Business Context and Reporting Period
Company: CEMENTOS PACASMAYO S.A.A. (Pacasmayo Cement Corporation)
Filing Type: Form 6-K (Report of Foreign Issuer)
Reporting Period: Monthly update as of July 31, 2018, filed on August 14, 2018.
Subject: Disclosure of the monthly position of financial derivatives, specifically Cross Currency Swaps used to hedge corporate bond liabilities.
Key Financial Metrics
The filing focuses exclusively on derivative financial instruments and does not provide consolidated revenue, profit, cash flow, or general liquidity metrics for the company.
| Metric | Value (PEN) | Notes |
|---|---|---|
| Notional Amount of Swaps | USD 300 Million | Total coverage for corporate bond liability. |
| Fair Value (Current Month) | 4,231,000 | As of July 31, 2018 (Liability). |
| Fair Value (Previous Month) | 3,293,000 | As of June 30, 2018 (Liability). |
| Cumulative Profit/Loss (YTD) | -18,856,000 | Total loss for the year due to derivative instruments. |
Material Changes and Composition of Loss
The cumulative loss of PEN 18,856,000 as of July 31, 2018, is composed of the following specific items:
- Unrealized Exchange Rate Loss: PEN 8,700,000 (loss due to holding bonds in U.S. dollars).
- Accrued Commissions: PEN 15,361,000 (recorded as interest expense in the profit and loss account).
- Deferred Income Tax: PEN 1,463,000 (benefit).
- Increase in Fair Value: PEN 3,742,000 (includes PEN 231,000 due to counterparty risk recorded in financial cost; remainder recorded in equity).
The fair value of the Cross Currency Swaps increased from PEN 3,293,000 to PEN 4,231,000 during the month, representing a growing liability position.
Management Commentary and Risks
Valuation Methodology: Fair value amounts are estimated internally in accordance with International Financial Reporting Standards (IFRS) using valuation techniques based on market data. Management notes these figures are preliminary and subject to change.
Accounting Treatment:
- Items related to fair value changes (excluding counterparty risk) are recorded in equity accounts.
- Counterparty risk is recorded in financial costs.
- Commissions are recorded as interest expense in the profit and loss account.
Risks: The filing highlights exposure to exchange rate fluctuations (USD/PEN) and counterparty risk associated with the derivative contracts.
Investor Verification Checklist
- Verify the impact of the PEN 15,361,000 in accrued commissions on the company's reported interest expense and net income.
- Confirm the classification of the PEN 3,742,000 fair value increase in equity versus the income statement.
- Assess the sensitivity of the USD 300 million corporate bond liability to further fluctuations in the PEN/USD exchange rate.
- Review the full annual report (Form 20-F) for consolidated revenue and operating margins, as this 6-K filing contains only derivative data.