Business Context and Reporting Period
Cementos Pacasmayo S.A.A. (Pacasmayo Cement Corporation), a Peruvian cement manufacturer, filed this Form 6-K on June 14, 2017. The report covers the month of June 2017 and provides specific financial data regarding derivative instruments as of May 31, 2017.
Key Financial Metrics
The filing focuses exclusively on the position of financial derivatives and does not provide consolidated revenue, profit, cash flow, or debt figures for the company as a whole.
- Derivative Instrument: Cross Currency Swaps.
- Notional Amount: USD 300 million.
- Purpose: Hedging liability associated with corporate bonds.
- Fair Value (May 31, 2017): PEN 71,197,000 (Liability).
- Fair Value (Previous Month): PEN 52,993,000.
- Cumulative Profit/Loss (Year-to-Date): PEN 8,801,000.
Material Changes
The fair value liability of the Cross Currency Swaps increased from PEN 52,993,000 in the previous month to PEN 71,197,000 as of May 31, 2017. The filing text does not provide comparative financial data for the prior year or prior comparable periods regarding overall company performance.
Outlook, Risks, and Unusual Items
Management Commentary and Composition of Gains/Losses: The cumulative profit/loss of PEN 8,801,000 is derived from the following components recorded in 2017:
- Increases: Increase in fair value of derivatives (PEN 1,285,000, including PEN 2,345,000 due to counterparty risk) and unrealized exchange rate gains on dollar-denominated bonds (PEN 26,400,000).
- Decreases: Deferred income tax (PEN 8,167,000) and commissions on Cross Currency Swap contracts (PEN 10,717,000).
Accounting Treatment: The fair value increase and exchange rate gains are recorded in equity accounts (except for counterparty risk, which is in financial income). Commissions are recorded as interest expense in the profit and loss account.
Risks and Contingencies: The fair value amounts are estimated internally using IFRS and market data. The filing explicitly states these figures are preliminary and subject to change.
Investor Verification Checklist
- Verify the final audited fair value of the Cross Currency Swaps, as the current figures are preliminary estimates.
- Confirm the impact of the PEN 10,717,000 commission expense on the company's net interest costs.
- Review the full annual report (Form 20-F) for consolidated revenue, EBITDA, and total debt figures, as this 6-K only details derivative positions.
- Assess the counterparty risk exposure of PEN 2,345,000 included in the derivative valuation.