Business Context and Reporting Period
Cementos Pacasmayo S.A.A., a Peruvian cement corporation, filed this Form 6-K on March 14, 2018. The report discloses the monthly position of financial derivatives as of February 28, 2018, in compliance with SEC regulations for foreign issuers.
Key Financial Metrics
The filing focuses exclusively on financial derivative instruments rather than comprehensive operational results. Key figures include:
- Derivative Notional Amount: USD 300 million (Cross Currency Swaps).
- Derivative Purpose: Coverage of a corporate bond liability.
- Fair Value (Current Month): PEN -7,752,000 (Liability).
- Fair Value (Previous Month): PEN -18,677,000 (Liability).
- Cumulative Profit/Loss (Year-to-Date): PEN -13,365,000.
The filing does not provide data on revenue, operating profit, cash flow, margins, total debt, or liquidity positions.
Material Changes
The fair value of the derivative liability improved (decreased in magnitude) from PEN -18,677,000 in the previous month to PEN -7,752,000 in the current month. The cumulative loss for the year stands at PEN -13,365,000, driven by the following components recorded in 2018:
- Decline in fair value of derivative instruments: PEN -8,241,000 (includes PEN -1,878,000 attributed to counterparty risk).
- Unrealized exchange rate loss on USD-denominated bonds: PEN -4,800,000.
- Deferred income tax benefit: PEN +3,847,000.
- Accrued commissions on Cross Currency Swaps: PEN -4,171,000.
Outlook, Risks, and Unusual Items
Accounting Treatment: The decline in fair value and unrealized exchange losses are recorded in equity accounts, except for the counterparty risk component which is recorded as a financial cost. Commissions are recorded as interest expense in the profit and loss account.
Valuation Risk: Management notes that fair value amounts are estimated internally using IFRS and market data. These figures are preliminary and subject to change.
Counterparty Risk: A specific portion of the loss (PEN 1,878,000) is explicitly attributed to counterparty risk.
Investor Verification Checklist
- Verify the full 2018 financial statements to understand the impact of the PEN 4,171,000 commission expense and PEN 1,878,000 counterparty risk cost on net income.
- Confirm the total outstanding corporate bond liability being hedged by the USD 300 million swap.
- Review subsequent filings to determine if the preliminary fair value estimates were adjusted.
- Assess the company's overall liquidity and debt profile, as this filing does not provide total debt or cash flow data.