Staatsolie Annual Report 2017

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Annual Report 2017 131 Staatsolie Maatschappij Suriname N.V. Notes to the Consolidated financial statements for the years ended December 31, 2017 and 2016 (continued) Future Inventories minimum are stated lease at payments the lower under of cost non-cancellation and net realizable operating value. leases Net realizable as at December value is 31, the 2017 estimated and 2016 selling are, price as follows: in the ordinary course of business, less estimated costs of completion and the estimated costs to sell. The x US$ cost 1,000 of crude oil and refined products is the purchase 2017 cost, the 2016 cost of refining, including the Within one year 6,295 6,764 appropriate proportion of depreciation, depletion and amortization and overheads based on normal After one year but not more than five years 5,457 4,118 operating capacity, determined on a weighted average basis. 11,752 10,882 The net realizable value of crude oil and refined products is based on the estimated selling price in the Other contractual obligations / commitments ordinary course of business, less the estimated costs of completion and the estimated costs necessary to x US$ 1,000 2017 2016 make the sale. Within one year 6,916 3,563 After one year but not more than five years 844 3,045 Materials and supplies are valued using the weighted average cost method. 7,760 6,608 Sales Pipeline contractual fill obligations The Crude Group oil, which has sales is necessary obligations to of bring US$ a 13,986 pipeline as at into December working order, 31, 2017 is treated as a part of the related pipeline. This is on the basis that it is not held for sale or consumed in a production process, but is x US$ 1,000 2017 2016 necessary Within one to year the operation of a facility during more than 9,816 one operating 29,088 cycle, and its cost cannot be After one year but not more than five years 4,170 4,131 recouped through sale (or is significantly impaired). This applies even if the part of inventory that is 13,986 33,219 deemed to be an item of property, plant and equipment cannot be separated physically from the rest of inventory. It is valued at cost and is depreciated over the useful life of the related asset. Legal claim contingency The Group also has a legal claim relating to a lease contract where there is not enough probability to n. Impairment of non-financial assets reasonably recommend a provision. The case is not pending in the courts of Suriname nor have been The Group assesses at each reporting date whether there is an indication that an asset may be impaired. entered into arbitration. The case has been reviewed by the in-house legal department. Based hereon it is If any indication exists, or when annual impairment testing for an asset is required, the Group estimates advised to the Group that the case is only possible, but not probable that the action will succeed. the asset’s recoverable amount. An asset’s recoverable amount is the higher of an asset’s or cash Accordingly, no provision for any liability has been made in these consolidated financial statement for this generating units (CGU) fair value less costs of disposal and its value in use. It is determined for an case. individual asset, unless the asset does not generate cash inflows that are largely independent of those The Group currently has legal claims amounting to US$ 1,384 (exclusive of interest and judicially from other assets or groups of assets. Where the carrying amount of an asset or CGU exceeds its imposed penalties) relating to labor related matters pending in the courts of Suriname of which a recoverable amount, the asset is considered impaired and is written down to its recoverable amount. In provision of 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 US$ 190 as at December 31, 2017 is recorded in these consolidated financial statements. Based on legal advice obtained, management is of the view that the Group is in a strong and defendable position and specific to the asset. In determining fair value less costs of disposal, recent market transactions are taken that no further provision is required. 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 131 63
Confidence in Our Own Abilities 132 Staatsolie Maatschappij Suriname N.V. Notes to the Consolidated financial statements for the years ended December 31, 2017 and 2016 (continued) Available-for-sale (AFS) financial investments Section 5. Capital and debt structure 5.1 Issued capital and reserves AFS financial investments include equity and debt securities. Equity investments classified as availablefor-sale are those neither classified as held-for-trading nor designated at fair value through profit or loss. The authorized share capital of Staatsolie as the parent of the Group amounts to US$12,104 as at After initial measurement, AFS financial investments are subsequently measured at fair value with December 31, 2017 and is divided into 5 million shares of which each amount to US$12.23 per thousand unrealized gains or losses recognized as OCI until the investment is derecognized, at which time, the shares. During the year, the authorized share capital remained unchanged. cumulative gain or loss is recognized in other operating income or expense, or the investment is determined Issued capital to be is as impaired, follows: at which time, the cumulative loss is reclassified to the consolidated statement of xUS$ profit 1,000 or loss in finance costs and removed 2017 from the OCI. 2016 The Group evaluates As at January its AFS 1, 2016 financial assets to Ordinary determine share whether capital the ability and intention to sell them in the near term is still appropriate. 5,000,000 ordinary shares 12,104 12,104 12,104 (ii) Reserve Financial for liabilities environment risk Recognition The environmental and measurement risk reserve is a reserve taken against environmental risk claims based on damages Financial which may liabilities result from are classified, an environmental at initial recognition, disaster in the as financial execution liabilities of ocean at freight fair value cargo through deliveries. profit or In loss, addition, loans damages and borrowings, to the environment payables, as due appropriate. to onshore All well financial operations liabilities are are also recognized appropriated initially for in at this fair value reserve. and, Based in the on case historical of loans information and borrowings and experience, and payables, the net Group of directly believes attributable that an annual transaction addition costs. of The US$ Group’s 500,000 financial is sufficient, liabilities which include is decided trade by and the board other of payables, directors. loans and borrowings including bank overdrafts. Reserve for committee of sports facilities Loans As decided and borrowings by the shareholder, a portion of the profit attributable to the shareholder is retained in a Sport This Fund is to the support category corporate most social relevant responsibility to the Group. in the After area initial of sports. recognition, On behalf interest of the bearing sole shareholder, loans and borrowings the GoS, a are committee subsequently “Sport measured Development at amortized Fund” cost was using established the EIR on method. April Gains 2013 and to conform losses are to recognized governance in principles. the consolidated The committee, statement of composed profit or loss of representatives when the liabilities from are the derecognized GoS and Staatsolie, as well as through provides the guidelines EIR amortization for submission process. of Amortized proposals, cost approves is calculated and monitors by taking the into allocation account of any funds. discount Every or premium year, the shareholder on acquisition decides and fees how or much costs to that withdraw are an from integral this reserve. part of the EIR. The EIR amortization is included in finance costs in the consolidated statement of profit or loss. This category generally applies to interest-bearing Other allocation loans / (withdrawal) and borrowings. Included in the other reserves as at December 31, 2017 is an amount of US$ 13,520, net of tax, which is a credit m. to the Inventories Government of Suriname (“GoS”) for amounts previously invoiced by, and paid to, SPCS Petroleum for energy products delivered, are but valued that, ultimately, the lower was of cost less and than net the realizable minimum value. energy output, as specified in the Power Purchase Agreement (PPA) between GoS and SPCS. 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 132 62
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Staatsolie Annual Report 2017

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