Business Context and Reporting Period
Cementos Pacasmayo S.A.A., a Peruvian cement corporation, filed this Form 6-K on June 13, 2018. The report discloses the monthly position of financial derivatives as of May 31, 2018, in compliance with local securities regulations and SEC requirements for foreign issuers.
Key Financial Metrics
The filing focuses exclusively on financial derivative instruments rather than comprehensive operating results. Key figures include:
- Derivative Instrument: Cross Currency Swaps.
- Notional Amount: USD 300 million (hedging corporate bonds).
- Current Fair Value (May 2018): PEN 6,332,000 (Liability).
- Previous Month Fair Value (April 2018): PEN -12,588,000.
- Cumulative Year-to-Date Profit/Loss: PEN -12,916,000 (Loss).
The filing does not provide data on total revenue, net profit, operating cash flow, gross margins, total debt, or liquidity ratios.
Material Changes
The fair value of the derivative liability shifted significantly from the previous month. The position moved from a negative value of PEN -12,588,000 in April to a positive liability of PEN 6,332,000 in May. The cumulative loss for the year stands at PEN -12,916,000, driven primarily by unrealized exchange rate losses and accrued commissions.
Management Commentary and Risks
Management notes that the cumulative profit/loss calculation includes:
- An increase in fair value of derivative instruments of PEN 5,843,000 (including PEN 187,000 for counterparty risk).
- An unrealized exchange rate loss on USD-denominated bond holdings of PEN 8,700,000.
- Deferred income tax of PEN 843,000.
- Accrued commissions on Cross Currency Swap contracts of PEN 10,902,000, recorded as interest expense.
Risks and Contingencies: The fair value amounts are estimated internally using IFRS and market data. Management explicitly states these figures are preliminary and subject to change. The primary risk exposure identified is currency fluctuation affecting the USD-denominated corporate bonds.
Investor Verification Checklist
- Verify the final audited figures for the Cross Currency Swaps, as the current values are marked as preliminary estimates.
- Confirm the impact of the PEN 10,902,000 in accrued commissions on the company's overall interest expense and net income.
- Review the full 2018 interim financial statements to understand the context of the PEN 12,916,000 derivative loss relative to total earnings.
- Assess the company's exposure to USD/PEN exchange rate volatility given the USD 300 million notional amount.