ALTRI, S.G.P.S., S.A. - marketscreener.com fileDIRECTORS’ REPORT 1st semester 2007 2 To the...

30 June 2007 Altri, S.G.P.S., S.A. (Open capital company) Rua General Norton de Matos, 68 4050-424 Porto Share Capital: 25.641.459 €

ALTRI, S.G.P.S., S.A. (OPEN CAPITAL COMPANY)

Directors’ Report Consolidated Accounts

DIRECTORS’ REPORT

1st semester 2007 1

INDEX Introduction 2 Stock exchange evolution 4 Group’s activity 7 Financial review 13 Second semester 2007 outlook 17 Corporate Governance 18 Legal matters 18 Declaration of responsibility 20 Closing remarks 21

DIRECTORS’ REPORT

1st semester 2007 2

To the Shareholders Pursuant to the legal requirements, the Board of Directors of Altri, S.G.P.S., S.A. (Open Capital Company) hereby presents its Directors’ Report for the first semester of 2007.

INTRODUCTION Incorporated as of March 2005, Altri, S.G.P.S., S.A. has, nowadays a distinction position in the national market of Pulp, Steel and Warehousing markets. The last two years were highlighted by various acquisitions that allowed Altri, SGPS, S.A. to reinforce its market position. The year 2005 was marked by the acquisition of 95% of the share capital of Celtejo – Empresa de Celulose do Tejo, S.A. During the first quarter of 2006 an extra 4.45% was acquired and in the first half of 2007 Altri reinforce its stake in Celtejo in 0.13%, holding currently 99.58% of the company. Total investment reached over 40 million Euro. In January 2006 the Group invested 7.5 million Euro in the acquisition of a 50% stake in the share capital of EDP Bioeléctrica, a strategic and high potential investment focused on biomass power production. In August 2006 Altri acquired 100% of the voting rights of Celbi – Celulose da Beira Industrial, S.A. to Stora Enso, a transaction amounting to approximately 430 million Euro. In the Steel sector (F. Ramada Group) the year 2006 was featured by the reorganization of the Group and by the reinforcement of the commercial position in the Benelux and Spanish markets.

DIRECTORS’ REPORT

1st semester 2007 3

Currently, Altri’s investments can be resumed in the following flowchart:

DIRECTORS’ REPORT

1st semester 2007 4

STOCK EXCHANGE EVOLUTION (Note: in order to enable a better comparison between the share price and the principle Portuguese stock exchange index (PSI20), the index has been considered as being equal in value to the opening price of the shares under analysis). Generically, during the first semester of 2007, the national capital market’s dynamics has been considerable, due to an economical recovery started in the end of 2006, which creates an adequate company’s development environment. Additionally, the PSI 20 has benefited from intense movements around eventual fusion and acquisition operations. The PSI 20 index ended the six month period bearing at 13,385 points (an increase of approximately 19% when compared to year opening). Altri’s shares maintained its significant growth, continuing the performance showed since 2005 (year of Altri’s incorporation) proving the investors´ confidence on the dynamics of the Group, enlarged with both the acquisition of Celtejo Group, in the second semester of 2005, and Celbi, in August 2006.

Stock exchange evolution

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AltriPSI 20

Altri’s shares price grew 70% in the first semester of 2007 and closed the period bearing at 6.85 Euro per share, with a market capitalization amounting to 703 million Euro. During the first semester of 2007, 110.5 million shares of Altri were transacted in the stock market, an amount extremely relevant considering the fact that the share capital of the Company is composed by 103 million titles.

DIRECTORS’ REPORT

1st semester 2007 5

The main events that distinguished the stock evolution during the first semester of 2007 may chronologically be described as follows:

4 January 2007 – Altri announces that Millenium bcp – Gestão de Fundos de Investimentos, S.A., representing its funds increase in 29, December 2006, its participation in Altri SGPS, S.A’ share capital to 2,202,153 shares corresponding to 2.15% of the share capital and voting rights of this company;

5 January 2007 - Altri announces that in the year 2006 the Group achieved production records in all its industrial units (Celbi, Celtejo, Caima and CPK), overcoming a consolidated production of 609 thousand tons, a 5% increase facing the year 2005. It was also announced that in a near future the Group is expecting to increase its production mainly in Celtejo (195 thousand tons) and in Celbi (550 thousands tons), which represents a growth of 69% of the production of these two industrial units;

15 February 2007 – Altri announces that Millenium bcp – Gestão de Fundos de Investimentos, S.A., representing its funds increase in 13, February 2007, its participation in Altri SGPS, S.A’ share capital to 4,111,384 shares corresponding to 4.01% of the share capital and voting rights of this company;

7 March 2007 - Altri announces the Group’s performance for the year 2006, with a net profit (including minority interests) of 21.1 million Euro (including solely to 4 months of Celbi’s activity, given this Company’s acquisition date, August 2006). Operating income amounted to 296 million Euro and EBITDA reached 63 million Euro. The net consolidated profit attributable to the parent company’s

Stock exchange evolution

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Altri2 Apr7 Mar

9 May 6 Jun

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DIRECTORS’ REPORT

1st semester 2007 6

shareholders amounted 20.8 million Euro. The operating income of the 4th quarter of 2006 achieved 98.5 million Euro, a operating net of 16.7 million Euro and an EBITDA of 22.5 million Euro, despite these values had been negatively affected by the programmed stop in Celbi and Caima industrial units. As of this date, the share’s price listed at 5.78 Euro;

16 March 2007 – Altri announces to Securities Market Commission (“Comissão do Mercado dos Valores Mobiliários” - CMVM) that Jorge Manuel Matos Borges de Oliveira and Carlos Manuel Matos Borges de Oliveira sold, each one, outside market, their 2,290,000 shares from Altri- SGPS, S.A., corresponding to 2.23% of share capital and voting rights. It was also announced that each one of these Directors have a participation of 50% in the share capital of Caderno Azul, SGPS, S.A., that, at this date, acquired, outside market. 4,458,000 shares of Altri, SGPS, S.A., corresponding to 4.47% of share capital and voting rights of this company;

2 April 2007 - the Company informed the Securities Market Commission (“Comissão do Mercado dos Valores Mobiliários” - CMVM) regarding the payment of a dividend of 0.05 Euro per share for the year 2006 as from 18 April 2006. At this day the share’s price listed at 5,75 Euro;

9 May 2007 - publication of the financial performance for the first quarter of 2007. In a comparable basis, it is clear the growth in Altri Group’s activity, namely, in the operating income with an increase of 8% and an increase of 27% in EBITDA. During the first quarter of 2007, Altri Group’s reached a consolidated operating income of 106 million of Euro, and a consolidated net profit of, approximately, 11 million Euro. EBITDA overcame, approximately, 28 million Euro. At that time, share’s price listed at 6.55 Euro; and

6 June 2007 – Altri announces to the Securities Market Commission (“Comissão do Mercado dos Valores Mobiliários” - CMVM) that J.P. Morgan Chase & Co does not have anymore a qualified participation in Altri SGPS, S.A., due to the sale of 738,108 shares through its participated J.P. Morgan Asset Management (UK) Limited, in 4 June 2007. The total number of shares detain by J.P. Morgan Chase & Co reduced to 1,966,113 corresponding to 1.91% of the share capital and voting rights of Altri.

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1st semester 2007 7

GROUP’S ACTIVITY With its genesis in the reorganization process of Cofina with the purpose of setting into a separate holding the industrial operations, Altri currently holds the investments in the paper, pulp, steel and storage systems.

A. Paper and Pulp The Group currently acts in this sector through Celulose do Caima, S.G.P.S., S.A., which, in its turn, holds participations in Caima – Indústria de Celulose and in Celbi, paper pulp producers, Silvicaima, which owns and manages the Group’s forest resources, Caima Energia, company that produces and selling electric and thermal energy, and Celtejo, producer and distributor, not only of raw kraft pulps but also kraftsack paper, through its subsidiary CPK.

Moreover, in order to fulfil its energetic needs and expand its activity in a strategic sector, in the begging of 2006 the Group acquired a participation of 50% of the share-capital of EDP Bioeléctrica.

DIRECTORS’ REPORT

1st semester 2007 8

Caima SGPS

Inflora

Invescaima

Silvicaima Caima Indústria

Caima Energia

100%100%

100%Celtejo

99,58%EDP Bioeléctrica

50%

CPK

100%

Altri, SL

100%

100%

Sosapel

80%

100%

Celbi

Viveiros do Furadouro Unipessoal, Lda Celbinave, Lda

100%100%

Operfoz, Lda

33%

100%

Rodão Power

100%

During the first semester of 2007, the pulp market performance followed the same trend as of 4Q06, becoming gradually more sustained. This was mainly due to an increase in global demand and a limited supply, especially in the Nordic Countries, despite capacity increases in other region. Worldwide the global pulp inventories are at exceptionally low levels. The European supply of long fibre pulp (NBSK and NBHK) decreased 11% during the first half of 2007. In addition the eucalyptus kraft pulp (BEKP) exportations increased 200 thousand tons in the European market. During the first six months of 2007 the BEKP price recorded a $20/tone increase reaching 690 US$/ton. The BEKP average price of the first half of 2007 reached 508€/ton (675 US$/ton). Splitting by quarter the average price in 1Q07 reached 512€/ton e (671 US$/ton), while the average price in 2Q07 reaching 504€/ton (679 US$/ton). The price reduction in Euro is exclusively related to the depreciation of the US dollar. In 1H07 the kraftsack paper market followed the same trend as in previous quarters with price increases and low inventory levels fuelled by a strong global demand. The average price of the kraftsack paper produced by CPK increased 11.3% year on year.

DIRECTORS’ REPORT

1st semester 2007 9

Evolution of the pulp prices in the international marketAmounts per ton

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Euros

660,00

665,00

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675,00

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US$

"BHKP PIX (Euros)"

"BHKP PIX (US$)

CELBI GROUP

Celbi unity, acquired during August 2006, reached during the semester sales amounting to 165.3 thousand tons of pulp, similar to the one recorded in the same period of 2006.

The pulp production reached 162.5 thousand tons, 3% above the amount in homologous period in 2006. CAIMA GROUP In the first semester of 2007, the sales volume amounted to 59.4 thousand tons, representing a 3% increase compared to the first semester of 2006. Turnover increased by approximately 29% when compared with the homologous period of the preceding year, in the sequence of the increase of prices. The Iberian Peninsula and the rest of the European Union maintained its ranking as main markets for the pulp sales.

During the first semester of 2007, Caima Group produced 57.8 thousand tons of pulp, volume 3.4% above the preceding year and that configures an optimal exploration of the production capacity of the factory. SIlvicaima developed an important role as supplier of other Group companies, being able to Group achieve, jointly with other outside suppliers, comfortable stock levels by the end of the first semester. The wood exchanges with other segment companies, which amounted, at 30 June 2007, 17.000 m3, allowed the reduction of transportation costs.

DIRECTORS’ REPORT

1st semester 2007 10

CELTEJO GROUP In the first semester of 2007 the sales volume amounted to 70.3 thousand tons of raw kraft pulps and 32.5 thousand tons of kraftsack paper, corresponding to a decrease and to an increase of 9% and 13%, respectively, when compared to the homologous period of 2007. In the first semester, the raw kraft pulp production amounted to 70.7 thousand tons, 6% inferior the one recorded in the first semester of 2006. Concerning the kraftsack paper, its production amounted to 31.9 thousand tons, which represents an increase of 17% in comparison to the homologous period of 2006. During the semester, all Group factories scrupulously complied with the environmental legislation, namely regarding the parameters of liquid and gas emissions, as well as the management and recycling of solid waste. B. Steel and Warehousing Systems Altri holds all the voting rights of F. Ramada Group, through which it operates in the Steel and Warehousing systems market.

In addition to these two business segments, F. Ramada has also interests in special steel for moulds, saws and tools market.

F. Ramada Group is currently composed by 8 companies, three being located in other European Union countries (United Kingdom, Belgium and France), thus reflecting the Group’s objectives of consolidation of its European distribution network. The Group also maintains partnerships with Spanish entities for the same purpose, thus rationalising the Iberian warehousing systems distribution network.

DIRECTORS’ REPORT


In the first semester of 2007 occurred a increase in the sales volume in Warehousing systems business foreign markets, related to the European sales spreading through distributors, which lead to several businesses in more than 50 countries all over the world. The orders of the semester allow the Group a comfortable position in the annual budget. 90% of these businesses, outside Portugal, are warehousing solutions with a great engineer component, as automatically warehousing or of high density to cold and agrifood and drinks industry. The decrease in the UK market was compensated by the entry of new markets such as Germany, Poland, Morocco, as well as, by the sales increase in Portugal, Spain, France and Benelux. In the Steel segment, the first semester of 2007 was frankly positive for the industrial activity at Union European which originated a favourable effect in industrial activity in Portugal. However, structural difficulties of Portuguese economy blocked a positive evolution. Despite these obstacles and due to the fact of being addressed to the foreign market, the Mould industry has an expressive increase of activity, mainly in the second quarter of 2007, which has a positive reflect in sales.

Steel Prices evolution in the European MarketConstant Prices of 1997(Amounts in Euro/Ton)

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DIRECTORS’ REPORT


Steel Prices evolution in the World MarketConstant Prices of 1997(Amounts is US$/Ton)

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Steel prices evolution (per type) in the European marketConstant prices 1997(Amounts in Euro/Ton)

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Hot RolledCoil

Hot RolledPlate

Cold RolledCoil

HD Galv.Coil

Wire Rod(mesh)

StructuralSections &BeamsRebar

Steel’s price in the international market maintained the levels of the beginning of the year, however the prices of nickel steels continued to increase as result of the increase of the price of this material. Resulting from the growth of international industry activity, the time of delivery from siderurgies extended and the Group was forced to temporarily reinforce its stocks. The commercial activity was intense which allowed achieving the objectives estimated. During the second semester the Group expects to maintain the levels of activity of the first semester.

DIRECTORS’ REPORT


FINANCIAL REVIEW

Altri, SGPS, S.A. The consolidated financial information of Altri for the first semester of 2007 was prepared in accordance with the International Financial Reporting Standards (IFRS). The comparative figures may be presented as follows: (amounts in thousand euro) IFRS IFRS ∆%

Jun-07 Dec 07Balance sheet

Net Assets 856.623 773.924 10,7%Shareholder´s funds 104.952 85.999 22,0%Gross remunerated debt 638.556 580.092 10,1%Cash and cash equivalents ( b ) 55.030 25.481 116,0%Net remunerated debt 583.526 554.611 5,2%

Statement of profit and loss Jun-07 Jun-06 (c)Operating income 213.028 122.284 74,2%Operating profit (EBIT) 39.235 14.573 169,2%Net financial income (15.007) (2.776) 440,6%Net consolid. profit attib. to the parent company´s shareholders 19.289 8.553 125,5%Minority interests 42 185 -77,3%Net consolidated profit for the period 19.331 8.738 121,2%

Ratios Jun-07 Jun-06 (c)Net profit / Operating income 9,1% 7,0% n.a.EBITDA (a) 53.467 23.180 130,7%Shareholder´s funds / Net Assets 12,3% 22,8% n.a.Return on Equity 36,8% 22,2% n.a.

(a) EBITDA = Operating profit + Amortisation(b) including the amount of the investments owned for negociation (c) does not include Celbi's activity acquired in August 2006

The data above presented is not totally comparable due to the fact of Celbi’s acquisition had just occurred in August, 2006. Therefore, for better analysis, it is also presented the financial figures for the second quarter of 2007, comparatively with the financial indicators of the first quarter 2007 and fourth quarter 2006. These are the only totally comparable periods with the same material consolidation scope. (amounts in thousand euro) IFRS IFRS IFRS ∆% ∆%

Statement of profit and loss 2Q07 1Q07 4Q06 2Q07/ 1Q07 2Q07/ 4Q06Operating income 107,079 105,949 98,494 1.1% 8.7%Operating profit (EBIT) 18,005 21,230 16,762 -15.2% 7.4%Net financial income (7,390) (7,617) (7,028) -3.0% 5.2%Net conolid. profit attib. to the parent company´s shareholders 8,687 10,602 8,919 -18.1% -2.6%Minority interests 22 21 18 4.8% 22.2%Net consolidated profit for the period (b) 8,708 10,623 8,938 -18.0% -2.6%

Ratios 2Q07 1Q07 4Q06Net profit / Operating income 8.1% 10.0% 9.1% n.a. n.a.EBITDA (a) 25,150 28,317 22,536 -11.2% 11.6%

(a) EBITDA = Operating profit + Amortisation(b) including minority interests

DIRECTORS’ REPORT


During the second quarter of 2007, Altri reached a consolidated operating income of 107 million Euro, and a consolidated net profit of, approximately, 9 million Euro. EBITDA overcame, approximately, 25 million Euro. During the first semester of 2007 the CAPEX reached 45 million Euro. Total investment made during the 2nd quarter of 2007 amount to 27 million Euro. The Group’s nominal net debt as of June 30, 2007 amounted to, around, 584 million Euro, while as of the first quarter of 2007 amounted, approximately, to 572 million Euro.

Celbi/Caima/Celtejo Group

(amounts in thousand euro) IFRS IFRS ∆% Jun-07 Dec 06

Balance sheetNet Assets 751.824 668.183 13%Shareholder´s funds 101.527 80.184 27%Gross remunerated debt 566.097 504.645 12%Cash and cash equivalents ( b ) 44.923 15.785 185%Net remunerated debt 521.174 488.860 7%

Statement of profit and loss Jun-07 Jun-06 ∆%Operating income 156.731 69.034 127%Sales and services rendered 154.455 67.522 129%Operating profit (EBIT) 34.306 9.349 267%Net consolid. profit attib. to the parent company´s shareholders 16.742 5.842 187%

Ratios Jun-07 Jun-06Net profit / Operating income 10,7% 8,5% 26%EBITDA (a) 47.124 16.397 187%EBITDA margin 30,5% 24,3% n.a.Shareholder´s funds / Net Assets 13,5% 34,8% -61%Return on Equity 33,0% 16,7% 97%

(a) EBITDA = Operating profit + Amortisation(b) including the amount of the investments owned for negociation (c) does not include Celbi's activity acquired in August 2006

As above-mentioned the performance of Celbi/Caima/Celtejo Group’s in the first half of 2007 is not directly comparable on a like for like basis because of the Celbi acquisition (occurred in August 2006). Therefore, for better comparison purposes, it is presented the financial information relating to the first and second quarters of 2007 and the last quarter of 2006.

DIRECTORS’ REPORT


(amounts in thousand euro) IFRS IFRS IFRS ∆% ∆%Statement of profit and loss 2Q07 1Q07 4Q06 2Q07/ 1Q07 2Q07/ 4Q06

Operating income 77,414 79,317 77,742 -2.4% -0.4%Operating profit (EBIT) 15,409 18,897 14,148 -18.5% 8.9%Net financial income (6,750) (6,324) (5,016) 6.7% 34.6%Net conolid. profit attib. to the parent company´s shareholders 7,092 9,650 9,108 -26.5% -22.1%Minority interests 21 21 18 0.0% 16.7%Net consolidated profit for the period 7,113 9,671 9,126 -26.5% -22.1%

Ratios 2Q07 1Q07 4Q06 Net profit / Operating income 9.2% 12.2% 11.7% n.a. n.a.EBITDA (a) 21,844 25,280 19,928 -13.6% 9.6%

(a) EBITDA = Operating profit + Amortisation During the first semester of 2007 the total production of Celbi/Caima/Celtejo Group’s reached 323 thousand tons, a 2% growth compared with the homologous period of 2006. During the second quarter of 2007, operating income reached approximately 77 million Euro, equivalent value to the last quarter of 2006, and which represents a 2% decrease comparing to the first quarter of 2007. This decrease is explained by the exchange rate effects mentioned above. EBITDA overcame 22 million Euro in the second quarter of 2007, which represents a 10% growth compared with the last quarter of 2006 and a 14% decrease compared with the first quarter of 2007. Operating income (EBIT) of the second quarter of 2007 reached 15 million Euro, representing a 9% growth compared with the last quarter of 2006 and a decrease of 18% compared with the first quarter of 2007. The EBITDA and EBIT decrease from the first quarter to the second quarter of 2007 is explained by the wood price increase and the US$ depreciation. During the second quarter of 2007, in order to increase its safety inventory, the company invested in imported wood from the Spanish region of Galiza, although the raw material price was heavily increased by transport costs.

DIRECTORS’ REPORT


F. Ramada Group (amounts in thousand euro) IFRS IFRS ∆%

Jun-07 Dec 06Balance sheet

Net Assets 124,147 97,988 27%Shareholder´s funds 33,277 34,287 -3%Gross remunerated debt 34,959 33,597 4%Cash and cash equivalents ( b ) 8,561 6,515 31%Net remunerated debt 26,398 27,082 -3%

Statement of profit and loss Jun-07 Jun-06Operating income 55,593 53,250 4%Operating profit (EBIT) 4,952 5,502 -10%Net consolid. profit attib. to the parent company´s shareholders 2,994 3,603 -17%

Ratios Jun-07 Jun-06Net profit / Operating income 5.4% 6.8% -21%EBITDA (a) 6,263 6,910 -9%Shareholder´s funds / Net Assets 26.8% 36.3% -26%Return on Equity 18.0% 23.9% -25%

(a) EBITDA = Operating profit + Amortisation(b) including the amount of the investments owned for negociation The consolidated operating income amounted to, approximately, 56 million Euro, 4 % above the same period in 2006. The operating profit decreased 10% to, approximately, 5 million Euro. During the first semester of 2007, EBITDA reached 6 million Euro, down 9% year on year. The main reason to the EBITDA’s performance is the decrease in gross profit, related to the increase in the steel’s price in the international market. It is the Group’s strategy to mitigate this reduction of margins in the steel segment, particularly moulds, through the conquest of greater market share on the storage systems´ sector. The net profit had a decrease of 17%, in comparison with the first semester of 2006, and amounted to around 3 million Euro.

DIRECTORS’ REPORT


SECOND SEMESTER 2007 OUTLOOK The Group foresees the second semester of 2007 with optimism, expecting that the conjunction of favourable political and economic factors may bring the needed stability and growth.

For the Paper and Pulp sector, if on one hand the contraction of paper production combined with the increase in pulp supply could have negative effects on price evolution, on the other hand the pressing of wood costs and the exchange rates could exert on the opposite way. In this way the Group expect to sustain the actual price levels for eucalyptus pulp.

Concerning the Steel sector, the new projects and investments directed to production of new products and development of competitiveness and quality perspective and growth in activity and goals set.

In the Warehousing Systems sector, continuous investment policy and the commercial effort in the main international target markets allow the Group to be optimistic regarding the goals set for sales growth and profitability.

DIRECTORS’ REPORT


CORPORATE GOVERNANCE In compliance with the guidelines included in the Stock Exchange Regulation (Regulamento da CMVM) 7/2001, with the changes introduced by Regulation 11/2003, the Company is exempted from presenting information related with Corporate Governance, as the presentation of this information is only mandatory jointly with the annual Directors’ Report, and because there have occurred no significant changes towards the information disclosed in the annual Directors’ Report for the year ended 31 December 2006. Regarding this matter, it is to highlight the fact that, following the changes introduced to the Commercial Companies Code by Decree-Law 76-A/2006, the Shareholders’ General Meeting held 29 March 2007 approved a partial change to the Company’s articles of association, transforming the oversight structure from the Sole Statutory Auditor regime to a Fiscal Board and Statutory Auditor. Thus, the Shareholders’ General Meeting elected, until the term of the current mandate (2005/2007) the following members: Fiscal Board • João da Silva Natária – President • Manuel Tiago Alves Baldaque de Marinho Fernandes - Member • Cristina Isabel Linhares Fernandes – Member • Joaquim Augusto Soares da Silva – Substitute Statutory Auditor • Deloitte & Associados, SROC S.A., represented by António Manuel Martins

Amaral LEGAL MATTERS Treasury stock Pursuant to the requirements of article 66 of the Commercial Company Code (“Código das Sociedades Comerciais”), the Directors inform that as of 30 June 2007 Altri and its subsidiaries had no treasury stock and did not acquire or sell any treasury stock during the period. Shares held by Altri’s corporate boards Pursuant to the requirements of article 447 of the Commercial Companies Code (“Código das Sociedades Comerciais”), the Directors inform that, as 30 June 2007, the held shares were as follows:

DIRECTORS’ REPORT


Shares held at

30.06.07

Paulo Jorge dos Santos Fernandes 3,085,746 Pedro Macedo Pinto de Mendonça 852,500 Domingos José Vieira de Matos 3,469,716 João Manuel Matos Borges de Oliveira (a) Carlos Manuel Matos Borges de Oliveira (a) 4,580,000

(a) 4,580,000 shares correspond to the total number of shares of Altri, S.G.P.S., S.A. held by Caderno Azul – S.G.P.S., S.A. whose shareholders include the directors João Manuel Matos Borges de Oliveira and Carlos Manuel Matos Borges de Oliveira.

As of 30 June 2007, the Statutory Auditor, the members of the Statutory Audit Board Board and of the Shareholders’ General Meeting held no shares of the Company.

Participation in the Company’s capital Pursuant to the requirements of articles 16 and 20 of the Securities Market Code (“Código de Valores Mobiliários”) and article 448 of the Commercial Companies Code (“Código das Sociedades Comerciais”), the Directors inform that, in accordance with the notifications received, the companies and/or individuals that hold qualified participations exceeding 2%, 5%, 10%, 20%, 33% and 50% of the voting rights, are as follows:

Exceeding 2% of the voting rights Shares held at

30.06.2007

Direct % of the voting

rights

Domingos José Vieira de Matos 3,469,716 3.38%Paulo Jorge dos Santos Fernandes 3,085,746 3.01%Caderno Azul, SGPS, S.A. (a) 4,580,000 4.47%Millennium bcp – Gestão de Fundos InvestimentosS.A.

4,111,384 4.01%

(a) 4,580,000 shares correspond to the total number of shares of Altri, S.G.P.S., S.A. held by Caderno Azul – S.G.P.S., S.A. whose shareholders include the directors João Manuel Matos Borges de Oliveira and Carlos Manuel Matos Borges de Oliveira.

Exceeding 5% of the voting rights Shares held at

30.06.2007

Direct % of the voting

rights

UBS AG – ZURIQUE 10,348,392 10.09%

Ana Rebelo Mendonça Fernandes 6,369,340 6.21%

DIRECTORS’ REPORT


Exceeding 20% of the voting rights Shares held

at 30.06.2007

% of the voting rights

Cofihold, S.G.P.S., S.A. a) directly 21,000,000 20.47% b) indirectly, through its directors

Paulo Jorge dos Santos Fernandes 3.01% Domingos José Vieira de Matos 3.38% Pedro Macedo Pinto de Mendonça 0.83% Carlos Manuel Matos Borges de Oliveira (a) João Manuel Matos Borges de Oliveira (a) 4.47%

(a) 4.47% corresponds to the total participation held by Caderno Azul – S.G.P.S., S.A. whose shareholders include the directors João Manuel Matos Borges de Oliveira and Carlos Manuel Matos Borges de Oliveira.

Altri was not informed of any participation exceeding 33% of the voting rights.

DECLARATION OF RESPONSABILITY

The members of the Board of Directors of Altri, S.G.P.S., S.A. declare that they assume responsibility for the information hereby presented, and assure that the items included herein are true and that, to the best of their knowledge, there are no omissions. As required by article 21 of Decree-Law 411/91 of 17 October, the Board of Directors informs that there are no overdue debts to the State, namely, with respect to Social Security.

DIRECTORS’ REPORT


CLOSING REMARKS The Board of Directors concludes by expressing a vote of gratitude to the personnel of the Group for their dedication and effort, and also to the other Corporate Boards and to the Financial Institutions that co-operated with the Group.

Porto, 5 September 2007 The Board of Directors: Paulo Jorge dos Santos Fernandes – President João Manuel Matos Borges de Oliveira Pedro Macedo Pinto de Mendonça Domingos José Vieira de Matos Carlos Manuel Matos Borges de Oliveira

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

CONDENSED CONSOLIDATED BALANCE SHEETS AS OF 30 JUNE 2007 AND 31 DECEMBER 2006(Translation of financial statements originally issued in Portuguese - Note 21)

(Amounts expressed in Euro)

ASSETS Notes 30.06.2007 31.12.2006NON CURRENT ASSETS:Biological assets 56,818,079 55,324,771Tangible assets 246,800,561 245,092,772Goodwill 266,875,965 266,875,965Intangible assets 496,703 667,898Investments in associated companies 4 8,771,167 7,750,614Investments held to maturity 15,000 15,000Investments available for sale 4 1,280,854 1,190,072Other non current assets 117,767 345,463Deferred tax assets 7 10,711,045 8,992,788

Total non current assets 591,887,141 586,255,343

CURRENT ASSETS:Inventories 61,359,579 55,408,732Customers 89,449,907 81,381,318Other debtors 44,531,329 21,189,534Other current assets 8,611,779 4,207,931Derivatives 5,752,898 -Investments recorded at fair value through profit and loss 12 1,763,043 2,829,120Cash and cash equivalents 6 53,267,447 22,652,129

Total current assets 264,735,982 187,668,764

Total assets 856,623,123 773,924,107

EQUITY AND LIABILITIES 30.06.2007 31.12.2006

SHAREHOLDERS' FUNDS:Share capital 8 25,641,459 25,641,459 Legal reserve 1,527,560 182,597 Other reserves 58,231,304 39,041,091 Consolidated net profit for the period 19,288,502 20,843,789 Total shareholders' funds attributable to the parent company's shareholders 104,688,825 85,708,936

Minority interests 9 262,815 290,356

Total shareholders' funds 104,951,640 85,999,292

LIABILITIES:NON CURRENT LIABILITIES:Bank loans 10 173,415,644 426,886,102 Other loans 10 327,693,953 35,349,336 Other non current creditors 250,214 25,298,862 Other non current liabilities 1,466,304 1,624,859 Deferred tax liabilities 7 2,577,495 1,167,417 Provisions 11 4,619,031 4,270,534

Total non current liabilities 510,022,641 494,597,110

CURRENT LIABILITIES:Bank loans 10 44,736,664 31,426,012 Other loans - short term 10 59,510,123 57,364,786 Suppliers 46,299,948 37,058,311 Other current creditors 50,269,330 35,330,550 Other current liabilities 37,012,552 26,817,538 Derivatives 12 3,820,225 5,330,508

Total current liabilities 241,648,842 193,327,705

Total shareholders' funds and liabilities 856,623,123 773,924,107

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

The Board of Directors


CONDENSED CONSOLIDATED STATEMENTS OF PROFIT AND LOSS BY NATUREFOR THE SIX MONTHS AND THREE MONTHS PERIODS ENDED 30 JUNE 2007

AND 30 JUNE 2006

(Translation of financial statements originally issued in Portuguese - Note 21)(Amounts expressed in Euro)

Notes 30.06.2007 (1) 2nd quarter 2007 30.06.2006 (1) 2nd quarter 2006

Operating incomeSales 206,814,405 104,941,400 116,538,812 62,293,170Services rendered 3,407,335 888,305 3,726,634 1,730,299Other operating income 2,806,019 1,249,329 2,018,184 1,405,394

Total operating income 17 213,027,759 107,079,034 122,283,630 65,428,863Operating expenses

Cost of sales 77,594,687 39,568,077 49,989,308 26,971,474External supplies and services 54,756,927 28,359,171 31,637,917 16,676,151Payroll expenses 22,537,374 11,580,747 15,619,157 8,106,237Amortisation and depreciation 14,232,591 7,145,660 8,606,764 4,162,135Provisions and impairment losses 11 871,868 687,021 873,319 668,772Other operating expenses 3,799,465 1,733,095 983,886 503,766

Total operating expenses 173,792,912 89,073,771 107,710,351 57,088,535Operating profit 17 39,234,847 18,005,263 14,573,279 8,340,328

Gains and losses in associated companies 13 (71,307) (76,546) 319,383 319,383Gains and losses in other investments 13 947,378 973,455 41,959 41,959Financial expenses 13 (17,854,012) (9,469,254) (3,392,443) (1,691,356)Financial income 13 1,971,223 1,182,713 254,821 (43,936)

Profit before income tax 24,228,129 10,615,631 11,796,999 6,966,378

Income tax (4,897,489) (1,907,834) (3,058,968) (1,831,380)Profit after income tax 17 19,330,640 8,707,797 8,738,031 5,134,998

Attributable to:Parent company's shareholders 19,288,502 8,686,508 8,552,813 5,001,876Minority interests 42,138 21,289 185,218 133,122

Earnings per shareBasic 16 0.19 0.08 0.08 0.05Diluted 16 0.19 0.08 0.08 0.05


(1) Subject to Limited Review by external auditors as required by the Securities Market Commission ("Comissão do Mercado dos Valores Mobiliários") regarding interim financial statements.



CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY FOR THE SIX MONTHS PERIOD ENDED30 JUNE 2007 AND 30 JUNE 2006

(Translation of financial statements originally issued in Portuguese – Note 21)(Amounts expressed in Euro)

Attributable to the parent company's shareholdersOther reserves Total

Notes Share capital Legal reserveHedging reserves

Conversion reserves Other Net profit Total

Minority interests

shareholders' funds

Balance as of 1 January 2006 25,641,459 - - (179,453) 34,867,623 10,415,229 70,744,858 1,778,485 72,523,343Appropriation of the consolidated net profit of 2005:

Transfer to legal reserves and retained earnings - 182,597 - - 7,668,486 (7,851,083) - - -Distributed dividends - - - - (2,564,146) (2,564,146) - (2,564,146)

Change in reserves:Conversion reserves - - - (13,749) - - (13,749) - (13,749)Others - - - - - - - 24,936 24,936

Acquisition of additional share capital of Celtejo - Empresa de Celulose do Tejo, S.A. - - - - - - - (1,778,088) (1,778,088)Net consolidated profit for the period

ended 30 June 2006 - - - - - 8,552,813 8,552,813 185,218 8,738,031Balance as of 30 June 2006 25,641,459 182,597 - (193,202) 42,536,109 8,552,813 76,719,776 210,551 76,930,327

Balance as of 1 January 2007 8 25,641,459 182,597 (3,396,295) (141,249) 42,578,635 20,843,789 85,708,936 290,356 85,999,292Appropriation of the consolidated net profit of 2006:

Transfer to legal reserves and retained earnings - 1,344,963 - - 14,370,534 (15,715,497) - - -Distributed dividends 19 - - - - - (5,128,292) (5,128,292) - (5,128,292)

Change in reserves:Conversion reserves - - - (66,666) - - (66,666) - (66,666)Hedging reserves 12 - - 4,907,500 - - - 4,907,500 - 4,907,500Others - - - - (21,155) - (21,155) - (21,155)

Acquisition of additional share capital of Celtejo - Empresa de Celulose do Tejo, S.A. 5 and 9 - - - - - - - (69,679) (69,679)Net consolidated profit for the period

ended 30 June 2007 - - - - - 19,288,502 19,288,502 42,138 19,330,640Balance as of 30 June 2007 25,641,459 1,527,560 1,511,205 (207,915) 56,928,014 19,288,502 104,688,825 262,815 104,951,640



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

CONDENSED CONSOLIDATED CASH-FLOW STATEMENT FOR THE SIX MONTHS PERIODENDED 30 JUNE 2007 AND 30 JUNE 2006.

(Translation of financial statements originally issued in Portuguese - Note 21)


Notes 30.06.2007 30.06.2006

Operating activities:Cash flow from operating activities (1) 33,419,137 19,659,008

Investment activities:Collections relating to:

Investments 1 3,620,539 11,074,083Tangible assets 1,543,720 383,278Interest and similar income 2,184,744 596,053Investment subsidies 75,916 2,265

Payments relating to:Investments 1 (2,887,365) (9,278,088)Intangible assets - (62,697)Tangible assets (33,268,746) (10,727,044)Biological assets (3,071,645) (1,434,561)

Cash flow from investment activities (2) (31,802,837) (9,446,711)

Financing activities:Collections relating to:

Loans obtained 345,981,047 60,405,149Payments relating to:

Lease contracts (519,324) (475,829)Interest and similar costs (14,920,028) (2,655,875)Dividends (5,128,292) (2,564,146)Loans obtained (290,223,869) (20,967,333)Loans granted (9,748,032) -

Cash flow from financing activities (3) 25,441,502 33,741,966

Cash and cash equivalents at the beginning of the period 2 13,931,279 3,007,363Variation of cash and cash equivalents: (1)+(2)+(3) 27,057,802 43,954,263Cash and cash equivalents at the end of the period 2 40,989,081 46,961,626




NOTES TO THE CONDENSED CONSOLIDATED STATEMENT OF CASH-FLOWS FOR THE SIX MONTHS PERIOD ENDED 30 JUNE 2007

(Translation of notes originally issued in Portuguese – Note 21)


1. PAYMENTS/COLLECTIONS RELATING TO INVESTMENTS

During the period ended 30 June 2007 the payments/collections relating to investments were as follows:

Transaction Amount amount paid/collected Acquisitions Investments recorded at fair value through profit and loss 1,633,982 1,633,982 EDP - Produção Bioeléctrica, S.A. 1,200,000 1,200,000 Celtejo - Empresa de Celulose do Tejo, S.A. 53,383 53,383 -------------- -------------- 2,887,365 2,887,365 ======== ======== Sales Investments recorded at fair value through profit and loss 3,270,539 3,270,539 Properties 350,000 350,000 --------------- --------------- 3,620,539 3,620,539 ========= ========= 2. BREAKDOWN OF CASH AND ITS EQUIVALENTS Cash and its equivalents presented in the condensed consolidated statement of cash flows for the period

and the reconciliation between that amount and the amounts shown in the balance sheet, are as follows:

30.06.2007 31.12.2006 Cash 50,009 232,606 Bank deposits repayable on demand 13,105,937 12,419,523 Term deposits 40,111,501 10,000,000 53,267,447 22,652,129 Bank overdrafts (12,278,366) (8,720,850) Cash and its equivalents 40,989,081 13,931,279


NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

AS OF 30 JUNE 2007



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1. INTRODUCTORY NOTE

Altri, SGPS, S.A. (“Altri” or “Company”) is an open capital company, incorporated at 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 Lisbon Euronext Stock Exchange. Altri was incorporated as a result of the reorganization process of Cofina, SGPS, S.A. through the demerger of the investment previously held by this group in Celulose do Caima, SGPS, S.A. (representing 97.23% of this company’s share capital), under a simple demerger operation predicted in item 1.a), article 118 of the Commercial Companies Code (“Código das Sociedades Comerciais”). The relevant date for the production of juridical and accounting effects of this operation was 1 March 2005. Altri’s shares were attributed to the shareholders of Cofina, SGPS, S.A. in accordance to the ratio of one share of Altri, SGPS, S.A. for each share of Cofina, SGPS, S.A. previously owned, and admitted to the official stock market, directed by Euronext Lisbon, in 1 March 2005.

Altri is the parent company of a group of companies listed in Note 4 known as Altri Group, and its main activity is the management of investments mainly in the industrial sector. The Group focus its operations in the following sectors:

a) production of pulp and paper through the Celbi, Celtejo and Caima Groups; b) commercialisation of steel and storage systems through the F. Ramada Group.

The condensed financial statements have been prepared using accounting policies consistent with International

Financial Reporting Standards and in accordance with International Accounting Standard (IAS) 34 Interim Financial Reporting.

2. BASIS OF PRESENTATION AND MAIN ACCOUNTING POLICIES

The accompanying consolidated financial statements have been prepared on a going concern basis, based on the accounting records of the companies included in the consolidation perimeter (Note 4) adjusted to reflect the recognition and measurement principles of International Financial Reporting Standards (“IFRS” – previously International Accounting Standards – “IAS”), issued by the International Accounting Standards Board (“IASB”) in force as of 1 January 2006, as adopted by the European Union.

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 2006. 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 periods.

4. INVESTMENTS

The companies included in the consolidated financial statements by the full consolidation method, their headquarters, percentage participation held and activity developed as of 30 June 2007 are as follows:

Company Head Office Percentage

held Activity Parent company: Altri, SGPS, S.A. Porto Investment management Celbi / Caima / Celtejo Group Celulose do Caima, SGPS, S.A. Lisbon 100% Investment management

Caima Indústria de Celulose, S.A. Constância Sul 100% Production and commercialization of pulp

Silvicaima – Sociedade Silvícola do Caima, S.A. Constância Sul 100% Sylvan exploration



AS OF 30 JUNE 2007



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Caima Energia – Empresa de Gestão e Exploração de Energia, S.A. Constância Sul 100% Production of energy

Invescaima – Investimentos e Participações, SGPS, S.A. Lisboa 100% Investment management

Inflora – Sociedade de Investimentos Florestais, S.A. Lisboa 100% Sylvan exploration

Celtejo – Empresa de Celulose do Tejo, S.A.

Vila Velha de Ródão

99.581%

Production and commercialization of pulp

and paper CPK – Companhia Produtora de Papel

Kraftsack, S.A. Vila Velha de

Ródão 99.581% Production and commercialization of paper

Sosapel – Sociedade Comercial de Sacos de Papel, Lda.

Vila Velha de Ródão 79.665% Commercialization

Celbi – Celulose da Beira Industrial, S.A. (a) Figueira da Foz 100% Production and

commercialisation of pulp

Celbinave – Tráfego e Estiva Unipessoal, Lda. (a)

Figueira da Foz 100% Freightage of ships

Viveiros do Furadouro Unipessoal, Lda.

(a) Óbidos 100%

Production of plants in nurseries and services related with forests and

landscapes

Altri, S.L. (b) Madrid, Spain 100% Investment management

F. Ramada Group

F. Ramada – Aços e Indústrias, S.A. Ovar 100% Steel commercialization

F. Ramada – Produção e Comercialização de Estruturas Metálicas de Armazenagem, S.A.

Ovar 100% Production and

commercialization of storage systems

F. Ramada II, Imobiliária, S.A. Ovar 100% Real estate

F. Ramada, Serviços de Gestão, Lda. Ovar 100% Administration and management services

Universal Afir – Aços Especiais e Ferramentas, S.A. Ovar 100% Steel commercialization

BPS – Equipements, S.A. Paris, France 100% Commercialization of storage systems

Storax Racking Systems, Ltd. Bromsgrove, United Kingdom 100% Commercialization of

storage systems

Storax Benelux Belgium 100% Commercialization of

storage systems

(a) – company acquired in August 2006, being included in the consolidation by the full consolidation method since 1 September 2006

(b) – company created in the second semester of 2006 All the above companies were included in the consolidated financial statements in accordance with the full

consolidation method.



AS OF 30 JUNE 2007



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The associated company, included in the consolidated financial statements in accordance with the equity method, the percentage participation held and the activity developed as of 30 June 2007, can be detailed as follows:

Company Percentage held Activity EDP – Produção Bioeléctrica, S.A. (a) 50% Production of energy

(a) – company acquired in January 2006 The book value of this investment as of 30 June 2007, its equity as of that date and the net profit for the period

then ended, are as follows:

Company

Investment book value (a)

Equity

Net profit

EDP - Produção Bioeléctrica, S.A.

8,771,167

7,554,191

(466,982)

(a) – including loans granted The caption “Investments available for sale” as of 30 June 2007 can be detailed as follows: Gross book value

Accumulated impairment losses on investments (Note 11)

Net book value

5. CHANGES IN THE GROUP COMPANIES

The change occurred during the period ended 30 June 2007 in the group companies included in the consolidated financial statements of Altri, was the acquisition of an additional participation of 0.133% in the share capital of Celtejo – Empresa de Celulose do Tejo, S.A.

6. INVESTMENTS RECORDED AT FAIR VALUE THROUGH PROFIT AND LOSS

The amount recorded under the caption “Investments recorded at fair value through profit and loss” as of 30 June 2007 refers to shares of companies listed in stock exchange markets and is recorded in accordance with its market value as of that date.

7. CURRENT AND DEFERRED INCOME TAXES

In accordance with current legislation, tax returns are subject to review and correction by the tax authorities during a six-year period until 2000 and a four-year period after that date (ten years for Social Security, until 2000, inclusive, and five years after 2001), except when there have been tax losses, 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 tax returns of Altri and its subsidiaries and associated companies since the year of 2003 are still subject to review. The Board of Directors of Altri believes that any potential corrections arising from reviews/inspections of these tax returns by the tax authorities will not have a significant effect on the accompanying consolidated financial statements.

1,391,736 (110,882) 1,280,854



AS OF 30 JUNE 2007



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As of 30 June 2007 and 31 December 2006 the deferred tax assets and liabilities, in accordance with the timing differences that originated them, were as follows:

Deferred tax assets Deferred tax liabilities30.06.2007 31.12.2006 30.06.2007 31.12.2006

Write-off of accrued costs - - 79,195 85,026Write-off of tangible assets 309,390 352,949 - -Write-off of intangible assets 50,821 51,617 - -Provisions and impairment losses not accepted for tax purposes 4,706,543 4,783,279 - -Amortisations and depreciations not accepted for tax purposes - - 331,871 371,686Harmonization of accounting principles 1,059,904 706,603 - -Reinvested capital gains - - 31,774 31,774Pension fund 938,934 863,934 - -Tax losses carried forward 689,515 701,557 - -Revaluation of depreciable tangible assets - - 268,454 287,469Fair value of derivatives 979,660 1,224,514 1,524,518 -Write-off of group gains 1,843,557 - - -Other 132,721 308,335 341,683 391,462

10,711,045 8,992,788 2,577,495 1,167,417

The tax losses carried forward for which the correspondent deferred tax assets have been recorded as of 30 June 2007, and the corresponding limit year to use these tax losses, are as follows:

Tax Deferred tax Limit year forlosses assets utilisation

Generated in 2006 2,758,060 689,515 2012

As a result of the issuance of the new “Lei das Finanças Locais” (local finance law) which changes the local income tax rate, and that is applicable since 1 January 2007, the tax rate used in the calculation of the deferred tax assets and liabilities is 27.5%, with the exception of deferred tax assets related with tax losses carried forward where the new rate amounts to 25%.

8. SHARE CAPITAL

As of 30 June 2007, the Company’s share capital, fully subscribed and paid-up, consisted of 102,565,836 ordinary shares with a nominal value of 0.25 Euro each. As of that date, Altri, SGPS, S.A. and its subsidiaries did not hold own shares.

As of 30 June 2007 the following entities held more than 20% of the subscribed share capital: - Cofihold, SGPS, S.A. 9. MINORITY INTERESTS

The reduction occurred in the caption “Minority interests” refers to the acquisition of an additional participation of 0.133% in the share capital of Celtejo – Empresa de Celulose do Tejo, S.A.



AS OF 30 JUNE 2007



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10. BANK LOANS AND OTHER LOANS

As of 30 June 2007 and 31 December 2006 the captions “Bank loans” and “Other loans” can be detailed as follows:

30-06-2007 31-12-2006

Nominal value Book value Nominal value Book valueCurrent Non current Current Non current Current Non current Current Non current

Bank loans 17,518,304 175,732,769 17,518,304 173,415,644 22,705,162 430,333,333 22,705,162 426,886,102Bank overdrafts 12,278,366 - 12,278,366 - 8,720,850 - 8,720,850 -Credit facilities 14,939,994 - 14,939,994 - - - - - Bank loans 44,736,664 175,732,769 44,736,664 173,415,644 31,426,012 430,333,333 31,426,012 426,886,102

Commercial paper 53,814,076 - 53,814,076 - 53,000,000 - 52,849,208 -Bonds - 321,500,000 - 314,952,409 - 21,500,000 - 21,031,927Factoring 3,643,740 - 3,643,740 - 3,562,694 - 3,562,695 -Repayable loan 2,052,307 12,741,544 2,052,307 12,741,544 952,883 14,317,409 952,883 14,317,409 Other loans 59,510,123 334,241,544 59,510,123 327,693,953 57,515,577 35,817,409 57,364,786 35,349,336

104,246,787 509,974,313 104,246,787 501,109,597 88,941,589 466,150,742 88,790,798 462,235,438 In the end of the first semester of 2007, Altri, S.G.P.S., S.A. issued an 8 year bond loan by private placement,

with a bank syndicate, totalling 300.000.000 Euro. This loan bears postponed semester interests with variable interest rate and has full repayment in 2015.

The expenses incurred with the issuance of loans are deducted to its nominal value and deferred and recognized as interest expenses during the period of the loan. The nominal value of the non current loans recorded under the caption “Bank loans” is repayable as follows:

Repayment year Amount2008 3,500,0002009 8,732,7692010 7,000,0002011 17,387,5002012 21,775,0002013 117,337,500

175,732,769

The nominal value of the non current loans recorded under the caption “Other loans” is repayable as follows:

Repayment year Amount2008 1,575,8692009 4,198,3332010 3,721,8922011 24,745,4502012 -2013 -2014 -2015 300,000,000

334,241,544



AS OF 30 JUNE 2007



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11. ACCUMULATED PROVISIONS AND IMPAIRMENT LOSSES

The movements occurred in provisions and impairment losses during the periods ended 30 June 2007 and 2006 can be detailed as follows:

30.06.2006

ProvisionsImpairment losses in

investmentsImpairment losses on current

assets (a)

Opening balance 150,637 2,924,803 15,570,720Increases 6,500 - 866,819Reversals and utilizations (4,489) (2,838,917) (288,345)Closing balance 152,648 85,886 16,149,194

30.06.2007

ProvisionsImpairment losses in

investmentsImpairment losses on current

assets (a)

Opening balance 4,270,534 110,882 24,015,972Increases 518,199 - 455,771Reversals and utilizations (169,702) - (30,207)Closing balance 4,619,031 110,882 24,441,536

(a) - including 1,404,512 Euro relating to impairment losses on accounts receivable recorded as non current assets.

The amount recorded under the caption “Provisions” as of 30 June 2007 corresponds to the Board of Directors’ best estimate to cover possible losses arising from legal actions in progress.

12. DERIVATIVES FINANCIAL INSTRUMENTS

During the six months period ending 30 June 2007 Celbi / Caima / Celtejo Group companies held derivative financial instruments to cover the variations in pulp paper prices and in interest rates, which were recorded at fair value. Celbi / Caima / Celtejo Group companies only use derivatives for interest rates to hedge future cash flows that results from the payment of interests of loans obtained. The detail of the financial instruments fair value as of 30 June 2007 and 31 December 2006 is as follows:

30.06.2007 31.12.2006

Pulp price fluctuation hedge derivatives ( 3.820.225 ) ( 3.327.260 ) Interest rates derivatives 5.752.898 ( 2.003.248 ) 1.932.673 ( 5.330.508 )

The net profit for the year related with the variation in the fair value of the non matured position of derivative hedge instruments, which has been computed by financial institutions, amounting to 4,907,500 Euro, was recorded directly in the equity caption “Hedging reserves” (as established in IAS 39 – Financial Instruments: Recognition and measurement), net of the correspondent deferred tax liabilities. In the profit and loss statement for the period of six months ending 30 June 2007, the Group recorded the part already matured.



AS OF 30 JUNE 2007



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13. NET FINANCIAL PROFIT

Net financial profit for the periods ended 30 June 2007 and 2006 can be detailed as follows:

30.06.2007 30.06.2006

Gains and losses in associated companiesGains in associated companies 162,184 319,383Losses in associated companies (233,491) -

(71,307) 319,383

Gains and losses in other investmentsGains obtained with treasury applications 947,378 41,959

947,378 41,959

Financial expensesInterests 16,763,644 2,605,532Derivatives 265,330 -Exchange losses 201,088 222,114Other financial expenses 623,950 564,797

17,854,012 3,392,443

Financial incomeInterests 1,637,875 155,597Income from interest properties 154,050 -Income from securities - 55Exchange gains 125,474 76,087Financial discounts received 36,270 2,337Other financial income 17,554 20,745

1,971,223 254,821

14. RELATED PARTIES

As of 30 June 2007 there are no relevant balances with related parties. During the period ended 30 June 2007 there were no relevant transactions with related parties.

15. FINANCIAL COMMITMENTS NOT INCLUDED IN THE CONSOLIDATED BALANCE SHEET In addition to the commitments mentioned in the notes to the consolidated financial statements as of 31 December 2006, the contractual obligations for the acquisitions of fixed assets assumed by Celbi/Caima/Celtejo Group as of 30 June 2007 amounted to, approximately, 325,000,000 Euro.

16. EARNINGS PER SHARE

Earnings per share for the period ended 30 June 2007 and 2006 were computed as follows:

30.06.2007 30.06.2006

Net profit considered for the computation of basic and diluted earnings per share 19,288,502 8,552,813

Number of shares used to compute the basic and diluted earnings per share 102,565,836 102,565,836

Earnings per shareBasic 0.19 0.08Diluted 0.19 0.08



AS OF 30 JUNE 2007



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17. SEGMENT REPORTING

In accordance with the origin and nature of the income generated by the Group, the main reporting segments identified are as follows:

- Steel; - Pulp and paper; and - Holding.

The contribution of the main business segments for some financial indicators for the semester ended 30 June 2007 and 30 June 2006 can be presented as follows:

30.06.2006

Steel Pulp and paper Holding

Eliminations and consolidation adjustments Consolidated

Net operating income 53,249,753 69,033,877 - - 122,283,630Operating cash-flow (EBITDA) (a) 6,910,111 16,396,986 (127,054) - 23,180,043Operating profit (EBIT) 5,502,001 9,349,461 (127,944) (150,239) 14,573,279Net profit for the period (b) 3,602,788 5,841,968 31,637,027 (32,343,752) 8,738,031

30.06.2007

Steel Pulp and paper Holding

Eliminations and consolidation adjustments Consolidated

Net operating income 55,593,032 156,731,271 - 703,456 213,027,759Operating cash-flow (EBITDA) (a) 6,263,103 47,124,319 (117,063) 197,079 53,467,438Operating profit (EBIT) 4,952,343 34,306,202 (117,954) 94,256 39,234,847Net profit for the period (b) 2,994,214 16,783,737 2,830,434 (3,277,745) 19,330,640

(a) - EBITDA = Operating profit + depreciation and amortisation(b) - net profit attributable to parent company's shareholders and minority interests

18. COMPARABILITY OF THE FINANCIAL STATEMENTS

In the second semester of 2006, Altri Group acquired 100% of the share capital of Celbi – Celulose Beira Industrial, S.A. As a result, the consolidated statement of profit and loss for the half-year ended 30 June 2007 includes the contribution of Celbi Group’s operations, which can be detailed as follows:

Euro

Operating income 101,784,599

Operating profit 23,183,750

Profit before income tax 18,691,169 19. DIVIDENDS

The Annual Shareholders’ Meeting held 29 March 2007, approved the distribution of dividends amounting to 5,128,292 Euro, corresponding to a dividend of 0.05 Euro per share.

20. FINANCIAL STATEMENTS APPROVAL

The financial statements were approved by the Board of Directors and authorized for issuance in 4 September 2007.



AS OF 30 JUNE 2007



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21. EXPLANATION ADDED FOR TRANSLATION

These consolidated financial statements are a translation of financial statements originally issued in Portuguese in accordance with International Financial Reporting Standards (IFRS/IAS) as adopted by the European Union, 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.

ALTRI, S.G.P.S., S.A. - marketscreener.com fileDIRECTORS’ REPORT 1st semester 2007 2 To the...

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