Business Context and Reporting Period
Cementos Pacasmayo S.A.A. (Pacasmayo Cement Corporation), a Peruvian cement manufacturer, filed this Form 6-K on October 17, 2016. The filing serves as a report of foreign issuer pursuant to Rule 13a-16 of the Securities Exchange Act of 1934. The primary content of this filing is an annex detailing the monthly position of financial derivatives as of September 30, 2016.
Key Financial Metrics
The filing does not provide comprehensive revenue, profit, cash flow, or liquidity metrics for the period. It focuses exclusively on the valuation of financial derivative instruments.
- Derivative Instrument: Cross Currency Swaps.
- Purpose: Coverage (hedging) for a USD 300 million corporate bond liability.
- Notional Amount: USD 300 million.
- Fair Value (Current Month - Sep 2016): PEN 82,891,000 (Liability).
- Fair Value (Previous Month - Aug 2016): PEN 88,620,000 (Liability).
- Cumulative Profit/Loss (Year-to-Date): PEN (49,719,000) loss.
Material Changes and Composition of Loss
The cumulative loss of PEN 49,719,000 for the year ending September 30, 2016, is composed of the following specific items:
- Decline in Fair Value: PEN 41,879,000 (Recorded in equity/other comprehensive income).
- Unrealized Exchange Rate Gain: PEN 3,000,000 (Recorded in equity/other comprehensive income).
- Deferred Income Tax: PEN 10,109,000 (Recorded in equity/other comprehensive income).
- Commission Expense: PEN 20,949,000 (Recorded as interest expense in the profit and loss account).
The fair value of the liability decreased from PEN 88,620,000 in the previous month to PEN 82,891,000 in September 2016.
Guidance, Risks, and Unusual Items
The filing does not contain forward-looking guidance, management commentary on operations, or specific risk factors beyond the inherent nature of the derivatives.
Valuation Note: The amounts relating to the fair value of the Cross Currency Swaps are estimated internally in accordance with International Financial Reporting Standards (IFRS) using valuation techniques based on market data. The filing explicitly states these values are preliminary and subject to change.
Investor Verification Checklist
- Verify the impact of the PEN 20,949,000 commission expense on the company's reported interest expense and net income for the period.
- Confirm the classification of the remaining cumulative loss components (fair value decline, exchange gain, deferred tax) within the equity section of the balance sheet.
- Review the company's full annual or quarterly financial statements (Form 20-F) for complete revenue, profit, and liquidity data, as this 6-K filing is limited to derivative positions.
- Monitor subsequent filings for updates to the preliminary fair value estimates of the Cross Currency Swaps.