these proceedings, was R$ 604,128 (R$ 626,393 as of December 31, 2016). Such proceedings arise mostly of the disregard of ICMS credits amounting to R$ 294,860 (R$ 283,367 as of December 31, 2016), of which R$ 118,365 (R$ 113,889 as of December 31, 2016) refer to proportional reversal requirement of ICMS credits related to the acquisition of hydrated alcohol; of alleged non-payment in the amount of R$ 110,364 (R$ 108,786 as of December 31, 2016); and inventory differences in the amount of R$ 151,086 (R$ 147,031 as of December 31, 2016) related to the leftovers or faults due to temperature changes or product handling.

b.1.3) The Company and its subsidiaries are parties to administrative and judicial suits involving Income Tax, Social Security Contribution, PIS and COFINS, substantially about denials of offset claims and credits disallowance which total amount is R$ 658,700 as of June 30, 2017 (R$ 450,120 as of December 31, 2016), mainly represented by:

b.1.3.1) In the first quarter of 2017, 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$ 183,084 as of June 30, 2017, which includes the amount of the income taxes, interest and penalty. Management assessed the likelihood of the tax assessment, supported by the opinion of its legal advisors, as “possible”, and therefore did not recognize a provision for this contingent liability.

Ultrapar Participações S.A. and Subsidiaries

Notes to the Individual and Consolidated Interim Financial Information

(In thousands of Brazilian Reais, unless otherwise stated)

b.2)

Contingent Liabilities for Civil, Environmental and Regulatory Claims

The Company and its subsidiaries have contingent liabilities for civil, environmental and regulatory claims in the amount of R$ 554,302 as of June 30, 2017 (R$ 480,065 as of December 31, 2016), 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$ 31,888 as of June 30, 2017 (R$ 31,281 as of December 31, 2016). The imposition of such administrative decision was suspended by a court order and its merit is being judicially reviewed.

b.2.2) On November 29, 2016, a technical opinion was issued by the Operational Support Center for Execution (Centro de Apoio Operacional à Execução—CAEX), a technical body linked to the São Paulo State Public Prosecutor (“MPE”), presenting a proposal of compensation for the alleged environmental damages caused by the fire on April 2^nd, 2015 at the Santos Terminal of the subsidiary Tequimar. This technical opinion is non-binding, with no condemnatory or sanctioning nature, and will still be evaluated by the authorities and parties. The subsidiary is negotiating an agreement with the MPE and the Brazilian Federal Public Prosecutor (“MPF”), and currently there is no lawsuit filed on the matter. The negotiations relate to in natura repair of the any damages. In case of satisfactory conclusion of the negotiations with the MPE and MPF, the payments related to the project costs may affect the future Company’s financial statements. For more information see Note 33.

b.2.3) In 2016, the subsidiary Cia. Ultragaz became party to two administrative proceedings and the subsidiary Bahiana became party to one administrative proceeding filed by CADE based on allegations of anti-competitive practices in the State of Paraíba and in the Federal District. The subsidiaries’ Management, supported by its external legal counsel, are evaluating the facts and evidences to present a defense. According to Law 12,529/11 (“Defense of Competition Law”), the charged fine for violation of the economic order has a range from 0.1% to 20% of the gross revenue of the company, group or conglomerate obtained, in the last year prior to the initiation of the administrative proceeding, in the business activity in which the infraction occurred, and shall never be less than the advantage obtained, when the estimative is possible. As of June 30, 2017, as a result of these administrative proceedings, no fine had been imposed to the subsidiaries. Based on the above, and supported by the opinion of external legal counsel that classified the probability of loss as “possible”, Management did not recognize a provision for these contingencies as of June 30, 2017.

If the conclusion is that the subsidiaries have done such activities or anti-competitive behavior, the subsidiaries may incur fines, penalties and/or criminal sanctions against them and/or certain executives, directors or employees.

b.3)

Contingent Liabilities for Labor Matters

The Company and its subsidiaries have contingent liabilities for labor matters in the amount of R$ 275,672 as of June 30, 2017 (R$ 252,914 as of December 31, 2016), mainly represented by:

b.3.1) In 1990, the Petrochemical Industry Labor Union (Sindiquímica), of which the employees of Oxiteno Nordeste and EMCA, companies located in the Camaçari Petrochemical Complex, are members, filed separate lawsuits against the subsidiaries demanding the compliance with the fourth section of the collective labor agreement, which provided for a salary adjustment in lieu of the salary policies practiced. In the same year, a collective labor dispute was also filed by the Union of Employers (SINPEQ) against Sindiquímica, requiring the recognition of the loss of effectiveness of such fourth section. The decisions rendered on the individual claims which were favorable to the subsidiaries Oxiteno Nordeste and EMCA are final and unappealable. The collective labor dispute remains pending trial by STF. In 2010, some companies in the Camaçari Petrochemical Complex signed an agreement with Sindiquímica and reported the fact in the collective labor dispute. In October 2015, Sindiquímica filed enforcement lawsuits against all Camaçari Petrochemical Complex companies that have not yet made settlements, including Oxiteno Nordeste and EMCA.

Ultrapar Participações S.A. and Subsidiaries

Notes to the Individual and Consolidated Interim Financial Information

(In thousands of Brazilian Reais, unless otherwise stated)

21.

Deferred Revenue (Consolidated)

The Company’s subsidiaries have recognized the following deferred revenue:


	06/30/2017		12/31/2016
‘am/pm’ and Jet Oil franchising upfront fee		19,220		18,620
Loyalty program “Km de Vantagens”		12,535		13,062
Loyalty program “Clube Extrafarma”		2,377		3,128

		34,132		34,810

Current		21,277		22,300
Non-current		12,855		12,510

Loyalty Programs

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

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 discounted from sales revenue.

Deferred revenue is estimated based on the fair value of the points granted, considering the value of the prizes and the expected redemption of points. Deferred revenue is recognized in profit or loss when the points are redeemed, on which occasion the costs incurred are also recognized. Deferred revenue of unredeemed points is also recognized in profit or loss when the points expire.

Franchising Upfront Fee

am/pm is the convenience stores chain of the Ipiranga service stations. Ipiranga ended on June 30, 2017 with 2,260 stores (2,165 stores on December 31, 2016). Jet Oil is Ipiranga’s lubricant-changing and automotive service specialized network. Ipiranga ended on June 30, 2017 with 1,649 stores (1,594 stores on December 31, 2016). The franchising upfront fee received by Ipiranga is deferred and recognized in profit or loss on the straight-line accrual basis throughout the terms of the agreements with the franchisees.

Ultrapar Participações S.A. and Subsidiaries

Notes to the Individual and Consolidated Interim Financial Information

(In thousands of Brazilian Reais, unless otherwise stated)

22.

Subscription warrants – indemnification

Because of the association between the Company and Extrafarma on January 31, 2014, 7 subscription warrants – indemnification were issued, corresponding to up to 3,205,622 shares of the Company. The subscription warrants – indemnification may be exercised beginning 2020 by the former shareholders of Extrafarma and are adjusted according to the changes in the amounts of provisions for tax, civil, and labor risks and contingent liabilities related to the period prior to January 31, 2014. The subscription warrants – indemnification’s fair value is measured based on the share price of Ultrapar (UGPA3) and is reduced by the dividend yield until 2020, since the exercise is possible only from 2020, and they are not entitled to dividends until that date. As of June 30, 2017, the subscription warrants – indemnification were represented by 2,434,514 shares and amounted to R$ 177,479 (as of December 31, 2016, they were represented by 2,394,825 and totaled R$ 153,429). Due to the final adverse decision of some of these lawsuits, on June 30, 2017, the maximum number of shares that could be issued related to the subscription warrants – indemnification was up to 3,037,669 (3,059,579 shares as of December 31, 2016). For further information on Extrafarma’s acquisition, see Note 3.a to the financial statements of the Company filed with the CVM on February 17, 2016.

23.

Shareholders’ Equity

a.	*Share Capital*

The Company is a publicly traded company listed on 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”. On June 30, 2017, the subscribed and paid-in capital stock consists of 556,405,096 common shares with no par value and the issuance of preferred shares and participation certificates is prohibited. Each common share entitles its holder to one vote at Shareholders’ Meetings.

The price of the shares issued by the Company as of June 30, 2017, on B3 was R$ 77.52.

As of June 30, 2017, the Company is authorized to increase capital up to the limit of 800,000,000 common shares, without amendment to the Bylaws, by resolution of the Board of Directors.

As of June 30, 2017, there were 29,614,106 common shares outstanding abroad in the form of ADRs (28,944,097 shares as of December 31, 2016).

b.	*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, of February 14, 1980 and 268, of November 13, 1997.

As of June 30, 2017, 13,031,356 common shares (13,131,356 as of December 31, 2016) were held in the Company’s treasury, acquired at an average cost of R$ 36.85 per share (R$ 36.85 as of December 31, 2016).

c.	*Capital Reserve*

The capital reserve reflects the gain on the transfer of shares at market price to be held in treasury by the Company’s subsidiaries, at an average price of R$ 30.37 per share. Such shares were used in the Deferred Stock Plan granted to executives of these subsidiaries, as mentioned in Note 8.c).

Because of Extrafarma’s association in 2014, the Company recognized an increase in the capital reserves in the amount of R$ 498,812, due to the difference between the value attributable to share capital and the market value of the Ultrapar shares on the date of issue, deducted by R$ 2,260 related to the incurred costs directly attributable to issuing new shares.

d.	*Revaluation Reserve*

The revaluation reserve 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 Individual and Consolidated Interim Financial Information

(In thousands of Brazilian Reais, unless otherwise stated)

e.	*Profit Reserves*

Legal Reserve

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

Retention of Profits

Reserve recognized in previous fiscal years and used for investments contemplated in a capital budget, mainly for expansion, productivity, and quality, acquisitions and new investments, in accordance with Article 196 of Brazilian Corporate Law.

Investments Reserve

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

The amounts of retention of profits and investments reserve are free of distribution restrictions and totaled R$ 2,582,898 as of June 30, 2017 (R$ 3,915,964 as of December 31, 2016). In compliance with Article 199 of the Brazilian Corporate Law, on April 19, 2017 the Annual General Shareholders’ Meeting deliberated the excess of the profit reserves in relation to share capital, increasing the share capital in the amount of R$ 1,333,066, related to the retained earnings reserve.

f.	*Other Comprehensive Income*

Valuation Adjustments

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

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

Cumulative Translation Adjustments

The change in exchange rates on assets, liabilities, and income of foreign subsidiaries that have (i) functional currency other than the presentation currency of the Company, (ii) an independent administration and (iii) notes in the foreign market (see Note 31—net investment hedge in foreign entities), is directly recognized in the shareholders’ equity. This accumulated effect is reflected in profit or loss as a gain or loss only in case of disposal or write-off of the investment.

Ultrapar Participações S.A. and Subsidiaries

Notes to the Individual and Consolidated Interim Financial Information

(In thousands of Brazilian Reais, unless otherwise stated)

Balance and changes in other comprehensive income of the Company are as follows:


	Valuation adjustments
	Fair value of cash flow hedging instruments			Actuarial gains of post- employment benefits			Total			Cumulative translation adjustment
Balance as of December 31, 2016		(26,883	)		2,896			(23,987	)		7,519
Translation of foreign subsidiaries, net of income tax		—			—			—			3,944
Changes in fair value		(4,052	)		—			(4,052	)		—
Income and social contribution taxes on fair value		2,656			—			2,656			—
Actuarial losses of post-employment benefits		—			(24	)		(24	)		—

Balance as of June 30, 2017		(28,279	)		2,872			(25,407	)		11,463


	Valuation adjustments
	Fair value of cash flow hedging instruments			Fair value of financial instruments classified as available for sale			Actuarial gains of post- employment benefits			Total			Cumulative translation adjustment
Balance as of December 31, 2015		6,261			1,523			11,169			18,953			66,925
Translation of foreign subsidiaries		—			—			—			—			(76,175	)
Changes in fair value		(97,696	)		(1	)		—			(97,697	)		—
Actuarial gain of post-employment benefits		—			—			4,327			4,327			—
Income and social contribution taxes on actuarial gains		—			—			(1,471	)		(1,471	)		—

Balance as of June 30, 2016		(91,435	)		1,522			14,025			(75,888	)		(9,250	)

g.	*Dividends and Allocation of Net Income*

The shareholders are entitled, under the Bylaws, to a minimum annual dividend of 50% of adjusted net income calculated in accordance with Brazilian Corporate Law. The dividends and interest on equity in excess of the obligation established in the Bylaws are recognized in shareholders’ equity until the Shareholders approve them. The proposed dividends payable as of December 31, 2016 in the amount of R$ 472,650 (R$ 0.87 – eighty seven cents of Brazilian Real per share), were approved by the Board of Directors on February 22, 2017, and paid beginning March 10, 2017, being ratified at the Annual General Shareholders’ Meeting on April 19, 2017.

Ultrapar Participações S.A. and Subsidiaries

Notes to the Individual and Consolidated Interim Financial Information

(In thousands of Brazilian Reais, unless otherwise stated)

24.

Revenue from Sale and Services (Consolidated)


	06/30/2017			06/30/2016
Gross revenue from sale		38,881,490			39,742,444
Gross revenue from services		342,626			294,968
Sales taxes		(864,834	)		(959,426	)
Discounts and sales returns		(461,002	)		(259,028	)
Deferred revenue (see Note 21)		2,648			3,563

Net revenue from sales and services		37,900,928			38,822,521

25.

Expenses by Nature (Consolidated)

The Company presents its expenses by function in the consolidated income statement and presents below its expenses by nature:


	06/30/2017		06/30/2016
Raw materials and materials for use and consumption		34,024,906		34,832,590
Personnel expenses		1,083,740		988,196
Freight and storage		549,144		525,374
Depreciation and amortization		589,216		545,363
Advertising and marketing		104,190		91,124
Services provided by third parties		158,764		138,239
Lease of real estate and equipment		93,194		79,699
Other expenses		204,523		178,582

Total		36,807,677		37,379,167

Classified as:
Cost of products and services sold		34,631,410		35,410,967
Selling and marketing		1,424,447		1,290,071
General and administrative		751,820		678,129

Total		36,807,677		37,379,167

Research and development expenses are recognized in the income statements and amounted to R$ 27,077 for the six-month period ended June 30, 2017 (R$ 23,055 for the six-month period ended June 30, 2016).

Ultrapar Participações S.A. and Subsidiaries

Notes to the Individual and Consolidated Interim Financial Information

(In thousands of Brazilian Reais, unless otherwise stated)

26.

Gain (loss) on Disposal of Property, Plant and Equipment and Intangibles (Consolidated)

The gain or loss is determined as the difference between the selling price and residual book value of the investment, property, plant, and equipment, or intangible asset disposed of. For the six-month period ended June 30, 2017, the loss was R$ 150 (loss of R$ 2,008 for the six-month period ended June 30, 2016), represented primarily from disposal of property, plant, and equipment.

27.

Other Operating Income, Net (Consolidated)


	06/30/2017			06/30/2016
Commercial partnerships ⁽¹⁾		20,971			19,316
Merchandising ⁽²⁾		9,254			22,075
Loyalty program ⁽³⁾		14,096			5,638
Ultracargo – fire accident in Santos (see Note 33)		(33,305	)		23,671
Reversal of provision – ICMS from PIS and COFINS tax bases (see Note 20.a.1.2)		49,152			—
Others		2,743			4,902

Other operating income, net		62,911			75,602

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

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

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

Ultrapar Participações S.A. and Subsidiaries

Notes to the Individual and Consolidated Interim Financial Information

(In thousands of Brazilian Reais, unless otherwise stated)

28.

Financial Income (Expense)


	Parent						Consolidated
	06/30/2017			06/30/2016			06/30/2017			06/30/2016
Financial income:
Interest on financial investments		55,416			73,387			251,023			167,872
Interest from customers		—			—			48,114			50,968
Other financial income		—			—			2,162			2,087

		55,416			73,387			301,299			220,927

Financial expenses:
Interest on loans		—			—			(385,130	)		(364,196	)
Interest on debentures		(49,573	)		(58,608	)		(180,176	)		(167,745	)
Interest on finance leases		—			—			(3,654	)		(6,485	)
Bank charges, financial transactions tax, and other charges		(1,286	)		(3,174	)		(43,423	)		(37,490	)
Exchange variation, net of gains and losses with derivative instruments		(1	)		(1	)		58,899			(28,588	)
Reversal of provision – ICMS from PIS and COFINS tax bases (see Note 20.a.1.2)		—			—			43,411			—
Changes in subscription warranty—indemnification (see Note 22)		(26,095	)		(45,775	)		(26,095	)		(45,775	)
Monetary restatement of provisions, net, and other financial expenses		588			(10	)		849			(9,564	)

		(76,367	)		(107,568	)		(535,319	)		(659,843	)

Financial income (expense)		(20,951	)		(34,181	)		(234,020	)		(438,916	)

Ultrapar Participações S.A. and Subsidiaries

Notes to the Individual and Consolidated Interim Financial Information

(In thousands of Brazilian Reais, unless otherwise stated)

29.

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 22, respectively.


Basic Earnings per Share	06/30/2017		06/30/2016
Net income for the period of the Company		614,270		749,378
Weighted average shares outstanding (in thousands)		541,774		541,356
Basic earnings per share –R$		1.1338		1.3843


Diluted Earnings per Share	06/30/2017		06/30/2016
Net income for the period of the Company		614,270		749,378
Weighted average shares outstanding (in thousands), including deferred stock plan and subscription warrants—indemnification		545,727		545,360
Diluted earnings per share –R$		1.1255		1.3741


Weighted Average Shares Outstanding (in thousands)	06/30/2017		06/30/2016
Weighted average shares outstanding for basic per share calculation:		541,774		541,356
Dilution effect
Subscription warrants—indemnification		2,386		2,150
Deferred Stock Plan		1,567		1,854

Weighted average shares outstanding for diluted per share calculation:		545,727		545,360

Ultrapar Participações S.A. and Subsidiaries

Notes to the Individual and Consolidated Interim Financial Information

(In thousands of Brazilian Reais, unless otherwise stated)

30.

Segment Information

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

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


	06/30/2017			06/30/2016
Net revenue from sales and services:
Ultragaz		2,825,251			2,575,608
Ipiranga		32,198,215			33,457,554
Oxiteno		1,797,537			1,912,980
Ultracargo		207,050			166,181
Extrafarma		904,101			737,113
Others ⁽¹⁾		23,787			19,792
Intersegment sales		(55,013	)		(46,707	)

Total		37,900,928			38,822,521

Intersegment sales:
Ultragaz		1,192			1,587
Ipiranga		—			—
Oxiteno		1,267			1,609
Ultracargo		28,867			23,838
Extrafarma		—			—
Others ⁽¹⁾		23,687			19,673

Total		55,013			46,707

Net revenue from sales and services, excluding intersegment sales:
Ultragaz		2,824,059			2,574,021
Ipiranga		32,198,215			33,457,673
Oxiteno		1,796,270			1,911,371
Ultracargo		178,183			142,343
Extrafarma		904,101			737,113
Others ⁽¹⁾		100			—

Total		37,900,928			38,822,521

Ultrapar Participações S.A. and Subsidiaries

Notes to the Individual and Consolidated Interim Financial Information

(In thousands of Brazilian Reais, unless otherwise stated)


	06/30/2017			06/30/2016
Operating income (expense):
Ultragaz		158,694			138,429
Ipiranga		914,970			1,087,640
Oxiteno		71,623			238,075
Ultracargo		23,505			53,218
Extrafarma		(14,753	)		(2,579	)
Others ⁽¹⁾		1,973			2,165

Total		1,156,012			1,516,948

Share of profit (loss) of joint-ventures and associates:
Ultragaz		891			(1	)
Ipiranga		(8,372	)		(10,049	)
Oxiteno		684			608
Ultracargo		852			(262	)
Others ⁽¹⁾		18,032			12,745

Total		12,087			3,041

Financial income		301,299			220,927
Financial expenses		(535,319	)		(659,843	)

Income before income and social contribution taxes		934,079			1,081,073

Additions to property, plant, and equipment and intangible assets:
Ultragaz		143,222			155,145
Ipiranga		474,186			318,246
Oxiteno		189,929			103,126
Ultracargo		30,244			21,844
Extrafarma		57,915			44,601
Others ⁽¹⁾		10,721			4,179

Total additions to property, plant, and equipment and intangible assets (see Notes 12 and 13)		906,217			647,141
Asset retirement obligation – fuel tanks (see Note 19)		(280	)		(160	)
Capitalized borrowing costs		(12,642	)		(11,024	)

Total investments in property, plant, and equipment and intangible assets (cash flow)		893,295			635,957


Depreciation and amortization charges (excluding intersegment account balances):
Ultragaz		84,859			78,472
Ipiranga		372,082			341,986
Oxiteno		73,042			76,476
Ultracargo		23,472			21,460
Extrafarma		28,607			20,067
Others ⁽¹⁾		7,154			6,902

Total		589,216			545,363

Ultrapar Participações S.A. and Subsidiaries

Notes to the Individual and Consolidated Interim Financial Information

(In thousands of Brazilian Reais, unless otherwise stated)


	06/30/2017		12/31/2016
Total assets (excluding intersegment account balances):
Ultragaz		2,342,325		2,308,686
Ipiranga		12,158,714		11,663,289
Oxiteno		6,285,667		6,354,788
Ultracargo		1,415,459		1,535,815
Extrafarma		1,749,108		1,719,524
Others ⁽¹⁾		587,411		577,568

Total		24,538,684		24,159,670

⁽¹⁾	Composed of the parent company Ultrapar (including goodwill of certain acquisitions) and subsidiaries Serma—Associação dos Usuários de Equipamentos de Processamento de Dados e Serviços Correlatos (“Serma”) and Imaven Imóveis Ltda.

Geographic Area Information

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


	06/30/2017		12/31/2016
United States of America		375,195		264,478
Mexico		115,732		103,051
Uruguay		66,712		67,251
Venezuela		4,443		5,989

		562,082		440,769

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


	06/30/2017		06/30/2016
Net revenue:
Brazil		37,368,913		38,261,863
Mexico		92,948		93,848
Uruguay		23,313		21,587
Venezuela		15,484		8,469
Other Latin American countries		196,671		228,609
United States of America and Canada		91,130		85,354
Far East		35,000		27,506
Europe		50,949		61,904
Others		26,520		33,381

Total		37,900,928		38,822,521

Ultrapar Participações S.A. and Subsidiaries

Notes to the Individual and Consolidated Interim Financial Information

(In thousands of Brazilian Reais, unless otherwise stated)

31.

Risks and Financial Instruments (Consolidated)

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 conservative policy for the management of resources, financial instruments, and risks approved by its 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 risks associated with currencies, interest rates, credit, and selection of financial instruments. Governance of the management of financial risks and financial instruments follows the segregation of duties below:

•

Implementation of the management of financial assets, instruments, and risks is the responsibility of the financial area, through its treasury department, with the assistance of the tax and accounting departments.

•

Supervision and monitoring of compliance with the principles, guidelines, and standards of the Policy is the responsibility of the Risk and Investment Committee, which is composed of members of the Company’s Executive Board (“Committee”). The Committee holds regular meetings and is in charge, among other responsibilities, of discussing and monitoring the financial strategies, existing exposures, and significant transactions involving investment, fundraising, or risk mitigation. The Committee monitors the risk standards established by the Policy through a monitoring map on a monthly basis.

•

Changes in the Policy or revisions of its standards are subject to the approval of the Board of Directors of Ultrapar.

•

Continuous improvement of the Policy is the joint responsibility of the Board of Directors, the Committee, and the financial area.

•

The internal audit department audits the compliance with the requirements of the Policy.

Ultrapar Participações S.A. and Subsidiaries

Notes to the Individual and Consolidated Interim Financial Information

(In thousands of Brazilian Reais, unless otherwise stated)

Currency Risk

Most transactions of the Company and its subsidiaries are located in Brazil and, therefore, the reference currency for risk management is the Brazilian Real. Currency risk management is guided by neutrality of currency exposures and considers the transactional, accounting, and operational risks of the Company and its subsidiaries and their exposure to changes in exchange rates. The Company considers as its main currency exposures the assets and liabilities in foreign currency and the short-term flow of net sales in foreign currency of Oxiteno.

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

Assets and Liabilities in Foreign Currencies


In millions of Brazilian Reais	06/30/2017			12/31/2016
Assets in foreign currency
Cash, cash equivalents and financial investments in foreign currency (except hedging instruments)		318.4			423.9
Foreign trade receivables, net of allowance for doubtful accounts and advances to foreign customers		186.0			323.4
Net investments in foreign subsidiaries (except cash, cash equivalents, financial investments, trade receivables, financing, and payables)		723.3			600.9

		1,227.7			1,348.2

Liabilities in foreign currency
Financing in foreign currency, gross of transaction costs and negative goodwill		(4,800.9	)		(4,736.3	)
Payables arising from imports, net of advances to foreign suppliers		(114.2	)		(57.1	)

		(4,915.1	)		(4,793.4	)

Foreign currency hedging instruments		2,267.1			2,206.4

Net asset (liability) position – Total		(1,420.3	)		(1,238.8	)
Net asset (liability) position – Income statement effect		(0.3	)		24.8
Net asset (liability) position – Shareholders’ equity effect		(1,420.0	)		(1,263.6	)

Ultrapar Participações S.A. and Subsidiaries

Notes to the Individual and Consolidated Interim Financial Information

(In thousands of Brazilian Reais, unless otherwise stated)

Sensitivity Analysis of Assets and Liabilities in Foreign Currency

The table below shows the effect of exchange rate changes in different scenarios, based on the net liability position of R$ 1,420.3 million in foreign currency:


In millions of Brazilian Reais	Risk	Scenario I			Scenario II			Scenario III
		10%			25%			50%
(1) Income statement effect	Real devaluation		(0.0	)		(0.1	)		(0.2	)
(2) Shareholders’ equity effect			(142.0	)		(355.0	)		(710.0	)

(1) + (2)	Net effect		(142.0	)		(355.1	)		(710.2	)

(3) Income statement effect	Real appreciation		0.0			0.1			0.2
(4) Shareholders’ equity effect			142.0			355.0			710.0

(3) + (4)	Net effect		142.0			355.1			710.2

The shareholders’ equity effect refers to cumulative translation adjustments of changes in the exchange rate on equity of foreign subsidiaries (see Notes 2.r and 23.f—Cumulative Translation Adjustments), net investments hedge in foreign entities, cash flow hedge of firm commitment and highly probable transaction (see Note 2.c and Hedge Accounting below).

Ultrapar Participações S.A. and Subsidiaries

Notes to the Individual and Consolidated Interim Financial Information

(In thousands of Brazilian Reais, unless otherwise stated)

Interest Rate Risk

The Company and its subsidiaries adopt conservative 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 CDI, as set forth in Note 4. Borrowings primarily relate to financing from Banco do Brasil, BNDES, and other development agencies, as well as debentures and borrowings in foreign currency, as shown in Note 14.

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

The table below shows the financial assets and liabilities exposed to floating interest rates:

In millions of Brazilian Reais


	Note		06/30/2017			12/31/2016
CDI
Cash equivalents		4		4,374.6			3,837.8
Financial investments		4		1,244.7			1,174.5
Asset position of foreign exchange hedging instruments—CDI		31		26.5			28.3
Loans and debentures		14		(6,570.6	)		(5,862.3	)
Liability position of foreign exchange hedging instruments—CDI		31		(2,236.4	)		(2,181.6	)
Liability position of fixed interest instruments—CDI		31		(357.0	)		—

Net liability position in CDI				(3,518.2	)		(3,003.3	)

TJLP
Loans –TJLP		14		(338.5	)		(404.4	)

Net liability position in TJLP				(338.5	)		(404.4	)

LIBOR
Asset position of foreign exchange hedging instruments—LIBOR		31		1,480.2			1,149.7
Loans—LIBOR		14		(1,818.3	)		(1,470.1	)

Net liability position in LIBOR				(338.1	)		(320.4	)

TIIE
Loans—TIIE		14		(3.7	)		(9.6	)

Net liability position in TIIE				(3.7	)		(9.6	)

SELIC
Loans – SELIC		14		(97.1	)		(99.5	)

Net liability position in SELIC				(97.1	)		(99.5	)

Total net liability position exposed to floating interest				(4,295.6	)		(3,837.2	)

Ultrapar Participações S.A. and Subsidiaries

Notes to the Individual and Consolidated Interim Financial Information

(In thousands of Brazilian Reais, unless otherwise stated)

Sensitivity Analysis of Floating Interest Rate Risk

The table below shows the incremental expenses and income that would be recognized in financial income as of June 30, 2017, due to the effect of floating interest rate changes in different scenarios:


In millions of Brazilian Reais
	Risk		Scenario I			Scenario II			Scenario III
			10%			25%			50%
Exposure of interest rate risk
Interest effect on cash equivalents and financial investments		Increase in CDI		24.9			62.1			124.4
Foreign exchange hedging instruments (assets in CDI) effect		Increase in CDI		0.1			0.3			0.6
Interest effect on debt in CDI		Increase in CDI		(36.0	)		(89.9	)		(179.9	)
Interest rate hedging instruments (liabilities in CDI) effect		Increase in CDI		(25.7	)		(57.2	)		(109.7	)

Incremental expenses				(36.7	)		(84.7	)		(164.6	)

Interest effect on debt in TJLP		Increase in TJLP		(1.3	)		(3.2	)		(6.3	)

Incremental expenses				(1.3	)		(3.2	)		(6.3	)

Foreign exchange hedging instruments (assets in LIBOR) effect		Increase in LIBOR		0.6			1.6			3.1
Interest effect on debt in LIBOR		Increase in LIBOR		(0.8	)		(1.9	)		(3.8	)

Incremental expenses				(0.2	)		(0.3	)		(0.7	)

Interest effect on debt in TIIE		Increase in TIIE		—			—			(0.1	)

Incremental expenses				—			—			(0.1	)

Interest effect on debt in SELIC		Increase in SELIC		(0.6	)		(1.4	)		(2.8	)

Incremental expenses				(0.6	)		(1.4	)		(2.8	)

Ultrapar Participações S.A. and Subsidiaries

Notes to the Individual and Consolidated Interim Financial Information

(In thousands of Brazilian Reais, unless otherwise stated)

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, and trade receivables.

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.

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 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.

Customer credit risk - Such 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 Company maintained the following allowances for doubtful accounts on trade receivables:


	06/30/2017		12/31/2016
Ipiranga		211,207		182,252
Ultragaz		38,962		33,804
Oxiteno		10,422		10,856
Extrafarma		4,420		3,449
Ultracargo		2,205		2,971

Total		267,216		233,332

Ultrapar Participações S.A. and Subsidiaries

Notes to the Individual and Consolidated Interim Financial Information

(In thousands of Brazilian Reais, unless otherwise stated)

Liquidity Risk

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

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

The Company and its subsidiaries believe to have enough working capital and sources of financing to satisfy their current needs. The gross indebtedness due over the next twelve months totals R$ 3,676.5 million, including estimated interests on loans (for quantitative information, see Note 14). Furthermore, the investment plan for 2017 totals R$ 2,174 million, and until June 30, 2017 the amount of R$ 969 million had been realized. As of June 30, 2017, the Company and its subsidiaries had R$ 6,124.4 million in cash, cash equivalents, and short-term financial investments (for quantitative information, see Note 4).

The table below presents a summary of financial liabilities as of June 30, 2017 to be settled 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 as of June 30, 2017.


							In millions of Brazilian Reais
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)		15,738.4		3,676.5		5,432.8		2,776.1		3,853.0
Currency and interest rate hedging instruments ⁽³⁾		434.6		105.1		213.2		100.7		15.6
Trade payables		1,165.4		1,165.4		—		—		—

⁽¹⁾

To calculate the estimated interest on loans some macroeconomic assumptions were used, including averaging for the period the following: (i) CDI of 9.6%, (ii) exchange rate of the Real against the U.S. dollar of R$ 3.36 in 2017, R$ 3.51 in 2018, R$ 3.74 in 2019, R$ 4.00 in 2020 and R$ 4.28 in 2021, R$ 4.54 in 2022, R$ 4.78 in 2023, R$ 5.05 in 2024, R$ 5.33 in 2025 and R$ 5.62 in 2026 (iii) TJLP of 7.0% p.a. and (iv) IGP-M of 4.4% in 2017, 4.4% in 2018, 4.5% from 2019 to 2031 (v) IPCA of 4.5% (source:B3, Bulletin Focus and financial institutions).

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

⁽³⁾

The currency and interest rate hedging instruments were estimated based on projected U.S dollar futures contracts and the futures curves of DI x Pre and Pre x IPCA contracts quoted on B3 on June 30, 2017 and on the futures curve of LIBOR (ICE—IntercontinentalExchange) on June 30, 2017. In the table above, only the hedging instruments with negative results at the time of settlement were considered.

Ultrapar Participações S.A. and Subsidiaries

Notes to the Individual and Consolidated Interim Financial Information

(In thousands of Brazilian Reais, unless otherwise stated)

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 14). 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.

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.

As mentioned in the section “Risk Management and Financial Instruments – Governance”, the Committee monitors compliance with the risk standards established by the Policy through a risk map, including the use of hedging instruments, on a monthly basis. In addition, the internal audit department verifies the compliance with the requirements of the Policy.

Ultrapar Participações S.A. and Subsidiaries

Notes to the Individual and Consolidated Interim Financial Information

(In thousands of Brazilian Reais, unless otherwise stated)

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


			Notional amount¹				Fair value				Amounts receivable		Amounts payable
Hedging instruments	Maturity		06/30/2017		12/31/2016		06/30/2017		12/31/2016		06/30/2017
							R$ million		R$ million		R$ million		R$ million
a –Exchange rate swaps receivable in U.S. dollars
Receivables in U.S. dollars (LIBOR)		Jul 2017 to Oct 2026		US$ 450.0		US$ 350.0		1,480.2		1,149.7		1,480.2		—
Receivables in U.S. dollars (Fixed)				US$ 961.8		US$ 1,062.4		813,7		1,084.6		813.7		—
Payables in CDI interest rate				(US$ 1,411.8)		US$ (1,412.4)		(2,236.4)		(2,181.6)		—		2,236.4

Total result				—		—		57.5		52.7		2,293.9		2,236.4

b – Exchange rate swaps payable in U.S. dollars + COUPON		Jul 2017 to Sep 2017
Receivables in CDI interest rates				US$ 8.1		US$ 8.5		26.5		28.3		26.5		—
Payables in U.S. dollars (Fixed)				(US$ 8.1)		US$ (8.5)		(26.8)		(27.9)		—		26.8

Total result				—		—		(0.3)		0.4		26.5		26.8

c – Interest rate swaps in Brazilian Reais
Receivables in fixed interest rates + IPCA		Apr 2024		R$352.4		—		352.8		—		352.8		—
Payables in CDI interest rates		Apr 2024		(R$352.4)		—		(357.0)		—		—		357.0

Total result				—		—		(4.2)		—		352.8		357.0

Total gross result								53.0		53.1		2,673.2		2,620.2
Income tax								(26.5)		(36.9)		(26.5)		—

Total net result								26.5		16.2		2,646.7		2,620.2

Positive result (see Note 4)								158.0		218.5
Negative result (see Note 14)								(131.5)		(202.3)

⁽¹⁾	In million. Currency as indicated.

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

Ultrapar Participações S.A. and Subsidiaries

Notes to the Individual and Consolidated Interim Financial Information

(In thousands of Brazilian Reais, unless otherwise stated)

Hedging instruments existing as of June 30, 2017 are described below, according to their category, risk, and hedging strategy:

a - Hedging against foreign exchange exposure of liabilities in foreign currency—The purpose of these contracts is (i) to offset the effect of the change in exchange rates of debts or firm commitments in U.S. dollars by converting them into debts or firm commitments in Brazilian Reais linked to CDI, (ii) firm commitments in U.S. dollars, changing them into debts or firm commitments in Reais indexed to the CDI and (iii) change a financial investment linked to the CDI and given as a guarantee to a loan in the U.S. dollar into a financial investment linked to the U.S. dollar. As of June 30, 2017, the Company and its subsidiaries had outstanding swap contracts totaling US$ 1,411.8 million in notional amount with a liability position, on average of 85.1% of CDI, of which US$ 228.8 million, had an asset position at US$ + 1.14% p.a., US$ 450.0 million had an asset position at US$ + LIBOR + 1.06% p.a. and US$ 733.0 million in interest rate swap with an asset position at US$ + 5.65% p.a. This amount includes US$ 470.0 million related to the fair value of hedging instruments of Ipiranga’s debt (see Notes 14.c and “hedge accounting” below) and US$ 119.5 million related to hedging instruments of cash flow of firm commitment (see “hedge accounting” below).

b - Hedging against foreign exchange exposure of operations—The purpose of these contracts is to make the exchange rate of the revenues of subsidiaries Oleoquímica, Oxiteno S.A. and Oxiteno Nordeste equal to the exchange rate of the cost of their main raw materials during their operating cycles. As of June 30, 2017, these swap contracts totaled US$ 8.1 million and, on average, had an asset position at 70.9% of CDI and a liability position at US$ + 0.0% p.a.

c - Hedging against fixed interest rate + IPCA in Brazilian Reais – The purpose of this contract is to change fixed interest rate + IPCA of debentures issued in Brazilian Reais to floating interest. As of June 30, 2017 this swap contract totaled R$ 352.4 million of notional amount, corresponding to the principal amount of the debt and had an asset position at 4.68% p.a. + IPCA and a liability position at 93.9% of CDI.

Ultrapar Participações S.A. and Subsidiaries

Notes to the Individual and Consolidated Interim Financial Information

(In thousands of Brazilian Reais, unless otherwise stated)

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.

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.

On June 30, 2017, the notional amount of foreign exchange hedging instruments designated as fair value hedge totaled US$ 470.0 million. As of June 30, 2017, a loss of R$ 68.8 million related to the result of hedging instruments, a gain of R$ 12.2 million related to the fair value adjustment of debt, and a loss of R$ 21.3 million related to the financial expense of the debt were recognized in the income statements, transforming the average effective cost of the operation into 103.0% of CDI (see Note 14.c.1).

On June 30, 2017, the notional amount of interest rate hedging instruments designated as fair value hedges totaled R$ 352.4 million. As of June 30, 2017, a loss of R$ 4.2 million related to the result of hedging instruments, a gain of R$ 15.3 million related to the fair value adjustment of debt, and a loss of R$ 3.6 million related to the financial expense of the debt were recognized in the income statements, transforming the average effective cost of the operations into 93.9% of CDI.

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 June 30, 2017, the notional amount of exchange rate hedging instruments of firm commitments designated as cash flow hedges totaled US$ 119.5 million, and a loss of R$ 32.2 million was recognized in the income statement. On June 30, 2017, the unrealized gain of “Other comprehensive income” is R$ 4.2 million (loss of R$ 13.8 million on December 31, 2016), net of deferred income and social contribution taxes.

On June 30, 2017, the notional amount of foreign exchange hedging instruments for highly probable future transactions designated as fair value hedge, related to notes in the foreign market totaled US$ 570.0 million. On June 30, 2017, the unrealized loss of “Other comprehensive income” is R$ 30.5 million (loss of R$ 12.1 million on December 31, 2016), net of deferred income and social contribution taxes.

Ultrapar Participações S.A. and Subsidiaries

Notes to the Individual and Consolidated Interim Financial Information

(In thousands of Brazilian Reais, unless otherwise stated)

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 June 30, 2017, 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$ 133.0 million. On June 30, 2017, the unrealized loss of “Other comprehensive income” is R$ 7.1 million (loss of R$ 2.8 million on December 31, 2016), net of deferred income and social contribution taxes. The effects of exchange rate changes on investments and hedging instruments were offset in shareholders’ equity.

Gains (losses) on Hedging Instruments

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


	R$ million
	06/30/2017
	Profit or loss			Equity
a – Exchange rate swaps receivable in U.S. dollars (i) (ii)		(40.7	)		4.2
b – Exchange rate swaps payable in U.S. dollars (ii)		2.2			—
c – Interest rate swaps in R$ (iii)		11.1			—
d – Non-derivative financial instruments (iv)		(41.1	)		(37.6	)

Total		(68.5	)		(33.4	)


	R$ million
	06/30/2017			12/31/2016
	Profit or loss			Equity
a – Exchange rate swaps receivable in U.S. dollars (i) (ii)		(88.0	)		(13.8	)
b – Exchange rate swaps payable in U.S. dollars (ii)		8.8			—
c – Interest rate swaps in R$ (iii)		(0.4	)		—
d – Non-derivative financial instruments (iv)		—			(14.9	)

Total		(79.6	)		(28.7	)

(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.

(iv)	Considers the results of notes in the foreign market.

Ultrapar Participações S.A. and Subsidiaries

Notes to the Individual and Consolidated Interim Financial Information

(In thousands of Brazilian Reais, unless otherwise stated)

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:


					06/30/2017				12/31/2016
	Category		Note		Carrying value		Fair value		Carrying value		Fair value
Financial assets:
Cash and cash equivalents
Cash and bank deposits		Loans and receivables		4		123,433		123,433		113,318		113,318
Financial investments in local currency		Measured at fair value through profit or loss		4		4,374,575		4,374,575		3,837,807		3,837,807
Financial investments in foreign currency		Measured at fair value through profit or loss		4		91,350		91,350		323,033		323,033
Financial investments
Fixed-income securities and funds in local currency		Available for sale		4		66,261		66,261		113,640		113,640
Fixed-income securities and funds in local currency		Measured at fair value through profit or loss		4		1,171,017		1,171,017		1,053,369		1,053,369
Fixed-income securities and funds in local currency		Held to maturity		4		7,449		7,449		7,449		7,449
Fixed-income securities and funds in foreign currency		Available for sale		4		150,137		150,137		34,775		34,775
Currency and interest rate hedging instruments		Measured at fair value through profit or loss		4		158,048		158,048		218,458		218,458

Total						6,142,270		6,142,270		5,701,849		5,701,849

Financial liabilities:
Financing		Measured at fair value through profit or loss		14		1,542,979		1,542,979		1,428,907		1,428,907
Financing		Measured at amortized cost		14		6,910,107		6,890,367		6,990,269		6,881,085
Debentures		Measured at amortized cost		14		3,391,177		3,396,042		2,746,881		2,746,915
Debentures		Measured at fair value through profit or loss		14		332,852		332,852		—		—
Finance leases		Measured at amortized cost		14		49,758		49,758		48,716		48,716
Currency and interest rate hedging instruments		Measured at fair value through profit or loss		14		131,529		131,529		202,357		202,357
Subscription warrants – indemnification		Measured at fair value through profit or loss		22		177,479		177,479		153,429		153,429

Total						12,535,881		12,521,006		11,570,559		11,461,409

Ultrapar Participações S.A. and Subsidiaries

Notes to the Individual and Consolidated Interim Financial Information

(In thousands of Brazilian Reais, unless otherwise stated)

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

•

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

•

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

•

Financial investments in CDBs (Bank Certificates of Deposit) and similar investments offer daily liquidity through repurchase at the “yield curve” and, therefore, the Company believes their fair value corresponds to their carrying value.

•

The subscription warrants – indemnification were measured based on the share price of Ultrapar (UGPA3) at the interim financial information date and are adjusted to the Company’s dividend yield, since the exercise is only possible starting in 2020 onwards and they are not entitled to dividends until then. The number of shares of subscription warrants – indemnification is also adjusted according to the changes in the amounts of provision for tax, civil, and labor risks and contingent liabilities related to the period prior to January 31, 2014. (See Note 22).

•

The fair value calculation of notes in the foreign market (see Note 14.b) is based on the quoted price in an active market.

The fair value of other financial investments and financing 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 June 30, 2017 and December 31,2016. 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 loans and receivables or financial 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, (ii) financial investments classified as measured at fair value through profit or loss, (iii) financial investments that are classified as available for sale, which are measured at fair value through other comprehensive income (see Note 4), (iv) loans and financing measured at fair value through profit or loss (see Note 14), (v) guarantees to customers that have vendor arrangements (see Note 14.k), which are measured at fair value through profit or loss, and (vi) subscription warrants – indemnification, which are measured at fair value through profit or loss (see Note 22). The financial investments classified as held-to-maturity are measured at amortized cost. Cash, banks, and trade receivables are classified as loans and receivables. Trade payables and other payables are classified as financial liabilities measured at amortized cost.

Ultrapar Participações S.A. and Subsidiaries

Notes to the Individual and Consolidated Interim Financial Information

(In thousands of Brazilian Reais, unless otherwise stated)

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); and

(c)	Level 3—inputs for the asset or liability which are not based on observable market variables (unobservable inputs).

The table below shows a summary of the financial assets and financial liabilities measured at fair value in the Company’s and its subsidiaries:


	Category		Note		06/30/2017		Level 1		Level 2		Level 3
Financial assets:
Cash equivalents
Cash and banks		Loans and receivables		4		123,433		123,433		—		—
Financial investments in local currency		Measured at fair value through profit or loss		4		4,374,575		4,374,575		—		—
Financial investments in foreign currency		Measured at fair value through profit or loss		4		91,350		91,350		—		—
Financial investments
Fixed-income securities and funds in local currency		Available for sale		4		66,261		66,261		—		—
Fixed-income securities and funds in local currency		Measured at fair value through profit or loss		4		1,171,017		1,171,017		—		—
Fixed-income securities and funds in local currency		Held to maturity		4		7,449		7,449		—		—
Fixed-income securities and funds in foreign currency		Available for sale		4		150,137		36,787		113,350		—
Currency and interest rate hedging instruments		Measured at fair value through profit or loss		4		158,048		—		158,048		—

Total						6,142,270		5,870,872		271,398		—

Financial liabilities:
Financing		Measured at fair value through profit or loss		14		1,542,979		—		1,542,979		—
Financing		Measured at amortized cost		14		6,890,367		2,451,808		4,438,559		—
Debentures		Measured at amortized cost		14		3,396,042		—		3,396,042		—
Debentures		Measured at fair value through profit or loss		14		332,852		—		332,852		—
Finance leases		Measured at amortized cost		14		49,758		—		49,758		—
Currency and interest rate hedging instruments		Measured at fair value through profit or loss		14		131,529		—		131,529		—
Subscription warrants – indemnification ⁽¹⁾		Measured at fair value through profit or loss		22		177,479		—		177,479		—

Total						12,521,006		2,451,808		10,069,198		—

Ultrapar Participações S.A. and Subsidiaries

Notes to the Individual and Consolidated Interim Financial Information

(In thousands of Brazilian Reais, unless otherwise stated)


	Category		Note		12/31/2016		Level 1		Level 2		Level 3
Financial assets:
Cash equivalents
Cash and banks		Loans and receivables		4		113,318		113,318		—		—
Financial investments in local currency		Measured at fair value through profit or loss		4		3,837,807		3,837,807		—		—
Financial investments in foreign currency		Measured at fair value through profit or loss		4		323,033		323,033		—		—
Financial investments
Fixed-income securities and funds in local currency		Available for sale		4		113,640		113,640		—		—
Fixed-income securities and funds in local currency		Measured at fair value through profit or loss		4		1,053,369		1,053,369		—		—
Fixed-income securities and funds in local currency		Held to maturity		4		7,449		7,449		—		—
Fixed-income securities and funds in foreign currency		Available for sale		4		34,775		32,167		2,608		—
Currency and interest rate hedging instruments		Measured at fair value through profit or loss		4		218,458		—		218,458		—

Total						5,701,849		5,480,783		221,066		—

Financial liabilities:
Financing		Measured at fair value through profit or loss		14		1,428,907		—		1,428,907		—
Financing		Measured at amortized cost		14		6,881,085		2,338,920		4,542,165		—
Debentures		Measured at amortized cost		14		2,746,915		—		2,746,915		—
Finance leases		Measured at amortized cost		14		48,716		—		48,716		—
Currency and interest rate hedging instruments		Measured at fair value through profit or loss		14		202,357		—		202,357		—
Subscription warrants – indemnification ⁽¹⁾		Measured at fair value through profit or loss		22		153,429		—		153,429		—

Total						11,461,409		2,338,920		9,122,489		—

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

Ultrapar Participações S.A. and Subsidiaries

Notes to the Individual and Consolidated Interim Financial Information

(In thousands of Brazilian Reais, unless otherwise stated)

Sensitivity Analysis

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

For the sensitivity analysis of foreign exchange hedging instruments, management adopted as a likely scenario the Real/U.S. dollar exchange rates at maturity of each swap, projected by U.S dollar futures contracts quoted on B3 as of June 30, 2017. As a reference, the exchange rate for the last maturity of foreign exchange hedging instruments is R$ 5.69 in the likely scenario. Scenarios II and III were estimated with a 25% and 50% additional appreciation or depreciation of the Brazilian Real against the likely scenario, according to the risk to which the hedged item is exposed.

Based on the balances of the hedging instruments and hedged items as of June 30, 2017, the exchange rates were replaced, and the changes between the new balance in Brazilian Reais and the original balance in Brazilian Reais as of June 30, 2017 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:


	Risk		Scenario I (likely)			Scenario II			Scenario III
Currency swaps receivable in U.S. dollars
(1) U.S. Dollar / Real swaps		Dollar		274,764			914,250			1,553,736
(2) Debts/firm commitments in dollars		appreciation		(274,722	)		(914,164	)		(1,553,606	)

(1)+(2)		Net effect		42			86			130

Currency swaps payable in U.S. dollars
(3) Real / U.S. Dollar swaps		Dollar		(219	)		6,552			13,322
(4) Gross margin of Oxiteno		devaluation		219			(6,552	)		(13,322	)

(3)+(4)		Net effect		—			—			—

For sensitivity analysis of hedging instruments for interest rates in Brazilian Reais, the Company used the futures curve of the DI x Pre contract quoted on B3 as of June 30, 2017 for each of the swap and debt (hedged item) maturities, to determine the likely scenarios. Scenarios II and III were estimated based on a 25% and 50% deterioration, respectively, of the likely scenario pre-fixed interest rate.

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


	Risk		Scenario I (likely)		Scenario II			Scenario III
Interest rate swap (in Brazilian Reais) – Debentures—CRA
(1) Fixed rate swap—CDI		Decrease in		—		52,527			115,634
(2) Fixed rate debt		Pre-fixed rate		—		(52,527	)		(115,634	)

(1) + (2)		Net effect		—		—			—

Ultrapar Participações S.A. and Subsidiaries

Notes to the Individual and Consolidated Interim Financial Information

(In thousands of Brazilian Reais, unless otherwise stated)

32.

Commitments (Consolidated)

a.	*Contracts*

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


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

If the annual movement is less than the minimum contractual movement, the subsidiary is liable to pay the difference between the effective movement and the minimum contractual movement, based on the port tariff rates in effect on the date established for payment. As of June 30, 2017, these rates were R$ 6.99 per ton for Aratu and R$ 2.90 per ton for Suape. The subsidiary has met the minimum cargo movement required since the beginning of the contractual agreements.

Subsidiary Oxiteno Nordeste has a supply agreement with Braskem S.A. which establishes a minimum annually consumption level of ethylene, and conditions for the supply of ethylene until 2021. The minimum purchase commitment clause provided for a minimum annual consumption of 205 thousand tons in 2017. Should the minimum purchase commitment not be met, the subsidiary would be liable for a fine based on the current ethylene price for the quantity not purchased. According to contractual conditions and tolerances, there are no material issues regarding the minimum purchase commitment.

Subsidiary Oxiteno S.A. has a supply agreement with Braskem S.A., valid until 2023, which establishes and regulates the conditions for supply of ethylene to Oxiteno based on the international market for this product. The minimum purchase is 22,050 tons of ethylene semiannually. Should the minimum purchase commitment not be met, the subsidiary would be liable for a fine based on the current ethylene price for the quantity not purchased. According to contractual conditions and tolerances, there are no material issues regarding the minimum purchase commitment.

Ultrapar Participações S.A. and Subsidiaries

Notes to the Individual and Consolidated Interim Financial Information

(In thousands of Brazilian Reais, unless otherwise stated)

b.	*Insurance Coverage in Subsidiaries*

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


	Maximum compensation value (*)
Oxiteno	US$	1,142
Ipiranga	R$	924
Ultracargo	R$	740
Ultragaz	R$	150
Extrafarma	R$	160

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

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

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

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

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

Ultrapar Participações S.A. and Subsidiaries

Notes to the Individual and Consolidated Interim Financial Information

(In thousands of Brazilian Reais, unless otherwise stated)

c.	*Operating Lease Contracts*

Subsidiaries Cia. Ultragaz, Bahiana, Tequimar, Serma, and Oxiteno S.A. have operating lease contracts for the use of IT equipment. These contracts have terms of 36 and 45 months. The subsidiaries have the option to purchase the assets at a price equal to the fair market price on the date of option, and management does not intend to exercise such option. Subsidiaries Cia. Ultragaz and Bahiana have operating lease contracts related to vehicles in their fleet. These contracts have terms of 24 to 60 months and there is no purchase option. The future disbursements (installments), assumed under these contracts, amount approximately to:


	Up to 1 year		Between 1 and 5 years		More than 5 years		Total
06/30/2017		40,369		72,786		—		113,155

The subsidiaries IPP, Extrafarma, and Cia. Ultragaz have operating lease contracts related to land and building of service stations, drugstores, and stores, respectively. The future disbursements and receipts (installments), arising from these contracts, amount approximately to:


		Up to 1 year			Between 1 and 5 years			More than 5 years			Total
06/30/2017	payable		132,114			395,777			280,023			807,914
	receivable		(49,712	)		(144,596	)		(71,991	)		(266,299	)

The expense recognized for the six-month period ended June 30, 2017 for operating leases was R$ 69,278 (R$ 47,967 for the six-month period ended June 30, 2016), net of sublease income.

33.

Ultracargo – Fire Accident in Santos

In April 2015, a fire occurred in six ethanol and gasoline tanks operated by Ultracargo in Santos, which represented 4% of the subsidiary’s overall capacity as of December 31, 2014. The Civil and Federal Police investigated the accident and its impacts, and concluded that it is not possible to determine the cause of the accident and neither to individualize active or passive conduct related to the cause, and there was no criminal charge against either individual or the subsidiary, by both authorities.

The decommissioning stage of the affected area were completed. In June 2017, the licensing required for the return to operation of 67.5 thousands cubic meters from the total of 150 thousands cubic meters affected by the fire was obtained. The remaining tanks continue to be paralyzed and in the process of recovery for subsequent licensing and start of operation.

As of December 31, 2016, the insurance receivable in the amount of R$ 366,678 and indemnities to customers and third parties in the amount of R$ 99,863 were recorded. In the first quarter of 2017, Ultracargo received the full amount from the insurers. In addition, there are contingent liabilities related to lawsuits and extrajudicial lawsuits in the amount of R$ 93,486 and R$ 20,866 (R$ 96,408 e R$ 16,637 as of December 31, 2016), respectively.

34.

Subsequent Event

a.	*Issuance of Debentures*

On July 24, 2017 the Board of Directors of Ultrapar approved the issuance of 1,500,000, simple, nonconvertible into shares, unsecured debentures, at face value of R$ 1,000.00, by the subsidiary IPP, and guaranteed by Ultrapar. The interest of these debentures correspond to 105% of CDI, and maturity of 5 years, with annual payment of interest.

b.	*ALE Acquisition*

On August 2, 2017, the Court of Appeals of CADE voted the transaction and despite all the efforts endeavored by the applicants throughout the analysis of the Concentration Act and the negotiations conducted with the Court of Appeals, the Court blocked the transaction. The contract is automatically resolved without any penalty from either party.

MD&A—ANALYSIS OF CONSOLIDATED EARNINGS

Second Quarter of 2017


(R$ million)	2Q17			2Q16			1Q17			D 2Q17 X 2Q16			D 2Q17 X 2Q16			1H17			1H16			D 1H17 x 1H16
(R$ million)	2Q17			2Q16			1Q17			D 2Q17 X 2Q16			D 2Q17 X 2Q16			1H17			1H16			D 1H17 x 1H16
Net revenue from sales and services		19,173.0			19,298.2			18,727.9			(1%	)		2%			37,900.9			38,822.5			(2%	)
Cost of products and services sold		(17,590.6	)		(17,604.9	)		(17,040.9	)		0%			3%			(34,631.4	)		(35,411.0	)		(2%	)
Gross profit		1,582.5			1,693.3			1,687.0			(7%	)		(6%	)		3,269.5			3,411.6			(4%	)
Selling, marketing, general and administrative expenses		(1,110.4	)		(1,005.2	)		(1,065.9	)		10%			4%			(2,176.3	)		(1,968.2	)		11%
Other operating income, net		6.6			40.2			56.3			(84%	)		(88%	)		62.9			75.6			(17%	)
Gain on disposal of property, plant and equipment and intangibles		6.2			(2.1	)		(6.4	)		(398%	)		(198%	)		(0.2	)		(2.0	)		(93%	)
Operating income		484.9			726.2			671.1			(33%	)		(28%	)		1,156.0			1,516.9			(24%	)
Financial expenses, net		(112.8	)		(222.5	)		(121.2	)		(49%	)		(7%	)		(234.0	)		(438.9	)		(47%	)
Share of profit of joint ventures and associates		5.7			6.3			6.4			(10%	)		(12%	)		12.1			3.0			297%
Income before income and social contribution taxes		377.7			510.1			556.4			(26%	)		(32%	)		934.1			1,081.1			(14%	)
Income and social contribution taxes – current and deferred		(137.2	)		(173.4	)		(193.5	)		(21%	)		(29%	)		(330.8	)		(378.7	)		(13%	)
Income and social contribution taxes – tax incentives		6.7			30.5			7.5			(78%	)		(11%	)		14.2			52.6			(73%	)
Net income		247.2			367.1			370.3			(33%	)		(33%	)		617.5			755.0			(18%	)
Net income attributable to Ultrapar		246.1			364.2			368.2			(32%	)		(33%	)		614.3			749.4			(18%	)
Net income attributable to non-controlling interests in subsidiaries		1.1			3.0			2.2			(64%	)		(50%	)		3.2			5.6			(42%	)
EBITDA		784.2			1,007.8			973.1			(22%	)		(19%	)		1,757.3			2,065.4			(15%	)
Volume—LPG sales (000 tons)		445.3			446.7			414.5			0%			7%			859.7			853.6			1%
Volume—Fuels sales (000 m³)		5,937.9			5,948.0			5,554.1			0%			7%			11,492.1			11,882.2			(3%	)
Volume—Chemicals sales (000 tons)		182.7			183.7			195.9			(1%	)		(7%	)		378.5			365.2			4%

Considerations on the financial and operational information

Standards and criteria adopted in preparing the information

The financial information presented in this document has been prepared according to International Financial Reporting Standards (IFRS). The financial information of Ultrapar corresponds to the company’s consolidated information. The information on Ipiranga, Oxiteno, Ultragaz, Ultracargo and Extrafarma is reported without the elimination of intercompany transactions. Therefore, the sum of such information may not correspond to Ultrapar’s consolidated information. Additionally, the financial and operational information presented in this document is subject to rounding and consequently the total amounts presented in the tables and charts may differ from the direct sum of the amounts that precede them. Except when otherwise indicated, the information presented in this document compares 2Q17 to 2Q16.

EBITDA—Earnings Before Interest, Taxes, Depreciation and Amortization and EBIT – Earnings Before Interest and Taxes are presented in accordance with CVM Instruction 527 of October 4, 2012.

Ultrapar


	2Q17		2Q16		1Q17		D (%) 2Q17 v 2Q16			D (%) 2Q17 v 1Q17			1H17		1H16		D (%) 1H17 v 1H16
	2Q17		2Q16		1Q17		D (%) 2Q17 v 2Q16			D (%) 2Q17 v 1Q17			1H17		1H16		D (%) 1H17 v 1H16
Net sales and services		19,173		19,298		18,728		(1	%)		2	%		37,901		38,823		(2	%)
Net earnings¹		247		367		370		(33	%)		(33	%)		618		755		(18	%)
Earnings per share attributable to Ultrapar shareholders²		0.45		0.67		0.68		(32	%)		(33	%)		1.13		1.38		(67	%)
EBITDA		784		1,008		973		(22	%)		(19	%)		1,757		2,065		(15	%)
Investments		484		386		485		25	%		0	%		969		684		42	%

Amounts

in R$ million (except for EPS)

¹	Under IFRS, consolidated net earnings include net earnings attributable to non-controlling shareholders of the controlled companies

²	Calculated based on the weighted average number of shares over the period, net of shares held in treasury

Net sales and services – Total of R$ 19,173 million (-1%) reflecting reductions at Ipiranga and Oxiteno, attenuated by growth at Ultragaz, Ultracargo and Extrafarma. In relation to 1Q17, net sales and services were 2% higher reflecting growth in revenue at all the businesses with the exception of Oxiteno. In the first six months of the year, net sales and services amounted to R$ 37,901 million, a decline of 2% in relation to 1H16.

EBITDA – Total of R$ 784 million (-22%) due to decreases in EBITDA of all the businesses with the exception of Ultragaz. In relation to 1Q17, EBITDA reported a reduction of 19% due to a decline in EBITDA at Ipiranga and Oxiteno, both affected by specific effects. In the first six months of the year, Ultrapar’s EBITDA totaled R$ 1,757 million, a decline of 15% compared with 1H16.

Depreciation and amortization – Total of R$ 294 million (+7%) reflecting investments over the last 12 months, particularly in the expansion of the Ipiranga service station network. Compared with 1Q17, total costs and expenses with depreciation and amortization posted a reduction of 1%. In the first six months of the year, costs and expenses with depreciation and amortization totaled R$ 589 million, 8% more than in 1H16.

Financial result – Ultrapar’s net debt on June 30 was R$ 6.2 billion (1.59x LTM EBITDA), compared with R$ 5.5 billion on June 30, 2016 (1.32x LTM EBITDA). Ultrapar reported net financial expenses of R$ 113 million, R$ 110 million lower than 2Q16, due to the decrease in the CDI Interbank Rate year-over-year—despite the growth in net debt—and to the exchange rate effects between periods. In relation to 1Q17, net financial expenses fell by R$ 8 million, again due to the exchange rate effects between periods and the decline in CDI, the impact of which offset by the reversal of the provision of R$ 43 million with respect to the exclusion of the ICMS sales tax from the PIS and Cofins calculation base in 1Q17. In the first six months of the year, the net financial expense was R$ 234 million, a decline of 47% relative to 1H16.

Net earnings – Total of R$ 247 million (-33%) due to the reduction of EBITDA and higher depreciation and amortization, partially mitigated by lower net financial expenses. Compared with 1Q17, net earnings were 33% lower, also due to a reduction of EBITDA. In 1H17, net earnings were R$ 618 million, a reduction of 18% compared with the same period in 2016.

Operating cash flow – Total of R$ 1,293 million (+R$ 625 million) due to lower investment in working capital which fell from an investment of R$ 329 million in 1H16 to divestment of R$ 271 million in 1H17.

Ipiranga


	2Q17		2Q16		1Q17		D (%) 2Q17 v 2Q16			D (%) 2Q17 v 1Q17			1H17		1H16		D (%) 1H17 v 1H16
	2Q17		2Q16		1Q17		D (%) 2Q17 v 2Q16			D (%) 2Q17 v 1Q17			1H17		1H16		D (%) 1H17 v 1H16
Total volume (000 m³)		5,938		5,948		5,554		0%			7%			11,492		11,882		(3%	)
Diesel		2,983		3,144		2,718		(5%	)		10%			5,701		6,147		(7%	)
Otto cycle		2,870		2,710		2,753		6%			4%			5,623		5,555		1%
Others¹		85		95		84		(10%	)		2%			169		180		(6%	)
EBITDA (R$ million)		582		718		705		(19%	)		(17%	)		1,288		1,430		(10%	)

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

Operational performance - Sales volume totaled 5,938 thousand m³ in 2Q17, flat compared to 2Q16, reinforcing the gradual recovery trend since 4Q16 when total volume presented a 14% year-over-year decline. The Otto cycle segment grew 6% in relation to 2Q16 due to the acceleration in investments to add new service stations, which will contribute progressively to a recovery in sales volumes, and also the market-share recovery. Diesel volume decreased by 5% compared to 2Q16, following the weak economic activity and in spite of an improvement in the wholesale segments. Sales volume showed an increase of 7% in relation to 1Q17 due to seasonality effects between periods. Total volume in 1H17 amounted to 11,492 thousand m³, a decline of 3% compared with 1H16.

Net sales and services – Total of R$ 16,279 million in 2Q17 (-2%) mainly due to variations in the cost of gasoline and diesel from Petrobras, but offset by the strategy of constant innovation in convenience and services, generating greater customer satisfaction and loyalty. In relation to 1Q17, net sales and services increased by 2% due to the growth in sales volume but attenuated by the aforementioned variations. In the first half, net sales and services amounted to R$ 32,198 million, a 4% decrease in relation to 1H16.

Cost of goods sold – Total of R$ 15,287 million in 2Q17 (-1%), principally due to the variations in the cost of gasoline and diesel from Petrobras. Cost of goods sold quarter-over-quarter increased by 3% due to the same reasons already mentioned in the net sales variation. In the first half 2017, costs of goods sold amounted to R$ 30,116 million, 4% lower than in 1H16.

Sales, general and administrative expenses – Total of R$ 614 million in 2Q17 (+10%) due to (i) variations in provisions for doubtful debts; (ii) concentration of expenses with marketing programs and expansion; and (iii) higher expenses with studies and projects for innovation initiatives. In relation to 1Q17, sales, general and administrative expenses increased by 3%, explained mainly to higher freight expenses, due to higher sales volume, partially offset by lower marketing expenses, which typically decreases in this comparison basis considering the annual resellers’ convention held in February. In the first six months of the year, sales, general and administrative expenses were R$ 1,208 million, a rise of 10% when compared to the same period in 2016.

EBITDA – Total of R$ 582 million (-19%) mainly due to inventory effects influenced by cost reductions in gasoline, ethanol and diesel and concentration of expenses. In relation to 1Q17, EBITDA decreased by 17%, again a reflection of the factor already mentioned. In the first six months of the year, Ipiranga’s EBITDA totaled R$ 1,288 million, 10% lower in relation to 1H16.

Investments – A total of R$ 277 million was invested during the quarter and allocated mainly to expansion and maintenance of the service stations and franchises. The service station network grew by 6% with net addition of 95 service stations in the quarter and 464 in the last 12 months. Out of the amount invested, R$ 236 million were related to additions to property, plant, equipment and intangible assets and R$ 40 million to the financing to clients, net of repayments. In 1H17, Ipiranga invested R$ 571 million, of which R$ 109 million were financing to clients, net of repayments, with a net addition of 180 new service stations in the first six months of the year, compared with 49 in the same period for 2016.

Oxiteno


	2Q17		2Q16		1Q17		D (%) 2Q17 v 2Q16			D (%) 2Q17 v 1Q17			1H17		1H16		D (%) 1H17 v 1H16
	2Q17		2Q16		1Q17		D (%) 2Q17 v 2Q16			D (%) 2Q17 v 1Q17			1H17		1H16		D (%) 1H17 v 1H16
Total volume (000 tons)		183		184		196		(1%	)		(7%	)		379		365		4%
Specialty chemicals		151		147		157		3%			(4%	)		309		293		5%
Commodities		31		37		38		(15%	)		(18%	)		70		72		(3%	)
Sales in Brazil		131		133		140		(2%	)		(6%	)		270		261		4%
Sales outside Brazil		52		51		56		3%			(8%	)		108		105		4%
EBITDA (R$ million)		34		117		112		(71%	)		(70%	)		145		315		(54%	)

Operational performance – Total volume of 183 thousand tons (-1% or 1 thousand ton). Sales volumes of specialty chemicals increased by 3%, the fourth consecutive quarter of growth, with a 3% increase in the domestic market – based on development of new products and solutions to the clients, notably in the oil and gas and automotive fluids segments. Specialty chemicals sales outside Brazil increased by 4%, reflecting stronger sales to the USA due to pre-marketing activities of the Pasadena facility. Commodity volumes in the quarter decreased by 15% due to the product’s volatility in price and demand. Compared with 1Q17, sales volume was 7% (13 thousand tons) lower following weaker sales performance for commodities. In the first six months of the year, Oxiteno recorded total volumes of 379 thousand tons, a 4% improvement on the first half of 2016.

Net sales and services – Total of R$ 885 million (-3%) due to an 8% stronger Real against the US Dollar, partially offset by 7% higher average price in US Dollar resulting from more favorable commodities prices and increased share of specialty chemicals in sales mix. Quarter-on-quarter, net sales and services also reported a decline of 3% due to a reduction in sales volume, partially compensated by a 2% weaker Real against the US Dollar and a better sales mix. In the first six months of the year, net sales and services amounted to R$ 1,798 million, 6% lower than 1H16.

Cost of goods sold – Total of R$ 731 million (+7%) due to: (i) the 20% increase in unit variable costs in US Dollars, due to the increase observed throughout 2016 and in the beginning of 2017 in certain raw materials; (ii) the higher pre-operational costs of the new plant in the US; and (iii) costs related to the extended stoppage at the Oleoquímica plant, offset by an 8% stronger Real in relation to the US Dollar. In relation to 1Q17, cost of goods sold remained stable while the 2% weaker Real against the US Dollar was offset by lower sales volume. In the first six months of the year, costs of goods sold amounted to R$ 1,461 million, an increase of 6% in relation to 1H16.

Sales, general and administrative expenses – Total of R$ 157 million (+5%) mainly due to (i) pre-operational expenses at the new US plant, (ii) the effects of the stoppage at the Oleoquímica plant, partially compensated by the effects of a stronger Real against the US Dollar in logistics and international units expenses. Compared to 1Q17, sales, general and administrative expenses increased by 1%, due to higher consultancy and legal advisory expenses. In 1H17, SG&A totaled R$ 313 million, 5% higher than the same period in 2016.

EBITDA – Total of R$ 34 million (-71%), principally a function of the appreciation of Real against the US Dollar and non-recurring effects (i) the significant decline in raw material prices as from March 2017, which had a negative effect on inventories, but will also improve Oxiteno’s products competitiveness over the following months and (ii) technical problems in the restarting of the Oleoquímica plant, both representing a negative impact of R$ 37 million in 2Q17. Compared with 1Q17, EBITDA decreased by 70%, principally due to the reversion of the provision of R$ 49 million reported in 1Q17, relating to the exclusion of the ICMS tax from the PIS and Cofins base, inventory losses and technical problems with the restarting of the Oleoquímica plant, attenuated by the depreciation of the Real in relation to the US Dollar. In 1H17, EBITDA amounted to R$ 145 million, 54% lower than in 1H16.

Investments – A total of R$ 114 million was invested during the quarter, largely related to investments in the new ethoxylation plant the United States, expected to start operations in 2018, and to its production units maintenance. In the first six months of the year, total investments were R$ 188 million.

Ultragaz


	2Q17		2Q16		1Q17		D (%) 2Q17 v 2Q16			D (%) 2Q17 v 1Q17			1H17		1H16		D (%) 1H17 v 1H16
	2Q17		2Q16		1Q17		D (%) 2Q17 v 2Q16			D (%) 2Q17 v 1Q17			1H17		1H16		D (%) 1H17 v 1H16
Total volume (000 tons)		445		447		414		0	%		7	%		860		854		1	%
Bottled		307		301		282		2	%		9	%		589		578		2	%
Bulk		139		146		132		(5	%)		5	%		271		275		(2	%)
EBITDA (R$ million)		124		108		120		14	%		3	%		244		217		13	%

Operational performance – Total volume of 445 thousand tons, stable year-over-year, in spite of the fewer business days, with a 2% growth of in the bottled segment, a reflection of investments in new resellers. This growth was offset by a 5% decline in the bulk segment due to increased sales volume to industrial clients in 2Q16 and higher loss of certain costumers that switched to natural gas. Compared to 1Q17, sales volumes increased by 7%, mainly due to seasonality effects between periods and higher new clients consumption, with growth in all segments, in spite of the fewer number of business days. In the first six months of the year, Ultragaz reported volumes of 860 thousand tons, 1% higher than that in 1H16.

Net sales and services – Total of R$ 1.473 million (+10%) due to: (i) variations in the costs of LPG supplied by Petrobras; and (ii) the strategy of differentiation and innovation, offset by the reduced participation of the bulk segment in the sales mix. Relative to 1Q17, net sales and services increased by 9% due to higher sales volume and variations in the cost of LPG supplied by Petrobras. In the first six months of the year, net sales and services amounted to R$ 2,825 million, an increase of 10% in relation to 1H16.

Cost of goods sold – Total of R$ 1,236 million (+10%) principally due to: (i) increases in costs of LPG supplied by Petrobras; and (ii) higher logistics costs with longer routes for sourcing products. In relation to 1Q17, cost of goods sold rose by 9%, a reflection of higher sales volumes and variations in the costs of LPG supplied by Petrobras. In the first six months of the year, Ultragaz’s cost of goods sold amounted to R$ 2,370 million, 10% higher than that in 1H16.

Sales, general and administrative expenses – Total of R$ 161 million (+8%) mainly due to increased marketing expenses and the effects of inflation on personnel expenses. Compared with 1Q17, sales, general and administrative expenses increased by 13% due to increased costs with marketing and projects. In the first six months of the year, sales, general and administrative expenses totaled R$ 303 million, 4% compared to 1H16.

Result from the disposal of assets – The result from the disposal of assets amounted to an income of R$ 2 million in 2Q17 compared with neutral results in 1Q17 and 2Q16. In 2Q17 and 1H17, the result principally reflected the disposal of an increased number of LPG bottles.

EBITDA – Total of R$ 124 million (+14%), the result of commercial initiatives to capture new customers and resellers as well as the differentiation strategy based on innovation. In relation to 1Q17, EBITDA increased by 3%, due to higher sales volume. In 1H17, Ultragaz posted an EBITDA of R$ 244 million, 13% higher than that in 1H16.

Investments – Ultragaz invested R$ 48 million, mainly allocated to new customers in the bulk segment and the purchase of LPG bottles. In the first six months of the year, the business invested R$ 128 million.

Ultracargo


	2Q17		2Q16		1Q17		D (%) 2Q17 v 2Q16			D (%) 2Q17 v 1Q17		1H17		1H16		D (%) 1H17 v 1H16
	2Q17		2Q16		1Q17		D (%) 2Q17 v 2Q16			D (%) 2Q17 v 1Q17		1H17		1H16		D (%) 1H17 v 1H16
Effective Storage¹ (000 m³)		727		662		695		10%			5%		711		660		8%
EBITDA (R$ million)		26		42		22		(38%	)		20%		48		74		(36%	)

¹	Monthly average

Operational performance – Ultracargo’s total average storage increased by 10% relative to 2Q16 due to greater fuel handling activity at the Aratu, Suape and Santos port terminals. This was largely the result of the partial resumption in operations at the Santos terminal, with the return in June of a capacity of 67.5 thousand m³ of the 151.5 thousand m³ suspended since the fire in April 2015. Compared with 1Q17, average storage at Ultracargo’s terminals increased by 5% due to greater fuel handling activities, spot ethanol operations and the partial resumption of activities in Santos. In the first six months of the year, Ultracargo’s average storage increased by 8%.

Net sales and services –Total of R$ 106 million in 2Q17 (+25%), due to: (i) the increase in average storage, with larger capacity being taken up by fuel handling activities; (ii) higher average prices at all terminals; and (iii) the partial resumption of operations in Santos. Compared with 1Q17, net sales and services were 6% higher, principally the result of greater fuel handling activities and partial resumption of activities in Santos. In 1H17, net sales and services amounted to R$ 207 million, 25% greater than 1H16.

Cost of services provided – Total of R$ 54 million (+8%) due to higher labor-related expenditures and with materials, in line with the growth in fuel handling activities at the terminals. Quarter-on-quarter, the cost of services provided increased 7% due to higher personnel and maintenance expenditures at the terminals. In the first six months of the year, the cost of services provided amounted to R$ 104 million, a growth of 7% in relation to 1H16.

Sales, general and administrative expenses – Total of R$ 28 million (+26%) principally a function of higher expenses with personnel and legal advisory services. In relation to 1Q17, sales, general and administrative expenses increased by 13%, principally due to greater expenses with personnel and with consultancy and legal advisory fees. In the first six months of the year, sales, general and administrative expenses amounted to R$ 53 million, a 27% growth over 1H16

Other operating results – The “Other operating results” item totaled a net expense of R$ 15 million in 2Q17, compared with net sales and services of R$ 18 million in 2Q16 and a net expense of R$ 16 million in 1Q17. Both in 1Q17 and in 2Q17, the amount consists of expenses related to commissioning and licensing of the Santos terminal while in 2Q16, in addition to the expenses, Ultracargo also recorded revenue from insurance recoveries of R$ 30 million.

Results from the disposal of assets – The results from the disposal of assets was an income of R$ 5 million in 2Q17 compared with neutral results in 1Q17 and 2Q16. In 2Q17 and 1H17, results are principally due to the sale of non-operating assets in Paulínia and Camaçari.

EBITDA – Total of R$ 26 million (-38%) reflecting mainly insurance recoveries on claims for the Santos fire amounting to R$ 30 million in 2Q16. On the same comparative basis and excluding non-recurring items with respect to fire-related expenses and revenues from asset disposals, EBITDA, ex-non-recurring items, increased 63% due to greater average storage and to higher average prices, reflecting also the resumption of operations at the Santos port terminal. In relation to 1Q17, EBITDA grew 20% due to greater average storage and better prices, notably in fuel handling activities. If non-recurring effects were excluded, 1Q17 EBITDA would have shown an increase of 3%. In the first half of 2017, EBITDA was R$ 48 million, a 36% drop in relation to 1H16, the comparison being affected by insurance recoveries in the same period in 2016.

Investments – Ultracargo invested R$ 3 million, allocated to maintenance and modernization of safety systems at the port terminals. In the first six months of the year, the business invested R$ 13 million.

Extrafarma

2Q17

2Q16

1Q17

D (%)
2Q17 v
2Q16

D (%)
2Q17 v
1Q17

1H17

1H16

D (%)
1H17 v
1H16

Gross revenues (R$ million)

482

409

476

18%

958

781

23%

Drugstores (end of period)

341

280

321

22%

341

280

22%

% of mature stores (+3 years)

53%

60%

55%

(6.9 p.p.

)

(2.7 p.p.

)

53%

60%

(6.9 p.p.

)

EBITDA (R$ million)

(20%

)

142%

(21%

)

Operational performance – Extrafarma ended 2Q17 with 341 stores (+22% with 78 openings and 17 closures). At the end of 2Q17, 47% of the stores were under 3 years of operation, compared with 40% in 2Q16. In relation to 1Q17, Extrafarma opened 22 new stores and closed 2, being two of the newly opened stores in a new state (Bahia – the 11^th state with presence of Extrafarma).

Gross revenue – Total of R$ 482 million (+18%) due to a growth of 22% in retail sales, as a result of the increased average number of stores and the 10% increase in same store sales (6% in mature stores). Compared with 1Q17, gross revenue increased 1% due to the annual price adjustment for pharmaceutical drugs announced by the Chamber for the Regulation of the Medical Pharmaceuticals Market (CMED) in April 2017 and the increased average number of stores. In the first six months of the year, gross revenues amounted to R$ 958 million, a growth of 23% in relation to 1H16.

Cost of goods sold and gross profit – Total of R$ 308 million (+19%) mainly reflecting higher sales volume. Gross profit was R$ 146 million (+13%), largely due to the sales growth, partially offset by lower year-over-year inventory gains due to the annual readjustment in prices of pharmaceutical drugs authorized by the CMED of 3% against 12% in 2016. In relation to 1Q17, cost of goods sold was 1% greater while gross profit remained stable and in line with retail performance in the period. In the first six months of the year, cost of goods sold amounted to R$ 612 million and gross profit, R$ 292 million, 23% and 21% above 1H16, respectively.

Sales, general and administrative expenses – Total of R$ 151 million (+19%). The increase in SG&A was largely due to the 22% rise in the average number of stores. Excluding the effects of the new stores, Extrafarma posted below-inflation increase in expenses, as a result of the productivity initiatives in the period. In relation to 1Q17, sales, general and administrative expenses increased by 1% due to the same factors as mentioned above, offset by non-recurring expenses in 1Q17 with the transfer of the DC in the amount of R$ 6 million. In the first six months of the year, sales, general and administrative expenses totaled R$ 301 million, 24% higher than 1H16.

Result from the disposal of assets – The result from the disposal of assets at Extrafarma was neutral in 2Q17 and 2Q16 while totaling a net expense of R$ 6 million in 1Q17. In 1Q17 and in 1H17, the result is explained by the write-off of non-depreciated assets following the transfer of the DC.

EBITDA – Total of R$ 10 million (-20%). The decline is principally due to the increased number of still maturing stores and higher inventory gains in 2Q16 due to the higher annual readjustment in prices authorized by the CMED in the period. These effects were partially offset by the growth in retail sales and initiatives taken to raise management standards in the retail pharmacy network, notably reducing expenses initiatives. In relation to 1Q17, EBITDA grew by R$ 4 million to R$ 10 million, principally due to non-recurring expenses of R$ 11 million with the transfer of the DC from Belém to Benevides in 1Q17. In the first six months of the year, EBITDA totaled R$ 14 million, a decline of 21% compared with 1H16.

Investments – Extrafarma invested R$ 36 million in 2Q17 principally in the opening of new stores and the renewal of existing ones. In this quarter, we finalized the exchange for the new brand, incorporating the attributes of the new visual identity in all of our stores. In the first six months of the year, a total of R$ 58 million was invested in Extrafarma.

LOGO

São Paulo, August 09, 2017 – Ultrapar Participações S.A. (Brazil:UGPA3/USA:UGP), a multi-business company engaged in specialized distribution and retail (Ipiranga/Ultragaz/Extrafarma), specialty chemicals (Oxiteno) and storage for liquid bulk (Ultracargo), hereby reports its results for the second quarter of 2017.

Net revenues

EBITDA

Net earnings

R$ 19,173 million

-1% YoY 2%QoQ

R$ 784 million

-22% YoY -19%QoQ

R$ 247 million

-33% YoY -33%QoQ


Investments	Operating cash flow	Market cap	Dividends
R$ 484 million	R$ 1,293 million	R$ 43 billion	R$ 462 million

Highlights:

•

Dividend distribution of R$ 462 million for 1H17 approved, with a 75% payout ratio and 6.2% growth over dividends declared in 1H16

•

Partial resumption of 67.5 thousand m³ in Ultracargo’s terminal in Santos

•

Ultrapar announces changes in the Executive Board and Frederico Curado takes office as CEO in October 2017

In June 2016, we announced the acquisition of Alesat, thereafter working intensively with the Brazilian Anti-Trust Authority – CADE in order to demonstrate the benefits of the transaction to the market as well as to the society. However, in the light of a ruling on August 2, CADE’s Administrative Court decided to block the deal. We reiterate that we will continue to invest in our businesses with a view to strengthening them and to advance further along Ultra’s path of sustained growth. Ipiranga’s expansion will proceed as planned for 2017. We have started to see initial results from both the investments to add service stations to our network and from our business model: the recovery in fuel volumes for light vehicles (Otto cycle) following six quarters of yoy decline. During the second quarter we resumed operations of 67.5 thousand m³ at Ultracargo’s Santos Terminal that contributed positively to Ultracargo’s results. We also moved on with Oxiteno’s international expansion through investments to build a plant in the United States, the expansion in Ultragaz’s resellers and the opening of Extrafarma drugstores.

In June, we announced a change in our Executive Board. After 5 years leading Ultrapar as CEO, Thilo Mannhardt is concluding his cycle of strengthening Ultra to make it a global reference as a multi-business company and leaving a legacy for the longevity of the Company. We welcome the new CEO, Frederico Curado, who will take office in October and will continue the permanent quest for renewal and success at Ultra.

LOGO

2Q17 Conference call

Ultrapar will be holding a conference call for analysts on August 10, 2017 to comment on the company’s performance in the second quarter of 2017 and outlook. The presentation will be available for download on the company’s website 30 minutes prior to the conference call.

Brazilian: 10h00 (US EST)

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

Code: Ultrapar

Replay: +1 (866) 890-2584 (available for 7 days)

Code: Ultrapar

International: 11h30 (US EST)

Participants in other countries: +1 (412) 317-5430

Code: Ultrapar

Replay: +1 (412) 317-0088 (available for 7 days)

Code: 10097279

WEBCAST live via internet at ri.ultra.com.br. Please connect 15 minutes in advance.

Considerations on the financial and operational information

EBITDA—Earnings Before Interest, Taxes, Depreciation and Amortization and EBIT – Earnings Before Interest and Taxes are presented in accordance with CVM Instruction 527 of October 4, 2012.

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Executive summary


Indicators	2Q17		2Q16		1Q17		D (%) 2Q17 v 2Q16			D (%) 2Q17 v 1Q17			1H17		1H16		D (%) 1H17 v 1H16
Average exchange rate (R$/US$)		3.21		3.51		3.14		(8%	)		2%			3.18		3.71		(14%	)
Brazilian interbank interest rate (CDI)		2.5%		3.4%		3.0%								5.6%		6.7%
Inflation in the period (IPCA)		0.2%		1.7%		1.0%								1.2%		4.4%
IBC—Br¹		134.1		133.8		134.0		0.3%			0.1%			134.1		134.2		(0.1%	)
Average Brent crude oil (US$/barrel)		50		46		54		9%			(7%	)		52		40		30%

¹	Seasonally adjusted quarterly average. Considering the first two months of the quarter (Jan-Feb and Apr-May.)

Ultrapar reported consolidated EBITDA of R$ 784 million in 2Q17 (-22%). Net income was R$ 247 million in 2Q17 (-33%).

Ipiranga

Ipiranga recorded stable sales volume compared to 2Q16, with a 6% growth in the Otto cycle segment and a 5% decline in diesel. This performance reinforces the gradual improvement trend since 4Q16 when total volume presented a 14% year-over-year decline, and reflects the recovery in volumes due to the acceleration in investments to add new service stations and better performance in the wholesale segment (retail wholesale resellers – “TRR” and large consumer segments). In turn, EBITDA amounted to R$ 582 million, down 19% from 2Q16, mainly due to inventory effects from the cost reductions in gasoline, ethanol and diesel and concentration of expenses.

Oxiteno

Oxiteno registered, once again, growth in sales volume of specialty chemicals in the domestic market, a continuation of the trend seen over the last four quarters, based on development of new products and solutions to the clients. EBITDA was impacted by the appreciation of the Real against US Dollar and two important effects: (i) the sharp drop in certain raw materials prices – with negative impact on inventory – but rendering Oxiteno’s products competitiveness over the following months; and (ii) technical problems with the restarting of the Oleoquímica plant, in Camaçari, after a scheduled stoppage. Both factors combined contributed to a negative effect of R$ 37 million in 2Q17.

Ultragaz

As a result of the strategy of growing and improving the resellers network, Ultragaz reported volumes flat year-over-year, despite fewer business days during the quarter. The result was due to a growth of 2% in the bottled segment and a decline of 5% in the bulk segment, the latter due to increased sales volumes to industrial clients in 2Q16 and the loss of certain costumers that switched to natural gas. The commercial initiatives to capture new clients and resellers as well as the strategy based on differentiation and innovation led Ultragaz to post a year-over-year increase of 14% in EBITDA, to R$ 124 million.

Ultracargo

From the operational point of view, Ultracargo has presented a significant improvement and seized the business opportunities from greater fuel handling activity, resulting an increase of 10% in average storage and 63% in EBITDA, excluding non-recurrent effects of fire-related expenses, insurance advances and result from the disposal of assets.

Extrafarma

Extrafarma ended 2Q17 with 341 drugstores, opened 22 new drugstores (2 closures) in the quarter and 78 stores in the last 12 months. In 2Q17, Extrafarma started its activities in Bahia and is now present in 11 Brazilian states. Despite the 10% same store sales growth and the initiatives to raise the management standards in the retail pharmacy network, notably cost reduction initiatives, Extrafarma’s EBITDA amounted to R$ 10 million in 2Q17, a drop of R$ 2 million year-over-year, mainly due to the higher share of maturing stores and lower levels of inventory gains.

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Ipiranga


	2Q17		2Q16		1Q17		D (%) 2Q17 v 2Q16			D (%) 2Q17 v 1Q17			1H17		1H16		D (%) 1H17 v 1H16
Total volume (000 m³)		5,938		5,948		5,554		0%			7%			11,492		11,882		(3%	)
Diesel		2,983		3,144		2,718		(5%	)		10%			5,701		6,147		(7%	)
Otto cycle		2,870		2,710		2,753		6%			4%			5,623		5,555		1%
Others¹		85		95		84		(10%	)		2%			169		180		(6%	)
EBITDA (R$ million)		582		718		705		(19%	)		(17%	)		1,288		1,430		(10%	)

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

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Oxiteno


	2Q17		2Q16		1Q17		D (%) 2Q17 v 2Q16			D (%) 2Q17 v 1Q17			1H17		1H16		D (%) 1H17 v 1H16
Total volume (000 tons)		183		184		196		(1%	)		(7%	)		379		365		4%
Specialty chemicals		151		147		157		3%			(4%	)		309		293		5%
Commodities		31		37		38		(15%	)		(18%	)		70		72		(3%	)
Sales in Brazil		131		133		140		(2%	)		(6%	)		270		261		4%
Sales outside Brazil		52		51		56		3%			(8%	)		108		105		4%
EBITDA (R$ million)		34		117		112		(71%	)		(70%	)		145		315		(54%	)

EBITDA – Total of R$ 34 million (-71%), principally a function of the appreciation on the Real against the US Dollar and non-recurring effects (i) the significant decline in raw material prices as from March 2017, which had a negative effect on inventories, but will also improve Oxiteno’s products competitiveness over the following months and (ii) technical problems in the restarting of the Oleoquímica plant, both representing a negative impact of R$ 37 million in 2Q17. Compared with 1Q17, EBITDA decreased by 70%, principally due to the reversion of the provision of R$ 49 million reported in 1Q17, relating to the exclusion of the ICMS tax from the PIS and Cofins base, inventory losses and technical problems with the restarting of the Oleoquímica plant, attenuated by the depreciation of the Real in relation to the US Dollar. In 1H17, EBITDA amounted to R$ 145 million, 54% lower than in 1H16.

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Ultragaz


	2Q17		2Q16		1Q17		D (%) 2Q17 v 2Q16			D (%) 2Q17 v 1Q17			1H17		1H16		D (%) 1H17 v 1H16
Total volume (000 tons)		445		447		414		0	%		7	%		860		854		1	%
Bottled		307		301		282		2	%		9	%		589		578		2	%
Bulk		139		146		132		(5	%)		5	%		271		275		(2	%)
EBITDA (R$ million)		124		108		120		14	%		3	%		244		217		13	%

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Ultracargo


	2Q17		2Q16		1Q17		D (%) 2Q17 v 2Q16			D (%) 2Q17 v 1Q17		1H17		1H16		D (%) 1H17 v 1H16
Effective Storage¹ (000 m³)		727		662		695		10%			5%		711		660		8%
EBITDA (R$ million)		26		42		22		(38%	)		20%		48		74		(36%	)

¹	Monthly average

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Extrafarma

2Q17

2Q16

1Q17

D (%)

2Q17 v
2Q16

D (%)

2Q17 v
1Q17

1H17

1H16

D (%)

1H17 v
1H16

Gross revenues (R$ million)

482

409

476

18%

958

781

23%

Drugstores (end of period)

341

280

321

22%

341

280

22%

% of mature stores (+3 years)

53%

60%

55%

(6.9 p.p.

)

(2.7 p.p.

)

53%

60%

(6.9 p.p.

)

EBITDA (R$ million)

(20%

)

142%

(21%

)

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Ultrapar


	2Q17		2Q16		1Q17		D (%) 2Q17 v 2Q16			D (%) 2Q17 v 1Q17			1H17		1H16		D (%) 1H17 v 1H16
Net sales and services		19,173		19,298		18,728		(1%	)		2%			37,901		38,823		(2%	)
Net earnings¹		247		367		370		(33%	)		(33%	)		618		755		(18%	)
Earnings per share attributable to Ultrapar shareholders²		0.45		0.67		0.68		(32%	)		(33%	)		1.13		1.38		(67%	)
EBITDA		784		1,008		973		(22%	)		(19%	)		1,757		2,065		(15%	)
Investments		484		386		485		25%			0%			969		684		42%

Amounts

in R$ million (except for EPS)

¹	Under IFRS, consolidated net earnings include net earnings attributable to non-controlling shareholders of the controlled companies

²	Calculated based on the weighted average number of shares over the period, net of shares held in treasury

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Capital markets

Ultrapar’s financial trading volume in 2Q17 was R$ 138 million/day (+6%) considering trading on both B3 and the NYSE. Ultrapar’s share price closed 2Q17 at R$ 77.52 on B3, an appreciation of 8% in the quarter. During the same period, the Ibovespa posted a depreciation of 3%. Ultrapar’s shares on the NYSE reported an appreciation of 4% in 2Q17, while the Dow Jones Industrial Average was up 3% in the period. Ultrapar closed 2Q17 with a market capitalization of R$ 43 billion (+9%).


Capital markets	2Q17		2Q16		1Q17		1H17		1H16
Number of shares (000)		556,405		556,405		556,405		556,405		556,405
Market capitalization¹ – R$ million		43,133		39,566		39,850		43,133		39,566
B3
Average daily volume (shares)		1,280,059		1,305,471		1,238,374		1,259,047		1,431,137
Average daily volume (R$ 000)		94,841		92,258		83,665		89,208		94,221
Average share price (R$/share)		74.09		70.67		67.56		70.85		65.84
NYSE
Quantity of ADRs² (000 ADRs)		29,614		30,204		29,619		29,614		30,204
Average daily volume (ADRs)		585,802		532,337		516,404		551,381		555,855
Average daily volume (US$ 000)		13,416		10,758		11,084		12,259		9,960
Average share price (US$/ADR)		22.90		20.21		21.46		22.23		17.92
Total
Average daily volume (shares)		1,865,861		1,837,808		1,754,778		1,810,428		1,986,991
Average daily volume (R$ 000)		138,126		129,848		118,467		128,285		130,751

¹	Calculated based on the closing price of the period.

²1	ADR = 1 common share

Performance of UGPA3 x Ibovespa – 2Q17

(Base 100)

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Indebtedness (R$ million)


Ultrapar consolidated	2Q17			2Q16			1Q17
Debt		(12,358.4	)		(8,922.6	)		(11,038.9	)
Cash and long term investments		6,142.3			3,416.7			4,753.1
Net debt		(6,216.1	)		(5,505.9	)		(6,285.8	)
Net debt/EBITDA LTM		1.59			1.32			1.52
Average cost of debt (% CDI)		94.9%			96.1%			93.5%
Average cash yield (% CDI)		93.9%			95.1%			92.7%

Debt amortization profile:

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Debt breakdown:


Local currency			7,501.7
Foreign currency			4,725.2
Unrealized losses on swaps transactions			131.5

Total			12,358.4

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ULTRAPAR

In million Reais

CONSOLIDATED BALANCE SHEET


	QUARTERS ENDED IN
	JUN 17			JUN 16			MAR 17
ASSETS

Cash, cash equivalents and financial investments		6,124.4			3,292.8			4,745.6
Trade accounts receivable		3,380.8			3,153.1			3,524.2
Inventories		2,588.1			2,432.0			2,606.5
Taxes		554.9			498.3			562.4
Other		258.5			353.5			247.2
Total Current Assets		12,906.8			9,729.6			11,686.0

Investments		136.4			118.0			148.4
Property, plant and equipment and intangibles		9,453.7			8,709.1			9,272.6
Financial investments		17.9			123.9			7.4
Trade accounts receivable		252.3			188.6			242.9
Deferred income tax		411.5			564.2			392.4
Escrow deposits		801.9			758.6			788.9
Other		558.3			320.9			488.5
Total Non-Current Assets		11,631.9			10,783.3			11,341.1

TOTAL ASSETS		24,538.7			20,512.9			23,027.1

LIABILITIES
Loans, financing and debentures		3,091.8			1,210.8			2,944.2
Suppliers		1,165.4			1,018.8			1,195.3
Payroll and related charges		325.3			302.5			286.9
Taxes		207.7			273.8			211.0
Other		350.2			237.4			385.3
Total Current Liabilities		5,140.3			3,043.3			5,022.8

Loans, financing and debentures		9,266.6			7,711.8			8,094.7
Judicial provisions		648.2			700.3			637.7
Post-retirement benefits		127.4			116.1			123.2
Other		343.9			534.4			328.4
Total Non-Current Liabilities		10,386.0			9,062.6			9,184.0

TOTAL LIABILITIES		15,526.4			12,105.9			14,206.8

STOCKHOLDERS’ EQUITY
Capital		5,171.8			3,838.7			3,838.7
Reserves		3,693.5			4,359.5			5,026.8
Treasury shares		(480.2	)		(483.9	)		(480.2	)
Others		600.5			664.3			402.0
Non-controlling interest		26.7			28.4			33.0
Total shareholders’ equity		9,012.3			8,407.0			8,820.3

TOTAL LIAB. AND STOCKHOLDERS’ EQUITY		24,538.7			20,512.9			23,027.1

Cash and financial investments		6,142.3			3,416.7			4,753.1
Debt		(12,358.4	)		(8,922.6	)		(11,038.9	)
Net cash (debt)		(6,216.1	)		(5,505.9	)		(6,285.8	)

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ULTRAPAR

In million Reais (except in per share data)

CONSOLIDATED INCOME STATEMENT


	2Q17			2Q16			1Q17			1H17			1H16
Net sales and services		19,173.0			19,298.2			18,727.9			37,900.9			38,822.5

Cost of products and services sold		(17,590.6	)		(17,604.9	)		(17,040.9	)		(34,631.4	)		(35,411.0	)
Gross profit		1,582.5			1,693.3			1,687.0			3,269.5			3,411.6

Operating expenses
Selling		(721.1	)		(648.9	)		(703.3	)		(1,424.4	)		(1,290.1	)
General and administrative		(389.2	)		(356.3	)		(362.6	)		(751.8	)		(678.1	)
Other operating income (expenses), net		6.6			40.2			56.3			62.9			75.6
Income from sale of assets		6.2			(2.1	)		(6.4	)		(0.2	)		(2.0	)
Operating income		484.9			726.2			671.1			1,156.0			1,516.9

Financial results
Financial income		136.9			105.8			164.4			301.3			220.9
Financial expenses		(249.8	)		(328.3	)		(285.5	)		(535.3	)		(659.8	)
Equity in earnings (losses) of affiliates		5.7			6.3			6.4			12.1			3.0
Income before income and social contribution taxes		377.7			510.1			556.4			934.1			1,081.1

Provision for income and social contribution taxes
Current		(124.9	)		(228.0	)		(197.7	)		(322.6	)		(455.3	)
Deferred		(12.3	)		54.5			4.2			(8.1	)		76.6
Benefit of tax holidays		6.7			30.5			7.5			14.2			52.6
Net Income		247.2			367.1			370.3			617.5			755.0

Net income attributable to:
Shareholders of Ultrapar		246.1			364.2			368.2			614.3			749.4
Non-controlling shareholders of the subsidiaries		1.1			3.0			2.2			3.2			5.6
EBITDA		784.2			1,007.8			973.1			1,757.3			2,065.4

Depreciation and amortization		293.6			275.2			295.6			589.2			545.4
Total investments, net of disposals and repayments		483.8			386.2			485.3			969.1			684.3
RATIOS
Earnings per share—R$		0.45			0.67			0.68			1.13			1.38
Net debt / Stockholders’ equity		0.69			0.65			0.71			0.69			0.65
Net debt / LTM EBITDA		1.59			1.32			1.52			1.59			1.32
Net interest expense / EBITDA		0.14			0.22			0.12			0.13			0.21
Gross margin		8.3	%		8.8	%		9.0	%		8.6	%		8.8	%
Operating margin		2.5	%		3.8	%		3.6	%		3.1	%		3.9	%
EBITDA margin		4.1	%		5.2	%		5.2	%		4.6	%		5.3	%
Number of employees		15,613			14,933			15,388			15,613			14,933

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ULTRAPAR

In million Reais

CONSOLIDATED CASH FLOW STATEMENT


	JAN - JUN
	2017			2016
Cash Flows from (used in) operating activities		1,292.7			668.2
Net income		617.5			755.0
Depreciation and amortization		589.2			545.4
Working capital		271.3			(329.2	)
Financial expenses (A)		432.4			135.1
Deferred income and social contribution taxes		8.1			(76.6	)
Income from sale of assets		0.2			2.0
Cash paid for income and social contribution taxes		(366.1	)		(322.3	)
Other (B)		(260.0	)		(41.1	)
Cash Flows from (used in) investing activities		(860.4	)		(648.4	)
Additions to fixed and intangible assets, net of disposals		(860.4	)		(622.6	)
Acquisition and sale of equity investments		(0.0	)		(25.8	)
Cash Flows from (used in) financing activities		8.1			(576.2	)
Debt raising		1,697.8			948.4
Amortization of debt / Payment of financial lease		(798.7	)		(413.6	)
Interest paid		(410.4	)		(669.9	)
Dividends paid (C)		(480.5	)		(441.1	)
Net increase (decrease) in cash and cash equivalents		440.4			(556.5	)
Cash and cash equivalents at the beginning of the period (D)		5,701.8			3,973.2
Cash and cash equivalents at the end of the period (D)		6,142.3			3,416.7

(A)	Comprised of interest and exchange rate and inflationary variation expenses on loans and financing. Does not include revenues from interest and exchange rate and inflationary variation on cash equivalents.

(B)	Comprised mainly of noncurrent assets and liabilities variations net.

(C)	Includes dividends paid by Ultrapar and its subsidiaries to third parties.

(D)	Includes long term financial investments.

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IPIRANGA

In million Reais

CONSOLIDATED BALANCE SHEET


	QUARTERS ENDED IN
	JUN 17		JUN 16		MAR 17
OPERATING ASSETS
Trade accounts receivable		2,365.9		2,232.6		2,522.0
Trade accounts receivable - noncurrent portion		215.4		154.1		208.4
Inventories		1,462.1		1,377.1		1,447.1
Taxes		281.0		253.4		269.6
Other		540.6		364.7		523.5
Property, plant and equipment, intangibles and investments		4,291.2		3,959.7		4,234.2

TOTAL OPERATING ASSETS		9,156.2		8,341.6		9,204.8

OPERATING LIABILITIES
Suppliers		774.1		686.6		737.0
Payroll and related charges		87.1		89.3		73.7
Post -retirement benefits		108.4		98.5		106.0
Taxes		98.2		99.0		109.2
Judicial provisions		103.4		103.4		102.5
Other accounts payable		206.6		204.4		259.4

TOTAL OPERATING LIABILITIES		1,377.9		1,281.2		1,387.8

CONSOLIDATED INCOME STATEMENT


	2Q17			2Q16			1Q17			1H17			1H16
Net sales		16,279.3			16,588.2			15,918.9			32,198.2			33,457.6
Cost of products and services sold		(15,287.0	)		(15,504.3	)		(14,829.3	)		(30,116.3	)		(31,316.7	)
Gross profit		992.3			1,084.0			1,089.6			2,081.9			2,140.9
Operating expenses		—			—			—			—			—
Selling		(420.0	)		(378.0	)		(415.1	)		(835.1	)		(760.1	)
General and administrative		(194.2	)		(180.4	)		(179.1	)		(373.3	)		(337.8	)
Other operating income (expenses), net		21.4			20.7			20.5			41.9			46.9
Income from sale of assets		(0.1	)		(1.4	)		(0.4	)		(0.5	)		(2.2	)
Operating income		399.4			544.8			515.6			915.0			1,087.6
Equity in earnings (losses) of affiliates		0.3			0.3			0.3			0.5			0.6
EBITDA		582.4			717.9			705.2			1,287.6			1,430.2
Depreciation and amortization		182.7			172.7			189.4			372.1			342.0
RATIOS
Gross margin (R$/m3)		167			182			196			181			180
Operating margin (R$/m3)		67			92			93			80			92
EBITDA margin (R$/m3)		98			121			127			112			120
EBITDA margin (%)		3.6%			4.3%			4.4%			4.0%			4.3%
Number of employees		2,986			2,920			2,953			2,986			2,920

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OXITENO

In million Reais

CONSOLIDATED BALANCE SHEET


	QUARTERS ENDED IN
	JUN 17		JUN 16		MAR 17
OPERATING ASSETS
Trade accounts receivable		523.3		497.5		531.1
Inventories		685.8		637.9		671.2
Taxes		133.0		83.5		125.3
Other		152.0		134.2		136.3
Property, plant and equipment, intangibles and investments		1,909.3		1,677.2		1,811.1

TOTAL OPERATING ASSETS		3,403.3		3,030.3		3,275.1

OPERATING LIABILITIES
Suppliers		189.3		140.5		182.9
Payroll and related charges		71.1		65.8		60.4
Taxes		33.8		39.5		38.1
Judicial provisions		13.9		107.5		13.5
Other accounts payable		64.6		33.9		44.1

TOTAL OPERATING LIABILITIES		372.7		387.1		339.0

CONSOLIDATED INCOME STATEMENT


	2Q17			2Q16			1Q17			1H17			1H16
Net sales		885.1			908.9			912.4			1,797.5			1,913.0
Cost of goods sold		—			—			—			—			—
Variable		(610.2	)		(560.2	)		(608.5	)		(1,218.8	)		(1,140.6	)
Fixed		(87.5	)		(87.4	)		(89.3	)		(176.8	)		(169.3	)
Depreciation and amortization		(33.2	)		(35.3	)		(32.3	)		(65.5	)		(69.3	)
Gross profit		154.1			226.0			182.4			336.5			533.8
Operating expenses		—			—			—			—			—
Selling		(70.1	)		(67.6	)		(71.0	)		(141.1	)		(137.2	)
General and administrative		(87.0	)		(81.9	)		(84.4	)		(171.4	)		(160.2	)
Other operating income (expenses), net		0.1			1.2			49.4			49.5			1.4
Income from sale of assets		(0.8	)		0.2			(0.9	)		(1.7	)		0.3
Operating income		(3.8	)		77.9			75.4			71.6			238.1
Equity in earnings (losses) of affiliates		0.4			0.2			0.2			0.7			0.6
EBITDA		33.8			116.8			111.5			145.3			315.2
Depreciation and amortization		37.1			38.8			35.9			73.0			76.5
RATIOS
Gross margin (R$/ton)		844			1,230			931			889			1,462
Gross margin (US$/ton)		263			351			296			280			394
Operating margin (R$/ton)		(21	)		424			385			189			652
Operating margin (US$/ton)		(6	)		121			123			60			176
EBITDA margin (R$/ton)		185			636			570			384			863
EBITDA margin (US$/ton)		58			181			181			121			233
Number of employees		1,877			1,864			1,906			1,877			1,864

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ULTRAGAZ

In million Reais

CONSOLIDATED BALANCE SHEET


	QUARTERS ENDED IN
	JUN 17		JUN 16		MAR 17
OPERATING ASSETS
Trade accounts receivable		322.5		258.5		302.0
Trade accounts receivable - noncurrent portion		36.5		34.1		34.1
Inventories		90.6		75.7		99.3
Taxes		70.1		61.4		68.1
Escrow deposits		208.6		201.9		204.9
Other		55.4		53.8		57.7
Property, plant and equipment, intangibles and investments		975.0		925.7		968.7

TOTAL OPERATING ASSETS		1,758.7		1,611.2		1,734.8

OPERATING LIABILITIES
Suppliers		52.6		52.3		53.0
Payroll and related charges		102.5		95.1		89.1
Taxes		9.2		8.4		9.4
Judicial provisions		107.6		102.2		106.2
Other accounts payable		43.1		34.4		44.0

TOTAL OPERATING LIABILITIES		315.0		292.4		301.7

CONSOLIDATED INCOME STATEMENT


	2Q17			2Q16			1Q17			1H17			1H16
Net sales		1,472.9			1,343.0			1,352.3			2,825.3			2,575.6
Cost of sales and services		(1,235.9	)		(1,124.4	)		(1,133.7	)		(2,369.6	)		(2,148.9	)
Gross profit		237.0			218.6			218.6			455.7			426.7
Operating expenses
Selling		(101.5	)		(97.4	)		(91.1	)		(192.6	)		(190.3	)
General and administrative		(59.1	)		(51.6	)		(51.0	)		(110.0	)		(99.3	)
Other operating income (expenses), net		0.7			0.3			2.2			2.9			1.3
Income from sale of assets		2.2			(0.7	)		0.5			2.7			(0.0	)
Operating income		79.5			69.1			79.2			158.7			138.4
Equity in earnings (losses) of affiliates		0.9			(0.0	)		(0.0	)		0.9			(0.0	)
EBITDA		124.1			108.4			120.4			244.4			216.9
Depreciation and amortization		43.7			39.3			41.2			84.9			78.5
RATIOS
Gross margin (R$/ton)		532			489			528			530			500
Operating margin (R$/ton)		178			155			191			185			162
EBITDA margin (R$/ton)		279			243			290			284			254
Number of employees		3,639			3,621			3,631			3,639			3,621

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ULTRACARGO

In million Reais

CONSOLIDATED BALANCE SHEET


	QUARTERS ENDED IN
	JUN 17		JUN 16		MAR 17
OPERATING ASSETS
Trade accounts receivable		36.0		37.8		37.2
Inventories		6.6		6.8		6.4
Taxes		0.7		0.4		0.7
Other¹		27.0		159.5		23.1
Property, plant and equipment, intangibles and investments		927.3		899.0		930.5

TOTAL OPERATING ASSETS		997.7		1,103.5		997.9

OPERATING LIABILITIES
Suppliers		16.2		16.6		15.2
Payroll and related charges		18.5		15.4		23.0
Taxes		6.1		5.1		5.9
Judicial provisions		26.3		13.9		25.6
Other accounts payable²		185.7		83.5		178.1

TOTAL OPERATING LIABILITIES		252.7		134.5		247.7

¹	Trade receivables – indemnification insurance company

²	Includes the long term obligations with clients account and the extra amount related to the acquisition of Temmar, in the port of Itaqui and payables – indemnification clients

CONSOLIDATED INCOME STATEMENT


	2Q17			2Q16			1Q17			1H17			1H16
Net sales		106.4			85.2			100.7			207.1			166.2
Cost of sales and services		(53.7	)		(49.5	)		(50.2	)		(104.0	)		(97.0	)
Gross profit		52.6			35.7			50.5			103.1			69.2
Operating expenses		—			—			—			—			—
Selling		(1.9	)		(1.4	)		(1.7	)		(3.6	)		(3.3	)
General and administrative		(26.4	)		(21.1	)		(23.4	)		(49.8	)		(38.8	)
Other operating income (expenses), net		(15.5	)		18.1			(15.7	)		(31.2	)		26.1
Income from sale of assets		4.8			0.0			0.1			5.0			0.0
Operating income		13.7			31.2			9.8			23.5			53.2
Equity in earnings (losses) of affiliates		0.6			(0.2	)		0.3			0.9			(0.3	)
EBITDA		26.1			41.8			21.7			47.8			74.4
Depreciation and amortization		11.8			10.8			11.7			23.5			21.5
RATIOS
Gross margin		49%			42%			50%			50%			42%
Operating margin		13%			37%			10%			11%			32%
EBITDA margin		25%			49%			22%			23%			45%
Number of employees		668			614			650			668			614

LOGO

EXTRAFARMA

In million Reais

CONSOLIDATED BALANCE SHEET


	QUARTERS ENDED IN
	JUN 17		JUN 16		MAR 17
OPERATING ASSETS
Trade accounts receivable		142.4		129.5		141.1
Inventories		343.0		334.5		382.6
Taxes		99.0		82.3		101.8
Other¹		17.8		16.1		19.5
Property, plant and equipment, intangibles and investments		1,051.0		955.3		1,029.6

TOTAL OPERATING ASSETS		1,653.3		1,517.6		1,674.5

OPERATING LIABILITIES
Suppliers		136.3		124.1		212.2
Payroll and related charges		45.8		36.7		40.5
Taxes		13.9		9.2		23.1
Judicial provisions		60.2		59.2		59.6
Other accounts payable		12.9		13.5		11.5

TOTAL OPERATING LIABILITIES		269.1		242.8		346.8

CONSOLIDATED INCOME STATEMENT


	2Q17			2Q16			1Q17			1H17			1H16
Gross Revenues		481.7			409.0			476.0			957.7			781.1
Sales returns, discounts and taxes		(27.4	)		(22.1	)		(26.2	)		(53.6	)		(43.9	)
Net sales		454.3			386.9			449.8			904.1			737.1
Cost of products and services sold		(308.0	)		(257.9	)		(303.9	)		(611.9	)		(496.3	)
Gross profit		146.3			129.0			145.9			292.2			240.8
Operating expenses		(151.1	)		(126.7	)		(150.1	)		(301.2	)		(243.1	)
Other operating income (expenses), net		(0.1	)		(0.1	)		0.0			(0.1	)		(0.1	)
Income from sale of assets		(0.0	)		(0.1	)		(5.6	)		(5.6	)		(0.1	)
Operating income		(4.9	)		2.0			(9.8	)		(14.8	)		(2.6	)
EBITDA		9.8			12.3			4.1			13.9			17.5
Depreciation and amortization		14.7			10.2			13.9			28.6			20.1
RATIOS¹
Gross margin (%)		30%			32%			31%			31%			31%
Operating margin (%)		-1%			0%			-2%			-2%			0%
EBITDA margin (%)		2%			3%			1%			1%			2%
Number of employees		5,989			5,451			5,798			5,989			5,451

(1)	Calculated based on gross revenues.

ULTRAPAR PARTICIPAÇÕES S.A.

Publicly Traded Company


CNPJ nº 33.256.439/0001- 39		NIRE 35.300.109.724

MINUTES OF THE MEETING OF THE BOARD OF DIRECTORS (07/2017)

Date, Time and Location:

August 9, 2017, at 2:30 p.m., at the Company’s headquarters, located at Av. Brigadeiro Luís Antônio, n^r 1343, 9^th floor, in the City and State of São Paulo.

Attendance:

(i) Members of the Board of Directors, duly signed; and (ii) member of the Fiscal Council, duly signed, pursuant to the terms of paragraph 3 of article 163, of the Brazilian Corporate Law.

Decisions:

As part of the ongoing monitoring of the business strategy, the members of the Board of Directors analyzed the strategic positioning proposal of Ultragaz, Company’s LPG distribution business.

After having analyzed and discussed the performance of the Company in the second quarter of the current fiscal year, the respective financial statements were approved.

“Ad referendum” of the Annual General Shareholders’ Meeting that will analyze the balance sheet and financial statements of the current fiscal year, to approve the distribution of dividends, to be payable from the net earnings account of the current year, in the total amount of R$ 461,867,679.00 (four hundred and sixty-one million, eight hundred and sixty-seven thousand, six hundred and seventy-nine Reais). Holders of common shares are entitled to receive R$ 0.85 (eighty-five cents of Real) per share, excluding the shares held in treasury at this date.

It has also been determined that dividends declared herein will be paid from August 25, 2017 onwards, without remuneration or monetary adjustment. The record date to establish the right to receive the approved dividends will be August 16, 2016 in Brazil and August 21, 2016, in the United States of America.

The members of the Board of Directors were updated on financing alternatives for the Company.

The members of the Board of Directors approved, based on the item 4.2(ii) of the Stock-based incentive plan of the Company approved at the shareholders’ meeting on April 19, 2017, Company’s performance goal to which the transfer of ownership of 50% (fifty percent) of the shares subject to the first program of restricted shares and performance shares to be approved in the future by this Board.

Observations: The deliberations were approved, with no amendments or qualifications, by all the Board Members present.

As there were no further matters to be discussed, the meeting was closed, the minutes of this meeting were written, read and approved by all the undersigned members present, as well as by the members of the Fiscal Council.

Paulo Guilherme Aguiar Cunha – Chairman

Pedro Wongtschowski – Vice-Chairman

Carlos Tadeu da Costa Fraga

Jorge Marques de Toledo Camargo

José Maurício Pereira Coelho

Lucio de Castro Andrade Filho

Nildemar Secches

Olavo Egydio Monteiro de Carvalho

Member of the Fiscal Council:

Flavio Cesar Maia Luz

ULTRAPAR PARTICIPAÇÕES S.A.

Publicly-Traded Company

CNPJ nº 33.256.439/0001- 39

NIRE 35.300.109.724

NOTICE TO SHAREHOLDERS

Distribution of dividends

We hereby inform that the Board of Directors of Ultrapar Participações S.A. (“Ultrapar”), at the meeting held today, approved the distribution of dividends, payable from the net earnings account for the fiscal year of 2017, in the amount of R$ 461,867,679.00 (four hundred and sixty-one million, eight hundred and sixty-seven thousand, six hundred and seventy-nine Reais), to be paid from August 25, 2017 onwards, without remuneration or monetary adjustment.

Holders of common shares issued by Ultrapar as of the record dates informed below will receive the dividend of R$ 0.85 per share.

The record date to establish the right to receive the dividend will be August 16, 2017 in Brazil, and August 21, 2017 in the United States of America. Therefore, from August 17, 2017 onwards, the shares will be traded “ex-dividend” on both the São Paulo Stock Exchange (B3 S.A. – Brasil, Bolsa, Balcão) and the New York Stock Exchange (NYSE).

São Paulo, August 9, 2017.

André Pires de Oliveira Dias

Chief Financial and Investor Relations Officer

ULTRAPAR PARTICIPAÇÕES S.A.

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: August 9, 2017


ULTRAPAR HOLDINGS INC.

By:		/s/Andre Pires De Oliveira Dias
		Name: Andre Pires de Oliveira Dias
		Title: Chief Financial and Investor Relations Officer

(Individual and Consolidated Interim Financial Information for the Three-Month Period Ended June 30, 2017 Report on Review of Interim Financial Information, 2Q17 Earnings release, Board of Directors Minutes and Notice to shareholders)