Altri SGPS S A : informs about Report and Accounts for the First Half of 2021

REPORT AND

ACCOUNTS

30 June 2021

(Unaudited information)

REPORT AND ACCOUNTS 1H2021

TABLE OF CONTENTS

MESSAGE FROM THE CEO .......................................................................................................................	4
INTRODUCTION ..........................................................................................................................................	5
STOCK EXCHANGE EVOLUTION ..............................................................................................................	8
GROUP'S ACTIVITY ..................................................................................................................................	11
OPERATIONAL AND FINANCIAL PERFORMANCE................................................................................	12
FINANCIAL REVIEW .................................................................................................................................	15
SUSTAINABILITY ......................................................................................................................................	16
OUTLOOK..................................................................................................................................................	17
CORPORATE GOVERNANCE ..................................................................................................................	18
LEGAL MATTERS .....................................................................................................................................	19
CLOSING REMARKS ................................................................................................................................	21
STATEMENT UNDER THE TERMS OF ARTICLE 246, PARAGRAPH 1, C) OF THE SECURITIES
MARKET CODE .........................................................................................................................................	23
STATEMENT OF RESPONSIBILITY .........................................................................................................	23

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Management Report

REPORT AND ACCOUNTS 1H2021

I. Management Report

(This is a translation of a document originally issued in Portuguese. In the event of discrepancies, the Portuguese

language version prevails - Note 20)

To the Shareholders

Pursuant to the legal requirements, the Board of Directors of Altri, SGPS, S.A. ("Altri") hereby presents its Management Report for the first half of 2021.

MESSAGE FROM THE CEO

The second quarter of this year continued to be a challenging time for Altri and for Portugal, in a pandemic situation, more than a year after it started in our Country.

A moment that necessarily affects the activity of our teams, our partners and customers. We have taken all the necessary measures to ensure, as a priority, the safety and well-being of all those who share our daily lives and the company has shown that it is prepared to face this challenge with resilience, creativity and focus on delivering results to all our stakeholders. I would like to thank all of our people for their dedication and the example they have set during this challenging period.

In this context, I note the strong operational and financial performance of Altri, with the establishment of quarterly and half-year records for production and sales. Our industrial units, which are second generation biorefineries, increased, without exception, their performance, allowing us to supply the market with base materials for thousands of products that are part of our daily lives, as well as to increase domestic sales and exports. In this period, the company recorded a strong growth in EBITDA to € 69.4 M, which represents an increase of +132% year-on-year, and +75.8% over the first quarter of the year. In the first semester, the Group also presented very significant results, with EBITDA growing to € 108.9 M, +72.8% when compared to the same period of last year.

In terms of forest management, Altri has contributed significantly to an increasingly better production forest, by systematically supporting producers and partners in the adoption of best practices and certification of their plantations.

A quarter that is also marked by the placement in the capital market of the subsidiary GreenVolt, in an absolutely record time and with the full commitment of its exceptional team.

Also in terms of our commitment to contribute to a more renewable world, Altri reinforced its commitment to measures that will allow the Group to meet its demanding Commitment 2030 and the United Nations Sustainable Development Goals.

José Pina

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REPORT AND ACCOUNTS 1H2021

I. Management Report

INTRODUCTION

Altri was incorporated in March 2005 and quickly became known and recognised as a leading European producer of bleached eucalyptus pulp and, more recently, of dissolving pulp. The company is now also a relevant player in the renewable energy sector, particularly in industrial cogeneration using black liquor and biomass, as its forestry strategy is based on the full use of all the components provided by the forest: pulp, black liquor and forest wastes.

All the shares representing Altri's share capital are admitted to trading on a regulated market - Euronext Lisbon - integrating its main reference index, PSI-20.

Altri's success is due to a variety of factors, most notably the high level of investment made, especially in recent years - Altri has invested in the last ten years more than 464 million Euro in industrial units in Portugal, equipping them with the most advanced technology available on the global market, adapting them, right from the start, to the conditions of the New BREF (Best Available Techniques - Reference Document for the Production of Pulp, Paper and Board). Therefore, Altri's industrial units are now national and international references in terms of best practices and environmental compliance.

Altri has three pulp mills in Portugal: Celulose Beira Industrial (Celbi), S.A., in Figueira da Foz, Celtejo - Empresa de Celulose do Tejo, S.A., in Vila Velha de Ródão and Caima - Indústria de Celulose, S.A., in Constância, with an installed capacity of production of eucalyptus pulp of more than 1 million tonnes per year in the three units as a whole. Additionally, Greenvolt - Energias Renováveis, S.A. (previously designated by Bioelétrica da Foz, S.A.) materializes the presence of Altri in the renewable energy sector, being currently composed by six biomass power plants which generates energy through biomass, considering the acquisition of Tilbury, in the United Kingdom, on 30 June 2021.

The forest is a strategic asset for Altri. At the end of 2020, Altri, through its subsidiaries, Altri Florestal, S.A. and Florestsul, S.A., managed 86.3 hectares of forest in Portugal. Altri's management practices are certified by the main sustainable forest management certification systems, a guarantee that the Company will achieve its goals, now and in the future.

In these lands, eucalyptus stands out as the main crop of Altri's forest, ensuring a self-supplythat complements the supply provided by the wood and biomass market. These lands are fully certified by the Forest Stewardship Council® (FSC®) and the Programme for the Endorsement of Forest Certification (PEFC), two of the most renowned certification bodies worldwide.

Although Altri's forests are scattered across the country, they are mostly concentrated in Tejo's valley, a fact that makes them even more relevant due to their proximity to Altri's manufacturing units. This proximity is extremely relevant from the strategic point of view, because it allows optimising transportation costs, while ensuring a greater efficiency in the mobilisation of wood when compared to the production of wood located at farther distances.

The pursuit of Altri's industrial strategy is based on integrated forest management in Portugal, which aims at optimising the forest, guaranteeing that all its components are fully used. Thus, eucalyptus is processed in Altri's mills, producing paper pulp and electricity (cogeneration), while the bark, the branches and the forest waste are used to generate electricity using biomass.

Altri's development strategy is clearly based on the reinforcement of its operational efficiency and, at the same time, on the diversification of the sources of revenue for segments with higher added value and that enable an evolution in the value chain. Thus, in order to comfortably compete in the commodity market, and in a context marked by an adverse exchange rate, the Company must reduce its operating costs and, on the other hand, invest in the manufacture of products with higher added value, which will allow the Group to grow.

Altri aims to become the most efficient producer on a global scale providing a door-to-doorservice to its customers. With this goal in mind, Altri developed a strategy based on three pillars:

 Cutting cash cost per tonne: the projects completed in recent years and those underway do not entail an increase in fixed costs, leading to a dilution of the cash cost per tonne;

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