Business Context and Reporting Period
Cementos Pacasmayo S.A.A., a Peruvian cement manufacturer, filed this Form 6-K on May 12, 2016. The report covers the month of May 2016 and provides specific financial data regarding derivative instruments as of April 30, 2016.
Key Financial Metrics
The filing focuses exclusively on the position of financial derivatives and does not provide consolidated revenue, profit, cash flow, or debt figures for the company.
- Derivative Instrument: Cross Currency Swaps.
- Purpose: Coverage for a corporate bond.
- Notional Amount: USD 300 million total.
- Underlying Asset: Corporate bond denominated in Soles.
- Fair Value (April 30, 2016): S/ 94,719,000.
- Fair Value (Previous Month): S/ 124,797,000.
- Accumulative Gain/Loss (Year-to-Date): (S/ 675,000) loss.
Material Changes
The fair value of the Cross Currency Swaps decreased by approximately S/ 30 million from the previous month (from S/ 124,797,000 to S/ 94,719,000). The year-to-date net impact on the company from derivative instruments is a loss of S/ 675,000.
Management Commentary and Unusual Items
The filing details the composition of the year-to-date gain/loss of S/ 675,000:
- Decrease in Fair Value: S/ 30,051,000 (recorded in net equity/other comprehensive income).
- Unrealized Gain (Exchange Rate): S/ 41,700,000 on US$ bonds held (recorded in net equity/other comprehensive income).
- Income Tax: S/ 3,029,000 (recorded in net equity/other comprehensive income).
- Commission Expense: S/ 9,295,000 (recorded as a financial expense in the statement of profit and loss).
Management notes that fair value estimates follow International Financial Reporting Standards (IFRS) using market data and are subject to change.
Investor Verification Checklist
- Verify the impact of the S/ 9,295,000 commission expense on the current quarter's net income.
- Confirm the total outstanding balance of the USD 300 million corporate bond being hedged.
- Review the full annual report (Form 20-F) for consolidated revenue and profit metrics, as they are not included in this 6-K.
- Monitor future filings for changes in the fair value of the Cross Currency Swaps given the significant month-over-month fluctuation.