Altri SGPS — Interim / Quarterly Report 2018

May 30, 2018

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 – 1 st Quarter of 2018 (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 was prepared in accordance with the International Financial Reporting Standards (IFRS).

Income Statement – 1Q 2018

thousand Euro	1Q 2018	1Q 2017	1Q18/1Q17 Var%	4Q 2017	1Q18/4Q17 Var%
Total Revenues	173,385	159,836	8.5%	174,987	-0.9%
Cost of sales External supplies and services	58,694 40,986	69,261 41,783	-15.3% -1.9%	56,816 44,994	3.3% -8.9%
Payroll expenses	8,315	7,719	7.7%	9,124	-8.9%
Other expenses	2,111	950	n.a.	5,427	-61.1%
Provisions and impairment losses	-	-	-	-167	-
Variation of the fair value in the biological assets	-	-	-	8,934	-
Total Expenses (a)	110,106	119,714	-8.0%	125,128	-12.0%
EBITDA (b) Margin	63,278 36.5%	40,122 25.1%	57.7% +12.1 pp	49,858 28.5%	26.9% +7.5 pp
Amortisation and depreciation	13,863	13,915	-0.4%	12,130	14.3%
EBIT (c)	49,415	26,207	88.6%	37,728	31.0%
Margin	28.5%	16.4%	+11.3 pp	21.6%	+6.4 pp
Gains/Losses in associated companies Financial costs Financial gains	723 -4,867 2,234	495 -5,082 448	46.0% -4.2% 398.1%	226 -6,835 1,953	219.7% -28.8% 14.4%
Financial Results	-1,910	-4,138	-53.9%	-4,656	-59.0%
Profit Before Income Tax	47,506	22,069	115.3%	33,072	43.6%
Income Tax	-14,860	-4,945	200.5%	-4,989	-0.9%
Profit for the period attributable to parent company's shareholders	32,645	17,124	90.6%	28,083	16.2%

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

(b) EBITDA = earnings before interest, taxes, depreciation and amortisation (c) EBIT = earnings before interest and taxes

The first quarter of 2018 was marked by three facts:

• (I) A continuous upwards trend in the price of pulp, whose market index (PIX) recorded, at the end of March 2018, 1,030 USD/ton, having continued to rise until the date of this press release. It should be noted that this index has been raising continuously since January 2017;
• (II) The conclusion of the investment project in Celbi's industrial unit, with interventions in the debarking and wood shredding and in the washing and bleaching of pulp. This project had an expressive impact in the reduction of the unitary and variable production costs;

(III) In environmental terms, it should be noted the fully functioning of the new Wastewater Treatment Plan of Celtejo, inaugurated at September 2017. This Plant uses the best technologies available in the world, including a treatment stage of ultrafiltration of membranes, with efficiency reduction of CQO, CBO5 and SST parameters by around 90%.

EBITDA records an increase of 58% amounting to 63.3 million Euro

Total revenues in the first quarter of 2018 achieved 173.4 million Euro, an increase of 9% over the same period of 2017 and a decrease of about 0.9% over the fourth quarter of 2017.

During the period under analysis, approximately 257.1 thousand tons of pulp were produced (-2.7% in relation to the 1st quarter of 2017), of which approximately 27.3 thousand tons of dissolving pulp (+2% when compared to the same period of 2017). The decrease in production levels was due to the restrictions applied to Celtejo by environmental authorities.

In terms of sales, in the first three months of 2018, around 247.5 thousand tons of pulp were sold (-9.8% over the same period of 2017), of which approximately 24.5 thousand tons of dissolving pulp (-8% comparatively to the same period of the previous year). The decrease on sales is related with the need to reset stocks to guarantee to the customers the good level of service and with the adverse weather conditions that induced the closure of some harbours.

In terms of exports, in the first quarter of 2018, Altri exported around 217.3 thousand tons of pulp, which corresponds to a decrease of about 13% over the same period of the previous year. In monetary terms, exports amounted to 131.7 million Euro, which implies an increase of 5.9% over the first quarter of 2017.

Total pulp sales amounted to 149.1 million Euro, which corresponds to an increase of about 11% over the same period of the previous year and in line with the amount of sales recorded in the last quarter of 2017.

Operating costs recorded a decrease of approximately 8% over the same period of the last year, and a decrease of 5% over the fourth quarter of 2017 (excluding the variation of the fair value in the biological assets caption). Hence, total costs, excluding depreciation, financial costs and taxes, in the first quarter of 2018, amounted to around 110 million Euro.

EBITDA for the first quarter of 2018 recorded about 63.3 million Euro, an increase of 58% over the EBITDA recorded in the same period of 2017. Regarding the fourth quarter of 2017, EBITDA recorded a raise of 27%.

The financial result was a net expense of 1.9 million Euro, which corresponds to a decrease of about 59% over the net financial expense incurred in the fourth quarter of 2017, essentially due to the exchange rate impact. The average cost of total financial debt is less than 3%.

Altri's consolidated net profit reached approximately 33 million Euro, which corresponds to an increase of about 91% when compared to the same period of 2017.

Net debt of 365.2 million Euro

Altri's nominal debt net of cash and cash equivalents as of March 31, 2018 amounted to 365.2 million Euro, which corresponds to a decrease of approximately 67 million Euro over the net debt recorded in the same period of 2017 and a decrease of 23 million Euro when compared to the net debt recorded in the end of 2017.

The total net investment (CAPEX) in the 1st quarter of 2018 by Altri's industrial units amounted to 23.4 million Euro.

The scheduling of Altri's remunerated gross debt maturity, as of March 31, 2018, is as follows:

Regarding risk management, Altri uses exchange rate derivatives to hedge future cash flows. Hence, Altri has contracted European-style call and put options (exchange rate collars) on USD 10 million per month, for the full 2018 financial year. Moreover, as of March 31, 2018, Altri had contracted Asian-style exchange collars, in the amount of USD 6 million per month, covering all 2019 financial year.

Key balance sheet indicators

thousand Euro	1Q 2018	2017	Var%
Biological assets	94,986.5	94,848.3	0%
Tangible assets	392,343.4	396,515.7	-1%
Goodw ill	265,531.4	265,531.4	0%
Investments in associated companies and joint ventures	18,180.2	17,456.9	4%
Others	60,526.1	52,609.1	15%
Total non current assets	831,567.5	826,961.4	1%
Inventories	54,810.3	50,728.0	8%
Customers	114,608.2	113,284.7	1%
Cash and cash equivalents	262,786.3	193,599.7	37%
Others	31,081.5	25,514.6	19%
Total current assets	463,286.2	383,127.1	21%
Total assets	1,294,853.8	1,210,088.5	7%
Shareholders' equity and non controlling interests	427,027.6	394,567.1	8%
Bank loans	33,500.0	39,500.0	-15%
Other loans Reimbursable incentives	530,491.3 14,565.8	442,483.9 14,565.8	20% 0%
Others	50,530.5	45,427.5	11%
Total non current liabilities	629,087.6	541,977.1	16%
Bank loans	6,059.2	6,216.6	-3%
Other current loans	58,492.1	94,830.7	-38%
Reimbursable incentives	3,121.5	3,121.5	0%
			5%
Suppliers	100,521.8	95,373.3
Others	70,543.8	74,002.2	-3%

Pulp Market

According to data from the Pulp and Paper Productions Council (PPPC Special Research Note - May 2017), during 2017, total demand for hardwood pulp increased by 5% comparing to the previous year, which corresponds to an additional consumption of 1.6 million tons, reaching around 33.9 million tons.

Geographically, the consumption of hardwood pulp in Europe was practically unchanged over the previous year, while China verified an increase of 12.8%. With regard to the eucalyptus pulp, there was a raise in the world demand around 3.6%, having maintained unchanged in Europe and having recorded an increase of 7.4% in China.

Regarding the demand evolution, according to the data from Pulp and Paper Products Council (PPPC World Chemical Market Pulp Global 100 Report – March 2018), during the first quarter of 2018, it was recorded a raise of hardwood pulp demand (YoY) of about 4.2%, which means, approximately 340 thousand tons of additional demand when compared to the first three months of 2017. Geographically, it is noted that Chinese consumption is increasing around 3% and European (Western and East) consumption is increasing around 6%.

In terms of BEKP pulp price evolution, the first quarter of 2018 was characterized by 7% increase in the price in USD, when compared to the previous quarter, and a 3% increase in the price in EUR. The average price recorded in the period under analysis reached 1,011 USD/ton (vs. 941 USD/ton in the previous quarter), while in EUR achieved 824 EUR/ton (vs. 800 EUR/ton in the previous quarter).

Evolution of BEHK pulp price in Europe since 2003 until May 2018

Source: FOEX

Outlook – 2 nd Quarter 2018

For the second quarter of 2018, in terms of BHKP pulp selling price evolution, it is expected to maintain the growth dynamics verified so far, while in operational terms, a raise on sales is expected.

The investment project in Celtejo is occurring within the scheduled period, being expectable to finish in the second half of the year.

Altri – Business Profile

Altri is a reference in European 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 Forest Stewardship Council® (FSC®)¹ and by Programme 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 2017 amounted 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 investment project contracted at Celbi is completed. At Celtejo, the amount of investment contracted was 85 million Euro and is aimed at improving the innovation and economic and environmental sustainability of the industrial unit with interventions at the level of the recovery boiler, steam reduction and industrial waste water treatment installation.

¹ FSC-C004615

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION AS AT 31 MARCH 2018 AND 31 DECEMBER 2017

(Translation of financial statements originally issued in Portuguese - Note 19) (Amounts expressed in Euro)

ASSETS	Notes	31.03.2018	31.12.2017
NON CURRENT ASSETS:
Biological assets		94,986,473	94,848,275
Tangible fixed assets		392,343,392	396,515,699
Investment property		4,512,169	113,310
Goodwill		265,531,404	265,531,404
Intangible assets		934,610	1,019,232
Investments in associated companies and joint ventures	4.2	18,180,159	17,456,932
Investments available for sale	4.3	8,692,628	8,692,628
Other non current assets		3,210,182	3,210,260
Derivatives	11	2,642,050	1,796,781
Deferred tax assets		38,162,396	37,776,892
Total non current assets		829,195,463	826,961,413
CURRENT ASSETS:
Inventories		54,810,256	50,728,047
Biological Assets		628,172	628,172
Customers		114,608,175	113,284,683
Other debtors		4,931,084	1,304,931
State and other public entities		16,976,232	16,435,629
Other current assets		3,108,391	2,242,035
Derivatives	11	5,381,513	4,903,860
Cash and cash equivalents	6	262,786,279	193,599,737
Total current assets		463,230,102	383,127,094
Total assets		1,292,425,565	1,210,088,507
SHAREHOLDERS' FUNDS AND LIABILITIES		31.03.2018	31.12.2017
SHAREHOLDERS' FUNDS:
Share capital	8	25,641,459	25,641,459
Legal reserve		5,128,292	5,128,292
Other reserves		363,612,494	267,729,157
Consolidated net profit / (loss)		32,645,345	96,068,168
Total shareholders' funds attributable to the parent company's shareholders		427,027,590	394,567,076
Non controlling interests		-	-
Total shareholders' funds		427,027,590	394,567,076
LIABILITIES:
NON CURRENT LIABILITES:
Bank loans	9	33,500,000	39,500,000
Other loans	9	530,491,342	442,483,927
Reimbursable subsidies	9	14,565,750	14,565,750
Other non current liabilities		16,993,533	14,627,018
Deferred tax liabilities		23,371,257	23,003,709
Pension liabilities		2,771,471	2,771,471
Provisions Total non current liabilities	10	5,022,209 626,715,562	5,025,260 541,977,135
CURRENT LIABILITIES:
Bank loans	9	6,059,229	6,216,583
Other loans	9	58,463,270	94,830,698
Reimbursable subsidies	9	3,121,502	3,121,502
Suppliers		100,521,834	95,373,275
Other current creditors		15,433,661	21,489,230
State and other public entities		21,423,815	10,308,029
Other current liabilities		31,637,431	40,398,914
Derivatives	11	2,021,671	1,806,065
Total current liabilites		238,682,413	273,544,296
Total shareholders' funds and liabilities		1,292,425,565	1,210,088,507

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

ALTRI, SGPS, S.A.

CONSOLIDATED STATEMENTS OF PROFIT AND LOSS FOR THE THREE MONTHS PERIODS ENDED 31 MARCH 2018 AND 2017

(Translation of financial statements originally issued in Portuguese - Note 19) (Amounts expressed in Euro)

	Notes	31.03.2018	31.03.2017
Sales		169,892,818	154,999,151
Services rendered		2,315,456	2,411,633
Other income	14	1,176,513	2,425,030
Cost of sales		(58,694,360)	(69,261,460)
External supplies and services		(40,986,119)	(41,783,093)
Payroll expenses		(8,314,972)	(7,719,061)
Amortisation and depreciation		(13,862,954)	(13,915,112)
Other costs		(2,110,947)	(950,237)
Gains and losses in associated companies and joint ventures	4.2	723,227	495,213
Financial expenses	12	(4,866,559)	(5,081,710)
Financial income	12	2,233,662	448,451
Profit befor income tax		47,505,765	22,068,805
Income tax		(14,860,420)	(4,944,716)
Profit after income tax		32,645,345	17,124,089
Consolidated net profit		32,645,345	17,124,089
Attributable to:
Parent company's shareholders		32,645,345	17,124,089
Non controlling interests		-	-
		32,645,345	17,124,089
Earnings per share:
Basic	13	0.16	0.08
Diluted	13	0.16	0.08

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

CONSOLIDATED STATEMENTS OF PROFIT AND LOSS AND OTHER COMPREHENSIVE INCOME FOR THE THREE MONTHS PERIODS ENDED 31 MARCH 2018 AND 2017

(Translation of financial statements originally issued in Portuguese - Note 19) (Amounts expressed in Euro)

	Notes	31.03.2018	31.03.2017
Net consolidated profit / (loss) for the period		32,645,345	17,124,089
Other comprehensive income: Items that may be reclassified to profit and loss
Change in fair value of cash flow hedging derivatives	11	(177,672)	1,973,327
Changes in currency translation reserves		(7,159)	2,222
Others		-	13,929
		(184,831)	1,989,479
Other comprehensive income for the period		(184,831)	1,989,479
Total comprehensive income for the period		32,460,514	19,113,568
Attributable to:
Shareholders' of the parent company		32,460,514	19,113,568
Non controlling interest		-	-

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

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITYFOR THE THREE MONTHS PERIODS ENDED 31 MARCH 2018 AND 2017

(Translation of financial statements originally issued in Portuguese - Note 19) (Amounts expressed in Euro)

	Att rib ble th 's s ha reh old uta to nt e p are co mp any ers
	No tes	Sh ita l are ca p	Le al g res erv e	Ot he r res erv es	Ne rof it t p	To tal	No n olli ntr co ng inte t res	To tal sh ho lde r's are fun ds
Ba lan of 1 J 20 17 ce as an ua ry	8	25 64 1, 45 9	128 29 2 5,	23 89 4, 61 9 5,	76 97 82 6 7,	34 3, 64 2, 196		34 3, 64 2, 196
Ap iat ion of th lida ted rof it o f 2 01 6 t p pro pr e c on so ne		, -	, -	76 97 82 6 7, ,	, ( 76 97 82 6 ) 7, ,	-	-	-
To tal reh siv e i fo r th eri od co mp en nco me e p Ba lan of 31 Ma rch 20 17 ce as	8	- 25 64 1, 45 9 ,	- 128 29 2 5, ,	1, 98 9, 47 9 78 96 30 7, 5 ,	17 124 08 9 , , 17 124 08 9 , ,	19 113 56 8 , , 36 2, 76 4 75 5,	- -	19 113 56 8 , , 36 2, 76 4 75 5,
Ba lan of 1 J 20 18 ce as an ua ry	8	25 64 1, 45 9 ,	5, 128 29 2 ,	26 7, 72 9, 157	96 06 8, 168 ,	39 4, 56 7, 07 6	-	39 4, 56 7, 07 6
Ap lica ão do ulta do lida do de 20 18 ç res co nso		-	-	96 06 8, 168 ,	( 96 06 8, 168 ) ,	-	-	-
To tal do nd ime in ral lida do do ríod nto teg re co nso pe o		-	-	( 184 83 1) ,	32 64 34 5, 5 ,	32 46 0, 51 4 ,	-	32 46 0, 51 4 ,
Ba lan of 31 Ma rch 20 18 ce as	8	25 64 1, 45 9 ,	5, 128 29 2 ,	36 3, 61 2, 49 4	32 64 5, 34 5 ,	42 7, 02 7, 59 0	-	42 7, 02 7, 59 0

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

The official chartered accountant

The Board of Directors

(translation of a document originally issued in Portuguese – note 19)

CONDENSED CONSOLIDATED CASH-FLOW STATEMENTS FOR THE THREE MONTHS PERIODS ENDED 31 MARCH 2018 AND 2017

(Translation of financial statements originally issued in Portuguese - Note 19) (Amounts expressed in Euro)

	Notes	2018			2017
Operating activies: Cash flow from operating activities (1)			55,538,749		36,391,407
Investment activities: Receipts relating to:
Financial investments Tangible assets Interests and similar income Dividends	6	48,000 5,978 1,350,718 -	1,404,696	- 16,809 93,001 -	109,810
Payments relating to: Tangible assets Other financial assets		(23,432,818) (2,417,146)		(24,435,217) -
Intangible assets Investment subsidies Cash flow from investment activities (2)		- (1,060)	(25,851,024) (24,446,328)	(2,064) -	(24,437,281) (24,327,471)
Financing activities: Receipts relating to:
Loans obtained Other financial operations Payments relating to:		85,000,000 101,049	85,101,049	23,111,045 -	23,111,045
Interest and similar costs Loans obtained		(4,326,281) (42,672,243)		(5,564,787) (123,089,882)
Other financial operations Cash flow from financing activities (3)		-	(46,998,524) 38,102,525	-	(128,654,669) (105,543,624)
Cash and cash equivalents at the beginning of the period Exchange rate effect	6		193,599,737 (8,404)		300,094,254 -
Variation of cash and cash equivalents: (1)+(2)+(3) Cash and cash equivalents at the end of the period	6		69,194,946 262,786,279		(93,479,688) 206,614,566

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 31 March 2018 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 2017.

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.

4. INVESTIMENTS

4.1 INVESTIMENTS 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 31 March 2018 and 31 December 2017, are as follows:

Company	Head Office		Percentage Held	Main Activ ity
		2018	2017
Parent-Company
Altri, SGPS, S.A.	Porto			Inv estment 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.	Ny on, Sw itzerland	100%	100%	Group management support serv ices
Altri, Participaciones Y Trading, S.L.	Vigo, Spain	100%	100%	Commercialization of pulp
Caima Energia – Empresa de Gestão e Ex ploração 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 Inv estimentos 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 - Inv estimentos Imobiliários, S.A.	Porto	100%	100%	Purchase and sale of properties
Viv eiros do Furadouro Unipessoal, Lda.	Óbidos	100%	100%	Production of plants in nurseries and serv ices 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 31 March 2018 and 31 December 2017 are as follows:

Company	Head Office	Statement of financial position		Percentage Held		Activ ity
		2018	2017	2018	2017
Associated companies:
Operfoz – Operadores do Porto da Figueira da Foz, Lda.	Figueira da Foz	816,450	701,421	33.33%	33.33%	Harbor operations
Joint v entures:
EDP – Produção Bioeléctrica, S.A.	Lisboa	17,363,709	16,755,511	50%	50%	Energy production
		18,180,159	17,456,932

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

(translation of a document originally issued in Portuguese – note 19)

The movements occurred in the balance of this caption in the periods ended in 31 March 2018 and 2017 were as follows:

			Statement of financial position
	31.March.2018		31.March.2017
	Operfoz	EDP Bioeléctrica (a)	Operfoz	EDP Bioeléctrica (a)
Opening balance	701,421	16,755,511	719,057	14,264,044
Equity method: Effects on gains and losses in associated companies and joint ventures	115,029	608,198	66,993	428,220
Closing balance	816,450	17,363,709	786,050	14,692,264

(a) – includes loans granted.

The total amount of the statement of financial position, equity and net profit as of 31 March 2018 and 31 December 2017 for the main joint ventures and associated companies were as follows:

	31.03.2018	31.12.2017
	EDP Bioeléctrica	EDP Bioeléctrica
Non-current assets	111,401,162	112,192,147
Current assets	30,226,358	22,439,361
Non-current liabilities	51,976,608	51,904,021
Current liabilities	50,532,378	44,940,951
Equity attributable to shareholders of the parent company	39,118,533	37,786,536
Turnov er	10,594,358	39,820,917
Net profit	1,331,998	5,109,338
Total comprehensiv e income	1,331,998	5,109,338

EDP – Produção Bioeléctrica, S.A. owns the total share capital of Ródão Power – Energia e Biomassa do Ródão, S.A., of Biorodão, S.A. and of Sociedade Bioeléctrica do Mondego, S.A.. Data hereby presented correspond to the company's individual accounts.

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 INVESTIMENTS AVAILABLE FOR SALE

As of 31 March 2018 and 31 December 2017 the investments available for sale are as follows:

	Statement of financial position
	2018	2017
Rigor Capital - Produção de Energia. Lda.	7,957,111	7,957,111
Other inv estments	735,517	735,517
	8,692,628	8,692,628

It is the understanding of the Altri Group that the caption "Investments available for sale" that 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 their fair value.

5. CHANGES OCCURED IN THE CONSOLIDATION PERIMETER

During the three months period ended on 31 March 2018 there were no changes in the consolidation perimeter compared to 31 December 2017.

6. CASH AND CASH EQUIVALENTS

As of 31 March 2018 and 2017, the caption "Cash and cash equivalents" can be detailed as follows:

	31.03.2018	31.03.2017
Cash	36,907	54,862
Bank deposits	262,749,372	206,559,704
Cash and cash equiv alents	262,786,279	206,614,566

During the three months periods ended on 31 March 2018 and 2017, there were no receipts or payments related to investments.

During the period ended as of 31 March 2018, the receipts relating with financial investments correspond to the partial collection of the sale of Sócasca – Recolha e Comércio de Recicláveis, S.A. (disposed in 2011).

7. CURRENT AND DEFERRED TAXES

In accordance with current legislation, tax returns are subject to review and correction by the tax authorities during a fouryear 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 2014 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 31 March 2018.

8. SHARE CAPITAL

As of 31 March 2018 and 2017, the Company's fully subscribed and paid up capital consisted of 205,131,672 shares with a nominal value of 12.5 cents of Euro each.

(translation of a document originally issued in Portuguese – note 19)

9. BANK LOANS, OTHER LOANS AND REIMBURSABLE SUBSIDIES

As of 31 March 2018 and 31 December 2017, the captions "Bank loans", "Other loans" and "Reimbursable subsidies" can be detailed as follows:

	31.03.2018
		Nominal Value			Book Value
	Current	Non Current	Total	Current	Non Current	Total
Bank loans	6,000,000	33,500,000	39,500,000	6,059,229	33,500,000	39,559,229
Bank loans	6,000,000	33,500,000	39,500,000	6,059,229	33,500,000	39,559,229
Commercial paper	-	143,500,000	143,500,000	96,076	143,488,471	143,584,547
Bonds	20,000,000	387,900,000	407,900,000	21,591,524	386,666,871	408,258,395
Other loans	36,775,670	336,000	37,111,670	36,775,670	336,000	37,111,670
Other loans	56,775,670	531,736,000	588,511,670	58,463,270	530,491,342	588,954,612
Reimbursable subsidies	3,121,502	14,565,750	17,687,253	3,121,502	14,565,750	17,687,253
	65,897,172	579,801,750	645,698,923	67,644,001	578,557,092	646,201,094
			31.12.2017

	Nominal Value			Book Value
	Current	Non Current	Total	Current	Non Current	Total
Bank loans	6,000,000	39,500,000	45,500,000	6,216,583	39,500,000	45,716,583
Bank loans	6,000,000	39,500,000	45,500,000	6,216,583	39,500,000	45,716,583
Commercial paper	-	58,500,000	58,500,000	34,654	58,500,000	58,534,654
Bonds	55,000,000	384,900,000	439,900,000	57,439,917	383,599,927	441,039,844
Other loans	37,356,127	384,000	37,740,127	37,356,127	384,000	37,740,127
Other loans	92,356,127	443,784,000	536,140,127	94,830,698	442,483,927	537,314,625
Reimbursable subsidies	3,121,502	14,565,750	17,687,253	3,121,502	14,565,750	17,687,253
	101,477,629	497,849,750	599,327,380	104,168,783	496,549,677	600,718,461

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).

10. ACCUMULATED PROVISIONS AND IMPAIRMENT LOSSES

The movements occurred in provisions and impairment losses for the three months periods ended at 31 March 2018 and 2017 can be detailed as follows:

		31.03.2018
		Impairment losses in
		Impairment losses in accounts	inv entories and biological
	Prov isions	receiv able	assets	Total
Opening balance	5,025,260	3,604,839	7,803,018	16,433,117
Increases	-	-	-	-
Utilizations	(3,051)	-	(690,000)	(693,051)
Closing balance	5,022,209	3,604,839	7,113,018	15,740,066
		31.03.2017
		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	-	-	-	-
Utilizations	(3,051)	-	-	(3,051)
Closing balance	5,061,351	3,717,961	8,319,880	17,099,192

The amount recorded under the caption "Provisions" as at 31 March 2018 and 2017 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 31 March 2018 and 2017 the companies of the Group operated with contracts for derivatives related to hedge interest rate variations and to hedge 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 created related with their activities.

As of 31 March 2018 and 31 December 2017 the detail of the financial derivative instruments is as follows:

		31.03.2018			31.12.2017
		Assets		Liabilities		Assets		Liabilities
	Current	Non Current	Current	Non Current	Current	Non Current	Current	Non Current
Interest rate derivatives	-	-	634,283	-	-	-	557,215	-
Exchange rate derivatives	4,718,944	2,642,050	-	-	4,048,407	1,796,781	-	-
Pulp price derivatives	662,569	-	1,387,388		855,453	-	1,248,850	-
	5,381,513	2,642,050	2,021,671	-	4,903,860	1,796,781	1,806,065	-

As of 31 March 2018 and 2017 movements of the financial derivative instruments occurred in the three months periods then ended are as follows:

Pulp price derivatives	Interest rate derivatives	Exchange rate derivatives	Total
(393,397)	(557,215)	5,845,188	4,894,576
			(197,542)
			1,497,742
(192,884)	-	-	(192,884)
(724,819)	(634,283)	7,360,994	6,001,892
Pulp price	Interest rate	Exchange rate
			Total
-	(549,066)	(4,301,607)	(4,850,673)
			2,360,842
			(18,853)
-	-	-	-
			(2,508,684)
	(1,659,405) 1,520,867 derivatives - - -	(53,943) (23,125) derivatives 77,491 (18,853) (490,428)	1,515,806 - derivatives 2,283,351 (2,018,256)

12. FINANCIAL RESULTS

The financial results for the three months periods ended at 31 March 2018 and 2017 are detailed as follows:

	31.03.2018	31.03.2017
Financial ex penses
Interests	3,012,337	3,483,401
Other financial ex penses	1,854,222	1,598,309
	4,866,559	5,081,710
Financial income
Interests	107,450	109,742
Other financial income	2,126,212	338,709
	2,233,662	448,451

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 on interest rate derivatives instruments that matured or were paid until that date (Note 11). The caption "Other financial income" includes, mainly, exchange rate gains.

13. EARNINGS PER SHARE

Earnings per share for the three months periods ended as of 31 March 2018 and 2017 were determined taking into consideration the following amounts:

	31.03.2018	31.03.2017
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	32,645,345	17,124,089
Earnings per share
Basic	0.16	0.08
Diluted	0.16	0.08

14. OTHER INCOME

As of 31 March 2018 and 2017 the caption of the statement of profit and loss "Other Income" is detailed as follows:

	31.03.2018	31.03.2017
Subsidies to inv estment and ex ploitation	1,117,732	1,062,942
Gains on disposal of fix ed assets	7,163	28,754
Other income	51,618	1,333,334
	1,176,513	2,425,030

15. 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.

16. 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 three months periods ended at 31 March 2018 and 2017, there were no transactions or loans granted to the members of the Board of Directors.

As of 31 March 2018 and 2017 the balances and transactions with related parties are as follow:

		Purchases and serv ices obtained		Sales and serv ices rendered		Interest income
Transactions	31.03.2018	31.03.2017	31.03.2018	31.03.2017	31.03.2018	31.03.2017
Associated companies and joint v entures (a)	411,750	603,507	3,888,345	4,244,947	31,340	33,716
Other related parties (b)	258,371	661,689	-	-	-	-
	670,121	1,265,196	3,888,345	4,244,947	31,340	33,716
	Accounts pay able		Accounts receiv able		Loans granted
Balances	31.03.2018	31.12.2017	31.03.2018	31.12.2017	31.03.2018	31.12.2017
Associated companies and joint v entures (a)	153,210	165,308	5,269,824	2,618,553	11,482,905	11,482,905

298,305 6,674,262 5,269,824 3,108,327 11,482,905 11,482,905

(a) All entities consolidated by the equity method as of 31 March 2018 and 2017 (Note 4.2);

Other related parties (b) 145,095 6,508,954 - 489,774 -

(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 31 March 2018 can be detailed as follow:

• Actium Capital, S.A.
• Adcom Media Anúncios e Publicidade S.A
• A Nossa Aposta Jogos e Apostas On-line, S.A.
• Caderno Azul, S.A.
• Cofihold, S.A.
• Cofihold II, 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, Lda.
• Expeliarmus Consultoria, S.A.
• F. Ramada II, Imobiliária, S.A.
• F. Ramada Investimentos, SGPS, S.A.
• Grafedisport Impressão e Artes Gráficas, S.A
• Livrefluxo, 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, S.A.
• VASP Sociedade de Transportes e Distribuições, Lda.
• 1 Thing Investments, S.A.

17. APPLICATION OF NET PROFIT

Regarding the fiscal year of 2017, the Board of Directors proposed, in its annual report, approved at the General Shareholders' Meeting held on 4 May 2018, that the individual net profit of Altri, SGPS, S.A., amounting to 56,705,382.66 Euro, would be entirely distributed as dividends. The Board of Directors proposed, as well, the distribution of free reserves amounting to 4,834,118.94 Euro, as of dividends, which corresponds to a total dividend of 0.30 Euro/share.

18. FINANCIAL STATEMENTS APPROVAL

The financial statements were approved by the Board of Directors and authorized for issuance in 11 May 2018.

19. 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

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