Staatsolie Annual Report 2017

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Annual Report 2017 125 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 (continued) Notes 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 The significant assumptions used in determining pension, post-employment healthcare and other longterm employee benefit obligations for the Group’s plans are shown below: selling price in the ordinary course of business, less estimated costs of completion and the estimated costs to sell. The cost of crude oil and refined products is the purchase % cost, the cost % of refining, including % the Discount rate: appropriate Staatsolie employee proportion pension of plan depreciation, depletion and amortization 4.6% and overheads 4.5% based 4.2% on normal Staatsolie retiree medical plan 12.5% 4.5% 4.5% operating capacity, determined on a weighted average basis. The Staatsolie net realizable jubilee benefits value of crude oil and refined products is 3.1% based on the estimated 3.2% selling price 3.1% in the Staatsolie periodic additional holiday allow ance 4.5% 4.5% 4.5% ordinary Executive course pension of plan business, less the estimated costs of completion 4.5% and the estimated 4.5% costs necessary 4.5% to make Supplementary the sale. Provision Board members 4.5% 4.5% 4.5% Materials and supplies are valued using the weighted average cost method. 2017 2016 January 1, 2016 Staatsolie funeral grant plan for retirees 4.5% 4.5% 4.5% Staatsolie pension gratuity 4.5% 4.5% 4.5% GOw 2 retiree medical plan 12.5% 11.5% 11.5% GOw 2 jubilee benefits 12.5% 11.5% 11.5% SPCS retiree medical plan 12.5% 4.5% 4.5% Pipeline SPCS funeral fill grant plan for retirees 4.5% 4.5% 4.5% SPCS pension gratuity 4.5% 4.5% 4.5% Crude SPCS oil, jubilee which benefits is necessary to bring a pipeline into working 4.5% order, is treated 4.5% as a part of the 4.5% related SPCS periodic additional holiday allow ance 4.5% 4.5% 4.5% pipeline. This is on the basis that it is not held for sale or consumed in a production process, but is necessary Future consumer to the price operation index increases: of a facility during more than one operating cycle, and its cost cannot be Staatsolie employee pension plan & Executive pension plan 3.0% 3.0% 3.0% recouped Staatsolie through jubilee benefits sale (or is significantly impaired). This applies 3.0% even if the 3.0% part of inventory 3.0% that is Staatsolie & SPCS retiree medical plan 11.0% 3.0% 3.0% deemed to be an item of property, plant and equipment cannot be separated physically from the rest of Staatsolie & SPCS funeral grant plan for retirees 3.0% 3.0% 3.0% inventory. Staatsolie It & is SPCS valued pension at cost gratuity and is depreciated over the useful 3.0% life of the related 3.0% asset. 3.0% Staatsolie & SPCS periodic additional holiday allow ance 3.0% 3.0% 3.0% Supplementary Provision Board members 3.0% 3.0% 3.0% GOw 2 retiree medical plan 11.0% 10.0% 10.0% n. Impairment of non-financial assets GOw 2 jubilee benefits 11.0% 10.0% 10.0% The Group assesses at each reporting date whether there is an indication that an asset may be impaired. Future salary increases: If any Staatsolie indication employee exists, pension or when plan & Executive annual impairment pension plantesting for 3.0% an + asset age related is required, merit - for the all Group three years estimates Staatsolie & SPCS jubilee benefits 3.0% + age related merit - for all three years the Staatsolie asset’s & recoverable SPCS pension amount. gratuity An asset’s recoverable amount 3.0% + age is the related higher merit - of for an all three asset’s years or cash generating Staatsolie & units SPCS (CGU) periodic fair additional value holiday less costs allow ance of disposal and its value in use. It is determined for an 3.0% + age related merit - for all three years individual Supplementary asset, Provision unless Board the asset members does not generate cash inflows 3.0% + that age related are largely merit - independent for all three years of those GOw 2 jubilee benefits 26% + merit 26% + merit 21% + merit from other assets or groups of assets. Where the carrying amount of an asset or CGU exceeds its Healthcare cost increase rate: recoverable amount, the asset is considered impaired and is written down to its recoverable amount. In Staatsolie & SPCS retiree medical plan 13.0% 5.0% 5.0% assessing GOw 2 retiree value medical in use, planthe estimated future cash flows are discounted 13.0% to their 10.0% present value using 10.0% a pretax Life discount expectation rate for retirees that reflects at the age current of 60: market assessments Years of the time value Years of money and Years the risks Staatsolie employee pension plan & Executive pension plan specific to the asset. In determining fair value less costs of disposal, recent market transactions are taken Male 18.4 18.4 17.8 into Female account. If no such transactions can be identified, an appropriate 21.0 valuation 21.0 model is used. 20.7 Post-employment healtcare & other long-term benefit plans Impairment losses of continuing operations are recognized in the consolidated statement of profit or loss Male 18.4 18.4 17.8 in Female those expense categories consistent with the function of 21.0 the impaired asset, 21.0 except for a 20.7 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. Page 63
Confidence in Our Own Abilities 126 Staatsolie Maatschappij Suriname N.V. Notes to the Consolidated financial statements for the years ended December 31, 2017 and 2016 (continued) The Available-for-sale average duration (AFS) of the financial various investments employee benefit obligations at the end of the reporting periods is presented AFS financial below. investments include equity and debt securities. Equity investments classified as availablefor-sale are those neither classified as held-for-trading 2017 nor designated 2016 at fair value January through 1, 2016 profit or loss. Weighted average life of the plans: After initial measurement, AFS financial investments are subsequently measured at fair value with Staatsolie employee pension plan 19 20 21 unrealized gains or losses recognized as OCI until the investment is derecognized, at which time, the Staatsolie retiree medical plan 22 21 21 cumulative Staatsolie funeral gain grant or loss plan for is retirees recognized in other 27operating income 27 or expense, or 27 the investment is determined Staatsolie pension to be gratuity impaired, at which time, the cumulative 9 loss is reclassified 9 to the consolidated 9 statement of Staatsolie profit or jubilee loss in benefits finance costs and removed from 7 the OCI. The Group 7 evaluates its AFS 7 financial assets Staatsolie periodic additional holiday allow ance 1 1 1 to determine whether the ability and intention to sell them in the near term is still appropriate. Executive pension plan 15 16 17 Supplementary Provision Board members 5 6 7 (ii) Financial liabilities GOw 2 retiree medical plan 19 20 20 Recognition and measurement GOw 2 jubilee benefits 7 7 8 Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through profit or loss, SPCS loans retiree and medical borrowings, plan payables, as appropriate. 34 All financial liabilities 35 are recognized 36 initially at fair SPCS funeral grant plan for retirees value and, in the case of loans and borrowings and 41 payables, net of 42 directly attributable 42transaction costs. SPCS pension gratuity 21 22 22 The Group’s financial liabilities include trade and other payables, loans and borrowings including bank SPCS jubilee benefits 10 11 11 overdrafts. SPCS periodic additional holiday allow ance 3 2 1 Loans and borrowings A quantitative sensitivity analysis for significant assumptions on the pension, post-employment healthcare This is the category most relevant to the Group. After initial recognition, interest bearing loans and and other long-term employee benefits as at December 31, 2017 and 2016 is shown below. The borrowings are subsequently measured at amortized cost using the EIR method. Gains and losses are sensitivity analyses are presented in US$. recognized in the consolidated statement of profit or loss when the liabilities are derecognized as well as through the EIR amortization process. Amortized cost is calculated by taking into account any discount or Staatsolie employee pension plan premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortization is The effect of a 1 percentage point change in the assumed discount rate, the assumed salary increases included in finance costs in the consolidated statement of profit or loss. This category generally applies to and the pension adjustment on the defined benefit obligation are: interest-bearing loans and borrowings. Assumptions Pension adjustment Discount rate Future salary increases Sensitivity 1% 1% 1% 1% 1% 1% level m. Inventories Increase Decrease Increase Decrease Increase Decrease 2017 15,989,569 (13,457,090) (20,194,171) 25,996,374 Petroleum products are valued at the lower of cost and net realizable value. 9,577,072 (8,438,706) 2016 20,203,549 (16,748,469) (23,807,170) 31,003,560 10,961,542 (9,669,060) Raw materials: • Purchase cost is valued on weighted average method Finished goods and work in progress: • Cost of direct materials and labor and a proportion of manufacturing overheads based on normal operating capacity but excluding borrowing costs Page 126 62
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