Page 198 - Pakistan Oilfields Limited - Annual Report 2020

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NOTES TO AND FORMING
PART OF THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED JUNE 30, 2020
196
PAKISTAN OILFIELDS LIMITED
1.
LEGAL STATUS AND OPERATIONS
Pakistan Oilfields Limited (the Company) is incorporated in Pakistan as a public limited company
and its shares are quoted on Pakistan Stock Exchange Limited. The registered office of the Company
is situated at Morgah, Rawalpindi. The Company is principally engaged in exploration, drilling
and production of crude oil and gas in Pakistan. Its activities also include marketing of liquefied
petroleum gas under the brand name POLGAS and transmission of petroleum. The Company is a
subsidiary of The Attock Oil Company Limited, UK and its ultimate parent is Coral Holding Limited.
CAPGAS (Private) Limited (CAPGAS), the subsidiary company is incorporated in Pakistan as a private
limited company under the Companies Act, 2017 and is principally engaged in buying, filling,
distribution and dealing in Liquefied Petroleum Gas (LPG).
For the purpose of these financial statements, POL and its consolidated subsidiary are referred as
the Group.
Geographical location and addresses of all other business units of the Group have been disclosed
in note 48.
2.
STATEMENT OF COMPLIANCE
These are consolidated financial statements of the Group. These financial statements have been
prepared in accordance with the accounting and reporting standards as applicable in Pakistan. The
accounting and reporting standards applicable in Pakistan comprise of:
- International Financial Reporting Standards (IFRS Standards) issued by the International
Accounting Standards Board (IASB) as notified under the Companies Act, 2017; and
- Provisions of and directives issued under the Companies Act, 2017.
Where provisions of and directives issued under the Companies Act, 2017 differ from the IFRS
Standards, the provisions of and directives issued under the Companies Act, 2017 have been
followed.
3.
NEW AND AMENDED STANDARDS AND INTERPRETATIONS
- IFRS 16“Leases”has replaced IAS 17“Leases”, the former lease accounting standard, and has become
effective from annual accounting periods beginning on or after January 1, 2019. Under the new
standard, almost all leases which meet the criteria described in the standard will be recognized on
the statement of financial position with only exceptions of short term and low value leases. Under
IFRS 16, an asset (the right to use the leased item) is recognized along with corresponding financial
liability to pay rentals at the present value of future lease payments over the lease term, discounted
with the specific incremental borrowing rate.
The Group’s lease portfolio includes lease contracts which are extendable through mutual agreement
between counter parties or cancellable by both parties immediately or on a short notice. Accordingly,
the Group has concluded that where the lease termof contracts are short-term in nature i.e. with a lease
term of twelve months or less at the commencement date, right of use assets is not recognized and
payments made in respect of these leases are expensed in the statement of profit or loss.
The Group has adopted IFRS 16 from July 1, 2019 using the modified retrospective approach and the
Group has assessed that the adoption of IFRS 16 does not have any material financial impact on these
financial statements.