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Annual Report 2015

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Summary

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Report of the Board of Directors HighlightsGeneral ConsiderationsEuropePulp IndustryCelbiMarket Forest ActivityIndustrial ActivityHuman ResourcesFinancial Risk Management Proposal for Application of ProfitsEnclosure to the Report of the Board of Directors

Financial StatementsStatements of Financial Position Statements of Financial Position Statements of Profit and LossStatements of Comprehensive Income Statements of Changes in Equity Cash Flow Statements

Report and Opinion of the Official Auditor and Statutory Auditor’s ReportReport and Opinion of the Statutory Audit BoardStatutory Audit Report

Annual Report 2015

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Highlights as of December 31st, 2015

M EUR 2015 2014 2013 2012 2011

Net sales 427 971 368 662 379 215 347 941 333 197

Depreciation 33 014 30 901 31 041 31 596 33 956

Operational results 143 194 77 187 96 450 93 666 74 435

Net results 119 284 28 073 45 099 42 680 20 402

Equity 278 437 288 843 323 809 311 946 288 285

Value-added 160 151 90 140 117 704 113 198 94 901

Investment 14 955 18 888 5 157 2 346 7 591

Permanent staff on December 31st (*) 207 213 210 205 218

(*) Governing bodies and temporary staff are not included

Report of the Board of Directors

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Sales of Eucalyptus Pulp (MTONS)

601 619

2012 2013 2014 2015

200

400

600

800

2011

658 692 690

Net Sales(M EUR)

2011 2012 2014 2015

75

225

375

525

2013

379 369 428333 348

Production of Eucalyptus Pulp(MTONS)

2011 2012 2014 2015

200

400

600

800

2013

626 666 687599 695 7,6 2,3 5,2 18,9 15,0

Investment(M EUR)

2011 2012 2014 2015

5

10

15

20

2013

94 96 77

Operational Results

(M EUR)

2011 2012 2014 2015

50

100

150

200

2013

74 143289

Equity

(M EUR)

2011 2012 2014 2015

150

250

350

450

2013288 278312 324

Annual Report 2015

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2015 Exercice


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General Considerations2015 will go down in history as another year of great economic instability. The growth of developed economies was absolutely insignificant, the emerging countries suffered recessions due to a sharp fall in the “commodities” and China registered a slight slowdown in their economic growth.In geopolitical terms, 2015 is also a year of great disturbance with the terrorism spreading across Europe, in particular with the Paris attack. The incapacity of Europe to deal with the refugee crisis and Syria’s Civil War led the Russia/Ukraine conflict to the background plan.The Europe and the USA, the two major world economic blocs, have taken important measures using the Central Banks’ intervention, via monetary policy, to influence the course of events. After a period of stability in interest rates, FED proceeded to an increase of 0.5% in dollar reference rate, looking for an increase in the near future. However, this behavior was not observed until now, because the observed signs of the recovery, which determined the intervention, did not result in the expected development and stability.Taking into account the economic stagnation of Europe, somehow anemic with the specter of deflation on the horizon, the European Central Bank decided to inject liquidity into the market through public debt purchase. Despite these monetary policy measures, the confidence of the consumers and investors still did not reach the expected results.

EuropeThe economic growth in Europe has been quite moderate, as referred, in spite of the European Central Bank quantitative expansion program, initiated in March, and the fall of oil prices, which lead to lower energy prices. Nevertheless, the growth rate in the euro zone slowed down (0.5% in the first quarter, 0.4% in second and 0.3% in the third and fourth quarters). The return of economic expansion has not been enough to increase the inflation, with high rate of unemployment (10.5% in November) to prevent inflationary pressure via wages.In 2015 the inflation ended at 0.2% year on year and the expectations for 2016 also remain very low, being expected that the European Central Bank ensures the continuity of its monetary policy.In 2015, the Portuguese economy had a moderate recovery with indicators showing an increase of 1.5% to GDP.The increase of the credit issuance and the fall in oil prices, led to the raise of the disposable income. However, the increase in investment and private consumption caused the imports growth, showing the structural imbalance of the Portuguese economy.The exports benefited from euro depreciation. On the other hand, they had to face the slowdown in traditional markets, such as Angola, due to the oil prices fall.There was a positive development in the labour market despite the stagnation of the unemployment rate that reached 11.9% in last quarters. Therefore, this behavior did not follow the continuous reduction that has been recorded since 2013.The forecasts for 2016 were pointed by the restrained recovery process of the economy as well as the gradual adjustment of the macroeconomic imbalances. The Portuguese Central Bank estimate an increase of 1.7% for this year.

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Pulp IndustryIn 2015, according to data provided by the Pulp and Paper Product Council (PPPC) world 20, the total demand of hard wood pulp grew 5.5%. In absolute terms, it had an increase of 1.2 million tonnes.

The Chinese market remained as the major driver of demand. According to the PPPC data, this market grew around 11% in global terms and 14.1% in eucalyptus pulp consumption.

The year began with a positive evolution of the price, registering 745 USD in January and reaching the peak in October with 810 USD.

However, in 2015 the average record of 1.097 USD, resultant from the euro depreciating trend against dollar, allowed price maximization per tonne of pulp in euros.

CelbiTaking into account this context and the combination of three main factors, price, exchange rate and efficiency, in 2015, Celbi obtained the best results to date.

The Company reached remarkable levels of efficiency, as a result of investment and technical skills of the employees, achieving an annual production of 694,758 tonnes, 1.1% more than the previous record of 2014.

The total pulp sales reached MEUR 374.4. The total operating income was MEUR 437.2, which represents an increase of 15.1% over the previous year.

The total operating costs were MEUR 294.0, less MEUR 8.0 in relation to 2014, despite the compensations paid under the Company’s restructuring, as well as the performance bonus granted to the employees.

The EBITDA of the period reached MEUR 143.2, exceeding last year’s value in more than 85%.

It was also a remarkable year for the cash flow generation, with the reduction of net debt in MEUR 86.5, reaching MEUR 343.7 in the end of the year.

In 2015, the level of investment was MEUR 15.0, which corresponds mainly to the C17 project conclusion.

Finally, in 2015, the net income was MEUR 119.3, which includes MEUR 40.0 of dividends received from subsidiaries companies.

MarketIn 2015, Celbi had its best year ever in business. The euro depreciation against dollar and strong demand in all pulp markets conducted to an unusual market condition throughout the year. In 2015, the bleached pulp market remained balanced, with the demand matching the supply in around 60 million tonnes, of which 1/3 corresponds to bleached eucalyptus pulp (BEKP). On these, in 2015 the supply increased 8.6% to satisfy the demand, which had an annual growth of 7.8%.

The year began with a positive outlook for the pulp market and less optimistic for the remaining “commodities”, affected by the economic slump in developed economies and, particularly, the BRICs. The fall in oil price and exchange rate fluctuations of reference currencies, completed a discouraging scenario.

The exchange rate of euro against dollar evolved from 1.162 USD in January to 1.0877 USD in December, leading the annual average to 1.097 USD against 1.329 USD in 2014.

Alongside this situation, the short fiber prices (which the eucalyptus pulp


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belong) evolved from 745 USD in January to 795 USD in December, reaching the highest value in October (810 USD).

During 2015, the investments made by Celbi improved the pulp features, strengthening its position against the South American producers.

It was in this scenario that Celbi saw its increase on sales which totalized 690,000 tonnes, as a result of a balanced commercial action either in the geographical distribution of its sales as in the careful selection of the end-use applications, for which its eucalyptus bleached pulp best fits.

The good market conditions, as well as the preferred geographical position, allowed us not only to optimize pulp sales in our reference market - Europe, but also to explore new opportunities in nearby fast-growing markets.

The outlook for 2016 is positive with only a new line of eucalyptus pulp production reaching to the market (1.1 million tonnes of capacity) which should match to the annual demand growth for such pulps.

Sales by application (Altri)

P&W 24%

Packaging2%

Specialities13%

Dissolving9%

Tissue 48%

Other 4%

Sales by region (Altri)

Asia 9%

Other 9%

Portugal 7%

Europe 75%

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Forest ActivityIn 2015, Celbi was supplied by wood from the forest assets managed by Altri Florestal, domestic market, Galicia and South America. The wood from domestic market has increased over the previous year, mainly due to favorable weather conditions to forestry, allowing a higher amount of wood supplied. However, this wood was not enough to fulfill the needs of the plant. Thus, it was required to import wood from Galicia and South America.

In 2015, from the total wood received, about 40% was from forests with accredited international certification systems of sustainable forest management. The wood provided by Altri Florestal, which is all certified, is included.

Taking into account the continuous improvement process, it was made an evaluation of Company’s wood suppliers in order to recognize those with best behavior and encourage the quality wood supply from forests with sustainable forest management.

Furthermore, in this year were made several initiatives jointly with the wood suppliers, such as, the visit to the Celbi facilities and the creation of the freephone support number for the wood suppliers, among others.

Industrial ActivityIn 2015, Celbi achieved a new annual production record, which is another milestone in the Company’s business.

During the annual mill shutdown that took place in April, the C15 Project was completed with the remodeling of the digestor, drying machine and causticizing.

The stability of the plant increased after the optimization period that occurred during a few months. This fact enabled the Company to reach new production levels.

New records: – Annual Production - 694,758 tonnes (+1.1% than in 2014);– Monthly - 64,389.5 tonnes (August);– Monthly average - 2,077.5 tonnes (August);– Daily - 2,282.8 tonnes (August 7).

In the energy area, the trend for the reduction of electricity consumption remained, reaching the lowest value ever of 527 KWh/tonne, less 1.7% than in 2014.

The goals set to TG6 Project, which started in late 2014 (in self-consumption system or avoided purchase) (return time less than 2 years) were achieved. Thus the acquired energy abroad fell 6.8%.

The natural gas consumption continued the trend of recent years, reducing its consumption by 3.2%.


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The water consumption also remained its downward trend. The overall consumption was 19.0 m3/tonne (19.6 m3/tonne in 2014), which represents a decrease of 3.2%.

In the environmental area there was nothing to refer in terms of liquid and gaseous emissions. However, in the waste production field, there was a reduction of 44%, mainly due to the reductions in causticizing and raw pulp screening, as a result of changes introduced by the C15 Project.

There were improvements in mechanical properties of the final product, as provided in the project, and there were no quality complaints.

Human ResourcesThe year 2015 was pointed by the 50th anniversary of the Company. Celbi, founded by public deed on March 5, 1965, soon proved to be an excellence project in Portuguese industry. Among the celebrations developed throughout the year, we highlight:

On March 10 took place the opening ceremony for local authorities, with the opening of the exhibition “Future Memories” and the book’s release “The pulp industry in history of Figueira da Foz - Celbi 1960/1967”;

On May 30 “we open the doors” to wood suppliers;On June 13, in partnership with the “Centro de Recreio Popular da Marinha

das Ondas - Praia da Leirosa”, the “Agrupamento de Escuteiros da Marinha das Ondas” and the support of the “Marinha das Ondas Parish Council”, about 200 people, including children and adults, worked hard to clean the Leirosa beach;

On June 19, we have celebrated the launch of the 1st stone that marked the symbolic beginning of the mill construction;

On July 10, it was the time to invite former employees to “relive the good ways” that driven and contributed to Celbi’s success nowadays;

We closed the year with a Gala at Figueira da Foz Casino, bringing together the employees and their families at the traditional Christmas Party, where we

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had the opportunity to socialize and remember the moments spent in Celbi, remembering, at the same time, the changes in society of the last 50 years.

The Company’s success present in the 50 years of history is associated with the concern about people, to develop their skills to face challenges. Furthermore, the Company need to ensure that the knowledge developed is available for you-nger generations.

The human resources management is essential to ensure the sustainability of the Company.

Taking into account the human resources management we have to think about:

Skills that will be needed to face future challenges that appear in an increasingly competitive global market - Training;

Staff that we will need in the future - Recruitment.In the Training area, we highlight the conclusion of the staff training program

known as “Altri Academy”, which began in late 2013 and covered all frames of the Altri Group (about 90 employees).

The training total volume reached 5,477 hours, representing an effort of about 1.4% of total work hours and, on average, about 21 hours per worker.

The rate of employees over 55 years is significant, reaching approximately 25% in 2015. Therefore, it has been given special attention to the staff framework, to prepare future replacements.


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In this sense, our concern is to enhance the qualifications of new employees. In 2015, it was recorded a rate of 31% of employees with college degrees when in 2010 was only 24%.

Taking into account the scarcity of qualified personnel in some specialties, we have promoted alongside with IEFP (Institute of Employment and Training), a program of Technical in Electronic, Automation and Instrumentation for 9 months’ period, held at the “Figueira da Foz Business Incubator” facilities.

With a focus on sickness and accidents absence, it was registered a decrease in absenteeism levels, where the rate stood at 2.3% (in 2014 had been 2.7%).

We have recorded an improvement in Frequency and Seriousness Index, re-garding accidents in 2014. Thus, the Frequency Index fell to 33.9 accidents per million worked hours (40.2 in 2014) and the Seriousness Index dropped to 0.5 lost days per thousand worked hours (0.8 in 2014).

This improvement is the outcome of the effort that the Company has devoted to accident prevention with the “responsible behavior” program and the creation of local security coordinators.

Financial Risk ManagementThe general principles of financial risk management of the Company are described in detail in Note 2 of the financial statements.

Figueira da Foz, March 17, 2016

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Proposal for Application of Profits

As shown in the Balance Sheet and Income Statement, the Net Income for the year ended December 31, 2015 was EUR 119,283,718. That value derives from the fact that the Company has, in accordance with applicable accounting standards, recognized as an expense in the accounts for the year and paid as an advance, the value of EUR 1,196,925 as the amount allocated to profit sharing by employees of the Company. This distribution was approved by the General Meeting upon proposal of the Board of Directors. Hereupon, the proposal to the results application is as follows:

For Dividend Distribution EUR 100,000,000For Retained Earnings EUR 19,283,718

Leirosa, March 17, 2016

THE BOARD OF DIRECTORSPaulo Jorge dos Santos Fernandes(Chairman)João Manuel Matos Borges de Oliveira_Domingos José Vieira de MatosPedro Miguel Matos Borges de OliveiraAgostinho Dolores FerreiraJosé António Nogueira dos SantosCarlos Alberto Sousa Vanzeller e Silva

Enclosure to the Report of the Board of Directors1. In accordance with article 447 (paragraph 5) of the Commercial Companies Code and concerning the individuals mentioned in Nos. 1 and 2 of the referred article:1.1 Shares owned as at December 31st, 2015This situation does not apply

2. In accordance with article 448 (paragraph 4) of the Commercial Companies Code:2.1 Ownership of the capital of Celulose Beira Industrial (Celbi), S.A. as at December 31st, 2015:Altri-Participaciones y Trading, S.L 15 493 288

Leirosa, March 17, 2016

Annual Report 2015

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Assets Notes 31.12.2015 31.12.2014

Noncurrent Assets

Biological assets 12 144 777 144 777

Tangible fixed assets 4 253 641 300 271 806 610

Intangible assets 5 83 821 139 269

Investment properties 6 3 353 643 3 429 182

Investments in subsidiary companies 7 353 732 306 338 582 619

Investments in associated companies 8 573 240 573 240

Investments available for sale 9 and 13 10 218 845 10 218 845

Other noncurrent debtors 10 and 13 - 2 521 897

Other noncurrent assets 39 597 706 395 982

Deferred tax assets 11 1 157 036 925 569

Total noncurrent assets 623 502 674 628 737 990

Current Assets

Inventories 12 35 345 093 35 035 511

Costumers 13, 14 and 30 67 678 765 62 164 378

Other debtors 13, 15 and 30 4 663 051 3 385 088

State and other public entities 16 1 616 318 4 209 125

Group companies 13 and 30 78 548 75 030 458

Other current assets 17 1 222 367 2 093 024

Cash and cash equivalents 13 and 18 157 763 248 223 875 563

268 367 390 405 793 147

Total assets 891 870 064 1 034 531 137

Statements of Financial Position as at December 31st 2015 and 2014Amounts expressed in Euro

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Statements of Financial Position as at December 31st 2015 and 2014Amounts expressed in Euro

Equity and Liabilities Notes 31.12.2015 31.12.2014

Equity

Share capital 19 77 500 000 77 500 000

Legal reserve 19 16 100 235 16 100 235

Other reserves 19 65 553 054 167 170 016

Net profit / (loss) 119 283 718 28 072 814

Total equity 278 437 007 288 843 065

Liabilities

Noncurrent liabilities

Bank loans 13 and 20 153 587 500 103 837 500

Other loans 13 and 20 270 022 085 211 581 537

Other noncurrent liabilities 22 19 607 645 22 582 475

Deferred tax liabilities 11 22 165 54 395

Provisions 21 510 409 780 409

Total noncurrentliabilities 443 749 804 338 836 316

Current liabilities

Bank loans 13 and 20 10 775 000 -

Other loans 13 and 20 81 383 041 344 966 800

Suppliers 13, 23 and 30 38 617 140 39 022 526

Group companies 13 and 30 16 967 496 1 438 778

Other current creditors 13, 24 and 30 2 253 123 2 412 805

State and other public entities 16 1 068 981 768 664

Other current liabilities 25 18 618 472 16 339 886

Derivatives 13 and 26 - 1 902 297

Total current liabilities 169 683 253 406 851 756

Total liabilities 613 433 057 745 688 072

Total equity and liabilities 891 870 064 1 034 531 137


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Statements of Profit and Lossas at December 31st 2015 and 2014Amounts expressed in Euro

Notes 31.12.2015 31.12.2014

Sales 30 and 31 427 970 998 368 661 805

Services rendered 30 and 31 4 825 625 4 890 120

Other income 30 and 32 4 428 577 6 258 835

Cost of sales 12 and 30 (186 214 547) (202 807 452)

External supplies and services 29, 30 and 37 (89 997 875) (85 914 751)

Payroll expenses 28 and 36 (14 602 566) (12 678 135)

Amortisation and depreciation 4, 5 and 6 (33 014 183) (30 900 864)

Provisions and impairment losses 21 (1 298 482) 160 731

Other expenses 33 (1 917 307) (1 384 533)

Financial expenses 34 (21 079 819) (27 590 553)

Financial income 30 and 34 45 732 628 8 312 172

Profit before income tax 134 833 049 27 007 375

Income tax 11 (15 549 331) 1 065 439

Net profit 119 283 718 28 072 814

Net profit 119 283 718 28 072 814

Earnings per share

Basic 35 7,70 1,81

Diluted 35 7,70 1,81

Statements of Comprehensive Income for the financial years ended December 31st 2015 and 2014Amounts expressed in Euro

Notes 31.12.2015 31.12.2014

Net profit for the year 119 283 718 28 072 814

Other comprehensive income:

Items that will not be reclassified to profit or loss - -

- -

Items that may be reclassified to profit or loss

Change in fair value of cash flow hedging derivatives 19 e 26 210 224 1 440 725

Others (4 900 000) 520 252

(4 689 776) 1 960 977

Other comprehensive income for the year (4 689 776) 1 960 977

Total comprehensive income for the year 114 593 942 30 033 791

Annual Report 2015

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Statements of Changes in Equity for the financial years ended December 31st 2015 and 2014Amounts expressed in Euro

Other reserves

Notes Share capital Own shares (nominal value)

Own shares (discounts and

premiums)

Legal reserve

Hedgingreserves

Other reserves and retained

earnings

Total other reserves Net profit Total share

capital

Balance as of 1 January 2014 19 77 500 000 (33 560) 33 560 16 100 235 (1 650 949) 186 761 467 185 110 518 45 098 521 323 809 274

Application of 2013 net profit:

Transfer to retained earnings - - - - - 45 098 521 45 098 521 (45 098 521) -

Dividends distribution - - - - - (65 000 000) (65 000 000) - (65 000 000)

Total comprehensive income - - - - 1 440 725 520 252 1 960 977 28 072 814 30 033 791

Balance as of 31 December 2014 19 77 500 000 (33 560) 33 560 16 100 235 (210 224) 167 380 240 167 170 016 28 072 814 288 843 065

Balance as of 1 January 2015 19 77 500 000 (33 560) 33 560 16 100 235 (210 224) 167 380 240 167 170 016 28 072 814 288 843 065




Total comprehensive income - - - - 210 224 (4 900 000) (4 689 776) 119 283 718 114 593 942

Balance as of 31 December 2015 19 77 500 000 (33 560) 33 560 16 100 235 - 65 553 054 65 553 054 119 283 718 278 437 007


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Other reserves

Notes Share capital Own shares (nominal value)

Own shares (discounts and

premiums)

Legal reserve

Hedgingreserves

Other reserves and retained

earnings

Total other reserves Net profit Total share

capital

Balance as of 1 January 2014 19 77 500 000 (33 560) 33 560 16 100 235 (1 650 949) 186 761 467 185 110 518 45 098 521 323 809 274




Total comprehensive income - - - - 1 440 725 520 252 1 960 977 28 072 814 30 033 791

Balance as of 31 December 2014 19 77 500 000 (33 560) 33 560 16 100 235 (210 224) 167 380 240 167 170 016 28 072 814 288 843 065

Balance as of 1 January 2015 19 77 500 000 (33 560) 33 560 16 100 235 (210 224) 167 380 240 167 170 016 28 072 814 288 843 065




Total comprehensive income - - - - 210 224 (4 900 000) (4 689 776) 119 283 718 114 593 942

Balance as of 31 December 2015 19 77 500 000 (33 560) 33 560 16 100 235 - 65 553 054 65 553 054 119 283 718 278 437 007

Annual Report 2015

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Notes 2015 2014

Operating activities

Collections from customers 427 444 779 376 874 736

Payments to suppliers (280 484 048) (286 132 319)

Payments to personnel (11 424 679) (9 580 626)

Other collections/payments relating to operating activities 2 091 013 (3 600 276)

Income tax 4 915 884 142 542 949 1 499 093 79 060 608

Cash flow from operating activities (1) 142 542 949 79 060 608

Investment activities

Collections relating to:

Loans granted 50 100 000 19 246 585

Investments 18 - 2 782 550

Interests and similar income 19 773 675 6 826 505

Tangible fixed assets 25 778 236 715

Intangible assets - -

Investment subsidies 2 657 310 3 055 689

Dividends 34 40 000 000 112 556 763 - 32 148 044

Payments realting to

Investments 18 (15 149 687) (715 000)

Tangible fixed assets (15 431 158) (19 280 675)

Intangible assets (24 080) (80 060)

Investment subsidies (8 632 411) (39 237 336) - (20 075 735)

Cash flow from investing activities (2) 73 319 427 - 12 072 309

Cash Flow Statements for the financial yearsended December 31st 2015 and 2014Amounts expressed in Euro


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Cash Flow Statements for the financial yearsended December 31st 2015 and 2014Amounts expressed in Euro

Notes 2015 2014

Financing activities

Collections relating to:

Loans obtained 254 500 000 254 500 000 162 823 963 162 823 963

Payments relating to:

Interests and similar costs (15 598 035) (24 844 486)

Loans obtained (395 876 656) (136 500 000)

Dividends (125 000 000) (536 474 691) (65 000 000) (226 344 486)

Cash flow from financing activities (3) (281 974 691) (63 520 523)

Cash and cash equivalents at the beginning of the year 18 223 875 563 193 511 995

Cash and cash equivalents at the beginning of the year resulting from merger

1 - 2 751 174

Change in cash and cash equivalents: (1)+(2)+(3) (66 112 315) 27 612 394

Cash and cash equivalents at the end of the year 18 157 763 248 223 875 563

Annual Report 2015

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NOTES TO THE FINANCIAL STATEMENTS AS OF DECEMBER 31 ST, 2015Amounts expressed in Euro

1. INTRODUCTORY NOTECelulose Beira Industrial (Celbi), S.A. (“Company” or “Celbi”) was established in 1965 and has its head office in Leirosa, Figueira da Foz. Its main activity is the production and marketing of paper pulp.

In August 2006, following the public process of divestment by the former shareholder, Altri, SGPS, S.A. (“Altri”), through its subsidiary Altri, Par-ticipaciones Y Trading, S.L. (“Altri SL”) acquired 99.96% of the Company’s share capital, represent-ing 100% of the voting rights, as the Company itself holds 6,712 shares. The Company is thus part of a business group led by Altri, SGPS, SA (“Altri”) listed in the Euronext Lisbon Stock Exchange. During the year ended December 31, 2014 it was made the merger of subsidiaries Altri - Energias Renováveis, SGPS, SA (“Altri Renováveis”), Cel-binave - Tráfego e Estiva SGPS, Unipessoal, Lda. (“Celbinave”) and Invescaima - Investimentos e participações SGPS, S.A. (“Invescaima”) (merged companies) in Celbi (absorbing company). The merger took effect from January 1, 2014.

The merger was performed according to paragraph 4-a), article 97 of the Portuguese Commercial Companies Code through the net worth incor-poration and the consequent extinction of the merged firms.

Celbi’s financial statements are presented in Euro rounded off to the unit, which is the currency used by the Company in its operations and thus consid-ered the functional currency.

2. MAIN ACCOUNTING POLICIESThe main accounting policies used in the prepa-ration of the accompanying financial statements are as follows:

2.1. Basis of preparation

The accompanying financial statements have been prepared on a going concern basis from the books and accounting records of the Company which were prepared in accordance with International Financial Reporting Standards as adopted by the European Union, in conformity with paragraph 3, article 4, of DL no. 158/2009 of July 13th. These standards include the International Financial Re-porting Standards (“IFRS”) issued by the Interna-tional Accounting Standards Board (“IASB”); the International Accounting Standards (IAS) issued by the International Accounting Standards Com-mittee (IASC) and interpretations issued by the International Financial Reporting Interpretation 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 “IFRS”.

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(i) Standards, interpretations, amendments and revisions that take effect in the financial yearThe following standards, interpretations, amendments and revisions endorsed by the European Union

started to have mandatory application in the year ended December 31, 2015:

StandardEffective Date (annual periods beginning on or after)

Observations

IFRIC 21 – Payments to the State 17-jun-14 This amendment establishes the conditions as to timing of the recognition of a liability relating to payment by an entity to the State as a result of a specific event (for example, participation in a specific market), without the payment having specific goods or services received in exchange.Amendment to IFRS 3 – Concentration of business activities (included in improvements to international financial statement standards – 2011-2013 cycle)

01-jan-15 Clarifies that IFRS 3 excludes from its scope of application the realization of a joint agreement on the financial statements of the joint agreement itself.

Amendment to IFRS 13 – Measurement at fair value (included in improvements to international financial statement standards – 2011-2013 cycle)

01-jan-15 Clarifies that the exception of the application of the standard to financial assets and liabilities with offsetting positions extends to all contracts under IAS 39, independently of their compliance with the definition of financial asset or liability of IAS 32.

Amendment to IAS 40 – Investment properties (included in improvements to international financial statement standards – 2011-2013 cycle)

01-jan-15 Clarifies that it is necessary to apply value judgement to determine if the acquisition of an investment property is the acquisition of an asset or the concentration of business activities covered by IFRS 3.

The effect in the financial statements of Celbi for the year ended as of December 31, 2015, resulting from

the adoption of standards, interpretations, amendments and revisions mentioned above, was not significant.


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(ii) Standards, interpretations, amendments and revisions that will take effect in future financial years

The following standards, interpretations, amendments and revisions, with mandatory application in future

financial years, were endorsed by the European Union until the date of approval of these financial statements:

(iii)

Standard Applicable in the European Union in the years starting on or after

Observations

Amendment to IAS 19 – Employee benefits – Employee contribution

01 – feb – 15 Clarifies under which circumstances employees’ contributions to post-employment benefit plans consist of a decrease in the cost of sort term benefits.

Improvements to international financial statement standards (2010-2012 cycle)

01 – feb – 15 "These improvements involve the clarification of some aspects relating to: IFRS 2 – Share based payments: definition of the vesting condition; IFRS 3 – Concentration of business activities: recording of contingent payments; IFRS 8 – Operating segments: disclosures relating to the aggregation of segments and clarification of the need to reconcile total assets by segment with the amount of the assets in the financial statements; IAS 16 – Tangible fixed assets and IAS 38 – Intangible assets: need to proportionately revalue accumulated amortization in the case of the revaluation of fixed assets; and IAS 24 – Disclosure of related parties: defines that an entity that renders management services to the Company or its parent company is considered a related party; and IFRS 13 – Fair value: clarification relating to the measurement of short term receivables or payables.”

Improvements to international financial statement standards (2012-2014 cycle)

01 – jan – 16 These improvements involve the clarification of some aspects relating to: IFRS 5 – Non-current assets held for sale and discontinued operating units: introduces guidelines on how to proceed in the case of changes as to the expected realization method (sale or distribution to the shareholders); IFRS 7 – Financial instruments: disclosures: clarifies the impact of asset monitoring contracts under the disclosures relating to continued involvement of derecognized investments, and exempts the interim financial statements from the disclosures required relating to the compensation of financial assets and liabilities; IAS 19 – Employee benefits: defines that the rate to be used to discount defined benefits must be determined by reference to high quality bonds of companies issued in the currency that the benefits will be paid; and IAS 34 – Interim financial statements: clarification on the procedures to be used when the information is available in other documents issued together with the interim financial statements.

Amendment to IFRS 11 – Joint Agreements – Recording of acquisitions of interests in joint agreements

01 – jan – 16 This amendment relates to the acquisition of interests in joint operations. It establishes the require-ment to apply IFRS 3 when the joint operation acquired consists of a business activity in accordance with IFRS 3. When the joint operation in question does not consist of a business activity, the tran-saction must be recorded as the acquisition of assets. This amendment is of prospective application to new acquisitions of interests.

"Amendment to IAS 1 – Presentation of Financial Statements - “Disclosure initiative”

01 – jan – 16 “This amendment clarifies some aspects relating to disclosure initiatives, namely: (i) the entity must not make it difficult to understand the financial statements by the aggregation of significant items with insignificant items or the aggregation of significant items of different natures; (ii) the disclosures specifically required by the IFRS need only to be provided if the information in question is significant; (iii) the lines in the financial statements specified by IAS 1 can be aggregated or segregated in accor-dance with what is significant in relation to the objectives of the financial statement; (iv) the part of other recognized income resulting from the application of the equity method in associates and joint agreements must be presented separately from the remaining elements of other recognized income, also segregating the items that can be reclassified to the statement of profit and loss from those that will not be reclassified; (v) the structure of the notes must be flexible, and should follow the following order: • a declaration of compliance with the IFRS’s in the first section of the notes; • a description of the significant accounting policies in the second section; • supporting information for the items on the financial statements in the third section; and• other information in the fourth section.”

Amendment to IAS 16 – Tan-gible fixed assets and IAS 38 – Intangible assets – Acceptable depreciation and amortization methods

01 – jan – 16 This amendment establishes the presumption (that can be refuted) that income is not an appropriate basis for amortizing an intangible asset and forbids the use of income as a basis for depreciating tangi-ble fixed assets. The presumption established for amortizing intangible assets can only be refuted when the intangible asset is expressed based on the income generated or when utilization of the financial benefits is significantly related to the income generated.

Amendment to IAS 16 – Tangible fixed assets and IAS 41 – Agriculture – Production plants

01 – jan – 16 This amendment excludes plants that produce fruits or other components used for harvesting and/or removal under the application of IAS 41, becoming covered by IAS 16.

Amendment to IAS 27 – Application of the equity method on separate financial statements

01 – jan – 16 This amendment introduces the possibility of measuring interests in subsidiaries, joint agreements and associates in separate financial statements in accordance with the equity method, in addition to the measurements methods presently existing. This change applies retrospectively.

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New standards and interpretations, amended or revised not adoptedThe following standards, interpretations, amendments and revisions, with mandatory application to future financial years, until the approval date of the accompanying financial statements, were not endorsed by the European Union:

Standard Observations

IFRS 9 – Financial Instruments (2009) and subsequent amendments

This standard is part of the revision of IAS 39 and establishes the new requirements for the classification and measurement of financial assets and liabilities to the methodology for the calculation of impairment and for the application of hedge accounting rules. This standard is of mandatory application for years beginning on or after 1 January 2018.

IFRS 14 – Regulated assets This standard establishes the financial statement requirements of entities that adopt for the first time IFRS standards applicable to regulated assets.

IFRS 15 – Revenue from Client Contracts This standard introduces a structure for recognizing revenue based on principles and a model to be applied to all contracts entered into with clients, substituting IAS 18 – Revenue, IAS 11 – Construction contracts; IFRIC 13 – Fidelity programs; IFRIC 15 – Agreements to construct real estate; IFRIC 18 – Transfer of assets from clients and SIC 31 – Revenue – Direct exchange contracts involving services and publicity. This standard is of mandatory application for years beginning on or after 1 January 2018.

IFRS 16 – Leases This standard introduced the principles for the recognition and measurement of leases, substituting IAS 17 – Leases. The standard defines a single model for recording lease contracts, which results in the recognition by the lessor of assets and liabilities for all lease contracts, except for those for periods of less than twelve months or for leases of assets of reduced value. Lessors will continue to classify leases between operating and finance leases, IFRS 16 not requiring substantial changes for such entities in relation to IAS 17.

Amendments to IFRS 10 – Consolidated Financial Statements, IFRS 12 – Disclosures Relating to Participations in Other Entities and IAS 28 – Investments in Associates and Jointly Controlled Entities

These amendments clarify several aspects relating to the application of the consolidation exception by investment entities.

Amendments to IFRS 10 – Consolidated Financial Statements and IAS 28 – Investments in Associates and Jointly Controlled Entities

These amendments eliminate the conflict existing between these standards, relating to the sale or the contribution of assets between the investor and the associate or between the investor and the jointly controlled entity.

These standards have not been endorsed by the European Union, ans as such, were not adopted by Celbi in the financial year ended December 31, 2015. No significant impacts on the financial state-ments of the Company are expected to arise from the adoption of these standards.

The accounting policies and measurement criteria adopted by Celbi in December 31, 2015 are con-sistent with those used in the preparation of financial statements as of December 31, 2014.

In preparing financial statements in accordance with IAS/IFRS, the Board of Directors of Celbi adopted certain estimates and assumptions that affect reported assets and liabilities as well as in-come and expenses incurred for the periods reported. All estimates and assumptions made by the Board of Directors were based on their best existing knowledge, at the date of approval of the finan-


39

cial statements, of the events and transactions in progress.

The financial statements have been prepared for consideration and approval at the General Shareholders Meeting. The Board of Directors believes that they will be approved without changes.

2.2. Main accounting policies

The main accounting policies used in the prepa-ration of the accompanying financial statements are as follows:

a) Intagible assetsIntangible assets are recorded at cost, net of de-preciation and accumulated impairment losses. Intangible assets are only recognized if it is likely that future economic benefit will flow to the Company, are controlled by the Company and if its value can be reliabily measured.

Research costs incurred on new technical knowl-edge, when existing, are recognized in the income statement.

Development costs are recognised as an intan-gible asset if the Company 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 ben-efits. Development costs that do not meet these criteria are recorded as expenses in the period they are incurred.

Internal costs associated with maintaining and developing software are recorded as expenses in the income statement when incurred, except when these costs are directly associated with pro-jects for which the existence of future economic benefits to the Company is likely to occur. In these situations, costs are capitalized as intan-gible 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).

b) Tangible fixed assetsTangible fixed assets acquired up to January 1st 2009 (date of transition to International Financial Reporting Standards as adopted by the European Union), are recorded at deemed cost, which cor-responds its acquisition cost or its acquisition cost re-valued in accordance with the generally accepted accounting principles in Portugal until that date, net of accumulated depreciation and impairment losses.

Tangible fixed assets acquired after that date, are recorded at acquisition cost net of depreciation and accumulated impairment losses.

Depreciation is calculated, as from the date the assets are ready to be used, on a straight-line basis in accordance with the period of expected useful life for each group of assets.

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

Years

Land and natural resources 7-50

Buildings and other constructions 10-50

Machinery and equipament 3-20

Vehicles 6

Tools 5-10

Office equipment 3-15

Other tangible assets 3-20

The caption “Land and natural resources”, in addi-tion to the land, roads, includes pavements, sewers, extension of the railway, wells and water pipes. As land is not depreciable the years of depreciation relate exclusively to the other components of this caption.

The maintenance and repair expenditure that does not increase the useful life of assets or result in sig-nificant benefits or improvements in the elements of the fixed assets are recorded as cost in the period they are incurred.

Tangible fixed assets in progress correspond to tangible fixed assets still under construction, and are recorded at acquisition cost net of impairment

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losses. These assets are depreciated from the date when the underlying assets are ready for use.

The gains or losses arising from sale or disposal of tangible fixed assets are calculated as the difference between the selling price and net book value at the date of sale or disposal, and are recorded in the in-come statement under the captions “Other income” or “Other costs “.

c) Lease contractsClassifying 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.

Assets acquired under financial lease contracts and the corresponding responsibilities are accounted by the financial method. According to this method, the asset cost is recorded in tangible fixed asset, the cor-responding responsibility is recorded in liabilities and interest included in rents, and depreciation of assets, calculated as described in Note 2.2.b), are recorded as costs in the income statement for the period to which they relate.

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.

d) Grants from the Government or other public entitiesGrants received related to training programmes or operating subsidies are recorded under the caption “Other operational income” of the income state-ment for the year in which these programmes are carried out regardless of the date they are received.

Non-repayable subsidies obtained to finance in-vestment in tangible fixed assets are recorded as “Other non-current liabilities” and “Other current liabilities” corresponding to the instalments repay-able in the long and short term, respectively, and recognized in the income statement in accordance

with the depreciation of the related tangible fixed assets.

e) Impairment of tangigle and intagible assetsAn assessment for impairment of assets is carried out at each balance sheet date and whenever events or changes in circumstances indicate that the car-rying amount of an asset may not be recoverable.

Where the carrying amount of an asset exceeds its recoverable amount, an impairment loss is recog-nized and recorded in the income statement under the caption “Provisions and impairment losses”.

The recoverable amount is the higher of an asset’s net selling price and its value in use. The net selling price is the amount obtainable from the sale of an asset in an arm’s length transaction, net of costs directly attributable to the sale. Use value is the present value of estimated future cash flows that are expected to arise from continued use of the asset and its disposal at the end of its useful life. The recoverable amount is estimated for each individual asset, if not possible, for the cash flows generating unit to which the asset belongs.

When the impairment losses recognized in prior years no longer exist, they are reversed. The reversal of an impairment loss is recognized in the income statement under “Other income”. This reversal of the impairment loss is only recognized to the extent that the increased carrying amount does not exceed the carrying amount that would be recognized (net of amortisation or depreciation) if the impairment loss had not been recorded in previous years.

f)Borrowing costsBorrowing costs are recognised as expense in the income statement in an accrual basis.

When the Company contracts loans with the specif-ic purpose of financing fixed assets, related interest is capitalized as part of the cost of the asset. The capitalization of costs begins after the start of the preparation of the construction activities, and ceas-es when the asset is ready for use or if the project is suspended.


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g) InventoriesThe raw, subsidiaries and consumables materials are valued at average acquisition cost less the amount of volume discounts granted by suppliers, which is lower than their market value. The finished products and semi-finished products, by-products and products and work in progress are valued at production cost, which includes the cost of raw materials incorporated, manpower and man-ufacturing overheads, which is lower than market value. Within this perspective, the wood harvested owned by the Company is valued at production cost, which includes costs incurred in harvesting and forwarding the wood, as well as a proportional part of the costs arising from establishment, main-tenance and administrative expenses of these assets in relation to the harvested area.

The Company shall register the corresponding impairment losses, when applicable, to reduce the inventories to their net realizable value or market price.

h) Biological assetsA part of the activity of Altri Group, to which the Celbi belongs, is the plantation of forest of different species, especially eucalyptus, which are used as raw material for the production of pulp. As at Decem-ber 31, 2015 the Altri Group owns several forests intended for this activity, which are classified under the heading “Biological assets”. The forest land owned by the Group is valued in accordance with the accounting policy described in Note 2.2 b) and is shown under “Tangible assets” of the consolidated statement of financial position.

In the absence of an active market in Portugal for forest species and given the impossibility of esti-mating in a reliable way the present value of future cash flows generated by these biological assets, the Board of Altri opted to record the biological assets at historical cost less impairment losses, which includes all expenses incurred with planting and development.

The cost of the wood is transferred to production costs when the wood is harvested and incorporated in the final product in relation to the quota between

the harvested area and the total area of the property. Consequently, the volumes harvested from Com-pany plantations are valued at the specific cost for each area that has been cut. Although it is not possible to estimate in a reliable way the fair value of biological assets for the reasons mentioned above, it is however the Board of Direc-tors’ belief that this is higher than its book value.

i) Investment propertiesThe Company’s investment properties basically correspond to land and buildings leased to other companies in the Altri Group, not intended for use in the production or supply of goods or services or for administrative purposes or for sale in the ordinary course of business of the Company.

Investment properties are measured at acquisition cost less accumulated depreciation and any accumu-lated impairment losses.

Depreciation is calculated after the time when the asset is ready to be used, according to the straight-line basis, in compliance with the period of useful life for each group of assets, which in the case of investment properties varies between 7 and 50 years.

j) ProvisionsThe Company’s investment properties basically correspond to land and buildings leased to other companies in the Altri Group, not intended for use in the production or supply of goods or services or for administrative purposes or for sale in the ordi-nary course of business of the Company.

Investment properties are measured at acquisition cost less accumulated depreciation and any accu-mulated impairment losses.

Depreciation is calculated after the time when the asset is ready to be used, according to the straight-line basis, in compliance with the period of useful life for each group of assets, which in the case of in-vestment properties varies between 7 and 50 years.

k) Pension fundThe Company ensures a pension fund through a defined contribution plan, being the contribu-

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tions recognized as expense in the period. The contribution varies annually in accordance with Altri Group results (EBITDA). Hereupon, it is assigned, for each employee of the permanent staff, a percentage of their pensionable salary (basic pay + time exemption + shift premium) based on their length of service.

l) Financial instrumentsi) Investments in Group companiesInvestments in share capital of subsidiary com-panies are measured in accordance with “IAS 27 - Consolidated and Separate Financial Statements,” at cost less any impairment losses.

ii) InvestmentsInvestments held by the Company are classified as follows:

Financial assets at fair value through profit or loss: this category is divided into two subcategories: “Financial assets held for trading” and “Investments at fair value through profit or loss.” A financial asset is classified in this category if acquired with the purpose of selling in the short term or if its performance and investment strategy are analysed and defined by the Board based on the fair value of the financial asset. Derivatives are also classified as held for trading unless they are allocated to hedging. Assets in this category are classified as current assets if they are held for trading or if it is expected to be sold within less than 12 months of the balance sheet date;

Investments held to maturity: this category in-cludes financial assets, non-derivatives, with fixed or variable pay, which have a fixed maturity and whose intention of the Board of Directors is to maintain them until the date of maturity;

Investments available for sale: they include finan-cial assets, non-derivatives that are designated as available for sale or those that do not fit the above categories. This category is included in non-current assets, unless the Board has the intention to sell the investment within less than 12 months of the balance sheet date. Investments are initially recorded at their acquisi-

tion value, which is the fair value of the price paid including transaction costs, for investments held to maturity and investments available for sale.

After initial recognition, investments at fair value through profit or loss and investments available for sale are revalued at their fair values by reference to their market value on the balance sheet date without any deduction for transaction costs that may occur until their sale. Investments in equity instruments that are not listed and for which it is not possible to estimate reliably the fair value, are held at cost less any impairment losses. Investments held to maturity are measured at amortised cost using the effective interest rate.

Gains or losses from changes in fair value of invest-ments available for sale are recognized in equity under the caption “Fair value reserve” included in “Other reserves” until the investment is sold or received or until the fair value investment is below its cost of acquisition which corresponds to an impairment loss, at which time the cumulative loss is transferred to the income statement.

All purchases and sales of investments are recog-nized on the date of signing of contracts of sale, regardless of their settlement date.

iii) Accounts receivableDebts from customers, other debtors and other parties are recorded at face value and presented in the statement of financial position net of any impairment losses recognized in “accumulated impairment losses,” so that assets may reflect the net realizable value. These items, when current, do not include interests, as the impact of the discount is not considered relevant.

Impairment losses are recorded in the sequence of events that indicate, objectively and in a quantifiable manner, that all or part of the outstanding balance will not be received. To this end, the Company takes into account market information demonstrating that:

- the counterparty shows significant financial dif-ficulty;- delays in payments by the counterparty are sig-nificant;


43

-it is probable that the debtor will enter into liqui-dation or financial restructuring.

The impairment losses represent the difference between the carrying amount of accounts receivable and the corresponding present value of estimated future cash flows, discounted at original effective interest rate, which in cases where there is a pros-pect of receiving in less than one year is considered void because the effect of discounting is deemed irrelevant.

iv) Loans and non-current accounts payableLoans and non-current accounts payable are re-corded in liabilities at their nominal value net of transaction costs that are directly attributable to the issuance of these liabilities. Financial costs are calculated according to the effective interest rate and recorded in the income statement for the period in accordance with the principle of accrual.

Whenever there is legally enforceable right to offset assets and liabilities and the Board has the intention to settle on a net basis or realize the asset and settle the liability simultaneously, they are balanced and presented in the statement of financial position for its net value.

v) Accounts payableAccounts payable which do not bear interest, are recorded at their nominal value, which is basically equivalent to its fair value, as the financial effect of discounting is considered immaterial.

vi) Cash and cash equivalentsThe amounts included in “Cash and cash equiva-lents” refer to cash, bank deposits, bonds and other short term investments which mature in less than three months, and that can be immediately mobi-lized without significant risk of changes in value .

As to the cash flow statement, the “Cash and cash equivalents” comprises bank overdrafts included in the balance sheet caption “Bank Loans”.

vii) DerivativesThe Company uses derivative instruments to man-age their financial risks as a way to hedge these risks; derivatives are not used for trading purposes.

Derivatives used by the Company defined as hedg-ing instruments in cash flow, refer to hedging in-struments of interest rate on borrowings, exchange rate, as well as hedging the price of paper pulp. The indexers, the calculation, the dates for recalculation of interest rates and the repayment plans of hedging instruments for interest rate are identical to the conditions established for the underlying loans contracted, thus forming perfect hedges. The price indices which are indexed to futures contracts cov-ering the price of paper pulp are the most commonly used by the Group companies as a reference price for the sale of its pulp.

The criteria used by the Company to classify de-rivatives as hedging instruments in cash flow are as follows:- it is expected that the hedge is 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 transac-tion to be covered at the beginning of the hedge;- the hedged transaction is highly probable.

The hedging instruments are recorded at fair value. Changes in fair value of these instruments are recog-nized in equity under the caption “Hedging reserve” and are transferred to results in the same period in which the hedged instrument affects results.

Determining the fair value of financial instruments is conducted using computer systems for valuation of derivatives and is based on the discount of future cash flows of the fixed and variable “legs” of the derivative, to the date of the statement of financial position.

Recording for hedging derivatives is discontinued when the instrument matures or is sold. In situ-ations where the derivative no longer qualifies as a hedging instrument, the fair value differences accumulated until then, which are recorded in shareholders’ equity caption “Hedging reserve”, are transferred to income for the period, or added to the amount of the asset to which the hedged trans-actions gave rise, and subsequent revaluations are recorded directly in the income statement.

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When there are derivatives embedded in other financial instruments or other contracts, they are treated as separate derivatives in situations where the risks and characteristics are not closely related to the host contracts and in situations where con-tracts are not presented at fair value with unrealized gains or losses recorded in the income statement.

Whenever derivative instruments, although con-tracted for the specific purpose of hedging financial risks, do not fit the above requirements for clas-sification as hedging instruments, changes in fair value directly affect the income statement under “Financial Income” “and” Financial costs “.

viii) Financial liabilities and equity instrumentsFinancial liabilities and equity instruments are classified according to the contractual substance of the transaction, regardless of their legal form. Equity instruments are the ones that show a residual interest in the Group’s assets, after deduction of the liabilities, being recorded at the amount received, net of costs incurred in their issue.

ix) Treasury sharesTreasury shares are recorded at acquisition cost as a deduction from equity. Gains and losses related to the sale of treasury shares are recorded under “Other reserves” and do not affect the profit/loss of the exercise.

x) Discount notes and accounts receivable sold in “factoring”The Company derecognise financial assets in its financial statements only in cases when the con-tractual right to cash flows inherent in such assets has expired, or when the Group transfers substan-tially all risks and rewards concerning ownership of such assets to a third party. If the Company retains substantially all the risks and benefits concerning ownership of such assets, this will continue to be recognized in the financial statements, recorded as liabilities under the heading “Other Loans” the monetary consideration for the assets transferred.

Consequently, the balances of customers covered by discount notes not matured and accounts re-ceivables factored on the date of each statement of financial position, with the exception of “non-

recourse factoring” operations (and to which it is clear that the risks and benefits inherent in such accounts receivable are transferred) are recognized in the financial statements of the Group until the time of its receipt.

xi) Assets classified as held for sale or discon-tinuedThe assets and liabilities are classified as held for sale or discontinued, when its realization is expect-ed to be effective not through use but through sale. The Company classifies assets and liabilities under this heading when there is a high probability of sale and the assets and liabilities are available for immediate sale. The Board of Directors is engaged in the sale of assets and liabilities under this heading and it is their understanding that this will take place over the next twelve months.

Assets classified as held for sale or discontinued are valued at the lower of book value at the date of decision to selling or at fair value less costs of sale.

m) Contingent assets and liabilitiesContingent liabilities are defined by the Company as (i) obligations arising from past events and whose existence will only be confirmed by the occurrence, or not, of one or more uncertain future events not completely within the control of the Company or (ii) present obligations arising from past events but not recognized because it is unlikely that a outflow of resources affecting economic benefits is required to settle the obligation or because the amount of the obligation cannot be measured with sufficient reliability. Contingent liabilities are not recognized in the financial statements of the Company but they are disclosed, unless the possibility of an outflow of funds affecting future economic benefits is remote, in which case they are not even disclosed.

Contingent assets are possible assets arising from past events and whose existence will only be con-firmed by the occurrence, or not, of one or more uncertain future events not completely within the control of the Company.

Contingent assets are not recognized in the Com-


45

pany’s financial statements but are disclosed only when the existence of future economic benefits is probable.

n) Income taxThe income tax for the year is calculated based on taxable income of the Company under the tax rules in force and considers deferred taxation.

Altri is the central company of a group of companies that are taxed under the Special Taxation Scheme for Groups of Companies (“RETGS”) in accordance with Article 69 of the Code of Taxation of Income and Gains of Collective Persons.

Deferred taxes are calculated based on the balance sheet liability method and reflect the temporary differences between the amount of assets and lia-bilities for accounting reporting purposes and the equivalent amounts for tax purposes. Deferred tax assets and liabilities are calculated and evaluated annually using the tax rates in force or announced to be in force at the time of the expected reversal of temporary differences.

Deferred tax assets are recognized only when there is reasonable expectation of future fiscal profits suf-ficient for their use, or in situations where there are taxable temporary differences to offset the deduct-ible temporary differences in the period of reversal. At the end of each period a review of deferred taxes is made, and they are reduced whenever their future use is no longer probable.

Deferred taxes are recorded as expenses or income for the year, except if they result from amounts recorded directly under equity, in which case the deferred tax is also recorded under that item.

o) Revenue and accrualsRevenue from the sale of goods is only recognized in the income statement when (i) the significant risks and rewards of ownership of property are transferred to the buyer, (ii) an ongoing managerial involvement to the degree usually associated with ownership or effective control of goods sold is not maintained, (iii) the amount of revenue can be reli-ably measured, (iv) it is probable that the economic benefits associated with the transaction will flow

to the Company and (v) the costs incurred or to be incurred concerning the transaction can be reliably measured. Sales are recognized net of taxes, rebates and other costs related to its implementation, by the fair value of the amount received or receivable.

Dividends are recognized as income in the income statement for the period in which its allocation is decided.

The remaining revenues and expenses are recorded in accordance with the principle of accruals for which they are recognized as they are generated, regardless of when they are received or paid. The differences between the amounts received and paid and the related income and expenses are recorded under accruals and deferrals included under “Other current assets” and “Other current liabilities”.

p) Balances and transactions expressed in foreign currenciesAll assets and liabilities expressed in foreign cur-rencies are converted into EUR equivalents using the official exchange rates prevailing on the date of the statement of the financial position. Both favourable and unfavourable exchange differ-ences arising from differences between exchange rates at the date of transactions and those valid for the date of collection, payment or at the date of the statement of financial position, for the mentioned transactions, are recorded as income and costs in the consolidated statement of income for the year, except those relating to non-monetary values whose change in fair value is recorded directly under equity.

q) Subsequent eventsEvents occurring after the balance sheet date that provide further evidence or information about conditions that existed at the balance sheet date (adjusting events) are reflected in financial state-ments. Events after the balance sheet date that are indicative of conditions that arose after the balance sheet date (non-adjusting events), when material, are disclosed in the notes to the financial statements.

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r) Cah flow statementThe cash flow statement is prepared in accord-ance with IAS 7, using the direct method. The Company classifies as “Cash and cash equiva-lents” investments with maturity less than three months and for which the risk of change in value is irrelevant.

The cash flow statement is classified in operat-ing activities (which include cash receipts from customers, payments to suppliers, personnel and other payments related to operating activities), financing activities (including, inter alia, payments and receipts for the loans, leasing contracts and payments of dividends) and investment activities (including, in particular, acquisitions and disposals of investments in subsidiaries and receipts and payments arising from the purchase and sale of tangible fixed assets).

s) Judgements and estimatesWhen preparing the accompanying financial state-ments, judgments and estimates have been made and various assumptions were used that affect the reported amounts of assets and liabilities as well as the reported amounts of income and expenses for the year.

The estimates and underlying assumptions were determined based on the best knowledge of cur-rent events and transactions existing at the date of approval of the financial statements, as well as the experience of past events and / or current events. However, situations may occur in subse-quent periods that are not foreseeable at the time of approval of financial statements, and these are not considered in those estimates. Changes to the estimates that occur after the date of the financial statements will be corrected prospectively. For this reason and given the degree of uncertainty, actual results of the transactions in question may differ from the corresponding estimates.

The main judgments and estimates made in preparing the accompanying financial statements were as follows:

– Useful lives of tangible and intangible assets;– Impairment analysis of tangible and intangible assets;

– Record of provisions and impairment losses; and– Fair value of derivative financial instruments.

t) Risk management policyCelbi is exposed primarily to (i) market risk, (ii) liquidity risk and (iii) credit risk. The Board´s main objective as to risk management is to reduce these risks to a level considered acceptable for the development of the Company’s activities. The guidelines of the risk management policy are set by Celbi’s Board of Directors, who determines the boundaries of acceptable risk. The deployment of the risk policy is carried out by the Board and the Management of the Company.

a) Market risk When managing the market risk, the interest rate risk, the risk of exchange rate and the risk of var-iability in commodities prices, are of particular importance.

The Company uses derivative instruments to man-age the market risks to which it is exposed in order to ensure their hedging. Derivative instruments are not used for trading or speculation purposes.

i) Interest rate riskThe Company’s exposure to interest rates arises mainly from long-term loans which consist mostly of debt indexed to Euribor.

Celbi uses derivatives or similar transactions for the purpose of hedging interest rate risk con-sidered significant. Three principles are used in the selection and determination of interest rate hedging instruments:

— For each derivative or hedging instrument used for protection of risk associated with a particular funding, there is coincidence between the dates of the flows of interest paid on loans subject to hedging and settlement dates under the hedging instruments;

— Perfect match between the base rates: the rate used in derivative or hedging instrument should be the same as the financing/transaction that is being covered; and


47

— Since the beginning of the transaction, the maximum cost of debt resulting from the hedging transaction performed is known and limited, even in scenarios of extreme changes in market interest rates, aiming that the level of fees thereof result-ing are within the cost of funds considered in the Company’s business plan.

Since the entire debt of Celbi is indexed at vari-able rates, interest rate swaps are used whenever it is deemed necessary as a means of protection against changes in future cash flows associated with interest payments. The interest rate swaps contracted have the economic effect of converting the loans associated with variable rates to fixed rates. Under these contracts Celbi agrees with third parties (banks) to exchange, in pre-deter-mined periods of time, the difference between the interests calculated at a fixed rate and at a variable rate contracted at the time of renegoti-ation, with reference to the respective notional amounts agreed.

The counterparties of hedging instruments are limited to credit institutions of high credit qual-ity, and it is the Company’s policy to favour banks that are part of its financing operations when contracting these instruments. In order to decide on the counterparty for sporadic operations, Celbi asks for proposals and indicative prices from a significant number of banks to ensure adequate competitiveness of these operations.

In determining the fair value of hedges, Celbi uses certain methods, such as valuation option models and discounting future cash flows models, and uses assumptions that are based on the conditions of market interest rates prevailing at the date of the consolidated statement of financial position. Comparative prices of financial institutions, for specific or similar instruments, are used as refer-ence for evaluation.

Celbi’s Board of Directors approves the terms and conditions of funding considered material to the Company, upon analysis of the debt structure, the risks involved and the different options on the market, particularly regarding the type of interest rate (fixed/variable).

The Company’s objective is to limit the volatility of cash flows and results taking into account the profile of its operational activity through the use of an appropriate mix of fixed and floating rate debt. Company policies allow the use of interest rate derivatives to reduce exposure to changes in the Euribor but not for speculation purposes.

Most of the derivatives used by the Company in the management of interest rate risk are defined as cash flow hedging instruments for setting perfect hedges. The indexers, the calculations, the renegotiation dates of interest rates and repayment plans of hedging instruments for interest rate are identical in all respects to the conditions established for the underlying loans contracted. However, there are some derivatives that, although they have been used for the pur-pose of hedging the interest rate, do not fit the above requirements for classification as a hedging instrument.

The sensitivity analysis of the Company’s results as to changes in the interest rate is shown in Note 20. ii) Exchange rate riskThe Company is exposed to exchange rate risk in transactions relating to sales of finished products in international markets in currencies other than the Euro.

Whenever the Board deems necessary, to reduce the volatility of its results to the variability of exchange rates, exposure is controlled through a programme to buy foreign currency forwards or other exchange rate derivatives.

Celbi’s Board of Directors believes that any changes in the exchange rate will not have a significant effect on the consolidated financial statements.

iii) Risk of variability in commodities pricesOffering services in a sector that trades in com-modities (paper pulp), Celbi is particularly ex-posed to changes in its price, with corresponding impact on its results. However, to manage this risk hedging contracts were closed covering

Annual Report 2015

48

variation in pulp prices at amounts and values deemed appropriate to the operations envisaged, thus reducing the volatility of its results.

The increase/decrease of 5% of the pulp price traded by Celbi during the year ended December 31, 2015 would have meant an increase/decrease in operating results of approximately EUR 18.7 million, regardless of the effect of paper pulp derivatives (Note 26) and keeping all other pa-rameters unchanged.

b) Liquidity riskThe main objective of liquidity risk management policy is to ensure that the Company has availa-ble, at all times, the financial resources needed to meet its responsibilities and pursue the strategies outlined by honouring all commitments with third parties, when they become due, through appropriate management of the maturity of funding.

The Company thus follows an active policy of refi-nancing, focused on (i) maintaining a high level of free and readily available resources to meet short term needs; and (ii) extension or maintenance of the maturity of the debt according to the cash flows and the leverage capability in its balance sheet.

The analysis of liquidity for financial instruments is shown with the respective notes to each class of financial liabilities.

c) Credit risk The Company is exposed to credit risk in its current operating activities. This risk is controlled through a system of collecting financial and qualitative infor-mation, provided by recognized entities that offer information on risks to help assess the viability of customers in fulfilling their obligations, in order to reduce the risk of granting credit.

The credit risk assessment is carried out on a regu-lar basis, taking into account the current economic conditions and the specific situation of the credit for each company. Corrective procedures are adopt-ed whenever deemed necessary.

Credit risk is limited by the concentration risk management and an accurate selection of counter-

parties as well as by contracting credit insurance with specialized institutions that cover a significant part of the credit granted as a result of activities undertaken by the Company.

The adjustments to accounts receivable are calcu-lated taking into account (i) the risk profile of the customer; (ii) the average collection period; and (iii) the customer’s financial condition.

The amounts shown in the statement of financial position are net of accumulated impairment losses for doubtful debts which were estimated by the Company, and are thus at their fair value.

3.CHANGES IN ACCOUNTING POLICIES AND CORRECTION OF ERRORSDuring the financial year ended December 31, 2015, there were no changes in accounting policies and no material errors relating to prior years were corrected.


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Annual Report 2015

50

4. TANGIBLE FIXED ASSETSDuring the financial years ended December 31, 2015 and 2014, the changes in value of tangible fixed assets and the depreciation and accumulated impairment losses were as follows:

2015

Gross asset value

Land and natural resources

Buildings and other constructions

Machinery and equipment Vehicles Office equipment Other tangible assets Ongoing

tangible assetsPrepayments

for fixed assets Total

Opening balance 11,282,575 66,055,134 665,714,689 751,517 4,397,401 7,641,274 17,148,200 115,887 773,106,677

Additions - - 13,830,728 13,126 163,920 9,315 913,698 955 14,931,742

Disposals - - (10,098,146) (32,672) (102,708) (138,761) - - (10,372,287)

Transfers and write-offs - - 17,003,582 - 2,805 65 (17,006,452) - -

Closing balance 11,282,575 66,055,134 686,450,853 731,971 4,461,418 7,511,893 1,055,446 116,842 777,666,132

Accumulated depreciation Land and natural

resourcesBuildings and other

constructionsMachinery and

equipment Vehicles Office equipment Other tangible assets Ongoing tangible assets

Prepayments for fixed assets Total

Opening balance 7,311,012 60,210,728 421,332,122 750,642 4,267,403 7,428,160 501,300,067

Additions 308,294 584,076 31,796,709 2,658 117,723 71,415 32,880,875

Disposals - - (9,891,117) (26,676) (102,708) (135,609) (10,156,110)

Transfers and write-offs - - - - - - -

Closing balance 7,619,306 60,794,804 443,237,714 726,624 4,282,418 7,363,966 524,024,832

3,663,269 5,260,330 243,213,139 5,347 179,000 147,927 1,055,446 116,842 253,641,300

2014

Gross asset value






Opening balance 11,052,575 66,055,134 659,999,893 751,517 4,584,837 7,690,992 4,532,561 189,210 754,856,719

Additions 230,000 - 4,579,891 - 49,620 26,190 13,848,733 - 18,734,434

Disposals - - (44,573) - (237,056) (123,859) - - (405,488)

Transfers and write-offs - - 1,179,478 - - 47,951 (1,233,094) (73,323) (78,988)

Closing balance 11,282,575 66,055,134 665,714,689 751,517 4,397,401 7,641,274 17,148,200 115,887 773,106,677

Accumulated depreciationLand and natural





Opening balance 6,995,854 59,616,772 391,744,961 749,767 4,423,480 7,461,460 470,992,294

Additions 315,158 593,956 29,631,734 875 80,979 90,560 30,713,262

Disposals - - (44,573) - (237,056) (123,860) (405,489)


Closing balance 7,311,012 60,210,728 421,332,122 750,642 4,267,403 7,428,160 501,300,067

3,971,563 5,844,406 244,382,567 875 129,998 213,114 17,148,200 115,887 271,806,610


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4. TANGIBLE FIXED ASSETSDuring the financial years ended December 31, 2015 and 2014, the changes in value of tangible fixed assets and the depreciation and accumulated impairment losses were as follows:

2015

Gross asset value






Opening balance 11,282,575 66,055,134 665,714,689 751,517 4,397,401 7,641,274 17,148,200 115,887 773,106,677

Additions - - 13,830,728 13,126 163,920 9,315 913,698 955 14,931,742

Disposals - - (10,098,146) (32,672) (102,708) (138,761) - - (10,372,287)

Transfers and write-offs - - 17,003,582 - 2,805 65 (17,006,452) - -

Closing balance 11,282,575 66,055,134 686,450,853 731,971 4,461,418 7,511,893 1,055,446 116,842 777,666,132

Accumulated depreciation Land and natural





Opening balance 7,311,012 60,210,728 421,332,122 750,642 4,267,403 7,428,160 501,300,067

Additions 308,294 584,076 31,796,709 2,658 117,723 71,415 32,880,875

Disposals - - (9,891,117) (26,676) (102,708) (135,609) (10,156,110)


Closing balance 7,619,306 60,794,804 443,237,714 726,624 4,282,418 7,363,966 524,024,832

3,663,269 5,260,330 243,213,139 5,347 179,000 147,927 1,055,446 116,842 253,641,300

2014

Gross asset value






Opening balance 11,052,575 66,055,134 659,999,893 751,517 4,584,837 7,690,992 4,532,561 189,210 754,856,719

Additions 230,000 - 4,579,891 - 49,620 26,190 13,848,733 - 18,734,434

Disposals - - (44,573) - (237,056) (123,859) - - (405,488)

Transfers and write-offs - - 1,179,478 - - 47,951 (1,233,094) (73,323) (78,988)

Closing balance 11,282,575 66,055,134 665,714,689 751,517 4,397,401 7,641,274 17,148,200 115,887 773,106,677

Accumulated depreciationLand and natural





Opening balance 6,995,854 59,616,772 391,744,961 749,767 4,423,480 7,461,460 470,992,294

Additions 315,158 593,956 29,631,734 875 80,979 90,560 30,713,262

Disposals - - (44,573) - (237,056) (123,860) (405,489)


Closing balance 7,311,012 60,210,728 421,332,122 750,642 4,267,403 7,428,160 501,300,067

3,971,563 5,844,406 244,382,567 875 129,998 213,114 17,148,200 115,887 271,806,610

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5. INTANGIBLE ASSETSDuring the financial years ended December 31, 2015 and 2014, changes in the value of intangible assets as well as the correspondent amortization and accumulated impairment losses were as follows:

2015

Gross assets

Software Other intangible assets Total Opening balance 7,048,561 25,600 7,074,161Additions 24,080 - 24,080

Closing balance 7,072,641 25,600 7,098,241

Accumulated amortization


Closing balance 6,988,820 25,600 7,014,420

83,821 - 83,821

2014

Gross assets

Software Other intangible assetss Total Opening balance 6,968,501 25,600 6,994,101Additions 80,060 - 80,060

Closing balance 7,048,561 25,600 7,074,161

Accumulated amortization


Closing balance 6,909,292 25,600 6,934,892

139,269 - 139,269


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6. INVESTMENT PROPERTIESThe amount recorded in “Investment properties” on December 31, 2015 and 2014 refers mainly to land and buildings leased.

During the financial year ended December 31, 2014 the Company sold lands, facilities and tree nursery equipment, located on Furadouro’s property, to the group company Viveiros do Furadouro, Lda. (Note 30).

The Board of Directors believes that the fair value of investment properties is greater than its net book value.

The investment properties changes during the financial years ended December 31, 2015 and 2014 were as follows:

2015

Gross assets

Opening balance Additions Disposals Transfers Closing balance

5,295,248 - (21,759) - 5,273,489

Accumulated depreciation


1,866,066 53,780 - - 1,919,846

3,429,182 3,353,643

2014

Gross assets


9,333,781 73,323 (4,117,521) 5,665 5,295,248

Accumulated depreciation


5,618,462 53,779 (3,806,175) - 1,866,066

3,715,319 3,429,182

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7. INVESTMENTS IN SUBSIDIARIESOn 31 December, 2015 the subsidiary companies were as follows: 31.12.2015

Company Head office Percentage ownership

Acquisition cost Share capital Net profit

Altri Florestal, S.A. Constância 100% 103,116,056 111,337,988 (565,261)

Caima Indústria de Celulose, S.A. Constância 100% 85,000,000 48,521,409 10,977,431

Caima Energia S.A. Constância 100% 15,000,000 11,614,236 2,177,226

Captaraiz - Unipessoal, Lda. Lisboa 100% 466,563 467,864 78,631

Celtejo - Empresa Celulose do Tejo, S.A.

Vila Velha de Ródão 100% 150,149,687 98,053,052 19,497,183

353,732,306

During the financial year ended December 31, 2015 the Company carried out supplementary capital con-tributions in Altri Florestal, S.A., amounting to EUR 15,000,000 and proceeded to the acquisition of the remaining participation in Celtejo - Empresa de Celulose do Tejo, S.A., amounting to EUR 149,687.

As a result of the merger process as well as capital increase, on December 31, 2015 the subsidiary compa-nies were as follows:

31.12.2014

Company Head Office Percentage ownership

Acquisition cost Share capital Net profit

Altri Florestal, S.A. Constância 100% 88,116,056 96,903,249 (3,252,863)

Caima Indústria de Celulose, S.A. Constância 100% 85,000,000 37,543,978 3,456,811

Caima Energia S.A. Constância 100% 15,000,000 9,437,010 1,103,802

Captaraiz - Unipessoal, Lda. Lisboa 100% 466,563 389,233 (1,080)


Vila Velha de Ródão 99.83% 150,000,000 118,555,870 10,256,190

338,582,619

During the financial year ended December 31, 2014 Celbi was submitted to a merger process, as part of the Altri Group’s restructuring process, where its subsidiaries (Invescaima – Investimentos e participações SGPS, S.A. and Celbinave – Tráfego e Estiva SGPS, Unipessoal, Lda.) were extinguished (Note 1).

During the financial year ended December 31, 2014 Celbi subscribed and carried out a capital increase of its subsidiary Viveiros do Furadouro, Lda. through cash inflows amounting to EUR 715,000. After this operation, the company Viveiros do Furadouro, Lda. was sold by the amount of EUR 1,465,000 (Notes 30 and 32).


55

8. INVESTMENTS IN ASSOCIATED COMPANIES On December 31, 2015 and 2014 the associated company and the share capital, obtained by the merger of Celbinave - Tráfego e Estiva SGPS, Unipessoal, Lda. (Note 1), was as follows:

31.12.2015 31.12.2014

Company Head Office Book value Percentage

ownershipShare capital Net profit Share

capital Net profit

Operfoz - Operador do Porto da Figueira da Foz

Figueira da Foz 573,240 33% 2,092,359 242,617 1,849,742 309,645

9. INVESTMENTS AVAILABLE FOR SALEOn December 31, 2015 and 2014 the investments available for sale were as follows:

31.12.2015 31.12.2014

Rigor Capital - Produção de Energia, Lda. 10,073,844 10,073,844

Other investments 145,001 145,001

10,218,845 10,218,845

The financial investment in Rigor Capital – Produção de Energia, Lda. resulted from the merger process referred in Note 1.

The Board of Directors of Celbi believes that the book value of the investments available for sale recorded at cost, net of impairment losses according to the accounting policy of the Note 2.2.l) ii), does not differ significantly from its fair value. In the particular case of the investment in Rigor Capital – Produção de Energia, Lda. such as understanding is based on as assessment based on the discounted cash flows method.

10. OTHER CURRENT DEBTORSFor the years ended 31 December 2015 and 2014, the caption “Other noncurrent debtors” was composed as follows:

31.12.2015 31.12.2014

Other debtors - 2,521,897

- 2,521,897

On 31 December, 2014 the item “Other debtors” refers, entirely, to a receivable account related to the bail paid under a lease agreement. On 31 December, 2015 this value is classified as a short term asset and it is recorded in the caption “Other debtors”, in current assets.

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11. CURRENT AND DEFERRED TAXESAccording to current legislation, tax returns are subject to revision and correction by the tax authorities for a period of four years (five years for Social Security), except when there are tax losses, tax benefits have been granted, or ongoing inspections, complaints or appeals, in which cases, depending on the cir-cumstances, the deadlines are extended or suspended. Thus, the Company’s tax returns since 2012 may still be subject to revision.

The Board of Directors believes that any adjustments resulting from reviews / inspections by the tax au-thorities to those tax returns will not have a significant impact on the financial statements on December 31, 2015 and 2014.

Under Article 88º of the Code of Taxation of Income and Gains of Collective Persons, the Company is sub-ject to additional autonomous taxation on a set of expenses at the rates provided in the mentioned article.

Celbi is incorporated in a group of companies (where Altri SGPS, S.A. is the core company) that is taxed under the Special Taxation Scheme for Groups of Companies (“RETGS”). All the companies included in this scheme record the income tax in their individual accounts under the heading “Group companies”. When the subsidiaries contribute with losses, the amount of tax corresponding to the loss that may be compensated with profit from the other companies in the scheme is recorded in individual accounts.

According to the legislation, Celbi uses a deferred tax of 22.5% that results from the sum of the rate ap-proved to the year 2016 and subsequent years which amounts to 21%, the municipal surtax whose rate is 1,5% for the Celbi, except from deferred tax assets that result from tax losses carried forward, when it is used a rate of 21%.

According to the legislation, for the year ending on December 31, 2015 the income tax rate was 21%.

Additionally, in accordance with current legislation, the State Surtax corresponds to the application of an additional tax of 3% on the portion of taxable income between MEUR 1.5 and MEUR 7.5, of 5% on the portion of taxable income between MEUR 7.5 and MEUR 35, and 7% on the taxable income portion that exceeds MEUR 35.

The income taxes recognized in the income statement for the years ended 31 December 2015 and 2014 are detailed as follows:

31.12.2015 31.12.2014

Current income tax (15,874,061) 1,192,255

Deferred income tax 324,730 (126,816)

(15,549,331) 1,065,439


57

Reconciliation of profit before tax for the tax of the year is as follows:

31.12.2015 31.12.2014

Profit before tax 134,833,049 27,007,375

Tax rate (including maximum rate and municipal surtax) 22.50% 24.50%

(30,337,436) (6,616,807)

31.12.2015 31.12.2014

Difference between tax and accounting capital gains and losses (67,880) 184,421

Tax benefits 11,652,419 8,755,489

Autonomous taxation (63,058) (54,029)

State surtax (5,835,858) (1,110,157)

Elimination of double taxation of dividends 9,000,000 -

Other effects 102,482 (93,478)

Income tax (15,549,331) 1,065,439

The item “Tax benefits” on December 31, 2015 and 2014 relates, essentially, to the use of part of the tax credit awarded by the Portuguese Government in the framework of the global incentive given to Celbi’s investment to increase its productive capacity (C09 Project) and for the modernization and expansion of the plant (C15 Project) (Note 38).

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The changes in assets and liabilities for deferred tax during the financial years ended December 31, 2015 and 2014 were as follows:

2015Deferred tax assets

Deferred tax liabilities

Opening balance as of 1.1.2015 925,569 54,395

Effects on income statement:

Increase/(Decrease) in provisions not accepted for tax purposes 292,500 -

Other effects - (32,230)

Total effect on income statement 292,500 (32,230)

Effect on shareholders' funds

Fair value of investments available for sale - -

Fair value of derivatives (Note 26) (61,033) -

Closing balance as of 31.12.2015 1,157,036 22,165

2014Deferred tax assets


Opening balance as of 1.1.2014 1,965,790 421,231

Effects on income statement:

Increase/(Decrease) in provisions not accepted for tax purposes (174,543) -

Other effects - (47,727)

Total effect on income statement (174,543) (47,727)

Effect on shareholders' funds

Fair value of investments available for sale (9,086) -

Fair value of derivatives (Note 26) (856,592) (319,109)

Closing balance as of 31.12.2014 925,569 54,395


59

The breakdown of assets and liabilities for deferred tax at December 31, 2015 and 2014, according to the temporary differences that generated them, is as follows:

31.12.2015 31.12.2014

Deferred tax assets


Deferred tax assets


Provisions and impairment losses not accepted for tax purposes 1,157,036 - 864,536 -

Fair value of investments available for sale - - - -

Fair value of derivatives - - 57,757 -

Other - 22,165 3,276 54,395

1,157,036 22,165 925,569 54,395

12. INVENTORIES AND BIOLOGICAL ASSETSOn December 31, 2015 and 2014, the amount recorded under “Biological assets” refers to forests and charges incurred with the plantations made by the Company. This value can be detailed as follows:

31.12.2015 31.12.2014

Gross value 144,777 144,777

Accumulated impairment losses on biological assets (Note 21) - -

144,777 144,777

On December 31, 2015 and 2014, the amount recorded as “Inventories” can be detailed as follows:

31.12.2015 31.12.2014

Raw, subsidiary and consumable materials 24,700,199 24,105,364

Goods and works in progress 575,585 575,585

Finished and intermediate goods 14,164,309 12,332,861

Advances on account of purchasing - 546,701

39,440,093 37,560,511

Accumulated impairment losses (Note 21) (4,095,000) (2,525,000)

35,345,093 35,035,511

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On December 31, 2015 and 2014, the following stocks were outside the Company’s facilities:

31.12.2015 31.12.2014

In EU ports 8,016,097 7,367,479

Held by third parties 2,599,878 1,904,698

10,615,975 9,272,177

Furthermore, on December 31, 2015 and 2014, there were in the custody of the Company no stocks owned by third parties.

Cost of sales for the year ended 31 December 2015 amounted to EUR 186,214,547 and was computed as follows:

2015

Raw, subsidiary and consumable

materials

Finished and intermediate

goods

Goods and works in progress Total

Opening balance 24,105,364 12,332,861 720,362 37,158,587

Purchases 188,640,830 - - 188,640,830

Inventory adjustment - - - -

Closing balance (24,700,199) (14,164,309) (720,362) (39,584,870)

188,045,995 (1,831,448) - 186,214,547

Sales costs for the year ended 31 December 2014 amounted to EUR 202,807,452 and was calculated as follows:

2014

Raw, subsidiary and consumable

materials

Finished and intermediate

goods

Goods and works in progress Total

Opening balance 23,925,555 14,462,972 578,028 38,966,555

Purchases 201,050,781 - - 201,050,781

Inventory adjustment - (51,297) - (51,297)

Closing balance (24,105,364) (12,332,861) (720,362) (37,158,587)

200,870,972 2,078,814 (142,334) 202,807,452


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13. CLASS OF FINANCIAL INSTRUMENTSThe financial instruments, in accordance with the policies described in Note 2, were classified as follows:

Assets

Notes Financial assets

Investments available for

saleTotal

December 31, 2015

Non current assets

Other noncurrent debtors 10 - - -

Investments available for sale 9 - 10,218,845 10,218,845

- 10,218,845 10,218,845

Current assets

Customers 14 67,678,765 - 67,678,765

Other debtors 15 4,663,051 - 4,663,051

Group companies 30 78,548 - 78,548

Cash and cash equivalents 18 157,763,248 - 157,763,248

230,183,612 - 230,183,612

230,183,612 10,218,845 240,402,457

Notes Financial assets

Investments available for

saleTotal

December 31, 2014

Non current assets

Other noncurrent debtors 10 2,521,897 - 2,521,897

Investments available for sale 9 - 10,218,845 10,218,845

2,521,897 10,218,845 12,740,742

Current assets

Customers 14 62,164,378 - 62,164,378

Other debtors 15 3,385,088 - 3,385,088

Group companies 30 75,030,458 - 75,030,458

Cash and cash equivalents 18 223,875,563 - 223,875,563

364,455,487 - 364,455,487

366,977,384 10,218,845 377,196,229

Annual Report 2015

62

Liabilites

December 31, 2015 Notes Financial liabilities Derivatives Total


Bank loans 20 153,587,500 - 153,587,500

Other loans 20 270,022,085 - 270,022,085

423,609,585 - 423,609,585

Current liabilities

Bank loans 20 10,775,000 - 10,775,000

Other loans 20 81,383,041 - 81,383,041

Suppliers 23 38,617,140 - 38,617,140

Group companies 30 16,967,496 - 16,967,496

Other current creditors 24 2,253,123 - 2,253,123

149,995,800 - 149,995,800

573,605,385 - 573,605,385

December 31, 2014 Notes Financial liabilities Derivatives Total


Bank loans 20 103,837,500 - 103,837,500

Other loans 20 211,581,537 - 211,581,537

315,419,037 - 315,419,037

Current liabilities

Bank loans 20 344,966,800 - 344,966,800

Other loans 23 39,022,526 - 39,022,526

Suppliers 30 1,438,778 - 1,438,778

Group companies 24 2,412,805 - 2,412,805

Other current creditors 26 - 1,902,297 1,902,297

387,840,909 1,902,297 389,743,206

703,259,946 1,902,297 705,162,243

Financial instruments recognised at fair valueThe following table details the financial instruments that are measured at fair value after initial recognition, grouped into three levels according to the possibility to observe its fair value in the market: Level 1: fair value is determined based on active market prices;

Level 2: fair value is determined based on valuation techniques. The main inputs of the valuation models are observable in the market;

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


63

31.12.2015 31.12.2014

Level 1 Level 2 Level 3 Level 1 Level 2 Level 3

Financial liabilities measured at fair value

Derivatives (Note 26) - - - - 1,902,297 -

14. COSTUMERSOn December 31, 2015 and 2014 this caption was composed as follows:

31.12.2015 31.12.2014

Customers, current accounts 67,678,765 62,164,378

Customers, doubtful debts 43,116 44,633

67,721,881 62,209,011

Accumulated impairment losses (Note 21) (43,116) (44,633)

67,678,765 62,164,378

The exposure of Celbi to credit risk is primarily attributable to accounts receivable from its operational activity. The amounts shown in the balance sheet are net of accumulated impairment losses for doubtful debts, which were estimated by the Company in accordance with their experience and based on the as-sessment of the situation and the economic environment. The Board of Directors believes that the book values of accounts receivable are close to their fair value, since they do not bear interest and the discount effect is considered immaterial.

As of December 31, 2015 and 2014, the aging of net customers’ balances can be analysed as follows:

31.12.2015 31.12.2014

Not due 59,873,507 50,593,213

Due with no impairment losses recorded

0 - 30 days 7,484,144 10,288,278

30 - 90 days 293,720 775,756

+ 90 days 27,394 507,131

7,805,258 11,571,165

67,678,765 62,164,378

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64

The Company has hired credit insurance to cover the risk of uncollectible parts of these accounts receiv-able as follows:

31.12.2015 31.12.2014

With credit insurance 53,846,205 44,104,332

Without credit insurance 13,875,676 18,104,679

67,721,881 62,209,011

Celbi does not charge any interests as long as the defined payment terms (on average 60 days) are being complied. Once the deadlines expire, the interest charged is the one set by contract according to the law and applicable to each case, which tends to occur only in extreme situations.

15. OTHER DEBTORSDuring the financial years ended December 31, 2015 and 2014 the caption “Other debtors” was composed as follows:

31.12.2015 31.12.2014

Advances to suppliers 8,711 10,154

Other debtors 5,312,695 4,033,289

5,321,406 4,043,443

Accumulated impairmant losses (Note 21) (658,355) (658,355)

4,663,051 3,385,088

On December 31, 2015 and 2014, the caption “Other debtors” refers primarily to accounts receivable from the value-added tax in foreign countries and accounts receivable from companies belonging to the Altri Group (Note 30). This caption also includes accounts receivable related with guarantees for lease contracts (Note 10).

On December 31, 2015 and 2014, the time frame of the net value of clients’ balances under “Other debtors” is entirely classified as not expired.

Balances that are not due show no signs of impairment. The book value assets net of impairment is con-sidered to be close to its fair value, so the effect of the financial discount is immaterial.


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16. STATE AND OTHER PUBLIC ENTITIESOn December 31, 2015 and 2014 these captions in assets and liabilities were as follows:

Debt balances: 31.12.2015 31.12.2014

Income tax - 2,421

Value-added tax 1,616,318 4,206,704

1,616,318 4,209,125

Credit balances:

Retentions - IRS dependent work (848,827) (545,784)

Social Security contributions (212,773) (214,454)

Other (7,381) (8.426)

(1,068,981) (768,664)

17. OTHER CURRENT ASSETSThe breakdown of “Other current assets” at December 31, 2015 and 2014 is as follows:

31.12.2015 31.12.2014

Rents ans leases paid in advance 398,412 763,408

Insurance paid in advance 517,849 453,885

Accrued income 96,846 665.559

Other 209,260 210,172

1,222,367 2,093,024

18. CASH AND CASH EQUIVALENTSOn December 31, 2015 and 2014, the breakdown of “Cash and cash equivalents” was as follows:

31.12.2015 31.12.2014

Cash 1,998 6,998

Bank deposits 157,761,250 223,868,565

Cash and cash equivalents 157,763,248 223,875,563

During the year ended on December 31, 2015, the payments related to the financial investments refer to supplementary capital contributions performed in Altri Florestal, S.A. and the acquisition of the remaining participation in Celtejo - Empresa de Celulose do Tejo, S.A. (Note 7). During the year ended on December 31, 2014, the payments related to the financial investments correspond to the capital increase on Viveiros do Furadouro, Lda. (Note 7). The collections result from the sale of this subsidiary by the amount of EUR 1,465,000 (Notes 7 and 32) and from the sale of the investments available for sale (Note 9).

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19. EQUITY AND RESERVESEquityOn December 31, 2015, the Company’s share capital was fully subscribed and paid and consisted of 15,500,000 shares with a nominal value of EUR 5 each.

On December 31, 2015, Altri, Participaciones Y Trading, S.L. (Note 1) holds 99.96% of the shares repre-senting the equity of the Company and 100% of voting rights.

Additionally, on December 31, 2015 the Company holds 6,712 own shares.

Legal reservePortuguese commercial legislation requires that at least 5% of annual net profit must be allocated to strengthen the “legal reserve” until it reaches at least 20% of the equity. This reserve is not to be distrib-uted, except in case of liquidation of the Company, but can be used to absorb losses after all other reserves have been exhausted and to increase share capital. Other reservesOn December 31, 2015 and 2014 the item “Other reserves” was as follows:

31.12.2015 31.12.2014

Hedging reserves - (210,224)

Other reserves and retained earnings 65,553,054 167,380,240

65,553,054 167,170,016

The item “Hedging reserves” refers to the fair value of derivatives classified as hedges of cash flows on the effective component of hedging, net of interest and the respective deferred tax (Note 26).


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20. BANK LOANS AND OTHER LOANSOn December 31, 2015 and December 31, 2014, the captions “Bank Loans” and “Other loans” can be detailed as follows:

2015

Nominal value Book valueCurrent Non current Total Current Non current Total

Bank loans

Bank loans 11,000,000 154,000,000 165,000,000 10,775,000 153,587,500 164,362,500

11,000,000 154,000,000 165,000,000 10,775,000 153,587,500 164,362,500

Commercial paper 52,000,000 75,000,000 127,000,000 52,000,000 75,000,000 127,000,000

Bonds - 190,000,000 190,000,000 - 189,309,086 189,309,086

Other loans 29,708,015 5,712,999 35,421,014 29,383,041 5,712,999 35,096,040

Other loans 81,708,015 270,712,999 352,421,014 81,383,041 270,022,085 351,405,126

92,708,015 424,712,999 517,421,014 92,158,041 423,609,585 515,767,626

2014

Nominal value Book valueCurrent Non current Total Current Non current Total

Bank loans

Bank loans - 105,000,000 105,000,000 - 103,837,500 103,837,500

- 105,000,000 105,000,000 - 103,837,500 103,837,500

Commercial paper 37,500,000 5,000,000 42,500,000 36,282,880 5,000,000 41,282,880

Bonds 270,000,000 205,000,000 475,000,000 269,405,820 203,525,848 472,931,668

Other loans 39,278,100 3,055,689 42,333,789 39,278,100 3,055,689 42,333,789

Other loans 346,778,100 213,055,689 559,833,789 344,966,800 211,581,537 556,548,337

346,778,100 318,055,689 664,833,789 344,966,800 315,419,037 660,385,837

The expenses incurred with the issuance of loans are deducted at face value, being recognized as interest over the period of the loan (Note 34).

Bank loansDuring 2013, Celbi obtained a bank loan amounting to 75,000,000 Euro, which was renegotiated in June 2014, with an interest rate equal to Euribor 3 months plus a spread. Payment will be made in five annual successive instalments of MEUR 5, maturing the first in June 2016, and in one final instalment of MEUR 50, in 2021. Therefore, the amount of MEUR 5 is classified as current debt and the remainder as non-current debt.

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During the year ended on December 31, 2014 Celbi has contracted a bank loan amounting to MEUR 30, which bears interest at an interest rate equal to 3 months Euribor plus spread. This loan will be repaid in 24 equal consecutive monthly installments, maturing the first in July 2017, so it is fully classified as non-current debt. During the year ended on December 31, 2015 Celbi has contracted a bank loan of MEUR 30, which bears interest at an interest rate equal to 6 months Euribor plus spread. Payment will be made in five annual successive instalments, maturing the first in January 2016, so the amount of MEUR 6 is classified as current debt and the remainder as non-current debt.

During the year ended on December 31, 2015 Celbi has contracted a bank loan of MEUR 30, which bears interest at an interest rate equal to 3 months Euribor plus spread. Payment will be made in three annual successive instalments, maturing the first in February 2018, so it is fully classified as non-current debt.

Commercial paperThe caption “Commercial paper” refers to four commercial paper programmes. The first program, with a maximum nominal amount of MEUR 12, has a maximum term of three years from the signing date matur-ing on February 15, 2016. The nominal amount of debt on December 31, 2015 is MEUR 12. The second programme, with a maximum nominal amount of MEUR 20, has a maximum term of three years from the date of signature, maturing on January 8, 2016. The nominal amount of debt on December 31, 2015 is MEUR 20. The third programme, with the maximum amount of MEUR 60, has a maximum term of five years from the signing date of the contract. On December 31, 2015 the nominal amount of debt is MEUR 20. Lastly, the fourth programme, with a maximum nominal amount of MEUR 75, has a minimum term of seven years from the signing date. The nominal amount of debt on December 31, 2015 is MEUR 75.

The total amount used on December 31, 2015 was MEUR 127 and on December 31, 2014 MEUR 42.5. On December 31, 2015 the amount of MEUR 52 (MEUR 37.5 on December, 31 2014) is classified as current debt, as it is either going to be repaid in the next twelve months, or because according to the contract both parties have the right to terminate the contract provided they notify their intention 30 days prior to the date indicated for the denunciation.

Bond loansIn February 2007 Celbi issued a bond loan of MEUR 300. The bonds had a term of eight years, maturing in 2015. Interests are payable half-yearly at the end of the period since the subscription date at a rate equal to Euribor six months plus a spread. In February 2015 this bond loan was fully repaid. In the first semester of 2008 the Company issued two ten-year bond loans, amounting MEUR 50 and MEUR 25, respectively. These loans have full repayment in 2018. In August 2015, it was made an early repayment, as allowed in the agreement.

During the year ended on December 31, 2014 Celbi issued two new bond loans. The first, in the amount of MEUR 80 with a term of five years, in March. The second loan in amount of MEUR 50 with a term of six years, in April. Regarding the latter, on 20 February 2015, Altri SGPS took over the contractual position held by its subsidiary Celbi, passing the bond to be called “ALTRI 2014/2020”.

During the year ended on December 31, 2015 Celbi issued three bond loans: one in the amount of MEUR 35 with a maturity of six years (in February); another in the amount of MEUR 35 with a maturity of two and half years (in August); and another in the amount of MEUR 40 with a term of four years (also in August), at a rate equal to Euribor six months plus a spread.


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The expenses incurred with the issuance of the loans are deducted to their nominal value and deferred as interest expenses during the period of the loan.

Other loans

(i) FactoringCelbi holds factoring agreements with two banking institutions for an initial period of one year, according to which accounts receivable may assign up to MEUR 55. These agreements are renewed for equal periods unless terminated by either party with at least 60 days notice. Upon discounted values, the Company will pay an interest rate Euribor three months plus spread and Euribor twelve months plus spread. On De-cember 31, 2015 the amount used reached EUR 29,708,015 (EUR 30,645,689 on December 31, 2014).

Celbi considers that the risks and rewards associated to the receivables were not transmitted to the en-tity with which the company signed this factoring agreement, so it only derecognises accounts receivable transferred to factoring after they have been paid by the original debtor, in accordance with the accounting policy described in Note 2.2 l) x).

(ii) SubsidiesC09 ProjectIn January 2007 Celbi and Altri signed a contract for financial and fiscal incentives under the bill DL no. 203/2003 of 10 September, with the Agency for Investment and Foreign Trade of Portugal, EPE (AICEP). The Portuguese State considered the project for expansion of Celbi’s production capacity as a Project of National Interest (PIN). The investment project ran from January 1, 2007 through June 30, 2010 and the contracted value was MEUR 320 of which the Portuguese State granted a refundable financial incentive equal to 16.5% of eligible expenses. If the Company meets the proposed objectives that will be measured by the end of 2009, 2010, 2013 and 2016 the Portuguese State still granted an Achievement Award that corresponded to non-repayment of up to 80% of the amount of the refundable incentive. The Portuguese Sate also granted an incentive corresponding to a tax credit on IRC (Corporation Income Tax) amounting to 12% of relevant applications. The total amount received by Celbi as refundable incentive amounted to EUR 51,644,921. During the year ended December 31, 2013 the Company requested AICEP for the anticipation of the project’s evaluation, given that in the year ended December 31, 2012 Celbi had already reached the required targets for 2013. The AICEP agreed with Celbi’s request to suspend payments. However, there are requirements that could only be assessed at the valuation date, therefore, AICEP postponed the decision to the year ended December 31, 2013. The performance reached by Celbi until December 31, 2013 enables the Company to fulfill requirements for the achievement premium which amounts to EUR 16,526,400. On this basis, this amount was transferred to the items “Other non-current liabilities” (Note 22) and “Other current liabilities” (Note 25), net of the amount already recognized as income on the income statement (Note 38), proportionally to the depreciated part of the subsidized tangible assets. On December 31, 2015 this incentive was fully paid.

C15 ProjectIn January 2014 Celbi signed a new concession contract for financial and fiscal incentives under the bill DL no. 203/2003, of 10 September, with the Agency for Investment and Foreign Trade of Portugal, EPE (AICEP) and the project of modernization and expansion of the plant was considered by the Portuguese State of strategic interest and relevance to the national economy. The investment project began on August 19, 2013, and ran until June 30, 2015 and the contract value amounts to EUR 30,251,000. The Portuguese State will grant a refundable financial incentive corresponding to 20% of the eligible expenses if Celbi complies with the proposed objectives measured at the end of 2016, 2017 and 2019. The Portuguese State will still grant an Achievement Award that correspond to non-repayment of up to 75% of the refundable incentive

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amount. The Portuguese State shall also give a tax incentive corresponding to a tax credit on corporate income tax in the amount of 15% of the relevant applications. Until December 31, 2015 Celbi received the amount of EUR 5,712,999 relating to the refundable incentive which is recorded as non-current debt.

Sensitivity analysis to changes in interest rateDuring the years ended December 31, 2015 and 2014, the Company’s sensitivity to changes in the indexed interest rate of an increase and decrease of one percentage point, measured as a change in financial results, can be analysed as follows, not considering the effect of hedging of derivatives (Note 26):

31.12.2015 31.12.2014

Interests (Note 34) 11,098,446 14,250,033

Decrease of 1 p.p. in the interest rate applied to the entire debt (5,200,000) (6,600,000)

Increase of 1 p.p. in the interest rate applied to the entire debt 5,200,000 6,600,000

The above sensitivity analysis was based on the exposure to the interest rate existing at the balance sheet date. For this analysis, a basic assumption was that the average financing structure (interest-bearing assets and liabilities) has remained stable throughout the year and similar to that presented at the end of each financial year.

On December 31, 2015 and 2014 the deadline for payment of bank loans and other loans was as follows:

31.12.2015

2016 2017 2018 > 2018 Total

Bank loans 11,000,000 18,500,000 36,000,000 99,500,000 165,000,000

Commercial paper 52,000,000 - - 75,000,000 127,000,000

Bonds - - 35,000,000 155,000,000 190,000,000

Other loans 29,708,015 509,281 1,088,675 4,115,043 35,421,014

Total 92,708,015 19,009,281 72,088,675 333,615,043 517,421,014

31.12.2014

2015 2016 2017 > 2017 Total

Bank loans - 25,000,000 32,500,000 47,500,000 105,000,000

Commercial paper 37,500,000 - - 5,000,000 42,500,000

Bonds 270,000,000 - - 205,000,000 475,000,000

Other loans 39,278,100 - 509,281 2,546,408 42,333,789

Total 346,778,100 25,000,000 33,009,281 260,046,408 664,833,789


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21. PROVISIONS AND IMPAIRMENT LOSSESThe movement in provisions and impairment losses during the years ended December 31, 2015 and 2014 can be detailed as follows:

31.12.2015

ProvisionsImpairment losses in

accounts receivable (Notes 14 and 15)

Impairment losses in inventories and

biological assets (Note 12)

Total

Opening balance 780,409 702,988 2,525,000 4,008,397

Increases - - 1,570,000 1,570,000

Uses/Reversals (270,000) (1,518) - (271,518)

Closing balance 510,409 701,470 4,095,000 5,306,879

31.12.2014

ProvisionsImpairment losses in

accounts receivable (Notes 14 and 15)

Impairment losses in inventories and

biological assets (Note 12)

Total

Opening balance 755,621 796,845 2,616,662 4,169,128

Increases 24,788 - - 24,788

Uses/Reversals - (93,857) (91,662) (185,519)

Closing balance 780,409 702,988 2,525,000 4,008,397

Increases in provisions and impairment losses, net of uses/reversals in the financial years ended December 31, 2015 and 2014 were recorded under the heading “Provisions and impairment losses” in the income statement.

The amount registered under “Provisions” on December 31, 2015 and 2014 corresponds to the Board of Directors’ best estimate to meet all the losses arising from general risks of the Company’s activity.

22. OTHER NON CURRENT LIABILITIESThe item “Other non-current liabilities” corresponds to portions of the investment subsidies to be recog-nized as income in the medium and long term (Notes 20, 25 and 38).

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23. SUPPLIERSOn December 31, 2015 and 2014 this caption was as follows:

Payables

31.12.2015 0-90 days 90-180 days >180 days

Suppliers, current account 35,119,659 35,119,659 - -

Suppliers, submitted invoices to be verified 3,497,481 3,497,481 - -

38,617,140 38,617,140 - -

Payables

31.12.2014 0-90 days 90-180 days >180 days

Suppliers, current account 27,535,235 27,535,235 - -

Suppliers, submitted invoices to be verified 11,487,291 11,487,291 - -

39,022,526 39,022,526 - -

On December 31, 2015 and 2014 the heading “Suppliers” refers to amounts payable resulting from acqui-sitions in the normal course of Celbi’s activities.

The Board of Directors believes that the book value of these debts is approximate to their fair value.

24. OTHER CREDITORSOn December 31, 2015 and 2014 the item “Other creditors” can be detailed as follows:

Payables

31.12.2015 0-90 days 90-180days >180 days

Fixed assets suppliers 160,557 160,557 - -

Other debts 2,092,566 2,092,566 - -

2,253,123 2,253,123 - -

Payables

31.12.2014 0-90 days 90-180days >180 days

Fixed assets suppliers 959,243 959,243 - -

Other debts 1,453,562 1,453,562 - -

2,412,805 2,412,805 - -

On December 31, 2015 and 2014 the caption “Other debts” refers mainly to value-added tax payable abroad.


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25. OTHER CURRENT LIABILITIESOn December 31, 2015 and 2014 the caption “Other current liabilities” can be detailed as follows:

31.12.2015 31.12.2014

Acrrued expenses

Amounts payable to employees (1,450,093) (1,463,313)

Interest payable (1,973,400) (3,009,255)

Gas and energy payables (3,365,444) (3,227,977)

Other payables (8,867,535) (5,550,252)

Current deferred income

Investment subsidies (Notes 20, 22 and 38) (2,962,000) (3,089,089)

(18,618,472) (16,339,886)

The line “Other payables” on December 31, 2015 and 2014 concern expenses related to operational activity already incurred and not yet settled.

26. DERIVATIVE FINANCIAL INSTRUMENTSOn December 31, 2014 Celbi operated with contracts for derivative financial instruments which are re-corded according to their fair value.

Celbi only use derivatives to hedge cash flows from operations generated by their activity.

(i) Interest rate derivativesIn order to reduce its exposure to the volatility of interest rates, the Company signed interest rates swaps contracts. These contracts were evaluated by their fair value at December 31, 2014, and the correspondent amount was registered under the caption “Derivatives”.

On December 31, 2015 and 2014 contracts were established for interest rate derivatives whose totals are as follows:

Fair value

Type Nocional Maturity Interest 31.12.2015 31.12.2014

Interest rate swap (a) 25,000,000 8-2-2015Pays a combination of different rates and receives Euribor 6 months

- (657,745)

Interest rate swap (b) 80,000,000 9-2-2015 Pays fixed interest rate and receives Euribor 6 months - (1,244,552)

- (1,902,297)

(a) Although they have been contracted with a view to hedging (not speculation), these contracts do not meet all necessary requirements to qualify as hedges (Note 2.2 l) vii)) reason why the change in fair value was charged against the income statement (Note 34).

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(b) In accordance with the accounting policies adopted, these derivatives meet the requirements to be designated as hedging instruments for interest rate (Note 2.2 l) vii)).

The fair value of derivatives contracted by the Company was settled by the respective counterparts (fi-nancial institutions with whom such contracts were signed). The model used by counterparts to evaluate these products is based on the discounted cash flow method, i.e. using the Par Swap Rates, quoted in the interbank market and available on Reuters and/or Bloomberg, for the relevant periods, the respective for-ward rates and discount factors that serve to discount the fixed cash flows (fixed leg) and the variable cash flows (variable leg) were calculated. The sum of the two parts results in the Net Present Value of future cash flows or fair value of derivatives.

On December 31, 2015 the Company had no interest rate derivatives.

(ii) Derivatives for hedging pulp priceIn order to reduce its exposure to the volatility of pulp prices, the Company signed pulp price hedging derivatives through the acquisition of asian put options on the “FOEX PIX Pulp BHKP “, for each month of 2016, with a volume of 5,000 tons per month (total of 60,000 tonnes).

(iii) Exchange rate derivativesThe Company uses exchange rate derivatives, mainly, in order to hedge future cash flows. Thus, the Com-pany, in the year of 2015, engaged in exchange rate forwards and options of U.S. dollars in order to manage the risk of exchange rate to which it is exposed.

The changes in the fair value of financial instruments during the years ended December 31, 2015 and 2014 can be detailed as follows:

2015Pulp price hedging derivatives

Interest rate derivatives Total

Opening balance - (1,902,297) (1,902,297)

Derivatives fair value changes/cessation

Effect on shareholders' funds - 271,257 271,257

Effect on the income statement - (268,267) (268,267)

Effect on the balance sheet - 1,899,307 1,899,307

Closing balance - - -

2014Pulp price hedging derivatives

Interest rate derivatives Total

Opening balance 720,361 (6,004,726) (5,284,365)

Derivatives fair value changes/cessation

Effect on shareholders' funds (720,361) 2,698,569 1,978,208

Effect on the income statement - 1,403,860 1,403,860

Closing balance - (1,902,297) (1,902,297)


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Gains and losses for the year associated with the change in fair value during the year 2015 of the hedging instruments in the period not elapsed (as named in IAS 39) amounting to EUR 271,257 (EUR 1,978,208 during the year 2014), were recorded directly in equity items net of the corresponding deferred tax amount-ing to EUR 61,033 (EUR 537,483 on December 31, 2014) (Notes 11 and 19).

Gains and losses for the year associated with the change in fair value during the year 2015 of the hedging instruments in the period elapsed, the instruments that notwithstanding having been contracted for the purpose of hedging do not meet the requirements for being classified as such, and the ineffective portion of hedging instruments, are directly recorded in the income statement for the year ended December 31, 2015 (Note 34).

27. CONTIGENT LIABILITIES AND GUARANTEESOn December 31, 2015 and 2014, the main contingent liabilities complied to tax claims (Note 39).

On December 31, 2015 and 2014 the bank guarantees can be detailed as follows:

31.12.2015 31.12.2014

AICEP/API (Note 38) 3,355,112 8,428,695

Other 1,311,516 1,311,516

4,666,628 9,740,211

28. FINANCIAL COMMITMENTS NOT INCLUDED IN THE STATEMENT OF FINANCIAL POSITION

a) Pension fundOn May 2014, after the achievement of all required approvals, the Company changed from the pension fund based on defined benefits to the defined contribution plan.

Hereupon, the Company no longer has responsibility by the future benefits related with the Pension Fund.

The Pension Fund value was divided by the participants according with the responsibilities by historical services until April 30, 2014. The management Entity opened an individual account, for each participant, with this initial credit.

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b) Other commitmentsOn December 31, 2015 and 2014 Celbi had assumed contractual commitments for acquisition of tangible fixed assets amounting to EUR 1,185,612 and EUR 11,138,375 respectively.

29. OPERATING LEASESDuring the financial years ended December 31, 2015 and 2014 the amounts of approximately EUR 1,126,521 and EUR 962,961 respectively, concerning rents paid under operating lease contracts, were recognized as cost of the year.

On December 31, 2015 Celbi participated as lessee in operating leases, whose minimum lease payments are due as follows:

2015

Year

Up to 1 year 141,998

Between 1 and 5 years 413,125

More than 5 years 59,107

614,230

On December 31, 2014 Celbi participated as lessee in operating leases, whose minimum lease payments are due as follows:

2014

Year

Up to 1 year 137,537

Between 1 and 5 years 350,278

More than 5 years 59,107

546,922


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30. GROUP COMPANIES AND REALTED PARTIESAltri Group companies have relationships between them that qualify as related party transactions, which were made at market prices.

On December 31, 2015, the main balances with Altri Group companies are as follows:

Receivables Payables

Costumers c/a

Groupcompanies

Other debtors

Suppliers c/a

Group companies

Company

Viveiros do Furadouro Unipessoal, Lda. 147,654 - 328,986 - -

Altri Florestal, S.A. 9,934 - - - -

Caima Indústria de Celulose, S.A. 37,830 - - - -

Caima Energia, S.A. - - - - -

Celtejo - Empresa Celulose do Tejo, S.A. 77,487 - - - -

Captaraiz - Unipessoal, Lda. 7,955 1,109 - - -

Altri Participaciones y Trading S.L. - 77,439 - (10,726,362) -

Altri SGPS, S.A. - - - - (16,967,496)

Altri Abastecimento de Madeira, S.A. - - - (10,956,327)

EDP Produção - Bioeléctrica, S.A. 1,860,342 - - - -

Ramada - Aços e Indústrias, S.A. - - - (30,995) -

F. Ramada, II Imobiliária, S.A. 127,982 - - - -

2,269,184 78,548 328,986 (21,713,684) (16,967,496)

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On December 31, 2014, the main balances with Altri Group companies are as follows:

Receivables Payables

Costumers c/a

Group companies

Other debtors

Suppliers c/a

Group companies

Other creditorsCompany

Viveiros do Furadouro Unipessoal, Lda. 590,400 - 328,986 - - -

Altri Florestal, S.A. 510,415 3,775,688 - (2,310,318) (360,895) -

Caima Indústria de Celulose, S.A. 790,928 - - (1,788,558) - -

Caima Energia, S.A. - 4,230,850 - - - -

Celtejo - Empresa Celulose do Tejo, S.A. - - - - (132,013) (412,196)

Captaraiz - Unipessoal, Lda. 7,955 836 - - - -

Altri Participaciones y Trading S.L. - 2,862,756 - (1,077,540) - -

Altri SGPS, S.A. - 64,160,328 - - (945,870) -

EDP Produção - Bioeléctrica, S.A. 1,385,073 - - - - -

Ramada - Aços e Indústrias, S.A. - - - (14,655) - -

F. Ramada, II Imobiliária, S.A. 124,305 - - - - -

3,409,076 75,030,458 328,986 (5,191,071) (1,438,778) (412,196)

On December 31, 2015 and 2014 the heading “Group Companies” includes the following amounts related to current loans granted to Group companies:

31.12.2015 31.12.2014

Altri SGPS S.A. - 46,100,000

Caima Energia, S.A. - 4,000,000

- 50,100,000

The account payable to Altri, Participaciones Y Trading, S.L. results from the sales commissions associated with the Agency Agreement established with this entity.

The remaining balances relate mainly to the effect of taxation in accordance with the Special Taxation Scheme for Groups of Companies (Note 11) as in the Code of Taxation of Income and Gains of Collective Persons and interest income associated with loans.

On December 31, 2015, Altri was owner of Company’s bonds in the nominal value of MEUR 10.4 with maturity in March 2019.


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The main transactions with the Altri Group companies in the financial year 2015 can be summarized as follows:

Other income

Sales and services

rendered

Acquisition raw and sub.

materials

Other supplies and

services

Financial Cost/Income

Sale/Acquisition

of investments

Company

Viveiros do Furadouro Unipessoal, Lda.

(414) - - - - -

Caima Indústria de Celulose S.A. (11,058) (27,152) - - - -

Caima Energia, S.A. - - - - (46,839) -

Altri Florestal, S.A. (16,114) - - 3,000 (118,482) (19,723)


(80,974) (343,758) - - (40,097,552) -

Altri Participaciones y Trading SL

(521,116) - - 12,684,830 - -

Altri SGPS - - - 3,076,000 (432,956) -

Altri Abastecimento de Madeira, S.A.

- (255,255) 150,492,805 - - -

EDP Produção - Bioeléctrica, S.A.

(276,412) (9,182,029) - - - -

Ramada - Aços e Indústrias, S.A. - - 114,475 - - -

F. Ramada, II Imobiliária, S.A. (127,982) - - - - -

(1,034,070) (9,808,194) 150,607,280 15,763,830 (40,695,829) (19,723)

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The main transactions with the Altri Group companies in the financial year 2014 can be summarized as follows:

CompanyOther

income

Sales and services

rendered

Acquisition raw and

sub. materials

Other supplies and

services

Financial Cost/

Income

Sale/Acquisition

of investments

Viveiros do Furadouro Unipessoal, Lda.

(120,000) - - - - (317,785)

Caima Indústria de Celulose S.A. (139) - - - - -

Caima Energia, S.A. - - - - (220,254) -

Altri Florestal, S.A. (95,199) (102,682) 14,467,105 3,000 (254,737) (1,465,000)


(270,216) (8,420,365) - - (499,267) -

Altri Participaciones y Trading SL (394,693) - 464,774 11,921,674 - -

Altri SGPS - - - 769,000 (1,354,759) -

EDP Produção - Bioeléctrica, S.A. (289,413) (8,904,208) - - - -

Ramada - Aços e Indústrias, S.A. - - 105,292 1,275 - -

F. Ramada, II Imobiliária, S.A. (124,305) - - - - -

(1,293,965) (17,427,255) 15,037,171 12,694,949 (2,329,017) (1,782,785)

Celbi acquires wood from Altri Abastecimento de Madeira, S.A. – Group company dedicated to wood commercialization. Altri, Participaciones Y Trading, S.L. is the pulp sales agent for the Altri Group, so the amount in column “Other supplies and services” with this organization relates to sales commissions under the Agency contract established.

31. SALES AND SERVICESGeographically, the breakdown of sales and services of the Company by market is as follows:

31.12.2015 31.12.2014

Domestic market 85,130,002 86,380,741

Foreign market 347,666,621 287,171,184

432,796,623 373,551,925


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32. OTHER INCOME The income statement line “Other income” in the year ended December 31, 2015 and 2014 can be sum-marized as follows:

31.12.2015 31.12.2014

Investment subsidies (Note 38) 3,101,919 3,103,104

Gains on disposal of fixed assets 26,039 117,998

Gains on disposal of the Viveiros do Furadouro, Lda. (Note 7) - 735,000

Other 1,300,619 2,302,733

4,428,577 6,258,835

33. OTHER EXPENSESThe main component of “Other costs” for the year ended December 31, 2015 and 2014 can be detailed as follows:

31.12.2015 31.12.2014

Direct taxes and fees 861,408 779,793

Other 1,055,899 604,740

1,917, 307 1,384,533

34. FINANCIAL RESULTSThe financial results for the years ended December 31, 2015 and 2014 are detailed as follows:

31.12.2015 31.12.2014

Final expenses:

Interest (Note 20) (11,098,476) (14,250,033)

Exchange losses (3,237,857) (824,790)

Other financial expenses and losses (6,743,486) (12,515,730)

(21,079,819) (27,590,553)

Financial income:

Interest gains 2,261,671 6,470,926

Exchange gains 3,455,847 1,837,993

Dividends 40,000,000 -

Other financial income and gains 15,110 3,253

45,732,628 8,312,172

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On December 31, 2015 and 2014, the item “Other financial expenses and losses” refers primarily to losses on derivatives (Note 26), costs incurred with the issuance of commercial paper and bank fees (Note 20).

During the year ended December 31, 2015 Celbi received MEUR 40 of dividends from its subsidiary Celtejo - Empresa Celulose do Tejo, S.A. which are recorded in “Dividends” item.

35. EARNING PER SHARE

31.12.2015 31.12.2014

Number of shares considered for the computation of basic and diluted earnings 15,500,000 15,500,000

Net profit considered for the computation of basic and diluted earnings 119,283,718 28,072,814

Earnings per share

Basic 7.70 1.81

Diluted 7.70 1.81

36. PAYROLL EXPENSESDuring the years ended December 31, 2015 and 2014 the average number of employees of the Company was 235 and 234, respectively.

On December 31, 2015 and 2014 the caption “Payroll expenses” can be detailed as follows:

31.12.2015 31.12.2014

Salaries 10,148,834 9,161,618

Social security contributions 2,072,409 1,963,385

Employee benefits 450,177 636,260

Compensations 923,991 1,791

Insurances 345,845 324,423

Other 661,310 590,658

14,602,566 12,678,135


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37. EXTERNAL SUPPLIES AND SERVICESOn December 31, 2015 and 2014 the caption “External supplies and services” can be detailed as follows:

31.12.2015 31.12.2014

Energy 25,357,287 24,984,452

Transport of goods 14,493,959 13,274,914

Commissions 12,684,830 11,924,115

Fuels 12,519,840 13,776,014

Maintenance and repair 8,049,628 7,904,218

Specialized jobs 6,181,634 3,701,412

Insurances 1,447,797 1,596,472

Rents and leasing 1,126,521 962,961

Other 8,136,379 7,790,193

89,997,875 85,914,751

38. SUBSIDIES AND INCENTIVES i) C09 ProjectIn January 2007 Celbi signed a contract granting of financial and fiscal incentives under Decree-Law no. 203/2003 of 10 September, with the Agency for Investment and Foreign Trade of Portugal, EPE (AICEP), as the Portuguese government considered the expansion of production capacity in Celbi as a project of national interest (PIN). The investment project ran from January 1, 2007 through June 30, 2010 and the contracted value was MEUR 320 of which the Portuguese State would grant a refundable financial incentive equal to 16.5% of eligible expenses if the Company meets the proposed objectives that will be measured by the end of 2009, 2010, 2013 and 2016. The Portuguese State shall further grant an Achievement Award that will correspond to non-repayment of up to 80% of the amount of the refundable incentive. The Portuguese State also grants an incentive corresponding to a tax credit on IRC (Corporation Income Tax) amounting to 12% of relevant applications. Up to the end of the fiscal year ended December 31, 2015 Celbi received the amount of EUR 51,644,921 for the refundable incentive. In the year ended December 31, 2013 the achievement award was entirely granted in the amount of EUR 41,316,000. During 2013 Celbi received the achievement success fee of EUR 16,526,400 as result of the anticipated evaluation performed in 2012, with the agreement of AICEP (Note 20). The non-refundable subsidies were transferred to the captions “Other current liabilities” and “Other non-current liabilities” (Notes 22 and 25), net of the amount already recognized as income on the income statement (Note 32), proportionally to the depreciated part of the subsidized tangible fixed assets. However, the final review of the Project purpose will only occur on the contractually scheduled date.

ii) C15 ProjectIn January 2014 Celbi signed a contract granting of financial and fiscal incentives under Decree-Law no. 203/2003 of 10 September, with the Agency for Investment and Foreign Trade of Portugal, EPE (AICEP). The Portuguese State considered the modernization and expansion of the plant as a project with strategic importance and relevance for the national economy. The investment started in August,19 2013 and will run until June 30, 2015. The contracted value was EUR 30,251,000 of which the Portuguese State will grant a refundable financial incentive equal to 20% of eligible expenses if Celbi meet the proposal objectives that will be measured by the end of 2016, 2017 and 2019. The Portuguese State shall further grant an

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Achievement Award that will correspond to non-repayment of up to 75% of the amount of the refundable incentive. The Portuguese State also granted an incentive corresponding to a tax credit on IRC (Corporation Income Tax) amounting to a maximum of 15% of relevant applications.

On December 31, 2015 and 2014 the detail of the subsidies received but not yet recognized as income in the income statement is as follows:

2015 2014

Subsidy associated to the expansion of the production capacity (Notes 20, 22 and 25) 22,555,297 25,387,260

Other investment subsidies 14,348 284,304

22,569,645 25,671,564

The movements in the investment incentives were as follows:

2015

Assigned incentives and not fully recognized 46,111,748

Recognition in results prior to 2014 (17,337,080)

Recognition in the result of 2014 (Note 32) (3,103,104)

Recognition in the result of 2015 (Note 32) (3,101,919)

Balance at December 31, 2015 22,569,645

iii) SIFIDEDuring the year ended on December 31, 2014, the Company incurred expenses for research and development (R&D) which, in their view, were likely to be eligible in the framework of the System of Tax Incentives for Corporate Research and Development II (“SIFIDE II”).

In this sense, the respective declaration was issued by the Certification Committee for Tax Incentives for Corporate Research and Development (Certification Committee), regarding the recommendation of the tax credits, in the amount of EUR 490,000 as result of the R&D activities performed.

Hereupon, alerted for the investments made in 2015 on this area, the Company is also developing a set of actions to submit the application to the competent authorities for this tax credit.

iv) RFAIUnder the Tax Regime for Investment Support (“RFAI”), Celbi is developing a set of actions to prepare the support documentation to the use of this credit for the investment expenses related with exploration assets, made during the year 2015, in order to incorporate tax documentation.

39. FISCAL PROCESSESAs a result of an inspection occurred in 2008, concerning the exercise of 2006, the Company received a notification from the Tax Authority, where it was stated the establishment of a process driven by the non-payment of the Stamp Duty in Financial Operations with other Altri Group companies. The


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Authorities considered as not proven that the loans were intended to the cash shortages. In early 2012 the Company received a notification concerning the same subject but taking 2009 as reference. The Company paid the billing documents submitted by the Tax Authority presenting as consequence its judicial challenge.The balance of the non-current asset item “Other non-current assets” relates to receivable amounts con-cerning the previously described situations.

40. INFORMATION ON ENVIRONMENTAL ISSUESUnder the Kyoto Protocol, the EU pledged to reduce emissions of greenhouse gases. In this context, the European Emission Trading System (ETS) was created, being this the first tool of the intra-Community market to the regulation of Greenhouse gases emissions, which is applicable, among others, to the pulp and paper industry.The ETS application began in 2005 and held between 2005 and 2007. This first period was considered as an experimental period by European Commission. It was essentially considered a learning season for the next period from 2008 to 2012. This phase coincided with the Kyoto Protocol’s fulfilment.During the first two periods, the ETS application (2005-2007 and 2008-2012) was, generally, performed by following the free allocation of emission permits, the obligation to monitor, verify and report the emissions and the devolution of emission permits by an equivalent amount. The free allocation took place through the so-called national allocation plans for the emission permits, “PNALE I” and “PNALE II”, which were approved by the Commission.In the post-2012 period these rules changed considerably with the publication of the Directive 2009/29/CE, the new ETS Directive included on the Climate Energy Package. As consequence, it has been found an extension of criteria with the introduction of new gases and new sectors, in the determination at a community level of the total quantity of emission permits and in the use of auction to allocate the emission permits. Despite this, the free allocation remains in a marginal way and it is made through the benchmark defined at a community level. In the year ended on December 31, 2013 the third application period began and were allocated to Celbi, for free, permits for the emission of 79,974 tonnes of CO2 for 2014 and 78.544 tonnes of CO2 for 2015. If actual emissions are higher than the permits granted, the Company will have to acquire the missing permits in the market. The allocation of “CO2 emission permits,” corresponding to the actual emissions in a financial year will be carried out early the following year. The values provided by the companies on emissions actually incurred are subject to inspection by an accredited body.On December 31, 2015 no environmental liability is recorded in the financial statements neither is there disclosed any environmental contingency, as the Board of Directors is convinced that, at this date, there are no contingencies or obligations from past events that can result in charges materially relevant to the Company.

41. APPROVAL OF FINANCIAL STATEMENTSThe financial statements were approved by the Board of Directors and authorized for issue on March 17, 2016. The final approval is still subject to agreement of the General Meeting.

42. EXPLANATION ADDED FOR TRANSLATIONThese 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 Chartered Account

The Board of Directors

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87

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Report and opinion of the Official Auditor and Statutory Auditor’sReport

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To the Shareholder of Celulose Beira Industrial (Celbi), S.A.,

In compliance with the applicable legislation and our mandate, we hereby submit our Report and Opinion, which covers the Board of Director’s Report and the Financial Statements of Celulose Beira Industrial (Celbi), S.A. (“Company”) for the year ended 31 December 2015, 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, the timely writing up of accounting records, the 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, all the information and explanations required.

As part of its duties, the Statutory Audit Board examined the statement of financial position as of 31 December 2015, the statement of profit and loss, comprehensive income, cash flow, and changes in shareholders’ funds for the year then ended. Additionally, the Statutory Audit Board examined the Report of the Board of Directors for the year 2015 as well as the proposed application of results therein presented, and fulfilled its duties concerning the review of the qualifications, independence and work of the Statutory Auditor, and reviewed the Statutory Audit, being in agreement with its content.

Considering the above, and taking into account paragraph 5 of the Statutory Audit, in the opinion of the Statutory Audit Board, the Board of Director’s Report, the Financial Statements as well as the proposed application of results are in accordance with accounting, legal and statutory requirements and consequently may be approved by the General Shareholders’ Meeting.

We wish to express to the Company’s Board of Directors and to the departments of the Company our appreciation for the assistance provided to us.

Porto, May 31, 2016

The Statutory Audit BoardJoão da Silva NatáriaPresident of the Statutory Audit BoardGuilherme Alexandre Dominguez Fernandes Cardoso RuanoPresident of the Statutory Audit BoardJosé Carlos Rodrigues MartinsPresident of the Statutory Audit Board

Report and Opinion of the Statutory Audit Board

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Introduction1. We have examined the accompanying financial statements of Celulose Beira Industrial (Celbi), S.A. (“Company”), which comprise the Statement of Financial Position as of 31 December 2015, that presents a total net assets of 891,870,064 Euro and total equity of 278,437,007 Euro, including a net profit of 119,283,718 Euro, the Statements of Profit and Loss, Comprehensive Income, Changes in Equity and of Cash Flows for the year then ended and the corresponding Notes.

Responsibilities2. The Board of Directors is responsible for the preparation of financial statements that present a true and fair view of the financial position of the Company, the results of its operations, changes in equity and cash flows, as well as the adoption of adequate accounting principles and criteria and the maintenance of an appropriate system of internal control. Our responsibility is to express a professional and independent opinion based on our examination of those financial statements.

Scope3. Our examination was performed in accordance with the Auditing 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 financial statements are free of material misstatement. An examination includes verifying, on a sample basis, evidence supporting the amounts and disclosures in the financial statements and assessing the significant estimates, based on judgments and criteria defined by the Company’s Management, used in their preparation. An examination also includes assessing the adequacy of the accounting principles used and their disclosure, taking into consideration the circumstances, verifying the applicability of the going concern concept and assessing the adequacy of the overall presentation of the financial statements. Our examination also comprises verifying that the financial information contained in the Management s Report is in accordance with the financial statements. We believe that our examination provides a reasonable basis for expressing our opinion.

Opinion4. In our opinion, the financial statements referred to in paragraph 1 above present fairly, for the purposes stated in paragraph 5 bellow, in all material respects, the financial position of Celulose Beira Industrial (Celbi), S.A.. as of 31 December 2015, the results of its operations, comprehensive income and changes in its equity and its cash flows for the year then ended in accordance with the International Financial Reporting Standards as adopted by the European Union.

Statutory Audit Report

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Emphasis5. The financial statements mentioned in paragraph 1 above, refer to the Company’s individual activity and were prepared for approval and publication in accordance with current legislation. As stated in Note 2.2 of the Notes to the Financial Statement, investments in subsidiaries and associated companies are recorded at cost less accumulated impairment losses. The accompanying financial statements do not include the effect of applying the equity method or the full consolidation of assets, liabilities, expenses and total income. The Company is not required to prepare consolidated financial statements, as it is a subsidiary and its financial statements are included in the consolidation perimeter of Altri, S.G.P.S, SA, an entity that presents consolidated financial statements in accordance with IFRS. Additional information about the Company’s subsidiaries is disclosed in Note 7.

Report on other legal requirements6. It is also our opinion that the financial information included in the Management Report is consistent with the financial statements for the year.

Porto, 31 May 2016

Deloitte & Associados, SROC S.A.

Represented by António Manuel Martins Amaral

Graphic Production: CBunidesign

Graphic Design: Ana Biscaia

Fonts: Ines e Gotham

Paper: Hahnemule (cover); Renova print 100grs (inside)

Figueira da Foz - julho 2016


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