The Navigator Company

Quarterly Report • May 31, 2017

DIRECTORS´ REPORT

CONTENT

0.	HIGHLIGHTS	2
1.	LEADING INDICATORS	3
2.	ANALYSIS OF RESULTS	4
3.	MARKET ANALYSIS	6
4.	OPERATING INDICATORS	10
5.	STRATEGIC DEVELOPMENT	11
6.	COST CUTTING MEASURES	12
7.	FINANCIAL PERFORMANCE	13
8.	CAPITAL MARKETS	14
9.	OUTLOOK	15
	10.CONSOLIDATED FINANCIAL STATEMENTS & NOTES	17

Highlights 1st Quarter 2017 (vs. 1st Quarter 2016)

• YoY drop in pulp and paper prices mitigated by cost reduction and increased sales volume
• Strong operating performance allows for 2.1% growth in turnover:
• − Sharp increase in volume of pulp sales (90 thousand tons, vs. 65 thousand; up 40%)
• − High volume of paper sales (371 thousand tons vs. 377 thousand; down 1.7%)
• − Sound performance in tissue sales (14 thousand vs. 11 thousand tons; +24%)
• − 15% increase in power sales (449 Mwh vs. 389 Mwh)
• Cost reduction programme continues, with estimated impact on EBITDA of € 6 million
• EBITDA stands at € 90.2 million (vs. € 93.5 million), with an EBITDA/ Sales of 23% (vs. 24.3%)
• Market conditions show significant improvement over the quarter, with order books growing and upward movement in prices
• Energy activity resumed with regular operations at the renewable co-generation plants in Cacia and Setúbal
• Group reduces net debt to € 616.6 million, keeping Net Debt / EBITDA ratio at 1.6
• Cost of borrowing down to 1.8%, as compared to 2.5% at end of March 2016
• New capital projects get under way in Figueira da Foz (increased pulp capacity) and Cacia (new tissue mill)
• Board of Directors proposes dividends of € 170 million, 0.2371 euros per share, in line with previous year; total proposed dividend including reserves of 0.3487€/share (9% dividend yield)
• Government plans to limit eucalyptus plantations are negative for 400 thousand forestry producers and could damage competitiveness of the Pulp and Paper Industry, already forced to import wood costing around € 200 million each year.

	Q1	Q1	% Change
in million euros	2017	2016	Q1 17/Q1 16
Total sales	392.7	384.6	2.1%
EBITDA (1)	90.2	93.5	-3.6%
Operating profits	52.0	56.4	-7.8%
Financial results	- 3.9	- 2.7	45.0%
Net earnings	35.6	44.7	-20.5%
Cash flow	73.7	81.8	-9.9%
Free Cash Flow (2)	24.2	18.0	6.1
Capex	14.3	49.0	-34.7
Net debt (3)	616.6	636.4	-19.9
EBITDA / Sales (%)	23.0%	24.3%	-1.4 pp
ROS	9.1%	11.6%	-2.6 pp
ROE	11.4%	14.5%	-3.1 pp
ROCE	11.1%	12.0%	-0.9 pp
Equity ratio	51.8%	51.1%	0.7 pp
Net Debt / EBITDA (4 )	1.6	1.6
	Q1	Q4	% Change
in million euros	2017	2016	Q1 17/Q4 16
Total sales	392.7	422.0	-7.0%
EBITDA (1)	90.2	95.9	-6.0%
Operating profits	52.0	52.3	-0.6%
Financial results	- 3.9	- 4.2	-5.7%
Net earnings	35.6	83.2	-57.3%
Cash flow	73.7	126.8	-41.9%
Free Cash Flow (2)	24.2	82.7	-58.6
Capex	14.3	38.0	-23.7
Net debt (3)	616.6	640.7	-24.2
EBITDA / Sales (%)	23.0%	22.7%	0.2 pp
ROS	9.1%	19.7%	-10.7 pp
ROE	11.4%	27.8%	-16.5 pp
ROCE	11.1%	11.1%	-0.1 pp
Equity ratio Net Debt / EBITDA (4 )	51.8% 1.6	51.2% 1.6	0.6 pp 0.0

1. SUMMARY OF LEADING INDICATORS – IFRS (UNAUDITED FIGURES)

(1) Operating profits + depreciation + provisions

(2) Var. Net debt + dividends + purchase of own shares

(3) Interest-bearing net debt – liquid assets

(4) EBITDA corresponding to last 12 months

(5) Variation in figures not rounded up/down

2. ANALYSIS OF RESULTS

1st Quarter 2017 vs. 1st Quarter 2016

Turnover grew by 2.1% to € 392.7 million, thanks to strong operational performance in sales pulp, tissue and energy, while the paper business also recorded higher-than-expected sales.

Pulp sales grew by around 40% and stood at more than 90 thousand tons. This increase was made possible by strong demand over the quarter and increased availability of pulp for the market from the Cacia mill. The growth in sales allowed the Group to minimise the negative impact of lower prices, as PIX-BHKP index presented an average price in euros 6.1% down on the first quarter of 2016. As a result, the value of pulp sales rose by 24.7%, to 43.2 million euros.

Paper sales also reflected an improvement in market conditions, with order books significantly stronger in Europe and a reduction in the level of imports. In this environment, the Group sold 371 thousand tons of paper, slightly down from the record figure of Q1 2016 (377 thousand tons), whilst improving its product mix. However, average prices were below the level recorded in the same quarter last year, with the PIX-A4-Bcopy Index at 803€/ton (vs. 836 €/ton, the highest average quarterly price for the past 4 years), with the result that the value of paper sales was down by 4.8%, at 282.3 million.

Figures for tissue sales were similarly positive, with growth of 23.5% in volume, to approximately 14 thousand tons, benefiting from the expansion of production and converting capacity over the course of 2015. In value, tissue sales totalled € 18.1 million, thanks to the increase in quantities sold, combined with a slight decrease in the average sales price as a result of reel sales accounting for a larger proportion of sales (up by 14.4%).

Technical issues affecting the renewable co-generation turbines in Cacia and Setúbal were successfully overcome and power sales rose in value by around 22%. Sales of electricity also

benefited from the higher Brent prices in relation to the same quarter in 2016. Total gross power output in the first quarter of 2017 was up by 10.5% in relation to the same period in 2016. The two biomass power stations, exclusively dedicated to selling power to the national grid, recorded an increase in gross output of 6%, benefiting from the operational improvements at the Cacia site.

After progressing to continuous operation in the final quarter of 2016, the Group recorded the first sales of pellets in early 2017 from its US operation, Colombo Energy. The sales volume stood at approximately 15.4 thousand tons, which is still low, but is a natural consequence of the mill being still at the start-up phase. It should be noted that a number of non-recurrent costs (approximately € 2.0 million) were stated in the accounts in the first quarter in relation to the start-up of pellet production and marketing.

In this context, first quarter EBITDA totalled € 90.2 million, slightly down on the figure recorded in the previous year, reflecting an EBITDA/Sales margin of 23%.

The Group is pressing ahead with efforts to cut its total costs and to increase productivity. Progress on this front in the first quarter is estimated to have boosted EBITDA by around 6 million euros. By increasing the number of initiatives rolled out under the M2 programme, the Group has succeeded in cutting a variety of cost items. The impact has been particularly positive on packaging and chemicals (€ 1.9 million), power purchases (€ 0.7 million) and wood purchases (€ 0.7 million).

In its raw material costs, the Group recorded a reduction in the average cost of wood purchases, but this failed to bring down overall production costs due to an increase in specific consumption, reflecting the use of wood from sources offering lower standards of industrial performance.

The Group recorded a financial loss for the quarter of € 3.9 million, as compared with a loss of € 2.7 million in the first quarter of 2016. This performance was due essentially to

exchange rate losses of € 1.5 million, compared to a positive balance of € 1.0 million recorded in the same period last year. Significantly, as a result of the restructuring of the Group's debt completed in 2016, the cost of financing operations has continued to improve, having fallen by € 777 thousand.

Net income for the quarter totalled € 35.6 million, compared to net income of € 44.7 million in the first quarter of 2016, which had benefited from an effective corporation tax rate of 16.88%, brought down by contractual tax benefits which no longer apply. As a result, the effective tax rate in the period returned to 27.5%.

Q1 2017 vs. Q4 2016

Comparison between the first quarter of 2017 and the final quarter of 2016 reflects seasonal factors in business at the end and at the start of each year. Turnover in the first quarter of 2017 was down by 7.0% in relation to the figure recorded in the previous quarter, due essentially to a drop in the volume of paper sales (down 14%) and also the need to replenish stocks at mills for operationally more appropriate levels.

As a result, the first quarter EBITDA of € 90.2 million was also 6% lower than in the previous quarter, whilst reflecting an increase in the margin to 23%, with the improvement in pulp and paper prices. EBIT held more or less steady between the two periods, at approximately € 52 million. Net income, at € 35 million in the first quarter, was significantly lower than the figure of € 83 million in the fourth quarter, which had benefited from a series of reversals of tax provisions in the final months of 2016.

3. MARKET ANALYSIS

3.1 UWF Paper

Over the past six months, and especially during the first quarter of 2017, demand for UWF paper grew in the emerging markets in Asia, the Middle East and Latin America. At the same time, a sharp reduction in production capacity in India, Malaysia and, to an unquantified extent, in China, as result of a government programme to shut down industrial units causing severe pollution, has improved conditions in these regional markets, resulting in higher prices.

In Europe, apparent consumption fell by a further 2.8%, due essentially to a drop in imports, with deliveries by European manufacturers up by 0.4%. Indeed, with an EUR-USD exchange rate unfavourable to imports, and attractive prices for foreign manufacturers on their local markets, estimates suggest that the volume of imports into Europe fell by around 30%. These purchases were redirected to European manufacturers who, limited by their capacity, dispatched volumes 3% in excess of output and sought to respond to improving order books, to the chance to substitute imports and to interesting opportunities in markets outside Europe.

As a result, incoming orders in the European industry grew by 8% in the first quarter of 2017 in relation to the same period in 2016, up by 22% in international markets and 5% in European markets. Order books in the industry in Europe are now at levels only rarely attained in the sector's history. Stock at mills and in the paper distribution circuit were reported in the period to be at normal levels or even slightly below normal.

In the United States, apparent consumption in the first two months of the year dropped by around 4.8% in relation to the first quarter of 2016. However, the closure of one manufacturer's capacity during 2016 helped the capacity utilisation rate to stabilise at around 93%.

In the course of this process, certain major cost items for paper production (such as pulp prices) recorded significant increases, with the result that the dynamic of supply and demand, combined with cost factors, led to an upswing in prices on the European market (in February), in the Middle East and Northern Africa (in January). It is important to note that European market prices are at all-time low levels, especially when compared with prices in other regions.

In this context, the Navigator Company achieved a sales volume in line with forecasts and with the previous year, whilst achieving a small improvement in its product mix, with premium products continuing to account for 50% of total. The Group's own brands also started to climb back up as a proportion of total sales, in particular in the highly demanding European markets.

3.2 Tissue Paper

Consumption in Western Europe remains closely tied to growth in GDP, whilst in recent years it has been observed that in southern European countries, namely Portugal, growth in tissue demand has clearly outstripped economic growth.

In this context, tissue business performed well during the first quarter of 2017, with growth of 23.5% in tons sold; as stated above, this was made possible by expansion in production and converting capacity over the course of 2015. Measured in value, sales rose by 15%, to 18.1 million euros. The Group's capacity utilisation rates were healthy, both in reels production, and in converting. Unit production costs were in line with the same quarter in 2016.

Navigator's sales on the Portuguese market totalled approximately € 11.6 million, whilst sales to the Spanish grew to 34% of total. In terms of the product mix, the away-from-home segment again represented the main destination for tissue sales (49%), whilst reel sales grew to around 13%, which was reflected in a reduction in the average sale price in relation to the first quarter of 2016.

3.3 BEKP Pulp

As previously reported, the short fibre pulp market was affected by a combination of factors in the second half of 2016.

Stock levels diminished, in anticipation of the start-up of APP's twin lines in Indonesia, with combined annual capacity of 2.8 million tons. Successive delays in the start-up of these units, which have totalled more than six months, have caused stocks to reduce significantly around the world, especially in the Chinese market. At the same time, demand for pulp was fuelled by the closure of highly polluting pulp capacity in China, growing demand for tissue pulp in China, and increased demand for paper grade pulp for viscose.

Early 2017 saw the normal seasonal factors in paper consumption combine with an upturn in the global paper industry and the replenishment of paper stocks, which had dropped to extremely low levels throughout the supply chain over the course of 2016. The result was growth in demand for pulp from Chinese buyers, up 18.7% YTD February, in line with the growth in Chinese demand for BEKP in the period. Global BEKP demand surged by 11.2% in the first months of the year, allowing the industry to add 6 percentage points to its capacity utilisation rate in relation to the same period in 2016.

As a result, on the heels of a cycle of prices rises for pulp which started in China in September, with prices already up 34% for local pulps and 21% for imports, prices in Europe started to climb in late 2016, and have so far risen steadily from month to month; from January to May, the gross BEKP price in Europe is expected to be up by 140 USD/ton.

The Navigator Company's sales in the first quarter totalled 90 thousand tons, 40% up on the same period in 2016, thanks to favourable market conditions and the increased availability of pulp for the market, after the expansion of the Cacia mill in 2015. Efforts were stepped up over the period to optimise margins, due to significant price gaps in different regions of the world.

4. OPERATING INDICATORS

Pulp and paper

( 000 tons)	Q1 2016	Q2 2016	Q3 2016	Q4 2016	Q1 2017
BEKP Output	370.2	373.4	367.8	359.0	382.4
BEKP Sales	64.6	65.1	71.2	89.8	90.4
UWF Output	397.7	397.0	399.9	392.4	396.4
UWF Sales	377.8	397.7	380.0	431.3	371.3
FOEX – BHKP Euros/ton	687	613	600	607	645
FOEX – BHKP USD/ton	757	694	670	654	686
FOEX – A4- BCopy Euros/ton	836	830	820	807	803

Tissue

( 000 tons)	Q1 2016	Q2 2016	Q3 2016	Q4 2016	Q1 2017
Reels Output	11.2	7.9	13.1	14.7	14.7
Output of Finished products	10.1	10.0	10.9	10.8	11.7
Sales of Reels and goods	1.7	2.2	2.4	2.7	2.7
Sales of Finished Products	9.7	10.7	10.7	10.8	11.3

Energy

	Q1 2016	Q2 2016	Q3 2016	Q4 2016	Q1 2017
Output (GWh)	508.1	519.7	537.2	549.4	561.3
Sales (GWh)	389.5	385.8	425.3	440.7	449.4

5. STRATEGIC DEVELOPMENT

Over the course of the quarter, the Group took the first steps towards implementing the capital projects announced at the start of 2017, for the construction of a tissue mill in Cacia and increasing pulp capacity at the Figueira da Foz mill.

As already reported, the Cacia project involves building a tissue production line and the respective converting facilities, with annual production capacity of around 70 thousand tons. Investment will total around € 121 million. The main equipment suppliers have already been selected and preliminary site preparation work is under way. The paper machine is planned to start up in August 2018.

At the Figueira da Foz pulp mill, the plans are designed to achieve improvements in production efficiency and environmental performance, and to boost capacity by 70 thousand tons, to total annual capacity of 650 thousand tons. The total investment is estimated at around € 85 million. Significant progress has already been made on the initial pile work and the civil construction contract has been adjudicated. The main plant is planned to be fitted in September 2017 and the company expected to start preliminary production trials after the maintenance stoppage programmed for March 2018.

As a result of these projects, total capital expenditure in the period stood at € 14.3 million, divided essentially between the project in Figueira da Foz (€ 8.9 million), pulp and paper business (€ 3.7 million) and tissue in Vila Velha de Rodão (€1.7 million).

Mozambique

During the quarter, the Group successfully completed a pilot operation, launched in late 2016, which consisted of exporting 2 thousand tons of eucalyptus timber from Zambézia through the Port of Nacala. This was a necessary trial run and an important learning experience, which resulted in improved knowledge of local processes, agents, logistics, certification procedures and the workings of the institutions involved in seeing through an operation of this kind.

In the meantime, the Group has welcomed the announcement of plans to build the Moatize-Macuse railway line and the port of Macuse, due for completion in 2021-22. This project is still at the pre-launch stage and financing has yet to be arranged; if it goes ahead, it will represent a gain in competitiveness for the operation based in Zambézia.

However, in line with the decision to slow the pace of its operations in Mozambique, the Group downsized its investment budget for 2017 to approximately € 10 million.

6. COST CUTTING MEASURES

During the first quarter of 2017, Navigator pressed ahead with its strategy of expanding the Lean System, starting work in Cacia, at the Paper Division in Figueira da Foz and at the Setúbal paper mill. In order to start spreading the lean culture to other areas of the organisation, work started on identifying opportunities in areas such as Nurseries and central departments involved in environmental and statistical processes, as well as extending projects to all other industrial divisions.

The Group started the process of implementing Lean methodology in its organisation by bringing in external consultants and currently has several members of staff dedicated exclusively to internalising Lean culture practices and methods.

M2 Programme

The 3rd M2 (More and Better) programme has got under way in 2017 with significantly more initiatives than in the previous year: around 150 (up 50%). The estimated impact on EBITDA is accordingly greater than in 2016. A particularly important development has been the

inclusion in the programme of various initiatives for renegotiating prices for a range of supply contracts for raw materials and services, from purchases of power and natural gas to supplies of corrugated cardboard and wrapping paper for printing formats, as well as purchases of chemicals, such as sodium chlorate and starches.

In relation to industrial projects, other programmes have been carried over from previous year, featuring initiatives to improve efficiency aiming, for example, to increase the pace of production on paper machines 3 and 4 in Setúbal and to increase the capacity of rewinders in Figueira; other projects relate to boosting competitiveness, by cutting variable costs for certain paper products and optimising production allocations to paper machines.

7. FINANCIAL PERFORMANCE

At the close of the quarter, the Group's gross debt stood at € 707.1 million, and net debt at € 616.6 million, down by € 24.1 million on year-end 2016. Cash flow generation over the period was hit by a series of one-off disbursements of the kind typically made in the first quarter, relating to premiums and advances to clients and wood suppliers. Another constraint on cash flow was the increase in inventories, and especially the replenishment of wood stocks, with a strong flow of purchases on the Portuguese market thanks to the mild winder (in contrast to the severe weather experienced in 2016), on competitive terms. This was also accompanied by a natural recovery in stocks of finished products, which had fallen to low levels at the end of the year. In relation to the same period in 2016, the total value of inventories was slightly lower, despite the increase in the value of wood stocks and the value corresponding to pellet stocks, which had not previously existed.

The Net Debt / EBITDA ratio also improved, standing at 1.56 at the end of March, slightly lower than the figure of 1.61 recorded at year-end 2016.

In 2016, Navigator completed a radical overhaul of its borrowing, in a process that started in 2015 and resulted in longer debt maturities and lower costs, the full effects of which will be

felt in 2017. At the end of March the average maturity of Navigator's debt was 4.4 years, and the average all-in cost was 1.8%.

At the end of the quarter, the Group had a total of € 225.0 million in commercial paper programmes contracted but unused, with maturities in excess of one year, and liquid assets of € 90.5 million, showing that it continued to enjoy a comfortable level of liquidity.

This reflects a financial profile which remains robust; this was further reinforced during the quarter when S&P and Moody's confirmed their long term ratings for the Group at BB and Ba2, both classifying the outlook as stable.

8. CAPITAL MARKETS

Despite the uncertainties surrounding political changes in the United States and the impact of the Brexit process on Europe, the capital markets were reasonably optimistic during the first quarter of 2017, with all equity markets recording gains. The Portuguese exchange reflected the wider European trends and ended the quarter up 7.0%.

Despite the recovery in the pulp and paper market, the performance of industry stocks varied significantly. European pulp and paper manufacturers enjoyed gains, especially in the case of Navigator, which recorded a total gain from the start of the year to the end of March of 15.3%, clearly outperforming the PSI20 and on a par with the top performing companies in the sector.

9. OUTLOOK

The global economy demonstrated renewed energy in late 2016, and this carried through into the early months of this year. In a financial context which remains favourable and propitious for growth, the IMF report published for the Spring Meetings adopted a more optimistic tone. In EMU countries, business and confidence indicators point to a significant rate of growth in the first quarter which, if confirmed, would add to the likelihood of a scenario of accelerating GDP this year.

In the short fibre pulp market, first quarter performance was strong with sharp growth in demand, low levels of stocks and upward pressure on prices. Several manufacturers have already announced price increases for the second quarter, and the months ahead may be expected to be fairly positive for the sector. However, concerns still persist in relation to new pulp capacity due to come onto the market as from the second half of the year and the impact this will have on the balance between supply and demand for pulp.

Tissue business in 2017 remains constrained by the general health of the economy, in

particular levels of employment and growth in earnings, as well as by a sharp increase in competition. The Group will continue to work on developing its sales, although increased pressure is expected on its margins due to the sharp rise in pulp prices and the arrival of new capacity on the market.

In the paper market, the Group has benefited from improving conditions in the market as from late 2016; this trend was maintained throughout the first quarter, and has resulted in record order books for this time of year. The sharp rise in pulp prices and production costs in general, combined with the low level of paper prices and evolution of the Euro/USD exchange rate, have made a global increase in UWF prices inevitable. After the close of the quarter, in April, the Group applied a further price rise for its products in Europe and in Middle Eastern and North African markets. Order books in the industry are at their strongest for seven years, and the strong conditions currently enjoyed by the sector are expected to continue over the second quarter.

Setúbal, 4 May 2017

10. CONSOLIDATED FINANCIAL STATEMENTS AND NOTES

CONSOLIDATED INCOME STATEMENT

FOR THE THREE MONTH PERIODS ENDED 31 MARCH 2017 AND 2016

Amounts in Euro	Notes	3 months 31-03-2017	3 months 31-03-2016
		(Unaudited)	(Unaudited)
Revenues	3
Sales		391.254.865	383.603.980
Services rendered		1.402.109	963.156
Other operating income	4
Gains on the sale of non-current assets		1.427	95.062
Other operating income		4.250.654	6.175.301
Change in the fair value of biological assets	14	(502.582)	(271.889)
Costs	5
Cost of inventories sold and consumed		(181.731.681)	(182.637.816)
Variation in production		15.764.876	16.887.070
Cost of materials and services consumed		(97.862.055)	(92.297.938)
Payroll costs		(37.084.975)	(35.363.220)
Other costs and losses		(5.323.909)	(3.650.348)
Provisions		(1.736)	(1.117.864)
Depreciation, amortization and impairment losses	6	(38.143.318)	(35.980.113)
Operating results		52.023.674	56.405.381
Net financial results	7	(3.936.664)	(2.715.629)
Profit before tax		48.087.010	53.689.752
Income tax	8	(13.244.421)	(9.066.576)
Net Income		34.842.589	44.623.176
Attributable to:
Navigator Company's Shareholders		35 573 405	44 720 091
Non-controlling interests		( 730 816)	( 96 915)
Earnings per share
Basic earnings per share, Euro	9	0,050	0,062
Diluted earnings per share, Euro	9	0,050	0,062

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

AS OF 31 MARCH 2017 AND 31 DECEMBER 2016

Amounts in Euro	31-03-2017	31-12-2016
		(Unaudited)
ASSETS
Non-Current Assets
Goodw ill	11	377.339.466	377.339.466
Other intangible assets	12	8.698.436	4.300.642
Plant, property and equipment	13	1.271.646.151	1.294.978.932
Investment properties		424.781	426.838
Biological assets	14	125.110.366	125.612.948
Other financial assets		260.486	260.486
Deferred tax assets	18	43.937.615	44.198.753
		1.827.498.937	1.847.199.702
Current Assets
Inventories		229.920.601	208 888 472
Receivable and other current assets	15	221.928.761	215 877 823
State and other public entities	16	67.886.287	69 619 349
Cash and cash equivalents	21	90.508.419	67 541 588
		610.244.068	561.927.232
Total Assets		2.437.743.005	2.409.126.934
EQUITY AND LIABILITIES
Capital and Reserves
Share capital	17	717.500.000	717.500.000
Treasury shares	17	(1.002.084)	(1.002.084)
Fair value reserves		(6.094.490)	(7.571.781)
Other reserves		99.709.036	99.709.036
Currency translation reserves		1.837.660	(779.369)
Retained earnings		424.892.070	205.639.863
Net profit for the period		35.573.406	217.501.437
		1.272.415.598	1.230.997.102
Non-controlling interests		1.145.816	2 272 606
		1.273.561.414	1.233.269.708
Non-current liabilities
Deferred taxes liabilities	18	61.072.757	59 859 532
Liability for defined benefits	19	5.301.580	6 457 116
Provisions	20	28.385.919	31 048 808
Interest-bearing liabilities	21	637.371.054	638 558 905
Other non-current liabilities	21	31.401.026	33 301 140
		763.532.336	769.225.503
Current liabilities
Interest-bearing liabilities	21	69.702.381	69 702 381
Payables and other current liabilities	22	252.820.886	255 831 284
State and other public entities	16	78.125.988	81 098 059
		400.649.255	406.631.724
Total liabilities		1.164.181.591	1.175.857.227
Total equity and liabilities		2.437.743.005	2.409.126.934

STATEMENT OF COMPREHENSIVE CONSOLIDATED INCOME

FOR THE THREE MONTH PERIODS ENDED 31 MARCH 2017 AND 2016

Amounts in Euro	3 months 31-03-2017	3 months 31-03-2016
Net profit for the period	34,842,589	44,623,176
Itens that can be reclassified subsequently to profit or loss
Fair value in derivative financial instruments	1,679,195	(3,857,818)
Currency translation differences	2,617,030	1,708,634
Tax on items above w hen applicable	(201,904)	1,060,900
	4,094,321	(1,088,284)
Itens that will not be reclassified subsequently to profit or loss
Share of other comprehensive income of associates	(11,736)	2,260,651
Actuarial gains / (losses)	1,366,590	367,060
Tax on itens above w hen applicable	(59)	(186,430)
	1,354,796	2,441,281
	5,449,117	1,352,997
Total recognized income and expense for the period	40,291,706	45,976,173
Attributable to:
The Navigator Company's shareholders	41,418,496	46,172,777
Non-controlling interests	(1,126,790)	(196,602)
	40,291,706	45,976,175

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

FOR THE THREE MONTH PERIODS ENDED 31 MARCH 2017 AND 2016

Amounts in Euro	1 January 2017	Gains/losses recognized in the period	Dividends paid and reserves distributed	Early earnings	Application of prior year's net profit (Note 10)	31 March 2017
Share capital	717,500,000	-	-	-	-	717,500,000
Treasury shares	(1,002,084)	-	-	-	-	(1,002,084)
Fair value reserves	(7,571,781)	1,477,291	-	-	-	(6,094,490)
Other reserves	99,709,036	-	-	-	-	99,709,036
Currency translation reserves	(779,369)	2,617,030	-	-	-	1,837,661
Retained earnings	205,639,863	1,750,769	-	-	217,501,437	424,892,069
Net profit for the period	217,501,437	35,573,405	-	-	(217,501,437)	35,573,405
Early earnings	-	-	-	-	-	-
Total	1,230,997,102	41,418,496	-	-	-	1,272,415,598
Non-controlling interests	2,272,606	(1,126,790)	-	-	-	1,145,816
Total	1,233,269,708	40,291,706	-	-	-	1,273,561,414

Amounts in Euro	1 January 2016	Gains/losses recognized in the period	Dividends paid and reserves distributed	Early earnings	Application of prior year's net profit (Note 10)	31 March 2016
Share capital	767,500,000	-	-	-	-	767,500,000
Treasury shares	(96,974,466)	-	-	-	-	(96,974,466)
Fair value reserves	(1,869,064)	(2,796,918)	-	-	-	(4,665,982)
Other reserves	91,781,112	-	-	-	-	91,781,112
Currency translation reserves	5,688,140	1,708,634	-	-	-	7,396,774
Retained earnings	273,081,975	2,540,970	-	(29,971,019)	196,404,220	442,056,146
Net profit for the period	196,404,220	44,720,091	-	-	(196,404,220)	44,720,091
Early earnings	(29,971,019)	-	-	29,971,019	-	-
Total	1,205,640,898	46,172,777	-	-	-	1,251,813,674
Non-controlling interests	8,622,303	(196,602)	-	-	-	8,425,701
Total	1,214,263,201	45,976,175	-	-	-	1,260,239,375

CONSOLIDATED STATEMENT OF CASH FLOWS

FOR THE THREE MONTH PERIODS ENDED 31 MARCH 2017 AND 2016

Amounts in Euro	Notes	31-03-2017	31-03-2016
OPERATING ACTIVITIES
Payments from customers		423.661.575	407.476.759
Payments to suppliers		344.995.551	345.108.162
Payments to employees		24.067.577	22.062.827
Cash flow from operations		54.598.448	40.305.770
Income tax received / (paid)		(15.136.406)	-
Other receipts / (payments) relating to operating activities		(1.134.606)	6.322.471
Cash flow from operating activities (1)		38.327.436	46.628.241
INVESTMENT ACTIVITIES
Inflows
Interest and similar income		1.009.615	651.475
Inflow s from investment activities (A)		1.009.615	651.475
Outflows
Tangible assets		24.858.834	26.240.968
Outflow s from investment activities (B)		24.858.834	26.240.968
Cash flows from investment activities (2 = A - B)		(23.849.219)	(25.589.493)
FINANCING ACTIVITIES
Inflows
Borrow ings		12.000.000	135.000.000
Inflow s from financing activities (C)		12.000.000	135.000.000
Outflows
Borrow ings		-	168.673.116
Interest and similar costs		3.511.386	3.443.054
Outflow s from financing activities (D)		3.511.386	172.116.170
Cash flows from financing activities (3 = C - D)		8.488.614	(37.116.170)
CHANGES IN CASH AND CASH EQUIVALENTS (1)+(2)+(3)		22.966.831	(16.077.422)
CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE PERIOD		67.541.588	72.657.585
CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD	21	90.508.420	56.580.163

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

AS OF 31 MARCH 2017 AND 2016

(In these notes, unless indicated otherwise, all amounts are expressed in Euro).

Company Identification

The Navigator group ("Group") comprises The Navigator Company, S.A. (previously designated as Portucel, S.A.) and its subsidiaries.

The Navigator group was created in the mid 1950's, when a group of technicians from "Companhia Portuguesa de Celulose de Cacia" made this company the first in the world to produce bleached eucalyptus sulphate pulp.

In 1976 Portucel EP was created as a result of the nationalization of all of Portugal's cellulose industry. As such, Portucel – Empresa de Celulose e Papel de Portugal, E.P. resulted from the merger with CPC – Companhia de Celulose, S.A.R.L. (Cacia), Socel – Sociedade Industrial de Celulose, S.A.R.L. (Setúbal), Celtejo – Celulose do Tejo, S.A.R.L. (Vila Velha de Ródão), Celnorte – Celulose do Norte, S.A.R.L. (Viana do Castelo) and Celuloses do Guadiana, S.A.R.L. (Mourão), being converted into a mainly public anonymous society by Decree- Law No. 405/90, of 21st December.

Years after, as a result of the restructuring of Portucel – Empresa de Celulose e Papel de Portugal, S.A., which was redenominated to Portucel, SGPS, S.A., towards to its privatization, Portucel S.A. was created, on 31st May 1993, through Decree-law 39/93, with the former assets of the two main companies, based in Cacia and Setúbal.

In 1995, the company was reprivatized, and became a publicly traded company.

Aiming to restructure the paper industry in Portugal, Portucel, S.A. acquired Papeis Inapa, S.A. (Setúbal) in 2000 and Soporcel – Sociedade Portuguesa de Papel, S.A. (Figueira da Foz) in 2001. Those key strategic decisions resulted in the PortucelSoporcel Group (currently The Navigator Company Group), which is the largest European and one of the world's largest producers of bleached pulp. It is also the biggest European producer of uncoated wood-free paper.

In June 2003, the Portuguese State sold a 30% stake of Portucel's equity, which was acquired by Semapa Group. In September 2003, Semapa launched a public acquisition offer tending to assure the Group's control, which was accomplished by guaranteeing a 67.1% stake of Portucel's equity.

In November 2006, the Portuguese State concluded the third and final stage of the sale of Portucel, S.A., by moving Parpublica SGPS, S.A. (formerly Portucel SGPS, S.A.) sell the remaining 25.72% it still held.

From 2009 to July 2015, more than 75% of the company's share equity was held directly and indirectly by Semapa - Sociedade de Investimento e Gestão SGPS, S.A. (excluding treasury shares) having the percentage of voting rights been reduced to 70% following the conclusion of the offer for the acquisition, in the form of an exchange offer, of the ordinary shares of Semapa, SGPS, S.A., in July 2015.

In February 2015, Portucel group started its activity in the Tissue segment with the acquisition of AMS- BR Star Paper, SA, a company that holds and explores a tissue paper mill, located in Vila Velha de Ródão.

In July 2016, the Navigator group expanded its activity to the pellets business with the construction of a plant in Greenwood, state of South Carolina, United States of America.

The Navigator group's main business is the production and sale of writing and printing paper and related products, and it is present in the whole value added chain, from research and development of forestry and agricultural production, to the purchase of wood and the production and sale of bleached eucalyptus kraft pulp – BEKP and electric and thermal energy, as well as its commercialization.

On February 6th 2016, the Portucel Group changed its corporate brand to The Navigator Company. This new corporate identity represents the union of companies with a history of more than 60 years, aiming to give the Group a more appealing and modern image.

Following this event, and after approval in the General Shareholder's Meeting, held on April 19th 2016, Portucel S.A. changed its designation to The Navigator Company, S.A..

The Navigator Company, S.A. (hereafter referred to as the Company or Navigator) is a publicly traded company with its share capital represented by nominal shares.

Head Office: Mitrena, 2901-861 Setúbal

Share Capital: Euros 717 500 000

Registration No: 503 025 798

These consolidated financial statements were approved by the Board of Directors on 3 May 2017.

The Navigator group's senior management, who are also the members of the Board of Directors that sign this report, declare that, to the best of their knowledge, the information contained herein was prepared in conformity with the applicable accounting standards, providing a true and fair view of the assets and liabilities, the financial position and results of the companies included in the Navigator group's consolidation scope.

1. BASIS OF PREPARATION

The Navigator group's consolidated financial statements for the three period ended 31 March 2017 have been prepared in accordance with International Accounting Standard 34 – Interim Financial Reporting.

The accompanying consolidated financial statements were prepared on a going concern basis from the accounting books and records of the companies included in the consolidation (Note 29), and under the historic cost convention, except for biological assets, available for sale financial assets and derivative financial instruments, which are recorded at fair value (Notes 24 and 14).

2. SUMMARY OF THE PRINCIPAL ACCOUNTING POLICIES

The accounting policies applied in the preparation of these interim consolidated financial statements are consistent to those used in the preparation of the financial statements as of 31 December 2016 and stated in the respective attached notes.

2.1New standards, changes and interpretations of existing standards

There are new standards, interpretations and amendments of existing standards that, despite having already been published, are only mandatory for the periods starting after 1 January 2017 and which the Navigator group decided not to early-adopt in the current period, as follows:

Standards and effective changes, on or after 1 January 2017, endorsed by EU	Effective Date *
IFRS 9 – Financial instruments	1 January 2018
IFRS 15 – Revenue from contracts w ith customers	1 January 2018
* Periods beginning on or after

Standards and effective changes, on or after 1 January 2017, not yet endorsed by EU	Effective Date *
IAS 7 - Statement of Cash Flow s	1 January 2017
IAS 12 - Income Taxes	1 January 2017
IAS 40 - Investment Property	1 January 2018
IFRS 2 – Share-based Payment	1 January 2018
IFRS 4 - Insurance Contracts	1 January 2018
Amendments to IFRS 15 – Revenue from contracts w ith customers	1 January 2018
IFRS 16 - Leases	1 January 2019
Annual improvements to IFRSs 2014 - 2016	1 January 2017
	or 1 January 2018
IFRIC 22 – Foreign Currency Transactions and Advanced Consideration	1 January 2018

* Periods beginning on or after

Up to the date of issuing this report, the Navigator group had not yet concluded the estimate of the effects of changes arising from the adoption of these standards, for which it decided not to early-adopt them. However, no material effect is expected in the financial statements as a result of their adoption.

3. SEGMENT INFORMATION

In accordance to the approach defined in IFRS 8, operational segments should be identified based in the way internal financial information is organized and reported to the management. An operating segment is defined by IFRS 8 as a component of the Navigator group:

• (i) that engages in business activities from which it may earn revenues and incur expenses;
• (ii) whose operating results are regularly reviewed by the entity's chief operating decision maker to make decisions about resources to be allocated to the segment and assess its performance, and
• (iii)For which discrete financial information is available.

The Executive Committee is the ultimate operating decision maker, analyzing periodic reports with operational information on segments, using them to monitor the operating performance of its businesses, as well as to decide on the best allocation of resources.

In 2016, the Navigator group has changed its segment reporting. Segment information is presented for business segments identified by the Navigator group, namely:

• Market Pulp;
• UWF Paper;
• Tissue Paper; and
• Other.

The segments Forestry and Energy became part of the segment "Other". This segment also includes the pellet business.

Revenues, assets and liabilities of each segment correspond to those directly allocated to them, as well as to those that can be reasonably attributed to those segments.

Financial data by operational segment for the periods ended 31 March 2017 and 2016 is shown as follows:

	3 months 31-03-2017
	PULP MARKET	UWF PAPER	TISSUE PAPER	OTHERS	ELIMINATIONS/ UNALLOCATED	TOTAL
REVENUE
Sales and services - external	47,664,569	314,742,932	18,118,210	12,131,263	-	392,656,974
Sales and services - intersegment	3,600,686			176,423,403	(180,024,089)	-
Total revenue	51,265,255	314,742,932	18,118,210	188,554,666	(180,024,089)	392,656,974
Profit/(loss)
Segmental Profit	10,800,293	55,460,097	1,237,445	(15,474,161)	-	52,023,674
Operating Profit	-	-	-	-	-	52,023,674
Net financial results	-	-	-	-	(3,936,664)	(3,936,664)
Income tax	-	-	-	-	(13,244,421)	(13,244,421)
Net profit before non-controling interest	-	-	-	-	-	34,842,589
Non-controling interest	-	-	-	-	730,816	730,816
Net profit	-	-	-	-	-	35,573,405
Other Information
Capital expenditure	1,644,153	11,727,768	262,411	712,158	-	14,346,490
Depreciation and impairment	(2,759,860)	(22,771,731)	(2,297,657)	(10,314,070)		(38,143,318)
Provisions	-	-	-	-	(1,736)	(1,736)
Other Informations
SEGMENT ASSETS
Plant, property and equipment	124,535,508	715,953,407	63,278,038	367,879,197	-	1,271,646,151
Biological assets	-	-	-	125,110,366	-	125,110,366
Available-for-sale financial assets	-	260,486	-	-	-	260,486
Inventories	15,955,437	132,942,533	9,130,015	71,892,616	-	229,920,601
Receivable and other current assets	2,957,530	184,566,826	16,489,419	17,914,988	-	221,928,762
Other assets	887,958	448,260,954	3,905,190	135,822,538	-	588,876,639
Total assets	144,336,433	1,481,984,206	92,802,662	718,619,704	-	2,437,743,005
SEGMENT LIABILITIES
Interest-bearing liabilities	2,805,080	-	1,432,616	702,835,740	-	707,073,435
Accounts Payable	12,176,849	112,278,527	8,087,711	120,277,799	-	252,820,886
Other liabilities	29,888,355	109,022,696	1,860,803	63,515,416	-	204,287,270
Total liabilities	44,870,283	221,301,222	11,381,130	886,628,955	-	1,164,181,591

The Navigator group's energy sales are reported under different business segments. The amount corresponding to the total energy sales was Euro 42,509,780 in 2017 and Euro 34,701,495 in 2016. Energy sales originated in the cogeneration process, in the amount of Euro 36,934,259, are reported under the "Market Pulp" (Euro 4,461,062) and "UWF Paper"

(Euro 32,473,197) segments. Sales of electricity exclusively produced in units dedicated to the production of electricity from biomass are reported under the segment "Other", in the amount of Euro 5,575,521.

Property, plant and equipment reported under the segment "Other" includes:

Valores em Euros	31-03-2017
Forestry Lands	78,837,443
Real estate - manufacturing site of Setúbal	58,307,433
Real estate - manufacturing site of Cacia	12,221,468
Real estate - manufacturing site of Figueira da Foz	53,021,849
Thermoelectric plant biomass	36,948,534
Pellets project - EUA	103,665,598
Mozambique project	7,325,686
Others	17,551,187
	367,879,197

Forest land and industrial real estate are reported in the individual financial statements as investment properties (Euro 202,388,192). The real estate property of Vila Velha de Ródão, in the amount of Euro 9,451,554, is included in the segment "Tissue Paper".

The majority of the assets allocated to each of the individual segments, with the exception of receivables, is located in Portugal. "Other" includes US and Mozambique, besides Portugal.

	3 months 31-03-2016
	PULP MARKET	UWF PAPER	TISSUE PAPER	OTHERS	ELIMINATIONS/ UNALLOCATED	TOTAL
REVENUE
Sales and services - external	36,041,064	325,684,230	15,842,531	6,999,311	-	384,567,136
Sales and services - intersegment	-	-	-	92,269,584	(92,269,584)	-
Total revenue	36,041,064	325,684,230	15,842,531	99,268,895	(92,269,584)	384,567,136
Profit/(loss)
Segmental Profit	3,040,643	47,684,495	352,746	5,327,497	-	56,405,381
Operating Profit	-	-	-	-	-	56,405,381
Net financial results	-	-	-	-	(2,715,629)	(2,715,629)
Income tax	-	-	-	-	(9,066,576)	(9,066,576)
Net profit before non-controling interest	-	-	-	-	-	44,623,176
Non-controling interest	-	-	-	-	96,915	96,915
Net profit	-	-	-	-	-	44,720,091
Other Information
Capital expenditure	1,400,626	10,164,851	79,513	34,733,528	-	46,378,517
Depreciation and impairment	(2,593,100)	(26,605,019)	(2,398,872)	(4,383,122)	-	(35,980,113)
Provisions	-	-	-	-	(1,117,864)	(1,117,864)
Other Informations
Segment assets	155,266,160	1,553,508,680	97,098,680	658,251,945	-	2,464,125,465
Financial investments	-	229,136	-	-	-	229,136
Total assets	155,266,160	1,553,737,816	97,098,680	658,251,945	-	2,464,354,601
Segment Liabilities	44,024,739	238,154,977	36,221,579	885,713,931	-	1,204,115,226
Total liabilities	44,024,739	238,154,977	36,221,579	885,713,931	-	1,204,115,226

4. OTHER OPERATING INCOME

Other operating income is detailed as follows for the three months periods ended 31 March 2017 and 2016:

	3 months	3 months
Amounts in Euro	31-03-2017	31-03-2016
Supplementary income	127,437	1,437,273
Grants - CO2 Emission allowances	917,606	786,758
Reversal of impairment losses in current assets	-	258,437
Gains on disposals of non-current assets	1,427	95,062
Gains on inventories	2,405,682	1,623,091
Government grants	1,509	27,852
Own work capitalised	43,004	9,266
Other operating income	755,415	2,032,624
	4,252,080	6,270,363

The gains with CO2 licenses correspond to the recognition of the free allocation of licenses for 173,699 tons of CO2, at the average price of Euro 5.28 (134,149 tons in 31 March 2016, at average price of Euro 5.86).

5. OPERATING EXPENSES

Operating expenses are detailed as follows for the three months periods ended 31 March 2017 and 2016:

Amounts in Euro	3 months 31-03-2017	3 months 31-03-2016
Cost of inventories sold and consumed	(181,731,681)	(182,637,816)
Variation in production	15,764,876	16,887,070
Cost of services and materials consumed	(97,862,055)	(92,297,938)
Payroll costs
Remunerations
Statutory bodies - fixed	(1,116,188)	(1,272,303)
Statutory bodies - variable	(1,166,208)	(1,148,580)
Other remunerations	(25,757,709)	(24,418,401)
	(28,040,104)	(26,839,284)
Social charges and other payroll cost
Pension and retirement bonus - defined benefit plans (Note 19)	(218,015)	(500,840)
Pension costs - defined contribution plans (Note 19)	(295,091)	(275,951)
Contributions to social security	(5,273,122)	(5,478,950)
Other payroll costs	(3,258,642)	(2,268,194)
	(9,044,870)	(8,523,935)
	(37,084,975)	(35,363,220)
Other costs and losses
Membership fees	(180,930)	(100,617)
Losses in inventories	(2,264,455)	(521,900)
Impairment losses in receivables	-	(1,082)
Indirect taxes	(247,020)	(255,735)
Shipment costs	(1,002,789)	(895,664)
Water resources charges	(392,212)	(411,918)
Cost w ith CO2 emissions	(917,606)	(992,393)
Other operating costs	(318,897)	(471,039)
	(5,323,909)	(3,650,348)
Provisions (Note 20)	(1,736)	(1,117,864)
Total	(306,239,479)	(298,180,116)

The costs with CO2 emissions correspond to the emission of 173,699 tons of CO2 at the average price of Euro 5.28 (31 March 2016: Euro 185,526 tons, at the average price of Euro 5.35).

For the three months periods ended 31 March 2017 and 2016 the consumed and sold inventory was detailed as follows:

	3 months	3 months
Amounts in Euro	31-03-2017	31-03-2016
Wood / Biomass	80,025,529	80,391,287
Natural gas	14,705,567	14,341,640
Other fuels	4,241,396	4,906,227
Water	452,030	346,665
Chemicals	35,089,378	35,976,642
BEKP pulp	12,441,018	12,968,131
UWF paper - subcontracts	2,083,303	3,529,315
Warehouse material	14,803,573	10,950,668
Packaging material	17,480,323	18,727,778
Other materials	409,563	499,464
	181,731,681	182,637,816

The cost of wood / biomass only relates to wood purchases to entities outside the Navigator group, either domestic or foreign, excluding self-supply.

For the three months periods ended 31 March 2017 and 2016 the cost of services and material consumed was detailed as follows:

Amounts in Euro	31-03-2017	31-03-2016
Comunications	314,649	321,570
Maintenance and repair	7,326,540	6,610,256
Travel and accommodation	1,232,842	1,119,831
Energy and fluids	28,266,824	24,592,163
Fees	1,130,585	903,639
Materials	2,203,056	913,195
Advertising and marketing	3,594,465	3,802,012
Rentals	4,077,775	3,115,302
Insurance	3,024,017	2,857,132
Subcontrats	322,078	460,859
Specialized services	18,249,858	18,791,867
Transportation of goods	27,441,397	27,122,984
Other	677,970	1,687,127
	97,862,055	92,297,938

The increase shown in the caption Energy and fluids mainly regards the programmed maintenance carried out in the natural gas cogeneration during the first quarter of 2016. The increase is also explained by the entry into continuous labor of the pellet mill in the United States, during the last quarter of 2016.

For the three months periods ended 31 March 2017 and 2016, the costs incurred with investigation and research activities amounted to Euro 1,073,230 and Euro 847,897, respectively.

Other payroll costs are detailed as follows for the three months periods ended 31 March 2017 and 2016:

Amounts in Euro	2017	2016
Training	454,143	218,658
Social Action	326,038	204,019
Insurance	972,807	726,218
Other	1,505,655	1,119,298
	3,258,642	2,268,194

The amount booked as "Others" essentially regards the compensation paid to the employees in the amount of Euro 1,042,806 (31 de March 2016: Euro 975,109) that adhered to the rejuvenation program initiated by the Navigator group in 2014.

6. DEPRECIATION, AMORTIZATION AND IMPAIRMENT LOSSES

For the three months periods ended 31 March 2017 and 2016, depreciation, amortization and impairment losses, net of the effect of investment grants recognized in the period were as follows:

	3 months	3 months
Amounts in Euro	31-03-2017	31-03-2016
Depreciation of property, plant and equipment
Land	-	-
Buildings	(2,929,260)	(2,758,769)
Equipments	(34,335,885)	(31,720,518)
Other tangible assets	(1,282,412)	(1,271,237)
	(38,547,557)	(35,750,524)
Investment grants	1,472,449	1,569,024
	(37,075,108)	(34,181,500)
Impairments
Mozambique impairment of lands	(1,068,210)
CO2 Emission allow ances	-	(1,798,613)
	(1,068,210)	(1,798,613)
	(38,143,318)	(35,980,113)

An impairment loss regarding the project in Mozambique was recognized, following the assessment made by the Navigator group on those assets.

7. NET FINANCIAL RESULTS

Financial costs are detailed as follows for the three month periods ended 31 March 2017 and 2016:

	3 months	3 months
Amounts in Euro	31-03-2017	31-03-2016
Interest paid on borrow ings	(2,420,619)	(3,673,284)
Interest earned on investments	601,984	651,479
Exchange rate differences	(2,965,585)	(962,477)
Gains / (losses) on financial instruments - trading (Note 24)	1,851,119	2,256,677
Gains / (losses) on financial instruments - hedging (Note 24)	(767,144)	(376,603)
Guarantees and bank charges	(834,913)	(682,668)
Compensatory interest	617,148	147,874
Other financial income / (expenses)	(18,653)	(76,627)
	(3,936,664)	(2,715,629)

8. CORPORATE INCOME TAX

Income tax is detailed as follows for the three month periods ended 31 March 2017 and 2016:

Amounts in Euro	3 months 31-03-2017	3 months 31-03-2016
Current tax	14,085,585	18,192,338
Provision / (reversal) for current tax	(2,131,957)	(5,438,520)
Deferred tax (Note 15)	1,290,793	(3,687,242)
	13,244,421	9,066,576

The current income tax includes Euro 13,214,150 (31 March 2016: Euro 18,002,922) due to the liability generated in fiscal consolidation scope.

For the three month periods ended 31 March 2017 and 2016, the reconciliation of the effective income tax rate was as follows:

Amounts in Euro	3 months 31-03-2017		3 months 31-03-2016
Profit before tax		48,087,010		53,689,752
Expected tax	21.00%	10 098 272	21.00%	11,274,848
Municipal surcharge	1.73%	833 628	2.29%	1,099,387
State surcharge	2.99%	1 437 773	4.86%	2,337,113
Differences (a)	1.82%	874 748	1.71%	820,370
Impairment and reversal of provisions	0.00%	-	(12.06%)	(5,800,629)
Tax benefits	0.00%	-	(1.38%)	(664,513)
	27.54%	13,244,421	18.85%	9,066,576

(a) This amount is made up essentially of:

3 months		3 meses
	31-03-2017	31-03-2016
Capital gains / (losses) for tax purposes	-	3,535
Capital gains / (losses) for accounting purposes	-	(4,791)
Taxable provisions	3 203 794	1,118,830
Tax benefits	( 91 656)	(70,396)
Effect of pension funds	209 207	690,792
Other	( 140 442)	1,245,195
	3,180,904	2,983,164
Tax Effect (27,5%)	874,748	820,370

On 1 July 2015, a new taxation group led by The Navigator Company, S.A. was set up, comprising all the companies located in Portugal in which the Group holds an interest or voting right of at least 75%, for more than a year.

However, the State Budget Law for 2017 (Law no. 42/2016, of 28 December) defined the obligation of coincidence between taxation and accounting periods.

Following the clarifications and guarantees requested by The Navigator Company, S.A., the competent authorities allowed the Navigator group companies (due to the new requirements introduced by The State Budget Law for 2017) to change their taxation period to its accounting period, thus maintaining its accounting and tax reporting periods coincident with the calendar year, even though the obligation to remain five years in the previous tax period had not yet been accomplished.

As so, the Navigator group companies changed, with effects from 1 January 2017, its taxation period from 1 July to 30 June to the period starting 1 January and ending 31 December of each year.

9. EARNINGS PER SHARE

Earnings per share were determined as follows:

	3 months	3 months
Amounts in Euro	31-03-2017	31-03-2016
Profit attributable to the Company's shareholders	35,573,405	44,720,091
Total number of issued shares	717,500,000	767,500,000
Treasury shares - period average	(489,973)	(50,489,973)
	717,010,027	717,010,027
Basic earnings per share	0.050	0.062
Diluted earnings per share	0.050	0.062

Since there is no financial instruments convertible in Navigator Group shares, its earnings are undiluted.

The changes in the average number of treasury shares were as follows:

	3 months 31-03-2017			3 months 31-03-2016
	Quantity	Quantity Quantity Accumulated				Quantity Accumulated
Treasury shares held on January			489,973			50,489,973
Acquisitions
January		-	489,973		-	50,489,973
February		-	489,973		-	50,489,973
March		-	489,973		-	50,489,973
Treasury shares held on 31 March			489,973			50,489,973
Average treasury shares held for the period			489,973			50,489,973

10. APPROPRIATION OF PREVIOUS YEARS' PROFIT

The application of the results for 2015 and 2014 is detailed as follows:

Amounts in Euro	2015	2014
Distribution of dividends (excluding treasury shares)	173,946,632	150,572,106
Legal reserves	7,927,924	8,136,585
Balance bonus	6,000,000	2,998,525
Net income from prior years	8,529,664	19,759,480
	196,404,220	181,466,696

The resolution for the appropriation of the 2015 net profit approved at The Navigator Company's General Meeting held on 19 April 2016, was based on the net profit for the year as defined by the accounting principles generally accepted in Portugal (Portuguese GAAP).

The difference in the net profit between the two standards, totaling Euro 37,845,737 (2014: Euro 18,734,999) was transferred to retained earnings.

11. GOODWILL

The Group annually computes the recoverable amounts of the cash generating units of its integrated paper production business in Figueira da Foz (Euro 376,756,383) and tissue production in Vila Velha de Ródão (Euro 583,083), to which Goodwill is allocated in the consolidated financial statements, by computing their value-in-use through a discounted cash flow model. The calculations are based on past performance and business expectations with the actual production structure, using the budget for next year and projected cash flows for the following 4 years, based on a constant sales volume. As a result of the calculations, up to this date no impairment losses have been identified.

The main assumptions for the above-mentioned calculation were as follows:

	2017	2016
Inflation Rate	1.00%	1.00%
Discount rate(post-tax)	6.77%	6.77%
Production grow th	0.00%	0.00%
Perpetuity grow th rate	-1.00%	-1.00%

The discount rate presented above is a post-tax rate equivalent to a pre-tax discount rate of 9.6% and has been calculated in accordance with the WACC (Weighted Average Cost of Capital) methodology, based in the following assumptions:

	2017	2016
Risk free interest rate	2.59%	2.59%
Equity risk premium (market and entity)	5.00%	5.00%
Tax rate	29.50%	29.50%
Debt risk premium	3.22%	3.22%

The Navigator group's subsidiary Navigator Tissue Ródão, S.A. invested in the construction of a second Tissue paper machine in its unit in Vila Velha de Ródão, having signed, for this purpose, in March 2014, investment contracts with AICEP that will allow financing part of the investment through european funds, through refundable financial grants of Euro 9,647,700, that can be converted into non-refundable grant, up to a limit of 50%, i.e. Euro 4,823,850, by meeting the contractually defined objectives, and tax grants in the amount of Euro 5,854,240, (to be used until 2024), which reduced the amount of goodwill recognized on the acquisition, as previously mentioned. Had this reduction not occurred and the recognition of these incentives in the Navigator group's income statement would be as follows:

Amounts in Euro	Financial incentives	Tax benefits	Total
2015	252,300	306,192	558,492
2016	1,363,076	928,948	2,292,024
2017	335,754	229,500	565,254
	1,951,130	1,464,640	3,415,770

12. OTHER INTANGIBLE ASSETS

During 2017 and 2016, the movement occurred in the caption of other intangible assets is detailed as follows:

Amounts in Euro	Industrial property and other rights	CO2 emission licenses	Total
Acquisition costs
Amount as of 1 January 2016	1,100	4,957,006	4,958,106
Acquisitions	3,300	3,230,781	3,234,081
Disposals	-	-	-
Adjustments, transfers and w rite-off's	-	-	-
Amount as of 31 March 2016	4,400	8,187,788	8,192,188
Acquisitions	-	-	-
Disposals	-	-	-
Adjustments, transfers and w rite-off's	-	(3,888,139)	(3,888,139)
Amount as of 31 December 2016	4,400	4,299,648	4,304,048
Acquisitions	-	4,397,896	4,397,896
Disposals	-	-	-
Adjustments, transfers and w rite-off's	-	-	-
Amount as of 31 March 2017	4,400	8,697,544	8,701,944
Accumulated depreciation and impairment losses Amount as of 1 January 2016	(1,100)	(25,500)	(26,600)
Amortizations and impairment losses Disposals	(1,998) -	(1,798,510) -	(1,800,508) -
Adjustments, transfers and w rite-off's	-	-	-
Amount as of 31 March 2016	(3,098)	(1,824,010)	(1,827,108)
Amortizations and impairment losses	(309)	1,825,905	1,825,596
Disposals	-	-	-
Adjustments, transfers and w rite-off's	-	(1,895)	(1,895)
Amount as of 31 December 2016	(3,407)	-	(3,407)
Amortizations and impairment losses	(103)	-	(103)
Disposals	-	-	-
Adjustments, transfers and w rite-off's	-	-	-
Amount as of 31 March 2017	(3,510)	-	(3,510)
Net book value as of 1 January 2016	-	4,931,506	4,931,506
Net book value as of 31 March 2016	1,302	6,363,778	6,365,081
Net book value as of 31 December 2016	993	4,299,648	4,300,642
Net book value as of 31 March 2017	890	8,697,544	8,698,435

On 31 March 2017, the Group held 1,102,401 CO2 emission licenses with a market value as of that date of Euro 5,170,261 (31 December 2016: 596,516 licenses with a market value of Euro 3,847,526).

It also holds contracts for the right to acquire 300,000 CO2 emission licenses that were signed in 2017, amounting to Euro 1,407,000 as of 31 March 2017 (31 December 2016: 250,000 licenses with a value of Euro 1,612,500).

13. PROPERTY, PLANT AND EQUIPMENT

The changes in Property, plant and equipment, as well as in the respective accumulated depreciation and impairment losses, were as follows:

Amounts in Euro	Land	Building and other constructions	Equipments and other tangibles	Assets under construction	Total
Acquisition costs
Amount as of 1 January 2016	120,148,481	521,104,585	3,403,601,831	77,831,582	4,122,686,481
Acquisitions	-	-	2,729,052	43,649,466	46,378,517
Disposals	-	-	(216,795)	-	(216,795)
Adjustments, transfers and w rite-off's	(97)	97,569	7,451,264	(7,747,922)	(199,185)
Amount as of 31 March 2016	120,148,385	521,202,154	3,413,565,352	113,733,129	4,168,649,018
Acquisitions	1,019,144	1,364,431	8,478,125	85,790,093	96,651,794
Disposals	-	(1,975,256)	(6,109,739)	-	(8,084,995)
Impairment losses	(2,960,025)			(42,825,138)	(45,785,163)
Adjustments, transfers and w rite-off's	3,892,607	18,725,598	109,052,455	(127,736,513)	3,934,146
Amount as of 31 December 2016	122,100,111	539,316,927	3,524,986,193	28,961,571	4,215,364,799
Acquisitions	-	-	-	14,346,490	14,346,490
Disposals	-	-	(30,914)	-	(30,914)
Impairment losses	-	-	-	(1,068,107)	(1,068,107)
Adjustments, transfers and w rite-off's	-	200,466	(565,091)	(3,493,385)	(3,858,010)
Amount as of 31 March 2017	122,100,111	539,517,393	3,524,390,187	38,746,569	4,224,754,258
Accumulated depreciation and impairment losses Amount as of 1 January 2016	(95,652)	(345,306,258)	(2,456,485,485)	-	(2,801,887,394)
Amortizations and impairment losses	-	(2,680,938)	(33,069,585)	-	(35,750,524)
Disposals	-	-	214,455	-	214,455
Adjustments, transfers and w rite-off's	-	12,756	149,703	-	162,459
Amount as of 31 March 2016	(95,652)	(347,974,440)	(2,489,190,912)	-	(2,837,261,004)
Amortizations and impairment losses	(75,000)	(8,228,251)	(83,258,947)	-	(91,562,197)
Disposals	-	-	3,731,677	-	3,731,677
Adjustments, transfers and w rite-off's	-	4,855,361	(149,702)	-	4,705,659
Amount as of 31 December 2016	(170,652)	(351,347,330)	(2,568,867,884)	-	(2,920,385,866)
Amortizations and impairment losses	-	(2,928,849)	(29,353,613)	-	(32,282,462)
Disposals	-	-	30,915	-	30,915
Adjustments, transfers and w rite-off's	-	-	(470,694)	-	(470,694)
Amount as of 31 March 2017	(170,652)	(354,276,179)	(2,598,661,277)	-	(2,953,108,107)
Net book value as of 1 January 2016	120,052,829	175,798,327	947,116,346	77,831,582	1,320,799,087
Net book value as of 31 March 2016	120,052,733	173,227,714	924,374,439	113,733,129	1,331,388,014
Net book value as of 31 December 2016	121,929,459	187,969,597	956,118,309	28,961,571	1,294,978,933
Net book value as of 31 March 2017	121,929,459	185,241,215	925,728,911	38,746,569	1,271,646,151

As of 31 March 2017 "Assets under construction" included Euro 2,394,037 (31 December 2016: Euro 1,599,808), related to advance payments and supplies of Property Plant and Equipment, under the scope of the investment projects being developed by the Navigator group. These amounts are fully guaranteed by first demand bank guarantees, handed by the respective suppliers that are promoting the investments of the Navigator group companies, in accordance with the implemented policies for the mitigation of credit risk.

The remaining refers to investments associated with improvements in the production process in the Navigator group's several factories.

This caption is deducted from the impairment loss associated with the investment in Mozambique of Euro 43,893,245 (31 December 2016: 42,825,138).

Land includes Euro 117,273,207, classified in the individual financial statements as investment properties, from which Euro 78,837,443 relate to forest land and Euro 38,435,764 to land allocated to industrial sites leased to the Group. It also includes Euro 1,609,030 of land in which the new pellets plant in the USA is located and Euro 5,096,238 of capitalized expenditures with land preparation in Mozambique that is being depreciated over the period of the concession deducted from impairment losses of Euro 2,960,025, therefore with a net book value of Euro 2,136,213.

14. BIOLOGICAL ASSETS

Over the three months period ended 31 March 2017 and the year 2016, changes in biological assets were as follows:

Amounts in Euro	2017	2016
Amount as of 1 January	125,612,948	116,996,927
Logging in the period	(5,200,046)	(5,080,835)
Grow th	27,530	601,135
New planted areas and replanting ( at cost )	614,630	451,382
Other changes in fair value	4,055,304	3,756,430
	(502,582)	(271,889)
Amount as of 31 March	125,110,366	116,725,038
Remaining quarters		8,887,910
Amount as of 31 December		125,612,948

The amounts shown as other changes in fair value correspond to planned and actual costs of forest asset management.

	3 months	3 months
Amounts in Euro	31-03-2017	31-03-2016
Costs os assets mangement
Forestry	534,638	366,394
Structure	738,733	691,893
Fixed and variable rents	2,781,933	2,698,143
	4,055,304	3,756,430

As of 31 March 2017 and 31 December 2016, biological assets were detailed as follows:

Amounts in Euro	31-03-2017	31-12-2016
Eucalyptus (Portugal)	115,910,418	116,413,499
Other Species (Portugal)	1,821,306	1,820,807
Eucalyptus (Mozambique)	7,378,642	7,378,642
	125,110,366	125,612,948

These amounts correspond to management's expectation of the volumes to be extracted from its woodlands as follows:

Amounts in Euro	31-03-2017	31-12-2016
Eucalyptus - m3 ssc'000 - Potencial Future of w ood extraction k ton	11,649	11,649
Pine - w ood - Ton'000 - Potencial Future of w ood extraction k ton	455	455
Pine - cones - Ton'000 - Potencial Future of cones extraction k ton	n/a	n/a
Coark Oak - @'000 - Potencial Future of oak extraction k ton	615	615
Eucalyptus - m3 ssc'000 (Mozambique) - Potencial Future of w ood extraction k ton (1)	1,218	1,988
(1) Only for areas assessed w ith one year or more

Concerning Eucalyptus in Portugal, the most relevant biological asset, for the nine months periods ended 31 March 2017 and 2016 the Group extracted 141,344 m3ssc and 137,693

15. RECEIVABLES AND OTHER CURRENT ASSETS

m3ssc of wood from its owned and explored forests, respectively.

As at 31 March 2017 and 31 December 2016, receivables and other current assets were detailed as follows:

Amounts in Euro	31-03-2017	31-12-2016
Accounts receivable	175,524,274	181,828,460
Accounts receivale - group companies (Nota 25)	-	77,226
Other receivables	34,689,926	28,295,847
Derivative financial instruments (Note 20)	1,295,278	901,050
Accrued income	208,231	1,087,929
Deferred costs	10,211,052	3,687,311
	221,928,761	215,877,823

The receivables shown above are net of impairment losses.

As at 31 March 2017 and 31 December 2016, other receivables were detailed as follows:

Amounts in Euro	31-03-2017	31-12-2016
Advances to employees	574,953	654,170
Advances to suppliers	3,191,369	263,153
Financial incentives receivable	58,870	58,870
Department of Commerce (EUA)	28,741,654	26,369,181
Other	2,123,080	950,472
	34,689,925	28,295,846

In 2015 the Group was subject to an investigation of alleged dumping practices in UWF imports to the United States of America, and an anti-dumping provisional tax rate was imposed over those sales, of 29.53%. On 11 January 2016, the US Department of Commerce settled the final duty rate at 7.8%. The amount receivable corresponds to the difference between the provisional and final anti-dumping rates over paper sales to the United States. Although the final rate is substantially lower than the initially determined margin, The Navigator Company, S.A. disagrees with any anti-dumping margin and will use all legal resources available to demonstrate that this measure is not justified, as there is no

causal link between paper exports to the United States of America and the alleged injury of the local paper industry from August 2015 onwards.

The amount shown as "Advances to suppliers" refers to advanced payments made to wood suppliers. As a way of ensuring the sustainability of the forest value chain to the industry, the Group advances payments to its suppliers upon presentation of guarantees, for the wood to be bought throughout the year. Those advances are settled as supplies are delivered.

The evolution of financial incentives to be received is detailed as follows:

Amounts in Euro	2017	2016
Amount as per 1 January	58,870	-
Increase/(decrease)	-	-
Assignments	-	646,157
Received in year	-	-
Amount as of 31 March
Remaining quarters		(587,287)
Amount as of 31 December	58,870	58,870

As at 31 March 2017 and 31 December 2016, accrued income and deferred costs were detailed as follows:

Amounts in Euro	31-03-2017	31-12-2016
Accrued income
Interest receivable	-	-
Other	208,231	1,087,929
	208,231	1,087,929
Deferred costs
Rents	3,257,836	3,157,699
Insurance	5,958,790	483,582
Other	994,426	46,030
	10,211,052	3,687,311
	10,419,283	4,775,240

16. STATE AND OTHER PUBLIC ENTITIES

As at 31 March 2017 and 31 December 2016, there were no overdue debts to the State and other public entities.

The open balances with these entities were as follows:

Current Assets

Amounts in Euro	31-03-2017	31-12-2016
State and other public entities
Value added tax - refunds requested	49,474,035	49,556,436
Value added tax - to recover	9,631,472	9,824,442
Amounts pending repayment (tax proceedings decided in favor of the group)	8,780,780	10,238,472
	67,886,287	69,619,349

As at 31 March 2017, the outstanding VAT refunds requested comprised the following, by month and by company:

Amounts in Euro	Feb/2017	Mar/2017	Total
The Navigator Company, S.A.	18,617,673	23,951,327	42,569,000
Bosques do Atlântico, S.L.	-	6,905,035	6,905,035
	18,617,673	30,856,362	49,474,035

Up to the date of issuing this report, Euro 18,617,673 of the amounts to be received as of 31 March 2017, had already been received.

As at 31 December 2016, the outstanding VAT refunds requested comprised the following, by month and by company:

Amounts in Euro	Nov/2016	Dec/2016	Total
Navigator Tissue Ródão, S.A. (former Navigator Fine Paper, S.A.)	19 897 644	24 075 341	43,972,985
Bosques do Atlântico, S.L.	-	5 583 451	5,583,451
	19,897,644	29,658,792	49,556,436

All these amounts were received during the first quarter of 2017.

Current Liabilities

Amounts in Euro	31-03-2017	31-12-2016
State and other public entities
Corporate income tax	40,740,327	42,155,907
Personal income tax - w itheld on salaries	2,555,058	3,072,408
Value added tax	30,625,488	31,794,573
Social security	2,446,590	2,447,250
Additional liabilities	1,465,022	1,465,022
Others	293,504	162,901
	78,125,988	81,098,059

Corporate income tax is detailed as follows:

Amounts in Euro	31-03-2017	31-12-2016
Corporate income tax (Note 8)	14,085,585	41,728,178
Payments on account of corporate income tax	(13,164,685)	(950,333)
Withholding Tax	(18,409)	(6,895)
Corporate Income Tax to pay from previous periods	28,590,934	(11,058,747)
Corporate income tax - Decreee law n.º 66/2016 (Reavaluation Regime)	10,471,202	10,471,202
Other receivables / payables	775,700	1,972,502
	40,740,327	42,155,907

The "Other receivable / payables" relate to the amount of income tax payable by the subsidiary Portucel group located in Belgium.

17. SHARE CAPITAL AND TREASURY SHARES

The Navigator Company is a public company with its shares quoted on the Euronext Lisbon.

As at 31 March 2017, The Navigator Company's share capital was fully subscribed and paid for; it is represented by 717,500,000 shares with nominal value of 1 Euro each, of which 489,973 were held as treasury shares.

These shares were mainly acquired during 2008 and 2012, and the changes in the period were as follows:

	2017		2016
Amounts in Euro	Quant	Value	Quant	Value
Treasury shares held in January	489,973	1,002,084	50,489,973	96,974,466
Acquisitions
January	-	-	-	-
February	-	-	-	-
March	-	-	-	-
Treasury shares held in March	489,973	1,002,084	50,489,973	96,974,466
Remaining quarters	-	-	(50,000,000)	(95,972,382)
Treasury shares held in December			489,973	1,002,084

At the General Meeting held on 19 April 2016, a reduction of the Company's share capital from Euro 767,500,000 to Euro 717,500,000 was approved, through the cancellation of 50,000,000 treasury shares held by the Company, amounting to Euro 50,000,000. The acquisition premium, in the amount of Euro 52,259,101 was deducted to reserves.

The market value of the treasury shares held on 31 March 2017 amounted to Euro 1,845,238 (31 December 2016: Euro 1,599,762), corresponding to a unit value of Euro 3.766 (31 December 2015: Euro 3.265) and the market capitalization amounted to Euro 2,702,105,000 compared to an equity, net of non-controlling interests, of Euro 1,272,415,598.

As at 31 March 2017 and 31 December 2016, the shareholders with significant positions in the Company's share capital were as follows:

	31-03-2017		31-12-2016
Entity	Nr. Of shares	% Equity	Nr. Of shares	% Equity
Seinpar Investments, BV	241,583,015	33.67%	241,583,015	33.67%
Semapa, SGPS, S.A.	256,033,284	35.68%	256,033,284	35.68%
Other Semapa´s Group companies	1,000	0.00%	1,000	0.00%
Zoom Lux S.A.L.R.	15,349,972	2.14%	15,349,972	2.14%
Treasury Shares	489,973	0.07%	489,973	0.07%
Post-employment benefits - BPI Bank	30,412,133	4.24%	30,412,133	4.24%
Other Shareholders	173,630,623	24.20%	173,630,623	24.20%
Total	717,500,000	100.00%	717,500,000	100.00%

18. DEFERRED TAXES

As at 2017 and 2016, the changes in assets and liabilities as a result of deferred taxes were as follows:

Amounts in Euro 1 January 2017 Increases Decreases Equity 31 March 2017 Temporary differences originating deferred tax assets Taxed provisions 1,328,771 3,203,794 - - 4,532,565 Adjustments in fixed assets 110,794,106 - (3,724,173) - 107,069,933 Financial instruments 8,859,457 - - (734,195) 8,125,262 Deferred accounting gains on inter-group transactions 30,432,332 4,024,624 (3,354,958) - 31,101,999 Government grants - Investment incentives 9,308,071 - (364,686) - 8,943,385 160,722,738 7,228,418 (7,443,816) (734,195) 159,773,144 Temporary differences originating deferred tax liabilities Revaluation of fixed assets (37,905) - - - (37,905) Retirement benefits (16,361) (82) - (214) (16,657) Derivative Financial Instruments at fair value (144,728) - - - (144,728) Valuation of biological assets (3,979,927) (69,386) - - (4,049,313) Deferred accounting losses on inter-group transactions (2,640,661) - 2,640,661 - - Government grants (1,270,679) (4,360,665) - 66,879 (5,564,465) Extension of useful lives of tangible fixed assets (209,580,756) (6,252,791) 3,563,869 - (212,269,678) (217,671,019) (10,682,923) 6,204,530 66,665 (222,082,747) Amounts recognised in balance sheet Deferred tax assets 44,198,753 1,987,815 (2,047,050) (201,904) 43,937,615 44,198,753 1,987,815 (2,047,050) (201,904) 43,937,615 Deferred tax liabilities (59,859,532) (2,937,804) 1,706,246 18,333 (61,072,757) (59,859,532) (2,937,804) 1,706,246 18,333 (61,072,757) Income Statement Amounts in Euro 1 January 2016 Increases Decreases Equity 31 December 2016 Temporary differences originating deferred tax assets Taxed provisions 257,908 1,118,830 (47,967) - 1,328,771 Adjustments in fixed assets 99,675,505 32,178,197 (21,059,596) - 110,794,106 Financial instruments 2,263,058 - - 6,596,399 8,859,457 Deferred accounting gains on inter-group transactions 25,439,698 5,078,787 (86,153) - 30,432,332 Valuation of biological assets 1,275,824 - (1,275,824) - - Government grants - Investment incentives 10,766,964 - (1,458,893) - 9,308,071 139,678,958 38,375,814 (23,928,433) 6,596,399 160,722,738 Temporary differences originating deferred tax liabilities Revaluation of fixed assets (6,748,157) - 6,710,252 (37,905) Retirement benefits (2,137,958) (394) 8,949,104 (6,827,114) (16,361) Derivative Financial Instruments at fair value (234,446) - - 89,718 (144,728) Valuation of biological assets - (3,979,927) - (3,979,927) Deferred accounting losses on inter-group transactions - (2,652,963) 12,301 (2,640,661) Government grants (11,991,792) (319,179) 10,535,135 505,157 (1,270,679)		Income Statement
Extension of useful lives of tangible fixed assets (299,964,933) (9,290,037) 99,674,214 (209,580,756)

Fair value of biological assets	-	-	-	-	-
	(321,077,287)	(16,242,499)	125,881,007	(6,232,239)	(217,671,019)
Amounts recognised in balance sheet
Deferred tax assets	38,411,713	10,553,349	(6,580,319)	1,814,010	44,198,753
Tax Incentives for Investment	12,522,612	-	(12,522,612)	-	-
	50,934,325	10,553,349	(19,102,931)	1,814,010	44,198,753
Deferred tax liabilities	(88,296,253)	(4,466,687)	34,617,277	(1,713,868)	(59,859,532)
	(88,296,253)	(4,466,687)	34,617,277	(1,713,868)	(59,859,532)

In the measurement of the deferred taxes as at 31 March 2017 and 31 December 2016, the corporate income tax rate used was 27.5%.

19. PENSIONS AND OTHER POST-EMPLOYMENT BENEFITS

19.1 Introduction

Under the prevailing Social Benefits Regulation, permanent employees of The Navigator Company that chose not to move to the defined contribution plan (13 in 2017 and 2016), together with the retired employees as of the transition date (1 January 2009) and from 1 January 2014, the former employees of Navigator Paper Figueira, Navigator Forest Portugal, RAIZ, Empremédia and Navigator Lusa, are entitled, after retirement in case of disability, to a monthly retirement pension or disability supplement. This is calculated according to a formula, which considers the beneficiary's gross monthly remuneration updated to the work category at the date of retirement and the number of years of service, up to a limit of 30 (limit of 25 to Navigator Paper Figueira, Navigator Forest Portugal, Empremédia, Navigator Lusa and RAIZ), including a survivor pension to the spouse and direct descendants.

To cover this liability, externally managed pension funds were set up, and the funds' assets are apportioned between each of the companies.

In 2010 and 2013, the Navigator Group completed the necessary procedures to convert the defined benefit plans of its subsidiaries The Navigator Company, Navigator Paper Figueira, Navigator Forest Portugal, Empremédia, S.A., RAIZ and Navigator Lusa, to defined contribution plans for the current employees, keeping the acquired benefits of former employees as defined benefit plans. The acquired rights attributable to former employees and retirees in case they leave the company or in case of a job change or retirement remains unchanged.

As at 31 March 2017 and 31 December 2016 the coverage of the companies' liabilities by the assets of the funds was as follows:

Amounts in Euro	31-03-2017	31-12-2016
Past service liabilities
- Active Employees	63,187,589	62,591,075
- Former Employees	16,913,347	17,035,183
- Retired Employees	69,174,485	69,251,641
Market value of the pension funds	(143,973,840)	(142,420,782)
	5,301,580	6,457,116
Insufficient funds/ overfunding	5,301,580	6,457,116

From a total of 3,091 Employees (31 December 2016: 3,111), active employees that benefit from pension funds as at 31 March 2017 amount to 570 (31 December 2016: 570). Former employees and retirees amount to 88 and 443 respectively (2016: 88 and 443).

19.2 Assumptions used in the valuation of the liabilities

The actuarial studies carried out by an independent entity for the purpose of determining the accumulated liabilities as at 31 March 2017 and 31 December 2016 were based on the following assumptions:

			Real outcome
	31-03-2017	31-12-2016	31-03-2017	31-12-2016
Disability Table	EKV 80	EKV 80	-	-
Mortality Table	TV 88/90	TV 88/90	-	-
Wage grow th rate	1.00%	1.00%	1.00%	1.00%
Technical interest rate	2.00%	2.00%	-	-
Return rate on plan assets	2.00%	2.00%	1.59%	3.74%
Pensions grow th rate	0.75%	0.75%	0.75%	0.75%

The discount rates used in this study were selected over the return rates of a bonds' portfolio, namely Markit iBoxx Eur Corporates AA 10+. From the portfolio, bonds with adequate maturity and rating were selected according to the amount and period cash outflows that will occur in regard to the payment of the benefits to employees.

The following table presents the five-year historical information on the present value of liabilities, the market value of the funds, non-financed liabilities and net actuarial gains/ (losses). This information from 2012 to 2016 and in the three-month period ended 31 March 2017, was as follows:

Amounts in Euro	2012	2013	2014	2015	2016	03_2017
Present value of liabilities	122,365,002	65,657,042	70,188,472	139,312,363	148,877,899	149,275,420
Fair value of plan assets	117,050,324	69,558,535	71,666,181	143,067,688	142,420,782	143,973,840
Surplus/(deficit)	(5,314,678)	3,901,493	1,477,709	3,755,326	(6,457,117)	(5,301,580)

19.3 Retirement and pension supplements

The movements in liabilities with retirement and pension plans in 2017 and 2016 were as follows:

Amounts in Euro	2017	2016
Opening Balance	148,877,899	139,312,363
Changes in assumptions	245,202	238,289
Individual Accounts	-	(1,990,100)
Costs recognised in the Income Statement	1,244,163	1,367,175
Pensions paid	(1,091,843)	(1,195,553)
As of 31 March	149,275,420	137,732,174
Remaining quarters		11,145,725
As of 31 December		148,877,899

The funds set up to cover the above mentioned liabilities had the following movement in 2017 and 2016:

Amounts in Euro	2017	2016
Opening balance	142,420,782	143,067,688
Expected return in the period	1,033,109	882,332
Actuarial gains/(losses) (difference betw een actual and expected returns)	1,611,791	291,568
Pensions paid	(1,091,843)	(1,195,553)
Other		(2,001,400)
As of 31 March	143,973,840	141,044,636
Remaining quarters		1,376,146
As of 31 December		142,420,782

Assuming assets under the defined contribution of € 52.2 million, pension fund assets are managed by Schroders (25%), BlackRock (23%), Credit Suisse (25%) and BMO (27%), as detailed below:

Amounts in Euro	2017	2016
Defined Benefit:
Ocidental - Pensions	179,002	509,857
Schroders	49,334,386	48,380,746
BlackRock	45,969,841	45,254,916
Account 1 - Credit Suisse	48,490,611	48,275,263
Total Defined Benefit	143,973,840	142,420,782
Defined Contribution:
Defensive Sub-Fund	7,939,723	9,592,386
Conservative Sub-Fund	24,672,436	26,890,076
Dynamic Sub-Fund	14,702,409	14,673,272
Agressive Sub-Fund	4,889,111	4,739,254
Total Defined Contribution	52,203,679	55,894,988
	196,177,519	198,315,770

The detail of the fund's assets as at 31 March 2017 and 31 December 2016 was as follows:

Amounts in Euro	31-03-2017	31-12-2016
Bonds	100,602,637	91,637,090
Shares	37,664,588	31,060,558
Liquidity	5,527,631	19,213,277
Other short-term applications	164,503	495,530
Real Estate	14,481	14,327
	143,973,840	142,420,782

Of the assets that compose the fund, all the shares and obligations presented are quoted on the regulated market.

As at 31 March 2017 and 31 December 2016, the effect in the income statement of these plans was as follows:

	3 months	3 months
Amounts in Euro	31-03-2017	31-03-2016
Defined Benefit Plans
Current services	534,513	525,401
Interest expenses	709,650	841,774
Return of the plan assets	(1,033,109)	(882,332)
Other	6,962	15,996
	218,015	500,840
Defined Contribution Plans
Contribution to the plan	295,091	275,951
	295,091	275,951
Costs for the period	513,106	776,791

20. PROVISIONS

At 2017 and 2016, changes in provisions were as follows:

Amounts in Euro	Legal Claims	Tax Claims	Other	Total
Amount as of 1 January 2016	2,626,049	56,214,594	364,951	59,205,593
Increases	-	-	1,118,830	1,118,830
Reversals	(965)	-	-	(965)
Transfers	(1,102)	(5,800,629)	-	(5,801,731)
Amount as of 31 March 2016	2,623,982	50,413,965	1,483,781	54,521,726
Increases	1,853,060	1,118,830	(1,118,830)	1,853,060
Reversals	(2,550,149)	-	-	(2,550,149)
Transfers	373,451	(22,784,331)	(364,951)	(22,775,831)
Amount as of 31 December 2016	2,300,344	28,748,464	-	31,048,808
Increases	-	1,736	-	1,736
Reversals		-	-	-
Transfers	-	(2,664,625)	-	(2,664,625)
Amount as of 31 March 2017	2,300,344	26,085,575	-	28,385,919

The amount of provisions stated as "Tax claims" results from the Navigator Group's judgement at the date, about the potential disagreement with tax authorities, considering most recent updates about this events.

21. INTEREST-BEARING LIABILITIES AND OTHER LIABILITIES

21.1 Interest-bearing liabilities

As at 31 March 2017 and 31 December 2016, non-current interest-bearing debt comprised the following:

31-03-2017
Amounts in Euro	Available amount	Outstanding amount	Maturity	Interest rate	Current	Non-current
Bond Loans
Portucel 2015-2023	200,000,000	200,000,000	September 2023	Variable rate indexed to euribor	-	200,000,000
Portucel 2016-2021	100,000,000	100,000,000	May 2021	Flat rate	-	100,000,000
Portucel 2016-2021	45,000,000	45,000,000	August 2021	Variable rate indexed to euribor	-	45,000,000
Commisions		(444,300)				(444,300)
European Bank of Investment
Loan BEI Ambiente A	18,571,429	18,571,429	December 2018	Variable rate indexed to euribor	9,285,714	9,285,714
Loan BEI Ambiente B	15,000,000	15,000,000	June 2021	Variable rate indexed to euribor	3,333,333	11,666,667
Loan BEI Energia	56,666,667	56,666,667	December 2024	Variable rate indexed to euribor	7,083,333	49,583,333
Loan BEI Cacia	25,000,000	25,000,000	May 2028	Flat rate	-	25,000,000
Commercial Paper Program
Commercial Paper Program 125M	125,000,000	125,000,000	May 2020	Variable rate indexed to euribor	-	125,000,000
Commercial Paper Program 70M	70,000,000	70,000,000	May 2021	Flat rate	-	70,000,000
Commercial Paper Program 50M	50,000,000	50,000,000	November 2017	Variable rate indexed to euribor	50,000,000	-
Commercial Paper Program 75M	75,000,000	-	July 2020	Variable rate indexed to euribor	-	-
Commercial Paper Program 50M	50,000,000	-	July 2020	Variable rate indexed to euribor	-	-
Commercial Paper Program 100M	100,000,000	-	March 2020	Variable rate indexed to euribor	-	-
Commissions		(1,958,056)				(1,958,056)
Bank Lines
Short term line 20M	20,450,714	-			-	-
Reimbursable grants
Reimbursable grants	-	4,237,695				4,237,695
		707,073,435			69,702,381	637,371,054

31-12-2016
Amounts in Euro	Available amount	Outstanding amount	Maturity	Interest rate	Current	Non-current
Bond Loans
Portucel 2015-2023	200,000,000	200,000,000	September 2023	Variable rate indexed to euribor	-	200,000,000
Portucel 2016-2021	100,000,000	100,000,000	May 2021	Flat rate	-	100,000,000
Portucel 2016-2021	45,000,000	45,000,000	August 2021	Variable rate indexed to euribor	-	45,000,000
Commisions		(560,476)				(560,476)
European Bank of Investment
Loan BEI Ambiente A	18,571,429	18,571,429	December 2018	Variable rate indexed to euribor	9,285,714	9,285,714
Loan BEI Ambiente B	15,000,000	15,000,000	June 2021	Variable rate indexed to euribor	3,333,333	11,666,667
Loan BEI Energia	56,666,667	56,666,667	December 2024	Variable rate indexed to euribor	7,083,333	49,583,333
Loan BEI Cacia	25,000,000	25,000,000	May 2028	Flat rate	-	25,000,000
Commercial Paper Program
Commercial Paper Program 125M	125,000,000	125,000,000	May 2020	Variable rate indexed to euribor	-	125,000,000
Commercial Paper Program 70M	70,000,000	70,000,000	May 2021	Flat rate	-	70,000,000
Commercial Paper Program 50M	50,000,000	50,000,000	November 2017	Variable rate indexed to euribor	50,000,000	-
Commercial Paper Program 75M	75,000,000	-	July 2020	Variable rate indexed to euribor	-	-
Commercial Paper Program 50M	50,000,000	-	July 2020	Variable rate indexed to euribor	-	-
Commercial Paper Program 100M	100,000,000	-	March 2020	Variable rate indexed to euribor	-	-
Commissions		(2,109,198)				(2,109,198)
Bank Lines
Short term line 20M	20,450,714	-			-	-
Reimbursable grants
Reimbursable grants	-	5,692,866				5,692,866
		708,261,286			69,702,381	638,558,905

On 13 May 2016, The Navigator Company paid out the remaining Portucel Senior Notes 5.375% bonds, anticipating its maturity from 2020, and amounting to Euro 150,000,000, in addition to the Euro 200,000,000 already repaid in September 2015. Simultaneously, the company contracted new financing lines, namely a bond loan of Euro 100,000,000 and a commercial paper of Euro 70,000,000, both with a maturity of five years, and contracted a loan with the European Investment Bank amounting to Euro 25,000,000, which matures in 2028. In the second half of 2016, the company contracted a new bond loan amounting to Euro 45 million for a period of 5 years and a new short-term commercial paper program amounting to Euro 50 million.

On 31 March 2017, the average cost of debt, considering interest rate, annual fees and hedging operations, was 1.8% (31 March 2016: 2.3%).

The repayment terms for the loans recorded as non-current are detailed as follows:

Amounts in Euro	31-03-2017	31-12-2016
Non-current
1 to 2 yeas	19,702,382	19,702,382
2 to 3 years	11,805,556	11,805,556
3 to 4 years	138,194,445	138,194,445
4 to 5 years	230,765,473	232,220,642
More than 5 years	239,305,554	239,305,554
	639,773,410	641,228,579

On 31 March 2017 the Navigator Group had commercial paper programs and credit lines available but not used of Euro 245,450,714 (31 December 2016: Euro 245,450,714).

As at 31 March 2017 and 31 December 2016, current interest-bearing debt was as follows:

Amounts in Euro	31-03-2017	31-12-2016
Interest-bearing liabilities
Non-current	637,371,054	638,558,905
Current	69,702,381	69,702,381
	707,073,435	708,261,286
Cash and cash equivalents
Cash	94,808	82,184
Short term bank deposits	49,892,499	15,535,486
Other	40,521,112	51,923,918
	90,508,419	67,541,588
Interest-bearing net debt	616,565,016	640,719,698

The Navigator Group has a strict policy of approval of its financial counterparts, limiting its exposure according to an individual risk analysis and previously approved plafonds. Beyond these limits, there is also a diversification policy applied to the number of the Group's counterparties. On 31 March 2017 the Navigator Group had no short term deposits in financial institutions. The amount of Euro 40,521,112 shown as other cash investments is invested in a portfolio of bonds from issuers with adequate rating (31 December 2016: Euro 39,992,710).

The evolution of the Navigator Group's net debt in the three months periods ended 31 March 2017 and 2016 was as follows:

Amounts in Euro	3 months 31-03-2017	3 months 31-03-2016	Remaining quarters	12 months 2016
As of 1 January	640,719,698	654,491,758	-	654,491,758
Expenses w ith the issue of bond loans	2,402,355	-	2,669,675	2,669,675
Interest paid	3,511,386	3,443,054	21,072,827	24,515,881
Interest received	(1,009,615)	(651,475)	(4,254,737)	(4,906,212)
Dividens paid and reserves distributed	-	-	170,004,583	170,004,583
Acquisition of treasury shares	-	-	-	-
Receipts related to investment activities	-	-	(4,438,520)	(4,438,520)
Payments related to acquisition of subsidiaries	-	-	-	-
Payments related to investment activities	24,858,834	26,240,968	54,944,309	81,185,277
Accumulated exchange rate diferences	(3,590,207)	(447,825)	11,209,120	10,761,295
Dividend receipts	-	-	-	-
Net receipts of operating activities	(50,327,435)		(46,628,241) (246,935,798) (293,564,039)
Liquid debt variation	(24,154,682)	(18,043,518)		(13,772,060)
	616,565,016	636,448,240		640,719,698

Also, the movements in the Navigator Group's net debt in 31 March 2017 and 2016 were as follows:

			Remaining
Amounts in Euro	31-03-2017	31-03-2016	quarters	31-12-2016
Net profit for the year	34,842,589	44,623,176	172,206,603	216,829,779
Depreciation, amortization and impairment losses	38,143,318	35,980,113	130,681,010	166,661,123
Net changes in provisions	1,736	1,117,864	(697,088)	420,776
	72,987,643	81,721,154	302,190,524	383,911,678
Change in w orking capital	(34,670,679)	(7,966,323)	(17,715,621)	(25,681,944)
Variation in the consolidation scope			-	-
Acquisitions of tangible fixed assets	(14,810,434)	(44,770,427)	(96,095,630)	(140,866,057)
Dividens paid and reserves distributed	-	-	(170,004,583)	(170,004,583)
Acquisition of treasury shares	-	-	-	-
Net changes in post-employment benefits	1,155,537	(162,724)	(9,537,296)	(9,700,020)
Other changes in equity	5,449,116	1,452,686	(23,593,337)	(22,140,651)
Expenses w ith the issue of bond loans	267,319	2,654,752	(528,933)	2,125,819
Other	(6,223,821)	(14,885,599)	11,013,417	(3,872,182)
Change in net debt (Free Cash Flow)	24,154,682	18,043,519	(4,271,459)	13,772,060

21.2 Other Liabilities

As at 31 March 2017 and 31 December 2016, the other non-current liabilities were as follows:

Amounts in Euro	31-03-2017	31-12-2016
Non-current
Grants	29,760,090	31,202,382
Equipment	1,640,936	2,098,759
	31,401,026	33,301,140

The amount of grants corresponds to the investment grants received in order to support the investment projects carried out by the group in the past, with regard to its non-current component.

Finance leases – IFRIC 4

As at 31 March 2017 and 31 December 2016, the Navigator Group showed the following equipment under finance lease plans recognized under IFRIC 4:

		31-03-2017
	Acquisition	Accumulated	Net book
Amounts in Euro	Value	depreciation	value
Equipment - Omya	14,000,000	(11,351,352)	2,648,648
	14,000,000	(11,351,352)	2,648,648
		31-12-2016
	Acquisition	Accumulated	Net book
Amounts in Euro	Value	depreciation	value
Equipment - Omya	14,000,000	(10,972,973)	3,027,027
	14,000,000	(10,972,973)	3,027,027

The non-current and current liabilities related to those equipment are recorded under "Other liabilities" and "Payables and other current liabilities", respectively, and are detailed as follows:

Amounts in Euro	31-03-2017	31-12-2016
Non-current
Equipment	1,664,804	2,098,759
Current (Note 22)	1,771,221	1,771,221
	3,436,025	3,869,980

In 2009, with the launch of the new paper mill in Setubal, the Navigator Group recognized as a finance lease the cost of the Precipitated Calcium Carbonate production unit, installed by Omya, S.A. at the industry site in Setúbal for the exclusive use of the new mill. This contract foresees the transfer of the assets' ownership to About The Future, S.A., upon its termination, in 2019.

22. PAYABLES AND OTHER CURRENT LIABILITIES

As at 31 March 2017 and 31 December 2016, "Payables and other current liabilities" were detailed as follows:

Amounts in Euro	31-03-2017	31-12-2016
Accounts payable to suppliers	146,470,632	145,702,873
Accounts payable to fixed assets suppliers	7,577,902	13,929,955
Accounts payable to fixed assets suppliers - leases (Note 21)	3,997,866	1,771,221
Accounts payable - Related parties	849,611	1,281,101
Derivative financial instruments	4,251,306	7,726,140
Other creditors - CO2 emissions	5,979,305	4,816,632
Sales Commissions	256,830	245,291
Tax Consolidation (Semapa)	7,431,351	7,296,382
Other creditors	1,500,326	1,268,749
Accrued costs	66,278,746	65,409,507
Deferred income	8,227,011	6,383,433
	252,820,886	255,831,284

On 31 March 2017 and 31 December 2016, accrued costs and deferred income were detailed as follow:

Amounts in Euro	31-03-2017	31-12-2016
Accrued costs
Payroll expenses - Annual Performance Bonus	19,029,519	14,884,168
Payroll expenses - Other	25,256,219	22,125,937
Interests payable, including compensatory interest	2,665,926	3,308,196
Rate of w ater resources	1,834,313	1,442,101
Others	17,492,769	23,649,104
	66,278,746	65,409,506
Deferred income
Government grants	5,916,385	5,926,517
Grants - CO2 emission licenses	1,733,671	(28,650)
Other	576,955	485,566
	8,227,011	6,383,433

As at 31 March 2017 and 31 December 2016, deferred income on government grants was detailed as follows:

Amounts in Euro	31-03-2017	31-12-2016
AICEP investment contracts (Note 9)
Enerpulp, S.A.	8,359,106	8,746,163
Navigator Pulp Cacia, S.A.	14,558,209	15,102,403
Navigator Pulp Setúbal, S.A.	830,150	897,543
Navigator Pulp Figueira, S.A.	8,943,765	9,308,451
Navigator Parques Industriais, S.A.	2,151,583	2,166,423
Navigator Paper Figueira, S.A.	241,402	276,120
	35,084,216	36,497,103
Other
Raiz	8,327	9,933
Viveiros Aliança, SA	583,932	621,863
	592,259	631,796
	35,676,475	37,128,899

During 2017 and 2016, the movements in Grants – CO2 emissions were as follows:

Amounts in Euro	2017	2016
Grants - CO2 emissions
Opening balance	-	-
Increase	2,570,570	4,280,610
Utilization	(834,779)	(2,123,366)
Amount as of 31 March	1,735,791	2,157,244
Remaining quarters		(2,157,244)
Amount as of 31 December		-

This amount regards the CO2 emission allowances granted for free to several group companies (2017: 479,584 and 504,595 for 2016).

23. FINANCIAL ASSETS AND LIABILITIES

As its activities are exposed to a variety of financial and operational risk factors, the Navigator group adopts a proactive approach to risk management, as a way to mitigate the potential adverse effects associated with those risks, namely the risk arising from the price of pulp, foreign exchange rates risk and interest rate risk.

23.1 Financial instruments held for trading

As at 31 March 2017 and 31 December 2016, the fair value of derivative financial instruments was as follows:

		31-03-2017
Amounts in Euro	Notional	Positive	Negative	Net	Net
Trading
Foreign Exchange Forw ards	71,310,006	-	(92,283)	(92,283)	(1,943,402)
	71,310,006	-	(92,283)	(92,283)	(1,943,402)

The Navigator Group has a currency exposure on sales invoiced in foreign currencies, namely US dollars (USD) and pounds sterling (GBP). As the Navigator Group's financial statements are translated into Euro, it runs an economic risk on the conversion of these currency flows to the Euro. The Navigator Group is also obliged, albeit to a lesser degree, to make certain payments in those same currencies which, for currency exposure purposes, act as a natural hedge. Thus, the hedge is aimed at safeguarding the net value of items in the statement of financial position denominated in foreign currencies against the respective currency fluctuations.

The hedging instruments used in this operation are foreign exchange forward contracts covering the net exposure to the foreign currencies at the time the invoices are issued, for the same maturity dates and the same amounts of these documents in such a way as to fix the exchange rate associated with the sales. The nature of the risk hedged is change in the carrying amount of on sales and purchases expressed in foreign currencies due to foreign currency fluctuations. At the end of each month, customer and suppliers' balances expressed in foreign currency are updated, with the gain or loss offset against the fair value change of the forwards negotiated.

The net fair value of trading instruments – forwards – as at 31 March 2017 is Euro 92,283 (31 March 2016: Euro 1,943,402).

23.2 Derivative financial instruments designated as hedging instruments

As at 31 March 2017 and 31 December 2016, the fair value of derivative financial instruments designated as hedging instruments was as follows:

	31-03-2017				31-12-2016
Amounts in Euro	Currency	Notional	Positive	Negative	Net	Net
Hedging
Foreign Exchange Forw ards (net investment)	USD	25,050,000	11,528		11,528	(249,275)
Foreign Exchange Forw ards (future sales)	USD	347,000,000	1,283,750	(338,659)	945,091	901,050
Interest rate sw ap for comercial Paper issued	EUR	125,000,000		(801,962)	(801,962)	(976,674)
Sw aps used to hedge the exposure to changes in the interest rate	EUR	200,000,000		(3,018,401)	(3,018,401)	(4,556,790)
		697,050,000	1,295,278	(4,159,023)	(2,863,744)	(4,881,689)

Net investment

The Navigator Group hedges the economic risk associated with exposure to the exchange rate of its participation in Navigator North America. To this end, the Group has entered into a foreign exchange forward maturing in May 2017, with a notional outstanding of USD 25,050,000.

This instrument is designated as an hedging of the investment in the North America subsidiary of the Group, with fair value changes recognized in comprehensive income. As at 31 March 2017, the fair value reserve associated with this coverage was Euro 4,093,255 (31 December 2016: Euro 4,354,058).

Cash flow hedge – Exchange rate risk EUR/USD

The Navigator Group makes use of derivative financial instruments in order to limit the net exchange risk associated with sales and future purchases estimated at USD.

In this context, during the last quarter of 2016, the Navigator Group contracted several financial structures in order to partially hedge its exposure to foreign currency on the estimated sales in USD for 2017. Derivative financial instruments contracted were options,

globally amounting to USD 200 million, which reach their maturity on 31 January 2017. In 2017, the financial instrument was reinforced with an additional contracting of USD 80 million through Options and Zero Cost Collar, with maturity until January 2018.

Cash flow hedge – Interest Rate

The Navigator Group hedges future interest payments associated with commercial paper issues by hiring an interest rate swap, which pays a fixed rate and receives a floating rate. This instrument is designated as hedges of cash flows from the commercial paper program and the bond loan. The credit risk is not part of the hedging relationship.

This hedge is designated for the entire life of the hedging instruments.

23.3 Credit and receivables

These amounts are initially recognized at fair value, and subsequently measured at amortized cost less any impairment losses identified during the course of the credit risk analysis of the credit portfolios held (Note 16).

23.4 Other financial liabilities

These items are recognized at their amortized cost, corresponding to the value of the respective cash flows discounted at the effective interest rate associated with each of the liabilities (Note 22).

23.5 Net gains on financial assets and liabilities

The effect in net income of the period of the financial assets and liabilities held is detailed as follows:

Amounts in Euro	31-03-2017	31-03-2016
Gain/ (loss) on loans and receivables	(2,965,585)	(962,477)
Gains / (losses) on financial instruments - hedging	(767,144)	(376,603)
Gains / (losses) on financial instruments - trading	1,851,119	2,256,677
Interest Income:
From deposits and other receivables	601,984	651,479
Interest expense:
Financial liabilities measured at amortized cost	(2,420,619)	(3,673,284)
Other	(236,418)	(611,421)
	(3,936,664)	(2,715,629)

The fair value of derivative financial instruments is included in "Receivables and other current assets" (Note 16) and "Payables and other current liabilities" (Note 23).

The movement in the balances recognized in the statement of financial position (Notes 16 and 23) related with financial instruments was as follows:

	Change in fair value (Trading)	Change in fair value (Hedging)	Total
Amount as of 1 January 2016	(359,770)	1,414,365	1,054,596
Maturity (Note 10)	(1,525,965)	(2,691,337)	(4,217,302)
Increase/decrease in fair value	(57,667)	(3,604,717)	(3,662,384)
Amount as of 31 December 2016	(1,943,402)	(4,881,689)	(6,825,091)
Maturity (Note 10)	1,851,119	(767,144)	1,083,975
Increase/decrease in fair value	-	2,785,088	2,785,088
Amount as of 31 March 17	(92,283)	(2,863,745)	(2,956,027)

As at 31 March 2017 and 31 December 2016, the derivative financial instruments previously summarized had the following maturities:

					31-03-2017	31-12-2016
		Nominal value	Maturity	Type	Fair Value	Fair Value
Exchange rate forw ards	USD	62,300,000	15-ago-17	Held for trading	(139,128)	(1,778,650)
	GBP	10,680,000	10-ago-17	Held for trading	46,845	(164,752)
Future purchase of C02 emission licences	EUR	3,328,500	16-mar-20	Held for trading	-	-
					(92,283)	(1,943,402)
Foreign Exchange forw ards - Net Equity	USD	25,050,000	30-mai-17	Hedging Instruments	11,528	(249,275)
Hedging for future sales	USD	347,000,000	31-jan-18	Hedging Instruments	945,091	901,050
Interest rate sw ap for comercial paper issued	EUR	125,000,000	26-mai-20	Hedging Instruments	(801,962)	(976,674)
Interest rate sw ap for loans	EUR	200,000,000	22-set-23	Hedging Instruments	(3,018,401)	(4,556,790)
					(2,863,744)	(4,881,689)
					(2,956,027)	(6,825,091)

24. BALANCES AND TRANSACTIONS WITH RELATED PARTIES

The following is a breakdown of related parties' balances as at 31 March 2017 and 31 December 2016:

	31-03-2017			31-12-2016
	Assets		Liabilities	Assets		Liabilities
			Other creditors			Other creditors
Amounts in Euro	Customers	Payables	(fiscal consolidation)	Customers	Payables	(fiscal consolidation)
Semapa - Soc. De Investimento e Gestão, SGPS, S.A.	-	862,982	7,431,351	-	909,341	7,296,382
Secil - Companhia Geral Cal e Cimento, S.A.	14,760	329	-	10,455	370,019	-
Secil Britas, S.A.	-	4158.5	-	-	8,731	-
Enermontijo, S.A.	48,489	-	-	66,771	6,708	-
Enerpar, SGPS, Lda.	-	-	-	-	-	-
Cimilonga - Imobiliária, S.A.	-	(13,700)	-	-	(13,700)	-
	63,249	849,611	7,431,351	77,226	1,281,099	7,296,382

On 31 March 2017 and 2016, transactions with related parties were as follows:

	31-03-2017		31-03-2016
Amounts in Euro	Sales and services rendered	Consumed materials and services	Sales and services rendered	Consumed materials and services
Semapa - Soc. De Investimento e Gestão, SGPS, S.A.	-	3,077,807	571	1,844,645
Secil - Companhia Geral Cal e Cimento, S.A.	18,927	301,414	18,000	328
Secil Britas, S.A.	-	8,317	-	12,116
Enermontijo, S.A.	42,957	65,445	293,999	47,167
Enerpar, SGPS, Lda.	-	58,964	-	85,398
Cimilonga - Imobiliária, S.A.	-	65,653	-	86,060
	61,884	3,577,602	312,570	2,075,714

On 1 February 2013, a contract to render administrative and management services was signed between Semapa - Sociedade de Investimentos e Gestão, SGPS, S.A. and Navigator Group, establishing a remuneration system based in equal criteria for both parties in the continuous cooperation and assistance relationships, that meets the rules applicable to commercial relationships between group companies.

In March 2015, The Navigator Company celebrated an agreement with Enerpar SGPS, Lda. under which paid a fee related to the promotion of its pellets project located in the United States of America, in particular for having defined and deepened several studies and initiatives including, amongst others, market analysis, real estate prospection, public entities negotiation, tax and corporate planning, projection of manufacturing facilities, equipment commissioning and customer acquisition, coordinating all these aspects in a single project.

Under the same agreement, Enerpar SGPS, Lda. will also render technical advisory services including engineering project support, coordination of work, equipment commissioning, factory ramp up, guaranteeing quality in the final product, supporting commercial contract management and training to be provided to the sales team that will be responsible to manage the customers they obtained.

Enerpar SGPS, Lda. is a company that manages holdings in the renewable energy sector, holding the full equity capital of Enermontijo, SA, which has been dedicated to the productions of forest-based wood pellets for about nine years, annually producing Tons 80,000 and to whom the Group sells biomass. Enerpar SGPS, Lda. is a related party as its shareholders have family relations with a non-executive Board Member of the Group.

It was also celebrated a lease agreement between Navigator Paper Figueira, S.A. and Cimilonga - Imobiliária, S.A. under which an office was leased in Semapa headquarters' building, in Lisbon.

25. NUMBER OF EMPLOYEES

As at 31 March 2017 the number of employees working for the Navigator Group Companies was 3,091 (31 December 2016: 3,111), and were distributed by business segment as follows:

	MARKET PULP	UWF PAPER	TISSUE PAPER	OTHER	TOTAL
Industrial / Forest site
Setúbal	-	968	-	241	1,209
Cacia	232	-	2	62	296
Figueira da Foz	-	878	-	84	962
Vila Velha de Ródão	-	-	188	-	188
Greenw ood	-	-	-	66	66
Moçambique	-	-	-	235	235
	232	1,846	190	688	2,956
Commercial companies
Europe	6	119	-	-	125
America	-	9	-	-	9
Overseas	-	1	-	-	1
	6	129	-	-	135
	238	1,975	190	688	3,091

26. COMMITMENTS

26.1 Commitments towards third-parties

As at 31 March 2017 and 31 December 2016, the Navigator Group had presented the following bank guarantees to the following entities:

Amounts in Euro	31-03-2017	31-12-2016
Spanish state tax agency	1,033,204	1,033,204
Customs clearence	1,835,250	2,868,454
Simria	338,829	338,829
IAPMEI	5,018,156	5,209,320
Other	718,675	677,601
	8,944,114	10,127,408

The guarantees in favor of IAPMEI were provided under the investment contracts celebrated between the Portuguese State and Navigator Pulp Cacia, S.A. (Euro 2,438,132) and Navigator Tissue Ródão, S.A. (Euro 2,580,023), as per the terms and conditions defined in the Payment Standard applicable to projects approved under QREN Incentive Systems.

26.2 Purchase commitments

In addition to the commitments described in the preceding note, purchase commitments assumed with suppliers at 31 March 2017 amounted to Euro 106,375,873 and referred to capital expenditure on Property, plant and equipment. In 31 December 2015 these commitments amounted to Euro 75,321,090.

On 31 March 2017 and 31 December 2016, the commitments relating to operating lease contracts comprised the following:

Amounts in Euro	31-03-2017	31-12-2016
Settlement date
2017	1,292,448	1,676,818
2018	1,383,447	1,296,734
2019	1,009,608	911,759
2020	525,448	431,452
2021	125,467	59,830
Later	64,955	7,543
	4,401,374	4,384,136

As at 31 March 2017 and 31 December 2016, the undiscounted commitments relating to external group forestry land rents comprised the following:

Amounts in Euro	31-03-2017	31-12-2016
2017	3,000,005	4,068,372
2018	3,859,817	3,757,512
2019	3,704,341	3,600,680
2020	3,385,726	3,232,701
2021	3,196,077	3,112,802
Later	37,261,986	35,720,215
	54,407,953	53,492,281

27. CONTINGENT ASSETS

27.1 Tax matters

27.1.1Public Debt Settlement Fund

According to Decree-Law no. 36/93 of 13 February, the tax debts of privatized companies relating to periods prior to the privatization date (in the case of The Navigator Company, 25 November 2006) are the responsibility of the Public Debt Settlement Fund. The Navigator Company submitted an application to the Public Debt Settlement Fund on 16 April 2008 requesting the payment by the State of the tax debts raised by the tax authorities for periods before that date. On 13 December 2010, The Navigator Company presented a new application requesting the payment of debts settled by the tax authorities regarding 2006 and 2003. This application was supplemented on 13 October 2011, with the amounts already paid and uncontested regarding these debts, as well as with expenses directly related to them, pursuant to court ruling dated 24 May 2011 (Case No. 0993A/02), which confirmed the company's position regarding the enforceability of such expenses. In this context, the aforementioned Fund is liable for Euro 30,375,727, detailed as follows:

		Requested	1st Refund	Decrease due to	Processes decided in favour	Outstanding
Amounts in Euro	Period	amounts		RERD	of the Group
Proceedings confirmed in court
VAT - Germany	1998-2004	5,850,000	(5,850,000)	-	-	-
Corporate Income Tax	2001	314,340	-	-	(314,340)	-
Corporate Income Tax	2002	625,033	(625,033)	-	-	-
Corporate Income Tax	2002	18,923	-	-	-	18,923
VAT	2002	2,697	(2,697)	-	-	-
Corporate Income Tax	2003	1,573,165	(1,573,165)	-	-	-
Corporate Income Tax	2003	182,230	(157,915)	-	(24,315)	-
Corporate Income Tax	2003	5,725,771	-	-	-	5,725,771
Corporate Income Tax (Withheld)	2004	3,324	-	-	-	3,324
Corporate Income Tax	2004	766,395	-	-	(139,023)	627,372
Stamp Duty	2004	497,669	-	-	(497,669)	-
Corporate Income Tax (Withheld)	2005	1,736	(1,736)	-	-	-
Expenses		314,957	-	-	-	314,957
		15,876,240	(8,210,546)	-	(975,347)	6,690,347
Proceedings not confirmed in court
VAT	2003	2 509 101	-	-	-	2 509 101
Corporate Income Tax	2005	11 754 680	-	(1 360 294)	-	10 394 386
Corporate Income Tax	2006	11 890 071	-	(1 108 178)	-	10 781 893
		26 153 852	-	(2 468 472)	-	23 685 380
		42,030,092	(8,210,546)	(2,468,472)	(975,347)	30,375,727

27.1.2 Taxes paid in litigation

At 31 March 2017, the additional tax assessments that are paid and disputed by the group are summarized as follows:

	37,108,934
Aggregate corporate income tax 2012	4,422,958
Aggregate corporate income tax - result of the income tax calculation - 2011	6,647,918
Aggregate corporate income tax - result of the income tax calculation - 2010	4,984,425
Aggregate corporate income tax 2006	8,150,146
Aggregate corporate income tax 2005	10,394,386
VAT 2003	2,509,101
Amounts in Euro

27.2 Non-tax matters 27.2.1 Public Debt Settlement Fund

In addition to the tax matters described above, a second request to the Public Debt Settlement Fund was submitted on 2 June 2010, which called for the reimbursement of various amounts, totaling Euro 136,243,939. These amounts regard adjustments in the financial statements of the group after its privatization that had not been considered in formulating the price of its privatization as they were not included in the documentation made available for consultation by the bidders.

On 24 May 2014 the Court denied the Navigator Group's proposal to present testimony evidence, alternatively proposing written submissions. On 30 June 2014, The Navigator Group appealed against this decision, but continuously presented written evidence. The Court subsequently confirmed the Navigator Group's views on this matter.

27.2.2 Infrastructure enhancement and maintenance fee

Under the licensing process nº 408/04 related to the new paper mill project, the Setubal City Council issued a settlement note to The Navigator Company regarding an infrastructure enhancement and maintenance fee ("TMUE ") amounting to Euro 1,199,560, with which the company disagrees.

This situation regards the amount collected under this levy in the licensing process mentioned above, for the construction of a new paper mill in the industrial site of Mitrena, Setúbal. The Navigator Company disagrees with the amount charged and filled an administrative claim against it on 25 February 2008 (request 2485/08), followed by an appeal to Court against the rejection of the claim on 28 October 2008. At 3 October 2012 this claim had an adverse decision, and in 13 November 2012, The Navigator Company appealed. This lawsuit is awaiting the decision of TCA since 4 July 2013.

28. SUBSEQUENT EVENTS

By decision of the Executive Committee of May 2017, a defined contribution pension plan was created in the current year, for all employees of the subsidiaries About The Future, S.A., Atlantic Forests, S.A. Eucaliptusland, S.A., Navigator Added Value, S.A., Navigator Paper Setúbal, S.A., Navigator Pulp Figueira, S.A., Navigator Pulp Cacia, S.A., Navigator Tissue Ródão, S.A. and Viveiros Aliança, S.A.. Each of the companies will contribute to these funds with an amount equivalent to 1% of the base remuneration of each employee, with effects from 1 January 2017.

29. COMPANIES INCLUDED IN THE CONSOLIDATION

		Share equity owned
Company	Head office		Directly Indirectly	Total
Parent-Company:
The Navigator Company, S. A.	Setúbal	-	-	-
Subsidiaries:
Navigator Paper Figueira, S.A.	Figueira da Foz	100,00	-	100,00
Navigator Parques Industriais, S.A.	Setúbal	100,00	-	100,00
Navigator Products & Tecnology, S.A.	Setúbal	100,00	-	100,00
Enerpulp – Cogeração Energética de Pasta, S.A.	Setúbal	100,00	-	100,00
About Balance - SGPS, S.A.	Lisboa	100,00	-	100,00
Navigator Tissue Cacia, S.A.	Aveiro	-	100,00	100,00
Navigator Tissue Rodão, SA	Vila Velha de Ródão	-	100,00	100,00
Navigator Internacional Holding SGPS, S.A.	Setúbal	100,00	-	100,00
Portucel Moçambique - Sociedade de Desenvolvimento Florestal e Industrial, Lda	Moçambique	20,05	60,15	80,20
Colombo Energy Inc.	EUA	25,00	75,00	100,00
Portucel Finance, Zoo	Polónia	25,00	75,00	100,00
Navigator Africa, SRL	Itália	-	100,00	100,00
Navigator Floresta, SGPS, S.A.	Setúbal	100,00	-	100,00
Sociedade de Vinhos da Herdade de Espirra - Produção e Comercialização de Vinhos, S.A.	Setúbal	-	100,00	100,00
Gavião - Sociedade de Caça e Turismo, S.A.	Setúbal		100,00	100,00
Navigator Forest Portugal, S.A.	Setúbal	-	100,00	100,00
Afocelca - Agrupamento complementar de empresas para protecção contra incêndios, ACE Portugal		-	64,80	64,80
Viveiros Aliança - Empresa Produtora de Plantas, S.A. Atlantic Forests, S.A.	Palmela Setúbal	- -	100,00 100,00	100,00 100,00
Raiz - Instituto de Investigação da Floresta e Papel	Aveiro	-	94,00	94,00
Bosques do Atlantico, SL	Espanha	-	100,00	100,00
Navigator Pulp Holding ,SGPS, S.A.	Setúbal	100,00	-	100,00
Navigator Pulp Figueira, S.A.	Figueira da Foz	-	100,00	100,00
Navigator Pulp Setúbal, S.A.	Setúbal	-	100,00	100,00
Navigator Pulp Cacia, S.A.	Aveiro	99,93	0,07	100,00
Portucel International GmbH	Alemanha	-	100,00	100,00
Navigator Paper Holding ,SGPS, S.A.	Setúbal	100,00	-	100,00
Navigator Cartolinas , S.A.	Setúbal	-	100,00	100,00
About the Future - Empresa Produtora de Papel, S.A.	Setúbal	-	100,00	100,00
Navigator Paper Setúbal, S.A.	Setúbal	-	100,00	100,00
Portucel Soporcel North America Inc.	EUA	-	100,00	100,00
Navigator Sales & Marketing, S.A.	Bélgica	25,00	75,00	100,00
Navigator Lusa, Lda	Figueira da Foz	-	100,00	100,00
Navigator Sw itzerland Ltd.	Suiça	25,00	75,00	100,00
PortucelSoporcel Afrique du Nord	Marrocos	-	100,00	100,00
PortucelSoporcel España, S.A.	Espanha	-	100,00	100,00
Navigator Netherlands, BV	Holanda	-	100,00	100,00
PortucelSoporcel France, EURL	França	-	100,00	100,00
Navigator Paper Company UK, Ltd	Reino Unido	-	100,00	100,00
Navigator Italia, SRL	Itália	-	100,00	100,00
PortucelSoporcel Deutschland, GmbH	Alemanha	-	100,00	100,00
Navigator Paper Austria, GmbH	Austria	-	100,00	100,00
PortucelSoporcel Poland SP Z o o	Polónia	-	100,00	100,00
Navigator Eurasia	Turquia	-	100,00	100,00
Navigator Rus Company, LLC	Russia	-	100,00	100,00
Navigator Participações Holding ,SGPS, S.A.	Setúbal	100,00	-	100,00
Portucel Florestal, S.A.	Setúbal	-	100,00	100,00
Arboser – Serviços Agro-Industriais, S.A.	Setúbal	-	100,00	100,00
EMA21 - Engenharia e Manutenção Industrial Século XXI, S.A.	Setúbal	-	100,00	100,00
Ema Cacia - Engenharia e Manutenção Industrial, ACE	Aveiro	-	92,60	92,60
Ema Setúbal - Engenharia e Manutenção Industrial, ACE	Setúbal	-	91,30	91,30
Ema Figueira da Foz- Engenharia e Manutenção Industrial, ACE	Figueira da Foz	-	88,70	88,70
Empremédia - Corretores de Seguros, S.A.	Lisboa	-	100,00	100,00
EucaliptusLand, S.A.	Setúbal	-	100,00	100,00
Headbox - Operação e Contolo Industrial, S.A.	Setúbal	-	100,00	100,00
Navigator Added Value, S.A.	Setúbal	-	100,00	100,00
Navigator Abastecimento de Madeira, ACE	Setúbal	-	100,00	100,00

BOARD OF DIRECTORS

Pedro Mendonça de Queiroz Pereira Chairman

Diogo António Rodrigues da Silveira Vice President/CEO

Luis Alberto Caldeira Deslandes Vice President

João Nuno de Sottomayor Pinto de Castello Branco Vice President

António José Pereira Redondo

Executive Board Member

José Fernando Morais Carreira de Araújo Executive Board Member

Nuno Miguel Moreira de Araújo Santos Executive Board Member

João Paulo Araújo Oliveira Executive Board Member

Adriano Augusto da Silva Silveira Board Member

Manuel Soares Ferreira Regalado Board Member

Paulo Miguel Garcês Ventura Board Member

José Miguel Pereira Gens Paredes Board Member

Ricardo Miguel dos Santos Pacheco Pires Board Member

Vitor Manuel Galvão Rocha Novais Gonçalves Board Member