Staatsolie Annual Report 2017

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Confidence in Our Own Abilities 58 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 initial cost of an asset comprises its purchase price or construction cost (if the asset was previously classified AFS financial as assets investments development), include equity any and costs debt directly securities. attributable Equity to investments bringing the classified asset into as operation, availablefor-sale the initial are estimate those neither of the classified decommissioning as held-for-trading obligation nor and, designated for qualifying at fair value assets through (where profit relevant), or loss. After borrowing initial costs. measurement, The purchase AFS price financial or construction investments cost are is the subsequently aggregate amount measured paid at and fair the value fair value with unrealized of any other gains consideration or losses given recognized to acquire as the OCI asset. until the investment is derecognized, at which time, the cumulative gain or loss is recognized in other operating income or expense, or the investment is determined (ii) Depreciation/amortization to be impaired, at which time, the cumulative loss is reclassified to the consolidated statement of Oil profit properties or loss are in finance depreciated/amortized costs and removed on a from UOP the basis OCI. over The the Group total evaluates proved developed its AFS financial reserves assets of the field to determine concerned. whether The the UOP ability rate and calculation intention for to sell the them depreciation/amortization in the near term is still of appropriate. field development costs takes into account expenditures incurred to date, together with sanctioned future development expenditure. (ii) Financial liabilities Other property, plant and equipment are generally depreciated on a straight-line basis over their Recognition and measurement estimated useful lives, which is generally 25 years for the refinery, and major inspection costs are Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through profit or amortized over three to five years, which represents the estimated period before the next planned major loss, loans and borrowings, payables, as appropriate. All financial liabilities are recognized initially at fair inspection. value and, in the case of loans and borrowings and payables, net of directly attributable transaction costs. An The item Group’s of property, financial plant liabilities and include equipment trade and and any other significant payables, part loans initially and recognized borrowings is including derecognized bank upon overdrafts. disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and Loans the and carrying borrowings amount of the asset) is included in the consolidated statement of profit or loss when the asset This is is the derecognized. category most relevant to the Group. After initial recognition, interest bearing loans and The borrowings asset’s are residual subsequently values, useful measured lives at and amortized methods cost of depreciation/amortization using the EIR method. Gains are reviewed and losses at each are reporting recognized period in the and consolidated adjusted prospectively, statement of if profit appropriate. or loss when the liabilities are derecognized as well as through the EIR amortization process. Amortized cost is calculated by taking into account any discount or (iii) premium Major on maintenance, acquisition refits, and fees inspection or costs and that repairs are an integral part of the EIR. The EIR amortization is Expenditure included in finance on major costs maintenance the consolidated refits, inspections statement or of repairs profit or comprises loss. This the category cost of replacement generally applies assets to or interest-bearing parts of assets, loans inspection and borrowings. costs and overhaul costs. Where an asset, or part of an asset that was separately depreciated and is now written off, is replaced and it is probable that future economic benefits associated m. with Inventories the item will flow to the Group, the expenditure is capitalized. Where part of the asset replaced Petroleum was products not separately are valued considered at the lower as of a cost component and net realizable and therefore value. not depreciated separately, the replacement value is used to estimate the carrying amount of the replaced asset(s) and is immediately Raw materials: written off. Inspection costs associated with major maintenance programs are capitalized and amortized • Purchase cost is valued on weighted average method over the period to the next inspection. All other day-to-day repairs and maintenance costs are expensed as Finished incurred. 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 62 Page 58
Annual Report 2017 59 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 Refinery, power plant and other fixed assets selling price in the ordinary course of business, less estimated costs of completion and the estimated The refinery, power plant and other fixed assets are valued at cost. The capitalized costs of these assets costs to sell. are depreciated on a straight-line basis, taking into account the estimated useful lifetime of the significant components The cost of of crude the refinery. oil and refined products is the purchase cost, the cost of refining, including the appropriate proportion of depreciation, depletion and amortization and overheads based on normal Projects operating in capacity, progress determined on a weighted average basis. Projects The net realizable in progress value relates of crude to work oil in and progress, refined for products which at is the based date on of the completion estimated the selling cost is price capitalized in the to ordinary the appropriate course of category business, of less property the estimated plant and costs equipment. of completion Project and in progress the estimated is not depreciated. costs necessary to make the sale. Power plant assets Materials and supplies are valued using the weighted average cost method. The power plant assets are depreciated on a straight line basis and as follows: Asset Category Percentage Pipeline Building fill hall 5% Crude Production oil, which hall is necessary to bring 10% a pipeline into working order, is treated as a part of the related Furniture 33.33% pipeline. This is on the basis that it is not held for sale or consumed in a production process, but is Tank battery 20% necessary Powerhouse to equipment the operation of a 5 facility - 50 % during more than one operating cycle, and its cost cannot be Other units 5 - 20% recouped through sale (or is significantly impaired). This applies even if the part of inventory that is deemed to be an item of property, plant and equipment cannot be separated physically from the rest of Corporate inventory. It & is Other valued fixed at cost assets and is depreciated over the useful life of the related asset. Land and freehold estates are not depreciated. Other properties outside the production field are being amortized n. on Impairment a straight line of non-financial basis. The annual assets depreciation percentages are as follows; Where applicable a The residual Group value assesses is taken at each into consideration. 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 Asset Category Percentage the asset’s recoverable amount. An asset’s recoverable amount is the higher of an asset’s or cash Building hall 10% generating Telecommunication units (CGU) equipment fair value less costs of disposal 20% and its value in use. It is determined for an individual Dock TLFasset, unless the asset does not generate cash 4% inflows that are largely independent of those Oil tanker 10% from other assets or groups of assets. Where the carrying amount of an asset or CGU exceeds its Drilling machinery 20% recoverable Heavy equipment amount, the asset is considered impaired and 20% is written down to its recoverable amount. In assessing Transportation value in equipment use, the estimated future cash flows 33.33% 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 An specific item to of the property, asset. In plant determining and equipment fair value is less derecognized costs of disposal, upon disposal recent market or when transactions no future economic are taken benefits into account. are expected If no such from transactions its use or can disposal. be identified, Any gain an appropriate or loss arising valuation on de-recognition model is used. of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is Impairment losses of continuing operations are recognized in the consolidated statement of profit or loss included in the consolidated statement of profit or loss when the asset is derecognized. The residual in those expense categories consistent with the function of the impaired asset, except for a property values, useful lives and methods of depreciation of property, plant and equipment are reviewed at each previously revalued where the revaluation was taken to OCI. In this case, the impairment is also financial year end and adjusted prospectively, if appropriate. recognized in OCI up to the amount of any previous revaluation. Page 63 Page 59
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Contact Information Head Office Dr.
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Staatsolie Annual Report 2017

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