Advertisement
Depreciation per cost category:
March 31, 2013 March 31, 2012----------------------------------------------------------------------------Cost of sales 10.3 10.9Selling, distribution and administrative costs 10.3 10.6----------------------------------------------------------------------------Total 20.6 21.5----------------------------------------------------------------------------
The carrying amount of Superior's property, plant, and equipment includes $66.8 million of leased assets as at March 31, 2013 (December 31, 2012 - $67.8 million).
7. Provisions
---------------------------------------------------------------------------- Decommissioning Environmental Costs Expenditures Total----------------------------------------------------------------------------Balance at December 31, 2012 16.2 1.4 17.6 Unwinding of discount 0.1 - 0.1 Impact of change in discount rate (0.4) - (0.4) Net foreign currency exchange difference 0.1 - 0.1--------------------------------------------------------------------------------------------------------------------------------------------------------Balance at March 31, 2013 16.0 1.4 17.4----------------------------------------------------------------------------
Decommissioning costs
Specialty Chemicals
Superior makes full provision for the future cost of decommissioning Specialty Chemicals' chemical facilities. The provision is on a discounted basis and is based on existing technologies at current prices or long-term price assumptions, depending on the activity's expected timing. As at March 31, 2013, the discount rate used in Superior's calculation was 2.5% (December 31, 2012 - 2.4%). Superior estimates the total undiscounted amount of expenditures required to settle its decommissioning liabilities is approximately $20.3 million (December 31, 2012 - $20.1 million) which will be paid over the next nineteen to twenty-seven years. While Superior's provision for decommissioning costs is based on the best estimate of future costs and the economic lives of the chemical facilities, the amount and timing of these costs is uncertain.
Energy Services
Superior makes full provision for the future costs of decommissioning certain assets associated with the Energy Services segment. Superior estimates the total undiscounted expenditures required to settle its decommissioning liabilities to be approximately $9.0 million at March 31, 2013 (December 31, 2012 - $8.8 million) which will be paid out over the next nineteen years. The risk-free rate of 2.5% at March 31, 2012 (December 31, 2012 - 2.4%) was used to calculate the present value of the estimated cash flows.
Environmental Expenditures
Provisions for environmental remediation are made when a clean-up is probable and the amount of the obligation can be reliably estimated. Generally, this coincides with commitment to a formal plan or, if earlier, on divestment or closure of inactive sites. The provision for environmental liabilities has been estimated using existing technology, at current prices and discounted using a risk-free discount rate of 2.5% at March 31, 2013 (December 31, 2012 - 2.4%). The majority of these costs are expected to be incurred over the next two years. The extent and cost of future remediation programs are inherently difficult to estimate. They depend on the scale of any possible contamination, the timing and extent of corrective actions, and Superior's share of the liability.
