Staatsolie Annual Report 2017

Annual Report 2017 119
Staatsolie Maatschappij Suriname N.V.
Staatsolie Maatschappij Suriname N.V.
Notes to the Consolidated financial statements for the years ended December 31, 2017 and 2016
Notes (continued) to the Consolidated financial statements for the years ended December 31, 2017 and 2016
(continued)
Inventories are stated at the lower of cost and net realizable value. Net realizable value is the estimated
GOw2 retiree pension plan
selling price in the ordinary course of business, less estimated costs of completion and the estimated
GOw2 has a long-term pension obligation regarding eight former Chevron retirees and widowers. The
costs to sell.
payment to those retirees are made by GOw2 out of funds deposited by Chevron at the time of the
The cost of crude oil and refined products is the purchase cost, the cost of refining, including the
acquisition in 2011. The remaining balance as at December 31, 2017 is US$ 95, while the remaining
appropriate proportion of depreciation, depletion and amortization and overheads based on normal
balance as at December 31, 2016 and January 1, 2016 are US$ 112, and US$ 129, respectively.
operating capacity, determined on a weighted average basis.
Post-employment The net realizable value benefits of crude oil and refined products is based on the estimated selling price in the
Retiree ordinary medical course of plan business, less the estimated costs of completion and the estimated costs necessary to
Retired make the employees sale. of Staatsolie, GOw2 and SPCS whose employment was terminated due to reaching
the retirement age after a specified number of years of service, as well as those who are part of their
Materials and supplies are valued using the weighted average cost method.
family, shall be entitled to medical care at the expense of the Group. Entitlements shall also be granted to
retired employees of Staatsolie whose employment was terminated due to disability with the entitlement
Pipeline fill
to a disability pension, as well as those who are part of their family at that time. There is no requirement
Crude oil, which is necessary to bring a pipeline into working order, is treated as a part of the related
for a minimum service.
pipeline. This is on the basis that it is not held for sale or consumed in a production process, but is
necessary to the operation of a facility during more than one operating cycle, and its cost cannot be
Pension gratuity plan
recouped through sale (or is significantly impaired). This applies even if the part of inventory that is
Staatsolie and SPCS employees are eligible for a gratuity upon retirement. The amount of the gratuity
deemed to be an item of property, plant and equipment cannot be separated physically from the rest of
depends on the years of service. Permanent employees whose service until the retirement date is at least
inventory. It is valued at cost and is depreciated over the useful life of the related asset.
10 years, shall be eligible for the gratuity.
n. Impairment of non-financial assets
Funeral grants plan
The Group assesses at each reporting date whether there is an indication that an asset may be impaired.
In the event of death of a retired employee of Staatsolie and SPCS, whose employment was terminated
If any indication exists, or when annual impairment testing for an asset is required, the Group estimates
due to reaching the retirement age after a specified number of service years and in the event of death of
the asset’s recoverable amount. An asset’s recoverable amount is the higher of an asset’s or cash
their spouse, a funeral grant shall be paid by Staatsolie. Retired employees whose employment was
generating units (CGU) fair value less costs of disposal and its value in use. It is determined for an
terminated due to disability with the entitlement to a disability pension, as well as those who are part of
individual asset, unless the asset does not generate cash inflows that are largely independent of those
their family at that time are also eligible to the funeral grant plan and there is no requirement for a
from other assets or groups of assets. Where the carrying amount of an asset or CGU exceeds its
minimum service.
recoverable amount, the asset is considered impaired and is written down to its recoverable amount. In
assessing value in use, the estimated future cash flows are discounted to their present value using a pretax
discount rate that reflects current market assessments of the time value of money and the risks
Excedent gratuity plan (Supplementary provision for board members)
Board members shall be eligible for an excedent gratuity upon retirement or earlier honorable termination
specific to the asset. In determining fair value less costs of disposal, recent market transactions are taken
of employment with Staatsolie. The amount of the excedent gratuity shall depend on the number of years
into account. If no such transactions can be identified, an appropriate valuation model is used.
of service, including years of service at Staatsolie before the date of appointment as board member, if
Impairment losses of continuing operations are recognized in the consolidated statement of profit or loss
applicable.
in those expense categories consistent with the function of the impaired asset, except for a property
previously revalued where the revaluation was taken to OCI. In this case, the impairment is also
recognized in OCI up to the amount of any previous revaluation.
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