Business Context and Reporting Period
Cementos Pacasmayo S.A.A. (Pacasmayo Cement Corporation), a Peruvian cement manufacturer, filed this Form 6-K on November 15, 2017. The report covers the month of November 2017 and includes an annex detailing the monthly position of financial derivatives as of October 31, 2017.
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.
- Notional Amount: USD 300 million.
- Purpose: Coverage for a corporate bond liability.
- Currency: Peruvian Sol (PEN).
- Fair Value (Current Month): PEN 3,636,000 (Liability).
- Fair Value (Previous Month): PEN 9,836,000 (Liability).
- Cumulative Profit/Loss (Year-to-Date): PEN -45,189,000.
Material Changes
The fair value liability associated with the Cross Currency Swaps decreased from PEN 9,836,000 in the previous month to PEN 3,636,000 in the current month (October 2017). The year-to-date cumulative loss on derivative instruments stands at PEN 45,189,000.
Management Commentary and Risks
The cumulative profit/loss calculation includes a decline in fair value of PEN 66,276,000 (including PEN 2,737,000 attributed to counterparty risk), offset by an unrealized exchange rate gain of PEN 33,000,000 on USD-denominated bonds and deferred income tax of PEN 9,816,000. Accrued commissions of PEN 21,729,000 are recorded as interest expense. Management notes that fair value estimates are internal, based on IFRS and market data, and are preliminary and subject to change.
Investor Verification Checklist
- Verify the impact of the PEN 21,729,000 in accrued commissions on the company's interest expense and net income.
- Confirm the status of the USD 300 million corporate bond liability being hedged.
- Assess the counterparty risk exposure of PEN 2,737,000 included in the fair value decline.
- Review the full annual report (Form 20-F) for consolidated revenue and earnings, as this filing contains only derivative data.