MFC BANCORP LTD., 20-F filed on 4/30/2019
Annual and Transition Report (foreign private issuer)
v3.19.1
DOCUMENT AND ENTITY INFORMATION
12 Months Ended
Dec. 31, 2018
shares
Document And Entity Information [Abstract]  
Entity Registrant Name MFC BANCORP LTD.
Entity Central Index Key 0000016859
Trading Symbol mfcb
Entity Current Reporting Status Yes
Entity Filer Category Non-accelerated Filer
Current Fiscal Year End Date --12-31
Entity Well-known Seasoned Issuer No
Entity Common Stock, Shares Outstanding 12,534,801
Document Type 20-F
Document Period End Date Dec. 31, 2018
Amendment Flag false
Document Fiscal Year Focus 2018
Document Fiscal Period Focus FY
Entity Emerging Growth Company false
Entity Shell Company false
v3.19.1
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION - CAD ($)
$ in Thousands
Dec. 31, 2018
Dec. 31, 2017
Current Assets    
Cash and cash equivalents $ 67,760 $ 74,870
Short-term cash deposits   194
Securities 7,400 5,127
Securities-derivatives 209 190
Trade receivables 5,343 34,259
Tax receivables 104 747
Other receivables 8,675 21,690
Inventories 11,406 9,826 [1]
Restricted cash 281  
Deposits, prepaid and other 828 2,378
Total current assets 102,006 149,281
Non-current Assets    
Securities 4,702 771
Securities-derivatives   56
Real estate held for sale 13,830 13,803
Investment property 37,804 37,660
Property, plant and equipment 58,325 83,954
Interests in resource properties 273,250 92,551
Tax receivables 488  
Deferred income tax assets 15,735 16,694 [1]
Other 773 2,132
Other, restricted   45
Total non-current assets 404,907 247,666
Total Assets 506,913 396,947
Current Liabilities    
Short-term bank borrowings   2,074
Debt, current portion 0 43,733
Account payables and accrued expenses 26,315 44,750
Financial liabilities-derivatives 37 302
Income tax liabilities 855 1,910
Total current liabilities 27,207 92,769
Long-term Liabilities    
Loan payable 3,981  
Decommissioning obligations 13,641 13,699
Deferred income tax liabilities 66,421 10,303 [1]
Other 1,257 227
Total long-term liabilities 85,300 24,229
Total liabilities 112,507 116,998
Equity    
Capital stock, fully paid 16 16
Additional paid-in capital 312,132 312,132
Treasury stock (2,643) (2,643)
Contributed surplus 16,735 16,666
Retained earnings (accumulated deficit) 19,333 (87,183)
Accumulated other comprehensive income 40,803 38,792
Shareholders' equity 386,376 277,780
Non-controlling interests 8,030 2,169
Total equity 394,406 279,949
Total liabilities and equity $ 506,913 $ 396,947
[1] Restated
v3.19.1
CONSOLIDATED STATEMENTS OF OPERATIONS - CAD ($)
$ in Thousands
12 Months Ended
Dec. 31, 2018
Dec. 31, 2017
Dec. 31, 2016
Profit or loss [abstract]      
Revenue $ 139,751 $ 274,035 $ 1,131,657
Costs and expenses:      
Costs of sales and services 129,522 263,586 1,061,052
Selling, general and administrative 26,365 45,472 79,164
Share-based compensation - selling, general and administrative 69 2,876 0
Loss on settlement 5,600    
Finance costs 2,125 8,415 24,102
Impairment of available-for-sale securities     91
Reversal of impairment of hydrocarbon, resource properties and property, plant and equipment, net (188,203) (8,945) (8,566)
Exchange differences on foreign currency transactions, net (gain) loss (3,556) 1,038 (7,480)
Total (28,078) 312,442 1,148,363
Income (loss) before income taxes 167,829 (38,407) (16,706)
Income tax (expense) recovery:      
Income taxes (56,105) (6,885) (5,994)
Resource revenue taxes 487 (1,773) (1,020)
(Provision for) recovery of income taxes (55,618) (8,658) (7,014)
Net income (loss) for the year 112,211 (47,065) (23,720)
Net loss (income) attributable to non-controlling interests 65 (790) (1,641)
Net income (loss) attributable to owners of the parent company $ 112,276 $ (47,855) $ (25,361)
Earnings (loss) per share:      
Basic (in dollars per share) $ 8.96 $ (3.81) $ (2.01)
Diluted (in dollars per share) $ 8.96 $ (3.81) $ (2.01)
Weighted average number of common shares outstanding      
- Basic (in shares) 12,534,801 12,544,141 12,628,454
- Diluted (in shares) 12,534,801 12,544,141 12,628,454
v3.19.1
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS - CAD ($)
$ in Thousands
12 Months Ended
Dec. 31, 2018
Dec. 31, 2017
Dec. 31, 2016
Statement of comprehensive income [abstract]      
Net income (loss) for the year $ 112,211 $ (47,065) $ (23,720)
Items that will be reclassified subsequently to profit or loss      
Exchange differences arising from translating financial statements of foreign operations 2,440 7,002 (14,067)
Reclassification adjustment for exchange differences to statements of operations for subsidiaries deconsolidated 672 (11,306) (560)
Net exchange difference 3,112 (4,304) (14,627)
Fair value gain (loss) on available-for-sale securities   542 (73)
Reclassification of fair value (gain) loss on available-for-sale securities to statements of operations for securities disposed of or impaired   (52) 141
Net fair value gain on available-for-sale securities   490 68
Fair value loss on securities at fair value through other comprehensive income (75)    
Reclassification of reversal of impairment charge to statement of operations (3)    
Net fair value loss on securities at fair value through other comprehensive income (78)    
Items that will not be reclassified subsequently to profit or loss Remeasurement of net defined benefit liabilities      
Remeasurement of net defined benefit liabilities   219 192
Other comprehensive (loss) income 3,034 (3,595) (14,367)
Total comprehensive income (loss) for the year 115,245 (50,660) (38,087)
Comprehensive income attributable to non-controlling interests (277) (683) (1,585)
Comprehensive income (loss) attributable to owners of the parent company $ 114,968 $ (51,343) $ (39,672)
v3.19.1
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY - CAD ($)
$ in Thousands
Capital Stock and additional paid-in capital
Treasury Stock
Share-based Compensation
Contingently Issuable Shares
(Accumulated Deficit) Retained Earnings
Available-for-sale Securities
Securities at Fair Value Through Other Comprehensive Income
Defined Benefit Obligations
Currency Translation Adjustment
Share-holders' Equity
Non-controlling Interests
Total
Balance at Dec. 31, 2015 $ 419,916 $ (61,085) $ 13,790 $ 1,627 $ (63,559) $ (97)   $ (499) $ 57,099 $ 367,192 $ 2,008 $ 369,200
Balance (in shares) at Dec. 31, 2015 17,315,673 (4,687,218)                    
Net (loss) income         (25,361)         (25,361) 1,641 (23,720)
Dividends paid                     (1,683) (1,683)
Net fair value (loss) gain           68       68   68
Net (loss) gain on remeasurements               192   192   192
Net exchange differences                 (14,571) (14,571) (56) (14,627)
Balance at Dec. 31, 2016 $ 419,916 $ (61,085) 13,790 1,627 (88,920) (29)   (307) 42,528 327,520 1,910 329,430
Balance (in shares) at Dec. 31, 2016 17,315,673 (4,687,218)                    
Repurchase and cancellation of shares and cancellation of shares and equity instruments $ (2,856)     $ (1,627) 3,165         (1,318)   (1,318)
Repurchase and cancellation of shares and cancellation of shares and equity instruments (in shares) (90,000)                      
Plan of arrangement - purchase of fractional shares $ (41)                 (41)   (41)
Plan of arrangement - purchase of fractional shares (in shares) (3,654)                      
Plan of arrangement - cash distributions $ (2)                 (2)   (2)
Plan of arrangement - offsetting deficit (87,850)       87,850              
Plan of arrangement - share capital restructuring $ (17,019) $ 58,442     (41,423)              
Plan of arrangement - share capital restructuring (in shares) (4,621,571) 4,621,571                    
Shares issued to non-controlling interests, net of subscription receivables                     1,177 1,177
Net (loss) income         (47,855)         (47,855) 790 (47,065)
Dividends paid                     (1,601) (1,601)
Share based compensation     2,876             2,876   2,876
Loss on disposition of shares in a subsidiary               88   88   88
Net fair value (loss) gain           490       490   490
Net (loss) gain on remeasurements               $ 219   219   219
Net exchange differences                 (4,197) (4,197) (107) (4,304)
Balance at Dec. 31, 2017 $ 312,148 $ (2,643) 16,666   (87,183) 461     38,331 277,780 2,169 279,949
Balance (in shares) at Dec. 31, 2017 12,600,448 (65,647)                    
Change in accounting policy (see Note 2B(i))         524 $ (461) $ (63)          
Net (loss) income         112,276         112,276 (65) 112,211
Dividends paid                     (805) (805)
Return of capital                     (52) (52)
Share based compensation     69             69   69
Loss on disposition of shares in a subsidiary         (6,284)       (157) (6,441) 6,441  
Net (loss) gain on remeasurements             (78)     (78)    
Net exchange differences                 2,770 2,770 342 3,112
Balance at Dec. 31, 2018 $ 312,148 $ (2,643) $ 16,735   $ 19,333   $ (141)   $ 40,944 $ 386,376 $ 8,030 $ 394,406
Balance (in shares) at Dec. 31, 2018 12,600,448 (65,647)                    
v3.19.1
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY - Components of Capital Stock - CAD ($)
$ in Thousands
Capital Stock
Common Shares
Capital Stock
Preferred Shares
[1]
Capital Stock
Total
Balance at Dec. 31, 2015 $ 402,897 $ 17,019 $ 419,916 $ 369,200
Balance (in shares) at Dec. 31, 2015 12,694,102 4,621,571 17,315,673  
Disclosure of classes of share capital [line items]        
Issuance of contingently issuable shares     $ 0  
Issuance of contingently issuable shares (in shares)     0  
Plan of arrangement     $ 0  
Plan of arrangement (in shares)     0  
Balance at Dec. 31, 2016 $ 402,897 $ 17,019 $ 419,916 329,430
Balance (in shares) at Dec. 31, 2016 12,694,102 4,621,571 17,315,673  
Disclosure of classes of share capital [line items]        
Issuance of contingently issuable shares $ (2,856)   $ (2,856)  
Issuance of contingently issuable shares (in shares) (90,000)   (90,000)  
Plan of arrangement $ (87,893) $ (17,019) $ (104,912)  
Plan of arrangement (in shares) (3,654) (4,621,571) (4,625,225)  
Balance at Dec. 31, 2017 $ 312,148   $ 312,148 279,949
Balance (in shares) at Dec. 31, 2017 12,600,448   12,600,448  
Disclosure of classes of share capital [line items]        
Issuance of contingently issuable shares     $ 0  
Issuance of contingently issuable shares (in shares)     0  
Plan of arrangement     $ 0  
Plan of arrangement (in shares)     0  
Balance at Dec. 31, 2018 $ 312,148   $ 312,148 $ 394,406
Balance (in shares) at Dec. 31, 2018 12,600,448   12,600,448  
[1] Preferred Shares were held by the Group as Treasury Stock
v3.19.1
EQUITY - Components of Common Shares - CAD ($)
$ in Thousands
Dec. 31, 2018
Dec. 31, 2017
Dec. 31, 2016
Statement of changes in equity [abstract]      
Capital stock, no par value and fully paid     $ 402,897
Issued capital $ 16 $ 16  
Additional paid-in capital 312,132 312,132  
Capital Stock and additional paid-in capital, total $ 312,148 $ 312,148 $ 402,897
v3.19.1
EQUITY - Components of Contributed Surplus - CAD ($)
$ in Thousands
Dec. 31, 2018
Dec. 31, 2017
Dec. 31, 2016
Statement of changes in equity [abstract]      
Share-based compensation $ 16,735 $ 16,666 $ 13,790
Contingently issuable shares     1,627
Contributed Surplus $ 16,735 $ 16,666 $ 15,417
v3.19.1
CONSOLIDATED STATEMENTS OF CASH FLOWS - CAD ($)
$ in Thousands
12 Months Ended
Dec. 31, 2018
Dec. 31, 2017
Dec. 31, 2016
Cash flows from operating activities:      
Net income (loss) for the year $ 112,211 $ (47,065) $ (23,720)
Adjustments for:      
Amortization, depreciation and depletion 5,712 6,732 11,951
Exchange differences on foreign currency transactions (3,556) 1,038 (7,480)
(Gain) loss on short-term securities and securities at FVTPL (3,856) 1 66
(Gain) loss on dispositions of subsidiaries (25,771) 10,219 (2,585)
Impairment of available-for-sale securities     91
Reversal of impairment of hydrocarbon and resource properties and property, plant and equipment, net (188,203) (8,945) (8,566)
Share-based compensation 69 2,876  
Deferred income taxes 55,238 3,141 1,454
Market value decrease (increase) on commodity inventories 109 (400) 4,273
Interest accretion 373 412 471
Change in fair value of a loan payable measured at FVTPL 167    
Credit losses 34,985 23,923 18,277
Write-offs of intangible assets and prepaid 2,129    
Gains on settlements of liabilities (9,502) (3,779)  
Loss on settlement 5,600    
Changes in operating assets and liabilities, net of effects of acquisitions and dispositions:      
Short-term cash deposits 197   39
Short-term securities (1,050)   3,997
Receivables 10,264 30,188 (16,869)
Inventories (1,429) 19,588 184,944
Restricted cash (275)   624
Deposits, prepaid and other 70 8,361 24,661
Assets held for sale   12,636  
Short-term bank borrowings (1,621) (34,513) 34,707
Account payables and accrued expenses 435 (26,513) (124,528)
Income tax liabilities (1,046) 21 (1,576)
Accrued pension assets, net of obligations   (54) 43
Other 1,559 (1,064) (407)
Cash flows (used in) provided by operating activities (7,191) (3,197) 99,867
Cash flows from investing activities:      
Purchases of securities (1,199)    
Purchases of property, plant and equipment, net (198) 4,783 (198)
Acquisition of intangible assets   (765)  
Proceeds from sales of investments, net   526 10,138
Proceeds from sales of investment property 1,018    
Increase in loan receivables   (590) (366)
Decrease in loan receivables   725 693
Acquisitions of subsidiaries, net of cash and cash equivalents acquired   (44) (23,926)
Dispositions of subsidiaries, net of cash and cash equivalents disposed of (825) (8,384) 48,796
Other (77) 255 345
Cash flows (used in) provided by investing activities (1,281) (3,494) 35,482
Cash flows from financing activities:      
Debt repayment   (42,253) (186,286)
Debt borrowing     20,694
Cash paid under the plan of arrangement   (43)  
Shares issued to non-controlling interests   1,177  
Return of capital to non-controlling interests (52)    
Dividends paid to non-controlling interests (805) (1,601) (1,683)
Cash flows used in financing activities (857) (42,720) (167,275)
Exchange rate effect on cash and cash equivalents 2,219 3,605 (37,540)
Decrease in cash and cash equivalents (7,110) (45,806) (69,466)
Cash and cash equivalents, beginning of year 74,870 120,676 197,519
Cash and cash equivalents included in assets held for sale, net     (7,377)
Cash and cash equivalents, end of year 67,760 74,870 120,676
Supplemental cash flows disclosure (see Note 27)      
Interest received 906 1,079 3,632
Dividends received 168   6
Interest paid (1,198) (4,575) (14,533)
Income taxes paid $ (2,626) $ (2,029) $ (3,317)
v3.19.1
Nature of Business
12 Months Ended
Dec. 31, 2018
Disclosure For Nature Of Business [Abstract]  
Nature of Business
Note 1. Nature of Business
MFC Bancorp Ltd. (“MFC Bancorp” or the “Company” is incorporated under the laws of the Cayman Islands. MFC Bancorp and the entities it controls are collectively known as the “Group” in these consolidated financial statements. The Group is a merchant bank that provides financial services, with its core asset being an interest in the Scully Iron Ore Mine in Newfoundland & Labrador, Canada. In addition, the Group owns other merchant banking assets and seeks to invest in businesses or assets whose intrinsic value is not properly reflected. The Group’s investing activities are generally not passive. The Group actively seeks investments where its financial expertise and management can add or unlock value.
On July 14, 2017, the former holding company of the Group completed a plan of arrangement (the “Arrangement”) under the Business Corporations Act (British Columbia). The Arrangement was approved by its shareholders and the British Columbia Supreme Court in July 2017. Pursuant to the Arrangement and the Court order, among other things: (i) its common shares were consolidated on a 100 for 1 basis, with any resulting fractional shares being eliminated and, thereafter, such shares were split on a 1 for 20 basis (the “Share Consolidation /  Split”); and (ii) each holder of its shares received one of our common shares for each share held as of the effective date of the Arrangement. In these consolidated financial statements, the number of shares and earnings per share in the prior period have been restated to reflect the Share Consolidation / Split.
v3.19.1
Basis of Presentation and Summary of Significant Accounting Policies
12 Months Ended
Dec. 31, 2018
Disclosure Of Basis Of Presentation, Accounting Policies, Critical Accounting Estimates And Judgements [Abstract]  
Basis of Presentation and Summary of Significant Accounting Policies
Note 2. Basis of Presentation and Summary of Significant Accounting Policies
A. Basis of Presentation
Basis of Accounting
These consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (the “IASB”). MFC Bancorp complies with all the requirements of IFRS. The principal accounting policies applied in the preparation of the consolidated financial statements are set out below. These policies have been consistently applied with the exception of the adoption of IFRS 9, Financial Instruments (“IFRS 9”), IFRS 15, Revenue from Contracts with Customers (“IFRS 15”) and the amendments to IFRS 2, Share-Based Payment from January 1, 2018. See Note 2B.
These consolidated financial statements were prepared using going concern, accrual (except for cash flow information) and historical cost (except for investment property and certain financial assets and financial liabilities which are measured at fair value and certain inventories that are measured at fair value less costs to sell) bases.
The presentation currency of these consolidated financial statements is the Canadian dollar ($), rounded to the nearest thousand (except per share amounts).
Principles of Consolidation
These consolidated financial statements include the accounts of MFC Bancorp and entities it controls. The Company controls an investee if and only if it has all the following: (a) power over the investee; (b) exposure, or rights, to variable returns from its involvement with the investee; and (c) the ability to use its power over the investee to affect the amount of its returns. When the Group holds, directly or indirectly, more than 50% of the voting power of an investee, it is presumed that the Group controls the investee, unless it can be clearly demonstrated that this is not the case. Subsidiaries are consolidated from the date of their acquisition, being the date on which the Group obtains control, and continue to be consolidated until the date that such control ceases. All intercompany balances and transactions, including unrealized profits arising from intragroup transactions, have been eliminated in full. Unrealized losses are eliminated unless the transaction provides evidence of an impairment of the asset transferred.
On the acquisition date, a non-controlling interest is measured at either its fair value or its proportionate share in the recognized amounts of the subsidiary’s identifiable net assets, on a transaction-by-transaction basis. Subsequently, the non-controlling interest increases or decreases for its share of changes in equity since the acquisition date.
After initial consolidation of a subsidiary, when the proportion of equity held by non-controlling interests changes, the Group, as long as it continues to control the subsidiary, adjusts the carrying amounts of the controlling and non-controlling interests to reflect the changes in their relative interests in the subsidiary. The Group recognizes directly in equity any difference between the amount by which the non-controlling interests are adjusted and the fair value of the consideration paid or received and attributes such difference to the owners of MFC Bancorp.
When the Group loses control of a subsidiary it: (a) derecognizes (i) the assets (including any goodwill) and liabilities of the subsidiary at their carrying amounts at the date when control is lost and (ii) the carrying amount of any non-controlling interests in the former subsidiary at the date when control is lost (including any components of other comprehensive income attributable to them); (b) recognizes (i) the fair value of the consideration received, if any, from the transaction, event or circumstances that resulted in the loss of control, (ii) if the transaction, event or circumstances that resulted in the loss of control involves a distribution of shares of the subsidiary to owners in their capacity as owners, that distribution and (iii) any investment retained in the former subsidiary at its fair value at the date when control is lost; (c) reclassifies to profit or loss, or transfers directly to retained earnings if required by IFRS, the amounts recognized in other comprehensive income in relation to the subsidiary; and (d) recognizes any resulting difference as a gain or loss under costs of sales and services in profit or loss attributable to the owners of MFC Bancorp.
The financial statements of MFC Bancorp and its subsidiaries used in the preparation of the consolidated financial statements are prepared as of the same date, using uniform accounting policies for like transactions and other events in similar circumstances.
Foreign Currency Translation
The presentation currency of the Group’s consolidated financial statements is the Canadian dollar.
MFC Bancorp conducts its business throughout the world through its foreign operations. Foreign operations are entities that are subsidiaries or branches, the activities of which are based or conducted in countries or currencies other than those of MFC Bancorp. Functional currency is the currency of the primary economic environment in which an entity operates and is normally the currency in which the entity primarily generates and expends cash. Foreign currency is a currency other than the functional currency of the entity. The functional currencies of the Company and its subsidiaries and branches primarily comprise the Canadian dollar, Euro (“EUR” or “€”) and United States dollar (“US$”).
Reporting foreign currency transactions in the functional currency
A foreign currency transaction is a transaction that is denominated or requires settlement in a foreign currency. A foreign currency transaction is recorded, on initial recognition in an entity’s functional currency, by applying to the foreign currency amount the spot exchange rate between the functional currency and the foreign currency at the date of the transaction. At the end of each reporting period: (a) foreign currency monetary items are translated using the closing rate; (b) non-monetary items denominated in a foreign currency that are measured in terms of historical cost are translated using the exchange rate at the date of the transaction; and (c) foreign currency non-monetary items that are measured at fair value are translated using the exchange rates at the date when the fair value was determined.
Exchange differences arising on the settlement of monetary items or on translating monetary items at rates different from those at which they were translated on initial recognition during the period or in previous periods are recognized in profit or loss in the period in which they arise, except for exchange differences arising on a monetary item that forms part of a reporting entity’s net investment in a foreign operation which are initially recorded in other comprehensive income in the consolidated financial statements and reclassified from equity to profit or loss on disposal of the net investment.
When a gain or loss on a non-monetary item is recognized in other comprehensive income, any exchange component of that gain or loss is recognized in other comprehensive income. Conversely, when a gain or loss on a non-monetary item is recognized in profit or loss, any exchange component of that gain or loss is recognized in profit or loss.
Use of a presentation currency other than the functional currency
When an entity presents its financial statements in a currency that differs from its functional currency, the results and financial position of the entity are translated into the presentation currency using the following procedures: (a) assets and liabilities for each statement of financial position presented are translated at the closing rate at the date of the statement of financial position; (b) income and expenses for each statement of operations presented are translated at exchange rates at the dates of the transactions or, for practical reasons, the average exchange rates for the periods when they approximate the exchange rates at the dates of the transactions; (c) individual items within equity are translated at either the historical exchange rates when practical or at the closing exchange rates at the date of the statement of financial position; and (d) all resulting exchange differences are recognized in other comprehensive income.
The following table sets out exchange rates for the translation of the Euro and United States dollar, which represented the major trading currencies of the Group, into the Canadian dollar:
     
EUR
   
US$
 
Closing rate at December 31, 2018
        1.5613           1.3642    
Average rate for the year 2018
        1.5302           1.2957    
Closing rate at December 31, 2017
        1.5052           1.2545    
Average rate for the year 2017
        1.4650           1.2986    
Closing rate at December 31, 2016
        1.4169           1.3427    
Average rate for the year 2016
        1.4660           1.3248    
Fair Value Measurement
Certain assets and liabilities of the Group are measured at fair value (see Note 2B).
Fair 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. A fair value measurement is for a particular asset or liability. Therefore, when measuring fair value, the Group takes into account the characteristics of the asset or liability if market participants would take those characteristics into account when pricing the asset or liability at the measurement date. A fair value measurement assumes that the transaction to sell the asset or transfer the liability takes place either:
(a)     in the principal market for the asset or liability; or
 
(b)     in the absence of a principal market, in the most advantageous market for the asset or liability.
 
The Group measures the fair value of an asset or a liability using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their economic best interest.
The Group uses valuation techniques that are appropriate in the circumstances and for which sufficient data is available to measure fair value, maximizing the use of relevant observable inputs and minimizing the use of unobservable inputs. IFRS 13, Fair Value Measurement (“IFRS 13”),establishes a fair value hierarchy that categorizes the inputs to valuation techniques used to measure fair value into three levels:
Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date.
Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly.
Level 3 inputs are unobservable inputs for the asset or liability.
Assessing the significance of a particular input to the fair value measurement in its entirety requires judgment, considering factors specific to the asset or liability.
Non-current Assets Held for Sale
A non-current asset (or disposal group) is classified as held for sale if its carrying amount will be recovered principally through a sale transaction rather than through continuing use. For this to be the case, the asset (or disposal group) must be available for immediate sale in its present condition subject only to terms that are usual and customary for the sale of such asset (or disposal group), the appropriate level of management must be committed to a plan to sell the asset (or disposal group) and an active program to locate a buyer and complete the plan must have been initiated. Further, the asset (or disposal group) must be actively marketed for sale at a price that is reasonable in relation to its current fair value and the sale is highly probable to complete within one year from the date of classification, except as permitted under certain events and circumstances. If the aforesaid criteria are no longer met, the Group ceases to classify the asset (or disposal group) as held for sale.
Non-current assets (and disposal groups) classified as held for sale are measured at the lower of their carrying amounts and fair values less costs to sell. The Group does not depreciate or amortize a non-current asset while it is classified as held for sale.
Use of Estimates and Assumptions and Measurement Uncertainty
The timely preparation of the consolidated financial statements in conformity with IFRS requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Management’s best estimates are based on the facts and circumstances available at the time estimates are made, historical experience, general economic conditions and trends and management’s assessment of probable future outcomes of these matters. Actual results could differ from these estimates and such differences could be material. For critical judgments in applying accounting policies and major sources of estimation uncertainty (see Notes 2C and 2D).
B. Significant Accounting Policies
(i) Financial Instruments
IFRS 9
The Group adopted IFRS 9 with a date of initial application of January 1, 2018.
Financial assets and financial liabilities are recognized on the consolidated statement of financial position when the Group becomes a party to the financial instrument contract. A financial asset is derecognized either when the Group has transferred substantially all the risks and rewards of ownership of the financial asset or when cash flows expire. A financial liability is derecognized when the obligation specified in the contract is discharged, canceled or expired.
The Group classifies its financial assets into the following measurement categories: (a) those measured subsequently at fair value (either through other comprehensive income (“FVTOCI”) or through profit or loss (“FVTPL”) and (b) subsequently measured at amortized cost. The classification of financial assets depends on the Group’s business model for managing the financial assets and the terms of the contractual cash flows. The Group classifies its financial liabilities as subsequently measured at amortized cost, except for financial liabilities at fair value through profit or loss.
Initial Adoption of IFRS 9
IFRS 9 does not require restatement of comparative periods. Accordingly, the Group has reflected the retrospective impact of the adoption of IFRS 9 due to the change in accounting policy for investments in equity securities as an adjustment to opening accumulated deficit as at January 1, 2018. Under IFRS 9, the Group’s investments in equity securities, which were previously classified as available for sale or at cost under IAS 39,Financial Instruments: Recognition and Measurement (“IAS 39”), are measured at FVTPL. The retrospective adjustment, which represented the fair value gain adjustment on investments in equity securities as of January 1, 2018, was $524 and debited to other comprehensive income.
Upon the initial adoption of IFRS 9 on January 1, 2018, the financial assets which were previously classified at fair value through profit or loss, held-to-maturity, loans and receivables and available-for-sale have been transferred to, financial assets measured at FVTPL, FVTOCI or amortised cost.
IAS 39 (Accounting Policies Applicable Prior to January 1, 2018)
All financial assets and financial liabilities were classified by characteristic and/or management intent. Except for certain financial instruments which were excluded from the scope, all financial assets were classified into one of four categories: (a) at fair value through profit or loss; (b) held-to-maturity; (c) loans and receivables; and (d) available-for-sale, and all financial liabilities were classified into one of two categories: (a) at fair value through profit or loss; and (b) at amortized cost.
A financial asset or financial liability at fair value through profit or loss was a financial asset or financial liability that met either of the following conditions: (a) it was classified as held for trading if it was (i) acquired or incurred principally for the purpose of selling or repurchasing it in the near term, (ii) part of a portfolio of identified financial instruments that were managed together and for which there was evidence of a recent actual pattern of short-term profit taking, or (iii) a derivative, except for a derivative that was a designated and effective hedging instrument; or (b) it was designated by the Group upon initial recognition as at fair value through profit or loss when certain conditions were met.
Available-for-sale financial assets were those non-derivative financial assets that were designated as available for sale, or that were not classified as loans and receivables, held-to-maturity investments, or at fair value through profit or loss.
Non-derivative financial liabilities were classified as financial liabilities measured at amortized cost.
After initial recognition, the Group measured financial assets, including derivatives that were assets, at their fair values, without any deduction for transaction costs it might incur on sale or other disposal, except for the following financial assets: (a) held-to-maturity investments which were measured at amortized cost using the effective interest method; (b) loans and receivables which were measured at amortized cost using the effective interest method; and (c) investments in equity instruments that did not have a quoted market price in an active market and whose fair value could not be reliably measured and derivatives that were linked to and had to be settled by delivery of such unquoted equity instruments which were measured at cost. All financial assets except those measured at fair value through profit or loss were subject to review for impairment.
Common to Both IFRS 9 and IAS 39
Regular way purchases and sales of financial assets are accounted for at the settlement date.
When a financial asset or financial liability is recognized initially, the Group measures it at its fair value plus, in the case of a financial asset or financial liability not at fair value through profit or loss, transaction costs that are directly attributable to the acquisition or issue of the financial asset or financial liability. Transaction costs related to the acquisition or issue of a financial asset or financial liability at fair value through profit or loss are expensed as incurred. The subsequent measurement of a financial instrument and the recognition of associated gains and losses are determined by the financial instrument classification.
A gain or loss on a financial asset or financial liability classified as at fair value through profit or loss is recognized in profit or loss for the period in which it arises. A gain or loss on an asset measured at FVTOCI or classified as available for sale is recognized in other comprehensive income, except for impairment losses, until the financial asset is derecognized, at which time the cumulative gain or loss previously recognized in accumulated other comprehensive income is recognized in profit or loss for the period. For financial assets and financial liabilities carried at amortized cost, a gain or loss is recognized in profit or loss when the financial asset or financial liability is derecognized or impaired and through the amortization process.
Net gains or net losses on financial instruments at fair value through profit or loss do not include interest or dividend income.
Whenever quoted market prices are available, bid prices are used for the measurement of fair value of financial assets while ask prices are used for financial liabilities. When the market for a financial instrument is not active, the Group establishes fair value by using a valuation technique. Valuation techniques include using recent arm’s length market transactions between knowledgeable, willing parties, if available; reference to the current fair value of another financial instrument that is substantially the same; discounted cash flow analysis; option pricing models; and other valuation techniques commonly used by market participants to price the financial instrument.
(ii) Cash and Cash Equivalents
Cash and cash equivalents include cash on hand, cash at banks and highly liquid investments (e.g. money market funds) readily convertible to a known amount of cash and subject to an insignificant risk of change in value. They have maturities of three months or less from the date of acquisition and are generally interest-bearing.
(iii) Securities
IFRS 9
Investments in equity securities are measured at FVTPL.
Debt securities which are held within a business model whose objective is to collect the contractual cash flows and sell the debt securities, and that have contractual cash flows that are solely payments of principal and interest on the principal outstanding are measured at FVTOCI.
IAS 39 (Accounting Policies Applicable Prior to January 1, 2018)
Securities were classified as at fair value through profit or loss (i.e. held for trading) or short-term or long-term available-for-sale securities.
Publicly-traded securities (debt and equity) which were acquired principally for the purpose of selling in the near term were classified as held for trading.
Available-for-sale securities consisted of publicly-traded securities and unlisted equity securities which were not held for trading and not held to maturity. Long-term available-for-sale securities were purchased with the intention to hold until market conditions render alternative investments more attractive. Short-term available-for-sale securities were held with the intention of management to sell within the current operating cycle but did not meet the definition of trading securities.
When a decline in the fair value of an available-for-sale security had been recognized in other comprehensive income and there was objective evidence that the asset is impaired, the cumulative loss that had been recognized in other comprehensive income was reclassified from equity to profit or loss as a reclassification adjustment even though the security had not been derecognized. A significant or prolonged decline in the fair value of an investment in an equity instrument below its cost is an objective evidence of impairment. The Group considered a decline in excess of 25 percent generally as significant and a decline in a quoted market price that persisted for 15 months as prolonged. Impairment losses recognized in profit or loss for an investment in an equity instrument classified as available for sale would not be reversed through profit or loss.
Gains and losses on sales of securities are calculated on the average cost basis.
(iv) Securities and Financial Liabilities – Derivatives
A derivative is a financial instrument or other contract with all three of the following characteristics: (a) its value changes in response to the change in a specified interest rate, financial instrument price, product price, foreign exchange rate, index of prices or rates, credit rating or credit index, or other variable; (b) it requires no initial net investment or an initial net investment that is smaller than would be required for other types of contracts that would be expected to have a similar response to changes in market factors; and (c) it is settled at a future date. A derivative financial instrument is either exchange-traded or negotiated. A derivative financial instrument is included in the consolidated statement of financial position as a security (i.e. financial asset) or a financial liability and measured at fair value. The recognition and measurement of a derivative financial instrument under both IFRS 9 and IAS 39 does not apply to a contract that is entered into and continues to be held for the purpose of the receipt or delivery of a non-financial item in accordance with the Group’s expected purchase, sale or usage requirements, unless the Group, as allowed under IFRS 9, designates the contract as measured at fair value through profit or loss if it eliminates or significantly reduces a measurement inconsistency.
Where the Group has both the legal right and intent to settle derivative assets and liabilities simultaneously with the counterparty, the net fair value of the derivative financial instruments is reported as an asset or liability, as appropriate.
Changes in the fair values of derivative financial instruments that do not qualify for hedge accounting are recognized in profit or loss as they arise.
(v ) Financial Liabilities
The Group measures financial liabilities at either amortised cost or FVTPL. Financial liabilities are measured at amortised cost, unless either it is held for trading and hence required to be measured at FVTPL or the group elects to measure the financial liability at FVTPL.
(vi) Receivables
Receivables are measured at amortized cost under both IFRS 9 and IAS 39.
Receivables are net of an allowance for credit losses, if any. The Group performs ongoing credit evaluations of its customers and recognizes a loss allowance for expected credit losses. Receivables are considered past due on an individual basis based on the terms of the contracts.
(vii) Allowance for Credit Losses
IFRS 9
The Group recognizes and measures a loss allowance for expected credit losses on a financial asset which is measured at amortized cost or at FVTOCI, including a lease receivable, a contract asset or a loan commitment and a financial guarantee contract. The impairment methodology applied depends on whether there has been a significant increase in credit risk since initial recognition. To assess whether there is a significant increase in credit risk, the Group compares the risk of a default occurring on the asset as at the reporting date with the risk of default as at the date of initial recognition based on all information available, and reasonable and supportive forward-looking information.
When there is significant increase in credit risk or for credit-impaired financial assets, the loss allowance equals the lifetime expected credit losses which is defined as the expected credit losses that result from all possible default events over the expected life of a financial instrument. If, at the reporting date, the credit risk on a financial asset has not increased significantly since initial recognition, the Group measures the loss allowance for that financial instrument at an amount equal to the 12-month expected credit losses which is defined as the portion of lifetime expected credit losses that represent the expected credit losses that result from default events on a financial instrument that are possible within the 12 months after the reporting date.
As required by IFRS 9, the Group always measures the loss allowance at an amount equal to lifetime expected credit losses for trade receivables and contract assets that result from transactions that are within the scope of IFRS 15.
IAS 39 (Accounting Policies Applicable Prior to January 1, 2018)
The Group applied credit risk assessment and valuation methods to its trade and other receivables. Credit losses arose primarily from receivables but might also relate to other credit instruments issued by or on behalf of the Group, such as guarantees and letters of credit. Specific provisions were established on an individual receivable basis.
Common to Both IFRS 9 and IAS 39
The Group’s allowance for credit losses is maintained at an amount considered adequate to absorb expected or estimated credit-related losses. Such allowance reflects management’s best estimate of the losses in the Group’s financial assets and judgments about economic conditions. Estimates and judgments could change in the near term, and could result in a significant change to a recognized allowance. An allowance for credit losses is increased by provisions, which are recognized in profit or loss and reduced by write-offs net of any recoveries. Write-offs are generally recorded after all reasonable restructuring or collection activities have taken place and there is no realistic prospect of recovery.
(viii) Inventories
Inventories principally consist of raw materials, work-in-progress, and finished goods. Inventories, other than commodities products, are recorded at the lower of cost and net realizable value. Cost, where appropriate, includes an allocation of manufacturing overheads incurred in bringing inventories to their present location and condition and is assigned by using the first-in, first-out or weighted average cost formula, depending on the class of inventories. Net realizable value represents the estimated selling price less all estimated costs of completion and costs to be incurred in marketing, selling and distribution. The amount of any write-down of inventories to net realizable value and all losses of inventories are recognized as an expense in the period the write-down or loss occurs. The reversal of a write-down of inventories arising from an increase in net realizable value is recognized as a reduction in the amount of costs of sales and services in the period in which the reversal occurs.
Commodity products acquired by the Group as a broker-trader in the Group’s merchant banking activities with the purpose of selling in the near future and generating a profit from fluctuations in price or broker-traders’ margin are measured at fair value less costs to sell. Fair values of the Group’s inventories are determined by reference to their contractual selling prices or quoted prices in marketplaces in the absence of a contract (Level 1 fair value hierarchy), in accordance with guidance on fair value in IFRS 13.
(ix) Real Estate Held for Sale
Real estate held for sale is real estate intended for sale in the ordinary course of business or in the process of construction or development for such sale.
Real estate held for sale is measured at the lower of cost (on a specific item basis) and net realizable value. Net realizable value is estimated by reference to sale proceeds of similar properties sold in the ordinary course of business less all estimated selling expenses around the reporting date, or by management estimates based on prevailing market conditions. The amount of any write-down of properties to net realizable value is recognized as an expense in the period the write-down occurs. The reversal of a write-down arising from an increase in net realizable value is recognized in the period in which the reversal occurs.
All of the Group’s real estate is located in Europe.
(x) Investment Property
Investment property is property that is held for generating rental income or for capital appreciation or both, rather than for: (a) use in the production or supply of goods or services or for administrative purposes; or (b) sale in the ordinary course of business. The Group’s investment property comprises freehold land and buildings. Investment property is initially recognized at cost including related transaction costs. After initial recognition, investment property is measured at fair value, with changes in fair value recognized in profit or loss in the period in which they arise.
The Group determines fair value without any deduction for transaction costs it may incur on sale or other disposal. Fair value of the Group’s investment property is based on valuations prepared annually by external evaluators in accordance with guidance issued by the International Valuation Standard Committee and reviewed by the Group, or these valuations are updated by management when there are no significant changes in the inputs to the valuation prepared by external evaluators in the preceding year, in accordance with guidance on fair value in IFRS 13.
(xi) Property, Plant and Equipment
Property, plant and equipment are carried at cost, net of accumulated depreciation and, if any, accumulated impairment losses. The initial cost of an item of property, plant and equipment comprises its purchase price or construction cost, any costs directly attributable to bringing the asset into operation, the initial estimate of any decommissioning obligation, if any, and, for qualifying assets, borrowing costs. The purchase price or construction cost is the aggregate amount paid and the fair value of any other consideration given to acquire the asset. Where an item of property, plant and equipment or part of the item that was separately depreciated is replaced and it is probable that future economic benefits associated with the replacement item will flow to the Group, the cost of the replacement item is capitalized and the carrying amount of the replaced asset is derecognized. All other replacement expenditures are recognized in profit or loss when incurred.
Inspection costs associated with major maintenance programs are capitalized and amortized over the period to the next inspection. All other maintenance costs are expensed as incurred.
The depreciable amounts of the Group’s property, plant, and equipment (i.e. the costs of the assets less their residual values) are depreciated according to the following estimated useful lives and methods:
     
Lives
   
Method
 
Buildings
   
20 years 
        straight-line    
Processing plant and equipment
   
5 to 20 years 
        straight-line    
Refinery and power plants
   
20 to 30 years 
        straight-line    
Office equipment and other
   
3 to 10 years 
        straight-line    
Depreciation expense is included in costs of sales and services or selling, general and administrative expense, whichever is appropriate.
The residual value and the useful life of an asset are reviewed at least at each financial year-end and, if expectations differ from previous estimates, the changes, if any, are accounted for as a change in an accounting estimate in accordance with IAS 8, Accounting Policies, Changes in Accounting Estimates and Errors. The depreciation method applied to an asset is reviewed at least at each financial year-end and, if there has been a significant change in the expected pattern of consumption of the future economic benefits embodied in the asset, the method is changed to reflect the changed pattern.
The carrying amount of an item of property, plant and equipment is derecognized upon disposal or when no future economic benefits are expected to arise from the continued use of the asset. Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the item) is included in profit or loss in the period in which the item is derecognized.
(xii) Interests in Resource Properties
The Group’s interests in resource properties are mainly comprised of an interest in the Scully Iron Ore Mine, and to a lesser extent exploration and evaluation assets (comprising hydrocarbon probable reserves and hydrocarbon undeveloped lands), hydrocarbon development and production assets.
(a) Exploration and evaluation assets
Exploration and evaluation costs, including the costs of acquiring undeveloped land and drilling costs are initially capitalized until the drilling of the well is complete and the results have been evaluated in order to determine the technical feasibility and commercial viability of the asset. Technical feasibility and commercial viability are considered to be determinable when proved and/or probable reserves are determined to exist. When proved and/or probable reserves are found, the drilling costs and the costs of associated hydrocarbon undeveloped lands are reclassified to hydrocarbon development and production assets or from hydrocarbon undeveloped lands to hydrocarbon probable reserves. The cost of hydrocarbon undeveloped land that expires or any impairment recognized during a period is charged to profit or loss. Pre-license costs are recognized in profit or loss as incurred.
(b) Hydrocarbon development and production assets and an interest in an iron ore mine
The Group’s interests in resource properties are mainly comprised of an interest in the Scully Iron Ore Mine, and to a lesser extent, hydrocarbon development and production assets.
(1) Recognition and measurement
Interests in resource properties are initially measured at cost and subsequently carried at cost less accumulated depletion and, if any, accumulated impairment losses.
The cost of an interest in resource property includes the initial purchase price and directly attributable expenditures to find, develop, construct and complete the asset. This cost includes reclassifications from exploration and evaluation assets, installation or completion of infrastructure facilities such as platforms, pipelines and the drilling of development wells, including unsuccessful development or delineation wells. Any costs directly attributable to bringing the asset to the location and condition necessary to operate as intended by management and result in an identifiable future benefit are also capitalized. These costs include an estimate of decommissioning obligations and, for qualifying assets, capitalized borrowing costs.
(2) Subsequent costs
Costs incurred subsequent to the determination of technical feasibility and commercial viability and the costs of replacing parts of property are capitalized only when they increase the future economic benefits embodied in the specific asset to which they relate. Such capitalized costs generally represent costs incurred in developing proved reserves and bringing in, or enhancing production from, such reserves and are accumulated on a field or geotechnical area basis. All other expenditures are recognized in profit or loss as incurred. The costs of periodic servicing of the properties are recognized in costs of sales and services as incurred.
The carrying amount of any replaced or sold component is derecognized.
(3) Depletion
The carrying amount of an interest in a resource property is depleted using the unit of production method by reference to the ratio of production in the period to the related reserves.
For interests in hydrocarbon development and production assets, depletion is calculated based on proved producing reserves, taking into account estimated future development costs necessary to bring those reserves into production and the estimated salvage values of the assets at the end of their estimated useful lives. Future development costs are estimated taking into account the level of development required to continue to produce the reserves. Reserves for hydrocarbon development and production assets are estimated annually by independent qualified reserve evaluators and represent the estimated quantities of natural gas, natural gas liquids and crude oil which geological, geophysical and engineering data demonstrate with a specified degree of certainty to be recoverable in future years from known reservoirs and which are considered commercially producible. For depletion purposes, relative volumes of petroleum and natural gas production and reserves are converted at the energy equivalent conversion rate of six thousand cubic feet of natural gas to one barrel of crude oil.
For the interest in an iron ore mine, depletion is calculated based on proved and probable reserves. The estimate of the reserves of iron ore is reviewed whenever significant new information about the reserve is available, or at least at each financial year-end.
(xiii) Impairment of Non-financial Assets
The Group reviews the carrying amounts of its non-financial assets at each reporting date to determine whether there is any indication of impairment. If any such indication exists, an asset’s recoverable amount is estimated.
The recoverable amount is the higher of an asset’s fair value less costs of disposal and value in use. Where an individual asset does not generate separately identifiable cash flows, an impairment test is performed at the cash-generating unit (“CGU”) level. A CGU is the smallest identifiable group of assets that generates cash inflows that are largely independent of the cash inflows from other assets or groups of assets. Where the carrying amount of an asset (or CGU) exceeds its recoverable amount, the asset (or CGU) is considered impaired and written down to its recoverable amount. In assessing value in use, the estimated future cash flows are discounted to their present value using a discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. In determining fair value less costs of disposal, an appropriate valuation model is used. These calculations are corroborated by external valuation metrics or other available fair value indicators wherever possible.
An assessment is made at the end of each reporting period whether there is an indication that previously recognized impairment losses no longer exist or have decreased. If such indication exists, an estimate of the asset’s (or CGU’s) recoverable amount is reviewed. A previously recognized impairment loss is reversed to the extent that the events or circumstances that triggered the original impairment have changed. The reversal is limited so that the carrying amount of the asset does not exceed its recoverable amount, nor exceed the carrying amount that would have been determined, net of depreciation, depletion and amortization, had no impairment loss been recognized for the asset in prior periods. A reversal of an impairment loss for a CGU is allocated to the assets of the CGU pro-rata with the carrying amounts of those assets. During the year ended December 31, 2018, there was a reversal of impairment of the Group’s interest in an iron ore mine (see Note 13).
Hydrocarbon probable reserves are tested for impairment when they are reclassified to hydrocarbon development and production assets or when indicators exist that suggest the carrying amount may exceed the recoverable amount. For purposes of impairment testing, hydrocarbon probable reserves are grouped with related producing resource properties as a CGU with common geography and geological characteristics.
Undeveloped lands are evaluated for indicators separately from hydrocarbon development and production assets and hydrocarbon probable reserves. Impairment is assessed by comparing the carrying amount of undeveloped lands to values determined by an independent land evaluator based on recent market transactions. Management also takes into account future plans for those properties, the remaining terms of the leases and any other factors that may be indicators of potential impairment.
(xiv) Defined Benefit Pension Plan
Prior to October 1, 2017, the Group had defined benefit pension plans.
The Group recognizes an accrued pension obligation, which represents the deficit of a defined benefit pension plan and is calculated by deducting the fair value of plan assets from the present value of the defined benefit obligations, in the consolidated statement of financial position.
The Group uses the projected unit credit method to determine the present value of its defined benefit obligations and the related current service cost and, where applicable, past service cost. Actuarial assumptions are unbiased and mutually compatible and comprise demographic and financial assumptions.
Past service cost, which is the change in the present value of the defined benefit obligation for employee service in prior periods resulting from a plan amendment or curtailment, is recognized as an expense at the earlier of when the amendment/curtailment occurs or when the Group recognizes related restructuring or termination costs. The gain or loss on a settlement, which is the difference between the present value of the defined benefit obligation being settled and the settlement price, is recognized in profit or loss when the settlement occurs.
Current service cost and net interest on the accrued pension obligation are recognized in profit or loss.
Remeasurements of the accrued pension obligation, which comprise actuarial gains and losses, the return on plan assets (excluding amounts included in net interest on the net defined benefit liability (asset)) and any change in the effect of the asset ceiling (excluding amounts included in net interest on the net defined benefit liability (asset)), are recognized in other comprehensive income and are not reclassified to profit or loss in a subsequent period.
(xv) Provisions and Contingencies
Provisions are recognized when the Group has a present obligation as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. Provisions are measured at management’s best estimate of the expenditure required to settle the obligation at the reporting date. Where appropriate, the future cash flow estimates are adjusted to reflect risks specific to the liability. If the effect of the time value of money is material, provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability. Where discounting is used, the increase in the provision due to the passage of time is recorded as accretion and included in finance costs.
Contingent liabilities are possible obligations whose existence will only be confirmed by future events not wholly within the control of the Group. Contingent liabilities, other than those assumed in connection with business combinations which are measured at fair value at the acquisition date, are not recognized in the consolidated financial statements but are disclosed unless the possibility of an outflow of economic resources is considered remote. Legal costs in connection with a loss contingency are recognized in profit or loss when incurred.
The Group does not recognize a contingent or reimbursement asset unless it is virtually certain that the contingent or reimbursement asset will be received.
(xvi) Decommissioning Obligations
The Group provides for decommissioning, restoration and similar liabilities (collectively, decommissioning obligations) on its resource properties, facilities, production platforms, pipelines and other facilities based on estimates established by current legislation and industry practices. The decommissioning obligation is initially measured at fair value and capitalized to interests in resource properties or property, plant and equipment as an asset retirement cost. The liability is estimated by discounting expected future cash flows required to settle the liability using a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability. The estimated future asset retirement costs are adjusted for risks such as project, physical, regulatory and timing. The estimates are reviewed periodically. Changes in the provision as a result of changes in the estimated future costs or discount rates are added to or deducted from the asset retirement cost in the period of the change. The liability accretes for the effect of time value of money until it is settled. The capitalized asset retirement cost is amortized through depreciation, depletion and amortization over the estimated useful life of the related asset. Actual asset retirement expenditures are recorded against the obligation when incurred. Any difference between the accrued liability and the actual expenditures incurred is recorded as a gain or loss in the settlement period.
(xvii) Own Equity Instruments
The Group’s holdings of its own equity instruments, including common stock and preferred stock, are presented as “treasury stock” and deducted from shareholders’ equity at cost and in the determination of the number of equity shares outstanding. No gain or loss is recognized in profit or loss on the purchase, sale, re-issue or cancellation of the Group’s own equity instruments.
(xviii) Revenue Recognition
IFRS 15
Effective January 1, 2018, the Group adopted IFRS 15, Revenue from Contracts with Customers (“IFRS 15”). Pursuant to IFRS 15, the Group recognizes revenue, excluding interest and dividend income and other such income from financial instruments recognized in accordance with IFRS 9, upon transfer of promised goods or services to customers in amounts that reflect the consideration to which the Group expects to be entitled in exchange for those goods or services based on the following five step approach:
Step 1:   Identify the contracts with customers;
Step 2:   Identify the performance obligations in the contract;
Step 3:   Determine the transaction price;
Step 4:   Allocate the transaction price to the performance obligations in the contract; and
Step 5:   Recognize revenue when (or as) the entity satisfies a performance obligation.
The Group typically satisfies its performance obligations upon shipment of the goods, or upon delivery as the services are rendered or upon completion of services depending on whether the performance obligations are satisfied over time or at a point in time. The Group primarily acts as principal in contracts with its customers. The Group does not have material obligations for returns, refunds and other similar obligations, nor warranties and related obligations.
For performance obligations that the Group satisfies over time, the Group typically uses time-based measures of progress because the Group is providing a series of distinct services that are substantially the same and have the same pattern of transfer.
For performance obligations that the Group satisfies at a point in time, the Group typically uses shipment or delivery of goods and/or services in evaluating when a customer obtains control of promised goods or services.
A significant financing component exists and is accounted for if the timing of payments agreed to by the parties to the contract provides the customer or the Group with a significant benefit of financing the transfer of goods and services to the customer. As a practical expedient, the Group does not adjust the promised amount of consideration for the effects of a significant financing component if the Group expects, at contract inception, that the period between when the Group transfers a promised good or service to a customer and when the customer pays for that good or service will be one year or less.
The incremental costs of obtaining contracts with customers and the costs incurred in fulfilling contracts with customers that are directly associated with the contract are recognized as an asset (hereinafter, “assets arising from contract costs”) if those costs are expected to be recoverable, which are included in other long-term assets in the consolidated statements of financial position. The incremental costs of obtaining contracts are those costs that the Group incurs to obtain a contract with a customer that they would not have incurred if the contract had not been obtained. As a practical expedient, the Group recognizes the incremental costs of obtaining a contract as an expense when incurred if the amortization period of the asset that the entity otherwise would have recognized is one year or less. Assets arising from contract costs are amortized using the straight-line method over their estimated contract periods.
The Group exercises judgments in determining the amount of the costs incurred to obtain or fulfill a contract with a customer, which includes, but is not limited to (a) the likelihood of obtaining the contract, (b) the estimate of the profitability of the contract, and (c) the credit risk of the customer. An impairment loss will be recognized in profit or loss to the extent that the carrying amount of the asset exceeds (a) the remaining amount of consideration that the entity expects to receive in exchange for the goods or services to which the asset relates, less (b) the costs that relate directly to providing those goods or services and that have not been recognized as expenses.
Initial Adoption of IFRS 15
Pursuant to the transition arrangement permitted under IFRS 15, the Group applied IFRS 15 retrospectively with the cumulative effect of initially applying IFRS 15 recognized at the date of initial application. There were no revisions on the accounts in the consolidated statement of financial position on January 1, 2018 upon the adoption of IFRS 15.
Moreover, there were no financial statement line items affected in the current year ended December 31, 2018 by the application of IFRS 15 as compared to the presentation under IAS 18, Revenue and related interpretations.
IAS 18, Revenue (“IAS 18”) (Accounting Policies Applicable Prior to January 1, 2018)
The Group accounted for revenues under IAS 18 and other related international accounting standards and interpretations for the recognition and measurement of revenue until December 31, 2017.
Revenue included proceeds from sales of merchant banking products and services, real estate properties, medical instruments and supplies, rental income on investment property, interest and dividend income and net gains on securities. In an agency relationship, revenue is the amount of commission earned.
Revenue from the sale of goods was recognized when: (a) the Group had transferred to the buyer the significant risks and rewards of ownership of the goods (which generally coincided with the time when the goods were delivered to the buyer and title had passed); (b) the Group retained neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold; (c) the amount of revenue could be measured reliably; (d) it was probable that the economic benefits associated with the transaction would flow to the Group; and (e) the costs incurred or to be incurred in respect of the transaction could be measured reliably.
Revenue from the rendering of services is recognized when: (a) the amount of revenue could be measured reliably; (b) it was probable that the economic benefits associated with the transaction would flow to the Group; (c) the stage of completion of the transaction at the reporting date could be measured reliably; and (d) the costs incurred for the transaction and the costs to complete the transaction could be measured reliably.
Revenue was measured at the fair value of the consideration received or receivable and represents amounts receivable for goods and services provided in the normal course of business, net of discounts, customs duties and sales taxes. When the Group charges shipping and handling fees to customers, such fees are included in sales revenue. Where the Group acts as an agent on behalf of a third party to procure or market goods, any associated fee income is recognized and no purchase or sale is recorded.
Interest, royalty and dividend income were recognized when it is probable that economic benefits will flow to the Group and the amount of income could be measured reliably.
(xix) Costs of Sales and Services
Costs of sales and services include the costs of goods (merchant banking products and services, real estate properties, medical instruments and supplies) sold. The costs of goods sold include both the direct cost of materials and indirect costs, freight charges, purchasing and receiving costs, inspection costs, distribution costs and a provision for warranty when applicable.
Costs of sales and services also include write-downs of inventories, net loss on securities, credit losses on financial assets, gains or losses on dispositions of subsidiaries, and fair value gain and loss on investment property, commodity inventories and derivative contracts.
The reversal of write-downs of inventories and credit losses reduces the costs of sales and services.
(xx) Employee Benefits
Wages, salaries, bonuses, social security contributions, paid annual leave and sick leave are accrued in the period in which the associated services are rendered by employees of the Group. The employee benefits are included in costs of sales and services or selling, general and administrative expenses, as applicable.
(xxi) Leases
A lease is classified as an operating lease if it does not transfer substantially all the risks and rewards incidental to ownership of the leased asset. Operating lease payments are expensed in profit or loss over the term of the lease on a straight line basis.
Lease income from operating leases is recognized in income on a straight-line basis over the term of the lease.
(xxii) Share-Based Compensation
The cost of equity-settled transactions with employees is measured by reference to the fair value of the equity instruments on the date at which the equity instruments are granted and is recognized as an expense over the vesting period, which ends on the date on which the relevant employees become fully entitled to the award. Fair value is determined by using an appropriate valuation model. At each reporting date before vesting, the cumulative expense is calculated, representing the extent to which the vesting period has expired and management’s best estimate of the achievement or otherwise of non-market conditions and the number of equity instruments that will ultimately vest. The movement in cumulative expense since the previous reporting date is recognized in profit or loss, with a corresponding amount in equity.
When the terms of an equity-settled award are modified or a new award is designated as replacing a cancelled or settled award, the cost based on the original award terms continues to be recognized over the original vesting period. In addition, an expense is recognized over the remainder of the new vesting period for the incremental fair value of any modification, based on the difference between the fair value of the original award and the fair value of the modified award, both as measured on the date of the modification. No reduction is recognized if this difference is negative. When an equity-settled award is cancelled other than by forfeiture when the vesting conditions are not satisfied, it is treated as if it had vested on the date of cancellation and any cost not yet recognized in profit or loss for the award is expensed immediately.
Share-based compensation expenses are included in selling, general and administrative expenses. When stock options are exercised, the exercise price proceeds together with the amount initially recorded in contributed surplus are credited to capital stock.
(xxiii) Finance Costs
Finance costs comprise interest expense on borrowings, accretion of the discount on provisions, decommissioning obligations and other liabilities and charges and fees relating to factoring transactions.
Finance costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use, are added to the cost of those assets until such time as the assets are substantially ready for their intended use. All other finance costs are recognized in profit or loss in the period in which they are incurred.
Capital stock and debt are recorded at the amount of proceeds received, net of direct issue costs (transaction costs). The transaction costs attributable to debt issued are amortized over the debt term using the effective interest method.
(xxiv) Income Taxes
Income tax expense (recovery) comprises current income tax expense (recovery) and deferred income tax expense (recovery) and includes all domestic and foreign taxes which are based on taxable profits. The current income tax provision is based on the taxable profits for the period. Taxable profit differs from income before income taxes as reported in the consolidated statements of operations because it excludes items of income or expense that are taxable or deductible in other periods and items that are never taxable or deductible. The Group’s liability for current income tax is calculated using tax rates that have been enacted or substantively enacted by the reporting date. Deferred income tax is provided, using the liability method, on all temporary differences at the reporting date between the tax bases of assets and liabilities and their carrying amounts in the consolidated statement of financial position.
Deferred income tax liabilities are recognized for all taxable temporary differences:
-       except where the deferred income tax liability arises on goodwill that is not tax deductible or the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss.
 
-       in respect of taxable temporary differences associated with investments in subsidiaries and branches, except where the Group is able to control the timing of the reversal of the temporary differences and it is probable that the temporary differences will not reverse in the foreseeable future.
 
Deferred income tax assets are recognized for all deductible temporary differences, carry-forward of unused tax credits and unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences and the carry-forward of unused tax credits and unused tax losses can be utilized:
-       except where the deferred income tax asset arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss.
 
-       in respect of deductible temporary differences associated with investments in subsidiaries and branches, deferred tax assets are recognized only to the extent that it is probable that the temporary differences will reverse in the foreseeable future.
 
On the reporting date, management reviews the Group’s deferred income tax assets to determine whether it is probable that the benefits associated with these assets will be realized. The Group also reassesses unrecognized deferred income tax assets. The review and assessment involve evaluating both positive and negative evidence. The Group recognizes a previously unrecognized deferred income tax asset to the extent that it has become probable that future taxable profit will allow the deferred income tax asset to be recovered.
Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply in the year when the asset is realized or the liability is settled, based on tax rates and tax laws that have been enacted or substantively enacted at the reporting date. Tax relating to items recognized in other comprehensive income or equity is recognized in other comprehensive income or equity and not in profit or loss.
Deferred income tax assets and liabilities are offset when there is a legally enforceable right to set off current income tax assets against current income tax liabilities, and when they relate to income tax levied by the same taxation authority and the Group intends to settle its current income tax assets and liabilities on a net basis.
Withholding taxes (which include withholding taxes payable by a subsidiary on distributions to the Group) are treated as income taxes when they have the characteristics of an income tax. This is considered to be the case when they are imposed under government authority and the amount payable is calculated by reference to revenue derived.
The Group includes interest charges and penalties on current income tax liabilities as a component of interest expense.
(xxv) Earnings Per Share
Basic earnings per share is determined by dividing net income attributable to ordinary equity holders of MFC Bancorp by the weighted average number of common shares outstanding during the period, net of treasury stock.
Diluted earnings per share is determined using the same method as basic earnings per share, except that the weighted average number of common shares outstanding includes the effect of dilutive potential ordinary shares. For the purpose of calculating diluted earnings per share, the Group assumes the exercise of its dilutive options with the assumed proceeds from these instruments regarded as having been received from the issue of common shares at the average market price of common shares during the period. The difference between the number of common shares issued and the number of common shares that would have been issued at the average market price of common shares during the period is treated as an issue of common shares for no consideration and added to the weighted average number of common shares outstanding. The amount of the dilution is the average market price of common shares during the period minus the issue price and the issue price includes the fair value of services to be supplied to the Group in the future under the share-based payment arrangement. Potential ordinary shares are treated as dilutive when, and only when, their conversion to ordinary shares would decrease earnings per share or increase loss per share from continuing operations.
When share-based payments are granted during the period, the shares issuable are weighted to reflect the portion of the period during which the payments are outstanding. The shares issuable are also weighted to reflect forfeitures occurring during the period. When stock options are exercised during the period, shares issuable are weighted to reflect the portion of the period prior to the exercise date and actual shares issued are included in the weighted average number of shares outstanding from the exercise date.
(xxvi) Business Combinations
The Group accounts for each business combination by applying the acquisition method. Pursuant to the acquisition method, the Group, when a business combination occurs and it is identified as the acquirer, determines the acquisition date (on which the Group legally transfers the consideration, acquires the assets and assumes the liabilities of the acquiree), recognizes and measures the identifiable assets acquired, the liabilities assumed and any non-controlling interest in the acquiree, and recognizes and measures goodwill or a gain from a bargain purchase (i.e. negative goodwill). The identifiable assets acquired and the liabilities assumed are measured at their acquisition-date fair values. A non-controlling interest is measured at either its fair value or its proportionate share in the recognized amounts of the subsidiary’s identifiable net assets, on a transaction-by-transaction basis.
The consideration transferred in a business combination is measured at fair value, which is calculated as the sum of the acquisition-date fair values of the assets transferred by the Group, the liabilities incurred by the Group to former owners of the acquiree and the equity interests issued by the Group.
In a business combination achieved in stages, the Group remeasures its previously held equity interest in the acquiree at its acquisition-date fair value and recognizes the resulting gain or loss, if any, in profit or loss.
If the initial accounting for a business combination is incomplete by the end of the reporting period in which the combination occurs, the Group reports in its financial statements provisional amounts for the items for which the accounting is incomplete. During the measurement period, the Group retrospectively adjusts the provisional amounts recognized at the acquisition date to reflect new information obtained about facts and circumstances that existed as of the acquisition date and, if known, would have affected the measurement of the amounts recognized as of that date. During the measurement period, the Group also recognizes additional assets or liabilities if new information is obtained about facts and circumstances that existed as of the acquisition date and, if known, would have resulted in the recognition of those assets and liabilities as of that date. The measurement period ends as soon as the Group receives the information it was seeking about facts and circumstances that existed as of the acquisition date or learns that more information is not obtainable. However, the measurement period does not exceed one year from the acquisition date.
Acquisition-related costs are costs the Group incurs to effect a business combination. Those costs include finder’s fees; advisory, legal, accounting, valuation and other professional or consulting fees; general administrative costs, including the costs of maintaining an internal acquisitions department; and costs of registering and issuing debt and equity securities. The Group accounts for acquisition-related costs as expenses in the periods in which the costs are incurred and the services are received, except for the costs to issue debt or equity securities (see Significant Accounting Policy Item (xxiii) above).
C. Critical Judgments in Applying Accounting Policies
In the process of applying the Group’s accounting policies, management makes various judgments, apart from those involving estimations under Note 2D below, that can significantly affect the amounts it recognizes in the consolidated financial statements. The following are the critical judgments that management has made in the process of applying the Group’s accounting policies and that have the most significant effects on the amounts recognized in the consolidated financial statements:
(i) Identification of Cash-generating Units
The Group’s assets are aggregated into CGUs, for the purpose of assessing and calculating impairment, based on their ability to generate largely independent cash flows. The determination of CGUs requires judgment in defining the smallest identifiable group of assets that generate cash inflows that are largely independent of the cash inflows from other assets or groups of assets. CGUs have been determined based on similar geological structure, shared infrastructure, geographical proximity, product type and similar exposure to market risks. In the event facts and circumstances surrounding factors used to determine the Group’s CGUs change, the Group will re-determine the groupings of CGUs.
(ii) Impairment and Reversals of Impairment on Non-Financial Assets
The carrying amounts of the Group’s non-financial assets, other than and deferred tax assets, are reviewed at the end of each reporting period to determine whether there is an indication of impairment or reversal of previously recorded impairment. If such indication exists, the recoverable amount is estimated.
Determining whether there are any indications of impairment or impairment reversals requires significant judgment of external factors, such as an extended change in prices or margins for hydrocarbon commodities or refined products, a significant change in an asset’s market value, a significant revision of estimated volumes, revision of future development costs, a change in the entity’s market capitalization or significant changes in the technological, market, economic or legal environment that would have an impact on the Company’s CGUs. Given that the calculations for recoverable amounts require the use of estimates and assumptions, including forecasts of commodity prices, marketing supply and demand, product margins and in the case of hydrocarbon properties, expected production volumes, it is possible that the assumptions may change, which may impact the estimated life of the CGU and may require a material adjustment to the carrying value of goodwill and non-financial assets.
Impairment losses recognized in prior years are assessed at the end of each reporting period for indications that the impairment has decreased or no longer exists. An impairment loss is reversed only to the extent that the carrying amount of the asset or CGU does not exceed the carrying amount that would have been determined, net of depletion, depreciation and amortization, if no impairment loss had been recognized.
(iii) Valuation of Investment Property
Investment properties are included in the consolidated statement of financial position at their market value, unless their fair value cannot be reliably determined at that time. The market value of investment properties is assessed annually by an independent qualified valuer, who is an authorized expert for the valuation of developed and undeveloped land in Germany, after taking into consideration the net income with inputs on realized basic rents, operating costs and damages and defects. The assumptions adopted in the property valuations are based on the market conditions existing at the end of the reporting period, with reference to current market sales prices and the appropriate capitalization rate. Changes in any of these inputs, or incorrect assumptions related to any of these items, could materially impact these valuations.
(iv) Assets Held for Sale and Discontinued Operations
The Group applies judgment to determine whether an asset (or disposal group) is available for immediate sale in its present condition and that its sale is highly probable and therefore should be classified as held for sale at the balance sheet date. In order to assess whether it is highly probable that the sale can be completed within one year, or the extension period in certain circumstances, management reviews the business and economic factors, both macro and micro, which include the industry trends and capital markets, and the progress towards a sale transaction. It is also open to all forms of sales, including exchanges of non-current assets for other non-current assets when the exchange will have commercial substance in accordance with IAS 16, Property, Plant and Equipment.
A discontinued operation is a component of an entity (which comprises operations and cash flows that can be clearly distinguished, operationally and, for financial reporting purposes, from the rest of the entity) that either has been disposed of or is classified as held for sale. While a component of the entity has distinguished financial data, judgments must be exercised on the presentation of inter-company transactions between components that are presented as discontinued operations and those that are presented as continuing operations. Furthermore, the allocation of income tax expense (recovery) also involves the exercise of judgments as the tax position of continuing operations may have an impact on the tax position of discontinued operations, or vice versa.
(v) Consolidation
Judgment is required when assessing whether the Group controls and therefore consolidates an entity, particularly an entity with complex share capital, management/decision-making or financing structures. Judgment is required to determine whether the Group has decision-making power over the key relevant activities of an investee, whether the Group has exposure or rights to variable returns from its involvement with the investee and whether the Group has the ability to use that power to affect its returns.
(vi) Purchase Price Allocations
For each business combination, the Group measures the identifiable assets acquired and the liabilities assumed at their acquisition-date fair values. The determination of fair value requires the Group to make assumptions, estimates and judgments regarding future events, including the profit forecast of the new subsidiary in the future. The allocation process is inherently subjective and impacts the amounts assigned to individual identifiable assets and liabilities, including the fair value of long-lived assets, the recognition and measurement of any unrecorded intangible assets and/or contingencies and the final determination of the amount of goodwill or bargain purchase. The inputs to the exercise of judgments include legal, contractual, business and economic factors. As a result, the purchase price allocation impacts the Group’s reported assets and liabilities and future net earnings due to the impact on future depreciation, depletion and amortization and impairment tests.
(vii) Credit Losses and Impairment of Receivables
On January 1, 2018, the Group adopted IFRS 9. As a result, the Group applies credit risk assessment and valuation methods to its trade and other receivables under IFRS 9 which establishes a single forward-looking expected loss impairment model to replace the incurred impairment model under IAS 39.
The Group measures the loss allowance for a financial instrument at an amount equal to the lifetime expected credit losses if the credit risk on that financial instrument has increased significantly since initial recognition. The objective of the impairment requirements is to recognize lifetime expected credit losses for all financial instruments for which there have been significant increases in credit risk since initial recognition — whether assessed on an individual or collective basis — considering all reasonable and supportable information, including that which is forward-looking.
At each reporting date, management assesses whether the credit risk on a financial instrument has increased significantly since initial recognition. When making the assessment, management uses the change in the risk of a default occurring over the expected life of the financial instrument instead of the change in the amount of expected credit losses. To make that assessment, management compares the risk of a default occurring on the financial instrument as at the reporting date with the risk of a default occurring on the financial instrument as at the date of initial recognition and consider reasonable and supportable information, that is available without undue cost or effort, that is indicative of significant increases in credit risk since initial recognition.
Allowance for credit losses is maintained at an amount considered adequate to absorb the expected credit losses. Such allowance for credit losses reflects management’s best estimate of changes in the credit risk on the Group’s financial instruments and judgments about economic conditions. The assessment of allowance for credit losses is a complex process, particularly on a looking-forward basis; which involves a significant degree of judgment and a high level of estimation uncertainty. The input factors include the assessment of the credit risk of the Group’s financial instruments, legal rights and obligations under all the contracts and the expected future cash flows from the financial instruments, which include inventories, mortgages and other credit enhancement instruments. The major source of estimation uncertainty relates to the likelihood of the various scenarios under which different amounts are expected to be recovered through the security in place on the financial assets. The expected future cash flows are projected under different scenarios and weighted by probability, which involves the exercise of significant judgment. Estimates and judgments could change in the near-term and could result in a significant change to a recognized allowance.
D. Major Sources of Estimation Uncertainty
The timely preparation of the consolidated financial statements requires management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses.
The major assumptions about the future and other major sources of estimation uncertainty at the end of the reporting period that have a significant risk of resulting in a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below. These items require management’s most difficult, subjective or complex estimates. Actual results may differ materially from these estimates.
(i) Interests in Resource Properties and Reserve Estimates
The Group had interests in resource properties mainly comprised of an interest in the Scully Iron Ore Mine, and to a lesser extent, hydrocarbon properties, with an aggregate carrying amount of  $273,250 as at December 31, 2018.
Estimation of reported recoverable quantities of proved and probable reserves include judgmental assumptions regarding production profile, prices of products produced, exchange rates, remediation costs, timing and amount of future development costs and production, transportation and marketing costs for future cash flows. It also requires interpretation of geological and geophysical models in anticipated recoveries. The economical, geological and technical factors used to estimate reserves may change from period to period. Changes in reported reserves can impact the carrying amounts of the Group’s interests in resource properties and/or property, plant and equipment, the recognition of impairment losses and reversal of impairment losses, the calculation of depletion and depreciation, the provision for decommissioning obligations and the recognition of deferred income tax assets or liabilities due to changes in expected future cash flows. The recoverable quantities of reserves and estimated cash flows from the Group’s hydrocarbon interests are independently evaluated by reserve engineers at least annually. During the year ended December 31, 2018, the Group recognized a reversal of impairment of  $188,203 in respect of its interest in an iron ore mine (see Note 13).
The Group’s hydrocarbon reserves represent the estimated quantities of petroleum, natural gas and natural gas liquids which geological, geophysical and engineering data demonstrate with a specified degree of certainty to be economically recoverable in future years from known reservoirs and which are considered commercially producible. Such reserves may be considered commercially producible if management has the intention of developing and producing them and such intention is based upon: (a) a reasonable assessment of the future economics of such production; (b) a reasonable expectation that there is a market for all or substantially all the expected hydrocarbon production; and (c) evidence that the necessary production, transmission and transportation facilities are available or can be made available. Reserves may only be considered proven and probable if producibility is supported by either production or conclusive formation tests.
Included in interests in resource properties as at December 31, 2018, were exploration and evaluation assets with an aggregate carrying amount of  $17,007. Exploration and evaluation assets are assessed for impairment when facts and circumstances suggest that the carrying amount of an exploration and evaluation asset may exceed its recoverable amount and upon reclassification to hydrocarbon development and production assets. If such indicators exist, impairment, if any, is determined by comparing the carrying amounts to the recoverable amounts. The measurement of the recoverable amount involves a number of assumptions, including the timing, likelihood and amount of commercial production, further resource assessment plans and future revenue and costs expected from the asset, if any.
(ii) Impairment of Other Non-Financial Assets
The Group had property, plant and equipment aggregating $58,325 as at December 31, 2018, consisting mainly of a power plant and a natural gas processing facility. Impairment of the Group’s non-financial assets is evaluated at the CGU level. In testing for impairment, the recoverable amounts of the Company’s CGUs are determined as the higher of their values in use and fair values less costs of disposal. In the absence of quoted market prices, the recoverable amount is based on estimates of future production rates, future product selling prices and costs, discount rates and other relevant assumptions. Increases in future costs and/or decreases in estimates of future production rates and product selling prices may result in a write-down of the Group’s property, plant and equipment.
(iii) Taxation
The Group is subject to tax in a number of jurisdictions and judgment is required in determining the worldwide provision for income taxes. Deferred income taxes are recognized for temporary differences using the liability method, with deferred income tax liabilities generally being provided for in full (except for taxable temporary differences associated with investments in subsidiaries and branches where the Group is able to control the timing of the reversal of the temporary differences and it is probable that the temporary differences will not reverse in the foreseeable future) and deferred income tax assets being recognized to the extent that it is probable that future taxable profits will be available against which the temporary differences can be utilized.
The operations and organization structures of the Group are complex, and related tax interpretations, regulations and legislation are continually changing. As a result, there are usually some tax matters in question that result in uncertain tax positions. The Group only recognizes the income tax benefit of an uncertain tax position when it is probable that the ultimate determination of the tax treatment of the position will result in that benefit being realized.
The Group companies’ income tax filings are subject to audit by taxation authorities in numerous jurisdictions. There are audits in progress and items under review, some of which may increase the Group’s income tax liabilities. In addition, the companies have filed appeals and have disputed certain issues. While the results of these items cannot be ascertained at this time, the Group believes that the Group has an adequate provision for income taxes based on available information.
The Group recognized deferred income tax assets of  $15,735 as at December 31, 2018. In assessing the realizability of deferred income tax assets, management considers whether it is probable that some portion or all of the deferred income tax assets will be realized. The ultimate realization of deferred income tax assets is dependent upon the generation of future taxable income during the periods in which temporary differences become deductible or before tax loss and tax credit carry-forwards expire. Management considers the future reversals of existing taxable temporary differences, projected future taxable income, taxable income in prior years and tax planning strategies in making this assessment. Unrecognized deferred income tax assets are reassessed at the end of each reporting period.
The Group provides for future income tax liabilities in respect of uncertain tax positions where additional income tax may become payable in future periods and such provisions are based on management’s assessment of exposure. The Group did not recognize the full deferred tax liability on taxable temporary differences associated with investments in subsidiaries and branches where the Group is able to control the timing of the reversal of the temporary differences and it is probable that the temporary differences will not reverse in the foreseeable future. The Group may change its investment decision in its normal course of business, thus resulting in additional income tax liabilities.
(iv) Contingencies
Pursuant to IAS 37, Provisions, Contingent Liabilities and Contingent Assets, the Group does not recognize a contingent liability. By their nature, contingencies will only be resolved when one or more future events occur or fail to occur. The assessment of contingencies inherently involves the exercise of significant judgment and estimates of the outcome of future events. If it becomes probable that an outflow of future economic benefits will be required for an item previously accounted for as a contingent liability, an accrual or a provision is recognized in the consolidated financial statements of the period in which the change in probability occurs. See Note 26 for further disclosures on contingencies.
E. Accounting Changes
Future Accounting Changes
IFRS 16, Leases (“IFRS 16”), issued in January 2016, introduces a single on-balance sheet model of accounting for leases by lessees that eliminates the distinction between operating and finance leases. Lessor accounting remains largely unchanged and the distinction between operating and finance leases is retained. IFRS 16 supersedes IAS 17, Leases, and related interpretations and management will adopt IFRS 16 for annual reporting periods beginning on January 1, 2019. Management concluded that the impacts of IFRS 16 on the Group’s consolidated financial statements as of January 1, 2019 would be a debit of  $2,911 to the right-of-use assets with credits of  $843 and $2,068, respectively, to the current and long-term lease payables.
In December 2017, Annual Improvements to IFRS Standards 2015-2017 Cycle amended paragraph 14 of IAS 23, Borrowing Costs. The amendments clarify that the capitalization rate to the expenditures on a qualifying asset shall be the weighted average of the borrowing costs applicable to the borrowings of the entity that are outstanding during the period, and an entity shall exclude from this calculation borrowing costs applicable to borrowings made specifically for the purpose of obtaining the qualifying asset until substantially all the activities necessary to prepare that asset for its intended use or sale are complete. The Group will apply these amendments for annual reporting periods beginning January 1, 2019 and management concluded that there will be no material impact on the Group’s consolidated financial statements.
In June 2017, IASB issued IFRIC 23 Uncertainty over Income Tax Treatments. IFRIC 23 aims to reduce diversity in how companies recognize and measure a tax liability or tax asset when there is uncertainty over income tax treatments. The Group will apply IFRIC 23 for annual reporting periods beginning January 1, 2019 and management concluded that there will be no material impact on the Group’s consolidated financial statements.
In October 2018, IASB issued amendments to its definition of material to make it easier for companies to make materiality judgements. The updated definition amends IAS 1, Presentation of Financial Statements, and IAS 8, Accounting Policies, Changes in Accounting Estimates and Errors. The amendments clarify the definition of material and how it should be applied and ensure that the definition of material is consistent across all IFRS Standards. The changes are effective from January 1, 2020, but companies can decide to apply them earlier. Management is assessing its impacts on the Group’s financial statement presentation.
v3.19.1
Capital Disclosure on the Group's Objectives, Policies and Processes for Managing Its Capital
12 Months Ended
Dec. 31, 2018
Disclosure of objectives, policies and processes for managing capital [abstract]  
Capital Disclosure on the Group's Objectives, Policies and Processes for Managing Its Capital Structure
Note 3. 
Capital Disclosure on the Group’s Objectives, Policies and Processes for Managing Its Capital Structure
 
The Group’s objectives when managing capital are to: (a) safeguard the entity’s ability to continue as a going concern so that it can continue to provide returns for shareholders and benefits for other stakeholders; (b) provide an adequate return to shareholders by pricing products and services commensurately with the level of risk; and (c) maintain a flexible capital structure which optimizes the cost of capital at acceptable risk.
The Group allocates capital in proportion to risk. The Group manages the capital structure and makes adjustments to it in light of changes in economic conditions and the risk characteristics of the underlying assets. In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares, or issue new debt.
Consistent with others in its industry, the Group monitors its capital on the basis of the debt-to-adjusted capital ratio and long-term debt-to-equity ratio. The debt-to-adjusted capital ratio is calculated as net debt divided by adjusted capital. Net debt is calculated as total debt less cash and cash equivalents. Adjusted capital comprises all components of shareholders’ equity. The long-term debt-to-equity ratio is calculated as long-term debt divided by shareholders’ equity. Debt does not include short-term bank borrowings.
As at December 31:
   
2018
   
2017
 
Total debt
   
$          — 
   
$    43,733 
 
Less: cash and cash equivalents
   
(67,760) 
   
(74,870) 
 
Net debt
   
Not applicable 
   
Not applicable 
 
Shareholders’ equity
   
386,376 
   
277,780 
 
Debt-to-adjusted capital ratio
   
Not applicable 
   
Not applicable 
 
As at December 31:
   
2018
   
2017
 
Long-term debt
   
$          — 
   
$          — 
 
Shareholders’ equity
   
386,376 
   
277,780 
 
Long-term debt-to-equity ratio
   
Not applicable 
   
Not applicable 
 
The above tables do not include a non-interest bearing long-term loan payable of  $3,981 (2017: $nil) which does not have a fixed repayment date.
During 2018, the Group’s strategy, which was unchanged from 2017, was to maintain the debt-to-adjusted capital ratio and the long-term debt-to-equity ratio at a manageable level. The ratios did not change in 2018 (i.e. not applicable).
v3.19.1
Acquisitions of Consolidated Entities
12 Months Ended
Dec. 31, 2018
Disclosure of detailed information about business combination [abstract]  
Acquisitions of Consolidated Entities
Note 4.  Acquisitions of Consolidated Entities
Year 2018
There was no business combination during the year ended December 31, 2018.
Year 2017
Effective October 1, 2017, the Group completed the acquisition of a metal processing company based in Europe. Pursuant to the transaction, the Group acquired the company which equaled the fair values of the identifiable assets acquired and the liabilities assumed on the closing date. Goodwill of  $502 was recognized upon the acquisition of the metal processing company. The amount of acquisition-related costs was nominal, which was included in selling, general and administrative expenses in profit or loss. This acquisition was not considered a material business combination and did not have material impact on the Group’s financial position.
Year 2016
Effective February 1, 2016, the Group completed the acquisition of a western European bank (the “Bank”). Pursuant to the transaction, the Group acquired the Bank for total purchase consideration of $142,419 which equaled the fair values of the identifiable assets acquired and the liabilities assumed on the closing date. There were no goodwill or intangible assets acquired. The amount of acquisition-related costs was nominal, which was included in selling, general and administrative expenses in profit or loss. This acquisition was not considered a material business combination and did not have material impact on the Group’s financial position.
v3.19.1
Assets Classified as Held for Sale
12 Months Ended
Dec. 31, 2018
Disclosure Of Assets Classified As Held For Sale And Discontinued Operation [Abstract]  
Assets Classified as Held for Sale
Note 5.  Assets Classified as Held for Sale
On December 31, 2016, the Group reclassified the assets and liabilities of a commodities trading subsidiary as held for sale, which had net assets held for sale of  $15,770. The sale was completed in 2017 and included in the consolidated statement of cash flows for the year ended December 31, 2017.
v3.19.1
Business Segment Information
12 Months Ended
Dec. 31, 2018
Disclosure of operating segments [abstract]  
Business Segment Information
Note 6. Business Segment Information
The Group is primarily in the merchant banking business, which includes its iron ore royalty, financial services and other resource interests and other proprietary investments.
In reporting to management, the Group’s operating results are categorized into the following operating segments: merchant banking and all other segments.
Basis of Presentation
In reporting segments, certain of the Group’s business lines have been aggregated where they have similar economic characteristics and are similar in each of the following areas: (a) the nature of the products and services; (b) the methods of distribution; and (b) the types or classes of customers/clients for the products and services.
The Group’s merchant banking segment includes its interest, captive supply assets, financial services and proprietary investing activities. The Group’s core merchant banking asset is an interest in the Scully Iron Ore Mine in Wabush, Newfoundland & Labrador, Canada. In addition, The Group owns other merchant banking assets and seeks to invest in businesses or assets whose intrinsic value is not properly reflected. The Group’s investing activities are generally not passive. The Group actively seeks investments where its financial expertise and management can add or unlock value.
The all other segment includes the Group’s corporate and operating segments whose quantitative amounts do not exceed 10% of any of the Group’s: (a) reported revenue; (b) net income; or (c) total assets. The Group’s all other operating segment primarily includes business activities in medical equipment, instruments, supplies and services.
The accounting policies of the operating segments are the same as those described in the summary of significant accounting policies in Note 2B. The chief operating decision maker evaluates performance on the basis of income or loss from operations before income taxes and does not consider acquisition accounting adjustments in assessing the performance of the Group’s reporting segments. The segment information presented below is prepared according to the following methodologies: (a) revenue and expenses directly associated with each segment are included in determining pre-tax earnings; (b) intersegment sales and transfers are accounted for as if the sales or transfers were to third parties at current market prices; (c) certain selling, general and administrative expenses paid by corporate, particularly incentive compensation and share-based compensation, are not allocated to reporting segments; (d) all intercompany investments, receivables and payables are eliminated in the determination of each segment’s assets and liabilities; and (e) deferred income tax assets and liabilities are not allocated.
Segment Operating Results
     
Year ended December 31, 2018
 
     
Merchant 
banking
   
All other
   
Total
 
Revenue from external customers
      $ 134,496         $ 5,255         $ 139,751    
Intersegment sale
        3,363           191           3,554    
Interest expense
        1,779           3           1,782    
Income (loss) before income taxes
        183,395           (15,566)           167,829    
     
Year ended December 31, 2017
 
     
Merchant 
banking
   
All other
   
Total
 
Revenue from external customers
      $ 256,412         $ 17,623         $ 274,035    
Intersegment sale
        1,668           204           1,872    
Interest expense
        4,931                     4,931    
Loss before income taxes
        (28,254)           (10,153)           (38,407)    
     
Year ended December 31, 2016
 
     
Merchant 
banking
   
All other
   
Total
 
Revenue from external customers
      $ 1,095,896         $ 35,761         $ 1,131,657    
Intersegment sale
        1,975           360           2,335    
Interest expense
        15,751                     15,751    
Loss before income taxes
        (13,785)           (2,921)           (16,706)    
     
As at December 31, 2018
 
     
Merchant 
banking
   
All other
   
Total
 
Segment assets
      $ 458,998         $ 47,915         $ 506,913    
     
As at December 31, 2017
 
     
Merchant 
banking
   
All other
   
Total
 
Segment assets
      $ 343,649         $ 53,298         $ 396,947    
     
As at December 31, 2018
 
     
Merchant 
banking
   
All other
   
Total
 
Segment liabilities
      $ 106,651         $ 5,856         $ 112,507    
     
As at December 31, 2017
 
     
Merchant 
banking
   
All other
   
Total
 
Segment liabilities
      $ 106,713         $ 10,285         $ 116,998    
Geographic Information
Due to the highly integrated nature of international products and services, merchant banking activities and markets, and a significant portion of the Group’s activities requiring cross-border coordination in order to serve the Group’s customers and clients, the methodology for allocating the Group’s profitability to geographic regions is dependent on estimates and management judgment.
Geographic results are generally determined as follows:
Segment
   
Basis for attributing revenue
 
Merchant banking
    Locations of external customers or the reporting units, whichever is appropriate  
All other
    Locations of the reporting units  
Due to the nature of cross-border business, the Group presents its geographic information by geographic regions, instead of by countries. The following table presents revenue from external customers by geographic region of such customers:
Years ended December 31:
   
2018
   
2017
   
2016
 
Canada
      $ 13,035         $ 19,595         $ 28,328    
Germany
        51,867           122,643           280,552    
Africa
        4,254           4,283           32,519    
Americas
        1,786           22,446           256,598    
Asia
        1,549           14,894           113,821    
Europe
        67,260           90,174           419,839    
        $ 139,751         $ 274,035         $ 1,131,657    
 
Except for the geographic concentrations as indicated in the above table and a customer in the merchant banking segment located in Slovakia representing approximately 16% of the Group’s revenue for the year ended December 31, 2018, there were no other revenue concentrations during the years ended December 31, 2018, 2017 and 2016.
The following table presents non-current assets other than financial instruments, deferred income tax assets and other non-current assets by geographic area based upon the location of the assets.
As at December 31:
   
2018
   
2017
 
Canada
      $ 297,537         $ 144,452    
Africa
        33,258           32,258    
Asia
        20           889    
Europe
        52,914           52,501    
        $ 383,729         $ 230,100    
 
 
v3.19.1
Securities
12 Months Ended
Dec. 31, 2018
Securities [Abstract]  
Securities
Note 7. Securities
As at December 31:
   
2018
   
2017
 
Short-term securities                          
Equity securities at FVTPL, publicly traded
      $ 1,072         $ 6    
Debt securities at FVOCI
        6,328              
Debt securities available for sale
                  5,121    
        $ 7,400         $ 5,127    
Long-term securities                          
Equity securities at FVTPL, publicly traded
      $ 701         $    
Equity securities at FVTPL, privately held
        4001              
Equity securities available for sale, publicly traded
                  771    
        $ 4,702         $ 771    
 
Equity securities available for sale of  $771 as at December 31, 2017 were reclassified to equity securities at FVTPL upon the initial adoption of IFRS 9 on January 1, 2018.
v3.19.1
Trade Receivables
12 Months Ended
Dec. 31, 2018
Trade and other receivables [abstract]  
Trade Receivables
Note 8. Trade Receivables
As at December 31:
   
2018
   
2017
 
Trade receivables, gross amount
      $ 5,654         $ 43,207    
Less: Allowance for expected credit losses under IFRS 9 or credit losses under IAS 39 
        (311)           (8,948)    
Trade receivables, net amount
      $ 5,343         $ 34,259    
 
All trade receivables comprise accounts from contracts with customers and primarily arise from merchant banking activities.
The Group has two non-recourse factoring arrangements with banks for trade receivables (see Note 15).
As at December 31, 2018, trade receivables of  $311 were credit-impaired and a loss allowance for lifetime expected credit losses of  $311 were recognized.
The movement in the loss allowance during the year ended December 31, 2018 was as follows:
     
Loss allowance measured at an amount 
equal to lifetime expected credit losses
 
     
Financial assets that 
are credit-impaired 
at year-end
   
Other trade 
receivables
   
Total
 
Loss allowance: opening balance
      $         $         $    
Reclassification from IAS 39 upon initial adoption of IFRS 9
        8,948                     8,948    
Additions for the year
        21,817           87           21,904    
Reversal
                               
Written off
        (30,935)                     (30,935)    
Exchange effect
        184           10           194    
Other
                  200           200    
Loss allowance: ending balance
      $ 14         $ 297         $ 311    
 
The allowance for expected credit losses under IFRS 9 as of January 1, 2018 and the allowance for credit losses under IAS 39 as of December 31, 2017 were of the same amount. As a result, no adjustment nor reconciliation was required when the Group adopted IFRS 9 on January 1, 2018.
In accordance with IFRS 9, management reviews the expected credit losses for the following twelve months based upon, among other things, the credit-worthiness of the exposure, collateral and other risk mitigation instruments, and the nature of the underlying business transaction. There have been no financial instruments acquired whose credit risk has increased substantially since initial recognition.
As at December 31, 2017, trade receivables of  $11,352 were past due but not impaired. The aging analysis of these trade receivables as at December 31, 2017 are as follows:
Past-due
   
2017
 
Below 30 days
      $ 7,322    
Between 31 and 60 days
        728    
Between 61 and 90 days
        1,175    
Between 91 and 365 days
        1,813    
Over 365 days
        314    
        $ 11,352    
 
As at December 31, 2017, trade receivables of  $30,337 were impaired and an allowance for credit losses of $8,948 has been provided. Not all past-due account balances are uncollectible as most of the accounts are covered by credit insurance or other collection procedures. Credit risk from trade account receivables is mitigated since they are credit insured, covered by letters of credit, bank guarantees and/or other credit enhancements (see Note 29).
The aging analyses of impaired trade receivables as at December 31, 2017 are as follows:
Past-due
   
2017
 
Below 30 days
      $    
Between 31 and 60 days
           
Between 61 and 90 days
           
Between 91 and 365 days
           
Over 365 days
        30,337    
          30,337    
Allowance for credit losses
        (8,948)    
Expected recoverable amount of impaired trade receivables(1)
      $ 21,389    
 
 
(1)     The recoverable amount of impaired trade receivables is covered by credit insurance, bank guarantees and/or other credit enhancements and, therefore, management of the Group believes this entire net amount to be collectible in the ordinary course of business.
 
The movement in the allowance for credit losses during the year ended December 31, 2017 was as follows:
     
2017
 
Balance, beginning of the year
      $ 58,488    
Additions
        12,213    
Reversals
        (1,541)    
Write-offs
        (7,726)    
Disposition of subsidiaries
        (33,999)    
Other
        (21,099)    
Currency translation adjustment
        2,612    
Balance, end of the year
      $ 8,948    
 
During the year ended December 31, 2016, the Group received proceeds of  $39,149 from risk mitigation assets, of which $35,121 was credited to profit or loss through a recovery of credit losses and the remainder was credited to trade receivables.
As at December 31, 2016, management of the Group reviewed the underlying contracts, legal documents, credit enhancement instruments and collateral to assess the recoverability of outstanding amounts related to a former insolvent customer, and recognized a cumulative allowance for credit losses of $43,943 in connection with this former customer group as at December 31, 2016, including an additional provision of $33,301 which was recognized during the second quarter of 2016. After the recognition of such impairment losses, the Group had net trade receivables of $100,008 due from this former customer group as at December 31, 2016.
During 2017, management of the Group continued to monitor and assess the collectability of the receivables. As a result of such reviews, the Group reversed and credited an allowance of  $1,541 to profit or loss in the third quarter. During the fourth quarter, the Group deconsolidated subsidiaries which had trade receivables due from this former customer group (see Note 31). Furthermore, the Group increased the valuation allowance by $224 based on its revision of expected future cash flows. As such, the Group had net trade receivables of  $21,375 due from this former customer group as at December 31, 2017.
During 2018, management recognized a further credit loss of  $21,812 and subsequently wrote off the remaining receivable balance from this former customer group as management determined the amount to be uncollectible. The maximum amount of credit risk, without taking into account any collateral or other credit enhancements, is equal to the carrying value of our receivables. The Group intends to pursue, where commercially reasonable, the recovery of receivables which have been impaired historically.
v3.19.1
Other Receivables
12 Months Ended
Dec. 31, 2018
Disclosure Of Other Current Receivables [Abstract]  
Other Receivables
Note 9. Other Receivables
As at December 31:
   
2018
   
2017
 
Royalty income from contracts with customers (net of an allowance of  $nil and $1,425, respectively)
      $         $ 4,525    
Contract assets under contracts with customers
        295           876    
Suppliers with debit balance
                  293    
Loans
        6,087           321    
Other
        2,293           15,675    
        $ 8,675         $ 21,690    
 
Other receivables primarily arise in the normal course of business and are expected to be collected within one year from the reporting date.
Royalty income receivables as of December 31, 2017 included $5,300 which had been disputed. Management of the Group reviewed the facts relating to the royalty receivables with its legal advisors, believing that the dispute was without merit, and determined that it was probable that the receivables would be recovered as the payments were held in trust. However, in March 2018 there was a court judgment which was not in favor of the Group, and the Group appealed. As a result of the initial court judgment, the Group provided $1,425 as a valuation allowance for the royalty income receivables as of December 31, 2017. In the second quarter of 2018, a higher court refused to grant leave to the Group to appeal the lower court judgment, and as a result, the Group wrote off the remaining receivable balance of  $3,875 during the year ended December 31, 2018.
The movement of contract assets under contracts with customers for the year ended December 31, 2018 was as follows:
     
2018
 
Balance, beginning of the year
      $ 876    
A change in the time frame for a right to consideration to become unconditional
        (581)    
Balance, end of the year
      $ 295    
v3.19.1
Inventories
12 Months Ended
Dec. 31, 2018
Disclosure Of Inventories [Abstract]  
Inventories
Note 10. Inventories
As at December 31:
   
2018
   
2017
 
Raw materials
      $ 3,640         $ 3,632    
Work-in-progress
        3,568           3,444    
Finished goods
        1,960           1,440    
Commodity inventories
        2,238           1,310    
        $ 11,406         $ 9,826    
Comprising:
               
(Restated)
 
Inventories contracted at fixed prices or hedged
      $ 9,432         $ 8,160    
Inventories – other
        1,974           1,666    
        $ 11,406         $ 9,826    
 
v3.19.1
Investment Property
12 Months Ended
Dec. 31, 2018
Disclosure of detailed information about investment property [abstract]  
Investment Property
Note 11. Investment Property
All of the Group’s investment property is located in Europe.
Changes in investment property included in non-current assets:
   
2018
   
2017
 
Balance, beginning of year
      $ 37,660         $ 35,663    
Change in fair value during the year
        (274)           (26)    
Disposals
        (976)           (194)    
Currency translation adjustments
        1,394           2,217    
Balance, end of year
      $ 37,804         $ 37,660    
 
The amounts recognized in profit or loss in relation to investment property during the years ended December 31, 2018, 2017 and 2016 are as follows:
Years ended December 31:
   
2018
   
2017
   
2016
 
Rental income
      $ 1,611         $ 1,510         $ 1,511    
Direct operating expenses (including repairs and maintenance) arising from investment property during the year
        193           256           226  
v3.19.1
Property, Plant and Equipment
12 Months Ended
Dec. 31, 2018
Disclosure of detailed information about property, plant and equipment [abstract]  
Property, Plant and Equipment
Note 12. Property, Plant and Equipment
The following changes in property, plant and equipment were recorded during the year ended December 31, 2018:
Costs
   
Opening
balance
   
Additions
   
Disposals
   
Dispositions
of
subsidiaries
   
Impairments
   
Currency
translation
adjustments
   
Ending
balance
 
Refinery and power plants
      $ 92,434         $         $ (148)         $ (27,214)         $         $ 3,487         $ 68,559    
Processing plant and equipment
        3,703           88           (25)                     (42)           37           3,761    
Office equipment
        1,135           340           (56)                     (4)           35           1,450    
        $ 97,272         $ 428         $ (229)         $ (27,214)         $ (46)         $ 3,559         $ 73,770    
 
Accumulated depreciation
   
Opening
balance
   
Additions
   
Disposals
   
Dispositions
of
subsidiaries
   
Impairments
   
Currency
translation
adjustments
   
Ending
balance
 
Refinery and power plants
      $ 11,047         $ 2,775         $ (148)         $ (1,668)         $         $ 757         $ 12,763    
Processing plant and equipment
        1,626           255           (10)                     (27)           29           1,873    
Office equipment
        645           211           (60)                     (4)           17           809    
          13,318         $ 3,241         $ (218)         $ (1,668)         $ (31)         $ 803           15,445    
Net book value
      $ 83,954                                                                     $ 58,325    
 
The following changes in property, plant and equipment were recorded during the year ended December 31, 2017:
Costs
   
Opening
balance
   
Additions
   
Disposals
   
Dispositions
of
subsidiaries*
   
Reclassified
from
inventories
   
Impairments
   
Currency
translation
adjustments
   
Ending
balance
 
Land and buildings
      $ 944         $ 26         $         $ (1,221)         $         $         $ 251         $    
Refinery and power plants
        91,392                                         3,786                     (2,744)           92,434    
Processing plant and equipment
        18,880           987           (8,678)           57                     (7,863)           320           3,703    
Office equipment
        5,189           300           (1,343)           (3,163)                               152           1,135    
        $ 116,405         $ 1,313         $ (10,021)         $ (4,327)         $ 3,786         $ (7,863)         $ (2,021)         $ 97,272    
 
 
*      Net of acquisition of a subsidiary
 
Accumulated depreciation
   
Opening
balance
   
Additions
   
Disposals
   
Dispositions
of
subsidiaries
   
Impairments
   
Currency
translation
adjustments
   
Ending
balance
 
Land and buildings
      $ 208         $ 344         $         $ (598)         $         $ 46         $    
Refinery and power plants