Pakistan State Oil : Transmission of Annual Report for the year ended June 30, 2022

CONTENTS

CORPORATE OVERVIEW

ABOUT THE REPORT	04
KEY HIGHLIGHTS OF THE YEAR	06
CHAIRMAN'S REVIEW	10
0$1$*,1*',5(&725 &(2·6/(77(572	12
SHAREHOLDERS
VISION	14
MISSION	15
VALUES	16
CODE OF CONDUCT	17
COMPANY PROFILE	18
MARKETS SERVED AND PRODUCT LINES	20
GROUP STRUCTURE	21
BUSINESS MODEL	21
STRATEGIC INVESTMENTS	22
VALUE CHAIN	23
HR STRENGTH	23
GEOGRAPHICAL PRESENCE	24
REGULATORY FRAMEWORK	25
SIGNIFICANT CHANGES FROM PRIOR YEARS	26
SIGNIFICANT EVENTS	28
MAJOR EVENTS	30
MARKETING INITIATIVES	34

MANAGEMENT REVIEW & REPRESENTATION

INTEGRATED BUSINESS MODEL	40
BUSINESS OBJECTIVES & STRATEGIES	42
RESOURCE ALLOCATION PLAN	43
SIGNIFICANT CHANGES IN OBJECTIVES AND	43
STRATEGIES FROM PREVIOUS YEARS
STRATEGIC DECISION MAKING PROCESS	43
AND ORGANIZATIONAL CULTURE
PANDEMIC RECOVERY PLAN BY THE	43
MANAGEMENT AND POLICY STATEMENT
SIGNIFICANT CHANGES IN THE LOCAL AND	43
INTERNATIONAL POLITICAL ENVIRONMENT
AFFECTING THE COMPANY
SIGNIFICANT PLANS AND DECISIONS	43
KEY PERFORMANCE INDICATORS	44
STRATEGY TO OVERCOME LIQUIDITY	44
CHALLENGES AND MANAGEMENT OF DEBTS
SIGNIFICANT FACTORS AFFECTING	44
EXTERNAL ENVIRONMENT AND COMPANY'S
RESPONSE

7+(*29(510(17·632/,&,(6$1',03$&7 45

COMPETITIVE LANDSCAPE AND MARKET	45
POSITIONING
ADEQUACY OF CAPITAL STRUCTURE	45
STEPS TAKEN TO PROMOTE INNOVATION	45
SWOT ANALYSIS	46

COMPOSITION OF LOCAL VERSUS	46
IMPORTED MATERIAL AND SENSITIVITY
ANALYSIS
MATERIALITY APPROACH ADOPTED BY THE	46
MANAGEMENT
DISCLOSURES BEYOND BEST CORPORATE	46
REPORTING REQUIREMENTS
KEY RESOURCES AND CAPABILITIES THAT	47
PROVIDE SUSTAINABLE COMPETITIVE
ADVANTAGE
THE LEGITIMATE NEEDS, INTERESTS OF KEY	47
STAKEHOLDERS AND INDUSTRY TRENDS
VALUE CREATION BY THE BUSINESS USING	47
ITS RESOURCES
ADOPTION OF INTERNATIONAL INTEGRATED	48
REPORTING FRAMEWORK
RISK AND OPPORTUNITY REPORT	49

NOTICE OF MEETING	56
CORPORATE GOVERNANCE
COMPANY INFORMATION	61
THE BOARD OF MANAGEMENT	62
ENGAGEMENT OF BOARD MEMBERS IN	72
BUSINESS ENTITIES
BOARD COMMITTEES	73
%2$5'·623(5$7,1*67$1'	77
DELEGATION TO MANAGEMENT
ROLE OF CHAIRMAN AND CEO	77
&(2·63(5)250$1&(5(9,(:%<7+(	77
BOARD
EVALUATION OF BOARD'S PERFORMANCE	77
TRAINING OF BOARD MEMBERS	77
ORIENTATION OF BOARD MEMBERS	77
REMUNERATION OF NON-EXECUTIVE	77
(INCLUDING INDEPENDENT) BOARD
MEMBERS
POLICY FOR RETENTION OF FEE BY AN	77
EXECUTIVE MEMBER
BOARD'S VIEW ON DIVERSITY	78
&203$1<·632/,&<)256$)(*8$5',1*	78
OF RECORDS
CONFLICT OF INTEREST AMONGST BOARD	78
MEMBERS
COMPLIANCE WITH THE BEST PRACTICES	78
OF THE CODE OF CORPORATE
GOVERNANCE
EXTERNAL OVERSIGHT OF VARIOUS	78
FUNCTIONS
BOARD MEETINGS HELD OUTSIDE PAKISTAN	78
RELATED PARTIES	79

0$1$*(0(17·65(63216,%,/,7<72:$5'6 79

FINANCIAL STATEMENTS

GOVERNANCE PRACTICES EXCEEDING	79
LEGAL REQUIREMENTS

02 ANNUAL REPORT 2022

APPOINTMENT OF BOARD INCLUDING	79
CHAIRMAN
&+$,50$1·66,*1,),&$17&200,70(176	79
ORGANIZATIONAL STRUCTURE	80
REPORT OF THE BOARD AUDIT &	82
COMPLIANCE COMMITTEE
SUMMARY OF KEY ACTIVITIES	82
STATEMENT OF COMPLIANCE	84
REVIEW REPORT TO THE MEMBERS	88
ATTENDANCE AT BOARD OF MANAGEMENT	89
AND BOARD COMMITTEE MEETINGS
MANAGEMENT COMMITTEE	90
COMPENSATION, ORGANIZATION &	90
EMPLOYEE DEVELOPMENT COMMITTEE

REPORT TO SHAREHOLDERS (UNCONSOLIDATED)

GLOBAL BUSINESS AND ECONOMIC	94
ENVIRONMENT
PAKISTAN'S BUSINESS AND ECONOMIC	94
OVERVIEW
OIL INDUSTRY OVERVIEW	95
THE COMPANY'S PERFORMANCE	96
BUSINESS LINES	98
FINANCIAL MANAGEMENT	119
OTHER MATTERS	120
FORWARD LOOKING STATEMENT	122

REPORT TO SHAREHOLDERS	126
(CONSOLIDATED)
FINANCIALS
DUPONT ANALYSIS	133
MARKET SHARE INFORMATION	134
SHARE PRICE SENSITIVITY ANALYSIS	134
ANALYSIS OF FINANCIAL POSITION	136
ANALYSIS OF FINANCIAL PERFORMANCE	137
ANALYSIS OF PERFORMANCE AGAINST	138
TARGET
SEGMENTAL REVIEW OF BUSINESS	138
PERFORMANCE
ANALYSIS OF VARIATIONS IN RESULTS	139
REPORTED IN INTERIM REPORTS
SUMMARY OF CASHFLOWS STATEMENT	140
DIRECT CASHFLOW STATEMENT	141
FINANCIAL RATIOS	142
STATEMENT OF VALUE ADDITIONS	150
HORIZONTAL AND VERTICAL ANALYSIS	151
INDICATORS AND PERFORMANCE	156
MEASURES
MAJOR CAPITAL EXPENDITURE / PROJECTS	156

CHANGE IN ACCOUNTING POLICIES,	157
JUDGEMENTS, ESTIMATES AND
ASSUMPTIONS
COMPLIANCE OF FINANCIAL ACCOUNTING	157
AND REPORTING STANDARDS
TAXES AND DIVIDENDS	157
,1'(3(1'(17$8',725·65(325721	159
UNCONSOLIDATED FINANCIAL STATEMENTS
UNCONSOLIDATED STATEMENT OF	164
FINANCIAL POSITION
NOTES TO THE UNCONSOLIDATED	169
FINANCIAL STATEMENTS
,1'(3(1'(17$8',725·65(325721	246
CONSOLIDATED FINANCIAL STATEMENTS
CONSOLIDATED STATEMENT OF FINANCIAL	250
POSITION
NOTES TO THE CONSOLIDATED FINANCIAL	255
STATEMENTS
STAKEHOLDERS' INFORMATION
STAKEHOLDERS' IDENTIFICATION	342
STAKEHOLDERS' ENGAGEMENT	342
ANALYSTS' AND CORPORATE BRIEFINGS	343
RESOLUTION OF CONCERNS RAISED AT	344
LAST AGM
ENCOURAGEMENT OF THE SHAREHOLDERS	344
TO ATTEND THE GENERAL MEETINGS
PRESENCE OF CHAIRPERSON OF THE	344
BOARD AUDIT & COMPLIANCE COMMITTEE
AT AGM
5('5(66$/2),19(67256·*5,(9$1&(6	344

,19(67256·5(/$7,2166(&7,2121362 6 344

WEBSITE

PATTERN OF SHAREHOLDING	345
SHAREHOLDERS' CATEGORIES	348
SHAREHOLDERS' AND INVESTORS'	350
INFORMATION
0$1$*,1*',5(&725 &(2·6,17(59,(:	350
GLOSSARY	351
FEEDBACK	351

CHAIRMAN'S REVIEW & REPORT TO SHAREHOLDERS (URDU)

REPORT TO SHAREHOLDERS	355
(CONSOLIDATED)
REPORT TO SHAREHOLDERS	379
(UNCONSOLIDATED)
CHAIRMAN'S REVIEW & REPORT TO	381

SHAREHOLDERS

FORMS

E-DIVIDEND MANDATE FORM

PROXY FORM (ENGLISH/URDU)

ANNUAL REPORT 2022

03

04

KEY HIGHLIGHTS OF THE YEAR

Gross Revenue

Highest-ever sales turnover

PKR 2.7

TRILLION

	2.8
trillion	1.8
PKR
	0.8
	FY19	FY20	FY21	FY22

Profit before Tax

Highest-ever profit

before tax

PKR 147.8

BILLION

	155
	115
PKR billion	113
75
	35
	-5
	FY19	FY20	FY21	FY22

		Earnings before Interest, Taxes,
Highest-ever		Dividend and Amortization
earnings before interest,		168
taxes, dividend and amortization
PKR 154.8		128
billion	88
	PKR
BILLION
	48
		8
		FY19	FY20	FY21	FY22

Contribution to

National Exchequer

Contribution to national exchequer

PKR 476.9

BILLION

500
350
PKR billion
200
50
FY19	FY20	FY21	FY22

06 ANNUAL REPORT 2022