Staatsolie Annual Report 2017

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Confidence in Our Own Abilities 80 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 time. The provision was decreased and released to the retained earnings as at January 1, 2016 for AFS US$ financial 577. investments In 2016 the provision include equity increased and debt with securities. finance charges Equity for investments US$ 149 recorded classified through as availablefor-sale and are loss. those neither classified as held-for-trading nor designated at fair value through profit or loss. profit After initial measurement, AFS financial investments are subsequently measured at fair value with E. unrealized Employee gains defined or losses benefit recognized liabilities as OCI until the investment is derecognized, at which time, the IAS cumulative 19 Employee gain or Benefits loss is outlines recognized the accounting other operating requirements income for employee or expense, benefits, or the including investment short- is determined benefits, to be post-employment impaired, at which benefits time, the such cumulative as retirement loss is reclassified benefits, other to the long-term consolidated benefits statement and termination of profit or loss benefits. in finance The standard costs and establishes removed from the the principle OCI. The that Group the cost evaluates of providing its AFS employee financial benefits assets should to determine be recognized whether the in the ability period and in intention which the to sell benefit them is in earned the near by term the employee, is still appropriate. rather than when it is paid or payable, and outlines how each category of employee benefits are measured, providing detailed guidance (ii) Financial particular liabilities about post-employment benefits. Recognition and measurement Based Financial on liabilities the above are mentioned classified, criteria, at initial the recognition, following provisions as financial resulted liabilities in re-measurements at fair value through under profit IFRS: or loss, loans and borrowings, payables, as appropriate. All financial liabilities are recognized initially at fair i. Under both US GAAP and IFRS, Staatsolie maintained the following post-employment benefit plans: value and, in the case of loans and borrowings and payables, net of directly attributable transaction costs. 1) employee pension plan, 2) directors insured pension plan and 3) retirees medical plan. The The Group’s financial liabilities include trade and other payables, loans and borrowings including bank calculation of this provision is based on an actuarial evaluation. IAS 19 Employee benefits requires overdrafts. actuarial evaluation of these long-term benefits which included a number of variables such as discount rate assumptions and accounting for actuarial gains and losses. The application of IAS 19 Loans and borrowings resulted in a decrease in the defined benefit obligation as at January 1, 2016 by US$ 2,443 which is This is the category most relevant to the Group. After initial recognition, interest bearing loans and recognized through retained earnings. borrowings are subsequently measured at amortized cost using the EIR method. Gains and losses are recognized ii. In addition, in the the consolidated discount rate statement used in of calculating profit or loss the when jubilee the plan liabilities benefits, are derecognized differs between as the well two as through accounting the EIR standards. amortization This process. resulted Amortized in an increase cost is in calculated the provision by taking of US$ into 540 account as at January any discount 1, 2016 or premium and US$ on acquisition 552 as at December and fees or 31, costs 2016. that These are amounts an integral were part released of the EIR. to the The profit EIR and amortization loss/retained is included earnings. finance costs in the consolidated statement of profit or loss. This category generally applies to interest-bearing loans and borrowings. iii. Lastly, the power plant (SPCS) employee savings fund balance of US$ 221 as at December 31, 2016 was m. reclassified Inventories out of employee defined benefits liabilities to accruals and other liabilities. Petroleum products are valued at the lower of cost and net realizable value. F. Income tax Raw materials: Income tax (expenses) / income and deferred tax asset / liability was recalculated and separately • Purchase cost is valued on weighted average method disclosed under section 3.3. Finished goods and work in progress: G. • Cost Hyperinflation of direct accounting materials and labor and a proportion of manufacturing overheads based on normal Suriname operating has capacity been identified but excluding as a hyperinflationary borrowing costs economy based on the three year cumulative inflation rates of 98% and 108%, measured at year end 2016 and 2017 respectively. Other hyperinflationary Page 62 Page 80
Annual Report 2017 81 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) Inventories are stated at the lower of cost and net realizable value. Net realizable value is the estimated characteristics of the economic environment were identified, such as (i) the general population regards selling price in the ordinary course of business, less estimated costs of completion and the estimated monetary amounts in terms of a relatively stable foreign currency as prices are often quoted in stable costs to sell. foreign currency, (ii) sales and purchases on credit take place at prices that compensate for the expected The loss of cost purchasing of crude power, oil and and refined (ii) the products general is population the purchase prefers cost, to keep the wealth cost of in refining, non-monetary including assets the appropriate or in a relatively proportion stable foreign of depreciation, currency. depletion and amortization and overheads based on normal operating capacity, determined on a weighted average basis. The functional currency of GOw2, a wholly owned subsidiary of Staatsolie, is the Surinamese dollar, The therefore net realizable the non-monetary value of crude assets oil and and liabilities refined of products GOw2 had is based to be revalued. on the estimated IAS 29 Financial selling price Reporting the ordinary Hyperinflationary course of business, Economies less requires the estimated management costs of to completion restate the and financial the estimated statements costs of entities necessary whose to make functional the sale. currency is the currency of a hyperinflationary economy, into the current purchasing power at the balance sheet date. The restatements resulted in an increase in PPE amounting to US$ 2,252, an Materials and supplies are valued using the weighted average cost method. increase in shared premiums of US$ 755 and a monetary gain of US$ 1,497 as at December 31, 2016 which is recognized in the consolidated statement of profit or loss. Pipeline fill Crude oil, which is necessary to bring a pipeline into working order, is treated as a part of the related H. Income tax payable was recalculated for IFRS conversion adjustments (see 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 I. Under US GAAP (ASC 715) the actuarial gains / losses for other long-term benefit plans are recouped through sale (or is significantly impaired). This applies even if the part of inventory that is recognized as other comprehensive income, while that differs per IAS 19 under IFRS. Because the deemed to be an item of property, plant and equipment cannot be separated physically from the rest of measurement of other long-term employee benefits is not usually subject to the same degree of inventory. It is valued at cost and is depreciated over the useful life of the related asset. uncertainty as the measurement of post-employment benefits, the actuarial gains / losses are recorded in the consolidated statement of profit or loss. This difference in treatment led to a conversion adjustment of n. Impairment of non-financial assets the jubilee and additional holiday allowance plans under IFRS of US$610 and US$508 respectively as at The Group assesses at each reporting date whether there is an indication that an asset may be impaired. December 31, 2016. The total adjustment amounted to US$1,118 gross of 32.4% deferred tax and the tax If any indication exists, or when annual impairment testing for an asset is required, the Group estimates impact amounted to US$362 which are both recognized in the consolidated statement of profit or loss. In the asset’s recoverable amount. An asset’s recoverable amount is the higher of an asset’s or cash addition, prior service cost of US$602 for the executive pension plan of 2016 is included in the OCI under generating units (CGU) fair value less costs of disposal and its value in use. It is determined for an US GAAP while that is not the case under IFRS. The tax impact is 32.4% equaling to US$ 195. individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets. Where the carrying amount of an asset or CGU exceeds its recoverable amount, the asset is considered 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 discount rate that reflects current market assessments of the time value of money and the risks 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. Page 63 Page 81
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Contact Information Head Office Dr.
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Staatsolie Annual Report 2017

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