EX-99.1 2 ea177553ex99-1_cementos.htm UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AS OF MARCH 31, 2023 AND FOR THE THREE-MONTH PERIOD THEN ENDED

Exhibit 99.1

 

 

 

 

 

 

 

 

Cementos Pacasmayo S.A.A. and Subsidiaries

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cementos Pacasmayo S.A.A. and Subsidiaries

 

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

 

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

 

 

 

 

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 March 31, 2023, and the related interim condensed consolidated unaudited statements of profit or loss, other comprehensive income, changes in equity and cash flows for the three-month period then ended, and explanatory notes. Management is responsible for the preparation and presentation of these interim condensed consolidated unaudited financial statements in accordance with IAS 34 Interim Financial Reporting (IAS 34). Our responsibility is to express a conclusion on these interim condensed consolidated unaudited financial statements based on our review.

 

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.

 

1

 

 

Report on review of interim condensed consolidated unaudited financial statements (continued)

 

Conclusion

 

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

 

Lima, Peru

April 26, 2023

 

Countersigned by:

 

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

 

2

 

 

Cementos Pacasmayo S.A.A. and Subsidiaries

 

Interim condensed consolidated unaudited statements of financial position

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

 

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

 

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

 

3

 

 

Cementos Pacasmayo S.A.A. and Subsidiaries

 

Interim condensed consolidated unaudited statements of profit or loss

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

 

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

 

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

 

4

 

 

Cementos Pacasmayo S.A.A. and Subsidiaries

 

Interim condensed consolidated unaudited statements of other comprehensive income

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

 

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

 

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

 

5

 

 

Cementos Pacasmayo S.A.A. and Subsidiaries

 

Interim condensed consolidated unaudited statements of changes in equity

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

 

   Capital
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   -    -    -    -    -    -    -    45,725    45,725 
Other comprehensive income for the period, net of income tax   -    -    -    -    -    -    1,442    -    1,442 
Total comprehensive income   -    -    -    -    -    -    1,442    45,725    47,167 
                                              
Balance as of March 31, 2022   423,868    40,279    (121,258)   432,779    168,636    (15,869)   (2,783)   317,320    1,242,972 
                                              
Balance 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   -    -    -    -    -    -    -    43,492    43,492 
Other comprehensive income for the period, net of income tax   -    -    -    -    -    -    1,520    -    1,520 
Other   -    -    -    -    -    (5)   -    -    (5)
Total comprehensive income   -    -    -    -    -    (5)   1,520    43,492    45,007 
Balance as of March 31, 2023   423,868    40,279    (121,258)   432,779    168,636    (16,272)   -    312,110    1,240,142 

 

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

 

6

 

 

Cementos Pacasmayo S.A.A. and Subsidiaries

 

Interim condensed consolidated unaudited statements of cash flows

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

 

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

 

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

 

7

 

 

Interim condensed consolidated unaudited statements of cash flows (continued)

 

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

 

 

8

 

 

Cementos Pacasmayo S.A.A. and Subsidiaries

 

Notes to interim condensed consolidated unaudited financial statements

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

 

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

 

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

 

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

 

2.Basis of preparation and changes to the 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.

 

9

 

 

Notes to interim condensed consolidated unaudited financial statements

(continued)

 

New standards, interpretations and amendments

 

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

 

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.

 

2.2Basis of consolidation -

 

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

 

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

 

2.3Seasonality of operations -

 

Seasonality is not relevant to the Group's activities.

 

10

 

 

Notes to interim condensed consolidated unaudited financial statements

(continued)

 

3.Cash and cash equivalents

 

(a)This caption consists of the following:

 

   As of
March 31,
2023		   As of
December 31,
2022		 
   S/(000)   S/(000) 
         
Cash on hand   157    161 
Cash at banks (b)   36,116    39,112 
Term deposits with original maturities of ninety days or less (c)   9,000    42,500 
    45,273    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)The short-term deposits held in domestic banks were freely available and earned interest at the respective short-term market rates and original maturity less than three months.

 

4.Trade and other receivables

 

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

 

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

 

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

 

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

 

11

 

 

Notes to interim condensed consolidated unaudited financial statements

(continued)

 

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

 

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

 

5.Inventories

 

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

 

6.Property, plant and equipment, net

 

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

 

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

 

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

 

12

 

 

Notes to interim condensed consolidated unaudited financial statements

(continued)

 

7Leases

 

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

 

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

 

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

 

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

 

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

 

13

 

 

Notes to interim condensed consolidated unaudited financial statements

(continued)

 

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

 

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

 

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

 

8.Trade and other payables

 

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

 

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

 

9.Financial 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 these have been paid with the corporate loan indicated in section (d) in February 2023.

 

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

 

14

 

 

Notes to interim condensed consolidated unaudited financial statements

(continued)

 

(b)Short-term promissory notes

 

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

 

(c)Financial 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:

 

IComply 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.

 

15

 

 

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

 

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

 

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

 

16

 

 

Notes to interim condensed consolidated unaudited financial statements

(continued)

 

10.Provisions

 

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

 

11.Income tax

 

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

 

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

 

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

 

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

 

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

 

17

 

 

Notes to interim condensed consolidated unaudited financial statements

(continued)

 

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

 

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

 

12.Sales of goods

 

This caption is made up as follows:

 

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

 

18

 

 

Notes to interim condensed consolidated unaudited financial statements

(continued)

 

13.Related party transactions

 

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

 

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

 

19

 

 

Notes to interim condensed consolidated unaudited financial statements

(continued)

 

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

 

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

 

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

 

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/6,127,000 during the three-month period ended March 31, 2023 (S/5,389,000 during the three-month period ended March 31, 2022), and the total long-term compensations expense amounted to S/2,068,000 during the three-month period ended March 31, 2023 (S/1,902,000 during the three-month period ended March 31, 2022). The Group does not compensate Management with post-employment or contract termination benefits or share-based payments.

 

14.Earnings per share (EPS)

 

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

 

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

 

20

 

 

Notes to interim condensed consolidated unaudited financial statements

(continued)

 

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

 

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

 

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

 

15.Financial assets and liabilities

 

(a)Financial 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 has been designated as hedging instruments for Senior notes that are denominated in U.S. dollars, with the intention of reducing the foreign exchange risk.

 

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

 

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

 

21

 

 

Notes to interim condensed consolidated unaudited financial statements

(continued)

 

Derivative assets from trading -

 

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

 

(b)Fair values 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   45,273    81,773    45,273    81,773    Level 1 
Trade and other receivables   145,143    145,034    145,143    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   190,690    313,974    190,690    313,974      
                          
Financial liabilities                         
Trade and other payables   219,738    284,554    219,738    284,554    Level 2 
Senior notes   569,109    1,071,781    513,885    996,156    Level 1 
Fixed rate notes   1,043,099    521,390    905,969    459,117    Level 2 
                          
Total financial liabilities   1,831,946    1,877,725    1,639,592   1,739,827      

 

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

 

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

 

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

 

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

 

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

 

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

 

22

 

 

Notes to interim condensed consolidated unaudited financial statements

(continued)

 

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

 

-The 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 equity of Fossal S.A.

 

16.Commitments and contingencies

 

Operating lease commitments – Group as lessor

 

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

 

Consortium contract –

 

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

 

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

 

Capital commitments

 

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

 

23

 

 

Notes to interim condensed consolidated unaudited financial statements

(continued)

 

Environmental matters

 

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

 

Tax situation

 

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

 

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

 

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

 

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

 

  Years 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.C. 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 March 31, 2023 and the consolidated financial statements as of December 31, 2022.

 

24

 

 

Notes to interim condensed consolidated unaudited financial statements

(continued)

 

Legal claim contingency

 

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

 

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

 

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

 

Mining royalty

 

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

 

17.Segment information

 

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

 

-Production 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.

 

25

 

 

Notes to interim condensed consolidated unaudited financial statements

(continued)

 

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

 

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

 

26

 

 

Notes to interim condensed consolidated unaudited financial statements

(continued)

 

   As of March 31, 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   3,132,415    45,910    73,081    31,963    3,283,369    3,086,104    38,353    70,327    32,210    3,226,994 
Other assets (*)   -    -    -    274    274    86,630    -    -    537    87,167 
Total assets   3,132,415    45,910    73,081    32,237    3,283,643    3,172,734    38,353    70,327    32,747    3,314,161 
Operating liabilities   1,983,780    58,894    -    745    2,043,419    2,041,923    76,780    -    323    2,119,026 
Capital expenditure (**)   76,889    -    -    -    76,889    190,126    -    -    -    190,126 

 

(*)As of March 31, 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”.

 

(**)Capital expenditure consists of S/76,889,000 and S/190,126,000 during the three-month period ended March 31, 2023 and year ended December 31, 2022, respectively, and are related to additions of property, plant and equipment, intangible and other minor non-current assets .

 

Geographic information

 

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

 

18.Financial risk management, objectives and 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.

 

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Notes to interim condensed consolidated unaudited financial statements

(continued)

 

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 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.

 

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 three-month period ended March 31, 2023   Change in
US$ rate		   Effect on
consolidated profit
before income tax
U.S. Dollar   %   S/(000)
         
    +5   1,891
    +10   3,782
    -5   (1,891)
    -10   (3,782)

 

For the three-month period ended March 31, 2022  

Change in

US$ rate

  

Effect on

consolidated profit

before income tax

U.S. Dollar   %   S/(000)
         
    +5   8,911
    +10   17,822
    -5   (8,911)
    -10   (17,822)

 

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Notes to interim condensed consolidated unaudited financial statements

(continued)

 

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 March 31, 2023 and December 31, 2022, no portion of the corporate bonds in soles 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 three-month period ended March 31, 2023 and 2022, there was moderate volatility in the US dollar exchange rate with respect to the soles, whose effects were partially mitigated by the exchange rate hedge maintained by the Company.

 

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

 

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

 

 

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