SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 6-K

Report of Foreign Private Issuer

Pursuant to Rule 13a-16 or 15d-16

of the Securities Exchange Act of 1934

For the month of June, 2016

Commission File Number 33-99720

ARAUCO AND CONSTITUTION PULP INC.

(Translation of registrant’s name into English)

El Golf 150

Fourteenth Floor

Santiago, Chile

(Address of principal executive offices)

Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F.

Form 20-F  x            Form 40-F  ¨

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):  ¨

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):  ¨

Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.

Yes  ¨            No   x

If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): 82-             

ARAUCO AND CONSTITUTION PULP INC

TABLE OF CONTENTS

Item		Page
1.	Ratio Analysis of the Consolidated Financial Statement		1
2.	Unaudited Consolidated Financial Statement		6
3.	Unaudited Consolidated Financial Income Statement		9
4.	Unaudited Consolidated Statement of Changes in Net Equity		10
5.	Unaudited Consolidated Statement of Cash Flow		11
6.	Unaudited Notes to the Consolidated Financial Statement		12
	Annex: Press Release

CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Ratio Analysis of the Consolidated Financial Statements

June 30, 2016

Amounts in thousands of U.S. dollars, except as indicated

1. ANALYSIS OF FINANCIAL POSITION

a) Statement of Financial Position

The principal components of assets and liabilities at each period, as follows:

Assets	06-30-2016 ThU.S.$		12-31-2015 ThU.S.$
Current assets		2,684,404		2,651,920
Non-current assets		11,275,455		11,018,471
Total assets		13,959,859		13,670,391
Liabilities	06-30-2016 ThU.S.$		12-31-2015 ThU.S.$
Current liabilities		1,335,528		1,034,251
Non-current liabilities		5,720,494		5,989,695
Non–parent participation		43,696		37,735
Net equity attributable to parent company		6,860,141		6,608,710
Total net equity and liabilities		13,959,859		13,670,391

As of June 30, 2016, total assets increased U.S.$289 million compared to December 31, 2015, equivalent to a 2.12% of variations. This deviation was driven mainly by increases in the balance of investments in connection with the purchase of a 50% interest in the joint venture SONAE ARAUCO, properties, plant and equipment and biological assets, partially offset by a decrease in trade and other accounts receivable.

In turn, total liabilities increased by U.S.$32 million mainly due to an increase in financial liabilities offset mainly by a decrease in non-financial liabilities for a lower register of provision for minimum dividend compared to December 31, 2015.

The main financial and operational indicators as of the dates and periods indicated below are as follows:

Liquidity ratios	06-30-2016		12-31-2015
Current Liquidity (current assets / current liabilities)		2.01		2.56
Acid ratio (( current assets-inventories, biological assets) / current liabilities)		1.09		1.42
Debt indicators	06-30-2016		12-31-2015
Debt to equity ratio (total liabilities / equity)		1.02		1.06
Short-term debt to total debt (current liabilities / total liabilities)		0.19		0.15
Long-term debt to total debt (non-current liabilities / total liabilities)		0.81		0.85
	06-30-2016		12-31-2015
Financial expenses coverage ratio (earnings before taxes + interest expense / interest expense)		2.10		2.86
Activity ratio	06-30-2016		12-31-2015
Inventory turnover-time (cost of sales / inventories + current biological assets)		2.82		2.95
Inventory turnover-time (excluding biological assets) (Cost of sales /inventory)		3.74		3.89
Inventory permanence-days ((inventories + biological assets) /cost of sales)		127.79		122.16
Inventory permanence-days (excluding biological assets) (inventory / cost of sales)		96.21		95.45

1

CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Ratio Analysis of the Consolidated Financial Statements

June 30, 2016

Amounts in thousands of U.S. dollars, except as indicated

As of June 30, 2016, the short-term debt represented 19% of total liabilities (15% as of December 31, 2015).

Our financial expenses coverage ratio decreased from 3.05 to 2.10, mainly due to the lower earnings before taxes for the period ended June 30, 2016, compared to the same period of 2015.

b) Statements of income

Income before income tax

Income before income tax registered a profit of approximately U.S.$150 million compared to a profit of approximately U.S.$269 million in the same period of 2015. The negative variation of U.S.$116 million is explained by the factors described in the following table:

Item	MU.S.$
Gross margin		(225	)
Distribution and Administrative Expenses		64
Other income/ expenses by function		31
Exchange differences		6
Others		5
Net change in income before income tax		(119	)

The main indicators related to result accounts and the details of revenues and operation costs are as follows:

Revenues	06-30-2016 ThU.S.$			06-30-2015 ThU.S.$
Pulp		1,067,282			1,206,429
Timber		1,226,945			1,365,244
Forestry		47,051			64,073
Other		12,033			18,314
Total revenues		2,353,311			2,654,060
Sales costs	06-30-2016 ThU.S.$			06-30-2015 ThU.S.$
Wood		375,592			366,475
Forestry work		275,293			314,094
Depreciation and amortization		183,986			182,401
Other costs		866,295			914,277
Total sales costs		1,701,166			1,777,247
Profitability index	06-30-2016			12-31-2015
Profitability on equity		3.26			5.46
Profitability on assets		1.60			2.59
Return on operating assets		2.59			4.13
Profitability ratios	06-30-2016			06-30-2015
Income per share (U.S.$) (1)		0.96			1.68
Income after tax (ThU.S.$) (2)		110,387			191,606
Gross margin (ThU.S.$)		652,145			876,813
Financial costs (ThU.S.$)		(135,770	)		(131,152	)

(1) Earnings per share refer to the profit to net equity to parent company.

(2) Includes non-controlling interest.

2

CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Ratio Analysis of the Consolidated Financial Statements

June 30, 2016

Amounts in thousands of U.S. dollars, except as indicated

EBITDA	06-30-2016 MU.S.$			06-30-2015 MU.S.$
Gain (loss)		110.4			191.6
Finance costs		135.8			131.2
Financial income		(17.9	)		(19.3	)
Expenses for income tax		39.6			77.2
EBIT		267.8			380.7
Depreciation and amortization		199.0			196.8
EBITDA		466.8			577.5
Cost at fair value of the harvest		167.1			150.2
Gain from changes in fair value of biological assets		(98.9	)		(94.1	)
Exchange difference		0.9			5.3
Others*		2.1			29.9
Adjusted EBITDA		536.2			668.7

* 2016: Forest loss provision MU.S.$2.1

* 2015: Forest loss provision MU.S.$11.4

2. MAIN SOURCES OF FINANCING

Arauco’s financing needs are mainly covered through the capital markets, with bond issuances and credits obtained from banks and financial institutions serving as the main sources of financing. For short-term borrowing, Arauco follows a liquidity policy which indicates the amounts and institutions from which it can borrow according to several conditions defined in the policy. In the case of long-term debt, corporate bond issuances in the local market and also in international markets are used as sources of new resources. Another source of long-term financing corresponds to borrowings from banks and financial institutions around the world.

3. DIFFERENCE BETWEEN ECONOMIC VALUES AND BOOK ASSETS

Assets and liabilities are presented in the Financial Statements according to International Financial Reporting Standards and instructions issued by the Chilean Securities Commission.

We believe that there are no material differences between the economic value of our assets and the value reflected in these Financial Statements.

4. MARKET SITUATION

Pulp Division

After the price adjustment during the first quarter of this year, especially in short fiber, prices reached a plateau in most markets and even regained some price strength in others. The short fiber market is still undergoing pressure, although there are signs that these are subsiding. In terms of region, Western Europe has had the slowest recovery rate. Worldwide inventory levels decreased by two days in long fiber and five days in short fiber. Paper producers looking to recover inventory levels as well as mill stoppages during the spring season in the Northern Hemisphere supported some price upsurges this quarter. Counteracting these factors are the incoming volume from new pulp mills coming into play during the first quarter of the year.

Asia was the leader in price recovery this quarter, with long fiber and short fiber prices up by U.S.$ 20 each, which translated to a 3% and 4% gain, respectively. Annual maintenance stoppage season helped long fiber prices along, while short fiber prices were boosted thanks to paper producers seeking to recover inventory levels. The price gap of approximately U.S.$

3

CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Ratio Analysis of the Consolidated Financial Statements

June 30, 2016

Amounts in thousands of U.S. dollars, except as indicated

110 (with short fiber on the lower end) also favored the substitution of long fiber to short fiber. Despite this optimism, price gains remain fragile and could be neutralized by the upcoming paper demand low season. Asian countries continue to follow Chinese price trends. Looking for better and more stable returns, many producers of unbleached long fiber pulp have started to produce larger quantities aimed for the niche market of fiber cement. This move has driven overall prices in this type of fiber downwards.

In Europe, paper producers foresee less demand in the upcoming summer months, and have therefore controlled their inventory levels, making price hikes harder to achieve. Supply- demand imbalances continue to impact these markets, although there could be more breathing room after many producers begin their maintenance stoppages. Prices remained stable during this quarter, with short fiber maintaining the same price levels as last quarter, and long fiber picking up 2% or U.S.$ 10. Inventory levels at European ports continue to be above normal levels, leading many producers to redirect volumes to other geographic areas.

In other markets, such as the Middle East, price increases were limited, reaching U.S.$ 10 in both fibers. Latin American demand growth has slowed down, while supply has increased from new pulp mills in Brazil, which commercialize long fiber, short fiber and fluff in the local market.

Our production levels were according to plan, decreasing due to maintenance stoppages in our Constitución Mill and Montes del Plata Mill. The maintenance stoppage of our Constitución Mill lasted two months, where the recovery boiler was modernized and preventative maintenance was performed, among other things. The Montes del Plata stoppage lasted for two weeks.

Timber Division

This quarter’s surge in sales by 7.3% was largely propelled by sales in the panels market. In sawn timber, prices have improved slightly but have yet to affect our bottom line. The impact of these price increases will most likely be seen come next quarter.

The panels market experienced an overall increase in sales volume during this quarter. In North America, the MDF market has been pressured as more supply has entered the market, although the temporary closing of a mill due to fire has enabled the market to recover. Arauco North America even had to import MDF from Brazil, Argentina, and Chile in order to meet sales requirements. Demand for laminated flooring and particleboard have also lifted sales in the Northern hemisphere. In Brazil, sales volume has improved in MDF, reaching a 7.8% growth in sales volume compared to the same quarter of last year. Counteracting this growth is the depreciation of the real, which affects the bottom line of our exports in U.S. dollar terms from this country. Particleboard regained momentum during April and May, showing price improvements. Colombia has been affected by the lack of ground transportation due to trucker strikes in that nation. Despite less sales activity in the rest of Latin America, Arauco has been able to meet planned sales volume, and has even been able to increase prices in some countries.

Sawn timber markets were greatly affected during the last quarter and are still in the recovery stage. Pine moldings sales volume has increased in North America despite oversupply. On the other side of the world, wood products used for packaging have shown strength in the Asian and Middle Eastern markets. New competition in the Middle East has stimulated demand for our products. A new shipping contract for this region should come into force at year-end, which will raise margins. Plywood has improved prices and sales volume in Europe, Latin America and North America, even recovering market share in the latter. The uplift in North American prices could be vulnerable to new supply coming from South America.

4

CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Ratio Analysis of the Consolidated Financial Statements

June 30, 2016

Amounts in thousands of U.S. dollars, except as indicated

5. ANALYSIS OF CASH FLOW

The main components of net cash flow in each period are as follows:

	06-30-2016 ThU.S.$			06-30-2015 ThU.S.$
Positive (negative) Cash flow
Cash flow from operating activities		453,719			448,591
Cash flow from (used in) financing activities:
Loan and bond payments		31,355			(507,417	)
Dividend payments		(100,250	)		(98,638	)
Others		37			(821	)
Cash flow from (used in) investment activities:
Loans to related companies		0			(23,428	)
Incorporation and sale of property, plant and equipment		(137,391	)		(193,750	)
Incorporation and sale of biological assets		(72,126	)		(83,577	)
Purchase of participation in joint ventures		(153,135	)
Sale of participation in associates		6,781
Dividends received		3,272			1,865
Others		(4,933	)		(1,867	)
Positive Net cash flow (negative)		27,329			(459,042	)

The financing cash flow had a negative balance of U.S.$69 million in the current period compared to a negative balance of U.S.$607 million in the same period of 2015. Such decrease was mainly due to an increase in bank loans received and a decrease in loan payments.

In relation to the flow of investment at the end of the current period, there was a negative balance of U.S.$357 million compared to a negative balance of U.S.$301 million in the same period of 2015. Such increase was mainly due to greater disbursements for the purchase of the interest in the joint venture SONAE ARAUCO, partially offset by lower payments for the acquisition of properties, plant and equipment and biological assets

6. MARKET RISK ANALYSIS

In respect of the economic risks resulting from interest rate variations, the Company maintains, as of June 30, 2016, a ratio of fixed rate debt to total consolidated debt of approximately 86%, which it believes is consistent with industry standards. The Company does not participate in futures trading as to maintain one of the lowest cost structures in the industry, the risks for price fluctuations are bounded.

The Company and most of its subsidiaries maintain their accounting records and prepare their financial statements in U.S. dollars. Both the accounts receivable and most financial liabilities are denominated in U.S. dollars or are covered by an exchange rate swap, as well as most of their revenues. As a result, exposure to changes in the exchange rate has decreased significantly.

In the report to the Consolidated Financial Statements as of June 30, 2016, a detailed analysis of the risks associated with the business of Arauco is available (See Note 23).

5

CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Consolidated Financial Statements

June 30, 2016

Amounts in thousands of U.S. dollars, except as indicated

INTERIM CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

	Note	06-30-2016 (Unaudited) ThU.S.$		12-31-2015 ThU.S.$
Assets
Current Assets
Cash and cash equivalents	5		527,360		500,025
Other current financial assets	23		10,738		32,195
Other current non-financial assets	25		158,360		133,956
Trade and other current receivables	23		667,847		733,322
Accounts receivable from related companies	13		3,748		3,124
Current Inventories	4		908,501		909,988
Current biological assets	20		324,862		306,529
Current tax assets			80,192		64,079
Total Current Assets other than assets or disposal groups classified as held for sale			2,681,608		2,683,218
Non-Current Assets or disposal groups classified as held for sale	22		2,796		3,194
Non-Current Assets or disposal groups classified as held for sale or as held for distribution to owners			2,796		3,194
Total Current Assets			2,684,404		2,686,412
Non-Current Assets
Other non-current financial assets	25		3,406		595
Other non-current non-financial assets	23		129,231		125,516
Trade and other non-current receivables			17,843		15,270
Investments accounted for using equity method	15-16		437,254		264,812
Intangible assets other than goodwill	19		84,845		88,112
Goodwill	17		75,472		69,475
Property, plant and equipment	7		6,945,144		6,896,396
Non-current biological assets	20		3,578,331		3,520,068
Deferred tax assets			3,929		3,735
Total non-Current Assets			11,275,455		10,983,979
Total Assets			13,959,859		13,670,391

The accompanying notes are an integral part of these interim consolidated financial statements.

6

CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Consolidated Financial Statements

June 30, 2016

Amounts in thousands of U.S. dollars, except as indicated

INTERIM CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (continued)

	Note	06-30-2016 (Unaudited) ThU.S.$			12-31-2015 ThU.S.$
Equity and liabilities
Liabilities
Current Liabilities
Other current financial liabilities	23		649,535			296,038
Trade and other current payables	23		583,433			583,018
Accounts payable to related companies	13		7,260			7,141
Other current provisions	18		751			858
Current tax liabilities			9,717			10,976
Current provisions for employee benefits	10		5,328			4,497
Other current non-financial liabilities	25		79,504			131,723
Total current liabilities other than assets included in disposal groups classified as held for sale			1,335,528			1,034,251
Total Current Liabilities			1,335,528			1,034,251
Non-Current Liabilities
Other non-current financial liabilities	23		3,927,299			4,236,965
Other non-current provisions	18		36,112			34,541
Deferred tax liabilities	6		1,636,835			1,619,012
Non-current provisions for employee benefits	10		60,320			51,936
Other non-current non-financial liabilities	25		59,928			47,241
Total non - current liabilities			5,720,494			5,989,695
Total liabilities			7,056,022			7,023,946
Equity
Issued capital			353,618			353,618
Retained earnings			7,269,804			7,204,452
Other reserves			(763,281	)		(949,360	)
Equity attributable to parent company			6,860,141			6,608,710
Non-controlling interests			43,696			37,735
Total equity			6,903,837			6,646,445
Total equity and liabilities			13,959,859			13,670,391

The accompanying notes are an integral part of these interim consolidated financial statements.

7

CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Consolidated Financial Statements

June 30, 2016

Amounts in thousands of U.S. dollars, except as indicated

INTERIM CONSOLIDATED STATEMENTS OF PROFIT OR LOSS

	Note	January-June						April-June
		(Unaudited)
		2016			2015			2016			2015
		ThU.S.$			ThU.S.$			ThU.S.$			ThU.S.$
Income Statement
Revenue	9		2,353,311			2,654,060			1,207,286			1,376,945
Cost of sales	3		(1,701,166	)		(1,777,247	)		(874,642	)		(916,716	)
Gross profit			652,145			876,813			332,644			460,229
Other income	3		119,766			110,156			61,749			54,636
Distribution costs	3		(229,821	)		(263,326	)		(119,632	)		(136,724	)
Administrative expenses	3		(251,816	)		(282,366	)		(139,108	)		(153,898	)
Other expense	3		(33,411	)		(54,311	)		(12,902	)		(28,799	)
Profit (loss) from operating activities			256,863			386,966			122,751			195,444
Finance income	3		17,897			19,277			6,585			8,794
Finance costs	3		(135,770	)		(131,152	)		(65,485	)		(62,956	)
Share of profit (loss) of associates and joint ventures accounted for using equity method	15		10,031			(986	)		5,993			(1,601	)
Exchange rate differences			918			(5,260	)		(191	)		2,599
Income before income tax			149,939			268,845			69,653			142,280
Income Tax	6		(39,552	)		(77,239	)		(12,185	)		(36,365	)
Net Income			110,387			191,606			57,468			105,915
Net income attributable to
Net income attributable to parent company			109,084			189,903			56,910			105,016
Income attributable to non-controlling interests			1,303			1,703			558			899
Profit (loss)			110,387			191,606			57,468			105,915
Basic earnings per share
Basic earnings per share from continuing operations			0.0009640			0.0016782			0.0005029			0.0009280
Basic earnings per share			0.0009640			0.0016782			0.0005029			0.0009280
Earnings per diluted shares
Earnings per diluted share from continuing operations			0.0009640			0.0016782			0.0005029			0.0009280
Earnings per diluted share			0.0009640			0.0016782			0.0005029			0.0009280

The accompanying notes are an integral part of these interim consolidated financial statements.

8

CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Consolidated Financial Statements

June 30, 2016

Amounts in thousands of U.S. dollars, except as indicated

INTERIM CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

	Note	January-June						April-June
		(Unaudited)
		2016			2015			2016			2015
		ThU.S.$			ThU.S.$			ThU.S.$			ThU.S.$
Profit (loss)			110,387			191,606			57,468			105,915
Components of other comprehensive income that will not be reclassified to profit or loss before tax:
Other comprehensive income before tax actuarial gains losses on defined Benefit plans			(2,915	)		1,405			(874	)		2,622
Share of other comprehensive income of associates and joint ventures accounted for using equity method that will not be reclassified to profit or loss before tax			(256	)		2,867			444			3,315
Other Comprehensive Income that will not be reclassified to profit or loss before tax			(3,171	)		4,272			(430	)		5,937
Components of other comprehensive income that will be reclassified to profit or loss before tax:
Exchange differences on translation
Gains (losses) on exchange differences on translation, before tax	11		191,553			(166,212	)		102,646			30,514
Other Comprehensive Income before tax exchange differences on translation			191,553			(166,212	)		102,646			30,514
Cash flow hedges
Gains (losses) on cash flow hedges, before tax			11,242			18,160			5,256			12,354
Reclassification adjustments on cash flow hedges before tax			(8,119	)		(7,104	)		(5,503	)		(4,720	)
Other Comprehensive Income before tax Cash flow hedges			3,123			11,056			(247	)		7,634
Other Comprehensive income that will be reclassified to profit or loss before tax			194,676			(155,156	)		102,399			38,148
Income tax relating to components of other comprehensive Income that will not be reclassified to profit or loss before tax
Income tax relating to defined benefit plans of other comprehensive income			788			(403	)		226			(677	)
Income tax relating to components of other comprehensive Income that will be reclassified to profit or loss before tax
Income tax relating to cash flow hedges of other comprehensive income	6		(1,042	)		(2,092	)		336			(1,319	)
Income tax relating to components of other comprehensive income that will be reclassified to profit or loss abstract			(1,042	)		(2,092	)		336			(1,319	)
Other comprehensive income			191,251			(153,379	)		102,531			42,089
Comprehensive income			301,638			38,227			159,999			148,004
Comprehensive Income attributable to
Comprehensive income, attributable to owners of parent company			295,163			41,250			156,566			146,172
Comprehensive income, attributable to non-controlling interests			6,475			(3,023	)		3,433			1,832
Total comprehensive income			301,638			38,227			159,999			148,004

The accompanying notes are an integral part of these interim consolidated financial statements.

9

CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Consolidated Financial Statements

June 30, 2016

Amounts in thousands of U.S. dollars, except as indicated

INTERIM CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

Unaudited 06-30-2016	Issue Capital ThU.S.$		Reserve of exchange differences on translation ThU.S.$			Reserve of cash flow hedges ThU.S.$			Reserve of actuarial gains or losses on defined benefit plans ThU.S.$			Several Other Reserves ThU.S.$			Other Reserves ThU.S.$			Retained Earnings ThU.S.$			Equity attributable to owners of parent T.hU.S.$			Non - controlling interests ThU.S.$			Total Equity ThU.S.$
Opening balance at 01/01/2016		353,618		(872,770	)		(55,396	)		(16,668	)		(4,526	)		(949,360	)		7,204,452			6,608,710			37,735			6,646,445
Changes in Equity:
Comprehensive income
Net income																			109,084			109,084			1,303			110,387
Other comprehensive income, net of tax				186,389			2,081			(2,135	)		(256	)		186,079						186,079			5,172			191,251
Comprehensive income		—		186,389			2,081			(2,135	)		(256	)		186,079			109,084			295,163			6,475			301,638
Dividends																			(43,732	)		(43,732	)		(439	)		(44,171	)
Increase (decrease) through for transfers and other changes equity																			—			—			(75	)		(75	)
Changes in equity		—		186,389			2,081			(2,135	)		(256	)		186,079			65,352			251,431			5,961			257,392
Closing balance at 06/30/2016		353,618		(686,381	)		(53,315	)		(18,803	)		(4,782	)		(763,281	)		7,269,804			6,860,141			43,696			6,903,837
Unaudited 06-30-2015	Issue Capital ThU.S.$		Reserve of exchange differences on translation ThU.S.$			Reserve of cash flow hedges ThU.S.$			Reserve of actuarial gains or losses on defined benefit plans ThU.S.$			Several Other Reserves ThU.S.$			Other Reserves ThU.S.$			Retained Earnings ThU.S.$			Equity attributable to owners of parent T.hU.S.$			Non - controlling interests ThU.S.$			Total Equity ThU.S.$
Opening balance at 01/01/2015		353,618		(498,495	)		(53,022	)		(15,790	)		(3,745	)		(571,052	)		6,984,564			6,767,130			47,606			6,814,736
Changes in Equity:
Comprehensive income
Net income																			189,903			189,903			1,703			191,606
Other comprehensive income, net of tax				(161,486	)		8,964			1,002			2,867			(148,653	)					(148,653	)		(4,726	)		(153,379	)
Comprehensive income		—		(161,486	)		8,964			1,002			2,867			(148,653	)		189,903			41,250			(3,023	)		38,227
Dividends																			(79,609	)		(79,609	)		(215	)		(79,824	)
Increase (decrease) for transfer and other changes																			—			—			(805	)		(805	)
Changes in equity		—		(161,486	)		8,964			1,002			2,867			(148,653	)		110,294			(38,359	)		(4,043	)		(42,402	)
Closing balance at 06/30/2015		353,618		(659,981	)		(44,058	)		(14,788	)		(878	)		(719,705	)		7,094,858			6,728,771			43,563			6,772,334

The accompanying notes are an integral part of these interim consolidated financial statements.

10

CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Consolidated Financial Statements

June 30, 2016

Amounts in thousands of U.S. dollars, except as indicated

INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS

	06-30-2016			06-30-2015
	ThU.S.$			ThU.S.$
STATEMENTS OF CASH FLOWS
Cash Flows from (used in) Operating Activities
Classes of cash receipts from operating activities
Receipts from sales of goods and rendering of services		2,571,994			2,878,668
Other cash receipts from operating activities		245,884			217,305
Classes of cash payments
Payments to suppliers for goods and services		(1,874,981	)		(2,099,691	)
Payments to and on behalf of employees		(250,573	)		(259,719	)
Other cash payments from operating activities		(113,136	)		(126,270	)
Interest paid		(106,230	)		(121,031	)
Interest received		15,408			7,070
Income taxes refund (paid)		(34,684	)		(48,874	)
Other (outflows) inflows of cash, net		37			1,133
Net Cash flows from Operating Activities		453,719			448,591
Cash flows (used in) investing activities
Other cash receipts from sales of equity or debt instruments of other entities		6,781			—
Other cash payments to acquire interests in joint ventures		(153,135	)		—
Loans to related parties		—			(23,428	)
Proceeds from sale of property, plant and equipment		8,030			2,515
Purchase of property, plant and equipment		(145,421	)		(196,265	)
Proceeds from sales of intangible assets		—			99
Purchase of intangible assets		(1,644	)		(1,947	)
Proceeds from other long-term assets		4			—
Purchase of other non-current assets		(72,130	)		(83,577	)
Dividends received		3,272			1,865
Other outflows of cash, net		(3,289	)		(19	)
Cash flows used in Investing Activities		(357,532	)		(300,757	)
Cash flows from (used in) Financing Activities
Total loans obtained		366,987			201,110
Loans obtained in long term		297			515
Proceeds from short-term borrowings		366,690			200,595
Repayments of borrowings		(335,632	)		(708,527	)
Dividends paid by subsidiaries or special purpose companies		(100,250	)		(98,638	)
Other inflows of cash, net		37			(821	)
Cash flows from (used in) Financing Activities		(68,858	)		(606,876	)
Net increase (decrease) in Cash and Cash Equivalents before effect of exchange rate changes		27,329			(459,042	)
Effect of exchange rate changes on cash and cash equivalents		6			(202	)
Net increase (decrease) of Cash and Cash equivalents		27,335			(459,244	)
Cash and cash equivalents, at the beginning of the period		500,025			971,152
Cash and cash equivalents, at the end of the period		527,360			511,908

The accompanying notes are an integral part of these interim consolidated financial statements.

11

CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Consolidated Financial Statements

June 30, 2016

Amounts in thousands of U.S. dollars, except as indicated

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS AS OF JUNE 30, 2016 AND 2015 AND DECEMBER 31, 2015

NOTE 1. PRESENTATION OF CONSOLIDATED FINANCIAL STATEMENTS

Entity Information

Celulosa Arauco y Constitución S.A. and subsidiaries, (hereafter “Arauco” or the “Company”), tax identification number 93,458,000-1, is a closely held corporation, that was registered in the Securities Registry (the “Registry”) of the Superintendency of Securities and Insurance (the “SVS”) as No. 042 on June 14, 1982. Additionally, the Company is registered as a non-accelerated filer with the Securities and Exchange Commission (SEC) of the United States of America.

Forestal Cholguán S.A., subsidiary of Arauco, is also registered in the Securities Registry as No. 030.

The Company’s head office address is El Golf Avenue 150, floor 14^th, Las Condes, Santiago, Chile.

Arauco is principally engaged in the production and sale of forestry and timber products. Its main operations are focused on the following business areas: Pulp, Plywood and Fiberboard Panels, Sawn Timber and Forestry.

Arauco is controlled by Empresas Copec S.A., which owns 99.9780% of Arauco, and is registered in the Securities Registry as No. 0028. Each of the above mentioned companies is subject to the oversight of the SVS.

The ultimate shareholders of Arauco are Mrs. Maria Noseda Zambra de Angelini, Mr. Roberto Angelini Rossi and Mrs. Patricia Angelini Rossi through the entity Inversiones Angelini y Cia. Ltda., which owns 63.4015% of the shares of AntarChile S.A., the controlling shareholder of our parent company Empresas Copec S.A.

Arauco’s Interim Consolidated Financial Statements were prepared on a going concern basis.

Presentation of Interim Consolidated Financial Statements

The Financial Statements presented by Arauco as of June 30, 2016 are:

• Interim Consolidated Statements of Financial Position as of June 30, 2016 and December 31, 2015.

• Interim Consolidated Statements of Comprehensive Income by function for the periods between January 1 and June 30, 2016 and 2015

• Interim Statements of Other Consolidated Comprehensive Income for the periods between January 1 and June 30, 2016 and 2015

• Interim Consolidated Statements of Changes in Equity for the periods between January 1 and June 30, 2016 and 2015.

• Interim Consolidated Statements of Cash Flows – Direct Method for the periods between January 1 and June 30, 2016 and 2015.

• Explanatory disclosures (notes)

12

CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Consolidated Financial Statements

June 30, 2016

Amounts in thousands of U.S. dollars, except as indicated

Period Covered by the Interim Consolidated Financial Statements

Period between January 1 and June 30, 2016.

Date of Approval of Interim Consolidated Financial Statements

These interim consolidated financial statements were approved by the Board of Directors of the Company (the “Board”) at the Extraordinary Session N° 553 held on August 23, 2016 for the period between January 1 and June 30, 2016.

Abbreviations used in this report:

IFRS - International Financial Reporting Standards

IASB - International Accounting Standards Board

IAS - International Accounting Standards

IFRIC - International Financial Reporting Standards Interpretations Committee

MU.S.$ - Millions of U.S. dollars

ThU.S.$ - Thousands of U.S. dollars

U.F. – Inflation index-linked units of account

EBITDA – Earnings Before Interest, Taxes, Depreciation, and Amortization

ICMS – Tax movement of inventories and services (Brazil)

Functional and Presentation Currency

Arauco and most of its subsidiaries determined the United States (“U.S.”) Dollar as its functional currency since the majority of its revenues from sales of its products are derived from exports denominated in U.S. Dollars, while their costs of sales are to a large extent related or indexed to the U.S. Dollar.

For the pulp operating segment, most of the sales are exports denominated in U.S. Dollars and costs are mainly related to plantation costs which are settled in U.S. Dollars.

For the sawn timber, panel and forestry operating segments, although total sales include a mix of domestic and exports sales, prices of the products are established in U.S. Dollars, which is also the case for the cost structure of the related raw materials.

In relation to the cost of sales, although labor and services costs are generally billed and paid in local currency, these costs are not as significant as the costs of raw materials, which are driven mainly by global markets and therefore, influenced mostly by the U.S. Dollar.

The presentation currency of the consolidated financial statements is the U.S. Dollar. Figures on these interim consolidated financial statements are presented in thousands of U.S. Dollar (ThU.S.$).

13

CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Consolidated Financial Statements

June 30, 2016

Amounts in thousands of U.S. dollars, except as indicated

Summary of significant accounting policies

a) Basis for preparation of interim consolidated financial statements

These interim consolidated financial statements were prepared in accordance with International Financial Reporting Standards (“IFRS”), as issued by the International Accounting Standards Board (“IASB”) and represent the full adoption, explicitly and unreserved of the mentioned international standards.

Retroactive application of IFRS

On October 17, 2014, the SVS issued Circular Letter No. 856, instructing auditees to register in fiscal year 2014 against equity the differences in assets and liabilities as a result of deferred taxes arising from the direct effect of the increase in the first category tax rates introduced by Law No. 20,780. Such accounting treatment differs from IAS 12 and, therefore, represented a change to the framework for the preparation and presentation of financial information adopted up to that date.

Considering what was explained in the preceding paragraph represented a specific and temporary deviation from IFRS, as from 2016 and according to paragraph 4A of IFRS 1, Arauco has decided to apply retroactively such rules (in accordance with IAS 8 “Accounting Policies, Changes in Accounting Estimates and Errors”), as if it had never stopped applying them.

Given that what was indicated in the preceding paragraph does not alter any of the accounts shown in the financial statements as of June 30, 2016 and 2015, nor the financial statements as of December 31, 2015 and 2014, in accordance with paragraph 40A of IAS 1 “Presentation of Financial Statements”, it is not necessary to present financial statements as of January 1, 2015 (third column).

The interim consolidated financial statements have been prepared on the historical cost basis, except for biological assets and certain derivative financial instruments which are measured at revalued amounts or fair value at the end of each period as explained in the following significant accounting policies.

b) Critical accounting estimates and judgments

The preparation of these interim consolidated financial statements, in accordance with Superintendency of Securities and Insurance (SVS), requires management to make estimates and assumptions that affect the carrying amounts reported. These estimates are based on historical experience and various other assumptions that are considered to be reasonable. Actual results may differ from these estimates. Management believes that the accounting policies below are the critical judgments that have the most significant effect on the amounts recognized in the consolidated financial statements.

14

CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Consolidated Financial Statements

June 30, 2016

Amounts in thousands of U.S. dollars, except as indicated

-Biological Assets

The recovery of forest plantations is based on discounted cash flow models which means that the fair value of biological assets is calculated using cash flows from continuing operations on a discounted basis, based on our sustainable forest management plans and the estimated growth of forests.

These discounted cash flows require estimates in growth, harvest, sales prices and costs; therefore it is important that management make appropriate estimates of future levels and trends for sales and costs, as well as conduct regular surveys of the forests to establish the volumes of wood available for harvesting and their current growth rates. The main considerations used to measure forest plantations are presented in Note 20, including a sensitivity analysis.

-Goodwill

Goodwill represents the excess of the acquisition cost over the fair value of the Group’s holding in the identifiable net assets of the acquired subsidiary at the date of acquisition. Said fair value is determined whether based on assessments and/or the discounted future flow method using hypotheses in their determination, such as sales prices and industry indexes, among others. See Note 17.

-Litigation and Contingencies

Arauco and its subsidiaries are subject to certain litigation proceedings. Future impact on Arauco’s financial condition derived from such litigations is estimated by management, in collaboration with its legal advisors. Arauco applies judgment when interpreting the reports of its legal advisors who provide updated estimates of the legal contingencies at each reporting period and/or at each time a modification is determined to be necessary. For a description of current litigations see Note 18.

c) Consolidation

The interim consolidated financial statements include all entities over which Arauco has the power to direct the relevant financial and operating activities. Subsidiaries (including special purpose entities) are consolidated from the date on which control is obtained and up to the date that control ceases.

Specifically, a company controls an investee or subsidiary if, and only if, they have all of the following:

(a) power over the investee, i.e. the investor has existing rights which give it the ability to direct the relevant activities (the activities that significantly affect the investee’s returns)

(b) exposure or rights to variable returns from involvement with the investee; and

(c) the ability to use power over the investee to affect the amount of the investor’s returns.

15

CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Consolidated Financial Statements

June 30, 2016

Amounts in thousands of U.S. dollars, except as indicated

When Arauco holds less than the majority of voting rights in a company in which it participates, it nonetheless has the power over said company - when these voting rights are enough - to grant it in practice the ability to unilaterally direct said company’s relevant activities. Arauco takes into account all facts and circumstances in order to assess if the voting rights in a company in which it participates are enough for granting it the power, including:

a) the size of the investor’s holding of voting rights relative to the size and dispersion of holdings of the other vote holders;

b) potential voting rights held by the investor, other vote holders or other parties;

c) rights arising from other contractual arrangements; and

d) any additional facts and circumstances that indicate the investor has, or does not have, the current ability to direct the relevant activities at the time that decisions need to be made, including voting patterns at previous shareholders’ meetings.

The Company will reevaluate whether or not it holds control of a company in which participates if the facts and circumstances indicate that changes have occurred in one or more of the three elements of control mentioned above.

Consolidation of an investee shall begin from the date the investor obtains control of the investee and cease when the investor loses control of the investee. An entity includes the income and expenses of an acquired or sold subsidiary in the interim consolidated financial statements from the date it gains control until the date when the entity ceases to control the subsidiary.

The profit or loss of each component of other comprehensive income is attributed to owners of the parent company and the non-controlling interest, as appropriate. Total comprehensive income is attributed to the owners of the parent company and non-controlling interests even if the results of the non-controlling interest have a deficit balance.

If a subsidiary uses accounting policies other than those adopted in the interim consolidated financial statements for transactions and other events in similar circumstances, appropriate adjustments are made to the financial statements of subsidiaries in order to ensure compliance with Arauco’s accounting policies.

All intercompany transactions and unrealized gains and losses from subsidiaries have been fully eliminated from interim consolidated financial statements and non-controlling interest is presented in the consolidated statement of financial position within equity, separately from the equity of the owners of the parent company.

The interim consolidated financial statements at the end of this period include the assets, liabilities, income and expenses of the subsidiaries shown in Note 13.

Certain consolidated subsidiaries have Brazilian Real and Chilean Pesos as their functional currencies. For consolidation purposes, the financial statements of those subsidiaries have been prepared in accordance with IFRS and translated into the presentation currency as indicated in Note 1 (e) (ii).

A parent company will present non-controlling interests in the consolidated statement of financial position within equity, separately from the equity of the owners of the parent company.

16

CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Consolidated Financial Statements

June 30, 2016

Amounts in thousands of U.S. dollars, except as indicated

d) Segments

Arauco has defined its operating segments according to its business areas, based on the products and services sold to its customers. This definition is consistent with the management, resource allocation and performance assessment made by key personnel responsible for making relevant decisions related to the Company’s operation. The Chief Operating Decision Maker (CODM) is the Chief Executive Officer who is responsible for making these decisions and it is supported by the Corporate Managing Directors of each segment.

Based on the aforementioned process, the Company has established operating segments according to the following business units:

• Pulp

• Timber

• Forestry

Refer to Note 24 for detailed financial information by operating segment.

e) Functional currency

(i) Functional currency

All items in the financial statements of Arauco and each of its subsidiaries, associates and jointly controlled entities are measured using the currency of the primary economic environment in which each entity operates (the functional currency). The interim consolidated financial statements are presented in U.S. dollars, which is Arauco’s functional and presentation currency.

(ii) Translation to the presentation currency of Arauco

For the purposes of presenting interim consolidated financial statements, assets and liabilities of Arauco’s operations in a functional currency different from Arauco´s are translated into U.S. dollars using exchange rates prevailing at the end of each reporting period. Income and expense items are translated at the average exchange rates for the period, unless exchange rates fluctuate significantly during that period, in which case the exchange rates at the dates of the transactions are used. Exchange rate differences are recognized in other comprehensive income and accumulated in “Other reserves” within–equity.

(iii) Foreign Currency Transactions

Transactions in currencies other than the functional currency are recognized at the exchange rates prevailing at the dates of the transactions. Profit or loss on transactions in currencies other than the functional currency resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies, are recognized in the statement of income, except those which are recorded in other comprehensive income and accumulated in equity such as cash flows hedging derivatives.

17

CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Consolidated Financial Statements

June 30, 2016

Amounts in thousands of U.S. dollars, except as indicated

f) Cash and cash equivalents

Cash and cash equivalents include cash-in-hand, deposits held on demand at banks and other short term highly liquid investments with an original maturity of three months or less and which are subject to an insignificant risk of changes in value.

g) Financial Instruments

Financial assets

Financial assets are classified into the following specified categories: ‘loans and receivables’ and “derivative financial instruments”. The classification depends on the nature and purpose of the financial assets and is determined at the time of initial recognition. All purchases and sales of financial assets are recognized and derecognized on the trade date, which require delivery of assets within the same time frame established by regulation or convention in the marketplace.

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. Loans and receivables are classified as current assets, except for those with maturities more than 12 months after the reporting period, which are classified as non-current assets. Loans and receivables include trade and other receivables.

Loans and receivables are initially recognized at fair value plus transaction costs that are directly attributable to the acquisition and are subsequently measured at amortized cost using the effective interest rate method, less any impairment.

Derivative financial instruments are explained in Note 1 h)

Financial liabilities

Financial liabilities (including borrowings and trade and other payables) are subsequently measured at amortized cost using the effective interest method.

The effective interest method is a method of calculating the amortized cost of a financial liability and of allocating interest expense over the relevant period. The effective interest rate is the rate that discounts estimated future cash payments (including all fees and amounts paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of the financial liability, or (where appropriate) a shorter period, to the net carrying amount on initial recognition.

Financial obligations are classified as current liabilities, unless Arauco holds an unconditional right to defer their settlement during at least 12 months after the balance sheet’s date.

The estimate of the fair value of obligations with banks is determined using valuation techniques that include discounted cash flow analyses applying rates of similar loans. Bonds are appraised at market value.

18

CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Consolidated Financial Statements

June 30, 2016

Amounts in thousands of U.S. dollars, except as indicated

h) Derivative financial instruments

(i) Derivative Financial Instruments - The Company enters into a variety of derivative financial instruments to manage its exposure to interest rate and foreign exchange rate risks, including foreign exchange forward contracts, interest rate swaps, currency swaps and zero cost collar contracts. The company’s policy is that derivative contracts are entered into for economic hedging purposes and that there be no instruments for speculation purposes.

Derivatives are initially recognized at fair value at the date the derivative contracts are entered into and are subsequently re-measured at fair value at the end of each reporting period. The resulting gain or loss is recognized in profit or loss unless the derivative is designated as a hedging instrument and complies with hedge accounting requirements of IAS 39, in which event the timing of the recognition in profit or loss depends on the nature of the hedge relationship.

(ii) Embedded derivatives - The Company assesses the existence of embedded derivatives in financial instrument contracts. Derivatives embedded in non-derivative host contracts are treated as separate derivatives when they meet the definition of a derivative, their risks and characteristics are not closely related to those of the host contracts and the contracts are not measured at FVTPL as a whole. Arauco has determined that no embedded derivatives currently exist.

(iii) Hedge accounting - The Company designates certain hedging instruments as either fair value hedges or cash flow hedges.

At the inception of the hedge relationship, the entity documents the relationship between the hedging instrument and the hedged item, along with its risk management objectives and its strategy for undertaking various hedge transactions. Furthermore, at the inception of the hedge and on an ongoing basis, Arauco documents whether the hedging instrument is highly effective in offsetting changes in fair values or cash flows of the hedged item attributable to the hedged risk.

-Fair Value Hedges under IAS 39- Changes in the fair value of derivatives that are designated and qualify as fair value hedges are recognized in profit or loss immediately, together with any changes in the fair value of the hedged asset or liability that are attributable to the hedged risk. The change in the fair value of the hedging instrument and the change in the hedged item attributable to the hedged risk are recognized in profit or loss in the line item relating to the hedged item.

-Cash flow hedges under IAS 39 - The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges is recognized in other comprehensive income and accumulated under the heading of cash flow hedging reserve. The gain or loss relating to the ineffective portion is recognized immediately in profit or loss, and is included in the Finance costs line item in the consolidated statement of profit or loss. Amounts previously recognized in other comprehensive income are reclassified to profit or loss in the periods when the hedged item affects profit or loss, in the same line as the recognized hedged item.

19

CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Consolidated Financial Statements

June 30, 2016

Amounts in thousands of U.S. dollars, except as indicated

Hedge accounting is discontinued when the Group revokes the hedging relationship, when the hedging instrument expires or is sold, terminated, or exercised, or when it no longer qualifies for hedge accounting. Any gain or loss recognized in other comprehensive income and accumulated in equity at that time remains in equity and is recognized when the forecasted transaction is ultimately recognized in profit or loss. When a forecasted transaction is no longer expected to occur, the gain or loss accumulated in equity is recognized immediately in profit or loss.

i) Inventories

Inventories are stated at the lower of cost and net realizable value. Cost is determined using the weighted average cost method.

The cost of finished and in process products includes the cost of raw materials, direct labor, other direct costs and manufacturing overhead expenses.

Initial costs of harvested wood are determined at fair value less cost of sale at the point of harvest.

Biological assets are transferred to inventories when forests are harvested.

Net realizable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale.

When market conditions result in the production costs of a product exceeding its net realizable value, the inventories are written-down to their net realizable value. This write-down also includes obsolescence amounts resulting from slow moving inventories and technical obsolescence.

Spare parts that will be consumed in a period of less than twelve months are presented in inventories and recognized as an expense when they are consumed.

j) Non-current assets held for sale

The Group classifies certain property, plant and equipment, intangible assets, investments in associates and disposal groups (groups of assets to be sold together with their directly associated liabilities) as non-current assets held for sale which as of the date of the statement of financial position are the subject of active sale efforts which are estimated to be highly probable. Non-current assets held for sale are presented separately from the other assets in the balance sheet.

These assets or disposal groups are measured at the lower of the carrying amount or the fair value less the costs to sell, and are no longer depreciated or amortized from the time they are classified as non-current assets held for sale.

k) Business Combinations

Arauco applies the acquisition method to account for a business combination. This method requires the identification of the acquirer, determination of the acquisition date, recognition and measurement of the identifiable assets acquired, the liabilities assumed and any non-controlling interest in the acquiree; and recognition and measurement of goodwill or a gain from a bargain purchase. Identifiable assets acquired and liabilities assumed and any contingent liabilities in a business combination are initially measured at fair value at the acquisition date, except:

20

CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Consolidated Financial Statements

June 30, 2016

Amounts in thousands of U.S. dollars, except as indicated

-deferred tax assets or liabilities, and assets or liabilities related to employee benefit arrangements are recognized and measured in accordance with IAS 12 Income Taxes and IAS 19 respectively;

-liabilities or equity instruments related to share-based payment arrangements of the acquire or share-based payment arrangements of the Group entered into to replace share-based payment arrangements of the acquire are measured in accordance with IFRS 3 at the acquisition date; and

-assets (or disposal groups) that are classified as held for sale in accordance with IFRS 5 Non-current Assets Held for Sale and Discontinued Operations are measured in accordance with such standard.

Acquisition-related costs are accounted for as expenses when they are incurred, except for costs to issue debt or equity securities which are recognized in accordance with IAS 32 and IAS 39.

A parent will present non-controlling interests in the consolidated statement of financial position within equity, separately from the equity of the owners of the parent company.

Changes in the ownership interest of a parent in its subsidiary that do not result in a loss of control are treated as equity transactions. Any difference between the amount by which non-controlling interests are adjusted and the fair value of the consideration paid or received is recognized directly in equity and attributed to owners of the parent company. No adjustment is made to the carrying amount of goodwill, neither gains nor losses are recognized in the statement of profit or loss.

Non-controlling interests that are present ownership interests and entitle their holders to a proportionate share of the entity’s net assets in the event of liquidation may initially be measured either at fair value or at the present ownership instruments’ proportionate share of non-controlling interests, in the recognized amounts of the acquiree’s identifiable net assets. The choice is made on a transaction-by-transaction basis.

Arauco measures the fair value of the acquired company in the business combination achieved in stage (“step acquisition”), recognizing the effects of remeasurement of previously held equity interest in the acquiree in the statements of income.

If the initial accounting for a business combination is not completed by the end of the reporting period in which the combination occurs, Arauco reports preliminary amounts for the items for which the accounting is incomplete. During the measurement period (no more than one year), these preliminary amounts are retrospectively adjusted, or additional assets or liabilities are recognized to reflect new information about facts and circumstances that existed at the acquisition date, if known, would have affected the amounts recognized at that date.

Business combinations that are under common control transactions are accounted using as a reference the pooling of interest. Under this method, assets and liabilities related to the transaction carry over the previous carrying values. Any difference between assets and liabilities included in the consolidation and the consideration transferred, is accounted in equity.

21

CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Consolidated Financial Statements

June 30, 2016

Amounts in thousands of U.S. dollars, except as indicated

l) Investments in associates and joint arrangements

Associates are entities over which Arauco exercises significant influence, but not control. Significant influence is the power to participate in the financial and operating policy decisions of the investee but is not control or joint control over those policies.

Joint arrangement is defined as an entity over which there is joint control, which exists only when the decisions about strategic of activities, both financial and operational, require the unanimous consent of the parties sharing control.

Investments in joint arrangements are classified as a joint venture or as a joint operation. A joint operation is a joint arrangement in which the parties that have joint control of the arrangement (i.e. joint operators) have rights to the assets and obligations for the liabilities, relating to the arrangement. A joint venture is a joint arrangement in which the parties that have joint control of the arrangement (i.e., participants in a joint venture) have rights to the net assets of the arrangement.

Investments in associates and joint ventures are accounted for using the equity method and are initially recognized at cost. Their carrying amount is increased or decreased to recognize Arauco’s share of the profit or loss and other comprehensive income. Dividends received are recognized by deducting the amount received from the carrying amount of the investment. Arauco’s investment in associates includes goodwill (both net of any accumulated impairment loss).

The investments in joint operations are recognized through consolidation of assets, liabilities and results of operations in relation to Arauco’s ownership percentage.

If the cost of acquisition is lower than the fair value of the net assets of the associate acquired, the difference is recognized directly in the income statement and presented in the line Other Income (Loss).

Investments in associates and joint ventures are presented in the consolidated statement of financial position in the line item “Investments accounted for using equity method”.

Only if the investor has incurred legal or constructive obligations or made payments on behalf of the associate or joint venture, it must recognize a liability, showing a zero investment until such time as it generates profits that reverse the generated negative equity previously generated as a result of accrued losses. Otherwise, a liability is not recognized but a zero investment is indicated regardless.

m) Intangible assets other than goodwill

After initial recognition, intangible assets with finite useful lives are carried at cost less any accumulated amortization and impairment losses.

Amortization of an intangible asset with a finite useful life is allocated over the asset’s useful life. Amortization begins when the asset is available for use, i.e., when it is in the location and condition necessary for it to be capable of operating in the manner intended by management.

22

CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Consolidated Financial Statements

June 30, 2016

Amounts in thousands of U.S. dollars, except as indicated

(i) Computer Software

Computer software licenses are capitalized in terms of the costs incurred to acquire and make them compatible with existing software. These costs are amortized over the estimated useful lives of the software.

(ii) Water Rights, Easements and Other Rights

This item includes water rights, easements and other acquired rights recognized at historical cost which have indefinite useful lives as there is no foreseeable limit to the period over which these assets are expected to generate future cash flows. These rights are not amortized, but are tested for impairment at least annually, or when there is any indication that the assets might be impaired.

(iii) Customers and trade relations with customers

Correspond to the valuation over the time of the established relationship with customers, from the sale of products and services through its sales team. These relations will materialize in sales orders, which generate revenue and cost of sales. The useful life has been determined to be 15 years.

n) Goodwill

Goodwill is measured as the excess of the sum of the consideration transferred, the amount of any non-controlling interest in the acquiree, and the fair value of the acquirer’s previously held equity interest in the acquiree (if any) over the net of the acquisition-date amounts of the identifiable assets acquired and the liabilities assumed. If the total of consideration transferred, non-controlling interest recognized and previously held interest measured is less than the fair value of the net assets of the subsidiary acquired in the case of a bargain purchase, the difference is recognized directly in the statement of income.

Goodwill is not amortized but tested for impairment on annual basis.

After initial recognition, goodwill is measured at cost less any accumulated impairment losses. For purposes of impairment testing, goodwill in a business combination is allocated as of the acquisition date to the cash generating unit or a group of cash generating units expected to benefit from the synergies of the combination irrespective of whether other assets or liabilities of the acquiree are allocated to those units or group of units.

The goodwill generated on acquisitions of foreign companies, is expressed in the functional currency of such foreign company.

Goodwill recognized for the acquisition of the subsidiary Arauco do Brasil S.A. whose functional currency is the Brazilian Real, is translated into U.S. Dollars at the closing exchange rate. At the date of these interim consolidated financial statements, the change in the carrying amount of goodwill in Brazil is only related to the net exchange rate differences on translation.

23

CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Consolidated Financial Statements

June 30, 2016

Amounts in thousands of U.S. dollars, except as indicated

o) Property, Plant and Equipment

Property, plant and equipment are measured at cost less accumulated depreciation and accumulated impairment. The cost includes expenditures that are directly attributable to the acquisition of the assets.

Subsequent costs, such as improvements and replacement of components, are included in the asset’s carrying amount or recognized as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to Arauco and the cost of the item can be measured reliably. The carrying amount of the replaced part is derecognized from property, plant and equipment. All other repairs and maintenance costs are expensed in the period in which they are incurred.

Arauco capitalizes borrowing costs that are directly attributable to the acquisition, construction or production of qualifying assets as part of the cost of those assets, until the assets are ready for their intended use (See Note 12).

Depreciation is calculated by components using the straight-line method.

The useful lives of the items of property, plant and equipment is estimated according to the expected use of the assets.

The residual values and useful lives of assets are reviewed and adjusted, if appropriate, annually.

p) Leases

Arauco applies IFRIC 4 to assess whether an arrangement is, or contains, a lease. Leases of assets in which Arauco substantially holds all the risks and rewards of ownership are classified as finance leases. All other leases are classified as operating leases.

Finance leases are initially recognized at the lower of the fair value at the inception of the lease of the leased property and the present value of the minimum lease payments.

When assets are leased under a finance lease, the present value of lease payments are recognized as financial account receivables. Finance income, which is the difference between the gross receivable and the present value of such amount, is recognized as the interest rate of return.

Leases in which substantially all risks and rewards are not transferred to the lessee are classified as operating leases. Payments under operating leases (net of any incentives received from the lessor) are recognized as an expense on a straight-line basis over the lease term.

Arauco evaluates the economic nature of the contracts that grant the right to use certain assets, for the purposes of determining the existence of implied leases. In these cases, the Company separates - at the beginning of the contract, and based on relative reasonable values - payments and considerations associated with the lease, from the rest of the elements incorporated to the contract.

24

CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Consolidated Financial Statements

June 30, 2016

Amounts in thousands of U.S. dollars, except as indicated

q) Biological Assets

IAS 41 requires that biological assets, such as standing trees, are measured at fair value less cost to sell in the statement of financial position. Forestry plantations are accounted for at fair value less costs to sell, based on the presumption that fair values of these assets can be measured reliably.

The measurement of forestry plantations is based on discounted cash flow models whereby the fair value of the biological assets is determined using estimated future cash flows from continuing operations calculated using our sustainable forest management plans and including the estimated growth of the forests. This valuation is performed on the basis of each identifiable farm block and for each type of tree.

The measurement of new forestry plantations made during the current year is made at cost, which corresponds to the fair value at that date. After twelve months, the valuation methodology used is that explained in the preceding paragraph.

Biological assets shown as current assets correspond to those forestry plantations that will be harvested in the short term.

Biological growth and changes in fair value of forestry plantations are recognized in the line item “Other income” in the consolidated statement of profit or loss.

r) Income tax expense and deferred income tax assets and liabilities.

The tax liabilities are recognized in the consolidated financial statements based on the determination of taxable income for the year and calculated using the tax rates in force in the countries where Arauco operates.

Deferred income tax is recognized using liability method, on the temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated annual accounts. Deferred income tax is determined using tax rates contained in laws adopted as of the date of the financial statements and that are expected to be applicable when the related deferred tax asset is realized or the deferred income tax liability is settled.

Deferred income taxes are registered according to rules established in IAS12 “Income Taxes”, except for the application in 2014 of the Official Circular Letter No. 856 issued on October 17, 2014 by the SVS, which instructed auditees to register in the respective fiscal year against equity on a one-time basis, differences in assets and liabilities for deferred taxes occurred as a direct effect of the increase in the first category tax rate introduced by Law No. 20,780.

This statement differs from that established by the IFRS, which requires that the effect be recorded against income.

This instruction issued by the SVS meant in the interim consolidated financial statements as of December 31, 2014, a change in the framework of preparation and presentation of financial information adopted by that date, since the previous frame (IFRS) requires to be adopted in a comprehensive, explicit and unreserved manner.

25

CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Consolidated Financial Statements

June 30, 2016

Amounts in thousands of U.S. dollars, except as indicated

The effect of this change in accounting bases meant in year 2014 a charge to retained earnings amounting to ThU.S.$292,155, which according to IFRS should have been presented under results of the year ended December 31, 2014.

The goodwill arising on business combinations does not give rise to deferred tax.

The deferred tax assets and tax credits are generally recognized for all deductible temporary differences to the extent that it is probable that future taxable profit will be available against which those deductible temporary differences can be utilized.

s) Provisions

Provisions are recognized when the Company has a present obligation, legal or constructive, as a result of past events; it is probable that an outflow of resources will be required to settle the obligation; and a reliable estimate can be made of the amount of the obligation. The amount recognized as a provision is the best estimate of the consideration required to settle the present obligation at the end of the reporting period.

t) Revenue recognition

Revenues are recognized when Arauco has transferred the risks and rewards of ownership to the buyer and Arauco has no right to dispose of the assets, nor effective control of such good.

(i) Revenue recognition from the Sale of Goods

Revenue from the sale of goods is recognized when Arauco has transferred to the buyer the significant risks and rewards of ownership of the goods, when the amount of revenue can be reliably measured, when Arauco does not retain any managerial involvement over the goods sold and when it is probable that the economic benefits associated with the transaction will flow to Arauco and the costs incurred in respect of the transaction can be measured reliably.

Sales are recognized in terms of the price agreed to in the sales contract, less any volume discounts and estimated product returns at the date of the sale. Volume discounts are evaluated in terms of estimated annual purchases. There is no significant financing component given that receivables from sales are collected within a short period, which is in line with market practices.

The structure for recognizing revenue from export sales is based on the 2010 Incoterms, which are the official rules for the interpretation of commercial terms issued by the International Chamber of Commerce.

The main Incoterms used by Arauco are the following:

“CFR (Cost and freight)”, where the company bears all costs including main transportation, until the products arrives at its port of destination. The risk is transferred to the purchaser once the products have been loaded onto the vessel, in the country of origin.

26

CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Consolidated Financial Statements

June 30, 2016

Amounts in thousands of U.S. dollars, except as indicated

“CIF (Cost Insurance & Freight)”, where the Company organizes and pays for external freight services and some other expenses. Arauco is no longer responsible for the products once they have been delivered to the ocean carrier company. The point of sale is the delivery of the products to the carrier chartered by the seller.

(ii) Revenue recognition from Rendering of Services

When the outcome of a transaction involving the rendering of services can be reliably estimated, revenue is recognized by reference to the stage of completion of the transaction at the date of the reporting period, and when it is probable that the economic benefits associated with the transaction will flow to the Arauco.

Arauco mainly provides power supply services which are transacted principally in the spot market of the Sistema Interconectado Central (“Central Interconnected System”). According to current regulations, the prices on that market called “Marginal Costs” are calculated by the Centro de Despacho Económico de Carga del Sistema Interconectado Central (CDEC–SIC) (“Economic Load Dispatch Center of the Central Interconnected System”) and are generally recognized in the period in which the services are rendered.

Electrical power is generated as a by-product of the pulp and wood process and is a complementary business to it, which is initially supplied to the group’s subsidiaries and any surplus is sold to the CDEC-SIC.

Arauco provides other non-core services such as port services and pest control whose revenues are derived from fixed price service contracts, generally recognized during the period of the service contract on a straight-line basis over the term of the contract.

Revenues from operating segments mentioned in Note 24 are measured in accordance with the policies indicated in the preceding paragraphs.

Revenues from inter-segment sales (which are made at market prices) are eliminated in the interim consolidated financial statements.

u) Minimum dividend

Article No. 79 of the Chilean Corporations Law states that, unless otherwise unanimously agreed by the shareholders, corporations must distribute annually at least 30% of net income for the current year as cash dividend to shareholders determined in proportion to their shares or in the proportion established in the by-laws for preferred shares, if any, except where necessary to absorb accumulated losses from prior years.

The General Shareholders’ Meeting of Arauco agreed to distribute annual dividends at 40% of net distributable income, including an interim dividend to be distributed at year end. Dividends payable are recognized as a liability in the financial statements in the period when they are declared and approved by the Arauco’s shareholders or when arises the corresponding present obligation based on existing legislation or distribution policies established by the Shareholders’ Meeting.

The dividends payable provision is registered for 40% of the liquid distributable profit and against a lower equity, based on the yearly resolution of the Shareholders’ Meeting.

Dividends payable are presented in the line item “Other current non-financial liabilities” in the consolidated statement of financial position.

27

CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Consolidated Financial Statements

June 30, 2016

Amounts in thousands of U.S. dollars, except as indicated

v) Earning per share

Basic earnings per share are calculated by dividing the net profit for the period attributable to the parent company by the weighted average number of ordinary shares outstanding during the period, excluding the average number of shares in the Company held by a subsidiary, if such circumstance exists. Arauco has not performed any type of transaction with a potential dilutive effect that would cause diluted earnings per share to be different from basic earnings per share.

w) Impairment

Non-financial Assets

The recoverable amount of property, plant and equipment and other assets with finite useful lives are measured whenever there are any circumstances indicating that the assets have to recognize an impairment loss. Among the circumstances to consider as evidence of impairment are significant declines in the assets’ market value, significant adverse changes in the technological environment, obsolescence or physical damages of assets and changes in the manner in which the asset is used or expected to be used). Arauco evaluates at the end of each reporting period whether there is any evidence of the indications above mentioned.

A previously recognized impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount, however the reversal is limited to the amount recognized in previous years.

For the purposes of assessing impairment losses, assets are grouped at the lowest level for which there is identifiable cash flows separately for each cash-generating unit. Non-financial assets, other than goodwill, which had recognized an impairment loss, are reviewed at the end of each reporting period whether there are any circumstances indicating that an impairment loss previously recognized may no longer exists or has decreased.

“Cash-generating units” are the smallest identifiable groups of those cash inflows that are largely independent of the cash inflow from other assets or groups of assets.

Goodwill

Goodwill and intangible assets with indefinite useful life are tested annually for impairment or whenever circumstances indicate it. The recoverable amount of an intangible asset is the higher of its fair value less costs to sell and its value in use. An impairment loss is recognized whenever the carrying amount exceeds the recoverable amount.

A cash-generating unit, for which goodwill has been allocated, is tested for impairment annually or more frequently when there are circumstances indicating that the unit may be impaired. If the recoverable amount of the cash-generating unit is less than its carrying amount, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to other assets pro rata based on the carrying amount of each asset in the unit. Any impairment loss of goodwill is recognized directly in profit or loss. An impairment loss recognized for goodwill is not reversed in subsequent periods.

28

CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Consolidated Financial Statements

June 30, 2016

Amounts in thousands of U.S. dollars, except as indicated

Goodwill is allocated to cash-generating units for impairment testing purposes. The allocation is made between cash-generating units or groups of cash generating units expected to benefit from the synergies of the combination.

Financial Assets

At the end of each reporting period, an assessment is performed in order to identify whether there is any objective evidence that a financial asset or a group of financial assets may have been impaired. Financial assets are impaired only when there is objective evidence that, as a result of one or more loss events that occurred after the initial recognition of a financial asset, the estimated future cash flows of the financial asset have been affected. Impairment losses are recognized in the consolidated statement of profit or loss.

An allowance for doubtful accounts is established based on an analysis of the maturity of the portfolio and considering the insurance coverage on accounts receivable. Other conditions are assessed, for example, when there is objective evidence of default or delinquency in payments under the original sale terms and when the customer enters into bankruptcy or financial reorganization, and is written-off when Arauco has exhausted all levels of recovery of the receivable in a reasonable time.

The allowance for doubtful accounts is measured as the difference between the carrying amount of receivables and the present value of estimated future cash flows. The carrying amount of the receivable is reduced through the use of the allowance. If the impairment loss decreases in later periods, it is reversed either directly or by adjusting the provision for doubtful accounts, with effect in profit or loss.

x) Employee Benefits

Arauco constitutes labor obligations for severance payable in all circumstances for certain of its employees with at least 5 years of work in the Company, based on the terms of the staff’s collective and individual bargaining agreements.

The related provision is an estimate of the years of service to be recognized as a future labor obligation liability, in accordance with contracts between Arauco and its employees and pursuant to actuarial valuation criteria for this type of liability. This post-employment benefit is considered a defined benefit plan.

The main factors considered for calculating the actuarial value of severance obligation for years of service are employee turnover, salary increases and life expectancy of the workers included in this benefit.

Actuarial gains and losses are recognized in other comprehensive income in the year they are incurred.

These obligations are related to post-employee benefits in accordance with current standards.

y) Employee Vacations

Arauco recognizes the expense for employee vacation according to labor legislation in each country on an accrual basis.

29

CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Consolidated Financial Statements

June 30, 2016

Amounts in thousands of U.S. dollars, except as indicated

This obligation is presented in the line item “Trade and Other current payables” and “Trade and Other non-current payables” depending on their respective maturities in the consolidated statement of financial position.

z) Recent accounting pronouncements

a) Standards, interpretations and amendments that are mandatory for the first time for annual periods beginning on January 1, 2016:

Amendments and improvements	Contents	Mandatory application for annual periods beginning on or after
IFRS 11-Amendments	Establishes how to account for the acquisition of an interest in a joint venture operation that qualifies as a business.	January 1, 2016
IAS 16 and IAS 38 – Amendments	This amendment clarifies that the use of revenue-based methods to calculate the depreciation of an asset is not appropiate. It also clarifies that revenue is generally presumed to be an inappropiate basis for measuring the consumption of the economic benefits embodied in an intangible asset.	January 1, 2016
IAS 16 and IAS 41 – Amendments	These amendments change the reporting for bearer plants, which should be accounted for in the same way as property, plant and equipment. The amendments include them in the scope of IAS 16 rather than IAS 41.	January 1, 2016
IAS 27-Amendments	Allows entities to use the equity method to account for investments in subsidiaries, join ventures and associates in their separate financial statements.	January 1, 2016
IFRS 10, and IAS 28-Amendments	These amendmets address an inconsistency between IFRS 10 and IAS 28 regarding the contribution of assets between an investor and its associate or join venture. The amendments aim at clarifying IAS 1 to address perceived impediments to preparers exercising their judgement in presenting their financial reports	January 1, 2016
IAS 1-Amendments	The amendments aim at clarifying IAS 1 to address perceived impediments to preparers exercising their judgement in presenting their financial reports.	January 1, 2016
IFRS 10, and IAS 28-Amendments	Amendments address issues that have arisen in the context of applying the consolidation exception for investment entities.	January 1, 2016
Annual Improvements 2012-2014 Cycle	Adds specific guidance in IFRS 5 for cases in which an entity reclassifies an asset from held for sale to held for distribution or vice versa and cases in which held-for-distribution accounting is discontinued.	January 1, 2016

The adoption of the standards, amendments and interpretations described above will not have a significant impact on the Interim Consolidated Financial Statements of Arauco.

30

CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Consolidated Financial Statements

June 30, 2016

Amounts in thousands of U.S. dollars, except as indicated

b) Standards, interpretations and amendments, the application of which is not yet mandatory, which have not been adopted in advance:

Standards and interpretations	Contents	Mandatory application for annual periods beginning on or after
IFRS 9	Financial Instruments The complete version of IFRS 9 replaces most of the guidance in IAS 39. IFRS 9 retains but simplifies the mixed measurement model and establishes three primary measurement categories for financial assets. There is now a new expected credit losses model that replaces the incurred loss impairment model used in IAS 39.	January 1, 2018
IFRS 15	This standard defines a new model to recognized revenue from contracts with costumers.	January 1, 2018
IFRS 16	Leases Specifies guidelines to recognise, measure, present and disclose leases. The standard provides a single lessee accounting model, requiring lessees to recognise assets and liabilities for all leases unless the lease term is 12 months or less or the underlying asset has a low value.	January 1, 2019
Amendments and improvements	Contents	Mandatory application for annual periods beginning on or after
IAS 7	Statement of Cash Flows Introduces additional disclosure that enable users of financial statements to evaluate changes in liabilities arising from financial activities.	January 1, 2017
IAS 12	Income taxes Clarifies the accounting for deferred tax assets relating to debt instruments measured at fair value.	January 1, 2017
IFRS 2	Share-based payment Clarifies the measurement of cash settled share-based payment transactions and the accounting for amendments that change such payments to equity instruments.	January 1, 2018

Arauco estimates that the adoption of standards, amendments and interpretations described above will not have a significant impact on the Interim Consolidated Financial Statements during the period of their initial application.

NOTE 2. CHANGES IN POLICIES AND ACCOUNTING ESTIMATES

There have been no changes in the treatment of estimates, amendments and accounting policies with respect to same period of last year.

31

CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Consolidated Financial Statements

June 30, 2016

Amounts in thousands of U.S. dollars, except as indicated

NOTE 3. DISCLOSURE OF OTHER INFORMATION

a) Disclosure of Information on Issued Capital

At the date of these interim consolidated financial statements the share capital of Arauco is ThU.S.$353,618.

100% of Capital corresponds to ordinary shares

	06-30-2016	12-31-2015
Description of Ordinary Capital Share Types	100% of Capital corresponds to ordinary shares
Number of Authorized Shares by Type of Capital in Ordinary Shares	113,159,655
Nominal Value of Shares by Type of Capital in Ordinary Shares	ThU.S.$0.0031210 per share
Amount of Capital in Shares by Type of Ordinary Shares that Constitute Capital	ThU.S.$353,618
	06-30-2016	12-31-2015
Number of Shares Issued and Fully Paid by Type of Capital in Ordinary Shares	113,159,655

b) Dividends paid

At June 30, 2016 there was no payment of dividends.

The interim dividend paid in December 2015 was equivalent to 15% of the distributable net income calculated as of the end of September 2015 and was considered as a decrease in the statement of changes in equity.

The final dividend paid each year corresponds to the difference between the 40% of the prior year distributable net profit and the amount of the interim dividend paid.

The ThU.S.$43,732 (ThU.S.$79,609 as of June 30, 2015) presented in the statement of changes in equity correspond to the minimum dividend provision recorded for the period 2016.

On the Cash Flow Statement on Dividends Paid an amount of MUS$ 100,250 at June 30, 2016 (ThU.S.$98,638 at June 30, 2015) of which ThU.S.$99,221 (ThU.S.$98,072 at June 30, 2015) correspond to the payment of dividends of parental company.

The following are the dividends paid and per share amounts during the period 2015 and 2016:

Detail of Dividend Paid, Ordinary Shares
Dividend Paid	Interim Dividend
Type of Shares for which there is a Dividend Paid	Ordinary Shares
Date of Dividend Paid	05-11-2016
Amount of Dividend	ThU.S.$99,221
Number of Shares for which Dividends are Paid	113,159,655
Dividend per Share, Ordinary Shares	U.S.$0.87683

32

CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Consolidated Financial Statements

June 30, 2016

Amounts in thousands of U.S. dollars, except as indicated

Detail of Dividend Paid, Ordinary Shares
Dividend Paid	Final Dividend
Type of Shares for which there is a Dividend Paid	Ordinary Shares
Date of Dividend Paid	16-12-2015
Amount of Dividend	ThU.S.$43,580
Number of Shares for which Dividends are Paid	113,159,655
Dividend per Share	U.S.$0.38512
Detail of Dividend Paid, Ordinary Shares
Dividend Paid	Final Dividend
Type of Shares for which there is a Dividend Paid	Ordinary Shares
Date of Dividend Paid	05-12-2015
Amount of Dividend	ThU.S.$98,072
Number of Shares for which Dividends are Paid	113,159,655
Dividend per Share	U.S.$0.86667

c) Disclosure of Information on Reserves

Other reserves comprise reserves of exchange differences on translation, reserves of cash flow hedges and other reserves. Arauco does not have any restrictions associated with these reserves.

Reserves of exchange differences on translation

Reserves of exchange differences on translation correspond to exchange differences relating to the translation of the results and net assets of Arauco’s subsidiaries whose functional currency is other than Arauco’s presentation currency.

Reserves of cash flow hedges

Reserves of cash flow hedges correspond to the portion of net gain or loss of derivative financial instruments that complies with the requirements of hedge accounting at the end of each period.

Reserve of Actuarial Losses in Defined Benefit Plans

This corresponds to changes in the present value of the obligation for defined benefits resulting from experience adjustments (the effect of the differences between the previous actuarial assumptions and the events that occurred within the context of the plan) and the effects of the changes in the actuarial assumptions.

Other reserves

This mainly corresponds to the share of other comprehensive income of investments in associates and joint ventures.

d) Other items in the Statement of Income

The table below sets forth other income, other expenses, finance income, finance costs and share of profit (loss) of associates and joint ventures as of June 30, 2016 and 2015:

33

CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Consolidated Financial Statements

June 30, 2016

Amounts in thousands of U.S. dollars, except as indicated

	January - June						April - June
	Unaudited						Unaudited
	2016			2015			2016			2015
	ThU.S.$			ThU.S.$			ThU.S.$			ThU.S.$
Classes of Other Income
Other Income, Total		119,766			110,156			61,749			54,636
Gain from changes in fair value of biological assets (See note 20)		98,874			94,062			48,399			47,280
Net income from insurance compensation		2,226			1,443			770			40
Revenue from export promotion		1,129			1,524			510			679
Leases received		1,561			1,277			742			707
Gain on sales of assets		10,147			3,954			7,269			3,020
Access easement		86			—			86			—
Other operating results (sale materials and waste, rent of easements, income tax recovery)		5,743			7,896			3,973			2,910
Classes of Other Expenses by activity
Total of other expenses by activity		(33,411	)		(54,311	)		(12,902	)		(28,799	)
Depreciation		(632	)		(613	)		(314	)		(227	)
Legal payments		(397	)		(1,536	)		864			(742	)
Impairment provision properties, plants and equipment and others		(1,878	)		(1,257	)		(951	)		(502	)
Plants stoppage operating expenses		(2,004	)		(2,617	)		(465	)		(2,357	)
Expenses projects		—			(373	)		—			(103	)
Loss of asset sales		(864	)		(813	)		(584	)		(566	)
Loss and repair of assets		(566	)		(165	)		(335	)		(57	)
Loss of forest due to fires		(2,064	)		(29,855	)		(2,064	)		(18,463	)
Other Taxes		(4,928	)		(5,652	)		(3,066	)		(2,989	)
Research and development expenses		(1,139	)		(1,161	)		(576	)		(571	)
Compensation and eviction		(2,454	)		(1,044	)		(2,254	)		(956	)
Fines, readjustments and interest		(303	)		(841	)		(151	)		(526	)
Loss on disposal of associates		(10,369	)		—			—			—
Other expenses (donations, repayments insurance)		(5,813	)		(8,384	)		(3,006	)		(740	)
Classes of financing income
Financing income, total		17,897			19,277			6,585			8,794
Financial income from mutual funds - deposits		6,308			5,527			3,067			918
Financial income resulting from swap - forward		8,069			610			1,524			(595	)
Financial income resulting from loans with related companies		—			9,176			—			9,176
Other financial income		3,520			3,964			1,994			(705	)
Classes of financing costs
Financing costs, Total		(135,770	)		(131,152	)		(65,485	)		(62,956	)
Interest expense, Banks loans		(16,916	)		(21,984	)		(8,221	)		(12,938	)
Interest expense, Bonds		(91,277	)		(97,779	)		(45,593	)		(47,114	)
Interest expense, financial instruments		(18,838	)		(2,064	)		(8,723	)		776
Other financial costs		(8,739	)		(9,325	)		(2,948	)		(3,680	)
Share of profit (loss) of associates and joint ventures accounted for using equity method
Total		10,031			(986	)		5,993			(1,601	)
Investments in associates		8,787			(1,285	)		5,512			(1,586	)
Joint ventures		1,244			299			481			(15	)

34

CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Consolidated Financial Statements

June 30, 2016

Amounts in thousands of U.S. dollars, except as indicated

The analysis of expenses by nature contained in these interim consolidated financial statements is presented below:

	January - June					April - June
	Unaudited					Unaudited
Cost of sales	2016 ThU.S.$			2015 ThU.S.$		2016 ThU.S.$			2015 ThU.S.$
Timber		375,592			366,475		186,742			182,046
Forestry labor costs		275,293			314,094		143,565			164,456
Depreciation and amortization		183,986			182,401		96,557			94,577
Maintenance costs		152,612			154,544		80,806			84,114
Chemical costs		237,271			270,843		119,320			143,168
Sawmill Services		58,924			61,564		31,092			33,287
Others Raw Materials		110,718			64,802		54,666			36,531
Others Indirect costs		65,824			89,721		38,871			45,530
Energy and fuel		69,613			87,381		37,194			40,529
Cost of electricity		20,313			26,772		8,912			12,222
Wage and salaries		151,020			158,650		76,917			80,256
Total		1,701,166			1,777,247		874,642			916,716
	January - June					April - June
	Unaudited					Unaudited
Distribution cost	2016 ThU.S.$			2015 ThU.S.$		2016 ThU.S.$			2015 ThU.S.$
Selling costs		16,733			25,080		9,151			12,095
Commissions		7,140			8,010		3,623			4,369
Insurance		1,842			2,644		922			1,363
Provision for doubtful accounts receivable		(25	)		1,849		(68	)		407
Other selling costs		7,776			12,577		4,674			5,956
Shipping and freight costs		213,088			238,246		110,481			124,629
Port services		13,160			12,655		6,778			6,491
Freights		167,467			182,791		86,770			94,051
Other shipping and freight costs		32,461			42,800		16,933			24,087
Total		229,821			263,326		119,632			136,724
	January - June					April - June
	Unaudited					Unaudited
Administrative expenses	2016 ThU.S.$			2015 ThU.S.$		2016 ThU.S.$			2015 ThU.S.$
Wage and salaries		105,155			117,680		58,867			65,166
Marketing, advertising, promotion and publications expenses		4,639			4,857		2,317			2,562
Insurance		12,237			15,659		6,317			7,738
Depreciation and amortization		13,237			12,687		7,133			6,332
Computer services		16,338			16,764		10,688			10,349
Lease rentals (offices, warehouses and machinery)		8,360			7,099		5,088			3,627
Donations, contributions, scholarships		5,652			4,594		2,824			2,882
Fees (legal and technical advisories)		20,038			22,544		10,149			11,558
Property taxes, patents and municipality rights		10,229			10,560		6,477			5,844
Other administration expenses (travel within and outside the country, cleaning services, security, basic services)		55,931			69,922		29,248			37,840
Total		251,816			282,366		139,108			153,898

35

CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Consolidated Financial Statements

June 30, 2016

Amounts in thousands of U.S. dollars, except as indicated

		January-June				April - June
		Unaudited				Unaudited
		2016		2015		2016		2015
Expenses for	Note	ThU.S.$		ThU.S.$		ThU.S.$		ThU.S.$
Depreciations	7		192,512		190,757		100,980		98,947
Employee benefits	10		259,700		270,626		137,603		142,195
Amortization	19		6,505		6,026		3,485		3,118

e) Auditor Fees and Number of Employees (Not audited)

At the end of this period, the auditor’s fees and number of employees are as follows:

	06-30-2016
Auditors fees	ThU.S.$
Audit services		1,072
Other services
Tax services		196
Others		215
TOTAL		1,483
Number of employees		No.
		14,748

NOTE 4. INVENTORIES

	06-30-2016
	Unaudited		12-31-2015
Components of Inventory	ThU.S.$		ThU.S.$
Raw materials		82,390		85,999
Production supplies		102,922		97,755
Products in progress		68,620		62,475
Finished goods		483,932		503,059
Spare Parts		170,637		160,700
Total Inventories		908,501		909,988

Inventories recognized as cost of sales at June 30, 2016 were ThU.S.$1,658,194 (ThU.S.$1,704,234 at June 30, 2015).

In order to have the inventories recorded at net realizable value at June 30, 2016, a net decrease of inventories was recognized associated with a higher provision of obsolescence of ThU.S.$1,265 (lower provision of ThU.S.$1,833 at June 30, 2015). As of June 30, 2016, the amount of obsolescence provision is ThU.S.$21,367 (ThU.S.$20,102 at December 31, 2015).

At June 30, 2016 there were inventory write-offs of ThU.S.$693 (ThU.S.$2,484 at June 30, 2015)

36

CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Consolidated Financial Statements

June 30, 2016

Amounts in thousands of U.S. dollars, except as indicated

The inventory obsolescence provision is calculated based on the sales conditions of products and age of inventory (inventory turnover).

As of the date of these interim consolidated financial statements, there are no inventories pledged as security to report.

Agricultural Products

Agricultural Products are mainly forestry products that are intended for sale in the normal course of our operations and are measured at fair value less costs to sell at the point of harvest at the end of each reporting period Agricultural products are classified as raw materials within the line item inventories.

NOTE 5. CASH AND CASH EQUIVALENTS

Cash and cash equivalents include cash on hand, bank checking account balances, time deposits, repurchase agreements and mutual funds. These are short-term highly liquid investments that are readily convertible to known amounts of cash, and are subject to an insignificant risk of changes in value.

The investment objective of time deposits and repurchase agreements is to maximize the amounts of cash surpluses in the short-term. These instruments are permitted under Arauco’s Investment Policy which allows investing in fixed income securities. These instruments have a maturity of less than three months from the date of acquisition.

Arauco invests in local and international mutual funds in order to maximize the returns of cash surpluses denominated in Chilean Pesos or in foreign currencies such as U.S. Dollars or Euros. These instruments are permitted under Arauco’s Investment Policy.

As of the date of these interim consolidated financial statements, there are no amounts of cash and cash equivalents with restrictions on use.

	06-30-2016
	Unaudited		12-31-2015
Components of Cash and Cash Equivalents	ThU.S.$		ThU.S.$
Cash on hand		218		201
Bank checking account balances		161,979		143,123
Time deposits		227,360		159,912
Mutual funds		133,581		196,789
Other cash and cash equivalents (*)		4,222		—
Total		527,360		500,025

The risk classification of the mutual funds in effect as of June 30, 2016 and December 31, 2015 is shown bellow.

	June 2016 ThU.S.$		December 2015
	Unaudited		ThU.S.$
AAAfm		113,138		196,749
AAfm		24,601		40
Total Mutual Funds		137,739		196,789

37

CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Consolidated Financial Statements

June 30, 2016

Amounts in thousands of U.S. dollars, except as indicated

NOTE 6. INCOME TAXES

The tax rates applicable in the countries in which Arauco operates are 24% in Chile, 35% in Argentina, 34% in Brazil, 25% in Uruguay and 34% in the United States (federal tax).

On September 29, 2014, the Official Gazette published Law No. 20,780, which introduced various amendments to the current income tax system, as well as to other taxes. The main amendment was the establishment of an option between two tax regimes: attributed income system and the partially integrated system. One of the effects of the regime selection is that it attaches a progressive increase in the First Category Tax for the fiscal years of 2014, 2015, 2016 and 2017 onwards, increasing to 21%, 22,5%, 24% y 25%, respectively, if the Company chooses the application of an attributed income system, or an increase to 21%, 22.5%, 24%, 25.5% y 27% for the fiscal years 2014, 2015, 2016 and 2017, if the Company chooses the application of the partially integrated system.

Subsequently, on February 29, 2016, the Official Gazette publishes Law No. 20,899, which introduced amendments to Law No. 20,780. Among the main amendments is the incorporation of certain limitations for applying to the attributed income system, and therefore Arauco’s Chilean companies must apply the general rule, that is, the partially integrated system.

Deferred Tax Assets

The following table sets forth the deferred tax assets as of the dates indicated:

	06-30-2016
	Unaudited			12-31-2015
Deferred Tax Assets	ThU.S.$			ThU.S.$
Deferred tax Assets relating to Provisions		13,959			13,498
Deferred tax Assets relating to Accrued Liabilities		9,528			8,535
Deferred tax Assets relating to Post-Employment benefits		17,479			15,480
Deferred tax Assets relating to Property, Plant and equipment		7,861			7,730
Deferred tax Assets relating to Financial Instruments		16,898			21,805
Deferred tax Assets relating to Tax Losses Carryforwards		36,498			35,751
Deferred tax Assets relating to Inventories		3,919			4,240
Deferred tax Assets relating to Provisions for Income		5,087			3,997
Deferred tax Assets relating to Allowance for Doubful Accounts		5,059			4,572
Intangible revaluation differences		33			56
Deferred tax Assets relating to Other Deductible Temporary Differences		22,449			24,587
Total Deferred Tax Assets		138,770			140,251
Netting presentation		(134,841	)		(136,516	)
Net Effect		3,929			3,735

38

CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Consolidated Financial Statements

June 30, 2016

Amounts in thousands of U.S. dollars, except as indicated

Certain subsidiaries of Arauco, as of the date of these interim consolidated financial statements, present tax losses for which we estimate that, given the projection of future profits, will allow the recovery of these assets. The total amount of these tax losses is ThU.S.$116,216 (ThU.S.$112,383 at December 31, 2015), which are mainly originated by operational and financial losses.

In addition, as of the closing of these interim consolidated financial statements there are ThU.S.$ 82,350 (ThU.S.$ 114,507 at December 31, 2015) of non-recoverable tax losses from companies in Uruguay as joint operations based on the participation of Arauco, for which deferred tax assets have not been recognized. The estimated recovery period exceeds the expiry date of such tax losses.

Deferred Tax Liabilities

The following table sets forth the deferred tax liabilities as of the dates indicated:

	06-30-2016
	Unaudited			12-31-2015
Deferred Tax Liabilities	ThU.S.$			ThU.S.$
Deferred tax Liabilities relating to Property, plant and equipment		926,063			930,608
Deferred tax Liabilities relating to Financial Instruments		4,934			6,376
Deferred tax Liabilities relating to Biological Assets		711,361			693,103
Deferred tax Liabilities relating to Inventory		32,033			31,912
Deferred tax Liabilities due to Prepaid Expenses		43,017			40,907
Deferred tax Liabilities due to Intangible		27,568			26,419
Deferred tax Liabilities relating to Other Taxable Temporary Differences		26,700			26,203
Total Deferred Tax Liabilities		1,771,676			1,755,528
Netting presentation		(134,841	)		(136,516	)
Net Effect		1,636,835			1,619,012

The effect of changes in current and deferred tax liabilities related to cash flow hedges corresponds to a credit of ThU.S.$1,042 as of June 30, 2016 (compared to a credit of ThU.S.$2,092 as of June 30, 2015), which is presented in consolidated statements of other comprehensive income and accumulated in Reserves for cash flow hedges in the consolidated statement of changes in equity.

39

CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Consolidated Financial Statements

June 30, 2016

Amounts in thousands of U.S. dollars, except as indicated

Reconciliation of deferred tax assets and liabilities

Unaudited	Opening Balance 01-01-2016		Deferred tax Expenses (Income)			Deferred tax of items charged to other comprehensive income			Increase (decrease) Net exchange differences			Closing balance 06/30/2016
Deferred Tax Assets	ThU.S.$		ThU.S.$			ThU.S.$			ThU.S.$			ThU.S.$
Deferred tax Assets relating to Provisions		13,498		151			—			310			13,959
Deferred tax Assets relating to accrued liabilities		8,535		989			—			4			9,528
Deferred tax Assets relating to Post-Employment benefits		15,480		1,158			788			53			17,479
Deferred tax Assets relating to Property, Plant and equipment		7,730		131			—			—			7,861
Deferred tax Assets relating to Financial Instruments		21,805		1,325			(6,232	)		—			16,898
Deferred tax Assets relating to tax losses carryforwards		35,751		(2,908	)		—			3,655			36,498
Deferred tax assets relating to provisions for income		4,240		(316	)		—			(5	)		3,919
Deferred tax assets relating to provisions for income		3,997		1,090			—			—			5,087
Deferred tax assets relating to provision for doubful accounts		4,572		429			—			58			5,059
Intangible revaluation differences		56		(23	)		—			—			33
Deferred tax assets relating to other deductible temporary differences		24,587		(2,695	)		—			557			22,449
Total deferred tax assets		140,251		(669	)		(5,444	)		4,632			138,770
Unaudited	Opening Balance 01-01-2016		Deferred tax Expenses (Income)			Deferred tax of items charged to other comprehensive income			Increase (decrease) Net exchange differences			Closing balance 06/30/2016
Deferred Tax Liabilities	ThU.S.$		ThU.S.$			ThU.S.$			ThU.S.$			ThU.S.$
Deferred tax liabilities relating to property, Plant and equipment		930,608		(9,211	)		—			4,666			926,063
Deferred tax liabilities relating to financial instruments		6,376		(1,443	)		—			1			4,934
Deferred tax liabilities relating to biological assets		693,103		3,322			—			14,936			711,361
Deferred tax liabilities relating to inventory		31,912		105			—			16			32,033
Deferred tax liabilities due to prepaid expenses		40,907		2,300			—			(190	)		43,017
Deferred tax liabilities due to intangible		26,419		(141	)		—			1,290			27,568
Deferred tax liabilities relating to other taxable temporary differences		26,203		(528	)		—			1,025			26,700
Total deferred tax liabilities		1,755,528		(5,596	)		—			21,744			1,771,676

40

CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Consolidated Financial Statements

June 30, 2016

Amounts in thousands of U.S. dollars, except as indicated

	Opening Balance 01-01-2015		Deferred tax Expenses (Income)			Deferred tax of items charged to other comprehensive income		Increase (decrease) from business combinations		Increase (decrease) Net exchange differences			Closing balance 12/31/2015
Deferred Tax Assets	ThU.S.$		ThU.S.$			ThU.S.$		ThU.S.$		ThU.S.$			ThU.S.$
Deferred tax Assets relating to Provisions		14,923		(813	)		—		—		(612	)		13,498
Deferred tax Assets relating to accrued liabilities		11,120		(2,561	)		—		—		(24	)		8,535
Deferred tax Assets relating to Post-Employment benefits		13,859		971			692		—		(42	)		15,480
Deferred tax Assets relating to Property, Plant and equipment		11,199		(3,469	)		—		—		—			7,730
Deferred tax Assets relating to Financial Instruments		14,129		23			7,653		—		—			21,805
Deferred tax Assets relating to tax losses carryforwards		44,832		(959	)		—		—		(8,122	)		35,751
Deferred tax assets relating to provisions for income		3,157		1,487			—		—		(404	)		4,240
Deferred tax assets relating to provisions for income		5,827		(1,825	)		—		—		(5	)		3,997
Deferred tax assets relating to provision for doubful accounts		3,855		797			—		—		(80	)		4,572
Intangible revaluation differences		1,080		(1,024	)		—		—		—			56
Deferred tax assets relating to other deductible temporary differences		34,302		(8,892	)		—		—		(823	)		24,587
Total deferred tax assets		158,283		(16,265	)		8,345		—		(10,112	)		140,251
	Opening Balance 01-01-2015		Deferred tax Expenses (Income)			Deferred tax of items charged to other comprehensive income		Increase (decrease) from business combinations		Increase (decrease) Net exchange differences			Closing balance 12/31/2015
Deferred Tax Liabilities	ThU.S.$		ThU.S.$			ThU.S.$		ThU.S.$		ThU.S.$			ThU.S.$
Deferred tax liabilities relating to property, plant and equipment		941,666		5,221			—		—		(16,279	)		930,608
Deferred tax liabilities relating to financial instruments		4,906		1,470			—		—		—			6,376
Deferred tax liabilities relating to biological assets		681,505		18,823			—		16,051		(23,276	)		693,103
Deferred tax liabilities relating to inventory		25,688		6,224			—		—		—			31,912
Deferred tax liabilities due to prepaid expenses		40,888		(184	)		—		—		203			40,907
Deferred tax liabilities due to intangible		32,990		2,666			—		—		(9,237	)		26,419
Deferred tax liabilities relating to other taxable temporary differences		29,506		(7,961	)		—		—		4,658			26,203
Total deferred tax liabilities		1,757,149		26,259			—		16,051		(43,931	)		1,755,528

41

CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Consolidated Financial Statements

June 30, 2016

Amounts in thousands of U.S. dollars, except as indicated

Temporary Differences

The following tables summarize the deductible and taxable temporary differences:

	06-30-2016
	Unaudited						12-31-2015
Detail of classes of Deferred Tax Temporary Differences	Deductible Difference ThU.S.$			Taxable Difference ThU.S.$			Deductible Difference ThU.S.$			Taxable Difference ThU.S.$
Deferred Tax Assets		102,272						104,500
Deferred Tax Assets - Tax losses		36,498						35,751
Deferred Tax Liabilities					1,771,676						1,755,528
Total		138,770			1,771,676			140,251			1,755,528
	January - June						April - June
	Unaudited
Detail of Temporary Difference Income and Loss Amounts	2016 ThU.S.$			2015 ThU.S.$			2016 ThU.S.$			2015 ThU.S.$
Deferred Tax Assets		2,239			(2,960	)		2,750			2,745
Deferred Tax Assets - Tax losses		(2,908	)		(1,722	)		(5,605	)		(6,102	)
Deferred Tax Liabilities		5,596			(9,184	)		14,024			7,202
Total		4,927			(13,866	)		11,169			3,845

Income Tax Expense

Income tax expense consists of the following:

	January - June						April - June
	Unaudited
Income Tax composition	2016 ThU.S.$			2015 ThU.S.$			2016 ThU.S.$			2015 ThU.S.$
Current income tax expense		(47,337	)		(66,758	)		(23,370	)		(38,206	)
Tax benefit arising from unrecognized tax assets previously used to reduce current tax expense		—			1,166			—			405
Previous period current tax adjustments		487			2,836			(100	)		(2,157	)
Other current tax expenses		2,371			(617	)		116			(252	)
Current Tax Expense, Net		(44,479	)		(63,373	)		(23,354	)		(40,210	)
Deferred tax income (expense) relating to origination and reversal of temporary differences		7,835			(12,144	)		16,774			9,947
Tax benefit arising from previously unrecognized tax assets used to reduce deferred expense from taxes		(2,908	)		(1,722	)		(5,605	)		(6,102	)
Total deferred Tax Expense, Net		4,927			(13,866	)		11,169			3,845
Income Tax Expense, Total		(39,552	)		(77,239	)		(12,185	)		(36,365	)

42

CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Consolidated Financial Statements

June 30, 2016

Amounts in thousands of U.S. dollars, except as indicated

The following table sets forth the current income tax expense by foreign and domestic companies at June 30 2016 and 2015:

	January - June						April - June
	Unaudited
	2016 ThU.S.$			2015 ThU.S.$			2016 ThU.S.$			2015 ThU.S.$
Foreign current income tax expense		(16,352	)		(27,091	)		(11,427	)		(14,109	)
Domestic current income tax expense		(28,127	)		(36,282	)		(11,927	)		(26,101	)
Total current income tax expense		(44,479	)		(63,373	)		(23,354	)		(40,210	)
Foreign deferred tax expense		(3,502	)		(3,807	)		1,659			(2,103	)
Domestic deferred tax expense		8,429			(10,059	)		9,510			5,948
Total deferred tax expense		4,927			(13,866	)		11,169			3,845
Total tax income (expense)		(39,552	)		(77,239	)		(12,185	)		(36,365	)

Reconciliation of income tax expense from statutory tax rate to the effective tax rate.

The reconciliation of income tax expense is as follows:

	January - June						April - June
	Unaudited
Reconciliation of Income tax from Statutory Rate to Effective Tax Rate	2016 ThU.S.$			2015 ThU.S.$			2016 ThU.S.$			2015 ThU.S.$
Tax Expense at applicable tax rate		(35,986	)		(60,490	)		(16,717	)		(32,013	)
Tax effect of foreign tax rates		(2,346	)		(6,997	)		73			(5,332	)
Tax effect of revenues exempt from taxation		5,047			21,863			4,255			8,225
Tax effect of expense not deductible in determining taxable profit (tax loss)		(4,952	)		(26,123	)		3,153			(7,774	)
Tax rate effect from change in tax rate (opening balances)		(1,039	)		(1,216	)		(453	)		(389	)
Tax rate effect of adjustments for current tax of prior periods		487			2,836			(100	)		(2,157	)
Other tax rate effects		(763	)		(7,112	)		(2,396	)		3,075
Total adjustments to tax expense at applicable tax rate		(3,566	)		(16,749	)		4,532			(4,352	)
Tax expense at effective tax rate		(39,552	)		(77,239	)		(12,185	)		(36,365	)

43

CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Consolidated Financial Statements

June 30, 2016

Amounts in thousands of U.S. dollars, except as indicated

NOTE 7. PROPERTY, PLANT AND EQUIPMENT

	06-30-2016
	Unaudited			12-31-2015
Property, Plant and Equipment, Net	ThU.S.$			ThU.S.$
Construction in progress		316,054			251,519
Land		992,546			951,638
Buildings		2,187,192			2,182,643
Plant and equipment		3,280,364			3,346,675
Information technology equipment		23,570			26,210
Fixtures and fittings		10,435			11,860
Motor vehicles		16,756			16,721
Other property, plant and equipment		118,227			109,130
Total Net		6,945,144			6,896,396
Property, Plant and Equipment, Gross
Construction in progress		316,054			251,519
Land		992,546			951,638
Buildings		3,781,401			3,698,351
Plant and equipment		6,031,050			5,927,789
Information technology equipment		73,173			73,573
Fixtures and fittings		33,304			35,283
Motor vehicles		47,312			45,503
Other property, plant and equipment		141,153			131,894
Total Gross		11,415,993			11,115,550
Accumulated depreciation and impairment
Buildings		(1,594,209	)		(1,515,708	)
Plant and equipment		(2,750,686	)		(2,581,114	)
Information technology equipment		(49,603	)		(47,363	)
Fixtures and fittings		(22,869	)		(23,423	)
Motor vehicles		(30,556	)		(28,782	)
Other property, plant and equipment		(22,926	)		(22,764	)
Total		(4,470,849	)		(4,219,154	)

Description of Property, Plant and Equipment Pledged as Security for Liabilities

To date there are no significant assets pledged as collateral for these interim consolidated financial statements.

Commitments for project disbursements or for the acquisition of property, plant and equipment.

	06-30-2016
	Unaudited		12-31-2015
	ThU.S.$		ThU.S.$
Amount committed for the acquisition of property, plant and equipment		150,450		109,713
	06-30-2016
	Unaudited		12-31-2015
	ThU.S.$		ThU.S.$
Disbursements for property, plant and equipment under construction		120,163		215,035

44

CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Consolidated Financial Statements

June 30, 2016

Amounts in thousands of U.S. dollars, except as indicated

Movement on Property, Plant and Equipment

The following tables set forth the reconciliation of the carrying amount of property, plant and equipment as of June 30, 2016 and December 31, 2015:

Movement of Property, Plant and Equipment Unaudited	Construction in progress ThU.S.$			Land ThU.S.$			Buildings ThU.S.$			Plant and equipments ThU.S.$			IT Equipment ThU.S.$			Fixtures and fittings ThU.S.$			Motor vehicles ThU.S.$			Other Property, Plant and Equipment ThU.S.$			TOTAL ThU.S.$
Opening Balance 01-01-2016		251,519			951,638			2,182,643			3,346,675			26,210			11,860			16,721			109,130			6,896,396
Changes
Additions		120,163			7,579			3,903			45,987			150			68			1,503			10,059			189,412
Disposals		(44	)		(402	)		(350	)		(471	)		(104	)		—			(121	)		(1,019	)		(2,511	)
Retirements		—			(25	)		(447	)		(497	)		(1	)		—			(7	)		(179	)		(1,156	)
Depreciation		—			—			(60,166	)		(169,692	)		(2,556	)		(982	)		(1,942	)		(2,387	)		(237,725	)
Impairment loss recognized in profit or loss		—			—			40			(221	)		(8	)		(1	)		—			—			(190	)
Increase (decrease) through net exchange differences		5,102			33,419			576			57,688			156			112			172			3,693			100,918
Increase (decrease) through transfers from construction in progress		(60,686	)		337			60,993			895			(277	)		(622	)		430			(1,070	)		—
Total changes		64,535			40,908			4,549			(66,311	)		(2,640	)		(1,425	)		35			9,097			48,748
Closing balance 06-30-2016		316,054			992,546			2,187,192			3,280,364			23,570			10,435			16,756			118,227			6,945,144
Movement of Property, Plant and Equipment	Construction in progress ThU.S.$			Land ThU.S.$			Buildings ThU.S.$			Plant and equipments ThU.S.$			IT Equipment ThU.S.$			Fixtures and fittings ThU.S.$			Motor vehicles ThU.S.$			Other Property, Plant and Equipment ThU.S.$			TOTAL ThU.S.$
Opening Balance 01-01-2015		265,440			949,531			2,172,177			3,565,502			28,521			11,654			17,346			109,412			7,119,583
Changes
Additions		215,035			50,504			17,360			139,749			2,178			2,234			1,829			9,774			438,663
Acquisitions through business combinations		—			—			1,474			7			—			15			—			—			1,496
Disposals		(20	)		(591	)		(456	)		(583	)		(78	)		(5	)		(432	)		(10	)		(2,175	)
Retirements		(4,596	)		(44	)		(1,389	)		(1,942	)		(5	)		(7	)		(101	)		(481	)		(8,565	)
Depreciation		—			—			(117,337	)		(320,135	)		(5,302	)		(2,980	)		(4,110	)		(5,915	)		(455,779	)
Impairment loss recognized in profit or loss		—			—			—			(4,065	)		—			—			—			—			(4,065	)
Increase (decrease) through net exchange differences		(4,432	)		(52,284	)		(30,258	)		(103,972	)		(290	)		(519	)		(300	)		(6,025	)		(198,080	)
Reclassification of assets held for sale		—			2,759			2,676			(117	)		—			—			—			—			5,318
Increase (decrease) through transfers from construction in progress		(219,908	)		1,763			138,396			72,231			1,186			1,468			2,489			2,375			—
Total changes		(13,921	)		2,107			10,466			(218,827	)		(2,311	)		206			(625	)		(282	)		(223,187	)
Closing balance 12-31-2015		251,519			951,638			2,182,643			3,346,675			26,210			11,860			16,721			109,130			6,896,396

45

CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Consolidated Financial Statements

June 30, 2016

Amounts in thousands of U.S. dollars, except as indicated

The depreciation expense for the period ending June 30, 2016 and 2015 is as follows:

	January-June				April - June
	Unaudited				Unaudited
	2016		2015		2016		2015
Depreciation for the year	ThU.S.$		ThU.S.$		ThU.S.$		ThU.S.$
Cost of sales		180,666		179,157		94,911		92,852
Administrative expenses		10,052		9,905		5,294		4,939
Other expenses		1,794		1,695		775		1,156
Total		192,512		190,757		100,980		98,947

The useful lives of property, plant and equipment are estimated based on the expected use of the assets. The average useful lives by asset class are as follows:

	Useful Life (Average)
Buildings		58
Plant and equipment		30
Information technology equipment		8
Fixtures and fittings		28
Motor vehicles		7
Other property, plant and equipment		14

See Note 12 for details of capitalized borrowing costs.

46

CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Consolidated Financial Statements

June 30, 2016

Amounts in thousands of U.S. dollars, except as indicated

NOTE 8. LEASES

Lessee

	06-30-2016		12-31-2015
	Unaudited
	ThU.S.$		ThU.S.$
Property, Plant and Equipment under finance leases		133,377		132,836
Plant and equipment		133,377		132,836

Reconciliation of Financial Lease Minimum Payments:

	06-30-2016
	Unaudited
Periods	Present Value ThU.S.$
Less than one year		43,713
Between one and five years		84,877
More than five years		—
Total		128,590
	12-31-2015
Periods	Present Value ThU.S.$
Less than one year		36,862
Between one and five years		90,697
More than five years		—
Total		127,559

Lease obligations are presented in the consolidated statement of financial position in line items “Other current financial liabilities” and “Other non-current financial liabilities” depending on their respective maturities as stated above.

47

CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Consolidated Financial Statements

June 30, 2016

Amounts in thousands of U.S. dollars, except as indicated

Lessor

Reconciliation of Financial Lease Minimum Payments:

	06-30-2016
	Unaudited
Periods	Gross ThU.S.$		Interest ThU.S.$		Present Value ThU.S.$
Less than one year		111		—		111
Between one and five years		1		—		1
More than five years		—		—		—
Total		112		—		112
	12-31-2015
	Gross		Interest		Present Value
Periods	ThU.S.$		ThU.S.$		ThU.S.$
Less than one year		10		1		9
Between one and five years		6		—		6
More than five years		—		—		—
Total		16		1		15

Finance lease receivables are presented in the consolidated statement of financial position in line items “Trade and other current receivable” and “Trade and other non-current receivable” depending on their maturities stated above.

Arauco accounts for its lease contracts as finance leases. These lease contracts are for a term of less than five-years at market interest rates and leased assets are forestry machinery and equipment. They also include an early termination option, under general and special conditions stipulated in each contract.

Arauco holds leases as lessee and lessor, described in the previous tables, for which there are no impairment contingent payments or restrictions to report.

NOTE 9. REVENUE

	January - June				April - June
	Unaudited				Unaudited
Classes of revenue	2016 ThU.S.$		2015 ThU.S.$		2016 ThU.S.$		2015 ThU.S.$
Revenue from sales of goods		2,294,927		2,567,935		1,174,681		1,333,777
Revenue from rendering of services		58,384		86,125		32,605		43,168
Total		2,353,311		2,654,060		1,207,286		1,376,945

48

CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Consolidated Financial Statements

June 30, 2016

Amounts in thousands of U.S. dollars, except as indicated

NOTE 10. EMPLOYEE BENEFITS

Classes of Benefits and Expenses by Employee

	January - June				April - June
	Unaudited
	2016 ThU.S.$		2015 ThU.S.$		2016 ThU.S.$		2015 ThU.S.$
Employee expenses		259,700		270,626		137,603		142,195
Wages and salaries		252,935		258,956		134,233		132,648
Severance indemnities		6,765		11,670		3,370		9,547

	06-30-2016			12-31-2015
Discount rate		4.78	%		4.91	%
Inflation		2.92	%		2.95	%
Annual rate of wage growth		5.22	%		5.22	%
Mortality rate		RV-2009			RV-2009

sensitivities to assumptions	Th.U.S.$
Discount rate
Increase in 100 bps		(3,943	)
Decrease in 100 bps		4,608
Wage growth rates
Increase in 100 bps		4,546
Decrease in 100 bps		(3,967	)

The following tables set forth the balances and the reconciliation of the present value of severance indemnities obligations as of June 30, 2016 and December 31, 2015:

	06-30-2016			12-31-2015
	Unaudited
	ThU.S.$			ThU.S.$
Current		5,328			4,497
Non-current		60,320			51,936
Total		65,648			56,433
Reconciliation of the present value of severance indemnities obligation	06-30-2016 Unaudited ThU.S.$			12-31-2015 ThU.S.$
Opening balance		56,433			52,172
Current service cost		2,662			13,032
Interest cost		1,442			2,257
Gains or losses from changes in actuarial assumptions		437			(5,723	)
Actuarial gains and losses arising from experience		2,478			6,980
Benefits paid		(1,882	)		(3,482	)
Increase (decrease) for foreign currency exchange rates changes		4,078			(8,803	)
Closing balance		65,648			56,433

49

CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Consolidated Financial Statements

June 30, 2016

Amounts in thousands of U.S. dollars, except as indicated

NOTE 11. BALANCES IN FOREIGN CURRENCY AND EFFECT OF FOREIGN EXCHANGE DIFFERENCES.

	06-30-2016		12-31-2015
	Unaudited
	ThU.S.$		ThU.S.$
Total Current Assets		2,684,404		2,686,412
Cash and Cash Equivalents		527,360		500,025
U.S Dollar		451,721		388,818
Euro		6,555		2,501
Brazilian Real		32,765		21,676
Argentine Pesos		18,566		40,573
Other currencies		3,695		2,979
Chilean Pesos		14,058		43,478
Other current financial assets		10,738		32,195
U.S Dollar		10,738		29,367
Argentine Pesos		—		2,828
Other current non-financial assets		158,360		133,956
U.S Dollar		76,877		55,365
Euros		109		82
Brazilian Real		21,599		16,505
Argentine Pesos		9,489		3,705
Other currencies		3,239		4,801
Chilean Pesos		47,047		53,280
U.F.		—		218
Trade and other current receivables		667,847		733,322
U.S Dollar		424,670		507,032
Euro		28,670		27,595
Brazilian Real		56,518		37,975
Argentine Pesos		22,467		23,016
Other currencies		16,580		14,091
Chilean Pesos		117,787		123,056
U.F.		1,155		557
Accounts receivable from related companies		3,748		3,124
U.S Dollar		132		21
Brazilian Real		230		995
Chilean Pesos		3,386		2,108
Current Inventories		908,501		909,988
U.S Dollar		865,546		871,629
Brazilian Real		42,955		38,359
Current biological assets		324,862		306,529
U.S Dollar		277,777		272,037
Brazilian Real		47,085		34,492
Current tax assets		80,192		64,079
U.S Dollar		377		5,464
Brazilian Real		4,689		5,243
Argentine Pesos		12		2,000
Other currencies		2,729		850
Chilean Pesos		72,385		50,522
Non-current assets or disposal groups classified as held for sale or as held for distribution to owners		2,796		3,194
U.S Dollar		2,796		3,194

50

CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Consolidated Financial Statements

June 30, 2016

Amounts in thousands of U.S. dollars, except as indicated

	06-30-2016
	Unaudited		12-31-2015
	ThU.S.$		ThU.S.$
Total Non Current Assets		11,275,455		10,983,979
Other non-current financial assets		3,406		595
U.S Dollar		3,074		212
Argentine Pesos		332		383
Other non-current non-financial assets		129,231		125,516
U.S Dollar		94,654		114,164
Brazilian Real		3,741		2,987
Argentine Pesos		10,189		7,138
Other currencies		683		706
Chilean Pesos		19,964		521
Trade and other non-current receivables		17,843		15,270
U.S Dollar		10,477		9,976
Other currencies		714		729
Chilean Pesos		5,852		3,145
U.F.		800		1,420
Investments accounted for using equity method		437,254		264,812
U.S Dollar		277,777		122,483
Brazilian Real		159,477		142,329
Intangible assets other than goodwill		84,845		88,112
U.S Dollar		83,664		87,154
Brazilian Real		1,093		876
Chilean Pesos		88		82
Goodwill		75,472		69,475
U.S Dollar		42,590		42,445
Brazilian Real		32,882		27,030
Property, plant and equipment		6,945,144		6,896,396
U.S Dollar		6,403,836		6,448,616
Brazilian Real		536,199		442,959
Chilean Pesos		5,109		4,821
Non-current biological assets		3,578,331		3,520,068
U.S Dollar		3,195,083		3,297,710
Brazilian Real		383,248		222,358
Deferred tax assets		3,929		3,735
U.S Dollar		3,667		3,735
Other currencies		52		—
Chilean Pesos		210		—

51

CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Consolidated Financial Statements

June 30, 2016

Amounts in thousands of U.S. dollars, except as indicated

	06-30-2016
	Unaudited								12-31-2015
	Up to 90 days ThU.S.$		From 91 days to 1 year ThU.S.$		Total ThU.S.$		Up to 90 days ThU.S.$		From 91 days to 1 year ThU.S.$		Total ThU.S.$
Total Liabilities, current		903,673		431,855		1,335,528		910,436		123,815		1,034,251
Other current financial liabilities		260,851		388,684		649,535		189,693		106,345		296,038
U.S Dollar		244,792		350,451		595,243		153,361		71,330		224,691
Brazilian Real		1,187		1,849		3,036		25,092		2,266		27,358
Argentine Pesos		1		174		175		—		356		356
Chilean Pesos		1,465		3,846		5,311		902		2,622		3,524
U.F.		13,406		32,364		45,770		10,338		29,771		40,109
Bank Loans		195,781		82,951		278,732		126,795		72,948		199,743
U.S Dollar		194,593		80,928		275,521		101,703		70,326		172,029
Brazilian Real		1,187		1,849		3,036		25,092		2,266		27,358
Argentine Pesos		1		174		175		—		356		356
Financial Leases		10,411		33,302		43,713		9,301		27,561		36,862
Chilean Pesos		1,465		3,846		5,311		902		2,622		3,524
U.F.		8,946		29,456		38,402		8,399		24,939		33,338
Other Loans		54,659		272,431		327,090		53,597		5,836		59,433
U.S Dollar		50,199		269,523		319,722		51,658		1,004		52,662
U.F.		4,460		2,908		7,368		1,939		4,832		6,771
Trade and other current payables		555,684		27,749		583,433		583,018		—		583,018
U.S Dollar		152,039		2,022		154,061		174,469		—		174,469
Euros		5,353		501		5,854		8,808		—		8,808
Brazilian Real		6,327		25,226		31,553		25,616		—		25,616
Argentine Pesos		30,639		—		30,639		27,068		—		27,068
Other currencies		15,066		—		15,066		17,619		—		17,619
Chilean Pesos		329,237		—		329,237		324,361		—		324,361
U.F.		17,023		—		17,023		5,077		—		5,077
Accounts payable to related companies		7,260		—		7,260		7,141		—		7,141
U.S Dollar		2,666		—		2,666		962		—		962
Chilean Pesos		4,594		—		4,594		6,179		—		6,179
Other current provisions		751		—		751		858		—		858
U.S Dollar		751		—		751		858		—		858
Current tax liabilities		9,717		—		9,717		10,030		946		10,976
U.S Dollar		5,896		—		5,896		6,380		—		6,380
Euros		1,530		—		1,530		1,093		—		1,093
Brazilian Real		1,328		—		1,328		530		—		530
Argentine Pesos		57		—		57		24		—		24
Other currencies		600		—		600		1,716		—		1,716
Chilean Pesos		306		—		306		287		946		1,233
Current provisions for employee benefits		5,192		136		5,328		1,751		2,746		4,497
Brazilian Real		—		—		—		—		—		—
Chilean Pesos		5,192		136		5,328		1,751		2,746		4,497
Other current non-financial liabilities		64,218		15,286		79,504		117,945		13,778		131,723
U.S Dollar		33,187		5,374		38,561		79,673		13,633		93,306
Euros		71		—		71		44		—		44
Brazilian Real		14,911		9,782		24,693		22,251		—		22,251
Argentine Pesos		3,055		129		3,184		4,428		139		4,567
Other currencies		4,394		—		4,394		3,704		—		3,704
Chilean Pesos		8,532		1		8,533		7,823		6		7,829
U.F.		68		—		68		22		—		22

52

CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Consolidated Financial Statements

June 30, 2016

Amounts in thousands of U.S. dollars, except as indicated

	06-30-2016
	From 13 months to 5 years ThU.S.$		Unaudited More than 5 years ThU.S.$		Total ThU.S.$		From 13 months to 5 years ThU.S.$		12-31-2015 More than 5 years ThU.S.$		Total ThU.S.$
Total non-current liabilities		3,811,069		1,909,425		5,720,494		3,732,206		2,257,489		5,989,695
Other non-current financial liabilities		2,223,827		1,703,472		3,927,299		2,141,600		2,095,365		4,236,965
U.S Dollar		1,785,479		1,102,276		2,887,755		1,748,723		1,525,269		3,273,992
Brazilian Real		16,751		1,992		18,743		13,953		1,929		15,882
Argentine Pesos		21		—		21		48		—		48
Chilean Pesos		14,290		—		14,290		10,455		—		10,455
U.F.		407,286		599,204		1,006,490		368,421		568,167		936,588
Bank Loans		638,447		121,667		760,114		648,017		149,782		797,799
U.S Dollar		621,675		119,675		741,350		634,016		147,853		781,869
Brazilian Real		16,751		1,992		18,743		13,953		1,929		15,882
Argentine Pesos		21		—		21		48		—		48
Financial Leases		84,877		—		84,877		90,697		—		90,697
Chilean Pesos		14,290		—		14,290		10,455		—		10,455
U.F.		70,587		—		70,587		80,242		—		80,242
Other Loans		1,500,503		1,581,805		3,082,308		1,402,886		1,945,583		3,348,469
U.S Dollar		1,163,804		982,601		2,146,405		1,114,707		1,377,416		2,492,123
U.F.		336,699		599,204		935,903		288,179		568,167		856,346
Other non-current provisions		36,112		—		36,112		34,541		—		34,541
U.S Dollar		—		—		—		4		—		4
Brazilian Real		5,552		—		5,552		4,410		—		4,410
Argentine Pesos		30,560		—		30,560		30,127		—		30,127
Deferred tax liabilities		1,489,926		146,909		1,636,835		1,456,888		162,124		1,619,012
U.S Dollar		1,409,300		127,941		1,537,241		1,373,597		162,124		1,535,721
Brazilian Real		80,626		18,968		99,594		83,291		—		83,291
Chilean Pesos		—		—		—		—		—		—
Non-current provisions for employee benefits		60,320		—		60,320		51,936		—		51,936
Other currencies		—		—		—		149		—		149
Chilean Pesos		60,320		—		60,320		51,787		—		51,787
Other non-current non-financial liabilities		884		59,044		59,928		47,241		—		47,241
U.S Dollar		231		—		231		392		—		392
Brazilian Real		—		59,044		59,044		46,043		—		46,043
Argentine Pesos		440		—		440		608		—		608
Chilean Pesos		213		—		213		195		—		195
U.F.		—		—		—		3		—		3

53

CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Consolidated Financial Statements

June 30, 2016

Amounts in thousands of U.S. dollars, except as indicated

The table below sets forth the subsidiaries that have determined a functional currency other than the U.S. Dollar as follows:

Subsidiary	Country	Functional Currency
Arauco do Brasil S.A.	Brazil	Brazilian Real
Arauco Forest Brasil S.A.	Brazil	Brazilian Real
Arauco Florestal Arapoti S.A.	Brazil	Brazilian Real
Empreendimentos Florestais Santa Cruz Ltda.	Brazil	Brazilian Real
Mahal Empreendimentos e Participacoes S.A.	Brazil	Brazilian Real
Investigaciones Forestales Bioforest S.A.	Chile	Chilean Pesos
Consorcio Protección Fitosanitaria Forestal S.A. (Ex-Controladora de Plagas Forestales S.A.)	Chile	Chilean Pesos
Flakeboard Company Limited	Canada	Canadian Dollar

The table below shows a detail per company of the effect in the period of the Reserve of Exchange Differences resulting from the conversion of the controlling participation.

	January - June					April - June
	Unaudited
	2016		2015			2016		2015
	ThU.S.$		ThU.S.$			ThU.S.$		ThU.S.$
Arauco Do Brasil S.A.		79,584		(67,944	)		43,510		12,895
Arauco Forest Brasil S.A.		73,261		(60,633	)		40,892		11,604
Arauco Florestal Arapoti S.A.		20,587		(18,862	)		11,454		3,715
Arauco Distribución S.A.		—		(1,438	)		—		(587	)
Arauco Argentina S.A.		5,592		(5,729	)		3,248		998
Flakeboard Company Limited		7,297		(6,890	)		671		979
Others		68		10			4		(21	)
Total reserve of exchange differences on translation		186,389		(161,486	)		99.779		29.583

Effect of foreign exchange rates changes

	January - June Unaudited					April – June Unaudited
	2016		2015			2016			2015
	ThU.S.$		ThU.S.$			ThU.S.$			ThU.S.$
Exchange differences recognized in profit or loss, except for those arising on financial instruments measured at fair value through profit or loss		918		(4,915	)		(191	)		2,599
Reserve of exchange differences on translation (with Non-controlling interests)		191,553		(166,212	)		102,646			30,514

54

CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Consolidated Financial Statements

June 30, 2016

Amounts in thousands of U.S. dollars, except as indicated

NOTE 12. BORROWING COSTS

Arauco capitalizes the cost of borrowing on current investment projects at effective interest rate.

	January - June						April - June
	Unaudited
	2016 ThU.S.$			2015 ThU.S.$			2016 ThU.S.$			2015 ThU.S.$
Property, plant and equipment capitalized cost
Property, plant and equipment capitalized interest cost rate		5.07	%		4.92	%		5.01	%		4.91	%
Amount of the capitalized interest cost, property, presented as plant and equipment		1,093			1,110			665			479

NOTE 13. RELATED PARTIES

Related Party Disclosures

Related parties are those entities defined in IAS 24 and under the rules of the Chilean SVS and the Chilean Corporations Law.

The receivable and payable amounts among related parties at the end of each period correspond to commercial and financing transactions denominated in Chilean Pesos, U.S. dollars and Brazilian Real, where collection or payment deadlines are shown in the following tables and in general do not bear interest, except for financing transactions.

As of the date of these interim consolidated financial statements, the main transactions with related parties are related to fuel purchases with Compañía de Petróleos de Chile S.A., sodium chlorate purchases at EKA Chile S.A., chips sales to Forestal del Sur S.A.

As of the date of these interim consolidated financial statements, there are neither provisions for doubtful accounts nor any guarantees granted or received related to the balances with related parties.

Name of Group’s Main Shareholders

The ultimate shareholders of Arauco are Mrs. Maria Noseda Zambra de Angelini, Mr. Roberto Angelini Rossi and Mrs. Patricia Angelini Rossi through Inversiones Angelini y Cia. Ltda.

Name of the Intermediate Controlling Entity that Produces interim Consolidated Financial Statements for Public Use

Empresas Copec S.A.

Compensation to Key Management Personnel

Compensation to key management personnel, including directors, managers and deputy managers, consist of a fixed monthly salary and an annual bonus subject to the results of the Company and the fulfillment of goals of the business as well as individual performance.

55

CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Consolidated Financial Statements

June 30, 2016

Amounts in thousands of U.S. dollars, except as indicated

Pricing Strategy Terms and Conditions Corresponding to Transactions with Related Parties

Related party transactions were made on terms of those prevailing under market conditions, with mutual independence of the parties.

The table below sets forth information about the Relationship between the Parent Company and its Subsidiaries

ID N°	Company Name	Country	Functional Currency	% Ownership interest 06-30-2016						% Ownership interest 12-31-2015
				Direct		Indirect		Total		Direct		Indirect		Total
-	Agenciamiento y Servicios Profesionales S.A.	Mexico	U.S. Dollar		0.0020		99.9970		99.9990		0.0020		99.9970		99.9990
-	Arauco Argentina S.A.	Argentina	U.S. Dollar		9.9753		90.0048		99.9801		9.9753		90.0048		99.9801
-	Arauco Australia Pty Ltd.	Australia	U.S. Dollar		—		99.9990		99.9990		—		99.9990		99.9990
96547510-9	Arauco Bioenergía S.A.	Chile	U.S. Dollar		98.0000		1.9999		99.9999		98.0000		1.9999		99.9999
-	Arauco Colombia S.A.	Colombia	U.S. Dollar		1.4778		98.5204		99.9982		1.4778		98.5204		99.9982
-	Arauco do Brasil S.A.	Brazil	Brazilian Real		1.1624		98.8366		99.9990		1.2485		98.7505		99.9990
-	Arauco Europe Cooperatief U.A.	Holland	U.S. Dollar		0.4646		99.5344		99.9990		0.4843		99.5147		99.9990
-	Arauco Florestal Arapoti S.A.	Brazil	Brazilian Real		—		79.9992		79.9992		—		79.9992		79.9992
-	Arauco Forest Brasil S.A.	Brazil	Brazilian Real		10.1297		89.8694		99.9991		10.1297		89.8694		99.9991
-	Arauco Middle East DMCC	Dubai	U.S. Dollar		—		99.9990		99.9990		—		99.9990		99.9990
-	Arauco Panels USA, LLC	USA	U.S. Dollar		—		99.9990		99.9990		—		99.9990		99.9990
-	Arauco Perú S.A.	Peru	U.S. Dollar		0.0013		99.9977		99.9990		0.0013		99.9977		99.9990
-	Arauco Wood Products, Inc.	USA	U.S. Dollar		0.0004		99.9986		99.9990		0.0004		99.9986		99.9990
-	Araucomex S.A.de C.V.	Mexico	U.S. Dollar		0.0005		99.9985		99.9990		0.0005		99.9985		99.9990
96657900-5	Consorcio Protección Fitosanitaria Forestal S.A.	Chile	Chilean Pesos		—		57.5404		57.5404		—		57.5404		57.5404
-	Empreendimentos Florestais Santa Cruz Ltda.	Brazil	Brazilian Real		—		99.9789		99.9789		—		99.9789		99.9789
-	Flakeboard America Limited	USA	U.S. Dollar		—		99.9990		99.9990		—		99.9990		99.9990
-	Flakeboard Company Ltd.	Canada	Canadian Dollar		—		99.9990		99.9990		—		99.9990		99.9990
85805200-9	Forestal Arauco S.A.	Chile	U.S. Dollar		99.9484		—		99.9484		99.9484		—		99.9484
93838000-7	Forestal Cholguán S.A.	Chile	Canadian Dollar		—		98.4712		98.4712		—		98.4478		98.4478
-	Forestal Concepción S.A.	Panama	U.S. Dollar		0.0050		99.9940		99.9990		0.0050		99.9940		99.9990
78049140-K	Forestal Los Lagos S.A.	Chile	U.S. Dollar		—		79.9587		79.9587		—		79.9587		79.9587
-	Forestal Nuestra Señora del Carmen S.A.	Argentina	U.S. Dollar		—		99.9805		99.9805		—		99.9805		99.9805
-	Forestal Talavera S.A.	Argentina	U.S. Dollar		—		99.9942		99.9942		—		99.9942		99.9942
-	Greenagro S.A.	Argentina	U.S. Dollar		—		97.9805		97.9805		—		97.9805		97.9805
96563550-5	Inversiones Arauco Internacional Ltda.	Chile	U.S. Dollar		98.0186		1.9804		99.9990		98.0186		1.9804		99.9990
79990550-7	Investigaciones Forestales Bioforest S.A.	Chile	Chilean Pesos		1.0000		98.9489		99.9489		1.0000		98.9489		99.9489
-	Leasing Forestal S.A.	Argentina	U.S. Dollar		—		99.9801		99.9801		—		99.9801		99.9801
-	Mahal Empreendimentos e Participacoes S.A.	Brazil	Brazilian Real		—		99.9934		99.9934		—		99.9934		99.9934
-	Novo Oeste Gestao de Ativos Florestais S.A.	Brazil	Brazilian Real		—		99.9990		99.9990		—		99.9990		99.9990
96510970-6	Paneles Arauco S.A.	Chile	U.S. Dollar		99.0000		0.9995		99.9995		99.0000		0.9995		99.9995
-	Savitar S.A.	Argentina	U.S. Dollar		—		99.9841		99.9841		—		99.9841		99.9841
76375371-9	Servicios Aéreos Forestales Ltda.	Chile	U.S. Dollar		0.0100		99.9890		99.9990		0.0100		99.9890		99.9990
96637330-K	Servicios Logísticos Arauco S.A.	Chile	U.S. Dollar		45.0000		54.9997		99.9997		45.0000		54.9997		99.9997

The companies in the table below are classified as joint operations in accordance with IFRS 11. The assets, liabilities, income and expenses are recorded in relation to the Company’s ownership percentage in accordance with accounting standards applicable in each case.

ID N°	Company Name	Country	Functional Currency
-	Euforest S.A.	Uruguay	U.S. Dollar
-	Celulosa y Energía Punta Pereira S.A.	Uruguay	U.S. Dollar
-	Zona Franca Punta Pereira S.A.	Uruguay	U.S. Dollar
-	Forestal Cono Sur S.A.	Uruguay	U.S. Dollar
-	Stora Enso Uruguay S.A.	Uruguay	U.S. Dollar
-	El Esparragal Asociación Agraria de R.L.	Uruguay	U.S. Dollar
-	Ongar S.A.	Uruguay	U.S. Dollar
-	Terminal Logística e Industrial M’Bopicua S.A.	Uruguay	U.S. Dollar

56

CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Consolidated Financial Statements

June 30, 2016

Amounts in thousands of U.S. dollars, except as indicated

There are no significant restrictions on the ability of subsidiaries to transfer funds to Arauco, in the form of cash dividends or repayment of loans and/or advances.

Employee Benefits for Key Management Personnel

	January - June				April - June
	Unaudited				Unaudited
	2016		2015		2016		2015
	ThU.S.$		ThU.S.$		ThU.S.$		ThU.S.$
Salaries and bonuses		39,321		36,416		25,261		20,670
Per diem compensation to members of the Board of Directors		622		566		404		289
Termination benefits		412		1,324		111		672
Total		40,355		38,306		25,776		21,631

Related Party Receivables, Current

Name of Related Party

Tax ID No.

Nature of Relationship

Country

Currency

Maturity

06-30-2016 Unaudited ThU.S.$

12-31-2015 ThU.S.$

Forestal Mininco S.A

91.440.000-7

Common director

Chile

Chilean pesos

30 days

116

44

Eka Chile S.A

99.500.140-3

Joint Venture

Chile

Chilean pesos

30 days

2,231

1,646

Stora Enso Arapoti Industria del Papel S.A

—

Associate

Brazil

Brazilian Real

30 days

—

472

Unilin Arauco Pisos Ltda.

—

Joint Venture

Brazil

Brazilian Real

30 days

230

523

Abastible S.A.

91.806.000-6

Common director

Chile

Chilean pesos

—

142

CMPC Celulosa S.A.

96.532.330-9

Common director

Chile

Chilean pesos

30 days

2

—

Fundación Educacional Arauco

71.625.000-8

Common director

Chile

Chilean pesos

30 days

1,037

276

Fundación Acerca Redes

65.097.218-K

Common director

Chile

Chilean pesos

30 days

132

21

TOTAL

3,748

3,124

Related Party Payables, Current

Name of Related Party

Tax ID No.

Nature of Relationship

Country

Currency

Maturity

06-30-2016 Unaudited ThU.S.$

12-31-2015 ThU.S.$

Compañía de Petróleos de Chile S.A.

99.520.000-7

Controlling Parent’s Subsidiary

Chile

Chilean pesos

30 days

4,374

6,057

Abastible S.A.

91.806.000-6

Controlling Parent’s Subsidiary

Chile

Chilean pesos

30 days

92

—

Sigma S.A.

86.370.800-1

Common director

Chile

Chilean pesos

30 days

99

—

Portaluppi, Guzman y Bezanilla Abogados

78.096.080-9

Common director

Chile

Chilean pesos

30 days

—

98

Empresa Nacional de Telecomunicaciones S.A.

92.580.000-7

Common director

Chile

Chilean pesos

30 days

1

—

Puerto Lirquén S.A.

96.959.030-1

Associate

Chile

U.S. Dollar

30 days

1,481

851

Compañía Puerto de Coronel S.A.

79.895.330-3

Associate

Chile

U.S. Dollar

30 days

1,185

111

Colbún Transmisión S.A.

76.218.856-2

Common director

Chile

Chilean pesos

6

—

Colbún S.A.

96.505.760-9

Common director

Chile

Chilean pesos

30 days

22

—

Empresas Copec S.A.

90.690.000-9

Common director

Chile

Chilean pesos

30 days

—

24

TOTAL

7,260

7,141

57

CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Consolidated Financial Statements

June 30, 2016

Amounts in thousands of U.S. dollars, except as indicated

Related Party Transactions

Purchases

Name of Related party	Tax ID No.	Nature of Relationship	Country	Currency	Transaction Descriptions	06-30-2016 Unaudited ThU.S.$		12-31-2015 ThU.S.$
Abastible S.A.	91.806.000-6	Controlling Parent’s Subsidiary	Chile	Chilean pesos	Fuel		1,029		2,503
Empresas Copec S.A	90.690.000-9	Controlling Parent	Chile	Chilean pesos	Management service		145		233
Compañía de Petróleos de Chile S.A.	99.520.000-7	Controlling Parent’s Subsidiary	Chile	Chilean pesos	Fuel and other		17,019		61,245
Compañía Puerto de Coronel S.A.	79.895.330-3	Associate	Chile	U.S. Dollar	Transport and stowage		4,901		10,917
Puerto Lirquén S.A.	96.959.030-1	Associate	Chile	U.S. Dollar	Port services		3,839		7,694
EKA Chile S.A.	99.500.140-3	Joint Venture	Chile	Chilean pesos	Sodium chlorate		22,644		39,362
Forestal del Sur S.A.	79.825.060-4	Common director	Chile	Chilean pesos	Wood and ships		1,413		2,018
Portaluppi, Guzman y Bezanilla Abogados	78.096.080-9	Common director	Chile	Chilean pesos	Legal services		607		1,312
Empresa Nacional de Telecomunicaciones S.A.	92.580.000-7	Common director	Chile	Chilean pesos	Telephone services		236		552
CMPC Maderas S.A.	95.304.000-K	Common director	Chile	Chilean pesos	Wood and logs		270		267
Forestal Mininco S.A.	91.440.000-7	Common director	Chile	Chilean pesos	Wood and logs		180		204
Sigma Servicios Informáticos S.A.	86.370.800-1	Common director	Chile	Chilean pesos	Computer Services		216		59
Empresa de Residuos Resiter Ltda	89.696.400-3	Common director	Chile	Chilean pesos	Industrial Cleaning Services		—		-285
Empresas de Residuos Industriales Resiter Ltda	76.329.072-7	Common director	Chile	Chilean pesos	Industrial Cleaning Services		—		5,027
Resiter Uruguay S.A	—	Common director	Uruguay	U.S. Dollar	Service to collect solid waste		—		774
Colbún Transmisión S.A.	76.218.856-2	Common director	Chile	Chilean pesos	Electrical Power		225		447
CMPC Celulosa S.A.	96.532.330-9	Common director	Chile	Chilean pesos	Others purchases		—		2,217

Sales

Name of Related Party	Tax ID No.	Nature of Relationship	Country	Currency	Transaction Descriptions	06-30-2016 Unaudited ThU.S.$		12-31-2015 ThU.S.$
Colbún S.A.	96.505.760-9	Common director	Chile	Chilean pesos	Electrical Power		378		1,083
EKA Chile S.A.	99.500.140-3	Joint venture	Chile	Chilean pesos	Electrical Power		8,326		17,543
Stora Enso Arapoti Industria de Papel S.A.	—	Associate	Brasil	Brazilian Real	Wood		1,149		5,617
Forestal del Sur S.A.	79.825.060-4	Common director	Chile	Chilean pesos	Wood and chips		11,373		18,506
Forestal del Sur S.A.	79.825.060-4	Common director	Chile	Chilean pesos	Harvesting services		689		822
Forestal Mininco S.A.	91.440.000-7	Common director	Chile	Chilean pesos	Wood		47		311
Unilin Arauco Pisos Ltda.	—	Joint venture	Brazil	Brazilian Real	Wood		2,444		2,666

Other Transactions

Name of Related Party	Tax ID No.	Nature of Relationship	Country	Currency	Transaction Descriptions	06-30-2016 Unaudited ThU.S.$		12-31-2015 ThU.S.$
Novo Oeste Gestao de Ativo Florestais S.A.		Associate	Brazil	Brazilian Real	Loans (Capital and interest)		—		41,091

58

CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Consolidated Financial Statements

June 30, 2016

Amounts in thousands of U.S. dollars, except as indicated

NOTE 14. INTERIM CONSOLIDATED FINANCIAL STATEMENTS

Company mergers

On December 1, 2015 there was a merger among the affiliates Paneles Arauco S.A. (successor), Aserraderos Arauco S.A. and Arauco Distribución S.A. This transaction had no effect on results and was performed with a view to generate greater synergies, share best practices and achieve better results for our clients. There will be a progressive integration of the activities of sawmills, remanufacturing, plywood, panels and distribution under the same view, with products oriented to the furniture, construction, fitting and packaging industries.

Investments in Subsidiaries

In October 2015, the company acquired the remaining 51% of the interest ownership in Novo Oeste Gestao de Ativos Florestais S.A., in which it held, on December 31, 2015, a stake of 100% through Arauco’s subsidiaries in Brazil. Tables below show the acquired assets and liabilities at fair value, consideration paid and effects generated through the transaction.

Novo Oeste Gestao de Ativos Florestais	10-27-2015 Th.U.S.$
Cash and cash equivalents		427
Inventories		3,747
Accounts receivable from related companies, Current		39,917
Other Assets, Current		154
Current Assets, Total		44,245
Accounts receivable from related companies, Non-current		12,439
Other Assets, Non Current		—
Property, plant and equipment		1,496
Biological assets, Non-current		87,580
Non Current Assets, Total		101,515
Assets, Total		145,760
Trade and other current payables, Current		238
Current tax liabilities		3,449
Accounts payable to related companies, current		10
Current Liabilities, Total		3,697
Accounts payable to related companies, Non-current		137,193
Deferred tax liabilities		16,051
Non Current Libilities, Total		153,244
Liabilities, Total		156,941

The interest previously held by Novo Oeste Gestao de Ativos Florestais S.A. was measured at fair value, recognizing a gain in the other income line of ThU.S.$15,268. The price paid for the 51% interest was ThU.S.$995, generating a goodwill of ThU.S.$6,697, for which Arauco decided to recognize in the results because of the Company’s accumulated losses. The impairment loss is presented net from the abovementioned gain.

On August 13, 2015, the company Arauco Middle East DMCC was incorporated with a single contribution from Inversiones Arauco Internacional Limitada of 3,673,000 Dirham (ThU.S.$1,000). The corporate purpose of this company is the promotion of products and the management of Arauco’s customer relations in the Middle East.

59

CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Consolidated Financial Statements

June 30, 2016

Amounts in thousands of U.S. dollars, except as indicated

On January 26, 2015 Arauco, through its subsidiaries in North America, acquired a melamine-based paper treatment plant located in Biscoe, North Carolina. The price paid was ThU.S.$9,522. The attached table displays the acquired assets at fair value and the price paid under the transaction:

	Th.U.S$
Inventories		372
Lands		597
Buildings		1,723
Plant and equipment		6,830
Value Paid, Total		9,522

The details of the subsidiaries included in the consolidation of Arauco are disclosed in Note 13.

60

CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Consolidated Financial Statements

June 30, 2016

Amounts in thousands of U.S. dollars, except as indicated

NOTE 15. INVESTMENTS IN ASSOCIATES

At June 30, 2016 and December 31, 2015 there are no new investments in associates to report.

The following tables set forth information about Investments in associates.

Name	Puertos y Logística S.A.
Country	Chile
Functional Currency	U.S. Dollar
Corporate purpose	Docking and warehousing operations for proprietary and third party use, cargo of all classes of goods, as well, as warehousing and transport operations.
Ownership interest (%)	20.2767%
	06-30-2016	12-31-2015
Carrying amount	ThU.S.$60,747	ThU.S.$58,922
Name	Inversiones Puerto Coronel S.A.
Country	Chile
Functional Currency	U.S. Dollar
Corporate purpose	Investments in movables and real estate, acquisition of companies, securities and investment instruments, investment management and development and/or participation in all kind of businesses and companies related to industrial, shipping, forestry and commercial activities.
Ownership interest (%)	50.0000%
	06-30-2016	12-31-2015
Carrying amount	ThU.S.$43,716	ThU.S.$43,200
Name	Servicios Corporativos Sercor S.A.
Country	Chile
Functional Currency	Chilean Pesos
Corporate purpose	Consulting services related to business management to Boards of Directors and Senior Management of all Arauco’s entities.
Ownership interest (%)	20.0000%
	06-30-2016	12-31-2015
Carrying amount	ThU.S.$ 238	ThU.S.$179
Name	Stora Enso Arapoti Industria de Papel S.A.
Country	Brazil
Functional Currency	Brazilian Real
Corporate purpose	Industrialization and commercialization of paper and cellulose, raw materials and by-products
Ownership interest (%)	20.0000%
	06-30-2016	12-31-2015
Carrying amount	—	ThU.S.$17,397

61

CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Consolidated Financial Statements

June 30, 2016

Amounts in thousands of U.S. dollars, except as indicated

Name	Genómica Forestal S.A.
Country	Chile
Functional Currency	Chilean Pesos
Corporate purpose	Developing forestry genomics, through the use of biotechnological, molecular and bioinformatics tools with the purpose of strengthening genetic programs so as to improve the competitive position of the Chilean forestry industry for priority tree species.
Ownership interest (%)	25.0000%
	06-30-2016	12-31-2015
Carrying amount	ThU.S.$16	ThU.S.$16
Name	Consorcio Tecnológico Bioenercel S.A.
Country	Chile
Functional Currency	Chilean Pesos
Corporate purpose	Developing of technologies which will promote the development of a biofuels industry in Chile, obtained from lingo-cellulosic materials. The future execution of this sustainable project is financed by the Innova Chile Committee.
Ownership interest (%)	20.0000%
	06-30-2016	12-31-2015
Carrying amount	ThU.S.$67	ThU.S.$67
Name	Vale do Corisco S.A.
Country	Brazil
Functional Currency	Brazilian Real
Corporate purpose	Management of forestry activities.
Ownership interest (%)	49.0000%
	06-30-2016	12-31-2015
Carrying amount	ThU.S.$155,309	ThU.S.$121,360

62

CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Consolidated Financial Statements

June 30, 2016

Amounts in thousands of U.S. dollars, except as indicated

Summarized Financial Information of Associates

	Assets
06-30-2016 Unaudited	Puertos y Logística S.A. ThU.S.$			Inversiones Puerto Coronel S.A. ThU.S.$		Serv.Corporativos Sercor S.A. ThU.S.$			Stora Enso Arapoti Ind.de Papel S.A. ThU.S.$			Novo Oeste Gestao de Ativos Florestais S.A. ThU.S.$			Vale do Corisco S.A. ThU.S.$			Consorcio Tecnológico Bioenercel S.A. ThU.S.$			Genómica Forestal S.A. ThU.S.$			Total ThU.S.$
Current		81,145			29		5,371			—			—			19,960			1			44			106,550
Non-current		525,412			87,485		728			—			—			401,395			345			146			1,015,511
Total		606,557			87,514		6,099			—			—			421,355			346			190			1,122,061
	Liabilities
	Puertos y Logística S.A. ThU.S.$			Inversiones Puerto Coronel S.A. ThU.S.$		Serv.Corporativos Sercor S.A. ThU.S.$			Stora Enso Arapoti Ind.de Papel S.A. ThU.S.$			Novo Oeste Gestao de Ativos Florestais S.A. ThU.S.$			Vale do Corisco S.A. ThU.S.$			Consorcio Tecnológico Bioenercel S.A. ThU.S.$			Genómica Forestal S.A. ThU.S.$			Total ThU.S.$
Current		36,183			82		3,866			—			—			4,473			7			7			44,618
Non-current		270,782			—		1,042			—			—			99,924			5			118			371,871
Equity		299,592			87,432		1,191			—			—			316,958			334			65			705,572
Total		606,557			87,514		6,099			—			—			421,355			346			190			1,122,061
06/30/2016
Revenues		55,549			1,594		2,321			492			—			21,807			—			—			81,763
Expenses		(43,930	)		—		(2,090	)		(6,320	)		—			(7,437	)		—			—			(59,777	)
Profit or loss		11,619			1,594		231			(5,828	)		—			14,370			—			—			21,986
12-31-2015
	Assets
	Puertos y Logística S.A. ThU.S.$			Inversiones Puerto Coronel S.A. ThU.S.$		Serv.Corporativos Sercor S.A. ThU.S.$			Stora Enso Arapoti Ind.de Papel S.A. ThU.S.$			Novo Oeste Gestao de Ativos Florestais S.A. ThU.S.$			Vale do Corisco S.A. ThU.S.$			Consorcio Tecnológico Bioenercel S.A. ThU.S.$			Genómica Forestal S.A. ThU.S.$			Total ThU.S.$
Current		90,896			29		4,174			59,594			—			14,736			1			44			169,474
Non-current		472,638			86,453		664			33,284			—			322,598			345			146			916,128
Total		563,534			86,482		4,838			92,878			—			337,334			346			190			1,085,602
	Liabilities
	Puertos y Logística S.A. ThU.S.$			Inversiones Puerto Coronel S.A. ThU.S.$		Serv.Corporativos Sercor S.A. ThU.S.$			Stora Enso Arapoti Ind.de Papel S.A. ThU.S.$			Novo Oeste Gestao de Ativos Florestais S.A. ThU.S.$			Vale do Corisco S.A. ThU.S.$			Consorcio Tecnológico Bioenercel S.A. ThU.S.$			Genómica Forestal S.A. ThU.S.$			Total ThU.S.$
Current		41,784			82		3,136			13,648			—			9,098			7			7			67,762
Non-current		231,160			—		808			7,094			—			80,563			5			118			319,748
Equity		290,590			86,400		894			72,136			—			247,673			334			65			698,092
Total		563,534			86,482		4,838			92,878			—			337,334			346			190			1,085,602
06-30-2015 (Unaudited)
Revenues		37,654			2,851		2,008			29,416			35			68,908			101			29			141,002
Expenses		(36,133	)		—		(3,134	)		(25,536	)		(11,527	)		(39,848	)		(110	)		(73	)		(116,361	)
Profit or loss		1,521			2,851		(1,126	)		3,880			(11,492	)		29,060			(9	)		(44	)		24,641

63

CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Consolidated Financial Statements

June 30, 2016

Amounts in thousands of U.S. dollars, except as indicated

Reconciliation of Investment in Associates and Joint Ventures

	06-30-2016
	Unaudited			12-31-2015
	ThU.S.$			ThU.S.$
Opening balance as of January 1		264,812			326,045
Changes
Investments in associates, Additions		—			1,808
Investment in joint ventures, Additions		153,135			—
Disposals, Investments in associates		(10,369	)		—
Share of profit (loss) in investment in associates		8,787			5,573
Share of profit (loss) in investment in joint ventures		1,244			1,175
Dividends Received, Investments in Associates		(3,275	)		(18,396	)
Increase (Decrease) in foreign exchange currency on translation of Associates and Joint Ventures		22,479			(55,207	)
Other increase (decrease) in investment and associates and joint ventures		441			3,814
Total changes		172,442			(61,233	)
Ending balance		437,254			264,812
	06-30-2016
	Unaudited			12-31-2015
	ThU.S.$			ThU.S.$
Carrying amount of associates accounted for using equity method		260,094			241,140
Carrying amount of joint ventures accounted for using equity method		177,160			23,672
Total investment accounted for using equity method		437,254			264,812

NOTE 16. INTERESTS IN JOINT ARRANGEMENTS

Investments and contributions made

On May 31, 2016, Inversiones Arauco Internacional Limitada, Arauco’s subsidiary, acquired 50% of the shares of Tableros de Fibras S.A, a Spanish subsidiary of SONAE INDUSTRIA, SGPS, S.A. (“Sonae”), which as of such date changed its name to “Sonae Arauco S.A.”. The price paid by Arauco for the acquisition of 50% of the shares of Sonae Arauco was the amount of €137,500,000 (equivalent to MUS $ 153,135 at the acquisition date). The fair value of the investment acquired over Sonae Arauco SA, has been provisionally determined as of June 30, 2016 at MUS$ 153,135 and is subject to change, until the completion of the valuation of its net assets.

Sonae Arauco will produce and market wood panels, of the type of MDF, PB and OSB, and sawn timber, through the operation of 2 panel plants and one sawmill in Spain; 2 panel plants and one resin plant in Portugal; 4 panel plants in Germany and 2 panel plants in South Africa.

In the aggregate, the production capacity of Sonae Arauco is of approximately 1.45 million m3 of MDF, 2.27 million m3 of particle boards, 460,000 m3 of OSB and 100,000 m3 of sawn timber.

As of June 30, 2016, Arauco has not carried out any contributions to Uruguayan companies Celulosa y Energía Punta Pereira S.A. and Zona Franca Punta Pereira S.A. (MUS$ 82,943 as of December 31, 2015), with Arauco still holding 50% of control under a joint agreement.

64

CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Consolidated Financial Statements

June 30, 2016

Amounts in thousands of U.S. dollars, except as indicated

The contributions made were invested in the construction of a last generation cellulose production plant, with a guaranteed annual capacity of 1.3 million tons, a port and an energy generation unit based on renewable resources, which is located in the town of Puerto Pereira, Province of Colonia, Uruguay.

The investments in Uruguay qualify as a joint operation. In relation to “other rights and contractual conditions”, the joint operation has the primary objective of providing the parties an output. As established in the “Pulp Supply Agreement”, both Arauco and its partner have the obligation to acquire 100% of the yearly pulp produced by the joint operation. Arauco has recognized the assets, liabilities, income and expenses associated with its interest ownership, as of January 1, 2013, pursuant to IFRS 11.

Furthermore, Arauco holds a 50% ownership interest in Unilin Arauco Pisos Laminados Ltda., a Brazilian company, and in Eka Chile S.A. (“Eka”), a company that sells sodium chlorate to cellulose plants in Chile. There is a contractual agreement with these companies whereby Arauco has engaged in an economic activity subject to common control, which is classified as a joint venture.

The following tables set forth summarized financial information of the more significant interests in joint arrangements, which qualify as joint operations:

Celulosa y Energía Punta Pereira S.A. (Uruguay)	06-30-2016 (Unaudited)				12-31-2015
	Assets ThU.S.$		Liabilities ThU.S.$		Assets ThU.S.$		Liabilities ThU.S.$
Current		187,351		185,639		173,499		167,067
Non-current		2,164,406		813,042		2,192,148		885,723
Equity				1,353,076				1,312,857
Total Joint Arrangement		2,351,757		2,351,757		2,365,647		2,365,647
Investment		676,538				656,429

	06-30-2016 (Unaudited) ThU.S.$			06-30-2016 (Unaudited) ThU.S.$
Income		322,688			301,058
Expenses		(285,755	)		(287,213	)
Joint Arrangement Net Income (Loss)		36,933			13,845

Forestal Cono Sur S.A.(consolidated)	06-30-2016 (Unaudited)				12-31-2015
	Assets ThU.S.$		Liabilities ThU.S.$		Assets ThU.S.$		Liabilities ThU.S.$
Current		31,607		21,058		23,267		21,495
Non-current		168,975		4,561		176,876		4,654
Equity				174,963				173,994
Total Joint Arrangement		200,582		200,582		200,143		200,143
Investment		87,482				86,997

	06-30-2016 (Unaudited) ThU.S.$			30-06-2015 (No Auditado) ThU.S.$
Income		2,923			620
Expenses		(1,954	)		(4,351	)
Joint Arrangement Net Income (Loss)		969			(3,731	)

65

CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Consolidated Financial Statements

June 30, 2016

Amounts in thousands of U.S. dollars, except as indicated

Eufores S.A.(consolidated)	06-30-2016 (Unaudited)				12-31-2015
	Assets ThU.S.$		Liabilities ThU.S.$		Assets ThU.S.$		Liabilities ThU.S.$
Current		168,912		198,371		158,735		187,311
Non-current		616,549		33,993		611,500		39,994
Equity				553,097				542,930
Total Joint Arrangement		785,461		785,461		770,235		770,235
Investment		276,549				271,465

	06-30-2016 (Unaudited) ThU.S.$			30-06-2015 (No Auditado) ThU.S.$
Income		133,264			147,304
Expenses		(123,097	)		(148,753	)
Joint Arrangement Net Income (Loss)		10,167			(1,449	)

	06-30-2016 (Unaudited)				12-31-2015
Zona Franca Punta Pereira S.A. (Uruguay)	Assets ThU.S.$		Liabilities ThU.S.$		Assets ThU.S.$		Liabilities ThU.S.$
Current		3,787		77,106		11,582		71,202
Non-current		496,591		75,949		494,585		88,182
Equity				347,323				346,783
Total Joint Arrangement		500,378		500,378		506,167		506,167
Investment		173,662				173,392

	06-30-2016 (Unaudited) ThU.S.$			30-06-2015 (No Auditado) ThU.S.$
Income		12,528			9,769
Expenses		(11,989	)		(23,730	)
Joint Arrangement Net Income (Loss)		539			(13,961	)

66

CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Consolidated Financial Statements

June 30, 2016

Amounts in thousands of U.S. dollars, except as indicated

The following tables set forth summarized financial information of the more significant interests in joint ventures:

Unilin Arauco Pisos Ltda.	06-30-2016 (Unaudited)				12-31-2015
	Assets ThU.S.$		Liabilities ThU.S.$		Assets ThU.S.$		Liabilities ThU.S.$
Current		6,852		2,871		5,943		2,304
Non-current		4,395		40		3,544		37
Equity				8,336				7,146
Total Joint Arrangement		11,247		11,247		9,487		9,487
Investment		4,168				3,573

	06-30-2016 (Unaudited) ThU.S.$			30-06-2015 (No Auditado) ThU.S.$
Income		—			48,118
Expenses		(318	)		(48,312	)
Joint Arrangement Net Income (Loss)		(318	)		(194	)

Eka Chile S.A.	06-30-2016 (Unaudited)				12-31-2015
	Assets ThU.S.$		Liabilities ThU.S.$		Assets ThU.S.$		Liabilities ThU.S.$
Current		19,259		5,011		23,457		8,365
Non-current		30,370		4,904		30,203		5,097
Equity				39,714				40,198
Total Joint Arrangement		49,629		49,629		53,660		53,660
Investment		19,857				20,099

	06-30-2016 (Unaudited) ThU.S.$			06-30-2015 (Unaudited) ThU.S.$
Income		24,644			21,589
Expenses		(21,837	)		(20,604	)
Joint Arrangement Net Income (Loss)		2,807			985

	06-30-2016 (Unaudited)
Sonae Arauco S.A.	Assets ThU.S.$		Liabilities ThU.S.$
Current		235,616		215,976
Non-current		566,677		353,901
Equity				232,416
Total Joint Arrangement		802,293		802,293
Investment		116,208
Adjustment to Net Assets		36,927
Investment		153,135

	06-30-2016 (Unaudited) ThU.S.$
Income		—
Expenses		—
Joint Arrangement Net Income (Loss)		—

67

CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Consolidated Financial Statements

June 30, 2016

Amounts in thousands of U.S. dollars, except as indicated

NOTE 17. IMPAIRMENT OF ASSETS

As of June 30, 2016 not new impairment provisions to report.

In 2015, a provision for the impairment of the Arapoti Sawmill in an amount of ThU.S.$2,428, was registered reducing the recoverable value for these assets to zero.

Disclosure of Impairment Losses of Assets

Provisions for impairment of property, plant and equipment due to technical obsolescence have been recorded as of June 30, 2016 and December 31, 2015 respectively, as shown below:

Disclosure of Asset Impairment
Principal classes of Assets affected by Impairment and Reversal of Losses	Machinery and Equipment
Principal Facts and Circumstances that lead to Recognizing Impairment and Reversal of losses	Technical Obsolescence and Claim
	06-30-2016	12-31-2015
Information relevant to the sum of all impairment	ThU.S.$4,777	ThU.S.$4,658

This impairment provision is being analyzed to determine the definitive write-off corresponding to the related assets. In addition, the Company recognized an impairment derived from the purchase of the 51% ownership in Novo Oeste Gestao de Ativos Florestais S.A. See Note 14 – acquisition of subsidiaries.

Goodwill

Goodwill is allocated to the groups of cash-generating units that are expected to benefit from the synergies of the combination.

At the date of these interim consolidated financial statements, the balance of goodwill is ThU.S.$75,472 (ThU.S.$69,475, at December 31, 2015)

Of the total of goodwill, ThU.S.$39,776 (ThU.S.$39,631 as of December 31, 2015) are generated by the acquisition of “Flakeboard”, a company that, directly and/or through its subsidiaries, possesses and operates 7 panel plants, for which Arauco acquired and paid, on September 24, 2012, the price of ThU.S.$242,502 for the 100% interest ownerhip.

The recoverable amount for Flakeboard’s cash generating unit was determined based on the calculations of its value in use, and this calculation was made using cash flow projections covering a 5-year term, applying a real discount rate of 7.8% which reflects current market assessments for the Panels segment in North America.

The investment in the panel plant in Pien, Brazil generated a goodwill of ThU.S.$32,882 (ThU.S.$27,030 as of December 31, 2015).

The recoverable amount for the Pien plant’s cash generating unit was determined based on the calculations of its value in use, and this calculation was made using cash flow projections based on the operational plan approved by the Administration, covering a 5-year term, applying a 9% real discount rate that reflects current evaluations for the panel segment in Brazil.

68

CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Consolidated Financial Statements

June 30, 2016

Amounts in thousands of U.S. dollars, except as indicated

As a result of the annual impairment test, the carrying value of the goodwill does not exceed their recoverable value, and therefore there is no need to recognize impairment losses.

As of June 30, 2016 and December 31, 2015, the variation of the balance in goodwill is only due to the translation adjustments as explained in the accounting policies.

NOTE 18. PROVISIONS, CONTINGENT ASSETS AND CONTINGENT LIABILITIES

The contingent liabilities for outstanding litigations are as follows:

Celulosa Arauco y Constitución S.A.

1. On August 25, 2005, the Chilean Servicio de Impuestos Internos (the “Chilean IRS”) issued tax resolutions No. 184 and No. 185 of 2005, objecting to certain income tax returns made by Arauco on April 16, 2001 and October 31, 2001, and furthermore, requested reimbursement from the Company for the tax returnes made in respect of certain claimed tax losses as well as the modification of the tax balance of retained earnings. On November 7, 2005, the Company requested a Review of the Supervision Action (Revisión de la Actuación Fiscalizadora, or “RAF”), which is an administrative review of the tax action brought by the Chilean IRS, and filed a claim disputing the abovementioned tax resolutions No. 184 and 185 of 2005. The RAF was resolved on January 9, 2009 by the Chilean IRS, which resolution only partially sustained the Company’s request. In response, the Company filed an additional complaint with regard to the portion of the RAF that was not granted by the administrative review. On February 19, 2010, the Court acknowledged receipt of the Company’s request. Subsequently, the tax authority issued a report and the Company commented on such report.

On September 26, 2014, Arauco requested the submission of this claim to the competent jurisdiction of the new Tax and Customs Courts. On October 10, 2014, Arauco’s request was granted. Currently the action is being considered by these new Courts under the Docket No. RUC 14-9-0002087-3. On March 20, 2015, the SII responded to the allegations submitted by Arauco against Liquidations No. 184 and 185 of 2005. Currently, the case’s evidentiary stage is due to begin.

Considering that the Company’s position is based on solid legal grounds, there is a reasonable margin for obtaining a favorable result for the Company.

2. In conecction with Licancel Plant, on June 22, 2011, the Company was notified of a civil claim for compensation of prejudice for an alleged tort liability, filed by twelve fishermen of the Mataquito River before the Court of First Instance, Guarantee and Family of Licantén under Docket number 73-2011. The case arose out of dead fish allegedly found in the Mataquito River on June 5, 2007 caused by the Licancel Plant. The plaintiffs seek to be compensated for alleged damages that they had from the aforementioned event, including loss of profits, pain and suffering and an alleged contractual liability.

On October 21, 2015 the Court issued a definitive first instance decision partially admitting the claim, sentencing Celulosa Arauco y Constitución S.A. to pay each claimant – as non-monetary damages – the sum of $5,000,000 plus adjustments, as per the variation of the CPI, calculated as from May 2007 until the month of the actual payment. On November 16, 2015, the defendant challenged the definitive decision through the submission of a cassation appeal based on formal aspects and an ordinary appeal. In turn, the plaintiff adhered to the appeal, seeking to have the amount of the non-monetary damages recognized by the first instance decision increased. Pending. (Court of Appeals Docket No. 60-2016).

69

CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Consolidated Financial Statements

June 30, 2016

Amounts in thousands of U.S. dollars, except as indicated

Considering that the Company’s position is based on solid legal grounds, there is a reasonable margin for obtaining a favorable result for the Company.

3. Through Res. Ex. N° 1 issued by the Superintendence of the Environment (“SMA”) on January 8, 2016, notified on January 14, 2016, the SMA formulated 11 charges against the Company, due to alleged breaches of certain Environmental Qualification Resolutions for the Valdivia Plant and of DS No. 90/2000. The 11 charges were classified as follows by the SMA: 1 critical, 5 severe, 5 minor.

On February 12, 2016, the Company submitted its defenses. The SMA shall analyze and rule on the defenses, and it may request new information or open a term for providing evidence. Once these proceedings have been discharged, the SMA will issue a resolution that either absolves or sanctions the Company. The resolutions issued by the SMA may be appealed before the Environmental Court.

Considering that the Company’s position is based on solid legal grounds, there is a reasonable margin for obtaining a favorable result for the Company.

4. Through Res. Ex. N° 1 of the SMA, dated February 17, 2016 notified on February 23, 2016, the SMA formulated 8 charges against the company due to alleged breaches of certain Environmental Qualification Resolutions for the Nueva Aldea Plant. The 8 charges were qualified by the SMA as follows: 7 severe and 1 minor.

On March 15, 2016, the company submitted - within the established term - a compliance program which contains 30 actions and goals, related to each one of the 8 alleged infringements. On July 15, 2016, the Exempted Resolution No. 11 of the SMA was notified, which approved the compliance program and suspended the punitive proceedings. If the program is satisfactorily implemented, it would be possible to conclude the proceedings without applying any sanctions.

On August 3, 2016, third-party complainants in the administrative proceeding filed a complaint appeal against Exempted Resolution No. 11 issued by the SMA, which approved the compliance program. The Third Environmental Court must issue a decision with regard to this complaint appeal.

Considering that the Company’s position is based on solid legal grounds, there is a reasonable margin for obtaining a favorable result for the Company.

Arauco Argentina S.A.

1. (i) On October 8, 2007, the Federal Administration of Internal Revenue (Administración Federal de Ingresos Públicos) (AFIP) initiated an ex oficio proceeding against our Argentine affiliate Arauco Argentina S.A. challenging its deduction from its income tax liability of certain expenses, interest payments and exchange rate differences generated by Private Negotiable Obligations which were issued by such company in 2001 and paid in 2007.

70

CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Consolidated Financial Statements

June 30, 2016

Amounts in thousands of U.S. dollars, except as indicated

On November 20, 2007, Arauco Argentina S.A. submitted a counterclaim completely rejecting all of AFIP’s allegations and asserting legal arguments that justify its actions in the determination of its income tax.

On December 14, 2007, AFIP notified Arauco Argentina S.A. that its counterclaim had been dismissed, thus issuing an ex oficio ruling and ordering the payment, within 15 working days, of the calculated income tax difference for the 2002, 2003 and 2004 fiscal years of Argentine Pesos $417,908,207 (ThU.S.$ 27,786 at June 30, 2016), compensatory interest, and fines for omission. On February 11, 2008, Arauco Argentina S.A. appealed the aforementioned ruling before the National Tax Court (“Tribunal Fiscal de la Nación”) (TFN).

On February 8, 2010, Arauco Argentina S.A. was notified of TFN’s ruling, which confirmed the ruling issued by AFIP, with court expenses, based on arguments different from those that justified AFIP’s ex oficio decision. This decision by the TFN extinguished the administrative process. As a result, the company’s only remaining option was to pursue a remedy before the Contentious Administrative Matters Federal Appeals Court (“Cámara de Apelaciones en lo Contencioso Administrativo Federal”) (CACAF) and, subsequently, the National Supreme Court of Justice (“Corte Suprema de Justicia de la Nación”).

On February 15, 2010, Arauco Argentina S.A. appealed before the CACAF, making all necessary submissions with the purpose of attaining a revocation of the contested decision. Arauco Argentina S.A. paid litigation fees (tasa de justicia) in the amount of Argentine Pesos 5,886,053 (ThU.S.$391 at June 30, 2016).

On March 18, 2010, the CACAF issued a court decree in which it ordered the AFIP to refrain from requesting the blocking of preventive interim relief measures, administratively demanding payment, issuing debt invoices, or initiating judicial collection actions, including seizure of property and other enforcement measures, against Arauco Argentina S.A. until CACAF reaches a decision on APSA’s request for an injunction.

On May 13, 2010, the CACAF decided to grant the injunction requested by Arauco Argentina S.A., ordering to suspend the enforcement of the AFIP resolution until the final decision on this matter. This injunction was granted by the CACAF subject to the granting of a corresponding bond. On May 19, 2010, Arauco Argentina S.A. filed with the Appeal Court a surety policy issued by Zurich Argentina Cía. de Seguros S.A. On May 20, 2010, the CACAF asked Arauco Argentina S.A. to specify the areas covered by the surety insurance. On May 28, 2010 Arauco Argentina S.A. complied with this request and attached Endorsement No. 1 of the surety policy in favor of the CACAF – Trial Chamber I – in the amount of Argentine Pesos 633,616,741 (equivalent to ThU.S.$42,129 as of June 30, 2016), which includes initial capital, plus adjustments and interests to the date of the bond. On June 2, 2010 the CACAF accepted this surety filed by Arauco Argentina S.A. and sent notice to AFIP of the injunction granted. On June 4, 2010 the AFIP was notified of the ruling dated May 13, 2010, which is final since June 22, 2010.

On February 1, 2013, Arauco Argentina S.A. received notice of the decision dated December 28, 2012, whereby the First Chamber of Appeals rejected the appeal lodged by the company, confirming the ex officio determination of the AFIP, and imposed the judicial fees for both instances as per their generation, since there was contradictory case law. The company appealed this decision before the National Supreme Court of Justice via the various legal procedural remedies available. On February 4, 2013, the company filed an ordinary appeal against the Chamber’s decision and on February 19, 2013, it also filed an extraordinary appeal against the same judgment, both before the National Supreme Court of Justice. On May 6, 2013, Arauco Argentina S.A. was notified of the decision of the Court

71

CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Consolidated Financial Statements

June 30, 2016

Amounts in thousands of U.S. dollars, except as indicated

of Appeals that, as of April 23, 2013, granted the ordinary appeal to the National Supreme Court of Justice and was present, to her chance the Extraordinary Appeal field. On May 27, 2013, the file was forwarded to the Supreme Court of Justice of the Country. On June 3, 2013, Arauco Argentina S.A. was notified of the procedural ruling issued by the High Court on May 29, 2013, declaring that the Ordinary Appeal had been duly received. On June 17, 2013, Arauco Argentina S.A. submitted a duly founded presentation in connection with the Appeal, which the Court subsequently ordered to be transferred to AFIP, a circumstance of which the company was notified on June 28, 2013.

The reasoning of the Chamber of Appeals’ decision did not modify the opinion of our external counsel in that the company acted in accordance with law when deducting the interest, expenses and exchange differences in the indebtedness challenged by the State, and they still hold that there are good possibilities for the decision to be quashed, rendering without effect AFIP’s ex officio determination.

(ii) Within the course of this case’s proceedings, and particularly regarding payment of the litigation fees (tasa de justicia) before the TFN, on July 18, 2008, the Examining Officer ordered Arauco Argentina S.A. to pay Argentine Pesos 10,447,705 (ThU.S.$694 at June 30, 2016) as payment of Tasa de Actuación (Litigation Fee) before the TFN. On August 14, 2008, Arauco Argentina S.A filed a petition with the court requesting that this order be reconsidered, or alternatively, rejected on the grounds that the requested amount was unreasonable. Arauco Argentina S.A provided evidence that it had paid Argentine Pesos 1,634,914 (equivalent to ThU.S.$109 at June 30, 2016), considering that this was the actual amount due, pursuant to Law, for the Tasa de Actuación (Litigation Fee). On April 13, 2010, the First Chamber of the CACAF denied Arauco Argentina S.A.’s appeal. On April 26, 2010, Arauco Argentina S.A. filed an ordinary appeal against the latter decree before the National Supreme Court of Justice, which was granted on February, 3, 2011. On June 23, 2011, the brief with the ordinary appeal was filed before the Supreme Court. On July, 14, 2011, AFIP answered the petition of this brief. On May 8, 2012, the Supreme Court ruled that the ordinary remedy was wrongly admitted, since the appealed sentence was not a final ruling. The case file was returned to First Chamber of the National Appeals Court of Contentious Administrative Matters. On June 15, 2012, Arauco Argentina S.A. requested that the case be suspended until the substantial issues of the case were resolved, a request which was rejected by the CACAF on June 25, 2012. On July 2, 2012, Arauco Argentina S.A. filed a motion to reconsider, requesting that such ruling be rendered ineffective and the extraordinary proceeding be suspended until the substantial issues of the case were ruled on, also expressing that it still maintained its interest in the extraordinary remedy that was submitted. On August 21, 2012, Arauco Argentina S.A. filed a presentation which expressed its interest to maintain the extraordinary appeal. On February 19, 2013, Arauco Argentina S.A. requested the Extraordinary Remedy to be dealt with, and that copy of the judgment passed in the main suit be attached thereto. On the same date Arauco Argentina S.A. lodged a Federal Extraordinary remedy on grounds that the judgment relating to the procedural tax discussed in this ancillary suit ought to be analyzed in consistency with that of the main suit. On April 8, 2013, the Chamber conferred upon AFIP a period to respond to Arauco Argentina S.A.’s Extraordinary Remedy. On November 26, 2013, Arauco Argentina S.A. was served with a ruling dated October 8, 2013 whereby the 1^st Chamber of the Appeals Department decided to deny Arauco Argentina S.A.’s May 6, 2010 Extraordinary Remedy, imposing upon Arauco Argentina S.A. the obligation to bear the court costs and fees. On November 18, 2014, the 1^st Chamber of the Appeals Department decided to dismiss Arauco Argentina S.A.’s second extraordinary remedy.

72

CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Consolidated Financial Statements

June 30, 2016

Amounts in thousands of U.S. dollars, except as indicated

2. By way of Resolutions Nos. 952/2000 and 83/03, and within the context of the provisions of Law No. 25,080, the former Secretary for Agriculture, Ranching, Fishing and Foods approved the projects submitted by Arauco Argentina S.A. to build an MDF plant (boards) and a sawmill, along with the forestation of several hectares for supplying said industries.

In March of 2005, by way of Note No. 145/05, issued by the Undersecretary for Agriculture, Ranching and Forestation, the exemption to pay exportation duties granted to Arauco Argentina S.A. was suspended, as were the exemptions granted to all other companies benefited by this system under Law No. 25,080, a suspension which was implemented as a preventive measure, invoking the need to review the proceedings conducted in the respective case files. After the exhaustion of the administrative procedures, the measure is being argued by the company before the courts. In said context, on November 8, 2006, the V Chamber of the National Appeals Court for Adversarial Administrative and Federal Matters issued a ruling ordering that Arauco Argentina S.A. to continue to enjoy an exemption from paying the exportation duties, provided that it guarantee said duties by taking out warranty insurance. The judicial measure became effective beginning on March of 2007 by collateralization through the granting of bond (caución) policies for each shipment permits exempted from payment of export duty. Notwithstanding this ruling, the issuance of the ruling on the substantial issues of the matter is still pending. The company maintains an assignment of funds equivalent to ThU.S.$ 23,440 in connection to the aforementioned export duties, which is shown under not current provisions.

The export duties paid by the company while the benefit was suspended were allocated to the results of each financial year. As of this date, the company has submitted a claim against the National Government demanding the return of ThU.S.$6,555, plus interest accrued as from the serving of process of said claim, amount which corresponds to the Export Duties paid between March of 2005 and March of 2007 as a result of the benefit’s suspension.

In turn, during April of year 2005, the Secretary for Agriculture, Ranching, Fishing and Foods issued Resolution No. 260/2005, requiring that holders of any firms that had received the fiscal benefits granted under Law No. 25,080 should establish guarantees to cover the total amount of any such benefits, considering for such purposes all benefits that had been enjoyed until the date of their establishment. Arauco Argentina S.A. then proceeded to establish the required guarantees, which - as of the date of these financial statements - amount to Argentine Pesos 245,359,796 (ThU.S.$16,314 at June 30, 2016).

Arauco Argentina S.A. believes that it has complied with all of the obligations imposed upon it by the system set forth under Law No. 25,080.

3. On December 6, 2013, Arauco Argentina S.A. was served upon Resolution 803 issued by the Central Bank of the Republic of Argentina (BCRA) on November 22, 2013. By means of such resolution, the BCRA initiated Investigation No. 5581, whereby it is sought to determine the absence of currency inflow and liquidation, and the delayed inflow of currency arising from export operations.

On March 6, 2014, the BCRA notified Arauco Argentina S.A. that it had received the APSA’s response and was beginning the trial period. On June 18, 2014 the BCRA notified the company of the closure of the trial period. On June 26, 2014 APSA presented its answer. On October 6, 2014, the company was served with the ruling dated September 30, 2014, issued by the National Criminal and Economic Court No. 8, Secretary No. 16, through which it was notified that the court would analyze the case under Case File No. 1330/2014.

73

CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Consolidated Financial Statements

June 30, 2016

Amounts in thousands of U.S. dollars, except as indicated

As of the date of issuance of these financial statements, in the opinion of the company´s legal advisors, the likelihood of obtaining a favorable outcome (that is to say, no fines being imposed) is high, given the solid defense arguments raised by Arauco Argentina S.A. and the precedents relating to infractions of a similar nature.

Arauco do Brasil S.A.

On November 8, 2012, the Brazilian tax authorities issued an Infringement Notice against one of our Brazilian subsidiaries, Arauco do Brasil S.A., for allegedly unpaid taxed owed by said company during the period from 2006 to 2010. Specifically, the tax authorities (i) objected to the deductibility of certain payments made, and expenses incurred (including the amortization of premiums, interest and litigation costs) by Arauco do Brasil between 2005 and 2010, and, (ii) argued that Arauco do Brasil made certain insufficient payments regarding the Brazilian Corporate Tax (“IRPJ”) and the Corporate Contribution over Net Profits (“CSLL”) during 2010.

On July 20, 2015, Arauco do Brasil was notified of the first-level administrative ruling which partially upheld the Infringement. Against this ruling, a Voluntary Appeal was filed seeking to revoke the Infringement Notice before the Brazilian Administrative Tax Council (Conselho Administrativo de Recursos Fiscais de Brasil or “CARF”), which is the second administrative level. As of the date of this report, the trial pertaining to this objection is still pending. The company believes that its challenge against the Infringement Notice is based on sound legal grounds and that a reasonable possibility exists that this matter will be resolved in favor of the company. However, if a favorable ruling is not obtained, it is possible that an obligation is generated in the aforementioned sums, plus interest and fines, up to the date on which the respective payment is made.

Forestal Arauco S.A.

On October 26, 2012, Forestal Valdivia S.A., now Forestal Arauco S.A., was notified of a restitution suit filed by Mr. Nelson Vera Moraga, Attorney representing the estate of Mrs. Julia Figueroa Oliveiro, which occurred over 60 years ago. That application was lodged with the Civil Court of Loncoche, Docket Number 79-2012, and the lawsuit demanded the recovery and restitution of two estates, with their products and improvements, arguing that the aforementioned estate is the sole and exclusive owner of two real estate properties whose total surface amounts to 1,210 hectares and are allegedly occupied by Forestal Valdivia S.A. On March 13, 2014, the Court issued a first instance ruling rejecting the claim.

On March 31, 2014, the plaintiff appealed the first instance ruling through the submittal of a cassation appeal with regards to procedural aspects to the Court of Appeals of Temuco. On August 10, 2015, the Court of Appeals of Temuco issued a decision confirming the first instance decision with litigation costs. On August 28, 2015, the plaintiff filed a cassation appeal based on substantial and procedural grounds against the judgment of the Court of Appeals. On September 4, 2015, the Court of Appeals set an outcome guaranty deposit (fianza de resultas) of 50 million Chilean pesos. On September 10, 2015, the defendant requested that the guaranty deposit be set aside, or alternatively reduced to the amount of 300,000 Chilean Pesos. On September 16, 2015, the Court of Appeals decided to keep the guaranty deposit in the amount of 50 million Chilean pesos. On October 21, 2015, the cassation appeal was processed by the Supreme Court. On October 23, 2015, the petitioner formally became a party to the cassation proceedings. On November 3, 2015, the respondent formally became a party to the cassation proceedings. On November 6, 2015, Forestal Arauco S.A. filed a motion for the declaration of inadmissibility of the cassation appeal. On June 1, 2016, the Supreme Court dismissed the cassation appeals. The case is now closed. (Court Docket No. 595-2014).

74

CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Consolidated Financial Statements

June 30, 2016

Amounts in thousands of U.S. dollars, except as indicated

2. On October 8, 2013, Bosques Arauco S.A., now Forestal Arauco S.A. was notified of a civil claim filed by Mr. Manuel Antonio Fren Casanova, requesting the court to declare the properties known as Cuyinco and Cuyinco Alto as two different properties and, therefore, to order the cancellation of the ownership registration in the name of Bosques Arauco S.A. found on N° 290 of page 266 of the Registry of Property kept by the Real Estate Registrar of Cuyinco Alto, on the grounds that, Bosques Arauco S.A. erroneously understood that its property, Cuyinco Alto of 4,600 hectares, would also encompass the land known as Cuyinco, which allegedly belongs to the claimant.

The claim was filed before the Civil Court of Lebu (Case File No. C-269-2013).

On October 27, 2015, the Court passed a first instance definitive judgment, dismissing the claim in its entirety. On November 16, 2015, the plaintiff challenged the first instance judgment by means of a cassation appeal based on substantial and procedural grounds. (Case Docket Court of Appeals No. 1956-2015). The Court of Appeals decided to send the case back to the first instance court, in order for the latter to issue a ruling regarding a witness disqualification that was not resolved in the original decision, thus completing the ruling. The first instance court, complying with the orders issued by the Court of Appeals of Concepción, decided to reject the witness disqualification filed against witness Mr. Gabriel Fernández P., and none of the parties objected to said decision. Thereafter, the case once again was remitted to the Court of Appeals of Concepción and the CONADI’s report was received. Currently, the case is being entertained by the Court of Appeals, pending a hearing and resolution of the appeal and formal cassation appeal filed in the trial. Pending.

Considering that the Company’s position is based on solid legal grounds, there is a reasonable margin for obtaining a favorable result for the Company.

3. Maquinarias y Equipos Klenner Limitada filed a civil damages claim before the First Civil Court of Valdivia, Case File number C-375-2015, against Forestal Arauco S.A. The claim seeks compensation for alleged damages brought as a result of the termination of a service provision contract that took place on February 9, 2010

On February 6, 2015, the claim was served on Mr. Cristián Durán Silva, on behalf of Forestal Arauco S.A. On February 12, 2015, the company appeared submitting a motion to void the service of process, since Mr. Cristian Durán Silva was not the legal representative of Forestal Arauco S.A., and because the requirements of article 44 of the Code of Civil Procedure had not been fulfilled in this service of process.

The Court granted the plaintiff the legal term to submit its arguments in this regard, issuing a resolution dated February 17 of 2015. Moreover, the company required that proceedings be suspended while this matter was pending decision. The Court gave the floor to the plaintiff with regard to this request. In view of the foregoing, on February 24, 2015, the company raised dilatory defenses, In view of the above, on February 24, 2015, the company filed dilatory defenses, which were dismissed by the Court on August 20, 2015. The decision whereby the defenses were dismissed was appealed by the defendant, and such appeal was ultimately dismissed by the Court of Appeals of Valdivia. On September 2, 2015, Forestal Arauco S.A. answered the claim. Subsequently, the plaintiff filed a reply, and the defendant filed the rejoinder. On October 1, 2015, a settlement hearing took place without any results.

75

CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Consolidated Financial Statements

June 30, 2016

Amounts in thousands of U.S. dollars, except as indicated

The Court issued the ruling ordering the production of evidence. Both parties lodged a reconsideration appeal, with a secondary ordinary appeal, in an effort to amend the abovementioned ruling. The Court dismissed both reconsideration appeals and granted the secondary ordinary appeals. The Court of Appeals rejected both secondary appeals, and no variations were made to the ruling that ordered the production of evidence.

The period for producing evidence in the first instance stage commenced, and both parties submitted documents and testimonial evidence, and the court ordered hearings for the production of electronic evidence and the exhibition of certain documents. The defendant requested the court to issue a ruling ordering the parties to await a final award. The Court ordered that it first be certified that the period for producing evidence had expired, and it was so certified on August 18. Pending.

Considering that the Company’s position is based on solid legal grounds, there is a reasonable margin for obtaining a favorable result for the Company.

4. On April 28, 2015, the company was notified of and answered the action for recovery submitted in ordinary proceedings by Mr. Rodrigo Huanquimilla Arcos and Mr. Mario Andrades Rojas, attorneys at law, on behalf of 24 members of the Arcos succession, who claiming to be owners of the estate that they identify as Hacienda Quivolgo, of 5,202 hectares, request that Forestal Celco S.A., currently Forestal Arauco S.A., be sentenced to return the abovementioned real property plus civil and natural fruits or revenues as well as any estates adhered to it, along with any damages that the real property may have suffered, with litigation costs. The company proceeded to answer the claim requesting that it be completely rejected, arguing that Forestal Celco S.A., currently Forestal Arauco S.A., is the sole and legitimate owner of the real property.

The Court issued the resolution that commenced the evidentiary stage and ordered that this trial be joined with case file No. C-54-2015, suspending the proceeding and ordering the parties to appoint a joint representative to act on behalf of both parties. The attorneys for both claimant parties conferred reciprocal powers to each other, and thus the Court deemed they had fulfilled the legal requirement. The defendant lodged an appeal against this ruling before the Court of Appeals of Talca. Likewise, the defendant lodged an appeal against the ruling that failed to decide the reconsideration appeal that had been previously filed against the ruling that ordered the production of evidence. Both appeals are still pending.

In the first instance stage, the period for producing evidence commenced and both parties produced evidence. The period for producing evidence expired on May 9, 2016, with the expert reports requested by both parties still pending. Case file C-334-2014 of the Civil Court of Constitución.

Considering that the Company’s position is based on solid legal grounds, there is a reasonable margin for obtaining a favorable result for the Company.

5. On April 6, 2015, the company was notified through a rogatory letter regarding the claim submitted by Mr. Gustavo Andrés Ochagavía Urrutia, attorney at law, acting on behalf of 23 members of the Arcos succession, who claim to be the owners of the estate that they identify as Hacienda Quivolgo, of 5,202 hectares, requesting that Forestal Celco S.A., currently Forestal Arauco S.A., be ordered to return the abovementioned real property plus civil and natural fruits or revenues as well as any estates adhered to it, along with any damages that the real property may have suffered, with litigation costs. They base their

76

CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Consolidated Financial Statements

June 30, 2016

Amounts in thousands of U.S. dollars, except as indicated

claim in that Forestal Celco S.A., currently Forestal Arauco S.A., is allegedly in possession but does not own the real property in question. On April 28, 2014, the company proceeded to answer the claim requesting that it be completely rejected, arguing that Forestal Celco S.A., currently Forestal Arauco S.A., is the sole and legitimate owner of the real property.

On January 6, 2016, the plaintiff was notified of the ruling which commences the trial period. On January 8, 2016, the defendant requested a consolidation of the proceedings with Case file 334-2014, as well as the suspension of the proceedings until this request is decided upon.

On January 12, 2016, the Court granted the plaintiff a term for issuing observations regarding the request for joinder of proceedings, and meanwhile suspended the procedure. The Court ordered this case file to be joined with the proceedings of case file No. C-334-2014. Case file C-54-2015 of the Civil Court of Constitución.

Considering that the Company’s position is based on solid legal grounds, there is a reasonable margin for obtaining a favorable result for the Company.

At the end of each reporting period there are no other contingencies that might significantly affect the Company’s financial, position or results of operations.

Provisions recorded as of June 30, 2016 and December 31, 2015 are as follows:

	06-30-2016
	Unaudited		12-31-2015
Classes of Provisions	ThU.S.$		ThU.S.$
Provisions, Current		751		858
Provisions for litigations		443		404
Other provisions		308		454
Provisions, non-Current		36,112		34,541
Provisions for litigations		12,671		10,996
Other provisions		23,441		23,545
Total Provisions		36,863		35,399

77

CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Consolidated Financial Statements

June 30, 2016

Amounts in thousands of U.S. dollars, except as indicated

	06-30-2016 Unaudited
Movements in Provisions	Litigations ThU.S.$			Other Provisions ThU.S.$			Total ThU.S.$
Opening balance		11,400			23,999			35,399
Changes in provisions
Increase in existing provisions		1,902			—			1,902
Used provisions		(197	)		(145	)		(342	)
Increase (decrease) in foreign currency exchange		(4	)		—			(4	)
Other Increases (Decreases)		13			(105	)		(92	)
Total Changes		1,714			(250	)		1,464
Closing balance		13,114			23,749			36,863

(*) The increase in legal claims is composed mainly of Th.U.S.$431 from Brazilian subsidiaries in connection with civil and labor lawsits, being the latter the most important. In addition there are ThU.S.$26 from Uruguay and ThU.S.$ 1,445 from Arauco Argentina in connection with labor lawsuits.

(**) The change of Other Provisions comprises mainly a reversal of existing provision of Th.U.S.$ 100 corresponding to Arauco Argentina.

	12-31-2015
Movements in Provisions	Litigations(*) ThU.S.$			Other Provisions(**) ThU.S.$			Total ThU.S.$
Opening balance		16,038			51,026			67,064
Changes in provisions
Increase in existing provisions		2,555			1,429			3,984
Used provisions		(2,990	)		—			(2,990	)
Increase (decrease) in foreign currency exchange		(5,163	)		—			(5,163	)
Other Increases (Decreases)		960			(28,456	)		(27,496	)
Total Changes		(4,638	)		(27,027	)		(31,665	)
Closing balance		11,400			23,999			35,399

(*) The increase in legal claims is composed mainly of Th.U.S.S$1,558 from Brazilian subsidiaries in connection with civil and labor lawsits, being the latter the most important. In addition there are ThU.S$840 from Arauco Argentina in connection with labor lawsuits.

(**) The increase of Other Provisions comprises mainly an increase of Th.U.S$1,429 from Arauco Argentina for export duties. While in the Other Increases (Decreases) line item, the reverse of Negative Equity to Arauco Forest Brasil over Novo Oeste by Th.U.S.$ 25,290 and Forestal Cholguán over Sercor is reflected by Th.U.S.$2,850.

Provisions for litigations are related to labor and tax claims whose payment period is uncertain. Other provisions mainly include the recognition of a liability related to investments in associates and joint ventures accounted under the equity method with net asset deficiency at the end of the reporting period.

78

CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Consolidated Financial Statements

June 30, 2016

Amounts in thousands of U.S. dollars, except as indicated

NOTE 19. INTANGIBLE ASSETS

	06-30-2016
Classes of Intangible Assets, Net	Unaudited ThU.S.$			12-31-2015 ThU.S.$
Intangible assets, net		84,845			88,112
Computer software		19,518			21,251
Water rights		5,689			5,485
Customer		53,950			55,265
Other identifiable intangible assets		5,688			6,111
Classes of intangible Assets, Gross		146,713			142,704
Computer software		60,404			58,275
Water rights		5,689			5,485
Customer		72,067			70,676
Other identifiable intangible assets		8,553			8,268
Classes of accumulated amortization and impairment
Total accumulated amortization and impairment		(61,868	)		(54,592	)
Accumulated amortization and impairment, intangible assets		(61,868	)		(54,592	)
Computer software		(40,886	)		(37,024	)
Customer		(18,117	)		(15,411	)
Other identifiable intangible assets		(2,865	)		(2,157	)

Reconciliation of the carrying amount of intangible assets at the beginning and end of each reporting period balances

	06-30-2016 Unaudited
Reconciliation of intangible assets	Computer Software ThU.S.$			Water Rigths ThU.S.$			Customer ThU.S.$			Others ThU.S.$			TOTAL ThU.S.$
Opening Balance		21,251			5,485			55,265			6,111			88,112
Changes
Additions		1,308			204			—			132			1,644
Disposals		(20	)		—			—			—			(20	)
Amortization		(3,490	)		—			(2,357	)		(658	)		(6,505	)
Increase (decrease) in foreign currency conversion		222			—			1,042			103			1,367
Others Increases (Decreases)		247			—			—			—			247
Changes Total		(1,733	)		204			(1,315	)		(423	)		(3,267	)
Closing Balance		19,518			5,689			53,950			5,688			84,845
	12-31-2015
Reconciliation of intangible assets	Computer Software ThU.S.$			Water Rigths ThU.S.$			Customer ThU.S.$			Others ThU.S.$			TOTAL ThU.S.$
Opening Balance		18,224			5,442			63,164			6,428			93,258
Changes
Additions		9,638			66.00			—			690			10,394
Amortization		(6,448	)		(2.00	)		(4,819	)		(684	)		(11,953	)
Increase (decrease) in foreign currency conversion		(84	)		-21			(3,080	)		(253	)		(3,438	)
Changes Total		3,027			43			(7,899	)		(317	)		(5,146	)
Closing Balance		21,251			5,485			55,265			6,111			88,112

79

CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Consolidated Financial Statements

June 30, 2016

Amounts in thousands of U.S. dollars, except as indicated

		Average
Computer Software	Years		5
Customer	Years		15
Brands	Years		7

The amortization of customer and computer software is presented in the Consolidated Statements of profit or loss under the Administrative Expenses line item.

NOTE 20. BIOLOGICAL ASSETS

Biological assets comprise forestry plantations, mainly radiata and taeda pine, and to a lesser extent eucalyptus. The plantations are located in Chile, Argentina, Brazil and Uruguay, with a total surface of 1.7 million hectares, out of which 1 million hectares are used for forestry planting, 406 thousand hectares are native forest, 187 thousand hectares are used for other purposes and 74 thousand hectares not yet planted.

As of June 30, 2016, the production volume of logs totaled 9.5 million cubic meters (10,7 million cubic meters as of June 30, 2015).

Measurements of fair value of Arauco’s biological assets are classified as Level 3, due to the fact that inputs are not observable. However, this information reflects the assumptions that market participants would use in pricing the asset, including assumptions about risk.

These unobservable inputs were developed using the best information available and includes internal data from Arauco. These unobservable inputs can be adjusted if the available information indicates that other market participants would use different information or there is something specific in Arauco that is not available to other market participants.

The main considerations in determining the fair value of biological assets include the following:

• Arauco uses discounted expected future cash flows of its forest plantations, which are based on a harvest projection date for all existing plantations.

• Current forestry plantations are projected based on a net volume that will not decrease, with a minimum growth equivalent to the current supply demand.

• Future plantations are not considered.

• The harvest of forestry plantations supplies raw materials for all other products that Arauco produces and trades. By directly controlling the development of forests that will be processed, Arauco ensures high quality timber for each of its products.

• Expected cash flows are determined in terms of harvest and expected sale of forestry products, associated with the demand from the Company’s own industrial centers and sales to third parties at market prices. Sales margin of the different products that are harvested in the forest is also considered in the valuation. The changes in the value of the plantations pursuant to the criteria defined above are accounted for in the results for the fiscal year, as established in IAS 41. These changes are presented in the Statement of profit or loss under the line item Other income per function, which as of June 30, 2016 amounted to ThU.S.$98,874 (ThU.S.$94,062 as of June 30, 2015). The appraisal of biological assets resulted in a greater cost of the lumber sold in comparison to the real incurred cost, which is presented included in the cost of sales which as of June 30, 2016 amounted to ThU.S.$98,445 (ThU.S.$90,087 as of June 30, 2015).

80

CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Consolidated Financial Statements

June 30, 2016

Amounts in thousands of U.S. dollars, except as indicated

• Forestry plantations are harvested according to the needs of Arauco’s production plants.

• The discount rates used are 8% in Chile, Brazil and Uruguay, and 12% in Argentina.

• It is expected that prices of harvested timber are constant in real terms based on market prices.

• Cost expectations with respect to the lifetime of the forests are constant based on estimated costs included in the projections made by Arauco.

• The average crop age by species and country is:

	Chile		Argentina		Brazil		Uruguay
Pine		24		15		15		—
Eucalyptus		12		10		7		10

The following table sets forth changes in fair value of biological assets considering variations in significant assumptions considered in calculating the fair value of the assets:

		ThU.S.$
Discount rate	0,5		(113,825	)
	-0,5		120,435
Margins (%)	10		391,848
	-10		(391,848	)

Forestry plantations classified as current Biological assets are those to be harvested and sold within twelve months after the reporting period.

The Company has contracted fire insurance policies for its forestry plantations, which in conjunction with the Company’s resources and efficient protection measures for these forestry assets, allow financial and operational risks to be minimized.

Detail of Biological Assets Pledged as Security

As of June 30, 2016, there are no forestry plantations pledged as security.

Detail of Biological Assets with Restricted Ownership

As of the date of these interim consolidated financial statements, there are no biological assets with restricted ownership.

No significant government grants have been received.

81

CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Consolidated Financial Statements

June 30, 2016

Amounts in thousands of U.S. dollars, except as indicated

Current and Non-Current Biological Assets

As of the date of these interim consolidated financial statements, the Current and Non-current biological assets are as follows:

	06-30-2016
	Unaudited		12-31-2015
	ThU.S.$		ThU.S.$
Current		324,862		306,529
Non-current		3,578,331		3,520,068
Total		3,903,193		3,826,597

Reconciliation of carrying amount of biological assets

Movement	06-30-2016 Unaudited ThU.S.$
Opening Balance		3,826,597
Changes in Biological Assets
Additions		62,326
Decreases due to Sales		(754	)
Decreases due to Harvest		(161,487	)
Gain (losses) arising from changes in fair value less costs to sale		98,874
Increases (decreases) in Foreign Currency Translation		75,539
Other Increases (decreases)		4,162
Total Changes		76,596
Closing Balance		3,903,193
Movement	12-31-2015 ThU.S.$
Opening Balance		3,846,353
Changes in Biological Assets
Additions		215,557
Decreases due to Sales		(1,028	)
Decreases due to Harvest		(299,501	)
Gain (losses) arising from changes in fair value less costs to sale		210,479
Increases (decreases) in Foreign Currency Translation		(111,502	)
Loss of forest due to fires		(34,850	)
Other Increases (decreases)		1,089
Total Changes		(19,756	)
Closing Balance		3,826,597

As of the date of these interim consolidated financial statements, there are no disbursements related to the acquisition of biological assets.

82

CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Consolidated Financial Statements

June 30, 2016

Amounts in thousands of U.S. dollars, except as indicated

NOTE 21. ENVIRONMENTAL MATTERS

Environment Management

For Arauco, sustainability means management strategy. This strategy incorporates values, commitments and standards, that together with the adoption of best practices as well as the use of the latest available technologies, seek to continuously improve the Company’s environmental management. It is the environmental department and each of its specialists that ensure these guidelines are met and are put in to practice in everyday company operations.

All of Arauco’s production units have certified environmental management systems, which reinforce the Company’s commitment to environmental performance and ensure the traceability of all raw materials used.

Arauco uses several supplies in its productive processes such as wood, chemical products, and water, etc., which in turn produce liquid and gas emissions. As a way to make the Company’s environmental management more efficient, significant progress has been made to reduce consumption and emissions.

Environmental investments have been made related to the control of atmospheric emissions, process improvements, water and waste management, as well as effluent treatment, in order to improve the environmental performance of all of Arauco’s business units.

Detail information of disbursements related to the environment

As of June 30, 2016 and December 31, 2015 Arauco has made and / or has committed the following disbursements by major environmental projects:

83

CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Consolidated Financial Statements

June 30, 2016

Amounts in thousands of U.S. dollars, except as indicated

06/30/2016

Disbursements undertaken 2016

Committed Disbursements

Company

Name of project

State of project

Amount ThU.S.$

Asset Expense

Asset/expense destination item

Amount ThU.S.$

Estimated date

Arauco Do Brasil S.A.

Environmental improvement studies

In process

0

Assets

Property, plant and equipment

701

2016

Arauco Do Brasil S.A.

Environmental improvement studies

In process

48

Expense

Administration expenses

1,571

2017

Celulosa Arauco Y Constitucion S.A.

Investment projects for the control and management of gas emissions from industrial process

In process

231

Assets

Property, plant and equipment

2,649

2016

Celulosa Arauco Y Constitucion S.A.

Investment projects for the control and management of gas emissions from industrial process

In process

36

Assets

Property, plant and equipment

8,525

2018

Celulosa Arauco Y Constitucion S.A.

Environmental improvement studies

In process

749

Assets

Property, plant and equipment

1,139

2016

Celulosa Arauco Y Constitucion S.A.

Investment projects for the control and management of hazardous liquids and water energy optimization of industrial plants

In process

15,731

Assets

Property, plant and equipment

100,375

2017

Celulosa Arauco Y Constitucion S.A.

Environmental improvement studies

In process

12,620

Expense

Operating cost

17,532

2016

Celulosa Arauco Y Constitucion S.A.

Expansion of solid industrial waste dumpsite for management of these in the future

In process

136

Assets

Property, plant and equipment

1,284

2016

Arauco Argentina S.A

Construction emisario

In process

8

Assets

Property, plant and equipment

797

2016

Arauco Argentina S.A

Expansion of solid industrial waste dumpsite for management of these in the future

In process

13

Assets

Property, plant and equipment

3,939

2016

Arauco Argentina S.A

Investment projects for the control and management of hazardous liquids and water energy optimization of industrial plants

In process

32

Assets

Property, plant and equipment

6,263

2016

Paneles Arauco S.A.

Investment projects for the control and management of hazardous liquids and water energy optimization of industrial plants

In process

629

Expense

Operating cost

1,887

2016

Paneles Arauco S.A.

Expansion of solid industrial waste dumpsite for management of these in the future

In process

231

Expense

Administration expenses

231

2016

Paneles Arauco S.A.

Environmental improvement studies

In process

1,002

Assets

Property, plant and equipment

336

2016

Forestal Arauco S.A. (Ex-Forestal Celco S.A.)

Environmental improvement studies

In process

311

Expense

Administration expenses

532

2016

Forestal los Lagos S.A

Environmental improvement studies

In process

106

Expense

Operating cost

208

2016

TOTAL

31,883

147,969

84

CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Consolidated Financial Statements

June 30, 2016

Amounts in thousands of U.S. dollars, except as indicated

12/31/2015

Disbursements undertaken 2015

Committed Disbursements

Company

Name of project

State of project

Amount ThU.S.$

Asset Expense

Asset/expense destination item

Amount ThU.S.$

Estimated date

Arauco Do Brasil S.A.

Environmental improvement studies

In process

32

Assets

Property, plant and equipment

220

2016

Arauco Do Brasil S.A.

Environmental improvement studies

In process

220

Expense

Administration expenses

699

2016

Celulosa Arauco Y Constitucion S.A.

Investment projects for the control and management of gas emissions from industrial process

In process

2,720

Assets

Property, plant and equipment

0

Celulosa Arauco Y Constitucion S.A.

Environmental improvement studies

In process

2,688

Assets

Property, plant and equipment

1,057

2016

Celulosa Arauco Y Constitucion S.A.

Environmental improvement studies

Finished

4,818

Assets

Property, plant and equipment

0

Celulosa Arauco Y Constitucion S.A.

Investment projects for the control and management of hazardous liquids and water energy optimization of industrial plants

Finished

244

Assets

Property, plant and equipment

0

Celulosa Arauco Y Constitucion S.A.

Investment projects for the control and management of hazardous liquids and water energy optimization of industrial plants

In process

6,668

Assets

Property, plant and equipment

113,321

2017

Celulosa Arauco Y Constitucion S.A.

Environmental improvement studies

Finished

27,868

Expense

Operating cost

0

Celulosa Arauco Y Constitucion S.A.

Expansion of solid industrial waste dumpsite for management of these in the future

In process

2,122

Assets

Property, plant and equipment

1,420

2016

Arauco Argentina S.A

Construction emisario

In process

0

Assets

Property, plant and equipment

805

2016

Arauco Argentina S.A

Expansion of solid industrial waste dumpsite for management of these in the future

In process

165

Assets

Property, plant and equipment

3,952

2016

Arauco Argentina S.A

Environmental improvement studies

Finished

117

Assets

Property, plant and equipment

0

Arauco Argentina S.A

Investment projects for the control and management of hazardous liquids and water energy optimization of industrial plants

In process

38

Assets

Property, plant and equipment

6,268

2016

Paneles Arauco S.A.

Investment projects for the control and management of hazardous liquids and water energy optimization of industrial plants

In process

1,627

Expense

Operating cost

109

2016

Paneles Arauco S.A.

Investment projects for the control and management of hazardous liquids and water energy optimization of industrial plants

In process

555

Assets

Property, plant and equipment

366

2016

Paneles Arauco S.A.

Investment projects for the control and management of hazardous liquids and water energy optimization of industrial plants

Finished

720

Assets

Property, plant and equipment

0

Paneles Arauco S.A.

Expansion of solid industrial waste dumpsite for management of these in the future

In process

355

Expense

Administration expenses

355

2016

Forestal Arauco S.A. (Ex-Forestal Celco S.A.)

Environmental improvement studies

In process

613

Expense

Administration expenses

783

2016

Forestal los Lagos S.A

Environmental improvement studies

In process

206

Expense

Operating cost

208

2016

TOTAL

51,776

129,563

85

CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Consolidated Financial Statements

June 30, 2016

Amounts in thousands of U.S. dollars, except as indicated

NOTE 22. NON-CURRENT ASSETS HELD FOR SALE

Arauco decided to sell assets in previous years corresponding mainly to sawmills in Chile and remains committed to its sales plan.

By the end of fiscal year 2015, Paneles Arauco S.A. decided to reclassify to Properties, plant and equipment an amount of ThU.S.$5,429, since the Escuadron, La Araucana and Remanufactura Lomas Coloradas plants were used as warehouses for finished products. These assets consisted of buildings and saw mill equipment, which were shut down in preceding years.

The following table sets forth information on the main types of non-current assets held for sale:

	06-30-2016 Unaudited ThU.S.$		12-31-2015 ThU.S.$
Land		218		217
Buildings		1,122		1,122
Property, plant and equipment		1,456		1,855
Total		2,796		3,194

There were no significant effect on results related to the sale of assets held for sale on June 30, 2016 and December 31, 2015

86

CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Consolidated Financial Statements

June 30, 2016

Amounts in thousands of U.S. dollars, except as indicated

NOTE 23. FINANCIAL INSTRUMENTS

23.1 Classification

Arauco’s financial instruments as of June 30, 2016 and December 31, 2015, are displayed in the table below. Regarding those instruments valued at an amortized cost, as estimation of their reasonable value is displayed for informational purposes.

Financial Instruments Thousands of dollars	June 2016 Unaudited				December 2015
	Carrying amount		Fair Value		Carrying amount		Fair Value
Fair value through profit or loss (held for trading)		135,425		135,425		200,034		200,034
Forward		1,844		1,844		3,245		3,245
Mutual funds (2)		133,581		133,581		196,789		196,789
Loans and Accounts Receivables		1,083,215		1,083,215		1,054,952		1,054,952
Cash and cash equivalents		393,779		393,779		303,236		303,236
Cash		162,197		162,197		143,324		143,324
Time deposits		227,360		227,360		159,912		159,912
Agreements		4,222		4,222		—		—
Accounts Receivables (net)		685,688		685,688		748,592		748,592
Trades and other receivables		558,348		558,348		614,655		614,655
Lease receivable		11		11		15		15
Other receivables		127,329		127,329		133,922		133,922
Accounts receivable from related parties		3,748		3,748		3,124		3,124
Other Financial Assets (5)		12,300		12,300		29,545		29,545
Financial Liabilities at amortized cost (3)		5,020,998		5,305,504		4,895,594		5,095,197
Bonds issued denominated in U.S. dollars		2,319,598		2,479,400		2,317,216		2,409,538
Bonds issued denominated in U.F. (4)		943,271		1,023,927		863,118		923,775
Bank Loans in Dollars		1,016,871		1,077,683		953,898		1,004,792
Bank borrowing denominated in U.S. dollars		21,975		21,975		43,644		43,644
Financial Leasing		128,590		111,826		127,559		123,289
Trades and other Payables		583,433		583,433		583,018		583,018
Accounts payable to related parties		7,260		7,260		7,141		7,141
Financial liabilities at fair value through profit or loss		911		911		1,429		1,429
Hedging Liabilities		145,619		145,619		226,139		226,139

(1) Assets measured at fair value through profit or loss other than mutual funds classified as cash equivalents, are presented in the line item “other financial assets” in the consolidated statement of financial position.

(2) Although mutual funds are measured at fair value through profit or loss for purposes of the consolidated statement of financial position mutual funds are classified as “Cash and cash equivalents” due to the are highly liquid short term investment.

(3) Financial liabilities measured at amortized cost, other than “Trade and other payables” and derivatives are presented in the consolidated statement of financial position in the line item “Other financial liabilities” as current and non-current based on their maturity.

(4) The Unidad de Fomento (“UF”) is a unit of account that is linked to, and is adjusted daily to reflect changes in the Chilean consumer price index.

(5) Includes guarantee fund for derivatives which correspond to the collateral under swap agreements.

87

CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Consolidated Financial Statements

June 30, 2016

Amounts in thousands of U.S. dollars, except as indicated

23.2 Fair Value Hierarchy of Financial Assets and Liabilities

The assets and liabilities measured at fair value in the consolidated statements of financial position as of June 30, 2016, have been measured based on the valuation methodologies provided in IAS 39. The methodologies applied for each financial instrument are classified according to their hierarchy as follows:

• Level 1: Securities or quoted prices in active markets for identical assets and liabilities

• Level 2: Inputs other than quoted prices included within Level 1 that are observable for the assets or liabilities, either directly (i.e. as prices) or indirectly (i.e. derived from prices); and

• Level 3: Inputs for the assets or liabilities that are not based on observable market data (unobservable inputs).

Thousands of dollars	Fair Value				Fair value
	June 2016		Level 1		Level 2		Level 3
Financial assets measured at fair value
Derivates		1,844				1,844
Mutual Funds (2)		133,581		133,581
Other financial assets		12,300		9,634		2,666
Financial liabilities measured at fair value
Bonds issued denominated in U.S. dollars		2,479,400		2,479,400
Bonds issued denominated in U.F. (4)		1,023,927		1,023,927
Bank Loans in Dollars		1,077,683				1,077,683
Bank borrowing denominated in U.S. dollars		21,975				21,975
Financial Leasing		111,826				111,826
Hedging Liabilities		145,619				145,619
Financial liabilities at fair value through profit or loss		911				911

88

CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Consolidated Financial Statements

June 30, 2016

Amounts in thousands of U.S. dollars, except as indicated

23.3 Explanation of the valuation of Financial Instruments.

Cash and cash equivalent and accounts receivable

The carrying amount of accounts receivable flows, cash and cash equivalents (including mutual funds), and other financial assets and liabilities approximate their fair value due to the short-term nature of such instruments.

Derivative financial instruments

Interest rate and currency swaps are valued under the cash flow discount method at the rate applicable according to the transaction’s risk, using an internal methodology based on the information obtained from Bloomberg. In this particular case, given that cross currency swaps correspond to future flows in UF and future flows in Dollars, Arauco calculates the current value of such flows by using 2 discount curves: the UF zero coupon curve and the Dollar zero coupon.

The fair value of the interest rate swap contracts is calculated by reference to the rate differential between the agreed upon rate and the market rate as of the end date of these financial statements.

The fair value of the currency forward contracts is calculated by reference to the current forward exchange rates of contracts with similar maturity profiles.

For the case of zero cost collar, the Bloomberg terminal is used to value Fuel Oil No. 6 options.

Financial Liabilities

The fair value of bonds issued was determined with reference to quoted market prices as they have standard terms and conditions.

The fair value of bank borrowings were determined based on discounted cash flow analysis, applying the corresponding discount yield curves to the remaining term to maturity.

Disclosures of the fair value of financial liabilities at amortized cost are determined via the use of discounted cash flows, calculated over variables of the observable markets as of the date of informing the consolidated financial statements, and correspond to Level 2 of the fair value hierarchy.

The following table shows compliance with financial covenants (level of indebtedness, exposed on point 23.9.3) required by domestic bond indentures:

89

CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Consolidated Financial Statements

June 30, 2016

Amounts in thousands of U.S. dollars, except as indicated

	June 2016 ThU.S.$ Unaudited			December 2015 ThU.S.$
Financial debt, current		647,758			291,798
Financial debt, non-current		3,782,547			4,013,637
Total financial debt		4,430,305			4,305,435
Cash and cash equivalent		(526,996	)		(500,025	)
Net financial debt		3,903,309			3,805,410
Non-controlling interests		43,696			37,735
Equity attributable to owners of parent		6,860,141			6,608,710
Total equity		6,903,837			6,646,445
Debt to equity ratio		0.57			0.57

The following table sets forth a reconciliation between the financial liabilities and the statement of financial position as of June 30, 2016 and December 31, 2015:

Thousands of dollars	June 2016
	Up to 90 days		From 91 days to 1 year		Other current financial liabilities, Total		From 13 months to 5 years		More than 5 years		Other non- current financial liabilities, Total		Total
Bonds obligations		52,882		272,431		325,313		1,355,750		1,581,805		2,937,555		3,262,868
Bank borrowing		195,781		82,951		278,732		638,447		121,667		760,114		1,038,846
Financial Leasing		10,411		33,302		43,713		84,877		—		84,877		128,590
Swap and Forward		1,777		—		1,777		144,753		—		144,753		146,530
Other Financial Liabilities, Total (a)		260,851		388,684		649,535		2,223,827		1,703,472		3,927,299		4,576,834
Thousands of dollars	June 2016
	Up to 90 days		From 91 days to 1 year		Total Current		From 13 months to 5 years		More than 5 years		Total non-current		Total
Trades and other payables		555,684		27,749		583,433		—		—		—		583,433
Related party payables		7,260		—		7,260		—		—		—		7,260
Accounts Payable, Total (b)		562,944		27,749		590,693		—		—		—		590,693
Financial Liabilities, Total (a) + (b)		823,795		416,433		1,240,228		2,223,827		1,703,472		3,927,299		5,167,527
Thousands of dollars	December 2015
	Up to 90 days		From 91 days to 1 year		Other current financial liabilities, Total		From 13 months to 5 years		More than 5 years		Other non-current financial liabilities, Total		Total
Bonds obligations		49,357		5,836		55,193		1,179,558		1,945,583		3,125,141		3,180,334
Bank borrowings		126,795		72,948		199,743		648,017		149,782		797,799		997,542
Financial leasing		9,301		27,561		36,862		90,697		—		90,697		127,559
Swap and Forward		4,240		—		4,240		223,328		—		223,328		227,568
Other Financial Liabilities, Total (a)		189,693		106,345		296,038		2,141,600		2,095,365		4,236,965		4,533,003
Thousands of dollars	December 2015
	Up to 90 days		From 91 days to 1 year		Total Current		From 13 months to 5 years		More than 5 years		Total non-current		Total
Trades and other payables		583,018		0		583,018		—		—		—		583,018
Related party payables		7,141		—		7,141		—		—		—		7,141
Accounts Payable, Total (b)		590,159		0		590,159		—		—		—		590,159
Financial Liabilities, Total (a) + (b)		779,852		106,345		886,197		2,141,600		2,095,365		4,236,965		5,123,162

90

CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Consolidated Financial Statements

June 30, 2016

Amounts in thousands of U.S. dollars, except as indicated

23.4 Derivative Financial Instruments

Hedging instruments recorded as of June 30, 2016 are cash flow hedges. Arauco uses derivatives for hedging purposes, such as cross currency swaps, currency and commodity forwards, interest rate swaps, and options. Depending on the fair value of each instrument, the position could be either an asset or a liability, and they are listed in the Statement of Financial Position under Other Non-current Financial Assets or Other Non-current Financial Liabilities, respectively. The effects for the period are presented under Equity as Other Comprehensive Income or the Statement of Comprehensive Income as Finance Income or Finance Costs, net of differences in exchange rate of the hedged items and the deferred tax.

A summary of the hedging instruments included in the Financial Position Statement as of the end of this period, is presented below:

Financial Instruments	Fair Value ThU.S.$
Assets at fair value through profit or loss (held for trading)		1,844
Forward- Uruguay (1)		1,844
Hedging Assets		1,901
Forward-Uruguay (1)		539
Zero Cost Collar		1,362
Financial liabilities at fair value through profit or loss		(911	)
Forward-Colombia		(808	)
Forward-Uruguay (1)		(103	)
Hedging Liabilities		(144,856	)
Cross Currency Swaps		(141,992	)
Zero Cost Collar		(503	)
Forward-Uruguay (1)		(2,361	)

(1) Include Swap and Forward from Uruguay tables.

23.4.1 Chile

23.4.1.1 Cross currency swaps

Arauco has exposure to cash flow variability in the exchange rate risk factor. This occurs mainly because of holding assets or liabilities in currencies other than the functional currency, creating variations that could affect the operation’s results.

Below are the cross currency swaps that Arauco has as of June 30, 2016 to cover the exposure to the exchange rate risk generated from bonds denominated in UF:

91

CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Consolidated Financial Statements

June 30, 2016

Amounts in thousands of U.S. dollars, except as indicated

Bond	Institution	Amount U.S.$		Amount UF		Starting date		Ending date		Market Value U.S.$
F	Deutsche - England		43,618,307		1,000,000		10/30/2011		10/30/2021		(7,336,237	)
F	JP Morgan - N.A.		43,618,307		1,000,000		10/30/2011		10/30/2021		(7,202,569	)
F	Deutsche - England		37,977,065		1,000,000		4/30/2014		4/30/2019		(7,699,491	)
F	BBVA - Chile		38,426,435		1,000,000		10/30/2014		4/30/2023		(7,699,491	)
F	BBVA - Chile		38,378,440		1,000,000		10/30/2014		4/30/2023		(7,795,986	)
F	Santander - Chile		37,977,065		1,000,000		10/30/2014		4/30/2023		(7,651,579	)
F	BCI - Chile		37,621,562		1,000,000		10/30/2014		4/30/2023		(7,487,056	)
J	Corpbanca - Chile		42,864,859		1,000,000		9/1/2010		9/1/2020		(9,212,969	)
J	BBVA - Chile		42,864,859		1,000,000		9/1/2010		9/1/2020		(8,940,391	)
J	Deutsche - England		42,864,859		1,000,000		9/1/2010		9/1/2020		765,332
J	Santander - Spain		42,873,112		1,000,000		9/1/2010		9/1/2020		(2,206,448	)
J	BBVA - Chile		42,864,257		1,000,000		9/1/2010		9/1/2020		(1,820,446	)
P	Corpbanca - Chile		46,474,122		1,000,000		5/15/2012		11/15/2021		(1,269,345	)
P	JP Morgan - N.A.		47,163,640		1,000,000		11/15/2012		11/15/2021		(708,525	)
P	BBVA - Chile		42,412,852		1,000,000		11/15/2013		11/15/2023		(5,952,180	)
P	Santander - Chile		41,752,718		1,000,000		11/15/2013		11/15/2023		(4,925,623	)
P	Deutsche - England		41,752,718		1,000,000		11/15/2013		11/15/2023		(4,896,210	)
R	Santander - Chile		128,611,183		3,000,000		10/1/2014		4/1/2024		(25,021,719	)
R	JP Morgan - England		43,185,224		1,000,000		10/1/2014		4/1/2024		(7,710,643	)
R	Corpbanca - Chile		43,277,070		1,000,000		10/1/2014		4/1/2024		(7,693,243	)
Q	BCI - Chile		43,185,224		1,000,000		10/1/2014		4/1/2021		(4,812,558	)
Q	BCI - Chile		43,196,695		1,000,000		10/1/2014		4/1/2021		(4,714,344	)
											(141,991,721	)

Arauco needs to minimize the risk of exchange rate as it holds adjustable obligations in Chilean Pesos. The objective of this position in the swap is to eliminate the uncertainty of the exchange rate, exchanging the flows derived from obligations expressed in adjustable pesos of the bonds described above, with flows in U.S. dollars (Arauco’s functional currency), at a fixed and determined exchange rate as of the agreement’s execution date.

Through an effectiveness test, and pursuant to IFRS 39, we were able to validate that the aforementioned hedging instruments are highly effective within an acceptable range for Arauco, for the purposes of eliminating the uncertainty of the exchange rate in the commitments derived from the hedged object.

92

CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Consolidated Financial Statements

June 30, 2016

Amounts in thousands of U.S. dollars, except as indicated

23.4.1.2 Zero Cost Collars

Our results are exposed to changes the price of certain fuels. To minimize the risk we limited the volatility of future cash flows associated with the purchase of Fuel Oil No. 6 for year 2016 through zero cost collar contracts of this commodity. The Fuel Oil No. 6 is consumed in the process of pulp production.

Furthermore, we have indirect exposure to the price of Diesel due to contracts with forestry industry contractors, whose rates vary according to the price of this commodity, as well as other variables. To minimize this risk, we use financial instruments to cover the risk associated with the volatility of the cost of forestry contractor rates, from June 2015 until May 2016.

Contracts held by Arauco as of June 30, 2016 are presented in the following table:

Commodity

Institution

Amount U.S.$

Unit

Hedge starting date

Ending date

Market Value U.S.$

Fuel Oil N°6

JP Morgan - U.K.

337

Miles Bbl.

1/1/2016

6/30/2016

(502,873

)

Fuel Oil N°6

JP Morgan - U.K.

167

Miles Bbl.

7/1/2016

12/31/2016

1,362,161

859,288

23.4.1.3 Forward

There are no forward contracts of derivative financial instruments in effect at June 30, 2016.

23.4.1.4 Colombia

Forward contracts that are in force and effect, executed by Arauco Colombia as of June 30, 2016, are detailed in the following table:

Institution	Amount U.S.$		Starting date		Hedge starting date		Market Value U.S.$
Corpbanca Colombia		7,000,000		4/11/2016		7/11/2016		(429,095	)
Corpbanca Colombia		5,000,000		5/10/2016		8/10/2016		(151,483	)
Corpbanca Colombia		7,000,000		6/14/2016		9/12/2016		(227,226	)
								(807,804	)

23.4.1.5 Argentina

There are no contracts of derivative financial instruments in effect at June 30, 2016.

93

CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Consolidated Financial Statements

June 30, 2016

Amounts in thousands of U.S. dollars, except as indicated

23.4.1.6 Uruguay

Forward

As of June 30, 2016, Arauco Uruguay maintains the following forward contracts in force and effect through a joint operation (50%) for the purposes of ensuring an exchange rate for sale of dollars:

Exchange rate	Institution		Notional		Market Value U.S.$
UYUUSD		Banco Santander Uy		13,050,000		1,012,356
UYUUSD		JP Morgan Chase Bank, N.A.		1,000,000		39,658
UYUUSD		Citibank U.K		2,775,000		73,642
UYUUSD		HSBC Uruguay		13,510,000		718,688
						1,844,344

The results of Arauco Uruguay’s also face exposure to the price variation of certain fuels, as occurs with Fuel Oil N°6, which is used during the cellulose manufacturing process. In order to minimize this risk, the volatility of future flows associated to the purchase of Fuel Oil No. 6 for years 2015, 2016 and 2017 has been limited, through forwards of this commodity. The agreements that are in force and effect as of June 30, 2016, are detailed below:

Exchange rate	Institution		Notional		Market Value U.S.$
Fuel Oil N°6		JPMorgan Chase Bank, N.A.		6,892,951		(396,523	)
Fuel Oil N°6		DNB Bank ASA		1,868,362		(204,492	)
Fuel Oil N°6		Citibank U.K.		501,437		12,470
						(588,545	)

23.4.1.7 Swap

In addition, Arauco Uruguay´s maintains an Interest Rate Swap in force and effect, a derivative instrument which purpose is to set the interest rate of a variable rate debt in the same currency (USD). The valuation off this instrument as of June 30, 2016, is shown below:

Exchange rate	Institution	Notional		Market Value U.S.$
USD	DNB Bank ASA		63,297,009		(1,335,772	)

Note: the amount value and market value in the tables included in section 23.4.4 represent 50% of the total, reflecting the stake held by Arauco in the subsidiaries in Uruguay.

23.5 Loans and Receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. In the consolidated statements of financial position they are included in line items “Cash and cash equivalents” (certain components of cash and cash equivalents), “Trade and Other Current/Non-Current Receivables” and “Accounts receivable from related parties”.

94

CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Consolidated Financial Statements

June 30, 2016

Amounts in thousands of U.S. dollars, except as indicated

Loans and receivables are measured at amortized cost using the effective interest method and are tested for impairment. Financial assets that are classified as loans and receivables are: cash and cash-equivalents, time deposits, repurchase agreements, trade and other current/non-current receivables, and account receivables from related parties.

	June 2016 ThU.S.$ Unaudited		December 2015 ThU.S.$
Loans and Accounts Receivables		1,083,215		1,054,952
Cash and cash equivalents		393,779		303,236
Cash		162,197		143,324
Time Deposits		227,360		159,912
Agreements		4,222		0
Trade and other receivables (net)		689,436		751,716
Trades and Other receivables		558,348		614,655
Lease receivable		11		15
Other receivables		127,329		133,922
Accounts receivable from related parties		3,748		3,124

23.5.1 Cash and Cash Equivalents

Includes cash on hand, bank checking accounts balances and time deposits and other short term highly liquid investments with an original maturity of three months or less. They are short-term, highly liquid investments that are readily convertible to known amounts of cash, and which are subject to an insignificant risk of changes in value.

The composition of cash and cash equivalents (including the balance of mutual funds displayed in this note as valuation, instruments at fair value with profit or loss) at June 30, 2016 and December 31, 2015, classified by origin coins is as follow:

	06-30-2016 Unaudited ThU.S.$		12-31-2015 ThU.S.$
Cash and Cash Equivalents		527,360		500,025
US Dollar		451,721		388,818
Euro		6,555		2,501
Other currencies		55,026		65,228
Chilean pesos		14,058		43,478

23.5.2 Time Deposits and Repurchase Agreements: The investment objective of time deposits and repurchase agreements is to maximize in the short-term the amounts of cash surpluses. These instruments are authorized by Arauco’s Investment Policy, which allows investing in fixed income securities. These instruments have a maturity of less than three months from the date of acquisition.

23.5.3 Trades and Other Receivables: These represent enforceable rights for Arauco resulting from the normal course of the business.

23.5.4 Other Receivables: These correspond to receivables from sales, services or loans that are not considered within the normal course of the business.

95

CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Consolidated Financial Statements

June 30, 2016

Amounts in thousands of U.S. dollars, except as indicated

The provision for doubtful accounts is presented as a deduction of trade and other receivables. The provision for doubtful accounts is established based on an analysis of the age of the portfolio and considering the insurance coverage on accounts receivable. Other conditions are assessed for example when there is objective evidence that Arauco will not receive payments under the original sale terms and when the customer is a party to a bankruptcy court agreement or cessation of payments, and is written-off when Arauco has exhausted all levels of recovery of the receivable in a reasonable time.

23.5.5 Accounts receivable from related parties: Represent enforceable rights for Arauco resulting from the normal course of business, calling normal to the line of business, activity or purpose of explotation and financing, and which Arauco owns a non-controlling ownership of the counterparty.

The following table sets forth trade and other current/non-current receivables classified by currencies as of June 30, 2016 and December 31, 2015:

	06-30-2016 Unaudited ThU.S.$		12-31-2015 ThU.S.$
Trades and other current receivables		667,847		733,322
US Dollar		424,670		507,032
Euros		28,670		27,595
Other currencies		95,565		75,082
Chilean pesos		117,787		123,056
U.F.		1,155		557
Accounts receivable from related parties, current		3,748		3,124
US Dollar		132		21
Other currencies		230		995
Chilean pesos		3,386		2,108
Trade and other non-current receivables		17,843		15,270
US Dollar		10,477		9,976
Other currencies		714		729
Chilean pesos		5,852		3,145
U.F.		800		1,420

96

CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Consolidated Financial Statements

June 30, 2016

Amounts in thousands of U.S. dollars, except as indicated

23.6 Total Financial Liabilities

Arauco’s financial liabilities to the date of these interim consolidated financial statements are as follows :

Financial Liabilities	June 2016 ThU.S.$ Unaudited		December 2015 ThU.S.$
Total Financial Liabilities		5,167,528		5,123,162
Financial liabilities at fair value through profit or loss (held for trading)		911		1,429
Hedging Liabilities		145,619		226,139
Financial Liabilities Measured at Amortized Cost		5,020,998		4,895,594

The following table sets forth the current portion of the non-current bank borrowings and debt issued as of June 30, 2016 and December 31, 2015.

	June 2016 ThU.S.$ Unaudited		December 2015 ThU.S.$
Bank borrowings - current portion		92,905		85,885
Bonds issued - current portion		54,786		55,193
Total		147,691		141,078

23.7 Financial Liabilities Measured at Amortized Cost

Financial liabilities correspond to non-derivative financial instruments with contractual cash-flow payments that can be either fixed or variable.

Also, this category includes those non-derivative financial liabilities for services or goods delivered to Arauco at the end of each reporting period that have not yet been paid. These amounts are not insured and are generally paid within thirty days after being recognized.

As the end of each reporting period, Arauco includes in this category bank borrowings, bonds issued denominated in U.S. Dollars and in UF, trade and other payables.

97

CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Consolidated Financial Statements

June 30, 2016

Amounts in thousands of U.S. dollars, except as indicated

			06-30-2016		12-31-2015		06-30-2016		12-31-2015
Thousands of U.S. dollars			Unaudited				Unaudited
	Currency		Amortized Cost				Fair Value
Total Financial Liabilities				5,020,998		4,895,594		5,305,504		5,095,197
Bonds Issued		U.S. Dollar		2,319,598		2,317,216		2,479,400		2,409,538
Bonds Issued		U.F.		943,271		863,118		1,023,927		923,775
Bank borrowings		U.S. Dollar		1,016,871		953,898		1,077,683		1,004,792
Bank borrowings		Other currencies		21,975		43,644		21,975		43,644
Financial Leasing		Other currencies		108,989		113,580		95,214		109,796
Financial Leasing		Chilean pesos		19,601		13,979		16,612		13,493
Trades and Other Payables		U.S. Dollar		154,061		174,469		154,061		174,469
Trades and Other Payables		Euro		5,854		8,808		5,854		8,808
Trades and Other Payables		Other currencies		77,258		70,303		77,258		70,303
Trades and Other Payables		Chilean pesos		329,237		324,361		329,237		324,361
Trades and Other Payables		U.F.		17,023		5,077		17,023		5,077
Related party payables		U.S. Dollar		2,666		962		2,666		962
Related party payables		Chilean pesos		4,594		6,179		4,594		6,179

The financial liabilities at amortized cost presented in the consolidated statements of financial positions as of June 30, 2016 and December 31, 2015 are as follows:

Thousands of U.S. dollars	June 2016 Unaudited
	Current ThU.S.$		Non Current ThU.S.$		Total ThU.S$
Other financial liabilities		647,758		3,782,547		4,430,305
Trade and other payables		583,433		0		583,433
Related Party Payables		7,260		0		7,260
Total Financial Liabilities Measured at Amortized Cost		1,238,451		3,782,547		5,020,998
Thousands of U.S. dollars	December 2015
	Current ThU.S.$		Non Current ThU.S.$		Total ThU.S$
Other financial liabilities		291,798		4,013,637		4,305,435
Trade and other payables		583,018		0		583,018
Related Party Payables		7,141		0		7,141
Total Financial Liabilities Measured at Amortized Cost		881,957		4,013,637		4,895,594

98

CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Consolidated Financial Statements

June 30, 2016

Amounts in thousands of U.S. dollars, except as indicated

23.8 Cash Flow Hedges Reserve Reconciliation

The following table sets forth the reconciliation balances of cash flow hedges presented in Other Comprehensive Income:

	January - June						April - June
	Unaudited						Unaudited
	2016 ThU.S.$			2015 ThU.S.$			2016 ThU.S.$			2015 ThU.S.$
Opening balance		(55,396	)		(53,022	)		(53,404	)		(50,373	)
Fair value gains (losses) arising during the year		82,975			(25,073	)		21,864			3,899
Exchange differences of bonds hedged		(79,245	)		35,857			(20,499	)		4,862
Finance costs		7,512			7,376			3,891			3,593
Settlements during the period		(8,119	)		(7,104	)		(5,503	)		(4,720	)
Deferred taxes		(1,042	)		(2,092	)		336			(1,319	)
Closing balance		(53,315	)		(44,058	)		(53,315	)		(44,058	)

23.9 Capital Disclosures

23.9.1 Information on Objectives, Policies and Processes applied by the Company regarding Capital Management

Arauco’s policies on capital management have the objective of:

a) Ensuring business continuity and normal operations in the long term;

b) Ensuring funding for new investments to achieve sustainable growth over time;

c) Keeping adequate capital structure considering all economic cycles that impact the business and the nature of the industry; and

d) Maximizing the Company’s value and providing an adequate return to shareholders.

23.9.2 Qualitative Information on Objectives, Policies and Processes applied by the Company regarding Capital Management

Arauco determines and manages its capital structure based on its carrying amount of equity plus its financial debt (bank borrowings and bonds issued).

23.9.3 Quantitative Information on Capital Management

The following table sets forth the financial covenants that the Company has to comply with as part of the terms of certain of its obligations:

Instrument	06-30-2016 unaudited Th.U.S.$		12-31-2015 Th.U.S.$		Interest coverage >= 2,0x		Debt level (1) <= 1,2x
Domestic bonds		943,271		863,118		N/A	ü
Syndicate Loan		298,652		298,316		ü	ü

N/R: Not required for the financial obligation

(1)Debt to equity ratio (financial debt divided by equity plus non-controlling interests)

99

CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Consolidated Financial Statements

June 30, 2016

Amounts in thousands of U.S. dollars, except as indicated

As of June 30, 2016 and December 31, 2015, Arauco has complied with all of its financial covenants.

The following table sets forth the credit ratings of our debt instruments as of June 30, 2016, are as follows:

Instrument	Standard & Poor’s	Fitch Ratings	Moody’s	Feller Rate
Local bonds	-	AA -	-	AA -
Foreign bonds	BBB -	BBB	Baa3	-

Capitalization requirements are established based on the Company’s financial needs and on maintaining an adequate liquidity level and complying with financial covenants established in current debt arrangements. The Company manages its capital structure and makes adjustments based on the prevailing economic conditions in order to mitigate the risks associated with adverse market conditions, and based on opportunities that may arise to improve the Company’s level of liquidity.

The capitalization of Arauco as of June 30, 2016 and December 31, 2015 is as follows:

Thousands of dollars	06-30-2016 Unaudited		12-31-2015
Equity		6,903,837		6,646,445
Bank borrowings		1,038,846		997,542
Financial leasing		128,590		127,559
Bonds issued		3,262,869		3,180,334
Capital		11,334,142		10,951,880

23.10 Risk Management

Arauco’s financial instruments are exposed to various financial risks: credit risk, liquidity risk and market risk (including exchange rate risks, interest rate risks and price risks).

Arauco’s overall risk management program focuses on uncertainty in financial markets and aims to minimize potential adverse effects on Arauco’s financial profitability.

Arauco’s financial risk management is overseen by the Corporate Finance Department. This department identifies, assesses and hedges financial risks in close collaboration with Arauco’s operational units.

23.10.1 Type of Risk: Credit Risk

Description

Credit risk refers to financial uncertainty at different periods of time relating to the fulfillment of obligations with counterparties, at the time of exercising the contract rights to receive cash or other financial assets on behalf of Arauco.

100

CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Consolidated Financial Statements

June 30, 2016

Amounts in thousands of U.S. dollars, except as indicated

Explanation of Credit Risk Exposure and How This Risk Arises

Arauco’s exposure to credit risk is directly related to each of its customer’s individual abilities to fulfill their contractual commitments, reflected in trade receivables. Furthermore, credit risk also arises for time deposits, repurchase agreements and mutual funds.

As a policy for its trade receivables, Arauco entered into insurance policies for open account sales. The insurance policies are used to cover export sales from Arauco, Celulosa Arauco y Constitución S.A., Paneles Arauco S.A. (previously Aserraderos Arauco S.A., Paneles Arauco S.A. and Arauco Distribución S.A.) Forestal Arauco S.A., Arauco Argentina S.A. and Arauco do Brasil S.A. as well as domestic sales Arauco México S.A. de C.V., Arauco Wood Inc., Arauco Colombia S.A., Arauco Perú S.A., Arauco Panels USA LLC, Flakeboard Co Ltd., Flakeboard America Ltd., Arauco Argentina S.A., Celulosa Arauco y Constitución S.A, Paneles Arauco S.A (previously Aserraderos Arauco S.A., Paneles Arauco S.A. and Arauco Distribución S.A.), Arauco Forestal Arapoti S.A., Arauco Forest Brasil S.A. and Arauco do Brasil S.A., Arauco contracts its insurance policies with Continental Credit Insurance Company (rated AA- by credit agencies as Humphreys and Fitch Ratings). The insurance policies cover 90% of the amount invoiced with no deductible.

In order to secure a credit line or an advanced payment to a supplier approved by the Credit Committee, Arauco receives several types of guarantees, such as mortgages, pledges, standby letters of credit, certificates of deposit, checks, promissory notes, mutual loans or any other guarantee that may be requested pursuant to each country’s legislation.

As of June, 2016 the total amount of guarantees given was U.S.$ 100.11 million which is summarized in the following table. The procedure of guarantees is regulated by the Policies of Arauco’s Guarantees which aims to control the accounting, the maturity and the custody of these.

Arauco Group Guarantees (ThU.S$)
Guarantees Debtors (received from clients)
Certificate of deposits	2,956	5.0	%
Standby	5,464	9.3	%
Promissory notes	34,926	59.3	%
Finance	7,209	12.2	%
Mortgage	8,067	13.7	%
Pledge	107	0.2	%
Promissory notes	200	0.3	%
Total Guarantees Debtors	58,929	100.0	%

At the end of each reporting period, the Company’s maximum credit risk exposure is limited to the carrying amount of the recognized trade receivables less the amounts receivable insured by credit insurance companies and the guarantees received by Arauco.

As of June 30, 2016, of the trade receivables balance of ThU.S.$566,894 that had agreed term of sales, 59.83% corresponded to credit sales, 34.35% to sales with letters of credit and 5.82% to other classes of sales, distributed among 2,354 customers. The customer with the largest open account outstanding did not exceed 2.89% of total.

Arauco has not entered into any refinancing or renegotiations with its customers which involve amendments to the invoice due, and if necessary, any renegotiation of debt with a customer will be analyzed on a case by case basis and approved by the Corporate Finance Department.

101

CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Consolidated Financial Statements

June 30, 2016

Amounts in thousands of U.S. dollars, except as indicated

The credit sales receivables covered by insurance or collateral were 98.4%. Therefore, Arauco’s credit risk exposure of its portfolio is 1.6%.

Secured Credit Sales Receivables

	ThU.S.$		%
Total credit sales receivables		339,166		100.0
Secured Receivables (*)		333,740		98.4
Unsecured Receivables		5,426		1.6

(*) Secured receivables are defined as the amount of trade receivables that are covered by credit insurance or collateral such as: stand-by letter of credits, mortgage or certificates of deposit, among others.

Accounts exposed to this type of risk are: trade receivable, financial lease debtors and other debtors.

Arauco does not have a securitized portfolio.

	June 2016 ThU.S.$ Unaudited		December 2015 ThU.S.$
Current Receivables
Trades receivables		556,356		614,623
Financial lease receivables		10		9
Other Debtors		111,481		118,690
Net subtotal		667,847		733,322
Trades receivables		566,894		625,201
Financial lease receivables		111		125
Other Debtors		117,478		127,856
Gross subtotal		684,483		753,182
Provision for doubtful trade receivables		10,538		10,578
Provision for doubtful lease receivables		101		116
Provision for doubtful other debtors		5,997		9,166
Subtotal Bad Debt		16,636		19,860
Non Current Receivables
Trades receivables		1,992		32
Financial lease receivables		1		6
Other Debtors		15,848		15,232
Net Subtotal		17,841		15,270
Trades receivables		1,992		32
Financial lease receivables		1		6
Other Debtors		15,848		15,232
Gross subtotal		17,841		15,270
Provision for doubtful trade receivables		—		—
Provision for doubtful lease receivables		—		—
Provision for doubtful other debtors		—		—
Subtotal Bad Debt		—		—

102

CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Consolidated Financial Statements

June 30, 2016

Amounts in thousands of U.S. dollars, except as indicated

The following table sets forth the reconciliation of changes in the allowance for doubtful accounts as of June 30, 2016 and December 31, 2015:

	06-30-2016 unaudited ThU.S.$			12-31-2015 ThU.S.$
Opening balance		(19,860	)		(18,520	)
Increase		(1,263	)		(3,072	)
Reversal of impairment losses		4,487			1,732
Closing balance		(16,636	)		(19,860	)

Explanation of Risk Management Objectives, Policies and Processes, and Measurement Methods

The Credit and Collections Department, which reports to the Treasury Department, is responsible for minimizing receivables credit risk and supervising past due accounts. The approval or rejection of credit limits for all forward sales is carried out by credit and collection departments of Arauco Wood Inc, Arauco Panels USA LLC, Flakeboard Company Ltd., Flakeboard America ltd., Arauco Argentina S.A., Celulosa Arauco y Constitución S.A., Paneles Arauco S.A., Arauco Forestal Arapoti, Arauco Forest Brasil S.a. and Arauco do Brasil S.A. that report to the Finance Corporate Management. The rules and procedures for the proper control and administration of risk on credit sales are set forth in the Credit Policy.

For the approval and/or modification of the clients’ credit facilities, a procedure has been put in place, which must be followed by all of the companies of the Arauco group. The requests for credit facilities are entered into SAP, where all of the available information is analyzed, including the amount of the facility granted by the credit insurance company. Afterwards, the requests are approved or rejected by each of the internal committees of each company of the Arauco group, depending on the maximum amount authorized by the Credit Policy. If the credit facility exceeds such amount, it is then analyzed by the Corporate Committee. Credit facilities are renewed on a yearly basis, following this internal process.

Sales via letters of credit are executed mostly in the markets of Asia and the Middle East. Periodically, a credit assessment is conducted regarding the banks which issue the letters of credit, in order to obtain the risk rating granted by the main risk rating agencies, along with their country and global ranking and financial situation during the last 5 years. Pursuant to this evaluation, a decision is made on whether to approve the issuer bank or to request a confirmation of the letter of credit.

All sales are automatically controlled by a credit verification system that has set parameters to block orders from customers who have accumulated past due amounts of a defined percentage of the debt and/or customers who at the time of product delivery have exceeded their credit limit or whose credit limit has expired.

103

CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Consolidated Financial Statements

June 30, 2016

Amounts in thousands of U.S. dollars, except as indicated

Out of total accounts receivables as of June 30, 2016, 92.94% are current (i.e. not past due), 0.79% are between 1 and 30 days past due, 0.46% are between 30 and 60 days past due, 0.19% are between 61 and 90 days past due, 0.01% are between 91 and 120 days past due, 0.14% are between 121 and 150 days past due, -0.01% are between 151 and 180 days past due, 0.04% are between 180 and 210 days past due, 0.12% are between 211 and 250 days past due, and 5.31% are more than 250 days past due.

June 30, 2016

Age of trade receivables
Days	Non-past due			1 to 30			31 to 60			61 to 90			91 to 120			121 to 150			151 to 180			181 to 210			211 to 250			More than 250			Total
ThU.S.$		526,889			4,487			2,605			1,103			70			800			(67	)		245			657			30,105			566,894
%		92.94	%		0.79	%		0.46	%		0.20	%		0.01	%		0.14	%		-0.01	%		0.04	%		0.12	%		5.31	%		100	%

December 31, 2015

Age of trade receivables
Days	Non-past due			1 to 30			31 to 60			61 to 90			91 to 120			121 to 150			151 to 180			181 to 210			211 to 250			More than 250			Total
ThU.S$		571,499			18,927			2,303			2,332			363			168			1,102			1,413			1,444			25,650			625,201
%		91.41	%		3.03	%		0.37	%		0.37	%		0.06	%		0.03	%		0.18	%		0.23	%		0.23	%		4.10	%		100	%

Explanation of any changes to risk exposure or changes in objectives, processes and policies regarding previous years’ risk management.

Arauco has implemented a Guarantee Policy in order to control accounting, valuation and expiration of these and a Corporate Credit Policy.

Currently there is a policy for provisions for doubtful accounts receivable under IFRS for all the Arauco group companies.

Investment Policy:

Arauco has an Investment Policy which identifies and limits the financial instruments and the entities into which the Arauco companies, in particular Celulosa Arauco y Constitucion S.A., are authorized to invest. The Company’s Treasury Department is centralized with operations in Chile. The Head Office is responsible for carrying out investments, cash flow surplus investments, and short and long term debt subscriptions. Exceptions to this rule are specific investments made through other companies where authorization is required from the Chief Financial Officer.

For financial instruments, the only permitted investments are fixed income investments with adequate liquidity. Each instrument has defined classifications and limits, depending on duration and type of issuer.

Regarding intermediaries (such as banks, securities brokers and dealers of mutual funds that are bank affiliates), a scoring methodology is used to determine the relative degree of risk of each intermediary based on their financial position and assign score points that result in a credit risk rating to each intermediary. Arauco uses this scoring system to determine its investment limits for each intermediary.

104

CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Consolidated Financial Statements

June 30, 2016

Amounts in thousands of U.S. dollars, except as indicated

The required information to evaluate the various criteria are obtained from published financial statements from the banks under evaluation and from the credit risk ratings of short and long term debt securities obtained from rating agencies authorized by the Superintendency of Banks and Financial Institutions (Fitch Ratings Chile, Humphreys and Feller Rate).

The criteria evaluated are: Capital and Reserves, Current Ratio, Return on equity, Net Income to Operating income Ratio, Debt to Equity Ratio and the Credit Risk rating of each entity.

Any necessary exceptions regarding investment limits in each particular instrument or entity must have the authorization from Arauco’s Chief Financial Officer.

23.10.2 Type of Risk: Liquidity Risk

Description

This risk corresponds to Arauco’s ability to fulfill its financial obligations upon maturity.

Explanation of Liquidity Risk Exposure and How This Risk Arises

Arauco’s exposure to liquidity risk is mainly from its obligations to bondholders, banks and financial institutions, creditors and other payables. Liquidity risk may arise if Arauco is unable to meet the net cash flow requirements, which sustain its operations under both normal and exceptional circumstances.

Explanation of Objectives, Policies and Processes for Risk Management, and Measurement Methods

The Financial Management Department monitors on an ongoing basis the Company’s cash flow forecasts based on short and long term forecasts and available financing alternatives. In order to manage the risk level of financial assets, Arauco follows its investment policy.

The following tables detail Arauco’s liquidity analysis for its financial liabilities as of June 30, 2016 and December 31, 2015. The tables have been drawn up based on the contractual undiscounted cash outflows and their remaining contractual maturities:

105

CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Consolidated Financial Statements

June 30, 2016

Amounts in thousands of U.S. dollars, except as indicated

June 30, 2016						Maturity														Total
Tax ID	Name		Currency		Name- Country Loans with banks	Up to 3 months ThU.S.$		3 to 12 months ThU.S.$		1 to 2 years ThU.S.$		2 to 3 years ThU.S.$		3 to 4 years ThU.S.$		4 to 5 years ThU.S.$		Mor than 5 years ThU.S.$		Current ThU.S.$		Non Current MUS$		Effective rate		Nominal rate
93.458.000-1		Celulosa Arauco y Constitución S.A.		U.S. Dollar	Scotiabank- Chile		—		41		17,178		309,537		7,299		4,135		2,429		41		340,578		1.53%		Libor + 0,70%
93.458.000-2		Celulosa Arauco y Constitución S.A.		U.S. Dollar	Scotiabank- Chile		30,018		—		—		—		—		—		—		30,018		—		0.75%		0.75%
93.458.000-3		Celulosa Arauco y Constitución S.A.		U.S. Dollar	Banco de Crédito e Inversiones		30,018		—		—		—		—		—		—		30,018		—		0.74%		0.74%
93.458.000-4		Celulosa Arauco y Constitución S.A.		U.S. Dollar	Banco Itau		30,001		—		—		—		—		—		—		30,001		—		0.58%		0.58%
—		Arauco Argentina S.A.		Argentine pesos	Banco Macro- Argentina		1		41		21		—		—		—		—		42		21		15.25%		15.25%
—		Arauco Argentina S.A.		Argentine pesos	Banco Galicia- Argentina		—		133		—		—		—		—		—		133		—		15.25%		15.25%
—		Zona Franca Punta Pereira		U.S. Dollar	Interamerican Development Bank		1,181		1,043		2,740		2,250		2,087		2,087		5,215		2,224		14,379		Libor + 2,05%		Libor + 2,05%
—		Zona Franca Punta Pereira		U.S. Dollar	Interamerican Development Bank		2,985		2,756		6,078		6,003		5,929		3,052		259		5,741		21,321		Libor + 1,80%		Libor + 1,80%
—		Zona Franca Punta Pereira		U.S. Dollar	BBVA		—		16,000		—		—		—		—		—		16,000		—		2.66%		Libor + 2%
—		Zona Franca Punta Pereira		U.S. Dollar	Citibank		—		2,501		—		—		—		—		—		2,501		—		2.62%		Libor + 2%
—		Celulosa y Energia Punta Pereira		U.S. Dollar	Finnish Export Credit		25,684		20,508		45,862		45,703		45,589		45,606		93,208		46,192		275,968		3.20%		3.20%
—		Celulosa y Energia Punta Pereira		U.S. Dollar	Interamerican Development bank		12,086		11,188		26,708		23,579		22,562		11,288		—		23,274		84,137		Libor + 2,05%		Libor + 2,05%
—		Celulosa y Energia Punta Pereira		U.S. Dollar	Interamerican Development bank		4,757		4,173		9,714		9,503		9,293		9,075		21,712		8,930		59,297		Libor + 1,80%		Libor + 1,80%
—		Celulosa y Energia Punta Pereira		U.S. Dollar	Dnb Nor Bank		161		—		—		—		—		—		—		161		—		Libor + 2,00%		Libor + 2,00%
—		Eufores S.A.		U.S. Dollar	Banco Republica Oriental de Uruguay		24,715		12,561		—		—		—		—		—		37,276		—		Libor + 1,75%		Libor + 1,75%
—		Eufores S.A.		U.S. Dollar	Citibank		10		—		—		—		—		—		—		10		—		Libor + 2,00%		Libor + 2,00%
—		Eufores S.A.		U.S. Dollar	Banco HSBC- Uruguay		1,202		—		—		—		—		—		—		1,202		—		Libor + 2,00%		Libor + 2,00%
—		Eufores S.A.		U.S. Dollar	Banco Itau - Uruguay		10,127		5,003		—		—		—		—		—		15,130		—		Libor + 2,00%		Libor + 2,00%
—		Eufores S.A.		U.S. Dollar	Heritage		1,351		—		—		—		—		—		—		1,351		—		Libor + 2,00%		Libor + 2,00%
—		Eufores S.A.		U.S. Dollar	Banco Santander		20,204		—		—		—		—		—		—		20,204		—		Libor + 2,00%		Libor + 2,00%
—		Arauco Do Brasil S.A.		U.S. Dollar	Banco ABC		7		20		11		—		—		—		—		27		11		2.50%		2.50%
—		Arauco Do Brasil S.A.		U.S. Dollar	Banco Bradesco		703		—		—		—		—		—		—		703		—		8.75%		8.75%
—		Arauco Do Brasil S.A.		Brazilian real	Banco do Brasil - Brasil		29		29		—		—		—		—		—		58		—		8.70%		8.70%
—		Arauco Do Brasil S.A.		Brazilian real	Banco JP Morgan		—		5,053		13		—		—		—		—		5,053		13		2.05%		2.05%
—		Arauco Do Brasil S.A.		Brazilian real	Banco Votorantim - Brasil		13		38		—		—		—		—		—		51		—		5.76%		5.76%
—		Arauco Do Brasil S.A.		U.S. Dollar	Banco Santander		2		—		90		91		92		2		—		2		275		9.50%		9.50%
—		Arauco Florestal Arapoti S.A.		Brazilian real	Banco Itau		3		8		6		—		—		—		—		11		6		2.50%		2.50%
—		Arauco Florestal Arapoti S.A.		Brazilian real	Banco Itau		14		40		52		31		—		—		—		54		83		3.50%		3.50%
—		Arauco Florestal Arapoti S.A.		Brazilian real	Banco Bradesco		11		33		45		45		15		—		—		44		105		6.00%		6.00%
—		Arauco Florestal Arapoti S.A.		Brazilian real	Banco Bradesco		—		389		—		—		—		—		—		389		—		8.75%		8.75%
—		Arauco Florestal Arapoti S.A.		Brazilian real	Banco Votorantim		36		—		—		—		—		—		749		36		749		5.00%		5.00%
—		Arauco Florestal Arapoti S.A.		Brazilian real	Banco Safra		23		67		89		67		—		—		—		90		156		6.00%		5.00%
—		Arauco Florestal Arapoti S.A.		Brazilian real	Banco Safra		8		21		27		27		27		25		—		29		106		10.00%		10.00%
—		Arauco Florestal Arapoti S.A.		Brazilian real	Banco Santander		3		30		34		34		34		—		—		33		102		9.22%		9.22%
—		Arauco Forest Brasil S.A.		Brazilian real	Banco Bradesco		20		60		79		65		—		—		—		80		144		5.91%		5.91%
—		Arauco Forest Brasil S.A.		Brazilian real	Banco Bradesco		—		390		—		—		—		—		—		390		—		8.75%		8.75%
—		Arauco Forest Brasil S.A.		Brazilian real	Banco Itau -Brasil		4		12		9		—		—		—		—		16		9		2.50%		2.50%
—		Arauco Forest Brasil S.A.		Brazilian real	Banco Votorantim—Brasil		190		524		699		699		58		—		664		714		2,120		9.31%		9.31%
—		Arauco Forest Brasil S.A.		Brazilian real	Banco Votorantim—Brasil		29		101		134		134		11		—		—		130		279		6.99%		6.99%
—		Arauco Forest Brasil S.A.		Brazilian real	Bndes		3		—		—		—		—		347		579		3		926		9.78%		9.78%
—		Arauco Forest Brasil S.A.		U.S. Dollar	Bndes		4		—		—		—		—		96		194		4		290		6.99%		6.99%
—		Arauco Forest Brasil S.A.		Brazilian real	Banco Santander		1		20		42		42		22		—		—		21		106		9.50%		9.50%
—		Arauco Forest Brasil S.A.		U.S. Dollar	Banco John Deere		63		168		—		—		—		—		—		231		—		6.00%		6.00%
—		Mahal Emprendimientos Pat. S.A.		Brazilian real	Bndes		22		—		—		2,290		3,054		763		—		22		6,107		8.91%		8.91%
—		Mahal Emprendimientos Pat. S.A.		Brazilian real	Bndes		14		—		—		1,374		1,832		458		—		14		3,664		9.91%		9.91%
—		Mahal Emprendimientos Pat. S.A.		Brazilian real	Bndes		60		—		—		1,358		2,037		679		—		60		4,074		6.99%		6.99%
—		Mahal Emprendimientos Pat. S.A.		Brazilian real	Bndes		18		—		—		1,527		2,036		511		—		18		4,074		11.11%		11.11%
					Total		195,781		82,951		109,631		404,359		101,977		78,124		125,009		278,732		819,100

106

CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Consolidated Financial Statements

June 30, 2016

Amounts in thousands of U.S. dollars, except as indicated

June 30, 2016				Maturity														Total
Tax ID	Name	Currency	Name - Country Bonds	Up to 3 months ThU.S.$		3 to 12 months ThU.S.$		1 to 2 years ThU.S.$		2 to 3 years ThU.S.$		3 to 4 years ThU.S.$		4 to 5 years ThU.S.$		Mor than 5 years ThU.S.$		Current ThU.S.$		Non Current MUS$		Effective rate			Nominal rate
93.458.000-1	Celulosa Arauco y Constitución S.A.	UF	Barau-F		—		1,933		11,597		23,675		34,961		33,907		245,645		1,933		349,785		4.25	%		4.21	%
93.458.000-2	Celulosa Arauco y Constitución S.A.	UF	Barau-J		2,117		—		6,350		6,350		6,350		200,021		—		2,117		219,071		3.23	%		3.22	%
93.458.000-3	Celulosa Arauco y Constitución S.A.	UF	Barau-P		—		975		2,199		1,613		1,026		440		197,959		975		203,237		3.96	%		3.96	%
93.458.000-3	Celulosa Arauco y Constitución S.A.	UF	Barau-Q		586		—		26,894		26,894		26,894		26,894		98,389		586		205,965		2.96	%		2.98	%
93.458.000-3	Celulosa Arauco y Constitución S.A.	UF	Barau-R		1,757		—		22,500		22,500		22,500		22,500		285,927		1,757		375,927		3.57	%		3.57	%
—	Alto Paraná S.A.	U.S. Dollar	Bono 144 A - Argentina		1,004		269,523		36,250		36,250		18,125		—		—		270,527		90,625		6.39	%		6.38	%
93.458.000-1	Celulosa Arauco y Constitución S.A.	U.S. Dollar	Yankee Bonds 2019		15,205		—		4,688		—		497,618		—		—		15,205		502,306		7.26	%		7.25	%
93.458.000-1	Celulosa Arauco y Constitución S.A.	U.S. Dollar	Yankee Bonds 2a Emisión		2,734		—		144,915		20,000		20,000		20,000		—		2,734		204,915		7.50	%		7.50	%
93.458.000-1	Celulosa Arauco y Constitución S.A.	U.S. Dollar	Yankee 2021		8,889		—		23,750		23,750		23,750		420,267		23,750		8,889		515,267		5.02	%		5.00	%
93.458.000-1	Celulosa Arauco y Constitución S.A.	U.S. Dollar	Yankee 2022		11,215		—		7,801		7,801		7,801		7,801		541,081		11,215		572,285		4.77	%		4.75	%
93.458.000-1	Celulosa Arauco y Constitución S.A.	U.S. Dollar	Yankee 2024		9,375		—		142,162		136,888		117,386		94,445		791,497		9,375		1,282,378		4.52	%		4.50	%
			Total		52,882		272,431		429,106		305,721		776,411		826,275		2,184,248		325,313		4,521,761

June 30, 2016				Maturity														Total
Tax ID	Name	Currency	Name - Country Leases	Up to 3 months T hU.S.$		3 to 12 months ThU.S.$		1 to 2 years ThU.S.$		2 to 3 years ThU.S.$		3 to 4 years ThU.S.$		4 to 5 years ThU.S.$		Mor than 5 years ThU.S.$		Current ThU.S.$		Non Current ThU.S.$		Effective rate	Nominal rate
85.805.200-9	Forestal Arauco S.A.	UF	Banco Santander		326		2,196		644		644		741		742		—		2,522		2,771	—	—
85.805.200-9	Forestal Arauco S.A.	UF	Banco Scotiabank		1,647		4,785		4,536		4,536		2,539		2,539		—		6,432		14,150	—	—
85.805.200-9	Forestal Arauco S.A.	UF	Banco Estado		640		1,718		2,206		2,206		1,297		1,297		—		2,358		7,006	—	—
85.805.200-9	Forestal Arauco S.A.	UF	Banco de Chile		3,779		11,803		9,255		9,255		5,571		5,571		—		15,582		29,652	—	—
85.805.200-9	Forestal Arauco S.A.	UF	Banco BBVA		1,760		6,573		3,549		3,549		103		103		—		8,333		7,304	—	—
85.805.200-9	Forestal Arauco S.A.	UF	Banco Credito e Inversiones		794		2,381		3,011		3,011		1,841		1,841		—		3,175		9,704	—	—
85.805.200-9	Forestal Arauco S.A.	Chilean Pesos	Banco Santander		364		548		437		437		—		—		—		912		874	—	—
85.805.200-9	Forestal Arauco S.A.	Chilean Pesos	Banco Chile		445		1,333		1,465		1,465		673		673		—		1,778		4,276	—	—
85.805.200-9	Forestal Arauco S.A.	Chilean Pesos	Banco Credito e Inversiones		656		1,965		2,568		2,568		2,002		2,002		—		2,621		9,140	—	—
			Total		10,411		33,302		27,671		27,671		14,767		14,768		—		43,713		84,877

As part of the policy of Arauco, it considers compliance with all Accounts Payable, whether with related (see Note 13) or third parties, within a period not exceeding 30 days.

107

CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Consolidated Financial Statements

June 30, 2016

Amounts in thousands of U.S. dollars, except as indicated

December 31, 2015				Maturity														Total
Tax ID	Name	Currency	Name - Country Loans with banks	Up to 3 months ThU.S.$		3 to 12 months ThU.S.$		1 to 2 years ThU.S.$		2 to 3 years ThU.S.$		3 to 4 years ThU.S.$		4 to 5 years ThU.S.$		More than 5 years ThU.S.$		Current ThU.S.$		Non Current ThU.S.$		Effective rate		Nominal rate
93.458.000-1	Celulosa Arauco y Constitución S.A.	U.S. Dollar	Scotiabank - Chile		—		25		4,638		301,770		—		—		—		25		306,408		1.53%		Libor +0,70%
—	Arauco Argentina S.A.	Argentine Pesos	Banco Macro - Argentina		—		49		48		—		—		—		—		49		48		15.25%		15.25%
—	Arauco Argentina S.A.	Argentine Pesos	Banco Galicia - Argentina		—		307		—		—		—		—		—		307		—		15.25%		15.25%
—	Zona Franca Punta Pereira S.A.	U.S. Dollar	Interamerican Development Bank		1,163		1,023		2,450		2,396		2,343		2,289		6,514		2,186		15,992		Libor + 2,05%		Libor + 2,05%
—	Zona Franca Punta Pereira S.A.	U.S. Dollar	Interamerican Development Bank		166		2,777		6,076		5,934		5,794		5,652		—		2,943		23,456		Libor + 1,80%		Libor + 1,80%
—	Zona Franca Punta Pereira S.A.	U.S. Dollar	Banco Santander		20,013		—		—		—		—		—		—		20,013		—		Libor + 2,00%		Libor + 2,00%
—	Celulosa y Energia Punta Pereira S.A.	U.S. Dollar	Finnish Export Credit		25,810		20,354		52,288		51,368		50,477		49,694		118,826		46,164		322,653		3.20%		3.20%
—	Celulosa y Energia Punta Pereira S.A.	U.S. Dollar	Interamerican Development bank		4,706		4,126		9,900		9,680		9,460		9,242		26,298		8,832		64,580		Libor + 2,05%		Libor + 2,05%
—	Celulosa y Energia Punta Pereira S.A.	U.S. Dollar	Interamerican Development bank		675		11,220		24,566		23,991		23,417		22,843		—		11,895		94,817		Libor + 1,80%		Libor + 1,80%
—	Celulosa y Energia Punta Pereira S.A.	U.S. Dollar	Dnb Nor Bank		—		245		—		—		—		—		—		245		—		Libor + 2,00%		Libor + 2,00%
—	Eufores S.A.	U.S. Dollar	Banco BBVA - Uruguay		16,115		—		—		—		—		—		—		16,115		—		Libor + 2,00%		Libor + 2,00%
—	Eufores S.A.	U.S. Dollar	Banco Republica Oriental de Uruguay		16,689		18,555		—		—		—		—		—		35,244		—		Libor + 1,75%		Libor + 1,75%
—	Eufores S.A.	U.S. Dollar	Citibank		—		2,514		—		—		—		—		—		2,514		—		Libor + 2,00%		Libor + 2,00%
—	Eufores S.A.	U.S. Dollar	Banco HSBC - Uruguay		1,201		—		—		—		—		—		—		1,201		—		Libor + 2,00%		Libor + 2,00%
—	Eufores S.A.	U.S. Dollar	Banco Itau -Uruguay		5,065		5,004		—		—		—		—		—		10,069		—		Libor + 2,00%		Libor + 2,00%
—	Eufores S.A.	U.S. Dollar	Heritage		1,357		—		—		—		—		—		—		1,357		—		Libor + 2,00%		Libor + 2,00%
—	Arauco Do Brasil S.A.	Brazilian Real	Banco ABC		5		17		20		—		—		—		—		22		20		2.50%		2.50%
—	Arauco Do Brasil S.A.	U.S. Dollar	Banco Bradesco		831		—		—		—		—		—		—		831		—		1.80%		1.80%
—	Arauco Do Brasil S.A.	Brazilian Real	Banco Bradesco		3,960		1,256		—		—		—		—		—		5,216		—		8.75%		8.75%
—	Arauco Do Brasil S.A.	Brazilian Real	Banco do Brasil - Brasil		23		72		—		—		—		—		—		95		—		8.70%		8.70%
—	Arauco Do Brasil S.A.	Brazilian Real	Banco HSBC - Brasil		7,779		—		—		—		—		—		—		7,779		—		8.00%		8.00%
—	Arauco Do Brasil S.A.	Brazilian Real	Banco Itau - Brasil		47		43		—		—		—		—		—		90		—		8.43%		8.43%
—	Arauco Do Brasil S.A.	U.S. Dollar	Banco JP Morgan		7,912		4,356		—		—		—		—		—		12,268		—		1.71%		1.71%
—	Arauco Do Brasil S.A.	Brazilian Real	Banco Votorantim - Brasil		19		38		32		—		—		—		—		57		32		6.30%		6.30%
—	Arauco Do Brasil S.A.	Brazilian Real	Banco Santander		12,881		3		37		76		75		39		—		12,884		227		8.00%		8.00%
—	Arauco Do Brasil S.A.	Brazilian Real	Fundo de Desenvolvimiento Econom. - Brasil		7		27		7		—		—		—		—		34		7		0.00%		0.00%
—	Arauco Florestal Arapoti S.A.	Brazilian Real	Banco Itau		3		6		8		1		—		—		—		9		9		2.50%		2.50%
—	Arauco Florestal Arapoti S.A.	Brazilian Real	Banco Itau		12		31		43		43		3		—		—		43		89		3.50%		3.50%
—	Arauco Florestal Arapoti S.A.	Brazilian Real	Banco Bradesco		11		27		37		37		31		—		—		38		105		6.00%		6.00%
—	Arauco Florestal Arapoti S.A.	Brazilian Real	Banco Votorantim		—		14		—		—		—		—		617		14		617		5.00%		5.00%
—	Arauco Florestal Arapoti S.A.	Brazilian Real	Banco Safra		19		55		73		73		18		—		—		74		164		6.00%		5.00%
—	Arauco Florestal Arapoti S.A.	Brazilian Real	Banco Safra		6		17		23		23		23		24		9		23		102		10.00%		10.00%
—	Arauco Florestal Arapoti S.A.	Brazilian Real	Banco Santander		4		24		27		27		27		13		—		28		94		9.22%		9.22%
—	Arauco Forest Brasil S.A.	Brazilian Real	Banco Bradesco		—		66		—		—		—		144		—		66		144		7.81%		7.81%
—	Arauco Forest Brasil S.A.	Brazilian Real	Banco Bradesco		307		—		—		—		—		—		—		307		—		12.11%		12.11%
—	Arauco Forest Brasil S.A.	Brazilian Real	Banco Itau -Brasil		9		13		—		86		14		—		—		22		100		5.52%		5.52%
—	Arauco Forest Brasil S.A.	Brazilian Real	Banco Votorantim - Brasil		—		285		—		—		—		1,474		546		285		2,020		9.31%		9.31%
—	Arauco Forest Brasil S.A.	U.S. Dollar	Banco Votorantim - Brasil		—		62		—		—		—		347		—		62		347		9.00%		9.00%
—	Arauco Forest Brasil S.A.	Brazilian Real	Bndes		—		3		—		—		—		—		757		3		757		4.61%		4.61%
—	Arauco Forest Brasil S.A.	U.S. Dollar	Bndes		—		4		—		—		—		6		289		4		295		10.80%		10.80%
0	Arauco Forest Brasil S.A.	Brazilian Real	Banco Santander		—		16		—		—		—		96		—		16		96		9.50%		9.50%
—	Arauco Forest Brasil S.A.	Brazilian Real	Banco John Deere		—		207		—		—		—		—		—		207		—		6.00%		6.00%
—	Mahal Emprendimientos Pat. S.A.	Brazilian Real	Bndes Subcrédito E-I		—		19		—		622		2,492		1,870		—		19		4,984		9.91%		9.91%
—	Mahal Emprendimientos Pat. S.A.	Brazilian Real	Bndes Subcrédito F-J		—		12		—		374		1,496		1,122		—		12		2,992		10.91%		10.91%
—	Mahal Emprendimientos Pat. S.A.	U.S. Dollar	Bndes Subcrédito G-K		—		61		—		511		2,037		1,528		—		61		4,076		6.99%		6.99%
—	Mahal Emprendimientos Pat. S.A.	Brazilian Real	Bndes Subcrédito H-L		—		15		—		444		1,646		1,233		—		15		3,323		12.11%		12.11%
			Total		126,795		72,948		100,273		397,456		99,353		97,616		153,856		199,743		848,554

108

CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Consolidated Financial Statements

June 30, 2016

Amounts in thousands of U.S. dollars, except as indicated

December 31,2015				Maturity														Total
Tax ID	Name	Currency	Name - Country Bonds	Up to 3 months ThU.S.$		3 to 12 months ThU.S.$		1 to 2 years ThU.S.$		2 to 3 years ThU.S.$		3 to 4 years ThU.S.$		4 to 5 years ThU.S.$		More than 5 years ThU.S.$		Current ThU.S.$		Non Current ThU.S.$		Effective rate			Nominal rate
93.458.000-1	Celulosa Arauco y Constitución S.A.	UF	Barau-F		—		1,771		10,625		10,625		32,403		31,438		239,473		1,771		324,564		4.24	%		4.25	%
93.458.000-2	Celulosa Arauco y Constitución S.A.	UF	Barau-J		1,939		—		5,818		5,818		5,818		186,141		—		1,939		203,595		3.23	%		3.22	%
93.458.000-3	Celulosa Arauco y Constitución S.A.	UF	Barau-P		—		913		7,147		7,147		7,147		7,147		229,723		913		258,311		3.96	%		3.96	%
93.458.000-3	Celulosa Arauco y Constitución S.A.	UF	Barau-Q		—		538		11,266		19,979		19,442		18,905		9,251		538		78,843		2.96	%		2.98	%
93.458.000-3	Celulosa Arauco y Constitución S.A.	UF	Barau-R		—		1,610		6,439		6,439		6,439		6,439		272,750		1,610		298,506		3.57	%		3.57	%
—	Arauco Argentina S.A.	U.S. Dollar	Bono 144 A - Argentina		—		1,004		277,869		—		—		—		—		1,004		277,869		6.39	%		6.38	%
93.458.000-1	Celulosa Arauco y Constitución S.A.	U.S. Dollar	Yankee Bonds 2019		15,205		—		36,250		36,250		533,483		—		—		15,205		605,983		7.26	%		7.25	%
93.458.000-1	Celulosa Arauco y Constitución S.A.	U.S. Dollar	Yankee Bonds 2a Emisión		2,734		—		134,257		—		—		—		—		2,734		134,257		7.50	%		7.50	%
93.458.000-1	Celulosa Arauco y Constitución S.A.	U.S. Dollar	Yankee 2021		8,889		—		20,000		20,000		20,000		20,000		406,108		8,889		486,108		5.02	%		5.00	%
93.458.000-1	Celulosa Arauco y Constitución S.A.	U.S. Dollar	Yankee 2022		11,215		—		23,750		23,750		23,750		23,750		527,255		11,215		622,255		4.77	%		4.75	%
93.458.000-1	Celulosa Arauco y Constitución S.A.	U.S. Dollar	Yankee 2024		9,375		—		22,500		22,500		22,500		22,500		590,928		9,375		680,928		4.52	%		4.50	%
			Total		49,357		5,836		555,921		152,508		670,982		316,320		2,275,488		55,193		3,971,219

December 31, 2015				Maturity														Total
Tax ID	Name	Currency	Name - Country Lease	Up to 3 months ThU.S.$		3 to 12 months ThU.S.$		1 to 2 years ThU.S.$		2 to 3 years ThU.S.$		3 to 4 years ThU.S.$		4 to 5 years ThU.S.$		More than 5 years ThU.S.$		Current ThU.S.$		Non Current ThU.S.$		Effective rate		Nominal rate
85.805.200-9	Forestal Arauco S.A.	UF	Banco Santander		338		904		650		650		3,362		—		—		1,242		4,662		—		—
85.805.200-9	Forestal Arauco S.A.	UF	Banco Scotiabank		1,303		4,370		4,875		4,875		6,059		—		—		5,673		15,809		—		—
85.805.200-9	Forestal Arauco S.A.	UF	Banco Estado		361		1,160		1,471		1,471		1,957		—		—		1,521		4,899		—		—
85.805.200-9	Forestal Arauco S.A.	UF	Banco de Chile		4,026		11,489		11,301		11,301		12,650		—		—		15,515		35,252		—		—
85.805.200-9	Forestal Arauco S.A.	UF	Banco BBVA		1,814		5,344		4,490		4,490		3,374		—		—		7,158		12,354		—		—
85.805.200-9	Forestal Arauco S.A.	UF	Banco Credito e Inversiones		557		1,672		2,129		2,129		3,008		—		—		2,229		7,266		—		—
85.805.200-9	Forestal Arauco S.A.	Chilean Pesos	Banco Santander		172		517		575		576		—		—		—		689		1,151		—		—
85.805.200-9	Forestal Arauco S.A.	Chilean Pesos	Banco Chile		262		704		824		824		365		—		—		966		2,013		—		—
85.805.200-9	Forestal Arauco S.A.	Chilean Pesos	Banco Credito e Inversiones		468		1,401		1,834		1,834		3,623		—		—		1,869		7,291		—		—
			Total		9,301		27,561		28,149		28,150		34,398		—		—		36,862		90,697

As part of the policy of Arauco, it considers compliance with all Accounts Payable, whether with related (see Note 13) or third parties, within a period not exceeding 30 days.

109

CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Consolidated Financial Statements

June 30, 2016

Amounts in thousands of U.S. dollars, except as indicated

Guarantees

As of the date of these interim consolidated financial statements, Arauco has financial assets of approximately ThU.S.$58,000 that have been pledged to third parties (beneficiaries), as direct guarantee. If Arauco does not fulfill its obligations, the guarantors could execute the guarantees.

As of June 30, 2016, the total assets pledged as an indirect guarantee were ThU.S.$827,000. In contrast to direct guarantees, indirect guarantees are given to secure obligations assumed by a third party.

On September 29, 2011, Arauco entered into a Security Agreement under which it granted a non-joint guarantee limited to 50% of the obligations of the Uruguayan companies (joint ventures) Celulosa y Energía Punta Pereira S.A. and Zona Franca Punta Pereira S.A., under the IDB Facility Agreement in the amount of up to ThU.S.$454,000 and the Finnevera Guaranteed Facility Agreement in the amount of up to ThU.S.$900,000. Both loan agreements were signed with the International Development Bank. Such guarantee is included in the table below, under indirect guarantees.

Direct and indirect guarantees granted by Arauco:

DIRECT

Subsidiary	Guarantee	Assets Pledged	Currency	ThU.S.$	Guarantor
Celulosa Arauco y Constitución S.A.	Guarantee letter	—	Chilean Pesos	488	Directorate General of Maritime Territory and Merchant Marine
Celulosa Arauco y Constitución S.A.	Guarantee letter	—	Chilean Pesos	313	Directorate General of Maritime Territory and Merchant Marine
Celulosa Arauco y Constitución S.A.	Guarantee letter	—	Chilean Pesos	230	Directorate General of Maritime Territory and Merchant Marine
Celulosa Arauco y Constitución S.A.	Guarantee letter	—	Chilean Pesos	209	Directorate General of Maritime Territory and Merchant Marine
Celulosa Arauco y Constitución S.A.	Guarantee letter	—	Chilean Pesos	115	Directorate General of Maritime Territory and Merchant Marine
Arauco Forest Brasil S.A.	Mortgage Industrial Plant of Jaguariaíva of Arauco do Brasil	—	U.S. Dollar	47,764	Bank Itaú BBA S.A.
Arauco Forest Brasil S.A.	Equipment	Property plant and equipment	U.S. Dollar	751	Bank Votorantim S.A.
Arauco Forest Brasil S.A.	Endorsement of Arauco do Brasil	—	U.S. Dollar	664	Bank Votorantim S.A.
Arauco Forest Brasil S.A.	Equipment	Property plant and equipment	U.S. Dollar	138	BNDES
Arauco Forest Brasil S.A.	Equipment	Property plant and equipment	U.S. Dollar	100	Bank Bradesco S.A.
Arauco do Brasil S.A.	Endorsement of ADB + Guarantee Letter AISA	—	U.S. Dollar	3,647	Bank Votorantim S.A.
Arauco do Brasil S.A.	Equipment	Property plant and equipment	U.S. Dollar	461	Bank do Brasil S.A.
Arauco do Brasil S.A.	Equipment	Property plant and equipment	U.S. Dollar	216	Bank Santander S.A.
Arauco do Brasil S.A.	Equipment	Property plant and equipment	U.S. Dollar	205	Bank Votorantim S.A.
Arauco do Brasil S.A.	Equipment	Property plant and equipment	U.S. Dollar	107	Bank ABC Brasil S.A.
Arauco Florestal Arapoti S.A.	Endorsement of Arauco do Brasil	—	U.S. Dollar	749	Bank Votorantim S.A.
Arauco Florestal Arapoti S.A.	Equipment	Property plant and equipment	U.S. Dollar	401	Bank Safra S.A.
Arauco Florestal Arapoti S.A.	Equipment	Property plant and equipment	U.S. Dollar	207	Bank Itaú BBA S.A.
Arauco Bioenergía S.A.	Guarantee letter	—	Chilean Pesos	483	Minera Escondida Ltda.
Arauco Bioenergía S.A.	Guarantee letter	—	Chilean Pesos	323	Minera Escondida Ltda.
Arauco Bioenergía S.A.	Guarantee letter	—	Chilean Pesos	221	Minera Escondida Ltda.
Arauco Bioenergía S.A.	Guarantee letter	—	Chilean Pesos	121	CODELCO S.A.
Arauco Bioenergía S.A.	Guarantee letter	—	Chilean Pesos	121	CODELCO S.A.
Arauco Bioenergía S.A.	Guarantee letter	—	Chilean Pesos	99	Minera Spence S.A
		Total		58,133
INDIRECT
Subsidiary	Guarantee	Assets Pledged	Currency	ThU.S.$	Guarantor
Celulosa Arauco y Constitución S.A.	Suretyship not supportive and cumulative	—	U.S. Dollar	537,526	Joint Ventures (Uruguay)
Celulosa Arauco y Constitución S.A.	Full Guarantee	—	U.S. Dollar	270,000	Arauco Argentina (bondholders)
Celulosa Arauco y Constitución S.A.	Guarantee letter	—	U.S. Dollar	4,362	Arauco Forest Brasil y Mahal (Brasil)
Celulosa Arauco y Constitución S.A.	Guarantee letter	—	Brazilian Real	14,772	Arauco Forest Brasil y Mahal (Brasil)
		Total		826,660

110

CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Consolidated Financial Statements

June 30, 2016

Amounts in thousands of U.S. dollars, except as indicated

23.10.3 Type of Risk: Market Risk – Exchange Rate

Description

Market risk arises from the probability of being affected by losses from fluctuations in currencies exchange rates in which assets and liabilities are denominated, in a functional currency other than the functional currency of Arauco.

Explanation of Currency Risk Exposure and How This Risk Arises

Arauco is exposed to the foreign currency risk from currency fluctuations arising from sales, purchases and obligations undertaken in foreign currencies, such as the Chilean Peso, Euro, Brazilian Real or other foreign currencies. In the case of significant exchange rate variations, the Chilean Peso is the currency that represents the main currency risk. See Note 11 for details assets and liabilities classified by currency.

Explanation of Risk Management Objectives, Policies and Processes, and Measurement Methods

Arauco performs sensitivity analyses to measure the currency risk over the EBITDA and Net Income.

Sensitivity analysis considers a variation of +/- 10% of the exchange rate over the Chilean Peso. This fluctuation range is considered possible given current market conditions as of the date of these financial statements. With all other variables at a constant rate, a U.S. Dollar exchange rate variation of +/- 10% in relation to the Chilean Peso would mean a change in the net income after tax +/- 3.57% (equivalent to ThU.S.$ +/- 9.3), and +/- 0.09% of equity (equivalent to ThU.S.$ +/- 5.6).

Additionally, a sensitivity analysis is carried out assuming a variation of +/- 10% in the closing exchange rate on the Brazilian Real, which is considered a possible range of fluctuation given the market conditions as of the date of these financial statements. With all the other variables constant, a variation of +/- 10% in the exchange rate of the dollar on the Brazilian Real would mean a variation on the net income after tax +/- 0.29% (equivalent to ThU.S.$787) and a change on the equity of +/- 0.007% (equivalent to ThU.S.$472).

23.10.4 Type of Risk: Market Risk – Interest rate risk

Description

Interest rate risk refers to the sensitivity of the value of financial assets and liabilities in terms of interest rate fluctuations.

Explanation of Interest Rate Risk Exposure and How This Risk Arises

Arauco is exposed to risks due to interest rate fluctuations for bonds issued, bank borrowings and financial instruments that bear interest at a variable rate.

111

CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Consolidated Financial Statements

June 30, 2016

Amounts in thousands of U.S. dollars, except as indicated

Explanation of Risk Management Objectives, Policies and Processes, and Measurement Methods

Arauco completes its risk analysis by reviewing its exposure to changes in interest rates. As of June 30, 2016, 14% our financial debt accrues interest at variable rates. A change of +/- 10% in the interest rate is considered a possible range of fluctuation. Such market conditions would affect the income after tax at rate of +/- 0.73% (equivalent to ThU.S.$-/+ 1.9) and +/- 0.02% (equivalent to ThU.S.$-/+ 1.2) on equity.

Thousands of dollars	June 2016 Unaudited		Total
Fixed rate		3,808,832		86.0	%
Bonds issued		3,262,869
Bank borrowings (*)		417,373
Financial leasing		128,590
Variable rate		621,473		14.0	%
Bonds issued		—
Loans with Banks		621,473
Total		4,430,305		100.0	%
Thousands of dollars	December 2015		Total
Fixed rate		3,689,719		85.7	%
Bonds issued		3,180,334
Bank borrowings (*)		381,826
Financial leasing		127,559
Variable rate		615,716		14.3	%
Bonds issued		—
Loans with Banks		615,716
Total		4,305,435		100.0	%

(*) Includes variable rate bank borrowings changed by fixed rate swaps.

23.10.5 Type of Risk: Market Risk – Price of Pulp Risks

Description

Pulp prices are determined by world and regional market conditions. Prices fluctuate based on demand, production capacity, commercial strategies adopted by large-scale forestry companies, pulp and paper producers and by the availability of substitutes.

Explanation of Price Risk Exposure and How This Risk Arises

Pulp prices are reflected in revenue from sales and directly affect the net income for the period.

As of June 30, 2016, revenue due to pulp sales accounted for 45.4% of total sales. Pulp prices are fixed on a monthly basis in accordance with the market. Forward contracts or other financial instruments are not used for pulp sales.

Explanation of Risk Management Objectives, Policies and Processes, and Measurement Methods

This risk is approached in different ways. Arauco has a team of specialists who perform periodic market and competition analyses, providing tools to analyze and evaluate trends and adjust forecasts. Similarly, Arauco performs price financial sensitivity analysis in order to take the necessary safeguards to confront different scenarios in the best possible manner.

112

CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Consolidated Financial Statements

June 30, 2016

Amounts in thousands of U.S. dollars, except as indicated

Sensitivity analysis considers a variation of +/- 10% in the average pulp price, a possible fluctuation range given current market conditions at the date of the closing balance. With all other variables constant, a variation of +/- 10% in the average pulp price would mean an EBITDA annual variation of 9.30% (equivalent to MU.S.$ 112.1), on the income after tax and +/- 24.62% (equivalent to MU.S.$88.0) and +/- 0.81% (equivalent to MU.S.$52.8) on equity.

NOTE 24. OPERATING SEGMENTS

The main products that generate revenue for each operating segment are described as follows:

• Pulp: The main products sold by this operating segment are long fiber bleached pulp (BSKP), short fiber bleached pulp (BHKP), long fiber raw pulp (UKP), and pulp fluff.

• Timber: The range of products sold by this operating segment are plywood panels, MDF panels (medium density fiberboard), Hardboard Panels, PB Panels (agglomerated different sizes of sawn wood and remanufactured products such as moldings, precut pieces and finger joints.

• Forestry: This operating segment produces and sells sawn logs, pulpable logs, posts and chips made from owned forests of Radiata and Taeda pine, eucalyptus globulus and nitens forests. Additionally, purchases logs and woodchip from third parties, which it sells to its other operating segment.

Pulp

The Pulp operating segment uses wood exclusively from pine and eucalyptus plantations for the production of different classes of wood cellulose or pulp. Bleached pulp is mainly used as raw material for producing printing and writing paper, as well as toilet paper and high quality wrapping paper. Unbleached pulp is used to produce packing paper, filters, fiber cement products, dielectric paper and others. On the other hand, fluff pulp is mainly used in the production of diapers and female hygiene products.

Arauco has seven plants, five in Chile, one in Argentina and one in Uruguay and they have a total production capacity of approximately 3.9 million tons per year. Pulp is sold in more than 45 countries, mainly in Asia and Europe.

Timber

The Panels operating segment produces a wide range of panel products and several kinds of moldings aimed at the furniture, decoration and construction industries. It consists of 17 industrial plants: 5 in Chile, 2 in Argentina, 2 in Brazil, and 8 plants around USA and Canada. The Company has a total annual production capacity of 6.7 million cubic meters of PBO, MDF, Hardboards, plywood and moldings.

The Sawn Timber operating segment produces a wide range of wood and remanufactured products with different kinds of uses and appearances, which include a wide variety of uses in the furniture, packing, construction and refurbishing industries.

113

CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Consolidated Financial Statements

June 30, 2016

Amounts in thousands of U.S. dollars, except as indicated

With 9 saw mills in operation (8 in Chile and 1 in Argentina), the Company has a production capacity of 3 million cubic meters of sawn wood.

Furthermore, the Company has 5 remanufacturing plants, 4 in Chile and 1 in Argentina. These plants reprocess sawn wood and produce high quality remanufactured products, such as finger joint and solid moldings as well as precut pieces.

Forestry

The Forestry operating segment is Arauco’s core business. It provides raw materials for all products manufactured and sold by the Company. By directly controlling the growth of the forests to be processed, Arauco guarantees itself quality wood for each of its products.

Arauco holds forestry assets distributed throughout Chile, Argentina, Brazil and Uruguay, reaching 1,6 million hectares, of which 1 million hectares are used for plantations, 406 thousand hectares for native forests, 187 thousand hectares for other uses and 74 thousand hectares are to be planted.

Arauco’s principal plantations consist of radiata and taeda pine and eucalyptus to a lesser degree. These are species that have fast growth rates and short harvest cycles compared with other long fiber commercial woods.

Arauco has no customers representing 10% or more of its revenues.

Below, please find summarized information concerning the assets, liabilities and profits and losses at the end of each period, by segments. The profit (loss) of each segment informed takes into consideration that taxes and income and financial costs have not been allocated to the various segments, and are shown as part of the Corporate’s segment:

114

CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Consolidated Financial Statements

June 30, 2016

Amounts in thousands of U.S. dollars, except as indicated

Period ended June 30, 2016 Unaudited	Pulp ThU.S.$		Forestry ThU.S.$		Panels ThU.S.$			Others ThU.S.$			Corporate ThU.S.$			Sub Total ThU.S.$			Elimination ThU.S.$			Total ThU.S.$
Revenues from external customers		1,067,282		47,051		1,226,945			12,033			0			2,353,311			0			2,353,311
Revenues from transactions with other operating segments		20,129		555,111		3,120			16,716			0			595,076			(595,076	)		0
Finance income		0		0		0			0			17,897			17,897			0			17,897
Finance costs		0		0		0			0			(135,770	)		(135,770	)		0			(135,770	)
Net finance costs		0		0		0			0			(117,873	)		(117,873	)		0			(117,873	)
Depreciation and amortizations		118,729		9,516		66,288			1,325			3,159			199,017			0			199,017
Sum of significant income accounts		4		107,035		143			0			0			107,182			0			107,182
Sum of significant expense accounts		0		0		11,352			0			0			11,352			0			11,352
Profit (loss) of each reportable segment		167,556		68,641		73,316			(1,717	)		(197,409	)		110,387			0			110,387
Share of profit (loss) of associates and joint ventures accounted for using equity method
Associates		0		0		0			0			8,786			8,786			0			8,786
Joint ventures		0		0		(159	)		0			1,404			1,245			0			1,245
Income tax expense		0		0		0			0			(39,552	)		(39,552	)		0			(39,552	)
Geographical information on revenues
Revenue – Chilean entities		877,051		26,525		628,470			316			0			1,532,362			0			1,532,362
Revenue – Foreign entities		190,231		20,526		598,475			11,717			0			820,949			0			820,949
Total Ordinary Income		1,067,282		47,051		1,226,945			12,033			0			2,353,311			0			2,353,311
Period ended June 30, 2016 Unaudited	Pulp ThU.S.$		Forestry ThU.S.$		Panels ThU.S.$			Others ThU.S.$			Corporate ThU.S.$			Sub Total ThU.S.$			Elimination ThU.S.$			Total ThU.S.$
Amounts of additions to non-current assets
Acquisition of property,plant and equipment and biological assets		75,410		96,574		44,670			1,268			1,273			219,195			0			219,195
Acquisition and contribution of investments in associates and joint venture		0		0		153,135			0			0			153,135			0			153,135

115

CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Consolidated Financial Statements

June 30, 2016

Amounts in thousands of U.S. dollars, except as indicated

Period ended June 30, 2016 Unaudited	Pulp ThU.S.$		Forestry ThU.S.$		Panels ThU.S.$		Others ThU.S.$		Corporate ThU.S.$		Sub Total ThU.S.$		Elimination ThU.S.$			Total ThU.S.$
Segment assets		5,026,284		5,583,460		2,530,879		32,880		827,865		14,001,368		(41,508	)		13,959,860
Segments assets (excluding deferred tax assets)		5,026,284		5,583,460		2,530,879		32,880		823,936		13,997,439		(41,508	)		13,955,931
Deferred tax assets		0		0		0		0		3,929		3,929		0			3,929
Investments accounted through equity method
Associates		0		155,309		0		0		104,785		260,094		0			260,094
Joint Ventures		0		0		157,303		0		19,857		177,160		0			177,160
Segment liabilities		322,568		151,566		296,468		9,755		6,275,665		7,056,022		0			7,056,022
Segments liabilities (excluding deferred tax liabilities)		322,568		151,566		296,468		9,755		4,638,830		5,419,187		0			5,419,187
Deferred tax liabilities		0		0		0		0		1,636,835		1,636,835		0			1,636,835
Geographical information on non-current assets (**)
Chile		2,546,563		3,540,138		741,306		108		130,620		6,958,735		(3,621	)		6,955,114
Foreign countries		1,728,697		1,515,948		998,992		21,564		55,140		4,320,341		0			4,320,341
Non-current assets, Total		4,275,260		5,056,086		1,740,298		21,672		185,760		11,279,076		(3,621	)		11,275,455

116

CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Consolidated Financial Statements

June 30, 2016

Amounts in thousands of U.S. dollars, except as indicated

Quarter April - June 2016 Unaudited	Pulp ThU.S.$			Forestry ThU.S.$			Panels ThU.S.$			Others ThU.S.$			Corporate ThU.S.$			Sub Total ThU.S.$			Elimination ThU.S.$			Total ThU.S.$
Revenues from external customers		541,451			24,801			635,205			5,829						1,207,286						1,207,286
Revenues from transactions with other operating segments		10,872			281,773			1,759			8,716						303,120			(303,120	)		0
Finance income		0			0			0			0			6,585			6,585			0			6,585
Finance costs		0			0			0			0			(65,485	)		(65,485	)		0			(65,485	)
Net finance costs		0			0			0			0			(58,900	)		(58,900	)		0			(58,900	)
Depreciation and amortizations		61,348			4,707			36,222			610			1,578			104,465						104,465
Sum of significant income accounts					54,326			121									54,447						54,447
Sum of significant expense accounts								983									983						983
Profit (loss) of each reportable segment		79,114			20,771			52,388			(964	)		(93,841	)		57,468						57,468
Share of profit (loss) of associates and joint ventures accounted for using equity method
Associates														5,511			5,511						5,511
Joint ventures								(107	)					589			482						482
Income tax expense														(12,185	)		(12,185	)					(12,185	)
Geographical information on revenues
Revenue – Chilean entities		454,478			14,192			316,938			154						785,762						785,762
Revenue – Foreign entities		86,973			10,609			318,267			5,675						421,524						421,524
Total Ordinary Income		541,451			24,801			635,205			5,829						1,207,286						1,207,286
Quarter April - June 2016 Unaudited	Pulp ThU.S.$			Forestry ThU.S.$			Panels ThU.S.$			Others ThU.S.$			Corporate ThU.S.$			Sub Total ThU.S.$			Elimination ThU.S.$			Total ThU.S.$
Amounts of additions to non-current assets
Acquisition of property, plant and equipment and biological assets		22,951			45,464			32,053			1,062			705			102,235						102,235
Acquisition and contribution of investments in associates and joint ventures								153,135									153,135						153,135
Segment Cash Flows
Cash Flows from (used in) Operating Activities		129,552			68,146			105,527			852			(77,521	)		226,556						226,556
Cash flows (used in) investing activities		(23,105	)		(24,342	)		(188,797	)		(1,062	)		(6,833	)		(244,139	)					(244,139	)
Cash flows from (used in) Financing Activities					(21,121	)		(3,788	)					(79,456	)		(104,365	)					(104,365	)
Net increase (decrease) in Cash and Cash Equivalents		106,447			22,683			(87,058	)		(210	)		(163,810	)		(121,948	)					(121,948	)

117

CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Consolidated Financial Statements

June 30, 2016

Amounts in thousands of U.S. dollars, except as indicated

Period ended June 30, 2015	Pulp ThU.S.$		Forestry ThU.S.$		Panels ThU.S.$			Others ThU.S.$		Corporate ThU.S.$			Sub Total ThU.S.$			Elimination ThU.S.$			Total ThU.S.$
Revenues from external customers		1,206,429		64,073		1,365,244			18,314		0			2,654,060			0			2,654,060
Revenues from transactions with other operating segments		23,162		253,454		5,301			16,134		0			298,051			(298,051	)		0
Finance income		0		0		0			0		19,277			19,277			0			19,277
Finance costs		0		0		0			0		(131,152	)		(131,152	)		0			(131,152	)
Net finance costs		0		0		0			0		(111,875	)		(111,875	)		0			(111,875	)
Depreciation and amortizations		112,477		7,547		71,471			1,969		3,319			196,783			0			196,783
Sum of significant income accounts		43		95,248		935			0		0			96,226			0			96,226
Sum of significant expense accounts		0		29,856		0			0		0			29,856			0			29,856
Profit (loss) of each reportable segment		245,487		50,234		150,941			1,680		(256,736	)		191,606			0			191,606
Share of profit (loss) of associates and joint ventures accounted for using equity method
Associates		0		0		0			0		(1,285	)		(1,285	)		0			(1,285	)
Joint ventures		0		0		(194	)		0		493			299			0			299
Income tax expense		0		0		0			0		(77,239	)		(77,239	)		0			(77,239	)
Geographical information on revenues
Revenue – Chilean entities		993,400		38,831		688,527			288		0			1,721,046			0			1,721,046
Revenue – Foreign entities		213,029		25,242		676,717			18,026		0			933,014			0			933,014
Total Ordinary Income		1,206,429		64,073		1,365,244			18,314		0			2,654,060			0			2,654,060
Period ended June 30, 2015	Pulp ThU.S.$		Forestry ThU.S.$		Panels ThU.S.$			Others ThU.S.$		Corporate ThU.S.$			Sub Total ThU.S.$			Elimination ThU.S.$			Total ThU.S.$
Amounts of additions to non-current assets (*)
Acquisition of property,plant and equipment and biological assets		130,617		95,557		52,451			977		2,187			281,789			0			281,789
Acquisition and contribution of investments in associates and joint venture		0		0		0			0		0			0			0			0

118

CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Consolidated Financial Statements

June 30, 2016

Amounts in thousands of U.S. dollars, except as indicated

Year ended December 31, 2015	Pulp ThU.S.$		Forestry ThU.S.$		Panels ThU.S.$		Others ThU.S.$		Corporate ThU.S.$		Sub Total ThU.S.$		Elimination ThU.S.$			Total ThU.S.$
Segment assets		5,172,095		5,471,322		2,374,134		31,679		669,703		13,718,933		(48,542	)		13,670,391
Segments assets (excluding deferred tax assets)		5,172,095		5,471,322		2,374,134		31,679		665,968		13,715,198		(48,542	)		13,666,656
Deferred tax assets		0		0		0		0		3,735		3,735		0			3,735
Investments accounted through equity method
Associates		0		121,359		0		0		119,781		241,140		0			241,140
Joint Ventures		0		0		3,573		0		20,099		23,672		0			23,672
Segment liabilities		318,880		147,432		269,963		11,526		6,276,145		7,023,946		0			7,023,946
Segments liabilities (excluding deferred tax liabilities)		318,880		147,432		269,963		11,526		4,657,133		5,404,934		0			5,404,934
Deferred tax liabilities		0		0		0		0		1,619,012		1,619,012		0			1,619,012
Geographical information on non-current assets (**)
Chile		2,565,307		3,536,372		758,936		30		128,185		6,988,830		(2,955	)		6,985,875
Foreign countries		1,782,286		1,313,685		735,924		23,406		142,803		3,998,104		0			3,998,104
Non-current assets, Total		4,347,593		4,850,057		1,494,860		23,436		270,988		10,986,934		(2,955	)		10,983,979

119

CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Consolidated Financial Statements

June 30, 2016

Amounts in thousands of U.S. dollars, except as indicated

Quarter April - June 2015 Unaudited	Pulp ThU.S.$		Forestry ThU.S.$		Panels ThU.S.$		Others ThU.S.$		Corporate ThU.S.$			Sub Total ThU.S.$			Elimination ThU.S.$			Total ThU.S.$
Revenues from external customers		633,035		35,395		698,863		9,652		0			1,376,945			0			1,376,945
Revenues from transactions with other operating segments		11,564		125,278		2,654		8,223		0			147,719			(147,719	)		0
Finance income		0		0		0		0		8,794			8,794			0			8,794
Finance costs		0		0		0		0		(62,956	)		(62,956	)		0			(62,956	)
Net finance costs		0		0		0		0		(54,162	)		(54,162	)		0			(54,162	)
Depreciation and amortizations		59,705		3,770		36,873		982		734			102,064			0			102,064
Sum of significant income accounts		0		48,372		381		0		0			48,753			0			48,753
Sum of significant expense accounts		0		18,462		0		0		0			18,462			0			18,462
Profit (loss) of each reportable segment		137,523		13,395		80,193		546		(125,742	)		105,915			0			105,915
Share of profit (loss) of associates and joint ventures accounted for using equity method
Associates		0		0		0		0		(1,586	)		(1,586	)		0			(1,586	)
Joint ventures		0		0		22		0		(37	)		(15	)		0			(15	)
Income tax expense		0		0		0		0		(36,365	)		(36,365	)		0			(36,365	)
Geographical information on revenues
Revenue – Chilean entities		521,364		23,122		345,959		102		0			890,547			0			890,547
Revenue – Foreign entities		111,671		12,273		352,904		9,550		0			486,398			0			486,398
Total Ordinary Income		633,035		35,395		698,863		9,652		0			1,376,945			0			1,376,945

120

CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Consolidated Financial Statements

June 30, 2016

Amounts in thousands of U.S. dollars, except as indicated

Quarter April - June 2015 Unaudited	Pulp ThU.S.$			Forestry ThU.S.$			Panels ThU.S.$			Others ThU.S.$			Corporate ThU.S.$			Sub Total ThU.S.$			Elimination ThU.S.$		Total ThU.S.$
Amounts of additions to non-current assets
Acquisition of property,plant and equipment and biological assets		100,055			60,354			25,182			891			504			186,986			0		186,986
Acquisition and contribution of investments in associates and joint venture		0			0			0			0			0			0			0		0
Segment Cash Flows
Cash Flows from (used in) Operating Activities		75,018			73,560			103,157			1,898			(16,109	)		237,524			0		237,524
Cash flows (used in) investing activities		(101,219	)		(49,394	)		(25,153	)		(891	)		(28,653	)		(205,310	)		0		(205,310	)
Cash flows from (used in) Financing Activities		0			13,005			(124,622	)		0			(453,464	)		(565,081	)		0		(565,081	)
Net increase (decrease) in Cash and Cash Equivalents		(26,201	)		37,171			(46,618	)		1,007			(498,226	)		(532,867	)		0		(532,867	)

Period ended June 30, 2016	Pulp ThU.S.$			Forestry ThU.S.$			Panels ThU.S.$			Others ThU.S.$			Corporate ThU.S.$			Sub Total ThU.S.$			Elimination ThU.S.$		Total ThU.S.$
Segment Cash Flows
Cash Flows from (used in) Operating Activities		341,291			123,926			165,971			3,366			(180,835	)		453,719			0		453,719
Cash flows (used in) investing activities		(77,393	)		(73,889	)		(202,834	)		(1,268	)		(2,148	)		(357,532	)		0		(357,532	)
Cash flows from (used in) Financing Activities		(28,948	)		(14,005	)		(35,953	)		0			10,048			(68,858	)		0		(68,858	)
Net increase (decrease) in Cash and Cash Equivalents		234,950			36,032			(72,816	)		2,098			(172,935	)		27,329			0		27,329

Period ended June 30, 2015	Pulp ThU.S.$			Forestry ThU.S.$			Panels ThU.S.$			Others ThU.S.$			Corporate ThU.S.$			Sub Total ThU.S.$			Elimination ThU.S.$		Total ThU.S.$
Segment Cash Flows
Cash Flows from (used in) Operating Activities		171,793			102,376			191,056			3,329			(19,963	)		448,591			0		448,591
Cash flows (used in) investing activities		(138,117	)		(84,585	)		(50,543	)		(977	)		(26,535	)		(300,757	)		0		(300,757	)
Cash flows from (used in) Financing Activities		(28,948	)		14,386			(113,852	)		0			(478,462	)		(606,876	)		0		(606,876	)
Net increase (decrease) in Cash and Cash Equivalents		4,728			32,177			26,661			2,352			(524,960	)		(459,042	)		0		(459,042	)

121

CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Consolidated Financial Statements

June 30, 2016

Amounts in thousands of U.S. dollars, except as indicated

Information required by geographic area:

	Geographical area
2016 unaudited	Local country		Foreign country
	Chile		Argentina		Brazil		USA/Canada		Uruguay		Total
Disclosure of geographical areas	ThU.S.$		ThU.S.$		ThU.S.$		ThU.S.$		ThU.S.$		ThU.S.$
Revenues at 06-30-2016		1,532,362		169,745		175,317		390,320		85,567		2,353,311
Revenues quarter April – June 2016		785,763		82,910		94,501		206,016		38,096		1,207,286
Non-current Assets at 06-30-2016 other than tax deferred		6,951,263		951,143		1,168,269		378,711		1,822,140		11,271,526

	Geographical area
2015 unaudited	Local country		Foreign country
	Chile		Argentina		Brazil		USA/Canada		Uruguay		Total
Disclosure of geographical areas	ThU.S.$		ThU.S.$		ThU.S.$		ThU.S.$		ThU.S.$		ThU.S.$
Revenues at 06-30-2015		1,721,046		232,362		217,135		402,218		81,299		2,654,060
Revenues quarter April – June 2015		890,547		120,529		108,733		210,332		46,804		1,376,945
Non-current Assets at 06-30-2015 other than tax deferred		6,986,236		978,285		837,886		364,889		1,812,948		10,980,244

122

CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Consolidated Financial Statements

June 30, 2016

Amounts in thousands of U.S. dollars, except as indicated

NOTE 25. OTHER NON-FINANCIAL ASSETS AND NON-FINANCIAL LIABILITIES

Current non-financial assets	06-30-2016 Unaudited ThU.S.$		12-31-2015 ThU.S.$
Roads to amortize current		56,707		47,731
Prepayment to amortize (insurance + others)		30,191		20,398
Recoverable taxes (Relating to purchases)		69,239		62,468
Other current non-financial assets		2,223		3,359
Total		158,360		133,956
Non current non-financial assets	06-30-2016 Unaudited ThU.S.$		12-31-2015 ThU.S.$
Roads to amortize, non current		111,320		111,319
Guarantee values		3,086		2,635
Recoverable taxes (Relating to purchases)		11,418		7,767
Other non current non-financial assets		3,407		3,795
Total		129,231		125,516
Current non-financial liabilities	06-30-2016 Unaudited ThU.S.$		12-31-2015 ThU.S.$
Provision of minimum dividend (1)		49,093		102,305
ICMS tax payable		8,742		6,172
Other tax payable		18,507		19,442
Other Current non-financial liablilities		3,162		3,804
Total		79,504		131,723

(1) Provision includes a minimum dividend of subsidiary minority.

Non current non-financial liabilities	06-30-2016 Unaudited ThU.S.$		12-31-2015 ThU.S.$
ICMS tax payable		58,261		45,365
Other non-current non financial liablilities		1,667		1,876
Total		59,928		47,241

123

CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Consolidated Financial Statements

June 30, 2016

Amounts in thousands of U.S. dollars, except as indicated

NOTE 26. DISTRIBUTABLE NET INCOME AND EARNINGS PER SHARE

Distributable net income

As a general policy, the Board of Directors of Arauco agreed that the net income to be distributed as dividend is determined based on realized net gains/(losses) of any relevant variations in the value of unrealized assets and liabilities, which are excluded from the calculation of net income during the period such changes are made.

As a result of the foregoing, for purposes of determining the distributable net income of the Company, which is the same considered for calculating the minimum dividend required and additional dividend, the following unrealized gains/losses are excluded from the net income for the year:

1) Unrealized gains/losses relating to the fair value recorded for forestry assets under IAS 41, adding them back to distributable net income when they are realized through sale or disposed of by other means.

2) Those generated through the acquisition of entities. These results will be added back to net income when they are realized through sale.

The deferred taxes associated with the amounts described in 1) and 2) above are also excluded.

The following table details the adjustments made for the determination of distributable net income as June 30, 2016 and 2015 in order to determine the provision of 40% of the distributable net income for each year:

Unaudited	Distributable Net Income ThU.S.$
Net income attributable to owners of parent at 06-30-2016		109,084
Adjustments:
Biological Assets
Unrealized gains/losses		(97,619	)
Realized gains/losses		98,545
Deferred income taxes		(679	)
Total adjustments		247
Distributable Net Income at 06-30-2016		109,331

	Distributable Net Profit ThU.S.$
Net income attributable to owners of parent at 06-30-2015		189,903
Adjustments
Biological Assets
Unrealized		(92,729	)
Realized		105,925
Deferred income taxes		(4,077	)
Total adjustments		9,119
Distributable Net Income at 06-30-2015		199,022

The Company expects to maintain its policy of distributing 40% of its net distributable income as dividends for all future fiscal years, but will also consider the alternative of distributing a provisional dividend at year end.

124

CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Consolidated Financial Statements

June 30, 2016

Amounts in thousands of U.S. dollars, except as indicated

As of June 30, 2016 in the Classified Statement of Financial Position, under the line item Other Ordinary Non-Financial Liabilities for an amount of ThU.S.$79,504, a total of ThU.S.$43,732 correspond to a provision for the minimum dividend for 2016 period, both corresponding to the Parent Company.

Basic and diluted earnings per share

Basic earnings per share are calculated by dividing the profit or loss attributable to ordinary equity holders of parent by the weighted average number of ordinary shares outstanding. Arauco does not have any shares with potential dilutive effect.

	January-June				April-June
	Unaudited				Unaudited
	2016		2015		2016		2015
	ThU.S.$		ThU.S.$		ThU.S.$		ThU.S.$
Profit or loss attributable to ordinary equity holder of parent		109,084		189,903		56,910		105,016
Weighted average of number of shares		113,159,655		113,159,655		113,159,655		113,159,655
Basic earnings per share (in U.S.$ per share)		0.96		1.68		0.50		0.93

NOTE 27. SUBSEQUENT EVENTS

The authorization for the issuance and publication of these interim consolidated financial statements for the period between January 1 and June 30, 2016 was approved by the Board of Directors of Arauco at the Extraordinary Session No. 553 held on august 23, 2016.

Subsequent to June 30, 2016 and until the date of issuance of these interim consolidated financial statements, there have been no events, other than those discussed above, that could materially affect the presentation of these financial statements.

125

Celulosa Arauco y Constitución S.A.

Second Quarter 2016 Results

August 24, 2016

1

HIGHLIGHTS

REVENUES U.S.$ 1,207.3 MILLION

Arauco’s revenues reached U.S.$ 1,207.3 million during the second quarter of 2016, a 5.3% increase compared to the U.S.$ 1,146.0 million obtained in the first quarter of 2016.

NET INCOME U.S.$ 57.5 MILLION

Net income reached U.S.$ 57.5 million, an increase of 8.6% compared to the U.S.$ 52.9 million obtained in the first quarter of 2016.

ADJUSTED EBITDA U.S.$ 283.4 MILLION

Adjusted EBITDA reached U.S.$ 283.4 million, an increase of 12.1% compared to the U.S.$ 252.8 million obtained during the first quarter of 2016.

NET FINANCIAL DEBT/ LTM ADJUSTED EBITDA

Net Financial Debt / LTM⁽¹⁾ Adjusted EBITDA ratio reached 3.4x this quarter, an increase compared to the 3.1x obtained in the first quarter of 2016.

(1) LTM = Last Twelve Months

CAPEX

CAPEX reached U.S.$ 271.8 million, an increase of 170.3% compared to the U.S.$ 100.5 million during the first quarter of 2016.

Conference Call

Thursday, September 1^st, 2016

11:00 Santiago Time

10:00 Eastern Time (New York)

Please Dial:

+1 (844) 839 2184 from USA

+1 (412) 317 2505 from other countries

Password: Arauco

For further information, please contact:

José Luis Rosso

jose.rosso@arauco.cl

Phone: (562) 2461 7309

Fernanda Paz Vásquez

fernanda.vasquez@arauco.cl

Phone: (562) 2461 7494

investor_relations@arauco.cl

For more details on Arauco’s financial statements please refer to www.svs.cl or www.arauco.cl

Readers are referred to the documents filed by Arauco with the United States Securities and Exchange Commission, specifically the most recent filing on Form 20-F that identifies important risk factors that could cause actual results to differ from those contained in the forward-looking statements. All forward-looking statements are based on information available to Arauco on the date hereof and Arauco does not assume any obligation to update such statements. References herein to “U.S.$” are to United States dollars. Discrepancies in any table between totals and sums of the amounts listed are due to rounding. This report is unaudited.

2

OVERVIEW

Arauco’s second quarter regained strength, with revenues improving 5.3% to U.S.$ 1,207.3 million. Our Adjusted EBITDA also recovered 12.1%, reaching U.S.$ 283.4 million.

In general, price adjustments in the pulp business reached a plateau in most markets, and many markets even bounced back with China leading the way. Annual maintenance stoppage season began in the Northern hemisphere, helping to release pressure off some markets with surplus. For the second half of the year, world economic growth is expected to accelerate or at the very least settle after Brexit.

Boost from our panels business also increased revenues during this quarter, with plywood significantly improving its performance. Sonae – Arauco, a joint venture with Portuguese company Sonae Industria, was materialized, making Arauco the second largest panel producer worldwide.

Our Free Cash Flow was negative U.S.$ 110.8 million, largely explained by the €137.5 million payment for the Sonae—Arauco deal, as well as dividend payments for U.S.$ 100.3 million. This in turn increased our Net Debt by U.S.$ 157.7 million. Compared with the previous quarter, our cash from operations increased by U.S.$ 32.2 million and Cash used in financing activities net of proceeds and repayments by U.S.$ 99.5 million increased likewise. Our leverage increased to 3.4 times during this quarter, mainly due to our decreased cash position.

Adjusted EBITDA and EBITDA Margin

(In U.S.$ Million)

3

INCOME STATEMENT

Net income for the second quarter of 2016 was U.S.$ 57.5 million, an increase of 8.6% or U.S.$ 4.5 million compared to the U.S.$ 52.9 million obtained in the first quarter of this year.

In U.S.$ Million	Q2 2016			Q1 2016			QoQ
Revenues		1,207.3			1,146.0			5.3	%
Cost of sales		(874.6	)		(826.5	)		5.8	%
Distribution costs		(119.6	)		(110.2	)		8.6	%
Administrative expenses		(139.1	)		(112.7	)		23.4	%
Other income		61.7			58.0			6.4	%
Other expenses		(12.9	)		(20.5	)		-37.1	%
Financial income		6.6			11.3			-41.8	%
Financial costs		(65.5	)		(70.3	)		-6.8	%
Participation in (loss) profit in associates and joint ventures accounted through equity method		6.0			4.0			48.4	%
Exchange rate differences		(0.2	)		1.1			-117.2	%
Income before income tax		69.7			80.3			-13.2	%
Income tax		(12.2	)		(27.4	)		-55.5	%
Net income		57.5			52.9			8.6	%

Revenues reached U.S.$ 1,207.3 million during the second quarter of 2016 compared with the U.S.$ 1,146.0 million in the previous quarter, thanks to an improvement in our revenues from the pulp, wood products, and forestry businesses. Our wood products segments increased its participation of our total sales. Revenue from our energy sales also increased 27.4% compared to the last quarter. Average prices in our pulp business decreased 2.7% compared to last quarter, while sales volume increased 4.6%. In our wood products business, average prices increased 3.3% compared to last quarter, and sales volume increased 3.8%. The following table shows a breakdown of our revenue sales separated by business segment:

In U.S.$ Million	Q2 2016		Q1 2016		QoQ
Pulp(*)		541.5		525.8		3.0	%
Wood Products(*)		635.2		591.7		7.3	%
Forestry		24.8		22.3		11.5	%
Others		5.8		6.2		-6.0	%
Total		1,207.3		1,146.0		5.3	%

(*) Pulp and Wood division sales include energy

4

Cost of sales for the second quarter of the year reached U.S.$ 874.6 million, U.S.$ 48.1 million or 5.8% higher than the U.S.$ 826.5 million obtained in the first quarter of 2016. This increase is in line with the increases in our sales volume. In terms of cost by concept, the main increase in absolute terms was forestry labor costs. This increase reflects the change in weather conditions during the winter season that causes forestry road maintenances to be more frequent during this time of year, and increases harvesting costs. Maintenance costs increased by U.S.$ 9.0 million, due to the two-month planned maintenance stoppage at our Constitución Mill. The Montes del Plata Pulp Mill in Uruguay also had a maintenance stoppage during the month of April. Both mill stoppages went according to plan. Other raw materials and indirect costs declined when we compare to the first quarter of the year, mainly due to inventory adjustments.

In U.S.$ Million	Q2 2016		Q1 2016		QoQ
Timber		186.7		188.9		-1.1	%
Forestry labor costs		143.6		131.7		9.0	%
Depreciation and amortization		96.6		87.4		10.4	%
Maintenance costs		80.8		71.8		12.5	%
Chemical costs		119.3		118.0		1.2	%
Sawmill services		31.1		27.8		11.7	%
Other raw materials and indirect costs		93.5		83.0		12.7	%
Energy and fuel		37.2		32.4		14.7	%
Cost of electricity		8.9		11.4		-21.8	%
Wage, salaries and severance indemnities		76.9		74.1		3.8	%
Cost of Sales		874.6		826.5		5.8	%

Administrative expenses overall increased by 23.4% or U.S.$ 26.4 million. Almost half of this increase is a result of higher expenses in wages, salaries and severance indemnities. Last quarter there was an adjustment on the provision for performance bonuses, which decreased last quarter’s expense in this item. The implementation of SAP in Arauco North America also brought forth some minor reclassification from items classified as cost of sales to administritative expenses. Among other things, yearly computer license expenses were disbursed during the month of April, increasing computer service expenses by U.S.$ 5.0 million.

In U.S.$ Million	Q2 2016		Q1 2016		QoQ
Wage, salaries and severance indemnities		58.9		46.3		27.2	%
Marketing, advertising, promotion and publications expenses		2.3		2.3		-0.2	%
Insurance		6.3		5.9		6.7	%
Depreciation and amortization		7.1		6.1		16.9	%
Computer services		10.7		5.7		89.2	%
Lease rentals (offices, warehouses and machinery)		5.1		3.3		55.5	%
Donations, contributions, scholarships		2.8		2.8		-0.1	%
Fees (legal and technical advisories)		10.1		9.9		2.6	%
Property taxes, patents and municipality rights		6.5		3.8		72.6	%
Other administration expenses		29.2		26.7		9.6	%
Administrative Expenses		139.1		112.7		23.4	%

5

Distribution costs increased 8.6% or U.S.$ 9.4 million. Freights had the largest deviation in absolute terms, increasing U.S.$ 6.1 million in comparison to last quarter’s freight costs, principally due to an increase in our pulp export sales.

In U.S.$ Million	Q2 2016		Q1 2016		QoQ
Commissions		3.6		3.5		3.0	%
Insurance		0.9		0.9		0.2	%
Other selling costs		4.6		3.1		46.5	%
Port services		6.8		6.4		6.2	%
Freights		86.8		80.7		7.5	%
Other shipping and freight costs		16.9		15.5		9.0	%
Distribution Costs		119.6		110.2		8.6	%

As a percentage, administrative expenses and distribution costs combined were 21.4%, showing an upward trend compared to the 19.4% in the previous quarter, and a downward trend compared to 21.7% in the fourth quarter of 2015.

Other income rose 6.4% or U.S.$ 3.7 million this quarter. Gains on sales of assets had increased by U.S.$ 4.4 million compared to last quarter, due to several minor sales of land in Chile, sale of equipment, and the sale of water rights. This increase was slightly offset by Gains from changes in fair value of biological assets, which decreased U.S.$ 2.1 million during this period.

In U.S.$ Million	Q2 2016		Q1 2016		QoQ
Gain from changes in fair value of biological assets		48.4		50.5		-4.1	%
Net income from insurance compensation		0.8		1.5		-47.1	%
Revenue from export promotion		0.5		0.6		-17.6	%
Leases received		0.7		0.8		-9.4	%
Gains on sales of assets		7.3		2.9		152.6	%
Access easement		0.1		—		—
Other operating results		4.0		1.8		124.5	%
Other Income		61.7		58.0		6.4	%

6

Other expenses fell overall 37.1% or U.S.$ 7.6 million. This result is mainly due to the effect last quarter of the sale of our subsidiary Stora Enso Arapoti Indústria de Papel S.A. in Brazil, of which Arauco owned 20%. Provision for forestry losses also increased by U.S.$ 2.1 million during this quarter.

In U.S.$ Million	Q2 2016			Q1 2016		QoQ
Depreciation		0.3			0.3		-1.3	%
Legal payments		(0.9	)		1.3		-168.5	%
Impairment provision property, plant and equipment and others		1.0			0.9		2.6	%
Plants stoppage operating expenses		0.5			1.5		-69.8	%
Gain (loss) from asset sales		0.6			0.3		108.6	%
Loss of assets		0.3			0.2		44.8	%
Provision for forestry fire losses		2.1			—		—
Other taxes		3.1			1.9		64.7	%
Research and development expenses		0.6			0.6		2.3	%
Compensation and eviction		2.3			0.2		1027.0	%
Fines, readjustments and interest		0.2			0.2		-0.7	%
(Gain) loss from subsidiary sales		—			10.4		-100.0	%
Other expenses (donations, repayments insurance)		3.0			2.8		7.1	%
Other expenses		12.9			20.5		-37.1	%

Foreign exchange differences showed a loss of U.S.$ 0.2 million, a U.S.$ 1.3 million difference when compared to the previous quarter that ended at U.S.$ 1.1 million. Although volatility in the economic market affected currency exchange rates throughout the quarter, exchange rates finished around the same levels as the beginning of this quarter. The Chilean peso appreciated 1.5% against the U.S. dollar, while the Argentine preso also appreciated by 3.0%. On the other hand, the Brazilian real depreciated throughout this quarter, deteriorating 9.7% in value against the U.S. dollar, which in turn negatively affected our U.S. dollar-denominated debt in that country.

7

ADJUSTED EBITDA

Adjusted EBITDA for the second quarter of 2016 was U.S.$ 283.4 million, 12.1% or U.S.$ 30.6 million higher than the US$ 252.8 million reached during the previous quarter. Adjusted EBITDA for the second quarter of 2016 was lower by 17.5% or U.S.$ 60.0 million when compared with the U.S.$ 343.3 million reached in the same period of 2015. In terms of Adjusted EBITDA by business, during the second quarter we had an upsurge from our wood division of 39.1% compared to last quarter. Our forestry division maintained stable sales, improving 1.8%. These effects were partially offset by our pulp division, which sustained a 4.2% decrease.

In U.S. Million	Q2 2016			Q1 2016			Q2 2015			QoQ			YoY
Net Income		57.5			52.9			105.9			8.6	%		-45.7	%
Financial costs		65.5			70.3			63.0			-6.8	%		4.0	%
Financial income		(6.6	)		(11.3	)		(8.8	)		-41.8	%		-25.1	%
Income tax		12.2			27.4			36.4			-55.5	%		-66.5	%
EBIT		128.6			139.3			196.4			-7.7	%		-34.6	%
Depreciation & amortization		104.5			94.6			102.1			10.5	%		2.4	%
EBITDA		233.0			233.8			298.5			-0.3	%		-21.9	%
Fair value cost of timber harvested		96.5			70.6			76.3			36.8	%		26.5	%
Gain from changes in fair value of biological assets		(48.4	)		(50.5	)		(47.3	)		-4.1	%		2.4	%
Exchange rate differences		0.2			(1.1	)		(2.6	)		-117.2	%		-107.3	%
Others (*)		2.1			—			18.5						-88.8	%
Adjusted EBITDA		283.4			252.8			343.3			12.1	%		-17.5	%

(*) Includes provision from forestry fire losses.

8

FORESTRY BUSINESS

The Adjusted EBITDA for our forestry business reached U.S.$ 72.9 million during this quarter, which translates to a 1.8% or U.S.$ 1.3 million increase compared to the previous quarter.

During the second quarter, our forestry production was 5.6 million m3, a 7.7% increase compared to the 5.2 million m3 produced in the previous quarter. Sales volume also increased by 6.8% from 7.2 million m3 to 7.7 million m3. This increase is mainly due to higher sales volume of pulp and wood products, which in turn led to higher internal demand for wood.

9

PULP BUSINESS

The Adjusted EBITDA for our pulp business reached U.S.$ 140.7 million during this quarter, which translates to a 4.2% or U.S.$ 6.2 million decrease compared to the previous quarter.

After the price adjustment during the first quarter of this year, especially in short fiber, prices reached a plateau in most markets and even regained some price strength in others. The short fiber market is still undergoing pressure, although there are signs that these are subsiding. In terms of region, Western Europe has had the slowest recovery rate. Worldwide inventory levels decreased by two days in long fiber and five days in short fiber. Paper producers looking to recover inventory levels as well as mill stoppages during the spring season in the Northern Hemisphere supported some price upsurges this quarter. Counteracting these factors are the incoming volume from new pulp mills coming into play during the first quarter of the year.   Asia was the leader in price recovery this quarter, with long fiber and short fiber prices up by U.S.$ 20 each, which translated to a 3% and 4% gain, respectively. Annual maintenance stoppage season helped long fiber prices along, while short fiber prices were boosted thanks to paper producers seeking to recover inventory levels. The price gap of approximately U.S.$ 110 (with short fiber on the lower end) also favored the substitution of long fiber to short fiber. Despite this optimism, price gains remain fragile and could be neutralized by the upcoming paper demand low season. Asian countries continue to follow Chinese price trends. Looking for better and more stable returns, many producers of unbleached long fiber pulp have started to produce larger quantities aimed for the niche market of fiber cement. This move has driven overall prices in this type of fiber downwards.   In Europe, paper producers foresee less demand in the upcoming summer months, and have therefore controlled their inventory levels, making price hikes harder to achieve. Supply-demand imbalances continue to impact these

markets, although there could be more breathing room after many producers begin their maintenance stoppages. Prices remained stable during this quarter, with short fiber maintaining the same price levels as last quarter, and long fiber picking up 2% or U.S.$ 10. Inventory levels at European ports continue to be above normal levels, leading many producers to redirect volumes to other geographic areas.

In other markets, such as the Middle East, price increases were limited, reaching U.S.$ 10 in both fibers. Latin American demand growth has slowed down, while supply has increased from new pulp mills in Brazil, which commercialize long fiber, short fiber and fluff in the local market.

Our production levels were according to plan, decreasing due to maintenance stoppages in our Constitución Mill and Montes del Plata Mill. The maintenance stoppage of our Constitución Mill lasted two months, where the recovery boiler was modernized and preventative maintenance was performed, among other things. The Montes del Plata stoppage lasted for two weeks.

10

WOOD PRODUCTS BUSINESS

The Adjusted EBITDA for our wood products business reached U.S.$ 88.3 million during this quarter, which translates to a 39.1% or U.S.$ 24.8 million increase compared to the previous quarter.

This quarter’s surge in sales by 7.3% was largely propelled by sales in the panels market. In sawn timber, prices have improved slightly but have yet to affect our bottom line. The impact of these price increases will most likely be seen come next quarter.   The panels market experienced an overall increase in sales volume during this quarter. In North America, the MDF market has been pressured as more supply has entered the market, although the temporary closing of a mill due to fire has enabled the market to recover. Arauco North America even had to import MDF from Brazil, Argentina, and Chile in order to meet sales requirements. Demand for laminated flooring and particleboard have also lifted sales in the Northern hemisphere. In Brazil, sales volume has improved in MDF, reaching a 7.8% growth in sales volume compared to the same quarter of last year. Counteracting this growth is the depreciation of the real, which affects the bottom line of our exports in U.S. dollar terms from this country. Particleboard regained momentum during April and May, showing price improvements. Colombia has been affected by the lack of ground transportation due to trucker strikes in that nation. Despite less sales activity in the rest of Latin America, Arauco has been able to meet planned sales volume, and has even been able to increase prices in some countries.   Sawn timber markets were greatly affected during the last quarter and are still in the recovery stage. Pine moldings sales volume has increased in North America despite oversupply. On the other side of the world, wood products used for packaging have shown strength in the Asian and Middle Eastern markets. New competition in the Middle East has stimulated demand for our products. A new shipping contract for this region should come into force at year-end, which will raise margins. Plywood has improved prices and sales volume in Europe, Latin America and North America, even recovering market share in the latter. The uplift in North American prices could be vulnerable to new supply coming from South America.

11

CAPITAL EXPENDITURES

US$ Million	Q2 2016		Q1 2016		Q2 2015		YTD 2016		YTD 2015
Cash flows used to purchase in associates		153.1		—		—		153.1		—
Purchase of sale of property, plant and equipment		82.2		63.2		133.1		145.4		196.3
Purchase and sales of intangible assets		1.1		0.5		1.0		1.6		1.8
Purchase of other long-term assets		35.4		36.8		52.9		72.1		83.6
Total CAPEX		271.8		100.5		187.0		372.3		281.7

During this quarter, capital expenditures increased by U.S.$ 171.2 million or 170.3% compared to the first quarter of 2016. The cash disbursement of € 137.5 million for the joint venture with Portuguese company Sonae Industria, which translated to U.S.$ 153.1 million, was made during the end of May of this year. In Arauco North America, our particleboard facility in Bennettsville, South Carolina underwent an expansion, increasing its capacity by 100,000 m3, which cost approximately U.S.$ 21.3 million. There was also a lamination line installed within the same facility for U.S.$ 10.5 million. The new water effluent treatment system also disbursed cash payments of U.S.$ 11.7 million during this quarter, compared to the U.S.$ 4.1 million it disbursed during last quarter. The maintenance stoppage at the Constitución Mill during this quarter cost a total of approximately U.S.$ 43.0 million. The new pulp mill in Grayling, Michigan has also begun with preliminary investments, totaling U.S.$ 2.8 million this quarter. The remaining CAPEX pertains to sustaining business investments.

12

FREE CASH FLOW

Despite the U.S.$ 30.6 million increase in Adjusted EBITDA, during the second quarter our Free Cash Flow was negative by U.S.$ 110.8 million. CAPEX this quarter included the € 137.5 million cash payment used to acquire our part of the joint venture Sonae—Arauco, plus other minor expansion projects in the United States that totaled nearly U.S.$ 32 million. On the other hand, in May we paid the balance of 2015’s dividends which totaled U.S.$100.3 million. The overall effect of this negative Free Cash Flow was an increase in our net financial debt leverage from 3.1x to 3.4x.

US$ Million	Q2 2016			Q1 2016			Q2 2015
Adjusted EBITDA		283.4			252.8			343.3
Working Capital Variation		39.2			27.7			(89.2	)
Interest paid and received		(22.4	)		(68.4	)		(41.4	)
Income tax paid		(21.4	)		(13.3	)		(35.3	)
Other cash inflows (outflows)		(35.8	)		12.0			60.0
Cash from Operations		243.0			210.7			237.5
Capex		(271.8	)		(100.5	)		(186.9	)
Proceeds from investment activities		5.7			2.3			(18.5	)
Other inflows of cash, net		(1.2	)		1.2			0.1
Cash from Investment Activities		(260.6	)		(97.0	)		(205.3	)
Dividends paid		(100.3	)		—			(98.6	)
Other inflows of cash, net		0.4			(0.4	)		(0.4	)
Cash from (used) in financing activities - Net of proceeds and repayments		(99.8	)		(0.4	)		(99.1	)
Effect of exchange rate changes on cash and cash equivalents		6.6			(6.6	)		3.9
Free Cash Flow		(110.8	)		106.8			(62.9	)

13

FINANCIAL DEBT AND CASH

Arauco’s financial debt as of June 30, 2016 reached U.S.$ 4,430.3 million, an increase of 1.0% or U.S.$ 42.4 million when compared to March 31, 2016. Our consolidated net financial debt increased 4.2% or U.S.$ 157.7 million when compared with March 2016, while cash and cash equivalents decreased by U.S.$ 115.4 million.

Our leverage, measured as Net Financial Debt/ LTM Adjusted EBITDA, increased compared to last quarter from 3.1 times to 3.4 times. LTM Adjusted EBITDA decreased by U.S.$60.0 million compared to last quarter.

	June		March		June
US$ Million	2016		2016		2015
Short term financial debt		647.8		360.9		689.2
Long term financial debt		3,782.5		4,027.0		3,849.6
TOTAL FINANCIAL DEBT		4,430.3		4,387.9		4,538.8
Cash and cash equivalents		527.4		642.7		511.9
NET FINANCIAL DEBT		3,902.9		3,745.2		4,026.9

(*) UF is a Chilean monetary unit indexed to inflation.

14

Financial Debt Profile

During the remaining half of the year, bank obligations (which include accrued interest) sum up a total of U.S.$ 241.3 million , which include the following maturities: U.S.$ 123.7 million in loans of Montes del Plata, U.S.$ 90.0 million from pre export financing loans, U.S.$ 21.5 million in leasing in Chile, and U.S.$ 5.6 million in our Brazilian subsidiaries. The remaining years have not undergone any major changes in financial obligations as compared to the previous quarter.

Cash

Our cash position was U.S.$ 527.4 million at the end of the first quarter, which is a U.S.$ 115.4 million or 17.9% decrease compared to the end of the first quarter of 2016. Main cash disbursements that decreased our cash position during the quarter were tax payments during April, dividend payments during May, and the payment of the joint venture Sonae – Arauco.

15

SECOND QUARTER AND SUBSEQUENT EVENTS AND NEWS

Sonae – Arauco joint venture completed

On May 31, 2016, Arauco completed a share agreement for the purchase of 50% of Spanish company Tafisa, a subsidiary of Sonae Industria. This agreement marks the beginning of Arauco’s production operations in Europe and South Africa under the company name Sonae—Arauco. The investment of approximately U.S.$ 153.1 million includes 12 production facilities in Spain, Portugal, Germany and South Africa. These facilities currently produce MDF, particleboard panels, OSB, and sawn timber. Total panel production capacity of Sonae – Arauco is 4.2 million m3, which combined with the rest of our company’s assets positions Arauco as the second largest panel producer globally, reaching a capacity of 9.0 million m3 annually.

Carolina Particleboard Mill expansion complete

Our Carolina Particleboard Mill, located in Bennettsville, South Carolina, increased its particleboard and TFL capacity. The particleboard expansion increased its capacity by 100,000 m3 annually through a new drying area, improving the plant’s flexibility to source a broader range of raw material. To complement this newfound capacity, a new state-of-the-art fast-cycle press was added within this facility, which doubles the mill’s output of thermally fused laminate panels. This project reached full acceptance in June 2016. These two projects will enable faster changeover capabilities in order to meet our client’s demands, as well as deliver better-quality products.

Constitución Mill successfully finishes programmed maintenance stoppage

The programmed maintenance stoppage for our Constitución Mill started on May 3 and ended on June 29, lasting the planned 57 days. Total investment was U.S.$ 43.0 million, composed of U.S.$ 29.0 million in investment projects and U.S.$ 14.0 million in programmed maintenance projects. Works included the renovation of the recovery boiler, as well as the upgrade of electrostatic precipators within this recovery boiler in order to reduce emissions from 100 mg/m3 to 35 mg/m3. These renovations increased Constitución Mill’s life by another 25 years.

Campus Arauco inaugurated in Chile

Campus Arauco, product of an alliance between Duoc UC and Arauco, was inaugurated in July of this year in the Southern commune of Arauco, Chile. The education center enables students to learn with more hands-on experience, offering technical majors in Electricity and Industrial automation; Electric Mechanical Maintenance, with a major in Industry; Risk Prevention; and Financial Management. The center covers more than 2,500 square meters, with seven classrooms, three workshops for industrial assembly and maintenance, welding and testing, as well as four computer and hydraulic labs, among others. Total investment from Arauco was U.S.$ 8.5 million.

16

FINANCIAL STATEMENTS

Income Statement

US$ Million	Q2 2016			Q1 2016			Q2 2015
Revenue		1,207.3			1,146.0			1,376.9
Cost of sales		(874.6	)		(826.5	)		(916.7	)
Gross profit		332.6			319.5			460.2
Other income		61.7			58.0			54.6
Distribution costs		(119.6	)		(110.2	)		(136.7	)
Administrative expenses		(139.1	)		(112.7	)		(153.9	)
Other expenses		(12.9	)		(20.5	)		(28.8	)
Financial income		6.6			11.3			8.8
Financial costs		(65.5	)		(70.3	)		(63.0	)
Participation in (loss) profit in associates and joint ventures accounted through equity method		6.0			4.0			(1.6	)
Exchange rate differences		(0.2	)		1.1			2.6
Income before income tax		69.7			80.3			142.3
Income tax		(12.2	)		(27.4	)		(36.4	)
Net income		57.5			52.9			105.9
Profit attributable to parent company		56.9			52.2			105.0
Profit attributable to non-parent company		0.6			0.7			0.9

17

Balance Sheet

US$ Million	Q2 2016		Q1 2016		Q2 2015
Cash and cash equivalents		527.4		642.7		511.9
Other financial current assets		10.7		21.8		11.8
Other current non-financial assets		158.4		152.8		164.8
Trade and other receivables-net		667.8		684.4		778.0
Related party receivables		3.7		8.7		4.4
Inventories		908.5		914.0		911.1
Biological assets, current		324.9		308.9		255.8
Tax assets		80.2		75.2		43.4
Non-Current Assets clasiffied as held for sale		2.8		3.4		8.0
Total Current Assets		2,684.4		2,811.8		2,689.1
Other non-current financial assets		3.4		0.8		2.0
Other non-current and non-financial assets		129.2		126.8		101.8
Non-current receivables		17.8		14.5		188.7
Investments accounted through equity method		437.3		264.4		303.8
Intangible assets		84.8		86.8		87.4
Goodwill		75.5		72.2		76.7
Property, plant and equipment		6,945.1		6,912.0		7,003.4
Biological assets, non-current		3,578.3		3,569.5		3,523.5
Deferred tax assets		3.9		3.9		149.7
Total Non-Current Assets		11,275.5		11,050.9		11,437.1
TOTAL ASSETS		13,959.9		13,862.7		14,126.1
Other financial liabilities, current		649.5		365.5		691.4
Trade and other payables		583.4		572.6		605.1
Related party payables		7.3		5.9		9.5
Other provisions, current		0.8		0.8		0.7
Tax liabilities		9.7		6.4		21.5
Current provision for employee benefits		5.3		5.0		4.3
Other non-financial liabilities, current		79.5		160.8		118.8
Total Current Liabilities		1,335.5		1,116.9		1,451.3
Other non-current financial liabilities		3,927.3		4,190.1		3,988.3
Other provisions, non-current		36.1		35.3		63.8
Deferred tax liabilities		1,636.8		1,637.7		1,745.7
Non-current provision for employee benefits		60.3		57.7		51.2
Other non-financial liabilities, non-current		59.9		54.8		53.5
Total Non-Current Liabilities		5,720.5		5,975.7		5,902.5
Non-parent participation		43.7		40.7		43.6
Net equity attributable to parent company		6,860.1		6,729.4		6,728.8
TOTAL LIABILITIES AND EQUITY		13,959.9		13,862.7		14,126.1

18

Cash Flow Statement

US$ Million	Q2 2016			Q1 2016			Q2 2015
Collection of accounts receivables		1,263.6			1,308.4			1,480.6
Other cash receipts (payments)		68.4			64.4			31.0
Payments of suppliers and personnel (less)		(1,048.2	)		(1,077.4	)		(1,194.0	)
Interest paid and received		(22.4	)		(68.4	)		(41.4	)
Income tax paid		(21.4	)		(13.3	)		(35.3	)
Other (outflows) inflows of cash, net		3.0			(2.9	)		(3.5	)
Net Cash Provided by (Used in) Operating Activities		243.0			210.7			237.5
Capital Expenditures		(271.8	)		(100.5	)		(187.0	)
Other investment cash flows		11.2			3.6			(18.3	)
Net Cash Provided by (Used in) Investing Activities		(260.6	)		(97.0	)		(205.3	)
Proceeds from borrowings		158.5			208.5			174.8
Repayments of borrowings		(163.0	)		(172.6	)		(640.8	)
Dividends paid		(100.3	)		0.0			(98.6	)
Other inflows of cash, net		0.4			(0.4	)		(0.4	)
Net Cash Provided by (Used in) Financing Activities		(104.4	)		35.5			(565.1	)
Total Cash Inflow (Outflow) of the Period		(121.9	)		149.3			(532.9	)
Effect of exchange rate changes on cash and cash equivalents		6.6			(6.6	)		3.9
Cash and Cash equivalents at beginning of the period		642.7			500.0			1,040.9
Cash and Cash Equivalents at end of the Period		527.4			642.7			511.9

19

Signature

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	Celulosa Arauco y Constitución, S.A.
	(Registrant)
Date: October 4, 2016	By:	/s/ Matías Domeyko Cassel
	Name:	Matías Domeyko Cassel
	Title:	Chief Executive Officer