Cementos Pacasmayo S.A.A. 6K Report of Foreign Private Issuer | CPAC 27 Oct 21

Exhibit 99.1

Cementos Pacasmayo S.A.A. and Subsidiaries

Unaudited interim condensed consolidated financial statements
as of September 30, 2021 and for the three and nine-month periods then ended

Cementos Pacasmayo S.A.A. and Subsidiaries

Unaudited interim condensed consolidated financial statements as of September 30, 2021 and for the three and nine-month periods then ended

Content

Report on review of interim condensed consolidated financial statements		F-1

Interim condensed consolidated financial statements

Interim condensed consolidated statements of financial position		F-2

Interim condensed consolidated statements of profit or loss		F-3

Interim condensed consolidated statements of other comprehensive income		F-4

Interim condensed consolidated statements of changes in equity		F-5

Interim condensed consolidated statements of cash flows		F-6

Notes to the interim condensed consolidated financial statements		F-8

Report on review of interim condensed consolidated financial statements

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

Introduction

We have reviewed the accompanying interim condensed consolidated statement of financial position of Cementos Pacasmayo S.A.A. (a Peruvian company) and its Subsidiaries (together the “Group”) as of September 30, 2021, and the related interim condensed consolidated statements of profit or loss, other comprehensive income, changes in equity and cash flows for the three and nine-month periods then ended, and explanatory notes. Management is responsible for the preparation and presentation of these interim condensed consolidated financial statements in accordance with IAS 34 Interim Financial Reporting (IAS 34). Our responsibility is to express a conclusion on these interim condensed consolidated 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 financial statements are not prepared, in all material respects, in accordance with IAS 34 Interim Financial Reporting.

Lima, Peru

October 26, 2021

Countersigned by:

Oscar Mere

C.P.C.C. Register No. 39990

F-1

Cementos Pacasmayo S.A.A. and Subsidiaries

Interim condensed consolidated statements of financial position

As of September 30, 2021 (unaudited) and December 31, 2020 (audited)

	Note	As of September 30, 2021			As of December 31, 2020
		S/(000)			S/(000)
Assets
Current assets
Cash and cash equivalents	3		298,914			308,912
Trade and other receivables	4		126,922			84,412
Income tax prepayments			12,247			18,076
Inventories	5		508,058			460,610
Prepayments			25,671			5,729
Total current asset			971,812			877,739
Non-current assets
Miscellaneous receivables,net	4		22,446			5,215
Financial instruments designated at fair value through other comprehensive income	15		692			692
Derivative financial instruments	15		123,489			42,247
Property, plant and equipment	6		1,961,765			2,014,508
Intangible assets			49,756			49,640
Goodwill			4,459			4,459
Deferred income tax assets			9,660			15,618
Right of use asset	7		5,056			6,006
Other assets			106			160
Total non-current asset			2,177,429			2,138,545
Total assets			3,149,241			3,016,284
Liability and equity
Current liabilities
Trade and other payables	8		211,989			180,190
Dividends payable	8		9,536			7,686
Financial obligations	9 y 15		233,448			65,232
Lease liabilities	7		1,804			1,531
Income tax payables			10,674			1,051
Provisions	10		15,644			9,380
Total current liabilities			483,095			265,070
Non-current liabilities
Financial obligations	9 y 15		1,332,349			1,203,352
Lease liabilities	7		4,680			5,102
Non-current provisions	10		34,702			25,341
Deferred income tax liabilities			149,733			149,864
Total non-current liabilities			1,521,464			1,383,659
Total liability			2,004,559			1,648,729
Equity
Capital stock			423,868			423,868
Investment shares			40,279			40,279
Investment shares holds in treasury			(121,258	)		(121,258	)
Additional paid-in capital			432,779			432,779
Legal reserve			168,636			168,636
Other accumulated comprehensive results			(19,628	)		(33,378	)
Retained earnings			220,006			456,629
Total equity			1,144,682			1,367,555
Total liability and equity			3,149,241			3,016,284

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

F-2

Cementos Pacasmayo S.A.A. and Subsidiaries

Interim condensed consolidated statements of profit or loss

For the three and nine-month periods ended September 30, 2021 and September 30, 2020 (unaudited)

		For the three-month period ended September 30,						For the nine-month period ended September 30,
	Note	2021			2020			2021			2020
		S/(000)			S/(000)			S/(000)			S/(000)

Sales of goods	12		507,170			407,393			1,412,898			820,996
Cost of sales			(358,767	)		(276,263	)		(1,014,868	)		(595,713	)
Gross profit			148,403			131,130			398,030			225,283

Operating income (expense)
Administrative expenses			(50,675	)		(36,200	)		(144,977	)		(109,778	)
Selling and distribution expenses			(14,204	)		(9,427	)		(42,559	)		(31,420	)
Other operating income (expense), net			(93	)		327			336			(317	)
Total operating expenses, net			(64,972	)		(45,300	)		(187,200	)		(141,515	)
Operating profit			83,431			85,830			210,830			83,768


Other income (expenses)
Finance income			1,524			748			2,304			2,445
Finance costs			(24,371	)		(23,172	)		(66,261	)		(66,985	)
Cumulative net loss on settlement of derivative financial instruments			-			-			(1,569	)		-
Net profit for valuation of trading derivative financial instruments			140			610			640			5,001
Gain (loss) from exchange difference, net			510			(1,454	)		927			(8,350	)
Total other expenses, net			(22,197	)		(23,268	)		(63,959	)		(67,889	)
Profit before income tax			61,234			62,562			146,871			15,879

Income tax expense	11		(19,118	)		(17,370	)		(45,290	)		(5,512	)

Profit for the period			42,116			45,192			101,581			10,367


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			0.24			0.02

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

F-3

Cementos Pacasmayo S.A.A. and Subsidiaries

Interim condensed consolidated statements of other comprehensive income

For the three and nine-month periods ended September 30, 2021 and September 30, 2020 (unaudited)

		For the three-month period ended September 30,						For the nine-month period ended September 30,
	Note	2021			2020			2021			2020
		S/(000)			S/(000)			S/(000)			S/(000)

Profit for the period			42,116			45,192			101,581			10,367

Other comprehensive income
Other comprehensive income to be reclassified to profit or loss in subsequent periods:
Net (loss) gain on cash flow hedges	15(a)		13,071			(2,594	)		19,503			(821	)
Deferred income tax	11		(3,856	)		766			(5,753	)		243
Other comprehensive income for the period, net of income tax			9,215			(1,828	)		13,750			(578	)

Total comprehensive income for the period, net of income tax			51,331			43,364			115,331			9,789

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

F-4

Cementos Pacasmayo S.A.A. and Subsidiaries

Interim condensed consolidated statements of changes in equity

For the nine-month period ended September 30, 2021 and September 30, 2020 (unaudited)

	Attributable to equity holders of the parent
	Capital stock		Investment shares		Treasury shares			Additional paid-in capital		Legal reserve		Unrealized gain on financial instruments designated at fair value			Unrealized gain 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, 2020		423,868		40,279		(121,258	)		432,779		168,636		(2,103	)		(17,750	)		497,200			1,421,651
Profit for the period		-		-		-			-		-		-			-			10,367			10,367
Other comprehensive income		-		-		-			-		-		-			(578	)		-			(578	)
Total comprehensive income		-		-		-			-		-		-			(578	)		10,367			9,789
Balance as of September 30, 2020		423,868		40,279		(121,258	)		432,779		168,636		(2,103	)		(18,328	)		507,567			1,431,440

Balance as of January 1, 2021		423,868		40,279		(121,258	)		432,779		168,636		(14,463	)		(18,915	)		456,629			1,367,555
Profit for the period		-		-		-			-		-		-			-			101,581			101,581
Other comprehensive income		-		-		-			-		-		-			13,750			-			13,750
Total comprehensive income		-		-		-			-		-		-			13,750			101,581			115,331
Dividends, note 8		-		-		-			-		-		-			-			(338,204	)		(338,204	)
Balance as of September 30, 2021		423,868		40,279		(121,258	)		432,779		168,636		(14,463	)		(5,165	)		220,006			1,144,682

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

F-5

Cementos Pacasmayo S.A.A. and Subsidiaries

Interim condensed consolidated statements of cash flows

For the three and nine-month period ended September 30, 2021 and September 30, 2020 (unaudited)

		For the three-month period ended September 30						For the nine-month period ended September 30
	Note	2021			2020			2021			2020
		S/(000)			S/(000)			S/(000)			S/(000)

Operating activities
Profit before income tax			61,234			62,562			146,871			15,879
Non-cash adjustments to reconcile profit before income tax to net cash flows
Depreciation and amortization			33,853			34,731			101,538			103,383
Finance costs			24,371			23,172			66,261			66,985
Long-term incentive plan	13		3,060			1,440			6,699			4,319
Net gain on settlement of trading derivative financial instruments			-			-			1,569			-
Estimate expected credit loss	4		324			111			1,517			2,287
Unrealized exchange difference related to monetary transactions			(6,929	)		305			(13,831	)		6,319
Finance income			(1,524	)		(748	)		(2,304	)		(2,445	)
Net gain on disposal of property, plant and equipment	6		(170	)		(677	)		(1,329	)		(2,309	)
Net gain on the valuation of trading derivative financial instruments			(140	)		(610	)		(640	)		(5,001	)

Other operating, net			2,266			(77	)		2,701			(1,367	)

Working capital adjustments
(Increase) decrease in trade and other receivables			(26,549	)		(7,547	)		(37,712	)		27,932
(Increase) decrease in prepayments			1,647			(553	)		(19,942	)		127
(Increase) decrease in inventories			(8,154	)		69,111			(47,785	)		62,437
Increase in trade and other payables			37,295			58,885			55,140			15,510
			120,584			240,105			258,753			294,056

Interests received			2,145			1,091			3,969			1,685
Interests paid			(35,224	)		(36,569	)		(67,848	)		(68,007	)
Income tax paid			(14,674	)		(3,661	)		(38,932	)		(18,255	)
Net cash flows provided by operating activities			72,831			200,966			155,942			209,479

F-6

Interim condensed consolidated statements of cash flows (continued)

		For the three-month period ended September 30,						For the nine-month period ended September 30,
	Note	2021			2020			2021			2020
		S/(000)			S/(000)			S/(000)			S/(000)

Investing activities
Proceeds from sale of property, plant and equipment			440			1,567			3,694			3,368
Collection of loan granted to third parties			145			-			427			91
Purchase of property, plant and equipment			(10,981	)		(5,327	)		(40,378	)		(23,553	)
Loans granted to related parties			(17,122	)		-			(17,122	)		-
Purchase of intangibles assets			(2,145	)		(657	)		(6,133	)		(3,466	)
Redemption of term deposits with original maturity greater than 90 days			-			31,000			-			158,990
Opening of term deposits with original maturity greater than 90 days.			-			-			-			(208,990	)
Loans granted to third parties			-			(1,776	)		-			(4,189	)
Net cash flows provided by (used in) investing activities			(29,663	)		24,807			(59,512	)		(77,749	)
Financing activities
Loan received	9		220,000			578,920			220,000			791,270
Income from settlement of derivative financial instrument			-			-			3,879			-
Dividends returned			35			52			232			292
Dividends paid			(336,106	)		(12	)		(336,586	)		(45,918	)
Payment of hedge finance cost			(8,012	)		(7,953	)		(15,214	)		(15,685	)
Payment of lease liabilities	7		(612	)		(640	)		(1,786	)		(1,171	)
Loan paid			-			(609,465	)		-			(609,465	)
Payment of bank overdraft			-			(70,691	)		-			(70,921	)
Bank overdraft			-			-			-			70,921
Net cash flows (used in) provided by financing activities			(124,695	)		(109,789	)		(129,475	)		119,323
Net increase (decrease) in cash and cash equivalents			(81,527	)		115,984			(33,045	)		251,053
Net foreign exchange difference			11,789			2,051			23,047			1,666
Cash and cash equivalents at the beginning of the period			368,652			202,950			308,912			68,266
Cash and cash equivalents at the end of the period	3		298,914			320,985			298,914			320,985
Transactions with no effect in cash flows:
Unrealized exchange difference related to monetary transactions			(6,929	)		305			(13,831	)		6,319
Recognition of right-of-use assets and lease liabilities during the period	7		-			-			217			7,504

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

F-7

Cementos Pacasmayo S.A.A. and Subsidiaries

Notes to interim condensed consolidated financial statements (unaudited)

As of September 30, 2021 and 2020, and December 31, 2020

Economic activity

(a)

Economic activity -

Cementos Pacasmayo S.A.A. (hereinafter “the Company”) was incorporated in 1957 and, in accordance with the General Law of Peruvian Companies, is an open stock corporation with publicly traded share. The Company is a subsidiary of Inversiones ASPI S.A., which holds 50.01 percent of the Company’s common shares as of September 30, 2021, December 31, 2020 and September 30, 2020.

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 financial statements of the Company and its subsidiaries (hereinafter the “Group”) as of September 30, 2021 and for the nine-month period then ended, were approved for issuance by the Company’s Management on October 26, 2021. The consolidated financial statements as of December 31, 2020 have been approved by the General Meeting of Shareholders, on March 23, 2021.

(b)

COVID 19 -

COVID-19, an infectious disease caused by a new virus, was declared a world-wide pandemic by the World Health Organization (“WHO”) on March 11 2020.The measures to slow the spread of COVID-19 have had a significant impact on the global economy.

On March 15, 2020, the Peruvian government declared a nationwide state of emergency, effectively shutting down all business considered non-essential (with exception of food production and commercialization, pharmaceuticals and health). As a result, since that date, we shut-down our three plants until the Peruvian government allowed us to restart production and commercial activities on May 20, 2020.

On August 14, 2021 the Government has decided to extend the state of health emergency nationwide for 180 calendar days from September 3, 2021, to March 1, 2022 in order to continue with the prevention, control and health care actions for the protection of the population of the entire country.

F-8

Notes to interim condensed consolidated financial statements (unaudited)
(continued)

During the halt period, we were unable to generate income; however, the Company largely returned to the operating levels prior to the shut-down as of the month of August 2020. The Group has prepared interim condensed consolidated financial statements until September 30 2021 on a going concern basis, which assumes continuity of current business activities and the realization of assets and settlement of liabilities in the ordinary course of business.

Regarding financial obligations, we have not yet seen any changes in our access and cost of funding, however, at the beginning of the nationwide emergency state we took a bank overdraft line and short-term loans as a precautionary measure in order to cover our working capital needs, some of these loans have already been canceled and others are still outstanding as shown in note 9.

The Company has taken various measures to preserve the health of its employees and to prevent contagion in its administrative and operational areas, such as remote work, rigorous cleaning of work environments, distribution of personal protective equipment, test of suspicious cases and body temperature measurement.

Basis of preparation and changes to the Group’s accounting policies

2.1

Basis of preparation -

The interim condensed consolidated 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). The interim condensed consolidated financial statements 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 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 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 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, 2020.

New standards, interpretations and amendments

The accounting policies adopted in the preparation of the interim condensed consolidated financial statements are consistent with the policies considered in the preparation of the consolidated financial statements of the Group at December 31, 2020, except for the adoption of new standards effective as of 1 January 2021. The standards and interpretations relevant to the Group, that are effective since January 1, 2021 are disclosed below.

F-9

Notes to interim condensed consolidated financial statements (unaudited)
(continued)

Amendments to IFRS 7, IFRS 9 and IAS 39 Interest Rate Benchmark Reform

The amendments to IFRS 9 and IAS 39 Financial Instruments: Recognition and Measurement provide a number of reliefs, which apply to all hedging relationships that are directly affected by interest rate benchmark reform, “LIBOR”. A hedging relationship is affected if the reform gives rise to uncertainty about the timing and/or amount of benchmark-based cash flows of the hedged item or the hedging instrument. These amendments have no impact on the consolidated financial statements of the Group since it does not have financial debt agreed with the reference interest rate “LIBOR” or associated hedging relationships.

The Group has not adopted in advance any other standard, interpretation or modification that has been issued but has not yet entered into force.

2.2

Basis of consolidation -

The interim condensed consolidated financial statements comprise the financial statements of the Company and its subsidiaries as of September 30, 2021 and 2020.

As of September 30, 2021 and 2020, 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, 2020.

2.3

Seasonality of operations -

Seasonality is not relevant to the Group’s activities.

Cash and cash equivalents

(a)

This caption consists of the following:

	As of September 30, 2021		As of December 31, 2020
	S/(000)		S/(000)

Cash on hand		235		177
Cash at banks (b)		231,491		22,510
Term deposits with original maturities of ninety days or less (c)		67,188		286,225

		298,914		308,912

(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)

The short-term deposits held in domestic banks were freely available and earned interest at the respective short-term market rates.

F-10

Notes to interim condensed consolidated financial statements (unaudited)
(continued)

Trade and other receivables

As of September 30, 2021 and December 31, 2020 this caption mainly include trade receivables, value-added tax credit (VAT), interest receivables and accounts receivables from related parties. At those dates, approximately S/58,703,000 and S/46,484,000, respectively of the trade receivables were guaranteed by banks guarantees and mortgages. These amounts correspond to 56 percent and 63 percent of the trade receivables as of that dates, respectively.

As of September 30, 2021 and 2020, the Group recorded S/1,517,000 and S/2,287,000, respectively, related to the provision for expected credit losses for trade receivables, which are presented in the caption “Sales and distribution expenses” of the interim condensed consolidated statement of income and; correspond 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 three-month period ended as of September 30, 2021 and 2020 is as follows:

	2021		2020
	S/(000)		S/(000)

Opening balance		14,358		12,781
Additions		1,517		2,287
Recoveries and others		17		(7	)

Ending balance		15,892		15,061

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.

Faced with the threat of a forced collection of this debt notified with coercive resolution by SUNAT; the Company made, under protest, partial payments of the debt arbitrarily placed in collection. These payments as of September 30, 2021 amount to approximately S/ 17,600, 000 and are presented in the caption “Miscellaneous receivables, net”, 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.

Inventories

As of September 30, 2021 and December 31, 2020 includes goods and finished products, work in progress, raw materials and other supplies to be used in the production process.

F-11

Notes to interim condensed consolidated financial statements (unaudited)
(continued)

Property, plant and equipment, net

During the three- and nine-month periods ended September 30, 2021 the Group’s additions amounted approximately to S/14,093,000 and S/42,513,000, respectively (S/7,311,000 and S/20,665,000 during the three- and nine-month periods ended September 30, 2020, respectively).

Assets with a net book value of S/939,000 were sold during the nine-month period ended September 30, 2021 (S/1,695,000 for the nine-month period ended September 30, 2020), resulting in a net gain on disposal of S/1,287,000 (S/2,309,000 for the nine-month period ended September 30, 2020).

As of September 30, 2021 the Group maintains accounts payable related to the acquisition of property, plant and equipment for S/2,134,000 (S/4,830,000 as of December 31, 2020).

Leases

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

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/992,000 for the nine-month period ended September 30, 2021 (S/1,255,000 as of September 30, 2020) and was recognized in the “Administrative expenses” caption of the interim condensed consolidated statement of profit or loss.

F-12

Notes to interim condensed consolidated financial statements (unaudited)
(continued)

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

	Transportation units		Other			Total
	S/(000)		S/(000)			S/(000)

Cost -
Balance as of January 1, 2020	-		109			109
Additions		7,504		-			7,504
Sales and/or retirement		-		(72	)		(72	)
Balance as of September 30, 2020		7,504		37			7,541
Balance as of January 1, 2021		7,504		38			7,542
Additions		217		-			217
Sales and/or retirement		-		(3	)		(3	)
Balance as of September 30, 2021		7,721		35			7,756

Accumulated depreciation -
Balance as of January 1, 2020		-		63			63
Additions		1,126		26			1,152
Sales and/or retirement		-		(61	)		(61	)
Balance as of September 30, 2020		1,126		28			1,154
Balance as of January 1, 2021		1,501		35			1,536
Additions		1,164		-			1,164
Balance as of September 30, 2021		2,665		35			2,700


Net book value
As of December 31, 2020		6,003		3			6,006
As of September 30, 2021		5,056		-			5,056

F-13

Notes to interim condensed consolidated financial statements (unaudited)
(continued)

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

	2021			2020
	S/(000)			S/(000)

Balance as of January, 1		6,633			57
Additions		217			7,504
Financial interest expense		285			303
Lease payments		(1,786	)		(1,171	)
Disposals		-			(19	)
Others		1,135			285
Balance as of September 30		6,484			6,959

Maturity
Current portion		1,804			1,512
Non-current portion		4,680			5,447
Balance as of September 30		6,484			6,959

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

Trade, dividend and other payables

As of September 30, 2021 and December 31, 2020, this caption includes trade payables, account payables to related parties, interest payable, dividends payable among other minor payables.

On April 29, 2021, the Board of Directors agreed to distribute dividends amounting to S/338,204,000 (this amount does not include dividends corresponding to treasury shares), from unrestricted earnings for the years 2014 to 2019, which were paid during the first days of July of the year 2021.

As of September 30, 2021 dividends payable amounted to S/9,536,000 (S/7,686,000 as of December 31, 2020).

Financial Obligations

Corporate bonds

On January 31, 2019, corporate bonds were issued in soles for S/260,000,000 at an interest rate of 6.688 percent per year and maturity of 10 years and; 15-year bonds for S/310,000,000 at an interest rate of 6.844 percent per year. As of September 30, 2021 and as of December 31, 2020 the corporate bonds issued in US Dollars amounts to US$131,612,000 with an annual interest rate of 4.5 per cent and maturity in 2023.

For the nine-month period ended September 30, 2021 and 2020, the corporate bonds generated interests that have been recognized in the interim condensed consolidated financial statement of profit or loss for S/47,681,000 and S/45,550,000, respectively.

F-14

Notes to interim condensed consolidated financial statements (unaudited)
(continued)

Bank loans

As of September 30, 2021 and December 31, 2020, the Company maintains two loans of S/79,500,000 each maturing in January 2022 with an effective annual interest rate of 2.62 percent. Also, as of December 31, 2020, the Company maintains a loan of US$18,000,000 maturing in July 2021 with an effective annual interest rate of 2.20 percent, this loan was renegotiated with maturity in July 2022 and an effective annual interest rate of 1.80 percent.

On July 1, 2021 the Company acquired two medium-term promissory notes with Banco de Crédito del Perú S.A. for the amount of S/ 110,000,000 each one, with maturity date December 23, 2022 and an effective annual interest rate of 1.55 percent.

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 will allow the payment of all the financial obligations that the company maintains with maturity until February 2023 and will be disbursed based on the maturity of each of them, so it would be expected that the first disbursement will be on January 2022. 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 is estimated for 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:

Comply with the following financial safeguards:

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

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

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.

II.

It maintains the following main obligations to do:

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

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

Keep your assets in good condition and properly insured.

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

III.

It maintains the following obligations not to do:

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.

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

F-15

Notes to interim condensed consolidated financial statements (unaudited)
(continued)

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

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

Financial covenants –

The contracts for corporate bonds issued in US dollars and 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.

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

	In sight		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)		S/(000)
As of September 30, 2021
Financial obligations		-		-		233,448		634,290		570,000		1,437,738
Interests		-		-		65,524		170,855		154,851		391,230
Trade and other payables		-		137,382		63,557		-		-		200,939
Dividends payable		9,536		-		-		-		-		9,536
Hedge finance cost payable		-		-		16,182		8,091		-		24,273
Lease liabilities		-		452		1,427		4,605		-		6,484

As of December 31, 2020
Financial obligations		-		-		65,232		572,993		570,000		1,208,225
Interests		-		30,033		35,056		186,607		193,454		445,150
Trade and other payables		-		134,567		38,235		-		-		172,802
Dividends payable		7,686		-		-		-		-		7,686
Hedge finance cost payable		-		8,032		8,032		24,096		-		40,160
Lease liabilities		-		-		383		1,148		5,102		6,633

10.

Provisions

As of September 30, 2021 and December 31, 2020, this caption includes workers’ profit sharing, provision for contingencies, long-term incentive plan and rehabilitation provision.

F-16

Notes to interim condensed consolidated financial statements (unaudited)
(continued)

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 statement of profit or loss and statement of other comprehensive income are:

	For the three-month period ended September 30,						For the nine-month period ended September 30,
	2021			2020			2021			2020
	S/(000)			S/(000)			S/(000)			S/(000)

Current income tax		(18,365	)		(3,696	)		(45,215	)		(5,609	)
Deferred income tax		(753	)		(13,674	)		(75	)		97
Total income tax expense (benefit) recognized in the interim consolidated statements of profit or loss		(19,118	)		(17,370	)		(45,290	)		(5,512	)
Income tax recognized in other comprehensive income		(3,856	)		766			(5,753	)		243
Total income tax		(22,974	)		(16,604	)		(51,043	)		(5,269	)

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

	For the three-month period ended September 30,						For the nine-month period ended September 30,
	2021			2020			2021			2020
	S/(000)			S/(000)			S/(000)			S/(000)

(Decrease) increase of deferred income tax asset (*)		(3,779	)		1,551			(5,958	)		9,164
Increase of deferred income tax liability(**)		(830	)		(14,459	)		130			(8,824	)

Total variation of deferred income tax		(4,609	)		(12,908	)		(5,828	)		340
Deferred income tax expense recognized in interim condensed consolidated statements of profit or loss		(753	)		(13,674	)		(75	)		97
Deferred income tax recognized in other comprehensive income		(3,856	)		766			(5,753	)		243

Total variation of deferred income tax		(4,609	)		(12,908	)		(5,828	)		340

(*)

As of September 30, 2020 corresponds to the increase of tax-loss carry forward in the subsidiaries Distribuidora Norte Pacasmayo S.R.L. and Dinoselva Iquitos S.A.C.

(**)

As of September 30, 2020 corresponds to difference of bases.

F-17

Notes to interim condensed consolidated financial statements (unaudited)
(continued)

Following is the composition of deferred tax related to items recognized in other comprehensive income:

	For the three-month period ended September 30,					For the nine-month period ended September 30,
	2021			2020		2021			2020
	S/(000)			S/(000)		S/(000)			S/(000)

(Loss) gain unrealized on derivative financial instruments		(3,856	)		766		(5,753	)		243

Total deferred income tax in OCI		(3,856	)		766		(5,753	)		243

12.

Sales of goods

This caption is made up as follows:

	Cement, concrete and precast		Quicklime		Construction Supplies		Other		Total
	S/(000)		S/(000)		S/(000)		S/(000)		S/(000)
For the three-month period ended September 30, 2021
Revenue from external customers		469,131		7,854		30,185		-		507,170
Revenue from external customers		469,131		7,854		30,185		-		507,170

For the nine-month period ended September 30, 2021
Revenue from external customers		1,305,234		23,970		83,466		228		1,412,898
Revenue from external customers		1,305,234		23,970		83,466		228		1,412,898

For the three-month period ended September 30, 2020
Revenue from external customers		368,143		8,985		29,855		410		407,393
Revenue from external customers		368,143		8,985		29,855		410		407,393
For the nine-month period ended September 30, 2020
Revenue from external customers		747,858		22,231		50,246		661		820,996
Revenue from external customers		747,858		22,231		50,246		661		820,996

F-18

Notes to interim condensed consolidated financial statements (unaudited)
(continued)

13.	Related party transactions

During the nine-months periods ended September 30, 2021 and 2020, the Group carried out the following main transactions with Inversiones ASPI S.A. and its related parties:

	For the three-month period ended September 30,					For the nine-month period ended September 30,
	2021		2020			2021		2020
	S/(000)		S/(000)			S/(000)		S/(000)
Income
Inversiones ASPI S.A.
Fees from office lease		5		3			15		9
Fees for management and administrative services		25		(206	)		73		66

Compañía Minera Ares S.A.C. (Ares)
Fees from land rental services		310		343			890		1,003
Fees from leasing of parking		87		87			307		252

Fosfatos del Pacífico S.A. (Fospac)
Fees from office lease		5		7			14		21
Fees for management and administrative services		12		(57	)		143		523

Fossal S.A.A. (Fossal)
Fees from office lease		3		3			13		11
Fees for management and administrative services		14		16			39		36

Asociación Sumac Tarpuy
Fees from office lease		5		-			15		-

Expenses
Security services provided by Compañía Minera Ares S.A.C.		660		475			1,980		1,425

F-19

Notes to interim condensed consolidated financial statements (unaudited)
(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 September 30, 2021 and December 31, 2020:

	September 30, 2021				December 31, 2020
	Accounts receivable		Accounts payable		Accounts receivable		Accounts payable
	S/(000)		S/(000)		S/(000)		S/(000)

Fossal S.A.A.		14,514		-		-		-
Fosfatos del Pacífico S.A.		4,122		8		1,449		-
Compañía Minera Ares S.A.C.		542		1,455		678		1,348
Inversiones ASPI S.A.		-		105		-		211
Other		72		-		85		-
		19,250		1,568		2,212		1,559

Outstanding balances are interest free, except for the loans granted in August 2021 to Fossal S.A.A. and Fosfatos del Pacífico S.A. for the amounts of US3,477,000 and US700,000 respectively, which have an effective annual interest rate of 1.6% percent, these loans were partially collected in October 2021. There have been no guarantees provided or received from any related party. As of September 30, 2021 and December 31, 2020, 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 compensations expense amounted to S/6,395,000 and S/16,665,000 during the three and nine-month periods ended September 30, 2021, respectively (S/5,897,000 and S/18,388,000, during the three and nine-month periods ended September 30, 2020), and the total long-term compensations expense amounted to S/3,060,000 and S/6,701,000 during the three and nine-month periods ended September 30, 2021, respectively (S/1,440,000 and S/4,319,000 during the three and nine-month period ended September 30, 2020, 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 nine-month period ended September 30, 2021 and 2020 by the weighted average number of common and investment shares outstanding during those periods.

The Group has no dilutive potential common shares as of September 30, 2021 and 2020.

F-20

Notes to interim condensed consolidated financial statements (unaudited)
(continued)

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

	For the three-month period ended September 30,				For the nine-month period ended September 30,
	2021		2020		2021		2020
	S/(000)		S/(000)		S/(000)		S/(000)

Numerator
Net profit attributable to ordinary equity holders of the Parent		42,116		45,192		101,581		10,367

For the three-month
period ended
September 30,

For the nine-month
period ended
September 30,

2021

2020

2021

2020

S/(000)

Denominator

Weighted average number of common and investment shares (thousands)

428,107

Basic profit for common and investment shares

0.10

0.11

0.24

0.02

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 financial statements.

15.

Financial assets and liabilities

(a)

Financial asset –

Derivatives assets of hedging –

Foreign currency risk –

As of September 30, 2021 the Group maintains Cross currency swap contracts for a nominal amount of US$132,000,000 (US$150,000,000 as of December 31, 2020), with maturity in 2023 and average rate of 2.97%. Of this total, US$131,612,000 have 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 an unrealized gain of S/19,503,000 and an unrealized loss of S/821,000 for the nine-month period ended September 30, 2021 and September 30, 2020 respectively included in the interim condensed consolidated statement of other comprehensive income. The amounts retained in other comprehensive income as of September 30, 2021 are expected to mature and affect the consolidated statement of profit or loss in 2023, settlement year of cross currency contracts.

Derivate assets from trading -

As of September 30, 2021 and 2020, cross currency swaps that do not have an underlying hedging relationship amounts to US$388,000 and US$18,388,000, respectively, have been designated as trading. The effect on profit or loss from its measurement at fair value was a gain of S/640,000 and S/5,001,000 for the nine-month period ended September 30, 2021 and 2020, respectively.

F-21

Notes to interim condensed consolidated financial statements (unaudited)
(continued)

(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
	2021		2020		2021		2020		2021/2020
	S/(000)		S/(000)		S/(000)		S/(000)
Financial assets
Cash and cash equivalents		298,914		308,912		298,914		308,912		Level 1
Trade and other receivables		130,669		89,139		130,669		89,139		Level 2
Derivative financial assets -“cross currency swaps”		123,489		42,247		123,489		42,247		Level 2
Financial instruments at fair value through other comprehensive income		692		692		692		692		Level 3
Total financial assets		553,764		440,990		553,764		440,990

Financial liabilities
Trade and other payables		200,939		169,712		200,939		169,712		Level 2
Dividends payable		9,536		7,686		9,536		7,686		Level 2
Senior notes		1,112,349		1,044,352		1,123,976		1,118,492		Level 1
Fixed rate notes		453,448		224,232		452,010		221,607		Level 2

Total financial liabilities		1,776,272		1,445,982		1,786,461		1,517,497

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 September 30, 2021 and December 31, 2020, there were no transfers between the fair value hierarchies.

F-22

Notes to interim condensed consolidated financial statements (unaudited)
(continued)

Management assessed that cash and term deposits, 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.

16.

Commitments and contingencies

Operating lease commitments – Group as lessor

As of September 30, 2021, 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 nine-month period ended September 30, 2021 and 2020 for S/890,000 and S/1,003,000, respectively.

Capital commitments

As of September 30, 2021, 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, 2020.

F-23

Notes to interim condensed consolidated financial statements (unaudited)
(continued)

Tax situation

The Company is subject to Peruvian tax law. As of September 30, 2021 and 2020, 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 September 30, 2021 and December 31, 2020.

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 open to review by Tax Authorities
Entity	Income tax	Value-added tax

Cementos Pacasmayo S.A.A.	2016-2020	Dec.2016-2021
Cementos Selva S.A.	2016-2020	Dec.2016-2021
Distribuidora Norte Pacasmayo S.R.L.	2016-2020	Dec.2016-2021
Empresa de Transmisión Guadalupe S.A.C.	2016-2020	Dec.2016-2021
Salmueras Sudamericanas S.A.	2016-2020	Dec.2016-2021
Calizas del Norte S.A.C. (on liquidation)	2016-2020	Dec.2016-2021
Soluciones Takay S.A.C.	2019-2020	May to Dec.2019-2021

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 financial statements as of September 30, 2021 and the consolidated financial statements as of December 31, 2020.

Legal claim contingency

As of September 30, 2021, some third parties have commenced actions against the Group in relation with its operations which claims in aggregate represent S/11,718,000. From this total amount, S/3,441,000 corresponded to labor claims from former employees; S/7,681,000 linked to resolutions of determination and fine on the property tax of the periods 2009 to 2014 issued by the District Municipality of Pacasmayo and S/596,000 related to the tax assessments received from the tax administration corresponding to 2009 tax period, which was reviewed by the tax authority during 2012.

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 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, 2020.

F-24

Notes to interim condensed consolidated 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 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.

	Revenues from external customers				Gross margin						Profit (loss) before income tax						Income tax						Profit (loss) for the period
	2021		2020		2021			2020			2021			2020			2021			2020			2021			2020
	S/(000)		S/(000)		S/(000)			S/(000)			S/(000)			S/(000)			S/(000)			S/(000)			S/(000)			S/(000)

For the three-month period ended September 30,
Cement, concrete and precast		469,131		368,143		147,005			128,219			63,473			61,650			(19,818	)		(17,393	)		43,655			44,257
Construction supplies		30,185		29,855		696			1,638			(1,710	)		1,194			535			(243	)		(1,175	)		951
Quicklime		7,854		8,985		1,282			1,481			701			1,016			(217	)		(368	)		484			648
Other		-		410		(580	)		(208	)		(1,230	)		(1,298	)		382			634			(848	)		(664	)

Total		507,170		407,393		148,403			131,130			61,234			62,562			(19,118	)		(17,370	)		42,116			45,192

For the nine-month period ended September 30,
Cement, concrete and precast		1,305,234		747,858		393,294			220,835			152,540			18,615			(47,038	)		(6,462	)		105,502			12,153
Construction supplies		83,466		50,246		2,334			2,216			(4,619	)		(648	)		1,424			225			(3,195	)		(423	)
Quicklime		23,970		22,231		2,857			2,659			1,165			1,187			(359	)		(412	)		806			775
Other		228		661		(455	)		(427	)		(2,215	)		(3,275	)		683			1,137			(1,532	)		(2,138	)

Total		1,412,898		820,996		398,030			225,283			146,871			15,879			(45,290	)		(5,512	)		101,581			10,367

F-25

Notes to interim condensed consolidated financial statements (unaudited)
(continued)

	Segment assets		Other Assets (**)		Total asset		Total liabilities by segment
	S/(000)		S/(000)		S/(000)		S/(000)

As of September 30, 2021
Cement, concrete and precast		2,871,394		123,117		2,994,511		1,922,593
Construction supplies		47,945		-		47,945		81,885
Quicklime		74,570		-		74,570		-
Other (*)		31,151		1,064		32,215		81

Total		3,025,060		124,181		3,149,241		2,004,559

As of December 31, 2020
Cement, concrete and precast		2,806,803		37,068		2,843,871		1,590,105
Construction supplies		51,225		-		51,225		58,517
Quicklime		83,621		-		83,621		-
Other (*)		31,696		5,871		37,567		107

Total		2,973,345		42,939		3,016,284		1,648,729

	(*)	The “Other” segment includes activities that do not meet the threshold for disclosure under IFRS 8.13 and represent non-material operations of the Group.

(**)

As of September 30, 2021 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/692,000 and S/123,489,000, respectively. As of December 31, 2020 corresponds to the financial instruments designated at fair value through other comprehensive income for approximately S/692,000 and fair value of derivative financial instruments (cross currency swap) for approximately S/42,247,000. 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”.

Geographic information

As of September 30, 2021 and December 31, 2020, all non-current assets are located in Peru and all revenues are from Peruvian clients.

F-26

Notes to interim condensed consolidated financial statements (continued)

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, 2020.

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).

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.

F-27

Notes to interim condensed consolidated financial statements (unaudited)
(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.

As of September 30, 2021	Change in US$ rate		Effect on consolidated profit before tax
U.S. Dollar	%		S/(000)

		+5		10,732
		+10		21,465
		-5		(10,732	)
		-10		(21,465	)

As of September 30, 2020	Change in US$ rate		Effect on consolidated profit before tax
U.S. Dollar	%		S/(000)

		+5		2,426
		+10		4,853
		-5		(2,426	)
		-10		(4,853	)

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. 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 September 30, 2021 and December 31, 2020, no portion of the corporate bonds will mature in less than one year.

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 nine-month period ended September 30, 2021, 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 September 30, 2021 and December 31, 2020, 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.

F-28

Cementos Pacasmayo S.A.A. (CPAC) 6-KReport of Foreign Private Issuer