Staatsolie Annual Report 2017

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Confidence in Our Own Abilities 74 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 assets and record a GOw2 currency translation effect resulting in an increase of US$ 188. Furthermore AFS intercompany financial adjustments investments were include made equity resulting and debt in a securities. decrease of Equity US$ 261 investments as at December classified 31, as 2016. availablefor-sale are those neither classified as held-for-trading nor designated at fair value through profit or loss. After 8. Prepayments initial measurement, and other current AFS financial assets were investments adjusted are for (US$ subsequently 8,973) and measured (US$ 23,915) at fair as value at January with unrealized 1, 2016 and gains December or losses 31, recognized 2016 respectively. as OCI The until adjustment the investment as at is January derecognized, 1, 2016 and at which December time, the 31, cumulative 2016 includes gain a reclassification or loss is recognized of (US$ 750) in other to cash operating and short income term deposits or expense, (see note or the 3b), investment a write-off for is determined (US$ 2,211) to regarding be impaired, prepayments at which time, in previous the cumulative years relating loss is to reclassified procurement to the of goods consolidated and services statement and reclassification of profit or loss in for finance a cash costs payment and removed from trade from receivables the OCI. The amounting Group evaluates to US$ 1,329 its AFS (see financial note 7). assets The adjustments to determine whether as at January the ability 1, and 2016 intention also to includes sell them a in reclassification the near term is to still equity appropriate. of US$ 2,707, a reclassification of the investments in the Uitkijk project of US$ 11,040 to projects in progress and the reclassification (ii) Financial liabilities from loan receivables amounting US$ 992. The Recognition adjustment and measurement at December 31, 2016 relates to a reclassification adjustment for (US$ 5,348), a reclassification Financial liabilities of the are provision classified, for at sales initial tax recognition, and wage as tax financial from long-term liabilities liabilities at fair value totaling through (US$ profit 5,082) or (see loss, note loans 15) and and borrowings, a reclassification payables, of US$ as appropriate. 805 from prepayments All financial to liabilities loan receivables. are recognized initially at fair value and, in the case of loans and borrowings and payables, net of directly attributable transaction costs. The Group’s financial liabilities include trade and other payables, loans and borrowings including bank 9. Staatsolie recognized provisions for decommissioning its production field and related facilities, the overdrafts. refinery and the power plant on the basis of discounted expected expenditures. US GAAP requires periodic evaluations of the assumptions used to determine the decommissioning provision. As the Loans and borrowings evaluation was not performed recently, it was done for fiscal years 2015 and 2016. As a result, This is the category most relevant to the Group. After initial recognition, interest bearing loans and adjustments were made to the decommissioning provision in the respective years. The provision for the borrowings are subsequently measured at amortized cost using the EIR method. Gains and losses are production field and related facilities decreased by (US$ 39,773) and (US$ 39,836) as at January 1, 2016 recognized in the consolidated statement of profit or loss when the liabilities are derecognized as well as and December 31, 2016 respectively. The refinery provision was decreased by (US$ 207) as at January through the EIR amortization process. Amortized cost is calculated by taking into account any discount or 1, 2016. The power plant provision decreased by (US$ 1,740) and (US$ 1,880) as at January 1, 2016 and premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortization is December 31, 2016 respectively. included in finance costs in the consolidated statement of profit or loss. This category generally applies to interest-bearing loans and borrowings. 10. Employee benefit liabilities Under US GAAP, Staatsolie only recognized liabilities for the following employee benefits: 1) employee m. Inventories pension plan, 2) executive pension plan and 3) retirees medical plan. No provision was recorded in prior Petroleum products are valued at the lower of cost and net realizable value. years for Staatsolie, SPCS and GOw2 for other employee benefits such as jubilee, gratuity, funeral grant gratuity, Raw materials: additional holiday allowances and executive excedent gratuities. The adjustment to record the provision • Purchase for these cost is other valued employee on weighted benefits average for Staatsolie method amounted to US$ 11,892 and US$ 12,772 as at January Finished 1, goods 2016 and and work December in progress: 31, 2016 respectively. Additionally, the directors insured pension plan was increased as at December 31, 2016 by US$ 601 due to a change in the assets of this plan. The • Cost of direct materials and labor and a proportion of manufacturing overheads based on normal adjustments for the other employee liabilities of SPCS amounted to US$ 287 and US$ 508 as at January operating capacity but excluding borrowing costs 1, 2016 and December 31, 2016 respectively. GOw2 only operates jubilee gratuity and retirees medical Page 62 Page 74
Annual Report 2017 75 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 plans. Adjustments of US$ 893 and US$ 513 were made as at January 1, 2016 and December 31, 2016 selling price in the ordinary course of business, less estimated costs of completion and the estimated respectively to record the provision related to the GOw2 employee benefit plans. costs to sell. 11. The The cost accruals of crude and oil other and liabilities refined products were (decreased) is the purchase / increased cost, by the (US$ cost 2,509) of refining, and US$ including 1,743 as the at January appropriate 1, 2016 proportion and December of depreciation, 31, 2016, depletion respectively. and The amortization decrease and of (US$ overheads 2,509) relates based primarily on normal to the operating settlement capacity, of the determined liability for on the a weighted land that average was sold basis. to EBS NV (see note 1c). The net increase of US$ The net 1,743 realizable as at December value of crude 31, 2016 oil and relates refined to an products increase is in based GOw2 on of the US$ estimated 1,532 relating selling to price currency in the translation ordinary course adjustment of business, coupled less with the estimated a reduction costs in of Staatsolie completion and and SPCS the estimated of US$ 61 costs and necessary US$ 222 to respectively make the sale. related to a reclassification. Furthermore an adjustment was made related to an under accrual of personnel costs which resulted in an increase of US$ 492 which was recognized in general and Materials and supplies are valued using the weighted average cost method. administrative expenses. Pipeline fill 12. Income tax expense and the related income tax payable was recalculated for the adjustments made Crude oil, which is necessary to bring a pipeline into working order, is treated as a part of the related and separately disclosed in section 3.3. pipeline. This is on the basis that it is not held for sale or consumed in a production process, but is necessary to the operation of a facility during more than one operating cycle, and its cost cannot be 13. Inventories (namely materials and supplies) decreased as at December 31, 2016 by (US$ 1,273) due recouped through sale (or is significantly impaired). This applies even if the part of inventory that is to the fact that import and transportation costs that were not attributable to purchased materials were expensed. deemed to This be an was item recorded of property, in other plant income and / equipment expenses. cannot be separated physically from the rest of inventory. It is valued at cost and is depreciated over the useful life of the related asset. 14. The short-term investment in shares of Hakrinbank and Assuria increased by US$ 40 as at December n. Impairment of non-financial assets 31, 2016 due to revaluations. 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 15. Reclassification of the provision for sales and wage tax amounting to US$ 5,082 from other long-term the asset’s recoverable amount. An asset’s recoverable amount is the higher of an asset’s or cash liabilities to prepayments and other current assets as at December 31, 2016. generating 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 independent of those 16. Trade payables increased as at December 31, 2016 by US$ 4,624 due to a write-off of a down from other assets or groups of assets. Where the carrying amount of an asset or CGU exceeds its payment to a vendor of US$ 1,277, increase due to intercompany adjustments of US$ 4,206 and the recoverable amount, the asset is considered impaired and is written down to its recoverable amount. In effects of currency translation adjustment of GOw2 resulting in a decrease of (US$ 860). The 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 corresponding entries as it relates to the write down of payments to vendor and intercompany adjustment were recorded through other income / expenses whereas the currency adjustment was recorded through specific to the asset. In determining fair value less costs of disposal, recent market transactions are taken general and administrative expenses. into account. If no such transactions can be identified, an appropriate valuation model is used. 17. Impairment Consolidated losses statement of continuing of profit operations or loss presentation are recognized in the consolidated statement of profit or loss Converting in those expense the presentation categories of consistent the US GAAP with the audited function statement of the of impaired profit or asset, loss from except a presentation for a property by “nature” previously to a revalued presentation where by the “function” revaluation caused was the taken majority to of OCI. the amounts In this case, in the the “re-statement” impairment column. is also These recognized adjustments in OCI up do to not the have amount any impact of any previous on the profit revaluation. or loss for the year. Page Page 75 63
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