a51212026.htm

	Cementos Pacasmayo S.A.A. and Subsidiaries

	Unaudited interim condensed consolidated financial statements as of September 30, 2015 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, 2015 and for the three and nine-month periods then ended

Content

Report on review of interim condensed consolidated financial statements

Interim condensed consolidated financial statements

Interim condensed consolidated statements of financial position

Interim condensed consolidated statements of profit or loss

Interim condensed consolidated statements of other comprehensive income

Interim condensed consolidated statements of changes in equity

Interim condensed consolidated statements of cash flows

Notes to the 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, 2015, 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.

Lima, Peru

October 28, 2015

Countersigned by:

________________________________

Carlos Valdivia Valladares

C.P.C.C. Register No. 27255

Cementos Pacasmayo S.A.A. and Subsidiaries

Interim condensed consolidated statements of financial position

As of September 30, 2015 (unaudited) and December 31, 2014 (audited)

	Note		As of September 30, 2015		As of December 31, 2014
				S/.(000)		S/.(000)
Assets
Current assets
Cash and term deposits		3		405,611		580,499
Trade and other receivables		4		126,575		110,843
Income tax prepayments				29,057		15,042
Inventories		5		309,217		324,070
Prepayments				12,538		4,367
				882,998		1,034,821
Non-current assets
Other receivables		4		62,346		53,948
Prepayments				1,585		2,268
Available-for-sale financial investments		12		470		744
Other financial instruments		12		108,287		12,251
Property, plant and equipment		6		2,396,914		2,060,976
Exploration and evaluation assets				77,145		57,740
Deferred income tax assets				20,485		17,175
Other assets				828		981
				2,668,060		2,206,083
Total assets				3,551,058		3,240,904
Liabilities and equity
Current liabilities
Trade and other payables		7		300,878		137,569
Income tax payable				2,467		8,720
Provisions		8		49,126		53,826
				352,471		200,115
Non-current liabilities
Interest-bearing loans and borrowings		12		954,996		883,564
Other non-current provisions				4,435		657
Deferred income tax liabilities				114,589		85,883
				1,074,020		970,104
Total liabilities				1,426,491		1,170,219
Equity
Capital stock				531,461		531,461
Investment shares				50,503		50,503
Additional paid-in capital				553,466		553,791
Legal reserve				170,380		154,905
Other components of equity				41,656		5,144
Retained earnings				673,058		696,736
Equity attributable to equity holders of the parent				2,020,524		1,992,540
Non-controlling interests				104,043		78,145
Total equity				2,124,567		2,070,685
Total liabilities and equity				3,551,058		3,240,904

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

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, 2015 and September 30, 2014 (both unaudited)

			For the three-month periods ended September 30,						For the nine-month periods ended September 30,
	Note		2015			2014			2015			2014
				S/.(000)			S/.(000)			S/.(000)			S/.(000)

Sales of goods		14		312,965			316,204			880,031			919,547
Cost of sales				(171,889	)		(187,127	)		(494,337	)		(546,260	)
Gross profit				141,076			129,077			385,694			373,287

Operating income (expense)
Administrative expenses				(51,383	)		(49,583	)		(149,145	)		(144,349	)
Selling and distribution expenses				(8,305	)		(7,553	)		(22,510	)		(23,119	)
Other operating income (expenses), net				532			(1,514	)		13,132			(1,715	)
Total operating expenses, net				(59,156	)		(58,650	)		(158,523	)		(169,183	)
Operating profit				81,920			70,427			227,171			204,104

Other income (expenses)
Finance income				1,271			1,252			2,757			7,231
Finance costs				(8,411	)		(6,355	)		(25,456	)		(24,698	)
Net gain (loss) from exchange difference				2,013			(6,217	)		7,279			(9,435	)
Total other expenses, net				(5,127	)		(11,320	)		(15,420	)		(26,902	)
Profit before income tax				76,793			59,107			211,751			177,202

Income tax expense		9		(21,472	)		(18,635	)		(59,906	)		(55,933	)

Profit for the period				55,321			40,472			151,845			121,269
Attributable to:
Equity holders of the parent				56,262			41,197			154,747			123,560
Non-controlling interests				(941	)		(725	)		(2,902	)		(2,291	)

				55,321			40,472			151,845			121,269
Earnings per share
Basic and diluted profit for the period attributable to equity holders of common shares and investment shares of the parent (S/. per share)		11		0.10			0.07			0.27			0.21

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

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, 2015 and September 30, 2014 (both unaudited)

			For the three-month periods ended September 30,						For the nine-month periods ended September 30,
	Note		2015			2014			2015			2014
				S/.(000)			S/.(000)			S/.(000)			S/.(000)

Profit for the period				55,321			40,472			151,845			121,269

Other comprehensive income
Other comprehensive income to be reclassified to profit or loss in subsequent periods:
Change in fair value of available-for-sale financial investments				(161	)		(2,198	)		(274	)		(6,694	)
Net gain on cash flow hedges		12		58,594			-			51,349			-
Deferred income tax related to component of other comprehensive income		9		(15,194	)		660			(14,563	)		2,009
Other comprehensive income for the period, net of income tax				43,239			(1,538	)		36,512			(4,685	)

Total comprehensive income, net of income tax				98,560			38,934			188,357			116,584

Total comprehensive income attributable to:
Equity holders of the parent				99,501			39,659			191,259			118,875
Non-controlling interests				(941	)		(725	)		(2,902	)		(2,291	)

				98,560			38,934			188,357			116,584

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

Cementos Pacasmayo S.A.A. and Subsidiaries

Interim condensed consolidated statements of changes in equity

For the nine-month periods ended September 30, 2015 and September 30, 2014 (both unaudited)

	Attributable to equity holders of the parent

	Capital stock		Investment shares		Additional paid-in capital			Legal reserve		Unrealized gain on available- for-sale investments			Unrealized gain on derivative financial instruments		Retained earnings			Total			Non-controlling interests			Total equity
	S/.(000)		S/.(000)		S/.(000)			S/.(000)		S/.(000)			S/.(000)		S/.(000)			S/.(000)			S/.(000)			S/.(000)

Balance as of January 1, 2014		531,461		50,503		556,294			119,833		19,045			-		653,704			1,930,840			78,630			2,009,470
Profit for the period		-		-		-			-		-			-		123,560			123,560			(2,291	)		121,269
Other comprehensive income		-		-		-			-		(4,685	)		-		-			(4,685	)		-			(4,685	)
Total comprehensive income		-		-		-			-		(4,685	)		-		123,560			118,875			(2,291	)		116,584

Appropriation of legal reserve		-		-		-			11,267		-			-		(11,267	)		-			-			-
Terminated dividends, note 7		-		-		-			1,670		-			-		-			1,670			-			1,670
Contribution of non-controlling interests, note 1		-		-		-			-		-			-		-			-			1,050			1,050
Other adjustments of non-controlling interests, note 1		-		-		(2,503	)		-		-			-		-			(2,503	)		2,503			-


Balance as of September 30, 2014		531,461		50,503		553,791			132,770		14,360			-		765,997			2,048,882			79,892			2,128,774

Balance as of January 1, 2015		531,461		50,503		553,791			154,905		218			4,926		696,736			1,992,540			78,145			2,070,685
Profit for the period		-		-		-			-		-			-		154,747			154,747			(2,902	)		151,845
Other comprehensive income		-		-		-			-		(204	)		36,716		-			36,512			-			36,512
Total comprehensive income		-		-		-			-		(204	)		36,716		154,747			191,259			(2,902	)		188,357

Appropriation of legal reserve		-		-		-			15,475		-			-		(15,475	)		-			-			-
Contribution of non-controlling interests, note 1		-		-		-			-		-			-		-			-			28,475			28,475
Other adjustments of non-controlling interests, note 1		-		-		(325	)		-		-			-		-			(325	)		325			-
Authorized dividends, note 7		-		-		-			-		-			-		(162,950	)		(162,950	)		-			(162,950	)

Balance as of September 30, 2015		531,461		50,503		553,466			170,380		14			41,642		673,058			2,020,524			104,043			2,124,567

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

Cementos Pacasmayo S.A.A. and Subsidiaries

Interim condensed consolidated statements of cash flows

For the three and nine-month periods ended September 30, 2015 and September 30, 2014 (both unaudited)

			For the three-month periods ended September 30,						For the nine-month periods ended September 30,
	Note		2015			2014			2015			2014
				S/.(000)			S/.(000).			S/.(000)			S/.(000)

Operating activities
Profit before income tax				76,793			59,107			211,751			177,202
Non-cash adjustments to reconcile profit before
income tax to net cash flows
Depreciation and amortization				17,656			16,650			50,930			47,554
Unrealized exchange difference related to monetary transactions				10,590			12,794			40,589			12,794
Finance costs				8,411			6,355			25,456			24,698
Long-term incentive plan		10		6,151			1,628			10,511			4,880
Amortization of costs of issuance of senior notes				411			409			1,233			1,231
Unwinding of discount of long-term incentive plan				198			170			594			506
Unrealized exchange difference hedge				(13,200	)		-			(44,687	)		-
Net (gain) loss on disposal of property, plant and Equipment		6		1,100			-			(7,661	)		1,079
Finance income				(1,271	)		(1,252	)		(2,757	)		(7,231	)
Recovery of impairment of inventories				-			(4	)		-			(21	)
Other operating, net				477			(770	)		571			144

Working capital adjustments
Increase in trade and other receivables				(1,465	)		(8,208	)		(12,390	)		(64,309	)
Decrease (increase) in prepayments				3,284			1,890			(7,488	)		(3,849	)
Decrease (increase) in inventories				11,673			(10,396	)		14,853			13,290
(Decrease) increase in trade and other payables				(10,633	)		25,855			(17,312	)		18,617
				110,175			104,228			264,193			226,585

Interests received				675			1,373			2,123			12,105
Interests paid				(22,084	)		(20,158	)		(43,158	)		(43,359	)
Income tax paid				(20,960	)		(14,141	)		(69,342	)		(49,154	)


Net cash flows provided from operating activities				67,806			71,302			153,816			146,177

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

Interim condensed consolidated statements of cash flows (continued)

			For the three-month periods ended September 30,						For the nine-month periods ended September 30,
	Note		2015			2014			2015			2014
			S/.(000)			S/.(000)			S/.(000)			S/.(000)
Investing activities
Liquidation of time deposits with original maturities
greater than 90 days				157,750			-			157,750			-
Purchase of property, plant and equipment		6		(123,969	)		(208,717	)		(378,639	)		(474,089	)
Acquisition of time deposits with original maturities
greater than 90 days				-			-			(157,750	)		-
Purchase of evaluation and exploration assets				-			-			(7,888	)		(1,744	)
Proceeds from sale of property, plant and
equipment				36			-			66			512

Net cash provided from (used in) investing activities				33,817			(208,717	)		(386,461	)		(475,321	)


Financing activities
Contribution of non-controlling interests		1		28,198			231			28,475			1,050
Dividends paid				-			(68	)		(328	)		(213	)

Net cash flows provided from financing
activities				28,198			163			28,147			837


Net decrease in cash and cash equivalents				129,821			(137,252	)		(204,498	)		(328,307	)
Net foreign exchange difference				4,219			16,793			29,610			16,007
Cash and cash equivalents at the beginning of the
period				271,571			785,111			580,499			976,952

Cash and cash equivalents at the end of the period		3		405,611			664,652			405,611			664,652

Transactions with no effect in cash flows:
Unrealized exchange difference related to monetary
transactions				9,813			12,794			39,812			12,794
Sale of property, plant and equiptment, pending of
collect				-			-			11,106			-
Unpaid declared dividends		7		162,950			-			162,950			-

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

Cementos Pacasmayo S.A.A. and Subsidiaries

Notes to interim condensed consolidated financial statements

As of September 30, 2015 and 2014 (both unaudited), and December 31, 2014 (audited)

1. Economic activity

Cementos Pacasmayo S.A.A. (hereinafter "the Company") was incorporated in 1957 and, under the Peruvian General Corporation Law, is an open stock corporation, with publicly traded shares. The Company is a subsidiary of Inversiones ASPI S.A., which holds 52.63 percent of the Company’s common shares and 33.17 percent of the Company’s investment shares as of September 30, 2015 and December 31, 2014. The registered office is located at Calle La Colonia No.150, Urbanizacion El Vivero, Santiago de Surco, Lima, Peru.

The Company’s main activity is the production and selling of cement, blocks, concrete and quicklime in Peru’s northern region.

The interim condensed consolidated financial statements of the Company and its subsidiaries (hereinafter “the Group”) as of September 30, 2015 and for the three and nine-month periods then ended, were authorized for issuance by the Company’s Management on October 28, 2015.

As of September 30, 2015, there were no changes in the main activities of the subsidiaries incorporated in the interim condensed consolidated financial statements of the Group, in relation to December 31, 2014.

Contributions of non-controlling interest -

Salmueras Sudamericanas S.A.

In order to finance the Salmueras project, the General Shareholders´Meeting of the subsidiary held on June 4, 2015, agreed a contribution of S/.2,400,000. During the nine-month period ended September 30, 2015, the contribution made by Quimpac S.A. amounts to S/.277,000 (S/.1,050,000 during the nine-months period ended September 30,2014).

All these contributions are partial payments of the capital commitment assumed by the Company and Quimpac S.A. for the brine project up to US$100,000,000 and US$14,000,000, respectively, to maintain its interests in this subsidiary.

The effect of the difference on capital contributions and interests maintained by each shareholder amounted to S/.325,000 during the nine-month period ended September 30, 2015, and these were recognized as a debit in additional paid-in capital and a credit in non-controlling interest (S/.1,234,000 during the nine-months period ended September 30, 2014).

Notes to interim condensed consolidated financial statements (continued)

Fosfatos del Pacifico S.A.

Fosfatos del Pacifico S.A. is the owner of a brick plant which is in a commissioning period. Regarding this project, Cementos Pacasmayo S.A.A. committed to assume the total capital expenditure that brick plant needs to achieve its nominal capacity. This commitment was formalized in the General Shareholders´ Meeting held on July 31, 2013 when it was agreed a contribution up to US$3,300,000 from Cementos Pacasmayo S.A.A. which will not include a change in the percentage of interests of the current shareholders´ structure. The effect of the difference on capital contributions and interests acquired by each shareholder amounted to S/.1,269,000 during the nine-month period ended September 30, 2014, and it was recognized as a debit in additional paid-in capital and a credit in non-controlling interest.

The General Shareholders´ Meeting of the subsidiary Fosfatos del Pacifico S.A. held on July 14, 2015 and September 25, 2015, agreed contributions of S/.78,178,000 and S/.15,812,000, respectively. During the nine-months ended September 30, 2015, the contribution made by MCA Phosphates Pte. amounts to S/.28,198,000.

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

2.1 Basis of preparation -

The interim condensed consolidated financial statements of the Company 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 available-for-sale financial investments and derivatives financial instruments that have been measured at fair value. The interim condensed consolidated financial statements are presented in nuevos soles and all values are rounded to the nearest thousand (S/.000), except as otherwise indicated.

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, 2014.

New standards, interpretations and amendments

The accounting policies adopted in the preparation of the interim condensed consolidated financial statements are consistent with those followed in the preparation of the Group´s annual financial statements for the year ended December 31, 2014.

Several new standards and amendments apply for the first time in 2015. However, they do not impact the interim condensed consolidated financial statements or the annual consolidated financial statements of the Group.

Notes to interim condensed consolidated financial statements (continued)

For information purpose, following is a summary of the nature and impact of each new standard:

-	Amendments to IAS 19 Defined Benefit Plans: Employee Contributions

This amendment is not relevant to the Group, because the Group does not use this form of employment contribution.

-	Annual Improvements 2010-2012 Cycle

These improvements are effective from 1 July 2014 and the Group has applied these amendments since January 1, 2015, however these amendments did not generate impacts on the Group’s financial statements. They include:

IFRS 8 Operating Segments

The amendments clarify that an entity must disclose the judgments made by management in applying the aggregation criteria and the reconciliation of segment assets to total assets is only required to be disclosed if the reconciliation is reported to the chief operating decision maker, similar to the required disclosure for segment liabilities.

The Group is not required to apply the aggregation criteria in IFRS 8.12. The Group has presented the reconciliation of segment assets to total assets in previous periods and continues to disclose the same in note 14 in these financial statements as the reconciliation is reported to the chief operating for the purpose of decision making.

IAS 16 Property, Plant and Equipment and IAS 38 Intangible Assets

The amendment clarifies that the asset may be revalued by reference to observable data by either adjusting the gross carrying amount of the asset to market value or by determining the market value of the carrying value and adjusting the gross carrying amount proportionately so that the resulting carrying amount equals the market value. In addition, the accumulated depreciation or amortization is the difference between the gross and carrying amounts of the asset. The Group did not record any revaluation adjustments during the current interim period.

IAS 24 Related Party Disclosures

The amendment clarifies that a management entity (an entity that provides key management personnel services) is a related party subject to the related party disclosures. In addition, an entity that uses a management entity is required to disclose the expenses incurred for management services. This amendment is not relevant for the Group as it has not received any management services from other entities.

-	Annual Improvements 2011-2013 Cycle

Notes to interim condensed consolidated financial statements (continued)

IFRS 13 Fair Value Measurement

The amendment clarifies that the portfolio exception in IFRS 13 can be applied not only to financial assets and financial liabilities, but also to other contracts within the scope of IFRS 9 (or IAS 39, as applicable). The Group does not apply the portfolio exception in IFRS 13.

The Group has not yet early adopted any other standard, interpretation or amendment that has been issued but is not yet effective.

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, 2015 and 2014.

2.3	Seasonality -
	Seasonality is not relevant for the activities of the Group.

3.	Cash and term deposits

(a) This caption consists of the following:

	As of September 30, 2015		As of December 31, 2014		As of September 30, 2014
	S/.(000)		S/.(000)		S/.(000)

Cash on hand		1,421		2,763		1,486
Cash at banks (b)		72,985		283,568		287,540
Short-term deposits (c)		331,205		294,168		375,626

Cash balances included in statements of cash flows		405,611		580,499		664,652

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

(c)	As of September 30, 2015, December 31, 2014 and September 30, 2014, the short-term deposits held in domestic banks were freely available and earned interest at the respective short-term market rates and have maturities of less than three months.

As of September 30, 2015, these deposits include approximately S/.12,880,000 related to the proceeds obtained on February 2013 through the issuance of Senior Notes.

4. Trade and other receivables

As of September 30, 2015 and December 31,2014 this caption mainly include trade receivables, value-added tax credit, interest receivables and tax refund receivable. In this specific case, according to the Company’s management and its legal advisor’s opinion, it is more likely than not that the subsidiary will recover these tax refunds, since it complied with all the formal and substantive requirements to obtain the VAT benefit. As a result, the Company’s management has concluded that there is no need to record a valuation allowance for this VAT credit.

5. Inventories

During the three and nine-month periods ended September 30, 2015 the Group has not recognized any provision for inventory carried at net realizable value (as of September 30, 2014, the Group reversed the provision for inventory carried at net realizable value for S/.21,000).

6. Property, plant and equipment

During the three and nine-month periods ended September 30, 2015 the additions of the Group amounted approximately to S/.133,403,000 and S/.372,706,000, respectively (S/.208,717,000 and S/.474,089,000 during the three and nine-month periods ended September 30, 2014), which are mainly related to the construction of a cement plant located in Piura in the northern of Peru. On September 1, 2015 a part of this project is operating.

During the three and nine-month periods ended September 30, 2015, the Group disposed assets with a net book value of S/.1,137,000 and S/. 3,511,000, respectively, resulting in a net loss on disposal of S/.1,100,000 and gain of S/.7,661,000, respectively, (net loss of S/.1,079,000 during the nine month period ended September 30, 2014), which was included in the “Operating income (expense)” caption of the interim condensed consolidated statement of profit or loss.

In connection with the construction of the cement plant in Piura, the borrowings costs capitalized during the three and nine-month periods ended as of September 30, 2015 were approximately S/.10,534,000 and S/.29,608,000, respectively. The rate used to determine the amount of borrowings costs eligible for capitalization was approximately 5.00 percent, which is the effective rate of the only borrowing the Group has as of September 30, 2015. The amount of borrowing costs eligible for capitalization is determined by applying the capitalization rate to the expenditures on qualifying assets.

As of September 30, 2015 the Group maintain accounts payable related to property, plant and equipment for S/.15,250,000 (S/.21,183,000 as of December 31,2014).

7. Dividends

The Board of Directors held on September 3, 2015 agreed the distribution of dividends for

S/. 162,950,000, which are pending of payment as of September 30, 2015 and are included in “Trade and other payables” account (as of December 31, 2014 dividends payable amounted to S/.3,453,000).

In 2014, in order to comply with Peruvian law requirements, S/.1,670,000 corresponding to dividends payable with aging greater than ten years were capitalized and recorded in the legal reserve caption, in equity.

8. Provisions

As of September 30, 2015 and December 31, 2014, this caption includes workers’ profit sharing, long-term incentive plan and rehabilitation provision.

9. Income tax

The Company 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 periods ended September 30,						For the nine-month periods ended September 30,
	2015			2014			2015			2014
	S/.(000)			S/.(000)			S/.(000)			S/.(000)

Current income tax expense		(18,458	)		(19,607	)		(49,074	)		(60,291	)
Deferred income tax expense		(3,014	)		972			(10,832	)		4,358
Income tax expense recognized in the
consolidated statements of profit or loss		(21,472	)		(18,635	)		(59,906	)		(55,933	)
Income tax recognized in other comprehensive
income		(15,194	)		660			(14,563	)		2,009

Total income tax		(36,666	)		(17,975	)		(74,469	)		(53,924	)

Following is the composition of deferred tax related to items recognized in OCI:

	For the three-month periods ended September 30,					For the nine-month periods ended September 30,
	2015			2014		2015			2014
	S/.(000)			S/.(000)		S/.(000)			S/.(000)

Unrealized loss on available-for-sale financial
investments		41			660		70			2,009
Unrealized gain on derivative financial instruments		(15,235	)		-		(14,633	)		-

Total deferred income tax on OCI		(15,194	)		660		(14,563	)		2,009

10. Related party transactions

During the three and nine-months periods ended September 30, 2015 and 2014, the Group carried out the following main transactions with Inversiones ASPI S.A. and its related parties:

	For the three-month periods ended September 30,						For the nine-month periods ended September 30,
	2015			2014			2015			2014
	S/.(000)			S/.(000)			S/.(000)			S/.(000)

Income
Fees from land rental services		83			72			244			217
Fees from office lease		85			70			247			176
Fees for management and administrative services		125			93			374			280

Expense
Security services provided by Compañía Minera
Ares S.A.C.		(217	)		(574	)		(763	)		(1,220	)

Other transactions
Unpaid declared dividends to Inversiones ASPI S.A.		83,004			-			83,004			-

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, 2015 and December 31, 2014:

	September 30, 2015				December 31, 2014
	Accounts receivable		Accounts payable		Accounts receivable		Accounts payable
	S/.(000)		S/.(000)		S/.(000)		S/.(000)

Dividends payable to Inversiones ASPI S.A.		-		83,004		-		-
Inversiones ASPI S.A.		321		-		187		-
Compañía Minera Ares S.A.C.		637		-		357		-
Others		87		-		13		-

		1,045		83,004		557		-

The sales to and purchases from related parties are made at terms equivalent to those that prevail in arm’s length transactions. Outstanding balances are unsecured and interest free. There have been no guarantees provided or received from any related party receivables or payables. For the periods ended September 30, 2015 and December 31, 2014, the Group has not recorded any impairment of receivables from related parties. This assessment is undertaken each financial year by examining the financial position of the related party.

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 amounted to S/. 6,964,000 and S/.16,612,000 during the three and nine-month periods ended September 30, 2015 (S/.5,917,000 and S/.15,982,000 during the three and nine-month periods ended September 30, 2014) , and the total long term compensations amounted to S/. 6,151,000 and S/.10,511,000 during the three and nine-month periods ended September 30, 2015 (S/.1,628,000 and S/.4,880,000 during the three and nine-month periods ended September 30, 2014). The Company does not compensate Management with post-employment or contract termination benefits or share-based payments.

11. Earnings per share (EPS)

Basic earnings per share amounts are calculated by dividing net profit for the three and nine-month periods ended September 30, 2015 and 2014 attributable to common shares and investment shares of the parent 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, 2015 and 2014.

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

	For the three-month periods ended September 30,				For the nine-month periods ended September 30,
	2015		2014		2015		2014
	S/.(000)		S/.(000)		S/.(000)		S/.(000)

Numerator
Net profit attributable to ordinary equity holders of
the parent		56,262		41,917		154,747		123,560

	For the three-month periods ended September 30,				For the nine-month periods ended September 30,
	2015		2014		2015		2014
	Thousands		Thousands		Thousands		Thousands

Denominator
Weighted average number of common and
investment shares		581,964		581,964		581,964		581,964

	For the three-month periods ended September 30,				For the nine-month periods ended September 30,
	2015		2014		2015		2014
	S/.		S/.		S/.		S/.
Basic and diluted earnings for common and
investment shares	$	0.10	$	0.07	$	0.27	$	0.21

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

12.	Financial instruments

(a) Financial asset and liabilities –

Financial assets –

	As of September 30, 2015		As of December 31, 2014
	S/.(000)		S/.(000)

Financial instruments at fair value through of other comprehensive income
Derivative financial instruments (cross currency swaps)		108,287		12,251
Total cash flow hedge		108,287		12,251

Available-for-sale financial investments at fair value through other comprehensive income
Quoted equity shares		470		744
Total available-for-sale investments		470		744

Total financial assets at fair value		108,757		12,995

Financial instruments at fair value through other comprehensive income reflect the positive change in fair value of cross currency swaps contracts, designated as cash flow hedges to hedge the Senior Notes balance denominated in US dollars.

Except cash flow hedge and available-for-sale investments, all financial assets which included cash and cash equivalents and trade and other receivables, are classified in the category of loans and receivables, are non-derivative financial assets carried at amortized cost and generate a fixed or variable interest income for the Group. The carrying value may be affected by changes in the credit risk of the counterparties.

Financial liabilities -

All financial liabilities of the Group including trade and other payables and interest-bearing loans and borrowings are classified as loans and borrowings and are carried at amortized cost.

(b)	Hedging activities and derivatives -
	Cash flow hedges -
	Foreign currency risk -

As of September 30,2015 the Group maintain Cross currency swap contracts for a notional amount of US$300,000,000, which are measured at fair value through other comprehensive income and designated as hedging instruments in cash flows hedges of Senior Notes denominated in US dollars.

The cross currency swap contracts balances vary with the level of expected forward exchange rates.

	As of September 30, 2015
	Assets		Liabilities
	S/.(000)		S/.(000)

Cross currency swap contracts designated as hedging instruments
Fair value (notional of US$300,000,000)		108,287		-

		108,287		-

	As of December 31, 2014
	Assets		Liabilities
	S/.(000)		S/.(000)

Cross currency swap contracts designated as hedging instruments
Fair value (notional of US$120,000,000)		12,251		-

		12,251		-

The terms of the cross currency swaps contracts match the terms of the related Senior Notes.

The cash flow hedge of the expected future payments was assessed to be highly effective and a net unrealized gain of S/.58,594,000 and S/. 51,349,000 for the three and nine-month periods ended September 30, 2015 is included in other comprehensive income. The amounts retained in other comprehensive income as of September 30, 2015 are expected to mature and affect the consolidated statement of profit or loss in 2023.

Set out below is a comparison of the carrying amounts and fair values of financial instruments as of September 30, 2015 and December 31, 2014:

	Carrying amount				Fair value
	2015		2014		2015		2014
	S/.(000)		S/.(000)		S/.(000)		S/.(000)

Financial assets
Derivatives financial assets – Cross
currency swaps		108,287		12,251		108,287		12,251
Available-for - sale financial investments		470		744		470		744
Total financial assets – non - current		108,757		12,995		108,757		12,995


Financial liabilities
Financial obligations:
Senior Notes		954,996		883,564		870,392		814,313

Total financial liabilities		954,996		883,564		870,392		814,313

Management assessed that cash and term deposits, trade receivables, trade payables and other current liabilities approximate their carrying amounts due to 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 price quotations at the reporting date, net of issuance costs. The Group has not unquoted liability instruments for which fair value is disclosed as of September 30, 2015 and December 31, 2014.

Fair value of available-for-sale investments is derived from quoted market prices in active markets.

(d)

Fair value hierarchy-

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 by re-assessing categorization (based on the lowest level input that is significant to the fair value measurement as a whole) at the end of each reporting period.

The following table provides the fair value measurement hierarchy of the Group´s assets and liabilities.

Quantitative disclosures fair value measurement hierarchy for assets and liabilities as of

September 30, 2015 –

	Fair value measurement using
	Total		Quoted prices in active markets (Level 1)		Significant observable inputs (Level 2)
	S/.(000)		S/.(000)		S/.(000)

Assets measured at fair value:
Derivative financial assets:
Cross currency swaps		108,287		-		108,287
Available-for-sale financial investments:
Quoted equity shares		470		470		-

Total financial assets		108,757		470		108,287

Liabilities for which fair values are disclosed:
Senior Notes		870,392		-		870,392

Total financial liabilities		870,392		-		870,392

During the reporting period ending September 30, 2015, there were no transfers between Levels. There were no assets or liabilities measured or disclosed at fair value using significant unobservable inputs (Level 3).

Quantitative disclosures fair value measurement hierarchy for assets and liabilities as of December 31, 2014 –

	Fair value measurement using
	Total		Quoted prices in active markets (Level 1)		Significant observable inputs (Level 2)
	S/.(000)		S/.(000)		S/.(000)

Assets measured at fair value:
Derivative financial assets:
Cross currency swaps		12,251		-		12,251
Available-for-sale financial investments:
Quoted equity shares		744		744		-

Total financial assets		12,995		744		12,251

Liabilities for which fair values are disclosed:
Senior Notes		814,313		-		814,313

Total financial liabilities		814,313		-		814,313

There have been no transfers between Levels during the period ending December 31, 2014. There were no assets or liabilities measured or disclosed at fair value using significant unobservable inputs

(Level 3).

Risk management activities-

As a result of its activities, the Group is exposed to foreign currency risk therefore the Company has acquired hedge financial instruments to mitigate that risk. Since November, 2014 the Group uses cross currency swaps to hedge the foreign currency risk of the Senior Notes denominated in US dollars. During the nine-month period ended September 30, 2015 was a moderate volatility in the US Dollar exchange rate against the Nuevo Sol which effects were partially mitigated by the cross currency swaps hedge signed by the Company.

As of September 30, 2015 and December 31, 2014, except for the 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.

13. Commitments and contingencies

Operating lease commitments – Group as lessor

As of September 30, 2015, the Company, 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 for the three and nine-month periods ended September 30, 2015 provided an income of S/.83,000 and S/.244,000 , respectively (S/.72,000 and S/.217,000 for the three and nine-months ended September 30, 2014).

Operating lease commitments – Group as lessee

In May 2012, the Group signed a contract with a third party to lease a land located in the north of Peru. The lease has a term of maturity of 30 years and accrued an annual rent of US$200,000 from 2012 to 2015, and from 2016 to the maturity date of the contract the rent will be equivalent to 0.64 percent of the sales of phosphoric rock of the subsidiary Fosfatos del Pacífico S.A., but may not be less than US$1,600,000 annually.

Capital commitments

As of September 30, 2015, the Group had the following main commitments:

-	Construction of a cement plant located in Piura by S/.47,995,000.
-	Commissioning of a diatomites brick plant in the North of Peru by S/.23,000.
-	Development activities of phosphoric rock by S/.4,183,000.
-	Commitment for development of brine Project up to US$100,000,000, see note 1. In connection with this commitment, as of September 30, 2015 the Group has made contributions for US$18,797,000.

Other commitments

-	Commitment of future sales of phosphoric rock to Mitsubishi Corporation when the project starts production.
-	The Group maintains long-term electricity supply agreements which billings are determined taking into consideration consumption of electricity and other market variables.
-	Since November 2013, the Group has a five-year period natural gas supply agreement for its diatomite brick plant, which billings are determined taking into account consumption of natural gas and other market variables. Also, the volumes are subject to take or pay clauses that establish minimum levels of natural gas consumption. As of September 30, 2015, the Group has accomplished the minimum requirements established in this agreement.
-	Since July 2015, the Group has a five-year period natural gas supply agreement for a cement plant located in Piura, which billings are determined taking into account consumption of natural gas and other market variables. Also, the volumes are subject to take or pay clauses that establish minimum levels of natural gas consumption. As of September 30, 2015, the Group has accomplished the requirements established in this agreement.

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, 2014.

Tax situation

The Group is subject to Peruvian tax law. As of December 31, 2014, the rate of income tax was 30 percent on taxable income. From 2015 onwards in attention to the 30296 Act, the tax rate applicable income on taxable income, after deducting the participation of workers is as follows:

- Exercise 2015 and 2016: 28 percent.

- Exercise 2017 and 2018: 27 percent.

- Exercise 2019 onwards: 26 percent.

Legal persons not domiciled in Peru and individuals are subject to retention of an additional tax on dividends received.

In this regard, in attention to the 30296 Act, the additional tax on dividend income generated is as follows:

-	4.1 percent of the profits generated until December 31, 2014.
-	For the profits generated from 2015 onwards, whose distribution is made after that date the percentages will be the following:

- 2015 and 2016: 6.8 percent.

- 2017 and 2018: 8 percent.

- 2019 onwards: 9.3 percent.

During the four years following the year tax returns are filed, the tax authorities have 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 authorities.

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

Cemento Pacasmayo S.A.A.		2011-2014	Dec. 2010-2015
Cementos Selva S.A.		2009/2011-2014		2011-2015
Distribuidora Norte Pacasmayo S.R.L.		2010/2012-2014	Dec. 2010-2015
Empresa de Transmisión Guadalupe S.A.C.		2010-2014	Dec. 2010-2015
Fosfatos del Pacífico S.A.		2010-2014	Dec. 2010-2015
Salmueras Sudamericanas S.A.		2011-2014		2011-2015
Calizas del Norte S.A.C.		2013-2014		2013-2015
Corianta S.A. (*)		2010-2011		(**)
Tinku Generacion S.A.C. (*)		2010-2011	Dec. 2010-2011

(*) These subsidiaries were merged with the Company in December 2011.

(**) The periods open to review by tax authorities for this entity are from January to May 2010 and from September to December 2011.

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, 2015 and the consolidated financial statements as of December 31, 2014.

Legal claim contingency

As of September 30, 2015, some third parties have commenced actions against the Group in relation with its operations which claims in aggregate represent S/.16,213,000. From this total amount, S/.1,330,000 corresponded to labor claims from former employees, S/.7,681,000 is related to property tax assessment received from Pacasmayo District Municipality for periods from 2009 to 2014, and S/.2,298,000 and S/.4,904,000 is related to the tax assessments received from the tax administration corresponding to 2009 and 2010 tax period, which was reviewed by the tax authority during 2012 and 2013, respectively.

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

Third parties

The subsidiary Fosfatos del Pacífico S.A., signed an agreement with the Peruvian Government, Fundación Comunal San Martin de Sechura and Activos Mineros S.A.C. related to the use of the Bayovar concession, which contains phosphoric rock and diatomites. As part of this agreement, the Subsidiary Fosfatos del Pacífico S.A. is required to pay to Fundación Comunal San Martin de Sechura and Activos Mineros S.A.C. an equivalent amount to US$1.5 each for each metric tons of diatomite extracted. The annual royalty may not be less than the equivalent to 40,000 metric tons during the second year of production and 80,000 metric tons since the third year of production. This royalty amounted to S/.580,000 for the nine-month periods ended September 30, 2015 ( S/.507,000 for the three and nine-month periods ended September 30, 2014).

In December 2013, the Company signed an agreement with a third party, related to the use of the Virrilá concession, to carry out other non-metallic mining activities. This agreement has a term of maturity of 30 years, with fixed annual payments of US$600,000 for the first three years and variables to the rest of the contract. These payments were recognized as part of property, plant and equipment on the interim condensed consolidated statements of financial position. As part of this agreement, the Company is required to pay an equivalent amount to US$4.5 each for each metric tons of calcareous extracted; the annual royalty may not be less than the equivalent to 850,000 metric tons since the fourth year of production.

The Company signed an agreement with the Peruvian Government, Fundación Comunal San Martin de Sechura and Activos Mineros S.A.C. related to the use of the Bayovar concession, which contains calcareous. As part of this agreement, the Company is required to pay to Fundación Comunal San Martin de Sechura and Activos Mineros S.A.C. an equivalent amount to US$5.1 each for each metric tons of calcareous extracted. The annual royalty may not be less than the equivalent to 40,000 metric tons since the sixth year of production.

Interest-bearing loans and borrowings covenants

	Senior Notes
	In February 2013, the Company issued Senior Notes by US$300,000,000 with interest rate of 4.50% and maturity on 2023. During the nine-month period ended as of September 30, 2015, the Senior Notes accrued interest for S/.31,904,000.

	In the case that the Company and Guarantee Subsidiaries requires to issue debt or equity instruments or merges with another company or dispose or rent significant assets, the Senior Notes will activate the following covenants, calculated on the Company and Guarantee Subsidiaries annual consolidated financial statements:

- The fixed charge covenant ratio would be at least 2.5 to 1.

- The consolidated debt-to-EBITDA ratio would be no greater than 3.5 to 1.

As of September 30, 2015, the Company has not entered in any of the operations previously mentioned

14.	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 blocks 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. Segment performance is evaluated based on profit before income tax and is measured consistently with profit before income tax in the interim condensed consolidated financial statements.

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

	Total revenue from external customers				Gross margin					Profit (loss) before income tax						Income tax						Profit (loss) for the period
	September 30, 2015		September 30, 2014		September 30, 2015		September 30, 2014			September 30, 2015			September 30, 2014			September 30, 2015			September 30, 2014			September 30, 2015			September 30, 2014
	S/.(000)		S/.(000)		S/.(000)		S/.(000)			S/.(000)			S/.(000)			S/.(000)			S/.(000)			S/.(000)			S/.(000)

For the three-month periods ended
Cement, concrete and blocks		280,153		276,139		137,541		126,092			81,138			63,863			(22,689	)		(20,135	)		58,449			43,728
Construction supplies		17,622		24,713		377		808			(345	)		(20	)		97			6			(248	)		(14	)
Quicklime		14,725		15,215		3,039		2,218			(332	)		(1,480	)		95			467			(237	)		(1,013	)
Other		465		137		119		(41	)		(3,668	)		(3,256	)		1,025			1,027			(2,643	)		(2,229	)

Consolidated		312,965		316,204		141,076		129,077			76,793			59,107			(21,472	)		(18,635	)		55,321			40,472

For the nine-month periods ended
Cement, concrete and blocks		771,099		801,580		372,560		365,405			222,704			191,556			(63,005	)		(60,464	)		159,699			131,092
Construction supplies		54,222		71,625		1,714		2,333			(347	)		(81	)		98			25			(249	)		(56	)
Quicklime		53,896		45,745		11,284		5,783			88			(4,824	)		(25	)		1,523			63			(3,301	)
Other		814		597		136		(234	)		(10,694	)		(9,449	)		3,026			2,983			(7,668	)		(6,466	)

Consolidated		880,031		919,547		385,694		373,287			211,751			177,202			(59,906	)		(55,933	)		151,845			121,269

	Segment assets		Other assets		Total assets		Segment liabilities
	S/.(000)		S/.(000)		S/.(000)		S/.(000)


September 30, 2015
Cement, concrete and blocks		2,890,544		-		2,890,544		1,390,734
Construction supplies		27,085		-		27,085		30,562
Quicklime		125,541		-		125,541		-
Other		399,131		108,757		507,888		5,195

Consolidated		3,442,301		108,757		3,551,058		1,426,491

December 31, 2014
Cement, concrete and blocks		2,744,140		-		2,744,140		1,129,792
Construction supplies		28,215		-		28,215		32,858
Quicklime		129,483		-		129,483		-
Other		326,071		12,995		339,066		7,569

Consolidated		3,227,909		12,995		3,240,904		1,170,219

During the nine-month period ended September 30, 2015 and 2014 there were no inter-segment revenues.

The “other” line includes activities that do not meet individually the threshold for disclosure under IFRS 8.13 and represent non-material operations of the Group.

Other assets

As of September 30, 2015 corresponds to the available-for-sale investments caption by S/.470,000 and other financial instruments for approximately S/.108,287,000 (S/.744,000 and S/.12,251,000, respectively as of December 31, 2014) which are not allocated to any segment.

Geographic information

All revenues are from Peruvian clients.

As of September 30, 2015 and December 31, 2014, all non-current assets are located in Peru.

15. Events after the reporting period

The Board of Directors’ Meeting of the Company held on September 21, 2015 approved the repurchase of Lima-trade investment shares , therefore, on October 15, 2015 the Company acquired 37,276,580 investment shares at a value of S/. 108,102,000.

The Board of Directors’ Meetings of Inversiones ASPI S.A. held on October 14 and 15, 2015 approved the sale of a total of 13,900,000 common shares and 16,753,544 investment shares of the Company. As a consequence, the percentage of participation of Inversiones ASPI S.A. on the Company’s common shares decreased from 52.63 percent to 50.01 percent and the percentage of participation on the Company’s investment shares decreased from 33.17 percent to zero.