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 September, 2017

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  ☑            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  ☑

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 Interim Consolidated Financial Statement		1
2.	Unaudited Interim Consolidated Statement of Financial Position		7
3.	Unaudited Interim Consolidated Statement of Profit or Loss		9
4.	Unaudited Interim Consolidated Statement of Changes in Equity		11
5.	Unaudited Interim Consolidated Statement of Cash Flow		12
6.	Unaudited Notes to the Interim Consolidated Financial Statement		13
	Annex: Press Release

CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Ratio Analysis of the Interim Consolidated Financial Statements

September 30, 2017

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	09-30-2017 ThU.S.$		12-31-2016 ThU.S.$
Current assets		2,672,683		2,722,360
Non-current assets		11,200,742		11,283,821
Total assets		13,873,425		14,006,181
Liabilities	09-30-2017 ThU.S.$		12-31-2016 ThU.S.$
Current liabilities		1,415,013		1,346,064
Non-current liabilities		5,342,982		5,660,834
Non–parent participation		44,917		44,032
Net equity attributable to parent company		7,070,513		6,955,251
Total net equity and liabilities		13,873,425		14,006,181

As of September 30, 2017, total assets decreased MU.S.$133 compared to December 31, 2016, equivalent to a 0.95% variation. This deviation was driven mainly by decreases in the balance of biological assets and inventory, which were partially offset by increases in Trade and other current receivables and property assets, plants and equipment.

In turn, total liabilities decreased by MU.S.$249 mainly due to a decrease in financial liabilities.

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

Liquidity ratios	09-30-2017		12-31-2016
Current Liquidity (current assets / current liabilities)		1.89		2.02
Acid ratio ((current assets-inventories, biological assets) / current liabilities)		1.12		1.16
Debt indicators	09-30-2017		12-31-2016
Debt to equity ratio (total liabilities / equity)		0.95		1.00
Short-term debt to total debt (current liabilities / total liabilities)		0.21		0.19
Long-term debt to total debt (non-current liabilities / total liabilities)		0.79		0.81
	09-30-2017		09-31-2016
Financial expenses coverage ratio (earnings before taxes + interest expense / interest expense)		2.46		1.99
Activity ratio	09-30-2017		12-31-2016
Inventory turnover-time (cost of sales / inventories + current biological assets)		3.19		2.99
Inventory turnover-time (excluding biological assets) (Cost of sales /inventory)		4.41		3.97
Inventory permanence-days ((inventories + biological assets) /cost of sales)		112.74		120.42
Inventory permanence-days (excluding biological assets) (inventory / cost of sales)		81.70		90.68

As of September 30, 2017, the short-term debt represented 21% of total liabilities (19% as of December 31, 2016).

1

CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Ratio Analysis of the Interim Consolidated Financial Statements

September 30, 2017

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

Our financial expenses coverage ratio increased from 1.99 to 2.46, mainly due to the higher earnings before taxes and lower financial costs for the period ended September 30, 2017, compared to the same period of 2016.

b) Statements of profit or loss

Income before income tax

Income before income tax registered a profit of approximately MU.S.$251 compared to a profit of approximately MU.S.$199 in the same period of 2016. The positive variation of MU.S.$52 is explained by the factors described in the following table:

Item	MU.S.$
Gross margin		279
Distribution and Administrative Expenses		(37	)
Other income and expenses (*)		(215	)
Others		25
Net change in income before income tax		52

(*) Includes MU.S.$174 of losses due to forestry claims and MU.S.$35 from insurance compensation.

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

Revenues	09-30-2017 ThU.S.$			09-30-2016 ThU.S.$
Pulp		1,814,458			1,588,710
Timber		1,979,720			1,865,010
Forestry		83,799			68,976
Other		29,062			18,085
Total revenues		3,907,039			3,540,781
Sales costs	09-30-2017 ThU.S.$			09-30-2016 ThU.S.$
Wood		555,367			553,041
Forestry work		480,222			443,319
Depreciation and amortization		288,424			277,483
Other costs		1,365,601			1,328,383
Total sales costs		2,689,614			2,602,226
Profitability index	09-30-2017			12-31-2016
Profitability on equity		3.54			3.19
Profitability on assets		1.74			1.57
Return on operating assets		4.60			2.21
Profitability ratios	09-30-2017			09-30-2016
Income per share (U.S.$) (1)		1.65			1.24
Income after tax (ThU.S.$) (2)		187,198			141,811
Gross margin (ThU.S.$)		1,217,425			938,555
Financial costs (ThU.S.$)		(171,766	)		(200,455	)

(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 Interim Consolidated Financial Statements

September 30, 2017

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

EBITDA	09-30-2017 MU.S.$			09-30-2016 MU.S.$
Gain (loss)		187.2			141.8
Finance costs		171.8			200.5
Financial income		(15.7	)		(25.8	)
Expenses for income tax		64.0			57.4
EBIT		407.3			373.9
Depreciation and amortization		312.3			301.8
EBITDA		719.6			675.7
Cost at fair value of the harvest		256.4			253.7
Gain from changes in fair value of biological assets		(101.2	)		(139.8	)
Exchange difference		(2.7	)		0.1
Others*		139.4			2.7
Adjusted EBITDA		1,011.5			792.3

* 2017: Forestry claims of MU.S.$173.9 net of MU.S.$35 from insurance compensation.

* 2016: Forestry claims of MU.S.$2.1

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

Consistent with the tendency at the end of the second quarter, the summer months of July and August proved to be stable in terms of pricing despite the usual seasonal downturn in demand. Price hikes started up once again in September throughout all markets, a clear sign of the healthy economies in Europe, Asia and North America. From the supply side, new incoming supply of market pulp into the market became more apparent. The OKI Mill is not expected to reach the 2.8 million tons of annual production, and instead is expected to produce approximately 2.0 million tons per year for the next three to four years. In turn, new supply from the Horizonte II Mill did not have a significant effect in the market.

Asian markets continue to follow Chinese trends in prices. Short fiber increased average prices by 5% during the quarter, while long fiber increased average prices by 4% during the quarter. Low inventories, especially in China, pushed local trader prices to elevated levels. The gap between local prices and import prices reached U.S.$ 100, hinting that prices will probably continue to rise. Paper producers have been able to pass along their higher costs to the final consumer and maintained or even increased their margins. Although it is too early to understand the full impact, the ban on unsorted paper waste has also limited the supply of

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CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Ratio Analysis of the Interim Consolidated Financial Statements

September 30, 2017

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

raw materials for paper and packaging producers. In a market that continues to grow and therefore demands an ever-growing amount of paper and packaging, this ban should have a positive effect on average pulp prices. The ban on old corrugated containers has caused unbleached pulp prices also to improve. Korea and Taiwan, which are important packaging producers, were affected by the increase in unbleached pulp prices but were somewhat offset by higher imports of unsorted paper waste to these countries where it is not banned. In Southeast Asia, demand in fibrocement which also utilizes unbleached pulp was subdued as the construction sector lost strength

In Europe, the positive demand for pulp and paper was a strong reflection of greater economic activity. During this season, paper producers usually have annual maintenance stoppages that can last anywhere between seven to ten days. This year, however, many paper producers decided otherwise, and production levels remained in above-normal levels. Average pulp prices increased 6% in short fiber and 2% in long fiber during the quarter. It is important to note that long fiber is most commonly provided for locally, and Chilean imports are not relevant within this market. Consumption of printing and writing paper increased between 3% and 5% for the first time in ten years, and European paper producers were able to push their higher costs to the final consumer. Tissue is a different matter, since tissue prices are usually negotiated once or twice a year, and therefore do not have as much flexibility to changes throughout the seasons. Other regions such as the Middle East, North America and South America followed international price trends. Particularly in the Middle East prices increased despite having added pressure since paper producers were unable to transfer increased costs through their value chain and due to lower activity during the month of Ramadan. Production during the third quarter increased by 3.7% compared to last quarter and 3.8% compared to the same quarter of last year. We had a maintenance stoppage in our Licancel Mill during the month of July.

Composite Panel

sales remained solid, with overall sales volume increasing 4.2% and average prices decreasing 1.4%. MDF and PBO sales were generally restrained in all markets. However, OSB sales in Chile more than compensated this downfall in terms of sales volume, thanks to production from Sonae Arauco which we were able to sell within this market through market trading.

Sales in the North American market continued to show sustainable price levels, undeterred by a slower MDF market due to South American imports that continue to penetrate these markets. The West coast showed the highest demand within the region.

Brazil has shown a muted recovery in terms of sales volume as internal consumption levels increased with a slight decrease in prices. However, there is still the need to keep exporting to other markets in order to decrease pressure in the local markets. The rest of Latin America reached stable sales thanks to our diversified product mix. These markets have not been as dynamic as other parts of the world, as less projects that require construction and furniture products come into execution. The new MDF mills in Brazil and Mexico continue to maintain a heightened level of competition in this region.

4

CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Ratio Analysis of the Interim Consolidated Financial Statements

September 30, 2017

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

Timber Division

Markets kept their positive trend from last quarter, with sales volume increasing 7.9% and average prices increasing 1.1%. Asia and the Middle East are the primary factor in this upsurge, since European markets increased their internal consumption and therefore decreased exports to these countries. Remanufactured wood products also showed stable revenues, with North America showing increased dynamism.

Panels

Continued to show better returns, as prices increased 4.4% and sales volume increased 10.6% compared to the last quarter. Sales to European markets have benefitted from the appreciation of the euro, while in North America the high demand in retail, distribution and industrial chains boosted overall average prices. Value added products continue to be key in maintaining higher margins despite the continuing incoming supply of products from Brazilian competitors in the Northern hemisphere.

5. ANALYSIS OF CASH FLOW

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

	09-30-2017 ThU.S.$			09-30-2016 ThU.S.$
Positive (negative) Cash flow
Cash flow from operating activities		732,065			597,374
Cash flow from (used in) financing activities:
Loan and bond obtention and payments		(372,847	)		(47,349	)
Dividend payments		(61,106	)		(100,557	)
Others		1,314			(246	)
Cash flow from (used in) investment activities:
Incorporation and sale of property, plant and equipment		(286,079	)		(233,617	)
Incorporation and sale of biological assets		(119,725	)		(101,741	)
Incorporation and sale of intangible assets		(9,860	)		(1,858	)
Additions (Disposals), Investments in joint ventures and associates.		3,123			(146,354	)
Dividends received		7,287			4,772
Others		(7	)		(3,606	)
Positive (negative) Net cash flow		(105,835	)		33,182

The financing flow shows a higher negative balance of MU.S.$433 for the current period, presenting variations in respect of the previous period (negative balance of MU.S.$148), resulting mainly from a higher indebtedness during the 2016 period.

Regarding the investment flow, as of the closing of the current period, it shows a lower negative balance of MU.S.$405 (MU.S.$482 for the 2016 period), mainly due to higher disbursements arising from the payment of the purchase of the joint business SONAE ARAUCO during the 2016 period.

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CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Ratio Analysis of the Interim Consolidated Financial Statements

September 30, 2017

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

7. MARKET RISK ANALYSIS

In respect of the economic risks resulting from interest rate variations, the Company maintains, as of September 30, 2017, a ratio of fixed rate debt to total consolidated debt of approximately 84.8%, 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 September 30, 2017, a detailed analysis of the risks associated with the business of Arauco is available (See Note 23).

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CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

September 30, 2017

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

INTERIM CLASSIFIED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

	Note		09-30-2017 (Unaudited) ThU.S.$		12-31-2016 ThU.S.$
Assets
Current Assets
Cash and cash equivalents		5		485,569		592,253
Other current financial assets		23		3,029		5,201
Other current non-financial assets		25		157,914		144,915
Trade and other current receivables		23		888,300		701,610
Accounts receivable from related companies		13		6,475		12,505
Current Inventories		4		775,110		852,612
Current biological assets		20		312,276		306,117
Current tax assets				41,141		104,088
Total Current Assets other than assets or disposal groups classified as held for sale				2,669,814		2,719,301
Non-Current Assets or disposal groups classified as held for sale		22		2,869		3,059
Non-Current Assets or disposal groups classified as held for sale or as held for distribution to owners				2,869		3,059
Total Current Assets				2,672,683		2,722,360
Non-Current Assets
Other non-current financial assets		25		27,799		8,868
Other non-current non-financial assets		23		122,226		130,319
Trade and other non-current receivables				14,210		14,273
Investments accounted for using equity method		15-16		361,696		446,548
Intangible assets other than goodwill		19		90,611		89,497
Goodwill		17		75,982		74,893
Property, plant and equipment		7		6,985,056		6,919,495
Non-current biological assets		20		3,514,632		3,592,874
Deferred tax assets				7,573		6,097
Total non-Current Assets				11,200,742		11,283,821
Total Assets				13,873,425		14,006,181

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

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CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

September 30, 2017

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

INTERIM CLASSIFIED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (continued)

	Note	09-30-2017 (Unaudited) ThU.S.$			12-31-2016 ThU.S.$
Equity and liabilities
Liabilities
Current Liabilities
Other current financial liabilities	23		629,916			697,452
Trade and other current payables	23		600,819			537,891
Accounts payable to related companies	13		14,684			3,831
Other current provisions	18		446			842
Current tax liabilities			9,845			1,641
Current provisions for employee benefits	10		5,549			5,244
Other current non-financial liabilities	25		153,754			99,163
Total current liabilities other than assets included in disposal groups classified as held for sale			1,415,013			1,346,064
Total Current Liabilities			1,415,013			1,346,064
Non-Current Liabilities
Other non-current financial liabilities	23		3,572,953			3,870,914
Other non-current provisions	18		37,423			38,138
Deferred tax liabilities	6		1,604,445			1,631,065
Non-current provisions for employee benefits	10		63,997			60,084
Other non-current non-financial liabilities	25		64,164			60,633
Total non - current liabilities			5,342,982			5,660,834
Total liabilities			6,757,995			7,006,898
Equity
Issued capital			353,618			353,618
Retained earnings			7,395,506			7,329,675
Other reserves			(678,611	)		(728,042	)
Equity attributable to parent company			7,070,513			6,955,251
Non-controlling interests			44,917			44,032
Total equity			7,115,430			6,999,283
Total equity and liabilities			13,873,425			14,006,181

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

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CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

September 30, 2017

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

INTERIM CONSOLIDATED STATEMENTS OF PROFIT OR LOSS

			January - September						July - September
			(Unaudited)
	Note		2017 ThU.S.$			2016 ThU.S.$			2017 ThU.S.$			2016 ThU.S.$
Income Statement
Revenue		9		3,907,039			3,540,781			1,393,373			1,187,470
Cost of sales		3		(2,689,614	)		(2,602,226	)		(940,324	)		(890,457	)
Gross profit				1,217,425			938,555			453,049			297,013
Other income		3		123,193			189,635			42,245			69,869
Distribution costs		3		(390,422	)		(360,466	)		(138,293	)		(126,052	)
Administrative expenses		3		(371,160	)		(363,874	)		(123,653	)		(127,254	)
Other expense		3		(193,018	)		(43,878	)		8,150			(10,467	)
Profit (loss) from operating activities				386,018			359,972			241,498			103,109
Finance income		3		15,651			25,759			3,334			7,862
Finance costs		3		(171,766	)		(200,455	)		(54,149	)		(64,685	)
Share of profit (loss) of associates and joint ventures accounted for using equity method		3-15		18,579			14,003			7,009			3,972
Exchange rate differences				2,721			(74	)		2,896			(992	)
Income before income tax				251,203			199,205			200,588			49,266
Income Tax		6		(64,005	)		(57,394	)		(52,185	)		(17,842	)
Net Income				187,198			141,811			148,403			31,424
Net income attributable to
Net income attributable to parent company				186,818			140,222			148,427			31,138
Income attributable to non-controlling interests				380			1,589			(24	)		286
Profit (loss)				187,198			141,811			148,403			31,424
Basic earnings per share
Basic earnings per share from continuing operations				1.6509241			1.2391519			1.3116601			0.2751687
Basic earnings per share				1.6509241			1.2391519			1.3116601			0.2751687
Earnings per diluted shares
Earnings per diluted share from continuing operations				1.6509241			1.2391519			1.3116601			0.2751687
Earnings per diluted share				1.6509241			1.2391519			1.3116601			0.2751687

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

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AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

September 30, 2017

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

INTERIM CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

			January - September						July - September
			(Unaudited)
			2017			2016			2017			2016
	Note		ThU.S.$			ThU.S.$			ThU.S.$			ThU.S.$
Profit (loss)				187,198			141,811			148,403			31,424
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				1,111			(4,497	)		1,080			(1,582	)
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				(2,974	)		299			(1,567	)		622
Other Comprehensive Income that will not be reclassified to profit or loss before tax				(1,863	)		(4,198	)		(487	)		(960	)
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		54,750			179,690			57,495			(11,863	)
Other Comprehensive Income before tax exchange differences on translation				54,750			179,690			57,495			(11,863	)
Cash flow hedges
Gains (losses) on cash flow hedges, before tax				7,754			44,277			4,329			33,035
Reclassification adjustments on cash flow hedges before tax				(11,004	)		(10,658	)		(2,264	)		(2,539	)
Other Comprehensive Income before tax Cash flow hedges				(3,250	)		33,619			2,065			30,496
Other Comprehensive income that will be reclassified to profit or loss before tax				51,500			213,309			59,560			18,633
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				(283	)		1,212			(275	)		424
Income tax relating to 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				553			—			273			(67	)
Income tax relating to cash flow hedges of other comprehensive income		6		375			(8,171	)		(578	)		(7,129	)
Income tax relating to components of other comprehensive income that will be reclassified to profit or loss abstract				375			(8,171	)		(578	)		(7,129	)
Other comprehensive income				50,282			202,152			58,493			10,901
Comprehensive income				237,480			343,963			206,896			42,325
Comprehensive Income attributable to
Comprehensive income, attributable to owners of parent company				236,248			337,382			205,617			42,219
Comprehensive income, attributable to non-controlling interests				1,232			6,581			1,279			106
Total comprehensive income				237,480			343,963			206,896			42,325

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

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AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

September 30, 2017

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

INTERIM CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

Unaudited 09-30-2017	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 01/01/2017		353,618		(703,886	)		1,096			(20,752	)		(4,500	)		(728,042	)		7,329,675			6,955,251			44,032			6,999,283
Changes in Equity:
Comprehensive income
Net income																			186,818			186,818			380			187,198
Other comprehensive income, net of tax				53,904			(2,875	)		822			(2,421	)		49,430						49,430			852			50,282
Comprehensive income		—		53,904			(2,875	)		822			(2,421	)		49,430			186,818			236,248			1.232			237,480
Dividends																			(120,986	)		(120,986	)		(340	)		(121,326	)
Increase (decrease) through for transfers and other changes equity																			—			—			(7	)		(7	)
Changes in equity		—		53,904			(2,875	)		822			(2,421	)		49,430			65,832			115,262			885			116,147
Closing balance at 09/30/2017		353,618		(649,982	)		(1,779	)		(19,930	)		(6,921	)		(678,612	)		7,395,507			7,070,513			44,917			7,115,430
09-30-2016	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																			140,222			140,222			1,589			141,811
Other comprehensive income, net of tax				174,703			25,448			(3,290	)		299			197,160						197,160			4,992			202,152
Comprehensive income		—		174,703			25,448			(3,290	)		299			197,160			140,222			337,382			6,581			343,963
Dividends																			(59,145	)		(59,145	)		266			(58,879	)
Increase (decrease) for transfer and other changes																			—			—			(88	)		(88	)
Changes in equity		—		174,703			25,448			(3,290	)		299			197,160			81,077			278,237			6,759			284,996
Closing balance at 09/30/2016		353,618		(698,067	)		(29,948	)		(19,958	)		(4,227	)		(752,200	)		7,285,529			6,886,947			44,494			6,931,441

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

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AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

September 30, 2017

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

INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS - DIRECT METHOD

	09-30-2017			09-30-2016
	Unaudited
	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		4,036,639			3,880,924
Other cash receipts from operating activities		250,020			371,835
Classes of cash payments
Payments to suppliers for goods and services		(2,885,685	)		(2,866,583	)
Payments to and on behalf of employees		(392,144	)		(386,161	)
Other cash payments from operating activities		(67,417	)		(168,339	)
Interest paid		(187,563	)		(178,700	)
Interest received		12,779			19,056
Income taxes refund (paid)		(25,848	)		(71,109	)
Other (outflows) inflows of cash, net		(8,716	)		(3,549	)
Net Cash flows from Operating Activities		732,065			597,374
Cash flows (used in) investing activities
Cash flow used in purchase of associates and joint ventures		3,123			6,781
Capital contributions to joint ventures		—			(153,135	)
Loans to related parties		—			—
Proceeds from sale of property, plant and equipment		3,593			9,413
Purchase of property, plant and equipment		(289,672	)		(243,030	)
Proceeds from sales of intangible assets		—			—
Purchase of intangible assets		(9,860	)		(1,858	)
Proceeds from other long-term assets		1,816			1,572
Purchase of other non-current assets		(121,541	)		(103,313	)
Dividends received		7,287			4,772
Other outflows of cash, net		(7	)		(3,606	)
Cash flows used in Investing Activities		(405,261	)		(482,404	)
Cash flows from (used in) Financing Activities
Total loans obtained		296,561			542,461
Loans obtained in long term		69,410			297
Proceeds from short-term borrowings		227,151			542,164
Repayments of borrowings		(669,408	)		(589,810	)
Dividends paid by subsidiaries or special purpose companies		(61,106	)		(100,557	)
Other inflows of cash, net		1,314			(246	)
Cash flows from (used in) Financing Activities		(432,639	)		(148,152	)
Net increase (decrease) in Cash and Cash Equivalents before effect of exchange rate changes		(105,835	)		(33,182	)
Effect of exchange rate changes on cash and cash equivalents		(849	)		(7,175	)
Net increase (decrease) of Cash and Cash equivalents		(106,684	)		(40,357	)
Cash and cash equivalents, at the beginning of the period		592,253			500,025
Cash and cash equivalents, at the end of the period		485,569			459,668

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

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AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

September 30, 2017

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

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS AS OF SEPTEMBER 30, 2017 AND 2016 AND DECEMBER 31, 2016

NOTE 1. PRESENTATION OF INTERIM 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., a subsidiary of Celulosa Arauco y Constitución S.A., is also registered in the Securities Registry as No. 030.

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

Arauco is principally engaged in the production and sale of products related to the forestry and timber industries. Its main operations are focused on business areas of pulp, 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 the Interim Consolidated Financial Statements

The Financial Statements presented by Arauco as of September 30, 2017 are:

• Interim Classified Consolidated Statements of Financial Position as of September 30, 2017 and December 31, 2016.

• Interim Consolidated Statements of Profit or Loss for the periods between January 1 and September 30, 2017 and 2016

• Interim Consolidated Statements of Comprehensive Income for the periods between January 1 and September 30, 2017 and 2016

• Interim Consolidated Statements of Changes in Equity for the periods between January 1 and September 30, 2017 and 2016

• Interim Consolidated Statements of Cash Flows for the periods between January 1 and September 30, 2017 and 2016

• Explanatory disclosures (notes).

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Unaudited Interim Consolidated Financial Statements

September 30, 2017

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

Period Covered by the Interim Consolidated Financial Statements

Periods between January 1 and September 30, 2017 and 2016.

Date of Approval of Interim Consolidated Financial Statements

These interim consolidated financial statements for the periods between January 1 and September 30, 2017 were approved by the Board of Directors of the Company (the “Board”) at the Extraordinary Meeting No.580 held November 14, 2017.

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

UTA - Annual Tax Unit

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 reportable 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 reportable 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 interim 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.$”).

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AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

September 30, 2017

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 have been prepared in accordance with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB) and represent the explicit and unreserved adoption of IFRS.

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 financial statements, in accordance with IFRS, 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 interim consolidated financial statements.

-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. The aforementioned 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.

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Unaudited Interim Consolidated Financial Statements

September 30, 2017

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

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 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.

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.

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Unaudited Interim Consolidated Financial Statements

September 30, 2017

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

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 interim consolidated 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 interim 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, Argentine Peso, Canadian Dollar 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 interim consolidated statement of financial position within equity, separately from the equity of the owners of the parent company.

d) Segments

Arauco has defined its reportable 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 reportable segments according to the following business units:    

• Pulp

• Timber

• Forestry

Refer to Note 24 for detailed financial information by reportable 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.

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Unaudited Interim Consolidated Financial Statements

September 30, 2017

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

(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 statements of profit or loss, except those which are recorded in other comprehensive income and accumulated in equity such as cash flows hedging derivatives.

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)

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Unaudited Interim Consolidated Financial Statements

September 30, 2017

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

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.

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 to enter into derivatives contracts only for economic hedging 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.

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Unaudited Interim Consolidated Financial Statements

September 30, 2017

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

-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 instruments and the change in the hedged items attributable to the hedged risks are recognized in profit or loss in the corresponding line 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 interim 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.

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.

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Unaudited Interim Consolidated Financial Statements

September 30, 2017

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

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 statements 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:

-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 acquiree or share-based payment arrangements of the Group entered into to replace share-based payment arrangements of the acquiree 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 interim 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.

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CELULOSA ARAUCO Y CONSTITUCION S.A.

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Unaudited Interim Consolidated Financial Statements

September 30, 2017

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

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 acquirer’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 businesses combination achieved (“step acquisition”), recognizing in the statements of profit or loss the effects of the re-measurement of previously held equity in the acquiree.

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.

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 the portion corresponding to the statements of profit or loss or to the statement of 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.

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CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

September 30, 2017

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

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

If Arauco’s share of losses of an associate or joint venture equals or exceeds its interest in the associate or joint venture, Arauco discontinues recognizing its share of further losses. After Arauco’s carrying value in the investee is reduced to zero, additional losses are provided for, and a liability is recognized, only to the extent that Arauco has incurred legal or constructive obligations or made payments on behalf of the associate or joint venture. If the associate or joint venture subsequently reports profits, Arauco resumes recognizing its share of those profits only after its share of the profits equals the share of losses not recognized.

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.

(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 acquired company, and the fair value of the acquirer’s previously held equity interest in the acquired company (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 statements of profit or loss.

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CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

September 30, 2017

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

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 acquired company 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.

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.

24

CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

September 30, 2017

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

When assets are leased under a finance lease, the present value of lease payments are recognized as financial accounts receivable. 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.

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.

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 interim consolidated statement of profit or loss.

r) Income taxes and deferred taxes.

The tax liabilities are recognized in the interim 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.

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

25

CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

September 30, 2017

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

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.

“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.

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CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

September 30, 2017

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

(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 reportable 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 interim consolidated statement of financial position.

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.

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CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

September 30, 2017

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

w) Impairment

Non-financial Assets

The recoverable amount of property, plant and equipment and other long-term 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 a reversal of an impairment loss shall not exceed the carrying amount that would have been determined (net of amortization or depreciation) had no impairment loss been recognized for the asset in prior 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.

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.

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CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

September 30, 2017

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

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.

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CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

September 30, 2017

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

y) Employee Vacations

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

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 interim consolidated statements of financial position.

z) Recent accounting pronouncements

a) Provisions, interpretations and amendments that are mandatory for the first time, for the financial years commencing as of January 1, 2017.

Amendments and improvements	Content	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 1	First-Time adoption of the IFRS Suspension of short-term exceptions	January 1, 2017
IFRS 12	Disclosure of Interests in Other Entities. Clarifies the scope of this rule.	January 1, 2017
IAS 28	Investments in Associates and Joint Ventures.	January 1, 2017

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

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CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

September 30, 2017

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	Content	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 recognize, measure, present and disclose leases. The standard provides a single lessee accounting model, requiring lessees to recognize 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
IFRIC 22	Transactions in Foreign Currency and Anticipated Considerations Applies to a transaction in foreign currency (or partially in foreign currency) when an entity recognizes a non-financial asset or a non-financial liability arising from the payment or collection of an anticipated consideration, before recognizing the related asset, expense, or income.	January 1, 2018
IFRIC 23	Uncertain tax positions It clarifies the method of applying the acknowledgment and measurement requirements of IAS 12 when there is uncertainty regarding the fiscal treatments.	January 1, 2019

Amendments and improvements	Content	Mandatory application for annual periods beginning on or after
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
IFRS 15	Revenue from contracts with customers. Introduces clarifications to the guidelines and examples related to the transition towards the new rule.	January 1, 2018
IFRS 4	Insurance contracts Introduces two approaches: overlap and temporary exemption of IFRS 9.	January 1, 2018
IAS 40	Investment properties Clarifies the requirements needed to transfer to, or from, investment properties.	January 1, 2018
IFRS 10 y IAS 28-Amendments	Sale or Contribution of assets among an Investor and its Associates or Joint Ventures.	Indeterminate

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CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

September 30, 2017

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

IFRS - 9 Financial Instruments.

IFRS 9 addresses the classification, measurement and derecognition of financial assets and financial liabilities. The provision includes new rules applicable to hedge accounting and a new impairment model for financial assets. The financial assets held by the Group mainly include: Mutual Fund Holdings, (hedge) Derivatives, and highly-liquid financial instruments.

Consequently, Arauco does not expect the new standard to have a significant impact in the classification and measurement of its financial assets. There will be no impact over the accounting of the group’s financial liabilities, because the new requirements only affect the accounting of financial liabilities that are recognized at fair value through profit and loss, and the group does not have such liabilities. Arauco does not intend to adopt IFRS 9 prior to its date of mandatory applicability.

IFRS 15 – Ordinary Activities’ Income from Contracts with Clients.

The new provision specifies how and when income will be recognized and increases the disclosures. The provision provides a single five-step model based on principles applicable to all contracts with clients. The provision will be in full force and effect on January 1, 2018.

Arauco is a pulp and wood supplier in the global markets. Arauco’s contracts with clients can be clearly identified on the basis of purchase orders placed by such clients. Performance obligations are regularly explicitly defined as the products are delivered in accordance with the client’s contracts.

The main contracts with clients do not include additional separate performance obligations that would substantially change the timing of income recognition in accordance to IFRS 15, compared to current income recognition practices.

IFRS 16 - Leases

IFRS 16 was issued in January, 2016. The new provision will result in recognizing practically all leases in the balance sheet, because the distinction between operational and financial leases was eliminated. Under the new provision an asset (the right to use the leased property) as well as a financial liability is recognized for lease payments. Short-term and low-value leases are an exception to this rule. This provision will be in full force and effect on January 1, 2019.

The group’s main assets with which it conducts its operations are either held or kept under financial lease by Arauco and its subsidiaries; this it does not expect that the impact of the new rule will cause a significant effect on the financial statements. However, the group has still not assessed what other adjustments, if any, are necessary in view of the changes in the definition of the lease termination and the different treatment of the lease’s variable payments and options to extend and terminate it. Therefore, it is not yet possible to estimate the value of the right of use over the assets and the liabilities for leases that shall be recognized in the adoption of the new rule and how this can affect the group’s earnings or losses and the classification of the cash flows in the future.

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CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

September 30, 2017

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

According to the evaluations carried out, the adoption of the other standards, amendments and interpretations described above will not have a significant impact on Arauco’s Interim Consolidated Financial Statements during its initial application period.

NOTE 2. ACCOUTING POLICIES, CHANGES IN ACCOUNTING ESTIMATES

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

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

	09-30-2017	12-31-2016
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
	09-30-2017	12-31-2016
Number of Shares Issued and Fully Paid by Type of Capital in Ordinary Shares	113,159,655

b) Dividends paid

The interim dividend paid in December 2016 was equivalent to 20% of the distributable net income calculated as of the end of September 2016 and was considered a decrease in the interim statement of consolidated changes in equity.

The final dividend paid each year, by the end of May, corresponds to 40% of the prior year distributable net profit, which takes into account the interim dividend paid

The ThU.S.$120,986 (ThU.S.$59,145 as of September 30, 2016) presented in the interim statement of consolidated changes in equity correspond to the minimum dividend provision recorded for the period 2017.

In the interim consolidated statements of cash flows, the Dividend Paid line shows an amount of ThU.S.$ 61,106 as of September 30, 2017 (ThU.S.$ 100,557 as of September 30, 2016), of which ThU.S.$ 59,005 (ThU.S.$ 99,221 as of September 30, 2016) correspond to the payment of dividends of the Parent Company.

33

CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

September 30, 2017

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

The following are the dividends paid and per share amounts during the period 2017 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	05-10-2017
Amount of Dividend	ThU.S.$59,005
Number of Shares for which Dividends are Paid	113,159,655
Dividend per Share, Ordinary Shares	U.S.$0.52143

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CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

September 30, 2017

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	12-14-2016
Amount of Dividend	ThU.S.$29,572
Number of Shares for which Dividends are Paid	113,159,655
Dividend per Share, Ordinary Shares	U.S.$0.26133

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	05-11-2016
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

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.

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CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

September 30, 2017

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

Other items in the Statements of Profit or Loss

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 September 30, 2017 and 2016:

	January-September						July-September
	Unaudited						Unaudited
	2017			2016			2017			2016
	ThU.S.$			ThU.S.$			ThU.S.$			ThU.S.$
Classes of Other Income
Other Income, Total		123,193			189,635			42,245			69,869
Gain from changes in fair value of biological assets (See note 20)		101,163			139,806			33,881			40,932
Net income from insurance compensation		1,410			2,752			1,106			526
Revenue from export promotion		2,743			1,797			870			668
Lease income		3,126			3,741			864			2,180
Gain on sales of assets		9,698			12,092			4,909			1,945
Access easement		441			3,560			—			3,474
Other operating results		4,612			24,906			615			19,163
Classes of Other Expenses by activity
Total of Other Expenses by activity		(193,018	)		(43,878	)		8,150			(10,467	)
Depreciation		(1,980	)		(976	)		(645	)		(344	)
Legal expenses		(2,482	)		(4,407	)		(505	)		(1,556	)
Impairment provision for property, plant and equipment and others		(4,254	)		(3,460	)		(1,523	)		(1,582	)
Operating expenses related to plants stoppage		(3,208	)		(2,517	)		(1,024	)		(513	)
Expenses related to projects		(713	)		(1,092	)		(76	)		(55	)
Loss of asset sales		(4,474	)		(1,277	)		(1,876	)		(413	)
Loss and repair of assets		(3,739	)		(889	)		(27	)		(323	)
Loss of forest due to fires		(139,376	)		(2,669	)		34,491			(605	)
Other Taxes		(8,111	)		(6,624	)		(4,346	)		(1,696	)
Research and development expenses		(2,051	)		(1,911	)		(498	)		(772	)
Fines, readjustments and interests		(2,104	)		(842	)		(1,669	)		(539	)
Loss on disposal of associates		—			(10,369	)		—			—
Other expenses		(20,526	)		(6,845	)		(14,152	)		(2,069	)
Classes of financing income
Financing income, total		15,651			25,759			3,334			7,862
Financial income from mutual funds - term deposits		8,038			8,762			2,401			2,454
Financial income resulting from swap - forward instruments		3,709			11,546			(271	)		3,477
Other financial income		3,904			5,451			1,204			1,931
Classes of financing costs
Financing costs, Total		(171,766	)		(200,455	)		(54,149	)		(64,685	)
Interest expense, Banks loans		(23,518	)		(26,268	)		(8,001	)		(9,352	)
Interest expense, Bonds		(123,511	)		(136,558	)		(38,222	)		(52,793	)
Interest expense, other financial instruments		(12,864	)		(17,475	)		(3,653	)		8,875
Other financial costs		(11,873	)		(20,154	)		(4,273	)		(11,415	)
Share of profit (loss) of associates and joint ventures accounted for using equity method
Total		18,579			14,003			7,009			3,972
Investments in associates		5,006			12,170			1,881			3,383
Joint ventures		13,573			1,833			5,128			589

(*) Loss of forest due to fires are presented net of ThU.S.$35,000 from insurance compensation.

36

CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

September 30, 2017

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 - September				July - September
	Unaudited				Unaudited
Cost of sales	2017 ThU.S.$		2016 ThU.S.$		2017 ThU.S.$		2016 ThU.S.$
Timber		555,367		553,041		178,738		177,449
Forestry labor costs		480,222		443,319		179,129		168,026
Depreciation and amortization		288,424		277,483		102,927		93,497
Maintenance costs		199,093		231,643		69,586		79,031
Chemical costs		386,348		357,345		132,812		120,074
Sawmill Services		84,926		84,022		30,906		25,098
Others Raw Materials		146,052		172,266		52,309		61,548
Others Indirect costs		127,524		109,386		46,064		40,002
Energy and fuel		139,165		101,868		51,136		32,255
Cost of electricity		32,872		30,186		9,794		9,873
Wage and salaries		249,621		241,667		86,923		83,604
Total		2,689,614		2,602,226		940,324		890,457

	January - September					July - September
	Unaudited					Unaudited
Distribution cost	2017 ThU.S.$		2016 ThU.S.$			2017 ThU.S.$		2016 ThU.S.$
Selling costs		28,634		25,259			10,238		8,526
Commissions		10,631		10,461			4,148		3,321
Insurance		2,315		2,426			770		584
Provision for doubtful accounts receivable		154		(119	)		50		(94	)
Other selling costs		15,534		12,491			5,270		4,715
Shipping and freight costs		361,788		335,207			128,055		117,526
Port services		22,782		20,351			7,950		7,191
Freights		289,793		259,920			101,324		92,453
Other shipping and freight costs		49,213		54,936			18,781		17,882
Total		390,422		360,466			138,293		126,052

	January - September				July - September
	Unaudited				Unaudited
Administrative expenses	2017 ThU.S.$		2016 ThU.S.$		2017 ThU.S.$		2016 ThU.S.$
Wage and salaries		159,083		147,192		55,741		49,110
Marketing, advertising, promotion and publications expenses		7,166		7,277		2,114		2,638
Insurance		13,152		16,703		3,920		4,466
Depreciation and amortization		21,228		21,708		6,889		8,471
Computer services		20,512		20,304		5,641		8,237
Lease rentals (offices, warehouses and machinery)		11,331		9,761		3,332		2,903
Donations, contributions, scholarships		5,635		7,161		1,777		1,509
Fees (legal and technical advisories)		27,873		34,127		10,623		14,089
Property taxes, patents and municipality rights		13,782		13,196		4,383		5,026
Personal care, supervision and transport services		18,747		19,512		6,286		7,554
Variable third party services (maneuvers, logistic operator)		31,039		30,852		10,991		10,436
Basic services (telephone, electricity, water)		6,057		6,544		1,970		2,297
Maintenance and repair		3,936		4,898		1,234		1,762
Seminars, courses, teaching materials		1,678		2,378		794		1,091
Other administration expenses		29,941		22,261		7,958		7,665
Total		371,160		363,874		123,653		127,254

37

CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

September 30, 2017

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

		January - September				July - September
		Unaudited				Unaudited
		2017		2016		2017		2016
Expenses for	Note	ThU.S.$		ThU.S.$		ThU.S.$		ThU.S.$
Depreciations	7		302,227		291,677		107,246		99,165
Employee benefits	10		409,374		392,137		141,305		132,437
Amortization	19		10,036		10,111		3,248		3,606

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

Auditors fees	09-30-2017 ThU.S.$
Audit services		1,622
Other services
Tax services		597
Others		177
TOTAL		2,396
Number of employees		No.
		15,737

NOTE 4. INVENTORIES

	09-30-2017		12-31-2016
	Unaudited
Components of Inventory	ThU.S.$		ThU.S.$
Raw materials		51,418		61,252
Production supplies		97,748		102,760
Products in progress		58,921		59,332
Finished goods		459,453		468,544
Spare Parts		107,570		160,724
Total Inventories		775,110		852,612

Inventories recognized as cost of sales at September 30, 2017 were ThU.S.$2,632,899 (ThU.S.$2,538,859 at September 30, 2016).

In order to have the inventories recorded at net realizable value at September 30, 2017, a net increase of inventories was recognized associated with a less provision of obsolescence of ThU.S.$9,347 (greater provision of ThU.S.$1,915 at September 30, 2016). As of September 30, 2017, the amount of obsolescence provision is ThU.S.$16,893 (ThU.S.$28,499 at December 31, 2016).

At September 30, 2017 there were inventory write-offs of ThU.S.$475 (ThU.S.$1,335 at September 30, 2016)

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

38

CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

September 30, 2017

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

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.

	09-30-2017 Unaudited		12-31-2016
Components of Cash and Cash Equivalents	ThU.S.$		ThU.S.$
Cash on hand		193		3,156
Bank checking account balances		138,246		146,290
Time deposits		183,159		247,391
Mutual funds		107,315		195,416
Other cash and cash equivalents (*)		56,656		—
Total		485,569		592,253

The risk classification of the mutual funds in effect as of September 30, 2017 and December 31, 2016 is shown below.

	September 2017 Unaudited ThU.S.$		December 2016 ThU.S.$
AAAfm		105,423		192,895
AAfm		1,892		2,521
Total Mutual Funds		107,315		195,416

39

CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

September 30, 2017

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

Changes in Financial Liabilities.

			Cash Flow
	Opening balance		Loans		Loans			interest paid			Accrual				Activities			Closing balance
	12-31-2016		obtained		Paid			and others			of interest		Adjustment		no cash flow			09-30-2017
Loans from banks		914,358		296,561		(274,408	)		(24,189	)		20,557		—		4,851			937,730
Leases		113,986		18,994		(7,096	)		(123	)		—		169		(9,842	)		116,089
Hedging liabilities		87,363		—		—			—			—		—		(49,302	)		38,061
Bonds and promissory notes		3,452,659		—		(395,000	)		(143,666	)		122,451		70,402		4,143			3,110,989
Total		4,568,366		315,554		(676,504	)		(167,978	)		143,008		70,571		(50,148	)		4,202,869

			Cash Flow
	Opening balance		Loans			Loans			interest paid			Accrual				Activities			Closing balance
	12-31-2015		obtained			Paid			and others			of interest		Adjustment		no cash flow			12-31-2016
Loans from banks		997,542		550,226			(645,211	)		(27,692	)		27,471		9		12,013			914,358
Leases		127,559		(13,573	)		—			—			—		—		—			113,986
Hedging liabilities		227,568		—			—			—			—		—		(140,204	)		87,364
Bonds and promissory notes		3,180,334		187,427			—			(163,881	)		165,017		79,923		3,838			3,452,658
Total		4,533,003		724,080			(645,211	)		(191,573	)		192,488		79,932		(124,353	)		4,568,366

40

CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

September 30, 2017

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 25.5% 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 in Chile. 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, 2017 and thereafter, if the Company chooses the application of the partially integrated system.

Subsequently, on February 28, 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:

	09-30-2017			12-31-2016
	Unaudited
Deferred Tax Assets	ThU,S,$			ThU.S.$
Deferred tax Assets relating to Provisions		7,872			5,771
Deferred tax Assets relating to Accrued Liabilities		8,310			11,716
Deferred tax Assets relating to Post-Employment benefits		18,745			17,618
Deferred tax Assets relating to Property, Plant and equipment		9,655			9,806
Deferred tax Assets relating to Financial Instruments		8,333			12,699
Deferred tax Assets relating to Tax Losses Carryforwards		63,787			50,917
Deferred tax Assets relating to Inventories		4,848			7,158
Deferred tax Assets relating to Provisions for Income		3,905			7,069
Deferred tax Assets relating to Allowance for Doubful Accounts		4,101			4,886
Intangible revaluation differences		11,340			10
Deferred tax Assets relating to Other Deductible Temporary Differences		22,329			30,216
Total Deferred Tax Assets		163,225			157,866
Netting presentation		(155,652	)		(151,769	)
Net Effect		7,573			6,097

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.$205,977 (ThU.S.$157,403 at December 31, 2016), 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.$ 78,383 (ThU.S.$ 76,280 at December 31, 2016) 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.

41

CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

September 30, 2017

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

Deferred Tax Liabilities

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

	09-30-2017			12-31-2016
	Unaudited
Deferred Tax Liabilities	ThU.S,$			ThU.S.$
Deferred tax Liabilities relating to Property, plant and equipment		906,661			934,892
Deferred tax Liabilities relating to Financial Instruments		7,798			7,186
Deferred tax Liabilities relating to Biological Assets		724,743			719,577
Deferred tax Liabilities relating to Inventory		33,737			31,072
Deferred tax Liabilities due to Prepaid Expenses		42,289			42,881
Deferred tax Liabilities due to Intangible		27,242			27,222
Deferred tax Liabilities relating to Other Taxable Temporary Differences		17,627			20,004
Total Deferred Tax Liabilities		1,760,097			1,782,834
Netting presentation		(155,652	)		(151,769	)
Net Effect		1,604,445			1,631,065

The effect of the period of the current and deferred tax related to the financial instruments of coverage, is a payment of ThU.S.$ 375 as of September 30, 2017 (a charge amounting to ThU.S.$ 8,171 as of September 30, 2016), which is portrayed in its net amount in the Reserve of cash flow hedges, in the interim consolidated statements of changes in equity.

42

CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

September 30, 2017

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

Reconciliation of deferred tax assets and liabilities

Unaudited	Opening Balance 01-01-2017		Deferred tax Expenses (Income)			Deferred tax of items charged to other comprehensive income			Increase (decrease) for Bussines Combination		Increase (decrease) Net exchange differences			Closing balance 09-30-2017
Deferred Tax Assets	ThU.S.$		ThU.S.$			ThU.S.$			ThU.S.$		ThU.S.$			ThU.S.$
Deferred tax Assets relating to Provisions		5,771		2,053			—			—		48			7,872
Deferred tax Assets relating to Accrued liabilities		11,716		(3,358	)		—			—		(48	)		8,310
Deferred tax Assets relating to Post-Employment benefits		17,618		1,444			(323	)		—		6			18,745
Deferred tax Assets relating to Property, Plant and equipment		9,806		(151	)		—			—		—			9,655
Deferred tax Assets relating to Financial Instruments		12,699		1,584			(5,950	)		—		—			8,333
Deferred tax Assets relating to Tax Loss Carryforward		50,917		12,348			—			—		522			63,787
Deferred tax assets relating to Inventories		7,158		(2,310	)		—			—		—			4,848
Deferred tax assets relating to Provisions for Income		7,069		(3,164	)		—			—		—			3,905
Deferred tax Assets relating to Allowance for Doubtful Accounts		4,886		(794	)		—			—		9			4,101
Intangible revaluation differences		10		(548	)		—			11,389		489			11,340
Deferred tax Assets relating to Other Deductible Temporary Differences		30,216		(7,458	)		—			—		(429	)		22,329
Total Deferred Tax Assets		157,866		(354	)		(6,273	)		11,389		597			163,225
Unaudited	Opening Balance 01-01-2017		Deferred tax Expenses (Income)			Deferred tax of items charged to other comprehensive income			Increase (decrease) for Bussines Combinatión		Increase (decrease) Net exchange differences			Closing balance 09-30-2017
Deferred Tax Liabilities	ThU.S.$		ThU.S.$			ThU.S.$			ThU.S.$		ThU.S.$			ThU.S.$
Deferred tax Liabilities relating to Property, Plant and Equipment		934,892		(28,445	)		—			—		214			906,661
Deferred tax Liabilities relating to Financial Instruments		7,186		612			—			—		—			7,798
Deferred tax Liabilities relating to Biological Assets		719,577		(37,027	)		—			38,016		4,177			724,743
Deferred tax Liabilities relating to Inventory		31,072		2,665			—			—		—			33,737
Deferred tax Liabilities relating to Prepaid Expenses		42,881		(592	)		—			—		—			42,289
Deferred tax Liabilities relating to Intangible		27,222		(206	)		—			—		226			27,242
Deferred tax Liabilities relating to Other Taxable Temporary Differences		20,004		(2,524	)		—			—		147			17,627
Total Deferred Tax Liabilities		1,782,834		(65,517	)		—			38,016		4,764			1,760,097

43

CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

September 30, 2017

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

	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 12-31-2016
Deferred Tax Assets	ThU.S.$		ThU.S.$			ThU.S.$			ThU.S.$			ThU.S.$
Deferred tax Assets relating to Provisions		13,498		(8,019	)		—			292			5,771
Deferred tax Assets relating to Accrued Liabilities		8,535		3,181			—			—			11,716
Deferred tax Assets relating to Post-Employment benefits		15,480		579			1,509			50			17,618
Deferred tax Assets relating to Property, Plant and equipment		7,730		2,076			—			—			9,806
Deferred tax Assets relating to Financial Instruments		21,805		1,500			(10,606	)		—			12,699
Deferred tax Assets relating to Tax Loss Carryforward		35,751		11,498			—			3,668			50,917
Deferred tax Assets relating to Inventories		4,240		2,918			—			—			7,158
Deferred tax Assets relating to Provisions for Income		3,997		3,050			—			22			7,069
Deferred tax Assets relating to Allowance for Doubtful Accounts		4,572		261			—			53			4,886
Intangible revaluation differences		56		(46	)		—			—			10
Deferred tax Assets relating to Other Deductible Temporary Differences		24,587		3,593			—			2,036			30,216
Total Deferred Tax Assets		140,251		20,591			(9,097	)		6,121			157,866
	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 12-31-2016
Deferred Tax Liabilities	ThU.S.$		ThU.S.$			ThU.S.$			ThU.S.$			ThU.S.$
Deferred tax Liabilities relating to Property, Plant and Equipment		930,608		(1,065	)		—			5,349			934,892
Deferred tax Liabilities relating to Financial Instruments		6,376		810			—			—			7,186
Deferred tax Liabilities relating to Biological Assets		693,103		12,642			—			13,832			719,577
Deferred tax Liabilities relating to Inventory		31,912		(840	)		—			—			31,072
Deferred tax Liabilities relating to Prepaid Expenses		40,907		2,078			—			(104	)		42,881
Deferred tax Liabilities relating to Intangible		26,419		(528	)		—			1,331			27,222
Deferred tax Liabilities relating to Other Taxable Temporary Differences		26,203		(9,229	)		—			3,030			20,004
Total Deferred Tax Liabilities		1,755,528		3,868			—			23,438			1,782,834

44

CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

September 30, 2017

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

Temporary Differences

The following tables summarize the deductible and taxable temporary differences:

	09-30-2017						12-31-2016
	Unaudited
	Deductible			Taxable			Deductible			Taxable
	Difference			Difference			Difference			Difference
Detail of classes of Deferred Tax Temporary Differences	ThU,S,$			ThU.S.$			ThU.S.$			ThU.S.$
Deferred Tax Assets		99,438						106,949
Deferred Tax Assets - Tax loss carryforward		63,787						50,917
Deferred Tax Liabilities					1,760,097						1,782,834
Total		163,225			1,760,097			157,866			1,782,834
	January - September						July - September
	Unaudited
Detail of Temporary Difference Income and Loss Amounts	2017 ThU,S,$			2016 ThU.S.$			2017 ThU.S.$			2016 ThU.S.$
Deferred Tax Assets		(16,243	)		6,258			(9,888	)		4,019
Deferred Tax Assets - Tax loss carryforward		15,889			(3,827	)		(4,943	)		(919	)
Deferred Tax Liabilities		65,517			3,793			24,053			(1,803	)
Total		65,163			6,224			9,222			1,297

Income Tax Expense

Income tax expense consists of the following:

	January - September						July - September
	Unaudited
Income Tax composition	2017 ThU,S,$			2016 ThU.S.$			2017 ThU.S.$			2016 ThU.S.$
Current income tax expense		(129,791	)		(56,730	)		(61,979	)		(9,393	)
Previous period current tax adjustments		(779	)		(8,955	)		(33	)		(9,442	)
Other current tax expenses		1,402			2,067			605			(304	)
Current Tax Expense, Net		(129,168	)		(63,618	)		(61,407	)		(19,139	)
Deferred tax income (expense) relating to origination and reversal of temporary differences		49,274			10,051			14,165			2,216
Tax benefit arising from previously unrecognized tax assets used to reduce deferred expense from taxes		15,889			(3,827	)		(4,943	)		(919	)
Total deferred Tax Expense, Net		65,163			6,224			9,222			1,297
Income Tax Expense, Total		(64,005	)		(57,394	)		(52,185	)		(17,842	)

45

CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

September 30, 2017

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

The following table sets forth the current income tax expense detailed by foreign and domestic (Chile) companies at September 30, 2017 and 2016:

	January - September						July - September
	Unaudited
	2017			2016			2017			2016
	ThU,S,$			ThU.S.$			ThU.S.$			ThU.S.$
Foreign current income tax expense		(29,917	)		(35,744	)		(13,511	)		(19,392	)
Domestic current income tax expense		(99,251	)		(27,874	)		(47,896	)		253
Total current income tax expense		(129,168	)		(63,618	)		(61,407	)		(19,139	)
Foreign deferred tax expense		10,538			13,345			2,546			16,847
Domestic deferred tax expense		54,625			(7,121	)		6,676			(15,550	)
Total deferred tax expense		65,163			6,224			9,222			1,297
Total tax income (expense)		(64,005	)		(57,394	)		(52,185	)		(17,842	)

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

The reconciliation of income tax expense is as follows:

	January - September						July - September
	Unaudited
	2017			2016			2017			2016
Reconciliation of Income tax from Statutory Rate to Effective Tax Rate	ThU,S,$			ThU.S.$			ThU.S.$			ThU.S.$
Statutory domestic (Chile) income tax rate		25.5	%		24.0	%		25.5	%		24.0	%
Tax Expense at statutory tax rate		(56,377	)		(47,809	)		(43,470	)		(11,823	)
Tax effect of foreign tax rates		(2,283	)		(7,804	)		(3,506	)		(5,458	)
Tax effect of revenues exempt from taxation		11,346			20,649			(1,195	)		15,602
Tax effect of expense not deductible in determining taxable profit (tax loss)		(29,106	)		(21,792	)		(10,519	)		(16,840	)
Tax rate effect of tax losses		(84	)		—			(84	)		—
Tax effect of a new evaluation of assets for deferred not recognized taxes		—			(235	)		—			(235	)
Tax rate effect from change in tax rate (opening balances)		754			(898	)		(380	)		141
Tax rate effect of adjustments for current tax of prior periods		(779	)		(8,955	)		(33	)		(9,442	)
Other tax rate effects		12,524			9,450			7,002			10,213
Total adjustments to tax expense at applicable tax rate		(7,628	)		(9,585	)		(8,715	)		(6,019	)
Tax expense at effective tax rate		(64,005	)		(57,394	)		(52,185	)		(17,842	)

46

CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

September 30, 2017

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

NOTE 7. PROPERTY, PLANT AND EQUIPMENT

	09-30-2017			12-31-2016
	Unaudited
Property, Plant and Equipment, Net	ThU.S.$			ThU.S.$
Construction in progress		512,181			321,031
Land		1,012,379			991,450
Buildings		2,119,593			2,169,731
Plant and equipment		3,098,990			3,256,348
Information technology equipment		23,266			24,154
Fixtures and fittings		9,830			9,880
Motor vehicles		15,385			16,858
Other property, plant and equipment		193,432			130,043
Total Net		6,985,056			6,919,495
Property, Plant and Equipment, Gross
Construction in progress		512,181			321,031
Land		1,012,379			991,450
Buildings		3,872,584			3,825,259
Plant and equipment		6,167,922			6,128,494
Information technology equipment		79,982			76,421
Fixtures and fittings		35,035			33,613
Motor vehicles		48,985			48,534
Other property, plant and equipment		219,291			153,838
Total Gross		11,948,359			11,578,640
Accumulated depreciation and impairment
Buildings		(1,752,991	)		(1,655,528	)
Plant and equipment		(3,068,932	)		(2,872,146	)
Information technology equipment		(56,716	)		(52,267	)
Fixtures and fittings		(25,205	)		(23,733	)
Motor vehicles		(33,600	)		(31,676	)
Other property, plant and equipment		(25,859	)		(23,795	)
Total		(4,963,303	)		(4,659,145	)

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

As of September 30, 2017, there are no significant assets pledged as collateral to be disclosed in these interim consolidated financial statements.

47

CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

September 30, 2017

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

Disbursements commitments for the acquisition of property, plant and equipment and disbursements for property, plant and equipment under construction.

	09-30-2017		12-31-2016
	Unaudited
	ThU.S.$		ThU.S.$
Amount committed for the acquisition of property, plant and equipment		87,914		122,757
	09-30-2017		12-31-2016
	Unaudited
	ThU.S.$		ThU.S.$
Disbursements for property, plant and equipment under construction		283,599		317,159

48

CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

September 30, 2017

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

Reconciliation of Property, Plant and Equipment

The following tables set forth the reconciliation of the carrying amount of property, plant and equipment as of September 30, 2017 and December 31, 2016:

Movement of Property, Plant and Equipment Unaudited	Construction in progress			Land			Buildings			Plant and equipments			IT Equipment			Fixtures and fittings			Motor vehicles			Other Property, Plant and Equipment			TOTAL
	ThU.S.$			ThU.S.$			ThU.S.$			ThU.S.$			ThU.S.$			ThU.S.$			ThU.S.$			ThU.S.$			ThU.S.$
Opening Balance 01-01-2017		321,031			991,450			2,169,731			3,256,348			24,154			9,880			16,858			130,043			6,919,495
Changes
Additions		283,599			277			7,264			38,997			226			114			724			66,712			397,913
Disposals		—			(1,585	)		(17	)		(3,462	)		(26	)		(23	)		(284	)		—			(5,397	)
Retirements		(2,312	)		(25	)		(1,002	)		(1,695	)		(3	)		(19	)		(48	)		(113	)		(5,217	)
Depreciation		—			—			(93,341	)		(234,185	)		(4,533	)		(1,543	)		(2,633	)		(4,004	)		(340,239	)
Impairment loss recognized in profit or loss		(208	)		—			(47	)		800			1			(266	)		—			—			280
Increase (decrease) through net exchange differences		823			5,334			3,750			7,650			60			4			140			794			18,555
Reclassification of assets held for sale		(418	)		—			—			84			—			—			—			—			(334	)
Increase (decrease) through transfers from construction in progress		(90,334	)		16,928			33,255			34,453			3,387			1,683			628			—			—
Total changes		191,150			20,929			(50,138	)		(157,358	)		(888	)		(50	)		(1,473	)		63,389			65,561
Closing balance 09-30-2017		512,181			1,012,379			2,119,593			3,098,990			23,266			9,830			15,385			193,432			6,985,056
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 01-01-2016		251,519			951,638			2,182,643			3,346,675			26,210			11,860			16,721			109,130			6,896,396
Changes
Additions		317,159			6,350			7,966			59,997			554			269			1,281			25,618			419,194
Disposals		(44	)		(1,107	)		(443	)		(2,382	)		(105	)		—			(199	)		(1,607	)		(5,887	)
Retirements		(1,754	)		(295	)		(926	)		(2,209	)		(24	)		(8	)		(30	)		(2,811	)		(8,057	)
Depreciation		—			—			(122,257	)		(330,876	)		(5,352	)		(1,970	)		(3,969	)		(4,729	)		(469,153	)
Impairment loss recognized in profit or loss		—			—			9			(1,254	)		(7	)		(1	)		—			(1,553	)		(2,806	)
Increase (decrease) through net exchange differences		6,610			30,514			(2,388	)		51,224			134			116			112			3,145			89,467
Reclassification of assets held for sale		—			—			—			341			—			—			—			—			341
Increase (decrease) through transfers from construction in progress		(252,459	)		4,350			105,127			134,832			2,744			(386	)		2,942			2,850			—
Total changes		69,512			39,812			(12,912	)		(90,327	)		(2,056	)		(1,980	)		137			20,913			23,099
Closing balance 12-31-2016		321,031			991,450			2,169,731			3,256,348			24,154			9,880			16,858			130,043			6,919,495

49

CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

September 30, 2017

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

The depreciation expense for the period ending September 30, 2017 and 2016 is as follows:

	January - September				July - September
	Unaudited				Unaudited
	2017		2016		2017		2016
Depreciation for the year	ThU.S.$		ThU.S.$		ThU.S.$		ThU.S.$
Cost of sales		282,283		272,505		100,991		91,839
Administrative expenses		17,333		16,575		5,577		6,523
Other expenses		2,611		2,597		678		803
Total		302,227		291,677		107,246		99,165

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 follow:

	Years of 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.

50

CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

September 30, 2017

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

NOTE 8. LEASES

Arauco acting as lessee

	09-30-2017		12-31-2016
	Unaudited
	ThU.S.$		ThU.S.$
Property, Plant and Equipment under finance leases		120,273		117,206
Plant and equipment		120,273		117,206

Reconciliation of Financial Lease Minimum Payments:

	09-30-2017
	Unaudited
	Present Value
Periods	ThU.S.$
Less than one year		40,102
Between one and five years		75,986
More than five years		—
Total		116,088

	12-31-2016
	Present Value
Periods	ThU.S.$
Less than one year		40,400
Between one and five years		73,586
More than five years		—
Total		113,986

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

51

CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

September 30, 2017

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

Arauco acting as lessor

Reconciliation of Financial Lease Minimum Payments:

	09-30-2017
	Unaudited
	Gross		Interest		Present Value
Periods	ThU.S.$		ThU.S.$		ThU.S.$
Less than one year		1,506		—		1,506
Between one and five years		1,811		—		1,811
More than five years		—		—		—
Total		3,317		—		3,317
	12-31-2016
	Gross		Interest		Present Value
Periods	ThU.S.$		ThU.S.$		ThU.S.$
Less than one year		512		—		512
Between one and five years		353		—		353
More than five years		—		—		—
Total		865		—		865

Finance lease receivables are presented in the interim consolidated statements 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 – September				July – September
	Unaudited				Unaudited
	2017		2016		2017		2016
Classes of revenue	ThU.S.$		ThU.S.$		ThU.S.$		ThU.S.$
Revenue from sales of goods		3,821,818		3,452,423		1,368,282		1,157,495
Revenue from rendering of services		85,221		88,358		25,091		29,975
Total		3,907,039		3,540,781		1,393,373		1,187,470

52

CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

September 30, 2017

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

NOTE 10. EMPLOYEE BENEFITS

Classes of Benefits and Expenses by Employee

	January - September				July - September
	Unaudited				Unaudited
	2017		2016		2017		2016
	ThU.S.$		ThU.S.$		ThU.S.$		ThU.S.$
Employee expenses		409,374		392,137		141,305		132,437
Wages and salaries		394,402		374,363		135,968		121,428
Severance indemnities		14,972		17,774		5,337		11,009

	09-30-2017			12-31-2016
Discount rate		4.87	%		4.52	%
Inflation		2.85	%		2.79	%
Annual rate of wage growth		5.22	%		5.22	%
Mortality rate (1)		RV-2009			RV-2009

Sensitivities to assumptions	ThU.S.$
Discount rate
Increase in 100 bps		(5,186	)
Decrease in 100 bps		5,666
Wage growth rates
Increase in 100 bps		5,562
Decrease in 100 bps		(5,259	)

The following tables set forth the balances and the reconciliation of the present value of severance indemnities obligations as of September 30, 2017 and December 31, 2016:

	09-30-2017			12-31-2016
	Unaudited
	ThU.S.$			ThU.S.$
Current		5,549			5,244
Non-current		63,997			60,084
Total		69,546			65,328
Reconciliation of the present value of severance indemnities obligation	09-30-2017			12-31-2016
	Unaudited
	ThU.S.$			ThU.S.$
Opening balance		65,328			56,433
Current service cost		3,736			5,334
Interest cost		2,130			2,957
(Gains) losses from changes in actuarial assumptions		(1,628	)		2,083
Actuarial gains and losses arising from experience		517			3,503
Benefits paid		(3,899	)		(7,871	)
Increase (decrease) for foreign currency exchange rates changes		3,362			2,889
Closing balance		69,546			65,328

53

CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

September 30, 2017

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

NOTE 11. BALANCES IN FOREIGN CURRENCY AND FOREIGN CURRENCY EXCHANGE RATE IMPACT IN PROFIT OR LOSS.

	09-30-2017		12-31-2016
	Unaudited
	ThU.S.$		ThU.S.$
Total Current Assets		2,672,683		2,722,360
Cash and Cash Equivalents		485,569		592,253
U.S Dollar		309,789		524,426
Euro		4,346		2,357
Brazilian Real		40,545		47,696
Argentine Pesos		9,667		4,046
Other currencies		2,945		3,327
Chilean Pesos		118,277		10,401
Other current financial assets		3,029		5,201
U.S Dollar		2,695		4,879
Argentine Pesos		289		315
Other currencies		45		7
Other current non-financial assets		157,914		144,915
U.S Dollar		92,146		62,246
Euro		59		71
Brazilian Real		20,564		22,537
Argentine Pesos		4,682		12,261
Other currencies		5,170		3,500
Chilean Pesos		35,293		44,300
Trade and other current receivables		888,300		701,610
U.S Dollar		604,982		489,056
Euro		20,692		26,544
Brazilian Real		55,165		46,150
Argentine Pesos		32,354		15,137
Other currencies		19,797		16,620
Chilean Pesos		153,190		106,681
U.F.		2,120		1,422
Accounts receivable due from related companies		6,475		12,505
U.S Dollar		1,094		274
Brazilian Real		342		726
Chilean Pesos		4,571		10,548
U.F.		468		957
Current Inventories		775,110		852,612
U.S Dollar		729,073		812,748
Brazilian Real		46,037		39,864
Current biological assets		312,276		306,117
U.S Dollar		276,716		271,551
Brazilian Real		35,560		34,566
Current tax assets		41,141		104,088
U.S Dollar		6,884		6,199
Brazilian Real		3,971		5,798
Argentine Pesos		38		39
Other currencies		3,548		2,696
Chilean Pesos		26,700		89,356
Non-current assets or disposal groups classified as held for sale		2,869		3,059
U.S Dollar		2,869		3,059

54

CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

September 30, 2017

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

	09-30-2017		12-31-2016
	Unaudited
	ThU.S.$		ThU.S.$
Total Non Current Assets		11,200,742		11,283,821
Other non-current financial assets		27,799		8,868
U.S Dollar		27,799		8,868
Other non-current non-financial assets		122,226		130,319
U.S Dollar		106,196		95,658
Brazilian Real		4,159		4,042
Argentine Pesos		10,697		9,900
Other currencies		739		636
Chilean Pesos		435		20,083
Trade and other non-current receivables		14,210		14,273
U.S Dollar		4,482		6,895
Other currencies		534		527
Chilean Pesos		7,376		5,753
U.F.		1,818		1,098
Accounts receivable due from related companies, non current		957		957
U.F.		957		957
Investments accounted for using equity method		361,696		446,548
U.S Dollar		127,586		124,324
Euro		177,152		156,990
Brazilian Real		56,898		165,203
Chilean Pesos		60		31
Intangible assets other than goodwill		90,611		89,497
U.S Dollar		89,414		88,394
Brazilian Real		1,102		1,026
Chilean Pesos		95		77
Goodwill		75,982		74,893
U.S Dollar		42,666		42,508
Brazilian Real		33,316		32,385
Property, plant and equipment		6,985,056		6,919,495
U.S Dollar		6,444,896		6,394,105
Brazilian Real		534,983		520,448
Chilean Pesos		5,177		4,942
Non-current biological assets		3,514,632		3,592,874
U.S Dollar		2,966,614		3,185,872
Brazilian Real		548,018		407,002
Deferred tax assets		7,573		6,097
U.S Dollar		4,630		4,134
Brazilian Real		2,631		1,697
Other currencies		53		52
Chilean Pesos		259		214

55

CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

September 30, 2017

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

			09-30-2017
			Unaudited						12-31-2016
	Up to 90 days		From 91 days to 1 year		Total		Up to 90 days		From 91 days to 1 year		Total
	ThU.S.$		ThU.S.$		ThU.S.$		ThU.S.$		ThU.S.$		ThU.S.$
Total Liabilities, current		914,690		500,333		1,415,023		806,280		539,784		1,346,064
Other current financial liabilities		138,073		491,843		629,916		196,001		501,451		697,452
U.S Dollar		100,504		446,000		546,504		178,442		455,908		634,350
Brazilian Real		1,982		4,794		6,776		3,558		1,282		4,840
Argentine Pesos		9		—		9		11		29		40
Chilean Pesos		1,458		4,261		5,719		1,132		3,387		4,519
U.F.		34,120		36,788		70,908		12,858		40,845		53,703
Bank Loans		102,046		431,735		533,781		134,140		61,483		195,623
U.S Dollar		100,055		426,941		526,996		130,571		60,172		190,743
Brazilian Real		1,982		4,794		6,776		3,558		1,282		4,840
Argentine Pesos		9		—		9		11		29		40
Financial Leases		10,061		30,041		40,102		9,534		30,866		40,400
Chilean Pesos		1,458		4,261		5,719		1,132		3,387		4,519
U.F.		8,603		25,780		34,383		8,402		27,479		35,881
Other Loans		25,966		30,067		56,033		52,327		409,102		461,429
U.S Dollar		449		19,059		19,508		47,871		395,736		443,607
U.F.		25,517		11,008		36,525		4,456		13,366		17,822
Trade and other current payables		600,787		32		600,819		511,371		26,520		537,891
U.S Dollar		197,059		—		197,059		146,652		3,510		150,162
Euros		10,567		—		10,567		12,006		1,028		13,034
Brazilian Real		34,785		—		34,785		4,849		21,982		26,831
Argentine Pesos		23,908		—		23,908		31,661		—		31,661
Other currencies		8,588		32		8,620		12,244		—		12,244
Chilean Pesos		306,770		—		306,770		285,359		—		285,359
U.F.		19,110		—		19,110		18,600		—		18,600
Accounts payable to related companies		14,684		—		14,684		3,831		—		3,831
U.S Dollar		1,877		—		1,877		1,969		—		1,969
Chilean Pesos		12,807		—		12,807		1,862		—		1,862
Other current provisions		446		—		446		842		—		842
U.S Dollar		446		—		446		842		—		842
Current tax liabilities		7,818		2,027		9,845		1,641		—		1,641
U.S Dollar		448		—		448		448		—		448
Euros		296		—		296		7		—		7
Brazilian Real		1,858		—		1,858		—		—		—
Argentine Pesos		51		—		51		133		—		133
Other currencies		131		—		131		574		—		574
Chilean Pesos		5,034		2,027		7,061		479		—		479
Current provisions for employee benefits		5,420		129		5,549		5,214		30		5,244
Chilean Pesos		5,420		129		5,549		5,214		30		5,244
Other current non-financial liabilities		147,462		6,302		153,764		87,380		11,783		99,163
U.S Dollar		119,853		6,300		126,153		62,974		163		63,137
Euros		74		—		74		53		—		53
Brazilian Real		14,009		—		14,009		9,426		11,616		21,042
Argentine Pesos		3,290		—		3,290		3,474		—		3,474
Other currencies		4,900		—		4,900		3,202		—		3,202
Chilean Pesos		5,318		2		5,320		8,183		4		8,187
U.F.		18		—		18		68		—		68

56

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AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

September 30, 2017

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

	From 13 months to 5 years ThU.S.$		09-30-2017 Unaudited More than  5 years ThU.S.$		Total ThU.S.$		From 13 months to 5 years ThU.S.$		12-31-2016 More than 5 years ThU.S.$		Total ThU.S.$
Total non-current liabilities		3,821,466		1,521,516		5,342,982		3,599,291		2,061,543		5,660,834
Other non-current financial liabilities		2,188,545		1,384,408		3,572,953		2,020,484		1,850,430		3,870,914
U.S Dollar		1,722,236		582,719		2,304,955		1,591,127		1,075,204		2,666,331
Brazilian Real		18,568		—		18,568		17,098		1,042		18,140
Chilean Pesos		10,638		—		10,638		11,151		—		11,151
U.F.		437,103		801,689		1,238,792		401,108		774,184		1,175,292
Bank Loans		313,004		90,945		403,949		626,384		92,351		718,735
U.S Dollar		294,436		90,945		385,381		609,286		91,309		700,595
Brazilian Real		18,568		—		18,568		17,098		1,042		18,140
Financial Leases		75,986		—		75,986		73,586		—		73,586
Chilean Pesos		10,638		—		10,638		11,151		—		11,151
U.F.		65,348		—		65,348		62,435		—		62,435
Other Loans		1,799,555		1,293,463		3,093,018		1,320,514		1,758,079		3,078,593
U.S Dollar		1,427,800		491,774		1,919,574		981,841		983,895		1,965,736
U.F.		371,755		801,689		1,173,444		338,673		774,184		1,112,857
Other non-current provisions		37,423		—		37,423		38,138		—		38,138
U.S Dollar		12		—		12		1		—		1
Brazilian Real		5,229		—		5,229		5,425		—		5,425
Argentine Pesos		32,179		—		32,179		32,712		—		32,712
Chilean Pesos		3		—		3		—		—		—
Deferred tax liabilities		1,467,337		137,108		1,604,445		1,479,596		151,469		1,631,065
U.S Dollar		1,353,644		137,108		1,490,752		1,412,506		131,406		1,543,912
Brazilian Real		113,693		—		113,693		67,090		20,063		87,153
Non-current provisions for employee benefits		63,997		—		63,997		60,084		—		60,084
Other currencies		182		—		182		144		—		144
Chilean Pesos		63,815		—		63,815		59,940		—		59,940
Other non-current non-financial liabilities		64,164		—		64,164		989		59,644		60,633
U.S Dollar		168		—		168		430		—		430
Brazilian Real		63,312		—		63,312		—		59,644		59,644
Argentine Pesos		228		—		228		349		—		349
Chilean Pesos		456		—		456		206		—		206
U.F.		—		—		—		4		—		4

57

CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

September 30, 2017

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
Novo Oeste Gestao de Ativos Florestais S.A.	Brazil	Brazilian Real
Investigaciones Forestales Bioforest S.A.	Chile	Chilean Pesos
Consorcio Protección Fitosanitaria Forestal S.A.	Chile	Chilean Pesos
Forestal Nuestra Señora del Carmen S.A.	Argentina	Argentine Pesos
Forestal Talavera S.A.	Argentina	Argentine Pesos
Greeneagro S.A.	Argentina	Argentine Pesos
Leasing Forestal S.A.	Argentina	Argentine Pesos
Savitar S.A.	Argentina	Argentine 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 on translation:

	January - September Unadited				July - September Unadited
	2017 ThU.S.$		2016 ThU.S.$		2017 ThU.S.$		2016 ThU.S.$
Arauco Do Brasil S.A.		12,959		74,607		19,543		(4,977	)
Arauco Forest Brasil S.A.		12,608		69,581		19,494		(3,680	)
Arauco Florestal Arapoti S.A.		3,358		19,882		5,177		(705	)
Sonae Arauco S.A.		17,027		—		5,799		—
Arauco Argentina S.A.		831		5,187		1,419		(405	)
Flakeboard Company Limited		6,933		5,381		4,636		(1,916	)
Others		188		65		126		(3	)
Total reserve of exchange differences on translation		53,904		174,703		56,194		(11,686	)

Effect of foreign exchange rates changes

	January - September					July - September
	Unadited					Unadited
	2017		2016			2017		2016
	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		2,721		(74	)		2,860		(992	)
Reserve of exchange differences on translation (with Non-controlling interests)		54,750		179,690			57,495		(11,863	)

58

CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

September 30, 2017

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 rates.

	January - September						July - September
	Unaudited
	2017			2016			2017			2016
	ThU.S.$			ThU.S.$			ThU.S.$			ThU.S.$
Property, plant and equipment capitalized cost
Property, plant and equipment capitalized interest cost rate		5.00	%		5.08	%		5.00	%		5.08	%
Amount of the capitalized interest cost, property, presented as plant and equipment		3,520			2,001			1,795			908

59

CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

September 30, 2017

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

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. and sodium chlorate purchases at EKA Chile 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.

Pricing Strategy Terms and Conditions Corresponding to Transactions with Related Parties

Related party transactions are equitable in relation to other transactions regularly performed at market conditions, with mutual independence of the parties.

60

CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

September 30, 2017

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

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

				% Ownership interest						% Ownership interest
			Functional	09-30-2017						12-31-2016
ID N°	Company Name	Country	Currency	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		1.1624		98.8366		99.9990
-	Arauco Europe Cooperatief U.A.	Netherlands	U.S. Dollar		0.4553		99.5438		99.9991		0.4614		99.5376		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		9.9971		90.0021		99.9992		10.1297		89.8694		99.9991
-	Arauco Middle East DMCC	Dubai	U.S. Dollar		—		99.9990		99.9990		—		99.9990		99.9990
76620842-8	Arauco Nutrientes Naturales SPA	Chile	U.S. Dollar		—		99.9484		99.9484		—		99.9484		99.9484
-	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	U.S. Dollar		—		57.5404		57.5404		—		57.5404		57.5404
-	Empreendimentos Florestais Santa Cruz Ltda.	Brazil	Brazilian Real		—		99.9795		99.9795		—		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	U.S. Dollar		—		98.4809		98.4809		—		98.4744		98.4744
-	Forestal Concepción S.A.	Panama	U.S. Dollar		—		—		—		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	Argentine pesos		—		99.9805		99.9805		—		99.9805		99.9805
-	Forestal Talavera S.A.	Argentina	Argentine pesos		—		99.9942		99.9942		—		99.9942		99.9942
-	Greenagro S.A.	Argentina	Argentine pesos		—		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	Argentine pesos		—		99.9801		99.9801		—		99.9801		99.9801
96510970-6	Maderas Arauco S.A. (ex Paneles Arauco S.A.)	Chile	U.S. Dollar		99.0000		0.9995		99.9995		99.0000		0.9995		99.9995
-	Mahal Empreendimentos e Participacoes S.A.	Brazil	Brazilian Real		—		99.9961		99.9961		—		99.9934		99.9934
-	Novo Oeste Gestao de Ativos Florestais S.A.	Brazil	Brazilian Real		—		99.9991		99.9991		—		99.9990		99.9990
-	Savitar S.A.	Argentina	Argentine pesos		—		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

61

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AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

September 30, 2017

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

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
-	Eufores 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

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 - September				July - September
	Unaudited				Unaudited
	2017		2016		2017		2016
	ThU.S.$		ThU.S.$		ThU.S.$		ThU.S.$
Salaries and bonuses		41,329		56,991		14,514		17,670
Per diem compensation to members of the Board of Directors		1,754		1,209		609		587
Termination benefits		4,643		3,756		1,919		3,344
Total		47,726		61,956		17,042		21,601

Related Party Receivables, Current

Name of Related Party	Tax ID No.	Nature of Relationship	Country	Currency	Maturity	09-30-2017 Unaudited ThU.S.$		12-31-2016 ThU.S.$
Forestal Mininco S.A	91.440.000-7	Common Stockholder	Chile	Chilean pesos	30 days		85		39
Eka Chile S.A	99.500.140-3	Joint Venture	Chile	Chilean pesos	30 days		1,656		1,701
Forestal del Sur S.A	79.825.060-4	Common director	Chile	Chilean pesos	—		—		7,618
Unilin Arauco Pisos Ltda.	—	Joint Venture	Brazil	Brazilian Real	30 days		342		726
Colbún S.A.	96.505.760-9	Common director	Chile	Chilean pesos	30 days		431		0
CMPC Celulosa S.A.	96.532.330-9	Common Stockholder	Chile	Chilean pesos	30 days		1		2
Fundación Educacional Arauco	71.625.000-8	Common director	Chile	Chilean pesos	30 days		2,398		1,188
Fundación Acerca Redes	65.097.218-K	Parent company is founder and contributor	Chile	U.S. Dollar	30 days		979		274
Compañía Puerto de Coronel S.A.	79.895.330-3	Subsidiary of the Associate	Chile	UF	30 días		583		957
TOTAL							6,475		12,505

62

CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

September 30, 2017

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

Related Party Receivables, Non-Current

Name of Related Party

Tax ID No.

Nature of Relationship

Country

Currency

Maturity

09-30-2017 Unaudited ThU.S.$

12-31-2016 ThU.S.$

Compañía Puerto de Coronel S.A.

79.895.330-3

Subsidiary of the Associate

Chile

UF

Sep-18

478

478

Compañía Puerto de Coronel S.A.

79.895.330-3

Subsidiary of the Associate

Chile

UF

Sep-19

479

479

TOTAL

957

957

Related Party Payables, Current

Name of Related party	Tax ID No.	Nature of Relationship	Country	Currency	Maturity	09-30-2017 Unaudited ThU.S.$		12-31-2016 ThU.S.$
Compañía de Petróleos de Chile S.A.	99.520.000-7	Controlling Parent’s Subsidiary	Chile	Chilean pesos	30 days		11,919		1,758
Abastible S.A.	91.806.000-6	Controlling Parent’s Subsidiary	Chile	Chilean pesos	30 days		511		97
Red to Green S.A.(Ex-Sigma Servicios Informáticos S.A.)	86.370.800-1	Common director	Chile	Chilean pesos	30 days		7		—
Portaluppi, Guzman y Bezanilla Abogados	78.096.080-9	Common director	Chile	Chilean pesos	30 days		181		—
Empresa Nacional de Telecomunicaciones S.A.	92.580.000-7	Common Stockholder	Chile	Chilean pesos	30 days		139		—
Servicios Corporativos Sercor S.A.	96.925.430-1	Subsidiary of the Associate	Chile	Chilean pesos	30 days		28		—
Puerto Lirquén S.A.	96.959.030-1	Subsidiary of the Associate	Chile	U.S. Dollar	30 days		463		1,246
Compañía Puerto de Coronel S.A.	79.895.330-3	Subsidiary of the Associate	Chile	U.S. Dollar	30 days		1,411		723
Adm.Estaciones de Servicio Serco Ltda.	79.689.550-0	Controlling Parent’s Subsidiary	Chile	Chilean pesos	23 days		1		—
Colbún Transmisión S.A.	76.218.856-2	Common director	Chile	U.S. Dollar	24 days		3		—
Adm. de Ventas al Detalle Arco Prime Ltda.	77.215.640-5	Controlling Parent’s Subsidiary	Chile	Chilean pesos	30 days		16		5
Empresa Distrib. Papeles y Cartones S.A.	88.566.900-k	Common Stockholder	Chile	Chilean pesos	—		—		2
Air BP Copec	96.942.120-8	Controlling Parent’s Subsidiary	Chile	Chilean pesos	30 days		5		—
TOTAL							14,684		3,831

63

CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

September 30, 2017

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	09-30-2017 Unaudited ThU.S.$		12-31-2016 ThU.S.$
Abastible S.A.	91.806.000-6	Controlling Parent’s Subsidiary	Chile	Chilean pesos	Fuel		2,140		2,199
Empresas Copec S.A	90.690.000-9	Controlling Parent	Chile	Chilean pesos	Management service		106		356
Compañía de Petróleos de Chile S.A.	99.520.000-7	Controlling Parent’s Subsidiary	Chile	Chilean pesos	Fuel and other		51,324		39,732
Compañía Puerto de Coronel S.A.	79.895.330-3	Subsidiary of the Associate	Chile	U.S. Dollar	Transport and stowage		6,273		8,633
Puerto Lirquén S.A.	96.959.030-1	Subsidiary of the Associate	Chile	U.S. Dollar	Port services		4,418		7,311
EKA Chile S.A.	99.500.140-3	Joint Venture	Chile	Chilean pesos	Sodium chlorate		34,969		47,236
Forestal del Sur S.A.	79.825.060-4	Common director	Chile	Chilean pesos	Wood and ships		976		2,093
Portaluppi, Guzman y Bezanilla Abogados	78.096.080-9	Common director	Chile	Chilean pesos	Legal services		1,089		1,295
Empresa Nacional de Telecomunicaciones S.A.	92.580.000-7	Common Stockholder	Chile	Chilean pesos	Telephone services		416		512
CMPC Maderas S.A.	95.304.000-K	Common Stockholder	Chile	Chilean pesos	Wood and logs		251		511
Red to Green S.A.(Ex-Sigma Servicios Informáticos S.A.)	86.370.800-1	Common director	Chile	Chilean pesos	Computer Services		118		249
Colbún Transmisión S.A.	76.218.856-2	Common director	Chile	Chilean pesos	Electrical Power		314		383
CMPC Celulosa S.A.	96.532.330-9	Common Stockholder	Chile	Chilean pesos	Others purchases		579		3

Sales

Name of Related Party	Tax ID No.	Nature of Relationship	Country	Currency	Transaction Descriptions	09-30-2017 Unaudited ThU.S.$		12-31-2016 ThU.S.$
Colbún S.A.	96.505.760-9	Common director	Chile	Chilean pesos	Electrical Power		1,014		5,999
EKA Chile S.A.	99.500.140-3	Joint venture	Chile	Chilean pesos	Electrical Power		15,086		16,326
Stora Enso Arapoti Industria de Papel S.A.	—	Subsidiary of the Associate	Brazil	Brazilian Real	Wood		—		1,149
Forestal del Sur S.A.	79.825.060-4	Common director	Chile	Chilean pesos	Harvesting services, Wood and chips		18,802		21,657
Compañía Puerto de Coronel S.A.	79.895.330-3	Subsidiary of the Associate	Chile	UF	Sale Land		—		1,914
Unilin Arauco Pisos Ltda.	—	Joint venture	Brazil	Brazilian Real	Wood		2,367		5,263

64

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AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

September 30, 2017

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

NOTE 14. INTERIM CONSOLIDATED FINANCIAL STATEMENTS

On August 2, 2016, our subsidiary Forestal Arauco S.A. incorporated the company Arauco Nutrientes Naturales SPA, with a capital contribution of ThU.S.$5,000 of which, as of September 30, 2017, Th.U.S.$3,000 had been paid. The corporate purpose of the company is the manufacture and sale of products made from extracts, fruits, and others.

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

NOTE 15. INVESTMENTS IN ASSOCIATES

At September 30, 2017, there are no new investments in associates to report.

On March 31, 2016, our subsidiary Arauco do Brasil S.A. sold its stake at Stora Enso Arapoti Industria de Papel S.A. for ThU.S.$4,141. This transaction generated a loss of ThU.S.$10,369, as reflected in the Interim Consolidated Statements of Profit or Loss, in the line item “Other Expenses”.

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%
	09-30-2017	12-31-2016
Carrying amount	ThU.S.$61,675	ThU.S.$61,505
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%
	09-30-2017	12-31-2016
Carrying amount	ThU.S.$45,769	ThU.S.$43,559
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%
	09-30-2017	12-31-2016
Carrying amount	ThU.S.$265	ThU.S.$190

65

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AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

September 30, 2017

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%
	09-30-2017	12-31-2016
Carrying amount	ThU.S.$(4)	ThU.S.$(1)
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%
	09-30-2017	12-31-2016
Carrying amount	ThU.S.$60	ThU.S.$31
Name	Vale do Corisco S.A.
Country	Brazil
Functional Currency	Brazilian Real
Corporate purpose	Management of forestry activities.
Ownership interest (%)	49.0000%
	09-30-2017	12-31-2016
Carrying amount	ThU.S.$52,534	ThU.S.$160,490

66

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Unaudited Interim Consolidated Financial Statements

September 30, 2017

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

Summarized Financial Information of Associates

	Assets
09-30-2017 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.$		Vale do Corisco S.A. ThU.S.$			Consorcio Tecnológico Bioenercel S.A. ThU.S.$			Genómica Forestal S.A. ThU.S.$			Total ThU.S.$
Current		92,722			29		4,802			—		7,820			3			21			105,397
Non-current		588,621			93,357		747			—		132,313			308			25			815,371
Total		681,343			93,386		5,549			—		140,133			311			46			920,768
	Liabilities and Equity
	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.$		Vale do Corisco S.A. ThU.S.$			Consorcio Tecnológico Bioenercel S.A. ThU.S.$			Genómica Forestal S.A. ThU.S.$			Total ThU.S.$
Current		41,079			82		3,446			—		—			—			11			44,618
Non-current		336,097			—		777			—		32,119			5			49			369,047
Equity		304,167			93,304		1,326			—		108,014			306			(14	)		507,103
Total		681,343			93,386		5,549			—		140,133			311			46			920,768
09-30-2017 Unaudited
Revenues		97,040			4,421		3,789			—		33,953			—			21			139,224
Expenses		(97,509	)		—		(3,436	)		—		(28,537	)		(9	)		(27	)		(129,518	)
Profit or loss (continuing operations)		(469	)		4,421		353			—		5,416			(9	)		(6	)		9,706
Other comprehensive income		1,787			—		—			—		102,598			—			—			104,385
Comprehensive income		1,318			4,421		353			—		108,014			(9	)		(6	)		114,091
Dividends		—			—		—			—		—			—			—			—

67

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AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

September 30, 2017

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

	Assets
12-31-2016	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.$			Vale do Corisco S.A. ThU.S.$			Consorcio Tecnológico Bioenercel S.A. ThU.S.$		Genómica Forestal S.A. ThU.S.$			Total ThU.S.$
Current		76,021			29		4,608			—			24,972			6		26			105,662
Non-current		572,831			88,936		668			—			415,083			153		63			1,077,734
Total		648,852			88,965		5,276			—			440,055			159		89			1,183,396
	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.$			Vale do Corisco S.A. ThU.S.$			Consorcio Tecnológico Bioenercel S.A. ThU.S.$		Genómica Forestal S.A. ThU.S.$			Total ThU.S.$
Current		44,457			82		3,412			—			3,446			—		9			51,406
Non-current		301,065			—		912			—			109,079			6		85			411,147
Equity		303,330			88,883		952			—			327,530			153		(5	)		720,843
Total		648,852			88,965		5,276			—			440,055			159		89			1,183,396
09-30-2016 Unaudited
Revenues		83,962			2,653		3,478			492			30,258			—		80			120,923
Expenses		(71,898	)		—		(3,175	)		(6,320	)		(10,240	)		—		(155	)		(91,788	)
Profit or loss (continuing operations)		12,064			2,653		303			(5,828	)		20,018			—		(75	)		29,135
Other comprehensive income		1,129			—		—			—			—			—		—			1,129
Comprehensive income		13,193			2,653		303			(5,828	)		20,018			—		(75	)		30,264
Dividends		—			—		—			—			—			—		—			—

68

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AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

September 30, 2017

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

Reconciliation of Investment in Associates and Joint Ventures

	09-30-2017 Unaudited			12-31-2016
	ThU.S.$			ThU.S.$
Opening balance as of January 1		446,548			264,812
Changes
Investment in joint ventures, Additions		—			153,135
Disposals, Investments in associates and joint ventures		—			(14,510	)
Share of profit (loss) in investment in associates		5,006			16,349
Share of profit (loss) in investment in joint ventures		13,573			7,590
Dividends Received, Investments in Associates		(7,079	)		(5,320	)
Increase (Decrease) in foreign exchange currency on translation of Associates and Joint Ventures		21,585			20,634
Other increase (decrease) in investment and associates and joint ventures		(117,937	)		3,858
Total changes		(84,852	)		181,736
Ending balance		361,696			446,548

(*) In May of 2017, the affiliate Florestal Vale do Corisco S.A. performed a reimbursement of capital to its shareholders. This transaction did not generate effects in the comprehensive results nor did it modify Arauco’s shareholding in Florestal Vale do Corisco S.A.

	09-30-2017 Unaudited		12-31-2016
	ThU.S.$		ThU.S.$
Carrying amount of associates accounted for using equity method		160,303		265,775
Carrying amount of joint ventures accounted for using equity method		201,393		180,773
Total investment accounted for using equity method		361,696		446,548

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 ThU.S.$153,135 at the acquisition date). This transaction generated goodwill of ThU.S 36,190, as shown in the Consolidated Statements of Financial Position as part of the investment.

Sonae Arauco produces and sells 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 1.38 million m3 of MDF, 1.74 million m3 of particle boards, 485,000 m3 of OSB and 101,000 m3 of sawn timber.

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AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

September 30, 2017

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

As of September 30, 2017 and December 31, 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.

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:

	09-30-2017 Unaudited				12-31-2016
Celulosa y Energía Punta Pereira S.A. (Uruguay)	Assets ThU.S.$		Liabilities ThU.S.$		Assets ThU.S.$		Liabilities ThU.S.$
Current		205,205		265,099		173,258		182,834
Non-current		2,089,531		584,478		2,131,266		735,679
Equity		—		1,445,159				1,386,011
Total Joint Arrangement		2,294,736		2,294,736		2,304,524		2,304,524
Investment		722,580				693,006

	09-30-2017 Unaudited ThU.S.$			09-30-2016 Unaudited ThU.S.$
Income		550,754			491,909
Expenses		(490,519	)		(437,565	)
Joint Arrangement Net Income (Loss)		60,235			54,344

	09-30-2017 Unaudited				12-31-2016
Forestal Cono Sur S.A. (consolidated)	Assets ThU.S.$		Liabilities ThU.S.$		Assets ThU.S.$		Liabilities ThU.S.$
Current		37,756		22,871		23,745		21,039
Non-current		171,536		2,591		178,236		1,381
Equity		—		183,830		—		179,561
Total Joint Arrangement		209,292		209,292		201,981		201,981
Investment		91,915				89,781

	09-30-2017 Unaudited			09-30-2016 Unaudited
	ThU.S.$			ThU.S.$
Income		13,504			3,940
Expenses		(7,768	)		(99	)
Joint Arrangement Net Income (Loss)		5,736			3,841

70

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AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

September 30, 2017

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

	09-30-2017 Unaudited				12-31-2016
	Assets		Liabilities		Assets		Liabilities
Eufores S.A. (consolidated)	ThU.S.$		ThU.S.$		ThU.S.$		ThU.S.$
Current		214,612		212,075		178,644		200,525
Non-current		599,591		9,996		604,736		23,052
Equity		—		592,132				559,803
Total Joint Arrangement		814,203		814,203		783,380		783,380
Investment		296,066				279,902

	09-30-2017 Unaudited			09-30-2016 Unaudited
	ThU.S.$			ThU.S.$
Income		253,104			208,609
Expenses		(218,065	)		(189,557	)
Joint Arrangement Net Income (Loss)		35,039			19,052

	09-30-2017 Unaudited				12-31-2016
Zona Franca Punta Pereira S.A. (Uruguay)	Assets ThU.S.$		Liabilities ThU.S.$		Assets ThU.S.$		Liabilities ThU.S.$
Current		6,364		99,646		4,397		82,331
Non-current		486,534		43,169		492,815		63,021
Equity		—		350,083		—		351,860
Total Joint Arrangement		492,898		492,898		497,212		497,212
Investment		175,042				175,930

	09-30-2017 Unaudited			09-30-2016 Unaudited
	ThU.S.$			ThU.S.$
Income		17,745			26,096
Expenses		(19,522	)		(18,285	)
Joint Arrangement Net Income (Loss)		(1,777	)		7,811

71

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AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

September 30, 2017

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:

	09-30-2017 Unaudited				12-31-2016
	Assets		Liabilities		Assets		Liabilities
Unilin Arauco Pisos Ltda.	ThU.S.$		ThU.S.$		ThU.S.$		ThU.S.$
Current		7,618		4,577		7,900		3,549
Non-current		5,721		35		5,094		18
Equity				8,727				9,427
Total Joint Arrangement		13,339		13,339		12,994		12,994
Investment		4,364				4,714

	09-30-2017 Unaudited			09-30-2016 Unaudited
	ThU.S.$			ThU.S.$
Income		13,297			75
Expenses		(14,121	)		(436	)
Joint Arrangement Net Income (Loss)		(824	)		(361	)
Other comprehensive income		—			—
Comprehensive income		(824	)		(361	)
Dividends		—			—

	09-30-2017 Unaudited				12-31-2016
	Assets		Liabilities		Assets		Liabilities
Eka Chile S.A.	ThU.S.$		ThU.S.$		ThU.S.$		ThU.S.$
Current		17,113		4,232		15,817		4,348
Non-current		31,641		4,769		31,690		5,021
Equity				39,753				38,138
Total Joint Arrangement		48,754		48,754		47,507		47,507
Investment		19,877				19,069

	09-30-2017 Unaudited			09-30-2016 Unaudited
	ThU.S.$			ThU.S.$
Income		34,933			37,384
Expenses		(32,087	)		(33,358	)
Joint Arrangement Net Income (Loss)		2,846			4,026
Other comprehensive income		—			—
Comprehensive income		2,846			4,026
Dividends		—			—

72

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AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

September 30, 2017

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

	09-30-2017 Unaudited
	Assets		Liabilities		Assets		Liabilities
Sonae Arauco S.A.	ThU.S.$		ThU.S.$		ThU.S.$		ThU.S.$
Current		256,236		220,658		223,145		213,228
Non-current		664,038		345,311		616,467		312,404
Equity				354,305				313,980
Total Joint Arrangement		920,274		920,274		839,612		839,612
Net assets		143,662				120,800
Net asset adjustment (Goodwill)		33,491				36,190
Investment		177,153				156,990

	09-30-2017 Unaudited			09-30-2016 Unaudited
	ThU.S.$			ThU.S.$ (*)
Income		728,990			—
Expenses		(703,724	)		—
Joint Arrangement Net Income (Loss)		25,266			—
Other comprehensive income		—			—
Comprehensive income		25,266			—
Dividends		—			—

(*) As of September 30, 2016, the Company did not present Financial Statements for purposes of disclosure.

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Unaudited Interim Consolidated Financial Statements

September 30, 2017

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

NOTE 17. IMPAIRMENT OF ASSETS

Provisions for impairment of property, plant and equipment due to technical obsolescence have been recorded as of September 30, 2017 and December 31, 2016 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
	09-30-2017	12-31-2016
Information relevant to the sum of all impairment	ThU.S.$7,689	ThU.S.$7,993

This impairment provision is being analyzed to determine the definitive write-off corresponding to the related assets

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.$75,982 (ThU.S.$74,893, at December 31, 2016)

Of the total of goodwill, ThU.S.$39,852 (ThU.S.$39,694 as of December 31, 2016) 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 ownership.

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 Timber segment in North America.

The investment in the panel plant in Pien, Brazil generated a goodwill of ThU.S.$33,316 (ThU.S.$32,385 as of December 31, 2016).

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 the period of total depreciation of the line, applying a 9% real discount rate that reflects current evaluations for the panel segment in Brazil.

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 September 30, 2017 and December 31, 2016, the variation of the balance in goodwill is only due to the translation adjustments as explained in the accounting policies.

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AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

September 30, 2017

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

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, and objected certain income tax returns made by Arauco on April 16, 2001 and October 31, 2001, and furthermore, requested the reimbursement of the amounts returned in connection to tax losses, along with the amendment of the FUT (Tax Profits Fund) Registry balance. In consideration to the foregoing, the above mentioned tax resolutions ordered the restitution of the historical amount of $4,571,664,617 (equal to ThU.S.$ 7,166 as of September 30, 2017). 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 above mentioned tax resolutions No. 184 and 185 of 2005. The RAF was resolved on January 9, 2009 by the Chilean IRS, partially sustaining the Company’s request, granting a discount to the total amount of $1,209,399,164 (equal to ThU.S.$ 1,896, as of September 30, 2017), resulting in a total disputed amount of $3,362,265,453 (equal to ThU.S.$ 5,270 as of September 30, 2017); consequently, on this date the claim corresponding to the sums not granted during the enforcement stage was filed. 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. On June 19, 2017, the Court issued the evidence production ruling, which resolution was notified via certified letter on July 23 of 2017. Arauco lodged a motion for reconsideration and a supplementary appeal, requesting the terms of the evidence production ruling be modified. On July 7, 2017, the Court upheld the motion for reconsideration. On September 20, 2017, the Court issued its first instance decision confirming the liquidations. On October 12, 2017, Arauco challenged the decision through an appeal, requesting the Court of Appeals of Santiago to revoke the first instance decision and uphold Arauco’s claim instead. The case is 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 and therefore as of September 30, 2017, Arauco has not made any provision whatsoever in connection to this contingency.

2. In connection 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, for a total of $2,695,560,000 (equal to ThU.S.$ 4,225 as of September 30, 2017).

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CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

September 30, 2017

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

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 $5,000,000 (equal to ThU.S.$ 7, as of September 30, 2017) plus adjustments, in accordance with the variation of the Consumer Price Index, calculated as of the month of May 2007, up to the month when the payment is made. 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. On June 27, 2017, the Court of Appeals of Talca confirmed the ruling, additionally declaring that it increased the amount awarded as non-monetary damages to $10,000,000 (equal to ThU.S.$ 16 as of September 30, 2017) for each claimant, plus Consumer Price Index-based adjustments, calculated from the date of the first instance ruling (October 21, 2015) up to the date of effective payment. On July 12, 2017, Arauco lodged a cassation appeal based on both procedural and substantial flaws. Pending. (Court of Appeals Docket No. 60-2016).

On October 5, 2017, the Appeal was admitted to the Supreme Court. On October 6, 2017, Arauco became a party to the Appeal. On October 11, 2017, the claimant requested a declaration of inadmissibility with respect to the appeals.

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 and therefore, as of September 30, 2017, Arauco has not made any provision whatsoever in connection to this contingency.

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, and therefore as of September 30, 2017, Arauco has not made any provision whatsoever in connection to this contingency.

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.

76

CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

September 30, 2017

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

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. On December 24, 2016, the Third Environmental Court rejected such complaint filed against Ex. Res. No. 11 SMA, which approved the compliance program. The petitioners did not file a cassation remedy.

Insofar as the compliance program is satisfactorily executed, no sanctions will be levied against the Company.

5. Through Exempted Resolution No. 1/File F-020-2016, dated May 6, 2016, the SMA formulated four charges against the company due to certain alleged breaches of the Environmental Qualification Resolutions of the Licancel Plant. The SMA classified the four charges as follows: 1 severe and 3 minor.

Regarding the 4 charges pressed by the Superintendence of the Environment through Exempted Resolution No. 1/Case File F-020-2016, dated May 6, 2016, against the Company for alleged infringements to the Environmental Qualification Resolutions of the Licancel Plant, we can inform the following:

On February 1, 2017, the Environment Superintendent issued Exempted Resolution No. 71, imposing a fine against the Company for the amount of 239 Annual Tax Units (UTA) (equivalent to ThU.S.$ 210, as of September 30, 2017).

• Regarding Charge No. 1, related to the disposal of solid industrial waste, particularly ashes in excess of the thresholds authorized by RCA No. 75/2004, a fine amounting to 3 UTA was applied (equivalent to ThU.S.$ 3, as of September 30, 2017).

• Regarding Charge No. 2, related to the failure to withdraw from the former treatment pond “pursuant to RCA No. 308/2006,” in the environmental inspections dated May of 2013 and February of 2015, a fine amounting to 234 UTA was applied (equivalent to ThU.S.$205, as of September 30, 2017).

• Regarding Charge No. 3, relaeted to exceeding the humidity percentages of the mud disposed of in the solid waste deposit, a fine amounting to 2 UTA was applied (equivalent to ThU.S.$ 2, as of September 30, 2017).

• Regarding Charge No. 4, related to the fact that the discharge point of the effluent was not built at the approved location, the Company was acquitted.

On February 13, 2017, the Company filed a motion for reconsideration, requesting the annulment of the fine or substantially decreasing it. This remedy is currently pending.

On August 7, 2017, a ruling was issued to resolve the reconsideration appeal, partially upholding the Company’s request regarding Charge No. 2, thus reducing the portion of the fine that corresponds to this charge, from 234 UTA to 177 UTA (equivalent to ThU.S.$155, as of September 30, 2017).

Additionally, regarding the total amount of the fine imposed for Charges Nos. 1, 2 and 3 (No. 4 had been rendered ineffective previously), the 25% reduction benefit was granted as a result of paying within the first 5 business days, and the total sum amounted to 136.5 UTA (equivalent to Th.U.S$ 120 as of September 30, 2017). Case closed.

77

CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

September 30, 2017

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

6. Through Exempted Resolution No. 1/File F-031-2016, dated September 15, 2016, the SMA formulated three charges against the company due to certain alleged breaches of certain Environmental Qualification Resolutions of the Constitución Plant, and an alleged contravention of Law 19,300 resulting from a purported circumvention of the Environmental Assessment System. The SMA classified the three charges as follows: 1 severe and 2 minor.

On October 17, 2016, the company filed a Compliance Program containing 7 actions and objectives. On January 3, 2017 the SMA served its resolution approving the compliance program submitted by the Company. If the compliance program is executed satisfactorily, the proceedings would conclude without the application of any sanctions.

Since the Company’s position is grounded in solid legal arguments, there is a reasonable margin for obtaining a favorable result for the Company and therefore, as of September 30, 2017, Arauco has not made any provision whatsoever in connection to this contingency.

Arauco Argentina S.A.

1. On December 14, 2007 the Federal Administration of Internal Revenue (Administración Federal de Ingresos Públicos) (“AFIP”) requested a determination, challenging the deductibility, as against Income Tax, of certain expenses, interests and exchange differences generated by Private Negotiable Obligations issued by the Company in 2001 and cancelled in 2007, for an amount of US$ 250,000,000.

This determination reached $417,908,207 Argentine Pesos (equivalent to ThU.S.$24,143 as of September 30, 2017) for principal, compensatory interest and fines.

On February 11, 2008, the Company appealed before the National Tax Court (Tribunal Fiscal de la Nación) (“TFN”), which upheld the State’s determination on February 2010. The Company appealed this decision before the National Chamber of Appeals for Federal Administrative Disputes.

Likewise, the Company requested an interim measure of relief before the Chamber of Appeals, so that the Chamber may order the suspension of the determination’s enforceability while the final judgment is pending. On May 13, 2010, Chamber I of the National Chamber of Appeals for Federal Administrative Disputes approved the request, subject to the pledge of collateral, which collateral was furnished by the Company by means of Insurance Policy No. 86058, issued by Zurich Argentina Cia. de Seguros S.A. for $633,616,741 Argentine Pesos (equivalent to ThU.S.$ 34,604 as of September 30, 2017).

The judgment of the Chamber of Appeals, issued in December 2012, was contrary to the company’s interests. The Company filed an Ordinary Appeal before the Supreme Court of Justice, which was authorized by the Chamber of Appeals, and an Extraordinary Appeal, which was duly noted by the Chamber for the relevant procedural phase.

78

CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

September 30, 2017

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

During this entire process, the Company, in consultation with its external legal advisors maintained their opinion that the Company had behaved within the limits of the law in its deduction of the interests, expenses and exchange differences that was challenged by the State, and that there were good change that this determination issued by the AFIP would be rendered without effect.

On July 22, 2016, Congress passed law No. 27,260, whose Title II, Book II establishes an Exceptional Regularization Regime for Tax, Social Security and Customs Obligations, for obligations that have been the subject matter of judicial proceedings (henceforth, the “Regularization Regime”).

The introduction of the Regularization Regime entails an exemption from the applicable fines as well as a portion of the interests. In order to enjoy these benefits, the taxpayer must unconditionally accept its counterparty’s claim in relation to the regularized obligations, as well as desist from and withdraw any action and right, including restitution actions, bearing the expense of litigation costs and expenses.

The legal counselors that have been intervening in the different stages of litigation have highlighted the very important economic advantages offered by the Regularization Regime in light of the contingency inherent to any judicial case.

On September 7, 2016, the Company materialized its application to the Regularization Regime before the AFIP, in connection to the obligations claimed in consideration to the adjustment conducted by the State regarding the Income Tax Statements filed between the years 2001 and 2004 and reported this situation to the Nation’s Supreme Court, consequently abandoning the Ordinary Appeal that had been promptly filed.

As of this date, the updated amount for the contingency amounted to approximately $891,758,132 Argentine Pesos (equal to ThU.S.$ 51,516 as of September 30, 2017), corresponding to principal, interest and fines. The Company decided to pay in cash, and the balance that was finally paid amounted to $ 248,503,504 Argentine Pesos (equal to ThU.S.$ 14,356 as of September 30, 2017). Additionally, the Company shall assume the payment of all litigation costs and trial expenses, the sum of which was undetermined as of the date of these financial statements. On November 1, 2016, the Nation’s Supreme Court of Justice declared the above mentioned remedy’s abandonment and returned the file to the court of origin. On November 30, 2016, the First Chamber of the National Appeals Court declared that the case file as returned. On April 18, 2017, Chamber I of the National Chamber declared that the Company had abandoned its actions and rights, including its repetition rights, thus condoning the fine and the corresponding interests. Additionally, it ordered the deferral of the fees regulation until payment of the state attorneys has been decided before the lower court, ordering the reimbursement of the Surety Insurance. The contingency insurance policy has been redeemed and returned to the insurance company.

2. Pursuant to law No. 25,080, the former Secretary of Agriculture, Livestock, Fishing and Foodstuffs, the enforcement agency referred to in the law approved, by Res. No. 952/2000, the forestry and industrial-forestry projects submitted by Arauco Argentina S.A. In the context of these projects, the Company afforested: 1) 4,777 hectares during 2000, in observance of its committed yearly plan; and 2) 23,012 hectares between 2000 and 2006 as a part of the multi-year afforestation plan. Likewise, a sawmill was built with installed capacity to produce 250,000 m3 of sawn timber per year.

79

CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

September 30, 2017

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

On January 11, 2001, Arauco Argentina S.A. submitted an expansion for the approved industrial-forestry project. The expansion was approved via Res. No. 84/03 issued by the former Secretary of Agriculture, Livestock, Fishing and Foodstuffs. In accordance with the assumed obligations, the Company built a MDF board (panels) plant and afforested 8,089 hectares between 2001 and 2006.

Additionally, the Company filed yearly forestry plans between years 2007 and 2015 for its local operations in the Provinces of Misiones and Buenos Aires.

In March, 2005, Note No. 145/05 of the Undersecretary of Agriculture, Livestock and Afforestation suspended the benefit that exempted Arauco Argentina S.A. from paying export duties under Law No. 25,080. This measure is currently under discussion by the Company. On November 8, 2006, the V Chamber of the National Appeals Court for Adversarial Administrative and Federal Matters issued a ruling ordering Arauco Argentina S.A. to continue to enjoy an exemption from paying the exportation duties, in the same manner and scope it had prior to the suspension ordered by Note No. 145/05, if the clearance of merchandise is performed pursuant to the guarantee regime established in article 453, subsection a) of the Customs Code, for the exempted tax obligation. 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. The company maintains an assignment of funds equivalent to $389,824,000 Argentine Pesos (ThU.S.$ 22,520 as of September 30, 2017) for guaranteed export duties, which appears under not current provisions. Additionally, the Company filed a restitution claim for a total amount of US$6,555,207, plus interests accrued from the service of the claim, corresponding to export duties between March 2005 and March 2007, as a result of the application of Note 145/05 issued by the Undersecretary of Agriculture, Livestock and Afforestation. Both the underlying issue and the restitution claim have yet to be resolved.

On the other hand, in April 2016, the Secretary of Agriculture, Livestock and Fishing issued Resolution No.154 – E/2016, that requires that the holders of enterprises that have received the fiscal benefits envisaged by Law No. 25,080, to establish collateral to cover a third of the duration of the project, with a minimum term of five years. During May of 2017, the Company modified the duly established collateral in accordance to the terms of said Resolution, for which reason the security was ultimately established at an amount of $276,508,024 (MUS$15,774 as of September 30, 2017).

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.

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.

80

CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

September 30, 2017

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

On July 20, 2015, Arauco do Brasil was notified of the first-level administrative ruling which partially upheld the Infringement, at the estimated amount of R$ 164,159,000 (MUS$ 51,896 as of September 30, 2017). 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. The CARF’s decision was issued on May 16, 2017, and took into consideration certain arguments presented by the Company regarding the agios, but preserving other charges. Administratively, it is possible that the parties can file a Special Remedy. If the current scenario remains in place, it is estimated that the claim will amount to R$57,278,771 (MUS$18,108 as of September 30, 2017), plus correction increments.

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. Otherwise, as the next step, the Company will discuss the Infringement Notice before the Brazilian Justice Courts.

Forestal Arauco S.A.

1. 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. The plaintiff valued the damages in the amount of $4,203,216,164 (equivalent to ThU.S.$ 6,327, as of September 30, 2017).

On November 14, 2016, the lower court issued a ruling partially upholding the claim, convicting Forestal Arauco S.A. to pay the sum of $115,026,673 (equivalent to ThU.S.$ 173 as of September 30, 2017) as general damage, and the sum of $607,849,413 (equivalent to ThU.S.$ 915 as of September 30, 2017) for loss profit, rejecting the claim for alleged moral damage, all without ordering the payment of litigation expenses.

Forestal Arauco S.A. challenged the ruling filing a cassation remedy based on procedural violations as well as an appeal. The plaintiff also challenged the ruling through an appeal. All remedies still have pending hearings and final resolutions before the Court of Appeals of Valdivia. Currently, the remedies have been under agreement pending the issuance of the resolution, since April 25, 2017. (Court entry Case File No. 779-2016).

On August 14th, 2017, the Court of Appeals of Valdivia revoked the first instance ruling that had partially upheld the claim lodged by Maquinarias y Equipos Klenner Limitada against Forestal Arauco S.A., and instead issued a decision that integrally dismissed said claim. This ruling is not yet final and enforceable. The claimant filed a cassation appeal that will be heard by the Supreme 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 and therefore, as of September 30, 2017, Arauco has not made any provision whatsoever in connection to this contingency.

81

CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

September 30, 2017

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

2. 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 above mentioned 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 ordered that this trial be joined with those entertained under Case File 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.

On December 9, 2016, the Court summoned the parties for the issuance of the ruling. On February 24, 2017, the first instance final ruling was notified, which ruling dismissed the claim in its entirety, and imposed the payment of court costs. On March 8, 2017, the claimant appealed against the first instance decision. Currently, the case is pending before the Court of Appeals, with the decree declaring that the case is ready to be heard by the Court being issued on April 12. Pending (Court of Appeals of Talca Case File No. 949-2017).

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 and therefore, as of September 30, 2017, Arauco has not made any provision whatsoever in connection to this contingency.

3. 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 above mentioned 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 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 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. The Court ordered this case file to be joined with the proceedings of case file No. C-334-2014 of the Civil Court of Constitución. On February 24, 2017, the final ruling of the lower court was notified, completely dismissing the claim, with litigation costs.

On March 8, 2017, the plaintiff filed an appeal against the lower court final ruling. Currently, the case is pending before the Court of Appeals, with the decree declaring that the case is ready to be heard by the Court being issued on April 12. Pending (Court of Appeals of Talca Case File No. 949-2017).

82

CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

September 30, 2017

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 and therefore, as of September 30, 2017, Arauco has not made any provision whatsoever in connection to this contingency.

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 September 30, 2017 and December 31, 2016 are as follows:

	09-30-2017
Classes of Provisions	Unaudited ThU.S.$		12-31-2016 ThU.S.$
Provisions, Current		446		842
Provisions for litigations		376		427
Other provisions		70		415
Provisions, non-Current		37,423		38,138
Provisions for litigations		13,966		14,696
Other provisions		23,457		23,442
Total Provisions		37,869		38,980

	09-30-2017 Unaudited
Movements in Provisions	Litigations ThU.S.$(*)			Other Provisions (**) ThU.S.$			Total ThU.S.$
Opening balance		15,123			23,857			38,980
Changes in provisions
Increase in existing provisions		967			34			1,001
Used provisions		(1,026	)		—			(1,026	)
Increase (decrease) in foreign currency exchange		(647	)		—			(647	)
Other Increases (Decreases)		(75	)		(364	)		(439	)
Total Changes		(781	)		(330	)		(1,111	)
Closing balance		14,342			23,527			37,869

(*) The increase in legal claims is composed mainly of ThU.S.$683 and ThU.S$278 (Brazilian and Argentine subsidiaries respectively) for civil and labor judgments.

(**) The change in Other Increases (Decrease) in Other Provisions is due to a reversal of the existing provisions, corresponding to the Zona Franca Punta Pereira.

	12-31-2016
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		5,363			1			5,364
Used provisions		(998	)		(39	)		(1,037	)
Increase (decrease) in foreign currency exchange		(609	)		—			(609	)
Other Increases (Decreases)		(33	)		(104	)		(137	)
Total Changes		3,723			(142	)		3,581
Closing balance		15,123			23,857			38,980

(*) The increase in legal claims is composed mainly of ThU.S.$ 863 and ThU.S.$ 2,255 (Brazilian and Argentine subsidiaries respectively) in connection with civil and labor lawsits, and ThU.S.$1,490 from Arauco Argentina in connection of fees in lawsuits

(**) The change in Other Increases (Decreases) in Other Provisions is due to a reversal of the existing provisions of ThU.S$ 100 of Arauco Argentina.

83

CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

September 30, 2017

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

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.

NOTE 19. INTANGIBLE ASSETS

	09-30-2017
Classes of Intangible Assets, Net	Unaudited ThU.S.$			12-31-2016 ThU.S.$
Intangible assets, net		90,611			89,497
Computer software		27,230			26,370
Water rights		5,697			5,689
Customer		48,430			50,982
Other identifiable intangible assets		9,254			6,456
Classes of intangible Assets, Gross		171,060			159,025
Computer software		79,298			72,008
Water rights		5,697			5,689
Customer		72,797			71,275
Other identifiable intangible assets		13,268			10,053
Classes of accumulated amortization and impairment
Total accumulated amortization and impairment		(80,449	)		(69,528	)
Accumulated amortization and impairment, intangible assets		(80,449	)		(69,528	)
Computer software		(52,068	)		(45,638	)
Customer		(24,367	)		(20,293	)
Other identifiable intangible assets		(4,014	)		(3,597	)

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

	09-30-2017 Unaudited
Reconciliation of intangible assets	Computer Software ThU.S.$			Water Rights ThU.S.$		Customer ThU.S.$			Others ThU.S.$			TOTAL ThU.S.$
Opening Balance		26,370			5,689		50,982			6,456			89,497
Changes
Additions		6,904			8		—			2,947			9,859
Disposals		(181	)		—		—			—			(181	)
Amortization		(6,141	)		—		(3,591	)		(304	)		(10,036	)
Increase (decrease) in foreign currency conversion		278			—		1,039			53			1,370
Others Increases (Decreases)		—			—		—			102,00			102
Changes Total		860			8		(2,552	)		2,798			1,114
Closing Balance		27,230			5,697		48,430			9,254			90,611

84

CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

September 30, 2017

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

	12-31-2016
Reconciliation of intangible assets	Computer Software ThU.S.$			Water Rights 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		12,935			204.00		—			1,718			14,857
Disposals		(1	)		—		—			—			(1	)
Amortization		(8,368	)		—		(4,770	)		(1,414	)		(14,552	)
Increase (decrease) in foreign currency conversion		178			—		487			41			706
Others Increases (Decreases)		375			—		—			—			375
Changes Total		5,119			204		(4,283	)		345			1,385
Closing Balance		26,370			5,689		50,982			6,456			89,497

	Years of Useful life (Average)
Computer Software		5
Customer		15
Brands		7

The amortization of customer and computer software is presented in the Interim 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 as of September 30, 2017 out of which 1 million hectares are used for forestry planting, 431 thousand hectares are native forest, 194 thousand hectares are used for other purposes and 81 thousand hectares not yet planted.

As of September 30, 2017, the production volume of logs totaled 16.1 million cubic meters (14.2 million cubic meters as of September 30, 2016).

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.

85

CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

September 30, 2017

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

• 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 Interim Consolidated Statements of Profit or Loss under the line item Other income per function, which as of September 30, 2017 amounted to ThU.S.$101,163 (ThU.S.$139,905 as of September 30, 2016). 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 September 30, 2017 amounted to ThU.S.$161,473 (ThU.S.$150,903 as of September 30, 2016).

• 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		(99,680	)
	-0.5		105,032
Margins (%)	10		380,117
	-10		(380,117	)

The adjustment to fair value of biological assets is recorded in the Interim Consolidated Statements of Profit or Loss, under the line item Other Income or Other Expenses, depending on whether it corresponds to profits or losses.

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

86

CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

September 30, 2017

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

The Company has contracted fire insurance policies for its forestry plantations, which in conjunction with the Company’s resources, allows to minimize such risks.

Detail of Biological Assets Pledged as Security

As of September 30, 2017, 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.

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:

	09-30-2017 Unaudited ThU.S.$		12-31-2016 ThU.S.$
Current		312,276		306,117
Non-current		3,514,632		3,592,874
Total		3,826,908		3,898,991

Reconciliation of carrying amount of biological assets

Movement	09-30-2017 Unaudited ThU.S.$
Opening Balance		3,898,991
Changes in Biological Assets
Additions		251,027
Decreases due to Sales		(3,403	)
Decreases due to Harvest		(259,421	)
Gain (losses) arising from changes in fair value less costs to sale		101,163
Increases (decreases) in Foreign Currency Translation		12,629
Loss of forest due to fires		(174,376	)
Other Increases (decreases)		298
Total Changes		(72,083	)
Closing Balance		3,826,908
Movement	12-31-2016 ThU.S.$
Opening Balance		3,826,597
Changes in Biological Assets
Additions		137,439
Decreases due to Sales		(1,351	)
Decreases due to Harvest		(326,494	)
Gain (losses) arising from changes in fair value less costs to sale		208,562
Increases (decreases) in Foreign Currency Translation		69,068
Loss of forest due to fires		(15,193	)
Other Increases (decreases)		363
Total Changes		72,394
Closing Balance		3,898,991

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

87

CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

September 30, 2017

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.

These investments are reflected in Arauco’s financial statements in Properties, Plants and Equipment, when they refer to disbursement in executed major constructions and reflected in Expenses when they refer to improvements or handling not directly associated to investment projects.

Detail information of disbursements related to the environment

As of September 30, 2017 and December 31, 2016 Arauco has made and / or has committed the following disbursements by major environmental projects:

88

CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

September 30, 2017

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

09-30-2017

Disbursements undertaken 2017

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

620

Assets

Property, plant and equipment

769

2017

Arauco Do Brasil S.A.

Environmental improvement studies

In process

475

Expense

Administration expenses

1,168

2017

Celulosa Arauco Y Constitucion S.A.

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

In process

2,897

Assets

Property, plant and equipment

6,726

2017

Celulosa Arauco Y Constitucion S.A.

Environmental improvement studies

In process

23,201

Assets

Property, plant and equipment

23,387

2018

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

36,000

Assets

Property, plant and equipment

29,245

2017

Celulosa Arauco Y Constitucion S.A.

Environmental improvement studies

In process

20,458

Expense

Operating cost

11,791

2017

Arauco Argentina S.A

Construction emisario

In process

2,303

Assets

Property, plant and equipment

797

2017

Arauco Argentina S.A

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

In process

139

Assets

Property, plant and equipment

28

2017

Arauco Argentina S.A

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

In process

—

Assets

Property, plant and equipment

5,940

2017

Maderas Arauco S.A

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

In process

320

Expense

Administration expenses

107

2017

Maderas Arauco S.A

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

In process

978

Expense

Operating cost

326

2017

Maderas Arauco S.A

Environmental improvement studies

In process

89

Assets

Property, plant and equipment

332

2017

Forestal Arauco S.A.

Environmental improvement studies

In process

887

Expense

Administration expenses

846

2017

Forestal los Lagos S.A

Environmental improvement studies

In process

161

Expense

Operating cost

106

2017

Arauco Do Brasil S.A.

Environmental improvement studies

In process

620

Assets

Property, plant and equipment

769

2017

Arauco Do Brasil S.A.

Environmental improvement studies

In process

475

Expense

Administration expenses

1,168

2017

TOTAL

88,528

51,568

89

CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

September 30, 2017

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

12-31-2016

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

285

Assets

Property, plant and equipment

417

2017

Arauco Do Brasil S.A.

Environmental improvement studies

In process

385

Expense

Administration expenses

1,231

2017

Celulosa Arauco Y Constitucion S.A.

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

In process

1,585

Assets

Property, plant and equipment

1,396

2017

Celulosa Arauco Y Constitucion S.A.

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

In process

476

Assets

Property, plant and equipment

8,085

2018

Celulosa Arauco Y Constitucion S.A.

Environmental improvement studies

In process

611

Assets

Property, plant and equipment

20,658

2017

Celulosa Arauco Y Constitucion S.A.

Environmental improvement studies

Finished

1,271

Assets

Property, plant and equipment

—

Celulosa Arauco Y Constitucion S.A.

Environmental improvement studies

In process

1,218

Assets

Property, plant and equipment

14,736

2018

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

51,703

Assets

Property, plant and equipment

64,450

2017

Celulosa Arauco Y Constitucion S.A.

Environmental improvement studies

In process

26,990

Expense

Operating cost

4,180

2018

Celulosa Arauco Y Constitucion S.A.

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

Finished

144

Assets

Property, plant and equipment

—

Arauco Argentina S.A.

Construction emisario

In process

8

Assets

Property, plant and equipment

824

2017

Arauco Argentina S.A.

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

In process

187

Assets

Property, plant and equipment

124

2017

Arauco Argentina S.A.

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

In process

183

Assets

Property, plant and equipment

6,112

2017

Maderas Arauco S.A.

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

Finished

1,332

Expense

Operating cost

—

Maderas Arauco S.A.

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

Finished

465

Expense

Administration expenses

—

Maderas Arauco S.A.

Environmental improvement studies

In process

1,217

Assets

Property, plant and equipment

304

2017

Forestal Arauco S.A.

Environmental improvement studies

In process

643

Expense

Administration expenses

946

2017

Forestal Los Lagos S.A.

Environmental improvement studies

In process

225

Expense

Operating cost

18

2017

TOTAL

88,928

123,481

90

CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

September 30, 2017

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.

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

	09-30-2017 Unaudited		12-31-2016
	ThU.S.$		ThU.S.$
Land		160		160
Buildings		1,122		1,122
Property, plant and equipment		1,587		1,777
Total		2,869		3,059

As of September 30, 2017 and December 31, 2016, there were no significant effects on results related to the sale of assets held for sale.

91

CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

September 30, 2017

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

NOTE 23. FINANCIAL INSTRUMENTS

23.1 Classification

Arauco’s financial instruments as of September 30, 2017 and December 31, 2016, are displayed in the table below. Regarding those instruments valued at an amortized cost, as estimation of their fair value is displayed for informational purposes.

Financial Instruments Thousands of dollars	September 2017 Unaudited				December 2016
	Carrying amount		Fair Value		Carrying amount		Fair Value
Fair value through profit or loss (held for trading) (1)		109,196		109,196		198,582		198,582
Derivatives		1,881		1,881		3,166		3,166
Mutual funds (2)		107,315		107,315		195,416		195,416
Loans and Accounts Receivables		1,288,196		1,288,196		1,126,182		1,126,182
Cash and cash equivalents (amortized cost)		378,254		378,254		396,837		396,837
Cash		138,439		138,439		149,446		149,446
Time deposits		183,159		183,159		247,391		247,391
Agreements		56,656		56,656		—		—
Accounts Receivable (net)		902,510		902,510		715,883		715,883
Trade and other receivables		747,055		747,055		600,589		600,589
Lease receivable		3,308		3,308		764		764
Other receivables		152,147		152,147		114,530		114,530
Accounts receivable due from related parties		7,432		7,432		13,462		13,462
Other Financial Assets (5)		28,947		28,947		10,903		10,903
Financial liabilities at amortized cost (3)		4,780,310		5,041,379		5,022,725		5,158,789
Bonds issued denominated in U.S. Dollars		1,901,020		2,032,350		2,321,980		2,480,063
Bonds issued denominated in U.F. (4)		1,209,969		1,310,927		1,130,679		1,078,934
Bank Loans in U.S. Dollars		912,266		945,941		891,338		926,070
Bank borrowing denominated in U.S. Dollars		25,464		25,464		23,020		23,020
Financial leasing		116,088		111,194		113,986		108,980
Trade and other payables		600,819		600,819		537,891		537,891
Accounts payable to related parties		14,684		14,684		3,831		3,831
Financial liabilities at fair value through profit or loss		440		440		336		336
Hedging Liabilities		37,622		37,622		87,027		87,027

(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 interim consolidated statement of financial position.

(2) Although mutual funds are measured at fair value through profit or loss for purposes of the interim 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 interim 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.

92

CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

September 30, 2017

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 September 30, 2017, 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).

	Fair Value		Fair value
Financial Instruments	September 2017 ThU.S.$		Level 1 ThU.S.$		Level 2 ThU.S.$		Level 3 ThU.S.$
Fair value through profit or loss (held for trading)
Derivatives		1,881				1,881
Mutual Funds		107,315		107,315
Other financial assets		28,947		3,649		25,298
Financial liabilities measured at amortized cost
Bonds issued denominated in U.S. Dollars		2,032,350		2,032,350
Bonds issued denominated in U.F. (4)		1,310,927		1,310,927
Bank loans in U.S. Dollars		945,941				945,941
Bank borrowing denominated in U.S. Dollars		25,464				25,464
Financial leasing		111,194				111,194
Financial liabilities at fair value through profit or loss		440				440
Hedging liabilities		37,622				37,622

93

CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

September 30, 2017

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 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.

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 and financial leases 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 interim consolidated financial statements, and correspond to Level 2 of the fair value hierarchy.

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AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

September 30, 2017

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

The following table shows the compliance with the financial covenants (level of indebtedness, detailed in section 23.9.3), for the bonds issued prior to the year 2015, as required by domestic indentures (Chile):

	September 2017 Unaudited ThU.S.$		December 2016 ThU.S.$
Interest bearing loans, current (a)		629,467		697,000
Other financial liabilities, current		629,916		697,452
Hedging liabilities current + Financial liabilities at fair value through profit or loss current		449		452
Interest bearing loans, non-current (b)		3,535,340		3,784,003
Other financial liabilities, non-current		3,572,953		3,870,914
Hedging liabilities non-current + Financial liabilities at fair value through profit or loss non-current		37,613		86,911
Financial debt total (c)		4,164,807		4,481,003
Cash and cash equivalents		485,569		592,253
Other financial assets current		3,029		5,201
Total, Cash (d)		488,598		597,454
Net Financial Debt (e)		3,676,209		3,883,549
Non-controlling interests		7,070,513		6,955,251
Equity attributable to owners of parent		44,917		44,032
Total, Equity (f)		7,115,430		6,999,283
Debt to equity ratio (g)		0.52		0.55

(a) Other Current Financial Liabilities – (Current Hedge Liabilities + Financial Liabilities with changes in current results)

(b) Other Non-Current Financial Liabilities – (Non-current Hedge Liabilities + Financial Liabilities with changes in non-current results)

(c) Interest bearing loans, current + Interest bearing loans, non-current

(d) Cash and Cash Equivalents + Other Current Financial Assets

(e) Total Financial Debt – Total Cash

(f) Equity attributable to owners of controlling parent + Non-controlling interests

(g) Net Financial Debt / Total Equity

Note: As of September 30, 2017 the amount for the financial Liabilities with changes in non-current profits and losses is zero, current hedging liabilities are ThU.S.$ 9, and financial liabilities at fair value through profit or loss are ThU.S.$ 440.

95

CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

September 30, 2017

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

The following table shows the compliance with the financial covenants (level of indebtedness, detailed in section 23.9.3), for the bonds issued after year 2015, as required by domestic indentures (Chile):

	September 2017 Unaudited ThU.S.$		December 2016 ThU.S.$
Other financial liabilities (a)		4,202,869		4,568,366
Other financial liabilities, current		629,916		697,452
Other financial liabilities, non-current		3,572,953		3,870,914
Financial liabilities at fair value through profit or loss		440		336
Hedging liabilities (b)		37,622		87,027
Swaps		37,593		86,895
Forward		29		132
Financial debt total (c)		4,164,807		4,481,003
Cash and cash equivalents		485,569		592,253
Total, Cash (d)		485,569		592,253
Net Financial Debt (e)		3,679,238		3,888,750
Non-controlling interests		7,070,513		6,955,251
Equity attributable to owners of parent		44,917		44,032
Total, Equity (f)		7,115,430		6,999,283
Debt to equity ratio (g)		0.52		0.56

(a) Other Financial Liabilities current + Other Financial Liabilities non-current

(b) Swaps + Forwards + Options

(c) Other financial liabilities +Financial liabilities at fair value through profit or loss + Hedging liabilities

(d) Cash and Cash Equivalents + Other Current Financial Assets

(e) Total Financial Debt – Total Cash

(f) Equity attributable to owners of controlling parent + Non-controlling interests

(g) Net Financial Debt / Total Equity

96

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Unaudited Interim Consolidated Financial Statements

September 30, 2017

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

The following table sets forth the reconciliation between the financial liabilities and the statement of financial position as of September 30, 2017 and December 31, 2016:

Thousands of dollars	September 2017 - Unaudited
	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		25,517		30,067		55,584		1,761,942		1,293,463		3,055,405		3,110,989
Bank borrowing		102,046		431,735		533,781		313,004		90,945		403,949		937,730
Financial Leasing		10,061		30,041		40,102		75,986		—		75,986		116,088
Swap and Forward		449		—		449		37,613		—		37,613		38,062
Other Financial Liabilities, Total (a)		138,073		491,843		629,916		2,188,545		1,384,408		3,572,953		4,202,869
Thousands of dollars	September 2017 - Unaudited
	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		600,787		32		600,819		—		—		—		600,819
Accounts payable to related companies		14,684		—		14,684		—		—		—		14,684
Accounts Payable, Total (b)		615,471		32		615,503		—		—		—		615,503
Financial Liabilities, Total (a) + (b)		753,544		491,875		1,245,419		2,188,545		1,384,408		3,572,953		4,818,372
Thousands of dollars	December 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		51,874		409,102		460,976		1,233,603		1,758,079		2,991,682		3,452,658
Bank borrowings		134,140		61,483		195,623		626,384		92,351		718,735		914,358
Financial leasing		9,534		30,866		40,400		73,586		—		73,586		113,986
Swap and Forward		453		—		453		86,911		—		86,911		87,364
Other Financial Liabilities, Total (a)		196,001		501,451		697,452		2,020,484		1,850,430		3,870,914		4,568,366
Thousands of dollars	December 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		511,371		26,520		537,891		—		—		—		537,891
Accounts payable to related companies		3,831		—		3,831		—		—		—		3,831
Accounts Payable, Total (b)		515,202		26,520		541,722		—		—		—		541,722
Financial Liabilities, Total (a) + (b)		711,203		527,971		1,239,174		2,020,484		1,850,430		3,870,914		5,110,088

97

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Unaudited Interim Consolidated Financial Statements

September 30, 2017

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

23.4 Derivative Instruments

Hedging instruments recorded as of September 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 derivative financial instruments included in the Statements of Financial Position as of September 30, 2017 and December 31, 2016, is presented below:

Financial Instruments	September 2017 Fair Value ThU.S.$
Assets at fair value through profit or loss (held for trading)		1,881
Derivative-Uruguay (1)		1,836
Forward- Colombia		45
Hedging Assets		25,298
Derivative-Uruguay (1)		1,382
Cross Currency Swaps		23,916
Financial liabilities at fair value through profit or loss		(440	)
Forward-Colombia		(437	)
Derivative-Uruguay (1)		(3	)
Hedging Liabilities		(37,622	)
Cross Currency Swaps		(37,593	)
Derivative-Uruguay (1)		(29	)

(1) Include Swap and Forward from Uruguay tables.

Financial Instruments	December 2016 Fair Value ThU.S.$
Assets at fair value through profit or loss (held for trading)		3,166
Derivative-Uruguay (1)		3,159
Forward-Colombia		7
Hedging Assets		8,658
Derivative-Uruguay (1)		2,029
Cross Currency Swaps		6,629
Financial liabilities at fair value through profit or loss		(336	)
Forward-Colombia		(267	)
Derivative-Uruguay (1)		(69	)
Hedging Liabilities		(87,027	)
Cross Currency Swaps		(86,895	)
Derivative-Uruguay (1)		(132	)

(2) Include Swap and Forward from Uruguay tables.

98

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AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

September 30, 2017

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

23.4.1. Chile

Cross currency swaps

Arauco is exposed to the risk of variability in cash flows from changes in foreign exchange rates and inflation, mainly due to balances of assets denominated in U.S. Dollars and other currencies differente from the functional currency, which causes mismatches that could affect operating results.

Below are the cross currency swaps that Arauco has as of September 30, 2017 and December 31, 2016 to cover the exposure to the exchange rate risk generated from bonds denominated in UF:

Bond	Institution	Amount U.S.$		Amount UF		Starting date		Ending date		September 2017 Market Value ThU.S.$			December 2016 Market Value ThU.S.$
F	Deutsche - U.K.		43,618,307		1,000,000		10-30-2011		10-30-2021		(2,124	)		(4,703	)
F	JP Morgan - N.A.		43,618,307		1,000,000		10-30-2011		10-30-2021		(2,017	)		(4,584	)
F	Deutsche - U.K.		37,977,065		1,000,000		04-30-2014		04-30-2019		4,403			1,782
F	BBVA - Chile		38,426,435		1,000,000		10-30-2014		04-30-2023		2,968			558
F	BBVA - Chile		38,378,440		1,000,000		10-30-2014		04-30-2023		3,294			908
F	Santander - Chile		37,977,065		1,000,000		10-30-2014		04-30-2023		3,810			1,427
F	BCI - Chile		37,621,562		1,000,000		10-30-2014		04-30-2023		4,327			1,952
J	Corpbanca - Chile		42,864,859		1,000,000		09-01-2010		09-01-2020		(2,318	)		(5,505	)
J	BBVA - Chile		42,864,859		1,000,000		09-01-2010		09-01-2020		(2,318	)		(5,505	)
J	Deutsche - U.K.		42,864,859		1,000,000		09-01-2010		09-01-2020		(2,382	)		(5,590	)
J	Santander - Spain		42,873,112		1,000,000		09-01-2010		09-01-2020		(2,289	)		(5,463	)
J	BBVA - Chile		42,864,257		1,000,000		09-01-2010		09-01-2020		(2,178	)		(5,318	)
P	Corpbanca - Chile		46,474,122		1,000,000		05-15-2012		11-15-2021		(3,996	)		(6,355	)
P	JP Morgan - N.A.		47,163,640		1,000,000		11-15-2012		11-15-2021		(3,888	)		(6,157	)
P	BBVA - Chile		42,412,852		1,000,000		11-15-2013		11-15-2023		(441	)		(2,548	)
P	Santander - Chile		41,752,718		1,000,000		11-15-2013		11-15-2023		513			(1,591	)
P	Deutsche - U.K.		41,752,718		1,000,000		11-15-2013		11-15-2023		538			(1,564	)
R	Santander - Chile		128,611,183		3,000,000		10-01-2014		04-01-2024		(7,545	)		(13,815	)
R	JP Morgan - U.K.		43,185,224		1,000,000		10-01-2014		04-01-2024		(2,005	)		(4,039	)
R	Corpbanca - Chile		43,277,070		1,000,000		10-01-2014		04-01-2024		(2,000	)		(4,026	)
Q	BCI - Chile		43,185,224		1,000,000		10-01-2014		04-01-2021		(1,078	)		(3,524	)
Q	BCI - Chile		43,196,695		1,000,000		10-01-2014		04-01-2021		(1,013	)		(3,443	)
S	Santander - Chile		201,340,031		5,000,000		11-15-2016		11-15-2026		4,063			(3,165	)
											(13,677	)		(80,266	)

Arauco has a high percentage of its assets in U.S. dollars, it needs to minimize the risk of the exchange rate, as it holds debt in pesos, adjustable to reflect inflation. 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 IAS 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.

99

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AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

September 30, 2017

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

23.4.2. Colombia

Forward contracts that are in force and effect, executed by Arauco Colombia as of September 30, 2017 and December 31, 2016 are detailed in the following table:

Exchange rate	Institution		Amount ThU.S.$		Starting date		Ending date		September 2016 Market Value ThU.S.$
USDCOP		Corpbanca Colombia		6,000		07/13/2017		10/06/2017		(284	)
USDCOP		BBVA Colombia		7,000		08/11/2017		11/08/2017		(153	)
USDCOP		BBVA Colombia		5,000		09/14/2017		12/12/2017		45
										(392	)

Exchange rate	Institution		Amount ThU.S.$		Starting date		Ending date		December 2016 Market Value ThU.S.$
USDCOP		BBVA Colombia		5,000		10/28/2016		01/11/2017		7
USDCOP		BBVA Colombia		4,000		11/18/2016		02/09/2017		(255	)
USDCOP		BBVA Colombia		7,000		12/13/2016		03/10/2017		(12	)
										(260	)

23.4.3. Uruguay

Forward

As of September 30, 2017 and December 31, 2016 Arauco Uruguay maintains the following forward contracts in force and for the purposes of ensuring an exchange rate for sale of dollars:

Exchange rate	Institution		Notional ThU.S.$		September 2017 Market Value ThU.S.$
UYUUSD		Banco Santander Uy		22,950		1,053
UYUUSD		Citibank U.K.		2,000		182
UYUUSD		HSBC Uruguay		8,000		533
						1,768

Exchange rate	Institution		Notional ThU.S.$		December 2016 Market Value ThU.S.$
UYUUSD		Banco Santander Uy		16,600		1,633
UYUUSD		Citibank U.K.		3,200		150
UYUUSD		HSBC Uruguay		10,750		1,256
						3,039

Arauco Uruguay’s profits and losses 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 2017, 2018 and part of 2019 has been limited, through forwards of this commodity. The agreements that are in force and effect as of September 30, 2017 and December 31, 2016 are detailed below:

Exchange rate	Institution		Notional ThU.S.$		September 2017 Market Value ThU.S.$
Fuel Oil N°6		JPMorgan Chase Bank, N.A.		5,911		729
Fuel Oil N°6		DNB Bank ASA		2,993		217
Fuel Oil N°6		Citibank U.K.		314		77
						1,022

Exchange rate	Institution		Notional ThU.S.$		December 2016 Market Value ThU.S.$
Fuel Oil N°6		JPMorgan Chase Bank, N.A.		5,508		1,059
Fuel Oil N°6		DNB Bank ASA		2,661		156
Fuel Oil N°6		Citibank U.K.		378		83
						1,298

100

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AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

September 30, 2017

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

Interest Rate Swap

In addition, Arauco in Uruguay 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 September 30, 2017 and December 31, 2016 is shown below:

Exchange rate	Institution	Notional ThU.S.$		September 2017 Market Value ThU.S.$
USD	DNB Bank ASA		50,638		396

Exchange rate	Institution	Notional ThU.S.$		December 2016 Market Value ThU.S.$
USD	DNB Bank ASA		59,077		650

Note: the amount value and market value on the tables in section 23.4.3 represents 50% of the total, reflecting the stake held by Arauco in its Uruguayan subsidiaries.

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 due from related parties”.

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 accounts receivable due from related parties.

As of September 30, 2017 and December 31, 2016 there are provisions for impairment of ThU.S.$ 14,934 and ThU.S.$ 16,644, respectively.

	September 2017 Unaudited ThU.S.$		December 2016 ThU.S.$
Loans and Accounts Receivables		1,288,196		1,126,182
Cash and cash equivalents		378,254		396,837
Cash		138,439		149,446
Time Deposits		183,159		247,391
Agreements		56,656		—
Trade and other receivables (net)		909,942		729,345
Trade and other receivables		747,055		600,589
Lease receivable		3,308		764
Other receivables		152,147		114,530
Accounts receivable due from related parties		7,432		13,462

101

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AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

September 30, 2017

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

23.5.1. Cash and Cash Equivalents

Includes cash on hand, bank checking account 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 September 30, 2017 and December 31, 2016, classified by origin coins is as follow:

	09-30-2017 Unaudited ThU.S.$		12-31-2016 ThU.S.$
Cash and Cash Equivalents		485,569		592,253
US Dollar		309,789		524,426
Euro		4,346		2,357
Other currencies		53,157		55,069
Chilean pesos		118,277		10,401

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 Trade 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.

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 due 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 exploitation and financing, and which Arauco owns a non-controlling ownership of the counterparty.

102

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AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

September 30, 2017

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

The following table sets forth trade and other current/non-current receivables classified by currencies as of September 30, 2017 and December 31, 2016:

	09-30-2016 Unaudited ThU.S.$		12-31-2016 ThU.S.$
Trades and other current receivables		888,300		701,610
US Dollar		604,982		489,056
Euros		20,692		26,544
Other currencies		107,316		77,907
Chilean pesos		153,190		106,681
U.F.		2,120		1,422
Accounts receivable from related parties, current		6,007		11,548
US Dollar		1,094		274
Other currencies		342		726
Chilean pesos		4,571		10,548
Trade and other non-current receivables		14,210		14,273
US Dollar		4,482		6,895
Other currencies		534		527
Chilean pesos		7,376		5,753
U.F.		1,818		1,098
Accounts receivable from related parties, non current		957		957
Others Currencies		957		957

103

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AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

September 30, 2017

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

23.6 Total Financial Liabilities

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

Financial Liabilities	September 2017 Unaudited ThU.S.$		December 2016 ThU.S.$
Total Financial Liabilities		4,818,372		5,110,088
Financial liabilities at fair value through profit or loss (held for trading)		440		336
Hedging liabilities		37,622		87,027
Financial liabilities measured at amortized cost		4,780,310		5,022,725

The following table sets forth the current portion of the non-current bank borrowings and debt issued as of September 30, 2017 and

	September 2017 Unaudited ThU.S.$		December 2016 ThU.S.$
Bank borrowings - current portion		919,464		88,028
Bonds issued - current portion		157,812		62,506
Total		1,077,276		150,534

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.

At 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.

104

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Unaudited Interim Consolidated Financial Statements

September 30, 2017

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

	Currency		09-30-2017		12-31-2016		09-30-2017		12-31-2016
			Unaudited				Unaudited
			Amortized Cost ThU.S.$				Fair Value ThU.S.$
Total Financial Liabilities				4,780,310		5,022,725		5,041,379		5,158,789
Bonds Issued		U.S. Dollar		1,901,020		2,321,980		2,032,350		2,480,063
Bonds Issued		U.F.		1,209,969		1,130,679		1,310,927		1,078,934
Bank borrowings		U.S. Dollar		912,377		891,338		945,941		926,070
Bank borrowings		Other currencies		25,353		23,020		25,464		23,020
Financial Leasing		U.F.		—		98,316		—		94,052
Financial Leasing		Chilean pesos		99,731		15,670		95,461		14,928
Trades and Other Payables		U.S. Dollar		16,357		150,162		15,733		150,162
Trades and Other Payables		Euro		—		13,034		—		13,034
Trades and Other Payables		Other currencies		197,059		70,736		197,059		70,736
Trades and Other Payables		Chilean pesos		10,567		285,359		10,567		285,359
Trades and Other Payables		U.F.		67,313		18,600		67,313		18,600
Related party payables		U.S. Dollar		306,770		1,968		306,770		1,968
Related party payables		Chilean pesos		19,110		1,863		19,110		1,863

The financial liabilities at amortized cost presented in the consolidated statements of financial positions as of September 30, 2017 and December 31, 2016 are as follows:

	September 2017 Unaudited ThU.S.$
	Current		Non Current		Total
Other financial liabilities		629,467		3,535,340		4,164,807
Trade and other payables		600,819		—		600,819
Accounts payable to related parties		14,684		—		14,684
Total Financial Liabilities Measured at Amortized Cost		1,244,970		3,535,340		4,780,310
	December 2016
	Current		ThU.S.$ Non Current		Total
Other financial liabilities		697,000		3,784,003		4,481,003
Trade and other payables		537,891		—		537,891
Accounts payable to related parties		3,831		—		3,831
Total Financial Liabilities Measured at Amortized Cost		1,238,722		3,784,003		5,022,725

105

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AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

September 30, 2017

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 - September						July - September
	Unaudited
	2017			2016			2017			2016
	ThU.S.$			ThU.S.$			ThU.S.$			ThU.S.$
Opening balance		1,096			(55,396	)		(11,197	)		(53,315	)
Gains (losses) on cash flow hedges		7,754			44,277			—			—
Recycle of cash flow hedges to profit or loss		(11,004	)		(10,658	)		48,443			40,383
Income tax		(2,432	)		(2,558	)		(47,724	)		(11,095	)
Recycle of income tax		2,807			(5,613	)		3,611			3,747
Closing balance		(1,779	)		(29,948	)		(6,868	)		(20,280	)

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	September 2017 ThU.S.$		December 2016 ThU.S.$		Interest coverage >= 2,0x	Debt level (1) <= 1,2x
Domestic bonds		1,209,969		1,130,679	N/A	✓
Syndicate Loan		367,245		298,967	✓	✓

N/R: Not required for the financial obligation

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

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September 30, 2017

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

As of September 30, 2017 and December 31, 2016, Arauco has complied with all of its financial covenants.

The following table sets forth the credit ratings of our debt instruments as of September 30, 2017, 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 September 30, 2017 and December 31, 2016 is as follows:

	September 2017
	Unaudited		December 2016
	ThU.S.$		ThU.S.$
Equity		7,115,430		6,999,283
Bank borrowings		937,730		914,358
Financial leasing		116,088		113,986
Bonds issued		3,110,989		3,452,659
Capitalization		11,280,237		11,480,286

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.

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September 30, 2017

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

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.

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.

Accounts exposed to credit risk are: trade receivable, financial lease debtors and other debtors.

Arauco does not have a securitized portfolio.

	September 2017
	Unaudited		December 2016
	ThU.S.$		ThU.S.$
Current Receivables
Trade receivables		745,063		598,597
Financial lease receivables		1,441		411
Other debtors		141,796		102,602
Net subtotal		888,300		701,610
Trade receivables		754,226		609,102
Financial lease receivables		1,542		512
Other debtors		147,466		108,640
Gross subtotal		903,234		718,254
Provision for doubtful trade receivables		9,163		10,505
Provision for doubtful lease receivables		101		101
Provision for doubtful other debtors		5,670		6,038
Subtotal Bad Debt		14,934		16,644
Non-Current Receivables
Trade receivables		1,992		1,992
Financial lease receivables		1,867		353
Other debtors		10,351		11,928
Net Subtotal		14,210		14,273
Trade receivables		1,992		1,992
Financial lease receivables		1,867		353
Other debtors		10,351		11,928
Gross subtotal		14,210		14,273
Provision for doubtful trade receivables		—		—
Provision for doubtful lease receivables		—		—
Provision for doubtful other debtors		—		—
Subtotal Bad Debt		—		—

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September 30, 2017

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

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

The Credit and Collections Sub-Division, dependent from the Treasury Division, is the area entrusted with minimizing the credit risk of the accounts receivable, supervising the delinquency of the accounts. The regulations and procedures applicable for the control and administration of the Arauco Group can be found in the Corporate Credit Policy.

As of September 30, 2017, Arauco’s balance for commercial Debtors was ThU.S.$ 754,226 of which, according to the agreed sales conditions, 56.0% corresponded to sales on credit (open account), 40.32% to sales with letters of credit and 3.67% to other types of sales, distributed in 2,329 debtors. The client with the largest Open Account debt represented 2.55% of the total accounts receivable as of that date.

Below we provide detail regarding accounts receivable, classified in tranches.

September 30, 2017 - Unaudited
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$		711,843			24,873			91			5,159			140			64			70			83			1,790			10,113			754,226
%		94.38	%		3.30	%		0.01	%		0.68	%		0.02	%		0.01	%		0.01	%		0.01	%		0.24	%		1.34	%		100	%
December 31, 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$		562,386			31,106			257			881			39			18			21			11			64			14,319			609,102
%		92.33	%		5.11	%		0.04	%		0.14	%		0.01	%		0.00	%		0.00	%		0.00	%		0.01	%		2.36	%		100	%

Arauco does not conduct rescheduling or renegotiations with its clients that imply an amendment to the maturity of the invoices and, should it be necessary, any debt renegotiation with a client shall be analyzed on a case-by-case basis and subjected to the approval of the Corporate Finance Division.

Regarding the provisions from non-enforceable accounts, below we provide detail for the movements as of September 30, 2017 and December 31, 2016:

	09-30-2017
	Unaudited			12-31-2016
	ThU.S.$			ThU.S.$
Opening balance		(16,644	)		(19,860	)
Impairment losses recognized on receivables		(137	)		(3,950	)
Reversal of impairment losses		1,847			7,166
Closing balance		(14,934	)		(16,644	)

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

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September 30, 2017

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

Explanation regarding the Sales Risk with Letters of Credit

The sales with letters of credit mainly occur in markets in Asia and the Middle East. Periodically, a credit assessment is conducted regarding the banks that issue the letters of credit with the purpose of obtaining their score over the basis of risk-qualification ratings, country-specific risk and financial statements. The decision of approving the issuing bank or asking for confirmation of the letter of credit is made in consideration to this assessment.

Explanation of the Sales Risk with Credit Line

Sales on credit are subject to the credit limit for each customer. The approval or rejection of a credit limit for all term sales is conducted by the Corporate Credit Sub-Division, as well as by the Credit and Collections area for North America, Brazil and Argentina, which report to the Corporate Finance Division. The regulations and procedures applicable for the correct control and risk management over the sales on credit are ruled by the Credit Policy.

A procedure that must be applied by all the companies of the Arauco group has been established for the approval and/or modification of client credit lines. Credit line requests are entered to the SAP that analyzes all available information. Afterwards, the same are either approved or rejected in each one of the internal committees of each company belonging to the Arauco group, depending on the maximum amount authorized by the Credit Policy. Lines of credit are renewed during this internal process on a yearly basis.

All sales are automatically controlled by a credit verification system, which has been configured to block any orders from clients who are delinquent in a given percentage of a debt and/or from clients whose line of credit, as of the time of the product’s shipping, has been exceeded or is overdue.

In order to minimize the credit risk for term or Open Account sales, it is Arauco’s policy to take out insurance to cover the export sales of companies Celulosa Arauco y Constitución S.A., Maderas Arauco S.A., Forestal Arauco S.A., and Arauco do Brasil S.A., as well as the domestic sales of Arauco México S.A. de C.V., Arauco Wood Inc, Arauco Colombia S.A., Arauco Perú S.A., Arauco Panels USA LLC, Flakeboard Company Ltd., Flakeboard America Ltd., Celulosa Arauco y Constitución S.A., Maderas Arauco S.A., Arauco Florestal Arapoti, Arauco Forest Brasil S.A. and Arauco do Brasil S.A and Arauco Nutrientes S.P.A.. Arauco works with credit insurance company Continental (AA- rating, as per risk rating companies Humphreys and Fitch Ratings). In order to cover the export sales and domestic sales of Arauco Argentina S.A., the preferred credit insurance company is Insur (a subsidiary of Continental in Argentina). Both companies grant a 90% coverage over the amount of each invoice, without deductibles, for registered clients and of 85% for non-registered clients. (Non-registered clients are those whose lines range between ThU.S.$ 5 and ThU.S.$ 70 (equivalent currency of their invoicing) of the local sales of companies Arauco Perú S.A., Arauco Colombia S.A., Arauco México S.A. de C.V., Arauco Do Brasil S.A., Arauco Argentina S.A. and Maderas Arauco S.A. Lines in excess of the aforesaid amounts correspond to registered clients.

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September 30, 2017

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

As another way of minimizing risk and supporting a line of credit approved by the Credit Committee, Arauco holds guarantees such as mortgages, pledges, Standby letters of credit, bank performance bonds, checks, promissory notes, loans or any other that could be required under the laws of each country. The total amount held in guarantees amounts to MU.S.$101.8, effective as of September 30, 2017, as summarized in the following chart. The procedure for guarantees is regulated by Arauco’s Policy on Guarantees, whose purpose is to control their accounting, due date and custody.

Guarantees Arauco Group (ThU.S.$)
Guarantees Debtors (received from clients)
Certificate of deposits	12,449	12,2	%
Standby	6,942	6,8	%
Promissory notes	67,856	66,7	%
Finance	2,892	2,8	%
Mortgage	9,059	8,9	%
Pledge	2,393	2,4	%
Promissory notes	200	0,2	%
Total Guarantees	101.791	100,0	%

The maximum exposure to credit risk is limited to the value at amortized cost of the Debtors’ account for sales registered as of the date of this report, minus the percentage of sales insured by the aforementioned credit insurance companies and the guarantees granted in favor of Arauco.

In summary, the open account debt covered by the various insurance policies and guarantees amounts to 98% and, therefore, Arauco’s portfolio exposure amounts to 2%.

Secured Open Accounts Receivable	ThU.S.$		%
Total open accounts receivable		422,400		100.0
Secured receivables(*)		413,952		98.0
Unsecured receivables		8,448		2.0

(*) Insured Debt is deemed to be the portion of accounts receivable that is covered by a credit company or by guarantees such as standby letters of credit, mortgages, performance bonds, among others

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.

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September 30, 2017

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

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.

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 Superintendence 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 September 30, 2017 and December 31, 2016. The tables have been drawn up based on the contractual undiscounted cash outflows and their remaining contractual maturities:

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

September 30, 2017 - Unaudited				Maturity														Total				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		—		299,412		—		—		—		—		—		299,412		—	1.70%	Libor + 0.70%
93.458.000-1	Celulosa Arauco y Constitución S.A.	U.S Dollar	Banco de Credito e Inversiones		30,004		—		—		—		—		—		—		30,004		—	1.30%	1.30%
—	Arauco Argentina S.A.	Argentine Pesos	Banco Macro- Argentina		9		—		—		—		—		—		—		9		—	15.25%	15.25%
—	Arauco Argentina S.A.	U.S Dollar	Banco Santander Rio		10,041		—		—		—		—		—		—		10,041		—	1.08%	1.08%
—	Arauco Argentina S.A.	U.S Dollar	Banco Macro- Argentina		5,031		—		—		—		—		—		—		5,031		—	1.40%	1.40%
—	Zona Franca Punta Pereira	U.S Dollar	Interamerican Development Bank		—		2,086		2,421		2,355		2,284		2,210		2,135		2,086		11,405	3.51%	Libor + 2.05%
—	Zona Franca Punta Pereira	U.S Dollar	Interamerican Development Bank		—		5,597		5,889		5,712		—		—		—		5,597		11,601	3.23%	Libor + 1.80%
—	Zona Franca Punta Pereira	U.S Dollar	BBVA		16,133		—		—		—		—		—		—		16,133		—	3.16%	Libor + 1.75%
—	Zona Franca Punta Pereira	U.S Dollar	Citibank		2,524		—		—		—		—		—		—		2,524		—	3.22%	Libor + 1.75%
—	Zona Franca Punta Pereira	U.S Dollar	Scotiabank		2,502		—		—		—		—		—		—		2,502		—	1.60%	1.60%
—	Celulosa y Energia Punta Pereira	U.S Dollar	Banco Interamericano de Desarrollo		—		8,424		9,775		9,502		9,205		8,918		8,629		8,424		46,029	3.51%	Libor + 2.05%
—	Celulosa y Energia Punta Pereira	U.S Dollar	Banco Interamericano de Desarrollo		—		22,630		23,810		23,087		—		—		—		22,630		46,897	3.26%	Libor + 1.80%
—	Celulosa y Energia Punta Pereira	U.S Dollar	Finnish Export Credit		—		44,115		50,406		49,863		48,121		47,389		23,469		44,115		219,248	3.20%	3.20%
—	Celulosa y Energia Punta Pereira	U.S Dollar	Dnb Nor Bank		—		6		—		—		—		—		—		6		—	0.00%	Libor + 2%
—	Eufores S.A.	U.S Dollar	Banco Republica Oriental de Uruguay		12,710		24,495		—		—		—		—		—		37,205		—	3.08%	Libor + 1.75%
—	Eufores S.A.	U.S Dollar	Citibank		6		—		—		—		—		—		—		6		—	3.43%	Libor + 2%
—	Eufores S.A.	U.S Dollar	Banco HSBC- Uruguay		1,203		—		—		—		—		—		—		1,203		—	2.91%	Libor + 1.75%
—	Eufores S.A.	U.S Dollar	Banco Itau -Uruguay		15,103		—		—		—		—		—		—		15,103		—	3.08%	Libor + 1.75%
—	Eufores S.A.	U.S Dollar	Heritage		1,351		—		—		—		—		—		—		1,351		—	3.03%	Libor + 1.75%
—	Eufores S.A.	U.S Dollar	Banco Santander		2,512		20,068		—		—		—		—		—		22,580		—	3.06%	Libor + 1.75%
—	Arauco Do Brasil S.A.	Brazilian Real	Banco ABC - Brazil		5		—		—		—		—		—		—		5		—	2.50%	2.50%
—	Arauco Do Brasil S.A.	Brazilian Real	Banco Santander		24		70		93		72		—		—		—		94		165	9.50%	9.50%
—	Arauco Do Brasil S.A.	Brazilian Real	Banco Bradesco		1,489		—		—		—		—		—		—		1,489		—	9.50%	9.50%
—	Arauco Do Brasil S.A.	Brazilian Real	Banco Alfa		6		52		77		77		77		25		—		58		256	11.25%	Tljp+2%+ spread 1.75%
—	Arauco Do Brasil S.A.	Brazilian Real	Banco Santander		3		8		10		10		10		—		—		11		30	9.34%	Tljp+2%+ spread 2%
—	Arauco Florestal Arapoti S.A.	Brazilian Real	Banco Itau		3		1		—		—		—		—		—		4		—	2.50%	2.50%
—	Arauco Florestal Arapoti S.A.	Brazilian Real	Banco Itau		14		40		18		4		—		—		—		54		22	3.50%	3.50%
—	Arauco Florestal Arapoti S.A.	Brazilian Real	Banco Bradesco		11		34		45		—		—		—		—		45		45	6.00%	6.00%
—	Arauco Florestal Arapoti S.A.	Brazilian Real	Banco Votorantim		8		—		—		—		380		380		—		8		760	5.00%	5.00%
—	Arauco Florestal Arapoti S.A.	Brazilian Real	Banco Safra		23		68		45		—		—		—		—		91		45	6.00%	6.00%
—	Arauco Florestal Arapoti S.A.	Brazilian Real	Banco Safra		8		21		27		27		19		—		—		29		73	10.00%	10.00%
—	Arauco Florestal Arapoti S.A.	Brazilian Real	Banco Santander		35		1,894		47		41		—		—		—		1,929		88	9.50%	9.50%
—	Arauco Florestal Arapoti S.A.	Brazilian Real	Banco Santander		18		29		—		—		11		—		—		47		11	9.89%	9.89%
—	Arauco Forest Brasil S.A.	Brazilian Real	Banco Bradesco		21		60		45		—		—		—		—		81		45	5.90%	5.91%
—	Arauco Forest Brasil S.A.	U.S Dollar	Banco Alfa		2		7		9		9		7		—		—		9		25	8.08%	Cesta+2%+spread 1.8%
—	Arauco Forest Brasil S.A.	Brazilian Real	Banco Alfa		6		18		23		23		18		—		—		24		64	11.30%	Tljp+2%+Spread 1.8%
—	Arauco Forest Brasil S.A.	Brazilian Real	Banco Itau -Brazil		4		1		—		—		—		—		—		5		—	2.50%	2.50%
—	Arauco Forest Brasil S.A.	Brazilian Real	Banco Votorantim - Brazil		192		540		600		—		337		337		—		732		1,274	8.76%	Tljp+1.8%+Spread 2%
—	Arauco Forest Brasil S.A.	U.S Dollar	Banco Votorantim - Brazil		34		101		112		—		—		—		—		135		112	7.58%	Cesta+1.3%+spread 2%
—	Arauco Forest Brasil S.A.	Brazilian Real	Banco Bndes Subcrédito A-B-D		3		—		—		—		476		476		—		3		952	9.82%	Tljp + 2.91%
—	Arauco Forest Brasil S.A.	U.S Dollar	Banco Bndes Subcrédito C		4		—		—		—		132		145		12		4		289	7.19%	Cesta+2.91%
—	Arauco Forest Brasil S.A.	Brazilian Real	Banco Santander		53		1,958		116		90		74		38		—		2,011		318	9.72%	9.72%
—	Mahal Emprendimientos Pat. S.A.	Brazilian Real	Bndes Subcrédito E-I		22		—		3,142		3,142		—		—		—		22		6,284	9.91%	Tljp + 2.91%
—	Mahal Emprendimientos Pat. S.A.	Brazilian Real	Bndes Subcrédito F-J		14		—		1,886		1,886		—		—		—		14		3,772	10.91%	Tljp + 3.91%
—	Mahal Emprendimientos Pat. S.A.	U.S Dollar	Bndes Subcrédito G-K		61		—		1,867		2,037		170		—		—		61		4,074	7.19%	Cesta + 2.91%
—	Mahal Emprendimientos Pat. S.A.	Brazilian Real	Bndes Subcrédito H-L		19		—		2,095		2,095		—		—		—		19		4,190	12.61%	Tljp + 5.11%
—	Mahal Emprendimientos Pat. S.A.	Brazilian Real	Banco Santander		—		—		21		29		29		8		—		—		87	11.50%	Tljp+2%+Spread 2%
—	Mahal Emprendimientos Pat. S.A.	U.S Dollar	Banco Santander		—		—		9		13		13		3		—		—		38	8.32%	Cesta+2%+Spread 2%
—	Novo Oeste Gestao de Ativos Florestais S.A.	Brazilian Real	Banco Santander		1		—		19		30		30		8		—		1		87	11.00%	Tljp+2%+Spread 2%
—	Novo Oeste Gestao de Ativos Florestais S.A.	U.S Dollar	Banco Santander		1		—		9		13		13		4		—		1		39	8.28%	Tljp+2%+Spread 2%
—	Flakeboard America Ltd	U.S Dollar	Banco del Estado de Chile		833		—		2,499		2,176		5,521		8,871		61,297		833		80,364	3.00%	Libor + 1.65%
			Total		118,079		95,780		403,010		101,593		80,506		65,110		97,258		213,859		747,477

113

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AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

September 30, 2017

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

September 30, 2017 - Unaudited				Maturity														Total				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		3,661		—		17,947		26,529		25,732		24,935		161,606		3,661		256,749		4.24	%		4.21	%
93.458.000-1	Celulosa Arauco y Constitución S.A.	UF	Barau-F		1,465		—		7,238		10,699		10,378		10,056		65,179		1,465		103,550		4.25	%		4.21	%
93.458.000-2	Celulosa Arauco y Constitución S.A.	UF	Barau-J		—		561		6,736		215,590		—		—		—		561		222,326		3.23	%		3.22	%
93.458.000-3	Celulosa Arauco y Constitución S.A.	UF	Barau-P		3,103		—		8,275		8,275		8,275		17,814		243,764		3,103		286,403		3.96	%		3.96	%
93.458.000-3	Celulosa Arauco y Constitución S.A.	UF	Barau-Q		11,691		10,447		22,773		22,151		21,529		—		—		22,138		66,453		2.96	%		2.98	%
93.458.000-3	Celulosa Arauco y Constitución S.A.	UF	Barau-R		3,728		—		7,455		7,455		7,455		7,455		304,888		3,728		334,708		3.57	%		3.57	%
93.458.000-3	Celulosa Arauco y Constitución S.A.	UF	Barau-S		1,869		—		4,985		4,985		4,985		4,985		222,596		1,869		242,536		2.44	%		2.89	%
93.458.000-1	Celulosa Arauco y Constitución S.A.	U.S. Dollar	Yankee Bonds 2019		—		6,142		534,833		—		—		—		—		6,142		534,833		7.26	%		7.25	%
93.458.000-1	Celulosa Arauco y Constitución S.A.	U.S. Dollar	Yankee 2021		—		3,889		20,000		20,000		407,540		—		—		3,889		447,540		5.02	%		5.00	%
93.458.000-1	Celulosa Arauco y Constitución S.A.	U.S. Dollar	Yankee 2022		—		5,278		23,750		23,750		23,750		505,939		—		5,278		577,189		4.77	%		4.75	%
93.458.000-1	Celulosa Arauco y Constitución S.A.	U.S. Dollar	Yankee 2024		—		3,750		22,500		22,500		22,500		22,500		548,024		3,750		638,024		4.52	%		4.50	%
			Total		25,517		30,067		676,492		361,934		532,144		593,684		1,546,057		55,584		3,710,311

September 30, 2017				Maturity														Total				Total
Tax ID	Name	Currency	Name - country Leases	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		192		819		1,021		1,021		7		6		—		1,011		2,055		—		—
85.805.200-9	Forestal Arauco S.A.	UF	Banco Scotiabank		1,722		4,080		4,036		4,036		1,291		1,292		—		5,802		10,655		—		—
85.805.200-9	Forestal Arauco S.A.	UF	Banco Estado		706		2,060		2,335		2,335		418		419		—		2,766		5,507		—		—
85.805.200-9	Forestal Arauco S.A.	UF	Banco de Chile		3,287		9,086		7,832		7,832		4,199		4,199		—		12,373		24,062		—		—
85.805.200-9	Forestal Arauco S.A.	UF	Banco BBVA		1,338		3,714		911		911		—		—		—		5,052		1,822		—		—
85.805.200-9	Forestal Arauco S.A.	UF	Banco Credito e Inversiones		1,358		6,021		5,005		5,006		5,618		5,618		—		7,379		21,247		—		—
85.805.200-9	Forestal Arauco S.A.	Chilean Pesos	Banco Santander		48		64		—		—		—		—		—		112		—		—		—
85.805.200-9	Forestal Arauco S.A.	Chilean Pesos	Banco Chile		585		1,739		1,054		1,054		211		212		—		2,324		2,531		—		—
85.805.200-9	Forestal Arauco S.A.	Chilean Pesos	Banco Credito e Inversiones		744		2,217		2,956		2,956		507		508		—		2,961		6,927		—		—
85.805.200-9	Forestal Arauco S.A.	Chilean Pesos	Banco Scotiabank		81		241		322		322		268		268		—		322		1,180		—		—
			Total		10,061		30,041		25,472		25,473		12,519		12,522		—		40,102		75,986

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.

114

CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

September 30, 2017

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

December 31, 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.$		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		—		36		302,242		—		—		—		—		36		302,242		1.63	%		1.63	%
—	Arauco Argentina S.A.	U.S. Dollar	Banco Galicia-Argentina		5,031		—		—		—		—		—		—		5,031		—		2.00	%		2.00	%
—	Arauco Argentina S.A.	Argentine Pesos	Banco Macro- Argentina		11		29		—		—		—		—		—		40		—		15.25	%		15.25	%
—	Zona Franca Punta Pereira	U.S. Dollar	Interamerican Development Bank		1,178		1,027		2,450		2,387		2,324		2,256		4,302		2,205		13,719		Libor + 2.05	%		Libor + 2.05	%
—	Zona Franca Punta Pereira	U.S. Dollar	Interamerican Development Bank		2,990		2,782		5,997		5,830		5,664		—		—		5,772		17,491		Libor + 1.80	%		Libor + 1.80	%
—	Zona Franca Punta Pereira	U.S. Dollar	BBVA		16,176		—		—		—		—		—		—		16,176		—		3.23	%		Libor + 2	%
—	Zona Franca Punta Pereira	U.S. Dollar	Citibank		—		2,501		—		—		—		—		—		2,501		—		2.95	%		Libor + 1.75	%
—	Zona Franca Punta Pereira	U.S. Dollar	Scotiabank		2,501		—		—		—		—		—		—		2,501		—		1.60	%		1.60	%
—	Celulosa y Energia Punta Pereira	U.S. Dollar	Banco Interamericano de Desarrollo		4,768		4,143		9,895		9,637		9,379		9,096		17,371		8,911		55,378		3.30	%		Libor + 2.05	%
—	Celulosa y Energia Punta Pereira	U.S. Dollar	Banco Interamericano de Desarrollo		12,104		11,237		24,249		23,568		22,888		—		—		23,341		70,705		3.05	%		Libor + 1.80	%
—	Celulosa y Energia Punta Pereira	U.S. Dollar	Finnish Export Credit		25,474		20,774		43,915		44,538		45,209		45,882		70,166		46,248		249,710		3.20	%		3.20	%
—	Celulosa y Energia Punta Pereira	U.S. Dollar	Dnb Nor Bank		89		—		—		—		—		—		—		89		—		Libor + 2.00	%		Libor + 2.00	%
—	Eufores S.A.	U.S. Dollar	Banco Republica Oriental de Uruguay		24,733		12,563		—		—		—		—		—		37,296		—		Libor + 1.75	%		Libor + 1.75	%
—	Eufores S.A.	U.S. Dollar	Citibank		5		—		—		—		—		—		—		5		—		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		10,135		5,003		—		—		—		—		—		15,138		—		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		22,735		—		—		—		—		—		—		22,735		—		Libor + 2.00	%		Libor + 2.00	%
—	Arauco Do Brasil S.A.	Brazilian Real	Banco ABC - Brazil		7		18		—		—		—		—		—		25		—		2.50	%		2.50	%
—	Arauco Do Brasil S.A.	Brazilian Real	Banco Itau		2,713		321		—		—		—		—		—		3,034		—		9.50	%		9.50	%
—	Arauco Do Brasil S.A.	Brazilian Real	Banco Votorantim		13		25		—		—		—		—		—		38		—		5.50	%		5.50	%
—	Arauco Do Brasil S.A.	Brazilian Real	Banco Santander		2		46		100		100		57		7		—		48		264		9.34	%		9.34	%
—	Arauco Florestal Arapoti S.A.	Brazilian Real	Banco Itau		2		6		1		—		—		—		—		8		1		2.50	%		2.50	%
—	Arauco Florestal Arapoti S.A.	Brazilian Real	Banco Itau		13		38		51		4		—		—		—		51		55		3.50	%		3.50	%
—	Arauco Florestal Arapoti S.A.	Brazilian Real	Banco Bradesco		11		33		44		37		—		—		—		44		81		6.00	%		6.00	%
—	Arauco Florestal Arapoti S.A.	Brazilian Real	Banco Bradesco		400		—		—		—		—		—		—		400		—		8.75	%		8.75	%
—	Arauco Florestal Arapoti S.A.	Brazilian Real	Banco Votorantim		17		—		—		—		—		369		369		17		738		5.00	%		5.00	%
—	Arauco Florestal Arapoti S.A.	Brazilian Real	Banco Safra		22		66		88		22		—		—		—		88		110		6.00	%		6.00	%
—	Arauco Florestal Arapoti S.A.	Brazilian Real	Banco Safra		8		21		27		27		27		11		—		29		92		10.00	%		10.00	%
—	Arauco Florestal Arapoti S.A.	Brazilian Real	Banco Santander		1		16		16		16		8		—		—		17		40		9.00	%		9.00	%
—	Arauco Florestal Arapoti S.A.	Brazilian Real	Banco Santander		5		18		30		30		19		8		—		23		87		9.22	%		9.22	%
—	Arauco Forest Brasil S.A.	Brazilian Real	Banco Bradesco		20		57		77		23		—		—		—		77		100		5.91	%		5.91	%
—	Arauco Forest Brasil S.A.	U.S. Dollar	Banco Alfa		—		5		9		9		9		5		—		5		32		7.94	%		7.94	%
—	Arauco Forest Brasil S.A.	Brazilian Real	Banco Alfa		—		12		23		23		23		11		—		12		80		11.30	%		11.30	%
—	Arauco Forest Brasil S.A.	Brazilian Real	Banco Itau -Brazil		4		12		1		2		—		—		—		16		3		2.50	%		2.50	%
—	Arauco Forest Brasil S.A.	Brazilian Real	Banco Votorantim- Brazil		195		520		694		405		—		327		327		715		1,753		8.59	%		8.59	%
—	Arauco Forest Brasil S.A.	U.S. Dollar	Banco Votorantim - Brazil		35		101		134		78		—		—		—		136		212		7.44	%		7.44	%
—	Arauco Forest Brasil S.A.	Brazilian Real	Banco Bndes Subcrédito A-B-D		4		—		—		—		114		460		346		4		920		9.82	%		9.82	%
—	Arauco Forest Brasil S.A.	U.S. Dollar	Banco Bndes Subcrédito C		4		—		—		—		24		144		120		4		288		7.05	%		7.05	%
—	Arauco Forest Brasil S.A.	Brazilian Real	Banco Santander		1		32		—		—		—		—		—		33		—		9.32	%		9.32	%
—	Arauco Forest Brasil S.A.	Brazilian Real	Banco John Deere		62		41		41		32		10		—		—		103		83		6.00	%		6.00	%
—	Mahal Emprendimientos Pat. S.A.	Brazilian Real	Bndes Subcrédito E-I		23		—		758		3,030		2,272		—		—		23		6,060		8.91	%		8.91	%
—	Mahal Emprendimientos Pat. S.A.	Brazilian Real	Bndes Subcrédito F-J		16		—		454		1,818		1,363		—		—		16		3,635		9.91	%		9.91	%
—	Mahal Emprendimientos Pat. S.A.	U.S. Dollar	Bndes Subcrédito G-K		60		—		339		2,037		1,697		—		—		60		4,073		7.05	%		7.05	%
—	Mahal Emprendimientos Pat. S.A.	Brazilian Real	Bndes Subcrédito H-L		19		—		504		2,020		1,514		—		—		19		4,038		11.11	%		11.11	%
			Total		134,140		61,483		392,139		95,673		92,601		58,576		93,001		195,623		731,990

115

CELULOSA ARAUCO Y CONSTITUCION S.A.

AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

September 30, 2017

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

December 31, 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.$		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		—		1,931		11,587		29,091		27,486		33,383		180,490		1,931		282,037		4.24	%		4.21	%
93.458.000-2	Celulosa Arauco y Constitución S.A.	UF	Barau-J		2,115		—		6,344		6,344		203,030		—		—		2,115		215,718		3.23	%		3.22	%
93.458.000-3	Celulosa Arauco y Constitución S.A.	UF	Barau-P		—		996		7,794		7,794		7,794		7,794		242,571		996		273,747		3.96	%		3.96	%
93.458.000-3	Celulosa Arauco y Constitución S.A.	UF	Barau-Q		586		9,839		21,758		21,172		20,586		10,073		—		10,425		73,589		2.96	%		2.98	%
93.458.000-3	Celulosa Arauco y Constitución S.A.	UF	Barau-R		1,755		—		7,022		7,022		7,022		7,022		290,572		1,755		318,660		3.57	%		3.57	%
93.458.000-3	Celulosa Arauco y Constitución S.A.	UF	Barau-S		—		600		4,695		4,695		4,695		4,695		210,785		600		229,565		2.44	%		2.89	%
—	Arauco Argentina S.A.	U.S. Dollar	Bono 144 A –Argentina		—		270,787		—		—		—		—		—		270,787		—		6.39	%		6.38	%
93.458.000-1	Celulosa Arauco y Constitución S.A.	U.S. Dollar	Yankee Bonds 2019		15,205		—		36,250		534,254		—		—		—		15,205		570,504		7.26	%		7.25	%
93.458.000-1	Celulosa Arauco y Constitución S.A.	U.S. Dollar	Yankee Bonds 2nd Emission		2,734		124,949		—		—		—		—		—		127,683		—		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		406,926		—		8,889		466,926		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		504,895		11,215		599,895		4.77	%		4.75	%
93.458.000-1	Celulosa Arauco y Constitución S.A.	U.S. Dollar	Yankee 2024		9,376		—		22,500		22,500		22,500		22,500		569,625		9,376		659,625		4.52	%		4.50	%
			Total		51,875		409,102		161,700		676,622		336,863		516,143		1,998,938		460,977		3,690,266

December 31, 2016				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		237		1,616		—		1,179		—		1,201		—		1,853		2,380		—		—
85.805.200-9	Forestal Arauco S.A.	UF	Banco Scotiabank		1,571		4,970		—		7,731		—		4,259		—		6,541		11,990		—		—
85.805.200-9	Forestal Arauco S.A.	UF	Banco Estado		645		2,008		—		5,092		—		2,035		—		2,653		7,127		—		—
85.805.200-9	Forestal Arauco S.A.	UF	Banco de Chile		3,294		10,861		—		16,861		—		8,906		—		14,155		25,767		—		—
85.805.200-9	Forestal Arauco S.A.	UF	Banco BBVA		1,673		5,030		—		4,663		—		183		—		6,703		4,846		—		—
85.805.200-9	Forestal Arauco S.A.	UF	Banco Credito e Inversiones		982		2,994		—		7,501		—		2,824		—		3,976		10,325		—		—
85.805.200-9	Forestal Arauco S.A.	Chilean Pesos	Banco Santander		46		138		—		61		—		—		—		184		61		—		—
85.805.200-9	Forestal Arauco S.A.	Chilean Pesos	Banco Chile		439		1,317		—		2,418		—		929		—		1,756		3,347		—		—
85.805.200-9	Forestal Arauco S.A.	Chilean Pesos	Banco Credito e Inversiones		647		1,932		—		5,053		—		2,690		—		2,579		7,743		—		—
			Total		9,534		30,866		—		50,559		—		23,027		—		40,400		73,586

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.

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September 30, 2017

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 MU.S.$57 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 September 30, 2017, the total assets pledged as an indirect guarantee were MU.S.$495. 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 MU.S.$454 and the Finnevera Guaranteed Facility Agreement in the amount of up to MU.S.$900. 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	129	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	313	Directorate General of Maritime Territory and Merchant Marine
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	209	Directorate General of Maritime Territory and Merchant Marine
Celulosa Arauco y Constitución S.A.	Guarantee letter	—	Chilean Pesos	100	National Customs Service
Arauco Forest Brasil S.A.	Equipment	Property plant and equipment	U.S. Dollar	140	Bank Bradesco S.A.
Arauco Forest Brasil S.A.	Equipment	Property plant and equipment	U.S. Dollar	102	Bank Bradesco S.A.
Arauco Forest Brasil S.A.	Equipment	Property plant and equipment	U.S. Dollar	234	Bank Santander S.A.
Arauco Forest Brasil S.A.	Endorsement of Arauco do Brasil	—	U.S. Dollar	673	Bank Votorantim S.A.
Arauco Forest Brasil S.A.	Endorsement of ADB + Guarantee Letter AISA	—	U.S. Dollar	3.696	Bank Votorantim S.A.
Arauco Forest Brasil S.A.	Mortgage Industrial Plant of Jaguariaíva of Arauco do Brasil	—	U.S. Dollar	48.394	BNDES
Arauco do Brasil S.A.	Equipment	Property plant and equipment	U.S. Dollar	109	Bank ABC Brasil S.A.
Arauco do Brasil S.A.	Equipment	Property plant and equipment	U.S. Dollar	219	Bank Santander S.A.
Arauco do Brasil S.A.	Equipment	Property plant and equipment	U.S. Dollar	215	Bank Alpha S.A.
Arauco Florestal Arapoti S.A.	Endorsement of Arauco do Brasil	—	U.S. Dollar	759	Bank Votorantim S.A.
Arauco Florestal Arapoti S.A.	Equipment	Property plant and equipment	U.S. Dollar	210	Bank Itaú BBA S.A.
Arauco Florestal Arapoti S.A.	Equipment	Property plant and equipment	U.S. Dollar	406	Bank Safra S.A.
Arauco Florestal Arapoti S.A.	Equipment	Property plant and equipment	U.S. Dollar	100	Bank Bradesco S.A.
Arauco Bioenergía S.A.	Guarantee letter	—	Chilean Pesos	185	Minera Escondida Ltda.
Arauco Bioenergía S.A.	Guarantee letter	—	Chilean Pesos	121	CODELCO S.A.
		Total		57.032

INDIRECT

Subsidiary	Guarantee	Assets Pledged	Currency	ThU.S.$	Guarantor
Celulosa Arauco y Constitución S.A.	Suretyship not supportive and cumulative	—	U.S. Dollar	408.351	Joint Ventures (Uruguay)
Celulosa Arauco y Constitución S.A.	Full Guarantee	—	U.S. Dollar	67.000	Arauco Forest Brasil y Mahal (Brasil)
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	15.201	Arauco Forest Brasil y Mahal (Brasil)
		Total		494.914

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.

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September 30, 2017

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

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 effect of this variable on equity and net result.

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 year after tax +/- 1.94% (equivalent to ThU.S.$ -/+ 7,501), and +/- 0.06% of equity (equivalent to ThU.S.$ -/+ 4,500).

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.$ 1,106) and a change on the equity of +/- 0.01% (equivalent to ThU.S.$ -/+ 663).

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September 30, 2017

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

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.

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 September 30, 2017, 15.2% 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 +/- 0.24% (equivalent to ThU.S.$-/+ 917) and +/- 0.01% (equivalent to ThU.S.$-/+ 550) on equity.

	September 2017 Unaudited ThU.S.$		Total
Fixed rate		3,531,284		84.8	%
Bonds issued		3,110,989
Bank borrowings (*)		304,207
Financial leasing		116,088
Variable rate		633,523		15.2	%
Bonds issued		—
Loans with Banks		633,523
Total		4,164,807		100.0	%
	December 2016 ThU.S.$		Total
Fixed rate		3,903,942		87.1	%
Bonds issued		3,452,659
Bank borrowings (*)		337,297
Financial leasing		113,986
Variable rate		577,061		12.9	%
Bonds issued		—
Bank borrowings		577,061
Total		4,481,003		100.0	%

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

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September 30, 2017

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

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 September 30, 2017, revenue due to pulp sales accounted for 46.4% 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.

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 a variation of +/- 45.89% (equivalent to ThU.S.$ 177.3) on the income for the year after tax and +/- 1.49% (equivalent to ThU.S.$106.4) on equity.

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September 30, 2017

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

NOTE 24. REPORTABLE SEGMENTS

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

• Pulp: The main products sold by this reportable 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 reportable 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 reportable 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 reportable segment.

Pulp

The Pulp reportable 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 reportable 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.

Through the Sonae Arauco joint venture (Note 16), it manufactures and commercializes MDF, PB and OSB wood panels, as well as sawn lumber, by operating 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 total, Sonae Arauco’s production capacity is approximately 1.38 million m3 of MDF, 1.74 million m3 of PB, 485,000 m3 of OSB and 101,000 m3 of sawn lumber.

The Sawn Timber reportable 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.

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September 30, 2017

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

With 8 saw mills in operation (7 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 reportable 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 1.7 million hectares as of September 30, 2016, of which 1 million hectares are used for plantations, 431 thousand hectares for native forests, 194 thousand hectares for other uses and 81 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:

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Unaudited Interim Consolidated Financial Statements

September 30, 2017

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

Period ended September 30, 2017	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		1,814,458		83,799			1,979,720		29,062		—			3,907,039			—			3,907,039
Revenues from transactions with other operating segments		32,503		814,749			4,738		25,946		—			877,936			(877,936	)		—
Finance income		—		—			—		—		15,651			15,651			—			15,651
Finance costs		—		—			—		—		(171,766	)		(171,766	)		—			(171,766	)
Net finance costs		—		—			—		—		(156,115	)		(156,115	)		—			(156,115	)
Depreciation and amortizations		181,024		16,046			107,311		2,685		5,197			312,263			—			312,263
Sum of significant income accounts		576		70,193			261		—		—			71,030			—			71,030
Sum of significant expense accounts		—		173,867			1,557		—		—			175,424			—			175,424
Profit (loss) of each reportable segment		395,611		(147,851	)		191,451		5,154		(257,167	)		187,198			—			187,198
Share of profit (loss) of associates and joint ventures accounted for using equity method
Associates		—		—			—		—		5,006			5,006			—			5,006
Joint ventures		—		—			12,150		—		1,423			13,573			—			13,573
Income tax expense		—		—			—		—		(64,005	)		(64,005	)		—			(64,005	)
Geographical information on revenues
Revenue – Chilean entities		1,199,624		43,396			993,999		428		—			2,237,447			—			2,237,447
Revenue – Foreign entities		614,834		40,403			985,721		28,634		—			1,669,592			—			1,669,592
Total Ordinary Income		1,814,458		83,799			1,979,720		29,062		—			3,907,039			—			3,907,039

Period ended September 30, 2017	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		126,475		146,165		145,815		376		2,242		421,073		—		421,073
Acquisition and contribution of investments in associates and joint venture		—		—		—		—		—		—		—		—

Period ended September 30, 2017	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		5,154,159		5,402,685		2,577,933		52,188		732,322		13,919,287		(45,862	)		13,873,425
Segments assets (excluding deferred tax assets)		5,154,159		5,402,685		2,577,933		52,188		724,749		13,911,714		(45,862	)		13,865,852
Deferred tax assets		—		—		—		—		7,573		7,573		—			7,573
Investments accounted through equity method
Associates		—		52,534		—		—		107,769		160,303		—			160,303
Joint Ventures		—		—		181,517		—		19,876		201,393		—			201,393
Segment liabilities		617,679		157,126		314,639		11,089		5,657,462		6,757,995		—			6,757,995
Segments liabilities (excluding deferred tax liabilities)		617,679		157,126		314,639		11,089		4,053,017		5,153,550		—			5,153,550
Deferred tax liabilities		—		—		—		—		1,604,445		1,604,445		—			1,604,445
Geographical information on non-current assets
Chile		2,590,828		3,265,302		685,263		22,483		156,462		6,720,338		(4,885	)		6,715,453
Foreign countries		1,708,899		1,596,177		1,125,968		21,571		32,674		4,485,289		—			4,485,289
Non-current assets, Total		4,299,727		4,861,479		1,811,231		44,054		189,136		11,205,627		(4,885	)		11,200,742

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Unaudited Interim Consolidated Financial Statements

September 30, 2017

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

Period ended September 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.$
Revenues from external customers		1,588,710		68,976		1,865,010			18,085			—			3,540,781			—			3,540,781
Revenues from transactions with other operating segments		31,155		802,896		5,128			24,810			—			863,989			(863,989	)		—
Finance income		—		—		—			—			25,759			25,759			—			25,759
Finance costs		—		—		—			—			(200,455	)		(200,455	)		—			(200,455	)
Net finance costs		—		—		—			—			(174,696	)		(174,696	)		—			(174,696	)
Depreciation and amortizations		176,355		14,927		103,839			1,925			4,741			301,787			—			301,787
Sum of significant income accounts		88		152,840		243			—			—			153,171			—			153,171
Sum of significant expense accounts		—		—		12,007			—			—			12,007			—			12,007
Profit (loss) of each reportable segment		244,782		69,610		120,543			(2,754	)		(290,370	)		141,811			—			141,811
Share of profit (loss) of associates and joint ventures accounted for using equity method
Associates		—		—		—			—			12,170			12,170			—			12,170
Joint ventures		—		—		(180	)		—			2,013			1,833			—			1,833
Income tax expense		—		—		—			—			(57,394	)		(57,394	)		—			(57,394	)
Geographical information on revenues
Revenue – Chilean entities		1,293,961		34,873		946,635			480			—			2,275,949			—			2,275,949
Revenue – Foreign entities		294,749		34,103		918,375			17,605			—			1,264,832			—			1,264,832
Total Ordinary Income		1,588,710		68,976		1,865,010			18,085			—			3,540,781			—			3,540,781

Period ended September 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.$
Amounts of additions to non-current assets
Acquisition of property,plant and equipment and biological assets		137,323		139,121		68,344		1,494		1,919		348,201		—		348,201
Acquisition and contribution of investments in associates and joint venture		—		—		153,135		—		—		153,135		—		153,135

Year ended December 31, 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 assets		5,077,300		5,492,364		2,515,092		30,970		932,059		14,047,785		(41,604	)		14,006,181
Segments assets (excluding deferred tax assets)		5,077,300		5,492,364		2,515,092		30,970		925,962		14,041,688		(41,604	)		14,000,084
Deferred tax assets		—		—		—		—		6,097		6,097		—			6,097
Investments accounted through equity method
Associates		—		160,490		—		—		105,285		265,775		—			265,775
Joint Ventures		—		—		161,703		—		19,070		180,773		—			180,773
Segment liabilities		277,474		161,091		311,667		11,836		6,244,830		7,006,898		—			7,006,898
Segments liabilities (excluding deferred tax liabilities)		277,474		161,091		311,667		11,836		4,613,765		5,375,833		—			5,375,833
Deferred tax liabilities		—		—		—		—		1,631,065		1,631,065		—			1,631,065
Geographical information on non-current assets
Chile		2,572,702		3,509,727		721,418		27		135,808		6,939,682		(3,575	)		6,936,107
Foreign countries		1,740,559		1,525,190		1,016,633		23,040		42,292		4,347,714		—			4,347,714
Non-current assets, Total		4,313,261		5,034,917		1,738,051		23,067		178,100		11,287,396		(3,575	)		11,283,821

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September 30, 2017

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

Quarter July-September 2017	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		663,198		35,030		686,976		8,169			—			1,393,373			—			1,393,373
Revenues from transactions with other operating segments		11,620		279,794		1,611		9,927			—			302,952			(302,952	)		—
Finance income		—		—		—		—			3,334			3,334			—			3,334
Finance costs		—		—		—		—			(54,149	)		(54,149	)		—			(54,149	)
Net finance costs		—		—		—		—			(50,815	)		(50,815	)		—			(50,815	)
Depreciation and amortizations		63,350		5,605		38,912		896			1,731			110,494			—			110,494
Sum of significant income accounts		—		—		—		—			—			—			—			—
Sum of significant expense accounts		—		—		—		—			—			—			—			—
Profit (loss) of each reportable segment		152,013		17,998		75,636		(391	)		(96,853	)		148,403			—			148,403
Share of profit (loss) of associates and joint ventures accounted for using equity method
Associates		—		—		—		—			1,881			1,881			—			1,881
Joint ventures		—		—		4,583		—			545			5,128			—			5,128
Income tax expense		—		—		—		—			(52,185	)		(52,185	)		—			(52,185	)
Geographical information on revenues
Revenue – Chilean entities		445,613		8,672		347,028		120			—			801,433			—			801,433
Revenue – Foreign entities		217,585		26,358		339,948		8,049			—			591,940			—			591,940
Total Ordinary Income		663,198		35,030		686,976		8,169			—			1,393,373			—			1,393,373

Quarter July-September 2017	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		47,553		42,736		77,359		202		1,142		168,992		—		168,992
Acquisition and contribution of investments in associates and joint venture		—		—		—		—		—		—		—		—

125

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Unaudited Interim Consolidated Financial Statements

September 30, 2017

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

Quarter July-September 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.$
Revenues from external customers		521.428		21.925		638.065			6.052			—			1.187.470			—			1.187.470
Revenues from transactions with other operating segments		11.026		247.785		2.008			8.094			—			268.913			(268.913	)		—
Finance income		—		—		—			—			7.862			7.862			—			7.862
Finance costs		—		—		—			—			(64.685	)		(64.685	)		—			(64.685	)
Net finance costs		—		—		—			—			(56.823	)		(56.823	)		—			(56.823	)
Depreciation and amortizations		57.626		5.411		37.551			600			1.582			102.770			—			102.770
Sum of significant income accounts		—		45.805		100			—			—			45.905			—			45.905
Sum of significant expense accounts		—		—		655			—			—			655			—			655
Profit (loss) of each reportable segment		77.226		969		47.227			(1.037	)		(92.961	)		31.424			—			31.424
Share of profit (loss) of associates and joint ventures accounted for using equity method
Associates		—		—		—			—			3.384			3.384			—			3.384
Joint ventures		—		—		(21	)		—			609			588			—			588
Income tax expense		—		—		—			—			(17.842	)		(17.842	)		—			(17.842	)
Geographical information on revenues
Revenue – Chilean entities		416.910		8.348		318.165			164			—			743.587			—			743.587
Revenue – Foreign entities		104.518		13.577		319.900			5.888			—			443.883			—			443.883
Total Ordinary Income		521.428		21.925		638.065			6.052			—			1.187.470			—			1.187.470

Quarter July-September 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.$
Amounts of additions to non-current assets
Acquisition of property,plant and equipment and biological assets		61,913		42,547		23,674		226		646		129,006		—		129,006
Acquisition and contribution of investments in associates and joint venture		—		—		—		—		—		—		—		—

126

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AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

September 30, 2017

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

The following is a breakdown of the cash flows by segment, which data is presented in a complementary manner, as required pursuant to local requirements:

Period ended September 30, 2017	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		511,877			183,490			282,899			5,545			(251,746	)		732,065			—		732,065
Cash flows (used in) investing activities		(126,345	)		(128,424	)		(149,439	)		(1,499	)		446			(405,261	)		—		(405,261	)
Cash flows from (used in) Financing Activities		(86,116	)		(2,830	)		(2,056	)		—			(341,637	)		(432,639	)		—		(432,639	)
Net increase (decrease) in Cash and Cash Equivalents		299,416			52,236			131,404			4,046			(592,937	)		(105,835	)		—		(105,835	)

Period ended September 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		433,019			187,905			274,382			2,271			(300,203	)		597,374			—		597,374
Cash flows (used in) investing activities		(139,637	)		(115,312	)		(227,900	)		(1,494	)		1,939			(482,404	)		—		(482,404	)
Cash flows from (used in) Financing Activities		(92,006	)		5,772			(36,235	)		—			(25,683	)		(148,152	)		—		(148,152	)
Net increase (decrease) in Cash and Cash Equivalents		201,376			78,365			10,247			777			(323,947	)		(33,182	)		—		(33,182	)

Quarter July-September 2017	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		133,997			84,792			107,743			2,044			(82,471	)		246,105			—		246,105
Cash flows (used in) investing activities		(47,578	)		(40,971	)		(77,340	)		(682	)		5,477			(161,094	)		—		(161,094	)
Cash flows from (used in) Financing Activities		(43,057	)		(1,103	)		(4,086	)		—			(65,220	)		(113,466	)		—		(113,466	)
Net increase (decrease) in Cash and Cash Equivalents		43,362			42,718			26,317			1,362			(142,214	)		(28,455	)		—		(28,455	)

Quarter July-September 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		91,728			63,979			108,411			(1,095	)		(119,368	)		143,655			—		143,655
Cash flows (used in) investing activities		(62,244	)		(41,423	)		(25,066	)		(226	)		4,087			(124,872	)		—		(124,872	)
Cash flows from (used in) Financing Activities		(63,058	)		19,777			(282	)		—			(35,731	)		(79,294	)		—		(79,294	)
Net increase (decrease) in Cash and Cash Equivalents		(33,574	)		42,333			83,063			(1,321	)		(151,012	)		(60,511	)		—		(60,511	)

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AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

September 30, 2017

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

Information required by geographic area:

2017 Unaudited	Geographical area
	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		2,237,447		340,423		270,736		620,125		438,308		3,907,039
Revenues 3rd Quarter		801,433		111,558		113,173		206,802		160,407		1,393,373
Non-current Assets		6,710,551		954,094		1,246,104		495,408		1,787,012		11,193,169

2016 Unaudited	Geographical area
	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		2,275,949		271,821		272,331		589,696		130,984		3,540,781
Revenues 3rd Quarter		743,587		102,076		97,014		199,376		45,417		1,187,470
Non-current Assets		6,931,755		960,596		1,186,538		397,924		1,800,911		11,277,724

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AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

September 30, 2017

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

NOTE 25. OTHER NON-FINANCIAL ASSETS AND NON-FINANCIAL LIABILITIES

Current non-financial assets	09-30-2017 Unaudited ThU.S.$		12-31-2016 ThU.S.$
Roads to amortize current		45,494		41,812
Prepayment to amortize (insurance + others)		50,845		23,086
Recoverable taxes (Relating to purchases)		57,803		71,357
Other current non-financial assets		3,772		8,660
Total		157,914		144,915
Non current non-financial assets	09-30-2017 Unaudited ThU.S.$		12-31-2016 ThU.S.$
Roads to amortize, non current		113,780		121,894
Guarantee values		3,146		3,302
Recoverable taxes (Relating to purchases)		1,799		1,493
Other non-current non-financial assets		3,501		3,630
Total		122,226		130,319
Current non-financial liabilities	09-30-2017 Unaudited ThU.S.$		12-31-2016 ThU.S.$
Provision of minimum dividend (1)		121,532		60,312
ICMS tax payable		13,256		14,856
Other tax payable		14,252		16,202
Other Current non-financial liablilities		4,714		7,793
Total		153,754		99,163

(1) Provision includes a minimum dividend of subsidiary minority.

Non-current non-financial liabilities	09-30-2017 Unaudited ThU.S.$		12-31-2016 ThU.S.$
ICMS tax payable		62,155		58,606
Other non-current non-financial liablilities		2,009		2,027
Total		64,164		60,633

129

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AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

September 30, 2017

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

NOTE 26. DISTRIBUTABLE NET PROFIT AND EARNINGS PER SHARE

Distributable net profit

As a general policy, the Board of Directors of Arauco agreed that the net profit 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 profit during the period such changes are made.

As a result of the foregoing, for purposes of determining the distributable net profit 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 profit 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 profit 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 profit 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 profit as September 30, 2017 and 2016 in order to determine the provision of 40% of the distributable net profit for each year:

	Distributable Net Income ThU.S.$
Net profit attributable to owners of parent at 09-30-2017		186,818
Adjustments:
Biological Assets
Unrealized gains/losses		(100,976	)
Realized gains/losses		253,816
Deferred income taxes		(37,190	)
Total adjustments		115,650
Distributable Net Profit at 09-30-2017		302,468

	Distributable Net Income ThU.S.$
Net Profit attributable to owners of parent at 09-30-2016		140,222
Adjustments:
Biological Assets
Unrealized gains/losses		(138,439	)
Realized gains/losses		150,696
Deferred income taxes		(4,618	)
Total adjustments		7,639
Distributable Net Profit at 09-30-2016		147,861

130

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AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

September 30, 2017

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

The Company expects to maintain its policy of distributing 40% of its net distributable profit as dividends for all future fiscal years, but will also consider the alternative of distributing a provisional dividend at year end.

As of September 30, 2017 in the Interim Classified Statements of Financial Position, under the line item Other non-current non-financial liabilities for an amount of ThU.S.$153,754, a total of ThU.S.$120,986 correspond to a provision for the minimum dividend for the 2017 period.

Basic and diluted earnings per share

Basic and diluted 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-September				July-September
	Unaudited
	2017 ThU.S.$		2016 ThU.S.$		2017 ThU.S.$		2016 ThU.S.$
Profit or loss attributable to ordinary equity holder of parent		186,818		140,222		148,427		31,138
Weighted average of number of shares		113,159,655		113,159,655		113,159,655		113,159,655
Basic and diluted earnings per share (in U.S.$ per share)		1.6509241		1.2391519		1.3116601		0.2751687

131

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AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

September 30, 2017

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

NOTE 27. SUBSEQUENT EVENTS

1) On October 26, 2017, Celulosa Arauco y Constitución S.A. has proceeded to fix the price and conditions of two series of bonds that were issued in the international capital markets on November 2, 2017. The maturity date of the bonds for one series (the 10-year term Series) is November 2, 2027, while the maturity date of the bonds of the other series (the 30-year term Series) is November 2, 2047.

The amount of the issuance for the 10-year Series is US$500,000,000, while the amount of the 30-year Series is US$400,000,000, being the total amount of the issuance US$900,000,000. The interest rate is 3.875% per annum for the 10-year Series and 5.500% for the 30-year Series. The principal shall be paid on the respective above-mentioned maturity dates of the 10-year and 30-year bonds, while interest shall be paid semi-annually.

The funds resulting from the issuance will be used for to repurchase part of existing bonds issued by the Company and the remaining funds will be used for other corporate purposes.

Arauco estimates that the information contained herein should bring about positive effects to the Company in the future, although it is not possible to quantify these effects at this time.

2) The issuance of these interim consolidated financial statements for the period between January 1 and September 30, 2017 were approved by the Board at the Extraordinary Meeting No.580 held November 14, 2017.

Subsequent to September 30, 2017 and until the date of issuance of these interim consolidated financial statements, there have been no financial or other events to report.

132

CELULOSA ARAUCO Y CONSTITUCIÓN S.A. Third Quarter 2017 Results November 16, 2017 renewables for a better life

HIGHLIGHTS REVENUES U.S.$ 1,393.4 MILLION Arauco’s revenues reached U.S.$ 1,393.4 million during the third quarter of 2017, a 8.9% increase compared to the U.S.$ 1,279.9 million obtained in the second quarter of 2017. NET INCOME U.S.$ 148.4 MILLION Net income reached U.S.$ 148.4 million, an increase of 76.5% or U.S.$ 64.3 million compared to the U.S.$ 84.1 million obtained in the second quarter of 2017. ADJUSTED EBITDA U.S.$ 385.3 MILLION Adjusted EBITDA reached U.S.$ 385.3 million, an increase of 15.2% or U.S.$ 50.7 million compared to the U.S.$ 334.6 million obtained during the second quarter of 2017. Accumulated up to September, Adjusted EBITDA reached U.S.$1,011.5 million, an increase of 27.7% or U.S.$ 219.2 million compared to the U.S.$ 792.3 million obtained during the first nine months of 2016. NET FINANCIAL DEBT/ LTM ADJUSTED EBITDA Net Financial Debt / LTM(1) Adjusted EBITDA ratio reached 2.9x in this quarter, a decrease compared to the 3.3x obtained in the second quarter of 2017. (1) LTM = Last Twelve Months CAPEX CAPEX reached U.S.$ 169.0 million, an increase of 27.8% or U.S.$ 36.7 million compared to the U.S.$ 132.2 million during the second quarter of 2017. Conference Call Monday, November 20th, 2017 17:00 Santiago Time 15:00 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: Marcelo Bennett marcelo.bennett@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 During this quarter, Arauco attained an overall EBITDA margin of 27.6%, preserving the upward trend we have been able to keep during this whole year. Pulp prices, which had a swift increase during the first semester of the year, consolidated their new price levels during the third quarter, increasing slightly by 2.0% compared to last quarter. Sales of our wood products also increased during the quarter, thanks to higher sales volume, partially offset by a decrease in average prices. Supply in the pulp market tightened thanks to supply disruptions and up ticking demand in China even after a seasonally strong demand during the summer months. Price hikes took up once again during the month of September after remaining fairly stable the first two months of the quarter. The ban on unsorted paper waste was also a factor that enabled prices to continue at their new levels. In Europe, overall economic growth beat forecasts and prices continued to follow developments in China. Our wood products segment increased its EBITDA margin with higher sales volume, especially from our value-added products. Forecasts for the economy in the United States was fairly optimistic, even after hurricane Irma and Harvey hit the East coast during the month of September. One deterrent for price hikes were the new MDF mills in Brazil and Mexico which maintain a heightened level of competition in the region. Arauco´s Free Cash Flow reached U.S.$ 86.9 million during the quarter, even with an increase in CAPEX as the Grayling Project continues its construction phase. In U.S. Million Q3 2017 Q2 2017 Q3 2016 QoQ YoY YTD 2017 YTD 2016 YoY Acum Revenue 1,393.4 1,279.9 1,187.5 8.9% 17.3% 3,907.0 3,540.8 10.3% Net income 148.4 84.1 31.4 76.5% 372.3% 187.2 141.8 32.0% Adjusted EBITDA 385.3 334.6 256.1 15.2% 50.4% 1,011.5 792.3 27.7% Adjusted EBITDA 27.6% 26.1% 21.6% 5.8% 28.2% 25.9% 22.4% 15.7% Margin LTM Adj. EBITDA 1,271.3 1,142.2 1,081.4 11.3% 17.6% 1,271.3 1,081.4 17.6% CAPEX 169.0 132.2 129.0 27.8% 31.0% 421.1 501.3 -16.0% Net Financial Debt 3,679.2 3,735.8 3,882.9 -1.5% -5.2% 3,679.2 3,882.9 -5.2% Net Financial Debt / 2.9x 3.3x 3.6x -11.5% -19.5% 2.9x 3.6x -19.5% LTM Adj. EBITDA Adjusted EBITDA and EBITDA Margin (In U.S.$ Million) 26.1% 27.6% 24.0% 23.5% 23.6% 22.1% 21.6% 21.3% 385.3 15.0% 334.6 289.1 283.4 291.7 252.8 256.1 259.8 10.0% Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017 FY 2015 FY 2016 YTD 2017 1,282.4 1,052.2 1,011.5 3

INCOME STATEMENT Net income for the third quarter of 2017 was U.S.$ 148.4 million, an increase of 76.5% or U.S.$ 64.3 million compared to the U.S.$ 84.1 million obtained in the second quarter of this year. In U.S.$ Million Q3 2017 Q2 2017 QoQ Revenues 1,393.4 1,279.9 8.9% Cost of sales(940.3)(877.7) 7.1% Distribution costs(138.3)(128.1) 7.9% Administrative expenses(123.7)(127.2) -2.8% Other income 42.2 32.6 29.5% Other expenses 8.2(8.1) -201.2% Financial income 3.3 5.9 -43.5% Financial costs(54.1)(57.7) -6.2% Participation in (loss) profit in associates and joint 7.0 3.4 103.8% ventures accounted through equity method Exchange rate differences 2.9(1.6) -277.0% Income before income tax 200.6 121.5 65.1% Income tax(52.2)(37.4) 39.4% Net income 148.4 84.1 76.5% Revenues reached U.S.$ 1,393.4 million during the third quarter of 2017 compared with the U.S.$ 1,279.9 million in the previous quarter, as a result of an increase in sales from our pulp, wood products and forestry sector. Revenues from our pulp segment also rose thanks to higher average pulp prices which increased by 2.0% compared to last quarter, and 15.0% when compared to the third quarter of 2016. Wood products revenues were driven by an increased sales volume of 5.6% compared to last quarter. Forestry revenues increased 20.2% as our pulp segment increased sales volume in both pulp and wood products segments. Energy sales overall decreased 38.7%, with prices being the main driver as energy spot prices in Chile sunk after a fairly wet season during the winter months. The following table shows a breakdown of our revenue sales distributed by business segment: In U.S.$ Million Q3 2017 Q2 2017 QoQ Pulp(*) 663.2 587.7 12.9% Wood Products(*) 687.0 652.7 5.2% Forestry 35.0 29.1 20.2% Others 8.2 10.4 -21.5% Total 1,393.4 1,279.9 8.9% (*) Pulp and Wood division sales include energy Sales by Business Segment 3Q 2017 Forestry Others 2.5% 0.6% Wood(*) Pulp(*) 49.3% 47.6% 4

Cost of sales for the third quarter of the year reached U.S.$ 940.3 million, U.S.$ 62.7 million or 7.1% higher than the U.S.$ 877.7 million obtained in the second quarter of 2017. Many of our costs increased with the rise in sales volume from our pulp and wood products segment. In particular, forestry costs increased by 18.3% compared to last quarter due to various factors: (i) an increase in the harvest of forests that were burnt during the summer months; (ii) an increase in the costs of roads, since harvesting during the winter months implies a higher use of asphalt roads; and (iii) an increase in the average distance of forests harvested to mills during this quarter. In U.S.$ Million Q3 2017 Q2 2017 QoQ Timber 178.7 189.9 -5.9% Forestry costs 179.1 151.5 18.3% Depreciation and amortization 102.9 89.9 14.5% Maintenance costs 69.6 65.5 6.2% Chemical costs 132.8 128.2 3.6% Sawmill services 30.9 25.4 21.9% Other raw materials and indirect costs 98.4 88.5 11.2% Energy and fuel 51.1 43.4 17.7% Cost of electricity 9.8 13.9 -29.6% Wage, salaries and severance indemnities 86.9 81.6 6.6% Cost of Sales 940.3 877.7 7.1% Administrative expenses have remained stable throughout each quarter of this year, overall decreasing by 2.8% or U.S.$ 3.5 million compared to the second quarter of the year. Computer services had the largest percentual decrease, after many licensing expenses were paid during the second quarter of the year. Other items did not fluctuate more than U.S.$ 3.4 million during the quarter. In U.S.$ Million Q3 2017 Q2 2017 QoQ Wage, salaries and severance indemnities 55.7 53.3 4.6% Marketing, advertising, promotion and 2.1 2.7 -21.0% publications expenses Insurance 3.9 5.0 -21.4% Depreciation and amortization 6.9 6.7 2.4% Computer services 5.6 8.2 -30.9% Lease rentals (offices, warehouses and machinery) 3.3 4.1 -19.1% Donations, contributions, scholarships 1.8 1.5 21.6% Fees (legal and technical advisories) 10.6 8.1 31.9% Property taxes, patents and municipality rights 4.4 5.1 -14.0% Other administration expenses 29.2 32.6 -10.3% Administrative Expenses 123.7 127.2 -2.8% 5

Distribution costs increased 7.9% or U.S.$ 10.2 million. In general, all variations are directly affected by an increase in sales volume from our pulp and wood products segment during the quarter. In U.S.$ Million Q3 2017 Q2 2017 QoQ Commissions 4.1 3.0 39.5% Insurance 0.8 0.8 -1.5% Other selling costs 5.3 5.5 -2.6% Port services 8.0 7.5 5.4% Freights 101.3 95.3 6.3% Other shipping and freight costs 18.8 16.1 16.9% Distribution Costs 138.3 128.1 7.9% As a percentage, administrative expenses and distribution costs combined were 18.8% of sales, showing a downward trend compared to the 19.9% in the previous quarter, and a downward trend compared to 19.8% in the quarter before that. Other income rose 29.5% or U.S.$ 9.6 million this quarter compared to the second quarter of 2017. Gain from changes in fair value of biological assets increased by U.S.$ 9.9 million compared to last quarter due to the adjustments made during the second quarter for the total year. The rest of the items did not suffer any major fluctuations. In U.S.$ Million Q3 2017 Q2 2017 QoQ Gain from changes in fair value of biological assets 33.9 24.0 41.0% Net income from insurance compensation 1.1 0.2 366.7% Leases received 0.9 1.2 -29.6% Gains on sales of assets 4.9 2.8 73.9% Access easement - 0.4 -100.0% Other operating results 1.5 3.9 -61.9% Other Income 42.2 32.6 29.5% 6

Other expenses fell overall 201.2% or U.S.$ 16.2 million compared to last quarter. The provision for forestry fire losses was decreased by U.S.$ 34.5 million due to the insurance payment that was provisioned during the third quarter. The payment of the insurance was finally received during October of this year. In U.S.$ Million Q3 2017 Q2 2017 QoQ Depreciation 0.6 0.4 45.3% Legal payments 0.5 1.1 -55.2% Impairment provision property, plant and 1.5 1.8 -13.3% equipment and others Plants stoppage operating expenses 1.0 1.1 -10.3% Project expenses 0.1(0.0) -685.8% Gain (loss) from asset sales 1.9 2.0 -7.8% Loss of assets 0.0(0.0) -485.7% Provision for forestry fire losses(34.5)(4.5) 667.5% Other taxes 4.3 1.9 129.0% Research and development expenses 0.5 0.8 -39.1% Fines, readjustments and interest 1.7 0.2 956.3% Other expenses (donations, repayments insurance) 14.2 3.2 343.8% Other expenses(8.1) 8.1 -201.2% Foreign exchange differences showed a gain of U.S.$ 2.9 million, a U.S.$ 4.5 million difference when compared to the previous quarter that ended at a loss of U.S.$ 1.6 million. The Chilean peso appreciated by 4.0% against the U.S. dollar during the quarter, which increased our cash and cash equivalents and outstanding debt in this currency. The average of the Chilean peso during the quarter also appreciated by 3.3% against the U.S. dollar, which increased our revenues and costs in Chilean pesos when converted to U.S. dollar. On the other hand, the Argentine peso depreciated by 4.1% against the U.S. dollar compared to last quarter, decreasing our cash and cash equivalents and our outstanding debts. The average of the Argentine peso depreciated by 9.8% throughout the quarter, which decreased our revenues and costs in Argentine pesos when converted to U.S. dollar. 7

ADJUSTED EBITDA Adjusted EBITDA for the third quarter of 2017 was U.S.$ 385.3 million, 15.2% or U.S.$ 50.7 million higher than the US$ 334.6 million reached during the previous quarter. In terms of Adjusted EBITDA by business, during the third quarter of the year we had an increase in our pulp and wood products divisions of 11.5% and 22.6%, respectively, partially offset by a 9.6% decrease in our forestry division. The positive trend in pulp prices continued to boost gross margins within this segment and increased our EBITDA margin. In the wood products segment, sales volume increased, offsetting the slight decrease in average prices. Our forestry EBITDA slightly decreased during the quarter, since the winter months usually bring with them an added cost to harvesting. In U.S.$ Million Q3 2017 Q2 2017 Q3 2016 QoQ YoY Net Income 148.4 84.1 31.4 76.5% 372.3% Financial costs 54.1 57.7 64.7 -6.2% -16.3% Financial income(3.3)(5.9)(7.9) -43.5% -57.6% Income tax 52.2 37.4 17.8 39.4% 192.5% EBIT 251.4 173.4 106.1 45.0% 137.0% Depreciation & amortization 110.5 96.8 102.8 14.1% 7.5% EBITDA 361.9 270.2 208.9 34.0% 73.3% Fair value cost of timber harvested 94.6 91.3 86.6 3.7% 9.2% Gain from changes in fair value of (33.9)(24.0)(40.9) 41.0% -17.2% biological assets Exchange rate differences(2.9) 1.6 1.0 -277.0% -391.9% Others (*)(34.5)(4.5) 0.6 667.5% -5801.0% Adjusted EBITDA 385.3 334.6 256.1 15.2% 50.4% (*) Includes provision from forestry fire losses. Adjusted EBITDA Variation by Business Segment Q2 2017 – Q3 2017 (In U.S.$ Million) 11.4 (5.7) 21.3 23.6 385.3 373.8 373.8 358.1 334.6 334.6 Q2 2017 Pulp Wood Forestry Corporate & Q3 2017 Consolidation Adjustments 8

FORESTRY BUSINESS The Adjusted EBITDA for our forestry business reached U.S.$ 53.0 million during this quarter, which translates to a 9.6% or U.S.$ 5.7 million decrease compared to the previous quarter. Adjusted EBITDA for Forestry Business (In U.S.$ Million) 65 72 73 61 59 59 50 53 Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017 During the third quarter, our forestry production was 6.1 million m3, a 1.9% decrease compared to the 6.2 million m3 produced in the previous quarter. Sales volume increased by 8.3% from 7.5 million m3 to 8.2 million m3. Production, Purchases and Sales Volume (In Thousand m3) 8,213 8,000 7,769 7,625 7,528 7,222 1,789 1,674 1,914 5,308 6,212 6,095 Q3 2016 Q2 2017 Q3 2017 Production Purchases Sales 9

PULP BUSINESS The Adjusted EBITDA for our pulp business reached U.S.$ 228.3 million during this quarter, which translates to a 11.5% increase or U.S.$ 23.6 million compared to the previous quarter. Adjusted EBITDA for Pulp Business (In U.S.$ Million) 228 161 205 154 147 141 119 128 Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017 Global Pulp Demand Change Q2 2017 – Q3 2017 North America 3.6% West Europe -0.1% East Europe 3.0% Latin America -0.6% Japan 5.4% China 2.2% Others -6.1% Source: Hawkins Wright Production and Sales Volume (In Thousand AdT) 949 949 984 1,017 900 901 Q3 2016 Q2 2017 Q3 2017 Production Sales Consistent with the tendency at the end of the second quarter, the summer months of July and August proved to be stable in terms of pricing despite the usual seasonal downturn in demand. Price hikes started up once again in September throughout all markets, a clear sign of the healthy economies in Europe, Asia and North America. From the supply side, new incoming supply of market pulp into the market became more apparent. The OKI Mill is not expected to reach the 2.8 million tons of annual production, and instead is expected to produce approximately 2.0 million tons per year for the next three to four years. In turn, new supply from the Horizonte II Mill did not have a significant effect in the market. Asian markets continue to follow Chinese trends in prices. Short fiber increased average prices by 5% during the quarter, while long fiber increased average prices by 4% during the quarter. Low inventories, especially in China, pushed local trader prices to elevated levels. The gap between local prices and import prices reached U.S.$ 100, hinting that prices will probably continue to rise. Paper producers have been able to pass along their higher costs to the final consumer and maintained or even increased their margins. Although it is too early to understand the full impact, the ban on unsorted paper waste has also limited the supply of raw materials for paper and packaging producers. In a market that continues to grow and therefore demands an ever-growing amount of paper and packaging, this ban should have a positive effect on average pulp prices. The ban on old corrugated containers has caused unbleached pulp prices also to improve. Korea and Taiwan, which are important packaging producers, were affected by the increase in unbleached pulp prices but were somewhat offset by higher imports of unsorted paper waste to these countries where it is not banned. In Southeast Asia, demand in fibrocement which also utilizes unbleached pulp was subdued as the construction sector lost strength. In Europe, the positive demand for pulp and paper was a strong reflection of greater economic activity. During this season, paper producers usually have annual maintenance stoppages that can last anywhere between seven to ten days. This year, however, many paper producers decided otherwise, and production levels remained in above-normal levels. Average pulp prices increased 6% in short fiber and 2% in long fiber during the quarter. It is important to note that long fiber is most commonly provided for locally, and Chilean imports are not relevant within this market. Consumption of printing and writing paper increased between 3% and 5% for the first time in ten years, and European paper producers were able to push their higher costs to the final consumer. Tissue is a different matter, since tissue prices are usually negotiated once or twice a year, and therefore do not have as much flexibility to changes throughout the seasons. Other regions such as the Middle East, North America and South America followed international price trends. Particularly in the Middle East prices increased despite having added pressure since paper producers were unable to transfer increased costs through their value chain and due to lower activity during the month of Ramadan. Production during the third quarter increased by 3.7% compared to last quarter and 3.8% compared to the same quarter of last year. We had a maintenance ppage in our Licancel Mill during the month of July. 10

WOOD PRODUCTS BUSINESS The Adjusted EBITDA for our wood products business reached U.S.$ 116.0 million during this quarter, which translates to a 22.6% increase or U.S.$ 21.3 million compared to the previous quarter. Adjusted EBITDA for Wood Product Business (In U.S.$ Million) 116 88 85 86 94 95 80 63 Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017 Production and Sales Volume: Panels(1) (In Thousand m3) 1,244 1,227 1,247 1,210 1,248 1,261 Q3 2016 Q2 2017 Q3 2017 Production Sales Production and Sales Volume: Sawn Timber(2) (In Thousand m3) 744 689 683 636 649 591 Q3 2016 Q2 2017 Q3 2017 Production Sales Production and Sales Volume: Plywood (In Thousand m3) 151 148 137 135 134 136 Q3 2016 Q2 2017 Q3 2017 Production Sales (1) Includes HB, MDF, OSB, PB (2) Includes sawn timber, kilned sawn timber, remanufactured wood products, pallets Note: Sales include trading Composite panel sales remained solid, with overall sales volume increasing 4.2% and average prices decreasing 1.4%. MDF and PBO sales were generally restrained in all markets. However, OSB sales in Chile more than compensated this downfall in terms of sales volume, thanks to production from Sonae Arauco which we were able to sell within this market through market trading. Sales in the North American market continued to show sustainable price levels, undeterred by a slower MDF market due to South American imports that continue to penetrate these markets. The West coast showed the highest demand within the region. Brazil has shown a muted recovery in terms of sales volume as internal consumption levels increased with a slight decrease in prices. However, there is still the need to keep exporting to other markets in order to decrease pressure in the local markets. The rest of Latin America reached stable sales thanks to our diversified product mix. These markets have not been as dynamic as other parts of the world, as less projects that require construction and furniture products come into execution. The new MDF mills in Brazil and Mexico continue to maintain a heightened level of competition in this region. Sawn timber markets kept their positive trend from last quarter, with sales volume increasing 7.9% and average prices increasing 1.1%. Asia and the Middle East are the primary factor in this upsurge, since European markets increased their internal consumption and therefore decreased exports to these countries. Remanufactured wood products also showed stable revenues, with North America showing increased dynamism. Plywood continued to show better returns, as prices increased 4.4% and sales volume increased 10.6% compared to the last quarter. Sales to European markets have benefitted from the appreciation of the euro, while in North America the high demand in retail, distribution and industrial chains boosted overall average prices. Value added products continue to be key in maintaining higher margins despite the continuing incoming supply of products from Brazilian competitors in the Northern hemisphere. 11

CAPITAL EXPENDITURES U.S.$ Million Q3 2017 Q2 2017 Q3 2016 YTD 2017 YTD 2016 Cash flows used to purchase in associates - - - - 153.1 Purchase and sales of property, plant and equipment 132.4 88.2 97.6 289.7 243.0 Purchase and sales of intangible assets 2.1 3.1 0.2 9.9 1.9 Purchase of other long-term assets 34.5 40.9 31.2 121.5 103.3 Total CAPEX 169.0 132.2 129.0 421.1 501.3 During this quarter, capital expenditures were U.S.$ 169.0 million, an increase of U.S.$ 36.7 million or 27.8% compared to the second quarter of 2017. The only programmed maintenance stoppage during the quarter was the Licancel Mill, which disbursed approximately U.S.$ 6.9 million. The water treatment plant disbursed U.S.$ 12.7 million during this quarter, with approximately U.S.$ 30.8 million left to disburse until completion. The Grayling Project disbursed approximately U.S.$ 57.3 million during the quarter, accumulating U.S.$ 100.6 million during the year and U.S.$ 117.3 million since the beginning of the project. Plantation CAPEX across all countries amounted to U.S.$ 34.5 million. The remaining CAPEX pertains to sustaining business investments. 12

FREE CASH FLOW Our free cash flow continued to be positive during the third quarter of 2017, with U.S.$ 86.9 million during the quarter. Our Adjusted EBITDA continues to be the main driver in the increase of our cash from operations, led by higher sales volume in our pulp and wood products segment, and better average prices in our pulp segment. Interest payments increased by U.S.$ 36.4 million as most of our interest payments are made during the first and third quarter of each year. CAPEX increased during this quarter as Grayling continues its construction phase, which disbursed U.S.$ 57.3 million during the period, in turn increasing the cash used in investment activities. This quarter there were no seasonal payments of dividends, increasing the cash from financing activities by U.S.$ 60.3 million. U.S.$ Million Q3 2017 Q2 2017 Q3 2016 Adjusted EBITDA 385.3 334.6 256.1 Working Capital Variation(13.9) 5.2(1.0) Interest paid and received(70.4)(34.0)(68.8) Income tax paid(12.3)(0.8)(36.4) Other cash inflows (outflows)(42.6) 0.3(6.2) Cash from Operations 246.1 305.2 143.7 Capex(169.0)(132.2)(129.0) Proceeds from investment activities 1.8 2.9 3.0 Other inflows of cash, net 6.1 4.3 1.2 Cash from (used in) Investment Activities(161.1)(125.1)(124.9) Dividends paid(0.6)(59.7)(0.3) Other inflows of cash, net 1.2 0.1(0.3) Cash from (used in) Financing Activities - 0.6(59.6)(0.6) Net of Proceeds and Repayments Effect of exchange rate changes on cash and 1.3(4.2)(7.2) cash equivalents Free Cash Flow 86.9 116.3 11.0 Net Debt Variation Q2 2017 – Q3 2017 (In U.S.$ Million) 37.6 (10.2) 2.9 (86.9) 3,735.8 3,676.3 3,676.3 3,679.2 3,648.9 3,648.9 Net Debt Q2 17 Free Cash Flow Exchange rate/ Accrued Others Net Debt Q3 17 inflation interest variation variation 13

FINANCIAL DEBT AND CASH Arauco’s financial debt as of September 30, 2017 reached U.S.$ 4,164.8 million, a decrease of 2.0% or U.S.$ 83.7 million when compared to June 30, 2017. Our consolidated net financial debt decreased 1.5% or U.S.$ 56.6 million when compared with June 2017, while cash and cash equivalents decreased by U.S.$ 27.2 million. Our leverage, measured as Net Financial Debt/LTM Adjusted EBITDA, decreased compared to last quarter from 3.3 times to 2.9 times. September June September In U.S.$ Million 2017 2017 2016 Short term financial debt 629.5 453.8 716.9 Long term financial debt 3,535.3 3,794.7 3,625.7 TOTAL FINANCIAL DEBT 4,164.8 4,248.6 4,342.6 Cash and cash equivalents 485.6 512.7 459.7 NET FINANCIAL DEBT 3,679.2 3,735.8 3,882.9 LTM Adjusted EBITDA 1,271.3 1,142.2 1,081.4 Net Financial Debt and Leverage (In U.S.$ Million) 3.7x 4.0x 3.4x 3.6x 3.5x 3.3x 3.0x 3.1x 3.5x 2.9x 3.0x 2.5x 2.0x 3,805.4 3,902.9 3,882.9 3,888.8 3,821.0 1.5x 3,745.2 3,735.8 3,679.2 1.0x 0.5x 0.0x Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017 Debt by Currency Debt by Instrument Other Currencies Leasing UF (*) swapped to 1% 3% U.S. Dollar 31% Banks 22% U.S.Dollar 68% Bonds 75% (*) UF is a Chilean monetary unit indexed to inflation. 14

Financial Debt Profile For the remainder of the year, bank obligations (which include accrued interest) sum up a total of U.S.$ 112.1 million, which include the following maturities: U.S.$ 54.0 million of loans in Montes del Plata, U.S.$ 30.0 million of a pre-export financing loan and U.S.$ 10.1 million from leasing in Chile, U.S.$ 15.1 million in our Argentine subsidiaries, and U.S.$ 2.1 million from our Brazilian subsidiaries. Bond amortizations include the first amortization of an amortizing local bond BARAU-Q of U.S.$ 10.5 million that will be paid in October. Of our committed facility line for the Grayling Project, a total of U.S.$ 31.0 million was disbursed during the quarter, amounting to a total of U.S.$ 67.0 million of the line used. Disbursements of the committed facility line can be made in the first two years. The total amount disbursed during the two years will then be amortized semiannually from 2019 to 2024, with a final balloon payment of 70% of the total loan. Financial Obligation by Year as of September 30, 2017 (In U.S.$ Million) 664 613 584 511 510 41 400 370 545 539 245 434 537 470 256 138 86 26 45 112 119 114 45 76 74 41 47 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 & thereafter Short term debt includes accrued interest Bank loans Bonds Cash Our cash position was U.S.$ 485.6 million at the end of the third quarter, which is a U.S.$ 27.2 million or 5.3% decrease compared to the end of the second quarter of 2017. Cash provided from operating activities decreased U.S.$ 59.1 million, as receipts from sales of goods and rendering of servicies decreased U.S.$ 19.7 million, and net interest paid seasonally increased by U.S.$ 36.4 million. CAPEX increased U.S.$ 36.7 million compared to last quarter with higher expenditures coming from the Grayling construction. During the quarter, we paid off a U.S.$ 125.0 million Yankee Bond and U.S.$ 120.0 million in pre export financing loans that were taken out and paid off during the quarter. In terms of our breakdown of cash by currency, this quarter ended with a higher-than-average exposure to the Chilean peso since payment to local suppliers were due during the first few days of October. Cash by Currency Cash by Instrument Other Repurchase Currencies Agreements 2% 12% Overnight Investment Chilean Peso Accounts 24% Money Market Argentinean Peso Funds 28% U.S. Dollar 22% Time 2% Deposits 64% 38% Brazilian Real 8% 15

THIRD QUARTER AND SUBSEQUENT EVENTS AND NEWS Arauco’s new visual identity On August 31st, Arauco changed its corporate image which expresses greater closeness and differentiation in a visual language that is simple and global; in this effect, Arauco is able to transition from the corporate world to products in contact with our customers and end consumers. Our new image aims to express the evolution that we’ve experienced in over 40 years in Chile and the world, by means of the concept “Renewables for a better life”. This image emerges from our story as a company and our corporate identity, which is supported by the renewable origin of our resources and the development of products and solutions that improve people’s lives. Another aspect is the global nature of our company, which, nearing its 50th anniversary, has transformed into an internationally renowned company that maintains its ongoing and dynamic growth under high management standards. Dissolving Pulp During September 2017, Arauco’s Board of Directors unanimously approved the Dissolving Pulp Project which will enable the Valdivia Mill to produce dissolving pulp without losing the capacity to switch back to market pulp. Arauco estimates the project will require an investment of US$ 185 million, which the Company will pay with its own cash generation. The project will be executed in the same existing installations, with some minor adjustments and additional equipment. The new equipment includes two new digesters with the purpose of optimizing the pulp production level, a new discharge pond for the pulp, and other treatment area modifications. This project allows Arauco to continue diversifying its product portfolio to the pulp market. Dissolving pulp is used in the textile industry to soften, shine, and purify fibers. It can also be used in the food, cellophane, and flexible packaging industries, among others. This project should take about two years of construction, with the ramp-up scheduled to occur during the end of 2019. Arauco to acquire Masisa’s subsidiary in Brazil In September 2017, Arauco do Brasil S.A. agreed with Masisa S.A. the total buyout of the social rights of the subsidiary named Masisa do Brasil Ltda. The transaction price is for approximately U.S.$ 102.8 million, with final disbursement amounting to U.S.$ 52.8 million. The main assets of Masisa do Brasil S.A. consist of two industrial complexes located in Ponta Grossa (Paraná) and Montenegro (Rio Grande do Sul) in Brazil, with a total annual installed capacity of 300,000 m3 of MDF, 500,000 m3 of MDP and 660,000 m3 of melamine capacity. When the transaction is finalized Arauco will have a total installed capacity of over 10 million m3, consolidating its position as the second largest player of panels in the world. The transaction is still subject to a series of conditions precedent, with the authorization of free competition given by the “Conselho Administrativo de Defensa Económica” (or “CADE”) of Brazil being the most relevant. This transaction is expected to finalize during the end of 2017 or the beginning of 2018. Arauco performed liability management during the fourth quarter of 2017 On November 2nd, Arauco issued two bonds in the United States market for a total of U.S.$ 900.0 million: U.S.$ 500.0 million with a tenor of 10 years and a coupon rate of 3.875%; and U.S.$ 400.0 million with a tenor of 30 years and a coupon rate of 5.500%. Both bonds are bullet with interests paid each semester. The main use of proceeds for these bonds was to partially repurchase three of our outstanding bonds: (i) 7.250% Notes due 2019 of U.S.$ 500.0 million, (ii) 5.000% Notes due 2022 of U.S.$ 400.0 million, and (iii) 4.750% Notes due 2022 of U.S.$ 500.0 million. There was an early bird settlement payment on November 2nd, with the final settlement of the cash tender offer on November 13th. In total, the following amounts were validly tendered: U.S.$ 297.2 million for the 7.250% Notes due 2019, U.S.$ 199.7 million for the 5.000% Notes due 2021, and U.S.$ 244.1 million for the 4.750% Notes due 2022. The remaining funds will be used for other corporate purposes. With this liability management, Arauco was able to extend its average debt duration from approximately 4.9 years to 8.3 years. 16

FINANCIAL STATEMENTS Income Statement In U.S.$ Million Q3 2017 Q2 2017 Q3 2016 YTD 2017 YTD 2016 Revenues 1,393.4 1,279.9 1,187.5 3,907.0 3,540.8 Cost of sales(940.3)(877.7)(890.5)(2,689.6)(2,602.2) Gross profit 453.0 402.3 297.0 1,217.4 938.6 Other income 42.2 32.6 69.9 123.2 189.6 Distribution costs(138.3)(128.1)(126.1)(390.4)(360.5) Administrative expenses(123.7)(127.2)(127.3)(371.2)(363.9) Other expenses 8.2(8.1)(10.5)(193.0)(43.9) Financial income 3.3 5.9 7.9 15.7 25.8 Financial costs(54.1)(57.7)(64.7)(171.8)(200.5) Participation in (loss) profit in associates and joint ventures accounted through 7.0 3.4 4.0 18.6 14.0 equity method Exchange rate differences 2.9(1.6)(1.0) 2.7(0.1) Income before income tax 200.6 121.5 49.3 251.2 199.2 Income tax(52.2)(37.4)(17.8)(64.0)(57.4) Net income 148.4 84.1 31.4 187.2 141.8 Profit attributable to parent company 148.4 84.0 31.1 186.8 140.2 Profit attributable to non-parent company(0.0) 0.1 0.3 0.4 1.6 17

Balance Sheet In U.S.$ Million Q3 2017 Q2 2017 Q3 2016 Cash and cash equivalents 485.6 512.7 459.7 Other financial current assets 3.0 4.4 9.6 Other current non-financial assets 157.9 181.3 177.6 Trade and other receivables-net 888.3 704.6 642.5 Related party receivables 6.5 6.2 3.7 Inventories 775.1 847.0 909.6 Biological assets, current 312.3 303.6 297.5 Tax assets 41.1 67.3 92.3 Non-Current Assets classified as held for sale 2.9 2.5 3.1 Total Current Assets 2,672.7 2,629.6 2,595.6 Other non-current financial assets 27.8 11.7 5.3 Other non-current and non-financial assets 122.2 111.0 129.9 Non-current receivables 15.2 14.9 15.5 Investments accounted through equity method 361.7 347.9 438.5 Intangible assets 90.6 91.0 81.6 Goodwill 76.0 74.5 75.1 Property, plant and equipment 6,985.1 6,867.1 6,914.3 Biological assets, non-current 3,514.6 3,519.0 3,588.5 Deferred tax assets 7.6 7.1 3.9 Total Non-Current Assets 11,200.7 11,044.2 11,252.7 TOTAL ASSETS 13,873.4 13,673.8 13,848.3 Other financial liabilities, current 629.9 454.0 717.9 Trade and other payables 600.8 508.8 558.0 Related party payables 14.7 8.5 7.3 Other provisions, current 0.4 0.4 0.6 Tax liabilities 9.8 4.8 8.9 Current provision for employee benefits 5.5 5.4 5.2 Other non-financial liabilities, current 153.8 84.4 91.3 Total Current Liabilities 1,415.0 1,066.3 1,389.2 Other non-current financial liabilities 3,573.0 3,866.7 3,731.5 Other provisions, non-current 37.4 37.5 38.7 Deferred tax liabilities 1,604.4 1,604.0 1,637.5 Non-current provision for employee benefits 64.0 61.8 59.8 Other non-financial liabilities, non-current 64.2 60.5 60.1 Total Non-Current Liabilities 5,343.0 5,630.6 5,527.6 Non-parent participation 44.9 43.7 44.5 Net equity attributable to parent company 7,070.5 6,933.3 6,886.9 TOTAL LIABILITIES AND EQUITY 13,873.4 13,673.8 13,848.3 18

Cash Flow Statement U.S.$ Million Q3 2017 Q2 2017 Q3 2016 YTD 2017 YTD 2016 Receipts from sales of goods and rendering of 1,347.6 1,367.3 1,308.9 4,036.6 3,880.9 services Other cash receipts (payments) 62.2 56.5 70.7 182.6 203.5 Payments of suppliers and personnel (less)(1,076.6)(1,081.4)(1,127.2)(3,277.8)(3,252.7) Interest paid and received(70.4)(34.0)(68.8)(174.8)(159.6) Income tax paid(12.3)(0.8)(36.4)(25.8)(71.1) Other (outflows) inflows of cash, net(4.5)(2.3)(3.6)(8.7)(3.5) Net Cash Provided by (Used in) Operating Activities 246.1 305.2 143.7 732.1 597.4 Capital Expenditures(169.0)(132.2)(129.0)(421.1)(501.3) Other investment cash flows 7.9 7.2 4.1 15.8 18.9 Net Cash Provided by (Used in) Investing Activities(161.1)(125.1)(124.9)(405.3)(482.4) Proceeds from borrowings 218.9 72.6 175.5 296.6 542.5 Repayments of borrowings(333.0)(284.8)(254.2)(669.4)(589.8) Dividends paid(0.6)(59.7)(0.3)(61.1)(100.6) Other inflows of cash, net 1.2 0.1(0.3) 1.3(0.2) Net Cash Provided by (Used in) Financing Activities(113.5)(271.8)(79.3)(432.6)(148.2) Total Cash Inflow (Outflow) of the Period(28.5)(91.6)(60.5)(105.8)(33.2) Effect of exchange rate changes on cash and cash 1.3(4.2)(7.2)(0.8)(7.2) equivalents Cash and Cash equivalents at beginning of the period 512.7 608.5 527.4 592.3 500.0 Cash and Cash Equivalents at end of the Period 485.6 512.7 459.7 485.6 459.7 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: November 29, 2017	By:	/s/ Matías Domeyko Cassel
	Name:	Matías Domeyko Cassel
	Title:	Chief Executive Officer