Business Context and Reporting Period
This Form 6-K filing by Cementos Pacasmayo S.A.A. (Pacasmayo Cement Corporation), a Peruvian issuer, covers the month of March 2019. The report specifically discloses the monthly position of financial derivatives as of February 28, 2019, in compliance with the Superintendency of Securities (SMV) of Peru.
Key Financial Metrics
The filing focuses exclusively on financial derivative instruments and does not provide consolidated revenue, profit, cash flow, or debt metrics for the company's core operations.
- Derivative Instruments: Cross Currency Swaps.
- Total Notional Amount: USD 150 million (USD 132 million for coverage + USD 18 million for negotiation).
- Cumulative Profit/Loss (2019 YTD): PEN -6,177,000 (Loss).
- Fair Value (Current Month - Feb 2019):
- Coverage Swaps: PEN -3,300,829 (Liability).
- Negotiation Swaps: PEN -461,171 (Liability).
- Fair Value (Previous Month - Jan 2019):
- Coverage Swaps: PEN 894,962 (Asset).
- Negotiation Swaps: PEN 125,038 (Asset).
Material Changes
There was a significant deterioration in the fair value of derivative instruments between January and February 2019. The portfolio shifted from a net asset position of approximately PEN 1.02 million in the previous month to a net liability position of approximately PEN 3.76 million in the current month. This volatility contributed to a cumulative loss of PEN 6.177 million for the year to date.
Outlook, Risks, and Management Commentary
Purpose of Derivatives: The instruments are utilized for hedging corporate bond liabilities (USD 132 MM) and exchange rate negotiation (USD 18 MM).
Valuation Risks: Management notes that fair value amounts are estimated internally using IFRS and market data. These figures are preliminary and subject to change.
Accounting Treatment: The cumulative loss includes variations in fair value, exchange differences, deferred income, and accrued commissions recorded in both the statement of profit and loss and other comprehensive income.
Investor Verification Checklist
- Verify the impact of the PEN 6.177 million derivative loss on the company's full-year 2019 net income.
- Confirm the specific exchange rate movements between the Peruvian Sol (PEN) and US Dollar (USD) that drove the fair value shift from asset to liability.
- Review the company's annual report (Form 20-F) for the total outstanding corporate bond debt being hedged.
- Assess the sensitivity of future earnings to further fluctuations in the PEN/USD exchange rate given the USD 150 million notional exposure.