Staatsolie Annual Report 2017

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Annual Report 2017 133 Staatsolie Maatschappij Suriname N.V. 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 5.2 Capital management selling price in the ordinary course of business, less estimated costs of completion and the estimated For the purpose of the Staatsolie’s capital management, capital includes issued capital and all other costs to sell. equity reserves attributable to the equity holders. The main objective of the capital management of The cost of crude oil and refined products is the purchase cost, the cost of refining, including the Staatsolie is to ensure a financial structure that optimizes the cost of capital, maximizes the performance appropriate proportion of depreciation, depletion and amortization and overheads based on normal of its shareholder and allows access to financial markets at a competitive cost to cover its financing needs operating capacity, determined on a weighted average basis. that supports sustainable growth and ensuring healthy capital ratios to be in compliance with the financial The covenants net realizable to support value the of business. crude oil and refined products is based on the estimated selling price in the ordinary In order to course achieve of business, this overall less objective, the estimated the Group’s costs of capital completion management, and the amongst estimated other costs things, necessary aims to make ensure the that sale. it meets the financial covenants attached to its interest-bearing loans and borrowings that Materials form part and of its supplies capital are structure valued using requirements. the weighted Breaches average in cost the method. financial covenants would permit the lenders to immediately call interest-bearing loans and borrowings. There have been no breaches in the Pipeline financial fill covenants of any interest-bearing loans and borrowings in the current or prior period. Crude The two oil, main which financial is necessary covenants to monitored bring a pipeline by the into Group working are: order, is treated as a part of the related pipeline. • The interest This is coverage on the basis ratio that which it is is not calculated held for by sale dividing or consumed the consolidated in a production EBITDA by process, the financial but is necessary expenses to the and operation income. For of 2017 a facility this ratio during was more 4.60 than (2016: one 2.84); operating the minimum cycle, and permitted its cost is 3.50. cannot be recouped • Consolidated through leverage sale (or is ratio significantly which is impaired). calculated This by dividing applies the even consolidated if the part of Total inventory Debt by that the is deemed consolidated to be an EBITDA. item of property, For 2017 plant this ratio and was equipment 1.58 (2016: cannot 3.28); be separated the maximum physically permitted from is the 2.50. rest of inventory. It is valued at cost and is depreciated over the useful life of the related asset. In 2016 Staatsolie requested lenders to waive any default or event of default arising from such failure to deliver the audited consolidated financial statements and the compliance certificate with the covenants. A n. Impairment of non-financial assets waiver was executed to the credit agreement to reflect the requests. The Group assesses at each reporting date whether there is an indication that an asset may be impaired. If any indication exists, or when annual impairment testing for an asset is required, the Group estimates 5.3 Financial instruments the asset’s recoverable amount. An asset’s recoverable amount is the higher of an asset’s or cash Interest-bearing loans and borrowings generating Bond units (CGU) fair value less costs of disposal and its value in use. It is determined for an individual asset, unless the asset does not generate cash inflows that are largely As at independent January 1, of those x US$ 1,000 Maturity 2017 2016 2016 from Local other Bond assets or groups of assets. May-20 Where the carrying 98,668 amount 98,475 of an asset or CGU 98,281exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount. In Term loans assessing value in use, the estimated future cash flows are discounted to their present As at January value 1, using a pretax x US$ discount 1,000 rate that reflects current Maturity market assessments 2017of the time 2016 value of money 2016 and the risks Loan facility DSB Jan-18 9,657 8,468 - specific Corporate to term the loan asset. In determining fair Nov-19 value less costs 259,844 of disposal, 296,353 recent market transactions 570,686 are taken Loan SPCS Nov-21 78,288 97,798 117,306 into account. If no such transactions can be identified, an appropriate valuation model is used. Loan Government of Suriname Oct-26 258,412 258,058 - Impairment Balance as at losses December of continuing 31 operations are recognized 606,201 in the consolidated 660,677 statement 687,992 of profit or loss in Current those portion expense of the categories loans consistent with the function 105,361 of the impaired 69,031 asset, except 64,801 for a property previously revalued where the revaluation was taken to OCI. In this case, the impairment is also Non current portion of the loans 500,840 591,646 623,191 recognized in OCI up to the amount of any previous revaluation. Page 133 63
Confidence in Our Own Abilities 134 Staatsolie Maatschappij Suriname N.V. Notes to the Consolidated financial statements for the years ended December 31, 2017 and 2016 (continued) Local Available-for-sale Bond (AFS) financial investments The AFS five-year financial investments 7% unsecured include coupon equity bond and matured debt securities. on May 14, Equity 2015. investments On this day classified Staatsolie as availablefor-sale five-year are those 7.75% neither unsecured classified coupon as held-for-trading bond and raised nor designated US$ 99,142. at fair The value applicable through annual profit interest or loss. issued a second rate After is initial 7.75%. measurement, A coupon was AFS sold financial for US$ investments 100 each. The are maturity subsequently date of measured this second at bond fair is value May with 14, 2020. unrealized Interest gains will or be losses paid semi-annually recognized as on OCI May until 14 and the November investment 14 is each derecognized, year. at which time, the As cumulative December gain 31, or loss 2017, is unamortized recognized debt in other arrangement operating fees income amounted or expense, to US$ 474. or the The investment amortization is of determined debt arrangement to be impaired, fees for at 2017 which amounted time, the cumulative US$ 193 (2016: loss is US$ reclassified 194) and to is the presented consolidated under statement finance cost of profit in the or consolidated loss in finance statement costs and of removed profit or loss. from the OCI. The Group evaluates its AFS financial assets to determine whether the ability and intention to sell them in the near term is still appropriate. Term loans Loan (ii) Financial facility liabilities This Recognition regards and a bullet measurement loan of US$ 9,657 obtained in June 2016 from “De Surinaamsche Bank N.V”. The initial Financial maturity liabilities date are of the classified, loan was at December, initial recognition, 30 2017. as This financial was liabilities extended at with fair one value month through to January profit or 30, loss, 2018. loans The and applicable borrowings, annual payables, interest as rate appropriate. is 7.0%. All The financial interest liabilities is being paid are recognized on a quarterly initially basis. at fair A parcel value and, of unoccupied in the case land of loans was given and borrowings as a collateral and to payables, the bank. net of directly attributable transaction costs. The Group’s financial liabilities include trade and other payables, loans and borrowings including bank Corporate term loan overdrafts. On September 28, 2015 Staatsolie refinanced the corporate five year loan for an initial amount of US$ 600,000. The total loan amount consisted of US$ 575,000 term loan and US$ 25,000 revolving loan. Loans and borrowings Repayment of the term loan was planned for 13 quarterly installments, to commence in the fourth quarter This is the category most relevant to the Group. After initial recognition, interest bearing loans and of 2016. On November 16, 2016 Staatsolie refinanced and prepaid the corporate loan for the total amount borrowings are subsequently measured at amortized cost using the EIR method. Gains and losses are of US$ 294,218. This prepayment included the first quarterly installment of 2016. The outstanding recognized in the consolidated statement of profit or loss when the liabilities are derecognized as well as corporate loan as of December 31, 2016 amounted to US$ 305,783 which consists of US$ 280,783 term through the EIR amortization process. Amortized cost is calculated by taking into account any discount or loan and US$ 25,000 revolving loan. Repayment of the term loan is planned for 13 quarterly installments. premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortization is A new amortization schedule is agreed and the last repayment is due in November 2019 with a bullet included in finance costs in the consolidated statement of profit or loss. This category generally applies to payment. The outstanding amount as of December 31, 2017 amounted to US$ 265,782 which consist of interest-bearing loans and borrowings. US$ 240,783 term loan and US$ 25,000 revolving loan. The applicable annual interest rate is 4.875% plus 3 months LIBOR. m. Inventories With Petroleum regard products to the are term valued loan, at the lower financial of cost institutions and net realizable required value. security for Staatsolie’s payment obligations. The security mainly consists of the offshore receivables. Staatsolie also has to comply with Raw materials: several affirmative and negative covenants. As at December 31, 2017 Staatsolie is in compliance with the • Purchase cost is valued on weighted average method covenants. Finished goods and work in progress: As at December 31, 2017, unamortized debt arrangement fees amounted to US$ 6,627 (2016: • Cost of direct materials and labor and a proportion of manufacturing overheads based on normal US$ 10,024). The amortization of debt arrangement fees for 2017 amounted US$ 3,397 (2016: US$ operating capacity but excluding borrowing costs 3,152) and is presented under finance cost in the consolidated statement of profit or loss. Page 134 62
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Staatsolie Annual Report 2017

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