Staatsolie Annual Report 2017

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Confidence in Our Own Abilities 50 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) Available-for-sale (AFS) financial investments The Group reassesses whether or not it controls an investee if facts and circumstances indicate that there AFS are changes financial to investments one or more include of the equity three and elements debt securities. of control. Equity Consolidation investments of a subsidiary classified as begins availablefor-sale the Group are obtains those neither control classified over the subsidiary as held-for-trading and ceases nor when designated the Group at fair loses value control through of the profit subsidiary. or loss. when After Assets, initial liabilities, measurement, income and AFS expenses financial of investments a subsidiary are acquired subsequently or disposed measured of during at fair the value year with are unrealized included in gains the consolidated or losses recognized financial statements as OCI until from the the investment date the Group is derecognized, gains control at until which the time, date the cumulative Group ceases gain to control or loss the is subsidiary. recognized Where in other the operating Group’s interest income is or less expense, than 100 or per the cent, investment the interest is determined attributable to outside be impaired, shareholders at which is time, reflected the cumulative in non-controlling loss is reclassified interest (NCI). to the consolidated statement of profit or loss in finance costs and removed from the OCI. The Group evaluates its AFS financial assets Profit or loss and each component of other comprehensive income (OCI) are attributed to the equity to determine whether the ability and intention to sell them in the near term is still appropriate. holders of the parent of the Group and to the NCI, even if this results in the NCI having a deficit balance. When necessary, adjustments are made to the financial statements of subsidiaries to bring their (ii) Financial liabilities accounting policies into line with the Group’s accounting policies. Recognition All intragroup and assets measurement and liabilities, equity, income, expenses and cash flows relating to transactions Financial between members liabilities are of the classified, Group are at eliminated initial recognition, in full on as consolidation. financial liabilities at fair value through profit or loss, loans and borrowings, payables, as appropriate. All financial liabilities are recognized initially at fair A change in the ownership interest of a subsidiary, without a loss of control, is accounted for as an equity value and, in the case of loans and borrowings and payables, net of directly attributable transaction costs. transaction. The Group’s financial liabilities include trade and other payables, loans and borrowings including bank If the Group loses control over a subsidiary, it derecognizes the related assets (including goodwill), overdrafts. liabilities, non-controlling interest and other components of equity while any resultant gain or loss is recognized in profit or loss. Any investment retained is recognized at fair value. Loans and borrowings This is the category most relevant to the Group. After initial recognition, interest bearing loans and 2.3 Summary of significant accounting policies borrowings are subsequently measured at amortized cost using the EIR method. Gains and losses are recognized The following the are consolidated the significant statement accounting of profit policies or loss applied when the in liabilities preparing are its derecognized consolidated as financial well as through statements: the EIR amortization process. Amortized cost is calculated by taking into account any discount or premium a. on Other acquisition intangible and fees assets or costs and goodwill that are an integral part of the EIR. The EIR amortization is included Intangible in assets finance acquired costs in separately the consolidated are measured statement on of initial profit recognition or loss. This at category cost. The generally cost of applies intangible to interest-bearing assets acquired loans in a business and borrowings. combination is their fair value at the date of acquisition. Following initial recognition, intangible assets with definite lives are carried at cost less any accumulated amortization (calculated m. on Inventories a straight-line basis over their useful lives) and accumulated impairment losses, if any. Petroleum Indefinite lived products intangibles, are valued such at as the goodwill, lower of cost are not and amortized, net realizable instead value. they are tested for impairment annually as a minimum, or when there are indicators of impairment. Raw materials: • When Purchase the Group cost is acquires valued on a weighted business, average it assesses method the financial assets and liabilities assumed for appropriate classification and designation in accordance with the contractual terms, economic Finished goods and work in progress: circumstances and pertinent conditions as at the acquisition date. To the extent that the cost of acquiring • Cost of direct materials and labor and a proportion of manufacturing overheads based on normal an equity investment exceeds the fair value of the net assets acquired, the excess is recorded as operating capacity but excluding borrowing costs goodwill. Currently, the group carries goodwill on the books related to the acquisition of GOw2 which occurred in fiscal year 2011. Page 62 Page 50
Annual Report 2017 51 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 Notes (continued) 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 The useful lives of intangible assets are assessed as either finite or indefinite. selling price in the ordinary course of business, less estimated costs of completion and the estimated Intangible costs to sell. assets with finite lives are amortized over the useful economic life and assessed for impairment whenever there is an indication that the intangible asset may be impaired. The amortization period and The cost of crude oil and refined products is the purchase cost, the cost of refining, including the the amortization method for an intangible asset with a finite useful life is reviewed at least at the end of appropriate proportion of depreciation, depletion and amortization and overheads based on normal each reporting period. Changes in the expected useful life or the expected pattern of consumption of operating capacity, determined on a weighted average basis. future economic benefits embodied in the asset are considered to modify the amortization period or method, The net realizable as appropriate, value and of crude are treated oil and as refined changes products in accounting is based estimates. on the estimated The amortization selling price expense in the on ordinary intangible course assets of business, with finite less lives the estimated is recognized costs of in completion the statement and of the profit estimated or loss costs in necessary the expense to category make the that sale. is consistent with the function of the intangible assets. Gains Materials or losses and supplies arising are from valued derecognition using the of weighted an intangible average asset, cost if method. any, are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognized in the statement Pipeline fill of profit or loss when the asset is derecognized. Crude oil, which is necessary to bring a pipeline into working order, is treated as a part of the related pipeline. b. This Investment is on the in basis a joint that venture it is not held for sale or consumed in a production process, but is The necessary Group to has the an operation investment, of a a facility 25% participation during more in than the one Suriname operating Gold cycle, Project and JV its (SurGold) cost cannot limited be partnership, recouped through whereas sale the (or Group is significantly has joint control impaired). over the This limited applies partnership. even if the The part Group of inventory invests monthly that is through deemed cash to be calls an item to SurGold. of property, The plant Group’s and equipment investment cannot in the limited be separated partnership physically is considered from the rest a joint of venture inventory. and It is valued accounted at cost for using and is the depreciated equity method. over the useful life of the related asset. Under the equity method, the investment in the joint venture is initially recognized at cost. The carrying amount n. of the Impairment investment of is non-financial adjusted to assets recognize changes in the Group’s share of net assets of the limited The Group partnership assesses since at each the acquisition 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 The statement of profit or loss reflects the Group’s share of the results of operations of the limited the asset’s recoverable amount. An asset’s recoverable amount is the higher of an asset’s or cash partnership. Any change in OCI of the investee is presented as part of the Group’s OCI. In addition, when generating units (CGU) fair value less costs of disposal and its value in use. It is determined for an there has been a change recognized directly in the equity of the limited partnership, the Group recognizes individual asset, unless the asset does not generate cash inflows that are largely independent of those its share of any changes, when applicable, in the statement of changes in equity. from other assets or groups of assets. Where the carrying amount of an asset or CGU exceeds its The aggregate of the Group’s share of profit or loss of the limited partnership is shown on the face of the recoverable amount, the asset is considered impaired and is written down to its recoverable amount. In statement of profit or loss outside operating profit and represents profit or loss before tax. The financial 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 statements of the limited partnership are prepared for the same reporting period as the Group. After specific application to the asset. of the In determining equity method, fair value the Group less costs determines of disposal, whether recent it is market necessary transactions to recognize are taken an impairment into account. loss, If no if such any, transactions its investment can be identified, in the limited an appropriate partnership. valuation The Group model determines is used. at each reporting date whether there is any objective evidence that the investment in the limited partnership is Impairment losses of continuing operations are recognized in the consolidated statement of profit or loss impaired. If this is the case, the Group calculates the amount of impairment as the difference between the in those expense categories consistent with the function of the impaired asset, except for a property recoverable amount of the joint venture and its carrying value and recognizes the loss as ‘Share of profit previously revalued where the revaluation was taken to OCI. In this case, the impairment is also of the participation in a JV’ in the statement of profit or loss. recognized in OCI up to the amount of any previous revaluation. Page 63 Page 51
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Staatsolie Annual Report 2017

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