Staatsolie Annual Report 2017

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Confidence in Our Own Abilities 88 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 As the economic assumptions used may change and as additional geological information is obtained AFS during financial the operation investments of a field, include estimates equity of and recoverable debt securities. reserves Equity may investments change. Such classified changes as may availablefor-sale the Group’s are reported those neither financial classified position as and held-for-trading results, which nor include: designated at fair value through profit or loss. impact • After The initial carrying measurement, value of exploration AFS financial and evaluation investments assets; are oil subsequently properties; property, measured plant at and fair equipment; value with unrealized and goodwill gains may or losses be affected recognized due to as changes OCI until in estimated the investment future cash is derecognized, flows. at which time, the • cumulative Depreciation gain or and loss amortization is recognized charges in other in the operating consolidated income statement or expense, of profit or or the loss investment may change is determined where such to be charges impaired, are at determined which time, the using cumulative the UOP loss method, is reclassified or where to the the useful consolidated life of the statement related of profit assets or loss change in finance (Note 4.1). costs and removed from the OCI. The Group evaluates its AFS financial assets • to determine Provisions whether for decommissioning the ability and intention may require to sell revision them in - the where near changes term is still to reserves appropriate. estimates affect expectations about when such activities will occur and the associated cost of these activities (Note (ii) Financial 4.7). liabilities • Recognition The recognition and measurement and carrying value of deferred tax assets may change due to changes in the Financial judgments liabilities regarding are classified, the existence at initial of recognition, such assets as and financial estimates liabilities of at the fair likely value recovery through profit such or loss, assets loans (Note and borrowings, 3.3). 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. Deferred The Group’s tax financial liabilities include trade and other payables, loans and borrowings including bank overdrafts. Judgment is required to determine which arrangements are considered to be a tax on income as opposed to an operating cost. Judgment is also required to determine whether deferred tax assets are recognized Loans in the and consolidated borrowings statement of financial position. Deferred tax assets, including those arising from This unutilized is the tax category losses, most require relevant the Group to the to assess Group. the After likelihood initial recognition, that the Group interest will bearing generate loans sufficient and borrowings taxable earnings are subsequently in future periods, measured in order at amortized to utilize recognized cost using the deferred EIR method. tax assets. Gains Judgment and losses is also are recognized required in respect in the consolidated of the application statement of existing of profit tax or laws loss in when each the jurisdiction. liabilities are derecognized as well as through the EIR amortization process. Amortized cost is calculated by taking into account any discount or Assumptions about the generation of future taxable profits depend on management’s estimates of future premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortization is cash flows. These estimates of future taxable income are based on forecast cash flows from operations included in finance costs in the consolidated statement of profit or loss. This category generally applies to (which are impacted by production and sales volumes, commodity prices, reserves, operating costs, interest-bearing loans and borrowings. closure and rehabilitation costs, capital expenditure, dividends and other capital management transactions). To the extent that future cash flows and taxable income differ significantly from estimates, m. Inventories the ability of the Group to realize the net deferred tax assets recorded at the reporting date could be Petroleum products are valued at the lower of cost and net realizable value. impacted. In addition, future changes in tax laws in the jurisdictions in which the Group operates could Raw limit the materials: ability of the Group to obtain tax deductions in future periods. • Purchase cost is valued on weighted average method Finished 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 88
Annual Report 2017 89 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 Oil properties selling price in the ordinary course of business, less estimated costs of completion and the estimated The application of the Group’s accounting policy for exploration and evaluation expenditure requires costs to sell. judgment to determine whether future economic benefits are likely from future either exploitation or sale, or The whether cost of activities crude oil have and not refined reached products a stage is which the purchase permits a cost, reasonable the cost assessment of refining, of the including existence the of appropriate reserves. The proportion determination of depreciation, of reserves depletion and resources and amortization is, in itself, and estimation overheads process based that on involves normal varying operating degrees capacity, of determined uncertainty on depending a weighted on average how the basis. resources are classified. These estimates directly impact The net when realizable the Group value of defers crude exploration oil and refined and products evaluation is based expenditure. on the estimated The deferral selling policy price requires in the management ordinary course to of make business, certain less estimates the estimated and assumptions costs of completion about future and the events estimated and costs circumstances, necessary to in particular, make the sale. whether an economically viable extraction operation can be established. Any such estimates and assumptions may change as new information becomes available. If, after expenditure is capitalized, Materials and supplies are valued using the weighted average cost method. information becomes available suggesting that the recovery of the expenditure is unlikely, the relevant capitalized amount is written off in the statement of profit or loss in the period when the new information Pipeline fill becomes available. Crude oil, which is necessary to bring a pipeline into working order, is treated as a part of the related 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 2.5.1 Changes in accounting policies and disclosures recouped through sale (or is significantly impaired). This applies even if the part of inventory that is New deemed and to amended be an item standards of property, and plant interpretations and equipment cannot be separated physically from the rest of The inventory. Group It applied is valued for at the cost first and time is depreciated certain amendments over the useful to the life standards, of the related which asset. are effective for annual periods beginning on or after January 1, 2017. The Group has not early adopted any standards, interpretations n. Impairment or amendments of non-financial that have been assets issued but are not yet effective. The nature Group assesses and the impact at each of each reporting amendment date whether is described there is below: 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 Amendments asset’s recoverable to IAS 7 Statement amount. An of Cash asset’s Flows: recoverable Disclosure amount Initiative is the higher of an asset’s or cash generating The amendments units (CGU) require fair entities value to less provide costs disclosure of disposal of changes and its in value their in liabilities use. It arising determined from financing for individual activities, asset, including unless both the changes asset does arising not from generate cash cash flows inflows and non-cash that are largely changes independent (such as of foreign those from exchange other gains assets or or losses). groups The of assets. amendments Where have the carrying no effect amount on the of Group’s an asset consolidated or CGU exceeds financial its position recoverable and amount, the consolidated the asset statement is considered of cash impaired flows 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 to IAS that 12 reflects Income current Taxes: market Recognition assessments of Deferred of the Tax time Assets value for of Unrealized money and Losses the risks Amendments The specific amendments to the asset. clarify In determining that an entity fair needs value to less consider costs of whether disposal, tax recent law restricts market the transactions sources of are taxable taken profits into account. against If which no such it may transactions make deductions can be identified, on the reversal an appropriate of deductible valuation temporary model difference is used. related to unrealized Impairment losses. of Furthermore, continuing operations the amendments are recognized provide guidance in the consolidated how an statement entity should of profit determine or loss future in those taxable expense profits categories and explain consistent the circumstances with the function in which of the taxable impaired profit asset, may include except the for recovery a property of some previously assets revalued for more where than their carrying revaluation amount. 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 89
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Contact Information Head Office Dr.
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Staatsolie Annual Report 2017

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