Staatsolie Annual Report 2017

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Annual Report 2017 129 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 Staatsolie jubilee 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 assumed salary increase on costs to sell. the defined benefit obligation are: The Assumptions cost of crude oil and Discount refined rateproducts is Future the purchase salary increases cost, the cost of refining, including the appropriate proportion 1% of depreciation, 1% depletion and 1% amortization 1% Sensitivity level and overheads based on normal Increase Decrease Increase Decrease operating capacity, determined on a weighted average basis. 2017 (448,557) 513,033 537,075 (478,662) The net 2016 realizable value (432,375) of crude oil 493,553 and refined products 517,627 is based (462,147) on the estimated selling price in the ordinary course of business, less the estimated costs of completion and the estimated costs necessary to SPCS jubilee plan make the sale. The effect of a 1 percentage point change in the assumed discount rate and assumed salary increase on Materials the defined and benefit supplies obligation are valued are: using the weighted average cost method. Assumptions Discount rate Future salary increases 1% 1% 1% 1% Pipeline Sensitivity fill level Increase Decrease Increase Decrease Crude 2017 oil, which is necessary (8,902) 10,472 to bring a pipeline 10,931 into working (9,451) order, is treated as a part of the related 2016 (8,118) 9,572 9,954 (8,582) pipeline. This is on the basis that it is not held for sale or consumed in a production process, but is necessary GOw2 jubilee to plan the operation of a facility during more than one operating cycle, and its cost cannot be recouped The effect through of a 1 percentage sale (or is point significantly change in impaired). the assumed This discount applies rate even and if assumed the part of salary inventory increase that on is deemed the defined to benefit an item obligation of property, are: plant and equipment cannot be separated physically from the rest of inventory. Assumptions It is valued Discount at cost and rate is depreciated Future over salary the useful increases life of the related asset. 1% 1% 1% 1% Sensitivity level Increase Decrease Increase Decrease 2017 n. Impairment (5,554) of non-financial 6,247 assets 6,364 (5,762) The Group 2016 assesses (5,359) at each reporting 6,008date whether 6,018 there is an indication (5,470) that an asset may be impaired. If any indication exists, or when annual impairment testing for an asset is required, the Group estimates Staatsolie periodic additional holiday allowance plan the asset’s recoverable amount. An asset’s recoverable amount is the higher of an asset’s or cash The effect of a 1 percentage point change in the assumed discount rate and assumed salary increase on generating units (CGU) fair value less costs of disposal and its value in use. It is determined for an the defined benefit obligation are: individual asset, unless the asset does not generate cash inflows that are largely independent of those Assumptions Discount rate Future salary increases from other assets or 1% groups of 1% assets. Where 1% the carrying 1% amount of an asset or CGU exceeds its Sensitivity level Increase Decrease Increase Decrease recoverable amount, the asset is considered impaired and is written down to its recoverable amount. In 2017 (34,511) 35,469 49,027 (48,464) 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 2016 (33,995) 34,988 47,753 (47,148) specific SPCS periodic to the asset. additional In determining holiday allowance fair value plan less costs of disposal, recent market transactions are taken into The account. effect of a If 1 no percentage such transactions point change can be in identified, the assumed an appropriate discount rate valuation and assumed model is salary used. increase on the defined benefit obligation are: Impairment losses of continuing operations are recognized in the consolidated statement of profit or loss Assumptions Discount rate Future salary increases in those expense categories consistent with the function of the impaired asset, except for a property 1% 1% 1% 1% Sensitivity level previously revalued Increase where the Decrease revaluation was Increase taken to Decrease OCI. In this case, the impairment is also 2017 (847) 882 1,019 (993) recognized in OCI up to the amount of any previous revaluation. 2016 (493) 515 652 (636) Page 63 Page 129
Confidence in Our Own Abilities 130 Staatsolie Maatschappij Suriname N.V. Notes to to the the Consolidated financial statements for the years ended December 31, 2017 and 2016 (continued) Available-for-sale Supplementary provision (AFS) financial board members investments 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 salary increase availablefor-sale the defined are benefit those neither obligation classified are: as held-for-trading nor designated at fair value through profit or loss. on After Assumptions initial measurement, Discount AFS ratefinancial investments Future salary are increases subsequently measured at fair value with 1% 1% 1% 1% unrealized Sensitivity level gains or losses recognized as OCI until the investment is derecognized, at which time, the Increase Decrease Increase Decrease cumulative 2017 gain or (34,444) loss is recognized 37,295 in other 41,132 operating (38,583) income or expense, or the investment is determined 2016 to be impaired, (36,094) at which 39,310 time, the cumulative 42,734 loss (39,828) is reclassified to the consolidated statement of profit or loss in finance costs and removed from the OCI. The Group evaluates its AFS financial assets The sensitivity analyses above have been determined based on a method that extrapolates the impact on to determine whether the ability and intention to sell them in the near term is still appropriate. the defined benefit obligation as a result of reasonable changes in key assumptions occurring at the end of the reporting period. The sensitivity analyses are based on a change in a significant assumption, (ii) Financial liabilities keeping all other assumptions constant. The sensitivity analyses may not be representative of an actual Recognition change in the and defined measurement benefit obligation as it is unlikely that changes in assumptions would occur in Financial isolation from liabilities one another. are classified, at initial recognition, as financial liabilities at fair value through profit or loss, loans and borrowings, payables, as appropriate. All financial liabilities are recognized initially at fair The following payments are expected contributions to the defined benefit plan (employee pension plan) in value and, in the case of loans and borrowings and payables, net of directly attributable transaction costs. future years: The Group’s financial liabilities include trade and other payables, loans and borrowings including bank overdrafts. x US$ 1,000 2017 2016 January 1, 2016 Within the next 12 months (next annual reporting period) 5,397 5,087 5,238 Betw een 2 and 5 years 25,081 23,641 22,284 Betw een 5 and 10 years 38,506 37,180 35,698 Loans and borrowings Beyond 10 years 85,417 93,580 101,505 This Total is expected the category payments most relevant to the Group. After 154,401 initial recognition, 159,488 interest 164,725 bearing loans and borrowings are subsequently measured at amortized cost using the EIR method. Gains and losses are The following payments are expected contributions to the defined benefit plan (executive pension plan) in recognized in the consolidated statement of profit or loss when the liabilities are derecognized as well as future years: through the EIR amortization process. Amortized cost is calculated by taking into account any discount or x US$ 1,000 2017 2016 January 1, 2016 premium Within the on next acquisition 12 months (next and annual fees or reporting costs period) that are an integral 134 part of the 1,224 EIR. The EIR 131 amortization is Betw een 2 and 5 years 579 563 1,640 included Betw een in 5 and finance 10 years costs in the consolidated statement of profit 828or loss. This 803category generally 780 applies to interest-bearing Beyond 10 years loans and borrowings. 959 1,135 1,305 Total expected payments 2,500 3,725 3,856 m. Inventories 4.9 Capital commitments and other contingencies Petroleum products are valued at the lower of cost and net realizable value. Raw Operating materials: lease commitments • The Purchase Group has cost entered is valued into operating on weighted leases average on certain method motor vehicles and vessels. These leases have an average life of three years with renewal terms. 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 130 62
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Staatsolie Annual Report 2017

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