Page 129 - Pakistan Oilfields Limited - Annual Report 2021

NOTES TO AND FORMING

PART OF THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED JUNE 30, 2021

payable to management staff is reduced by an amount determined by the actuary equivalent
to amount paid by the gratuity fund. Management staff hired after January 1, 2012 are only
entitled to benefits under gratuity fund. Actuarial valuations are conducted annually using
the “Projected Unit Credit Method” and the latest valuation was conducted as at June 30, 2021.

Actuarial gain and losses arising from experience adjustments and change in actuarial
assumptions are charged or credited to equity in other comprehensive income in the period
in which they arise.

Past service costs are recognized immediately in statement of profit or loss.

Since both are complementary plans, combined details and valuation for pension plan and
gratuity plan are given in note 36.

(ii) Separate approved contributory provident funds for management and non-management
employees for which contributions are made by the Company and the employee at the rate
of 10% of basic salary.
(iii) These include charge against employee retirement benefits of Rs 88,660 thousand (2020: Rs
103,205 thousand).

4.10 Trade and other payables

Liabilities for trade and other payables are carried at cost which is the fair value of the consideration
to be paid in future for goods and services received.

4.11 Contingent liabilities

A contingent liability is disclosed when the Company has a possible obligation as a result of past
events, whose existence will be confirmed only by the occurrence or non-occurrence, of one or
more uncertain future events not wholly within the control of the Company; or the Company has a
present legal or constructive obligation that arises from past events, but it is not probable that an
outflow of resources embodying economic benefits will be required to settle the obligation, or the
amount of the obligation cannot be measured with sufficient reliability.

4.12 Property, plant and equipment

Property, plant and equipment are stated at cost less accumulated depreciation and impairment
losses except for freehold land and capital work in progress, which are stated at cost.
Depreciation is provided on straight line method at rates specified in note 12.1 to the financial
statements. Depreciation is charged on additions from the month the assets become available for
the intended use up to the month in which these are derecognized.

Maintenance and normal repairs are charged to income as and when incurred. Major renewals and
improvements are capitalized and the assets so replaced, if any, are retired. Gains and losses on
derecognition of assets are included in income currently.

4.13 Exploration assets/ costs and development costs
4.13.1 Exploration and development costs are accounted for using the “Successful Efforts Method” of
accounting.

ANNUAL REPORT 2021 127