annual report 2011 - celulose beira industrial (celbi) sa · 2015. 9. 13. · 14 celbi annual...

annualreport 2011

annual report 2011

index report of the board of directors

highlights

general considerations

the market

communication and information

technology

forest activities

industrial activities

investments

human resources

management systems

financial activities

proposal for application of profits

enclosure to the report of the board

of directors

financial statements

statement of financial position

statement of profit and loss

statement of comprehensive income

statement of changes in equity

cash flow statment

notes to the financial statements

report and opinion of the statutory audit board and

legal certification of accounts

report and opinion of the statutory audit board

legal certification of accounts

6

8

10

12

14

16

18

20

22

24

25

29

29

30

32

34

35

36

38

39

102

104

106

6 celbi annual report 2011 report of the board of directors 7

report of the board of directors


net salesmillion eur

2007 2008 2009 2010 2011

year total

2007 197

2008 145

2009 158

2010 329

2011 333

year total

2007 58,0

2008 225,1

2009 81,9

2010 20,0

2011 7,6

2007 2008 2009 2010 2011

investmentmillion eur

250

200

150

100

50

0

operacional resultsmillion eur

2007 2008 2009 2010 2011

year total

2007 60

2008 16

2009 29

2010 101

2011 74

year total

2007 325

2008 270

2009 401

2010 539

2011 601

2007 2008 2009 2010 2011

sales of eucalyptus pulpthousand tonnes

2007 2008 2009 2010 2011

equitymillion eur

year total

2007 226

2008 232

2009 225

2010 262

2011 288

2007 2008 2009 2010 2011

production of eucalyptus pulpthousand tonnes

year total

2007 325

2008 275

2009 398

2010 540

2011 599

summary as of december 31st, 2011

EUR 1,000 2011 2010 2009

net sales 333,197 328,904 157,893

depreciation 33,956 33,057 20,346

operational results 74,435 101,428 29,192

net result 20,402 39,925 151

equity 288,285 261,650 225,246

value-added 94,901 133,367 35,214

investment 7,591 20,034 81,919

permanent staff on december 31st (*) 218 218 216

(*) Fiscal and Board members not included


The year 2011 was a year of contrasts:

while, internally, the company saw the

consolidation of the investments made

by obtaining a new production record, we had to

struggle with the depressed external environment

caused by the crisis of the euro and of the Western

economies.

The pulp market continued to reflect the

pessimism that settled in Europe, and if it were not

for the growth that occurred in emerging economies,

namely China, the degradation of the prices

experienced in the second half-year would have been

even more striking.

The conditions of wood supply in the domestic

market continued to fail to meet the demands of

the industry both quantity and quality wise. The

certification of the wood did not evolve, since

no awareness policy has been deployed with the

producers towards the growing demand of the

markets in this area.

The installation of new information platforms

based on SAP, the continuous training for employees

and the deployment of actions leading to energy

certification - which came to pass in 2012 - were

the challenges and practices faced by Celbi in 2011

that paved the way for the company assertiveness

and maintenance as one of the most competitive in

Europe in the production of bleached eucalyptus

pulp.

general considerations

annual report 2011

The year 2011was a year of contrasts.


For the market pulp producers, 2011 was a challenging year.

The strategy to focus sales in its natural market

– Europe – persisted throughout the year. Celbi’s

product – eucalyptus paper pulp - is recognized as a

top quality product and much appreciated by Euro-

pean producers for various applications, particularly

printing, writing and specialty papers. The use of

Celbi pulp for the production of tissue paper is also

quite relevant, since this sector is showing very posi-

tive growth rates in Europe.

The total sales volume was 601,311 tonnes, 11.6%

higher than in 2010. This increase resulted from

greater availability of pulp as a consequence of a

gradual increase in production in 2011. In 2012, as

no new capacities will be entering the market, it is

expected that, during the first half-year, the market

will recover much of the adjustment occurred in the

second half of 2011 and it should remain relatively

stable until the end of the year.

the market

For the market pulp producers, 2011 was

a challenging year. The market was strong

in the first two quarters, weakening pro-

gressively throughout the second half-year. World-

wide sales of pulp in the year reached 52,6 million

tonnes, 2,4 million more than in 2010, i.e. showing

an increase of 4.8%. The Chinese market was largely

responsible for this growth with an increase of

30.5% compared to 2010, corresponding in absolute

terms to 3,2 million tonnes of increasing demand,

the largest annual increase ever occurred.

As for eucalyptus pulp, global demand rose 8% in

2011, i.e. 1,3 million tonnes. The international price

of eucalyptus fibre began the year at 850 USD/t end-

ing at 650 USD/t, after reaching a peak of

880 USD/t in May.

The exchange rate of the USD against the EUR had

naturally an impact on the company’s results since it

ranged from USD 1.336 in January to USD 1.3179 in

December. Nevertheless, the euro reached its high-

est value exactly in May quoting USD 1.4882. Celbi

then benefited from this market environment by

placing on the market the new production capacity

that resulted from the expansion project.


Concurrently, the ROP (Reception of Other Products) system was upgraded and extended to the other Group units. This system manages all products, apart from wood and biomass, which are controlled in the mill reception gates.

We have completed the studies for the upgrade of the Documents Management System and Intra-net (MS Sharepoint) as well as the Mill Informa-tion System (MIS).

Assistance was provided to Internet users and to the development work in CelbiNet, the existing maintenance contracts have been renewed and several changes and improvements were introdu-ced in other existing Information and Communi-cation Systems.

All users got the necessary support and the work of installing antivirus and other similar products was continued in order to protect the networks against impending hacker attacks.

communication and information technology The challenge for the installation of

a new information platform based on ERP SAP system and the upgrade of the

maintenance management system were the most important in the area of IT in 2011. The project called SAP Altri Unify & Máximo covered all the Group companies and started-up in September.

The installation of a new information platform.


The wood supply plan for 2011 was prepa-red taking into account the estimates of consumption of Celbi, the availability of

the national and Iberian markets based on recent inventories, as well as a perspective on the inter-ference of other agents consuming eucalyptus wood in the market.

The deficit of eucalyptus wood in the Iberian Peninsula has forced us to import raw material from South America, mainly in the form of chips. On the other hand, our operations in Galicia have increased as a result of the proven availabilities in this Spanish region. In terms of logistics we would like to stress the increase in the use of rail.

The demand for wood in the Portuguese ma-rket from the Spanish companies in the sector increased during this year. However, this fact was compensated by a decrease of about 40% in sales outside the Iberian Peninsula.

The volumes of the domestic market supplied to Celbi increased over the previous year as a result of greater availability of wood. The amount of certified wood supplied by the market is still quite small. The national certified area has increased very slowly in recent years, despite the incentives paid to certified wood. The volume of wood deli-vered to Celbi by Altri Florestal was similar to the previous year.

forest activities

In terms of logistics we would like to stress the increase in the use of rail.


Operational efficiency improved along the year and reached, in recent months, values close to 90%.

industrial activities

The facilities underwent a set of changes that helped increase the peak of production, reduce consumptions, increase availability and impro-ve environmental and energy performance. Of particular relevance are the consumption and production of electrical energy and the reduc-tion of the natural gas and water consump-tions.

The year 2011 was marked by an increase in spe-cific wood consumption to levels never before seen in Celbi. This was due to imports of wood and to the consumption of poor quality domes-tic wood, especially very low diameter logs. Due to these factors, we prevented the predictable difficulties in the wood preparation by rein-forcing teams in order to allow the increase of the peak capacity and the availability of several lines.

Special attention has been paid to the tools that contribute to increase the reliability of the facilities and reduce costs, namely GRUTASF in partnership with SKF, the analysis of indicators and the planning and preparation of stops and shut-downs.

The year 2011 was characterized by the consolidation of the mill production and especially by increasing the reliability of

the facilities, particularly in the last third of the year, which allowed Celbi to reach the planned production of 600,000 tonnes/year. However, remaining problems in the wood digesting, bleaching and automation areas prevented the production to reach higher values.

Operational efficiency improved along the year and reached, in recent months, values close to 90%. The annual production was 599,278 ton-nes, a new annual record. The following further records were beaten:

→ Monthly record - 55,431 t → Daily average – 1,798 t → Daily record – 2,059.9 t


During the year 2011 we have identified situations that gave rise to studies to improve the reliability and availability

of various facilities and process equipment. We performed a set of development projects in Celbi, among which the following stand out for their size and value of investment:

→ Installation of the concept “Dolphin” in the primary, secondary and tertiary screens and installation of a new waste press and a screw to separate sand in the LCO fibre recovery;

→ Installation of a new centrifuge and increase of the extraction capacity of fibres in the effluent treatment;

→ Construction of the roof of chip silo No. 1.

The detailed engineering of the following projects was also carried out:

→ Refurbishment of the ventilation system of the Drying Machine;

→ Increase capacity/reliability of the Causticizing plant.

We completed the licensing procedures of the cogeneration plant and obtained the relevant technical operating license. Municipal licenses for construction and use of new buildings were also obtained. We gave the necessary steps towards the legalisation of the containers under pressure (RSP) by completing various tests and sending out documentation to the authorities.

We continued to support the strategic develop-ment of Celtejo, particularly in the conception and deployment of significant changes carried out in the plant. We would like to emphasize the deve-lopment of the basic engineering and budgeting that lead to the approval of the investment for the refurbishment of the Evaporation plant.

investments

the reliability and availability of various facilities and process equipment.


The results of the impact of training in health and safety are mirrored in the decrease in indica-tors like absenteeism and accidents at workplace. In fact, accidents with lost days went from 16 in 2010 to 7 in 2011, and the Severity Index decrea-sed from 0.70 to 0.15. Also the absenteeism rate for accidents and illness decreased from 2.6% to 2.1%.

The average number of staff in 2011 stood at 244. At the end of the year as a result of the pro-gramme to rejuvenate the company, there were 14 contract terminations by mutual agreement. The total hours worked increased by about 3% as a result of a significant increase in overtime which stood at 7.5% of the potential working hours.

Personnel costs were MEUR 13,4, represen-ting an increase of 1.5% over the same period of 2010. To this contributed not only the 1.3% wage

increase but also the increase in overtime and the contract terminations by the end of the year that were not accrued in its entirety.

As part of our Social Responsibility we conti-nued to cooperate with schools, providing 26 cur-ricular internships, of which 20 are of secondary technical and professional courses and 6 univer-sity courses. In addition to these we granted 11 professional internships. We kept extending to schools and universities our Free-Time Program-me in the summer months that aims at encoura-ging 38 youngsters to occupy their school holiday time in a useful way and to make acquaintance with the world of work.

On what concerns our involvement with the community, we have given positive response to 55 of the 95 requests for support and donations.

T he Human Resources Depart-ment continued investing in the em-ployees’ skills development, especially

in its technical side, completing the training plan presented to the Operational Programme for Human Potential (OPHP) in 2010 with a degree of achievement of 82%. The subsidized amount corresponded to about 50% of the total invested in these activities.

In 2011 the total number of training hours was 4,176 h. This training effort represents 1.0% of the total potential hours and an average of 2,3 training days per employee. The priorities of trai-ning were targeted at IT areas due to the project Altri SAP/Máximo (42.7%), followed by Occupa-tional Health and Safety (19.4%) and Production Process (8.3%).

human resources

Celbi continued investing in the employees’ skills development


includes the EMAS Environmental Statement. The certification of the Occupational Health and Safety Management System in accordance with OHSAS 18001 and the certification of the Laboratory, in accordance with ISO 17025, were restored.

Throughout the year internal and external audits to ensure the normal functioning of the manage-ment system (Quality, Environment, Safety and Wood Chain of Custody) were carried out.

We guaranteed the continuous monitoring of exhaust gases in the main stacks and the testing of air pollutants by accredited laboratories, as required in the Environmental License. Every effort was made to monitor the functioning and calibration of the air pollutants meters in the new stacks resulting from Project C09 and to measure the emissions from the biomass boiler. All the results, both from the laboratory and from the continuous measurements, were reported to the relevant authorities.

A new intervention was carried out in the pro-tection barrier of the sand-dune system, where the submarine pipe runs through. We have been closely following up the status of this specific sand-dune as well as all the dune system south of Leirosa which have been suffering an alarming deterioration. We have also intervened, in collabo-ration with and the permission of the Municipality of Figueira da Foz, INAG and CCDRC in the area adjacent to the pier of the Leirosa beach.

Several improvements were implemented in the fire protection system including the start-up of a new water pumping station, the installation of sprinklers in the chip silos and the setting up of three water cannons in the northern area of the biomass silo. We maintained and streamlined the Specific Improvement Programmes through the implementation of technical improvements for collective protection that were identified in inspec-tions and audits under the Safety Management System. We conducted a fire fighting drill at the biomass piles, and two drills for action in case of alkali spills.

We continued strengthening the collaboration

with service providers in safety matters. Training actions aimed at employees of external contrac-tors were regularly held. It is worth noting that the various training courses organised by Celbi had a high number of participants. This training focused mainly on aspects of Safety and Environmental Protection (99.7%). Internally, we held regularly the training scheduled in the Annual Training Plan mainly focusing on the operation of process facilities, maintenance of equipment, integration of operators, safety and fire protection.

One of the goals set for 2011, was the implementation and certification of an Energy Management System (EMS) ac-

cording to ISO 50001. We started a set of activities, including the preparation of the initial diagnosis, inventory of energy issues, definition of some specific procedures and adjustment of the existing ones, establishment of improvement programmes and the necessary technical actions that aim at ob-taining certification of the EMS in 1st half of 2012.

We have prepared and published the Sustainabi-lity Report, concerning the previous year, which

The implementation and certification of an Energy Management System (EMS) according to ISO 50001.

management systems


Production of 599,279 tonnes of eucalyptus pulp.

The year 2011 was characterized by a slowdown in the global economy. The continuing debt crisis in the Euro zone,

the catastrophe in Japan and the aggressive poli-cies implemented to combat inflation in emerging countries weighed heavily on the performance of the global economy.

In the Euro zone the crisis grew deeper and Portugal had to follow the path that Greece and Ireland had already gone in 2010, asking for foreign aid and implementing a strict austerity programme. The GDP in the Euro zone grew 1.5% in 2011, being Germany (+3.0%) the great engine of a very unbalanced Europe at this level. For 2012 we expect a further slowdown in the pace of growth, with the midpoint of the predictions very close to 0%.

financial activities


As shown in the Balance Sheet and Income State-

ment, the Net Income for the year ended

December 31, 2011 was EUR 20,401,809. That value

derives from the fact that the Company has, in

accordance with applicable accounting standards, re-

cognized as an expense in the accounts for the year,

the value of EUR 569,058 as the amount allocated to

profit sharing by employees of the Company.

The Board of Directors proposes that the Net Profit

for the year ended December 31, 2011 in the amount

of EUR 20,401,809 is transferred to Retained Ear-

nings.

It is further proposed that Celbi pays to its em-

ployees the referred amount of EUR 569,058, accor-

ding to the profit sharing scheme of the Company

and in line with criteria established by the Board.

Leirosa, March 2, 2012

THE BOARD OF DIRECTORS

Paulo Jorge dos Santos Fernandes

(Chairman)

João Manuel Matos Borges de Oliveira

Pedro Macedo Pinto de Mendonça

Domingos José Vieira de Matos

Agostinho Dolores Ferreira

Joaquim Ferreira Matos

proposal for application of profits

1. 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, 2011

This 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 In-

dustrial (Celbi), S.A. as at December 31st, 2011:

Altri-Participaciones y Trading, S.L 15,493,288

Leirosa, March 2, 2012

enclosure to the report of the board of directors

The earthquake in Japan and the consequent nuclear accident were events that influenced negatively the economy in 2011. The event caused the suspension of industrial activity in many fac-tories in the country, whose consequences have resulted in a lack of supply of goods worldwide.

Emerging economies, including Brazil, India and China, continued with the momentum of growth already recorded in 2010. However, the high inflationary pressures were a major issue in 2011. Despite the slowdown in the second half of the year, GDP growth in these countries conti-nues to be a determining factor for the growth of world economy. In Portugal, the evolution of the economy continues to be constrained mainly by three factors: the implementation of the adjust-ment programme agreed with the troika, the deleveraging of various sectors of the economy and economic external environment.

Celbi’s performance in 2011 showed a produc-tion of 599,279 tonnes of eucalyptus pulp, which accounts for a new maximum annual production, corresponding to an increase in 11.0% when com-pared with the previous year.

Pulp sales, which registered a volume 11.5% higher than in 2010, did not show the equivalent increment in the invoiced value of MEUR 333,2 due to the negative trend in prices that occurred throughout 2011, with special focus in the last quarter.

At the end of the year, the market price of BEKP in Europe (PIX) reached USD 651/ton, correspon-ding to about EUR 499/ton. In 2011, the average price was USD 748/ton which was equivalent to about EUR 582/ton.

Operating costs, excluding amortisation, amounted to MEUR 260, higher than the pre-vious year by about 20%. This is due not only to the aforementioned increase in production and consequent increase in sales, but also to the in-crease in the price of some raw materials, mainly wood, whose import caused a significant raise in the average acquisition prices.

EBITDA achieved in the year was MEUR 74,4, 26.6% less than the previous year. The Net Profit for the year was MEUR 20,4, also lower than the one recorded in 2010 by 48.9%.

financial risk managementThe general principles of financial risk mana-

gement of the Company are described in detail in note 2 to the financial statements.

Figueira da Foz, March 2, 2012


f inancial statements

32 celbi relatório & contas 2011 financial statements 33 32 celbi annual report 2011

equity and liabilities notes 31.12.2011 31.12.2010

equity

share capital 16 77,500,000 77,500,000

legal reserve 16 16,100,235 16,100,235

other reserves 16 174,282,530 128,124,724

net profit/loss 20,401,809 39,925,239

total equity 288,284,574 261,650,198

liabilities

noncurrent liabilities

bank loans 10 and 17 11,875,000 -

other loans 10 and 17 517,036,869 532,744,337

other noncurrent liabilities 19 18,542,546 19,467,948

deferred tax liabilities 8 134,476 157,351

provisions 18 458,472 1,273,663

total noncurrent liabilities 548,047,363 553,643,299

current liabilities

bank loans 10 and 17 3,125,000 -

other loans 10 and 17 82,025,861 70,805,621

suppliers 10, 20 and 27 46,366,776 53,624,938

group companies 10 and 27 749,894 3,318,725

other current creditors 10, 21 and 27 3,642,497 10,478,404

state and other public entities 13 428,796 11,566,344

other current liabilities 22 17,044,861 13,027,051

derivatives 10 and 23 14,751,984 15,303,996

total current liabilities 168,135,669 178,125,079

total liabilities 716,183,032 731,768,378

total equity and liabilities 1,004,467,606 993,418,576


as at december 31st 2011 and 2010

amounts in euro

assets notes 31.12.2011 31.12.2010

noncurrent assets

biological assets 9 340,072 354,088

tangible fixed assets 4 338,059,442 365,018,342

intangible fixed assets 5 890,378 220,417

investment properties 6 4,022,162 5,479,841

investments in subsidiary companies 7 252,262,500 252,262,500

investments available for sale 74,935 -

other noncurrent assets 35 400,214 400,214

deferred tax assets 8 2,595,357 5,058,499

total noncurrent assets 598,645,060 628,793,901

current assets

inventories 9 34,083,659 30,361,094

customers 10, 11 and 27 81,820,241 90,901,271

other debtors 10, 12 and 27 1,414,067 2,675,376

state and other public entities 13 4,326,048 3,877,321

group companies 10 and 27 187,334,431 132,564,506

other current assets 14 1,814,055 1,572,245

cash and cash equivalents 10 and 15 95,030,045 102,672,862

total current assets 405,822,546 364,624,675

total assets 1,004,467,606 993,418,576


as at december 31st 2011 and 2010

amounts in euro

34 celbi relatório & contas 2011 financial statements 35 34 celbi annual report 2011

statement of comprehensive income

for financial years ended december 31st. 2011 and 2010

amounts in euro

notes 31.12.2011 31.12.2010

net income 20,401,809 39,925,239

change in fair value of cash flow hedging derivatives

23 6,232,567 (3,520,542)

other comprehensive income for the year 6,232,567 (3,520,542)

total comprehensive income for the year 26,634,376 36,404,697

statement of profit and loss


amounts in euro

notes 31,12,2011 31,12,2010

sales 27 and 28 333,196,790 328,904,342

services rendered 28 3,665,435 1,392,245

other income 29 5,508,662 7,192,886

cost of sales 9 and 27 (170,741,323) (134,574,162)

external supplies and services 26 and 27 (75,868,701) (68,935,909)

payroll expenses 25 and 33 (13,450,549) (13,245,849)

amortisation and depreciation 4, 5 and 6 (33,956,472) (33,056,820)

provisions and impairment losses 18 (96,163) (99,138)

other expenses 30 (7,778,713) (19,206,356)

financial expenses 31 (27,700,045) (25,384,076)

financial income 27 and 31 11,355,600 7,263,640

profit before tax 24,134,521 50,250,803

income tax 8 (3,732,712) (10,325,564)

net profit 20,401,809 39,925,239

net profit 20,401,809 39,925,239

earnings per share

basic 32 1,32 2,58

diluted 32 1,32 2,58

36 celbi annual report 2011 financial statements 37

other reserves

notes share capital

own shares (nominal value)

own shares (discounts and

premiums)

legalreserve

hedging reserves

other reserves and retained

earnings

total other reserves net profit total share

capital

balance as of january 1st, 2010 16 77,500,000 (33,560) 33,560 16,100,235 (7,143,864) 138,637,667 131,493,803 151,462 225,245,500

application of 2009 results

transfer to retained earnings - - - - - 151,462 151,462 (151,462) -

total comprehensive income - - - - (3,520,541) - (3,520,541) 39,925,239 36,404,698

balance as of december 31st, 2010 16 77,500,000 (33,560) 33,560 16,100,235 (10,664,405) 138,789,129 128,124,724 39,925,239 261,650,198

balance as of january 1st, 2011 16 77,500,000 (33,560) 33,560 16,100,235 (10,664,405) 138,789,129 128,124,724 39,925,239 261,650,198

application of 2010 results

transfer to retained earnings - - - - - 39,925,239 39,925,239 (39,925,239) -

total comprehensive income - - - - 6,232,567 - 6,232,567 20,401,809 26,634,376

balance as of december 31st, 2011 16 77,500,000 (33,560) 33,560 16,100,235 (4,431,838) 178,714,368 174,282,530 20,401,809 288,284,574

statement of changes in equity


amounts in euro

financial statements 38 celbi annual report 2011 notes to the financial statements 39

notes to the financial statements

as of december 31st, 2011

(amounts in eur)

1. introductionCelulose 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 share-holder, Altri, SGPS, S.A. (“Altri”), through its subsidiary Altri – Participaciones y Trading, S.L. (“Altri SL”) acquired 99.96% of the Company’s share capital, repre-senting 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 on NYSE Euronext Lisbon.

Celbi’s financial statements are presented in EUR rounded to the unit, which is the currency used by the Company in its business and thus considered the func-tional currency.

2. main accounting policiesThe main accounting policies used in the preparation of the accompanying finan-cial statements are as follows:

2.1. basis of preparationThe financial statements have been prepared assuming the continuity of operations based on the books and 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. As part of those standards we should consider: the International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board (IASB); the Interna-tional Accounting Standards (IAS) issued by the International Accounting Standards Committee (IASC) and their interpretations - IFRIC and SIC, issued respectively by the International Financial Reporting Interpretation Committee (IFRIC) and by the Stand-ing Interpretation Committee (SIC) – that have been adopted by the European Union. From now on, all those standards and interpretations are designated generically as “IAS/IFRS.”

cash flow statements


amounts in euro

notes 2011 2010

operating activities

collections from customers 346,939,513 304,239,945

payments to suppliers (254,608,919) (186,097,624)

payments to personnel (10,177,374) (9,626,293)

other cash payments/cash receipts from operating activity (4,416,118) (22,655,865)

income tax paid (18,515,130) 59,221,972 292,917 86,153,080

cash flow from operating activities (1) 59,221,972 86,153,080

investment activities

collections relating to

interests and similar income 5,091,324 4,807,247

tangible fixed assets 1,651,974 1,162,141

subsidies for investment - 6,743,298 677,548 6,646,936

payments relating to

loans (51,474,935) (16,250,000)

intangible assets (694,531) (714,896)

fixed tangible assets (10,793,207) (62,962,673) (19,020,161) (35,985,058)

cash flow from investing ac-tivities (2) (56,219,375) (29,338,122)

financing activities

collections relating to

loans 40,309,731 40,309,731 - -

payments relating to

interests and similar costs (19,955,145) (14,650,966)

loans (31,000,000) (50,955,145) (10,890,376) (25,541,342)

cash flow from financing activities (3) (10,645,414) (25,541,342)

cash and cash equivalents at the beginning of the year 15 102,672,862 71,399,246

variation of cash and cash equivalents: (1)+(2)+(3) (7,642,817) 31,273,616

cash and cash equivalents at the end of the year 15 95,030,045 102,672,862


(i) Adoption of new standards and interpretations, amended or revisedThe following standards, interpretations, amendments and revisions endorsed by the European Union and with mandatory fiscal periods beginning on or after January 1st, 2011, were first adopted in the year ended December 31, 2011:

standard effective date notes

amendments to IAS 24related party disclosures

and amendments to IfRS 8 operating segments

after Dec 31st, 2010

this review clarifies the definition of “related party”. at the same time as it eliminates internal inconsistencies it also provides exemptions from related party disclosure requirements for government-related entities.

changes to ifrs 8 arise from above mentioned review of IAS 24

amendments to IfRIc 14 prepayments of a minimum funding requirement

after Dec 31st, 2010

the proposed amendments are aimed at correcting an unintended consequence of IFRIC 14 in the cases where an entity subject to a minimum funding requirement makes an early payment of contributions being, in some circumstances, required to recognize that payment as an expense. if a specific defined benefit plan is subject to a minimum funding requirement, the amendment to IFRIC 14 provides that the payment is treated, like any other prepayment, as an asset.

IfRIc 19 extinguishing financial liabilities with equity instruments andamendments to IfRS 1 first-time adoption of international financial reporting standards

after June 30th, 2010

this interpretation addresses the following questions:a) the equity instruments issued to extinguish all or part of a financial liability are “consideration paid” in accordance with paragraph 41 of IAS 39?b) how should an entity initially measure the equity instruments issued to extinguish this financial liability?c) how should an entity account for any difference between the carrying amount of the financial liability extinguished and the initial measurement amount of the equity instruments issued?

the companies that adopt IFRS for the first time may apply the transitional provisions of IFRIC 19

amendments to IfRS 1 first-time adoption of international financial reporting standards and to IfRS 7 financial instruments: disclosures

after June 30th, 2010limited exemption from the requirement to provide comparative disclosures in accordance with IFRS 7 for the first-time adopters.

amendments to several IfRS: IfRS 1, IfRS 3 e IfRS 7 IAS 1, 32, 34, 39 e IfRIc 13

IfRS 1, 3 and IAS 32, 39:after June 30th, 2010e IfRS 7, IAS 1, 34 and IfRIc 13: after Dec 31th, 2010

improvements in international financial reporting standards to simplify and clarify the internationalaccounting standards.

IAS 32 financial instruments

after Jan 31th, 2010 presentation is amended in accordance with the annex to this regulation.

The effect on the financial statements of Celbi for the year ended December 31, 2011, resulting from the adoption of standards, interpretations, amendments and revisions mentioned above, was not significant.

42 celbi annual report 2011 financial statements notes to the financial statements 43

2.2 main accounting policiesThe main accounting policies used in the preparation of the accompanying finan-cial statements are as follows:

a) intangible assetsIntangible assets are recorded at cost, net of depreciation and accumulated impairment losses. Intangible assets are only recognized if it is likely that future economic benefit will arise to the Company, that they are controlled by the Company and that its value can be reasonably measured.

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

Development costs for which the Company proves the ability to complete the develop-ment and begin marketing and/or use and for which it is likely that the asset created will generate future economic benefits, are capitalized. 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, when incurred, are recorded as expenses in the income statement, except in the situation where these costs are directly associated with projects for which they are likely to generate future economic benefits to the Company. In these situations, costs are capitalized as intangible assets.

Amortisation is calculated on a straight-line basis, after the asset is first used, over its expected useful life (generally 3 to 5 years).

b) tangible fixed assetsTangible fixed assets acquired up to January 1st 2009 (date of transition to In-ternational Financial Reporting Standards as adopted by the European Union), are recorded at deemed cost, which corresponds to the cost of acquisition or revaluated cost of acquisition in accordance with accounting principles generally accepted in Portugal until that date, net of accumulated depreciation and impair-ment losses.

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

(ii) improvements to international financial reporting standardsThis process involved a review of eight standards and interpretations. Following the adoption of the changes resulting from the improvements made to the inter-national financial reporting standards, there were no significant effects in the accompanying financial statements.

(iii) new standards or interpretations, amended or revised, not adoptedThe following amendments, with mandatory application after July 1st, 2011, have been to date of approval of these financial statements endorsed by the European Union:

standard effective date notes

amendments to IfRS 7 financial instruments: disclosures

after July1st, 2011

this revision is to increase the disclosure requirements for transactions involving the transfer of financial assets. It seeks to ensure greater transparency in relation to exposure to risks when financial assets are transferred and the entity that transfers maintains some involvement (exposure) in them.

These standards, although endorsed by the European Union, were not adopted by Celbi in the financial year ended December 31, 2011, because the application is not yet mandatory. No significant impacts on the financial statements 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, 2011 are consistent with those used in the preparation of financial statements as of December 31, 2010.

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 income and expenses incurred for the periods re-ported. All estimates and assumptions made by the Board of Directors were based on their best knowledge existing at the date of approval of the financial state-ments, events and transactions in progress.

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


Assets acquired under financial lease contracts and the corresponding respon-sibilities are accounted by the financial method. According to this method, the asset cost is recorded in tangible fixed asset, the corresponding responsibility is recorded in liabilities and interest included in rents, and amortisation of assets, calculated as described in note 2.2.b), are recorded as costs in the income state-ment for the period to which they relate.

In the case of operating leases, the rents due to assets acquired under this scheme are recorded as cost in the income statement for the year to which they relate. d) grants from the government or other public entitiesThe grants received in the framework of training programmes or operating subsi-dies are recorded under “Other operational income” of the consolidated statement of income for the year in which these programmes are carried out regardless of the date of receipt.

The non-repayable subsidies for financing tangible fixed assets are recorded in the balance-sheet as “Other liabilities” and “Other non-current liabilities” in relation to portions of short-term and medium and long term respectively, and recognized in the income statement in proportion to the depreciation of tangible fixed assets subsidized.

e) impairment of tangible and intangible assetsAn assessment for impairment of assets is carried out at each balance sheet date and whenever events or changes in circumstances indicate that the amount by which the asset is recorded may not be recoverable.

Where the amount by which the asset is recorded exceeds its recoverable amount, an impairment loss is recognized and recorded in the income statement under “Provisions and impairment losses”.

The recoverable amount is the higher between the net selling price and the value in use. The net selling price is the amount possibly obtained from selling the asset in a transaction between knowledgeable and independent entities, 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 asset on its own or, if this is not possible, for the unit generating cash flows to which the asset belongs.

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

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

years

land and natural resources 7-50buildings and other constructions 10-50machinery and equipment 3-20vehicles 6tools 5-10office equipment 3-15other tangible assets 3-20

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

The maintenance and repair expenditure that does not increase the useful life of assets or result in significant benefits or improvements in the elements of the fixed assets are stated as cost for the year they are incurred.

Tangible fixed assets in progress represent tangible fixed assets still under con-struction, and are recorded at cost less any impairment losses. These assets are amortised from the time when the underlying assets are ready for use.

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

c) lease contractsThe classification of financial or operational lease contracts is performed on the contents of the contracts in question and not its form.

The leases are classified as (i) financial leases when through them all risks and rewards relating to ownership are substantially transferred or as (ii) operating leases when through them all risks and rewards relating to ownership are not substantially transferred.


In the absence of an active market in Portugal for forest species and given the impossibility of estimating in a reliable way the present value of future cash flows generated by these biological assets, the Board of Altri opted to record the biologi-cal 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 har-vested 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 company 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 biologi-cal assets for the reasons mentioned above, it is however the Board of Directors’ belief that this is higher than its book value. This understanding is based on the fact that the forest management is concentrated in the subsidiary Altri Florestal S.A. which leads to a balanced utilisation as the industrial units of the Altri Group buy their raw material from Altri Florestal S.A. at the same price as the wood from third party providers.

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 produc-tion 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 deprecia-tion and any accumulated impairment losses.

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 state-ment under “Other income”. This reversal of the impairment loss is only up to the amount that would be recognized (net of amortisation or depreciation) if the impairment loss had not been recorded in previous years.

f) financial costs of loans obtainedFinancial costs related to loans obtained are recognised as cost in the profits and losses statement in accordance with the accrual principle.

When loans are hired with the specific purpose to finance 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 ceases when the asset is ready for use or if the project is suspended.

g) inventoriesThe raw materials, subsidiaries and consumables 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 manufacturing 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, maintenance and administrative expenses of these assets in rela-tion to the harvested area.The Company shall register the corresponding impairment losses, where applica-ble, 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 December 31, 2011 the Altri Group owns several forests intended for this activity, which are classified under the heading “Biologi-cal 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.


l) financial instruments

i) investments in group companiesInvestments in share capital of subsidiary companies 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 take place within less than 12 months of the balance sheet date;

Investments held to maturity: this category includes financial assets, non-deriva-tives, 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 financial 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 acquisition 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 avail-able for sale investments are revalued at their fair values by reference to their mar-ket 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.

Depreciation is calculated after the time when the asset is ready to be used, ac-cording 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) provisionsProvisions are recognized when and only when the Company (i) has a present obligation (legal or constructive) resulting from a past event, (ii) it is likely that, in order to settle the obligation, an outflow of funds occurs and (iii) the amount of the obligation can be reasonably estimated. Provisions are reviewed at each bal-ance sheet date and adjusted to reflect the best estimate of the Board on that date.

Provisions for restructuring costs are recognized whenever there is a detailed and formal plan of restructuring which has been communicated to the parties involved.

Where a provision is determined taking into account the cash flows required to settle that obligation, this is recorded at the current value.

k) pension fundWhen there are commitments to provide cash benefits to employees by way of complementary pensions for old age or disability, provisions are recorded based on actuarial calculations made by specialized agencies. The actuarial liabilities are calculated according to the “Projected Unit Credit Method” using the financial and actuarial assumptions considered most appropriate.


iv) loans and non-current payable accountsLoans and non-current accounts payable are recorded in liabilities at their nomi-nal 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 equivalents” refer to cash, bank de-posits, bonds and other short term investments which mature in less than three months, and that can be mobilized immediately without significant risk of changes in value .

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

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

→ Derivatives used by the Company defined as hedging instruments in cash flow, refer to hedging instruments of interest rate on borrowings, exchange rate, as well as hedging the price of paper pulp. The indices, 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 covering the price of paper pulp are the most commonly used by the Group companies as a reference price for the sale of its pulp.

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

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

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 realisable net 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, objec-tively 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 difficulty; → delays in payments by the counterparty are significant; → it is probable that the debtor will enter into liquidation 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 is considered void because the effect of discounting is deemed irrelevant in cases where there is a prospect of receiving in less than one year.


viii) financial liabilities and equity instrumentsFinancial liabilities and equity instruments are classified according to the contrac-tual substance of the transaction, regardless of their legal form. Equity instru-ments are the ones that show a residual interest in the Group’s assets, after deduc-tion 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 re-serves” and do not affect the outcome of the exercise.

x) discount notes and accounts receivable sold in “factoring”The Company does not recognise financial assets in its financial statements in cases when the contractual right to cash flows inherent in such asset has expired, or when the Group transfers substantially all risks and rewards concerning owner-ship 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, recording 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 receivables factored on the date of each statement of financial posi-tion, 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 discontinuedThe assets and liabilities are classified as held for sale or discontinued, when its completion is expected 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.

The criteria used by the Company to classify derivatives as hedging instru-ments 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 transaction to be covered at the begin-ning of the hedge;

→ The hedged transaction is highly probable.

The hedging instruments are recorded at fair value. The changes in fair value of these instruments are recognized in equity under the caption “Hedg-ing 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 update of future cash flows of the fixed and variable “legs” of the derivative, to the date of the statement of financial position.

Hedge accounting for derivatives is discontinued when the instrument matures or is sold. In situations where the derivative no longer qualifies as a hedging instrument, the fair value differences accumulated so far, 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 transactions gave rise, and subsequent revaluations are recorded directly in the income statement items. Where 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 contracts are not presented at fair value with unrealized gains or losses recorded in the income statement.

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


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 reliably 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 liabilities”.

p) balances and transactions expressed in foreign currenciesAll assets and liabilities expressed in foreign currencies 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 variation 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 state-ment of income for the year, except those relating to non-monetary values whose change in fair value is recorded directly under equity.

m) contingent assets and liabilitiesContingent liabilities are defined by the Company as (i) obligations arising from past events and whose existence will 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 flow 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 be confirmed 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 Company’s financial statements but 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.

Celbi 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 liabilities for account-ing 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.

The deferred tax assets are recognized only when there is reasonable expectation of future fiscal profits sufficient for their use, or in situations where there are taxable temporary differences to offset the deductible 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.


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

→ Useful lives of tangible and intangible assets; → Analysis of impairment of tangible and intangible assets; → Registration of provisions and impairment losses; → Calculation of responsibility associated with the Pension Fund, 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 Direction of the Company.

a) market riskWhen managing the market risk, the interest rate risk, the risk of exchange rate and the variability in commodities prices, are of particular importance.

The Company uses derivative instruments to manage the market risks to which it is exposed in order to guarantee their coverage. 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 inter-est rate considered 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 associ-ated with a particular funding, there is coincidence between the dates of the flows of interest paid on loans subject to coverage 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

q) subsequent eventsEvents occurring after the balance sheet date that provide further evidence or infor-mation about conditions that existed at the balance sheet date (adjusting events) are reflected in financial statements. Events after the balance sheet date that are in-dicative of conditions that arose after the balance sheet date (non-adjusting events), while material, are disclosed in the notes to the financial statements.

r) statement of cash flowsThe statement of cash flows is prepared in accordance with IAS 7, using the direct method. The Company classifies as “Cash and cash equivalent” investments with maturity less than three months and for which the risk of change in value is irrel-evant.

The statement of cash flows is classified in operating activities (which include cash receipts from customers, payments to suppliers, personnel and other payments re-lated to operating activities), financing (including, inter alia, payments and receipts for the loans, leasing contracts and payment of dividends) and investment (includ-ing, 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 statements, judgments and esti-mates 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 current 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 subsequent periods that are not foresee-able 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 cor-responding estimates.


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

The sensitivity analysis of the Company’s results as to changes in the interest rate is shown in note 17.

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 forward or other exchange rate derivatives.

Celbi’s Board of Directors believes that any changes in the exchange rate will have a significant effect on the consolidated financial statements.

iii) risk of variability in commodities pricesOffering services in a sector that trades in commodities (paper pulp) Celbi is particularly exposed to changes in price, with corresponding impact on its results. However, to manage this risk hedging contracts were closed covering variation in pulp prices at amounts and values deemed appropriate to the opera-tions 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, 2011 would have meant an increase/decrease in operating results of approximately EUR 20 million, regardless of the effect of derivatives of paper pulp (note 23) and keeping all other parameters unchanged.

b) Liquidity riskThe main objective of liquidity risk management policy is to ensure that the Com-pany has available, at all times, the financial resources needed to meet its respon-sibilities and pursue the strategies outlined by honouring all commitments with

→ Since the beginning of the transaction, the maximum cost of debt resulting from the hedging transaction performed is known and limited, even in sce-narios of extreme changes in market interest rates, aiming at the level of fees thereof resulting falls into the cost of funds considered in the Company’s busi-ness plan.

Once the entire debt of Celbi is indexed at variable 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 vari-able rates to fixed rates. Under these contracts Celbi agrees with third parties (banks) to exchange, in pre-determined periods of time, the difference between the interest calculated at a fixed rate and at a variable rate contracted at the time of renegotiation, with reference to the respective notional amounts agreed.

The counterparties of hedging instruments are limited to credit institutions of high credit quality, 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 com-petitiveness of these operations.

In determining the fair value of hedges, Celbi uses certain methods, such as valuation models of options and updating of future cash flows, and uses as-sumptions 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 con-sidered 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 ap-propriate 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.


third parties, when they become due, through appropriate management of the maturity of funding.

The Company thus follows an active policy of refinancing, focused on (i) maintain-ing 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 riskThe Company is exposed to credit risk in its current operating activities. This risk is controlled through a system of collecting financial and qualitative information, 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 regular basis, taking into account the current economic conditions and the specific situation of the credit for each company. Corrective procedures are adopted whenever deemed necessary.

Credit risk is limited by the concentration risk management and an accurate selec-tion of counterparties as well as by contracting credit insurance with specialized institutions that cover a significant part of the credit granted as a result of activi-ties undertaken by the Company.

The adjustments to accounts receivable are calculated taking into account (i) the risk profile of the customer, (ii) the average collection period, and (iii) the finan-cial condition of the customer.

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, 2011, there were no changes in ac-counting policies and no material errors relating to prior years were corrected.


2010

gross asset value

land and natural resources

buildings and other constructions

machinery and equipment vehicles office equipment other tangible

assetsongoing tangible

assetsprepayments for fixed

assets total

opening balance 10,679,838 66,515,910 456,264,863 814,727 1,513,577 9,318,299 179,921,071 2,874,902 727,903,186

additions 280,144 1,935 10,819,334 20,597 233,743 193,603 8,334,187 - 19,883,542

disposals - (304,075) (1,807,817) (21,368) - (78,086) - - (2,211,346)

transfers and write/offs 49,440 - 181,401,182 - 2,557,169 (1,728,448) (179,773,657) (2,505,686) -

closing balance 11,009,422 66,213,770 646,677,562 813,955 4,304,489 7,705,367 8,481,601 369,216 745,575,383

accumulated depreciation




assets total

opening balance 5,551,752 57,244,518 276,587,821 788,065 974,438 8,931,346 350,077,940

additions 370,863 785,898 31,008,948 20,211 303,155 151,557 32,640,632

disposals - (292,702) (1,769,377) (21,368) - (78,084) (2,161,531)

transfers and write-offs - - (794,202) - 2,524,049 (1,729,847) -

closing balance 5,922,615 57,737,714 305,033,190 786,908 3,801,642 7,274,972 380,557,041

5,086,807 8,476,056 341,644,371 27,047 502,847 430,395 8,481,601 369,216 365,018,342

4. tangible fixed assetsDuring the financial years ended December 31, 2011 and 2010, the changes in value of tangible fixed assets and the depreciation and accumulated impairment losses were as follows:

2011

gross asset value




assetsongoing tangible

assetsprepayments for

fixed assets total

opening balance 11,009,422 66,213,770 646,677,562 813,955 4,304,489 7,705,367 8,481,601 369,216 745,575,382additions 18,568 - 6,286,441 - 23,148 37,545 746,046 - 7,111,748disposals - (216,854) (3,790) (38,172) (73,232) (51,414) - - (383,462)transfers and write-offs - 40,146 7,171,326 - 212,006 18,865 (8,076,115) (180,006) (813,778)

closing balance 11,027,990 66,037,062 660,131,539 775,783 4,466,411 7,710,363 1,151,532 189,210 751,489,890





assets total

opening balance 5,922,615 57,737,714 305,033,190 786,908 3,801,642 7,274,972 380,557,041

additions 449,508 768,416 31,505,801 11,170 352,278 120,745 33,207,918

disposals - (173,482) (3,790) (32,594) (73,229) (51,416) (334,511)

transfers and write-offs - - - - - - -

closing balance 6,372,123 58,332,648 336,535,201 765,484 4,080,691 7,344,301 413,430,448

4,655,867 7,704,414 323,596,338 10,299 385,720 366,062 1,151,532 189,210 338,059,442


6. investment propertiesThe amount recorded in “Investment properties” on December 31, 2011 and 2010 refers mainly to land and buildings leased to a group company.

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

The movements under the heading “Investment property” during the financial years ended December 31, 2011 and 2010 were as follows:

2011

gross assets

opening balance additions disposals transfers closing balance

10,994,208 - (1,444,139) - 9,550,069



5,514,367 124,682 (111,142) - 5,527,907

5,479,841 4,022,162

2010

gross assets


11,143,029 66,909 (215,730) - 10,994,208



5,455,135 128,039 (68,807) - 5,514,367

5,687,894 5,479,841

On December 31, 2010, the principal amounts included under “Tangible assets in progress” relate to charges incurred for the renovation project of the chip silo.

5. intangible assetsDuring the financial years ended December 31, 2011 and 2010, changes in the value of intangible assets as well as the correspondent depreciation for accumu-lated impairment losses were as follows:

2011

gross assets

software other intangible assets total opening balance 5,426,415 - 5,426,415

additions 634,462 25,600 660,062

disposals - - -

transfers and write-offs 601,575 - 601,575

closing balance 6,662,452 25,600 6,688,052

2010

gross assets


additions 115,657 - 115,657

disposals - - -

transfers and write-offs - - -

closing balance 5,426,415 - 5,426,415



additions 615,339 8,533 623,872

disposals - - -

transfers and write-offs (32,196) - (32,196)

closing balance 5,789,141 8,533 5,797,674

873,311 17,067 890,378



additions 288,150 - 288,150

disposals - - -

transfers and write-offs - - -

closing balance 5,205,998 - 5,205,998

220,417 - 220,417


Under current legislation Celbi uses a deferred tax rate of 26.5% in cases where the 1.5% municipal tax “derrama” applies, except on what concerns deferred tax assets resulting from reported tax losses, in which a rate of 25% is used.

Additionally, in accordance with current legislation, the State Surtax corresponds to the application of an additional fee of 2.5% on the portion of taxable income exceeding MEUR 2.

The income taxes recognized in the income statement for the years ended 31 De-cember 2011 and 2010 are detailed as follows:

31.12.2011 31.12.2010

current income tax 3,539,561 9,612,068

diferred income tax 193,151 713,496

3,732,712 10,325,564

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

31.12.2011 31.12.2010

profit before tax 24,134,521 50,250,803

tax rate (including maximum rate and municipal income tax "derrama") 26,50% 26,50%

6,395,648 13,316,463

difference between tax and accounting capital gains (587,978) (133,445)

tax benefits (2,640,513) (5,069,720)

autonomous taxation 103,834 101,703

state surtax 478,259 1,206,658

other effects (16,538) 903,906

income tax 3,732,712 10,325,564

The item “Tax Benefits” on December 31, 2011 and 2010 relates primarily to the use of part of the tax credit awarded by the Portuguese Government in the frame-work of the global incentive given to Celbi investment for increasing its produc-tive capacity (note 34).

7. investments in group companiesOn December 31, 2011 and 2010, the group companies were as follows:

company head office acquisition cost

percentage ownership

invescaima - investimentos e participações sgps, s.a. lisboa 252,238,500 100%

celbinave - tráfego e estiva sgps, unipessoal, lda. fig. da foz 9,000 100%

viveiros do furadouro unipessoal, lda óbidos 15,000 100%

252,262,500

31.12.2011 31.12.2010

company share capital net profit share

capital net profit

invescaima - investimentos e participações sgps, s.a. 166,796,806 860,945 165,935,863 (1,115,809)

celbinave - tráfego e estiva sgps, unipessoal, 369,324 50,470 344,265 54,731

viveiros do furadouro unipessoal, lda 473,411 129,146 318,854 128,297

8. 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), ex-cept where there are tax losses, tax benefits have been granted, or ongoing inspec-tions, complaints or appeals, in which cases, depending on the circumstances, the deadlines are extended or suspended. Thus, the Company’s tax returns since 2008 may still be subject to revision.

The Board of Directors believes that any adjustments resulting from reviews / inspections by the tax authorities to those tax returns will not have a significant impact on the financial statements on December 31, 2011 and 2010.

Under Article 88 of the IRC Code (Taxation of Income and Gains of Collective Persons), the Company is subject to additional autonomous taxation on a set of expenses at the rates provided in the mentioned article.

Celbi is the core company of a group of companies that is taxed under the Spe-cial 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”. Where the subsidiaries contribute with loss, 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.


The breakdown of assets and liabilities for deferred tax at December 31, 2011 and 2010, according to the temporary differences that generated them, is as follows:

9. inventories and biological assetsOn December 31, 2011 and 2010, 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:

31.12.2011 31.12.2010

gross value 431,734 445,750

accumulated impairment losses on biological assets (note 18) (91,662) (91,662)

340,072 354,088

On December 31, 2011 and 2010, the amount recorded as “inventories” may be detailed as follows:

31.12.2011 31.12.2010

raw, subsidiary and consumable materials 22,056,869 23,298,970

product and works in progress 414,105 219,070

finished and intermediate goods 9,007,937 9,368,054

advances against purchasing 5,129,748 -

36,608,659 32,886,094

accumulated impairment losses (note 18) (2,525,000) (2,525,000)

34,083,659 30,361,094

31.12.2011

deferred tax

assets

deferred tax

liabilities

provisions and impairment losses not accepted for tax purposes 997,483 -

fair value of derivatives 1,597,874 -

other - 134,476

2,595,357 134,476

31.12.2010

deferred tax

assets

deferred tax

liabilities

provisions and impairment losses not accepted for tax purposes 1,213,509 -

fair value of derivatives 3,844,990 -

other - 157,351

5,058,499 157,351

The changes in assets and liabilities for deferred tax during the financial years ended December 31, 2011 and 2010 were as follows:

2011

deferred tax assets

deferred tax liabilities

opening balance as of 01.01.2011 5,058,499 157,351

effects on income statement

increase/(decrease) in provisions not accepted for tax purposes (216,026) -

other effects - (22,875)

total effect on income statement (216,026) (22,875)

effect on shareholders' funds

fair value of derivatives (note 23) (2,247,116) -

closing balance as of 31.12.2011 2,595,357 134,476

2010

deferred tax assets

deferred tax liabilities

opening balance as of 01.01.2010 4,528,610 183,278

effects on income statement

increase/(decrease) of tax losses carried forward (755,148) -

increase/(decrease) in provisions not accepted for tax purposes 15,726 -

other effects - (25,927)

total effect on income statement (739,422) (25,927)

effect on shareholders' funds

fair value of derivatives (note 23) 1,269,311 -

closing balance as of 31.12.2010 5,058,499 157,351


10. class of financial instrumentsThe financial instruments, in accordance with the policies described in note 2, were classified as follows:

financial assets31.12.2011 notes financial assets

current assets

customers 11 81,820,241

other debtors 12 1,414,067

group companies 27 187,334,431

cash and cash equivalents 15 95,030,045

365,598,784

31.12.2010 notes financial assets

current assets

customers 11 90,901,271

other debtors 12 2,675,376

group companies 27 132,564,506

cash and cash equivalents 15 102,672,862

328,814,015

The amount recorded on line “Advances against purchasing” refers to the amount advanced to the Altri Group company - Altriflorestal, SA - for the purchase of wood to be held during the financial year 2012 (note 27).

On December 31, 2011, the following stocks were outside the Company:

31.12.2011 31.12.2010

in EU ports 5,661,087 3,846,883

in the custody of third parties 2,260,123 1,710,800

7,921,210 5,557,683

Furthermore, on December 31, 2011 and 2010, there were no stocks owned by third parties in the custody of the Company.

Cost of sales for the year ended 31 December 2011 amounted to EUR 170,741,323 and was calculated as follows:

Sales costs for the year ended 31 December 2010 amounted to EUR 134,574,162 and were calculated as follows:

raw, subsidiary and consumable

materials

finished and intermediate

goods

product and work in

progresstotal

opening balance 23,298,970 9,368,054 664,820 33,331,844

purchases 169,371,336 - - 169,371,336

inventory adjustment 12,107 (63,319) - (51,212)

closing balance (22,056,869) (9,007,937) (845,839) (31,910,645)

170,625,544 296,798 (181,019) 170,741,323

raw, subsidiary and consumable

materials

finished and intermediate

goods

product and work in

progresstotal

opening balance 11,331,057 7,721,938 846,376 19,899,371

purchases 147,953,376 - - 147,953,376

inventory adjustment 60,462 (7,202) - 53,260

closing balance (23,298,970) (9,368,054) (664,820) (33,331,844)

136,045,925 (1,653,318) 181,556 134,574,162


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 possibil-ity to observe its fair value in the market:level 1: The fair value is determined based on market prices of assets;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.

11. costumersOn December 31, 2011 and 2010 this caption was as follows:

31.12.2011 31.12.2010

customers, current accounts 81,820,241 90,901,271

customers, doubtful debts 528,394 351,066

82,348,635 91,252,337

accumulated impairment losses (note 18) (528,394) (351,066)

81,820,241 90,901,271

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 assessment 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.

31.12.2011 31.12.2010

level 1 level 2 level 3 level 1 level 2 level 3

financial liabilities measured at fair value

derivatives (note 23) - 14,751,984 - - 15,303,996

financial liabilities

31.12.2011 notes financial liabilities derivatives total


bank loans 17 11,875,000 - 11,875,000

other loans 17 517,036,869 - 517,036,869

528,911,869 - 528,911,869

current liabilities

bank loans 17 3,125,000 - 3,125,000

other loans 17 82,025,861 - 82,025,861

suppliers 20 46,366,776 - 46,366,776

group companies 27 749,894 - 749,894

other current creditors 21 3,642,497 - 3,642,497

derivatives 23 - 14,751,984 14,751,984

135,910,028 14,751,984 150,662,012

664,821,897 14,751,984 679,573,881

31.12.2010 notes financial liabilities derivatives total


other loans 17 532,744,337 - 532,744,337

532,744,337 532,744,337

current liabilities

other loans 17 70,805,621 - 70,805,621

suppliers 20 53,624,938 - 53,624,938

group companies 27 3,318,725 - 3,318,725

other current creditors 21 10,478,404 - 10,478,404

derivatives 23 - 15,303,996 15,303,996

138,227,688 15,303,996 153,531,684

670,972,025 15,303,996 686,276,021


On December 31, 2011 and 2010, 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 Group (note 27).

On December 31, 2011 and 2010, the time frame of the net value of clients’ bal-ances under “Other debtors” is entirely classified as not expired.

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

13. state and other public entitiesOn December 31, 2011 and 2010 the asset and liabilities were as follows:

31.12.2011 31.12.2010

debt balances

income tax 2,572,191 467,270

value-added tax 1,753,857 3,410,051

4,326,048 3,877,321

credit balances

income tax - (11,030,256)

retentions - irs dependent work (173,170) (306,531)

social security contributions (252,192) (229,557)

other (3,434) -

(428,796) (11,566,344)

14. other current assetsThe breakdown of “Other current assets” at December 31, 2011 and 2010 is as fol-lows:

31.12.2011 31.12.2010

rents ans leases paid in advance 99,212 108,964

insurance paid in advance 525,180 525,180

excess of pension fund (note 25) 161,665 -

other costs paid in advance 97,017 113,187

accrued income 930,981 824,914

1,814,055 1,572,245

As of December 31, 2011 and 2010, the age of customers’ balances can be analysed as follows:

31.12.2011 31.12.2010

not due 43,031,130 51,644,830

due with no impairment losses recorded

0 - 30 days 9,868,164 3,604,765

30 - 90 days 14,867,280 1,218,412

+ 90 days 14,053,667 34,433,264

38,789,111 39,256,441

total 81,820,241 90,901,271

The Company has hired credit insurance to cover the risk of uncollectible parts of the accounts receivable as follows:

31.12.2011 31.12.2010

with credit insurance 41,060,409 42,661,413

without credit insurance 41,288,226 48,590,924

82,348,635 91,252,337

Due balances over 30 days on December 31, 2011 and 2010 relate mainly to bal-ances with companies belonging to the Group (note 27).

Celbi does not charge any interests as long as the defined payment terms (on aver-age 60 days) are being respected. 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.

12. other receivablesDuring the financial years ended December 31, 2011 and 2010 the caption “Other debtors” was composed as follows:

31.12.2011 31.12.2010

advances to suppliers 318,491 422,995

other debtors 1,894,372 3,095,482

2,212,863 3,518,477

accumulated impairmant losses (note 18) (798,796) (843,101)

1,414,067 2,675,376


17. bank loans and other loansOn December 31, 2011 and December 31, 2010, the captions “Bank Loans” and “Other loans” are as follows:

2011

nominal value book value

current noncurrent total current noncurrent total

bank loans

bank loans 3,125,000 11,875,000 15,000,000 3,125,000 11,875,000 15,000,000

3,125,000 11,875,000 15,000,000 3,125,000 11,875,000 15,000,000

commercial paper 64,000,000 120,000,000 184,000,000 63,936,820 119,831,518 183,768,338

bonds - 375,000,000 375,000,000 - 372,046,493 372,046,493

other loans 19,147,024 25,158,857 44,305,881 18,089,041 25,158,858 43,247,899

other loans 83,147,024 520,158,857 603,305,881 82,025,861 517,036,869 599,062,730

86,272,024 532,033,857 618,305,881 85,150,861 528,911,869 614,062,730

2010

nominal value book value

current noncurrent total current noncurrent total

commercial paper 71,000 144,000 215,000,000 70,805,621 143,705,160 214,510,781

bonds - 375,000 375,000,000 - 369,930,527 369,930,527

other loans - 19,108,650 19,108,650 - 19,108,650 19,108,650

other loans 71,000 538,108,650 609,108,650 70,805,621 532,744,337 603,549,958

The expenses incurred with the issuance of loans are deducted at face value, being recognized as interest over the period of the loan (note 31).

commercial paperThe heading “Commercial paper” refers to four commercial paper programmes. The first program in a maximum nominal amount of MEUR 180 dates from 2007, has a maximum term of 8 years from the date of signing, in 2011 the amount of MEUR 36 was reimbursed, hence the nominal amount of debt on December 31, 2011 is MEUR 144. The second commercial paper programme, in a maximum nominal amount of MEUR20, has a maximum of five years term from the date of signature, i.e., April 8, 2013. The third programme with the maximum amount of MEUR 15, has a maximum term of three years from the date of sign-ing the contract, i.e. October 21, 2011. The fourth programme with a maximum nominal amount of MEUR 5 was signed on January 12, 2011 for a maximum term

15. cash and cash equivalentsOn December 31, 2011 and 2010, the breakdown of “Cash and cash equivalents” was as follows:

31.12.2011 31.12.2010

cash 6,998 6,998

bank deposits 95,023,047 102,665,864

cash equivalents 95,030,045 102,672,862

16. equity and reservesequityOn December 31, 2011, 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, 2011, Altri - y Participaciones Trading, SL (note 1) holds 99.96% of the shares representing the equity of the Company and 100% of voting rights.

Additionally, on December 31, 2011 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 distributed, 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, 2011 and 2010 the item “Other reserves” was as follows:

31.12.2011 31.12.2010

hedging reserves (4,431,838) (10,664,405)

other reserves and retained earnings 178,714,368 138,789,129

174,282,530 128,124,724

The item “Hedging reserve” refers to the fair value of derivatives classified as hedges of cash flows on an effective component of coverage, net of tax (note 23).


o Investimento, EPE (AICEP). The Portuguese government considered the pro-ject for expansion of Celbi’s production capacity as a Project of National Interest (PIN). Up to the end of the financial year 2011 Celbi received the amount of EUR 51,644,921 as refundable incentive. The achievement premium for the year 2011 was of 60% taking into account the objectives already fulfilled. The amount of EUR 24.789.600 was then transferred to the items’ “Other current liabilities” and “Other non-current liabilities” (notes 19 and 22).

sensitivity analysis to change in interest rateDuring the years ended December 31, 2011 and 2010, the Company’s sensitivity to changes in the indexed interest rate of about one percentage point, measured as the change in financial results, can be analysed as follows, not considering the effect of coverage of derivatives (note 23):

31.12.2011 31.12.2010

interests (note 31) 14,158,779 10,567,776

decrease of 1 p.p. in the interest rate applied to the entire debt (6,137,073) (6,091,087)

increase of 1 p.p. in the interest rate applied to the entire debt 6,137,073 6,091,087

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 aver-age financing structure (interest-bearing assets and liabilities) has remained stable throughout the year and similar to that presented in December 2011 and 2010.

On December 31, 2011 and 2010 the deadline for payment of bank loans and other loans is as follows:

31.12.2011

2012 2013 2014 > 2015 total

bank loans 3,125,000 7,500,000 4,375,000 - 15,000,000

commercial paper 64,000,000 42,000,000 42,000,000 36,000,000 184,000,000

bonds - - - 375,000,000 375,000,000

other loans 19,147,024 7,043,530 8,386,324 9,729,003 44,305,881

total 86,272,024 56,543,530 54,761,324 420,729,003 618,305,881

31.12.2010

2011 2012 2013 2014 > 2015 total

commercial paper 71,000,000 36,000,000 36,000,000 36,000,000 36,000,000 215,000,000

bonds - - - - 375,000,000 375,000,000

other loans - 1,420,149 5,896,167 5,896,167 5,896,167 19,108,650

total 71,000,000 37,420,149 41,896,167 41,896,167 416,896,167 609,108,650

of 3 years. The total amount used on December 31, 2011 was MEUR 184 and on December 31st, 2010 MEUR 215. On December 31, 2011 the amount of MEUR 64 is classified as current debt, as it is either going to be repaid in 2012, 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 have a term of eight years, maturing in 2015. In January and February 2008 the Company issued two new bonds amounting to MEUR 50 and MEUR 25 respectively. Both loans have a term of 10 years and its maturity is in 2018. The interest is half-yearly, in arrears from the date of subscription, based on interest rate Euribor six months plus spread. bank loans During the year ended December 31, 2011 Celbi has contracted a bank loan amounting to MEUR 15 which bears interest at an interest rate Euribor three months plus spread. Payment will be made in 24 monthly successive instalments, starting in August 2012. This is why the amount of EUR 3,125,000 is classified as current debt and the amount of EUR 11,875,000 is classified as non-current debt.

other loans(i) factoringDuring the year ended December 31, 2011 the Company signed a factoring agree-ment for a period of one year, according to which accounts receivable may assign up to MEUR 60. The agreement is automatically 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. On De-cember 31, 2011 the amount used reached EUR 17,450,561.

Celbi considers that the risks and rewards of ownership of the receivables were not transmitted to the entity with which the company signed this factoring agree-ment, 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) subsidies In January 2007 Celbi and Altri signed a contract for financial and fiscal incentives under Decree-Law no. 203/2003 of September 10, with Agência Portuguesa para


20. suppliersOn December 31, 2011 and 2010 this caption was as follows:

payables

31.12.2011 0-90 days 90-180 days > 180 days

suppliers, current account 38,881,346 38,881,346 - -

suppliers, submitted invoices to be verified 7,485,430 7,485,430 - -

46,366,776 46,366,776 - -

payables

31.12.2010 0-90 days 90-180 days > 180 days

suppliers, current account 46,751,539 46,751,539 - -

suppliers, submitted invoices to be verified 6,873,399 6,873,399 - -

53,624,938 53,624,938 - -

On December 31, 2011 and 2010 the heading “Suppliers” refers to amounts pay-able resulting from acquisitions 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.

21. other creditorsOn December 31, 2011 and 2010 the item “Other creditors” can be detailed as follows:

payables

31.12.2011 0-90 days 90-180 days > 180 days

fixed assets suppliers 417,732 417,732 - -

other debts 3,224,765 3,224,765 - -

3,642,497 3,642,497 - -

payables

31.12.2010 0-90 days 90-180 days > 180 days

fixed assets suppliers 6,123,073 6,123,073 - -

other debts 4,355,331 4,355,331 - -

10,478,404 10,478,404 - -

On December 31, 2011 and 2010 the caption “Other debts” refers primarily to value added tax, payable abroad and payables to companies belonging to the Group (note 27).

18. provisions and impairment lossesThe movement in provisions and impairment losses during the years ended De-cember 31, 2011 and 2010 can be detailed as follows:

31.12.2011

provisionsimpairment

losses inaccounts receivable

(notes 11 and 12)

impairment losses in inventories and

biological assets (note 9)

total

opening balance 1,273,663 1,194,167 2,616,662 5,084,492

increases - 190,717 - 190,717

utilisations/reversions (815,191) (57,694) - (872,885)

transfers - - - -

closing balance 458,472 1,327,190 2,616,662 4,402,324

31.12.2010

provisionsimpairment

losses inaccounts receivable

(notes 11 and 12)

impairment losses in inventories and

biological assets (note 9)

total

opening balance 1,214,322 1,154,370 2,616,662 4,985,354

increases 59,341 93,821 - 153,162

utilisations/reversions - (54,024) - (54,024)

transfers - - - -

closing balance 1,273,663 1,194,167 2,616,662 5,084,492

Increases in provisions and impairment losses, net of uses/reversals recorded in the financial years ended December 31, 2011 and 2010 were recorded under the heading “Provisions and impairment losses” of the income statement, except for the amount of EUR 778,331 to be used as provisions.

The amount registered under “Provisions” on December 31, 2011 and 2010 corre-sponds to the Board of Directors’ best estimate to meet all the losses arising from general risks of the Company’s activity.

19. other non current liabilitiesThe item “Other non-current liabilities” corresponds to portions of the investment allowance to be recognized as income in the medium and long term (notes 17, 22 and 34).


On December 31, 2011 and 2010 contracts were established for interest rate de-rivatives whose totals are as follows:

fair value

type notional maturity interest 31.12.2011 31.12.2010

interest rate collar (c) 143.750.000 31-07-2013Pays fixed interest rate and receives Euribor 6 months

(4,710,860) -

interest rate swap (a) 25.000.000 08-02-2012

Pays a combination of different rates and receives Euribor 6 months

(2,808,574) -

interest rate swap (b) 200.000.000 08-02-2011Pays fixed interest rate and receives Euribor 6 months

- (943,398)


- (457,230)


(483,074) (630,089)


(1,202,102) (1,108,242)


(5,244,441) (3,429,759)

(14,449,051) (6,568,719)

(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 31).

(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)) (c) Although they have been contracted with a view to hedging (not speculation), part of the derivative contract does not comply with all requirements necessary to qualify as hedging (note 2.2 l) vii)) reason why the fair value variation in the part that does not comply with all requirements necessary to qualify as hedging, was charged against the income statement (note 31).

22. other current liabilitiesOn December 31, 2011 and 2010 the caption “Other current liabilities” can be detailed as follows:

31.12.2011 31.12.2010

accured expenses

amounts payable to employees (2,243,533) (2,205,517)

interest payable (4,079,871) (3,920,170)

gas and energy payables (3,459,176) -

other payables (4,253,793) (2,662,559)

current deferred income

investment subsidies (notes 17, 19 and 34) (2,944,869) (4,182,834)

other (63,619) (55,971)

(17,044,861) (13,027,051)

The line “Other settlement charges” on December 31, 2011 and 2010 concern ex-penses related to operational activity already incurred and not yet settled.

23. derivate financial instruments On December 31, 2011 and 2010 contracts for derivative financial instruments related to hedge changes in the price of pulp, interest rate and exchange rate (the latter only on December 31, 2010) were effective. These instruments were recorded according to its fair value.Celbi only use derivatives to hedge cash flows from operations generated by their activity.

(i) interest rate derivatives

In order to reduce their exposure to the volatility of interest rates, the company con-

tracted “swaps” and an interest rate collar. These contracts were valued according

to its fair value at December 31, 2011 and 2010, and the corresponding amount was

registered under the heading “Derivative Financial Instruments”.


On December 31, 2010 and 2009 the following derivative contracts in the price of pulp were in force:

fair value

hedging quantity maturity 31.12.2011 31.12.2010

2000 ton/month 31-12-2013 (509,407) -

2000 ton/month 31-12-2012 (474,575) (2,690,281)

2000 ton/month 31-12-2013 (296,828) -

500 ton/month 31-12-2012 (117,029) (373,932)

500 ton/month 31-12-2012 (78,252) (320,786)

2000 ton/month 30-06-2013 122,469 (1,216,668)

2000 ton/month 31-12-2012 188,606 -

2000 ton/month 31-12-2013 270,031 -

2000 ton/month 30-06-2012 592,052 (459,532)

1000 ton/month 31-12-2010 - (151,325)

750 ton/month 31-12-2010 - (115,931)

1000 ton/month 31-07-2011 - (1,055,903)

500 ton/month 31-07-2011 - (527,952)

1000 ton/month 31-07-2011 - (1,238,587)

500 ton/month 31-08-2011 - (584,380)

(302,933) (8,735,277)

The price set for contracts maturing in 2012 and 2013 varies between EUR 510 and 565 per ton of pulp.

The fair value of derivatives hedging the pulp price contracted by the company was settled by the respective counterparts (financial institutions with whom such contracts were signed). The model used by counterparts to evaluate these prod-ucts, is based on the discounted cash flow method, i.e. the difference is calculated between the estimated price of pulp (PIX) and the price fixed for the relevant periods, which is later updated to the assessment report date.

In accordance with the accounting policies adopted, these derivatives of pulp do meet the requirements to be considered as hedging instruments, so the change in fair value is recorded in the equity section “Hedging reserve”.

The increase/decrease of 5% in indexing the derivatives from the pulp (PIX) for the year ended December 31, 2011 was estimated for the duration of these deriva-tives and would have meant a decrease/increase in operating income for the year ended December 31, 2011 of approximately MEUR 2,0 and in the equity section “Hedging reserve” of approximately EUR 15,000, before tax.

The fair value of derivatives contracted by the company was settled by the respective counterparts (financial 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 forward 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 deriva-tives.

The increase/decrease of one percentage point in indexing the interest rate over the financial year 2011 and estimated for the duration of the derivatives would have led to the increase/decrease of financial results for the year ended December 31, 2011 of approximately MEUR 3,870 and equity under the item “Hedging reserve” of ap-proximately MEUR 4,5/4,8 before tax.

(ii) derivatives for hedging pulp priceIn order to reduce their exposure to the volatility of the pulp price, the company contracted derivatives hedging the price of pulp, which were evaluated according to its fair value at December 31, 2011 and 2010. The corresponding amount was registered under the heading “Derivatives”.


24. contingent liabilitiesOn December 31, 2011 and 2010, the main contingent liabilities complied with the tax claims (note 35) and guarantees which were as follows:

31.12.2011 31.12.2010

aicep/api (note 34) 12,911,230 12,911,230

other 339,647 308,188

13,250,877 13,219,418

25. financial commitments not included in the statements of financial positiona) pension fundCelbi gives to its employees with a permanent employment contract who retire at the Company’s service, a set of benefits defined in the Pension Fund Regulation, published in the Official Gazette (Diário da República) No. 221-III series of 21 Sep-tember 1999.According to this regulation the Company guarantees the following benefits:

i) retirement by age limitThe participants who retire at normal retirement date will be entitled to an annual pension, equal to 11.5% of the pensionable annual salary

ii) retirement due to disabilityplan A If the participant retires definitely due to disability under the general welfare rules, or is accepted as disabled by the participant’s medical services and the management entity, the Fund guarantees the payment of a pension calculated in accordance with the following formulas:

1. 1) with less than ten years of pensionable service time 50% of the annual pensionable salary2. 2) with ten or more years of pensionable service time80% of the annual pensionable salaryThe value of the annual pension as defined above will be set up minus the deductible amount of the annual pension.

pension 2The participants are entitled to an additional capital equal to a fifth of the monthly salary received at the time of retirement for each year of pensionable service time.

The changes in fair value of financial instruments for the years ended December 31, 2011 and 2010 can be detailed as follows:

During the year ended December 31, 2011 Celbi acquired from other companies belonging to the Group, interest rate derivatives at fair value at the date of trans-action.

Gains and losses for the year associated with the change in fair value during the year 2011 of the hedging instruments in the period not elapsed (as named in IAS 39) amounting to EUR 8,479,683 (EUR 4,789,853 during the year 2010), were recorded directly in equity items net of the corresponding deferred tax amounting to EUR 2,247,116 (EUR 1,269,311 on December 31, 2010) (notes 8 and 16).

Gains and losses for the year associated with the change in fair value during the year 2011 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 hedg-ing instruments, are directly recorded in the income statement for the year ended December 31, 2011 (note 31).

2010

pulp price hedging

derivatives

interest rates derivatives

exchange rate

derivativestotal

opening balance (5,603,720) (2,361,757) (2,548,666) (10,514,143)

derivatives fair value variation/cessation

effect on shareholders' funds (3,131,557) (4,206,962) 2,548,666 (4,789,853)

closing balance (8,735,277) (6,568,719) - (15,303,996)

2011

pulp price hedging

derivatives

interest rates derivatives total

opening balance (8,735,277) (6,568,719) (15,303,996)

derivatives fair value variation/cessation

acquisition of new derivatives - (5,335,902) (5,335,902)

effect on shareholders' funds 8,432,344 47,339 8,479,683

effect on financial statements - (2,591,769) (2,591,769)

closing balance (302,933) (14,449,051) (14,751,984)


The movement in the present value of responsibilities for past services during the years ended December 31, 2011 and 2010 is as follows:

2011 2010

responsibilities in the beginning of the year 6,771,450 6,716,220

benefits paid by the pension fund (273,727) (322,070)

current service cost 266,221 252,318

interest costs 266,451 263,275

actuarial (gain)/loss (123,159) (138,293)

other effects 26,698 -

responsibilities in the end of the year 6,933,934 6,771,450

The movement in the assets of the pension fund during the years ended December 31, 2011 and 2010 is as follows:

2011 2010

pension fund's value at the beginning of the year 7,667,099 7,751,916

contributions - -

paid pensions (273,727) (322,070)

fund's profit/return (297,773) 237,253

pensions fund's value at the end of the year 7,095,599 7,667,099

The determination of responsibilities concerning Celbi’s Pension Plan was based on the following assumptions:

(i) Method of calculation “Projected Unit Credit”;(ii) Mortality Tables GKF95;(iii) Disability Tables SR 2001;(iv) Return/discount rate until the age of retirement 4%, after retirement age a 3%;(v) Salary increase rate 2.5%.

Celbi’s Pension Fund has the following characteristics:(i) breakdown of portfolio:

a. 24.8 % shares;b. 33.9 %fixed rate bonds;c. 31.7 % variable rate bonds, andd. 9.6% a.i.1.d. ash and other assets.

(ii) expected return on plan assets in the long term 4%.

2011 2010

current services costs (266,221) (252,318)

interest on obligation (266,451) (263,275)

actuarial gain /(loss) 123,159 138,293

fund profit/return (297,773) 237,253

(707,286) (140,047)

pension 3If the disability happens when the participant is more than 55 years old, the capital stated in pension 2 is topped with another equal to 50% of the pension-able annual salary.

plan B If the participant retires definitely due to disability under the general welfare rules, or is accepted as disabled by both the participant’s medical servic-es and the management entity, the Fund guarantees the payment of an annual which will be the result from the product of 11.5% over the annual pensionable salary. Plan A applies only to participants who were already at the Company’s service when this change took place. To these participants, and for plans A and B, the most favour-able scheme will apply. When participants who joined the Company after this change took place retire due to disability, only plan B applies.

The benefit scheme defined in the pension plan applies to all workers in Celbi.

According to actuarial studies made by the fund management companies as at De-cember 31, 201, 2010, 2009 and 2008, the current value of the company’s respon-sibilities for past service for active and retired employees, as well as the assets of pension funds on those dates, were as follows:

The excess of the value of the fund compared to current responsibilities over past services amounting to EUR 191,665 as at 31 December 2011 is recorded in “Other current assets” (note 14).

The breakdown of the amounts recorded in the income statement relating to benefit pension plans defined for the years ended December 31, 2011 and 2010 is as follows:

2011 2010 2009 2008

current responsibilities for past services 6,933,934 6,771,450 6,716,220 7,397,736

assets of pension fund 7,095,599 7,667,099 7,751,916 7,767,535


27. group companies and related partiesAltri Group companies have relationships between them that qualify as related party transactions, which were made at market prices. On December 31, 2011, the main balances with Altri Group companies are as fol-lows:

company receivables payables

customers c/a and

other debtors

group companies

suppliers c/a and

other creditors

suppliers c/c group companies

celbinave - tráfego e estiva unipessoal, lda. 14,434 85 - - (331)

viveiros do furadouro unipessoal, lda. 772,489 43,495 - -

celulose do caima sgps, s.a. - 54,422,975 - - -

altri florestal, s.a. 26,294,929 1,235,716 4,215,027 (6,557,838) -

caima energia s.a. - 1,290,350 - - -

caima industria de celulose, s.a. 36,932 2,329,219 - (1,788,558) -

celtejo-empresa celulose do tejo, s.a. 4,488,555 1,563 - (942,633) (324,772)

altri energias renováveis, s.a. - 61,643 - - -

captaraiz-unipessoal, lda. 7,955 459 - - (2,432)

invescaima- inv.part. sgps - 103,772,856 - - (421,762)

altri participaciones y trading s.l. - - - (2,673,444) -

altri sgps, s.a. - 24,176,070 - - -

pedro frutícola, lda. - - - - (597)

31,615,294 187,334,431 4,215,027 (11,962,473) (749,894)

b) Other commitments On December 31, 2011 and 2010 Celbi had assumed contractual commitments for acquisition of tangible fixed assets amounting to EUR 196,473 and EUR 4,787,000 respectively.

26. operating leasesDuring the financial years ended December 31, 2011 and 2010 the amounts of ap-proximately EUR 672,683 and EUR 731,442 respectively, concerning rents paid under operating lease contracts, were recognized as Cost for the year.

On December 31, 2011 Celbi participated as lessee in operating leases, whose minimum lease payments fall due as follows:

year up to 1 year 39,011

between 1 and 5 years 688,089

more than 5 years 304,076

1,031,176

On December 31, 2010 Celbi participated as lessee in operating leases, whose minimum lease payments fall due as follows:

year up to 1 year 290,563

between 1 and 5 years 853,201

more than 5 years 304,076

1,447,840


The remaining balance relates mainly to the effect of taxation in accordance with the Special Taxation Scheme for Groups of Companies (note 8) as in the Code of Taxation of Income and Gains of Collective Persons and interest income associ-ated with loans.

The main transactions with the Altri Group companies in the financial year 2011 can be summarized as follows:

other income sale of products

acquisitionraw and sub.

materials

other services

rendered

financial costs/ income

celbinave - tráfego e estiva unipessoal, lda. - - - - -

viveiros do furadouro unipes-soal, lda. (132,024) - - - -

operfoz - operadores do porto da figueira da foz, lda. - - - 1,594,119 -

celulose do caima sgps, s.a. - - - - 1,397,672

caima industria de celulose, s.a. (30,026) - 1,454,112 - -

altri florestal, s.a. (63,792) (16,465) 29,335,416 3,000 -

celtejo-empresa celulose do tejo, s.a. (66,510) (1,278,984) 766,368 - -

captaraizunipessoal, lda. - - - - -

invescaima- inv.art. sgps - - - - 2,331,106

altri participaciones y trading s.l. - - - 11,198,005 -

altri sgps - - - - 1,234,300

(292,352) (1,295,449) 31,555,896 12,795,124 4,963,078

On December 31, 2010, the main balances with Altri Group companies are as fol-lows:

On December 31, 2011 and 2010 the heading “Group Companies” includes the fol-lowing amounts related to current loans granted to Group companies:

2011 2010

celulose do caima, sgps s.a. 45,000,000 32,000,000

invescaima - investimentos e participações, sgps sa 96,600,000 62,500,000

altri sgps s.a. 24,000,000 17,000,000

165,600,000 111,500,000

Accounts receivable from Altri Forest, SA resulted primarily from transfers in previous years, of most of the forestry activities of the Company for this entity. The account payable to Altri, Participaciones Y Trading, SL results from the sales commissions associated with the Agency Agreement established with this entity.

company receivables payables

customers c/a group companies suppliers c/a group

companies

celbinave - tráfego e estiva unipessoal, lda. 13,871 - - (666)

viveiros do furadouro unipessoal, lda. 723,600 23,537 - -

celulose do caima sgps, s.a. - 39,119,192 - -

altri florestal, s.a. 26,273,716 2,465,478 (2,435,394) -

caima energia s.a. - 1,331,806 - -

caima industria de celulose, s.a. 45,344 2,381,348 - -

celtejo-empresa celulose do tejo, s.a. 2,842,589 - (1,728) (2,433,423)

altri energias renováveis, s.a. - 161,384 - -

captaraiz-unipessoal, lda. 6,600 - - -

só casca rec. com e reciclagem, s.a. - - - (100,513)

invescaima- inv.part. sgps - 70,041,751 - (353,011)

altri participaciones y trading s.l. - - (8,213,564) -

altri sgps, s.a. - 17,040,010 - (431,111)

29,905,719 132,564,506 (10,650,686) (3,318,725)


In addition to the above balances at December 31, 2011 and 2010 there was an ac-count receivable from the subsidiary F. Ramada II - Imobiliária, SA amounting to EUR 124,738 and EUR 4,523,203 respectively, registered under “Clients” that con-cerns the sale of land to this entity in previous years.

28. sales and servicesGeographically, the breakdown of sales and services of the Company by market is as follows:

31.12.2011 31.12.2010

domestic market 65,893,834 69,125,304

external market 267,302,956 261,171,283

333,196,790 330,296,587

29. other incomeThe income statement lines “Other income” in the year ended December 31, 2011 can be summarised as follows:

subsidies for investment and operation (note 34) 2,212,975

gains on disposal of fixed assets 1,502,345

other 1,793,342

5,508,662

30. other expensesThe main component of “Other costs” for the year ended December 31, 2011 can be summarised as follows:

direct taxes and fees 860,147

losses on commodity derivative contracts (note 23) 6,638,936

other 279,630

7,778,713

The main transactions with the Altri Group companies in the financial year 2010 can be summarized as follows:

other income

sale of products

acquisitionraw and sub.

materials

other services

rendered

financial costs/

income

custos / proveitos

financeiros

viveiros do furadouro unipessoal, lda. - (120,000) - - - -

operfoz operadores do porto da figueira da foz, lda.

- - - 657,464 686,334 -

celulose do caima sgps, s.a. - - - - - (1,137,309)

caima indústria de celulose s.a. - (37,536) (679,503) - - -

altri florestal, s.a. 2,917 (72,203) (196,421) 23,327,909 - -

celtejoempresa celulose do tejo, s.a.

- (42,399) (566,791) 167,071 - (22,800)

sócasca-rec.com e reciclagem s.a. - - - - - (939)

invescaima-inv.partic.sgps, s.a. - - - - - (1,588,728)

altri participaciones y trading sl - - - - 11,296,651 -

altri sgps - - - - - (430,237)

2,917 (272,138) (1,442,715) 24,152,444 11,982,985 (3,180,012)

Operfoz–Operadores do Porto da Figueira da Foz, Lda. provide services for port operations for the pulp. Celbi acquires wood from Altri Forest, SA. Altri, Participaciones Y Trading, SL is the pulp sales agent for the Altri Group, so the amount in column “Other services rendered” with this organization relates to sales’ commissions under the agency contract established.


34. subsidiesIn January 2007 Celbi signed a contract granting financial and fiscal incentives under Decree-Law no. 203/2003 of 10 September, with Agência para o Investi-mento e Comércio Externo de Portugal, E.P.E. (AICEP), as the Portuguese gov-ernment 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 government would grant a refundable financial incentive equal to 16.5% of eligi-ble expenses. If the Company meets the proposed objectives that will be measured by the end of 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 government also grants an incentive cor-responding 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, 2011 Celbi received the amount of EUR 51,644,921 for the refundable incentive. During 2011 the Achievement Award reached 60%, taking into account the objectives already achieved. On this basis, the amount of EUR 24,789,600 was transferred to the items’ “Other current liabilities” and “Other non-current liabilities” (notes 19 and 22).

On December 31, 2011 and 2010 the detail of the grants received but not yet recog-nized as income in the income statement is as follows:

31.12.2011 31.12.2010

subsidy associated to the expansion of the production capacity (notes 17, 19 and 22) 20,335,660 22,128,774

other investment subsidies 1,151,755 1,522,009

21,487,415 23,650,783

During the years ended December 31, 2011 and 2010, the Company incurred ex-penses for research and development (R&D) which, in their view, are likely to be eligible in the framework of the System of Tax Incentives for Corporate Research and Development (SIFIDE) under Law. No. 40/2005 of 3 August, later amended by Law No. 10/2009 of 10 March.

As a consequence, the Company will, in due course, fill in an applications, for the year 2011, with the Certification Committee for Tax Incentives for Corporate R&D in order to obtain a declaration certifying that the activities effectively corresponded to R & D and that they are eligible to the corresponding tax credit.

31. financial resultsThe financial results for the years ended December 31, 2011 and 2010 are detailed as follows:

31.12.2011 31.12.2010

financial expenses

interest (note 17) (14,158,779) (10,567,776)

exchange losses (2,688,320) (1,408,979)

other financial expenses and losses (10,852,946) (13,407,321)

(27,700,045) (25,384,076)

financial income

interest gains (note 27) 8,457,940 4,784,422

exchange gains 2,718,915 2,233,338

other financial income and gains 178,745 245,880

11,355,600 7,263,640

On December 31, 2011 and 2010, the item “Other financial expenses” refers pri-marily to losses on derivatives (note 23) costs incurred with the issuance of com-mercial paper and bank fees for services (note 17).

32. earnings per share

31.12.2011 31.12.2010

number of shares considered for the computation of basic and diluted earning 15,500,000 15,500,000

net profit considered for the computation of basic and diluted earning 20,401,809 39,925,239

operations results per share

basic 1,32 2,58

diluted 1,32 2,58

33. staffingDuring the years ended December 31, 2011 and 2010 the average number of em-ployees of the Company was 244 and 240 respectively.


36. information on environmental issuesUnder the Kyoto Protocol, the EU pledged to reduce emissions of greenhouse gases. In this context, a EU Directive was issued for the sale of the so-called “CO2 emission permits”. This Directive was in the meantime transposed into the Portu-guese law and is applicable from January 1, 2005, among others, to the pulp and paper industry.

By the publication of the Joint Ministerial Dispatch No. 2836/2008 of 5 Febru-ary 2008, the Portuguese government distributed the “CO2 emission permits” to several Portuguese companies, with the initial allocation to Celbi, for free, of permits for the emission of 87,229 tonnes of CO2 during 2011. If actual emissions are higher than the permits granted, the Company will have to acquire the miss-ing permits in the market. The allocation of “CO2 emission permits,” correspond-ing to the actual emissions in a financial year will be carried out early next year. The values provided by the companies on emissions actually incurred are subject to certification by an independent entity.

Whereas these permits relate to the period 2008-2012, based on provisional data for CO2 emissions, no significant charges for the Company are estimated as a result of enactment of this legislation for the year ended December 31, 2011.

On December 31, 2011 no environmental liability is recorded in the financial state-ments neither is there disclosed any environmental contingency, as the Board is convinced that there are at this date no contingencies or obligations from past events that can cause charges materially relevant to the Company.

37. approval of financial statementsThe financial statements were approved by the Board of Directors and authorized for issue on March 2, 2011. The final approval is still subject to agreement of the General Meeting.

The Chartered Accountant

The Board of Directors

35. fiscal processesBy the end of 1994, following a visit paid by the tax authorities, the Company received a notification from Direcção Geral das Contribuições e Impostos (Inland Revenue) claiming the payment of Corporate Income Tax amounting to EUR 2,030,945 plus the corresponding interest on arrears amounting to EUR 2,094,863. This tax was claimed on the assumption that the technical ser-vices rendered to the Company in the years 1989 to 1992 as part of an investment project, are considered transfers of technology and as such subject to withholding tax. The Company decided to challenge in court the assessment made, in the full assurance that no payment is due.

In late 1996 and also as a result of a visit by the tax authorities, the Company received another notification from Direcção Geral das Contribuições e Impostos (Inland Revenue) claiming the payment of Corporate Income Tax amounting to EUR 205,641 plus the corresponding compensatory interest of EUR 110,276 for the technical services of the same nature, rendered to the Company in the years 1992 to 1995. Consistently the Company decided to challenge in court the assess-ment made.

However, in order to benefit from the privileges granted by Decree 124/96, the Company chose to pay the tax claimed, while proceeding with the ongoing legal challenge because it is the Board’s conviction that such services do not fall within the tax authorities’ interpretation.

On April 15, 1998, the Tax Court of 1st Instance of Coimbra deemed void the set-tlement of IRC following the notification received in 1994. In 2006, a judgment of the Supreme Administrative Court confirmed the decision previously made by the Tribunal Central Administrativo Sul to deny the appeal brought forward by the Public Treasury. For this reason, in October 2006 the Company got back the amount of EUR 2,030,945 plus indemnity interest amounting to approximately MEUR 1,26 for the process referring to years 1989 through1992.

The Company is still awaiting the decision on a notification received by the end of 1996, for the years 1992 through 1995. The balance of “Other non-current assets” relates primarily to this situation.


report and opinion of the statutory audit board

and legal certifications of accounts

104 celbi annual report 2011 report and auditor´s opinion and legal certification of accounts 105

In compliance with the applicable legislation and the mandate entrusted to us, we hereby submit to your consideration this Report

and Opinion which covers our activity and the financial statements of Celulose Beira Industrial (Celbi), SA (“the Company”) for the financial year ended December 31, 2011, which are the responsi-bility of the Company’s Board of Directors.

With the frequency and extent deemed appropria-te we monitored the progress of the Company’s activities, the accuracy of the accounting records and the compliance with the relevant legal and statutory provisions in force and have obtained, both from the Board of Directors and the various services of the Company, all the information and clarifications requested.

Within the scope of our duties, we examined the balance sheet on 31 December 2011, the annual Income Statements by nature, the comprehensi-ve income, the changes in equity and cash flow statements for 2011 and the corresponding notes. In addition we have analysed the Management Report for 2011 prepared by the Board of Direc-

tors as well as the allocation of results therein presented. As a consequence of the statutory audit we have issued the Legal Certification of Accounts which includes emphasis on paragraph 5.

In view of the above, and taking into account pa-ragraph 5 of the Legal Certification of Accounts, we are of the opinion that the above mentioned financial statements, the Management Report and the proposed allocation of results are consistent with the accounting legal and statutory requi-rements, and therefore may be approved at the General Shareholders’ Meeting.

We wish to express to the Board of Directors and to the various services of the company our appre-ciation for the assistance provided throughout our work.

Porto, March 30, 2012

Deloitte & Associados, SROC S.A.

Represented by António Manuel Martins Amaral

r e p o r t a n d a u d i t o r ´ s o p i n i o n

to the shareholder of celulose beira industrial (celbi), s.a.

106 celbi annual report 2011 report and auditor´s opinion and legal certification of accounts 107

opinion

4 It is our opinion that the financial state-ments referred to in paragraph 1 above, for

the purposes stated in paragraph 6 below, give a true and fair view in all material respects of the fi-nancial position of Celulose Beira Industrial (Cel-bi), SA, as well as the result and the comprehensi-ve income of its operations, changes in equity and cash flows for the year then ended, in accordance with the International Financial Reporting Stan-dards as adopted by the European Union.

emphasis

5 The financial statements mentioned in paragraph 1 above refer to the activity of

the Company individually and were prepared for approval and disclosure according to the relevant legislation. As mentioned in number 2.2 of the Notes to the Financial Statements investments in subsidiaries are stated at cost less impairment losses. The accompanying financial statements do not include the effect of applying the equity me-thod, or a full consolidation of assets, liabilities, expenses and total income. The company is not required to prepare consolidated financial state-ments as it is a subsidiary and its financial state-ments are included in the consolidation of Altri, SGPS, SA - a Group that presents consolidated financial statements in accordance with the IFRS. Note 7 of the Annex gives additional information about the subsidiaries.

report on other legal requirements

6 It is also our opinion that the financial infor-mation contained in the Management Report

is consistent with the financial statements of the financial year.

Porto, March 30, 2012

Deloitte & Associados, SROC S.A.

Represented by António Manuel Martins Amaral

introduction

1 We have audited the accompanying finan-cial statements of Celulose Beira Industrial

(Celbi), SA (“the Company”), which comprise the Statement of Financial Position at 31 Decem-ber 2011 showing a total of EUR 1,004,467,606 and shareholders’ equity of EUR 288,284,574, including a net profit of EUR 20,401,809, the statements of results by segment, comprehensive income, changes in equity and cash flows for the year then ended and the corresponding notes.

responsibilities

2 The Company’s Board of Directors is res-ponsible for the preparation of the financial

statements that present a true and fair view of the Company’s financial position, the results and comprehensive income of its operations, changes in equity and cash flows, as well as the adoption of adequate accounting policies and criteria and the maintenance of an appropriate internal audit sys-tem. Our responsibility is to express a professional and independent opinion, based on our audit of the financial statements.

scope

3 Our examination was performed in accordan-ce with the Technical Standards and Revision

/Audit Guidelines of the Institute of Chartered Accountants, which require that the audit be plan-ned and performed with the objective to achieve a reasonable assurance as to whether the financial statements are free of material misstatements. Such an examination includes verifying, on a sam-ple basis, evidence supporting the amounts and disclosures in the financial statements and asses-sing the estimates used in their preparation, based on judgments and criteria defined by the Board of Directors. The monitoring also includes an asses-sment of the adequacy of the accounting policies adopted and their disclosure, taking into account the circumstances, verifying the applicability of the principle of continuity of operations and assess-ment of the adequacy of the overall presentation of the financial statements. Our examination also included verifying that the financial information contained in the Management Report is in accor-dance with the financial statements. We believe that our audit provides a reasonable basis for our opinion.

l e g a l c e r t i f i c a t i o n s o f a c c o u n t s

celulose beira industrial (celbi), s.a.

leirosa3081-853 figueira da foz portugaltel. +351 233 955 600fax +351 233 955 648

www.celbi.ptwww.altri.pt

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