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FOSSAL S.A.A.

2019 ANNUAL REPORT

Dear Shareholders,

Pursuant to the provisions of the Company´s Bylaws, the Board of Directors submits to

your consideration the Annual Report, which includes reports from FOSSAL S.A.A.´s

businesses corresponding to the fiscal year 2019.

Section I: RESPONSIBILITY STATEMENT

This document contains truthful and sufficient information regarding the development

of the business of FOSSAL S.A.A. during 2019. Notwithstanding the responsibility of the

issuer, the signatories make themselves responsible for its content in accordance with

the applicable legal provisions.

Humberto Nadal del Carpio 1 Alfredo Tong Lam

Chief Executive Officer Accountant

Lima, February 14, 2020

1 Mr. Humberto Nadal Del Carpio represents Cementos Pacasmayo S.A.A. in the General Management of Fossal S.A.A.

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Section II: BUSINESS

A. General Information

Company Name: FOSSAL S.A.A.

Address: Calle La Colonia No. 150, Urbanización El Vivero, Santiago de Surco, Lima.

Telephone: 317-6000

Fax: 317-6099

Incorporation: Notarized document dated August, 8, 2016, issued by Notary Public

Ricardo Fernandini Barreda

Registration: August, 8, 2016, filed in Electronic Card No. 13685858 of the Registry

of Corporations of the Public Records Office in and for Lima.

Group: FOSSAL S.A.A. belongs to the “Hochschild – Pacasmayo” economic group,

mainly composed by the following companies:

Business Name Business Purpose

Inversiones ASPI Investments

Cementos Pacasmayo S.A.A. Cement manufacturing and marketing

Cementos Selva S.A. Cement manufacturing and marketing

Distribuidora Norte Pacasmayo

S.R.L.

Distribution and marketing

Dinoselva Iquitos S.A.C. Distribution and marketing

Empresa de Transmisión

Guadalupe S.A.C.

Energy transmission

Acuícola Los Paiches S.A.C. Fishing and operation of fish farms

Fosfatos del Pacífico S.A. Mining activities for manufacturing fertilizers and

chemical products

Salmueras Sudamericanas S.A. Mining activities for manufacturing salt, fertilizers and

chemical products

Calizas del Norte S.A.C. En

Liquidación

Mining activities

Hochschild Mining PLC subsidiarias Mining activities

Soluciones Takay S.A.C. Advice and provision of information services, promotion,

acquisition, and intermediation services for the

management and development of real estate projects

The share capital of the issuer as to December 31, 2019 is S/ 107,594,030.00 fully

paid and subscribed.

Created and Issued Shares Classes: 107,594,030 common shares and 10,224,230

investment shares.

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Share Number and Nominal Value: 107,594,030 common shares at S/ 1.00 per share

and 10,224,230 investment shares at S/ 1.00 per share.

Shareholder structure: The percentages of equity stake of natural persons or legal

entities owning 5% or more of the stock are as follows:

Shareholders with equity stake exceeding 5% of the social capital stock:

Name Shareholding Nationality Economic Group

Inversiones ASPI S.A.

50.01% Peruvian Hochschild –

Pacasmayo

JPMorgan Chase Bank N.A.

FBO Holders Of ADRs

13.05% USA

Shareholder structure: Percentage of shareholding for the 10 main common

shareholders is as follows:

1.

2.

3.

4.

5.

6.

7.

8.

9.

10.

50.01 %

13.05 %

4.81 %

4.27 %

3.39 %

2.48 %

2.46%

2.40 %

1.68 %

1.25 %

Shares entitled to vote:

Holding Number of Shareholders Percentage of Shareholding

Less than 1% 6,645 13.17%

Between 1% - 5% 9 23.77%

Between 5% -10% 0 0.00%

More than 10% 2 63.06%

Total 6,656 100.00%

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Investment Shares:

Share Number and Nominal Value: 10,224,230 shares at S/. 1.00 per share.

Holding Number of Shareholders Percentage of Shareholding

Less than 1% 360 9.51%

Between 1% - 5% 1 1.01%

Between 5% -10% 0 0.00%

More than 10% 1 89.48%

Total 362 100.00%

B. Operations and Development Description

Company purpose: Investment in securities, security titles or shares of other

corporations, formation/promotion and development of manufacturing enterprises

and other investments.

CIIU: 6420

Term: Indefinite

History

FOSSAL S.A.A. (hereinafter, the “Company”) was incorporated in August 8, 2016. In

accordance with the Peruvian Corporate Act, it is considered a Stock Corporation, whose

common shares are registered in the Stock Market Public Registry of the

Superintendencia del Mercado de Valores (SMV) and in the Stock Registry of the Lima

Stock Exchange. The Company is a subsidiary of Inversiones Aspi S.A. (hereinafter,

“ASPI”), which owns 50.01% of the Company’s common shares as to December 31, 2019.

The Company’s main purpose is the investment in securities, security titles or shares of

other corporations, formation, promotion and development of manufacturing

enterprises and other investments.

In September 2016, the General Shareholders’ Meeting of Cementos Pacasmayo S.A.A.

approved the spin-off of a portion of its net assets (composed by the assets and liabilities

related to the Company’s interest in Fosfatos del Pacífico S.A.) to Fossal S.A.A.

(“FOSSAL”), a newly formed entity created as a subsidiary of Inversiones ASPI S.A. The

purpose of the spin-off was to allocate Cementos Pacasmayo’s assets and liabilities in

accordance with the specialization of each business, cement and phosphate &

diatomite. The spin-off took place in March 2017 and with it FOSSAL became the owner

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of 70% of the shares of Fosfatos del Pacífico S.A., being to date the only company in

which it owns shares.

Sector and Market Overview

FOSSAL’s only subsidiary is Fosfatos del Pacífico S.A., whose main object is to engage in

all kind of non-metal and metal mining activities, and the industrialization and marketing

of fertilizers and chemical products in general for the agricultural sector.

With the indefinite adjudication of the Diatomites concession Bayóvar N ° 9 by

Proinversión and Activos Mineros S.A. in favor of Cementos Pacasmayo S.A.A. in 2007,

and the constitution in 2009 of Fosfatos del Pacífico S.A.; Fosfatos del Pacífico S.A. will

engage in the exploitation and marketing of the diatomite and phosphoric rock

resources of the Bayovar N ° 9 concession located in the district and province of Sechura,

department of Piura, approximately 1,000 km. north of the capital, Lima, 110 km south

of Piura and 30 km from the Pacific Ocean.

Historically, the Bayovar Phosphate Rock has been known worldwide for its good P2O5

content, its high solubility and low impurities level. This places it as an easily marketable

rock in the international market. Based on Golder Associates’ report, who validated the

program of exploration and the mineral resources database, Bayovar’s concession

resources are 546.1 million tons (dry basis measurements) of phosphate rock with 18.2%

of P2O5. Regarding Reserves, these amount 108.1 million tons of phosphate rock of

17.8% of P2O5.

Phosphate rock is obtained through the mining of phosphate minerals, which are then

put through a metallurgical process. Phosphate that is contained in phosphate rock

serves as a vital macronutrient for transfer of energy, photosynthesis and cells division.

Likewise, its contribution is essential for plants growth as it promotes both root

development and resistance to droughts. Most natural and farm soils are phosphorous

deficient, therefore application of fertilizers containing such element is required.

Phosphate rock, among other applications, is used to produce phosphoric acid, and

phosphate fertilizers, the latter making up approximately 90% of world phosphate rock.

In the family of phosphate fertilizers, the more important are diammonium phosphate

(DAP), monoammonium phosphate (MAP) and triple superphosphate (TSP)2.

As for the phosphate market, the year 2019 was marked by a stable phosphate rock

demand, while production of phosphoric acid and phosphate fertilizers (DAP, MAP and

TSP) would have recovered according to preliminary estimates. Phosphate rock exports

would have been reduced by 3%, coming down from 31 Mt to 30 Mt in 2019, and it is

2 CRU / Energy Mining Planning Unit, International Fertilizer Association (IFA)

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estimated that world production remained at the same level as 2018 at 207 Mt. On the

production of phosphate rock, more than 50% of the world production takes place in

China, followed secondly by Morocco; however, the latter is in first place in terms of

reserves with approximately 50 billion tons (more than 70% of world reserves).3

Regarding the agricultural sector, a sector linked to the fertilizers demand, it is estimated

that agricultural production will grow but at a slower pace, due to an improvement in

land productivity rather than an increase in agricultural surface.4 Regarding political

decisions, it is expected that these will continue to affect world fertilizer consumption,

with measures aimed at discouraging the use of polluting fertilizers and favoring the use

of mineral fertilizers, which are obtained from mineral resources such as nitrogen

sources, potassium and phosphorus. Mineral fertilizers, in addition to improving

production, have a lower environmental impact as they prevent the wear and tear of

soil reserves.

At the national level, according to the results of the National Agricultural Census, of the

more than 2 million producers that exist nationwide, 56% do not apply any fertilizer,

32.7% use mineral fertilizers in small quantities and just over 11% use it enough5, which

suggests a high growth potential for the demand of phosphate fertilizers of mineral

origin.

In Peru, according to preliminary information from the Ministry of Agriculture and

Irrigation, the production of the agricultural sector grew 2.6% in 2019 compared to the

previous year. This growth was mainly explained by blueberry, mango and cotton as

there was an increase in the area sown and harvested in the regions of Piura, La Libertad

and Lambayeque, among others6. On the other hand, it is estimated that the national

fertilizer market will close the year 2019 with sales of 1.2 million metric tons, a slightly

increase compared to 20187. In 2020, it is expected a similar growth than in 2019, mainly

enhanced by blueberry, grape and avocado crops 8.

As for the international price of phosphate rock, it has shown significant fluctuations in

the last 5 years. However, the outlook remains positive based on sustained agricultural

growth.

3 Statista: Global phosphate rock production by country 2018. Published by M. Garside, Feb 4, 2020 4 International Fertilizer Association. Fertilizer Outlook 2018 – 2022: 5 https://gestion.pe/economia/empresas/beneficia-fertilizantes-minerales-produccion-agricola-220586-noticia/?ref=gesr 6 Minagri, Sistema Integrado de Estadística Agraria (SIEA): http://siea.minagri.gob.pe/siea/ 7 https://gestion.pe/economia/agricultura-por-que-el-mercado-de-fertilizantes-no-crece-lo-suficiente-en-el-peru-si-existe-potencial-noticia/?ref=gesr 8 https://larepublica.pe/economia/2020/01/05/ministerio-de-agricultura-sector-agro-sera-impulsado-por-berries-y-uvas-en-el-2020-inia-senasa-frutas-arandanos-paltas-cafe-cacao/

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Monthly Phosphate Rock Price – US$ per TM

Source: Indexmundi

C. Human Resources

FOSSAL does not have any staff on payroll since it is an investment company; neither

has hired any temporary staff during 2019.

Senior Management is in charge of Cementos Pacasmayo S.A.A. by virtue of a General

Management Agreement and Services Provision.

D. Judicial, Administrative or Arbitration Proceedings

As to December 31, 2019 and to this document date, no judicial proceedings are known

that could have a significant impact on the Company’s results and financial position.

E. Administration

List of Directors:

Name Positiont Director since

Eduardo Hochschild Beeck President 26.09.2016

Raimundo Morales Dasso Board Member 26.09.2016

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Humberto Nadal Del Carpio Board Member 26.09.2016

Marco Antonio Zaldívar García Board Member 24.03.2017

Eduardo Hochschild Beeck

Mr. Hochschild is President of the Board. He is a mechanical engineer from Tufts

University, Boston, USA. Mr. Hochschild is also Executive President of Hochschild Mining

plc, Inversiones ASPI S.A., and Chairman of the Board of Directors of UTEC and TECSUP.

Director of Banco de Crédito del Perú, El Pacífico Peruano-Suiza Compañía de Seguros y

Reaseguros, Fosfatos del Pacífico S.A., Sociedad de Comercio Exterior del Perú (COMEX

Peru), and an expert consultant of the Economic Counsel of the Episcopal.

Raimundo Morales Dasso

Mr. Morales received bachelor´s degrees in Economics and Management from

Universidad del Pacífico and a Master´s degree in Business Administration from The

Wharton School, University of Pennsylvania, USA. Between 1970 and 1980 he served in

various positions at Bank of America and Wells Fargo.

He served as General Manager at Banco de Crédito from October 1990 to April 2008. He

is currently Vice-Chairman of the Board of Directors of Credicorp Ltd, Banco de Crédito

del Perú, and El Pacífico Compañía de Seguros y Reaseguros. He is a member on the

Board of Directors of Atlantic Securty Bank, Alicorp S.A.A., Pesquera Centinela S.A.,

Grupo Romero, Cementos Pacasmayo S.A.A., Salmueras Sudamericanas S.A., Fosfatos

del Pacífico S.A., Cerámica Lima S.A., Corporación Cerámica S.A. and Inversiones y

Propiedades S.A., as well as member on the Executive Council of the Peruvian Institute

of Economy.

Humberto Nadal Del Carpio

Mr. Nadal joined Cementos Pacamsayo as Corporate Development Manager in June

2007, has been Director since March 2008 and Chief Executive Officer of Cementos

Pacasmayo since April 2011. He received an undergraduate degree in Economics from

Universidad del Pacífico and a Master´s degree in Business Administration from

Georgetown University. He is also CEO of ASPI S.A., Fosfatos del Pacifico S.A. and

FOSSAL. Additionally, he is Chairman of Patronato de la Universidad del Pacifico, director

of Ferreycorp and has been Chairman of the Board of Directors of Fondo Mi Vivienda. In

April 2006, he joined Compañía Minera Ares S.A.C. (subsidiary of Hochschild Mining plc)

as Corporate Development Manager. Mr. Nadal was also Business, Administration and

Finance Manager of the Instituto Libertad y Democracia and CEO of Socosani S.A.

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Distinguished among the three best CEOs of the construction industry in Latin America

by the Institutional Investor magazine for the years 2014, 2015, 2016, 2017 and 2018.

Marco Antonio Zaldívar García

Mr. Zaldívar is a Certified Public Accountant, graduated from Universidad de Lima and

the PAD Executive Development Program of the Universidad de Piura. He has an MBA

at the Adolfo Ibáñez School of Management (USA). He has been Chairman of the Board

of the Lima Stock Exchange. Previously, at Ernst & Young, he has been a Partner of Risk

Management and Regulatory Matters, Senior Partner of the Audit and Business Advisory

Division of the firm. He has also been Vice Dean of the Association of Public Accountants

of Lima, President of the Board of Directors and Chairman of the Corporate Governance

Committee of Procapitales. He is currently Independent Director of Banco Santander del

Perú, Edpyme Santander Consumo and Unión de Cervecerías Peruanas Backus y

Johnston, among other positions, highlighting his extensive experience in Corporate

Governance issues.

F. General Administration

The general administration service provided by Cementos Pacasmayo S.A.A. to the

Company includes, in addition to its function as general manager, services according to

the requirements and needs of the company, such as: (i) legal advice, (ii) internal audit,

(iii) accounting, (iv) human resources, (v) logistics, (vi) budget, treasury and finance, (vii)

information and communications systems, and (viii) general services (visits,

correspondence, telephone exchange and archiving). Cementos Pacasmayo S.A.A. is

providing these services since 2016.

Management Staff:

General Manager: Cementos Pacasmayo S.A.A. Mr. Humberto Nadal del Carpio is the

natural person that represents it.

The other management tasks of the company are carried out by Cementos Pacasmayo

personnel, according to the General Management Agreement and Services Provision.

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G. Operation

FOSSAL had no direct operating income from sales in 2019 or 2018.

H. Main Assets

The main asset of FOSSAL (separate) is the investment in subsidiaries for S/ 220.35

million, which comprises the investment in Fosfatos del Pacifico S.A., where FOSSAL

owns a 70% stake.

Section III: SEPARATE FINANCIAL STATEMENTS AS OF DECEMBER 31, 2019

AND 2018

a) Liquidity:

The treasury management policy is based on the principle of prudence and is focused

on complying with the current obligations of the Company, mainly: i) administrative

services and ii) capital contribution plan to subsidiary Fosfatos del Pacífico S.A.

Liquidity Ratios 2019 2018

Current Ratio (Current Assets / Current Liabilities) 50.79 82.40

Liquidity ratios as of December 2019 have decreased with respect to 2018 due to a

reduction in the level of cash and equivalents, which was contributed as capital to the

subsidiary Fosfatos del Pacífico S.A.

b) Capital and Financing:

Future investment in the Company is directly related to investment in its subsidiary, for

the Phosphate Project, which will depend on phosphate rock market conditions and the

availability of corresponding financing in the appropriate terms for the company.

Framed in a policy of prudence in the use of financial resources during this year,

Management is evaluating both critical factors for the Phosphate Project.

Debt and Solvency Ratios 2019 2018

Total Liabilities / Total Assets 0.001 0.001

Total Shareholder Net Equity / Total Assets 0.999 0.999

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The financial ratios remain stable as of December 31, 2019 regarding financial

information as of December 31, 2018.

c) Economic Results:

In 2019 and 2018 FOSSAL S.A.A. reported a net loss of S/ 31.34 million and S/ 4.03

million, respectively, and an operating loss of S/ 0.28 million and S/ 0.73 million,

respectively.

The increase in net loss was mainly due to the termination by Fosfatos del Pacífico S.A.

of the surface contract in March 2019, which allowed Fosfatos del Pacífico S.A. to use

the land located adjacent to a marine area in northern Peru and to execute the

Phosphate Loading Terminal project in Bayóvar (Piura). Fosfatos del Pacífico S.A. decided

to terminate the aforementioned contract considering that currently the economic and

financial conditions for its development are not adequate; consequently, in March 2019

the investment related to the Phosphate Loading Terminal project was derecognized for

S/34.12 million.

The Profit and Loss Statement as of December 31, 2019, and December 31, 2018,

records an accumulated loss of S/ 39.15 million and S/ 7.82 million, respectively.

Changes within the Responsible of Elaborating and Reviewing Financial Statements

During 2019 there has been no change within the team responsible on the elaboration

and review of the financial statements of the Company.

Section IV: CONSOLIDATED FINANCIAL STATEMENTS AS OF DECEMBER 31,

2019 AND 2018

a) Liquidity:

Liquidity Ratios 2019 2018

Current Ratio (Current Assets / Current Liabilities) 8.16 10.5

Liquidity ratios as of December 31, 2019, have diminished compared to December 31,

2018 mainly as a result of the use of cash for operating expenses.

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b) Capital and Financing:

Debt and Solvency Ratios 2019 2018

Total Liabilities / Total Assets 0.008 0.007

Total Shareholder Net Equity / Total Assets 0.992 0.993

The financing indicators remain stable as of December 31, 2019 regarding financial

information as of December 31, 2018.

c) Economic Results

In 2019 and 2018 FOSSAL S.A.A. and subsidiary reported a net loss of S/ 45.16 million

and S/ 5.63 million, respectively, and an operating loss of S/ 45.38 million and S/ 8.26

million, respectively.

The Profit and Loss Statement as of December 31, 2019, and December 31, 2018,

records an accumulated loss of S/ 39.16 million and S/ 7.82 million, respectively.

Given that current economic and financial conditions are not considered suitable for the

execution of the Phosphate Project, due to the situation of the Phosphate Rock Market,

revenues and expenses will not have significant changes until Management decides to

start with investments for the execution of the Phosphate Rock Project of Fosfatos del

Pacífico S.A.

Changes within the Responsible of Elaborating and Reviewing Financial Statements

During 2019 there has been no change within the team responsible on the elaboration

and review of the financial statements of the Company

Section V: ANNEXES

Monthly share prices of FOSSAL S.A.A in the fiscal year of 2019

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FOSSAL S.A.A.

Renta Variable

Precio

Código ISIN Nemónico Año - Mes Apertura Cierre Máxima Mínima Promedio

S/ S/ S/ S/ S/

PEP736211009 FOSSALC1 2019-01 -.- -.- -.- -.- 0.179

PEP736211009 FOSSALC1 2019-02 -.- -.- -.- -.- 0.179

PEP736211009 FOSSALC1 2019-03 0.186 0.186 0.186 0.186 0.186

PEP736211009 FOSSALC1 2019-04 0.200 0.200 0.200 0.200 0.197

PEP736211009 FOSSALC1 2019-05 0.199 0.180 0.199 0.180 0.184

PEP736211009 FOSSALC1 2019-06 0.160 0.144 0.170 0.144 0.149

PEP736211009 FOSSALC1 2019-07 -.- -.- -.- -.- 0.148

PEP736211009 FOSSALC1 2019-08 -.- -.- -.- -.- 0.144

PEP736211009 FOSSALC1 2019-09 -.- -.- -.- -.- 0.142

PEP736211009 FOSSALC1 2019-10 -.- -.- -.- -.- 0.109

PEP736211009 FOSSALC1 2019-11 0.110 0.120 0.120 0.110 0.111

PEP736211009 FOSSALC1 2019-12 -.- -.- -.- -.- -.-

PEP736215000 FOSSALI1 2019-01 -.- -.- -.- -.- 0.104

PEP736215000 FOSSALI1 2019-02 -.- -.- -.- -.- -.-

PEP736215000 FOSSALI1 2019-03 -.- -.- -.- -.- -.-

PEP736215000 FOSSALI1 2019-04 -.- -.- -.- -.- 0.100

PEP736215000 FOSSALI1 2019-05 -.- -.- -.- -.- -.-

PEP736215000 FOSSALI1 2019-06 -.- -.- -.- -.- -.-

PEP736215000 FOSSALI1 2019-07 -.- -.- -.- -.- 0.100

PEP736215000 FOSSALI1 2019-08 -.- -.- -.- -.- -.-

PEP736215000 FOSSALI1 2019-09 -.- -.- -.- -.- 0.100

PEP736215000 FOSSALI1 2019-10 -.- -.- -.- -.- 0.070

PEP736215000 FOSSALI1 2019-11 -.- -.- -.- -.- -.-

PEP736215000 FOSSALI1 2019-12 -.- -.- -.- -.- -.-

C O T I Z A C I O N E S 2 0 1 9