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 March, 2019

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.		Board of Directors minutes
2.		Shareholders’ Meeting Manual
3.		Remote voting form – Extraordinary Shareholders’ Meeting
4.		Remote voting form – Annual General Shareholders’ Meeting

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

Date, Time and Location:

March 11, 2019, at 2:30 pm, at the Company’s headquarters, located at Av. Brigadeiro Luís Antônio, n. 1,343 – 9th floor, in the City and State of São Paulo.

Attendance:

Members of the Board of Directors, including participation by phone.

Deliberações:

1. Pursuant to Article 28, item “i” of the Company’s Bylaws, the members of the Board of Directors discussed and determined the composition of the slate, to be proposed by this body, slate that will be competing in the election of the members of the Board of Directors to be held at the next annual shareholders’ meeting of the Company. The slate indicated by this Board will be composed of:

Alexandre Gonçalves Silva

Ana Paula Vitali Janes Vescovi

Flávia Buarque de Almeida

Joaquim Pedro Monteiro de Carvalho Collor de Mello

Jorge Marques de Toledo Camargo

José Galló

José Mauricio Pereira Coelho

Lucio de Castro Andrade Filho

Nildemar Secches

Pedro Wongtschowski

(Minutes of the Meeting of the Board of Directors of Ultrapar Participações S.A., March 11, 2019)

2. Pursuant to Article 20, paragraph 2 of the Company’s Bylaws, the Board of Directors authorizes the Company’s Board of Executive Officers to disclose the slate indicated hereby, providing all the documents required by the applicable law and by the Bylaws.

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.

Pedro Wongtschowski – Chairman

Lucio de Castro Andrade Filho – Vice-Chairman

Alexandre Gonçalves Silva

Carlos Tadeu da Costa Fraga

Jorge Marques de Toledo Camargo

José Maurício Pereira Coelho

Nildemar Secches

Olavo Egydio Monteiro de Carvalho

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Shareholders’ Meeting Manual

Annual and General Extraordinary

Shareholders’ Meeting

of April 10, 2019

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3		Message from the Management

4		Call notice

9		Additional procedures

10		Management Proposal for matters to be discussed in the Extraordinary and Annual General Shareholders’ Meeting, including:

		Exhibit I— Report on the source and rational for the proposed amendments to the bylaws of Ultrapar Participações S.A.

		Exhibit II—Financial statements referring to the fiscal year ended on December 31, 2018, including (i) the Management Report of the fiscal year ended on December 31, 2018; (ii) Report from our Independent Auditors and (iii) Report from our Fiscal Council

		Exhibit III—Management discussion and analysis on the financial conditions of the Company, under the terms of item 10 of the Reference Form

		Exhibit IV—Allocation of net earnings proposal for the fiscal year, pursuant to Annex 9-1-II of CVM Instruction 481/09

		Exhibit V— Information about the candidates for members of the Board of Directors and the Fiscal Council indicated or supported by the management, under the terms of items 12.5 to 12.10 of the Reference Form

		Exhibit VI—Management and Fiscal Council compensation proposal

		Exhibit VII—Information about the management compensation, under the terms of item 13 of the Reference Form

		Glossary of the terms used in items 10, 12.5 to 12.10 and 13 of the Reference Form which are part of this document

257		Model for power of attorney

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MESSAGE FROM THE MANAGEMENT

Dear Shareholders,

We are pleased to invite you to attend the Annual General Shareholders’ Meeting (the “Meeting”) of Ultrapar Participações S.A. (“Ultrapar” or the “Company”), to be held on April 11, 2019, at 2:00 p.m., in the Company’s headquarters, located at Av. Brigadeiro Luís Antônio, nr 1,343, 9^th floor, in the City and State of São Paulo, Brazil, in accordance with the Call Notice, to be published in the newspapers Valor Econômico and in Diário Oficial do Estado de São Paulo on March 12, 13 and 14, 2019, also available at the Company’s website (ri.ultra.com.br).

The preparation of this Shareholders’ Meeting Manual (the “Manual”) is aligned with the Company’s philosophy towards the continuous improvement of its corporate governance practices, including the quality and convenience of the information provided to our shareholders.

The purpose of this document is to present the management proposals and to provide you with clarification and guidance regarding the matters to be discussed and procedures required for your attendance and power of attorney to participate in the Meeting, consolidating in a single file all documents published by Ultrapar in connection with the Meeting.

In addition to the information disclosed, we also inform you that Ultrapar’s Investor Relations team will be available for additional clarification by e-mail Invest@ultra.com.br or telephone +55 (11) 3177-7014.

All shareholders of Ultrapar (including holders of common shares in the form of ADRs) may vote in all matters included in the agenda. Each common share entitles its holder to one vote in the Meeting’s resolutions. Holders of ADR will be represented as specified in a communication to be delivered to ADR holders by the depositary institution, pursuant to the terms of the Deposit Agreement.

We count on your presence.

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CALL NOTICE

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ULTRAPAR PARTICIPAÇÕES S.A.

Publicly-Traded Company


CNPJ nº 33.256.439/0001- 39		NIRE 35.300.109.724

Call Notice

EXTRAORDINARY AND ANNUAL GENERAL SHAREHOLDERS’ MEETING

The shareholders are hereby invited to attend the Extraordinary and the Annual General Shareholders’ Meeting of Ultrapar Participações S.A. (“Ultrapar” or “Company”), to be held on April 10, 2019, at 2:00 p.m., in the Company’s headquarters, located at Av. Brigadeiro Luís Antônio, nr 1343, 9^th floor, in the City and State of São Paulo (the “Shareholders’ Meeting”), to pass on the following matters:

In the Extraordinary General Meeting:

To decide on the following amendments to the Company’s Bylaws as described in the Management Proposal disclosed to the market on this date:

(a)

adaptation of the statutory provisions pursuant to the New Market Regulation, effective since January 02, 2018;

(b)

modification of the maximum number of members of the Board of Directors;

(c)

modification of the duties of the management bodies for the purpose of optimizing the Company’s decision-making and governance procedures;

(d)

creation of a strategy committee of the Board of Directors and the standardization of the provisions common to all the statutory committees of the Board of Directors; and

(e)

simplify the wording of statutory provisions through the elimination of content replicated from the legislation and regulations in effect or through adjusting the Bylaws to the legal text, as well as formal adjustments of renumbering and cross references, when applicable.

To approve the stock split of the common shares issued by the Company at the ratio of one existing share for 2 (two) shares of the same class and type and the consequent amendment of the Article 5 and Article 6 of the Bylaws, in order to reflect the new number of the shares in which the capital stock is divided, and the new authorized capital stock of the Company; and

To approve the consolidation of the Bylaws in order to reflect the amendments proposed in the foregoing items.

In Annual General Meeting:

The examination and approval of the Management report and accounts as well as the financial statements for the fiscal year ended on December 31, 2018 in addition to the report of the Independent Auditors and the opinion of the Fiscal Council;

To approve the allocation of net income for the fiscal year ended December 31, 2018;

To approve the number of members to be elected to the Board of Directors;

To approve the election of the members of the Board of Directors;

To approve the setting of Management compensation;

To approve the election of the members of the Fiscal Council and their respective alternates given the request for installation of the Fiscal Council made by a shareholder representing more than 2% (two percent) of the voting shares issued by the Company, pursuant to Article 161 to Law 6.404/76 and CVM Instruction 324/00; and

Considering the item above, to approve the compensation of the Fiscal Council for fiscal year 2019.

Election of the members of the Board of Directors—Procedure to request the adoption of cumulative vote

The minimum percentage of voting capital necessary for requesting the adoption of cumulative vote for the election of members of the Board of Directors is 5% (five percent) of the voting shares, according to CVM Instruction 165/91, amended by CVM Instruction 282/98.

Pursuant article 21 of the Company’s Bylaws and article 141, paragraph 1 of the Brazilian Corporate Law, such option shall be exercised by shareholders up to 48 (forty eight) hours prior to the Shareholders’ Meeting.

Attendance at the Shareholders’ Meeting

The shareholders, including holders of American Depositary Receipts (“ADRs”), of the Company may attend the Shareholders’ Meeting in person or represented by proxies, upon the fulfilment of the requirements for attendance provided for in article 12 of the Company’s Bylaws, presenting the documents listed under items Individual Shareholder, Corporate Shareholder and Investment Funds below.

The status of shareholder will be evidenced by submitting a statement issued by the bookkeeping institution or by the custodian institution, indicating the number of shares held by them up to three days prior to the Meeting.

The Company will adopt for this Shareholders’ Meeting the remote voting system in accordance with CVM Instruction 481/09, allowing its shareholders to send, through their respective custodian institution or bookkeeping institution or directly to the Company, a Remote Voting Form for the Extraordinary General Meeting and a Remote Voting Form for the Annual General Meeting, as provided by the Company together with other documents to be discussed at the Shareholders’ Meeting. The Company informs that the instructions for the exercise of the remote voting are described in the Shareholders’ Meeting Manual. The remote voting forms sent by the shareholders on the first call of the Extraordinary and the Annual General Meeting shall be considered valid for the second call, pursuant to art. 21-X, sole paragraph, of CVM Instruction 481/09.

Holders of ADRs will be represented at the Shareholders Meeting by the custodian of underlying shares of the ADRs pursuant to the terms of the deposit agreement, dated December 16, 1999, as amended (“Deposit Agreement”). The procedures for exercising voting rights in connection with the ADRs will be specified in a communication to be delivered to ADR holders by the depositary institution, pursuant to the terms of the Deposit Agreement.

Individual Shareholder

•

Original or certified copy of a photo identification (ID, Alien Resident Card, driver’s license, officially recognized work card, or passport, in case of non-Brazilians); and

•

Original or certified copy of the power-of-attorney, if applicable, and a photo identification of the proxy.

Corporate Shareholder

•

Certified copy of the most recent consolidated bylaws or articles of incorporation and of the corporate acts granting power of attorney (minutes of the meeting of election of the board members and/or power of attorney);

•

Original or certified copy of photo identification of the proxy or proxies; and

•

Original or certified copy of the power of attorney, if applicable, and photo identification of the proxy.

Investment Funds

•

Evidence of the capacity of fund manager conferred upon the individual or legal entity representing the shareholder at the Shareholders’ Meeting, or the proxy granting such powers;

•

The corporate acts of the manager, in case it is a legal entity, granting powers to the representative attending the Shareholders’ Meeting or to whom the power of attorney has been granted; and

•

In the event the representative or proxy is a legal entity, the same documents referred to in “Corporate Shareholder” must be presented to the Company.

The documents listed above must be sent to the Investor Relations Department until 2:00 p.m. of April 8, 2019.

Availability of Documents and Information

In accordance with Ultrapar’s Bylaws and with article 6 of CVM Instruction 481/09, the documents and information regarding the matters to be voted upon, as well as the Shareholders’ Meeting Manual, the Remote Voting Forms for the Extraordinary General Meeting and for the Annual General Meeting, and other relevant information and documents to the exercise of voting rights in the Extraordinary General Meeting and the Annual General Meeting, were filed with the CVM and are available in CVM website (www.cvm.gov.br), in the Company’s headquarters, in the B3 – Brasil, Bolsa, Balcão website (www.b3.com.br) and in the Company’s website (ri.ultra.com.br).

São Paulo, March 11, 2019.

PEDRO WONGTSCHOWSKI

Chairman of the Board of Directors

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ADDITIONAL PROCEDURES

The documents necessary for your participation in the Meeting are specified in the Call Notice.

We clarify that in the case of non-Brazilian investment funds and shareholders, a sworn translation of the documents shall not be required if the documents are originally in English or Spanish.

Ultrapar, aiming to facilitate the representation of its shareholders at the Meeting (excluding holders of common shares in the form of ADRs), provides in the end of this Manual a power-of-attorney model, through which shareholders may appoint the lawyers thereby indicated to represent them at the Meeting, at no cost and strictly in accordance with the powers granted. To the extent shareholders (excluding holders of common shares in the form of ADRs) opt to be represented at the Meeting using the model provided by the Company, the power of attorney must include all the representatives listed in the power-of-attorney model.

We kindly ask you to send the documents listed above to the Investor Relations Department, at Avenida Brigadeiro Luís Antônio, 1,343, 8th floor, CEP 01317-910, in the City and State of São Paulo, up to 2:00 p.m. of April 8, 2019.

Remote Voting Forms

The remote voting forms of the Extraordinary Shareholders’ Meeting and of the Annual General Meeting and other supporting documents shall be filed at the Company within 7 days from the Annual General Meeting and Extraordinary Shareholders’ Meeting date, that is, until April 4, 2019.

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MANAGEMENT PROPOSAL

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ULTRAPAR PARTICIPAÇÕES S.A.

A Publicly Traded Company

CNPJ nº 33.256.439/0001- 39

NIRE 35.300.109.724

MANAGEMENT PROPOSAL

Dear Shareholders,

The Management of Ultrapar Participações S.A. (“Ultrapar” or “Company”) hereby presents the Management Proposal to the Shareholders with respect to the matters to be decided in the Extraordinary and Annual General Meeting to be held on April 10, 2019 at 2:00 p.m.:

Extraordinary General Meeting:

1.1) To decide on the following amendments to the Company’s Bylaws as described herein

We propose to approve the modifications in Ultrapar’s Bylaws as described in the following items:

(i)

adaptation of the statutory provisions pursuant to the New Market Regulation, effective since January 02, 2018;

(ii)

modification to the maximum number of members of the Board of Directors;

(iii)

modification of the duties of the management bodies for the purpose of optimizing the Company’s decision-making and governance procedures;

(iv)

creation of a strategy committee of the Board of Directors and the standardization of the provisions common to all the statutory committees of the Board of Directors; and

(v)

The information related to this item and the justifications for these amendments are available in the comparative table of the Bylaws in Exhibit I of this Proposal, pursuant to CVM Instruction 481/09.

1.2) To approve the stock split of the common shares issued by the Company at the ratio of one existing share for 2 (two) shares of the same class and type and the consequent amendment of the Article 5 and Article 6 of the Bylaws

We propose that the stock split of the common shares issued by Ultrapar is approved, in order to approve that each share issued by the Company represents 2 (two) shares of the same type and class. The stock split shall not imply any change in the capital stock, therefore being no alteration in the financial amount and shareholder participation in the Company’s capital stock.

Should the stock split be approved, the capital stock of the Company shall henceforth be divided into 1,112,810,192 (one billion, one hundred and twelve million, eight hundred and ten thousand, one hundred and ninety-two) shares, all of them nominative with no par value.

In addition to the information already disclosed in the Material Notice published by the Company on February 20, 2019, the stock split record date shall be April 17, 2019 in the São Paulo Stock Exchange (“B3”) and April 22, 2019 in the New York Stock Exchange, the shares to be traded ex-stock split as from April 18, 2019, inclusive. The financial institution providing the services of book entry registrar for Ultrapar shall take the necessary steps to automatically credit the new shares to the account of the shareholders on April 23, 2019. In parallel, the depositary agent of the American Depositary Receipts issued by the Company (“ADRs”) shall be responsible for the issue and distribution of the new ADRs, which shall take place on April 25, 2019.

Consequently, in order to reflect the above proposal, we further propose that the amendment in the wording of the caption sentence to Article 5 and Article 6 of the Company’s Bylaws pursuant to the comparative table of the Bylaws included in Exhibit I of this Proposal.

1.3) To approve the consolidation of the Bylaws in order to reflect the amendments proposed in the foregoing items

We propose the consolidation of Ultrapar’s Bylaws in order to reflect the modifications described in items 1.1 and 1.2 of this Proposal. The Exhibit I of this document includes the comparative table of the proposed amendments of the Bylaws, in addition to the respective justifications for the said amendments, pursuant to CVM Instruction 481/09.

Annual General Meeting:

2.1) Examination and approval of the Management report and accounts as well as the financial statements for the fiscal year ended on December 31, 2018 in addition to the report of the Independent Auditors and the opinion of the Fiscal Council

The Management Report and the financial statements for the fiscal year ending December 31, 2018 were filed within the Brazilian Securities and Exchange Commission—CVM on February 20, 2019 and published in wide circulation newspapers on February 22, 2019.

These documents (i) were approved by the Board of Directors and (ii) obtained a favorable opinion from the Company’s Fiscal Council at a meeting held on February 19, 2019. The respective minutes were also filed with the CVM on February 20, 2019.

In addition, the financial statements were audited and received an unqualified report from the Company’s independent auditors, KPMG Auditores Independentes. These documents are available in Exhibit II of this Proposal. Management’s comments on the financial situation of the Company, pursuant to item 10 of the Reference Form are available in Exhibit III.

We propose that the above mentioned documents be approved without qualification by the Company’s shareholders.

2.2) Allocation of net income for the fiscal year ended December 31, 2018

Pursuant to subsection II, Paragraph 1, Article 9 of CVM Instruction 481/09, as amended, and in the format of Exhibit 9-1-II of the same Instruction, we have provided information on the allocation of net income for the fiscal year ended December 31, 2018 in Exhibit IV.

We propose that the allocation of the net income be approved as shown in Exhibit IV.

2.3) Setting of the number of members to be elected to the Board of Directors

In accordance with the declared understanding of the CVM, when the Bylaws provide for a minimum and maximum number of members, the decision on the number of members of the Board of Directors shall be subject to a resolution of the Annual General Meeting of Shareholders.

Should item 1.1 (ii) of this Proposal be approved, the Management proposes that the Board of Directors be composed of 10 (ten) members in accordance with the criteria established in the Bylaws of the Company.

Further, the possibility should be noted as to the adoption of the multiple voting process for election of members of the Board of Directors, should this be requested by shareholders representing a minimum of 5% (five percent) of the common shares, pursuant to CVM Instruction 165/91, as amended by CVM Instruction 282/98. In this case, election as a slate shall no longer occur pursuant to Article 21, Paragraph 3 of the Company’s current Bylaws.

2.4) Election of the members of the Board of Directors

Pursuant to Article 20, Paragraph 1 of the Company’s currently effective Bylaws, we propose the election of the following slate as members of the Board of Directors:

- Alexandre Gonçalves Silva

- Ana Paula Vitali Janes Vescovi

- Flavia Buarque de Almeida

- Joaquim Pedro Monteiro de Carvalho Collor de Mello

- Jorge Marques de Toledo Camargo

- José Galló

- José Mauricio Pereira Coelho

- Lucio de Castro Andrade Filho

- Nildemar Secches

- Pedro Wongtschowski

This slate combines candidates who are currently members of Ultrapar’s Board of Directors together with four new candidates. For the first time, Ana Paula Vitali Janes Vescovi, Flavia Buarque de Almeida, José Galló and Joaquim Pedro Monteiro de Carvalho Collor de Mello incorporate Management’s proposed slate. The new candidates bring relevant experience and knowledge to Ultrapar, providing a renewed vision and contributing to the development of the Company.

We believe that the proposed slate will maintain a balanced composition of qualifications among the candidates, based on abilities which, jointly, are important for the Company, as well as contributing to the continuation of the work executed by the Ultrapar’s Management over the years.

The information on candidates’ professional experience can be found in Exhibit V, pursuant to items 12.5 to 12.10 of the Reference Form.

2.5) Setting of Management compensation

We propose that the compensation of the Company’s Management be approved pursuant to Exhibit VI.

We provide additional information on compensation policies and practices of Management in Exhibit VII pursuant to item 13 of the Reference Form to ensure the understanding of the rationale for this proposal.

2.6) Election of the members of the Fiscal Council and their respective alternates given the request for installation of the Fiscal Council made by a shareholder representing more than 2% (two percent) of the voting shares issued by the Company, pursuant to Article 161 to Law 6.404/76 and CVM Instruction 324/00

We propose the election of the following candidates as members of the Company’s Fiscal Council, as well as their alternates:

- Geraldo Toffanello (effective) / Márcio Augustus Ribeiro (alternate)

- Marcelo Amaral Moraes (effective) / Pedro Ozires Predeus (alternate)

- William Bezerra Cavalcanti Filho (effective) / Paulo Cesar Pascotini (alternate)

Detailed information on the candidates can be found in Exhibit V, pursuant to items 12.5 to 12.10 of the Reference Form.

2.7. In the light of the foregoing item above, the setting of the compensation of the Fiscal Council for fiscal year 2019

We propose that the compensation of the members of the Fiscal Council for the period of their term of office be approved according to the terms shown in Exhibit VI.

Access to Documents and Information

Pursuant to Ultrapar’s Bylaws and Article 6 to CVM Instruction 481/09, as amended, documents and information relative to the matters to be approved, including the remote voting ballot to the Extraordinary General Meeting and the Annual General Meeting and any other significant matters for exercising the right to vote in the Meeting, were filed with the CVM and are available from the CVM website (www.cvm.gov.br), from the Company’s headquarters, in the website of B3 (www.b3.com.br) and in the Company’s website (ri.ultra.com.br).

São Paulo, March 11, 2019.

PEDRO WONGTSCHOWSKI

Chairman of the Board of Directors

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EXHIBITS

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EXHIBIT I – REPORT ON THE SOURCE AND RATIONAL FOR THE

PROPOSED AMENDMENTS TO THE BYLAWS OF ULTRAPAR PARTICIPAÇÕES S.A.

(According to annex 11 of CVM Instruction 481/2009)

REPORT ON THE SOURCE AND RATIONAL FOR THE PROPOSED AMENDMENTS TO THE BYLAWS OF ULTRAPAR PARTICIPAÇÕES S.A.


Current version	Proposed version	Comments/Justifications on Proposed Changes
ULTRAPAR PARTICIPAÇÕES S.A. BYLAWS CHAPTER I Name, Headquarters, Purpose and Term Article 1. The Company is an authorized capital company (sociedade de capital autorizado). The name of the Company is ULTRAPAR PARTICIPAÇÕES S.A.	ULTRAPAR PARTICIPAÇÕES S.A. BYLAWS CHAPTER I Name, Headquarters, Purpose and Term Article 1. The Company is an authorized capital company (sociedade de capital autorizado). The name of the Company is ULTRAPAR PARTICIPAÇÕES S.A.	N/A
Sole Paragraph. The admission of the Company on New Market (Novo Mercado) special listing segment of the BM&FBOVESPA S.A. – Securities, Options and Futures Exchange (“BM&FBOVESPA”) subjects the Company, its shareholders, its management and members of the Statutory Audit Council, if installed, to the Listing New Market Regulation of BM&FBOVESPA (“New Market Regulation”).	Sole Paragraph. The Company’s listing on the New Market (Novo Mercado) special segment of B3 S.A. – Brasil, Bolsa, Balcão (“B3”) subjects the Company, its shareholders including controlling shareholders, if applicable, its management and members of the Fiscal Council, if installed, to the Regulations of the New Market of B3 (“New Market Regulation”).	Changes due to New Market Regulation as well as to reflect the new corporate denomination of B3 S.A. – Bolsa, Brasil e Balcão, and to simplify the wording of the provision.
Article 2. The Company’s headquarters and jurisdiction are located in the city of São Paulo, State of São Paulo.	Article 2. The Company’s headquarters and jurisdiction are located in the city of São Paulo, State of São Paulo.	N/A
Article 3. The purpose of the Company is to invest its own capital in commerce, industry, agriculture and service provision, through the subscription or acquisition of shares or quotas of other companies.	Article 3. The purpose of the Company is to invest its own capital in commerce, industry, agriculture and service provision, through the subscription or acquisition of shares or quotas of other companies.	N/A
Article 4. The Company is organized for an indefinite term.	Article 4. The Company is organized for an indefinite term.	N/A


Current version	Proposed version	Comments/Justifications on Proposed Changes
CHAPTER II Capital Stock and Shares Article 5. The subscribed and paid-in capital stock is R$ 5,171,751,608.08 (five billion, one hundred seventy-one million, seven hundred fifty-one thousand, six hundred and eight Reais and eight cents), represented by 556,405,096 (five hundred fifty-six million, four hundred five thousand, ninety-six) nominative common shares, with no par value, and with no issuance of preferred shares or founder’s shares permitted.	CHAPTER II Capital Stock and Shares Article 5. The subscribed and paid-in capital stock is R$ 5,171,751,608.08 (five billion, one hundred seventy-one million, seven hundred fifty-one thousand, six hundred and eight Reais and eight cents), represented by one billion, one hundred and twelve million, eight hundred and ten thousand, one hundred and ninety two (1,112,810,192) nominative common shares, with no par value, and with no issuance of preferred shares or founder’s shares permitted.	Change of wording and to reflect the Company’s stock split at the ratio of one common share to 2 (two) shares of the same class and type, not however implying a change in the capital stock and modification in the financial amount and shareholder participation in the Company’s capital. The stock split aims to reposition the minimum lot price and potentially enable an increase of the trading volume of the Company’s shares.
§1 All of the Company shares are in book-entry form and held in a deposit account with a financial institution authorized by the Brazilian Securities and Exchange Commission – CVM, in the name of their holders, without certificates issued.	§1 All of the Company shares are in book-entry form and held in a deposit account with a financial institution authorized by the Brazilian Securities and Exchange Commission – CVM, in the name of their holders, without certificates issued.	N/A
§2 The transfer and record cost, as well as the cost of the services relating to the book-entry shares, may be charged directly to the shareholder by the bookkeeping institution, as set forth in the stock bookkeeping agreement.	§2 The transfer and record cost, as well as the cost of the services relating to the book-entry shares, may be charged directly to the shareholder by the bookkeeping institution, as set forth in the stock bookkeeping agreement.	N/A
Article 6. The Company is authorized to increase its capital stock up to the limit of eight hundred million (800,000,000) common shares, by resolution of the Board of Directors, notwithstanding any amendment to the Bylaws.	Article 6. The Company is authorized to increase its capital stock up to the limit of one billion and six hundred million (1,600,000,000) common shares, by resolution of the Board of Directors, notwithstanding any amendment to the Bylaws.	Change to reflect the Company’s stock split at the ratio of one common share to 2 (two) shares of the same class and type.


Current version	Proposed version	Comments/Justifications on Proposed Changes
Article 7. The subscription and payment of shares issued by the Company shall follow the criteria provided for in this Article:	Article 7. The subscription and payment of shares issued by the Company shall follow the criteria provided for in this Article:	N/A
a) up to the limit of the authorized capital, the issuance, amount, price and term for payment of the shares to be issued by the Company shall be provided for by the Board of Directors; b) the resolution to increase the capital stock for payment in assets, other than monetary credits, may only be made at a Shareholders’ Meeting; and c) upon the issuance of new shares, debentures convertible into shares or subscription warrants offered on a stock exchange, public subscription or share exchange in a tender offer for the acquisition of corporate control, the Board of Directors may waive the preemptive rights of the former shareholders or reduce the period for the exercise thereof.	a) up to the limit of the authorized capital, the issuance, amount, price and term for payment of the shares to be issued by the Company shall be provided for by the Board of Directors; b) the resolution to increase the capital stock for payment in assets, other than monetary credits, may only be made at a Shareholders’ Meeting; and c) upon the issuance of new shares, debentures convertible into shares or subscription warrants offered on a stock exchange, public subscription or share exchange in a tender offer for the acquisition of corporate control, the Board of Directors may waive the preemptive rights of the former shareholders or reduce the period for the exercise thereof.	N/A
Article 8. The Company may grant stock options through stock option plans, approved by a Shareholders’ Meeting, to directors and executive officers, employees or individuals providing services to the Company or to its directly or indirectly controlled companies.	Article 8. The Company may grant stock options through stock option plans, approved by a Shareholders’ Meeting, to the management and employees.	Exclusion aims to restrict the stock option grant to the management and employees only, aligning the article to the Stock Based Incentive Plan approved by the Annual and Extraordinary General Shareholders’ Meeting held on April 19, 2017, available at IPE system in CVM website.
Article 9. Each common share entitles the holder thereof to one vote for resolutions made at the Shareholders’ Meetings.	Article 9. Each common share entitles the holder thereof to one vote for resolutions made at the Shareholders’ Meetings.	N/A
CHAPTER III Shareholders’ Meetings Article 10. The annual Shareholders’ Meeting shall be called by the Board of Directors within the first four (4) months upon conclusion of the fiscal year and extraordinary meetings shall be held whenever the Company’s interest shall so require.	CHAPTER III Shareholders’ Meetings Article 10. The annual Shareholders’ Meeting shall be called by the Board of Directors within the first four (4) months upon conclusion of the fiscal year and extraordinary meetings shall be held whenever the Company’s interest shall so require.	N/A
§ 1 Documents pertaining to the matters to be deliberated upon at the Shareholders’ Meetings shall be made available to the shareholders, at the Company’s headquarters, at the date of publication of the first call notice, except if a longer period for making such documents available is otherwise required by law or applicable regulations.	§ 1 Documents pertaining to the matters to be deliberated upon at the Shareholders’ Meetings shall be made available to the shareholders, at the Company’s headquarters, at the date of publication of the first call notice, except if a longer period for making such documents available is otherwise required by law or applicable regulations.	N/A


Current version	Proposed version	Comments/Justifications on Proposed Changes
§ 2 The Shareholders’ Meeting shall be presided over by the Chairman of the Board of Directors or by whom he/she may designate. In the absence of the Chairman and of his/her designation, the Shareholders’ Meeting shall be presided over by the Vice-Chairman of the Board of Directors, or by whom he/she may designate. The chairman of the Meeting shall choose one of the attendees to act as secretary of the meeting.	§ 2 The Shareholders’ Meeting shall be presided over by the Chairman of the Board of Directors or by whom he/she may designate. In the absence of the Chairman and of his/her designation, the Shareholders’ Meeting shall be presided over by the Vice-Chairman of the Board of Directors, or by whom he/she may designate. The chairman of the Meeting shall choose one of the attendees to act as secretary of the meeting.	N/A
§ 3 The chairman of the Meeting shall have the exclusive power, in compliance with the rules provided for in these Bylaws, to conduct the election of the members of the Board of Directors, including any decision relating to the number of votes of each shareholder.	§ 3 The chairman of the Meeting shall have the exclusive power, in compliance with the rules provided for in these Bylaws, to conduct the election of the members of the Board of Directors, including any decision relating to the number of votes of each shareholder.	N/A
Article 11. Before the Shareholders’ Meeting is commenced, the shareholders as duly identified shall sign the “Shareholders Attendance Register”, which shall contain their names and the number of shares held by each of them.	Article 11. Before the Shareholders’ Meeting is commenced, the shareholders in attendance, as duly identified, shall sign the “Shareholders Attendance Register”, which shall contain their names and the number of shares held by each of them.	Change in wording to clarify that shareholders physically present at the Shareholders’ Meeting must sign the shareholders’ presence register prior to the commencement of the meeting, considering however participation in the Shareholders’ Meeting may take place on a remote basis.
§ 1 The list of the attending shareholders shall be closed by the chairman of the Meeting at the time the Shareholders’ Meeting is commenced.	§ 1 The list of the attending shareholders shall be closed by the chairman of the Meeting at the time the Shareholders’ Meeting is commenced.	N/A
§ 2 The shareholders who appear at the Shareholders’ Meeting after its commencement may take part in the meeting, however they shall not be entitled to vote on any resolution.	§ 2 The shareholders who appear at the Shareholders’ Meeting after its commencement may take part in the meeting, however they shall not be entitled to vote on any resolution.	N/A


Current version	Proposed version	Comments/Justifications on Proposed Changes
Article 12. At the Shareholders’ Meeting, the Company and the presiding board shall comply with the following requirements for attendance, in addition to the procedures and requirements provided for by law:	Article 12. At the Shareholders’ Meeting, the Company and the presiding board shall comply with the following requirements for attendance, in addition to the procedures and requirements provided for by law:	N/A
a) Up to forty-eight (48) hours prior to the Shareholders’ Meeting: (i) all shareholders shall furnish to the Company a share statement issued by the bookkeeping institution or by the custodian institution, indicating the number of shares held by them of record no more than three (3) days prior to the Shareholders’ Meeting; and (ii) the shareholders represented by proxies shall send to the Company the respective power of attorney; b) The shareholders organized as investment funds shall send the Company, within the same period mentioned in item (a) above: (i) evidence of the capacity of fund manager conferred upon the individual or legal entity representing the shareholder at the Shareholders’ Meeting, or the proxy granting such powers; (ii) the corporate action of the manager, in case it is a legal entity, granting powers to the representative attending the Shareholders’ Meeting or to whom the power of attorney has been granted; and (iii) in the event the representative or proxy is a legal entity, the same documents referred to in (ii) of this item, as related thereto; c) The documents referred to in the preceding items may be presented as copies, however the original documents referred to in item (a), shall be shown to the Company prior to the commencement of the Shareholders’ Meeting, the signatures of which shall not need to be notarized; d) The Company shall adopt the principle of good faith in verifying the validity of the documents demonstrating the representative capacity of shareholder, and will presume the truthfulness of the credible statements made to it; however, the shareholders who fail to present the respective power of attorney granted to their representatives, or the custodian’s statement, in the event the shares are recorded as held with a custodian institution, shall be prohibited from participating in the meeting; and e) In the event the shareholders who were present at the Shareholders’ Meeting (i) were not duly represented; or (ii) did not hold the stated number of shares, the Company shall notify them that, regardless of a new Shareholders’ Meeting, the Company shall disregard the votes of such shareholders, and they shall be liable for losses and damages arising from their acts.	a) Up to forty-eight (48) hours prior to the Shareholders’ Meeting: (i) all shareholders shall furnish to the Company a share statement issued by the bookkeeping institution or by the custodian institution, indicating the number of shares held by them of record no more than three (3) days prior to the Shareholders’ Meeting; and (ii) the shareholders represented by proxies shall send to the Company the respective power of attorney; b) The shareholders organized as investment funds shall send the Company, within the same period mentioned in item (a) above: (i) evidence of the capacity of fund manager conferred upon the individual or legal entity representing the shareholder at the Shareholders’ Meeting, or the proxy granting such powers; (ii) the corporate action of the manager, in case it is a legal entity, granting powers to the representative attending the Shareholders’ Meeting or to whom the power of attorney has been granted; and (iii) in the event the representative or proxy is a legal entity, the same documents referred to in (ii) of this item, as related thereto; c) The documents referred to in the preceding items may be presented as copies, however the original documents referred to in item (a), shall be shown to the Company prior to the commencement of the Shareholders’ Meeting, the signatures of which shall not need to be notarized; d) The Company shall adopt the principle of good faith in verifying the validity of the documents demonstrating the representative capacity of shareholder, and will presume the truthfulness of the credible statements made to it; however, the shareholders who fail to present the respective power of attorney granted to their representatives, or the custodian’s statement, in the event the shares are recorded as held with a custodian institution, shall be prohibited from participating in the meeting; and e) In the event the shareholders who were present at the Shareholders’ Meeting (i) were not duly represented; or (ii) did not hold the stated number of shares, the Company shall notify them that, regardless of a new Shareholders’ Meeting, the Company shall disregard the votes of such shareholders, and they shall be liable for losses and damages arising from their acts.	N/A


Current version	Proposed version	Comments/Justifications on Proposed Changes
Article 13. Resolutions of the Shareholders’ Meeting shall require a majority vote of the attendees, not taking into account blank votes, except as otherwise provided for by law.	Article 13. Resolutions of the Shareholders’ Meeting shall require a majority vote of the attendees, not taking into account blank votes, except as otherwise provided for by law or in these Bylaws.	Change in wording considering the provision of Article 49, (a) of the Bylaws proposal.
Article 14. Minutes of the Shareholders’ Meetings shall be kept and signed by the presiding board of the meeting and by the attending shareholders.	Article 14. Minutes of the Shareholders’ Meetings shall be kept and signed by the presiding board of the meeting and by the attending shareholders.	N/A
Article 15. The Shareholders’ Meeting shall determine the overall compensation of the members of the Board of Directors and of the executive officers, specifying the amounts to be allocated to each managing body.	Article 15. The Shareholders’ Meeting shall determine the overall compensation of the members of the Board of Directors and of the executive officers.	Change to simplify the wording, considering that the approval of said matter by the Shareholders’ Meeting is based on the Management’s proposal and item 13 of the Reference Form, both filed with the call notice of the meeting. Such documents already disclose the information regarding the compensation of each corporate body.
§ 1 The Board of Directors shall determine the compensation to be paid to the Chief Executive Officer and the other executive officers, in the latter case based on the Chief Executive Officer’s recommendation, in accordance with the amount set forth at the Shareholders’ Meeting, in the introductory paragraph of this Article and the competencies of the People and Organization Committee, as provided for in Article 42 herein.	§ 1 The Board of Directors shall determine the compensation to be paid to the Chief Executive Officer and the other executive officers, considering the proposal of the People Committee, in accordance with the amount set forth at the Shareholders’ Meeting, in the introductory paragraph of this Article and the competencies of the People Committee, as provided for in Article 41 herein.	Changes to clarify the Board of Directors shall set the compensation to be a granted to the Chief Executive Officer and to each other member of the Board of Executive Officers, always considering the amount approved by the Shareholders’ Meeting and the proposal of the People Committee.
§ 2 The members of the Board of Directors and the executive officers are entitled to profit sharing, as provided for by law.	§ 2 The members of the Board of Directors and the executive officers are entitled to profit sharing, as provided for by law.	N/A
CHAPTER IV Management – General Rules Article 16. The Company shall be managed by a Board of Directors and a Board of Executive Officers.	CHAPTER IV Management – General Rules Article 16. The Company shall be managed by a Board of Directors and a Board of Executive Officers.	N/A
Sole Paragraph. The commencement of the term of the directors and executive officers, which shall not require the posting of a bond, shall be made upon the execution of the instrument of assumption of duties. The commencement of the term of the directors and executive officers shall be conditioned on their prior execution of the Instrument of Consent of the Directors’ and Executive Officers provided for in the New Market Regulation and of the Disclosure and Trading Policy adopted by the Company.	Sole Paragraph. The commencement of the term of the directors and executive officers, which shall not require the posting of a bond, shall be contingent upon their adhesion to the Disclosure and Trading Policy adopted by the Company and execution of the respective deed of investiture, which shall include consent to the contents of Article 52 hereof.	Changes made in order to align the Bylaws to the New Market Regulation, that no longer requires the Instrument of Agreement of the Managers but now demands the deed of investiture includes a commitment to the arbitration clause.


Current version	Proposed version	Comments/Justifications on Proposed Changes
CHAPTER V Board of Directors Section I – Members Article 17. The Board of Directors shall be comprised of at least five (5) and at maximum nine (9) members, all of whom shall be elected and removable at the Shareholders’ Meeting, for a unified term of two (2) years, with reelection being permitted.	CHAPTER V Board of Directors Section I – Members Article 17. The Board of Directors shall be comprised of at least five (5) and at maximum eleven (11) members, all of whom shall be elected and removable at the Shareholders’ Meeting, for a unified term of two (2) years, with reelection being permitted.	Increase in the maximum number of members of the Board of Directors to be elected by a Shareholders’ Meeting, allowing the introduction of more competencies and experience in the composition of the Board of Directors, given the increased complexity of the Company’s business.
§ 1 The positions of Chairman of the Board of Directors and Chief Executive Officer may not be held by the same individual.	§ 1 The positions of Chairman of the Board of Directors and Chief Executive Officer or principal executive of the Company may not be held by the same individual.	Change to align with the statutory clause required in the New Market Regulation.
§ 2 The Board of Directors shall adopt Internal Bylaws that shall provide for, among other relevant matters, its own operation, and the rights and duties of its members, as well as their relationship with the Board of Executive Officers and other corporate bodies.	§ 2 The Board of Directors shall adopt Internal Bylaws that shall provide for, among other relevant matters, its own operation, and the rights and duties of its members, as well as their relationship with the Board of Executive Officers and other corporate bodies.	N/A
§ 3 The only persons eligible for election to the Board of Directors, unless otherwise permitted by the Shareholders’ Meeting, shall be those who, in addition to complying with legal and regulatory requirements and being of well-regarded reputation, do not hold any position in a company which may be considered a competitor of the Company or its controlled companies, and do not have, nor represent, a conflicting interest with the Company’s interest or those of its controlled companies; it shall be presumed that a person has a conflicting interest with the Company if, cumulatively: (i) he/she has been elected by a shareholder who has also elected a director in a competing company; and (ii) he/she has a subordinate relationship with the shareholder who elected him/her.	§ 3 Observed the requirements set forth in the Company’s corporate policies, the only persons eligible for election to the Board of Directors, unless otherwise permitted by the Shareholders’ Meeting, shall be those who, in addition to complying with legal and regulatory requirements and being of well-regarded reputation, do not hold any position in a company which may be considered a competitor of the Company or its controlled companies, and do not have, nor represent, a conflicting interest with the Company’s interest or those of its controlled companies; it shall be presumed that a person has a conflicting interest with the Company if, cumulatively: (i) he/she has been elected by a shareholder who has also elected a director in a competing company; and (ii) he/she has a subordinate relationship with the shareholder who elected him/her.	Inclusion to align the election of the Board of Directors with the criteria of the management nomination policy required under the New Market Regulation.
§ 4 Subject to the introductory paragraph of this Article, the number of members who will comprise the Board of Directors for each term of office shall be determined at each Shareholders’ Meeting electing the members of the Board of Directors, and which must be submitted to a vote by the chairman of the Meeting.	§ 4 Subject to the introductory paragraph of this Article, the number of members who will comprise the Board of Directors for each term of office shall be determined at each Shareholders’ Meeting electing the members of the Board of Directors, and which must be submitted to a vote by the chairman of the Meeting.	N/A


Current version	Proposed version	Comments/Justifications on Proposed Changes
Article 18. At least thirty percent (30%) of the members of the Board of Directors shall be Independent Directors.	Article 18. The Board of Directors of the Company shall have, at least, thirty percent (30%) or 02 (two), whichever is higher, independent members, pursuant to the New Market Regulation, and the classification of the appointed members of the Board of Directors as independent Directors shall be voted on the Shareholders’ meeting that elect them.	Change in order to align with the statutory clause required under the New Market Regulation.
§ 1 Independent Directors shall be those who meet the independence requirements provided for in the New Market Regulation.	There is no corresponding provision.	Exclusion due to new criteria and procedures set forth in the New Market Regulation for recognizing members of the Board of Directors as independent. The recognition of the independent director shall meet the criteria and procedures established in the New Market Regulation.
§ 2 Independent Directors shall also be those who have been elected in conformity with Article 141, Paragraph 4, of Law no. 6,404/76.	There is no corresponding provision.
§ 3 Where, as a result of compliance with the percentage referred to in the introductory paragraph of this Article, the number of directors results in a fraction, such number will be rounded to: (i) the immediately higher whole number, if the fraction is equal to or higher than five tenths (0.5); or (ii) the immediately lower whole number, if the fraction is lower than five tenths (0.5).	§ 1 When, as a result of compliance with the percentage referred to in the introductory paragraph of this Article, the number of directors results in a fraction, such number will be rounded to the immediately higher whole number.	Alignment with the new rule for rounding up set forth in the New Market Regulation.
Article 19. If a member of the Board of Directors fails to meet the requirements set forth in Article 17 above due to a supervening or unknown fact at the time of his/her election, he/she shall be immediately replaced.	Article 19. If a member of the Board of Directors fails to meet the requirements set forth in Article 17 above due to a supervening or unknown fact at the time of his/her election, he/she shall be immediately replaced.	N/A
Sole Paragraph. The same actions provided for in the introductory paragraph of this Article shall be taken in the event any of the Independent Directors fails to meet the independence requirements set forth in Article 18, resulting in the thirty percent (30%) requirement provided for in the same article not being met.	Sole Paragraph. The same actions provided for in the introductory paragraph of this Article shall be taken in the event any of the independent Directors fails to meet the independence criteria set forth in the New Market Regulation, resulting in noncompliance with the minimum share of thirty percent (30%) of independent Directors, as provided in Article 18 hereof.	Alignment with the provisions of the New Market Regulation on the matter.
Section II – Election Article 20. Except for the provisions in Article 21, the election of the members of the Board of Directors shall be made through the nomination of a slate of candidates.	Section II – Election Article 20. Except for the provisions in Article 21, the election of the members of the Board of Directors shall be made through the nomination of a slate of candidates.	N/A


Current version	Proposed version	Comments/Justifications on Proposed Changes
§ 1 Under the election provisions of this Article, only the following slates of candidates will be eligible for election: (a) those nominated by the Board of Directors; or (b) those nominated by any shareholder or group of shareholders, as provided for in Paragraph 3 hereof.	§ 1 Under the election provisions of this Article, only the following slates of candidates will be eligible for election: (a) those nominated by the Board of Directors; or (b) those nominated by any shareholder or group of shareholders, as provided for in Paragraph 3 hereof.	N/A
§ 2 At the date the Shareholders’ Meeting for electing the members of the Board of Directors is called, the Board of Directors shall make available at the Company’s headquarters a statement signed by each of the members of the slate of candidates nominated by it, containing: (a) their full identification; (b) a complete description of their professional experience, describing the professional activities previously performed, as well as their professional and academic qualifications; and (c) information about disciplinary and judicial proceedings for which a final judgment was rendered and in which any such members have been convicted, as well as inform, if the case may be, the existence of events of limitations or conflict of interest provided for in Article 147, Paragraph 3 of Law no. 6,404/76.	§ 2 At the date the Shareholders’ Meeting for electing the members of the Board of Directors is called, the Board of Directors shall make available at the Company’s headquarters a statement signed by each of the members of the slate of candidates nominated by it, containing: (a) their full identification; (b) a complete description of their professional experience, describing the professional activities previously performed, as well as their professional and academic qualifications; and (c) information about disciplinary and judicial proceedings for which a final judgment was rendered and in which any such members have been convicted, as well as inform, if the case may be, the existence of events of limitations or conflict of interest provided for in Article 147, Paragraph 3 of Law 6,404/76.	N/A
§ 3 The shareholders or group of shareholders desiring to propose another slate of candidates to be elected to the Board of Directors shall, at least five (5) days prior the date of the Shareholders’ Meeting, send to the Board of Directors statements individually signed by the candidates nominated by them, containing the information mentioned in the preceding Paragraph; the Board of Directors shall immediately disclose such information, by notice posted on the Company’s internet website and sent by electronic means of communication to the CVM and the BM&FBOVESPA notifying them that the documents with respect to the other slate of candidates submitted to the Board of Directors are available to the shareholders at the Company’s headquarters.	§ 3 The shareholders or group of shareholders desiring to propose another slate of candidates to be elected to the Board of Directors shall, at least five (5) days prior the date of the Shareholders’ Meeting, send to the Board of Directors statements individually signed by the candidates nominated by them, containing the information mentioned in the preceding Paragraph; the Board of Directors shall immediately disclose such information, by notice posted on the Company’s internet website and sent by electronic means of communication to the CVM and the B3 notifying them that the documents with respect to the other slate of candidates submitted to the Board of Directors are available to the shareholders at the Company’s headquarters.	Adjustment made to reflect the new corporate denomination of B3.


Current version	Proposed version	Comments/Justifications on Proposed Changes
§ 4 The persons nominated by the Board of Directors or by shareholders shall be identified, as the case may be, as candidates to Independent Directors, subject to the provisions of Article 18 above.	§ 4 The persons nominated by the Board of Directors or by shareholders shall be identified, as the case may be, as candidates to independent Directors, subject to the provisions of Article 18 above, as well as the contents of the New Market Regulation.	Changes to include the reference to the provisions of the New Market Regulation, notably the provisions referring to characterization of the person nominated to the board of directors as an independent director.
§ 5 The same person may stand for election in two or more slates of candidates, including those nominated by the Board of Directors.	§ 5 The same person may stand for election in two or more slates of candidates, including those nominated by the Board of Directors.	N/A
§ 6 Each shareholder shall be entitled to vote for only one slate of candidates, and the slate of candidates receiving the largest number of votes at the Shareholders’ Meeting will be elected.	§ 6 Each shareholder shall be entitled to vote for only one slate of candidates, and the slate of candidates receiving the largest number of votes at the Shareholders’ Meeting will be elected.	N/A
Article 21. When electing members to the Board of Directors, shareholders will be entitled to request, as required by law, the adoption of a cumulative voting process, provided that they do so within, at least, forty-eight (48) hours in advance of the Shareholders’ Meeting.	Article 21. When electing members to the Board of Directors, shareholders will be entitled to request, as required by law, the adoption of a cumulative voting process, provided that they do so within, at least, forty-eight (48) hours in advance of the Shareholders’ Meeting.	N/A
§ 1 The Company, immediately after receiving the request, shall notify the CVM and the BM&FBOVESPA by electronic means and post on its internet website that the election will be conducted by cumulative voting.	§ 1 The Company, immediately after receiving the request, shall notify the CVM and the B3 by electronic means and post on its internet website that the election will be conducted by cumulative voting.	Adjustment made to reflect the new corporate denomination of B3.
§ 2 After the Shareholders’ Meeting is commenced, the presiding board shall calculate the number of votes to which each shareholder is entitled by reviewing the signatures appearing on the Shareholders Attendance Register and the number of shares held by the attending shareholders.	There is no corresponding provision.	Exclusion to simplify the Bylaws.
§ 3 In the event members of the Board of Directors are elected by cumulative voting, the candidates will not be elected through a nomination on a slate of candidates; the candidates for the Board of Directors shall be those who are part of the slate of candidates as provided for in Article 20, as well as the candidates who are nominated by a shareholder attending the meeting, provided that the Shareholders’ Meeting is provided with the statements signed by these candidates as set forth in Paragraph 2 of Article 20 of these Bylaws.	§ 2 In the event members of the Board of Directors are elected by cumulative voting, the candidates will not be elected through a nomination on a slate of candidates; the candidates for the Board of Directors shall be those who are part of the slate of candidates as provided for in Article 20, as well as the candidates who are nominated by a shareholder attending the meeting, provided that the Shareholders’ Meeting is provided with the statements signed by these candidates as set forth in Paragraph 2 of Article 20 of these Bylaws.	Change in numbering.


Current version	Proposed version	Comments/Justifications on Proposed Changes
§ 4 Each shareholder shall be entitled to cast the entirety of the votes to which he/she is entitled on one sole candidate or to distribute them among several candidates; the candidates who received the largest number of votes shall be elected.	§ 3 Each shareholder shall be entitled to cast the entirety of the votes to which he/she is entitled on one sole candidate or to distribute them among several candidates; the candidates who received the largest number of votes shall be elected.	Change in numbering.
§ 5 Positions that are not filled due to a tie vote shall require a new election, following the same procedure, adjusting the number of votes to which each shareholder will be entitled to the number of positions to be filled.	§ 4 Positions that are not filled due to a tie vote shall require a new election, following the same procedure, adjusting the number of votes to which each shareholder will be entitled to the number of positions to be filled.	Change in numbering.
§ 6 In the event the election has been conducted by cumulative voting, the removal of any member of the Board of Directors by the Shareholders’ Meeting shall entail the removal of the other members, giving rise to a new election.	§ 5 In the event the election has been conducted by cumulative voting, the removal of any member of the Board of Directors by the Shareholders’ Meeting shall entail the removal of the other members, giving rise to a new election.	Change in numbering.
§ 7 In the event the Company may be controlled by one shareholder or group of shareholders, as defined in Article 116 of law no. 6,404/76, shareholders representing ten percent (10%) of the capital stock may require, in conformity with Paragraph 4 of Article 141 of Law no. 6,404/76, that the election of one of the members of the Board of Directors is carried out separately, notwithstanding the rules set forth in Article 20 above.	§ 6 In the event the Company may be controlled by one shareholder or group of shareholders, as defined in Article 116 of law no. 6,404/76, shareholders representing ten percent (10%) of the capital stock may require, in conformity with Paragraph 4 of Article 141 of Law 6,404/76, that the election of one of the members of the Board of Directors is carried out separately, notwithstanding the rules set forth in Article 20 above.	Change in numbering.
Article 22. In the event a director residing and domiciled outside Brazil is elected, the commencement of his/her term shall be conditioned on the appointment of an attorney-in-fact, residing and domiciled in Brazil, empowered to receive service of process for any corporate law-based lawsuit that may be brought against him/her. The term of such power of attorney shall be for, at least, three (3) years after the end of the term of office of the respective director.	Article 22. In the event a director residing and domiciled outside Brazil is elected, the commencement of his/her term shall be conditioned on the appointment of an attorney-in-fact, residing and domiciled in Brazil, empowered to receive service of process for any corporate law-based lawsuit that may be brought against him/her. The term of such power of attorney shall be for, at least, three (3) years after the end of the term of office of the respective director.	N/A
Article 23. The Board of Directors shall elect a Chairman and Vice-Chairman among its members, to occur at the first meeting after the commencement of the directors´ term or at the first meeting after there is a vacancy of these positions on the Board of Directors.	Article 23. The Board of Directors shall elect a Chairman and Vice-Chairman among its members, to occur at the first meeting after the commencement of the directors´ term or at the first meeting after there is a vacancy of these positions on the Board of Directors.	N/A


Current version	Proposed version	Comments/Justifications on Proposed Changes
Section III – Meetings and Replacements Article 24. The Board of Directors shall hold regular meetings once every three (3) months and special meetings whenever called by the Chairman or by any two (2) directors.	Section III – Meetings and Replacements Article 24. The Board of Directors shall hold regular meetings once every three (3) months and special meetings whenever called by the Chairman or by any two (2) directors.	N/A
§ 1 The meetings of the Board of Directors shall be called in writing, by letter, telegram, fax, e-mail or any other form that allows proof of receipt of the call notice by the recipient, and shall contain, in addition to the place, date and time of the meeting, the agenda.	§ 1 The meetings of the Board of Directors shall be called in writing, by letter, telegram, fax, e-mail or any other form that allows proof of receipt of the call notice by the recipient, and shall contain, in addition to the place, date and time of the meeting, the agenda.	N/A
§ 2 The meetings of the Board of Directors shall be called at least three (3) days in advance. Regardless of the formalities observed in calling the meeting, a meeting shall be deemed to be duly called if attended by all the members of the Board of Directors.	§ 2 The meetings of the Board of Directors shall be called at least three (3) days in advance. Regardless of the formalities observed in calling the meeting, a meeting shall be deemed to be duly called if attended by all the members of the Board of Directors.	N/A
§ 3 In case of urgency, the Chairman of the Board of Directors may call a meeting of the Board of Directors with less than the period provided for in Paragraph 2 of this Article, provided that in this case the meeting shall not be held unless at least two-thirds (2/3) of the elected members attend the meeting.	§ 3 In case of urgency, the Chairman of the Board of Directors (or a third party he or she may appoint) may call a meeting of the Board of Directors with less than the period provided for in Paragraph 2 of this Article, provided that in this case the meeting shall not be held unless at least two-thirds (2/3) of the elected members attend the meeting.	The inclusion is to instill greater efficiency in the calling of urgent meetings of the Board of Directors.
§ 4 The directors may attend the meetings of the Board of Directors by telephone conference, videoconference or by any other means of communication allowing the identification of the director and simultaneous communication with all the other persons present at the meeting. In this case, directors will be considered to be present at the meeting and sign the corresponding minutes.	§ 4 The directors may attend the meetings of the Board of Directors by telephone conference, videoconference or by any other means of communication allowing the identification of the director and simultaneous communication with all the other persons present at the meeting. In this case, directors will be considered to be present at the meeting and sign the corresponding minutes.	N/A
Article 25. Except for the provisions in Paragraph 3 of Article 24, the majority of the directors must attend a meeting of the Board of Directors for it to commence, including the Chairman or the Vice-Chairman, and the resolutions shall require a majority vote, with the Chairman or, in his/her absence, the Vice-Chairman, in addition to his/her own vote, providing the casting vote.	Article 25. Except for the provisions in Paragraph 3 of Article 24, the majority of the directors must attend a meeting of the Board of Directors for it to commence, including the Chairman or the Vice-Chairman, and the resolutions shall require a majority vote, with the Chairman or, in his/her absence, the Vice-Chairman, in addition to his/her own vote, providing the casting vote.	N/A


Current version	Proposed version	Comments/Justifications on Proposed Changes
Sole Paragraph. In event of absence or temporary unavailability of the Chairman of the Board of Directors, his/her duties will be exercised, on a temporary basis, by the Vice-Chairman or by another member of the Board of Directors nominated by him/her.	Sole Paragraph. In event of absence or temporary unavailability of the Chairman of the Board of Directors, his/her duties will be exercised, on a temporary basis, by the Vice-Chairman or by another member of the Board of Directors nominated by him/her.	N/A
Article 26. No member of the Board of Directors may have access to information, take part in resolutions and discussions of the Board of Directors or of any managing bodies, vote or, in any manner, intervene in the matter in which he/she is directly or indirectly in a conflict with the Company’s interests, as provided for by law.	Article 26. No member of the Board of Directors may have access to information, take part in resolutions and discussions of the Board of Directors or of any managing bodies, vote or, in any manner, intervene in the matter in which he/she is directly or indirectly in a conflict with the Company’s interests, as provided for by law.	N/A
Article 27. Except for the provisions in Paragraph 6 of Article 21, a substitute for a vacancy on the Board of Directors shall be appointed by the remaining directors and shall hold the office until the subsequent Shareholders’ Meeting, at which a new director shall be elected for remaining term of office of the replaced director. In the event of vacancy of the majority of the Board of Directors, a Shareholders’ Meeting shall be called within fifteen (15) days from the date thereof, in order to elect substitutes, who shall complete the term of office of the replaced members.	Article 27. Except for the provisions in Paragraph 5 of Article 21, a substitute for a vacancy on the Board of Directors shall be appointed by the remaining directors and shall hold the office until the subsequent Shareholders’ Meeting, at which a new director shall be elected for remaining term of office of the replaced director. In the event of vacancy of the majority of the Board of Directors, a Shareholders’ Meeting shall be called within fifteen (15) days from the date thereof, in order to elect substitutes, who shall complete the term of office of the replaced members.	Change in numbering.
Section IV – Powers Article 28. The Board of Directors shall have the power to: a) set the general guidelines of the Company’s and its subsidiaries’ business;	Section IV – Powers Article 28. The Board of Directors shall have the power to: a) set the general guidelines of the Company’s and its subsidiaries’ business;	N/A
b) elect and remove the executive officers of the Company, appointing among them the Chief Executive Officer and the Investor Relations Officer, and define their duties;	b) elect and remove the executive officers of the Company, appointing among them the Chief Executive Officer and the Investor Relations Officer, and define their duties;	N/A
c) oversee the management of the executive officers; examine, at any time, the books and documents of the Company; request information about agreements previously entered into or in the process of being entered into by the Company or by its subsidiaries;	c) oversee the management of the executive officers; examine, at any time, the books and documents of the Company; request information about agreements previously entered into or in the process of being entered into by the Company or by its subsidiaries;	N/A
d) express its opinion with respect to management reports and the financial statements of the Company, submitting them to the Shareholders’ Meeting for approval;	d) express its opinion with respect to Management Report and the financial statements of the Company, submitting them to the Shareholders’ Meeting for approval;	Change in wording.


Current version	Proposed version	Comments/Justifications on Proposed Changes
e) fix the compensation of the members of the Board of Directors and of the Chief Executive Officer and of the other executive officers, in the latter case based on the Chief Executive Officer’s recommendation;	e) fix the compensation of the members of the Board of Directors and the individual compensation of the Executive Officers of the Company, considering the proposal of the People Committee, according to article 41, single paragraph, “b”.	Aligned with the changes proposed to Paragraph 1, Article 15, the modification aims to clarify that the Board of Director’s decision on the compensation of the Chief Executive Officer and other members of the Board of Executive Officers shall always consider the People Committee proposal.
f) define the overall criteria regarding the compensation and benefits policy of the directors and executive officers as well as of the senior employees of the Company and, whenever necessary, of its subsidiaries, taking into consideration the People and Organization Committee’s proposal;	f) define the overall criteria regarding the compensation and benefits policy of the directors and executive officers as well as of the senior employees of the Company and, whenever necessary, of its subsidiaries, taking into consideration the People Committee’s proposal;	Change in the new denomination of the People and organization Committee to better reflect the competencies and responsibilities of the corporate body.
g) grant stock options under the terms of Article 8 of these Bylaws;	g) grant stock options under the terms of Article 8 of these Bylaws;	N/A
h) call the Shareholders’ Meetings;	h) call the Shareholders’ Meetings;	N/A
i) submit a slate of candidates to the Shareholders’ Meeting for election of directors, pursuant to Article 20 of these Bylaws;	i) submit a slate of candidates to the Shareholders’ Meeting for election of directors, pursuant to Article 20 of these Bylaws;	N/A
j) propose to the Shareholders’ Meeting the allocation of the balance of the adjusted net profit for the year, as referred to in letter “d”, of Article 55 of these Bylaws;	j) propose to the Shareholders’ Meeting the allocation of the balance of the adjusted net income for the year, as referred to in letter “c”, paragraph one of Article 54 of these Bylaws;	Change in numbering.
k) approve the preparation of financial statements at shorter intervals than the fiscal year, the distribution of dividends based on such financial statements or interim dividends, as well as the payment or crediting of interest on own capital, under the terms of the applicable laws;	k) approve the preparation of financial statements at shorter intervals than the fiscal year, the distribution of dividends based on such financial statements or interim dividends, as well as the payment or crediting of interest on own capital, under the terms of the applicable laws;	N/A
l) pass resolutions on the issuance of shares, debentures convertible into shares and subscription warrants, within the limits of the authorized capital of the Company;	l) pass resolutions on the issuance of shares, debentures convertible into shares and subscription warrants, within the limits of the authorized capital of the Company;	N/A
m) submit proposals to the Shareholders’ Meeting concerning an amalgamation, spin-off, merger, merger of shares or dissolution of the Company, as well as amendments to these Bylaws;	m) submit proposals to the Shareholders’ Meeting concerning an amalgamation, spin-off, merger, merger of shares or dissolution of the Company, as well as amendments to these Bylaws;	N/A
n) authorize the acquisition of shares of the Company to be held as treasury shares, cancelled or subsequently disposed of, subject to applicable laws;	n) authorize the acquisition of shares of the Company to be held as treasury shares, cancelled or subsequently disposed of, subject to applicable laws;	N/A


Current version	Proposed version	Comments/Justifications on Proposed Changes
o) approve the public issuance of commercial promissory notes by the Company or by its controlled companies;	o) approve the public issuance of commercial promissory notes by the Company or by its controlled companies;	N/A
p) approve the following transactions, either by the Company or by its controlled companies, when the value exceeds three percent (3%) of the Company’s shareholders’ equity: (i) acquisition, disposal or encumbrance of assets; (ii) granting of collateral; (iii) borrowings or waivers of any rights; (iv) investment or investment project; and (v) direct or indirect acquisition or disposal of an equity interest, including by means of a consortium or special partnership;	p) approve the following transactions, either by the Company or by its controlled companies, when the value exceeds five percent (5%) of the Company’s shareholders’ equity: (i) acquisition, disposal or encumbrance of assets; (ii) granting of collateral; (iii) borrowings or waivers of any rights; (iv) investment or investment project; and (v) direct or indirect acquisition or disposal of an equity interest, including by means of a consortium or special partnership;	Change aiming to give more agility to the Company’s management considering the significant increase in the size of the Company in recent years.
q) approve the execution of shareholders’ agreements by the Company or by its controlled companies;	q) approve the execution of shareholders’ agreements by the Company or by its controlled companies;	N/A
r) select and dismiss the independent auditors, after receiving the Audit Committee’s opinion;	r) select and dismiss the independent auditors, after receiving the Audit and Risks Committee’s opinion;	N/A
s) provide a list with the names of three firms specialized in corporate economic appraisals to prepare an appraisal report with respect to the shares of Company, in the event of deregistration as a publicly-held company or withdrawal from the New Market, as set forth in Paragraph 2 of Article 48 of these Bylaws;	There is no corresponding provision.	Change due to the New Market Regulation no longer including this procedure.
t) express an opinion as to whether it is in favor or against any tender offer for the shares of the Company, through a prior opinion containing the reasons for such position disclosed within 15 (fifteen) days from the publication of the tender offer notice, opinion which should cover, at minimum: (i) the convenience and opportunity of the tender offer for shareholders as a whole and with respect to the liquidity of their shares, (ii) the effects of the tender offer on the Company; (iii) the strategic plans disclosed by the offeror in relation to the Company; (iv) other points that the Board of Directors considers pertinent, as well as information required by the rules set forth by the CVM; and	s) express an opinion as to whether it is in favor or against any tender offer for the shares of the Company, through a prior opinion containing the reasons for such position disclosed within 15 (fifteen) days from the publication of the tender offer notice, opinion which should cover, at minimum: (i) the convenience and opportunity of the tender offer for the Company and its shareholders as a whole, including with respect to the price and potential impacts on share liquidity; (ii) any alternatives to accepting the tender offer for the shares on free float;	Alignment with the text of the New Market Regulation.
There is no corresponding provision.	t) approve corporate policies as per the proposals submitted by the relevant entities; and	Inclusion of such duty to improve the organization and clarity of the Bylaws.
u) pass resolutions on other matters not regulated by these Bylaws, as well as otherwise resolving such matters.	u) pass resolutions on other matters not regulated by these Bylaws, as well as otherwise resolving such matters.	N/A


Current version	Proposed version	Comments/Justifications on Proposed Changes
Article 29. The Chairman of the Board of Directors shall: a) call the Shareholders’ Meeting, whenever so decided by the Board of Directors or, exceptionally, on his/her own initiative, in which case he/she shall immediately inform the other directors of the meeting;	Article 29. The Chairman of the Board of Directors shall: a) call the Shareholders’ Meeting, whenever so decided by the Board of Directors or, exceptionally, on his/her own initiative, in which case he/she shall immediately inform the other directors of the meeting;	N/A
b) call and preside the meetings of the Board of Directors;	b) call and preside the meetings of the Board of Directors;	N/A
c) communicate the dates of the regular meetings and oversee the Board of Director’s administrative activities; and	c) communicate the dates of the regular meetings and oversee the Board of Director’s administrative activities; and	N/A
d) convey resolutions made by the Board of Directors to the Board of Executive Officers and instruct the latter on the fulfillment thereof.	d) convey resolutions made by the Board of Directors to the Board of Executive Officers and instruct the latter on the fulfillment thereof.	N/A
Article 30. The Vice-Chairman of the Board of Directors shall replace the Chairman, in his/her occasional absences and unavailability and, in case of vacancy in the office of Chairman, to hold such office until the date of the election of the new Chairman.	Article 30. The Vice-Chairman of the Board of Directors shall replace the Chairman, in his/her occasional absences and unavailability and, in case of vacancy in the office of Chairman, to hold such office until the date of the election of the new Chairman.	N/A
CHAPTER VI Board of Executive Officers Article 31. The Board of Executive Officers shall be comprised of four (4) to eight (8) executive officers, who may or may not be shareholders, shall be resident in Brazil and be elected by the Board of Directors, without specific designation except for the Chief Executive Officer and the Investor Relations Officer.	CHAPTER VI Board of Executive Officers Article 31. The Board of Executive Officers shall be comprised of up to eight (8) executive officers, who may or may not be shareholders, shall be resident in Brazil and be elected by the Board of Directors, without specific designation except for the Chief Executive Officer and the Investor Relations Officer.	Change aims to give more flexibility to the functioning of the Board of Executive Officers which shall now have the minimum number of Officers pursuant to Law 6,404/76.
Sole paragraph. The term of the members of the Board of Executive Officers shall be 2 (two) years, with reelection permitted, and will continue until each successor is elected.	Sole paragraph. The term of the members of the Board of Executive Officers shall be 2 (two) years, with reelection permitted, and will continue until each successor is elected.	N/A
Article 32. The Board of Executive Officers shall hold meetings whenever the interest of the Company shall so require and their decisions shall be made by simple majority of votes, requiring one-half of the number of the elected members to form a quorum, with the Chief Executive Officer, in addition to his/her own vote, providing the casting vote.	Article 32. The Board of Executive Officers shall hold meetings whenever the interest of the Company shall so require and their decisions shall be made by simple majority of votes, requiring one-half of the number of the elected members to form a quorum, with the Chief Executive Officer, in addition to his/her own vote, providing the casting vote.	N/A


Current version	Proposed version	Comments/Justifications on Proposed Changes
Article 33. The Board of Executive Officers shall perform the acts necessary for the regular operation of the Company and for the management of its business, and shall be authorized to open and close branches, offices or other premises and facilities in any location in Brazil or abroad, subject to the guidelines provided by the Board of Directors.	Article 33. The Board of Executive Officers shall perform the acts necessary for the regular operation of the Company and for the management of its business, and shall be authorized to open and close branches, offices or other premises and facilities in any location in Brazil or abroad, subject to the guidelines provided by the Board of Directors.	N/A
§ 1 Actions which may affect third parties shall be signed by two executive officers, jointly, or by one executive officer and one attorney-in-fact, or by two attorneys-in-fact, with specific powers.	§ 1 Actions which may affect third parties shall be signed by two executive officers, jointly, or by one executive officer and one attorney-in-fact, or by two attorneys-in-fact, with specific powers.	N/A
§ 2 The Company, acting by two of its executive officers, may appoint attorneys-in-fact, specifying in the power of attorney the purpose thereof, the powers granted and the term of the power of attorney, which shall not exceed one year, unless the power of attorney is granted with ad judicia powers, in which case it may be valid for an indefinite term.	§ 2 The Company, acting by two of its executive officers, may appoint attorneys-in-fact, specifying in the power of attorney the purpose thereof, the powers granted and the term of the power of attorney, which shall not exceed one year, unless the power of attorney is granted with ad judicia powers, in which case it may be valid for an indefinite term.	N/A
§ 3 The Board of Executive Officers may, in exceptional cases, authorize the Company to be represented by one sole executive officer or one sole attorney-in-fact appointed for such purpose, and shall specify the purpose and limit of the powers granted in the minutes of the meeting.	§ 3 The Board of Executive Officers may, in exceptional cases, authorize the Company to be represented by one sole executive officer or one sole attorney-in-fact appointed for such purpose, and shall specify the purpose and limit of the powers granted in the minutes of the meeting.	N/A
Article 34. The Chief Executive Officer shall: a) direct, instruct and coordinate the activities of the Company; b) call and preside over the meetings of the Board of Executive Officers; and c) represent the Company in court, either as plaintiff or defendant.	Article 34. The Chief Executive Officer shall: a) direct, instruct and coordinate the activities of the Company; b) call and preside over the meetings of the Board of Executive Officers; and c) represent the Company in court, either as plaintiff or defendant.	N/A
Article 35. The executive officer exercising the duties of Investor Relations Officer shall provide information to investors, the CVM and the stock exchange or over-the-counter market on which the Company’s securities are traded, as well as maintain the registration of the Company updated in conformity with the CVM’s applicable regulations and to meet the other requirements contained in such regulations, in addition to exercising the duties assigned to him/her by the Board of Directors.	Article 35. The executive officer exercising the duties of Investor Relations Officer shall provide information to investors, the CVM and the stock exchange or over-the-counter market on which the Company’s securities are traded, as well as maintain the registration of the Company updated in conformity with the CVM’s applicable regulations and to meet the other requirements contained in such regulations, in addition to exercising the duties assigned to him/her by the Board of Directors.	N/A


Current version	Proposed version	Comments/Justifications on Proposed Changes
Article 36. The executive officers without a specific designation, in addition to their statutory duties, shall perform those duties which may be assigned to them by the Board of Directors.	Article 36. The executive officers without a specific designation, in addition to their statutory duties, shall perform those duties which may be assigned to them by the Board of Directors.	N/A
Article 37. The executive officers shall substitute each other, subject to the following conditions:	Article 37. The executive officers shall substitute each other, subject to the following conditions:	N/A
a) in case of the occasional absence and unavailability of the Chief Executive Officer for a period of up to sixty (60) days, the Chairman of the Board of Directors shall nominate a substitute for him/her from among the members of the Board of Executive Officers, and the substitute executive officer shall temporarily exercise the duties of Chief Executive Officer until the latter returns to his/her office or the next following meeting of the Board of Directors, whichever occurs first; and b) in case of vacancy in the office of an executive officer, he/she may be replaced, until the following meeting of the Board of Directors, by another executive officer appointed by the Chief Executive Officer.	a) in case of the occasional absence and unavailability of the Chief Executive Officer for a period of up to sixty (60) days, the Chairman of the Board of Directors shall nominate a substitute for him/her from among the members of the Board of Executive Officers, and the substitute executive officer shall temporarily exercise the duties of Chief Executive Officer until the latter returns to his/her office or the next following meeting of the Board of Directors, whichever occurs first; and b) in case of vacancy in the office of an executive officer, he/she may be replaced, until the following meeting of the Board of Directors, by another executive officer appointed by the Chief Executive Officer.	N/A
CHAPTER VII Committees Article 38. The Company shall have the following support committees to the Board of Directors: a) Audit Committee; and b) People and Organization Committee.	CHAPTER VII Committees Article 38. The Company shall have the following support committees attached to the Board of Directors: (a) Audit and Risks Committee; (b) People Committee; and (c) Strategy Committee	Refinement of the wording and change to reflect (i) the new denomination of the People Committee; and (ii) the establishment of the Strategy Committee.
There is no corresponding provision.	§ 1 Each committee shall have its own internal bylaws, which shall require the approval of the Board of Directors, to govern matters associated with its working and define the role of its coordinator.	Inclusion of a provision aligned with the New Market Regulation which provides that the Company must prepare and disclose the charters of its advisory committees as well as establish the role of the coordinator of the committee in such a document.
§ 1 The Board of Directors may establish additional committees for assisting it in the management of the Company, which may have specific purposes and may appoint their respective members.	§2 The Board of Directors may establish additional committees for assisting it in the management of the Company, which may have specific purposes and may appoint their respective members.	Change in numbering


Current version	Proposed version	Comments/Justifications on Proposed Changes
§ 2 The same obligations and restrictions imposed by law, by these Bylaws and by the New Market Regulation on the directors and executive officers of the Company shall apply to the members of the Audit Committee, People and Organization Committee and other additional committees that may be established by the Board of Directors for assistance in the management of the Company.	§ 3 The same obligations and restrictions imposed by law, by these Bylaws and by the New Market Regulation on the directors and executive officers of the Company shall apply to the members of the Audit and Risks Committee, the People Committee, the Strategy Committee and other additional committees that may be established by the Board of Directors for assistance in the management of the Company.	Change in wording to include the new Strategy Committee and to adjust the text for the new denomination of the People Committee.
Article 39. Subject to the provisions in Articles 41 and 43, the Audit Committee shall be comprised of three (3) members, at least two (2) of which shall be external and independent members (“External Members”). § 1 The members of the Audit Committee shall be elected by the Board of Directors and meet all the requirements applicable to the Independent Directors, as set forth in Article 18 of these Bylaws. § 2 The External Members of the Audit Committee shall: (a) not be a member of the Board of Directors of the Company or of its controlled companies; and (b) have knowledge or experience in auditing, controls, accounting, taxation or rules applicable to publicly-held companies, in so far as they refer to the adequate preparation of their financial statements.		The rules applicable to the Audit and Risks Committee shall now be included (i) in the general rules applicable to the committees; and (ii) in the new article 40, already adapted to the New Market Regulation.
	Article 39. Subject to the criteria set forth below, the Committees shall be comprised of at least three (3) members, being at least one of them a Director, all elected by the Board of Directors for a term of office of two (2) years, and the term shall coincide with the term of office of the Directors, with reelection being permitted for successive terms.	Establishment of an article with applicable rules to all the advisory committees of the Board of Directors in order to standardize the general provisions, simplifying the Bylaws.
Article 40. The members of the Audit Committee shall be elected by the Board of Directors for a term of office of one (1) year, with reelection being permitted for successive terms.		The applicable rules to the Audit and Risks Committee is now covered (i) in the general rules applicable to the committees; and (ii) in the new Article 40, already aligned to the New Market Regulation.
§ 1 During their term of office, the members of the Audit Committee may not be replaced except for the following reasons: a) death or resignation; b) unjustified absence from three (3) consecutive meetings or six (6) alternate meetings per year; or c) a substantiated decision of the Board of Directors.	§ 1 During their term of office, the members of each Committee may not be replaced except for the following reasons: a) death or resignation; b) unjustified absence from three (3) consecutive meetings or six (6) alternate meetings per year; or c) a substantiated decision of the Board of Directors.	Change in wording referring to the committees generically in order to standardize the provisions in common to the advisory committees reporting to the Board of Directors (formerly Article 40 paragraphs 1 and 2).


Current version	Proposed version	Comments/Justifications on Proposed Changes
§ 2 In the event of a vacancy in the Audit Committee, the Board of Directors shall elect a person to complete the term of office of the replaced member.	§ 2 In the event of a vacancy in any member of the Committees, the Board of Directors shall elect a person to complete the term of office of the replaced member.	Change in wording to refer to all advisory committees in order to standardize the provisions in common (formerly Article 40 paragraphs 1 and 2).
Section I – Audit Committee	Section I – Audit and Risks Committee	Change to reflect the new denomination of the audit and Risks Committee.
	Article 40. The Audit and Risks Committee shall include at least one (01) independent Director and at least one (01) member with recognized experience in corporate accounting matters, as provided in the applicable regulations of the CVM.	Proposed change for the Article 40 aims to consolidate specific rules applicable to the audit committee, such as duties and composition, aligned with the text of the New Market Regulation on the subject.
	§ 1 A single member of the Audit Committee may concentrate the two foregoing requirements.	Alignment with the text of the New Market Regulation.
§ 3 The Audit Committee shall:	§ 2 The Audit Committee shall:	Change in numbering.
a) propose to the Board of Directors the nomination of the independent auditors as well as their replacement; b) review the management report and the financial statements of the Company and of its controlled companies, and provide the recommendations it deems necessary to the Board of Directors; c) review the quarterly financial information and the periodic financial statements prepared by the Company; d) assess the effectiveness and sufficiency of the internal control structure and of the internal and independent audit processes of the Company and of its controlled companies, including in relation to the provisions set forth in the Sarbanes-Oxley Act, submitting the recommendations it deems necessary for the improvement of policies, practices and procedures; e) provide its opinion, upon request of the Board of Directors, with respect to the proposals of the management bodies, to be submitted to the Shareholders’ Meetings, relating to changes to the capital stock, issuance of debentures or warrants, capital budgets, dividend distribution, transformation, merger, amalgamation or spin-off; and f) provide its opinion on the matters submitted to it by the Board of Directors, as well as on those matters it determines to be relevant.	a) recommend to the Board of Directors the retention and dismissal of independent audit services, as well as propose to the Board of Directors the nomination of the independent auditors and their replacement; b) review the Management Report and the financial statements of the Company and of its controlled companies, and provide the recommendations it deems necessary to the Board of Directors; c) review the quarterly financial information, interim statements, and financial statements prepared by the Company; d) monitor the activities of the Company’s internal audit and internal controls departments, including follow up and assessment of the effectiveness and sufficiency of the internal control structure and of the internal and independent audit processes of the Company and of its controlled companies, including in relation to the provisions set forth in the Sarbanes-Oxley Act, submitting the recommendations it deems necessary for the improvement of policies, practices and procedures; e) evaluate and monitor the Company’s risk exposure, as per the Risk Management Policy, as well as to provide its opinion on any review of the contents thereof, in addition to advising the Board of Directors in connection with the setting of acceptable risk levels; f) review, monitor and recommend to management any corrections or improvements to be made to the Company’s corporate policies; g) establish procedures for the acceptance and handling of information submitted by any party relating to alleged noncompliance with applicable legal and regulatory requirements applicable to the Company, in addition to internal regulations, policies and codes, including procedures for confidential or anonymous submission, safeguarding information secrecy; h) interact with the other Company’s governing bodies in connection with the receipt and review of information on noncompliance with legal and regulatory requirements applicable to the Company, as well as with internal regulations, policies and code; and i) provide its opinion on the matters submitted to it by the Board of Directors, as well as on those matters it determines to be relevant.	Alignment with the text of the New Market Regulation.


Current version	Proposed version	Comments/Justifications on Proposed Changes
§ 4 The Audit Committee shall approve, by majority vote of its members, a proposal for Internal Bylaws regulating the matters relating to its operation, to be approved by the Board of Directors.	There is no corresponding provision.	The internal charters are now regulated by the new Article 38, Paragraph 1 of the proposed Bylaws.
Article 41. In the event the Statutory Audit Council is established as set forth in Law 6,404/76 and in Article 43 below, the Statutory Audit Council shall operate as the Audit Committee exercising all the duties provided for in these Bylaws as required of the Audit Committee, and with respect to its members, subject to all the requirements and limitations provided for by law.	There is no corresponding provision.	Exclusion given that the Audit and Risks Committee is now mandatory and with permanent functioning pursuant to the New Market Regulation.
Sole Paragraph. The Audit Committee will not operate in any fiscal year when a Statutory Audit Council is installed.	There is no corresponding provision.	Provision excluded such that the Audit and Risks Committee will function even in the fiscal years when the Fiscal Council is installed.
Section II – People and Organization Committee	Section II – People Committee	Change to reflect the new denomination for the People Committee.
Article 42. The People and Organization Committee shall be comprised of four (4) members, two (2) of which shall be Independent Directors, and the others may be Directors or not.	Article 41. The People Committee shall be comprised of a minimum of two (2) independent Directors, and the other members may be Directors or not.	Common rules applicable to the composition of all the advisory bodies reporting to the Board of Directors have been included under Article 39. In addition, the change in the composition aims to bring more flexibility for designating members that might contribute for a improved performance of the People Committee.
Sole Paragraph. The People and Organization Committee shall: a) propose to the Board of Directors the compensation to be paid to the directors and executive officers and senior employees of the Company and its controlled companies, to the members of the committees and of other governing bodies assisting the Board of Directors, pursuant to the proposal received from the Chief Executive Officer, and periodically revise the parameters and guidelines and, as a result, the compensation policy and other benefits of the Company and its controlled companies; b) propose to the Board of Directors, pursuant to the proposal received from the Chief Executive Officer, the overall compensation of the directors and executive officers of the Company, which shall be submitted to the Shareholders’ Meeting; c) ensure that the Company prepares itself adequately for the succession of its directors, executive officers and other key employees, particularly the Chief Executive Officer and the principal executive officers; and d) carry out diligence and supervise the steps taken to ensure that the Company adopts a model of competence and leadership, attraction, retention and motivation in line with its strategic plans.	Sole Paragraph. The People Committee shall: a) propose to the Board of Directors the compensation to be paid to the directors and executive officers and senior employees of the Company and its controlled companies, to the members of the committees and of other governing bodies assisting the Board of Directors, pursuant to the proposal received from the Chief Executive Officer, and periodically revise the parameters and guidelines and, as a result, the compensation policy and other benefits of the Company and its controlled companies; b) propose to the Board of Directors, pursuant to the proposal received from the Chief Executive Officer, the overall compensation of the directors and executive officers of the Company, which shall be submitted to the Shareholders’ Meeting, and propose the individual compensation of the Board of Executive Officers; c) ensure that the Company prepares itself adequately for the succession of its directors, executive officers and other key employees, particularly the Chief Executive Officer and the principal executive officers; and d) carry out diligence and supervise the steps taken to ensure that the Company adopts a model of competence and leadership, attraction, retention and motivation in line with its strategic plans.	Change to the new denomination of the People Committee and to include the duty of the People Committee to propose the individual compensation of the members of the Board of Executive Officers to the Board of Directors, pursuant to the proposal of the Chief Executive Officer.


Current version	Proposed version	Comments/Justifications on Proposed Changes
There is no corresponding provision.	Section III – Strategy Committee	Inclusion of a new section to establish and regulate the proposed Strategy Committee.
	Article 42. The Strategy Committee shall be comprised entirely of Directors and its duties shall be as follows: a) to advise the Board of Directors in overall business direction, as well as in the drafting and monitoring of the Company’s strategic plans and budgets; b) to provide its opinion on, and monitor, the Company’s strategic partnerships and main investments, as provided in the Investment Policy; and c) to provide its opinion on the capital allocation strategy and on the management of the Company’s portfolio, including mergers and acquisitions.	Inclusion to reflect the establishment of the new Strategy Committee, an advisory body reporting to the Board of Directors which will have the duties described in this provision. The establishment of such body considers the complexity of the Company’s business and the need to examine questions of a strategic nature in the markets in which the Company operates.
CHAPTER VIII Statutory Audit Council (Conselho Fiscal) Article 43. The Company shall have a Statutory Audit Council, comprised of three (3) members and an equal number of alternate members, with such duties, powers and compensation as provided for by law. The Statutory Audit Council shall have a term of office of one (1) year, with reelection being permitted, and shall operate on a non-permanent basis, being installed by the Shareholders’ Meeting, as provided for by law.	CHAPTER VIII Fiscal Council (Conselho Fiscal) Article 43. The Company’s Fiscal Council shall be non-permanent and, when installed by the Shareholders’ Meeting as provided in Law 6,404/76, shall be comprised of three (3) members and an equal number of alternate members, with such duties, powers and compensation as provided for by law. The Fiscal Council shall have a term of office of one (1) year, with reelection being permitted.	Improvement of wording.
§ 1 Once the Statutory Audit Council has been installed, the commencement of the term of its members shall be conditioned on their prior execution of the Instrument of Consent of the Statutory Audit Council Members referred to in the New Market Regulation and of the Disclosure and Trading Policy adopted by the Company.	§ 1 Once the Fiscal Council has been installed, the commencement of the term of its full and alternate members shall be conditioned on the execution of the respective deed of investiture, which shall cover their consent to the contents of Article 52 hereof.	Changes made in order to align the Bylaws to the New Market Regulation, that no longer requires the Instrument of Agreement of the Managers but now demands the deed of investiture includes a commitment to the arbitration clause.
§ 2 The Statutory Audit Council shall hold regular meetings once every quarter, and extraordinary meetings whenever necessary, and shall keep minutes of such meetings in the Company’s records.	§ 2 The Fiscal Council shall hold regular meetings once every quarter, and extraordinary meetings whenever necessary, and shall keep minutes of such meetings in the Company’s records.	Change in wording of translation.
§ 3 The same obligations and restrictions imposed by law, these Bylaws and the New Market Regulation on the directors and executive officers of the Company shall apply to the members of the Statutory Audit Council.	§ 3 The same obligations and restrictions imposed by law, these Bylaws and the New Market Regulation on the directors and executive officers of the Company shall apply to the members of the Fiscal Council.	Change in wording of translation.


Current version	Proposed version	Comments/Justifications on Proposed Changes
CHAPTER IX Tender Offers	CHAPTER IX Tender Offers	N/A
Section I – Sale of a Controlling Interest Article 44. The consummation of a direct or indirect Sale of the Controlling Interest, either in a single transaction, or in a series of successive transactions, shall be conditioned upon the buyer making a tender offer, either as a condition precedent or condition subsequent, for shares held by the remaining shareholders, subject to the conditions and terms set forth under applicable laws, these Bylaws and the New Market Regulation, in order to provide shareholders equal treatment to the Selling Controlling Shareholder.	Section I – Sale of a Controlling Interest Article 44. A direct or indirect sale of the controlling interest in the Company, either in a single transaction, or in a series of successive transactions, shall be conditioned upon the buyer making a tender offer for shares issued by the Company held by the remaining shareholders, subject to the conditions and terms set forth under the applicable laws and regulations and in the New Market Regulation, in order to provide shareholders equal treatment to that afforded to the seller.	Changes in order to align the provision in the New Market Regulation related to the sale of a controlling stake.
§ 1 The Selling Controlling Shareholder may not transfer the ownership of its shares, nor may the Company register any transfer of shares until the purchaser of the controlling interest, or those which may acquire Shareholder Control, have signed the Instrument of Consent of the Controlling Shareholders, as provided for in the New Market Regulation.	There is no corresponding provision.
§ 2 No shareholders’ agreement setting forth provisions with respect to the exercise of Shareholder Control of the Company may be registered at the Company’s headquarters without the signatories thereof having executed the Instrument of Consent of the Controlling Shareholder referred to in the Paragraph above.	There is no corresponding provision.
§ 3 After the closing of the tender offer mentioned in the introductory paragraph of this article, the purchaser of the controlling interest shall be required to take all steps to have at least twenty-five percent (25%) of the shares of the Company constitute the Free Float within the following six (6) months.	Sole Paragraph. The buyer of a controlling interest shall, after the financial settlement of the foregoing tender offer, take the appropriate actions to, over the course of the subsequent eighteen (18) months, restore the minimum percentage of outstanding shares as per the New Market Regulation.
§ 4 In event of disposal of the controlling interest of a legal entity having Shareholder Control of the Company, the Selling Controlling Shareholder shall disclose to BM&FBOVESPA the value attributed to the Company in connection with such disposal and attach evidentiary documentation.	There is no corresponding provision.
Article 45. The tender offer referred to in Article 44 above shall be made in the event of an assignment of rights for consideration to subscribe for shares and other securities and rights relating to securities convertible into shares, which may result in the Sale of the Controlling Interest of the Company.	There is no corresponding provision.


Current version	Proposed version	Comments/Justifications on Proposed Changes
Section II – Acquisition of Relevant Interest Article 46. Any person, regardless of whether he/she is a shareholder, which, on his/her own account or through Joint Action with another person (“Purchaser of a Relevant Interest”), acquires or becomes the holder of Company shares, through a single transaction or a series of successive transactions, representing twenty percent (20%) or more of its capital stock (“Relevant Interest”), shall be required to make a tender offer for the acquisition of the shares held by the remaining shareholders at a price equal to the highest value per share paid by him/her in the preceding six (6) months, adjusted pursuant to the SELIC Rate.	Section II – Acquisition of Relevant Interest Article 45. Any person, regardless of whether he/she is a shareholder, which, on his/her own account or through Joint Action with another person (“Purchaser of a Relevant Interest”), acquires or becomes the holder of Company shares, through a single transaction or a series of successive transactions, representing twenty percent (20%) or more of its capital stock (“Relevant Interest”), shall be required to make a tender offer for the acquisition of the shares held by the remaining shareholders at a price equal to the highest value per share paid by him/her in the preceding six (6) months, adjusted pursuant to the SELIC Rate.	Change in numbering.
§1 The Purchaser of a Relevant Interest shall not be required to make the tender offer provided for in this Article, in case he/she shall timely and cumulatively: (a) notify the Company of his/her intent to exercise the right provided for in this Paragraph within forty-eight (48) hours from the time he/she becomes owner of the Relevant Interest; and (b) sell, on a stock exchange, the number of shares of capital stock of the Company that exceeds the Relevant Interest, within thirty (30) days from the date of the notice mentioned in item (a) of this Paragraph.	§1 The Purchaser of a Relevant Interest shall not be required to make the tender offer provided for in this Article, in case he/she shall timely and cumulatively: (a) notify the Company of his/her intent to exercise the right provided for in this Paragraph within forty-eight (48) hours from the time he/she becomes owner of the Relevant Interest; and (b) sell, on a stock exchange, the number of shares of capital stock of the Company that exceeds the Relevant Interest, within thirty (30) days from the date of the notice mentioned in item (a) of this Paragraph.	N/A
§2 For purposes of calculating the limit of twenty percent (20%) set forth in the introductory paragraph of this Article, treasury shares held by the Company shall be excluded.	§2 For purposes of calculating the limit of twenty percent (20%) set forth in the introductory paragraph of this Article, treasury shares held by the Company shall be excluded.	N/A
§3 The offer referred to in this Article shall not be required in the event any shareholder, or shareholders joined by a voting agreement registered with the Company, or shareholders who have a controlling relationship or are under common control are holders of more than one-half of the capital stock at the time of the acquisition of the Relevant Interest, excluding, for effects of such calculation, treasury shares held by the Company.	§3 The offer referred to in this Article shall not be required in the event any shareholder, or shareholders joined by a voting agreement registered with the Company, or shareholders who have a controlling relationship or are under common control are holders of more than one-half of the capital stock at the time of the acquisition of the Relevant Interest, excluding, for effects of such calculation, treasury shares held by the Company.	N/A
§4 The obligation to carry out the offer provided for in the introductory paragraph of this Article shall not apply in the event the obligation to carry out the offer provided for in Article 44 applies.	§4 The obligation to carry out the offer provided for in the introductory paragraph of this Article shall not apply in the event the obligation to carry out the offer provided for in Article 44 applies.	N/A


Current version	Proposed version	Comments/Justifications on Proposed Changes
Section III – Indemnity Obligations Article 47. In the event an offer is made pursuant to Articles 44 and 46 of these Bylaws, the offeror shall be bound to pay, under the terms indicated below, an amount equivalent to the difference between the tender offer price and the value per share that he/she may have acquired on a stock exchange in the six (6) months preceding the date of the acquisition of the Shareholder Control or the Relevant Interest, as the case may be, adjusted pursuant to the SELIC Rate until the payment date. Such amount shall be distributed by BMF&FBOVESPA pursuant to its regulation among all persons which have sold their shares of the Company on the trading session in which the offeror made the acquisition in proportion to their respective daily net sale balance.	There is no corresponding provision.	Exclusion to align the Bylaws with the New Market Regulation which excluded this obligation, as well as to align the rules applicable to public offering for a Relevant Interest to the rules applicable to a public offer related to the sale of control.
Section IV – Deregistration as Publicly-Held Company and Withdrawal from the New Market	Section III – Deregistration as Publicly-Held Company and Withdrawal from the New Market	Change in numbering.
Article 48. In the event the shareholders present at a Shareholders’ Meeting approve: a) the Company’s deregistration as a publicly-held company, either the Company, or the shareholders or Group of Shareholders which hold the Shareholder Control of the Company, shall carry out a tender offer for the acquisition of the shares held by the remaining shareholders, for a price based on, at minimum, the economic value of the Company, which will be calculated by an appraisal report prepared under the terms of Paragraphs 1 to 3 of this Article, subject to the applicable laws and regulations; or b) the Company’s withdrawal from the New Market, in order for its shares to be registered outside the New Market or as a result of a corporate reorganization in which the shares of the surviving company are not admitted to trading on the New Market within one hundred twenty (120) days from the date of the Shareholders’ Meeting approving such transaction, the shareholders or Group of Shareholders holding the Shareholder Control of the Company shall carry out a tender offer to acquire the shares held by the remaining shareholders, for a price based on, at minimum, the economic value of the Company, to be calculated in an appraisal report prepared under the terms of Paragraphs 1 to 3 of this Article, subject to applicable laws and regulations.	There is no corresponding provision.	Exclusion to alignm with the New Market Regulation. The delisting of a publicly held company and its removal from the New Market segment is now covered by articles 46 to 50 of this Bylaws proposal as determine by the rules of B3.


Current version	Proposed version	Comments/Justifications on Proposed Changes
§ 1 The appraisal reports referred to in the introductory paragraphs of this Article shall be prepared by an institution or specialized company, with proven experience and independence with respect to the decision making power of the Company, its directors and executive officers and the Controlling Shareholder, in addition to meeting the requirements of Paragraph 1 of Article 8 of Law no. 6,404/76 and are subject to the same liability provided for in Paragraph 6 of the same Article.	There is no corresponding provision.	Exclusion to align with the New Market Regulation The delisting of a publicly held company and the cancellation of its New Market registration, are now covered by articles 46 to 50 of the Bylaws proposal as mandated by B3.
§ 2 The selection of the institution or specialized company responsible for determining the economic value of the Company shall be made at the Shareholders’ Meeting from a list of three alternatives submitted by the Board of Directors, the selection of which shall be made by a majority vote of the shareholders representing the Free Float present at such Shareholders’ Meeting, not counting blank votes, which, if convened on first call, shall have the attendance of shareholders representing, at least, twenty percent (20%) of the entire Free Float s, or which, if convened on second call, shall have the attendance of any number of shareholders representing the Free Float.	There is no corresponding provision.	Exclusion in order to ensure alignment with the New Market Regulation. The delisting of a publicly held company and the cancellation of its New Market registration, is now covered by articles 46 to 50 of the Bylaws proposal as mandated by B3.
§ 3 The offeror shall pay the costs of preparation of the appraisal report.	There is no corresponding provision.	Exclusion in order to ensure alignment with the New Market Regulation. The delisting of a publicly held company and its and the cancellation of its New Market registration, is now covered by articles 46 to 50 of the Bylaws proposal as mandated by B3.
	Article 46. The Company’s deregistration as a publicly-held company, shall be preceded by a tender offer for shares at a fair price, such a tender offer to abide by the procedures and requirements set forth in Law 6,404/76 and the CVM regulations governing tender offers for the purposes of deregistration as a publicly held company.	Change to align with the provisions of the New Market Regulation on the delisting of a publicly held company.
There is no corresponding provision.	Article 47. The Company’s withdrawal from the New Market, be it voluntary, mandatory or as a result of a corporate reorganization, shall abide by the rules set forth in the New Market Regulation.	Alignment with the text of the New Market Regulation.


Current version	Proposed version	Comments/Justifications on Proposed Changes
There is no corresponding provision.	Article 48. As provided in the New Market Regulation and except for the provisions of Article 49, next, the Company’s voluntary withdrawal from the New Market, in order for its shares to be registered outside the New Market shall be preceded by a tender offer for shares in line with the procedures set forth in CVM Regulations governing tender offers for shares for the purposes of deregistration as a publicly listed company, and the following requirements:	Alignment with the text of the New Market Regulation.
There is no corresponding provision.	a) the price of the tender shall be fair and calculated pursuant to the parameters set forth in Article 4-A of Law 6,404/76 and the applicable CVM Regulations;	Alignment with the text of the New Market Regulation.
There is no corresponding provision.	b) holders of interests in excess of one-third (1/3) of shares outstanding shall accept the tender offer or explicitly agree with withdrawal from the segment without selling their shares.	Alignment with the text of the New Market Regulation.
There is no corresponding provision.	Sole Paragraph – For the purposes of Article 48, item“b”, of the present Bylaws, outstanding shares shall be only those whose holders explicitly agree with withdrawal from the New Market or qualify for the tender offer auction as per the CVM regulations governing tender offers for the purposes of deregistration as a publicly listed company.	Alignment with the text of the New Market Regulation.


Current version	Proposed version	Comments/Justifications on Proposed Changes
Article 49. In the event there is no Controlling Shareholder and it is decided that the Company shall withdraw from the New Market in order to register its securities for trading outside the New Market, or as a result of a corporate reorganization the surviving company’s securities are no longer admitted for trading in the New Market within one hundred twenty (120) days from the date of the Shareholders’ Meeting approving such transaction, or, further, in the event of the deregistration of the Company as a publicly-held company, such withdrawals shall be conditioned on a tender offer being held under the same conditions provided for in Article 48 above. §1 The Shareholders’ Meeting shall determine the persons responsible for carrying out the tender offer among those present at the Shareholders’ Meeting, who shall expressly undertake the obligation to carry out the offer. §2 In the absence of having identified persons responsible for carrying out the tender offer, in case of a corporate reorganization in which the securities of the company resulting from such reorganization are not admitted for trading in the New Market, the shareholders having voted in favor of the corporate reorganization shall carry out the referred offer.	There is no corresponding provision.	Alignment with the text of the New Market Regulation.
There is no corresponding provision.	Article 49. Voluntary withdrawal from the New Market as provided in foregoing Article 48 may take place irrespective of a tender offer if such a waiver is approved by the Shareholders’ Meeting, to convene: a) on first call with the attendance of shareholders representing, at least, two-thirds (2/3) of all shares outstanding; or b) on second call with any number of holders of outstanding shares in attendance.	Alignment with the text of the New Market Regulation.
There is no corresponding provision.	Sole Paragraph – The decision regarding the foregoing waiver of a tender offer shall be made by a majority vote of the holders of outstanding shares in attendance at the Shareholders’ Meeting;	Alignment with the text of the New Market Regulation.


Current version	Proposed version	Comments/Justifications on Proposed Changes
Article 50. The Company’s withdrawal from the New Market as a result of any breach of the New Market Regulation requirements is subject to a tender offer for the shares, at a price based on, at minimum, the economic value of the Company, which will be calculated by an appraisal report prepared pursuant to Article 48 of these Bylaws, subject to applicable laws and regulations.	There is no corresponding provision.	Alignment with the text of the New Market Regulation.
§ 1 The Controlling Shareholder shall carry out the tender offer referred to in the introductory paragraph of this Article.	There is no corresponding provision.	Alignment with the text of the New Market Regulation.
§ 2 In the event there is no Controlling Shareholder and the Company withdraws from the New Market as a result of any breach of the New Market Regulation requirements due to decisions taken at a Shareholders´ Meeting, the tender offer shall be carried out by the Shareholders who voted in favor of the resolution that resulted in such breach.	There is no corresponding provision.	Alignment with the text of the New Market Regulation.
§ 3 In the event there is no Controlling Shareholder and the Company withdraws from the New Market as set out in the introductory paragraph of this Article as a result of a management action or fact, the management of the Company shall call a Shareholders’ Meeting pursuant to the Article 123 of Law 6,404/76, for the purpose of taking the necessary decisions to remedy the breach of the obligations provided for in the New Market Regulation or, as the case may be, approve the withdrawal from the New Market.	There is no corresponding provision.	Alignment with the text of the New Market Regulation.
§ 4 In the event the Shareholders’ Meeting referred to in paragraph 3 above approves the withdrawal of the Company from the New Market, the Shareholders’ Meeting shall determine the persons responsible for carrying out the tender offer referred to in the introductory paragraph of this Article, who, while present at the meeting, shall expressly undertake the obligation to carry out the offer.	There is no corresponding provision.	Alignment with the text of the New Market Regulation.


Current version	Proposed version	Comments/Justifications on Proposed Changes
Article 51. A single tender offer may be made for more than one of the purposes provided for in this Chapter, in the New Market Regulation, in Law no. 6,404/76 or in the regulations issued by the CVM, provided that the procedures used in the tender offer are compatible with all requirements of each different tender offer, the tender offer offerees do not suffer any damages and the authorization of the CVM is obtained, when required by applicable law.	Article 50. A single tender offer may be made for more than one of the purposes provided for in this Chapter, in the New Market Regulation, in Law 6,404/76 or in the regulations issued by the CVM, provided that the procedures used in the tender offer are compatible with all requirements of each different tender offer, the tender offer offerees do not suffer any damages and the authorization of the CVM is obtained, when required by applicable law.	Change in numbering.
Article 52. To the extent the rights provided for in these Bylaws to shareholders with respect to tender offers are affected, the rules set forth by the New Market Regulation will prevail over the provisions herein.	Article 51. To the extent the rights provided for in these Bylaws to shareholders with respect to tender offers are affected, the rules set forth by the New Market Regulation will prevail over the provisions herein.	Change in numbering.
CHAPTER X Arbitration Court Article 53. The Company, its shareholders, directors and executive officers and members of the Statutory Audit Council are required to submit to arbitration at the Market Arbitration Tribunal, any and all disputes or controversies arising between them, either related to or resulting from the application, validity, effectiveness, interpretation, violation and their effects, of the provisions set forth in Law 6,404/76, in the Bylaws, in the rules enacted by the CVM, as well as other rules applicable to capital markets in general, in addition to those set forth in the New Market Regulation, in the Arbitration Regulation, in the Sanctions Regulation and in New Market Participation Agreement.	CHAPTER X Arbitration Court Article 52. The Company, its shareholders, directors and executive officers and the full and alternate members of the Fiscal Council, if any, are required to submit to arbitration at the Market Arbitration Tribunal, pursuant to the rules thereof, any and all controversies arising between them, either related to or resulting from their status as issuer, shareholders, managers and members of the Fiscal Council, in particular if arising from the provisions set forth in Law 6,385/76, Law 6,404/76, in the Bylaws, in the rules enacted by the National Monetary Council, the Central Bank of Brazil and the CVM, as well as other rules applicable to capital markets in general, in addition to those set forth in the New Market Regulation, other B3 regulations and the New Market Participation Agreement.	Change in numbering and for alignment to the New Market Regulation.
CHAPTER XI Exercício Social Article 54. The fiscal year begins on January 1st and ends on December 31st of each year.	CHAPTER XI Exercício Social Article 53. The fiscal year begins on January 1st and ends on December 31st of each year.	Change in numbering.
Article 55. After the balance sheet and the other financial statements are prepared, and after the deduction of accrued losses, the provision for income tax and, if applicable, the provision for directors’ and executive officers’ annual profit sharing, adjusted net profit shall be allocated as follows: a) Five percent (5%) to the legal reserve, up to the limit of twenty percent (20%) of the capital stock;	Article 54. After the balance sheet and the other financial statements are prepared, and after the deduction of accrued losses, the provision for income tax and, if applicable, the provision for directors’ and executive officers’ annual profit sharing, five percent (5%) of the net profit will be allocated to the legal reserve, up to the limit of twenty percent (20%) of the capital stock. §1 The remaining profit will have the following destination:	Change in numbering and to reflect that net income will be reduced for the constitution of the legal reserve and the remaining profit will serve as the base amount for calculating the mandatory dividend and the constitution of the statutory reserve for investments reflecting the provision in the Corporate Law.


Current version	Proposed version	Comments/Justifications on Proposed Changes
b) fifty percent (50%) for payment of the mandatory dividend to the shareholders, deducted by semiannual or interim dividends that may have already been distributed; and	a) fifty percent (50%) for payment of the mandatory dividend to the shareholders, deducted by semiannual or interim dividends that may have already been distributed; and	Change numbering.
c) by proposal of the managing bodies, up to forty-five percent (45%) for creating an investment reserve, aimed at protecting the integrity of the Company´s assets and to supplement its capital stock, in order to allow new investments to be made, up to the limit of one hundred percent (100%) of the capital stock, provided that the balance of such reserve, when combined with other profit reserve balances, except for the unrealized profit reserve and the contingency reserves, shall not exceed one hundred percent (100%) of the capital stock and, once such limit is reached, the shareholders’ meeting shall determine the allocation of the surplus through an increase of the capital stock or in the distribution of dividends; and	b) by proposal of the managing bodies, up to fifty percent (50%) for creating an investment reserve, aimed at protecting the integrity of the Company´s assets and to supplement its capital stock, in order to allow new investments to be made, up to the limit of one hundred percent (100%) of the capital stock, provided that the balance of such reserve, when combined with other profit reserve balances, except for the unrealized profit reserve and the contingency reserves, shall not exceed one hundred percent (100%) of the capital stock and, once such limit is reached, the shareholders’ meeting shall determine the allocation of the surplus through an increase of the capital stock or in the distribution of dividends; and	Change in numbering and in the percentage to the total remaining profit to be allocated to the investment reserve.
d) the balance will be allocated according to the resolution adopted at the Shareholders’ Meeting, which will take into account the Board of Directors’ proposal.	c) the balance will be allocated according to the resolution adopted at the Shareholders’ Meeting, which will take into account the Board of Directors’ proposal.	Change in numbering.
§ 1 The Company may, in addition to the annual balance sheet, prepare semiannual or interim balance sheets at any time, and the Board of Directors may, ad referendum of the Annual General Shareholders’ Meeting, declare interim dividends to the account of retained earnings or profit reserves recorded in its latest annual or semiannual balance sheets.	§ 1 The Company may, in addition to the annual balance sheet, prepare semiannual or interim balance sheets at any time, and the Board of Directors may, ad referendum of the Shareholders’ Meeting, declare interim dividends to the account of retained earnings or profit reserves recorded in its latest annual or semiannual balance sheets.	Change in numbering and to reflect the generic mention of the Shareholders’ Meeting.
§ 2 Dividends not claimed within three (3) years from the date they were made available to the shareholders shall be forfeited to the Company.	§ 2 Dividends not claimed within three (3) years from the date they were made available to the shareholders shall be forfeited to the Company.	Change in numbering.
CHAPTER XII Miscellaneous Article 56. The Company shall be liquidated as provided for by law, and the Shareholders´ Meeting shall decide the method of liquidation, appoint the liquidator and elect the Statutory Audit Council to operate during the liquidation process.	CHAPTER XII Disposições Gerais Article 55. The Company shall be liquidated as provided for by law, and the Shareholders’ Meeting shall decide the method of liquidation, appoint the liquidator and elect the Fiscal Council to operate during the liquidation process.	Change in numbering.
Article 57. The minutes of the Shareholders’ Meetings, as well as the minutes of meetings of the Board of Directors and of the Board of Executive Officers, shall be mechanically issued, in separate pages, and signed by the attendees, for subsequent bookbinding. In the event they contain resolutions affecting third parties, they shall be filed with the Commerce Registry Office and published.	Article 56. The minutes of the Shareholders’ Meetings, as well as the minutes of meetings of the Board of Directors and of the Board of Executive Officers, shall be mechanically issued, in separate pages, and signed by the attendees, for subsequent bookbinding. In the event they contain resolutions affecting third parties, they shall be filed with the Commerce Registry Office and published.	Change in numbering.


Current version	Proposed version	Comments/Justifications on Proposed Changes
CHAPTER XIII Definitions Article 58. For the purposes of these Bylaws, the terms below shall have the following meanings:	There is no corresponding provision.	The exclusion of the glossary of definitions is to simplify the Bylaws.
“Arbitration Regulation” means the Market Arbitration Chamber Regulation; “BM&FBOVESPA” has the meaning provided for in the Sole Paragraph of Article 1 of these Bylaws. “Bylaws” means the bylaws of Ultrapar Participações S.A.; “Chairman” means the chairman of the Board of Directors; “Company” means Ultrapar Participações S.A.; “Controlling Interest” means the block of shares entitling, either directly or indirectly, their respective holders the individual and/or shared exercise of the Shareholder Control of the Company; “Controlling Shareholder” means the shareholder or Group of Shareholders exercising the Shareholder Control of the Company; “CVM” means the Brazilian Securities and Exchange Commission – CVM; “Disclosure and Trading Policy” means the policy adopted by the Company setting forth the rules for disclosure of relevant information of the Company to the public and the use of such information by the Company itself; “External Members” has the meaning provided for in Paragraph 2 of Article 39 of these Bylaws; “Free Float” means all the shares issued by the Company, except for the shares held by the Controlling Shareholder, by persons related thereto, by directors and executive officers of the Company and treasury shares; “Group of Shareholders” means the group of persons: (i) bound by contracts or agreements of any nature, including shareholders’ agreements, either directly or by means of controlled or controlling companies or companies under common control; or (ii) among which there is a controlling relationship; or (iii) that are under common control; or (iv) that act in the representation of a common interest. Examples of persons representing a common interest include: (a) a person holding, directly or indirectly, an equity interest equal to or greater than fifteen percent (15%) of the capital stock of another person; and (b) two persons having a third investor in common that holds, directly or indirectly, an equity interest equal to or greater than fifteen percent (15%) in the capital stock of each of the two persons. Any joint ventures, funds or investment clubs, foundations, associations, trusts, condominiums, cooperatives, securities portfolios, universality of rights, or any other forms of organization or enterprise, organized in Brazil or outside Brazil, shall be deemed members of one Group of Shareholders whenever two or more such entities: (y) are managed by one single legal entity or related parties of one single legal entity; or (z) have most of their directors and executive officers in common, but in the case of investment funds with a common manager, only such entities in which the determination of the vote to be held at a Shareholders’ Meetings, as determined by the respective statutes, is in the manager’s sole discretion, shall be deemed as part of the Group of Shareholders; “Independent Directors” has the meaning provided for in Article 18 of these Bylaws; “Instrument of Consent of the Controlling Shareholders” means the instrument by which the new Controlling Shareholders undertake personal liability for abiding by and acting in conformity with the New Market Participation Agreement, the New Market Regulation and the Arbitration Regulation; “Instrument of Consent of the Directors and Executive Officers” means the instrument under which the new directors and executive officers of the Company assume personal liability to abide by and to act in conformity with the New Market Participation Agreement, the New Market Regulation and the Arbitration Regulation; “Instrument of Consent of the Statutory Audit Council Members” means the instrument under which the members of the Statutory Audit Council of the Company, when established, undertake personal liability for abiding by and acting in conformity with the Arbitration Regulation; “Joint Action” means the action of persons, including a Group of Shareholders, cooperating to acquire a Relevant Interest, pursuant the terms of Article 46 of these Bylaws; “New Market” means the Novo Mercado segment of the BM&FBOVESPA; “New Market Participation Agreement” means the agreement entered into between, on the one hand, BMF&BOVESPA and, on the other hand, the Company, the directors and executive officers and, in case there is one, the Controlling Shareholder, containing obligations relating to the listing of the Company on the New Market; “New Market Regulation” has the meaning provided for in the Sole Paragraph of Article 1 of these Bylaws; “Purchaser of a Relevant Interest” has the meaning provided for in Article 46 of these Bylaws; “Relevant Interest” has the meaning provided for in Article 46 of these Bylaws; “Sale of Controlling Interest” means the transfer to a third party, for compensation, of the Controlling Interest; “Sanctions Regulation” means the Regulation for Pecuniary Sanctions of the New Market, as amended, which regulates the sanctions applicable to partial or total noncompliance with the New Market Regulation; “SELIC Rate” means the rate calculated in the Special Custody and Liquidation System of the Brazilian Central Bank; “Selling Controlling Shareholder” means the Controlling Shareholder when it is Selling the Controlling Interest of the Company; “Shareholder Control” means the power effectively used to direct the corporate activities and guide the operation of the Company’s governing bodies, either directly or indirectly, in practice or by law. A person or group of persons will be presumed to have control if they are bound by a shareholders’ agreement or under common control holding shares that have granted them the absolute majority of votes of the shareholders who attended the last three Shareholders’ Meetings of the Company, regardless of whether they hold title to shares that grant them the absolute majority of the Company´s total voting shares; and “Vice-Chairman” means the vice-chairman of the Board of Directors.	There is no corresponding provision.	The exclusion of the glossary of definitions is to simplify the Bylaws.

LOGO

EXHIBIT II – FINANCIAL STATEMENTS

LOGO

EXHIBIT III – ITEM 10 OF THE REFERENCE FORM (MD&A)

10.1 – Management discussion & analysis:

Introduction

You should read this discussion together with our consolidated financial statements, filed with the CVM on February 20, 2019, including the notes thereto, and other financial information included elsewhere in this document.

a. General financial and equity conditions

Company overview

With more than 80 years of history, Ultrapar occupies positions of leadership in the five business segments in which it operates:

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the LPG distribution business, conducted by Ultragaz;

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the fuels distribution business, conducted by Ipiranga;

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the chemical and petrochemical business, conducted by Oxiteno;

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the storage for liquid bulk business, conducted by Ultracargo; and

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the retail pharmacy business, conducted by Extrafarma.

Ipiranga is one of the largest fuel and lubricants networks in the country, Ipiranga offers an increasingly complete and digitized network of more than 7 thousand service stations as well as one of the largest convenience store franchises in Brazil, the am/pm franchise, with 2.5 thousand stores. It also has one of the major loyalty programs in Brazil, KMV, with more than 29 million participants at the end of 2018. Oxiteno occupies the leadership position in Latin America in the production of surfactants and specialty chemicals and recently started operating a plant in the United States increasingly expanding its international footprint. In addition to this new industrial unit, it operates six plants in Brazil, three in Mexico, one in Uruguay and one in Venezuela. Oxiteno has commercial offices in Argentina, Belgium, China and Colombia. Ultragaz is a pioneer and leader in the domestic market for distribution of Liquefied Petroleum Gas (LPG), it is also a benchmark in innovation and in creating new solutions for the use of the product. It has a modern research and development laboratory dedicated to special gases, a segment which it has a leadership position. Ultracargo is the largest provider of storage for liquid bulk in Brazil, with a presence in six ports at strategic locations in the Northeast, Southeast and South regions. Extrafarma operates in distribution and retail pharmacy sector and in 2018, it reached the mark of 433 stores employing 7 thousand people. With its origins in the North and the Northeast, the business unit now is present in 13 Brazilian states.

2018

A series of atypical events characterized 2018, reducing the stability and predictability of operations in several sectors. Our results in the first quarter of 2018 were impacted by the contractual fine following the Brazilian Anti-Trust Authority’s (CADE) rejection of the Liquigás acquisition. In addition, competition in the trading environment for the fuels distribution sector continued intense given fuel imports during the period. The second quarter saw both the truckers’ strike—which brought the country to a standstill and affected almost all the sectors of the economy weakening confidence among both consumers and business. However, following the outcome of the general elections, confidence levels resumed growth.

Economic recovery prior to the strike was enough to allow two further reductions of 0.25 p.p. each in the basic rate of interest, which was 7.0% at the end of 2017 and has remained stable at 6.5% per annum since March 2018. The average Real/Dollar rate in 2018 was R$ 3.65/US$ compared with R$ 3.19/US$ in 2017, a 14% increase.

The decision of members of OPEC+ to cut oil production was sufficient to drive up prices until September. From October, oil prices began to decline with the announcement of increased output in the United States and continuing high inventory levels. At the end of the year, a barrel of oil was priced at US$ 53/barrel (Brent), a 20% drop in the year.

In 2018, the number of registered light vehicles resumed growth totaling 2.5 million, a year-over-year increase of 14%. ABIQUIM data for chemicals for industrial applications recorded a drop of 1% in 2018 in National Apparent Consumption. In the retail pharmacy sector, Abrafarma members’ data shows that sales grew by 8% in 2018.

To meet this scenario of challenges and uncertainties, Ultrapar revisited its investment plan seeking to be more selective and assertive in capital allocation, preserving its cash and adjusting its existing structures in readiness for a resumption in growth. As a consequence, the Company ended the year with increased liquidity ratios compared with 2017 and a reduction in leverage compared to the peak of 2.9x recorded in September 2018.

2017


	2018		2017		2016
Current ratio		2.6		2.2		2.4
Quick ratio		2.0		1.7		1.9
Net debt/ Adjusted EBITDA		2.7x		1.8x		1.4x

After two difficult years in deep recession, Brazilian GDP started 2017 in a downward trend, with gradual recovery of the economic activity throughout the year. The early expectations on the economy resumption were gradually confirmed by an increase in real average income and stable unemployment rates. The beginning of the economic situation upturn allowed continued reduction of the basic interest rate, which dropped from 13.75% at year end 2016 to 7.00% in 2017. The average price of the US Dollar relative to the Brazilian Real in 2017 was R$ 3.19 vis-à-vis R$ 3.49 in 2016, a 9% drop. After four years of decreasing indicators, the number of light vehicles registered resumed growth and reached 2.2 million units, up 9% from 2016. The decision of OPEC members to reduce oil production until November 2018 influenced the international oil price, which was US$ 55/barrel (Brent) when 2017 began and reached year end at US$ 67/barrel, up 21%. In the petrochemical market, ABIQUIM data show a 6% increase in National Apparent Consumption in 2017. As for pharmaceuticals retailing, Abrafarma data show 9% bigger gross revenue in 2017. In 2017, Ultrapar’s net sales and services amounted to R$ 80.0 billion, EBITDA amounted to R$ 4,063.5 million and net earnings amounted to R$ 1,573.9 million. Net debt to EBITDA ratio in the end of 2017 was 1.8 times. Ultrapar ended 2017 with total assets of R$ 28.3 billion and shareholders’ equity of R$ 9.7 billion.

2016

In a year characterized by the worsening of the crises on both political and economic fronts, Brazil ended 2016 with a combination of slowing business activity and a deterioration in disposable incomes and employment, thus curbing consumption and creating a challenging business environment. In the second half, there were some sporadic signs of improvement and inflation rates declined paving the way for cuts in the basic interest rate from 14.25% at the end of 2015 to 13.75% in 2016. The average R$/US Dollar exchange rate in 2016 was R$ 3.49 compared with R$ 3.33 in 2015, a devaluation of 5% of the Real on average albeit with an appreciating tendency of 17% during 2016. The number of light vehicles licensed during the year amounted to 2.0 million, making for a 2% growth in the fleet in 2016. The downturn in the global economy and the decisions of production of the OPEC member countries had influenced international oil prices, which began the year at US$ 36/barrel (Brent) and closed 2016 at US$ 55/barrel. In the petrochemical market, ABIQUIM data indicated an increase of 5% in 2016 in National Apparent Consumption. Sales in the retail pharmacy sector, according to data from members of Abrafarma, grew 11% in 2016. In 2016, Ultrapar’s net sales and services amounted to R$ 77.4 billion, EBITDA amounted to R$ 4,216.7 million and net earnings amounted to R$ 1,570.6 million. Net debt to EBITDA ratio in the end of 2016 was 1.4 times, slightly above the ratio at the end of 2015. Ultrapar ended 2016 with total assets of R$ 24.2 billion and shareholders’ equity of R$ 8.6 billion.

b. Capital structure and possibility of redemption of shares

Capital structure

Ultrapar’s capital as of December 31, 2018 amounted to R$ 5,171.8 million, composed by 556,405,096 common shares, without par value.

2018

Ultrapar reached year end 2018 with R$ 15,206.1 million in gross debt and R$ 6,994.4 million in total cash, getting to R$ 8,211.7 million net debt. On December 31, 2018, shareholders’ equity amounted to R$ 9,800.0 million, resulting in a net debt to shareholders’ equity ratio of 84%.

2017

Ultrapar reached year end 2017 with R$ 13,590.6 million in gross debt and R$ 6,369.9 million in total cash, getting to R$ 7,220.7 million net debt. On December 31, 2017, shareholders’ equity amounted R$ 9,624.0 million, resulting in a net debt to shareholders’ equity ratio of 75%.

2016

Ultrapar’s gross debt at the end of the fiscal year 2016 was R$ 11,417.1 million with a total cash position of R$ 5,701.8 million, resulting in a net debt position of R$ 5,715.3 million, an increase of R$ 786.8 million in relation to 2015, in line with the growth of the Company. On December 31, 2016, shareholders’ equity amounted R$ 8,746.1 million, resulting in a net debt to shareholders’ equity ratio of 67%.

Ultrapar association agreement with Extrafarma transaction was closed on January 31, 2014. As a consequence of the closing of the transaction, 12,021,100 new common, nominative book-entry shares with no par value of Ultrapar were issued, totaling an increase in equity of R$ 640.7 million. In addition, Ultrapar issued 3,205,622 shares related to subscription warrants – indemnification that may be exercised from 2020, it is adjusted according to the variations of provisions for tax, civil, and labor risks, and contingent liabilities related to the period beginning before January 31, 2014. The fair value of subscription warrants – indemnification is calculated based on the share price of Ultrapar (UGPA3) and are reduced by the dividend yield until 2020, since the exercise is possible only from 2020, and they are not entitled to receive dividends until that date. For more information, see notes 3.a and 22 to our 2014 financial statements and note 24 to our 2018 financial statements.


(R$ million)	2018		% of shareholders’ equity			2017		% of shareholders’ equity			2016		% of shareholders’ equity
Gross debt		15,206.1		155	%		13,590.6		141	%		11,417.1		135	%
Cash and financial investments		6,994.4		71	%		6,369.9		66	%		5,701.8		67	%
Net debt		8,221.7		84	%		7,220.7		75	%		5,715.3		67	%

c. Capacity to meet our financial commitments

Our principal sources of liquidity derive from (i) cash, cash equivalents and financial investments, (ii) cash generated from operations and (iii) financings. We believe that these sources are sufficient to satisfy our current funding requirements, which include, but are not limited to, working capital, capital expenditures, amortization of debt and payment of dividends.

Periodically, we assess the opportunities for acquisitions and investments. We consider different types of investments, either directly or through joint ventures, or associated companies, and we finance such investments using cash generated from our operations, debt financing, through capital increases or through a combination of these methods.

We believe we have sufficient working capital to satisfy our current needs. In addition to the cash flow generated from our operations during the year, as of December 31, 2018, we had R$ 6,792.1 million in cash, cash equivalents and short-term investments. The gross indebtedness due between January and December 2019, including estimated interests on loans, totals R$ 2,274.0 million. Furthermore, the investment plan for 2019 totals R$ 1,762.1 million.

We anticipate that we will spend approximately R$ 19.5 billion in the next five years to meet long-term contractual obligations, including the amortization of existing loans and financings, and respective payment of interests, as well as the 2019 budgeted capital expenditures.


(R$ million)	2019-2023
Contractual obligations		2,601.9
Investment plan for 2019		1,762.1
Financing¹		11,418.0
Estimated interest payments on financing²		3,361.1
Hedging instruments³		375.8

Total		19,518.8

¹	Does not include currency and interest rate hedging instruments.

Includes estimated interest payments on short-term and long-term loans. Information of our derivative instruments is not included. The fair value information of such derivatives is available in note 31, filed with the CVM on February 21, 2018. To calculate the estimated interest on loans certain macroeconomic assumptions were used, including, on average for the period, (i) CDI of 6.39% in 2018, 7.38% from 2019 to 2021, 8.52% from 2022 to 2023, 9.49% from 2024 to 2033, (ii) exchange rate of the Real against the U.S. dollar of R$ 3.87 in 2018, R$ 3.92 in 2019, R$ 4.06 in 2020, R$ 4.27 in 2021 and R$ 4.53 in 2022, R$ 4.81 in 2023, R$ 5.12 in 2024, R$ 5.44 in 2025, R$ 5.77 in 2026 and R$ 6.13 in 2027 (iii) TJLP of 7.03% p.a. and (iv) IGP-M of 8.12% in 2018, 4.14% in 2019, 3.90% from 2020 to 2033 (v) IPCA of 4.01% (source: B3, Bulletin Focus and financial institutions).

The currency and interest rate hedging instruments were estimated based on projected U.S. dollar futures contracts and the futures curve of DI x Pre and DI x IPCA contracts quoted on B3 as of December 28, 2018 and on the futures curve of LIBOR (ICE – Intercontinental Exchange) on December 31, 2018. In the table above, only hedging instruments expected to generate losses at the time of settlement were considered.

See “Item 10.1.f. Indebtedness level and debt profile”, “Item 10.8.b. Other off-balance sheet arrangements” and “Item 10.10.a.i. Quantitative and qualitative description of the investments in progress and the estimated investments” for further information.

We expect to meet these cash requirements through a combination of cash generated from operating activities and cash generated by financing activities, including new debt financing and the refinancing of some of our indebtedness.

d. Sources for financing working capital and investments in non-current assets

We reported cash flow from operating activities of R$ 2,889.0 million, R$ 1,739.0 million and R$ 2,513.7 million in 2018, 2017 and 2016, respectively. In 2018, our cash flow from operating activities was R$ 1,149.9 million higher (66% increase) than that of 2017 despite the 23% reduction observed in Adjusted EBITDA. The increase observed in 2018 is mainly due to optimization in the businesses working capital as well as higher compensation of tax credits during the year. In 2017, net cash provided by operating activities was R$774.6 million lower than that of 2016 (31% decrease), mainly due to the 6% reduction of the Adjusted EBITDA year-over-year and the increase in investment in working capital given the volatility observed in LPG and fuels’ acquisition prices. In 2016, our cash flow from operations was R$ 688.0 million lower than that of 2015, despite the 7% EBITDA growth and lower investment in working capital in the comparison with 2015. Due to the use of the indirect method of cash flow, interest on financial liabilities and variations on the exchange rates were R$ 818.8 million in cash flow from operating activities in 2016 compared to 2015.

Cash flow from investing activities was of R$$ 3,177.6 million in 2018, of which R$ 1,669.9 million in financial investments net of redemptions (reallocation of resources from cash equivalents, maintaining their immediate liquidity), and R$ 1,507.7 million in acquisition of companies, additions to property, plant and equipment, intangible assets and capital increase in invested companies, net of disposals. Cash flow from investing activities was R$ 1,371.8 million in 2017, of which R$ 60.9 million in net redemptions from financial investments, and R$ 1,432.6 million in additions to property, plant and equipment, intangible assets and capital increase in invested companies, net of disposals. In 2016, cash flow from investing activities was R$ 1,848.8 million. In addition, capital investments in ConectCar amounted to R$ 31.9 million, R$ 16.0 million and R$ 47.3 million in 2018, 2017 and 2016, respectively. In 2018 and 2017 the Company invested R$ 390.2 million and R$ 529.7 million, respectively in Contractual assets with customers – exclusive rights. For 2016, investments in Contractual assets with customers – exclusive rights were considered in additions to intangible assets.

Net cash from financing activities totaled a cash usage of R$ 801.0 million for 2018 and cash generation of R$ 340.3 million and R$ 928.4 million for 2017 and 2016, respectively. In 2018, cash flow used by financing activities decreased in R$ 1,141.3 million compared to 2017, mainly due to the growth of use of resources for amortization of debt. In 2017, cash flow used by financing activities decreased in R$ 588.0 million compared to 2016, mainly due to the growth of use of resources for amortization of debt, partially offset by an increase of R$ 833.8 million, which strengthened the cash position. In 2016, cash flow used by financing activities increased in R$ 3,449.1 million compared to 2015, mainly as a result of lower use of resources for amortization of debt and an increase of R$ 1,292.3 million in new loans and financings, that strengthened the cash position and extended the Company’s debt profile.

Accordingly, cash and cash equivalents totaled R$ 3,939.0 million in 2018, R$ 5,002.0 million in 2017 and R$ 4,274.2 million in 2016.

e. Sources for financing working capital and investments in non-current assets to be used in case of deficiencies in liquidity

In 2018, 2017 and 2016, we did not present deficiencies in liquidity. We believe that Ultrapar has own resources and operational cash generation sufficient to finance its needs for working capital and investments estimated for 2019. In addition, if necessary, we have access to third party financing resources.

f. Indebtedness level and debt profile

Our total indebtedness, considering all current liabilities and non-current liabilities, grew by 11%, from R$ 18,660.3 million as of December 31, 2017 to R$ 20,699.4 million as of December 31, 2018.

Our gross financial debt increased by 14% from R$ 13,590.6 million as of December 31, 2017 to R$ 15,206.1 million as of December 31, 2018. Our short-term financial debt was equivalent to 15% of our gross debt as of December 31, 2018 and to 26% as of December 31, 2017.

The table below shows our financial indebtedness for each period:


Loans	Currency		Weighted average financial charges as of December 31, 2018		Principal amount of outstanding debt and accrued interest as of
					12/31/2018		12/31/2017		12/31/2016
Foreign currency – denominated loans:
Foreign loan (*)		US$		LIBOR (1) + 0.9%		582.1		788.8		942.5
Foreign loan (*)		US$		+3.9%		985.3		259.0		486.5
Foreign loan		US$		LIBOR (1) + 2.1%		234.4		298.9		332.6
Financial institutions		US$		LIBOR (1) + 2.5%		620.6		330.8		195.0
Advances on foreign exchange contracts		US$		+3.2%		11.7		44.5		111.1
Financial institutions		US$		+2.9%		127.3		106.7		109.9
Foreign currency advances delivered		US$		+2.9%		1.5		26.1		32.6
Financial institutions		MX$(2)		+9.0%		27.8		27.0		24.6
Financial institutions		MX$(2)		TIIE (2) + 1.5%		4.0		3.4		9.6
BNDES		US$		+6.5%		2.6		4.5		7.1
Financial institutions		Bs$(7)				—		0.6		0.4
Notes in the foreign market (*)		US$		+5.3%		2,889.6		2,454.1		2,412.1
Brazilian *Reais* – denominated loans:
Debentures – Ipiranga (4, 6 and 8)		R$		105.0% of CDI		2,039.7		2,836.7		1,914.5
Banco do Brasil – floating rate		R$		107.3% of CDI		2,614.7		2,794.3		2,956.5
Debentures—5^th and 6^th issuance (2 and 7)		R$		105.3% of CDI		1,757.0		817.7		832.4
Debentures – CRA (1, 3 and 5)		R$		95.8% of CDI		2,029.5		1,380.9		—
Debentures – CRA (1, 3 and 5) (*)		R$		IPCA + 4.6%		833.2		554.4		—
BNDES		R$		TJLP (3) + 2.4%		147.9		206.4		307.6
BNDES		R$		SELIC (6) + 2.3%		51.5		69.4		71.4
Finance leases		R$		IGP-M (5) + 5.6%		46.1		48.5		48.6
FINEP		R$		+4.0%		22.6		35.6		48.7
FINEP		R$		TJLP (3) + 1.5%		53.2		32.7		34.6
Bank Credit Bill		R$		124.0% of CDI		50.1		—		—
Banco do Nordeste do Brasil		R$		8.5% (4)		15.8		28.1		47.1
BNDES		R$		+6.6%		14.1		26.3		40.3
FINAME		R$		TJLP (3)+5.7%		—		0.1		0.1
Export Credit Note – floating rate		R$		CDI		—		157.7		158.8
BNDES EXIM		R$		TJLP (3)		—		62.8		62.1
BNDES EXIM		R$		SELIC (6)		—		30.9		28.1

Total loans						15,162.2		13,426.9		11,214.8
Currency and interest rate hedging instruments (**)						43.9		163.7		202.4

Total						15,206.1		13,590.6		11,417.1

(*)	These transactions were designated for hedge accounting (see note 33.h of the consolidated financial statements).

(**)	Accumulated losses (see note 33.g of the consolidated financial statements).

(1)	LIBOR – London Interbank Offered Rate.

(2)	MX$—Mexican peso; TIIE—Mexican interbank balance interest rate.

(3)	TJLP (Long-Term Interest Rate) = set by the National Monetary Council, TJLP is the basic financing cost of BNDES. As of December 31, 2018, TJLP was fixed at 7.03% p.a.

(4)

Contract linked to the rate of FNE fund (Northeast Constitutional Financing Fund) whose purpose is to promote the development of the industrial sector, managed by Banco do Nordeste do Brasil. As of December 31, 2018, the FNE interest rate was 10% p.a. FNE grants a discount of 15% on the interest rate for timely payments.

(5)	IGP-M = General Index of Market Prices of Brazilian inflation, calculated by the Fundação Getúlio Vargas.

(6)	SELIC – basic interest rate set by the Brazilian Central Bank.

(7)	Bs$ = Bolívar.

The changes in loans, debentures and finance leases are shown below:


Balance as of December 31, 2017	13,426.9
New loans and debentures with cash effect	4,461.1
Interest accrued	873.2
Principal payment and financial leases	(3,715.8	)
Interest payment	(737.6	)
Monetary and exchange rate variation	804.3
Change in fair value	50.2

Balance as of December 31, 2018	15,162.2

Our consolidated debt as of December 31, 2018 had the following maturity schedule:


Year	Maturities
	(R$ million)
2019		2,274.0
2020		962.9
2021		1,551.1
2022		3,219.5
2023		3,431.5
2024 thereafter		3,767.3

Total		15,206.1

See “Item 10.1.c. Capacity to meet our financial commitments”.

i.	Relevant loan and financing contracts

Notes in the foreign market

On October 06 2016, the subsidiary 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 hedging instruments for this transaction (see note 33.h.3 of the consolidated financial statements).

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

•

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

•

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.

Foreign loans

1) The subsidiary IPP has foreign loans in the amount of US$ 395 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 104.4% of CDI (see note 33.h.1 of the consolidated financial statements). 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 Ultrapar.

The maturity of the foreign loans is distributed as follows:


Maturity	US$ (million)		R$ (million)		Cost in % of CDI
Charges¹		9.5		36.8		—
Jun/21		100.0		387.5		105.0
Jul/21		60.0		232.5		101.8
Jul/23		50.0		193.7		104.8
Sep/23		60.0		232.5		105.0
Sep/23		65.0		251.9		104.7
Nov/23		60.0		232.5		104.5

Total / average cost		404.5		1,567.4		104.4

¹	Includes interest and transaction costs.

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 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.

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

2) The subsidiary Global Petroleum Products Trading Corporation has a foreign loan in the amount of US$ 60 million with maturity on June 22, 2020 and interest rate 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.

3) The subsidiary LPG International Inc. had 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 was guaranteed by the Company and its subsidiary IPP. The subsidiary settled on the maturity date.

Debentures

1) In December 2018, the subsidiary IPP carried out its eighth issuance of debentures in the amount of R$ 900,000, in two series, being one of 660,000 and another of 240,000, simple, nonconvertible into shares, nominative, book-entry and unsecured debentures. The debentures have been subscribed by Vert Companhia Securitizadora. The proceeds from this issuance were used exclusively for the purchase of ethanol by subsidiary IPP.

The financial settlement occurred on December 21, 2018. The debentures have an additional guarantee from Ultrapar and the main characteristics of the debentures are as follows:

Principal amount: R$ 660,000,000.00

Unit par value: R$ 1,000.00

Maturity date: December 23, 2023

Repayment method: Lump sum at final maturity

Interest: 97.5% of CDI

Payment of interest: Semi-annually

Reprice: Not applicable

Principal amount: R$ 240,000,000.00

Unit par value: R$ 1,000.00

Maturity date: December 15, 2025

Repayment method: Lump sum at final maturity

Interest: IPCA + 4.61%

Payment of interest: Annually

Reprice: Not applicable

The subsidiary IPP contracted hedging instruments subjected to IPCA variation, changing the debentures charges linked to IPCA to 97.1% of 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.

2) In March 2018, the Company made its sixth issuance of debentures in a single series of 1,725,000, simple, non-convertible into shares, nominative, book-entry and unsecured debentures which main characteristics are:

Principal amount: R$ 1,725,000,000.00

Unit par value: R$ 1,000.00

Maturity date: March 5, 2023

Repayment method: Lump sum at final maturity

Interest: 105.25% of CDI

Payment of interest: Semi-annually

Reprice: Not applicable

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

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

Principal amount: R$ 730,384,000.00

Unit par value: R$ 1,000.00

Maturity date: October 24, 2022

Repayment method: Lump sum at final maturity

Interest: 95.0% of CDI

Payment of interest: Semi-annually

Reprice: Not applicable

Principal amount: R$ 213,693,000.00

Unit par value: R$ 1,000.00

Maturity date: October 24, 2024

Repayment method: Lump sum at final maturity

Interest: IPCA + 4.34%

Payment of interest: Annually

Reprice: Not applicable

The subsidiary IPP contracted hedging instruments subjected to IPCA variation, changing the debentures charges linked to IPCA to 97.3% of 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.

4) In July 2017, the subsidiary IPP made its sixth issuance of public debentures, in one single series of 1,500,000 simple, nonconvertible into shares and unsecured debentures, which main characteristics are as follows:

Principal amount: R$ 1,500,000,000.00

Unit par value: R$ 1,000.00

Maturity date: July 28, 2022

Repayment method: Annual as from July 2021

Interest: 105.0% of CDI

Payment of interest: Annually

5) In April 2017, the subsidiary IPP carried out its fifth issuance of debentures, in two 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. The proceeds from this issuance were used exclusively for the purchase of ethanol by subsidiary IPP.

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

Principal amount: R$ 660,139,000.00

Unit par value: R$ 1,000.00

Maturity date: April 18, 2022

Repayment method: Lump sum at final maturity

Interest: 95.0% of CDI

Payment of interest: Semi-annually

Reprice: Not applicable

Principal amount: R$ 352,361,000.00

Unit par value: R$ 1,000.00

Maturity date: April 15, 2024

Repayment method: Lump sum at final maturity

Interest: IPCA + 4.68%

Payment of interest: Annually

Reprice: Not applicable

The subsidiary IPP contracted hedging instruments subjected to IPCA variation, changing the debentures charges linked to IPCA to 93.9% of 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.

6) 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:

Principal amount: R$ 500,000,000.00

Unit par value: R$ 1,000,000.00

Maturity date: May 25, 2021

Repayment method: Amortizing annually, beginning in May 2019

Interest: 105.0% of CDI

Payment of interest: Semi-annually

Reprice: Not applicable

7) 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:

Principal amount: R$ 800,000,000.00

Unit par value: R$ 10,000.00

Maturity date: March 16, 2018

Repayment method: Lump sum at final maturity

Interest: 108.25% of CDI

Payment of interest: Semi-annually

Reprice: Not applicable

The debentures were settled by the subsidiary IPP on the maturity date.

8) 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:

Principal amount: R$ 800,000,000.00

Unit par value: R$ 10,000.00

Maturity date: December 20, 2018

Repayment method: Lump sum at final maturity

Interest: 107.9% of CDI

Payment of interest: Semi-annually

The debentures were settled by the subsidiary IPP on the maturity date.

The debentures have maturity dates distributed as shown below (includes accrued interest through December 31, 2018).


Maturity	R$ (million)
May/19		168.9
May/20		165.8
May/21		165.8
Apr/22		657.5
Jul/22		1,529.3
Oct/22		727.2
Mar/23		1,757.0
Dec/23		644.8
Apr/24		377.6
Oct/24		217.9
Dec/25		237.8

Total		6,659.5

BNDES

Ultrapar’s 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, to be verified in the annual consolidated audited financial statements:

•

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.

Ultrapar is in compliance 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.

Financial Institutions

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

The subsidiary Oxiteno USA has loans bearing interest of LIBOR + 2.1% and maturity as shown below:


Maturity	US$ (million)		R$ (million)
Charges¹		0.2		0.9
Aug/19		10.0		38.7
Feb/20		10.0		38.7
Aug/20		10.0		38.7
Sep/20		20.0		77.5
Feb/21		10.0		38.7
Mar/22		30.0		116.2
Oct/22		40.0		155.0
Mar/23		30.0		116.2

Total		160.2		620.6

¹	Includes interest and transaction costs.

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

Banco do Brasil

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

These loans mature, as follows (including interest until December 31, 2018):


Maturity
Feb/19			168.4
May/19			1,432.8
May/20			337.8
May/21			337.8
May/22			337.8

Total			2,614.7

Export Credit Note

The export credit note contract of the subsidiary Oxiteno Nordeste, with maturity in May 2018, and floating rate of 101.5% of CDI, paid quarterly, was settled on the maturity date.

Financial Leases

The subsidiary Cia. Ultragaz has a finance lease contract related to LPG bottling facilities, maturing in April 2031. The amounts of equipment and intangible assets, net of depreciation and amortization, and the amounts of the corresponding liabilities are shown below:


	12/31/2018		12/31/2017
Equipment and intangible assets, net of depreciation and amortization		13.8		15.7
Financing (present value)		46.1		48.5

Current		2.9		2.7
Non-current		43.2		45.8

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


	12/31/2018		12/31/2017
Up to 1 year		5.1		5.1
From 1 to 2 years		5.1		5.1
From 2 to 3 years		5.1		5.1
From 3 to 4 years		5.1		5.1
From 4 to 5 years		5.1		5.1
More than 5 years		37.6		42.6

Total		63.2		68.2

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

ii.

Other long-term relations with financial institutions

In addition to the relationships mentioned in items “10.1.f.i. Relevant loan and financing contracts” and “10.1.g. Limits of use of contracted loans and financing”, Ultrapar maintains long term relationships with financial institutions (i) in connection with the ordinary course of the business, such as the payroll of its employees, credit and collection, payments and currency and interest rate hedging instruments and (ii) through a long-term contract between Ipiranga and Itaú Unibanco for the provision of financial services and management of the Ipiranga-branded credit cards.

In October 2015, Redecard acquired 50% of ConectCar, a company that operates in the segment of electronic payment for tolls, parking lots and fuel. Ipiranga holds the remaining 50% interest of the company.

iii.

Subordination of debt

Our secured debt as of December 31, 2018, amounted R$ 70 million. Except for secured debt, there is no subordination among our existing debt contracts.

iv.

Any restrictions imposed on the issuer, especially related to indebtedness limits and the hiring of new debt, to dividend distribution, to the sale of assets, to the issuing of new securities and to change of control, and if the issuer has complied with these restrictions.

Ultrapar and its subsidiaries are subject to covenants required by loans contracted. The restrictions imposed on Ultrapar and its subsidiaries are those usual for transactions of this nature and have not limited their ability to conduct their business to date.

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

•

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

•

Restriction on encumbrance of assets exceeding US$ 150 million or 15% of the amount of the consolidated tangible assets.

As a result of foreign loans, 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 EBITDA, at less than or equal to 3.5; and

•

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

During the life of the agreements entered into with BNDES, Ultrapar must keep the following capitalization and current liquidity levels, as verified in 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.

The Company is compliant with the covenants levels required by financing contractors.

g. Limits of use of contracted loans and financings and percentages already used

The Company has certain financing contracts with BNDES whose amounts were only partially received. As of December 31, 2018, the total value of such contracts amounted R$ 377 million, sum that had not been yet used.

h. Main changes in each item of the financial statements

Ultrapar – Consolidated


	12/31/2018		12/31/2017		12/31/2016		12/31/2018 vs. 12/31/2017			12/31/2017 vs. 12/31/2016
ASSETS
Cash, cash equivalents and financial investments		6,792.1		6,285.5		5,686.7		8	%		11	%
Trade accounts receivable and reseller financing		4,436.6		4,147.9		3,388.2		7	%		22	%
Inventories		3,354.5		3,513.7		2,781.4		-5	%		26	%
Recoverable taxes		896.9		881.6		541.8		2	%		63	%
Contractual assets with customers – exclusive rights		484.5		456.2		448.3		6	%		2	%
Other		247.2		205.2		519.8		20	%		-61	%

Total Current Assets		16,211.7		15,490.1		13,366.1		5	%		16	%

Investments		129.1		150.2		141.7		-14	%		6	%
Property, plant and equipment and intangibles assets		9,648.2		8,875.9		7,688.1		9	%		15	%
Financial investments		202.3		84.4		15.1		140	%		459	%
Trade accounts receivable and reseller financing		429.8		330.0		227.1		30	%		45	%
Deferred income tax		514.2		614.1		459.6		-16	%		34	%
Escrow deposits		881.5		822.7		778.8		7	%		6	%
Contractual assets with customers – exclusive rights		1,034.0		1,046.1		989.8		-1	%		6	%
Other		1,448.5		870.9		408.3		66	%		113	%

Total Non-Current Assets		14,287.7		12,794.2		10,708.4		12	%		19	%

TOTAL ASSETS		30,499.4		28,284.3		24,074.5		8	%		17	%

LIABILITIES
Loans, debentures and financial leases		2,274.0		3,503.7		2,475.6		-35	%		42	%
Trade payables		2,731.7		2,155.5		1,709.7		27	%		26	%
Salaries and related charges		428.2		388.1		362.7		10	%		7	%
Taxes payable		268.0		221.5		168.4		21	%		32	%
Other		634.9		740.9		767.9		-14	%		-4	%

Total Current Liabilities		6,336.8		7,009.7		5,484.3		-10	%		28	%

Loans, debentures and financial leases		12,932.2		10,086.9		8,941.5		28	%		13	%
Provision for tax, civil and labor risks		865.2		861.2		727.1		0	%		18	%
Post-employment benefits		204.2		207.5		119.8		-2	%		73	%
Other		361.0		495.0		325.7		-27	%		52	%

Total Non-Current Liabilities		14,362.6		11,650.6		10,114.2		23	%		15	%

TOTAL LIABILITIES		20,699.4		18,660.3		15,598.5		11	%		20	%

EQUITY
Capital		5,171.8		5,171.8		3,838.7		0	%		35	%
Reserves		4,646.2		4,184.6		4,941.3		11	%		-15	%
Treasury shares		-485.4		-482.3		-483.9		1	%		0	%
Others		115.5		372.2		149.0		-69	%		150	%
Non-controlling interest		351.9		377.8		30.9		-7	%		1125	%

TOTAL EQUITY		9,800.0		9,624.0		8,476.1		2	%		14	%

TOTAL LIABILITIES AND EQUITY		30,499.4		28,284.3		24,074.5		8	%		17	%

As from January 1, 2018, the IFRS 9 and 15 standards were adopted in order to provide a comparative basis for the financial statements, the information for 2017 shown in this document incorporates these accounting changes, consequently differing from the values previously reported in the respective publications of results. The information of the statements of financial position of the year ended on December 31, 2016 used as source for the opening balance sheet on January 1, 2017, also incorporate these changes of accounting rules. In order to understand the effects of the new accounting rules, item 10.4.b contain explanations of the impacts on the principal accounts of the financial statements for fiscal year ended on December 31, 2017 and opening balance sheet of January 1, 2017. Additional information can be found in note 2.y of the financial statements of December 31, 2018.

Main changes in the consolidated statements of financial position accounts on December 31, 2018 compared with December 31, 2017

Assets

Current Assets

Current assets totaled R$ 16,221.7 million on December 31, 2018, an increase of R$ 721.6 million in relation to December 31, 2017, principally due to increased cash, cash equivalents and financial investments and trade receivables.

Cash, cash equivalents and financial investments

Cash, cash equivalents and financial investments totaled R$ 6,792.1 million on December 31, 2018, an increase of R$ 506.6 million in relation to December 31, 2017, mainly due to increase in operating cash flow.

Trade receivables and resellers’ financing

Trade receivables amounted to R$ 4,436.6 million on December 31, 2018, an increase of R$ 288.7 million in relation to December 31 2017, mainly a function of an increase in net revenues.

Inventories

Inventories amounted to R$ 3,354.5 million on December 31, 2018, a decrease of R$ 159.2 million in relation to December 31, 2017, largely a function of a reduction in levels of fuel inventory at Ipiranga partially attenuated by the increase in Extrafarma’s inventories due to readjustment in pharmaceutical prices by the Medicine Market Regulation Chamber (CMED) and the increase in the number of drugstores.

Non-current assets

Non-current assets totaled R$ 14,287.7 million on December 31, 2018, an increment of R$ 1,493.5 million in relation to December 31, 2017, largely a function of increases in property, plant and equipment and intangible assets, as a consequence of investments made and recoverable taxes.

Property, plant and equipment and intangible assets

Property, plant and equipment and intangible assets amounted to R$ 9,648.2 million on December 31, 2018, an increase of R$ 772.4 million in relation to December 31, 2017, a reflection of investments undertaken during 2018 principally in Oxiteno, which unveiled its new plant in the United States in September 2018. These investments were partially offset by depreciation and amortization in the period.

Liabilities

Current liabilities

Current liabilities on December 31, 2018 were R$ 6,336.8 million, a decline of R$ 672.9 million in relation to December 31, 2017, mainly due to the decrease in loans, debentures and financial leases, albeit partially offset by increases in trade payables.

Loans, debentures and financial leases

Loans and debentures totaled R$ 2,274.0 million on December 31, 2018, a decline of R$ 1,229.7 million in relation to December 31, 2017, largely due to the amortization of loans falling due in 2018, partially offset by the transfer of an amount due in 2019 from non-current liabilities to current liabilities, and preserving Ultrapar’s debt profile. See “Non-current liabilities – Loans, debentures and financial leases”.

Trade payables

Trade payables amounted to R$ 2,731.7 million on December 31, 2018, an increase of R$ 576.2 million in relation to December 31, 2017, mainly due to increases in suppliers accounts at Ipiranga and Oxiteno, consequence of increase in costs during 2018 and an increase in days payables outstanding in Ipiranga and Oxiteno.

Non-current liabilities

Non-current liabilities were R$ 14,362.6 million on December 31, 2018, an increase of R$ 2,711.9 million in relation to December 31, 2017. The increase in non-current liabilities is due to a higher figure for loans, debentures and financial leases.

Loans, debentures and financial leases

Loans and debentures totaled R$ 12,932.2 million on December 31, 2018, an increase of R$ 2.845,2 million in relation to December 31, 2017, principally due to new funding, but attenuated by the transfer of an amount falling due in 2019 from non-current to current liabilities, Ultrapar’s debt profile being preserved.

Equity

Ultrapar’s equity totaled R$ 9,800.0 million on December 31, 2018, an increase of R$ 176.0 million in relation to December 31, 2017 due to the increase in profit reserves, reflecting 2018 earnings.

Main changes in the consolidated statements of financial position accounts on December 31, 2017 compared with December 31, 2016

Assets

Current assets

Current assets totaled R$ 15,490.1 million as of December 31, 2017, an increase of R$ 2,124.0 million compared to December 31, 2016, mainly due to increases in cash, equivalents and financial investments, inventory and accounts receivable.

Cash, cash equivalents and financial investments

Cash, cash equivalents and financial investments totaled R$ 6,285.5 million on December 31, 2017, an increase of R$ 598.8 million compared to December 31, 2017, mainly due to new loans and financings in the period.

Trade receivable and resellers’ financing

Trade accounts receivable totaled R$ 4,147.9 million on December 31, 2017, an increase of R$ 759.7 million compared to December 31, 2016, mainly due to an increase in days of sales outstanding (DSO) at Ipiranga.

Inventories

Inventories amounted to R$ 3,513.7 million as of December 31, 2017, an increase of R$ 732.3 million compared to December 31, 2016, mainly due to (i) increases in ethanol and gasoline costs throughout the year, increasing the final inventory balance of Ipiranga, (ii) increases in LPG acquisition, and (ii) the adjustment of prices of medicines set by the CMED and a larger number of newly opened stores, both increasing Extrafarma’s inventory.

Non-current assets

Non-current assets totaled R$ 12,794.2 million as of December 31, 2017, an increase of R$ 2,085.8 million compared to December 31, 2016, mainly due to increases in property, plant and equipment and intangible assets and financial investments, and also an increase in deferred income tax, trade account receivables and contractual assets with customers – exclusive rights.

Property, plant and equipment and intangible assets

Property, plant and equipment and intangible assets totaled R$ 8,875.9 million as of December 31, 2017, an increase of R$ 1,187.8 million compared to December 31, 2016 due to greater investments during the period.

Liabilities

Current liabilities

Current liabilities amounted to R$ 7,009.7 million as of December 31, 2017, an increase of R$ 1,525.4 million compared to December 31, 2016, mainly due to an increase in loans, debentures and financial leases.

Loans, debentures and financial leases

Loans, debentures and financial leases totaled R$ 3,503.7 million as of December 31, 2017, an increase of R$ 1,028.1 million compared to December 31, 2016, mainly due to transfer of the amount due in 2018 from non-current liabilities to current liabilities, partially offset by the payment of loans maturing in 2018. See “Non-current liabilities—Loans, debentures and financial leases.”

Trade payables

Trade payables amounted to R$ 2,155.5 million as of December 31, 2017, an increase of R$ 445.8 million compared to December 31, 2016, due to an increase in trade payables in all business, except for Ultracargo.

Non-current liabilities

Non-current liabilities totaled R$ 11,650.6 million as of December 31, 2017, an increase of R$ 1,536.5 million compared to December 31, 2016. The increase in non-current liabilities is mainly due to the increase in loans, debentures and financial leases.

Loans, debentures and financial leases

Loans, debentures and financial leases totaled R$ 10,086.9 million as of December 31, 2017, an increase of R$ 1,145.4 million compared to December 31, 2016, mainly due to new loans and financings.

Equity

Ultrapar’s equity amounted to R$ 9,624.0 million on December 31, 2017, an increase of R$ 1,148.0 million compared to December 31, 2016, as a result of an increase in Capital and the association with Chevron in the lubricants segment.

Main changes in the consolidated statements of financial position accounts on December 31, 2016 compared with December 31, 2015

Assets

Current assets

Current assets totaled R$ 13,366.1 million as of December 31, 2016, an increase of R$ 3,454.8 million compared to December 31, 2015, mainly due to increases in cash, equivalents and financial investments, inventory, trade accounts receivable, insurance receivable and the creation of the Contractual Assets with Customers – exclusive rights account following the adoption of IFRS 15 in 2018 and consequent restatement of the 2016 balance sheet.

Cash, cash equivalents and financial investments

Cash, cash equivalents and financial investments totaled R$ 5,686.7 million in December 31, 2016, an increase of R$ 2,180.5 million compared to December 31, 2015, mainly due to new loans and financings in the period.

Trade accounts receivable and resellers’ financing

Trade accounts receivable totaled R$ 3,388.2 million in December 31, 2016, an increase of R$ 221.0 million compared to December 31, 2015, mainly due to an increase in days of sales outstanding (DSO) at Ipiranga and the adjustment made as a consequence of IFRS 9 previously mentioned.

Inventories

Inventories amounted to R$ 2,781.4 million as of December 31, 2016, an increase of R$ 286.1 million compared to December 31, 2015, mainly due to (i) increases in ethanol and gasoline costs throughout the year, increasing the final inventory balance of Ipiranga, and (ii) the adjustment of prices of medicines set by the CMED and a larger number of newly opened stores, both increasing Extrafarma’s inventory.

Contractual assets with customers – exclusive rights

The contractual assets with customers – exclusive rights account was created following the adoption of IFRS 15 in 2018 with the restatement of the 2017 numbers and of the statements of financial position of December 31, 2016. IFRS 15 relates largely to the reclassification from selling expenses with amortization of rights under exclusive contracts with service stations (Ipiranga) to a reduction of revenue. Consequently, there was also a reclassification from intangible assets to current and non-current assets. Contractual assets with customers amounted to R$ 448.3 million on December 31, 2016.

Other

Other current assets increased R$ 405.8 million as a consequence of the registration of insurance receivables in the amount of R$ 366.7 million following the incident at Ultracargo’s terminal in Santos in April 2015.

Non-current assets

Non-current assets totaled R$ 10,708.4 million as of December 31, 2016, a decrease of R$ 93.3 million compared to December 31, 2015, mainly due to a decrease in property, plant and equipment and intangible assets following the adoption of IFRS 15 and reduction in financial investments partially compensated by the creation of the Contractual Assets with Customers – exclusive rights account following the adoption of IFRS 15 in 2018 and consequent restatement of the 2016 statements of financial position.

Property, plant and equipment and intangible assets

Property, plant and equipment and intangible assets totaled R$ 7,688.1 million as of December 31, 2016, a reduction of R$ 1,044.8 million compared to December 31, 2015, mainly due to the restatement of the 2016 statements of financial position following the adoption of IFRS 15 in 2018.

Liabilities

Current liabilities

Current liabilities amounted to R$ 5,484.3 million as of December 31, 2016, an increase of R$ 1,650.9 million compared to December 31, 2015, mainly due to an increase in loans, debentures and financial leases and trade payables.

Loans, debentures and financial leases

Loans, debentures and financial leases totaled R$ 2,475.6 million as of December 31, 2016, an increase of R$ 1,377.7 million compared to December 31, 2015, mainly due to the transfer of the amount due in 2017 from non-current liabilities to current liabilities, partially offset by the payment of loans maturing in 2016. See “Non-current liabilities—Loans, debentures and financial leases.”

Trade payables

Trade payables amounted to R$ 1,709.7 million as of December 31, 2016, an increase of R$ 249.1 million compared to December 31, 2015, mainly concentrated in Ipiranga suppliers.

Non-current liabilities

Non-current liabilities totaled R$ 10,114.2 million as of December 31, 2016, an increase of R$ 1,208.6 million compared to December 31, 2015. The increase in non-current liabilities is mainly due to the increase in loans, debentures and financial leases.

Loans, debentures and financial leases

Loans, debentures and financial leases totaled R$ 8,941.5 million as of December 31, 2016, an increase of R$ 1,137.8 million compared to December 31, 2015, mainly due to new loans and financings.

Equity

Ultrapar’s equity amounted to R$ 8,476.1 million on December 31, 2016, an increase of R$ 501.9 million compared to December 31, 2015, as a result of an increase in profit reserves, due to earnings generated in 2017 and the association with Chevron in the lubricants segment.

Main changes in the consolidated statements of income for the year ended December 31, 2018 compared with the year ended December 31, 2017


(R$ million)	Year ending December 31			% of net sales and services		Year ending December 31			% of net sales and services		Percent change 2018-2017
	2018					2017¹
Net revenue from sales and services		90,698.0			100%		79,230.0			100%		14%
Cost of products and services sold		(84,537,4	)		93%		(72,431.5	)		91%		17%
Gross profit		6,160.6			7%		6,798.5			9%		-9%
Selling, marketing, general and administrative expenses		(4,296.7	)		5%		(4,062.9	)		5%		6%
Other operating income, net		57.5			0%		59.4			0%		-3%
Income from disposal of assets		(22.1	)		0%		(2.2	)		0%		885%
Operating income		1,899.4			2%		2,792.7			4%		-32%
Financial results		(113.5	)		0%		(474.3	)		1%		-76%
Equity in earnings (losses) of affiliates		(14.8	)		0%		20.7			0%		-171%
Income and social contribution taxes		(638.7	)		1%		(813.3	)		1%		-21%
Net income		1,132.3			1%		1,525.9			2%		-26%
Net income attributable to:
Shareholders of Ultrapar		1,150.4			1%		1,526.5			2%		-25%
Non-controlling shareholders of the subsidiaries		(18.1	)		0%		(0.6	)		0%		2729%

Adjusted EBITDA		3,068.9			3%		3,981.0			5%		-23%

Depreciation and amortization²		1,184.3			1%		1,167.6			1%		1%

¹	Information for 2017 restated according to accounting standards IFRS 9 and 15 issued by IASB (International Accounting Standards Board) and adopted from 2018. Readjustment of 2017 figures made for comparability with 2018 figures.

²	Includes amortization of contractual assets with clients – exclusive rights.

EBITDA – Earnings Before Interest, Taxes, Depreciation and Amortization; Adjusted EBITDA – adjusted for amortization of contractual assets with customers—exclusive rights; and EBIT – Earnings Before Interest and Taxes, are presented in accordance with CVM Instruction No. 527, issued by CVM on October 4, 2012. The calculation of Adjusted EBITDA from net earnings is shown below:

R$ million

2018

2017

D(%) 2018
v 2017

Net income

1,132.3

1,525.9

-26

(+) Income and social contribution taxes

638.7

813.3

(+) Financial result

113.5

474.3

(+) Depreciation and amortization

812.5

704.5

EBITDA

2,697.1

3,518.0

-23

Adjustments

(+) Amortization of contractual assets with customers - exclusive rights (Ipiranga)

371.8

463.0

Adjusted EBITDA

3,068.9

3,981.0

-23

Information for 2017 restated according to accounting standards IFRS 9 and 15 issued by IASB (International Accounting Standards Board) and adopted from 2018. Readjustment of 2017 figures made for comparability with 2018 figures.

The purpose of including Adjusted EBITDA information is to provide a measure used by the management for internal assessment of our operating results, besides being a directly or indirectly related measure to a portion of our employee profit sharing plan. It is also a financial indicator widely used by investors and analysts to measure our ability to generate cash from operations and our operating performance. We also calculate EBITDA in connection with covenants related to some of our financing, as described in item 10.1.iv and in note 15 to the financial statements. We believe Adjusted EBITDA allows a better understanding not only of our financial performance but also of our capacity of meeting the payment of interest and principal from our debt and of obtaining resources for our investments and working capital. Our definition of Adjusted EBITDA may differ from similarly titled measures used by other companies, and may not be comparable, thereby limiting its usefulness as a comparative measure. Because Adjusted EBITDA excludes net financial expense (income), income tax and social contribution, depreciation and amortization and amortization of contractual assets with customers—exclusive rights (Ipiranga) it provides an indicator of general economic performance that is not affected by debt restructurings, fluctuations in interest rates or changes in income tax and social contribution, depreciation and amortization and amortization of contractual assets with customers—exclusive rights (Ipiranga). Adjusted EBITDA is not a measure of financial performance under accounting practices adopted in Brazil or IFRS. Adjusted EBITDA should not be considered in isolation, or as a substitute for net income, as a measure of operating performance, as a substitute for cash flows from operations or as a measure of liquidity. Adjusted EBITDA has material limitations that impair its value as a measure of a company’s overall profitability since it does not address certain ongoing costs of our business that could significantly affect profitability such as financial expenses, income taxes and depreciation and amortization.

Overview on sales volume


	2018		2017		D(%) 2018 - 2017
Ipiranga (000 m³)		23,680		23,458		1	%
Oxiteno (000 tons)		769		790		-3	%
Ultragaz (000 tons)		1,725		1,746		-1	%
Ultracargo (000 m³)		757		724		5	%
Extrafarma (# of stores)		433		394		10	%

Sales volume at Ipiranga rose 1% in 2018, with diesel increasing 2%, in line with the gradual recovery in the economy. Conversely, fuel volume for light vehicles (Otto cycle) was 1% less year-over-year, declining until July before resuming growth during the second half. Record ethanol production in 2018 contributed to the reduction in its prices and, consequently, drove the 45% increase in sales while gasoline sales volume recorded a decline of 14%. For Oxiteno, an increase in the demand for commodities, whose volumes rose 8%, together with the 5% reduction in specialty chemical volumes, resulted in an overall reduction of 3% in sales volume compared with 2017, a year Oxiteno reported record sales. Despite the increase in sales volume from the new plant in the USA following its startup in September, export volumes fell 4% in 2018 due to reduced demand from Mercosur countries, notably Argentina. Sales volume in the domestic market also fell 2% compared with 2017. Ultragaz’s total sales volume was down 1% in 2018, in line with the decline in the overall Brazilian market. While volume was flat year-over-year in the bottled segment, the bulk segment posted a reduction of 3%, principally due to the programmed reduction of an industrial client. Total average storage at Ultracargo was up 5% due to increased handling activity in Santos, reflecting a partial resumption of its operations in June 2017, and increased ethanol handling in Brazilian ports, notwithstanding the reduction in fuel imports in 2018. Extrafarma opened 68 new stores and closed 29 in 2018, a 10% expansion (a net increase of 39 stores) in the network.

Net revenue from sales and services


(R$ million)	2018		2017		D(%) 2018 - 2017
Ipiranga		76,473.4		66,950.5		14	%
Oxiteno		4,748.4		3,959.4		20	%
Ultragaz		7,043.2		6,071.0		16	%
Ultracargo		493.6		438.4		13	%
Extrafarma¹		2,141.0		1,980.5		8	%

¹	Gross revenue.

Ultrapar reported net revenues from sales and services of R$ 90,698 million in 2018, a year-over-year growth of 14%, as a consequence of the increase in revenues at all businesses. Ipiranga posted an increase of 14% in net revenues, due principally to: (i) movements in the average costs of diesel and gasoline which recorded consecutive increases from January through September, in line with international benchmark prices and the devaluation of the Real against the US dollar; (ii) an increase in fuel value-added taxes (PIS/COFINS) in July 2017; and (iii) the strategy of constant innovation in services and convenience at the service station, creating greater customer satisfaction and loyalty. Oxiteno’s net revenues were up 20%, principally due to the 14% devaluation in the Real against the US dollar as well as an increase in the average price in US dollars of 8%, in line with the year-over-year increase in the cost of raw materials. These factors offset the effect of lower sales volumes and the greater share of commodities in the sales mix. Ultragaz’s net revenues were up 16% in 2018, largely due to readjustments in bottled and bulk LPG costs in the refineries and the differentiation and innovation strategies adopted. Ultracargo’s net revenues rose 13% in 2018, due to: (i) increased average storage following the partial resumption of activities at the Santos terminal; (ii) improved productivity at Ultracargo; and (iii) contractual readjustments for inflation. Extrafarma’s gross revenues were up 8% in 2018 due to an 11% increase in retail sales, the result of an expanded store network and the higher average number of stores. This growth was partially compensated by a 21% drop in revenues from the wholesale segment and an increase in competition in the sector. In June 2018, the Company replaced its retail IT system, temporarily affecting both retail and wholesale operations during the implementation and stabilization period.

Cost of products and services sold


(R$ million)	2018		2017		D(%) 2018 - 2017
Ipiranga		73,053.2		62,697.2		17	%
Oxiteno		3,757.7		3,200.3		17	%
Ultragaz		6,153.0		5,096.5		21	%
Ultracargo		245.1		218.5		12	%
Extrafarma		1,421.1		1,277.3		11	%

Ultrapar’s cost of goods sold and services provided was R$ 84,537 million in 2018, up 17% from 2017 as a result of growth in all businesses. Ipiranga’s cost of goods sold was up 17%, due mainly to shifts in the costs of diesel and gasoline. The cost of goods sold at Oxiteno rose 17% in 2018, due to: (i) the increase in the cost of raw materials, principally ethylene; (ii) the 14% devaluation in the Real relative to the US dollar; and (iii) costs relating to the startup of the new industrial unit in the USA. Ultragaz’s cost of goods sold was up 21%, mainly due to the higher cost of LPG in the refineries. The cost of services provided by Ultracargo was up 12%, principally due to higher expenditures with rentals, payroll, contracting of third party services in Santos and tankage maintenance services at the terminals in addition to the payment of higher property taxes in 2018. The cost of goods sold at Extrafarma increased by 11% in 2018, mainly due to higher sales volume and the annual readjustment in pharmaceutical prices authorized by the CMED.

Gross profit

Ultrapar posted a gross profit of R$ 6,161 million in 2018, down 9% compared with 2017 due to a decline in aggregate gross profits at Ipiranga and Ultragaz.

Selling, marketing, general and administrative expenses


(R$ million)	2018		2017		D(%) 2018 - 2017
Ipiranga		2,149.8		2,018.0		7	%
Oxiteno		735.5		668.0		10	%
Ultragaz		575.7		644.5		-11	%
Ultracargo		116.7		112.7		4	%
Extrafarma		716.7		623.3		15	%

Ultrapar’s general, administrative, sales and commercial expenses totaled R$ 4,297 million in 2018, 6% up on 2017 due to the effects of inflation on expenses and specific factors from each business unit. Ipiranga’s selling general and administrative expenses rose 7%, principally due to the consolidation of expenses relating to ICONIC (addition of expenses from Chevron’s lubricants operation and extraordinary expenses relating to the startup of the joint operation itself), which initiated in December 2017. If the expenses with the ICONIC business were excluded then sales, general and administrative expenses would have remained flat compared to 2017, as a result of initiatives adopted for reducing expenses in the light of the unfavorable operating environment in 2018. Oxiteno’s selling, general and administrative expenses increased 10%, principally due to the effect of the devaluation of the Real on expenses with international operations as well as higher payroll expenses. Ultragaz’s selling, general and administrative expenses fell 11% in 2018, the result of initiatives for reducing expenses and improved efficiencies such as lower marketing and freight expenses, mainly due to the gradual shift from CIF to FOB delivery method among its clients, as well as lower expenses with strategic consultancies and lower loss provisions. Ultracargo’s selling, general and administrative expenses were up 4% in 2018. The increase reflected: (i) higher payroll expenses due to annual salary adjustments and increased variable remuneration, in line with improved results; and (ii) higher outlays with strategic consultancies and operational safety, but attenuated by reimbursement of an incorrectly charged port management fee in previous fiscal years. Extrafarma’s selling, general and administrative expenses were up 15% in 2018, due to the 19% greater average number of stores. Excluding the effect of the new stores, sales, general and administrative expenses would have declined by 3%, principally due to the Company’s initiatives implemented for productivity gains and reducing expenses, notably in payroll and travel expenses as well as acquiring fees.

Depreciation and amortization

Total costs and expenses with depreciation and amortization in 2018 amounted to R$ 1,184 million, up 1% from 2017 due to the investments made in the period. The above-mentioned amount includes amortization of contractual assets with clients – exclusive rights.

Other operating income

In 2018, Ultrapar recorded net revenues of R$ 58 million, 3% down on 2017, due to: (i) the break-up fee due after CADE’s rejection of the proposed acquisition of Liquigás, and (ii) recognition of tax credits in favor of Oxiteno with respect to the exclusion of the ICMS sales tax from the calculation base for PIS and COFINS taxes.

Income from disposal of assets

In 2018, Ultrapar registered a net expense on property disposals of R$ 22 million compared to a net expense of R$ 2 million in 2017, the result of the writing down of IT assets at all the businesses and a more rigorous selection of non-performing drugstores at Extrafarma for closure, attenuated by the sale of real estate by Ipiranga.

Operating income

Ultrapar posted R$ 1,899 million in operating income in 2018, down 32% from 2017 because of the lower operating income reported by Ipiranga, Ultragaz and Extrafarma.

Financial result

Ultrapar’s financial result was a net expense of R$ 114 million in 2018, down R$ 361 million from the net expenses registered in 2017 despite the increase in net debt, due mainly to (i) the lower Interbank (CDI) interest rate in the period, (ii) the financial income from the constitution of tax credits at Oxiteno with the exclusion of the ICMS sales tax from the PIS/COFINS taxes calculation base, and (iii) the effects of the depreciation of Ultrapar’s share over the subscription warrants issued in the association with Extrafarma.

Net income

Ultrapar’s consolidated net income in 2018 was R$ 1,132 million, a reduction of 26% in relation to 2017, principally due to the decline in EBITDA for the period, partially compensated by the lower net financial expense.

Adjusted EBITDA


(R$ million)	2018			2017		D(%) 2018 - 2017
Ipiranga		2,052.4			3,066.8		-33	%
Oxiteno		625.4			295.9		111	%
Ultragaz		258.1			440.0		-41	%
Ultracargo		178.5			124.3		44	%
Extrafarma		(46.8	)		23.1		na

Ultrapar’s consolidated Adjusted EBITDA reached R$ 3,069 million in 2018, a reduction of 23% compared to 2017. Ipiranga’s Adjusted EBITDA in 2018 amounted to R$ 2,052 million, 33% lower than 2017, principally due to: (i) the truckers’ strike and its impact on sales volumes, variation in margins and higher costs and non-recurring expenses in the period; (ii) the extraordinary expenses with consolidation and startup of the ICONIC operations; and (iii) the movements in fuel costs during 2018. Oxiteno’s EBITDA amounted to R$ 625 million in 2018, an increase of 111% compared with 2017, in spite of lower sales volume. The increase is largely explained by (i) the constitution of tax credits, with a net effect of R$ 186 million in EBITDA, and (ii) the depreciation of R$ 0.46/US$ in the average Real/US dollar exchange rate in 2018. If the tax credits were excluded, Oxiteno would have still reported 48% growth in EBITDA in 2018. Ultragaz’s EBITDA was R$ 258 million, 41% lower than 2017. Excluding the impact of the above-mentioned break-up fee and TCC, the Company’s EBITDA would have grown by 4%, largely reflecting the initiatives for reducing costs and expenses despite lower sales volumes. Ultracargo’s EBITDA was up 44% to R$ 178 million in 2018 due to: (i) greater handling activity at the terminals; (ii) contractual readjustments; and (iii) residual effects of the fire in April 2015 at the Santos Port terminal with a negative impact of R$ 39 million in 2017. Extrafarma recorded a R$ 47 million negative EBITDA compared with R$ 23 million in 2017 due to: (i) the impacts caused by the implementation and stabilization of the new retail management system; (ii) the non-recurring event involving a more rigorous selection of stores for closure in the third quarter of 2018; (iii) the greater number of new and still maturing stores and (iv) increased competition in the sector.

Main changes in the consolidated statements of income for the year ended December 31, 2017 compared with the year ended December 31, 2016


(R$ million)	Year ending December 31			% of net sales and services		Year ending December 31			% of net sales and services		Percent change 2017-2016
(R$ million)	Year ending December 31			% of net sales and services		Year ending December 31			% of net sales and services		Percent change 2017-2016
	2017¹					2016
Net revenue from sales and services		79,230.0			100%		77,353.0			100%		2%
Cost of products and services sold		(72,431.5	)		91%		(70,342.7	)		91%		3%
Gross profit		6,798.5			9%		7,010.2			9%		-3%
Selling, marketing, general and administrative expenses		(4,062.9	)		5%		(4,097.4	)		5%		-1%
Other operating income, net		59.4			0%		199.0			0%		-70%
Income from disposal of assets		(2.2	)		0%		(6.1	)		0%		-63%
Operating income		2,792.7			4%		3,105.7			4%		-10%
Financial results		(474.3	)		1%		(842.6	)		1%		-44%
Equity in earnings (losses) of affiliates		20.7			0%		7.5			0%		176%
Income and social contribution taxes		(813.3	)		1%		(700.0	)		1%		16%
Net income		1,525.9			2%		1,570.6			2%		-3%
Net income attributable to:
Shareholders of Ultrapar		1,526.5			2%		1,561.6			2%		-2%
Non-controlling shareholders of the subsidiaries		(0.6	)		0%		9.0			0%		-107%

Adjusted EBITDA		3,981.0			5%		4,216.7			5%		-6%

Depreciation and amortization²		1,167.6			1%		1,103.5			1%		6%

¹	Information for 2017 restated according to accounting standards IFRS 9 and 15 issued by IASB (International Accounting Standards Board) and adopted from 2018. Readjustment of 2017 figures made for comparability with 2018 figures.

²	Includes amortization of contractual assets with clients – exclusive rights.


R$ million	2017		2016		D(%) 2017 - 2016
Net income		1,525.9		1,570.6		-3	%
(+) Income and social contribution taxes		813.3		700.0
(+) Financial result		474.3		842.6
(+) Depreciation and amortization		704.5		1,103.5
EBITDA		3,518.0		4,216.7		-17	%
Adjustments
(+) Amortization of contractual assets with customers - exclusive rights (Ipiranga)		463.0		—
Adjusted EBITDA		3,981.0		4,216.7		-6	%

Until 2016 the amortization of contractual assets with customers – exclusive rights (Ipiranga) was classified as amortization from intangible assets and no adjustments were necessary.

The purpose of including Adjusted EBITDA information is to provide a measure used by the management for internal assessment of our operating results, besides being a directly or indirectly related measure to a portion of our employee profit sharing plan. It is also a financial indicator widely used by investors and analysts to measure our ability to generate cash from operations and our operating performance. We also calculate EBITDA in connection with covenants related to some of our financing, as described in item 10.1.iv and in note 15 to the financial statements. We believe Adjusted EBITDA allows a better understanding not only of our financial performance but also of our capacity of meeting the payment of interest and principal from our debt and of obtaining resources for our investments and working capital. Our definition of Adjusted EBITDA may differ from similarly titled measures used by other companies, and may not be comparable, thereby limiting its usefulness as a comparative measure. Because EBITDA excludes net financial expense (income), income tax and social contribution, depreciation and amortization and amortization of contractual assets with customers—exclusive rights (Ipiranga) it provides an indicator of general economic performance that is not affected by debt restructurings, fluctuations in interest rates or changes in income tax and social contribution, depreciation and amortization and amortization of contractual assets with customers—exclusive rights (Ipiranga). Adjusted EBITDA is not a measure of financial performance under accounting practices adopted in Brazil or IFRS. Adjusted EBITDA should not be considered in isolation, or as a substitute for net income, as a measure of operating performance, as a substitute for cash flows from operations or as a measure of liquidity. Adjusted EBITDA has material limitations that impair its value as a measure of a company’s overall profitability since it does not address certain ongoing costs of our business that could significantly affect profitability such as financial expenses and income taxes and depreciation and amortization.

Overview on sales volume


	2017		2016		D(%) 2017 - 2016
Ipiranga (000 m³)		23,458		23,507		0	%
Oxiteno (000 tons)		790		738		7	%
Ultragaz (000 tons)		1,746		1,760		-1	%
Ultracargo (000 m³)		724		672		8	%
Extrafarma (# of stores)		394		315		25	%

Ipiranga’s sales volume remained stable compared to total sales in 2016 with a decrease in volume in the first half of the year and increasing volume in the second half. Despite the increase in fuel prices over the course of the year, the volume of light-vehicle fuels sold (Otto cycle) was up 1%, impacted by fleet expansion. In line with the economy’s performance, the volume of Diesel only began to increase in the second half, and reached year end at an accumulated reduction of 2%. In 2017, Oxiteno posted record-breaking sales volume, up 7% from 2016. This came as a result of 16% and 5% increases in the volumes of commodities and specialty chemicals, respectively, reflecting the pre-marketing volume sold to USA due to the new plant in Pasadena, along with bigger growth of internal market than the recovery of Brazil’s economy. Ultragaz’s total sales volume was down 1% in 2017. Despite the stable sales volume in the bottled segment, due to investments to add new resellers, the bulk segment posted a 3% reduction, explained by the loss of some customers to natural gas. Total average storage at Ultracargo was up 8% due mainly to the increased fuels handling at the Santos, Suape and Itaqui terminals, reflecting the partial resumption of activities and the higher demand for fuels’ handling at Brazilian ports. Extrafarma opened 100 new stores and closed 21 in 2017, for a 25% expansion (79 stores) of the network.

Net revenue from sales and services


(R$ million)	2017		2016		D(%) 2017 - 2016
Ipiranga		66,950.5		66,407.3		1	%
Oxiteno		3,959.4		3,700.7		7	%
Ultragaz		6,071.0		5,365.5		13	%
Ultracargo		438.4		355.4		23	%
Extrafarma¹		1,980.5		1,674.3		18	%

¹	Gross revenue.

As consequence of the revenues increase in every business, Ultrapar’s net sales and services revenues were R$ 79,230 million in 2017, up 2% from 2016. Despite stable sales volumes, Ipiranga’s net revenues were up 1%, in line with the costs, due mainly (i) to shifts in diesel and gasoline prices, which, are now more frequently adjusted to reflect international benchmark prices, (ii) to the increase in fuels’ taxes (PIS/Cofins) in June 2017, (iii) to the greater share of gasoline in the 2017 sales breakdown, (iv) the strategy of constant fueling station services and convenience innovation, generating improved customer satisfaction and loyalty, and (v) amortization of contractual assets with customers – exclusive rights that was reclassified in 2017 to revenues reduction. Oxiteno’s net revenues were up 7%, due mainly to the greater sales volume. On the other hand, the average price of the Brazilian Real, up 9%, partly offset these effects. Ultragaz’s net revenues were up 13% in 2017, due mainly (i) to the higher cost of bottled and bulk LPG at refineries, which now follow international benchmark prices, (ii) the bigger sales volume of bottled LPG as a result of new commercial initiatives to capture new customers and resellers, and (iii) the differentiation and innovation strategy. The lower share of bulk gas in sales partly offset the revenues growth. Ultracargo’s net revenues were up 23% in 2017 due to increased average storage and greater fuels handling, improved productivity at Ultracargo and partially resumed activities in Santos. Extrafarma’s gross revenues were up 18% in 2017 due to 25% increase in retail sales (except for telephony), a result of the bigger average store network and 12% greater same store sales (except for cellular phones sales). The growth was partly offset by a 17% decrease in cellular phones revenues, and lower revenues from the wholesale segment.

Cost of products and services sold


(R$ million)	2017		2016		D(%) 2017 - 2016
Ipiranga		62,697.2		61,877.4		1	%
Oxiteno		3,200.3		2,781.7		15	%
Ultragaz		5,096.5		4,467.2		14	%
Ultracargo		218.5		199.0		10	%
Extrafarma		1,277.3		1,071.9		19	%

Ultrapar’s cost of goods sold and services provided was R$ 72,432 million in 2017, up 3% from 2016 as a result of growth in every business. Ipiranga’s cost of goods sold was up 1%, due mainly to shifts in the costs of diesel and gasoline and to the increase in fuels’ taxes (PIS/Cofins) in June 2017. Oxiteno’s cost of goods sold was up 15% in 2017 due (i) to the greater sales volume, (ii) costs associated with the lengthy stoppage of the Oleoquímica plant, and (iii) higher pre-operational costs at the new Pasadena plant, partially compensated by a stronger Brazilian Real. Ultragaz’s cost of goods sold was up 14%, due mainly to the higher cost of LPG at refineries. Ultracargo’s cost of services provided was up 10%, due mainly to higher payroll and materials costs, in line with the greater volume in storage. Extrafarma’s cost of goods sold was up 19% in 2017, due mainly to the greater sales volume and the annual adjustment in medicine prices as authorized by the CMED.

Gross profit

Ultrapar posted R$ 6,799 million in gross profits in 2017, down 3% from 2016, as a result of the adoption of IFRS 9 and IFRS 15 and consequent restatement of 2017 financial statements.

Selling, marketing, general and administrative expenses


(R$ million)	2017		2016		D(%) 2017 - 2016
Ipiranga		2,018.0		2,257.6		-11	%
Oxiteno		668.0		616.4		8	%
Ultragaz		644.5		615.5		5	%
Ultracargo		112.7		99.7		13	%
Extrafarma		623.3		511.1		22	%

Ultrapar’s general, administrative, sales and commercial expenses were R$ 4,063 million in 2017, down 1% from 2016 because of the effects of the adoption of IFRS 9 and 15 in 2018 with reclassifications to the better presentation of the financial statements and consequent restatement of 2017 financial statements, despite the inflation on expenses and other specific reasons in each business. Ipiranga’s general, administrative and sales expenses were down 11% due to the reclassification of selling expenses with amortization of contractual assets with customers – exclusive rights to a reduction of revenue with the adoption of IFRS 15 as from 2018 with the consequent readjustment of accounting data for 2017. The reduction was softened by (i) increase in unit freight, (ii) higher expenses with projects and strategic initiatives, particularly those connected with the association with Chevron for lubricants, and (iii) expansion of the service stations and franchises networks. Oxiteno’s general, administrative and sales expenses were up 8% due to higher freight expenses, because of the greater volume sold and pre-operating expenses at the new Pasadena plant. Ultragaz’s general, administrative and sales expenses increased by 5% in 2017. Ultracargo’s General, administrative and sales expenses were up 13% in 2017, due mainly to (i) payroll expenses because of the additional personnel, the annual salaries’ adjustment and higher variable compensation, in line with operating indicators growth, and (ii) higher costs incurred with consultancies and legal advice. Extrafarma’s general, administrative and sales expenses were up 22% in 2017. The increase is due to the 23% greater average number of stores and to non-recurring expenses with the transfer of the distribution center from Belém to Benevides, and indemnities in 1Q17. Excluding the mentioned one-off and the impacts from new stores, expenses grew below inflation as consequence of initiatives to increase productivity.

Depreciation and amortization

Total depreciation and amortization costs and expenses in 2017 were R$ 1,168 million, up 7% from 2016 because of the investments made in the period.

Other operating income

In 2017, Ultrapar posted revenues net of expenses, in other operating income of R$ 59 million, versus R$ 199 million in net revenues in 2016, due (i) to the effects of the April 2015 fire in Santos, with a positive impact of R$ 68 million in 2016, due mainly to recovery from insurers, and a negative impact of R$ 39 million in 2017; and (ii) the Cease and Desist Agreement that Ultrapar signed, with a negative impact of R$ 84 million in 2017. Ultragaz’s “Other operating income” line reached year end 2017 with net expenses of R$ 79 million, from R$ 4 million in net revenues in 2016. In 2017, Ultragaz registered R$ 84 million in expenses associated with an one-off contingency related to the signing of a Cease and Desist Agreement (“Termo de Compromisso de Cessação de Prática”) that put an end to proceedings before anti-trust authority CADE. Ultracargo’s “Other operating income” line reached year end 2017 with R$ 37 million in net expenses. In 2016, Ultracargo had R$ 134 million in revenues from fire insurance in addition to fire-linked expenses, leading “Other operating income” to R$ 71 million year end.

Income from disposal of assets

In 2017 Ultrapar posted disposal of property expenses of R$ 2 million, compared with net expenses of R$ 6 million in 2016, due mainly to the lower sales of Ipiranga real estate.

Operating income

Ultrapar posted R$ 2, 793 million in operating income in 2017, down 10% from 2016 because of the lower operating income in every business, with the exception of Ipiranga.

Financial income

Ultrapar’s financial income was R$ 474 million in net expenses in 2017, down R$ 368 million from 2016 despite the greater net debt, due mainly to the lower CDI rate for the period, and foreign exchange effects in the period.

Net income

Ultrapar’s consolidated net income was R$ 1,526 million in 2017, down 3% from 2016, mainly due to the reduced EBITDA YOY and higher amortization and depreciation because of investments made over the course of 2017. These results were partly offset by lower financial expenses in the period.

Adjusted EBITDA


(R$ million)	2017		2016		D(%) 2017 - 2016
Ipiranga		3,066.8		3,080.5		0	%
Oxiteno		295.9		458.9		-36	%
Ultragaz		440.0		446.6		-1	%
Ultracargo		124.3		171.2		-27	%
Extrafarma		23.1		37.1		-38	%

Ultrapar’s consolidated EBITDA was R$ 3,981 million in 2017, down 6% from 2016. If adjusted by the positive one-off effects of the related to the exclusion of the ICMS sales tax from the calculation base for PIS and COFINS taxes of Oxiteno, and by the negative effects associated with the signing of the TCC at Ultragaz and, effects related to the fire at Santos in 2015 at Ultracargo, Ultrapar’s EBITDA would have reduced 2% over 2016 results. Ipiranga’s 2017 EBITDA was R$ 3,067, stable over 2016 due mainly (i) to the strategy of constant services and convenience innovation at service stations, and (ii) improved sales breakdown with a bigger share of gasoline in the mix. Oxiteno’s 2017 EBITDA was R$ 296 million, down 36% from 2016 despite the increase in total volumes. The reduction is due mainly (i) to the R$ 0.30/US$ appreciation of the average price of the Brazilian Real in 2017, (ii) higher volatility of certain raw materials prices, (iii) the lengthy stoppage of the Oleoquímica plant, and (iv) pre-operational costs at the new Pasadena plant. Ultragaz’s EBITDA was R$ 440 million, down 1% from 2016 in spite of costs and expenses cutting initiatives, as well as commercial actions intended to capture new customers and resellers, and of the differentiation and innovation strategy. If the above-mentioned R$ 84 million contingency expense is not considered, Ultragaz EBITDA posted a 17% growth. Ultracargo’s EBITDA was down 27% to R$ 124 million in 2017. Excluding the extraordinary events, Ultracargo’s EBITDA would grow by 58%, because of increased volume handling in its terminals. Extrafarma’s EBITDA was R$ 23 million, down 38% from 2016 because of the greater number of maturing stores, which went from 45% of the chain in 2016 to 55% in 2017, and expenses with the transfer of the distribution center to Benevides. The drop was cushioned by strategic and commercial initiatives intended to reduce costs and increase efficiency.

Main changes in the consolidated statements of income for the year ended December 31, 2016 compared with the year ended December 31, 2015


(R$ million)	Year ending December 31			% of net sales and services			Year ending December 31			% of net sales and services			Percent change 2016-2015
	Year ending December 31			% of net sales and services			Year ending December 31			% of net sales and services			Percent change 2016-2015
	2016						2015
Net revenue from sales and services		77,353.0			100	%		75,655.3			100	%		2	%
Cost of products and services sold		(70,342.7	)		91	%		(68,933.7	)		91	%		2	%
Gross profit		7,010.2			9	%		6,721.6			9	%		4	%
Selling, marketing, general and administrative expenses		(4,097.4	)		5	%		(3,837.9	)		5	%		7	%
Other operating income, net		199.0			0	%		50.6			0	%		293	%
Income from disposal of assets		(6.1	)		0	%		27.3			0	%		-122	%
Operating income		3,105.7			4	%		2,961.5			4	%		5	%
Financial results		(842.6	)		1	%		(703.3	)		1	%		20	%
Equity in earnings (losses) of affiliates		7.5			0	%		(10.9	)		0	%		-169	%
Income and social contribution taxes		(700.0	)		1	%		(734.3	)		1	%		-5	%
Net income		1,570.6			2	%		1,513.0			2	%		4	%
Net income attributable to:
Shareholders of Ultrapar		1,561.6			2	%		1,503.5			2	%		4	%
Non-controlling shareholders of the subsidiaries		9.0			0	%		9.5			0	%		-5	%

EBITDA		4,216.7			5	%		3,953.3			5	%		7	%

Depreciation and amortization		1,103.5			1	%		1,002.6			1	%		10	%


R$ million	2016		2015		D(%) 2016-2015
Net income		1,570.6		1,513.0		4	%
(+) Income and social contribution taxes		700.0		734.3
(+) Financial result		842.6		703.3
(+) Depreciation and amortization		1,103.5		1,002.6
EBITDA		4,216.7		3,953.3		7	%

The purpose of including EBITDA information is to provide a measure used by the management for internal assessment of our operating results, besides being a directly or indirectly related measure to a portion of our employee profit sharing plan. It is also a financial indicator widely used by investors and analysts to measure our ability to generate cash from operations and our operating performance. We also calculate EBITDA in connection with covenants related to some of our financing, as described in item 10.1.iv and in note 15 to the financial statements. We believe EBITDA allows a better understanding not only of our financial performance but also of our capacity of meeting the payment of interest and principal from our debt and of obtaining resources for our investments and working capital. Our definition of EBITDA may differ from similarly titled measures used by other companies and may not be comparable, thereby limiting its usefulness as a comparative measure. Because EBITDA excludes net financial expense (income), income tax and social contribution, depreciation and amortization, it provides an indicator of general economic performance that is not affected by debt restructurings, fluctuations in interest rates or changes in income tax and social contribution, depreciation and amortization. EBITDA is not a measure of financial performance under accounting practices adopted in Brazil or IFRS. EBITDA should not be considered in isolation, or as a substitute for net income, as a measure of operating performance, as a substitute for cash flows from operations or as a measure of liquidity. EBITDA has material limitations that impair its value as a measure of a company’s overall profitability since it does not address certain ongoing costs of our business that could significantly affect profitability such as financial expenses and income taxes and depreciation and amortization.

Overview on sales volume


	2016		2015		D(%) 2016 - 2015
Ipiranga (000 m³)		23,507		25,725		-9	%
Oxiteno (000 tons)		738		725		2	%
Ultragaz (000 tons)		1,760		1,697		4	%
Ultracargo (000 m³)		672		655		3	%
Extrafarma (# of stores)		315		254		24	%

Ipiranga’s sales volume recorded a decline of 9% compared with 2015. Fuel sales volume for light vehicles (Otto cycle) reported a decrease of 9%, in spite of the effective growth of 2% in the light vehicle fleet, reflecting economic conditions, a worsening in employment levels and the increase in the relative prices of fuel compared to household income. Diesel volume was also down 9%, mirroring weakness in the economy overall. Volume sold at Oxiteno was 2% higher in 2016 as a result of a 17% expansion in commodities, in search of increased efficiency in the use of capacity and dilution of plant, above all in 1H16 to compensate for the 1% decline in specialty chemicals, a reflection of weak economic activity in Brazil. Sales volume at Ultragaz was 4% higher in 2016, with a 3% growth in the LPG bottled segment, the result of investments to increase the numbers of resellers, and 6% growth in the bulk segment due to investments in the capture of new customers. Ultracargo’s total average storage posted an increase of 3% due mainly to greater fuel handling at the Suape and Aratu port terminals although offset by the partial interruption of activities at the Ultracargo terminal in Santos in 2015 due to the fire in April of that year. Excluding operations in Santos, handling was up by 8%. Extrafarma ended 2016 with 315 stores, a 24% increase (61 stores) compared to 2015. Over the course of the year, 71 new stores were opened and ten closed.

Net revenue from sales and services


(R$ million)	2016		2015		D(%) 2016 - 2015
Ipiranga		66,407.3		65,349.8		2	%
Oxiteno		3,700.7		4,082.5		-9	%
Ultragaz		5,365.5		4,621.2		16	%
Ultracargo		355.4		315.5		13	%
Extrafarma¹		1,674.3		1,336.3		25	%

¹	Gross revenue.

In 2016, Ultrapar reported net revenue from sales and services of R$ 77,353 million, a growth of 2% in relation to 2015 due to revenue growth in all the businesses with the exception of Oxiteno. Ipiranga posted a 2% increase in net revenue despite lower sales volume mainly due to (i) the increase in diesel and gasoline costs by Petrobras in October 2015 and also higher ethanol prices, (ii) the greater share of gasoline in the overall sales mix in 2016, and (iii) the strategy of constant innovation in service station services and convenience, resulting in greater customer satisfaction and loyalty. Oxiteno’s net revenue was 9% down, largely due to 15% lower average prices in US Dollars, as a consequence of lower international commodities prices and a greater share of these products in the sales mix. Decrease in net revenue was partially offset by the depreciation of 5% in the Real against the US dollar and increased sales volume. Ultragaz reported net revenues 16% higher, mainly due to (i) the increases in the cost of bottled and bulk LPG at the refineries in 2015 and 2016, (ii) higher volume sold, the result of commercial initiatives for capture of new customers and resellers, (iii) the adoption of differentiation and innovation strategies, and (iv) the increased share of the bulk segment in the composition of total sales mix. Ultracargo’s net revenue was 13% higher mainly due to the increase in average storage and higher average tariffs at the terminals. Excluding operations at the Santos terminal, net revenue was 18% higher. Extrafarma reported an 18% increase in gross revenue due to the larger average number of stores and growth of 21% in same store sales (sales in stores opened over 12 months).

Cost of products and services sold


(R$ million)	2016		2015		D(%) 2016 - 2015
Ipiranga		61,877.4		61,236.8		1	%
Oxiteno		2,781.7		2,809.8		-1	%
Ultragaz		4,467.2		3,884.6		15	%
Ultracargo		199.0		151.9		31	%
Extrafarma		1,071.9		900.9		19	%

Ultrapar reported cost of goods sold and services provided at R$ 70,343 million in 2016, an increase of 2% in relation to 2015 due to growth recorded at all the businesses with the exception of Oxiteno. Cost of goods sold by Ipiranga was 1% higher, due to increases in diesel and gasoline costs in October 2015 and correspondingly higher ethanol costs, partially attenuated by lower sales volume. Cost of goods sold by Oxiteno fell by 1% due to lower payroll costs offset by higher sales volume, a 5% depreciation in the Real against the US dollar and increased prices of certain raw materials. Ultragaz’s cost of goods sold was 15% higher mainly due to (i) the increase in LPG costs, (ii) higher volumes, and (iii) higher unit freight costs due to the increase in product sourcing from more distant routes. Ultracargo’s cost of services provided reported growth of 31% due to higher costs with payroll and terminal maintenance. Additionally, since January 2016, some expenses have been reclassified as costs, in 2016 amounting to R$ 16 million. In Extrafarma, the cost of goods sold was 19% higher due to greater sales volume and the annual price adjustment in medicines authorized by the CMED.

Gross profit

Ultrapar posted a gross profit of R$ 7,010 million in 2016, an increase of 4% relative to 2015, due to increases in gross profits at Ipiranga, Ultragaz and Extrafarma.

Selling, marketing, general and administrative expenses


(R$ million)	2016		2015		D(%) 2016 - 2015
Ipiranga		2,257.6		2,087.2		8	%
Oxiteno		616.4		690.8		-11	%
Ultragaz		615.5		525.4		17	%
Ultracargo		99.7		100.6		-1	%
Extrafarma		511.1		427.5		20	%

Ultrapar’s selling, marketing, general and administrative expenses totaled R$ 4,097 million in 2016, 7% more than 2015 due to the effects of inflation on expenses and to particular aspects in each business. Selling, marketing, general and administrative expenses of Ipiranga increased by 8% due to (i) higher expenses with studies and projects for expansion and innovation, (ii) expansion in the service station and franchise network and (iii) the effects of inflation in the period, offset in part by reduced freight on lower sales volume. In Oxiteno, selling, marketing, general and administrative expenses fell 11%, mainly due to lower personnel expenses, offset by the depreciation of the Real on logistics and international units expenses, aimed by increased sales volume. Ultragaz’s selling, marketing, general and administrative expenses increased by 17% due to (i) higher expenditure on studies and projects for expansion and innovation, (ii) higher expenses with systems and support for commercial initiatives, and (iii) greater spending with advertising and marketing, highlighting key aspects of the current strategy focused on consumer convenience and services. Selling, marketing, general and administrative expenses of Ultracargo fell 1% mainly due to expenses that were considered as costs as from January 2016 and partially offset by higher payroll expenses. In Extrafarma, selling, marketing, general and administrative expenses recorded a 20% rise. The increase reflects an 18% average increase in the number of stores, the effects of inflation on payroll expenses and expenses with the launch of the new brand, partially offset by actions implemented for improving retail pharmacy management standards.

Depreciation and amortization

Total costs and expenses with depreciation and amortization in 2016 were R$ 1,104 million, 10% higher than 2015 due to investments made during the course of 2016.

Income from disposal of assets

In 2016, Ultrapar recorded a net expense from the sale of assets of R$ 6 million against net revenues of R$ 27 million in 2015, mainly due to reduced real estate sales by Ipiranga.

Operating profit

Ultrapar recorded operating income of R$ 3,106 million in 2016, 5% up on 2015, due to higher operating profit at Ipiranga, Ultragaz and Ultracargo.

Financial result

Ultrapar’s financial result showed a net expense of R$ 843 million in 2016, R$ 139 million more than 2015, mainly due to (i) higher CDI rates in the period, (ii) higher net debt, and (iii) currency rate fluctuations in the period.

Net income

Ultrapar reported a consolidated net income for 2016 of R$ 1,571 million, 4% more than the net income recorded in 2015, due to growth in EBITDA between the periods, partially offset by higher financial expenses and higher amortization and depreciation, the result of investments executed during the period.

EBITDA


(R$ million)	2016		2015		D(%) 2016 - 2015
Ipiranga		3,080.5		2,768.8		11	%
Oxiteno		458.9		739.8		-38	%
Ultragaz		446.6		357.0		25	%
Ultracargo		171.2		26.3		551	%
Extrafarma		37.1		28.7		29	%

Ultrapar’s consolidated EBITDA was R$ 4,217 million in 2016, a growth of 7% in relation to 2015 due to an increase in EBITDA at Ipiranga, Ultragaz, Ultracargo and Extrafarma. Ipiranga’s EBITDA in 2016 amounted to R$ 3.080 million, up 11% compared to 2015, despite lower sales volume, mainly due to (i) the strategy of constant innovation in service station services and convenience, (ii) the better sales mix and (iii) the reduction of the average fuels’ cost, made possible by imports. Oxiteno posted a 2016 EBITDA of R$ 459 million, a year-over-year decline of 38%, mainly due to (i) the variation in currency rates and in prices of certain raw materials, both moving in opposite directions in the comparison between 2016 and 2015, and (ii) the greater share of commodities in the product mix, attenuated by higher sales volume and by a 5% depreciation of the Real against the US dollar(R$ 0.16/US$). Ultragaz’s EBITDA amounted to R$ 447 million, 25% more than in 2015, the result of commercial initiatives for the capture of new customers and resellers and the strategy of differentiation and innovation. Ultracargo reported an EBITDA of R$ 171 million in 2016, a growth of R$ 145 million due to recoveries against insurance claims and greater handling movement. Excluding Santos operations and the effects of the fire, Ultracargo’s remaining port terminals recorded an EBITDA of R$ 100 million, 7% greater than 2015. Extrafarma reported an EBITDA of R$ 37 million, a year-over-year increase of 29% due to sales growth and actions taken to improve pharmaceutical retail management standards, partially attenuated by the larger number of stores yet to reach full maturity.

10.2 – Comments on:

a. Company’s operating results, especially:

i. Description of major components of revenues

Over the past three years, more than 90% of consolidated net revenues of Ultrapar was generated by the fuel and LPG distribution businesses. Therefore, the main components of these revenues come from diesel, gasoline and ethanol sales by Ipiranga and from LPG sales by Ultragaz. See “Item 10.2.c. effect of inflation, changes in prices of main inputs and products, foreign exchange and interest rates on the Company’s operating results and financial results”.

ii. Factors that materially affected operating results

See “Item 10.1.h. Main changes in each item of the financial statements – Main changes in consolidated income statement”.

b. Changes in revenues attributable to changes in prices, exchange rates, inflation, changes in volumes and introduction of new products and services

See “Item 10.1.h. Main changes in each item of the financial statements – Main changes in consolidated income statement” and See “Item 10.2.c. effect of inflation, changes in prices of main inputs and products, foreign exchange and interest rates on the Company’s operating results and financial results”.

c. Effect of inflation, changes in prices of main inputs and products, foreign exchange and interest rates on the Company’s operating results and financial results, if relevant

LPG business

Between 2003 and the end of 2007, LPG prices charged to LPG distributors in Brazil have been stable, despite increases in oil and LPG prices in the international markets, which were partially offset by the appreciation of the Real compared to the U.S. dollar. However, since 2008 Petrobras has increased LPG refinery price for commercial and industrial usage sporadically. In 2017 and 2018, LPG refinery prices were adjusted more frequently, as shown below:


	Jan/08		Apr/08		Jul/08		Jan/10		Dec/14		Sep/15		Dec/15		Dec/16
Comercial and Industrial LPG (% readjustment)		15%		10%		6%		6%		15%		11%		4%		12%

Apr/
17

Jul/
17

Aug/
17

Sep/
17

Nov/
17

Dec/
17

Jan/
18

Feb/
18

Mar/
18

May/18

Jul/
18

Sep/
18

Nov/
18

Dec/
18

Comercial and Industrial LPG (% readjustment)

-4.0%

-5.2%
and
8.0%

7.2%

2.3%
and
7.9%

6.5%

5.3%

-6.3%

-4.6%

-4.2%
and
4.7%

7.1%
and
3.6%

4.4%

5.0%

-5.6%
and
-9.2%

-4.7%

The LPG refinery prices for residential use remained unchanged from May 2003 to September 2015, when Petrobras increased prices by 15%. In the last years, Petrobras’ practice was not to immediately reflect volatility of international prices of oil and its derivatives in the Brazilian market. However, in June 2017, the dynamic of LPG prices supplied by the distributors was modified to reflect international price volatility and exchange rate variation. To smooth out the peaks and troughs in international prices, in January 2018, the pricing dynamic was adjusted. Currently, the period for verification of international prices and currency rates which dictate the percentages of price adjustment are the average of the preceding twelve months and no longer the monthly variation. Price movement have become quarterly and not monthly.


	Mar/17		Jun/17		Jul/17		Aug/17		Sep/17		Oct/17		Nov/17		Dec/17		Jan/18		Apr/18		Jul/18		Nov/18
Residential LPG (readjustment %)		9.8%		6.7%		-4.5%		6.9%		10.7% and 6.9%		12.9%		4.5%		8.9%		-5.0%		-4.4%		4.4%		8.5%

Currently there is no formal orientation for LPG prices for industrial and commercial uses. We are unable to guarantee that this tendency will continue. An eventual abrupt increase in LPG prices collected from the distributors may have an impact on the results of Ultragaz, should it not be possible to maintain operating margins or sales volume.

LPG bulk sales are correlated to economic growth. Thus, an acceleration or deceleration in Brazilian GDP growth can affect our sales volume, since the segment represented approximately 30% of the volume sold by Ultragaz. Bottled LPG is an essential good and, therefore, it has a relatively low correlation with economic performance.

Chemical and petrochemical business

The specialty chemicals volume in the Brazilian market is correlated to economic performance. Therefore, an acceleration or deceleration in the Brazilian GDP can affect our sales volume, as Oxiteno’s specialty chemicals sales in Brazil represented 53% of its total sales in 2018. As the Brazilian market grows, Oxiteno aims at (i) increasing the volume sold in the domestic market, once the logistics costs are usually lower than those of exports, and (ii) increasing sales volume of specialties, products of higher value added than commodities. In 2018, sales of specialty chemicals represented 80% of the total volume sold by Oxiteno, lower than the percentage of 82% sold in 2017.

Almost all of Oxiteno’s products prices and variable costs are linked to U.S. dollar. Therefore, a sharp appreciation or depreciation of the U.S. dollar could have an impact on Oxiteno’s contribution margin in the future. In 2016, the Real appreciated 17% against the U.S. dollar. In 2017 Real depreciated 15% against the U.S. dollar. In 2018, Real depreciated 18% against the U.S. dollar.

Oxiteno’s main raw material is the ethylene, which is produced from naphtha in Brazil. Generally, naphtha prices in Brazil fluctuates with oil prices. In 2016, oil prices ended at US$ 55/barrel, up 55% compared to 2015. In 2017, oil prices ended at US$ 67/barrel, up 21% compared to 2016. In 2018, oil prices ended at US$ 53/barrel, down 20% compared to 2017. A sharp variation in ethylene prices would impact Oxiteno’s results if it is not able to maintain operating margins. The second most important raw material for Oxiteno is the palm kernel oil, whose international prices went from US$ US$ 1,747/ton in December 2016 to US$ 1,367/ton in December 2017 and to US$ 694/ton in December 2018.

The increase in demand for chemical and petrochemical products in Brazil during the last years and the ongoing integration of regional and world markets have contributed to the increasing integration of the Brazilian petrochemical industry into the international marketplace. As a consequence, events affecting the petrochemical industry worldwide could have a material effect on our business and results of operations.

Fuel distribution business

In the recent past, the combined sales of gasoline, ethanol and natural gas (Otto cycle) in Brazil have been correlated mainly to the growth of the light vehicle fleet. According to ANFAVEA, in 2018 the light vehicle fleet continued to grow, with about 2.5 million new vehicles licensed in Brazil and estimated growth of 2.0% of the average fleet compared to 2017, reaching about 42 million light vehicles. Additionally, we believe the current ratio of inhabitants per vehicle in Brazil is still low when compared to the rate seen in countries with similar level of development. According to 2015 data released by ANFAVEA (the last available data), the penetration of light vehicles in Brazil is about 21% of total inhabitants, while in Argentina is 31% and in Mexico is 29%.

According to information provided by ANP, in 2018 national Otto Cycle volume sold remained stable despite the increase in light vehicle fleet.

Diesel sales, which in 2018 accounted for 51% of the volume sold by Ipiranga, have historically been correlated with the Brazilian economic performance, particularly the agricultural and consumer goods segments. In 2018, the Brazilian diesel market, according to ANP data, showed a growth of 2% when compared to 2017, influenced by a recovery of the economy. The increase in fuels consumption could have a positive effect on the future volume sold by the Company and on its results.

Until 2016, Petrobras’ practice was not to immediately reflect the volatility of international prices of oil and its derivatives in the Brazilian market. Between January 2012 and September 2016, increases in prices occurred, on average, every eight months. In October 2016, a new dynamic for gasoline and diesel prices was established with the objective of, amongst other aspects, fluctuate prices according to international references on a monthly basis. Therefore, gasoline and diesel prices became directly influenced by the international prices and the Real/U.S. dollar exchange rate. The prices started to fluctuate on a daily basis from June 2017 on.

In 2018, fuel costs increased in Brazil as oil prices rose globally and the real depreciated. As a consequence, at the end of May 2018 the truck drivers started a nationwide strike claiming for a decrease on diesel prices, exemption from tolls on passages without goods, a legal reform, among others calls.

The strike caused fuels and other consumer goods shortages all over the country. Therefore, the Brazilian government reacted by establishing some emergency measures, such as minimum freight price table, reduction of R$ 0.46 per liter in diesel price, of which R$ 0.16 per liter in CIDE and PIS/COFINS taxes and R$ 0.30 per liter by a subvention program implemented by the government until December 31, 2018.

Initially, prices remained flat for 60 days, and after this period, they were monthly adjusted according to a parametric formula established by ANP.

The program ended on December 31, 2018 and Petrobras returned to the previous policy adjustment according to the international market.

The following figures show the price volatility of fuels acquired by the distributors from the refineries:

LOGO

Source: Petrobras

Effects of inflation over our operational costs and expenses

Ultrapar’s operational costs and expenses are substantially in Reais, thus influenced by the general price levels in the Brazilian economy. In 2018, 2017 and 2016, the variation of IPCA (Consumer Prices Index), the index adopted by the Brazilian government to set inflation targets, was 3.75%, 2.95% and 6.29%, respectively. From December 31, 2018 to January 31, 2019, the variation of IPCA was 0.32%.

Financial result

The main macroeconomic factors that influence the financial results of Ultrapar are the foreign exchange and interest rates.

Exchange rate

Most of the transactions of the Company are located in Brazil and, therefore, the reference currency for currency risk management is the Real. Currency risk management is guided by neutrality of currency exposures and considers the transactional, accounting, and operational risks of the Company and its 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. Ultrapar and its subsidiaries use exchange rate hedging instruments (especially between the Real and the U.S. dollar) available in the financial market to protect their assets, liabilities, revenues and disbursements in foreign currency and net investments in foreign operations, in order to reduce the effects of changes in exchange rates on its results and cash flows in 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, revenues and disbursements in foreign currency to which they are related. Assets and liabilities in foreign currencies are stated below, translated into Reais as of December 31, 2018, 2017 and 2016:

Assets and liabilities in foreign currency


(R$ million)	12/31/2018			12/31/2017			12/31/2016
Assets in foreign currency
Cash, cash equivalents and financial investments in foreign currency (except hedging instrument)		254.2			236.4			423.9
Foreign trade accounts receivable, net of allowance for doubtful accounts and advances to foreign customers		235.1			214.9			323.4
Other net assets in foreign (except cash, cash equivalents, financial investments, trade receivables, financing, and payables)		1,382.9			930.0			600.9

		1,874.2			1,381.3			1,348.2

Liabilities in foreign currency
Financing in foreign currency, gross of transaction costs and discount		(5,515.6	)		(4,416.2	)		(4,736.3	)
Payables arising from imports, net of advances to foreign suppliers		(567.7	)		(173.1	)		(57.1	)

		(6,083.3	)		(4,589.3	)		(4,793.4	)

Foreign currency hedging instruments		2,483.0			1,777.6			2,206.4
Net liability position — Total		(1,726.1	)		(1,430.4	)		(1,238.8	)

Net asset (liability) position – Income statement effect		282.7			(26.1	)		24.8

Net liability position – Equity effect		(2,008.8	)		(1,404.3	)		(1,263.6	)

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$ 1,726.1 million in foreign currency:


(R$ million)	Risk	Scenario I			Scenario II			Scenario III
		Likely			25%			50%
(1) Income effect	Real devaluation		28.3			70.7			141.4
(2) Equity effect			(200.9	)		(502.2	)		(1,004.4	)

(1) + (2)	Net effect		(172.6	)		(431.5	)		(863.0	)

(3) Income effect	Real valuation		(28.3	)		(70.7	)		(141.4	)
(4) Equity effect			200.9			502.2			1,004.4

(3) + (4)	Net Effect		172.6			431.5			863.0

The shareholders’ equity effect refers to cumulative translation adjustments of changes in the exchange rate on equity of foreign subsidiaries (see notes 2.s.1 and 25.f.2 of the consolidated financial statement), net investments hedge in foreign entities, cash flow hedge of firm commitments and highly probable transaction (see note 2.c and h of the consolidated financial statement).

Interest Rate

The Company and its subsidiaries adopt policies for borrowing and investing financial resources and for capital cost minimization. The financial investments of the Company and its subsidiaries are primarily held in transactions linked to the CDI, as set forth in note 4 of the consolidated financial statement. Borrowings primarily relate to financing from Banco do Brasil, debentures and borrowings in foreign currency, as shown in note 15 of the consolidated financial statement. 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 as of December 31, 2018, 2017 and 2016:


(R$ million)	note		12/31/2018			12/31/2017			12/31/2016
CDI
Cash equivalents		4.a		3,722			4,822			3,838
Financial investments		4.b		2,537			1,153			1,174
Asset position of foreign exchange hedging instruments – CDI		33.g		34			30			28
Loans and debentures		15.a		(8,441	)		(7,987	)		(5,862	)
Liability position of foreign exchange hedging instruments – CDI		33.g		(2,206	)		(1,877	)		(2,182	)
Liability position of hedging instruments + IPCA—CDI		33.g		(824	)		(587	)		—

Net liability position in CDI				(5,176	)		(4,447	)		(3,003	)

TJLP
Loans –TJLP		15.a		(201	)		(302	)		(404	)

Net liability position in TJLP				(201	)		(302	)		(404	)

LIBOR
Asset position of foreign exchange hedging instruments – LIBOR		33.g		812			984			1,150
Loans – LIBOR		15.a		(1,437	)		(1,419	)		(1,470	)

Net liability position in LIBOR				(626	)		(434	)		(320	)

TIIE
Loans—TIIE		15.a		(4	)		(3	)		(10	)

Net liability position in TIIE				(4	)		(3	)		(10	)

SELIC
Loans—SELIC				(52	)		(100	)		(99	)
Net liability position in SELIC		15.a		(52	)		(100	)		(99	)
Total net liability position exposed to floating rate				(6,059	)		(5,287	)		(3,837	)

Sensitivity analysis of floating interest rate risk

The table below shows the incremental expenses and income that would be recognized in financial income in 2018, due the effect of floating interest rate changes in different scenarios:


(R$ million)	Risk		Scenario I			Scenario II			Scenario III
			Likely			25%			50%
Exposure of interest rate risk
Interest effect on cash equivalents and financial investments		Increase in CDI		32.7			81.7			163.3
Foreign exchange hedging instruments (assets in CDI) effect		Increase in CDI		0.1			0.2			0.5
Interest effect on debt in CDI		Increase in CDI		(55.0	)		(137.4	)		(274.9	)
Interest rate hedging instruments (liabilities in CDI) effect		Increase in CDI		(33.7	)		(73.4	)		(139.6	)

Incremental expenses				(55.9	)		(128.9	)		(250.7	)

Interest effect on debt in TJLP		Increase in TJLP		(1.7	)		(4.2	)		(8.3	)

Incremental expenses				(1.7	)		(4.2	)		(8.3	)

Foreign exchange hedging instruments (assets in LIBOR) effect		Increase in LIBOR		2.8			6.9			13.9
Interest effect on debt in LIBOR		Increase in LIBOR		(3.6	)		(9.1	)		(18.1	)

Incremental expenses				(0.8	)		(2.2	)		(4.2	)

Interest effect on debt in TIIE		Increase in TIIE		(0.1	)		(0.3	)		(0.5	)

Incremental expenses				(0.1	)		(0.3	)		(0.5	)

Interest effect on debt in SELIC		Increase in SELIC		(0.4	)		(1.0	)		(2.0	)

Incremental expenses				(0.4	)		(1.0	)		(2.0	)

10.3 – Comments on material effects that the events below have caused or are expected to cause on the Company’s financial statements and results:

a. Introduction or disposal of operating segment

There was no introduction or disposal of operating segment in the fiscal year 2018.

b. Establishment, acquisition or sale of ownership interest

There was no relevant establishment, acquisition or sale of ownership interest in the fiscal year 2018 that have caused or are expected to cause significant effects on the Company’s financial statements.

In 2016, Ultrapar signed agreements for associations and acquisitions:

- 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, Ipiranga and Chevron hold 56% and 44%, respectively, of the association formed by Ipiranga’s and Chevron’s lubricants operations in Brazil. 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”). On March 2, 2017, CADE issued a certificate approving the decision published on February 10, 2017. On August 1, 2017, IPP segregated the lubricants business to the subsidiary Ipiranga Lubrificantes S.A. (“IpiLubs”) and the operating contracts were signed. On December 1, 2017, association was concluded, through the contribution of IpiLubs to Chevron Brasil Lubrificantes S.A. (“CBLSA”) and consequently IPP obtains direct control of CBLSA. In order to simplify the corporate structure and join companies with similar activities, IpiLubs was merged by CBLSA on November 1, 2018. In that same act, the subsidiary changed its corporate name to Iconic Lubrificantes S.A. (“Iconic”).

- On November 17, 2016, Ultrapar, by its subsidiary Companhia Ultragaz S.A, signed a sale and purchase agreement for the acquisition of Liquigás. The conclusion of the acquisition was subjected to certain conditions precedent, usual in this type of transactions, and mainly the Antitrust Authority’s approval. On February 28, 2018, 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.

c. Unusual events or transactions

Not applicable.

10.4 – Comments on:

a. Significant changes in accounting practices

Except for the statement of financial position of January 1, 2017, the financial information for 2016 is not adjusted by the adoption of IFRS 9 and IFRS 15 effective starting in 2017.

2018:

The following standards, amendments, and interpretations to IFRS were issued by the IASB, which are effective as of January 1, 2018:


		Equivalent CPC
• 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
• 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
• Financial Reporting in hyperinflationary economies – IAS 29 and the applying the restatement approach under IAS 29 – IFRIC 7.		42 and ICPC 23

For more information see note 2.y of the financial statements filled at CVM on February 20, 2019.

2017:

There were no significant changes in accounting practices in the fiscal year 2017.

2016:

There were no significant changes in accounting practices in the fiscal year 2016.

b. Significant effects of changes in accounting practices

The tables below summarize the effects of the IFRS 9 (CPC 48) and 15 (CPC 47) adoption, reclassifications, on consolidated statements of financial position on December 31, 2017 and January 1, 2017, on the statements of profit or loss and statements of cash flow of 2017:


Assets	As previously reported		IFRS 9 adoption			IFRS 15 adoption			Reclassifications		After adoption IFRS 9 and 15
	12/31/2016
Current assets
Trade receivables and reseller financing		3,502,322		(84,713	)		(29,442	)		—		3,388,167
Inventories		2,761,207		—			20,170			—		2,781,377
Contractual assets with customers – exclusive rights		—		—			448,316			—		448,316
Other current assets		6,748,267		—			—			—		6,748,267

Total current assets		13,011,796		(84,713	)		439,044			—		13,366,127

Non-current assets
Contractual assets with customers – exclusive rights		—		—			989,768			—		989,768
Deferred income and social contribution taxes		417,344		28,802			13,472			—		459,618
Other non-current assets		1,429,262		—			—			—		1,429,262