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 November 30, 2017, filed on December 18, 2017.
Jurisdiction: Republic of Peru
Subject: Monthly Position of Financial Derivatives.
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.
- Notional Amount: USD 300 Million (Total).
- Purpose: Coverage (Hedging) of Corporate Bond Liability.
- Underlying Liability: Corporate bond denominated in USD.
- Reporting Currency: Peruvian Sol (PEN).
- Fair Value (Current Month): PEN -5,002,000 (Liability).
- Fair Value (Previous Month): PEN 9,836,000 (Asset).
- Total Cumulative Profit/Loss (Year-to-Date): PEN -50,245,000.
Material Changes and Composition of Loss
The cumulative loss of PEN -50,245,000 as of November 30, 2017, is composed of the following specific items:
- Decline in Fair Value: PEN -74,914,000 (includes PEN -2,836,000 attributed to counterparty risk).
- Unrealized Exchange Rate Gain: PEN +37,500,000 (due to holding USD bonds).
- Deferred Income Tax: PEN +11,037,000.
- Accrued Commissions: PEN -23,868,000 (recorded as interest expense).
Accounting Treatment: The decline in fair value, exchange rate gain, and deferred tax are recorded in equity accounts (Other Comprehensive Income), except for the counterparty risk which is recorded in financial income. 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 amounts relating to the fair value of the Cross Currency Swaps are preliminary and subject to change.
- 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 -23,868,000 in accrued commissions on the company's net interest expense.
- Review the full 2017 annual report (Form 20-F) for consolidated revenue and earnings, as this filing only covers derivatives.
- Assess the counterparty risk exposure of PEN -2,836,000 included in the fair value decline.