Altri SGPS — Interim / Quarterly Report 2017

Nov 30, 2017

ALTRI, SGPS, S.A.

Public Company

Head Office: Rua do General Norton de Matos, 68, r/c – Oporto Fiscal Number 507 172 086 Share Capital: 25,641,459 Euro

Financial Information – 3rd Quarter of 2017 (Unaudited)

This document is a translation of a document originally issued in Portuguese, prepared using accounting policies consistent with the International Financial Reporting Standards and in 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 financial information presented was prepared in accordance with the International Financial Reporting Standards (IFRS).

thousand Euro	3Q 2017	3Q 2016	3Q17/3Q16 Var%	2Q 2017	3Q17/2Q17 Var%
Total Revenues	165,539	149,542	10.7%	165,417	0.1%
Cost of Sales External supplies and services	62,233 39,832	59,803 39,752	4.1% 0.2%	68,700 40,049	-9.4% -0.5%
Payroll expenses	8,649	8,135	6.3%	8,461	2.2%
Other costs	1,089	1,605	-32.2%	826	31.9%
Provisions and impairment losses	0	0	ss	0	ss
Total Costs (a)	111,802	109,295	2.3%	118,036	-5.3%
EBITDA (b)	53,737	40,247	33.5%	47,381	13.4%
Margin	32.5%	26.9%	+5.5 pp	28.6%	+3.8 pp
Depreciations and Amortizations	13,729	13,249	3.6%	13,918	-1.4%
EBIT (c)	40,008	26,998	48.2%	33,463	19.6%
Margin	24.2%	18.1%	+6.1 pp	20.2%	+3.9 pp
Gains/Losses in associated companies Financial Costs Net exchange gains/losses Financial gains	937 -6,164 -1,135 1,276	1,179 -5,463 254 774	-20.5% 12.8% 64.8%	925 -5,451 -1,661 1,250	1.3% 13.1% 2.1%
Financial Results	-5,087	-3,256	56.2%	-4,937	3.0%
Profit Before Income Tax	34,922	23,742	47.1%	28,526	22.4%
Income Tax	-8,489	-6,920	22.7%	-4,098	107.2%
Consolidated Net Profit	26,433	16,823	57.1%	24,428	8.2%

Income Statement – 3Q 2017

(a) Operating costs excluding amortization, financial expenses and income tax

(b) EBITDA = earnings before interests, taxes, depreciation and amortization

(c) EBIT = earrnigs before interests and taxes

During the third quarter of 2017 the price of BHKP pulp maintained the upward trend, by rising around 12% in USD (from 783 USD in the previous quarter to 873 USD in the current quarter), while in EUR this increase was around 5%.

On the other hand, the investment projects in Celbi and Celtejo's industrial units remain on course, being highlighted the latter, with interventions in the recovery boiler, steam reduction and industrial waste water treatment installations, implying a limitation of the mill operational potential, in terms of production capacity and efficiency of production costs. This investment is expected to be completed by the end of the first half of 2018.

In respect to the investment in Celtejo, there was a short programmed maintenance stoppage in September (three days) in this industrial unit.

EBITDA of 54 million Euro and margin of 32.5%

Total revenues in the third quarter of 2017 achieved 165.5 million Euro, an increase of 11% over the same period of last year and in line with the revenues from the previous quarter.

During the period under analysis, approximately 270 thousand tons of pulp were produced (268 thousand in the third quarter of 2016), of which approximately 28.2 thousand tons of dissolving pulp (26.9 thousand tons in the same quarter of 2016).

In terms of sales, in the third quarter, were sold approximately 255 thousand tons of pulp, of which 27 thousand tons were dissolving pulp. The difference between produced tons and sold tons is related with the need to accumulate stocks to offset the lower estimated production for the fourth quarter of 2017, as a consequence of the programmed maintenance stoppage at Celbi's industrial unit.

In terms of exports, during the period under analysis, Altri exported around 228.6 thousand tons of pulp, corresponding to approximately 126 million Euro, corresponding to approximately 90% of its pulp sales.

Total pulp sales amounted to 139.7 million Euro, which corresponds to a decrease of approximately 1.6% over the previous quarter of 2017, in result of the reduction of the volume sold and an increase of 13% in relation to the same period of the previous year.

Operating costs recorded an increase of 2.3% over the same period of 2016, higher than the variation in the volume sold (-1.3%), which is explained by the normal inefficiencies that arise during investment periods and the above-mentioned stoppage at Celtejo's industrial unit. Total costs, excluding amortisations, financial costs and taxes, in this quarter, amounted to approximately 111.8 million Euro, which corresponds to a reduction of 5.3% over the previous quarter of 2017.

Financial Information 3Q 2017

Regarding the forest fires that happened in the country until the 30th of September 2017, the effect over the Group's consolidated financial statements is fully recorded and is immaterial. Considering the forests fires that occurred after the closing of the quarter, the Company is currently evaluating their impact. However, it is not expected that these events will be materially relevant, neither jeopardize the wood supply to the plants in the short-term.

EBITDA for the third quarter of 2017 was around 53.7 million Euro, an increase of 34% compared to EBITDA recorded in the same period of 2016. In relation to the second quarter of 2017, EBITDA increased 13%.

The financial result was a net loss of 5 million Euro. The variation of the financial result is due to exchange rate differences, a consequence of the devaluation of USD against EUR that occurred during the period under analysis. The average cost of total financial debt is below 3%.

Altri's consolidated net profit reached approximately 26.4 million Euro, an increase of 8% over the second quarter of 2017 and an increase of 57% over the same quarter of the previous year.

First nine months of 2017

In accumulated figures, total revenues reached approximately 491 million Euro (+8%). EBITDA reached 141.2 million Euro, corresponding to an increase of 10% over the same period of 2016. The net profit was around 68 million Euro, an increase of 19% over the first nine months of 2016.

thousand Euro	9M 2017	9M 2016	var %
Total Revenues	490,792	453,403	8.2%
Cost of Sales	200,195	177,678	12.7%
External supplies and services	121,663	118,266	2.9%
Payroll expenses	24,829	24,290	2.2%
Other costs	2,865	4,599	-37.7%
Provisions and impairment losses	0	-88	ss
Total Costs (a)	349,552	324,746	7.6%
EBITDA (b)	141,240	128,657	9.8%
Margin	28.8%	28.4%	+0.4 pp
Depreciations and Amortizations	41,562	39,805	4.4%
EBIT (c)	99,678	88,852	12.2%
Margin	20.3%	19.6%	+0.7 pp
Gains/Losses in associated companies	2,358	1,907	23.6%
Financial Costs	-19,494	-15,961	22.1%
Net exchange gains/losses	0	0	ss
Financial gains	2,974	3,298	-9.8%
Financial Results	-14,162	-10,756	31.7%
Profit Before Income Tax	85,516	78,097	9.5%
Income Tax	-17,532	-21,053	-16.7%
Consolidated Net Profit	67,985	57,043	19.2%

(a) Operating costs excluding amortization, financial expenses and income tax

(b) EBITDA = earnings before interests, taxes, depreciation and amortization

(c) EBIT = earrnigs before interests and taxes

Free Cash Flow to Equity reached 19,5 million Euro

Altri's nominal debt net of cash and cash equivalents at 30 September 2017 reached to 436.3 million Euro, which corresponds to a decrease of 19.5 million Euro compared to net debt of 455.8 million Euro, recorded in the end of June 2017.

The total net investment (CAPEX) incurred until the end of September 2017 by the industrial units of the Group amounted to 59.4 million Euro, which means that during the third quarter of 2017 it was paid 11.7 million Euro of CAPEX.

The scheduling of Altri's remunerated gross debt maturity is as follows:

	2017	2018	2019	2020	2021	2022	2023	2024	2025	2026	2027	TOTAL
Bank loans		16 12	16	16	20	28	-	-	-	-	-	108
Commercial paper		- 30	12	-	37	-	-	-	-	-	-	79
Bonds		55 -	40	-	35	45	-	141	90	-	35	441
Other Loans		0 42	0	0	-	-	-	-	-	-	-	42
TOTAL		71 84	68	16	92	73	-	141	90	-	35	669

In the end of September 2017, Altri's cash and equivalents amounted to approximately 233 million Euro.

Regarding the risk management, Altri uses exchange rate derivatives to hedge future cash flows. Accordingly, Altri has contracted European-style call and put options (exchange rate collars) on 10 million USD per month, covering the period from October 2017 to December 2018.

For the fourth quarter of 2017, the exchange rate collars present lower levels between 1.000 and 1.065 and protection levels of 1.15 and 1.17.

During the month of October, it was contracted European-style exchange rate collars, with a notional amount of 6 million USD per month, covering the 12 months of 2019.

Key Balance Sheet Indicators

Thousand Euro	9M2017	2016	Var%
Biological Assets	97,572.0	102,302.6	-5%
Tangible Assets	386,429.1	359,638.8	7%
Goodw ill	265,531.4	265,531.4	0%
Investments in associated companies and joint venture	17,285.7	14,983.1	15%
Others	54,379.5	55,072.8	-1%
Non-Current Assets	821,197.7	797,528.7	3%
Inventories	65,553.4	58,890.4	11%
Costumers	107,286.2	92,261.4	16%
Cash and Cash Equivalents	233,002.9	300,094.3	-22%
Others	33,806.4	36,291.8	-7%
Current Assets	439,648.8	487,537.8	-10%
Total Assets	1,260,846.5	1,285,066.5	-2%
Shareholders' Equity and non-controlling interests	366,876.3	343,642.2	7%
Bank Loans	79,500.0	118,000.0	-33%
Other Loans	484,143.4	462,357.6	5%
Reimbursable Incentives	17,142.9	14,946.6	15%
Others	43,682.8	48,451.2	-10%
Non-Current Liabilities	624,469.1	643,755.4	-3%
Bank Loans	28,205.1	38,897.7	-27%
Other Loans	77,620.2	120,854.4	-36%
Reimbursable Incentives	1,929.6	3,115.2	-38%
Suppliers	81,341.5	69,045.1	18%
Others	80,404.7	65,756.4	22%
Current Liabilities	269,501.1	297,668.9	-9%

Pulp Market

In accordance with information from the Pulp and Paper Products Council (PPPC World Chemical Market Pulp Global 100 Report – September 2017), during the first nine months of 2017, total demand for hardwood pulp increased by 3.6% relatively to the same period of 2016, reaching around 24.7 million tons, which represents an increase of 1 million of tons. The hardwood pulp produced through eucalyptus recorded an increase in demand of 2.9% in the same period.

In terms of stock days, the hardwood pulp had 40 days of inventory in the end of September, compared to 43 days one year ago. Comparing August with September of 2017, there was an increase of three days of inventory.

Concerning the supply evolution, during the second semester of 2017 there were unscheduled stops of some hardwood pulp producers, which had a very positive impact in terms of pulp price evolution. On the other hand, it was announced the entry of a new mill in Brazil – Horizonte 2 belonging to Brazilian company Fíbria.

In terms of BEKP pulp price evolution, the third quarter of 2017 was characterized by an increase of the price in USD of 12% compared to the previous quarter and an increase of the price in EUR of 5%. The average price recorded in the period under analysis reached 873 USD/ton (vs. 783 USD/ton in the previous quarter), while in Euro achieved 746 EUR/ton (vs. 714 EUR/ton in the previous quarter).

Evolution of BEHK pulp price in Europe since 2003 until the press release date (EUR)

Source: FOEX

Outlook for the 4th quarter of 2017

During the fourth quarter of 2017, Celbi's industrial unit had its programmed annual stoppage, which occurred in accordance with the forecast, having the production in that industrial unit restarted successfully at the date of this press release. It was also concluded the ongoing investment project in that mill.

In terms of BHKP pulp selling prices evolution it is expected that, in the short-term, the prices will remain with an upward trend, peaking historical levels. However, the level of prices announced start to jeopardize the profitability of some paper producers.

Moreover, already during the fourth quarter, Altri received 12 million Euro related to payments on account of income tax from previous years.

Altri – Business Profile

Altri is a European reference eucalyptus pulp producer. 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 has under its intervention over 81 thousand hectares of forest in Portugal entirely certified by the 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 that in 2016 amounted to more than 1 million tons/year of bleached eucalyptus pulp.

The Altri Group, through its subsidiaries Celbi and Celtejo, engaged two investment contracts with the Portuguese State, represented by AICEP, at the beginning of 2017, considered to be of strategic interest to the country for the innovation introduced by the creation and qualification of jobs and the development of the regions where the industrial units are located, with financial and fiscal incentives being granted to the projects in question.

The amount of the investment contracted at Celbi was 40 million Euro and is aimed at improving the production process, particularly in the debarking and wrecking of wood and in the washing and bleaching of pulp. At Celtejo, the amount of the investment contracted was 85 million Euro and its objective is the innovation, economic and environmental sustainability of the industrial unit with interventions at the level of the recovery boiler, steam reduction and industrial waste water treatment installations.

¹ FSC‐C004615

Consolidated financial statements and notes (translation of a document originally issued in Portuguese – note 20)

ALTRI, SGPS, S.A.

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION AS AT 30 SEPTEMBER 2017 AND 31 DECEMBER 2016

(Translation of financial statements originally issued in Portuguese)

(Amounts expressed in Euro)

ASSETS	Notes	30.09.2017	31.12.2016
NON CURRENT ASSETS:
Biological assets		97,572,019	102,302,637
Tangible fixed assets		386,429,065	359,638,821
Investment property		113,310	113,310
Goodwill		265,531,404	265,531,404
Intangible assets		689,191	643,354
Investments in associated companies and joint ventures	4.2	17,285,739	14,983,101
Investments available for sale	4.3	11,262,914	11,262,914
Other non current assets		3,374,254	3,544,289
Derivative financial instruments	11	1,447,282	-
Deferred tax assets	7	37,492,515	39,508,901
Total non current assets		821,197,693	797,528,731
CURRENT ASSETS:
Inventories		65,553,359	58,890,414
Biological assets		340,119	-
Customers		107,286,173	92,261,372
Other debtors		2,856,106	4,297,543
State and other public entities		25,023,682	29,538,312
Other current assets		2,884,289	2,455,926
Derivative financial instrument	11	2,702,206	-
Cash and cash equivalents	6	233,002,863	300,094,254
Total current assets		439,648,797	487,537,821
Total assets		1,260,846,490	1,285,066,552
SHAREHOLDERS' FUNDS AND LIABILITIES		30.09.2017	31.12.2016
SHAREHOLDERS' FUNDS:
Share capital	8	25,641,459	25,641,459
Legal reserve		5,128,292	5,128,292
Other reserves		268,121,786	235,894,619
Consolidated net profit / (loss)		67,984,749	76,977,826
Total shareholders' funds attributable to the parent company's sharedholders		366,876,286	343,642,196
Non controlling interests		-	-
Total shareholders' funds		366,876,286	343,642,196
LIABILITIES:
NON CURRENT LIABILITES:
Bank loans	9	79,500,000	118,000,000
Other loans	9	484,143,420	462,357,627
Reimbursable subsidies	9	17,142,916	14,946,631
Other non current liabilities		16,433,445	19,698,356
Deferred tax liabilities	7	19,665,254	18,731,619
Pension liabilities		2,528,818	2,528,818
Provisions	10	5,055,249	5,064,402
Derivatives	11	-	2,428,023
Total non current liabilities		624,469,102	643,755,474
CURRENT LIABILITIES:
Bank loans	9	28,205,123	38,897,709
Other loans	9	77,620,159	120,854,418
Reimbursable subsidies	9	1,929,607	3,115,183
Suppliers		81,341,496	69,045,134
Other current creditors		23,167,212	14,915,753
State and other public entities		15,193,937	14,318,318
Other current liabilities		41,466,705	34,099,716
Derivatives	11	576,863	2,422,650
Total current liabilites		269,501,102	297,668,881
Total shareholders' funds and liabilities		1,260,846,490	1,285,066,552

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 2017 AND 2016

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

		NINE MONTHS PERIOD ENDED			THREE MONTHS PERIOD ENDED
	Notes	30.09.2017	30.09.2016	30.09.2017	30.09.2016
Sales		477,835,461	440,120,191	161,172,637	144,821,070
Services rendered		7,022,834	6,952,130	2,296,477	2,353,058
Other income	14	5,933,918	6,330,947	2,070,081	2,367,723
Cost of sales		(200,195,087)	(177,678,296)	(62,233,150)	(59,802,888)
External supplies and services		(121,663,416)	(118,266,097)	(39,831,617)	(39,751,708)
Payroll expenses		(24,829,259)	(24,289,718)	(8,648,732)	(8,135,096)
Amortisation and depreciation		(41,561,883)	(39,804,980)	(13,728,614)	(13,248,808)
Provisions and impairment losses		-	87,602	-	-
Other costs	15	(2,864,676)	(4,599,490)	(1,088,834)	(1,605,354)
Gains and losses in associated companies and joint ventures	4.2	2,302,638	1,906,741	882,148	1,179,315
Financial expenses	12	(19,493,573)	(15,960,733)	(7,299,519)	(5,209,075)
Financial income	12	3,029,300	3,298,335	1,330,866	774,171
Profit before income tax		85,516,257	78,096,632	34,921,743	23,742,408
Income tax		(17,531,508)	(21,053,448)	(8,489,118)	(6,919,690)
Profit after income tax		67,984,749	57,043,184	26,432,625	16,822,718
Consolidated net profit		67,984,749	57,043,184	26,432,625	16,822,718
Attributable to:
Parent company's shareholders		67,984,749	57,043,184	26,432,625	16,822,718
Non controlling interests		-	-	-	-
		67,984,749	57,043,184	26,432,625	16,822,718
Earnings per share:
Basic	13	0.33	0.28	0.13	0.08
Diluted	13	0.33	0.28	0.13	0.08

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

(translation of a document originally issued in Portuguese – note 20)

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

CONSOLIDATED STATEMENTS OF PROFIT AND LOSS AND OTHER COMPREHENSIVE INCOME FOR THE NINE AND THREE MONTHS PERIODS ENDED 30 SEPTEMBER 2017 AND 2016

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

		NINE MONTHS PERIOD ENDED		THREE MONTHS PERIOD ENDED
	Notes	30.09.2017	30.09.2016	30.09.2017	30.09.2016
Net consolidated profit / (loss) for the period		67,984,749	57,043,184	26,432,625	16,822,718
Other comprehensive income: Items that will not be reclassified to profit or loss		-	-	-	-
Items that may be reclassified to profit and loss		-	-	-	-
Change in fair value of cash flow hedging derivatives Changes in currency translation reserves Others	11	6,546,219 (46,185) 32,225	(421,491) (8,582) -	2,556,776 (33,977) -	(421,491) 2,407 -
		6,532,259	(430,074)	2,522,799	(419,085)
Other comprehensive income for the period		6,532,259	(430,074)	2,522,799	(419,085)
Total comprehensive income for the period		74,517,008	56,613,110	28,955,424	16,403,633
Attributable to: Shareholders' of the parent company Non controlling interest		74,517,008 -	56,613,110 -	28,955,424 -	16,403,633 -

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 MONTHS PERIODS ENDED 30 SEPTEMBER 2017 AND 2016

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

		Att ribu tab le t he 's s har eho lde o t ent par co mp any rs
	No tes	Sh ital are ca p	Leg al r ese rve	Ot her re ser ves	Ad van ce on fits pro	Ne rofi t p t	Tot al	No ont roll ing n c inte ts res	Tot al sha reh old er's fun ds
Ba lan of 1 Ja 201 6 ce as nua ry		25 641 459 , ,	4, 336 498 ,	225 998 128 , ,	( ) 51, 282 918 ,	117 656 401 , ,	322 349 568 , ,	-	322 349 568 , ,
Ap iati of t he sol ida ted rofi t of 20 15 t p pro pr on con ne		-	79 1, 794	65 581 689 , ,	51 282 918 , ,	( 117 656 401 ) , ,	-	-	-
Div ide nd dis trib utio n		-	-	( 51, 282 918 ) ,	-	-	( 51, 282 918 ) ,	-	( 51, 282 918 ) ,
Tot al c hen siv e in e fo r th erio d om pre com e p		-	-	( ) 430 074 ,	-	57 043 184 , ,	56 613 110 , ,	-	56 613 110 , ,
of 3 0 S Ba lan tem ber 20 16 ce as ep		25 641 459 , ,	5, 128 292 ,	239 866 825 , ,	-	57 043 184 , ,	327 679 760 , ,	-	327 679 760 , ,
of 1 Ba lan Ja 201 7 ce as nua ry		25 641 459 , ,	5, 128 292 ,	235 894 619 , ,	-	76 977 826 , ,	343 642 196 , ,	-	343 642 196 , ,
Ap iati of t he sol ida ted rofi t of 20 16 t p pro pr on con ne	18	-	-	76 977 826 , ,	-	( 76, 977 826 ) ,	-	-	-
Div ide nd dis trib utio n	18	-	-	( 51, 282 918 ) ,	-	-	( 51, 282 918 ) ,	-	( 51, 282 918 ) ,
Tot al c hen siv e in e fo r th erio d om pre com e p		-	-	6, 532 259 ,	-	67 984 749 , ,	74 517 008 , ,	-	74 517 008 , ,
0 S Ba lan of 3 tem ber 20 17 ce as ep		25 641 459 , ,	5, 128 292 ,	268 121 786 , ,	-	67 984 749 , ,	366 876 286 , ,	-	366 876 286 , ,

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

The official chartered accountant

The Board of Directors

Consolidated financial statements and notes

(translation of a document originally issued in Portuguese – note 20)

ALTRI , SGPS, S.A.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW FOR THE NINE AND THREE MONTHS PERIODS ENDED 30 SEPTEMBER 2017 AND 2016

(Translation of financial statements originally issued in Portuguese)

(Amounts expressed in Euro) Notes 30.09.2017 30.09.2016 30.09.2017 30.09.2016 Operating activies: Cash flow from operating activities (1) 137,095,994 65,808,734 52,278,734 14,226,440 Investment activities: Receipts relating to: Tangible assets 66,295 448,544 11,209 34,603 Investment subsidies 774,835 878,333 458,018 202,839 Dividends received 55,000 - - - Interest and similar income 76,107 524,807 76,107 - Payments relating to: Investment subsidies (1,729,914) (279,436) - - Financial investments - (2,550,000) - (2,550,000) Tangible assets (59,232,703) (23,953,580) (11,533,411) - Intagible assets (113,495) (226,628) (76,723) (13,772,038) Other financial assets - (103,000) - - Cash flow from investment activities (2) (60,103,875) (25,260,960) (11,064,800) (16,084,596) Financing activities: Receipts relating to: Loans obtained 114,349,302 123,130,823 76,948,841 72,569,561 Other financial operations - 5,103 - - Payments relating to: Loans obtained (191,886,432) (192,273,238) (68,413,071) (17,973,111) Interest and similar costs (15,252,742) (11,792,840) (6,764,277) (4,378,808) Dividends distribution 18 (51,282,918) (51,282,918) - - Cash flow from financing activities (3) (144,072,790) (132,213,070) 1,771,493 50,217,642 Cash and cash equivalents at the beginning of the period 300,094,254 243,154,160 190,028,156 103,129,377 Exchange rate differences effect (10,720) - (10,720) - Variation of cash and cash equivalents: (1)+(2)+(3) (67,080,671) (91,665,297) 42,985,427 48,359,486 Cash and cash equivalents at the end of the period 6 233,002,863 151,488,863 233,002,863 151,488,863 NINE MONTHS PERIOD ENDED THREE MONTHS PERIOD ENDED

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

1. INTRODUCTORY NOTE

Altri, SGPS, S.A. ("Altri" or "Company") is an open capital company incorporated as of 1 March 2005, as a result of the reorganization process of Cofina, SGPS, S.A., has its head-office located at Rua General Norton de Matos, 68, r/c – Porto, Portugal and its shares are listed in the Euronext Lisbon 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 pulp of eucalyptus through three mills (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 believes that there is only one business segment (production and commercialization of bleached pulp from eucalyptus) and the management information is also analysed 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 ACCOUTING POLICIES AND BASIS FOR PRESENTATION

The consolidated financial statements as of 30 September 2017 were prepared using accounting policies consistent with the International Financial Reporting Standards and in accordance with the 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 2016.

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 a document originally issued in Portuguese – note 20)

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 2017 and 31 December 2016, are as follows:

Company	Head Office	Percentage Held		Main Activity
		2017	2016
Parent-Company
Altri, SGPS, S.A.	Porto			Investment management
Subsidiaries
Altri Abastecimento de Madeira, S.A.	Figueira da Foz	100%	100%	Wood commercialization
Altri Florestal, S.A.	Figueira da Foz	100%	100%	Forest management
Altri Sales, S.A.	Nyon, Sw itzerland	100%	100%	Group management support services
Altri, Participaciones Y Trading, S.L.	Pontevedra, Spain	100%	100%	Commercialization of pulp
Caima Energia – Empresa de Gestão e Exploração de Energia, S.A.	Constância	100%	100%	Production of energy
Caima Indústria de Celulose, S.A.	Constância	100%	100%	Production and commercialization of pulp
Captaraíz Unipessoal, Lda.	Figueira da Foz	100%	100%	Purchase and sale of properties
Celtejo – Empresa de Celulose do Tejo, S.A.	Vila Velha de Ródão	100%	100%	Production and commercialization of pulp
Celulose Beira Industrial (Celbi), S.A.	Figueira da Foz	100%	100%	Production and commercialization of pulp
Inflora – Sociedade de Investimentos Florestais, S.A.	Figueira da Foz	100%	100%	Forest management
Pedro Frutícola, Sociedade Frutícola, S.A.	Constância	100%	100%	Agriculture production
Sociedade Imobiliária Porto Seguro - Investimentos Imobiliários, S.A.	Porto	100%	100%	Purchase and sale of properties
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 2017 and 31 December 2016 are as follows:

Company	Head Office	Statement of financial position		Percentage Held		Activity
		2017	2016	2017	2016
Associated companies:
Operfoz – Operadores do Porto da Figueira da Foz, Lda.	Figueira da Foz	691,796	719,057	33.33%	33.33%	Harbor operations
Joint ventures:
EDP – Produção Bioeléctrica, S.A.	Lisboa	16,593,943	14,264,044	50%	50%	Energy production
		17,285,739	14,983,101

Associated companies and joint ventures were included in the Altri Group consolidated financial statements in accordance with the equity method.

Consolidated financial statements and notes (translation of a document originally issued in Portuguese – note 20)

The movements occurred in the balance of this caption in the periods ended in 30 September 2017 and 2016 were as follows:

	Statement of financial position
	30.September.2017		30.September.2016
	EDP Bioeléctrica		EDP Bioeléctrica
	Operfoz	(a)	Operfoz	(a)
Opening balance	719,057	14,264,044	697,453	11,310,766
Equity method:
Effects on gains and losses in associated companies and joint ventures	(27,261)	2,329,899	-	1,906,741
Closing balance	691,796	16,593,943	697,453	13,217,507

(a) - Includes loans granted.

The total amount of the statement of financial position, equity and net profit for the periods ended on 30 September 2017 and 31 December 2016 for the main joint ventures and associated companies were as follows:

	30.09.2017	31.12.2016
	EDP Bioeléctrica (a) / (b)	EDP Bioeléctrica (a)
Non-current assets	116,599,664	119,046,942
Current assets	23,024,450	23,102,698
Non-current liabilities	63,554,228	61,633,836
Current liabilities	48,736,068	47,838,608
Equity attributable to shareholders of the parent company	27,333,818	32,677,196
Turnov er	37,431,597	39,115,664
Net profit	3,958,598	5,423,422
Total comprehensiv e income	3,958,598	5,423,422

(a) - Includes loans granted.

(b) - Financial statements non-audited.

EDP – Produção Bioeléctrica, S.A. owns shares representing the total share capital of Ródão Power – Energia e Biomassa do Ródão, S.A., Bioródão, S.A. and Sociedade Bioeléctrica do Mondego, S.A.

The accounting policies used by these companies do not differ significantly from those used by Altri Group, fact that led to no accounting policies harmonization.

4.3 INVESTMENTS AVAILABLE FOR SALE

As of 30 September 2017 and 31 December 2016 the investments available for sale are as follows:

	Statement of financial position
	30.09.2017	31.12.2016
Rigor Capital - Produção de Energia, Lda.	10,527,397	10,527,397
Other inv estments	735,517	735,517
	11,262,914	11,262,914

It is the understanding of the Altri Group that the caption "Investments available for sale" includes 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, which does not differ significantly from its fair value.

FINANCIAL INFORMATION 3Q2017

Consolidated financial statements and notes (translation of a document originally issued in Portuguese – note 20)

5. CHANGES OCCURED IN THE CONSOLIDATION PERIMETER

During the nine months period ended on 30 September 2017, there were no changes in the consolidation perimeter compared to 31 December 2016.

6. CASH AND CASH EQUIVALENTS

As of 30 September 2017 and 2016, the caption "Cash and cash equivalents" can be detailed as follows:

	30.09.2017	30.09.2016
Cash	44,533	40,485
Bank deposits	232,958,330	151,448,378
Cash and cash equiv alents	233,002,863	151,488,863

During the nine months' periods ended on September 30, 2017 and 2016 there were no collections related with financial investments.

During the nine months' period ended on September 30, 2017 there were no payments related to investments and during the nine months' period ended on September 30, 2016 there was just the payment of the acquisition of shares of Sociedade Imobiliária Porto Seguro, S.A..

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 when 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 2013 are still subject to review.

The Board of Directors of Altri 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 2017.

The movements occurred in deferred tax assets and liabilities in the nine months periods ended in 30 September 2017 and 2016 were as follows:

	2017
	Deferred tax assets	Deferred tax liabilities
Opening balance as of 1.1.2017	39,508,901	18,731,619
Effects on income statement:
Harmonization of depreciation rates	(247,472)	-
Others	(802,034)	-
Total effect on income statement	(1,049,506)	-
Effects on sharedholders' funds:
Fair v alue of deriv ativ es	(966,880)	933,635
Closing balance as of 30.09.2017	37,492,515	19,665,254
	Deferred tax assets	Deferred tax liabilities
	2016
Opening balance as of 1.1.2016	27,060,866	15,871,624
Effects on income statement:
Increases/(Decreases) in prov isions not accepted	581,698	1,370,179
Harmonization of depreciation rates	(174,136)	-
Others	-	-
Total effect on income statement
Effects on sharedholders' funds:	407,562	1,370,179
Fair v alue of deriv ativ es	162,081	-
Closing balance as of 30.09.2016	27,630,509	17,241,803

(translation of a document originally issued in Portuguese – note 20)

8. SHARE CAPITAL

As of 30 September 2017 and 2016 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.

9. BANK LOANS, OTHER LOANS AND REIMBURSABLE SUBSIDIES

As of 30 September 2017 and 31 December 2016, the captions "Bank loans", "Other loans" and "Reimbursable subsidies" can be detailed as follows:

	30.09.2017
		Nominal value		Book value
	Current	Non current	Total	Current	Non current	Total
Bank loans	28,000,000	79,500,000	107,500,000	28,205,123	79,500,000	107,705,123
Pledged current accounts	-	-	-	-	-	-
Bank loans	28,000,000	79,500,000	107,500,000	28,205,123	79,500,000	107,705,123
Commercial paper	-	78,500,000	78,500,000	101,679	78,500,000	78,601,679
Bonds	35,000,000	406,000,000	441,000,000	35,636,975	405,211,420	440,848,395
Other loans	41,881,505	432,000	42,313,505	41,881,505	432,000	42,313,505
Other loans	76,881,505	484,932,000	561,813,505	77,620,159	484,143,420	561,763,579
Reimbursable subsidies	1,929,607	17,142,916	19,072,523	1,929,607	17,142,916	19,072,523
	106,811,112	581,574,916	688,386,028	107,754,889	580,786,336	688,541,225
			31.12.2016
		Nominal value			Book value
	Current	Non current	Total	Current	Non current	Total
Bank loans	13,500,000	118,000,000	131,500,000	13,854,263	118,000,000	131,854,263
Pledged current accounts	25,000,000	-	25,000,000	25,043,446	-	25,043,446
Bank loans	38,500,000	118,000,000	156,500,000	38,897,709	118,000,000	156,897,709
Commercial paper	58,500,000	115,000,000	173,500,000	58,500,000	115,000,000	173,500,000
Bonds	31,600,000	346,500,000	378,100,000	31,790,307	347,357,627	379,147,934
Other loans	30,564,111	-	30,564,111	30,564,111	-	30,564,111
Other loans	120,664,111	461,500,000	582,164,111	120,854,418	462,357,627	583,212,045
Reimbursable subsidies	3,115,183	14,946,631	18,061,814	3,115,183	14,946,631	18,061,814

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).

162,279,294 594,446,631 756,725,925 162,867,310 595,304,258 758,171,568

10. ACCUMULATED PROVISIONS AND IMPAIRMENT LOSSES

The movements occurred in provisions and impairment losses for the nine months periods ended at 30 September 2017 and 2016 can be detailed as follows:

		30.09.2017
			Impairment losses in
		Impairment losses in accounts	inv entories and biological
	Prov isions	receiv able	assets	Total
Opening balance	5,064,402	3,717,961	8,319,880	17,102,243
Increases	-	-	-	-
Rev ersals and utilizations	(9,153)	(1,518)	-	(10,671)
Closing balance	5,055,249	3,716,443	8,319,880	17,091,572
		30.09.2016
			Impairment losses in
		Impairment losses in accounts	inv entories and biological
	Prov isions	receiv able	assets	Total
Opening balance	5,062,741	3,720,996	7,764,789	16,548,526
Increases	-	-	-	-
Rev ersals and utilizations	(96,755)	-	-	(96,755)
Closing balance	4,965,986	3,720,996	7,764,789	16,451,771

The amount recorded under the caption "Provisions" as at 30 September 2017 and 2016 is the best estimate of the Board of Directors in order to face all the losses that may be supported due to claims in force.

11. DERIVATIVE FINANCIAL INSTRUMENTS

As of 30 September 2017 and 2016 the companies of the Group operated with contracts for derivatives related to hedge interest rate variations and as of 30 September 2017 they had contracts of exchange rate derivatives, which are recorded according to their fair value.

Altri Group's companies only use derivatives to hedge cash flows associated with operations related with their activities.

As of 30 September 2017 and 2016 the detail of the financial derivative instruments and its movements occurred in the nine months periods then ended are as follows:

		Exchange rate derivatives	Interest rate derivatives	Total
	Non current assets	Current assets	Non current liabilities	Current liabilities	Current liabilities
Opening balance as of 31 December 2016	-	-	(2,428,023)	(1,873,584)	(549,066)	(4,850,673)
Derivatives fair value variation/cessation
Effects on shareholder's funds	1,447,282	2,702,206	2,428,023	1,873,584	(4,361)	8,446,734
Effects on the profit and loss statement	-	-	-	-	(23,436)	(23,436)
Closing balance as of 30 September 2017	1,447,282	2,702,206	-	-	(576,863)	3,572,625

	Interest rate deriv ativ es
Opening balance asof 31 December 2015	(136,786)
Deriv ativ es fair v alue v ariation/cessation
Effects on shareholder's funds	(643,345)
Effects on the profit and loss statement	(26,813)
Closing balance as of 30 September 2016	(806,944)

12. FINANCIAL RESULTS

The financial results for the nine months periods ended at 30 September 2017 and 2016 are detailed as follows:

	30.09.2017	30.09.2016
Financial ex penses:
Interests	12,195,003	10,834,941
Other financial ex penses	7,298,570	5,125,792
	19,493,573	15,960,733
Financial income:
Interests	426,129	473,416
Other financial income	2,603,171	2,824,919
	3,029,300	3,298,335

The caption "Other financial expenses" includes, mainly, expenses with loans setup, which are recognized in the profit and loss statement through the duration of those loans (Note 9) and interest rate derivatives instruments that matured or were paid until that date (Note 11).

Consolidated financial statements and notes (translation of a document originally issued in Portuguese – note 20)

13. EARNINGS PER SHARE

Earnings per share for the nine months periods ended as of 30 September 2017 and 2016 were determined taking into consideration the following amounts:

	30.09.2017	30.09.2016
Share number considered for the computation of basic and diluted earnings	205,131,672	205,131,672
Net profit considered for the computation of basic and diluted earnings	67,984,749	57,043,184
Earnings per share
Basic	0.33	0.28
Diluted	0.33	0.28

14. OTHER INCOME

As of 30 September 2017 and 2016 the caption of the statement of profit and loss "Other Income" is detailed as follows:

	30.09.2017	30.09.2016
Subsidies to inv estment and ex ploitation	3,726,318	3,504,430
Gains on disposal of fix ed assets	49,184	215,457
Other income	2,158,416	2,611,060
	5,933,918	6,330,947

15. OTHER EXPENSES

As of 30 September 2017 and 2016 the caption of the statement of profit and loss "Other expenses" is detailed as follows:

	30.09.2017	30.09.2016
Direct tax es and charges	1,141,399	1,185,773
Other costs	1,723,277	3,413,717
	2,864,676	4,599,490

16. SEGMENTAL INFORMATION

On 16 April 2008, was signed the Altri SGPS, S.A. spin-off public deed. Under the terms of that project, the planned reorganization implies the split of Altri's two business units that manage equity holdings 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. This allows for the Altri Group to focus its activity on its core business, production and commercialization of bleached pulp from eucalyptus, so the Board of Directors believes that there is only one business segment and the management information is reported and analysed on this basis.

17. RELATED PARTIES

The subsidiary companies of the Group have between each other transactions that classify as transactions with related parties and which are made at market prices.

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 2017 and 2016, there were no transactions or loans granted to the members of the Board of Directors.

Consolidated financial statements and notes

(translation of a document originally issued in Portuguese – note 20)

As of 30 September 2017 and 2016 the balances and transactions with related parties are as follow:

	Purchases and serv ices obtained		Sales and serv ices rendered		Interest income
Transactions	30.09.2017	30.09.2016		30.09.2016	30.09.2017	30.09.2016
Associated companies and joint v entures (a)	1,759,803	1,622,043	12,825,924	11,293,612	129,765	142,490
Other related parties (b)	4,589,840	3,299,211	-	-	-	-
	6,349,643	4,921,254	12,825,924	11,293,612	129,765	142,490
	Contas a pagar			Contas a receber	Empréstimos concedidos
Balances	30.09.2017	30.09.2016	30.09.2017	30.09.2016	30.09.2017	30.09.2016
Associated companies and joint v entures (a)	309,885	212,810	3,006,327	4,145,017	11,482,905	11,482,905
Other related parties (b)	121,606	69,890	360,260	-	-	-
	431,491	282,700	3,366,587	4,145,017	11,482,905	11,482,905

• (a) All entities consolidated by the equity method as of 30 September 2017 and 2016 (Note 4.2);
• (b) Were considered as related parties the companies listed below.

Besides the companies included in consolidation (Note 4), entities considered as related parties as of 30 September 2017 can be detailed as follow:

• Actium Capital, SGPS, S.A.
• Adcom Media Anúncios e Publicidade, S.A.
• Alteria, SGPS, S.A.
• A Nossa Aposta Jogos e Apostas On-line, S.A.
• Caderno Azul, SGPS, S.A.
• Cofihold, SGPS, S.A.
• Cofina Media, S.A.
• Cofina, SGPS, S.A.
• Destak Brasil Editora de Publicações, S.A.
• Destak Brasil Empreendimentos e Participações, S.A.
• Elege Valor, SGPS, S.A.
• Expeliarmus Consultoria, S.A.
• F. Ramada II, Imobiliária, S.A.
• F. Ramada Investimentos, SGPS, S.A.
• Grafedisport Impressão e Artes Gráficas, S.A.
• Livrefluxo, SGPS, S.A.
• Mercados Globais Publicação de Conteúdos, Lda.
• Planfuro Global, S.A.
• Préstimo Prestígio Imobiliário, S.A.
• Promendo, SGPS, S.A.
• Ramada Aços, S.A.
• Ramada Storax, S.A.
• Socitrel Sociedade Industrial de Trefilaria, S.A.
• Storax S.A.
• Storax Benelux, S.A.
• Storax Ltd.
• Storax España, S.L.
• Universal Afir, S.A.
• Valor Autêntico, SGPS, S.A.
• VASP Sociedade de Transportes e Distribuições, Lda.
• 1 Thing Investments, SGPS, S.A.

18. APPLICATION OF THE NET PROFIT

The Board of Directors proposed, in its annual report, approved at the General Shareholders' Meeting held on 26 April 2017, that the individual net profit of Altri SGPS, S.A. amounting to 59,541,558.30 Euros would be allocated as follows:

Free reserves 8,258,640.30 Distribution of dividends 51,282,918.00 --------------------- 59,541,558.30 ============

19. FINANCIAL STATEMENTS APPROVAL

The financial statements were approved by the Board of Directors and authorized for issuance in 3 November 2017.

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 in 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

João Manuel Matos Borges de Oliveira

Domingos José Vieira de Matos

Laurentina da Silva Martins

Pedro Miguel Matos Borges de Oliveira

Ana Rebelo de Carvalho Menéres de Mendonça

José Manuel de Almeida Archer

ALTRI, SGPS, S.A.

Rua do General Norton de Matos, 68 - R/C 4050 – 424 Porto PORTUGAL Tel: + 351 22 834 65 02

www.altri.pt