Business Context and Reporting Period
Cementos Pacasmayo S.A.A. (Pacasmayo Cement Corporation), a Peruvian issuer, filed this Form 6-K on July 11, 2018. The report discloses the monthly position of financial derivatives as of June 30, 2018, in compliance with local securities regulations and SEC requirements for foreign issuers.
Key Financial Metrics
The filing focuses exclusively on financial derivative instruments rather than full operational financial statements.
- Derivative Instrument: Cross Currency Swaps.
- Notional Amount: USD 300 million (total).
- Purpose: Coverage of a corporate bond liability.
- Underlying Liability: Corporate bond denominated in U.S. Dollars (USD).
- Reporting Currency: Peruvian Sol (PEN).
- Fair Value (Current Month): PEN 3,293,000 (Liability).
- Fair Value (Previous Month): PEN 6,332,000 (Liability).
- Cumulative Profit/Loss (Year-to-Date): PEN -17,252,000 (Loss).
Material Changes
The fair value liability associated with the Cross Currency Swaps decreased from PEN 6,332,000 in the previous month to PEN 3,293,000 as of June 30, 2018. The filing does not provide comparative data for the prior year or prior quarter to assess year-over-year material changes.
Management Commentary, Risks, and Unusual Items
The cumulative loss of PEN 17,252,000 for the year is composed of the following components:
- Unrealized Exchange Rate Loss: PEN 8,700,000 loss due to holding USD-denominated bonds.
- Accrued Commissions: PEN 13,095,000 expense recorded as interest expense in the profit and loss account.
- Fair Value Increase: PEN 2,804,000 gain (includes PEN 29,000 due to counterparty risk).
- Deferred Income Tax: PEN 1,739,000 benefit.
Accounting Treatment: The fair value adjustments (excluding counterparty risk) are recorded in equity accounts, while commissions are recorded as interest expense. The filing notes that fair value estimates are preliminary, based on internal valuation techniques using market data, and subject to change.
Investor Verification Checklist
- Verify the impact of the PEN 13,095,000 in accrued commissions on the company's net interest expense and EBITDA.
- Confirm the classification of the PEN 2,804,000 fair value gain in equity versus the profit and loss statement.
- Assess the exposure to USD/PEN exchange rate fluctuations given the USD 300 million notional amount hedged against a corporate bond.
- Review the full interim financial statements for the period ending June 30, 2018, as this filing does not provide total revenue, profit, or cash flow figures.