ALTRI, S.G.P.S., S.A.en.altri.pt/~/media/Files/A/Altri/reports/english/2009/2009ALTRI... ·...

December 31, 2009 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

Annual Report ’09 1

INDEX Introduction 2 Macroeconomic background 4

Stock Exchange evolution 7 Group’s activity 10 Financial review 16 2010 outlook 19 Proposal of the Board of Directors for appropriation of the non consolidated net profit for the year 19 Corporate Governance 20 Legal Matters 43 Declaration of responsibility 44 Closing remarks 44

DIRECTORS’ REPORT


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 Director’s Report for the year 2009.

INTRODUCTION Altri was incorporated as of March 2005, as a result of the demerger of Cofina. Altri is a reference European producer of bleached eucalyptus pulp and is a public listed company included in the PSI 20 (Portuguese Stock Index), the benchmark stock market index. In addition to pulp production, the company is also present in electric energy from forest renewable sources, namely industrial cogeneration, 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.

Nowadays, Altri major assets are three pulp mills, with a 2009 total capacity above 650,000 tonnes/year of bleached eucalyptus pulp. The Company has investment projects on an advanced ramp up phase that will increase its production capacity to more than 900 thousand tones/year in 2010.

Altri obtained certification from the Forest Stewardship Council (FSC) and from the Programme for the Endorsement of Forest Certification (PEFC), two of the most worldwide acknowledged certification entities, for the whole 82,000 ha of forest under their management in Portugal. Altri’s industrial strategy implementation is based on integrated forest management in Portugal. This model is based on forest optimization, 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. Until June 2008, Altri had another industrial activity through the F.Ramada, which was devoted to retail steel and development of industrial solutions for storage systems. In June 2008 took place the split of the F. Ramada. The strategic rationale of this operation lies in focusing exclusively Altri on their core business, forest management and production of pulp.

The last years were highlighted by various acquisitions (Celtejo in 2005 and in 2006 Celbi) that allowed Altri to reinforce its position in its operating markets and by the development of a set of expansion activity projects.

DIRECTORS’ REPORT


During 2009, Altri’s most significant events were:

- Conclusion of the new pulp production line on Celbi: the Celbi’s project of doubling its pulp production capacity was completed during the 4Q 2009. The full completion of the project is expected to occur during the first quarter of 2010 with the installation of the cogeneration turbine. In January 2010, Celbi made a technical stop for the installation of this turbine, which is currently being tested;

- New Celtejo’s bleaching line project: during the 3 quarter 2009, Celtejo concluded the production learning curve of the new bleached eucalypt pulp production line, and since then also to produce bleached eucalyptus paper;

- 82 thousand hectares of forest certified in Portugal: by the end of 2009, Altri had 82.3 thousand ha of forest under management in Portugal which were already fully certificated by the Forest Stewardship Council (FSC), and is now also certificated by the Programme for the Endorsement of Forest Certification (PEFC); - EDP Bioeléctrica – electric energy production from biomass: by the end of 2009 EDP Bioeléctrica (50% held by Altri) holds a total amount of, approximately, 65 MW of electric power produced from forest biomass, which is translated to a net supplied power of about 57 MW, divided into 4 power plants: Mortágua (9MW), Ródão (a part of Celtejo industrial unit) with 13 MW of capacity, Constância (a part of Caima industrial unit) with 13 MW of capacity and Figueira da Foz (a part of Celbi industrial unit) with, approximately, 30 MW of capacity. Altri’s structure as of 31 December 2009 is as follows:

DIRECTORS’ REPORT


MACROECONOMIC BACKGROUD

International background

The year 2009 was presented as a reflection of the economic financial crisis, with global scope, which started in 2008. Global growth remained unsatisfactorily decreasing compared to previous boom periods. For the data of the 1st quarter of 2009, GDP in the U.S., EU 27 and Japan have losses of 2.6%, 4.4% and 9.1% respectively, while retaining the slowdown in advanced economies and the extent of it to emerging economies.

In Europe and the U.S., governments and central banks have strengthened their efforts to stabilize and support, however, failed to prevent high levels of volatility in the markets for raw materials, monetary, financial and foreign exchange globally.

The Euro Area, saw a significant decline in output and employment as well as investment and consumption. Among the perverse results of the global scenario, said the increase in the ratio of public debt to the GDP of member states, from 69.3% in 2008 to 84% fall in GDP by about 5% cumulative increase the unemployment rate to values close to 10% and losses in financial institutions. Of the extraordinary measures taken by the European Central Bank (ECB), stressed the strong drop in benchmark interest rate which is set at 1% in May (the lowest rate ever) and the extension of the marginal lending scheme (between six months and one year) of the ECB to other financial institutions that led, among other things, the lowering of the inflation rate during 2009.

The effects manifested in the Euro Area were also checked in the U.S. economy. Although the U.S. economy have shown satisfactory results in recent quarters, the U.S. GDP in the whole of 2009 showed a contraction of 2.4%, compared with growth of 0.4% in the year 2008. In this overall context, the North American Federal Reserve kept its incisive action in monetary policy, keeping the key interest rate by a range of between 0% to 0.25%. The economy showed striking performances throughout the year, however, kept disturbing figures in 2009 regarding the unemployment rate, the oscillation rate of inflation (by virtue of the evolution of oil prices), the devaluation of the dollar against the euro, the high fiscal deficit and contraction in domestic demand.

In financial markets, the financial crisis was had its peak in the 1st half of 2009. In the second half of the year, signs of extraordinary performances reflected in investor confidence, registering in the European stock rises above 20%. The success of stock exchange indexes was also visible through the rise of 82% of the Brazilian market and China's Shanghai stock exchange up to 20%. In Portugal, PSI 20 followed the international and European trend and ended the year with gains of more than 30% over the beginning of the year.

DIRECTORS’ REPORT


National Background

During 2009, the Portuguese economy mirrored the general condition of the entire Euro Area. The future trend experienced between 2006 and 2007 were discontinued in 2008 and revised downward in 2009. There was a reduction in homologous terms in GDP, 2.6%, reflecting the contraction of the components that constitute it, except for public consumption. The public accounts showed a degree of impairment substantially higher than expected. The structural deficit in 2009 reached 8.1% of GDP, something which derives mainly from revenue, which showed a decrease compared to the annual forecast. The Portuguese government debt stood at 76.6% of GDP, an increase of 10.3 percentage points compared to 2008.

The deterioration in economic activity during the year, reflected in the labor market and on prices. The unemployment rate reached 9.5%, increasing 1.9 percentage points (pp) in 2008, registering a further decrease in employment by 2.9% over the period homologous. Throughout 2009, the labor market brought about the profound aspects of the crisis was felt in the drop in productivity, at the levels of private consumption and indebtedness of Portuguese families. Regarding the evolution of inflation, the prices of energy products and food (especially unprocessed) showed successive drops in annual terms, in recent months, representing the most important contribution to reducing the average annual inflation rate (-0, 8%), which face the Euro Area represents one of the most negative rates. This happens because these products weighing more than the average of the Euro Area, in the total mix of the HICP (Harmonised Index of Consumer Prices).

Overall, Portugal showed results similar to those observed in European economies and in most developed countries. This is the result of an open economy and integrated it is presented to the Portuguese economy, in which the spread of disturbances in the financial system and slowing global economic activity continued to have adverse implications, as already noted in 2008. He kept the uncertainty of financial markets, and extraordinary control in currency markets that do not awarded nor encouraged investment and savings difficult. Additionally, in 2009 focuses on the spread of these disturbances in domestic economic activity, and most importantly, the deterioration in the labor market and issues related to social conditions (conditions of national reforms, living standards, health, education).

Future prospects

During 2009, the macroeconomic scenario presented a global economic slowdown, reflecting the economic and financial crisis that triggered the final months of 2008. During this period, there were higher levels of instability in financial markets of the last decades and a decline in economic activity in most countries, with significant effect on world trade.

DIRECTORS’ REPORT


From the second quarter of 2009, global indicators started to point to an economic recovery, particularly the increased level of confidence of economic and quantitative indicators such as GDP and world trade, although growth rates remain negative.

This development was due largely to the performance of automatic stabilizers, and the shrinkage of the price of raw materials, increased social support granted by governments and the reduction of interest rates. These measures contributed to the reduction of the behavior of financial markets and for the recovery of economies.

For the Portuguese economy, it has shown a set of structural weaknesses that have limited its potential growth over recent years, amid increased competition in international markets, particularly in terms of labor productivity.

For 2010, it is expected that the performance of the Portuguese economy to provide more favorable compared with 2009, reflecting signs of recovery, although slow, the global economy.

Growth in Gross Domestic Product (GDP) is estimated at 0.7 percent for 2010 and 1.4 percent in 2011, after a contraction of 2.6 percent recorded in 2009.

This projection for growth in economic activity is concomitant with the increase in external demand, which already has benefited from measures implemented by the authorities in promoting financial stability and monetary and fiscal stimulus implemented in major world economies.

For the unemployment rate in Portugal, the prospects of a growing, reaching about 9.8% in 2010 compared to 9.6% in 2009.

The inflation rate is estimated to reach 0.7% in 2010 and 1.6% in 2011, mainly as a result of increased oil prices, the increase in imports of non-energy goods and a moderate growth of unit work.

As regards public debt, it is estimated that this takes place in 84% of GDP in 2010 compared with 76.6% achieved in 2009. Note that the Portuguese public debt is above the European average and, together with the primary structural deficit, it will be a factor in the sustainability of public finances in the medium to long term.

DIRECTORS’ REPORT


STOCK EXCHANGE EVOLUTION

(Note: in order to enable a better comparison of the stock fluctuations, the PSI 20 index has been considered as being equal in value to the opening price of the shares in question.)

PSI 20 has since the early months of 2009 signs of recovery over the low performance of 2008. After a slight recovery in the first quarter, the price of PSI 20 in March reached its minimum, showing thereafter a period marked by the consistent recovery, having grown 22% in just four months and 30% for the whole year. The Portuguese stock market followed through the year 2009 the main stock indexes in his movements recovery reflected in a recovery of 33.5% of the major indexes.

In 2009, the main Portuguese stock index, the PSI-20, showed a gain of 33.5%, closing at 8,463.85 points equivalent to a gain of 17.5 billion euros, winning the Portuguese stock market the second best performance in Europe, only surpassed by the Dutch index.

Altri followed the trend of the Portuguese stock market in the first nine months of the year, but in the last quarter showed a significantly better performance than the PSI 20 following the evolution of the price of bleached pulp.

0.00.51.01.52.02.53.03.54.04.55.0

Stock Exchange Evolution

PSI 20

Altri

Altri’s share price increased around 90% during 2009, and closed bearing at 4 Euro per share with a market capitalization amounting to, approximately, 409.7 million Euros

During the year 2009 were traded approximately 104.4 million shares of the Company, volume extremely relevant if we take into consideration that their capital is composed of about 103 million shares.

DIRECTORS’ REPORT


The main events that distinguished the stock evolution during 2009 may be described chronologically as follows:

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

5.0

Stock Exchange Evolution

Altri

9 Jan25 Mar

27May

26 Aug

25 Nov.

9 January 2009 – Altri informed the permanently shutdown of its subsidiary CPK – Papel Kraft, S.A. (kraft sack paper unit). This strategic decision was taken due to the negative environment currently felt in kraft sack business and the negligible current impact of CPK to Altri’s profit. This fact allowed Altri to reinforce its strategic position in its core business: forest management and pulp production;

25 March 2009 - Altri announced the financial performance for the year 2008,

with a net profit (attributable to company shareholders) of 4.67 million Euro. Operating income amounted to 280 million Euro, a 3% decrease when compared with 2007. EBITDA amounted to, approximately, 69 million Euro, recording a 16% decrease in comparison with 2007. The Company recorded an impairment loss of approximately 5.8 Million Euro, which is essentially related to Celtejo stocks. Note that CPK (unit closed in December 2008) was fully supplied by Celtejo pulp;

27 May 2009 – Altri communicated the results of the 1st quarter of 2009. Operating income amounted, approximately, 62.8 million Euro which represents a 18% decrease comparing with the 1st quarter of 2008. EBITDA exceeded 9.5 million Euro, a 52% decrease compared with the 1st quarter of 2008 (20 million Euro);

DIRECTORS’ REPORT


26 August 2009 – the Group announced its performance for the first semester of 2009 with the net profit including minority interests of approximately 13.1 million Euro, from which 1 million Euro refer to operating discontinued units. The consolidated operating income was up than 141.5 million Euro. The EBITDA was 13.8 million euro;

25 November 2009 – Altri announces the results for the 3rd quarter of 2009. The consolidated operating income of Altri Group reached around 222.3 million Euro which represents a decrease of 2.5% compared to the 3rd quarter of 2008. The EBITDA amounted to about 25.3 million Euro and registered a decrease of 55.4% compared with the 3rd quarter of 2008. These results produced a consolidated net profit greater than -12 million Euro (11.1 million euros in the third quarter of 2008), from which 1.1 million Euro refer to operating discontinued units;

January 5, 2010 Altri reported that in 2009 registered an absolute record production of eucalyptus pulp, whose combined total was around 658 thousand tonnes, representing a growth of 30% over 2008.

DIRECTORS’ REPORT


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 held until 1 June 2008 the investments in the paper, pulp, steel and storage systems, date considered for the demerger process the business of steel and storage systems. This reorganization is part of a focusing and business transparency strategy, aiming at giving greater visibility to each area and increasing market perception of value. In January 2009 the group officially informed that its subsidiary CPK – Papel Kraft, S.A. decided to shut down permanently its kraft sack paper unit. Altri reinforces its strategic position in its core business: forest management and pulp production.

The Group currently operates in this sector through Celulose do Caima, S.G.P.S., S.A., which, in its turn, holds participations in:

- Caima – Indústria de Celulose (Constância), producer and distributor of paper pulp;

- Celbi – Celulose da Beira Industrial, S.A. (Figueira da Foz), producer and distributor of paper pulp;

- Celtejo – Empresa de Celulose do Tejo, S.A. (Vila Velha de Ródão), producer and distributor of paper pulp;

- Silvicaima – Sociedade Silvícola do Caima, S.A. (Constância), owner and manager of the Group’s forestry resources;

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

DIRECTORS’ REPORT


Altri’s complete structure of participation as of 31 December 2009 is as follows:

Caima SGPS

Inflora

Invescaima

Silvicaima Caima Indústria

Caima Energia

100%100%

100%Celtejo

99,83%EDP Bioeléctrica

45%

CPK

100%

Altri, SL

100%

100%

Sosapel

100%

100%

Celbi

Viveiros do Furadouro Unipessoal Celbinave

100%100%

Operfoz

33%

100%

Sócasca

100%

Altri Sales

100%

Altri – Energias Renováveis, SA

5%

100%

Captaraíz

100%

Pedro Frutícola

60%

40%

100%

Altri SGPS

Paper pulp market

During 2009, eucalyptus pulp market showed two distinct behaviors: the price showed a declining trend in the first half of the year, reaching a minimum of 480 USD in April (due to exchange rate, the minimum in Euro was reached in June, with 351 Euro). Thereafter, the price has reversed this trend, reaching in the end of the year 700 USD (486 Euro).

DIRECTORS’ REPORT


Over 2009, there have been two factors to stress related to the pulp market: (1) on one hand, the demand is rising again, with particular attention from China and; on the other hand (2), the level of extremely low price achieved in the first half of the year has accelerated structural change, which was materialized on the closure of capacity in geographical areas where production costs are higher.

In terms of demand, the total market for the bleached pulps reached over 45 million tonnes (+0.8% vs. 2008), and the total demand for eucalyptus pulp was around 15.1 million tonnes (+14% vs. 2008). For the eucalyptus pulp, Europe remains in 2009 the biggest market with a share of about 39%, while China had a market share of 26%.

In terms of supply, total installed capacity of eucalyptus in 2009 was around 15.5 million tonnes, representing a growth of about 8% over 2008. In terms of closures, during 2009 it is estimated that more than 4 million tonnes (bleached pulp) have exited the market, temporarily or permanently.

These actions contributed to stocks of pulp available in European ports reduction, reaching their minimum in November 2009, with about 651.5 thousand tonnes. In December, European level of stocks in ports was 762.4 thousand tonnes.

Evolution of pulp stock on European ports since 2004 to YE09 (ton) Source EUROPULP

0

500,000

1,000,000

1,500,000

2,000,000

2004 2005 2006 2007 2008 Jan-09 Feb-09 Mar-09 Apr-09 May-09 Jun-09 Jul-09 Aug-09 Sep-09 Oct-09 Nov-09 Dec-09

DIRECTORS’ REPORT


Starting on May 2009, there were announced 6 consecutive price increases that made the BEKP pulp market price rise from 480 USD/ton on April 2009 to 700 USD/ton on December 2009, which represents a growth of 46%. The depreciation of the USD, however, switches this growth to 38% when converted to Euro.

On the other hand, many international projects of capacity expansion and new units that were in pipeline were cancelled or postponed.

Evolution of BEKP pulp price since 2002 to YE09 (€) Source FOEX

200,00

300,00

400,00

500,00

600,00

700,00

Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09

Accordingly with PIX, BEKP pulp market price as of December 31, 2009 amounted to 700 USD/ton, which corresponds to 486 EUR/ton. During 2009 the three units pulp sales amounted to about 677.3 thousand tonnes of pulp, which represents a growth of over 42% compared to 476.6 thousand tonnes of pulp sold during 2008. Pulp sales quarterly evolution (tonnes)

DIRECTORS’ REPORT


Although production was higher in the 4th quarter when compared with the 3rd quarter 2009, pulp sales in the 4th quarter 2009 were lower than those in the previous quarter. This fact is related to the establishment of strategic stocks, in order to compensate lower production that occurred in January and February 2010, due to the mentioned stop for Celbi’s new turbine cogeneration installation.

Pulp sales by region and detail by application

Europe 86.1%

Asia; 5.9%

Others; 5.5%

Portugal; 2.6%

Tissue, 36%

Printing and writing; 35%

Specialties; 12%

Packaging; 5%

Others; 12%

Analysing sales by destination, in 2009 Altri exported more than 97% of its production, with particular attention to the European market. In terms of application, the tissue segment has the highest relative weight, with a 36% share. On the other hand, the net revenues from electric power of cogeneration and other forestry derivatives (liquor and bark) amounted to, approximately, 13 million Euro in 2009.

CELBI

Celbi reached during 2009 sales of 401.1 thousand tons of pulp, representing an increase of 48.3% over the previous year. Regarding the production of pulp this amounted to 401.3 thousand tons, 45.9% above the production of the previous year, as a result of the project to increase capacity which ran until 2009.

CAIMA

In 2009, the sales volume was 113.3 thousand tons of pulp which represents an increase of 10.3% compared with sales recorded in 2008. The Iberian Peninsula and the other European Countries of European Union remained as the main markets. During 2009 Caima produced 115.3 tons of pulp, volume 1.8% above the previous year and that configures an optimal exploitation of the production capacity of the factory.

DIRECTORS’ REPORT


Silvicaima still has an important role in the supply of the group companies. CELTEJO

The sales volume in 2009 amounted to 162.9 thousand tons of pulp, representing an increase of 52.3% compared with the same period the previous year.

The production of pulp in the year was 141.2 tons, 14.8% above than the production of 2008.

The Group is increasing its production capacity in its units, with particular emphasis on Celtejo and Celbi. Altri estimated that in 2010 will reach a total production capacity of 910 thousand tons of pulp, which puts the Company among the 10 largest in the world in the area of eucalyptus pulp. During 2009 production facilities in the sector of pulp and paper continued to scrupulously comply with environmental legislation, particularly regarding the parameters of liquid and gaseous emissions as well as the management and exploitation of solid waste.

DIRECTORS’ REPORT


FINANCIAL REVIEW

The consolidated financial information of Altri for the year 2009 and its comparison with the same period of 2008, was prepared in accordance with the recognition and measurement principles defined by the International Financial Reporting Standards as adopted by the European Union. Today's activity is Altri forest management and production of pulp. However, in 2008, Altri developed other activities, notably in steel (by FRamada) and production of packaging paper (by CPK). The FRamada left the scope of consolidation Altri in June 2008 and CPK was closed in December 2008. Thus, the result of activity of the FRamada and CPK in 2008 is accounted for under "Profit for the period from discontinuing operations". Additionally, although the CPK was closed in December 2008 during 2009 results were recorded associated with the disposal of its assets, which were recorded under the caption "Income for the period from discontinuing operations".

DIRECTORS’ REPORT


Therefore, the key data and consolidated activity Group indicators can be summarised as follows:

2009 2008 Var %

Operating income 309.609 280.174 10.5%

Cost of sales 112.018 79.543 40.8%External supplies and services 109.012 86.637 25.8%Payroll expenses 33.392 30.924 8.0%Provisions and impairment losses 0.928 5.823 -84.1%Other expenses 2.760 8.718 -68.3%Total expenses (a) 258.110 211.644 22.0%

EBITDA (b) 51.499 68.530 -24.9%Margin 16.6% 24.5% -7,8 bp

Amortisation and depreciation 38.911 28.821 35.0%

EBIT (c) 12.588 39.709 -68.3%Margin 4.1% 14.2% -10.1 bp

Profits related with assets classified as held for sale 0.000 -0.252 -Gains and losses in associated companies -0.242 -1.075 77.5%Gains and losses in other investments 0.109 -0.521 121.0%Financial expenses -29.856 -46.375 35.6%Financial income 4.670 10.776 -56.7%Financial profit -25.319 -37.446 -32.4%

Profit before income tax -12.731 2.262 -

Income tax 0.766 1.895 -Minority interests -0.032 0.048 -

Profit after income tax -11.933 4.109 -

Profit for the period from discontinued operations 1.023 0.559 83.1%

Consolidated net profit -10.910 4.668 -

(amounts in thousand Euros)(a) Operat ing costs excluding amortization, Financial profit and Income tax(b) EBITDA = Earnings before Interest, Taxes , Depreciation and Amort ization(c) EBIT = Earnings before Interes t and Taxes Cumulatively, total income amounted to 309.6 million Euro in 2009, which represents an increase of 10.5% comparing to 280.2 million Euro of 2008. EBITDA reached, approximately, 51.5 million Euro (-25%) and EBIT reached 12.6 million Euro. Consolidated net loss was, approximately, 11 million Euro.

DIRECTORS’ REPORT


1Q 09 2Q 09 3Q 09 4Q09

Operating income 62.753 78.744 80.823 87.289

Cost of sales 22.690 34.839 32.388 22.101External supplies and services 22.204 29.419 28.255 29.135Payroll expenses 7.415 8.999 7.934 9.044Provisions and impairment losses 0.000 1.050 0.100 -0.222Other expenses 0.847 0.248 0.655 1.010Total expenses (a) 53.155 74.555 69.332 61.068

EBITDA (b) 9.598 4.189 11.491 26.221Margin 15.3% 5.3% 14.2% 30.0%

Amortisation and depreciation 9.581 5.899 6.173 17.259

EBIT (c) 0.017 -1.710 5.318 8.962Margin 0.0% -2.2% 6.6% 10.3%

Profits related with assets classified as held for sale 0.000 0.000 0.000 0.000Gains and losses in associated companies -0.705 0.077 0.099 0.287Gains and losses in other investments -0.012 0.058 0.084 -0.021Financial expenses -8.929 -7.028 -7.126 -6.772Financial income 2.714 0.011 1.093 0.851Financial profit -6.932 -6.882 -5.850 -5.655

Profit before income tax -6.915 -8.592 -0.532 3.307

Income tax 1.564 0.760 0.556 -2.114Minority interests -0.029 -0.003 -0.003 0.003

Profit after income tax -5.321 -7.829 0.027 1.191

Profit for the period from discontinued operations -0.540 1.617 0.026 -0.079

Consolidated net profit -5.861 -6.212 0.052 1.111(amounts in thousand Euros)(a) Operat ing costs excluding amortization, Financial profit and Income tax(b) EBITDA = Earnings before Interest, Taxes , Depreciation and Amort ization(c) EBIT = Earnings before Interes t and Taxes

In terms of evolution of the quarterly financial performance there is generally a reflection of increased capacity, higher selling price and improved production efficiency throughout the year.

Also note that the EBITDA recorded in the fourth quarter of 2009 was about 26.2 million Euros, which corresponds to the highest ever recorded by Altri. Total investment (CAPEX) for the year amounted to 92.1 million euros. It is noted that with the completion of the new line of Celbi folder, the investment cycle initiated by Altri in 2006 is nearly complete.

The nominal net debt of Altri on December 31, 2009 amounted to 799.98 million Euros. Taking in consideration the total costs recorded during the financial year (about 29.9 million Euros), the average cost of debt was 3.7%.

According to the current level of debt is expected that during the year 2010, the amortization of debt Altri has less than 25 million Euros. Financing requirements are fully insured, and the Company has at the end of December 2009 cash and cash equivalents amounting to 80.2 million euros. Moreover, Altri owns about 98.2 million Euros in financing lines available but not used.

DIRECTORS’ REPORT


2010 OUTLOOK

With the stabilization of production processe, primarily in Celbi and Celtejo, and with the coming into operation of equipment were the subject of investments made in recent years is expected for 2010, a significant increase in Pulp Production in Group Altri. Moreover the increased efficiency expected due to the regularity in the operation of factories, allows an early optimization of production costs per tonne of pulp produced.

With the reversal of, at the price of the pulp in May 2009, after having reached the minimum value of 480USD in April of that year, prices began an upward trend reaching the end of the year the value of 700USD.

The resurgence in demand, with special focus on Chinese market, and temporary or permanent closure of some units, geographically located in areas with higher production costs, caused a decrease in available stocks of pulp and it was reached in November 2009 European ports, the historical value and abnormally low of about 651.5 thousand tons.

So for 2010, coupled with the economic recovery that is starting to happen, mainly in emerging countries, and the disruption in supply caused by the disaster in Chile, it is expected that demand will be maintained at levels allowing very interesting, as such, but the rise at least the sustainability of current prices.

PROPOSAL OF THE BOARD OF DIRECTORS FOR APPROPRIATION OF THE NON CONSOLIDATED NET PROFIT FOR THE YEAR

Altri, S.G.P.S., S.A., as holding company for the Group, achieved in its financial statements prepared in accordance with generally accepted accounting principles in Portugal, a net loss of 2,004,309,13 Euro which, in accordance with the applicable legislation and the Company’s articles of association, the Board of Directors proposes to the Shareholders General Meeting its transfer to the caption “Retained earnings”.

DIRECTORS’ REPORT


CORPORATE GOVERNANCE

Altri adopts the regulations and recommendations from Corporate Governance as it is disclosed in this report.

This report, given the circular issued by the CMVM on February 17, 2010, was prepared in accordance with the CMVM Regulation No. 1 / 2007 of November 21, as amended by CMVM Regulation No. 5 / 2008 of 15 October and with the Code of Corporate Governance and aims to be the summary of the fundamental aspects of the management of the Company as regards the Board of Directors, considering the need for transparency on this issue and the need for communication with investors and recipients of information.

Are additionally satisfied the disclosure requirements imposed by the Law 28/2009, of June 19, by articles 447 and 448 of the Companies Code and the CMVM Regulation No. 5 / 2008.

DIRECTORS’ REPORT


0. Statement of compliance

0.1 Indication of where are available to the public the text of the codes of corporate governance to which the issuer is subject

This report, given the circular issued by the CMVM on February 17, 2010, was prepared in accordance with the CMVM Regulation No. 1 / 2007 of November 21, as amended by CMVM Regulation No. 5 / 2008 of 15 October and with the Code of Corporate Governance, available at www.cmvm.pt.

0.2 Indication of the recommendations contained in the CMVM Code of Corporate

Governance adopted and not adopted Altri, S.G.P.S., S.A. complies with the majority of recommendations of the Securities Market Commission (Comissão do Mercado de Valores Mobiliários – CMVM) as follows:

CMVM recommendations Complies Fails Not

applicable

I. SHAREHOLDERS’ GENERAL MEETINGSI.1. Board of the Shareholders’ General Meeting

I.1.1 The Chairman of the Board of the Shareholders’ General Meeting shall be givenadequate human and logistical resources, taking into consideration the financial position of the Company.

I.1.2 The remuneration of the Chairman of the Board of the Shareholders’ General Meetingshall be disclosed in the annual Corporate Governance Report.

I.2. Participation at the MeetingI.2.1 The requirement to deposit or block shares before Shareholders’ General Meetings,contained in the Articles of Association, shall not exceed five working days.

I.2.2 Should the Shareholders’ General Meeting be suspended, the Company shall not require share blocking during the full perioduntil the meeting is resumed, but shall apply the same period as for the first session.

I.3. Voting and Exercising Voting Rights

I.3.1 Companies should not impose any statutory restriction on postal voting. √

I.3.2 The statutory advance deadline for receiving voting ballots by post shall not exceedthree working days.

I.3.3 The Company’s Articles of Association shall respect the one share-one vote principle. √

I.4. Quorum and Resolutions

I.4.1 Companies shall not set a constitutive or deliberative quorum that exceeds the minimum required by Portuguese Company Law. √

I.5. Attendance Lists, Minutes and Information on Resolutions Adopted

I.5.1 The minutes of the Shareholders’ General Meetings shall be made available to shareholders on the Company’s websitewithin a five day period, irrespective of the fact that such information may not be legallyclassified as material information. The lists of attendees, agendas items and resolutions adoptedshall be kept in a historic file on the Company’s website, covering meetings held for at least the last three years.

I.6. Measures Relating to Changes in ControlI.6.1 Measures aimed at preventing the success of takeover bids, shall respect the interestsof the both the Company and its shareholders.

I.6.2 In accordance with the principle established in the previous sub-paragraph, any Company that has Articles of Associationwith clauses that restrict or limit the number of votes that may be held or exercised by a singleshareholder, either individually or acting in concert with other shareholders, shall also require that,at least once every five years, the continuation of such clauses must be ratified at a Shareholders’ GeneralMeeting, at which the quorum shall not exceed the legal minimum and all votes cast shall count,without applying any restriction.

I.6.3 Defensive measures that automatically lead to a serious erosion in the value of the Company’sassets should not be adopted, when there has been a change in control or a changein the Company’s management, as this prevents the free transmission of shares andthe ability of shareholders to effectively evaluate those responsible for managing the Company.

II. MANAGEMENT AND AUDIT BOARDSII.1. General PointsII.1.1. Structure and Duties

II.1.1.1 In the Corporate Governance Report, the Board of Directors shall assess the governance modeladopted by the Company, by identifying any restrictions that are holding back performanceand by proposing actions to be taken that are judged to be appropriate to resolve them.

II.1.1.2 Companies shall set up internal control systems to efficiently detect risks relating to the Company’s activity,in order to protect its assets and keep its corporate governance transparent.

II.1.1.3 The Board of Directors and Statutory Audit Board shall establish internal regulations,which shall be disclosed on the Company’s website.

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DIRECTORS’ REPORT


CMVM recommendations Complies Fails Not applicable

II.1.2. Incompatibility and Independence

II.1.2.1 The Board of Directors shall include a sufficient number of non-executive members to ensure thatthere is the capacity to effectively supervise, audit and assess the activity of the executive members.

II.1.2.2 Non-executive members shall include an adequate number of independent members,taking into account the size of the Company and its shareholder structure, but thisshall never be less than one quarter of the total number of Board members.

II.1.3. Eligibility Criteria for Appointment

II.1.3.1 Depending on the governance model adopted, the Chairman of the Statutory AuditBoard, or of the Board Audit Committee or of the Financial Matters Committee shall beindependent and possess the necessary skills to perform their duties.

II.1.4. Policy on the Reporting of Irregularities

II.1.4.1The Company shall adopt a policy of reporting any irregularities that have allegedly occurred, which includes the following informai) the means through which any irregularities may be reported internally, including the persons that are entitled to receive the reports;ii) how the report is to be handled, including confidential treatment, should this be requested by the reporter.

II.1.4.2 General guidelines from this policy should be disclosed in the Corporate Governance Report. √

II.1.5. Remuneration

II.1.5.1 The remuneration of the members of the Board of Directors shall be structured to be alignedwith the interests of the shareholders. In this sense: i) The remuneration of Directors carryingout executive duties should include a variable component based on performance linked to a performance assessmentthat shall be carried out periodically by the governance body or committee appointed for this purpose;ii) the variable component shall be consistent with the maximisation of the long-termperformance of the Company, and shall be dependent on sustainability of the variables adopted to measure performance;iii) non-executive members of the Board of Directors shall only receive fixed remuneration,unless the legal requirements dictate otherwise.

II.1.5.2 The Shareholders’ Remuneration Committee and the Board of Directors shall present to the Shareholders’ Annual General Meetia statement of the remuneration policy applied to the Statutory Governing Bodies (including the Board of Directors and Statutory Audit Boas well as to other persons discharging managerial responsibilities (‘Dirigentes’) as defined in Article 248º-B, Clause 3 of the PortugueseSecurities Code. The information to shareholders shall include the criteria and main indicators proposed to be used in assessing perform and determining the variable component, independently of whether this is in the form of bonuses paid in shares, share options,annual bonuses or other awards.

II.1.5.3 At least one representative of the Shareholders’ Remuneration Committee shall bepresent at the Shareholders’ Annual General Meeting (‘AGM’).

II.1.5.4 A proposal shall be submitted to the Shareholders’ General Meeting to approve plans to grant shares and/or share options or awardcompensation based on variations in share prices, to members of the Statutory Governing Bodies (including the Board of Directorsand Statutory Audit Board), as well as to other persons discharging managerial responsibilities (‘Dirigentes’) as defined in Article 248º-B,Clause 3 of the Portuguese Securities Code. The proposal shall include all information necessary for a comprehensive assessment of the plan. The proposal shall be presented together with the regulation that governs the plan or if this has not yet been prepared, the general conditions that will be applied. Similarly, the main characteristics of any retirement benefit plan that benefits the Statutory Governing Bodies (including the Board of Directors and Statutory Audit Board), as well as other persons discharging managerial responsibilities (‘Dirigentes’)as defined in Article 248º-B, Clause 3 of the Portuguese Securities Code, shall also be approved at a Shareholders’ General Meeting.

II.1.5.5 The remuneration of the members of the Statutory Governing Bodies (including the Board of Directors and Statutory Audit Board)shall be individually disclosed on an annual basis. Fixed and variable components must be disclosed separately,when applicable, as well as any other remuneration received from other companies within the same Groupor from companies controlled by shareholders with qualifying share holdings.

II.2. Board of Directors

II.2.1 Within the limits established by Portuguese Company Law for each management and audit governance structure, and unless the Companyis restricted by its size, the Board of Directors shall delegate the day-to-day running of the Company and the powers and terms of thedelegation should be set out in the Corporate Governance Report.

II.2.2 The Board of Directors shall ensure that the Company acts in accordance with its objectives, and should not delegate its own responsibilities, including: i) definition of the Company’s strategy and general policies; ii) definition of the corporate structure of the Group; and iii) decisions that are considered to be strategic due to the amounts, risks and special circumstances involved.

II.2.3 Should the Chairman of the Board of Directors have an executive role, the Board of Directors shall set up efficient mechanismsto co-ordinate the work of the nonexecutive members, to ensure that they may take decisionsin an independent and informed manner, and shall also explain these mechanisms to the shareholdersin the Corporate Governance Report.

II.2.4 The Annual Management Report shall include a description of the activity carried out by the non-executiveBoard Members and shall, in particular, report any restrictions that they encountered.

II.2.5. The governing body responsible for management (Board of Directors) should promote the rotation of the Board member responsibfor financial matters (CFO) at least at the end of every two mandates.

II.3. Chief Executive Officer (‘CEO’), Executive Committee and Executive Board of Directors

II.3.1 When Directors, who carry out executive duties are requested by other Board Members to supply information, they shall provideanswers in a timely manner with information that adequately responds to the request made.

II.3.2 The Chairman of the Executive Committee shall send the notices convening meetings and minutes of the respective meetings to the Chairman of the Board of Directors and, when applicable, to the Chairman of the Statutory Audit Boardor the Audit Committee.

II.3.3 The Chairman of the Executive Board of Directors shall send the notices convening meetings and minutes of the respective meetings to the Chairman of the General and Supervisory Board and to the Chairman of theFinancial Matters Committee. √

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DIRECTORS’ REPORT


CMVM recommendations Complies Fails Not applicable

II.4. General and Supervisory Board, Financial Matters Committee, Audit Committee and Statutory Audit Board

Audit Committee and Statutory Audit Board

II.4.1 In addition to fulfilling its supervisory and verification roles, the General and Supervisory Boardshall fulfil a role of advisor, as well as monitor and continually assess the management of the Company by the Executive Board of Directors. Amongst the other matters on which the General and Supervisory Board should opine are the following: i) definition of the strategy sand general policies of the Company; ii) the corporate structure of the Group; and iii) decisions that are considered to be strategic due to the amounts, risks and special circumstances involved.circumstances involved.

II.4.2 The annual reports on the activity of the General and Supervisory Board, the FinancialMatters Committee, the Audit Committee and the Statutory Audit Board shall bedisclosed on the Company’s website together with the financial statements.

II.4.3 The annual reports on the activity of the General and Supervisory Board, the FinancialMatters Committee, the Audit Committee and the Statutory Audit Board shall include a description of the supervisoryand verification work completed and shall, in particular, report any restrictions that they encountered.

II.4.4 The Financial Matters Committee, the Audit Committee or the Statutory Audit Board (depending on the governancemodel adopted) shall represent the Company, for all purposes, in the relationship with the external auditor.This shall include proposing who will provide this service, their respective remuneration, and ensuring that the Companyprovides adequate conditions to allow them to deliver their service, as well as acting as the point of contact with the Companyand being the first recipient of their reports.

II.4.5 The Financial Matters Committee, the Audit Committee or the Statutory Audit Board (depending on the governance model adoptedshall assess the external auditor on an annual basis and propose to the Shareholders’ General Meeting that the external auditor shouldbe discharged, should justifiable grounds exist.

II.5. Specialised Committees

II.5.1 Unless the Company is restricted by its size, the Board of Directors and the General and Supervisory Committee, depending on the governance model adopted, shall set up the necessary Committees in order to: i) ensure that a robust and independent assessment of the performance of the Executive Directors is carried out, as well as of its own overall performance and including the performance of all existing Committees; and ii) consider the governance system adopted, assess its efficiency and propose to the relevant bodies measures to make improvements.

II.5.2 Members of the Shareholders’ Remuneration Committee or alike, shall be independentfrom the Members of the Board of Directors.

II.5.3 All Committees shall draw up minutes of the meetings they hold. √

III. INFORMATION AND AUDITING

III.1. General Disclosure Requirements

III.1.2 Companies shall ensure that permanent contact is maintained with the market, upholding the principle ofequal treatment for all shareholders and avoiding any asymmetry in the access to information by investors.To achieve this, the Company shall set up an Investor Relations Office.

III.1.3 The following information disclosed on the Company’s Internet website, shall be available in English:a) The Company, its listed company status, registered office and the remaininginformation set out in Article 171 of Portuguese Company Law;b) Articles of Association;c) Identification of the members of the Statutory Governing Bodies and of the Representative for Relations with the Market;d) Investor Relations Office — its functions and contact details;e) Financial Statements;f) Half-Yearly Calendar of Company Events;g) Proposals presented to Shareholders’ General Meetings; andh) Notices convening Shareholders’ General Meetings.

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0.3 Not adopted and not applicable recommendations Recommendations I.3.2, II.1.1.3, II.1.2.1, II.1.4.1, II.1.4.2, II.1.5.1, II.1.5.2, II.1.5.5, II.2.1 and II.2.3 are not fully adopted by Altri, and Recommendations II.1.2.2, II.1.5.4, II.2.4, II.3.2, II.3.3 and II.4.1 are not applicable to Altri, as it is explained below: Not adopted recommendations: Recommendation I.3.2: The statutory advance deadline for receiving voting ballots

by post shall is five working days. The Board of Directors believes that the difference to the Portuguese Company Law (3 working days) is not relevant;

Recommendation II.1.1.3: The Board of Directors and Statutory Audit Board did not

establish internal regulations formally approved and published in its web site, though its powers are disclosed in Altri regulation, which also has a code of conduct applicable to all employees of the Group and extended to its Board of Directors;

DIRECTORS’ REPORT


Recommendation II.1.2.1: The Board of Directors, elected by the Shareholders’ General Meeting, does not include any member that may be independent nor has non-executive members;

Recommendation II.1.4.1 and II.1.4.2: Taking into consideration the proximity of the

members of the Board of Directors in relation to the current activities of the several group companies and its workers, there is no formal model of communication of internal irregularities. Each time any irregularity is detected, it is promptly communicated to the Board members that make sure that the adequate and fair procedure is adopted to deal with the irregularities. At evaluation of ethical issues skills level and the structure of governance, such functions are performed directly by the Board of Directors, which maintains a constant debate on this issue;

Recommendation II.1.5.1: The criteria for allocation of variable remuneration of the

members of the Board are not formally defined. However, the Board of Directors will propose to the General Assembly for approval of accounts from 2009 to formalize these criteria, reflecting their alignment with the objectives of medium and long term the Company;

Recommendation II.1.5.2: Altri, S.G.P.S., S.A. believes that the disclosure of the parameters for calculating the variable component of the Board merbers’ remuneration of members does not bring relevant information to shareholders, being disclosed in the Directors’ Report general information about directors’ fixed and variable remuneration;

Recommendation II.1.5.5: In this section Altri, S.G.P.S., S.A. discloses information relating the fixed and variable remuneration of its Board of Directors and believes that disclosure of the individual remuneration of each director does not provide relevant information for the shareholders;

Recommendation II.2.1 and II.2.3: all Altri’s directors are executive and take part in the operational companies’ management.

Not applicable recommendations:

Recommendations II.1.2.2 and II.2.4: The Board of Directors has no non-executive members, so those Recommendations are not applicable;

Recommendation II.1.5.4: There are no plans or incentive systems related to stock

option plans for the members of the Board of Directors or the employees, so this Recommendation is not applicable;

Recommendation II.3.2: There is no Executive Committee, so this recommendation

is not applicable;

DIRECTORS’ REPORT


Recommendations II.3.3 e II.4.1: Altri does not have General and Supervisory Board nor Financial Matters Committee, so those recommendations are not applicable.

0.4 Measuring the governance bodies’ independence The governance bodies’ members, except from the Board of Directors, are considered independent, being its independence measured at the time of their designation by their own expressed declaration.

I. SHAREHOLDERS’ GENERAL MEETING

I.1 Board of the Shareholders’ General Meeting

The Shareholders’ General Meeting, is made up of all the shareholders with voting rights, who are responsible for approving changes in the articles of association, making a general assessment of the Management and monitoring the Company, approving the Directors’ Report and financial statements for the year, electing the members of the corporate bodies of its competence and, in general, considering all the matters submitted to it by the Board of Directors.

The Shareholders’ General Meeting elected for the term 2008/2010 is composed as follows:

o Pedro Nuno Fernandes de Sá Pessanha da Costa - President

o Fernando Eugénio Cerqueira Magro Ferreira - Member

The President of the Shareholders’ General Meeting has the manpower and logistical support that are appropriate to his needs and fulfill his duties, including the support and collaboration provided by the secretariat of the company and the Secretary of the Company. His remuneration for the year ended 31 December 2009 amounted to 5,000 Euro.

I.2 Participation at the Meeting

Prior to each General Shareholders’ Meeting, in compliance with the legally required periods of notice, Altri publishes extensively the dates on which meetings are to take place, complementing this with inclusion of the notice calling the meeting in its institutional site (www.altri.pt). Shareholders may vote if they hold at least one share registered or deposited in their name in the centralised securities system. Registration and deposit referred to must be shown to have been made at least five working days before the date of the General Shareholders’ Meeting. In case of suspension of the session, the shares should be blocked with an advance of five working days to the restart of the session.

http://www.altri.pt/�

DIRECTORS’ REPORT


I.3 Voting and Exercising Voting Rights The General Shareholders’ Meeting is made up of all the shareholders with the right to vote, with one vote for each share held.

The vote by mail can be made under the following terms: - the vote by correspondence should be exercised through a written declaration, with a signature recognized by a public notary or an attorney and accompanied by a document supporting the registration of shares on behalf of the shareholder and respective immobilization, until the term of the day of the General Shareholders’ Meeting; - the declaration of intent to exercise the vote by and the supporting document of the quality of shareholder must be delivered in the Company’s headquarters, until 5 p.m. of the fifth working day prior to the day assigned for the meeting, with identification of the remittent, directed to the Chairman of the General Shareholders’ Meeting”; - there must be a declaration of vote for each point of the Order of the Day for which the vote by correspondence is admitted and each declaration of vote will have to be sent in a closed and sealed envelope, inside the mentioned letter, which can only be opened by the Chairman of the General Shareholders’ Meeting at the moment of the counting of the votes, for what each envelope will have to indicate in its exterior the point of the Order of the Day that it respects to; - the votes by correspondence will be valid as negative votes in relation to the proposals of deliberation presented after to the emission of the vote; - the presence of the shareholder in the General Meeting, or its representative, will be understood as revocation of its vote by correspondence. The model for the mail vote is available in the Company’s headquarters with the time in advance legally predicted and indicated in the convocation of the General Shareholders’ Meeting.

At this time there is no provision for voting by electronic means.

Individual persons who are shareholders with the right to vote may be represented by another shareholder, spouse, ascendant or descendant, or any member of the Board of Directors. Legal entities which are shareholders of the Company are represented by the person designated for that purpose. Such representation must be communicated to the President of the Board of the General Shareholders’ Meeting, by letter delivered to the Company’s head office up to 5 p.m. on the fifth day preceding that of the meeting. There is no a specific model provided for representation in the Shareholders’ General Meeting. Shareholders that do not have a sufficient number of shares to vote may do so by grouping together so as to have the number of shares needed to vote, only one of the members of the group being designated to represent the group at the Shareholders’ General Meeting. I.4. Quorum and Resolutions

DIRECTORS’ REPORT


Altri's articles do not contemplate any constituent or deliberative quorum higher than considered in the law.

I.5 Attendance lists, minutes and information on resolutions adopted The minutes of the Shareholders’ General Meeting are available to shareholders on the website of Altri, where it is maintained an historical archive of the main information on those meetings.

I.6 Measures relating to changes on control

Altri did not adopt any clause or defensive measure to prevent the free transfer of shares representing its capital and free assessment, by the Shareholders, of the Board of Directors performance. The Company is not aware of any para-social arrangement in what it concerns to the exercise of social rights or to the transferability of the shares nor is there, to the best of its knowledge, any agreement that aims to secure or frustrate the success of bids.

II. MANAGEMENT AND AUDIT BOARDS

II.1 General Points II.1.1 Structure and duties Corporate Bodies The corporate bodies of Altri, S.G.P.S., S.A. are:

The Shareholders’ General Assembly, made up of all the shareholders with voting rights, who are responsible for approving changes in the articles of association, making a general assessment of the Management and monitoring the Company, approving the Directors’ Report and financial statements for the year, electing the members of the corporate bodies of its competence and, in general, considering all the matters submitted to it by the Board of Directors;

The Board of Directors, elected by the Shareholder’s General Assembly, currently made up of 5 members who are responsible for carrying out all the management functions to implement the operations inherent in its corporate objectives, acting in the best interests of the Company, its shareholders and employees. At the date of this report, this corporate body was composed of the following members:

o Paulo Jorge dos Santos Fernandes President

o João Manuel Matos Borges de Oliveira Member

o Pedro Macedo Pinto de Mendonça Member

o Domingos José Vieira de Matos Member

o Laurentina da Silva Martins Member

DIRECTORS’ REPORT


Statutory Audit Board, appointed by the General Assembly, composed of three members and one or two alternates, responsible for the surveillance of the society and the appointment of the Statutory Auditor. On December 31, 2009 this corporate body was composed by the following members:

o João da Silva Natária – President

o Manuel Tiago Alves Baldaque de Marinho Fernandes - Member

o Cristina Isabel Linhares Fernandes – Member

o Joaquim Augusto Soares da Silva – Substitute

The Statutory Auditor, who is responsible for the examination of Company’s financial statements. On December 31, 2009 this function was performed for Deloitte & Associados, SROC S.A.

Risk control system

The Board of Directors consider that the group is exposed to the normal risks associated with its operations, namely in its operating units. Therefore, the main risks considered by the Group are: Credit Risk, Interest Rate Risk, Exchange rate Risk and Commodities Price variability Risk. Credit Risk Like any activity involving a commercial component, the Group’s exposure to credit risk is attributable mainly to the accounts receivable resulting from the Group’s operating activity. The first approach is performed through the daily management of the credit rating attributed to each credit prior to its acceptance and additionally through the adequacy of the granted payment periods. Credit risk evaluation is done in a regular basis, by analysing the current economic conjuncture conditions, in particular the credit situation of each company and, when necessary, adopting the corrective measures. Interest Rate Risk Considering the Group’s debt, possible variations on the interest rate may have an unwanted impact on the results. Therefore, the Group adopts a balanced position between the cost of the debt and its exposure to the interest rate variability. When the reasonable risk is exceeded, the Group engages interest rate swaps in order to reduce its exposure to risk and to restrict the potential volatility of results.

DIRECTORS’ REPORT


Exchange Rate Risk Due to the great volume of transactions with non resident entities and with different currencies, exchange rate instability might have a relevant impact on the Group’s performance. Therefore, whenever the Group considers necessary to reduce the volatility of its results, the position is covered by contracting derivative instruments. Commodities Price variability Risk By developing its activity in one commodities transactional industry (paper pulp), the Group is particularly exposed to its price fluctuations, with the correspondent impacts in their results. However, being in these industries allows the celebration of paper pulp price fluctuations hedging contracts’ by the adequate amounts by the foreseen operations, reducing the volatility of its results. As Altri is an open capital company, its Management and employees pay great attention to compliance with the duties of confidentiality in its relations with third parties, safeguarding Altri’s position in situations of conflict of interest. In terms of internal control, Altri’s operating companies include management control bodies, which perform work at all levels of the subsidiary companies and prepare monthly reports for each Board of Directors, in addition to the work performed in the various companies by the Statutory Auditor and external auditors under the provisions of the law.

The Altri’s governance model and practices does not contains any constraints to the normal functioning of the Board of Directors or of its specialized committees, nor has the Board of Directors been aware of the existence of any such constraints on the functioning of any other governing bodies. The Statutory Audit Board has exercised its supervisory powers, having received all the required support of the Board to that effect. The Statutory External Auditor has analysed the Company’s activity and has conducted the exams and verifications deemed necessary to the proper audit and legal certification of the accounts, in interaction with the Statutory Audit Board, and with the full cooperation of the Board of Directors. The Board of Directors, has been carrying out its duties and cooperating with the Statutory Audit Board and the Statutory External Auditor in a transparent and rigorous manner and in compliance with its terms of reference and best corporate governance practices.

II.1.2 Incompatibility and Independence

The Board of Directors elected by the General Assembly does not include any member that can be considered independent and doesn’t’ have non-executive members.

DIRECTORS’ REPORT


II.1.3 Eligibility Criteria for Appointment

The governance bodies’ members are elected in the Shareholder General Meeting for three year terms. Regarding the Statutory Audit Board as a college body that is, the measure of independence is made to all those that compose it, given the application of paragraph 6 of art. 414 of the CSC, considering independence in accordance with the definition that is given under paragraph 5 of art. 414 and incompatibility as defined in paragraph 1 in 414-A both from CSC. The three members of the Statutory Audit Board meet the rules of incompatibility and independence identified above.

In what it concerns to the competence for the exercise of functions, it is considered that all members have appropriate skills to carry out their tasks and the President is adequately supported by other members of the Statutory Audit Board.

II.1.4 Policy on the Reporting of Irregularities

Taking into consideration the proximity of the members of the Board of Directors in relation to the current activities of the several group companies and its workers, there is no formal model of communication of internal irregularities. Each time any irregularity is detected, it is promptly communicated to the Board members that make sure that the adequate and fair procedure is adopted to deal with the irregularities. At evaluation of ethical issues skills level and the structure of governance, such functions are performed directly by the Board of Directors, which maintains a constant debate on this issue. II.1.5 Remuneration According to the Entity articles, the members of the governing bodies will have their remuneration fixed the remuneration committee composed of three elements, one of whom shall be the President and will have a quality vote and must be elected by shareholders' resolution. Additionally, the remuneration committee president must be present in all the Shareholders’ General Meetings. Shareholders’ General Meeting President The remuneration of the Shareholders’ General Meeting amounted, during the year ended 31 December 2009, was 5,000 Euro.

DIRECTORS’ REPORT


Board of Directors Board of Directors members receive no remuneration from the Company, being remunerated directly by the other Altri Group companies in which they exercise board functions. Remuneration of the members of the Board of Directors is not directly dependent upon the short term evolution of the price of the Company’s shares. There is no defined policy regarding compensation attributable to the Board members in case of dismissal or early release of their labour contracts. Remuneration for the year’s 2009 and 2008 of the members of Altri’s Board of Directors for the exercise of their functions in Group companies was as follows:

31.12.2009 31.12.2008

Fixed remunerations 496,513 493,200Variable remunerations 530,000 540,000

1,026,513 1,033,200

Under Article 3 of Law No. 28/2009 of June 19 as well as in a) and b) of Article 3 of

CMVM Regulation No. 1 / 2010, it is reported that administrators did not receive any remuneration during 2009 in Altri, SGPS, S.A.

The variable remuneration results from the performance of the Group companies. There are no:

- plans or incentive systems related to stock option plans for the members of the Board of Directors;

- indemnities paid or due to former Board members related to the suspension of duties during the year;

- complementary pension or early retirement regimes for the Board members;

- non monetary benefits considered as remuneration. Altri, S.G.P.S., S.A. has no plans or incentive systems related to stock option plans for the members of the Board of Directors or the employees.

DIRECTORS’ REPORT


Statutory Audit Board The Statutory Audit Board members’ remuneration is composed by an annual fixed amount, based on Altri’s situation and the market current practices. As of the year ended 31 December 2009 and 2008 their total remuneration was as follows:

Member of statutory audit board

2009 2008

João da Silva Natária 8,880 8,880Manuel Tiago Alves Baldaque de Marinho Fernandes 7,440 7,440Cristina Isabel Linhares Fernandes 7,440 7,440

23,760 23,760

Statutory Auditor Fees paid to the Group’s auditors and other entities belonging to the same network by the Company and its subsidiaries amounted to, approximately, 917, 290 Euros during 2008 and to approximately, 668,974 Euros during 2009, distributed as follows:

2009 2008Statutory audit 27.2% 22.5%Other assurance services 45.1% 34.1%Tax consultancy services 20.8% 40.5%Other services 6.9% 2.9%

In requesting projects, before awarding the services, the Board of Directors ensures that services are not contracted that, under the terms of European Commission Recommendation C (2002) 1873 of 16 May 2002, can put in question the independence of the auditors and their respective network. In addition, independence is usually safeguarded by the fact that the other services are rendered by different professionals from those performing financial audit services. Additionally, the quality system of the Auditor controls and monitors the potential risks of loss of independence and possible conflicts of interest with Altri. II.2 Board of Directors In accordance with Altri’s articles of association, the Board of Directors is made up of three, five, seven or nine members, shareholders or not, elected by the General Shareholders’ Meeting for a three year period. The present members of the Board of Directors were nominated for the three-year period of 2008/2010.

DIRECTORS’ REPORT


All members of Altri’s Board of Directors perform executive functions and cannot be considered independent, according to the definition no 2 of the article no 1 of CMVM Regulation no 7/2001.

The Board of Directors, elected in the Shareholders’ General Meeting, develops its tasks on a collective basis with the functions of management and coordination of the Group companies and is currently made up of a president and four members, all with executive functions. The Board of Directors has broad powers to manage and represent the Company and carry out all operations relating to its corporate objects, namely:

- Acquire, sell and encumber moveable assets, namely vehicles and, within

the legal limits, immovable assets; - Acquire participations in other companies; - Sell participations in other companies; - Rent moveable and immovable assets from and to third parties; - Issue mandates and powers of attorney for specific acts or categories of

acts, defining the extent of the mandates; - Actively and passively represent the Company in law and otherwise,

propose and have legal actions followed, confess and desist from legal actions, as well as to commit themselves to arbitrators.

There is no limit to the maximum number of duties that the Board members can accumulate in administrative organs of other companies. The members of Altri’s Board of Directors endeavour to be part of the administration of the most significant group companies, so as to enable their activities to be more closely attended. The Board of Directors meets regularly, and its decisions are only valid if a majority of its members is present. In 2008 the Board of Directors met 11 times, the corresponding minutes of the meetings being recorded in the Board of Directors’ Meetings Minute Book. The Board of Directors’ meetings from the associated companies, where Altri directors also take part, these occur with the frequency necessary for proper monitoring of its operations.

DIRECTORS’ REPORT


The distribution of functions among the several members of the Board of Directors may be presented as follows:

Generically, Altri SGPS directors focus their activities in managing the Group’s participation and defining its strategic development. The daily management of each operating company is a responsibility of its Board of Directors, which includes some of Altri’s directors but also some other members with defined jurisdictions. Thus, taking into consideration the activities developed by the Board Members, both in Altri SGPS and in the several group companies, the functional organization chart can be presented as follows:

Altri SGPS

Board of Directors:

Paulo FernandesJoão Borges de OliveiraPedro Pinto Mendonça

Domingos MatosLaurentina Martins

Celtejo

Board of Directors

PauloFernandesJoão Borges de OliveiraPedro Pinto Mendonça

Agostinho Dolores FerreiraJoaquim Ferreira Matos

Celbi

Board of Directors

Paulo FernandesDomingos Matos

Pedro Pinto MendonçaJoão Borges de Oliveira

Graham DewarAgostinho Dolores Ferreira

Luís Todo Bom

Celulose do Caima

Board of Directors

Paulo FernandesJoão Borges de OliveiraPedro Pinto Mendonça

Domingos MatosFrancisco Silva Gomes

Agostinho Dolores FerreiraJoaquim Ferreira Matos

As of 31 December 2009, the Board members owned Altri’s shares as follows:

Nome Shares held

Paulo Jorge dos Santos Fernandes 7,000,746 Pedro Macedo Pinto de Mendonça 852,500 Domingos José Vieira de Matos 6,969,716 João Manuel Matos Borges de Oliveira (a) 9,246,660 Laurentina da Silva Martins

0

Paulo Fernandes Chairman

João Borges Oliveira Chief Financial Officer

Pedro Pinto Mendonça

Members . .

Laurentina Martins

Domingos Matos

DIRECTORS’ REPORT


(a) 9,246,660 shares represent the total shares of Altri SGPS, SA owned by Caderno Azul -

SGPS SA, which the administrator João Manuel Matos Borges de Oliveira is shareholder

The professional qualification of the present members of the Board of Directors, its professional activity and the detail of other companies where they also carry out management functions are as follows:

Paulo Jorge dos Santos Fernandes

Was one of the founders of Cofina (company that led to the creation of Altri, by spin-off), and has been involved in the Group’s management since its incorporation. Graduated from Porto University with a degree in Electronic Engineering, also has an MBA from the University of Lisbon. Develops his activity in the media and industrial operations, as well as in the strategic definition of the Group. In addition to the Companies which currently exercises functions of administration, his professional experience includes: 1982/1984 Assistant Director of Production of CORTAL 1986/1989 General Director of CORTAL 1989/1994 President of the Board of CORTAL 1995 Administrator of CRISAL – CRISTAIS DE ALCOBAÇA, SA 1997 Administrator of the Group Vista Alegre, SA 1997 Chairman of the Board of ATLANTIS - Cristais de Alcobaça, SA 2000/2001 Administrator of SIC 2001 Administrator of V.A.A. Throughout his career, also played roles in several associations: 1989/1994 President of FEMB (Fédération Européene de Mobilier de Bureau) for Portugal; 1989/1990 President of the General Assembly Assoc. Industr. Águeda 1991/1993 Member of the Advisory Board Assoc. Ind. Portuense The other companies where he carries out management functions as of 31 December 2009, are as follows: - Alteria, S.G.P.S., S.A. (a) - Altri, S.G.P.S., S.A. - Caima – Indústria de Celulose, S.A. - Caminho Aberto, S.G.P.S., S.A. (a) - Celbi – Celulose da Beira Industrial, S.A. - Celtejo – Empresa de Celulose do Tejo, S.A. - Celulose do Caima, S.G.P.S., S.A. - Cofina Media, S.G.P.S., S.A. (a) - CPK – Companhia Produtora de Papel Kraftsack, S.A. - Edisport – Soc. de Publicações, S.A. (a) - Efe Erre Participações, S.G.P.S., S.A. (a) - Elege Valor, S.G.P.S., S.A. (a) - F. Ramada Investimentos, S.G.P.S., S.A. (a)

DIRECTORS’ REPORT


- F. Ramada – Produção e Comercialização de Estruturas Metálicas de Armazenagem, S.A. (a)

- F. Ramada II Imobiliária, S.A. (a) - F. Ramada Serviços de Gestão, Lda. (a) - F. Ramada, Aços e Indústrias, S.A. (a) - Invescaima, S.G.P.S., S.A. - Malva – Gestão Imobiliária, S.A. (a) - Mediafin – S.G.P.S., S.A. (a) - Presselivre – Imprensa Livre, S.A. (a) - Prestimo – Prestígio Imobiliário, S.A. (a) - Ródão Power, S.A. (a) - Sociedade Imobiliária Porto Seguro – Investimentos Imobiliários, S.A. (a) - Torres da Luz – Investimentos Imobiliários, S.A. (a)

(a) - Companies that, as of December 31, 2009 cannot be considered to be part of

Altri, S.G.P.S., S.A. Group João Manuel Matos Borges de Oliveira Was one of the founders of Cofina (company that led to the creation of Altri, by spin-off), and has been involved in the Group’s management since its incorporation. Graduated from the Porto University with a degree in Chemical Engineering, holds an MBA from INSEAD. Develops his activity in the media and industrial operations, as well as in the strategic definition of the Group. In addition to the Companies which currently exercises functions of administration, his professional experience includes: 1982/1983 Assistant Director of Production of Cortal 1984/1985 Production Director of Cortal 1987/1989 Marketing Director of Cortal 1989/1994 General Director of Cortal 1989/1995 Vice President of the Board of Cortal 1989/1994 Administrator of Seldex 1996/2000 Non-executive Director of Atlantis, SA 1997/2000 Non-executive Director of Vista Alegre, SA 1998/1999 Administrator of Efacec Capital, SGPS, SA The other companies where he carries out management functions as of 31 December 2009, are as follows: - Alteria, S.G.P.S., S.A. (a) - Altri, S.G.P.S., S.A. - Caderno Azul, S.G.P.S., S.A. (a) - Caima – Indústria de Celulose, S.A. - Celbi – Celulose da Beira Industrial, S.A. - Celtejo – Empresa de Celulose do Tejo, S.A. - Celulose do Caima, S.G.P.S., S.A. - Cofina Media, S.G.P.S., S.A. (a) - Edisport – Soc. de Publicações, S.A. (a) - Efe Erre Participações, S.G.P.S., S.A. (a)

DIRECTORS’ REPORT


- Elege Valor, S.G.P.S., S.A. (a) - F. Ramada Investimentos, S.G.P.S., S.A. (a) - F. Ramada – Produção e Comercialização de Estruturas Metálicas de

Armazenagem, S.A. (a) - F. Ramada II Imobiliária, S.A. (a) - F. Ramada Serviços de Gestão, Lda. (a) - F. Ramada, Aços e Indústrias, S.A. (a) - Invescaima, S.G.P.S., S.A. - Jardins de França – Empreendimentos Imobiliários, S.A. (a) - Malva – Gestão Imobiliária, S.A. (a) - Presselivre – Imprensa Livre, S.A. (a) - Prestimo – Prestígio Imobiliário, S.A. (a) - Sociedade Imobiliária Porto Seguro – Investimentos Imobiliários, S.A. (a) - Storax Racking Systems, Ltd. (a) - Zon Multimédia – Serviços de Telecomunicação e Multimédia, S.G.P.S., S.A. (a) (a) - Companies that, as of December 31, 2009 cannot be considered to be part of

Altri, S.G.P.S., S.A. Group

Pedro Macedo Pinto de Mendonça Attended the Faculty of Medicine in Porto for two years, and holds a degree in Mechanics from the École Superiore de L’Etat in Brussels. He is shareholder of the Company since its incorporation and has been administrator since that date. In addition to the Companies which currently exercises functions of administration, his professional experience includes: 1959 Director of Supply of Empresa de Metalurgia Artística Lisboa 1965 Production Director of Empresa de Metalurgia Artística Lisboa 1970 Administrator and sales responsible of Seldex 1986 Founding Partner of Euroeel 1986/1990 Administrator of Euroeel 1986 Chairman of the Board of Seldex 1989 Administrator of Cortal The other companies which perform functions of administration as of 31 December 2009 are: - Alteria, S.G.P.S., S.A. (a) - Altri, S.G.P.S., S.A. - Caima – Indústria de Celulose, S.A. - Celbi – Celulose da Beira Industrial, S.A. - Celtejo – Empresa de Celulose do Tejo, S.A. - Celulose do Caima, S.G.P.S., S.A. - Cofihold, S.G.P.S., S.A. (a) - Cofina Media, S.G.P.S., S.A. (a) - Efe Erre Participações, S.G.P.S., S.A. (a) - Elege Valor, S.G.P.S., S.A. (a) - F. Ramada Investimentos, S.G.P.S., S.A. (a)

DIRECTORS’ REPORT


- F. Ramada – Produção e Comercialização de Estruturas Metálicas de Armazenagem, S.A. (a)

- F. Ramada II Imobiliária, S.A. (a) - F. Ramada Serviços de Gestão, Lda. (a) - F. Ramada, Aços e Indústrias, S.A. (a) - Malva – Gestão Imobiliária, S.A. (a) - Prestimo – Prestígio Imobiliário, S.A. (a) - Sociedade Imobiliária Porto Seguro – Investimentos Imobiliários, S.A. (a) - Universal Afir – Aços, Máquinas e Ferramentas, S.A. (a) (a) - Companies that, as of December 31, 2009 cannot be considered to be part of


Domingos José Vieira de Matos Holds a degree in Economics from the Faculty of Economy of the University of Porto. Initiated his carrier in management in 1978. He is shareholder of the Company since its incorporation and has been administrator since that date. In addition to the Companies which currently exercise functions of administration, his professional experience includes: 1978/1994 Administrator of CORTAL, SA 1983 Founding Partner of PROMEDE – Produtos Médicos, SA 1998/2000 Administrator of ELECTRO CERÂMICAS, SA The other companies where he carries out management functions as of 31 December 2009 are as follows: - Alteria, S.G.P.S., S.A. (a) - Altri, S.G.P.S., S.A. - Caima – Indústria de Celulose, S.A. - Celbi – Celulose da Beira Industrial, S.A. - Celulose do Caima, S.G.P.S., S.A. - Efe Erre Participações, S.G.P.S., S.A. (a) - Elege Valor, S.G.P.S., S.A. (a) - F. Ramada Investimentos, S.G.P.S., S.A. (a) - F. Ramada – Produção e Comercialização de Estruturas Metálicas de

Armazenagem, S.A. (a) - F. Ramada II Imobiliária, S.A. (a) - F. Ramada Serviços de Gestão, Lda. (a) - F. Ramada, Aços e Indústrias, S.A. (a) - Jardins de França – Empreendimentos Imobiliários, S.A. (a) - Livre Fluxo, S.G.P.S., S.A. (a) - Malva – Gestão Imobiliária, S.A. (a) - Prestimo – Prestígio Imobiliário, S.A. (a) - Silvicaima – Sociedade Silvícola Caima, S.A. - Sociedade Imobiliária Porto Seguro – Investimentos Imobiliários, S.A. (a) - Universal Afir – Aços, Máquinas e Ferramentas, S.A. (a) (a) - Companies that, as of December 31, 2009 cannot be considered to be part of


DIRECTORS’ REPORT


Laurentina da Silva Martins

With formation in Finance and Administration from Instituto Superior do Porto and is connected with Altri Group since incorporation. Her Professional experience includes: 1965 Finance Direction Assessor of Companhia de Celulose do Caima, S.A. 1990 Finance Director of Companhia de Celulose do Caima, S.A. 2001 Director of Cofina Media, SGPS, S.A. 2001 Director of Caima Energia – Empresa de Gestão e Exploração de

Energia, S.A. 2004 Director of Grafedisport – Impressão e Artes Gráficas, S.A. 2005 Director of Silvicaima – Sociedade Silvícola do Caima, S.A. 2006 Director of EDP – Produção Bioeléctrica, S.A. 2007 Director of Edisport – Sociedade de Publicações, S.A. 2007 Director of Metro News – Publicações, S.A. 2008 Director of Edirevistas – Sociedade Editorial, S.A.

The other companies where she carries out management functions as of 31 December 2009 are as follows: - Altri, S.G.P.S., S.A. - Cofina Media, SGPS, S.A. (a) - Caima Energia – Empresa de Gestão e Exploração de Energia, S.A. - Edirevistas – Sociedade Editorial, S.A. (a) - Edisport – Sociedade de Publicações, S.A. (a) - Grafedisport – Impressão e Artes Gráficas, S.A. (a) - Silvicaima – Sociedade Silvícola do Caima, S.A. - EDP – Produção Bioeléctrica, S.A. - Metro News – Publicações, S.A. (a) (a) – Companies that, as of December 31, 2009 cannot be considered to be part

of Altri, S.G.P.S., S.A. Group

II.3 Chief Executive Officer (‘CEO’), Executive Committee and Executive Board of Directors

There is no Executive Committee with management powers. Management’s decisions are taken by the Board of Directors under the normal course of its functions, and so such a committee is considered to be unnecessary for the Company’s operations and for the investors’ protection.

DIRECTORS’ REPORT


II.4 General and Supervisory Board, Financial Matters Committee, Audit Committee and Statutory Audit Board

Statutory Audit Board, appointed by the General Shareholders’ Meeting, composed of three members and one or two alternates, responsible for the superintendence of the society and the appointment of the Sole Statutory Auditor. The company’s supervision is responsibility of this two bodies: the Statutory Audit Board and the Sole Statutory Auditor. Regarding the Statutory Audit Board as a college body that is, the measure of independence is made to all those that compose it, given the application of paragraph 6 of art. 414 of the CSC, considering independence in accordance with the definition that is given under paragraph 5 of art. 414 and incompatibility as defined in paragraph 1 in 414-A both from CSC. The three members of the Statutory Audit Board meet the rules of incompatibility and independence identified above. In 2009 the Statutory Audit Board met 5 times, the corresponding minutes of the meetings being recorded in the Statutory Audit Board’s Meetings Minute Book. In what it concerns to the competence for the exercise of functions, it is considered that all members have appropriate skills to carry out their tasks and the President is adequately supported by other members of the Statutory Audit Board. In exercising its powers and performance of their duties, the Statutory Audit Board proposes to the General Shareholders’ Meeting the Sole Statutory Auditor, monitors its independence, particularly in what it concerns to the render of additional services and the scope of their services and the audit services related with the financial statements of the Company. The Statutory Audit Board meets wherever necessary with the external auditor in accordance with its mission. It must also represent the Company for all purposes, next to the External Auditor, in particular, being its responsibility to propose the provider of these services, their remuneration and ensure they are secured within the company, the appropriate provision of services. The annual reports on the activities undertaken by the Statutory Audit Board are subject to disclosure on the website of the company, together with the financial statements. II.5 Specialized Committees In accordance with the Company’s articles of association, the members of the corporate bodies will be entitled to the remunerations fixed by a committee composed of three shareholders, one of which will be the president and will have a quality vote, elected by the General Shareholders’ Meeting. The remuneration may be previously settled or include a percentage that can never exceed five per cent of the net profit for the year.

DIRECTORS’ REPORT


The Board believes that the only committee to meet the essential needs of the Company taking into account its size is the Remuneration Committee. In the Shareholders’ General Meeting of 28 May 2008 it was approved the constitution of the Remuneration Committee for the term 2008-2010, composed by:

o Pedro Nuno Fernandes de Sá Pessanha da Costa – President o João da Silva Natária - Member o Fernando Eugénio Cerqueira Magro Ferreira – Member

Any member of this Commission is a member of the board of the Society as well as none of their spouses or relatives in a straight line to the 3rd degree, inclusive. It is practice of the Compensation Committee to be represented in the General Assembly by the President. There are no other specialized committees formally constituted and operating in the Altri.

III. INFORMATION AND AUDIT

III.1 Information general duties Dividend distribution As it was incorporated during 2005, Altri has not yet a dividends distribution historial perfectly defined. Although, according to the Board of Directors’ defined policy, there are proposed dividend distributions which aim to provide the shareholders with adequate compensation on invested capital, and at the same time, provide the Group’s needs regarding its continuous growth and investment. In 2005 there was a dividend distribution amounting to 2,564,146 Euro, corresponding to an earnings per share of 0.05 Euro, in a total of 51,282,918. In the years 2006 and 2007 there were dividend distributions amounting 5,128,292 Euro, corresponding to an earnings per share of 0.05 Euro, in a total of 102,565,836.

For the year 2008, was approved to not distribute any dividends. With regard to 2009, the Board also proposes not to distribute any dividends.

DIRECTORS’ REPORT


Transactions carried out between the Company and members of its corporate boards During 2009 no transactions were carried out between the Company and the members of its corporate boards (direction or superintendence), holders of qualified participations or subsidiaries of the Group that were not performed under normal market conditions for similar transactions, and always performed under the Company’s normal course of business of managing its participations. Market relationships There is in the Company a market relationships’ delegate - Alfredo Luís Portocarrero Pinto Teixeira, a company’s secretary. The contact for investors to obtain information is as follows: Rua do General Norton de Matos, 68 – r/c 4050-424 Porto Tel: 22 8346502 Fax: 22 8346503 E-mail: [email protected] When need, he provides to the market to provide all relevant information regarding the events, facts considered as the relevant facts, disclosure of quarterly results and answers to any requests for clarification by the investors or the general public on public financial information. Additionally, Altri provides financial information relating to its non consolidated and consolidated operations, as well as that of its participated companies, through its official internet page (www.altri.pt). This site is also used by the Altri to provide information on press releases, as well as any relevant facts occurring in the life of the Company. This page also includes the Altri’s documents of accounts.

mailto:[email protected]�

http://www.altri.pt/�

DIRECTORS’ REPORT


LEGAL MATTERS

Treasury stock Pursuant to the requirements of article 66 of the Commercial Companies’ Code (Código das Sociedades Comerciais), the Directors inform that as of 31 December 2009 Altri had no treasury stock and did not acquire or sell any treasury stock during the year. Shares held by the governing bodies of Altri Pursuant to the requirements of article 447 of the Commercial Companies’ Code, the Directors inform that, as of 31 December 2009, they held the following shares:

Paulo Jorge dos Santos Fernandes 7,000,746 Pedro Macedo Pinto de Mendonça 852,500 Domingos José Vieira de Matos 6,969,716 João Manuel Matos Borges de Oliveira (a) 9,246,660 Laurentina da Silva Martins 0

(a) 9,246,660 shares represent the total shares of Altri SGPS, SA owned by Caderno Azul - SGPS SA, which the administrator João Manuel Matos Borges de Oliveira is shareholder.

As of 31 December 2009, the Statutory Auditor, the members of the Statutory Audit Board and the members of the Board of the General Shareholders’ Meeting held no shares of the Company.

Participation in the Company’s share capital Pursuant to the requirements of articles 16 and 20 of the Stock Exchange Code (Código de Valores Mobiliários) and article 448 of the Commercial Companies Code, 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

31.12.2009 Direct % of the

voting rights Bestinver Gestión, SGIIC, S.A. Pedro Miguel Matos Borges de Oliveira

5,008,862 4,333,340

4,88% 4,22%

Exceeding 5% of the voting rights Shares held at

31.12.2009 Direct % of the

voting rights UBS AG, Zurique 9,778,608 9,53% Caderno Azul, SGPS, S.A. (a) 9,246,660 9,02% Paulo Jorge dos Santos Fernandes 7,000,746 6,83% PROMENDO – SGPS S.A. (b) Domingos José Vieira de Matos

7,000,000 6,969,716

6,82% 6,80%

Ana Rebelo Mendonça Fernandes (c) 6,731,891 6,56%

DIRECTORS’ REPORT


(a) 9,246,660 shares represent the total shares of Altri SGPS, SA owned by Caderno Azul - SGPS SA, which the administrator João Manuel Matos Borges de Oliveira is shareholder; (b) 7,000,000 shares of Altri – SGPS, S.A. held by PROMENDO – SGPS, S.A., are attributable to Ana Rebelo Mendonça Fernandes, manager and shareholder, holder of 59.6% of the capital; (c) it is also, due to Ana Rebelo Fernandes Mendonça, in addition to the 7,000,000 shares of Altri - SGPS, SA held by the company Promo - SGPS, SA mentioned in (b) also 1,162,000 actions of Altri - SGPS, SA held by the company Promendo – Promoções Empresariais SA, for which she is manager and shareholder, holder of 68% of their capital. Thus, in legal terms, are considered attributable to Ana Rebelo Fernandes Mendonça, a total of 14,893,891 shares, representing 14.52% of the capital and voting rights of Altri - SGPS, SA.

Altri was not informed of any participation exceeding 20% of the voting rights DECLARATION OF RESPONSIBILITY

The members of the Board of Directors of Altri, S.G.P.S., S.A. declare that they assume responsibility for this information and affirm 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. CLOSING REMARKS The Board of Directors concludes by expressing a vote of thanks to the Personnel of the Altri Group for their dedication and effort, and also wishes to express its’ thanks to the other Corporate Boards and to the Financial Institutions that co-operated with the Group. Porto, 15 de April de 2010 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 Laurentina da Silva Martins

DIRECTORS’ REPORT

Annual Report ’09

Article 447 of the Portuguese Companies Act and of Article 14, paragraph 7 of Portuguese Securities Regulator (CMVM) Regulation nr. 05/2008

Disclosure of shares and other securities held by members of the Board of Directors and by those discharging managerial responsibilities, as well as by people closely connected with them (article 248 B of the Portuguese Securities Code), and disclosure of the respective

transactions during the year involving such shares and other securities

Paulo Jorge dos Santos FernandesData Natureza Volume Preço (€) Local Saldo Final

31-Dez-08 - - - - 6.645.746 21-Abr-09 Compra 34.000 2,053618 Euronext Lisbon 6.679.746 22-Abr-09 Compra 10.000 2,072341 Euronext Lisbon 6.689.746 23-Abr-09 Compra 15.000 2,066942 Euronext Lisbon 6.704.746 24-Abr-09 Compra 11.000 2,069934 Euronext Lisbon 6.715.746 10-Jun-09 Compra 5.000 2,334000 Euronext Lisbon 6.720.746 11-Jun-09 Compra 50.000 2,325061 Euronext Lisbon 6.770.746 12-Jun-09 Compra 45.000 2,343455 Euronext Lisbon 6.815.746 13-Ago-09 Compra 20.000 2,500800 Euronext Lisbon 6.835.746 14-Ago-09 Compra 30.000 2,605300 Euronext Lisbon 6.865.746 01-Set-09 Compra 50.000 3,005065 Euronext Lisbon 6.915.746 02-Set-09 Compra 20.000 2,914724 Euronext Lisbon 6.935.746 08-Set-09 Compra 50.000 3,436870 Euronext Lisbon 6.985.746 09-Set-09 Compra 15.000 3,548353 Euronext Lisbon 7.000.746 31-Dez-09

Pedro Macedo Pinto de MendonçaData Natureza Volume Preço (€) Local Saldo Final

31-Dez-08 - - - - 852.500 31-Dez-09

Domingos José Vieira de MatosData Natureza Volume Preço (€) Local Saldo Final

31-Dez-08 - - - - 6.969.716 31-Dez-09

João Manuel Matos Borges de Oliveira (imputação via CADERNO AZUL - SGPS, S.A.)Data Natureza Volume Preço (€) Local Saldo Final

31-Dez-08 - - - - 9.246.660 31-Dez-09

Statement Under the terms of Article 245, paragraph 1, c) of the Securities Code The signatories individually declare that, to their knowledge, the Management Report, the Individual Financial Statements prepared in accordance with generally accepted accounting principles in Portugal and the Consolidated Financial Statements prepared meeting the standards of the applicable International Financial Reporting Standards as adopted by the European Union, and other accounting documents required by law or regulation, giving a truthful (fairly) and appropriate image, in all material respects, of the assets and liabilities, financial position and the consolidated and individual results of Altri, SGPS, S.A. (“Altri”) at 31 December 2009 and that the Management Report faithfully describes the business evolution and position of Altri and of the companies included in the consolidation perimeter and contains a description of the major risks and uncertainties that they face. Porto, 15 April 2010 Paulo Jorge dos Santos Fernandes President of the Board of Directors João Manuel Matos Borges de Oliveira Member of the Board of Directors Pedro Macedo Pinto de Mendonça Member of the Board of Directors Domingos José Vieira de Matos Member of the Board of Directors Laurentina da Silva Martins Member of the Board of Directors

ALTRI, SGPS, S.A.

CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 2009 AND 2008

(Translation of financial statements originally issued in Portuguese – Note 43)(Amounts expressed in Euro)

ASSETS Notes 31.12.2009 31.12.2008NON CURRENT ASSETS:

Biological assets 10 80.486.847 75.879.431Tangible fixed assets 7 525.137.385 473.140.189Goodwill 8 269.401.310 269.323.108Intangible assets 9 290.122 538.237Investments in associated companies 4.2 10.509.914 17.909.611Investments available for sale 4.3 and 6 714.354 780.330Other non current assets 17 694.667 397.414Deferred tax assets 11 18.063.845 10.983.234

Total non current assets 905.298.444 848.951.554

CURRENT ASSETS:Inventories 10 37.887.922 57.613.288Customers 6 and 12 69.602.593 57.819.150Other debtors 6 and 13 6.982.879 14.749.641State and other public entities 14 15.643.774 24.418.762Other current assets 15 6.548.231 10.127.859Derivatives 6 and 27 - 12.546.735Investments recorded at fair value through profit and loss 4.4 and 6 602.670 747.450Cash and cash equivalents 6 and 16 80.261.966 74.300.279

217.530.035 252.323.164Assets classified as held for sale or in discontinuation 4.5 695.758 13.576.029

Total current assets 218.225.793 265.899.193

Total assets 1.123.524.237 1.114.850.747

SHAREHOLDERS' FUNDS AND LIABILITIES 31.12.2009 31.12.2008

SHAREHOLDERS' FUNDS:Share capital 18 25.641.459 25.641.459 Legal reserve 18 2.862.981 1.630.523 Other reserves 18 40.079.391 54.156.623 Consolidated net profit / (loss) (10.910.016) 4.668.149 Total shareholders' funds attributable to the parent company's shareholders 57.673.815 86.096.754

Minority interests 19 109.371 283.991

Total Shareholders' funds 57.783.186 86.380.745

LIABILITIES:NON CURRENT LIABILITIES:

Bank loans 6 and 20 149.913.243 150.015.292 Other loans 6 and 20 612.519.785 521.270.017 Other non current creditors 6 and 22 339.766 491.190 Other non current liabilities 6 and 23 24.101.086 1.513.306 Deferred tax liabilities 11 981.007 3.914.691 Provisions 21 2.424.509 5.107.335

Total non current liabilities 790.279.396 682.311.831

CURRENT LIABILITIES:Bank loans 6 and 20 46.559.986 51.886.464 Other loans 6 and 20 109.171.440 110.996.123 Suppliers 6 and 24 65.999.089 58.901.992 Other current creditors 6 and 25 10.779.891 70.905.701 State and other public entities 14 3.806.882 3.062.921 Other current liabilities 26 20.755.541 38.487.310 Derivatives 6 and 27 18.213.114 6.059.446

275.285.943 340.299.957 Liabilities associated with assets classified as held for sale or in discontinuation 4.5 175.712 5.858.214

Total current liabilities 275.461.655 346.158.171

Total shareholders' funds and liabilities 1.123.524.237 1.114.850.747

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

The Board of Directors

ALTRI, SGPS, S.A.

CONSOLIDATED STATEMENTS OF PROFIT AND LOSSFOR THE YEARS ENDED 31 DECEMBER 2009 AND 2008


Notes 31.12.2009 31.12.2008

Continuing operations

Sales 37 272.739.290 253.154.116Services rendered 37 2.911.100 2.325.100Other income 33 33.958.596 24.694.996Cost of sales 10 (112.017.763) (79.542.865)External supplies and services 30.1 (109.012.032) (86.636.886)Payroll expenses 32 and 38 (33.392.309) (30.924.372)Amortisation and depreciation 7 and 9 (38.911.128) (28.820.774)Provisions and impairment losses 21 (928.327) (5.822.688)Other expenses 34 (2.759.800) (8.717.661)Gains and losses related with assets classified as held for sale - (251.693)Gains and losses in associated companies 4.2 and 35 (242.000) (1.074.707)Gains and losses in other investments 35 109.236 (520.597)Financial expenses 35 (29.855.579) (46.375.356)Financial income 35 4.669.540 10.775.865

Profit before income tax (12.731.176) 2.262.478

Income tax 11 766.170 1.894.609Net profit (11.965.006) 4.157.087

Attributable to:Parent company's shareholders 36 (11.932.959) 4.109.378Minority interests 19 (32.047) 47.709

Discontinued operations

Profit for the year from discontinued operations 4.5 and 5 1.022.943 558.771

Attributable to:Parent company's shareholders 4.5 and 5 1.022.943 558.771Minority interests - -

Consolidated net profit (10.942.063) 4.715.858

Attributable to:Parent company's shareholders 36 (10.910.016) 4.668.149Minority interests 19 (32.047) 47.709

(10.942.063) 4.715.858

Earnings per share:Continuing operations

Basic 36 (0,12) 0,04Diluted 36 (0,12) 0,04

Continuing and discontinued operationsBasic 36 (0,11) 0,05Diluted 36 (0,11) 0,05



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

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOMEFOR THE YEARS ENDED 31 DECEMBER 2009 AND 2008


Notes 31.12.2009 31.12.2008

Net consolidated profit / (loss) for the year (10.942.063) 4.715.858

Change in conversion exchange reserves - (195.568)

Change in fair value of cash flow hedging derivatives 27 (17.500.081) 8.225.583

Other comprehensive income (17.500.081) 8.030.015

Total comprehensive income for the year (28.442.144) 12.745.873

Attributable to:Shareholders' of the parent company (28.410.097) 12.698.164Minority interests 19 (32.047) 47.709




CONSOLIDATED STATEMENTS OF CHANGES IN EQUITYFOR THE YEARS ENDED 31 DECEMBER 2009 AND 2008


Attributable to the parent company's shareholdersOther reserves

Notes Share capital Legal reserveHedging reserves

Conversion reserves

Others reserves and retained earnings

Total others reserves Net profit Total

Minority interests

Total shareholder's

funds

Balance as of 1 January 2008 25.641.459 1.527.560 (931.402) (373.328) 56.943.872 55.639.142 35.193.702 118.001.863 274.494 118.276.357Appropriation of the consolidated net profit of 2007:

Transfer to legal reserves and retained earnings - 102.963 - - 29.962.447 29.962.447 (30.065.410) - - -Distributed dividends - - - - - - (5.128.292) (5.128.292) - (5.128.292)

Others - - - - (348) (348) - (348) - (348)Demerger of F. Ramada 5 - - - 568.896 (40.043.529) (39.474.633) - (39.474.633) - (39.474.633)Acquisition of additional share capital of Celtejo - Empresa de Celulose do Tejo, S.A. 5 - - - - - - - - (38.212) (38.212)Total comprehensive income for the year - - 8.225.583 (195.568) - 8.030.015 4.668.149 12.698.164 47.709 12.745.873

Balance as of 31 December 2008 25.641.459 1.630.523 7.294.181 - 46.862.442 54.156.623 4.668.149 86.096.754 283.991 86.380.745

Balance as of 1 January 2009 25.641.459 1.630.523 7.294.181 - 46.862.442 54.156.623 4.668.149 86.096.754 283.991 86.380.745Appropriation of the consolidated net profit of 2008:

Transfer to legal reserves and retained earnings - 1.232.458 - - 3.435.691 3.435.691 (4.668.149) - - -Others - - - - (12.842) (12.842) - (12.842) - (12.842)Acquisition of additional share capital of Celtejo - Empresa de Celulose do Tejo, S.A. 5 - - - - - - - - (142.573) (142.573)Total comprehensive income for the year - - (17.500.081) - - (17.500.081) (10.910.016) (28.410.097) (32.047) (28.442.144)

Balance as of 31 December 2009 25.641.459 2.862.981 (10.205.900) - 50.285.291 40.079.391 (10.910.016) 57.673.815 109.371 57.783.186



ALTRI , SGPS, S.A.

CONSOLIDATED CASH-FLOW STATEMENTSFOR THE YEARS ENDED 31 DECEMBER 2009 AND 2008


Notes 2009 2008

Operating activities:Collections from customers 293.306.993 314.653.759Payments to suppliers (200.437.931) (208.830.728)Payments to personnel (30.244.953) (33.101.347)Other collections/payments relating to operating activities 19.618.464 (19.221.783)Income tax 369.637 82.612.210 (4.586.460) 48.913.441

Cash flow from operating activities (1) 82.612.210 48.913.441

Investment activities:Collections relating to:

Investments 41 - 21.682.699Tangible assets 2.321.315 1.944.083Borrows - 21.640.843Investment subsidies 4.281.035 83.849Interest and similar income 5.234.207 11.836.557 10.543.510 55.894.984

Payments relating to:Investments 41 (5.041.089) (8.659.281)Intangible assets (65.171) (107.117)Tangible assets (114.565.558) (245.764.240)Biological assets (13.372.438) (133.044.256) (11.727.778) (266.258.416)

Cash flow from investment activities (2) (121.207.699) (210.363.432)

Financing activities:Collections relating to:

Loans obtained 145.829.071 145.829.071 375.033.065 375.033.065Payments relating to:

Lease contracts (48.519) (167.168)Interest and similar costs (40.963.632) (40.527.407)Distributed dividends - (5.128.292)Loans obtained (61.612.028) (102.624.179) (180.582.847) (226.405.714)

Cash flow from financing activities (3) 43.204.892 148.627.351

Cash and cash equivalents at the beginning of the year 16 73.023.397 125.514.513Effect of change in the companies consolidated - (39.668.476)Variation of cash and cash equivalents: (1)+(2)+(3) 4.609.403 (12.822.640)Cash and cash equivalents at the end of the year 16 77.632.800 73.023.397

The accompanying notes form an integral part of the consolidated cash flow statement.



NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

AS OF 31 DECEMBER 2009

(Translation of notes originally issued in Portuguese – Note 43)

(Amounts expressed in Euro)

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1.

INTRODUCTORY NOTE

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

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. At 16 April 2008 took place the business reorganization, which involved the demerger process of the equity share held at F. Ramada - Aços e Indústrias, S.A., representative of the voting rights of the mentioned company. The restructuring involved a simple demerger operation predicted on item 1.a), article 118, of the Commercial Companies Code (“Código das Sociedades Comerciais”), for the constitution of a new company – F. Ramada – Investimentos, SGPS, S.A. (“Ramada Investimentos”). Due to this process, the company’s patrimonial share related to the equity holdings management business unit for the sector of steel and storage systems was demerged to Ramada Investimentos, including all other resources (such as human resources, assets and liabilities) related to those companies activities, and the relevant date for the production of juridical and accounting effects of this operation was 1 June 2008. Altri is the parent company of a group of companies listed in Note 4 known as Altri Group. The current activity of Altri Group focuses on the production of bleached paper pulp of eucalyptus through three production units (Celbi in Figueira da Foz, Caima in Constância do Ribatejo and Celtejo in Vila Velha de Ródão). Due to this new reality of Altri Group, the Board of Directors believe that there is only one business segment (production and commercialization of bleached paper pulp from eucalyptus) and the management information is also analyzed on this basis, for which the segmental information mentioned in Note 37 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. The operations of foreign companies whose functional currency isn’t the Euro are not included in the consolidated financial statements in accordance with the policy set out in Note 2.2.d).






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2.

MAIN ACCOUNTING POLICIES

The main accounting policies adopted in the preparation of the accompanying consolidated financial statements are as follows:

2.1

BASIS OF PRESENTATION

The accompanying consolidated financial statements have been prepared on a going concern basis from the books and accounting records of the companies included on the consolidation adjusted to reflect the recognition and measurement principles of International Financial Reporting Standards ("IFRS") as adopted by the European Union for financial years started from 1 January 2009 on a going concern basis and under the historical cost convention, except for some financial instruments which are stated at fair value. These standards include International Financial Reporting Standards issued by the International Accounting Standards Board ("IASB"), International Accounting Standards (“IAS”) issued by International Accounting Standards Committee (“IASC”) and interpretations issued by the International Financial Reporting Interpretations Committee ("IFRIC") or by the previous Standing Interpretations Committee ("SIC"), as adopted by the European Union. Standards and interpretations above mentioned will be generally presented as “IAS/IFRS”.

Interim financial statements are presented quarterly in accordance with the rules imposed by CMVM (“Comissão do Mercado de Valores Mobiliários”).

New accounting standards and their impact in the accompanying consolidated financial statements:

(i) The following standards, interpretations, changes and reviews have been endorsed by European Union until the approval date of these consolidated financial statements, some of which have started producing effects in the financial period ended at 31 December 2009.

Standard/Interpretation

Effective date

(annual periods beinning on or after)

NEW STANDARD AND INTERPRETATION: IFRS 8 – Operations segments 1-Jan-09 IFRS 8 replaces IAS 14, let to a redefinition

of an entity reporting segments and the information to report on them.

IFRIC 13 – Costomer loyalty programmes

1-Jul-08 This interpretation establishes that credits awarded to clients as part of Sales transaction are accounted as a separate component of the transaction.

REVISED: IAS 1 – Presentation of financial statements (Revised in 2007)

1-Jan-09 This revision introduced chances in terminology, including new names for financial statements, as well as, changes in the format and content of such statements.

IAS 23 – Borrowing cost (Revised in 2007)

1-Jan-09 This revision introduces the requirement for capitalization of borring costs that relate to assets that qualify for such.






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Effective date

(annual periods beginning on or

after)

AMENDMENTS: IFRS 1 – First time adoption of IFRS/ IAS 27 – Consolidated and Separate Financial Statements (amendments)

1-Jan-09 These amendments address the measurement of the cost of investments in subsidiaries, jointly controlled entities and associates on first-time adoption of IFRSs and the recognition of dividends from subsidiaries, in the separate financial statements of the parent company.

IFRS 2 – Share-Based Payment (amendments)

1-Jan-09 This amendment clarifies the definition of vesting conditions and non-vesting conditions and the clarification of the accounting treatment of cancellations.

IFRS 7 – Financial Instruments: Disclosures (amendments)

1-Jan-09 This amendment to IFRS 7 enhances disclosures on fair value measurement and liquidity risk.

IAS 1 – Presentation of financial statements / IAS 32 – Financial instruments: presentation (amendments)

1-Jan-09 These amendments clarify the classification and the presentation of financial instruments with a option put.

IAS 39 – Financial Instruments: recognition and measurement (amendments)

1-Jul-08 These amendments allow, in rare circumstances, the reclassification of non derivated financial.

Improvements to IFRSs – 2007 Various (mainly 1-Jan-

09 This process included the review of 32 accounting standards.

The consequences in financial statements of Altri Group for the financial period ended at 31 December 2009,

due to implementation of standards and interpretations, reviews and changes above mentioned have not been significant because accounting policies followed by Company have already been, in general, consistent with some of new standards. Only changes of IAS 1 had important effects, related with terminology, format and content of financial statements.

IFRS 8 has replaced the previous IAS 14, but that hasn’t caused a redefinition of reportable segments of Altri

Group because, as mentioned in Introductory Note, there is only one business segment (production and commercialization of bleached paper pulp from eucalyptus) and internal information is report on this basis.

(ii) The following standards, interpretations, changes and reviews have been endorsed by European Union, until approval date of these financial statements, but they are mandatory only at future financial periods:






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Effective date (annual periods beginning on or

after)

NEW STANDARD AND INTERPRETATION: IFRIC 12 – Service concession arrangements

1-Jan-10

This interpretation introduces rules on recognition and measurement by the private operator involved in the provision of infrastructure constructions and operation under public-private partnership concessions.

IFRIC 15 – Agreements for the construction of real estate

1-Jan-10 This interpretation establishes the way to assess whether a construction agreement for property is within the scope of IAS 11 – Construction Contracts or in the scope of IAS 18 – Revenue and how the corresponding revenue should be recognized.

IFRIC 16 – Hedges of a net investment in a foreign operation

1-Jul-09 This interpretation provides guidance on hedge accounting for net investments in foreign operations.

IFRIC 18 – Transfer of assets from customers

Transfers made on or after 1-Jul-09

This interpretation provides guidance on accounting, by operators, of tangible assets “of customers”.

REVIEWS: IFRS 1 – First time adoption of IFRS (2008 Review)

1-Jan-10 This revision reflects the many changes since the first version of this standard.

IFRS 3 –Business combination / IAS 27 – Consolidated and Separate Financial Statements (amendments)

1-Jul-09 This revision brings some chances concerning the record of business combinations, namely in respect to: (a) the measurement of noncontrolling interests (new term for “minority interest”); (b) recognition and subsequent measurement of contingent consideration; (c) treatment of direct cost associated with the acquisition; and (d) the record of the acquisition of additional shares in the subsidiary after control was obtained, and the partial disposal of an investment in a subsidiary while control is retained.

AMENDMENTS: IAS 39 – Financial Instruments: recognition and measurement (amendments)

1-Jul-09 Includes clarifications related to following issues of hedge accounting: (i) designation of inflation as a hedge risk and (ii) hedging with financial options.

IFRIC 9 – Reassessment of embedded derivative/ IAS 39 – Financial Instruments: recognition and measurement (amendments)

Annual periods beginning on or after

30-Jun-09

The amendments clarify the circumstances which allow the subsequent reassessment of the requirement to separate an embedded derivative.






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These standards have not been implemented by Altri Group for financial period ended at 31 December 2009, because they are not mandatory. Nevertheless, material impacts in consolidated financial statements as consequence of them are not expected.

The accounting policies and mensuration criteria used in the preparation of the consolidated financial

statements are consistent with those used in the preparation of the financial statements for the period ended 31 December 2008. Accompanying consolidated financial statements have been prepared for appreciation and approval in General Assembly of Shareholders. The Board of Directors believes that they will be approved without changes.

2.2

CONSOLIDATION POLICIES

The consolidation policies adopted by the Group in the preparation of the consolidated financial statements are as follows:

a)

Investments in group companies

Investments in companies in which the Group owns, directly or indirectly, more than 50% of the voting rights at the Shareholders’ General Meeting and is able to control the financial and operating policies so as to benefit from its activities (definition of control normally used by the Group), are included in the consolidated financial statements by the full consolidation method. Equity and net profit attributable to minority shareholders are shown separately, under the caption “Minority interests”, in the consolidated balance sheet and in the consolidated statement of profit and loss. Companies included in the consolidated financial statements by the full consolidation method are listed in Note 4.1.

When losses attributable to the minority interests exceed the minority interest in the equity of the subsidiary, the excess and any further losses attributable to the minority interests are charged against the majority interests except to the extent that the minority shareholders have a binding obligation and are able to cover such losses. If the subsidiary subsequently reports profits, such profits are allocated to the majority interests until the minority’s share of losses previously absorbed by the Group has been recovered.

Under concentration processes, occurred after the transition date to International Financial Reporting Standards as adopted by the European Union (1 January 2004) the assets and liabilities of each subsidiary are measured at their fair value at the date of acquisition according to IFRS 3 - “Business Combinations”. Any excess on the cost of acquisition over the fair value of the identifiable net assets and liabilities acquired is recognised as goodwill. Any excess of the fair value of the identifiable net assets and liabilities acquired over its cost is recognised as income in the profit and loss statement of the period of acquisition, after reassessment of the estimated fair value. Minority interests are presented according to their share in the fair value of the identifiable assets and liabilities. The results of subsidiaries acquired or disposed during the period are included in the consolidated statement of profit and loss from the effective date of acquisition or up to the effective date of disposal, respectively. Adjustments to the financial statements of Group companies are performed, whenever necessary, in order to adapt its accounting policies to those used by the Group. All intercompany transactions, balances and distributed dividends are eliminated during the consolidation process. Whenever the Group has, in substance, control over other entities created for a specific purpose (“Special Purpose Entities”), even if no share capital interest is directly held in those entities, these are consolidated by the full consolidation method.






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b) Investments in associated companies

Investments in associated companies (companies where the Group has significant influence but has no control over the financial and operating decisions - usually corresponding to holdings between 20% and 50% in a company’s share capital) are accounted for in accordance with the equity method. According to the equity method, the investments in associated companies are initially recorded at acquisition cost, which is adjusted proportionally to the Group’s corresponding share capital, as at the acquisition date or as at the date of the first adoption of the equity method. On a yearly basis, investments are adjusted in accordance with the Group’s participation in the associated company’s net income. Additionally, the dividends of the subsidiary are recorded as a reduction in the investment’s book value and the Group’s proportion in the changes occurred in the associated company’s equity are recorded as a change in the Group’s equity.

Any excess of the cost of acquisition over the Group’s share in the fair value of the identifiable net assets

acquired is recognised as goodwill, which is included in the caption “Investments in associated companies”. If that difference is negative it is recorded as a gain in the caption “Gains and losses in associated companies” after reassessment of the fair value of the identifiable assets and liabilities acquired. An evaluation of investments held in associated companies is performed whenever there are signs of impairment in those investments. Impairment losses are recorded in the statement of profit and loss for the period. When those losses recorded in previous periods vanish, they are reverted in the statement of profit and losses for the period. When the Group’s share of losses of the associated company exceeds the investment’s book value, the investment is recorded at nil value, except to the extent of the Group’s commitments to the associate. In such case, the Group records a provision to cover those commitments. Unrealised gains arising from transactions with associated companies are eliminated to the extent of the group’s interest in the associate against the investment held.

Unrealised losses are eliminated but only to the extent that there is no evidence of impairment of the asset transferred.

Investments in associated companies are listed in Note 4.2.

c) Goodwill

In concentration processes, the difference between the acquisition cost of the investment in group and associated companies and the fair value of the identifiable assets and liabilities of those companies as at the date of acquisition is recorded, when positive, in the balance sheet captions “Goodwill” and “Investments in associated companies”, respectively. The excess of the cost of acquisition of investments in foreign companies over the fair value of their identifiable assets and liabilities as at the date of acquisition is calculated using the local currency of each of those companies. Translation to the Group’s currency (Euro) is made using the exchange rate as at the balance sheet date. Exchange rate differences arising from this translation are recorded under the equity caption “Conversion reserves”. Goodwill transferred through the demerger process (Introductory Note) arising from acquisitions made prior to the date of transition to IFRS (1 January 2004) is stated using the carrying amounts in accordance with generally accepted accounting principles in Portugal and was subject to impairment tests. The impact of these adjustments was recorded in the caption “Other reserves”, in accordance with IFRS 1. Goodwill arising from the acquisition of foreign companies was recalculated retrospectively using the local currency of each subsidiary.






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Goodwill is not amortised, but is subject to impairment tests on an annual basis. Impairment losses identified in the period are recorded in the statement of profit and loss under the caption “Provisions and impairment losses”, and may not be reversed.

The differences between the acquisition cost of group companies and the fair value of the identifiable assets and liabilities of those companies at the date of acquisition, if negative, are recorded, at the date of acquisition and after reassessment of the fair value of the identifiable assets and liabilities acquired, as gains in the profit and loss statement. The Group tests on an annual basis the impairment of goodwill. The recoverable amount of the cash-generating unities is computed based on the value of use. This computation implies the use of assumptions based on estimates of future events which may occur differently from expected.

d) Translation of financial statements of foreign companies

Assets and liabilities in the financial statements of foreign entities are translated to Euro using the exchange rates in force at the balance sheet date. Profit and loss and cash flows are converted to Euro using the average exchange rate for the period. The exchange rate differences originated are recorded in the equity caption “Conversion reserves”.

Goodwill and adjustments to the fair value arising from the acquisition of foreign subsidiaries are recorded as assets and liabilities of those companies and translated to Euro at the balance sheet date exchange rate.

Whenever a foreign company is sold, the accumulated exchange rate differences are recorded in the statement of profit and losses as a gain or loss associated with the sale.

2.3 MAIN ACCOUNTING POLICIES

The main accounting policies used in the preparation of the consolidated financial statements are as follows:

a) Intangible assets

Intangible fixed assets are recorded at cost, net of depreciation and accumulated impairment losses. Intangible assets are only recognised if it is likely that future economic benefits will flow to the Group, are controlled by the Group and if its cost can be reliably measured. Development costs are recognised as an intangible asset if the Group has proven technical feasibility and ability to finish the development and to sell/use such assets and it is likely that those assets will generate future economic benefits. Development costs which do not fulfil these conditions are recorded as an expense in the period in which they are incurred. Internal costs related with maintenance and development of software are recorded as expenses in the statement of profit and loss for the period in which they are incurred, except when these costs are directly attributable to projects for which the existence of future economic benefits is likely. Being this the case, they are capitalized as intangible assets. Amortisation is calculated on a straight line basis, as from the date the asset is first used, over its expected useful life (usually 3 to 5 years).






- 8 -

b) Tangible fixed assets

Tangible fixed assets acquired until 1 January 2004 (IFRS transition date) and transferred to Altri Group through the demerger (Introductory Note), are recorded at deemed cost, which corresponds to its acquisition cost, or its acquisition cost revalued in accordance with generally accepted accounting principles in Portugal until that date, net of accumulated amortisation and accumulated impairment losses. Tangible assets acquired after that date are recorded at acquisition cost, net of depreciation and accumulated impairment losses. Depreciation is calculated on a straight line basis, as from the date the asset is first used, over the expected useful life for each group of assets.

The depreciation rates used correspond to the following estimated useful lives:

Years Land and natural resources 20 to 50 Buildings and other constructions 10 to 50 Plant and machinery 2 to 15 Vehicles 2 to 10 Tools 4 to 14 Office equipment 2 to 10 Other tangible assets 3 to 10 Maintenance and repair costs related to tangible assets which do not increase the useful life or result in

significant benefits or improvements in tangible fixed assets are recorded as expenses in the period they are incurred.

Tangible fixed assets in progress correspond to fixed assets still in construction and are stated at acquisition

cost, net of impairment losses. These assets are depreciated from the date they are concluded or ready to be used under the conditions and for the use established by the management.

Gains or losses arising from the sale or disposal of tangible assets are calculated as the difference between

the selling price and the asset’s net book value as at the date of its sale/disposal, and are recorded in the statement of profit and loss under the captions “Other income” or “Other expenses”, respectively.

c) Lease contracts

Classifying a lease as financial or as operational depends on the substance of the transaction rather than

the form of the contract. Lease contracts are classified as (i) a finance lease if the risks and rewards incidental to ownership lie with

the lessee and (ii) as an operating lease if the risks and rewards incidental to ownership do not lie with the lessee.

Tangible fixed assets acquired under financial lease contracts and the corresponding liabilities are recorded

in accordance with the financial method. Under this method, the cost of the fixed assets and the corresponding liability are reflected in the balance sheet. In addition, interests included in the lease instalments and depreciation of the fixed assets, calculated as explained in Note 2.3.b), are recorded in the statement of profit and loss of the period to which they apply.

The operational lease instalments on assets acquired under long-term rental contracts are recognized in full

as expenses in the period to which they refer to.






- 9 -

d) Subsidies from Government or other public entities

Subsidies for personnel training programmes or production support are recorded in the statement of profit

and loss caption “Other income” when attributed, independently of when they are received. Non-repayable subsidies obtained to finance investment in tangible fixed assets are recorded as “Other non

current liabilities” and “Other current liabilities” corresponding to the instalments repayable in the long and short term, respectively. These subsidies are recognised in the statement of profit and loss in accordance with the depreciation of the related tangible fixed assets.

e) Impairment of assets, except for goodwill

Assets are assessed for impairment at each balance sheet date and whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.

Whenever the carrying amount of an asset exceeds its recoverable amount, an impairment loss is

recognised in the statement of profit and loss under the caption “Provisions and impairment losses”. The recoverable amount is the higher of an asset’s net selling price and its value of use. The net selling

price is the amount obtainable from the sale of an asset in an arm’s length transaction less the costs of the disposal. The value of use is the present value of estimated future cash flows expected to arise from the continued use of an asset and from its disposal at the end of its useful life. Recoverable amounts are estimated for individual assets or, if not possible, for the cash-generating unit to which the asset belongs.

Reversal of impairment losses recognised in prior years is recorded when the Group concludes that the

impairment losses previously recognised for the asset no longer exist or has decreased. The reversal is recorded in the statement of profit and loss as “Other income”. However, the increased carrying amount of an asset due to a reversal of an impairment loss is recognised to the extent it does not exceed the carrying amount that would have been determined (net of depreciation and amortisation) had no impairment loss been recognised for that asset in prior years.

f) Borrowing costs

Borrowing costs are recognised as expense in the statement of profit and loss for the period in which they

are incurred, in an accrual basis. When the Company contracts loans to specifically finance capital assets, the corresponding interests are

capitalized, being part of the cost of the asset. The capitalization of these interests starts after the beginning of the preparation of the activities of construction, and ceases when the asset is ready for use or in case the project is suspended.

g) Inventories

Raw, subsidiary and consumable materials are stated at acquisition average cost, deducted from quantity discounts granted by suppliers, which is lower than its market value.

Finished and intermediate goods, sub-products and work in progress are stated at production cost, which

includes the cost of raw materials, direct labour and production overheads, which is lower than market value. Therefore, harvested wood owned by the Group is valued at production cost, which includes the costs incurred with the cutting, gathering and transport of harvested wood, as well as the accumulated cost of plantations, maintenance and administrative expenses in proportion to the harvested area.

When necessary the Group companies record impairment losses to reduce inventories to its net realisable

or market value.






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h) Biological assets

Plantations owned by the Group are classified in the caption “Biological assets”. Costs incurred with the

acquisition of plantations and plantations made, and costs incurred with its development, conservation and maintenance are included in this caption. The cost of wood is transferred to production cost when the wood is harvested. The cost of wood harvested is determined based on the specific cost of each plantation attributed to each harvesting, which also includes the costs incurred on each plantation since the last harvesting. The Group records, as costs of the period, the accumulated cost of plantations, maintenance and administrative expenses in proportion to the area harvested during the period.

The Board of Directors decided not to record the biological assets at their its value for considering that,

bearing in mind the type of assets being evaluated, the computation depends on assumptions which might not be accurately determined and consequently the fair value might not be reliably measured. However, the Board of Directors believes, based in some indicators, that the acquisition cost of the biological assets is close to its fair value.

i) Provisions

Provisions are recognised when, and only when, the Group has an obligation (legal or constructive) arising from a past event, it is probable that an outflow of resources will be required to settle the obligation, and a reliable estimate can be made of that obligation. Provisions are reviewed and adjusted at each balance sheet date to reflect the best estimate as of that date.

Restructuring provisions are recorded by the Group whenever a formal and detailed restructuring plan exists and has been communicated to the involved parties.

j) Pension complements

Some Group companies have assumed commitments to provide pension complements to employees retiring due to age or disability. To cover these liabilities there have been created autonomous pension funds, which annual charges, computed in accordance with actuarial analysis, are recorded in the statement of profit and loss in accordance with IAS 19 – “Employee benefits”. These liabilities were calculated under the “Projected unit credit method” under the actuarial and financial assumptions deemed to be the most adequate (Note 29).

k) Financial instruments

i) Investments

Investments held by the Group are divided into the following categories:

Investments held to maturity, are classified as non-current assets unless they mature within 12 months of the balance sheet date. The investments classified as held to maturity are non-derivative assets with defined or determinable payment dates, have defined maturity and the Group has the intention and ability to maintain them until the maturity date.

Investments measured at fair value through profit and loss are classified as current assets. The purpose of these investments is to obtain short term profits.

Investments available for sale are all the other investments that are not classified as held to maturity or

measured at fair value through profit and loss, being classified as non current assets.






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Investments are initially measured at cost, which is the fair value of the price paid, including transaction costs if related with held to maturity and available for sale investments. Investments available for sale and investments measured at fair value through profit and loss are subsequently measured at fair value by reference to the market value at the balance sheet date without any deduction for transaction costs which may be incurred until its sale. Investments in equity instruments which are not listed on a stock exchange market and whose fair value cannot be reliably measured are stated at cost net of impairment losses. Investments held to maturity are recorded at amortised cost, using the effective interest method.

Gains or losses arising from a change in the fair value of available for sale investments are recognised under the equity caption “Fair value reserve” included in caption “Other reserves”, until the investment is sold or disposed, or until it is determined to be impaired, at which time the cumulative loss previously recognised in equity is transferred to profit and loss account for the period.

All purchases and sales of investments are recorded on its trade date, independently of the liquidation date.

ii) Accounts receivable

Receivables from “customers” and “other debtors” are stated at nominal value less impairment losses so that those receivables reflect its net realisable value.

Impairment is recognised if there is objective and measurable evidence that, as a result of one or more

events that occurred, the balance will not be fully received. Therefore, each group company takes into consideration market information which shows the client default in their responsibilities’, as well as historic information on outstanding debts not received.

Recognized Impairment losses equals to the difference between the nominal value of the receivable

balance and the correspondent present value of future estimated discounted cash-flows at the initial effective interest rate; when the payment is expected to occur in a period less than a year, the rate is considered null.

iii) Loans and non-current payable accounts Loans are recorded as liabilities at nominal value, net of up-front fees and commissions directly related

to the issuance of those instruments. Financial expenses are calculated based on the effective interest rate and are recorded in the statement of profit and loss on an accrual basis. The portion of the effective interest charge relating to up-front fees and commissions, if not paid in the period, is added to the book value of the loan.

Assets and liabilities are compensated and presented for its net amount as long as there is the right for

compulsory fulfilment of compensation and the Board of Directors intends to realise them on a net basis or realise the asset and simultaneously settle the liability.

iv) Accounts payable Non interest bearing accounts payable are stated at nominal value, once the discount effect is

immaterial.






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v) Derivatives

Altri uses hedge derivatives for the management and hedging of its financial risks not being used for the purpose of trading.

Derivatives classified as cash flow hedge instruments are used by the Group mainly to hedge interest rate fluctuation, exchange rate and to fix pulp price. The index, the computation conventions, the interest rate hedging instruments are similar to the ones established for the underlying loans and therefore are qualified as perfect hedging. The derivatives most used by the Group are the price indexations of pulp using future contracts.

The Group’s criteria for classifying a derivative instrument as a cash flow hedge instrument are:

- the hedge transaction is expected to be highly effective in offsetting changes in cash flows

attributable to the hedged risk; - the effectiveness of the hedge can be reliably measured; - there is adequate documentation of the hedging relationships at the inception of the hedge; - the forecasted transaction that is being hedged is highly probable.

The cash flow hedge instruments are recorded at its fair value. Changes in the fair value of these instruments are recorded in assets or liabilities, against the corresponding entry under the equity caption “Hedging reserves”, and transferred to the statement of profit and loss when the operation subjected to hedging affects the net profit.

The determination of the fair value of these financial instruments is made with informatic systems of derivative instruments valuation and had, on its basis the actualization, for the balance sheet date, of the future fix and variable leg cash flows of the derivative instrument.

Hedge accounting of derivative instruments is discontinued when the instrument matures or is sold. Whenever a derivative instrument can no longer be qualified as a hedging instrument, the fair value differences recorded and deferred in equity under the caption “Hedging reserves” are transferred to profit and loss of the period or to the carrying amount of the asset that resulted from the hedged forecast transaction. Subsequent changes in fair value are recorded in the income statement. When embedded derivatives exist, they are accounted for as separate derivatives when the risks and the characteristics are not closely related to economic risks and characteristics of the host contract and when these are not stated at fair value with gains and losses not realizable are recorded in the profit and loss statement. When derivative instruments, although specifically contracted to hedge financial risks, do not fulfil the requirements listed above to be classified and accounted as hedge instruments, the changes in fair value are directly recorded in the profit and loss statement, as financial results.

vi) Financial liabilities and Equity instruments

Financial liabilities and equity instruments are classified and accounted for based upon its contractual substance. Equity instruments are those that represent a residual interest upon the Group’s net assets and are recorded by the amount received, net of costs incurred with its issuance.






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vii) Own shares Own shares are recorded at acquisition cost as a deduction to equity captions. Gains or losses on its

sale are recorded in the equity caption “Other reserves” not affecting the project and loss statement for the period.

viii) Discounted bills and accounts receivable transferred to factoring companies

Only when the assets´ cash flows contractual right has expired or when the risks and benefits inherent to those assets property are transferred to a third entity the Group derecognise the financial assets of its financial statements. If the Group retains substantially the risks and benefits inherent to the property of such assets, the Group continues to recognize them in its financial statements, by recording in the caption “Loans” the monetary counterparty for the conceded assets. In consequence, the costumers balances formed by non outstanding discounted bills and accounts receivable transferred to factoring companies as of the balance sheet date, with exception of the non-appealing factoring operations are recognized in the Group’s financial statements until the moment of its collection.

ix) Cash and cash equivalents

Cash and cash equivalents include cash on hand, cash at banks on demand and term deposits and other treasury applications which reach maturity within less than three months and may be mobilized without significant risk of change in value.

For purposes of the consolidated statement of cash flows, “Cash and cash equivalents” caption also includes bank overdrafts, which are included in the balance sheet caption “Bank loans”.

x) Assets classified as held for sale or in discontinuation

The assets and liabilities are classified as held for sale or in discontinuation, when their realization is made not by its use but by its sale. The Group classifies assets and liabilities in this caption when exists a high probability of its sale becomes effective and the assets and liabilities are available for immediate sale. The Board of Directors is committed in the sale of the assets and liabilities recorded in this caption, and is their understanding that this sale will be completed in the next twelve months.

The assets classified as held for sale or in discontinuation are valued at the lower of its accounting value at the date of the sale decision and its fair value deducted of their selling costs.

l) Contigent assets and liabilities

Contingent assets are possible assets arising from past events and whose existence will be confirmed, or not, by uncertain future events not controlled by the Company.

Contingent assets are not recorded in the consolidated financial statements but only disclosed when the

existence of future economic benefits is likely. Contingent liabilities are defined by the Company as (i) possible obligations that arise from past events and

which existence will be confirmed, or not, by one or more occurrences of uncertain future events not controlled by the Company, or (ii) present obligations that arise from past events but that are not recorded because it is unlikely that an outflow of resources occurs to settle the obligation or the obligation amount can not be reliably measured.






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Contingent liabilities are not recorded in the consolidated financial statements, being disclosed, unless the

probability of a cash outflow is remote, in which case no disclosure is made.

m) Income tax Income tax for the period is determined based on the taxable results of the companies included in the

consolidation and takes into consideration deferred taxation. Current income tax is determined based on the taxable results of the companies included in the

consolidation, in accordance with tax regulations in force at the location of the head office of each Group company, considering the annual estimated income tax rate.

For some of the companies included in the consolidation of Altri Group by the full consolidation method, the

income tax is determined in accordance with article 63 of the Corporate Income Tax Code (Código do Imposto sobre o Rendimento das Pessoas Colectivas), under the special regime of taxation of groups of companies.

Deferred taxes are computed using the balance sheet liability method and reflect the timing differences

between the amount of assets and liabilities for accounting purposes and the correspondent amounts for tax purposes. Deferred taxes are computed using the tax rate that is expected to be in force at the time these temporary differences are reversed.

Deferred tax assets are only recorded when there is reasonable expectation that sufficient taxable profits

will arise in the future to allow such deferred tax assets to be used. At the end of each period the company reviews its recorded and unrecorded deferred tax assets which are reduced whenever its realisation ceases to be likely, or recorded if it is likely that taxable profits will be generated in the future to enable its recovery.

Deferred tax assets and liabilities are recorded in the statement of profit and loss, except if they relate to

items directly recorded in equity. In these cases the corresponding deferred tax is recorded in the same equity captions.

n) Income recognition and accrual basis

Revenue arising from the sale of goods is recognised in the consolidated income statement when (i) the risks and benefits have been transferred to the buyer, (ii) the company retains neither continued management involvement in a degree usually associated with ownership nor effective control over the goods sold, (iii) the amount of the revenue can be measured reasonably, (iv) it is likely that the economic benefits associated with the transaction will flow to the Company, and (v) the costs incurred or to be incurred related with the transaction can be reliably measured. Sales are recorded net of taxes, discounts and other expenses arising from the sale, and are measured at the fair value of the amount received or receivable.

Dividends are recognised as income in the period its distribution is approved.

All other income and expenses are recognised in the period to which they relate, independently of when the amounts are received or paid. Differences between the amounts received and paid and the corresponding income and expenses are recorded in the captions “Other current assets”, “Other current liabilities”, “Other non current assets” and “Other non current liabilities”. When the actual amount of income or expenses is yet unknown, these are recorded based on the best estimate of the Board of Directors of the Group companies.

o) Balances and transactions expressed in foreign currencies

All assets and liabilities expressed in foreign currencies were translated to Euro using the exchange rates in force on the balance sheet date.






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Favourable and unfavourable exchange differences arising from changes in the exchange rates between those prevailing on the dates of the transactions and those in force on the dates of payment, collection or as of the balance sheet date are recorded in the consolidated statement of profit and loss, except the ones related to non monetary values which fair value variation be directly recorded in equity.

p) Subsequent events

Post balance sheet date events that provide additional information about conditions that existed at the balance sheet date (“adjusting events”), are reflected in the consolidated financial statements. Post balance sheet date events that provide information about conditions that have only arise after the balance sheet date are considered “non adjusting events” and are disclosed in the notes to the financial statements, if material.

q) Segment information

In each period, the Company identifies the most adequate segment division taking into consideration the

business areas in which the Group is present. At the moment, Altri Group has only one business segment (production and commercialization of bleached

paper pulp from eucalyptus) for which the internal report of segmental information is analyzed under this assumption.

r) Jugments and estimates

In preparing the consolidated financial statements in accordance with IAS / IFRS, the Group's Board of Directors has adopted certain assumptions and estimates that affect the reported assets and liabilities and income and expenses incurred for the periods reported. All estimates and assumptions made by the Board were made based on your best knowledge existing at the date of approval of the financial statements, events and transactions in progress.

The most significant accounting estimates reflected in the consolidated income statements include:

a) Useful lives of the tangible and intangible fixed assets; b) Impairment analysis of goodwill and of other tangible and intangible fixed assets; c) Recognition of impairment on assets, namely inventory and account receivables, and provisions; d) Pension Fund responsabilities calculation; and e) Fair value of Derivative Financial Instruments.

Estimates used are based on the best information available during the preparation of consolidated financial

statements and are based on best knowledge of past and present events. Although future events are neither controlled by the Group nor foreseeable, some could occur and have impact on the estimates. Changes to the estimates used by the management that occur after the date of these consolidated financial statements, will be recognised in net income, in accordance with IAS 8, using a prospective methodology.

2.4 FINANCIAL RISK MANAGEMENT

Altri´s Group is exposed essentially to the: (i) market risk; (ii) liquidity risk and (iii) credit risk. The main objective of the Board of Directors, on what risk management concerns, is to reduce these risks to a level considered acceptable for the development of the Group activities. The guiding lines of the risk management policy are defined by Altri´s Board of Directors, which determines the acceptable risk limits. The operational concretization of the risk management policy is made by the Board of Directors and by the management of each participated company.






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a) Market risk At this level of market risk, a particular importance is given to interest rate risk, exchange rate risk and variability of the commodities’ price risk. The Group uses derivative instruments on the management of their market risks which is exposed as a way of ensure its hedging and does not use derivative instruments with the objective of negotiation or speculation.

i) Interest rate risk The exposure of the Group to interest rate results of the long term loans constituted, mainly, by debt indexed to Euribor. The Group objective is to limit the cash-flows and results volatility according to its operational activity through the utilization of an adequate combination of fix and variable tax debt. The Group policy allows the use of interest rate derivatives in order to obtain a reduction of the exposure to Euribor variations and not to speculative transactions. Most derivative instruments used by the Group in interest rate management are defined as cash-flow hedging instruments as these configure perfect hedging relations. The index, the computation conventions, the interest rate hedging instruments are similar to the ones established for the underlying loans. Nevertheless, there are some derivative instruments which, although have been contracted with the hedging interest risk objective, do not match with the requirements above defined for the hedging instruments classification. ii) Exchange rates risk The Group is exposed to exchange rates risk in transactions related with the finished goods sales in international markets with different currency from Euro. Whenever the Board of Directors considers necessary to reduce the volatility of their results to the variability of exchange rates the exposition is managed trough forwards programs or other exchange rates derivatives. As of 31 December 2009 and 2008 the balances expresses in USD are as follow:

31.12.2009 31.12.2008

Accounts receivable 9,638,145 6,605,312Accounts payable 25,786 7,223Bank deposits 3,227,680 304,997

12,891,611 6,917,532

The Board of Directors considers that eventual changes in exchange rates do not have a significant effect in the consolidated financial statements.

iii) Variability risk on commodities price By developing its activity in a commodity transactional industry (paper pulp), the Group is particularly exposed to its price fluctuations, with the correspondent impacts in their results. However, in order to manage this risk, paper pulp price fluctuations hedging contracts were celebrated by the adequate amounts by the foreseen operations, reducing the volatility of its results.






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b) Liquidity risk

The purpose of liquidity risk management is to ensure, at all times, that the Group has the financial capacity to fulfil its commitments as they become due and to carry on its business activities and strategy trough an adequate financing maturities management. The Group prosecutes an active refinancing policy distinguished by the maintenance of high free and immediate available resources to face short term necessities and the extension or sustenance of the debt maturity in accordance with the predicted cash flows and the Balance leverage capability. The liquidity analysis’ for financial instruments is disclosed next to the respective note to each financial liabilities class. c) Credit risk The Group is exposed to the credit risk in its current operational activity. This risk is controlled trough a collecting information system of financial and qualitative information provided by recognized entities that supply information of risks, which allow the assessment of the clients’ viability in the fulfilment of their obligations in order to reduce the credit concession risk. The amounts presented in the balance sheet are net of accumulated impairment losses to doubtful debts which were estimated by the Group; as a result these assets are presented at fair value. The risk credit is limited by the risk concentration management and a strict selection of counterparts as well as the contracting of credit insurances’ to specialized institutions which ensure a significant part of the conceded credit in result of the activity developed by the Group.

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.






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4. INVESTMENTS 4.1 INVESTMENTS IN GROUP COMPANIES

The companies included in the consolidated financial statements by the full consolidation method, its headquarters, percentage participation held and main activity as of 31 December 2009 and 2008, are as follows:

Company Head Office Percentage Held Activity2009 2008

Mother - companyAltri, SGPS, S.A. Porto Investment management

Caima / Celtejo / Celbi group:

Celulose do Caima, SGPS, S.A. Lisbon 100% 100% Investment management

Caima Indústria de Celulose, S.A. Lisbon 100% 100% Production and commercialisation of pulp

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

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

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

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

Sócasca – Recolha e Comércio de Recicláveis, S.A. Águeda 100% 100% Commercialisation of recycled products

Celtejo – Empresa de Celulose do Tejo, S.A. Vila Velha de Ródão 99.83% 99.59% Production and commercialisation of pulp

CPK – Companhia Produtora de Papel Kraftsack, S.A. (b) Vila Velha de Ródão 99.83% 99.59% Production and commercialisation of paper

Altri - Energias Renováveis, SGPS, S.A. Lisbon 99.83% 99.59% Investment management

Sosapel – Sociedade Comercial de Sacos de Papel, Lda. Vila Velha de Ródão 99.83% 99.59% Commercialisation of pulp

Celbi – Celulose da Beira Industrial, S.A. Figueira da Foz 100% 100% Production and commercialisation of pulp

Celbinave – Tráfego e Estiva SGPS, Unipessoal, Lda. Figueira da Foz 100% 100% Freightage of ships

Viveiros do Furadouro Unipessoal, Lda. Óbidos 100% 100% Production of plants in nurseries and services related with forests and landscapes

Altri, Participaciones Y Trading, S.L. Madrid, Spain 100% 100% Investment management

Altri Sales, S.A. Nyon, Switzerland 100% 100% Commercialisation of pulp

Pedro Frutícola, Sociedade Frutícola, Lda. Constância 100% 100% Agriculture production

Captaraíz Unipessoal, Lda. Lisbon 100% 100% Property bying and selling

Ramada group

F. Ramada – Aços e Indústrias, S.A. Ovar - (a) Steel commercialisation

F. Ramada – Produção e Comercialização de Estruturas Metálicas de Armazenagem, S.A. Ovar - (a) Production and commercialisation of storage systems

F. Ramada II, Imobiliária, S.A. Ovar - (a) Real Estate

F. Ramada, Serviços de Gestão, Lda. Ovar - (a) Administration and management services

Universal Afir - Aços, Máquinas e Ferramentas, S.A. Porto - (a) Steel commercialisation

BPS – Equipements, S.A. Paris, France - (a) Commercialisation of storage systems

Storax Racking Systems, Ltd. Bromsgrove, UK - (a) Commercialisation of storage systems

Storax Benelux, S.A. Belgium - (a) Commercialisation of storage systems

(a) – company merged in 2008 (Note 5); (b) – company whose assets and liabilities were classified in 2008 as "in discontinuation” (Note 4.5);

All the above companies were included in the consolidated financial statements in accordance with the full consolidation method, as established in Note 2.2.a).






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4.2 INVESTMENTS IN ASSOCIATED COMPANIES The associated companies, percentage of capital held and main activity as of 31 December 2009 and 2008 are

as follows:

Company Percentage held Activity2009 2008

EDP – Produção Bioeléctrica, S.A. 50% 50% Energy production and trading

Operfoz – Operadores do Porto da Figueira da Foz, Lda. 33.33% 33.33% Harbor operations

Ródão Power - Energia e Biomassa do Ródão, S.A. (a) 50% 50% Energy production and trading (a) - company partially sold on 2008 to the associated company EDP – Produção Bioeléctrica, S.A.

These associated companies were included in the consolidated financial statements in accordance with the equity method, as explained in Note 2.2b).

The book value, share capital and net profit for the year ended on 31 December 2009 for these associated companies were as follows:

Company Book value (a) Asset Equity Net profit

EDP – Produção Bioeléctrica, S.A. 10,239,435 160,583,469 4,570,252 (420,031)

Operfoz – Operadores do Porto da Figueira da Foz, Lda. 270,479 3,685,908 811,437 76,154

Ródão Power - Energia e Biomassa do Ródão, S.A. - 21,355,336 (75,099) (114,739)

10,509,914

(a) – includes loans conceded.

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

4.3 INVESTIMENTS AVAILABLE FOR SALE As of 31 December 2009 and 2008 the investments available for sale and their book value as of that date, were

as follows:

2009 2008

Buildings 671,546 737,522Others 42,808 42,808

714,354 780,330

Book value

Altri Group believes that there is no significant differences between accounting and just values of these

investments available for sale. 4.4 INVESTMENTS RECORDED AT FAIR VALUE TROUGH PROFIT AND LOSSES

The amount included in the caption “Investments recorded at fair value through profit and loss” as of 31 December 2009 and 2008 refers to shares of companies listed in stock exchange markets and are recorded in accordance with its market value as of that date, because they were acquired with intention of selling in short-run.






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4.5 ASSETS CLASSIFIED AS HELD FOR SALE OR IN DISCONTINUATION

In the end of December 2008 the industrial paper unit of CPK - Companhia Produtora de Papel Kraftsack, S.A, was closed so its assets and liabilities, as of 31 December 2009 and 2008 were classified as in discontinuation (net from intragroup operations) which are recorded according to the accounting policy described in Note 2.3 k) x). The detail of assets and liabilities from CPK in discontinuation as of 31 December 2009 and 2008 are as follow:

31.12.2009 31.12.2008Tangible fixed assets - 2,516,063Intangible assets - 3,194Inventories - 5,827,543Customers 680,334 4,419,345Other debtors 15,424 806,842Other current assets - 1,542Cash and cahs equivalents - 1,500Assets classified as in discontinuation 695,758 13,576,029

Provisions (49,500) (3,400,000)Suppliers (125,195) (1,728,199)Other payables (1,017) (101,799)Other current liabilities - (628,216)Liabilities associated with assets classified as in discontinuation (175,712) (5,858,214)

Assets net from liabilities in discontinuation 520,046 7,717,815

During the year ended 31 December 2009 the net profit of CPK – Companhia Produtora de Papel Kraftsack, S.A. (net from intragroup operations) amounted to 1,022,943 Euro ((752,764) Euro as of 31 December 2008), which is presented in the Income Statement caption “Profit for the year from discontinued operations”.

5. CHANGES IN THE GROUP COMPANIES

During 2009, Altri Group has acquired an additional percentage of 0,232% in Celtejo Group capital, for an amount of 92,887 Euro, which was fully paid (Note 41).

At 16 April 2008 was signed the F. Ramada – Aços e Indústrias, S.A. demerger public deed. Under the terms of the 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. The demerger process originated the constitution of a new company, F. Ramada – Investimentos, SGPS, S.A. (“Ramada Investimentos”) and the relevant date for the production of effects of this operation was 1 June 2008, the date when F. Ramada – Aços e Indústrias, S.A. (“F. Ramada - Aços”) and its subsidiaries were no longer included in the consolidated financial statements of Altri, SGPS, S.A. As a consequence of the demerger process, F. Ramada – Aços and its subsidiaries contributes during five months to the consolidated income statement of Altri, SGPS, S.A., have been classified as Discontinued Operations, according to IFRS 5 – Non Current Assets Held For Sale and Discontinued Operations.






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The impacts of the Ramada – Aços and its subsidiaries’ net assets demerger process on the consolidated balance sheet on the 1st of June 2008 (Demerger date) were as follows:

Demerger dateTangible and intangible assets (Notes 7 e 9) 84,899,532Goodwill (Note 8) 2,199,238Deferred tax assets (Note 11) 2,681,528Inventories (b) 42,408,422Derivatives 626,696Cash and cash equivalents 39,668,476Other assets (a) 94,587,310Loans (110,070,311)Provisions (Note 21) (137,084)Deferred tax liabilities (Note 10) (401,714)Other liabilities (116,987,460)Total demerged 39,474,633

The impacts of the demerger process on the consolidated income statement at the demerger date were as follows:

Demerger dateSales and services rendered 49,278,067Other operating income 521,685Cost of sales (26,972,174)Other operating expenses (19,489,828)Financial loss (1,556,007)Income before tax 1,781,743Income tax (470,208)Net profit 1,311,535

(a) – The amount of the caption “Other assets” is net of impairment losses in investments of 85,886 Euro and impairment losses in other current assets of 17,071,176 Euro (Note 21). (b) – The net amount of the caption “Inventories” corresponds to a gross amount of 42,781,708 Euro (Note 10) and to impairment losses in inventories of 373,286 Euro (Note 21). Additionally, during 2008 the Group acquired the remaining 20% of the share capital of Sosapel – Sociedade Comercial de Sacos de Papel, Lda., for 2,000 Euro which was fully payed, as well as an additional percentage of 0.013% of Celtejo Group share capital for 5,539 Euro which was also fully payed. During 2008 it was made an additional payment of 810,763 Euro (Note 8) for the correction of the purchase price of Celbi, in August 2006, related to the receiving of a subsidy.






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6. FINANCIAL INSTRUMENTS BY CLASS

Financial instruments, according to the policies described in Note 2.3.k), were classified as follow:

31 December 2009 Note Loans and receivables Available for sale Derivates

Assets recorded at fair value through

profit and lossTotal

NON CURRENT ASSETS:Investments available for sale 4.3 - 714,354 - - 714,354

- 714,354 - - 714,354

CURRENT ASSETS:Customers 12 69,602,593 - - - 69,602,593Other debtors 13 6,982,879 - - - 6,982,879Derivatives 27 - - - - -Investments recorded at fair value through profit and loss 4.4 - - - 602,670 602,670Cash and cash equivalents 16 80,261,966 - - - 80,261,966

156,847,438 - - 602,670 157,450,108

156,847,438 714,354 - 602,670 158,164,462

31 December 2008 Note Loans and receivables Available for sale Derivates

Assets recorded at fair value through

profit and lossTotal

NON CURRENT ASSETS:Investments available for sale 4.3 - 780,330 - - 780,330

- 780,330 - - 780,330

CURRENT ASSETS:Customers 12 57,819,150 - - - 57,819,150Other debtors 13 14,749,641 - - - 14,749,641Derivatives 27 - - 12,546,735 - 12,546,735Investments recorded at fair value through profit and loss 4.4 - - - 747,450 747,450Cash and cash equivalents 16 74,300,279 - - - 74,300,279

146,869,070 - 12,546,735 747,450 160,163,255

146,869,070 780,330 12,546,735 747,450 160,943,585

31 December 2009 Note Financial liabilities Derivatives Sub-total Liabilities not

covered by IFRS 7 Total

Bank loans 20 149,913,243 - 149,913,243 - 149,913,243Other loans 20 612,519,785 - 612,519,785 - 612,519,785Other non current creditors 22 339,766 - 339,766 - 339,766Other non current liabilities 23 22,500,000 - 22,500,000 1,601,086 24,101,086

785,272,794 - 785,272,794 1,601,086 786,873,880

Bank loans 20 46,559,986 - 46,559,986 - 46,559,986Other loans 20 109,171,440 - 109,171,440 - 109,171,440Suppliers 24 65,999,089 - 65,999,089 - 65,999,089Other current creditors 25 10,779,891 - 10,779,891 - 10,779,891Derivatives 27 - 18,213,114 18,213,114 - 18,213,114

232,510,406 18,213,114 250,723,520 - 250,723,520

1,017,783,200 18,213,114 1,035,996,314 1,601,086 1,037,597,400

31 December 2008 Note Financial liabilities Derivatives Sub-total Liabilities not covered by IFRS 7 Total

Bank loans 20 150,015,292 - 150,015,292 - 150,015,292 Other loans 20 521,270,017 - 521,270,017 - 521,270,017 Other non current creditors 22 491,190 - 491,190 - 491,190 Other non current liabilities 23 - - - 1,513,306 1,513,306

671,776,499 - 671,776,499 1,513,306 673,289,805

Bank loans 20 51,886,464 - 51,886,464 - 51,886,464 Other loans 20 110,996,123 - 110,996,123 - 110,996,123 Suppliers 24 58,901,992 - 58,901,992 - 58,901,992 Other current creditors 25 70,905,701 - 70,905,701 - 70,905,701 Derivatives 27 - 6,059,446 6,059,446 - 6,059,446

292,690,280 6,059,446 298,749,726 - 298,749,726

964,466,779 6,059,446 970,526,225 1,513,306 972,039,531

NON CURRENT LIABILITIES:

NON CURRENT LIABILITIES:

CURRENT LIABILITIES:

CURRENT LIABILITIES:






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Financial instruments recognized at fair value The following table details the financial instruments are measured at fair value after initial recognition, grouped

into three levels according to the degree to which the fair value observable: Level 1: fair value is measured based on quoted prices of assets; Level 2: fair value is measured based on valuation techniques. The main inputs of the valuation models are

observable in the market; Level 3: fair value is measured based on valuation models, whose main inputs are not observable in the market.

Level 1 Level 2 Level 3 Level 1 Level 2 Level 3Financial assets recorded at fair value

Investiments (Note 4.4) 602,670 - - 747,450 - -Derivatives - - - - 12,546,737 -

602,670 - - 747,450 12,546,737 -Financial liabilities recorded at fair value

Derivatives (Note 27) - 18,213,114 - - 6,059,446 -- 18,213,114 - - 6,059,446 -

31.12.2009 31.12.2008

7. TANGIBLE FIXED ASSETS

During the years ended 31 December 2009 and 2008, the movement occurred in tangible fixed assets and the corresponding accumulated depreciation, was as follows:

2009

Gross assets

Land and natural resources

Buildings and other constructions

Plant and machinery Vehicles Tools Office equipment Other tangible assets Work in progress

Advances on account of fixed assets Total

Opening Balance 24,129,116 103,721,619 631,291,226 4,032,919 3,643,969 10,892,211 10,149,053 283,489,676 3,295,555 1,074,645,344Additions 1,819,873 2,124,793 17,342,341 135,479 18,480 655,990 199,462 68,613,365 - 90,909,783Disposals and write-offs (43,941) (171,036) (86,552,322) (68,649) (1,135,049) (381,262) (181,109) - - (88,533,368)Transfers 1,569,677 2,164,839 165,148,389 - - 453,374 12,834 (169,247,047) (26,250) 75,816

Closing balance 27,474,725 107,840,215 727,229,634 4,099,749 2,527,400 11,620,313 10,180,240 182,855,994 3,269,305 1,077,097,575

Accumulated deppreciation



Plant and machinery Vehicles Tools Office equipment Other tangible assets Total

Opening Balance 5,668,417 81,048,389 489,545,992 2,671,166 3,532,032 9,797,349 9,241,810 601,505,155Additions 375,016 2,006,790 34,911,724 315,363 40,038 788,329 374,904 38,812,164Disposals and write-offs - (171,036) (86,434,756) (54,292) (1,135,049) (380,887) (181,109) (88,357,129)Transfers and write-offs - - - - - - - -

Closing balance 6,043,433 82,884,143 438,022,960 2,932,237 2,437,021 10,204,791 9,435,605 551,960,190

21,431,292 24,956,072 289,206,674 1,167,512 90,379 1,415,522 744,635 182,855,994 3,269,305 525,137,385

2008Gross assets



Plant and machinery Vehicles Tools Office equipment Other tangible assets Work in progress

Advances on account of fixed assets Total

Opening Balance 90,049,788 112,550,957 594,921,277 7,351,968 4,420,896 13,834,867 10,055,506 98,297,789 7,532,931 939,015,979Changes in demerged activities untill demerge date 13,973,510 (69,197) (60,182) (62,305) (49,317) (100,300) 325,622 492,716 - 14,450,547Changes in the group - demerge (Note 5) (78,578,699) (12,729,575) (24,241,511) (3,524,910) (755,798) (3,255,273) (445,620) (836,574) - (124,367,960)Changes in the group - decreases (Note 4.5) - (364,337) (14,040,636) (65,257) (2,924) (29,325) (24,400) - - (14,526,879)Additions 162,254 3,420,127 28,774,424 598,785 31,112 340,494 317,448 229,432,443 - 263,077,087Disposals (1,528,801) (65,612) (283,238) (265,362) - (44,470) (208,019) - - (2,395,502)Transfers 51,064 979,256 46,221,092 - - 146,218 128,516 (43,896,698) (4,237,376) (607,928)

Closing balance 24,129,116 103,721,619 631,291,226 4,032,919 3,643,969 10,892,211 10,149,053 283,489,676 3,295,555 1,074,645,344

Accumulated deppreciation



Plant and machinery Vehicles Tools Office equipment Other tangible assets Total

Opening Balance 5,455,125 88,503,234 498,838,444 5,821,660 4,221,193 12,477,510 8,947,490 624,264,656Changes in demerged activities untill demerge date - 159,628 660,008 (46,370) (15,292) (80,811) 250,857 928,020Changes in the group - demerge (Note 5) - (9,374,385) (22,985,794) (3,214,351) (714,874) (3,066,245) (335,383) (39,691,032)Changes in the group - decreases (Note 4.5) - (74,253) (11,651,498) (19,299) (2,924) (14,647) (24,400) (11,787,021)Additions 214,107 1,873,605 24,918,424 333,498 43,929 578,698 611,265 28,573,526Disposals (815) (39,440) (231,780) (203,972) - (97,156) (208,019) (781,182)Transfers and write-offs - - (1,812) - - - - (1,812)

Closing balance 5,668,417 81,048,389 489,545,992 2,671,166 3,532,032 9,797,349 9,241,810 601,505,155

18,460,699 22,673,230 141,745,234 1,361,753 111,937 1,094,862 907,243 283,489,676 3,295,555 473,140,189






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The most significant values included in the caption “Tangible fixed assets in progress” as of 31 December 2009 and 2008 refer to the following projects:

12/31/2009 12/31/2008Project to expand capacity 179,225,871 278,787,766Mechanical equipment improvement - 3,160,044Other projects 3,630,123 1,541,866

Total 182,855,994 283,489,676

As of 31 December 2009 one major project is in progress: the settlement of the equipment for energy production, related with the increase in the production capacity of Celbi – Celulose da Beira Industrial, S.A., project with the estimated conclusion in 2010 (Note 29). During 2009 and 2008, the financial costs supported by Altri Group with the borrowing for the acquisition of fixed assets related to the expansion of production capacity amounted to 5,559,876 Euro and 8,525,560 Euros, respectively, which were capitalized under the caption "Tangible fixed assets in progress" according to the policy described in Note 2.3 f).

8. GOODWILL

During the years ended 31 December 2009 and 2008, the movement occurred in goodwill and the corresponding impairment losses, was as follows:

Opening Balance as of 01.01.2009 269,323,108Increases 78,202Closing Balance as of 31.12.2009 269,401,310

Opening Balance as of 01.01.2008 270,523,604Increases 998,742Decreases - Demerge effects (Note 5) (2,199,238)Closing Balance as of 31.12.2008 269,323,108

The increases recorded in 2009 are related to additional payments for the acquisition of Sócasca - Recolha e Comércio de Recicláveis, S.A. The increases recorded in 2008 refers to the acquisition of Sócasca - Recolha e Comércio de Recicláveis, S.A. (187,979 Euro) and Celbi – Celulose Beira Industrial, S.A. (810,763 Euro) (Note 5).

Goodwill is not amortised. Impairment tests to Goodwill are made on an annual basis and whenever an event or a change in circumstances that reveals the amount which the related asset is recorded could not be recoverable. Whenever the amount which the asset is recorded is superior to its recoverable amount impairment loss is recognized. The recoverable amount is the highest between the net sale price and the value of use. During 2009 and 2008, there were not recorded or reverted any impairment losses.






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During 2009, in order to analyze the existence or not of impairment on the main goodwill amount that resulted from Celbi - Celulose Beira Industrial, SA acquisition, in the year 2006, amounting to 253,391,251 Euro, the Group evaluated this affiliated company, and concluded that there was no impairment at that goodwill level. That evaluation was based on Celbi’s historical performance and an estimate of discounted cash flows based on a Celbi’s 6 year business plan considering the long term price of paper pulp, not affect by the short term variations. The main assumptions used in this calculation were:

Inflation rate 2,00%

Discount rate 8,62%

Growth rate in perpetuity 2,00% The discount rate net of taxes used was 8.62% and was calculated according to the WACC (Weigthed Average Cost of Capital), considering the following assumptions:

Risk-free interest rate 4,39%

Equity risk premium 6,00%

Debt risk premium 2,00%

Regarding the remaining goodwill amounting to 16,010,059 Euro, in order to analyze the existence or not of impairment losses as of 31 December 2009, the Group made a comparison of net cash flows generated annually by company with the correspondent goodwill, and concluded that there was no impairment.






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9. INTANGIBLE ASSETS During 2009 and 2008, the movement in intangible assets, as well as in the corresponding accumulated

depreciation, was as follows:

2009Gross assets

Installation expenses

Development expenses

Industrial property and other rights Software

Intangible assets in progress Total

Opening balance 48,674 3,619,423 80,873 - 358,487 4,107,457Additions 1,519 30,605 - - 30,456 62,580Disposals - - - - - -Transfers and write-offs - (840,128) 4,110 - (268,921) (1,104,939)

Closing balance 50,193 2,809,900 84,983 - 120,022 3,065,098

Accumulated depreciationInstallation expenses




Opening balance 3,888 3,480,349 84,983 - 3,569,220Additions - 98,964 - - 98,964Disposals - - - - -Transfers and write-offs - (893,208) - - (893,208)

Closing balance 3,888 2,686,105 84,983 - 2,774,976

46,305 123,795 - - 120,022 290,122

2008Gross assets

Despesas de instalação

Despesas de desenvolvimento

Propriedade industrial e outros direitos Software

Activo intangíveis em curso Total

Opening balance 46,018 3,586,299 88,873 491,199 505,922 4,718,311Changes in demerged activities untill demerge date - - - (54,571) - (54,571)Changes in the group - demerge (Note 5) - - - (436,628) - (436,628)Changes in the group - (193,293) (8,000) - (5,934) (207,227)Additions 2,656 94,117 - - 88,276 185,049Disposals - - - - - -Transfers and write-offs - 132,300 - - (229,777) (97,477)

Closing balance 48,674 3,619,423 80,873 - 358,487 4,107,457 Accumulated depreciation

Installation expenses




Opening balance 3,888 3,428,145 80,767 237,890 3,750,690Changes in demerged activities untill demerge date - - - (23,866) (23,866)Changes in the group - demerge (Note 5) - - - (214,024) (214,024)Changes in the group - (185,050) (5,778) - (190,828)Additions - 237,254 9,994 - 247,248Disposals - - - - -Transfers and write-offs - - - - -

Closing balance 3,888 3,480,349 84,983 - 3,569,220

44,786 139,074 (4,110) - 358,487 538,237






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10. BIOLOGICAL ASSETS AND INVENTORIES As of 31 December 2009 and 2008, the amount recorded in the caption “Biological assets” relates to the

plantations and related charges held by the Group and can be detailed as follows:

31.12.2009 31.12.2008Biological assets 80,866,853 76,259,437Accumulated impairment losses in biological assets (Note 21) (380,006) (380,006)

80,486,847 75,879,431

As of 31 December 2009 and 2008 the caption “Inventories” was made up as follows:

31.12.2009 31.12.2008Raw, subsidiary and consumable materials 23,006,154 33,592,703Sub-products and others - 58,380Work in progress 390,629 387,955Finished and intermediate goods 19,080,657 30,879,007

42,477,440 64,918,045Accumulated impairment losses (Note 21) (4,589,518) (7,304,757)

37,887,922 57,613,288

The cost of sales for the period ended 31 December 2009 amounted to 112,017,763 Euro and was computed as follows:

MerchandiseRaw, subsidiary and

consumable materials Sub-products Finished and

intermediate goods Work in progress Biological assets Total

Opening balance - 33,592,703 58,380 30,879,007 387,955 76,259,437 141,177,482Purchases 1,368,108 93,559,825 - - - - 94,927,933Inventory adjustment - 1,010 - (313,574) - (430,795) (743,359)Closing balance - (23,006,154) - (19,080,657) (390,629) (80,866,853) (123,344,293)

1,368,108 104,147,384 58,380 11,484,776 (2,674) (5,038,211) 112,017,763

The cost of sales for the period ended 31 December 2008 amounted to 79,542,865 Euro and was computed as follows:

MerchandiseRaw, subsidiary and

consumable materials Sub-products Finished and

intermediate goods Work in progress Biological assets Total

Opening balance 17,911,343 30,621,230 54,773 19,363,928 6,187,993 62,219,275 136,358,542Increases in the demerged activities until demerge 1,740,220 (40,567) 9 (569,666) 7,744,554 - 8,874,550Changes in the group - demerge (Note 5) (19,605,565) (7,480,223) (18) (2,019,149) (13,676,753) - (42,781,708)Changes in the group - sales (Note 4 .5) - (1,301,196) - (2,225,345) - - (3,526,541)Purchases 1,390,381 120,822,048 - - - - 122,212,429Inventory adjustment 176,634 64,467 - (527,718) (130,308) - (416,925)Closing balance - (33,592,703) (58,380) (30,879,007) (387,955) (76,259,437) (141,177,482)

1,613,013 109,093,056 (3,616) (16,856,957) (262,469) (14,040,162) 79,542,865






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11. CURRENT AND DEFERRED TAXES

In accordance with current legislation, tax returns are subject to review and correction by the tax authorities during a four-year period (five years for Social Security), except when there has 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 subsidiary and associated companies for the years 2006 to 2009 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 December 2009 and 2008. The movements occurred in deferred tax assets and liabilities in the years ended in 31 December 2009 and 2008 were as follows:

2009Deferred tax assets Deferred tax liabilities

Opening balance as of 1 January 2009 10,983,234 3,914,691

Effects on income statement:

Increases/(Decreases) of tax losses carried forward 5,969,632 -

Increases/(Decreases) in provisions not accepted for tax purposes (2,087,361) -

Harmonization of depreciation rates 1,665,038 -

Annulement of gains and transactions between group companies (263,402) -

Pension fund (1,006,687) 437,313

Other effects (181,278) (46,112)

Total effect on income statement 4,095,942 391,201

Effect on shareholders' funds:

Fair values of derivatives (Note 27) 2,984,669 (3,324,885)

Closing balance as of 31 December 2009 18,063,845 981,007

2008Deferred tax assets Deferred tax liabilities

Opening balance as of 1 January 2008 11,925,730 1,884,051

Increases in demerged activities untill demerge date 271,316 77,106

Change in the group (Note 5) (2,681,528) (401,714)

Effect on the profit and loss statement:

Increases/(Decreases) in provisions not accepted for tax purposes 1,157,188 -

Harmonization of depreciation rates 1,416,837 -

Annulement of gains and transactions between group companies (1,183,753) -

Other effects 537,059 (150,823)

Total effect on income statement 1,927,331 (150,823)

Effect on shareholders' funds:

Fair values of derivatives (Note 27) (459,615) 2,506,071

Closing balance as of 31 December 2008 10,983,234 3,914,691






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As of 31 December 2009 and 2008 the detail of deferred tax assets and liabilities, in accordance with the timing differences that originated them, were as follows:

31.12.2009 31.12.2008Deferred tax assets Deferred tax liabilities Deferred tax assets Deferred tax liabilities

Provision and impairment losses not accepted for tax purposes 1,866,416 - 3,953,777 -

Tax losses carried forward 5,969,632 - - -

Fair value of derivatives 4,216,732 - 1,037,092 3,324,885

Write-off of tangible assets 306,101 - 327,145 -

Pension fund 148,188 437,313 1,154,875 -

Harmonization of accounting principles 4,471,011 - 2,805,973 -

Annulement of gains and transactions between group companies 1,042,397 - 1,305,799 -

Other 43,368 543,694 398,573 589,806

18,063,845 981,007 10,983,234 3,914,691 According to the legislation in force, the Group uses a deferred tax of 26.5%% in those cases where there is a municipal income tax of 1.5%, except from deferred tax assets that result from tax losses carried forward, when it is used a rate of 25%. On December 31, 2009 were evaluated to recognize deferred taxes resulting from tax losses. In cases that originated deferred tax assets, these were only recorded to the extent that it is probable that taxable profits arising in future and that can be used to recover tax losses or deductible tax differences. On December 31, 2009 there were tax losses carried forward amounting to approximately 4.26 million Euros, of which the deferred tax assets in line with a caution, they are not registered and amounted to approximately 1.065 million Euros in case they were recorded. Income taxes recorded in the profit and loss statement for the years ended 31 December 2009 and 2008 can be detailed as follows:

31.12.2009 31.12.2008

Current income tax 2,938,571 183,545 Deferred income tax (3,704,741) (2,078,154)

(766,170) (1,894,609)

The reconciliation of the Income before Tax to the Income Tax is as follow:

31.12.2009 31.12.2008Profit before tax (12,731,176) 2,262,478 Tax Rate (including maximum and spills) 26.50% 26.50%

(3,373,762) 599,557

Other costs not accepted for tax purposes 2,025,532 2,030,494Failure / (Excess) of estimated tax (462,172) (103,796)Difference between more and less capital gains tax and accounting (154,853) (4,858,494)Update costs of forest holdings (271,789) (1,092,589)Use of tax losses which did not lead to deferred tax assets - (289,387)Effect of existence of different tax rate of up presented 110,606 1,118,305Tax benefits (66,073) (72,173)Other effects 1,426,341 773,474 Income tax (766,170) (1,894,609)






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12. COSTUMERS As of 31 December 2009 and 2008 this caption can be detailed as follows:

31.12.2009 31.12.2008

Costumers, current accounts 70,004,902 58,222,047Costumers, doubtful debts 364,159 347,851

70,369,061 58,569,898Accumulated impairment losses (Note 21) (766,468) (750,748)

69,602,593 57,819,150

The Group’s exposure to credit risk is attributable mainly to the accounts receivable resulting from the Group’s

operating activity. The amounts recorded in the balance sheet are presented net of accumulated impairment losses for doubtful accounts that were estimated by the Group, in accordance with its experience and based on the economical environment evaluation. The Board of Directors believes that the recorded net amounts are close to its fair value; once these accounts receivable do not pay interests and the discount effect is immaterial.

As of 31 December 2009 and 2008, the age of costumer’s balances can be analysed as follow:

31.12.2009 31.12.2008

Not due 49,156,033 32,563,401

Due with no impairment losses recorded 0 - 30 days 4,772,198 8,962,391 30 - 90 days 1,241,146 3,836,399 + 90 days 14,377,166 12,456,959

20,390,510 25,255,749Due with impairment losses recorded 90 - 180 days 56,050 - 180 - 360 days - - + 360 days - -

56,050 -

Total 69,602,593 57,819,150

The Group contracted credit insurances to cover the recoverability risk from these accounts receivables as follow:

31.12.2009 31.12.2008With credit insurance 36,576,094 20,371,976Without credit insurance 33,792,967 38,197,922

70,369,061 58,569,898

Due balances with more than 90 days but with no impairment losses recorded are mainly with companies of F. Ramada Group (Note 31). The Group does not charge any interests as long as defined pay terms (in average 60 days) are respected. Once that period ends, interests are charged in accordance with the contract and the applicable law to each particular situation, which only occurs in extreme situations.






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13. OTHER DEBTORS As of 31 December 2009 and 2008 this caption can be detailed as follows:

31.12.2009 31.12.2008

Advances to suppliers 30,147 244,013Other debtors 7,919,814 15,514,810

7,949,961 15,758,823

Accumulated impairment losses (Note 21) (967,082) (1,009,182)6,982,879 14,749,641

As of 31 December 2009 and 2008 the caption "Other debtors" is, mainly, composed by accounts receivable originated from the disposal of fixed assets and accounts receivable for which were constituted impairment losses.

As of 31 December 2009 and 2008, the age of the balances in “Other Debtors” can be analysed as follow:

31.12.2009 31.12.2008

Not due 3,992,240 12,042,910

Due with no impairment losses recorded 0 - 30 days 49,042 886,383 30 - 90 days - 10,442 > 90 days 2,941,597 1,809,906

2,990,639 2,706,731Due with impairment losses recorded > 360 days - -

6,982,879 14,749,641

The not due balances do not present any sign of impairment, the net accounting value of these assets is considered as being close to its fair value and its financial discount is not material.

14. STATE AND PUBLIC SECTOR

As of 31 December 2009 and 2008 this caption can be detailed as follows:

Debtor balances 31.12.2009 31.12.2008Income tax 2,315,981 4,021,692Retentions 614,796 1,019,410Value added tax 12,707,252 19,377,660Other taxes 5,745 -

15,643,774 24,418,762

Valores credores:Value added tax (2,553,752) (1,727,266)Retentions - IRS dependent work (732,210) (743,291)Social Security contributions (500,916) (567,817)Other taxes (20,004) (24,547)

(3,806,882) (3,062,921)






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15. OTHER CURRENT ASSETS As of 31 December 2009 and 2008 this caption can be detailed as follows:

31.12.2009 31.12.2008436,641 2,875,501

2,427,192 2,400,735Pension fund (Note 29) 1,795,787 -

571,458 465,752Transportation costs paid in advance 89,559 1,080,141Other costs paid in advance 1,227,594 3,305,730

6,548,231 10,127,859

Accrued income:Others

Deferred costs:Rents paid in advance

Insurances paid in advance

16. CASH AND CASH EQUIVALENTS

As of 31 December 2009 and 2008 the caption “Cash and cash equivalents” can be detailed as follows:

31.12.2009 31.12.2008

Cash 24,768 24,911Bank deposits on demand 80,237,198 74,275,368

80,261,966 74,300,279

Bank overdrafts (Note 20) (2,629,166) (1,276,882)

Cash and cash equivalents 77,632,800 73,023,397

On bank overdrafts are considered credit balances in current accounts with financial institutions, included in the

statement of financial position in the caption bank loans (Note 20). 17. OTHER NON CURRENT ASSETS

As of 31 December 2009 and 2008, this caption just includes rents paid in advance.

18. SHARE CAPITAL AND RESERVES

Share Capital

As of 31 December 2009 and 2008 the company’s fully subscribed and paid up capital consisted of 102,565,836 shares with a nominal value of 25 cents of a Euro each.

As of 31 December 2009 and 2008 there were no entities holding more than 20% of the subscribed share

capital.

Legal reserves

As of 31 December 2009, the Company presented the amount of 2,862,981 Euro (1,630,523 Euro as of 31 December 2008) of legal reserves, which can not be distributed to share holders unless the Company closes, although these reserves can be used to absorb losses after all other reserves are over, or incorporated in share capital. Other Reserves

31.12.2009 31.12.2008

Hedging reserves (10,205,900) 7,294,181Other reserves 50,285,291 46,862,442

40,079,391 54,156,623






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The caption “Hedging reserves” reflects the fair value of the derivative financial instruments classified as cash-flows hedging in the effective hedging component, net of the tax effect (Note 27).

19. MINORITY INTERESTS

The amounts of this caption during the years ended 31 December 2009 and 2008 are as follow:

31.12.2009 31.12.2008Opening balance 283,991 274,494

Part acquired to minorities from Celtejo - Empresa de Celulose do Tejo, S.A. (142,573) (9,335)Acquisition of 20% of Sosapel - Sociedade Comercial de Sacos de Papel, Lda. - (28,877)Net profit attributable to minority interests (32,047) 47,709

Closing balance 109,371 283,991

20. BANK LOANS AND OTHER LOANS As of 31 December 2009 and 2008, the captions “Bank loans” and “Other loans” can be detailed as follows:

2009Nominal Value Book Value

Current Non current Total Current Non current Total

Bank loans 44,097,371 150,516,358 194,613,729 43,930,820 149,913,243 193,844,063 Bank overdrafts (Note 16) 2,629,166 - 2,629,166 2,629,166 - 2,629,166

Bank loans 46,726,537 150,516,358 197,242,895 46,559,986 149,913,243 196,473,229

Commercial paper 85,000,000 180,000,000 265,000,000 84,891,974 179,641,980 264,533,954 Bonds 20,500,000 375,000,000 395,500,000 20,338,303 368,872,544 389,210,847 Other loans 3,941,163 64,005,261 67,946,424 3,941,163 64,005,261 67,946,424

Other loans 109,441,163 619,005,261 728,446,424 109,171,440 612,519,785 721,691,225

156,167,700 769,521,619 925,689,318 155,731,426 762,433,028 918,164,454

2008Nominal Value Book Value

Current Non current Total Current Non current Total

Bank loans 50,887,167 150,785,809 201,672,976 50,609,582 150,015,292 200,624,874 Bank overdrafts (Note 16) 1,276,882 - 1,276,882 1,276,882 - 1,276,882

Bank loans 52,164,049 150,785,809 202,949,858 51,886,464 150,015,292 201,901,756

Commercial paper 85,000,000 115,000,000 200,000,000 84,974,531 114,578,800 199,553,331 Bonds 21,500,000 375,000,000 396,500,000 21,236,178 367,814,561 389,050,739 Other loans 4,785,414 38,876,656 43,662,070 4,785,414 38,876,656 43,662,070

Other loans 111,285,414 528,876,656 640,162,070 110,996,123 521,270,017 632,266,140

163,449,463 679,662,465 843,111,928 162,882,587 671,285,309 834,167,896






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Bank Loans In August 2006, the subsidiary Altri, S.L. signed a loan agreement with a bank syndicate amounting to 400,000,000 Euro with the purpose of buying 99.96% of the share capital corresponding to 100% of the voting rights of Celbi. In 2007 this loan suffered an extraordinary amortization of 250,000,000 Euro. Interests are payable half-yearly at the end of the period and capital will be repaid in 5 successive half-yearly instalments, beginning in August 2011. In July 2005 Invescaima, SGPS, S.A. signed a loan agreement with Caixa Geral de Depósitos (CGD) and Caixa Banco de Investimento (CBI) amounting to 30,000,000 Euro with interest payable half-yearly and capital being repaid in 10 successive, equal half-yearly instalments, beginning in January 2007. The remaining amount of the loan not yet reimbursed of 12,000,000 Euro is recorded as “current debt” because of contractual terms that give the banks the option to require early repayment although the Board of Directors is convinced that this early repayment will not be required.

As of 31 December 2009, contracted bank overdrafts amounted to 118 million Euro (121 million Euro as of 31 December 2008) from which were being used 31,842,276 Euro (32,887,167 Euro as of 31 December 2008), classified in the caption “Bank Loans”.

Other Loans

In August 2005 Celulose do Caima, SGPS, S.A. issued a bond loan amounting to 21,500,000 Euro repayable in 6 years which has associated some covenants related with the accomplishment of financial ratios. The due amount (20,500,000 Euro) is recorded as “current debt” because of contractual terms that give the banks the option to require early repayment, although the Board of Directors is convinced that this early repayment will not be required. Celbi – Celulose da Beira Industrial, S.A. issued, in February 2007, a bond loan amounting to 300,000,000 Euro repayable in 8 years until 2015. Interests are payable half-yearly at the end of the period since the subscription date at a rate equal to Euribor 6 months plus a spread. In the first semester of 2008 the Celbi – Celulose da Beira Industrial, S.A. issued two 10 year bond loans, amounting 50,000,000 Euro and 25,000,000 Euro, respectively. These loans have full repayment in 2018. The Group has renewable commercial paper programs in the maximum amount of 265,000,000 Euro as of 31 December 2009 (the same amount as of 31 December 2008), with collocation guarantees subscribed by the several companies. As of 31 December 2009 the amount in use was the maximum (200,000,000 Euro as of 31 December 2008). The amount of 85,000,000 Euro is classified as current liability because, according to the contracts, both parties can terminate the program with a pre-defined warning of 30 to 60 days, although, if the programs are not terminated before its maturity, they will only be repaid in years 2011 and 2013 in the amounts of 25,000,000 Euro, 45,000,000 Euro respectively, and the Board of Directors is convinced that there will be no early terminations from any parts to these commercial paper program.

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 (Note 35). In February 2005, the application of the subsidiary Celtejo to the financial benefits granted by the ”Programa Operacional da Economia – POE” (Operating Economics Program) to finance the expansion and modernization of the industrial unity was approved. The main purpose of this project is to increase the production capacity and establish a better market differentiation of the pine and eucalyptus pulp. This represents an investment of, approximately, 49,464,000 Euro. The financial grant is made up as follows: (i) a repayable benefit up to 14,919,000 Euro; (ii) a success fee similar to a non-repayable benefit with a maximum amount of 14,919,000 Euro that will be deducted to the repayable benefit mentioned in (i); and (iii) a non-repayable grant related with personnel training programs. On December 31, 2009, the balance outstanding on this subsidy amounts to 6,566,438 Euros.






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During 2006 it was submitted an application under the PRIME in the aim of the pulp bleaching on Celtejo unit. This investment had an estimated total amount of 72,000,000 Euro and was concluded in 2008. The financial grant is made up as follows: (i) a repayable benefit up to 15,323,000 Euro; (ii) a success fee similar to a non-repayable benefit with a maximum amount of 12,317,000 Euro that will be deducted to the repayable benefit mentioned in (i). The success fee will be awarded according to the fulfillment degree of the contract, determined in measurements to be made at the end of the years 2010, 2011 and 2013. The repayable financial benefit will be paid by Celtejo in 10 semiannual installments, the first of them at 18 January 2012. Additionally, in January 2007 Altri and Celbi signed a contract for granting financial and tax incentives under Decree-Law no. 203/2003 of 10 September, with AICEP (Agência para o Investimento e Comércio Externo de Portugal, E.P.E.) which the Portuguese Government considered of national interest PIN (Projecto de Interesse Nacional) this project to expand the productive capacity of Celbi. The investment project will run from 1 January 2007 to 30 June 2010 and the contract value is 320,000,000 Euro and the Portuguese Government will grant a financial incentive equal to 16.5% of the eligible expenses. If Celbi complies with the proposed objectives measured at the end of 2009, 2010, 2013 and 2016 the Portuguese Government will give a success fee which will correspond to the the non-repayment of up to 80% of the amount of the repayable incentive. The Portuguese Government will also grant a tax incentive, corresponding to a tax credit amounting to 12% of relevant applications. Until 31 December 2009 Celbi received the amount of 43,898,250 Euro concerning to the repayable incentive, which is recorded under the caption "Other loans". Some loans are subject to "financial covenants" which compliance with these conditions has been analyzed to date of the statement of financial position, not having seen situations with material impact in terms of loans.

In the years ended 31 December 2009 and 2008 the Group sensitivity to the change of the interest rate index of more or less 1 percentual point, measured as variation on Financial Profit, not considering the hedging effects of the derivative financial instruments (Note 27), may be analysed as follow:

31.12.2009 31.12.2008

Interests (Note 35) 22,037,223 34,528,851

Positive change of 1 p.p. in the interest rate applied to the entire indebtedness (9,256,893) (8,431,119)

Negative change of 1 p.p. in the interest rate applied to the entire indebtedness 9,256,893 8,431,119






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The bank loans and other loans reimbursement plan as well as the associated interests are as follow:

31-12-2009

2010 2011 2012 2013 >2014 Total

Bank loansCapital 44,097,371 11,088,640 21,951,247 117,476,471 - 194,613,729 Interests (a) 7,946,079 7,480,663 7,975,265 7,162,540 - 30,564,547

Bank overdraftsCapital 2,629,166 - - - - 2,629,166 Interests (a) 88,945 - - - - 88,945

Commercial paperCapital 85,000,000 36,000,000 36,000,000 36,000,000 72,000,000 265,000,000 Interests (a) 1,940,550 5,706,000 5,644,800 4,640,760 5,061,960 22,994,070

Bond loansCapital 20,500,000 - - - 375,000,000 395,500,000 Interests (a) 9,820,265 12,637,500 15,450,000 16,863,750 47,648,250 102,419,765

Other loansCapital 3,941,163 4,460,257 6,217,165 17,829,483 35,498,356 67,946,424 Interests (a) - - - - - -

TotalCapital 156,167,700 51,548,897 64,168,412 171,305,954 482,498,356 925,689,319 Interests 19,795,839 25,824,163 29,070,065 28,667,050 52,710,210 156,067,327

175,963,539 77,373,060 93,238,477 199,973,004 535,208,566 1,081,756,646

31-12-20082009 2010 2011 2012 >2013 Total

Bank loansCapital 50,887,167 11,111,310 21,998,810 117,500,468 175,221 201,672,976Interests (a) 8,066,919 5,488,603 5,754,589 5,130,660 8,043 24,448,814

Bank overdraftsCapital 1,276,882 - - - - 1,276,882Interests (a) 52,352 - - - - 52,352

Commercial paperCapital 85,000,000 - - 25,000,000 90,000,000 200,000,000Interests (a) 2,507,500 2,978,500 3,530,500 3,806,500 9,558,000 22,381,000

Commercial paperCapital 21,500,000 - - - 375,000,000 396,500,000Interests (a) 13,877,500 11,775,000 13,575,000 14,475,000 42,945,000 96,647,500

Bond loansCapital 4,785,414 3,888,620 6,297,387 6,217,167 22,473,482 43,662,070Interests (a) - - - - - -

TotalCapital 163,449,463 14,999,930 28,296,197 148,717,635 487,648,703 843,111,928 Interests 24,504,271 20,242,103 22,860,089 23,412,160 52,511,043 143,529,666

187,953,734 35,242,033 51,156,286 172,129,795 540,159,746 986,641,594

(a) Considering the available information related to the interest rates evolution and the capital amortisation in the end of each year.






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21. ACCUMULATED PROVISIONS AND IMPAIRMENT LOSSES

The movements occurred in provisions and impairment losses for the years ended 31 December 2009 and 2008 can be detailed as follows:

31-12-2009

Provisions

Impairment losses in accounts receivable (Notes 12 and 13)

Impairment losses in inventories and biological

assets (Note 10)Impairment losses in

investments Total

Opening balance 5,107,335 1,759,930 7,684,763 - 14,552,028Increases 448,408 74,919 405,000 - 928,327Reversals (Note 33) (1,700,000) - - - (1,700,000)Utilizations (1,431,234) (101,299) (3,120,239) - (4,652,772)Transfers - - - - -

Closing balance 2,424,509 1,733,550 4,969,524 - 9,127,583

31-12-2008

Provisions

Impairment losses in accounts receivable (Notes 12 and 13)

Impairment losses in inventories and biological

assets (Note 10)Impairment losses in

investments (Note 4.3) Total

Opening balance (a) 4,817,457 20,398,686 4,365,721 110,882 29,692,746Increases in demerged activities untill demerge date 72,547 589,344 29,489 - 691,380Changes in the group - demerge (Note 5) (137,084) (17,071,176) (373,286) (85,886) (17,667,432)Changes in the group (Note 4.5) (412,916) (200,000) (225,000) - (837,916)Increases 1,367,931 200,000 4,254,757 - 5,822,688Reversals (Note 33) - - (366,918) - (366,918)Utilizations (600,600) (2,156,924) - (24,996) (2,782,520)Transfers - - - - -

Closing balance 5,107,335 1,759,930 7,684,763 - 14,552,028

The increases in impairment losses occurred in the year ended 31 December 2009 and 2008 were recorded

against the caption “Provisions and impairment losses” of the profit and loss statement. The amount recorded under the caption “Provisions”, at 31 December 2009 and 2008, is the best estimate of

the Administration in order to face all the losses that may be supported due to the law suits under trial. 22. OTHER NON CURRENT CREDITORS As of 31 December 2009 and 2008 this caption is made up as follows:

31.12.2009 31.12.2008

Fixed assets' suppliers (Note 30.2) 339,766 491,190

23. OTHER NON CURRENT LIABILITIES As of 31 December 2009 and 2008 this caption is made up as follows:

31.12.2009 31.12.2008

Investment subsidies 1,601,086 1,513,306Other debts 22,500,000 -

24,101,086 1,513,306

On December 31, 2009 the caption "Other debts" refers to an amount payable to Parpública, SGPS, SA which, according to the contractual terms in force, shall be fully liquidated in the year 2011 (Note 25). On December 31, 2009 and 2008 the caption "Investment subsidies" refers to portions of investment subsidies to recognize as income in the medium and long term.






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24. SUPPLIERS As of 31 December 2009 and 2008 this caption is made up as follows:

31.12.2009 0-90 days 90-180days >180 daysSuppliers, current account 58,609,229 34,062,319 235,300 24,311,610Suppliers, invoices in conference 7,389,860 7,389,860 - -

65,999,089 41,452,179 235,300 24,311,610

31.12.2008 0-90 days 90-180days >180 daysSuppliers, current account 51,010,434 35,029,737 246,038 15,734,659Suppliers, invoices in conference 7,891,558 7,891,558 - -

58,901,992 42,921,295 246,038 15,734,659

Payables

Payables

As of 31 December 2009 and 2008 the caption “Suppliers” refers to accounts payable from the normal activities of the Group. Most of the balances with more than 180 days are with companies of F. Ramada Group (Note 31). Board of Directors understands that the book value of these debts is close to its fair value.

25. OTHER CURRENT CREDITORS

As of 31 December 2009 and 2008 the caption “Other current creditors” can be detailed as follows:

31.12.2009 0-90 days 90-180days >180 daysFixed assets suppliers 8,544,318 8,200,679 92,755 250,884Other debts 2,235,573 1,960,979 - 274,594

10,779,891 10,161,658 92,755 525,478

31.12.2008 0-90 days 90-180days >180 daysFixed assets suppliers 33,679,259 30,760,558 825,373 2,093,328Advances on account of sales 471,078 471,078 - -Other debts 36,755,364 36,379,505 - 375,859

70,905,701 67,611,141 825,373 2,469,187

Payables

Payables

The caption “Other debts” includes, as of 31 December 2009, 25,000,000 Euro payable to Parpública, SGPS, S.A. which, in accordance with the current contractual conditions, will be paid in 2011 (Note 23).

26. OTHER CURRENT LIABILITIES As of 31 December 2009 and 2008 the caption “Other current liabilities” can be detailed as follows:

31.12.2009 31.12.2008

Accrued expenses:Amounts payable to employees (3,659,382) (3,694,075)Interest payable (5,868,899) (9,699,807)Pension Fund (Note 29) (559,201) (4,703,443)Rents (1,186,961) (1,146,825)Others (4,925,462) (4,805,398)

Current deferred income:Investment subsidies (3,450,362) (1,770,860)Others (1,105,274) (12,666,902)

(20,755,541) (38,487,310)






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27. DERIVATIVE FINANCIAL INSTRUMENTS

Interest rate derivatives

In order to reduce the exposition to the interest rates volatility, the Group signed interest rates swap contracts and an interest rate collar. These contracts were evaluated by its fair value as of 31 December 2009 and 2008, and the correspondent amount has been recognized under the caption “Derivatives”.

As of 31 December 2009 and 2008 there were established derivatives contracts which total amounts are as follow:

Fair valueTipo Juro 31.12.2009 31.12.2008

Interest rate collar (c) Pays fixed interest rate and receives Euribor 6M (7,567,273) (3,883,723)Interest rate swap (a) Pays fixed interest rate and receives Euribor 3M (913,110) (2,175,723)Interest rate swap (b) Pays fixed interest rate and receives Euribor 6M (1,383,465) -Forward rate agreement (b) Pays fixed interest rate and receives Euribor 6M (196,880) -

(10,060,728) (6,059,446)

(a) Although these contracts were made with the purpose of risk hedging (and not speculation), these

contracts do not fulfill every necessary requirements so they can be classified as hedging (Note 2.3k) v)), and therefore, the variation of its fair value was recorded in the Statements of Profit and Losses in the caption “Gains/losses in derivative instruments” (Note 35).

(b) In accordance with the accounting policies adopted, these derivatives fulfil every requirement to be

designed as interest rate hedging instruments (Note 2.3k) v)).

(c) Although these contracts were made with the purpose of risk hedging (and not speculation), a part of this contract does not fulfill every necessary requirements so it can be classified as hedging (Note 2.3k) v)), and therefore, the variation of the fair value of the party that does not fulfill the necessity requirements to be classified as hedging was recorded in the Statements of Profit and Losses in the caption “Gains/losses in derivative instruments” (Note 35).

The fair value of the Group’s contracted derivatives is determined by the respective counterparts (financial institutions with who were signed such contracts). The derivative evaluation model, used by the counterparts is based on the Discounted Cash Flows Method, i.e., using the Swaps Par Rates, listed in the interbank market and available on the Reuters and Bloomberg, for the applicable periods where the forward rates and the discount factors used to discount the fixed cash flows (fix leg) and the variable cash-flows (variable leg) are computed. The sum of these two components results on the Net Present Value of the future cash flows or on the fair value of the derivatives. The increase/decrease of 1 p.p. on the interest rate indexes verified during 2009 and estimated for the period of these derivatives duration would result in a increase/decrease of the financial results of the year ended 31 December 2009 of 1,074,398 Euro/1,397,408 Euro and of the equity’s caption “Hedging reserves” of 8,770,826 Euro/9,595,535 Euro before considering the tax effects. Paper pulp price hedging derivatives In order to reduce its exposure to volatility of paper pulp price volatility, the Group signed paper pulp price hedging derivatives, which were evaluated according to its fair value as of 31 December 2009 and 2008; the correspondent amount was recognized under the caption “Derivatives”.






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As of 31 December 2009 and 2008 there were established the following paper pulp derivative contracts which total amounts are as follow:

Hedging Quantity MaturityFair value

31.12.2009Fair value

31.12.2008

3.500 ton/month 31-12-2011 (a) - 9,120,226500 ton/month 31-08-2011 (528,945) -

2.500 ton/month 31-07-2011 (2,781,993) -1.750 ton/month 31-12-2010 (79,639) 3,426,5093.000 ton/month 31-08-2010 (2,213,143) -

(5,603,720) 12,546,735

(a) This derivative was finished in advance during the year ended at 31 December 2009

The Derivative fair value valuation of the paper pulp price hedging, contracted by the Group was executed by the respective counterparts (financial institutions with which were signed such contracts). The derivative evaluation model, used by these counterparts is based on the Discounted Cash Flows Method, i.e., it’s calculated the difference between the estimated paper pulp quotation (PIX) and the fixed price for the relevant periods, which is, afterwards, discounted to the evaluation date. In accordance with the adopted accounting policies, these paper pulp derivatives fulfil with the requirements to be classified as hedging instruments; so the variation on its fair value was recorded in the equity’s caption “Hedging reserves”. The increase/decrease of 5% on the paper pulp price indexes (PIX) during the year ended 31 December 2009 and estimated for the period of these derivatives duration would result in a decrease/increase of the operational result of the year ended 31 December 2009 of 1,263,935 Euro and an decrease/increase on the equity’s caption “Hedging reserves” of 2,328,570 Euro before considering the tax effects.

Exchange rate derivates

Altri uses derivatives exchange rate, mainly in order to hedge future cash flows. Thus Altri hired some exchange rate "forwards" of U.S. dollars in order to manage the risk of exchange rate to which is exposed. On December 31, 2009, the fair value of exchange rate derivatives, which was considered hedging derivatives, calculated based on current market values of financial instruments equivalent exchange rate is (2,548,666) Euro. Determining the fair value of financial instruments is based on the discount to the date of the statement of financial position of the amount that is estimated to be received / paid on the date of expiry of the contract. The settlement amount is considered in the assessment equal to the reference currency multiplied by the exchange rate and the market contracted for the settlement date given the date of valuation. The increase / decrease of 5% indexed to the exchange rate during the year ended December 31, 2009 and estimated for the duration of these derivatives would have meant an increase / decrease in income for the year ended December 31, 2009 from 2,560,897 Euro / 2.705.314 and the equity item "Hedging reserves" of 2,375,166 Euro 3.350.688 Euro before considering the tax effects.






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The movement occurred in the fair value of the financial instruments during the years ended 31 December 2009 and 2008 can be detailed as follow:

2009Pulp price hedging

derivativesInterest rates derivatives

Exchange rates derivatives Total

Opening balance 12,546,735 (6,059,446) - 6,487,289

Derivatives fair value variation/cessation Effect on shareholders' funds (Note 18) (18,150,455) (3,110,514) (2,548,666) (23,809,635) Effects on the profit and loss statement (Note 35) - (890,768) - (890,768)

Closing balance (5,603,720) (10,060,728) (2,548,666) (18,213,114)

2008Pulp price hedging

derivativesInterest rates derivatives Total

Opening balance (4,183,446) 3,748,671 (434,775)

Derivatives fair value variation Effect on shareholders' funds 16,730,181 (5,538,912) 11,191,269 Effects on the profit and loss statement (Note 35) - (4,269,205) (4,269,205)

Closing balance 12,546,735 (6,059,446) 6,487,289

The gains and losses of the year associated to the fair value variation, during 2009, of the hedging instruments in the non matured part (as described in IAS 39), in the amount of (23,809,635) Euro (11,191,269 Euro as of 31 December 2008) were directly recorded under equity’s captions net of the respective deferred tax liabilities, in the amount of 6,309,554 Euro (2,965,686 Euro as of 31 December 2008) (Note 11). The gains and losses of the year associated to the fair value variation, during 2009, of the hedging instruments in the matured part and of the instruments which although had been contracted with a hedging purpose, do not gather the requirements to be classified as so, and their ineffective part was recorded directly in the Statement of Profit and Losses for the year 31 December 2009 (Note 35).

28. CONTINGENT LIABILITIES

As of 31 December 2009 and 2008, contingent liabilities have essentially included bank guarantees provided by Group companies, which can be detailed as follows:

31.12.2009 31.12.2008AICEP/API 11,621,950 30,036,372Others 851,524 864,837

12,473,474 30,901,209

29. FINANCIAL COMMITMENTS NOT INCLUDED IN THE CONSOLIDATED BALANCE SHEET a) Pension Fund

Some of the Group companies have assumed commitments related with retirement pensions not included in the consolidated balance sheet.






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The Caima and Silvicaima Pension Funds, managed by “BPI Pensões - Sociedade Gestora de Fundos de Pensões, S.A.” was created by a public deed held 31 December 1987, and aims to provide the employees who (i) at its normal retirement age or (ii) at the end of its contract with the company have completed at least 10 years of continuous service and 57 years old, with a monthly pension complement based on their average gross salary for the two years preceding the date of their retirement, beginning in the usual year of retirement. Following a decision of Caima’s Board of Directors and after obtaining approval from “Instituto de Seguros de Portugal” (the Portuguese insurance institute), the Caima and Silvicaima Pension Fund was divided into two independent funds in December 1998. Under the set of laws of the Social Benefits Regulation, the employees of the permanent board of Celtejo with at least five years of continuous service, are entitled to a monthly pension complement after their retirement or if they become disabled. This complement is defined according with a formula that takes into consideration the net monthly salary applicable to the employee as of the retirement date and the number of years of continuous service, in a maximum of 30 years, also guarantying survival pensions to the employees’ spouses and direct descendants. To cover those responsibilities there is an autonomous pension fund named Tejo Pension Fund. According to the application made to the Insurance Institute of Portugal, was authorized in 2009, the extinction of the part of the fund affect the CPK and amendment of the contract of incorporation of the Pension Fund Celtejo. Celbi grants to its workers, with non-defined term labour contract, which retire while working for Celbi, a set of benefits in accordance with the company’s Rules for Pension Funds, published in the Republic Journal (“Diário da República”) number 221-III serie, dated 21 September 1999. In accordance with those rules, the Company grants the following benefits:

i) Retirement by age limit: the participants that retire in the normal timing will be entitled to an annual pension, equal to 11.5% of

the pensionable annual salary; ii) Retirement due to disability:

Plan A – If the participant retires himself permanently due to disability by the normal regime of social security, or is accepted as so by the medical services of the company and the management entity, the Fund secures the payment of a pension calculated in accordance with the following formulas:

Pension 1: 1. With less than 10 years of service – 50% of the annual pensionable salary; 2. With 10 or more years of service – 80% of the annual pensionable salary. The amount of the annual pension is deducted to the annual pension computed as described above.

Pension 2: The participants will be entitled to an amount equal to one fifth of the monthly salary earned at the retirement date by each year of service.

Pension 3:

If the disability happens when the participant is more than 55 years old, to the amount referred to in Pension 2 is added 50% of the annual pensionable salary.

Plan B - If the participant retires himself permanently due to disability by the normal regime of social security, or is accepted as so by the medical services of the company and the management entity, the Fund secures the payment of an annual pension equal to 11.5% of the pensionable annual salary.

Only the participants working for the company when the present change took place can benefit from Plan A. In relation to these workers and in relation to plans A and B the most favourable will be applicable. To the other participants is applicable the Plan B.

This regime applies to all Celbi’s workers.






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In accordance with the latest actuarial valuation prepared by the funds’ managers, the present value of the past service liabilities with retired and current employees as of 31 December 2009 and 2008 as well as the funds’ patrimonial situation were as follows:

2009Caima Indústria Silvicaima Celtejo CPK Celbi Total

Current responsibilities for past services 3,235,516 262,670 10,398,330 - 6,716,221 20,612,737

Assets of pension funds 2,676,315 389,324 12,067,463 - 7,751,915 22,885,017

2008Caima Indústria Silvicaima Celtejo CPK Celbi Total

Current responsibilities for past services 2,989,026 226,679 14,903,246 - 7,397,736 25,516,687

Assets of pension funds 2,680,365 378,449 11,955,771 1,597,021 7,767,535 24,379,141

The detail of the amounts recorded in the Statement of Profit and Losses under the caption “Payroll expenses” related with the benefit Pension plans defined in the year ended 31 December 2009 and 2008 is as follow:

2009 2008

Current services cost (702,930) (731,787)Interest on obligation (1,253,624) (1,316,100)Actuarial gains/(losses) (Note 33) 5,171,797 2,082,097Return on plan assets (52,530) (2,011,911)

3,162,713 (1,977,701)

The movement in the present value of responsibilities for past services during the years ended 31 December 2009 and 2008 is as follow:

2009 2008

Responsibilities in the beginning of the year 25,516,687 28,897,177

Benefits paid by the Pension Funds (1,688,710) (975,594)Current service cost 702,933 731,787Interest costs 1,253,624 1,316,100Actuarial (gains)/losses (5,171,797) (2,082,097)Responsabilities extinguished by the CPK closing activity (Note 4.5) - (2,370,686)

Responsibilities in the end of the year 20,612,737 25,516,687

The movement verified on Pension Funds patrimonial situation during the years ended 31 December 2009 and 2008 is as follow:

2009 2008

Pension funds value at the beginnig of the year 24,379,141 27,136,824

Contributions 250,000 250,000Paid pensions (1,691,594) (995,772)Return on plan assets (52,530) (2,011,911)

Pension funds value at the end of the year 22,885,017 24,379,141

To cover differences between the present value of past services liabilities and the funds patrimonial situation, the Group has recorded under the caption “Other current liabilities – accrued expenses” (Note 26) the amount needed to cover those differences, when positive. Additionally, is recorded under "Other current assets (Note 15) the amount of 1,795,787 Euro for the excess of assets of pension funds in relation to current liabilities for past services to the extent that this represents reduction future reinforces to be made to the pension funds by the Altri Group companies.






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Those liabilities, except for Celbi, were determined using the “Projected Unit Credit” method, the TV 73/77 mortality tables and the EKV-80 handicap tables. In addition to the technical parameters referred to above, for Caima and Silvicaima, the valuation was performed assuming real long term profitability of 3% when it compared with salary increase. In the calculation of Celtejo it was assumed a real long term profitability of 4.5% and pension increases of 1.25%. For Celbi, those liabilities were determined using the “Projected Unit Credit” method, the GKF95 mortality tables and the SR 2001 handicap tables. In addition to the technical parameters referred to above, the valuation was performed assuming real long term profitability of 4% until the age of retirement and a rate of 3% after that that age and a salary increase of 2.5%.

b) Other commitments

As of 31 December 2009, the contractual obligations for the acquisitions of fixed assets assumed by the Group companies amounted to, approximately, 11,000,000 Euro (72,000,000 Euro as of 31 December 2008) (Note 7). As of 31 December 2009, the estimated value for assumed responsibilities with the acquisition of raw materials, evaluated at the average market price of stand wood, amounts to, approximately, 14,300,000 Euro (14,400,000 Euro as of 31 December 2008).

30. LEASE CONTRACTS

30.1 OPERATIONAL LEASES As of 31 December 2009 it was recognized in the Statement of Profit and Losses of the year an amount of, proximately, 8,400,000 (7,200,000 Euro as of 31 December 2008) of operational leases paid rents, essentially, related with explored lands by the Group. Additionally, at the balance sheet date the Group held as lessee, operational lease contracts, which minimal lease payments present the following maturity:

Year

2010 8,175,4922011 8,294,0712012 9,065,7702013 and next 108,618,339

134,153,672

As of 31 December 2008 the Group held as lessee, operational lease contracts, which minimal lease payments present the following maturity:

Year

2009 7,978,5162010 7,749,2182011 7,886,7972012 and next 111,203,419

134,817,950






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30.2 FINANCIAL LEASES

As of 31 December 2009, the responsibilities reflected in the Balance Sheet related to financial leases had the following maturity:

Ano

2011 162,1262012 124,8742013 and next 52,766 Mid-long term total (Note 22) 339,7662010 (short term) 213,985

553,751

As of 31 December 2008, the responsibilities reflected in the Balance Sheet related to financial leases had the following maturity:

Year

2009 159,6512010 107,4682011 and next 81,954 Mid-long term total (Note 21) 349,0732008 (short term) 473,689

822,762

On December 31, 2009 and 2008, estimated that the fair value of financial obligations in leasing contracts corresponds to approximately its book value. Obligations under finance lease contracts are guaranteed by the reserve of ownership of the leased assets.

31. RELATED PARTIES

The participated companies of the Group realize between them and at market prices, transactions that classifies as transactions with related parties. In the consolidation procedures the transactions between the companies included in consolidation by the full consolidation method are eliminated, once the consolidated financial statements present the owner and its subsidiaries information as one single company.






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As of 31 December 2009 and 2008 the balances and transactions with related parties are as follow: Transactions 31.12.2009 31.12.2008 31.12.2009 31.12.2008 31.12.2009 31.12.2008 31.12.2009 31.12.2008Parent company - - - - - - 417,397 379,225Group companies (a) 44,170,757 86,074,392 47,138,576 69,958,440 7,587,479 9,265,844 6,016,780 7,788,767Associated companies (b) 676,179 483,167 3,271,057 9,083,244 - - 924,615 976,800Other related parties (c) 5,763,218 21,484,961 200,521 29,000,836 - - 228,687 121,052

50,610,154 108,042,520 50,610,154 108,042,520 7,587,479 9,265,844 7,587,479 9,265,844

Fixed Assets Transactions 31.12.2009 31.12.2008 31.12.2009 31.12.2008Parent company - - - -Group companies (a) - - - 31,721,210Associated companies (b) - - - -Other related parties (c) - 31,721,210 - -

- 31,721,210 - 31,721,210

Balances 31.12.2009 31.12.2008 31.12.2009 31.12.2008 31.12.2009 31.12.2008 31.12.2009 31.12.2008Parent company 190,971 172,806 1,174,278 962,461 15,000,000 11,000,000 - -Group companies (a) 94,372,917 84,135,976 100,919,927 88,705,377 137,774,209 130,125,764 175,710,529 165,905,265Associated companies (b) 66,513 25,406 2,585,287 2,907,144 22,842,905 18,122,905 - -Other related parties (c) 24,311,610 14,102,526 14,262,519 5,861,732 215,036 11,114,525 121,621 4,457,929

118,942,011 98,436,714 118,942,011 98,436,714 175,832,150 170,363,194 175,832,150 170,363,194

Fixed assets acquisitions Fixed assets disposals

LoansAccounts receivable Accounts payable Obtained Granted

Sales and services rendered Purchases and services obtained Interest income Interest expense

(a) All entities consolidated by the full consolidation method as of 31 December 2009 and 2008 (Note 4.1) except from CPK – Papel Kraft, S.A. in descontinuing activity as of 31 December 2008 (Note 4.5);

(b) All entities consolidated by the equity method as of 31 December 2009 and 2008 (Note 4.2); (c) Were considered as related parties CPK – Papel Kraft, S.A. (Note 4.5) and Group Ramada companies (Note 4.1) as of 31

December 2009 and 2008 (Notes 12 and 24). Besides the companies included in consolidation (Note 4), entities considered as related parties as of 31 December 2009 can be detailed as follow:

Alteria, S.G.P.S., S.A. Caderno Azul, S.G.P.S., S.A. Caminho Aberto, S.G.P.S., S.A. Cofihold, S.G.P.S., S.A. Cofina, SGPS, S.A. Cofina B.V. Cofina Media, SGPS, S.A. Cofina Eventos e Comunicação, S.A. Destak Brasil – Editora de Publicações, S.A. Destak Brasil – Empreendimentos e Participações, S.A. Edisport – Sociedade de Publicações, S.A. Edirevistas – Sociedade Editorial, S.A. Efe Erre Participações, S.G.P.S., S.A. Elege Valor, S.G.P.S., S.A. F. Ramada – Investimentos, SGPS, S.A. (Note 5) Grafedisport – Impressão e Artes Gráficas, S.A. Holdimédia, SGPS, S.A. Jardins de França – Empreendimentos Imobiliários, S.A Livre Fluxo, S.G.P.S., S.A. Malva – Gestão Imobiliária, S.A. Mediafin, SGPS, S.A. Metronews – Publicações S.A. Mercados Globais – Publicação de Conteúdos, Lda. Prestimo – Prestígio Imobiliário, S.A. Presselivre – Imprensa Livre, S.A. Sociedade Imobiliária Porto Seguro – Investimentos Imobiliários, S.A. Transjornal – Edição de Publicações, S.A. Torres da Luz – Investimentos Imobiliários, S.A. VASP – Sociedade de Transportes e Distribuições, S.A. Web Works – Desenvolvimento de Aplicações para Internet, S.A.






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32. KEY MANAGEMENT COMPENSATIONS

The compensations attributed to key managers, the Board of Directors in Altri´s case due to its governance model, during the years ended 31 December 2009 and 2008 amounted to 1,026,513 Euro and 1,033,200 Euro, respectively. The remunerations attributed to key managers can be detailed as follow:

31.12.2009 31.12.2008

Fixed remunerations 496,513 493,200Variable remunerations 530,000 540,000

1,026,513 1,033,200

On December 31, 2009, there are not: (i) plans or incentive systems related to grant of shares to members of the Board, (ii) paid or payable to former directors in relation to the transfer of functions during the year (iii) supplementary pensions or early retirement for directors, or (iv) non-cash benefits considered as remuneration. Altri, SGPS, SA does not have any plan to grant shares or options to purchase shares to members of governing bodies or to their employees.

33. OTHER INCOMES The caption of the income statement "Other income" in the years ended December 31, 2009 and 2008 includes: gains on derivative contracts, on the part of the contract early finished from wood pulp in the year 2009 and part on the gains derived mainly from pulp, effective December 31, 2009 and 2008 (Note 27), gains in pension funds (Note 29), investment and exploration subsidies and investment, reversal of provisions (Note 21), gains on disposal of property, compensation received, supplementary income and other income. Additionally, on December 31, 2008 the caption "Other income" includes the portion of the gain recognized on the sale of Ródão Power to the associated company EDP - Produção Bioeléctrica, S.A. (Notes 4.2 and 26).

34. OTHER EXPENSES

The caption of the income statement "Other costs" in the years ended December 31, 2009 and 2008 includes: indirect taxes and fees, losses on derivative contracts (Note 27), cost with claims, donations and other costs.






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35. NET FINANCIAL PROFIT

Consolidated net financial profit for the years ended 31 December 2009 and 2008 are made up as follows:

31.12.2009 31.12.2008

Gains and losses in other investments:Gains in investments measured at fair value trough Profit and Losses 302,780 -Losses in investments measured at fair value trough Profit and Losses (193,544) (520,597)

109,236 (520,597)Financial expenses:

Interest (Note 20) (22,037,223) (34,528,851)Exchange losses (1,007,289) (1,181,370)Losses in derivatives (3,008,284) (8,108,548)Other financial expenses (3,802,783) (2,556,587)

(29,855,579) (46,375,356)Financial income:

Interest 3,251,133 6,665,365Exchange gains 1,153,938 1,990,329Gains in derivative instruments - 1,666,859Other financial income 264,469 453,312

4,669,540 10,775,865

As of 31 December 2009, the caption "Losses on derivatives" includes the amount of (890,768) related with interest rate derivatives instruments in force at 31 December 2009 (Note 27) and the amount of (2,117,516) Euro related with the loss on interest rate derivatives instruments that matured or were paid until that date. As of 31 December 2008 the captions "Losses on derivatives" and "Gains on derivatives" in the net amount of (6,441,689) Euro include the amount of (4,269,205) Euro related with derivatives in force at 31 December 2008 (Note 27) and the amount of (2,172,484) Euro for the net loss on derivatives that matured or were paid until that date. The caption “Other financial expenses” includes, mainly, expenses with the loans settlement, which are recognized in the Statement of Profit and Losses trough the period of life of those loans (Note 20). The caption “Gains and losses in associated companies” correspond, mainly, to the appropriation of the Group quote of the results in the investments in associated companies (Note 4.2).

36. EARNING PER SHARE

Earnings per share for the years ended 31 December 2009 and 2008 were determined taking into consideration the following amounts:

31-12-2009 31-12-2008

Share number considered for the computation of basic and diluted earning 102,565,836 102,565,836

Net profit considered for the computation of basic and diluted earning for continuing operations (11,932,959) 4,109,378

Continuing operations earnings per shareBasic (0.12) 0.04Diluted (0.12) 0.04

Net profit considered for the computation of basic and diluted earning for continuing and non-continuing activities (10,910,016) 4,668,149

Continuing and non-continuing operations earnings per shareBasic (0.11) 0.05Diluted (0.11) 0.05

As of 31 December 2009 and 2008 there are no diluted effects of the circulation shares number.






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37. SEGMENTAL INFORMATION

On 16 April 2008 was signed the F. Ramada – Aços e Indústrias, S.A. demerger public deed. Under the terms of the 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. Furthermore, in the end of 2008 ALTRI decided to shut down its Kraft paper industry unit. This decision was based on the declining Kraft paper business perspectives and on the poor contribute that this unit was giving to Group Altri’s EBITDA. Therefore, the contributes of this the units mentioned above, on the income statement, was recorded as “Operational units in discontinuation” (Notes 4.5 and 5). This decision allows Altri Group to focus its activity on its core business, production and commercialization of bleached paper pulp form eucalyptus, so the Board of Directors believe that there is only one business segment and the management information is reported and analyzed on this basis.

Sales and services rendered in 2009 and in 2008 by the Group, according to the geographic segments, were as follows:

31.12.2009 31.12.2008Domestic market 63,134,569 67,337,288Foreign market 212,515,821 188,141,928

275,650,390 255,479,216

38. NUMBER OF PERSONNEL

During the years ended 31 December 2009 and 2008, the average number of employees of the companies included in the consolidated financial statements by the full consolidation method was of 710 and 726, respectively.

39. NET PROFIT AFFECTATION

As regards the year 2009, the Board proposed in its annual report that the individual net loss of Altri, SGPS, S.A. amounting to 2,004,309.13 Euro be transferred to retained earnings.

40. ENVIRONMENTAL INFORMATION Following the Kyoto Protocol, the European Union committed herself to reduce the emission of greenhouse gases. Therefore, it has issued a Directive that predicts the commercialisation of carbon dioxide emission licenses. This directive was transposed to the Portuguese legislation and became mandatory since 1 January 2005, namely, for the pulp and paper industry. Following the ministerial dispatch number 2836/2008 dated 5 February 2008, the Portuguese government distributed to the companies the carbon dioxide emission licenses. The Group companies received a free license for the emission of 110,135 tons of carbon dioxide in 2008. If the Group exceeds that amount it will have to buy in the market the remaining licenses. The distribution of the carbon dioxide emission licenses is made in the beginning of the following year, being the emission amounts presented subject to a certification made by an independent entity.






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Bearing in mind that these licenses refer to the period 2008-2012, in accordance with the estimates for the year 2009, the Group does not expect this new legislation to carry significant additional costs. As of 31 December 2009 the Group has not recorded any liability concerning environmental issues, nor has disclosed any environmental contingency, since the Board of Directors believes that, as of that date, no obligations and responsibilities arising from past events have occurred that lead to significant costs to the Group.

41. PAYMENTS AND RECEIPTS RELATED TO FINANCIAL INVESTMENTS As of 31 December 2009, payments and receipts related to financial investments can be detailed as follows:

Transaction Paid amount amount Acquisitions EDP – Produção Bioeléctrica, S.A. (a) 4,720,000 4,720,000 Socasca – Recolha e Comércio de Recicláveis, S.A. (b) 5,197,126 228,202 Celtejo – Empresa de Celulose do Tejo, S.A. (c) 92,887 92,887 --------------- ---------------- 10,010,013 5,041,089 ========= ========= (a) – Granted loans reinforcement; (b) – Until 31 December 2008, it has already paid the amount of 4,808,924 Euro; (c) – Acquisition of an additional part of 0,232% in social capital representative shares (Note 5).

As of 31 December 2008, payments and receipts related to financial investments can be detailed as follows:

Transaction Paid amount amount Acquisitions EDP – Produção Bioeléctrica, S.A. (a) 7,503,000 7,503,000 Socasca – Recolha e Comércio de Recicláveis, S.A. (b) 5,118,924 337,979 Sosapel – Sociedade Comercial de Sacos de Papel, Lda (c) 2,000 2,000 Celtejo – Empresa de Celulose do Tejo, S.A. (d) 5,539 5,539 Celbi – Celulose da Beira Industrial, S.A. (e) 810,763 810,763 --------------- ---------------- 13,440,226 8,659,281 ========= ========= Disposals Ródão Power – Energia e Biomassa do Ródão, S.A. 21,657,703 21,657,703 Investments available for sale 24,996 24,996 --------------- ---------------- 21,682,699 21,682,699 ========= ========= (a) – Granted loans reinforcement; (b) – Until 31 December 2007, it has already paid the amount of 4,470,945 Euro; (c) – Acquisition of the single non- acquired part, which represents 20% of social capital; (d) – Acquisition of an additional part of 0,013% in social capital; (e) – Payment of an additional proportion of the change in initial price.






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42. FINANCIAL STATEMENTS APPROVAL

The financial statements were approved by the Board of Directors and authorized for issuance in 15 April 2010. The final approval depends on the agreement of the General Shareholders Meeting.

43. 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), some of which may not conform or be required by generally accepted accounting principles in other countries. In the event of discrepancies, the Portuguese language version prevails.

The Board of Directors, Paulo Jorge dos Santos Fernandes – President João Manuel Matos Borges de Oliveira Pedro Macedo Pinto de Mendonça Domingos José Vieira de Matos Laurentina da Silva Martins

REPORT AND OPINION OF THE STATUTORY AUDIT BOARD CONSOLIDATED FINANCIAL STATEMENTS

(Translation of a report originally issued in Portuguese – Note 43)

To the Shareholders of Altri, SGPS, S.A. 1. Report In compliance with the applicable legislation and our mandate, we hereby submit our Report and Opinion, which covers the Management Report and consolidated Financial Statements of Altri, SGPS, S.A. (“Company”) for the year ended 31 December 2009, which are the responsibility of the Company’s Board of Directors. During the year under analysis, the Statutory Audit Board accompanied the operations of the Company and its affiliates, the timely writing up of accounting records, compliance with statutory and legal requirements and the effectiveness of the risk management and internal control systems, having held meetings with the periodicity and length considered appropriate and having always obtained, from the Board of Directors and personnel of the Company and its affiliates, all the information and explanations required. As part of its duties, the Statutory Audit Board examined the consolidated statement of financial position as of 31 December 2009, the consolidated statements of profit and loss and of comprehensive income, of cash flow and of changes in shareholders’ funds for the year then ended, and the corresponding notes. Additionally, the Statutory Audit Board examined the Report of the Board of Directors for the year 2009, and fulfilled its duties concerning the review of the qualifications, independence and work of the Statutory Auditor, and reviewed the Statutory Audit and Auditors’ Report and was in agreement with its content. 2. Opinion Considering the above, in the opinion of the Statutory Audit Board, the Management Report and the consolidated Financial Statements are in accordance with accounting, legal and statutory requirements and consequently should be approved by the Shareholders’ General Meeting. 3. Declaration of responsibility In accordance with the terms of the Article 8º paragraph 1, a) of the Securities Code Regulation 5/2008 the members of the Statutory Audit Board declare that, to their knowledge, the Management Report, the Consolidated Financial Statements prepared in accordance with the International Financial Reporting Standards as adopted by the European Union, and other accounting documents required by law or regulation, giving a truthful (fairly) and appropriate image, in all material respects, of the assets and liabilities, financial position and the consolidated results of the Company at 31 December 2009 and that the Management Report faithfully describes the business evolution and position of Altri, SGPS, S.A. and of the companies included in the consolidation perimeter and contains a description of the major risks and uncertainties that they face.

We wish to thank the Company’s Board of Directors and the departments of the Company and its affiliates involved for the assistance provided to us. Porto, 15 April 2010 The Statutory Audit Board João da Silva Natária President of the Statutory Audit Board Manuel Tiago Alves Baldaque de Marinho Fernandes Member of the Statutory Audit Board Cristina Isabel Linhares Fernandes Member of the Statutory Audit Board

STATUTORY AUDIT AND AUDITOR’S REPORT

CONSOLIDATED FINANCIAL STATEMENTS

(Translation of a report originally issued in Portuguese – Note 43) Introduction

1. In compliance with the applicable legislation, we hereby present our Statutory Audit and Auditors’ Report on the consolidated financial information contained in the Board of Directors’ Report and the consolidated financial statements of Altri, S.G.P.S., S.A. (“Company”) and subsidiaries for year ended 31 December 2009, which comprise the consolidated statement of financial position, that reflects a total of 1,123,524,237 Euro and shareholders’ equity of 57,783,186 Euro, including net loss attributable to the Company’s Equity Holders of 10,910,016 Euro, the Consolidated Statements of profit and loss, comprehensive income, changes in equity and cash-flows for the year then ended and the corresponding Notes.

Responsibilities

2. The Company’s Board of Directors is responsible for: (i) the preparation of consolidated financial statements that present a true and fair view of the financial position of the companies included in the consolidation, the consolidated results of their operations, comprehensive income, changes in equity and their consolidated and individual cash-flows; (ii) the preparation of historical financial information in accordance with International Financial Reporting Standards as adopted by the European Union and that is complete, true, timely, clear, objective and licit, as required by the Securities Market Code (“Código dos Valores Mobiliários”); (iii) the adoption adequate accounting policies and criteria and the maintenance of appropriate systems of internal control; and (iv) informing on any significant facts that have influenced the operations of the Company and of the group of companies included in the consolidation, their financial position or their results and comprehensive income.

3. Our responsibility is to examine the financial information contained in the accounting documents referred to above, including verifying that, in all material aspects, the information is complete, true, timely, clear, objective and licit, as required by the Portuguese Securities Market Code, and to issue a professional and independent report based on our work.

Scope

4. Our examination was performed in accordance with the Technical/Audit Standards (“Normas Técnicas e as Directrizes de Revisão/Auditoria”) issued by the Portuguese Institute of Statutory Auditors (“Ordem dos Revisores Oficiais de Contas”), which require that the examination be planned and performed with the objective of obtaining reasonable assurance about whether the consolidated financial statements are free of material misstatement. Such an examination includes verifying, on a sample basis, evidence supporting the amounts and disclosures in the consolidated financial statements and assessing the estimates, based on judgments and criteria defined by the Board of Directors, used in their preparation. Such an examination also includes verifying the consolidation procedures, the application of the equity method and that the financial statements of the companies included in the consolidation have been appropriately examined, assessing the adequacy of the accounting principles used and their uniform application and disclosure, taking into consideration the circumstances, verifying the applicability of the going concern concept, verifying the adequacy of the overall presentation of the consolidated financial statements and assessing that, in all material respects, the consolidated financial information is complete, true, up-to-date, clear, objective and licit. Our examination also comprises verifying that the financial information contained in the Board of Directors’ Report is in accordance with the consolidated financial statements. We believe that our examination provides a reasonable basis for expressing our opinion.

of 2

Opinion

5. In our opinion, the consolidated financial statements referred to in paragraph 1 above, present fairly in all material respects, the consolidated financial position of Altri, S.G.P.S., S.A. and subsidiaries as of 31 December 2009, the consolidated results of their operations, consolidated comprehensive income, changes in consolidated equity and their consolidated cash flows for the year then ended, in accordance with the International Financial Reporting Standards as adopted by the European Union and the information contained therein is, in terms of the definitions included in the technical and audit standards referred to in paragraph 4 above, complete, true, up-to-date, clear, objective and licit.

Porto, 15 April 2010 DELOITTE & ASSOCIADOS, SROC S.A. Represented by António Manuel Martins Amaral

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