Equibles

6-K

CEMENTOS PACASMAYO SAA (CPAC)

6-K 2023-04-27 For: 2023-04-27
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Added on April 07, 2026

UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549

FORM 6-K

REPORT OF FOREIGN ISSUERPURSUANT TO RULE 13a-16 OR 15b-16 OFTHE SECURITIES EXCHANGE ACT OF 1934

For the month of April2023

Commission File Number 001-35401

CEMENTOS PACASMAYO S.A.A.

(Exact name of registrant as specified in its charter)

PACASMAYO CEMENT CORPORATION

(Translation of registrant’s name into English)

Republic of Peru

(Jurisdiction of incorporation or organization)

Calle La Colonia 150, Urbanización El Vivero

Surco, Lima

Peru

**(**Address of principal executive office)

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

Form 20-F  ☒          Form 40-F  ☐

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

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

CEMENTOS PACASMAYO S.A.A.

The following exhibit is attached:

EXHIBIT NO. DESCRIPTION
99.1 Unaudited<br> interim condensed consolidated financial statements as of March 31, 2023 and for the three-month period then ended 
1

Signatures

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.

CEMENTOS PACASMAYO S.A.A.
By: /s/ CARLOS JOSE MOLINELLI MATEO
Name: Carlos Jose Molinelli Mateo
Title: Stock Market Representative
Date: April 27, 2023

2

Exhibit 99.1

Cementos Pacasmayo S.A.A. and Subsidiaries

Unaudited interim condensed consolidated financial statements

as of March 31, 2023 and for the three-month period then ended

Cementos Pacasmayo S.A.A. and Subsidiaries

Unaudited interim condensed consolidated financial statements as of March 31, 2023 and for the three-month period then ended

Content
Report on review of interim condensed consolidated unaudited financial statements 1
Interim condensed consolidated unaudited financial statements 2
Interim condensed consolidated unaudited statements<br> of financial position 3
Interim condensed consolidated unaudited statements<br> of profit or loss 4
Interim condensed consolidated unaudited statements<br> of other comprehensive income 5
Interim condensed consolidated unaudited statements<br> of changes in equity 6
Interim condensed consolidated unaudited statements<br> of cash flows 7
Notes to the interim condensed consolidated unaudited<br> financial statements 9

Reporton review of interim condensed consolidated unaudited financial statements

To the Board of Directors and Shareholders of Cementos Pacasmayo S.A.A.

Introduction

We have reviewed the accompanying interim condensed consolidated unaudited statement of financial position of Cementos Pacasmayo S.A.A. and its Subsidiaries (together the "Group") as of March 31, 2023, and the related interim condensed consolidated unaudited statements of profit or loss, other comprehensive income, changes in equity and cash flows for the three-month period then ended, and explanatory notes. Management is responsible for the preparation and presentation of these interim condensed consolidated unaudited financial statements in accordance with IAS 34 Interim Financial Reporting (IAS 34). Our responsibility is to express a conclusion on these interim condensed consolidated unaudited financial statements based on our review.

Scopeof review

We conducted our review in accordance with International Auditing Standard on Review Engagements (ISRE) 2410, Review of Interim Financial Information Performed by the Independent Auditor of the Entity. A review of interim financial information consists of making inquiries, primarily of the persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

1

Reporton review of interim condensed consolidated unaudited financial statements (continued)

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the accompanying interim condensed consolidated unaudited financial statements are not prepared, in all material respects, in accordance with IAS 34.

Lima, Peru

April 26, 2023

Countersigned by:

Manuel Arribas
C.P.C. Register No. 45987 
2

Cementos Pacasmayo S.A.A. and Subsidiaries

Interim condensed consolidated unaudited statements of financial position

As of March 31, 2023 (unaudited) and December 31, 2022 (audited)

Note As<br> of <br> March 31, 2023 As<br> of<br> December 31, <br>2022
S/(000) S/(000)
Assets
Current assets
Cash<br> and cash equivalents 3 45,273 81,773
Derivative<br> financial instruments 15 - 86,893
Trade<br> and other receivables 4 101,735 101,491
Income<br> tax prepayments 12,137 8,268
Inventories 5 930,233 884,969
Prepayments 26,204 25,059
Total<br> current asset 1,115,582 1,188,453
Non-current<br> assets
Trade<br> and other receivables 4 43,546 43,543
Financial<br> instruments designated at fair value through other comprehensive income 15 274 274
Property,<br> plant and equipment 6 2,048,678 2,007,838
Intangible<br> assets 58,651 56,861
Goodwill 4,459 4,459
Deferred<br> income tax assets 9,158 9,005
Right-of-use<br> asset 7 3,209 3,639
Other<br> assets 86 89
Total<br> non-current asset 2,168,061 2,125,708
Total<br> assets 3,283,643 3,314,161
Liability<br> and equity Current<br> liabilities
Trade<br> and other payables 8 219,738 284,554
Financial<br> obligations 9<br> and 15 306,055 618,907
Lease<br> liabilities 7 2,004 2,005
Income<br> tax payables 17,184 16,340
Provisions 10 42,480 31,333
Total<br> current liabilities 587,461 953,139
Non-current<br> liabilities
Financial<br> obligations 9<br> and 15 1,306,153 974,264
Lease<br> liabilities 7 1,798 2,350
Non-current<br> provisions 10 15,881 47,638
Deferred<br> income tax liabilities 132,208 141,635
Total<br> non-current liabilities 1,456,040 1,165,887
Total<br> liability 2,043,501 2,119,026
Equity
Capital<br> stock 423,868 423,868
Investment shares 40,279 40,279
Investment<br> shares held in treasury (121,258 ) (121,258 )
Additional<br> paid-in capital 432,779 432,779
Legal<br> reserve 168,636 168,636
Other<br> accumulated comprehensive loss (16,272 ) (17,787 )
Retained<br> earnings 312,110 268,618
Total<br> equity 1,240,142 1,195,135
Total<br> liability and equity 3,283,643 3,314,161

The accompanying notes are an integral part of the interim condensed consolidated unaudited financial statements.

3

Cementos Pacasmayo S.A.A. and Subsidiaries

Interim condensed consolidated unaudited statements of profit or loss

For the three-month period ended March 31, 2023 and March 31, 2022 (unaudited)

For<br> the three-month period <br> ended March 31,
Note 2023 2022
S/(000) S/(000)
Sales of<br> goods 12 479,995 525,409
Cost<br> of sales (319,400 ) (360,444 )
Gross<br> profit 160,595 164,965
Operating<br> income (expense)
Administrative<br> expenses (57,729 ) (53,389 )
Selling<br> and distribution expenses (17,534 ) (16,970 )
Other<br> operating income (expense), net 1,403 (1,024 )
Total<br> operating expenses, net (73,860 ) (71,383 )
Operating<br> profit 86,735 93,582
Other<br> income (expenses)
Finance<br> income 1,355 558
Finance<br> costs (25,721 ) (22,795 )
Net<br> profit (loss) for valuation of trading derivative financial instruments 15(a) 19 (109 )
Gain<br> (loss) from exchange difference, net 823 (6,514 )
Total<br> other expenses, net (23,524 ) (28,860 )
Profit<br> before income tax 63,211 64,722
Income<br> tax expense 11 (19,719 ) (18,997 )
Profit<br> for the period 43,492 45,725
Earnings<br> per share
Basic<br> profit for the period attributable to equity holders of common shares and investment shares of the parent (S/ per share) 14 0.10 0.11

The accompanying notes are an integral part of the interim condensed consolidated unaudited financial statements.

4

Cementos Pacasmayo S.A.A. and Subsidiaries

Interim condensed consolidated unaudited statements of other comprehensive income

For the three-month period ended March 31, 2023 and March 31, 2022 (unaudited)

For<br> the three-month period <br>ended March 31,
Note 2023 2022
S/(000) S/(000)
Profit<br> for the period 43,492 45,725
Other<br> comprehensive income
Other<br> comprehensive income to be reclassified to profit or loss in subsequent periods:
Net<br> gain on cash flow hedges 15(a) 2,154 2,046
Deferred<br> income tax 11 (634 ) (604 )
Other<br> comprehensive income for the period, net of income tax 1,520 1,442
Total<br> comprehensive income for the period, net of income tax 45,012 47,167

The accompanying notes are an integral part of the interim condensed consolidated unaudited financial statements.

5

Cementos Pacasmayo S.A.A. and Subsidiaries

Interim condensed consolidated unaudited statements of changes in equity

For the three-month period ended March 31, 2023 and March 31, 2022 (unaudited)

Capital<br> <br> stock Investment<br><br> shares Investments<br> shares held in treasury Additional<br> paid-in capital Legal<br><br> reserve Unrealized<br> gain (loss) on financial instruments designated at fair value Unrealized<br> gain (loss) on <br>cash flow hedge Retained<br> earnings Total<br> <br> equity
S/(000) S/(000) S/(000) S/(000) S/(000) S/(000) S/(000) S/(000) S/(000)
Balance<br> as of January 1, 2022 423,868 40,279 (121,258 ) 432,779 168,636 (15,869 ) (4,225 ) 271,595 1,195,805
Profit<br> for the period - - - - - - - 45,725 45,725
Other<br> comprehensive income for the period, net of income tax - - - - - - 1,442 - 1,442
Total<br> comprehensive income - - - - - - 1,442 45,725 47,167
Balance<br> as of March 31, 2022 423,868 40,279 (121,258 ) 432,779 168,636 (15,869 ) (2,783 ) 317,320 1,242,972
Balance<br> as of January 1, 2023 423,868 40,279 (121,258 ) 432,779 168,636 (16,267 ) (1,520 ) 268,618 1,195,135
Profit<br> for the period - - - - - - - 43,492 43,492
Other<br> comprehensive income for the period, net of income tax - - - - - - 1,520 - 1,520
Other - - - - - (5 ) - - (5 )
Total<br> comprehensive income - - - - - (5 ) 1,520 43,492 45,007
Balance<br> as of March 31, 2023 423,868 40,279 (121,258 ) 432,779 168,636 (16,272 ) - 312,110 1,240,142

The accompanying notes are an integral part of the interim condensed consolidated unaudited financial statements.

6

Cementos Pacasmayo S.A.A. and Subsidiaries

Interim condensed consolidated unaudited statements of cash flows

For the three-month period ended March 31, 2023 and March 31, 2022 (unaudited)

Note For<br> the three-month period <br>ended March 31,
2023 2022
S/(000) S/(000)
Operating activities
Profit before income tax 63,211 64,722
Non-cash<br> adjustments to reconcile profit before income tax to net cash flows (used in) provided by operating activities
Depreciation and amortization 33,943 33,891
Finance costs 25,721 22,795
Long-term incentive<br> plan 13 2,068 1,902
Estimate expected credit<br> loss 4 1,284 1,497
Unrealized exchange<br> difference related to monetary transactions 148 7,699
Finance income (1,355 ) (558 )
Net gain on disposal<br> of property, plant and equipment 6 (111 ) (176 )
(Gain) loss on the valuation<br> of trading derivative financial instruments (19 ) 109
Other operating, net 696 (579 )
Working capital adjustments
Increase in trade and<br> other receivables (1,177 ) (8,174 )
Increase in prepayments (4,672 ) (1,707 )
Increase in inventories (45,812 ) (32,768 )
(Decrease)<br> increase in trade and other payables (65,162 ) 5,419
8,763 94,072
Interest received 1,370 510
Interest paid (36,274 ) (34,603 )
Income tax paid (32,953 ) (32,865 )
Net<br> cash flows (used in) provided by operating activities (59,094 ) 27,114

The accompanying notes are an integral part of the interim condensed consolidated unaudited financial statements.

7

Interim condensed consolidated unaudited statements of cash flows (continued)

Note For<br> the three-month period <br>ended March 31,
2023 2022
S/(000) S/(000)
Investing<br> activities
Purchase<br> of property, plant and equipment (75,579 ) (12,664 )
Purchase<br> of intangibles assets (4,027 ) (2,213 )
Loan<br> to third party (370 ) (141 )
Proceeds<br> from sale of property, plant and equipment 330 443
Net<br> cash flows used in investing activities (79,646 ) (14,575 )
Financing<br> activities
Paid<br> bank loans 9 (507,338 ) (159,000 )
Payment<br> of bank overdraft (85,333 ) -
Payment<br> of hedge finance cost (7,708 ) (7,682 )
Payment<br> of lease liabilities 7 (626 ) (460 )
Dividends<br> paid (263 ) (156 )
Loan<br> received 9 525,000 159,000
Proceeds<br> from sale of derivative financial instruments 93,323 -
Proceeds<br> from bank overdraft 85,333 -
Net<br> cash flows provided by (used in) financing activities 102,388 (8,298 )
Net<br> (decrease) increase in cash and cash equivalents (36,352 ) 4,241
Net<br> foreign exchange difference (148 ) (13,045 )
Cash<br> and cash equivalents at the beginning of the period 81,773 273,402
Cash<br> and cash equivalents at the end of the period 3 45,273 264,598
Transactions<br> with no effect in cash flows:
Outstanding<br> accounts payable related to acquisition of property, plant and equipment 6 11,415 5,984
Unrealized<br> exchange difference related to monetary transactions 32 7,699 
8

Cementos Pacasmayo S.A.A. and Subsidiaries

Notesto interim condensed consolidated unaudited financial statements

As of March 31, 2023 and 2022, and December 31, 2022

1. Economic<br> activity
(a) Economic<br> activity -
--- ---

Cementos Pacasmayo S.A.A. (hereinafter "the Company") was incorporated in 1957 and, in accordance with the Law of Peruvian Companies, is an open stock corporation, its shares are listed in the Lima and New York Stock Exchange. The Company is a subsidiary of Inversiones ASPI S.A., which holds 50.01 percent of the Company's common shares as of March 31, 2023, December 31, 2022 and March 31, 2022.

The address registered by the Company is Calle La Colonia No.150, Urbanización El Vivero, Santiago de Surco, Lima, Peru.

The main activity of the Company is the production and commercialization of cement, precast, concrete and quicklime in the northern region of Peru.

The interim condensed consolidated unaudited financial statements of the Company and its subsidiaries (hereinafter the "Group") as of March 31, 2023 and for the three-month period then ended, were approved for issuance by the Company’s Management on April 26, 2023. The consolidated audited financial statements as of December 31, 2022 have been approved by the General Meeting of Shareholders, on March 24, 2023.

2. Basis of preparation and changes to the<br> Group’s accounting policies
2.1 Basis of<br> preparation -
--- ---

The interim condensed consolidated unaudited financial statements of the Group have been prepared in accordance with IAS 34 Interim FinancialReporting as issued by the International Accounting Standards Board (IASB) and have been prepared on a historical cost basis, except for financial instruments designated at fair value through other comprehensive income (OCI) and derivatives financial instruments that have been measured at fair value. The interim condensed consolidated unaudited financial statements are presented in soles and all values are rounded to the nearest thousand (S/000), except when otherwise indicated. The Group has prepared the financial statements on the basis that it will continue to operate as a going concern. The Management consider that there are no material uncertainties that may cast doubt significant doubt over this assumption. They have formed a judgement that there is a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future, and not less than 12 months from the end of the reporting period.

The interim condensed consolidated unaudited financial statements do not include all the information and disclosures required in the annual financial statements and should be read in conjunction with Group’s annual consolidated financial statements as of December 31, 2022.

9

Notes to interim condensed consolidated unaudited financial statements

(continued)

New standards, interpretations and amendments

The accounting policies adopted in the preparation of the interim condensed consolidated unaudited financial statements are consistent with the policies considered in the preparation of the consolidated financial statements of the Group at December 31, 2022, except for the adoption of new standards effective as of 1 January 2023. The standards and interpretations relevant to the Group, that are effective since January 1, 2023 are disclosed below.

Definitionof Accounting Estimates - Amendments to IAS 8

The amendments to IAS 8 clarify the distinction between changes in accounting estimates, and changes in accounting policies and the correction of errors. They also clarify how entities use measurement techniques and inputs to develop accounting estimates.

The amendments had no impact on the Group’s interim condensed consolidated unaudited financial statements.

Disclosureof Accounting Policies - Amendments to IAS 1 and IFRS Practice Statement 2

The amendments to IAS 1 and IFRS Practice Statement 2 Making Materiality Judgements provide guidance and examples to help entities apply materiality judgements to accounting policy disclosures. The amendments aim to help entities provide accounting policy disclosures that are more useful by replacing the requirement for entities to disclose their ‘significant’ accounting policies with a requirement to disclose their ‘material’ accounting policies and adding guidance on how entities apply the concept of materiality in making decisions about accounting policy disclosures.

The amendments had no impact on the Group’s interim condensed consolidated unaudited financial statements but are expected to affect the accounting policy disclosures in the Group’s annual consolidated financial statements.

DeferredTax related to Assets and Liabilities arising from a Single Transaction – Amendments to IAS 12

The amendments to IAS 12 Income Tax narrow the scope of the initial recognition exception, so that it no longer applies to transactions that give rise to equal taxable and deductible temporary differences such as leases and decommissioning liabilities. The amendments had no impact on the Group’s interim condensed consolidated financial statements.

2.2 Basis of<br> consolidation -

The interim condensed consolidated unaudited financial statements comprise the financial statements of the Company and its subsidiaries as of March 31, 2023 and December 31, 2022 and for the three-month period ended March 31, 2023 and 2022 (unaudited).

For the three-month period ended March 31, 2023 and 2022, there was no changes in the participation of the common shares that the Company’s had on its subsidiaries; the main activities and information about subsidiaries are revealed on the consolidated financial statements as of December 31, 2022.

2.3 Seasonality<br> of operations -

Seasonality is not relevant to the Group's activities.

10

Notes to interim condensed consolidated unaudited financial statements

(continued)

3. Cash and cash equivalents
(a) This caption<br> consists of the following:
--- ---
As<br> of<br><br> March 31, <br>2023 As<br> of<br><br> December 31, <br>2022
--- --- --- --- ---
S/(000) S/(000)
Cash on hand 157 161
Cash at banks (b) 36,116 39,112
Term<br> deposits with original maturities of ninety days or less (c) 9,000 42,500
45,273 81,773
(b) Cash at banks<br> is denominated in local and foreign currencies, is deposited in domestic and foreign banks<br> and is freely available. The cash at banks interest yield is based on daily bank deposit<br> rates.
--- ---
(c) The short-term<br> deposits held in domestic banks were freely available and earned interest at the respective<br> short-term market rates and original maturity less than three months.
--- ---
4. Trade and other receivables
--- ---

As of March 31, 2023 and December 31, 2022, this caption mainly includes trade receivables, value-added tax credit (VAT), interest receivables and accounts receivables from related parties. At those dates, approximately 57% and 63% of the trade receivables were guaranteed by bank guarantees and mortgages amounting to S/46,684,000 and S/49,162,000, respectively.

On March 22, 2021, the Company received Tax Court Resolution N° 00905-4-21 that declares the calculation of Mining Royalty should be based on gross sale of the final product (cement) for the years 2008 and 2009. This is an opposite position to what is established by the Constitutional Court in the STC Exp. N° 1043-2013-PA/TC that declares founded the writ of protection presented by the Company and its right to calculate the Mining Royalty exclusively based on the value of the mining component, without considering in any way the value of the final products derived from industrial and manufacturing processes.

The Company has made, under protest, partial payments of the debts arbitrarily placed in collection. These payments as of March 31, 2023 and December 31, 2022 amount to approximately S/28,922,000 and are presented in the caption “Trade and other receivables”, non-current assets. To date, the Company has already initiated the corresponding legal actions to recover said payments and in the opinion of Management and its external legal advisors, it has a high probability of obtaining a favorable result.

For the three-month period ended March 31, 2023 and 2022, the Group recorded S/1,284,000 and S/1,497,000, respectively, related to the provision for expected credit losses for trade receivables, which are presented in the caption “Selling and distribution expenses” of the interim condensed consolidated unaudited statement of profit or loss and corresponds to the best estimate of Management considering the current situation. The Group's Management will continue evaluating the conditions of its client portfolio and, if deemed necessary, the corresponding provisions will be made.

11

Notes to interim condensed consolidated unaudited financial statements

(continued)

The movement of the allowance for expected credit losses on trade and others receivable for the three-month period ended as of March 31, 2023 and 2022 is as follows:

2023 2022
S/(000) S/(000)
Opening balance 16,467 14,573
Additions 1,284 1,497
Recoveries and others (46 ) (62 )
Ending balance 17,705 16,008
5. Inventories
--- ---

As of March 31, 2023 and December 31, 2022 includes goods and finished products, work in progress, raw materials and other supplies to be used in the production process.

6. Property, plant and equipment, net

During the three-month period ended March 31, 2023 the Group’s additions amounted approximately to S/74,064,000 (S/11,033,000 during the three-month period ended March 31, 2022).

Assets with a net book value of S/115,000 were disposed during the three-month period ended March 31, 2023 (S/307,000 for the three-month period ended March 31, 2022), resulting in a net gain on disposal of S/111,000 (S/176,000 for the three-month period ended March 31, 2022).

As of March 31, 2023 the Group maintains accounts payable related to the acquisition of property, plant and equipment for S/11,415,000 (S/14,560,000 as of December 31, 2022).

12

Notes to interim condensed consolidated unaudited financial statements

(continued)

7 Leases

The Group has lease contracts with third parties, mainly a 5-year lease contract of trucks.

The annual incremental interest rate used for the initial recognition of the right-of-use asset and the lease liability ranges between 5.2 and 6.2 percent.

The Group also leases certain minor equipment for less than 12 months, the Group has decided to apply the recognition exemption for short term leases (less than 12 months) and for leases of low value assets. The expense for this type of lease amounted to S/428,000 for the three-month period ended March 31, 2023 (S/309,000 as of March 31, 2022) and was recognized in the “Administrative expenses” caption of the interim condensed consolidated unaudited statements of profit or loss.

The movement of the right of use assets recognized by the Group is shown below:

Transportation<br> units Other Total
S/(000) S/(000) S/(000)
Cost -
Balance<br> as of January 1, 2022 7,721 - 7,721
Balance<br> as of March 31, 2022 7,721 - 7,721
Balance<br> as of January 1, 2023 8,029 307 8,336
Balance<br> as of March 31, 2023 8,029 307 8,336
Accumulated<br> depreciation -
Balance as of January<br> 1, 2022 3,053 - 3,053
Additions 390 - 390
Balance<br> as of March 31, 2022 3,443 - 3,443
Balance as of January<br> 1, 2023 4,672 25 4,697
Additions 404 26 430
Balance<br> as of March 31, 2023 5,076 51 5,127
Net book value
As<br> of December 31, 2022 3,357 282 3,639
As<br> of March 31, 2023 2,953 256 3,209 
13

Notes to interim condensed consolidated unaudited financial statements

(continued)

The movement of the lease liabilities recognized by the Group is shown below:

**** 2023 **** 2022 ****
S/(000) S/(000)
Balance as of January 1 4,355 5,829
Financial interest expense 57 71
Lease payments (626 ) (460 )
Others 16 (460 )
Balance as of March<br> 31 3,802 4,980
Maturity
Current portion 2,004 1,756
Non-current portion 1,798 3,224
Balance as of March<br> 31 3,802 4,980
Net book value
As of December 31, 2022 4,355
As of March 31, 2023 3,802

The future cash disbursements in relation to lease liabilities have been disclosed in note 9.

8. Trade<br> and other payables

As of March 31, 2023 and December 31, 2022, this caption includes trade payables, account payables to related parties, interest payable, dividends payable among other minor payables.

As of March 31, 2023 dividends payable amounted to S/9,500,000 (S/9,764,000 as of December 31, 2022).

9. Financial<br> Obligations
(a) Corporate<br> bonds
--- ---

On January 31, 2019, corporate bonds were issued in soles for S/260,000,000 at a rate of 6.688 percent per year and maturity of 10 years and; 15-year bonds for S/310,000,000 at a rate of 6.844 percent per year. As of December 31, 2022 the corporate bonds issued in US Dollars amounts to US$131,612,000 with an annual rate of 4.5 percent and these have been paid with the corporate loan indicated in section (d) in February 2023.

For the three-month period ended March 31, 2023 and 2022, the corporate bonds generated interests that have been recognized in the interim condensed consolidated unaudited financial statements of profit or loss for S/11,136,000 and S/14,888,000, respectively.

14

Notes to interim condensed consolidated unaudited financial statements

(continued)

(b) Short-term<br> promissory notes

As of March 31, 2023 and December 31, 2022, the Company maintains two loans of S/38,000,000 each, with maturity in December 2023 and at an effective annual interest rate of 8.93 percent. In addition, the Company acquired two promissory notes in January 2023 for S/38,000,000 each, with a maturity in January 2024 and an effective annual interest rate of 9.78 percent and 9.44 percent, respectively. In March 2023, the Company acquired two promissory notes of S/19,000,000 each, with maturity in March 2024 and an effective annual interest rate of 8.83 percent.

(c) Financial<br> covenants –

The contracts for corporate bonds issued in soles have the following covenants to limit incurring indebtedness for the Company and its guarantor subsidiaries, which are measured prior to the following transactions: issuance of debt or equity instruments, merger with another company or disposal or rental of significant assets. The covenants are the following:

- The<br> debt service coverage ratio (includes amortization plus interest) must be at least 2.5 to<br> 1.
- The<br> financial debt to Ebitda ratio may not be greater than 3.5 to 1.
--- ---
(d) Medium-term<br> Corporate Loan under “Club deal” modality -
--- ---

On August 6, 2021, the Company established the conditions of a medium-term corporate loan under “Club Deal” modality with Banco de Crédito del Perú S.A. and Scotiabank Perú S.A.A. The loan amounts to S/860,000,000 that allowed the payment of all the financial obligations that the Company maintained with maturity until February 2023. The loan conditions include a grace/availability period of 18 months from August 6 and a payment term of 7 years from the last disbursement, which was in February 2023. Since that date, the loan will be paid in 22 equal quarterly installments and has an annual interest rate of 5.82 percent.

As part of the loan conditions, the Company would assume the following obligations:

I Comply<br> with the following financial safeguards:
(a) Debt Ratio<br> (Financial Debt / EBITDA) <= 3.50x
--- ---
(b) Debt Service<br> Coverage Ratio (FCSD / SD)> = 1.15x
--- ---
(c). Debt Service<br> Coverage Ratio (EBITDA / SD) = 1.50x
--- ---

These financial safeguards will be calculated and verified at the end of each calendar quarter, considering the information of consolidated financial statements of the Company for the last 12 months, prepared in accordance with International Financial Reporting Standards - IFRS.

15

Notes to interim condensed consolidated unaudited financial statements

(continued)

II. It<br> maintains the following main obligations to do:
(a). Subordinate<br> any obligation the Company had or may have to this loan.
--- ---
(b). Maintain<br> the loan with a status equal to other senior financing of the Company.
--- ---
(c.) Keep your<br> assets in good condition and properly insured.
--- ---
(d) Maintain<br> all licenses, authorizations, concessions, permits, titles and rights required by government<br> authorities.
--- ---
III. It<br> maintains the following obligations not to do:
--- ---
(a). Refrain<br> from paying dividends, reducing capital stock or any other distribution to its shareholders<br> if this event make the Company not comply with the obligations assumed.
--- ---
(b.) That the<br> Company and its subsidiaries participate in processes of liquidation, transformation, corporate<br> reorganization, acquisition of companies, merger or spin-off.
--- ---
(c). Transfer,<br> sell, alienate, donate or give in usufruct, lease, give in fiduciary domain, encumber their<br> assets, income flows and / or collection rights.
--- ---
(d). Grant financing,<br> personal or real guarantees in favor of third parties.
--- ---

As of March 31, 2023, the Company complied with the ratios contained in the loan conditions.

The table below summarizes the maturity profile of the Group’s financial liabilities based on contractual undiscounted payments:

Less<br> than 3 months 3<br> to 12 months 1<br> to 5 <br> years More<br> than 5 years Total
S/(000) S/(000) S/(000) S/(000) S/(000)
As of March 31, 2023
Financial obligations - 307,273 625,452 687,275 1,620,000
Interests 12,285 88,432 258,347 100,337 459,401
Trade and other payables 154,796 54,029 - - 208,825
Lease liabilities 495 1,509 1,798 - 3,802
As of December 31, 2022
Financial obligations 414,290 116,818 326,544 651,638 1,509,290
Interests 36,222 45,282 213,427 119,201 414,132
Trade and other payables 231,698 41,510 - - 273,208
Hedge finance cost payable 7,473 - - - 7,473
Lease liabilities 502 1,503 2,350 - 4,355 
16

Notes to interim condensed consolidated unaudited financial statements

(continued)

10. Provisions

As of March 31, 2023 and December 31, 2022, this caption includes workers’ profit sharing, provision for contingencies, long-term incentive plan and rehabilitation provision.

11. Income tax

The Group calculates income tax expense of the period using the tax rate that would be applicable to the expected total annual earnings.

The major components of the income tax expense in the interim condensed consolidated unaudited statement of profit or loss and interim condensed consolidated unaudited statements of other comprehensive income are:

For<br> the three-month period <br> ended March 31,
2023 2022
S/(000) S/(000)
Current income tax (29,933 ) (20,336 )
Deferred income tax 10,214 1,339
Income tax expense (19,719 ) (18,997 )
Deferred income tax<br> recognized in other comprehensive income (634 ) (604 )
Total<br> income tax (20,353 ) (19,601 )

The movement of the Group’s deferred income tax assets and liabilities is shown below:

For<br> the three-month period <br> ended March 31,
2023 2022
S/(000) S/(000)
Increase (decrease) of deferred<br> income tax asset 153 (209 )
Increase of deferred<br> income tax liability 9,427 944
Total<br> variation of deferred income tax 9,580 735
Deferred income tax expense recognized in interim<br> condensed consolidated unaudited statements of profit or loss 10,214 1,339
Deferred income tax<br> recognized in other comprehensive income (634 ) (604 )
Total<br> variation of deferred income tax 9,580 735 
17

Notes to interim condensed consolidated unaudited financial statements

(continued)

Following is the composition of deferred tax related to items recognized in interim condensed consolidated unaudited statements of other comprehensive income:

For the three-month period <br>ended March 31,
2023 2022
S/(000) S/(000)
Loss unrealized on derivative financial instruments (634 ) (604 )
Total deferred income tax recognized in OCI (634 ) (604 )
12. Sales of goods

This caption is made up as follows:

For<br> the three-month period ended March 31, 2023 Cement,<br> concrete,<br><br> mortar and precast Construction<br> Supplies Quicklime Other Total
S/(000) S/(000) S/(000) S/(000) S/(000)
Revenue<br> from external customers 447,110 21,821 11,053 11 479,995
Revenue<br> from external customers 447,110 21,821 11,053 11 479,995
For the three-month period  ended<br> March 31, 2022
Revenue from external<br> customers 477,637 33,404 14,364 4 525,409
Revenue<br> from external customers 477,637 33,404 14,364 4 525,409 
18

Notes to interim condensed consolidated unaudited financial statements

(continued)

13. Related party transactions

During the three-months periods ended March 31, 2023 and 2022, the Group carried out the following main transactions with Inversiones ASPI S.A. and its related parties:

For<br> the three-month period <br>ended March 31,
2023 2022
S/(000) S/(000)
Income
Parent
Inversiones ASPI S.A.
Fees from<br> office lease 4 5
Fees for management<br> and administrative services 22 25
Other related parties
Compañía Minera Ares S.A.C. (Ares)
Fees from land rental<br> services 293 290
Fees from leasing of<br> parking 66 92
Fosfatos del Pacífico S.A. (Fospac)
Fees from office lease 4 5
Fees for management<br> and administrative services 36 10
Fossal S.A.A.  (Fossal)
Fees from office lease 4 5
Fees for management<br> and administrative services 10 13
Asociación Sumac Tarpuy
Fees from office lease 4 5
Expenses
Other related parties
Security services provided by Compañía<br> Minera Ares S.A.C. (660 ) (660 ) 
19

Notes to interim condensed consolidated unaudited financial statements

(continued)

As a result of these and other transactions, the Group had the following rights and obligations with Inversiones ASPI S.A. and its related parties as of March 31, 2023 and December 31, 2022:

March 31, 2023 December 31, 2022
Accounts <br> receivable Accounts <br> payable Accounts <br> receivable Accounts <br> payable
S/(000) S/(000) S/(000) S/(000)
Parent
Inversiones ASPI S.A. 22 - - 5
22 - - 5
Other related parties
Fosfatos del Pacífico S.A. 1,181 146 1,123 461
Compañía Minera Ares S.A.C. 658 2,445 564 2,220
Fossal S.A.A 15 - 75 -
Other 108 - 96 -
1,962 2,591 1,858 2,681
1,984 2,591 1,858 2,686

Outstanding balances are unsecured and interest free. There have been no guarantees provided or received, from any related party. As of March 31, 2023 and December 31, 2022, the Group has not recorded any allowance for expected credit losses on receivables from related parties.

Compensationof key management personnel of the Group -

The compensation paid to key management personnel includes expenses for profit-sharing, compensation and other concepts for members of the Board of Directors and the key management. The total short-term compensation expense amounted to S/6,127,000 during the three-month period ended March 31, 2023 (S/5,389,000 during the three-month period ended March 31, 2022), and the total long-term compensations expense amounted to S/2,068,000 during the three-month period ended March 31, 2023 (S/1,902,000 during the three-month period ended March 31, 2022). The Group does not compensate Management with post-employment or contract termination benefits or share-based payments.

14. Earnings per share (EPS)

Basic earnings per share amounts are calculated by dividing net profit for the three-month period ended March 31, 2023 and 2022 by the weighted average number of common and investment shares outstanding during those periods.

The Group has no dilutive potential common shares as of March 31, 2023 and 2022.

20

Notes to interim condensed consolidated unaudited financial statements

(continued)

Calculation of the weighted average number of shares and the basic earnings per share is presented below:

For the three-month period ended March 31,
2023 2022
S/(000) S/(000)
Numerator
Net profit attributable to ordinary equity holders of the Parent 43,49 2 45,725
Denominator
Weighted average number of common and investment shares (thousands) 428,107 428,107
Basic profit for common and investment shares 0.10 0.11

There have been no other transactions involving common and investment shares between the reporting date and the date of completion of these interim condensed consolidated unaudited financial statements.

15. Financial assets and liabilities
(a) Financial<br> asset –
--- ---

Derivatives assets of hedging -

Foreigncurrency risk –

As of December 31, 2022 the Group maintained Cross currency swap contracts for a nominal amount of US$132,000,000, with maturity in February 2023 and a rate of 2.97%. Of this total, US$131,612,000 has been designated as hedging instruments for Senior notes that are denominated in U.S. dollars, with the intention of reducing the foreign exchange risk.

The cash flow hedge of the expected future payments was assessed to be highly effective and in the interim condensed consolidated unaudited statements of other comprehensive income is included an unrealized gain of S/2,154,000 and S/2,046,000 for the three-month period ended March 31, 2023 and 2022.

As of March 31, 2023 the Group settled the Cross currency swap contracts on their maturity date in relation with the payment of international bonds in dollars mentioned in note 9(a).

21

Notes to interim condensed consolidated unaudited financial statements

(continued)

Derivative assets from trading -

In February 2023, cross currency swaps from trading have been settled and obtained a gain of S/19,000 which was recognized in the interim condensed consolidated unaudited statement of profit or loss for the three-month period ended March 31, 2023 presented in “Net profit (loss) for valuation of trading derivative financial instruments” caption. As of March 31, 2022, cross currency swaps that do not have an underlying relationship amounts to US$388,000, have been designated as trading. The effect on profit or loss from its measurement at fair value was a loss of S/109,000 for the three-month period ended March 31, 2022.

(b) Fair values<br> and fair value accounting hierarchy –

Set out below is a comparison of the carrying amounts and fair values of financial instruments of the Group, as well as the fair value accounting hierarchy:

Carrying<br> amount Fair<br> value Fair<br> value hierarchy
2023 2022 2023 2022 2023/2022
S/(000) S/(000) S/(000) S/(000)
Financial<br> assets
Cash<br> and cash equivalents 45,273 81,773 45,273 81,773 Level<br> 1
Trade<br> and other receivables 145,143 145,034 145,143 145,034 Level<br> 2
Derivative<br> financial assets -"cross currency swaps" - 86,893 - 86,893 Level<br> 2
Financial<br> instruments at fair value through other comprehensive income 274 274 274 274 Level<br> 3
Total<br> financial assets 190,690 313,974 190,690 313,974
Financial<br> liabilities
Trade<br> and other payables 219,738 284,554 219,738 284,554 Level<br> 2
Senior<br> notes 569,109 1,071,781 513,885 996,156 Level<br> 1
Fixed<br> rate notes 1,043,099 521,390 905,969 459,117 Level<br> 2
Total<br> financial liabilities 1,831,946 1,877,725 1,639,592 1,739,827

All financial instruments for which fair value is recognized or disclosed are categorized within the fair value hierarchy, based on the lowest level input that is significant to the fair value measurement as a whole, as follows:

Level 1 — Quoted (unadjusted) market prices in active markets for identical assets or liabilities.

Level 2 — Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable.

Level 3 — Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable.

For assets and liabilities that are recognized at fair value on a recurring basis, the Group determines whether transfers have occurred between levels in the hierarchy. As of March 31, 2023 and December 31, 2022, there were no transfers between the fair value hierarchies.

Management assessed that cash and cash equivalents, trade and other receivables and other current liabilities approximate their carrying amounts largely due to the short-term maturities of these instruments.

22

Notes to interim condensed consolidated unaudited financial statements

(continued)

The following methods and assumptions were used to estimate the fair values:

- The<br> fair value of cross currency swaps is measured by using valuation techniques where inputs<br> are based on market data. The most frequently applied valuation techniques include swap valuation<br> models, using present value calculations. The models incorporate various inputs, including<br> the credit quality of counterparties, foreign exchange, forward rates and interest rate curves.

A credit valuation adjustment (CVA) is applied to the “Over-The-Counter” derivative exposures to take into account the counterparty’s risk of default when measuring the fair value of the derivative. CVA is the mark-to market cost of protection required to hedge credit risk from counterparties in this type of derivatives portfolio. CVA is calculated by multiplying the probability of default (PD), the loss given default (LGD) and the expected exposure (EE) at the time of default.

A debit valuation adjustment (DVA) is applied to incorporate the Group’s own credit risk in the fair value of derivatives (that is the risk that the Group might default on its contractual obligations), using the same methodology as for CVA.

- The<br> fair value of the quoted senior notes is based on the current quotations value at the reporting<br> date.
- The<br> fair value of the promissory note is calculated using the results of cash flow discounted<br> at the indebtedness market rates effective as of the date of estimation.
--- ---
- The<br> fair value of financial instruments designated at fair value through other comprehensive<br> income has been determined using the percentage of shareholding of the Company equity of<br> Fossal S.A.
--- ---
16. Commitments and contingencies

Operating lease commitments – Group as lessor

As of March 31, 2023, the Group, as lessor, has a land lease with Compañía Minera Ares S.A.C., a related party of Inversiones ASPI S.A. This lease is annually renewable and provided a rent for the three-month period ended March 31, 2023 and 2022 for S/293,000 and S/290,000, respectively.

Consortium contract –

On December 19, 2022, Distribuidora Norte Pacasmayo S.R.L., subsidiary of the Group, has subscribed a collaboration contract with Flujo Libre S.A.C., with the purpose to participate together in the project “Mejoramiento del Sistema de Pistas y Cerco Perimétrico del Aeropuerto de Piura”. The mentioned contract is valid for a maximum of 2 years and 11 months.

On this matter, the Company has communicated to the tax authority the subscription of the collaboration contract which will not take independent accounting and Distribuidora Norte Pacasmayo S.R.L. will be the contracting party that will act as operator of the contract.

Capital commitments

As of March 31, 2023, the Group had no significant capital commitments.

23

Notes to interim condensed consolidated unaudited financial statements

(continued)

Environmental matters

The Group exploration and exploitation activities are subject to environmental protection standards. Such standards are the same as those disclosed on the consolidated financial statement as of December 31, 2022.

Taxsituation

The Company is subject to Peruvian tax law. As of March 31, 2023 and 2022, the income tax rate is 29.5 percent of the taxable profit after deducting employee participation, which is calculated at a rate of 8 to 10 percent of the taxable income.

For purposes of determining income tax, transfer pricing transactions with related companies and companies resident in territories with low or no taxation, must be supported with documentation and information on the valuation methods used and the criteria considered for determination. Based on the analysis of operations of the Group, Management and its legal advisors believe that as a result of the application of these standards will not result in significant contingencies for the Group as of March 31, 2023 and December 31, 2022.

During the four years following the year tax returns are filed, the tax authority has the power to review and, as applicable, correct the income tax computed by each individual company.

The income tax and value-added tax returns for the following years are open for review by the tax authority:

Years<br> open to review by Tax Authorities
Entity Income<br> tax Value-added<br> tax
Cementos Pacasmayo S.A.A. 2018-2022 Dec.2018-2023
Cementos Selva S.A.C. 2018-2022 Dec.2018-2023
Distribuidora Norte<br> Pacasmayo S.R.L. 2018-2022 Dec.2018-2023
Empresa de Transmisión<br> Guadalupe S.A.C. 2018-2022 Dec.2018-2023
Salmueras Sudamericanas<br> S.A. 2018-2022 Dec.2018-2023
Soluciones Takay S.A.C. 2019-2022 May to Dec.2019-2023

Due to possible interpretations that the tax authorities may give to legislation in effect, it is not possible to determine whether any of the tax audits that may be performed will result in increased liabilities for the Group. For that reason, tax or surcharge that could arise from future tax audits would be applied to the income during the period in which it is determined. However, in management’s opinion, any possible additional payment of taxes would not have a material effect on the interim condensed consolidated unaudited financial statements as of March 31, 2023 and the consolidated financial statements as of December 31, 2022.

24

Notes to interim condensed consolidated unaudited financial statements

(continued)

Legal claim contingency

As of March 31, 2023, the Group has received claims from third parties in relation with its operations which in aggregate represent S/3,353,000. From this total amount, S/2,753,000 corresponded to labor claims from former employees, S/596,000 is related to the tax assessments received from the tax administration corresponding to 2009 tax period, which was reviewed by the tax authority during 2012 and S/4,000 corresponded to contentious-administrative claims.

Management expects that these claims will be resolved within the next five years based on prior experience; however, the Group cannot assure that these claims will be resolved within this period because the authorities do not have a maximum term to resolve cases.

The Group has been advised by its legal counsel that it is only possible, but not probable, that these actions will succeed. Accordingly, no provision for any liability has been made in these interim condensed consolidated unaudited financial statements.

Mining royalty

The Group signed agreements with third parties and with Peruvian Government related to the use of concessions for extraction activities on process of cement production. The information of the payment of royalties are reveled on the consolidated financial statements of the Group as of December 31, 2022.

17. Segment information

For management purposes, the Group is organized into business units based on their products and activities, and have three reportable segments as follows:

- Production<br> and marketing of cement, concrete, mortar and precast in the northern region of Peru.
- Sale of construction<br> supplies in the northern region of Peru.
--- ---
- Production<br> and marketing of quicklime in the northern region of Peru.
--- ---

No operating segments have been aggregated to form the above reportable operating segments.

Management monitors the profit before income tax of each business units separately for the purpose of making decisions about resource allocation and performance assessment.

25

Notes to interim condensed consolidated unaudited financial statements

(continued)

Transfer prices between operating segments are on an arm’s length basis in a similar manner to transactions with third parties.

**** For the three-month period ended March 31, 2023 **** For the three-month period ended March 31, 2022 ****
**** Cement, concrete, mortar and precast **** Construction supplies **** Quicklime **** Other (*) **** Total consolidated **** Cement, concrete, mortar and precast **** Construction supplies **** Quicklime **** Other (*) **** Total consolidated ****
S/(000) S/(000) S/(000) S/(000) S/(000) S/(000) S/(000) S/(000) S/(000) S/(000)
Sales<br> of goods 447,110 21,821 11,053 11 479,995 477,637 33,404 14,364 4 525,409
Gross<br> profit 159,119 129 1,570 (223 ) 160,595 161,719 2,291 1,023 (68 ) 164,965
Administrative<br> expenses (56,609 ) (695 ) (314 ) (111 ) (57,729 ) (52,354 ) (643 ) (290 ) (102 ) (53,389 )
Selling<br> and distribution expenses (17,194 ) (211 ) (95 ) (34 ) (17,534 ) (16,641 ) (204 ) (92 ) (33 ) (16,970 )
Other<br> operating  income (expense), net 1,403 (1 ) - 1 1,403 (1,040 ) 20 - (4 ) (1,024 )
Finance<br> income 1,337 1 - 17 1,355 541 11 - 6 558
Finance<br> cost (25,720 ) - - (1 ) (25,721 ) (22,793 ) (1 ) - (1 ) (22,795 )
Net<br> profit (loss) for valuation of trading derivative financial instruments 19 - - - 19 (109 ) - - - (109 )
Gain<br> (loss) from exchange difference, net 815 - 12 (4 ) 823 (6,446 ) 2 (68 ) (2 ) (6,514 )
Profit<br> before income tax 63,170 (777 ) 1,173 (355 ) 63,211 62,877 1,476 573 (204 ) 64,722
Income<br> tax expense (19,706 ) 242 (366 ) 111 (19,719 ) (18,455 ) (433 ) (168 ) 59 (18,997 )
Profit<br> for the period 43,464 (535 ) 807 (244 ) 43,492 44,422 1,043 405 (145 ) 45,725 
26

Notes to interim condensed consolidated unaudited financial statements

(continued)

As<br> of March 31, 2023 As<br> of December 31, 2022
Cement, concrete<br> and<br><br> precast Construction<br> supplies Quicklime Other Consolidated Cement, concrete<br> and<br><br> precast Construction<br> supplies Quicklime Other Consolidated
S/(000) S/(000) S/(000) S/(000) S/(000) S/(000) S/(000) S/(000) S/(000) S/(000)
Segment assets 3,132,415 45,910 73,081 31,963 3,283,369 3,086,104 38,353 70,327 32,210 3,226,994
Other assets (*) - - - 274 274 86,630 - - 537 87,167
Total assets 3,132,415 45,910 73,081 32,237 3,283,643 3,172,734 38,353 70,327 32,747 3,314,161
Operating liabilities 1,983,780 58,894 - 745 2,043,419 2,041,923 76,780 - 323 2,119,026
Capital expenditure (**) 76,889 - - - 76,889 190,126 - - - 190,126
(*) As<br> of March 31, 2023, corresponds to the financial instruments designated at fair value through<br> other comprehensive income for S/274,000. As of December 31, 2022, corresponds to the financial<br> instruments designated at fair value through other comprehensive income and to the fair value<br> of derivative financial instruments (cross currency swap) for approximately S/274,000 and<br> S/86,893,000, respectively. The fair value of hedge derivative financial instruments is allocated<br> to the segment of cement, and the financial instruments designated at fair value through<br> other comprehensive income and the fair value of the trading derivative financial instrument<br> are presented as “Other”.
--- ---
(**) Capital<br> expenditure consists of S/76,889,000 and S/190,126,000 during the three-month period ended<br> March 31, 2023 and year ended December 31, 2022, respectively, and are related to additions<br> of property, plant and equipment, intangible and other minor non-current assets .
--- ---

Geographic information

As of March 31, 2023 and December 31, 2022, all non-current assets are located in Peru and all revenues are from Peruvian clients.

18. Financial risk management, objectives and<br> policies

The Group’s main financial assets include cash and short-term deposits (with maturity less than 360 days) and trade and other receivables that derive directly from its operations. The Group also holds financial instruments designated at fair value through OCI, cash flow hedges instruments and derivative financial instruments of trading. The Group’s main financial liabilities comprise trade payables and other payables, loans and borrowings, with short-term and long-term maturities. The main purpose of these financial liabilities is to finance the Group’s operations.

The Group is exposed to market risk, credit risk and liquidity risk. The Group’s senior management oversees the management of these risks. The Group’s senior management is supported by financial management that advises on financial risks and the appropriate financial risk governance framework for the Group. The financial management provides assurance to the Group’s senior management that the Group’s financial risk-taking activities are governed by appropriate policies and procedures and that financial risks are identified, measured and managed in accordance with the Group’s policies and risk objectives.

The Management reviews and agrees policies for managing each of these risks as mentioned in the consolidated financial statements as of December 31, 2022.

27

Notes to interim condensed consolidated unaudited financial statements

(continued)

Foreigncurrency risk -

Foreign currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates. The Group’s exposure to the risk of changes in foreign exchange relates primarily to the Group’s operating activities (when revenue or expense is denominated in a different currency from the Group’s functional currency).

As of December 31, 2022, the Group hedges its exposure to fluctuations on the translation into soles of its Senior Notes which are denominated in US dollars, by using cross currency swaps contracts, see note 15.

Foreigncurrency sensitivity

The following table demonstrates the sensitivity to a reasonably possible change in the US dollar exchange rate, with all other variables held constant. The impact on the Group’s profit before income tax is due to changes in the fair value of monetary assets and liabilities.

For the three-month period ended March 31, 2023 Change in US$ rate Effect on consolidated profit before income tax
U.S. Dollar % S/(000)
+5 1,891
+10 3,782
-5 (1,891)
-10 (3,782)
For<br> the three-month period ended March 31, 2022 Change<br> in<br><br> <br>US$<br> rate Effect<br> on<br><br> <br>consolidated<br> profit<br><br> <br>before<br> income tax
--- --- ---
U.S. Dollar % S/(000)
+5 8,911
+10 17,822
-5 (8,911)
-10 (17,822) 
28

Notes to interim condensed consolidated unaudited financial statements

(continued)

Liquidityrisk -

The Group monitors its risk of shortage of funds using a recurring liquidity planning tool.

The Group’s objective is to maintain a balance between continuity of funding and flexibility through the use of bank loans and debentures of long term. Access to fund sources is sufficiently available and debt maturing within 12 months can be rolled over under the same conditions with existing lenders, if necessary.

As of March 31, 2023 and December 31, 2022, no portion of the corporate bonds in soles will mature in less than one year.

Riskmanagement activities –

As a result of its activities, the Group is exposed to the foreign currency exchange rate risk, thereof the Company has acquired hedging financial instruments to cover this risk. Since November 2014, the Group has hedged its exposure to foreign currency from its corporate bonds (denominated in US dollars). During the three-month period ended March 31, 2023 and 2022, there was moderate volatility in the US dollar exchange rate with respect to the soles, whose effects were partially mitigated by the exchange rate hedge maintained by the Company.

As of March 31, 2023 and December 31, 2022, except for the derivatives financial instruments (cross currency swaps) signed by the Company to hedge the foreign currency risk of its Senior Notes, the Group had no other financial instruments to hedge its foreign exchange risk, interest rates or market price (purchase price of coal) fluctuations.

As of March 31, 2023 derivatives financial instruments (cross currency swaps) were fully settled in relation with the payment of international bonds in dollars.

29

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