SANTIAGO - Terranova and Masisa have included in their management the Sustainability Report in order to demonstrate that environmental and social subject-matters investments may strengthen competition at increasingly demanding markets, improving management at every area, enabling larger efficiency results. Terranova is presenting its report for the second time, while for Masisa is the first time.

Julio Moura, Chairman to Terranova, explained that the Sustainability Reports seeks to improve the company's economic, environmental and social performance feedback, addressing their shareholders a performance report. Reports were elaborated based on the proposal model of Global Reporting Initiative, GRI, initiative concerned at setting common standards able to warranty a proper level of completeness, comparability and credibility.

Moura also explained "Terranova, as well as Masisa, found their growth strategies under the sustainability principles, able to ensure environmental preservation and social responsibility, especially regarding the communities as a fact of the economic activities they develop.

This vision implies the search for excellence with each activity. "This is the time for the Group to further significant efforts towards environmental efficiency, demonstrating investments on the environmental subject-matter turns us more competitive in the market and more production-efficient. A proper management of the environmental issues is a source of value for the company, because our manufacture is cheaper than our competitors, giving our customers warranties of excellence and offering worthier products, since our overall chain of value preserves the future needs", added Moura.

The Terranova group is a leader in the implementation of the sustainable development concept in the region. In fact, Terranova was the first company in Chile to carry-out the practice of publishing its results within the different environments. In this context, the report reflects the group's commitment with the sustainable development in Chile and Latin America. "Beyond the local environment, Chilean businessmen have the opportunity to position themselves as leaders in the environmental and social responsibility exercise. For them, this is especially outstanding since they are increasingly integrating and participating in the global markets", stressed Moura.

The world's larger companies, organized under the Entrepreneurial World Council for Sustainable Development, have adopted this new way of doing business and creating value. "Companies act in this way because it entails a business sense". Healthy, strong and stable communities benefit the companies' growth, finally expressed Moura.

Likewise, Gonzalo Zegers, General Manager to Terranova, stressed the three challenges involving the Report. "There is the must to implement the triple bottom line, where there are not only economic and financial goals, but environmental and social as well. Additionally, development itself is a challenge, since economic, environmental and social variables must be integrated. Finally, we are already working on the indicators of the 2006 report.

Terranova and Masisa's commitment is to publish this report each two years, so as to inform about the progresses regarding the financial resources management, operating results of the environmental sphere and management of the social aspects.

In the economic sphere, Terranova reached sales amounting to US$296 million in 2002 and US$482 million in 2003. The operating results were US$29 million in 2002 and US$22 million in 2003. As from July 2002, these results include Masisa S.A. On the other hand, Masisa's control became final and a new plant's commissioning for panels' production as well as a saw mill in Venezuela concluded.

In the social aspect, the creation of the Corporate Management for Social and Environmental Responsibility stands out. During 2003, the World Pact initiative favored by Kofi Annan was subscribed. On the other hand, consulting formal processes were initiated with the public concerned about the operations in Chile, Brazil and Venezuela. In Chile, agreements with the native communities claiming their land's property back were achieved. Also, training workshops on RS were done. The OHSAS 18001 certification were granted for the operations in Chile, Brazil, Venezuela and the U.S.A

In the environmental aspect, Terranova's Chile forest division received the 2002 Environmental National Award for the category "environmental management of the manufacturing sector" granted by the Chilean government through the National Environmental Commission (CONAMA).

Terranova in Brazil gained the Forest Stewardship Council certification, certifying its safety chain in 2003. The same was achieved by Terranova Venezuela. The ISO 14001 certification was achieved by the Brazilian and American industry and by the Venezuelan forest area.

A joint referendum with the 'Casa de la Paz 'NGO was done in Chile.
A community opinion poll was done to the communities, private, public, academic sectors and NGOs. Based on the results, the company will coordinate actions to better its operational and/or communicative performance.

Safety at Workplace Campaign.
Over 2003, a safety campaign looking to improve the awareness regarding at workplace and out of it safety was done. The message was striking alerting every collaborator about every time and circumstance safety importance and the personal responsibility it implies.

Additionally, during 2003, risk, training and prevention programs were significantly reinforced.

Likewise, in the context of offering safety and healthy conditions at the workplaces, Terranova is in the process of certifying all of its subsidiaries with the OHSAS 18001 (Occupational and Safety Assessment Series). This will mean a contribution to improve our performance. By June 2005, all the operations will be certified under this management system that will include both direct and indirect collaborators.

Training
In 2003, 40.726 hours were addressed to staff's training in Chile.
Training aimed at workers and weaker processes, irrespective if it deals with direct or indirect collaborators. Tools were offered regarding safety, environmental, quality and productivity subjects.

In Chile, several activities complimentary to training are kept such as: awarding to the most outstanding worker, the most environmentally-efficient area, and to the preventing action of the contractor company. A contest is also promoted to foster innovative ideas coming from the collaborators.

In Brazil, since 2001 the workers' health committee developed a specific program addressed to AIDS, smoking and alcoholism prevention.

Remunerations and life standard
During 2003, the company has done significant efforts to increase labor benefits additional to those demanded by law. Considering Terranova S.A. and its subsidiaries, the company has invested US$8.4 million on additional and voluntary benefits.

The benefits granted to the direct collaborators are focused on improving the workplace', feeding, transport and health condition, and in general, are more remarkable in those countries of lower average income.

Workers' unionization
Terranova respects the workers' right to unionize or collectively organize to bargain their working conditions. Among its direct collaborators, 42.9% is unionized.

Terranova Foundation
During 2003, the Terranova Foundation, which counts on two training and growth centers in Chile, trained 183 people where 79% were women.

Courses were given on: structural steelwork, cutting and making up, furnishing, allotment garden, gastronomy, hairdressing, plumbing, decoration, tapestry, tenant farmer techniques, construction, cattle veterinarian assistant, thinning marking, under plastic gardening, *mapuche spinning and weaving textile, medicinal plants, apiculture, food conservation and farm monitoring.

For Masisa, the results achieved can already be assessed. In the economic aspect, in 2002 and 2003 results after tax were US$14.6 million and US$ 9.6 million, respectively. The influence of the Argentine crises provoked this diminishing, putting pressure on prices at the Chilean market. The construction and commissioning of a new plant in Brazil was concluded. In Argentina, a pre-painted MDF line of moldings began to run. On the other hand, a successful placement of bonds was done. The Center of Shared Services and SAP as a management tool for the overall organization strengthens.

In the social aspect, the Corporate Management for Social and Environmental Responsibility was established. The company accedes to the nine principles of the World Pact, initiative sponsored by Kofi Annan. Entrepreneur social responsibility workshops were given to all of the subsidiaries of the company, where the management teams participated. The OHSAS 18001 certification was granted to Masisa's Brazil health and job safety system.

*Mapuche: native community.

In the environmental aspect, in 2003 the ISO 14001 environmental management system was implemented and certified at eight Masisa's operations. Forestal Tornagaleones** was recommended for the Forest Stewardship Council (FSC). Likewise, the company participated in the Implementation National Plan for the Handling of Persistent Organic Pollutants draft fostered by the Chilean Government.

** Forestal Tornagaleones: name of a forestry company.

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