Altri SGPS — Interim / Quarterly Report 2014

Nov 21, 2014

ALTRI, SGPS, S.A. Public Company

Head Office: Rua do General Norton de Matos, 68, r/c – Porto Fiscal Number: 507 172 086 Share Capital: 25.641.459 Euros

Financial Information – 3rd Quarter of 2014 (Unaudited)

The financial information was prepared in accordance with the International Financial Reporting Standards (IFRS).

Income Statement

thousand euros	3Q 2013	3Q 2014	3Q14/3Q13 Var%	2Q 2014	3Q14/2Q14 Var%
Sales Services rendered Other income	138.616 2.105 3.474	137.879 2.311 2.795	-0,5% 9,8% -19,5%	130.332 2.184 2.409	5,8% 5,8% 16,0%
Total Revenues	144.195	142.985	-0,8%	134.926	6,0%
Costs of sales External supplies and services Payroll expenses Other expenses Provisions and impairment losses	60.961 37.139 6.867 3.332 -398	65.063 39.516 7.254 936 128	6,7% 6,4% 5,6% -71,9%	62.024 38.926 7.010 814 31	4,9% 1,5% 3,5% 15,0%
Total expenses (a)	107.901	112.898	4,6%	108.805	3,8%
EBITDA (b) Margin	36.294 25,2%	30.088 21,0%	-17,1% -4,1 pp	26.120 19,4%	15,2% +1,7 pp
Amortisation and depreciation	12.287	12.595	2,5%	12.577	0,1%
EBIT (c) Margin	24.007 16,6%	17.493 12,2%	-27,1% -4,4 pp	13.543 10,0%	29,2% +2,2 pp
Gains and losses in associated companies Financial expenses Financial income	15 -8.412 1.174	786 -9.517 2.004	ss 13,1% 70,6%	945 -10.533 1.664	-16,8% -9,6% 20,4%
Financial profit	-7.223	-6.728	-6,9%	-7.924	-15,1%
Profit before income tax	16.784	10.765	-35,9%	5.619	91,6%
income tax Minority interest	-3.907 5	-608 3	ss ss	-587 1	ss ss
Profit for the period attributable to parent company's shareholders	12.872	10.155	-21,1%	5.032	101,8%

(a) operating costs excluding amortisation, financial expenses and income tax

(b) EBITDA = Earnings before interests, taxes, depreciation and amortisation

(c) EBIT = Earnings before interest and taxes

The third quarter of 2014 was characterizedboth by an increase in production and sales of pulp, and by the beginning of a recovery in sales price in euros, motivated by an appreciation of the US Dollar against the Euro, seen mainly from September 2014.

Thus, the production and sales of pulp of the third quarter increased about 3% and 5.4% respectively, comparing to the second quarter of the year, recording, again, a quarter high.

Production and sales systematically in quarterly high

After the three industrial units of Altri have beaten the production record in the second quarter of 2014, in the third quarter, the production reached about 263.3 thousand tons of pulp, which represents a growth of about 8.5% and 3% comparing to the same period of 2013 and to the second quarter of 2014 respectively.

In detail, during the third quarter, the main Altri industrial unit, Celbi, produced around 185.4 thousand tons of pulp (+11%, comparing to the same period of 2013); Celtejo produced around 56.4 thousand tons (+6%) and Caima produced around 21.6 thousand tons (-4%) – it is important to mention that Caima is going through an investment project that aims the production of specialties, which is predicted to end in the second quarter of 2015.

Evolution of pulp production between 3rdQ 2013 and 3rdQ 2014 by mill (thousand tons)

Evolution of pulp sales between 3rdQ 2013 and 3rdQ 2014 by mill (thousand tons)

In terms of sales, during the third quarter, the Group sold about 263.7 thousand tons, which represents an increase of about 8% compared to 245.0 thousand tons of pulp sold during the third quarter of 2013 and an increase of about 5.4% compared to the 250.2 thousand tons sold during the second quarter of 2014.

The pulp sales amounted to 114.5 million Euro, representing around 80% of Altri's total revenue, recording a decrease of about 4.8% compared to the pulp sales of the same period of 2013 and an increase of about 4.7% compared to the second quarter of 2014.

During the third quarter of 2014, Altri exported about 244 thousand tons of pulp, which represents 93% of Altri's pulp sales. The amount of these exports reached 106.6 million Euro.

The average sale price of pulp per ton during the third quarter of 2014, recorded a decrease of more than 10% compared to the same period of 2013, and a decrease of about 1% compared to the second quarter of 2014. However, it's important to mention that from September onwards it has been recorded a reversal of this trend.

The total revenue recorded in third quarter of 2014, was around 143 million Euro, which corresponds to a decrease of about 1% over the same period of 2013 and an increase of about 6% compared to the second quarter of 2014.

Total costs, excluding depreciation, interest and taxes amounted to approximately 112.9 million Euro.

It should be remarked that the evolution of the caption "Cost of sales" reflects the increase of pulp sales and the oscillations recorded in the wood price. The increase recorded in the caption "External supplies and services" was due to the increase in some costs, namely electricity.

Third quarter profit doubled from the previous quarter, to 10 million Euro

EBITDA of the third quarter of 2014 reached about 30.1 million Euro, a decrease of around 17% compared to third quarter of 2013 and an increase of around 15% compared to the second quarter of 2014. EBITDA margin recorded the quarter year high, reaching 21%.

The operating income (EBIT) was about 17.5 million Euro, which corresponds to a decrease of around 27% compared to EBIT of third quarter of 2013 and an increase around 29% compared to the second quarter of 2014.

Altri's net profit reached around 10.2 million Euro, which corresponds to a decrease of around 21% compared to the same period of 2013, and an increase higher than 100% compared to the second quarter of 2014.

9 months period of 2014

Total revenue recorded during the first nine months of 2014 reached around 406.7 million Euro (-8%), EBITDA was around 82.3 million Euro (-26%) and net profit was around 22.9 million Euro (-47%).

thousand euros	9M 2013	9M 2014	9M14/9M13 Var%
Sales	424.454	392.803	-7,5%
Services rendered	6.405	6.681	4,3%
Other income	8.825	7.203	-18,4%
Total Revenues	439.684	406.687	-7,5%
Costs of sales	184.792	189.508	2,6%
External supplies and services	111.728	111.036	-0,6%
Payroll expenses	20.371	21.175	3,9%
Other expenses	10.941	2.491	-77,2%
Provisions and impairment losses	230	180	-21,4%
Total expenses (a)	328.062	324.391	-1,1%
EBITDA (b)	111.623	82.296	-26,3%
Margin	25,4%	20,2%	-5,2 pp
Amortisation and depreciation Other indirect taxes	36.926 2.723	37.751 0	2,2% -
EBIT (c)	71.974	44.545	-38,1%
Margin	16,4%	11,0%	-5,4 pp
Gains and losses in associated companies Financial expenses Financial income Financial profit	1.124 -23.030 3.147 -18.759	2.039 -27.317 5.200 -20.078	81,5% 18,6% 65,2% 7,0%
Profit before income tax	53.215	24.467	-54,0%
income tax Minority interest	-10.071 16	-1.610 3	ss ss
Profit for the period attributable to parent company's shareholders	43.129	22.854	-47,0%

(a) operating costs excluding amortisation, financial expenses and income tax

(b) EBITDA = Earnings before interests, taxes, depreciation and amortisation

(c) EBIT = Earnings before interest and taxes

30 September of 2014: remunerated net debt of 532 million Euro

The net investment made by Altri's industrial units during the third quarter of 2014 reached 10.1 million Euro, which amounts to a total investment of 28.6 million Euro during the first nine months period of 2014.

Altri's nominal remunerated debt net of cash and cash equivalents and investments available for sale on September 30, 2014 amounted to 531.7 million Euro, decreasing around 18.3 million Euro comparing to 550.0 million Euro of net debt recorded in the end of June 2014.

During the first nine months of 2014, Altri reduced its remunerated net debt from 563.2 million Euro to 531.7 million Euro. Considering that during the second quarter of 2014, the Company paid dividends of 8.6 million Euro the cash-flow generated to the shareholders from January to September 2014 amounted 40.1 million Euro.

In the first semester of 2014, the Group issued three bond loans in a total amount of 200 million Euro: one of 70 million Euro, with maturity in 2018, other of 80 million Euro, with maturity in 2019 and another of 50 million Euro, with maturity in 2020. All bond loans bear interest at variable rate, based on 6-month Euribor, with an average spread lower than 4%. The schedule maturities of Altri bond issues are as follows:

Bonds	2014	2015	2016	2017	2018	2019	2020	2021
CELBI Float 02/2015 Euribor+0,875%		300,0
CELBI Float 01/2018 Euribor+0,950%					50,0
CELBI Float 02/2018 Euribor+0,950%					25,0
CELBI Float 03/2019 Euribor+3,650%						80,0
CELBI Float 04/2020 Euribor+3,500%							50,0
ALTRI Float 11/2018 Euribor+3,000%					70,0
	‐	300,0	‐	‐	145,0	80,0	50,0	‐

During the third quarter of 2014, Altri conducted a set of treasury operations that aimed to reduce the gross debt, with a special focus on short-term debt. The gross remunerated debt was reduced by 107.4 million Euros, which explains the quarterly reduction of around 88 million Euro in the caption "Cash and cash equivalents". In the end of September, Altri had around 228 million Euro of available medium-term funding lines unused.

Key balance sheet indicators

thousand euro	2013	3Q 2014	Var%
Biological assets	107.123,0	106.045,1	-1%
Tangible assets	390.512,5	383.179,1	-2%
Goodw ill	265.531,4	265.531,4	0%
Investments avaiable for sale	14.656,9	10.691,2	-27%
Others	43.534,6	46.840,8	8%
Total non current assets	821.358,4	812.287,6	-1%
Inventories	54.829,3	60.555,6	10%
Customers	80.294,6	84.965,7	6%
Cash and cash equivalents	232.450,5	250.180,1	8%
Others	32.445,0	20.895,0	-36%
Total current assets	400.019,4	416.596,5	4%
Total assets	1.221.377,8	1.228.884,0	1%
Shareholder's equity and non controlling interests	241.809,8	257.110,1	6%
Bank loans	74.212,5	103.781,3	40%
Other loans	439.370,3	300.835,2	-32%
Reimbursable incentives	11.228,4	10.879,8	-3%
Others	55.809,3	52.200,6	-6%
Total non current liabilities	580.620,5	467.697,0	-19%
Bank loans	78.693,4	-	-100%
Other current loans	213.719,6	381.990,2	79%
Reimbursable incentives	71,0	8.874,4	12398%
Suppliers	60.034,6	58.679,5	-2%
Others	46.429,0	54.532,9	17%

Pulp Market

According to data from Pulp and Paper Products Council (PPPC) from August 2014, the total demand for bleached pulp increased 0.9% compared to the same period of 2013, reaching 36.3 million tons.

The demand for hardwood pulp recorded an increase of 2.2%, highlighting the increase in the demand for eucalyptus pulp that, until August, recorded an increase of 7.6% - observing only August (compared to August 2013) the increase in the demand for hardwood eucalyptus pulp was 14.3%

Geographically, during the first eight months of 2014, the PPPC data observed that the consumption of hardwood pulp in Western Europe recorded a negative evolution of about 1.5%, whilst China recorded a growth of 6.4%.

Between January and August 2014, the total consumption of hardwood pulp reached about 19.1 million tons, an increase of 405 thousand tons compared to the same period of 2013. The market share of Western Europe is 30.3%, whilst China has a market share of 28.7%.

In terms of supply, during the first quarter of 2014, it has started operating a new industrial unit for production of eucalyptus pulp in Brazil, with projected annual production capacity of 1.5 million tons, for which it is estimated that 1 million tons will be produced this year. Additionally, a new unit was inaugurated in Uruguay, with an estimated production of pulp, for 2015, of about 500 thousand tons.

It should be also marked some announcements of closures of existing capacity in Europe and Canada.

In terms of evolution of the BEKP pulp price, according to the PIX, the third quarter of 2014 was characterized by a slight increase of 0.3% of the price in EUR comparing to the previous quarter. The average price of the first nine months of 2014 was 553 Euro (748 USD).

Evolution of BEKP pulp price in Europe since 2003 until September 2014 Source: Hawkins Wright

Outlook

It is expected a rise in the pulp price, driven by the announcement of price increases for October, which place the price at about 750 USD from November on.

The level of Altri pulp sales, for the fourth quarter of 2014, will be lower than in previous quarters due to the scheduled stoppage of Caima and Celtejo, which took place in the fourth quarter, and the need for restocking that ensure the normal supply to customers considering the stoppage for maintenance of Celbi, scheduled for April 2015.

Altri – business profile

Altri is a reference in European eucalyptus pulp producers. In addition to pulp production, the Company is also present in the renewable power production business from forest base sources namely industrial cogeneration through black liquor and biomass. The forestry strategy is based on the full use of all the components provided by the forest: pulp, black liquor and forest wastes.

Currently, Altri manages over 84 thousand hectares of forest in Portugal entirely certified by Forest Stewardship Council® (FSC®)1 and by the Program for the Endorsement of Forest Certification (PEFC), two of the most worldwide acknowledged certification entities.

Currently, Altri has three pulp mills in Portugal with an installed capacity in 2013 that reached about 973 thousand tons/year of eucalyptus pulp bleached. The company has some ongoing small projects for optimizing operating efficiency which will allow, in the medium term, to increase the production capacity.

Altri's organic structure is as follows:

Oporto, October 28, 2014

1 FSC-C004615

ALTRI, SGPS, S.A.

CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 30 SEPTEMBER 2014 AND 31 DECEMBER 2013

(Translation of financial statements originally issued in Portuguese – Note 20) (Amounts expressed in Euro)

ASSETS	Notes	30.09.2014	31.12.2013
NON CURRENT ASSETS:
Biological assets		106,045,089	107,122,952
Tangible fixed assets		383,179,067	390,512,538
Investment property		456,936	460,627
Goodwill		265,531,404	265,531,404
Intangible assets		113,127	194,285
Investments in associated companies and joint ventures	4.2	8,356,314	8,642,309
Investments available for sale	4.3	10,691,197	14,656,909
Other non current assets		6,829,745	3,071,539
Deferred tax assets	7	31,084,669	31,165,814
Total non current assets		812,287,550	821,358,377
CURRENT ASSETS:
Inventories		60,555,617	54,829,315
Customers		84,965,710	80,294,638
Other debtors		4,913,712	7,562,193
State and other public entities		10,267,717	20,223,728
Other current assets		5,638,708	3,454,873
Derivatives	11	74,892	1,204,184
Cash and cash equivalents	6	250,180,129	232,450,518
Total current assets		416,596,484	400,019,449
Total assets		1,228,884,035	1,221,377,826
SHAREHOLDERS' FUNDS AND LIABILITIES		30.09.2014	31.12.2013
SHAREHOLDERS' FUNDS:
Share capital	8	25,641,459	25,641,459
Legal reserve		3,405,143	2,862,981
Other reserves		205,060,038	157,811,081
Consolidated net profit / (loss)		22,853,965	55,347,961
Total shareholders' funds attributable to the parent company's shareholders		256,960,606	241,663,482
Non controlling interests		149,538	146,308
Total Shareholders' funds		257,110,144	241,809,790
LIABILITIES:
NON CURRENT LIABILITIES:
Bank loans	9	103,781,250	74,212,500
Other loans	9	300,835,245	439,370,297
Reimbursable incentives	9	10,879,835	11,228,419
Other non current creditors		404,350	404,350
Other non current liabilities		28,880,824	32,384,801
Deferred tax liabilities	7	17,586,109	17,896,214
Provisions	10	5,329,363	5,123,914
Total non current liabilities		467,696,976	580,620,495
CURRENT LIABILITIES:
Bank loans	9	-	78,693,353
Other loans	9	381,990,159	213,719,587
Reimbursable incentives	9	8,874,382	71,008
Suppliers		58,679,470	60,034,597
Other current creditors		12,389,581	6,395,461
State and other public entities		1,954,716	1,914,156
Other current liabilities		38,283,742	31,630,830
Derivatives	11	1,904,866	6,488,549
Total current liabilities		504,076,916	398,947,541
Total shareholders' funds and liabilities		1,228,884,035	1,221,377,826

The accompanying notes form an integral part of the consolidated financial statements.

ALTRI, SGPS, S.A.

CONSOLIDATED STATEMENTS OF PROFIT AND LOSS FOR THE NINE AND THREE MONTHS PERIODS ENDED 30 SEPTEMBER 2014 AND 2013

(Translation of financial statements originally issued in Portuguese – Note 20 (Amounts expressed in Euro)

		NINE MONTHS ENDED		QUARTER ENDED
	Notes	30.09.2014	30.09.2013	30.09.2014	30.09.2013
Sales		392,803,346	424,453,652	137,879,499	138,615,661
Services rendered		6,681,022	6,405,236	2,310,645	2,105,286
Other income	14	7,202,664	8,825,252	2,795,344	3,474,334
Cost of sales		(189,507,863)	(184,792,469)	(65,063,243)	(60,960,951)
External supplies and services		(111,036,322)	(111,727,584)	(39,516,254)	(37,139,423)
Payroll expenses		(21,175,213)	(20,371,003)	(7,254,174)	(6,866,749)
Amortisation and depreciation		(37,750,801)	(36,925,735)	(12,594,991)	(12,287,225)
Provisions and other impairment losses	10	(180,479)	(229,704)	(127,576)	398,051
Other expenses	15	(2,491,421)	(10,940,870)	(936,267)	(3,332,080)
Other indirect taxes	10	-	(2,722,651)	-	-
Gains and losses in associated companies and joint ventures	4.2	2,039,005	1,123,643	786,040	14,554
Financial expenses	12	(27,316,958)	(23,030,347)	(9,517,475)	(8,411,578)
Financial income	12	5,199,863	3,147,440	2,003,925	1,174,434
Profit before income tax		24,466,844	53,214,860	10,765,473	16,784,314
Income tax		(1,609,649)	(10,070,750)	(608,130)	(3,906,608)
Consolidated net profit		22,857,194	43,144,110	10,157,343	12,877,706
Attributable to:
Parent company's shareholders	13	22,853,965	43,128,584	10,154,549	12,872,294
Non controlling interests		3,229	15,526	2,793	5,412
		22,857,194	43,144,110	10,157,343	12,877,706
Earnings per share:
Basic	13	0.11	0.21	0.05	0.06
Diluted	13	0.11	0.21	0.05	0.06

The accompanying notes form an integral part of the consolidated financial statements

ALTRI, S.G.P.S., S.A.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME FOR THE NINE AND THREE MONTHS PERIODS ENDED 30 SEPTEMBER 2014 AND 2013

(Translation of financial statements originally issued in Portuguese – Note 20 (Amounts expressed in Euro)

	$1.1110$ and $0.11011$ and $0.0000$ at $1.11$ and $0.001$

	NINE MONTHS ENDED		QUARTER ENDED
	30.09.2014	30.09.2013	30.09.2014	30.09.2013
Net consolidated profit / (loss) for the period	22,857,194	43,144,110	10,157,343	12,877,706
Other comprehensive income: Items that will not be reclassified to profit or loss	-	-	-	-
	-	-	-	-
Items that may be reclassified to profit or loss
Change in fair value of cash flow hedging derivatives	1,034,344	5,277,625	(132,362)	3,635,225
Change in fair value of available for sale investments	34,286	(65,306)	34,286	(43,106)
	1,068,630	5,212,319	(98,076)	3,592,119
Other comprehensive income	1,068,630	5,212,319	(98,076)	3,592,119
Total comprehensive income for the period	23,925,824	48,356,429	10,059,266	16,469,825
Attributable to:
Shareholders' of the parent company	23,922,595	48,340,903	10,056,473	16,464,413
Non controlling interests	3,229	15,526	2,793	5,412

The accompanying notes form an integral part of the consolidated financial statements.

ALTRI, S.G.P.S., S.A.

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITYFOR THE NINE AND THREE MONTHS PERIODS ENDED 30 SEPTEMBER 2014 AND 2013

(Translation of financial statements originally issued in Portuguese – Note 20) (Amounts expressed in Euro)

		Att ribu tab le t he 's s ha reh old o t t co pa ren mp any ers
	No tes	Sh ital are ca p	Le l re ga ser ve	Oth ers res erv es	Ne rof it t p	To tal	No n llin tro con g inte ts res	To tal sha reh old er's fun ds
Ba lan of 1 J 20 13 ce as an ua ry		25 64 1, 45 9 ,	2, 862 98 1 ,	10 3, 112 41 5 ,	52 181 89 1 , ,	18 3, 798 746 ,	12 8, 166	18 3, 926 912 ,
Ap iati of t he sol ida ted rof it o f 2 012 t p pro pr on con ne		-	-	52 181 89 1 , ,	( 52 181 89 1) , ,	-	-	-
Div ide nds		-	-	( ) 5, 128 292 ,	-	( ) 5, 128 292 ,	-	( ) 5, 128 292 ,
Oth ers		-	-	( ) 171	-	( ) 171	-	( ) 171
To tal hen siv e in e fo r th erio d com pre com e p		-	-	212 31 9 5, ,	43 128 584 , ,	48 34 0, 903 ,	15 52 6 ,	48 35 6, 42 9 ,
Ba lan of 3 0 S be tem r 2 013 ce as ep		25 64 1, 45 9 ,	2, 862 98 1 ,	15 5, 37 8, 162	43 128 584 , ,	22 7, 01 1, 186	14 3, 692	22 7, 154 878 ,
Ba lan of 1 J 20 14 ce as an ua ry		25 64 1, 45 9	2, 862 98 1	15 81 1, 08 1 7,	34 96 1 55 7,	24 1, 663 482	14 6, 30 8	24 1, 80 9, 790
Ap iati of t he sol ida ted rof it o f 2 013 t p on con ne		,	, 54 2, 162	54 805 79 9	, ( 55 34 7, 96 1)	,
pro pr Div ide nds	18	-		, , ( 0) 8, 615 53	,	- ( 0) 8, 615 53	-	- ( 0) 8, 615 53
Oth		-	-	, 94	-	, 94	-	, 94
ers		-	-	( 1) 9,	-	( 1) 9,	-	( 1) 9,
To tal hen siv e in e fo r th erio d com pre com e p Ba lan of 3 0 S be r 2		-	-	1, 068 630 ,	22 853 965 , , 22	23 922 595 , ,	3, 23 0 14	23 925 825 , ,
tem 014 ce as ep	8	25 64 1, 45 9 ,	3, 40 5, 143	20 5, 060 038 ,	853 965 , ,	25 6, 960 606 ,	9, 53 8	25 7, 110 144 ,

The accompanying notes form an integral part of the consolidated financial statements.

The official chartered of accounts

The Board of Directors

ALTRI , SGPS, S.A.

CONDENSED CONSOLIDATED CASH-FLOW STATEMENTS FOR THE NINE AND THREE MONTHS PERIODS ENDED 30 SEPTEMBER 2014 AND 2013

(Translation of financial statements originally issued in Portuguese – Note 20) (Amounts expressed in Euro)

		NINE MONTHS ENDED		QUARTER ENDED
	Notes	30.09.2014	30.09.2013	30.09.2014	30.09.2013
Operating activities:
Cash flow from operating activities (1)		82,475,061	92,282,179	33,928,121	25,926,307
Investment activities:
Collections relating to:
Investments	6	3,676,836	48,000	2,551,836	36,000
Tangible assets		76,543	341,203	75,343	35,287
Intangible assets		-	-	(30,192)	-
Interest and similar income		3,540,256	2,735,371	1,477,701	1,000,114
Investment subsidies		8,903,680	2,186,673	448,846	1,573,830
Payments relating to:
Investments	6	-	(2,993,239)	-	(19,395)
Investment subsidies		(1,495,878)	(4,783,887)	(747,939)	(747,939)
Tangible assets		(25,786,213)	(10,442,155)	(6,554,411)	(3,539,660)
Cash flow from investment activities (2)		(11,084,776)	(12,908,034)	(2,778,816)	(1,661,763)
Financing activities:
Collections relating to:
Loans obtained		421,561,707	119,481,119	5,646,696	16,261,032
Payments relating to:
Loans obtained		(439,946,173)	(103,038,644)	(114,839,609)	(70,328,915)
Interest and similar costs		(26,581,944)	(30,479,492)	(9,144,794)	(10,641,276)
Distribution of dividends	18	(8,615,530)	(5,128,292)	-	-
Cash flow from financing activities (3)		(53,581,939)	(19,165,309)	(118,337,706)	(64,709,159)
Cash and cash equivalents at the beginning of the period		232,371,783	110,624,494	337,368,530	211,287,944
Variation of cash and cash equivalents: (1)+(2)+(3)		17,808,346	60,208,836	(87,188,401)	(40,454,615)
Cash and cash equivalents at the end of the period	6	250,180,129	170,833,330	250,180,129	170,833,329

The accompanying notes form an integral part of the consolidated financial statements.

ALTRI, S.G.P.S., S.A. NOTE TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

AS OF 30 DE SEPTEMBER 2014

(Translation of notes originally issued in Portuguese – Note 20)

(Amounts expressed in Euro)

1. INTRODUCTORY NOTE

Altri, SGPS, S.A. ("Altri" or "Company") was incorporated as of 1 March 2005, has its head-office located at Rua General Norton de Matos, 68, r/c – Porto, Portugal and its shares are listed in the NYSE Lisbon Euronext Stock Exchange. Its main activity is the management of investments.

Altri is the parent company of a group of companies listed in Note 4 known as Altri Group. The current activity of Altri Group focuses on the production of bleached paper pulp of eucalyptus through three production units (Celbi in Figueira da Foz, Caima in Constância do Ribatejo and Celtejo in Vila Velha de Ródão).

Due to this reality of Altri Group, the Board of Directors believe that there is only one business segment (production and commercialization of bleached paper pulp from eucalyptus) and the management information is also analyzed on this basis, for which the segmental information mentioned in Note 16 is limited by this.

The consolidated financial statements of Altri Group are presented in Euro rounded off to the unit, which is the currency used by the Group in its operations and considered as the functional currency.

2. MAIN ACCOUNTING POLICIES AND BASIS FOR PRESENTATION

The consolidated financial statements as of 30 September 2014 were prepared using accounting policies consistent with the International Financial Reporting Standards and in accordance with the International Accounting Standard and International Accounting Standard 34 – Interim Financial Reporting and includes the statement of financial position, the statement of profit and loss, the statement of comprehensive income, the statement of changes in equity and the condensed statement of cash flows as well as the selected explanatory notes.

The accounting policies used in the preparation of the consolidated financial statements of Altri are consistent with those used in the year ended 31 December 2013.

3. CHANGES IN ACCOUNTING POLICIES AND CORRECTION OF MISTAKES

During the period there were no changes in accounting policies and were identified no material mistakes related to previous years.

(Translation of notes originally issued in Portuguese – Note 20)

(Amounts expressed in Euro)

4. INVESTMENTS

4.1 INVESTMENTS IN SUBSIDIARIES

The companies included in the consolidated financial statements by the full consolidation method, its headquarters, percentage participation held and main activity as of 30 September 2014 and 31 December 2013, are as follows:

Company	Head Office		Percentage Held	Main activity
		2014	2013
Mother-Company:
Altri, SGPS, S.A.	OPorto			Investment management
Subsidiaries:
Altri - Energias Renováveis, SGPS, S.A.	Vila Velha de Ródão	99,83%	99,83%	Investment management
Altri Florestal, S.A.	Figueira da Foz	100%	100%	Sylvan exploration
Altri Sales, S.A.	Nyon, Sw itzerland	100%	100%	Group management support services
Altri, Participaciones Y Trading, S.L.	Madrid, Spain	100%	100%	Commercialization of pulp
Caima Energia – Empresa de Gestão e Exploração de Energia, S.A.	Constância	100%	100%	Production of thermal and electrical energy
Caima Indústria de Celulose, S.A.	Constância	100%	100%	Production and commercialization of pulp
Captaraíz Unipessoal, Lda.	Figueira da Foz	100%	100%	Property buying and selling
Celbinave – Tráfego e Estiva SGPS, Unipessoal, Lda.	Figueira da Foz	100%	100%	Freightage of ships
Celtejo – Empresa de Celulose do Tejo, S.A.	Vila Velha de Ródão	99,83%	99,83%	Production and Commercialization of pulp
Celulose Beira Industrial (Celbi), S.A.	Figueira da Foz	100%	100%	Production and Commercialization of pulp
Celulose do Caima, SGPS, S.A.	Figueira da Foz	100%	100%	Investment management
Inflora – Sociedade de Investimentos Florestais, S.A.	Figueira da Foz	100%	100%	Sylvan exploration
Invescaima – Investimentos e Participações, SGPS, S.A.	Figueira da Foz	100%	100%	Investment management
Pedro Frutícola, Sociedade Frutícola, S.A.	Constância	100%	100%	Agriculture production
Viveiros do Furadouro Unipessoal, Lda.	Óbidos	100%	100%	Production of plants in nurseries and services related w ith forests and landscapes

All the above companies were included in the Altri Group consolidated financial statements in accordance with the full consolidation method.

4.2 INVESTMENTS IN ASSOCIATED COMPANIES AND JOINT VENTURES

The associated companies and joint ventures, percentage of capital held and main activity as of 30 September 2014 and 31 December 2013 are as follows:

Company	Percentage held		Main activity
	2014	2013
Associated companies:
Operfoz – Operadores do Porto da Figueira da Foz, Lda.	33,33%	33,33%	Harbor operations
Joint ventures:
EDP – Produção Bioeléctrica, S.A.	50%	50%	Electric energy production

Associated companies and joint ventures are included in the consolidation of Altri by the equity method.

(Translation of notes originally issued in Portuguese – Note 20)

(Amounts expressed in Euro)

The book value, net assets, equity and net profit for the nine months period ended on 30 September 2014 for these associated companies and joint ventures are as follows:

Company	Book value (a)	Asset	Equity	Net profit
Associated companies:
Operfoz – Operadores do Porto da Figueira da Foz, Lda.	573.240	5.239.108	1.719.718	179.621
Joint ventures:
EDP – Produção Bioeléctrica, S.A.	7.783.074	137.102.761	21.032.204	3.644.880
	8.356.314

(a) – includes loans granted.

4.3 INVESTMENTS AVAILABLE FOR SALE

As of 30 September 2014 and 31 December 2013 the investments available for sale are as follows:

Company		Book value
	2014	2013
Rigor Capital - Produção de Energia. Lda.	10.527.397	10.527.397
Other investments	163.800	4.129.512
	10.691.197	14.656.909

It is the understanding of the Altri Group that the caption "Investments available for sale" includes mainly financial investments under 20%, in companies where Altri Group has no significant influence on its management and is stated at acquisition cost, reduced by impairment losses, does not differ significantly from their fair value.

On December 31, 2013, the caption "Other investments" corresponds mainly to listed securities which are recorded at their market value.

5. CHANGES OCCURED IN THE CONSOLIDATION PERIMETER

During the nine months period ended 30 September 2014, there were no changes in the consolidation perimeter compared to 31 December 2013.

6. CASH AND CASH EQUIVALENTS

As of 30 September 2014 and 2013, the caption "Cash and cash equivalents" can be detailed as follows:

	30.09.2014	30.09.2013
Cash	12.498	13.524
Bank deposits	250.167.631	172.775.195
	250.180.129	172.788.719
Bank overdrafts	-	(1.955.389)
Cash and cash equivalents	250.180.129	170.833.330

ALTRI, S.G.P.S., S.A. NOTE TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AS OF 30 DE SEPTEMBER 2014 (Translation of notes originally issued in Portuguese – Note 20)

(Amounts expressed in Euro)

During the nine months period ended 30 September 2014, receipts from investments were as follows:

	Transaction amount	Amount received
EDP – Produção Bioelétrica, S.A. (a) Other investments available for sale (Note 4.3)	2.325.000 1.351.836	2.325.000 1.351.836
	--------------- 3.676.836	---------------- 3.676.836
(a) – Repayment of loans granted.	=========	=========

During the nine months period ended 30 September 2013, receipts from investments were as follows:

	Transaction amount	Amount received
Sócasca –Recolha e Comércio de Recicláveis, S.A. (Sold in 2011)	2.300.000	48.000
	---------------	----------------
	2.300.000	48.000
	=========	=========

During the nine months period ended 30 September 2014, there were no payments related with investments.

During the nine months period ended 30 September 2013, payments of investments were as follows:

Transaction	Amount
amount	paid
2.993.239	2.993.239 ----------------
2.993.239	2.993.239
=========	=========
	---------------

7. CURRENT AND DEFERRED TAXES

In accordance with current legislation, tax returns are subject to review and correction by the tax authorities during a four-year period (five years for Social Security), with the exception when there have been tax losses, cases with there have been granted tax benefits, or tax inspections or claims are in progress, in which cases the periods may be extended or suspended. Therefore, the Company tax returns since 2010 are still subject to review.

The Board of Directors believes that any potential corrections resulting from reviews/inspections of these tax returns by the tax authorities will not have a significant effect on the consolidated financial statements as of 30 September 2014.

ALTRI, S.G.P.S., S.A.

NOTE TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

AS OF 30 DE SEPTEMBER 2014

(Translation of notes originally issued in Portuguese – Note 20)

(Amounts expressed in Euro)

The movements occurred in deferred tax assets and liabilities in the six months periods ended in 30 September 2014 and 2013 were as follows:

		2014
	Deferred tax assets	Deferred tax liabilities
Opening balance as of 1.1.2014	31.165.814	17.896.214
Effects on income statement:
Harmonization of depreciation rates	1.003.499	-
Other effects	(366.883)	(259)
Total effect on income statement	31.802.430	17.895.955
Effect on shareholders' funds:
Fair values of derivatives	(717.760)	(309.846)
Closing balance as of 30.09.2014	31.084.669	17.586.109
		2013
	Deferred tax assets	Deferred tax liabilities
Opening balance as of 1.1.2013	33.357.371	16.931.978
Effects on income statement:
Harmonization of depreciation rates	1.017.609	-
Other effects	744.208	550.082
Total effect on income statement	1.761.817	550.082
Effect on shareholders' funds:
Fair values of derivatives	(3.649.208)	-
Closing balance as of 30.09.2013	31.469.980	17.482.060

8. SHARE CAPITAL

As of 30 September 2014 the Company's fully subscribed and paid up capital consisted of 205,131,672 shares with a nominal value of 12.5 cents of a Euro each.

(Translation of notes originally issued in Portuguese – Note 20)

(Amounts expressed in Euro)

9. BANK LOANS, OTHER LOANS AND REIMBURSABLE INCENTIVES

As of 30 September 2014 and 31 December 2013, the captions "Bank loans", "Other loans" and "Reimbursable incentives" can be detailed as follows:

			30-09-2014
		Nominal Value		Book Value
	Current	Non current	Total	Current	Non current	Total
Bank loans	-	105.000.000	105.000.000	-	103.781.250	103.781.250
Bank loans	-	105.000.000	105.000.000	-	103.781.250	103.781.250
Commercial paper	53.000.000	28.000.000	81.000.000	51.348.979	27.697.003	79.045.982
Bonds	297.411.000	275.000.000	572.411.000	296.602.821	273.138.242	569.741.063
Other loans	34.038.359	-	34.038.359	34.038.359	-	34.038.359
Other loans	384.449.359	303.000.000	687.449.359	381.990.159	300.835.245	682.825.404
Reimbursable incentives	8.874.382	10.879.835	19.754.217	8.874.382	10.879.835	19.754.217
	393.323.741	418.879.835	812.203.576	390.864.541	415.496.330	806.360.871
			31-12-2013
		Nominal Value			Book Value
	Current	Non current	Total	Current	Non current	Total
Bank loans	78.877.288	75.000.000	153.877.288	78.614.615	74.212.500	152.827.115
Bank overdrafts	78.738	-	78.738	78.738	-	78.738
Bank loans	78.956.026	75.000.000	153.956.026	78.693.353	74.212.500	152.905.853
Commercial paper	181.900.000	66.000.000	247.900.000	181.497.235	65.207.880	246.705.115
Bonds	-	375.000.000	375.000.000	-	374.162.417	374.162.417
Other loans	33.347.002	-	33.347.002	32.222.352	-	32.222.352
Other loans	215.247.002	441.000.000	656.247.002	213.719.587	439.370.297	653.089.884
Reimbursable incentives	71.008	11.228.419	11.299.427	71.008	11.228.419	11.299.427
	294.274.036	527.228.419	821.502.455	292.483.948	524.811.216	817.295.164

As of 30 September 2014, there are no bank overdrafts used (500,000 Euro as of 31 December 2013), classified in the caption "Bank Loans".

The expenditures with the constitution of the loans were deducted from its nominal value, being these recognized as financial expenses along the loan's life period (Note 12).

(Translation of notes originally issued in Portuguese – Note 20)

(Amounts expressed in Euro)

10. ACCUMULATED PROVISIONS AND IMPAIRMENT LOSSES

The movements occurred in provisions and impairment losses for the nine months periods ended at 30 September 2014 and 2013 can be detailed as follows:

		30.09.2014
		Impairment losses in
	Provisions	current assets	Total
Opening balance	5.123.914	9.505.979	14.629.893
Increases	280.670	-	280.670
Utilizations	(75.221)	(385.928)	(461.148)
Closing balance	5.329.363	9.120.051	14.449.414
		30.09.2013
		Impairment losses in
	Provisions	current assets	Total
Opening balance	1.535.342	5.536.965	7.072.307
Increases	2.722.651	450.000	3.172.651
Utilizations	-	(1.051.789)	(1.051.789)
Closing balance	4.257.993	4.935.176	9.193.169

During the nine months period ended in September 30 2013, the subsidiary Caima Indústria de Celulose, S.A., proceeded to the payment of an additional settlement of the Value Added Tax from previous years in the amount of 2,722,651 Euro which was recorded under the caption "Other non-current assets" for not agreeing with the fundamentals of that settlement. To face the risk of such settlement, Altri recorded a liability under the caption "Provisions" against the caption "Other indirect taxes" in the income statement.The remaining increase in provisions and impairment losses in the amount of 450,000 Euro, is recorded against the income statement caption "Provisions and other impairment losses".

The reduction of impairment losses verified in the nine months period ended 30 September 2013 relates to the use of impairment losses in the amount of 831,493 Euro and reversals of impairment losses in the amount of 220,296 Euro.

The amount recorded under the caption "Provisions", at 30 September 2014 and 2013, is the best estimate of the Administration in order to face all the losses that may be supported due to the general risks from the activity of Altri's Group.

11. DERIVATIVE FINANCIAL INSTRUMENTS

As of 30 September 2014 and 2013 the companies of Altri's Group had contracts concerning financial derivative instruments to hedge of variations in pulp price and interest rates being these instruments registered according to its fair value.

The companies of Altri's Group only use derivatives to hedge cash flows from the operations generated by its activity.

(Translation of notes originally issued in Portuguese – Note 20)

(Amounts expressed in Euro)

As of 30 September 2014 and 2013 the detail of the financial derivative instruments are as follows:

	Pulp price hedging derivatives	Interest rates derivatives	Total
Opening balance as of 31.12.2013	720.362	(6.004.727)	(5.284.365)
Derivatives fair value variation/cessation
Effects on shareholders' funds	(645.470)	2.087.728	1.442.258
Effects on the profit and loss statement		2.012.133	2.012.133
Closing balance as of 30.09.2014	74.892	(1.904.866)	(1.829.974)
	Pulp price hedging derivatives	Interest rates derivatives	Exchange rate derivatives	Total
Opening balance as of 31.12.2012	(8.696.330)	(13.417.466)	261.783	(21.852.013)
Derivatives fair value variation/cessation
Effects on shareholders' funds	6.521.809	2.405.024	-	8.926.833
Effects on the profit and loss statement	-	4.165.412	(261.783)	3.903.629
Closing balance as of 30.09.2013	(2.174.521)	(6.847.030)	-	(9.021.551)

12. FINANCIAL RESULTS

The financial results for the nine months periods ended at 30 September 2014 and 2013 are detailed as follows:

	30-09-2014	30-09-2013
Financial expenses:
Interests	15.579.903	14.592.184
Other financial expenses	11.737.055	8.438.163
	27.316.958	23.030.347
Financial income:
Interests	3.462.656	2.441.675
Other financial income	1.737.207	705.765
	5.199.863	3.147.440

The caption "Other financial expenses" includes expenses incurred with the establishment of the loans which are being recognized as costs through the life period of the respective loans (Note 9), losses in investments available for sale (Note 4.3) and losses regarding interest rate financial derivative instruments (Note 11).

The "results of associated companies and joint ventures" correspond to the appropriation of the Group's share of results in associated companies and joint ventures (Note 4.2).

(Translation of notes originally issued in Portuguese – Note 20)

(Amounts expressed in Euro)

13. EARNINGS PER SHARE

Earnings per share in the nine months periods ended as of 30 September 2014 and 2013 were calculated considering the following amounts:

	30-09-2014	30-09-2013
Share number considered for the computation of basic and diluted earning	205.131.672	205.131.672
Net profit considered for the computation of basic and diluted earning	22.853.965	43.128.584
Earnings per share Basic Diluted	0,11 0,11	0,21 0,21

14. OTHER INCOME

As of 30 September 2014 and 2013 the caption of the statement of profit and loss "Other Income" is detailed as follows:

	30-09-2014	30-09-2013
Investment and exploration subsidies	3.739.263	6.737.587
Gains in commodities derivatives contracts (Note 11)	550.452	-
Other income	2.912.949	2.087.665
	7.202.664	8.825.252

15. OTHER EXPENSES

As of 30 September 2014 and 2013 the caption of the statement of profit and loss "Other expenses" is detailed as follows:

	30-09-2014	30-09-2013
Direct taxes and charges	1.246.375	1.385.447
Losses in commodities derivatives contracts (Note 11)	-	7.735.839
Other costs	1.245.045	1.819.584
	2.491.421	10.940.870

16. SEGMENTAL INFORMATION

On 16 April 2008, the Board of Administration of Altri, S.G.P.S., S.A. approved a simple reorganization project of this society which implies the split of Altri's two business units that operates in the pulp and paper sector and in the steel and storage systems sector. This reorganization aimed a bigger focus and transparency on ALTRI's business, and giving each of the areas an opportunity to be better seen and better evaluated by the market, and allows Altri Group to focus its activity on its core business, production and commercialization of bleached paper pulp form eucalyptus, so the Board of Directors believe that there is only one business segment and the management information is reported and analyzed on this basis.

ALTRI, S.G.P.S., S.A.

NOTE TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

AS OF 30 DE SEPTEMBER 2014

(Translation of notes originally issued in Portuguese – Note 20)

(Amounts expressed in Euro)

17. RELATED PARTIES

The Altri Group companies realize between them and at market prices, transactions that classifies as transactions with related parties.

In the consolidation procedures the transactions between the companies included in consolidation by the full consolidation method are eliminated, once the consolidated financial statements present the owner and its subsidiaries information as one single company, therefore they are not disclosed in this note.

During the nine months periods ended at 30 September 2014 and 2013, there were no transactions with the Directors of the Group and there are no loans granted.

As of 30 September 2014 and 2013 the balances and transactions with related parties are as follow:

	Purchases and services			Sales and services	Interest income
Transactions	30.09.2014	30.09.2013	30.09.2014	30.09.2013	30.09.2014	30.09.2013
Associated companies and joint ventures (a)	2.582.232	1.313.112	12.044.140	3.758.101	226.960	240.192
Other related parties (b)	4.869.052	4.791.880	-	-	-	-
	7.451.284	6.104.992	12.044.140	3.758.101	226.960	240.192
	Accounts payable			Accounts receivable	Granted loans
Balances	30.09.2014	30.09.2013	30.09.2014	30.09.2013	30.09.2014	30.09.2013
Associated companies and joint ventures (a)	379.456	129.697	2.505.843	1.632.021	11.482.905	13.807.905
Other related parties (b)	45.317	23.590	-	-	-	-
	424.773	153.287	2.505.843	1.632.021	11.482.905	13.807.905

(a) All entities consolidated by the equity method as of 30 September 2014 and 2013 (Note 4.2);

(b) Were considered as related parties the companies of Ramada Group.

Besides the transactions identified above, there are no other transactions with related companies.

Besides the companies included in consolidation (Note 4), entities considered as related parties as of 30 September 2014 can be detailed as follow:

Actium Capital, S.G.P.S., S.A. Adcom Media Anúncios e Publicidade, S.A. Alteria, S.G.P.S., S.A. Caderno Azul, S.G.P.S., S.A. Cofihold, S.G.P.S., S.A. Cofina Eventos e Comunicação, S.A. Cofina Media, SGPS, S.A. Cofina, SGPS, S.A. Destak Brasil – Editora de Publicações, S.A. Destak Brasil – Empreendimentos e Participações, S.A. Edirevistas – Sociedade Editorial, S.A. Edisport – Sociedade de Publicações, S.A. Efe Erre Participações, S.G.P.S., S.A. Elege Valor, S.G.P.S., S.A. Ramada – Aços, S.A. F. Ramada – Investimentos, SGPS, S.A. F. Ramada II, Imobiliária, S.A. F. Ramada Serviços de Gestão, Lda. Grafedisport – Impressão e Artes Gráficas, S.A. Livrefluxo, S.G.P.S., S.A. Malva – Gestão Imobiliária, S.A. Mediafin, SGPS, S.A. Mercados Globais – Publicação de Conteúdos, Lda.

ALTRI, S.G.P.S., S.A.

NOTE TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

AS OF 30 DE SEPTEMBER 2014

(Translation of notes originally issued in Portuguese – Note 20)

(Amounts expressed in Euro)

Metronews – Publicações S.A. Presselivre – Imprensa Livre, S.A. Promendo, S.G.P.S., S.A. Sociedade Imobiliária Porto Seguro – Investimentos Imobiliários, S.A. Storage Solutions, S.A. Storax – Equipements, S.A. Storax Benelux Storax Racking Systems, Ltd. Torres da Luz – Investimentos Imobiliários, S.A. Transjornal – Edição de Publicações, S.A. Universal – Afir, S.A. Valor Autêntico, SGPS, S.A. VASP – Sociedade de Transportes e Distribuições, Lda Web Works – Desenvolvimento de Aplicações para Internet, S.A.

18. APPROPRIATION OF THE NET PROFIT

The Board of Directors has, in its annual report, approved at the Shareholders' General Meeting held on 24 April 2014, proposed that the individual net profit of Altri SGPS, S.A. amounting to 10,843,235.78 Euro to be distributed as follows:

Legal reserve	542.161,79
Others reserve	1.685.543,77
Distribution of dividends	8.615.530,22
	------------------
	10.843.235,78
	===========

19. FINANCIAL STATEMENTS APPROVAL

The financial statements were approved by the Board of Directors and authorized for issuance in 28 October 2014.

(Translation of notes originally issued in Portuguese – Note 20)

(Amounts expressed in Euro)

20. EXPLANATION ADDED FOR TRANSLATION

These condensed consolidated financial statements are a translation of financial statements originally issued in Portuguese, prepared using accounting policies consistent with the International Financial Reporting Standards and with accordance with the International Accounting Standard 34 – Interim Financial Reporting, some of which may not conform or be required by generally accepted accounting principles in other countries. In the event of discrepancies, the Portuguese language version prevails.

The Board of Directors

Paulo Jorge dos Santos Fernandes – President

João Manuel Matos Borges de Oliveira – Vice President

Pedro Macedo Pinto de Mendonça

Domingos José Vieira de Matos

Laurentina da Silva Martins

Pedro Miguel Matos Borges de Oliveira

Ana Rebelo de Carvalho Menéres de Mendonça