Staatsolie Annual Report 2017

Annual Report 2017 137
Staatsolie Maatschappij Suriname N.V.
Notes to the Consolidated financial statements for the years ended December 31, 2017 and 2016
(continued)
Financial Inventories risk are management stated at the lower objectives of cost and and policies net realizable value. Net realizable value is the estimated
selling price in the ordinary course of business, less estimated costs of completion and the estimated
Market risk
costs to sell.
Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate
because The cost of of changes crude oil in and market refined prices. products Market is risk the comprises purchase three cost, types the cost of risk: of refining, commodity including price risk, the
interest appropriate rate risk proportion and foreign of depreciation, currency risk. depletion Financial and instruments amortization affected and by overheads market risk based include on loans normal and
borrowings, operating capacity, deposits, determined trade receivables, on a weighted trade payables average basis. and accrued liabilities.
Market The net risks realizable due to value interest of rate crude (LIBOR) oil and risk refined have products been accepted is based and on is the evaluated estimated and selling managed price as in part the
of ordinary the portfolio course risk of business, management less the policies. estimated In addition costs of Staatsolie completion monitors and the a estimated desired ratio costs for necessary its available to
cash make in the US$ sale. to fulfill its foreign currency business obligations. Furthermore Staatsolie accepts the risks of
price Materials fluctuations and supplies of oil are products, valued while using takes the weighted into account average a conservative cost method. low price for its work program
and budget.
Pipeline fill
Interest Crude oil, rate which risk is necessary to bring a pipeline into working order, is treated as a part of the related
Interest pipeline. rate This risk on is the the risk basis that that the it fair is value not held or future for sale cash or flows consumed of a financial a production instrument process, will fluctuate but is
because necessary of to changes the operation in market of a interest facility rates. during The more Group’s than one exposure operating to the cycle, risk and of changes its cost cannot in market be
interest recouped rates through relates sale primarily (or is to significantly the Group’s impaired). long-term This debt obligations applies even with if floating the part interest of inventory rates. that is
deemed to be an item of property, plant and equipment cannot be separated physically from the rest of
Interest
inventory.
rate
It is
sensitivity
valued at cost and is depreciated over the useful life of the related asset.
The following table demonstrates the sensitivity to a reasonably possible change in interest rates on that
portion of
n.
loans
Impairment
and borrowings
of non-financial
affected. With
assets
all other variables held constant, the Group’s profit before
tax
The
is
Group
affected
assesses
through
at
the
each
impact
reporting
on floating
date whether
rate borrowings,
there is an
as
indication
follows:
that an asset may be impaired.
If any indication Increase exists, / decrease or when annual Effect impairment on profit before testing tax for an Effect asset on is profit required, before the tax Group estimates
the x US$ asset’s 1 in basis points Corporate term loan
Loan SPCS
recoverable amount. An asset’s recoverable amount is the higher of an asset’s or cash
generating 2017 units (CGU) fair value less costs of disposal and its value in use. It is determined for an
individual US dollar asset, unless +60the asset does not generate cash 1,595 inflows that are largely independent 470 of those
-60 (1,595) (470)
from other assets or groups of assets. Where the carrying amount of an asset or CGU exceeds its
recoverable 2016 amount, the asset is considered impaired and is written down to its recoverable amount. In
US dollar +60 1,778 587
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
-60 (1,778) (587)
specific to the asset. In determining fair value less costs of disposal, 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.
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