Staatsolie Annual Report 2017

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Annual Report 2017 149 Staatsolie Maatschappij Suriname N.V. Notes to the Consolidated financial statements for the years ended December 31, 2017 and 2016 (continued) (a) Inventories Classification are stated and measurement at the lower of cost and net realizable value. Net realizable value is the estimated Overall, selling price Staatsolie in the ordinary expects course the adoption of business, of IFRS less 9 estimated may have costs an of effect completion on the and classification the estimated and measurement costs to sell. of its financial assets, but no significant impact on the classification and measurement of the financial liabilities or equity. The cost of crude oil and refined products is the purchase cost, the cost of refining, including the Staatsolie appropriate will proportion consider of whether depreciation, any of the depletion sales contracts and amortization contain an and embedded overheads derivative, based on but normal do not meet operating the capacity, normal sales determined and purchases on a weighted exemption. average Under basis. IAS 39, where provisionally priced sales contracts contain an embedded derivative that is considered to be closely related to the host contract, this The net realizable value of crude oil and refined products is based on the estimated selling price in the is not separated from the host contract until delivery into the contract for accounting purposes under IAS ordinary course of business, less the estimated costs of completion and the estimated costs necessary to 39. Accordingly, the embedded derivative, which does not qualify for hedge accounting, is recognized at make the sale. fair value, with subsequent changes in fair value recognized in the statement of profit or loss and other comprehensive Materials and supplies income are each valued period using until the final weighted settlement. average The initial cost method. estimate of fair value and subsequent changes in fair value up until final settlement, are estimated by reference to forward market prices. Pipeline fill On adoption of IFRS 9, embedded derivatives will no longer be separated from the host receivable as Crude oil, which is necessary to bring a pipeline into working order, is treated as a part of the related these receivables are not expected to give rise to cash flows that represent solely payments of principal pipeline. This is on the basis that it is not held for sale or consumed in a production process, but is and interest. Instead, the receivables will be accounted for as one instrument and measured at fair value necessary to the operation of a facility during more than one operating cycle, and its cost cannot be through profit or loss with subsequent changes in fair value recognized in the statement of profit or loss recouped through sale (or is significantly impaired). This applies even if the part of inventory that is and other comprehensive income each period until final settlement. This will mean that the quantum of deemed to be an item of property, plant and equipment cannot be separated physically from the rest of the fair value movements may be different under IFRS 9, because the fair value of the receivable will inventory. It is valued at cost and is depreciated over the useful life of the related asset. factor in the impact of credit and interest rates. Other non-provisionally n. Impairment priced of non-financial trade receivables assets are considered to be held to collect contractual cash flows The Group and are assesses expected at each to give reporting rise to cash date whether flows representing there is an solely indication payments that an of asset principal may and be impaired. interest. Staatsolie If any indication expects exists, that or these when will annual continue impairment to be measured testing for at an amortized asset is required, cost under the IFRS Group 9. estimates However, Staatsolie the asset’s will recoverable analyze the amount. contractual An cash asset’s flow recoverable characteristics amount of these is the instruments higher of in an more asset’s detail or before cash concluding generating whether units (CGU) all these fair instruments value less costs meet of the disposal criteria for and amortized its value cost in use. measurement It is determined under IFRS for an 9. For individual other asset, financial unless assets the currently asset does measured not generate fair cash value, inflows e.g., derivative that are largely financial independent assets, Staatsolie of those expects from other to continue assets or measuring groups of these assets. at fair Where value. the carrying amount of an asset or CGU exceeds its There recoverable will be amount, no impact the on asset financial is considered liabilities. impaired and is written down to its recoverable amount. In assessing value in use, the estimated future cash flows are discounted to their present value using a pretax Impairment discount rate that reflects current market assessments of the time value of money and the risks (b) IFRS specific 9 requires to the asset. to now In use determining an expected fair value credit less loss costs model of for disposal, its trade recent receivables market measured transactions at amortized are taken cost, into account. either on If no a such 12-month transactions or lifetime can basis. be identified, Staatsolie an appropriate expects to valuation apply the model simplified is used. approach and record Impairment lifetime losses expected of continuing losses on operations all trade receivables are recognized measured in the consolidated amortized cost. statement Given of the profit short-term loss nature in those of expense these receivables, categories Staatsolie consistent does with not the expect function these of changes the impaired will have asset, a significant except for impact. 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 Page 149 63
Confidence in Our Own Abilities 150 Staatsolie Maatschappij Suriname N.V. Notes to the Consolidated financial statements for the years ended December 31, 2017 and 2016 (continued) (c) Available-for-sale Hedge accounting (AFS) financial investments The AFS changes financial in investments IFRS 9 relating include to hedge equity and accounting debt securities. will have Equity no impact investments as Staatsolie classified does as not availablefor-sale hedge are those accounting. neither classified as held-for-trading nor designated at fair value through profit or loss. currently apply After initial measurement, AFS financial investments are subsequently measured at fair value with unrealized 2. IFRS gains 15 Revenue or losses from recognized Contracts as OCI with until Customers the investment is derecognized, at which time, the cumulative IFRS 15 was gain issued or loss in May is 2014 recognized and establishes in other operating a five-step income model to or account expense, for or revenue the investment arising from is contracts determined with to be customers. impaired, at Under which IFRS time, the 15, cumulative revenue is loss recognized is reclassified at an to the amount consolidated that reflects statement the consideration of profit or loss to in which finance costs entity and expects removed to be from entitled the in OCI. exchange The Group for transferring evaluates its goods AFS or financial services assets to a customer. determine whether the ability and intention to sell them in the near term is still appropriate. The new revenue standard will supersede all current revenue recognition requirements under IFRS. Either (ii) Financial a full retrospective liabilities application or a modified retrospective application is required for annual periods beginning Recognition on and or after measurement January 1, 2018. Early adoption is permitted. Financial Staatsolie liabilities plans to are adopt classified, the new at standard initial recognition, on the required as financial effective liabilities date using at fair the value modified through retrospective profit or loss, method. loans and borrowings, payables, as appropriate. All financial liabilities are recognized initially at fair value and, in the case of loans and borrowings and payables, net of directly attributable transaction costs. During 2017, Staatsolie commenced its preliminary assessment of IFRS 15, which may be subject to The Group’s financial liabilities include trade and other payables, loans and borrowings including bank changes as more detailed analysis is completed. Furthermore, Staatsolie is considering the clarifications overdrafts. issued by the IASB in April 2016 and will monitor any further development. Loans Staatsolie and is borrowings the business of exploring for, developing, producing, refining and selling oil and electricity This to customers is the category in various most locations relevant around to the the Group. world. To After date, initial Staatsolie recognition, has identified interest the bearing following loans issues and borrowings that require are consideration: subsequently measured at amortized cost using the EIR method. Gains and losses are recognized in the consolidated statement of profit or loss when the liabilities are derecognized as well as through (a) Provisionally the EIR amortization priced sales process. Amortized cost is calculated by taking into account any discount or As premium discussed on acquisition under IFRS and 9 fees Financial or costs Instruments that are an above, integral from part time of to the time EIR. Staatsolie The EIR may amortization enter into is contracts included in contain finance provisional costs in the pricing consolidated features statement which are considered of profit or loss. to be This embedded category derivatives. generally applies to Under interest-bearing IAS 18 Revenue, loans and revenue borrowings. is recognized at the estimated fair value of the total consideration received or receivable when the crude oil is shipped and risks and rewards are considered to have passed. m. This Inventories fair value is based on the most recently determined estimate of crude oil price given the specific Petroleum quality products of the are crude valued and at the the estimated lower of cost forward and price net realizable which the value. entity expects to receive. The initial estimate Raw materials: of the fair value of the embedded derivative, and subsequent changes in fair value up until final settlement, • Purchase are cost also is valued estimated on weighted by reference average to forward method market prices. The subsequent changes in fair value are recognized in the statement of profit or loss and other comprehensive income each period until Finished goods and work in progress: final settlement. • Cost of direct materials and labor and a proportion of manufacturing overheads based on normal operating capacity but excluding borrowing costs Page Page 150 62
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Staatsolie Annual Report 2017

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