Business Context and Reporting Period
Cementos Pacasmayo S.A.A. (Pacasmayo Cement Corporation), a Peruvian issuer, filed this Form 6-K on February 15, 2018. The report discloses the monthly position of financial derivatives as of January 31, 2018.
Key Financial Metrics
The filing focuses exclusively on financial derivative instruments and does not provide consolidated revenue, profit, cash flow, or liquidity metrics for the company.
- Derivative Instrument: Cross Currency Swaps.
- Notional Amount: USD 300 million (covering corporate bonds).
- Current Fair Value (Jan 2018): PEN -18,677,000 (Liability).
- Previous Month Fair Value: PEN 489,000.
- Accumulated Profit/Loss (Year-to-Date): PEN -9,726,000.
Material Changes
The fair value of the derivative instruments shifted significantly from a positive value of PEN 489,000 in the previous month to a liability of PEN -18,677,000 as of January 31, 2018. This change reflects a decline in fair value of PEN 19,166,000 during the period, partially offset by an unrealized exchange rate gain of PEN 8,400,000 on U.S. dollar-denominated bonds.
Management Commentary and Risks
The company notes that the fair value estimates are preliminary, calculated internally using International Financial Reporting Standards (IFRS) and market data, and are subject to change. The total cumulative loss includes:
- A decline in fair value of PEN 19,166,000 (including PEN 530,000 attributed to counterparty risk recorded as financial cost).
- An unrealized exchange rate gain of PEN 8,400,000.
- Deferred income tax of PEN 3,176,000.
- Accrued commissions of PEN 2,136,000 recorded as interest expense.
Most items are recorded in equity accounts, except for counterparty risk and commissions.
Investor Verification Checklist
- Verify the final audited fair value of the Cross Currency Swaps, as the current figures are preliminary estimates.
- Confirm the impact of the PEN 530,000 counterparty risk on the company's financial cost line item.
- Review the full 2018 interim financial statements to see how the PEN 2,136,000 in accrued commissions affects net income.
- Assess the exposure to exchange rate fluctuations given the USD 300 million notional amount hedged against Peruvian Sol liabilities.