(Commission File No. 1-14862 )

Quattor Participações S.A.
Financial Statements at
December 31, 2009 and 2008
and Report of Independent Auditors

Report of Independent Auditors

To the Board of Directors and Shareholders Quattor Participações S.A.

1 We have examined the accompanying balance sheets of Quattor Participações S.A. (the “Company”) and the consolidated balance sheets of Quattor Participações S.A. and its subsidiaries as of December 31, 2009 and 2008, and the related statements of income, changes in shareholders’ equity and cash flows of the Company, and the related consolidated statements of income and cash flows for the years then ended. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements.

2 We conducted our audits in accordance with approved Brazilian auditing standards, which require that we perform the audit to obtain reasonable assurance about whether the financial statements are fairly presented in all material respects. Accordingly, our work included, among other procedures: (a) planning our audit taking into consideration the significance of balances, the volume of transactions and the accounting and internal control systems of the companies; (b) examining, on a test basis, evidence and records supporting the amounts and disclosures in the financial statements; and (c) assessing the accounting practices used and significant estimates made by management, as well as evaluating the overall financial statement presentation.

3 In our opinion, the aforementioned financial statements present fairly, in all material respects, the financial position of Quattor Participações S.A. and of Quattor Participações S.A. and its subsidiaries at December 31, 2009 and 2008, as well as the results of operations, changes in shareholders’ equity and cash flows of Quattor Participações S.A. for the years then ended, as well as the consolidated results of operations and consolidated cash flows for these years, in conformity with accounting practices adopted in Brazil.

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Quattor Participações S.A.

4 The consolidated financial statements of Quattor Participações S.A. and its subsidiaries for the year ended December 31, 2009 were prepare don the assumption that the works for the normalization of supply of raw materials for subsidiary Rio Polímeros S.A., currently undertaken by Petróleo Brasileiro S.A. - PETROBRAS, will be successfully completed, as described in Note 1(c). Accordingly, these financial statements do not include any adjustments arising from this uncertainty.

Rio de Janeiro, March 18, 2010

PricewaterhouseCoopers
Auditores Independentes
CRC 2SP000160/O-5 "F" RJ

Carlos Alberto de Sousa
Contador CRC 1RJ056561/O-0

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

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

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

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

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1 Operations

Quattor Participações S.A. (the "Company") was forme don August 20, 2007 under the name Dapean Participações S.A. ("Dapean"), as a holding company that directly controlled Quattor Petroquímica S.A. ("Quattor Petroquímica"), whose corporate name was then Suzano Petroquímica S.A. ("Suzano Petroquímica").

As described in Note 17, the Extraordinary Shareholders’ Meeting (AGE) held on November 27, 2007 approved a Company capital increase by R$ 881,821 through the subscription and payment of 97,264,445 common and 76,322,383 preference shares issued by Quattor Petroquímica, at that time named Suzano Petroquímica, at book value, based on a valuation report issued by an independent expert.

On Noveber 30, 2007, the aquisition of 76.57 of Quattor Petroquímica shares (then named Suzano Petroquímica) by Petróleo Brasileiro S.A. ("Petrobras"), was completed for R$ 2,100,402. As from that date, Suzano Petroquímica became a subsidiary of Petrobras.

Also on November 30, 2007, Petrobras and UNIPAR - União de Indústrias Petroquímicas S.A. ("Unipar") communicated through a Relevant Event notice jointly disclosed that the negotiations to organize a new petrochemical company had been completed, through the contribution by these companies of their respective interests in petrochemical companies.

Under this agreement, Unipar transferred the following assets to a special purpose entity owned by it and named Fasciatus Participações S.A. ("Fasciatus"):

. Interest in Rio Polímeros S.A. ("Riopol") equal to 33.33% of its total capital.

. Interest in Quattor Químicos Básicos (then named Petroquímica União S.A.) ("QQB") equal to 51.35% of its totl capital.

. 100% of its assets, rights and obligations pertaining to its Chemical Division (Unipar Divisão Química (UDQ)).

. R$ 380 million in cash, that were used to acquire an interest in Rio Polímeros S.A. equal to 32.65% of its total capital.

. Interest in Polietilenos União S.A. ("Polietilenos União") equal to 99% of its total capital.

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Subsequently, on June 11, 2008, Fasciatus was merged into the Company (then named Dapean), which at that time already controlled Quattor Petroquímica (then named Suzano Petroquímica S.A.), in addition to a 17.44% interest in the capital of Quattor Químicos Básicos S.A. (then named Petroquímica União S.A.). The Meeting that approved such merger also changed the Company name to Quattor Participações S.A., thus completing the process to organize the Petrochemical Company addressed to in the aforementioned Relevant Fact November 30, 2007.

During the second half of 2008, through a Public Offer for the Acquisition of Shares (OPA) auction, widely disclosed to market participants, the Company acquired minority interests in companies Quattor Petroquímica and QQB, as described in Note 10. Such acquisitions led to an increased holding in these companies and the delisting of QQB.

As announced to market participants, Quattor Químicos Básicos S.A. ("QQB"), where the Company held a 91.53% interest, was merged into Polietilenos União on June 30, 2009. The General Shareholders’ Meeting of Polietilenos União that approved the merger also resolved to change its corporate name to Quattor Química S.A. with the merger of QQB, the Company then held a 94.10% interest in Quattor Química S.A.

Main activities of the Company and its subsidiaries

Following the above mentioned restructuring, the Company, in addition to investing in subsidiary and associated companies, also started to manufacture and market petrochemical products (cumene, olefins and isoparafins). The raw material used in this productive process is primarily purchased from subsidiary QQ (QB-CK unit).

The main activities of the subsidiaries are as follows:

(a) Quattor Química S.A. ("QQ")

This company mainly engages in the manufacturing and marketing of basic petrochemicals and plastic resins, as well as its derivative and related products; import, export, purchase, distribution and sale of these products; provision to advisory and technical and administrative consultancy services associated with these activities to third parties; and independent commercial representation.

QQ has Petrobras as its major supplier of raw materials and energy inputs, while its sales of products and services are primarily made to second generation petrochemical producers, that are mainly located in the Brazilian Southeast region.

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(b) Quattor Petroquímica S.A.

This company mainly engages in: (i) production, marketing, development, import, export, transportation, representation and consignment of petrochemicals, as well as their byproducts, compounds and derivative products, such as polypropylene, polypropilene films, polyethilenes, elastomers and related manufactured products; (ii) rental or free loan of own assets or assets held under commercial leasing contracts, as long as these represent a means to accomplish the activities included in (i); (iii) provision of services associated with the above mentioned activities; and (iv) holding interests as shareholder in any company or venture in this same area of activities, pursuant to items (i) and (ii) above.

(c) Rio Polímeros S.A.

This company mainly engages in the production of polyethylene from the fraction of natural gás produced in the Campos Basin. Its plant is located at the Duque de Caxias (Rio de Janeiro State) Chemical Gás Complex.

Riopol is the resulto f na investment made with funds of its own shareholders plus financing from Banco Nacional de Desenvolvimento Econômico e Social (BNDES), US Ex-Im Bank, and a Syndicate of European Banks, under a guarantee provided by Servizi Assicurativi Del Commercio Estero da Itália (SACE).

Since the start-up of Riopol’s integrated plant in 2006, this subsidiary has been impacted by the irregular supply of raw materials and, in the year ended December 2009, posted an operating loss of R$ 89,182, largely driven by such instability. In order to regularize the supply of this input, Petrobras has undertaken works at the processing plant at Cabiúnas, State of Rio de Janeiro, and the transportation ducts of gas produced at the Campos Basin. These works are scheduled to be completed during the first half of 2010. Riopol management believes that, as soon as the full and ongoing supply of gas following the completion of the aforementioned works, the plant will be in a position to optimize its operations and reverse the current operating losses.

2 Presentation of the Financial Statements

The financial statements for the year ended December 31, 2009 were approved by the Company management on March 12, 2010. These financial statements were prepared and are presented in accordance with the accounting practices adopted in Brazil, which comprise the provisions of the Brazilian Corporation Law and the Brazilian Securities Commission (CVM) rules, including the Pronouncements issued by the Accounting Pronouncements Committee (CPC).

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The main accounting practices adopted in the preparation of these financial statements are those applicable to the financial statements ended December 31, 2009, which will be different from the practices to be used for the preparation of the financial statements at December 31, 2010, as described below.

The preparation of financial statements requires the use of estimates to record certain assets, liabilities, revenues and expenses. Therefore, the Company’s financial statements include estimates related to the selection of the useful lives of property, plant and equipment, provisions for contingent tax, civil and labor liabilities, provisions for income tax and other similar liabilities. The actual results may differ from those estimated.

New accounting pronouncements

The standards and standard interpretations listed below have been published and will be mandatory for years starting on or after January 1, 2010. Other rules and interpretations modifying the accounting practices adopted in Brazil, as part of the convergence process with international standards, have also been published. The standards listed below include only those that may (or must) have a more material impact on the Company’s financial statements. The Company did not choose the early adoption of such standards during the year ended December 31, 2008.

CPCs that are believed to be applicable to the Company, in the light of its operations, include:

. Investments in Associated Companies (CPC18).

. Loan Costs (CPC 20).

. Provisions, Contingent Liabilities and Assets (CPC 25).

. Property, Plant and Equipment (CPC 27).

. Property for Investment (CPC 28).

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. Revenues (CPC 30).

. Taxes on Net Income (CPC 32).

. Consolidated Statements (CPC 36).

. First-time Adoption of International Accounting Standards (CPC 37).

. Financial Instruments: Recognition and Measurement (CPC 38).

. Financial Instrumens: Presentation (CPC 39).

. Financial Statements: Evidence (CPC 40).

. Accounting of Proposal to Pay Dividends (ICPC 08).

. Individual, Separate and Consolidated Financial Statements and Application of the Equity Method (ICPC 09).

. Clarification of CPC 27 and CPC 28 (ICPC 10).

The Company management is currently reviewing the impacts of changes introduced by these new pronouncements and chose not to adopt on an early basis those CPC Pronouncements, Interpretations and Guidelines effective for years starting as from January 1, 2010 in its financial statements for 2009. With respect to adjustments arising from the adoption of new accounting practices as from January 1, 2010, the Company will assess the need to remeasure the effects that would affect its 2009 financial statements, for comparison purposes, should such new procedures be in effect since the beginning of the year ended December 31, 2010.

3 Significant Accounting Practices

The main accounting practices adopted in the preparation of these financial statements are set out below:

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(a) Cash and cash equivalents

Cash and cash equivalents include cash, bank deposits and short-term, high liquidity investments with maturities of three months or less, that are promptly convertible Into a known amount of cash and imply a negligible risk of change in value. In the cash flow statements, cash and cash equivalents are shown net of balances taken under guaranteed accounts. Such guaranteed accounts are stated on the balance sheet as “loans”, under current liabilities.

(b) Financial instruments

Classification and measurement

The Company and its subsidiaries classify their financial instruments in the following categories: measured at fair value through profit or loss, loans and receivables, held to maturity, and available for sale. The classification depends on the purpose for which the financial assets were acquired. Management determines the classification of financial assets when originally recognizing each transaction.

(i) Financial assets at fair value through profit or loss

Financial assets measured at fair value through profit or loss are those held for active, frequent trading. Derivatives, when contracted, are also classified as held for trading and, as such, fall into this category, unless they have been designated as hedge instruments. Assets in this category are classified as current assets. Gains or losses resulting from variations in the fair value of financial assets at fair value through profit or loss are recognized in income under “Financial results” for the period when they occur, unless the instrument has been contracted in connection with a different transaction. In this case, changes are recognized in the same income line relating to that transaction.

(ii) Loans and receivables

These include granted loans and receivables that are non-derivative financial assets with fixed or determinable payments, not quoted in an active market. They are stated as current assets, except for those whose maturity date exceeds 12 months subsequently to the balance sheet date (these are classified as non-current assets). The Company’s and its subsidiaries’ loans and receivables consist of the balances of trade accounts receivable, other accounts receivable, and cash and cash equivalents, except for short-term investments. Loans and receivables are accounted for at amortized cost using the actual interest rate method.

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(iii) Assets held to maturity

These essentially include those financial assets that may not be classified as loans and receivables for being quoted in an active market. In that event, these financial assets are acquired with the purpose and financial capacity for maintenance in portfolio up to maturity. They are appraised at acquisition cost plus accrued earnings, as a contra entry to income for the year, on the actual interest rate method

(iv) Financial assets available for sale

These are non-derivatives that are designated in that category or that have not been classified in any other category. They are included in non-current assets, unless management intends to dispose of the investment in up to 12 months subsequently to the balance sheet date. Financial assets available for sale are accounted for at fair value. Interest rates on securities available for sale, calculated on the actual interest rate method, are recognized as financial income in the statement of income. The portion corresponding to the variation in fair value is recorded under shareholders’ equity, net of taxes, in the equity valuation adjustment line, and is realized against income upon its settlement or due to a permanent loss (impairment).

(v) Fair value

The fair values of investments with public quotation are base don the current purchase price. As regards financial assets with no active market or public quotation, the Company and its subsidiaries determine the fair value by means of valuation techniques. Such techniques include the use of recent transactions carried out with third parties, reference to other substantially similar instruments and the analysis of discounted cash flows, that use information generated by the market as much as possible and count as little as possible on information generated by the companies management.

On the balance sheet date, the Company and its subsidiaries evaluate whether there is objective evidence that a financial asset or group of financial assets is impaired. If there is such evidence for available-for-sale financial assets, the cumulative loss – measured as the difference between the cost of acquisition and the current fair value, minus any loss for impairment of this financial asset previously recognized in income – is removed from equity and recognized in the statement of income.

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(vi) Derivative financial instruments and hedge activities

Derivatives are initially recognized at fair value on the derivative contract date and subsequently remeasured at fair value. Changes in fair value are accounted for in income, unless the derivative is designated as a cash flow hedge instrument.

Although the Company and its subsidiaries use derivatives for protection purposes, they do not apply the so-called hedge accounting

The fair values of derivative instruments are stated in Note 22.

(c) Trade accounts receivable

Trade accounts receivable are originally assessed at fair value and reduced by the provision for doubtful accounts. The provision for doubtful accounts is recorded when there is objective evidence that the Company and its subsidiaries will not be able to collect all amounts due within their original terms. The provision amount is the difference between the book value and the recoverable value.

(d) Inventories

Inventories are stated at average cost of purchase or production, which is lower than market value. The production cost reflects the method of total absorption of industrial costs, based on the regular utilization of the production capacity; the cost corresponding to the underutilization of the normal capacity is taken to income for the period. Replacement parts are recognized based on the acquisition cost and written off as production cost upon their consumption or obsolescence.

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(e) Deferrec income tax and social contribution

Deferred income tax and social contribution are compute don tax losses and the related temporary differences between the calculation bases of income on assets and liabilities, and the book amounts per financial statements. It should be noted that, for the parent company, deferred income tax and social contribution are recorded only on temporary differences. The rates currently in effect to determine deferred credits are 25% for income tax and 9% for social contribution.

Deferred tax assets are recognized to the extent that it is probable that future taxable income will be available to offset temporary differences and/or tax losses, pursuant to forecasts of future profits that are prepared and base don internal assumptions and future economic scenarios which are thus subject to changes (Note 9(a)).

(f) Deposits in court

These are monetarily restated and presented as a deduction from the corresponding liability when they can be redeemed only upon a favorable outcome for the Company and/or its subsidiaries in the dispute.

(g) Investments in subsidiary and associated companies

Cost and/or equity value

Investments in subsidiary and associated companies are recorded base don the equity accounting method, and the equity in the results of investees if recognized in the statements of operations for the year as operating income (or expense). Other investments, consisting of minority interests, are recognized at cost.

When calculating equity in the results, unrealized gains on transactions between the Company and its subsidiaries are eliminated, unless the transaction provides evidence of impairment of the asset transferred.

When necessary, the accounting practices of the direct and indirect subsidiaries are adjusted to be consistent with the practices adopted by the Company.

(h) Foreign currency translation

Transactions in foreign currency are translated into reais using exchange rates on the transaction dates. Balance sheet account balances are translated at the exchange rate in effect on the balance sheet date. Foreign exchange gains and losses resulting from the settlement of these transactions and from the translation of monetary assets and liabilities denominated in foreign currency are recognized in the results of operations.

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(i) Property, plant and equipment

This is stated at the cost of acquisition, formation or construction. Depreciation is calculated on the straight-line basis at rates that take into account the estimated useful lives of the related assets (Note 11). Land is not depreciated.

Gains and losses on sales are determined by comparing the sales amounts with the book value and are included in the statements of operations.

The costs of borrowings used to finance the construction of property, plant and equipment are capitalized during the period necessary to construct and prepare the asset for its intended use.

Repair and maintenance costs are allocated to the results of operations as they are incurred. The cost of major renovations is included in the book value of the asset when it is probable that the Company will realize future economic benefits that exceed the performance initially expected for the existing asset. Major renovations are depreciated over the remaining useful life of the related asset.

(j) Intangible assets

(i) Goodwill

Goodwill or negative goodwill on the acquisition of an investment is calculated as the difference between the purchase amount and book value of the shareholders’ equity of the company acquired. The goodwill is based on: (i) the fair value adjustment of assets, represented by the difference between the book value of the company acquired and the fair value of its assets and liabilities (recorded in investments) and (ii) expected future profitability, represented by the difference between the fair value of assets and liabilities and the purchase amount (recorded in intangible assets). The portion based on the appreciation of assets and liabilities is amortized in proportion to the realization of the acquired company’s assets and liabilities. The amount based on expected future profitability was amortized, up to December 31, 2008, in proportion to the estimated results, not exceeding ten years. Negative goodwill without any stated economic support is amortized only when the investment is sold.

In the consolidated financial statements, goodwill is first allocated to the assets and liabilities acquired, as the difference between the fair value of assets and liabilities and their book values. The goodwill included in identifiable assets and liabilities is amortized as these are realized in the subsidiary company. The portion of the goodwill that cannot be recorded as identifiable assets and liabilities is classified as expected future profitability and was amortized, up to December 31, 2008, in proportion to the estimated results, not exceeding ten years.

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When the Company share in accumulated losses of subsidiaries is equal to or higher than the investment value, the Company does not recognize additional losses, unless it has assumed commitments or made payments on behalf of these companies.

(ii) Computer programs (software)

Software licenses acquired are capitalized and amortized over their estimated useful life, at the rates described in Note 12.

Ongoing costs of software development or maintenance are expensed as incurred. Expenditures directly associated with identifiable and unique software, controlled by the Company and/or its subsidiaries and which will probably generate economic benefits greater than the costs for more than one year, are recognized as intangible assets. Direct expenses include remuneration of the software development team and the appropriate portion of related general expenses.

Software development expenditures recognized as assets are amortized on the straight-line basis over their useful lives, at the rates described in Note 12.

(iii) Technology

. Polyethilene technology (PE)

This relates to licenses acquired by subsidiary Riopol, in connection with the patent and right of use of the technology in the fluidized bed process, low-pressure gaseous phase for the manufacture of low- and high-densiry polyethilenete (LDPE and HDPE). Expenditures are being amortized on the straight-line basis over 30 years.

. Basic Chemicals Technology (QB)

This relates to licenses acquired by subsidiary Riopol, in connection with the patent and right of use in the production process of olefins for the manufacture of polymer grade ethylene, polymer grade propylene and other by-products. Expenditures are being amortized on the straight-line basis over 30 years.

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(iv) Water main

Expenditures for the construction of the Guandy-Reduc water main for the transportation of water used in the production process of subsidiary Riopol are being amortize don the straight-line basis over 30 years.

(v) Other intangible assets

The acquisition costs of patents, trademarks, licenses and exploration rights are capitalized and amortize don the straight-line method over their useful lives, at the rates described in Note 12. Intangible assets are not revalued.

(k) Deferred charges

Expenses incurred during the pre-operating stage of subsidiary companies, recorded at formation cost, are deferred and amortized after start-up in up to ten years, as described in Note 13.

(l) Impairment of assets

Property, plant and equipment and other non-current assets, including goodwill and intangible assets, are reviewed annually to identify evidence of impairment, and also whenever events of changes in circumstances indicate that the book value may not be recoverable. In this case, the recoverable value is calculated to verify if there is any loss. In the event of loss, it is recognized at the amount by which the book value of the asset exceeds its recoverable value, which is the higher between the net sales price and the value in use of an asset. For evaluation purposes, assets are grouped at the lowest level for which there are separately identifiable cash flows.

(m) Provisions

Provisions are recognized when the Company and/or its subsidiaries have a legal or informal present obligation as a result of past events, it is probable that assets will be surrendered to settle the obligation, and a reliable estimate of the amount can be made.

The Company recognizes a provision for onerous contracts when the benefits expected to be obtained from a contract are lower than the unavoidable costs to satisfy the obligations assumed in the contract.

(n) Employee benefits

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(i) Pension obligations

For remaining instances of employees entitled to former defined benefit plans, when a deficit is determined base don a study performed by independent actuaries, a provision is recorded to meet such deficit. In the event of a surplus, the Company and its subsidiaries do not recognize the related asset.

For the defined contribution plans, the Company and its subsidiaries pay contributions to pension plans administered publicly or privately on compulsory, contractual or voluntary bases, After the contributions have been made, the Company has no further obligations for additional payments. The regular contributions comprise net periodic costs of the period in which they are due and, therefore, are included in the personnel costs. At December 31, 2009, plans provided by the Company and its subsidiaries are fully defined contribution schemes.

(ii) Profit sharing and bonuses

The Company and its subsidiaries afford profit sharing to its employees and bonuses to its managers, linked to the accomplishment of corporate and individual targets. At December 31, 2009, the amounts of R$ 397 and R$ 4,900 were recorded as profit sharing and bonuses, for the parent company and consolidated (December 31, 2008 - R$ 3,070 and R$ 9,003), respectively, under “Salaries and social charges”, in current liabilities.

(o) Loans and financing

Borrowings and financing are initially recognized at fair value, upon receipt of funds, net of transaction costs. Subsequently, borrowings are presented at amortized cost, that is, plus charges and interest in proportion to the period elapsed (pro rata temporis), considering the actual rate on the related loans and financing.

(p) Determination of net income

The results of operations of the Company and its subsidiaries are determined on the accrual basis of accounting. Revenues from the sale of products are recognized in income when the risks and benefits of the ownerships of goods are transferred to the purchaser. Revenues are not recognized when there is significant uncertainty surrounding their realization.

(q) Deferred income

At December 31, 2009 and 2008, deferred income, in non-current liabilities, primarily consist of negative goodwill on the acquisition of subsidiary Riopol in the amount of R$ 119,211. On a consolidated basis, the amount stated is R$ 14,081, recorded in subsidiary Quattor Petroquímica.

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4 Consolidated Financial Statements

The consolidated financial statements were prepared in accordance with the consolidation criteria set forth in the accounting practices adopted in Brazil and CVM normative instructions and deliberations, and include the financial statements of the Company and its subsidiaries, as shown below:

Description of the main consolidation procedures:

. Elimination of assets and liabilities balances between consolidated companies.

. Eliminations of investments, reserves and retained earnings of consolidated companies

. Elimination of income and expense balances, as well as unrealized profits arising from transactions among the consolidated companies, net of income tax and social contribution, when applicable.

. Segregation of the amount of minority interests in subsidiaries in the consolidated financial statements.

. Elimination of balances relating to the revaluation of property, plant and equipment at subsidiary QQ and related impacts on results for the year, for consistency with the accounting practices adopted by the Company.

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5 Cash and Cash Equivalents and Marketable Securities

Immediate liquidity financial investments essentially comprise investments remunerated at the variation of Interbank Deposit Certificates (CDIs), which have an average remuneration rate of approximately 100.84% of CDI (December 31, 2008 – 101.41%), and maturity within 90 days or less as from the investment contract date.

Marketable securities comprise investments of subsidiary Riopol, including:

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(*) Linked to the U.S. dollar.

At December 31, 2009, the offshore amount of R$ 28,311 (December 31, 2008 - R$ 50,483) is linked to loans obtained by subsidiary Riopol from US Ex-Im Bank and Sace. Short-term Bank Deposit Certificates (CDB) bear interest of approximately 102% of Interbank Deposit Certificates (CDI).

6 Trade Accounts Receivable

Changes in the provision for doubtful accounts, on a consolidated basis were as follows during 2009:

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At December 31, 2009, accounts receivable of subsidiary Quattor Petroquímica is stated net of vendor transactions in the amount of R$ 101,551 (December 31, 2008 - R$ 99,239). Under these transactions, customers obtain bank financing for cash settlement of purchases of products of this subsidiary, which provides an endorsement of the transactions to the related financial institutions. In the event of a default by customers, the subsidiary must reimburse the financial institutions involved.

7 Inventories

Changes in the provision for losses on inventories, on a consolidated basis for 2009, are as follows:

(*) At December 31, 2008, subsidiary Quattor Petroquímica recorded a provision for losses on the realization of its finished products in the amount R$ 37,844, in the light of the decline in international prices of thermoplastic resins which at that time significantly affected the selling price of these products in the domestic and foreign markets. In early 2009, these inventories were sold and the provision was reversed. The remaining changes primarily relates to the reversal through realization of the provision for losses on inventories of maintenance materials.

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8 Taxes to Be Offset

Tax credits arising from the acquisition of property, plant and equipment are recognized at their respective present values.

The main characteristics of credits accumulated by the Company and its subsidiaries, as well as the major iniciatives and strategies to recover such credits are described below:

(a) Quattor Petroquímica

This company developed a specific plan to recover ICMS accumulated credits, pursuant to the strategic moves described below, which were instrumental for the gradual reduction of existing balances.

(i) Mauá Unit (Plant) – State of São Paulo

. Adhesion of the Project to Foster the Development of the Plastic Industry in São Paulo, under State Decree 52430, of December 4, 2007, subject to related regulation, so that the tax burden on the acquisitions of propylene and sales of polypropilene is equal to 12%, thus countering the formation of accumulated ICMS credits on interstate sale transactions.

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. Market decrease in resin export transaction, which are not taxed due to constitutional exemption, thus reducing the formation of new ICMS credits.

. Furthermore, management understands that the Group corporate restructuring, that will consist of the unification of all its petrochemical businesses under a single legal entity, will allow for optimizing the realization of existing tax credits.

(ii) Camaçari Unit (Plant) – State of Bahia

. Deferral (non-levy) of ICMS on imports of inputs and goods intended for processing, as well as machinery and equipment intended to comprise fixed assets.

. Monthly passing through of accumulated ICMS credits on local sales with deferral to the central raw materials unit, thus countering the formation of credits on incentive sale transactions (Bahiaplast, ProBahia e Desenvolve Programs).

Quattor Petroquímica enjoys a 12% abatement benefit on the ICMS rate on local acquisitions of its main raw material, pursuant to Decree 11059 of May 19, 2008, thus equalizing the tax burden on interstate sale transactions. As a result of the incentive obtained from the State Treasury, the Company failed to accumulate credits in the amount of R$ 11,607 in the period from June 1, 2008 to December 31, 2009, thus enabling the gradual decrease in accumulated balances on transactions carried out in the domestic market.

(iii) Provision for losses on ICMS recoverable

Bearing in mind the expected realization of ICMS credits in the State of Bahia and the new tax environment in that state, Quattor Petroquímica reversed the provision for losses recorded in prior years, as management understands that the credits will be fully realized.

(b) Riopol

(i) Deferred ICMS, recognized based on Decree-Law 25665/1999, levied on imports of equipment and parts for the formation of the industrial facilities. Said Decree allows riopol, as a substitute taxpayer, to delay the payment of ICMS for six years from the date of purchase of the assets, with no financial charges. At December 31, 2009 and 2008, deferred ICMS amounted to R$ 109,478 and R$ 164,077, respectively, and R$ 70,885 and R$ 73,043, respectively, in non-current assets, under “Taxes and contributions payable", and the remaining amount in current liabilities, under “Taxes payable”. Following the tax due date, the Company is entitled to offset ICMS credits on its transactions, at the rate of 1/48. Additionally, Riopol has ICMS credits of R$ 4,961 relating to the purchase of equipment for the industrial facilities in other States, not included in the aforementioned deferral. These other credits will also be offset at the rate of 1/48.

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(ii) PIS and COFINS arising from the acquisition of equipment which comprise the industrial complex delivered on April 1, 2006 by the Consortium charged with its construction In the first quarter of 2007, Riopol reclassified the amount of R$ 93,898 from property, plant and equipment to taxes recoverable, to be realized at the rate of 1/48, pursuant to the applicable law.

(iii) Advancement of income tax and social contribution for 2009, in the total amount of R$ 15,936 (December 31, 2008 - R$ 10,654) and credit balances from prior years.

(c) QQ

(i) ICMS credits comprise: R$ 33,458 relating to credits on purchases of property, plant and equipment items (CIAP), offset at the rate of 1/48, pursuant to the applicable law, and R$ 131,581 relating to credits generated on the acquisition of inputs and raw materials.

(ii) PIS and COFINS recoverable in the amount of R$ 162,821 relate to credits recognized on the acquisition of inputs, raw materials and fixed assets. Changes seen from 2008 primarily relate to extemporaneous credits on the acquisition of fixed assets recorded by Quattor Química in 2009, which are offset at the rate of 12, 24 or 48/100, as provided in the applicable law.

9 Income Tax and social Contribution

(a) Income tax and social contribution credits

The parent company and subsidiary deferred income tax and social contribution balances shown in the financial statements arise from temporary differences and tax losses.

The sources of deferred income tax and social contribution balances are as follows:

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Management of the Company and its subsidiaries, based on forecasts of future profits, recognized tax credits on tax losses in prior years, which do not expire, but whose offset is limited to 30% of annual taxable income.

The estimated recovery of tax credits is base don projections of taxable income, taking into account a number of financial and business assumptions as of the date of such projections. Consequently, the estimates may not materialize in the future, due to uncertainties inherent in such forecasts.

Based on these projects, management of the Company and its subsidiaries estimates the realization of tax credits in the following years:

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In addition to these deferred tax assets, the Company and its subsidiaries consider the tax amounts of R$ 65,297 and R$ 74,305, respectively, to be offset against future taxable income, although such amounts have not been recorded in the books, as it is not possible to state, at this time, that their realization is probable within a period of up to ten years.

(b) Reconciliation of income tax and social contribution in the statement of operations

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(c) Transition Tax Regime (RTT)

The Transition Tax Regime (RTT) will be in effect until the law governing the tax effects of the new accounting methods is enacted, in order to preserve the tax neutrality.

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RTT is optional in calendar years 2008 and 2009, provided that: (i) it is applied to the two-year period 2008-2009, and not to a single calendar year; and (ii) companies must state their option when submitting the Statement of Corporate Economical and Tax Information (DIPJ).

The Company and its subsidiaries elected to adopt RTT in 2008. As a consequence, for the purposes of determine income tax and social contribution on net income for years 2009 and 2008, the Company and its subsidiaries took avail of the provisions of RTT.

10 Investments

The Company and its subsidiaries reviewed the impairment of their goodwill, property, plant and equipment intangible and deferred assets in accordance with the terms of CVM Deliberation 527 - "Impairment of Assets". For more details, please refer to Note 11.

As subsidiary Quattor Química identified the need to record a provision for impairment of its assets, the Company recognized a provision for loss on the full value of goodwill on the appreciation of assets of subsidiary Quattor Química, in the amount of R$ 22,265.

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The position of, and changes in, investments of subsidiaries are shown below:

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(i) Includes results for the period and equity results only up to June 2009. Merged into Quattor Química S.A. in June 2009.

(ii) Includes results for the period and equity results only from June 2009 onwards.

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11 Property, Plant and Equipment