Business Context and Reporting Period
This Form 6-K filing by Cementos Pacasmayo S.A.A. (Pacasmayo Cement Corporation) covers the month of July 2016, with financial data presented as of June 30, 2016. The report focuses on the company's monthly position regarding financial derivatives, specifically Cross Currency Swaps used to hedge a USD 300 million corporate bond.
Key Financial Metrics
The filing does not provide comprehensive revenue, profit, cash flow, or liquidity metrics. It specifically details the fair value and performance of derivative instruments:
- Derivative Instrument: Cross Currency Swaps.
- Notional Amount: USD 300 million (hedging corporate bonds).
- Fair Value (Current Month): S/ 91,813,000 (Peruvian Soles).
- Fair Value (Previous Month): S/ 123,702,000.
- Accumulated Gain/Loss (Year-to-Date): (S/ 11,337,000) loss.
Material Changes
The fair value of the Cross Currency Swaps decreased by approximately S/ 31.9 million from the previous month (from S/ 123,702,000 to S/ 91,813,000). The year-to-date accumulated loss on derivative instruments is S/ 11,337,000. This net loss is composed of:
- A decrease in fair value of S/ 32,957,000.
- An unrealized gain from exchange rate differences on US$ bonds of S/ 36,300,000.
- Income tax of S/ 869,000.
- Commissions on swap contracts of S/ 13,811,000 (recorded as a financial expense).
Outlook, Risks, and Management Commentary
Management notes that the fair value amounts for Cross Currency Swaps are estimated internally following International Financial Reporting Standards (IFRS) using valuation techniques based on market data. The filing explicitly states that these values are subject to change. The reporting of gains and losses follows instructions from the Superintendencia del Mercado de Valores (SMV), with the majority of the variation recorded in net equity (other comprehensive income) rather than the statement of profit and loss, except for the commission fees.
Investor Verification Checklist
- Verify the impact of the S/ 13,811,000 commission expense on the current period's net income.
- Confirm the current market valuation of the USD 300 million corporate bond being hedged.
- Review the full 20-F annual report for comprehensive revenue, debt, and liquidity figures not included in this derivative-specific filing.
- Monitor future fluctuations in the fair value of the swaps, as noted by management to be subject to change based on market data.