Staatsolie Annual Report 2017

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Annual Report 2017 127 Staatsolie Staatsolie Maatschappij Maatschappij Suriname Suriname N.V. N.V. Notes to the Consolidated financial statements for the years ended December 31, 2017 and 2016 Notes to the Consolidated financial statements for the years ended December 31, 2017 and 2016 (continued) (continued) Inventories are stated at the lower of cost and net realizable value. Net realizable value is the estimated Executive pension plan selling price in the ordinary course of business, less estimated costs of completion and the estimated The effect of a 1 percentage point change in the assumed discount rate and the assumed salary costs to sell. increases on the defined benefit obligation are: The cost of crude oil and refined products is the purchase cost, the cost of refining, including the Assumptions Discount rate Future salary increases appropriate Sensitivityproportion 1% of depreciation, 1% depletion and 1% amortization 1% and overheads based on normal operating level capacity, Increase determined on Decrease a weighted average Increase basis. Decrease 2017 (595,536) 728,625 234,617 (220,421) The net 2016 realizable value (554,220) of crude oil 681,790 and refined products 245,949 is based (229,740) on the estimated selling price in the ordinary course of business, less the estimated costs of completion and the estimated costs necessary to make Staatsolie the sale. medical retiree plan The effect of a 1 percentage point change in the assumed discount rate and assumed medical cost Materials and supplies are valued using the weighted average cost method. inflation on the defined benefit obligation are: Assumptions Discount rate Medical cost inflation Pipeline fill 1% 1% 1% 1% Crude Sensitivity oil, which levelis necessary Increaseto bring Decrease a pipeline into working Increase order, is treated Decrease as a part of the related pipeline. 2017 This is on the (3,561,356) basis that it is 4,669,039 not held for sale 4,452,180 or consumed in (3,478,493) a production process, but is necessary 2016 to the operation (3,928,231) of a facility 5,186,001 during more than 5,101,720 one operating cycle, (3,944,694) and its cost cannot be recouped through sale (or is significantly impaired). This applies even if the part of inventory that is GOw2 medical retiree plan deemed to be an item of property, plant and equipment cannot be separated physically from the rest of The effect of a 1 percentage point change in the assumed discount rate and assumed medical cost inventory. It is valued at cost and is depreciated over the useful life of the related asset. inflation on the defined benefit obligation are: Assumptions Discount rate Medical cost inflation n. Impairment of non-financial assets 1% 1% 1% 1% The Sensitivity Group assesses level at Increase each reporting Decrease date whether there Increase is an indication Decrease that an asset may be impaired. If any indication 2017 exists, or (78,229) when annual 100,826 impairment testing 95,850 for an asset (76,144) is required, the Group estimates 2016 (68,814) 88,795 84,397 (66,986) the asset’s recoverable amount. An asset’s recoverable amount is the higher of an asset’s or cash generating SPCS medical units retiree (CGU) plan fair value less costs of disposal and its value in use. It is determined for an individual The effect asset, of a 1 unless percentage the asset point does change not generate in the assumed cash inflows discount that rate are largely and assumed independent medical of those cost from inflation other on assets the defined or groups benefit of obligation assets. Where are: the carrying amount of an asset or CGU exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount. In Assumptions Discount rate Medical cost inflation assessing value in use, the 1% estimated 1% future cash flows 1% are discounted 1% to their present value using a pretax discount rate that Sensitivity level Increase reflects current Decrease market assessments Increase of Decrease the time value of money and the risks 2017 (63,971) 91,495 88,073 (63,179) specific 2016 to the asset. In determining (61,980) fair 90,249 value less costs 87,246 of disposal, (61,461) recent market transactions are taken into account. If no such transactions can be identified, an appropriate valuation model is used. Impairment losses of continuing operations are recognized in the consolidated statement of profit or loss 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. Page 63
Confidence in Our Own Abilities 128 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) Available-for-sale (AFS) financial investments Staatsolie funeral grant plan AFS The effect financial of a investments 1 percentage include point change equity and in the debt assumed securities. discount Equity rate investments and assumed classified funeral as grant availablefor-sale increase are on those the defined neither benefit classified obligation as held-for-trading are: nor designated at fair value through profit or loss. After Assumptions initial measurement, Discount AFS ratefinancial investments Funeral grant are increase subsequently measured at fair value with unrealized gains or 1% losses recognized 1% as OCI 1% until the investment 1% is derecognized, at which time, the Sensitivity level Increase Decrease Increase Decrease cumulative gain or loss is recognized in other operating income or expense, or the investment is 2017 (195,922) 270,373 260,695 (193,198) determined 2016 to be impaired, (185,916) at which 257,608 time, the cumulative 248,569 loss is (183,473) reclassified to the consolidated statement of profit or loss in finance costs and removed from the OCI. The Group evaluates its AFS financial assets to SPCS determine funeral whether grant plan the ability and intention to sell them in the near term is still appropriate. The effect of a 1 percentage point change in the assumed discount rate and assumed funeral grant (ii) increase Financial on the liabilities defined benefit obligation are: Assumptions Discount rate Funeral grant increase Recognition and measurement 1% 1% 1% 1% Sensitivity level Financial liabilities Increase are classified, Decrease at initial recognition, Increaseas financial Decrease liabilities at fair value through profit or 2017 (2,574) 3,956 3,863 (2,571) loss, loans 2016 and borrowings, (2,134) payables, 3,310as appropriate. 3,235 All financial (2,133) liabilities are recognized initially at fair value and, in the case of loans and borrowings and payables, net of directly attributable transaction costs. Staatsolie pension gratuity plan The Group’s financial liabilities include trade and other payables, loans and borrowings including bank The effect of a 1 percentage point change in the assumed discount rate and assumed salary increase on overdrafts. the defined benefit obligation are: Assumptions Discount rate Future salary increases Loans and borrowings 1% 1% 1% 1% This Sensitivity is the level category Increase most relevant Decrease to the Group. Increase After initial Decrease recognition, interest bearing loans and borrowings 2017 are subsequently (232,138) measured 267,703 at amortized 283,256 cost using (249,663) the EIR method. Gains and losses are 2016 (226,174) 260,950 275,346 (242,482) 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 SPCS pension gratuity 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 and assumed salary increase on included in finance costs in the consolidated statement of profit or loss. This category generally applies to the defined benefit obligation are: interest-bearing loans and borrowings. Assumptions Discount rate Future salary increases 1% 1% 1% 1% Sensitivity level m. Inventories Increase Decrease Increase Decrease 2017 (3,197) 3,993 4,083 (3,314) Petroleum products are valued at the lower of cost and net realizable value. 2016 (2,778) 3,494 3,568 (2,876) 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 62 Page 128
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Staatsolie Annual Report 2017

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