UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

 

FORM 6-K

 

REPORT OF FOREIGN ISSUER
PURSUANT TO RULE 13a-16 OR 15b-16 OF
THE SECURITIES EXCHANGE ACT OF 1934

 

For the month of July 2023

 

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  ☐

 

 

 

 

 

CEMENTOS PACASMAYO S.A.A.

 

The following exhibit is attached:

 

EXHIBIT NO.   DESCRIPTION
99.1   Unaudited interim condensed consolidated financial statements as of June 30, 2023 and for the three and six-month periods 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: July 20, 2023  

 

 

2

 

 

Exhibit 99.1

 

 

 

 

 

Cementos Pacasmayo S.A.A. and Subsidiaries

 

Unaudited interim condensed consolidated financial statements
as of June 30, 2023 and for the three and six-month periods then ended

 

 

 

 

 

Cementos Pacasmayo S.A.A. and Subsidiaries

 

Unaudited interim condensed consolidated financial statements as of June 30, 2023 and for the three and six-month periods then ended

 

Content

 

Report on review of interim condensed consolidated unaudited financial statements 1
Interim condensed consolidated unaudited financial statements
Interim condensed consolidated unaudited statements of financial position 2
Interim condensed consolidated unaudited statements of profit or loss 3
Interim condensed consolidated unaudited statements of other comprehensive income 4
Interim condensed consolidated unaudited statements of changes in equity 5
Interim condensed consolidated unaudited statements of cash flows 6
Notes to the interim condensed consolidated unaudited financial statements 8

 

i

 

 

Report on 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 June 30, 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 and six-month periods 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.

 

Scope of 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.

 

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

July 20, 2023

 

Countersigned by:

 

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

 

1

 

 

Cementos Pacasmayo S.A.A. and Subsidiaries

 

Interim condensed consolidated unaudited statements of financial position

As of June 30, 2023 (unaudited) and December 31, 2022

 

   Note   As of
June 30,
2023		   As of
December 31,
2022		 
       S/(000)   S/(000) 
Assets            
Current assets            
Cash and cash equivalents   3    65,660    81,773 
Term deposits with maturity greater than ninety days   3    10,000    - 
Derivative financial instruments   15    -    86,893 
Trade and other receivables   4    92,072    101,491 
Income tax prepayments        7,450    8,268 
Inventories   5    929,918    884,969 
Prepayments        26,375    25,059 
Total current asset        1,131,475    1,188,453 
Non-current assets               
Trade and other receivables   4    44,076    43,543 
Financial instruments designated at fair value through other comprehensive income   15    274    274 
Property, plant and equipment   6    2,090,370    2,007,838 
Intangible assets        59,681    56,861 
Goodwill        4,459    4,459 
Deferred income tax assets        10,873    9,005 
Right of use asset   7    7,199    3,639 
Other assets        81    89 
Total non-current asset        2,217,013    2,125,708 
Total assets        3,348,488    3,314,161 
Liability and equity               
Current liabilities               
Trade and other payables   8    234,958    284,554 
Financial obligations   9 and 15    345,146    618,907 
Lease liabilities   7    3,052    2,005 
Income tax payables        11,773    16,340 
Provisions   10    48,510    31,333 
Total current liabilities        643,439    953,139 
Non-current liabilities               
Financial obligations   9 and 15    1,267,393    974,264 
Lease liabilities   7    4,585    2,350 
Non-current provisions   10    17,860    47,638 
Deferred income tax liabilities        131,635    141,635 
Total non-current liabilities        1,421,473    1,165,887 
Total liability        2,064,912    2,119,026 
Equity               
Capital stock        423,868    423,868 
Investment shares        40,279    40,279 
Investment shares held in treasury        (121,258)   (121,258)
Additional paid-in capital        432,779    432,779 
Legal reserve        168,636    168,636 
Other accumulated comprehensive loss        (16,272)   (17,787)
Retained earnings        355,544    268,618 
Total equity        1,283,576    1,195,135 
Total liability and equity        3,348,488    3,314,161 

 

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

 

2

 

 

Cementos Pacasmayo S.A.A. and Subsidiaries

 

Interim condensed consolidated unaudited statements of profit or loss

For the three and six-month periods ended June 30, 2023 and June 30, 2022 (unaudited)

 

       For the three-month period
ended June 30, 2023		   For the six-month period
ended June 30, 2023		 
   Note   2023   2022   2023   2022 
       S/(000)   S/(000)   S/(000)   S/(000) 
                     
Sales of goods   12    442,039    502,886    922,034    1,028,295 
Cost of sales        (289,461)   (344,804)   (608,861)   (705,248)
Gross profit        152,578    158,082    313,173    323,047 
                          
Operating income (expense)                         
Administrative expenses        (58,327)   (54,861)   (116,056)   (108,250)
Selling and distribution expenses        (15,674)   (17,025)   (33,208)   (33,995)
Other operating income (expense), net        73    (311)   1,476    (1,335)
Total operating expenses, net        (73,928)   (72,197)   (147,788)   (143,580)
Operating profit        78,650    85,885    165,385    179,467 
                          
Other income (expenses)                         
Finance income        836    1,012    2,191    1,570 
Finance costs        (24,156)   (23,813)   (49,877)   (46,608)
Net profit (loss) for valuation of trading derivative financial instruments   15(a)   -    45    19    (64)
Gain from exchange difference, net        4,518    6,865    5,341    351 
Total other expenses, net        (18,802)   (15,891)   (42,326)   (44,751)
Profit before income tax        59,848    69,994    123,059    134,716 
                          
Income tax expense   11    (16,414)   (22,015)   (36,133)   (41,012)
                          
Profit for the period        43,434    47,979    86,926    93,704 
                          
Earnings per share                         
Basic 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    0.20    0.22 

 

The accompanying otes 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 other comprehensive income

For the three and six-month periods ended June 30, 2023 and June 30, 2022 (unaudited)

 

      For the three-month period
ended June 30,		   For the six-month period
ended June 30,		 
   Note  2023   2022   2023   2022 
      S/(000)   S/(000)   S/(000)   S/(000) 
                    
Profit for the period       43,434    47,979    86,926    93,704 
                         
Other comprehensive income                        
Other comprehensive income to be reclassified to profit or loss in subsequent periods:                        
Net gain (loss) on cash flow hedges   15(a)   -    (1,655)   2,154    391 
Deferred income tax   11   -    488    (634)   (116)
Other comprehensive income for the period, net of income tax       -    (1,167)   1,520    275 
                         
Total comprehensive income for the period, net of income tax       43,434    46,812    88,446    93,979 

 

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 changes in equity

For the six-month period ended June 30, 2023 and June 30, 2022 (unaudited)

 

   Capital
stock		   Investment
shares		   Investments
shares
held in treasury		   Additional
paid-in
capital		   Legal
reserve		   Unrealized gain
(loss) on financial
instruments
designated at fair
value		   Unrealized gain
(loss) on
cash flow hedge		   Retained earnings   Total
equity		 
   S/(000)   S/(000)   S/(000)   S/(000)   S/(000)   S/(000)   S/(000)   S/(000)   S/(000) 
                                     
Balance 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 for the period   -    -    -    -    -    -    -    93,704    93,704 
Other comprehensive income for the period, net of income tax   -    -    -    -    -    -    275    -    275 
Total comprehensive income   -    -    -    -    -    -    275    93,704    93,979 
                                              
Balance as of June 30, 2022   423,868    40,279    (121,258)   432,779    168,636    (15,869)   (3,950)   365,299    1,289,784 
                                              
                                              
Balance 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 for the period   -    -    -    -    -    -    -    86,926    86,926 
Other comprehensive income for the period, net of income tax   -    -    -    -    -    -    1,520    -    1,520 
Others   -    -    -    -    -    (5)   -    -    (5)
Total comprehensive income   -    -    -    -    -    (5)   1,520    86,926    88,441 
                                              
Balance as of June 30, 2023   423,868    40,279    (121,258)   432,779    168,636    (16,272)   -    355,544    1,283,576 

 

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 cash flows

For the three and six-month period ended June 30, 2023 and June 30, 2022

 

      For the three-month period
ended June 30		   For the six-month period
ended June 30		 
   Note   2023   2022   2023   2022 
       S/(000)   S/(000)   S/(000)   S/(000) 
                     
Operating activities                    
Profit before income tax        59,848    69,994    123,059    134,716 
Non-cash adjustments to reconcile profit before income tax to net cash flows (used in) provided by operating activities                         
Depreciation and amortization        33,963    34,639    67,906    68,530 
Finance costs        24,156    23,813    49,877    46,608 
Long-term incentive plan   13    1,855    1,902    3,923    3,804 
Estimate expected credit loss   4    231    396    1,515    1,893 
Unrealized exchange difference related to monetary transactions        32    (3,477)   180    4,222 
(Gain) loss on settlement of trading derivative financial instruments        -    (45)   (19)   64 
Net gain on disposal of property, plant and equipment   6    (276)   (231)   (387)   (407)
Finance income        (836)   (1,012)   (2,191)   (1,570)
Other operating, net        1,142    1,628    1,838    1,049 
                          
Working capital adjustments                         
Decrease in trade and other receivables        8,444    17,103    7,267    8,929 
(Increase) in prepayments        (691)   (13,032)   (5,363)   (14,739)
(Increase) in inventories        (333)   (83,724)   (46,145)   (116,492)
(Decrease) increase in trade and other payables        9,568    9,217    (55,594)   14,636 
         137,103    57,171    145,866    151,243 
                          
Interests received        691    778    2,061    1,288 
Interests paid        (9,852)   (2,711)   (46,126)   (37,314)
Income tax paid        (20,773)   (18,235)   (53,726)   (51,100)
Net cash flows provided by  operating activities        107,169    37,003    48,075    64,117 

 

6

 

 

Interim condensed consolidated unaudited statements of cash flows (continued)

 

   Note   For the three-month period
ended June 30,		   For the six-month period
ended June 30,		 
   Note   2023   2022   2023   2022 
       S/(000)   S/(000)   S/(000)   S/(000) 
                     
Investing activities                    
Opening of term deposits with original maturity greater than 90 days   3    (10,000)   -    (10,000)   - 
Purchase of property, plant and equipment        (73,134)   (26,252)   (148,713)   (38,916)
Purchase of intangibles assets        (3,336)   (2,939)   (7,363)   (5,152)
Loans to third parties        (130)   -    (500)   (141)
Collection of loan to third parties        150    149    150    149 
Proceeds from sale of property, plant and equipment        355    678    685    1,121 
Net cash flows used in investing activities        (86,095)   (28,364)   (165,741)   (42,939)
                          
Financing activities                         
Paid bank loans   9    -    -    (507,338)   (159,000)
Bank overdraft paid        -    -    (85,333)   - 
Payment of hedge finance cost        -    -    (7,708)   (7,682)
Payment of lease liabilities   7    (761)   (733)   (1,387)   (1,193)
Dividends paid        (184)   (313)   (456)   (639)
Loan received   9    -    -    525,000    159,000 
Proceeds from sale of derivative financial instruments        -    -    93,323    - 
Bank overdraft        -         85,333      
Dividends returned        290    -    299    170 
Net cash flows (used in) provided by financing activities        (655)   (1,046)   101,733    (9,344)
                          
Net (decrease) increase in cash and cash equivalents        20,419    7,593    (15,933)   11,834 
Net foreign exchange difference        (32)   5,799    (180)   (7,246)
Cash and cash equivalents at the beginning of the period        45,273    264,598    81,773    273,402 
Cash and cash equivalents at the end of the period   3    65,660    277,990    65,660    277,990 

 

Transactions with no effect in cash flows:                    
Unrealized exchange difference related to monetary transactions        32    (3,477)   180    4,222 
Outstanding accounts payable related to acquisition of property, plant and equipment as of June 30   6    379    6,027    (11,036)   6,027 
Recognition of right-of-use assets and lease liabilities during the period   7    4,829    305    4,829    305 

 

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

 

7

 

 

Cementos Pacasmayo S.A.A. and Subsidiaries

 

Notes to interim condensed consolidated unaudited financial statements (unaudited)

As of June 30, 2023 and 2022, and December 31, 2022

 

1.Economic activity

 

(a)Economic 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 June 30, 2023, December 31, 2022 and June 30, 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 June 30, 2023 and for the six-month period then ended, were approved for issuance by the Company’s Management on July 20, 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 Group’s accounting policies

 

2.1Basis of preparation -

 

The interim condensed consolidated unaudited financial statements of the Group have been prepared in accordance with IAS 34 Interim Financial Reporting 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.

 

8

 

 

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 2022. The standards and interpretations relevant to the Group, that are effective since January 1, 2023 are disclosed below.

 

Definition of 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.

 

Disclosure of 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.

 

Deferred Tax 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.

 

9

 

 

Notes to interim condensed consolidated unaudited financial statements (continued)

 

2.2Basis of consolidation -

 

The interim condensed consolidated unaudited financial statements comprise the financial statements of the Company and its subsidiaries as of June 30, 2023 (unaudited) and December 31,2022 and for the six-month period ended June 30, 2023 and 2022 (unaudited).

 

For the six-month period ended June 30, 2023, 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.

 

2.3Seasonality of operations - Seasonality is not relevant to the Group’s activities.

 

3.Cash and cash equivalents

 

(a)This caption consists of the following:

 

   As of
June 30,
2023		   As of
December 31,
2022		 
    S/(000)    S/(000) 
           
Cash on hand   167    161 
Cash at banks (b)   34,493    39,112 
Term deposits with original maturities of ninety days or less (c)   31,000    42,500 
           
Cash balances included in statements of cash flows   65,660    81,773 
           
Term deposits with original maturities greater than ninety days (c)   10,000    - 
    75,660    81,773 

 

(b)Cash at banks is denominated in local and foreign currencies, is deposited in domestic and foreign banks and is freely available. The cash at banks interest yield is based on daily bank deposit rates.

 

(c)As of June 30, 2023, the short-term deposits held in domestic banks and are comprised of S/31,000,000, with annual interest of term deposits and original maturity of ninety days or less.

 

As of June 30, 2023, long-term deposits with original maturities greater than ninety days comprehend S/10,000,000 with an annual interest rates between 7.80 percent and 7.92 percent, and original maturity of 95 to 123 days.

 

4.Trade and other receivables

 

As of June 30, 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/47,109,000 and S/49,162,000, respectively.

 

10

 

 

Notes to interim condensed consolidated unaudited financial statements (continued)

 

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 June 30, 2023 and December 31, 2022 amounts to approximately S/29,559,000, 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 six-month period ended June 30, 2023 and 2022, the Group recorded S/1,515,000 and S/1,893,000, respectively, related to the provision for expected credit losses for trade receivables, which are presented in the caption “Salling and distribution expenses” of the interim condensed consolidated unaudited statement 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.

 

The movement of the allowance for expected credit losses on trade and others receivable for the six-month period ended as of June 30, 2023 and 2022 is as follows:

 

   2023   2022 
   S/(000)   S/(000) 
         
Opening balance   16,467    14,573 
Additions   1,515    1,893 
Recoveries and others   (32)   (47)
Ending balance   17,950    16,419 

 

5.Inventories

 

As of June 30, 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- and six-month periods ended June 30, 2023 the Group’s additions amounted approximately to S/72,755,000 and S/145,189,000 (S/26,295,000 and S/37,328,000 during the three- and six-month periods ended June 30, 2022, respectively).

 

Assets with a net book value of S/193,000 were sold during the six-month period ended June 30, 2023 (S/533,000 for the six-month period ended June 30, 2022), resulting in a net gain on disposal of S/387,000 (S/407,000 for the six-month period ended June 30, 2022).

 

As of June 30, 2023 the Group maintains accounts payable related to the acquisition of property, plant and equipment for S/11,036,000 (S/14,560,000 as of December 31, 2022).

 

11

 

 

Notes to interim condensed consolidated unaudited financial statements (continued)

 

7.Leases

 

The Group has lease contracts with third parties, mainly 4 to 5-year lease contracts of front loaders and 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/1,074 ,000 for the six-month period ended June 30, 2023 (S/656,000 for the six-month period ended June 30, 2022) and was recognized in the “Administrative expenses” caption of the interim condensed consolidated unaudited statement of profit or loss.

 

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

 

   Transportation units   Machinery and equipment   Other   Total 
   S/(000)   S/(000)   S/(000)   S/(000) 
Cost -                
Balance as of January 1, 2022   7,721    -    -    7,721 
Additions   305    -    -    305 
Balance as of June 30, 2022   8,026    -    -    8,026 
                     
Balance as of January 1, 2023   8,029    -    307    8,336 
Additions   136    4,693    -    4,829 
Sales and/or retirement   (344)   -    -    (344)
Balance as of June 30, 2023   7,821    4,693    307    12,821 
                     
Accumulated depreciation -                    
Balance as of January 1, 2022   3,053    -    -    3,053 
Additions   809    -    -    809 
Balance as of June 30, 2022   3,862    -    -    3,862 
                     
Balance as of January 1, 2023   4,672    -    25    4,697 
Additions   769    334    51    1,154 
Sales and/or retirement   (229)   -    -    (229)
Balance as of June 30, 2023   5,212    334    76    5,622 
                     
Net book value                    
As of December 31, 2022   3,357    -    282    3,639 
As of June 30, 2023   2,609    4,359    231    7,199 

 

12

 

 

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 
Additions   4,829    305 
Disposals   (147)   - 
Financial interest expense   191    148 
Lease payments   (1,387)   (1,193)
Others   (204)   (111)
Balance as of June 30   7,637    4,978 
           
Maturity          
Current portion   3,052    1,860 
Non-current portion   4,585    3,118 
Balance as of June 30   7,637    4,978 

 

Net book value    
As of December 31, 2022   4,355 
As of June 30, 2023   7,637 

 

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

 

8.Trade and other payables

 

As of June 30, 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 June 30, 2023 dividends payable amounted to S/9,607,000 (S/ 9,764,000 as of December 31, 2022).

 

9.Financial Obligations

 

(a)Corporate 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 theses have been paid with the corporate loan indicated in section (d) in February 2023.

 

For the six-month period ended June 30, 2023 and 2022, the corporate bonds generated interests that have been recognized in the interim condensed consolidated unaudited financial statement of profit or loss for S/19,575,000 and S/30,253,000, respectively.

 

13

 

 

Notes to interim condensed consolidated unaudited financial statements (continued)

 

(b)Short-term promissory notes

As of June 30, 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 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 debt service coverage ratio (includes amortization plus interest) must be at least 2.5 to 1.

 

-The financial debt to Ebitda ratio may not be greater than 3.5 to 1.

 

(d)Medium-term 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 with the following financial safeguards:

 

(a)Debt Ratio (Financial Debt / EBITDA) <= 3.50x

 

(b)Debt Service Coverage Ratio (FCSD / SD) >= 1.15x

 

(c)Debt Service 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.

 

14

 

 

Notes to interim condensed consolidated unaudited financial statements (continued)

 

II.It maintains the following main obligations to do:

 

(a)Subordinate any obligation the Company had or may have to this loan.

 

(b)Maintain the loan with a status equal to other senior financing of the Company.

 

(c)Keep your assets in good condition and properly insured.

 

(d)Maintain all licenses, authorizations, concessions, permits, titles and rights required by government authorities.

 

III.It maintains the following obligations not to do:

 

(a)Refrain from paying dividends, reducing capital stock or any other distribution to its shareholders if this event make the Company not comply with the obligations assumed.

 

(b)That the Company and its subsidiaries participate in processes of liquidation, transformation, corporate reorganization, acquisition of companies, merger or spin-off.

 

(c)Transfer, sell, alienate, donate or give in usufruct, lease, give in fiduciary domain, encumber their assets, income flows and / or collection rights.

 

(d)Grant financing, personal or real guarantees in favor of third parties.

 

As of June 30, 2023, the Company complies 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 than 3 months   3 to 12 months   1 to 5
years		   More than 5 years   Total 
   S/(000)   S/(000)   S/(000)   S/(000)   S/(000) 
As of June 30, 2023                    
Financial obligations   39,092    307,272    625,452    648,184    1,620,000 
Interests   31,825    62,867    249,264    98,811    442,767 
Trade and other payables   134,470    89,298    -    -    223,768 
Lease liabilities   733    2,319    4,585    -    7,637 
                          
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 

 

15

 

 

Notes to interim condensed consolidated unaudited financial statements (continued)

 

10.Provisions

 

As of June 30, 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 statement of other comprehensive income are:

 

   For the three-month period
ended June 30,		   For the six-month period
ended June 30,		 
   2023   2022   2023   2022 
   S/(000)   S/(000)   S/(000)   S/(000) 
                 
Current income tax   (18,702)   (24,247)   (48,635)   (44,583)
Deferred income tax   2,288    2,232    12,502    3,571 
Income tax expense   (16,414)   (22,015)   (36,133)   (41,012)
Deferred Income tax recognized in other comprehensive income   -    488    (634)   (116)
Total income tax   (16,414)   (21,527)   (36,767)   (41,128)

 

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

 

   For the three-month period
ended June 30,		   For the six-month period
ended June 30,		 
   2023   2022   2023   2022 
   S/(000)   S/(000)   S/(000)   S/(000) 
                 
Increase of deferred income tax asset   1,715    927    1,868    718 
Increase of deferred income tax liability   573    1,793    10,000    2,737 
                     
Total variation of deferred income tax   2,288    2,720    11,868    3,455 
Deferred income tax expense recognized in interim condensed consolidated unaudited statement of profit or loss   2,288    2,232    12,502    3,571 
Deferred income tax recognized in other comprehensive income   -    488    (634)   (116)
                     
Total variation of deferred income tax   2,288    2,720    11,868    3,455 

 

16

 

 

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
ended June 30,		   For the six-month period
ended June 30,		 
   2023   2022   2023   2022 
   S/(000)   S/(000)   S/(000)   S/(000) 
                 
Loss (gain) unrealized on derivative financial instruments   -    488    (634)   (116)
                     
Total deferred income tax recognized in OCI   -    488    (634)   (116)

 

12.Sales of goods

 

This caption is made up as follows:

 

   Cement, concrete, mortar and precast   Quicklime   Construction Supplies   Other   Total 
   S/(000)   S/(000)   S/(000)   S/(000)   S/(000) 
                     
For the three-month period ended June 30, 2023                    
Revenue from external customers   420,645    5,244    16,128    22    442,039 
Revenue from external customers   420,645    5,244    16,128    22    442,039 
                          
For the six-month period ended June 30, 2023                         
Revenue from external customers   867,755    16,297    37,949    33    922,034 
Revenue from external customers   867,755    16,297    37,949    33    922,034 
                          
For the three-month period ended June 30, 2022                         
Revenue from external customers   469,399    7,448    26,039    -    502,886 
Revenue from external customers   469,399    7,448    26,039    -    502,886 
For the six-month period ended June 30, 2022                         
Revenue from external customers   947,036    21,812    59,443    4    1,028,295 
Revenue from external customers   947,036    21,812    59,443    4    1,028,295 

 

17

 

 

Notes to interim condensed consolidated unaudited financial statements (continued)

 

13.Related party transactions

 

During the three and six-months periods ended June 30, 2023 and 2022, the Group carried out the following main transactions with Inversiones ASPI S.A. and its related parties:

 

   For the three-month period
ended June 30,		   For the six-month period
ended June 30,		 
   2023   2022   2023   2022 
   S/(000)   S/(000)   S/(000)   S/(000) 
                 
Income                
Parent                
Inversiones ASPI S.A.                
Fees from office lease   4    3    8    8 
Fees for management and administrative services   22    25    44    50 
                     
Other related parties                    
Compañía Minera Ares S.A.C. (Ares)                    
Fees from land rental services   283    288    576    578 
Fees from leasing of parking   64    39    130    131 
                     
Fosfatos del Pacífico S.A. (Fospac)                    
Fees from office lease   4    3    8    8 
Fees for management and administrative services   36    12    71    22 
                     
Fossal S.A.A.  (Fossal)                    
Fees from office lease   4    3    8    8 
Fees for management and administrative services   11    13    22    26 
                     
Asociación Sumac Tarpuy                    
Fees from office lease   4    3    8    8 
                     
Expenses                    
Other related parties                    
Security services provided by Compañía Minera Ares S.A.C.   660    660    1,320    1,320 

 

18

 

 

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 June 30, 2023 and December 31, 2022:

 

   June 30, 2023   December 31, 2022 
   Accounts
receivable		   Accounts
payable		   Accounts
 receivable		   Accounts
payable		 
   S/(000)   S/(000)   S/(000)   S/(000) 
Parent                
Inversiones ASPI S.A.   35    -    -    5 
    35    -    -    5 
Other related parties                    
Fosfatos del Pacífico S.A.   1,315    21    1,123    461 
Compañía Minera Ares S.A.C.   1,106    3,187    564    2,220 
Fossal S.A.A.   21    -    75    - 
Other   281    -    96    - 
                     
    2,723    3,208    1,858    2,681 
    2,758    3,208    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 June 30, 2023 and December 31, 2022, the Group has not recorded any allowance for expected credit losses on receivables from related parties.

 

Compensation of 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/5,982,000 and S/12,109,000 during the three and six-month periods ended June 30, 2023, respectively (S/5,549,000 and S/10,938,000 during the three and six-month periods ended June 30, 2022), and the total long-term compensations expense amounted to S/1,855,000 and S/3,923,000 during the three and six-month periods ended June 30, 2023, respectively (S/1,902,000 and S/3,804,000 during the three and six-month period ended June 30, 2022, respectively). 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 six-month period ended June 30, 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 June 30, 2023 and 2022.

 

19

 

 

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 June 30,		   For the six-month period
ended June 30,		 
   2023   2022   2023   2022 
   S/(000)   S/(000)   S/(000)   S/(000) 
                 
Numerator                
Net profit attributable to ordinary equity holders of the Parent   43,434    47,979    86,926    93,704 
                     
Denominator                    
Weighted average number of common and investment shares (thousands)   428,107    428,107    428,107    428,107 
                     
Basic profit for common and investment shares   0.10    0.11    0.20    0.22 

 

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 asset –

 

Derivatives assets of hedging -

 

Foreign currency 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 had 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 statement of other comprehensive income is included an unrealized gain of S/2,154,000 and S/391,000 for the six-month period ended June 30, 2023 and 2022.

 

As of June 30, 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).

 

Derivative assets from trading –

 

As of June 30, 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/64,000 for the six-month period ended June 30, 2022.

 

20

 

 

Notes to interim condensed consolidated unaudited financial statements (continued)

 

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 June 30, 2023 presented in “Net profit (loss) for valuation of trading derivative financial instruments” caption.

 

(b)Fair values 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 amount   Fair value   Fair value
hierarchy
   2023   2022   2023   2022   2023/2022
   S/(000)   S/(000)   S/(000)   S/(000)    
                    
Financial assets                   
Cash and cash equivalents   65,660    81,773    65,660    81,773   Level 1
Term deposits with original maturities greater than ninety days   10,000    -    10,000    -   Level 1
Trade and other receivables   136,148    145,034    136,148    145,034   Level 2
Derivative financial assets -“cross currency swaps”   -    86,893    -    86,893   Level 2
Financial instruments at fair value through other comprehensive income   274    274    274    274   Level 3
Total financial assets   212,082    313,974    212,082    313,974    
                        
Financial liabilities                       
Trade and other payables   234,958    284,554    234,958    284,554   Level 2
Senior notes   569,137    1,071,781    513,913    996,156   Level 1
Fixed rate notes   1,043,402    521,390    932,146    459,117   Level 2
                        
Total financial liabilities   1,847,497    1,877,725    1,681,017    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.

 

21

 

 

Notes to interim condensed consolidated unaudited financial statements (continued)

 

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 June 30, 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.

 

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

 

-The fair value of cross currency swaps is measured by using valuation techniques where inputs are based on market data. The most frequently applied valuation techniques include swap valuation models, using present value calculations. The models incorporate various inputs, including 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 fair value of the quoted senior notes is based on the current quotations value at the reporting date.

 

-The fair value of the promissory note is calculated using the results of cash flow discounted at the indebtedness market rates effective as of the date of estimation.

 

-The fair value of financial instruments designated at fair value through other comprehensive income has been determined using the percentage of shareholding of the Company on the equity of Fossal S.A. A.

 

22

 

 

Notes to interim condensed consolidated unaudited financial statements (continued)

 

16.Commitments and contingencies

 

Operating lease commitments – Group as lessor

 

As of June 30, 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 six-month period ended June 30, 2023 and 2022 for S/576,000 and S/578,000, respectively.

 

Consortium contract –

 

On December 19, 2022, Distribuidora Norte Pacasmayo S.R.L., subsidiary of the Group, has subscribed a collaboration contract with a third party, 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 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 June 30, 2023, the Group had no significant capital commitments.

 

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.

 

Tax situation

 

The Company is subject to Peruvian tax law. As of June 30, 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 June 30, 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.

 

23

 

 

Notes to interim condensed consolidated unaudited financial statements (continued)

 

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

 

    Years open to review by Tax Authorities
Entity   Income tax   Value-added tax
         
Cementos Pacasmayo S.A.A.   2018-2022   Dec.2018-2023
Cementos Selva S.A.   2018-2022   Dec.2018-2023
Distribuidora Norte Pacasmayo S.R.L.   2018-2022   Dec.2018-2023
Empresa de Transmisión Guadalupe S.A.C.   2018-2022   Dec.2018-2023
Salmueras Sudamericanas 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 June 30, 2023 and the consolidated financial statements as of December 31, 2022.

 

Legal claim contingency

 

As of June 30, 2023, the Group has received claims from third parties in relation with its operations which in aggregate represent S/2,111,000 that corresponded to labor claims from former employees.

 

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 audited financial statements of the Group as of December 31, 2022.

 

24

 

 

Notes to interim condensed consolidated unaudited financial statements (continued)

 

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 and marketing of cement, concrete, mortar and precast in the northern region of Peru.

 

-Sale of construction supplies in the northern region of Peru.

 

-Production 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.

 

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 June 30, 2023   For the three-month period ended June 30, 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 of goods   420,645    16,128    5,244    22    442,039    469,399    26,039    7,448    -    502,886 
Gross profit   152,651    (113)   238    (198)   152,578    159,755    112    (1,507)   (278)   158,082 
Administrative expenses   (57,196)   (703)   (317)   (111)   (58,327)   (53,796)   (661)   (299)   (105)   (54,861)
Selling and distribution expenses   (15,369)   (189)   (86)   (30)   (15,674)   (16,694)   (205)   (93)   (33)   (17,025)
Other operating income (expense), net   71    -    -    2    73    (327)   (3)   -    19    (311)
Finance income   819    (1)   -    18    836    1,000    5    -    7    1,012 
Finance cost   (24,156)   -    -    -    (24,156)   (23,811)   (2)   -    -    (23,813)
Net profit gain on derivative financial instruments   -    -    -    -    -    45    -    -    -    45 
Gain (loss) from exchange difference, net   4,494    (1)   34    (9)   4,518    6,795    9    68    (7)   6,865 
Profit (loss) before income tax   61,314    (1,007)   (131)   (328)   59,848    72,967    (745)   (1,831)   (397)   69,994 
Income tax expense   (16,846)   282    60    90    (16,414)   (22,900)   210    551    124    (22,015)
Profit (loss) for the year   44,468    (725)   (71)   (238)   43,434    50,067    (535)   (1,280)   (273)   47,979 

 

25

 

 

Notes to interim condensed consolidated unaudited financial statements (continued)

 

   For the six-month period ended June 30, 2023   For the six-month period ended June 30, 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 of goods   867,755    37,949    16,297    33    922,034    947,036    59,443    21,812    4    1,028,295 
Gross profit   311,770    16    1,808    (421)   313,173    321,474    2,403    (484)   (346)   323,047 
Administrative expenses   (113,805)   (1,398)   (631)   (222)   (116,056)   (106,150)   (1,304)   (589)   (207)   (108,250)
Selling and distribution expenses   (32,563)   (400)   (181)   (64)   (33,208)   (33,335)   (409)   (185)   (66)   (33,995)
Other operating income (expense), net   1,474    (1)   -    3    1,476    (1,367)   17    -    15    (1,335)
Finance income   2,156    -    -    35    2,191    1,541    16    -    13    1,570 
Finance cost   (49,876)   -    -    (1)   (49,877)   (46,604)   (3)   -    (1)   (46,608)
Net profit (loss) gain on (settlement of) derivative financial instruments   19    -    -    -    19    (64)   -    -    -    (64)
Gain (loss) from exchange difference, net   5,309    (1)   46    (13)   5,341    349    11    -    (9)   351 
Profit (loss) before income tax   124,484    (1,784)   1,042    (683)   123,059    135,844    731    (1,258)   (601)   134,716 
Income tax expense   (36,552)   524    (306)   201    (36,133)   (41,355)   (223)   383    183    (41,012)
Profit (loss) for the year   87,932    (1,260)   736    (482)   86,926    94,489    508    (875)   (418)   93,704 

 

   As of June 30, 2023   As of December 31, 2022 
   Cement, concrete and precast   Construction supplies   Quicklime   Other   Consolidated   Cement, concrete and precast   Construction 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   3,211,381    39,787    65,524    31,522    3,348,214    3,086,104    38,353    70,327    32,210    3,226,994 
Other assets (*)   -    -    -    274    274    86,630    -    -    537    87,167 
Total assets   3,211,381    39,787    65,524    31,796    3,348,488    3,172,734    38,353    70,327    32,747    3,314,161 
Operating liabilities   2,000,794    63,711    -    407    2,064,912    2,041,923    76,780    -    323    2,119,026 
Capital expenditure (**)   157,381    -    -    -    157,381    190,126    -    -    -    190,126 

 

(*)As of June 30, 2023, corresponds to the financial instruments designated at fair value through other comprehensive income for S/274,000. As of December 31, 2022, corresponds to the financial instruments designated at fair value through other comprehensive income and to the fair value of derivative financial instruments (cross currency swap) for approximately S/274,000 and S/86,893,000, respectively. The fair value of hedge derivative financial instruments is allocated to the segment of cement, and the financial instruments designated at fair value through other comprehensive income and the fair value of the trading derivative financial instrument are presented as “Other”.

 

(**)The capital expenditures amount to S/162,015,000 and S/190,126,000 as of June 30, 2023 and December 31, 2022, respectively corresponds to purchases of property, plant and equipments, intangible assets and other minor non.current assets.

 

26

 

 

Notes to interim condensed consolidated unaudited financial statements (continued)

 

Geographic information

 

As of June 30, 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 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.

 

Foreign currency 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 hedged 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.

 

27

 

 

Notes to interim condensed consolidated unaudited financial statements (continued)

 

Foreign currency 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 six-month period ended June 30, 2023  Change in
US$ rate		   Effect on
consolidated profit
before income tax		 
U.S. Dollar  %   S/(000) 
         
    +5    1,176 
    +10    2,353 
   -5    (1,176)
    -10    (2,353)

 

Fort he six-month period ended June 30, 2022  Change in
US$ rate		   Effect on
consolidated profit
before income tax		 
U.S. Dollar  %   S/(000) 
         
   +5    9,142 
    +10    18,285 
    -5    (9,142)
    -10    (18,285)

 

Liquidity risk -

 

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. The Group generates positive cash flows by operating activities and has sources of financing sufficiently available according to its good credit record. Debt maturing within 12 months can be rolled over under the same conditions with existing lenders, if necessary.

 

Risk management 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 six-month period ended June 30, 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 June 30, 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 June 30, 2023 derivatives financial instruments (cross currency swaps) were fully settled in relation with the payment of international bonds in dollars.

 

 

28