Business Context and Reporting Period
Cementos Pacasmayo S.A.A. (Pacasmayo Cement Corporation), a Peruvian issuer, filed this Form 6-K on July 14, 2017. The report covers the month of July 2017 and provides an annex detailing the monthly position of financial derivatives as of June 30, 2017.
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.
- Purpose: Coverage for a USD 300 million corporate bond liability.
- Notional Amount: USD 300 million.
- Reporting Currency: Peruvian Sol (PEN).
- Fair Value (Current Month): PEN 41,338,000 (Liability).
- Fair Value (Previous Month): PEN 71,197,000 (Liability).
- Accumulative Gain/Loss (Year-to-Date): PEN -10,792,000 (Loss).
Material Changes
The fair value liability associated with the Cross Currency Swaps decreased from PEN 71,197,000 in the previous month to PEN 41,338,000 as of June 30, 2017. The filing text does not provide comparative financial data for the prior year or prior comparable periods outside of the immediate month-over-month derivative valuation.
Management Commentary, Risks, and Unusual Items
Composition of Year-to-Date Loss: The cumulative loss of PEN 10,792,000 is derived from the following components:
- Decline in fair value of derivative instruments: PEN 28,574,000 (includes PEN 3,349,000 attributed to counterparty risk).
- Unrealized exchange rate gain on USD-denominated bond holdings: PEN 31,500,000.
- Deferred income tax: PEN 863,000.
- Accrued commissions on Cross Currency Swap contracts: PEN 12,855,000 (recorded as interest expense).
Accounting Treatment: The decline in fair value, exchange rate gain, and deferred tax are recorded in equity accounts, except for the counterparty risk which is recorded in financial income. Commissions are recorded as interest expense in the profit and loss account.
Risks and Valuation: Fair value amounts are estimated internally using IFRS and market data. The filing notes these figures are preliminary and subject to change.
Investor Verification Checklist
- Verify the impact of the PEN 12,855,000 in accrued commissions on the company's interest expense and net income.
- Confirm the counterparty risk exposure of PEN 3,349,000 and its treatment in financial income.
- Review the full 2017 Form 20-F for consolidated revenue, profit, and liquidity metrics not included in this derivative-specific filing.
- Monitor the preliminary nature of the fair value estimates for potential adjustments in future reporting.