Altri : SGPS, S.A. informs about Report and Accounts for the First Half of 2017

INTRODUCTION 4

STOCK EXCHANGE EVOLUTION 6

GROUP'S ACTIVITY 8

FINANCIAL REVIEW 11

CORPORATE GOVERNANCE 14

LEGAL MATTERS 15

CLOSING REMARKS 17

STATEMENT UNDER THE TERMS OF ARTICLE 246, PARAGRAPH 1, C) OF THE SECURITIES MARKET CODE 20

STATEMENT OF RESPONSIBILITY 20

CONSOLIDATED FINANCIAL STATEMENTS AND NOTES 25

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1. Management Report

   (This is a translation of a document originally issued in Portuguese.

   In the event of discrepancies, the Portuguese language version prevails - Note 20)

   To the Shareholders

   Pursuant to the legal requirements, the Board of Directors of Altri, SGPS, S.A. ("Altri") hereby presents its Management Report for the first half of 2017.

   INTRODUCTION

   Altri was incorporated as of March 2005, as a result of Cofina's demerger. Altri is a reference European producer of bleached eucalyptus pulp and is a listed company included in Euronext Lisbon, integrating the PSI 20 (Portuguese Stock Index), the benchmark stock market index. In addition to pulp and dissolving pulp production, the company is also present in the sector of renewable energy based on forest resources, namely industrial cogeneration from black liquor and biomass. The forestry strategy is based on full use of all the components provided by the forest: pulp, black liquor and forest wastes.

   Over the past years, Altri invested in Portugal approximately 580 million Euro on its industrial units. Currently, Altri owns three pulp mills in Portugal with a total capacity of 1 million tons/year of bleached eucalyptus pulp in 2016.

   Forest is a strategic asset of Altri, with a forest area under management amounting 79,000 hectares in Portugal. Eucalyptus stands out as the main production of Altri's forest, ensuring a self-supply of wood and biomass that complements the market supply. This forest area is certified by the Forest Stewardship Council® (FSC®)1 and by the Programme for the Endorsement of Forest Certification (PEFC), two of the most worldwide acknowledged certification entities. Altri Florestal management practices are certified by the main sustainable forest management certification systems, ensuring the achievement of the company's current and future goals.

   Although Altri's forests are scattered across the country, the vast majority is concentrated in Tejo's valley, close to the group's mills, increasing its relevance. This proximity has a strategic importance as it allows the optimization of transportation costs, as well as an increase in efficiency in wood mobility when compared to productions held at higher distances.

   Altri's industrial strategy implementation is based on integrated forest management in Portugal. This model is based on forest optimisation, ensuring a full recovery of all its components. Thus, the eucalyptus is processed in Altri mills, producing pulp and power (cogeneration). The bark, the branches and forest waste are used to produce electric energy from biomass.

   Altri's development strategy is clearly based on strengthening its operating efficiency and, at the same time, the diversification of revenue into segments with higher value added, enabling an increase in the value chain. In order to compete in the commodities market and with an adverse exchange rate environment, the company has to cut its operating costs and to invest on the production of higher value added products, allowing for future growth, despite the increases of pulp production capacity in recent and despite the investments already announced for the near future all over the world.

   Altri aims to be the most efficient producer in placing pulp at the client's facilities. As so, the Company developed a

   strategy based on three pillars:

   • Cutting cash cost per ton: recent years' projects and ongoing projects do not imply an increase in fixed costs, leading to a dilution of the cash cost per ton;

1 FSC-C004615

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