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: Information as of February 28, 2017, filed on March 14, 2017.
Jurisdiction: Republic of Peru
This filing discloses the monthly position of financial derivatives held by the registrant.
Key Financial Metrics
The filing focuses exclusively on financial derivative instruments and does not provide consolidated revenue, profit, cash flow, or debt figures for the company.
- Derivative Instrument: Cross Currency Swaps
- Purpose: Coverage (Hedging) for a USD 300 million Corporate bond liability.
- Notional Amount: USD 300 million
- Current Fair Value (Feb 2017): PEN 62,513,000 (Liability)
- Previous Month Fair Value: PEN 48,810,000
- Cumulative Profit/Loss (YTD 2017): PEN 11,307,000 (Net Gain)
Material Changes and Composition of Results
The cumulative profit/loss of PEN 11,307,000 for the year is derived from the following components recorded in books during 2017:
- Unrealized Exchange Rate Gain: PEN 29,100,000 (due to holding bonds in dollars).
- Decline in Fair Value of Derivatives: PEN 7,399,000 (includes PEN 245,000 attributed to counterparty risk).
- Deferred Income Tax: PEN 6,402,000 (expense).
- Swap Commissions: PEN 3,992,000 (expense).
Accounting Treatment: The fair value changes and exchange gains are recorded in equity accounts (Other Comprehensive Income), except for the counterparty risk which is recorded in financial expenses. Swap commissions are recorded as interest expense in the profit and loss account.
Management Commentary and Risks
- Valuation Methodology: Fair values are estimated internally in accordance with International Financial Reporting Standards (IFRS) using market data-based valuation techniques.
- Uncertainty: The filing explicitly states that amounts relating to the fair value of Cross Currency Swaps are subject to change and are preliminary.
- Regulatory Compliance: Calculations follow instructions from the Superintendency of Securities (SMV).
Investor Verification Checklist
- Verify the final audited fair value of the Cross Currency Swaps, as the current figures are preliminary.
- Confirm the impact of the PEN 245,000 counterparty risk on the current period's financial expenses.
- Review the full 20-F annual report for consolidated revenue, EBITDA, and total debt figures, as this 6-K filing contains only derivative data.
- Monitor the USD 300 million corporate bond liability status and the effectiveness of the hedging strategy.