RELATÓRIO DO CONSELHO DE ADMINISTRAÇÃO DIRECTORS REPORT

Transcription

1 RELATÓRIO DO CONSELHO DE ADMINISTRAÇÃO DIRECTORS REPORT December,

2 RELATÓRIO DO CONSELHO DE ADMINISTRAÇÃO (This is a translation of a report originally issued in Portuguese. In the event of discrepancies, the Portuguese language version prevails Note 45) INDEX INTRODUCTION... 3 MACROECONOMIC BACKGROUND... 5 STOCK EXCHANGE EVOLUTION... 6 GROUP S ACTIVITY... 8 CORPORATE RESPONSIBILITY AND SUSTAINABILITY FINANCIAL ANALYSIS ACTIVITY DEVELOPED BY NON-EXECUTIVE MEMBERS OF THE BOARD OF DIRECTORS PROPOSAL OF THE BOARD OF DIRECTORS FOR APPROPRIATION OF THE NON CONSOLIDATION NET PROFIT FOR THE YEAR AND DISTRIBUTION OF RESERVES OUTLOOK CORPORATE GOVERNANCE LEGAL MATTERS STATEMENT UNDER THE TERMS OF ARTICLE 245, PARAGRAPH 1, C) OF THE SECURITIES CODE 52 DECLARATION OF RESPONSABILITY CLOSING REMARKS APPENDIX No index entries found. 2

3 RELATÓRIO DO CONSELHO DE ADMINISTRAÇÃO To the Shareholders Pursuant to the legal and statutory requirements, the Board of Directors of Altri, S.G.P.S., S.A. hereby presents its Director s Report for the year According to number 6 of article C of the Portuguese Companies Act, the Board of Directors decided to submit a single Board of Directors Report, fulfilling all legal requirements. INTRODUCTION Altri was incorporated as of March 2005, as a result of the demerger of Cofina. Altri is a reference European producer of bleached eucalyptus pulp and is a listed company included in NYSE Euronext Lisbon, integrating the PSI 20 (Portuguese Stock Index), the benchmark stock market index. In addition to pulp production, the company is also present in the sector of renewable energy based on forest resources, namely industrial cogeneration from black liquor and biomass. The forestry strategy is based on full use of all the components provided by the forest: pulp, black liquor and forest wastes. Over the past years, Altri invested in Portugal about 470 million euro, mainly on Celbi and Celtejo unities. Currently, Altri owns three pulp mills in Portugal with a total capacity above 970,000 tonnes/year of bleached eucalyptus pulp in There is an ongoing process of small investments, to increase production capacity of Celbi and Caima, whose completion is expected to occur in between the end of 2014 and beginning of Caima, after the completion of the conversion project to dissolving pulp will produce 105 thousand tons. On the other hand, Celbi will have an installed capacity exceeding 700 thousand tons of bleached pulp type BEKP. Currently, Altri manages over 84 thousand hectares of forest in Portugal. The company obtained certification from the Forest Stewardship Council (FSC ) 1 and Programme for the Endorsement of Forest Certification (PEFC), two of the most worldwide acknowledged certification entities. Altri s industrial strategy implementation is based on integrated forest management in Portugal. This model is based on forest optimization, ensuring a full recovery of all its components. Thus, the eucalyptus is processed in Altri mills, producing pulp and power (cogeneration). The bark, the branches and forest waste are used to produce electric energy from biomass. Until June 2008, Altri had another industrial activity through F.Ramada, which was devoted to retail steel and development of industrial solutions for storage systems. In June 2008 took place the demerger of F. Ramada. The strategic rational of this operation lies in focusing Altri exclusively on its core business: forest management and production of pulp. Since the beginning of its activity Altri carried out various acquisitions (Celtejo in 2005 and in 2006 Celbi) that allowed Altri to reinforce its position in its operating markets through the development of a set capacity increase projects. For a better valuation of forest resources, Altri acquired in 2005, 50% of EDP Produção - Bioeléctrica, S.A., in a jointventure with EDP to produce electricity from forest biomass. This company is leader in its market segment with a share of 50% of licenses to produce electricity through forest biomass. 1 FSC-C

4 RELATÓRIO DO CONSELHO DE ADMINISTRAÇÃO Altri s organic structure is as follows: 4

5 RELATÓRIO DO CONSELHO DE ADMINISTRAÇÃO MACROECONOMIC BACKGROUND During 2013, the global economy continued to face high levels of uncertainty and the economic recovery occurred only in certain regions. In particular, the Eurozone continued to suffer the impact of lack of dynamism in economic activity, especially felt in the countries of southern Europe, since the additional policies and tax measures had strong consequences on the level of private consumption, especially in the category of durable products. In the northern countries of Europe there was a different environment, having begun to show some signs of the much desired recovery. According to the latest estimates from leading institutions for 2013, real growth of GDP should have been situated at -0.4 % in 2013 (-0.7% in 2012) for Eurozone, reflecting a slowdown of recession that characterized the last years. Projections for 2014 already reflect a scenario of reversal, with projected growth of +1% assuming more modest contributions of the economies of southern Europe, which will have a longer path to recovery. The weight of the debt crisis, both public and private, continues to constrain the political and financial options (in the way of austerity), necessarily impacting the levels of domestic demand. In this scenario, exports are expected to take a leading role in the effort to recover the economies of the Eurozone. Uncertainties related to the performance of the Eurozone, in particular with regard to the sustainability of reforms and the governance model in place, remain dormant and extremely critical in any projection model. In the Eurozone, inflation is expected to remain at low levels throughout 2014 (about 1.5% according to the IMF s Autumn World Economic Outlook) and the average unemployment should be around 12% (according to the same source) reflecting very different realities by country and rates ranging from 5% to 27%. The deleveraging process of the banking sector is set to continue in the up coming years involving the maintenance of restrictions on access to credit. Levels of interbank interest rates are at historically low levels, not foreseeing that there is a reversal of this trend in the short term. Achieving a gradual recovery may cause slight shortening of the gap of the lending interest rates of banks compared to the reference rate (currently at 0.25%). The performance of the Portuguese economy in 2013 necessarily reflects the impact of implementation of the measures in the economic and financial adjustment program (EFAP). As more recent estimates included in the Winter Bulletin of the Bank of Portugal, GDP showed a decline of 1.4% in 2013, compared to a decrease of 3.2% in 2012, which envisaged a recovery to positive territory in 2014 (+0.8%). Like the Eurozone, the projected performance of the Portuguese economy is based on a fall in domestic demand (- 2.7% in 2013 versus -6.9% in 2012) partially offset by an increase in net exports (1.1% in 2013 and 3.7% in 2012). In the last quarter of 2013 it will have already occurred over the same period of last year, a homologous increase of around 1.6% with a positive contribution of domestic demand, a situation that didn t occur since the 4th quarter of In cumulative terms, the decline in domestic demand in the period will have been around 17 percent. Inflation should be of 0.5% in 2013 (2.8% in 2012), and the unemployment rate should have remained high, closing the year at 15.3% (16.5% in 2012). Projections for 2014 point to a recovery in economic growth, though tenuous, of about 0.8% of GDP - continuing the trend of the last quarters of 2013 (+0.3% variation in chain in the 3rd quarter and +0.5% in the 4 th quarter). 5

6 RELATÓRIO DO CONSELHO DE ADMINISTRAÇÃO STOCK EXCHANGE EVOLUTION (Note: in order to enable a better comparison of the stock fluctuations, the PSI 20 index has been considered as being equal in value to the opening price of the shares in question.) The year 2013 was marked by a strong performance of stock exchange markets but without a linear trend. The Portuguese market grew by about 16%, but this positive evolution was obtained in the second half of the year once the index until July had a negative performance. Altri s shares exceeded the index, recording an increase of 41% but with greater focus from September onwards Stock exchange evolution of Altri's shares and PSI 20 (%) Altri PSI20 Altri s share price closed 2013 at 2.24 Euro per share. The market capitalization at the end of 2013 was about 459 million Euro. During 2013, Altri s shares were traded at a maximum price of Euro per share and the minimum of Euro per share. In total, 103 million Altri shares were traded in 2013, equivalent to 50% of the issued capital. The main events that marked the evolution of the Company s shares during 2013 may be described chronologically as follows: Stock exchange evolution May: Earnings announcement 1Q Mar: Earnings announcement Apr: Disclosure of deliberations of AGM 23-Apr: Dividend payment announcement 1-Aug: Earnings announcement 1S13 29-Oct: Earnings announcement 3Q13 Altri 0.4 6

7 RELATÓRIO DO CONSELHO DE ADMINISTRAÇÃO On 7 March, the Group announced its financial performance for the year 2012, standing consolidated net profit of 52 million Euro. The consolidated total revenues amounted to 543 million Euro, representing an increase of 11.6% over Consolidated EBITDA amounted to million Euro, recording a growth of 26.5% over the previous year. At that date, shares closed quoting at Euro per share; In a statement made on 18 April 2013, Altri informed the market about the resolutions of the General Meeting held on that date whereas it was approved, among others, the proposed distribution of dividends corresponding to Euro per share; On April 23, 2013, the Company informed the market that the dividends for the year 2012 would be paid from May 17 onwards; Through an announcement made on May 8, the Group announced results for the first quarter of The consolidated total revenues during this period reached a record 145 million Euro, which represents an increase of about 18% over the same period of EBITDA amounted to 36.3 million Euro, which means an increase of about 27% over the first quarter of 2012; On August 1, Altri announced to the market the result of the 1st half of 2013 presenting EBITDA of 75 million Euro, which represents an increase of 13% over the same period of EBITDA margin reached 25.5% and the operating profit (EBIT) was about 48 million Euro, the margin was 16.2%. The net profit of Altri reached about 30.3 million Euro; On 29 October the 3rd quarter results were released. The Group achieved a record volume of sales in that period. EBITDA achieved in the first nine months of 2013 totalled 112 million Euro, which represents an increase of 4.5% over the same period of 2012 and net profit reached 43.1 million Euro. 7

8 RELATÓRIO DO CONSELHO DE ADMINISTRAÇÃO GROUP S ACTIVITY With its genesis in the reorganization process of Cofina with the purpose of setting into a separate holding the industrial operations, Altri held until 1 June 2008 the investments in the paper, pulp, steel and storage systems. On that date the business of steel and storage systems was demerged to a separate holding. This reorganization was part of a focusing and business transparency strategy, aiming at giving greater visibility to each area and increasing market s perception of value. The main participations where Altri holds the majority of capital are indirectly hold, and are as follows: - Caima Indústria de Celulose (Constância), producer and distributor of paper pulp; - Celbi Celulose da Beira Industrial, S.A. (Figueira da Foz), producer and distributor of paper pulp; - Celtejo Empresa de Celulose do Tejo, S.A. (Vila Velha de Ródão), producer and distributor of paper pulp; - Altri Florestal (Constância), manager of the Group s forestry resources. Moreover, in order to fulfil its energetic needs and expand its activity in a strategic sector, the Group holds a participation of 50% of the share capital of EDP Bioeléctrica. Location of the industrial units of the Group Location of the centrals of energy production 8

9 RELATÓRIO DO CONSELHO DE ADMINISTRAÇÃO Altri s complete structure of participation as of 31 December 2013 is as follows: Pulp Market According to Pulp and Paper Products Council (PPPC), in 2013, total demand for hardwood pulp increased by 5.4% (reached 28.8 million tons), highlighting the type produced by eucalyptus, which registered an increase of 15.3%, compared to At the end of 2013 the share of eucalyptus market in comparison with all bleached pulps (softwood and hardwood) increased 140 basis points reaching 35.4% in 2013 (34% in 2012). The consumption of hardwood pulp, in 2013, increase by 1.5 million tons over the previous year. In geographical terms, China consumed more 1.3 million tons in 2013 than in 2012, which represents an increase of 19%, higher than the weighted average annual growth since In the 4th quarter of 2013, the BEKP price, in USD, was categorized by a decrease of 3% compared to previous quarter. However, when converted to euro, the decrease was much more pronounced, reaching 6%. Thereby, the average market price was 770 USD/ton, in the 4th quarter of 2013 (vs 795 USD/ton in the 3rd quarter of 2013), while in EUR it reached 566 EUR/ton (vs 602 EUR/ton in the 3rd quarter of 2013). Market price evolution in BEKP pulp in Europe since 1990 until the end of 2013 (EUR) Source: Hawkins Wright

10 RELATÓRIO DO CONSELHO DE ADMINISTRAÇÃO In 2013 Altri reached, again, a new record of production and sales of pulp. Thus, during this year Altri s three mills produced 973 thousand tons of pulp. Evolution of pulp production between 2012 and 2013 by mill (thousands tons) The main Altri mill, Celbi, produced 667 thousand tons of pulp (+7%); Celtejo produced 218 thousand tons (+13%) and Caima produced 89 thousand tons (-2%). The decrease recorded in Caima s production is related to the conversion to dissolving pulp. It is expected that the project ends in 2014/2015, increasing the level of capacity of the industrial unit to 105 thousand tons. In terms of pulp sales, 964 thousand tons were sold, more 4.5% of pulp sales compared to 2012 (922 thousand tons). Evolution of sales between 2012 and 2013 by mill (thousands tons) 10

11 RELATÓRIO DO CONSELHO DE ADMINISTRAÇÃO Pulp sales by region and detail by use Dissolving 10% Others 4% Portugal 6% Asia 8% Others 1% Specialities 13% Tissue 46% Packaging 3% Priting and writing 24% Europe 85% Pulp revenues reached million euro (+4.5%), approximately 83% of Altri s total revenues. In 2013, Altri exported 907 thousand tons of pulp, which represents an increase of 7% compared to 2012, being the Western Europe the main destination, representing 80% of sales, approximately 735 thousand tons. In terms of pulp use, tissue paper producers are Altri s main clients, with a share of 46% (40% in last year). 11

12 RELATÓRIO DO CONSELHO DE ADMINISTRAÇÃO CORPORATE RESPONSIBILITY AND SUSTAINABILITY Altri believes that the welfare of its stakeholders, including society in general, their customers, their suppliers, their employees and their shareholders, depends on the continued success of the company and on its commitment to sustainable development. Altri is responsible to continuously improve its environmental and social performance looking for a continued increase in return of capital from its shareholders. Environment: renewable raw materials from sustainably managed forests are the base for the production of Altri s pulp in Portugal, which manages a large area of certified forest, and all the wood produced in these areas is to supply its mills. Altri is self-sufficient in electricity, using cogeneration systems where it is made a combined production of thermal energy and electrical power for industrial use. The excess of electricity is placed in the national network. Investment in new technologies and investing in best practices in energy efficiency have enabled to produce almost all its energy by the burning of biofuels. It has taken a lot of efforts in optimizing the balance of electric power in Altri s mills, reflecting the importance of energy for the Group. Also, the water consumption has declined over the years. Specific consumption of electric power, kwh/tpsa Specific consumption of water (m 3 /tpsa ) The emission of some liquid pollutants also reduced significantly, showing the Group's commitment to continuous improvement of its environmental performance. Specific emissions of CQO, kg O2/tpsa Specific emissions of SST, kg/tpsa

13 RELATÓRIO DO CONSELHO DE ADMINISTRAÇÃO The other indicators of eco-efficiency and environmental performance in the areas of water, air, waste and natural resources, have remained stable and in line with the best available techniques defined for the sector of pulp and paper reflected in the environmental certifications of the three mills of Altri. Altri is also a member of BCSD (Business Council for Sustainable Development) and of WBCSD (World Business Council for Sustainable Development). Certification of Management Systems: All industrial units of Altri have its management systems certified in accordance with the requirements of ISO 9001, ISO and OHSAS and have their laboratories certified by ISO / IEC Celbi and Celtejo have implemented energy management systems, certified according to ISO Celbi and Caima are also registered under EMAS, a Community Eco-management and Audit System of the European Union. Celtejo has its system of Research, Development and Innovation certified by the Norm NP The responsibility s chains of wood supply are also certified by international standards of forest management (FSC Forest Stewardship Council 2 and PEFC - Programme for the Endorsement of Forest Certification Schemes), which demonstrates the commitment established in the supply policy of Altri to check the origin of the wood along the supply chain. Human Resources: Investing in developing the skills of senior staff, the Group began in 2013 a training program which will run until 2015, with the goal of consolidating knowledge in areas of communication, management and leadership techniques. This challenge is partnered with Porto Business School. Social Responsibility: In its relationship with society, Altri streamlines the economy of the areas in which it operates, particularly in the creation of direct and indirect employment. It also has a policy of granting internships, whether professional or as a complement to the school curriculum, which allow young people the opportunity to have contact with a business reality. In partnership with several local institutions, Altri tries to develop and support initiatives and activities essential to the creation of relevant relationships with the surrounding community. Through donations and logistical support, the Group seeks to identify and support projects with merit and impact on the population s quality of living. 2 FSC-C

14 RELATÓRIO DO CONSELHO DE ADMINISTRAÇÃO FINANCIAL REVIEW The consolidated financial information of Altri was prepared in accordance with the International Financial Reporting Standards (IFRS) as adopted by the European Union. The key data and indicators of consolidated activity of Altri Group can be summarized as follows: Thousand euros /2012 Var% Sales % Services rendered % Other income % Total Revenues ,5% Cost of sales % External supplies and service % Payroll expenses % Provisions and impairment losses Other expenses % Total expenses (a) ,9% EBITDA (b) ,2% Margin 26,4% 24,7% -1,7 pp Amortisation and Depreciation ,8% Other indirect taxes EBIT (c) ,8% Margin 17,4% 15,5% -1,7 pp Gains and losses in associated companies ,1% Financial expenses ,4% Financial income ,0% Financial profit ,6% Earnings before taxes ,3% Income tax ,5% Minority interest ,2% Net income attributable to parent company's shareholders ,1% (a) operating costs excluding amortisation, financial expenses and income tax (b) EBITDA = Earnings before interests, taxes, depreciation and amortisation (c) EBIT = Earnings before interests and taxes Altri s total revenues reached million euro in 2013, which represents an increase about 5.5% compared to This increase in sales, associated to a dynamic management of debt and short-term lines, led to a net profit of approximately 55 million Euro, an increase of 6% compared to Excluding depreciation, financial costs and taxes, total costs in 2013 reached approximately 431 million euro, a 8% increase compared to This increase is related to a production growth and to the increase of prices of some production factors, in particular, the wood price which recorded an increase higher than inflation. 14

15 RELATÓRIO DO CONSELHO DE ADMINISTRAÇÃO Payroll costs recorded a decrease of 13%, reflecting operating efficiency measures that have been taken during the year. At the end of the year Altri had 643 employees. EBITDA reached approximately 141 million Euro, a 1.2% decrease compared to 2012 and EBITDA margin of 2013 reached 24.7% (-1.7 p.p.). EBIT recorded a decrease of 5%, compared to 2012, reaching 89.4 million euro. Altri s net profit reached 55.3 million Euro, having recorded a growth of 6.1% over the previous year. The origin of the net profit growth was the decrease in net financial loss of 30%, which moved from a net financial loss of about 33 million Euro in 2012 to a net financial loss of 23 million Euro in Key balance sheet indicators thousand euro Var% Biological assets , ,0-1% Tangible assets , ,5-8% Goodw ill , ,4 0% Investments avaiable for sale , ,9-2% Others , ,6 6% Total non current assets , ,4-4% Inventories , ,3 16% Customers , ,6-15% Cash and cash equivalents , ,5 107% Others , ,0 63% Total current assets , ,4 46% Total assets , ,8 8% Shareholder's equity and m inority interests , ,8 31% Bank loans , ,5-28% Other loans , ,3-3% Reimbursable subsidies , ,4-51% Others , ,3 36% Total non current liabilities , ,5-7% Bank loans , ,4 80% Other current loans , ,6 51% Reimbursable subsidies ,6 71,0-99% Suppliers , ,6 7% Others , ,0-33% Total current liabilities , ,5 24% 15

16 RELATÓRIO DO CONSELHO DE ADMINISTRAÇÃO In 2013, total net investment (CAPEX) was 16.1 million Euro. Altri s nominal remunerated debt net of cash and investments available for sale as of 31 December 2013 reached million Euro corresponding to a decrease of 56.5 million Euro compared to 2012 (619.7 million Euro). It should be highlighted that, in 2013, the company paid 5.1 million Euro of dividends related to Financial needs are fully assured, the Group holds 232 million euro in cash and cash equivalents, in 31 December In 2014, Altri completed the refinancing of is bonds Celbi 2015 amounting to 300 million Euros, through 4 medium and long term loans. These loans were granted by domestic banks and have weighted average maturity in The weighted average cost of net debt amounted, during 2013, to 4.5%. It should, however, be noted that the marginal costs of current financing programs record spreads below 4%. 16

17 RELATÓRIO DO CONSELHO DE ADMINISTRAÇÃO ACTIVITY DEVELOPED BY THE NON-EXECUTIVE MEMBERS OF THE BOARD OF DIRECTORS During 2013, the non-executive directors of the Company have developed regularly and effectively their functions which consist in monitoring and evaluating the activities of the executive directors. During 2013, the non-executive directors regularly and actively attended the Board of Directors meetings, discussing the matters under consideration and expressing their respective opinions on the Group s strategic guidelines. Whenever necessary, they maintained a close contact with the financial and operational key staff of the group companies. In the year 2013, and during the Board of Directors meetings, the executive members provided all the information required by the remaining members of the Board of Directors. 17

18 RELATÓRIO DO CONSELHO DE ADMINISTRAÇÃO PROPOSAL OF THE BOARD OF DIRECTORS FOR APPROPRIATION OF THE NON CONSOLIDATED NET PROFIT FOR THE YEAR AND DISTRIBUTION OF RESERVES Altri, S.G.P.S., S.A., as holding company of the Group, recorded in its individual financial statements prepared in accordance with International Financial Reporting Standards as adopted by the European Union, free reserves of 24,642, Euro and negative retained earnings of 11,976, Euro, for which, in accordance with the applicable legislation and the Company s articles of association, the Board of Directors proposes to General Shareholders Meeting, its offset against those free reserves. Additionally Altri, S.G.P.S., S.A. recorded in its individual financial statements prepared in accordance with International Financial Reporting Standards as adopted by the European Union, a net profit of 10,843, Euro, for which, in accordance with the applicable legislation and the Company s articles of association, the Board of Directors proposes to General Shareholders Meeting the following application: Legal reserve 542, Free reserves 1,685, Dividends distribution 8,615, ,843, ============ 18

19 RELATÓRIO DO CONSELHO DE ADMINISTRAÇÃO 2014 OUTLOOK At the economic level, the year 2014 should be characterized by a slight recovery in Europe and a stronger improvement in the United States. However, recent economic indicators raise some doubts about the performance of the Chinese economy. Moreover, the evolution of the exchange rate of the EUR/USD has followed a pattern opposite to that expected by most market analysts, i.e.,what actually occurred in the last months of 2013 and early 2014 was a deepening the devaluation of the U.S. dollar against the Euro. Thus it is very difficult to anticipate a trend for the evolution of the U.S. dollar. Concerning the global pulp market, 2014 will be a year of new capacities coming from Latin America. In the recent past, net capacity additions were easily absorbed by increased demand, in particular by growth of chinese demand. Regarding Altri, the company is developing a number of projects aimed at enhancing operational efficiency, which include variable cost reductions, particularly in terms of specific consumption of wood, chemicals, water and electricity. The company also has an ongoing project to convert Caima mill, which aims to transform this mill into a specialties producer. The completion of both projects is scheduled for the year The Board of Directors is convinced that Altri is developing a correct strategy based on strengthening the operational efficiency and simultaneously diversifying sources of revenue for segments with higher added value and which enable a change in the value chain. Thus, to compete comfortably in the commodities market, and in an adverse exchange rate context, the company must place a great emphasis on reducing operating costs, and on the other hand, the development of a strategy based on the production of higher value added products aims to provide Altri with additional sources of growth. 19

20 RELATÓRIO DO CONSELHO DE ADMINISTRAÇÃO CORPORATE GOVERNANCE PART I INFORMATION ON SHAREHOLDER AND ORGANIZATION STRUCTURE AND CORPORATE GOVERNANCE A. SHAREHOLDER STRUCTURE I. CAPITAL STRUCTURE 1. The capital structure On 31 December 2013, the Company's share capital was fully subscribed and paid up and was made up of 205,131,672 shares with a nominal value of 12.5 Euro cents each, all entitled to dividends. 2. Restrictions on the transfer and ownership of shares Altri s shares have no restrictions on their transfer or on their ownership. 3. Own shares Pursuant to the purposes of the article 66 of the Portuguese Companies Act, the Directors inform that as of 31 December 2013 Altri had no treasury own shares and did not acquire or sold own shares during Important agreements to which the company is a party and that come into effect, amend or terminated in cases such as a change in the control of the company after a takeover bid, and the respective effects There are no significant agreements concluded by Altri or its subsidiaries that include any clauses of control change (including after a takeover bid), that is, which come into effect, be amended or terminated, well as their effects. There are also no specific conditions that limit the exercise of voting rights by shareholders of the Company or other matters that may interfere with the success of takeover bids. 5. System that is subject to the renewal or withdrawal of countermeasures, particularly those that provide for a restriction on the number of votes capable of being held or exercised by only one shareholder individually or together with other shareholders Altri didn t adopt any countermeasures. 6. Shareholders agreements that the company is aware of and that may result in restrictions on the transfer of securities or voting rights As far as Altri is aware there are no agreements regarding the exercise of voting rights or the transfer of shares and does not exist, to the best of its knowledge, any agreement to ensure or frustrate the success of takeover bids. 20

21 RELATÓRIO DO CONSELHO DE ADMINISTRAÇÃO II. Shareholdings and Bonds held 7. Qualifying holdings As of 31 December 2013 pursuant to the requirements of articles 16 and 20 of the Securities Code ( Código de Valores Mobiliários ) and article 448 of the Portuguese Companies Act, the Company informs that, in accordance with the notifications received, the companies and/or individuals that hold qualifying holdings exceeding 2%, 5%, 10%, 20%, 33% and 50% of the voting rights, are as follows: Direct % of the Exceeding 2% of the voting rights Shares held voting rights LIVREFLUXO SGPS, S.A. (a) 8,664, % Lazard Frères Gestion SAS (b) 4,157, % Norges Bank 4,149, % (a) The 8,664,064 shares of Altri SGPS, S.A held by LIVREFLUXO SGPS, S.A., are attributable to Domingos José Vieira Matos, its director and dominant shareholder. (b) The 4,157,000 shares are held by SICAV OBJECTIF EURO SMALL CAPS. Having SICAV delegated the exercise of voting rights in Lazard Frères Gestion SAS, this participation is considered attributable to Lazard Frères Gestion SAS. Direct % of the voting Exceeding 5% of the voting rights Shares held rights Domingos José Vieira de Matos (a) 13,939, % Pedro Miguel Matos Borges de Oliveira 10,930, % Bestinver Gestión S.A., SGIIC 10,269, % (a) It is also attributable to Domingos José Vieira de Matos, 8,664,064 shares of Altri SGPS, S.A held by LIVREFLUXO SGPS, S.A., of which he is director and dominant shareholder. Thus, in legal terms, are considered attributable to Domingos José Vieira de Matos a total of 22,603,496 shares, representing 11.02% of the capital and voting rights of Altri SGPS, S.A. Direct % of the Exceeding 10% of the voting rights Shares held voting rights Caderno Azul, SGPS, S.A. (a) 29,000, % Paulo Jorge dos Santos Fernandes (b) 21,643, % (a) shares represent Altri SGPS, S.A total shares held by the company Caderno Azul SGPS, S.A., of which João Manuel Matos Borges de Oliveira is director and shareholder. (b) It is also attributable to Paulo Jorge dos Santos Fernandes, 2,400,000 shares of Altri SGPS, S.A held by ACTIUM CAPITAL SGPS, S.A., of which he is director and dominant shareholder. Thus, in legal terms, are considered attributable to Paulo Jorge dos Santos Fernandes a total of 24,043,168 shares, representing 11.72% of the capital and voting rights of Altri SGPS, S.A. Direct % of the Exceeding 15% of the voting rights Shares held voting rights PROMENDO SGPS, S.A. 30,837, % Altri was not informed of any participation exceeding 20% of the voting rights. 21

22 RELATÓRIO DO CONSELHO DE ADMINISTRAÇÃO 8. Number of shares and bonds held by members of the management and supervisory boards, under the terms of 447/5 of the Portuguese Companies Act Pursuant to and for the requirements of article 447 of the Portuguese Companies Act the Company hereby states that on December 31, 2013, the directors of the Company held the following shares: Paulo Jorge dos Santos Fernandes (a) 24,043,168 Pedro Macedo Pinto de Mendonça 1,705,000 Domingos José Vieira de Matos (b) 22,603,496 João Manuel Matos Borges de Oliveira (c) 29,000,000 Laurentina da Silva Martins 0 (a) Are also considered attributable to Paulo Jorge dos Santos Fernandes, apart from the 21,643,168 shares of Altri, SGPS, SA, held on an individual basis, 2,400,000 shares of Altri, SGPS, SA held by ACTIUM CAPITAL SGPS, SA of which he is the dominant shareholder and director. Therefore, in legal terms, are considered attributable to Paulo Jorge dos Santos Fernando a total of 24,043,168 shares, representing 11.72% of capital and voting rights of Altri, SGPS, SA (b) Are also considered attributable to Domingos José Vieira de Matos in addition to the 13,939,432 shares of Altri, SGPS, SA held on an individual basis, 8,664,064 shares of Altri SGPS, S.A held by LIVREFLUXO SGPS, S.A., of which he is director and dominant shareholder. Thus, in legal terms, are considered attributable to Domingos José Vieira de Matos a total of 22,603,496 shares, representing 11.02% of the capital and voting rights of Altri SGPS, S.A. (c) The shares represent Altri SGPS, S.A. total shares held by the company Caderno Azul SGPS, S.A., of which João Manuel Matos Borges de Oliveira is director and shareholder. As of December 31, 2013, the Statutory Auditor, the members of the Supervisory Board and the members of the Board of the General Shareholders Meeting held no shares of Altri. 9. Special powers of the Board of Directors, especially as regards resolutions on the capital increase Altri s articles of association assign to the Board of Directors powers to manage and represent the Company and carry out all operations related to its corporate purpose including, among others, the possibility to decide, with the prior opinion of the supervisory board of the company, capital increases, by one or more occasions, up to 35 million Euro in cash. 10. Significant business relationships between the holders of qualifying holdings and the company There were no businesses or significant transactions between the Company and holders of qualifying holdings except those that, as part of normal operations, were performed in normal market conditions for similar transactions. The amounts involved are immaterial. B. CORPORATE BOARDS AND COMMITTEES I. GENERAL MEETING a) Composition of the Presiding Board of the General Meeting 11. Details and position of the members of the Presiding Board of the General Meeting and respective term of office The Shareholders General Meeting Chairman is Pedro Nuno Fernandes de Sá Pessanha da Costa and the Secretary is Fernando Eugénio Cerqueira Magro Ferreira. The current Altri s Shareholders General Meeting members were elected on May 26, 2011 for the period 2011/

23 RELATÓRIO DO CONSELHO DE ADMINISTRAÇÃO b) Exercising the right to vote 12. Restrictions on voting rights The General Meeting is composed by all shareholders with voting right, corresponding one vote to each share. There aren t articles of association which restrict voting rights or which enable voting rights over a certain number not to be counted, when issued by a shareholder individually or together with other related shareholders. Individual shareholders with voting rights and companies who are shareholders of the Company may be represented by the person designated for that purpose. The representation should be communicated to the Chairman of the General Meeting, in writing, until the end of the third working day prior to the day scheduled for the meeting. The Company makes available at its headquarters and at its site, before the date of each General Meeting, a draft of the appropriate power of attorney form. A shareholder may appoint different representatives for the shares owned in different securities accounts, without prejudice to the principle of unity of vote and of vote in different directions allowed to shareholders acting as professionals. Shareholders can exercise voting rights via postal voting on all matters subject to the General Meeting. According to the articles of association, the declaration of intention to cast postal votes and the supporting document proving the quality of shareholder must be delivered in the Company s headquarters, until the end of the third working day prior to the day scheduled for the meeting, with identification of the sender, addressed to the Chairman of the General Shareholders Meeting. It isn t provided the possibility to exercise voting rights by electronic means. 13. maximum percentage of voting rights that may be exercised by a single shareholder or by shareholders that are in any relationship as set out in Article 20/1 The General Meeting is composed by all shareholders with voting right, corresponding one vote to each share. There aren t articles of association which envisage the existence of shares that do not confer voting rights or which enable voting rights over a certain number not to be counted, when issued by a single shareholder or together with other related shareholders. 14. Shareholders' resolutions that, imposed by the articles of association, may only be taken with a qualified majority Altri s articles of association do not include quorum for convening or deciding greater than the ones established by law. II. MANAGEMENT AND SUPERVISION a) Composition 15. Identification of corporate governance model adopted The structure of the Company's Corporate Governance is based on the reinforced Latin model and is composed by the Board of Directors, Supervisory Board and Statutory Auditor, all appointed by the Shareholders General Meeting. 23

24 RELATÓRIO DO CONSELHO DE ADMINISTRAÇÃO 16. Articles of association rules on the procedural requirements governing the appointment and replacement of members of the Board of Directors, the Executive Board and the General and Supervisory Board, where applicable The Members of the Board of Directors of the Company are appointed by the Shareholders General Meeting for a three years mandate and may be re-elected once or more. The Board is made up by three to nine members, shareholders or not, appointed by the Shareholders General Meeting. At the General Shareholders Meeting elections, 1 (one), 2 (two) or 3 (three) Directors shall be elected individually among the candidates proposed on the lists endorsed by groups of shareholders, depending on whether the total number of Directors is 3 (three) or 4 (four), 5 (five) or 6 (six), 7 or more than 7 (seven), provided that none of the said groups own shares representing over 20 % (twenty per cent) or less than 10 % (ten per cent) of the share capital. Each of the referred lists shall propose at least 2 (two) candidates eligible for each one of the available posts, one of them being nominated as substitute. No shareholder may endorse more than 1 (one) of the mentioned lists. The General Shareholders Meeting may not proceed to the election of any further Directors until 1 (one), 2 (two) or 3 (three) have been elected, as per the dispositions above, unless the above mentioned lists have not been presented. In the case of there being no elected Director, his/her respective substitute shall be called. In the case of there being no substitute, a new election shall be called, in which the dispositions above shall be applied with the necessary adaptations. 17. Composition of the Board of Directors The Board of Directors is composed by three to nine members, shareholders or not, elected by the Shareholder s General Meeting. Company s Board of Directors Members are elected by Shareholder s General Meeting for three years mandates and can be re-elected once or more. The Board of Directors is currently made up of 5 members who are responsible for carrying out all the management functions to implement the operations inherent to its corporate goals, acting in the best interests of the Company, its shareholders and other stakeholders. On December 31, 2013 this corporate board was composed of the following members: Paulo Jorge dos Santos Fernandes President João Manuel Matos Borges de Oliveira Member Domingos José Vieira de Matos Member Laurentina da Silva Martins Member Pedro Macedo Pinto de Mendonça Member All Board of Directors members were appointed by the Shareholder s General Meeting held in May 26, 2011 for the period 2011/13. Name First appointment End of mandate Paulo Jorge dos Santos Fernandes March December 2013 João Manuel Matos Borges de Oliveira March December 2013 Domingos José Vieira de Matos March December 2013 Pedro Macedo Pinto de Mendonça March December 2013 Laurentina da Silva Martins March December Distinction to be drawn between executive and non-executive directors and, as regards non-executive members, details of members that may be considered independent As of December 31, 2013, the Board of Directors included two non-executive members: Pedro Macedo Mendonça Pinto da Silva Martins and Laurentina da Silva Martins. 24

25 RELATÓRIO DO CONSELHO DE ADMINISTRAÇÃO The Board Directors does not include any member that satisfies the standard of independence referred in recommendation II.1.7 of Corporate Governance Code issued by the Portuguese Securities Regulator (CMVM) since the non-executive director Pedro Mendonça is relative of holders of qualifying holdings and the non-executive director Laurentina Martins was employee of the subsidiary Caima Indústria de Celulose, S.A. To allow to the non-executive directors an independent and informed decision, the Company has the following mechanisms: Notices of meetings of the Board of Directors sent to all directors include the agenda, even tentatively, of the meeting, and are accompanied by all the relevant information and documentation; and The non executive directors have wide powers to obtain information on any aspect of the Company, to examine its books, records, documents and other antecedents of the Company s operations. They can request relevant information directly to the directors and to the financial and operating senior staff of all group companies, without requiring any intervention of the executive directors in this process. Additionally, it is Company's practice the presence of non-executive directors in the meetings of the Board. The Director s report includes in its chapter Activity developed by the non-executive members of the Board," a description of the activity of the non-executive director during Given the Corporate model adopted, the composition of the governing boards and the way they operate, namely the independence of the Supervisory Board and of the Statutory Auditor, without the existence of any delegation of powers, the Group believes that the appointment of independent directors would not bring significant gains for the proper functioning of the adopted corporate governance model which has been deemed appropriate and efficient. 19. Professional qualifications and other relevant curricular information of each member of the Board of Directors The qualifications, experience and positions held in other Companies by the members of the Board of Directors are presented in Appendix I. 20. Customary and meaningful family, professional or business relationships of members of the Board of Directors with shareholders that are assigned qualifying holdings that are greater than 2% of the voting rights The director José Domingos Vieira de Matos is director and dominant shareholder of LIVREFLUXO - SGPS, SA which owns 4.22 % of the share capital of Altri, SGPS, SA. The director João Manuel Matos Borges de Oliveira is director and shareholder of CADERNO AZUL - SGPS, SA, which owns 14.14% of the share capital of Altri, SGPS, SA. In addition, that director is brother of Pedro Miguel Matos Borges de Oliveira, holder of a qualifying holding of 5.33 % of the share capital of Altri, SGPS, SA. The company Promendo SGPS, SA, holder of % of the share capital of Altri, SGPS, SA has as its director and dominant shareholder Ana Rebelo de Carvalho Menéres Mendonça, daughter of the director Pedro Macedo Pinto Mendonça. 25

26 RELATÓRIO DO CONSELHO DE ADMINISTRAÇÃO 21. Organisational charts or flowcharts concerning the allocation of powers between the various corporate boards, committees and/or departments within the company, including information on delegating powers, particularly as regards the delegation of the company's daily management The Board of Directors, appointed in the Shareholders General Meeting, develops its functions of management and coordination of the Group companies on a collective basis and is currently made up of a president and four members, two of them being non-executive. The Board has been exercising its activity in constant dialogue with the Supervisory Board and the Statutory Auditor, providing the assistance requested with transparency and rigor, complying their regulations and best practices of corporate governance. There is no limit to the maximum number of positions that the Board members can accumulate as directors of other companies. The members of Altri s Board of Directors are part of the management of the most significant group companies, so as to enable their activities to be more closely monitored. In what refers to of internal control, operating companies of Altri Group have management control boards that are active at all levels, preparing monthly reports to each Board of Directors. The distribution of functions among the several members of the Board of Directors may be presented as follows: Generically, Altri SGPS directors focus their activities in managing the Group s holdings and defining its strategic development guidelines. The strategic decisions are adopted by the Board including all its members, executives and non-executives, in the normal accomplishment of their duties. The daily management of each operating company is a responsibility of its Board of Directors, which includes some of Altri s directors but also some other members with defined functions. Thus, taking into consideration the activities developed by the Board Members, both in Altri SGPS and in the several group companies, the functional organisational chart can be presented as follows: 26

27 RELATÓRIO DO CONSELHO DE ADMINISTRAÇÃO b) Functioning 22. Availability and place where rules on the functioning of the Board of Directors may be viewed The Board of Directors and the Supervisory Board approved their regulations, which are available on the website of Altri. 23. The number of meetings held and the attendance report for each member of the Board of Directors The Company's Board of Directors meets regularly and the Boards of Directors of subsidiaries of which Altri s directors are also part meet as often as necessary to the proper monitoring of its operations. Additionally, the Board of Directors meets periodically with the Supervisory Board providing them the necessary support, including for the preparation of their annual report on the supervision of the Company and its opinion on the directors report and on the Board of Directors proposals. The meetings of the Board are scheduled and prepared in advance, and timely documentation relating to the matters contained in its agenda is provided, to ensure all members of the Board the conditions for the informed exercise of their functions. Similarly, minutes of meetings, once approved, and the respective notices of meeting are forwarded to the President of the Supervisory Board. The Board of Directors meets regularly, and their decisions are only valid if the majority of members is present. During 2013 the Board of Directors met 14 times being the corresponding minutes recorded in the minute book of the Board of Directors. 24. Details of competent corporate boards undertaking the performance appraisal of executive directors The performance assessment of executive directors belongs to the Remuneration Committee and is based on the functions performed by them in Altri and in group companies as well as their responsibility and added value and the experience and knowledge accumulated on the job. 25. Predefined criteria for assessing executive directors' performance The remuneration of executive members of the Board of Directors includes a variable component of medium term (2011 to 2013) computed based on total shareholders return, on the sum of net profit for that period and on the evolution in the Company's business. 26. Availability of each member of the Board of Directors and details of the positions held at the same time in other companies within and outside the group, and other relevant activities undertaken by members of these boards throughout the financial year The professional activity of the current members of Altri s Board of Directors, with reference to other companies where they have directors functions and other relevant activities undertaken are presented in Appendix I. The members of Board of Directors showed availability in the exercise of their functions being present and participating in all meetings of the Board. All members of the Board attended all the meetings. 27