Arauco & Constitution Pulp 6-K Current report (foreign)

FORM6-K

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

Report of Foreign Private Issuer

Pursuant to Rule13a-16 or15d-16

of the Securities Exchange Act of 1934

For the month of March, 2020

Commission File Number33-99720

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 Form20-F or Form40-F.

Form20-F  ☑            Form40-F  ☐

Indicate by check mark if the registrant is submitting the Form6-K in paper as permitted by RegulationS-T Rule 101(b)(1):  ☐

Indicate by check mark if the registrant is submitting the Form6-K in paper as permitted by RegulationS-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 Rule12g3-2(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 Rule12g3-2(b):82-            

ARAUCO AND CONSTITUTION PULP INC

TABLE OF CONTENTS

Item		Page
1.	Ratio Analysis of the Interim Consolidated Financial Statements		1
2.	Unaudited Interim Consolidated Statements of Financial Position		7
3.	Unaudited Interim Consolidated Statements of Profit or Loss		9
4.	Unaudited Interim Consolidated Statements of Comprehensive Income		10
5.	Unaudited Interim Consolidated Statements of Changes in Equity		11
6.	Unaudited Interim Consolidated Statements of Cash Flow		12
7.	Unaudited Notes to the Interim Consolidated Financial Statements		13
	Annex: Press Release

CELULOSA ARAUCO Y CONSTITUCION S.A. AND SUBSIDIARIES

Ratio Analysis of the Interim Consolidated Financial Statements

March 31, 2020

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 are as follows:

Assets	03-31-2020 ThU.S.$		12-31-2019 ThU.S.$
Current assets		3,633,135		3,931,381
Non-current assets		11,884,475		11,928,649
Total assets		15,517,610		15,860,030

Liabilities	03-31-2020 ThU.S.$		12-31-2019 ThU.S.$
Current liabilities		1,309,520		1,261,522
Non-current liabilities		7,216,002		7,229,093
Non–parent participation		35,129		35,011
Net equity attributable to parent company		6,961,959		7,334,404
Total net equity and liabilities		15,517,610		15,860,030

As of March 31, 2020, total assets decreased MU.S.$342 compared to December 31, 2019, equivalent to a 2.16% variation. This variation was driven mainly by decreases in cash equivalents (bank checking accounts and mutual funds) and biological assets.

In turn, total liabilities increased by MU.S.$35 principally due to an increase in financial liabilities, partially offset by decreases in deferred tax liabilities and trade and other current payables.

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

Liquidity ratios	03-31-2020		12-31-2019
Current Liquidity (current assets / current liabilities)		2.77		3.12
Acid ratio ((current assets-inventories, biological assets) / current liabilities)		1.77		2.06

Debt indicators	03-31-2020		12-31-2019
Debt to equity ratio (total liabilities / equity)		1.22		1.15
Short-term debt to total debt (current liabilities / total liabilities)		0.15		0.15
Long-term debt to total debt(non-current liabilities / total liabilities)		0.85		0.85
	03-31-2020		03-31-2019
Financial expenses coverage ratio (earnings before taxes + interest expense / interest expense)		0.45		3.46

Activity ratio	03-31-2020		12-31-2019
Inventory turnover-time (cost of sales / inventories + current biological assets)		2.55		2.92
Inventory turnover-time (excluding biological assets) (Cost of sales /inventory)		3.20		3.75
Inventory permanence-days ((inventories + biological assets) /cost of sales)		141.13		123.17
Inventory permanence-days (excluding biological assets) (inventory / cost of sales)		112.51		95.93

1

CELULOSA ARAUCO Y CONSTITUCION S.A. AND SUBSIDIARIES

Ratio Analysis of the Interim Consolidated Financial Statements

March 31, 2020

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

As of March 31, 2020, the short-term debt to total debt ratio represented 15% of total liabilities (15% too as of December 31, 2019).

Our financial expenses coverage ratio decreased from 3.46 to 0.45, mainly due to lower earnings before taxes for period ended March 31, 2020, compared to the same period of 2019.

b) Statement of profit or loss

Profit before income tax

Profit before income tax registered a loss of approximately MU.S.$39 compared to a profit of approximately MU.S.$141 in the same period of 2019. The negative variation of MU.S.$180 is explained by the factors described in the following table:

Item	MU.S.$
Gross profit		(163	)
Distribution and Administrative Expenses		23
Other income and expenses		(19	)
Other financial income and expenses		(14	)
Others		(7	)
Net change in profit before income tax		(180	)

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

Revenues	03-31-2020 ThU.S.$			03-31-2019 ThU.S.$
Pulp		450,910			652,215
Timber		646,550			697,781
Forestry		29,624			30,747
Other		82			7,443
Total revenues		1,127,166			1,388,186
Sales costs	03-31-2020 ThU.S.$			03-31-2019 ThU.S.$
Wood		191,255			184,242
Forestry work and other services		107,457			133,003
Depreciation and amortization		113,214			115,187
Other costs		431,634			509,484
Total sales costs		843,560			941,916
Profitability index	03-31-2020			12-31-2019
Profitability on equity		(1.65	)		0.84
Profitability on assets		(0.76	)		0.41
Return on operating assets		0.68			1.90
Profitability ratios	03-31-2020			03-31-2019
Income per share (U.S.$) (1)		(0.26	)		1.11
Profit after tax (ThU.S.$) (2)		(29,706	)		126,099
Gross margin (ThU.S.$)		283,606			446,270
Finance costs (ThU.S.$)		(71,782	)		(57,391	)

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

(2) Includesnon-controlling interest.

2

CELULOSA ARAUCO Y CONSTITUCION S.A. AND SUBSIDIARIES

Ratio Analysis of the Interim Consolidated Financial Statements

March 31, 2020

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

EBITDA	03-31-2020 ThU.S.$			03-31-2019 ThU.S.$
Profit (loss)		(29,706	)		126,099
Finance costs		71,782			57,391
Finance income		(7,207	)		(6,746	)
Income tax expense		(9,761	)		15,100
EBIT		25,108			191,844
Depreciation and amortization		125,411			124,684
EBITDA		150,519			316,528
Cost at fair value of the harvest		67,024			74,837
Gain from changes in fair value of biological assets		(52,018	)		(36,981	)
Exchange difference		3,427			(2,127	)
Others*		25,615			2,627
Adjusted EBITDA		194,567			354,884

* Considers incidents and impairment provision for industrial property, plant and equipment and biological assets.

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. MARKET SITUATION

Pulp Division

The first quarter of 2020 was challenging, especially due to the effects ofCOVID-19 in the global markets. The tissue market was positively affected due to a higher demand, but P&W markets suffered a significant adverse impact because of the shutdown of offices, schools and universities. Global inventories for long fiber pulp remained stable, yet those of short fiber increased on a quarterly basis (although not reaching 1Q 2019 levels). All of this led to prices remaining stable for both fibers in most of the markets we take part in.

In China, the quarter began with a positive trend in terms of demand prior to the Chinese New Year. During those festivities, theCOVID-19 breakout led to a prolonged holiday as well as quarantines across the country in order to prevent movements of people. This generated disruptions to supply chains which, nevertheless, didn’t have any major impact on our sales. The market showed positive signs up untilmid-March, when demand for P&W paper and specialties started to decline associated to lower economic activity both in domestic and export markets.

In Europe, the quarter began with a strong demand even with some clients asking to anticipate deliveries. During March, theCOVID-19 broke out in Italy to then expand to other countries. As in other markets, demand for tissue remained strong. This contrasts with the demand for P&W which fell, with clients announcing plant stoppages and production cuts. Prices remained stable throughout the quarter, with a slight decrease at the end of it.

3

CELULOSA ARAUCO Y CONSTITUCION S.A. AND SUBSIDIARIES

Ratio Analysis of the Interim Consolidated Financial Statements

March 31, 2020

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

Production increased during the quarter by 6.1% or approximately 52 th. tonnes, mainly due to less maintenance stoppages during this quarter. This increase was partially offset by the Licancel mill stoppage, which wasn’t operating since December 2019, because of low water flow in the Mataquito river. This mill resumed operations on March 20th. During this period, we also undertook the annual maintenance stoppage of the mentioned mill. Additionally, the Constitución mill undertook its annual maintenance stoppage (6 days). Moreover, both production lines of our Arauco mill had to stop because of a quarantine required by the health authorities because a contractor’s employee tested positive forCOVID-19 in the canteen. Line 2 was stopped for 5 days, and Line 1 for nearly a month as we anticipated our annual maintenance stoppage initially programmed for June 2020.

Composite Panel

Sales decreased compared to the fourth quarter, with sales volume and prices decreasing by 1.6% and 1.5%, respectively.

During the beginning of the first quarter the Latin American market showed encouraging signs, but the impact ofCOVID-19 has been significant in the region due to ongoing quarantines in some countries. This started to affect our sales at the end of March, and uncertainty going forward remains.

In the US and Canada sales volumes and prices remained stable.

Sawn timber

During the first quarter, sales volume and prices were similar to the previous quarter. Even as we noted signs of recovery from Asian markets, total sales volume decreased by 3.4% compared to the last quarter.

Results for remanufactured wood products were stable. We were able to capture additional market share in part due to competitors facing possible tariffs, and a generalized supply deficit.

Plywood

Sales volume increased by 4.1% during the first quarter. The year began with an improvement in some markets with respect to the previous quarter. In terms of supply, we have noted competitors leaving the market due to low profitability.

4

CELULOSA ARAUCO Y CONSTITUCION S.A. AND SUBSIDIARIES

Ratio Analysis of the Interim Consolidated Financial Statements

March 31, 2020

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

4. ANALYSIS OF CASH FLOW

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

	03-31-2020 ThU.S.$			03-31-2019 ThU.S.$
Positive (negative) Cash flow
Net cash flows from operating activities		(15,742	)		130,251
Cash flows from (used in) financing activities:
Loan and bond obtention and payments		95,091			(53,483	)
Payment of lease liabilities		(21,230	)		(20,949	)
Others		69			(316	)
Cash flows from (used in) investment activities:
Purchase and sale of property, plant and equipment		(354,147	)		(161,616	)
Purchase and sale of biological assets		(64,487	)		(72,629	)
Purchase and sale of intangible assets		(6,084	)		(3,603	)
Additions (Disposals), Investments in joint ventures and associates		(15,090	)		(151,294	)
Dividends received		3,539			6,206
Others		(596	)		—
Positive (negative) net cash flow		(378,677	)		(327,433	)

Cash flow from operating activities shows a negative balance of MU.S.$16 for the current period, representing a variation to the same period of 2019 (a positive balance MU.S.$130 as of March 31, 2019), resulting mainly from lower revenues from customer collections and higher payments due to derivatives instruments.

The financing cash flow shows a positive balance of MU.S.$74 for the current period, representing a variation in respect of the same period of 2019 (negative balance of MU.S.$75), resulting mainly from cash received from bank loans.

Regarding the investment cash flow, the current period shows a higher negative balance of MU.S.$437 (compared to the negative balance of MU.S.$383 for the same period of 2019), mainly due to higher disbursements for the purchase of property, plant and equipment in the current period, partially offset by the purchase of plants to Masisa in Mexico in 2019.

5

CELULOSA ARAUCO Y CONSTITUCION S.A. AND SUBSIDIARIES

Ratio Analysis of the Interim Consolidated Financial Statements

March 31, 2020

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

5. MARKET RISK ANALYSIS

In respect of the economic risks resulting from interest rate variations, the Company maintains, as of March 31, 2020, a ratio of fixed rate debt to total consolidated debt of approximately 89.2%, which we believe is consistent with industry standards.

Regarding variations in prices of pulp and forestry products, 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 Interim Consolidated Financial Statements as of March 31, 2020, a detailed analysis of the risks associated with the business of Arauco is available (See Note 23).

6

CELULOSA ARAUCO Y CONSTITUCION S.A. AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

March 31, 2020

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

INTERIM CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

	Note	03-31-2020 ThU.S.$		12-31-2019 ThU.S.$
Assets
Current Assets
Cash and cash equivalents	5-23		1,155,458		1,560,012
Other current financial assets	23		52,638		3,370
Other currentnon-financial assets	25		174,893		174,110
Trade and other current receivables	23		667,435		642,315
Accounts receivable from related companies	13		15,233		17,526
Current inventories	4		1,055,235		1,053,867
Current biological assets	20		260,744		275,792
Current tax assets	6		247,202		199,953
Total Current Assets other than assets or disposal groups classified as held for sale			3,628,838		3,926,945
Non-Current Assets or disposal groups classified as held for sale	22		4,297		4,436
Non-Current Assets or disposal groups classified as held for sale or as held for distribution to owners			4,297		4,436
Total Current Assets			3,633,135		3,931,381
Non-Current Assets
Othernon-current financial assets	23		73		9,395
Othernon-currentnon-financial assets	25		126,850		112,414
Trade and othernon-current receivables	23		8,576		9,456
Investments accounted for using equity method	15-16		288,070		293,118
Intangible assets other than goodwill	19		104,096		106,252
Goodwill	17		59,349		65,751
Property, plant and equipment	7		7,681,483		7,648,183
Right of use assets	8		261,743		284,379
Non-current biological assets	20		3,347,839		3,393,634
Deferred tax assets	6		6,396		6,067
TotalNon-Current Assets			11,884,475		11,928,649
Total Assets			15,517,610		15,860,030

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

7

CELULOSA ARAUCO Y CONSTITUCION S.A. AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

March 31, 2020

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

INTERIM CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (continued)

	Note	03-31-2020 ThU.S.$			12-31-2019 ThU.S.$
Equity and Liabilities
Liabilities
Current Liabilities
Other current financial liabilities	23		586,263			460,846
Current lease liabilities	23		60,914			69,208
Trade and other current payables	23		614,487			673,057
Accounts payable to related companies	13		3,956			8,880
Other current provisions	18		1,234			1,259
Current tax liabilities	6		2,568			2,242
Current provisions for employee benefits	10		5,323			5,965
Other currentnon-financial liabilities	25		34,775			40,065
Total Current Liabilities other than assets included in disposal groups classified as held for sale			1,309,520			1,261,522
Total Current Liabilities			1,309,520			1,261,522
Non-Current Liabilities
Othernon-current financial liabilities	23		5,546,655			5,452,194
Non-current lease liabilities	23		169,681			201,817
Non-current payables	23		2,230			2,230
Othernon-current provisions	18		31,068			31,765
Deferred tax liabilities	6		1,316,326			1,360,187
Non-current provisions for employee benefits	10		62,057			69,464
Othernon-currentnon-financial liabilities	25		87,985			111,436
TotalNon-Current Liabilities			7,216,002			7,229,093
Total Liabilities			8,525,522			8,490,615
Equity
Issued capital	3		353,618			353,618
Retained earnings			7,844,190			7,873,650
Other reserves			(1,235,849	)		(892,864	)
Equity attributable to parent company			6,961,959			7,334,404
Non-controlling interests			30,129			35,011
Total Equity			6,992,088			7,369,415
Total Equity and Liabilities			15,517,610			15,860,030

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

8

CELULOSA ARAUCO Y CONSTITUCION S.A. AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

March 31, 2020

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

INTERIM CONSOLIDATED STATEMENTS OF PROFIT OR LOSS

		For the years ended March 31,
		2020			2019
	Note	ThU.S.$			ThU.S.$
Statements of profit or loss
Revenue	9		1,127,166			1,388,186
Cost of sales	3		(843,560	)		(941,916	)
Gross profit			283,606			446,270
Other income	3		55,246			45,539
Distribution costs	3		(137,429	)		(142,858	)
Administrative expenses	3		(123,503	)		(141,280	)
Other expense	3		(50,938	)		(22,317	)
Profit from operating activities			26,982			185,354
Finance income	3		7,207			6,746
Finance costs	3		(71,782	)		(57,391	)
Share of profit of associates and joint ventures accounted for using equity method	3-15		1,553			4,363
Gains (losses) on exchange differences on translation			(3,427	)		2,127
Profit before income tax			(39,467	)		141,199
Income Tax	6		9,761			(15,100	)
Net Profit			(29,706	)		126,099
Net profit attributable to
Net profit attributable to parent company			(29,460	)		125,836
Net profit attributable tonon-controlling interests			(246	)		263
Net Profit			(29,706	)		126,099
Basic and diluted earnings per share (in U.S.$ per share)
Basic and diluted earnings per share from continuing operations			(0.2603	)		1.1120
Basic and diluted earnings per share			(0.2603	)		1.1120

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

9

CELULOSA ARAUCO Y CONSTITUCION S.A. AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

March 31, 2020

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

INTERIM CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

			For the years ended March 31
			2020			2019
	Note		ThU.S.$			ThU.S.$
Net profit				(29,706	)		126,099
Components of other comprehensive income that will not be reclassified to profit or loss before tax:
Other comprehensive income before tax gains losses on remeasurements of defined benefit plans		10		109			811
Other Comprehensive Income that will not be reclassified to profit or loss before tax				109			811
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		(264,389	)		(8,622	)
Other Comprehensive Income before tax exchange differences on translation				(264,389	)		(8,622	)
Cash flow hedges
Gains (losses) on cash flow hedges, before tax		23		(103,466	)		(4,823	)
Recycle of cash flow hedges to profit or loss before tax		23		(2,797	)		(2,148	)
Other Comprehensive Income before tax Cash flow hedges				(106,263	)		(6,971	)
Share of other comprehensive income of associates and joint ventures accounted for using equity method that will be reclassified to profit or loss before tax
Share of other comprehensive income of associates and joint ventures accounted for using equity method that will be reclassified to profit or loss before tax				(6,029	)		592
Share of other comprehensive income of associates and joint ventures accounted for using equity method that will be reclassified to profit or loss before tax				(6,029	)		592
Other Comprehensive income that will be reclassified to profit or loss before tax				(376,681	)		(15,001	)
Income tax relating to components of other comprehensive income that will not be reclassified to profit or loss before tax
Income tax relating to remeasurements of defined benefit plans of other comprehensive income				(64	)		(199	)
Income tax relating to components of other comprehensive income that will not be reclassified to profit or loss before tax				(64	)		(199	)
Income tax relating to components of other comprehensive income that will be reclassified to profit or loss before tax
Income tax relating to cash flow hedges of other comprehensive income		6		27,786			3,718
Income tax relating to share of other comprehensive income of associates and joint ventures accounted for using equity method that will be reclassified to profit or loss				1,264			(137	)
Income tax relating to components of other comprehensive income that will be reclassified to profit or loss				29,050			3,581
Other comprehensive income (loss)				(347,586	)		(10,808	)
Comprehensive income (loss)				(377,292	)		115,291
Comprehensive Income (loss) attributable to
Comprehensive income (loss), attributable to Owners of parent company				(372,445	)		115,276
Comprehensive income (loss), attributable toNon-controlling interests				(4,847	)		15
Total comprehensive income (loss)				(377,292	)		115,291

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

10

CELULOSA ARAUCO Y CONSTITUCION S.A. AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

March 31, 2020

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

INTERIM CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

03-31-2020	Issued Capital ThU.S.$		Reserve of exchange differences on translation ThU.S.$			Reserve of cash flow hedges ThU.S.$			Reserve of actuarial losses on defined benefit plans ThU.S.$			Other Reserves ThU.S.$			Total other Reserves ThU.S.$			Retained Earnings ThU.S.$			Equity attributable to owners of parent ThU.S.$			Non- controlling interests ThU.S.$			Total Equity ThU.S.$
Opening balance at01-01-2020		353,618		(902,387	)		9,010			(19,511	)		20,024			(892,864	)		7,873,650			7,334,404			35,011			7,369,415
Changes in Equity:
Comprehensive income
Net profit																			(29,460	)		(29,460	)		(246	)		(29,706	)
Other comprehensive income, net of tax		—		(259,789	)		(78,477	)		46			(4,765	)		(342,985	)					(342,985	)		(4.601	)		(347,586	)
Comprehensive income		—		(259,789	)		(78,477	)		46			(4,765	)		(342,985	)		(29,460	)		(372,445	)		(4.847	)		(377,292	)
Dividends																			—			—			(35	)		(35	)
Increase (decrease) from transfers and other changes																			—			—			—			—
Changes in equity		—		(259,789	)		(78,477	)		46			(4,765	)		(342,985	)		(29,460	)		(372,445	)		(4,882	)		(377,327	)
Closing balance at03-31-2020		353,618		(1,162,176	)		(69,467	)		(19,465	)		15,259			(1,235,849	)		7,844,190			6,961,959			30,129			6,992,088
03-31-2019	Issued Capital ThU.S.$		Reserve of exchange differences on translation ThU.S.$			Reserve of cash flow hedges ThU.S.$			Reserve of actuarial losses on defined benefit plans ThU.S.$			Other Reserves ThU.S.$			Total other Reserves ThU.S.$			Retained Earnings ThU.S.$			Equity attributable to owners of parent ThU.S.$			Non- controlling interests ThU.S.$			Total Equity ThU.S.$
Opening balance at01-01-2019		353,618		(872,395	)		13,395			(17,571	)		687			(875,884	)		7,824,045			7,301,779			37,192			7,338,971
Increase (decrease) for changes in accounting policies																			(188	)		(188	)		—			(188	)
Re-expressed opening balance		353,618		(872,395	)		13,395			(17,571	)		687			(875,884	)		7,823,857			7,301,591			37,192			7,338,783
Changes in Equity:
Comprehensive income
Net profit																			125,836			125,836			263			126,099
Other comprehensive income, net of tax		—		(8,374	)		(3,253	)		612			455			(10,560	)					(10,560	)		(248	)		(10,808	)
Comprehensive income		—		(8,374	)		(3,253	)		612			455			(10,560	)		125,836			115,276			15			115,291
Dividends																			(53,105	)		(53,105	)		57			(53,048	)
Increase (decrease) from transfers and other changes																			143			143			—			143
Changes in equity		—		(8,374	)		(3,253	)		612			455			(10,560	)		72,874			62,314			72			62,386
Closing balance at03-31-2019		353,618		(880,769	)		10,142			(16,959	)		1,142			(886,444	)		7,896,731			7,363,905			37,264			7,401,169

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

March 31, 2020

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

INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS

	For the years ended March 31,
	2020			2019
	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		1,122,841			1,377,157
Other cash receipts from operating activities		198,106			93,953
Classes of cash payments
Payments to suppliers for goods and services		(962,459	)		(1,063,142	)
Payments to and on behalf of employees		(159,328	)		(174,271	)
Other cash payments from operating activities		(123,000	)		(30,115	)
Interest paid		(41,828	)		(48,124	)
Interest received		6,483			4,666
Income taxes paid		(55,469	)		(28,085	)
Other inflows (outflows) of cash, net		(1,088	)		(1,788	)
Net Cash flow from Operating Activities		(15,742	)		130,251
Cash flows from (used in) Investing Activities
Cash flow used in obtaining control of subsidiaries and other businesses		—			(150,824	)
Cash used for the purchase ofnon-controlling interests		(15,090	)		(470	)
Proceeds from sale of property, plant and equipment		2,611			4,239
Purchase of property, plant and equipment		(356,758	)		(165,855	)
Purchase of intangible assets		(6,084	)		(3,603	)
Proceeds from sales of other long-term assets		3,060			1,230
Purchase of othernon-current assets		(67,547	)		(73,859	)
Dividends received		3,539			6,206
Other inflows (outflows) of cash, net		(596	)		—
Cash flows from (used in) Investing Activities		(436,865	)		(382,936	)
Cash flows from (used in) Financing Activities
Total borrowings obtained		140,000			7,000
Debt obtained in long-term		—			7,000
Debt obtained in short-term		140,000			—
Repayments of borrowings		(44,909	)		(60,483	)
Payments of lease liabilities		(21,230	)		(20,949	)
Other outflows of cash, net		69			(316	)
Cash flows from (used in) Financing Activities		73,930			(74,748	)
Net increase (decrease) in Cash and Cash Equivalents before effect of exchange rate changes		(378,677	)		(327,433	)
Effect of exchange rate changes on cash and cash equivalents		(25,877	)		(738	)
Net increase (decrease) of Cash and Cash Equivalents		(404,554	)		(328,171	)
Cash and cash equivalents, at the beginning of the period		1,560,012			1,075,942
Cash and cash equivalents, at the end of the period		1,155,458			747,771

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

March 31, 2020

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

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS AS OF MARCH 31, 2020 AND 2019 AND DECEMBER 31, 2019

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 number93,458,000-1, is a closely held corporation, that was registered in the Securities Registry (the “Registry”) of the Chilean Commission for the Financial Market (“CMF”) as No. 042 on June 14, 1982. Additionally, the Company is registered as anon-accelerated filer in the Securities and Exchange Commission (SEC) of the United States of America.

The Company’s head office address is El Golf Avenue 150, 14^thfloor, 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, wood products and forestry.

As of March 31, 2020, Arauco is controlled by Empresas Copec S.A., tax identification number90,690,000-9, 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 CMF.

Moreover, Empresas Copec S.A. is controlled by the public corporation AntarChile S.A., tax identification number96,556,310-5, which owns 60.8208% of Empresas Copec S.A. Furthermore, the ultimate shareholders of AntarChile S.A. and, consequently, of Empresas Copec S.A., are Mr. Roberto Angelini Rossi, tax identification number5,625,652-0, and Mrs. Patricia Angelini Rossi, tax identification number5,765,170-9.

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

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CELULOSA ARAUCO Y CONSTITUCION S.A. AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

March 31, 2020

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

Presentation of Interim Consolidated Financial Statements

The Consolidated Financial Statements presented by Arauco are comprised by the following:

• Interim Consolidated Statements of Financial Positionas of March 31, 2020 and December 31, 2019.

• Interim Consolidated Statements of Profit or Loss for the periods ended March 31, 2020 and 2019.

• Interim Consolidated Statements of Comprehensive Income for the periods ended March 31, 2020 and 2019.

• Interim Consolidated Statements of Changes in Equity for the periods ended March 31, 2020 and 2019.

• Interim Consolidated Statements of Cash Flows for the periods ended March 31, 2020 and 2019.

• Explanatory disclosures (notes)

Period Covered by the Interim Consolidated Financial Statements

Periods ended March 31, 2020 and 2019.

Date of Approval of the Interim Consolidated Financial Statements

These interim consolidated financial statements were approved by the Board of Directors of the Company (the “Board”) at the Extraordinary Meeting No. 631 on May 12, 2020.

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

ICMS - Tax movement of inventories and services (Brazil)

Functional and Presentation Currency

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

For the pulp 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 wood products 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.

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CELULOSA ARAUCO Y CONSTITUCION S.A. AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

March 31, 2020

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

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 currency used to finance operations is mainly the U.S. Dollar.

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

Summary of significant accounting policies

a) Basis for preparation of the 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 they represent the explicit and unreserved adoption of IFRS.

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

b) Critical accounting estimates and judgments

The preparation of these interim consolidated financial statements, in accordance with 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 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 makes 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.

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CELULOSA ARAUCO Y CONSTITUCION S.A. AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

March 31, 2020

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

- 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.

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 the 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.

16

CELULOSA ARAUCO Y CONSTITUCION S.A. AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

March 31, 2020

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

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 thenon-controlling interest, as appropriate. Total comprehensive income is attributed to the owners of the parent company andnon-controlling interests even if the results of thenon-controlling interest have a deficit balance.

If a subsidiary uses accounting policies other than those adopted in the interim consolidated financial statements for transactions and other events in similar circumstances, appropriate adjustments are made to the 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 these interim consolidated financial statements andnon-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 Pesos, Canadian Dollars 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 as indicated in Note 1 (e) (ii).

A parent company will presentnon-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 personnel responsible for making such decisions are the Executive Vice-president and the Chief Executive Officer who are the highest authorities for making decisions and are 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

• Wood products

• Forestry

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

17

CELULOSA ARAUCO Y CONSTITUCION S.A. AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

March 31, 2020

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

e) Functional currency

(i) Functional currency

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

(ii) Translation to the presentation currency of Arauco

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

(iii) Foreign Currency Transactions

Transactions in currencies other than the functional currency are recognized at the exchange rates prevailing at the dates of the transactions. Profit or loss on transactions in currencies other than the functional currency resulting from the settlement of such transactions and from the translation atyear-end exchange rates of monetary assets and liabilities denominated in foreign currencies, are recognized in the interim consolidated 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 includecash-on-hand, deposits held on demand at financial entities 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

Initial classification

Arauco classifies its financial assets into the following categories: fair value through profit or loss and amortized cost.

Arauco does not have financial assets at fair value through other comprehensive income.

The classification is based on the business model used to manage the assets and the characteristics of their contractual cash flows.

18

CELULOSA ARAUCO Y CONSTITUCION S.A. AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

March 31, 2020

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

Management determines the classification of its financial assets at the time of their initial recognition.

(a) Financial assets at fair value through profit or loss: these instruments are initially measured at fair value. Net income and losses, including any income from interest or dividends, are registered in the profit or loss of the period. Financial assets are classified in the category of financial assets at fair value through profit or loss when they are maintained for negotiation or designated in their initial registration as assets at fair value through profit or loss. A financial asset can be classified in this category if it is acquired mainly for the purposes of being sold in the short-term. Gain or losses of assets held for negotiations are registered in the consolidated statements of Profit or Loss, and the related interest is registered independently as financial income. Derivatives are classified as acquired for negotiation also unless they are designated as hedging instruments.

(b) Assets measured at amortized cost: they are initially registered at the fair value of the transaction, adding or subtracting the transaction costs that are directly attributable to the issuance of the financial asset or financial liability. The financial asset is maintained within a business model, the objective of which is to maintain financial assets to obtain contractual cash flows and the contractual conditions of the asset give rise, on specified dates, to cash flows that are solely payments of principal and interests (“SPPI”) over the amount of the outstanding principal.

Subsequent measurement

Financial instruments are subsequently measured at fair value through profit or loss or amortized cost.

The classification is based on two criteria: i) the Company’s business model for the management of financial instruments, and ii) whether the contractual cash flows related to the financial instruments represent “Solely Payments of Principal and Interests”.

a) Financial assets at fair value through profit or loss: these instruments are subsequently measured at fair value. Net earnings and losses, including income from interests and dividends, are registered as profits or losses for the period. These instruments are held for negotiation and they are mainly acquired to be sold in the short term. Derivatives are also classified as held for negotiation, unless they are registered as hedging instruments. Financial instruments of this type are classified as Other Current andNon-Current Financial Assets. They are subsequently valuated by determining their fair value, registering changes in value in the interim consolidated statements of Profit or Loss, in the items of Financial Income or Financial Costs.

b) Financial assets measured at amortized cost: These instruments are subsequently measured at amortized cost minus accumulated amortizations, using the effective interest method and adjusted by loss allowance and volume discounts, in the case of financial assets. Financial income and expenses, foreign exchange income and losses, and impairment are registered in results. Any earnings or losses due to initial or subsequent reductions of the value of the asset are registered in the statement of profit or loss of the period. Loans and receivables arenon-derivative financial instruments with fixed or determinable payments not traded in any active market. They are registered at amortized cost, registering accrued conditions directly in profit or loss.

19

CELULOSA ARAUCO Y CONSTITUCION S.A. AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

March 31, 2020

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

Arauco measures accumulated losses in a quantity equivalent to expected credit losses during the lifelong commitment. Expected credit losses are based on contractual cash flow differences based on the allowance of each contract and the cash flows that Arauco expects. The difference is then discounted based on an approximation of the asset’s original effective interest rate. The asset’s carrying value is reduced as the allowance is used, and the loss is recognized in sales expenses in the interim consolidated statements of profit or loss. When an account receivable cannot be collected, it is regularized against the allowance account for receivables. Subsequent recoveries of previously impaired amounts are recognized as a debit in distribution costs.

Derivative financial instruments are explained in Note 1 h).

Financial liabilities

Arauco classifies its financial liabilities as follows: fair value through profit or loss, derivatives designated as effective hedging instruments and amortized costs.

Management determines the classification of its financial liabilities upon initial recognition. Financial liabilities are derecognized when the obligation is cancelled, settled or expired. When an existing financial liability is replaced with another of the same provider under substantially different terms, or where the terms of an existing liability are substantially amended, such exchange or modification is treated as awrite-off of the original liability, with a new liability being recognized, and the difference between the respective carrying amounts is recognized in the interim consolidated statement of profit or loss.

Financial liabilities are initially recognized at fair value, and in the case of loans, they include the costs directly attributable to the transaction. The subsequent measurement of the financial liabilities depends on their classification:

Financial Liabilities at fair value through profit or loss

Financial liabilities are included in the category of financial liabilities at fair value through profit or loss when they are held for trading or originally designated at fair value through profit or loss. Income and losses from liabilities held for trading are recognized in profit or loss. This category includesnon-designated derivatives for hedging accounting.

Financial Liabilities at amortized cost

Other financial liabilities are subsequently valued at their amortized cost based on the effective interest rate method. The amortized cost is calculated taking into account any premium or acquisition discount and includes the costs of transactions that are an integral part of the effective interest rate. This category includes Commercial Accounts Payable and Other Accounts Payable, lease liabilities, as well as the loans included in Other Current andNon-Current Financial Liabilities.

20

CELULOSA ARAUCO Y CONSTITUCION S.A. AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

March 31, 2020

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

h) Derivative financial instruments

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

Derivatives are initially recognized at fair value at the date the derivative contracts are entered into and are subsequentlyre-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, 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 innon-derivative host contracts are treated as separate derivatives when they meet the definition of a derivative, their risks and characteristics are not closely related to those of the host contracts and the contracts are not measured at FVTPL as a whole. Arauco has determined that no embedded derivatives currently exist.

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

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

-Fair Value Hedges -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.

-Cash flow hedges -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.

21

CELULOSA ARAUCO Y CONSTITUCION S.A. AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

March 31, 2020

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

i) Inventories

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

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

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

Biological assets are transferred to inventories when forests are harvested.

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

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

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

j) Non-current assets held for sale

Arauco 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) asnon-current assets held for sale which as of the date of the interim consolidated statements of financial position are the subject of active sale efforts which are estimated to be highly probable.

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 asnon-current assets held for sale.

22

CELULOSA ARAUCO Y CONSTITUCION S.A. AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

March 31, 2020

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

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 anynon-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 5Non-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 IFRS 9.

A parent will presentnon-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 whichnon-controlling interests are adjusted and the fair value of the consideration paid or received is recognized directly in equity and attributed to owners of the parent company. No adjustment is made to the carrying amount of goodwill, neither gains nor losses are recognized in the statement of profit or loss.

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

Arauco measures the fair value of the acquired company in the business combination achieved in each stage (“step acquisition”), recognizing the effects of remeasurement of previously held equity in the acquiree in the interim consolidated statements of profit or loss.

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.

23

CELULOSA ARAUCO Y CONSTITUCION S.A. AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

March 31, 2020

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

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 statement 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.

If the acquisition cost is lower than the fair value of the net assets of the associate acquired, the difference is recognized directly in statement of profit or loss in line Other gains (losses).

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.

24

CELULOSA ARAUCO Y CONSTITUCION S.A. AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

March 31, 2020

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

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 anynon-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 theliabilities 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.

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.

25

CELULOSA ARAUCO Y CONSTITUCION S.A. AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

March 31, 2020

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

Goodwill recognized in subsidiaries Arauco Canada Ltd., Arauco do Brasil S.A. and Arauco Argentina S.A., generated on subsidiaries acquisitions whose functional currency is different from the functional currency of the parent company and presentation of these financial statements, are translated into U.S. Dollars at the closing exchange rate.

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 IFRS 16 for recognizing leases in a manner consistent with contracts with similar features and akin circumstances.

At the beginning of a contract, Arauco assesses whether the contract is, or if it contains, a lease. A contract is, or contains, a lease if it transfers the right to control the use of a given asset for a certain period of time, in exchange for consideration.

As of the initial date for recording a lease, Arauco, as lessee, recognizes an asset by the right of use at cost.

The cost of the asset for right of use comprises:

- The amount of the initial measurement of the lease liability. This measurement is at present value of the payments for leases that have not been disbursed as of that date. Payments for leases are discounted using the incremental interest rate for financial loans;

- Payments for leases performed prior to or as of the initiation date, minus the lease incentives that have been received;

- The initial direct costs incurred by the lessee; and

- An estimation of the costs to be incurred by the lessee when dismantling and eliminating the underlying asset, restoring the location where the same is located, or restoring the underlying asset to the condition required under the terms and conditions of the lease, unless such costs are incurred in order to produce inventories. The lessee assumes obligations stemming from such costs either at the commencement date, or as a result of having used the underlying asset during a specific period.

26

CELULOSA ARAUCO Y CONSTITUCION S.A. AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

March 31, 2020

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

After the initial recognition date, Arauco, as lessee, recognizes its asset for right of use by applying the cost model, minus the accumulated depreciation and impairment losses, and adjusted for remeasurement of the liability for lease.

At the beginning, Arauco in the capacity of lessee, recognizes the lease liability at present value of the lease payments that have not been disbursed as of that date. Lease payments are discounted using the incremental interest rate for financial loans.

After the initial recognition date (January 1, 2019), Arauco, as lessee, recognizes a liability for leases by increasing the book value, so as to reflect the interest over the liability for lease, reducing the amount in order to reflect the payments for leases that have been performed and once again recognizing the book value, so as to reflect the remeasurement and also to reflect the essential fixed payments for leases that have been revised.

Arauco presents the assets by right of use in the Interim Consolidated Statement of Financial Position and are further disclosed in Note 8. Likewise, lease liabilities are presented in the Interim Consolidated Statement of Financial Position and further disclosed in Note 23.

IFRS 16 maintains substantially the accounting requirements of the lessor from IAS 17. Therefore, Arauco has continued to classify its leases as operational or financial, as the case may be.

Income from operating leases in which Arauco is the lessor are recognized on a straight-line basis during the term of the lease. Initial direct costs are added to the book value of the underlying asset and are recognized as expenses during the term of the lease on the same basis as the lease income. Leased assets are included within the statement of financial position, in property, plant and equipment. Arauco did not make adjustments with respect to assets that maintains as a lessor, as a result of IFRS 16 adoption.

When assets are leased under a financial lease, the present value of lease payments are recognized as financial accounts receivable. The difference between the gross receivable and the present value of such amount, is recognized as financial return on capital.

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 its relative reasonable values, payments and considerations associated with the lease, from the rest of the elements incorporated into the contract.

27

CELULOSA ARAUCO Y CONSTITUCION S.A. AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

March 31, 2020

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

q) Biological Assets

IAS 41 requires that biological assets, such as standing trees, are measured at fair value less cost to sell in the interim 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 statements of profit or loss.

r) Income 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.

Deferred taxes are recognized in accordance with the standards established in IAS 12-Income Tax.

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

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

s) Provisions

Provisions are recognized when the Company has a present obligation, legal or constructive, as a result of past events, under which, it is probable that an outflow of resources will be required to settle the obligation; and when 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.

28

CELULOSA ARAUCO Y CONSTITUCION S.A. AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

March 31, 2020

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

t) Revenue recognition

Revenues are valued at fair value of the consideration received or to be received, derived from them.

Arauco analyses and takes under consideration all relevant facts and circumstances to apply the five-step model established under IFRS 15 to customer contracts: (i) identify the contract, (ii) identify the performance obligations, (iii) determine the transaction price, (iv) allocate the transaction price, and (v) recognise revenue. Additionally, Arauco evaluates the incremental costs of obtaining a contract and the costs incurred to comply with a contract.

Arauco recognizes revenues when the steps established in IFRS have been satisfactorily complied with.

Accounts receivable are recognized when control over goods or services has been transferred to the customer, because at this point of the time collection is unconditional and the passage of time is only needed to receive payment.

(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 committed 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. Revenue from the sale of goods are recognized when there is no obligation unsatisfied that could affect the customer’s acceptance of the product. The delivery is effective when the products are sent to the specific location, the risks of obsolescence and loss have been transferred to the customer and when Arauco has objective evidence that all acceptance criteria have been satisfied.

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. 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.

29

CELULOSA ARAUCO Y CONSTITUCION S.A. AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

March 31, 2020

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

(ii) Revenue recognition from Rendering of Services

Revenue from the rendering of services is recognized as long as the performance obligation have been satisfied.

Revenue is recognized considering the stage of completion of the transaction at the date of the reporting period, when Arauco has the enforceable right of payment from the rendering of the services.

There is no significant financing component, given that sales are made with a reduced average collection period, which is in line with market practice.

Arauco mainly provides power supply services which are transacted principally in the spot market of the Sistema Eléctrico Nacional (SEN) (“National Electrical System”). According to current regulations, the prices on that market called “Marginal Costs” are calculated by the Coordinador Eléctrico Nacional (CEN) (“National Electrical Coordinator”) and are generally recognized in the period in which the services are rendered.

Electrical power is generated as aby-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 SEN.

Arauco provides othernon-core services such as port services and pest control whose revenues are derived from fixed price service contracts are recognized considering the stage of completion of the services rendered at the date of reporting, generally 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 theby-laws for preferred shares, if any, except where necessary to absorb accumulated losses from prior years.

On October 28, 2019, Arauco approved to amend the Company’sby-laws in order to establish that the Ordinary Shareholders’ Meeting will be determining, on an annually basis, the dividends to be distributed, without being subject to the 30% distributable minimum indicated by Chilean Corporations Law.

For the purposes of the annual distribution of the net profits on each period, it will be responsibility of the Ordinary Shareholders’ Meeting to determine the portion of such profits that will be distributed as dividend to the shareholders. Such determination will be made by the Shareholders’ meeting without being subject to the 30% minimum established in article 79 of Law No. 18,046 (regarding Corporations), who may agree on the distribution of a smaller percentage. In any case, the Board of Directors may, under the personal responsibility of the directors participating in the respective agreement, distribute interim dividends out of the profits of the corresponding year, provided there are no accumulated losses.

30

CELULOSA ARAUCO Y CONSTITUCION S.A. AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

March 31, 2020

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

v) Earning per share

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

w) Impairment

Non-financial Assets

The recoverable amount of property, plant and equipment and other 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

31

CELULOSA ARAUCO Y CONSTITUCION S.A. AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

March 31, 2020

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

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 the interim consolidated statement of 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.

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.

An allowance for doubtful accounts is established based on a measurement of expected losses using a simplified approach.

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 reversedeither 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.

32

CELULOSA ARAUCO Y CONSTITUCION S.A. AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

March 31, 2020

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 line item “Trade and Other current payables” in the interim consolidated statements of financial position.

z) Recent accounting pronouncements

a) Standards, interpretations and amendments that are mandatory for the first time for annual periods beginning on January 1, 2020:

Amendments and    improvements	Content	Mandatory application for annual periods   beginning on or after
IAS 1 y IAS 8	Presentation of Financial Statements and Accounting Policies, Changes in Accounting Estimates and Errors. Clarifies the definition of material and align the definition used in the Conceptual Framework and the standards themselves.	January 1, 2020
IFRS 3	Definition of a Business Narrows the definitions of a business	January 1, 2020
IFRS 9, IAS 39 and IFRS 7	Interest rate benchmark reform Provides certain reliefs in connection with interest rate benchmark reform.	January 1, 2020

The adoption of the standards, amendments and interpretations described above do not have a significant impact on Arauco Consolidated Financial Statements during its initial application period.

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 17	Insurance Contracts Supersedes IFRS 4. It changes mainly the accounting for insurance contracts and investments contracts.	January 1, 2021

Amendments and    improvements	Content	Mandatory application for annual periods   beginning on or after
IFRS 10 y IAS28-Amendments	Sale or Contribution of assets among an Investor and its Associates or Joint Ventures.	Indeterminate
IAS 1	Presentation of Financial Statements Provides more general approach to the classification of liabilities as Current orNon-current based on the contractual arrangements in place at the reporting date. Also, it clarifies what is meant by ‘settlement’ of liabilities.	January 1, 2022

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

33

CELULOSA ARAUCO Y CONSTITUCION S.A. AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

March 31, 2020

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

NOTE 2. ACCOUNTING POLICIES, CHANGES IN ACCOUNTING ESTIMATES

Changes to accounting policies

As of March 31, 2020, there have been no changes regarding the accounting policies with respect to the 2019 financial year.

Changes to accounting estimates

As of March 31, 2020, there have been no changes regarding the accounting estimates with respect to the 2019 financial 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.

	03-31-2020	12-31-2019
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
	03-31-2020	12-31-2019
Number of Shares Issued and Fully Paid by Type of Capital in Ordinary Shares	113,159,655

b) Dividends paid

As of March 31, 2020, and 2019, no dividends were paid.

As of March 31, 2020, and December 31, 2019 according to the current dividends policy, it is not required to recognize a minimum dividend provision.

The following are the dividends paid and the corresponding per share amounts during the periods 2019:

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	05-08-2019
Amount of Dividend	ThU.S.$ 182,040
Number of Shares for which Dividends are Paid	113,159,655
Dividend per Share	U.S.$ 1.60870

34

CELULOSA ARAUCO Y CONSTITUCION S.A. AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

March 31, 2020

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

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

The hedging reserve includes the cash flow hedge reserve and the costs of hedging reserve. The cash flow hedge reserve is used to recognise the effective portion of gains or losses on derivatives that are designated and qualify as cash flow hedges.

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.

35

CELULOSA ARAUCO Y CONSTITUCION S.A. AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

March 31, 2020

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

d) Other items in the Interim Consolidated 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 for the periods ended March 31, 2020 and 2019 are as follows:

	January - March
	2020 ThU.S.$			2019 ThU.S.$
Classes of Other Income
Other Income, Total		55,246			45,539
Gain from changes in fair value of biological assets (See note 20)		52,017			36,981
Net income from insurance compensation		20			708
Revenue from export promotion		276			358
Lease income		346			620
Gain on sales of assets		1,488			4,268
Compensations received		1			33
Other operating results		1,098			2,571
Classes of Other Expenses by activity
Total of Other Expenses by activity		(50,938	)		(22,317	)
Legal expenses		(1,390	)		(1,338	)
Impairment provision for property, plant and equipment and others		(18,059	)		(2,627	)
Operating expenses related to staff restructuring or from plants stoppage or closed		(13,111	)		(3,713	)
Expenses related to projects		(3,550	)		(7,332	)
Loss of asset sales		(948	)		(1,411	)
Loss and repair of assets		(2,512	)		(34	)
Loss of forest due to fires		(5,056	)		—
Other Taxes		(3,916	)		(3,737	)
Research and development expenses		(501	)		(587	)
Fines, readjustments and interests		(571	)		(97	)
Other expenses		(1,324	)		(1,441	)
Classes of financing income
Financing income, total		7,207			6,746
Financial income from mutual funds—term deposits		5,331			4,859
Financial income resulting from swap—forward instruments		343			—
Other financial income		1,533			1,887
Classes of financing costs
Financing costs, Total		(71,782	)		(57,391	)
Interest expense, Banks loans		(8,206	)		(7,301	)
Interest expense, Bonds		(43,658	)		(35,697	)
Interest expense, other financial instruments		(9,485	)		(6,227	)
Interest expense for right of use		(2,532	)		(2,869	)
Other financial costs		(7,901	)		(5,297	)
Share of profit (loss) of associates and joint ventures accounted for using equity method
Total		1,553			4,363
Investments in associates		1,919			262
Joint ventures		(366	)		4,101

36

CELULOSA ARAUCO Y CONSTITUCION S.A. AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

March 31, 2020

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 - March
Cost of sales (*)	2020 ThU.S.$		2019 ThU.S.$
Timber		191,255		184,242
Forestry labor costs and other services		107,457		133,003
Depreciation and amortization		98,268		96,649
Depreciation for right of use		14,946		18,538
Maintenance costs		58,937		74,041
Chemical costs		118,425		141,217
Sawmill Services		27,893		36,544
Other Raw Materials		50,531		57,350
Other Indirect costs		32,653		41,805
Energy and fuel		41,747		54,538
Cost of electricity		8,811		8,767
Wages and salaries		92,637		95,222
Total		843,560		941,916

(*) Total amount is composed by the cost of inventory sales for ThU.S.$ 833,737 (ThU.S.$ $ 928,199 as of March 31, 2019) and by cost of rendering services for ThU.S.$ 9,823 (ThU.S.$ 13,717 as of March 31, 2019)

	January - March
Distribution costs	2020 ThU.S.$			2019 ThU.S.$
Selling costs		8,696			9,651
Commissions		3,110			3,376
Insurance		837			917
Provision for doubtful accounts		(44	)		(208	)
Other selling costs		4,793			5,566
Shipping and freight costs		128,733			133,207
Port services		8,619			5,659
Freights		110,343			119,246
Depreciation for right of use		413			—
Other shipping and freight costs (internment, warehousing, stowage, customs and other costs)		9,358			8,302
Total		137,429			142,858

	January - March
Administrative expenses	2020 ThU.S.$		2019 ThU.S.$
Wages and salaries		53,461		59,349
Marketing, advertising, promotion and publications expenses		3,385		6,627
Insurances		5,719		4,936
Depreciation and amortization		7,615		7,029
Depreciation for right of use		2,775		2,131
Computer services		5,301		8,026
Lease rentals (offices, other property and vehicles)		1,508		3,782
Donations, contributions, scholarships		2,599		3,426
Fees (legal and technical advisors)		9,325		10,838
Property taxes, city permits and rights		3,871		3,986
Cleaning services, security services and transportation		5,193		5,902
Third-party variable services (maneuvers, logistics)		8,196		10,474
Basic services (electricity, telephone)		1,757		2,259
Maintenance and repair		1,355		1,362
Seminars, courses, training materials		528		587
Other administration expenses (travels, clothing and safety equipment, environmental expenses, audits and others)		10,915		10,566
Total		123,503		141,280

37

CELULOSA ARAUCO Y CONSTITUCION S.A. AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

March 31, 2020

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

e) Auditor Fees and Number of Employees

Auditors fees	03-31-2020 ThU.S.$		03-31-2019 ThU.S.$
Audit services		576		729
Other services
Tax services		221		421
Others		42		57
TOTAL		839		1,207
Number of employees	N°
		18,119		17,252

NOTE 4. INVENTORIES

Components of Inventory	03-31-2020 ThU.S.$		12-31-2019 ThU.S.$
Raw materials		106,940		129,004
Production supplies		125,370		128,229
Work in progress		73,570		69,760
Finished goods		564,623		532,200
Spare Parts		184,732		194,674
Total Inventories		1,055,235		1,053,867

Inventories recognized as cost of sales as of March 31, 2020 were ThU.S.$ 833,737 (ThU.S.$ 928,199 as of March 31, 2019).

In order to have the inventories recorded at net realizable value as of March 31, 2020, a net increase of inventories was recognized associated with a lower provision of obsolescence of ThU.S.$ 6,786 (increase of ThU.S.$ 553 as of March 31, 2019). As of March 31, 2020, the amount of obsolescence provision is ThU.S.$46,394 (ThU.S.$ 53,180 as of December 31, 2019).

As of March 31, 2020, there were inventory write-offs of ThU.S.$335 (ThU.S.$ 1,511 as of March 31, 2019).

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

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

38

CELULOSA ARAUCO Y CONSTITUCION S.A. AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

March 31, 2020

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

NOTE 5. CASH AND CASH EQUIVALENTS

Cash and cash equivalents include cash on hand, bank checking account balances, time deposits 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.

Theinvestment objective of time deposits 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.

Components of Cash and Cash Equivalents	03-31-2020 ThU.S.$		12-31-2019 ThU.S.$
Cash on hand		146		177
Bank checking account balances		214,562		314,804
Time deposits		918,762		611,073
Mutual funds		21,988		633,958
Total		1,155,458		1,560,012

The risk classification of the Company’s mutual funds as of March 31, 2020 and December 31, 2019 is shown below.

	03-31-2020 ThU.S.$		12-31-2019 ThU.S.$
AAAfm		13,513		624,534
No classification		8,475		9,424
Total Mutual Funds		21,988		633,958

39

CELULOSA ARAUCO Y CONSTITUCION S.A. AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

March 31, 2020

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

Changes in Financial Liabilities

			Cash Flow
	Opening balance 01-01-2020 ThU.S.$		Borrowings obtained ThU.S.$		Borrowings paid ThU.S.$			Interest paid ThU.S.$			Accrued interest ThU.S.$		Inflation adjustment ThU.S.$			Non-cash movements ThU.S.$			Closing balance 03-31-2020 ThU.S.$
Borrowings from banks		947,022		140,000		(44,776	)		(7,772	)		7,512		(2,349	)		(1,439	)		1,038,198
Hedging liabilities		134,275		—		—			(2,848	)		2,848		—			256,552			390,827
Bonds and promissory notes		4,831,743		—		(133	)		(28,690	)		50,241		(151,274	)		2,006			4,703,893
Other financial liabilities, Total		5,913,040		140,000		(44,909	)		(39,310	)		60,601		(153,623	)		257,119			6,132,918

			Cash Flow
	Opening balance 01-01-2020 ThU.S.$		Borrowings obtained ThU.S.$		Borrowings paid ThU.S.$			Interest paid ThU.S.$			Accrued interest ThU.S.$		Inflation adjustment ThU.S.$			Non-cash movements ThU.S.$			Closing balance 03-31-2020 ThU.S.$
Lease liabilities (IFRS 16)		271,025		—		(21,230	)		(2,518	)		2,445		(14,549	)		(4,578	)		230,595
Lease liabilities, Total		271,025		—		(21,230	)		(2,518	)		2,445		(14,549	)		(4,578	)		230,595

	Opening balance 01-01-2019 ThU.S.$		Increase (decrease) for changes in accounting policies ThU.S.$		Re- expressed opening balance ThU.S.$		Cash Flow																Increase (decrease) due to business combination ThU.S.$
							Borrowings obtained ThU.S.$		Borrowings paid ThU.S.$			Commissions paid ThU.S.$			Interest paid ThU.S.$			Accrued interest ThU.S.$		Inflation adjustment ThU.S.$					Non-cash movements ThU.S.$			Closing balance 12-31-2019 ThU.S.$
Borrowings from banks		940,435		—		940,435		156,350		(143,998	)		(4,797	)		(36,902	)		31,480		(125	)		6,738		(2,159	)		947,022
Hedging liabilities		71,599		—		71,599		—		—			—			(29,464	)		29,464		—			—		62,676			134,275
Bonds and promissory notes		3,501,654		—		3,501,654		1,986,089		(577,954	)		(5,900	)		(188,748	)		190,765		(66,385	)		4,324		(12,102	)		4,831,743
Other financial liabilities, Total		4,513,688		—		4,513,688		2,142,439		(721,952	)		(10,697	)		(255,114	)		251,709		(66,510	)		11,062		48,415			5,913,040

	Opening balance 01-01-2019 ThU.S.$		Increase (decrease) for changes in accounting policies ThU.S.$		Re- expressed opening balance ThU.S.$		Cash Flow															Increase (decrease) due to business combination ThU.S.$
							Borrowings obtained ThU.S.$		Borrowings paid ThU.S.$			Commissions paid ThU.S.$		Interest paid ThU.S.$			Accrued interest ThU.S.$		Inflation adjustment ThU.S.$					Non-cash movements ThU.S.$		Closing balance 12-31-2019 ThU.S.$
Lease liabilities (IFRS 16)		68,187		249,317		317,504		—		(80,323	)		—		(10,905	)		10,601		(9,339	)		4,133		39,354		271,025
Lease liabilities, Total		68,187		249,317		317,504		—		(80,323	)		—		(10,905	)		10,601		(9,339	)		4,133		39,354		271,025

40

CELULOSA ARAUCO Y CONSTITUCION S.A. AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

March 31, 2020

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 27% in Chile, 30% in Argentina and Mexico, 34% in Brazil, 25% in Uruguay and 21% in the United States (federal tax).

On December 29, 2017, Law No. 27,430 was published in the Official Gazette of Argentina, which amended several articles of the Income Tax Act. The most relevant amendments include the reduction of the federal income tax rate from 35% to 30% by 2018 and 2019 fiscal years, and 25% by 2020. Law 27,541 suspended the withdrawal for the year 2020, so the tax rate for this fiscal year is 30%.

On March 25, 2019, the subsidiary Arauco Argentina S.A. chose to conduct the Tax Reappraisal set forth in Title X – Chapter 1 of Law No. 27,430. The option was exercised for all Properties, Plants and Equipments included in the category of amortizable movable assets, pursuant to the income tax law, which were adjusted to inflation using the coefficients published in such law for the purposes of calculating the aforementioned tax. The effect of the special tax in the presentation US$ 3 millions, which was paid in six instalments during year 2019. Additionally, the increase of the value of these tax assets, arising from this adjustment, generated a decrease of the liabilities for deferred taxes as of December 31, 2019 of approximately ThU.S.$12,629. Both the loss for the special tax as well as the profits for the decrease of the deferred tax, are shown in the Income tax line in period 2019.

41

CELULOSA ARAUCO Y CONSTITUCION S.A. AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

March 31, 2020

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

Deferred Tax Assets

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

	03-31-2020			12-31-2019
Deferred Tax Assets	ThU.S.$			ThU.S.$
Deferred tax Assets relating to Provisions		5,555			5,749
Deferred tax Assets relating to Accrued Liabilities		5,512			7,182
Deferred tax Assets relating to Post-Employment benefits		18,153			20,378
Deferred tax Assets relating to Property, Plant and equipment		15,131			16,609
Deferred tax Assets relating to Impairment provision		21,080			20,169
Deferred tax Assets relating to Financial Instruments		69,247			68,390
Deferred tax Assets relating to Tax Loss Carryforward		163,491			144,652
Deferred tax Assets relating to Inventories		12,679			12,460
Deferred tax Assets relating to Provisions for Income		8,095			6,631
Deferred tax Assets relating to Allowance for Doubtful Accounts		3,937			4,349
Deferred tax Assets relating to Intangible revaluation		4,481			6,044
Deferred tax Assets relating to tax credits		18,753			8,029
Deferred tax Assets relating to Other Deductible Temporary Differences		19,217			16,161
Total Deferred Tax Assets		365,331			336,803
Offsetting presentation		(358,935	)		(330,736	)
Net Effect		6,396			6,067

Certain subsidiaries of Arauco mainly in Chile, Brazil, Argentina and USA, 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.$598,126 (ThU.S.$ 550,551 at December 31, 2019), which are mainly originated by operational and financial losses.

In addition, as of the closing date of these interim consolidated financial statements there are ThU.S.$148,788 (ThU.S.$ 188,474 at December 31, 2019) ofnon-recoverable tax losses from companies in Uruguay as joint operations based on the participation of Arauco and subsidiaries in USA, for which deferred tax assets have not been recognized. The estimated recovery period exceeds the expiry date of such tax losses.

Deferred Tax Liabilities

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

	03-31-2020			12-31-2019
Deferred Tax Liabilities	ThU.S.$			ThU.S.$
Deferred tax Liabilities relating to Property, Plant and Equipment		893,686			900,415
Deferred tax Liabilities relating to Financial Instruments		25,197			25,630
Deferred tax Liabilities relating to Biological Assets		636,681			642,221
Deferred tax Liabilities relating to Inventory		37,992			38,251
Deferred tax Liabilities relating to Prepaid Expenses		44,127			41,338
Deferred tax Liabilities relating to Intangible		15,630			17,942
Deferred tax Liabilities relating to Other Taxable Temporary Differences		21,948			25,126
Total Deferred Tax Liabilities		1,675,261			1,690,923
Offsetting presentation		(358,935	)		(330,736	)
Net Effect		1,316,326			1,360,187

The effect of changes in current and deferred tax liabilities related to financial hedging instruments corresponds to a credit of ThU.S.$27,786 as of March 31, 2020 (ThU.S.$3,718 as of March 31, 2019), which is presented net in Reserves for Cash Flow Hedges in the Interim Consolidated Statement of Changes in Equity.

42

CELULOSA ARAUCO Y CONSTITUCION S.A. AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

March 31, 2020

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

Reconciliation of deferred tax assets and liabilities

	Opening Balance 01-01-2019		Deferred tax Income (Expenses)			Deferred tax of items charged to other comprehensive income			Increase (decrease) Net exchange differences			Closing balance 12-31-2019
Deferred Tax Assets	ThU.S.$		ThU.S.$			ThU.S.$			ThU.S.$			ThU.S$
Deferred tax Assets relating to Provisions		5,749		229			—			(423	)		5,555
Deferred tax Assets relating to Accrued Liabilities		7,182		(1,644	)		—			(26	)		5,512
Deferred tax Assets relating to Post-Employment benefits		20,378		(2,116	)		(64	)		(45	)		18,153
Deferred tax Assets relating to Property, Plant and equipment		16,609		(1,523	)		—			45			15,131
Deferred tax Assets relating to Impairment provision		20,169		3,023			—			(2,112	)		21,080
Deferred tax Assets relating to Financial Instruments		68,390		(5,020	)		7,309			(1,432	)		69,247
Deferred tax Assets relating to Tax Loss Carryforward		144,652		8,411			20,477			(10,049	)		163,491
Deferred tax Assets relating to Inventories		12,460		585			—			(366	)		12,679
Deferred tax Assets relating to Provisions for Income		6,631		1,552			—			(88	)		8,095
Deferred tax Assets relating to Allowance for Doubtful Accounts		4,349		(67	)		—			(345	)		3,937
Deferred tax Assets relating to Intangible revaluation		6,044		(321	)		—			(1,242	)		4,481
Deferred tax Assets relating to tax credits		8,029		10,724			—			—			18,753
Deferred tax Assets relating to Other Deductible Temporary Differences		16,161		3,766			—			(710	)		19,217
Total Deferred Tax Assets		336,803		17,599			27,722			(16,793	)		365,331
	Opening Balance 01-01-2019		Deferred tax Income (Expenses)			Deferred tax of items charged to other comprehensive income			Increase (decrease) Net exchange differences			Closing balance 12-31-2019
Deferred Tax Liabilities	ThU.S.$		ThU.S.$			ThU.S.$			ThU.S.$			ThU.S$
Deferred tax Liabilities relating to Property, Plant and Equipment		900,415		6,780			—			(13,509	)		893,686
Deferred tax Liabilities relating to Financial Instruments		25,630		(433	)		—			—			25,197
Deferred tax Liabilities relating to Biological Assets		642,221		12,258			—			(17,798	)		636,681
Deferred tax Liabilities relating to Inventory		38,251		(182	)		—			(77	)		37,992
Deferred tax Liabilities relating to Prepaid Expenses		41,338		2,976			—			(187	)		44,127
Deferred tax Liabilities relating to Intangible		17,942		(64	)		—			(2,248	)		15,630
Deferred tax Liabilities relating to Other Taxable Temporary Differences		25,126		(526	)		—			(2,652	)		21,948
Total Deferred Tax Liabilities		1,690,923		20,809			—			(36,471	)		1,675,261

	Opening Balance 01-01-2019		Deferred tax Income (Expenses)			Deferred tax of items charged to other comprehensive income		Increase (decrease) through business combinations		Increase (decrease) Net exchange differences			Closing balance 12-31-2019
Deferred Tax Assets	ThU.S.$		ThU.S.$			ThU.S.$		ThU.S.$		ThU.S.$			ThU.S$
Deferred tax Assets relating to Provisions		6,105		(517	)		—		244		(83	)		5,749
Deferred tax Assets relating to Accrued Liabilities		10,906		(3,921	)		—		197		—			7,182
Deferred tax Assets relating to Post-Employment benefits		19,072		423			717		150		16			20,378
Deferred tax Assets relating to Property, Plant and equipment		10,125		6,484			—		—		—			16,609
Deferred tax Assets relating to Impairment provision		11,963		8,385			—		—		(179	)		20,169
Deferred tax Assets relating to Financial Instruments		9,761		55,087			3,609		—		(67	)		68,390
Deferred tax Assets relating to Tax Loss Carryforward		109,320		35,577			—		1,505		(1,750	)		144,652
Deferred tax Assets relating to Inventories		5,532		6,288			—		279		361			12,460
Deferred tax Assets relating to Provisions for Income		7,443		(657	)		—		112		(267	)		6,631
Deferred tax Assets relating to Allowance for Doubtful Accounts		5,001		(645	)		—		68		(75	)		4,349
Deferred tax Assets relating to Intangible revaluation		7,651		(1,345	)		—		—		(262	)		6,044
Deferred tax Assets relating to tax credits		—		8,029			—		—		—			8,029
Deferred tax Assets relating to Other Deductible Temporary Differences		11,328		4,470			—		731		(368	)		16,161
Total Deferred Tax Assets		214,207		117,658			4,326		3,286		(2,674	)		336,803
	Opening Balance 01-01-2019		Deferred tax Income (Expenses)			Deferred tax of items charged to other comprehensive income		Increase (decrease) through business combinations		Increase (decrease) Net exchange differences			Closing balance 12-31-2019
Deferred Tax Liabilities	ThU.S.$		ThU.S.$			ThU.S.$		ThU.S.$		ThU.S.$			ThU.S$
Deferred tax Liabilities relating to Property, Plant and Equipment		831,471		66,656			—		4,234		(1,946	)		900,415
Deferred tax Liabilities relating to Financial Instruments		14,225		11,405			—		—		—			25,630
Deferred tax Liabilities relating to Biological Assets		661,582		(15,770	)		—		—		(3,591	)		642,221
Deferred tax Liabilities relating to Inventory		39,025		(774	)		—		—		—			38,251
Deferred tax Liabilities relating to Prepaid Expenses		37,897		3,487			—		69		(115	)		41,338
Deferred tax Liabilities relating to Intangible		20,240		(1,914	)		—		—		(384	)		17,942
Deferred tax Liabilities relating to Other Taxable Temporary Differences		22,790		2,905			—		182		(751	)		25,126
Total Deferred Tax Liabilities		1,627,230		65,995			—		4,485		(6,787	)		1,690,923

43

CELULOSA ARAUCO Y CONSTITUCION S.A. AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

March 31, 2020

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

Temporary Differences

The following tables summarize the deductible and taxable temporary differences:

	03-31-2020						12-31-2019
	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		201,840			—			192,151
Deferred Tax Assets—Tax loss carryforward		163,491			—			144,652
Deferred Tax Liabilities		—			1,675,261					1,690,923
Total		365,331			1,675,261			336,803		1,690,923
	January - March
	2020			2019
Detail of Temporary Difference Income and Loss Amounts	ThU.S.$			ThU.S.$
Deferred Tax Assets		9,188			19,295
Deferred Tax Assets—Tax loss carryforward		8,411			17,136
Deferred Tax Liabilities		(20,809	)		(1,490	)
Total		(3,210	)		34,941

Income Tax Expense

Income tax expense consists of the following:

	January – March
Income Tax composition	2020 ThU.S.$			2019 ThU.S.$
Current income tax expense		13,662			(46,825	)
Prior period current income tax adjustments		(4	)		(2,815	)
Other current benefit tax (expenses)		(687	)		(401	)
Current Tax Expense, Net		12,971			(50,041	)
Deferred tax expense relating to origination and reversal of temporary differences		(11,621	)		17,805
Tax benefit arising from previously unrecognized tax loss carryforward		8,411			17,136
Total deferred Tax benefit (expense), Net		(3,210	)		34,941
Income Tax benefit (expense), Total		9,761			(15,100	)

44

CELULOSA ARAUCO Y CONSTITUCION S.A. AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

March 31, 2020

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

The following table presents the current income tax expense detailed by foreign and domestic (Chile) companies at March 31, 2020 and 2019:

	January - March
	2020 ThU.S.$			2019 ThU.S.$
Foreign current income tax expense		22,015			(9,303	)
Domestic current income tax expense		(9,044	)		(40,738	)
Total current income tax expense		12,971			(50,041	)
Foreign deferred tax benefit (expense)		(26,482	)		19,861
Domestic deferred tax benefit (expense)		23,272			15,080
Total deferred tax benefit (expense)		(3,210	)		34,941
Total income tax benefit (expense)		9,761			(15,100	)

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

The reconciliation of income tax expense is as follows:

	January - March
Reconciliation of Income tax from Statutory Rate to Effective Tax Rate	2020 ThU.S.$			2019 ThU.S.$
Statutory domestic (Chile) income tax rate		27.0	%		27.0	%
Tax Expense at statutory tax rate		10,656			(38,124	)
Tax effect of foreign tax rates		(181	)		552
Tax effect of revenues exempt from taxation		(21	)		38,462
Tax effect of not deductible expenses		(14,420	)		(23,772	)
Tax effect of Previously Unrecognized Tax Benefit in the Income Statement		14,393			—
Tax effect of a new evaluation of assets for deferred not recognized taxes		(374	)		11,553
Tax rate effect of adjustments for current tax of prior periods		(4	)		(2,815	)
Other tax rate effects		(288	)		(956	)
Total adjustments to tax expense at applicable tax rate		(895	)		23,024
Tax benefit (expense) at effective tax rate		9,761			(15,100	)

Current tax assets and liabilities

The current tax assets and liabilities balances are as follow:

Current tax Assets	03-31-2020 ThU.S.$			12-31-2019 ThU.S.$
Monthly Provisional Payments (MPP)		222,538			190,169
Income tax receivable		49,158			27,628
Fixed assets tax credits		54			57
Provision tax income		(47,491	)		(39,490	)
Other tax receivables		22,943			21,589
Total		247,202			199,953
Current tax Liabilities	03-31-2020 ThU.S.$			12-31-2019 ThU.S.$
Provision tax income (First category)		12,032			10,626
Monthly Provisional Payments (MPP)		(11,680	)		(9,309	)
Article No. 21 tax		1			1
Other tax payables		2,215			924
Total		2,568			2,242

45

CELULOSA ARAUCO Y CONSTITUCION S.A. AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

March 31, 2020

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

NOTE 7. PROPERTY, PLANT AND EQUIPMENT

Property, Plant and Equipment, Net	03-31-2020 ThU.S.$			12-31-2019 ThU.S.$
Construction work in progress		1,379,986			1,128,431
Land		938,692			971,061
Buildings		2,182,696			2,247,996
Plant and equipment		3,020,776			3,139,761
Information technology equipment		20,986			20,906
Fixtures and fittings		13,425			13,421
Motor vehicles		15,414			14,922
Other property, plant and equipment		109,508			111,685
Total Net		7,681,483			7,648,183
Property, Plant and Equipment, Gross
Construction work in progress		1,379,986			1,128,431
Land		938,692			971,061
Buildings		4,213,559			4,268,590
Plant and equipment		6,872,240			7,004,549
Information technology equipment		92,187			91,585
Fixtures and fittings		45,755			45,703
Motor vehicles		56,978			56,771
Other property, plant and equipment		128,195			131,030
Total Gross		13,727,592			13,697,720
Accumulated depreciation and impairment
Buildings		(2,030,863	)		(2,020,594	)
Plant and equipment		(3,851,464	)		(3,864,788	)
Information technology equipment		(71,201	)		(70,679	)
Fixtures and fittings		(32,330	)		(32,282	)
Motor vehicles		(41,564	)		(41,849	)
Other property, plant and equipment		(18,687	)		(19,345	)
Total		(6,046,109	)		(6,049,537	)

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

As of March 31, 2020, there are no significant assets pledged as collateral to be disclosed in these interim consolidated financial statements.

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

	03-31-2020 ThU.S.$		12-31-2019 ThU.S.$
Amount committed for the acquisition of property, plant and equipment		1,083,148		1,200,111

46

CELULOSA ARAUCO Y CONSTITUCION S.A. AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

March 31, 2020

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 March 31, 2020 and December 31, 2019:

	Construction work in progress			Land			Buildings			Plant and equipment			IT Equipment			Fixtures and fittings			Motor vehicles			Other Property, Plant and Equipment			TOTAL
Reconciliation of Property, Plant and Equipment	ThU.S.$			ThU.S.$			ThU.S.$			ThU.S.$			ThU.S.$			ThU.S.$			ThU.S.$			ThU.S.$			ThU.S.$
Opening Balance  01-01-2020		1,128,431			971,061			2,247,996			3,139,761			20,906			13,421			14,922			111,685			7,648,183
Changes
Additions		284,925			2,739			588			8,545			50			322			23			3,285			300,477
Disposals		—			(140	)		(26	)		(26	)		—			—			(56	)		(1	)		(249	)
Withdrawals		(12	)		—			(39	)		(330	)		(32	)		—			—			(7	)		(420	)
Depreciation		—			—			(36,208	)		(70,919	)		(1,576	)		(770	)		(1,222	)		(294	)		(110,989	)
Impairment loss recognized in profit or loss		—			—			(7,671	)		(8,977	)		(153	)		—			(51	)		—			(16,852	)
Increase (decrease) through net exchange differences		(5,338	)		(34,974	)		(26,300	)		(66,592	)		(338	)		(182	)		(297	)		(5,160	)		(139,181	)
Increase (decrease) through transfers from construction in progress		(28,020	)		6			4,356			18,890			2,129			634			2,005			—			—
Reclassification from lease to Property, plant and equipment		—			—			—			424			—			—			90			—			514
Total changes		251,555			(32,369	)		(65,300	)		(118,985	)		80			4			492			(2,177	)		33,300
Closing balance03-31-2020		1,379,986			938,692			2,182,696			3,020,776			20,986			13,425			15,414			109,508			7,681,483
	Construction work in progress			Land			Buildings			Plant and equipment			IT Equipment			Fixtures and fittings			Motor vehicles			Other Property, Plant and Equipment			TOTAL
Reconciliation of Property, Plant and Equipment	ThU.S.$			ThU.S.$			ThU.S.$			ThU.S.$			ThU.S.$			ThU.S.$			ThU.S.$			ThU.S.$			ThU.S.$
Opening Balance  01-01-2019		1,030,730			972,143			2,062,887			2,921,462			23,292			15,906			14,916			133,357			7,174,693
Increase (decrease) for changes in accounting policies		—			—			—			(55,015	)		—			—			—			(17,237	)		(72,252	)
Restated opening balance		1,030,730			972,143			2,062,887			2,866,447			23,292			15,906			14,916			116,120			7,102,441
Changes
Additions		889,882			6,722			13,561			44,800			1,637			960			3,808			10,779			972,149
Acquisitions through business combinations		12,839			3,915			24,118			110,701			238			156			313			6,272			158,552
Disposals		—			(2,241	)		(2,167	)		(2,821	)		(94	)		(1	)		(213	)		(29	)		(7,566	)
Withdrawals		(6,992	)		(3,442	)		(3,435	)		(23,231	)		(2	)		(1	)		(36	)		(13,202	)		(50,341	)
Depreciation		—			—			(130,454	)		(297,332	)		(6,426	)		(2,722	)		(4,111	)		(1,180	)		(442,225	)
Impairment loss recognized in profit or loss		—			—			(15,398	)		(60,219	)		(337	)		(14	)		(74	)		—			(76,042	)
Increase (decrease) through net exchange differences		(1,066	)		(7,530	)		(479	)		(1,347	)		(74	)		27			(31	)		(918	)		(11,418	)
Reclassification to assets held for sale		—			—			—			990			—			—			—			—			990
Increase (decrease) through transfers from construction in progress		(796,962	)		1,494			299,363			500,140			2,672			(890	)		340			(6,157	)		—
Reclassification from lease to Property, plant and equipment		—			—			—			1,633			—			—			10			—			1,643
Total changes		97,701			(1,082	)		185,109			273,314			(2,386	)		(2,485	)		6			(4,435	)		545,742
Closing balance12-31-2019		1,128,431			971,061			2,247,996			3,139,761			20,906			13,421			14,922			111,685			7,648,183

47

CELULOSA ARAUCO Y CONSTITUCION S.A. AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

March 31, 2020

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

The depreciation expense for the period ending March 31, 2020 and 2019 is as follows:

	January - March
Depreciation for the year	2020 ThU.S.$		2019 ThU.S.$
Cost of sales		98,268		96,649
Administrative expenses		4,086		3,857
Other expenses		1,394		337
Total		103,748		100,843

Depreciation charged to profit or loss differs from the movement of the period for Property, Plant and Equipment. This is mainly due to the periodic cost processes in which a portion of the depreciation charge remains in the Inventories. Furthermore, this deviation is also affected by the conversion differences of the companies with a functional currency other than U.S. dollars.

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.

48

CELULOSA ARAUCO Y CONSTITUCION S.A. AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

March 31, 2020

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

NOTE 8. LEASES

Arauco acting as lessee

In the application of IFRS 16, Arauco chose not to apply the requirements to recognize a liability and an asset for right of use for leases which term ends within 12 months from January 1, 2019 and for leases in which the underlying asset is of low value.

Lease liabilities and their maturity are presented in Notes 11 and 23.

Right of use assets

	03-31-2020			12-31-2019
	ThU.S.$			ThU.S.$
Property, Plant and Equipment by right of use, Net
Land		62,611			67,804
Buildings		24,396			25,940
Plant and equipment		36,511			44,753
Information technology equipment		588			574
Fixtures and fittings		1,011			1,138
Motor vehicles		117,067			126,587
Other property, plant and equipment		19,559			17,583
Total Net		261,743			284,379
Property, Plant and Equipment by right of use, Gross
Land		71,418			75,403
Buildings		31,969			32,266
Plant and equipment		68,402			71,394
Information technology equipment		799			757
Fixtures and fittings		1,595			1,595
Motor vehicles		165,054			164,683
Other property, plant and equipment		22,095			19,580
Total Gross		361,332			365,678
Accumulated depreciation and impairment by right of use
Land		(8,807	)		(7,599	)
Buildings		(7,573	)		(6,326	)
Plant and equipment		(31,891	)		(26,641	)
Information technology equipment		(211	)		(183	)
Fixtures and fittings		(584	)		(457	)
Motor vehicles		(47,987	)		(38,096	)
Other property, plant and equipment		(2,536	)		(1,997	)
Total		(99,589	)		(81,299	)

49

CELULOSA ARAUCO Y CONSTITUCION S.A. AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

March 31, 2020

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

Reconciliation of Property, Plant and Equipment by Right of Use

The following tables set forth the reconciliation of the carrying amount of property, plant and equipment by right of use as of March 31, 2020 and December 31, 2019:

Reconciliation of Property, Plant and Equipment by right of use	Land ThU.S.$			Buildings ThU.S.$			Plant and equipment 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 Balance01-01-2020		67,804			25,940			44,753			574			1,138			126,587			17,583			284,379
Changes
Additions		1,268			1,275			—			203			—			—			3,205			5,951
Withdrawals		—			—			(3,018	)		—			—			(75	)		—			(3,093	)
Depreciation		(1,994	)		(1,593	)		(5,283	)		(70	)		(127	)		(9,705	)		(715	)		(19,487	)
Increase (decrease) through net exchange differences		(4,520	)		(397	)		32			(119	)		—			(392	)		—			(5,396	)
Increase (decrease) through others		53			(829	)		27			—			—			659			—			(90	)
Reclassification from lease to Property, plant and equipment		—			—			—			—			—			—			(514	)		(514	)
Total changes		(5,193	)		(1,544	)		(8,242	)		14			(127	)		(9,520	)		1,976			(22,636	)
Closing balance03-31-2020		62,611			24,396			36,511			588			1,011			117,067			19,559			261,743

Reconciliation of Property, Plant and Equipment by right of use	Land ThU.S.$			Buildings ThU.S.$			Plant and equipment 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 Balance01-01-2019		—			—			—			—			—			—			—			—
Increase (decrease) for changes in accounting policies		65,363			20,865			76,258			310			—			144,304			17,237			324,337
Restated opening balance Changes		65,363			20,865			76,258			310			—			144,304			17,237			324,337
Additions		8,668			10,580			5,817			449			1,595			20,531			4,745			52,385
Business combination		906			1,129			3,257			—			—			290			—			5,582
Withdrawals		—			—			(13,750	)		—			—			—			—			(13,750	)
Depreciation		(7,599	)		(6,326	)		(26,641	)		(183	)		(457	)		(38,096	)		(2,756	)		(82,058	)
Increase (decrease) through net exchange differences		466			(216	)		137			(2	)		—			(131	)		—			254
Increase (decrease) through others		—			(92	)		(325	)		—			—			(311	)		—			(728	)
Reclassification from lease to Property, plant and equipment		—			—			—			—			—			—			(1,643	)		(1,643	)
Total changes		2,441			5,075			(31,505	)		264			1,138			(17,717	)		346			(39,958	)
Closing balance12-31-2019		67,804			25,940			44,753			574			1,138			126,587			17,583			284,379

The depreciation expense for the period ending March 31, 2020 and 2019 Property, Plant and Equipment by right of use is as follows:

	January – March
Depreciation for the period	2020 ThU.S.$		2019 ThU.S.$
Cost of sales		14,946		18,538
Distribution costs		413		—
Administrative expenses		2,775		2,131
Total		18,134		20,669

Depreciation charged to profit or loss differs from the movement of the period for Property, Plant and Equipment for right of use. This is mainly due to the periodic cost processes in which a portion of the depreciation charge remains in the Inventories. Furthermore, this deviation is also affected by the conversion differences of the companies with a functional currency other than U.S. dollars.

Additionally, Arauco has recognized directly in the interim consolidated statement of profit or loss, the following leases concepts excluded from the application of IFRS 16:

	January - March
Depreciation for the year	2020 ThU.S.$		2019 ThU.S.$
Expenses from payments of variable leases		32,048		34,195
Expenses from low value leases		1,371		2,022
Expenses from short-term leases		15,856		9,143
Total		49,275		45,360

50

CELULOSA ARAUCO Y CONSTITUCION S.A. AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

March 31, 2020

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

Arauco acting as lessor

IFRS 16 substantially maintains the accounting requirements of the lessor of IAS 17. Consequently, Arauco has continued to classify its leases as operating or financial.

Reconciliation of Financial Lease Minimum Payments:

	03-31-2020
Periods	Gross ThU.S.$		Interest ThU.S.$		Present Value ThU.S.$
Less than one year		787		39		748
Between one and five years		144		—		144
More than five years		—		—		—
Total		931		39		892

	12-31-2019
Periods	Gross ThU.S.$		Interest ThU.S.$		Present Value ThU.S.$
Less than one year		960		48		912
Between one and five years		200		—		200
More than five years		—		—		—
Total		1,160		48		1,112

Financial lease receivables are presented in the interim consolidated statements of financial position in line items “Trade and other current receivable” and “Trade and othernon-current receivable” depending on their maturities stated above.

Arauco accounts for its lease contracts as financial 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.

51

CELULOSA ARAUCO Y CONSTITUCION S.A. AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

March 31, 2020

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

NOTE 9. REVENUE

	January - March
Classes of revenue	2020 ThU.S.$		2019 ThU.S.$
Revenue from sales of goods		1,107,035		1,371,253
Revenue from rendering of services		20,131		16,933
Total		1,127,166		1,388,186

The reportable segments revenues by business area and by geographical area are presented in Note 24.

NOTE 10. EMPLOYEE BENEFITS

Classes of Benefits and Expenses by Employee

	January - March
	2020 ThU.S.$		2019 ThU.S.$
Employee expenses		152,709		170,202
Wages and salaries		149,050		165,678
Severance indemnities		3,659		4,524

	03-31-2020			12-31-2019
Discount rate		1.81	%		1.81	%
Inflation		3.00	%		3.00	%
Annual rate of wage growth		5.22	%		5.22	%
Mortality rate (1)		RV-2014			RV-2014

(1) For the purposes of determining the technical reserves, Chilean annuity providers are required by law to utilize the mortality tables specified by the CMF (Chilean Commission for the Financial Market). The most recent table is theRV-2014, which is based on Chilean pensioner experience from 2006-2013 (SP & SVS, 2013). The mortality tables distinguish between males and females.

Sensitivities to assumptions	ThU.S.$
Discount rate
Increase in 100 bps		(5,211	)
Decrease in 100 bps		6,026
Wage growth rates
Increase in 100 bps		5,321
Decrease in 100 bps		(4,648	)

52

CELULOSA ARAUCO Y CONSTITUCION S.A. AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

March 31, 2020

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

The following tables set forth the balances and the reconciliation of the present value of severance indemnities obligations as of March 31, 2020 and December 31, 2019:

	03-31-2020 ThU.S.$			12-31-2019 ThU.S.$
Current		5,322			5,965
Non-current		62,057			69,464
Total		67,379			75,429
Reconciliation of the present value of severance indemnities obligations	03-31-2020 ThU.S.$			12-31-2019 ThU.S.$
Opening balance		75,429			70,551
Business combinations		—			462
Current service cost		1,303			5,884
Interest cost		793			3,855
(Gains) losses from changes in actuarial assumptions		—			6,095
Actuarial gains and losses arising from experience		(109	)		(3,440	)
Benefits paid		(807	)		(3,028	)
Increase (decrease) for foreign currency exchange rates changes		(9,230	)		(4,950	)
Closing balance		67,379			75,429

53

CELULOSA ARAUCO Y CONSTITUCION S.A. AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

March 31, 2020

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.

March 31, 2020	U.S Dollar ThU.S.$		Euros ThU.S.$		Brazilian Real ThU.S.$		Argentine Pesos ThU.S.$		Mexican Pesos ThU.S.$		Other currencies ThU.S.$		Chilean Pesos ThU.S.$		U.F. ThU.S.$		Total ThU.S.$
Assets
Current Assets
Cash and Cash Equivalents		966,267		2,525		52,344		10,669		19,850		4,611		99,192		—		1,155,458
Other current financial assets		52,619		—		—		—		—		19		—		—		52,638
Other currentnon-financial assets		36,326		78		14,460		9,714		712		7,777		105,826		—		174,893
Trade and other current receivables		486,327		9,515		37,078		11,009		35,839		6,134		79,071		2,462		667,435
Accounts receivable due from related companies		1,548		—		430		—		—		—		12,757		498		15,233
Current Inventories		952,265		—		79,251		—		22,343		—		1,376		—		1,055,235
Current biological assets		206,669		—		54,075		—		—		—		—		—		260,744
Current tax assets		36,161		178		5,044		3,191		2,402		1,528		198,698		—		247,202
Non-current assets or disposal groups classified as held for sale		2,738,182		12,296		242,682		34,583		81,146		20,069		496,920		2,960		3,628,838
Non-current assets or disposal groups classified as held for sale		3,815		—		443		—		39		—		—		—		4,297
Total Current Assets		2,741,997		12,296		243,125		34,583		81,185		20,069		496,920		2,960		3,633,135
Non-Current Assets
Othernon-current financial assets		73		—		—		—		—		—		—		—		73
Othernon-currentnon-financial assets		1,724		—		8,534		1,211		835		90		114,456		—		126,850
Trade and othernon-current receivables		3,673		—		180		—		—		—		2,423		2,300		8,576
Investments accounted for using equity method		77,292		159,945		32,138		—		—		—		18,695		—		288,070
Intangible assets other than goodwill		102,587		—		1,455		—		54		—		—		—		104,096
Goodwill		41,999		—		17,350		—		—		—		—		—		59,349
Property, plant and equipment		7,198,255		—		366,652		—		116,272		—		304		—		7,681,483
Right of use assets		241,410		—		20,333		—		—		—		—		—		261,743
Non-current biological assets		3,063,710		—		284,129		—		—		—		—		—		3,347,839
Deferred tax assets		5,277		—		664		—		455		—		—		—		6,396
TotalNon-Current Assets		10,736,000		159,945		731,435		1,211		117,616		90		135,878		2,300		11,884,475
Total Assets		13,477,997		172,241		974,560		35,794		198,801		20,159		632,798		5,260		15,517,610
March 31, 2020	U.S Dollar ThU.S.$		Euros ThU.S.$		Brazilian Real ThU.S.$		Argentine Pesos ThU.S.$		Mexican Pesos ThU.S.$		Other currencies ThU.S.$		Chilean Pesos ThU.S.$		U.F. ThU.S.$		Total ThU.S.$
Liabilities
Current Liabilities
Other current financial liabilities		362,596		368		2,389		—		—		2		—		220,908		586,263
Current lease liabilities		10,192		—		3,972		—		1,123		116		29,346		16,165		60,914
Trade and other current payables		171,007		6,071		58,187		18,762		26,360		8,806		298,461		26,833		614,487
Accounts payable to related companies		2,350		—		—		—		—		—		1,606		—		3,956
Other current provisions		419		—		—		—		815		—		—		—		1,234
Current tax liabilities		1,299		—		383		—		1		—		885		—		2,568
Current provisions for employee benefits		—		—		—		—		—		—		5,323		—		5,323
Other currentnon-financial liabilities		3,279		—		16,243		26		2,448		2,973		9,806		—		34,775
Total Liabilities, current		551,142		6,439		81,174		18,788		30,747		11,897		345,427		263,906		1,309,520
Non-Current Liabilities
Othernon-current financial liabilities		4,468,253		112,986		1,315		—		—		—		—		964,101		5,546,655
Non-current lease liabilities		71,343		—		16,562		—		6,804		162		57,358		17,452		169,681
Othernon-current payables		2,230		—		—		—		—		—		—		—		2,230
Othernon-current provisions		9		—		4,435		26,624		—		—		—		—		31,068
Deferred tax liabilities		1,248,685		—		64,197		—		3,444		—		—		—		1,316,326
Non-current provisions for employee benefits		—		—		—		—		935		—		61,122		—		62,057
Othernon-currentnon-financial liabilities		25		—		87,936		18		—		—		6		—		87,985
Totalnon-current liabilities		5,790,545		112,986		174,445		26,642		11,183		162		118,486		981,553		7,216,002
Total Liabilities		6,341,687		119,425		255,619		45,430		41,930		12,059		463,913		1,245,459		8,525,522

54

CELULOSA ARAUCO Y CONSTITUCION S.A. AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

March 31, 2020

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

December 31, 2019	U.S Dollar ThU.S.$		Euros ThU.S.$		Brazilian Real ThU.S.$		Argentine Pesos ThU.S.$		Mexican Pesos ThU.S.$		Other currencies ThU.S.$		Chilean Pesos ThU.S.$		U.F. ThU.S.$		Total ThU.S.$
Assets
Current Assets
Cash and Cash Equivalents		1,412,688		2,264		50,868		11,292		13,684		6,756		62,460		—		1,560,012
Other current financial assets		3,370		—		—		—		—		—		—		—		3,370
Other currentnon-financial assets		24,554		95		15,134		8,014		1,244		6,742		118,327		—		174,110
Trade and other current receivables		435,663		8,483		56,039		11,218		33,981		7,287		86,954		2,690		642,315
Accounts receivable due from related companies		1,319		—		197		—		—		—		15,512		498		17,526
Current Inventories		931,619		—		90,362		—		31,886		—		—		—		1,053,867
Current biological assets		209,844		—		65,948		—		—		—		—		—		275,792
Current tax assets		7,955		234		9,246		2,908		2,936		2,658		174,016		—		199,953
Non-current assets or disposal groups classified as held for sale		3,027,012		11,076		287,794		33,432		83,731		23,443		457,269		3,188		3,926,945
Non-current assets or disposal groups classified as held for sale		3,814		—		572		—		50		—		—		—		4,436
Total Current Assets		3,030,826		11,076		288,366		33,432		83,781		23,443		457,269		3,188		3,931,381
Non-Current Assets
Othernon-current financial assets		9,395		—		—		—		—		—		—		—		9,395
Othernon-currentnon-financial assets		1,889		—		10,962		1,054		884		90		97,535		—		112,414
Trade and othernon-current receivables		3,691		—		351		—		—		—		2,983		2,431		9,456
Investments accounted for using equity method		77,725		168,880		41,811		—		—		—		4,702		—		293,118
Intangible assets other than goodwill		104,165		—		1,992		—		95		—		—		—		106,252
Goodwill		43,373		—		22,378		—		—		—		—		—		65,751
Property, plant and equipment		7,024,518		—		471,620		—		151,692		—		353		—		7,648,183
Right of use assets		256,524		—		27,855		—		—		—		—		—		284,379
Non-current biological assets		3,021,411		—		372,223		—		—		—		—		—		3,393,634
Deferred tax assets		5,897		—		—		—		170		—		—		—		6,067
TotalNon-Current Assets		10,548,589		168,880		949,191		1,054		152,841		90		105,573		2,431		11,928,649
Total Assets		13,579,415		179,956		1,237,557		34,486		236,622		23,533		562,842		5,619		15,860,030
December 31, 2019	U.S Dollar ThU.S.$		Euros ThU.S.$		Brazilian Real ThU.S.$		Argentine Pesos ThU.S.$		Mexican Pesos ThU.S.$		Other currencies ThU.S.$		Chilean Pesos ThU.S.$		U.F. ThU.S.$		Total ThU.S.$
Liabilities
Current Liabilities
Other current financial liabilities		215,453		41		4,391		—		—		—		—		240,961		460,846
Current lease liabilities		7,357		52		6,108		—		2,361		117		33,575		19,638		69,208
Trade and other current payables		155,524		20,414		70,259		14,365		22,272		10,322		348,155		31,746		673,057
Accounts payable to related companies		454		—		—		—		—		—		8,426		—		8,880
Other current provisions		444		—		—		—		815		—		—		—		1,259
Current tax liabilities		1,784		—		—		—		246		—		212		—		2,242
Current provisions for employee benefits		—		—		—		—		—		—		5,965		—		5,965
Other currentnon-financial liabilities		7,353		59		20,022		3,128		2,711		2,335		4,457		—		40,065
Total Liabilities, current		388,369		20,566		100,780		17,493		28,405		12,774		400,790		292,345		1,261,522
Non-Current Liabilities
Othernon-current financial liabilities		4,245,493		116,218		1,791		—		—		—		—		1,088,692		5,452,194
Non-current lease liabilities		76,228		—		22,299		—		7,664		160		73,471		21,995		201,817
Othernon-current payables		2,230		—		—		—		—		—		—		—		2,230
Othernon-current provisions		12		—		5,226		26,527		—		—		—		—		31,765
Deferred tax liabilities		1,271,282		—		84,420		—		4,485		—		—		—		1,360,187
Non-current provisions for employee benefits		836		—		—		—		285		—		68,343		—		69,464
Othernon-currentnon-financial liabilities		24		—		111,380		19		—		—		13		—		111,436
Totalnon-current liabilities		5,596,105		116,218		225,116		26,546		12,434		160		141,827		1,110,687		7,229,093
																	—
Total Liabilities		5,984,474		136,784		325,896		44,039		40,839		12,934		542,617		1,403,032		8,490,615

55

CELULOSA ARAUCO Y CONSTITUCION S.A. AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

March 31, 2020

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

	03-31-2020						12-31-2019
	Up to 90 days ThU.S.$		From 91 days to 1 year ThU.S.$		Total ThU.S.$		Up to 90 days ThU.S.$		From 91 days to 1 year ThU.S.$		Total ThU.S.$
Total Liabilities, current		802,108		507,412		1,309,520		844,866		416,657		1,261,523
Other current financial liabilities		133,628		452,635		586,263		93,182		367,664		460,846
U.S Dollar		98,545		264,051		362,596		89,688		125,765		215,453
Euros		368		—		368		—		41		41
Brazilian Real		1,132		1,257		2,389		1,462		2,929		4,391
Other currencies		2		—		2		—		—		—
U.F.		33,581		187,327		220,908		2,032		238,929		240,961
Bank Loans		54,824		251,827		306,651		69,971		113,334		183,305
U.S Dollar		53,324		250,570		303,894		68,509		110,364		178,873
Euros		368		—		368		—		41		41
Brazilian Real		1,132		1,257		2,389		1,462		2,929		4,391
Other Loans		78,804		200,808		279,612		23,211		254,330		277,541
U.S Dollar		45,221		13,481		58,702		21,179		15,401		36,580
U.F.		33,581		187,327		220,908		2,032		238,929		240,961
Current lease liabilities		15,640		45,274		60,914		21,518		47,690		69,208
U.S Dollar		1,984		8,208		10,192		4,570		2,787		7,357
Euros		—		—		—		24		28		52
Brazilian Real		1,186		2,786		3,972		1,644		4,464		6,108
Mexican Pesos		374		749		1,123		1,235		1,126		2,361
Other currencies		26		90		116		26		91		117
Chilean Pesos		7,336		22,010		29,346		8,313		25,262		33,575
U.F.		4,734		11,431		16,165		5,706		13,932		19,638
Trade and other current payables		607,637		6,850		614,487		672,809		248		673,057
U.S Dollar		170,564		443		171,007		155,501		23		155,524
Euros		6,071		—		6,071		20,414		—		20,414
Brazilian Real		52,007		6,180		58,187		70,140		119		70,259
Argentine Pesos		18,762		—		18,762		14,365		—		14,365
Mexican Pesos		26,133		227		26,360		22,166		106		22,272
Other currencies		8,806		—		8,806		10,322		—		10,322
Chilean Pesos		298,461		—		298,461		348,155		—		348,155
U.F.		26,833		—		26,833		31,746		—		31,746
Accounts payable to related companies		3,956		—		3,956		8,880		—		8,880
U.S Dollar		2,350		—		2,350		454		—		454
Chilean Pesos		1,606		—		1,606		8,426		—		8,426
Other current provisions		419		815		1,234		444		815		1,259
U.S Dollar		419		—		419		444		—		444
Mexican Pesos		—		815		815		—		815		815
Current tax liabilities		1,442		1,126		2,568		2,031		211		2,242
U.S Dollar		1,299		—		1,299		1,784		—		1,784
Brazilian Real		141		242		383		—		—		—
Mexican Pesos		1		—		1		246		—		246
Chilean Pesos		1		884		885		1		211		212
Current provisions for employee benefits		4,686		637		5,323		5,938		27		5,965
Chilean Pesos		4,686		637		5,323		5,938		27		5,965
Other currentnon-financial liabilities		34,700		75		34,775		40,063		2		40,065
U.S Dollar		3,279		—		3,279		7,353		—		7,353
Euros		—		—		—		59		—		59
Brazilian Real		16,243		—		16,243		20,022		—		20,022
Argentine Pesos		26		—		26		3,128		—		3,128
Mexican Pesos		2,386		62		2,448		2,711		—		2,711
Other currencies		2,973		—		2,973		2,335		—		2,335
Chilean Pesos		9,793		13		9,806		4,455		2		4,457

56

CELULOSA ARAUCO Y CONSTITUCION S.A. AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

March 31, 2020

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

	03-31-2020								12-31-2019
	From 13 months to 3 years ThU.S.$		From 3 years to 5 years ThU.S.$		More than 5 years ThU.S.$		Total ThU.S.$		From 13 months to 3 years ThU.S.$		From 3 years to 5 years ThU.S.$		More than 5 years ThU.S.$		Total ThU.S.$
Totalnon-current liabilities		1,685,265		1,097,723		4,433,014		7,216,002		1,534,114		1,169,993		4,524,986		7,229,093
Othernon-current financial liabilities		767,738		1,038,805		3,740,112		5,546,655		531,475		1,080,656		3,840,063		5,452,194
U.S Dollar		682,733		940,047		2,845,473		4,468,253		432,496		968,514		2,844,483		4,245,493
Euros		18,943		26,916		67,127		112,986		22,236		29,648		64,334		116,218
Brazilian Real		1,315		—		—		1,315		1,791		—		—		1,791
U.F.		64,747		71,842		827,512		964,101		74,952		82,494		931,246		1,088,692
Bank Loans		193,141		471,279		67,127		731,547		196,611		502,772		64,334		763,717
U.S Dollar		172,883		444,363		—		617,246		172,584		473,124		—		645,708
Euros		18,943		26,916		67,127		112,986		22,236		29,648		64,334		116,218
Brazilian Real		1,315		—		—		1,315		1,791		—		—		1,791
Other Loans		574,597		567,526		3,672,985		4,815,108		334,865		577,884		3,775,728		4,688,477
U.S Dollar		509,850		495,684		2,845,473		3,851,007		259,913		495,390		2,844,482		3,599,785
U.F.		64,747		71,842		827,512		964,101		74,952		82,494		931,246		1,088,692
Non-current lease liabilities		94,949		29,724		45,008		169,681		117,608		46,408		37,801		201,817
U.S Dollar		19,348		14,099		37,896		71,343		27,570		21,621		27,037		76,228
Brazilian Real		5,295		4,893		6,374		16,562		6,970		6,336		8,993		22,299
Mexican Pesos		4,442		2,362		—		6,804		3,546		3,296		822		7,664
Other currencies		162		—		—		162		160		—		—		160
Chilean Pesos		50,874		6,383		101		57,358		61,283		12,072		116		73,471
U.F.		14,828		1,987		637		17,452		18,079		3,083		833		21,995
Othernon-current payables		2,230		—		—		2,230		2,230		—		—		2,230
U.S Dollar		2,230		—		—		2,230		2,230		—		—		2,230
Othernon-current provisions		31,068		—		—		31,068		31,765		—		—		31,765
U.S Dollar		9		—		—		9		12		—		—		12
Brazilian Real		4,435		—		—		4,435		5,226		—		—		5,226
Argentine Pesos		26,624		—		—		26,624		26,527		—		—		26,527
Deferred tax liabilities		695,808		—		620,518		1,316,326		741,164		7,254		611,769		1,360,187
U.S Dollar		628,167		—		620,518		1,248,685		659,513		—		611,769		1,271,282
Brazilian Real		64,197		—		—		64,197		77,166		7,254		—		84,420
Mexican Pesos		3,444		—		—		3,444		4,485		—		—		4,485
Non-current provisions for employee benefits		62,057		—		—		62,057		69,464		—		—		69,464
U.S Dollar		—		—		—		—		836		—		—		836
Mexican Pesos		935		—		—		935		285		—		—		285
Chilean Pesos		61,122		—		—		61,122		68,343		—		—		68,343
Othernon-currentnon-financial liabilities		31,415		29,194		27,376		87,985		40,407		35,675		35,354		111,436
U.S Dollar		25		—		—		25		24		—		—		24
Brazilian Real		31,366		29,194		27,376		87,936		40,351		35,675		35,354		111,380
Argentine Pesos		18		—		—		18		19		—		—		19
Chilean Pesos		6		—		—		6		13		—		—		13

57

CELULOSA ARAUCO Y CONSTITUCION S.A. AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

March 31, 2020

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 Canada Ltd.	Canada	Canadian Dollar
Arauco do Brasil S.A.	Brazil	Brazilian Real
Arauco Florestal Arapoti S.A.	Brazil	Brazilian Real
Arauco Forest Brasil S.A.	Brazil	Brazilian Real
Arauco Industria de Mexico, S.A. de C.V.	Mexico	Mexican pesos
Arauco Industria de Paineis Ltda.	Brazil	Brazilian Real
Arauco Quimica S.A. de C.V.	Mexico	Mexican pesos
Arauco Serviquimex, S.A. de C.V.	Mexico	Mexican pesos
Araucomex Servicios, S.A. de C.V.	Mexico	Mexican pesos
Consorcio Protección Fitosanitaria Forestal S.A.	Chile	Chilean Pesos
Empreendimentos Florestais Santa Cruz Ltda.	Brazil	Brazilian Real
Leasing Forestal S.A.	Argentina	Argentine pesos
Mahal Empreendimentos e Participacoes S.A.	Brazil	Brazilian Real
Novo Oeste Gestao de Ativos Florestais S.A.	Brazil	Brazilian Real
Tablered Araucomex, S.A. de C.V.	Mexico	Mexican pesos

The table below shows a detail per company of the effect in the period of the Reserve of Exchange Differences on translation:

	January - March
	2020			2019
	ThU.S.$			ThU.S.$
Arauco do Brasil S.A.		(90,877	)		(2,327	)
Arauco Forest Brasil S.A.		(84,621	)		(2,326	)
Arauco Florestal Arapoti S.A.		(21,440	)		(509	)
Sonae Arauco S.A.		(3,540	)		(3,439	)
Arauco Argentina S.A.		(3	)		(330	)
Arauco Canada Ltd.		(14,677	)		1,304
Arauco Industria México S.A. de C.V.		(43,394	)		(736	)
Others		(1,237	)		(11	)
Total reserve of exchange differences on translation		(259,789	)		(8,374	)

Effect of foreign exchange rates changes

	January - March
	2020 ThU.S.$			2019 ThU.S.$
Exchange differences recognized in profit or loss, except for those arising on financial instruments measured at fair value through profit or loss		(3,427	)		2,127
Reserve of exchange differences on translation (withNon-controlling interests)		(264,389	)		(8,622	)

NOTE 12. BORROWING COSTS

Arauco capitalizes interest at effective rate on current investment projects.

At the date of issuance of these interim consolidated financial statements, Arauco has capitalized financial interest related to the modernization and extension of Planta Arauco (MAPA) project in Chile and to the Grayling project in the United States.

	January - March
	2020 ThU.S.$			2019 ThU.S.$
Property, plant and equipment capitalized cost
Property, plant and equipment capitalized interest cost rate		4.70	%		3.97	%
Amount of the capitalized interest cost, property, plant and equipment		8,495			6,705

58

CELULOSA ARAUCO Y CONSTITUCION S.A. AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

March 31, 2020

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 Commission for the Financial Market 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 accounts of doubtful collection nor any guarantees granted or received related to the balances with related parties.

Name of Group’s Main Shareholders

The ultimate shareholders of Arauco, direct and indirectly, are Mr. Roberto Angelini Rossi and Mrs. Patricia Angelini Rossi.

Name of the Intermediate Controlling Entity that Produces 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 managers and deputy managers also receive 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

Transactions carried out with related parties are intended to contribute to the corporate interest, are adjusted in price, terms and conditions to those prevailing in the market at the time of approval, and meet the requirements and procedures set forth in the law.

59

CELULOSA ARAUCO Y CONSTITUCION S.A. AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

March 31, 2020

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

			Functional	% Ownership interest 03-31-2020						% Ownership interest 12-31-2019
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		9.9707		90.0093		99.9800		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 Canada Ltd.	Canada	Canadian dollar		—		99.9990		99.9990		—		99.9990		99.9990
-	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		1.0681		98.9309		99.9990		1.0681		98.9309		99.9990
-	Arauco Europe Cooperatief U.A.	Netherlands	U.S. Dollar		0.5416		99.4574		99.9990		0.5493		99.4497		99.9990
-	Arauco Florestal Arapoti S.A.	Brazil	Brazilian Real		—		79.9992		79.9992		—		79.9992		79.9992
-	Arauco Forest Brasil S.A.	Brazil	Brazilian Real		10.0809		89.9182		99.9991		10.0809		89.9182		99.9991
-	Arauco Industria de México, S.A.de C.V.	Mexico	Mexican pesos		—		99.9990		99.9990		—		99.9990		99.9990
-	Arauco Industria de Paineis Ltda.	Brazil	Brazilian Real		—		99.9990		99.9990		—		99.9990		99.9990
-	Arauco Middle East DMCC	Dubai	U.S. Dollar		—		99.9990		99.9990		—		99.9990		99.9990
-	Arauco North America, Inc.	United States	U.S. Dollar		0.0001		99.9989		99.9990		0.0001		99.9989		99.9990
76620842-8	Arauco Nutrientes Naturales SPA	Chile	U.S. Dollar		—		99.9484		99.9484		—		99.9484		99.9484
-	Arauco Perú S.A.	Peru	U.S. Dollar		0.0013		99.9977		99.9990		0.0013		99.9977		99.9990
-	Arauco Química S.A. de C.V.	Mexico	Mexican pesos		—		99.9990		99.9990		—		99.9990		99.9990
-	Arauco Serviquimex, S.A. de C.V.	Mexico	Mexican pesos		—		99.9990		99.9990		—		99.9990		99.9990
-	Arauco Wood (China) Company Limited	China	U.S. Dollar		—		99.9990		99.9990		—		99.9990		99.9990
-	Araucomex S.A. de C.V.	Mexico	U.S. Dollar		0.0005		99.9985		99.9990		0.0005		99.9985		99.9990
-	Araucomex Servicios, S.A. de C.V.	Mexico	Mexican pesos		—		99.9990		99.9990		—		99.9990		99.9990
96657900-5	Consorcio Protección Fitosanitaria Forestal S.A.	Chile	Chilean pesos		—		57.0831		57.0831		—		57.0831		57.0831
-	Empreendimentos Florestais Santa Cruz Ltda.	Brazil	Brazilian Real		—		99.9985		99.9985		—		99.9985		99.9985
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		—		98.5676		98.5676		—		98.5676		98.5676
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
-	Forestal Talavera S.A.	Argentina	Argentine pesos		—		—		—		—		99.9942		99.9942
-	Greenagro S.A.	Argentina	Argentine pesos		—		—		—		—		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	U.S. Dollar		1.0000		98.9489		99.9489		1.0000		98.9489		99.9489
-	Leasing Forestal S.A.	Argentina	Argentine pesos		—		99.9800		99.9800		—		99.9801		99.9801
-	Maderas Arauco Costa Rica S.A.	Costa Rica	U.S. Dollar		—		99.9990		99.9990		—		99.9990		99.9990
96510970-6	Maderas 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.	Brasil	Brazilian Real		—		99.9990		99.9990		—		99.9990		99.9990
-	Novo Oeste Gestao de Ativos Florestais S.A.	Brasil	Brazilian Real		—		99.9990		99.9990		—		99.9990		99.9990
-	Prime-Line, Inc.	United States	U.S. Dollar		—		99.9990		99.9990		—		99.9990		99.9990
-	Savitar S.A.	Argentina	Argentine pesos		—		—		—		—		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
-	Tablered Araucomex, S.A. de C.V.	Mexico	Mexican pesos		—		99.9990		99.9990		—		99.9990		99.9990

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.

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 - March
	2020		2019
	ThU.S.$		ThU.S.$
Salaries and bonuses		14,984		17,905
Per diem compensation to members of the Board of Directors		713		617
Termination benefits		475		846
Total		16,172		19,368

60

CELULOSA ARAUCO Y CONSTITUCION S.A. AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

March 31, 2020

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

Related Party Receivables, Current

Name of Related Party

Tax ID No.

Nature of Relationship

Country

Currency

Maturity

03-31-2020 ThU.S.$

12-31-2019 ThU.S.$

Forestal Mininco S.A.

91.440.000-7

Common Stockholder

Chile

Chilean pesos

30 days

4

14

Eka Chile S.A.

99.500.140-3

Joint Venture

Chile

Chilean pesos

30 days

2,483

1,834

Forestal del Sur S.A.

79.825.060-4

Associate of a subsidiary’s minority shareholder

Chile

Chilean pesos

30 days

5,932

10,519

Unilin Arauco Pisos Ltda.

—

Joint Venture

Brazil

Brazilian Real

30 days

233

197

Colbún S.A.

96.505.760-9

Common Stockholder

Chile

Chilean pesos

—

—

43

CMPC Maderas S.A.

95.304.000-K

Common Stockholder

Chile

Chilean pesos

30 days

2

—

CMPC Pulp S.A.

96.532.330-9

Common Stockholder

Chile

Chilean pesos

30 days

1,673

834

Fundación Educacional Arauco

71.625.000-8

Parent company is founder and contributor

Chile

Chilean pesos

30 days

1,477

931

Fundación Acerca Redes

65.097.218-K

Parent company is founder and contributor

Chile

Chilean pesos

30 days

1,437

1,319

Parque Eólico Ovejera del Sur SpA

76.839.949-2

Associate

Chile

Chilean pesos

30 days

100

—

Sonae Arauco Portugal S.A.

—

Subsidiary of a Joint Venture

Portugal

U.S. Dollar

���

370

—

Compañía Puerto de Coronel S.A.

79.895.330-3

Subsidiary of an Associate

Chile

UF

30 days

—

498

E2E S.A.

76.879.577-0

Associate

Chile

Chilean pesos

10-May-20

445

440

E2E S.A.

76.879.577-0

Associate

Chile

Chilean pesos

28-Oct-20

280

278

E2E S.A.

76.879.577-0

Associate

Chile

Chilean pesos

30 days

797

618

Colbún Transmisión S.A.

76.218.856-2

Common Stockholder

Chile

Chilean pesos

—

—

1

TOTAL

15,233

17,526

Related Party Payables, Current

Name of Related Party

Tax ID No.

Nature of Relationship

Country

Currency

Maturity

03-31-2020 ThU.S.$

12-31-2019 ThU.S.$

Compañía de Petróleos de Chile S.A.

99.520.000-7

Common controlling parent

Chile

Chilean pesos

30 days

2,174

8,075

Abastible S.A.

91.806.000-6

Common controlling parent

Chile

Chilean pesos

30 days

104

156

Red to Green S.A.

86.370.800-1

Common Stockholder

Chile

Chilean pesos

—

—

1

Portaluppi, Guzman y Bezanilla Asesorías Ltda.

78.096.080-9

Common director

Chile

Chilean pesos

30 days

46

68

Empresa Nacional de Telecomunicaciones S.A.

92.580.000-7

Common Stockholder

Chile

Chilean pesos

30 days

2

96

Servicios Corporativos Sercor S.A.

96.925.430-1

Associate

Chile

Chilean pesos

30 days

10

5

Compañía Puerto de Coronel S.A.

79.895.330-3

Subsidiary of an associate

Chile

U.S. Dollar

30 days

1,606

447

Colbún Transmisión S.A.

76.218.856-2

Common Stockholder

Chile

Chilean pesos

30 days

2

—

Colbún S.A.

96.505.760-9

Common Stockholder

Chile

Chilean pesos

30 days

4

—

Elemental S.A.

76.659.730-0

Associate of controlling parent

Chile

Chilean pesos

—

—

4

Orizon S.A.

96.929.960-7

Common controlling parent

Chile

Chilean pesos

30 days

2

2

Vía Limpia SPA

79.874.200-0

Common controlling parent

Chile

Chilean pesos

30 days

6

11

Air BP Copec

96.942.120-8

Joint venture of controlling parent

Chile

Chilean pesos

—

—

8

Sonae Arauco Portugal S.A.

—

Subsidiary of a Joint Venture

Portugal

U.S. Dollar

—

—

7

TOTAL

3,956

8,880

61

CELULOSA ARAUCO Y CONSTITUCION S.A. AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

March 31, 2020

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	03-31-2020 ThU.S.$		12-31-2019 ThU.S.$
Abastible S.A.	91.806.000-6	Common controlling parent	Chile	Chilean pesos	Fuel		468		2,864
Compañía de Petróleos de Chile S.A.	99.520.000-7	Common controlling parent	Chile	Chilean pesos	Fuel and other		13,328		64,271
Compañía Puerto de Coronel S.A.	79.895.330-3	Subsidiary of the Associate	Chile	U.S. Dollar	Transport and stowage		3,650		10,662
Puerto Lirquén S.A.	96.959.030-1	Subsidiary of the Associate	Chile	U.S. Dollar	Port services		—		2,206
EKA Chile S.A.	99.500.140-3	Joint Venture	Chile	Chilean pesos	Sodium chlorate		9,498		41,349
Forestal del Sur S.A.	79.825.060-4	Associate of a subsidiary’s minority shareholder	Chile	Chilean pesos	Wood and chips		1,365		4,547
Portaluppi, Guzman y Bezanilla Asesorías Ltda.	78.096.080-9	Common director	Chile	Chilean pesos	Legal services		173		828
Empresa Nacional de Telecomunicaciones S.A.	92.580.000-7	Common Stockholder	Chile	Chilean pesos	Telephone services		82		524
Colbún Transmisión S.A.	76.218.856-2	Common Stockholder	Chile	Chilean pesos	Electrical Power		81		240
Woodtech S.A.	76.724.000-7	Indirect associate of controlling parent	Chile	Chilean pesos	Wood volumen measurement services		466		1,988
Inversiones Siemel S.A.	94.082.000-6	Common Stockholder	Chile	Chilean pesos	Rentals		68		256
Vía Limpia SPA	79.874.200-0	Common controlling parent	Chile	Chilean pesos	Other purchases		59		215

Sales

Name of Related Party	Tax ID No.	Nature of Relationship	Country	Currency	Transaction Descriptions	03-31-2020 ThU.S.$		12-31-2019 ThU.S.$
Colbún S.A.	96.505.760-9	Common Stockholder	Chile	Chilean pesos	Electrical Power		50		543
EKA Chile S.A.	99.500.140-3	Joint venture	Chile	Chilean pesos	Electrical Power		4,842		18,764
Forestal del Sur S.A.	79.825.060-4	Associate of a subsidiary’s minority shareholder	Chile	Chilean pesos	Harvesting services, wood and chips		8,246		29,543
CMPC Pulp S.A.	96.532.330-9	Common Stockholder	Chile	Chilean pesos	Wood and chips		1,722		1,467
Unilin Arauco Pisos Ltda.	—	Joint venture	Brazil	Brazilian Real	Wood		807		3,350
E2E S.A.	76.879.577-0	Associate	Chile	Chilean pesos	Loan (capital + interests)		6		718
E2E S.A.	76.879.577-0	Associate	Chile	Chilean pesos	Wood, plywood and boards		273		787

62

CELULOSA ARAUCO Y CONSTITUCION S.A. AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

March 31, 2020

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

NOTE 14. INTERIM CONSOLIDATED FINANCIAL STATEMENTS

On September 1, 2019, the corporation Prime-Line, Inc. was acquired through the subsidiary Arauco North America, Inc. The price paid was ThU.S.$12,626. This transaction generated a goodwill for ThU.S.$ 732.

On January 31, 2019, Arauco’s subsidiaries Inversiones Arauco Internacional Limitada and Araucomex, S.A. de C.V., closed the purchase of all of the shares of Masisa’s Mexican subsidiaries, namely Maderas y Sintéticos de México, S.A. de C.V. (currently Arauco Industria de Mexico, S.A. de C.V.), Maderas y Sintéticos Servicios, S.A. de C.V. (currently Araucomex Servicios, S.A. de C.V.), Masisa Manufactura, S.A. de C.V. (currently Arauco Serviquimex, S.A. de C.V.), Placacentro Masisa México, S.A. de C.V. (currently Tablered Araucomex, S.A. de C.V.) y Masnova Química, S.A. de C.V. (currently Arauco Química S.A. de C.V.).

The final price of the transaction was ThU.S.$168,680 and was paid in 2019.

The main assets acquired, consist of two industrial complexes located in Durango and Zitácuaro, that jointly have three Particleboard (PB) lines with an annual installed capacity of 339,000 m3; a MDF line of with an annual installed capacity of 220,000 m3; melamine (or TFL) lines with an annual total installed capacity of 309,000 m3 ; a chemical plant with an installed capacity of 60,000 tons of resins and 60,600 tons of formaldehyde; and impregnation lines with an aggregate annual installed capacity of 28.9 million of m2.

Arauco carried out the initial recognition of the acquisition of these companies based on the information available as of that date, performing a preliminary determination about the allocation of the fair values during the acquisition of the same. The amounts of acquired assets and liabilities are deemed to be provisional amounts and could be adjusted during the measurement period of this acquisition, in order to reflect new information obtained based on facts and circumstances that existed as of the acquisition date and which, if known, would have affected the measurement of the amounts recognized as of that date. The measurement period will not exceed the term of one year as from the acquisition date. During the year 2019, after finalizing the determination of fair values for the acquisition of these companies in Mexico, Arauco recognized a profit of ThU.S.$ 21,674 in Other Gains (Losses) in the Consolidated Statements of Profit or Loss.

63

CELULOSA ARAUCO Y CONSTITUCION S.A. AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

March 31, 2020

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

The table below shows the fair values of assets and liabilities at the date of the transaction:

Masisa Mexico Group	01-31-2019 ThU.S.$
Cash and cash equivalent		9,164
Other currentnon-financial		321
Trade and other current receivables (*)		23,163
Accounts receivable from related companies		27,702
Inventories		30,477
Current tax assets		8,769
Investments accounted for using equity method		278
Property, plant and equipment		155,722
Deferred tax assets		3,701
Non-Current Assets or disposal groups classified as held for sale		49
Total assets		259,346
Trade and other current payables		2,024
Accounts payable to related companies		27,100
Other current provisions		17,832
Current tax liabilities		3,243
Deferred tax liabilities		14,368
Non-current provisions for employee benefits		4,426
Total liabilities		68,993
Total equity		190,353

(*) Trade receivables and other current receivables have an insignificant risk of bad debt. At the acquisition date, the bad debt provision was near to 1%, which is in accordance with the Arauco policy.

The following table shows revenue and net profit recognized from the acquisition date through December 31, 2019:

Masisa Mexico Group	02-01-2019 to  12-31-2019 ThU.S.$
Revenue		138,803
Net loss		995

If the acquisition had occurred on January 1, 2019, consolidatedpro-forma revenue and profit for the year ended December 31, 2019 would have been:

CELULOSA ARAUCO Y CONSTITUCIÓN S.A. AND SUBSIDIARIES	January-December 2019 (Pro-forma) ThU.S.$
Revenue		5,353,354
Net profit		58,472

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

64

CELULOSA ARAUCO Y CONSTITUCION S.A. AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

March 31, 2020

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

NOTE 15. INVESTMENTS IN ASSOCIATES

As of March 31, 2020, there were no new investments in associates to report.

Between January and February 2020, Arauco through its subsidiary Maderas Arauco S.A. has contributed M$ 12.000.000 (equivalent to MUS$ 15.022) to E2E S.A.

On April 5, 2019 Celulosa Arauco y Constitución S.A. sold its participation in Puertos y Logística S.A. to DP World Group for a total amount of ThU.S.$ 101,972. This operation generated a profit of ThU.S$ 18,875.

The following tables set forth information about Investments in associates.

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%
		03-31-2020	12-31-2019
Carrying amount accounted for using equity method		ThU.S.$56,790	ThU.S.$55,030
Name		Servicios Corporativos Sercor S.A.
Country		Chile
Functional Currency		Chilean Pesos
Corporate purpose		Consulting services related to business management to Boards of Directors and Senior Management of all Arauco’s entities.
Ownership interest (%)		20.0000%
		03-31-2020	12-31-2019
Carrying amount accounted for using equity method		ThU.S.$ 145	ThU.S.$ 172
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%
		03-31-2020	12-31-2019
Carrying amount accounted for using equity method		ThU.S.$(9)	ThU.S.$(2)

65

CELULOSA ARAUCO Y CONSTITUCION S.A. AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

March 31, 2020

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

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%
	03-31-2020	12-31-2019
Carrying amount accounted for using equity method	ThU.S.$7	ThU.S.$7
Name	Vale do Corisco S.A.
Country	Brazil
Functional Currency	Brazilian Real
Corporate purpose	Management of forestry activities.
Ownership interest (%)	49.0000%
	03-31-2020	12-31-2019
Carrying amount accounted for using equity method	ThU.S.$29,438	ThU.S.$38,370
Name	E2E S.A.
Country	Chile
Functional Currency	Chilean pesos
Corporate purpose	Development of construction solutions
Ownership interest (%)	50.0000%
	03-31-2020	12-31-2019
Carrying amount accounted for using equity method	ThU.S.$16,056	ThU.S.$1,739
Name	Parque Eólico Ovejera Sur SpA
Country	Chile
Functional Currency	Chilean pesos
Corporate purpose	Electrical power projects
Ownership interest (%)	50.0000%
	03-31-2020	12-31-2019
Carrying amount accounted for using equity method	ThU.S.$728	ThU.S.$796

66

CELULOSA ARAUCO Y CONSTITUCION S.A. AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

March 31, 2020

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

Summarized Financial Information of Associates

												Assets
03-31-2020	Puertos y Logística S.A. ThU.S.$			Inversiones Puerto Coronel S.A. ThU.S.$		Serv.Corporativos Sercor S.A. ThU.S.$			E2E S.A. ThU.S.$			Parque Eólico Ovejera del Sur SpA. 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		—			29		3,438			32,112			106			3,044			2		15			38,746
Non-current		—			115,400		2,988			2,819			1,555			77,206			36		46			200,050
Total		—			115,429		6,426			34,931			1,661			80,250			38		61			238,796
	Puertos y Logística S.A. ThU.S.$			Inversiones Puerto Coronel S.A. ThU.S.$		Serv.Corporativos Sercor S.A. ThU.S.$			E2E S.A. ThU.S.$			Liabilities Parque Eólico Ovejera del Sur SpA. 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		—			83		3,644			1,597			205			274			—		5			5,808
Non-current		—			—		2,055			1,222			0			19,898			5		32			23,212
Equity		—			115,346		727			32,112			1,456			60,078			33		24			209,776
Total		—			115,429		6,426			34,931			1,661			80,250			38		61			238,796
03-31-2020
Revenues		—			—		1,003			456			—			1,629			—		—			3,088
Expenses		—			3,505		(947	)		(846	)		(8	)		(879	)		—		(2	)		823
Profit or loss (continuing operations)		—			3,505		56			(390	)		(8	)		750			—		(2	)		3,911
Other comprehensive income		—			—		—			—			—			—			—		—			—
Comprehensive income		—			3,505		56			(390	)		(8	)		750			—		(2	)		3,911
Dividends		—			—		—			—			—			783			—		—			783
12-31-2019	Puertos y Logística S.A. ThU.S.$			Inversiones Puerto Coronel S.A. ThU.S.$		Serv.Corporativos Sercor S.A. ThU.S.$			E2E S.A. ThU.S.$			Assets Parque Eólico Ovejera del Sur SpA. 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		—			29		9,974			3,045			95			4,992			2		25			18,162
Non-current		—			111,896		3,436			3,099			1,505			99,943			36		19			219,934
Total		—			111,925		13,410			6,144			1,600			104,935			38		44			238,096
	Puertos y Logística S.A. ThU.S.$			Inversiones Puerto Coronel S.A. ThU.S.$		Serv.Corporativos Sercor S.A. ThU.S.$			E2E S.A. ThU.S.$			Liabilities Parque Eólico Ovejera del Sur SpA. 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		—			98		10,222			1,331			2			965			—		9			12,627
Non-current		—			—		2,325			1,336			5			25,664			5		42			29,377
Equity		—			111,827		863			3,477			1,593			78,306			33		(7	)		196,092
Total		—			111,925		13,410			6,144			1,600			104,935			38		44			238,096
03-31-2019
Revenues		46,763			476		1,272			1			3			563			—		—			49,078
Expenses		(46,751	)		—		(1,215	)		(154	)		(1	)		(253	)		—		—			(48,374	)
Profit or loss (continuing operations)		12			476		57			(153	)		2			310			—		—			704
Other comprehensive income		7,540			—		—			—			—			—			—		—			7,540
Comprehensive income		7,552			476		57			(153	)		2			310			—		—			8,244
Dividends		—			—		—			—			—			—			—		—			—

67

CELULOSA ARAUCO Y CONSTITUCION S.A. AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

March 31, 2020

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

Reconciliation of Investment in Associates and Joint Ventures

	03-31-2020			12-31-2019
	ThU.S.$			ThU.S.$
Opening balance as of January 1		293,118			358,053
Changes
Investment in joint ventures, Additions (*)		15,090			2,741
Disposals, investment in associates and joint ventures (**)		—			(58,850	)
Share of profit (loss) in investment in associates		1,919			6,786
Share of profit (loss) in investment in joint ventures		(366	)		989
Dividends Received, Investments in Associates		(3,174	)		(13,601	)
Increase (Decrease) in foreign exchange currency on translation of Associates and Joint Ventures		(12,855	)		(5,440	)
Other increase (decrease) in investment and associates and joint ventures		(5,662	)		2,440
Total changes		(5,048	)		(64,935	)
Closing balance		288,070			293,118

(*) As of February 1, 2020, Arauco Bioenegía S.A. contributed ThU.S.$ 88 corresponding to 53 shares to Parque Eólico Ovejera del Sur SpA. During the first quarter of 2020, Maderas Arauco S.A. has made two contributions, one for M$300,000 on January 29, and the second for M$11,700,000 on February 03, both equivalent to ThU.S.$ 15,022.

(**) ThU.S.$ 56,492 account for the carrying amount of investment in Puertos y Logística S.A., which was sold on April 5, 2019.

	03-31-2020		12-31-2019
	ThU.S.$		ThU.S.$
Carrying amount of associates accounted for using equity method		103,170		96,114
Carrying amount of joint ventures accounted for using equity method		184,900		197,004
Total investment accounted for using equity method		288,070		293,118

NOTE 16. INTERESTS IN JOINT ARRANGEMENTS

Investments and contributions made

On April 1, 2019 Arauco through its subsidiary Forestal Arauco S.A. entered into a shareholders agreement with respect to Agrícola San Gerado SpA, which was established with the special purpose of developing an agricultural project in Molina. The capital contributed by Forestal Arauco S.A. was M$1,570,000 (equivalent to ThU.S.$ 2,162 as of December 31, 2019).

As of March 31, 2020 and December 31, 2019, Arauco has not made 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.

Arauco holds a 50% interest in Sonae Arauco, which subsidiary produces and commercializes 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.

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.

68

CELULOSA ARAUCO Y CONSTITUCION S.A. AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

March 31, 2020

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 arrangements, which qualify as joint operations:

	03-31-2020				12-31-2019
Celulosa y Energía Punta Pereira S.A. (Uruguay)	Assets ThU.S.$		Liabilities ThU.S.$		Assets ThU.S.$		Liabilities ThU.S.$
Current		306,866		219,012		346,498		206,683
Non-current		2,142,009		391,903		2,158,586		444,181
Equity		—		1,837,960		—		1,854,220
Total Joint Arrangement		2,448,875		2,448,875		2,505,084		2,505,084
Investment		918,980				927,110

	03-31-2020 ThU.S.$			03-31-2019 ThU.S.$
Income		144,574			235,359
Expenses		(143,505	)		(155,393	)
Joint Arrangement Net Income (Loss)		1,069			79,966

	03-31-2020				12-31-2019
Forestal Cono Sur S.A. (consolidated)	Assets ThU.S.$		Liabilities ThU.S.$		Assets ThU.S.$		Liabilities ThU.S.$
Current		52,319		1,973		37,625		2,180
Non-current		158,545		11,208		172,913		9,046
Equity		—		197,683		—		199,312
Total Joint Arrangement		210,864		210,864		210,538		210,538
Investment		98,842				99,656

	03-31-2020 ThU.S.$			03-31-2019 ThU.S.$
Income		16,472			14,332
Expenses		(18,102	)		(12,795	)
Joint Arrangement Net Income (Loss)		(1,630	)		1,537

	03-31-2020				12-31-2019
Eufores S.A. (consolidated)	Assets ThU.S.$		Liabilities ThU.S.$		Assets ThU.S.$		Liabilities ThU.S.$
Current		171,377		257,504		148,550		209,665
Non-current		833,670		135,945		808,647		117,443
Equity		—		611,598		—		630,089
Total Joint Arrangement		1,005,047		1,005,047		957,197		957,197
Investment		305,799				315,045

	03-31-2020 ThU.S.$			03-31-2019 ThU.S.$
Income		59,773			69,046
Expenses		(75,662	)		(65,019	)
Joint Arrangement Net Income (Loss)		(15,889	)		4,027

	03-31-2020				12-31-2019
Zona Franca Punta Pereira S.A. (Uruguay)	Assets ThU.S.$		Liabilities ThU.S.$		Assets ThU.S.$		Liabilities ThU.S.$
Current		6,936		116,363		5,823		115,627
Non-current		461,410		28,891		464,151		19,740
Equity		—		323,092		—		334,607
Total Joint Arrangement		468,346		468,346		469,974		469,974
Investment		161,546				167,304

	03-31-2020 ThU.S.$			03-31-2019 ThU.S.$
Income		4,550			4,510
Expenses		(16,065	)		(5,811	)
Joint Arrangement Net Income (Loss)		(11,515	)		(1,301	)

69

CELULOSA ARAUCO Y CONSTITUCION S.A. AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

March 31, 2020

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 accounted in for equity method:

	03-31-2020				12-31-2019
Unilin Arauco Pisos Ltda.	Assets ThU.S.$		Liabilities ThU.S.$		Assets ThU.S.$		Liabilities ThU.S.$
Current		5,298		2,852		6,674		3,761
Non-current		2,996		43		4,024		55
Equity		—		5,399		—		6,882
Total Joint Arrangement		8,294		8,294		10,698		10,698
Investment		2,700				3,441

	03-31-2020 ThU.S.$			03-31-2019 ThU.S.$
Income		2,704			4,492
Expenses		(2,626	)		(4,448	)
Joint Arrangement Net Income (Loss)		78			44
Other comprehensive income		—			—
Comprehensive income		78			44
Dividends		—			—

	03-31-2020				12-31-2019
Eka Chile S.A.	Assets ThU.S.$		Liabilities ThU.S.$		Assets ThU.S.$		Liabilities ThU.S.$
Current		16,269		4,736		21,449		4,930
Non-current		33,832		4,652		33,442		4,917
Equity		—		40,713		—		45,044
Total Joint Arrangement		50,101		50,101		54,891		54,891
Investment		20,357				22,522

	03-31-2020 ThU.S.$			03-31-2019 ThU.S.$
Income		9,971			11,930
Expenses		(9,519	)		(10,293	)
Joint Arrangement Net Income (Loss)		452			1,637
Other comprehensive income		—			—
Comprehensive income		452			1,637
Dividends		2,391			—

	03-31-2020				12-31-2019
Sonae Arauco S.A.	Assets ThU.S.$		Liabilities ThU.S.$		Assets ThU.S.$		Liabilities ThU.S.$
Current		244,824		233,483		216,342		215,632
Non-current		675,016		366,468		695,902		358,851
Equity		—		319,889		—		337,761
Total Joint Arrangement		919,840		919,840		912,244		912,244
Net assets		131,720				140,146
Net asset adjustment (Goodwill)		28,225				28,735
Investment		159,945				168,881

	03-31-2020 ThU.S.$			12-31-2019 ThU.S.$
Income		885,812			243,157
Expenses		(887,230	)		(236,494	)
Joint Arrangement Net Income (Loss)		(1,418	)		6,663
Other comprehensive income		—			—
Comprehensive income		(1,418	)		6,663
Dividends		—			7,480

	03-31-2020				12-31-2019
Agrícola San Gerardo SpA.	Assets ThU.S.$		Liabilities ThU.S.$		Assets ThU.S.$		Liabilities ThU.S.$
Current		1,386		—		—		—
Non-current		2,416		3		2,162		—
Equity		—		3,799		—		2,162
Total Joint Arrangement		3,802		3,802		2,162		2,162
Investment		1,900				1,081

	03-31-2020 ThU.S.$			12-31-2019 ThU.S.$
Income		—			—
Expenses		(18	)		—
Joint Arrangement Net Income (Loss)		(18	)		—
Other comprehensive income		—			—
Comprehensive income		(18	)		—
Dividends		—			—

70

CELULOSA ARAUCO Y CONSTITUCION S.A. AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

March 31, 2020

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

NOTE 17. IMPAIRMENT OF ASSETS

As a result of current market conditions generated by the fall in prices, the impairment tests carried out at the CGU. yielded a provision of ThU.S.$43,181 (ThU.S.$38,913 of Property, plant and equipment, and ThU.S.$4,268 of spare parts from Inventories) in connection with two plants of Wood products business area in USA. For these calculations a discount rate of 8% was used.

In addition, due to the modernization and expansion project of the Arauco Mill (Proyecto de Modernización y Ampliación de la Planta Arauco, or MAPA Project), as of March 31, 2020, an impairment provision due to a reduction in the useful lives for the CGU Line 1 of Arauco Mill (Pulp business) was recorded in an amount of ThU.S.$50,422 (ThU.S.$33,570 as of December 31, 2019). For this calculation a discount rate of 6.1% was used. The Line 1 of the Arauco mill will be permanently shut down when the MAPA project is completed.

Both impairment provision charges are presented in the consolidated statement of Profit or Loss in Other expenses line.

Provisions for impairment of property, plant and equipment due to technical obsolescence (does not include the CGU impairments discussed above) have been recorded as of March 31, 2020 and December 31, 2019, 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
	03-31-2020	12-31-2019
Provisions for impairment of property, plant and equipment	ThU.S.$13,774	ThU.S.$13,774

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.$59,349 (ThU.S.$ 65,751 at December 31, 2019), as shown below:

	03-31-2020		12-31-2019
Goodwill	ThU.S.$		ThU.S.$
Arauco Canada Ltd. (Flakeboard Company Ltd)		40,582		40,765
Arauco do Brasil S.A. (Pien mill)		17,350		22,378
Arauco North America, Inc. (Prime-Line, Inc.)		732		732
Arauco Argentina S.A. (Forestal Nuestra Señora del Carmen S.A.)		—		1,191
Forestal Arauco S.A. (Forestal Los Lagos S.A.)		685		685
Closing balance		59,349		65,751

	03-31-2020			12-31-2019
Goodwill	ThU.S.$			ThU.S.$
Opening balance at January 1		65,751			65,851
Increase (decrease) due to business combination		—			732
Increase (decrease) due to merge		(1,191	)		—
Increase (decrease) in foreign currency exchange		(5,211	)		(832	)
Closing balance		59,349			65,751

Of the total of goodwill, ThU.S.$40,582 (ThU.S.$ 40,765 as of December 31, 2019) are generated by the acquisition of “Flakeboard” (currently Arauco Canada Ltd.), a company that, directly and/or through its subsidiaries, possesses and operates 7 panel plants, for

71

CELULOSA ARAUCO Y CONSTITUCION S.A. AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

March 31, 2020

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

which Arauco acquired and paid, on September 24, 2012, the price of ThU.S.$242,502 for the 100% interest ownership. The remaining balance of ThU.S.$ 732 corresponds to the acquisition of Prime-Line Inc, on September 1, 2019, for which Arauco North America Inc, a subsidiary of Arauco Canada Ltd. paid ThU.S.$ 18,880 for all the shares of said company.

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 a7-year term, applying a real discount rate of 8% which reflects current market assessments for the wood products segment in North America.

The investment in the panel plant in Pien, Brazil generated a goodwill of ThU.S.$17,350 (ThU.S.$ 22,378 as of December 31, 2019).

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 a5-year term, applying a 7% real discount rate that reflects current evaluations for the panel segment in Brazil.

As of March 31, 2020 and December 31, 2019, the carrying value of the goodwill of the plants did not exceed their recoverable value, and therefore there was no need to recognize impairment losses.

72

CELULOSA ARAUCO Y CONSTITUCION S.A. AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

March 31, 2020

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 with 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 as of October 31, 2002 of $4,571,664,617 (equal to ThU.S.$5,366 as of March 31, 2020). 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.$1,419 as of March 31, 2020), resulting in a total disputed amount of $3,362,265,453 (equal to ThU.S.$3,946 as of March 31, 2020) plus fines and interests. On February 19, 2010, the Court acknowledged receipt of the Company’s request.

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. RUC14-9-0002087-3. 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. On June 29, 2018, the Court of Appeals of Santiago issued a ruling on appeal, confirming the first instance decision. On July 19, 2018, Arauco lodged a cassation appeal based on formal and substantial flaws before the Supreme Court. (case file24,758-2018).

On June 21, 2019, Celulosa Arauco y Constitución S.A. filed a claim before the Constitutional Court to declare the legal provision contemplated under section 53, paragraph 3 of the Tax Code unconstitutional and, as a consequence, inapplicable.

On October 29, 2019 the Constitutional Court accepted the claim filed by Celulosa Arauco y Constitución S.A., finding unconstitutional and declaring the inapplicability of section 53, paragraph 3 of the Tax Code in the context of the proceeding “Celulosa Arauco y Constitución S.A. with SII Large taxpayers”, which is in the Supreme Court docket as a result of a cassation appeal (based on form and content) under case file24,758-2018.

Currently, the case is related to 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 March 31, 2020, Arauco has not made any provision whatsoever in connection with this contingency.

73

CELULOSA ARAUCO Y CONSTITUCION S.A. AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

March 31, 2020

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

2. 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.

On December 15, 2017, the Superintendence of the Environment issued Exempted Resolution No. 1,487, closing the punitive administrative proceeding, absolving the company with regards to one of the charges and convicting for other 10 charges, applying a fine of 7,777 UTA (equal to ThU.S.$ 5,479 as of March 31, 2020). On December 22, 2017, the Company submitted a motion for reconsideration regarding Exempted Resolution No. 1,487, before the SMA, requesting that we be absolved of all infringements, with the exception of the charge specified under number 7 (late submission of the water quality report regarding the Cruces river). On March 23, 2018, the reconsideration appeal lodged by the company was rejected. On April 5, 2018, a judicial claim was submitted before the Third Environmental Court.

On February 11, 2020 the judgment of the Third Environmental Court was notified, which partially accepted the legal claim of the Company, only as to the inadequate severity qualification of one of the charges (charge No. 2, consisting of not deriving as last resource to the effluent treatment system, the green liquor spill occurred on January 17, 2014).

On February 28, 2020, both the Company and the SMA submitted cassation appeals based on form and content, to be heard and resolved by the Supreme Court. 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 March 31, 2020, Arauco has not made any provision whatsoever in connection with this contingency.

Celulosa Arauco y Constitución S.A., Forestal Arauco S.A., Maderas Arauco S.A. and Servicios Logísticos Arauco S.A.

1. On August 13, 2018, Asociación Gremial de Dueños de Camiones de Constitución (ASODUCAM) filed a complaint seeking the performance of a contract and claiming compensation for damages against Celulosa Arauco y Constitución S.A., Forestal Arauco S.A., Maderas Arauco S.A. and Servicios Logísticos Arauco S.A. The complaint is based on alleged breaches of some agreements for the allocation, distribution and supply of cargo volumes for the years 2001 and 2005, initially executed by associates of ASODUCAM with Forestal Arauco S.A., and then, allegedly, with Servicios Logísticos Arauco S.A., in favor of the other two defendants, Celulosa Arauco and Constitución S.A. and Maderas Arauco S.A.

The complaint seeks to enforce the contract, plus $575,000,000 (equal to ThU.S.$ 675 as of March 31, 2020) in compensation for damages. In the alternative, it claims (a) $11,189,270,050 (equivalent to ThU.S.$ 13,132 as of March 31, 2020), for actual damages; (b) $ 11,189,270,050 monthly during the entire course of the trial, until the termination of the contract is declared in the final ruling, for loss of profits, and (c) $5,000,000,000 (equivalent to ThU.S.$ 5,868 as of March 31, 2020) for moral damages.

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CELULOSA ARAUCO Y CONSTITUCION S.A. AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

March 31, 2020

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

On August 28, 2018 the claim was served upon Celulosa Arauco y Constitución S.A., Forestal Arauco S.A. and Maderas Arauco S.A.; service is pending on Servicios Logísticos Arauco S.A. (Case fileC-757-2018 with the Civil Court of Constitución).

Considering that the Company’s position is based on solid legal grounds, there is a reasonable margin for obtaining a favorable result for the Company and, therefore, as of March 31, 2020, Arauco has not made any provision whatsoever in connection with this contingency.

Forestal Arauco S.A.

1. On July 11, 2017, the company was notified of a civil claim for recovery in ordinary proceedings, filed by Mrs. Carmen Muñoz Domínguez on behalf of Forestal Ezrece S.A. The plaintiff argues that its client would be the rightful owner – as a result of an assignment and sale – of 87.5% of the hereditary rights in the rural real estate property called “Pino Huacho,” located in the boroughs of Los Alamos and of Cañete, province of Lebu, Eighth Region, for a surface area amounting to 5,144.22 hectares, which actions would be under the possession of Forestal Arauco S.A. The claimant has requested the court to order Forestal Arauco S.A. to be sentenced to restitute these actions and rights. Forestal Arauco S.A. answered the claim, requesting its total dismissal, with litigation costs, and further filing a counterclaim based on the ordinary prescription and, in lieu thereof, based on extraordinary prescription.

On July 30, 2019, the final ruling was issued down rejecting both the main and the reconventional lawsuits in all of its parts (Case FileC-109-2017 First Instance and Guarantee Court of Lebu).

On August 12, 2019, the plaintiff filed an appeal against the final ruling. On September 2, 2019, Forestal Arauco S.A. adhered to the appeal, which resolution is pending in the Court of Appeals of Concepción (Case file 1853-2019).

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 March 31, 2020, Arauco has not made any provision whatsoever in connection with this contingency.

2. Mrs. Estela Jaramillo, filed a lawsuit in a special indigenous procedure, before the First Civil Court of Osorno (CaseC-2540-2018), requesting the absolute nullity of the contract of sale signed in 1999, by which Consorcio Forestal S.A. sold to Forestal Valdivia S.A., today Forestal Arauco S.A., 1,505.6 hectares under the name of Fundo San Nicolás Dos Lote Uno Norte. It also demands compensation for damages for the exploitation and use of indigenous lands against Forestal Arauco S.A.

On November 10, 2018, Forestal Arauco SA was notified of the lawsuit. On January 16, 2019, the Court dismissed the lawsuit regarding Consorcio Forestal S.A., who was not notified of the complaint.

On March 18, 2019, the answer and settlement hearing took place, and, during such hearing, the court decided to proceed to the production of evidence stage.

On November 11, 2019, the parties were summoned to hear the ruling, which is pending.

75

CELULOSA ARAUCO Y CONSTITUCION S.A. AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

March 31, 2020

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 March 31, 2020, Arauco has not made any provision whatsoever in connection with this contingency.

3. Inversiones Forestales Los Alpes Limitada and Forestal Neltume-Carrasco S.A. filed a claim against Forestal Arauco S.A. before the Civil Court of Angol(C-502-2015), in which they request that Forestal Arauco S.A. restitute the material possession of 1,855.9 hectares, which would be part of their property “Resto del Fundo Los Alpes”, which would have an area of approximately 2,700 hectares. Likewise, they requested that it be declared that the property is the exclusive domain of the actors, the restitution of the civil and natural fruits, in addition to the deteriorations that the property would have experienced, with litigation costs.

On May 29, 2019, the lawsuit was answered and the counterclaim of the acquisitive prescription was filed.

On March 3, 2020, a conciliation hearing was held; the resolution that opens the period to produce evidence is still 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 March 31, 2020, Arauco has not made any provision whatsoever in connection with this contingency.

4. On August 2, 2019, the company was notified of a lawsuit for termination of contract and compensation for damages filed by “Sociedad Recuperadora de Fibra S.A.” before the First Court of Valdivia (CaseC-2215-2019). In the lawsuit, the plaintiff questions the anticipated termination of a contract by Forestal Arauco.

It also claims that the company would have breached various contractual obligations regarding to 2 groups of contracts:

A. (i) Aggregates Transport Contract and (ii) Production, Cargo, Storage and Construction Management Contract for Platforms and flooring.

B. (i) Contract for the Production of Aggregates, (ii) Contract for Long Freight Services for Aggregates and (iii) Contract for Construction Services for Granular floor and Short Freight for Aggregates.

Based on the foregoing, it requests payment of compensation for an amount of $3,486,187,431 (equivalent to ThU.S.$ 4,092 as of March 31, 2020) plus interests, readjustments and litigation costs.

On September 17, 2019, Forestal Arauco S.A. answered the claim and filed a counterclaim for compensation of damages which is in the process of a conciliation hearing, requesting that the main claimant be ordered to pay $421,723,281 (equivalent to ThU.S$563 as of December 31, 2019).

Through the resolution dated as of January 9, 2020, the court received the case to commence the production of evidence; the notification of such resolution is pending.

76

CELULOSA ARAUCO Y CONSTITUCION S.A. AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

March 31, 2020

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 March 31, 2020, Arauco has not made any provision whatsoever in connection with this contingency.

5. On April 15, 2020, Forestal Arauco S.A. was notified of a lawsuit filed against it by the company “Agrícola, Forestal, Transportes y Inversiones El Quillay SpA”, which is being reviewed by the Court of Constitución (CaseC-298-2020).

The plaintiff claims to be owner of rights and shares corresponding to 4.17% or 1/24 of all the rights to the property called “Bodega de la subdelegación de Quivolgo”, under the domain of the estate of Mr. José Arcos Gonzalez, there existing parallel inscriptions between the domain registration of said property and the domain registrations of Forestal Arauco S.A. relating to the properties: (i) “property that was part of the Hijuela Sur Poniente, of Hijuela Sur from Fundo Quivolgo”, (ii) “Lomas de Quivolgo” and, (iii) “Hijuela Astillero”, generating as a result an overlap of 3,424.38 hectares.

The plaintiff indicates that it would have been deprived of possession of the property “Bodega de la subdelegación de Quivolgo”, further indicating that Forestal Arauco S.A. has been developing forestry tasks on the property since December 21, 2019, and as a consequence that the applicant cannot enjoy said property.

By virtue of the foregoing, it requests, in summary:

A. To be declared that the plaintiff owns an undivided interest of 4.17% or 1/24 of the property called “Bodega de la subdelegación de Quivolgo”.

B. To cancel the registration of the following properties of Forestal Arauco SA: (i) “property that was part of the Hijuela Sur Poniente, of Hijuela Sur from Fundo Quivolgo”, (ii) “Lomas de Quivolgo” and (iii) “Hijuela Astillero”, deeming it as abad-faith holder.

C. To order Forestal Arauco S.A. to make restitution of the piece of land occupied, of 3,424 hectares.

D. That, alternatively, the existence of a condominium be declared between the plaintiff and Forestal Arauco S.A. on the overlapping part, and to order the defendant to make restitution of the piece of land used.

E. To order Forestal Arauco S.A. to make restitution of all natural and civil benefits, as well as all goods and products, which are deemed to be part of the claimed property.

F. To order the defendant to pay the costs.

Currently, the answer to the lawsuit is pending.

77

CELULOSA ARAUCO Y CONSTITUCION S.A. AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

March 31, 2020

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

Arauco Argentina S.A.

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.

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 has filed yearly forestry plans between years 2007 and 2018 for its local operations in the provinces of Misiones and Buenos Aires.

On March 25, 2019, the Secretary of Agriculture, Livestock and Fishing approved the resolution No.2019-55-APN-SECAGYP#MPYT, approving the annual forestry plan for 2007. In addition, said organism through the resolution No.2019-114-APN-SECAGYP#MPYT approved the annual forestry plan for 2009 on June 12, 2019, and through the resolution No.2019-228-APN-SECAGYP#MPYT approved the annual forestry plan for 2008 on November 29, 2019. For this reason, Arauco Argentina S.A. may compute the exemption in the income tax related to the forest appraisal on the plantations to be harvested from the lands included in those plans as from the 2019 period.

In March 2005, Note No. 145/05 of the Subsecretary 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 (caution) policies for each shipment permits exempted from payment of export duty. The company maintains an assignment of funds equivalent to $1,406,696,320 Argentine Pesos (ThU.S.$ 21,847 as of March 31, 2020) for guaranteed export duties between 2007-2015, 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. The Company’s claim is being heard under case file No. 21830/2006 before the Federal Contentious Administrative Court No. 4. On October 28, 2019, a judgment of first instance was issued in said case, rejecting the claim and imposing the litigation costs on Arauco. Against that judgment, the Company filed an appeal and expressed the corresponding arguments in December 2019.

78

CELULOSA ARAUCO Y CONSTITUCION S.A. AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

March 31, 2020

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

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, establish collateral to cover a third of the duration of the project, with a minimum term of five years. During May of 2019, 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 $384,317,563 Argentine Pesos (ThU.S.$5,969 as of March 31, 2020).

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.

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 (ThU.S.$31,568 as of March 31, 2020). 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 premium, but preserving other charges. On September 27, 2018, Arauco do Brasil was notified of the CARF’s decision, representing the final amount of this case R$57,556,262 (ThU.S.$ 11,068 as of March 31, 2020), and interests and readjustments will be added to that value until the discussion is over. Arauco do Brasil S.A. filed an appeal for declaration embargoes, to elicit clarifications from the CARF regarding certain points of the decision.

On January 25, 2019, the CARF ruled that there were no clarifications or omissions to be made and, consequently, granted a term for filing the last remedy within the administrative realm (“Special Remedy”). This Special Remedy was submitted before the Upper Chamber of Fiscal Remedies of the CARF (CSRF) on February 11, 2019, reiterating the Company’s defense allegations regarding the matters and charges that remained in such process; we are currently expecting the decision on such Special Remedy.

On July 17, 2019, the Company became aware of an intermediate decision issued by CARF that, when examining the legal conditions for the admissibility of the Special Remedy submitted, decided to admit it only in relation to point “4”, which is the challenge to the isolated fine of 50%. In relation to the other points (“1” Comment of the contractual expenses deducted in the purchase of Tafisa; “2” Comment of interests and legal expenses on debts paid in the amnesty program; “3” Less IRPJ and CSLL in the second part of 2010) CARF understood that there were no legal conditions for the admissibility of the appeal. Thus, in relation to point “4”, the process will go to the CSRF for trial.

79

CELULOSA ARAUCO Y CONSTITUCION S.A. AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

March 31, 2020

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

In relation to the other points (“1”, “2” and “3”), another administrative appeal (“Grievance of Instrument”) was presented in order to modify the understanding of the inadmissibility of those points.

Based on the last decision of the declaratory liens, the CARF submitted that the current value under discussion would amount to R$58,059,580.30 (ThU.S.$ 11,165 as of March 31, 2020), with basis as of January 31, 2019. Interests and adjustments must be added to the aforesaid amount as from January 31, 2019 and until the discussion concludes.

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.

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 March 31, 2020, Arauco has not made any provision whatsoever in connection with this contingency.

At the closing date, there are no other contingencies in which the Companies act as obligor, that may significantly affect their financial, economic or operational conditions.

Provisions recorded as of March 31, 2020 and December 31, 2019 are as follows:

	03-31-2020		12-31-2019
Classes of Provisions	ThU.S.$		ThU.S.$
Provisions, Current		1,234		1,259
Provisions for litigations		1,234		1,259
Provisions,non-Current		31,068		31,765
Provisions for litigations		7,566		8,265
Other provisions		23,502		23,500
Total Provisions		32,302		33,024

	03-31-2020
	Litigations			Other Provisions			Total
Movements in Provisions	ThU.S.$			ThU.S.$			ThU.S.$
Opening balance		9,524			23,500			33,024
Changes in provisions
Increase in existing provisions		742			3			745
Used provisions		(115	)		—			(115	)
Increase (decrease) in foreign currency exchange		(1,483	)		—			(1,483	)
Other Increases (Decreases)		132			(1	)		131
Total Changes		(724	)		2			(722	)
Closing balance		8,800			23,502			32,302

	12-31-2019
	Litigations			Other Provisions		Total
Movements in Provisions	ThU.S.$			ThU.S.$		ThU.S.$
Opening balance		10,797			23,500		34,297
Changes in provisions
Increase in existing provisions		1,196			—		1,196
Increase through business combinations		815			—		815
Used provisions		(1,988	)		—		(1,988	)
Increase (decrease) in foreign currency exchange		(1,942	)		—		(1,942	)
Other Increases (Decreases)		646			—		646
Total Changes		(1,273	)		—		(1,273	)
Closing balance		9,524			23,500		33,024

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, and the constitution of provision for the lawsuit of export duties (see Arauco Argentina’s contingent liability set forth in this note).

80

CELULOSA ARAUCO Y CONSTITUCION S.A. AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

March 31, 2020

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

NOTE 19. INTANGIBLE ASSETS

	03-31-2020			12-31-2019
Classes of Intangible Assets, Net	ThU.S.$			ThU.S.$
Intangible assets, net		104,096			106,252
Computer software		46,920			39,065
Water rights		5,966			5,966
Customer		37,903			39,981
Other identifiable intangible assets		13,307			21,240
Classes of intangible Assets, Gross		220,876			220,222
Computer software		123,300			113,487
Water rights		5,966			5,966
Customer		73,461			74,723
Other identifiable intangible assets		18,149			26,046
Classes of accumulated amortization and impairment
Total accumulated amortization and impairment		(116,780	)		(113,970	)
Accumulated amortization and impairment, intangible assets		(116,780	)		(113,970	)
Computer software		(76,380	)		(74,422	)
Customer		(35,558	)		(34,742	)
Other identifiable intangible assets		(4,842	)		(4,806	)

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

	03-31-2020
	Computer Software			Water Rights		Customer			Others			TOTAL
Reconciliation of intangible assets	ThU.S.$			ThU.S.$		ThU.S.$			ThU.S.$			ThU.S.$
Opening Balance		39,065			5,966		39,981			21,240			106,252
Changes
Additions		1,455			—		—			1,303			2,758
Disposals		(32	)		—		—			—			(32	)
Amortization		(2,164	)		—		(1,283	)		(82	)		(3,529	)
Increase (Decrease) related to foreign currency translation		(445	)		—		(795	)		(113	)		(1,353	)
Other Increases (Decreases)		9,041			—		—			(9,041	)		—
Changes Total		7,855			—		(2,078	)		(7,933	)		(2,156	)
Closing Balance		46,920			5,966		37,903			13,307			104,096

	12-31-2019
	Computer Software			Water Rights		Customer			Others			TOTAL
Reconciliation of intangible assets	ThU.S.$			ThU.S.$		ThU.S.$			ThU.S.$			ThU.S.$
Opening Balance		26,545			5,966		41,634			15,948			90,093
Changes
Additions		17,908			—		—			4,472			22,380
Additions through business combination		223			—		2,800			1,300			4,323
Disposals		(67	)		—		—			—			(67	)
Amortization		(8,008	)		—		(4,769	)		(360	)		(13,137	)
Increase (Decrease) related to foreign currency translation		177			—		316			(120	)		373
Other Increases (Decreases)		2,287			—		—			—			2,287
Changes Total		12,520			—		(1,653	)		5,292			16,159
Closing Balance		39,065			5,966		39,981			21,240			106,252

	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.

81

CELULOSA ARAUCO Y CONSTITUCION S.A. AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

March 31, 2020

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

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 March 31, 20120 out of which 1 million hectares are used for forestry planting, 511 thousand hectares are native forest, 106 thousand hectares are used for other purposes and 108 thousand hectares not yet planted.

For the period ended March 31, 2020, the production volume of logs totaled 4.3 million m3 (5.1 million m3 as of March 31, 2019).

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

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

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

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

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

• Future plantations are not considered.

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

• Expected cash flows are determined in terms of harvest and expected sale of forestry products, associated with the demand from the Company’s own industrial centers and sales to third parties at market prices. Sales margin of the different products that are harvested in the forest is also considered in the valuation. The changes in the value of the plantations pursuant to the criteria defined above are accounted for in the results for the fiscal year, as established in IAS 41. These changes are presented in the interim Consolidated Statements of Profit or Loss under the line item Other income per function, which as of March 31, 2020 amounted to ThU.S.$52,017 (ThU.S.$ 36,981 as of March 31, 2019). 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 March 31, 2020 amounted to ThU.S.$32,676 (ThU.S.$ 45,876 as of March 31, 2019).

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

• The discount rates used are 6.4% in Chile, 7.9% Brazil, 10.5% in Argentina and 6.9% in Uruguay.

82

CELULOSA ARAUCO Y CONSTITUCION S.A. AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

March 31, 2020

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

• 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		(129,207	)
	-0,5		137,426
Margins (%)	10		392,634
	-10		(392,634	)

The significant unobservable input data used in the measurement of the fair value of biological assets are discount rates and sales margins of the different products that are harvested from the forest. Increases (decreases) in any of these input data considered in isolation would result in a smaller or greater fair value measurement. A change in the assumption used for the probability of a change in the discount rate is accompanied by a change in the opposite direction in the assumption used before a change in the sales margins.

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.

The Company has contracted fire insurance policies for its forestry plantations, which in conjunction with the Company’s resources, allow risks to be minimized.

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

Detail of Biological Assets Pledged as Security

As of March 31, 2020, there are no forestry plantations pledged as security.

83

CELULOSA ARAUCO Y CONSTITUCION S.A. AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

March 31, 2020

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

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 andNon-Current Biological Assets

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

	03-31-2020		12-31-2019
	ThU.S.$		ThU.S.$
Current		260,744		275,792
Non-current		3,347,839		3,393,634
Total		3,608,583		3,669,426

Reconciliation of carrying amount of biological assets

	03-31-2020
	Current			Non-current			Total
Movement	ThU.S.$			ThU.S.$			ThU.S.$
Opening Balance		275,792			3,393,634			3,669,426
Changes in real incurred cost		(16,868	)		(50,389	)		(67,257	)
Additions through acquisition and costs of new plantations		1,725			61,388			63,113
Sales		—			(1,206	)		(1,206	)
Harvest		(28,039	)		—			(28,039	)
Increases (decreases) in Foreign Currency Translation		(13,895	)		(84,490	)		(98,385	)
Loss of forest due to fires		—			(2,740	)		(2,740	)
Transfers fromnon-current to current		23,341			(23,341	)		—
Changes in fair value		1,820			4,595			6,415
Gain (losses) arising from changes in fair value minus sale costs		—			52,017			52,017
Sales		—			(851	)		(851	)
Harvest		(42,435	)		—			(42,435	)
Loss of forest due to fires		—			(2,316	)		(2,316	)
Transfers fromnon-current to current		44,255			(44,255	)		—
Total Changes		(15,048	)		(45,794	)		(60,842	)
Closing balance		260,744			3,347,840			3,608,584
	12-31-2019
	Current			Non-current			Total
Movement	ThU.S.$			ThU.S.$			ThU.S.$
Opening Balance		315,924			3,336,339			3,652,263
Changes in real incurred cost		(22,719	)		90,999			68,280
Additions through acquisition and costs of new plantations		9,195			217,562			226,757
Sales		—			(2,722	)		(2,722	)
Harvest		(133,335	)		—			(133,335	)
Increases (decreases) in Foreign Currency Translation		4,699			(23,091	)		(18,392	)
Loss of forest due to fires		—			(3,823	)		(3,823	)
Transfers fromnon-current to current		96,875			(96,875	)		—
Other Increases (decreases)		(153	)		(52	)		(205	)
Changes in fair value		(17,413	)		(33,704	)		(51,117	)
Gain (losses) arising from changes in fair value minus sale costs		(6,588	)		161,294			154,706
Sales		—			(4,015	)		(4,015	)
Harvest		(198,089	)		—			(198,089	)
Loss of forest due to fires		—			(3,718	)		(3,718	)
Transfers fromnon-current to current		187,264			(187,264	)		—
Total Changes		(40,132	)		57,295			17,163
Closing balance		275,792			3,393,634			3,669,426

84

CELULOSA ARAUCO Y CONSTITUCION S.A. AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

March 31, 2020

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 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 Arauco’s business units.    

These investments are reflected in the Interim Consolidated Financial Statements as Properties, Plants and Equipment when they refer to disbursements in major works executed and are reflected in Expenses when they refer to improvements or management not directly associated with investment projects.

Detail information of disbursements related to the environment

As of March 31, 2020, and December 31, 2019 Arauco has made and / or has committed the following disbursements in major environmental projects:

85

CELULOSA ARAUCO Y CONSTITUCION S.A. AND SUBSIDIARIES

Unaudited Consolidated Financial Statements

December 31, 2019

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

03-31-2020

Disbursements undertaken 2020

Committed Disbursements

Company

Name of project

State of project

Amount ThU.S.$

Asset Expense

Asset/expense destination item

Amount ThU.S.$

Estimated date

Arauco Florestal Arapoti S.A.

Environmental improvement studies

In process

—

Assets

Property, plant and equipment

241

2020

Celulosa Arauco y Constitucion S.A.

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

In process

51

Assets

Property, plant and equipment

1,826

2020

Celulosa Arauco y Constitucion S.A.

Environmental improvement studies

In process

7,052

Assets

Property, plant and equipment

46,812

2020

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

918

Assets

Property, plant and equipment

10,043

2020

Celulosa Arauco y Constitucion S.A.

Environmental improvement studies

In process

2,849

Expense

Operating cost

9,915

2020

Celulosa Arauco y Constitucion S.A.

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

In process

2,440

Expense

Operating cost

6,506

2020

Arauco Argentina S.A.

Construction emissary

In process

—

Assets

Property, plant and equipment

697

2020

Arauco Argentina S.A.

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

In process

208

Assets

Property, plant and equipment

10,861

2020

Arauco Argentina S.A.

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

In process

32

Assets

Property, plant and equipment

311

2020

Maderas Arauco S.A.

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

In process

116

Expense

Operating cost

349

2020

Maderas Arauco S.A.

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

In process

116

Assets

Property, plant and equipment

373

2020

Forestal Arauco S.A.

Environmental improvement studies

In process

73

Expense

Administration expenses

413

2020

Celulosa y Energía Punta Pereira S.A.

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

In process

740

Assets

Property, plant and equipment

2,690

2020

Celulosa y Energía Punta Pereira S.A.

Environmental improvement studies

Finished

221

Expense

Administration expenses

—

—

Celulosa y Energía Punta Pereira S.A.

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

Finished

545

Assets

Property, plant and equipment

—

—

Celulosa y Energía Punta Pereira S.A.

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

Finished

350

Assets

Property, plant and equipment

—

—

Forestal Los Lagos S.A.

Environmental improvement studies

In process

34

Expense

Operating cost

215

2020

Arauco North America, Inc

Environmental improvement studies

In process

925

Assets

Property, plant and equipment

—

—

Arauco North America, Inc

Environmental improvement studies

Finished

327

Assets

Property, plant and equipment

—

—

TOTAL

16,997

91,252

12-31-2019

Disbursements undertaken 2019

Committed Disbursements

Company

Name of project

State of project

Amount ThU.S.$

Asset Expense

Asset/expense destination item

Amount ThU.S.$

Estimated date

Celulosa Arauco y Constitución S.A.

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

In process

267

Assets

Property, plant and equipment

792

2020

Celulosa Arauco y Constitución S.A.

Environmental improvement studies

In process

21,927

Assets

Property, plant and equipment

53,111

2020

Celulosa Arauco y Constitución S.A.

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

Finished

375

Expense

Operating cost

—

—

Celulosa Arauco y Constitución S.A.

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

In process

3,535

Assets

Property, plant and equipment

6,595

2020

Celulosa Arauco y Constitución S.A.

Environmental improvement studies

Finished

15,570

Expense

Operating cost

—

—

Celulosa Arauco y Constitución S.A.

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

Finished

348

Assets

Property, plant and equipment

—

—

Celulosa Arauco y Constitución S.A.

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

Finished

7,745

Expense

Operating cost

—

—

Arauco Argentina S.A.

Construction emissary

In process

40

Assets

Property, plant and equipment

697

2020

Arauco Argentina S.A.

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

In process

1,174

Assets

Property, plant and equipment

1,816

2020

Arauco Argentina S.A.

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

In process

987

Assets

Property, plant and equipment

343

2020

Maderas Arauco S.A.

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

In process

208

Expense

Operating cost

—

—

Maderas Arauco S.A.

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

In process

647

Expense

Operating cost

—

—

Maderas Arauco S.A.

Environmental improvement studies

Finished

305

Assets

Property, plant and equipment

—

—

Forestal Arauco S.A.

Environmental improvement studies

In process

626

Expense

Administration expenses

401

2020

Celulosa y Energía Punta Pereira S.A.

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

In process

684

Assets

Property, plant and equipment

2,567

2020

Celulosa y Energía Punta Pereira S.A.

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

In process

400

Assets

Property, plant and equipment

100

2020

Celulosa y Energía Punta Pereira S.A.

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

Finished

448

Assets

Property, plant and equipment

—

—

Forestal Los Lagos S.A.

Environmental improvement studies

In process

210

Expense

Operating cost

63

2020

Arauco North America, Inc

Environmental improvement studies

In process

945

Assets

Property, plant and equipment

530

2020

TOTAL

56,441

67,015

86

CELULOSA ARAUCO Y CONSTITUCION S.A. AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

March 31, 2020

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 periods corresponding mainly to sawmills in Chile and remains committed to its sales plan.

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

	03-31-2020 ThU.S.$		12-31-2019 ThU.S.$
Land		2,407		2,422
Buildings		1,256		1,256
Property, plant and equipment		634		758
Total		4,297		4,436

As of March 31, 2020 and 2019, there were no significant effects on results related to the sale of assets held for sale.

87

CELULOSA ARAUCO Y CONSTITUCION S.A. AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

March 31, 2020

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

NOTE 23. FINANCIAL INSTRUMENTS

23.1 Classification

Arauco’s financial instruments as of March 31, 2020 and December 31, 2019, are displayed in the table below. Regarding those instruments valued at an amortized cost, an estimation of their fair value is displayed for informational purposes.

	March 2020				December 2019
Financial Instruments Thousands of dollars	Carrying amount		Fair Value		Carrying amount		Fair Value
Financial assets at fair value through profit or loss (held for trading)		22,007		22,007		634,079		634,079
Derivatives (1)		19		19		121		121
Mutual funds (2)		21,988		21,988		633,958		633,958
Financial assets at amortized cost		1,877,338		1,877,338		1,597,356		1,597,356
Cash and cash equivalents (amortized cost)		1,133,470		1,133,470		926,054		926,054
Cash		214,708		214,708		314,981		314,981
Time deposits		918,762		918,762		611,073		611,073
Accounts Receivable (net)		676,011		676,011		651,771		651,771
Trade and other receivables		589,204		589,204		562,419		562,419
Lease receivable		892		892		1,112		1,112
Other receivables		85,915		85,915		88,240		88,240
Accounts receivable due from related parties		15,233		15,233		17,526		17,526
Other financial assets (3)		52,624		52,624		2,005		2,005
Hedging assets		68		68		10,639		10,639
Financial liabilities at amortized cost (4)		6,593,359		6,189,134		6,733,957		7,001,457
Bonds issued denominated in U.S. Dollars		3,518,884		2,968,349		3,502,090		3,554,538
Bonds issued denominated in U.F. (5)		1,185,009		1,301,238		1,329,653		1,475,667
Bank Loans in U.S. Dollars		921,140		929,576		824,581		874,584
Bank borrowing denominated in U.S. Dollars		117,058		138,703		122,441		141,476
Lease liabilities		230,595		230,595		271,025		271,025
Trade and other payables		616,717		616,717		675,287		675,287
Accounts payable to related parties		3,956		3,956		8,880		8,880
Financial liabilities at fair value through profit or loss		303		303		33		33
Hedging Liabilities		390,524		390,524		134,242		134,242

(1) The derivatives are presented in the line item “other financial assets” in the interim consolidated statements of financial position.

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

(3) Corresponds to the balance of assets from margin call for current derivatives (collateral).

(4) Financial liabilities measured at amortized cost, other than “Trade and other payables”, “Accounts payable to related parties” and derivatives are presented in the interim consolidated statements of financial position in the line item “Other financial liabilities” as current andnon-current based on their maturity.

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

88

CELULOSA ARAUCO Y CONSTITUCION S.A. AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

March 31, 2020

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 interim consolidated statements of financial position as of March 31, 2020, have been measured based on the valuation methodologies provided in IFRS 13. 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	March 2020 ThU.S.$		Level 1 ThU.S.$		Level 2 ThU.S.$		Level 3 ThU.S.$
Financial assets at fair value
Derivatives		19				19
Mutual Funds		21,988		21,988
Hedging assets		68				68
Financial liabilities at fair value through profit or loss		303				303
Hedging liabilities		390,524				390,524

At the closing date of these interim consolidated financial statements, there have been no transfers between the different hierarchy levels.

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 and counterparties’ 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, U.S. dollars and Euros, Arauco calculates the current value of such flows by using discount curves: the UF zero coupon curve, Dollar zero coupon and the Euro 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.

89

CELULOSA ARAUCO Y CONSTITUCION S.A. AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

March 31, 2020

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

The counterparty risk, for the 3 cases, uses theZ-Spread obtained from the curve of the bonds issued by counterparties, and they are deducted from each flow as appropriate.

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 was determined based on discounted cash flow analysis applying the corresponding discount yield curves to the remaining term to maturity.

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

The following table shows 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):

	March 2020		December 2019
	ThU.S.$		ThU.S.$
Interest bearing loans, current (a)		639,627		529,217
Other financial liabilities, current		586,263		460,846
Current Lease liabilities		60,914		69,208
Hedging liabilities current + Financial liabilities at fair value through profit or loss current		7,550		837
Interest bearing loans,non-current (b)		5,333,059		5,520,573
Other financial liabilities,non-current		5,546,655		5,452,194
Non-current lease liabilities		169,681		201,817
Hedging liabilitiesnon-current + Financial liabilities at fair value through profit or lossnon-current		383,277		133,438
Financial debt total (c)		5,972,686		6,049,790
Cash and cash equivalents		1,155,458		1,560,012
Other financial assets current		52,638		3,370
Total Cash (d)		1,208,096		1,563,382
Net Financial Debt (e)		4,764,590		4,486,408
Non-controlling interests		6,961,959		7,334,404
Equity attributable to owners of parent		30,129		35,011
Total Equity (f)		6,992,088		7,369,415
Debt to equity ratio (g)		0.68		0.61

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

(b) OtherNon-Current Financial Liabilities +Non-current Lease liabilities –(Non-current Hedge Liabilities + Financial Liabilities with changes innon-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

90

CELULOSA ARAUCO Y CONSTITUCION S.A. AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

March 31, 2020

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):

	March 2020 ThU.S.$		December 2019 ThU.S.$
Other financial liabilities (a)		6,132,918		5,913,040
Other financial liabilities, current		586,263		460,846
Other financial liabilities,non-current		5,546,655		5,452,194
Lease liabilities (b)		230,595		271,025
Current lease liabilities		60,914		69,208
Non-current lease liabilities		169,681		201,817
Financial liabilities at fair value through profit or loss		303		33
Hedging liabilities (c)		390,524		134,242
Swaps		381,156		133,390
Forward		9,368		852
Financial debt total (d)		5,972,686		6,049,790
Cash and cash equivalents		1,155,458		1,560,012
Total Cash (e)		1,155,458		1,560,012
Net Financial Debt (f)		4,817,228		4,489,778
Non-controlling interests		6,961,959		7,334,404
Equity attributable to owners of parent		30,129		35,011
Total Equity (g)		6,992,088		7,369,415
Debt to equity ratio (h)		0.69		0.61

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

(b) Current lease liabilities +Non-current lease liabilities

(c) Swaps + Forwards + Options

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

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

(f) Total Financial Debt – Total Cash

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

(h) Net Financial Debt / Total Equity

91

CELULOSA ARAUCO Y CONSTITUCION S.A. AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

March 31, 2020

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

The following table sets forth a reconciliation between the financial liabilities and the consolidated statements of financial position as of March 31, 2020 and December 31, 2019:

Thousands of dollars	March 2020
	Up to 90 days		From 91 days to 1 year		Other current financial liabilities, Total		From 1 year to 3 years		From 3 years to 5 years		More than 5 years		Other non-current financial liabilities, Total		Total
Bonds obligations		71,254		200,808		272,062		191,320		567,526		3,672,985		4,431,831		4,703,893
Bank borrowing		54,824		251,827		306,651		193,141		471,279		67,127		731,547		1,038,198
Swap and Forward		7,550		—		7,550		383,277		—		—		383,277		390,827
Other Financial Liabilities, Total (a)		133,628		452,635		586,263		767,738		1,038,805		3,740,112		5,546,655		6,132,918
Thousands of dollars	March 2020
	Up to 90 days		From 91 days to 1 year		Total Current		From 1 year to 3 years		From 3 years to 5 years		More than 5 years		Total non-current		Total
Lease liabilities		15,640		45,274		60,914		94,949		29,724		45,008		169,681		230,595
Lease liabilities, Total (b)		15,640		45,274		60,914		94,949		29,724		45,008		169,681		230,595
Thousands of dollars	March 2020
	Up to 90 days		From 91 days to 1 year		Total Current		From 1 year to 3 years		From 3 years to 5 years		More than 5 years		Total non-current		Total
Trades and other payables		607,637		6,850		614,487		2,230		—		—		2,230		616,717
Accounts payable to related companies		3,956		—		3,956		—		—		—		—		3,956
Accounts Payable, Total (c)		611,593		6,850		618,443		2,230		—		—		2,230		620,673
Financial Liabilities, Total (a) + (b) + (c)		760,861		504,759		1,265,620		864,917		1,068,529		3,785,120		5,718,566		6,984,186
Thousands of dollars	December 2019
	Up to 90 days		From 91 days to 1 year		Other current financial liabilities, Total		From 1 year to 3 years		From 3 years to 5 years		More than 5 years		Other non-current financial liabilities, Total		Total
Bonds obligations		22,374		254,330		276,704		201,427		577,884		3,775,728		4,555,039		4,831,743
Bank borrowing		69,971		113,334		183,305		196,611		502,772		64,334		763,717		947,022
Swap and Forward		837		—		837		133,438		—		—		133,438		134,275
Other Financial Liabilities, Total (a)		93,182		367,664		460,846		531,476		1,080,656		3,840,062		5,452,194		5,913,040
Thousands of dollars	December 2019
	Up to 90 days		From 91 days to 1 year		Total Current		From 1 year to 3 years		From 3 years to 5 years		More than 5 years		Total non-current		Total
Lease liabilities		21,518		47,690		69,208		117,608		46,408		37,801		201,817		271,025
Lease liabilities, Total (b)		21,518		47,690		69,208		117,608		46,408		37,801		201,817		271,025

Thousands of dollars	December 2019
	Up to 90 days		From 91 days to 1 year		Total Current		From 1 year to 3 years		From 3 years to 5 years		More than 5 years		Total non-current		Total
Trades and other payables		672,809		248		673,057		2,230		—		—		2,230		675,287
Accounts payable to related companies		8,880		—		8,880		—		—		—		—		8,880
Accounts Payable, Total (c)		681,689		248		681,937		2,230		—		—		2,230		684,167
Financial Liabilities, Total (a) + (b) + (c)		796,389		415,602		1,211,991		651,314		1,127,064		3,877,863		5,656,241		6,868,232

92

CELULOSA ARAUCO Y CONSTITUCION S.A. AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

March 31, 2020

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

23.4 Derivative Instruments

Hedging instruments recorded as of March 31, 2020 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 Interim Contolidated Statements of Financial Position under OtherNon-Current Financial Assets or OtherNon-Current Financial Liabilities, respectively. The effects for the period are presented in Consolidated statement of changes in equity as Other Comprehensive Income or the Statements 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 interim consolidated statements of financial position as of March 31, 2020 and December 31, 2019, is presented below:

Financial Instruments	March 2020 Fair Value ThU.S.$			December 2019 Fair Value ThU.S.$
Assets at fair value through profit or loss (held for trading)		19			121
Derivatives (1)		—			121
Forward (2)		19			—
Hedging Assets		68			10,639
Derivatives (1)		68			5,827
Cross Currency Swaps		—			4,812
Financial liabilities at fair value through profit or loss		(303	)		(33	)
Derivatives (1)		(287	)		(19	)
Forward (2)		(16	)		(14	)
Hedging Liabilities		(390,524	)		(134,242	)
Cross Currency Swaps		(56,171	)		(22,842	)
Derivatives (1)		(334,353	)		(111,400	)

(1) Includes Swap and Forward from Uruguay tables and Forward from Chile.

(2) Includes Forwards from Colombia and Chile.

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 different from the functional currency, which causes mismatches that could affect operating results.

93

CELULOSA ARAUCO Y CONSTITUCION S.A. AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

March 31, 2020

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

Below are the cross currency swaps that Arauco has as of March 31, 2020 and December 31, 2019 to cover the exposure to the exchange rate risk generated from bonds denominated in U.F.:

Bond	Institution	Amount U.S.$		Amount U.F.		Starting date		Ending date		March 2020 Fair Value ThU.S.$			December 2019 Fair Value ThU.S.$
F	Deutsche - England		39,653,006		909,091		10-30-2011		10-30-2021		(8,418	)		(4,435	)
F	JP Morgan - N.A.		39,653,006		909,091		10-30-2011		10-30-2021		(8,376	)		(4,392	)
F	Scotiabank - Chile		34,933,122		909,091		10-30-2014		04-30-2023		(3,861	)		615
F	Scotiabank - Chile		34,889,941		909,091		10-30-2014		04-30-2023		(3,685	)		801
F	Santander - Chile		34,524,604		909,091		10-30-2014		04-30-2023		(3,301	)		1,214
F	BCI - Chile		34,201,420		909,091		10-30-2014		04-30-2023		(2,932	)		1,611
F	Banco de Chile - Chile		34,524,605		909,091		04-30-2019		10-30-2029		(4,795	)		418
J	Itau - Chile		42,864,859		1,000,000		09-01-2010		09-01-2020		(9,105	)		(5,123	)
J	Scotiabank - Chile		42,864,859		1,000,000		09-01-2010		09-01-2020		(9,105	)		(5,123	)
J	Deutsche - U.K.		42,864,859		1,000,000		09-01-2010		09-01-2020		(9,109	)		(5,132	)
J	Santander - Spain		42,873,112		1,000,000		09-01-2010		09-01-2020		(9,106	)		(5,118	)
J	Scotiabank - Chile		42,864,257		1,000,000		09-01-2010		09-01-2020		(9,081	)		(5,075	)
P	Itau - Chile		46,474,122		1,000,000		05-15-2012		11-15-2021		(11,287	)		(7,100	)
P	JP Morgan - N.A.		47,163,640		1,000,000		11-15-2012		11-15-2021		(11,579	)		(7,420	)
P	Scotiabank - Chile		42,412,852		1,000,000		11-15-2013		11-15-2023		(7,142	)		(2,416	)
P	Santander - Chile		41,752,718		1,000,000		11-15-2013		11-15-2023		(6,402	)		(1,609	)
P	Deutsche - U.K.		41,752,718		1,000,000		11-15-2013		11-15-2023		(6,388	)		(1,594	)
Q	BCI - Chile		16,194,459		375,000		10-01-2014		04-01-2021		(3,452	)		(1,755	)
Q	BCI - Chile		16,198,761		375,000		10-01-2014		04-01-2021		(3,444	)		(1,747	)
R	Santander - Chile		128,611,183		3,000,000		10-01-2014		04-01-2024		(25,114	)		(11,059	)
R	JP Morgan - U.K		43,185,224		1,000,000		10-01-2014		04-01-2024		(8,146	)		(3,461	)
R	Itau - Chile		43,277,070		1,000,000		10-01-2014		04-01-2024		(8,166	)		(3,486	)
S	Santander - Chile		201,340,031		5,000,000		11-15-2016		11-15-2026		(27,219	)		153
W	Goldman Sachs - N.A.		40,521,750		1,000,000		10-10-2018		10-10-2028		(8,961	)		(3,360	)
W	Scotiabank - Chile		40,537,926		1,000,000		10-10-2018		10-10-2028		(8,934	)		(3,169	)
W	Goldman Sachs - N.A.		40,066,555		1,000,000		10-10-2018		10-10-2028		(8,455	)		(2,766	)
X	Santander - Chile		118,400,504		3,000,000		10-10-2018		10-10-2038		(26,684	)		(1,036	)
X	Santander - Chile		97,971,786		2,500,000		10-10-2018		10-10-2038		(22,088	)		(614	)
											(274,335	)		(82,178	)

Additionally, as of March 31, 2020 and December 31, 2019, Arauco maintains cross currency swaps contracts to cover the exposure to the risk of the exchange rate for bank contracts in Euro, as shown in the following table:

Institution	Amount U.S.$		Amount EUR		Starting date		Ending date		March 2020 Fair Value ThU.S.$			December 2019 Fair Value ThU.S.$
Santander - Chile		118,670,000		100,000,000		06-15-2021		12-15-2029		(12,039	)		(4,903	)
Banco de Chile - Chile		59,335,000		50,000,000		06-15-2021		12-15-2029		(5,998	)		(2,428	)
MUFG - N.A.		118,670,000		100,000,000		06-15-2021		12-15-2029		(11,991	)		(4,846	)
JP Morgan - N.A.		237,340,000		200,000,000		06-15-2021		12-15-2029		(23,989	)		(9,740	)
HSBC - N.A.		59,335,000		50,000,000		06-15-2021		12-15-2029		(6,001	)		(2,493	)
										(60,018	)		(24.410	)

Arauco needs to minimize the risk of the exchange rate, as it holds debt in other currencies different from U.S. dollars. 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 other currencies of the liabilities 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.

94

CELULOSA ARAUCO Y CONSTITUCION S.A. AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

March 31, 2020

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

Forward

Arauco maintains, as of March 31, 2020 and December 31, 2019, forward contracts to hedge the exchange rate risk exposure in connection with construction company contracts in local currency, as follows:

Institution	Amount U.S.$		Amount CLP		Starting date		Ending date		March 2020 Fair Value ThU.S.$			December 2019 Fair Value ThU.S.$
Banco de Chile - Chile		33,208,937		22,904,204,187		10-11-2019		12-11-2020		(6,061	)		(3,543	)
Banco de Chile - Chile		33,165,659		22,904,204,187		10-11-2019		12-11-2020		(6,018	)		(3,482	)
BCI - Chile		33,112,916		22,904,204,187		10-11-2019		12-11-2020		(5,967	)		(3,408	)
Itau - Chile		33,141,664		22,904,204,187		10-11-2019		12-11-2020		(5,995	)		(3,449	)
Itau - Chile		32,955,689		22,904,204,187		10-11-2019		12-11-2020		(5,814	)		(3,188	)
Itau - Chile		33,539,772		23,468,449,346		10-11-2019		12-11-2020		(5,737	)		(3,065	)
BCI - Chile		32,708,640		23,468,449,346		10-11-2019		12-11-2020		(4,928	)		(1,855	)
Itau - Chile		38,996,478		30,340,039,912		01-10-2020		12-11-2020		(3,158	)		2,131
Scotiabank - Chile		38,962,424		30,340,039,912		01-10-2020		12-11-2020		(3,125	)		2,175
										(46,803	)		(17,684	)

Through an effectiveness test, and pursuant to IFRS 9, 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.

23.4.2. Colombia

Forward contracts that are in force and effect, executed by Arauco Colombia as of March 31, 2020 and December 31, 2019, are detailed in the following table:

Exchange rate	Institution		Amount ThU.S.$		Starting date		Ending date		March 2020 Fair Value ThU.S.$
USDCOP		Itaú Corpbanca Colombia		1,500		02-11-2020		04-13-2020		(16	)
USDCOP		Itaú Corpbanca Colombia		2,100		02-26-2020		05-19-2020		19
USDCOP		Itaú Corpbanca Colombia		1,400		03-27-2020		06-23-2020		—
										3
Exchange rate	Institution		Amount ThU.S.$		Starting date		Ending date		December 2019 Fair Value ThU.S.$
USDCOP		Corpbanca Colombia		2,100		11-07-2019		01-14-2020		(8	)
USDCOP		Corpbanca Colombia		1,700		11-25-2019		02-11-2020		(6	)
										(14	)

95

CELULOSA ARAUCO Y CONSTITUCION S.A. AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

March 31, 2020

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

23.4.3. Uruguay

Forward

As of March 31, 2020 and December 31, 2019, Arauco through its subsidiaries as a joint operation (50%) in Uruguay maintains the following forward contracts in force and effect for the purposes of ensuring an exchange rate for sale of dollars:

Exchange rate	Institution		Notional ThU.S.$		March 2020 Fair Value ThU.S.$
UYUUSD		Santander - Uruguay		12.055		(1,540	)
UYUUSD		HSBC - Uruguay		10.765		(1,478	)
UYUUSD		Itaú - Uruguay		2.310		(248	)
EURUSD		Citibank U.K.		833		(41	)
						(3,307	)
Exchange rate	Institution		Notional ThU.S.$		December 2019 Fair Value ThU.S.$
UYUUSD		Santander - Uruguay		8,070		(182	)
UYUUSD		HSBC - Uruguay		12,915		(264	)
UYUUSD		Citibank U.K.		1,500		(101	)
UYUUSD		Itaú - Uruguay		3,710		(4	)
EURUSD		Citibank U.K.		833		(20	)
						(571	)

Arauco Uruguay’s profits and through its subsidiaries as a joint operation (50%), also face exposure to the price variation of certain fuels, as occurs with Fuel Oil N°6, which is used during the pulp manufacturing process. In order to minimize this risk, the volatility of future flows associated to the purchase of Fuel Oil No. 6 for years 2020 and 2021 has been limited through forwards of this commodity. The agreements that are in force and effect as of March 31, 2020 and December 31, 2019, are detailed below:

Commodity	Institution	Notional ThU.S.$		March 2020 Fair Value ThU.S.$
Fuel Oil N°6	JP Morgan - N.A.		8,626		(3,389	)
Fuel Oil N°6	DNB Bank ASA		4,751		(2,178	)
					(5,567	)
Commodity	Institution	Notional ThU.S.$		December 2019 Fair Value ThU.S.$
Fuel Oil N°6	JP Morgan - N.A.		6,925		878
Fuel Oil N°6	DNB Bank ASA		5,241		472
					1,350

96

CELULOSA ARAUCO Y CONSTITUCION S.A. AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

March 31, 2020

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

Interest Rate Swap

In addition, Arauco through its subsidiaries as a joint operation (50%) 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 March 31, 2020 and December 31, 2019 is shown below:

Exchange rate	Institution	Notional ThU.S.$		March 2020 Fair Value ThU.S.$
USD	DNB Bank ASA		29,539		(713	)
Exchange rate	Institution	Notional ThU.S.$		December 2019 Fair Value ThU.S.$
USD	DNB Bank ASA		33,758		(8	)

23.5 Loans and Receivables

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

As of March 31, 2020 and December 31, 2019, there are provisions for impairment for ThU.S.$ 16,317 and ThU.S.$ 16,368, respectively.

	March 2020 ThU.S.$		December 2019 ThU.S.$
Financial assets at amortized cost		1,877,338		1,597,356
Cash and cash equivalents (Mutual Funds not included)		1,133,470		926,054
Cash		214,708		314,981
Time Deposits		918,762		611,073
Trade and other receivables (net)		691,244		669,297
Trade and other receivables		589,204		562,419
Lease receivable		892		1,112
Other receivables		85,915		88,240
Accounts receivable from related parties		15,233		17,526
Other financial assets		52,624		2,005

97

CELULOSA ARAUCO Y CONSTITUCION S.A. AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

March 31, 2020

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 March 31, 2020 and December 31, 2019, classified by currency is as follows:

	03-31-2020 ThU.S.$		12-31-2019 ThU.S.$
Cash and Cash Equivalents		1,155,458		1,560,012
U.S. Dollars		966,267		1,412,688
Euro		2,525		2,264
Mexican pesos		19,850		13,684
Other currencies		67,624		68,916
Chilean pesos		99,192		62,460

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:Theserepresent 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 allowance 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 iswritten-off when Arauco has exhausted all levels of recovery of the receivable in a reasonable time.

98

CELULOSA ARAUCO Y CONSTITUCION S.A. AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

March 31, 2020

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

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

The following table sets forth trade and othercurrent/non-current receivables classified by currencies as of March 31, 2020 and December 31, 2019:

	03-31-2020 ThU.S.$		12-31-2019 ThU.S.$
Trades and other current receivables		667,435		642,315
U.S. Dollars		486,327		435,663
Euros		9,515		8,483
Mexican pesos		35,839		33,981
Other currencies		54,221		74,544
Chilean pesos		79,071		86,954
U.F.		2,462		2,690
Accounts receivable from related parties, current		15,233		17,526
U.S. Dollars		1,548		1,319
Other currencies		430		197
Chilean pesos		12,757		15,512
U.F.		498		498
Trade and othernon-current receivables		8,576		9,456
U.S. Dollars		3,673		3,691
Other currencies		180		351
Chilean pesos		2,423		2,983
U.F.		2,300		2,431

23.6 Financial Liabilities

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

Financial Liabilities	March 2020 ThU.S.$		December 2019 ThU.S.$
Total Financial Liabilities		6,984,186		6,868,232
Financial liabilities at fair value through profit or loss (held for trading)		303		33
Hedging Liabilities		390,524		134,242
Financial Liabilities Measured at Amortized Cost		6,593,359		6,733,957

The following table sets forth the current portion of thenon-current bank borrowings and debt issued as of March 31, 2020 and December 31, 2019.

	March 2020 ThU.S.$		December 2019 ThU.S.$
Bank borrowings - current portion		62,079		62,220
Bonds issued - current portion		103,805		85,641
Total		165,884		147,861

99

CELULOSA ARAUCO Y CONSTITUCION S.A. AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

March 31, 2020

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

23.7 Financial Liabilities Measured at Amortized Cost

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

Also, this category includes thosenon-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 U.F., lease liabilities, and trade and other payables.

		03-31-2020		12-31-2019		03-31-2020		12-31-2019
	Currency	ThU.S.$		ThU.S.$		ThU.S.$		ThU.S.$
		Amortized Cost				Fair Value
Total Financial Liabilities			6,593,359		6,733,957		6,189,134		7,001,457
Bonds Issued	U.S. Dollar		3,518,884		3,502,090		2,968,349		3,554,538
Bonds Issued	U.F.		1,185,009		1,329,653		1,301,238		1,475,667
Bank borrowings	U.S. Dollar		921,140		824,581		929,576		874,584
Bank borrowings	Euro		113,354		116,259		138,703		141,476
Bank borrowings	Other currencies		3,704		6,182		—		—
Lease liabilities	U.F.		33,617		41,633		33,617		41,633
Lease liabilities	Chilean pesos		86,704		107,046		86,704		107,046
Lease liabilities	Mexican pesos		7,927		10,025		7,927		10,025
Lease liabilities	U.S. Dollar		81,535		83,585		81,535		83,585
Lease liabilities	Euro		—		52		—		52
Lease liabilities	Other currencies		20,812		28,684		20,812		28,684
Trades and Other Payables	U.S. Dollar		173,237		157,754		173,237		157,754
Trades and Other Payables	Euro		6,071		20,414		6,071		20,414
Trades and Other Payables	Mexican pesos		26,360		22,272		26,360		22,272
Trades and Other Payables	Other currencies		85,755		94,946		85,755		94,946
Trades and Other Payables	Chilean pesos		298,461		348,155		298,461		348,155
Trades and Other Payables	U.F.		26,833		31,746		26,833		31,746
Accounts payable to related parties	U.S. Dollar		2,350		454		2,350		454
Accounts payable to related parties	Chilean pesos		1,606		8,426		1,606		8,426

The financial liabilities at amortized cost presented in the consolidated statements of financial positions as of March 31, 2020 and December 31, 2019 are as follows:

	March 2020 ThU.S.$
	Current		Non-Current		Total
Other financial liabilities		578,713		5,163,378		5,742,091
Lease liabilities		60,914		169,681		230,595
Trade and other payables		614,487		2,230		616,717
Accounts payable to related parties		3,956		—		3,956
Total Financial Liabilities Measured at Amortized Cost		1,258,070		5,335,289		6,593,359
	December 2019 ThU.S.$
	Current		Non-Current		Total
Other financial liabilities		460,009		5,318,756		5,778,765
Lease liabilities		69,208		201,817		271,025
Trade and other payables		673,057		2,230		675,287
Accounts payable to related parties		8,880		—		8,880
Total Financial Liabilities Measured at Amortized Cost		1,211,154		5,522,803		6,733,957

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CELULOSA ARAUCO Y CONSTITUCION S.A. AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

March 31, 2020

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 the interim consolidated statements of comprehensive income:

	January - March
	2020			2019
	ThU.S.$			ThU.S.$
Opening balance		9,010			13,395
Gains (losses) on cash flow hedges		(103,466	)		(4,823	)
Recycle of cash flow hedges to profit or loss		(2,797	)		(2,148	)
Income tax		27,786			3,718
Closing balance		(69,467	)		10,142

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	March 2020 ThU.S.$		December 2019 ThU.S.$		Interest coverage >= 2,0x	Debt level (1) <= 1,2x
Domestic bonds (Chile)		1,185,009		1,329,653	N/A	☐
Syndicate Loan Scotiabank		199,154		200,703	☐	☐
Syndicate Loan Banco Estado - Grayling		304,130		301,452	☐	☐
Syndicate ECA Banco BNP Paribas		113,354		116,259	☐	☐

N/R: Not required for the financial obligation

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

As of March 31, 2020 and December 31, 2019, Arauco has complied with all of its financial covenants.

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Unaudited Interim Consolidated Financial Statements

March 31, 2020

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

The following table sets forth the credit ratings of our debt instruments as of March 31, 2020 and December 31, 2019, 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 March 31, 2020 and December 31, 2019 is as follows:

	March 2020		December 2019
	ThU.S.$		ThU.S.$
Equity		6,992,088		7,369,415
Bank borrowings		1,038,198		947,022
Lease liabilities		230,595		271,025
Bonds issued		4,703,893		4,831,743
Capitalization		12,964,774		13,419,205

23.10 Risk Management

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

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

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

23.10.1 Type of Risk: Credit Risk

Description

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

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Unaudited Interim Consolidated Financial Statements

March 31, 2020

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

Explanation of Credit Risk Exposure and How This Risk Arises

Arauco’s exposure to credit risk is directly related to each of its customer’s individual abilities to fulfill their contractual commitments, reflected in trade receivables.

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

Arauco does not have a securitized portfolio.

	March 2020		December 2019
	ThU.S.$		ThU.S.$
Current Receivables
Trade receivables		586,196		559,164
Financial lease receivables		748		912
Other debtors		80,491		82,239
Net subtotal		667,435		642,315
Trade receivables		595,178		568,123
Financial lease receivables		748		912
Other debtors		84,168		85,848
Gross subtotal		680,094		654,883
Provision for doubtful trade receivables		8,982		8,959
Provision for doubtful lease receivables		—		—
Provision for doubtful other debtors		3,677		3,609
Subtotal Bad Debt		12,659		12,568
Non-Current Receivables
Trade receivables		3,008		3,255
Financial lease receivables		144		200
Other debtors		5,424		6,001
Net Subtotal		8,576		9,456
Trade receivables		6,666		7,055
Financial lease receivables		144		200
Other debtors		5,424		6,001
Gross subtotal		12,234		13,256
Provision for doubtful trade receivables		3,658		3,800
Provision for doubtful lease receivables		—		—
Provision for doubtful other debtors		—		—
Subtotal Bad Debt		3,658		3,800

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

The Credit and CollectionsSub-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 March 31, 2020, Arauco’s balance for commercial Debtors was ThU.S.$ 601,844 of which, according to the agreed sales conditions, 62.28% corresponded to sales on credit (open account), 36.85% to sales with letters of credit and 0.87% to other types of sales, distributed in 2,902 debtors. The client with the largest Open Account debt represented 3.29% of the total accounts receivable as of that date.

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Unaudited Interim Consolidated Financial Statements

March 31, 2020

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

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

March 31, 2020
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.$		552,836			34,921			726			11			237			432			130			64			78			12,409			601,844
%		91.86	%		5.80	%		0.12	%		0.00	%		0.04	%		0.07	%		0.02	%		0.01	%		0.01	%		2.06	%		100	%
December 31, 2019
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.$		531,881			28,469			899			309			18			846			22			34			389			12,311			575,178
%		92.47	%		4.95	%		0.16	%		0.05	%		0.00	%		0.15	%		0.00	%		0.01	%		0.07	%		2.14	%		100	%

Arauco applies the simplified approach regarding the expected losses from commercial debtors, which allows for the use of an estimate of expected credit losses over the instrument’s lifespan for all commercial accounts receivable. In order to establish this estimate, the commercial debtors have been grouped in relation to the corresponding risks for sales conditions as well as for tranches, including clients that areup-to-date or in default.

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
Letters of credit		218,396			3,310			48			—			—			—			—			—			—			—			221,754
Loss allowance provision		—			—			—			—			—			—			—			—			—			—			—
Expected loss rate		0.00	%		0.00	%		0.00	%		0.00	%		0.00	%		0.00	%		0.00	%		0.00	%		0.00	%		0.00	%
Credit line		331,021			30,075			488			10			237			432			130			64			77			12,302			374,836
Loss allowance provision		—			—			5			1			24			44			13			64			77			12,302			12,530
Expected loss rate		0.00	%		0.00	%		1.00	%		10.00	%		10.00	%		10.00	%		10.00	%		100.00	%		100.00	%		100.00	%
Others		3,419			1,536			190			1			—			—			—			—			1			107			5,254
Loss allowance provision		—			—			2			—			—			—			—			—			1			107			110
Expected loss rate		0.00	%		0.00	%		1.00	%		0.00	%		0.00	%		0.00	%		0.00	%		0.00	%		100.00	%		100.00	%
Trade receivables, total (ThU.S.$)		552,836			34,921			726			11			237			432			130			64			78			12,409			601,844
Allowance for doubtful accounts, total (ThU.S.$)		—			—			7			1			24			44			13			64			78			12,409			12,640

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 acase-by-case basis and subjected to the approval of the Corporate Finance Division.

Regarding the loss allowance provision for trade receivables and others, below we provide detail for the movements as of March 31, 2020 and December 31, 2019:

	March 2020			December 2019
	ThU.S.$			ThU.S.$
Opening loss allowance as at January 1		(16,368	)		(15,147	)
Increase in loan loss allowance recognised in profit or loss during the year		(193	)		(2,506	)
Receivables written off during the year as uncollectible		12			163
Unused amount reversed		232			1,122
Closing balance		(16,317	)		(16,368	)

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

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CELULOSA ARAUCO Y CONSTITUCION S.A. AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

March 31, 2020

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 CreditSub-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., Arauco Argentina S.A., and Arauco do Brasil S.A., as well as the domestic sales of Arauco Europe Coöperatief U.A., Arauco Argentina S.A., Araucomex S.A. de C.V., Arauco Industria de México, S.A. de C.V., Arauco Colombia S.A., Arauco Perú S.A., Arauco North America, Inc., Arauco Canada Ltd., Celulosa Arauco y Constitución S.A., Maderas Arauco S.A., Arauco Florestal Arapoti, Arauco Forest Brasil S.A., Arauco do Brasil S.A., Arauco Industria de Paineis Ltda. and Arauco Nutrientes SPA. Arauco works with credit insurance company Euler Hermes World Agency (Aa3 rating, as per risk rating companies Moody’s and AA by S&P). The company grant a 90% coverage over the amount of each invoice, without deductibles, for registered clients and of 90% fornon-registered clients (*).

(*)Non-registered clients are those whose lines are under ThU.S.$ 100 (equivalent currency of their invoicing) of the credit sales for all companies in the Arauco group that have a valid insurance policy. The top lines are from nominated clients.

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 ThU.S.$91,989, effective as of March 2020, 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.

105

CELULOSA ARAUCO Y CONSTITUCION S.A. AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

March 31, 2020

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

Guarantees Arauco Group (ThU.S.$)
Guarantees Debtors (received from clients)
Certificate of deposits	7,106	7.7	%
Standby	8,657	9.4	%
Promissory notes	69,225	75.2	%
Finance	2,630	2.9	%
Mortgage	2,233	2.4	%
Pledge	138	0.2	%
Promissory notes	2,000	2.2	%
Total Guarantees	91,989	100	%

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 94.8% and, therefore, Arauco’s portfolio exposure amounts to 5.2%.

Secured Open Accounts Receivable	ThU.S.$		%
Total open accounts receivable		406,502		100.0	%
Secured receivables (*)		385,364		94.8	%
Unsecured receivables		21,138		5.2	%

(*) 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 apply to short and long-term debt, and will be for specific investments made through other companies where authorization is required from the Chief Financial Officer.

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

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

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).

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CELULOSA ARAUCO Y CONSTITUCION S.A. AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

March 31, 2020

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

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 Corporate Financial Management Division 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 March 31, 2020 and December 31, 2019. The tables have been drawn up based on the contractual undiscounted cash outflows and their remaining contractual maturities:

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CELULOSA ARAUCO Y CONSTITUCION S.A. AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

March 31, 2020

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

March 31, 2020				Maturity														Total
Tax ID	Name	Currency	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. Dollars	Scotiabank		—		5,979		5,979		5,979		203,014		—		—		5,979		214,972		2.95%	Libor 6M + 1.1%
93.458.000-1	Celulosa Arauco y Constitución S.A.	Euros	BNP Paribas / ECA		609		599		7,792		14,316		14,175		14,038		68,044		1,208		118,365		1.06%	1.06%
93.458.000-1	Celulosa Arauco y Constitución S.A.	U.S. Dollars	Banco Crédito e Inversiones		—		40,365		—		—		—		—		—		40,365		—		1.80%	1.80%
93.458.000-1	Celulosa Arauco y Constitución S.A.	U.S. Dollars	Santander		—		101,021		—		—		—		—		—		101,021		—		2.02%	2.02%
—	Zona Franca Punta Pereira S.A.	U.S. Dollars	Banco Interamericano de Desarrollo A		—		2,278		2,220		2,161		1,058		—		—		2,278		5,439		2.79%	Libor 6M + 2.05%
—	Zona Franca Punta Pereira S.A.	U.S. Dollars	Banco Interamericano de Desarrollo B		—		2,833		—		—		—		—		—		2,833		—		2.54%	Libor 6M + 1.80%
—	Celulosa y Energía Punta Pereira S.A.	U.S. Dollars	Banco Interamericano de Desarrollo A		—		9,213		8,977		8,738		4,280		—		—		9,213		21,995		2.79%	Libor 6M + 2.05%
—	Celulosa y Energía Punta Pereira S.A.	U.S. Dollars	Banco Interamericano de Desarrollo B		—		11,460		—		—		—		—		—		11,460		—		2.54%	Libor 6M + 1.80%
—	Celulosa y Energía Punta Pereira S.A.	U.S. Dollars	Finn Vera/ Finnish Export Credit		—		51,585		50,061		48,524		—		—		—		51,585		98,585		3.20%	3.20%
—	Celulosa y Energía Punta Pereira S.A.	U.S. Dollars	DNB Nor ASA		—		282		196		109		22		—		—		282		327		0.00%	0.00%
—	Eufores S.A.	U.S. Dollars	BBVA		—		14,222		—		—		—		—		—		14,222		—		3.22%	Libor 6M + 1.3%
—	Eufores S.A.	U.S. Dollars	Banco República Oriental del Uruguay		26,769		—		—		—		—		—		—		26,769		—		3.22%	Libor 6M + 1.3%
—	Stora Enso Uruguay S.A.	U.S. Dollars	Banco República Oriental del Uruguay		559		—		—		—		—		—		—		559		—		3.22%	Libor 6M + 1.3%
—	Eufores S.A.	U.S. Dollars	Citibank		4,062		—		—		—		—		—		—		4,062		—		3.14%	Libor 6M + 1.25%
—	Eufores S.A.	U.S. Dollars	ITAU		12,695		—		—		—		—		—		—		12,695		—		3.20%	Libor 6M + 1.3%
—	Eufores S.A.	U.S. Dollars	Heritage		1,359		—		—		—		—		—		—		1,359		—		2.50%	Libor 3M + 1.3%
—	Eufores S.A.	U.S. Dollars	Santander		—		20,203		—		—		—		—		—		20,203		—		2.04%	Libor 6M + 1.3%
—	Eufores S.A.	U.S. Dollars	Santander		5,080		—		—		—		—		—		—		5,080		—		3.21%	Libor 6M + 1.3%
—	Eufores S.A.	U.S. Dollars	Scotiabank		2,541		—		—		—		—		—		—		2,541		—		3.22%	Libor 6M + 1.3%
—	Arauco Forest Brasil S.A.	Brazilian Real	Banco Votorantim		—		21		226		215		—		—		—		21		441		5.00%	5.00%
—	Arauco Forest Brasil S.A.	Brazilian Real	BNDES Subcrédito A		5		79		140		66		—		—		—		84		206		8.00%	TJLP + 2.91%
—	Arauco Forest Brasil S.A.	Brazilian Real	BNDES Subcrédito B		3		49		85		40		—		—		—		52		125		9.00%	TJLP + 3.91%
—	Arauco Forest Brasil S.A.	U.S. Dollars	BNDES Subcrédito C		5		78		156		86		—		—		—		83		242		7.03%	Cesta + 2.91%
—	Arauco Forest Brasil S.A.	Brazilian Real	BNDES Subcrédito D		4		55		96		45		—		—		—		59		141		10.20%	TJLP + 5.11%
—	Arauco Florestal Arapoti S.A.	Brazilian Real	Banco Votorantim		—		23		254		243		—		—		—		23		497		5.00%	5.00%
—	Mahal Empreendimentos e Participações S.A.	Brazilian Real	BNDES SubcréditoE-I		500		491		—		—		—		—		—		991		—		8.00%	TJLP + 2.91%
—	Mahal Empreendimentos e Participações S.A.	Brazilian Real	BNDES SubcréditoF-J		301		295		—		—		—		—		—		596		—		9.00%	TJLP + 3.91%
—	Mahal Empreendimentos e Participações S.A.	Brazilian Real	BNDES Subcrédito H-L		336		328		—		—		—		—		—		664		—		10.20%	TJLP + 5.11%
—	Mahal Empreendimentos e Participações S.A.	U.S. Dollars	BNDES Subcrédito G-K		527		689		—		—		—		—		—		1,216		—		7.03%	Cesta + 2.91%
—	Arauco North America, Inc.	U.S. Dollars	Banco del Estado de Chile—NY Branch		5,463		3,923		38,378		37,519		36,659		213,016		—		9,386		325,572		2.83%	Libor 6M + 1.65%
			Total		60,818		266,071		114,560		118,041		259,208		227,054		68,044		326,889		786,907

March 31, 2020				Maturity														Total
Tax ID	Name	Currency	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.	U.F.	Barau-F		15,171		14,946		29,219		28,321		27,422		26,524		119,146		30,117		230,632		4.25%	4.25%
93.458.000-1	Celulosa Arauco y Constitución S.A.	U.F.	Barau-J		—		170,525		—		—		—		—		—		170,525		—		3.25%	3.25%
93.458.000-1	Celulosa Arauco y Constitución S.A.	U.F.	Barau-P		3,323		3,323		6,647		21,752		21,148		20,544		142,596		6,646		212,687		4.00%	4.00%
93.458.000-1	Celulosa Arauco y Constitución S.A.	U.F.	Barau-Q		8,766		8,641		8,516		—		—		—		—		17,407		8,516		3.00%	3.00%
93.458.000-1	Celulosa Arauco y Constitución S.A.	U.F.	Barau-R		2,994		2,994		5,988		5,988		5,988		5,988		230,695		5,988		254,647		3.60%	3.60%
93.458.000-1	Celulosa Arauco y Constitución S.A.	U.F.	Barau-S		2,002		2,002		4,004		4,004		4,004		4,004		175,827		4,004		191,843		2.40%	2.40%
93.458.000-1	Celulosa Arauco y Constitución S.A.	U.F.	Barau-W		1,052		1,052		2,103		2,103		2,103		2,103		109,106		2,104		117,518		2.10%	2.10%
93.458.000-1	Celulosa Arauco y Constitución S.A.	U.F.	Barau-X		2,476		2,476		4,951		4,951		4,951		4,951		278,671		4,952		298,475		2.70%	2.70%
93.458.000-1	Celulosa Arauco y Constitución S.A.	U.S. Dollars	Yankee 2022		—		5,993		132,161		—		—		—		—		5,993		132,161		4.75%	4.75%
93.458.000-1	Celulosa Arauco y Constitución S.A.	U.S. Dollars	Yankee 2024		—		22,500		22,500		22,500		22,500		511,250		—		22,500		578,750		4.50%	4.50%
93.458.000-1	Celulosa Arauco y Constitución S.A.	U.S. Dollars	Yankee 2027		9,688		9,688		19,375		19,375		19,375		19,375		558,125		19,376		635,625		3.88%	3.88%
93.458.000-1	Celulosa Arauco y Constitución S.A.	U.S. Dollars	Yankee 2047		11,000		11,000		22,000		22,000		22,000		22,000		906,000		22,000		994,000		5.50%	5.50%
93.458.000-1	Celulosa Arauco y Constitución S.A.	U.S. Dollars	Yankee 2029		10,625		10,625		21,250		21,250		21,250		21,250		595,625		21,250		680,625		4.25%	4.25%
93.458.000-1	Celulosa Arauco y Constitución S.A.	U.S. Dollars	Yankee 2049		13,750		13,750		27,500		27,500		27,500		27,500		1,173,750		27,500		1,283,750		5.50%	5.50%
93.458.000-1	Celulosa Arauco y Constitución S.A.	U.S. Dollars	Yankee 2030		—		21,000		21,000		21,000		21,000		21,000		605,000		21,000		689,000		4.25%	4.25%
93.458.000-1	Celulosa Arauco y Constitución S.A.	U.S. Dollars	Yankee 2050		—		25,750		25,750		25,750		25,750		25,750		1,143,750		25,750		1,246,750		5.50%	5.50%
—	Prime-Line, Inc.	U.S. Dollars	Bond ADFA 2014		128		384		512		512		512		512		1,877		512		3,925		4.84%	4.84%
—	Prime-Line, Inc.	U.S. Dollars	Bond ADFA 2013		38		114		150		149		75		—		—		152		374		4.00%	4.00%
					81,013		326,763		353,626		227,155		225,578		712,751		6,040,168		407,776		7,559,278

108

CELULOSA ARAUCO Y CONSTITUCION S.A. AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

March 31, 2020

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

March 31, 2020				Maturity														Total
Tax ID	Name	Currency	Underlying asset class	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.$
85.805.200-9	Forestal Arauco S.A.	U.F.	Motor vehicles		423		1,308		1,667		1,255		664		415		488		1,731		4,489
85.805.200-9	Forestal Arauco S.A.	U.F.	Other property, plant and equipment		3,771		8,500		5,610		2,302		—		—		—		12,271		7,912
85.805.200-9	Forestal Arauco S.A.	Chilean pesos	Lands		3		12		14		14		14		15		168		15		225
85.805.200-9	Forestal Arauco S.A.	Chilean pesos	Other property, plant and equipment		707		1,745		489		167		32		—		—		2,452		688
—	Arauco Argentina	U.S. Dollars	Buildings and constructions		122		354		368		—		—		—		—		476		368
—	Arauco Argentina	U.S. Dollars	IT equipment		347		1,040		1,386		1,290		1,002		418		—		1,387		4,096
—	Arauco Argentina	U.S. Dollars	Other property, plant and equipment		13		39		53		22		—		—		—		52		75
—	Arauco Argentina	U.S. Dollars	Motor vehicles		382		1,100		1,027		809		630		149		—		1,482		2,615
—	Arauco Industria de Paineis S.A.	Brazilian Real	Other property, plant and equipment		131		383		487		70		—		—		—		514		557
—	Arauco Industria de Paineis S.A.	Brazilian Real	IT equipment		10		31		41		14		—		—		—		41		55
—	Arauco Industria de Paineis S.A.	Brazilian Real	Motor vehicles		3		10		13		4		—		—		—		13		17
—	Arauco Forest Brasil S.A.	Brazilian Real	IT equipment		7		20		22		14		—		—		—		27		36
—	Arauco Forest Brasil S.A.	Brazilian Real	Lands		675		2,025		2,476		2,701		2,701		2,701		6,751		2,700		17,330
—	Arauco Florestal Arapoti S.A.	Brazilian Real	IT equipment		5		14		10		4		—		—		—		19		14
—	Arauco do Brasil S.A.	Brazilian Real	Buildings and constructions		123		128		35		29		—		—		—		251		64
—	Arauco do Brasil S.A.	U.S. Dollars	Buildings and constructions		98		293		333		299		291		—		—		391		923
—	Novo Oeste Gestao de Ativos Florestais S.A.	Brazilian Real	Lands		469		597		—		—		—		—		—		1,066		—
93.458.000-1	Celulosa Arauco y Constitucion S.A.	U.F.	Buildings and constructions		361		1,070		1,388		1,302		635		—		—		1,431		3,325
93.458.000-1	Celulosa Arauco y Constitucion S.A.	U.F.	Motor vehicles		179		510		566		475		176		102		74		689		1,393
93.458.000-1	Celulosa Arauco y Constitucion S.A.	Chilean pesos	Buildings and constructions		17		50		61		61		—		—		—		67		122
93.458.000-1	Celulosa Arauco y Constitucion S.A.	U.S. Dollars	Other property, plant and equipment		—		1,612		—		—		—		—		—		1,612		—
93.458.000-1	Celulosa Arauco y Constitucion S.A.	Chilean pesos	Motor vehicles		4,218		12,654		16,872		15,533		2,966		—		—		16,872		35,371
93.458.000-1	Celulosa Arauco y Constitucion S.A.	U.S. Dollars	Motor vehicles		45		136		166		—		—		—		—		181		166
—	Arauco North America, Inc.	U.S. Dollars	Lands		1		4		193		83		—		—		—		5		276
—	Arauco North America, Inc.	U.S. Dollars	Buildings and constructions		14		54		2,740		1,302		1,334		1,366		4,414		68		11,156
—	Arauco North America, Inc.	U.S. Dollars	Motor vehicles		—		2		83		72		—		—		—		2		155
—	Arauco North America, Inc.	U.S. Dollars	Other property, plant and equipment		2		3		142		—		—		—		—		5		142
—	Arauco Canada Limited	Canadian Dollars	Other property, plant and equipment		1		1		1		1		1		1		1		2		5
—	Arauco Canada Limited	Canadian Dollars	Motor vehicles		—		2		80		52		40		—		—		2		172
—	Celulosa y Energía Punta Pereira	U.S. Dollars	Buildings and constructions		1,477		4,432		5,909		5,909		5,909		5,909		75,344		5,909		98,980
—	Celulosa y Energía Punta Pereira	U.S. Dollars	Other property, plant and equipment		262		661		504		373		373		373		7,182		923		8,805
—	Eufores S.A.	U.S. Dollars	Lands		785		2,326		5,425		5,279		5,095		4,787		34,625		3,111		55,211
—	Eufores S.A.	U.S. Dollars	Other property, plant and equipment		306		917		1,222		1,222		1,222		1,222		3,361		1,223		8,249
—	Eufores S.A.	U.S. Dollars	Buildings and constructions		119		308		239		117		117		20		—		427		493
96.510.970-6	Maderas Arauco S.A.	Chilean pesos	Motor vehicles		3,342		9,944		11,363		9,263		3,466		—		—		13,286		24,092
96.510.970-6	Maderas Arauco S.A.	U.F.	Motor vehicles		111		311		343		257		42		17		6		422		665
96.510.970-6	Maderas Arauco S.A.	U.F.	Lands		—		4		4		4		4		4		49		4		65
—	Arauco Colombia S.A.	U.S. Dollars	Buildings and constructions		8		17		8		—		—		—		—		25		8
—	Arauco Colombia S.A.	U.S. Dollars	Fixed facilities and accessories		116		195		499		—		—		—		—		311		499
—	Arauco Europe Cooperatief U.A.	U.S. Dollars	Motor vehicles		8		14		10		10		4		—		—		22		24
—	Arauco Europe Cooperatief U.A.	U.S. Dollars	Buildings and constructions		16		52		74		76		78		46		—		68		274
—	Araucomex S.A. de C.V.	Mexican pesos	Buildings and constructions		389		131		2,703		1,691		1,393		1,062		—		520		6,849
—	Araucomex S.A. de C.V.	U.S. Dollars	Buildings and constructions		126		85		—		—		—		—		—		211		—
—	Arauco Industria de México, S.A. de C.V.	Mexican pesos	Motor vehicles		647		216		—		—		—		—		—		863		—
—	Arauco Industria de México, S.A. de C.V.	U.S. Dollars	Motor vehicles		326		580		—		—		—		—		—		906		—
—	Arauco Industria de México, S.A. de C.V.	Mexican pesos	Buildings and constructions		—		5		7		7		2		—		—		5		16
—	Arauco Industria de México, S.A. de C.V.	Mexican pesos	Lands		—		3		—		—		—		—		—		3		—
—	Arauco Industria de México, S.A. de C.V.	U.S. Dollars	Lands		—		255		311		—		—		—		—		255		311
—	Araucomex Servicios S.A. de C.V.	U.S. Dollars	Buildings and constructions		—		172		230		230		77		—		—		172		537
—	Araucomex Servicios S.A. de C.V.	U.S. Dollars	Motor vehicles		—		64		66		14		—		—		—		64		80
96.637.330-K	Servicios Logisticos Arauco S.A.	U.F.	Motor vehicles		20		60		66		56		—		—		—		80		122
79.990.550-7	Investigaciones Forestales Bioforest S.A.	U.F.	Lands		—		19		19		19		19		19		97		19		173
79.990.550-7	Investigaciones Forestales Bioforest S.A.	U.F.	Motor vehicles		26		62		44		31		12		2		—		88		89
			Total		20,211		54,530		65,369		52,433		28,299		18,628		132,560		74,741		297,289

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

109

CELULOSA ARAUCO Y CONSTITUCION S.A. AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

March 31, 2020

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

December 31, 2019				Maturity														Total
Tax ID	Name	Currency	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. Dollars	Scotiabank		3,179		3,014		5,979		5,979		205,979		—		—		6,193		217,937		3.14%	Libor 6M + 1.1%
93.458.000-1	Celulosa Arauco y Constitución S.A.	Euros	BNP Paribas / ECA		—		1,209		7,792		14,316		14,175		14,038		68,044		1,209		118,365		1.06%	1.06%
—	Zona Franca Punta Pereira	U.S. Dollars	Banco Interamericano de Desarrollo A		1,216		1,196		2,325		2,238		2,152		—		—		2,412		6,715		4.10%	Libor 6M + 2.05%
—	Zona Franca Punta Pereira	U.S. Dollars	Banco Interamericano de Desarrollo B		2,906		2,852		—		—		—		—		—		5,758		—		3.85%	Libor 6M + 1.80%
—	Celulosa y Energía Punta Pereira S.A.	U.S. Dollars	Banco Interamericano de Desarrollo A		4,919		4,838		9,403		9,052		8,702		—		—		9,757		27,157		4.10%	Libor 6M + 2.05%
—	Celulosa y Energía Punta Pereira S.A.	U.S. Dollars	Banco Interamericano de Desarrollo B		11,754		11,536		—		—		—		—		—		23,290		—		3.85%	Libor 6M + 1.80%
—	Celulosa y Energía Punta Pereira S.A.	U.S. Dollars	Finn Vera/Finnish Export Credit		26,366		26,008		50,823		49,286		24,065		—		—		52,374		124,174		3.20%	3.20%
—	Eufores S.A.	U.S. Dollars	BBVA		—		14,222		—		—		—		—		—		14,222		—		3.22%	Libor 6M + 1.30%
—	Eufores S.A.	U.S. Dollars	Banco República Oriental del Uruguay		—		27,328		—		—		—		—		—		27,328		—		3.22%	Libor 6M + 1.30%
—	Eufores S.A.	U.S. Dollars	Citibank		—		4,062		—		—		—		—		—		4,062		—		3.14%	Libor 6M + 1.25%
—	Eufores S.A.	U.S. Dollars	ITAU		—		12,695		—		—		—		—		—		12,695		—		3.20%	Libor 6M + 1.30%
—	Eufores S.A.	U.S. Dollars	Heritage		1,361		—		—		—		—		—		—		1,361		—		3.21%	Libor 3M + 1.30%
—	Eufores S.A.	U.S. Dollars	Santander		20,328		—		—		—		—		—		—		20,328		—		3.29%	Libor 6M + 1.30%
—	Eufores S.A.	U.S. Dollars	Santander		—		5,080		—		—		—		—		—		5,080		—		3.21%	Libor 6M + 1.30%
—	Eufores S.A.	U.S. Dollars	Scotiabank		—		2,541		—		—		—		—		—		2,541		—		3.22%	Libor 6M + 1.30%
—	Arauco Forest Brasil S.A.	Brazilian Real	Banco Votorantim		—		27		291		278		—		—		—		27		569		5.00%	5.00%
—	Arauco Forest Brasil S.A.	Brazilian Real	BNDES Subcrédito A		7		63		185		130		—		—		—		70		315		8.48%	TJLP + 2.91%
—	Arauco Forest Brasil S.A.	Brazilian Real	BNDES Subcrédito B		5		39		112		78		—		—		—		44		190		9.48%	TJLP + 3.91%
—	Arauco Forest Brasil S.A.	U.S. Dollars	BNDES Subcrédito C		5		43		159		124		—		—		—		48		283		7.22%	Cesta + 2.91%
—	Arauco Forest Brasil S.A.	Brazilian Real	BNDES Subcrédito D		6		45		127		87		—		—		—		51		214		10.68%	TJLP + 5.11%
—	Arauco Florestal Arapoti S.A.	Brazilian Real	Banco Votorantim		—		30		328		313		—		—		—		30		641		5.00%	5.00%
—	Mahal Empreendimentos e Participações S.A.	Brazilian Real	BNDES Subcrédito E-I		658		1,279		—		—		—		—		—		1,937		—		8.48%	TJLP + 3.91%
—	Mahal Empreendimentos e Participações S.A.	Brazilian Real	BNDES SubcréditoF-J		397		769		—		—		—		—		—		1,166		—		9.48%	TJLP + 3.91%
—	Mahal Empreendimentos e Participações S.A.	Brazilian Real	BNDES Subcrédito H-L		444		858		—		—		—		—		—		1,302		—		10.68%	TJLP + 5.11%
—	Mahal Empreendimentos e Participações S.A.	U.S. Dollars	BNDES Subcrédito G-K		537		1,217		—		—		—		—		—		1,754		—		7.22%	Cesta + 2.91%
—	Arauco North America, Inc.	U.S. Dollars	Banco del Estado de Chile - NY Branch		—		10,895		40,563		39,480		38,396		213,803		—		10,895		332,242		3.56%	Libor 6M + 1.65%
			Total		74,088		131,846		118,087		121,361		293,469		227,841		68,044		205,934		828,802

December 31, 2019				Maturity														Total
Tax ID	Name	Currency	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.	U.F.	Barau-F		—		33,928		32,916		31,904		30,892		29,880		134,219		33,928		259,811		4.25%		4.25%
93.458.000-1	Celulosa Arauco y Constitución S.A.	U.F.	Barau-J		3,047		192,098		—		—		—		—		—		195,145		—		3.25%		3.25%
93.458.000-1	Celulosa Arauco y Constitución S.A.	U.F.	Barau-P		—		7,488		7,488		24,504		23,823		23,143		160,636		7,488		239,594		4.00%		4.00%
93.458.000-1	Celulosa Arauco y Constitución S.A.	U.F.	Barau-Q		—		19,609		9,593		—		—		—		—		19,609		9,593		3.00%		3.00%
93.458.000-1	Celulosa Arauco y Constitución S.A.	U.F.	Barau-R		—		6,746		6,746		6,746		6,746		6,746		259,880		6,746		286,864		3.60%		3.60%
93.458.000-1	Celulosa Arauco y Constitución S.A.	U.F.	Barau-S		—		4,510		4,510		4,510		4,510		4,510		198,071		4,510		216,111		2.40%		2.40%
93.458.000-1	Celulosa Arauco y Constitución S.A.	U.F.	Barau-W		—		2,370		2,370		2,370		2,370		2,370		122,909		2,370		132,389		2.10%		2.10%
93.458.000-1	Celulosa Arauco y Constitución S.A.	U.F.	Barau-X		—		5,577		5,577		5,577		5,577		5,577		313,926		5,577		336,234		2.70%		2.70%
93.458.000-1	Celulosa Arauco y Constitución S.A.	U.S. Dollars	Yankee 2019		—		—		—		—		—		—		—		—		—		7.25%		7.25%
93.458.000-1	Celulosa Arauco y Constitución S.A.	U.S. Dollars	Yankee 2021		—		—		—		—		—		—		—		—		—		5.00%		5.00%
93.458.000-1	Celulosa Arauco y Constitución S.A.	U.S. Dollars	Yankee 2022		2,996		2,996		5,993		129,164		—		—		—		5,992		135,157		4.75%		4.75%
93.458.000-1	Celulosa Arauco y Constitución S.A.	U.S. Dollars	Yankee 2024		11,250		11,250		22,500		22,500		22,500		522,500		—		22,500		590,000		4.50%		4.50%
93.458.000-1	Celulosa Arauco y Constitución S.A.	U.S. Dollars	Yankee 2027		—		19,375		19,375		19,375		19,375		19,375		558,125		19,375		635,625		3.88%		3.88%
93.458.000-1	Celulosa Arauco y Constitución S.A.	U.S. Dollars	Yankee 2047		—		22,000		22,000		22,000		22,000		22,000		906,000		22,000		994,000		5.50%		5.50%
93.458.000-1	Celulosa Arauco y Constitución S.A.	U.S. Dollars	Yankee 2029		—		21,250		21,250		21,250		21,250		21,250		595,625		21,250		680,625		4.25%		4.25%
93.458.000-1	Celulosa Arauco y Constitución S.A.	U.S. Dollars	Yankee 2049		—		27,500		27,500		27,500		27,500		27,500		1,173,750		27,500		1,283,750		5.50%		5.50%
93.458.000-1	Celulosa Arauco y Constitución S.A.	U.S. Dollars	Yankee 2030		5,250		10,500		21,000		21,000		21,000		21,000		615,500		15,750		699,500		4.25%		4.25%
93.458.000-1	Celulosa Arauco y Constitución S.A.	U.S. Dollars	Yankee 2050		6,438		12,875		25,750		25,750		25,750		25,750		1,156,625		19,313		1,259,625		5.50%		5.50%
—	Prime-Line, Inc.	U.S. Dollars	Bond ADFA 2014		128		384		512		512		512		512		2,005		512		4,053		4.84%		4.84%
—	Prime-Line, Inc.	U.S. Dollars	Bond ADFA 2013		38		114		152		149		112		—		—		152		413		4.00%		4.00%
			Total		29,147		400,570		235,232		364,811		233,917		732,113		6,197,271		429,717		7,763,344

110

CELULOSA ARAUCO Y CONSTITUCION S.A. AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

March 31, 2020

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

December 31, 2019				Maturity															Total
Tax ID	Name	Currency	Underlying asset class	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.$
85.805.200-9	Forestal Arauco S.A.	U.F.	Motor vehicles		465		1,462		1,932			1,459		977		528		649		1,927		5,545
85.805.200-9	Forestal Arauco S.A.	U.F.	Other property, plant and equipment		4,644		9,357		7,576			3,823		38		—		—		14,001		11,437
85.805.200-9	Forestal Arauco S.A.	Chilean pesos	Lands		—		16		16			16		16		16		190		16		254
85.805.200-9	Forestal Arauco S.A.	Chilean pesos	Other property, plant and equipment		860		2,431		885			259		74		—		—		3,291		1,218
—	Arauco Argentina	U.S. Dollars	Buildings and constructions		122		361		450			35		—		—		—		483		485
—	Arauco Argentina	U.S. Dollars	IT equipment		13		39		53			35		—		—		—		52		88
—	Arauco Argentina	U.S. Dollars	Other property, plant and equipment		347		1,040		1,386			1,386		1,002		668		—		1,387		4,442
—	Arauco Argentina	U.S. Dollars	Motor vehicles		382		1,145		1,162			809		684		297		—		1,527		2,952
—	Arauco Industria de Paineis S.A.	Brazilian Real	Other property, plant and equipment		192		577		722			288		—		—		—		769		1,010
—	Arauco Industria de Paineis S.A.	Brazilian Real	Motor vehicles		4		13		17			10		—		—		—		17		27
—	Arauco Forest Brasil S.A.	Brazilian Real	IT equipment		6		17		18			11		—		—		—		23		29
—	Arauco Forest Brasil S.A.	Brazilian Real	Lands		871		2,612		3,193			3,483		3,483		9,579		—		3,483		19,738
—	Novo Oeste Gestao de Ativos Florestais S.A.	Brazilian Real	Lands		595		1,389		—			—		—		—		—		1,984		—
—	Arauco Florestal Arapoti S.A.	Brazilian Real	IT equipment		6		17		18			—		—		—		—		23		18
—	Arauco do Brasil S.A.	Brazilian Real	Buildings and constructions		272		655		454			393		376		94		—		927		1,317
93.458.000-1	Celulosa Arauco y Constitucion S.A.	U.F.	Buildings and constructions		407		1,217		1,582			1,477		1,082		—		—		1,624		4,141
93.458.000-1	Celulosa Arauco y Constitucion S.A.	U.F.	Motor vehicles		201		593		670			558		288		131		106		794		1,753
93.458.000-1	Celulosa Arauco y Constitucion S.A.	Chilean pesos	Buildings and constructions		19		58		70			70		17		—		—		77		157
93.458.000-1	Celulosa Arauco y Constitucion S.A.	U.S. Dollars	Other property, plant and equipment		1,612		—		1,612			—		—		—		—		1,612		1,612
93.458.000-1	Celulosa Arauco y Constitucion S.A.	Chilean pesos	Motor vehicles		4,800		14,399		19,199	��		19,199		6,651		—		—		19,199		45,049
93.458.000-1	Celulosa Arauco y Constitucion S.A.	U.S. Dollars	Motor vehicles		45		136		181			30		—		—		—		181		211
—	Arauco North America, Inc.	U.S. Dollars	Lands		1		4		193			83		—		—		—		5		276
—	Arauco North America, Inc.	U.S. Dollars	Buildings and constructions		15		55		2,741			1,303		1,335		1,367		4,415		70		11,161
—	Arauco North America, Inc.	U.S. Dollars	Motor vehicles		—		2		80			52		40		—		—		2		172
—	Arauco Canada Limited	Canadian Dollars	Other property, plant and equipment		2		3		142			—		—		—		—		5		142
—	Arauco Canada Limited	Canadian Dollars	Motor vehicles		—		2		83			72		—		—		—		2		155
—	Celulosa y Energía Punta Pereira S.A.	U.S. Dollars	Buildings and constructions		1,477		4,432		5,909			5,909		5,909		5,909		76,821		5,909		100,457
—	Celulosa y Energía Punta Pereira S.A.	U.S. Dollars	Other property, plant and equipment		262		786		373			373		373		373		7,275		1,048		8,767
—	Eufores S.A.	U.S. Dollars	Lands		546		1,637		5,383			5,240		5,057		4,752		34,676		2,183		55,108
—	Eufores S.A.	U.S. Dollars	Other property, plant and equipment		306		917		1,222			1,222		1,222		1,222		3,667		1,223		8,555
—	Eufores S.A.	U.S. Dollars	Buildings and constructions		119		358		280			117		117		49		—		477		563
96.510.970-6	Maderas Arauco S.A.	Chilean pesos	Motor vehicles		3,804		11,411		13,487			12,093		5,545		—		—		15,215		31,125
96.510.970-6	Maderas Arauco S.A.	U.F.	Motor vehicles		126		359		413			319		97		26		7		485		862
96.510.970-6	Maderas Arauco S.A.	U.F.	Lands		—		5		5			5		5		5		55		5		75
—	Arauco Colombia S.A.	U.S. Dollars	Buildings and constructions		10		31		10			—		—		—		—		41		10
—	Arauco Colombia S.A.	U.S. Dollars	Fixed facilities and accessories		137		411		548			—		—		—		—		548		548
—	Arauco Europe Cooperatief U.A.	Euros	Motor vehicles		7		17		12			11		7		—		—		24		30
—	Araucomex S.A. de C.V.	Mexican pesos	Buildings and constructions		549		614		1,933			1,932		1,834		1,784		904		1,163		8,387
—	Araucomex S.A. de C.V.	U.S. Dollars	Buildings and constructions		125		125		80			—		—		—		—		250		80
—	Arauco Industria de México, S.A. de C.V.	Mexican pesos	Motor vehicles		—		772		578			—		—		—		—		772		578
—	Arauco Industria de México, S.A. de C.V.	U.S. Dollars	Motor vehicles		—		139		404			404		—		—		—		139		808
—	Arauco Industria de México, S.A. de C.V.	Mexican pesos	Buildings and constructions		—		—		8			8		8		3		—		—		27
—	Arauco Industria de México, S.A. de C.V.	Mexican pesos	Lands		—		—		5			—		—		—		—		—		5
—	Arauco Industria de México, S.A. de C.V.	U.S. Dollars	Lands		—		—		318			291		—		—		—		—		609
—	Araucomex Servicios S.A. de C.V.	U.S. Dollars	Buildings and constructions		—		—		277			277		277		93		—		—		924
—	Araucomex Servicios S.A. de C.V.	U.S. Dollars	Motor vehicles		—		25		110			58		16		—		—		25		184
96.637.330-K	Servicios Logisticos Arauco S.A.	U.F.	Motor vehicles		22		67		79			65		15		—		—		89		159
79.990.550-7	Investigaciones Forestales Bioforest S.A.	U.F.	Lands		—		22		22			22		22		22		109		22		197
79.990.550-7	Investigaciones Forestales Bioforest S.A.	U.F.	Motor vehicles		30		75		56			35		20		5		—		105		116
			Total		23,401		59,803		75,947			63,232		36,587		26,923		128,874		83,204		331,563

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.

111

CELULOSA ARAUCO Y CONSTITUCION S.A. AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

March 31, 2020

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.$31 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 March 31, 2020, the total assets pledged as an indirect guarantee were MU.S.$ 497. 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 anon-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		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
Arauco Forest Brasil S.A.		Mortgage Industrial Plant of Jaguariaíva of Arauco do Brasil	Property plant and equipment	Brazilian Real		29,490	BNDES
Arauco Forest Brasil S.A.		Endorsement of Arauco do Brasil	—	Brazilian Real		410	Bank Votorantim S.A.
Arauco Florestal Arapoti S.A.		Endorsement of Arauco do Brasil	—	Brazilian Real		462	Bank Votorantim S.A.
			Total			31,059
INDIRECT
Subsidiary	Guarantee		Assets Pledged	Currency	ThU.S.$		Guarantor
Celulosa Arauco y Constitución S.A.		Suretyship not supportive and cumulative	—	U.S. Dollar		193,058	Joint Ventures (Uruguay)
Celulosa Arauco y Constitución S.A.		Full Guarantee	—	U.S. Dollar		300,000	Arauco North America, Inc. (USA)
Celulosa Arauco y Constitución S.A.		Guarantee letter	—	U.S. Dollar		1,485	Arauco Forest Brasil y Mahal (Brasil)
Celulosa Arauco y Constitución S.A.		Guarantee letter	—	Brazilian Real		2,796	Arauco Forest Brasil y Mahal (Brasil)
			Total			497,339

112

CELULOSA ARAUCO Y CONSTITUCION S.A. AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

March 31, 2020

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

23.10.3 Type of Risk: Market Risk – Exchange Rate

Description

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

Explanation of Currency Risk Exposure and How This Risk Arises

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

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

Arauco performs sensitivity analyses to measure the 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 +/- 12.92% (equivalent to ThU.S.$ -/+ 15,353), and +/- 0.13% of equity (equivalent to ThU.S.$ -/+ 9,212).

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 +/- 2.04% (equivalent to ThU.S.-/+$2,423) and a change on the equity of +/- 1.17% (equivalent to ThU.S. -/+$82,142).

113

CELULOSA ARAUCO Y CONSTITUCION S.A. AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

March 31, 2020

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 March 31, 2020, 10.8% 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 +/- 1.03% (equivalent to ThU.S.$-/+ 1,223) and +/- 0.01% (equivalent to ThU.S.$-/+ 734) on equity.

Thousands of dollars	March 2020 ThU.S.$		Total
Fixed rate		5,327,285		89.2	%
Bonds issued		4,703,893
Bank borrowings (*)		392,797
Lease liabilities		230,595
Variable rate		645,401		10.8	%
Bonds issued		—
Loans with Banks		645,401
Total		5,972,686		100.0	%
Thousands of dollars	December 2019 ThU.S.$		Total
Fixed rate		5,382,970		89.0	%
Bonds issued		4.831,743
Bank borrowings (*)		280,202
Lease liabilities		271,025
Variable rate		666,820		11.0	%
Bonds issued		—
Loans with Banks		666.820
Total		6.049.790		100.0	%

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

114

CELULOSA ARAUCO Y CONSTITUCION S.A. AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

March 31, 2020

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 March 31, 2020, revenue due to pulp sales accounted for 40% 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 +/- 26.48% (equivalent to ThU.S.$-/+ 31,460) on the income for the year after tax and +/- 0.27% (equivalent to ThU.S.$18,876) on equity.

115

CELULOSA ARAUCO Y CONSTITUCION S.A. AND SUBSIDIARIES

Unaudited Interim Consolidated Financial Statements

March 31, 2020

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.

• Wood products: 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 (50% property of Arauco) and they have a total production capacity of approximately 4 million tons per year. Pulp is sold in more than 46 countries, mainly in Asia and Europe.

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March 31, 2020

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

Wood products

The Panels area produces a wide range of panel products and several kinds of moldings aimed at the furniture, decoration and construction industries. It consists of 23 industrial plants: 5 in Chile, 2 in Argentina, 4 in Brazil, 2 in Mexico, and 10 plants around USA and Canada. The Company has a total annual production capacity of 8.7 million cubic meters of PBO, MDF, Hardboard, plywood and moldings.

Through the joint venture Sonae Arauco (see note 16), 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 total, Sonae Arauco’s production capacity is approximately 1.5 million m3 of MDF, 2.3 million m3 of PB, 516,000 m3 of OSB and 50,000 m3 of sawn lumber.

Including Sonae Arauco at 50%, Arauco totalize a capacity of 4.8 million m3 of MDF, 4.8 million m3 of PB and 258,000 m3 of OSB in its plants.

The Sawn Timber area 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.

With 8 saw mills in operation (7 in Chile and 1 in Argentina), the Company has a production capacity of 3.0 million m3 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 March 31, 2020, of which 1 million hectares are used for plantations, 511 thousand hectares for native forests, 106 thousand hectares for other uses and 108 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.

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March 31, 2020

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

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:

Period ended March 31, 2020	Pulp ThU.S.$			Forestry ThU.S.$		Wood products ThU.S.$			Others ThU.S.$			Corporate ThU.S.$			Subtotal ThU.S.$			Elimination ThU.S.$			Total ThU.S.$
Revenues from goods sale		432,684			27,801		646,550			—			—			1,107,035						1,107,035
Revenues from rendering of services		18,226			1,823		—			82			—			20,131						20,131
Revenues from external customers		450,910			29,624		646,550			82			—			1,127,166						1,127,166
Revenues from transactions with other operating segments		9,146			259,117		5,643			7,711			—			281,617			(281,617	)		—
Finance income		—			—		—			—			7,207			7,207						7,207
Finance costs		—			—		—			—			(71,782	)		(71,782	)					(71,782	)
Net finance costs		—			—		—			—			(64,575	)		(64,575	)					(64,575	)
Depreciation and amortizations		64,219			9,450		49,245			387			2,110			125,411						125,411
Other income		409			52,984		1,734			—			119			55,246						55,246
Other expenses		27,682			6,997		13,012			—			3,247			50,938						50,938
Share of profit (loss) of associates and joint ventures accounted for using equity method
Associates		—			367		—			—			1,552			1,919						1,919
Joint ventures		—			—		(574	)		—			208			(366	)					(366	)
Income tax expense		—			—		—			—			9,761			9,761						9,761
Profit (loss) of each reportable segment		(1,392	)		41,349		13,382			(35	)		(83,010	)		(29,706	)					(29,706	)
Geographical information on revenues
Revenue – Chilean entities		317,355			11,450		248,941			82			—			577,828						577,828
Revenue – Foreign entities		133,555			18,174		397,609			—			—			549,338						549,338
Total Ordinary Income		450,910			29,624		646,550			82			—			1,127,166						1,127,166
Period ended March 31, 2020	Pulp ThU.S.$			Forestry ThU.S.$		Wood products ThU.S.$			Others ThU.S.$			Corporate ThU.S.$			Subtotal ThU.S.$			Elimination ThU.S.$			Total ThU.S.$
Amounts of additions tonon-current assets
Acquisition of property, plant and equipment and biological assets		294,153			84,653		48,888			295			2,400			430,389			—			430,389
Acquisition and contribution of investments in associates and joint venture													15,090			15,090			—			15,090

Period ended March 31, 2020	Pulp ThU.S.$		Forestry ThU.S.$		Wood products ThU.S.$		Others ThU.S.$		Corporate ThU.S.$		Subtotal ThU.S.$		Elimination ThU.S.$			Total ThU.S.$
Segment assets		5,822,180		5,091,630		2,928,535		21,080		1,692,904		15,556,329		(38,719	)		15,517,610
Segments assets (excluding deferred tax assets)		5,822,180		5,091,630		2,928,535		21,080		1,686,508		15,549,933		(38,719	)		15,511,214
Deferred tax assets										6,396		6,396					6,396
Investments accounted through equity method
Associates		—		29,438		—		—		73,732		103,170					103,170
Joint Ventures		—		—		162,644		—		22,256		184,900					184,900
Segment liabilities		193,609		169,029		372,706		7,947		7,782,231		8,525,522					8,525,522
Segment liabilities (excluding deferred tax liabilities)		193,609		169,029		372,706		7,947		6,465,905		7,209,196					7,209,196
Deferred tax liabilities										1,316,326		1,316,326					1,316,326
Geographical information onnon-current assets
Chile		3,450,013		3,356,998		633,017		20,131		261,543		7,721,702		(2,748	)		7,718,954
Foreign countries		1,590,709		1,194,777		1,287,904		—		92,131		4,165,521					4,165,521
Non-current assets, Total		5,040,722		4,551,775		1,920,921		20,131		353,674		11,887,223		(2,748	)		11,884,475

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March 31, 2020

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

Period ended March 31, 2019	Pulp ThU.S.$		Forestry ThU.S.$			Wood products ThU.S.$		Others ThU.S.$			Corporate ThU.S.$			Subtotal ThU.S.$			Elimination ThU.S.$			Total ThU.S.$
Revenues from goods sale		649,697		28,635			693,225		—						1,371,557						1,371,557
Revenues from rendering of services		14,343		2,112			—		174						16,629						16,629
Revenues from external customers		664,040		30,747			693,225		174						1,388,186						1,388,186
Revenues from transactions with other operating segments		9,812		272,861			7,686		9,186						299,545			(299,545	)		—
Finance income		—		—			—		—			6,746			6,746						6,746
Finance costs		—		—			—		—			(57,391	)		(57,391	)					(57,391	)
Net finance costs		—		—			—		—			(193,884	)		(193,884	)					(193,884	)
Depreciation and amortizations		67,061		14,684			40,221		588			2,130			124,684						124,684
Other income		2,883		39,421			2,925		59			251			45,539						45,539
Other expenses		4,086		2,350			12,995		—			2,886			22,317						22,317
Share of profit (loss) of associates and joint ventures accounted for using equity method
Associates		—		(12	)		—		—			274			262						262
Joint ventures		—		—			3,282		—			819			4,101						4,101
Income tax expense		—		—			—		—			(15,100	)		(15,100	)					(15,100	)
Profit (loss) of each reportable segment		178,238		15,828			29,322		(720	)		(96,569	)		126,099						126,099
Geographical information on revenues
Revenue – Chilean entities		494,065		14,564			191,857		174						700,660						700,660
Revenue – Foreign entities		169,975		16,183			501,368		—						687,526						687,526
Total Ordinary Income		664,040		30,747			693,225		174						1,388,186						1,388,186
Period ended March 31, 2019	Pulp ThU.S.$		Forestry ThU.S.$			Wood products ThU.S.$		Others ThU.S.$			Corporate ThU.S.$			Subtotal ThU.S.$			Elimination ThU.S.$			Total ThU.S.$
Amounts of additions tonon-current assets
Acquisition of property, plant and equipment and biological assets		110,301		79,758			52,561		544			153			243,317						243,317
Acquisition and contribution of investments in associates and joint venture		—		—			—		—			151,294			151,294						151,294

Period ended December 31, 2019	Pulp ThU.S.$		Forestry ThU.S.$		Wood products ThU.S.$		Others ThU.S.$		Corporate ThU.S.$		Subtotal ThU.S.$		Elimination ThU.S.$			Total ThU.S.$
Segment assets		5,566,128		5,222,381		3,101,716		21,180		1,985,595		15,897,000		(36,970	)		15,860,030
Segments assets (excluding deferred tax assets)		5,566,128		5,222,381		3,101,716		21,180		1,979,528		15,890,933		(36,970	)		15,853,963
Deferred tax assets		—		—		—		—		6,067		6,067					6,067
Investments accounted through equity method
Associates		—		38,370		—		—		57,744		96,114					96,114
Joint Ventures		—		—		172,321		—		24,683		197,004					197,004
Segment liabilities		140,243		194,282		425,116		8,466		7,722,508		8,490,615					8,490,615
Segment liabilities (excluding deferred tax liabilities)		140,243		194,282		425,116		8,466		6,362,321		7,130,428					7,130,428
Deferred tax liabilities		—		—		—		—		1,360,187		1,360,187					1,360,187
Geographical information onnon-current assets
Chile		3,260,990		3,300,806		640,275		20,530		265,930		7,488,531		(3,440	)		7,485,091
Foreign countries		1,596,632		1,350,467		1,408,923		—		87,536		4,443,558		—			4,443,558
Non-current assets, Total		4,857,623		4,651,273		2,068,982		20,530		353,466		11,932,089		(3,440	)		11,928,649

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March 31, 2020

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

The following table shows information related to cash flows by segments which is presented as a complementary information as required by our regulatory entities:

Period ended March 31, 2020	Pulp ThU.S.$			Forestry ThU.S.$			Wood products ThU.S.$			Others ThU.S.$			Corporate ThU.S.$			Subtotal ThU.S.$			Elimination ThU.S.$		Total ThU.S.$
Segment Cash Flows
Cash Flows from (used in) Operating Activities		(23,138	)		41,236			61,132			577			(95,548	)		(15,741	)		—		(15,741	)
Cash flows (used in) investing activities		(292,750	)		(77,884	)		(66,915	)		(295	)		979			(436,865	)		—		(436,865	)
Cash flows from (used in) Financing Activities		99,459			(10,345	)		(14,227	)		(132	)		(826	)		73,929			—		73,929
Net increase (decrease) in Cash and Cash Equivalents		(216,429	)		(46,993	)		(20,010	)		150			(95,395	)		(378,677	)		—		(378,677	)
Period ended March 31, 2019	Pulp ThU.S.$			Forestry ThU.S.$			Wood products ThU.S.$			Others ThU.S.$			Corporate ThU.S.$			Subtotal ThU.S.$			Elimination ThU.S.$		Total ThU.S.$
Segment Cash Flows
Cash Flows from (used in) Operating Activities		183,761			(4,780	)		12,289			1,018			(62,037	)		130,251			—		130,251
Cash flows (used in) investing activities		(101,800	)		(78,534	)		(2,259	)		(544	)		(199,799	)		(382,936	)		—		(382,936	)
Cash flows from (used in) Financing Activities		(49,023	)		(22,331	)		2,505			864			(6,763	)		(74,748	)		—		(74,748	)
Net increase (decrease) in Cash and Cash Equivalents		32,938			(105,645	)		12,535			1,338			(268,599	)		(327,433	)		—		(327,433	)

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March 31, 2020

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

Information required by geographic area:

	Geographical area
2020	Local country		Foreign country
	Chile		Argentina		Brazil		USA/Canada		Uruguay		Mexico		Total
Disclosure of geographical areas	ThU.S.$		ThU.S.$		ThU.S.$		ThU.S.$		ThU.S.$		ThU.S.$		ThU.S.$
Revenues from goods sale		565,624		86,096		109,368		234,558		74,789		36,600		1,107,035
Revenues from rendering of services		12,204		—		—		—		7,927		—		20,131
Revenues at03-31-2020		577,828		86,096		109,368		234,558		82,716		36,600		1,127,166
Non-current Assets at03-31-2020 other than deferred tax		7,714,217		769,942		729,725		823,029		1,721,156		120,010		11,878,079

	Geographical area
2019	Local country		Foreign country
	Chile		Argentina		Brazil		USA/Canada		Uruguay		Mexico		Total
Disclosure of geographical areas	ThU.S.$		ThU.S.$		ThU.S.$		ThU.S.$		ThU.S.$		ThU.S.$		ThU.S.$
Revenues from goods sale		672,715		99,558		126,838		336,206		112,722		23,518		1,371,557
Revenues from rendering of services		16,120		—		—		—		509		—		16,629
Revenues at03-31-2019		688,835		99,558		126,838		336,206		113,231		23,518		1,388,186
Non-current Assets at12-31-2019 other than deferred tax		7,480,456		781,693		947,265		832,570		1,724,698		155,900		11,922,582

121

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March 31, 2020

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

NOTE 25. OTHERNON-FINANCIAL ASSETS ANDNON-FINANCIAL LIABILITIES

	03-31-2020		12-31-2019
Currentnon-financial assets	ThU.S.$		ThU.S.$
Roads to amortize current		43,341		48,380
Prepayment to amortize (insurance and others)		30,409		17,965
Recoverable taxes (GST and others)		94,114		102,875
Other currentnon-financial assets		7,029		4,890
Total		174,893		174,110
	03-31-2020		12-31-2019
Non-currentnon-financial assets	ThU.S.$		ThU.S.$
Roads to amortize,non-current		113,698		96,530
Guarantee values		3,715		4,442
Recoverable taxes		5,661		4,568
Othernon-currentnon-financial assets		3,776		6,874
Total		126,850		112,414
	03-31-2020		12-31-2019
Currentnon-financial liabilities	ThU.S.$		ThU.S.$
Provision of minimum dividend (1)		2,635		2,451
ICMS,PIS-COFINS and other tax payables - Brasil		14,213		18,195
Other tax payable		16,851		18,206
Other Currentnon-financial liabilities		1,076		1,213
Total		34,775		40,065

(1) In late 2019, the Parent’s dividend policy was modified as disclosed in notes 1 and 26. Provision includes a minimum dividend of subsidiary minority.

	03-31-2020		12-31-2019
Non-currentnon-financial liabilities	ThU.S.$		ThU.S.$
ICMS tax payable - Brasil		87,674		111,012
Othernon-currentnon-financial liabilities		311		424
Total		87,985		111,436

122

CELULOSA ARAUCO Y CONSTITUCION S.A. AND SUBSIDIARIES

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March 31, 2020

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 Board of Directors agreed to modify the Company’s dividend policy established by the Board of Directors in Session No. 587 dated as of April 24, 2018, in the sense that, notwithstanding the powers of the Shareholders’ Meeting to determine the portion of the profits of the year to be distributed as dividend, it will be proposed, with respect to the results of the years 2019 and 2020, not to distribute dividends, due to the financial requirements that the Company has in the coming months, especially those related to the MAPA Project.

Therefore, as of March 31, 2020 there is no minimum dividend provision registered. In addition, as of March 31, 2020 the distributable net profit is a loss effect.

The following table details the adjustments made for the determination of distributable net profit as of March 31, 2020 and 2019 to determine the provision of 40% of the distributable net profit for each period:

	Distributable Net Profit ThU.S.$
Net profit attributable to owners of parent at03-31-2020		(29,460	)
Adjustments:
Biological assets
Unrealized gains/losses		(52,284	)
Realized gains/losses		35,700
Deferred income taxes		6,617
Total adjustments		(9,967	)
Distributable Net Profit at03-31-2020		(39,427	)

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March 31, 2020

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

	Distributable Net Profit ThU.S.$
Net profit attributable to owners of parent at03-31-2019		125,836
Adjustments:
Biological assets
Unrealized gains/losses		(36,674	)
Realized gains/losses		45,114
Deferred income taxes		(1,514	)
Total adjustments		6,926
Distributable Net Profit at03-31-2019		132,762

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 - March
	2020			2019
	ThU.S.$			ThU.S.$
Profit or loss attributable to ordinary equity holder of parent		(29,460	)		125,836
Weighted average of number of shares		113,159,655			113,159,655
Basic and diluted earnings per share (in U.S.$ per share)		(0.2603	)		1.1120

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March 31, 2020

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

NOTE 27.COVID-19

In late December 2019 a notice of pneumonia originating from Wuhan, Hubei province(COVID-19, caused by a novel coronavirus) was reported to the World Health Organization, with cases soon confirmed in multiple provinces in China, as well as in other countries. Several measures have been undertaken by governments around the globe, including the use of quarantine, screening at airports and other transport hubs, travel restrictions, suspension of visas, nation-wide lockdowns, closing of public and private institutions, suspension of sport events, restrictions to museums and tourist attractions and extension of holidays, among many others. However, the virus continues to spread globally and, as of the date of these consolidated financial statements, has affected more than 180 countries and territories around the world, including Chile, Argentina, Brazil, Uruguay, Mexico and the United States, among others. To date, the outbreak of the novel coronavirus has caused significant social and market disruption. The long-term effects to the global economy and the Company of epidemics and other public health crises, such as theon-going novel coronavirus, are difficult to assess or predict, and may include a decline in market prices (including the market price of our securities), risks to employee health and safety, and reduced sales in geographic locations impacted. Any prolonged restrictive measures put in place in order to control an outbreak of a contagious disease or other adverse public health development in any of our targeted markets may have a significant effect on our business operations. Moreover, considering that some of our clients (especially in our pulp business) are located in China and other affected countries, the demand of our products and the logistics associated with the sale of those products may be impacted, which would have a negative effect on our business operations. We may also be affected by the need to implement policies limiting the efficiency and effectiveness of our operations, including home office policies. It is unclear whether these challenges and uncertainties will be contained or resolved, and what effects they may have on the global political and economic conditions in the long term. Additionally, we cannot predict how the disease will evolve (and potentially, spread) in the countries where we have industrial operations, nor anticipate what additional restrictions governments of those countries or other countries may impose.

125

CELULOSA ARAUCO Y CONSTITUCION S.A. AND SUBSIDIARIES

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March 31, 2020

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

NOTE 28. SUBSEQUENT EVENTS

1) In the Board of Directors’ meeting held on April 28, 2020 it was agreed to convene an Extraordinary Shareholders’ Meeting to be held on May 19, 2020, for such Shareholders´ Meeting to decide on the proposal of the Board of Directors to increase the capital of the Company, up to a maximum amount of US$700 million, through the issuance of shares that would be payable in cash. Of the total amount proposed for the capital increase, it is estimated that US$250 million will be required to be paid during the year 2020, while the remaining US$ 450 million would be paid during the course of the year 2021, depending on the required resources in such year.

The capital increase would aim to contribute to the financing of the projects developed by the Company, especially the MAPA Project, and to strengthen the Company´s financial position, which has been affected by the capital requirements of the different projects that is carrying and has carried out, by the effects on the market as a result of the trade war between China and the United States of America and by the decrease in the demand of products that is observed worldwide as a consequence ofthe Covid-19 pandemic.

In compliance with article 19 of the Rules of Corporations Law No. 18.046 (Reglamento de la Ley N°18.046 de Sociedades Anónimas), in addition to the above-mentioned capital increase proposal, it would correspond to carry out in the Shareholders’ Meeting the capitalization of corporate reserves arising from profits and legal revaluations existing as of the date of the last balance sheet, through the issuance of shares free of payment, unless otherwise unanimously agreed by all the shares issued by the Company.

In case such capital increase is approved, it will be proposed in the same Extraordinary Shareholders’ Meeting to replace article fifth of the Company’s bylaws and to add into the bylaws necessary transitional provisions to implement the reforms to be agreed by the Shareholders’ Meeting.

2) The authorization for the issuance and publication of these interim consolidated financial statements for the period ended March 31, 2020 was approved by the Board of Directors of Arauco at the Extraordinary Session No. 631 held on May 12, 2020.

Subsequent to March 31, 2020 and until the date of issuance of these interim consolidated financial statements, there have been no events, other than those discussed above, that could materially affect the presentation of these financial statements.

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Press Release 1Q 2020

1Q 2020 RESULTS Highlights For more details on ARAUCO´s financial statements please visit www.cmfchile.cl or www.arauco.com Readers are referred to the documents filed by ARAUCO with the United States Securities and Exchange Commission, specifically the most recent filing on Form20-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. REVENUES US$1,127.2 million ARAUCO’s revenues reached US$1,127.2 million during the first quarter of 2020, a 6.2% decrease compared to the US$1,202.3 million obtained during the fourth quarter of 2019 and a 18.8% decrease compared to the first quarter of 2019. NET INCOME-US$29.7 million ARAUCO’s net income was-US$29.7 million, a reduction in losses equivalent to US$62.3 million, compared to the-US$92.0 million net income obtained during the fourth quarter of 2019, and a US$155.8 million decrease compared to the first quarter of 2019. ADJUSTED EBITDA US$194.6 million Adjusted EBITDA reached US$194.6 million, a 7.8% or US$16.5 million decrease compared to the US$211.0 million obtained during the fourth quarter of 2019, and a 45.2% or US$160.3 million decrease compared to the same period of 2019. NET DEBT TO EBITDA 4.9x Net Financial Debt increased by US$327.4 million or 7.3% compared to the last quarter. Net Financial Debt / LTM Adjusted EBITDA ratio reached 4.9x in this quarter, an increase compared to 3.9x in the fourth quarter of 2019 and to the 2.3x reached in the first quarter of 2019. CAPEX US$445.5 million CAPEX reached US$445.5 million during this quarter, 2.6% or US$11.3 million higher than the US$434.3 million from the fourth quarter of 2019.

1Q 2020 RESULTS Overview ARAUCO´s first quarter 2020 net income was-US$29.7 million, which translates to a decrease in losses of US$62.3 million compared to the fourth quarter of 2019. This is mainly explained by a better operational result and lower other expenses. Our Adjusted EBITDA was 7.8% lower than the fourth quarter, reaching US$194.6 million. Adjusted EBITDA margin decreased to 17.3% compared to the 17.6% of the fourth quarter. Net Financial Debt increased by US$327.4 million or 7.3% compared to the last quarter. Our Net Debt/LTM EBITDA ended up in 4.9x, compared to the 3.9x reached in the fourth quarter of 2019. In US$ Million Q1 2020 Q4 2019 Q1 2019 QoQ YoY YTD 2020 YTD 2019 YoY Acum Revenue 1,127.2 1,202.3 1,380.9 -6.2% -18.8% 1,127.2 1,388.2 -18.8% Net income (29.7) (92.0) 70.1 -67.7% -123.6% (29.7) 126.1 -123.6% Adjusted EBITDA 194.6 211.0 354.9 -7.8% -45.2% 194.6 354.9 -45.2% Adjusted EBITDA 17.3% 17.6% 25.6% -1.7% -32.5% 17.3% 25.6% -32.5% Margin LTM Adj. EBITDA 987.1 1,147.4 1,748.4 -14.0% -43.5% 987.1 1,748.4 -43.5% CAPEX 445.5 434.3 394.6 2.6% 12.9% 445.5 394.6 12.9% Net Financial Debt 4,817.2 4,489.8 4,017.8 7.3% 19.9% 4,817.2 4,017.8 19.9% Net Financial Debt / 4.9x 3.9x 2.3x 24.7% 112.4% 4.9x 2.3x 112.4% LTM Adj. EBITDA Adjusted EBITDA and EBITDA Margin (in US$ Million) FY 2018 FY 2019 YTD 2020 1,850.5 1,147.4 194.6

1Q 2020 RESULTS Net income shows a reduction in losses of 67.7% during the first quarter Income of 2020 reaching-US$29.7 million. This is explained by better operational results compared to the last quarter, mainly due to a higher decrease in cost of sales than in revenues, particularly in our pulp (maintenance Statement costs) and forestry business segments. Additionally, other expenses decreased because of less impairment provisions of property plant and equipment. In US$ Million Q1 2020 Q4 2019 QoQ Revenues 1,127.2 1,202.3 -6.2% Cost of sales (843.6) (950.2) -11.2% Distribution costs (137.4) (138.3) -0.6% Administrative expenses (123.5) (126.1) -2.1% Other income 55.2 58.8 -6.1% Other expenses (50.9) (116.5) -56.3% Financial income 7.2 10.3 -29.7% Financial costs (71.8) (80.9) -11.3% Share of profit (loss) of associates and joint ventures accounted for using equity method 1.6 3.9 -60.1% Other income (loss) 0.0 21.7 -100.0% Exchange rate differences (3.4) (13.0) -73.6% Income before income tax (39.5) (128.1) -69.2% Income tax 9.8 36.1 -73.0% Net income (29.7) (92.0) -67.7%

1Q 2020 RESULTS Revenues ARAUCO’s revenues reached US$1,127.2 million in the first quarter, a decrease of 6.2% when compared to the previous quarter. This variation is mainly explained by lower revenues in our pulp division, due to lower sales volume of 5.9% and lower average prices of 4.7%. Revenues in our wood products segment remained stable, only increasing 0.6% or US$3.6 million. The following table shows a breakdown of our revenues by business segment: In US$ Million Q1 2020 Q4 2019 QoQ Pulp(*) 450.9 526.7 -14.4% Wood Products(*) 646.6 642.9 0.6% Forestry 29.6 32.5 -8.9% Others 0.1 0.1 -43.1% Total 1,127.2 1,202.3 -6.2% 1Q 2020 Revenue’s breakdown (*) Pulp and Wood products division sales include energy.

1Q 2020 RESULTS Cost of sales Decreased by 11.2% or US$106.7 million compared to the fourth quarter of 2019. This is primarily explained by lower timber costs, associated to a decrease in timber prices and purchased volumes. Additionally, the decrease in maintenance costs is mainly because of less maintenance stoppages when compared to the previous quarter. Also, forestry labor costs decreased due to cost reductions in felling, transportation, processing and road construction. In US$ Million Q1 2020 Q4 2019 QoQ Timber 191.3 237.2 -19.4% Forestry labor costs 107.5 118.5 -9.3% Depreciation and amortization 98.3 101.8 -3.4% Depreciation for right of use 14.9 16.4 -9.0% Maintenance costs 58.9 75.0 -21.4% Chemical costs 118.4 127.2 -6.9% Sawmill services 27.9 30.7 -9.1% Other raw materials and indirect costs 83.2 96.2 -13.6% Energy and fuel 41.7 46.6 -10.5% Cost of electricity 8.8 8.1 8.5% Wage, salaries and severance indemnities 92.6 92.5 0.2% Cost of Sales 843.6 950.2 -11.2% Administrative expenses Decreased by 2.1% or US$2.6 million compared to the previous quarter, mainly due to a decrease in other administration expenses due to lower travel expenses. Additionally, computer services expenses decreased because of less software licenses payments. This was partially offset by a 14.4% increase in wages, salaries and severance indemnities equivalent to US$6.7 million, mainly as a result of adjustments to bonus provisions during the past quarter, and new provisions made during this quarter. In US$ Million Q1 2020 Q4 2019 QoQ Wages, salaries and severance indemnities 53.5 46.7 14.4% Marketing, advertising, promotion and publications expenses 3.4 2.9 15.0% Insurance 5.7 5.0 13.7% Depreciation and amortization 7.6 8.3 -7.9% Depreciation for the right of use 2.8 3.3 -16.7% Computer services 5.3 8.9 -40.1% Lease rentals (offices, warehouses and machinery) 1.5 1.2 26.1% Donations, contributions, scholarships 2.6 2.5 4.1% Fees (legal and technical advisories) 9.3 11.4 -18.3% Property taxes, patents and municipality rights 3.9 2.9 33.4% Other administration expenses 27.9 32.9 -15.1% Administrative Expenses 123.5 126.1 -2.1%

1Q 2020 RESULTS Distribution costs Distribution costs remained stable. There were no significant variations related to distribution costs during this quarter. In US$ Million Q1 2020 Q4 2019 QoQ Commissions 3.1 2.5 25.6% Insurance 0.8 0.7 19.7% Other selling costs 4.7 3.8 26.0% Port services 8.6 9.3 -7.3% Freights 110.3 110.4 -0.1% Depreciation for the 0.4 0.4 -5.7% right of use Other shipping and 9.4 11.2 -16.3% freight costs Distribution Costs 137.4 138.3-0.6% Other income Decreased by 6.1% equivalent to US$3.6 million, mainly explained by other operating results which decreased due to a provision reversal occurred during the previous quarter, and due to lower gains on sales of assets due toone-time effects during the past quarter. This was partially offset by an increase in gains from changes in fair value of biological assets. In US$ Million Q1 2020 Q4 2019 QoQ Gain from changes in fair 52.0 44.2 17.7% value of biological assets Net income from 0.0 0.8 -97.4% insurance compensation Leases received 0.3 0.3 0.3% Gains on sales of assets 1.5 4.1 -63.8% Gain on sales of — associates Other operating results 1.4 9.4 -85.4% Other Income 55.2 58.8-6.1%

1Q 2020 RESULTS Other expenses Decreased by US$65.6 million or 56.3% compared to the previous quarter, primarily due to a decrease in impairment provisions of property, plant and equipment and others due to provisions made during the previous quarter related to some of our North American panel mills. The provisions made during this quarter are mostly related to the Line 1 of the Arauco mill, which will be shut down once the Line 3 starts its operations. In US$ Million Q1 2020 Q4 2019 QoQ Legal payments 1.4 2.3 -40.0% Impairment provision property, plant and 18.1 87.1 -79.3% equipment and others Operating expenses related to plant 13.1 11.4 14.7% stoppages Project expenses 3.6 3.9 -8.5% Loss (gain) from asset 0.9 2.8 -66.7% sales Loss and repair of assets 2.5 0.6 310% Provision for forestry fire 5.1 1.3 279.6% losses Other taxes 3.9 4.8 -19.1% Research and 0.5 0.9 -44.9% development expenses Other expenses (donations, repayments 1.9 1.2 57.3% insurance) Other expenses 50.9 116.5 -56.3% Foreign exchange differences Showed a net loss of US$3.4 million, a US$9.6 million reduction when compared to the fourth quarter that ended with a US$13.0 million loss. The main significant effects are given by the variation of the currencies of the countries where we have industrial operations. These currency variations affected our cash and cash equivalents as measured in US dollar. Income tax For the fourth quarter, income tax reached US$9.8 million, US$26.3 million lower than the US$36.1 million gain in the previous quarter. This gain is mainly due to this quarter’s negative income before tax.

1Q 2020 RESULTS Adjusted EBITDA for the first quarter of 2020 was US$194.6 million. In terms Adjusted of Adjusted EBITDA by business, the most significant variation was in our pulp division with an increase of 17.7% or US$12.0 million. This was mostly related to lower maintenance costs when compared to the previous quarter. This EBITDA was partially offset by a decrease in the Adjusted EBITDA of our wood products and forestry divisions of 10.3% and 0.8% respectively. In US$ Million Q1 2020 Q4 2019 Q1 2019 QoQ YoY Net Income (29.7) (92.0) 126.1 -67.7%-123.6% Financial costs 71.8 80.9 57.4 -11.3% 25.1% Financial income (7.2) (10.3) (6.7) -29.7% 6.8% Income tax (9.8) (36.1) 15.1 -73.0%-164.6% EBIT 25.1 (57.4) 191.8 -143.7%-86.9% Depreciation & amortization 125.4 132.5 124.7 -5.3% 0.6% EBITDA 150.5 75.1 316.5 100.5%-52.4% Fair value cost of timber harvested 67.0 78.7 74.8 -14.8%-10.4% Gain from changes in fair value of (52.0) (44.2) (37.0) 17.7% 40.7% biological assets Exchange rate differences 3.4 13.0 (2.1) -73.6%-261.1% Others (*) 25.6 88.5 2.6 -71.0% 875.1% Adjusted EBITDA 194.6 211.0 354.9 -7.8%-45.2% (*) Includes provision from forestry fires and provisions from property, plants and equipment, and others Adjusted EBITDA variation by business segment (in US$ million)

1Q 2020 RESULTS Forestry The Adjusted EBITDA for our forestry business was US$71.3 million for the first quarter, which translates to a US$0.6 million decrease compared to the previous quarter. Business The production during the fourth quarter was 4.4 million m3, 16.3% down compared to the previous quarter. Sales volume reached 7.2 million m3, a decrease of 3.2% compared to the last quarter. Production, Purchase and Sales Volume (in thousand m3)

The first quarter of 2020 was challenging, especially due to the effects ofCOVID-19 in the global markets. The tissue market was positively affected due 1Q 2020 RESULTS to a higher demand, but P&W markets suffered a significant adverse impact because of the shutdown of offices, schools and universities. Global inventories for long fiber pulp remained stable, yet those of short fiber increased on a quarterly basis (although not reaching 1Q 2019 levels). All of this led to prices remaining stable for both fibers in most of the markets we take part in. Global Pulp Demand Change North America-7.1% West Europe 1.3% China 10.6% Others 7.6% Total 4.3% Last 2 months,Jan-Feb 2019 and 2020 Pulp Source:World-20 Bleached Chemical Pulp Demand. Hawkins Wright Report In China, the quarter began with a positive trend in terms of demand prior to Business the Chinese New Year. During those festivities, theCOVID-19 breakout led to a prolonged holiday as well as quarantines across the country in order to prevent movements of people. This generated disruptions to supply chains which, nevertheless, didn’t have any major impact on our sales. The market showed positive signs up untilmid-March, when demand for P&W paper and specialties started to decline associated to lower economic activity both in domestic and export markets. In Europe, the quarter began with a strong demand even with some clients asking to anticipate deliveries. During March, theCOVID-19 broke out in Italy to then expand to other countries. As in other markets, demand for tissue remained strong. This contrasts with the demand for P&W which fell, with clients announcing plant stoppages and production cuts. Prices remained stable throughout the quarter, with a slight decrease at the end of it. Production increased during the quarter by 6.1% or approximately 52 th. tonnes, mainly due to less maintenance stoppages during this quarter. This increase was partially offset by the Licancel mill stoppage, which wasn’t operating since December 2019, because of low water flow in the Mataquito river. This mill resumed operations on March 20th. During this period, we also undertook the annual maintenance stoppage of the mentioned mill. Additionally, the Constitución mill undertook its annual maintenance stoppage (6 days). Moreover, both production lines of our Arauco mill had to stop because of a quarantine required by the health authorities because a contractor’s employee tested positive forCOVID-19 in the canteen. Line 2 was stopped for 5 days, and Line 1 for nearly a month as we anticipated our annual maintenance stoppage initially programmed for June 2020. Production and Sales Volume (In thousand tonnes) 910 932 856 902 909 849 Q1 2019 Q4 2019 Q1 2020 Production Sales

1Q 2020 RESULTS The Adjusted EBITDA for our pulp business reached US$80.2 million during this quarter, which translates to a 17.7% or US$12.0 million increase compared to the fourth quarter 2019. Pulp EBITDA Mg reached 17.8%, 4.8% up from the last quarter. Days of Stoppages 2019 2020 Mill 3Q 4Q 1Q 2Q Arauco—Line 1 19 6 Arauco—Line 2 13 5 Constitución 6 Licancel 67 9 16 Nueva Aldea 6 Valdivia 60 Alto Paraná Montes del Plata 12

Panels 1Q 2020 RESULTS Sales decreased compared to the fourth quarter, with sales volume and prices decreasing by 1.6% and 1.5%, respectively. During the beginning of the first quarter the Latin American market showed encouraging signs, but the impact ofCOVID-19 has been significant in the region due to ongoing quarantines in some countries. This started to affect our sales at the end of March, and uncertainty going forward remains. In the US and Canada sales volumes and prices remained stable. Production and Sales Volume: Panels (1) (In thousand m3) Wood Sawn timber Products During the first quarter, sales volume and prices were similar to the previous quarter. Even as we noted signs of recovery from Asian markets, total sales volume decreased by 3.4% compared to the last quarter. Business Results for remanufactured wood products were stable. We were able to capture additional market share in part due to competitors facing possible tariffs, and a generalized supply deficit. Production and Sales Sawn Timber (2) Volume: (In thousand m3) Plywood Sales volume increased by 4.1% during the first quarter. The year began with an improvement in some markets with respect to the previous quarter. In terms of supply, we have noted competitors leaving the market due to low profitability. Production and Sales Volume: Plywood (In thousand m3) Includes OSB and HB. Includes sawn timber, kilned sawn timber, remanufactured wood products, pallets. Note: Sales include trading

1Q 2020 RESULTS Adjusted EBITDA for our wood products business reached US$65.4 million during the first quarter of 2020, which translates to a 10.3% or US$7.5 million decrease, compared to the fourth quarter. Wood products EBITDA Mg was 10.1%, lower than the 11.3% reached in the fourth quarter.

1Q 2020 RESULTS During this quarter, capital expenditures reached US$445.5 million, Capital US$11.2 million or 2.6% higher than the previous quarter. This was mainly due to a 2.6% or US$8.9 million increase in purchase and sale of property, plant and equipment, mostly related to the ongoing Expenditures MAPA project. Our main project-related expenditures during the first quarter were: MAPA Project: US$213.8 million Dissolving Pulp Project: US$13.3 million US$ Million Q1 2020 Q4 2019 Q1 2019 YTD 2020 FY 2019 Cash flow used to obtain control of—(0.6) 150.8—69.2 subsidiaries or other businesses Cash flow used to purchase in 15.1 (0.1) 0.5 15.1 0.6 associates Purchase and sale of property, plant 356.8 347.9 165.9 356.8 1,000.4 and equipment Purchase and sale of intangible assets 6.1 16.8 3.6 6.1 32.0 Purchase of other long-term assets 67.5 70.1 73.9 67.5 247.8 Total CAPEX 445.5 434.3 394.6 445.5 1,350.0

1Q 2020 RESULTS During the first quarter, free cash flow decreased by US$212.0 million compared to Free the previous quarter, ending with a deficit of US$499.6 million. Cash provided by operating activities decreased by US$182.7 million mainly due to working capital variation, and a decrease in Adjusted EBITDA. Cash used in investment activities Cash Flow remained stable increasing by 2.4% or US$10.3 million. Cash used in financing activities decreased by 8.9% or US$2.1 million. US$ Million Q1 2020 Q4 2019 Q1 2019 Adjusted EBITDA 194.6 211.0 354.9 Working Capital Variation (87.7) 121.4 (70.9) Interest paid and received (35.3) (97.4) (43.5) Income tax paid (55.5) (56.4) (28.1) Other cash inflows (outflows) (31.8) (11.7) (82.2) Cash from Operations (15.7) 167.0 130.3 Capex (445.5) (434.3) (394.6) Proceeds from investment activities 5.7 5.3 5.5 Other inflows of cash, net 2.9 2.5 6.2 Cash from (used in) Investment Activities (436.9) (426.5) (382.9) Dividends paid ——Other inflows of cash, net (21.2) (23.2) (21.3) Cash from (used in) Financing Activities—Net of Proceeds and Repayments (21.2) (23.2) (21.3) Effect of exchange rate changes on cash and cash equivalents (25.9) (4.9) (0.7) Free Cash Flow (499.6) (287.7) (274.7) Net Debt Variation Q1 2020 – Q4 2019 (in US$ million) (*) The total amount corresponds to leasing variation.

ARAUCO ‘s total financial debt as of March 31, 2020 reached US$5,972.7 1Q 2020 RESULTS million, a decrease of 1.3% or US$77.1 million when compared to December 31, 2019. Our consolidated net financial debt increased 7.3% or US$327.4 million when compared with December 2019, while cash and cash equivalents decreased by US$404.6 million. Our leverage, measured as Net Financial Debt/LTM Adjusted EBITDA was 4.9x, which compares to the 3.9x in the last quarter. In US$ Million Mar 2020 Dec 2019 Mar 2019 Short term financial debt 639.6 529.2 576.2 Financial Long term financial debt 5,333.1 5,520.6 4,189.3 TOTAL FINANCIAL DEBT 5,972.7 6,049.8 4,765.5 Cash and cash 1,155.5 1,560.0 747.8 Debt and equivalents Cash NET FINANCIAL DEBT 4,817.2 4,489.8 4,017.8 LTM Adjusted EBITDA 987.1 1,147.4 1,748.4 Net Financial Debt and Leverage (In US$ Million) Debt by Currency Debt by Instrument (*) UF is a Chilean monetary unit indexed to inflation.

1Q 2020 RESULTS Cash Our cash position was US$1,155.5 million at the end of the first quarter, which translates to a 25.9% decrease or US$404.6 million when comparted to the end of the fourth quarter of 2019. Cash provided by operating activities decreased by US$182.7 million, mainly due to a decrease in sales. Cash provided by financing activities decreased by US$608.3 million or 89.2% mainly because during the previous quarter we issued US$1,000 million through a sustainable US bond. In terms of liquidity, and additionally to our strong cash position, the Company has a committed credit facility for a total amount of US$375 million, which as of the date of this report hasn’t been withdrawn. This facility is due in February 2025. Cash by Currency Cash by Instrument Financial Debt Profile For the remainder of 2020, bank and bond obligations (which include accrued interest) sum up US$609.9 million. Bank obligations include the following maturities: US$140.5 million in Chile(Pre-export financing), US$129.2 million of loans for Montes del Plata, US$60.1 million in leasing, US$5.3 million of loans in the United States and US$3.6 million of our Brazilian subsidiaries. Bond obligations for the remainder of the year sum up US$272.1 million. Amortization payments for local bonds amount to US$206.0 million, which include the final amortization payment of US$167.8 million for theBARAU-J on September, and amortization of 2 local bonds(BARAU-F andBARAU-Q). Debt Amortization Profile as of March 31, 2020 (In US$ Million)

1Q 2020 RESULTS First Quarter Subsequent Events and NewsCOVID-19 update During March 2020, our industrial activities were declared as essential businesses by the authorities in most of the countries where we have operations. We have implemented enhanced health and safety protocols in all our facilities in order to preventCOVID-19 contagions. These include social distancing, body temperature measurement, home office policies, limiting the number of people in meetings, preventive testing, increasing workplace sanitation frequency, suspending domestic and international travels, among others. We have also requested our contractors, including those of the MAPA project, to take similar measures. These efforts have been further extended to support local communities and hospitals with medical devices and a wide range of sanitary and health related actions. Capital Increase On April 28, 2020, the ARAUCO Board of Directors agreed to convene an Extraordinary Shareholder’s Meeting to be held on May 19, 2020, for such Shareholders’ Meeting to decide on the proposal of the Board of Directors to increase the capital of ARAUCO, up to a maximum amount of US$700 million. Of the total amount proposed for the capital increase, it is estimated that US$250 million will be required to be paid during 2020, while the remaining US$450 million could be paid during the course of 2021, depending on the required resources in such year. The capital increase would aim to strengthen ARAUCO’s financial position which has been affected by ongoing and past projects, trade tensions between China and the US, and the decrease in the demand of products that is observed worldwide as a result of theCOVID-19 pandemic. Dissolving Pulp Project update The Dissolving Pulp Project was completed as of February 2020. Thestart-up is expected by June 2020. Originally it was programmed for January 2020 but was delayed as a precautionary measure to start production closer to the autumn/winter when water flow of the Cruces River usually increases. Total investment for this brownfield project was approximately US$200 million. MAPA Project update MAPA Project progress as of the end of April 2020 was 48.6%. During this quarter, we started a14-day adjustment process in construction activities in order to enhance the health and safety protocols to prevent possible contagions ofCOVID-19 among the workers. On April 6th this adjustment process was finished, and enhanced health and safety protocols are in place. Approximately 6,000 people are currently working at the site. Thestart-up of the new Line 3 is expected to take place during the second quarter of 2021. At that point the existing eucalyptus line (Line 1) will be permanently shut down. North American Mills update On April 22, 2020, we announced that we will be ending operations of our Bennettsville MDF mill effective May 18, 2020. The reasons of this difficult decision are related to our permanent efforts to maintain and enhance the operational efficiency of our mills. This mill was built in 1991 and has a production capacity of 251,000 m3 of MDF. Forestry Fires update During the 2019-2020 forestry fire season the area affected reached 2,700 hectares, which had a fair value of approximately US$5 million. This compares to 1,347 hectares affected during the 2018-2019 forestry fire season.

1Q 2020 RESULTS CONFERENCE CALL May 20, 2020 12:00 Santiago Time 12:00 Eastern Time (New York) Dial in: +1 (844) 450 3845 from USA UPCOMING +56 (44) 208 1274 from Chile EVENTS +1 (412) 317 6368 from other countries Conference ID: Arauco For further information, please contact: Marcelo Bennett Treasurer marcelo.bennett@arauco.com Phone: +56 2 2461 7309 Gonzalo Jofré Investor Relations gonzalo.jofre@arauco.com Phone: +56 2 2461 7494 investor_relations@arauco.cl

1Q 2020 RESULTS Financial Statements Income Statement In US$ Million Q1 2020 Q4 2019 Q1 2019 YTD 2020 YTD 2019 Revenues 1,127.2 1,202.3 1,388.2 1,127.2 1,388.2 Cost of sales (843.6) (950.2) (941.9) (843.6) (941.9) Gross profit 283.6 252.1 446.3 283.6 446.3 Other income 55.2 58.8 45.5 55.2 45.5 Distribution costs (137.4) (138.3) (142.9) (137.4) (142.9) Administrative expenses (123.5) (126.1) (141.3) (123.5) (141.3) Other expenses (50.9) (116.5) (22.3) (50.9) (22.3) Financial income 7.2 10.3 6.7 7.2 6.7 Financial costs (71.8) (80.9) (57.4) (71.8) (57.4) Share of profit (loss) of associates and joint 1.6 3.9 4.4 1.6 4.4 ventures accounted for using equity method Other income (loss) 0.0 21.7 0.0 0.0 0.0 Exchange rate differences (3.4) (13.0) 2.1 (3.4) 2.1 Income before income tax (39.5) (128.1) 141.2 (39.5) 141.2 Income tax 9.8 36.1 (15.1) 9.8 (15.1) Net income (29.7) (92.0) 126.1 (29.7) 126.1 Profit attributable to parent company (29.5) (91.9) 125.8 (29.5) 125.8 Profit attributable tonon-parent company (0.2) (0.1) 0.3 (0.2) 0.3

1Q 2020 RESULTS Balance Sheet In US$ Million31-03-202031-12-201931-03-2019 Cash and cash equivalents 1,155.5 1,560.0 747.8 Other financial current assets 52.6 3.4 1.3 Other currentnon-financial assets 174.9 174.1 223.1 Trade and otherreceivables-net 667.4 642.3 930.4 Related party receivables 15.2 17.5 5.0 Inventories 1,055.2 1,053.9 1,094.6 Biological assets, current 260.7 275.8 317.1 Tax assets 247.2 200.0 40.0Non-Current Assets classified as held for sale 4.3 4.4 5.8 Total Current Assets 3,633.1 3,931.4 3,365.0 Othernon-current financial assets 0.1 9.4 26.7 Othernon-current andnon-financial assets 126.9 112.4 88.5Non-current receivables 8.6 9.5 12.0 Investments accounted through equity method 288.1 293.1 353.6 Intangible assets 104.1 106.3 95.1 Goodwill 59.3 65.8 65.8 Property, plant and equipment 7,943.2 7,932.6 7,651.3 Biological assets,non-current 3,347.8 3,393.6 3,366.2 Deferred tax assets 6.4 6.1 5.6 TotalNon-Current Assets 11,884.5 11,928.6 11,664.6 TOTAL ASSETS 15,517.6 15,860.0 15,029.6 Other financial liabilities, current 647.2 530.1 577.0 Trade and other payables 614.5 673.1 741.0 Related party payables 4.0 8.9 11.3 Other provisions, current 1.2 1.3 1.3 Tax liabilities 2.6 2.2 162.3 Current provision for employee benefits 5.3 6.0 5.8 Othernon-financial liabilities, current 34.8 40.1 279.8 Total Current Liabilities 1,309.5 1,261.5 1,778.5 Othernon-current financial liabilities 5,716.3 5,654.0 4,244.6 Trade and Other payablesnon-current 2.2 2.2 2.2 Other provisions,non-current 31.1 31.8 33.7 Deferred tax liabilities 1,316.3 1,360.2 1,386.7Non-current provision for employee benefits 62.1 69.5 67.5 Othernon-financial liabilities,non-current 88.0 111.4 115.3 TotalNon-Current Liabilities 7,216.0 7,229.1 5,850.0Non-parent participation 30.1 35.0 37.3 Net equity attributable to parent company 6,962.0 7,334.4 7,363.9 TOTAL LIABILITIES AND EQUITY 15,517.6 15,860.0 15,029.6

1Q 2020 RESULTS Cash Flow Statement US$ Million Q1 2020 Q4 2019 Q1 2019 YTD 2020 YTD 2019 Receipts from sales of goods and rendering of 1,122.8 1,450.7 1,377.2 1,122.8 1,377.2 services Other cash receipts (payments) 75.1 78.2 63.8 75.1 63.8 Payments of suppliers and personnel (less) (1,121.8) (1,206.8) (1,237.4) (1,121.8) (1,237.4) Interest paid and received (35.3) (97.4) (43.5) (35.3) (43.5) Income tax paid (55.5) (56.4) (28.1) (55.5) (28.1) Other (outflows) inflows of cash, net (1.1) (1.4) (1.8) (1.1) (1.8) Net Cash Provided by (Used in) Operating (15.7) 167.0 130.3 (15.7) 130.3 Activities Capital Expenditures (445.5) (434.3) (394.6) (445.5) (394.6) Other investment cash flows 8.6 7.7 11.7 8.6 11.7 Net Cash Provided by (Used in) Investing Activities (436.9) (426.5) (382.9) (436.9) (382.9) Proceeds from borrowings 140.0 996.2 7.0 140.0 7.0 Repayments of borrowings (44.9) (290.8) (60.5) (44.9) (60.5) Dividends paid 0.0 0.0 0.0 0.0 0.0 Other inflows of cash, net (21.2) (23.2) (21.3) (21.2) (21.3) Net Cash Provided by (Used in) Financing Activities 73.9 682.2 (74.7) 73.9 (74.7) Total Cash Inflow (Outflow) of the Period (378.7) 422.6 (327.4) (378.7) (327.4) Effect of exchange rate changes on cash and cash (25.9) (4.9) (0.7) (25.9) (0.7) equivalents Cash and Cash equivalents at beginning of the 1,560.0 1,142.2 1,075.9 1,560.0 1,075.9 period Cash and Cash Equivalents at end of the Period 1,155.5 1,560.0 747.8 1,155.5 747.8

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: May 22, 2020	By:	/s/ Matías Domeyko Cassel
	Name:	Matías Domeyko Cassel
	Title:	Chief Executive Officer