Business Context and Reporting Period
Company: CEMENTOS PACASMAYO S.A.A. (Pacasmayo Cement Corporation)
Filing Type: Form 6-K (Report of Foreign Issuer)
Reporting Period: Monthly update as of July 31, 2017, filed on August 14, 2017.
Jurisdiction: Republic of Peru
Subject: Monthly Position of Financial Derivatives.
Key Financial Metrics
The filing focuses exclusively on the fair value and performance of financial derivative instruments. It does not provide consolidated revenue, profit, cash flow, or debt figures for the entire company.
- Derivative Instrument: Cross Currency Swaps.
- Purpose: Coverage for a USD 300 million corporate bond liability.
- Current Fair Value Liability (July 2017): PEN 41,593,000.
- Previous Month Fair Value Liability (June 2017): PEN 41,338,000.
- Cumulative Profit/Loss (Year-to-Date): PEN -10,066,000 (Loss).
Material Changes and Components
The cumulative loss of PEN 10,066,000 as of July 31, 2017, is derived from the following components:
- Decline in Fair Value: PEN 28,319,000 loss (includes PEN 4,045,000 attributed to counterparty risk).
- Unrealized Exchange Rate Gain: PEN 35,400,000 gain (due to holding bonds in U.S. dollars).
- Deferred Income Tax: PEN 2,089,000 reduction.
- Accrued Commissions: PEN 15,058,000 expense (recorded as interest expense in the profit and loss account).
Accounting Treatment: The fair value decline, exchange rate gain, and tax effects are recorded in equity accounts (Other Comprehensive Income), except for the counterparty risk which is recorded in financial income. Commissions are recorded in the profit and loss account.
Outlook, Risks, and Contingencies
- Valuation Risk: The amounts relating to the fair value of the Cross Currency Swaps are estimated internally using IFRS and market data. The filing explicitly states these figures are preliminary and subject to change.
- Counterparty Risk: A specific portion of the fair value decline (PEN 4,045,000) is attributed to counterparty risk.
- Management Commentary: No forward-looking guidance or general management commentary regarding operations is provided in this specific filing.
Investor Verification Checklist
- Verify the final audited figures for the Cross Currency Swap fair value, as the current filing notes they are preliminary estimates.
- Confirm the impact of the PEN 15,058,000 in accrued commissions on the company's reported interest expense and net income.
- Review the full annual report (Form 20-F) for consolidated revenue, EBITDA, and total debt levels, as this 6-K only covers derivative positions.
- Assess the exposure to counterparty risk given the specific allocation of PEN 4,045,000 to this category.