Business Context and Reporting Period
Cementos Pacasmayo S.A.A. (Pacasmayo Cement Corporation), a Peruvian cement manufacturer, filed this Form 6-K for the month of June 2016. The report discloses the company's monthly position regarding financial derivatives as of May 31, 2016, in compliance with local regulatory requirements.
Key Financial Metrics
The filing focuses exclusively on financial derivative instruments rather than comprehensive operational results.
- Derivative Instrument: Cross Currency Swaps.
- Purpose: Coverage (hedging) for a total corporate bond issuance of USD 300 million.
- Underlying Asset: Corporate bonds denominated in US Dollars.
- Reporting Currency: Peruvian Soles (PEN).
- Fair Value (Current Month): S/ 123,702,000.
- Fair Value (Previous Month): S/ 94,719,000.
- Accumulative Gain/Loss (Year-to-Date): (S/ 3,945,000) loss.
Material Changes
The fair value of the Cross Currency Swaps increased by approximately S/ 28.98 million from the previous month (from S/ 94.72 million to S/ 123.70 million). The year-to-date derivative activity resulted in a net loss of S/ 3.945 million, driven by a decrease in fair value of S/ 1.068 million and swap commissions of S/ 11.813 million, partially offset by an unrealized gain of S/ 11.7 million from exchange rate differences on US$ bonds.
Management Commentary and Risks
Management notes that the fair value amounts are estimated internally using International Financial Reporting Standards (IFRS) and valuation techniques based on market data, meaning these figures are subject to change. The filing distinguishes between items recorded in net equity (other comprehensive income) and those recorded as financial expenses in the statement of profit and loss. Specifically, the swap commission of S/ 11.813 million is treated as a financial expense.
Investor Verification Checklist
- Verify the total outstanding balance of the USD 300 million corporate bond being hedged.
- Confirm the impact of the S/ 11.813 million swap commission on the current period's net income.
- Review the full annual 20-F report for comprehensive revenue, profit, and liquidity metrics not included in this derivative-specific filing.
- Assess the sensitivity of the fair value estimates to future fluctuations in the USD/PEN exchange rate.