Petroleum Company of Trinidad and Tobago Limited Consolidated Financial Statements 2017 September 30 (Presented in Thousands of Trinidad and Tobago Dollars)Petroleum Company of Tri Note Page Note Page Tana Emagen i 7 ama 3250 ei) [8 [Impairment oF fixed assets S758 esipiteill Rui Fiepatt = 9 | Other costs related to exploration Cones rear af aed | forend sven ofc and 5 peation bata gat sores rlaaeadernpectemiveccone | | Sateen) oe Console nent oF anges | TT | foie ese asia = inequity — Conse isaeararaar | 5 | Treman eais 7 exe 13__| Tavestment = Other a Nowe ha OTE Ts | 106 1 RT T [Reportage w i ieee 7 2 | is tenet Tee To | Cashin escrow — shareholder OAT 1 Seana obs ii se 77 Came rscabi 7] 31 | Aveounting standards and 1315 eR | iivensoter th ines 2 eivemineee —|— 32 [Bist of cneoiaon TF 20 | Cask and esate B 33) Property lak and equipment and | TERE A | Non-Conenr ase arse | 3 ortin angle eect 7 3a [etna 3 theese a | iatuceeamersaaes | = | [a rovon ve Serlpeea nl petals 25 | Ca TTS 3 [tates HE 36 | Tne and oe papa 7 a a6 27] Shoes ig 2 | Taderaai 3 ai Reve 7 37 | Cal ndash arate % 2 | ec opeang ee w 510 | Shae capil 2% 3” | Oesaie cam rie aa “RIT | Trade and other payables 26 ar ‘Impairment (write-back)/losses 84 3.12 | Borrowings 26-27 related to investments 3.13 | Current and deferred income tax ae 2p conn Ey as Tunplayes beaetis, cata 33 Finanee income and eosis C7 3S | Rane 35 alee ee Se — = 5 ana % Ey Leta eee at 36 Contingent liabilities ‘87 Bil | Brahmas 3 a= [Conan a w _ ecessie capes aa 30] Rell i waranions 92 5 eae em! 39] Tires in oops Ta 75 | Cae icra at 43_| Fair value estimation a 1A ae eee ce overeat [AS 3 ‘Critical accounting estimates and 45-48 oe Suberpriyeenr sa jou 7 [one phat meat —| BEStatement of Management Responsibilit Petroleum Company of Trinidad and Tobago Limited Management is responsible for the following: + Preparing and fairly presenting the accompanying consolidated financial statements of Petroleum Company of Trinidad and Tobago (the Group), which comprise the consolidated statement of financial Position as at 2017 September 30, the consolidated statements of profit or loss and other comprehensive Income, changes in equity and cash flows for the year then ended, and notes, comprising significant accounting policies and other explanatory information; + Ensuring that the Group keeps proper accounting records; + Selecting appropriate accounting polices and applying them in a consistent manner; * Implementing, monitoring and evaluating the system of intemal control that assures security of the Group's assets, detection/prevention of fraud, and the achievement of the Group's operational efficiencies; + Ensuring thatthe system of internal control operated effectively during the reporting period © Producing reliable financial reporting that comply with laws and regul: ‘Act; and ns, including the Companies ‘* Using reasonable and prudent judgement in the determination of estimates. In preparing these audited consolidated financial statements, management utilised the International Financial Reporting Standards, as issued by the Intemational Accounting Standards Board and adopted by the Institute of Chartered Accountants of Trinidad and Tobago. Where International Financial Reporting Standards presented altemative accounting treatments, management chose those considered most appropriate in the cumstances. Nothing has come to the attention of management to indicate that the Group will not remain a going concer for the next twelve months from the reporting date; or up to the date the accompanying consolidated financial statements have been authorised for issue. Management affirms that it has carried out its responsibilities as outlined above. Manager Fingncial Accounting (Ag,) President Q0/f.02.2F 2018-02. a Date Date PagetKPMG Chartered Accountants Savannah East Tal (868) 612-KPMG 11 Queen's Park East (868) 623-1081 PO. Box 1328 Fax (868) 623-1084 Port of Spain Email kpmg@kpmg.co.tt Trinidad and Tobago, W.l. Web: www.kpmg.comitt Independent Auditors' Report To the Shareholders of Petroleum Company of Trinidad and Tobago Limited Opinion We have audited the consolidated financial statements of Petroleum Company of Trinidad & Tobago Limited (Petrottin” or “the Group”), which comprise the consolidated statement of financial position as at September 30, 2017 the consolidated statements of profit or loss and other comprehensive income, changes in equity and cash flows for the year then ended, and notes, comprising significant accounting policies and other explanatory information. In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the consolidated financial position of Petrotrin as at September 30, 2017, and its consolidated financial performance and its consolidated cash flows for the year then ended in accordance with International Financial Reporting Standards (IFRSs).. Basis for Opinion ‘We conducted our audit in aecordance with Intemational Standards on Auditing (ISAs). Our responsibilities tunder those standards are further described in the Auditors’ Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We are independent of the Group in accordance with the International Ethies Standards Board for Accountants! Code of Ethics for Professional Accountants (IESBA Code) together with the ethical requirements that are relevant to our audit of the consolidated financial statements in the Republic of Trinidad and Tobago, and we have fulfilled our other ethical responsibilities in accordance with these requirements and with the IESBA Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion, Other Information Management is responsible forthe other information. ‘The other information comprises the information included in the Group's annual report, but does not include the consolidated financial statements and our auditors’ report thereon. The Annual Report is expected to be made available to us after the date of this auditor's report, Our opinion on the consolidated financial statements does not cover the other information and we do not express any form of assurance conclusion thereon, The annual report is expected to be made available to us after the date of this auditors report, In connection with our audit of the consolidated financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the consolidated financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is material misstatement of this other information, we are required to report that fact. We have nothing to report inthis regard, Sicccieeermaeestmen fhe GE MROies of Management and ‘Those Charged with Governance for the Consolidated Financial Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with IFRSs and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error. In preparing the consolidated financial statements, management is responsible for assessing Petrotrin’s abi to continue as @ going concern, disclosing, as applicable, matters related to going concer and using the going concem basis of accounting unless management either intends to liquidate Petrotrin or to cease operations, or hhas no realistic alternative but to do so. ‘Those charged with governance are responsible for overseeing Petrotrin’s financial reporting process, 1 Statements Auditors’ Responsibilities for the Audit of the Consolidated Finan Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole ate free from material misstatement, whether due to fraud or error, and to issue an auditors’ report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit ‘conducted in accordance with ISAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements. As part of an audit in accordance with ISAs, we exercise professional judgment and m skepticism throughout the audit. We also: iain professional © Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control ‘* Obtain an understanding of intemal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of Petrotrin’s internal control * Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management. * Conclude on the appropriateness of management's use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that ‘may cast significant doubt on Petrotrin's ability to continue as a going concem. If we conclude that a material uncertainty exists, we are required 0 draw attention in our auditors’ report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors? report. However, future events or conditions may cause Petrotrin to cease to continue as a going eoncem. + Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation. Page 3kbing! | Auditors’ Responsibilities for the Audit of the Consolidated Financial Statements (continued) | We communicate with those charged with governance regarding, among other matters, the planned scope and ‘iming of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit, Kem pete! Chartered Accountants Port of Spain Trinidad and Tobago 2018 February 28 Page ¢Petroleum Company of Trinidad and Tobago Limited Consolidated Statement of Financial Position (Presented in Thousands of Trinidad and Tobago Dollars) Note 2017 2016 2015 ASSETS: Restated Restated Non-current assets Property, plant and equipment 6 —-§ 18,700,167 § 19,561,814 —$ 19,236971 Intangible assets and goodwill 7 4,703,822 6374,088 6,085,250 Avalable-orsale financial instruments u a2 2200 2302 Investment in associate 2 36,968 325582 Investment - Other 1B 23,827 = e Deferred income tax assets 4 1.077407 11,681,219 14,940,010 Income taxes recoverable 15 530,683 530,683 530,683 Cashin escrow ~ shareholder 16 211,988 184,561 149,384 Loan Receivable "7 FS 5 Assets classified as held for sale 21 — a eee 35.258,565 __38,399,247 -40,987.202 Current assets Inventories 18 2433321 2285,17 2217951 Receivables and prepayments 9 2343417 22270813 25586.481 Cash and eash equivalents 20 852.222 527,678 L731.918 5.328.960 __5,383,668 6.536.310 Total assets S_a0887526 $43,782.95 $_47,523,512 EQUITY AND LIABILITIES: Capital and reserves atributable to equity holders of the Company Share capital 2 22m 23n274 2amars Retained earings 1.232225 3,588,579 838,462 Currency translation differences 98.787 550,863 138.165 4.003.286 6,411,716 70,748,901 Non-controlling interests 58.554) 54.840) 55.411) Total equity tou __o3ses76 10,003,490 Liabitites Non-current liabilities Borowings B 7,384,200 7,756,889 7,714,660 Deferred income tax Habiliies 18 10212,662 10,559,477 10,485,439, Retirement benefit obligation pension benefits 10) "734200 "220,500 28,500 Retirement benefit obligation ~ medical benefits 100) 2,536,700 2,387,900 2,969,100 Provisions 4 3598467 4396941 _4.501,291 24466229 _ 28,721,701 25,668,990 Curren liabilities Trade and other payables 6 5.616483 4,754,878 3,596,439 Current tax liabilities 25 2254175 2,123,021 2,123,493, Current portion of long-term borrowings 23 482,018 479,385 454,185 Short-term loans 2 3,819,316 4,339,367 4.984394 Provisions 24 4373 1681 2519 12176565 __11,704,332 11,161,032 ‘Total abilities 36612.704 _37.426039 36,830,022 ‘Total equity and abilities 54087526 SARTIROIS — §_47.523512 ‘The notes on pages 10 10 96 are an integral part of these consolidated financial statements (On 2018 February 28 the Board of Directors of Petroleum Company of Trinidad ang Tobago Limitespasthorsed these consolidated fiancial statements for issue. a wo." Director ae Director PagesPetroleum Company of Trinidad and Tobago Limited Consolidated Statement of Profit or Loss and Other Comprehensive Income (Presented in Thousands of Trinidad and Tobago Dollars) Year ended September 30 Note 2017 2016 ois Restated Restated Revenue 28 S$ 20,035,067 § 16,580,693 $19,751,646 Cost of sales: 30 (18,926,909) (16,166,640) 19,253,844) Gross profit/ (loss) 1,108,158 414,083, 497,802 Administrative expenses 30 (1,625,079) (1,322,661), (1,269,983) Marketing expenses 30 (156,699) (140,011) (118,424) Other operating expenses 30 (137.254) (12322) (51,817) Impairment write-back’ (Losses) 31 1.820 236 631) Other operating income 29 127,869 252,082 _ 192,690 Operating loss (681,185) (808,623) (750,383) Finance income 33 1474 1,867 2,644 Finance costs 33 __(1051,005) 088.058) _ 4,177,029) Net finance costs 3 1.049.531) (1.086.191) _(174:385) Share of profit of equity accounted investees, net of tax _ 1,584 2,376 Loss before tax (1,730,716) (1,893,230) (1,922,392) Income tax (expense)/credit 34 (463,487) (3,093,686) 880,214 Lass for the year $2,194,203) $4,986,916) § (1,042,178) ‘Other comprehensive income: tems that will never be reclassified to profit or loss: Currency translation differences (52,362) 409,974 400 Re-measurements experience adjustments on retirement benefit obligation ~ pension benefits 10 (406,800) (4,000) Re-measurements experience adjustments on retirement benefit obligation ~ medical benefits 10 165,600 313,700 15,700 Income tax credit/ (expense) on other comprehensive income 15616 ___(269,377) 200,513 217,946) 650,297 ___(178,487) Items that will be reclassified to profit or loss: Available-for-sale financial assets ~net change in fair value ———, 46 = ot Ss 46 Other comprehensive (loss)/ income/, net of tax 217,941) _ 650,30: 178.441) ‘Total comprehensive loss S (2.412144 $ (4,336,614) § (1,220,619) (Loss)/Profit attributable to: Equity holders of the Company (2,190,775) (4,990,211) (1,040,885) Non-controlling interests 3.428) 3,295 1,293) $2,194,203) $ (4,986,916) —$ (1,042,178) Total comprehensive loss attributable to: Equity holders of the Company (2,408,430) (4,337,185) (1,219,436) ‘Non-controlling interests 3714) sz L183) S_4,336,614) — S_(1,220,619) ‘The notes on pages 10 to 96 are an integral part of these consolidated financial statements. PageePetroleum Company of Trinidad and Tobago 2017 September 30 Consolidated Statement of Changes in Equity (Presented in Thousands of Trinidad and Tobago Dollars) Attributable to equity holders of the Company Total equity Curreney Retained Fotat translation earnings differences s s s s 5 s Balance at 2016 September 30 as previously reported 2.272274 550.863. «4.245803 707030 «S4BAD) 7.915.190 Restatemonts: Impact of changes in accounting treatment IAS 23 = (6585314 (6583314) (658314 Balance at 2016 Seprember 30 (after restatements) 2,272,274 «S506 «3.88879 GALLTIO. (SAAD) 6.356,876 Los for the year - (2.190775) @,190.75) 428) 2,194,203) Other comprehensive income: Currency translation differences ~ (52,076) . (52076) (286) (32,362) Re-measurements experience adjustments on defined Tenet asset (pension) é ~ (406,800) (406,800) (406,300) Resmeasurements experience adjustments on defined ‘benefit obligation tmeical) : 165.500 16,600 ~ 165,600 Change in fur value of avalable-for-sae financial instrument = 5 5 s Income tax expense on ether comprehensive income 25616 75616 16 (52.076) 165579) 17655) 286) i790 “oial comprehensive income(oss fr the year 52.076) (2.386.354) 2.408.430) a7) _a.an2.149 Total other comprehensive income Balance at 2017 September 30 ats 498.787 1.252.225 4,003,286 58.554) 3.944.732 Balance at 2015 September 30 as previously reported 2.272274 138,165 —«8,777931— 1188370 (55411) 11,132,959 Restatements: Impact of changes in uosounting treatment LAS 25 439469) 439469) (55,411) (439460) Balance at 2015 September 30 (after restatements) 2.2722 1381658338452 10,748,901 ($5411) 10693490, Loss for the year = = 4.990211) (ase0211) 3295 (4,986,916) Other comprehensive income: Currency translation differences 412698 = 412698 272) 40974 Re-measurements experince adjustments on defined benefit assee (pension) 3 ‘. (4,000) (4.000) = (40m Resmessurements experience adjustments on defined tenefit eblization (medical - * 513,700 $13,700 + S170 ‘Change in fair value of eailable-Rr-sae financial insirurent ; = s 5 - 5 Income 1ax expense other comprehensive income 3 = 299,377) 269377) 9377) 412698 240328 653006, 2.724) 630,302 2698 (A, 9.8K) 4.337.185) ST 4336614) 0863 .S8RSTY_—G.AIL.TIG (54,840) 6.350876 Teal other comprehensive income “otal comprehensive inceme:loss) fr the year Balance at 2016 September 30 2272274 ‘The notes on pages 10 to 96 are an integral part of these consolidated financial statements, Page 7Petroleum Company of Trinidad and Tobago Limited 2017 September 30 Consolidated Statement of Changes in Equity (Presented in Thousands of Trinidad and Tobago Dollars) table to equity holders ofthe Company “Total equity Share Curreney Retained Total capital translation earnings differences s s s s s s Balance at 2014 September 30 as, previously reported 2am 137875 9.778.481 12,188,600 (4228) 12,134,372 Impact of changes in accounting teealmen IAS 23 (220,263 (220.263) 220,263 Balance at 2014 September 30 (after restatements) 2272274 137875 9,858,188 11,968,337 ($4228 914,109 Loss forthe year (1.040385) (1,040,885) 1.293) (.08,178) ‘Other comprehensive income: ‘Currency translation diferences es 290 290 no 400 Resmeasurements experince adjustments on defined benefit asst (pension) 5 é 695,100) (95,100) - (295,100) Resmeasurements experience adjustments on defined benefit, obligation (medica!) ~ = 15:70 15,700 = 13,700 (Change in fir value of available- ‘for-sale financit instrument - - 46 46 2 46 Income tax credit on thr ‘smprehensve income ie 2 200.513, 200,513, os 200,513, Total other comprehensive loss seh 290. 1783841 178.551 0 178.441 Total eomprehensve loss fr the year = 230) 1,219,726 1.219.436) 4.183) 1,220,619) Balance at 2015 September 30 227278 138,168 8338402 10,748,901 (sal 10,693.90, The notes on pages 10 to 96 are an integral part of these consolidated financial statements. PagesPetroleum Company of T 2017 September 30 Consolidated Statement of Cash Flows (Presented in Thousands of Trinidad and Tobago dollars) ‘Year ended September 30 Note 2017 2016 2015 Restated Restated Cash flows from operating activit Cash generated from operations 40 $ 2,492,200 S$ 2,571,718 $ 6,848,216 Tax paid = = _G.61L151) Net cash from operating activities 2.492.200 __2,571,718 __3,237,065 Cash flows from investing activities: Payments for property, plant and equipment and intangible assets (530,106) (1,171,561) (1,538,019) Proceeds from sale of property, plant and equipment 40 10,780 37 16 Amounts deposited to shareholder escrow account (25,770) (9,385) (31,692) Proceeds from non-current assets held for sale 27,692 : 2 Recovery on loans to related parties 4,669 4,683 4,793 Disbursements of loans to related parties (2,862) (4.447) (5,300) Interest received 1.376 2.083 __2.627 Net cash used in investing activities 514,221) (1,178,590) _ (1,567,575: Cash flows from financing activities: Proceeds from short-term loans 9,537,661 7,830,636 9,394,464 ‘Repayments of short-term loans (10,012,862) (8,510,200) (10,009,321) Repayments of long-term borrowings (391,281) 391,281) 391,282) Interest paid. (939,673) __(896,201) __(908,610) Net cash used in financing activities 1,806,155) (1,967,046) _ (1,914,749) Currency translation differences relating to cash and eash equivalents (147,280) _(330,322 168,877 Increase (Decrease) in eash and cash equivalents 24,544 (904,240) (76,382) Cash and cash equivalents at start of year 827,678 __1,731,918 __ 1,808,300 Cash and cash equivalents at end of year 20 $_852,222 $_827,678 $_1,731,918 The notes on pages 10 to 96 are an integral part of these consolidated financial statements. Page 9Petroleum Company of Trinidad and Tobago Limited 2017 September 30 Notes to the Consolidated Financial Statements (Presented in Thousands of Trinidad and Tobago Dollars) 1. Reporting entity Petroleum Company of Trinidad and Tobago Limited (PETROTRIN) is incorporated in the Republie of Trinidad and Tobago, Petroleum Company of Trinidad and Tobago Limited and its subsidiaries (The Group) is primarily engaged in integrated petroleum operations which include the exploration for, development and production of hydrocarbons and the manufacturing and marketing of petroleum products, The sole shareholder is the Government of the Republic of Trinidad and Tobago (GORTT). The rewistered office is the Administration Building, Southern Main Road, Pointe-a-Picrre, Trinidad and Tobago, West Indies. ‘The consolidated financial statements of the Group as at and for the year ended 2017 September 30 comprise PETROTRIN and its subsidiaries (together referred to as the “Group’) and the Group's interest in jointly controlled entities, The following subsidiaries have been consolidated: Country of Proportion of Issued Name of Company Incorporation Equity Capital held Trinidad and Tobago Marine Trinidad and Tobago 80% Petroleum Company Limited Trinidad and Tobago Marine Petroleum Company Limited (Trintomar) is principally engaged in developing and producing natural gas from the Pelican Field which originally formed part of the South East Coast Consortium area. ‘Trinmar Limited Trinidad and Tobago 100% Trinmar Limited operated certain concessions in accordance with a Marine Operating Agreement dated August 1, 1960. This company is now dormant. Trinidad Northern Areas Limited United Kingdom 100% Trinidad Northern Areas Limited (TNA) was formed for the specific purpose of holding cettain licenses. These licenses assign certain rights to explore for, drill, develop, produce and take oil, natural gas and other hydrocarbons from certain geological areas within the jurisdiction of Trinidad and Tobago. PEAPSL, Trinidad and Tobago 100% Petrotrin EAP Services Limited (PEAPSL) provides counselling services for employees and third partics. World GTL Trinidad Limited ‘Trinidad and Tobago 100% WGTL TL was formed to undertake the construction, completion, ownership and operation of a gas to liquids plant at Petrotrin’s Pointe-a-Pierre refinery complex. The said plant is in receivership. Paue 10Petroleum Company of Trinidad and Tobago Limited 2017 September 30 Notes to the Consolidated Financ Statements (continued) (Presented in Thousands of Trinidad and Tobago dollars) Basis of preparation (a) Statement of compliance ‘These consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board and effective for the year ended 2017 September 30. The accounting policies that follow have been consistently applied to all years presented, Where retrospective restatements were required as a result of the implementation of new accounting standards or changes to existing accounting standards, these have been applied to all comparative years presented. (b) Basis of measurement ‘The consolidated financial statements have been prepared on the historical cost basis, except for the defined benefit obligation which is recognised at the present value of the defined benefit obligation less the fair value of the plan assets and the effect of the asset ceiling test. (©) Foreign currency translation ‘+ Functional and presentation currency Items included in the consolidated financial statements are measured using the currency of the primary economic environment in which the Group operates (“the functional currency”). The United States dollar is the Group’s functional currency, The consolidated financial statements are presented in Trinidad and Tobago dollars, rounded to the nearest thousand, which is the Group’s presentation currency, ‘The Group’s main stakeholders are the Government of the Republic of Trinidad and Tobago, the Ministry of Finance and its employees. ‘+ Transactions and balances Foreign currency transactions ate translated into the functional currency using the exchange rates prevailing at the dates of the transactions, Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end of monetary assets and liabilities denominated in foreign currencies are recognised in profit or loss. Translation to presentation currency ‘The financial position and results of the Group are translated into the presentation currency as follows: ~ assets and liabilities for each statement of financial position presented are translated at the closing rate at the date of reporting; ~ income and expenses for the statement of comprehensive income are translated at average exchange rates (unless this average is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are translated at the rate on the dates of the transactions); and ~ all resulting exchange differences are recognised as a separate component of equity, Page 1Petroleum Company of Tri 2017 September 30 Notes to the Consolidated (Presented in Thousands of jidad and Tobago Limited inancial Statements (continued) idad and Tobago dollars) @ © Basis of preparation (continued) Use of estimates and judgements The preparation of these consolidated financial statements in conformity with IFRS requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expenses, Actual results may differ from these estimates. The areas involving a higher degree of judgment or complexity, or areas where assumptions and estimates are significant 10 the ‘consolidated financial statements are disclosed in Note 5, ‘Changes in es ates and judgements During the current year, the Group made the following changes when calculating the provision for decommissioning: = The Trinidad and Tobago inflation rate was used instead of the United States inflation rate as expenditure will be incurred in Trinidad and Tobago dollars - The discount rate was based on the Trinidad and Tobago Treasury Yield Curve as quoted by the Central Bank of Trinidad and Tobago instead of Petrotrin’s borrowing, rate. ~ The tenor was changed for Pointe-a-Pierre Refinery and brought in line with value in use calculation, At this time itis impracticable to quantify the effect for future periods. Correction of Errors Interest on loan for USLD project was expensed retrospectively to financial year 2014 as active construction on this facility ceased in 2013 September. Refer to note 35. Page 12Petroleum Company of Trinidad and Tobago Limited 2017 September 30 Notes to the Consolidated Financial Statements (continued) statements and are set out below. (Presented in Thousands of Trinidad and Tobago dollars) 3. Summary of significant accounting policies ‘The significant accounting policies adopted in the preparation of these consolidated financial statements have been applied consistently to all periods in the consolidated finan Certain comparative amounts have been reclassified to conform to the current year's presentation. 3.1, Accounting standards and interpretations (a) New standards, amendments and interpretations adopted ‘There were no new standards, amendments and interpretations effective for Petrotrin’s accounting period beginning 2016 October 1, which were adopted in the current year: (>) New standards, and interpretations not yet adopted: ‘A number of new accounting standards and interpretations are effective for annual periods beginning on or after 2017 January 01. These standards are not yet effective for Petrotrin's accounting periods beginning on or after 2016 October 01 and have not been early adopted by the company, The Group’s assessment of the impact of these new standards and interpretations is outlined below: itle of Standard IFRS 9 Financial Instruments Nature of change IFRS 9 addresses the classification, measurement and de-recognition of financial assets and financial liabilities, introduces new rules for hedge accounting and a new impairment model for financial assets. Impact The Group has reviewed its financial assets and liabilities and has categorised them as follows: Financial Assets: * Equity instruments currently classified as AFS which is held primarily for dividend income and will be classified as FVPL. * Loans Receivable where the objective of the business model is to collect contractual cash flows and will be classified at amortised cost Trade and Other Receivables where the objective of the business model is to collect contractual cash flows and will be classified at amortised cost. Financial Liabilities: * Accounts Payable ‘© Short Term Loans Long Term Loans Page 13Petroleum Company of Trinidad and Tobago Limited 2017 September 30 Notes to the Consolidated Financial Statements (continued) (Presented in Thousands of Trinidad and Tobago dollars) Summary of significant accounting policies (continued) 3.1 Accounting standards and interpretations (continued) (b) New standards, and interpretations not yet adopted (continued) Title of Standard IFRS 9 Financial Instruments Tmpact ‘There will be no impact on the Group's accounting Tor financial liabilities, as the new requirements only affect the accounting for financial liabilities that are designated at fair value through profit or loss and the group does not hhave any such liabilities. All Petrotrin’s financial liabilities are measured at amartised cost The new impairment model requires the recognition of impairment provisions based on expected credit losses (ECL) rather than only ineurred credit losses and applies to financial assets classified at amortised costs, Management has not yet determined the financial impact of this standard on its Financial Assets, ‘The new standard also introduces expanded disclosure requirements and changes in presentation, ‘These are expected to change the nature and extent of the Group's disclosures about its financial instruments particularly in the year of the adoption of the new standaed. ‘Dale of adopion by Group | Must be applied for Tnanclal years commencing on or afl January 20TE Therefore, the Group will apply the new rules retrospectively form 2018 October 01 Title of Standard IFRS 15 Revenue from Contracts with Customers Nature of Change ‘This new standard applies to the recognition of revenue and replaces IAS 18 which | covers contracts for goods and services and IAS 11 which covers construction contracts, The new standard is based on the principle that revenue is recognised when control of 4 good or service transfers to a customer. The standard permits either a full Fetrospective ora modified retrospective approach for the adoption, Tinpact ‘As at 3077 September 30, Management has Mentfied the folowing, ‘© Contracts with customers + Performance obligations inthe contract ‘© The transaction price Management has not yet assessed the financial impact of adopting this standard for the accounting period beginning 2018 October 0 Date of adoption by the Group | Mandatory for financial years commencing on of aller 2018 January OL. Therefore, the Group will be adopting this standard for accounting period beginning 2018 October 01 Page 14Petroleum Company of Trinidad and Tobago Limited 2017 September 30 Notes to the Consolidated Financial Statements (continued) (Presented in Thousands of Trinidad and Tobago dollars) Summary of significant accounting policies (continued) 3.1 Accounting standards and interpretations (continued) (b) New standards, and interpretations not yet adopted (continued) ‘Title of Standard TERS 16 Leases Nature of Change IFRS 16 was issued in 2016 January. It will result in almost all leases being recognised on the balance sheet, as the distinction between operating and finance leases is removed. Under the new standard, an asset and a financial liability to pay rentals are recounised. The only exceptions are short-term and low-value Teases, Impact ‘The standard will affect primarily the accounting for the Group's operating leases. As at the reporting dated, the Group has operating leases with several ‘companies for rentals of vehicles, boats and equipment. However, the group has not yet assessed what adjustments are necessary and the associated financial | impact. Date of adoption by the Mandatory for financial years commencing on or after 2019 January 01, At this Group | stage, the Group does not intend to adopt the standard before its effective date which is 2019 October 01 Other Standards The following amended standards and interpretations are not expected to have a significant impact on the Group’s financial statements: TERS 1, IAS 28 Annual improvements 1o IFRSs 2014-2016 eyele. TERS 2 “Classification and measurement of share based payment transactions, TAS 40 Transfers of investment proper IERS 10, TAS 28 Sale or contribution of assets between an Investor and ls Associate or Joint Venture. TERIC 22 Foreign currency transactions and advance consideration, TERIC 23, Uncertainty over income tax treatment Page 15Petroleum Company of Trinidad and Tobago Limited 2017 September 30 Notes to the Consolidated Financial Statements (continued) (Presented in Thousands of Trinidad and Tobago dollars) Summary of significant accounting policies (continued) Basis of consolidation In these consolidated financial statements, subsidiary undertakings ~ which are those companies in which the Group directly or indirectly, has an interest of more than half the voting rights or otherwise has power to exercise control over the operations - have been fully consolidated. The investments in jointly controlled entities are accounted for using the equity method, and are recognised initially at cost. (a) Subsidiaries Subsidiaries are all entities over which the group has control. The group controls an entity when the group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power to direct the activities of the entity. The financial statements of subsidiaries are fully consolidated from the date on which control is transferred to the group until the date on which control ceases. (6) Non-controlling interests Non- controlling interest are measured initially at their proportionate share of the acquiree’s identifiable net assets at the date of acquisition. Non-controlling interests in the results and equity of subsidiaries are shown separately in the consolidated statement of profit or loss, statement of comprehensive income, statement of changes in equity and balance sheet respectively. (©) Interests in equity-accounted investees ‘The Group's interests in equity-aecounted investees comprise interests in associates and joint ventures, (@) Equity Method Under the equity method of accounting, the investments are initially recognised at cost and adjusted thereafter to recognise the group's share of the post-acquisition profits or losses of the investee in profit or loss, and the group's share of movements in other comprehensive income of the inyestee in other comprehensive income. Dividends received or receivable from associates and joint ventures are recognised as a reduction in the carrying amount of the investment. When the group's share of losses in an equity-accounted investment equals or exceeds its interest in the entity, including any other unsecured long-term receivables, the group does not recognise further losses, unless it has incurred obligations or made payments on behalf of the other entity Unrealised gains on transactions between the group and its associates and joint ventures are climinated to the extent of the group's interest in these entities. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. Accounting policies of equity accounted investees have been changed where necessary to ensure consistency with the policies adopted by the group. Page 16Petroleum Company of Trinidad and Tobago Limited 2017 September 30 Notes to the Consolidated ancial Statements (continued) (Presented in Thousands of Trinidad and Tobago dollars) 3. Summary of significant accounting policies (continued) © @ © Associates Associates are those entities in which the group has significant influence, but not control or joint control, over the financial and operating policies. This is generally the case where the group holds between 20% and 50% of the voting rights. Investments in associates are accounted for using the equity method of accounting after initially being recognised at cost Joint ventures A joint venture is an arrangement in which the Group has joint control, whereby the Group has rights to the net assets of the arrangement, rather than rights to its assets and obligations for its liabilities. Interests in joint ventures are accounted for using the equity method after initially being recognised at cost in the consolidated balance sheet. Joint Arrangements, Under IFRS 11 Joint Arrangemems, investments in joint arrangements are classified as either joint operations or joint ventures. The classification depends on the contractual rights and obligations of each investor, rather than the legal structure of the joint arrangement Petrotrin has both joint operations and joint ventures. Joint Operations Petrotrin recognises its direct right to the assets, liabilities, revenues and expenses of joint operations and its share of any jointly held or incurred assets, liabilities, revenues and expenses. These have been incorporated in the financial statements under the appropriate headings. Page 17Petroleum Company of Trinidad and Tobago Limited 2017 September 30 Notes to the Consolidated Financial Statements (continued) (Presented in Thousands of Trinidad and Tobago doltars) 3.3 Property, plant and equipment (a) l certain intangible assets Oil and gas assets il and gas properties are aggregated exploration and evaluation (E&E) tangible assets associated ‘with finding commercial reserves, and development and production expenditures related to developing the commercial reserves discavered and bringing them into production, together with EAE expenditures transferred from intangible E&E assets, ‘The cost of development and production assets also includes the cost of acquisitions and purchases of such assets, directly attributable overheads, finance costs capitalised, and the cost of recognising provisions for future restoration and decommissioning. Exploration and evaluation assets ~ Capitalisation Oil and natural gas exploration and evaluation expenditures are accounted for using the successful efforts method of accounting. Under this method, casts are accumulated on a field-by- field basis and capitalised upon discovery of commercially viable mineral reserves. If the ‘commercial viability is not achieved or achievable, such costs are charged to expense. Capitalisation is made within property, plant and equipment or intangible assets according to the nature of the expenditure. Costs incurred in the exploration and evaluation of assets includes: License and property acquisition costs - Exploration and property leasehold acquisition costs are capitalised within intangible assets until determination of commercially viable mineral reserves. If commercial viability is not obtained these costs are written off. Exploration and evaluation expenditure - Capitalisation is made within property, plant and equipment or intangible assets according to its nature. However, the majority of such expenditure is capitalised as an intangible asset including geological and geophysical costs. Costs directly associated with an exploration well are capitalised until the determination of commercial reserves is evaluated. If commercial reserves arc found the costs continue to be carried as an asset. If commercial reserves are not found, exploration and evaluation expenditures are written off as a dry hole, Once commercial reserves are found, exploration and evaluation assets are tested for impairment and transferred to development tangible and intangible assets as applicable, No depreciation ‘and/or amortisation are charged during the exploration and evaluation phase. Page 18Petroleum Company of Tri idad and Tobago Limited 2017 September 30 Notes to the Consolidated Financial Statements (continued) (Presented in Thousands of Trinidad and Tobago dollars) Summary of significant accounting policies (continued) Property, plant and equipment and certain intangible assets (continued) (a) Oil and gas assets (continued) Exploration and evaluation assets ~ Impairment See Note 3.5 for the accounting policy related to impairment, Development/Production tangible and intangible assets - Capitalisation Acquisitions, asset purchases and disposals Acquisitions of oil and gas properties are accounted for under the purchase method. (See Note 3.2 for accounting policy). Transactions involving the purchases of an individual field interest, or a group of field interests, are treated as asset purchases, irrespective of whether the specific transactions involve the transfer of the field interests directly, or the transfer of an incorporated entity. Accordingly, the consideration is allocated to the assets and liabilities purchased on a relative fair value basis. Proceeds on disposal are applied to the carrying amount of the specific intangible asset or development and production assets disposed. Any excess is recorded as a gain on disposal, and any shortfall between the proceeds and the carrying amount is recorded as a loss on disposal, in profit or loss. Expenditure on the construction, installation or completion of infrastructure facilities such as platforms, pipelines and the drilling of development commercially proven wells is capitalised within tangible and intangible assets according to its nature, When development is completed on a specific field it is transferred to production assets. No depreciation and/or amortisation are charged during the development phase. Sce Note 3.12 for the accounting policy related to borrowing costs. Page 19Petroleum Company of Trinidad and Tobago Limited 2017 September 30 Notes to the Consolidated Finan Statements (continued) (Presented in Thousands of Trinidad and Tobago dollars) Summary of significant accounting policies (continued) Property, plant and equipment and certain intangible assets (continued) (a) Oil and gas assets (continued) Development/Production tangible and intangible assets impairment See Note 3.5 for the accounting policy related to impairment Production assets ~ Depreciation Oil and gas properties are depreciated generally on a field-by-field basis using the unit-of- production method, Unit-of-production rates are based on production and proved produc: eserves, which are oil, gas and other mineral reserves estimated to be recovered from existing wells with existing facilities using current operating methods. Under the unit-of-production method, oil and gas volumes are considered produced once they have been measured through meters at custody transfer ot sales transaction points atthe outlet valve on the field storage tank. 1 Producing assets are generally grouped into cash generating units with other assets that are dedicated to serving the same reserves for depreciation purposes, but are depreciated separately from producing assets that serve other reserves. The cash generating unit applied for depreciation purposes is generally the ficld, except that a number of field interests may be grouped as a single cash generating unit where the cash flows of each field are inter-dependent. Pro n for decommissioning costs Provision for decommissioning is recognised in full at the commencement of oil and gas production. The amount recognised is the net present value of the estimated cost of decommissioning at the end of the economic producing lives of the wells and the end of the useful lives of refinery and storage units, Such costs include removal of equipment, restoration of Jand or scabed. The unwinding of the discount on the provision is included in profit or loss within finance costs A corresponding intangible asset is also created at an amount equal to the provision. This subsequently depleted as patt of the capital costs of the production assets. Any change in the present value of the estimated expenditure or discount rates are reflected as an adjustment to the provision and the intangible asset and dealt with prospectively. When decommissioning liability is shared with other parties, as in the case of jointly controlled assets, the Group recognises as its provision, the proportion for which it is liable. Provisions are measured at the present value of the expenditures expected to be required to settle the obligation using @ risk free rate in the same currency as the obligation and with similar maturity These rates were obtained from the Trinidad and Tobago Treasury Yield Curve as quoted by the ‘Central Bank of Trinidad and ‘Tobago as at 2017 September 30. Page 20Petroleum Company of Trinidad and Tobago Limited 2017 September 30 Notes to the Consolidated Financial Statements (continued) (Presented in Thousands of Trinidad and Tobago dollars) 3.Summary of significant accounting policies (continued) 3.3. Property, plant and equipment and certain intangible assets (continued) () Refining and other non-oil and gas assets All other property, plant and equipment are stated at historical cost less accumulated depreciation and less accumulated impairment losses. Intangible costs capitalised within the refinery generally includes extemal consulting costs incurred in the upgrading of the refinery processes, management systems and implementation of new and upgraded technology. Subsequent costs are inchided in the asset's carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. Refinery spares inventory is allocated to refining assets. Repairs and maintenance, except for major overhaul costs (See Note 3.3 ©), are charged to profit or loss during the financial period in which they are incurred, Land is not depreciated. Depreciation of other non-oil and gas assets is calculated using the following rates and methods to allocate the cost to their residual values over their estimated useful lives: Manufacturing plant and equipment 3.75% to 10% | ~ straight-line Refinery spares, 5% ~ straight-line Floating property 20% ~ diminishing balance ‘Transportation equipment 20% ~ diminishing balance Furniture and fixtures 20% ~ diminishing balance Domestic appliances 20% + straight-line Buildings 3% ~ diminishing balance ‘Computer equipment/software (specialised) 10%, + straight-line ‘Computer equipment/software 33.3% + straight-line (non-speciatised) Other supporting equipment and 27.5% ~ in the first year and 7.5% facilities ona diminishing balance for subsequent years ‘The expected useful lives of property, plant and equipment are reviewed on an annual basis, and if necessary changes in useful lives are adjusted for prospectively. These assets are derecognised upon disposal or when no future economic benefits are expected to arise from continued use. An asset's carrying amount is written down immediately to its recoverable amount if the asset's carrying amount is greater than its estimated recoverable amount. Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognised within profit or loss. Any change in the present value of the estimated ‘expenditure or discount rates are reflected as an adjustment to the provision and the intangible asset and dealt with prospectively. See Note 3.12 for the accounting policy related to borrowing costs. Page 21Petroleum Company of Tri idad and Tobago Limited 2017 September 30 Notes to the Consolidated Financial Statements (continued) (Presented in Thousands of Trinidad and Tobago dollars) 33 34 Summary of significant accounting policies (continued) Property, plant and equipment and certain intangible assets (continued) (©) Major overhaul costs Major overhaul costs include catalyst costs and expenditure incurred in testing and inspection work carried out on manufacturing plant and equipment. These costs are incurred at regular intervals over the useful life of the asset and are incurred to allow the continued use of the asset. These costs are accounted for as a component of the asset. Costs less residual value are written off over a period of 3-5 years on a straight-line basis Intangible assets (a) Goodwill Goodwill represents the excess of the cost of an acquisition over the fair value of the Group's share of the net identifiable assets of the acquired subsidiary/joint venture at the date of acquisition, Goodwill on acquisition is included in intangible assets. Gains and losses on the disposal of an entity include the value of the goodwill relating to the entity sold. () Computer software Acquired computer software licences are capitalised on the basis of the costs incurred to acquire and bring to use the specific software. These costs are amortised over their estimated useful lives (ten years for specialised software, three years for non-specialised software). Costs associated with maintaining computer software programmes are recognised as an expense as incurred. Development costs that are directly associated to the design and testing of identifiable and unique software products controlled by the Group are recognised as intangible asscts when the following criteria are met * itis technically feasible to complete the software product so that it will be available for use; ‘+ Management intends to complete the software product and use or sell i + there isan ability to use or sell the software product; + it can be demonstrated how the software product will generate probable future economic benefits; + adequate technical, financial and other resources to complete the development and to use or sell the software product are available; and + the expenditure attributable to the software product during its development can be reliably ‘measured. Page 22Petroleum Company of T 2017 September 30 Notes to the Consolidated Financial Statements (continued) (Presented in Thousands of Trinidad and Tobago dollars) idad and Tobago Limited ‘Summary of significant accounting policies (continued) 3.4 Intangible assets (continued) () Computer software (continued) Directly attributable costs that are capitalised as part of the software produet include software development, employee cost, and an appropriate portion of relevant overheads. Other development expenditures that do not meet these criteria are recognised as an expense as incurred. Development costs previously recognised as an expense ate not recognised as an asset in a subsequent period. (©) Other intangible assets This comprises intangible costs associated with tangible PP&E structures. Refer to Note 3.3 (a) 3.5 Impairment of non-financial assets ‘At each reporting date, the Company reviews the carrying amounts of its non-financial assets to determine Whether there is any indication of impairment. If any such indication exists, the assets recoverable amount is estimated. Non-financial assets Goodwill ‘Goodwill i tested annually for impairment and cared at cast Tess wecumulated impairment losses. Goodwill is allocated to cash generating units forthe purpose of impairment testing and any impairment loss in respect of goodwill is not reverse. ‘The allocation is made to those cash generating units or groups of cash generating Units that are expected to benefit fiom the business combination in which the 0 goodwill arose. Exploration and Evaluation [Exploration and evaluation assels are tested for Impairment when reclassified to assets development tangible and intangible assets as applicable or whenever facts and circumstances indicate impairment. An impairment loss is recognised forthe amount by which the exploration and evaluation assets’ carrying amount exceed their recoverable amount. The recoverable amount is the higher of the exploration and evaluations assets’ fair value less costs to sell and their value-in-use, For the purposes of assessing impairment, the exploration and evaluation assets subject to Testing are grouped with existing cash generating units (CGUs) of related prociaction fields located in the same geographical region, The geographical region is the same as that used for reserves reporting purposes ‘The following indicators are evaluated to determine whether these assets should be tested for impairment = the period for which the Company has the right to explore in the specific * whether substantive expenditure on further exploration and evaluation in the specific area is budgeted or planned; * whether exploration and evaluation in the specific aren have not led tothe discovery of commercially viable quantities and the Company has decided to discontinue such activities in the specific aren; ‘+ sufficient data exist to indicate that, although a development i the specific area is likely to proceed, the carrying amount of the exploration and evaluation asset is unlikely to be recovered in full from suecesstul development or by sale Page 23Petroleum Company of Trinidad and Tobago Limited 2017 September 30 Notes to the Consolidated ancial Statements (continued) (Presented in Thousands of Trinidad and Tobago dollars) 3.5 Impairment of non-financial assets (continued) Non-financial assets T 3.6 3.6.1 velopment and roducion | intangible assis at fave an vndeine use Me andlor arena yt aaah Tir Intangible assets use are not subject io amorsatin, ad therefor. ae texted analy fo impairment Tange asses Tse Ta are Buject To amoncatan are Teel Tor impairment whenever VES or changes in circumstances indicate tha the caring. amount may not Be recoverable. Assets are grouped together into the smallest group of assets (CGU) that generate cash inflows fom continuing use that are largely independent of the cash flows of other assets or cash generating units (CGU). The reeaverable amount of the COU is the greater of the value in use and its fair value less cost to sell, The value in use is based on the estimated future cash flows, discounted to their present value using a presax discount rate that reflects current matket assessments of the time value of ‘money and the risks specific tothe asset or CGU. ‘The canying value is compared against the expected recoverable amount. If the carrying amount of the asset or CGU exceeds its recoverable amount, an impairment loss is recognised in the profit o loss and reduces the carrying amounts ofthe assets in the CGU. ‘An impairment loss is reversed only to the extent thatthe assets carrying amount does not exceed the carrying amount that would have een determined if no impairment loss had been recognised, The cash generating unit applied for impairment test purposes is generally the fel ‘These fields are the same as that used for reserves reporting purposes. Classification ‘The Group classifies its financial assets in the following categories: loans and receivables and available-for-sale. The classification depends on the purpose for which the financial assets were acquired. Management determines the ancial assets at initial recognition, (a) Loans and receivables Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market, They are included in current assets, except for maturities greater than twelve months after the reporting date, which are classified as non-current assets Loans and receivables include trade and other receivables, cash and cash equivalents in the statement of financial position. (b) Ayailable-for-sale financial instruments Available-for-sale financial assets comprise financial instruments in unquoted equity. ‘They are included in non-current assets unless Management intends to dispose of the investment within 12 months of the reporting date. Page 24Petroleum Company of Trinidad and Tobago Limited 2017 September 30 Notes to the Consolidated Finanei: Statements (continued) (Presented in Thousands of Trinidad and Tobago dollars) 3.6 3.6.2 37 mmary of significant accounting policies (continued) nancial assets (continued) Recognition and measurement Loans and receivables as well as available-for-sale financial instruments are initially recognized at fair value plus any directly attributable transaction costs. Subsequent to initial recognition, loans and receivables are measured at amortised cost using the elfective interest method, less any impairment losses, while available-for-sale financial instruments are recorded at cost less impairment Financial assets and liabilities are offset and the net amount presented in the statement of financial position when, and only when, the Group has a legal right to offset the amounts and intends either to seltle on a net basis oF to realise the asset and settle the lability simultancously. Translation differences on monetary financial assets and liabilities are recognised in profit or loss, Management assesses at each reporting date whether there is objective evidence that a financial asset or a group of financial assets is impaired, In the case of equity securities classified as available for sale, a significant or prolonged decline in the fair value of the security below its cost is considered as an indicator that the securities are impaired. If any such evidence exists for available for sale financial assets, the cumulative loss ~ measured as the difference between the acquisition cost and the current fair value, less any impairment loss on that financial asset previously recognised in profit or loss — is, removed from equity and recognised in profit or loss. Inventori Inventories of erude oil and refined products are stated at the lower of cost and net realisable value, Cost is determined using the weighted average cost. (a) Crude oit ‘The cost of purchased crude ol for the month is valued using the weighted average cost. ‘The cost of produced crude oil for the month is computed on the basis of the related month's production costs, Net realisable value is based on the market prices of an equivalent grade of crude oil (b) Refined products Refined products are valued at the lower of the cost of producing the refined products and net realisable value based on current market prices. The total product cost is comprised of the production cost of own crude, the cost of purchased crude and the total refinery expenses (adjusted to exclude incremental expenses related to the processing of crude for third parties). Net realisable values arc refined products sales prices as quoted in the ‘Caribbean Postings’ and the ‘Platts Oilgram’ at the close of the reporting period. When inventories of refined products are sold, the carrying amount of those inventories is recognised as an expense in cost of sales in the period in which the related sale is recognised. The amount of any write-down of inventories to net realisable value and all losses of inventories is recognised as an expense in the period the write-down or loss occurs. The amount of any reversal of any write-down of inventories, arising from an increase in net realisable value, is recognised as a reduction in the cost of inventories recognised as an expense in the period in which the reversal occurs Page2sPetroleum Company of Trinidad and Tobago Limited 2017 September 30) Notes to the Consolidated Financi: Statements (continued) (Presented in Thousands of Trinidad and Tobago dollars) 38 39 3.10 all 3.12 Summary of significant accounting policies (continued) Inventories (continued) (©) Materials and supplies Inventories of materials and supplies are stated at the lower of cost and net realisable value. Cost is determined using the weighted average basis. Net realisable value is the estimated selling price in the ordinary course of business less applicable variable selling expenses of the materials and supplies. Refinery spare parts are considered refining assets, See Note 3.3 (b). ‘Trade receivables Trade receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less provision for impairment, A provision for impairment of trade receivables is established when there is objective evidence that the Group will not be able to collect all amounts due according to the original terms of receivables. Significant financial difficulties of the debtor, probability that the debtor will enter bankruptcy or financial reorganisation, and default or delinquency in payments (morc than 120 days overdue) are considered indicators that the trade receivable is impaired. Any provision for impairment is recognised in profit or loss within cost of sales. ‘When a trade receivable is uncollectible, itis written off against the provision for impairment account for trade receivables, Subsequent recoveries of amounts previously written off are credited against cost of sales in profit or loss. Cash and cash equivalents Cash and cash equivalents include cash in hand, deposits held at call with banks, other short-term highly liquid investments with original maturities of three months or less, and cheques issued but not yet presented to financial institutions. Cash and cash equivalents are subject to insignificant risk of changes in value, Share capital Ordinary shares are classified as equity. ‘Trade and other payables Trade and other payables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method. Borrowings Borrowings are recognised initially at fair value, net of transaction costs incurred, Borrowings are subsequently stated at amortised cost; any difference between the proceeds (net of transaction costs) and the redemption value is recognised over the period of the borrowings using the effective interest method, Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least 12 months after the reporting date. Page 26Petroleum Company of Trinidad and Tobago Limited 2017 September 30 Notes to the Consol lated Financial Statements (continued) (Presented in Thousands of Trinidad and Tobago dollars) 3. 312 33 Summary of significant accounting policies (continued) Borrowings (continued) Borrowing Costs Specific and general borrowing costs incurred for the vonstruction of qualifying assets are capitalised during the period of time required to complete and prepare the asset for its intended use, Interest on general borrowings eligible for capitalisation is determined by applying capitalisation rate to expenditure on qualifying assets. The capitalisation rate is the weighted average of borrowing costs applicable to the borrowings of the Group, that are outstanding during the period, other than specific borrowings. This amount is capitalised during the construction period of the qualifying asset, and upon completion of the asset, itis recognised in profit or loss until the maturity of borrowings. Other borrowing costs are expensed, Current and deferred income tax Income tax expense comprises current and deferred tax. It is recognised in profit or loss except to the ‘extent that itrelates to a business combination, or items recognised directly in equity or in OCL Interest and penalties related to income taxes, including uncertain tax treatments, are accounted for under LAS 37 Provisions, Contingent Liabilities and Contingent Assets. ‘Current tax comprises the expected tax payable or receivable on the taxable income or loss for the year and any adjustment to the tax payable or receivable in respect of previous years. The amount of current tax payable or receivable is the best estimate of the tax amount expected to be paid or reccived that reflects uncertainty related to income taxes, if any. It is measured using tax rates enacted or substantively enacted at the reporting date. Current tax also includes any tax arising from dividends, ‘Current tax assets and liabilities are offset only if certain criteria are met, Deferred tax is recognised in respect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is not recognised for: ~ temporary differences on the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profit or loss; temporary differences related 10 investments in subsidiaries, associates and joint arrangements to the extent that the Group is able to control the timing of the reversal of the temporary differences and itis probable that they will not reverse in the foreseeable future; and taxable temporary differences atising on the initial recognition of goodwill Deferred tax assets are recognised for unused tax losses, unused tax credits and deductible temporary differences to the extent that itis probable that future taxable profits will be available against which they can be used. Future taxable profits are determined based on the reversal of relevant taxable temporary differences. If the amount of taxable temporary differences is insufficient to recognise a deferred tax asset in full, then future taxable profits, adjusted for reversals of existing temporary differences, are considered, based on the business plans for individual subsidiaries in the Group. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that itis no longer probable that the related tax benefit will be realised; such reductions are reversed when the probability of future taxable profits improves. Page2?Petroleum Company of Trinidad and Tobago Limited 2017 September 30 Notes to the Consolidated iancial Statements (continued) (Presented in Thousands of Trintdad and Tobago dollars) 33 Summary of significant accounting policies (continued) Current and deferred income tax (continued) Unrecognised deferred tax assets are reassessed at each reporting date and recognised to the extent that it has become probable that future taxable profits will be available against whieh they can be used. Deferred tax is measured at the tax rates that are expected to be applied to temporary differences when they reverse, using tax rates enacted or substantively enacted at the reporting date. The measurement of deferred tax reflects the tax consequences that would follow from the manner in which the Group expects, at the reporting date, to recover or seitle the carrying amount of its assets and liabilities. For this purpose, the carrying amount of investment property measured at fair value is presumed to be recovered through sale, and the Group has not rebutted this presumption, Deferred tax assets and liabilities are offset only if certain criteria are met Employee benefits (a) Short-term employee benefits Short-term employee benefits are expensed as the related service is provided. A liability is recognised for the amount expected to be paid if the Group has a present legal or constructive obligation to pay this amount as a result of past service provided by the employee and the obligation can be estimated reliably. (b) Defined benefit plans Retirement benefits for employees are provided through two (2) defined benefit plans, which are funded by contributions from employers and employees. The schemes are generally funded ‘through payments to trustec-administered funds as determined by periodic actuarial calculations. A. defined benefit plan is a pension plan that defines an amount of pension benefit that an employee will receive on retirement, usually dependent on one or more factors such as age, years of service and compensation. ‘The Group’s net obligation in respect of defined benefit plans is calculated separately for each plan by estimating the amount of future benefit that employees have earned in the current and prior periods, discounting that amount and deducting the fair value of any plan assets, ‘The calculation of defined benefit obligations is performed annually by a qualified actuary using the projected unit credit method, When the calculation results in a potential asset for the Group, the recognised asset is limited to the present value of economic benefits available in the form of any future refunds from the plan or reductions in future contributions to the plan, To calculate the present value of economic benefits, consideration is given to any applicable minimum funding requirements. Page 28Petroleum Company of Trinidad and Tobago Limited 2017 September 30 Notes to the Consolidated Financial Statements (continued) (Presented in Thousands of Trinidad and Tobago dollars) ‘Summary of significant accounting policies (continued) 3.14 Employee benefits (continued) () © @ Defined benefit plans Re-measurements of the net defined benefit liability, which comprise actuarial gains and losses, the return on plan assets (excluding interest) and the effect of the asset ceiling (if any, excluding interest), are recognised immediately in OCI. The Group determines the net interest expense income) on the net defined benefit liability (asset) for the period by applying the discount rate used to measure the defined benefit obligation at the beginning of the annual period to the then- net defined benefit liability (asset), taking into account any changes in the net defined benefit liability (asset) during the period as a result of contributions and benefit payments, Net interest expense and other expenses related to defined benefit plans are recognised in profit or loss. When the benefits of a plan are changed or when a plan is curtailed, the resulting change in benefit that relates to past service or the gain or loss on curtailment is recognised immediately in profit or loss. The Group recognises gains and losses on the settlement of a defined benefit plan ‘when the settlement occurs. Other post-employment obligations The Group provides post-employment healthcare benefits to its retirees under two (2) medical plans. The Group's net obligation in respect of long-term employee benefits is the amount of future benefit that employees have earned in return for their service in the current and prior periods. That benefit is discounted to determine its present value. The entitlement to these benefits is usually conditional on the employee remaining in service up to retirement age and the completion of a minimum service period. ‘The expected costs of these benefits are accrued over the period of employment, using an accounting methodology similar to that for defined benefit pension plans. Actuarial gains and losses arising from experience adjustments, and changes in actuarial assumptions are immediately recognised in other comprehensive income. Re- measurements are recognised in other comprehensive income in the period in which they arise. These obligations are valued annually by independent qualified actuaries. ‘Termination benefits ‘Termination benefits are expensed at the earlier of when the Group can no longer withdraw the offer of those benefits and when the Group recognises costs for a restructuring. If benefits are not expected to be settled wholly within 12 months of the reporting date, then they are discounted. Page29Petroleum Company of Trinidad and Tobago Limited 2017 September 30 Notes to the Consolidated Financial Statements (continued) (Presented in Thousands of Trinidad and Tobago dollars) 3. Summary of significant accounting pol (continued) 3.15. Revenue recognition Revenue comprises the fair value of the consideration received or receivable for the sale of goods and services in the ordinary course of the Group’s activities. Revenue is shown, net of value-added tax, returns, rebates and discounts and after eliminating sales within the Group. ‘The Group recognises revenue when the amount of revenue can be reliably measured, itis probable that future economic benefits will flow to the entity and specific criteria have been met for each of the Group’s activities as described below. The amount of revenue is not considered to be reliably ‘measurable until all contingencies relating to the sale have been resolved. The Group bases its estimates on historical results, taking into consideration the type of customer, the type of transaction and the specifies of each arrangement. Included in revenue is an amount relating to subsidy on local refined product sales, this amount is recognised on the same basis as revenue is recognised and incurs an interest charge for late payment. (a) Sales revenue Revenues from sales of products ate recognised upon transfer of risks and rewards associated with the ownership of products. In particular, revenues are recognised: ~ for crude oil, generally upon shipment; ~ for natural gas and natural gas liquids, when the natural gas is delivered to the customer; ~ for refined products, generally upon shipment, Revenues are recognised upon shipment when, at that date, the risks of loss are transferred to the acquirer. Revenues from the sale of crude oil and, natural gas produced in properties in which Petrotrin has an interest together with other producers, are recognised on the basis of Petrotrin’s working interest in those properties (entitlement method), (b) Royalty income Royalty income is recognised on an accrual basis in accordance with the substance of the relevant agreements, Royalty income is comprised mainly of overriding royalties from lease operator and farmout arrangements. (©) Interest income Interest income is recognised on a time-proportion hasis using the effective interest method. When a receivable is impaired, the Group reduces the carrying amount to its recoverable amount, being the estimated future cash flows discounted at original effective interest rate of the instrument. Interest income on impaired loans is recognised using the original effective interest rate (@) Marine income and processing fees Marine income and processing fees are recognised upon delivery of services and customer acceptance. Marine income is comprised mainly of wharf dues, barging fees, tug and launch hire Page 30Petroleum Company of Trinidad and Tobago Limited 2017 September 30 Notes to the Consolidated ancial Statements (continued) (Presented in Thousands of Trinidad and Tobago dollars) 3.16 3.17 Summary of significant accounting policies (continued) Leases Determining whether an arrangement contains a lease AL inception of an arrangement, the Group determines whether the arrangement is or contains a lease. At inception or on reassessment of an arrangement that contains a lease, the Group separates payments ‘and other consideration required by the arrangement into those for the lease and those for other elements on the basis of their relative fair values. If the Group concludes for a finance lease that it is impracticable to separate the payments reliably, then an asset and liability are recognised at an amount equal to the fair value of the underlying asset; subsequently, the liability is reduced as payments are made and an imputed finance cost on the liability is recognised using the Group's incremental borrowing rate. Leased assets Leases of property, plant and equipment that transfer to the Group substantially all of the risks and rewards of ownership are classified as finance leases. The leased assets are measured initially at an amount equal to the lower of their fair value and the present value of the minimum lease payments. Subsequent to initial recognition, the assets are accounted for in accordance with the accounting policy applicable to that asset. Assets held under other leases are classified as operating leases and are not recognised in the Group's statement of financial position. ‘Lease payments Payments made under operating leases are recognised in profit or loss on a straight-line basis over the term of the lease. Lease incentives received are recognised as an integral part ofthe total lease expense, over the term of the lease. Minimum lease payments made under finance leases are apportioned between the finance expense and the reduction of the outstanding liability. The finance expense is allocated to each period during the lease term so as to produce a constant periodic rate of interest on the remaining balance of the liability Dividend distribution Dividend distribution to the Group's shareholders is recognised as a liability in the related subsidiary’s financial statements in the period in which the dividends are approved, Page stPetroleum Company of Tri lad and Tobago Limited 2017 September 30 Notes to the Consolidated Financial Statements (continued) (Presented in Thousands of Trinidad and Tobago dollars) ‘Summary of significant accounting policies (continued) Fair value measurement “Fai value’ is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date in the principal ot, in its ‘absence, the most advantageous market to which the Group has access at that date. The fair value ofa liability reflects its non-performance risk. Certain of the Group’s accounting policies and disclosures require the measurement of fair values, for both financial and non-financial assets and liabilities. When one is available, the Group measures the fair value of an instrument using the quoted price in an active market for that instrument. A market is regarded as active if transactions for the asset or liability take place with sufficient frequeney and volume to provide pricing information on an ongoing basis. If there is no quoted price in an active ‘market, then the Group uses valuation techniques that maximise the use of relevant observable inputs and minimise the use of unobservable inputs. ‘The chosen valuation technique incorporates all of the factors that market participants would take into account in pricing a transaction. If an asset or a liability measured at fair value has a bid price and an ask price, then the Group measures assets and long positions at a bid price and liabilities and short positions at an ask price. The best evidence of the fair value of a financial instrument on initial recognition is normally the iransaction price ~ i.e. the fair value of the consideration given or received. If the Group determines that the fair value on initial recognition differs from the transaction price and the fair value is evidenced neither by a quoted price in an active market for an identical asset or liability nor based on a valuation technique for which any unobservable inputs are judged to be insignificant in relation to the measurement, then the financial instrument is initially measured at fair value, adjusted to defer the difference between the fair value on initial recognition and the transaction price. Subsequently, that ) Oil. and gas reserves ‘The oil and gas reserves are assessed by Management and audited by extemal engineers in accordance with the Standards pertaining to the Estimating of Oil and Gas Reserves Information promulgated by the Society of Petroleum Engineers. Engineering estimates of the Group's oil and gas reserves are inherently uncertain, Proved reserves are the estimated volumes of crude oil, natural gas and gas condensates, liquids and associated substances which geological and engineering data demonstrate with reasonable certainty to be recoverable in future years from known reservoirs under existing economic and operating conditions Although there are authoritative guidelines regarding the engineering criteria that have to be met before estimated oil and gas reserves can be designated as proved, the accuracy of any reserve estimate is a function of the quality of available data and engineering and geological interpretation; the accuracy of assumptions and judgment, ‘There may be substantial upward and downward revisions to the results of drilling, testing and production after the date of the estimate. In addition, changes in oil and natural gas prices could have an effect on the value of proved reserves as regards the initial estimate, Accordingly, the estimated reserves could be materially different from the quantities of oil and natural gas that ultimately will be recorded PageasPetroleum Company of Trinidad and Tobago Limited 2017 September 30 Notes to the Consolidated (Presented in Thousands of inancial Statements (continued) nidad and Tobago dollars) (b) «© @ Critical accounting est rates and judgments (continued) Oil and gas reserves (continued) Estimated proved reserves are used in determining depletion and impairment expenses. Depreciation rates on oil and gas assets using the Unit-of-Produetion basis are determined from the ratio between the amount of hydrocarbons extracted in the year and proved producing reserves existing at the year-end increased by the amounts extracted during the year. Assuming all other variables are held constant, an increase in estimated proved producing reserves decreases depreciation, depletion and amortisation expense. On the contrary, a decrease in estimated proved producing reserves iticreases depreciation, depletion and amortisation expense. Also, estimated total proved reserves are used to calculate future cash flows from oil and gas properties, which serve as an indicator in determining whether a property impairment testis to be carried out or not, The larger the volume of estimated reserves, the less likely the property is impaired. Lease licences Iti assumed that licences to develop oil and gas properties acreages will continue to be extended to the Group by the Government of the Republic of Trinidad and Tobago throughout the remaining productive lives of the related fields: Field Name Terms of Agreement Trinidad Norther Areas — Trinmar Extended period of 6 years effective 2012 December 31 “Trinidad Northem Areas— North Marine | Extended period of 6 years effective 2012 December 31 ‘Guapo = Oropuche — Brighton Horizon (Area D) | Effective period from 2007 for 25 years (Cruise Horizon (Area A) [Effective period from 2007 for 25 years Mayaro/Guayaguayare Horizon [Effective period from 2007 for 25 years Herrera Horizon (Area C) Effective period from 2007 for 25 years ‘The Group's estimates of reserves, the estimated provisions for decommissioning and the impairment assessments are based on this assumption. Impairment of assets @ Goodwill ‘The Group tests annually whether goodwill has suffered any impairment, in accordance with the accounting poliey stated in Note 3.5. This requires an estimation of the ‘value-in-use’ of the cash generating units to which the goodwill is allocated. Estimating a ‘value-in-use* amount requires Management to make an estimate of the expected future cash flows from the cash generating unit and also to choose a suitable discount rate in order to calculate the present value of those cash flows. Further details are given in Note 7. Page aePetroleum Company of T: 2017 September 30 Notes to the Consolidated Financial Statements (continued) (Presented in Thousands of Trinidad and Tobago dollars) jad and Tobago Limited Critical accounting estimates and juclgments (continued) (@) Impairment of assets (continued) (ii) Financial assets Financial assets excluding trade and other receivables are assessed at each reporting period to deiermine whether there is any objective evidence that they are impaired, while trade and other receivables are reviewed quarterly for impairment In determining whether an impairment loss should be recorded in profit or loss, the Group makes judgments as to whether there is any observable data indicating that there is a measurable decrease in the estimated future cash flows. This evidence may include observable data indicating that there has been an adverse change in the payment status of customers, or national or local economic conditions. The methodology and assumptions used for estimating both the amount and timing of future cash flows are reviewed regularly Ifthere is objective evidence that an impairment loss on loans receivable carried at amortized cost has been incurred, the amount of the loss is measured as the difference between the assets carrying amount and the present value of the estimated future cash flows discounted at the original effective interest rate. ‘The carrying amount of the asset is reduced, with the amount of the loss recognized in profit or loss. (ili) Other assets Property, plant and equipment and intangible assets are assessed for possible impairment if events and changes in circumstances indicate that the carrying amount may not be recoverable. If assets are determined to be impaired, the carrying amounts of those assets are written down to their recoverable amount. This is the higher of fair value less costs to sell and value-in-use determined as the amount of estimated discounted future cash flows. For this purpose, assets are grouped into cash generating units based on separately identifiable and largely independent cash inflows. Impairments can also occur when decisions are taken to dispose of assets Impairments, except those relating to goodwill, are reversed as applicable, to the extent of the changes in the events and circumstances that triggered the original impairment Estimates of future cash flows are based on Management's estimates of future commodity prices, market supply and demand, product margins and in the case of oil and gas properties, the expected future production volumes. Other factors that can lead to changes in estimates include restructuring plans and variations in regulatory environments. Expected future production volumes, which are based on proved reserves, are used for impairment testing because the Group believes this to be the most appropriate data for expected future cash flows. Estimates of future cash flows are consistent in the Group’s business plan, A discount rate based on the Group's weighted average costs of capital (pre-tax) is used. Assumptions on future oil prices tend to be stable because the Group does not consider short-term increases or decreases in prices as being indicative of long-term levels. ‘The future prices used in impairment testing are determined after assessments of drivers; historical analysis, trends and statistical volatility are part of this assessment as well as analysis of possible future global and regional economic conditions. PageaTPetroleum Company of Trinidad and Tobago Limited 2017 September 30 Notes to the Consolidated Financial Statements (continued) (Presented in Thousands of Trinidad and Tobago dollars) Critical accounting estimates and judgments (continued) (©) Decommissioning and environmental obligations (i) Decommissioning obligation Obligations related to the removal of tangible equipment and the restoration of land or seabed, once operations are terminated, requires the recognition of significant provision for decommissioning, Estimating the future cost of asset removal is difficult and requires Management to make estimates and judgments because most of the removal obligations are many years in the future, and related contracts and regulations often contain vague descriptions of what constitutes removal. Asset removal technologies and costs are constantly changing, as well as political, environmental, safety and public relations considerations. The criticality of these estimates is also increased by the accounting policy used that requires entities to record the fair value of a liability for decommissioning in the period when it is incurred (typically at the time the asset is installed at the production location). When the liability is initially recorded, the related fixed asset is increased by a corresponding amount. Over time, the liabilities are increased for the provisions due to reflect the passage of time and any change of the estimates following the modification of the future cash flows or the discount rate adopted. The recognised decommissioning liability amounts are based upon furure retirement cost estimates and incorporate many assumptions such as expected recoverable quantities of crude oil and natural gas, time to abandonment, future inflation rates and the risk-free rate of interest. See Note 24 (ii) Environmental liabilities ‘Together with other companies in the industries in which it operates, Petrotrin is subject to national, regional and local environmental laws and regulations concerning its oil and gas ‘operations, productions and other activities, including legislation that implements international conventions or protocols. Provision for environmental costs is made when it becomes probable or certain that a liability has been incurred and the amount can be reasonably estimated. Ifa new regulation or a notice of a regulation violation is received, and itis likely to have a financial impact, a provision will be recorded. (Income taxes ‘The Group recognises liabilities for anticipated tax audit issues based on estimates of whether additional taxes will be due. Where the final tax outcome of these matters is different from the amounts that were initially recorded, such differences will impact the income tax and deferred income tax provisions in the period in which such determination is made. The Income Tax Regulation of Trinidad and Tobago provides for penalties and interest to be charged on outstanding taxes due to the Government of Trinidad and Tobago, No such provision has been made in these financial assets as Petrotrin has never been charged penalties and interest for late payment of taxes and as such the likelihood of future economic outflows arising from same is deemed negligible. PageasPetroleum Company of Trinidad and Tobago Limited 2017 September 30 Notes to the Consolidated Financial Statements (continued) (Presented in Thousands of Trinidad and Tobago dollars) 6. Property, plant and equipment Tange Exploration ‘and Devclopment Sub-total Production Other Tota! valuation ‘ 8 8 s 8 s Cont Restated Balance as at | Octoher 2016 9,338 176,106 185,444 6,863,279 24,376.024 836,330 32,261,077 Adore (470) 217,974 217,508 85,786 276,535 12,009 591,834 Transtrs (2,734) (280,850) (283,584) 283,584 Ss = xchange differences (349) (10.945 40,148__ 105,524 553, Balance ast 30 Sop. 2017 5102, ) 7,272,797 24,758,083 851,892 Accumulated depreciation, ‘depletion, amortisation and impairment Balance as at 1 October 2016 = a zs Depreciation Depletion & 178,327 7,175,096 245,841 12,699,264 ‘Amorisation 328,840 788365 31,711 1,148,916 Impairment 86,232 = (284,222 340,454 Exchange differences 24470 67,755 816 93,041 Balance as at 30 Sept. 2017 5,717,869 8,031,216 532,590 14,281,675. Carrying Amounts Asat | October 2016 1,584,953 17,200,928 590.489 19,561,814 Aaa eT INN? 5.785 102.285 108,070 _1,554,928_16.726867__319,302_18,709,167 Page adPetroleum Company of Trinidad and Tobago Limited 2017 September 30 Notes to the Consolidated Financial Statements (continued) (Presented in Thousands of Trinidad and Tobago dollars) 6. Property, plant and equipment (continued) Tangible assets (continued) ‘Tangible Exploration and Development Sub-total Production nan Other Toul aation s s s s s é s ‘Cost Restated Balance as at | October 2015 3,560 215,284 218,844 6,301,727 22,733,254 775,822. 30,029,647 Additions 2842 68,528 71,370 86,715 306,791 15,710 480,586 Transfers 2,561 (117,514) (114,953) —114,953 = = Exchange differences 3759808 10.183 359,884 44,298 1,750,844 Balance as at 30 Sept. 2016 9338 176,106 185.444 (63,279 336,330 3 Accumulated depreciation, depletion, amortisation and impairment Balance as at | October 2015 - - < 4,685,928 5,889,881 216,867 10,792,676 Depreciation Depletion & ‘Amortsaton = = - 217,129 897014 15,550 1,129,693 Impairment - - 104,571 Exchange differences 270,698 Balance as at 30 Sep, 2016 78,326 Carrying Amounts Asat | October 2015 3,560 215,284 218,844 1,615,799 16,843,373, eee ee 9.338 176,106 185,444 __1,584,953 17,200,928 $90,489. 19,561,814 Page 50Petroleum Company of Trinidad and Tobago Limited 2017 September 30 Notes to the Consolidated Financial Statements (continued) (Presented in Thousands of Trinidad and Tobago dollars) 6. Property, plant and equipment (continued) ‘Tangible assets (continued) ‘Tangible eee Refining and and” Desclopment Sabot Pruduction otter Total valuation z aries s s 5 s s 5 s Cost Restated Balance as at 1 October 2014 19 215,743 215,762 6,004,810 22,390,234 751,660 29,362,466 Additions BB 125.932 126,670 184,363 386,603. —25,562—723,198 ‘Transfers 2,829 (117,945) (115,116) 115,116 = - ES xchange differences (26) (8446) (8,472) @'562)__(43.583) (1.400) (56017) Balance as at 30 Sept. 2015 3.560 215,284 218,844 6.301,727 92,733,254 775,822 30,029,647 Accumulated depreciation, depletion, amortisation and impairment Balance as at | October 2014 = 3 4398837 4,992,420 202,316 9,593,573, Depreciation Depletion & Amovtisaten - ~ 283577 904,250 14,905 1,202,732 Impairment - - 181s y = 11815 Exchange differences Balance as at 30 Sept, 2015 = ~ (8.301 6.789) ___(354)__(15.444) = = 4,685,928 5,889,881 216,867 10,792,676 Carrying Amounts Asat | October 2014 19 215,743_215,762_, ‘As.at 30 September 2015 973 17,397,814 $49,344 19,768,893, 215,284 218,844 1,615,799 16,843,373 $58,955 19,236,971 Page STPetroleum Company of Tri 2017 September 30 Notes to the Consolidated Financial Statements (continued) (Presented in Thousands of Trinidad and Tobago dollars) idad and Tobago Limited 6. Property, plant and equipment (continued) Depreciation charge of $1,117,205 (2016: $1,114,143; 2015: $1,187,827) has been charged in cost of sales, while S31.711 (2016: $15,550; 2015; $14,905) has been charged in other operating expenses Net impairment losses recorded are as follows: FY 2017 FY 2016 FY 2015, ] Corporate 254,222 = =| EXP Production Assets, 86,232 104,571 T1815 | Refining = = =. Costs not subject to depreciation totalled $5,322,415 (2016: $5,998,689; 2015: $5,526,056). ‘These are assets under construction in Refining and Marketing and Corporate as well as Exploration and Evaluation and Development costs. Whilst costs not subject to depletion is $517,$70 and relates to Production asscts, also categorised as assets under construction. As at September 30 Restated Restated 2017 2016 2015 Assets under construction 8 8 s Exploration , Evaluation and Development assets 108,070 185,444 218,845 Production assets 517,570 568,118, 594,390 Refining and Marketing assets 5,180,504 4,827,013. 4,313,622 Other Business and Corporate assets 33,841 418,114 399,199 Included in Development assets and Refining and Marketing assets is interest capitalised during the year, ‘on general borrowings of $17,811 (2016: $13,783; 2015: $10,506) and $60,997 (2016: $34,326; 2015. $28,368) respectively. ‘The capitalisation rate on general borrowings is 3.85% (2016: 2.56%; 2015: 1.86%). Page 52Petroleum Company of Trinidad and Tobago Limited 2017 September 30 Notes to the Consolidated Financial Statements (continued) (Presented in Thousands of Trinidad and Tobago dollars) 7. Intangible assets tangible Exploration Production Software Development Sebtatal_—Goodwitt, Total Matttling €estsOther s s s s s s s Cost Balance as at 1 October 2016 975,200 1949412 2.924612 409,046 13,895,593 1,366,770 203,878 18,799,899 Additions 18,890 80,777 99,667 (1368) a 1,938 100,241 Transfers (462,973) (670328) (133,302) 1,133,302 oH = 2 Decommissioning cost - - (775,020) (514,093) 4,738 (1,284,375) Disposals, (11.206) (676) (11,882) 3 - 92,768) = 34650) Exchange differences (120752) (113.486) _(234.238) 1,764 __ 306,524 ___(11,008) 883 63.925 Balance as at 30 Sept, 2017 399,159 1,245,698 1,644,857 470.810 14,559,035 818.901 11437_17,645.040 Accumulated depreciation, depletion, amortisation and impairment Balance a at ! October 2016 = i é 142816 11,382,105 738,165 162,725 12,425,811 Depreciation Depletion & Amortsation = “ 2 - 886301 37,205 5991 929497 Impairment < 117,025 - 4738 371,887 ‘Write back of depletion (713.27) (100,295) (813,572) Disposals - - - = 115.198) (15,198) Exchange differences é 17870 34938 (10.580) $543,193 Balance as at 30 Sept. 2017 = 410,810 11,707,092 649.207 1744191941, 618 Carrying Amounts Asat | October 2016 975200 1.949.412___-2.924.612 266,230 2.513488 628.605 _ 41,153 6,374,088, As at 30 September 2017 309.159 1.245698 1,644,857 2851943 169.608 37.018 4,703,422 Page 33Petroleum Company of Trinidad and Tobago Limited 2017 September 30 Notes to the Consolidated Financial Statements (continued) (Presented in Thous nds of Trinidad and Tobago dollars) 7. Intangible assets (continued) Intangible Cost Balance as at 1 October 2015, Additions ‘Transfers Decommis Disposals Exchange differences Balance as at 30 Sept. 2016 ining cost Accumulated depreciation, depletion, amortisation and impairment Balance as at 1 October 2015, Depreciation Deplecion & ‘Amortsaton limpairment \Write back of depletion Exchange differences Balance as at 30 Sept, 2016 Carrying Amounts Asat | October 2015 As at 1 October 2016 Berea Production Softwar ‘and Develapment Sub-total Good re Total yalation CostvOther s 5 5 s s s s 770342 1,580.40 2.350682 386,635 13,260,356 1.381.731 ——185,855.17535,259 124184 406581 530,735 140,320 a 7488 678.213, (74271) (115,870) (190,141) 190,141 = ‘ i z 74838) (63,312) ~ (438,150) (15.061) (15061) - = (15.061) 154975 93422248307 ___22.411__679.614__TS3SL_10,865 1.030.638. 975,200 1949812 2924612 409.046 13,895,593 1,366,770 203.878 18,790,809) es a 134990 10.539,485 623,938 141,596 11,440,009 5 “ - oag2T 73,76 17% 716329 - = ~ (82,936) - = (82,936) aS = = 30.930) - 330.930) - = 7826 621,659 40,451 13.403 _ 683,339 7 = 42816 11,382,105 738,165 162.725 12,425.81 710342 1,580,340 _2,350,682 251.685 2.770871 727.793 ___44.259 6,095,250, 975,200 1,949,412 2.924612 266.230 2.513488 628605 __41,153 6,374,088 Page 54Petroleum Company of Trinidad and Tobago Limited 2017 September 30 Notes to the Consolidated Financial Statements (continued) (Presented in Thousands of Trinidad and Tobago dollars) 7. Intangible assets (continued) Cost Balance as at ! October 2014 Additions Transfers Decommissioning cost Disposals Exchange differences Balance as at 30 Sept. 2015 Accumulated depreciation, depletion, amortisation and spairment alance as at | October 2014 Depreciation Depletion & Amertisation Impairment Write back of depletion Exchange diferences Balance a at 30 Sept. 2015 Carrying Amounts As at | October 2015, As at | October 2016 valuat s 706.738 am 53,687 Devetopment s 1,887,251 809,413 (1,107,136) Subst s 2,593,989 2.135 (1.053.449) Good x 387424 rodueion Refining sare rete and a Marketing s s s 15026927 1,398,139 180,391 19,586,870 132,859 58M 960.818 1083,449 = e 933.101) (43,562) (2.976.668) 2805) __(9.188)__(11.993)__(789) 19,78) (2.846) 60) __35.166) 770342 1580340 2.350682 386.635 13,260,356 1.35 TRS.NSS 17,535,259) = 138265 22377 $52,803 134,383 1,984,828 = - 1038348 72,097,513 1,117,967 Z a 146,025 "146,025 é <= (1,751,608) ~ 1,751,698) es = (a7) “5 S64) 974 Go) 07,113) = 134,990 10,539,485 623,938 141,596 1,440,009 706,738 __1887,251_2,593,989 _252,159 3,904,550 _845,336 46,0089 _7,642,042 770342 1,580,340 _2,350682 251,645 __2,720871__727.793 44,259 __ 6,095,250 Page 55Petroleum Company of Trinidad and Tobago Limited 2017 September 30 Notes to the Consolidated Financial Statements (continued) (Presented in Thousands of Trinidad and Tobago dollars) 7. Intangible assets (continued) Amortisation charge/ (write-back)/ of $109.934 (2016: $377,673; 2015: (S641,244)) has been included in cost of sales while $5,991 (2016: $7,726; 2015: $7,513) has been charged to other operating expenses. An impairment loss of $371,877 was recorded in 2017 (2016: net write-back of impairment loss of $82,936; 2015: impairment loss of $146,025). Coss not subject 10 amortisation totaled 81,644,857 (2016: $2,924,612; 2015: $2,350,682). Included in production assets is an amount of $106,623 (2016: $4.254; 2015: $31,397) in respect of assets under construction and a net amortised amount of $124,371 (2016: $101,894: 2015:$152,550) in respect of decommissioning costs. The remaining amortisation periods for these decommissioning costs are one (1) to forty (40) years, Included in refining assets is a net amortised amount $5,107 (2016: $626,444; 2015: $751,526) in respect of costs, The femsining amortisation periods for these decommissioning costs are one (1) to nineteen (19) years Included in Development assets is interest capitalised on general borrowings of $68,204 (2016: $53,197; 2015: $30,255). The capitalisation rate on general borrowings is 3.85% (2016: 2.56%; 2015: 1.86%), (a) Impairment review of goodwill In accordance with International Accounting Standard 36 - Impairment of Assets, the test for the impairment of goodwill was calculated based on the average 5-year forecast of prices as approved by Management. Prices beyond the 5-year period were assumed to escalate by 5.0%, Goodwill is allocated to the Group’s cash generating unit, Petrotrin Trinmar Marine Operations” Soldado field, as this is the unit to which the goodwill is associated. The recoverable amount of the Trinmar Operations oil and gas reserves was based on value-in-use calculations. These calculations use the pre-tax cash flow projections based on proved reserves covering a 20-year period, ‘The key assumptions used for the value-in-use calculations are as follows: + Price per barrel of crude of *US$S2.08 (TT$351.12) and price per msef of natural gas of "US$I.43 (TTS9.64), estimated using the market assumptions of the Company's Budget for the year ending 2018 September 30 and 2018-2022 Business Plan; + The finure cash flows were adjusted to reflect risks specific to the cash generating unit and risks surrounding the cash flows. These cash flows were discounted using the Weighted Average Cost of Capital pre-tax rate of 13.10% for Exploration and Production operations; "The maximum economic life used for the valuation of reserves was fifly (50) years as this represents Management's estimation of the economic productive life of the field at current rates of extraction; * Supplemental petroleum taxes and other levies on production volumes were calculated at prevailing rates; + The cash flow beyond the 5-year period was extrapolated using projections based on constant prices and constant costs; "The carrying value as at 2017 September 30 is nil ‘The carrying value of this asset exceeded the recoverable amount and consequently a viite-down of goodwill ‘was required. The carrying amount of the goodwill allocate to Trinmar was $267,379 and the full value was impaired. This impairment loss will not be reversed in subsequent years. The recoverable value of the Trinmar cash generating unit was estimated based on the present value of the Future cash flows using a pre-tax discount rate of 13.10%. The eash flow projections included specific estimates for S years *0il and gas prices quoted above are not expressed in thousands of dollarsPetroleum Company of Trinidad and Tobago 2017 September 30 Notes to the Consolidated Financial Statements (continued) (Presented in Thousands of Trinidad and Tobago dollars) ited 8. Impairment of fixed assets In assessing whether a write-down is required in the carrying value ofa potentially impaired intangible asset, ot an item of property, plant and equipment, its carrying value is compared with its recoverable amounts. Unless otherwise indicated, the recoverable amount used in assessing the impairment charges (described below) is its value-in-use which is derived using a discounted cash flow model, The future cash flows are adjusted for risks specific to the asset and are discounted using the Weighted Average Cost of Capital pre-tax discount rate of 13.10% for Exploration and Production operations and pre-tax rate of 6.79% for Refining and Marketing operations. Produetion ‘The value-in-use is based on cash flows expected to be wenerated by the projected oil and natural gas production profiles up to the expiration of the licence agreement. Key assumptions used fr the value-in-use calculations are as follows: * Revenues were derived using projected production and future prices, This data was obtained from market experts (See Note 5(b)); * Direct operating costs were projected based on past experience and available historical data on lifing, costs; ‘+ The time horizon used for the valuation of the reserves was between two (2) to fifty (50) years as this represents Management's estimation of the economic productive life of the field at current rates of extraction; ‘+ Supplemental petroleum taxes and other levies on production volumes were calculated at prevailing rates; ‘+ The cash flow beyond the 5-year period was extrapolated using projections based on constant prices and constant costs; The Group recorded an impairment loss on three (3) fields of $453,381 (2016 reversal of impairment loss $146,448 and impairment loss of $168,083; 2015: impairment loss of $157,840) with respect (0 one cash generating unit. Its estimated that an increase in the weighted average cost of capital (WACC) pre-tax discount rate by 5% would result in the recoverable amount exceeding the carrying value by $4,180,807, Exploration and Evaluation assets In accordance with IFRS 6, exploration and evaluation assets are assessed for impairment annually or if there are any indications that the assets might be impaired, There were no facts and circumstances indicating that the Group should test these assets for impairment. The following indicators were evaluated (o determine whether these assets should be tested: * The period for which the Group has the right to explore in the specific area; + Whether substantive expenditure on further exploration and evaluation in the specific area is budgeted or planned; * Whether exploration and evaluation in the specific area have not led to the discovery of commercially viable quantities and the Group has decided to discontinue such activities in the specific arc: + Sufficient data exist to indicate that, although a development in the specific area is likely to proceed, the ‘carrying amount of the exploration and evaluation asset is unlikely to be recovered in full fom. successful development or by sae. Amounts related to exploration and evaluation activities were written off in the Consolidated Statement of Profit or Loss and Other Comprehensive Income, in the year ended 2017 September 30 was NIL. (2016: $14,972; 2015: 35,930). Page 37Petroleum Company of Trinidad and Tobago Limited 2017 September 30 Notes to the Consolidated Financial Statements (continued) (Presented in Thousands of Trinidad and Tobago dollars) 8, Impairment of fixed assets (continued) Refining and Marketing ‘The Group assesses its fixed assets for possible impairment in circumstances which indicate that the carrying values of the assets may not be recoverable. Such indicators include changes in the Group’s business plans, changes in product prices leading to an unprofitable performance, low plant utilization and evidence of physical damage. If there are low refining and marketing margins during an extended period, the Group may need to recognise impairment charges. The Group estimates value-in-use using a discounted cash flow model. The key assumptions, to which the calculation of value-in-use for the Refining and Marketing division is most sensitive, are refinery gross margin, capital expenditure and discount rate. ‘The average value assigned to the refinery gross margin during the plan period is based on * USS9.59 per barrel. For the purpose of determining, value-in-use, risk-adjusted cash flows for a period of 20 years have been used at the Weighted Average Cost of Capital (WACC) pre-tax rate of 6.80%. Refining and Marketing recoverable amount exceeds its carrying amount by $7,023,683 (2016: $6,309,598, 2015: $1,462,012). Based on sensitivity analysis, a change of 1% in the cost of capital ‘would change the value-in-use by $1,990,317. *Oil and gas prices quoted above are not expressed in thousands of dollars. 9. Other costs related to exploration for and evaluation of oil and natural gas resources Assets and liabilities related to the exploration for and evaluation of mineral resources other than those presented in Notes 6 and 7 above are as follows: ‘As at September 30 2017 2016 2015 s s s Payable to contractors and operators $ 18187 $ 24056 $ 4,802 ‘Year ended September 30 2017 2016 2015 Net cash used in operating activities 8 - $ (14972) $ (5,930) ‘Net cash used in investing activities $1,191 $ (48,708) —$ (47,712) Page 58Petroleum Company of Trinidad and Tobago Limited 2017 September 30 Notes to the Consolidated Finan tatements (continued) (Presented in Thousands of Trinidad and Tobago dollars) Impairment of fixed assets (continued) Refining and Marketing ‘The Group assesses its fixed assets for possible impairment in circumstances which indicate that the carrying values of the assets may not be recoverable. Such indicators include changes in the Group's business plans, changes in product prices leading to an unprofitable performance, low plant utilization and evidence of physical damage. If there are low refining and marketing margins during an extended period, the Group may need to recognise impairment charges. The Group estimates value-in-use using a discounted cash flow model. The key assumptions, to which the calculation of value-in-use for the Refining and Marketing division is most sensitive, are refinery gross margin, capital expenditure and discount rate. ‘The average value assigned to the refinery gross margin during the plan period is based on * US$9.59 per barrel, For the purpose of determining value-in-use, risk-adjusted cash flows for a period of 20 years have been used at the Weighted Average Cost of Capital (WACC) pre-tax rate of 6.80%, Refining and Marketing recoverable amount exceeds its carrying amount by $7,023,683 (2016: $6,309,598, 2015: $1,462,012). Based on sensitivity analysis, a change of 1% in the cost of capital would change the value-in-use by $1,990,317, *Oil and gas prices quoted above are not expressed in thousands of dollars. Other costs related to exploration for and evaluation of oil and natural gas resources Assets and liabilities related to the exploration for and evaluation of mineral resources other than those presented in Notes 6 and 7 above are as follows: As at September 30 2017 2016 2015 $ 8 s Payable to contractors and operators $ 18187 $ 24056 $4,802 Year ended September 30 2017 2016 2015 Net cash used in operating activities 8 - $ (14972) $6,930) Net cash used in investing activities $ 1,191 $ (48,708) —$ (47,712) Page 58Petroleum Company of T! 2017 September 30 Notes to the Consolidated Financial Statements (continued) (Presented in Thousands of Trinidad and Tobago dollars) idad and Tobago Limited 10, Retirement benefit asset/ (obligation) 10.1 Employee benefits The majority of the Group's employees participated in one of the Group’s two (2) pension plans (the Plans). The Plans are of the defined benefit type and are established under Trust with the following Trustees: Pension Plan Membership Trustee Petrotrin Employees’ Pension Plan Allemployees excluding ex- Republic Bank Limited ~ Trust and (PEPP) Trintopee monthly rated Asset Management Division employees ‘Trintopec Staff Pension Plan (SPP) _—_All.ex-Trintopee monthly rated RBC Trust Limited employees ‘The SPP is exempt approved under the Income Tax Act whilst the PEPP was approved by the Board of Inland Revenue and registered with the Central Bank on 2017 March 06. ‘The Plans are funded to cover pension liabilities in respect of service up to the reporting date. They are subject to independent actuarial valuations atleast every three (3) years, on the basis of which the independent qualified actuary certifies the rate of employer's contributions which, together with the specified contributions payable by the employees and proceeds from the Plans’ assets, are expected to be sufficient to fund the benefits payable under the Plans, Employees contribute to the Plans at a rate of 7% of pensionable pay (basic salary, wages and cost of living allowance), reducing to 4% after 31 years’ pensionable service. For the year ended 2017 September 30, the employer's contribution rate was 14% of pensionable pay for PEPP and SPP, ‘The Pension Plans pay. © Pensions calculated on the basis of service, accrual rate and pensionable salary, and are subject 10 limitation of 66 2/3 % of final pensionable earnings. Upon retirement, the member has an option of either 100% monthly pension or 75% reduced monthly pension plus a tax-fee lump sum. The pension is guaranteed for 15 years and payable for the lifetime of the member: Death afier retirement benefit equal {o a lump sum of three (3) months pensionable basic earnings at time of retirement; Death in service benefit of refund of contributions plus interest in addition to four (4) times member's annual pensionable earnings at the time of death; + Disability benefit equal 0 60% of pensionable earnings at time of disability for a fixed period, but not after age 60; ‘* Spousal benefit of 50% of the pension the pensioner was in receipt of at the time of retirement and 65% {for Trinmar pensioners after guaranteed period expires. ‘A full independent actuarial valuation of the Plans was carried out as at 2016 September 30 and revealed that the finding level of the PEPP was 103% if no salary increases were granted for the period 2014/2017 or 2015/2018 or ‘98% if salary increase of 4% is granted whilst that of the SPP was 136%, The aggregate market value of assets of the former Plans that now form the PEPP stood at $8,953,000 as at 2017 September 30 while that of the SPP stood at 51,618,000. ‘A full independent actuarial valuation is completed every three years. Page 9Petroleum Company of Trinidad and Tobago Limited 2017 September 30 Notes to the Consolidated Financial Statements (continued) (Presented in Thousands of Trinidad and Tobago dollars) 10. Retirement benefit asset/(obligation) 10.1 Employee benefits (continued) An updated valuation of all of the Plans” assets and expected liabilities as at 2017 September 30, carried out by independent actuaries in accordance with the requirements of LAS 19 (revised) ‘This valuation is based on the most recent full actuarial valuation at 2016 September 30, rolled forward to reflect developments since that date which would have a significant effect on the defined benefit obligation and service cost and on up-to-date asset values. Financial assumptions used in the 2016 valuation are revised to reflect prevailing current economic conditions while the demographic assumptions remain identical to those used in the latest full actuarial valuation. ‘There are 2 self-administered Medical Plans for healthcare in respect of employees and retirces of the Group. All employees are eligible for membership in the Petrotrin Employees Medical Benefit Plan and the Trinmar Plan, where the coverage includes major medical expenses, hospitalisation, dental and optical care. All retirees are eligible for membership under the Petrotrin Retirees" Medical Assistance Plan and the Trinmar Plan where the coverage includes limited medical ‘expenses, hospitalisation for surgery only, dental and optical care. Provision has been made in respect of these medical benefits due to retirees only. No cover is provided to former deferred pensioners even after their pension comes into payment. The charge to the Profit and Loss includes current service cost, net interest on net retirement benefit/obligation, past service cost and administrative expenses. As at September 30 2017 2016 2015 s s 8 Obligation in statement of financial position: Retirement benefit obligation - @ (734,200) (220,500) (28,500) Pension benefits - net Retirement benefit obligation - Medical benefits © 2,536,100) 2,587,900) __(2,969,100) 43,270,900) (2,808,400) _(2,997,600) Year ended September 30 20 2016 2015 8 8 s Expense recognised in profit or loss: Net pension cost @ (276,100) (359,300) (238,600) Net benefit cost ) (204,200) 223,600 (217,400) (480,300) (582,900) (456,000) Page 60Petroleum Company of Trinidad and Tobago Limited 2017 September 30 Notes to the Consolidated Financial Statements (continued) (Presented in Thousands of Trinidad and Tobago dollars) 10. Retirement benefit obligation (continued) (a) Retirement benefit (obligation)/asset - pension benefits The amounts recognised in the consolidated statement of financial position for both plans are determined as follows: [As at September 30 2017 2016 2015 8 s s Present value of defined benefit obligation (11,188,600) (10,305,300) (10.451,200) Fair value of Plan assets 10,860,900 10,609,000 10,845,800 (Deficit) Surplus (327,700) 303,700 394,600 Effects of Asset Ceiling (406,500) 524,200) (423.100) Net retirement benefit obligation ___(734,200) (220,500) (28,500) ‘This obligation represents the present value of the (inerease)‘reduction in future contributions, as advised by the actuaries, Movement in present value of defined benefit obligation during the year: As at September 30 2017 2016 2015 s $ s Defined benefit obligation at start of year (10,305,300) (10,451,200) (10,421,200) ‘Current service cost (264,900) (262,400) (261,100) Interest cost (550,600) (506,500) (505,100) Members’ contributions (85,300) (85,900) (83,500) Re-measurement Past Service cost - (96,000) Z Experience adjustments (523,500) (115,800) 173,400 Actuarial gains from changes in financial assumptions (91,500) 362,400 “ ‘Actuarial gains from changes in demographic assumptions, 35,100 z é Benefits paid 597.404 631,100 646,300 Defined benefit obligation at end of year (11,188,600) (10,305,300) 0,451,200) Movement in Fair Value of Plan assets during the year: As at September 30 2017 2016 2015 s s s Fair Value of Plan assets at start of year 10,609,000 10,845,800 11,314,700 Interest income 574,000 532,400 555,700 ‘Return on Plan assets, excluding interest income 26,600 370,700) (616,900) Company contributions 169,200 171,300 160,700 Members’ contributions 85,300 86,900 83,500 Benelits paid (597,400) (651,100) Administrative expenses 5,800) 5.600) Fair Value of Plan Assets at end of year 10,860,900 10,609,000 _10,845,800 Page 61Petroleum Company of Trinidad and Tobago Limited 2017 September 30 Notes to the Consolidated Financial Statements (continued) (Presented in Thousands of Trinidad and Tobago dollars) 10, Retirement benefit asset/ (obligation) (continued) (a) Retirement benefit obligation - pension benefits (continued) Movement in the net retirement benefit asset recognised in the consolidated statement of financial position ‘As at September 30 2017 2016 2015 $ $ $ Retirement benefit (obligation)/asset at start of year (220,500) (28,500) 444,500 Net pension cost (276,100) (359,300) (238,600) Re-measurement recognised in other comprehensive income (406,800) (4,000) (395,100) Company contributions paid 169,200 171.300 160,700 Retirement benefit obligation at end of year (734,200) (220,500) (28,500) Contributions to post-employment benefit plans for the year ending 2018 September 30 are expected to be approximately $218,000. ‘The amounts recognised as part of administrative expenses in the consolidated statement of profit or loss was determined as follows: Year ended September 30 2017 2016 2015 s s 8 Current service cost (264,900) (262,400) (261,100) Net interest income on Plan assets (5,400) 4,700 28,100 Past Service Cost - (96,000) = Administrative expenses (5,800) _(5,600) (5,600) Net pension cost (Note 30) 276,100) 359,300) (238,600) Re-measurements recognised in Other Comprehensive Income: Year ended September 30 2017 2016 2015 s s s Experience gains/(losses) (553,300) 75,900 (443,500) Effect of asset ceiling 146,500 (79,900) 48,400, Re-measurements recognised in other comprehensive income (406,800) _ (4,000) 395,100)Petroleum Company of Trinidad and Tobago Limited 2017 September 30 Notes to the Consolidated Financial Statements (continued) (Presented in Thousands of Trinidad and Tobago dollars) 10. Retirement benefit asset/(obligation) (continued) (a) Retirement benefit obligation - pension benefits (continued) ‘The actual return on the Plan assets was: As at September 30 2017 2016 2015 8 s s ‘Actual return on Plan assets 600,600 161,700 (61,200) ‘The Plans’ assets are fully invested in a diversified general portfolio fund managed by the various ‘Trustees. Asset allocation is as follows: As at September 30 201 2016 2015 $ s s Locally listed equities 3,270,600 3,351,100 3,597,800 Overseas equities 2,003,200 1,772,400 1,594,900 Bonds 4,866,700 5,026,500 5,051,600 Mortgages. 24,300 9,100 12,100 ‘Mutual Funds 174,300 188,700 95,600 Cash and cash equivalents 521,800 261,200 493,800 Fair value of Plan assets at end of year 10,860,900 _ 10,609,000 __10,845,800 ‘The principal actuarial assumptions used were as follows": As at September 30 2017 2016 2015 Discount rate 5.50% 5.50% 5.00% Future salary increases 5.00% 4.75% 4.75% * Percentages shown are per annum No allowance was made for increases to pensions in payment or deferment. This is consistent with the basis used in previous years. Any pension increases granted are thus treated as a once-off event and would give rise to a past service cost under IAS 19 in the year of implementation. An allowance for future administrative expenses of 0.25% of pensionable earnings was assumed in the respective years. Assumptions regarding future mortality experience are set based on actuarial advice in accordance with published statistics. Post-retirement mortality is obtained from the Standard PMA (80) and PFA (80) tables centred in year 2010 for current pensioners and 2020 for future pensioners. Page 63Petroleum Company of Trinidad and Tobago Limited 2017 September 30 Notes to the Consolidated Financial Statements (continued) (Presented in Thousands of Trinidad and Tobago dollars) 10. Re ment benefit asset/ (obligation) (continued) (a) Retirement benefit (obligation)/asset - pension benefits (continued) These tables translate the average life expectancy in years and experience history of a pensioner retiring at age 60 as follows: Mortality assumptions As at September 30 2017 2016 2015 Life expectancy at age 60 for current pensioners in years Male 210 2 21.0 Female 25.1 25.1 25.1 Life expectancy at age 60 for current members aged 40 in years Male 214 214 214 Female 25.4 25.4 5.4 Sensitivity Analysis ‘The caleulation of the defined benefit obligation is sensitive to the assumptions used. The following table summarises how the defined benefit obligation as at 2017 September 30, would have changed as a result of a change in these assumptions, 1% pa higher 1% pa lower 8 3 = Discount rate (1,103,500) 1,286,300 ~ Future salary increases 336,200 (350,500) ‘An increase of one (1) year in the assumed life expectancies shown above would increase the defined benefit obligation at 2017 September 30, by $142,000, ‘The sensitivities were calculated by re-calculating the defined benefit obligations using the revised assumptions. Page oFPetroleum Company of Trinidad and Tobago ited 2017 September 30 Notes to the Consolidated Financial Statements (continued) (Presented in Thousands of Trinidad and Tobago dollars) 10, Retirement benefit asset/(obligation) (continued) (b) Retirement benefit obligation - medical benefits As at September 30 2017 2016 2015 Retirement benefit obligation at start of year $ (2,587,900) $ (2,969,100) $ (2,871,500) Current service cost (64,600) (7,700) (76,400) Interest cost (139,600) (145,900) (141,000) Re-measurement ~ Experience Adjustments 96,200 312,000 15,700 Actuarial Gain/loss from changes in demographic assumptions 69,400 201,700 2 Benefits paid by Company (net of retiree contributions) 89,800 91,100 104,100 Retirement benefit obligation at end of year _$_ (2,536,700) $ (2,587,900) $_(2,969,100) Page 65Petroleum Company of Trinidad and Tobago Limited 2017 September 30 Notes to the Consolidated Financial Statements (continued) (Presented in Thousands of Trinidad and Tobago dollars) 10, Retirement benefit asset/(obligation) (continued) (b) Retirement benefit obligation - medical benefits (continued) ‘The amounts recognised as part of administrative expenses in profit or loss was determined as follows: ‘Year ended September 30 2017 2016 2015 s 8 s Current service cost (64,600) (77,700) (76,400) Interest on retirement benefit obligation, 139,600 145,900) __(141,000) Net benefit cost (Note 30) (204,200) (223,600) (217,400) Re-measurements recognised in Other Comprehensive Income: Year ended September 30 2017 2016 2015, $ S s Re-measurements experience adjustments 165,600 $13,200 __15,700 ‘Summary of principal assumptions used were as follows": As at September 30 2017 2016 2015 Discount rate 5.50% 5.50% 5.00% Medical expenses increases 5.75% 5.15% 5.15% * Percemtages shown are per annum. ‘Sensitivity Analysis ‘The caleulation of the defined benefit obligation is sensitive to the assumptions used, The following table summarises how the defined benefit obligation as at 2017 September 30 would have changed as a result of a change in the assumptions used. 1% pa higher 1% pa lower $ 8 ~ Discount rate (325,300) 410,800 - Medical expenses increases 407,600 (328,500) ‘An increase of 1 year in the assumed life expectancies shown above would increase the defined benefit obligation at 2017 September 30 by $128,900. The sensitivities were calculated by re-calculating the defined benefit obligations using the revised assumptions. Page 66Petroleum Company of Trinidad and Tobago Limited 2017 September 30 Notes to the Consolidated Financial Statements (continued) (Presented in Thousands of Trinidad and Tobago dollars) 11, Available-for-sale finan iments As at September 30 2017 2016 2015 Ss s 8 Colonial Life Insurance Company Limited (CLICO) 1,910 2 2,132 Metal Industries Company Limited 190 2222 2.322 There were no disposals during the year and no impairment loss was recorded in the year ended 2017 September 30 (2016 and 2015: nil) 12, Investment in Associate As at September 30 2017 2016 201s s s 8 La Brea Industrial Development Company Limited (LABIDCO) 36.968 32,582 Prior to Financial Year 2017, Petrotrin’s share of the investee was 19% which was reduced to 8.6% during the Financial Year 2017. The reduction in Petrotrin’s shareholding in LABIDCO has been reduced to a simple investment as described in Note 13 13. Investment - Other As at September 30 2017 2016 2015 $ 8s s La Brea Industrial Development Company Limited (LABIDCO) 23,827 = LABIDCO is principally engaged in the promotion and development of an industrial estate as well as. ‘marine infrastructure facilities at La Brea. During financial year 2017 Petrotrin’s shareholding in LABIDCO was reduced from 19% to 8.6%. The value of the shares owned by Petrotrin was determined using the net assets of LABIDCO until a valuation is undertaken by an independent consulting firm. Page 67Petroleum Company of Trinidad and Tobago Limited 2017 September 30 Notes to the Consolidated Financial Statements (continued) (Presented in Thousands of Trinidad and Tobago dollars) 14, Net Deferred Income Tax Assets/(Liabi 's) Deferted income taxes are calculated on all temporary differences under the liability method using tax rates of 55% (Exploration and Production Operations (E&P)) and 50% (Refining and Marketing Operations (R&eM)) ‘The movement of the deferred income tax account is as follows: At start of year (Charge)Credit for the year: Recognised in profit or loss (Note 34) Recognised in other comprehensive income Atend of year As at September 30 2017 2016 2015 s s s 1,121,742 4,484,571 3,391,901 (332,613) (3,093,452) 892,157 5,616 ___ (269,377) 200.513 864,745 1,121,742 _4,484,571 Deferred income tax assets are recognised only to the extent that realisation of the related tax benefit is probable. Deferred income tax assets and liabilities in the statement of financial position, and the deferred tax (charge)/credit to profit or loss, are attributable to the following items Deferred income tax assets Retirement benefit asset Provision for abandonment Vacation leave payable Interest payable ‘Tax losses carried forward Retirement benefit obligation Exchange loss/ (gain) Deferred income tax liabilities Accelerated tax depreciation Net deferred income tax assets As at 2016 September 30 s 1,372,472 2,293,258 108,166 245,250 7,538,521 123,552 230,033 11,911,252 10,789,510 112,742 (Charged)/Credited As at 2017 September 30 Other Profit or loss comprehensive income s s s 24,857 (51,916) 1,345,413 (545,022) - 1,748,236 4,232 - 112,398, (177,555) - 67,695 647,143) - 7,191,378 143,958 127,532 395,042 12,788 245 909,461) 73616 _11,077.407 576,848 (10,212,662) 632,613) 75,616 _864,745 Page o®Petroleum Company of Trinidad and Tobago Limited 2017 September 30 Notes to the Consolidated Financial Statements (continued) (Presented in Thousands of Trinidad and Tobago dollars) 14, Net Deferred Income Tax Assets/(Liabi Deferred income tax assets Retirement benefit asset Provision for abandonment Vacation leave payable Interest payable TTax losses earried forward Retirement benefit obligation Deferred income tax liabilities Accelerated tax depreciation Exchange (gain)/loss Net deferred income tax assets Deferred income tax assets Retirement benefit obligation Provision for abandonment Vacation leave payable Interest payable Retirement benefit asset ‘Tax losses carried forward Deferred income tax liabilities Accelerated tax depreciation Exchange loss/(gain) Net deferred income tax assets ies) (continued) As at 2015 (Chargedy/Credited September 30 Other Profit or loss comprehensive come 8 s s 1,573,936 70,027 71,491) 2,388,306 (95,048) 5,628 246,632 (1,382) - 10,606,518 (3,067,997) ~ 22,080 ___99,358 __2.114 14,940,010 _(2,989,414 (269,377) (10,443,827) (345,683) - 1,612) 241,645 - 0,455,439) 104,038) = 4.484.571 —_G,093,452) (269,377) As at 2014 (Chargedy/Credited September 30 Other Profit/(loss) comprehensive income s s s 1,522,355 59,879 (8,298) 3,840,535 (1,452,229) - 98,787 3,751 = 250,372 (3,740) =f (227,900) 41,169 208,811 8,838,954 __1,767,564 = 14,323,103 416,394 200,513 (10,874,684) 430,857 (56,518) __44,906 10,931,202) __475,763 3,391,901 892,157 200,513 As at 2016 September 30 s 1,372,472 2,293,258 108,166 245,250 7,538,521 123,552 11,681,219 (10,789,510) — 230,033 (10,559,477) 1,121,742 As at 2018 September 30 8 1,573,936 2,388,306 102,538 246,632 22,080 10,606,518 14,940,010 (10,443,827) 612) (10,455,439) 4,484,571 Page ooPetroleum Company of Trinidad and Tobago Limited 2017 September 30 Notes to the Consolidated Financial Statements (continued) (Presented in Thousands of Trinidad and Tobago dollars) 14, Net Deferred Income Tax Assets/(Liabilities) (continued) Tax losses The following table provides details of tax losses for Refining & Marketing and Exploration & Production: Year ended September 30 Restated 2017 2016 2015 s s $ Tax losses not recognised as deferred tax 11,669,270 8,627,572 57,558 ‘Tax losses recognised as deferred tax 14,205.610 15,255,019 _21,167,232 ‘Total unutilised losses carried forward 25,874,880 23,882.59 21,224,790, 15. Income taxes recoverable As at September 30 2017 2016 2015 Ss $ s Income taxes recoverable 530,683 _$30,683 530,683 ‘These amounts represent overpayments of Petroleum Profits Taxes resulting from re-filing of tax returns to claim previously un-utilised tax losses for the years 1994 to 2006. In financial year 2016 Petrotrin was successful in its tax appeal against Board of Inland Revenue for the use of the tax losses of the predecessor companies. 16, Cash in escrow - shareholder As at September 30 2017 2016 2015 s s is 211,948 184,561 49,384 Page 70Petroleum Company of Tri 2017 September 30 Notes to the Consolidated Financial Statements (continued) (Presented in Thousands of Trinidad and Tobago dollars) jidad and Tobago Limited 16, Cash in escrow ~ shareholder (continued) The new land licences agreements effective in the year 2006, contain a clause requiring Petrotrin to establish an escrow account at an approved financial institution in the name of the Minister of Energy and Energy Affairs. Cash reserves, calculated based on production volumes, are to be accumulated in the account for use as @ contingency fund for remediation of pollution arising from Petroleum operations carried out under the licenses, as well as the eventual decommissioning of wells and facilities in the licensed areas, The Minister has sole discretion to access these funds in the event that Petrotrin fails to effect any environmental clean-up, properly abandon wells or decommission facilities. However, once the Group fulfils all decommissioning obligations to the satisfaction of the Minister, and upon determination of the license, the Minister shall return all existing funds in the escrow account to Petrotrin, 17. Loans receivable As at September 30 2017 2016 2015 8 $ $ World GTL Trinidad Limited (WGTL TL) in receivership of which: Current portion % 4 ‘Non-current portion ere ze Atend of year Beginning of year - - - Disbursements 2,862 4,447 5,300 Impairment loss (Note 29) (2,862) (4.447) (5,300) Reversal of previous impairment losses (Note 29) - - - Recoveries Exchange differences End of year At a meoting held on 2009 November 18 the Board of Directors agreed that all funds advanced by Petrotrin to the Receiver will form a secured loan between Petrotrin and the Receiver, at an interest rate of 10.37% for a term of three (3) years with a one (1) year moratorium on principal repayment. A full provision for impairment was recognised on this loan receivable at 2010 September 30 (US842,452/TT$268,216*), Additional disbursements of TTS2,862 were made in the year ended 2017 ‘September 30 (2016: TTS4,447; 2015: TT$5,300). A full provision was also made for these amounts. * This USS amount has been converted to TT$ at the rate prevailing at the date of the transaction. Page 7Petroleum Company of Trinidad and Tobago Limited 2017 September 30 Notes to the Consolidated Financial Statements (continued) (Presented in Thousands of Trinidad and Tobago dollars) 16, Cash in escrow ~ shareholder (continued) ‘The new land licences agreements effective in the year 2006, contain a clause requiring Petrotrin to establish an escrow account at an approved financial institution in the name of the Minister of Energy and Energy Affairs. Cash reserves, calculated based on production volumes, are to be accumulated in the account for use as a contingency fund for remediation of pollution arising from Petroleum operations carried out under the licenses, as well as the eventual decommissioning of wells and facilities in the licensed areas. The Minister has sole discretion to access these funds in the event that Petrotrin fails to cffect any environmental clean-up, properly abandon wells or decommission facilities, However, once the Group fulfils all decommissioning obligations to the satisfaction of the Minister, and upon determination of the license, the Minister shall return all existing funds in the escrow account to Petrotrin, Loans receivable As at September 30 2017 2016 2015 s 8 $ World GTL Trinidad Limited (WGTL TL) in receivership of which Current portion Non-current portion ‘At end of year Beginning of year - ~ Disbursements 2,862 4,447 5,300 Impairment loss (Note 29) (2,862) (4447) (5,300) Reversal of previous impaitment losses (Note 29) - - - Recoveries - Exchange differences = End of year At a mecting held on 2009 November 18 the Board of Directors agreed that all funds advanced by Petrotrin to the Receiver will form a secured loan between Petrotrin and the Receiver, at an interest rate of 10.37% for a term of three (3) years with a one (1) year moratorium on prineipal repayment. A full provision for impairment was recognised on this loan receivable at 2010 September 30 (US$42,452/TTS268,216*). Additional disbursements of TTS2,862 were made in the year ended 2017 September 30 (2016; TTS4,447; 2015: TT$5,300). A full provision was also made for these amount. * This US$ amount has been converted to TTS at the rate prevailing at the date of the transaction. Page 7Petroleum Company of Trinidad and Tobago Limited 2017 September 30 Notes to the Consolidated Financial Statements (com ed) (Presented in Thousands of Trinidad and Tobago dollars) 18. Inventories As at September 30 2017 2016 2015 $ 8 s Materials and supplies 676,328 704,219 673,725 Less: provision for obsolescence 204,024) (93,836) __(62,474) 472,304 610,383 611,251 Crude oil 571,603, 530,710 532,109 Refined products 1,089,414 1.144.084 074,591 2,133,321 2,285,177 2,217,951 ‘The Group recognised an increase of $110,188 in 2017 (increase of $31,362 in 2016; decrease of $7,250 in 2015) in the provision for obsolescence of its inventories, Page 72Petroleum Company of Trinidad and Tobago Limited 2017 September 30 Notes to the Consolidated Financial Statements (continued) (Presented in Thousands of Trinidad and Tobago dollars) 19. Receivables and prepayments civables* Less: provision for impairment of trade receivables Receivables from related parties * Less: provision for impairment of receivables Other receivables Less: provision for pairment of other receivables ‘Trade and other receivables excluding prepayments and taxes ‘Taxes recoverable Prepayments, Deferred Charges and Accrued Revenue Trade and other receivables including prepayments and taxes “Includes Subsidy recoverable from GORTT 20. Cash and cash equivalents Cash at bank and in hand Short-term bank deposits ‘The weighted average effective interest rate on short-term deposits was 0.26% (2016: As at September 30 2017 2016 201s $ $s $ 753,593 815,500 1,037,434 18.212) 10,223) ___ (821 —— 735,381 805,277 ___ 1,036,613 1,082,003 1,003,222 1,179,268, ——44.614) __(23.844)_ (68,908) 1,037,389 __ 979,378 1,110,360, 402,458 393,320 299,168 (243,858) (219,532) 181.015) 158,600 73.288 118.153 1,931,370 1,958,443, 2,265,126 3,757 4,867 15,598 498.290 307.503 305.717 2417 2.270.813 __2,586,441 815,516 837,543 932,840 ‘As at September 30 2017 2016 2015 $s $ $ 315,576 300,434 488,666 536.646 $27,244 1,243,252 — 852,222 827,678 1,731,918 20%; 2015 0.21%). These deposits have an average maturity of one (1) day (2016: one (I) day; 2015: one (1) day). 21, Non-current asset held for sale During fiscal 2017 the Group completed the sale of its 20% interest in Block 1A to The National Gas Company of Trinidad and Tobago. Page 73Petroleum Company of Trinidad and Tobago Limited 2017 September 30 Notes to the Consolidated Financial Statements (continued) (Presented in Thousands of Trinidad and Tobago dollars) 22, Share capital As at September 30 2017 2016 s s Authorised 300,000,000 ordinary shares of no par value Issued and fully paid 300,000,000 ordinary shares of no par value 2.272.274 2,272,274 23. Borrowings ‘The carrying amounts of borrowings are stated below: 2015 8 2,272,274 As at September 30 2017 2016 2015 s s s Gasoline Optimisation Project /Ultra Low Sulphur Diesel Plant @ 5,720,398 5,669,372 5,349,063 Gasoline Optimisation Project (a) 2,081,489 2,502,716 2,757,435 Other (b) 64,331 64,186 2.347 Total borrowings (at fixed rates) 7,866,218 8.236.274 __ 8,168,845 of which. Current portion 482,018 479,385 454,185 Non-current portion 7,384,200 7.256889 __7,714,660 7,866,218 8,236,274 8,168,845 Maturity of non-current borrowings Later than 1 and less than 3 years 6,123,805 6,501,907 785,559 Between 3 and 4 years 839,354 841,272 5,742,877 5 years and over 421,041 413.710 __ 1,186,224 7,384,200 _____7,756,889 7,714,660 Weighted average effective interest rates Year ended September 30 2017 2016 2015 bank borrowings (medium and long-term) 8.74% 8.48% 8.48% Page 74Petroleum Company of Trinidad and Tobago Limited 2017 September 30 Notes to the Cons lated Finan icial Statements (continued) (Presented in Thousands of Trinidad and Tohago dollars) 23. Borrowings (continued) (a) Gasoline Optimisation Project/ Ultra Low Sulphur Diesel Plant Description I USS850 Million USS750M ‘Canrying Value at 2017 September 30 | FTS5,720.398 TTS2,087,459 ‘Carrying value at 2016 September 30, T1S5.669.372 TTS2,502.716 ‘Carrying value at 2015 September TTS5.349.063, “T1S2,757.435 Currency usD USD Tope ofNots lay Pevsin | Sener Umsed Notes under 148 Seale UTA ee 1 BI/BB by Moody's Investor BI/BB by Moody's Investor Services to Services and Standard and Poor's | standard and Poor's espestvely Date of loan 2009 August 14 2007 May 08 Fixed coupon ae 975% per ann 6.00% pe annum Yield 988% 6.08%, Tenor 10 years — 1S years Moratorium : 3 years on principal payments Interest payments Payable semi-annually on August | and February 14 commencing ‘on 2009 August 14 Payable semi-annually on May 08 and November 08 commencing 2007 May 08 24 equal semi-annual instalments on ‘each May 08 and November 08 of Bale para Ball US$31,250/TTS210,691 beginning ‘November 08,2010 Maturity 2019 August 14 2022 May 08 Redemption ‘Subject to optional redemption | Subject to optional redemption Effective FY 2014, the interest portion relating to this plant has Interest on USLD been expensed in the Profit/Loss as active construction on this plant has ceased, Refer Note 33, © Standard Investment Grade covenants apply including limitations on liens, limitations on sale and leaseback transactions and limitations on consolidation, merger and sale of assets [ectesaae © Petrotrin is required to furnish to the Trustee and Holders of the Notes, its quarterly and annual audited financial statements. The former is due within 60 calendar days after the end of each of the first three finaneial quarters and the latter within 150 calendar days after the end of each fiscal ‘year. Failure to comply with the above reporting requirement does not constitute an event of default in accordance with loan documentation Evsets of Dau There were no events of default over the period 2015-2017 Page 75Petroleum Company of Trinidad and Tobago Limited 2017 September 30 Notes to the Consolidated Financial Statements (continued) (Presented in Thousands of Trinidad and Tobago dollars) ued) 23. Borrowings (cont The proceeds of the Notes were used to finance the Gasoline Optimisation Project (GOP), and to construct the Ultra Low Sulphur Diesel (ULSD) Plant. The GOP was an extensive upgrade of the refinery, which has enabled Petrotrin to produce increased volumes of higher quality environmentally satisfactory gasoline, The GOP included the addition of an upgraded Fluidised Catalytic Cracking Unit (FCCU), a Naphtha Pre-Fractionation Unit (PFU), an Isomerisation Unit, a Continuous Catalytic Regeneration Platformer Unit (CCR), an Alkylation Uni/Acid Plant and all associated utilities and offsites. All plants achieved commercial production during 2013, ‘The ULSD Plant is a high pressure, catalytic, hydrotreating process utilising the SynSat licensed process technology. Upon implementation, Petrotrin will produce improved quality diesel that will meet new local and international quality specifications. In addition, the ULSD Plant will provide additional value as it would enable our refinery to process a broader range of crude oils, and can result in the substitution of relatively expensive erudes with some that are less expensive, improving overall margins. The project is not yet completed. (b) Other As at September 30 2017 2016 2015 ‘The National Gas Company of Trinidad and Tobago Limited $64,331 $64,186 __62,347 This represents the balance owed to NGC by Trintomar in respect of a Sharcholders Loan provided to meet the shortfall in funding required to complete the Pelican Development Project back in 1993. This is an interest free, unsecured loan with no fixed terms of repayment. Whilst the lenders have ‘agreed not to request repayment of any part of this loan balance within the foreseeable future, the loan is still repayable on demand, 24. Provisions Decommissioning costs As at September 30 2017 2016 2015 At start of year S$ 4,604,622 $4,503,810 $7,163,047 Revised costs estimates 1,309,841) (453,642) 2,976,663) Charge to profit or loss. - Finance charge (Note 31) 266,504 269,041 338,652 - Utilisation G14) (465) 6.257) ‘Translation differences 45,169 285,878 15,969) Atend of year $3,603,040 $4,604,622 $_ 4,503,810 of which Current portion 4,573 7,681 2,519 Non-current portion 3,598,467 4,596,941 4,501,291 At end of year $3,603,049 $4,604,622 $_4,503,810 Page 76Petroleum Company of Trinidad and Tobago Limited 2017 September 30 Notes to the Consolidated Financial Statements (continued) (Presented in Thousands of Trinidad and Tobago dollars) 24, Provisions (continued) Decommissioning costs This represents Management's best estimated cost of dismaniling exploration and production assets at the end of the producing lives of the fields and the refinery at the end ofits useful life and includes the costs of environmental remediation. ‘The estimated decommissioning cost at the end of the producing lives of fields is reviewed annually and is based on engineering estimates and reports. Provision is made for the estimated cost of decommissioning at the reporting date. The provision has been estimated using existing technology, at current prices using an escalation rate of 1.2% (2016 and 2015: 2%), and discounted at 6.11% for LNE & Trinmar (Exploration and Production) and 5.4% for Refining and Marketing (2016: 6.1785%; 2015: 6.0%) per annum, The overall decrease in decommissioning costs for the year ended 2017 September 30 is mainly due toa lower escalation rate as well as a longer tenor allocated to Refining and Marketing assets in order to bring it in line with the value in use calculation. This was partly offset by lower discount rates. The amount and timing of settlement in respect of future decommissioning provisions are uncertain and dependent on various factors that are not always within Management's control but are currently anticipated to be between 2018 and 2065. A 1% change in the escalation and discount rate will have the following impact on the provision for decommissioning: rap R&M Point Fortin Sensitivities LNE ‘Trinmar | PAP/ AUC 1% increase 206,543 173,084 197,137 35,176 escalation rate 3 2 1% decrease (190,968) (264,995) (78,507) 2,683) escalation rate 1% increase in (192,881) (207.460) (178,608) G8251) discount rate r al 1% decrease in 209,347 278,270 201,126 43,062 discount rate Page 77Petroleum Company of T: 2017 September 30 Notes to the Consolidated Financial Statements (continued) (Presented in Thousands of Trinidad and Tobago dollars) idad and Tobago Limited 28, Current Tax Lial Movement in current tax liabilities is as follows: : ‘As at September 30 2017 2016 2015 Balance at start of the year 2,123,021 2,123,495 | __ 5,156,100 Taxes = -[__ GIS Current Year Tax Expense - PPT 61 234 11,750 ‘Current Year Tax Expensei{credit) - SPT 279 (708) 366,796 ior period adjustment 130,224 = = Balance at the close of the year 2,254,175 2,123,021 | 2,123,495 26, Trade and other payables As at September 30 2017 2016 2015 ‘Trade payables $1,331,432 $1,282,732 $755,400 Due to related parties 189,441 121,628, 143,265 Benefits due to employees 1,013,770 756,540 716,620 Accrued expenses 1,134,709 1,135,857 1,177,443 ‘Acerued interest 148,107 164,516 157,343 Other payables 436,300 449,408 301,738 Trade and other payables excluding statutory Liabilities 4,253,759 3,910,681 3,251,809 Due to Government of Trinidad and Tobago ~ Royalties 851,651 645,388 240,587 - Taxes other than income taxes 511,073 _198,809 104,043, ‘Trade and other payables including statutory liabilities $5,016,483 S4,754,878 — $_3,596,439 Page 78Petroleum Company of Trinidad and Tobago Limited 2017 September 30 Notes to the Consolidated Financial Statements (continued) (Presented in Thousands of Trinidad and Tobago dollars) 25. Current Tax Liabilities Movement in current tax Liabilities is as follows: ‘As at September 30 2017 2016 | 2015 ‘Balance at start of the year 2,123,021 2,123,495 | __ 5,156,100 ‘Taxes Paid = ~ (611,151) | Current Year Tax Expense - PPT 651 234 11,750 Current Year Tax Expense/(credit) - SPT 279 (708) 566,796 Prior period adjustment 130,224 ~ = ‘Balance at the close of the year 2,254,175 |_ 2,123,021 2,123,495 26, Trade and other payables As at September 30 2017 2016 2015 Trade payables S 1,331,432 $1,282,732. $755,400 Due to related parties 189,441 121,628 143,265, Benefits due to employees 1,013,770 756,540 716,620 Acerued expenses 1,134,709 1,135,857 1,177,443 Accrued interest 148,107 164,516 157,343, Other payables 436,300 449,408 301.738 Trade and other payables excluding statutory Liabilities 4,253,759 3,910,681 3,251,809 Due to Government of Trinidad and Tobago ~ Royalties 851,651 645,388 240,587 = Taxes other than income taxes 511,073 198,809 104,043 ‘Trade and other payables including statutory liabilities $5,016,483 $_4,754,878 —$_3.596,439 Page 78Petroleum Company of Trinidad and Tobago Limited 2017 September 30 Notes to the Consolidated Financial Statements (continued) (Presented in Thousands of Trinidad and Tobago dollars) 27. Short-term loans Short-term loans 3819316 $4,339,367 $_ 4,984,304 Short-term loans during the year were unsecured with effective interest rates ranging from 2.58% to 5.46% (2016: 1.66% to 4.20%; 2015: 1.03% to 2.39%) per annum, They had varying maturity dates 030 to 365 days (2016: 42 to 360 days; 2015; 59 to 180 days). 28. Revenue Refined products sales Natural gas sales Crude oil sales Royalty income Natural gas liquids sales Other revenue Year ended September 30 2017 2016 2015 S$ 19,168,770 $ 15,891,387 $18,496,292 271,167 204,697 489,302 223,553 201,927 269,105 355,943 268,059 456,322 14,233 11,265 39,626 1,401 3358 999 $20,035,067 $_16,580,693 $_ 19,751,646 Page 79Petroleum Company of Trinidad and Tobago Limited 2017 September 30 Notes to the Consolidated Financial Statements (continued) (Presented in Thousands of Trinidad and Tobago dollars) 29. Other operating income Marine income Processing fees Storage fees Income from utilities Access fees Interest on receivables Sulphuric Acid fees Gain: foreign currency exchange Other income ‘Year ended September 30 s 2016 64,791 298 14,524 5,956 12,555 6,328 111,145 7,326 2018 68,967 4,909 14,949 7,137 12,722 72,600 4,382 Page 80Petroleum Company of Trinidad and Tobago Limited 2017 September 30 Notes to the Consolidated Financial Statements (continued) (Presented in Thousands of Trinidad and Tobago dollars) 30. Operating costs by nature (b)_ The following items are included in cost of sales; administrative expenses; marketing expenses and other operating expenses from continuing operations: Year ended 2017 September 30 Cost ofsales Administrative Marketing Other ‘Total expenses. expenses operating expenses s s s s s Purchases 13,015,119 = 13,015,119 Production taxes $80,153 - 580,153 Employee benefits expense (excluding retirement benefits) (Note 32) 1,342,835 901,447 63.404 ~ 2,307,686 Production and refining expenses 1,816,443, - 1,816,443 Movement in inventories 13,880 - 13,880 Amortisation of intangible assets (Note 7) 109,933 - 5,991 115,924 Depreciation (Note 6) 1,117,205, = 317M 1,148,916 Impairment of PPE assets 458,119 254,222 712,341 Rental of equipment 370,085 8,576 2,994 381,655 Gain on disposal of property, plant and equipment (Note 40) a =» - 8,672 Net benefit cost (Note 10) - 204,200 - 204,200 Charge for bad and doubtful debts 92,222 908 - - 53,130 Directors and key management remuneration (Note 38) = 12,238 - = 12,238 Net pension cost (Note 10) - 276,100 - — 276,100 Interest charges (COPCO) (14,949) (14,949) Bad Debt - LFPP project 86,319 86,319 Loss on foreign currency = = - 10,108 10,108 Other expenses/(income) 50,915 ___ (32,612) __90,301 __ 9,402 __118,006 Total 8,926,909 625,079 __156,699 __137,254 _ 20,845,941 Page 8)Petroleum Company of Trinidad and Tobago Limited 2017 September 30 Notes to the Consolidated Financial Statements (continued) (Presented in Thousands of Trinidad and Tobugo dollars) 30. Operating costs by nature (continued) Purchases Production taxes, Employee benefits expense (excluding retirement benefits) (Note 32) Production and refining expenses Movement in inventories Amortisation of intangible assets (Note 7) Depreciation (Note 6) Rental of equipment Gain on disposal of property, plant and equipment (Note 40) Impairment of PPE assets Net benefit cost (Note 10) Charge for bad and doubtful debts Directors and key management remuneration (Note 38) Increase in provision for inventory obsolescence (Note 18) ‘Net pension cost (Note 10) Other expenses/(income) Total Cost of sales 8 10,608,668 519,182 1,342,728 1,768,276 (67,748) 377,673 1,114,143, 384,457 21,635 75,682 Year ended 2016 September 30 Administrative Marketing Other Total expenses, expenses operating expenses 8 8 8 8 - es = 10,608,668 - _ = $19,182 718,711 56,315 ~ 2,117,754 34,809 = 1,803,085 (67,748) 7,726 385,399 15,550 1,129,693, ~ 395,810 ~ - 15,024 15,024 21,035 223,600 223,600 2,119 77,801 14,685 - ~ 14,685 31,362 S - 31,362 359,300 A - 359,300 36,693) __ 47,111 __(25,978) 6,384 —1.222,661 140,011 __12,322 _17,641,634 Page 82Petroleum Company of Trinidad and Tobago Limited 2017 September 30 Notes to the Consolidated Financial Statements (continued) (Presented in Thousands of Trinidad and Tobago dollars) 30. Operating costs by nature (continued) Year ended 2015 September 30 Cost of sales Administrative Marketing Other Total expenses expenses operating expenses s 8 s s Purchases 11,588,957 = 2 a Production taxes Employee benefits expense (excluding retirement benefits) (Note 32) 1,420,981 795,634 61,739 ~ 2,278,354 Production and refining expenses 1,750,989 2 ~ 1,750,989 Movement in inventories 1,838,584 = - 1,838,584 Amortisation of intangible assets (write back)charge (Note 7) (641,244) * - 7,513 (633,731) Depreciation (Note 6) 1,187,827 - =~ 14,905 1,202,732 Rental of equipment 430,752 13,669 2,626 - 447,047 Loss on disposal of property, plant and equipment (Note 40) - ~ - (16) (16) Impairment of PPE assets 157,840 157,840 Net benefit cost (Note 10) - 217,400 - - 217,400 Loss on foreign currency exchange = = 26,026 26,026 Charge for bad and doubtful debts 68,320 66 - 68,386 Directors and key management remuneration (Note 38) - 28,760 - - 28,760 Increase in provision for inventory obsolescence (Note 18) - 7,250 7,250 Net pension cost (Note 10) - 238,600 - 238,600 Other expenses/(income) 28511 __G1,396) 54,059 3389 __54,563 Total 19,253,844 _1,269,983 118.424 __S1,817 20,694,068 Page 83Petroleum Company of Trinidad and Tobago Limited 2017 September 30 Notes to the Consolidated (Presented in Thousands of 1 inancial Statements (continued) “inidad and Tobago dollars) 31. Impairment (write-back)/losses related to investments Year ended September 30 2017 2016 2014 s 8 8 Impairment loss related to loans receivable: - WGTL TL in receivership 2,862 4,447) 5,300) 17 S862) $ (4,447) $5,300) Reversal of previous impairment losses/(gani): = CLICO 13 ’ (20) -LATT 4,669 4,678 4.669 $4682 $4683 § 4.649 Net impairment writeback/(losses) $__1,820 §. 236 $__(6s1) In the year 2017 September 30, the reversal of impairment losses for Lake Asphalt Company of Trinidad and Tobago Limited (LATT) related to receipt of funds for the redemption of preference shares which were issued by LAT in settlement of amounts owed to Petrotrin for bitumen sales. 32, Employee benefits expense (excluding retirement benefits) Year ended September 30 2017 2016 2015 Salaries and wages benefits $1,576,264 $1,502,530 $1,501,918 Allowances 148,433, 135,589 220,966 Overtime 320,421 229,309 280,560 Other personnel costs 39,861 41,884 40,953 Medical services 67,413, 68,074 92,085 ‘Travel plan 20,771 21,561 22,590 Voluntary Selective Separation Plan 200 1,772 = Housing aid 18,489 19,244 19,531 Savings plan 40,268 34.745 33,774 National Insurance 75566 ___ 63,046 65,977 $2,307,686 $2,117,754 §_2.278,354 33. Finance income and costs Restated Restated, - Bank borrowings S$ (784,501) $ (819.017), $ (838,377), - Finance charge on decommissioning costs (Note 23) (266,504) 269,041) 338,652) Finance costs S (1,051,005) § (1,088,058) $ (1,177,029) Finance income: + Interest on short-term investments 1,474 1,867 2.644 Finance ineome and costs S_(1,049,531) $1,086,191) $_ (1,174,385) In the year ended 2017 September 30, the Group incurred interest on borrowings of $784,501 (2016: $819,017; 2015: $838,377), of which $147,011 (2016: $101,306; 2015: $78,129) was capitalised as interest on general borrowings. Page stPetroleum Company of Trinidad and Tobago 2017 September 30 Notes to the Consolidated Financial Statements (continued) (Presented in Thousands of Trinidad and Tobago dollars) ed 34, Tax (a) Amounts recognised in profit or loss Year ended September 30 2017 2016 2015 s s s Tax (expense)ieredit Current tax: (651) (234) (11,943) Prior period adjustment PPT (130,223) - - Deferred income tax: current year (Note 14) (332,613) (3,093,452) 892,157 1214 (463,487) 3,093,686) ‘The tax on the Group's profit before tax differs from the theoretical amount that would arise using the basic tax rate applicable to profits as follows: ‘Year ended September 30 2017 2016 2015 $ s s Loss before tax 1,730,716) __ (1,893,230) 922,392 Tax calculated at a rate of 55% 951,260 1,041,276 1,057,315 ~ Expenses not deductible for tax purposes (206,852) (26,211) (13,906) = Income not subject to tax. - = 425 - Effect of difference on initial recognition 44,959 57,901 115,274 - Prior year tax adjustment -PPT/DIT (127,960) - (11,750) - Effect of Deferred income tax not recognised on R&M tax losses for current year (1,111,267) (837,504) = - De-recognition of Deferred income tax asset relating to prior year R&M tax losses - 561,903) 12,326 - R&M deferred taxes rate reduction (90,835) (101,804) (156,395) - Difference due to translation 33,322 434,476 (27,725) ~ Effect of deferred income tax asset not recognised on Trintomar = 2,524 2 - Other 43,886 102,441 (95,350 (463,487) 3,093,686) 880,214 Page 8SPetroleum Company of Trinidad and Tobago Limited 2017 September 30 Notes to the Consolidated Financial Statements (continued) (Presented in Thousands of Trinidad and Tobago dollars) 35. Restatements, Prior to financial year 2017, interest incurred on borrowings to finance the Ultra Low Sulphur Diesel Project (ULSD) was inappropriately capitalised as part of the costs of the project. In 2013 September, structural failures occurred during hydro-testing and during the course of investigating these failures, seismi design issues were also discovered. As such active construction on this project was ceased, Interest previously capitalised is now expensed through the statement of profit and loss and other comprehensive income. Effet on Statement of Financial position As at 2016 September 30 Non-current assets Property, plant and equip - interest capitalised for FY2016/15/14 Retained earnings ent Effect on statement of profit and loss Finance cost ~ ULSD interest expensed for FY2016 Effect on statement of financial position As at 2015 September 30 Non-current assets Property, plant and equipment interest capitalised for FY2015/14 Retained earnings Effect on statement of profit and loss Finance cost ~ ULSD — interest expensed for FY2015 sTT‘000 As previously reported 20,220,128 4,246,893, 869,213, 19,676,440 777,931 957,823 STT"000 Restatement Adjustments (658,314) (658,314) 218,844 (439,469) (439,469) 219,206 STT"000 As restated 19,561,814 3,588,579. 1,088,057 19,236,971 8,338,462 1,177,029, Page 86Petroleum Company of Trinidad and Tobago Limited 2017 September 30 Notes to the Consolidated Financial Statements (continued) (Presented in Thousands of Trinidad and Tobago dollars) 36. Contingent liabilities (a) Housing loan guarantee The Group has guaranteed mortgage-housing loans amounting to approximately 2017: $5,242 (2016 $5,786; 2015: $6,320) made by various financial institutions to its employces participating in the housing aid scheme operated by the Group. (b) Letter of credit The Group has an outstanding letter of credit facility with a financial institution for 2017 $143,956 /USS21,352 (2016: $141,834/USS21, 128; 2015: $131,821/US$20,775) which expired on 2017 December 31. This credit facility was established to meet Petrotrin’s 15% share of its abandonment liability with respect to its TSP Joint Venture, (©) Litigation Contractors” claims against the Group amounted to $121,387 (2016: $48,587; 2015: $46,668). There are a number of other legal claims against the Group amounting to $56,622 (2016: $28,292: 2015: $29,132) in the ordinary course of business, including employment and pollution. At present, it is not possible to predict the outcome of such legal proceedings; however, the Group believes that they will be resolved with no significant impact on Group operations, financial position ot liquidity. (@) Customs and immigration bonds Contingent liabilities of the Group in respect of custom and immigration bonds amounted to approximately 2017: $6,749 (2016: $1,309; 2015: $3,308). (©) Severance payments ‘The Group has several union agreements, which provide for severance payments on the retrenchment of any member who has one or more years of service. If and when such retrenchment occurs the Group shall negotiate with the union the amount of severance to be paid which will be in addition to any other benefits to which the employee may be entitled. No provision has been made for such a contingent liability in these consolidated financial statements. () Financial support guarantee Further to a letter of guarantee dated 1999 September 23, as the major shareholder in Trintomar with respect to abandonment liabilities, the Group has provided a guarantee of financial support to Trintomar in the event Trintomar cannot meet its normal operating commitment,Petroleum Company of Trinidad and Tobago Limited 2017 September 30 Notes to the Consolidated Financial Statements (continued) (Presented in Thousands of Trinidad and Tobago dollars) 37. Commitments (a) Capital commitments Capital expenditure contracted for at the reporting date but not yet incurred is as follows! As at September 30 2017 2016 2015 s s 8 Property, plant and equipment 625,020 1,121,700 1,917,926 (b) Operating lease commitments ~ where the Group is the lessee The lease expenditure charged to the profit or loss during the year is disclosed in Note 28, (© Sales commitments ‘The Group has entered into long-term sales contracts with a number of its customers, At the reporting date, these amounted to approximately $4,498,121 (2016: $3,363,717; 2015: $3,095,739). This is for the delivery of contracted volumes. The selling price used to value the commitment is a formula based on Platt’s reference price, which is then forecasted based on Petroleum Institute Research Associates forecasts. Sales price at the actual date of sale is based on the pricing formula referenced to the Platt's posting. (@) Purchases commitments ‘There were no purchases commitments at 2017 September 30 (2016 and 2015: nil). Page 88Petroleum Company of Trinidad and Tobago Limited 2017 September 30 Notes to the Consolidated Financial Statements (continued) (Presented in Thousands of Trinidad and Tobago dollars) 38. Related party transactions In the ordinary course of its business Petrotrin enters into transactions concerning the exchange of goods, provision of services and financing with affiliated companies and subsidiaries as well as with entities directly and indireetly owned or controlled by the Government of the Republic of Trinidad and Tobago. Most significant transactions concern: ‘* Sale of refined products to Trinidad and Tobago National Petroleum Marketing Company Limited ‘© Purchase of natural gas from The National Gas Company of Trinidad and Tobago Limited © The exploration for and production of crude oil and natural gas through joint arrangements ‘The following is a description of trade and financing transactions with related parties: As at 2017 September 30 Gross Payables Commitments Name of Company/Equity receivables 3 8 s ‘The Government of the Republic of Trinidad and, ‘Tobago (GORTT) “Subsidy Receivable 815,516 es Taxes and royalties 3,110,454 a Taxes other than income taxes - 510,862 ~ Entities under common control Trinidad and Tobago National Petroleum ‘Marketing Company Limited 08 iOS eae = The National Gas Company of Trinidad and Tobago Limited Be: Ashe = Year ended 2017 September 30 Cost Revenue Goods Services Goods. Services s s s s ‘The Government of the Republic of ‘Trinidad and Tobago (GORTT) = Taxes and royalties = 411,821 - - Other = 223,959 2 mmon control ‘Trinidad and Tobago National Petroleum ue mie eer ca Marketing Company Limited ‘The National Gas Company of Trinidad 495,016 S = = and Tobago Limited Page 89Petroleum Company of Trinidad and Tobago Limited 2017 September 30 Notes to the Consolidated Financial Statements (continued) (Presented in Thousands of Trinidad and Tobago dollars) 38. Related party transactions (continued) ‘As at 2016 Seitnimbar30 Gross Payables Commitments Name of Company/Equity receivables 8 s s The Government of the Republic of Trinidad and ‘Tobago (GORTT) “Subsidy Receivable 837,543, - -Taxes and royalties ~ 2,763,835 ~ Taxes other than income taxes 78 198,568 Entities under common control Trinidad and Tobago National Petroleum 348,268 ay me Marketing Company Limited The National Gas Company of Trinidad and ae Tobago Limited 90,111 e ‘Year ended 2016 September 30 Cost Revenue Goods Serviees Goods Services 8 s s $ The Government of the Republic of Trinidad and Tobago (GORTT) - Taxes and royalties - 379,105 - Taxes other than income taxes - 180,854 - Entities under common control Trinidad and Tobago National Petroleum. 11,122 = 3,185,161 4,530 Marketing Company Limited The National Gas Company of Trinidad 468,836 5 - 2 and Tobago Limited Page 50Petroleum Company of Trinidad and Tobago Limited 2017 September 30 Notes to the Consolidated Financial Statements (continued) (Presented in Thousands of Trinidad and Tobago dollars) 38. Related party transactions (continued) As at 2015 September 30 Gross Payables Commitments Name of Company/Equit receivables 8 s s ‘The Government of the Republic of Trinidad and Tobago (GORTT) Subsidy Receivable 932,840 - - -Taxes and royalti = 1,833,212 - - Taxes other than income taxes 78 103,660 - Entities under common control ‘Trinidad and Tobago National Petroleum Sashes me Bs ‘Marketing Company Limited ‘The National Gas Company of Trinidad and ‘Tobago Limited at ley Year ended 2015 September 30 Cost Revenue Goods Services Goods Services s s 8 s ‘The Government of the Republic of Trinidad and Tobago (GORTT) = Taxes and royalties - Taxes other than income taxes 1,229,621 224,363 Entities under common control Trinidad and Tobago National Petroleum 14,597 4,425,109 9271 Marketing Company Limited ‘The National Gas Company of Trinidad and 324,233, z s 2 ‘Tobago Limited Page 9TPetroleum Company of Trinidad and Tobago Limited 2017 September 30 Notes to the Consolidated Financial Statements (continued) (Presented in Thousands of Trinidad and Tobago dollars) 38, Related party transactions (continued) Compensation of directors and key management personn Compensation of persons with responsibility for key positions in planning, direction and control functions of the Group, including executive officers (key Management personnel) consist of the following: Year ended September 30 2017 2016 2015 s s Short-term employees benefits 10,966 12,059 27,920 Long-term employees benefits 1,272 2,626 840 12,238 14,685 28,760 39, Interest in joint operations ‘The Company has a shared control in the following joint operations which are all based in Trinidad and Tobago: As at September 30 2017 2016 2015 Effective Effective Effective Interest Interest Interest NCMA Block 9 — Offshore 19.50% 19.50% 19.50% Central Block 35.00% 35.00% 35.00% East Brighton Block 30.00% 30.00% 30.00% Moruga West 40.00% 40.00% 40,00% Point Ligoure, Guapo Bay, Brighton Marine (PGB) 30.00% 30.00% 30.00% South East Coast Consortium 16.00% 16.00% 16.00% South West Peninsula 27.50% 27.50% 27.50% Parrylands ‘E’ Block 25.00% 25.00% 25.00% Teak, Samaan, Poui (TSP) 15.00% 15.00% 15,00% Block La . 20.00% 20.00% Block Lb - 20.00% 20.00% Block 22 10.00% 10.00% 10.00% Block 3A 15.00% 15.00% 15.00% Galeota 35.00% 35.00% 35.00% Guayaguayare Shallow 35.00% 35.00% Guayaguayare Deep 20.00% 20.00% Block 2ab - 35.00% Mayaro/Guayaguayare 30.00% 30.00% NCMA2 20.00% 20.00% NCMA 3 = 20.00% 20.00% NCMA4 20.00% 20.00% 20.00% Rio Claro Block 20.00% 20.00% 20.00% Ortoire Block 20.00% 20.00% 20.00% St. Mary’s Block 20.00% 20.00% 20.00% During the Financial Year 2017 Petrotrin’s 20% Sharcholding in Block 1A was sold to NGC E&P Investments Limited, whilst Block 1b, Guayaguayare Shallow and Deep, Block 2ab, Mayaro Guayaguayare, NCMA 2.and NCMA 3 were relinquished to the State. Page 92ted Petroleum Company of Trinidad and Tobago 2017 September 30 Notes to the Consolidated Financial Statements (continued) (Presented in Thousands of Trinidad and Tobago dollars) 39. Interest in joint operations (continued) ‘These joint operations are involved in the exploration for and product They represent unincorporated, jointly controlled operations. ‘The liabilities and expenditures of these ventures are included in the releva financial statements. m of crude oil and natural gas. up's. interest in the assets, components of the Group's The following table sets out summarized financial data of the Group's share of the assets and liabilities and material revenue and expenses of these jointly controlled operations. ‘These amounts are included in the Group's statement of financial position and profit or loss and other comprehensive Joint operations NCMA Teak, Central South East Other Total Block 9— Samaan, Block Coast Offshore oui (TSP) Consortium As at 2017 September 30 Assets: s 8 s . s s Property, plant and equipment 169,476 113,415 125,204 84,795 176,994 669,884 Current assets 32,466 17,002 2,765 21,659 1271 75,163 Liabili Current liabilities 18,784 14,456 7,462 9,618 14,433 64,753 Commitments 5,388 8,750 879 7,575 7,903 30,495 Year ended 2017September 30 Revenue 237,564 217,727 47,716 144,753 14,043 661,803 Cost of Sales (342,183) (153,178) (75,261)——(62,026) (6493) (639,141) Income tax benefit! (expense) 70,103 (32,457)——*15,436 (56,573) (7,866) (10,757) As at 2016 September 30 Assets: s s s $ 8 $ Property, plant and equipment 465,083 117,274 158,526 107,645 2,503,447 3,351,975 Current assets 48,363 14,422 9,973 27,141 1,103 101,002 Liabilities Current liabilities - 2 1,984 14,592 14,407 30,983 Commitments 22,503 13,750 19,183 5,000 3,125 63,561 Year ended 2016 September 30 Revenue 152,028 186,836 63,829 138,601 11497—$52,791 Cost of Sales (143,625) (196,804) (97,078) (99.950) (8,361) (545,818) Income tax benefit/ (expense) 7,624 7,286 13,487 (28,752) (4.421) (4,776) Page 93Petroleum Company of T: 2017 September 30 Notes to the Consolidated Financial Statements (continued) (Presented in Thousands of Trinidad and Tobago dollars) lad and Tobago Limited 39. Interest in joint operations (continued) Joint operations NCMA Teak, Central South East Block 9 Block Coast Offshore Pou (TSP) Consortium As at 2015 September 30 Ass 5 s s s Property, plant and equipment 536,942 374,850 194,708 173,429 Current assets 83,096 34,904 17,925 Liabi Current liabilities, 2 - 13,145 41,157 Commitments 19,952 66,563 19,899 1,251 Year ended 2015 September 30 Revenue 398,159 272,045 118,744 205,640 Cost of Sales (373,535) (305,005) (127,477) (124,628) Income tax benefit/ (expense) 17,043 15,630 (12,246) (68,567) ‘The commitments related solely to expenditure for which vendors have been contract contingencies related to the Group’s interest in these ventures, Other Total 8 s 253,339 68 5,601 "225,802 4,840 59,142 13,136 120,801 20,063 1,014,651 (12,526) (43,171) (7,830) (55,970) ed. There are no There are no contingencies related to the Group's interest in the joint ventures. No disclosure of amounts relating to the completion of the Gas-to-Liquids Plant has been included as work has temporarily ceased. These commitments related solely to expenditure for which vendors have been contracted. Page osPetroleum Company of Trinidad and Tobago Limited 2017 September 30 Notes to the Consolidated ancial Statements (continued) (Presented in Thousands of Trinidad and Tobago dollars) 40. Cash generated from operations Reconciliation of profit/(loss) before tax to cash generated from operations Operating Activities Loss before tax. Amortisation/(write back) of intangible assets Utilisation of decommissioning provision Depreciation Impairment related to investments ~ Associate Impairment losses related to investments Impairment write back related to investments Foreign currency translation loss Finance costs Finance income Loss/(Gain) on disposal of property, plant and equipment Share of profit of associate Net pension cost Net benefit cost ‘Taxes other than income taxes Pension contributions paid Post-employment medical benefits paid Changes in working capital: Decrease in accounts receivables and prepayments Decrease in inventories Decrease in other liabilities Cash generated from operations Note 31 31 33 3 30 10 10 10 10 Year ended September 30 2017 216 s s Restated (1,730,716) (1,893,230) 487,812 302,463, G14) (465) 1,489,370 1,234,264 20,311 - 2,862 4447 (4,669) (4,683) 237,916 103,177 1,051,005 1,088,058 1,474) (1,867) 8,672 15,024 - (1,584) 276,100 359,300 204,200 223,600 385 (689) (169,200) (171,300) (89,800) (91,100) (72,506) 315,412 155,408 24973) 629,938 1,115,864 2,492,200 __2,571,718 2018 s Restated (1,922,393) (487,706) (5,257) 14,547 (4,649) 43,172 1,177,029 2,644) 6) 2376) 238,600. 217,400 566,797 (160,700) (104,100) 4,785,448 1,771,558 (451,793) 6,848,217 Page 95Petroleum Company of Trinidad and Tobago Limited 2017 September 30 Notes to the Consolidated Financial Statements (continued) (Presented in Thousands of Trinidad and Tobago dollars) 40. Cash generated from operations (continued) In the cash flow statement, proceeds from sales of property, plant and equipment and intangible assets comprise! Year ended September 30 2017 2016 2015 Ss Ss 3 Net book value (Note 7) 19,452 15,061 - Loss/(Gain) on disposal (Note 30) ___8,672 15,024 6) Proceeds from sales ES), a a a 41. Subsequent events (a) Contingent liabilities - Letter of credit ‘To meet Petrotrin’s 15% share of its abandonment liability with respect to its TSP Joint Venture, a letter of credit facility for $143,957/USS21,352_(2016:$134,063/USS21,128; 2015: $131,821/US$20,775) with an expiry date of 2017 December 31 was established. Effective 2018 January 01, a new facility was established for $146,356/USS21,708 with an expiry date of 2018 December 31 (b) Status of Petrotrin Discussions are ongoing with our shareholders and other stakeholders with respect to the reorganisation of Petrotrin. (©) Negotiations ‘As at 2018 January 28, Petrotrin awaiting judgement from the Industrial Court with respect 10 outstanding wage negotiations. (©) USS 850 million Loan Petrotrin is currently reviewing its options for the refinancing of this debt. Pageos