Business Context and Reporting Period
Cementos Pacasmayo S.A.A. (Pacasmayo Cement Corporation), a Peruvian cement manufacturer, filed this Form 6-K on May 14, 2018. The filing discloses the monthly position of financial derivatives as of April 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 and does not provide consolidated revenue, profit, cash flow, or debt figures for the company.
- Derivative Instrument: Cross Currency Swaps.
- Purpose: Coverage (hedging) for a USD 300 million corporate bond liability.
- Notional Amount: USD 300 million.
- Reporting Currency: Peruvian Sol (PEN).
- Fair Value (April 2018): PEN -12,588,000 (Liability).
- Fair Value (March 2018): PEN -9,929,000 (Liability).
- Cumulative Profit/Loss (YTD 2018): PEN -18,869,000.
Material Changes
The fair value liability associated with the Cross Currency Swaps increased (became more negative) by approximately PEN 2.66 million from the previous month (from -9,929,000 to -12,588,000). The cumulative loss for the year stands at PEN 18,869,000.
Management Commentary and Components of Loss
The cumulative loss of PEN 18,869,000 as of April 30, 2018, is composed of the following specific items:
- Decline in Fair Value: PEN 13,077,000 (includes PEN 1,044,000 attributed to counterparty risk recorded as financial cost).
- Unrealized Exchange Rate Loss: PEN 1,500,000 due to holding USD-denominated bonds.
- Deferred Income Tax: PEN 4,300,000 (positive impact).
- Accrued Commissions: PEN 8,592,000 (recorded as interest expense in the profit and loss account).
Management notes that fair value estimates are internal, based on IFRS and market data, and are preliminary and subject to change. Most items are recorded in equity accounts, except for counterparty risk and commissions.
Investor Verification Checklist
- Verify the impact of the PEN 8,592,000 in accrued commissions on the company's reported interest expense and net income.
- Confirm the counterparty risk exposure of PEN 1,044,000 and its treatment in financial costs.
- Review the full 2018 annual report (Form 20-F) for consolidated revenue, EBITDA, and total debt figures, as this filing only covers derivative positions.
- Monitor future filings for changes in the fair value of the USD 300 million bond hedge, given the volatility indicated by the month-over-month increase in liability.